RULES AND REGULATIONS
INSURANCE DEPARTMENT
UNDERGROUND STORAGE TANK
INDEMNIFICATION BOARD
[25 PA. CODE CH. 977]
Fees and Collection Procedures
[32 Pa.B. 6258] The Insurance Department (Department) and the Underground Storage Tank Indemnification Board (Board) amend §§ 977.12 and 977.33 (relating to owner and operator fees; and fund coverage and exclusions) to read as set forth in Annex A. Sections 206, 506, 1501 and 1502 of The Administrative Code of 1929 (71 P. S. §§ 66, 186, 411 and 412) provide the Insurance Commissioner with the authority to promulgate regulations governing the enforcement of the laws relating to insurance. Section 705 of the Storage Tank and Spill Prevention Act (act) (35 P. S. § 6021.705) provides the Board with the authority to promulgate regulations concerning the establishment of fees to be paid by participants in the Underground Storage Tank Indemnification Fund (Fund). Public notice of this amendment is impractical and unnecessary because the proposed changes are needed to ensure the solvency of the Fund and any input from the public would not decrease the necessity to increase the fees collected.
Notice of proposed rulemaking is omitted in accordance with section 204(3) of the act of July 31, 1968 (P. L. 769, No. 240) (45 P. S. § 1204(3)), known as the Commonwealth Documents Law (CDL). In accordance with section 204(3) of the CDL, notice of proposed rulemaking may be omitted when the agency for good cause finds that public notice of its intention to amend an administrative regulation is, under the circumstances, impracticable and unnecessary.
Purpose
The amendments will bring the regulation's fees to the appropriate levels as recommended by an actuarial report that was completed on September 12, 2002. After reviewing this report, the Board determined that this increase is necessary to maintain the solvency of the Fund for the public health and safety of this Commonwealth's citizens and their environment. The actuarial study, performed by MMC Enterprise Risk Consulting, Inc., determined that an increase in the gallon and capacity fees was necessary to maintain the actuarial soundness of the Fund in the future.
Explanation of Regulatory Requirements
Section 977.12 is being changed to reflect the fees that the Board approved after extensive review and discussion of the report.
Section 977.33 is being changed to reflect the changes made to the act by the amendments contained in the act of December 13, 2002 (P. L. 900, No. 99). These amendments increase the limits of liability for corrective action costs and bodily injury and property damage claims that may occur from an underground release.
Fiscal Impact
An owner or operator transacting business in this Commonwealth will be affected by these amendments. The fee increases approved by the Board are significant; however, despite these increases, the fees are only half as much as they were when the program began in 1994.
The costs that the 2,045 local governments/school districts are currently paying will increase by approximately $482 per quarter or $1,928 per year for each municipality/school district.
State-owned tanks are exempt from all Fund fees.
General Public
Because the public is a consumer of goods and services provided by owners and operators of an underground storage tank (UST) or a heating oil tank (HOT), any increase to the fees could result in higher prices to consumers. However, it is expected that this increase in fees will result in an additional $.81 per month to motorists, in accordance with a survey on vehicle fuel consumption and expenditures by United States' households, conducted by the Energy Information Administration, Office of Energy Markets and End Use.
This increase is proposed to keep the Fund solvent after an actuarial study completed in September 2002 indicated the need for additional revenue to maintain the Fund's actuarial soundness.
Effectiveness/Sunset Date
This final-omitted rulemaking will become effective January 1, 2003.
Paperwork
Adoption of this final-omitted rulemaking should not require significant paperwork for the owners or operators of USTs or HOTs. The paperwork necessary after the increase is expected to be the same as before the increase was implemented.
Persons Regulated
This final-omitted rulemaking applies to owners or operators of USTs and HOTs in this Commonwealth.
Contact Person
Questions regarding the final-omitted rulemaking may be addressed to Peter J. Salvatore, Regulatory Coordinator, Insurance Department, 1326 Strawberry Square, Harrisburg, PA 17120, (717) 787-4429. Questions may also be e-mailed to psalvatore@state.pa.us or faxed to (717) 772-1969.
Regulatory Review
Under section 5.1(c) of the Regulatory Review Act (71 P. S. § 745.5a(c)), on October 25, 2002, the Department and the Board submitted a copy of this rulemaking with the proposed rulemaking omitted to the Independent Regulatory Review Commission (IRRC) and to the Chairpersons of the House Committee on Insurance and the Senate Committee on Banking and Insurance. On the same date, the final-omitted rulemaking was submitted to the Office of Attorney General for review and approval under the Commonwealth Attorneys Act (71 P. S. §§ 732-101--732-506).
