Reference Title: underground storage tank; amendments

AN ACT
AMENDING SECTIONS 49-1001, 49-1001.01, 49-1031, 49-1051, 49-1052 AND 49-1054, ARIZONA REVISED STATUTES; AMENDING LAWS 1996, CHAPTER 292, SECTIONS 7 AND 9; RELATING TO UNDERGROUND STORAGE TANKS.

Be it enacted by the Legislature of the State of Arizona:

Section 1. Section 49-1001, Arizona Revised Statutes, is amended to read:

49-1001 . Definitions

In this chapter, unless the context otherwise requires:

1. "Being used" means not having been taken out of operation.

2. "Closure" means the removal of an underground storage tank from operation.

3. "Corrective actions" means those actions that are prescribed pursuant to section 49-1005 , subsection E .

4. "Designated representative" means a person to whom an owner or an operator, or both, assign in writing any right, title or interest which the owner or operator, or both, may have in and to the proceeds of a reimbursement for a corrective action made under article 3 of this chapter.

5. "Fiduciary" means:

(a) A trust company or bank certified or authorized to engage in the trust business pursuant to title 6, chapter 8, article 1.

(b) Any person appointed by a court or testamentary act to act as personal representative, executor, trustee, administrator, guardian, conservator, receiver or trustee in bankruptcy.

(c) Any person acting as a trustee of a deed of trust pursuant to section 33-803.

(d) Any person acting as a trustee pursuant to title 14, chapter 7.

(e) Any person acting pursuant to and subject to fiduciary obligations under the employee retirement income security act of 1974, 29 United States Code sections 1101 through 1114.

6. "Guarantor" means a person, other than an owner or operator, who provides evidence of financial responsibility for an owner or operator pursuant to this chapter.

7. "Motor fuel" means petroleum or a petroleum based substance that is motor gasoline, aviation gasoline, number 1 or number 2 diesel fuel or any grade of oxygenated gasoline typically used in the operation of a motor engine.

8. "Occurrence" means an incident or accident, including continuous or repeated exposure to conditions, which results in a release from an underground storage tank.

9. "Operator" means a person in control of, or having responsibility for, the day-to-day operation of an underground storage tank.

10. "Out of operation" means having been closed in accordance with all applicable fire codes and other statutory and regulatory requirements for closure in effect on the date that closure was accomplished.

11. "Person" means an individual, trust, firm, joint stock company, corporation, joint venture, partnership, association, consortium, state, municipality, interstate body, commission, political subdivision of a state and the United States government.

12. "Petroleum" means petroleum, including crude oil or any fraction of crude oil, which is liquid at sixty degrees fahrenheit and 14.7 pounds per square inch absolute, and petroleum based substances comprised of a complex blend of hydrocarbons derived from crude oil through processes of separation, conversion, upgrading and finishing, such as motor fuels, residual fuel oils, lubricants, jet fuels, distillate fuel oils, petroleum solvents and used oils.

13. "Political subdivision" means a county, city, town or other taxing district other than the state that is authorized to take property by eminent domain.

14. "Regulated substance" means:

(a) Petroleum.

(b) A substance specified in the comprehensive environmental response, compensation, and liability act of 1980 (P.L. 96-510; 94 Stat. 2767; 42 United States Code section 9601(14)) but not including a substance regulated as a hazardous waste under the solid waste disposal act of 1984 (P.L. 98-616; 98 Stat. 3221; 42 United States Code section 6921).

15. "Release" means a spill, leak, emission, discharge, escape, leach or disposal of a regulated substance from an underground storage tank into groundwater, surface water or subsurface soils.

16. "Suspected release" means any of the following:

(a) The discovery by owners and operators or others of released regulated substances at the underground storage tank site or in the surrounding area.

(b) Erratic behavior of regulated substance dispensing equipment, the sudden loss of a regulated substance from an underground storage tank, an unexplained presence of water in the underground storage tank or other extraordinary operating conditions that could reasonably be associated with a release from an underground storage tank and that are observed by owners and operators, unless system equipment is found to be defective but not leaking and is repaired or replaced immediately.

(c) That the monitoring results from a release detection method required under 40 Code of Federal Regulations sections 280.41 and 280.42, this chapter or rules adopted pursuant to this chapter indicate that a release may have occurred unless either of the following occurs:

(i) The monitoring device is found to be defective and is immediately repaired, recalibrated or replaced and additional monitoring data do not confirm the initial result.

(ii) In the case of inventory control, a second month of inventory reconciliation data does not confirm the initial result.

17. "Tank" means a stationary device constructed of wood, concrete, steel, plastic or other nonearthen materials and used to contain regulated substances.

18. "Underground storage tank" means a tank or combination of tanks and underground pipes AND IMPACT VALVES connected to tanks being used or having been used to contain regulated substances and which has at least ten per cent of the total volume of the tank and underground portions of pipes connected to the tank underground. Underground storage tank does not mean any of the following:

(a) A farm or residential tank of one thousand one hundred gallons or less capacity used for storing motor fuel for noncommercial purposes.

(b) A tank used for storing heating oil for consumptive use on the premises where stored.

(c) A septic tank.

(d) A pipeline facility, including gathering lines, regulated under either:

(i) The natural gas pipeline safety act of 1968 (49 United States Code sections 1671 through 1686).

(ii) The hazardous liquid pipeline safety act of 1979 (49 United States Code section 2001).

(e) An intrastate pipeline facility regulated under a state law comparable to the provisions of law referred to in subdivision (d), item (i) or (ii).

