&EPA
United States
Environmental Protection
Agency
Office of
Underground Storage Tanks
Washington, D.C. 20460
EPA/530/UST-88/002
August 1988
Funding Options for
States and Local
Governments
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N.
UNDERGROUND STORAGE TANK PROGRAMS:
FUNDING OPTIONS
FOR STATE AND LOCAL GOVERNMENTS
U.S. Environmental Protection Agency
Office of Underground Storage Tanks
August 1988
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ACKNOWLEDGEMENTS
The Environmental Protection Agency's
Office of Underground Storage Tanks (OUST)
wishes to acknowledge and express its appre-
ciation for the efforts of Ann Carey of ICF In-
corporated and the EPA Regional UST staff
and State program representatives who gathered
the initial data for this handbook in a very short
time. They reviewed, revised, and updated it
throughout its preparation.
OUST also wishes to thank the members of
review panel who gave generously of their time
to provide their comments and support to make
this a better handbook. Review panel members
included; Victoria Gallagher, San Diego UST
Program; Chuck Head, UST Coordinator,
Tennessee Division of Groundwater Protection;
John Hoick, UST Coordinator, Minnesota Pol-
lution-Control Agency; Helen Ladd, Ph.D.,
Professor of Public Policy Studies, Duke
University; Jerry Miller, Director, National
Association of State Budget Officers; John
Petersen, Government Finance Officers Asso-
ciation; and Frank Sudol, Newark, NJ, De-
partment of Engineering. We give special
recognition to Dr. Ladd for providing the
ideas and framework for a major revision of
Chapter III.
Finally, special thanks to Kate Becker of
ICF Incorporated, who performed the diffi-
cult task of turning early, technical drafts of
this report into a more "user-friendly" hand-
book.
Sandy Strauss
EPA Project Manager
June 1988
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CONTENTS
I. UNDERGROUND STORAGE TANKS: FINANCING STATE AND
LOCAL PROGRAMS
How The Federal Law Affects You 1
How To Pay For Your UST Program 2
How This Handbook Can Help You 3
How This Handbook Is Organized 3
II. WORKING WITH THE LEGISLATIVE AND EXECUTIVE BRANCHES
Starting A New Program: Initial Funding Efforts 5
Justifying Your Program Costs 6
Knowing The Political Climate 6
Involving The Interest Groups 6
Giving A Little To Get A Little 6
III. GENERAL CONSIDERATIONS FOR SELECTING A
FUNDING MECHANISM
What Are The Funding Needs Of Your Program? 9
What Is Your Program's Scope And Design? 9
Is It A New Or An Ongoing Program? 10
Can Some Of The Effort Be Delegated? 10
What Are General Approaches To Raising Program Funds? 10
How Do Different Funding Mechanisms Perform? 11
What Is The Revenue Potential Of A Mechanism? 11
Projecting Revenues 11
Pattern of Revenues Over Time 12
What Is The Distribution Of The Funding Burden? 12
"Those Who Created the Need Should Pay" 12
"Those Who Benefit Should Pay" 12
"Widely Dispersed Program Benefits Should Be Paid For By All Taxpayers" 13
What Are The Incentives Created By A Mechanism? 13
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CONTENTS
IV. FUNDING MECHANISMS FOR STATE PROGRAMS 15
Registration And Permit Fees 15
Tank And Facility Fees 16
Site Activity Fees 16
Tank Tester And Installer License Fees 17
Petroleum Product Assessments 20
Gasoline Sales Tax 20
Petroleum Product Excise Tax 20
Bonds 23
General Obligation Bonds 24
Revenue Bonds 24
Special Tax Bonds 24
Revolving Loan Funds Capitalized With Bond 25
Corporate Receipts Or Income Taxes 26
Other Mechanisms In Use 27
V. FUNDING MECHANISMS FOR LOCAL PROGRAMS 29
Water Utility Assessments 29
Special Property Assessments 30
Other Funding Mechanisms For Local Programs 31
VI. WHAT SOME OTHER STATES HAVE TRIED:
A SUMMARY OF EPA'S 1987 SURVEY 33
How Are States Currently Funding Their UST Programs? 33
What Changes In Funding Sources Are States Considering? 34
What Can You Conclude From What Other States Are Doing? 35
VII. WHERE DO YOU GO FROM HERE? 41
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APPENDICES A-l
A. Comparison of Financing Mechanisms by Major Choice Factors A-l
B. Registration and Permit Fees by Stale B-l
C. Petroleum Product Assessments by State C-l
D. Bonds by State D-l
E. Other Funding Mechanisms by State E-l
F. State Implementing Agencies F-l
EXAMPLES 17
The Maine Tank Registration Fee 17
The Florida Tank Registration Fee 18
The Maine Tank Installer Certification Fee 19
The Maine Petroleum Product Transfer Fee 21
The Florida Petroleum Product Tax 22
The California Hazardous Substance Cleanup Bond Fund 25
The Superfund Corporate Income Tax 27
The Santa Clara Valley Water District Groundwater Charge 29
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CHAPTER I
UNDERGROUND STORAGE TANKS:
FUNDING STATE AND LOCAL PROGRAMS
Underground storage tanks (USTs) are a fact
of American life. They constitute a hazard to
public health if they are not installed and main-
tained safely, and they require immediate and
often costly cleanups when they leak. There are
consequences for those who decide to ignore the
problem of leaking USTs. In the event of a major
cleanup, your government may face the ultimate
responsibility for paying the costs for cleanups
that are not covered by owners or operators or the
Federal Leaking Underground Storage Tank
(LUST) Trust Fund. An effective prevention
program that detects problems early is the best
insurance against environmental damage and
health risks caused by leaks. You, as a State or
local UST program official, can help decide
whether your program's current funding is suffi-
cient or whether more or different funding sources
arc necessary.
The purpose of this handbook is to present
you with funding alternatives that can provide
new or expanded sources of funds for your pro-
gram. It is often helpful to learn how other pro-
gram officials have met similar challenges. Some
of you, however, are officials in one of the many
State and local governments that has an effective
UST program up and running. We suggest that
you be selective in your reading of this handbook.
We did not design it to be read from cover to
cover; we did try to provide a wide range of op-
tions for those of you who are new to the question
of program funding.
We at the U.S. Environmental Protection
Agency (EPA) have assembled information on
how State and local UST programs are being
funded. In 1987, EPA surveyed the UST pro-
grams in all 50 States. Each State reported on the
mechanisms it uses to fund its prevention and
cleanup activities; some Slates have continued to
submit funding data throughout the preparation of
this handbook. The data from the survey appear
as examples of specific applications of dedicated
funding mechanisms throughout the handbook; the
raw data are in the appendices; a summary ap-
pears in Chapter VI. Please note that these data
represent only what is happening now. In addi-
tion, we wish to make the following statements
about the data.
• All programs are still in their develop-
ment phase.
• Funding data contained herein are for the
programs at their current levels.
• These levels differ from State to State.
• Funding needs are changing and will con-
tinue to change as programs evolve.
• The mechanisms used and the levels of
funding are constantly changing.
How the Federal Law Affects You
In 1984, Congress passed Subtitle I of the
Hazardous and Solid Waste Amendments to the
Resource Conservation and Recovery Act. Sub-
title I requires the EPA to address the problem of
leaking underground storage tank systems. Be-
cause of the nature of the problem, Congress in-
tended the UST program to be administered pri-
marily at the State and local levels. EPA is not in
a position to underwrite UST programs.
Some resources are available through EPA
program grants for prevention programs and
through the LUST Trust Fund for cleanups, but
neither will fund an entire program. EPA program
grants provide "seed" money for the develop-
ment and implementation of State-run UST pre-
vention programs. Currently, fundable tasks in-
clude such activities as developing legislative
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PAGE 2
authorities, developing enforcement programs, or
developing the funding mechanisms discussed in
this handbook. Other fundable tasks include State
program approval application activities, outreach
efforts, and compliance monitoring and enforce-
ment activities. Current (fiscal year 1989) fund-
ing levels for State grants are $162,500 per State
(as well as Puerto Rico and the District of Colum-
bia) and $137,500 for the remaining territories. A
25 percent match is required.
The LUST Trust Fund was created by the Su-
perfund Amendments and Reauthorization Act
(SARA) and is available to States for cleanups of
leaking USTs. The Trust Fund can be used only if
the costs of a cleanup exceed the minimum insur-
ance coverage that an owner or operator is re-
quired to maintain, or if a solvent owner cannot be
located or refuses to pay for corrective action. In
addition, the Trust Fund can be used only for en-
forcement- or cleanup-related activities associated
with petroleum releases; it will not be available
for most regulatory activities (such as routine in-
spections, permits, outreach, and program devel-
opment). States and territories will be required to
provide a 10 percent match once the new UST
regulations take effect.
Neither the Trust Fund nor the program grants
will provide sufficient resources necessary to fund
an effective State or local UST program. State
and local governments need to find additional
funding sources to pay for their UST programs.
How to Pay for Your UST Program
State and local program revenues typically
come from one of two sources: general revenues
and dedicated fees or taxes. General revenues are
drawn from a State or local general fund and are
appropriated on an annual or biennial basis to
various programs. Each year (or every two years),
UST program needs are balanced against compet-
ing demands for limited resources. Over time, the
amount of annual appropriations may become
constant. However, there is no binding commit-
ment from year to year, and appropriations for in-
dividual programs may change as a result of shift-
ing public priorities or changes in revenues.
General revenues are currently the most com-
mon source of funding for State UST programs;
38 States currently use general revenues either
alone or in conjunction with dedicated funding
sources. General revenues are not discussed in
detail in this handbook because they are already
being used by a number of programs, and they are
generally well understood by program managers.
The other major source of funding is dedi-
cated program fees or taxes. These are fees or
taxes that are collected from a designated source
and are dedicated to a specific program, hence
their name. Fees are typically levied for a particu-
lar service, whereas taxes are often more generally
applied.
There is a wide variety of funding mecha-
nisms that you can potentially use to support State
and local UST programs. In this handbook we
focus on the following mechanisms:
• Registration and permit fees,
• Petroleum product assessments,
• Corporate receipts or income taxes,
• Water utility assessments, and
• Special property assessments.
This list is not intended to be all-inclusive;
rather, it illustrates the range of mechanisms
available for your consideration. Dedicated fund-
ing mechanisms can be used to supplement or re-
place general revenue funding. They can be used
to pay for specific activities (such as licensing) or
for general program costs. The applicability of
different mechanisms to various program needs
depends on the amount and flow of revenues from
such mechanisms, as discussed later.
Bonds are sometimes considered a third
source of revenue. While they generate bond pro-
ceeds, they are only a mechanism for spreading
the program funding burden out over time. An-
other source of funds (general revenues or dedi-
cated fees or taxes) is still needed to repay the
bonds. The applicability of bonds to UST pro-
gram needs is discussed in this handbook.
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PAGE 3
In choosing a funding mechanism, you must
consider what segment of the population will pro-
vide the funds through that mechanism. Some
dedicated funding mechanisms, such as registra-
tion and permit fees, tend to fall to those parties
who contribute directly to the problem (for ex-
ample, tank owners or product manufacturers and
distributors). Others, such as petroleum product
or water assessments, fall to parties who are indi-
rectly related to the problems (gasoline buyers) or
are beneficiaries of the program (water users).
How This Handbook Can Help You
You may need a combination of funding
sources to cover the costs and ensure the stability
of your UST program. The question is which ones
and in what combination? Because every State
and local government is unique, we can't answer
that question for you. We can, however, give you
information about the funding mechanisms and
examples of what other States have done and how
they rate their success. And we can make some
suggestions. For example, the funds appropriated
to your program from general revenues may vary
from year to year because of the process by which
they are allocated. So we suggest that if you use
general revenues you also have in place other
funding mechanisms, preferably dedicated mecha-
nisms, to guard against a major loss of revenues as
a result of changes in funding priorities, the econ-
omy, and the like.
As you read this handbook, you will note that
there is no one right way to fund a program.
States are currently using a number of strategies,
each achieving some measure of success.
How This Handbook Is Organized
The organization of this handbook is quite
straightforward.
• Chapter II has information on working
with the legislative and executive
branches.
• Chapter III provides factors that you
should consider when choosing a funding
mechanism.
• Chapter IV looks at the funding mecha-
nisms that are best suited for States. It
contains descriptions of each mechanism,
pros and cons as they relate to the choice
factors, and examples of their applica-
tion.
• Chapter V covers the funding mecha-
nisms that are best suited for localities
and treats them as in Chapter IV.
• Chapter VI is an overview of how some
mechanisms are being used,
including combinations of funding
mechanisms and the relationship of the
mechanism to the activities performed.
• Chapter VII contains some ideas about
where to go for additional
information.
• The appendices contain charts and raw
data and are referenced throughout the
chapters. These data come from EPA's
1987 Interim Report on State Funding for
Underground Storage Tank Programs and
additional information submitted from
States since that report.
We encourage you to contact individual State
programs to find out how well a specific mecha-
nism works in a specific State. A list of State im-
plementing agencies is provided in Appendix F.
Staff members from the Office of Underground
Storage Tanks (OUST) (202-475-9722) can refer
you to people who can answer any other questions
you may have as a result of reading this hand-
book.
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CHAPTER II
PAGES
WORKING WITH THE LEGISLATIVE AND
EXECUTIVE BRANCHES
Establishing funding for an UST program re-
quires that you work effectively with a variety of
decision makers. It means not only determining
what funds you need and selecting appropriate
mechanisms, but it also means interacting with
your own agency officials, the executive branch,
the State or local budget office, and the State leg-
islature or local commissioners or boards. These
decision makers are often faced with critical po-
litical choices and must decide among numerous
conflicting demands. After your office determines
its funding needs and proposes a funding mecha-
nism, officials in your own agency must be com-
mitted to your choice before it can be presented to
the legislature. The legislature will decide
whether your funding proposal fits into the overall
fiscal priorities of your State, while the executive
branch (often with the advice of the budget of-
fice), will determine whether the mechanism is
worthy of being signed into law. All these deci-
sion makers can influence your ability to establish
dedicated funding mechanisms to run an UST
program.
There is considerable work to do before you
present your decision makers with the information
they need to make a decision concerning the fund-
ing of your UST program. Much of the informa-
tion that you will need to consider for your work
is contained in the chapters that follow.
