Opposition to funding mechanism for new Weather Center building explained

Prepared by Edwin Kessler
April 8, 2002

The meteorological community in Norman, Oklahoma, has been growing at an annual rate near 5% for the last 15 to 20 years, and some components have a pressing need for new office space. A decision has been made to build a large structure on Highway 9 in Norman to house together all of the research and educational components of this community. A problem has arisen in identifying all of the money needed to build this structure, and H.B.2536, recently passed by the Oklahoma Legislature and signed by the Governor, would cause a transfer of tax receipts currently earmarked for the remediation of leaking underground petroleum storage tanks (USTs) and their effects, in order to match a federal appropriation. I have prepared this essay because I think that any linking of the meteorological community to increased pollution of our groundwater would be terrible and would carry potentials for grave negative consequences.

There is a "Fact Sheet on OU-OSU Research Bill", which I understand was prepared at the University of Oklahoma. It attempts to justify diversion of funds from the UST remediation program by showing that H.B.2536 would actually provide more funds to the ongoing program than that program now has. I submit that this 'Fact Sheet', hereafter FS, is misleading. The following paragraphs of this document explain why I think that this is so, based on information obtained from people whom I trust. This section is followed by excerpts from a letter from the Environmental Protection Administration to Corporation Commissioner Denise Bode. Later in this document is a list of other possible sources of funds, with some commentary. At the end of this document are a few comments on the history of the meteorological community here and the outlook suggested by the proposed Weather Center.

If some of the information that I have is demonstrably false, I will, of course, change my views accordingly.

1) Analysis of the Fact Sheet

In describing the impact of H.B.2536, recently signed by the Governor, the first paragraph of the FS indicates that there is $19 million in the environmental cleanup fund now, that $6 million more will go in before July 1st, and that $28 million more will go in during the following two years. These numbers sum to $53 million, and the FS indicates that this represents more money over two years plus three months than is given by the current rate of expenditure. Then the first paragraph notes that of this $53 million, $17 million is already committed to projects scheduled for completion during the next 12 months.

The situation with regard to receipts is not as depicted by the FS. At present, the one-cent gasoline tax that is earmarked for the UST produces about $2 million per month, which is equal to the average rate of expenditure. This would be halved for two years if H.B.2536 goes into effect and would produce just $1 million per month, or $24 million over two years, not $28 million, if the rate of purchase of gasoline remains as it is today. The $28 million figure is a projection that assumes an increase of gasoline consumption. Of the $19.5 million presently in the fund, $18.5 million is committed to purchase orders already authorized and $1 million is in a reserve for emergencies.

The FS fails to take account of process aspects of the UST remediation program. The committed funds amounting to $18.5 million are a buffer between receipts and expenditures. After funds are committed to specific contractors and sites in need of remediation, work proceeds, but completion of the work takes time, and about eight months typically elapses between issuance of a purchase order and completion of the on-site work, inspection of the site to assure that the completion is proper, and payment. Therefore, there is a significant amount of money in the fund, and without the contractual commitment with available funds, the remediation work could not proceed. The buffer funds should not be added to the other amounts to indicate an increase in rate of receipts.

Inflation is continual and is associated with rising costs over time. Remediation costs are expected to increase, but receipts are uncertain to the extent that they fluctuate with the amount of gasoline purchased, which is a function of the level of the economy, population of cars and their fuel requirements, etc. In any event, the situation with regard to receipts by the UST Indemnity Fund is most clearly indicated by a reading of H.B.2536. The matter is quite simple: H.B.2536 would halve the remediation program for two years and reduce it 25% below its current level for two more years before the program is restored to its current level.

Paragraph 2 of the FS indicates that extension of the program from the year 2009 to 2012 will provide as much money for the program as would have been received by the year 2009 without H.B.2536. While true, this is a thoroughly specious argument. Remediation of only the 837 sites now identified as needing remediation is estimated to cost $160 million, and this would take until about 2009 to accomplish. With a halving of the program for two years and a following 25% reduction for two more years, the remedial periods for leaky tanks already identified would stretch out at least one and a half years. In addition to the 837 sites in the remediation queue as of March 7th of this year, 4533 closed sites with no assessment have been identified as needing assessment and there are 6240 historic sites needing assessment. Current data indicate that about a third of closed sites with no assessment leak, and almost all of the historic sites leak. Thus, as many as 7750 sites may require remediation, and even with full funding, the UST program must continue well beyond 2009 - whether the program is extended now or extended six or seven years from now doesn't matter. By reducing the program, costs are increased by spreading contaminant plumes that would have otherwise been remediated.

