Financial Responsibility Requirements
As part of the federal underground storage tank regulations, UST owners and operators are required to demonstrate financial responsibility (FR). Financial responsibility is defined as the ability to pay for cleanup or third-party liability costs that result from a release from an UST.
For the most part, the state regulatory agencies are responsible for collecting this information from owners and operators. The specifics for demonstrating and maintaining FR may vary from state to state. This article is based on the US EPA’s Financial Responsibility Reference Manual.
The most common options for financial responsibility are:
- Passing a Financial Test of Self-insurance
- Corporate Guarantee
- Insurance Coverage
- Surety Bond
- Letter of Credit
- Trust Fund
- State Financial Assurance Funds
All regulated USTs must have some form of financial responsibility, even temporarily closed sites. An owner/operator can discontinue FR only when the UST(s) have been properly closed, or if corrective action is required, after corrective action has been completed and the tank has been properly closed.