United States Solid Waste and
Environmental Protection Emergency Response
Agency (5305W)
EPA510-R-97-009
November 1997
»EPA
RCRA, Superfund & EPCRA
Hotline Training Module
Introduction to:
RCRA Subtitle I:
Underground Storage Tanks
(40 CFR Part 280)
Updated July 1997
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DISCLAIMER
This document was developed by Booz-Allen & Hamilton Inc. under contract 68-W0-0039 to EPA. It is
intended to be used as a training tool for Hotline specialists and does not represent a statement of EPA
policy.
The information in this document is not by any means a complete representation of EPA's regulations or
policies. This document is used only in the capacity of the Hotline training and is not used as a reference
tool on Hotline calls. The Hotline revises and updates this document as regulatory program areas change.
The information in this document may not necessarily reflect the current position of the Agency. This
document is not intended and cannot be relied upon to create any rights, substantive or procedural,
enforceable by any party in litigation with the United States.
RCRA, Superfund & EPCRA Hotline Phone Numbers:
National toll-free (outside of DC area)
Local number (within DC area)
National toll-free for the hearing impaired (TDD)
(800) 424-9346
(703) 412-9810
(800) 553-7672
The Hotline is open from 9 am to 6 pm Eastern Time,
Monday through Friday, except for federal holidays.
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UNDERGROUND STORAGE TANKS
CONTENTS
1. Introduction 1
2. Regulatory Summary 3
2.1 Scope of the UST Program 3
2.2 Notification Requirements 6
2.3 Performance and Operating Standards 6
2.4 Special Requirements for Chemical USTs 9
2.5 Release Reporting, Response, and Corrective Action 9
2.6 Out-of-Service USTs and UST Closure 11
2.7 Financial Responsibility 12
2.8 Lender Liability 17
2.9 Leaking Underground Storage Tank Trust Fund 17
2.10 State Programs 18
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UndergrounciStorage^Tanks^l
1. INTRODUCTION
Across the United States, there are approximately 1 million underground storage tanks
(USTs) in use that store petroleum or hazardous substances. Placing tanks
underground minimizes potential fire and explosion hazards, and provides a
convenient place to store liquid materials while hiding unsightly equipment, thereby
preserving aboveground aesthetics and maximizing usable aboveground space. These
tanks are nearly ubiquitous, as many are owned by small "Mom and Pop" businesses.
These underground tanks are used to store, among other things, gasoline, crude oil,
hazardous chemicals, and heating oil. USTs are found at a variety of locations,
including convenience stores, airports, private residences, farms, service stations, small
and large manufacturing facilities, and hazardous waste management facilities. Many
of these tanks are made of bare, unprotected steel. Because of their underground
location, these tanks pose unique problems in preventing their contents from leaking
due to faulty installation, corrosion, tank or pipe rupture, or spills. With over 50
percent of the U.S. population relying on groundwater as their primary source of
drinking water, Congress acted to protect this resource in 1984 by adding Subtitle I to the
Resource Conservation and Recovery Act (RCRA). Pursuant to this Congressional
mandate, EPA established a regulatory program in 1988 that includes technical
requirements to prevent, detect, and clean up releases from USTs, as well as financial
responsibility requirements to guarantee that UST owners and operators have enough
money set aside to clean up releases and to compensate third parties.
This module is designed to familiarize you with the universe of regulated USTs, and
the technical and financial requirements that apply to them. After reading this
module, you should be able to:
• Define an UST
• Determine which USTs are subject to regulation
• Discuss such topics as deadlines for upgrading tanks and the closure and
corrective action requirements
• Summarize the financial responsibility requirements for petroleum USTs.
The information in this document is not by any means a complete representation of EPA's regulations or policies,
but is an introduction to the topic used for Hotline training purposes.
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1
2 - Underground StojggeTanks
The information in this document is not by any means a complete representation of EPA's regulations or policies,
but is an introduction to the topic used for Hotline training purposes.
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Underground Storage Tanks - 3
2. REGULATORY SUMMARY
When developing RCRA Subtitle I, Congress's primary concern was to protect
groundwater by establishing standards that prevent releases and enable UST owners
and operators to quickly respond to releases that do occur. Since a complete visual
inspection is impossible for any tank that is even partially underground, RCRA
Subtitle I defines an UST as any tank that is 10 percent or more beneath the surface of
the ground. Because this includes the volume of underground pipes connected to the
tank, above ground tanks with extensive underground piping may fall within the
purview of the federal UST regulations, as well as tanks that are partially or completely
below ground.
Not all underground storage tanks are subject to the UST regulations. EPA regulates
only certain underground tanks that hold petroleum or hazardous chemicals. For
example, underground tanks holding nonhazardous substances, such as water, are not
covered by these regulations. Other underground tanks are not regulated under
Subtitle I because they are already covered under other federal programs (such as
underground tanks holding hazardous wastes, which are regulated under Subtitle C of
RCRA), or because the tank does not contain enough of a regulated substance to
warrant regulation.
The UST regulations are found in 40 CFR Part 280. Since the UST program is not part
of RCRA Subtitle C, Part 280 contains its own applicability and definitions sections, in
addition to regulations establishing technical and administrative requirements. These
requirements include notification, design and installation standards, closure, and
corrective action. Because many USTs were installed prior to the development of the
federal UST program, the regulations also establish a schedule for upgrading older
tanks to meet current design and operating standards. Finally, Part 280 also contains
regulations requiring owners and operators of petroleum USTs to demonstrate that
they have the financial resources to pay for the cost of cleaning up any releases that
occur.
States can apply for, and obtain, approval to implement the UST regulations in lieu of
the federal government. Approval of a state's UST program is independent of a state's
authorization under Part 271 to implement the Subtitle C hazardous waste program.
