Produced by: Nebraska Department of Environmental Quality, P.O. Box 98922, Lincoln, Neb. 68509-8922;

phone (402) 471-2186. To view this, and other information related to our agency, visit our web site at http://deq.ne.gov.

This guidance document is advisory in nature but is binding on an agency until amended by such agency. A guidance

document does not include internal procedural documents that only affect the internal operations of the agency and does not impose additional requirements or penalties on regulated parties or include confidential information or rules and regulations made in accordance with the Administrative Procedure Act. If you believe that this guidance document

imposes additional requirements or penalties on regulated parties, you may request a review of the document.

16-009 October 2016

Petroleum Remediation Section Petroleum Release Remedial Action Reimbursement Fund

(Title 200 Program)

Reimbursement Reduction Guidance

http://deq.ne.gov/

Table of Contents

Title 200 Reimbursement Reduction Guidance ............................................................................................ 1

1. Requirements Before Closure ............................................................................................. 2 I. PRRA Fund Fee Payments .................................................................................... 2 II. Registration/Permitting of Non-Exempt Tanks ..................................................... 2 III. Registration/Permitting of Exempt Tanks ............................................................. 3 IV. Registration of Tanks Permanently Out of Service ............................................... 3 V. Registration of Tanks Permanently Out of Service ............................................... 3 VI. Release Detection/Tank Gauging .......................................................................... 3

2. Requirements Before or At the Time of Closure................................................................. 3 VII. Release Notification ............................................................................................... 3 VIII. Release Abatement/Containment ........................................................................... 4 IX. Failure to Clean Up Documented Past Spills ......................................................... 4

3. Requirements at the Time of Closure .................................................................................. 4 X. Tank Permits at Time of Removal/Closure ........................................................... 4 XI. Disposal of Wastes ................................................................................................. 4

4. Post Closure Requirements ................................................................................................. 4 XII. Non-Compliance with DEQ Timetables (One Time Reduction) ........................... 4 XIII. Non-Compliance with Title 200 Provisions (One Time Reductions) .................... 5 XIV Substantial Non-Compliance—Categories I - XI .................................................. 5 XV Flexibility ............................................................................................................... 5

Reimbursement Reduction Support Document ............................................................................................. 6

1. Purpose ............................................................................................................................... 6 2. DEQ Determinations ........................................................................................................... 6 3. Exemption ........................................................................................................................... 7 4. Percentages and Limits ....................................................................................................... 7 5. Compliance Violation Categories ..................................................................................... 10

I. PRRA Fund Fee Payments .................................................................................. 10 II. Registration/Permitting of Non-Exempt Tanks ................................................... 10 III. Registration/Permitting of Exempt Tanks ........................................................... 10 IV. Registration of Tanks Permanently Out of Service ............................................. 11 V. Tank Design, Construction, Installation, and Repair ........................................... 11 VI. Release Detection/Tank Gauging ........................................................................ 12 VII. Release Notification ............................................................................................. 12 VIII. Release Abatement/Containment ......................................................................... 12 IX. Failure to Clean Up Documented Past Spills ....................................................... 13 X. Tank Permits at Time of Removal/Closure ......................................................... 13 XI. Disposal of Wastes ............................................................................................... 13 XII. Non-Compliance with DEQ Timetables .............................................................. 13 XIII. Non-Compliance with Title 200 Provisions ........................................................ 14 XIV. Substantial Non-Compliance—Categories I - XI ................................................ 15 XV. Flexibility ............................................................................................................. 15

Title 200 Reimbursement Reduction Guidance

Pursuant to Neb. Rev. Stat. §66-1525 (5) reimbursements made for remedial action costs may be reduced as much as one hundred percent for failure by the responsible person to comply with applicable statutory or regulatory requirements. These guidelines were established for consistent and equitable determinations and/or calculations of reductions in reimbursements. The Department of Environmental Quality (DEQ) will, however, maintain flexibility with the use of these guidelines where situations warrant change. Reductions are determined as a percentage of reimbursement with a corresponding limit unless otherwise noted.

In determining the amount of the reimbursement reduction, the DEQ takes into consideration:

a) The extent and reasons for non-compliance; b) The likely environmental impact of the non-compliance; and c) Whether non-compliance was negligent, knowing, or willful.

Three numerical values are given for most categories of non-compliance that correspond to the instance of non-compliance being negligent, knowing, or willful. If in the DEQ’s judgment the non-compliance was negligent, the lowest percentage reduction and corresponding limit would be applied to the reimbursement. Accordingly, if in the DEQ’s judgment the non-compliance was willful, the highest percentage reduction and corresponding limit would be applied to the reimbursement.

When the Department makes a determination of non-compliance, the responsible person will be notified of the decision via certified letter. Reimbursements to the responsible person under Title 200 will then be reduced by the specified percentage up to a maximum dollar amount based on the circumstances and extent of non-compliance. Non-compliance reduction amounts will decrease the $975,000 ($985,000 if low volume) maximum amount reimbursable for remedial actions under Neb. Rev. Stat. §66-1523.

