Local/State
Published Tue, Nov 24, 2009 02:00 AM
Modified Tue, Nov 24, 2009 04:26 AM

Leaky tanks drain state's money

Email Print Order Reprint
Share: Yahoo! Buzz
Text

tool name

close x
tool goes here
- Staff Writer
Tags: news | politics | state | oil | gas | environment

North Carolina is struggling to find money to clean up thousands of underground tanks that are leaking gas and oil into the dirt and water.

As a result, a new state report says it is time for businesses with such tanks to buy insurance to cover the costs of any cleanup.

North Carolina has spent more than $441 million to clean up pollution from private tank leaks since it set up a fund in the late 1980s to cover such expenses. But the state has a backlog of more than 6,500 locations that will take another 25 years to get to, according to a report from the program evaluation office at the state legislature.

The state fund is filled by tax revenue from fuel excise and inspection taxes and yearly fees on commercial tanks. But legislators have routinely had to step in to pump up the fund. In 2004, North Carolina enacted a one-year increase in the motor fuel excise tax to raise $30 million to cover claims. A few years later, legislators increased the fee for tank owners.

But the increases have not made much of a dent in the backlog, which will cost an estimated $513 million to clear.

"I think everyone understands the fund was not properly capitalized," said Grover Nicholson, chief of the underground storage tank section at the state Department of Environment and Natural Resources.

Environmental groups say it is time for gas stations and other commercial tank owners to take more responsibility for leaking tanks.

"North Carolina should get out of the business of being the insurance company for any new tanks," said Molly Diggins, head of the North Carolina chapter of the Sierra Club.

The legislature's program evaluation office said in its report that businesses should be weaned from the state fund over five years, giving them time to transition to private insurance.

Out of luck from a leak

Private insurance for tank owners sounds like a good idea to Robert Hodge, a Rowan County farmer and feed-store operator whose drinking water was contaminated by a neighboring gas station.

Hodge endured a years-long ordeal after greasy, smelly water started flowing from his faucets around 2000 and the state declared it unfit to drink.

"You would turn on the faucet and you could smell it," Hodge said. "And then it was brown."

The owner of the gas station paid for a new drinking well, but a lawsuit from Hodge was dismissed because a judge said too much time had passed between when the gas tanks were pulled from the ground in the late 1980s and when Hodge filed for damages.

Hodge said he has an appraisal that says the contamination has made his house worthless.

"We were going to get enough money out of damages to pay the house off and shut the house down and move somewhere else," Hodge said.

But telling tank owners to find their own insurance is not as simple as it sounds, said Rep. Pryor Gibson, an Anson County Democrat.

Gibson, who helps run the legislature's Environmental Review Commission, said the legislature has tried at least three times in the last 10 years to find alternatives and couldn't make any proposal work.

The report's recommendation "is fine in a vacuum," Gibson said. "In practicality, it's not going to work."

Finding insurance for older tanks would be particularly difficult, said Doug Howey, a lobbyist for the N.C. Petroleum and Convenience Marketers. The group investigated insurance availability a few years ago and found that companies wouldn't cover tanks more than 20 years old.

More than half of the state's commercial tanks are that old.

"We're just skeptical about whether the insurance market could come in here and provide the same financial responsibility as the state fund," he said.

Bill Holman, a former head of the state DENR, said there is an insurance market to cover tank leaks, and the market would probably grow with greater demand.

"That's typically the way other environmental liability is addressed," said Holman, who now works as director of state policy at Duke University's Nicholas Institute for Environmental Policy Solutions.

Email Print Order Reprint
Share: Yahoo! Buzz
Text

tool name

close x
tool goes here

Latest Comment View all comments

    Local/State Top Stories

    Get local news updates

    Keep up with the latest stories with our local news e-mail newsletters, delivered straight to your inbox!

    Hot Deals View All
    Find a Car
    Go
    Top Jobs View All
    Find a Job
    Go
    Featured Homes View All
    Find a Home
    Go

    How the fund works

    North Carolina and most other states set up what are called financial assurance funds in the late 1980s so commercial underground tank owners could show the federal government they had a way to pay cleanup costs. Owners can use the fund to clean spills if they obey operating rules and pay the annual fee and deductibles.

    Businesses pay $20,000 deductibles toward cleanup costs and $100,000 deductibles to cover damages to neighbors' property. The trust fund reimburses owners' cleanup costs up to $1.5 million, with a 20 percent co-payment for costs over $1 million.

    Some states never started assurance funds. Other states that had funds similar to North Carolina's phased them out and require businesses to find other ways to pay for cleanups.

    Florida, for example, stopped using its fund to clean pollution from new spills after 1998.

    Similar stories:

    Print Ads

    Print Ads