KRS 224.60-140: Petroleum storage tank environmental assurance fund -- Claims for

reimbursement.

(1) There is hereby created the petroleum storage tank environmental assurance fund.

The fund shall consist of a financial responsibility account and a petroleum storage

tank account. Each account shall be maintained as a separate and distinct interest -

bearing account. Interest credited to an account shall be retained in that account. All

of the following amounts shall be deposited in the fund:

(a) Four-tenths of o ne 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 the financial responsibility account;

(b) 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 to the petroleum storage tank account;

(c) Money appropriated by the General Assembly for deposit in each account;

(d) Any money recovered by the f und pursuant to this section shall be deposited

in the appropriate account; and

(e) Any money collected in the form of penalties levied pursuant to KRS 224.60 -

155 shall be deposited to the appropriate account.

(2) Money in the fund, financial responsibilit y account, and the petroleum storage tank

account shall be used by the division for the following purposes:

(a) To reimburse petroleum storage tank owners or operators for the costs,

expenses, and other obligations incurred for corrective action required b y the

cabinet to be undertaken as the result of a release into the environment from a

petroleum storage tank. Reimbursement shall be limited to only those costs,

expenses, and other obligations incurred to comply with corrective action

requirements establi shed in law or administrative regulation by the cabinet.

Additional costs related to compliance with a local program operating under

KRS 224.60-105(4) shall be neither reimbursable by the fund nor imposed on

the owner or operator. Reimbursement shall not i nclude the costs related to

the removal, or actions incidental to the removal, of a tank system except as

authorized under KRS 224.60-130(1)(j);

(b) For payment of or reimbursement for third -party claims for bodily injury and

property damage, related to a facility eligible for participation in the financial

responsibility account, which are asserted against a petroleum storage tank

owner or operator as a result of a release into the environment from a

petroleum storage tank;

(c) To pay the reasonable, prorated costs incurred by the division in administering

each account; and

(d) The cost to operate the small operators' assistance account pursuant to KRS

224.60-130(1)(d), the small operators' tank removal account pursuant to KRS

224.60-130(1)(j), to perform o r contract for the performance of financial

audits conducted under KRS 224.60 -130(1)(k), and to employ sufficient

inspectors to carry out the provisions of KRS 224.60-130 and to set forth their

duties. These costs shall be prorated to each account.

(3) The use of the fund shall not exceed one million dollars ($1,000,000) per

occurrence for corrective action and one million dollars ($1,000,000) per

occurrence for compensating third parties for bodily injury and property damage.

(4) Money in the fund may be u sed by the cabinet for costs incurred by the cabinet for

corrective action taken pursuant to KRS 224.60-135(2) and (4).

(5) The fund shall be used to guarantee payment of reasonable costs and expenses to a

contractor performing corrective action under cont ract with a petroleum storage

tank owner or operator subject to entry level amounts payable by the petroleum

storage tank owner or operator. Money in the fund shall be obligated to secure the

guarantee.

(6) A petroleum storage tank owner or operator may apply to the division for

reimbursement from the fund of costs to perform corrective action, except that the

petroleum storage tank owner or operator shall be responsible for and shall not be

reimbursed for an amount equal to the entry level into the fund as set pursuant to

administrative regulation of the division.

(7) The division or its designated agent shall issue all decisions made on claims filed

pursuant to this section in writing, with notification to all appropriate parties, within

ninety (90) days after submission of the claim, unless all parties to the claim agree

in writing to an extension of time. The division shall by phone or facsimile

transmission immediately notify the claim applicant and its consultant, if applicable,

when the claim is determined to be deficient. The notification shall provide

sufficient information to allow the applicant and its consultant, if applicable, to

begin to correct the deficiency. The division shall then notify the ap plicant and its

consultant, if applicable, by certified mail of the deficiency. The notice shall

indicate how many days remain in the ninety (90) day review period from the time

of mailing. The review period shall be tolled pending submittal of information

responding to the deficiency, but not to exceed thirty (30) days. When the division

receives information that corrects the deficiency, or at the end of the thirty (30) day

period, the division shall complete the review of the claim within the time

remaining in the ninety (90) day review period. Nothing in this section shall be

construed as preventing the fund from making partial reimbursement as appropriate.

(8) Except as provided in subsection (9), any costs incurred and payable from the fund

for corrective action taken pursuant to KRS 224.60-135(2) shall be recovered by the

division from the petroleum storage tank owner or operator which released the

petroleum or petroleum products into the environment.

(9) The liability of a petroleum storage tank owner or operator subject to a cost

recovery under this section shall not exceed an amount equal to the entry level into

the fund, the division's cost incurred in the cost recovery, and any penalties applied

in accordance with KRS 224.60 -155. This amount shall i nclude any expenditures

made by the petroleum storage tank owner or operator for the release into the

environment from the petroleum storage tank that is the subject of the cost of

recovery.

(10) The amount of costs determined pursuant to subsections (8) a nd (19) of this section

shall be recoverable in a civil action. This subsection does not deprive a party of any

defense the party may have.

(11) Money recovered by the division pursuant to this section shall be deposited in the

appropriate account.

(12) Upon motion and sufficient showing by any party, the court shall join to the action

any person who may be liable for costs or expenditures recoverable pursuant to this

section.

