TESTIMONY OF ARTHUR J. DeBLOIS, III
ON BEHALF OF
THE SOCIETY OF INDEPENDENT GASOLINE MARKETERS OF AMERICA
AND THE NATIONAL ASSOCIATION OF CONVENIENCE STORES
ON S. 1850, THE “UNDERGROUND STORAGE TANK COMPLIANCE ACT OF 2001”
February 25, 2002
Pascoag, Rhode Island
Good morning, Mr. Chairman. My name is Arthur J. DeBlois. I am President and CEO of DB Companies, Inc., an independent motor fuels marketer headquartered here in Providence. DB Companies own and operate 86 DB Mart stores in Rhode Island, Massachusetts, Connecticut and the Hudson Valley of New York. In addition, we have 84 franchisee-operated locations.
Thank you for inviting me to testify today on issues related to “USTs” – that is, underground storage tanks – and your bill, S. 1850, the “Underground Storage Tank Compliance Act of 2001.” I am representing the Society of Independent Gasoline Marketers of America (“SIGMA”) and the National Association of Convenience Stores (“NACS”).
SIGMA is a national trade association of approximately 260 motor fuels marketers operating in all 50 States. SIGMA members supply over 28,000 motor fuel outlets and sell over 48 billion gallons of gasoline and diesel annually – or approximately 30 percent of all motor fuels sold in the nation. NACS is a national trade association of more than 2,300 companies that operate over 104,000 convenience stores nationwide and employ 1.4 million individuals. Over 75 percent of NACS’ member companies sell motor fuels, and the convenience store industry sold more than 115 billion gallons of motor fuels in 2000.
SIGMA and NACS applaud you for holding this UST hearing today in Pascoag and for your leadership on this issue. Through today’s hearing, the Associations would like to send a clear and strong message to the residents of Pascoag – responsible petroleum marketers have “zero tolerance” for the kind of release that has contaminated your drinking water supply. We are sorry for the inconvenience you have had to endure these many months. At the same time, NACS and SIGMA have been long-standing and vocal advocates for vigorous enforcement of federal and state UST regulations. Further, S. 1850 takes additional steps to strengthen UST enforcement and provide more funds to address situations like the one that has occurred here in Northwest Rhode Island.
As an aside, I was reminded the other day that Rhode Island has played an interesting, key role in the history of UST regulation. In December 1983, the “60 Minutes” show introduced over 30 million viewers to the problems of leaking tanks. The narrator, Harry Reasoner, detailed the serious groundwater contamination problems in Canob Park, a nine-acre development in Richmond, Rhode Island, resulting from service station tank leaks. The CBS News story was one catalyst that led to the enactment of the federal tank law in November 1984. Much has been done in the last 18 years to prevent, detect and clean up UST releases. Rather than having history repeat itself, SIGMA and NACS hope that the problems faced today by the residents of Pascoag will lead to prompt action by Congress to improve the current UST program by enhancing the ability of the states to enforce and address tank leaks and spills by expanding their allowable uses of the annual congressional appropriations from the federal Leaking Underground Storage Tank (“LUST”) Trust Fund. As you know, your bill includes over $460 million in new authorizations from the nearly $2 billion – and growing – LUST Trust Fund.
In the few minutes that I have been allotted to speak, I would like to make some connections between the situation here in Pascoag and S. 1850 – that is, how the enactment of S. 1850 would help to mitigate future Pascoags from occurring. My familiarity with the facts associated with the local MTBE contamination largely is from reading the newspaper accounts. As a result, I am not qualified to address specifics with the Department of Environmental Management (“DEM”) investigation and the technical aspects of the remedy. Again, as I said at the outset, NACS and SIGMA’s members do not condone the actions of the suspected UST operator before and after the release was detected.
Last May, the General Accounting Office (“GAO”) presented you and Senator Robert Smith with a report, “Improved Inspections and Enforcement Would Better Ensure the Safety of Underground Storage Tanks.” GAO concluded, in part, that the U.S. Environmental Protection Agency (“EPA”) and the states have failed to enforce consistently the UST requirements. GAO estimated that, nearly three years after EPA’s deadline of the 10-year phase-in (December 22, 1998) for environmentally protective tanks, only 89 percent of the regulated USTs had been replaced, upgraded or closed. GAO identified state and local governmental agencies and very small businesses as the primary categories of UST owners and operators who remain in non-compliance. GAO also indicated that rates for ongoing UST leak detection and compliance are lower than expected.
In its report, GAO recommended steps that Congress could take to address these identified inconsistencies in the existing UST program. NACS and SIGMA have supported, and continue to support, measures that address GAO’s recommendations and that are included in S. 1850:
· Authorize the use of LUST Trust Fund monies by the states for UST enforcement;
· Remove restrictions on the use of LUST Trust Fund monies by state UST funds, permitting clean-up resources to be deployed faster and minimizing clean-up costs and environmental harm from tank leak;
· Provide additional funds for use by the states in addressing high-priority releases, such as those containing MTBE; and
· Create a national UST database to track upgraded and closed USTs.