A responsible person may elect to formally petition the Department for review of the determination of non-compliance within thirty days of the date of the DEQ’s official notification as a contested case pursuant to Title 115, Chapter 7 of the Nebraska Administrative Code. Title 115 is available on the agency web page www.deq.ne.gov.

http://www.deq.ne.gov/

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1. Requirements Before Closure

Compliance Violation * Percent Reduction†

Maximum Limit‡

I. PRRA Fund Fee Payments

A. No payment of Initial PRRA fees 8.33% $2,500 (≥50% of all contributing tanks) 16.67% $5,000 33.33% $10,000 No payment of Initial PRRA fees 4.00% $1,000 (

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Compliance Violation * Percent Reduction†

Maximum Limit‡

III. Registration/Permitting of Exempt Tanks

A. No Initial registration or untimely registration 2.00% $500 3.00% $750 4.00% $1,000

IV. Registration of Tanks Permanently Out of Service

A. Failure to register 2.00% $500 3.00% $750 4.00% $1,000

V. Registration of Tanks Permanently Out of Service

A. Does not meet SFM, SPCC, or NRC requirements 4.00% $1,000 6.00% $1,500 10.00% $2,500

VI. Release Detection/Tank Gauging

A. Inadequate release detection 8.33% $2,500 16.67% $5,000 33.33% $10,000 B. Inadequate tank gauging records 4.00% $1,000

6.00% $1,500 10.00% $2,500

2. Requirements Before or At the Time of Closure

Compliance Violation Percent Reduction

Maximum Limit

VII. Release Notification

A. Non-reporting of release to DEQ or SFM Period of non-reporting 2-7 days 2.00% $500 8-30 days 8.33% $2,500 31-60 days 33.33% $10,000 61-90 days 50.00% $15,000 91 days or more 100.00% -----

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Compliance Violation Percent Reduction

Maximum Limit

VIII. Release Abatement/Containment

A. No attempt at containment or inadequate containment 4.00% $1,000 6.00% $1,500 10.00% $2,500

IX. Failure to Clean Up Documented Past Spills

A. Failure to clean up 4.00% $1,000 6.00% $1,500 10.00% $2,500

3. Requirements at the Time of Closure

Compliance Violation Percent Reduction

Maximum Limit

X. Tank Permits at Time of Removal/Closure

A. No closure permit 8.33% $2,500 16.67% $5,000 33.33% $10,000

B. No certified closer 4.00% $1,000 6.00% $1,500 10.00% $2,500

XI. Disposal of Wastes

A. Documented improper disposal of wastes (tanks, sludge from tanks, contaminated soils, contaminated wastewater, etc.)

8.33% 16.67% 33.33%

$2,500 $5,000

$10,000

4. Post Closure Requirements

XII. Non-Compliance with DEQ Timetables (One Time Reduction)

Failure to meet a DEQ compliance date will result in a 10% reduction of total expenses associated with the work effort(s) for which the timetable was established in writing by the DEQ, or agreed upon in a Stipulated Agreement. A responsible person or party will be given one notice/warning of non-compliance (5 day warning letter) during the history of a site without a reduction in reimbursement. Thereafter, any failures to meet DEQ compliance dates will result in a 10% reduction for the corresponding work efforts. Seven calendar days beyond an established compliance date will be considered failure for the purposes of this category. A timetable is that amount of time allotted to complete each of the various phases of remedial action described in Title 118. A new timetable is established by the DEQ in writing during the

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remedial action process. The reduction in reimbursement is calculated as a percentage of the total expenses associated with the work in question and not as a percentage of the calculated reimbursement.

XIII. Non-Compliance with Title 200 Provisions (One Time Reductions)

A. For work performed during or before April 1995, remedial action taken prior to Departmental approval of a plan that is subsequently approved or accepted as completed will result in a 25% reduction of total expenses associated with the work effort(s) completed before Departmental approval. This reduction in reimbursement is calculated as a percentage of the total expenses associated with the work in question and not as a percentage of the calculated reimbursement. However, for work performed after April 1995, responsible persons may undertake remedial prior to approval of a plan with no reduction, if the work is later approved by the DEQ project manager.

B. Remedial action(s) taken that the DEQ cannot approve, either before or after the work is completed, will be ineligible for reimbursement. Responsible persons and/or their consultants must follow applicable guidelines, regulations, and statutes pursuant to Neb. Rev. Stat. §66-1525 (2) (d).

C. Applications that are submitted to the DEQ subsequent to the time limits described in Chapter 2, Section 007 of Title 200 will be subject to reimbursement reduction according to the following schedule:

Submittal Period (Calendar days beyond time limit)

Percent Reduction

Maximum Limit

1 – 30 days 10% $2,500 31 – 45 days 25% $10,000 46 – 60 days 50% $25,000 61+ days 100% -----

This percentage is calculated after any deductible and/or co-payment obligations are subtracted from the eligible expenses. Other applicable noncompliance reductions will be calculated after this reduction is assessed.

