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ARIZONA HOUSE OF REPRESENTATIVESFifty-fifth Legislature First Regular Session |
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HB 2671: technical correction; underground storage; closure
S/E underground storage tank; standards; reimbursement
Sponsor: Representative John, LD 4
Committee on Natural Resources, Energy & Water
Overview
Requires newly underground storage tanks (USTs) and certain components to comply with federal regulations. Eliminates the UST excise tax's repeal date and requires legislative review of this tax and its supporting programs. Extends the time period for submitting a reimbursement claim to the UST Revolving Fund and changes the eligibility criteria for certain claims.
History
Performance Standards
A UST is a tank or combination of tanks and underground pipes and impact valves connected to tanks that contain regulated substances (such as diesel or gasoline) for which at least 10% of the total volume of the tank and portions of pipes connected to the tank are underground (A.R.S. § 49-1001(21)).
In 1984, Congress created a federal program to regulate USTs to limit corrosion and structural defects and minimize tank leaks. The U.S. Environmental Protection Agency (EPA) sets operating requirements and technical standards for tank design and installation, leak detection, spill and overfill control, corrective action and tank closure. The EPA delegated regulatory authority to approved state programs. Since Arizona's program has not received this approval, UST owners and operators must comply with both state and federal regulations. However, the rules that ADEQ adopts for USTs must be consistent, but no more stringent, than federal regulations.
Statute requires, in part, that:
1) USTs and piping components comply with federal secondary containment and release detection requirements; and
2) If a motor fuel dispenser is installed or replaced, an under-dispenser that complies with federal release detection requirements must also be installed (A.R.S. § 49-1009).
Federal regulations for USTs were most recently updated in 2015 (Federal Register, Volume 80, No. 135).
Underground Storage Tank Revolving Fund
The UST Revolving Fund offers partial reimbursement for permanent closures, leak prevention, and corrective action costs related to leaking USTs incurred by ADEQ, owners, operators, or political subdivisions. To qualify, someone must be preapproved, except for certain actions and costs that could not have been reasonably incurred during the preapproval process. ADEQ will prioritize applications based on certain criteria such as financial need and risks to human health and the environment. Once pre-approved, ADEQ will reimburse certain costs for releases that are reported before the end of the baseline period, which currently ends on January 1, 2023. If ADEQ or the State incurs unrecovered costs from corrective actions on behalf of someone other than the UST owner or operator, or the owner or operator does not have the required financial responsibility mechanism when a release is discovered or claim filed, ADEQ has a lien on their property (A.R.S. § 49-1051 et seq.). UST Revolving Fund monies can also be used for certain noncorrective actions, such as those needed to ensure that a UST complies with federal requirements and replacing or permanently closing a UST (A.R.S. § 49-1071).
This fund receives revenue from a 1¢ excise tax that is annually assessed on each gallon of regulated substances stored in USTs (A.R.S. § 49-1031). USTs operated by federal or state government agencies, as well as those that contained certain substances such as kerosene-type jet fuel, are exempt. This tax will expire on January 1, 2024 (Laws 2015, Chapter 247, § 22).
Provisions
Performance Standards (Sec. 1)
1. Requires the following to comply with the secondary containment performance standards for new USTs and release detection requirements for interstitial monitoring in 40 Code of Federal Regulations Section 280.43(g) in effect on January 1, 2020:
a) Newly installed USTs; and
b) Any newly installed piping component that is 50% or more of the total linear footage of all connected piping in the UST and conveys a regulated substance.
2. Directs someone who installs or replaces a dispenser system that connects to a UST to install an under-dispenser containment.
3. Stipulates that this under-dispenser containment comply with the performance standards for new USTs in 40 Code of Federal Regulations Section 280.20(f) in effect on January 1, 2020.
UST Revolving Fund (Sec. 2)
4. Allows fund monies to be used to reimburse ADEQ for reasonable and necessary costs it incurs in administering the UST Site Improvement Program (instead of the UST Grant Program).
5. Authorizes the ADEQ Director to annually transfer the lesser of 33% of excise tax revenues received or $10 million to the Water Quality Assurance Revolving Fund (WQARF) beginning on July 1, 2023.
6. Requires this transfer to WQARF to be reduced on a dollar-for-dollar basis for any reduction in excise tax revenues to this fund from any other reallocation.
Legislative Review of Excise Tax (Sec. 3)
7. Requires the UST excise tax and the programs it supports to be reviewed as part of ADEQ's sunset review.
Preapproval Process (Sec. 4)
8. Repeals provisions allowing someone who comes into possession or control of the property where a UST is located (but who is not an owner) to request reimbursement from the UST Revolving Fund.
9. Removes the requirement that, for corrective actions and costs and activities to be eligible for reimbursement, they could not reasonably have been incurred through the preapproval process.
10. Allows the corrective actions and costs for activities that were completed before ADEQ's approval of the scope of work to be eligible for reimbursement if the applicant meet statutory criteria and one of the following criteria:
a) Corrective actions and costs for activities completed from January 1, 2016 through December 31, 2019 (instead of 2018) that were not the subject of a time-barred claim or otherwise reimbursed by the ADEQ.
b) Only corrective actions and costs of activities completed before January 1, 2020 (instead of 2019) for which ADEQ receives the reimbursement claim before January 1, 2021 (instead of 2020) and other specified criteria are met.
