WILLIAM DONALD SCHAEFER, Governor

The federal regulations phase in these financial requirements
over a two-year period. The largest companies must comply by
January 26, 1989. Others must comply at later dates depending
upon the size of the business, with the smallest businesses and
local governments being required to comply by October 26, 1990.
This phase-in process is intended to allow time for the
commercial insurance industry to respond to this market and for
states, where appropriate, to develop state trust funds.

While major companies and the larger local governments are not
seriously affected by these financial requirements since they can
self-insure, there is a problem for small petroleum operations,
municipalities, and other small businesses. As a former Mayor, I
am particularly concerned with the problem facing municipalities
and consequently, the decision to veto this legislation was made
more difficult.

Senate Bill 581 provides revenue for the Underground Storage Tank
Fund from a one-time $50 fee for each underground storage tank in
the State, and would provide estimated revenues the first year of
$1.5 million. Thereafter, the legislation would impose a 12
cents per barrel fee on each barrel of gasoline and diesel fuel
transferred into the State. Annual revenues from the fee were
estimated at $7.2 million. However, the Attorney General has
identified a title defect which will prevent the license fee on
diesel fuel from being levied, thereby reducing anticipated
annual revenue by $1.1 million per year.

There is insufficient actuarial data, however, to reasonably
project the potential claims against this fund. Although the
legislation limits the fund's liability to $1 million per
occurrence and $2 million in the aggregate, the State's exposure
to potential claims for clean-up, property damage, and personal
injury could far exceed the available revenues in the fund.
Based on our limited history and the experience of other states
with underground tank clean-ups, the Department of the
Environment estimates the expected claims at over $15 million per
year. Under the current inspection and enforcement program, the
cost of clean-up alone is estimated at $70,000 per tank and the
potential liability for third party claims for property damage
and personal injury is unknown.

There are over 30,000 tanks in Maryland. Under Senate Bill 581,
the State would be responsible to cover the costs for every owner
or operator of an underground storage tank, regardless of their
ability to self-insure or obtain private insurance. I believe
that without the actuarial data to predict State costs and the
probable lack of revenues to meet potential claims, the
establishment of an Underground Storage Tank Fund may be
premature.

I am, of course, aware of the provisions in Senate Bill 581 which
would limit the State's responsibility to the amount of revenues

- 4759 -