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ARIZONA STATE SENATE
Fifty-Fifth Legislature, First Regular Session
AMENDED
technical correction; underground storage; closure
(NOW: underground storage tanks; standards; reimbursements)
Purpose
Modifies criteria and requirements for reimbursement from the Underground Storage Tank (UST) Revolving Fund and expands reimbursement eligibility for certain claims. Eliminates the UST excise tax repeal date and requires legislative review of the excise tax. Replaces referenced federal performance standards for compliance for new USTs.
Background
UST Performance Standards
A UST is a stationary tank or combination of tanks and underground pipes connected to the tank used to contain regulated substances, primarily petroleum, and that has at least 10 percent of its total volume underground (A.R.S. § 49-1001). Statute prohibits a person from installing a UST unless the UST is in compliance with federal standards for secondary containment, release detection and interstitial monitoring, as prescribed by the section of the Code of Federal Regulations which governs methods for release detection for tanks (40 C.F.R. § 280.43). The Code of Federal Regulations performance standards for new UST systems prescribes performance standards designed to prevent releases due to structural failure, corrosion, spills or overfills (40 C.F.R. § 280.20).
Corrective Actions
Upon
detection of a release of the regulated substance from a UST into groundwater,
surface water or soil, the owner or operator of the UST must take immediate
action to stop the release and mitigate any resulting hazard. A corrective
action must: 1) assure the protection of public health and welfare and the
environment; 2) provide for the control, management or cleanup of regulated
substances as to allow the maximum beneficial use of Arizona water and soil;
and
3) be reasonable, necessary, cost-effective and technically feasible (A.R.S.
§ 49-1005).
If the Director of the Arizona Department of Environmental Quality (ADEQ) cannot locate the UST owner or operator, or if the UST owner or operator is not capable of completing corrective action, ADEQ may conduct the corrective action on behalf of the UST owner or operator. The UST owner or operator is liable to the state and ADEQ has a lien on the property for unrecovered costs or if the UST owner or operator did not have the federally required financial responsibility (FR) mechanism at the time of the release (A.R.S. §§ 49-1017 and 49-1056).
Noncorrective Actions
An owner or operator may request reimbursement from ADEQ for the following noncorrective actions: 1) actions that are necessary to ensure the UST, the UST piping and the UST under-dispenser containment comply with new installation standards and other federal requirements; 2) confirmation of a suspected release at a UST or site; 3) obtaining a baseline assessment of a site; and 4) removing a UST for permanent closure or replacement. A person may file an application for funding and request reimbursement with ADEQ at any time during the noncorrective actions, but reimbursement is limited to costs incurred after ADEQ approval. Noncorrective reimbursement is capped at $300,000 per site (A.R.S. §§ 49-1017.02 and 49-1071).
UST Revolving Fund and Excise Tax
The UST owner or operator may apply for preapproval for reimbursement from the UST Revolving Fund for eligible costs for conducting corrective actions. Eligible reimbursement costs include costs incurred during: 1) sampling, analysis and reporting that verify the existence of a UST release and require corrective action; 2) cleanups that are reasonable, cost effective and foreseeable; 3) sampling, analysis and reporting that verifies the existence of UST release that requires cleanup during UST closure; and 4) preparation of the initial approved preapproval application and the consulting expenses incurred in participating in the initial preapproval meeting but not more than two percent of the amount incurred for the project cost in the first year (A.R.S. § 49-1053). If UST Revolving Fund monies are available, ADEQ may provide financial assistance to a UST owner or operator to conduct specified noncorrective actions at a site to prevent future releases (A.R.S. § 49-1017.02).
The UST Revolving Fund receives revenue from an annual $0.01 excise tax assessed on each gallon of regulated substances stored in USTs (A.R.S. § 49-1031). A UST that is operated by federal or state government agencies is exempt from the tax. This UST excise tax expires on January 1, 2024 (Laws 2015, Ch. 247 § 22).
