SITE INFORMATION AND CORRESPONDENCE FILE 2

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02/18/2009 2:3:51 4785802 MR SPACE PAGE 02 UST Cleanup Fund Claimants and 1 -2, January 28, 2009 interested Parties 2. Suspend active LOCs to (begin Ilo bring long-term payment demands Into balance with revenue. Suspensions are occurring consistent with the legislatively mandated priority system. Payment Processing Details i Payment requests for active claims will continue to be received and processed. Payments for claims with a suspended LOC will also be processed to cover costs incurred up to ten days following the date of suspension. A letter specifying the approved payment amount will be mailed. With the passible exception of Priority Class A, the letter will state that the payment will be held until funds become available. As you may know, Fund statutes dictate that each priority class must be paid a minimum of 14% of the annual allocation for claims if there are not adequate funds to pay all claims in a given i year. In recent years, the demand by priority class has been approximately as follows: Priority Class A-- 1%, Priority Class 8--46%, Priority Class C--38°ria and Priority Class D— 14%. However, with lower funds available in the future, we will need to reduce payments to Priority Class C, resulting In the following approximate distribution of funds: Priority Class A—2%, Priority Glass B—TM Priority Class C-+ 14%and Priority Class U 14%. For the current Fiscal Year (FY) (July 1, x'008 through June 30, 2009) Priority Class C has already exceeded the 14% minimum and!almost no priority Class C payments have been made. To meet the minimum statutory level, for the remainder of this FY, Priority D claims will be paid up to the minimum 14% required by law and any remaining funds will be paid to Priority Class A and B. No additional payments will be made to Priority Class C. Beginning next FY(starting July 1, 2009) we will pay some C and la claims throughout the year at approximately the minimum rate requi66d. Priority Class Detail Fallowing is a discussion of actions taken and possible future actions we may need to take as we evaluate the demand for funds against the rate of revenue. We will update all estimates in the future as we are able. i 1. Priority Class A (Residentlal claiRiants):' i Priority Class A claims are the highest priority and payment requests are being processed and payments made a$funds become available. These payments will be delayed less than 3 months, If at 011, Priority Class A claimants represent less than 2 percent of the historic payment demand on the Fund's net revenues. Priority Class A claims will not have their LOCs suspended. New LOCs will continue to be issued to claimants In this class. 'These are simplified priority class descriptions. The full definition of the Fund's priority classes is provided in Health and Safety Code se9tiora,4§;Z90A2. Californaa Environmental Prorecliion Agency n rffd Pp- i