XIV Substantial Non-Compliance—Categories I - XI

Reductions in reimbursement will be added together in cases where multiple non-compliance issues exist. A total of 100% or greater is considered substantial non-compliance and will result in the denial of access into the Fund. In addition, if an Administrative Order is issued, the responsible party does not meet the Order, and DEQ must seek court action against the responsible party, the cause of the court action would be considered substantial non-compliance. An Appeal of a Final Order filed by the Responsible Party to determine responsibility will in and of itself not be considered non-compliance.

XV Flexibility

The procedures established herein are for maintaining consistency in applying reductions to reimbursements. DEQ however reserves the ability to be flexible if circumstances warrant.

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Reimbursement Reduction Support Document

1. Purpose

The Petroleum Release Remedial Action Act and the corresponding regulation (Title 200) give the DEQ duty and authority as described in the Act to reduce reimbursements by as much as one hundred percent for failure by a responsible person to comply with applicable statutory or regulatory requirements.

In making such reduction determinations without specific statutory direction, the DEQ recognized the need for consistency in applying reductions. The guidelines were developed primarily for purposes of consistency in the application of reductions in reimbursements.

The guidance includes issues of non-compliance in applying reductions that relate to petroleum storage tank and environmental remedial action requirements generally found in State Fire Marshal (SFM) and DEQ regulations. SFM regulations address the registration, operation, permitting, and removing of a tank. DEQ regulations address investigation and remedial action in response to a release. Compliance violation categories contained in the policy are arranged into four areas of requirements relating to time: requirements prior to closure, requirements prior to or at the time of closure, requirements at the time of closure, and post closure requirements.

2. DEQ Determinations

In determining the amounts of reimbursement reductions pursuant to §66-1525 (5) and Title 200 Chapter 3, 005.01, the DEQ shall consider:

1. The extent of and reasons for non-compliance; 2. The likely environmental impact of the non-compliance; and 3. Whether non-compliance was negligent, knowing, or willful.

The extent and reasons for non-compliance and the likely environmental impact of the non-compliance were considered in arriving at the categories included in the policy, and they were factored into the size of potential reductions and limits for each category.

For the purposes of the policy, the terms negligent, knowing, and willful will be used in their literal sense and as defined in English dictionaries or by the Nebraska Supreme Court in case law. To help explain how the DEQ will make a determination as to whether a person or party has been negligent, knowing, or willful, a typical example follows:

Concerning the SFM requirement and compliance violation category II: Registration/permitting of non-exempt tanks, A. No Initial registration (≥50% of all contributing tanks):

(a) An owner did not register his or her tank, is not a member of any marketing group, and was never notified by the SFM of the requirement. The DEQ would find this person negligent and in doing so would apply a reduction of 8.33% with a limit of $2500.

(b) An owner did not register his or her tank, is not a member of any marketing group, and has been informed once of the registration requirement by receiving a general mailing from the SFM sent to many tank owners. The DEQ would find this person to be knowing as they were informed of the requirement but failed to take action and in doing so would apply a 16.67% reduction with a limit of $5000.

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(c) An owner did not register his or her tank, is a member of a marketing group, has been directly notified at least once of the SFM requirement, and/or has been given orders by the SFM to register his or her tanks. The Department would find this person willful and they were notified and ordered but did not comply, and in doing so would apply a 33.33% reduction with a limit of $10,000.

The DEQ’s determination in this example considers whether the Responsible Party (RP) had knowledge of the requirement (with documentation). That is, was the owner notified or even ordered by the SFM to register his or her tanks, and is there documentation confirming this? The DEQ then may also consider the RP’s opportunity to know about such requirements. In this particular example, this consideration was not necessary. While not knowing about a regulatory requirement is of course not a defense for not adhering to a requirement, the DEQ secondarily considers such items such as an owner’s affiliation to a marketing group. Most owners of exempt tanks are not affiliated with such groups. Most owners of non-exempt, “commercial” tanks are affiliated with some sort of association.

The DEQ considers non-compliance issues for which reimbursement reductions will be assessed according to Title 200 Chapter 3, 005.02. The policy therefore includes all of these as non-compliance categories. Title 200 directs the DEQ to consider such issues as:

A. Tank permit and registration requirements. B. Tank design, construction, installation, and repair. C. Release detection requirements. D. Tank gauging requirements. E. Release notification requirements. F. Release containment. G. Failure to clean up past spills and overfills when they occurred. H. Compliance with Department standards of quality and performance, with Department

timetables, and with other applicable regulations. I. Disposal of wastes.

3. Exemption

When determining potential reductions in reimbursement, the DEQ will not consider future or current SFM compliance issues for newer tanks at a facility where a previous release is being addressed. For example, at a hypothetical facility tanks were removed in 1990 and leaked. In the years before and including 1990, the owner had complied with all SFM requirements. The site is now an on-going investigation with DEQ in 1993. New tanks were installed in 1990 when the leaking tanks were removed. The owner has not complied with some SFM requirements in 1992 and 1993. The issues of SFM non-compliance relating to the new tanks at the same facility will not be considered when applying potential reductions in reimbursement for the on-going investigation and remediation of a release from the tanks removed in 1990.

