Financial Assurance Program Frequently Asked Questions

The State Financial Assurance Program is a financial responsibility mechanism. The program is intended to help owners and operators of petroleum underground storage tanks (USTs) comply with state and federal regulations. Through this program, PLIA will directly assist owners and operators of enrolled tanks with funds to pay for costs to address contamination and complete successful cleanups. Under certain conditions, the Program will also clean up leaks from non-enrolled tanks.

PLIA’s assurance program will provide a funding option that meets federal and state financial responsibility requirements for owners and operators of USTs. This is similar to insurance which can also meet financial responsibility requirements depending on the individual policies. The main difference is the assurance program will be provided directly by the state, and insurance will be provided by private companies.

The Financial Assurance Program is not a mandatory program. Petroleum underground storage tank (UST) owners and operators must opt-in by submitting an application to the program. Once the application is accepted and the enrollment fee is paid, UST owners and operators can receive coverage under the program.

Financial assurance is just one financial responsibility mechanism along with private insurance. Private insurers may continue to offer coverage, and PLIA encourages you to contact them directly about their coverage options. If a UST is both enrolled in the Financial Assurance Program and covered by private insurance, private insurance funds must be exhausted before Program funds can be used for cleanup of releases.

Yes. The Financial Assurance Program will help UST owners and operators meet financial assurance requirements to ensure funding for cleanup. The UST Loan and Grant Program provides funding for cleanup and infrastructure upgrades for sites that are not registered for the Financial Assurance Program or have already exhausted available funds from insurance or assurance.

No. The UST Loan and Grant Program applicants will continue to maintain their position for funding.

Yes. In order to receive financial assurance, a petroleum UST owner or operator must enroll their tanks in accordance with procedures established by PLIA and maintain compliance with Program eligibility requirements.

UST owners and operators must meet the following requirements to be eligible for the FA Program:

1. The petroleum UST must be located in Washington State.
2. The UST must be registered with the Washington State Department of Ecology (Ecology) or federal or tribal equivalent, and in compliance with state and federal law regulating petroleum USTs. Temporarily closed USTs are eligible if the owner or operator can demonstrate compliance with all applicable UST regulations prior to closure.
3. The owner or operator of the UST must agree to clean up any future release or leak to meet the state’s Model Toxics Control Act (MTCA) cleanup standards, or the most stringent of state, federal, or tribal standards. If Program funding is used for cleanup costs, the project may be required to enroll in PLIA’s Technical Assistance Program.

There are additional requirements for USTs with existing releases prior to enrollment.

No. Aboveground storage tanks are not regulated and will not be a part of the Program.

No. Financial assurance is not applicable to residential heating oil tanks.

For petroleum releases that occurred before an underground storage tank (UST) owner or operator’s enrollment in the Financial Assurance Program, coverage of up to $1 million is available for cleanup costs of all affected properties. This funding is subject to cost recovery by PLIA. That means that PLIA may seek repayment of funding from parties liable for the petroleum releases.

Yes. If a UST is covered by private insurance and has a leak, cleanup of that leak may be funded by the $1 million coverage for historical releases if the UST is later enrolled in the Financial Assurance Program. However, the owner or operator must first exhaust private insurance funds, and, as with cleanup of all historic releases, PLIA will seek to recover costs, and may place a lien on the property where the UST is located.

PLIA will contract directly with primary contractors to perform cleanups funded by the Program and will pay contractors directly. Primary contractors will be assigned to sites, but there will be a process to allow owners and operators of enrolled USTs to change contractors.

No. All cleanup costs must be pre-approved by PLIA and should be performed by contractors hired by PLIA. There will be some exceptions for emergency cleanup procedures and cleanup costs incurred by another government agency and passed on to the owner or operator of the enrolled UST. Further information is provided in the Program Guidance Document.

The FA Program provides different amounts of coverage depending on when the leak happened. There are no deductibles under this program.

Petroleum leaks that occur while a tank is enrolled in the FA Program will be eligible for up to $2 million for cleanup and infrastructure costs. The $2 million includes cleanup for the enrolled property and all impacted properties, as well as third-party coverage for damages.

Coverage for leaks from USTs that start before enrollment is available for up to $1 million for cleanup. Funds spent on cleaning up leaks that started before the UST is enrolled in PLIA’s program are subject to cost recovery, which means that PLIA will seek repayment of the funds from the individual or company liable for a release of contamination. Releases that occurred prior to enrollment in the FA Program do not qualify for third-party coverage.

Third-party coverage is available for underground storage tanks (USTs) that have a release after enrollment in the Financial Assurance Program. However, cleanup of releases is the priority of the Program, and third-party coverage for bodily injury and property damage caused by a release must wait for any funds left following cleanup.

USTs with a known release before enrollment in the Financial Assurance Program do not qualify for third-party coverage.

Enrollment fees for the FA Program are paid annually and depend on the age of the underground storage tank (UST). Enrollment fees are listed below:

• UST is 0-10 years old: $1,000 per UST.
  
• UST is 11-20 years old: $1,500 per UST.
  
• UST is 21-30 years old: $2,000 per UST.
  
• UST is 30+ years old: $2,500 per UST.

There are no deductibles under this program.

Enrollment in the Financial Assurance Program will be for a 12-month period. Payment plans will be available, though owners and operators of enrolled USTs must pay the full enrollment fee within the 12-month enrollment term period.

PLIA will send out renewal notices 60 days before the renewal date. The renewal notice will include a new enrollment agreement for signature. There will be no break in coverage if PLIA receives the signed enrollment agreement and fee payment prior to the end of the previous enrollment period. An owner or operator may request not to renew enrollment, but coverage will continue until the end of the enrollment period unless PLIA cancels enrollment.

No. PLIA is not an enforcement agency and does not have enforcement authority, which remains with the Washington State Department of Ecology.

Enrolled UST owners and operators must still contact the Department of Ecology’s Spills Program to report releases and for emergency responses.

Tribal owners and operators of USTs will be eligible to participate in the program, as will owners and operators of USTs located on government property.

Incentives will be developed as part of the program planning process with the goal of preventing releases. Discounts will be available for enrolled tanks at the beginning of their second year of enrollment.

PLIA anticipates Department of Licensing business requirements will remain the same after implementation of the program. PLIA is coordinating with the Department to keep them up to date on the program.

No. The Financial Assurance Program will not provide reimbursement to past owners of USTs.

Yes. PLIA will work with both the property owners and the contractors employed to perform the cleanup work at a contaminated site in a way that will allow an existing business to continue operating, if possible.

No. Funding for the Financial Assurance Program has no relation to the Washington State Fuel Tax.

The program is funded in part by the Petroleum Products Tax which is a tax on the wholesale value of petroleum at its first sale in the state. The Petroleum Products Tax is usually paid by distributors who purchase fuel to sell it to individual gas stations.