Underground Storage Tank Cleanup Fund Lisa Babcock State Water Resources Control Board CUPA Conference February 4, 2013

Presentation OUTLINE OVERVIEW OF RECENT CHANGES Fund stats – QUARTERLY & ANNUAL REPORTS AB 1715 AND REVIEW SUMMARY REPORTS LOW-THREAT PoLICY CASE REVIEWS LOP Contracts Looking forward FRAUD

1. OVERVIEW OF RECENT CHANGES

drivers to use UST Cleanup Fund more effectively 2009 Audit and Task Force Recommendations Fraud, Waste, Abuse State Water Board Resolutions (5 since 2008) Low Threat Policy Recent Laws: AB 358, AB 291, AB 1701, AB 1715 Reduced Revenues Unintended Consequences – Greenhouse gasses Current Fund Sunset Date < 3 years – Fiscal Cliff

Challenges for Cleanup Fund AVERAGE case has been open 17 years – every year more costs are incurred that may not be reasonable and necessary Many cases not yet assessed, therefore not being either remediated (if necessary) or closed (17 yr X $30K/yr monitoring only = $510K) Dramatic increase in corrective action costs over time: Closed claims averaged $180,000/claim Current claims averaging $500,000/claim and counting Current claims projected total > $750,000/claim # open claims >$1M reimbursed to date = 469 or 15%

Recent State Water Board Steps AFFECTING CLEANUP FUND State Water Board moving aggressively to close low-threat cases so that resources can be used to clean up the remaining high-priority cases (especially cases without viable responsible parties) - Res. No. 2009-42 directed actions to review and close cases - Res. No. 2012-0016 adopted UST Low-Threat Closure Policy - Res. No. 2012-0061 delegated closures that meet Policy criteria to Executive Director - Res. No. 2012-0062 approved Plan for Policy implement- ation and additional program improvements

2. Fund stats – QUARTERLY & ANNUAL REPORTS

QUARTERLY REPORT/ANNUAL REPORT Posted on Fund website Quarterly Report Fund Stats by Quarter Status of claims RRs received, reviewed, paid Accounts receivable owed to Fund Five year reviews Year-end Summary Annual Report

CLAIMS BY PRIORITY CLASS since 1992 (July 2012) CLOSED CLAIMS ACTIVE CLAIMS PRIORITY LIST CLAIMS CLAIM REIMURSE-MENTS A 409 42 $0.04B B 3,521 1,585 40 $1.40B C 3,030 965 87 $1.16B D 1,228 444 4,562 $0.60B TOTAL = 15,913 8,188 3,036 4,689 $3.20B

UST Cleanup Fund Annual Expenditures

Recent FUND ACTIONS Active claims Reimbursed most costs incurred prior to July 2011 Provide annual budget for ongoing work Requiring RRs include information required by law Priority payments or budgets for site closeout claims, cases affecting water supply wells, cases with significant free product per Res. 2012-0062 Priority List claims Activating A’s, B’s, and Schools as they come onto list Activating D’s as necessary to meet 14% law

3. AB 1715: 5-Year reviews & REVIEW SUMMARY REPORTS

AB 1715 Health & Safety Code 25299.39.2 “The Legislature finds and declares that the State Water Resources Control Board should expediently process underground storage tank cases…” Added to 5-year review process

Fund Manager Determination Fund Manager Determination that Case Appropriate for Closure Document as Review Summary Report (RSR) Opportunity for Agency Comment Freeze Existing and New Directives Exceptions to Freeze

Fund Manager Recommendation Permission from O/O to close Fund Manager Recommendation to close Triggers max. $10K/year corrective action costs Adds monitoring

Fund Manager Recommendation 60 day comment period per Low-Threat Policy Closure order signed by Exec Director if passes Low-Threat Policy criteria or by State Water Board if passes Res. 92-49 per Res. 2012-0061

5-Year Review Products Review Summary Report, with Checklist for Policy (3 page) or, if fails, Checklist for Res. 92-49, and Summary of Basic Case Information (Conceptual Site Model) using GT data

