KRS 224.60-130: Petroleum storage tank environmental assurance fund -- Duties of

Division of Waste Management -- Deadline for reimbursement of corrective

action projects.

(1) The Energy and Environment Cabinet, Department for Environmental Protection,

Division of Waste Management, shall:

(a) Establish by administrative regulation the policy, guidelines, and procedures

to administer the financial responsibility and petroleum storage tank accounts

of the petroleum storage tank environmental assurance fund. In adopting

administrative regulations to carry out this section, the division may

distinguish between types, classes, and ages of petroleum storage tanks. The

division may establish a range of amounts to be paid from the fund, or may

base payments on met hods such as pay for performance, task order, or firm

fixed pricing, which are designed to provide incentives for contractors to more

tightly control corrective action costs, and shall establish criteria to be met by

persons who contract to perform correct ive action to be eligible for

reimbursement from the fund. The criteria may include the certification of

individuals, partnerships, and companies. Criteria shall be established to

certify laboratories that contract to perform analytical testing related to the

underground storage tank program. Owners and operators shall have all

required analytical testing performed by a certified laboratory to be eligible

for fund participation. Persons who contract with petroleum storage tank

owners or operators shall not be paid more than the amount authorized by the

division for reimbursement from the fund for the performance of corrective

action. At a minimum, the division shall promulgate administrative

regulations in accordance with KRS Chapter 13A that will ensure an

unobligated balance in the fund adequate to meet financial assurance

requirements and corrective action requirements of KRS 224.60 -135(2) and

(4). If the unobligated balance in the fund is not adequate to meet the

requirements of this paragraph, the divisi on shall obligate funds necessary to

meet these requirements;

(b) Establish by administrative regulation the criteria to be met to be eligible to

participate in the financial responsibility and petroleum storage tank accounts

and to receive reimbursement from these accounts. The division may establish

eligibility criteria for the petroleum storage tank account based upon the

financial ability of the petroleum storage tank owner or operator. Owners or

operators seeking coverage under the petroleum storage tank account shall file

for eligibility and for financial assistance with the division. To ensure cost

effectiveness, the division shall promulgate administrative regulations in

accordance with KRS Chapter 13A specifying the circumstances under which

prior approval of corrective action costs shall be required for those costs to be

eligible for reimbursement from the fund. In promulgating administrative

regulations to carry out this section, the division may distinguish between

types, classes, and ages of petr oleum storage tanks and the degree of

compliance of the facility with any administrative regulations of the cabinet

promulgated pursuant to KRS 224.60-105 or applicable federal regulations;

(c) Establish a financial responsibility account within the fund w hich may be

used by petroleum storage tank owners and operators to demonstrate financial

responsibility as required by administrative regulations of the cabinet or the

federal regulations applicable to petroleum storage tanks, consistent with the

intent of the General Assembly as set forth in KRS 224.60 -120(5). The

account shall receive four -tenths of one cent ($0.004) from the one and four -

tenths cent ($0.014) paid on each gallon of gasoline and special fuels received

in this state pursuant to KRS 224.60 -145. To be eligible to use this account to

demonstrate compliance with financial responsibility requirements of the

cabinet or federal regulations, or to receive reimbursement from this account

for taking corrective action and for compensating third parties for bodily

injury and property damage, the petroleum storage tank owner or operator

shall meet the eligibility requirements established by administrative regulation

promulgated by the division;

(d) Establish a small operator assistance account within the fund which may be

used by the division to make or participate in the making of loans, to purchase

or participate in the purchase of the loans, which purchase may be from

eligible lenders, or to insure loans made by eligible lenders;

(e) Establish a petrole um storage tank account within the fund to be used to pay

the costs of corrective action due to a release from a petroleum storage tank

not eligible for reimbursement from the financial responsibility account.

Reimbursements of corrective action projects p erformed under the petroleum

storage tank account shall be carried out on or before July 15, 2034. Any

corrective action costs incurred after this date shall not be eligible for

reimbursement under the petroleum storage tank account. The account shall

receive one cent ($0.01) from the one and four -tenths cent ($0.014) paid on

each gallon of gasoline and special fuels received in this state pursuant to

KRS 224.60-145. This account shall not be used to compensate third parties

for bodily injury and property d amage. Within three (3) months after July 15,

2004, the division shall develop a plan to address the payment of claims and

completion of corrective action at facilities eligible for reimbursement from

this account. The division shall establish a ranking sy stem to be used for the

distribution of amounts from this account for the purpose of corrective action.