Part 281 contains the regulations governing the application and approval process for
UST state programs.
2.1 SCOPE OF THE UST PROGRAM
When addressing any issue involving underground storage tanks, it is critical that you
first determine if the tank meets the regulatory definition of UST, found in §280.12.
EPA defines an UST as any one or combination of tanks (including connected
underground pipes) that is used to contain an accumulation of "regulated substances"
and the volume of which (including the volume of underground pipes connected
The information in this document is not by any means a complete representation of EPA's regulations or policies,
but is an introduction to the topic used for Hotline training purposes.
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1
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4-'Underground Storage Tanks
thereto) is 10 percent or more beneath the surface of the ground. A "regulated
substance" means (1) any substance defined under §101(14) of the Comprehensive
Environmental Response, Compensation, and Liability Act, or CERCLA (but not
including any substance regulated as a hazardous waste under RCRA Subtitle C), and
(2) petroleum, including crude oil or any fraction thereof that is a liquid at standard
temperature and pressure.
As stated earlier, USTs, depending on their size, location, contents, and/or purpose,
may be either subject to Part 280 regulation, deferred to other regulatory programs, or
excluded from federal regulation altogether. Because Congress expressly excluded a
number of units from the definition of UST in RCRA §9001, §280.12 also excludes these
units. These units include, among others, farm and residential tanks with a volume of
1,100 gallons or less that store motor fuel for noncommercial purposes; tanks storing
heating oil for use on site; septic tanks; pipeline facilities regulated under the Natural
Gas Pipeline Safety Act of 1968 and the Hazardous Liquid Pipeline Safety Act of 1969;
and storage tanks situated upon or above the floor in a basement, cellar, or other
underground area. A complete list of these exclusions can be found in Table 1.
Once you determine that a tank meets the definition of an UST, you must evaluate it
against a number of exclusions found in the applicability section (§280.10(b)). EPA
developed -some of these exclusions to avoid subjecting certain types of tanks to dual
regulation. For example, tank systems regulated under RCRA Subtitle C and
wastewater treatment tanks regulated under the Clean Water Act (CWA) are excluded
because they are already covered by other regulatory programs. Other exclusions
exempt tanks that pose little or no risk, allowing implementing agencies to concentrate
their resources on tanks that pose the greatest environmental threat. These include
tanks that contain small concentrations of regulated substances and tanks with a
capacity of 110 gallons or less. Table 1 contains a complete list of these exclusions.
Finally, if a tank meets the definition of an UST and is not excluded under §280.10(b),
you must determine if it qualifies for one of the deferrals in §§280.10(c) and (d). Most of
these tanks are deferred from regulation because their design or use pose unique
regulatory challenges. A deferral provides EPA with additional time to evaluate these
tanks to determine if they warrant full regulation under Part 280. Section 280.10(c)
defers five types of UST systems from the Part 280 design and installation standards and
notification, release detection, release reporting, and closure requirements. These tanks
are, however, subject to release response, corrective action and financial responsibility.
In addition, new tanks must meet the design standards of §280.11. See Table 1 for a list
of the tanks subject to this deferral. Section 280.10(d) defers USTs storing fuel for
emergency power generators from the release detection requirements only — these
tanks are subject to all other Part 280 requirements.
If a tank meets the definition of an underground storage tank, and is not excluded or
deferred from regulation, then it is subject to the Part 280 regulations. The remainder
of this module provides an overview of the technical and financial responsibility
requirements that apply to regulated USTs.
The information in this document is not by any means a complete representation of EPA's regulations or policies,
but is an introduction to the topic used for Hotline training purposes.
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Underground Storage Tanks- 5
Table 1
TANKS NOT SUBJECT TO FEDERAL UST REGULATIONS UNDER PART 280
Type of Tank
Citation
1,100-gallon or less Farm or Residential Tanks1
§280.12
Heating Oil Tanks1
§280.12
Septic Tanks1
§280.12
Pipeline Facilities Regulated Under Other Federal or State Laws1
§280.12
Surface Impoundments, Pits, Ponds, Lagoons1
§280.12
Stormwater or Wastewater Collection Systems1
§280.12
Flow-Through Process Tanks1
§280.12
Liquid Traps Related to Oil/Gas Production1
§280.12
Storage Tanks in an Underground Area1
§280.12
Tanks Holding RCRA Subtitle C Hazardous Waste1
§280.10(b)(1)
Tanks that are Part of a Wastewater Treatment Facility Regulated Under the
Clean Water Act1
§280.10(b)2)
Equipment Containing Regulated Substances for Operational Purposes1
§280.10(b)(3)
USTs with capacities of 110 gallons or less1
§280.10(b)(4)
USTs containing De Minimis Concentrations of Regulated Substances1
§280.10(b)(5)
Wastewater Treatment Tank Systems2
§280.10(c)(1)
Tanks Containing Radioactive Material Regulated Under the Atomic Energy Act2
§280.10(c)(2)
Tanks that are Part of an Emergency Generator System at Nuclear Power
Generation Facilities Regulated by the Nuclear Regulatory Commission2
§280.10(c)(3)
Airport Hydrant Fuel Distribution Systems2
§280.10(c)(4)
Field-Constructed Tanks2
§280.10(c)(5)
Tanks Storing Fuel for Use by Emergency Power Generators3
§280.10(d)
1 These tanks are excluded from the definition of "UST"
2 These tanks are deferred from Part 280, Subparts B, C, D, E, and G
3 These tanks are deferred from Subpart D only
The information in this document is not by any means a complete representation of EPA's regulations or policies,
but is an introduction to the topic used for Hotline training purposes.
