It is enacted by the General Assembly as follows:

SECTION 1. Title 46 of the general laws entitled "Waters and Navigation" is hereby amended by adding thereto the following chapter:

{ADD 46-12.9-1. Short title. -- ADD} {ADD This chapter shall be known as the "Rhode Island Underground Storage Tank Financial Responsibility Act." ADD}

{ADD 46-12.9-2. Legislative findings. -- ADD} {ADD The general assembly finds: (a) that a state administered Underground Storage Tank (UST) clean-up fund is needed to provide an effective mechanism for USTs owners to comply with financial responsibility requirements and to insure that the environmental and public health impacts of UST leaks are addressed in an effective and timely manner.

(b) Certain tank owners must be able to demonstrate one million dollars ($1,000,000) of liability coverage to satisfy the U.S. Environmental Protection Agency (EPA). Specifically the EPA requirement is that all tank owners must demonstrate financial responsibility of up to one million dollars ($1,000,000) per incident and up to two million dollars ($2,000,000) in the aggregate for damages. Failure by the state to create a state-sponsored fund will result in enforcement action by the EPA which can include both financial penalties against tank owners and closure of tanks, if the owner fails to demonstrate financial responsibility.

(c) The Rhode Island Department of Economic Development recently concluded that failure by the State of Rhode Island to enact a state fund will adversely impact the state's economy by eighteen million dollars ($18 million) annually. ADD}

{ADD 46-12.9-3. Definitions. -- ADD} {ADD When used in this chapter:

(1) "Department" means the Rhode Island Department of Environmental Management.

(2) "Director" means the director of the Department of Environmental Management or his or her designee.

(3) "Fund" means the Rhode Island Underground Storage Tank Financial Responsibility Fund established herein.

(4) "Fund Administrator" means the Clean Water Finance Agency established pursuant to the provisions of chapter 12.2 of title 46 or any other agency of state government designated by the governor.

(5) "Operator" means any person in control of, or having the responsibility for, the daily operation of an underground storage tank system.

(6) "Owner" means any agency or political subdivision of the state, any municipality, public or private corporation or authority, individual, trust, firm, joint stock company, partnership, association or other entity, and any officer, employee or agent thereof.

(7) "Petroleum" means crude oil, crude oil fractions, and refined petroleum fractions, including gasoline, kerosene, heating oils, used/waste oil and diesel fuels.

(8) "Release" means any leaking, emitting, discharging, escaping or leaching of petroleum from any underground storage tank or underground storage tank system into the environment.

(9) "Responsible party" means the person or persons liable for release of petroleum.

(10) "Site" means any location at which or from which there has been a release of petroleum associated with an underground storage tank or an underground storage tank system or any location to which such petroleum has migrated.

(11) "Underground storage tank" means any one (1) or combination of tanks, including underground pipes connected thereto, used to contain an accumulation of petroleum and the volume of which, including the volume of underground pipes connected thereto, is ten percent (10%) or more beneath the surface of the ground.

(12) "Underground storage tank system" means an underground storage tank and its associated ancillary equipment and containment system, if any.

(13) "Review Board" means the Rhode Island Underground Storage Tank Financial Responsibility Review Board established pursuant to the provisions of section 47-12.9-8. ADD}

{ADD 46-12.9-4. Petroleum cleanup fund. -- ADD} {ADD (a) There is hereby established the Rhode Island Underground Storage Tank Financial Responsibility Fund.

(b) The fund shall consist of any funds which the state may from time to time appropriate, as well as monies received as gifts, grants, bequests, donations or other funds from any public or private sources or annual tank registration fees as established herein which are intended to serve the purposes of the Rhode Island Underground Tank Financial Responsibility Fund and all funds collected pursuant to section 46-12.9-11.

(c) All funds received under the provisions of this chapter shall be paid to and received by the general treasurer of the state of Rhode Island, who shall keep such monies in a distinct interest-bearing restricted receipt account to the credit of and for the exclusive use of the fund. ADD}

{ADD 46-12.9-5. Purpose of fund. -- ADD} {ADD The purpose of the fund shall be to facilitate the clean-up of leaking underground storage tanks or underground storage tank systems, in order to protect the environment including drinking water supplies and public health. The fund shall provide reimbursement to responsible parties for the eligible costs, expenses and other obligations incurred by them as a result of release of petroleum from underground storage tanks or underground storage tank system as provided herein. Monies in the fund shall be dispensed only upon the order of the general treasurer or his or her designee for the following purposes, and only after the approval of the review board:

(a) Administrative expenses, personnel, expenses and miscellaneous costs directly related to the fund management incurred by the fund administrator and approved by the review board in carrying out fund activities; Provided, however, that no more than three (3%) percent of the fund balance as recorded at the beginning of each fiscal year or one hundred and fifty thousand dollars ($150,000) whichever is greater shall be dispensed from the fund for administrative purposes during the fiscal year; and

