Reducing Remediation Red Tape
Methyl tertiary butyl ether (MTBE) has been a common additive to replace lead and increase octane levels in gasoline since its introduction in 1979. In 1995, reformulated gasoline containing 11 percent MTBE by volume was introduced into ozone non-attainment areas on a nationwide basis. Unfortunately, some of the underground tanks used to store gasoline have leaked the MTBE additive into the surrounding groundwater.
Last year, "60 Minutes" aired a segment that brought the MTBE health impact question to the forefront. Since then, remediation of MTBE-contaminated groundwater sites has been receiving a great deal of funding, modeled primarily on the traditional petroleum storage tank (PST) fund, provided through state taxation of petroleum sales. This arrangement has been successful in the past, but just as remediation technology has improved, it is now time for a better, more efficient form of remediation funding.
Traditionally, underground storage tank remediation has been funded by a "pay as you go" arrangement that was fairly open ended. If the original remediation system wasn't adequate or needed to be replaced by another method, changes would be made and additional costs incurred. Invoices were billed monthly, and the project would continue as long as it took for the clean-up goals to be satisfied, often far exceeding the original estimates for cost and time. Pay for performance is a new method that protects the client from cost over-runs and reduces regulatory oversight. This method uses a lump sum, capped amount, half of which is typically paid upon installation of the remediation technology. The remaining 50 percent is paid in increments of 10 percent as clean-up goals are met. The final 10 percent is paid after the remediation system has been shut down, and the site is shown to have maintained the clean-up goals after a period of time. This contract is easy to administer and advantageous to all pa
rties.
Pay for performance is a new method that protects the client from cost over-runs and reduces regulatory oversight. |
For Example
The state of Utah asked Wasatch Environmental Inc. to remediate a polluted groundwater supply under the terms of one of the initial pay for performance contracts in the state's history. Gasoline had leaked from the underground tanks at a plastic pipe manufacturing facility located in Salt Lake City. A large plume consisting of MTBE and benzene, tolvene, ethylbenzene and xylenes (BTEX) was located under asphalt pavement in a silty clay soil with groundwater at a depth of six feet.
The in situ remediation system design uses density driven convection (DDC), an in-well aeration, recirculation well technology. This system allows the client to continue operations during the estimated two to three years needed to reduce petroleum hydrocarbon contaminant concentrations to the cleanup goals.
The pay for performance contract offers obvious advantages for the client. For the state of Utah, the remediation cost is capped, and it does not have to spend time and financial resources reviewing the documentation that accompanies regular invoices. The advantages for the consulting firm are not as obvious, but just as valuable. Typically, there is no back-up documentation required, no tedious time tracking and no questions from the client. Results are submitted; invoices are paid.
MTBE-contaminated sites, however, present particular difficulties in remediation that must be addressed during the negotiation process. These difficulties can pose risks to the contractor in estimating the resources necessary to reach the remediation goals. Likewise, the client must acknowledge these risks and accept that MTBE-contaminated sites are inherently more costly to clean up.
The pay for performance arrangement offers the consulting firm the flexibility to operate the remediation as they see fit and to evaluate contaminant concentrations at their discretion. |
At the subject site, DDC is the primary method being used to remediate the groundwater. This in situ remediation technique injects air into the bottom of the well; as it rises, it reduces the density of the water column and creates an upward vertical gradient that draws contaminated water into the lower part of the well and pushes aerated groundwater out through the upper part of the well. A groundwater circulation cell is created within the contaminated aquifer. Remediation is achieved by air stripping within the well and circulating dissolved oxygen outside of the well, which stimulates microbial growth throughout the contaminated aquifer.
The pay for performance arrangement offers the consulting firm the flexibility to operate the remediation as they see fit and to evaluate contaminant concentrations at their discretion. At the subject site, the DDC wells were installed in April of 1999. The first measurements taken on May 27,1999 showed a 273 percent increase in contaminant concentration, as MTBE and BTEX were desorbed and mobilized. However, measurements taken on October 19, 1999 verified that the DDC wells were indeed working and that the concentration measured at installation had been reduced 55 percent. This exceeded not only the 25 percent milestone, but the 50 percent milestone as well, entitling the consulting firm to two payments of 10 percent. The third measurement was taken on March 6, 2000 and showed that the concentration was holding steady at 55 percent. The 75 percent reduction milestone was reached on October 30, 2000 with an overall reduction of 87 percent, thus earning the third 10 percent of performance payment, and 80 pe
rcent of total payment. The final two 10 percent portions will be paid for the Final Concentration Reduction and the Rebound Concentration verification.
The advantages for the consulting firm are not as obvious, but just as valuable. Typically, there is no back-up documentation required, no tedious time tracking and no questions from the client. Results are submitted; invoices are paid. |
After the first year of required quarterly sampling, the pay for performance contract allows the consulting firm to collect and test samples at its discretion. This offers significant savings over the traditional quarterly reporting. The cost of maintaining the wells for the entire project is figured into the contract and is part of the first 50 percent paid upon installation of the system. The consulting firm bears the cost of sampling.
The consulting firm is certainly motivated to complete the project as soon as possible, because the wells need only to be maintained for the time it takes to remove the contaminants: the faster the goals are met, the more money the consulting firm makes. If the remediation goals are met in three years instead of four, the consulting firm still retains the maintenance costs for the fourth year. Money is also saved since quarterly measurements are no longer required, nor are resources used to prepare obligatory regular reports. In addition to these economic benefits, there is the advantage of being able to run a project without unnecessary interference from the client. The pay for performance contract gives the consultant the ability to work without the rigmarole of asking for permission or requesting changes and allows the project to run smoother and more efficiently.
This approach is resulting in a successful remediation for the state of Utah, the pipe manufacturing facility and Wasatch Environmental Inc. States and private companies who are considering adopting the pay for performance approach will find that it attracts the more experienced environmental consulting firms to enter the bidding process. Pay for performance requires the consulting firm to have the necessary experience and expertise to design, construct, and operate successful remediation systems in a variety of environmental scenarios.
This article originally appeared in the May 2001 issue of Environmental Protection, Vol. 12, No. 5, p. 28.
This article originally appeared in the 05/01/2001 issue of Environmental Protection.