While each jurisdiction has unique character-
istics and political considerations to which you
must be sensitive, there are some general pointers
for working effectively with the administration
and the legislature to develop UST funding
mechanisms. Please bear with us when we cover
aspects of this material that you already know.
We can't assume that all readers have the same
level of knowledge and experience. Our goal here
is to pass along some of the ideas and approaches
that have worked successfully for some States.
Starting a New Program:
Initial Funding Efforts
Certain programs have been receiving public
funding for many years, and government manag-
ers and legislators are accustomed to continuing
their funding. Typically, however, the UST pro-
gram presents a new demand on funds, and legis-
lators and agency officials may be reluctant to
dedicate extensive funding to a new program.
You should make a realistic assessment of your
program needs and be ready to convey them to
your decision makers. If you start small and pro-
pose a less demanding funding mechanism, it may
be easier to get UST funding on the legislative
agenda or in your agency budget. You can then
demonstrate the need for and value of increasing
the funding in the future. Traditionally, programs
need to start small as they are unlikely to be able
to spend large appropriations in their early phases.
And starting small does not mean that EPA will
intervene more actively in the State. EPA is com-
mitted to having State-run UST programs and
realizes that some will start small.
An example of a program that started small
comes from Utah. Program officials there worked
with the legislature to pass a tank fee system that
was modest in its initial fee structure but allowed
for growth. The tank fee is to be used to cover the
costs of developing the UST program. The initial
assessment was $25 per year per tank, and the
legislative committee can raise the fee up to $100
per tank if it becomes evident that the fee is not
covering program costs. Thus, the legislation,
while starting small, allows for growth. In fact,
the Utah legislature is currently considering rais-
ing the fee to $60 per tank per year.
Officials in Delaware used a different strategy
to get on the legislative agenda for developing
UST funding. The UST statute in Delaware ere-
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PAGE 6
ated the Delaware Underground Petroleum Re-
sponse Fund. This fund can be used for conduct-
ing and overseeing cleanups; for helping owners
meet Federal financial requirements over
$100,000 per occurrence for corrective action, and
$300,000 for third-party damage; and for creating
an amnesty program that reimburses owners and
operators for all costs incurred in cleanups during
the first 18 months after the law was established.
While the fund has been established, it does not
yet have a funding mechanism dedicated to pro-
vide revenues. During the next session of the
Delaware legislature, lawmakers will have to
decide who will provide the resources for the
fund. Thus, the legal establishment of the fund
demands that the legislature create a mechanism
to support it. UST program officials are consider-
ing proposing a gasoline tax, issuing a bond, or
using general revenues.
Justifying Your Program Costs
Defining your program's resource needs is a
crucial step in developing a funding mechanism.
Legislators, administrators, budget officers, and
other officials will be particularly interested in
your estimates of program costs. In developing
your estimates, you might rely on information
from other environmental programs, from other
State and local UST programs, and from similar
nonenvironmental programs. New Jersey devel-
oped a 3-year cost projection based on the number
of tanks and a list of costing factors, including the
costs of full-time employees and other administra-
tive costs, and then used it to justify appropriation
requests to the legislature. Be careful to not sim-
ply transfer work projections and costs from other
programs or to assume that work will be done as it
has been done in the past. They may not be ap-
propriate for a program with the number of
sources of problems and known products present
in the UST field.
Knowing the Political Climate
Clearly, to propose and develop funding
mechanisms successfully, you need to understand
the disposition toward different types of mecha-
nisms in your State and its legislature. Some State
environmental programs have a history of being
fee-for-service supported; proposing other types
of mechanisms may be going against the grain. In
other States, where petroleum taxes may be his-
torically or legally used only for transportation-
related programs, proposing petroleum taxes may
be futile. Knowing what will and what will not be
acceptable can allow program officials to focus on
mechanisms that can realistically be established.
Involving the Interest Groups
You should consider listening to the concerns
of relevant interest groups in your State and enlist
their participation. Soliciting industry or other
representatives' input can foster their support for
the program. Working with an advisory commit-
tee is an extremely effective way to develop a
program that has a good chance for being success-
ful. In addition, groups affected by a proposed
funding mechanism may voice stronger opposition
later if they are not involved in developing the
mechanism early on.
Iowa has set up a legislative council respon-
sible for developing UST legislation. The council
is composed of two State senators, two representa-
tives, a representative of the petroleum storage
tank owners and operators, and a representative
from the petroleum industry. Other States have
similar councils, many of which are more broadly
based than Iowa's. Including industry officials in
the legislative process may help eliminate
divisiveness and lead to legislation that is accept-
able to all parties.
Giving a Little to Get a Little
The legislative and budget processes often in-
volve compromising to achieve success. Decision
makers in both the executive and legislative
branches must compromise with one another, and
people proposing a financing mechanism must
compromise with those affected by it. In Pennsyl-
vania, a recent bill was passed and signed into law
dedicating a percentage of the State's broad-based
capital stock-franchise tax (a tax on business in-
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PAGE 7
come and net worth) to be used for hazardous
waste cleanup. To pass such a tax, the legislature
had to reach a compromise between those who
wanted a reduction in the capital stock tax and
those who wanted to use a portion of the tax to
fund hazardous waste cleanups. The solution was
to partially reduce the overall tax and to dedicate
a portion to the Hazardous Sites Cleanup Fund.
Similarly, Delaware established a tank fee
system to fund the administrative portion of its
UST program. The bill was passed without vis-
ible opposition of tank owners because it included
an amnesty program they wanted.
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CHAPTER III
PAGE 9
GENERAL CONSIDERATIONS FOR
SELECTING A FUNDING MECHANISM
In this chapter, we describe a general ap-
proach to selecting an appropriate funding mecha-
nism for your UST program. This approach fol-
lows three basic steps:
• Determining your program's funding
need.
• Selecting among different revenue
sources (general revenues, dedicated
mechanisms, or bond proceeds).
• Evaluating how alternative funding
mechanisms perform with respect to
revenues, distribution of the funding
burden, and incentives.
Each of these steps is discussed in greater detail
below, and a matrix which provides brief, side-by-
side comparisons appears in Appendix A.
What Are the Funding Needs of Your
Program?
The three main considerations that will affect
the funding needs of your program are discussed
below.
What Is Your Program's Scope And
Design?
Program scope and design are probably the
most critical determinants of funding needs. The
scope and design of a program are determined by
the program activities, which, in turn, are deter-
mined by factors such as:
• Political and legislative concerns.
• Environmental circumstances and con-
cerns.
• Program goals.
• Tank characteristics (number, age, type,
location, and ownership).
• Standard operating procedures.
An example of a factor that has political, environ-
mental, and legislative overtones is deciding on
whether the emphasis of the program will be on
prevention or cleanup activities or both.
For the purpose of this handbook, we define
"prevention program" or "prevention activities"
as those activities designed to prevent and detect
releases of regulated substances. A prevention
program may include the following:
• Developing regulatory requirements such
as new and existing tank system stan-
dards, release detection requirements,
testing, notification and other reporting
requirements, and closure standards.
• Implementing a notification program that
provides a data base of all regulated tanks
in a given jurisdiction.
• Establishing a compliance/enforcement
program that both monitors for compli-
ance with regulatory requirements and
ensures that systems not in compliance
are corrected.
• Investigating suspected releases for con-
firmation purposes.
"Cleanup program" or "cleanup activities"
are defined as the responses made once the exis-
tence of a release has been confirmed. Therefore,
a cleanup program includes all activities to abate
and remedy releases of regulated substances.
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PAGE 10
The distinction between "prevention pro-
gram" and "cleanup program" is made explicit
here because some States are organized along
these lines. In fact, in certain States, responsibil-
ity for prevention and cleanup activities may lie in
different agencies or departments. You will find
that throughout this handbook we note that some
of the funding mechanisms described are used for
prevention programs, while others are used for
cleanup programs. Appendices B through E in-
clude data on how each mechanism is used. The
data for each State or local government are based
on that particular government's definition of the
prevention and cleanup program, which may dif-
fer from the definitions given above. The defini-
tions above merely provide a common frame of
reference.
EPA recommends that both prevention and
cleanup activities be funded. In fact, States must
be prepared, either through direct funds or in-kind
contributions (such as staff or equipment), to pro-
vide the 25-percent match for UST program grants
and the 10-percent match for the LUST Trust
Fund beginning in Federal fiscal year 1989.
In the event of a major cleanup that results
from lack of attention to a problem, your jurisdic-
tion may have to pay cleanup costs that are not
covered by owners or operators of tanks. An
effective prevention program that detects prob-
lems early is the best insurance against both the
environmental damage and the health risks caused
by leaks.
Is It A New Or An Ongoing Program?
Just as program activities change during the
life of a program, so do the funding needs of a
program. For example, the funding needed for
compliance monitoring, enforcement, and correc-
tive action may be high at first but should decline
and level off in the latter stages of a program as
problems are corrected.
Can Some Of The Effort Be Delegated?
It may be worthwhile to consider incorporat-
ing UST program functions into ongoing activities
in other programs or agencies. For example, UST
inspection requirements might be added to exist-
ing inspection programs at less cost than creating
an entirely new program. The ability to delegate
program activities and responsibilities is heavily
influenced by standard operating procedures, effi-
ciency concerns, and personnel experience.
Responsibility can also be delegated to tank
owners and operators themselves. Shifting the re-
sponsibility for certain activities to the regulated
community is often referred to as "privatization."
Privatization can substantially reduce the costs to
the regulatory agency of many UST prevention
activities. An example of privatization is requir-
ing UST owners and operators to conduct (or hire
someone to conduct) their own facility inspec-
tions. The owner or operator would then be re-
quired to report the results of the inspection to the
regulatory agency. The regulatory agency can
then verify the results of selected self-reported
inspections and enforce against those who falsi-
fied their results. This privatizing of work elimi-
nates the need for your agency to conduct facility
inspections at all facilities.
What Are the General Approaches to
Raising Program Funds?
Although there is some movement toward the
use of two or more funding sources, individual
State and local programs (including UST pro-
grams) typically have been financed by either
annual appropriations from general revenues or
dedicated program fees and/or taxes. There are
benefits and drawbacks to both.
The appropriations process places the UST
program on equal footing with other public pro-
grams supported with general revenues. Each
year the needs of this program are balanced
against competing demands for limited resources.
Over time the amount of annual appropriations
may become constant as the program matures and
funding needs are well-defined. At the same time,
a large one-time appropriation to cover a cata-
strophic event can also benefit the program. In
general, this process ensures program responsive-
ness to changing public priorities.
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PAGE 11
Dedicated fees or taxes remove the UST pro-
gram from the budgetary process, providing some-
what greater control to program management.
Legislative control over program design and im-
plementation may be diminished, and control over
program priorities relinquished to the executive
branch. At the same time, program activities may
be limited by the capacity of the funding mecha-
nism, and the program may forego periodic distri-
butions of additional general revenues.
Bonds are sometimes considered a third
source of program funds. While bonds generate
bond proceeds, they differ from the other two
revenue sources in that they are simply a mecha-
nism for spreading the funding burden out over
time. Bonds do not remove the need for either
general or dedicated revenue sources. Such
sources are still needed to pay the annual debt
service on the bonds, where "debt service" in-
cludes interest expense and repayment of princi-
pal. Bonds may be appropriate where initial pro-
gram funding needs are higher than amounts that
could reasonably be raised with dedicated fees or
taxes or appropriated from general revenues (for
example, for extensive removal, replacement, or
cleanup activities). These other sources would
then be tapped to repay the bonds, spreading the
funding burden out over time.
How Do Different Funding Mechanisms
Perform?
In selecting a funding mechanism for your
UST program, it is important to understand and
evaluate how that mechanism would perform in
your particular situation. In the sections below,
we describe how to evaluate different funding
mechanisms with respect to three critical con-
cerns:
• What is the revenue potential of a mecha-
nism?
• What is the distribution of the funding
burden?
• What are the incentives (either desirable
or undesirable) created by a mechanism?
These issues are explored primarily as they
relate to dedicated funding sources. While the
same questions could be applied to general reve-
nues, they are not concerns that are dealt with at
the program level. For UST program managers,
the primary considerations when evaluating gen-
eral revenues are the amount of funds likely to be
appropriated annually to the program and the
continuity of those appropriations from year to
year.
What Is The Revenue Potential Of A
Mechanism?
A critical factor in evaluating any funding
mechanism is its capacity to provide sufficient
and predictable revenues. Revenue potential is
how much money can be raised with a particular
mechanism (annual and total projected revenues),
and how stable those revenues are over time.
Funding needs vary at different stages of a pro-
gram; if a mechanism cannot provide sufficient
cash flow when needed, it may hamper or inter-
rupt program activities.
Projecting Revenues
To determine how much revenue a particular
mechanism can generate, you must consider both
the tax base and the tax (or fee) rate. For the
mechanisms described in this handbook, the tax
base can take many forms (such as tanks, facili-
ties, petroleum and petroleum products, water,
property, gross receipts, or income). Similarly,
the tax rate can be expressed in several ways (in-
cluding dollars per unit or percent of value).
When estimating revenues from a new fund-
ing mechanism, remember that the size of the tax
base could change in response to the fee or tax. If
tank owners respond to a tank fee by closing
tanks, actual revenues would be less than pro-
jected revenues. The experience of other pro-
grams with similar mechanisms may help in esti-
mating changes in the tax base in response to a
new fee or tax.
Another consideration is how the fee will be
collected. If the program is responsible for fee
collection, it will incur costs that will offset the
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PAGE 12
proceeds from the fee. If the fee is collected
through another department or agency and allo-
cated to the program, there may be little or no cost
to the program.
Pattern Of Revenues Over Time
Some funding mechanisms provide a one-
time source of revenues; others provide a continu-
ous source; and still others provide revenues that
fluctuate over time. Ideally, the timing of reve-
nues from one or more funding mechanisms will
match the expenditure needs of the program.
Mechanisms that provide a one-time or immediate
source of cash (such as a surcharge on an existing
tax) or that have a limited duration (such as one-
time registration fees) may be more appropriate
for short-term needs. In contrast, mechanisms that
take time to establish (such as a product tax) but
then provide a sustained source of revenues may
be more appropriate for long-term funding needs.