(f) A surface impoundment, pit, pond or lagoon.

(g) A storm water or wastewater collection system.

(h) A flow-through process tank.

(i) A liquid trap or associated gathering lines directly related to oil or gas production and gathering operations.

(j) A storage tank situated in an underground area, such as a basement, cellar, mine working, drift, shaft or tunnel, if the storage tank is situated on or above the surface of the floor.

(k) Pipes connected to any of the structures described in subdivisions (a) through (j).

Sec. 2. Section 49-1001.01, Arizona Revised Statutes, is amended to read:

49-1001.01 . Definition of owner; rules

A. In this chapter, unless the context otherwise requires, "owner" OF AN UNDERGROUND STORAGE TANK means a person who owns an underground storage tank, or a person who owned an underground storage tank immediately before the underground storage tank was taken out of operation EITHER:

1. HOLDS A LEGAL, EQUITABLE, OR POSSESSORY INTEREST OF ANY KIND IN AN UNDERGROUND STORAGE TANK.

2. HELD AT THE TIME OF A RELEASE, OR IMMEDIATELY BEFORE AN UNDERGROUND STORAGE TANK WAS LAST OPERATED, A LEGAL, EQUITABLE OR POSSESSORY INTEREST OF ANY KIND IN THE UNDERGROUND STORAGE TANK.

B. A person who acquires ownership or control of property where an underground storage tank is located is NOT the owner of the underground storage tank except that the person is not an owner if either of the following applies:

1. The person, after conducting a due diligence investigation immediately prior to acquiring ownership of the property, did not know and had no reason to know that the underground storage tank was located on the property. Due diligence shall consist of performing a phase I environmental assessment of the property which meets the requirements of ASTM standard E-1527-93 or E-1528-93, or other generally accepted commercial practices or standards for due diligence performed prior to the adoption of this standard.

2. The person has not placed regulated substances in the underground storage tank and has not dispensed regulated substances from the underground storage tank , and the department, after reasonable investigations, can determine the identity of the previous owner of the property containing the underground storage tank immediately prior to the person's acquisition of the property . For the purposes of this paragraph, dispensing does not mean emptying the underground storage tank for purpose of closure.

B. C. A person who holds indicia of ownership primarily to protect a security interest in either the petroleum underground storage tank or in the property on which the petroleum underground storage tank is or was located but who does not participate in the management of the underground storage tank and who is not otherwise engaged in petroleum refining or marketing is not an owner for purposes of this chapter.

C. D. A person who holds indicia of ownership as prescribed by subsection B C of this section and who acquires ownership or control of a petroleum underground storage tank through foreclosure of the property where a petroleum underground storage tank is located shall not be deemed an owner and shall not be required to investigate a release or take corrective action in response to a release if the person does all of the following:

1. Complies with the notification requirements prescribed by section 49-1002.

2. Complies with the reporting requirements prescribed by section 49-1004, subsections A and C to the extent that the information is known to the person at the time of the report.

3. Temporarily or permanently closes the petroleum underground storage tank as prescribed by section 49-1008.

4. Divests itself of the property in a reasonably prompt manner using whatever commercially reasonable means are relevant or appropriate with respect to the property, taking into consideration all of the facts and circumstances.

D. E. A fiduciary is not an owner or operator for purposes of this chapter, except if the appointment of the fiduciary is for the purpose of avoiding liability under this chapter. This subsection does not preclude claims against assets held in an estate, a trust or any other fiduciary capacity that contains an underground storage tank in which regulated substances are placed or dispensed. Those claims may be asserted against a fiduciary in its representative capacity without regard to whether the fiduciary is personally liable, and the liability of the fiduciary is limited to the value of the estate, trust or other property that is held in a fiduciary capacity. A fiduciary may not be a fiduciary and grantor of the same fiduciary estate.

E. F. The director may adopt rules to implement subsection D E of this section.

Sec. 3. Section 49-1031, Arizona Revised Statutes, is amended to read:

49-1031 . Imposition of tax

A. From and after July 1, 1990, there is imposed and the director shall collect an excise tax on the operation of underground storage tanks regulated under this chapter measured by the quantity of regulated substances placed in a tank in any calendar year. The tax is levied at the rate of one cent per gallon of regulated substance. On or before December 15 each year the director shall recommend to the legislature any revision to the tax rate necessary to maintain the assurance account of the underground storage tank revolving fund at the level prescribed by section 49-1051.

B. For proper administration of this article, and to prevent the evasion of the tax imposed by this article, it shall be presumed until the contrary is established by competent proof under rules and procedures adopted by the director that all regulated substances which are motor vehicle fuel as defined in section 28-101, aviation fuel as defined in section 28-101 and diesel as defined in section 28-1599.45 and which are refined, manufactured, produced, compounded or blended in this state, or imported into this state, will be placed in an underground storage tank from which the fuel is dispensed to users who consume the fuel and do not further distribute it. Under this presumption, the owner and operator of an underground storage tank from which motor vehicle fuel, aviation fuel or diesel is dispensed and from which no further bulk distribution will be made, shall be considered to have paid the tax collected under section 28-1599.45.

