Division of Remediation Financial Update Steve Sanders, Director DoR

Division of Remediation Financial Update Steve Sanders, Director DoR - December 4, 2019

Sources of DoR Revenue 1.0M annual appropriation from the General Assembly – FY19 additional 1.7M supplemental appropriation 1,964,939 in Hazardous Waste fees 1,436,548 in Enforcement/Voluntary cost recovery 1,221,288 in Federal grants, cooperative agreements, etc. FY19 Total Revenue 7,322,745 (includes obligated 700k)

DoR Expenses 3,739,470 - Personnel (Salary & Benefits) 162,525 - Misc. (travel, printing, training, supplies, equipment, etc.) 110,685 - State Contractor Expenses 1,030,937 - NPL (State 10% Match offset by appropriation) 301,055 - Rent 1,358,468 - Other Services from State Agencies FY19 Total Expenses 6,703,140 FY19 Revenue minus Expenses 80,395 – (does not include

DoR Revenue & Expenses FY15-FY19 8,000,000 FY19 Total Revenue 7,322,745 (includes 1.7M appropriation, 5,622,745 without appropriation) 7,000,000 6,000,000 FY19 Total Expenses 6,703,140 5,000,000 4,000,000 3,000,000 FY15 Total Revenue FY16 FY17 Total Expenses FY18 Revenue w/o Appropriation FY19

Division of Remediation Finances What are the areas of need? Hazardous Waste Remedial Action Fund (HWRAF) – Division revenues are not keeping pace with expenses – Federal grants decreasing Drycleaner Environmental Response Program (DCERP) – Program is underfunded for obligated workload Clandestine Methamphetamine Lab Cleanup (CML) – No funding provided for program

HWRAF Balances FY15-FY19 4,000,000 3,500,000 3,000,000 2,500,000 2,000,000 1,500,000 1,000,000 FY 19 HWRAF balance without obligated 1.7M appropriation 500,000 - FY15 FY16 HWRA Fund FY17 Balance minus Supplemental Appropriation FY18 FY19

Funding & Unobligated Liabilities

NPL Obligations There are currently 19 NPL sites in the state. Nine of these sites, identified on the map shown below, are financed using federal dollars. 4 Superfund State Contracts: Ross Metals, Smalley Piper, Velsicol Hardeman County, and Southside Chattanooga Lead - total obligation 6,710,463. FY18-19 the state paid 1,030,937 from the HWRA Fund to the EPA for the state matches or obligations on EPA Superfund financed. Estimated obligations in FY19-20: 915,159.

NPL Obligations NPL sites with contractual obligations Ross Metals, Rossville, TN - 150,488 Smalley Piper, Collierville, TN - 261,864 Velsicol Hardeman County*, Toone, TN - 3,317,081 ( 255,159 annual payment to EPA until match paid.) Velsicol Hardeman County*, Toone, TN - 400,000 (cap maintenance) (20,000 annual obligation*20 year period used for estimates) Southside Chattanooga Lead Site, Chattanooga, TN - 2,581,030 ( 500,000 payment first two years, then 400,000 annually until match paid.) As new NPL sites are identified and listed additional SSCs will be required. The SSC provides a 90/10 match for NPL costs.

HWRAF Obligations HWRAF Total GASB 49 related liability of 10,816,894 NPL SSCs - GASB 49 liability of 6,710,463 Non-NPL State Superfund Program - GASB 49 liability of 4,106,431 HWRAF Balance FY18-19: 2,523,504 – (does not include balance from Voluntary Fund)

DCERP Obligations FY19 DCERP fund ending balance of 649,102 This ending balance includes an obligated amount for DCERP cleanups of 548,727 and a required statutory reserve of 100,000. DCERP sites are not included on GASB49 TCA §68-217-103(f) states “All claims against the fund shall be expressly and exclusively obligations of the fund only and not of the state, ” Should the DCERP program/fund cease to exist, obligations for former drycleaners would shift to the HWRAF and those not funded by liable parties would require inclusion into GASB 49 liabilities

Meth Program Obligations TDEC responsibilities implementing TCA §68-212 Part 5 dealing with property where methamphetamine was manufactured include: – Developing cleanup standards for properties contaminated by methamphetamine manufacturing – Maintaining a list of certified hygienists (and such other persons or entities the commissioner certifies as qualified to perform the services of industrial hygienists) – Maintaining a list of persons authorized to perform clean-up of property – Compiling a list of all quarantined sites in the state DoR expenses range between 150k- 200k per year based on the number of CML quarantines. Program funding was not included in legislation

Funding Requirements Need to build HWRAF capacity to address obligations – Annual Expenses 5-6 million – GASB 49 obligations 4.3M – Meth program funding 150-200k – Potential DCERP obligation 548,727 – Other obligations under TCA 68-212-201 et. seq. NPL State Superfund Contract obligations 4.7M * Calculated by the Bureau of Labor Statistics CPI inflation calculator. https://www.bls.gov/data/inflation calculator.htm

Connection To Stakeholders

Water Quality DCERP – Total estimated potential clean-up costs for full site remediation with potential impacts to groundwater supplies is 119.3 million State Superfund – 60% of sites have groundwater impacts – 79% have groundwater impacts confirmed or impacts currently unknown – 9% of sites have surface water impacts – 32.7% of sites with surface water impacts or impacts currently unknown NPL – 7 NPL and potential NPL sites have been identified as having potential ground water and/or surface water contamination. The best available estimated financial impact is 8.8 million Velsicol/Hardeman County Landfill – Toone, TN - 4.0 million Murray Ohio Landfill – Lawrenceburg, TN - 3.3 million Custom Cleaners

Community Health DCERP – Unknown number of potential sites – Potential for vapor intrusion in adjoining businesses or current location of former operations (Ted’s Cleaners) State Superfund (GASB 49) – No viable PRPs to address impacts (Arapahoe/Rock Hill Labs, John Little Drum) CML – 1,169 quarantined properties as of 10/01/2019 – Many additional properties are never placed on the quarantined list by law enforcement NPL – Chattanooga Southside Lead, Smalley-Piper, Hardeman County LF

Funding Options

Funding Options Budget Process Legislation Rule Amendment Additional Grant/Cooperative Agreements