An unfortunate fact is that as long as we drive cars that consume petroleum products, there will be leaking underground storage tanks, although modern installations should be less prone to leakage than those installed years ago. The good news has been that Oklahoma has had an excellent program for remediation of leaking USTs and their effects.

The third paragraph of the FS indicates that no substantive changes are made in the program by H.B. 2536. This is true only if one does not regard a halving of funds for the program over two years as substantive.

The fourth paragraph of the FS indicates that there will be a performance audit. Since this is required by current law, it seems strange that this should be stated in the FS. Does inclusion of this statement represent an attempt to create skepticism about the quality of the present program?

The fifth (last) paragraph of the FS indicates that the cash flow will be maintained at a more than adequate level, and the diversion will enable funding of "two crucially needed research projects". It seems true that the diversion would enable funding of the Weather Center at OU and a center for study of bioterrorism at OSU, but the cash flow under terms of the legislation may be considered adequate only if the program as formerly projected is deemed overfunded by 100% for the first two years commencing on July 1st of this year and by 33% for the following two years.

2) Letter from Carl Edlund, Director, Multimedia Planning & Permitting Div., EPA, Region 6

Copies of the EPA letter to Corporation Commissioner Denise Bode are attached hereto, but excerpts are given here with some commentary.

EPA expresses concern "that the viability of the [UST Indemnity] Fund as a mechanism approved by EPA for the financial assurance requirements of UST owners and operatorsÉ could be compromisedÉ" The letter states, "Oklahoma is one of the leading states in the nation insofar as locating and cleaning up leaking USTs is concerned. This proactive result is due, to a great degree, to the UST owners and operators having the Indemnity Fund as their mechanism for meeting the financial responsibility requirementsÉ. The Fund remains viable because the Petroleum Storage Tank Division is able to plan and reasonably anticipate the funds needed to clean up the environmentÉ in concert with the rate of accumulation of new projectsÉ Removing financial viability of the Fund could cause a great hardship to UST owners and operators and to the progress of this vital programÉ [and] it may place Oklahoma's authorization from EPA for the UST program in questionÉ When other states have diverted monies financing state funds, a wide array of negative impacts followedÉ. Furthering the ripple effect, Oklahoma could also experience the loss of expertise as contractors and state staff leave the programÉ We request that you explain how the State of Oklahoma intends to compensate for financial assurance for UST cleanups that may be lost due to House Bill 2536."

We should be concerned that the EPA cautions have been absent from local public discussion of Weather Center funding. The UST remediation industry employs more than 300 persons, approximately half of whom would lose their jobs, at least temporarily, if H.B.2536 goes into effect at the end of the present legislative session. Further, there has been no attention paid to negative personal, economic, and administrative effects of the large oscillation that would be imposed on the UST program by its proposed reduction and restoration.

3) Alternative sources of funding

A deadline for identification of matching funds is September 30 of this year [**please see note below]. Therefore, there is some appreciable time during which further consideration can be given to the funding mechanism. The process involving H.B.2536 gave a public appearance of having been conducted in haste. I do not know how extensive was private discussion of this bill. Pros and cons attach to all of the following suggestions; they are submitted as suggestions only. The public should know why one or more of them are not better choices and whether there is some other unlisted good choice.

a) There could be a bond issue. This would be approved by a vote of the people with a tax sufficient to amortize the issuance as required by our Constitution.

b) There could be an additional one-cent tax on gasoline or a 10-cent tax on cigarettes for a period of about 18 months. Such tax increases might have to be approved by _ of our legislators in both Senate and House. Such increases might have to be part of a larger package of tax adjustments.

c) Could bonds be issued in anticipation of rents? Such bonds are known as lease-revenue bonds and can be authorized by the Legislature and then approved by the Capitol Improvements Authority and Bond Oversight Commissions without a vote of the people. Recent bond issuances have been labeled as lease-revenue bonds but they are not really such because there is no real source of rent in the object of the funds. A very recent example is a bond proposed to complete funding of the Capitol Dome, but it is not intended to rent the Dome. The Supreme Court of Oklahoma ruled in 1998 that such bonds, which appear to violate the constitution, do not constitute a debt of the state, but are legal nevertheless under the appellation "Moral obligation bonds". In the present case, there might be a real source of rent from federal and state entities housed in the proposed structure.