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6^Underground^^
2.2 NOTIFICATION REQUIREMENTS
Because of the vast number of underground storage tanks already in existence when
Congress enacted RCRA Subtitle I, EPA's first action in responding to this mandate was
to establish a notification system allowing EPA to track the universe of existing USTs,
as well as providing a mechanism that would alert EPA when a new UST was brought
into operation. Owners and operators of UST systems that were in the ground on or
after May 8, 1986, were required to notify the designated state or local agency of the
tank's existence, unless the tank was taken out of operation on or before January 1,
1974. Any owner or operator who brings an UST into use after May 8, 1986, must notify
the designated state or local agency of the existence of the tank system within 30 days of
bringing the tank into use (§280.22). As an additional safeguard, any person who sells a
tank intended to be used as an UST must inform the purchaser of the owner's
notification requirement under §280.22.
2.3 PERFORMANCE AND OPERATING STANDARDS
The Part 280 UST regulations were published on September 22, 1988, and became
effective on December 22, 1988 (53 FR 37082). December 22,1988, is used as a critical cut-
off point for determining the applicability of certain elements of the UST regulations.
To accommodate the thousands of USTs in existence at the time the Part 280
regulations were established, EPA built a certain amount of flexibility into the UST
program to ensure that tanks already in use were covered by the new program, yet not
immediately subjected to cost-prohibitive design standards. Part 280 draws a distinction
between new tanks, which are immediately subject to strict installation and design
standards, and existing tanks, which are provided a grace period before they must be
upgraded to meet the same standards that apply to new tanks. Tanks for which
installation began after December 22, 1988, are considered to be new USTs, and are
subject to stringent performance standards at the time of installation. These standards
address preventative measures necessary to protect against structural failure, corrosion,
leaks, and spills and overfills during product transfer to the UST system (§280.20).
Tanks installed before December 22, 1988, are considered existing tanks, and are
provided a series of deadlines by which they must be upgraded to meet the same (or
similar) standards as new tanks or be replaced. For example, UST owners and operators
must fully upgrade existing tanks by December 22,1998, or must remove them from
service. In addition to these design standards, both new and existing tank systems are
subject to general operating requirements to ensure proper operation and maintenance.
Each of these requirements are discussed below, noting where standards differ for new
and existing tank systems.
PROPER INSTALLATION
Improper installation is a typical cause of UST failures, particularly piping failures.
Proper installation is crucial to ensure the structural integrity of both the tank and its
The information in this document is not by any means a complete representation of EPA's regulations or policies,
but is an introduction to the topic used for Hotline training purposes.
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Underground Storage Tanks - 7
piping. Many mistakes can be made during installation, a process which includes
deciding where to locate the tank, excavation, tank system assembly, backfilling of the
tank system, and surface grading. For example, mishandling of the tank during
installation can cause cracks in fiberglass-reinforced plastic tanks, or damage the
protective coating on steel tanks with cathodic protection, leading to corrosion. These
problems usually result from careless installation practices that do not follow
recognized industry codes and procedures. Therefore, owners and operators of new
tank systems must certify on their UST notification form that the tank system was
installed in accordance with the manufacturer's instructions and in accordance with
practices developed by a nationally recognized association, such as the American
Petroleum Institute (API) (§280.20(d)).
STRUCTURAL AND CORROSION PROTECTION MEASURES
When EPA surveyed the regulated universe of USTs in 1988, it discovered that over 75
percent of existing USTs were made of unprotected steel. When unprotected steel is
buried in the ground, it can be eaten away by corrosion, a process that results when bare
metal, soil, and moisture conditions combine to produce an underground electric
current that destroys steel, returning it to its original iron ore state. This
transformation causes holes to develop, and leaks to begin, eventually leading to
contamination of the surrounding soil and groundwater. Because of this problem, new
tanks are required to be designed and constructed so that they are protected from
corrosion. This can be accomplished by constructing the tank of materials that do not
corrode, such as fiberglass and plastic, or outfitting a steel tank with a thick layer of
noncorrodible material. A third option is to construct the tank using steel that has a
corrosion-resistant coating while also providing a means of reversing the corrosion-
causing electrical current (also called cathodic protection). Piping that routinely
contains product and is in contact with soils must meet similar corrosion protection
standards (§§280.20(a) and (b)).
Owners and operators of existing bare steel tanks have until December 22, 1998, to
upgrade, replace, or close their tanks. By the December 22, 1998, deadline, these existing
tanks must be protected from corrosion either by meeting the performance standards
for new tanks or by following special upgrading procedures. These procedures, found
in §280.21, include options for installing cathodic protection and/or adding a thick,
corrosion-resistant interior lining to the tank. Existing steel piping must also have
cathodic protection by this date.
Once installed, the regulations require that corrosion protection systems be properly
operated and maintained to ensure that no releases occur. In addition, UST systems
with cathodic protection must be periodically inspected and tested to ensure that the
equipment is operating properly (§280.31). Finally, the owner or operator must keep
records documenting compliance with these operation, maintenance, and inspection
requirements (§280.34(b)(2)).
The information in this document is not by any means a complete representation of EPA's regulations or policies,
but is an introduction to the topic used for Hotline training purposes.
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^S^LJndergroundJStorageJ^anj^
In addition to ensuring the structural integrity of the tank by preventing corrosion,
owners and operators of USTs must ensure that any substance stored in the UST does
not react in such a way that it threatens the integrity of the tank. For this reason, the
tank and piping must be made of, or lined with, a material that is compatible with the
substance stored in the tank (§280.32)).