C. The tax imposed by this article does not apply to underground storage tanks operated by the United States or this state, its agencies or to ANY OF THE FOLLOWING SUBSTANCES PLACED IN underground storage tanks:

1. Used for the purpose of storing, handling or distributing Naphtha-type jet fuel or kerosene-type jet fuel.

2. REGULATED SUBSTANCES AS DEFINED PURSUANT TO SECTION 49-1001, PARAGRAPH 14, SUBDIVISION (b) , UNLESS SUCH REGULATED SUBSTANCES WERE PLACED IN AN UNDERGROUND STORAGE TANK PRIOR TO JULY 1, 1997, AND THE OWNER OR OPERATOR OF THE UNDERGROUND STORAGE TANK HAS PAID PRIOR TO JULY 1, 1997 ALL TAXES IMPOSED BY THIS ARTICLE APPLICABLE TO SUCH REGULATED SUBSTANCES. IF THE OWNER OR OPERATOR HAS PAID THOSE TAXES, THEY MAY ELECT TO CONTINUE TO PAY THE TAX IMPOSED BY THIS ARTICLE REGARDING SUCH REGULATED SUBSTANCES.

D. The owner and operator of an underground storage tank regulated under this chapter are jointly and severally liable for the tax, but the owner and operator may agree between themselves and file a notarized affidavit with the director designating either the owner or operator as primarily responsible for the tax under this article.

E. Any person who purchases motor vehicle fuel as defined in section 28-101, aviation fuel as defined in section 28-101, or diesel as defined in section 28-1599.45 for which the tax imposed by this section has been paid and which fuel has been placed in a tank which is not subject to the underground storage tank tax imposed by this section and from which no further bulk distribution of the fuel will be made, may claim a refund of the tax levied. Refunds shall be submitted on forms prescribed by the director and shall be supported by substantiation for the amount of the tax paid.

F. Any person eligible to claim a refund of the tax imposed by this section, including an assignee of a refund claim, may assign such claim to the person from whom the fuel was purchased, and the assignee of the claim may claim the refund allowed under subsection E of this section provided that the assignor of the claim certifies in writing to the assignee, on forms prescribed by the director, that the assignor relinquishes all interest in the refund and shall not also claim a refund from the director.

G. If a refund claim is assigned to a person who is required to make payments under section 28-1599.45, the refund shall be taken into account in the manner provided in section 28-1599.45, subsection D.

H. The director shall adopt temporary and permanent rules for administering the tax imposed by this article and specifying the forms of the return and of the certification provided for in section 28-1599.45, subsections D and J. The temporary and permanent rules shall prescribe the forms for and manner in which refunds may be claimed and refund claims assigned pursuant to subsection E of this section, shall specify the circumstances in which fuel may be excluded from the quantity of fuel used to measure the tax pursuant to section 28-1599.45, and shall prescribe the forms for and manner which the certification provided in section 28-1599.45 shall be made.

I. Title 41, chapter 6, shall not apply to the temporary rules adopted pursuant to this section. The temporary rules shall be filed with the secretary of state and shall be effective for a period of one hundred eighty days from the date of filing with the secretary of state. The temporary rules may be renewed twice in the same manner as they were adopted, may be amended at the time or times they are renewed, and shall be effective for a period of one hundred eighty days from the date the renewed temporary rules are filed with the secretary of state.

J. The permanent rules adopted pursuant to this section shall be adopted as provided in title 41, chapter 6.

Sec. 4. Section 49-1051, Arizona Revised Statutes, is amended to read:

49-1051 . The assurance account

A. The assurance account of the underground storage tank revolving fund consists of underground storage tank tax revenues collected and distributed under section 49-1036, amounts reimbursed to the account by the department and any other monies designated for the account by the legislature.

B. Monies in the assurance account may be used by the director as follows:

1. To provide partial coverage for corrective action costs described in section 49-1052.

2. To reimburse the department for THE REASONABLE AND NECESSARY costs incurred by the department in taking ADMINISTERING THE corrective actions ACTION REQUIREMENTS OF THIS CHAPTER.

3. To reimburse the department for costs of administering the account. The assurance account shall reimburse the department for the reasonable costs of administering the assurance account , but the assurance account shall not be charged with any other costs incurred by the department in administering this chapter . THE DEPARTMENT SHALL NOT PAY FROM THE ASSURANCE ACCOUNT ANY COSTS, PAYMENTS OR OTHER EXPENSES THAT RESULT FROM A CONTRACT AWARDED PURSUANT TO THIS SUBSECTION UNLESS THE CONTRACT INCLUDES PERFORMANCE STANDARDS AND CONTRACTUAL PENALTIES FOR NON-PERFORMANCE OR INADEQUATE PERFORMANCE UNDER THE CONTRACT.

4. To pay for the reasonable and necessary costs incurred by the department in taking corrective actions under section 49-1017.

C. The director shall reimburse the assurance account for any corrective action costs which are paid out of the assurance account and are subsequently recovered by the department under section 49-1017.

D. On or before December 1 of each year the director shall submit a report to the legislature of assurance account activities for the preceding fiscal year. The report shall include the balance of monies in the account at the beginning of the fiscal year, monies deposited in the account by source during the fiscal year, disbursements from the account by category during the fiscal year, the average daily balance in the account during the fiscal year, the balance in the account at the end of the fiscal year and a projection of the balances in the account at the end of the current fiscal year and the subsequent fiscal year. The director shall include in the report his recommendation, pursuant to section 49-1031, subsection A, for any revision of the underground storage tank tax rate necessary to maintain an average balance in the assurance account of thirty-six million dollars.

Sec. 5. Section 49-1052, Arizona Revised Statutes, is amended to read:

49-1052 . Partial coverage of corrective action costs

A. Except as provided in subsection P O of this section, the department shall provide from the assurance account partial coverage of the costs incurred after September 15, 1989 of a corrective action initiated under section 49-1005. The partial coverage provided by this section is available only to the extent of the monies available in the assurance account. If there are insufficient monies available in the assurance account to pay all corrective action costs which the department has determined should be paid, the department shall defer such payment until sufficient monies are available to pay such corrective action costs. The department shall not provide any coverage, and the assurance account is not liable, for compensating third parties for bodily injury or property damage caused by releases from underground storage tanks.