d) An appropriation could be made from the General Fund. However, given the condition of State finances, this would probably impair other essential services, such as health and welfare, justice, education, etc.

e) An appropriation could be made from the Rainy Day Fund. I have been told that a majority of legislators actually approved this, but this option was rejected by the legislative leadership. It was said that if the Rainy Day Fund were used, there would be less money there to help the budget next year, which is projected to be another very lean year.

f) Might funds be provided from the OU Foundation as loan, grant, or bond issuance?

If a funding mechanism other than the UST indemnity/remediation fund cannot be found, then construction of the Weather Center should be postponed. Perhaps additional suitable space can be found in Norman in commercial properties.

3. Some gratuitous comments of a general nature

A building to house together all of the research and education components of Norman's meteorological community has been much more a "top-down" rather than "bottom-up" program. The virtues of a great university include opportunities for easy communication among staff in different disciplines. At the corner of Jenkins and Highway 9, the meteorological community would be relatively isolated and would produce a major impact to an already overloaded highway. Of course, there are no easy choices, but there should be some serious study of means for mitigating such negative factors. Perhaps such a study is underway.

As noted in the first sentence of this document, the meteorological community has been growing recently at an annual rate of about 5%. In fact, the community has been growing rapidly ever since it was started here in the early 1960s, owing much to vigorous efforts of then OU President George Cross, coupled with administrative malfeasance at Texas A&M (since corrected!) and good work from Robert Simpson of the U.S. Weather Bureau.. Note that all of the growth of the meteorological community has occurred without a central Weather Center building, and no one among the world-class scientists who came here did so primarily because of buildings or even offices. (Nor did they come because of Oklahoma's brand of politics.) Of course, we certainly agree that offices are needed!

The present situation has earmarks of a takeover in the sense that the fruits of a program developed by scientists and engineers are taken and/or adapted by the business community and other powerful political forces to serve their interests. This is not necessarily bad, it frequently happens in different forms, and it is indeed a reason for support of scientific and engineering efforts by the larger community. But harmony in relationships and constructive community development call for both the scientific and business communities to work together and take each other's suggestions seriously in the interests of the larger community.

Finally, here are gratuitous comments that represent a reaction to partially offensive content of recent advertisements and published letters, not explicitly restated here. A new grand building should provide better office space and perhaps a more facilitative environment for research and learning. We certainly hope that this will be the case and that the building will promote a proper kind of further growth. The meteorological community already constitutes a leading force in meteorological research and data acquisition, and it provides many jobs with above-average pay. Leading scientists and engineers do not have buildings in the forefront of their career pursuits, and, as already noted, none of the leading persons who are now here came because of the buildings. Nor are buildings apt to be a leading reason for scientists and engineers to come to Norman in the future. The quality of our political system is much more of a detriment to the quality of our growth than is the quality of our buildings. In order for the proposed new building to be an asset rather than a stigma, it must never be possible to say truthfully that it was built on a foundation of groundwater pollution to house the meteorological community.

Letter from Carl E. Edlund to Commissioner Bode, March 21, 2002
Fact sheet on OU-OSU Research Bill

David Boren, President, University of Oklahoma
Frederick H. Carr, Chair, School of Meteorology, University of Oklahoma
Kelvin Droegemeier, Director, Center for Analysis and Prediction of Storms, Univ. of Okla.
Cal Hobson, Senator
Frank Keating, Governor of Oklahoma
James F. Kimpel, Director, National Severe Storms Laboratory, NOAA
John Snow, Dean of Geosciences, University of Oklahoma
Jim Wade, President, Norman Chamber of Commerce
Don Wood, Executive Director, Norman Economic Development Coalition
Corporation Commissioners Anthony, Apple, and Bode

**Please Note: This statement was based on the incorrect presentations available at the time of this document's preparation, and it was later learned that there is no requirement for matching funds and no deadline for obtaining state funds to augment the federal appropriation. The incorrect information is implied by the fact sheet that misled legislators into too hasty action.