(13) (a) Any party found liable for any costs or expenditures recoverable under t his

section who establishes that only a portion of those costs or expenditures are

attributable to their actions, shall pay only for that portion.

(b) If the trier of fact finds the evidence insufficient to establish each party's

portion of costs or expenditures pursuant to subsection (12) of this section, the

court shall apportion those costs or expenditures, to the extent practicable

according to equitable principles among the defendants.

(c) The appropriate account shall pay any portion of the judgment in excess of the

aggregate amount of costs or expenditures apportioned under paragraphs (a)

and (b) of this subsection.

(14) (a) No indemnification, hold harmless, conveyance, or similar agreement shall be

effective to transfer any liability for costs recov erable under this section. This

subsection shall not bar any agreement to insure, hold harmless, or indemnify

a party to the agreement for any costs under KRS 224.60-105 to 224.60-160.

(b) The entry of judgment against any party to the action shall not bar any future

action by the fund against any other person who is later discovered to be

potentially liable for costs paid from the fund.

(c) Payment of any claim by the fund pursuant to KRS 224.60 -105 to 224.60-160

shall be subject to the state acquiring by subrogation the rights of the claimant

to recover those costs of corrective action for which it has compensated the

claimant from the person responsible or liable for the release.

(15) This section shall not be construed as authorizing recovery for costs o f corrective

action resulting from any release authorized or permitted pursuant to state or federal

law.

(16) The cabinet shall attempt, to the maximum extent practicable, to secure or obtain

funds that may be available for corrective actions under federal laws. However,

nothing in this subsection shall prevent the cabinet from expending any funds

available under KRS 224.60-105 to 224.60-160 if such federal funds are determined

to be unavailable.

(17) The fund shall not be used for corrective action, reimbu rsement, or third -party

liability resulting from releases from petroleum storage tanks used exclusively for

storage of fuel used in the operation of a commercial ship or vessel oil tanks used

exclusively for storage of fuel used for the purposes of powering locomotives.

(18) (a) Any person filing a claim for reimbursement from the division shall, prior to

filing the claim for reimbursement, ensure full payment of the claims of all

vendors and subcontractors who have performed work or supplied materials

related to corrective action at an underground storage tank facility, where

labor or materials supplied by a vendor or subcontractor form a basis for at

least part of the claim for reimbursement.

(b) A vendor or subcontractor may waive, in writing, his right t o receive full

payment before the person files the claim for reimbursement. Any vendor or

subcontractor who waives, in writing, his right to full payment shall also

waive, in writing, his right to take legal recourse against the division and the

underground storage tank facility owner or operator for nonpayment from a

prime contractor for work performed or materials supplied to the prime

contractor during corrective action at an underground storage tank facility.

Any vendor or subcontractor who waives, in w riting, his right to full payment

prior to the filing of the claim for reimbursement shall acknowledge in the

written waiver that his, his heirs', successors', and assigns' sole recourse for

the nonpayment of work performed or materials supplied to a prime contractor

during corrective action at an underground storage tank facility is to proceed

against the prime contractor for whom he performed the work or supplied

materials. Any vendor or subcontractor who waives, in writing, his right to

full payment prio r to the filing of the claim for reimbursement shall release

and discharge any liens filed as a result of work performed or materials

provided at the underground storage tank facility. Subcontractor and vendor

waivers must be made on standard forms furnish ed by the division. Their

signatures must be notarized.

(c) Unless the provisions of paragraph (b) of this subsection apply, any person

filing a claim for reimbursement from the division shall certify, by affidavit,

on standard forms furnished by the divis ion, that all vendors and

subcontractors who have performed work or supplied materials related to

corrective action at an underground storage tank facility, where labor and

materials supplied by a vendor or subcontractor form a basis for at least part

of t he claim for reimbursement, have been paid in full as of the date of

submission of the claim for reimbursement. A single affidavit may be made

for each claim for reimbursement, provided, however, that the representations

made in the affidavit shall be appl ied to each vendor or subcontractor

individually, and, where false, shall be treated, as to each vendor or

subcontractor, as a separate violation for the purpose of applying any criminal

statute.

(d) Any person with responsibility for administering the division who believes, or

has information, that an affidavit submitted pursuant to this subsection

contains false or misleading information, or any person with responsibility for

administering the division who believes or has information that an application

for financial assistance or a claim for reimbursement contains false or

misleading information, shall provide that information to the

Commonwealth's attorney whose jurisdiction includes the county where the

majority of the subject underground storage tank f acility is located. That

person may additionally provide the information to any other interested

prosecutor with jurisdiction to prosecute crimes pertaining to an application

for financial assistance or the claim for reimbursement.

(19) Any person who knowingly makes a false statement, representation, or certification

in an application for reimbursement from the fund, or in any supporting

documentation attached thereto, shall be responsible for and shall not be reimbursed

for any amounts incurred based upon the false statement, representation, or

certification. Any costs incurred and paid from the fund which are based on a false

statement, representation, or certification in an application for reimbursement from

the fund, or in any supporting documentation attached thereto, shall be recovered by

the fund administrators from the person who asserted the false statement,

representation, or certification.