B. The department may provide the coverage required by this section either by paying the owner, the operator or a designated representative of the owner or operator or any combination of these persons or a political subdivision covered by subsection H of this section or by making direct payments for corrective actions on behalf of the owner, operator or political subdivision. Pursuant to rules adopted by the department the department shall require compliance with preapproval procedures for all corrective actions and related costs for which payment is being sought pursuant to this section. Preapproval shall not be required by the department until final rules are adopted. Owners or operators who are not seeking payment pursuant to this section are exempt from any preapproval requirements. This subsection shall not be construed to relieve an owner or operator from any of the requirements of this chapter. The department shall not impose the requirements of this chapter on an owner or operator in a manner which is inconsistent with the procedures for preapproval adopted pursuant to the rules authorized under this subsection. The department shall not take enforcement action or impose penalties against the owner or operator who submitted the application for preapproval while the application for preapproval is pending. The department shall not consider the passage of time while the preapproval application is pending to be a basis for taking an enforcement action. FOR ANY CORRECTIVE ACTION SUBMITTED FOR PREAPPROVAL, THE PERIOD OF TIME FOR COMPLIANCE WITH CORRECTIVE ACTIONS ASSOCIATED WITH THAT PREAPPROVAL BEGINS TO RUN FROM THE DATE OF PREAPPROVAL OF THE CORRECTIVE ACTION. IF THE DEPARTMENT DETERMINES, BASED ON THE POINTS RECEIVED PURSUANT TO SUBSECTION G OF THIS SECTION, THAT THE SITE DOES NOT POSE A SIGNIFICANT RISK TO HUMAN HEALTH AND THE ENVIRONMENT AND THAT THE APPLICANT IS FINANCIALLY NEEDY, THE PERIOD OF TIME FOR COMPLIANCE WITH CORRECTIVE ACTIONS ASSOCIATED WITH THAT PREAPPROVAL BEGINS TO RUN FROM THE DATE MONIES ARE INCUMBERED FOR THE APPLICATION.

C. An owner, an operator, a designated representative of an owner or operator or a political subdivision covered by subsection H of this section may apply to the department for partial coverage of the corrective action costs pursuant to this article and rules adopted pursuant to this article. ANY EMPLOYEE OF THE OWNER OR OPERATOR MAY SUBMIT AN APPLICATION TO THE DEPARTMENT ON BEHALF OF THE OWNER OR OPERATOR.

D. The department shall not pay for corrective action costs unless the department determines that the corrective action has met, or when completed will meet, the APPLICABLE requirements of section 49-1005. The department may require by rule that persons who perform payable corrective actions meet specified standards of qualification and be approved by the department.

E. The department shall not provide any coverage described in this article to the United States or to its agencies or this state or to its agencies or to owners and operators of underground storage tanks used for the purpose of storing, handling or distributing naphtha-type jet fuel or kerosene-type jet fuel with respect to such tanks.

E. THE DEPARTMENT SHALL NOT PROVIDE ANY COVERAGE DESCRIBED IN THIS ARTICLE TO AN OWNER OR OPERATOR OF UNDERGROUND STORAGE TANKS DESCRIBED IN SECTION 49-1031, SUBSECTION C. THE DEPARTMENT SHALL NOT PROVIDE ANY COVERAGE DESCRIBED IN THIS ARTICLE WITH RESPECT TO THE SUBSTANCES DESCRIBED IN SECTION 49-1031, SUBSECTION C, UNLESS THE TAX IMPOSED BY ARTICLE 2 OF THIS CHAPTER APPLIES TO SUCH SUBSTANCES.

F. The department shall not provide any coverage described in this article to an owner or operator or any person or entity employed or retained by an owner or operator, if any of the following apply:

1. The owner or operator is delinquent in the payment of any fee, penalty, or interest thereon imposed under this chapter and fails to cure that delinquency WITHIN THIRTY DAYS after RECEIVING notice from the department. THE DEPARTMENT SHALL PROVIDE NOTICE OF THE DELINQUENCY WITHIN THIRTY DAYS AFTER RECEIVING AN APPLICATION FOR PAYMENT FROM THE ASSURANCE ACCOUNT OR WITHIN SIXTY DAYS AFTER A WORK PLAN IS SUBMITTED FOR PREAPPROVAL. IF THE DEPARTMENT DOES NOT PROVIDE NOTICE PURSUANT TO THIS PARAGRAPH, THE DEPARTMENT SHALL NOT WITHHOLD PAYMENT BASED ON THAT DELINQUENCY NOR SHALL THE DEPARTMENT USE THAT DELINQUENCY AS A BASIS FOR THE DEPARTMENT TO DELAY PREAPPROVAL OF CORRECTIVE ACTIONS AND RELATED COSTS. AN OWNER OR OPERATOR REMAINS ELIGIBLE FOR COVERAGE FOR OTHER UNDERGROUND STORAGE TANK SITES IF NO FEES, PENALTIES OR INTEREST IS DELINQUENT FOR THOSE SITES.

