Legislative Program Review and Investigations Committee
Executive Summary
Regulation of Underground Storage Tanks
The Legislative Program Review and Investigations Committee voted to conduct a study of Connecticut’s regulation of underground storage tanks as carried out by the Department of Environmental Protection in March 1998. The study focus was to: assess Connecticut’s performance in regulating these tanks; identify any obstacles or delays in obtaining compliance; and develop proposals to improve the regulatory system and promote compliance.
Both aspects of the state’s underground storage tank program were examined: efforts to prevent pollution and other damages from leaking tanks through regulation and enforcement; and activities to remediate releases from regulated tanks through the federally funded Leaking Underground Storage Tank (LUST) program and the state funded Underground Storage Tank Petroleum Clean-up Account. Specifically, the study addressed the:
scope of regulation and tanks covered in Connecticut;
extent of compliance with registration and 1998 federal upgrade requirements;
adequacy of DEP’s underground storage tank programs to enforce regulations, respond to sites with leaking tanks, and oversee corrective action to clean up; and
performance of the underground storage tank Clean-up Account.
The program review committee found that Connecticut made better progress than most states in upgrading or removing tanks by the December 1998 federal deadline. To date, DEP’s efforts have emphasized technical assistance, education, and other compliance guidance rather than strong enforcement. Stronger measures will have to be taken with tank owners and operators who remain out of compliance beyond the deadline. The committee recommends additional enforcement personnel be hired, and that tanks not meeting requirements be red-tagged to prohibit petroleum deliveries.
Residential tanks are not currently required to be upgraded or removed. The program review committee does not endorse regulating such tanks, but recommends the state support a goal of removal through a grant and loan program. Increasingly residential tanks are the source of leaks, and while most of these releases do not result in significant contamination, the committee supports access to the Clean-up Account for residential tank owners. The program review committee finds the LUST program’s policy to focus its investigative and remediation resources on sites posing the highest potential risk to public health and the environment is realistic and reasonable. However, deficiencies in the unit’s database make it difficult to track less risky sites, determine legitimate sites of spills and releases, or assess their current clean-up status.
The committee’s review focused heavily on the Underground Storage Tank Clean-up Account. The major purpose of the Clean-up Account is not well defined in statute and the account, as a mechanism to clean up sites, has had weak support from DEP management. The program review committee recommends continuation of the account, but with a statutory clarification of purpose, and improved management support. The committee also proposes no restrictions on current statutory eligibility, and no sunset provisions on the account or on covered release dates.
Much of the gross receipts tax earmarked for the Clean-up Account have been allocated to the General Fund because of the statutory triggers in place. The ceiling and floor levels were established when the account was created in 1989, and have not been modified since. Because claims activities have increased, the committee recommends the triggers be modified so the account will not be faced with an inability to pay claims when they come due. The committee also recommends an actuarial study be conducted to determine the account’s future liability.
Substantial progress has been made in reducing the claims backlog, but the committee found many deficiencies still exist with the claims review process. Recommendations to simplify application forms, develop guidance materials for applicants, and require staff to follow established categories for noncompliance reductions will all expedite claims review. Clarification of third party status and assignment of community responsibility where no one responsible party clearly exists, and using risk-based closure standards on account claims are also recommended as methods of making the account work more efficiently and cleaning up more sites quickly.
Because of confusion in roles, consideration was given to changing the Clean-up Account staff from DEP personnel to independent board staff or outside contractors, but program review rejected the option as not cost effective, and too disruptive after eight years of operating under the current structure. Instead, the committee recommends the board hire its own legal counsel to provide advice on claims, as well as develop a decision index to help the board make more consistent decisions, and create and standardize documents for the board’s use.
Membership of the board should be expanded to include a member with mandated environmental consulting experience, and the board should develop a consent agenda to facilitate processing those claims where there is agreement and no discussion is required. Finally, the process to appeal a board’s decision takes too long, needs greater attention from staff with a formal legal background, and the board needs better information on the status of appeals.
RECOMMENDATIONS
Regulation and Enforcement
1. Three staff shall be added to the enforcement unit.
2. DEP shall immediately develop the regulations necessary to implement the fee inspection program, including who the fee will apply to, and how and when it will be collected.
3. Beginning July 1, 1999, all regulated petroleum underground storage tanks not in compliance with the 1998 upgrade requirements shall be red-tagged and no deliveries of petroleum to those tanks be permitted.