Water Quality Assurance Revolving Fund (WQARF)
The
WQARF is administered by the Director of ADEQ (Director) and consists of
legislative appropriations, monies from corporate income tax and fees and taxes
related to:
1) pesticides; 2) fertilizers; 3) municipal water use; 4) groundwater
withdrawal; 5) hazardous waste; and 6) prospective purchaser agreements. The WQARF
is required to receive $18,000,000 annually, including an annual deposit of
$15,000,000 from the corporate income tax. The WQARF may be used for all
reasonable costs incurred in remedial actions taken in response to a release or
threat of a release of a hazardous substance or pollutant that presents an
emergency to the public health or the environment (A.R.S. §§
49-282
and 49-282.02).
There is no anticipated fiscal impact to the state General Fund associated with this legislation.
Provisions
UST Performance Standards
1. Requires a UST, connected piping or under-dispenser containment, upon installation of a new UST or applicable system parts, to meet federal secondary containment performance standards for new UST systems as prescribed by 40 C.F.R. § 280.20 in effect on January 1, 2020, and specifies that the UST must meet federal release detection requirements and interstitial monitoring requirements in effect on January 1, 2020.
2. Increases, from 25 percent to 50 percent, the threshold for installation of new piping that requires the UST owner to bring all connected piping into federal compliance.
3. Applies the requirement that the UST owner or operator install under-dispenser containment to installation of any dispenser system that connects to a UST, rather than only installation of a motor fuel dispenser that connects to a UST.
UST Revolving Fund
4. Allows monies in the UST Revolving Fund to be used to reimburse ADEQ for reasonable and necessary costs it incurs in administering the UST Site Improvement Program, rather than UST grant programs.
5. Requires the UST excise tax and supported programs to be reviewed during the legislative sunset review of ADEQ.
6. Repeals the January 1, 2024 sunset date for the UST excise tax.
Reimbursements for Corrective Actions
7. Prohibits a person who comes into possession or control of the property where a UST is located, but is not the owner, from requesting or receiving reimbursement from the UST Revolving Fund.
8. Removes, for UST Revolving Fund eligibility, the requirement that corrective actions and costs for an activity completed before ADEQ's approval to not have been reasonably incurred during the preapproval process.
9. Allows the corrective actions and costs for an activity completed before ADEQ's approval of the scope of work to be eligible for reimbursement if the applicant meets statutory criteria and if the activity was completed before January 1, 2020, and ADEQ received the claim for reimbursement by January 1, 2021.
10. Deems corrective actions and costs for activities for corrective actions completed between January 1, 2016, and December 31, 2019, that are not subject to time-barred claims or were not otherwise reimbursed by ADEQ, as eligible for reimbursement without ADEQ preapproval if otherwise compliant.
11. Limits reimbursement for corrective actions and costs for activities without ADEQ preapproval to eligible claims received by January 1, 2021.
12. Allows, ADEQ or its designated contractor, if there are insufficient monies to pay for approved corrective actions in any annual corrective action allocation, to preapprove reimbursement of corrective action costs for a person who owns more than 20 USTs in Arizona without encumbering monies.
13. Allows, rather than requires, reimbursement to be based on the date the corrective action is completed if monies are available at the end of the corrective action allocation year.
14. Requires an owner or operator of a UST to report any payment of corrective actions costs through alternative FR mechanisms to ADEQ.
15. Extends from January 1, 2023, to January 1, 2033, the requirement that only releases of regulated substances that are reported before that date are eligible for corrective action cost reimbursements from the UST Revolving Fund.
16. Requires an application for:
a) reimbursement of eligible costs to be filed with ADEQ by 5:00 p.m. on December 31, 2040; and
b) preapproval to be filed with ADEQ by 5:00 p.m. on December 31, 2039.
17. Precludes any application for expense incurred after December 31, 2040, from eligibility for reimbursement from the UST Revolving Fund and declares all claims extinguished.
Liens Against a Property for Unrecovered Corrective Action Costs
18. Eliminates ADEQ's authority to:
a) place a lien on the property of a person who did not have the required FR mechanism at
the time the release was discovered or the claim was filed; and
b) obtain a lien on any other property or FR mechanism of that party.
