You asked for a summary of the Underground Storage Tank amendment to SB 1151 (LCO 7267). This summary includes changes to the amendment that we discussed June 1, 2005.

SUMMARY

This amendment revises the commercial Underground Storage Tank (UST) clean-up program. Major changes include:

1. authorizing an inspection program of commercial USTs, and permitting private licensed environmental professionals (LEPs) to evaluate USTs for compliance with the law and regulations (§ 501);

2. authorizing the Department of Environmental Protection (DEP) to stop deliveries to, and operation of, non-compliant commercial USTs (§501);

3. expanding the categories of people eligible for reimbursement from the UST account (“responsible parties”) (§ 502) ;

4. allowing UST owners and operators to assign their claims (§ 503);

5. requiring applicants to submit requests for reimbursement by certain deadlines, and to achieve remediation milestones (§§ 503 & 507);

6. requiring a compliance report before the board acts on a request for reimbursement, and allowing the commissioner to deny or reduce payment if she finds an applicant is not in compliance with UST regulations (§ 506);

7. allowing the commissioner to create a price schedule that limits the amount the board can reimburse applicants for the costs of labor, equipment and material (§ 506);

8. authorizing the UST review board, with an applicant’s consent, to pay up to 90% of certain requested costs in exchange for a review of the claim within 90 days (§ 506);

9. limiting the amount of legal fees the board may reimburse (§ 503);

10. requiring LEP or DEP commissioner approval of expenditures made after October 1, 2005 (§ 506);

11. requiring UST owners and operators to reimburse the board if they receive payments for leaks from insurance or other sources (§ 503); and

12. authorizing the attorney general to recover damages from owners of property on which there is a leaking UST if certain conditions are met, and changing some of the conditions under which he may sue (§506).

SECTION-BY-SECTION DISCUSSION

§ 501(f)–—Tank Inspection and Removal From Service

The amendment authorizes the commissioner to adopt regulations establishing inspection requirements for tanks for compliance with laws and regulations concerning their design, construction, installation and operation. She also may adopt regulations authorizing people to inspect them; to determine if violations that caused them to be removed from service have been fixed; barring deliveries to noncompliant tanks; and prohibiting tank owners or operators from placing a noncompliant tank back in service.

§ 501(g)—Noncompliant USTs

The amendment authorizes the DEP commissioner to require a tank owner or operator to (1) (a) pump out the tank and (b) place on it a plainly visible notice indicating it is not in compliance and cannot be used or accept deliveries, or (2) install a device that prohibits deliveries and renders the UST unusable. She may do so if she find that a tank (1) is not designed, built, installed or operated according to law or regulations; or (2) does not have, or operate, proper (a) release detection equipment or (b) overfill and spill protection measures or equipment.

No one may deliver any product to a tank with such a notice or on which the commissioner has placed a disabling device until the commissioner or someone she authorizes determines the violation has been corrected. The UST owner or operator must ensure it does not dispense any product or receive deliveries, and people and towns must not remove, alter, deface or tamper with a notice or disabling device. (By law, the DEP commissioner may fine violators up to $ 25,000 a day. )

The commissioner must provide the UST owner or operator with an opportunity for a hearing within two business days of placing a notice or disabling the UST. The hearing must deal only with the question of whether a violation occurred, and if it is continuing.

A UST may be returned to service only when the violation has been corrected to the satisfaction of the commissioner or a person authorized to make such a determination under the regulations the commissioner may adopt. The commissioner must determine if a violation has been corrected within 24 hours of receiving notice that such a correction has been made. If she fails to make a determination within 24 hours, and until she authorizes inspectors to make one, the UST owner or operator may return the UST to service if he provides the commissioner with a written affidavit (1) certifying he has corrected all violations and (2) fully describing all corrective action he has taken. He must provide this information the same day he returns the UST to service, or the next business day if the UST is returned to service on a weekend or holiday.

