Remediation of Underground Storage Tank Leaks in Colorado-part Ii
| Publication year | 1992 |
| Pages | 717 |
| Citation | Vol. 21 No. 4 Pg. 717 |
1992, April, Pg. 717. Remediation of Underground Storage Tank Leaks in Colorado-Part II
Part I of this article(fn1) outlined the procedures and standards for remediating contamination caused by the release of petroleum from underground storage tanks ("UST") systems in Colorado. This Part II examines how an owner/operator of a petroleum UST system can seek reimbursement for part of the cost of conducting such remediation. As in Part I, this article focuses on the regulatory details which have been added to the framework of Colorado's Underground Storage Tank Act ("Act"). It also discusses the regulatory gaps which remain to be filled.
The UST fund ("fund") is not mentioned in the Legislative Declaration to the Act but, nevertheless, it is an important component. The essential purpose of the fund is spelled out in CRS § 8-20-509(1)(d):
The fund created by this Act, combined with the financial responsibilities required by this article, may be used by owners and operators of petroleum underground storage tanks to demonstrate their compliance with any financial responsibility requirements promulgated under state and federal regulations.
In 1986, Congress amended federal UST legislation---enacted two years earlier as Subtitle I to the Resource Conservation and Recovery Act(fn2)---to mandate financial responsibility for all owners and operators of petroleum USTs. Owners and operators are required by the federal legislation to demonstrate the financial capacity to cover UST remediation costs of up to $1 million per occurrence.(fn3) A variety of mechanisms may be utilized to satisfy the requirement, including insurance, letters of credit and other similar guarantees of payment. In its regulations, the Environmental Protection Agency also suggested the creation of state funds as a means of compliance.(fn4)
The fund established by the Colorado General Assembly in the Act is tailored to meet federal requirements. The fund is supplied from several sources, the most important being an environmental response surcharge on manufacturers of motor fuel. This surcharge is twenty-five dollars per tank truckload for fuel products delivered in Colorado for sale or use.(fn5)
The fund covers a maximum of $1 million per occurrence in the aggregate for owners or operators with 100 or fewer underground tanks. That figure rises to $2 million for those with more than 100 tanks.(fn6) An occurrence is defined as
the entire period of time from the identification through the remediation of any release, leak, or spill of a petroleum product from an underground storage tank or group of associated tanks.(fn7)
The Act imposes "deductibles" of $10,000 for corrective action and $25,000 for third-party liability, per occurrence. Either the owner or the operator of each regulated UST must establish this financial responsibility pursuant to regulations promulgated by the State Inspector of Oils ("State Inspector").(fn8)
According to the Act, the fund may be used to reimburse owner/operators for petroleum corrective action and third-party liability where costs exceed the deductibles. Fund monies also may be used for (1) administrative costs up to a capped amount, (2) fire and safety hazard abatement by the State Inspector and (3) investigation and remediation of UST releases undertaken by the Colorado Department of Health ("CDH").(fn9)
Unlike the significant overlap found with respect to reporting and investigation of UST releases,(fn10) the respective spheres of influence between the CDH and the State Inspector over fund issues are defined clearly. The State Inspector is charged with determining whether owner/operators seeking fund monies
Actual administration of the fund is performed by the UST advisory committee ("committee"), which is charged by the Act with establishing the policies and procedures owners/operators must follow in seeking fund monies and those governing the processing, adjusting and paying of such claims.(fn12) The CDH and the State Inspector are permanent members of the committee, along with five representatives of UST-related industry groups and the public. The State Board of Health adopts and ratifies the rules and decisions of the committee, which conducts its work pursuant to the State Administrative Procedures Act.(fn13)
Because neither "corrective action" nor "third-party liability" is defined by the Act, the committee has broad discretion in deciding what costs are compensable. The committee has attempted to give substance to its statutory...
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