5-Year Review Products Review Summary Reports (RSRs) RSR-Concur RSR-Additional Work RSR-Closure = Fund Manager Determination UST Case Closure RSR = Fund Manager Recommendation

AB 1715 & REVIEW SUMMARY REPORTS DRAFT RSR - Concur RSR - Concur 45-day Regulator Review FIVE- year Review Freeze Directives Limit $10K/year DRAFTRSR –Addl Work RSR –Addl Work Requested consultation DRAFTRSR - Closure RSR - Closure RP Permission to Close Case ClosureRSR 60-day Public Comment Case ClosureOrder <6 months Abandon wells Closure Letter Submit Final RR <365-days <60-days Dispose waste

4. RES. 2012-0062 FUND LOW-THREAT PoLICY CASE REVIEWS

State Board prefers agency close cases that meet Policy STATE WATER BOARD RES. 2012-0062 State Board prefers agency close cases that meet Policy GT Online Checklist not needed for cases that meet Policy

STATE WATER BOARD RES. 2012-0062 Fund staff review cases where 5-Year Review has recommended agency pursue closure If agency will NOT close case soon, Fund staff reviews case against Low-Threat Policy criteria and, if necessary Res. 92-49

Cases meeting CLOSURE criteria Fund Manager UST Case Closure RSR includes BOTH Determination that freezes directives AND Recommendation that limits reimbursement to $10K Public notice 60 days

Cases meeting CLOSURE criteria Executive Director Order Up to 6 mos for waste removal & well destruction Up to 30 days for notification from agency that closure activities completed Up to 30 days for State Board closure letter

Cases not meeting CLOSURE criteria Issue a revised 5-Year Review recommendation (“RSR-Concur” or “RSR-Further Work”) Make GT Online Checklist available for agency to document impediments to closure and Path to Closure

5. LOP Contracts

LOP FY 13/14 Contracts Transition administration to Cleanup Fund Res. 2013-0001 adopted “Underground Storage Tank Local Oversight Program Procedures and Criteria for Certification” on Jan 8 Requires LOP certification applicants submit proposed budget for FY 13/14 by Feb 7 to Cleanup Fund Manager

LOP FY 13/14 Contracts Expect LOP contract language to tie back to : LOP certification criteria Activities required by Res. 2012-0062 Performance measures developed pursuant to Res. 2012-0062 As caseloads change from year to year, contract dollars may change.

6. Looking forward

UST Cleanup Fund Where do we go from here? xxx Low-Threat Policy

UST CLEANUP FUND Storage Fee (cents per gallon stored) Million Dollars FUND SUNSET 1/1/2016 Million Dollars Fiscal Year 0 .6 0.7 0.9 1.2 .1.3 1.4 2.0 Storage Fee (cents per gallon stored)

FUND SUNSET/PROGRAM WIND-DOWN Current Fund sunset date now <3 years away Focus on moving cases towards closure OR What cases are left whenever the Fund sunsets? Need for deadlines for an orderly wind-down: Switch to other financial assurances mechanisms for operating USTs Deadline for new claim eligibility and resolution of eligibility disputes Deadline for submittal and processing of requests for reimbursement

CLEANUP FUND PROGRAMS THAT HELP WITH WIND-DOWN Schools Account = higher priority for reimbursement Commingled Plume Account = pools maximum available Orphan Sites (OSCA) = Brownfields Emergency, Abandoned, Recalcitrant (EAR) = serious problem sites

7. FRAUD

Fraud against UST Cleanup Fund Office of Enforcement’s investigations and/or arrests for alleged fraud against Fund: E2C, Hayden Environmental, Ami Adini & Assoc., PW Environmental Fraud against UST Cleanup Fund may be widespread & Fraud Unit continues numerous investigations UST Cleanup Fund administration making adjustments with goal of fraud prevention

REPORT FRAUD http://www.waterboards.ca.gov/water_issues/programs/ustcf/fraud.shtml

Referenced Websites UST Cleanup Fund including Quarterly Report: http://www.waterboards.ca.gov/water_issues/programs/ustcf/ UST Program: http://www.waterboards.ca.gov/water_issues/programs/ust/

AB 1715: Sections shown in logic/ process order

AB 1715 Five Year Review: Existing Provision 25299.39.2.(a) (1) The manager responsible for the fund shall notify tank owners or operators who have an active letter of commitment that has been in an active status for five years or more and shall review the case history of their tank case on an annual basis unless otherwise notified by the tank owner or operator within 30 days of the notification.