Baseline Assessment for Noncorrective Actions (Sec. 5)
11. Replaces the baseline period with a new one from January 1, 2016 to January 1, 2033.
Reimbursement for Corrective Action Costs (Sec. 6)
12. Specifies that if:
a) There are insufficient monies to pay for approved corrective actions in any annual corrective action allocation, ADEQ or its designated contractor may preapprove reimbursement of corrective action costs for an owner who is not a small owner without encumbering monies.
b) Monies are available at the end of the corrective action allocation year, reimbursement may be based on the date the corrective action is completed.
Extent of Reimbursement (Sec. 7)
13. Requires an owner or operator to report to ADEQ any payment of corrective action costs through alternative financial assurance mechanisms.
Eligibility for Reimbursement (Sec. 8)
14. Declares that starting on January 1, 2033, only releases of regulated substances that are reported before that date are eligible for corrective action cost reimbursements from the UST Revolving Fund.
15. Requires an application for:
a) Reimbursement to be filed with ADEQ by 5 P.M. on December 31, 2040.
b) Preapproval to be filed with ADEQ by 5 P.M. on December 31, 2039.
16. Declares that any application made or expense incurred after December 31, 2040 is not eligible for reimbursement from the UST Revolving Fund and all such claims will be extinguished.
Lien Rights (Sec. 9)
17. Eliminates ADEQ's authority to:
a) place a lien on someone who did not have the required financial responsibility mechanism at the time the release was discovered or claim filed or;
b) obtain, by agreement with the responsible party, a lien on any other property or financial responsibility mechanism of that party.
18. Repeals language outlining how the amount of the lien is determined and factors that reduce this amount.
19. Stipulates that if ADEQ or Arizona incurs unrecovered costs for corrective actions on behalf of someone other than the UST owner or operator, ADEQ has a lien on the property for those costs.
20. Authorizes ADEQ to forgo a lien on the property when its Director orders corrective actions that are necessary to protect human health, safety or the environment.
Noncorrective Action Tank Site Improvement (Sec. 10)
21. Increases, from one year to 545 days, the time limit in which approved UST Revolving Fund monies can be used for noncorrective actions such as ensuring the UST and its components comply with federal requirements, removing these tanks for closure or replacement, and confirming a release at a tank or site.
22. Allows ADEQ to reimburse costs incurred for work that takes place before its approval for an application for monies to confirm a suspected release at a tank or site.
23. Specifies, for all other noncorrective actions, that ADEQ can only reimburse eligible costs that were incurred after it approved the application.
24. Authorizes ADEQ to reimburse costs incurred for work that was conducted after October 1, 2020 (including work that occurred before its final determination) for applications that it received before September 30, 2020.
UST Excise Tax (Sec. 11)
25. Deletes the January 1, 2024 repeal date for the UST excise tax.
Previously Ineligible Claims (Sec. 12)
26. Declares that—for UST owners and operators that appropriately reported and confirmed a regulated substances release between when they were required by federal regulations to demonstrate financial responsibility for taking corrective actions and compensating others for damages caused by accidental releases and July 1, 1996, but who failed to comply with these regulations and received at least one payment from the assurance account—the following apply:
a) The costs for corrective actions that were conducted between July 1, 2010 and December 31, 2016 are eligible for reimbursement of up to $1 million per facility, regardless of the number of releases, as assurance account time-barred claims;
i. Specifies that if reimbursement claims for this facility were made before July 1, 2010, the total amount of payments for those claims will reduce reimbursement eligibility by the amount paid.
b) The costs of corrective actions that were conducted after January 1, 2017 are eligible for reimbursement of up to $1 million per facility regardless of the number of releases under ADEQ's preapproval program;
c) Costs incurred before December 31, 2021 are eligible without ADEQ's prior approval; and
d) Costs for corrective actions conducted starting on January 1, 2022 are eligible for reimbursement subject to statutory requirements.
27. Forbids facilities for which corrective actions are being performed under ADEQ's State Lead Program or Preapproval Program on this act's effective date from being eligible for additional reimbursement.
28. Requires:
a) Claims for reimbursement of corrective action costs incurred before January 1, 2022 to be submitted to ADEQ by December 31, 2022;
b) Reimbursement applications to include a certification signed by the owner or operator that affirms the submitted costs are accurate and have not previously been submitted and paid or denied by ADEQ for a reason other than failing to demonstrate financial responsibility; and
c) An owner or operator, at minimum, to be submit invoices, proof of payment and documentation of work for which they are seeking reimbursement.
29. Specifies that only costs that ADEQ approves are eligible for payment.
30. Clarifies that ADEQ is not required to take any action on a reimbursement application until January 1, 2023.
31. Instructs ADEQ to:
a) Reimburse costs that are reasonable and actually incurred for corrective actions that were actually performed;
b) Determine the amount of monies in the UST Revolving Fund available to pay claims but specifies that this agency is not required to evaluate available monies and issue payments more than once annually; and
c) Develop criteria to prioritize payments that include reimbursing small owners and operators first.
Miscellaneous
32. Makes technical and conforming changes. (Sec. 1-4 and 6-7)
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36. HB 2671
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