Editorial: Don't let oil industry skate on leaking tanks' costs

By The Herald Editorial Board

In anticipation over increasing sales of electric vehicles and Washington state's plans to restrict sales of new vehicles to zero-emission vehicles by 2030, many have focused on plans to build up the infrastructure for that future, including support for networks of EV charging stations.

But there are other stations that should raise more concern right now.

Less attention has gone to the part of that transportation transition that accounts for the gas stations that have fueled carbon-emitting vehicles for more than a century, a system that has relied on underground fuel tanks that are aging and becoming more prone to leaking fuel and potentially contaminating soils and groundwater, lakes, streams, rivers and sea.

It's a particular problem in Washington state because more than a third of all underground gas and diesel storage tanks at gas stations are more than 30 years old, the mark seen as the service life for those tanks and the point where leaks from the tanks and their lines become increasingly more likely.

A report last year by The Seattle Times found that more than 3,500 underground tanks were installed between 30 and 60 years ago, but another 4,100 have seen between 20 and 30 years of service. In Snohomish County, more than 340 underground tanks are more than 30 years old.

There are provisions for cleanup; the federal government requires gas station owners and operators to carry at least $1 million of insurance to cover the costs of cleanup from leaks and contamination. And since 1990, Washington state has offered a program through a little-known state agency, the Pollution Liability Insurance Agency, which backs insurance companies that provide coverage to owners and operators of underground storage tanks and heating oil tanks.

Essentially, the state provides reinsurance that amounts to $925,000 of each $1 million policy, which increases the availability of the insurance and reduces premium costs for gas stations.

The program was created more than 30 years ago because private insurers were reluctant to bear the total liability risk of those tanks. The state stepped in — with hopes the program would be temporary — until the insurance market could meet the market's need. That hasn't happened.

"I can honestly report that we are no closer to a private market (for insurance) than we were in 1990," Russell Olsen, executive director of the PLIA, said at a House Environment and Energy Committee hearing in mid-January.

Since 1990, the program has funded about $84.5 million in cleanup of contamination from leaking gas station tanks and lines across the state. Over the 10 years of his leadership, Russell said, he has seen a growing trend of more station owners and operators seeking support to help in cleanup and closure of sites. Olsen told the committee he is aware of five sites throughout the state that will exhaust their $1 million policies.

The problem is that, even with the state picking up more than 9/10ths of the liability, insurance companies are balking at the likelihood of covering even their $75,000 share.

Legislation in Olympia, House Bill 1175 seeks to reform the program, essentially making the state the insurance company, a model used in 36 other states that would — after a site assessment for leaks and contamination — provide up to $2 million coverage for cleaning up leaking tanks; and giving the state more oversight to make sure cleanup is being completed as intended.

The program would be funded through a fee charged to owners of registered tanks of up to $25,000 annually and a doubling of the current program's tax on gasoline, diesel and home heating oil from about half a cent to a penny per gallon. That revenue would go to a trust account for funding the program's work that can't exceed $30 million.

But that won't be close to enough for the liability the state would take on each year until the program's sunset in 2030, warns Matthew Metz.

Metz is best known as co-executive director for Coltura, a Seattle-based organization focused on the transition from fossil fuels to cleaner alternatives, but has written a law review article on gas station regulation and even bought a gas station a few years ago and had its tanks removed and the site cleaned up, with the intention of converting it to an electric vehicle charging station.

"If a private insurance company that's only taking $75,000 worth of risk is not willing to touch the thing, then why would you want to give $2 million in coverage for the same property?" Metz asked rhetorically in an interview last week.

It's no longer insurance against a possibility, he said; there's a great probability that many of the nearly 10,000 underground tanks in the state are leaking or will leak in coming years. With the average cleanup costs for a station estimated at a $500,000, Metz and others objecting to the proposed legislation, including Carbon Washington and the Washington Physicians for Social Responsibility, peg the total liability for cleanup of underground tanks in coming years at more than $1 billion.

There are advantages to the program, Metz said, including providing the state more control of cleanup beyond the state Department of Ecology's existing oversight and regulation.

But the state would take on huge liabilities without knowing the extent of the problem that lurks underground now and without the funds to cover that cost.

"The state will take even the dirtiest gas stations with the oldest tanks into the program," Metz said during a Feb. 1 hearing before the House Appropriations Committee. "That could be millions of dollars with no rigorous screening program for keeping them out. These stations will have no incentive to modernize their tanks and strong incentives to keep operating business as usual even if their tanks are leaking gasoline into the soil and water. The main funding source will only pay for 10 to 20 percent of the claims, and those revenues will be declining" as sales of gasoline continue to ebb.

Before moving forward with such a program, Metz and others told the House committee, the state needs a much clearer picture of the potential costs for cleanup of problem tanks and a more robust and sustainable way of paying for that cleanup.

Speaking in favor of the legislation at committee hearings were representatives of the Western States Petroleum Association and the Washington Oil Marketers Association. But there should be no mystery as to why — in exchange for a modest increase in the fuel tax — they should support the state taking on responsibility for underground fuel tanks.

Two points:

Starting in the 1980s, the major oil companies began selling off gas stations to private operators and chains. Along with being a less profitable side of the business, they recognized — just as Exxon and others knew about climate change as early as 40 years ago — the cleanup costs ahead posed by underground tanks.

The oil industry — specifically U.S. players ExxonMobil, Chevron, Shell and Conoco-Phillips — posted combined record profits last year of $177 billion.

Consumers and taxpayers can fairly be expected to provide the funding that builds a clean-energy network for transportation and more for the future, but they should not be expected to bail out an industry that buried its responsibility beneath our feet.