The commissioner may adopt regulations that establish different requirements than the amendment.

§ 501(i)—Fees

Under current law, anyone who notifies the commissioner of the installation of a tank must submit a $ 100 notification fee. The amendment requires the filing of such a fee when notifying the commissioner of the installation of a tank or system.

§ 502—Expanding Who Is Considered A Responsible Party

Under current law, a “responsible party” is anyone, including the state, which owns or operates a UST from which a release occurred. The amendment expands this definition for applications received before and after July 1, 2005.

For applications received between the amendment’s effective date to July 1, 2005, a responsible party is any person who owns or operates a tank from which a release or suspected release takes places. The amendment defines person to include individuals, firms, partnerships, associations, syndicates, companies, trusts, corporations, LLCs, towns, state agencies and all other legal entities.

For applications for payment submitted after July 1, 2005, the amendment defines a responsible party as: any person who, at any time (1) owns, leases, uses, operates, or has an interest in a UST from which a leak or suspected leak occurred; or (2) owns, leases, uses or has an interest in property on which such a tank is located. These people are responsible parties whether or not they had such an interest in the tank or property when the leak occurred. Under the amendment, a responsible party also includes anyone related to anyone in the first two groups through a family, contractual, corporate or financial relationship.

The amendment does not affect any determination the board makes before July 1, 2005 about an applicant’s status for reimbursement purposes.

§ 503—Reimbursement, Assignment And Price Schedule

Changes in Reimbursement. Starting June 1, 2005, the amendment prohibits the board from reimbursing claims for (1) lost property value or interest, and (2) attorneys’ fees or other costs of legal representation (a) of more than $ 5,000 to any responsible party, (b) of more than $ 10,000 to any other party, or (c) by a responsible party for defending against claims brought by another party.

Deductibles. By law, responsible parties must pay the first $ 10,000 of clean-up expenses. Third parties are not required to pay this deductible (see § 506 (i)). With certain exceptions, responsible parties and third parties are responsible for costs in excess of $ 1 million.

Assignment of Claims. Responsible parties may assign their claims. The amendment authorizes the commissioner to pay assignees from the account, providing: (1) the assignor has not yet been paid, (2) the assignor directs the commissioner to pay the assignee on a form the commissioner approves, (3) the account does not bear any of the assignment costs, and (4) neither the state nor any state agency bears any liability with respect to the assignment.

Pay for Performance Subaccount. The amendment establishes a subaccount in the clean-up account called the “pay for performance subaccount. ” She may use this subaccount for a program to pay applicants who achieve environmental milestones or results.

§ 503(d)—Application Deadlines

The amendment creates deadlines by which applicants must request payment. An applicant whose initial application was received by the board before July 1, 2005, cannot submit any supplemental request after September 30, 2009. An applicant whose initial request was received by the board after July 1, 2005, has five years from the board’s receipt of the request to submit any additional requests. These deadlines do not apply to request for reimbursement for annual groundwater remediation, including the preparation of annual progress reports.

Deadline Extensions. Under the amendment, the above deadlines must be extended by six months if the board fails to decide on a particular request for payment within six months of receiving it. However, a deadline for a particular request cannot be extended by a total of more than two years. And if the commissioner determines a request was ready for a decision by the board but was not placed on its agenda because the board was unable to meet or act on it, the deadline can be extended only for the length of time the board was unable to meet or act.

§ 503(e)—Insurance Coverage Reimbursement

Under the amendment a person may apply to the board for reimbursement even if he has insurance or another agreement to reimburse him for costs incurred in response to a leak. But, he must (1) notify the board, in writing, of the payment or expected payment, and (2) repay the account all the money he receives from such other sources within 30 days of receiving these payments. Another provision of the amendment allows for payment from the account only if the applicant’s insurance or contract has been denied or is insufficient to cover the costs for which the applicant is seeking payment.

