Be Prepared: Financial Responsibility, Climate Change, and USTs
As the underground storage tank (UST) industry continues to face challenges, owners and operators will need to remain informed about the pace of change transforming the U.S. transportation market. As alternative fuels and electric vehicles (EVs) become a larger portion of the U.S. auto market, UST owners will be well-served to make calculated plans to meet the challenges and opportunities that lie ahead.
Earlier this fall, at the 27th National Tanks Conference held in Pittsburgh, Pennsylvania, federal and state regulators, UST owners and operators, as well as industry representatives gathered to talk about the future of the UST industry. Conference sessions focused on an aging tank infrastructure and decisions tank owners are facing in light of the energy transition and climate change impacts. The EPA highlighted a published resource for tank owners that contained critical information for dealing with aging tanks, which can be found by clicking the link here.
Noting that the average age of a UST in the U.S. is around 26 years, there were several sessions where the states and the EPA discussed some of the upcoming challenges owners will face in terms of both removal/replacement and releases discovered during those events. With some state cleanup funds closing in on sunset dates, many tank owners asked whether other mechanisms, such as private insurance, will be available and affordable. While insurance-industry representatives at the conference indicated insurance products are available, it was widely acknowledged that new policies on an out-of-warranty tank system would come at a significant premium and higher deductibles. Tank owners should be preparing themselves for that possibility in states where fund sunset is a probability and evaluate all of the acceptable options.
Another topic on their minds was whether funding would be available in the future for states where the cleanup fund is not sunsetting. Will the possibility of a continual decline in gasoline sales that is predicted due to the auto industry’s increased production of EVs, produce significant declining revenue at the same time large numbers of tanks are removed and/or replaced creating a perfect storm of high demand/low availability for cleanup funding?
One of the most interesting statistics provided at the conference was the fact that 35% of all registered USTs in the U.S. are more than 30 years old and that number will increase exponentially over the next several years (to almost 75%). Many states, in recognition of upcoming financial needs, have adopted incentive programs for tank replacements and/or removals in the form of grant and loan programs. The EPA has compiled these resources for tank owners to help assist in identifying opportunities. More information can be found here about these programs.
Another key issue that was brought to the forefront at the conference, was the increased effects of climate change on UST systems. Going forward, tank owners will continue to have to address the effects of disasters like wildfires, droughts, and flooding on their systems as these natural disasters become more frequent. Disaster planning and ensuring front-line employees are prepared will be of paramount importance. The EPA has published a resource guide for tank owners focused on wildfires, which addresses preventative actions and steps to be followed should one deal with this type of disaster.
While there is relative certainty that alternative fuels and EVs are in our future and that extreme weather is anticipated to happen more frequently, the extent of the impact on business planning isn’t as clear. Therein lies the challenge.
Just as in any other industry, some of the greatest opportunities present themselves during times of great challenges. The changing energy market in the U.S. will continue to catapult fuel retail into a new era. Tank owners that plan for this changing landscape will be able to get ahead of the competition by minimizing risk and securing available funding first. Supporting organizations like NECSEMA is a great way for tank owners to stay informed about the changing market including changes to state UST assurance funds, availability of grant/loan programs, and other important information surrounding disaster preparedness.
While there is relative certainty that alternative fuels and EVs are in our future, the timing of this shift isn’t as clear. Therein lies the challenge to meet whatever the market demands over the next several years.
Pinnacle EMS can assist you with navigating these challenges including securing funding associated with grant/loan programs for tank removal/replacement as well as cleanup associated with a UST release. Please contact us to find out how we might help you.
Pinnacle Environmental Management Support, founded in 1995, is a specialized process management and consulting firm supporting the environmental and energy sector. Helping clients understand environmental liability and the mechanisms used to compensate and reduce the financial, compliance, and administrative burden, Pinnacle EMS has offices in Florida, Massachusetts, and North Carolina, as well as employees across the US.