In promulgating administrative regulations to carry out this section, the

division shall consider the financial ability of the petroleum storage tank

owner or operator to perform corrective action and the extent of damage

caused by a release into the environment from a petroleum storage tank;

(f) Hear complaints brought before the division regarding the payment of claims

from the fund in accordance with KRS 224.10-410 to 224.10-470;

(g) Establish and maintain necessary offices within this state, appoint employees

and agents as necessary, and prescribe their duties and compensation;

(h) Employ, in accordance with the procedures found in KRS 45A.690 to

45A.725 for awarding personal service contracts, a qualified actuary to

perform actuarial studies, as directed by the division, for determining an

appropriate reserve in the financial responsibility account and the petroleum

storage tank account sufficient to satisfy the obligations in each account for all

eligible facilities and to satisfy future liabilities and expenses necessary to

operate each account. The division shall, by administrative regulation, set the

entry level for participation in the fund;

(i) Authorize expenditures from the fund to carry out the purpose of KRS

224.60-105 to 224.60 -160, including reasonable costs of administering the

fund, the procurement of legal services, and the procurement of analytical

testing services when necessary to confi rm the accuracy of analytical testing

results obtained by a petroleum storage tank owner or operator. The

expenditures shall be paid from the appropriate account;

(j) Establish a small operators' tank removal account within the fund to reimburse

the reasonable cost of tank system removal for small owners and operators.

The account shall not be used when an owner or operator is removing the tank

with the intention of rep lacing or upgrading the tank. In promulgating

administrative regulations to carry out this paragraph, the division may

distinguish among owners and operators based on income and types and

classes of tanks. The division shall not place a limit on the number of tanks

that an owner or operator has in order to be eligible to participate in the

program and receive reimbursement under this paragraph;

(k) Establish by administrative regulation the policy, guidelines, and procedures

to perform financial audits of a ny petroleum storage tank owner or operator

receiving reimbursement from the fund or any entity contracting or

subcontracting to provide corrective action services for facilities eligible for

fund reimbursement. Financial audits shall be limited to those f iles, records,

computer records, receipts, and other documents related to corrective action

performed at a facility where the costs of corrective action have been

reimbursed by the fund. Files, records, computer records, receipts, and other

documents related to corrective action reimbursed by the fund shall be subject

to a financial audit for a period of three (3) years after the date of final

reimbursement from the fund. Results of the audits shall be protected from

disclosure as allowed by KRS 61.878(1)(c ). Financial auditing services may

be contracted for or personnel may be employed as needed to implement the

requirements of this paragraph;

(l) Be authorized to enter and inspect any facility intending to seek

reimbursement for the cost of corrective acti on to determine the

reasonableness and necessity of the cost of corrective action. The division

may collect soil or water samples or require storage tank owners or operators

to split samples with the division for analytical testing. Refusal to allow entry

and inspection of a facility or refusal to allow the division to collect or split

samples shall make the facility ineligible for fund participation;

(m) Have inspectors on site at all tank system removals. Failure to comply with

this provision shall make t he facility ineligible for fund participation. A

petroleum storage tank owner or operator may request through certified mail

that the division schedule an inspector to be present at an upcoming tank

removal. If the request is made at least two (2) weeks be fore the time for the

removal and an inspector fails to be present at the time scheduled, the tank

removal may proceed without making the facility ineligible for fund

participation unless the owner is notified by the division no later than ten (10)

days pr ior to the proposed date that an inspector is not available on the

proposed date, in which event a representative of the division shall contact the

operator and schedule a new date. If no inspector is present at the rescheduled

date, the removal may then proceed without penalty; and

(n) Establish that the deadline for submission of final reimbursement requests

under the petroleum storage tank account is two (2) years after receipt of a no

further action letter.

(2) The division may advise the cabinet on the promulgation of administrative

regulations concerning petroleum storage tanks.

(3) The division may sue and be sued in its own name.

(4) The division may transfer funds from the petroleum storage tank account to the

small operator tank removal account as needed to satisfy the obligations, future

liabilities, and expenses necessary to operate that account. The division may

transfer funds to the financial responsibility account as needed to maintain within

that account sufficient funds to demonstrate financi al responsibility and to ensure

payment of claims as provided in subsection (1)(c) of this section.