It is also important to consider whether pro-
gram costs will increase over time (for example,
as a result of inflation). If they are expected to
increase, it is desirable to design a revenue source
that grows with inflation. This could be accom-
plished by indexing the fee schedule to inflation
or by levying taxes on an ad valorem (percent of
sales) rather than a per unit basis. Another ap-
proach is providing for an automatic rate increase
in response to program needs. Such a provision is
contained in the Florida Product Tax described in
Chapter IV.
What Is The Distribution Of The
Funding Burden?
A second major consideration in evaluating a
funding mechanism is determining who should
bear the burden of program costs. While it is not
an absolute necessity, choosing a funding mecha-
nism that links the parties who pay with the prob-
lems for which the funds are spent may strengthen
a State or local government's efforts to establish
dedicated program funding.
Deciding who should pay for program costs
can be based on one or more of the following
principles:
• Those firms or individuals who, as a
group, created the need for the program
should pay for its costs.
• Those individuals or groups who benefit
from program activities should pay those
costs.
• When the benefits of a program are
widely dispersed and the first principle is
not dominant, all taxpayers should pay
the program costs.
There are no hard-and-fast rules on how the
funding burden should be distributed. The rela-
tionship of each of these three principles to the
funding approaches discussed in this handbook is
explained below.
"Those Who Created The Need Should
Pay"
This principle can be used to support fees or
taxes on producers and suppliers of petroleum
(and products) and on tank owners or operators
whose activities create the need for an ongoing
program to prevent the possibility of ground-water
contamination from a release. This principle is
most applicable to funding for the prevention
aspects of an UST program.
"Those Who Benefit Should Pay"
The idea that people who benefit from public
programs should pay for them is a standard prin-
ciple of tax equity in other contexts. For example,
this benefit principle is often used to justify the
use of gasoline taxes to finance highways; those
people who use the most gasoline are likely to be
the ones that benefit the most from publicly pro-
vided highways. Beneficiaries of an UST pro-
gram might include water users who benefit be-
cause prevention of UST releases helps ensure
water quality. Or, in a geographic area of known
leakages, cleanup of the area can benefit all prop-
erty owners by increasing property values.
A somewhat different application of the bene-
fit principle applies to benefits that accrue over
time. This means that in any one year people
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PAGE 13
should pay for only that portion of the benefit that
accrues in that year. This intergenerational bene-
fit principle would justify bond financing in the
case of a program to clean up sites that reflect past
events, such as leaks from abandoned tanks. This
cleanup program clearly benefits both current and
future citizens; therefore, under the intergenera-
tional benefit principle, cleanup costs should be
spread out over current and future taxpayers.
"Widely Dispersed Program Benefits
Should Be Paid For By All Taxpayers"
When benefits are widely dispersed (and
burdens are not imposed on the creators of the
problem), the cost may be spread among all tax-
payers through the use of broad-based taxes or
general revenues. Use of either of these funding
sources weakens the link between the program
and the funding of that program. Targeted fees
would be inappropriate funding mechanisms be-
cause the burden would fall on only a segment of
the beneficiaries. Regulating tank owners or pro-
viding oversight for cleanup activities might be
considered a worthwhile public expenditure simi-
lar in spirit to education, which provides benefits
to large segments of the population.
What Are The Incentives Created By A
Mechanism?
A third major consideration in evaluating a
funding option is the incentives created by the fee
or tax. It is important to understand whether and
how a mechanism can be used to create positive
incentives, and how to avoid or minimize perverse
incentives.
Those funding mechanisms that are closely
tied to UST program activities (such as tank fees
or petroleum product taxes) may influence tank
management decisions, such as the selection of
tanks or the handling of petroleum products. For
example, a two-tiered tank fee schedule based on
compliance with regulatory requirements could
encourage the use of a preferred technology. Pe-
troleum product taxes, if passed through to the
customer, may lead to reduced consumption of
those products.
The ability to create positive incentives with
many of the funding mechanisms identified in this
handbook is limited by three factors. First, even
at currently used or proposed rates, the tax or fee
will generally not be large enough to induce firms
to shift to the preferred technology if the
differential cost of that technology greatly exceeds
the fee. Second, once States set the standards for
management practices, setting fees for varying
levels of compliance will be difficult. Finally, the
administrative costs associated with differential
fee schedules, could require the inspection of
every tank and could far exceed the marginal
revenues generated by the mechanism.
While the potential for positive incentives is
limited, any revenue source can lead to undesired
behavioral responses. For example, a tank fee
might encourage some firms to avoid registering
their tanks; an additional tax on gasoline in one
State may induce consumers to buy some of their
gasoline in other States. In all cases, the higher
the tax rate, the greater the incentive for undesir-
able behavior. Although undesirable effects can-
not be avoided completely, they can be minimized
by keeping tax rates relatively low.
This discussion suggests that the primary jus-
tification for choosing most funding mechanisms
should be based on their ability to fund a program.
However, to the extent that those mechanisms also
create appropriate economic incentives, that fact
may be used to support the selection of a mecha-
nism. Program managers should also be aware of
factors other than fees or taxes that create incen-
tives for better tank management, such as finan-
cial assurance requirements or potential cleanup
actions. In most cases, these regulatory expenses
are far greater than any currently imposed fee or
tax and may operate as partial incentives to tank
owners and operators.
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CHAPTER IV
PAGE 15
FUNDING MECHANISMS FOR STATE
PROGRAMS
Some funding mechanisms are better suited
for either State or local application; some are
suitable for both. This chapter presents informa-
tion on mechanisms that are suitable for State
UST programs. Each mechanism is discussed in
the same manner. First we describe the mecha-
nism, then we relate its performance to the factors
given in Chapter III, and finally we give examples
of current use, whenever possible. The examples
appear in inset boxes and cover why a mechanism
was chosen, how it was implemented, what was
learned, and general comments and recommen-
dations that the program officials wished to share
with us.
As noted earlier, EPA's 1987 survey of State
UST funding is the main source of the funding
data cited in this handbook. Raw data appear in
Appendices B through E; a summary of all State
funding mechanisms appears in Chapter VI. (We
want to remind the reader that the data in Appen-
dices B through E represent only what was being
done by the States at the time this handbook was
written. Many States are now in the process of
developing programs. As a consequence, the
figures we cite here may already be changed.)
The dedicated mechanisms that States are
currently using to fund their UST programs in-
clude:
• Registration and permit fees.
• Petroleum product assessments.
• Bonds.
• Corporate receipts or income taxes.
• Other mechanisms in use.
As discussed in Chapter III, deciding who
will pay the tax and understanding how the tax
burden will affect the taxed party is critical to the
success of your program. The funding mecha-
nisms are discussed in light of who will bear the
tax burden. We hope that this approach will help
you, the program official, in your decision-making
process.
Registration and Permit Fees
Registration and permit fees can be consid-
ered as costs for the privilege of conducting cer-
tain types of activities (such as operating or in-
stalling a tank system in order to run a gasoline
station) and as payment for the services provided
by a government agency. These fees are often
viewed as a way to provide a measure of control
over the business operations and procedures that
affect the welfare of a business community. The
possibility of a fine or revocation of a license can
help persuade businesses to comply with State or
local requirements. Registration and permit fees
may be defined as follows:
• Registration fees are fees paid to cover
notification and recording. They require
nothing more of the regulated party.
• Permit fees are fees paid to obtain a
permit. They require the regulated party
to meet certain operating or performance
standards.
As shown in Appendix B: Registration and
Permit Fees By State, 17 States currently use reg-
istration and/or permit fees to fund their UST pro-
grams. They are: California, Delaware, Florida,
Illinois, Iowa, Kansas, Louisiana, Maine, Ne-
braska, New Jersey, New Mexico, New York,
Ohio, Oregon, Texas, Utah, and Vermont.
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PAGE 16
Most of the States in this group use tank or
facility fees. A few States use other varieties of
registration and permit fees. One variation is a
site activity fee. Another is certification or li-
cense fees. Brief descriptions of each of these
types of fees appears below.
Aside from general revenues, registration and
permit fees are the most common method of fund-
ing State UST programs. Because these fees place
the funding burden directly on responsible parties
(such as owners and operators), they establish a
clear link between the fee and the program. The
process of collecting fees itself supports program
activities by helping to verify and improve tank
data in the program.
The revenue-generating potential of registra-
tion and permit fees is limited by the number of
tanks, facilities, personnel, activities, and so forth
that are taxed and the rate of the fee. In addition,
revenues may be affected by changes in the af-
fected population.
Tank And Facility Fees
Tank and facility fees are paid by tank and
facility owners or operators. Often they consist of
a one-time registration fee and a yearly (or peri-
odic) renewal fee. Some States impose a multi-
year fee; some States have counties set their own
fees. Tank and facility fees vary according to:
• Size of tank.
• Kind of product stored in the tank
(chemicals or petroleum).
• Size of the business (in terms of square
footage of buildings, number of employ-
ees, or other characteristics).
• Number of tanks.
• Amount charged (currently ranging from
$3 to $100 per tank; generally in line
with other State fees).
Some States exempt certain tanks or facilities
(for example, State and local government tanks,
heating oil tanks, farm tanks) from any fees. Ex-
amples of how Maine and Florida are using this
funding mechanism are discussed in inset boxes.
Revenues from periodic tank or facility fees
tend to fluctuate in the first few periods as more
owners and operators are identified and as some
drop out by closing their tanks in response to the
new regulatory requirements. Some States have
found that owners tend to close tanks that either
are so far out of compliance that the cost of bring-
ing them into compliance is prohibitive or are of
marginal usefulness to them. Although this is a
desirable result from an environmental point of
view, it causes fee revenues to level out as the
tank population stabilizes. One-time registration
fees provide an initial infusion of funds, but the
revenues are reduced considerably once the ma-
jority of tanks have been registered.
At current and proposed fee rates, the eco-
nomic impact on the majority of tank and facility
owners and operators is likely to be small. For
most, the fees will be considerably less than the
cost of local license or business fees or other regu-
latory requirements (for example, leak detection
or financial responsibility). For owners or opera-
tors of tanks of marginal utility or profitability,
however, the fees affect the decision to maintain
or close a tank, or the fees could discourage notifi-
cation and registration altogether.
Site Activity Fees
Site activity fees are fees charged by an UST
regulatory agency for any activity that requires the
agency to visit the facility. For example, agencies
can charge for inspections or for investigations of
a reported release. These fees are usually calcu-
lated by hourly rates and are often adjusted de-
pending on when the activity takes place (for
example, a higher fee is charged during non-busi-
ness hours). Illinois currently uses a site activity
fee to provide a portion of the funds for its UST
program. Details of the Illinois fee appear in
Appendix B.
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PAGE 17
Tank Tester And Installer License Fees
Tank tester and installer license fees are fees
charged to certify or license tank tightness testers
or installers. Tank testers and installers are often
licensed by State or local regulatory agencies to
ensure the quality of their services. These fees
can be imposed before a tank tester or installer
takes a licensing exam or before issuing a license.
Annual renewal fees can also be imposed. These
types of fees are both a method of raising revenue
and a system of keeping track of who is perform-
ing tank services.
Unlike the mechanisms described previously,
license fees should not be considered a primary
source of UST program funding. The revenue
potential of these fees is limited by the number of
licenses issued and the amount of fee that can be
reasonably imposed. These fees can, however, be
used to offset the administrative costs of issuing
licenses, which is consistent with the fee-for-
service concept. Maine's Tank Installer Cerfifica-
tion Fee provides an example of how these fees
can be structured. Maine's fee is discussed in the
inset box following the discussions of the Maine
and Rorida tank fees.
THE MAINE TANK REGISTRATION
FEE
Maine uses an annual Tank Registration Fee
to partially support its Ground Water Oil Cleanup
Fund, which pays for UST program administration
and cleanup. Fees are assessed on owners or op-
erators of underground storage tanks according to
the following schedule. The fee per tank is:
Less than 6000 gallons
$25
6000 gallons or more $50
Late charge $75 or $ 150
Late charge on consumptive- $50
use tanks registered after
May 1, 1986
Fees are due on or before January 1. The $75
or $150 late charge (three times the initial tank
registration fee) is imposed on February 1. The
Department of Environmental Protection's (DEP)
Bureau of Oil and Hazardous Material Control
(Bureau) has one full-time data processing em-
ployee to maintain a data base, send out bills, and
track fee payments.
Why This Mechanism Was Chosen
State legislators supported the development
and implementation of a tank fee for two reasons.
• Traditionally, Maine has used dedicated
funding mechanisms for State programs.
• Advocates of the fee argued that tank
fees are equitable because owners and
operators of tanks are responsible for any
contamination caused by UST system
leaks.
Maine's fee schedule is based on the idea that
smaller facilities with presumably smaller tanks
would be less able to pay the fee. DEP acknowl-
edges that the problems caused by leaking tanks
bear little relation to tank size and that tank size is
not a good indicator of ability to pay. However,
DEP believes that net profit, possibly a better
indicator, would be difficult to integrate into a fee
schedule.
In determining which parties should pay the
fee, the legislature excluded tanks that store petro-
leum for consumption on the premises. While the
legislature recognized that all tanks have the po-
tential to leak, it believed that owners and opera-
tors of marketing and distribution tanks are in a
better position to pay the fee because they sell the
product for profit. Just as petroleum wholesalers
who pay a product fee pass some or all of the tax
burden on to their buyers, so too could tank own-
ers and operators pass the burden on to their cus-
tomers.
The legislature also believed that it would be
easier to administer the fees levied on marketing
and distribution tanks than those levied on resi-
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PAGE 18
dential and industrial tanks because groups of
marketing and distribution facilities often have the
same owner. (An estimated 5300 marketing and
distribution facilities are subject to the fee; some
have the same owner. An estimated 6500 residen-
tial and 10,000 commercial industrial tanks could
be subject to the fee; few have the same owner.)
What Was Learned
Based on the number and kind of tanks, the
Bureau projected that the fee would generate ap-
proximately $250,000 in the first year. It actually
generated $225,000 in the fiscal year from July
1985 to June 1986 and $170,000 for the period
from July 1986 through May 1987. The Bureau
attributes the discrepancy between actual and
projected revenues to changes in the tank popula-
tion that resulted from 1985 legislation. This
legislation imposed liability requirements and
tank technical standards. The fee has generated
approximately one-fifth of the total funding for
the Ground Water Oil Cleanup Fund. The balance
is generated through a Petroleum Product Transfer
Fee. Bureau officials noted that the tank fee has
helped them in updating tank population records
and identifying responsible parties in the event of
aleak.
