SOP - 3. Deductibles and CAPs

As noted in the Cleanup Program Summaries, several of the funding assistance programs have a requirement for the property owner/responsible party to share in the cost of the cleanup. In addition to the copayment/cost-savings/combination  requirements of the Petroleum Cleanup Participation Program (PCPP) and co-payment requirements of Advanced Cleanup (AC) (which are handled under contract), there are also Petroleum Liability and Restoration Insurance Program (PLRIP) deductibles and CAPs (the limit of State funds that can be used on a site) that must be applied and tracked. These amounts are set by statute and cannot be negotiated or waived. Information on the PLRIP CAP and deductible for specific sites, and whether the deductible has been paid or the CAP reached, can be found on the Storage Tank and Contamination Monitoring Database (STCM) screen “CAPs and Deductibles.” Abandoned Tank Restoration Program (ATRP) deductibles, because they are established by rule, may be waived if the applicant applies to the Office of General Council (OGC) and receives a waiver order pursuant to Section 120.542, F.S.

Effective 11/14/2019 the Petroleum Restoration Program is not collecting deductibles.  For PLRIP eligibilities, the CAP amount is reduced by the outstanding deductible balance.  For example, if you have a PLRIP eligibility with a $300,000 CAP and an unpaid deductible in the amount of $10,000, the CAP is now $290,000.   PCPP copayment/cost-savings/combination and CAPs are still applicable.

Deductibles

Deductible Amount

The deductible amount should be checked by referring to the STCM screen “CAPs and Deductibles.” If the deductible amount listed on STCM does not agree with the amount in the original eligibility packet in the site file (the cover page of this packet should list the deductible amount [for PLRIP sites only the original deductible plus the highest listed supplemental for each discharge applies]), then the Site Manager should contact the Eligibility Coordinator to resolve the discrepancy. If a site has multiple discharges with deductibles, then the deductibles are cumulative.

Deductible Payment

To determine if a deductible has been paid, the site manager should check the “CAPs and Deductibles” screen in STCM. 

The statutes do not provide for any ‘offset’ or ‘in kind’ payment of the deductible in which the property owner/responsible party pays for some portion of the cleanup (except for “special entity PLRIP” or counties and municipalities in PLRIP).

Deductible Tracking

Deductible payments were entered into STCM for tracking by PRP Accounting with support from the Eligibility Coordinator.  When it is discovered that the deductible was paid by way of a deduction from a reimbursement order, but not reflected in STCM, then a copy of that order should be forwarded to PRP Accounting so that STCM can be updated.

Deductible Overpayment

There are two situations in which a deductible might be overpaid. The first situation is simply because we billed the property owner/responsible party incorrectly. In such cases, DEP may issue a refund check for the overpaid portion of the deductible. In the second case, the total cost to close the site does not exceed the deductible (e.g., closure after the assessment). In this case, we should refund the amount of the deductible that is more than the cleanup costs. Such refunds should be coordinated with PRP Accounting.

CAPs

Petroleum contamination incidents eligible under the Petroleum Liability and Restoration Insurance Program (PLRIP) and Petroleum Cleanup Participation Program (PCPP) are subject to limitations on the amount of cleanup funding available from the Inland Protection Trust Fund (IPTF). These funding CAPs range from $300,000 to $1,200,000 per incident, though some properties may have more than one eligible incident or discharge.

It is very important that all IPTF expenditures for these incidents be monitored closely to ensure that the Department does not exceed its statutory spending authority. In addition, the Site Owners/ Responsible Parties (RP’s) and Agency Term Contractors should be informed of the funding status and procedures for transition from State funded cleanup to Responsible Party (RP) funded  status early in the process to allow RP involvement in decisions regarding remedial alternative and closure goals prior to the funding CAPs being reached.

The CAP is the limit of state funds that can be used on a discharge which is the statutory funding limit less the outstanding deductible amount.  This limit applies per discharge and not per property or owner/responsible party. CAPs are non-negotiable and cannot be exceeded. If the cleanup is not completed before the CAP is reached, then the site is considered Eligible but State Funding CAP Exhausted (ESFCE).  Although the site remains eligible, it proceeds with the property owner/responsible party will be responsible for completing the cleanup at their own expense and the Department continues to monitor the cleanup progress in accordance with 62-780, F.A.C. Therefore, the existence of a funding CAP should be a factor in decisions regarding the course of action at a site.

