Underground Storage Tanks

What are financial responsibility requirements?

When Congress amended Subtitle I of the Resource Conservation and Recovery Act in 1986, it directed the U.S. Environmental Protection Agency (EPA) to develop financial responsibility regulations (PDF) (36 pp, 148K, About PDF) for owners and operators of underground storage tanks.

Congress wanted owners and operators of underground storage tanks (USTs) to show that they have the financial resources to clean up a site if a release occurs, correct environmental damage, and compensate third parties for injury to their property or themselves. The amount of coverage required depends on the type and size of the business, as explained in the chart below. OUST produced a 16-page booklet called Dollars And Sense that clearly presents these requirements to UST owners and operators.

How can owners and operators demonstrate financial responsibility?

Owners and operators have several options: obtain commercial environmental impairment liability insurance; demonstrate self-insurance; obtain guarantees, surety bonds, or letters of credit; place the required amount into a trust fund administered by a third party; or rely on coverage provided by a state financial assurance fund. Local governments have four additional compliance mechanisms tailored to their special characteristics: a bond rating test, a financial test, a guarantee, and a dedicated fund.

Have compliance deadlines passed?

Yes. All of the compliance deadlines for financial responsibility have passed. All USTs that have not been permanently closed must currently meet the financial responsibility requirements. For historical reference, the table at the end of this page presents the former compliance deadlines.

What are the required coverage amounts?

The UST regulations identify five groups of UST owners and operators and the required coverage amounts for each group.  The table at the end of this page presents each group and its required coverage amount.

What is the cost of demonstrating financial responsibility?

The cost of obtaining financial responsibility depends greatly upon the mechanism used and in some cases (such as insurance) can also depend upon the type of UST system (such as single vs. double-walled tanks). State funds and insurance are the most common mechanisms used to comply with financial responsibility requirements. Owners and operators who participate in a state financial assurance fund generally pay annual tank fees of from $100 to $250 per tank. In terms of the costs for meeting financial responsibility requirements, insurance premiums for a facility with three to five upgraded tanks may range from about $1,000 to $1,500 per year. OUST has developed a List of Known Insurance Providers for Underground Storage Tanks to provide UST owners and operators with a list of insurance providers who may be able to help them comply with financial responsibility requirements by providing a suitable insurance mechanism.

In developing the Financial Responsibility regulations (PDF) (36 pp, 148K, About PDF), EPA has been sensitive to the financial impact of the regulations on small business. EPA phased in compliance deadlines, allowing the smallest businesses the longest time to comply. It has since responded to business owners' concerns by delaying compliance dates for the smallest owners and operators. EPA also has worked with states to develop state financial assurance funds and grant and loan programs.

How can state financial assurance funds help?

Many states have developed financial assurance funds to reduce the economic hardship of compliance with financial responsibility requirements and to help cover the costs of cleanups. State financial assurance fund programs, which supplement or are a substitute for private insurance, have been especially useful for small-to-medium sized petroleum marketers. Other characteristics of the funds appear below:

• Financial assurance funds are created by state legislation and must be submitted to EPA for approval before they can be used as compliance mechanisms.
• In most cases, states generate money for the funds with tank registration and petroleum fees.
• Legislatures delegate authority for the fund to a state agency addressing health, environmental, or insurance issues.
• Some state assurance funds incorporate eligibility requirements, such as demonstrations that facilities are in compliance with technical requirements.
• Most state funds contain some deductible that the owner or operator is responsible for paying. Details on the funds are specific to each state.

Nationwide, these state funds raise about $1 billion annually.

How many states have financial assurance funds?

Currently about 40 state funds qualify as financial assurance mechanisms. One additional state (Washington) has a reinsurance program that enables insurance companies to offer lower-cost premiums to the state's UST owners.

Financial Responsibility Requirements

Group Of UST Owners And Operators	Compliance Deadline	Per Occurrence Coverage	Aggregate Coverage
GROUP 1: Petroleum marketers with 1,000 or more tanks OR Nonmarketers with net worth of $20 million or more (for nonmarketers, the "per occurrence" amount is the same as Group 4-B below)	January 1989	$1 million	$2 million if you have more than 100 tanks OR $1 million if you have 100 or fewer tanks
GROUP 2: Petroleum marketers with 100-999 tanks	October 1989	$1 million	$2 million if you have more than 100 tanks OR $1 million if you have fewer than 100 tanks
GROUP 3: Petroleum marketers with 13-99 tanks	April 1991	$1 million	$1 million
GROUP 4-A: Petroleum marketers with 1-12 tanks	December 1993	$1 million	$1 million
GROUP 4-B: Nonmarketers with net worth of less than $20 million	December 1993	$500,000 if throughput is 10,000 gallons monthly or less OR $1 million if throughput is more than 10,000 gallons monthly	$2 million if you have more than 100 tanks OR $1 million if you have fewer than 100 tanks
GROUP 4-C: Local governments (including Indian tribes not part of Group 5)	February 1994	$500,000 if throughput is 10,000 gallons monthly or less OR $1 million if throughput is more than 10,000 gallons monthly	$2 million if you have more than 100 tanks OR $1 million if you have fewer than 100 tanks
GROUP 5: Indian tribes owning USTs on Indian lands (USTs must be in compliance with UST technical requirements)	December 1998	$500,000 if throughput is 10,000 gallons monthly or less OR $1 million if throughput is more than 10,000 gallons monthly	$2 million if you have more than 100 tanks OR $1 million if you have fewer than 100 tanks

For more information on financial responsibility regulations and mechanisms, the following publication may be useful: Financial Responsibility for Underground Storage Tanks: A Reference Manual. This is a detailed, comprehensive manual developed to help UST inspectors understand the restrictions, limitations, and requirements of each financial responsibility mechanism provided in the federal UST regulations. Note that this "Reference Manual" is based on the federal UST financial responsibility requirements, though it should provide useful information and insight into understanding and reviewing state-specific financial responsibility mechanisms.

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