SPILL AND OVERFILL PROTECTION
Even if an UST is properly designed and installed, and is equipped with corrosion
protection, spills can occur during product transfer (i.e., when the tank is being filled or
when liquids are being removed). These types of releases are usually due to human
error, and as such, are largely preventable or controllable. The spill and overfill
protection regulations consist of both general operating procedures and design
standards. The general operating requirements consist of common-sense procedures,
such as ensuring that there is enough room in the tank to receive a delivery of gasoline
before the delivery is made, and watching the entire delivery to prevent spilling or
overfilling. In addition, spills and overfills can be eliminated or minimized by
installing special equipment. For example, catchment basins can contain small
amounts of product that are spilled when the delivery hose is uncoupled from the fill
pipe. Overfill protection devices either shut off delivery once the product has reached a
certain level in the tank, or sounds an alarm that notifies the delivery driver that the
tank is almost full.
All tank systems are subject to the general operating standards for spill and overfill
control, found in §280.30. New tanks must have catchment basins and overfill
protection devices when they are installed (§280.20(c)), while existing tanks must be
upgraded to meet these design standards by December 22,1998 (§280.21 (d)). The only
exception to these requirements are for USTs that never receive product transfers of
more than 25 gallons at a time; they do not have to meet the spill and overfill design
standards.
LEAK DETECTION
All tanks and their associated piping are subject to the leak detection regulations of Part
280, Subpart D. For tanks, the owner or operator must choose one of a number of
monthly monitoring schemes to ensure timely detection of a leak. While the
regulations do not prescribe a specific method of release detection that must be used,
§280.40(a)(3) establishes performance standards that any release detection method used
must meet. There are two basic types of leak detection: external and internal. External
leak detection involves monitoring nearby soil or groundwater for the presence of
petroleum vapors or liquid. Examples of internal leak detection include interstitial
monitoring, a system that involves monitoring the space between the two walls of a
double-walled tank for the presence of liquids, and automatic tank gauging systems,
where a gauge installed inside the tank monitors changes in product level.
Underground piping that routinely contains regulated substances is also subject to
release detection standards. These requirements differ slightly from those for tanks as
The information in this document is not by any means a complete representation of EPA's regulations or policies,
but is an introduction to the topic used for Hotline training purposes.
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Underground Storage Tanks - 9
they are tailored to the specific functions of piping. The release detection recordkeeping
requirements, found in §280.45, include maintaining results of any sampling, testing, or
monitoring, as well as maintaining documentation of all calibration, maintenance, and
repair of release detection equipment.
2.4 SPECIAL REQUIREMENTS FOR CHEMICAL USTs
In addition to meeting the same requirements for installation, corrosion protection,
and spill and overfill protection as petroleum USTs, new and existing USTs containing
CERCLA hazardous substances, also known as chemical USTs, must meet special leak
detection requirements.
NEW CHEMICAL USTs
New chemical USTs and their associated underground piping must have secondary
containment and interstitial monitoring. A single-walled tank is the first, or
"primary," containment. By enclosing a tank with a second wall, leaks can be contained
and detected quickly before harming the environment. Acceptable methods of
secondary containment include: (1) placing one tank inside of another tank or one pipe
inside another pipe, (2) placing the UST system inside a concrete vault, or (3) lining the
excavation zone around the UST system with a liner that cannot be penetrated by the
chemical. Interstitial monitoring means having a leak detection device that can detect
the presence of a leak in the confined space between the inner and outer barrier of the
secondary containment system.
EXISTING CHEMICAL USTs
The secondary containment and interstitial monitoring requirements that apply to new
chemical USTs do not apply to existing chemical USTs until December 22, 1998. Until
then, owners and operators of existing chemical USTs can use any leak detection
method found in §280.43 if the method chosen can detect the release of chemicals
stored in the UST. After December 22, 1998, all existing chemical USTs must meet the
leak detection requirements for new chemical USTs or close, unless they receive a
variance from the regulating agency (§280.42). In addition, owners and operators of
existing chemical USTs are not required to install corrosion protection and spill and
overfill equipment until December 22, 1998.
2.5 RELEASE REPORTING, RESPONSE, AND CORRECTIVE ACTION
Part 280 also includes regulations that address release reporting, response, and
corrective action requirements for petroleum and hazardous substance USTs. The Part
280, Subpart E, release reporting and Subpart F release response and corrective action
regulations include procedures for investigating and confirming suspected releases,
The information in this document is not by any means a complete representation of EPA's regulations or policies,
but is an introduction to the topic used for Hotline training purposes.
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10 - Underground Storage Tanks
reporting releases to the implementing agency, and steps for cleaning up releases to the
environment. All UST owners and operators must be attentive to a variety of warning
signals that indicate an UST may be leaking. These include evaluation of results of leak
detection monitoring and testing, observation of any unusual operating conditions at
the pump (such as erratic or overly slow product flow), and evidence of product leakage
into the environment (e.g., the presence of free product in nearby surface water or soil).
Upon observing such a warning signal, the owner or operator must immediately report
the suspected leak to the implementing agency. The owner or operator must then
determine if the suspected leak is an actual leak by conducting tightness testing of the
entire UST system (the term tightness testing describes a variety of methods used to
determine if a tank is leaking, most of which involve monitoring changes in product
level or volume in a tank over a period of several hours). The owner or operator must
also measure for the presence of contaminants in soil or groundwater and determine
the source of the release if they observed any damage to the environment.
If the results of tank tightness testing and /or the site check indicate that no leak has
occurred, then no further investigation is required. If, however, the results of these
investigations indicate a release has occurred, the owner or operator must respond by
controlling and cleaning up the release, and repairing or replacing any damaged
equipment.
Response to a confirmed release is laid out in Part 280, Subpart F, and consists of a
short-term and a long-term stage. The initial stage of the response consists of short-
term actions to stop and contain the leak or spill, and steps to ensure that the leak or
spill poses no immediate hazard to human health and safety by removing explosive
vapors and fire hazards. The owner or operator must report the confirmed release to
the implementing agency within 24 hours. The owner or operator must also remove
as much product from the UST system as necessary to prevent any further release,
begin to recover any free (released) product, and provide a report to the implementing
agency that includes a description of the initial abatement actions taken, an assessment
of the extent of contamination, and a plan on how they will clean up the release.
