Press Release from Ed Hatchett, Release Date: January
31, 2000 |
Commonwealth of Kentucky |
| (Frankfort
1-31-2000) State Auditor Ed Hatchett has released a
performance audit of the Petroleum Storage Tank Environmental Assurance Fund, faulting the
current reimbursement process for preventing timely and cost-effective cleanup of
underground storage tank sites. The audit identified an absence of coordination between the Fund in the Public Protection and Regulation Cabinet and the Underground Storage Tank Branch in the Natural Resource and Environmental Protection Cabinet as the chief obstruction to effectiveness and efficiency. As evidence, Hatchett pointed to the Cabinets' unfinished shared imaging and database system, begun in April 1996. "After four years and $1.2 million, the system is still not complete." Further, the audit found that because the reimbursement process focuses on inputs and not outcomes, there is little incentive for cost-effective cleanup of contaminated sites. For example, detailed documentation of individual cleanup costs leads to claim deficiencies, creating a backlog for the Fund. The audit found that alternative methods such as pay-for-performance contracting or firm fixed pricing have been successfully used by other states to simplify and accelerate the reimbursement process. Such alternative methods have not been implemented in Kentucky because of the absence of coordination and planning. "Both agencies have a responsibility to the taxpayers of Kentucky to plan and work together to improve the reimbursement process" In Kentucky, the Fund administers the reimbursement of expenses associated with UST removal and cleanup. UST regulatory and environmental issues, on the other hand, are the responsibility of the UST Branch. "Poor coordination between the two destroys incentive for cost-effective cleanup," said Hatchett. Currently, cleanup contractors may bill the Fund for work until the amount reaches a statutory cap of $1 million per site. Furthermore, the UST Branch does not concern itself with the costs associated with corrective action plans. As a result, long-term cleanup activities may endanger the solvency of the Fund. As of June 30, 1999, the Office has processed 8,911 claims for reimbursement and has paid out over $119 million in cleanup costs. However, the Fund has generated approximately $268 million since it's inception in 1990. As of October 1999, the fund's balance was approximately $138 million. However, after accounting for obligations that are pending reimbursement, the fund's balance is approximately $31 million. |
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Edward B. Hatchett Jr. |
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