4. Percentages and Limits

The policy provides percent reductions ranging from 2.0% to 100% for individual violations, and up to 100% for multiple violations. Limits range from $500 to $15,000 for individual violations and, like the percentages, are cumulative for multiple violations.

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The odd percentages can best be explained by first discussing the limits and how they relate to the percentages. The limits were chosen to be comparable to typical administrative penalties. Larger limits have corresponding larger percentages as these relate to more serious instances of non-compliance.

For categories I through XI, one to three “sets” of numbers are given for most categories. A “set” is a percentage and a corresponding limit. Multiple sets are used to account for and to differentiate as to whether the instance of non-compliance was negligent, knowing, or willful. An instance of negligent non-compliance receives the lower set reduction. An instance of willful non-compliance receives the higher set reduction.

The following items were taken into account in determining the percentages:

(a) In order to be fair, an RP who receives a lower set reduction should typically not have to incur (over time) a higher limit than an RP who receives a medium or higher set reduction within the same category of non-compliance. Because each limit has a corresponding percentage, an RP must incur ‘X’ number of dollars to reach that limit (usually over several applications). Further, if total remedial costs at a particular site do not reach ‘X’ number of dollars, the reduction in reimbursement for that site becomes smaller than the assigned limit. The procedure of reducing reimbursements rather than paying a one time reduction prior to reimbursement in order to participate in the fund makes it possible for an RP who receives a higher set reduction to incur less penalty than an RP who receives a lower set reduction because total remedial costs for the higher set RP may in some cases be very low.

(b) The reduction incurred should be large enough to justify administrative time to apply the reduction and to grasp the attention of the RP, but not so large as to cause an unacceptable number of RPs to become insolvent in the process. The reduction should also be large enough to serve as a deterrent to RPs or potential RPs.

To address item (a), a mathematical equation was used to find out at what percents all three set divisions within a particular category would meet the set limits with equivalent remedial costs, and taking into consideration the deductible and co-pay amounts. The equivalent total remedial costs chosen would therefore have a direct relationship to the percentages determined. Total remedial costs of $45,000 for low-volume sites and $50,000 for high-volume sites were selected for categories I.A, II.A, VI.A, VI.A, X.A, and XI.A. These are the “large” categories with reductions up to 50% and limits up to $15,000. For the remaining categories, total remedial costs of $38,333.34 (low-volume) and $43,333.34 (high-volume) were selected.

As an example, consider an RP who failed to register his or her non-exempt tanks, and was simply negligent in doing so. This category (II.A) and the lower division set (8.33% and $2,500 limit) would be utilized for assessing the amount of reduction from reimbursement. The RP would have to incur and make application for reimbursement of $50,000 in total eligible remedial costs in order to reach the limit of $2,500. Again, this also takes into consideration the deductible and co-payment.

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Eligible Deductible Co-payment Subtotal Reduction 8.33% Reimbursed

$20,000 $10,000 $2,500 $7,500 $625 $6,875 $10,000 ------ $2,500 $7,500 $625 $6,875 $10,000 ------ $2,500 $7,500 $625 $6,875

$10,000 ------ $2,500 $7,500 $625 $6,875

$50,000 $10,000 $10,000 $30,000 $2,500 $27,500

Now as a related example, take for instance the same conditions described above, but instead of being negligent in failing register his or her tanks, the RP was found to be willful in not doing so. The higher division set (33.33% and $10,000) within this same category would be utilized for assessing the amount of reduction from reimbursement. Although the percentage reduced and the limit have changed from the first example, this “willful” RP will also incur and make application for $50,000 in total remedial costs in order to reach the limit of $10,000.

Eligible Deductible Co-payment Subtotal Reduction 8.33% Reimbursed

$20,000 $10,000 $2,500 $7,500 $2,500 $5,000 $10,000 ------ $2,500 $7,500 $2,500 $5,000 $10,000 ------ $2,500 $7,500 $2,500 $5,000

$10,000 ------ $2,500 $7,500 $2,500 $5,000

$50,000 $10,000 $10,000 $30,000 $10,000 $20,000

By developing set divisions within each category that are based upon the equivalent total remedial costs cited above, we believe that in almost all instances the amount of total reductions in reimbursement will more closely relate to the act of non-compliance, rather than the cost of remediating a site - large or small.

Item (b) above was one consideration in selecting the figures of $45,000/$50,000 and $38,333.34/$43,333.34 as total remedial costs that must be incurred in order to also incur the maximum limit in reimbursement reduction. In most cases the deductible alone will force insolvency if the situation is imminent.

