Underground Storage Tank Program Grant guidelines Financial Responsibility
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Grant Guidelines To States
For Implementing The
Financial Responsibility And Certification Provision
Of The Energy Policy Act Of 2005
U.S. Environmental Protection Agency
Office of Underground Storage Tanks
Washington, DC
www. epa.gov/oust
EPA-510-D-06-002
May 2006
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Underground Storage Tank Program Grant guidelines Financial Responsibility
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Contents
Overview Of Financial Responsibility And Installer Certification
Guidelines 1
Why Is EPA Issuing These Guidelines? 1
What Is In These Guidelines? 2
When Do These Guidelines Take Effect? 2
Requirements For Financial Responsibility And Installer Certification . 3
What Tanks Do These Guidelines Apply To? 3
What Provisions Must A State Program Include To Meet These Requirements?... 3
What Enforcement Authority Must States Have For Financial
Responsibility And Installer Certification? 6
How Will States Demonstrate Compliance With These Guidelines? 6
How Will EPA Enforce States' Compliance With These Guidelines? 7
For More Information On The Financial Responsibility And Installer
Certification Grant Guidelines 8
Background About The Energy Policy Act Of 2005 8
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Overview Of Financial Responsibility And
Installer Certification Guidelines
Why Is EPA Issuing These Guidelines?
The U.S. Environmental Protection Agency (EPA), in consultation with states,
underground storage tank owners, and the tank industry, has developed these grant
guidelines to implement the financial responsibility and installer certification provision in
Section 9003(i) of the Solid Waste Disposal Act (SWDA), enacted by the Underground
Storage Tank Compliance Act, part of the Energy Policy Act of 2005 signed by
President Bush on August 8, 2005.
Section 1530 of the Energy Policy Act amends Section 9003 in Subtitle I of the
Solid Waste Disposal Act to add requirements for additional measures to protect
groundwater from contamination. In order to be in compliance with statutory
requirements applicable to Subtitle I, state underground storage tank (UST) programs
must, at a minimum, implement either ihe financial responsibility and installer
certification requirements in these guidelines or the secondary containment and under-
dispenser containment requirements described in separate guidelines. EPA must
require each state that receives funding under Subtitle I meet, at a minimum, one of the
following:
1. Tank And Piping Secondary Containment- Each new underground storage
tank, or piping connected to any such new tank, that is within 1,000 feet of any
existing community water system or any existing potable drinking water well must
be secondarily contained and monitored for leaks. In the case of a replacement
of an existing underground storage tank or existing piping connected to the
underground storage tank, the secondary containment and monitoring shall apply
only to the specific underground storage tank or piping being replaced, not to
other underground storage tanks and connected pipes comprising such system.
In addition, each new motor fuel dispenser system installed within 1,000 feet of
any existing community water system or any existing potable drinking water well
must have under-dispenser containment. These requirements do not apply to
repairs meant to restore an underground storage tank, piping, or dispenser to
operating condition.
Or,
2. Evidence Of Financial Responsibility And Certification - A person that
manufactures an underground storage tank or piping for an underground storage
tank system or installs an underground storage tank system must maintain
evidence of financial responsibility under Section 9003(d) of Subtitle I in order to
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Underground Storage Tank Program Grant guidelines Financial Responsibility
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provide for the costs of corrective actions directly related to releases caused by
improper manufacture or installation unless the person can demonstrate
themselves to be already covered as an owner or operator of an underground
storage tank under Section 9003 of Subtitle I. In addition, installers must be
certified, or they must certify the installation of underground storage tank systems
they install. These provisions do not affect or alter the liability of any owner or
operator of an underground storage tank. Owners and operators must still
comply with all technical regulations. For example, they must comply with the
requirements to report a release and perform all necessary corrective action and
to maintain financial responsibility to pay for corrective action and compensate
third parties.
EPA's Office of Underground Storage Tanks (OUST) is issuing these grant
guidelines to establish the minimum requirements states must meet in order to comply
with the financial responsibility and installer certification requirements in the Energy
Policy Act.
What Is In These Guidelines?
These guidelines describe the minimum requirements for financial responsibility
and installer certification that a state's underground storage tank program must contain
in order for a state to comply with statutory requirements for Subtitle I. These guidelines
include definitions, requirements, criteria, and options for states choosing to implement
the financial responsibility and installer certification provisions.
When Do These Guidelines Take Effect?
