UST Removal Incentives and How To Capitalize on Them

Cleanup Funding Demand: The Impact of Electric Vehicles and Risk-Based Cleanup Standards on UST Cleanup Funds

States that collect motor fuel taxes and fees to support UST clean-up programs will face new challenges as the number of internal combustion engine (ICE) vehicles on the roads decrease and the number of electric vehicles (EVs) increase. As gasoline sales decrease, so will gas tax revenues that fund the UST clean-up programs.

The good news has been that over the past two decades, many states have adopted risk-based cleanup standards, which in many cases has lessened the demand on these state-administered UST clean-up funds. Therefore, it might seem a natural conclusion that as revenues decline, demand is also declining, ensuring an easy flight path to wrapping up the need for UST clean-up funding.

While it might seem a natural conclusion that as revenues decline, demand is also declining, the reality is that the majority of tank systems that were upgraded as part of the Federal upgrade requirements in the mid to late 1990's, are now reaching the end of their useful life. It can be assumed that over the next ten to twenty years most of these tanks will need to be decommissioned and removed and many may not be replaced as the country transitions to alternative fuels. While it’s hard to predict how many of these upcoming UST removals will result in a reportable release, experience tells us that approximately 20-40% will, placing greater demand on the funds.

Interestingly enough, as of this writing, many of the state clean-up funds find themselves with excess reserves. States are looking for ways to prioritize the removal and possible clean-ups by offering financial assistance for UST removals, especially if the tank will not be replaced.

Many of these incentives pay some or all of the cost for removing the tank from the ground, which historically, has not been a covered expense under most state UST clean-up programs.

Examples of State Incentives:

Every state has different criteria surrounding their UST Removal Incentives, so be sure to give us a call so you don’t miss out on any of the funds that may be available to you. Let’s take a look at how four states are pioneering these incentives and the types of programs you can expect to find.

California: Loan and Grant Program

California created a loan and grant program, making low-interest loans available for amounts between $10,000 and $750,000 to qualifying businesses for a term of 10-20 years. These RUST loans (Replacing, Removing, or Upgrading Underground Storage Tanks) are to assist with costs for removing certain single-walled tanks. California also has pending legislation to conduct a study of the cost for transitioning retail gas stations to alternate fuels. The bill would require the study to include an assessment of potential financial incentives and regulatory barriers this transition would impose upon gas station owners.

Indiana: Covers up to 50%

Indiana recently passed legislation that allows for payment of up to fifty percent (50%) of the costs of decommissioning or replacing underground petroleum storage tanks that meet certain criteria. This legislation also imposes an annual fee on electric vehicles to make up for the loss of revenue the state was collecting on gas taxes. In 2023, EV owners will pay $214 and hybrid owners $72. These fees are set to be adjusted annually based on inflation.

Colorado: Cost Sharing Program

In an effort to remove older underground storage tanks, Colorado has had a cost sharing program in place for several years now. The program, called Policy 29, was designed to enable tank owners to replace or close aging tank systems. To advance the transition from petroleum fuels to electric, Colorado plans to have 7,500 electric vehicle charging stations on the roads by 2025 and almost one million electric vehicles on the roads by 2030. This is quite ambitious as the current population above driving age is approximately 5 million people.

Washington: Reinstated their Reimbursement Fund

The State of Washington recently passed legislation in July 2023 to reinstate their reimbursement fund. The previous fund was sunset in 2020, which shows that states are recognizing that these funds are necessary to help cover the cost of cleaning up the environment. The new fund date is effective 7/23/2023, and funding will come from both a gas tax at the pump as well as a new fee imposed upon tank owners. The gas tax has been set at $.0031 per gallon at the pump and the tank fee has yet to be determined but will be effective 10/1/2023.

Reduce the Risk of Missing Out on Incentive Programs

The active legislation in Washington serves as an example of how frequently the laws and incentives are changing. Pinnacle is a trusted and dependable partner as you navigate the changing world of UST’s and alternative fuels. We have the resources to keep you informed about new legislative or regulatory mandates and opportunities. We also want to caution you against putting this on the back burner. If (or when) state incentives expire—you’ll simply miss the opportunity and will still have to eventually remove your old USTs. The only difference is you’ll not have the opportunity to cover those costs.

Your Pinnacle Program Manager can provide more information about whether the state(s) you operate in have a participating program currently or on the horizon. If you haven’t worked with us before you can contact us here.