The DEQ also recognized that for the “larger” categories, I.A, II A, VI A, VII A, X A, and XI A, it may not be realistic to utilize total remedial costs of $38,333.34/$43,333.34, and therefore selected the figures of $45,000/50,000. If the lower total remedial costs were chosen for these “larger” categories, the percentages would have to be much higher in order to meet the limits. For example, a willful RP with a limit of $15,000 would receive reductions in reimbursements at 60% and would incur $33,333.33 of the first $43,333.33 in total remedial costs. The higher percentages would also affect substantial non-compliance determinations - category XIV (See discussion below in 5 XIV.).

Another consideration or assumption is that most sites which have caused a problem to the extent that fund dollars will be applied for will have total remedial costs of a least $38,333.34 to $45,000, or $43,333.33 to $50,000. Total dollars expended on remedial costs beyond these figures are usually not comparable for two randomly picked sites. If the calculations are based on total remedial costs higher than these figures, the scenario given in item (a) above may occur frequently—an RP who receives a lower set reduction will pay/incur a larger limit than a higher set RP within the same category. Further, if the reduction method is based on higher total remedial costs, the percentages would have to be lower to match the assigned limits, and therefore would affect substantial non-compliance determinations (see discussion below in 5 XIV). Some of the points raised in item (b) above may also be compromised by

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using higher total remedial costs—percent reductions could become so small that administrative time to apply the reductions may not be justified, and such small percentages may not grasp the attention of violators or serve as a deterrent to RPs or potential RPs.

In short, three types of figures found in the guidance are “in balance” with one another based upon DEQ judgment and philosophy, and the necessity to make consistent and equitable determinations. The three types of figures are the percentages, the limits, and the figure of 100% constituting substantial non-compliance. Because these figures are “in balance” with one another, a change in one type necessitates a change in the other two types of figures.

5. Compliance Violation Categories

Further explanation is given here for what each category addresses, and the reasoning for the size of reduction percentages and limits.

I. PRRA Fund Fee Payments

Categories I A, B, and C address non-payment of Petroleum Release Remedial Action Fees - Initial one-time fees and Annual fees. In applying these categories, the PRRA fees not paid will be recovered in the reimbursement process. Non-payment of the Initial fees is divided into two applications under I. A. Larger percentage reductions and limits are applied to the reimbursement if an owner failed to pay the fees on greater than or equal to 50% of the tanks at the facility that contributed to the release. This differentiation was included in the guidance primarily for those sites where a waste oil tank was neglected in the registration and therefore the initial Fund fee payment process.

Reductions for non-payment of the Annual fees will be applied for each year of non-compliance. This is one of the categories that does not have three sets of percentages and limits corresponding to negligent, knowing, and willful. Rather, for each year that Annual fees were not paid, a 2.0% reduction is applied to the reimbursement with a limit of $500 per year. For example, if an owner failed to pay the fees on any of his or her tanks for five years, the percentage reduction applied to the reimbursement would be 10% with a limit of $2500.

Full payment of Petroleum Release Remedial Action (PRRA) fees during the period of usage of a leaking tank(s) is a requirement for participation in the fund. Category I C addresses the issue. Non-payment of all fees (Initial and Annual) will result in total ineligibility of costs submitted for reimbursement. If the fees were paid some years and not others, categories I A and/or B will be utilized to assess a reduction. This category addresses an owner who never paid the fees. This category does not make room for a differentiation of negligent or knowing, as the DEQ can only draw the conclusion that the non-compliance was willful. The DEQ has become aware of owners who make payment of their Annual tank registration fees but intentionally do not make payment of the PRRA fees. The DEQ believes that the creation of the fund and the mechanism of funding operate much like insurance. The DEQ interprets the legislation to require funding participation (i.e., fees payments) by all tank owners specified.

II. Registration/Permitting of Non-Exempt Tanks

III. Registration/Permitting of Exempt Tanks

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IV. Registration of Tanks Permanently Out of Service

Categories II A - D, III A, and IV A address initial (one-time) registration of all tanks. Categories II A, III A, and IV A address situations where an owner failed to provide Initial registration. Like category I A, category II A is divided into two applications. Category II B addresses situations where an owner had not secured a permit until the last year before the tanks were to be removed, upgraded, sold, etc. More commonly, this category is used for owners who want to remove their tanks and in order to do so have to register their tanks within a few days of the tank removal. Category II C addresses situations where owners have failed to secure a permit, but have registered their tanks at least a year or more before the release was discovered.

Category II D addresses Annual permits for non-exempt and not permanently abandoned tanks. Like category I B, only one set of percentage and limit is given for this category. This category will be applied for each year that an annual permit was not secured.

All categories differentiate between non-exempt and exempt tanks or tanks that are permanently out of service. Further, the non-exempt categories carry higher percentages and limits than exempt or out of service categories. The DEQ believes that the leaking non-exempt tanks have a greater potential to harm or impact humans and the environment than do the other tanks. In general, non-exempt tanks handle much larger volumes of petroleum than do exempt tanks. Therefore, by not meeting the SFM requirements, a leaking tank may go undiscovered and continue to leak. This philosophy is supported by the SFM regulations and corresponding legislation as non-exempt tanks are in general terms more heavily regulated.

