GAS TANK MEASURE TO TAKE EFFECT

Owners of gasoline stations in Missouri say they are concerned about liability exposure they face because of an inability to get insurance coverage on underground storage tanks. They also said they are upset over delays by the Department of Natural Resources in setting up a state program to provide coverage.

Station owners are liable for the costs of cleaning up underground tanks that develop leaks. Because of the costs of cleaning up leaks, and strict state and federal regulations, insurance coverage has become either unavailable to or not affordable by most stations.

Earlier this year, the Missouri General Assembly passed a law establishing a fee of $25 per transport load. It will provide most of the money for a new underground storage tank insurance fund.

The fee will take effect Tuesday and, based on a normal transport load of 8,000 gallons, amounts to just .35 of 1 cent per gallon.

On Friday, Fred Hutson, underground storage tank coordinator for DNR, said the department was working as fast as it could to get the insurance program in operation, but it would still be early next year before it starts.

In the meantime, hundreds of stations have no insurance to cover clean-up costs in the event of a leak.

Bob Blank of Bi State Oil Co. in Cape Girardeau said he can't understand the delay. "One leak can happen and a guy's whole lifetime of work is gone before his eyes," said Blank. "It is a terrible thing that we are being held hostage on this."

Jim Maurer of Rhodes Oil Co., which like Bi State had to drop its insurance coverage on tanks because of the cost, said, "The state keeps saying it will start the (insurance) program and they keep putting it off."

Maurer said his company had to drop coverage when premiums on tanks increased about 500 percent.

Both Blank and Maurer agree that costs of cleaning up a major leak could leave companies like theirs out of business.

"One leak and it's goodbye Charlie," exclaimed Blank. "You can realize the precarious position we are in: we're left sitting on a powder keg where a lifetime of work can be taken away by some bureaucrat."

Bill Cooper of Farmington, president of the Missouri Petroleum Marketers Association, also expressed frustration over the time it is taking to get the fund operating. "With one big leak, a lot of companies could be wiped out," he said.

Cooper said some members of the Association had accused DNR of dragging its feet on the program, which triggered an immediate response from DNR officials. "They met with us in Jefferson City and wanted to speed up implementation. They are trying very hard to implement it and get it going," said Cooper.

"Like any government agency, I'm sure they've got a lot to do, but it seems like nothing is getting done."

From meetings with staff in DNR, Cooper said he felt satisfied that DNR was trying to set the program up as soon as possible, and would have it in place by the first of the year.

Hutson said his office is in the process of establishing rules for the fund by working through the Missouri Clean Water Commission.

"We are working with the individual groups to keep them informed and keep them in the rule-making process as much as possible for their input," he said.

But Hutson said DNR does not have enough staff to operate the fund, so it will hire an outside firm to manage it. "This is the critical element to getting the fund up and running: having a third-party administrator run the fund for the state," said Hutson.

"It is our game plan to have this fund up and running this winter, sometime after the new year. The exact date depends on when we have the third-party administrator on board."

Hutson acknowledged there had been some complaints about the time it is taking to get operating, but, he said, "We are taking all the steps we can to expedite the process, but it is a complex process."

Once a contract is awarded to a third party, Hutson said the firm would have to be in business within a month.

Hutson explained that prior to passage of the law setting up the transport load fee, funds were to come from a tank fee ranging from $500 to $2,200 per tank, depending on its age and safety equipment.

Under this law, there is a registration fee of $100 to $300 per tank to be part of the insurance fund. Participation is voluntary; however, Hutson anticipates most companies will participate.

The transport fee is expected to generate about $10.5 million per year and will be the fund's main source of revenue. Once the fund reaches $20 million, the collection of the fee will stop until the fund balance drops below $8 million.

Participants must include some additional information in their applications, said Hutson, who believes nearly all tank owners in the state will apply.

Federal law requires tank owners to have up to $1 million per occurrence insurance for clean-up costs and for bodily injury. The coverage under Missouri's new law has a $25,000 deductible on the liability, and the bodily injury coverage is capped at $100,000. That means tank owners have to show proof of being able to pay the deductible and have insurance coverage beyond the $100,000 bodily injury cap.

Applicants must also show they are in compliance with technical regulations and show proof of "tank integrity," Hutson said.

In 1988, the federal Environmental Protection Agency started requiring all underground gasoline tanks to be replaced within 10 years. New tanks must contain safety features to prevent leaks and monitor whether there are any leaks.

Maurer said his company is checking its tanks daily, comparing usage to sales to make sure there are no leaks.

Hutson said eventually, as old tanks are replaced and hazards reduced, private insurance companies will likely begin providing tank insurance and the need for the state fund will diminish. The law establishing the fund expires in 1998.

Maurer said most tank spills are very minor and are not expensive to clean up; however, when there is a spill that gets into a well or stream, the clean-up costs skyrocket and that increases the cost of the average spill.

Cooper said the tank insurance problem really developed when the EPA decided that gasoline was a hazardous material several years ago. He said the EPA and DNR have gone overboard on enforcing regulations that deal with underground tanks.

"What upsets me is that the shoulders of all highways are sprayed with oil blacktop, which is the same thing, and nothing is said about that," said Cooper. "All blacktop driveways and parking lots at shopping centers are basically the same thing."

Maurer agreed that regulations keep changing and it is hard to understand just what is required. "What you read today changes tomorrow," said Maurer. "That's what makes it so tough."

Hutson said as soon as the company is hired to manage the fund, information about applications will be sent to everyone with registered tanks. He said DNR is planning seminars around the state to help companies determine the basic facts they will need for an application.