Comments
Accounting and data systems need to be well
established before this funding mechanism can be-
come effective. Enforcing tank fees and late
charges has increased the administrative burden of
Bureau staff.
THE FLORIDA TANK
REGISTRATION FEE
The Florida Administrative Code requires all
owners and operators of storage systems (both
above and below ground tanks) containing vehicu-
lar fuels to register their tanks with the Florida
Department of Environmental Regulation (DER).
The State Underground Petroleum Response Act
(SUPER) imposes the following fees on a per-tank
basis:
• Initial registration $50
• Annual renewal $25
• Late charge (one month late) $20
Revenues from fees on petroleum product
tanks are deposited in the Inland Protection Trust
Fund, which is used to clean up surface or ground-
water contamination related to l.he storage of pe-
troleum products.
The Storage Tank Regulation Section (the
Section) in DER's Bureau of Waste Planning and
Regulation is responsible for administering the
tank fee. The Section uses the 'data base compiled
during the initial (1984) tank registration effort to
identify registrants. It sends a bill to each regis-
trant for the annual renewal fee, which is due no
later than June 1.
Why This Mechanism Was Chosen
The Department supported implementation of
a tank fee because it assesses the population most
likely to be responsible for serious damage from
leaks, that is, the owners and operators of large
vehicular-fuel tanks. DER officials noted that the
larger tanks tend to be in more populated areas
and that they could affect a large number of pri-
vate drinking water sources. The State legislature
strengthened the tank fee in 1987 by making it
unlawful for a petroleum distributor to sell gaso-
line to an unregistered facility. DER officials feel
that the law has been instrumental in promoting
compliance with the registration requirement.
How It Was Implemented
The primary difficulty with implementing the
tank fee was establishing an accounting and bill-
ing system to accommodate the large numbers of
registrants. The first bills for initial registration
were sent in February 1987, and the renewal no-
tices were sent in May 1987. When the Section
began registering tanks, it employed 13 data entry
technicians to handle the heavy administrative
burden. Since then, the workload has decreased,
and the Section anticipates staff decreases as a
result.
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PAGE 19
What Was Learned
DER officials believe that collecting the
fee has sharpened Florida's UST program in
the following ways:
• Upon receiving bills, tank owners and
operators notified the Bureau to
correct errors in the data base. This
improved the accuracy of the data
base enough to eliminate the neces-
sity of separate tank surveys.
• Approximately 2 percent of the tanks
initially registered have been
removed or properly closed. The
Section believes that these actions
resulted from the desire toavoid
paying fees on older, noncomplying,
or unused tanks.
Because old tanks have been removed or
replaced since 1984/85 when the data base was
compiled, revenues from the tank fee have
been slightly lower than projected. The Sec-
tion sent 19,236 initial registration fee forms
to tank owners in February 1987, representing
approximately 56,000 tanks. Payments of the
initial fee generated approximately $2.3 mil-
lion. The Section sent 14,692 renewal fee
forms in May 1987 and received $649,000 by
the due date. This figure is significantly lower
than the $2.3 million figure because it is based
on the $25 renewal fee, rather than on the $50
registration fee. Although these funds are
used primarily for remedial action, 1 percent
of the revenue may be used for administrative
costs related to fee collection.
Comments
The Section has received numerous com-
plaints about the fee, most from small gas
station owners who claim the fee is unfair or
that they are unable to pay. The Section does
not believe, however, that the relatively small
fee will cause economic hardship. Large mo-
tor-fuel distributors have complained as well,
claiming that the fee is unfair because they
must pay a product tax and a tank fee. Many
large distributors who are tank owners have be-
gun to pass the fee on to dealers.
THE MAINE TANK INSTALLER
CERTIFICATION FEE
Maine established a certification fee in 1985
to be imposed on all tank installation contractors
in the State. Installation contractors applying for
certification are required to pay a $35 application
and examination fee. This fee allows the appli-
cant to take the oral or written test on under-
ground tank installation rules. First-time appli-
cants must also successfully complete an on-site
exam that consists of installing an underground
storage tank under the supervision of a member
of the State Board of Underground Oil Storage
Tank Installers. A $100 fee for this on-site exam
is required. Installers are required to renew their
license every 2 years, to pay the $35 application
and examination fee, and to take the oral or writ-
ten exam. On-site examinations are not required
to renew a license. Currently, there are approxi-
mately 250 certified tank installers in the State.
Why This Mechanism Was Chosen
The revenue generated from this mechanism
was intended to offset some of the administrative
costs of the Board of Underground Storage Tank
Installers and the costs of training materials.
How It Was Implemented
Although most staffing costs are provided
through the Maine Ground Water Oil Cleanup
Fund, this mechanism is useful in generating ad-
ditional revenue with very few implementation or
enforcement problems.
What Was Learned
The State did not have figures for actual
revenues collected. However, based on the num-
ber of installers currently certified, it can be esti-
mated that the fee has generated $33,750 from
initial application and on-site examination fees
and that it generates approximately $4,375 per
year from renewal fees.
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PAGE 20
Comments
Officials of the Maine Bureau of Oil and Haz-
ardous Material Control commented that this
mechanism may also dissuade unqualified tank
installers from applying for certification.
Petroleum Product Assessments
petroleum-refining or chemical-processing
activities. Keep in mind that the strength of those
industries in a particular State may influence the
legislative acceptability of petroleum product
taxes. In addition, there are differences between
sales taxes and petroleum excise taxes that should
be considered.
Gasoline Sales Tax
Petroleum product assessments include taxes
or surcharges on the manufacture, distribution,
sale, or consumption of petroleum products, at
either the wholesale or retail level. These taxes
can be justified as payment for the cost that their
consumption places on society. They are levied
on distributors, retailers, and consumers at a rate
that may be a percentage of the sale price or a per-
unit charge. Petroleum product assessments may
vary according to product type and use, and they
can exempt certain products or users. There are
two major categories of petroleum product assess-
ments:
• Gasoline sales tax, which is usually
assessed at a rate per gallon or barrel.
• Petroleum product excise tax, which in-
cludes taxes on imports of crude or
refined petroleum, licensing fees on
processed fuel, and transfer fees.
As shown in Appendix C: Petroleum Product
Assessments by State, nine States currently use
petroleum product assessments to fund their UST
programs. The States are: Florida, Maine, Mary-
land, Minnesota, New Hampshire, New Jersey,
New Mexico, New York, and Wisconsin. Each
State levies a petroleum product excise tax. Ex-
amples of what two States (Maine and Florida) are
doing appear in boxes.
As broad-based mechanisms (mechanisms
that spread the burden over a larger population),
petroleum product assessments can raise consider-
able revenues at relatively low rates (for example,
only a few cents per barrel or tenths of a cent per
gallon). Petroleum product assessments are most
beneficial in those States or localities with large
The precedent for using a gasoline sales tax to
fund UST programs was established with the crea-
tion of the LUST Trust Fund, which imposes a
tenth of a cent per gallon tax on motor fuels. Be-
cause of the broad tax base, gasoline taxes have
the potential to raise considerable revenues at
relatively low rates (for example, tenths of a cent
per gallon). Total revenues, however, will fluctu-
ate with consumption, which rises or falls with
changes in price. While virtually every State
levies a tax on gasoline, many currently use the
revenues only for road construction or transporta-
tion services; in some States, use of gasoline taxes
may be constitutionally restricted to those activi-
ties. In addition, the gasoline sales tax is increas-
ingly used as a means to raise general revenues at
the State level. The revenue-generating potential
for UST programs may, therefore, be limited.
The economic impact of a gasoline sales tax
depends on where the tax is imposed; it could be
imposed on producers, distributors, wholesalers,
or retailers. One concern is that gasoline taxes
tend to be regressive, meaning that low-income
consumers pay at the same rale as high-income
consumers. Also, increasing a gasoline sales tax
could cause some negative economic impacts in
those States whose tax rates are already high,
especially where consumers can purchase gasoline
in border States which charge lower tax rates.
Petroleum Product Excise Tax
The consumption of petroleum products other
than gasoline (primarily for manufacturing) is
closely tied to overall economic activity. Hence,
general trends in the economy may cause petro-
leum product assessment revenues to fluctuate.
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PAGE 21
If a petroleum product excise tax is placed on
primary feedstocks (such as crude oil), consider-
able revenue can be generated at very low rates.
(This is the mechanism used to fund the Compre-
hensive Environmental Response, Compensation
and Liability Act [CERCLA or Superfund].) For
other products manufactured from petroleum
(such as benzene, solvents, kerosene, pesticides),
the revenue-generating potential may also be con-
siderable, depending on the amount of chemical-
industry activity in a given State or locality.
The economic impact of a petroleum product
excise tax falls directly on the producers and/or
distributors of petroleum products. Because this
burden may be passed along to consumers in the
form of higher prices, the relatively low tax rates
may not significantly affect producers.
THE MAINE PETROLEUM
PRODUCT TRANSFER FEE
Maine uses a Petroleum Product Transfer Fee
to help support both the Ground Water Oil
Cleanup Fund and the Coastal and Inland Surface
Oil Cleanup Fund. The fees are paid by oil termi-
nal licensees. Oil terminal facilities are defined as
facilities with a greater than 500-barrel-storage
capacity that are used or capable of being used for
the purpose of transferring, processing, storing, or
refining oil. Marinas that are both purchasers and
consumers of fuel are exempt from the licensing
and fee requirements.
The fee is levied on gasoline and petroleum
products and by-products other than gasoline
(such as No. 2 and No. 6 fuel oil, kerosene, jet
fuel, diesel fuel), liquid asphalt, and crude oil. The
fee schedule for the Ground Water Oil Cleanup
Fund is:
Gasoline
SO.OS/barrel
Other refined petroleum products
(excluding crude oil and
liquid asphalt) $0.02/barrel
The fee schedule for the Coastal and Inland Sur-
face Oil Cleanup Fund is:
Gasoline
$0.0 I/barrel
Other refined petroleum $0.05/barrel
products (including liquid
asphalt)
Crude oil
$0.0l5/barrel
The Transfer Fee is paid monthly by the oil
terminal facility licensee. The Department of
Environmental Protection's (DEP) Bureau of
Administration (Bureau) keeps track of the pay-
ments and issues letters if they are not made.
The Ground Water Oil Cleanup Fund is used
solely for UST-related activities and receives
revenues from tank fees and installer certification
fees, as well as from the oil transfer fee. The
Coastal and Inland Surface Oil Cleanup Fund is
used to respond to surface spills and receives
revenues only from the transfer fee.
Why This Mechanism Was Chosen
Legislators developed the Ground Water Oil
Cleanup Fund as an extension of Maine's Coastal
Protection Fund, which was established in 1970
using an oil transfer fee. Revenues from the fee
are divided between the two funds in order to
address underground leaks as well as surface
spills.
There was some difficulty with equity ques-
tions such as whether liquid asphalt producers
should be subject to the tax. Negotiations with the
affected industries resolved many of the problems
encountered in the implementation of the fees.
How It Was Implemented
Because of Maine's experience with its
Coastal and Inland Surface Oil Cleanup Fund,
implementing the additional fees required less
development than would initiating a new tax for
the Ground Water Oil Cleanup Fund.
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PAGE 22
What Was Learned
Oil company compliance has been good. In
FY 1987, approximately $1.1 million was gener-
ated by the oil transfer fee for the Ground Water
Oil Cleanup Fund. An additional $709,000 was
generated for the Coastal and Inland Surface Oil
Cleanup Fund. In the first three quarters of fiscal
year 1988, the transfer fee has generated $686,000
for the Ground Water Oil Cleanup Fund and
$560,000 for the Coastal and Inland Surface Oil
Cleanup Fund.
THE FLORIDA PETROLEUM
PRODUCT TAX
Florida maintains an Inland Protection Trust
Fund which is explicitly authorized to address and
correct problems caused by leaking petroleum or
petroleum product storage tanks. Revenues for
the fund are generated primarily through an excise
tax on all petroleum products. Additional revenue
is generated through a fee on vehicular-fuel stor-
age tanks (described earlier), judgments, recover-
ies, reimbursements, and loans from other State
funds.
This tax is paid by "any person who is li-
censed by the Department to engage in the pro-
duction or importation of motor fuel, special fuel,
aviation fuel, or other pollutants." While several
taxpayers (such as producers exporting beyond the
jurisdiction of the State with no intermediate stor-
age) are exempt from this tax, they do not consti-
tute a significant portion of the assessable popula-
tion. In addition, refunds and credits arc available
for taxpayers who are double taxed, such as li-
censed refiners who purchase tax-paid products
from another refiner and export these products
from the State.
The rate structure of the petroleum product
tax is designed to maintain a stable dollar amount
in the fund. When the law was passed in 1984,
the tax was 10 cents per barrel. The law stipu-
lated that if the fund did not exceed $5 million by
January 1, 1987, the tax was to increase to 20
cents per barrel until the fund reached $15 mil-
lion. At that point, the tax would be reduced to 10
cents per barrel. When the fund reaches $50 mil-
lion, the tax will be discontinued until the fund
falls below $35 million. At that point, a tax of 10
cents per barrel would be assessed once again.
These changes in rate would take effect 60 days
after the conditions stated in the law are reached.
To date, the Petroleum Product Tax has generated
approximately $20 million.
The taxpayer submits a monthly report to the
Florida Department of Revenue, which admini-
sters the tax. The taxes are due on the first of the
month following production and are late if paid
after the twentieth of the month. Revenues are
deposited into the Gas Tax Collection Trust Fund,
and the appropriate amount (determined from the
monthly report) is then transferred to the Inland
Protection Trust Fund.
Why This Mechanism Was Chosen
The Florida legislature reasoned that the
cleanup of contaminated sites would be more
expedient if a dedicated trust fund, rather than
litigation, were used. The primary objection to a
Petroleum Product Tax was raised by major oil
companies who had upgraded their UST facilities
and established their own cleanup funds. Depart-
ment officials argued that smaller tank owners
would not be able to provide sufficient financial
assurance.