Category II A, failure to initially register non-exempt tanks, is the only “large” category under all registration/permitting categories. This category imposes higher percentages of reduction and higher limits than the other categories. Further, total remedial costs must reach $45,000/50,000 in order to reach the limits in this category as opposed to $38,333.34/43,333.34 for the remaining categories. A larger reduction was assigned to this category because the DEQ believes that by not initially registering any tank, but especially non-exempt tanks which generally handle much larger volumes of petroleum, all future requirements like leak detection, annual registration, etc. would not be met, and the regulating agency (SFM) would be unaware of the tanks and their compliance status. Again, in not meeting the requirements, a leaking tank may go undiscovered and continue to leak.

V. Tank Design, Construction, Installation, and Repair

This category covers a broad array of requirements for existing and new underground and aboveground tanks. This category is applied to USTs which have failed to meet the requirements of precision testing, new UST system performance standards, upgrade requirements, closure requirements, overfill protection, corrosion protection, release detection, secondary containment for new tanks which are within 500 feet of a public water supply system, and system compatibility with product to be stored. This category is applied to ASTs and USTs that are subject to and have failed to meet the SPCC requirements of planning and updated Oil Pollution Act requirements of spill response planning. ASTs and USTs are also subject to the National Fire Protection Association (NFPA) 30 - Flammable and Combustible Liquids Code that outline containment requirements and other construction requirements. NFPA 30 is enforced by the SFM. Lastly, ASTs are also subject to Department of Natural Resources regulations outlining containment requirements within flood plain management programs.

This category has been assigned “medium” reductions in reimbursements because the category relates to failure of preventive measures or inadequate construction/repair requirements that were intended to lessen the possibility of, or lessen the impact of, a release. Releases have happened and will continue to happen

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even when all design, construction, installation, and repair requirements are met. For this reason, the DEQ believes that “larger” reductions are not appropriate. At the same time, the DEQ believes that preventive measures are of high importance and therefore “small” reductions are not appropriate, as they do not convey this message.

VI. Release Detection/Tank Gauging

Category VI A addresses both a failure to apply release detection and inadequately performing release detection. Release detection in most cases involves several items that when paired together meet the total requirements of release detection. Release detection is also a requirement for new tank installations covered by category V A above. Category VI B. addresses both a failure to perform and inadequately performing inventory control (tank gauging), and record keeping.

Categories VI A and B are often times applied together on reimbursements. This is due to the fact that tank gauging when paired with annual precision testing meets the requirements of release detection for UST systems which do not meet the performance standards of Design and Installation Standards for New UST Systems, or the Upgrade Requirements for Existing UST Systems (Chapters 4 and 5 of Title 159). There exist other methods to meet the release detection requirements. Regardless of the chosen method, inventory control and record keeping is always a separate requirement.

Category VI A - release detection has been assigned “large” reduction percentages and limits because the DEQ believes that without release detection or with inadequate release detection, leaking tanks may go undiscovered and continue to harm or impact humans and the environment. With that same philosophy, category VI B - tank gauging has been assigned “medium” reduction percentages and limits. “Larger” reductions were not assigned to the tank-gauging category because the DEQ recognizes the inaccuracies, correction for temperature, metering methods, etc. associated with tank filling and gauging. Nonetheless, by not performing tank gauging or doing it improperly, a release may go undiscovered.

VII. Release Notification

Both the SFM and DEQ utilize regulations outlining requirements for immediate notification of a release or suspected release. The DEQ believes that immediate notification is of great importance for reasons such as taking immediate action to respond to a release to protect public health or taking immediate remedial measures to lessen the extent of impact to the environment. As such, “large” reductions are assessed for failure to notify in excess of 30 days, and non-participation in the fund (substantial non-compliance) is applied for failure to notify in excess of 90 days.

The term immediate seems straightforward but has been interpreted to mean varying degrees of time. The DEQ has recognized that often it is not possible to make immediate notification past business hours and has on occasion treated “next day” notification as meeting the notification requirements. For these reasons a “small” reduction is assigned for notifications within 2 to 7 days.

VIII. Release Abatement/Containment

This category generally addresses failures by RPs to physically respond to releases or improperly respond to releases. Abatement and containment requirements in the event of a release are found in DEQ Title 126. Common use of this category would be an instance where an RP flushes a petroleum release to waters of the State, rather than containing and lessening the impacts of the release. Such instances of “making the situation worse,” or “ignoring” the release altogether if immediate abatement and containment measures are necessary, are viewed by the DEQ as serious, and have therefore been assigned “medium to large” reduction percentages and limits.

