If you’re interested in the Leaking Underground Storage Tank (LUST) issues of Illinois, you should start by reading the following.
Leaking Underground Tanks: How Big of a Problem Is It?
I’m in business development for a small but growing environmental consulting company. A3 Environmental Consultants is located in Lisle, Illinois. We’ve been in business for 7 years, have 18 employees, and have never done a LUST Fund project. We work for Illinois Department of Transportation (IDOT), Chicago Public Schools, PACE, ComEd, WE Energy to name a few. Fifty percent of our revenues come from the private sector (non-government) work. We had 1500 completed projects from all across the country last year. We’ve worked in Hawaii and the US Virgin Islands. We work very hard and focus on putting out the best environmental consulting work-product we can, to earn the respect of our clients and industry peers. We’re stiff competition when bidding on projects. We’re a great partner to have on your bidding team.
- Illinois has 5,500 open LUST incidents.
- The LUST Trust Fund has $77 Million in it.
- The LUST Budget for 2022 has $40 Million allocated
- In 2021, only $21 Million of the $40 Million budgeted was spent.
A3E should be rolling in LUST projects.
How LUST Fund Projects (Don’t) Work
Site Remediation Program (SRP)
Before we talk about how the LUST program doesn’t work for consultants, I need to explain there’s an alternative. The Site Remediation Program (SRP) can get a contaminated property to an NFR letter years and years faster than the LUST program can. The difference between the SRP program and the LUST program is the costs for the SRP program are borne by the client themselves, not any fund at the state.
You might be thinking “SCORE! The state doesn’t have to pay a dime!”
Sure, it is a score up until you realize there are 5,500 contaminated properties, open LUST incidents with owners who don’t care about cleaning their sites or don’t have the money, even if they did care. What this does is create a lot of brownfields, unusable dead land, pockmarked all over the state. It’s also a hazard to human health and the broader environment.
The good news about the SRP program for Environmental Consultants like A3E is the clients in SRP pay their bills in 45 days.
Illinois Doesn’t Pay It’s Bills
In the past decade, Illinois has taken up to 2 years to pay its bills. Even though the LUST fund has money in it, the state has not released funds for up to 2 years after the bills have been submitted. You may think, “Big deal, you got paid eventually right?” Eh, it doesn’t really work that way. The owners of the contaminated LUST site don’t have the money, or don’t care enough to spring for anything more than the deductible. So if an environmental consultant wants to win LUST projects, we need to set aside the cash flow to advance the project, knowing we aren’t going to get paid quickly and the upper limit of the time frame we’re going to get paid in is 2 years.
Think about that for a second. These projects can be several hundred thousands of dollars in cost. A consultant like A3E is essentially doing the work, acting as the bank, lending the money to the property owner, paying all the subcontractors such as drillers and laboratories, paying their employees and then two years later, we get paid from the state.
Artificial Price Ceilings
Consultants could float the costs for remediation if we were also able to charge whatever we wanted for the services we perform. We would just tack on a stack of extra cost for all the trouble we endure getting these projects done. Only we can’t. Prices and budgets for LUST projects are capped and the prices are set artificially low. You can’t charge whatever you want.
To be fair, consultants did charge whatever they wanted in the past and projects did move forward but what feels like financing costs to a consultant looks like financial impropriety to a state regulatory agency. The IEPA solution was artificial price ceilings.
Environmental Consultants Abandon LUST Fund Projects
Price caps and the risk of never getting paid combined to make company management tell business development people to stay away from LUST fund projects. There are companies who remain in the industry, as evidenced by the $21 Million spent in LUST fund payouts. But who are they?
Very Small Companies
I love the entrepreneur, the rock-star of the business world. Seven years ago, A3E started out of the owner’s house. Nothing about being small is bad. It does limit available resources and makes bigger projects harder to do, but nothing I’m saying should disparage the very small business. I’ve called about 100 open LUST “Responsible Parties” (RP) so far. When they tell me they have a consultant who is working on their project I ask for the name of the company. Often they don’t know the name of the company because it’s not a company, it’s a person. When I can find out a name, I do the research and the address tracks back to a person working out of their house. These people, god bless them, go out of business all the time when they take jobs at big companies for regular paychecks. The LUST project they were working on goes dark, often without warning to the land owner.
Big Companies Don’t Do LUST Projects
Big companies like Arcadis, AECOM, Weston, Andrews who all work in Illinois, typically don’t get involved in LUST projects. In only one case have I seen any blue-chip environmental consultants (AECOM) on a LUST project. I can only imagine their client is paying them in 45 days, then the client is waiting their own sweet time for reimbursement from the state, which almost certainly does not cover the cost AECOM actually billed the client.
Attitude or Law?
I don’t know if the method IEPA has gone about addressing open LUST incidents is done because of agency attitude or if it is prescribed by law. In an effort to find out, I have reached out to my State Representative and State Senator. I have meetings scheduled with both.
If you think it’s a problem because there’s not enough budget, click here.
If you think it’s a problem because there’s not enough good data, click here.
If you think it’s a problem because there’s not enough good environmental consultants, click here.
If you think it’s a problem with Agency Attitude or State Law, click here.