If the board determines an applicant is seeking reimbursement from the account, and that such reimbursement is available from another source, it may impose any reasonable conditions regarding the amount it pays from the account.

§ 504—Change in Board Responsibilities and Membership

Under the amendment, the board no longer reviews applications to determine if a release has occurred and the amount of damage it caused, but must decide whether to order reimbursement based on applicable laws and regulations affecting USTs.

Under current law the board includes a member representing the Connecticut Gasoline Retailers Association, appointed by the House minority leader. The amendment replaces this member with a representative of the Gasoline and Automotive Services Dealers of America, Inc.

§ 505(b)—Price Schedule

The amendment authorizes the commissioner to prepare a price schedule of the maximum the UST clean-up account will reimburse applicants for costs incurred as a result of a leak. The amounts in the price schedule must be no more than the usual, customary and reasonable amounts charged for these services or materials, as determined by the commissioner. The amendment bars the commissioner from having to review the price schedule more than once every two years, but also authorizes her to do so more often if she believes it necessary.

When the commissioner adopts a schedule that includes a price for a particular service, the amendment supersedes a regulatory requirement that applicants obtain three written bids for such a service. It requires LEPs to use a seal, as provided in regulations, to provide the required written approvals the amendment requires.

§ 506—Claims and Notification

The amendment authorizes responsible parties who are not liable for the release to apply to the board for reimbursement of costs resulting from the release, and expands eligible costs to include remediation costs. Under current law, other people who claim to have suffered damage or personal injury because of a release may apply to the board for reimbursement, if the responsible party (1) denies there was a release, or (2) does not apply to the board for payment of a claim. The amendment instead requires that a person who claims to have suffered bodily injury, property damage or damage to natural resources make a reasonable attempt to notify the responsible party in writing. This claimant may seek payment from the board if the responsible party does not apply to the board within 60 days of receiving such notice or such other time the parties agree to.

§ 506(b)—Prior Written Approval of Claims

The amendment bars the board from ordering payment from the account unless an applicant can show that, for total costs of $ 250,000 or less, that the commissioner or an LEP has given written approval for the costs of labor and materials provided after October 1, 2005, and for services and activities begun after that date. The commissioner must approve in writing, or authorize, in writing, an LEP to approve in writing such expenditures when the total cost exceeds $ 250,000.

§ 506(c)—Conditions for the Board to Order Reimbursement

Under current law, the board reimburses responsible parties and others (third parties) who suffer damage or personal injury because of a UST leak. The board must order reimbursement when these applicants meet certain conditions. The amendment modifies some of the conditions and adds new ones.

It eliminates a requirement that the board find a leak to be the proximate cause of the damage for which reimbursement is sought. It instead requires that the board find that the expense or other obligation for which reimbursement is sought is reasonable, and qualifies according to law.

Under current law, a responsible party must notify the board of (1) a release as soon as practicable, and (2) any resulting third-party claim. The bill instead requires responsible parties to notify the commissioner of a release according to regulations or as soon as practicable, and to notify the board as soon as practicable, of any claim made by someone other than a responsible party.

The board must determine what, if any, reductions should be made to the amount sought, based on the compliance evaluations the bill requires.

Under the amendment, a responsible party also must show that:

• he did not remediate the UST to a more stringent standard than DEP requires, except at the commissioner’s written direction;

• he does not have insurance, or a contract or other agreement to provide payment or reimbursement for costs, or that such insurance or contract has been denied or is insufficient to cover the costs for which the applicant is seeking payment;

• he has completed a milestone the amendment establishes; and

• if there is no operating UST on the property when a request for payment is made, that the leak was not caused by (1) failing to comply with UST laws and regulations, or (2) a negligent, reckless, willful, wanton or intentional act or omission.