2. The owner or operator is delinquent in filing any excise tax return required by section 49-1032, subsection B and fails to cure that delinquency WITHIN THIRTY DAYS AFTER RECEIVING NOTICE OF THE DELINQUENCY FROM THE DEPARTMENT. THE DEPARTMENT SHALL PROVIDE NOTICE OF THE DELINQUENCY WITHIN THIRTY DAYS AFTER RECEIVING AN APPLICATION FOR PAYMENT FROM THE ASSURANCE ACCOUNT OR WITHIN SIXTY DAYS AFTER A WORK PLAN IS SUBMITTED FOR PREAPPROVAL. IF THE DEPARTMENT DOES NOT PROVIDE NOTICE PURSUANT TO THIS PARAGRAPH, THE DEPARTMENT SHALL NOT WITHHOLD PAYMENT BASED ON THAT DELINQUENCY. THE DEPARTMENT SHALL NOT USE A DELINQUENCY PURSUANT TO THIS PARAGRAPH AS A BASIS FOR THE DEPARTMENT TO DELAY PREAPPROVAL OR CORRECTIVE ACTIONS AND RELATED COSTS .

3. The underground storage tanks included in the application for coverage are located at a site that is the subject of an enforcement proceeding under section 49-1013. The owner or operator remains eligible for coverage for other sites where underground storage tanks are located if the owner or operator is not the subject of an enforcement proceeding regarding those sites. Payment from the assurance account will be withheld during the pendency of TIME THAT a final compliance order IS IN EFFECT ONLY for those costs directly associated with those activities that are the subject of the compliance order. Any payment costs that are incurred prior to a compliance order becoming final and that are not directly associated with the subject of that compliance order shall be eligible for payment pursuant to this section. PROCESSING OF PAYMENT FROM THE ASSURANCE ACCOUNT SHALL NOT BE DELAYED UNTIL A COMPLIANCE ORDER BECOMES FINAL. An owner or operator who formally consents in writing to an administrative order shall not be considered to be subject to an enforcement proceeding. , provided that the owner or operator is in compliance with the consent order IF THE DEPARTMENT DETERMINES THAT THE OWNER OR OPERATOR IS IN VIOLATION OF THE CONSENT ORDER, THE OWNER OR OPERATOR SHALL NOT BE CONSIDERED TO BE SUBJECT TO AN ENFORCEMENT PROCEEDING AND PROCESSING OF PAYMENT FROM THE ASSURANCE ACCOUNT SHALL NOT BE DELAYED UNTIL A FINAL ADMINISTRATIVE DECISION IS RENDERED FINDING THAT THE OWNER OR OPERATOR IS IN VIOLATION OF THE CONSENT ORDER. PAYMENT FROM THE ASSURANCE ACCOUNT SHALL BE WITHHELD ONLY FOR THOSE COSTS DETERMINED IN THE FINAL ADMINISTRATIVE DECISION TO BE INCURRED FOR THOSE ACTIVITIES THAT ARE THE DIRECT SUBJECT OF THE DETERMINED VIOLATION OF THE CONSENT ORDER. ANY OTHER PAYMENT COSTS THAT ARE INCURRED PRIOR TO A FINAL ADMINISTRATIVE DECISION FINDING A VIOLATION OF THE CONSENT ORDER OR PAYMENT COSTS THAT ARE NOT THE DIRECT SUBJECT OF THE CONSENT ORDER VIOLATION SHALL BE ELIGIBLE FOR PAYMENT PURSUANT TO THIS SECTION.

4. An individual, an owner or operator or any entity seeking coverage is convicted of fraud relating to a corrective action or to any claim made for corrective action payment from the assurance account. This paragraph applies only to the individual, the owner or operator or the entity that is actually convicted of fraud relating to a corrective action or to a claim made for corrective action payment.

5. The owner or operator has failed to comply with the financial responsibility requirements of 40 Code of Federal Regulations part 280, subpart H with respect to the underground storage tanks included in the application for coverage and all of the following conditions are met on or after July 1, 1996:

(a) The person seeking coverage is an owner or operator of the tank.

(b) The tank is in operation and there are no preexisting conditions precluding the ability to obtain financial responsibility which would have covered the release.

(c) The release is reported.

The owner or operator remains eligible for coverage for other sites where the owner or operator has complied with the financial responsibility requirements of this paragraph.

G. The department shall establish criteria for determining priorities among the applications for partial coverage under this article. The criteria shall include:

1. The need for financial assistance.

2. The risk to human health and the environment.

3. Whether the partial coverage is provided as a direct payment to a person performing a corrective action.

4. The extent to which a delay in providing coverage will affect a corrective action in progress.

5. The date on which an application for coverage is made.

6. The date on which a corrective action for which coverage is sought is to be or was taken.

7. Whether the payment has been previously deferred because of insufficient monies in the assurance account and, if deferred, the length of such deferral.

H. The department may provide the partial coverage described in this article for corrective action costs incurred by a political subdivision with respect to a release from an underground storage tank if the underground storage tank or the property where the underground storage tank is located comes into the possession or control of the political subdivision under either title 12, chapter 8, article 2 or 3.

i. I. The department may provide the partial coverage described in this article for corrective action costs with respect to a release from an underground storage tank incurred by a person WHO CURRENTLY OWNS THE PROPERTY AND who undertakes to meet the requirements of sections 49-1002, 49-1004, 49-1005 and 49-1008, but who is not an owner or operator. A person who undertakes to meet the requirement REQUIREMENTS and who is not an owner or an operator is eligible for one hundred per cent coverage. By December 31 of each year, the department of environmental quality shall forward a list of the parties who received payment pursuant to this subsection during the previous calendar year to the department of revenue for purposes of determining eligibility for the income tax credit provided in sections 43-1085 and 43-1173. By December 31 of each year, the department of environmental quality shall also provide the department of revenue verification of the corrective actions taken by each person during the previous calendar year pursuant to this subsection.

