FUNDING UST CORRECTIVE ACTION

FUNDING UST CORRECTIVE ACTION

According to the US Environmental Protection Agency (EPA), Michigan is one of the few States without an Underground Storage Tank (UST) financial assurance fund. The absence of this fund and the high cost of acquiring the necessary financial resources as required by EPA may be contributing factors in Michigan being one of the top states in the nation with approximately 8,500 Leaking Underground Storage Tanks (LUST).  Until now.

Public Act 416, amends Part 215 of the Natural Resources and Environmental Protection Act (PA 451 of 1994), and was signed into law by Governor Rick Snyder to create a new Underground Storage Tank Authority Board that will annually allocate $20 million per year of the existing environmental protection fee of 7/8th of a cent-per-gallon on all refined petroleum sold in the State of Michigan to address private corrective actions for LUSTs.  The remainder of the revenue generated by the 7/8 of a cent-per-gallon (expected to be $30 million per year) will remain in the Refined Petroleum Fund to be used to fund LUST corrective actions conducted by the state, administrative costs and other purposes. 

UST Authority Board 
Housed within the Michigan Department  of  Environmental Quality, a six member UST Authority Board has been appointed to administer a cost reimbursement program for owners and operators of

petroleum USTs to assist in paying for corrective actions.  The UST Authority Board is also charged with outlining a process on how and when to submit claims,  arrive at a reasonable schedule of costs and determine if corrective actions are reasonable, necessary and consider site conditions consistent with Part 213 of NREPA (regulates LUSTs) requirements to achieving site closure. Perhaps the most notable change will be the fact that this new board will allow compliance with the Federal Financial Responsibility requirements, without owner/operators having to purchase  


insurance for environmental damage caused by leaking USTs.  Claims will be made to the UST Authority Board. However, that will not occur until the EPA decides whether or not PA 416 meets the requirements of fulfilling federal and state financial assurance mandates. For this reason, owners and operators are encouraged to retain their existing private insurance until this Authority receives final EPA approval.  Do not cancel your insurance or fail to renew until you are absolutely certain that you are qualified and enrolled in the Authority’s database.

Eligibility
For owner/operators to qualify for funding; 
1.) USTs must be in compliance with the registration rules and fee requirements prior to a release being discovered under Part 211 of NREPA (regulates UST systems)
2.) The release must be reported within 24 hours after discovery
3.) The release is not for a UST closed prior to January 1, 1974, and
4.) The release must be discovered and reported on or after December 30, 2014.

Claims
Claims are limited to $1 million per claim period (October 1st to September 30th of each year) for owners and operators of 1 to 100 USTs, and $2 million per claim period for owners and operators of more than 100 USTs.

Deductibles
Deductibles will be required and responsible operation of USTs will still be required to qualify for reimbursement from the fund. Generally, the deductible will be $50,000 per claim, but owners of 8 tanks or less will be able to lower their deductibles to $15,000 with an annual payment of $500 per tank.  

Note: Each compartment of a compartmentalized tank is considered a separate UST for fee assessment purposes.

Market Response
Although financial institutions appear to have taken a wait-and-see approach on this new fund, The Associated Food and Petroleum Dealers (AFPD), American Petroleum Institute (API) and the Michigan Petroleum Association (MPA) are among the organizations that view PA 416 as a victory for fuel retailers who have found UST insurance coverage either unavailable or cost prohibitive.  AFPD

has stated the Act will save fuel retailers money spent previously on UST insurance to comply with federal UST financial requirements, help cleanup sites that have been dormant or underfunded, and will help facilitate land development where properties have been mothballed because buyer and seller couldn’t agree on a cleanup approach. 

ASTI Environmental routinely reviews prior reports, outlines cleanup options and makes cost benefit recommendations to help our clients move their projects forward.


State of Michigan Enrolled Senate Bill No. 791, Legislative Analysis from the House Fiscal Agency, the EPAs State UST Financial Assurance Funds webpage and AFPD in the News were reviewed prior to writing this article. Questions can be directed to ASTIs Director of Site Redevelopment Services, Mr. Robert Anderson at 810/869-6726 randerson@asti-env.com

 Tech-Bits is a publication of ASTI Environmental, P.O. Box 2160, Brighton, Michigan, 48116-2160.  For a free subscription call 800.395.ASTI or visit www.asti-env.com

Tech-Bits is a publication of ASTI Environmental, P.O. Box 2160, Brighton, Michigan, 48116-2160.  For a free subscription call 800.395.ASTI or visit www.asti-env.com


Tech-Bits is intended to provide information concerning current environmental issues, and is not intended to provide technical or legal advice regarding any particular situation.  Specific questions should be addressed to your environmental professional.  ©2015 by ASTI