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Michigan Lawmakers Ease Access to Underground Storage Tank Clean-up Funds
Michigan just made it easier for owners and operators of underground storage tanks to demonstrate financial assurance and obtain cash for closing leaking tanks.
Last year, I wrote about a new Michigan program for funding cleanups and closures of underground storage tanks (USTs), which created the Michigan UST Cleanup Act (MUSTA) Fund.
The Michigan Legislature hoped that easing financial responsibility requirements and establishing a new fund would speed the closure of leaking underground storage tanks (LUST). However, increases in the number of closures failed to materialize, partly because of the high deductibles for qualifying for the MUSTA Fund.
During the 2016 lame duck legislative session, the Legislature amended the financial responsibility requirements and LUST legislation to make it easier for owners and operators of UST systems that are in current compliance with UST registration and financial obligations to qualify for funding. The major impact of the changes is to provide access to the fund by lowering deductible amounts and removing the need to “buy down” deductible amounts, thus expanding the likely number of participants and increasing the likelihood of closures.
Under the previous legislation, the deductible amount for owners and operators of eight or more USTs was $50,000, which the new legislation reduced to $10,000. Small operators (i.e., those who own or operate fewer than eight USTs), had their deductible reduced to $2,000 from $15,000. The previous statute allowed a reduction in deductible amounts with a payment of $500, but that is no longer required, as all get the lower deductible amount. Further, these changes are retroactive for all claims related to all post-Dec. 30, 2014 – for discovered and reported releases.
Depending on the size of an operation, there are dollar limits for claims. Any one claim can obtain a maximum of $1 million in coverage. There are annual limits (based on the state’s fiscal year, October to September) of $1 million for those who own or operate 100 or fewer USTs and $2 million for those with over 100 USTs.
The law mandates cost control measures. The claims only cover the work it would take to meet the standard for corrective action appropriate for the current use of the site. There are competitive bidding requirements. Not all response costs are covered, as there are lists of eligible and ineligible costs. Checks for approved claims will be issued to both the owner or operator and the environmental contractor.
MUSTA and the changes to Michigan’s LUST statute makes the fund more accessible and clarifies the process and procedures to obtaining coverage and closure at LUST sites. As both federal and state law requires a demonstration of financial assurance from owners and operators of USTs, Michigan’s program should provide welcome assistance to maintaining USTs and cleaning leaks when they happen.Tags: Environmental Legislation, Environmental Protection Agency, Environmental Regulation, Oil & Gas, Underground Storage Tanks (UST)