(b) The fund shall pay not more than one million dollars ($1,000,000) of eligible costs, expenses and other obligations as defined in regulations promulgated hereunder and, as further defined in subsection (c) excluding legal costs and expenses, incurred by a responsible party as a result of a release of petroleum from an underground storage tank or underground storage tank system; provided, however, that a responsible party shall be responsible for the first twenty thousand dollars ($20,000) of said costs, expenses and other obligations excluding legal costs and expenses; and

(c) Costs, expenses and other obligations as shall be incurred by the responsible party for site investigation, site remediation or other corrective action activities ordered or directed by the department or voluntarily done by the responsible party; provided, however, that a responsible party must bear the financial responsibility set forth in subsection (b) of this section; and

(d) Reimbursement for any third party claim including, but not limited to, claims for bodily injury, property damage and damage to natural resources which are asserted against a responsible party and which have arisen as a result of a release of petroleum from an underground storage tank or underground storage tank system in an amount not to exceed one million dollars ($1,000,000) for each release as set forth in subsection (b) of this section; provided, that such claims are found by the review board to be justified, reasonable, related to the release of petroleum and not excessive or spurious in nature; and

(e) Costs, expenses or obligations incurred by the department in carrying out the investigative, remedial and corrective action activities at sites of a petroleum release associated with an underground storage tank or underground storage tank system where the responsible party fails to comply with an order of the department to take such corrective action. In the event of such failure, the department may access the fund to perform the ordered work and shall proceed to recover from the responsible party on behalf of the fund any amount expended from the fund by the department including expenses of not more than twenty thousand dollars ($20,000).

(f) Nothing contained in chapter 12.9 of title 46 shall be construed to prevent subrogation by the state of Rhode Island against any responsible party other than the owner and/or operator for all sums of money which the fund shall be obligated to pay hereunder plus reasonable attorneys' fees and costs of litigation and such right of subrogation is hereby created. ADD}

{ADD 46-12.9-6. Eligibility. -- ADD} {ADD In order to be eligible for reimbursement from the fund for costs, expenses and other obligations as set forth in the section 46-12.9-5, a responsible party must be subject to financial responsibility as required by the EPA and:

(a) Have complied with all state technical requirements for underground storage tanks and underground storage tank systems as promulgated by the department of environmental management pursuant to chapters 46-12 and 42-17.1, including but not limited to, requirements for registration, proper installation, spill containment, line leak detection, corrosion protection, leak detection, tank tightness testing, inventory control, closure and leak or spill reporting;

(b) Have incurred a cost, expense or obligation, whether for clean-up or related matters or for claims of third parties resulting from a release of petroleum from an underground storage tank or underground storage tank system. In order to apply for reimbursement from the fund, it shall not be necessary that the third party and the responsible party complete adjudication of any claim before submission to the review board; provided, however, that all such claims shall be reasonably verified and must be demonstrated to the reasonable satisfaction of the review board in order to be considered eligible for reimbursement. ADD}

{ADD 46-12.9-7. Rules and regulations. -- ADD} {ADD The review board, after consultation with the general treasurer and the department, is hereby authorized to promulgate, implement and amend regulations providing for the submission of claims to the fund and the timely disbursement of monies from the fund. Such regulations shall include, but not be limited to, the following:

(1) A means of notifying all eligible parties of the existence and functioning of the fund;

(2) The record keeping required of eligible parties for submission to and reimbursement from the fund;

(3) A set criteria which establishes the eligibility for reimbursement of specific costs, expenses and other obligations;

(4) A means of making periodic and partial reimbursement to eligible parties to enable such parties to meet their interim costs, expenses, and obligations;

(5) A method of providing reimbursement for costs, expenses and obligations incurred by an eligible party after the effective date of this chapter;

(6) A requirement that the review board render its decisions to an eligible party upon the receipt of a complete claim for reimbursement within sixty (60) days following its receipt of completed claim;

(7) Establishing procedures for verifying claims presented under this chapter;

(8) Establishing procedures for approving, modifying or denying claims;

(9) Empowering the review board to levy an annual tank registration fee of five hundred dollars ($500) per underground storage tank not to exceed two thousand five hundred dollars ($2,500) per site on underground storage tanks which are subject to financial responsibility regulation and which are used to store petroleum products for which the motor and special fuels tax is inapplicable including but not limited to underground storage tanks used for the distribution of No. 2 heating oil, used/waste oil, kerosene, aviation fuel or other materials as deemed appropriate by the review board; provided however that heating oil used solely for onsite consumption shall be exempt from fees assessed under this statute; and

(10) The eligibility of claims shall be determined by the board, provided however, that no reimbursement costs shall be considered for claims that occurred prior to the effective date of this act. ADD}

{ADD 46-12.9-8. Review board. -- ADD} {ADD There is hereby established a review board to oversee administration and implementation of the fund, to review submissions and claims received from eligible parties and to proceed to approve, modify or deny disbursements to eligible parties and to have such other powers as are provided herein.

