Environmental Progress - Autumn 1996

Off Again, On Again UST Program Funding Starting To Make Inroads

At one point, deficits topped $60 million as reimbursement claims outstripped fund revenues

Cars and trucks move modern America, creating apparently insatiable demands for improved surfaces, services, and fuels. The result has been a tangle of blacktop and concrete, often marked at their intersections with service stations sitting atop reservoirs of refined petroleum buried in steel or, more recently, fiberglass tanks. Across Illinois, thousands of such tanks hold millions of gallons of petroleum products.

Over the years, many of these tanks have leaked, contaminating soil and groundwater and leaving tank owners liable for hefty sums incurred in correcting the resulting environmental threats.To ease the financial burden, a reimbursement program was begun in Illinois in 1990 that allows owners of underground storage tanks (USTs) to be reimbursed for nearly 90 percent of their cleanup costs.

Funds so far have twice failed to keep pace with demands

By Labor Day 1996, the Illinois EPA had authorized payments of more than $185 million to tank owners. However, a failure of funding to keep pace with demands has twice left tank owners having to borrow money or dip into savings as they waited for reimbursement checks that were projected to be as much as 12 to 15 years in the future.

The problem was underfunding. The law creating reimbursement criteria authorized a pump tax of three-tenths of a cent per gallon of fuel sold. The tax was designed to supply the UST fund, but monthly claims quickly ran the fund up to 16 times higher than third-of-a-penny tax could provide. Deficits developed almost immediately, and were resolved temporarily through bond sales that bailed out the fund at the end of 1994.

During 1995 and 1996, reimbursement claims continued to outstrip fund revenues. Making matters worse, the fund reached its appropriation ceiling and was unable to pay any claims from late winter through early summer. Deficits quickly topped $60 million.

At the urging of UST owners and operators, the Illinois legislature created a new environmental impact fee that would bolster the fund by providing a $60 fee on each 7,500 gallon delivery to an underground tank.

Getting the new program in place proved to be difficult, and lawmakers were forced to pass the legislation twice. The most recent law took effect in May and a few weeks later environmental impact fees began flowing into the UST fund.

During August, $4.6 million in claims were authorized for reimbursement payments

During August, the Agency authorized payment of reimbursement claims totaling $4.6 million, a record-setting payout that retired 128 claims dating from late 1994. The claims ranged from $635 to $382,652. An additional $4 million was earmarked for disbursement in September.

"We're delighted to see the UST Fund making payments that are significantly reducing the fund's deficit," said Bill Child, chief of the Illinois EPA's Bureau of Land.

"If nothing disrupts the fund's inflows, we can expect to continuously reduce the fund's backlog in increments of about $4 million a month. This means tank owners submitting reimbursement claims in the summer of 1996 can expect to receive payments by the end of 1997, or perhaps even earlier.

"These current payments may appear to be somewhat slow, until you realize what an enormous improvement they are compared to last summer. Environmental impact fees did not exist a year ago, and tank owners and operators faced the prospect of waiting 12 to 15 years for reimbursement," Child said. "Today, their prospects are much brighter."