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Navigating Michigan’s New UST Funding Program

Michigan’s Underground Storage Tank (UST) program took a significant step forward with the passage of Public Act 416, signed by Governor Rick Snyder on December 30, 2014. The act amends Part 215 of the Natural Resources and Environmental Protection Act (NREPA) to create a new Underground Storage Tank Cleanup Fund Authority that annually allocates $20 million of the existing 7/8-cent per gallon fee on refined petroleum to this new UST Cleanup Fund. The fund will be governed by a new authority consisting of a board of six individuals from industry and the public and a fund administrator, all to be appointed by the Governor and led by the Director of the Michigan Department of Environmental Quality (MDEQ). The 7/8-cent per gallon revenue is expected to generate $40 to 50 million annually, with the balance of the funds earmarked to address leaking underground storage tank corrective actions conducted by the State, including administrative costs. Although the bill was effective on December 30, 2014, significant hurdles remain before any claims can be submitted. The USEPA is currently reviewing the program to consider whether or not it meets the requirements of fulfilling the federal and state financial assurance mandates. In addition, the authority board must be formed and policy has to be developed to determine whether the corrective actions performed are reasonable and necessary, considering site conditions, and consistent with Part 213 requirements to achieving site closure. The authority board must also determine a reasonable cost structure and develop a schedule of costs. This all has to take place prior to the State being able to establish a date by which it will allow claims to be submitted. The fund’s structure has been established to include claim limits of $1,000,000 per claim period (October 1st to  September 30th of each year) for owners and operators of 1-100 USTs and $2,000,000 per claim period for owners and operators of more than 100 USTs. It includes a deductible of $50,000 per claim or $15,000 per claim for owners and operators of fewer than 8 USTs who elect to pay a fee of $500 per UST (each compartment of a compartmentalized tank is considered a separate UST for fee assessment purposes).

As a UST owner, how can you prepare to be eligible to utilize this insurance mechanism?

First, the UST system must be in compliance with the registration, fee requirements and rules under Part 211 of the NREPA prior to a release being discovered. Any release must be discovered and reported on or after the effective date of this legislation and within 24 hours after discovery as required by Part 211. A claim cannot be made for a UST closed before January 1, 1974. Additionally, the owner or operator assumes financial responsibility for the deductible amount (see above). The owner or operator must pay the deductible amount and the total amount of the expenditures (including the deductible) cannot exceed the claim limit. Upon submitting a claim, the Administrator will have 45 days to review and either approve or deny the claim. If approved, the Administrator will have an additional 45 days to pay the claim. It is expected the policies and processes will be in place to begin accepting claims by mid to late summer of this year. Given this, now is the time for UST owners and operators to put their house in order by documenting inventory control programs, by double checking that registration fees have been paid, and by shopping and considering a private insurance program to help fund resulting deductibles levied through this new program.

How we can help

AKT Peerless has extensive knowledge of this new legislation and the resulting program and we can assure you fully utilize these available resources for your UST management. As a MDEQ Qualified Consultant employing numerous Certified Underground Storage Tank Professionals, we have successfully achieved closure on thousands of regulated UST release sites during the past 25+ years. Our UST clients know they can count on the engineering expertise, the funding specialists, the positive relationships with MDEQ, and the policy development involvement of the staff of AKT Peerless to successfully achieve closure and reimbursement program approval. Let us help with your UST management – for a free consultation, please give AKT Peerless a call today at 1-800-985-7633.

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