This week’s “major milestone” announcement (https://www.michigan.gov/mienvironment/0,9349,7-385-90162-491567--,00.html) by the Michigan Department of Environmental Quality (MDEQ) regarding Michigan’s Underground Storage Tank Cleanup Fund is significant for the State’s regulated community. The announcement outlines how the Michigan Underground Storage Tank Authority (MUSTA) is now utilized by more than 50% of underground storage tank (UST) owners as their primary means for insuring against the threat of a petroleum release and the associated environmental risks. And although the MUSTA fund is still relatively young, being established in 2014, it has already become the predominant financial backstop against the risk of the costs of petroleum cleanups across the State of Michigan.
Why has MUSTA been so well received by the regulated community? I believe it’s for the following reasons:
- The program is funded by a nominal one cent per gallon fee charged to all refined petroleum products sold throughout Michigan. The premiums are now paid by the end user, in effect, and no longer out-of-pocket by the UST owners.
- The coverage is nearly equal to or better than most private-sector offerings, with coverage up to one million dollars for all releases discovered during a claim period for owners, operators and affiliates with up to 100 USTs. Owners, operators and affiliates of more than 100 USTs are subject to a claim period aggregate limit of $2 million for all releases discovered during a claim period.
- The deductible amount for owners and operators of seven refined petroleum USTs or fewer is $2,000 per claim. The deductible amount for owners and operators of eight or more refined petroleum USTs is $10,000 per claim. In other words, it is very affordable for UST owners and operators, and this contributes significantly to the success of this program.
- The system for processing claims is clear and understandable. The process for initiating a claim is clearly outlined on the MDEQ’s website here: https://www.michigan.gov/deq/0,4561,7-135-3311_4109_9977_73545-372721--,00.html. Standardized claim submittal forms are quick and easy to process – the MUSTA administration typically reviews and responds within two weeks. This is not a bureaucratic process. Staff are easy to contact, responsive and direct. A schedule of typical costs is published so that there are no surprises to the regulated community as to what is covered, and to what extent. Administrators will work with the UST owners and operators in reviewing work plans prior to initiating corrective action to meet the requirements of Michigan’s Part 213.
- Work invoices are quickly processed for payment (typically within 45 days) after the administration makes its determination of eligible activities and allowable expenses.
- The outcome is predictable. If there is a challenge, claimants have the ability to appeal to a board of directors if the administration denies a claim or invoice. Appeals are kept to a minimum as a result of the proactive position of the administration and its staff.
- The funding is secure. With a fund balance of more than $86 million dollars and an annual income from fees of approximately $20 million, the fund is engineered to be viable for generations to come.
- It is no surprise that the MUSTA program has now captured a majority of the market. The process to establish the Authority was well thought out, and lessons learned from the old MUSTFA program were incorporated to make this new program work smoothly and provide the long-term value needed by the market.
The MUSTA program has certainly become one of the success stories within Michigan’s regulatory framework. The outstanding performance milestones, engagement and cleanups are proof it is working, and I wouldn’t be surprised to see the program ultimately serve as a model for success in other states too.