PAYFORPERFORMANCE

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PAY-FOR-PERFORMANCE

• The Oklahoma Experience
• Dave Kelley
• Petroleum Storage Tank Division
• Oklahoma Corporation Commission

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ACCOUNTABILITY

• We have a fiduciary responsibility
• We knew legislators would ask were the money went
• We knew the State Auditor would ask
• The public would ask

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We discovered a problem

• The Football Field
• Paying out money with little or no environmental
  results
• Major disallowances and bad consultant relations
• We looked at Pay-For-Performance

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What is Pay-for-Performance

• Payment is made when a measurable environmental
  goal is reached
• Or when a task integral to the clean up is
  satisfactorily completed
• A guaranty is given to complete the task of
  achieving the environmental goal

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How did Oklahoma Implement PFP?
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Stakeholder Involvement

• Auditors look at dollars being spent and PFP
• Consultants did not like the idea
• Tank owners loved the idea

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Meetings with petroleum marketers and consultants

• Closing site meant closing the cash flow
• Taking same risks contractor and tank owner

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Invited tank owners to learn the benefits of PFP

• Paperwork is reduced
• Time to pay is shortened to a few days
• Our emphasis turned from documentation to
  environmental results
• Disallowances are reduced to zero
• Collaboration between the tank owner, consultant,
  regulatory and the fund
• Funds are encumbered at the signing.

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We began to sign contracts

• The tank owners tried to change the law, but
  failed
• A voluntary approach to PFP
• We were accused of playing favorites
• Non-participating consultants.

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Results of PFP (Pre-approval)

• 65 PFP contracts, total of 30 million
• Paperwork has been reduced
• Time to pay is a few days
• Disallowances near zero
• Cooperation between parties
• Difficult sites are being cleaned

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Other benefits of Oklahoma PFP(Pre-approval)
program

• Tank Owner benefits are
• they get a guaranteed cleanup
• they have zero disallowances.
• Consultants have less paperwork
• The Fund remains solvent
• Promotes innovative technology
• Improved relationships between parties
• Questionable consultants went out of business

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Problems encountered in PFP program.

• Improper sampling techniques
• How do you measure free product reduction
• Change of lab causes inconsistencies
• New regulations i.e.. MTBE
• Timing of baseline sampling

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SUCCESS AT LAST !!!!

• Rules implemented 5-29-98
• Makes the pre-approval process mandatory
• SB027 unanimously approved 6-9-98.
• The regulatory and fund divisions have been
  combined.
• Let me show you some results.

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