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08/18/2022 Underground Storage Tanks

Oles, City of Santa Monica

Hi all - Federal underground storage tank (UST) regulations requires UST owners and operators to demonstrate financial responsibility, which is the ability to pay for cleanup or third-party liability compensation that results from a release from an UST. There are several mechanisms to demonstrate the financial responsibility. In the past, the City demonstrated the financial responsiblity by using the local governement bond rating test. As of 7/1/22, we no longer have any general obligation bonds and as such cannot use this mechanism. We are looking into two options going forward. One is using the Local Government Financial Test, which mean self-insuring the exposure. Another one is purchasing separate insurance coverage for the tanks. I believe there are a couple of ACCEL members with USTs. Can you please let me know which mechanism your entity has selected? Thank you.
2 replies
Daniel

08/18/2022 06:18:17 PM

One thing to note about the insurance option.  We are finding it harder to place coverage at a reasonable price (say $1,500 for a typical modern tank) if the tank is over 25 years old.  A lot of tanks were replaced in the late 80's and early 90's and underwriters believe they are too risky at this age.
Betsy

08/18/2022 12:24:50 PM

Hi Oles, we buy coverage. We have 15 tanks and it's inexpensive to purchase insurance. Betsy