Fuel-tank insurance: required but scarce - liability insurance for underground gasoline storage tanks - Small-Business Update

Nation's Business, Jan, 1990

Fuel-Tank Insurance: Required But Scarce

Gasoline-station operators and other small petroleum marketers are having difficulty obtaining the liability insurance now required on underground storage tanks.

Businesses in petroleum refining, production, or marketing must have insurance sufficient to cover at least $1 million of cleanup costs resulting from any leak from an underground storage tank. While prospects for easing the coverage rules appear slim, full enforcement of the requirement is being deferred in hopes that insurance will become more widely available. The Environmental Protection Agency's financial-responsibility regulations for the tanks are being phased in over a two-year period that began in January 1989.

A subcommittee of the House Small Business Committee has held hearings to look at small businesses' problems in meeting deadlines for obtaining the required coverage. The deadline is April 26, 1990, for petroleum marketers who own 13 to 99 tanks at more than one facility. Oct. 26 is the deadline for marketers owning no lmore than 12 tanks and those with fewer than 100 at one facility, for nonmarketers with a net worth below $20 million, and for all local government entities.

"It is difficult for small businesses to secure insurance coverage for their underground storage tanks," said Rep. Dennis E. Eckart, D-Ohio, chairman of a House subcommittee that deals with the impact of deregulation. "Due to imminent EPA deadlines, these small service stations and other petroleum-driven businesses fear closure if adequate financial assurance is not obtained."

Hardest hit by the regulations would be independent gasoline-station owners, who account for about 80,000 retail outlets.

Insurance would cover cleanup costs for tanks that leak, but a General Accounting Office study found that liability insurance to cover the smallest of businesses with underground tanks was virtually unavailable.

EPA reports that 18 insurance firms write coverage for underground petroleum tanks, but only one specializes in coverage for businesses with fewer than 25 tanks. While at least 36 states have set up insurance funds to help tank owners comply with the law, much of that coverage has limitations.

The law permits EPA's administrator to suspend the enforcement deadlines for up to 180 days. While EPA has not ruled out the possibility of suspending the deadlines, it reports that such a suspension "is not warranted at this time." GAO reports that the deadlines may "force faster development of an insurance market and state trust funds."

PHOTO : Underground storage tanks for gasoline now must be covered by insurance to pay for

PHOTO : cleaning up leaks, but such coverage is hard to find.