(a) The review board shall consist of thirteen (13) members, as follows: the director of the department or his or her designee; the director of the department of business regulation or his or her designee; the auditor general of the state or his or her designee; a representative of the Rhode Island Petroleum Association to be appointed by the speaker of the house; a representative of the independent oil marketers association of New England to be appointed by the senate majority leader; a representative of the oil heat institute appointed by the governor; a member of the house of representatives appointed by the speaker of the house; a member of the senate appointed by the senate majority leader; a member of a state-wide environmental organization to be appointed by the governor; a representative of the Independent Petroleum Dealers Association of Rhode Island appointed by the governor; a member of the Rhode Island marine trade association, who is a marina operator and/or owner, to be appointed by the governor; a member of the general public, to be appointed by the governor; a member of the house of representatives to be appointed by the house minority leader.

(b) The review board shall file an annual report of all receipts and disbursements with the governor, general assembly and secretary of state. When claims are pending, the review board shall meet no less than six (6) times per year. ADD}

{ADD 46-12.9-9. Reconsideration hearing. -- ADD} {ADD Any person aggrieved by a decision of the review board may request a reconsideration hearing before the review board under the provisions of the regulations of the board and such regulations shall be consistent with the Rhode Island Administrative Procedures Act. Any such decision shall contain a notice of the right to request a hearing and may specify a reasonable time limit, not to exceed twenty-one (21) days within which said person shall request a hearing. If no such request is made in a timely manner, the said person shall be deemed to have assented to the decision. If a timely request is received, the review board within a reasonable period of time shall act upon such request in accordance with the provisions of the Rhode Island Administrative Procedures Act. ADD}

{ADD 46-12.9-10. Nonparticipation in insurer's insolvency fund. -- ADD} {ADD Notwithstanding any other provisions of the law to the contrary, the Rhode Island underground storage tank financial responsibility act shall not be considered an insurance company or insurer under the laws of this state and shall not be a member of nor be entitled to claim against the Rhode Island insurer's insolvency fund created under chapter 27-34 of the general laws. ADD}

{ADD 46-12.9-11. Funding. -- ADD} {ADD (a) There is hereby imposed an environmental protection regulatory fee of at the rate of one cent ($0.01) per gallon payable of motor fuel, to be collected by distributors of motor fuel when such product is sold to owners and/or operators of underground storage tanks. Each such distributor shall be responsible to the tax administrator for the collection of the regulatory fee, and if the distributor is unable to recover such fee from the person who ordered such product, the distribution shall nonetheless remit to the tax administrator the regulatory fee associated with such delivery. In accordance with the regulations to be promulgated hereunder, the fee shall be collected, reported and paid to the Rhode Island division of taxation as a separate line item entry, on a quarterly tax report by those persons charged with the collection, reporting, and payment of motor fuels taxes. This fee shall be administered and collected by the division of taxation. Notwithstanding the provisions of this section, the fee shall not be applicable to purchases by the United States government.

(b) All fees derived under the provisions of this chapter, including tank registration fees assessed pursuant to section 46-12.9-7(9) shall be paid to and received by the general treasurer of the state of Rhode Island, who shall keep such monies in a distinct interest-bearing restricted receipt account to the credit of and for the exclusive use of the fund. All such fees collected may be invested as provided by law and all interest received on such investment shall be credited to the fund.

(c) When the fund reaches the sum of eight million dollars ($8,000,000), the imposition of the fee set forth in this chapter shall be suspended, and the division of taxation shall notify all persons responsible for the collection, reporting and payments of the fee of the suspension. In the event that the account balance of the fund subsequently is reduced to a sum less than five million dollars ($5,000,000) as a result of fund activity, the fee shall be reinstated by the division of taxation, following proper notice thereof, and, once reinstated, the collection, reporting and payment of the fee shall continue until the account balance again reaches the sum of eight million dollars ($8,000,000).

(d) Upon the determination by the review board that the fund has reached a balance sufficient to satisfy all pending or future claims, the review board shall recommend to the general assembly the discontinuation of the imposition of the fee created in section 46-12.9-11. ADD}

{ADD 46-12.9-12. Severability clause. -- ADD} {ADD If any of the provisions of this chapter or the applicability thereof is held invalid by any court of competent jurisdiction, the remainder of these provisions of this chapter shall not be affected hereby. ADD}

SECTION 2. This act shall take effect upon passage.