4. To implement red-tagging, DEP UST enforcement staff shall:
give the red-tagging program highest priority;
before the July 1999 red-tagging date, identify and verify through the UST registration database and other means, the noncompliant tanks in the state; and
tag noncompliant tanks promptly either on, or shortly after, the date delivery prohibition takes effect.
5. DEP shall:
put all regulated underground storage tanks sites on a five-year compliance inspection schedule;
inspect each site at least once every five years according to schedule;
once a site has been inspected and found to be in compliance, the site is issued a letter of compliance;
file a copy of the compliance letter with the Clean-up Account, which shall remain in effect until the next five-year inspection schedule, unless the site comes under a DEP enforcement action during that period;
issue a notice of violation if the site is found to be noncompliant. The notice of violation will allow the site a period of time, as established by DEP enforcement staff, to take corrective action; and
reinspect the site at the end of the established period, and if the violations have not been corrected, a letter stating the areas of noncompliance shall be issued and filed with the Clean-up Account. The letter of noncompliance shall be kept on file with the Clean-up Account until the next regularly scheduled compliance inspection.
6. Regarding residential tanks, the State shall:
establish a goal in statute to remove by the year 2005 all residential underground storage tanks over 20 years old;
implement the goal through education, outreach and technical assistance provided primarily by DEP;
establish a state-funded grant and loan program coordinated by the Department of Economic and Community Development and administered by the community action program (CAP) agencies. The grant program would be limited to households 80 percent or below the median household income for the area. The loan program would offer low-interest loans, with no income eligibility restrictions, to be repaid over five years. Individual grants and loans would be subject to a maximum amount of $3,500 per tank; and
fund the grant and loan program at $10 million annually. The fund would be financed through an allocation from the gross receipts tax on petroleum products. The grant and loan program would sunset on December 31, 2005.
7. Section 22a-449 of the Connecticut General Statutes shall be modified to:
allow residential tank owners to apply to the Underground Storage Petroleum Clean-up Account for payment of clean-up costs incurred as a result of a leaking underground heating oil tank;
residential tank owners shall be responsible for the first $2,500 in clean-up costs, with the Clean-up Account paying for clean-up costs over $2,500 up to a maximum of $50,000 for a residential site; and
the required $2,500 deductible shall be spent only on clean-up costs. Tank removal and/or replacement costs shall not be considered clean-up costs in meeting the deductible.
LUST Program
8. Make correcting, updating, and maintaining the information used by the LUST program a priority; the reported release database and LUST component of the underground storage tank program information system should be made current by July 31, 1999.
Clean-up Account
9. The statutes shall be amended to include a statement that the primary purpose of the Clean-up Account is to protect the environment and public health by cleaning up releases from underground storage tanks.
10. The Underground Storage Petroleum Clean-up Account be continued:
as a publicly supported clean-up fund financed through one-third of the gross receipts tax on petroleum products;
to be available to those who are currently eligible by statute;
have no sunset date be applied at this time; and
have an actuarial study of the account conducted with the results publicly available by July 1, 2000 .
11. Both the financial triggers established in Section 22a-449b(b) shall be modified so the account floor is $10 million and the ceiling is $30 million.
12. The Clean-up Account issue a report on September 1, 1999, and annually thereafter, which shall include but not be limited to:
statutory authority for the account;
a list of board members;
a summary of the application process, what constitutes an eligible party, and what applicants can expect from the account in terms of processing times, and staff and board procedures; and
statutory and/or administrative changes occurring over the prior year.
13. To address the variation in staff treatment of claims and applicants:
the purpose of the Clean-up Account – to quickly clean-up sites with underground storage tanks that have leaked and caused contamination -- shall be clearly communicated to account staff by DEP management and account supervisors;
management and supervisory staff will provide written guidance and staff training in how claims should be reviewed with the declared purpose in mind;
supervisory personnel shall review the work of the claims review staff to ensure the account purpose is being achieved, and for consistency and uniformity; and
DEP should provide training to Clean-up Account staff in communication skills and customer relations.
14. To address the current workload variation:
DEP management and Clean-up Account supervisory staff should establish performance standards for the number of claims technical staff should review per month.
Claims review standards be used as part of Clean-up Account staff performance evaluations.
No future statutory changes should be made in the total amount of DEP’s administrative expenses for the Clean-up Account, unless management can demonstrate that such performance standards are in place and staff are meeting them, but that the workload has increased due to growing number of claims.
15. The Clean-up Account database shall be used as a mechanism to detect abuse or fraud in obtaining payment or reimbursement through the account:
the Clean-up Account Board and DEP staff shall communicate the intent to use the database for this purpose; and
the board and DEP shall develop procedures on how it will follow up on areas it red-flags as potential problems. Such procedures might include requiring an independent audit, and, where fraud or abuse is found, repayment to the account, prohibition against future access to the account, and other penalties.