The Site Manager is responsible for determining the amount spent to date for the discharge before issuing the first task assignment or purchase order for the site. A file review must be performed by the Site Manager to determine the CAP amount (statutory funding limit less outstanding deductible amount) as well as all previous expenditures for the site, including reimbursement payments, task assignments, work order, purchase orders, utilities, NPDES permit fees payments and Lump Sum Payments such as Settlement Agreements or Agreements to Compensate. Note, some expenditures are excluded from the CAP including funds expended under the Limited Source Removal with Early Upgrade Incentive (LSRI), Forensic Investigations (FTSS) and expenditures associated with the Innovative Technology Initiative (ITECH) bid projects beginning in Fiscal Year 2016-17 (ITECH prior to that were not excluded from the CAP). Funding priority codes for these exclusions were 2J for LSRI and 2W for ITECH. Once the amount spent to date has been determined, the Site Manager must monitor site expenditures and notify their Section Leader and the property owner/responsible party when a site has completed the site assessment phase or reached 80 percent of the CAP amount, whichever comes first.

It is very important to make sure that owners/responsible parties understand the consequences of not being able to complete the cleanup of the site with available state funding. Site Managers should contact the property owner/responsible party and the Contractor at the earliest possible opportunity to discuss possible courses of action for the cleanup. At sites with low CAPs, it is particularly useful to let owners/responsible parties know about Natural Attenuation Monitoring, LSSI No Further Action (LNFA) (priority score dependent), Conditional Closure Agreement (CCA) and the NFA with conditions (NFAC) options (Risk Management Option (RMO) Level II or III criteria as specified in Chapter 62-780, F.A.C.). In the event the remaining available state funding is not sufficient to create a meaningful and logical scope of work for the final task assignment or purchase order for the property, and the property owner/responsible party agrees to expand the scope of work at their own expense, the Funding CAP Transition Agreement should be used and applied to the final Task Assignment or purchase order only. 

If the property owner/responsible party (or their insurance company) continues to pay for the cleanup once the CAP is reached, then the site will continue to be managed in Tallahassee or by the local program. If the property owner/responsible party fails to continue the cleanup, then the site will be turned over to the appropriate DEP District office for enforcement.

CAP Amount

The CAP amount is determined by the program eligibility less the outstanding deductible amount. CAP amounts are listed on the “CAPs and Deductibles” screen in STCM, and Table 2 - Summary of Florida Restoration Coverage and Requirements for ATRP, IVPSSRP, PLRIP and PCPP Sites contains a summary of this information.

CAP Tracking

The Site Manager is responsible for ensuring that the funding CAP is not exceeded at their site. The Site Manager should always be aware of what CAP(s) apply to a cleanup and how close the funded amount is to the CAP. There is no additional state funding once the CAP is reached, and no task assignment, purchase order or utility payment, etc. can cause the total to exceed the CAP. Note that state funding is not just limited to PRP task assignment or purchase order amounts, but also includes any payments made under Reimbursement, State Cleanup, Preapproval and Procurement as well as utility payments, lump sum payments and NPDES discharge permit fees paid.

The Petroleum Cleanup Funding Cap Encumbrance to Date Report includes the total amount paid to date for each eligible facility. This is a useful screening tool, though the total paid does not differentiate subtotals for different discharges.  Site managers must determine the amount of this total spent toward each discharge at a site. 

Site managers can also access the PCT Historical Payments screen in STCM.  This screen displays the above information, in addition to each individual payment that supports the totals encumbered to date. To access in STCM, select Cleanup : History: Historical Payments and enter the last 7 digits of the facility ID #.

Management of Eligible Sites with IPTF Funding CAPs and Transition to Responsible Party Funded Cleanup or Enforcement

Managing CAP Sites

Site Managers should maintain good communication with the property owner/RP and note any communication on a Communication Log and upload to Oculus.  Site manager should also be sure that property owner/RP knows about the various closure options.

Soon after assignment, the Site Manager shall send the “Initial Owner CAP Letter”  to the Owner/RP outlining the status of available State funding for each incident, advising that continuation of cleanup activities may be required at their expense after available State funds have been exhausted. This letter should also recommend that, if they have not already done so, they provide official notification of commencement of cleanup work to their insurance carrier (if applicable).

