How gas tank cleanups may go away to fix potholes

For the first time in this session, the new 16-member Joint Finance Committee will meet tomorrow. The agenda is relatively minor, a few of the special session bills on opiod abuse, a child labor bill (in JFC due to licensing cost changes), and a 13.10 meeting to deal with a handful of in-year fiscal adjustments. That was where my attention was drawn, because of an item dealing with Petroleum Environmental Cleanup Fund Awards (PECFA).

First of all, let’s allow the Legislative Fiscal Bureau to explain how PECFA works.

The petroleum environmental cleanup fund award (PECFA) program reimburses owners for a portion of the cleanup costs of discharges from petroleum product storage tank systems and home heating oil systems. The amount of reimbursement varies from 75% to over 99% of eligible cleanup costs. Owners of certain underground and aboveground tanks may receive up to $1,000,000 for the costs of investigation, cleanup and monitoring of environmental contamination. PECFA awards are funded from the segregated petroleum inspection fund, which receives revenue from a 2¢ per gallon petroleum inspection fee assessed on all petroleum products brought into the state, including gasoline, diesel, and heating oil. The fund also receives revenues from inspection and plan review fees for bulk petroleum tanks, and interest income on the fund balance….

Under 2015 Wisconsin Act 55, PECFA eligibility is not available for any site if a person: (a) did not notify the Department of Natural Resources (DNR) of the petroleum discharge and the potential for submitting a claim before July 20, 2015; and (b) does not submit a claim for the reimbursement of eligible costs before July 1, 2020. In addition, Act 55 required that an owner or operator of an eligible site must submit a claim for reimbursement within 180 days after incurring the eligible costs, or February 1, 2016, whichever is later, or else the costs are no longer eligible for reimbursement.

This move in Walker’s last budget led to a rush to put in claims and clean up places that had petroleum contamination, so much so that the PECFA fund is out of money for the last few months of the 2017 Fiscal Year. So it has led to this 13.10 request for $2.1 million in more money to be set aside for claims over the next 3 months.

On February 16, 2017, DNR announced that the PECFA program had expended all of the 2015-17 available appropriation, and the program would pay claims when funds become available. PECFA claims approved for reimbursement as of March, 2017, are being placed on a waiting list for payment after additional funding is available in the PECFA claims appropriation. DNR indicates that PECFA claim demand increased in response to the Act 55 requirements. In addition, many site owners may be trying to speed progress on site cleanup work during the 2016 through 2019 construction seasons, so they may submit final claims before the June 30, 2020.

So this means that there's more money coming out from the PECFA fund to pay for these claims. Which makes for a complication in another part of Scott Walker's budget for the next 2 years, because Walker is planning to use for PECFA money for another purchase- to fill budget (pot)holes for the state's deficit-ridden Transportation Fund. As the Legislative Fiscal Bureau describes

Transfer $24,000,000 annually during the 2017-19 biennium from petroleum inspection fund (PIF) to the transportation fund. This transfer would be in addition to the existing ongoing transfer of $6,258,500 annually from PIF to the transportation fund. As a result, the total estimated PIF revenues provided to the transportation fund would be $30,258,500 annually compared to a total of $27,258,500 annually in the 2015-17 biennium in ongoing ($6,258,500) and one-time ($21,000,000) transfers.

Require the Secretary of the Department of Administration (DOA), beginning on June 30, 2020, and on June 30 of each subsequent fiscal year, to transfer the unencumbered balance of PIF to the transportation fund, except for an amount equal to not less than 5% of the gross revenues received by PIF during the fiscal year in which the transfer is made.

But is there going to be enough money to pull off this transfer of $30 mil a year out of the PECFA fund when we already don't have enough to pay for all the claims now? A quick look at the Petroleum Inspection Fund condition says they might be able to squeak by, because there is a few million less to be paid in debt over the next two years. But if there's a continued increase in claims for these items, and an increased need to pay for inspections and administration as a result, and those funds could be gone really fast.

And then what happens to Walker's plans to use the 2 cent-a-gallon PECFA fee as a backdoor gas tax increase to pay try to prop up the DOT Fund starting in 2020, a move that would probably net something like $70-$75 million a year? If that money isn't around, or if the needs to clean up these storage tanks continue past 2020, then where do we find the money to do that? Does remediation just get de-emphasized in the "open for business" DNR, and if people get their drinking water and soils contaminated by old gas tanks, so be it?

I'd be interested in seeing what those plans are for the PECFA duties over the next 3-4 years, as well as seeing how much money really is available. Maybe we won't get that information in tomorrow's 13.10 hearing before the Joint Finance Committee, but it definitely needs to come up as we go over budget talks in the coming months.