RALEIGH ó For as long as it’s been around, a fund set up in the late 1980s to clean up leaky underground gas and oil tanks in North Carolina has struggled to meet demand.
The money for the fund comes from gas excise taxes, inspection fees and annual fees on the tanks. The taxes and fees have allowed the state to put more than $441 million toward cleaning up the leaky tanks and the surrounding pollution.
It’s not enough.
The state still has a backlog of more than 6,500 sites where tanks leaking gas and oil need to be removed from the ground and the area cleaned up.
A new report from the North Carolina General Assembly’s Program Evaluation Division proposes a solution ó insurance.
Just one problem. Insurance, the creation of a risk pool, typically assumes that some number of those being insured will cost the insurer little or nothing in a single year. In this case, state regulators know that they have 6,500 sites that are going to cost money.
The owners of those sites say no one is interested in insuring them.
Doug Howey, a lobbyist for the N.C. Petroleum and Convenience Marketers, recently remarked that the group investigated the possibility of insurance just a few years ago. At that time, no one wanted to cover tanks more than 20 years old.
Of course, those older tanks are mainly the problem.
Legislators also seem to have thrown up their hands. They don’t want to put a bigger burden on either business owners or taxpayers. Without doing so, the backlog becomes inevitable.
State officials say the leaky tank problem, at the current rate of clean-up, won’t be fixed for another 25 years.
Environmental groups, though, believe the state never should have assumed the responsibility for the clean-up in the first place. By doing so, taxpayers subsidize a portion of the cost that rightly should be a part of the price of doing business.
They also point out that other environmental liabilities are being addressed by insurance, and that markets grow as demand for those insurance products increase.
Maybe they’re right. But some tanks may well have been abandoned without state involvement. The result would have been more gas and oil seeping into drinking water supplies and otherwise fouling the environment.
That doesn’t mean the private insurance market doesn’t offer a way out.
If insurers won’t cover older tanks, what about newer ones whose designs ought to better account for the risk of leaks? The owners of these tanks have no excuse today not to know the potential dangers and liabilities associated with polluting groundwater.
Fees and taxes can continue to be collected, going to clean up the older tanks. Maybe then, in 20 years, the backlog of older, leaking tanks will be gone and there will be no new backlog to fall upon the state and taxpayers to address.
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Scott Mooneyham writes about state government for Capitol Press Association.