J. The department may provide the partial coverage described in this article for corrective action costs with respect to a release from an underground storage tank incurred by a person who owns or owned property at the time an underground storage tank is located on the property under the circumstances described in section 49-1001.01. Partial coverage provided under this subsection shall be subject to the requirements imposed by this article.

K. J. On or after January 1, 1996 and subject to section 38-503 and other applicable statutes and rules, the department may contract with a private consultant for the purpose of assisting the department in reviewing work plans, site characterization reports, corrective action plans, monitoring reports and other information to determine whether corrective actions meet the criteria and requirements of this chapter and the rules adopted by the director. If the department contracts with a consultant pursuant to this section, an owner or operator may request that the department expedite the review or inspection process by requesting that the department use the services of the consultant and by agreeing to pay to the department the costs of the consultant's services. The department shall not use a private consultant if the fee charged for that service would be more than the fee the department would charge to provide that service. The department shall pay the consultant for the services rendered by the consultant from fees paid by the applicant to the department pursuant to this section.

L. K. Claims for coverage that are not paid within one hundred eighty days after receipt by the department of a complete and correct claim accrue interest at the rate of eight per cent per year. Interest shall not accrue on any claim that is unpaid as a result of insufficient monies in the area account for that claim.

M. L. Requests by the department for additional information from claimants shall be reasonably related to the determination of the validity of the claim as prescribed by this article.

N. M. Beginning on January 1, 1996, claims for coverage , OR A WORK PLAN FOR PREAPPROVAL, at a site shall be submitted to the department no more than one hundred twenty EIGHTY days after the claimant receives a site closure letter sent by the department by certified mail with notice that the claimant has one hundred twenty EIGHTY days to submit a claim for that site. If the claim is submitted in a timely manner, the claimant may correct or supplement the claim on request of the department within a reasonable time as specified by the department without loss of coverage. IF A WORK PLAN IS SUBMITTED IN A TIMELY MANNER, THE CLAIMANT MAY, AT ANY TIME THEREAFTER, CORRECT, SUPPLEMENT OR RESUBMIT THE WORK PLAN. Failure to submit a timely claim OR WORK PLAN shall result in denial of the claim. THE ONE HUNDRED EIGHTY DAY TIME LIMIT PRESCRIBED BY THIS SUBSECTION DOES NOT APPLY TO CLOSED SITES THAT ARE SUBSEQUENTLY REOPENED FOR THE PERFORMANCE OF ADDITIONAL CORRECTIVE ACTIONS OR AT WHICH CORRECTIVE ACTIONS ARE PROCEEDING PURSUANT TO A WORK PLAN FOR PRE-APPROVAL SUBMITTED BEFORE THE SITE WAS CLOSED.

O. N. The department shall provide coverage for the costs of corrective actions relating to soil remediation that are consistent with remediation standards developed pursuant to chapter 1, article 4 of this title. Payment shall only be made for corrective action costs to remediate to levels approved by the department pursuant to rule. The department shall not enforce this subsection until final rules are adopted.

P. O. No coverage shall be provided for any phase of corrective action unless the department is notified of the proposed corrective action prior to commencement of the action. The department, upon receipt of the notice, shall notify the owner or operator that:

1. Monies in the assurance fund are limited.

2. Payments from the fund may be delayed.

3. No interest shall be paid on any delayed payment pursuant to subsection L K of this section.

Sec. 6. Section 49-1054, Arizona Revised Statutes, is amended to read:

49-1054 . Extent of coverage; insurance

A. The department shall provide coverage from the assurance account for ninety per cent of the reasonable and necessary costs of corrective actions pertaining to soil and groundwater remediation. The claimant shall pay the remaining costs of the corrective action. The maximum amount that is subject to ninety per cent coverage is five hundred thousand dollars. An owner or operator is eligible for additional coverage from the assurance account up to a maximum of one million dollars if the owner or operator is in compliance with the requirements for coverage pursuant to section 49-1052, subsection F, paragraph 5 and meets both of the following conditions:

1. The owner or operator has submitted certification to the department that the owner or operator has submitted a claim against any applicable insurance coverage and has certified to the department the amount of any benefits or reimbursement that the owner or operator has received from any insurance coverage that might apply to the costs of the corrective action. The owner or operator is eligible for payment from the department to the extent that the corrective action costs have not been reimbursed by insurance and within the coverage limits prescribed by this paragraph. The department may compel the production of documents to determine the existence, amount and type of coverage available. An owner or operator shall report to the department any subsequent payment or reimbursement for claims made for corrective actions costs. The owner or operator shall remit to the department within thirty days any amounts that were previously paid to the owner or operator from the underground storage tank revolving fund assurance account and that have also been recovered from insurance.

2. The owner or operator has utilized to the maximum extent possible any alternative financial assurance mechanisms required for coverage pursuant to section 49-1052, subsection f, paragraph 5. The department may compel the production of documents to determine the existence, amount and type of alternative coverage available. An owner or operator shall report to the department any payment of corrective actions costs through these alternative mechanisms. The owner or operator shall remit to the department within thirty days any amounts that were recovered by the owner or operator from the underground storage tank revolving fund assurance account and that have also been recovered from any alternative mechanisms.

B. The department shall not disburse more than the maximum amounts prescribed by subsection A of this section from the assurance account for corrective action costs associated with an occurrence regardless of the number of persons who are eligible for coverage.

