UST Financial Responsibility

Financial responsibility (FR) is a state and federal requirement that underground storage tank (UST) owners and operators have the fiscal means to handle any corrective action costs and third-party liability claims associated with accidental releases from UST systems. Having FR not only puts the owner or operator in compliance with state and federal regulations, it also provides their business with protection in the event of an accidental release from their UST system.
 
Federal and state governments and their agencies that own USTs are not required to demonstrate FR if their debts and liabilities are of a state or the United States.
 

Coverage Requirements

There are two required coverage amounts:
1. Per Occurrence — All petroleum marketing firms (e.g., gas stations) must have $1 million available to clean up and pay for any third-party damages resulting from each release. For other establishments (e.g., school districts, hospitals, etc.), the required per occurrence amount is based on an average monthly throughput. An average monthly throughput of 10,000 gallons or less requires coverage of $500,000, and more than 10,000 gallons requires $1 million of coverage.
2. Aggregate — The annual aggregate is a limit or cap on the dollar amount of coverage per year. The number of UST systems owned determines aggregate coverage. The annual aggregate coverage required is $1 million for owners of one to 100 USTs. Owners of more than 100 USTs are required to have $2 million of aggregate coverage.
 

Scope of Coverage

The full scope of required FR coverage includes different types of both obligations and releases. The owner or operator needs coverage for sudden and non-sudden releases for both on-site and off-site corrective action and third-party compensation (for bodily injury and property damage).
 

Financial Mechanisms

Financial mechanisms available to owners and operators include commercial liability insurance/risk retention group, self-insurance, guarantee, letter of credit, surety bond, trusts and certificates of deposit. Local government entities may also use a government fund, bond rating test, government guarantee or government financial test. Owners and operators may use a combination of mechanisms to meet FR obligations, the most common of which is UST pollution liability insurance.
 
Property insurance policies typically exclude underground storage tanks. Your insurance agent can obtain UST pollution liability insurance for you. Please call your insurance agent or contact ADEQ for more information.
Environmental Protection Agency list of known insurance providers | View now >
 

Arizona Requirements

Owners of UST systems must notify ADEQ if they begin operation of a new facility, if changes in owner/operator occur or if there are any modifications/additions to the tanks at the facility. The submitted information must include new/updated FR documentation including the mechanism(s) used to demonstrate compliance.1
 
Required Documentation
Owners/operators must submit documentation demonstrating FR compliance to ADEQ on a yearly basis that includes a schedule of covered tanks and a Certification of Financial Responsibility. Either the owner or the operator may provide FR coverage, but both are responsible if FR requirements are not in compliance. If you have UST pollution liability insurance, note that ACORDS, Declarations and Binders are NOT acceptable proof of FR compliance documentation. An Endorsement or Certificate of Insurance (whichever is applicable) must be submitted and worded as specified in the regulations.
 
Enforcement
Failure to submit and/or maintain FR compliance documentation may result in an enforcement action. Enforcement may include the ADEQ Director issuing a stop-use order and affixing a tag to stop operation of the UST, civil penalties of up to $25,000 per day and/or injunctive relief. Consult the Arizona Revised Statues for more information | View now >