This Fiscal Note is not an official copy and should not be quoted or cited.
Fiscal Note - SB 0708 - Ins. & Remedial Prog. For Above/Underground Storage Tanks
L.R. NO. 2724-07
BILL NO. HCS for SCS for SB 708
SUBJECT: Petroleum Storage Tank
TYPE: Original
DATE: April 30, 1996
FISCAL SUMMARY
ESTIMATED NET EFFECT ON STATE FUNDS
FUND AFFECTED FY 1997 FY 1998 FY 1999
Underground
Storage Tank
Insurance Fund ($30,000,000) $0 $0
Petroleum Storage
Tank Insurance
Fund 30,000,000 $0 $0
Total Estimated
Net Effect on All $0 $0 $0
State Funds
This proposal creates an additional liability of $863,700,380 in the
Petroleum Storage Tank Insurance fund. No fiscal impact is expected during
the fiscal note period as present liabilities exceed anticipated revenues.
ESTIMATED NET EFFECT ON FEDERAL FUNDS
FUND AFFECTED FY 1997 FY 1998 FY 1999
None
Total Estimated
Net Effect on All
Federal Funds $0 $0 $0
ESTIMATED NET EFFECT ON LOCAL FUNDS
FUND AFFECTED FY 1997 FY 1998 FY 1999
Local Government $0 $0 $0
FISCAL ANALYSIS
ASSUMPTIONS
The Department of Natural Resources (DNR) assumes the proposal creates the
Petroleum Storage Tank Insurance fund to replace the Underground Insurance
Tank fund to be administered by a Board of Trustees. The proposal requires
DNR or another state agency to provide staff for the Board. DNR assumes the
agreement with the Board would include a provision for appropriations from
the new fund for the costs of providing staff.
DNR assumes the proposal provides for cleanup of contamination caused by
releases from petroleum tanks, regardless of when the release occurred
provided the person makes application by December 31, 1997. The proposal
deletes the language that prohibits the use of funds for cleanup of releases
being remediated prior to August 28, 1989. Therefore, DNR assumes they may
receive claims for all past cleanups if the participant meets other applicant
requirements.
As a result of this proposal, the DNR expects 21,721 additional tanks will
enter the fund. Of those, DNR estimates that 18,221 will be leaking. DNR
estimates costs of $45,000 for the clean-up of each site. An additional
$3,000 will be needed to pay contractor costs associated with processing the
claims for leaking underground storage tanks. DNR estimates the total costs
of contractors and cleanup would be $864,108,000.
There is no existing information or staff related to AST in the DNR to carry
out the work associated with the above ground storage tank and additional
underground storage tank projects anticipated by this legislation.
Therefore, DNR assumed they would request 35.5 FTE and related expenses and
equipment including six four-wheel drive vehicles, a portable gas
chromatograph and a geoprobe to carry out the responsibilities of the
proposal. Additionally, DNR assumes they would lease a stationary gas
chromatograph for $30,000 a year.
DNR would request 13.5 FTE, including three planners and seven and one-half
clerk typists, to perform administrative, planning, fund management, and
clerical duties. They would request 12 Environmental Specialists to provide
evaluations of release investigation reports and provide technical reviews of
cleanup plans and efforts. They would request two environmental engineers to
assist with complex release investigations and cleanup plans. DNR would also
request one Chemist, one Geologist and a Public Information Officer.
DNR would request an additional planner and a clerk typist to monitor the
status of remediation projects and prepare the annual status reports required
in the proposal. They would also review cost estimates to determine whether
costs are excessive. As this proposal allows creditors to participate in the
fund, this staff would also be responsible for reviewing documentation of the
creditors claims.
Oversight assumes the minimum planning duties required by this proposal could
be performed by two planners, rather than the three requested.
Oversight assumes, based on a decision by the Oversight Subcommittee on a
similar proposal, this proposal creates an additional liability of
$864,108,000 in the Petroleum Storage Tank Insurance fund. The revenue
generated as a result of this proposal would be used to pay the costs of
additional staff needed to implement the proposal. Cleanup and contractor
costs would be paid with any additional income remaining thereby reducing the
unfunded liability to $863,700,380. No fiscal impact for bringing
additional petroleum storage tanks into the program is expected during the
fiscal note period as present liabilities exceed anticipated revenue.
Oversight assumes all income to, and expenditures from the fund will cease on
December 31, 1998, when the fund is scheduled to expire pursuant to
319.129.15. Oversight also assumes the transport load fees will be reduced
to $0 effective December 31, 1998. Oversight assumes future legislation will
address the disposition of any money remaining in the fund on that date.
FISCAL IMPACT - State Government FY 1997 FY 1998 FY 1999
(10 Mo.) (6 Mo.)