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IX. Failure to Clean Up Documented Past Spills

This category is self explanatory except to note that the past spill(s) must be documented. That is, they must have been reported to the State or documented by some other reliable method that the DEQ would recognize, such as, notification to a local regulatory body. The DEQ believes that such documentation is necessary to make reductions in reimbursement. In reality, almost every tank system has spills of varying sizes throughout the history of use. Some are cleaned up, some are not; some are “sort of” cleaned up. Often times this “historical contamination” adds to or is the sole source of ground water contamination. For these reasons, the DEQ has assigned “medium” reduction percentages and limits to this category.

X. Tank Permits at Time of Removal/Closure

Categories X A and B address a failure to obtain a closure permit and failure to use a certified closer. These categories have been assigned “large” and “medium” reduction percentages and limits respectively. The DEQ believes that obtaining a closure permit and utilizing a certified closer are important in identifying releases and in decreasing the opportunities for dishonesty in reporting. Because the SFM and DEQ cannot be at every removal/closure, the permitting and certification process has been developed to ensure that releases are identified, assessed, and reported in a responsible and honest fashion.

XI. Disposal of Wastes

Disposal of wastes from removal of an UST system are subject to DEQ approval. Contaminated soils are generally classified as special waste and regulated under DEQ Title 132. Sludges and contaminated wastewater may be hazardous waste. This category is most commonly utilized when no contact is made with the DEQ regarding disposal of wastes generated from an UST, and improper disposal has occurred. An example of improper disposal would be the dumping of contaminated soil in an unapproved location such as on the banks of a waterway. “Medium to large” reduction percentages and limits are assigned to this category because the DEQ believes that improper disposal can enlarge the scope of contamination not only at a leaking UST site, but also off-site where contamination may be first introduced as a result of improper disposal. Further, improper disposal may lead to the contamination of another medium that may be more fragile and/or more difficult to remediate.

XII. Non-Compliance with DEQ Timetables

The DEQ sets timetables for completion of remedial action phases for various reasons: (a) to reach cleanup in a short timeframe and therefore be able to address more sites, (b) to keep the scope of the problems from enlarging, (c) to ensure that human health threats are eliminated, (d) to address all sites in a consistent manner, and (e) to reach site closure more economically. These are only some of the reasons that timeframes are established. The DEQ has assigned a 10% reduction to this category with no limit. Failing to meet a timetable has little to do with the reasons for setting limits for the above categories. The reduction is one-time - for the particular work effort or phase that may be in question. The reductions for Categories I - XI are lifetime - they are reduced from all reimbursements until the limit is reached.

To ensure that the DEQ has made all reasonable attempts at attaining voluntary compliance as contemplated in NEPA, the DEQ assesses this reduction in the following manner. If a compliance date is missed anywhere during the chronological history of site cleanup, and a single warning letter was sent informing the RP of their compliance status, no reduction is assessed. This instance of non-compliance is forgiven. If then after such a warning letter is sent and one or more compliance dates are missed in the ongoing history of site investigation and cleanup, a 10% reduction for each corresponding missed compliance date and associated work effort or phase of remediation is assessed. If no warning letters are

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sent informing the RP of their compliance status, no reductions are assessed no matter how many compliance dates are missed.

This category may also be applied to a reimbursement where a Stipulated Agreement was not adhered to by the responsible party. This would not require a warning letter as described above.

XIII. Non-Compliance with Title 200 Provisions

Category XIII. A. One of the eligibility criteria established in Title 200 is that the DEQ has approved the plan for remedial action. The reasons for this approval process are many; however, simply stated the DEQ approves plans to ensure that the remedial action is sufficient, is economical, is satisfying regulatory requirements, and is not contradicting or violating any other environmental statutes or regulations.

For work performed during or before April 1995, a 25% reduction has been assigned. Although approval of a plan for remedial action is one of the eligibility criteria for participation in the fund, the DEQ believes that an argument could be made that no harm has been caused if a plan is subsequently approved. Further, the DEQ has interpreted the approval aspect of the act and Title 200 regulation to imply approval before any work is initiated. Title 200 requires Departmental acceptance of an increment of remedial action prior to reimbursement of costs associated with that phase. The DEQ will not wholly accept an increment of remedial action (and work product) if the work was done before approval. With this in mind, the DEQ believes these instances of non-compliance should still be allowed to be reimbursed from the fund at 75% of total expenses associated with the particular work effort or phase of remedial action that may be in question.

Statutory changes made to Neb. Rev. Stat. §66-1525 (2) (d), established the voluntary remedial action program (VRA) for work performed after April 1995. Under VRA, responsible persons may undertake remedial actions before Departmental approval. This allows responsible persons with backlogged, suspended, or active sites to perform remedial activities and receive reimbursement at a later date. However, the responsible person and/or their consultant must follow all applicable guidance, regulations, and statutes. Reimbursement will not be made until the site is activated or reactivated and/or the work performed is approved.

Category XIII. B. This section addresses instances where not only was remedial action taken without approval, but the DEQ subsequently disagreed with the remedial action plan in whole or part and did not approve of the plan. The DEQ believes that in these instances the eligibility criteria is clearly not met and therefore all expenses are ineligible.