The amendment requires the board to reimburse a third party who suffered bodily injury, property damage or damage to natural resources as the result of a leak, if such a party can show (1) the cost was incurred after July 5, 1989, (2) the responsible party is subject to federal UST laws requiring financial responsibility, (3) the remediation for which reimbursement is sought is no more stringent than remediation standards require, unless the commissioner has directed the responsible party otherwise in writing; and (4) the responsible party does not have insurance or another agreement to pay the requested costs, or the insurance has been denied or is insufficient. The board must also determine that the party seeking damages (1) has suffered bodily injury, property damage, or damage to natural resources, (2) the costs are reasonable, (3) the party submitting them has provided or tried to provide written notice of its claim to the responsible party, and (4) the responsible party has not asked the board to pay the claim.

§ 506(d)—Compliance Evaluations

Under the amendment, for applications filed starting January 1, 2006, where a UST is dispensing oil at the time of a request, the board cannot consider an initial or supplemental request for payment unless it includes a summary of the compliance status of all tanks on the applicant’s property.

The compliance summary must be prepared by an independent consultant on a form the commissioner accepts or prepares, and must include an evaluation of compliance with regulations concerning the design, construction, installation, notification, general operating, release detection, system upgrading, abandonment and removal date requirements. The consultant must base the summary on an evaluation conducted no more than 180 days before the board receives the payment request, except for the evaluation of record-keeping, monitoring or testing, which or monitoring, which must be based on the one-year period prior to the board’s receipt of an application. The summary must fully describe all steps taken to correct any noncompliance the evaluation identified.

The above provisions apply to supplemental applications submitted after January 1, 2006, regardless of when the initial application was submitted. However, the board cannot require a compliance summary in a supplemental request if a request submitted in the prior year included a compliance summary.

The board may reimburse an applicant a maximum of $ 1,000 per evaluation for the cost of hiring an independent consultant to perform a compliance evaluation, provided the evaluation is conducted according to law and includes all USTs on the property. If the price schedule the commissioner adopts includes an amount for performing a compliance evaluation, the amount eligible will be the amount the schedule prescribes.

The amendment does not affect any board decision to deny reimbursement or provide only partial payment from the account. The board cannot reconsider or reevaluate such a decision.

If there is no UST dispensing oil when an application is submitted, such application must show the leak was not caused by (1) failing to comply with UST laws and regulations, or (2) a negligent, reckless, willful, wanton or intentional act or omission, regardless of whether a previous application provided such information. This provision does not apply to a request for annual groundwater remediation actions, including the preparation of a groundwater remedial action progress report.

§ 506(e)—Reduction of Reimbursements

The amendment authorizes the board to reduce payments if the compliance summary shows the applicant failed to fully correct a violation when he requests payment. The board may completely disallow the payment if the applicant did not (1) meet tank or piping construction requirements, or (2) properly report a leak. It may reduce the payment by 75% if it finds the applicant did not have proper (1) cathodic protection, (2) spill or overfill prevention, or (3) release detection. In addition, the commissioner can take other enforcement actions against someone who failed to comply with applicable laws or regulations, regarding ownership or operation of a UST.

§ 506(g)—Deadline Extension For Request For Payment

Under current law, the board cannot order payment from the account for work performed or services provided after October 1, 2004, unless it receives an application or preauthorization request within 180 days of the time the work was performed or material provided. The amendment extends this deadline to one year from the date the initial invoice was submitted by the provider of the work or services.

§ 506(h)—Attorney General’s Actions for Damages

The amendment expands the attorney general’s power to sue for certain damages. Under current law the attorney general may, at the board’s request, file suit in Hartford Superior Court to recover damages from responsible parties. The amendment authorizes the DEP commissioner to also make such a request, and allows actions against anyone who (1) owns or operates the UST when the leak occurs, or (2) owns the land where the UST is located at the time or after the leak occurred until a final remedial action report is submitted and approved as the amendment provides. The amendment changes several of the conditions under which the attorney general may sue such people:

• Under current law, the attorney general may sue if the responsible party knowingly and intentionally failed to notify the commissioner of a leak, and the leak was the result of the responsible party’s reckless, willful, wanton or intentional conduct. The amendment instead authorizes the attorney general to sue where a party negligently failed to notify the commissioner, and where the leak resulted from negligence.