Based on this initial site characterization, the implementing agency will decide whether
further action is warranted. Some leaks and spills will require additional, long-term
attention to correct the problem. In these cases, the implementing agency will request a
corrective action plan from the owner or operator that describes how they will respond
to and clean up any contaminated soils and groundwater. The implementing agency
then evaluates the plan to determine if it will adequately protect human health and the
environment, taking into account such factors as the type of substance released, site-
specific hydrogeology, and potential impacts on drinking water. Once the corrective
action plan is approved, the owner or operator must implement the plan and report
the results of the cleanup to the implementing agency.
UST owners and operators must also respond immediately to all spills and overfills by
containing and cleaning up the released product. If more than 25 gallons of petroleum
are released, or if the petroleum release causes an oily sheen on nearby surface water,
The information in this document is not by any means a complete representation of EPA's regulations or policies,
but is an introduction to the topic used for Hotline training purposes.
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iUndergrou£d
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n^Unde^round^torage^Tanl^
More stringent regulations apply if an UST system is temporarily closed for longer than
12 months. Tanks cannot be temporarily closed for this long unless they meet the
requirements for new or upgraded tanks. If the tank does not meet these requirements,
or if the owner or operator decides to discontinue using the tank altogether, they must
permanently close the tank. Permanent closure involves a number of steps designed to
ensure that the tank will pose no threats to human health or the environment after it
is closed. These steps include notifying the implementing agency of the intent to close
so that it can oversee the closure process, assessing the tank and surrounding area to
determine if any releases have occurred, initiating corrective action to clean up any
such releases, removing all liquids and accumulated sludges from the tank, and either
removing the tank from the ground or filling it with an inert material such as concrete
or sand.
In some cases, an owner or operator may decide to use a formerly regulated UST system
to store a nonregulated substance. This is considered a change-in-service. Before
making this change, the owner or operator must notify the implementing agency,
empty and clean the tank, conduct a site assessment to determine if a release has
occurred, and initiate corrective iaction if appropriate. For both tank closures and
changes-in-service, the owner or operator must maintain results of the site assessment
for at least three years, or mail the results to the implementing agency.
2.7 FINANCIAL RESPONSIBILITY
Environmental cleanups can be both costly and time consuming. In 1986, Congress
directed EPA to develop regulations requiring petroleum UST owners and operators to
demonstrate that they have the financial resources available to pay for the cleanup of
any releases from their USTs and to compensate third parties for bodily injury and
property damage caused by their leaking USTs. In essence, the financial responsibility
regulations require UST owners and operators to certify that they have sufficient
financial resources to pay for corrective action costs and lawsuits from injured third
parties. Part 280, Subpart H, lays out the minimum financial coverage required and
provides a number of different mechanisms by which an UST owner or operator can
demonstrate compliance with these requirements.
APPLICABILITY
Currently, the financial responsibility regulations apply only to owners and operators of
regulated petroleum USTs. EPA plans to develop financial responsibility requirements
for chemical USTs in the future (53 FR 3818; February 9, 1988). Either the owner or the
operator of the UST (if they are different individuals or firms) must demonstrate
compliance with the financial responsibility requirements. It is the responsibility of the
owner and operator to decide who will meet the requirements. If neither the owner or
operator demonstrates financial responsibility, both can be held liable for costs incurred
as a result of a release from the UST (§280.90(e)).
The information in this document is not by any means a complete representation of EPA's regulations or policies,
but is an introduction to the topic used for Hotline training purposes.
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Underground Storage Tanks - 13
Federal and state governments and their agencies that own USTs are not required to
demonstrate financial responsibility, since EPA considers them "permanent and stable
institutions that have the requisite financial strength to cover the costs of taking
corrective action and compensating third parties" (52 FR 12796; April 17,1987). Local
governments and Indian tribes, however, must, comply with the financial
responsibility requirements. On the other hand, USTs that are in compliance with the
applicable technical requirements and located on Indian lands are not required to
demonstrate financial responsibility until December 22, 1998.
AMOUNT OF COVERAGE
There are two categories of financial responsibility coverage: "per occurrence" and
"annual aggregate." Per occurrence means the amount of money that must be available
to pay the costs from one leak. Annual aggregate is the total amount of financial
responsibility coverage required to cover all leaks that occur in one year. For example,
an owner or operator may be required to have per occurrence coverage of $1 million
and annual aggregate coverage of $2 million. An UST owner or operator with this
amount of coverage will have sufficient funds available to spend up to $1 million twice
a year to respond to any leaks. Alternatively, the owner or operator would be able to
spend $100,000 per leak 20 times in the year, or any other combination within the
prescribed annual aggregate limits.
The minimum amount of coverage required depends on the type of business operated
(petroleum marketers v. nonmarketers), the average amount of petroleum handled at
the facility per month, and the number of tanks at the facility. A petroleum marketer is
a facility at which petroleum is produced, refined, or sold (such as service stations and
truck stops). All petroleum marketers must have per occurrence coverage of $1
million. Nonmarketing facilities (examples include car dealerships and farms) must
have per occurrence coverage of either $500,000 or $1 million, depending on the
amount of petroleum handled by the facility per month, based on annual throughput.
This figure is calculated by counting the total amount of product removed or dispensed
from USTs at a facility over the course of the previous calendar year, and dividing by
12. For example, a facility with an annual throughput of 110,000 gallons handles 9,167
gallons per month. Nonmarketing facilities that handle 10,000 gallons or less per
month must have per occurrence coverage of $500,000. Nonmarketing facilities that
handle more than 10,000 gallons per month must have per occurrence coverage of $1
million.
