Financial Responsibility for Bulk Storage Tanks under Subtitle 1 of the Resource Conservation and Recovery Act
"Financial responsibility" and who it applies to
The Federal Underground Storage Tank (UST) Regulations (40 CFR Subpart H) and DEC's Petroleum Bulk Storage regulations (6 NYCRR Subpart 613-8) require that owners and operators of certain underground storage tank systems have the financial means to help pay for the costs of corrective action and third-party damages caused by a release from their underground storage tank system. These costs could include cleaning up leaked petroleum, correcting environmental damage, supplying drinking water, and compensating injured parties for personal injury or property damage.
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 6 NYCRR section 613-8.1.)
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.
** DEC originally petitioned EPA in 1993 to consider the New York State Oil Spill Fund as a financial responsibility mechanism, at least for a few years while facilities obtain alternative, long-term mechanisms (e.g., insurance). EPA granted the request in 1994, with the caveat that the Spill Fund is not considered an acceptable standalone mechanism as it does not cover costs of third-party bodily injury. (This meant that facilities relying on the Spill Fund for financial responsibility must have also had a supplementary mechanism solely for third-party bodily injury.)
This request was formally rescinded upon adoption of the financial responsibility requirements in the Petroleum Bulk Storage regulations, effective October17, 2023 (thereby reverting the Spill Fund to its original purpose as a contingency fund to address any spill where the spiller is unknown, unwilling, or unable to pay for corrective actions). As such, the Spill Fund is no longer an acceptable mechanism.
Insurance to cover the cost of a tank leak
All facilities with federally regulated underground storage tank systems, must obtain one of the financial responsibility mechanisms allowed in 6 NYCRR subdivision 613-8.4(d). Contact your local insurance carrier to discuss coverage; alternatively, you can contact the State Insurance Department for information about obtaining insurance of this kind. EPA also compiles a list of insurance providers on their website (List Of Insurance Providers For UST Financial Responsibility Requirements | US EPA) based on information received from them.
(Note: DEC does not endorse any insurance provider, and EPA's list may only be a partial listing of all possible insurance providers. Owners/operators of federally regulated underground storage tank systems are not required to utilize an insurance provider on EPA's list, but may find that these providers can help them obtain insurance to fulfill the Financial Responsibility requirements.)
