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Michigan Legislature Passes Bill to Revive Refined Petroleum UST Cleanup/Insurance Program

During its lame duck session, Michigan legislators passed an important bill amending multiple sections of the Natural Resources and Environmental Protection Act (“NREPA”) that is intended to help underground storage tank (UST) owners and operators. Senate Bill 791 (“SB 791”) allows refined petroleum UST owners and operators to meet their financial responsibility requirements by creating the Underground Storage Tank Cleanup Fund (the “Fund”) to be funded by the deposit of an environmental protection regulatory fee of 7/8 cents per gallon on all refined petroleum products sold or consumed in Michigan. The objectives of the Fund are two-fold: (1) to pay for corrective actions for releases from covered USTs and (2) to assist owners and operators in meeting financial responsibility requirements imposed by the state.

Important elements of SB 791 are as follows:

• Claim limits: $1,000,000 per claim period (October 1 – September 30 of each year) for owners and operators of 1-100 USTs; $2,000,000 per claim period for owners and operators of more than 100 USTs.
• Deductible: $50,000 per claim; $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).
• Eligibility Requirements:
  • The release from the UST system is discovered and reported on or after the effective date of SB 791;
  • The UST system from which the release occurs is in compliance with the registration and fee requirements and rules under Part 211 of NREPA;
  • The UST owner or operator reports the release within 24 hours after discovery, as required by Part 211;
  • The UST owner or operator is not the US Government;
  • The claim is not for a UST closed before January 1, 1974;
  • The owner or operator has maintained financial responsibility for the deductible amount (see above);
  • The owner or operator has paid the deductible amount;
  • The owner or operator is otherwise eligible to receive money;
  • The total amount of expenditures (including the deductible) does not exceed the claim limit (see above).

It is important to note that releases from aboveground piping and dispensers associated with a covered UST system are eligible under the Fund, provided that (1) the release is sudden and imminent; (2) the quantity released is greater than 25 gallons and is released to soil, surface water or groundwater; (3) the release is reported to the Michigan Department of Environmental Quality (“DEQ”) within 24 hours of discovery; and (4) the owner or operator is otherwise eligible to receive money from the Fund. Releases that occur as a result of loading or unloading are not eligible.

The Fund will be managed by a newly created Underground Storage Tank Authority, which will be governed by a board of directors consisting of the Director of the DEQ and six Michigan residents appointed by Gov. Snyder (“Board”). The six individuals will serve terms of three years and are to represent the following: petroleum refiners, independent petroleum marketers, motor fuel retail associations, business associations which include UST owners and operators, a statewide environmental organization, and the general public. The Board will appoint an administrator of the authority (“Administrator”) and may delegate responsibilities to the Administrator to act on its behalf. 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. The new legislation includes procedures for contesting claim denials.

The Authority will establish a “Schedule of Costs” that lists allowable amounts that may be billed for specific corrective action activities. For items or actions that are not included in the Schedule of Costs, a determination will be made as to whether the costs are reasonable and necessary.

SB 791 is currently awaiting signature by Gov. Snyder. Although it will take some time for the Authority to get organized, develop and implement rules, and get the program up and running so that it can accept claims, it is imperative that owners and operators of refined petroleum USTs are aware of this important program and its potential impact their operations. Now, more than ever, plans for station renovations, insurance renewals, and reporting of new releases must be carefully managed.

To read the full text of the bill, click here: http://www.legislature.mi.gov/documents/2013-2014/billconcurred/Senate/pdf/2014-SCB-0891.pdf

We will update this blog as program developments occur.

GGTM Law

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