States must implement e/Yfterthe financial responsibility and installer certification
requirements described in these guidelines or the secondary containment requirements
(described in separate guidelines) by February 8, 2007.
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Requirements For Financial Responsibility
And Installer Certification
What Tanks Do These Guidelines Apply To?
For purposes of this document, the term "underground storage tank" means
those tanks that store petroleum products that satisfy the definition of underground
storage tank in 40 Part 280.12, except for those tanks identified in 40 Part 280.10(b)
and 280.10(c) as excluded or deferred underground storage tanks.
What Provisions Must A State Program Include To Meet These Requirements?
State requirements must, at a minimum, include the following provisions. States
may choose to be more stringent than the minimum requirements described in these
guidelines.
A. Persons Affected
State requirements must clearly define who will be covered. At a minimum, the
following persons must be covered.
• A person that manufactures an underground storage tank or piping for an
underground storage tank system that is installed in the state.
• A person that installs an underground storage tank system in the state.
• A person that installs tank components that modify the existing
underground storage tank system (if different from the installer described
above).
For the purposes of these guidelines, an "underground storage tank system" is
defined as "an underground storage tank (defined above), connected
underground piping, underground ancillary equipment, and containment system,
if any"; "ancillary equipment" is defined as "any devices including, but not limited
to, such devices as piping, fittings, flanges, valves, and pumps used to distribute,
meter, or control the flow of regulated substances to and from an underground
storage tank." These definitions are the same as those contained in 40 CFR Part
280.12.
In states where a single installer of an underground storage tank system is
required to obtain an installation permit, that person is the one required to
maintain financial responsibility for that installation. Where there is not a single
installer of record, states must define those who must maintain evidence of
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financial responsibility and meet the certification requirements described in these
guidelines.
B. Amount And Scope Of Coverage
States must require a minimum of $1 million per occurrence and $2 million
annual aggregate for manufacturers to cover the costs of corrective action of a
release from a regulated underground storage tank caused by improper
manufacture and $1 million per occurrence and $2 million annual aggregate for
installers to cover the costs of corrective action of a release from a regulated tank
system due to improper installation. These limits do not include legal defense
costs.
C. Length Of Coverage
States must require that manufacturers and installers maintain evidence of
financial responsibility for as long as their existing component(s) is (are) still in
service.
Note: EPA is seeking input from commenters on an alternative time frame
for coverage. Please provide any input you might have on this alternative:
State requirements must indicate how long manufacturers and installers must
maintain evidence of financial responsibility for a specific tank, piping, or
installation.
D. Allowable Mechanisms
States may allow manufacturers and installers to use a variety of financial
mechanisms as long as these mechanisms meet the following criteria:
1. The mechanism must be valid and enforceable;
2. The mechanism must be issued by a provider that is legally authorized
to provide such coverage in the state;
3. The mechanism must pay for the costs of corrective action (up to the
coverage limits described above) of a release from a regulated
underground storage tank or tank system caused by improper
manufacture or installation, as appropriate; and
4. Within a time frame determined to be reasonable by each state, the
mechanism must require that the provider notify the insured and the
state of cancellation or nonrenewal of the mechanism.
These mechanisms may include the ones currently used by tank owners and
operators to meet their financial responsibility requirements under 40 Part 280.94
to 280.103. Not all of these mechanisms may be appropriate for use to meet the
manufacturer and installer financial responsibility requirement, and some may
have to be modified to meet this new requirement.
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EPA is aware that state funds (funds created by states to provide financial
responsibility coverage for tank owners and operators) have historically taken
very different approaches to situations where releases may have been caused by
improper manufacture or installation. In some states, the state fund has
subrogated against the manufacturer or installer to recover costs when the state
believes improper manufacture or installation caused or contributed to the
release that was covered by the state fund. In a few other states, the state fund
is already providing coverage to installers by charging them a fee similar to an
insurance premium for that coverage.
If a state is going to allow manufacturers and/or installers to meet their financial
responsibility requirements by using its state fund, the state must ensure that the
state fund has adequate revenue to cover this added risk and should charge
manufacturers and installers an appropriate and separate fee in return for this
coverage. Unless this is done, EPA is concerned that a loss of potential revenue
by the state fund can negatively affect the fund's ability to pay for cleanups and
jeopardize the fund's viability as a financial responsibility mechanism.
E. Notification And Record Keeping
State requirements must contain a provision or provisions requiring a system of
notification and record keeping to and by the manufacturer, installer, owner,
operator, and/or the state program.
