Fund Facts

    Direct Payment Agreements

What is direct pay?

? The Petroleum UST Release Compensation Board’s claims process allows for a responsible person (RP) to transfer his rights to reimbursement for corrective action work performed as a result of a release from an assured UST system.

Why does the Board allow direct pay?

? The direct pay process allows RPs to proceed with clean-ups who otherwise would not have the financial resources to expend money and then wait for reimbursement from the Fund. 

? Multiple site owners can initiate and complete remediations at more than one site at the same time than may otherwise be financially feasible.

? Direct pay can be used when property transfers. If a new owner performs the clean-up, the RP can transfer the reimbursement rights to the new owner.

What should an RP consider before entering into a direct pay agreement?

? All liability for corrective actions remains with the RP.
? The corrective action to be performed must be authorized by the rules of the Fire Marshal.
? The RP should review all work plans before approving them, maintaining an active role in the clean-up process.
? Any work performed in excess of the Fire Marshal’s rules and costs in excess of the usual and typical rates of the Board are not eligible for reimbursement.
? A consultant has no standing to file an appeal of the Director’s determination.

What should an RP look for and require in a contract?

? Who is responsible for costs not reimbursed by the Fund? Many consultants offer a hold-harmless contract which means any non-reimbursable costs are not passed on to the RP.
? Require the consultant to obtain voluntary pre-approval of costs for all phases of the project.
? Require the project to be performed in well defined stages rather than an open-end contract for the entire project. 
? Require that the consultant limit mark-up and unit rates consistent with current Fund reimbursement policies.
? Require open communication between the RP, the consultant, the Fund and BUSTR.

Who is ultimately responsible for clean-up?

? As a responsible person, an owner or operator is responsible for all actions, including costs, as a result of a petroleum release.
? By staying actively involved in the clean-up an RPs can make more informed decisions regarding their responsibilities and their ability to ensure cost-effective remediations are performed.

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