Some persons attending today’s hearing may wonder why petroleum and convenience store marketers support effective enforcement of the UST regulations. Let me explain our position. First, small inventory losses become huge financial losses given our slim profit margins from intense competition. Second, since EPA promulgated its UST requirements in 1988, SIGMA and NACS members have spent hundreds of millions of dollars complying with the tank standards. My company spent over $5 million upgrading our USTs. Further, many of our members, including the “moms-and-pops” closed retail locations as a means of compliance. I testified many years ago at a hearing held by the late Senator John Chafee that, with a 10-year phase-in of the requirements, there is absolutely no reason why any UST owner and operator should not be in compliance.
Let me digress a moment and make a point that was best articulated by the late Senator in December 1998 to EPA – that is, there is no justification for EPA or the states to distinguish between private and publicly-owned tanks when it comes to protecting human health and environment. A leak from the local public works or fire department’s tank causes the same environmental harm as a release from a retail gasoline outlet’s UST.
Accordingly, NACS and SIGMA support the key elements of your bill – namely, expanding the allowable uses of the LUST Trust Fund monies for UST enforcement; requiring every UST to be inspected at regular intervals; directing EPA to publish guidelines for training operators in the proper operation and maintenance of USTs; requiring EPA and the states to publish strategies for ensuring compliance for USTs owned by governmental agencies at every level; and providing additional funding for the remediation of certain MTBE or high-priority UST releases.
There is one provision in S. 1850 that SIGMA and NACS would like to change. As introduced, your bill limits the use of LUST Trust Fund monies by state UST reimbursement funds, like the one we have here in Rhode Island, where the UST owner or operator would face financial hardships but for the reimbursement. This provision encourages non-compliance by UST owners and operators. We believe that elimination of this limitation would expedite UST clean-ups and would leverage limited tank remediation funds.
Notwithstanding the experiences of the residents of Pascoag, most UST cleanups are managed by responsible parties – that is, tank owners or operators – and are overseen by state UST implementing agencies – such as, DEM. The UST corrective action program largely has worked extremely well.
State UST reimbursement funds, such as ours here in Rhode Island, have expended more than $5 billion for UST clean-ups over the past decade. According to state data, most state UST reimbursement funds are solvent; however, some of these funds have been paying claims at a faster rate than the revenues they receive. A growing concern from NACS and SIGMA members is that some state legislatures, increasingly strapped for cash, might “borrow” or raid the cash balances in these state UST assurance funds. This occurred here in Rhode Island during the State’s last budget “crunch.” Cash flow, therefore, remains critical to the success of the state UST reimbursement funds, and allowing a state to use some of its LUST Trust Fund monies from EPA for its UST reimbursement fund is one way to leverage limited clean-up resources.
There is also a misplaced perception that eliminating the limitation in S. 1850 would send millions of dollars back to the major oil companies. NACS and SIGMA do not believe that to be the case. Most major oil companies were to first to replace their tanks, and likely have received the bulk of any clean-up reimbursements they were owed under the state UST assurance funds.
In fact, removing the limitation would benefit Rhode Island’s fund and the citizens of the State. The fund here has worked well despite severe funding limitations. According to State data, from late 2000 through the middle of last year, Rhode Island governmental entities placed a tremendous strain on the fund with 11 governmental sites consuming close to 48 percent of the fund’s available resources. Additional monies from the LUST Trust Fund would be a boost to Rhode Island’s UST fund.
UST owners and operators are more likely to initiate and complete tank clean-ups if they know that, after they pay the required “front end” amount, the state UST assurance fund will timely reimburse their clean-up expenses. Stated differently, if reimbursements become stretched out over a longer period of time, the UST owner or operator has an incentive to slow down the pace of their clean-ups. Thus, limiting the use of LUST Trust Fund monies by State UST reimbursement funds will do nothing to maintain the pace of corrective actions.
SIGMA and NACS also feel that removing the limitation also will assist with the clean-up of high-priority releases, such as the one here in Pascoag containing MTBE. If, for example, a small business can avoid significant legal expenses by assigning their clean-up costs to a state UST reimbursement fund, limited resources can be expended on clean-ups, rather than lawyers and consultants.
As a final point, I would like to note NACS and SIGMA members’ frustration with the level of LUST Trust Fund appropriations. In many instances, the per-gallon excise tax that funds the LUST Trust Fund is not passed through in the marketplace to the consumer; it is a cost of doing business. However, the LUST Trust Fund now is approaching an unobligated balance of $2 billion, and the current level of appropriations is less than the annual interest earned on the fund, not including the ongoing tax collections. The Government has and is continuing to collect a lot of money for the LUST Trust Fund. S. 1850 recognizes this fact and authorizes a substantial increase in funding. The Associations hope that the key elements of your bill can be enacted and the appropriators agree to increase the annual appropriations.
SIGMA and NACS appreciate this opportunity to present their views on USTs and S. 1850. The Associations regret that Pascoag is the backdrop for this hearing and that the residents here have been inconvenienced from the release that occurred. We look forward to working with you and members of the Senate Environment and Public Works Committee on UST legislation. I hope that NACS and SIGMA might be allowed to testify at a future legislative hearing on S. 1850 in Washington, D.C.
I will be happy to answer any questions my testimony may have raised. Thank you, Senator.