These provisions should reasonably address, at a minimum, the following
questions:
• To whom and when must the evidence of financial responsibility be
provided?
• How and where must manufacturers and installers maintain the evidence
of financial responsibility?
• If an event (for example, if the underground storage tank system is taken
out of service and no leak is discovered) negates a manufacturer or
installer's financial responsibility for a certain component or installation,
who will notify the manufacturer and installer of that fact?
• If the manufacturer or installer files for bankruptcy or ceases operation
for any other reason, whom should they notify and when?
• Other questions that the state may deem appropriate.
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F. installer Certification
The requirements found in the Act [described under Section 1530(a)(2)(B)] are
identical to the requirements already found under 40 Part 280.20(e) and Part
280.33(a) of the Technical Standards and Corrective Action Requirements for
Owners and Operators of Underground Storage Tanks promulgated on
September 23, 1988. Most, if not all, state underground storage tank regulations
already cover these requirements in these two provisions. If a state does not
have such provisions, that state must modify its regulations to include these two
provisions.
However, when a state expands its definition of "installer" to include persons who
replace or add equipment at a point of time after the initial installation of the
underground storage tank system (stated above), then state regulations
regarding the certification of such persons will have to be amended and
expanded to include such persons. In other words, under the Energy Policy Act
of 2005, all persons who are subject to the "installer financial responsibility
requirement" are also subject to the "instaHer certification requirement," and a
state's regulations regarding certification must apply to that universe of persons.
What Enforcement Authority Must States Have For Financial Responsibility And
Installer Certification?
At a minimum, states must have the same enforcement authorities for violations
of their financial responsibility and installer certification requirements as they have for
violations of current underground storage tank requirements.
How Will States Demonstrate Compliance With These Guidelines?
After February 8, 2007, the effective date of the financial responsibility
requirements, and before receiving future grant funding, states must provide one of the
following to EPA:
• For a state that has met the requirements for financial responsibility, the state
must submit a certification indicating that the state meets the requirements in the
guidelines.
• For a state that has not yet met the requirements for financial responsibility, the
state must provide a document that describes the state's efforts to meet the
requirements. This document must include:
A description of the state's activities to date to meet the requirements
in the guidelines;
A description of the state's planned activities to meet the
requirements; and
The date by which the state expects to meet the requirements.
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How Will EPA Enforce States'Compliance With These Guidelines?
As a matter of law, each state that receives funding under Subtitle I, which would
include a Leaking Underground Storage Tank (LUST) Cooperative Agreement, must
comply with the underground storage tank requirements of the Energy Policy Act. EPA
anticipates State and Tribal Assistance Grants (STAG) funds will be available under the
2007 Appropriations Act for certain purposes authorized by the Energy Policy Act, and
EPA will condition STAG grants with compliance with these guidelines. Absent a
compelling reason to the contrary, EPA expects to address noncompliance with these
STAG grant conditions by utilizing EPA's grant enforcement authorities under 40 CFR
Part 31.43, as necessary and appropriate.
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Underground Storage Tank Program Grant guidelines Financial Responsibility
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For More Information On The Financial Responsibility
And Installer Certification Grant Guidelines
Visit the EPA Office of Underground Storage Tanks' web site at www.epa.gov/oust or
call 703-603-9900.
Background About The Energy Policy Act Of 2005
On August 8, 2005, President Bush signed the Energy Policy Act of 2005. Title XV, Subtitle B of this
act (entitled the Underground Storage Tank Compliance Act) contains amendments to Subtitle I of the
Solid Waste Disposal Act - the original legislation that created the underground storage tank (UST)
program. This new law significantly affects federal and state underground storage tank programs, will
require major changes to the programs, and is aimed at reducing underground storage tank releases
to our environment
The underground storage tank provisions of the Energy Policy Act focus on preventing releases.
Among other things, it expands eligible uses of the Leaking Underground Storage Tank (LUST) Trust
Fund and includes provisions regarding inspections, operator training, delivery prohibition, secondary
containment and financial responsibility, and cleanup of releases that contain oxygenated fuel
additives.
Some of these provisions require implementation by August 2006; others will require implementation
in subsequent years. To implement the new law, EPA and states will work closely with tribes, other
federal agencies, tank owners and operators, and other stakeholders to bring about the mandated
changes affecting underground storage tank facilities.
To see the full text of this new legislation and for more information about EPA's work to implement the
underground storage tank provisions of the law, see: http://www.epa.gov/oustffedlaws/nrg05 01 .htm
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