The required amount of annual aggregate coverage depends on the number of tanks
that are covered by a single financial assurance mechanism or combination of
mechanisms. Mechanisms that cover more than 100 tanks must provide annual
aggregate coverage of at least $2 million, while mechanisms that cover 100 tanks or less
must provide at least $1 million in annual aggregate coverage. For example, if an
insurance policy covers more than 100 tanks, the owner or operator must have annual
aggregate coverage of at least $2 million for this group of tanks. If the policy covers 100
The information in this document is not by any means a complete representation of EPA's regulations or policies,
but is an introduction to the topic used for Hotline training purposes.
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^l^JUndergroimd^Storage^anks
or fewer tanks, the owner or operator must have annual aggregate coverage of at least
$1 million.
ALLOWABLE MECHANISMS
There are a variety of methods that petroleum UST owners and operators can use to
demonstrate compliance with the financial responsibility requirements. These can be
used singly or in combination, as long as the total amount of coverage equals or exceeds
the minimum required.
Financial Test of Self-Insurance
Many large corporations, based on their financial strength, may be able to demonstrate
that they have the assets or funds available to pay for costs incurred due to releases
from their USTs. These firms may satisfy the financial responsibility requirements by
passing the financial test of self-insurance. The test's conditions include a
demonstration that the firm has a tangible net worth 10 times the required annual
aggregate coverage. For example, a petroleum marketer with 450 tanks must have
annual aggregate coverage of $2 million, and so must have a tangible net worth of at
least $20 million in order to qualify for the financial test (§280.95).
Corporate Guarantee
The corporate guarantee allows a firm that is related to or has a substantial business
relationship with the owner or operator of the UST to "guarantee" coverage for any
costs incurred due to releases from the UST for which the owner or operator is unable
to pay (§280.96). For example, a company that has a controlling interest in the owner or
operator (i.e., a parent firm) can guarantee coverage for the daughter company. In order
to qualify as a guarantor, the firm must demonstrate that it meets the financial test
criteria of §280.95. An owner or operator that uses the corporate guarantee to meet the
financial responsibility requirements must supplement it with a standby trust fund (see
below).
Insurance Coverage
An owner or operator may demonstrate financial assurance by obtaining coverage
through a private insurer, a process similar to obtaining car or health insurance, or by
joining a risk retention group. A risk retention group (RRG) is an insurance company
formed by businesses or individuals with similar risks to provide insurance coverage
for those risks. To join an RRG, an owner or operator may be asked to make a one-time
payment, called a capital contribution, and pay annual premiums thereafter (§280.97).
Surety Bond
A surety bond is a guarantee from a surety company that it will meet the obligations of
the owner or operator in the event of failure to perform the necessary cleanup
The^Jomiatio^inThjrdocumenrTr'norby^ny^eansTcompieteTepresentahonof'^PA'rTeguiaHoris or policies,
but is an introduction to the topic used for Hotline training purposes.
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IJndergToun^^torageTan^^lS
activities or failure to pay someone else to perform them. Unlike an insurance policy,
however, the use of a surety bond does not transfer the ultimate obligation to pay for
the cleanup from the owner or operator to the surety company. Instead, the owners or
operators using a surety bond must repay any amounts advanced under the surety.
Any owner or operator that uses a surety bond to meet the financial responsibility
requirements must also establish a standby trust fund in conjunction with it to ensure
that the funds will be accessible and available (§280.98).
Letter of Credit
A letter of credit is a contract between three parties: the issuer (usually a bank), the
owner or operator, and the implementing agency. By issuing a letter of credit, the
issuer promise's to pay a certain amount, as directed by the implementing agency, in the
event that the owner or operator fails to meet an obligation to pay for a cleanup or
compensate third parties for damages. Owners and operators must establish a standby
trust fund in conjunction with a letter of credit (§280.99).
State-Required Mechanism
Some states that have not received approval for the federal UST program (see Section
2.10 of this module) have their own UST regulatory programs, including financial
assurance requirements. Recognizing the potential for UST owners and operators in
these states to be subject to both federal and state financial responsibility regulations,
EPA included a provision in §280.100 that allows UST owners and operators to use a
state mechanism in lieu of one of the Part 280, Subpart H, mechanisms. In order to be
eligible for use on the federal level, these state-required mechanisms must provide a
level of financial assurance equal to or greater than that provided by one of the federal
mechanisms, and the Regional Administrator must approve their use.
State Financial Assurance Fund
Some states have established financial assurance funds that can be used by owners and
operators of petroleum USTs located in their state (§280.101). Owners and operators can
access these funds to help pay for the cleanup costs resulting from a release. Owners or
operators may be required to pay an annual fee per tank in order to qualify for coverage
by the state fund. Also, some state funds pay only for a portion of cleanup costs, require
the payment of a deductible amount, have eligibility requirements such as proof of
compliance with leak detection and recordkeeping requirements, and do not cover
third-party liability costs.
Trust Fund
Under a trust fund, monies for corrective action and third-party liability costs are held
and administered by an impartial third-party. In order to demonstrate compliance with
the financial responsibility requirements using only this mechanism, the owner or
operator must place the entire annual aggregate amount required into the fund. By
The information in this document is not by any means a complete representation of EPA's regulations or policies,
but is an introduction to the topic used for Hotline training purposes.
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1
. \
16 - Underground Storage Tanks
placing the money in an independent fund, the monies will be kept separate from the
owner or operator's other assets, and so will always be available in the event a release
occurs and a claim is made (§280.102).
USE OF FINANCIAL RESPONSIBILITY MECHANISMS
The UST regulations contain specific provisions about how the financial responsibility
mechanisms are implemented. For example, the regulations address the use of standby
trust funds in conjunction with the other mechanisms, the availability of alternative
mechanisms to local governments, and the combination of mechanisms when
demonstrating financial responsibility.