Category XIII. C. Pursuant to Chapter 2, Section 007, applicants who incur expenses in excess of the applicable deductible amount must submit their Title 200 application in a timely fashion. For costs incurred on or before June 11, 1997, an application must have been submitted by June 11, 1998. For costs incurred after June 11, 1997, an application must be submitted within one year of the compliance date established by the DEQ when the remedial phase is approved or the actual completion date of the remedial stage whichever is later. Chapter 2 also states that applications submitted to the DEQ subsequent to this time limit may be subject to reimbursement reduction or denial.

The tiered, maximum-limit approach to reimbursement reduction for this category is consistent with the manner in which the document addresses other non-compliance issues that are “time sensitive” (e.g., release notification). The DEQ believes that the submittal period categories are appropriate for a number of reasons. First, a responsible person has a one-year period to submit his/her application before any reduction is assessed. As environmental consultants and contractors typically invoice their clients on a monthly basis, and most remediation phases extend over a period of several months, responsible persons

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have ample opportunity over the course of a remediation phase to gather any necessary backup documentation that might be needed in order to complete their application form. Even should an applicant wait until he/she receives the final invoice of the phase before assembling their application, a one-year period is adequate to obtain necessary invoice/payment documentation. In addition, under provisions in Section 007.03, applicants who submit an incomplete application within the one-year period gain an additional 30 days to correct and resubmit their application without reduction.

Additionally, a responsible person is not penalized when, due to unforeseen difficulties, his/her consultant is unable to complete a remedial phase within the original compliance deadline. However, the RP and/or their consultant must obtain a deadline extension from their DEQ project manager. This extension request should be made two weeks before the original deadline in writing. This new extended compliance deadline then becomes the date from which the one-year application submittal period originates.

With regard to the 100% reduction in reimbursement for application submitted 61 or more days following the application deadline, it should be noted that this timely submittal requirement was instituted, in part, due to the many responsible persons that have performed remedial work and elected not to participate in the Title 200 reimbursement program but failed to inform the DEQ of their intentions. In the past, these sites represented an obligation to the fund that was impossible to quantify. Now, however, through implementation of a 100% reduction, the DEQ has the ability to take such sites “off the books” and thus more efficiently prioritize and utilize the funds available.

XIV. Substantial Non-Compliance—Categories I - XI

The Act directs the DEQ to determine if owners or operators were in substantial compliance with all applicable rules and regulations as an eligibility criterion for reimbursement, and gives the DEQ duty and authority to reduce reimbursements by as much as 100% for non-compliance. Limits have been assigned to categories I through XI and therefore, even when several categories are applied to a single site, a responsible party may still be eligible for reimbursement of the majority of site remedial action costs. This, however, is not the case when categories that may be added together total greater than or equal to 100%. Being at or above 100% constitutes “substantial non-compliance,” and denial of any reimbursement from the fund. If a responsible person was willfully non-compliant in three of the “large” categories, that is, three individual assessments of 33⅓%, the DEQ would find the person to be substantially non-compliant.

XV. Flexibility

The DEQ recognizes that this policy cannot cover every circumstance and therefore should incorporate the ability to be flexible where instances of odd circumstance, including the extent and reasons for non-compliance, warrant such flexibility. In such instances where the DEQ utilizes this flexibility, detailed documentation will be provided to the RP and the DEQ file.

Title 200 Reimbursement Reduction Guidance1. Requirements Before Closure2. Requirements Before or At the Time of Closure3. Requirements at the Time of Closure4. Post Closure RequirementsXII. Non-Compliance with DEQ Timetables (One Time Reduction)XIII. Non-Compliance with Title 200 Provisions (One Time Reductions)XIV Substantial Non-Compliance—Categories I - XIXV Flexibility

I. PRRA Fund Fee PaymentsII. Registration/Permitting of Non-Exempt TanksIII. Registration/Permitting of Exempt TanksIV. Registration of Tanks Permanently Out of ServiceV. Registration of Tanks Permanently Out of ServiceVI. Release Detection/Tank GaugingVII. Release NotificationVIII. Release Abatement/ContainmentIX. Failure to Clean Up Documented Past SpillsX. Tank Permits at Time of Removal/ClosureXI. Disposal of WastesReimbursement Reduction Support Document1. Purpose2. DEQ Determinations3. Exemption4. Percentages and Limits5. Compliance Violation CategoriesI. PRRA Fund Fee PaymentsII. Registration/Permitting of Non-Exempt TanksIII. Registration/Permitting of Exempt TanksIV. Registration of Tanks Permanently Out of ServiceV. Tank Design, Construction, Installation, and RepairVI. Release Detection/Tank GaugingVII. Release NotificationVIII. Release Abatement/ContainmentIX. Failure to Clean Up Documented Past SpillsX. Tank Permits at Time of Removal/ClosureXI. Disposal of WastesXII. Non-Compliance with DEQ TimetablesXIII. Non-Compliance with Title 200 ProvisionsXIV. Substantial Non-Compliance—Categories I - XIXV. Flexibility