• Current law authorizes the attorney general to sue in cases where a UST leaked as a direct result of its non-compliance with either a commissioner’s order or UST laws and regulations. The amendment eliminates the need for the attorney general to prove that noncompliance was the direct cause of the leak, but limits lawsuits to instances of noncompliance with a final order of the commissioner or a final judgment of a court.

• Under the amendment, the attorney general cannot bring a legal action unless the board paid money from the account to a party (including the commissioner) other than the person being sued.

• The amendment allows the commissioner, as well as the board, to recover all payments made from the account and the commissioner concerning the leak or suspected leak, interest on the payments at an annual rate of 10%, and the costs of recovering the payments, including reasonable attorneys’ fees.

• The amendment bars anyone whom the attorney general has sued, or to whom the commissioner has sent a demand letter, from requesting reimbursement for the amount the attorney general or commissioner is seeking, and prohibits the board from acting on such a request.

§ 506(i)—Refusal of Responsible Party to Pay Third Party Claim for Deductible

The amendment eliminates a provision authorizing the commissioner, at the board’s direction, to pay the first $ 10,000 of third party claims directly to a third party claimant if the responsible party (1) refused to do so, and (2) did not pay the $ 10,000 deductible. Under current law, the board can seek to recover this money.

§ 506(k)—Discounted Payments

The amendment authorizes the review board to speed up consideration of a written request for payment for certain activities, costs or expenses when considering a supplemental application or request for payment based on an initial application it received before June 1, 2005, and found eligible for payment.

Under the amendment, the commissioner may identify categories of activities that cost less than $ 100,000 for which the board may approve payments of less than the full amount in return for expediting a decision on reimbursement. The board may approve payments of up to 90% of the average amount previously paid for these categories.

A party who agrees to accept a percentage approved by the board must do so in writing. He must sign the acceptance and acknowledge he is agreeing to accept less than the full amount requested. The board has 90 days from receiving the applicant’s acceptance to determine whether to order payment from the account for the specified activity. The percentage the board pays is considered full payment, and the applicant cannot seek additional reimbursements for such costs.

§ 507—Milestones

For applications received starting October 1, 2005, the board can reimburse an applicant only when he meets one of seven milestones the amendment creates. Six of the milestones require one report. The amendment allows a responsible party to file a maximum of four requests for payment per year for the seventh milestone, annual groundwater remediation progress reports.

The milestone requirements apply to applications received as of that date regardless of when the release or suspected release took place, whether action has been taken in response to the release, or whether prior applications have been submitted to the board. The amendment authorizes the commissioner to adopt regulations establishing these or other milestones, including milestones that differ from those in the amendment. The milestones set out in regulation will supplant those in statute upon adoption of the regulations.

§ 508—Application Processing Plan

Within 180 days of the amendment’s passage, the commissioner, after consulting with the board, must develop and implement a plan to process applications submitted to the board, emphasizing applications submitted before June 30, 2005. The plan may include expedited procedures for processing certain categories of applications, identifying, providing notice and processing incomplete applications, and helping applicants complete their applications. She must update the board regarding the plan’s implementation every six months until July 31, 2007, and must, by that date, prepare a report, apparently for the board, describing (1) progress in processing applications submitted before June 30, 2005; (2) estimated results achieved by using the new procedures, (3) the number of pending applications, and (4) her recommendations for improving the application process. The commissioner must seek public comment before implementing the plan.

§ 509—Repeal Of Application Moratorium

By law, the board could not accept applications for reimbursement between September 1, 2003, and June 8, 2004. Under current law, the moratorium on applications resumes July 1, 2005, and ends October 1, 2005. The amendment repeals those moratoria, allowing the board to consider applications submitted during those periods.

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