Standby Trust Fund
A standby trust fund cannot be used as a financial responsibility mechanism; rather, it
is a depository instrument that an owner or operator must put in place when using a
letter of credit, a surety bond, or a corporate guarantee. In the event that an owner or
operator cannot pay for corrective action or liability claims, the implementing agency
will direct that the UST financial responsibility money that has been set aside in a letter
of credit, surety bond, or corporate guarantee be deposited into a standby trust fund.
These funds are then held and administered by an impartial third party, such as a bank
or other financial institution, ensuring that funds provided by the issuer of the letter of
credit, surety bond, or corporate guarantee will be immediately available for use in an
UST cleanup or third-party compensation. This is necessary because funds paid directly
to EPA are deposited into the U.S. Treasury and require Congressional action to make
them available for corrective action and liability costs. For example, if a release occurs
at a facility where the owner has a letter of credit, and that owner or operator does not
have the funding to pay for necessary cleanup, the issuer of the letter of credit will
transfer funds into the standby trust fund rather than directly to the agency overseeing
the cleanup. Consequently, monies necessary for the UST cleanup will be dispersed
directly from the standby trust fund by an impartial third party, such as the bank
administering the standby trust fund.
Local Governments
In the past, local government entities that own or operate USTs, such as municipalities,
townships, and school districts, have had difficulty demonstrating compliance with the
Part 280, Subpart H, financial responsibility requirements, since many of the financial
assurance mechanisms were developed to meet the needs of the private sector. In
response, EPA promulgated four additional options that local governments may choose
from when demonstrating financial responsibility (58 FR 9026; February 18, 1993). They
include a bond rating test (§280.104), a financial test (§280.105), and a guarantee
(§280.106), as well as a dedicated fund (§280.107). These mechanisms are similar in
intent to the corporate guarantee (§280.96) and the financial test of self-insurance
(§280.95), but are tailored to meet the special needs of local governments rather than
The information in this document is not by any means a complete representation of EPA's regulations or policies,
but is an introduction to the topic used for Hotline training purposes.
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Underground Storage Tanks - 17
private corporations. In essence, they allow financially capable entities the opportunity
to self-insure, rather than obtaining insurance coverage from a private carrier.
Combinations of Mechanisms
Owners or operators can combine mechanisms to demonstrate UST financial
responsibility. It is important to note, however, that if an owner or operator uses
different mechanisms to demonstrate financial responsibility for different groups of
tanks, then they must meet the annual aggregate coverage requirement for each group.
For example, an owner of 300 tanks that uses an insurance policy for 140 tanks located
in Massachusetts and a state fund for 160 tanks in Florida must have $2 million annual
aggregate coverage for each of the two mechanisms, for a sum of $4 million.
Conversely, if the same owner or operator were to use a single mechanism to cover all
300 tanks, they would need only $2 million in annual aggregate coverage.
2.8 LENDER LIABILITY
Many UST owners and operators must secure loans from financial and other
institutions to comply with environmental regulations, such as UST upgrading and
maintenance requirements. These owners and operators often use the property on
which the UST is located as collateral in order to secure the loan. Financial institutions
historically have been reluctant to extend loans to UST owners and operators for fear of
later incurring UST cleanup liability. For example, if a bank held property as collateral
for a service station that later became bankrupt, the lender would take possession of the
property, becoming the "owner" of the property and the tanks on it. Financial
institutions feared that they would then be subject to the Part 280 regulations, including
financial responsibility for corrective action and third-party liability. Until recently, this
potential for lending institutions to be held liable for releases from USTs, known as
"lender liability," greatly hampered the ability of UST owners and operators to secure
the capital necessary to make tank improvements, upgrade, or comply with other
requirements. The Part 280, Subpart I, lender liability regulations provide lenders with
an exemption from all federal UST regulatory requirements provided that the lender,
or secured creditor, does not participate in the management of the UST system. This
means that the lender is exempt from corrective action requirements and liability for
cleanup costs of contaminated property, both prior to and after foreclosure, as long as
the lender does not engage in petroleum production, refining, or marketing; does not
manage or operate the UST; and does not store petroleum in the UST after foreclosure.
2.9 LEAKING UNDERGROUND STORAGE TANK TRUST FUND
Congress created the Leaking Underground Storage Tank (LUST) Trust Fund in 1986 to
provide state agencies with additional funds to oversee UST cleanups, and to provide
money to clean up abandoned leaking USTs. Financed by an excise tax on motor fuels,
The information in this document is not by any means a complete representation of EPA's regulations or policies,
but is an introduction to the topic used for Hotline training purposes.
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lS^Unde^round^Storage^Tan^
the LUST Trust Fund may be used if the financial resources of an owner or operator are
not sufficient to pay for corrective action costs, if the owner or operator is unwilling or
incapable of carrying out corrective action properly, or if the owner or operator cannot
be identified. Most of the collected money is dispersed to states, where state officials use
the funds for administration, oversight, and cleanup work. Congress has restored this
taxing authority effective September 30,1997, until April 1, 2005, under the Tax Payers
Relief Act of 1997.
2.10 STATE PROGRAMS
States play an important role in the administration of the UST program. Because of the
size and diversity of the UST regulated community, states and local governments are in
the best position to oversee USTs. Because Congress intended for states to take over the
day-to-day administration of the UST program from the federal government, RCRA
Subtitle I allows EPA to approve state UST programs to operate in lieu of the federal
UST program if they are at least as stringent as the federal program and provide
adequate enforcement. The regulations establishing the application and approval
processes are found at 40 CFR Part 281.