How It Was Implemented and What Was
Learned
The Inland Protection Trust Fund builds on an
existing tax on the production and transfer of oil
and petroleum products (initially established to
support the Coastal Protection Trust Fund). As
such, the tax was relatively easy to implement;
revenue estimates were based on previous experi-
ence.
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PAGE 23
Bonds
Bonds are distinct from the other funding
mechanisms presented in this Handbook. While
they can be used to provide one-time or periodic
financing, they are not strictly a source of reve-
nues, as bonds must be repaid. Instead, bonds are
a means of spreading the funding burden out over
time. The issuer of a bond receives monies up
front and then repays the bond over time through
"debt service," which includes interest expense
plus repayment of principal. Debt service can be
paid from general revenues, from project reve-
nues, or from special taxes or fees, as described
below.
Bonds typically are used in one of two ways
by State and local governments. They can pro-
vide direct funding for projects (such as wastewa-
ter treatment plants or highways) whose large
capital costs are incurred immediately but whose
benefits extend into the future. Alternatively,
they can be used to "capitalize" (or fund) a re-
volving loan fund.
There are several important factors to con-
sider when evaluating the use of bonds for pro-
gram funding.
• Examine the expenditure needs of your
program. Where program funding needs
(for example, for extensive cleanup
activities) are higher than amounts that
could reasonably be raised with dedicated
fees or taxes or appropriated from general
revenues, bonds may provide a source of
funds.
• Determine how the bonds will be repaid
(as they are not a source of revenues in
and of themselves).
• Examine the equity of bond financing,
that is, the rationale for spreading the
funding burden out over many years.
Where the benefits from program
expenditures will be enjoyed into the
future, the repayment of bonds places the
funding burden on those future benefi-
ciaries.
• Consider the cost of issuing bonds. A
major drawback of bonds is the interest
expense, which when extended over 20 or
30 years can more than double the initial
project cost in nominal terms.
While some of that cost may be offset by the
time value of money (that is, the present value of
the debt service used to repay the bonds may
equal the initial project cost), there may be other
expenses that make the use of bond funding more
expensive than other sources of revenues. This
last consideration makes bonds generally inappro-
priate for funding operating costs, such as for
prevention activities.
The application of bonds to funding UST pro-
grams is limited primarily to cleanup activities.
As noted above, bonds typically are used to pay
for up-front capital costs; the repayment of debt is
then spread out over the useful life of the project.
In environmental programs, bonds have been used
to pay for cleanups that result in benefits extend-
ing long into the future, those benefits being re-
duction or elimination of threats to public health
and the environment (for example, the protection
of groundwater). States with considerable bond
funding for environmental programs include Cali-
fornia, Massachusetts, New Jersey, and New
York. These States have approved bonds to sup-
port their hazardous waste (or Superfund) cleanup
programs, which may extend to problems result-
ing from UST systems, depending on the sub-
stances stored in those tanks and the comprehen-
siveness of the program.
Government bonds fall into three major
classes of debt:
• General obligation bonds.
• Revenue bonds, and
• Special tax bonds.
They differ with respect to the revenue
pledged for repayment of debt service, their inter-
est rates, the need for voter appproval, and other
restrictions on their use. The following para-
graphs describe each of these bonds in greater
detail.
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PAGE 24
General Obligation Bonds
General obligation bonds are paid out of gen-
eral revenues and have their repayment insured by
the full faith, credit, and taxing power of the is-
suer. If the taxes levied initially are insufficient to
meet the interest payments in any period, the
issuer is legally obligated to either raise the tax
rate or broaden the tax base to obtain the neces-
sary funds. If the issuer's taxing power is limited
to a specified tax rate, the bonds are still general
obligation bonds, but they are called limited tax
bonds. Purchasers must be informed of the limita-
tion on the issuer's taxing power. It should be
noted that general obligation bonds, while repaid
from general revenues, differ from general reve-
nues as a source of program funding. Essentially,
general obligation bonds commit the issuer to
payment of debt service from general revenues for
the term of the bond. When the program is
funded directly from general revenues, those
funds are subject to appropriations from year to
year.
General obligation bonds often carry the low-
est available interest rate of any State of local
bond offering because they are backed by the
"full faith and credit" of the State or locality.
Bond purchasers generally consider this one of the
most secure sources of repayment. There are,
however, two major restrictions on the use of gen-
eral obligation bonds. They are subject to voter
approval (usually through referendum), and they
are limited by ceilings on the total amount of
general obligation debt that can be issued by a
State or locality. This limit is sometimes ex-
pressed on a per capita basis.
Revenue Bonds
Revenue bonds are repaid from revenues gen-
erated at facilities constructed with the proceeds
of the bond or other facilities owned by the State.
Revenues are generated by tolls, charges, or rents.
Bonds payable primarily from revenues of a par-
ticular facility and also secured by a pledge of the
full faith, credit, and taxing power of the issuer
are called double-barreled bonds. (For example,
sewer bonds are payable primarily from revenues
of the sewer system, but they are also secured by
the full faith, credit, and taxing power of a city.)
The interest rate on revenue bonds is often
higher than the rate on general obligation bonds.
This higher rate reflects the inherent "riskiness"
of the project (that is, the possibility that revenues
generated from user fees would be insufficient to
cover debt service) and the lack of full faith and
credit backing. For "double-barreled" bonds, the
interest rate may be equal to that available on
general obligation bonds. One advantage is that
revenue bonds generally do not require voter ap-
proval and do not count against a State or local
government's debt ceiling. The use of revenue
bonds for environmental programs (such as USTs)
is limited to those projects that may reasonably
collect a fee for a product or benefit derived from
the expenditure.
Special Tax Bonds
Special tax bonds are repaid only with funds
raised by a special tax (such as highway bonds
that are repaid only from a gasoline sales tax).
These bonds include special assessment bonds,
which are payable only from taxes paid by those
who benefit from the facilities constructed with
the proceeds from the sale of the bonds. (For
example, special improvement bonds for curbs
and gutters are paid for by citizens who live in the
jurisdictions that benefit from the new curbs and
gutters.)
The interest rate on special tax bonds is likely
to be higher than the rate on general
obligation bonds. Again, the interest rate reflects
the bond purchasers' perception of the security of
the revenue stream pledged for repayment of the
debt. If the special tax is subject to legal chal-
lenge or repeal, or if it generates an uneven flow
of funds (because of, say, changes in the level of
economic activity), purchasers may require a
higher return on the bond. In most cases, special
tax bonds are not subject to voter approval, and
they do not count against State or local debt ceil-
ings.
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PAGE 25
Revolving Loan Funds Capitalized
With Bonds
Bonds can also be used to "capitalize" a re-
volving loan fund program. A revolving loan
fund is a program that lends to localities at interest
rates equal to or less than the State's own borrow-
ing rate. Under this program, the State issues
bonds, whose proceeds are used to set up the fund.
The State is then responsible for repaying the debt
service on the bonds. Localities can then borrow
from the loan fund to finance specific projects and
will, in turn, repay the fund. The security of the
State debt may be linked to payments from locali-
ties.
The major attraction of a revolving loan fund
is its potential for long-term self-sufficiency.
Once it is capitalized, loan repayments are used to
replenish the fund and make loans for future proj-
ects, thereby leveraging the State's initial invest-
ment. In practice, however, few revolving loan
funds operate on a "true" revolving basis, with
loan repayments maintaining the fund at a level
that would allow it to operate in perpetuity. The
ability of a revolving loan fund to maintain its
purchasing power will be affected by the terms
under which it makes loans to localities. One ad-
vantage of this program is that it allows localities
to borrow funds at below-market interest rates and
to repay those funds over an extended period of
time. Such generous lending practices by the
State, however, limit the overall funding available
through this mechanism.
THE CALIFORNIA HAZARDOUS
SUBSTANCE CLEANUP BOND FUND
California established the Hazardous Sub-
stance Cleanup Bond Fund (Bond Fund) in 1984
to fund both its share of hazardous waste removal
or cleanup activities as required by CERCLA and
those waste removal or cleanup activities of State-
selected sites that are not eligible for Federal
reimbursement. The State appropriated $7.5 mil-
lion from the Bond Fund to the California Water
Resources Quality Control Board to oversee the
cleanup of leaking UST systems.
The State may issue up to $100 million in
debt for the Bond Fund. When it established the
Bond Fund, the legislature specified the methods
for repayment of the bonds, the priority of each
method, and an account (a hazardous substance
clearing account) for making the payments. The
sources of funds and their priority for use in re-
paying the bond are as follows:
• Money from the premium and accrued
interest on bond proceeds which are sold.
• Recoveries from responsible parties.
• Federal reimbursements.
• Monies from the Hazardous Waste Dis-
posal Tax up to $5 million and other un-
obligated monies generated by the tax.
• General revenues.
The Hazardous Waste Disposal Tax funds
most of the bond repayment. It is levied on all
persons disposing of more than 500 pounds per
year of any kind of hazardous waste. Different
rates are assigned to different types of hazardous
wastes. The rates are adjusted annually so that the
total revenue will be $15 million. The tax is to be
terminated on July 1, 1991, but State officials
believe it may be extended. Although this tax and
the other sources for repaying the bond are clearly
specified, the bonds are backed by the full faith
and credit of the State.
Why This Mechanism Was Chosen
California officials established the Bond Fund
because they felt that the Hazardous Waste Dis-
posal Tax alone could not generate sufficient
funds to pay the costs of hazardous waste cleanups
in the State. The officials decided to forego a
portion of the Hazardous Waste Disposal Tax --
$5 million per year and other unobligated monies
generated by the tax -- to finance bonds that
would generate a large amount of money in a
short time. The advantage of this system is that
California does not dedicate all tax revenues to
bond repayment. As a result, California has both
a constant stream of revenues from the Hazardous
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PAGE 26
Waste Disposal Tax and a large amount of capital
from the bonds.
What Was Learned
California has issued $50 million worth of
bonds to date and plans to issue $50 million more
in 1988. To date the State has been able to fi-
nance its entire repayment of these bonds from its
top four priority sources (as listed above). No
general revenues have been needed or used; the
State does not expect to need them for this pur-
pose in the future.
Corporate Receipts or
Income Taxes
Corporate receipts or income taxes may be
levied on corporations and major businesses
within the State. This type of tax could be levied
on all corporations or only those that own under-
ground storage tanks or handle petroleum prod-
ucts. In fact, many States already have corporate
taxes which are used for other purposes; therefore,
these taxes can be added to existing State or local
business taxes, eliminating the need to create a
new tax.
While both the corporate receipts and income
tax mechanisms tax a firm's income, they draw
from different bases and apply different rates.
Both the corporate receipt tax (often called a gross
receipt tax) and the corporate income tax are de-
scribed below.
• A gross receipts tax uses total revenues as
its base; it does not take the firm's ex-
penses into account.
• An income tax uses the firm's revenues
after deducting expenses as its base.
A gross receipts tax typically uses a larger
dollar base and a lower rate than an income tax.
Both taxes can be levied at different rates depend-
ing on the size or type of the business, and both
can be collected in conjunction with any existing
corporate tax and transferred to an appropriate
fund. One example of a corporate income tax, the
Superfund Corporate Income Tax, is presented
below.
The relationship of a corporate receipts or in-
come tax to your UST program will depend on the
structure of the tax base -- who and what is taxed?
In most cases, small businesses such as "mom and
pop" establishments are exempt from this type of
tax. However, there are other considerations to be
made. For example, if only those businesses that
produce, import, or consume petroleum-based
products are taxed, one can say that revenues are
raised from the parties who potentially contribute
to the problem. On the other hand, if the tax base
is broader, including, for example, all types of
commercial businesses or industries, one can
argue that revenues are being raised from those
who benefit from UST program activities, and the
revenue potential may be much greater.
While the revenue-generating potential of a
broad-based corporate receipts or income tax is
very high at relatively low rates, corporate re-
ceipts and income taxes are subject to fluctuations
consistent with the business cycle. They are also
subject to change due to modifications in the defi-
nition of the tax base (that is, what is considered
receipts or income). If the corporate tax base is
broad enough, the funding burden will be shared
by a large number of taxpaying entities, and the
economic impact on individual businesses will be
kept to a minimum.
In most States, corporate receipts or income
taxes are a component of general revenues. Their
percent contribution to general revenues varies
from State to State depending on the rates im-
posed and the other sources of revenues; for ex-
ample, some States impose no personal income
tax. Many State legislators may be unwilling to
earmark a portion of business tax revenues for a
specific program, believing that all public pro-
grams should compete equally for general reve-
nues. Clearly defining the tax base in terms of
who pays on which measure and demonstrating
the relationship between these parties and the UST
problem may help to overcome such obstacles.
New Jersey, for example, requires owners and
operators of hazardous waste facilities to pay a 5-
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PAGE 27
percent tax on gross receipts to the municipality in
which the facility is located. The municipalities
use the receipts from this tax to pay the expenses
made necessary by the hazardous waste facility
(for example, the extra fire and police protection,
the inspection programs, the extra road construc-
tion). The connection between those paying the
taxes and the use of the tax money is clearly de-
fined. Whether the tax should be on receipts or
income depends primarily on the existing State or
local tax structure. Most States currently tax net
income rather than gross receipts.
THE SUPERFUND CORPORATE
INCOME TAX
One of the few examples of a broad-based
corporate income tax specifically dedicated to en-
vironmental programs is the Environmental Tax
passed by Congress in the Superfund Amendments
of 1986. The tax is one of several sources of
funding for the Hazardous Substances Response
Trust Fund (the Federal Superfund), which sup-
ports cleanup of hazardous substance releases na-
tionwide. (It does not cover petroleum products.)
The Superfund Environmental Tax is levied
at a rate of 0.12 percent of corporate income.
Corporate income is based on the Alternative
Minimum Taxable Income, as defined by the 1986
Tax Reform Act. There is a deduction of $2 mil-
lion, thus excluding smaller businesses from the
taxable population. There are no other exemp-
tions, and all businesses are subject to the tax. As
a result, the tax base is very broad, and a number
of benefits therefore accrue. These benefits in-
clude the following:
• The tax can generate considerable
revenue at a low tax rate.
• The tax can provide a continuous and
predictable level of funding, because it is
based on aggregate economic activity and
not on specific industries.
