Financial Assurance for Petroleum Underground Storage Tank Systems
Owners or operators of an underground storage tank (UST) must demonstrate financial assurance for corrective action and third party pollution liability, except for owners and operators of any UST system described in Title 30, Texas Administrative Code (TAC), §334.3 (relating to Exemptions) and §334.4 (relating to Exclusions) or a state or federal entity described in §37.801(b) (relating to Applicability). Rules detailing financial assurance requirements for USTs are found in Subchapter I of Chapter 37. Other Subchapters of Chapter 37 do not apply to UST owners and operators.
A brief summary of the two types of required coverages is listed below:
- Corrective Action - covers the cost of taking corrective action caused by accidental releases arising from the operation of USTs.
- Third Party Liability - compensates third parties for bodily injury and property damage caused by accidental releases arising from the operation of USTs.
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Types of Financial Assurance Mechanisms
Owners or operators may choose from any of the options listed below for providing financial assurance: insurance, surety bond, letter of credit, financial test (self insurance), corporate guarantee or trust. Local governments may also choose the local government test or local government guarantee.
Insurance is the most common choice. The required coverage is not usually included in the Commercial General Liability coverages routinely carried by many businesses. Insurance agents may know the required coverage as Pollution Legal Liability.
Regardless of the option you choose to demonstrate your financial assurance requirements, you must have a mechanism worded exactly as required by Subchapter I of Chapter 37. Mechanisms worded per federal regulations in 40 CFR Chapter 280 are not acceptable, with the exception of the local government test and local government guarantees, which should be worded per Chapter 280. ACORD forms from insurance companies are also unacceptable. Original mechanisms should be maintained at the designated place of business or at the location of the USTs.