On April 25, 2023, Governor Jay Inslee signed Engrossed Substitute House Bill (ESHB) 1175, that directs the Pollution Liability Insurance Agency (PLIA) to create and administer a state financial assurance program for owners and operators of commercial petroleum underground storage tanks (UST), such as gas station owners.
Commercial UST owners and operators in the state of Washington must attain a minimum $1M of insurance coverage per release to satisfy the United States Environmental Protection Agency (USEPA) financial responsibility requirements. Starting in 1989, the state of Washington developed and supported a mechanism that provides “reinsurance” to private insurance companies, in which the state entered into an agreement with a private insurance company to bear a portion of the cost of a claim made against that insurer for a release. As the state bore a significant portion of the liability for these policies, the private insurer offered policy coverage to many owners/operators who were not able to attain it prior to the state’s program. Additionally, the state started the Pollution Liability Insurance Agency to administer and regulate this program.
PLIA’s reinsurance program enabled many UST owners/operators in Washington the ability to respond to and clean up petroleum releases as they occurred, reportedly helping more than 2,000 small businesses in Washington who otherwise would be forced to close. In the 32 years since the program’s inception, PLIA has spent over $89.4M, providing significant protection to human health and the environment through cleanup funding. However, the reinsurance model limited the state’s control in terms of what claims the insurance companies approved. PLIA often advocated on behalf of owners with their insurers for coverage determinations and for approaches to meet the state’s cleanup requirements. Some cleanups can stretch ineffectively and inefficiently for decades, significantly impacting the small businesses and property owners with diminished property values and an inability to redevelop a property due to the presence of contamination.
In response, sponsors of ESHB 1175 developed this bill to provide for a new approach to how the state helps UST owners/operators meet financial responsibility and respond to petroleum cleanup. The state financial assurance program allows the process of approving coverage or influencing cleanup approaches to be more effective and enables more efficient use of state funds. The intent of the bill is to provide an additional, more direct option to UST owners/operators while continuing to allow for a private insurance marketplace to develop without reinsurance. The bill also reverts the current tax rate on wholesale petroleum sales from 0.15% back to 0.3%, and increases the account ceiling threshold from $15M to $30M in order to fund this new program.
The bill directs the program’s focus at preventing releases, responsiveness when a release occurs, and emphasizing cleanup of releases in areas where there is risk to drinking water sources, particularly in overburdened communities. PLIA will provide updates regarding the development of this new program and will have a communication strategy to apprise the public about the transition to the state financial assurance program. Regardless of how the program is set up and unfolds, it is clear that this marks a significant change for UST owners/operators in the state of Washington.
Have questions? PLIA’s Website provides an excellent source of information on their programs and resources available to UST owners/operators. You can also sign up for their e-mail notification distribution listserv (available by reaching out to firstname.lastname@example.org). Additionally, please contact Landau’s team of remediation professionals, who have decades of experience providing technical expertise and cleanup services at petroleum sites.
Further information about ESHB 1175 can be found below: