Two weeks after the formal close of the Tennessee legislative season, a committee of lawmakers agreed to give the state’s petroleum companies a break.
The Joint Government Operations Committee approved new rules that shift the financial burden of cleaning up toxic spills at gas stations and truck stops from business owners to taxpayers for the next five years.
The new rules will save Pilot Flying J, Chevron, Exxon and other companies, large and small, $2 million each year by eliminating environmental fees, while taxpayers will remain on the hook for roughly $14 million annually through a four-tenths-of-a-cent, per-gallon gas tax.
The fees and gas tax, for decades, have been earmarked for a state fund used to pay for the clean-up of toxic spills from company-owned underground storage tanks.
When those tanks leak, they can spill dangerous levels of hazardous waste into soil and groundwater. Cleaning up those leaks is an expensive undertaking that — up till now — has been shared by taxpayers and industry.
The new rules, for the first time, also give company owners with a history of environmental violations access to the state’s clean-up fund for leaking tanks. Previously, companies who failed to comply with state environmental rules were barred from accessing state funding.
Officials with the Tennessee Department of Environment and Conservation told lawmakers that the current solvency level of the underground storage tank fund — which has remained steady at about $50 million for years, even after clean up costs — allow for the suspension of company fees.
“This is a great rule,” said Sen. Mike Bell, R-Riceville. “This rule does nothing to change the inspection process. But what it does do, because there’s such a hefty reserve that’s been built up, it allows the department not to have to charge our businesses back home who have underground tanks these tank fees over the next five years, saving local businesses about $10 million dollars. This is putting $10 million back into our economy, back into our local business’ pockets”
Sen. Heidi Campbell, D-Nashville, called the rule “appalling.”
“The Lee administration is shifting responsibility to small businesses and families,” she said. “They’re passing the buck of corporate interests to the citizens. Obviously the purpose of the funds is to protect public land and water. It’s common sense that business owners who pollute our land and water should pay the price.”
The rule change eliminates the $125-per-tank annual fee paid into the states’ clean-up fund by companies for the next five years.
Mom and pop gas stations may only own a couple of tanks, but corporate-run gas station and truck stop chains can collectively own hundreds, according to a state database. The Love’s Travel Stops chain has 141. Pilot Flying J Travel Stops operate more than 500 tanks in Tennessee. Eliminating tank fees can save corporate chains tens of thousands of dollars each year.
The payouts from the public remediation fund, when spills occur, far exceed the cost of even hefty annual tank fees. Each tank failure can be reimbursed for up to $2 million in clean up costs, after companies pay a deductible.
The elimination of fees is the latest in a decade-long shift from holding company owners financially responsible for paying clean up costs that began under the administration of former Tennessee Governor Bill Haslam, whose wealth was amassed through his family’s ownership of the Pilot Flying J truck stop chain.
In 2012, Haslam successfully passed a law that removed consumer representation from the Underground Storage Tank and Solid Waste Disposal Control Board, which administers the clean up fund and enforces environmental rules.
Former Tennessee Gov. Bill Haslam (Photo: TN.gov)
Former Tennessee Gov. Bill Haslam (Photo: TN.gov)
Under the administration of Gov. Bill Haslam, whose family owns the Pilot Flying J truck stop chain, Tennessee began to absolve company owners from financial responsibility for clean up costs.
The 14-member board retained its four petroleum interest representatives. In 2015, the board voted in favor of a resolution that increased the state dollars available to private companies for environmental spills caused by failures or accidents from $1 million to $2 million. The resolution became law later that year.
In 2016, the board voted in favor of another resolution to give itself the authority to suspend fees entirely, despite hearing from a TDEC official that a “historically high burden of this funding has shifted onto the public.” The legislature that year voted in favor of giving the board the authority, which it ultimately acted upon last month.
The year before Haslam took office, in 2010, companies were contributing 19% of the annual fund collections, according to TDEC budget reports, with taxpayers footing nearly all of the remaining balance in the clean up fund. By 2015, their share was down to 10%, leaving taxpayers to contribute nearly all of the remaining funds — although a small portion comes from the federal government and fines paid by companies that violate tank environmental rules.
With last month’s rule change, taxpayers will be responsible for nearly 100% of the clean up fund’s revenue going forward.
Tennessee Lookout is a nonprofit news site covering state government and politics.