C. The department shall not pay corrective action costs unless the department determines that the costs were reasonable and were actually incurred. Corrective action costs that are preapproved by the department OR CORRECTIVE ACTIONS PERFORMED AT THE WRITTEN REQUEST OR WRITTEN INSTRUCTION OF THE DEPARTMENT are deemed reasonable , NECESSARY AND REIMBURSABLE . The department may SHALL ANNUALLY establish schedules of corrective action costs which the department considers reasonable. THESE COST SCHEDULES SHALL BE TASK-BASED WHERE PRACTICABLE. THE DEPARTMENT SHALL NOT REQUIRE COSTS ASSOCIATED WITH A GIVEN TASK TO INCLUDE DETAILS ON TIME AND MATERIALS IF THE TOTAL COSTS CLAIMED FOR THAT TASK DO NOT EXCEED THE AMOUNT FOR THAT TASK IN THE SCHEDULE OF CORRECTIVE ACTION COSTS AS ESTABLISHED PURSUANT TO THIS SECTION. PAYMENTS TO AN OWNER OR OPERATOR SHALL BE BASED ON THE SCHEDULE OF CORRECTIVE ACTION COSTS IN EFFECT ON THE DATE A CONTRACT FOR CORRECTIVE ACTION WORK WAS ENTERED INTO BY THE OWNER OR OPERATOR, OR IF THAT DATE CANNOT BE DETERMINED, THE DATE WORK ASSOCIATED WITH THE CORRECTIVE ACTION WAS PERFORMED.

D. The department shall allow upgrade and replacement costs incurred at the time of corrective action for compliance with 40 Code of Federal Regulations section 280.21 regarding corrosion protection and spill and overfill prevention to be applied on a dollar for dollar basis not to exceed ten per cent of the reasonable and necessary costs of corrective actions as calculated pursuant to subsection A of this section.

E. An owner or operator shall not receive payment from the department until after the owner or operator has submitted certification to the department that the owner or operator has submitted a claim against any applicable insurance coverage and has certified to the department the amount of any benefits or reimbursement that the owner or operator has received from any insurance coverage that might apply to the costs of the corrective action. The owner or operator is eligible for payment from the department to the extent that the corrective action costs have not been reimbursed by insurance and within the coverage limits prescribed by this section. An owner or operator shall report to the department whether it has insurance coverage available and shall comply with all applicable financial responsibility requirements. The department may compel the production of documents to determine the existence, amount and type of coverage available. An owner or operator shall report to the department any subsequent payment or reimbursement for claims made for corrective actions costs. The owner or operator shall remit to the department within thirty days any amounts that were previously paid to the owner or operator from the underground storage tank revolving fund assurance account and that have also been recovered from insurance.

Sec. 7. Laws 1996, chapter 292, section 7 is amended to read:

Sec. 7. Advisory committee on prioritizing underground storage tank corrective actions and state assurance fund coverage

A. The advisory committee on prioritizing underground storage tank corrective actions and state assurance fund coverage is established consisting of:

1. The director of the department of environmental quality or the director's designee.

2. One person who represents the petroleum industry and who is appointed by the president of the senate.

3. One person who represents petroleum marketers and who is appointed by the speaker of the house of representatives.

4. One person who represents convenience stores with retail petroleum outlets and who is appointed by the governor.

5. One member who represents the insurance industry and who is appointed by the president of the senate.

6. One person who represents governmental entities with underground storage tanks, excluding state and federal agencies, and who is appointed by the speaker of the house of representatives.

7. One person who represents service station dealers and who is appointed by the governor.

8. One person who represents lending institutions and who is appointed by the president of the senate.

9. One person who represents environmental consultants and who is appointed by the speaker of the house of representatives.

10. One person who represents environmental contractors and who is appointed by the governor.

11. One person who represents an environmental organization and who is appointed by the governor.

12. ONE PERSON REPRESENTING THE PUBLIC AT LARGE, AND WHO IS APPOINTED BY THE GOVERNOR.

13. ONE PERSON WITH FINANCIAL AND STATE BUDGET EXPERTISE APPOINTED BY THE PRESIDENT OF THE SENATE.

12. 14. Two members of the senate, one from the majority party and one from the minority party, who serve as ex officio, nonvoting members and who are appointed by the president of the senate.

13. 15. Two members of the house of representatives, one from the majority party and one from the minority party, who serve as ex officio, nonvoting members and who are appointed by the speaker of the house of representatives.

B. The committee shall select a chairperson and a vice-chairperson.

C. The committee shall examine, analyze and make recommendations on:

1. The implementation of a system and procedures for the prioritization of TO EXPEDITE AND INCREASE EFFICIENCY REGARDING corrective actions related to leaking underground storage tanks, including:

(a) Criteria for analyzing risk to human health and the environment.

(b) The basis and procedures for payment from the underground storage tank assurance account. , determined exclusively on risk to human health and the environment.

(c) An appeals process for underground storage tank owners and operators who dispute their ranking MATTERS PERTAINING TO CORRECTIVE ACTIONS AND PAYMENT FROM THE UNDERGROUND STORAGE TANK ASSURANCE ACCOUNT.

(d) The need to modify the provisions of the underground storage tank program to accommodate prioritization OF CORRECTIVE ACTIONS AND REQUIREMENTS RELATING TO CORRECTIVE ACTIONS BASED ON RISK TO HUMAN HEALTH AND THE ENVIRONMENT.

2. Requiring a site closure letter to be issued when a site poses no threat to human health and the environment, with the result that:

(a) No further corrective action work is required by the department at the site.

