[CPEO-BIF] GAO report on Underground Storage Tanks

[Lenny Siegel <lsiegel@cpeo.org>]

LEAKING UNDERGROUND STORAGE TANKS
EPA Should Take Steps to Better Ensure the Effective Use of Public 
Funding for Cleanups
United States Government Accountability Office

GAO-07-152
February 8, 2007
To download the full report, go to
http://www.gao.gov/cgi-bin/getrpt?GAO-07-152.


What GAO Found

States estimated that fully cleaning up about 54,000 of the 
approximately 117,000 releases (leaks) known to them as of September 30, 
2005, will cost about $12 billion in public funds. The Environmental 
Protection Agency (EPA) estimates that it costs an average of about 
$125,000 to fully clean up a release. State officials said that tank 
owners or operators will pay to clean up most of the remaining 63,000 
releases. However, an unknown number of releases lack a viable owner, 
and the full extent of the cost to clean them up is unknown. A tank 
owner may not be viable because the owner fails to maintain adequate 
financial responsibility coverage, which is intended to provide some 
assurance that the owner has access to funds to pay for cleanups. While 
16 states require annual proof of coverage, 25 states check owners' 
coverage less often or not at all. Furthermore, 43 states expect to 
confirm about 16,700 new releases in the next 5 years that will require 
at least some public funds for cleanup.

States reported that they primarily use financial assurance funds to pay 
the costs of cleaning up leaks. States reported that they spent an 
estimated $1.032 billion from financial assurance funds to clean up tank 
releases in 2005. Overall, fund revenues totaled about $1.4 billion in 
2005, of which about $1.3 billion came from state gasoline taxes. The 
assurance funds in the 39 states for which GAO has information held an 
estimated $1.3 billion as of September 30, 2005, according to state 
officials. However, many states also use these funds to clean up 
releases from sources other than underground tanks. Several state 
assurance funds may lack sufficient resources to ensure timely cleanups. 
While EPA monitors the status of state funds, its method of monitoring 
the soundness of these funds has limitations. Furthermore, there are 
concerns that, by paying the bulk of the cleanup costs, state financial 
assurance funds may provide disincentives for tank owners - who pay only 
a relatively small deductible - to prevent releases.

In addition to their own funds, states employ resources from the LUST 
Trust Fund, the primary federal source of funds for cleaning up releases 
from underground storage tanks. As of September 30, 2005, the fund 
balance was about $2.5 billion. For fiscal year 2005, the Congress 
appropriated about $70 million from the fund to help EPA and the states 
clean up releases and to oversee cleanup activities. EPA distributed 
about $58 million of this amount to the states to investigate and clean 
up releases and conduct enforcement efforts, among other actions. To 
distribute LUST Trust Fund money among the states, EPA uses a formula 
that includes a base amount for each state and factors to recognize 
states' needs and past cleanup performance. However, although the LUST 
Trust Fund provides funds to states to assist in addressing releases 
from tanks without a viable owner, EPA has not incorporated this factor 
into its formula. Furthermore, EPA's information on states' performance 
comes from state reports; however, GAO found that some of the 
information in these reports is inaccurate and inconsistent.

Why GAO Did This Study

Underground storage tanks that leak hazardous substances can contaminate 
nearby groundwater and soil. Under the Resource Conservation and 
Recovery Act (RCRA), tank owners and operators are primarily responsible 
for paying to clean up releases from their tanks. They can demonstrate 
their financial responsibility by using, among other options, publicly 
funded state financial assurance funds. Such funds function like 
insurance and are intended to ensure timely cleanup. These funds also 
pay to clean up releases from tanks without a viable owner, as does the 
federal Leaking Underground Storage Tank (LUST) Trust Fund.

GAO was asked to report on (1) states' estimates of the public costs to 
clean up known releases, (2) states' primary sources of cleanups funding 
and their viability, and (3) federal sources to address these releases. 
GAO surveyed all states and discussed key issues with EPA and selected 
state officials.

What GAO Recommends

GAO recommends actions for EPA to ensure that (1) tank owners maintain 
adequate financial responsibility coverage and (2) state assurance funds 
provide reliable coverage, among other things. In commenting on a draft 
of this report, EPA agreed with GAO's recommendations.


--


Lenny Siegel
Director, Center for Public Environmental Oversight
c/o PSC, 278-A Hope St., Mountain View, CA 94041
Voice: 650/961-8918 or 650/969-1545
Fax: 650/961-8918
<lsiegel@cpeo.org>
http://www.cpeo.org


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