In accordance with section 5.1(d) of the Regulatory Review Act, this final-omitted rulemaking was deemed approved by the Senate and House Committees on November 14, 2002. The Attorney General approved this final-omitted rulemaking on November 8, 2002. Under section 5.1(e) of the Regulatory Review Act, IRRC met on November 21, 2002, and approved this final-omitted rulemaking.
Findings
The Insurance Commissioner finds that:
(1) There is good cause to amend §§ 977.12 and 977.33 effective upon publication with the proposed rulemaking omitted. Deferral of the effective date of these regulations would be impractical and not serve the public interest. Under section 204(3) of the CDL, there is no purpose to be served by deferring the effective date. An immediate effective date will best serve the public interest by ensuring that fees have the full potential that the actuarial study predicted.
(2) There is good cause to forego public notice of the intention to amend §§ 977.12 and 977.33 because notice of proposed rulemaking under the circumstances is unnecessary and impractical because the changes proposed are necessary to ensure the solvency of the Fund and any input from the public would not decrease the necessity to increase the fees collected.
Order
The Insurance Commissioner, acting under the authority in sections 206, 506, 1501 and 1502 of The Administrative Code of 1929, orders that:
(1) The regulations of the Department, 25 Pa. Code Chapter 977, are amended by amending §§ 977.12 and 977.33 to read as set forth in Annex A, with ellipses referring to the existing text of the regulations.
(2) The Department shall submit this order and Annex A to the Office of Attorney General and the Office of General Counsel for approval as to form and legality as required by law.
(3) The Department shall certify this order and Annex A and deposit them with the Legislative Reference Bureau as required by law.
(4) This order shall take effect January 1, 2003.
M. DIANE KOKEN,
Insurance CommissionerE. BRUCE SHELLER,
Chairperson
Underground Storage Tank Indemnification Board(Editor's Note: For the text of the order of the Independent Regulatory Review Commission, relating to this document, see 32 Pa.B. 6016 (December 7, 2002).)
Fiscal Note: 11-216. No fiscal impact; (8) recommends adoption.
Annex A
TITLE 25. ENVIRONMENTAL PROTECTION.
PART VIII. UNDERGROUND STORAGE TANK INDEMNIFICATION BOARD
CHAPTER 977. UNDERGROUND STORAGE TANK INDEMNIFICATION FUND
Subchapter B. FEES AND COLLECTION PROCEDURES § 977.12. Owner and operator fees.
* * * * * (b) Tank and gallon fees. A UST owner or operator storing gasoline, new motor oil, hazardous substances, gasohol, aviation fuel, mixture, farm diesel and other types of substances based on the tank registration information maintained by the DEP may be assessed the following fees:
* * * * * (2) Gallon fee. A gallon fee on all regulated substances entering a UST of $.01 per gallon. (For example, 10,000 gallons at $.01 per gallon equals $100).
* * * * * (d) Capacity fee. An owner or operator which stores regulated substances including diesel, heating oil, used motor oil, kerosene and unknown substances based on the tank registration information maintained by the DEP may be assessed a capacity fee of $.075 per gallon of capacity, which amount is established in accordance with section 705(d)(2) of the act (35 P. S. § 6021.705(d)(2)). (For example, 10,000 gallons at $.075 per gallon equals $750).
Subchapter C. COVERAGE AND CLAIMS PROCEDURES § 977.33. Fund coverage and exclusions.
(a) Fund coverage.
* * * * * (4) Limits of liability. Payment of corrective action costs and bodily injury and property damage claims (See section 704 of the act (35 P. S. § 6021.704)) are subject to the following limits of liability:
(i) Payments for reasonable and necessary corrective action costs, and bodily injury or property damage may not exceed a total of $1.5 million per tank per occurrence and may not exceed the annual aggregate limit.
(ii) Payments may not exceed:
(A) An annual aggregate of $1.5 million for each owner and operator of 100 or less USTs or an owner or operator of 100 or less HOTs.
(B) An annual aggregate of $3 million for each owner or operator of 101 or more USTs or an owner or operator of 101 or more HOTs.
* * * * *
[Pa.B. Doc. No. 02-2272. Filed for public inspection December 20, 2002, 9:00 a.m.]
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