(b) No further payment is required from the assurance account for corrective action work at the site that is not otherwise required, already performed or in progress.

3. The feasibility of noncompliance penalties relating to payment from the underground storage tank assurance account.

4. 2. The feasibility of transferring the financial responsibility requirements for underground storage tank corrective actions back to the private insurance industry and the discontinuation of the state coverage for corrective actions, including a focus on:

(a) Whether or not the risk of releases from underground storage tanks has been reduced to a manageable level.

(b) To what extent existing leaking underground storage tanks have been discovered and remediated.

(c) The existence of markets in the private sector for the financing of the coverage of underground storage tanks that is currently provided by the state underground storage tanks assurance account.

(d) Whether or not the insurance industry can maintain an actuarially sound program for insuring underground storage tank sites and offer affordable rates for this coverage.

3. THE FEASIBILITY OF ESTABLISHING A PERMANENT UNDERGROUND STORAGE TANK COMMISSION, WHICH MAY INCLUDE THE CONSIDERATION OF:

( a ) THE MAKE UP OF THE COMMISSION AND THE APPROPRIATE QUALIFICATIONS OF THE COMMISSION MEMBERS.

( b ) THE COMMISSION DEVELOPING A LONG-RANGE REMEDIATION STRATEGY FOR THE STATE REGARDING UNDERGROUND STORAGE TANKS.

( c ) THE COMMISSION OVERSEEING THE DEPARTMENT OF ENVIRONMENTAL QUALITY IN ITS ADMINISTRATION OF THE UNDERGROUND STORAGE TANK ASSURANCE ACCOUNT.

( d ) THE COMMISSION HEARING APPEALS FROM PERSONS AGGRIEVED BY A DECISION OR DETERMINATION MADE BY THE DEPARTMENT OF ENVIRONMENTAL QUALITY RELATING TO PAYMENTS FROM THE UNDERGROUND STORAGE TANK ASSURANCE ACCOUNT, GRANTS FROM THE UNDERGROUND STORAGE TANK GRANT ACCOUNT OR ANY WORK PLAN DETERMINATION MADE BY THE DEPARTMENT.

( e ) THE PERSONNEL NEEDS OF THE COMMISSION.

( f ) ANY OTHER ISSUE RELATING TO THE ROLE OF AN UNDERGROUND STORAGE TANK COMMISSION.

4. ANY OTHER TOPIC RELATING TO UNDERGROUND STORAGE TANKS DEEMED APPROPRIATE FOR CONSIDERATION BY THE COMMITTEE.

D. Legislative staff and department of environmental quality staff shall provide technical assistance and staff support to the committee.

E. THE COMMITTEE SHALL SUBMIT AN INITIAL REPORT CONTAINING THE COMMITTEE'S RECOMMENDATIONS FOR LEGISLATION ON THE ESTABLISHMENT OF AN UNDERGROUND STORAGE TANK COMMISSION AS PROVIDED IN SUBSECTION C, PARAGRAPH 3 OF THIS SECTION, TO THE PRESIDENT OF THE SENATE, THE SPEAKER OF THE HOUSE OF REPRESENTATIVE AND THE GOVERNOR ON OR BEFORE OCTOBER 15, 1997. THE OBJECTIVE OF THIS REPORTING DEADLINE IS THE ENACTMENT OF LEGISLATION THAT WOULD ESTABLISH THIS COMMISSION BY AUGUST 1, 1998. The committee shall submit a final report containing the committee's findings and recommendations to the president of the senate, the speaker of the house of representatives and the governor on or before December 15, 1996 1997.

Sec. 8. Laws 1996, chapter 292, section 9 is amended to read:

Sec. 9. Delayed repeal

Section 7 of this act is repealed from and after January 31, 1997 1998 .

Sec. 9. Coverage for corrective actions; deductible

Notwithstanding section 49-1054, subsection A, Arizona Revised Statutes, an owner or operator of an underground storage tank who applied for coverage from the underground storage tank assurance account or who submitted an application for preapproval for corrective actions before March 12, 1996 is eligible for up to one hundred thirty thousand dollars of coverage from the assurance account by paying a five thousand dollar deductible. For underground storage tank sites that qualify for the deductible pursuant to this section, only a single five thousand dollar deductible for the first one hundred thirty thousand dollars of coverage without regard to the number of release occurrences at that site shall be required. Expenses incurred over the one hundred thirty thousand dollar coverage limit shall be subject to the copayment requirements pursuant to section 49-1054, Arizona Revised Statutes, as amended by this act.

Sec. 10. Soil remediation rules; eligibility for coverage

Notwithstanding section 49-1052, subsection N, Arizona Revised Statutes, as amended by this act, if the final soil remediation rules that are adopted by the department of environmental quality pursuant to Laws 1995, chapter 232, section 5, as amended by Laws 1996, chapter 151, section 9, are more stringent than the interim standards adopted pursuant to section 49-152, subsection A, paragraph 1, Arizona Revised Statutes, as amended by this act, an owner or operator of an underground storage tank who has not received a site closure letter from the department prior to the time the final soil remediation rules become effective, may perform corrective action at that site and be eligible for coverage for those corrective actions under the standards set forth in the final soil remediation rules.

Sec. 11. Emergency

This act is an emergency measure that is necessary to preserve the public peace, health or safety and is operative immediately as provided by law.

APPROVED BY THE GOVERNOR APRIL 24, 1997.

FILED IN THE OFFICE OF THE SECRETARY OF STATE APRIL 24, 1997.