Big job, little money: State lags in tank cleanup

Dale Flaherty said he and his friends in the resort town of Lake Ann used to joke that buying gasoline at the local convenience store was risky, because the fuel was allegedly contaminated with water.

And they were right, sort of. Contamination did occur. No one knew until the late 1990s, though, that gasoline from the store’s leaking underground fuel tanks was contaminating the town’s beloved lake.

State officials investigating a complaint of contaminated drinking water in Lake Ann, located west of Traverse City, found gasoline-related compounds in one residential well. The Michigan Department of Environmental Quality traced the problem back to leaking underground storage tanks at the nearby store, and discovered the submerged plume of fuel had reached the edge of Lake Ann, according to state records.

“On one lot, gasoline vapors were coming out of the ground by the lakeshore,” Flaherty said. “People were worried about how the fuel leak might affect our drinking water wells and … what did it mean for someone coming in contact with the chemicals in the lake.”

State officials determined that a toxic plume of about 7,000 gallons of gasoline was in the ground and flowing toward Lake Ann, said Ann Emington, a DEQ senior geologist.

The convenience store owner coudn’t afford a cleanup, so the Michigan Department of Environmental Quality used $3.4 million in taxpayer funds to contain the underground fuel spill and treat millions of gallons of contaminated groundwater.

“We usually don’t spent this kind of money on LUST (leaking underground storage tank) sites, but there was significant risk to people on the lake,” Emington said. The state put a lien on the store in a bid to recoup some of the cleanup costs.

Though pricey, the cleanup saved Lake Ann and prevented contamination of several drinking water wells. It also demonstrated the importance of having a state fund devoted to cleaning up the toxic legacy from leaking underground storage tanks, known as LUSTs.

 The absence of a designated cleanup fund is one of the reasons for Michigan’s huge backlog of contaminated LUST sites, according to a 2011 report by the U.S. Environmental Protection Agency. The state has 9,100 contaminated LUST sites and at least 1,440 of those pose an immediate risk to human health, according to the EPA report.

Michigan is one of just 14 states without a designated fund for cleaning up LUST sites, even though it has the nation’s second largest backlog of polluted sites, according to federal data.

“Michigan is the only state that takes on responsibility for a significant number of cleanups without having a state fund or other funding mechanism specifically in place to finance LUST cleanups,” according to the EPA study.

The state levies a gas tax that generates $56 million annually. Though intended for LUST cleanups, most of that money has been diverted in recent years to help balance the state budget, according to state records.

Many states spend far more on LUST cleanups. Some states reimburse businesses for cleanup costs.

California and Florida each spend more than $100 million annually on LUST cleanups, according to federal data.

Virginia reimburses businesses and individuals for qualified cleanup costs. The state’s cleanup fund is supported by a one-fifth of a penny per gallon tax on fuel products.

In Washington, the state’s Pollution Liability Insurance Agency makes private insurance more affordable for owners of underground storage tanks by re-insuring private insurers for cleanup costs over $75,000.

Tennessee, which has cleaned up 96 percent of its LUST sites, reimburses tank owners for up to $1 million of eligible cleanup costs.

But none of the states that fund cleanups of LUST sites has sufficient revenue to cover all the work needed, according to the EPA.

First attempt at cleanup fund flamed out

Michigan once had a LUST cleanup fund: The Michigan Underground Storage Tank Financial Assurance Act program was established in 1980.

Funded with a 7/8th of one-cent per gallon gas tax, MUSTFA supported state and privately funded cleanups at LUST sites. Overwhelming demand for grants, and fraud on the part of some cleanup contractors, drained the fund and it was declared insolvent in 1995.

The state still levies the 7/8th of 1-cent tax gas tax, which generates $56 million annually for the LUST program. DEQ officials have said the agency needs $177 million annually to reduce to the backlog of polluted sites and keep pace with new ones.

Anne Couture, acting chief of the DEQ’s remediation division, said she asked Gov. Rick Snyder to ensure the LUST program receives more of the $56 million annually that the gas tax generates.

From 2005-2007, the LUST program received just 7 percent of the gas tax revenue. That was increased to $20 million last year.

The governor has proposed $30 million in gas tax revenue for the LUST program in fiscal 2013.

Environmentalists, industry representatives agree that Michigan’s LUST program needs a larger, more stable funding source.

“A two-cent gas tax would probably be more realistic,” said Peter Bosanic, an environmental consultant who has worked on efforts to revampMichigan’s cleanup program.

Jeff Alexander is owner of J. Alexander Communications LLC, as well as a writer and media consultant at the National Wildlife Federation. He’s a former staff writer for the Muskegon Chronicle.