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Scrubbing Costs from Cleanups

BY: | February 2000



Environmental regulators in a handful of states are trying a new approach to get the mess from leaking underground storage tanks cleaned up in about half the usual time and for roughly half the price.

Florida, Oklahoma, South Carolina and several other states have turned to pay-for-performance contracts that give clean-up contractors financial rewards for finishing jobs expeditiously. Instead of reimbursing owners or consultants for expenses incurred in removing petroleum that has seeped into the soil from rusting or cracked vessels--operations that have frequently dragged on for three or more years--state regulatory staffs negotiate a fixed price to clean up a site. Contractors get paid only after reaching milestones based on the removal of specified amounts of contamination.

"The more efficient they are, the more money they make," says David Kelley, the Oklahoma Petroleum Storage Tank Division's deputy director.

The approach has encouraged contractors to adopt cost-saving clean-up approaches. Instead of billing government clean-up funds for a new pump for every job, for instance, consulting companies save money by acquiring better equipment themselves that they can move from site to site. This drive for efficiency, regulators say, has helped advance the use of biological remediation, vacuum extraction and other technologies.

As to the bottom line, performance-based cleanups in South Carolina have been completed in about half the time of similar conventional projects. And, where a conventional project typically cost $300,000, contractors' pay-for-performance bids are averaging $160,000, reports Art Shrader, the state environmental quality division's corrective action director. "Time is money to them," he says. "The price has dropped as contractors get more comfortable with the process."


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Tom Arrandale
Tom Arrandale

Tom Arrandale is a GOVERNING correspondent.

E-mail: arrandaletom@gmail.com
Twitter: @governing

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