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Hobson Seeking to Reform, Not Dismantle Underground Storage Tank Indemnity Fund

Senate President Pro Tempore Cal Hobson said Tuesday that he has never suggested dismantling the state fund dedicated to cleaning up the environmental threats from leaking underground petroleum storage tanks.

Hobson, D-Lexington, said his only desire is to ensure proper stewardship of both the environment and the taxpayer’s money by reforming management of the Underground Storage Tank Indemnity Fund.

An independent investigative audit recently found more than $58 million in questionable expenditures from the fund by the Oklahoma Corporation Commission’s Petroleum Storage Tank Division.

“That hasn’t stopped special interest groups from suggesting the Legislature shouldn’t act to make sure that public tax dollars are spent correctly,” Hobson said.

Hobson said a press release issued Tuesday by Robert C. Keyes of Associated Industries of Norman is an example of those defending the status quo.

“If these funds are so important to Mr. Keyes and others, why are they continuing to defend business as usual? Why are they defending the very practices that led an independent auditing firm to question nearly $60 million in expenditures from the Underground Storage Tank Indemnity Fund?” Hobson said.

Examples of the questioned appropriations include:

1. The Oklahoma Corporation Commission’s Petroleum Storage Tank Division calculated the available Indemnity Fund balance inconsistently with the statutory direction in Section 354 of Title 17. This allowed the Indemnity Fund to receive the proceeds of the 1-cent assessment for every month during the fiscal year ending June 30, 2002. Due to this misuse of calculations, the Department of Transportation and the Department of Environmental Quality were denied millions of dollars due to them from the assessment.

2. The Corporation Commission created an unauthorized program which allowed municipalities and other ineligible parties to access the Underground Storage Tank Indemnity Fund for tank assessments and paid the cities “project management fees.” The auditor questioned $1.1 million of expenditures from this program.

3. Non-competitively bid Pay for Performance Contracts: The manner in which the contracting process has worked allowed contractors to receive large portions of the contracted amounts (up to 80 percent) in advance of reaching cleanup goals, therefore leaving no incentive to achieve final cleanup goals. This also included payments for the purchase of equipment which the contractor was allowed to own at the end of the contract period. The auditor questioned $35 million of these expenditures.

Keyes is among the contractors who benefited from the pay for performance contracts and other facets of the program.

In his press release, Keyes also accused Hobson of seeking to dismantle the fund.
Hobson said he has never suggested dismantling the fund only taking apart the network of fraud and abuse that has led to the misappropriation of funds uncovered the by the audit.

Hobson said that unlike Keyes, he has never received and will never receive any benefit, financial or otherwise, from the fund.

“It’s understandable why people like Mr. Keyes call it the LUST Fund. So many people who have lived off the questionable expenditures from the fund continue to lust after those tax dollars.

“What I still can’t understand is how anyone who cares about the environment or the proper expenditure of tax dollars can defend the abuse revealed in the investigative audit. From the day I was first briefed about the findings of the investigative audit, I have said two things. First, I have said that the Legislature has responsibility to make sure future expenditures from the fund are proper and appropriate. Secondly, I have urged anyone who questions why we need to clean up this fiscal mess to simply read the audit.

“Once they’ve done that I think they’ll agree with me and not Mr. Keyes,” Hobson said.

Contact info
Senate Communications Division - (405) 521-5605