Petroleum Release Compensation Fund - Frequently Asked Questions
Q1: What is the PRCF?
A: The Petroleum Release Compensation Fund (PRCF) is a state-operated program that can financially assist petroleum tank owners with the cleanup of petroleum releases. The PRCF has been approved by the Environmental Protection Agency as an acceptable financial assurance mechanism for underground petroleum storage tanks that are regulated under 40 CFR part 280. The PRCF was established under the Petroleum Inspection and Release Compensation Act in 1988.
Q2: What is the revenue source for the PRCF?
A: The PRCF receives revenue from a $0.02 per gallon tank inspection fee. The PRCF receives 10.65% of the revenues collected, or about $1.6 million per year. The remainder goes to the Ethanol Fuel Fund and Capital Construction Fund. The tank inspection fee is collected by the South Dakota Department of Revenue under a contract with the PRCF.
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Q3: How is the PRCF administered?
A: The PRCF is administered by the Department of Environment and Natural Resources (DENR). The Secretary of DENR is advised by a 5-member citizen's board appointed by the Governor. There are offices in Pierre, Watertown and Sioux Falls.
Q4: Who is eligible to receive financial assistance from the PRCF?
A: A responsible person or a person who has custody of a responsible person's property is eligible to apply for financial assistance from the PRCF. The term "responsible person" refers to the person who owned or operated a tank or tank system during or after a release. A person who is eligible for financial assistance from the PRCF is called a "covered party". Most tank owners are automatically covered. Pre-registration with the PRCF is not required.
Q5: How is financial assistance provided from the PRCF?
A: The PRCF provides financial assistance by reimbursing a covered party for certain expenses incurred as a result of petroleum cleanup efforts. The covered party can submit an application to the PRCF when they either suspect or have documented a petroleum release.
Q6: Is there a deductible?
A: Yes. There is a $10,000 deductible per occurrence.
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Q7: What are the limits of coverage?
A: The PRCF can cover necessary and reasonable expenses up to $1,000,000 per occurrence, less a $10,000 deductible. The PRCF provides $2,000,000 aggregate coverage per year for tank owners with more than one site with a petroleum release.
Q8: Are there other qualifications for coverage?
A: Yes, but there are not many. Most petroleum storage tanks that have leaked or had a spill are covered, including both underground tanks and above-ground tanks. Contact the PRCF office for more information.
Q9: Do you have to be in the petroleum marketing business to receive coverage?
A: No. Anyone who has had a leak or spill from a petroleum tank, or owns property where a release took place can apply for reimbursement of cleanup expenses. This includes homeowners, non-profit organizations, businesses, governmental units and farmers as well as petroleum marketers.
Q10: What type of expenses can be reimbursed by the PRCF?
A: Necessary and reasonable costs associated with the cleanup of a petroleum spill can be considered for reimbursement. This includes environmental consulting expenses for site assessments as well as actual cleanup expenses. Costs for upgrading existing equipment or for making improvements to the property are specifically excluded from coverage.
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Q11: How does the PRCF review a claim?
A: The PRCF provides two levels of review. First, a claims investigator will review site conditions, expense invoices and other documentation to assure that the work was actually performed as required and any materials or equipment meets the necessary specifications. The PRCF claims investigators and engineering staff will then evaluate the expenses for necessity and reasonableness.
Q12: How does the PRCF determine if the expenses are necessary and reasonable?
A: Generally, costs incurred under an order or recommendation from the Department of Environment and Natural Resources or the PRCF are considered "necessary". Necessary costs are only reimbursable if the PRCF has given approval before they are incurred. Reasonableness is determined by a number of factors, including site-specific conditions and local market trends. Tools used by the PRCF for determining reasonableness include internal cost screening guidelines for both contractor work and environmental consulting services, competitive quotes and a specialized computer model for estimating cleanup expenses.
Q13: What can I do if I disagree with and wish to appeal the amount of the PRCF reimbursement?
A: Any payment decision made by the PRCF can be appealed for further consideration by the PRCF Board. The appeal procedure is established in the South Dakota Administrative Procedures Act, SDCL ch. 1-26.
Q14: Does the EPA or state require tank owners to purchase other insurance if they are covered by the PRCF?
A: In most cases, supplemental insurance coverage is not required by EPA or the state. The PRCF has been approved the EPA as a full coverage program that meets the financial responsibility requirements for both corrective action and third-party liability coverage. However, full coverage is not provided under certain circumstances. For example, if a petroleum release was reported prior to April 1, 1990, the PRCF does not provide coverage for third-party liability. Contact the PRCF office for more information.
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Q15: If I have other pollution insurance, am I still covered by the PRCF?
A: Yes, but the PRCF will only reimburse second to other insurance.
Q16: How and when do I begin working with the PRCF and applying for reimbursement?
A: A claims representative of the PRCF will contact you under the following circumstances:
- you report a petroleum release to the Department of Environment and Natural Resources;
- you notify the DENR that you intend to remove, upgrade or permanently close a petroleum storage tank; or
- you submit a contract for environmental services to the PRCF for review.
Our claims representative will work with you throughout your project to help assemble the necessary documentation to file a claim. Of course, you are welcome to contact the PRCF anytime and do not necessarily have to wait for a PRCF investigator to contact you first.
Q17: Who is qualified to investigate and cleanup petroleum releases?
A: The consultants who conduct or oversee petroleum cleanups in South Dakota must be certified. You can obtain an up-to-date list of certified professionals or apply for certification by contacting the South Dakota Board of Technical Professions at (605) 394-2510 or by visiting www.state.sd.us/dol/boards/engineer.
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Q18: How long does it take to receive reimbursement?
A: The PRCF can consider a claim for reimbursement only when the following requirements have been met:
- you have submitted a complete application package, pay request forms and thorough documentation of expenses, including invoices;
- you have met the deductible;
- you have determined the extent of the release and have submitted an acceptable plan for cleaning up the release.
The PRCF can usually complete the review of a claim within 30 days of the date of receipt. This can vary, depending on level of cleanup activity statewide and the number of claims pending. Also, some claims take longer to review due to their complexity or because of difficulty in obtaining documentation. Reimbursement checks are usually mailed within one week after the review has been completed.
Q19: Once my cleanup is completed, am I still covered by the PRCF against future releases?
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Q20: If I sell my property before any cleanup has taken place or during cleanup, but before it is completed, are the new owners covered by the PRCF?
A: Yes. A new owner can become a "covered party". However, the PRCF will only recognize one covered party at a time.
Q21: Can you offer some advice to help improve my cleanup project?
A: It is recommended that all covered parties consider the following:
- obtain prior approval from the PRCF before taking any corrective action except in emergency conditions;
- cooperate with the PRCF and Department of Environment and Natural Resources;
- check references of consultants and contractors and obtain multiple proposals;
- understand the charges you are being assessed by your consultants and contractors;
- ask your consultants and contractors about ineligible expenses;
- request itemized invoices;
- ask questions and keep yourselves informed.
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