[Originally published as a Wendel Rosen Client Alert, October 29, 2008. Also published in The Wendel Report, Winter 2008.]

On October 23, 2008, the Underground Storage Tank (UST) Cleanup Fund (Fund) announced that it will be delaying payments, suspending letters of commitment (“LOCs”) for lower priority claims, and requiring all “B” and “C” claimants to submit a budget for anticipated needs.  The Fund explained that these measures are necessary due to a significant increase in fund payments coupled with a decrease in revenues.

First, payments for all claimants will be delayed for several months.  The Fund will make payments as funds are available, according to a priority system determined by priority class and the date the Fund received the request for reimbursement.  

Second, the Fund will suspend LOCs for several hundred lower priority claims, depending on the date of the claimant's application to the Fund.  After the Fund notifies a claimant that its claim has been suspended, any costs incurred ten days after such notification will be ineligible for the Fund.  Eligible costs incurred before that time will be paid if funds are available.    

Third, the Fund is requiring priority class “B” and “C” claimants to submit a line-item 18- month budget (from January 1, 2009 to June 30, 2010).  This budget must be submitted by February 1, 2009 . The budget must be resubmitted each year at least six months before the end of the previous 18 month period. 

Finally, the Fund urges all claimants, consultants, and regulators, to take appropriate cost reduction measures, to improve efficiencies at cleanup sites, and move cases as quickly as possible toward closure.  It remains to be seen what sort of mandate, if any, will be issued to the Regional Quality Water Control Boards and other regulators regarding closure of sites; however, claimants may be better positioned to press for closure at some sites. 

Claimants should take immediate steps to evaluate whether this new Fund directive will impact funding for their cleanup and whether site closure should be discussed with regulators and consultants.  In addition, all claimants should submit requests for reimbursement to the Fund as promptly as possible, and B and C priority classes should prepare budgets for submission to the Fund.

For further information contact any of the environmental attorneys at Wendel, Rosen, Black & Dean LLP.