Tank Owner And Operator Financial Responsibility Information
"Financial responsibility" and who it applies to
Federal law and the Federal Underground Storage Tank (UST) Regulations (40 CFR Subpart H) require that owners and operators of certain underground tanks have the financial means to help pay for the costs of corrective action and third party damages caused by a release from their underground tank. These costs could include cleaning up leaked petroleum, correcting environmental damage, supplying drinking water, and compensating injured parties for personal injury or property damage.
Financial responsibility for Bulk Storage Tanks under Subtitle 1 of the Resource Conservation and Recovery Act
Kinds of underground tanks covered by the federal law
Underground petroleum tanks, including the connecting pipes, which have a capacity of more than 110 gallons are covered. Certain tanks have been exempted from the law including heating oil tanks used for on-premises consumption, farm or residential tanks with a capacity of 1,100 gallons or less which store motor fuel for noncommercial purposes, operational tanks and others. (See 40 CFR 280.12)
Mechanisms that can be used as proof of financial responsibility
The following can be used to prove financial responsibility:
- Liability insurance coverage from a qualified provider
- Financial test of self-insurance
- Guarantee*
- Surety bond*
- Letter of Credit
- Trust fund
- Local government bond rating test
- Local government financial test
- Local government guarantee*
- Local government fund
Note: the last four mechanisms, as implied by their names, are only applicable to municipalities and other forms of local government, not private sector owners and operators.
* Guarantees and surety bonds are currently not allowed pending a statement from the State Attorney General that they are legally valid and enforceable obligations in New York State.
Insurance to cover the cost of a tank leak
40 CFR 280 requires that all Federally Regulated facilities obtain one of the financial responsibility mechanisms allowed in section 280.94. Contact your local insurance carrier to discuss coverage. In addition, you can contact the State Insurance Department for information about obtaining insurance of this kind.
Division of Environmental Remediation
625 Broadway
Albany, NY 12233
