In Massachusetts, there are now just two agencies that oversee issues related to the operation, maintenance and use of underground storage tanks (USTs). While this is presumably more beneficial to the days when there were three, navigating through the two regulatory schemes can still be a challenge even for those that self-proclaim expert status.
The Massachusetts Department of Environmental Protection (MassDEP) promulgated its version of UST regulations (310 CMR 80.00) on January 2, 2015. The updated regulations established new or expanded upon the existing UST operation and maintenance requirements. The areas in the MassDEP regulations most notably affected were cathodic protection, registration, containment sumps, spill and overfill protection, inventory reconciliation and third party inspections.
Not to the surprise of many in the regulated community, there are some specific compliance challenges that have been encountered as the full effect of the MassDEP regulations are beginning to take shape. For example, the new regulations require testing of sumps and spill buckets on or before January 2, 2017. Estimates suggest that there are approximately 3,400 facilities that will need to be tested. According to industry experts, very few facilities have actually performed the required testing. There are less than a handful of contractors in Massachusetts that are capable of performing the testing services. The law of averages, therefore, suggests that the next 10 months may not favor those who wait until the last minute to search out available contractors. Furthermore, MassDEP is in the process of finalizing guidance on the re-use of fluid utilized in the testing process. This guidance could certainly play a role in contractor testing strategy and cost.
Another area that has presented a challenge is the Compliance Self Certification (310 CMR 80.34) an owner or operator is required to submit to MassDEP. The certification is required to be submitted at the midway point of the Third Party Inspection three-year cycle. The owner or operator is required to certify that they have complied with among other things, financial responsibility, emergency procedures, record keeping, operator training and inspections. The submission process itself was intended to be simple. The reality is that very few owners or operators even know the self-certification requirement exists, let alone submitted one by their applicable deadline. MassDEP has indicated that they will be increasing their outreach to those that have not yet filed. Ultimately, Notices of Noncompliance (NONs) could be issued to those that fail to respond to the MassDEP directives.
The final key area pertaining to the MassDEP UST regulations is the August 7, 2017 single-walled steel tank removal deadline. This deadline has been part of the UST regulations since 2007. Despite a ten year warning, there will still be a population of owners that proclaim that the timeline was not long enough. Similar to the dilemma facing those that need to perform sump and spill bucket testing, the minimal supply of contractors and tank manufacturers available for the 2017 deadline is going to prove unfavorable for those who procrastinate. Moreover, MassDEP appears to be unwilling at this point to offer any extension to the August 2017 deadline. Those that choose the “wait and see” approach will likely find themselves unable to operate after August 2017.
The Massachusetts Department of Revenue (MA DOR) oversees the UST Petroleum Cleanup Fund (the “21J Fund”). The 21J Fund is the mechanism that owners and operators of USTs utilize for demonstrating compliance with state and federal financial responsibility (FR) requirements.
In the event that there is a release, the owner or operator can potentially qualify for up to $1.5 million in reimbursement for eligible cleanup costs. There are approximately 2,900 facilities that utilize the 21J Fund for demonstrating financial responsibility. Approximately 350 of those facilities will have to remove their single-walled steel tanks by August 7, 2017. For any of those in the 350 single-walled facility population, it may be wise to evaluate whether waiting until the last minute to upgrade your facility will be the best choice. Competition for reimbursement proceeds from the 21J Fund as a result of the 2017 deadline will undoubtedly be at a premium.
The 21J Fund continues to serve its purpose of reimbursing the owners and operators that have filed approximately $600 million in claims. It continues to adjust to the ever-changing regulatory climate. For example, in the summer of 2015 its enabling legislation was amended to provide an additional $1 million to third parties affected by releases from petroleum dispensing facilities. This additional $1 million would seem to be a welcomed response to the plight of third parties. The harsh reality, however, is that obtaining the benefit of those funds is a challenging task. In order for a third party to obtain access to this $1 million set aside, they must first pay for the costs associated with addressing the impacts of the release. They must then file a lawsuit and obtain a judgment against the owner of the dispensing facility. Assuming these two steps have been met, the third party must then have the costs evaluated by the 21J Fund Board to ensure that the expenses were reasonable, cost-effective and necessary. Keeping in mind that the 21J Fund does not pay for diminution of property or emotional distress, a third party seeking anything from the $1 million would need to seriously consider whether the benefits will be worth the efforts.
The MassDEP and MA DOR Parallels
The MassDEP and the MA DOR have been increasingly sharing information over the last few years. This certainly makes sense from a governmental efficiency standpoint; however, the regulated community should take note. NONs issued by MassDEP are now forwarded to MA DOR as a matter of course. Failure to address the NON could ultimately result in a revocation of coverage by the 21J Fund.
While financial responsibility is demonstrated by possession of a Certificate of Compliance (COC) from the 21J Fund, enforcement ultimately resides with the MassDEP. To that end, even though an owner possesses a current COC, it does not necessarily mean full compliance with MassDEP’s requirements for financial responsibility. The rationale behind this concept is itself complicated and could very well be its own article. It is best summarized by saying that owners that have received more than $500,000 in reimbursement from the 21J Fund could find themselves in a position of responding to a MassDEP request to supplement their COC with another form of FR. To some, obtaining that other form of FR in and of itself may be an impossible feat.
Operation of USTs in Massachusetts will no doubt be interesting over the next 18 months, requiring careful attention to detail. Those choosing the hibernation approach may just find their awakening to be in a very cold place.
William Alpine is Corporate Counsel/Director of Cost Recovery for ATC. He was previously the Executive Director of the Commonwealth of Massachusetts 21J Fund. ATC has served the petroleum industry with its environmental, due diligence and regulatory compliance needs for over 30 years. Connect with Bill here.