Phone: (714) 730-5397

Phone: (714) 730-5397

Policy Update: California UST Cleanup Fund Business Model

The California Underground Storage Tank (UST) Cleanup Fund is in the midst of changing its business model in order to manage its cash flow based on projected revenues for fiscal year 2011/12, beginning July 1. The Fund now requires each claimant to provide a budget for the upcoming year’s assessment of cleanup/remediation activities. If budgets have not been submitted to the Fund, those sites will not receive reimbursements in the coming fiscal year. It is not clear at this point if the Fund will reimburse monies spent equal to the submitted budgets.

The Fund is anticipating a dramatic decrease in revenues when AB 1188 expires at the end of this calendar year. When AB 1188 expires, the per gallon fee charged to UST operators will decrease from 2.0 cents per gallon to 1.4 cents per gallon. This 30% decrease, coupled with dropping fuel sales as the price of gasoline, remains above $4.00 per gallon which will leave the Fund with a $126 million shortfall in FY 2011/12. The budgeting process is meant to address this shortfall.

Fund management has stated that they expect to reveal the details of the new business model in May of this year. It is likely that the improved cash management at the Fund will not alleviate the shortfall. It is also likely that assessments and cleanups will suffer delays due to lack of funding. As claimants fall behind on regulatory requirements to investigate and complete soil and groundwater contamination remediation, they risk falling out of compliance with regulatory agencies’ requirements.

The Reynolds Group stays current with all policy updates. To learn how TRG can help you with the Fund, call the office at (714) 730-5397 or email [email protected]