906R87109
United States
Environmental Protection
Agency
Office of
Underground Storage Tanks
Washington, D.C 20460
April 1987
&EPA
Proposed Regulations for
Underground Storage Tanks
Your Financial
Responsibilities
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Acknowledgement
The text of this brochure was prepared by ICF, Incorporated for EPA's Office of Underground Storage Tanks.
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Your Financial
Responsibilities
The U.S. Environmental Protection Agency
(EPA) has recently published a proposed rule
concerning financial responsibilities if you
own or operate underground storage tanks that
contain petroleum. Although the complete
proposal appears in the Federal Register
(April 17,1987), this brochure provides a
brief summary and answers some important
questions about your financial responsibilities.
The Agency will issue the final rule in early
1988 after considering comments from the
public on the proposal. EPA is also developing
a financial responsibility rule for chemical
tanks.
ery Act by adding Subtitle I to control the
problem of leaking USTs. Subtitle I requires
EPA to develop regulations for installing and
operating underground storage tanks and for
responding to leaks. EPA's proposed rule for
these technical requirements appears in the
Federal Register (April 17,1987). You
may call the EPA Hotline (800-424-9346)
to get a copy of "Proposed Regulations for
Underground Storage Tanks: What's In The
Pipeline," a brochure summarizing this
proposed rule. Subtitle I also directs EPA to
develop "financial responsibility" regulations,
and these are described in this brochure.
Why Is EPA Proposing These
Regulations?
What Is "Financial
Responsibility"?
Several million underground storage tanks in
the United States contain petroleum or hazard-
ous chemicals. Thousands of these underground
storage tanks-often called USTs--are leaking
and can cause fire and explosion hazards. They
can also contaminate ground water. Because
ground water is both a vital natural resource
and a major source of drinking water, Congress
amended the Resource Conservation and Recov-
Financial responsibility means that if you
own or operate an UST, you must take steps to
ensure that there will be money to pay for the
costs of a leak from your tank. These costs
could include cleaning up leaked product,
supplying drinking water, and compensating
people for personal injury or property
damage.
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When Will The Financial
Responsibility Rules
Become Effective?
EPA will issue a final rule for petroleum tanks
next spring. The financial responsibility
requirements would become effective 90 days
later, or about June 1988. It is, therefore,
crucial that owners and operators start
planning their financial assurance programs
now in order to be able to comply with the rule
when it becomes effective. The fundamental
aspects (e.g., level of coverage) of the proposed
rule are very unlikely to change for the final
rule because they were established by
Congress. EPA will issue a financial
responsibility rule for chemical tanks later.
Who Must Show Financial
Responsibility?
Either the owner or the operator of the tank
must show financial responsibility, but not
both. The tank owner and the tank operator
must decide which one will show financial
responsibility under EPA's rule.
Under the proposed rule, if you own or operate
a tank that was properly closed and any con-
tamination cleaned up before the rule becomes
effective (i.e., June 1988), then the financial
responsibility requirements will not apply to
the closed tank.
Response, Compensation, and Liability Act, also
known as "Superfund"). If a tank contains more
petroleum than hazardous chemicals, the finan-
cial responsibility rule will apply. However, if
the tank contains more chemicals than petro-
leum, then this financial responsibility rule
will not apply, even though the tank contains
some petroleum.
Note: EPA will be proposing a separate financial
responsibility rule for hazardous chemical tanks
later.
What Amount Of Money Are
You Responsible For?
You must be able to show that you have $ 1 mil-
lion of "per occurrence" coverage (the poten-
tial cost of one leak) and an annual aggregate
coverage depending on the number of tanks you
own. The annual aggregate amount is the total
amount of coverage you must have for all poten-
tial releases.
Number of Tanks Aggregate Amount
1 -12
13-60
61 -140
141 - 250
251 - 340
341 or more
$ 1 million
2 million
3 million
4 million
5 million
6 million
What Kinds Of Tanks Are
Covered By The Proposed
Rule?
Financial responsibility must be shown for all
USTs containing petroleum. Some tanks contain
petroleum mixed with hazardous chemicals (as
defined under the Comprehensive Environmental
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How Can You Show Financial
Responsibility For Your USTs?