UNDERGROUND STORAGE TANK FUND
Transfer out to -
Petroleum Storage Tank Fund ($30,000,000) $0 $0
PETROLEUM STORAGE TANK
INSURANCE FUND
Income - Board of Trustees
Transfer in - from
Underground Storage Tank Fund $30,000,000 $0 $0
Registration fees 7,000,000 0 0
Participation fees 2,172,000 2,172,000 1,086,050
$39,172,000 $2,172,100 $1,086,050
Costs - DNR
Personal Service ($963,074) ($493,576)
Fringe Benefits (296,049) (151,725)
Expense and Equipment (780,400) (165,703)
Other - Cleanup costs ($9,172,000) (132,577) (275,046)
Total Costs ($9,172,000) ($2,172,100) ($1,086,050)
NET EFFECT ON -
PETROLEUM STORAGE TANK
INSURANCE FUND * $30,000,000 $0 $0
* Does not include an additional liability of $863,700,380.
FISCAL IMPACT - Local Government FY 1997 FY 1998 FY 1999
(10 Mo.)
$0 $0 $0
DESCRIPTION
The HCS changes current law regulating underground storage tanks to
regulations covering petroleum storage tanks. Liability and coverage remain
essentially the same as in current law, except that "petroleum storage
tanks", defined as above- or underground storage tanks used to contain
petroleum, replaces "underground storage tanks". The name of the insurance
fund from which moneys are paid for the costs of contamination cleanup is
changed from the "Underground Storage Tank Insurance Fund" to the "Petroleum
Storage Tank Insurance Fund".
A Board of Trustees is established to provide administration and fiduciary
oversight of the fund. The board will consist of the Commissioner of the
Office of Administration, the Director of the Department of Natural Resources
(DNR), and the Director of the Department of Agriculture, or their designees.
In addition, eight citizens appointed by the Governor, with the advice and
consent of the Senate, will serve on the board. Of the appointed board
members, one will represent a financial lending institution; one will
represent the insurance underwriting industry; one will represent industrial
or commercial users of petroleum; three will be owners or operators of retail
petroleum storage tanks, including an owner of large tanks, an owner of small
tanks, and one above-ground storage tank owner or operator; and two members
will have no petroleum-related business interests. The trustees are to serve
without compensation but will receive reimbursement for their actual and
necessary expenses, and are required to meet at least quarterly. Staff
resources for the insurance fund shall be provided by the DNR or another
state agency as determined by the board. Reimbursement for staff resources
shall be made from the fund pursuant to contracts negotiated between the
board and the DNR or other state agency.
The substitute requires owners or operators of above-ground storage tanks in
service on August 28, 1996 or brought into service after August 28, 1996 to
remit $100 per tank to the DNR within 30 days of the effective date of this
substitute or of the tank's initial use.
Current law allows the fund to provide moneys for the cleanup of
contamination caused by releases, if the owner or operator was participating
in or had applied for participation in the fund by August 28, 1995. This
substitute changes the cut-off date to December 31, 1997, and provides that
tanks coming into service after that date may apply to and participate in the
fund. This substitute prohibits owners and operators of ASTs from applying
for participation in the fund before July 1, 1997. The costs of cleanup from
releases caused by aboveground tanks taken out of use before December 31,
1997 will be covered by the fund, if the sites have been reported to the DNR
before December 31, 1997. The fund will not cover expenses related to
aboveground tanks incurred before July 1, 1997. The costs of cleanup from
releases caused by underground tanks taken out of use before December 31,
1997 will be covered by the fund, if the sites have been reported to the DNR
before December 31, 1997. Current law specifies that expenses related to
underground tanks incurred before August 28, 1995 will not be covered by the
fund.
Bids must be requested for actual remediation or cleanup work. The DNR will
select a cost ceiling for competent and timely completion of the projected
work, and will inform bidders of the cost ceiling. Bids are not required for
costs associated with environmental consultants. However, the DNR may
disapprove all or part of the costs if these are deemed excessive. Appeals
of DNR disapproval of costs are made to the board.
Currently, a minimum fund balance of $8 million is required. This substitute
requires that the board insure a minimum balance of $20 million. The board
is to set surcharge rates on each transport load, up to $25 per transport
load, which is defined as 8,000 gallons. This substitute also requires the
board to establish procedures whereby those owning 50 or more petroleum tanks
may pay required annual fees in installments.
Finally the substitute allows creditors to debtors with qualified properties
to succeed the debtor in participating in the insurance fund, provided notice
of the creditor's interest is given by certified mail to the insurance fund.
The creditor may remedy any of the debtor's defaults in payments required by
the insurance fund. Creditors must provide notice to the fund of any
transfer of property with underground tanks by the creditor to a subsidiary
or affiliate.
This legislation is not federally mandated, would not duplicate any other
program and would not require additional capital improvements or rental
space.
SOURCES OF INFORMATION
Department of Natural Resources
Department of Agriculture
Department of Revenue
Department of Highways and Transportation
Department of Public Safety
Missouri State Highway Patrol
Office of the State Treasurer
Office of Administration