AB 1715 Fund Manager Determination – Appropriate for Closure: New Provision 25299.39.2.(a) (1)(A) If the manager determines that closure of the tank case is appropriate based upon that review, the manager shall provide a review summary report to the applicable regional board and local agency summarizing the reasons for this determination and

AB 1715 Fund Manager Determination – Opportunity for Agency Comment: New 25299.39.2.(a) (1)(A) … shall provide the applicable regional board and local agency with an opportunity for comment on the review summary report.

AB 1715 Fund Manager Determination - Freeze on Existing and New Directives: New 25299.39.2(a)(4) After the manager provides a review summary report to the applicable regional board and local agency in accordance with subparagraph (A) of paragraph (1), the regional board or local agency shall not issue a corrective action directive or enforce an existing corrective action directive for the tank case until the board issues a decision on the closure of the tank case, unless one of the following applies:

AB 1715 Fund Manager Determination - Exceptions to Freeze on Directives: New 25299.39.2(a)(4)(A) The regional board or local agency demonstrates to the satisfaction of the manager that there is an imminent threat to human health, safety, or the environment. (B) The regional board or local agency demonstrates to the satisfaction of the manager that other site-specific needs warrant additional directives during the period that the board is considering case closure. (C) After considering responses to the review summary report and other relevant information, the manager determines that case closure is not appropriate. (D) The regional board or local agency closes the tank case but the directives are necessary to carry out case-closure activities.

AB 1715 Fund Manager Recommendation – Case Closure to Board: Old 25299.39.2(a) (1) (B) If the manager determines that closure of the tank case is appropriate, the manager, with approval of the tank owner or operator, may make a recommendation to the board for closure. (C) The board may close any tank case or require the closure of any tank case where an unauthorized release has occurred if the board determines that corrective action at the site is in compliance with all of the requirements of subdivisions (a) and (b) of Section 25296.10 and the corrective action regulations adopted pursuant to Section 25299.3. ) If the manager determines that closure of the tank case is appropriate, the manager, with approval of the tank owner or operator, may make a recommendation to the board for closure. (C) The board may close any tank case or require the closure of any tank case where an unauthorized release has occurred if the board determines that corrective action at the site is in compliance with all of the requirements of subdivisions (a) and (b) of Section 25296.10 and the corrective action regulations adopted pursuant to Section 25299.3.

AB 1715 Fund Manager Recommendation - Opportunity for Public Comment: Revised 25299.39.2(a)(1)(D) Before closing or requiring closure of an underground storage tank case, the board shall provide an opportunity for reviewing and providing responses to the manager's recommendation to the applicable regional board and local agency, and to the water replenishment district, municipal water district, county water district, or special act district with groundwater management authority if the underground storage tank case is located in the jurisdiction of that district.

AB 1715 Fund Manager Recommendation - Limit on Reimbursement: Revised 25299.39.2(a)(2) Except as provided in paragraph (3), if the manager recommends closing a tank case pursuant to paragraph (1), the board shall limit reimbursement of subsequently incurred corrective action costs, including costs for groundwater monitoring, to ten thousand dollars ($10,000) per year.

AB 1715 Fund Manager Recommendation – Exceptions to Limit: Old 25299.39.2(a)(3) The board may allow reimbursement of corrective action costs in excess of the ten thousand dollar ($10,000) limit specified in paragraph (2) if the board determines that corrective action costs related to the closure will exceed this amount, or that additional corrective action is necessary to meet the requirements specified in subdivisions (a) and (b) of Section 25296.10.