You asked for a description of the Leaking Underground Storage Tank (LUST) tax, National Oilheat Research Alliance (NORA) Fee, and how the revenues they generate are used. You also wanted to know about state funds available to municipalities that have suffered a significant fuel oil leak from an underground storage tank (UST).

SUMMARY

The LUST tax, a one cent per gallon federal tax imposed on taxable fuels sold nationwide, funds the LUST Trust Fund, which provides money to states for (1) oversight and enforcement of corrective action taken by responsible parties owning or operating a leaking UST and (2) cleanups at UST sites if the owner or operator is unknown, unwilling, or unable to respond or immediate emergency action is required. The fund is administered by the Environmental Protection Agency (EPA).

The NORA fee, a two cent per gallon federal fee assessed on all oilheat used for heating purposes funds NORA, a collaborative program intended to improve education and training for oilheat industry employees, provide customers with information about oilheat, and develop new products. The fee applies only in states where oilheat retailers and wholesalers vote in a referendum to participate in the program.

The state has a program that assists owners of federally regulated petroleum USTs with cleanup. The Department of Environmental Protection (DEP) administers the UST clean up program, but currently has insufficient funds to meet claim reimbursements, according to the DEP website.

LUST TAX

The LUST tax is a one cent per gallon federal tax imposed on taxable fuels sold nationwide. It funds the LUST Trust Fund, which provides money to states for (1) oversight and enforcement of corrective action taken by the responsible party owning or operating the leaking UST and (2) cleanups at UST sites where the owner or operator is unknown, unwilling, or unable to respond, or which require immediate emergency action. According to the EPA's website, only about 4% of cases have been without a responsible party. The tax and fund were created by Congress in 1986.

The fund receives approximately $70 million each year, allocating over 80% (approximately $56 million) to the administration, oversight, and cleanup of sites. The EPA uses the remaining money to negotiate and oversee cooperative agreements, implement programs on Indian lands, and support regional and state offices. In the American Recovery and Reinvestment Act of 2009, Congress appropriated $200 million from the LUST Trust Fund to EPA for cleaning up leaks from underground storage tanks.

To receive money from the Trust Fund, a state must enter into a cooperative agreement with the federal government to spend the money as federal law requires. Trust Fund money is divided among EPA regional offices based on a formula that uses state data. Connecticut received $2 million in LUST funds on August 7, 2009 (http://www.epa.gov/OUST/eparecovery/statealloc.htm).

NORA FEE

Description

The NORA fee is a two cent per gallon fee assessed on all oilheat used for non industrial commercial or residential space or hot water heating purposes sold in participating states. It applies to (dyed) high sulfur diesel and heating oil (#1 and #2), (dyed) low sulfur and ultra low sulfur heating oil (#1 and #2), products used to make a blended heating oil whether for low sulfur (.2%) or for low cloud or pour (by adding kerosene), and BioHeat® Fuel blended into heating oil. The fee funds NORA, a collaborative program intended to improve education and training for oilheat industry employees, provide oilheat customers with more information, and develop new products. The fee is assessed in compliance with a law that was passed by Congress in 2000 (Public Law 106-469).

The law allows states to decide whether to participate in the program by a referendum of their retailers and wholesalers. If a state chooses to participate, up to 85% of the funds derived from that state will be returned to it for technical training and consumer education.

NORA Fee Sunset

NORA was originally set to expire on February 6, 2005, but Congress extended the sunset date to February 6, 2010 (Section 713 of the Energy Act of 2000; Public Law 106–469; 42 USC 6201). Congress has not extended the date further. Fees were suspended and no payments were due after midnight February 6, 2010.

DEP'S UST PETROLEUM CLEAN-UP PROGRAM  

We were unable to find a cleanup program exclusively for municipal USTs, however, the UST Petroleum Clean-Up Program is open to owners of any federally regulated petroleum USTs who are financially responsible for the tank. These USTs do not include:

1. farm and residential tanks of 1,100 gallons or less capacity holding motor fuel used for noncommercial purposes,

2. tanks storing heating oil used on the premises where it is stored,

3. tanks on or above the floor of underground areas,

4. septic tanks and systems for collecting storm water and wastewater,

5. flow-through process tanks,

6. tanks of 110 gallons or less capacity, or

7. emergency spill and overfill tanks (http://www.epa.gov/swerust1/faqs/ustdefn.htm).

State-owned USTs are eligible. Federally-owned USTs and USTs storing heating fuel used on the premises are not eligible (http://www.ct.gov/dep/cwp/view.asp?a=2717&q=435126&depNav_GID=1652).

There is a $10,000 deductible for responsible parties. Responsible parties and third parties cannot be reimbursed for costs of a release over $1 million. Parties are reimbursed after completing the specified task, and may submit applications for reimbursement within one year of completion. Eligible legal fees may be reimbursed for up to $5,000 for a responsible party and $10,000 for a third party. Currently, the UST Program Balance is insufficient to meet all recommended claim reimbursements (http://www.ct.gov/dep/cwp/view.asp?a=2717&q=435126&depNav_GID=1652).

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