19. Eliminates the statutory lien amount calculation required of ADEQ for a lien incurred on unrecovered UST corrective actions.
20. Specifies that if ADEQ or Arizona incurs unrecovered corrective action costs for a corrective action on behalf of someone other than the UST owner or operator, ADEQ has a lien on the property equal to only those costs.
21. Allows ADEQ to forgo a lien on a property when the Director orders corrective actions that are necessary to protect human health, safety or the environment.
Previously Ineligible Claims
22. Applies the following stipulations for UST owners and operators that properly reported and confirmed a release of a regulated substances between when federal regulations required them to establish evidence of FR for corrective actions and compensation for damages caused by accidental releases and July 1, 1996, but who failed to comply with the FR requirement and received at least one payment from the assurance account:
a) costs for corrective actions that were conducted between July 1, 2010, and December 31, 2016, are eligible for reimbursement capped at $1,000,000 per facility minus the total amount of reimbursement payments paid before July 1, 2010, regardless of the number of releases;
b) costs of corrective actions that were conducted after January 1, 2017, are eligible for reimbursement capped at $1,000,000 per facility regardless of the number of releases under the ADEQ 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 pursuant to statutory requirements established in this act.
23. Prevents a facility for which corrective actions are being performed under the ADEQ Lead Program or Preapproval Program from receiving additional reimbursement on the general effective date.
24. Requires a UST owner or operator seeking reimbursement of corrective action costs incurred before January 1, 2022, to:
a) submit the claim to ADEQ by December 31, 2022;
b) include, in the application, 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) submit invoices, proof of payment and documentation of work for which reimbursement is sought.
25. Specifies that only costs that are approved by ADEQ are eligible for additional reimbursement.
26. Requires ADEQ to reimburse costs that are reasonable and actually incurred for performed corrective actions.
27. Allows ADEQ to not act on previously ineligible claim reimbursement applications until January 1, 2023.
28. Allows ADEQ to determine the amount of monies in the UST Revolving Fund available to pay previously ineligible claims and pay claims at least once annually.
29. Requires ADEQ to develop criteria to prioritize payments that include reimbursing small UST owners and operators first.
Reimbursement for Noncorrective Actions
30. Extends, from one year to 545 days, the maximum duration between the date of the noncorrective action and the approval of UST Revolving Fund monies for reimbursement.
31. Allows ADEQ to reimburse costs incurred for work that takes place before application approval for noncorrective actions that confirm a suspected release at a UST or site.
32. Eliminates the seven-year baseline assessment period beginning January 1, 2016, and extends the baseline assessment period through January 1, 2033.
33. Allows ADEQ, for an application received before September 30, 2020, to reimburse costs incurred for work that was conducted after October 1, 2020, including work that occurred before ADEQ's final determination.
Miscellaneous
34. Makes technical and conforming changes.
35. Becomes effective on the general effective date.
Amendments Adopted by Committee
2. Specifies that a transfer from the UST Revolving Fund to the WQARF may not exceed the difference between $15,000,000 and the amount appropriated to the WQARF for the fiscal year.
3. Removes the requirement that a transfer from the UST Revolving Fund to the WQARF be reduced on a dollar-for-dollar basis for any reduction in the excise tax revenues to the UST Revolving Fund from any other reallocation.
4. Makes technical changes.
Amendments Adopted by Committee of the Whole
1. Restores the prohibition on monies in the UST Revolving Fund being used to implement the WQARF Program.
2. Removes the Director's authority to transfer the lesser of 33 percent of excise tax revenues received or $10,000,000 to WQARF if WQARF has not received an appropriation of at least $15,000,000.
House Action Senate Action
NREW 2/16/21 DPA/SE 9-0-0-1 APPROP 3/9/21 DPA 10-0-0
3rd Read 2/24/21 59-0-1
Prepared by Senate Research
June 15, 2021
LMM/DH/kja