In order to be approved, a state program must meet three requirements. First, the state
program must set standards for eight performance criteria that are no less stringent
than federal standards. These include the technical standards for UST system design,
release detection, and upgrading, as well as release reporting and corrective action.
Second, the program must contain provisions that ensure adequate enforcement of the
UST regulations. This means that the state must have adequate legal authority to
implement and enforce the regulations, including the authority to inspect records and
sites, require monitoring and testing, and assess penalties. In some cases states will
have to enact additional laws in order to have adequate authority. The program must
also include opportunities for public participation in the state enforcement process.
Finally, the state program must regulate at least the same universe of USTs as is
covered by the federal program, although states may implement programs that are
broader in scope than the federal program. For example, a state may choose to regulate
all heating oil tanks, even though the federal UST program excludes tanks used for
storing heating oil for consumptive use on the premises where stored. In such cases,
EPA does not review or approve the portion of the program that is broader in scope
than the federal program. EPA can, however, approve requirements that are more
stringent than the federal program. For example, a state may be authorized by EPA to
implement release detection requirements that are more stringent than those
contained in Part 280.
Because state programs operate in lieu of the federal program, owners and operators in
states that have an approved UST program do not have to deal with two sets of statutes
and regulations that may be conflicting. Once their programs are approved, states have
the lead role in UST program enforcement. On the other hand, states without formal
The information in this document is not by any means a complete representation of EPA's regulations or policies,
but is an introduction to the topic used for Hotline training purposes.
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Underground Storage Tanks - 19
EPA approval can have agreements with the Agency that gives the state a lead role in
implementing certain aspects of the UST program.
Currently, 24 states and the District of Columbia have approved UST programs. For
states without approved programs, EPA works in conjunction with state officials to
enforce the federal UST regulations. These states may have Memoranda of Agreement
with their EPA Regional Office which allow them to implement specific parts of the
UST regulations on behalf of EPA. The following table lists which states and U.S.
territories have final approval for their UST programs.
Table 2
STATE UST PROGRAM APPROVAL STATUS
Region
States With Final Approval for
UST Program
States Without Final Approval
for UST Program
I
CT, RI, MA, ME, NH, VT
n
NJ, NY, Puerto Rico, Virgin
Islands
m
DC, DE, MD
PA, VA, WV
IV '
AL, GA, MS
FL, KY, NC, SC, TN,
V
IL, IN, MI, MN, OH, WI,
VI
AR, LA, NM, OK, TX
VII
IA, KS
NE, MO
VIII
MT, ND, SD, UT
CO, WY
IX
NV
American Samoa, AZ, CA, Guam,
HI, Northern Mariana Islands
X
W A
AK, ID, OR
The information in this document is not by any means a complete representation of EPA's regulations or policies,
but is an introduction to the topic used for Hotline training purposes.
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50272-101
REPORT DOCUMENTATION ° 1. REPORT NO.
PAGE 0 EPA510-B-97-009
4. Title and Subtitle
RCRA, SUPERFUND, AND EPCRA HOTLINE TRAINING MODULE: INTRODUCTION TO
RCRA SUBTITLE I: UNDERGROUND STORAGE TANKS (40 CFR PART 280)
5. Report Date
NOVEMBER 1997
6.
Author(s)
8. Performing Organization Rept. No
9. Performing Organization Name and Address
U.S. EPA
OFFICE OF UNDERGROUND STORAGE TANKS
401 M STREET, SU
WASHINGTON. DC 20460
10. Project/Task/Work Unit No.
11. Contract(C) or Grant(G) No.
(C)
(G)
12. Sponsoring Organization Name and Address
13. Type of Report & Period Covered
TRAINING - UPDATED 7/97
14.
15. Supplementary Notes
16. Abstract (Limit: 200 words)
ONE OF A SERIES OF MOOULES DEVELOPED AS A TRAINING TOOL FOR HOTLINE SPECIALISTS. EXPLAINS THE UNDERGROUND STORAGE TANK
REGULATORY PROGRAM ESTABLISHED IN 1988, THAT INCLUDES TECHNICAL REQUIREMENTS TO PREVENT, PROTECT, AND CLEAN UP RELEASES
FROM UNDERGROUND STORAGE TANKS (USTs), AS WELL AS FINANCIAL RESPONSIBILITY REQUIREMENTS TO GUARANTEE THAT UST OWNERS AND
OPERATORS HAVE ENOUGH MONEY SET ASIDE TO CLEAN UP RELEASES AND COMPENSATE THIRD PARTIES. DESCRIBES THE UNIVERSE OF USTs
AND THE TECHNICAL AND FINANCIAL REQUIREMENTS THAT APPLY TO THEM. DEFINES UNDERGROUND STORAGE TANK AND PROVIDES CRITERIA
FOR DETERMINING WHICH USTs ARE SUBJECT TO REGULATION. DISCUSSES DEADLINES FOR UPGRADING TANKS AND THE CLOSURE AND
CORRECTIVE ACTION REQUIREMENTS. SUMMARIZES THE FINANCIAL RESPONSIBILITY REQUIREMENTS FOR PETROLEUM USTs. THE INFORMA-
TION IN THIS DOCUMENT IS NOT A COMPLETE REPRESENTATION OF EPA'S REGULATIONS OR POLICIES, BUT IS AN INTRODUCTION USED FOR
HOTLINE TRAINING PURPOSES.
17. Docunent Analysis a. Descriptors
b. Identifiers/Open-Ended Terms
c. COSATI Field/Group
18. Availability Statement
RELEASE UNLIMITED
° 19. Security Class (This Report)0 21. No. of Pages
0 UNCLASSIFIED " 19
° 20. Security Class (This Page) 0 22. Price
° UNCLASSIFIED 0 0.00
(See ANSI-Z39.18)
OPTIONAL FORM 272 (4-77)
(Formerly NTIS-35)
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