appropriation; underground storage tanks

Purpose

Appropriates $2 million in FY 2000-2001 from the state general fund to the Department of Environmental Quality (DEQ) for deposit in the Area A account of the underground storage tank assurance account.

Background

The state Underground Storage Tank (UST) program was established in 1989 by the Legislature to implement UST regulations adopted by Congress in 1984 as part of the Resource Conservation and Recovery Act. The UST program was designed to prevent, detect and clean up releases of petroleum and other hazardous (regulated) substances into the groundwater, surface and subsurface soils. The state program also provides financial coverage to UST owners and operators for upgrading and removing tanks and the clean up of site contamination from leaking USTs.

The UST program is self-funded, with primary revenues coming from a one cent per gallon excise tax on regulated substances (primarily petroleum), a $100 tank registration fee and two federal grants. The UST assurance account is intended to provide partial coverage of corrective action costs incurred by a UST owner or operator and to pay for corrective action costs incurred by DEQ. Most of the revenues from the excise tax are deposited into this account. In addition to the assurance account of the UST revolving fund, there is a grant account and a regulatory account.

During the Sixth Special Session of the 41^st Legislature in 1993 on air quality, the assurance and regulatory accounts of the UST revolving fund were divided into two subaccounts: one for Area A (Maricopa County nonattainment area) and one for the rest of the state (Area B). A portion of the monies collected in the Area A account were transferred to the emissions inspection (EI) fund to help pay for enhanced vehicle emissions inspection costs, including the IM 240 test. Monies were to be transferred from the Area A account to the EI fund as follows: $2 million in FY 1993-1994 and $8 million in FY 1994-1995 and FY 1995-1996. In addition, $6 million was transferred from the Area A subaccount to the public transportation fund. This transfer was to be paid back from Powerball lottery revenues received by the Regional Public Transportation Authority once the Authority received a certain annual dollar amount from Powerball revenues. This threshold, however, has never been met. In July 1995, ADEQ declared the Area A subaccount insolvent, as claims and statutory obligations exceeded the available monies by $17.1 million. As a result of this, during the Fourth Special Session of the 42^nd Legislature in December 1995, the $8 million transfer from the Area A subaccount to the EI fund was repealed.

During the 1996 regular session, the ongoing transfer of 50 percent of the UST excise tax revenues from the Area A account to the emission inspection fund (approximately $5.5 million annually) was stopped. In addition, $3 million was appropriated from the general fund to the Area A account in FY 1996-1997 to cover a portion of the outstanding claims payable from the fund.

During the 1999 regular session, legislature appropriated $13 million from the state general fund in FY 1999-2000 through FY 2009-2010 to the UST assurance account, not to be used for administrative costs. Also, $550,000 was appropriated from the state general fund to the UST regulatory account in FY 1999-2000. The Governor line item vetoed the proposed appropriations in FY 2000-2001 through FY 2009-2010 for a total of $11.2 million.

S.B. 1301 appropriates $2 million from the state general fund to DEQ in FY 2000-2001 for deposit into the UST assurance account, Area A, to complete repayment of monies transferred from the account for non-UST purposes.

Provisions

1. Appropriates $2 million in FY 2000-2001 from the state general fund to DEQ for deposit into the UST revolving fund assurance account, Area A, to be used for paying claims for partial coverage for corrective action costs. Prohibits use of these monies for administrative costs.

2. Specifies that the $1.3 million appropriation from the general fund to the UST assurance account in FY 2000-2001 is to be distributed to the Area A and non-Area A accounts in a proportion determined by excise tax revenues collected in those areas in FY 1994.

3. Prohibits the distribution of any amount of the $1.3 million appropriation to the non-Area A account that exceeds the non-Area A portion of the $3 million transferred from the UST loan account to the general fund in 1992.

4. Exempts the appropriation from lapsing.

5. Provides for a general effective date.

Amendments Adopted by GES Committee

1. Adjusts the general fund appropriation to the UST assurance account, Area A, to $12,673,700.

2. Specifies the distribution of monies between the Area A account and non-Area A accounts.

Amendments Adopted by Appropriations Committee

1. Reduces the general fund appropriation to the UST assurance account, Area A, from $12.6 million to $2 million.

2. Specifies the distribution of monies previously appropriated to the UST revolving fund assurance account between the Area A and non-Area A subaccounts.

Amendments Adopted by Committee of the Whole

1. Appropriation Amendment was adopted, GES amendment was withdrawn.

2. Clarifies that the general fund appropriation to the UST assurance account, Area A, is in FY 2000-2001.

Senate Action

GES 2/7/00 DPA 9-0-0-0

APPROP 2/9/00 DPA 9-2-3-0

3^rd Read 2/28/00 22-8-0-0

Prepared by Senate Staff

February 29, 2000