According to data published by ASTSWMO, the dollar amount of claims filed with state sponsored LUST funds that are delaying reimbursement totals over one billion. In financial terms, the LUST fund may be suffering from an "Asset - Liability Mismatch", a financial term that describes a periodic imbalance when the dollar volume of submitted claims exceeds the fund's revenues. What happens is that the fund's cash balance is eventually depleted and a payment queue results, resulting in RP's waiting months receive reimbursement*. Cash flow problems for the private sector can feed back into public policy problems for state fund administrators and their political leaders.

• Small Regulated Tank Owners: Tying up significant amounts of working capital for long periods can materially impair the profitability & balance sheets of small businesses, depress property values, impede real estate transactions (reduced marketability) & slow job creation.
• Large Regulated Tank Owners: Large regulated tank owners are not immune from payment delays, which when combined with the real-world reality of annual environmental budget constraints, can cause inefficiencies that slow the clean up process (ex. spreading work over several budget cycles). This can result in higher total costs to the RP and to the LUST fund.
• State Fund Administrators & Political Leaders: Payment delays can cause a breakdown in the marketplace when RP's simply run out of financial capacity to continue clean up's, and environmental consultants are no longer able to wait many months to receive the reimbursement check.
  • Reduced voluntary cooperation can sometimes result in delays in identifying & removing LUSTs, which can result in increased public health risks & higher total clean up costs.
  • Regulators may spend limited management resources pursuing enforcement actions against financially strapped RP's rather than pursuing actual clean ups.
  • Payment delays can lead to delays in closing real estate transactions or impede refinancings.
  • The failure to remove "free product" may be a violation of CFR 280.64 Payment delays increase the risk that the LUST fund may no longer be deemed viable for meeting EPA's financial responsibility regulations.
  • Payment delays can lead to increased risk that the state legislature acts to eliminate the fund.

*Some LUST funds resort to other means to preserve their cash balance, including slowing down (or stopping) clean ups, slowing down claim approval, implementing prioritization measures, monitoring sites instead of cleaning them up, or reimbursing one class of tank owner before another.