16. The Clean-up Account application should be simplified and separate forms be developed for responsible parties and third parties. Guidance materials outlining the steps in the process, what constitutes a complete application, and basic eligibility requirements in plain language should be developed and provided to applicants. The new application forms and guidance materials should be in place by July 1999.
17. At least one field inspection should be conducted of the site of each application filed with the account.
18. Standard reduction categories for noncompliance shall be established in statute. Specifically:
C.G.S. Section 22a-449f should be amended to remove reference to proximate cause and to include language that permits the board to reduce the reimbursement or payment of a Clean-up Account claim by 25 percent for serious noncompliance and 10 percent for minor noncompliance with the state underground storage tank regulations; and
a written policy to guide staff and applicants about the statutory noncompliance reduction should be developed within six months of the effective date of the proposed statutory change.
19. The review board shall establish a policy promoting community responsibility for cases involving multiple sites and commingled contamination. Under this policy:
Parties involved in commingled sites could develop an agreement to work cooperatively on clean-up activities, including how to share investigation and remediation costs.
The allocation of responsibility worked out by the parties would be accepted by the board in reviewing claims for reimbursement.
If parties are unable to reach an agreement within a time specified by the board, the department would be directed by the review board to undertake the investigation and remediation work required, using account funds, and the parties would be subject to cost recovery actions and any related penalties.
20. Statutes shall be amended to establish two categories of third party status: 1) innocent property owners, specifically those parties who have been damaged by a release from eligible underground tanks not located on their site; and 2) property owners with leaking tanks located on their site who never operated them and will not be operating tanks in the future.
Further, a graduated deductible amount related to the applicant’s status should be established, under which:
the first category of third parties is exempt from any deductible amount (as current law provides for any third party);
the second category of third parties is responsible for clean-up costs up to $5,000; and
all other applicants are subject to the present deductible of $10,000 .
21. Statutes shall be amended to:
make clear that a third party may independently apply to the account for payment of damages from an eligible tank release after making reasonable attempts to contact the responsible party for compensation;
any legal action a third party may bring against the responsible party does not have to be finally adjudicated before an application is made to the account; and
the account’s rights to reimbursement of its expenditures for third party claims, as well as other claims that may be awarded a financial settlement through private means, should also be clarified in statute. Claimants shall be required, as part of the application process, to sign a document stating that amounts reimbursed from the Clean-up Account will be repaid if they later receive financial settlements through other means .
22. The board should continue to determine property damage in third party claims on a case-by-case basis .
23. A site closure standard based on a risk-based corrective action (RBCA) process shall be established for Clean-up Account cases. The statutes should be amended to require a RBCA analysis be conducted for each clean-up account case that has been active for three years or been awarded a total of $200,000 dollars. The purpose of the analysis is to determine whether further remediation is necessary to control risk to human health and the environment, and if not, to close to the case to any further claims for clean-up cost reimbursement. Claims for third party compensation would not be affected .
24. A position of legal counsel to the Clean-up Account review board shall be established by July 1, 1999. The counsel will be an employee of the board with the position’s expenses to be paid from account revenues. The board should adopt, in writing, a job description and the procedures to be followed in hiring its legal counsel.
25. The statutes shall be amended to expand the review board membership to 13, with the new position representing environmental professionals involved in investigating and remediating underground storage tank sites, to be appointed by the senate president pro tempore.
26. Orientation materials shall be developed and provided to all new members upon their appointment to the board.
27. The account staff should send out summaries of claims for the 30-day review and require applicants to respond at least seven days prior to the board meeting date as to whether they agree or not with the staff’s recommended action. If an applicant is in agreement with the staff, the claim is placed on a consent agenda; if not, the claim goes on a discussion agenda. All items on the consent agenda can be acted upon through one vote by the board. Claims can be moved from the consent agenda to the discussion agenda at the request of any board member.
28. An index of Clean-up Account review board decisions should be developed by January 1, 2000 .
29. Section 22a-449f(c) of the C.G.S. shall be modified to require that a hearing be held within 90 days after an appeal has been filed, and that a decision be issued 60 days after the close of hearings and/or dates of filing final legal documents related to the proceedings.
30. Board’s legal counsel should be assigned to handle all preparatory work on appeals from board decisions .
31. Appeal status update should be placed on the agenda for Clean-up Account board meetings.