Michigan - New UST Cleanup Fund Risk Management
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The new UST Cleanup Fund for Michigan will provide reimbursement for cleanup costs from releases from underground storage tanks. It will be administered by an Authority with representatives from industry and the state. The fund will accept claims starting in October 2015 and aims to pay approved claims within 45 days. It establishes a standard $50,000 deductible per claim but owners can qualify for a lower $15,000 deductible with an annual fee. The fund is meant to address issues with the previous cleanup fund that shut down in 1995 and only reimbursed a fraction of claims. It also provides funding to clean up orphan sites.
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Michigan - New UST Cleanup Fund Risk Management
- 1. New UST Cleanup Fund for Michigan Presented to: Michigan Bankers Association, January 2015 Grand Rapids, MI Cincinnati, OH
- 2. Regulatory Requirements 1 • 36 states have whole or partial funds • Michigan Natural Resources and Environmental Protection Act (NREPA) – Consolidated various Michigan statutes – Divided in “Parts” • Part 211 “Underground Storage Tank Regulations” – Regulates Underground Storage Tanks – Includes Financial Responsibility (FR) requirements • Part 213 “Leaking Underground Storage Tank” (LUST) – Regulates releases from USTs – Provides means to cleanup and “close” LUSTs
- 3. History of MUSTFA 2 • Former Cleanup Fund • Accepted claims 1989 through June 1995 • MUSTFA had financial problems throughout • Continued to collect 7/8₵/gal • Key issues with MUSTFA finances (OMB Study 1996) – No licensing or certification of contractors & consultants – Little guidance/limits for cleanup, especially initially – Very conservative cleanup standards • RBCA came in after MUSTFA – Avg cost of cleanup: $125,000
- 4. Reimbursement under MUSTFA 3 • ≈ 30% of early claims were rejected with $0 reimbursed • For MUSTFA-approved claims – Reimbursement well less than 100%, often at 50% or less – Reimbursement delays commonly over 180 days • Fund shut down twice, w/ final in 1995 Copyright, BLDI, Inc. 2015, all rights reserved.
- 5. Enter Son of MUSTFA 4 • UST Cleanup Fund (Fund) • Signed by Governor on December 30, 2014 • Coverage as of Governor signature • Accepting claims: likely as of 10/1/15 • Administered by an Authority (think Mac Bridge) • Authority details – 7 seats , DEQ plus 6 Michigan residents – Stipulates 4 seats for industry reps
- 6. Fund Details 5 • UST owner or operator (O/O) receive money for a release discovered and reported after the bill's effective date. • Deductible – Standard deductible amount of $50,000/claim – O/O of fewer than eight (8) USTs can obtain a lower deductible of $15,000/claim w/ an annual fee of $500 per tank. – (Note: each compartment of a multi-compartment tank is considered a tank for fee purposes). • Approved claims to be paid within 45 days after the proper determinations. • The Bill provides that the Authority and the State will not be liable for work invoices or indemnification requests if revenue is insufficient. • Allows O/O w. denied claim to request review by the Authority's board of directors • Provides appeal of claim denial to Circuit Court • Cap on administrative cost to maximum of 7% of Fund's projected revenue • Provides funding to Michigan Department of Environmental Quality (MDEQ) for the cleanup of orphan sites • Penalties for fraud, including creative payment of deductible Copyright, BLDI, Inc. 2015, all rights reserved.
- 7. Fund Details: cont’d 6 Fund will be accepting claims ≈10/1/15 Impact of coverage on prior release(s) Schedule of Costs (semi-PUSTCRB (Ohio)) Ohio: top down Agency-driven program (work-plans must be approved) Very different geology and limited groundwater Protected groundwater identified in statute Prosecution against consultants/contractors not uncommon Michigan: little agency involvement, no licensing Controls on consultant: rejection of claim, leaves to O/O Copyright, BLDI, Inc. 2015, all rights reserved.
- 8. Closures Process 7 • Only two checkpoints w/ DEQ • Can expend significant funds before any checkpoint • Closure ≠ Clean Site (or even low risk) Example of “Closed” site with LNAPL migrating to adjacent property Copyright, BLDI, Inc. 2015, all rights reserved.
- 9. For the rest of the presentation…llow Up Contact Marty Janowiak (mjanowiak@bldi.com) at 616-459-3737. Also refer to www.michiganenvironmentalblog.com 13 Copyright, BLDI, Inc. 2015, all rights reserved.