Upon completion of the site assessment phase or once 80% of the available funding has been expended (whichever comes first) but prior to RAP preparation, the Site Manager shall send the “Owner Participation Letter” to the Owner/RP with an example of the “Declaration of Restrictive Covenant”.   The letter informs the site owner of the status of funds expended on the site relative to the site’s funding CAP and also informs the site owner of the option to complete the cleanup with a No Further Action (NFA) with conditions as a means to lower the site’s cleanup cost.  In addition, the Site Manager  shall discuss the remedial options with the Cleanup Contractor and Owner/RP if they choose to attend, including conditional closure with deed restrictions, a phased approach (such as source removal or limited scope remedial action followed by natural attenuation monitoring) or a comprehensive remediation system. . The Site Manager should also communicate with the site owner and cleanup contractor to discuss the cleanup strategies and options and verify the site owner’s cleanup intentions prior to submittal of a Remedial Action Plan (RAP). This communication should be documented by the site manager in a Communication Log per the Communication Plan. If the responsible party is not the current site owner, the responsible party will need to be involved in the discussion with the site owner.

Prior to issuing a Purchase Order for the RAP, the Site Manager should confirm that the various options have been discussed with the RP and documentation of discussions inserted into the OCULUS file. The Purchase Order should require that the cost estimate in the RAP highlight the estimated amount that the RP (or insurance carrier) would be required to fund after the CAP is reached, and that the RP/Owner be provided a copy of the RAP by the Cleanup Contractor.

Transition When Nearing CAP or CAP Exhausted

As the funding CAP is nearing exhaustion, often the available funds are not sufficient to execute a Purchase Order for a logical and meaningful scope of work.  The Site Manager shall send the RP the “Imminent Funding Limit Letter” which advises them of the limited funds remaining and the option of using the funding CAP transition agreement. The letter gives the RP 30 days to respond with their intention to proceed with cleanup in accordance with Chapter 62-780, F.A.C. at their own expense.

The Funding CAP Transition Agreement can facilitate the creation of a final Purchase Order encumbering the exact State funding balance, promoting continuation of cleanup progress, and pursuit of a specific cleanup goal with the least out of pocket expense.  The “Funding CAP Transition Agreement”) will apply only to the final purchase order in which State funds will be encumbered.

Once the Funding CAP Transition Agreement has been executed, the final Purchase Order is prepared. The Site Manager will select the “Yes” radio button on the top right of the Invoice Rate Sheet tab of the Schedule of Pay Items (SPI).  This opens the cell for entering the ‘Remainder in CAP’.  Entering this amount will limit the amount the FDEP will pay (including retainage) in this purchase order and the difference including any future change orders will be reflected in the amount owed by the owner/responsible party.

CAP Exhausted

Once the funding CAP for a discharge has been exhausted, the Site Manager must prepare a memorandum through the Team Leader to the Team Leader for the Agency Term Contracts Team to have STCM updated to reflect the CAP for the discharge has been exhausted.   The memo must include details of the CAP, Deductible, and Funds Expended on the discharge. The Site Manager will attach supporting documentation including screen shots of the Historical Payment Screen from STCM and any other backup to show the total spent on the discharge. The memo must also attest that copies of all Final Invoices, Reimbursement Orders, Utility Payments and all other payments such as Settlement Agreements, are available in OCULUS.  Based on the data provided, the Agency Term Contracts Team Leader will evaluate the data and if they agree, sign the memo, update the CAP Exhausted cell in STCM and insert the signed memo into OCULUS.

Transition to Responsible Party Funded Cleanup

If Eligible Funding is exhausted, the Site Manager may offer to the District to continue management as long as the Responsible Party (RP) proceeds under 62-780. If the RP fails to continue the cleanup in accordance with Chapter 62-780, F.A.C., at their own expense, for ESFCE sites, then the Site Manager must send the RP notice outlining that the site will be referred to the District for enforcement if work is not resumed within 60 days of the date of the letter, and the District will be copied on the correspondence. If cleanup, is not resumed within 60 days, , the site should be referred to the District Office for enforcement.

Transition to Enforcement Status

If the RP provides a written response indicating they either cannot or will not continue the petroleum cleanup at their own expense, the Site Manager shall send them written notification that the site will be referred to the applicable DEP District Office for enforcement (with a copy to the District). The Site Manager should then prepare a memo to the appropriate District Tanks Supervisor through their Team Leader and the PRP Administrator referring the site for enforcement status. 

Prior to referring a site to the District for enforcement status, the Site Manager should confirm that all applicable technical reports and correspondence associated with the cleanup and transition are in the electronic document management system (OCULUS) and entered into the Storage Tanks Contamination Monitoring (STCM) database. A copy of the most recent correspondence to and from the RP regarding the transition should be mentioned in and attached to the District referral memo. The memo should also include a statement that the technical reports and historical site information are available in OCULUS.

Return to: PRP Site Manager Standard Operating Procedures (SOP) webpage.

Return to: SOP - 2. Cleanup Program Summaries page.

Return to: SOP Site Manager Guide page.