Under the proposed rule, there are four ways
you can demonstrate financial responsibility
for your USTs:
1. Prove that your "tangible net worth"
is at least 10 times your required
annual aggregate amount. For example,
you can provide this proof through annual
financial statements filed with the
Securities and Exchange Commission.
2. Arrange for someone else to be
responsible for cleanup and damage
costs. You may use any of the following
methods: insurance (including risk reten-
tion group coverage), guarantee, indemnity
contract, surety bond, or letter of credit.
EPA has strict requirements for these
methods. They are described in detail in
the proposed rule. Your banker, account-
ant, trade association representative, or
insurance agent may be able to advise you
on how to proceed.
3. Use State approved methods. If EPA
has authorized your State to administer its
own program for USTs, you may also use
any method of coverage approved by your
State.
4. Use State funds. If your State has
established a State fund that will pay for the
cleanup costs of a leak, then you may not
need additional coverage to show you can pay
for the same costs. You will still need to
show financial responsibility for the costs
of compensating those injured by leaks,
unless the State fund would also pay for
those costs.
What Records Must You Keep
Or File With EPA?
You must keep records of the type of coverage
you have at your tank site or your place of
business. Under the proposed rule, you only
need to file copies of these records with EPA in
the following circumstances:
0 You install a new tank.
• You suspect or identify a leak in a tank.
• You receive notice that a method of coverage
you have will be cancelled or will no longer
provide sufficient coverage, and you are
unable to get other coverage.
• EPA or a State agency requests the records.
What Happens If Your
Coverage Is Cancelled?
Under the proposed rule, a provider of cover-
age or insurance may cancel your coverage
only after giving you 120 days notice. You
have 60 days from the receipt of the cancel-
lation notice to find another method of cover-
age. If you are unable to find coverage after
60 days, then you must notify EPA.
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What If You Are Unable To
Demonstrate Financial
Responsibility?
If you are unable to find coverage or meet the
financial requirements, you may qualify for a
temporary suspension of enforcement. This
means the regulating agency will not enforce
the financial responsibility requirements
against you for a period of 180 days (which
can be extended by another 180 days). To
qualify, you must belong to a "class" of owners
or operators who can prove they have tried,
and are still trying, but thus far have been
unable to find coverage. The rule does not
define or limit which groups of owners or
operators may form a class. The class may
petition EPA for a temporary suspension of the
requirements. EPA may not suspend these
requirements for individual owners or
operators.
For a suspension to be granted, the class must
show it is taking steps to form a "risk retention"
group, which is a way of providing insurance
coverage for members of the group. Or it can
show that the State in which the tanks are located
is establishing a fund to cover the costs of leaks.
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How Can You Get More Information?
You can call the Hotline at 800-424-9346 or contact one of the Regional LIST Coordinators listed below.
EPA Regional UST Coordinators
Boston
William Torrey
U.S. EPA, Region I
Kennedy Bldg., Room 1903
Boston, MA 02203
617-223-1595
Mike Williams
U.S. EPA, Region IV
345 Courtland St., N.E.
Atlanta, GA 30308
404-347-3866
Chet Mclaughlin
U.S. EPA, Region VII
726 Minnesota Avenue
Kansas City, KS 66101
913-236-2852
Eric Yunker
U.S. EPA, Region IX
215 Fremont Street
San Francisco, CA 94105
415-974-8160
Tom Taccone
U.S. EPA, Region II
26 Federal Plaza, Rm. 906
New York, NY 10278
212-264-1829
Wayne Naylor
U.S. EPA, Region III
841 Chestnut Street
Mail Code 3HW34
Philadelphia, PA 19107
215-597-7354
Gerald Phillips
U.S. EPA, Region V
230 South Dearborn St.
Chicago, IL 60604
312-886-6159
William Rhea (6H-A)
U.S. EPA, Region VI
1445 Ross Avenue
Dallas, TX 75202-2733
214-655-6757
Henry Schroeder
U.S. EPA, Region VIII
999 18th St., Suite 500
Denver, CO 80202
303-293-1676
Joan Cabreza
U.S. EPA, Region X
12006th Avenue
Mail Stop 530
Seattle, WA98101
206-442-0344
GOVERNMENT PRINTING OFFICE 1987 - 716-002 - 1302/60598
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