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MARKETING & SUPPLY BY KEITHREID Mixed news for three troubled state UST insurance programs A TALE OF THREE STATES recession or shallow recovery, depending upon your point of view, has only exasperated the prob- lem. The reasons are myriad and by their very nature difficult for politicians to address or the financial challenges wouldn't be an issue in the first place. Lacking easy solutions, politicians tend to look for shortcuts that often involve defunding or raiding existing programs that are seen to have less of a public profile. In some cases, the bureaucratic inefficiencies underlies many of the states' broader financial problems and similarly impact programs that would otherwise be healthy and stable. State underground storage tank insurance pro- W grams can easily feel pressure. NPN Magazine takes a look at three states that have faced pressure in recent years. In two of those states relatively recent developments have been a source of encourage- ment, while in the third such developments are leaving marketers and retailers feeling like the busi- ness associates of Bernie Madoff. CALIFORNIA When basket-case economies are discussed at the state level, California is usually top of mind. A state possessing perhaps the best climate in America with an ocean view and an abundance of resources has managed to spend like one of those lottery winners that went bankrupt a few short years after turning in the winning ticket. Structurally, the program is based on a 2-cent- per-gallon assessment for all fuels that go into underground storage tanks and that generates about $250 million to $300 million in revenue depending upon the utilization of fuels in the state. The state will pay up to $1.5 million per case with most claims generally being in the $500,000 range. California's cleanup fund was making local headlines in 2009 because it had suspended pay- ments for over 1,000 remediation projects due to 30 MAY/JUNE 2012 HILE THE PLIGHT OF THE FEDERAL economy tends to get the most news coverage, a great many states have financial challenges on the same scale. The current lack of funds in a system that had abundant fund- ing revenues. For all of that, California's program is generally well appreciated by local marketers. "In my opinion the California program has been very successful," said Tom Robinson, presi- dent of San Jose, Calif.-based Robinson Oil Corp. "It's been successful for three reasons. First, a significant amount of site remediation has been accomplished. Second, it's been done in such a way that we've had very little litigation. We ben- efited because from the start it was designed so that a tank owner can get reimbursed for the costs associated with cleanup, but not for legal fees. So, it discourages legal fees and if you think about all the other programs that go on there are many programs that encourage legal fees. Third, it's been pretty reasonably funded and it is crafted so that effectively the state cannot steal money out of the fund without having to pay it back, which keeps the state from robbing it at will." California's strong environmental focus, which can impact businesses negatively in so many ways, impacts this program in a positive manner in that citizens, the media and state legislators have an actual appreciation for the benefits of the program and want it to succeed. For all of its good points the program has suffered from bureaucratic overload and ineffi- ciency. "Where negatives are concerned, I think the amount of money that has been wasted is appall- ing," said Robinson. Jay McKeeman, vice president of govern- ment relations for the California Independent Oil Marketers Association explained. "The real prob- lem we've had here in California is the 'how clean is clean,' which has resulted in about 80 percent of the claims that are in the fund right now having been on the books for more than 15 years. People cannot get their sites closed." McKeeman noted that the core issue is a multi- agency involvement in the initialization, oversight, cleanup and funding of sites. Local agencies initiate and provide oversight for the cleanups. The state's water board is supposed to provide policy guid- NPN Magazine n www.npnweb.com