If you think you are covered under the Massachusetts Underground Storage Tank Cleanup Fund, you may want to think again.

The Massachusetts Underground Storage Tank Cleanup Fund (the Fund) has been reimbursing owners and operators of fuel dispensing facilities for over 20 years. In that time frame, over $500 million has been disbursed towards remediating eligible releases from underground storage tanks (USTs). The UST Fund has been the panacea to many UST owners faced with the financial uncertainties of cleaning up their properties.

Over the last few years, however, there has been a lengthy debate brewing among the members of the UST Fund’s governing Board (the UST Board) insofar as the true meaning and effect of a Certificate of Compliance.  A Certificate of Compliance is in essence your admission into the UST Fund. Comparatively speaking, it is the insurance policy between an insurer and insured. In order to obtain the piece of paper symbolizing coverage, an owner of a UST system needs to prove certain things to the UST Board every five years – namely that at the time of the five year renewal, the UST system was fully compliant with all regulatory requirements pertaining to USTs and that all annual fees are paid in full.

The recent debate focuses on the obligations of the owner of a UST system and the UST Board after the Certificate of Compliance is issued. Under the Fund’s regulations, there are several provisions which touch upon the owner’s responsibility to maintain compliance with all regulatory requirements in between the five year renewal cycle. The regulations also state that the UST system must be in full compliance with all regulatory requirements at the time of a release. Within the regulations, the UST Board is empowered to revoke a Certificate of Compliance upon proof that a UST system has become noncompliant. Before doing so, however, certain procedural steps must be followed (i.e., notice and opportunity to cure). In the end, the focus of the controversy has been on whether the UST Board must go through the procedural requirements before deeming a facility noncompliant or whether it has the authority to retroactively make that determination after a release has occurred.

There is no question that an owner can become complacent in their compliance responsibilities in between their five year renewal cycles.  The Massachusetts Department of Environmental Protection recently promulgated a very stringent version of UST regulations.   Enforcement around those regulations coupled with third party inspection requirements every three years has undoubtedly resulted in fewer facilities falling off the radar.

Most UST owners may be unaware of this interpretational issue.  It usually is not obvious until the time that they are seeking coverage under the Fund through the Application for Eligibility process. At that point, the Application for Eligibility is denied by the Fund because it was determined that there was some form of regulatory infraction at the time of the release.

This issue finally came to a head at the April 2016 UST Board meeting. In the end, the Board decided by a five to four vote to allow for compliance to be determined at the time of the release.   There are certain appellate proceedings under the Fund that remain available to an owner in challenging the severity of their regulatory infractions. The consequences to an owner who has failed to comply with their regulatory obligations nonetheless could be costly.

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.