Petroleum Cleanup Advisory Council Provides Spending Recommendations on $59.3 Million Fund to Governor, Legislature
6/9/2005
The Refined Petroleum Cleanup Advisory Council has delivered its first set of recommendations to the state of Michigan on how to spend more than $59.3 million in fees collected from the sale of petroleum products.
The seven-member Council, which is being chaired by Kenneth W. Vermeulen, an environmental attorney with Warner Norcross & Judd LLP, provided a set of detailed recommendations, outlining expenditure allotments, eligibility requirements and the application process for two proposed rounds of cleanup funding. Gov. Jennifer Granholm and the Michigan legislature will likely consider the spending recommendations for funds in the Refined Petroleum Fund after the state budget is finalized.
The Council is also working to develop guidelines on how to spend money generated from current and future sales of petroleum products and plans to deliver recommendations on this issue to the legislature later this summer. Representatives from the Council and from the Michigan Department of Environmental Quality will attend a national conference of state underground storage tank administrators later this month, which Vermeulen said will be helpful in formulating its next set of guidelines.
"In developing this first set of recommendations, we tried to build off the successes of the original legislation while repairing some of its problems," Vermeulen said. "Our intention was to develop a mechanism that provided short-term relief for owners and operators who were in the middle of cleanup projects and then left with the bill after the state stopped all reimbursements.
"We feel we have provided the governor and the legislature with a reasonable, thoughtful set of guidelines that will provide much-needed assistance to owners and operators to continue the cleanup of leaking underground storage tank sites."
The four-page memo outlining the Council's recommendations for the current balance in the Refined Petroleum Fund recommends:
Designating 75 percent of the funds to be used by private tank owners for cleanup projects that meet certain conditions. The DEQ would receive the remaining funds to administer the program and to conduct work at so-called "orphan" sites where no viable, responsible party exists.
Individual site owners would be eligible for up to $50,000 of funding for cleanup activities. The owners would have to pay a 20 percent "co-pay" for any expenditures.
To be eligible for the first round, sites must pose an immediate environmental or health risk. Additionally, the owner would have had to have been eligible under the original state program.
Owners would have six months to apply for funds and an additional 18 months to complete cleanup work.
If any funds remain, a second round of allocations would be established for sites that were not eligible in the first round.
The Council was established earlier this spring as an outgrowth of legislation passed in 1989 establishing the Michigan Underground Storage Tank Financial Assurance Fund, or MUSTFA, which collected a seven-eighths-cent fee on each gallon of petroleum products sold in the state. The funds collected were used to assist gas stations and other owners and operators of underground storage tanks in paying for cleanup of contamination caused by leaking underground storage tanks.
Initial demand for MUSTFA funding far outpaced the state's ability to collect fees, prompting Michigan to sell bonds in the early 1990s to finance payment of the corrective actions. In June 1995, MUSTFA was declared insolvent and the state stopped reimbursing MUSTFA claimants. Continued collection of the fee, however, was authorized until sufficient funds were available to pay off the previously issued bonds.
By the summer of 2004, the fund had collected enough money to pay off the bonds and to bank more than $60 million in fees, according to the Michigan Treasury Department. After lawsuits were filed attempting to force repayment of those fees, the legislature stepped in to approve the retroactive collection of the fees, to establish the Refined Petroleum Fund and to create the Advisory Council.
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About Warner Norcross & Judd:
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