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Utah Department of
Environmental Quality
Efforts are under way to establish a financially sound Petroleum Storage Tank Trust Fund, a state insurance policy against damages caused by leaky underground storage tanks. According to the most recent actuarial study, the fund could run out of money by 2008.
The Tank Advisory Task Force, made up of industry and state representatives, in May recommended that the 2006 Legislature change the law to give owners and operators of underground petroleum storage tanks an “all or none” choice: either participate fully in the fund by including all tanks under the state's insurance program or self-insure all the tanks. Federal law requires all tank owners and operators to have the financial ability to pay for any cleanup associated with damages caused by a petroleum leak. But Utah's law has allowed operators to choose from their tank fleet which ones to have covered under the Petroleum Storage Tank Trust Fund (PST) while self-insuring the others.
During the summer, the Natural Resources, Agriculture, and Environment Interim Committee received testimony on the PST Fund and requested that legislation be drafted to modify the law to that of a concept of “all or none.”
Brad Johnson, director of the Division of Environmental Response and Remediation (DERR), said the vast majority - about 85 percent of the operators - participate fully in the fund, leaving about 15 percent who have tanks that are left out of the fund. However, the fund is paying for those tanks where owners can't get competitive insurance rates. There's the risk that insurance money would pay for a cleanup that would end up absorbing much of the fund. The “all or none” concept is a gamble, officials admit. There's the risk that operators will opt out of the fund completely. But officials are hopeful participation will increase. “Having everyone participate is a temporary solution for solvency,” Johnson said. It's not a panacea, added Bill Sinclair, deputy director of the Department of Environmental Quality, “It may not solve the problem, but it should extend the time period of solvency. We will continue to pursue working on potential solutions that will result in a stable insurance fund for the tank owners and operators.”
Rep. David Ure (R-Kamas) will sponsor legislation that would require owners and operators to have all or none of their tanks on the PST Fund. Passage of the bill could generate an additional $1.5 million a year. The fees would remain the same, officials said. The revenue going toward the PST is from an environmental assurance fee of ½ cent per gallon on the initial sale of gasoline and diesel in the state. An annual assessment also is applied to each underground tank. If the cash balance of the PST Fund on June 30 each year exceeds $20 million, the assessment of the environmental assurance fee for the next fiscal year is reduced to a ¼ cent per gallon on petroleum delivered to tanks.
The State Privatization Policy Board has evaluated the feasibility of privatizing the fund administration. That would require operators and owners of underground petroleum storage tanks to seek private coverage, which could end up costing the operators more.