New UST Corrective Action Funding

by Paul French
Feb 19, 2015

Blog Photo_UST removal 3

The State of Michigan has recently enacted new legislation that provides funding to address releases from petroleum underground storage tank (UST) systems in the state. The legislation entitled "Part 215 - Underground Storage Tank Corrective Action Funding" became effective December 30, 2014. The legislation will set aside $20 million per year for a newly created UST Cleanup Fund; the revenue will be generated from the current environmental protection regulatory fee of 7/8 cent per gallon on all refined petroleum sold in the state.

The primary purpose of the Cleanup Fund is to reimburse owners and operators (O/O) of UST systems for corrective action undertaken to bring their UST releases into compliance with the Leaking Underground Storage Tank (LUST) regulations and other third party liabilities. The fund may be utilized by an O/O to meet financial responsibility obligations required under the UST regulations - Part 211. The funding will also be used to pay administrative costs and to pay principal and interest on bonds or notes that may be issued to cover program short falls during early implementation.

Claim Limit: The fund establishes a $1 million limit (per claim period) for all claims of an O/O having less than 100 tanks in total; a $2 million limit is established for O/O's having more than 100 USTs. A claim period extends from October 1st of each year to September 30th of the following year.

Deductible: O/O's with less than eight USTs will pay an annual fee of $500 per UST along with a $15,000 deductible per claim. O/O's with more than eight tanks will pay a deductible of $50,000 per claim.

Eligibility requirements:

  • The release is discovered and reported on or after December 30, 2014.
  • The UST from which the release occurred was registered at the time of the release and remains in compliance with current UST rules.
  • The release was reported within 24 hours following its discovery.
  • The O/O maintains financial responsibility for, and has paid the deductible amount.
  • The release is not for a UST closed prior to January 1, 1974.
  • Corrective action and third party indemnification for releases from above ground piping and dispensers are eligible.

An authority represented by petroleum stakeholders and businesses, government and the general public will be created to administer the fund. Once created, the authority will be developing forms, allowable cost schedules and other procedures to implement the fund. An O/O may wish to delay non-immediate response activities, other than Initial Response Actions required under Section 324.21307 of Part 213, until the implementation procedures are fully developed by the authority.

The program is expected to begin accepting claims in mid-2015. Approved claims are to be paid within 90 days following submittal, as long as there is sufficient money available in the fund. The legislature allows the Authority the ability to issue bonds or notes to pay approved claims and other expenditures.

The remainder of the revenue generated by the 7/8 cent per gallon environmental protection regulatory fee (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.

Envirologic has over 25 years of experience with Michigan's LUST Regulations and has been successfully involved in each of the reimbursement programs offered by the state including the former Michigan Underground Storage Tank Financial Assurance Act (MUSTFA), the Revised Petroleum Fund/Temporary Reimbursement Program.

Please contact our environmental professionals with any questions you may have.

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