What is Financial Responsibility?
Owners/operators of regulated tank systems are required to have enough money available to clean up an accidental release of petroleum from their systems. Owners/operators meet this requirement by using a state fund, as in Colorado, or by using an insurance policy or other mechanism if a state fund is not available or if the tank owner is not eligible to use the state fund.
The financial requirement ranges from $500,000 to $2 million, depending on how much fuel the facility handles and the number of tanks the owner/operator manages. Federal regulations apply only to UST (underground storage tank) systems, but Colorado statutes apply the financial responsibility requirement to AST (aboveground storage tank) systems as well.
Colorado also allows other financial means (per Section 7-2 of the Colorado Petroleum Storage Tank Regulations), which may include:
- An insurance policy
- A letter of credit
- A trust fund
- A certificate of deposit
- Another secured financial instrument
The Fund may serve as the financial responsibility mechanism for most petroleum UST and AST owners/operators in Colorado. In order to utilize the Fund, the petroleum storage tank systems must be in operational compliance, and in the event of a release, owners/operators must apply for eligibility to the Fund to receive reimbursement.