• The economic impacts are minimal,
because the tax burden is spread as wide
as possible.
The tax is relatively simple to administer,
because it is based on information
already collected by the Internal Revenue
Service.
Other Mechanisms in Use
Two States are currently using other funding
mechanisms that you might wish to consider.
These mechanisms include a tax on fire insurance
premiums and a hazardous waste disposal fee.
Little detailed information is available on how
these mechanisms perform when measured against
the factors in Chapter III. However, some data
appear in Appendix E: Other Funding Mecha-
nisms by State.
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CHAPTER V
PAGE 29
FUNDING MECHANISMS FOR LOCAL PROGRAMS
The following mechanisms appear to be best
suited to funding local UST programs. The infor-
mation in this chapter is presented in the same
format as Chapter IV.
Water Utility Assessments
Water utility assessments are fees based on
water consumption. The rate may be a percentage
of the sale price or a per-unit charge. They can be
assessed on business, commercial, or residential
consumers. Selected groups may be exempted
from the assessment or given a tax credit to offset
a portion of their payment. Funds raised may be
collected from the water utility and transferred to
the appropriate fund. Water utility assessments
can generate considerable revenue with a low tax
rate because of their large tax base. An example
of this mechanism, the Santa Clara Valley Water
District Groundwater Charge, is discussed in the
inset box below.
Water utility assessments for UST program
activities are a relatively new funding approach.
Traditionally, localities have placed assessments
on water to fund public services and the structure
to support those services (such as providing water
and maintaining sewers). As States and localities
review their groundwater protection efforts, how-
ever, water utility assessments may be used more
often.
Water utility assessments are directed at the
beneficiaries of an UST program--water consum-
ers. As noted above, the tax base for water utility
assessments is potentially very large, and consid-
erable funds can be raised with a low tax rate.
Further, revenues from water assessments are
fairly stable, as water consumption tends to re-
main constant despite overall economic fluctua-
tions. Rare circumstances, such as extreme
drought, can affect revenues.
The greatest burden of water utility assess-
ments is felt by business or commercial firms
who consume large quantities of water. It should
be noted that inequities among taxpayers can
occur if not all sources of water (for example,
private wells) are taxed. Using different tax rates
for different sources may be the answer: users of
public water could have rates based on amount
consumed, and owners of private wells could have
rates based on an estimated monthly or annual
withdrawal.
THE SANTA CLARA VALLEY
WATER DISTRICT GROUND
WATER CHARGE
The Santa Clara Valley Water District
(SCVWD), a government entity in California,
funds part of its UST activities through a Pump
Tax on water usage that was established in 1963.
All water producing facilities, that is, any facility
extracting water from the ground for any purpose,
must register with the SCVWD. Failure to regis-
ter is punishable by a fine. All water extracted by
a registered facility in the District is taxed at a set
rate per acre foot. The District is divided into two
zones, each with different tax rates. In the North
zone, the rate is $100 per acre foot for water used
for nonagricultural purposes and $25 per acre foot
for water used for agricultural purposes. In the
South zone (which until recently was untaxed),
the rate is $22 for nonagricultural uses and $5.50
for agricultural uses. The tax is assessed and col-
lected semi-annually.
How It Was Implemented
The SCVWD has five methods for measuring
the amount of water extracted at each facility. For
nonagricultural facilities extracting more than 10
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PAGE 30
acre feet of water in a payment period and agricul-
tural facilities extracting more than 40 acre feet,
the SCVWD installs a water meter. The cost of
the meter ($250 to $300) and installation are paid
for by SCVWD. The SCVWD uses four other less
accurate measuring methods for facilities that
extract less water than the above amounts. The
water meter and three of the alternative methods
require on-site readings by the SCVWD. Read-
ings of the water meters at larger facilities are
taken monthly, and readings at other facilities are
taken semi-annually, prior to the assessment
What Was Learned
Total revenue produced by the ground-water
charge was $20 million in 1987, and SCVWD's
total budget is $201 million. Revenues fluctuate
with the amount of rain in a given fiscal year.
Thus, revenue projections are as accurate as the
estimates for the year's rainfall.
Comments and Recommendations
Program officials cite several difficulties in
assessing and collecting the groundwater charge.
First, identifying the facilities can be time con-
suming. When the SCVWD recently began taxing
a new area, it identified over 4000 facilities.
Temporary personnel were hired to canvass the
entire area and register all facilities. Second,
taking on-site readings is labor intensive. Four of
the five measuring systems require them. Third,
developing an accurate computerized tracking
system is crucial to the success of the revenue
collection effort.
Special Property Assessments
Special property assessments are levied
against property in a geographic area that is likely
to benefit from a project or program. Although
the procedures and restrictions on the use of these
assessments vary greatly among States and among
localities, they are usually restricted to funding
local improvements. Special property assessments
often differ from traditional property taxes in that
the rate is based on the likely benefit the property
owner will receive from the program or project as
opposed to the value of the property. These as-
sessments could be used to fund an UST program
by assessing those property owners likely to bene-
fit from program activities.
To date, special property assessments have
not been used to fund UST activities. They are
most commonly used to fund infrastructure proj-
ects (such as street paving, sewers, sidewalks) or
services (such as water, gas, electricity). Property
assessments are easier to use when the benefits
fall to a well-defined group of property owners,
such as the projects and services just mentioned.
They may be more difficult to use in an UST
program, particularly in densely populated areas,
where it is difficult to determine exactly which
property owners will benefit. Property assess-
ments may be more applicable in less populated
areas (such as unincorporated areas) where the
beneficiaries are more easily identified.
Property assessments are limited by the
amount and value of property subject to the as-
sessment. If the assessment is a flat rate (for ex-
ample, a set dollar amount per acre), then revenue
potential is limited by acre. If the assessment is
based on property value (that is, mills per dollar of
assessed value), then revenue is subject to changes
in property value. This may be particularly true
of properties with underground storage tanks, as
their value may decline as a result of a leak and
contamination of soil or groundwater. Revenues
are also affected by the size of the tax base (that
is, whether taxable property is limited to that of
the tank owners and operators or whether it ex-
tends to adjacent or nearby properties).
The economic impact of special property
taxes depends on the assessment rate and the ex-
isting property tax burden. If the tax is directed at
tank owners and operators, those with large lots or
high property value and few tanks may decide to
close their tanks. If the tax is directed at adjacent
property, it may prove a disincentive to purchase
property adjacent to properties containing under-
ground storage tanks.
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PAGE 31
Property taxes are the domain of local gov-
ernments. In many jurisdictions, property taxes
are used exclusively to fund education and other
public services. Some States or localities may be
reluctant to expand their use to other purposes,
preferring to reserve the revenues for education or
other direct services. In addition, some States
have capped property assessments in response to
taxpayer initiatives.
Other Funding Mechanisms For Local
Programs
Some of the mechanisms described in the
chapter on State programs can also be used by
local jurisdictions. These include:
• General revenues.
• Registration and permit fees.
• Petroleum product fees.
• Bonds.
• Direct assessment for costs incurred in
site activities by local agencies.
These mechanisms are already being used in some
localities. The general considerations described in
Chapter III apply when choosing a funding
mechanism for a local jurisdiction.
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CHAPTER VI
PAGE 33
WHAT SOME OTHER STATES
HAVE TRIED:
A SUMMARY OF EPA'S 1987 SURVEY
In October 1987, EPA's Regional UST staffs
gathered information on the funding mechanisms
used for UST programs in all 50 States. Each
State identified the kinds of funding mechanisms
it was using and when the mechanism was estab-
lished, who was being assessed and how often,
and what fee schedules were being used. No data
were requested on the total revenues gathered
from or the adequacy of current funding mecha-
nisms, but the States did indicate any limits on
individual assessments, caps on total revenues
from a mechanism, sunset provisions on the
mechanism, and whether new or expanded fund-
ing mechanisms were being considered. The
results of the survey were distributed in December
1987 in EPA's Interim Report on State Funding
for Underground Storage Tank Programs. Since
the release of the Interim Report, these data have
been updated to include additional data obtained
from States. They are presented in Appendices B
through E.
Although we include the data to illustrate
some of the funding options available to you,
please be aware that the data are preliminary in
nature. States are continually developing and
expanding programs; real program costs are just
becoming known; and levels of funding are, in
some cases, proving inadequate. Activity in the
form of proposed legislation to increase fees and
add new funding mechanisms is occurring in some
States. Some States are just starting to become
active in the area of UST programs. Therefore,
we present the data in Appendices B through E
with the caveat that they provide merely a snap-
shot of what is happening now; they do not reflect
what may exist once there are more fully opera-
tional programs. Rather, they represent programs
in many different stages. We do not want to mis-
lead the reader or misrepresent the data.
It should also be noted that this handbook
does not provide specific information on what is
required to run a successful UST program. Our
purpose here is to pass along some ideas, solu-
tions, hints, and suggestions that have been effec-
tive for some State and local governments in es-
tablishing funding for their programs. EPA is cur-
rently collecting data on several State programs
that will be published in mid-1988. The Report
will document the level of activity and the re-
sources needed to support UST programs in those
States; it should be very useful to States looking at
ways to design, expand, or reorganize their pro-
grams. Also in mid-1988, EPA will release its
State Financial Assurance Program Handbook,
which will contain, as the title suggests, informa-
tion on establishing financial assurance programs.
This handbook will be updated as new data from
the States are forwarded to EPA. Both the report
and the handbook will be available through EPA
Regional Offices and the EPA Hotline.
How Are States Currently Funding
Their UST Programs?
Table VI-1 provides a summary of each
State's funding sources and supported activities.
For further detail on each of the mechanisms in-
cluded in Table VI-1 (with the exception of gen-
eral revenues), see Appendices B through E.
One State currently provides no funding for
an UST program. Of the 49 States that do provide
funding, 22 States use one or more dedicated
mechanisms to fund all or part of their programs;
38 use general revenues, either alone or in con-
junction with dedicated mechanisms.
-------
PAGE 34
Roughly two-thirds of the States (32) rely on
a single source of funding for their UST programs.
Only five of the 32 rely solely on a dedicated
mechanism, the rest use general revenues. Of the
17 States that use more than one mechanism, six
rely on dedicated mechanisms alone.
Most States (37) fund both prevention and
cleanup programs at some level; 16 use more than
one mechanism to do so. Three States fund only
cleanup programs, and three fund only prevention
programs. Of these six States, only one uses more
than one mechanism to fund its program. Six
States did not specify how their funds are spent
and appear to provide funding only for their match
with the Federal UST grant.
As noted earlier in this handbook, registration
and permit fees are the most widely used mecha-
nisms at this time, with 17 States using them.
Most States currently use these fees to pay for
prevention activities. Nine States are using petro-
leum product assessments; most to pay for
cleanup activities. Only two States currently use
bonds, and both dedicate the funds to pay for
cleanups. One State uses a tax on fire insurance
premiums to pay for prevention activities, and one
uses a surcharge on hazardous waste disposal to
pay for cleanup activities.
What Changes in Funding Sources Are
States Considering?
Several States have passed and implemented
new funding mechanisms since our survey in
October 1987. Several others have either pro-
posed or are considering additional or expanded
funding mechanisms. Many of these States cur-
rently rely on general revenues for all of their
UST funding. This pattern suggests that relying
entirely on general revenues has proven inade-
quate in nearly half of the States that do so. Reg-
istration and permit fees are the funding mecha-
nism being considered or proposed most com-
monly, and some sort of a tax on petroleum prod-
ucts and bonds are being considered in other
States.
What Can You Conclude From What
Other States Are Doing?
The following generalities may be drawn
from the survey results.
• There is no one right way to fund an UST
program, although certain funding
mechanisms are currently more widely
used than others.
• Roughly two-thirds of the States rely on a
single source of funding. Most of these
States rely on general revenues rather
than dedicated funding mechanisms for
all of their UST funding.
• Current sources may be proving inade-
quate. Most State UST programs are
relatively young, and they will need addi-
tional funding in the future.
• Most States are funding some prevention
and cleanup activities.
• New or expanded dedicated funding
mechanisms are being considered or pro-
posed in several States. Most of these
States currently rely entirely on general
revenues.
-------
TABLE VI-1
SUMMARY OF STATE FINANCING MECHANISMS AND ACTIVITIES
STATE
Alabama*
Alaska
Arizona
Arkansas*
California
Colorado
Connecticut
Delaware
Florida
Georgia*
Hawaii
Idaho
FINANCING MECHANISM
General
Revenues
X
X
X
X
X
X
X
X
X
X
Registration/
Permit
Fees
Local permit fees/
state surcharge
UST Response Fund
Tank fee
Petroleum
Product
Assessments
Petroleum Product Tax
Bonds
Hazardous Substance
Cleanup Bond Fund
Other
HOW USED
Prevention
Program
X
X
X
Cleanup
Program
X
X
X
Prevention
& Cleanup
Programs
X
X
X
X
X
X
X
How Used not indicated
"8
O
cn
-------
o
ra
SUMMARY OF STATE FINANCING MECHANISMS AND ACTIVITIES (continued)
STATE
Illinois
Indiana
Iowa
Kansas
Kentucky
Louisiana
Maine
Maryland
Massachusetts
Michigan
FINANCING MECHANISM
General
Revenues
X
X
X
X
X
X
X
Registration/
Permit
Fees
Tester Registration Fee
Site Activity Fee
UST Fund (tank fee)
Tank fee
Tank fee
Tank fee
Tank fee
Petroleum
Product
Assessments
Petroleum Product
Transfer fee
Licensing fee on
processed fuel
Bonds
State Superfund
Other
HOW USED
Prevention
Program
X
X
X
X
X
Cleanup
Program
X
X
X
Prevention
& Cleanup
Programs
X
X
X
X
X
X
X
X
X
-------
SUMMARY OF STATE FINANCING MECHANISMS AND ACTIVITIES (continued)
STATE
Minnesota
Mississippi*
Missouri*
Montana
Nebraska
Nevada
New Hampshire
New Jersey
New Mexico
FINANCING MECHANISM
General
Revenues
X
X
X
X
X
X
X
X
Registration/
Permit
Fees
Tank fee
Registration/Annual
Certification Fee
Tank fee
Petroleum
Product
Assessments
Petrofund
Oil Transfer Fund
NJ Spill Fund
Tax on gasoline,
special fuels
Bonds
Other
HOW USED
Prevention
Program
X
X
X
X
Cleanup
Program
X
X
X
Prevention
& Cleanup
Programs
X
X
X
X
X
X
* How Used not indicated
I
ca
-------
o
w
SUMMARY OF STATE FINANCING MECHANISMS AND ACTIVITIES (continued)
STATE
New York
North Carolina
North Dakota
Ohio
Oklahoma*
Oregon
Pennsylvania
Rhode Island
South Carolina
South Dakota
Tennessee*
Texas
FINANCING MECHANISM
General
Revenues
X
X
X
X
X
X
X
X
Registration/
Permit
Fees
Tank fee (hazardous
substances); Facility
fee (petroleum)
Tank Permit Fund
Tank fee
Tank fee
Petroleum
Product
Assessments
Throughput fee
Bonds
Other
Fire Marshall Operating
Fund (tax on fire in-
surance premiums)
State Superfund
(surcharge on haz-
ardous waste disposal)
HOW USED
Prevention
Program
X
X
X
Cleanup
Program
X
Prevention
& Cleanup
Programs
X
X
X
X
X
X
X
X
X
* How Used not indicated
-------
SUMMARY OF STATE FINANCING MECHANISMS AND ACTIVITIES (continued)
STATE
Utah
Vermont
Virginia
Washington
West Virginia
Wisconsin
Wyoming
FINANCING MECHANISM
General
Revenues
X
X
X
X
X
Registration/
Permit
Fees
Tank fee
Tank permit fee
Petroleum
Product
Assessments
Fee on petroleum
products
Bonds
Other
HOW USED
Prevention
Program
X
X
X
Cleanup
Program
X
X
Prevention
& Cleanup
Programs
X
X
X
•fl
o
-------
CHAPTER VII
PAGE 41
WHERE DO YOU GO FROM HERE?
The prevention and cleanup of leaks from
underground storage tanks is a national issue.
Congress has provided start-up funding for pre-
vention work and trust funds to support enforce-
ment and corrective action where a release has
occurred. However, underground tanks are a local
problem first, and State and local program offi-
cials will need to develop and provide adequate
funding to support their programs. In this report,
we have presented you with a range of alternative
mechanisms for funding your program. We've
described which mechanisms are currently being
used and which are being considered by all 50
States. No single mechanism or combination of
mechanisms will be right for all States, but we
hope that you are now in a better position to make
the choice that's right for your circumstances. If
you need more information to help with this
decision, you can contact the State implementing
agencies listed in appendix F for answers to spe-
cific or detailed questions, and the Office of
Underground Storage Tanks (202-475-9722) for
concerns of a more general nature.
-------
COMPARISON OF FINANCING MECHANISMS BY MAJOR CHOICE FACTORS
FINANCING
MECHANISM
General Revenues
Registration and
Permit Fees
Petroleum Product
Assessments
Corporate Receipts
or Income Taxes
Water/Utility
Assessments
Special Property
Assessments
Bonds
REVENUE POTENTIAL
May vary; dependent on
governmental priorities
Limited by number of tanks,
personnel, activities, etc.
for which fee must be paid
Potentially high; dependent
on petroleum usage in the
jurisdiction
Potentially high; dependent
on size of tax base
Potentially high; dependent
on water usage
Limited by amount or value
of property base
Potentially high; dependent
on size of bond issue
CONTINUITY
OF FUNDING
May vary, dependent on
governmental priorities
May fluctuate early due to
changes in the regulated
population
May fluctuate due to trends
in economic activity
May fluctuate due to trends
in economic activity or modi-
fications in tax base
Probably stable, but may
fluctuate with changes in
economic activity or in
droughts
Depends on how it is used;
i.e. temporary or permanent
funding
Generated all at once or
over very short period
LEGISLATIVE
ACCEPTABILITY
Dependent on state prior-
ities; actual funding may de-
pend on current priorities
Potentially high; already
used in many states and
localities
Dependent on current tax
levels, limitations concern-
ing use, acceptability to
industry, etc
Dependent on willingness
of legislature to earmark
such funds for a specific
program
Dependent on willingness to
use for other than tradi-
tional purposes
Unknown-no known use of
this mechanism for UST at
this time
May be authorized by
legislature; usually subject
to voter approval
ECONOMIC IMPACTS/
EQUITY ISSUES
Dependent on the effect
on overall tax rate
Dependent on rate of fee,
number of tanks, facilities,
etc., taxed and health
of taxed entity
Dependent on rate of tax and
fiscal condition of taxed
entity; can be easily
passed on to consumers
Dependent on rate of tax and
fiscal condition of taxed
entity, can be easily
passed on to consumers
Dependent on rate of tax
and fiscal condition of
taxed entity
Dependent on rate of tax,
amount or value of property
and condition of taxed entity
Dependent on type of bond
and source of repayment
RELATIONSHIP OF
TAXED ENTITY TO
PROGRAM ACTIVITIES
Taxes program beneficiaries,
distributes burden according
to jurisdiction's tax structure
Taxes source of problem, i.e.
tank and facility owners and
operators, or is directly
attributable to program
activities
Taxes source of problem, i.e.
producers and consumers of
product
Taxed entity may be source
of problem or program bene-
ficiary, depending on wheth-
er only hazardous material
producers or all corpora-
tions are taxed
Taxes program beneficiary,
i.e. water consumers
Dependent on who is
assessed; difficult to define
a population who should pay
and who will benefit
Dependent on mechanism to
retire the debt
g
H
>
-------
APPENDIX B
APPENDIX B-l
REGISTRATION AND PERMIT FEES BY STATE
What is the
funding
mechanism
used?
When was the
fee
established'
Who pays?
What is the
fee structure
and how often
is it collected''
Is there a
maximum
assessment?
Are there any
exemptions or
restrictions on
that which is
assessed'
Is there a cap
on total rev-
enues? (If so,
what')
Is there a sun-
set provision'
(If so, when')
Are any
changes
planned or
anticipated?
Used for pre-
vention and/
or cleanup
program?
California
Tank fee
1984
Tank owners
1 . Annual permit fee that
varies among local
agencies
2 Per tank state sur-
charge set annually by
legislature and col-
lected once in five years
(current surcharge fee
is $56)
NO
1 Annual permit fee may
be waived for state,
local, and farm tank
owners (1100-1500
gal capacity)
NO
Yes; local agencies with
own ordinance cur-
rently collecting state
surcharge stop collect-
ing it on 1/1/90
NO
Prevention program
Delaware
Tank fee
1/1/88
Tank owners
and operators
$50/tank annually;
$30/tank for late pay-
ment of annual fee
NO
State and county munici-
pal tanks are exempt;
restricted to petroleum
tanks only
NO
NO
Amendment to HB331
anticipated to create
LIST Response Fund
Prevention and Cleanup
programs
Rorida
Tank fee
1987
Owners of above and
below ground tanks
1 . $50/tank initial
registration fee
2. $25/tank annual
renewal fee
NO
Petroleum tanks < 550
gal are exempt
NO
NO
May be amended to in-
clude chemical tanks
Prevention program
Illinois
Tank fee
1988
1 Registration fee for
owners and operators
registered after 1/1/88.
2. Annual tank fee for
owners and operators
1 . $500/tank one-time
registration fee
2. $100/tank annual fee
between 1/1/88 and
12/31/91
NO
NO
Yes; 1991
Cleanup program
-------
APPENDIX B-2
REGISTRATION AND PERMIT FEES BY STATE
(continued)
What is the
funding
mechanism
used?
When was the
fee
established?
Who pays?
What is the
fee structure
and how often
is it collected'
Is there a
maximum
assessment?
Are there any
exemptions or
restrictions on
that which is
assessed''
Is there a cap
on total rev-
enues? (If so,
what')
Is there a sun-
set provision?
(If so, when')
Are any
changes
planned or
anticipated?
Used for pre-
vention and/
or cleanup
program?
Illinois
Site activity fee
1988
Installers, repairers and
removers of USTs
$100/site activity M-F;
$200/site activity Sat ,
Sun. or holiday
NO
NO
YES; 1991
NO
Prevention program
Illinois
Tester registration fee
1988
Tank tightness testers
$100/tester annually
NO
NO
YES; 1991
NO
Prevention program
Iowa
Tank fee
1986; revised in 1987
Tank owners
1 $10/tank one-time
registration fee
2. $15/tank annual
permit fee
NO
Tanks < 1 1 00 gal. are
exempt
NO
NO
NO
Prevention and Cleanup
programs
Kansas
Tank fee
1984
Tank owners
$3/tank annually
NO
Farm tanks; only col-
lected on petroleum
product tanks
NO
MO
YES
Prevention program
-------
APPENDIX B-3
REGISTRATION AND PERMIT FEES BY STATE
(continued)
What is the
funding
mechanism
used?
When was the
fee
established?
Who pays?
What is the
fee structure
and how often
is it collected'
Is there a
maximum
assessment?
Are there any
exemptions or
restrictions on
that which is
assessed?
Is there a cap
on total rev-
enues' (If so,
what?)
Is there a sun-
set provision?
(If so, when?)
Are any
changes
planned or
anticipated'
Used for pre-
vention and/
or cleanup
program'
Louisiana
Tank fee
1985
Tank owners
1 . $25/tank one-time
registration fee for
chemical tanks
$15/tank one-time
registration fee for
petroleum tanks
2. $15/tank annually for
> 10000 gal.
$10/tank annually for
2000-9999 gal
$5/tank annually for i.
1000-1 999 gal.
1.$1000/ceiling on reg-
istration fees for
petroleum
2. No ceiling on annual
fees
Same as in EPA proposed
regulations
NO
NO
Looking into changing to
tax on gasoline
Prevention and Cleanup
programs
Maine
Tank fee
1985
Distributors and mar-
keters
1.$50/tank one-time
registration fee
2. $25/tank annually for
< 6000 gal.
$50/tank annually for
2 6000 gal
—
Prevention program
Nebraska
Tank fee
1986
Tank owners
1 . $5/tank one-time
registration fee
2. $7 50/tank annually for
< 2500 gal.
$10/tank annually for
> 2500 gal. and < 5000
gal.
$12. 50/tank annually
for > 5000 and < 7500
gal.
$15/tank annually for
> 7500 gal.
NO
NO
NO
NO
Program will be reviewed.
A "Superfund" bill for cor-
rective action will be rein-
troducedin 1988.
Prevention and Cleanup
programs
New Jersey
Facility fee
1986
Facility owners
$100/facility annually
for facilities with 1 -5
tanks; $15/tank addi-
tional for each tank
over 5 at a facility
NO
NO
NO
NO
NO
Prevention program
-------
APPENDIX B-4
REGISTRATION AND PERMIT FEES BY STATE
(continued)
What is the
funding
mechanism
used'
When was the
fee
established7
Who pays'
What is the
fee structure
and how often
is it collected'
Is there a
maximum
assessment?
Are there any
exemptions or
restrictions on
that which is
assessed'
Is there a cap
on total rev-
enues' (If so,
what?)
Is there a sun-
set provision?
(If so, when')
Are any
changes
planned or
anticipated'
Used for pre-
vention and/
or cleanup
program?
New Mexico
"ank fee
6/1/88
Tank owners
$28/tank annually in 1988,
Subsequent fees to be
established by NM Envi-
ronmental Improvement
Board
NO
Same as in EPA proposed
regulations except heat-
ing oil tanks
NO
NO
NO
Prevention program
New York
Tank fee
(Hazardous Substances)
1986
Tank owners
$50/tank every 2 yrs.
for < 550 gal
$100/tank every 2 yrs.
for i 550 and< 11 00 gal
$125/tank every 2 yrs
for 2. 11 00 gal.
$50,000/site*
Process, farm and
movable tanks are
exempt
NO
NO
NO
Prevention program
New York
Facility fee
(Petroleum)
1983
Facility owners
$50/facility every 5 yrs
for >1 100 and < 5000 gal.
$150/facility every 5 yrs.
for ;> 5000 and < 10000
gal
$250/facility every 5 yrs.
for > 1 0000 gal.
NO
Facilities < 11 00 gal.
are exempt
NO
NO
NO
Prevention program
Ohio
Tank fee
1 988
Tank owners
S20/tank every 3 yrs.
plus fines, penalties
NO
State and local govern-
ment tanks are exempt
NO
NO
Prevention and Cleanup
programs
* Maximum assessment for facility with multiple tanks.
-------
APPENDIX B-5
REGISTRATION AND PERMIT FEES BY STATE
(continued)
What is the
funding
mechanism
used?
When was the
fee
established?
Who pays?
What is the
fee structure
and how often
is it collected?
Is there a
maximum
assessment?
Are there any
exemptions or
restrictions on
that which is
assessed?
Is there a cap
on total rev-
enues? (If so,
what?)
Is there a sun-
set provision?
(If so, when')
Are any
changes
planned or
anticipated?
Used for pre-
vention and/
or cleanup
program?
Oregon
Tank fee
2/88
Tank owners or operators
1 . $25/tank one-time
permit application fee
2. $25/tank annual
compliance fee ($20/
tank annually after
7/1/89)
NO
Tanks exempt by Subtitle I
of RCRA are exempt
NO
NO
NO
Prevention program
Texas
Tank fee
1987
Tank owners
$25/tank annually
maximum
NO
Permanently out-of-ser-
vice tanks are exempt
NO
NO
NO
Prevention and Cleanup
programs
Utah
Tank fee
1987
Tank owners
$25/tank annually*
YES; $100/tank"
NO
NO
Annual legislative
approval required
YES
Prevention program
Vermont
Tank fee
1987
Tank owners or operators
$25/tank annually
—
Prevention program
Authority to $100/tank, with public hearings required to raise the rate
The 1988 Legislature provided for a legislative task force to examine the entire state UST issue Accommodations on their
findings will be made this year. A $60Aank assessment has been proposed
-------
APPENDIX C
APPENDIX C-l
PETROLEUM PRODUCT ASSESSMENTS BY STATE
What is the
funding
mechanism
used?
When was the
fee
established?
Who pays?
What is the
fee structure
and how often
is it collected?
Is there a
maximum
assessment?
Are there any
exemptions or
restrictions on
that which is
assessed?
Is there a cap
on total rev-
enues? (If so,
what?)
Is there a sun-
set provision7
(If so, when?)
Are any
changes
planned or
anticipated?
Used for pre-
vention and/
or cleanup
program?
Florida
Transfer tax on petro-
leum imported into state
1987
-
$.10/barrel monthly*
—
$50 million
1992
Cleanup program
Maine
Oil transfer fee
1985; revised 1987
Oil terminal facility
licensees
$.03/barrel monthly for
gasoline
$.02/barrel monthly for
refined petroleum
products and by-products
—
Gasoline and liquid
asphalt are not included
in by-product tax
NO
—
Cleanup program
Maryland
Licensing fee on
processed fuel
1973
Bulk oil handlers
3/4 cent/barrel monthly
for oil**
3/4 cent/barrel;
flat fee
Only bulk oil products
$750,000
NO
YES
Prevention and Cleanup
programs
Minnesota
Petroleum tank release
cleanup fee
1987
Petroleum product
distributors
$10/1000 gal.
petroleum*
NO
NO##
NO
NO
Prevention and Cleanup
programs
##
If the fund falls below $5 million, the rate is increased to $.20/barrel. When the fund increases to $15 million, the rate
drops back to $.10/barrel. When the fund exceeds $50 million, no excise tax will be collected until the fund falls below
$35 million.
Collection would stop if the fund reaches $750,000. It would be reinstated if the fund falls below $500,000.
The fee will be collected initially during October and November 1987, until $5 million is collected. Collections of the fee will
be reinstated when the fund balance approaches $1 million
The original collection will be $5-6 million, which probably represents the fund's maximum amount.
-------
APPENDIX C-2
PETROLEUM PRODUCT ASSESSMENTS BY STATE
(continued)
What is the
funding
mechanism
used?
When was the
fee
established?
Who pays?
What is the
fee structure
and how often
is it collected?
Is there a
maximum
assessment?
Are there any
exemptions or
restrictions on
that which is
assessed9
Is there a cap
on total rev-
enues' (If so,
what')
Is there a sun-
set provision'
(If so, when?)
Are any
changes
planned or
anticipated'
Used for pre-
vention and/
or cleanup
program'
New Hampshire
Oil transfer fee
1979
D istrib utors/retai lers
$ 025/barrel monthly
NO
NO
$2 75 million
NO
May expand to include
tank replacement costs
in 1988
Cleanup program
New Jersey
New Jersey Spill Fund-
transfer fee
1971
Tank owners
$.01/barrel annually
NO
NO
$50 million
NO
NO
Cleanup program
New Mexico
Tax on gasoline and
special fuels
1988
Distributors/retailers
2/10 cent/gallon col-
lected at point of sale
2/10 cent/gallon
NO
$10 million
NO
NO
Cleanup program
New York
Throughput fee
1977
Terminal operators with
> 400,000 gal capacity
$.035/barrel monthly
($ 01 for cleanup funds,
$ 025 for solid waste
facilities)
NO
NO
$25 million
NO
MO
Prevention and Cleanup
programs
-------
APPENDIX C-3
PETROLEUM PRODUCT ASSESSMENTS BY STATE
(continued)
What is the
funding
mechanism
used?
When was the
fee
established?
Who pays''
What is the
fee structure
and how often
is it collected?
Is there a
maximum
assessment?
Are there any
exemptions or
restrictions on
that which is
assessed'
Is there a cap
on total rev-
enues? (If so,
what')
Is there a sun-
set provision?
(If so, when'}
Are any
changes
planned or
anticipated'
Used for pre-
vention and/
or cleanup
program'
Wisconsin
Petroleum storage
cleanup fund; fee on
petroleum products
1987
Wholesalers/dealers
(usually wholesalers)
-
To be determined
NO
YES, legislation under
development
Cleanup program
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APPENDIX D
APPENDIX D-l
BONDS BY STATE
What is the
funding
mechanism
used?
When was the
fee
established?
Who pays?
What is the
fee structure
and how often
is it collected'
Is there a
maximum
assessment7
Are there any
exemptions or
restrictions on
that which is
assessed'
Is there a cap
on total rev-
enues? (If so,
what?)
Is there a sun-
set provision?
(If so, when?)
Are any
changes
planned or
anticipated?
Used for pre-
vention and/
or cleanup
program?
California
Bond issue
1987
Hazardous waste
generators
—
$15 million
1989
NO
Cleanup program
Massachusetts
Bond issue
1983
Taxpayers
-
$25 million
NO
NO
Cleanup program
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APPENDIX E
APPENDIX E-l
OTHER FUNDING MECHANISMS BY STATE
What is the
funding
mechanism
used?
When was the
fee
established'
Who pays?
What is the
fee structure
and how often
is it collected?
Is there a
maximum
assessment?
Are there any
exemptions or
restrictions on
that which is
assessed'
Is there a cap
on total rev-
enues' (If so,
what?)
Is there a sun-
set provision'
(If so, when?)
Are any
changes
planned or
anticipated'
Used for pre-
vention and/
or cleanup
program?
Ohio
Tax on fire insurance
premiums
1979
Anyone who buys fire
insurance
3/4 of 1 % of fire
insurance premiums semi-
annually
NO
Funds can only be used
to administer the Fire
Marshall Division
NO
NO
YES; a permit fund will be
implemented 1/1/88
Prevention program
Oregon
Surcharge on hazardous
waste disposal (for state
Superfund)
1986
Disposers
$20/ton collected at
disposal
NO
NO
NO
NO
NO
Cleanup program
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APPENDIX F
APPENDIX F-l
STATE IMPLEMENTING AGENCIES
State
Agency
State
Agency
Alabama Department of Environmental Management
Ground Water Section/Water Division
1751 Federal Drive
Montgomery, AL 36130
(205) 271-7832
Alaska Department of Environmental Conservation
Pouch O
Juneau, AK99811
(907) 465-2653
Arizona UST Coordinator
Department of Environmental Quality
Environmental Health Services
2005 N. Central
Phoenix, AZ 85004
(602)257-2318
Arkansas Department of Pollution Control and
Ecology
P.O. Box 9583
Little Rock, AR 72219
(501) 562-7444
California State Water Resources Control Board
P.O. Box 100
Sacramento, CA 95801
(916) 322-0210
Colorado Department of Health
Waste Management Division
Underground Tank Program
4310 East llth Avenue
Denver, CO 80220
(303)331-4864
Connecticut Hazardous Materials Management Unit
Department of Environmental Protection
State Office Building
165 Capitol Avenue
Hartford, CT 06106
(203) 566-4630
Delaware Division of Air and Waste Management
Department of Natural Resources and
Environmental Control
P.O. Box 1401
89 Kings Highway
Dover, DE 19903
(302) 736-3693
Florida
Georgia
Hawaii
Idaho
Illinois
Department of Environmental Regulation
Solid Waste Section
Twin Towers Office Building
2600 Blair Stone Road
Tallahassee, FL 32399
(904) 488-0300-2400
Mike Williams, Chief
UST Section
Ground-Water Protection Branch
Water Management Division
U.S. EPA, Region IV
345 Counland Street
Atlanta, GA 30365
(404) 347-3866
Administrator, Hazardous Waste Program
(UST)
645 Halekauwila Street
Honolulu, HI 96813
(808) 548-2270
Department of Health
P.O. Box 3378
Honolulu, HI 96801-9984
(808) 548-2270
Underground Storage Tank Coordinator
Water Quality Bureau
Department of Health and Welfare
Division of Environment
450 W. State Street
Boise, ID 83720
(208) 334-5847
Underground Storage Tank Coordinator
(Coordinating Agency)
Division of Fire Prevention
Office of State Fire Marshall
3150 Executive Park Drive
Springfield, IL 62703-4599
Illinois EPA (Lead Agency)
Division of Land Pollution Control
Environmental Protection Agency
2200 Churchhill Road, Room A-104
Springfield, IL 62706
(217) 782-6760
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APPENDIX F-2
State
Agency
State
Agency
Indiana
Iowa
Kansas
Kentucky
Louisiana
Maine
Maryland
Massachuchetts
Underground Storage Tank Program
Office of Environmental Response
Department of Environmental Management
105 South Meridian Street
Indianapolis, IN 46223
(317)243-5055
Department of Water, Air, and Waste
Management
900 East Grand
DesMoines, IA50319
(515)281-5968
Department of Health and Environment
Forbes Field, Building 740
Topeka, KS 66620
(913)862-9369
Department for Environmental Protection
Hazardous Waste Management
Fort Boone Plaza, Building #2
18ReillyRoad
Frankfort, KY 40601
(502) 564-6716
Department of Environmental Quality
P.O. Box 44066
Baton Rouge, LA 70804
(504) 342-7808 or 9030
Underground Tanks Program
Bureau of Oil and Hazardous Material
Control
Department of Environmental Protection
Stale House - Station 17
Augusta, ME 04333
(207) 289-2651
Department of the Environment
Hazardous and Solid Waste Management
Administration
201 West Preston Street
Baltimore, MD 21201
(301)225-6549
UST Registry, Department of Public Safety
1010 Commonwealth Avenue
Boston, MA 02215
(617) 566-4500
Department of Environmental Quality
Engineering (LUST)
1 Winter Street
Boston, MA 02108
(617) 292-5648
Michigan Groundwater Quality Division (UST
Notification)
Department of Natural Resources
Box 30157
Lansing, MI 48909
Michigan Department of Natural Resources
Waste Mangement Division
P.O. Box 30028
Lansing, MI 48909
(517) 373-2794
Minnesota Underground Storage Tank Program
Division of Solid and Hazardous Wastes
Minnesota Pollution Control Agency
520 West Lafayette Road
St. Paul, MN 55155
(612)296-7743
Mississippi Department of Natural Resources
Bureau of Pollution Control
Underground Storage Tank Section
P.O. Box 10385
Jackson, MS 3209
Missouri Department of Natuial Resources
P.O. Box 176
Jefferson City, MO 65102
(314)751-7428
Montana Solid and Hazardous Waste Bureau
Department of Health and Environmental
Science
Cogswell Building - Room B-201
Helena, MT 59620
Nebraska Nebraska State Fire Marshall (UST)
P.O. Box 94677
Lincoln, NE 68509-4677
(402)471-9465
Department of Environmental Control
Box 94877
State House Station
Lincoln, NE 68509
(402)471-4230
Nevada UST Coordinator
Division of Environmental Protection
Department of Conservation and Natural
Resources
Capitol Complex, 201 S. Fall Street
Carson City, NV 89710
(702) 885-4670
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APPENDIX F-3
State
Agency
State
Agency
New Hampshire Department of Environmental Services
Water Supply and Pollution Control
Division
Hazen Drive
P.O. Box 95
Concord, NH 03301
(603) 271-3503
New Jersey Underground Storage Tank Coordinator
Department of Environmental Protection
Division of Water Resources (CN-029)
Trenton, NJ 08625
(609)984-3156
New Mexico Health and Environment Department
Environmental Improvement Division
P.O. Box 968
Sanu Fe, NM 87504
(505) 827-2894
New York Bulk Storage Section
Division of Water
Department of Environmental Conservation
50 Wolf Road, Room 326
Albany, NY 12233-0001
(518) 457-4351
North Carolina Division of Environmental Management
Ground-Water Operation Branch
Department of Natural Resources and
Community Development
P.O. Box 27687
Raleigh, NC 27611
(919)733-6926
North Dakota Division of Hazardous Management and
Special Studies
Department of Health
Box 5520
Bismarck, ND 58502-5520
(701) 224-2366
Ohio State Fire Marshall's Office
Department of Commerce
8895 E. Main Street
Reynoldsburg, OH 43068
(614) 864-5510
Oklahoma Underground Storage Tank Program (UST)
Oklahoma Corporation Commission
Jim Thorpe Building
Oklahoma City, OK 73105
(405)521-3107
Oklahoma Department of Pollution Control
(LUST)
P.O. Box 53504
Oklahoma City, OK 73152
(405)271-4468
Oregon
Pennsylvania
Rhode Island
South Carolina
South Dakota
Tennessee
Texas
Utah
Department of Environmental Quality
811SW Sixth Avenue
Portland, OR 97204
(503) 229-5153 or 5733
Department of Environmental Resources
Bureau of Water Quality Management
Non-Point Source and Storage Tank
Section
9th Floor Fulton Building
P.O. Box 2063
Harrisburg, PA 17120
(717)787-8184
UST Registration
Department of Environmental Management
83 Park Street
Providence, RI 02903
(401) 277-2234
Ground-Water Protection Division
Department of Health and Environmental
Control
2600 Bull Street
Columbia, SC 29201
(803) 734-3296
Office of Water Quality
Department of Water and Natural
Resources
Joe Foss Building
Pierre, SD 57501
(605)773-5335
Division of Ground-Water Protection
(UST)
Department of Health and Environment
150 9th Avenue, North
Nashville, TN 3719-5404
(615)741-0690
Texas Water Commission
P.O. Box 13087
Austin, TX 78711
(512) 463-7786
Division of Environmental Health (UST)
P.O. Box 45500
Salt Lake City, UT 84145-0500
(801)533-6121
Bureau of Solid and Hazardous
Waste (UST)
Division of Environmental Health
288 N. 1460 West
P.O. Box 16690
Salt Lake City, UT 84116-0690
(801)538-6170
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APPENDIX F-4
State
Agency
Vermont Underground Storage Tank Program (UST)
Vermont AEC/Waste
Management Division
State Office Building
Montpelier. VT 05602
(802) 828-3395
Department of Environmental Conservation
(LUST)
103 South main Street
Waterbury, VT 05676
(802) 244-8702
Virginia Virginia Water Control Board
P.O. Box 11143
Richmond, VA 23230-1143
(804) 257-6685
Washington Department of Ecology, M/S PV-11
Solid and Hazardous Waste Program
Olympia, WA 98504
(206) 459-6272
West Virgina UST Notification
Solid and Hazardous Waste
Ground Water Branch
Department of Natural Resources
1201 Greenbriar Street
Charleston, WV 25311
(304) 348-5935
Wisconsin Bureau of Petroleum Inspection
P.O. Box 7969
Madison, WI 53707
(608) 266-7605
Wyoming Water Quality Division
Department of Environmental Quality
Herschler Building, 4th Floor West
122 West 25th Street
Cheyenne, WY 82002
(307) 777-7085
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