Issue Update

Last Updated: May 9, 2016

The Issue
Federal and state programs that oversee the Leaking Underground Storage Tanks (LUST) program rely upon funding from the LUST Trust Fund, which is financed by a 1/10th penny tax on each gallon of gasoline and diesel fuel sold. The program, established in 1986, is designed to ensure that all tank owners take appropriate means to prevent fuel from leaking into the environment and to clean up tank releases for which there is no viable responsible party.

The Energy Policy Act of 2005 (EPAct) established new requirements for states and tank owners to ensure that all underground storage tanks are held to the same standards and to enhance compliance with federal regulations. These requirements included, among others provisions, on-site inspections of every tank once every three years, training for tank operators, full compliance of tanks located on government and tribal lands, and the closure of tanks that are found to be non-compliant with the regulations.

In related developments, in 2011, EPA proposed regulatory reforms that would extend the EPAct’s 2005 requirements to all tank owners, not just those in states that receive federal funding. The proposed rule had also sought to impose a variety of additional requirements on tank owners. In July 2015, EPA published its final rule in the Federal Register. NACS had worked with EPA to improve its proposal and many of those recommendations were included in the final rule.

NACS Position
NACS supports dedicating 100% of LUST tax revenues to funding the tanks program. In addition, NACS supports application of the regulations to all tank owners and supports the final rule released by EPA.

Retail Impact
The diversion of LUST tax revenues to non-tank related purposes reduces the ability to adequately fund tank programs. EPA reports there are 70,000 sites waiting to be cleaned up using LUST money, but Congress has failed to appropriate sufficient resources. In addition, EPA reported in May 2014 that not one EPA region can boast a 90% compliance rate for any category of program requirements, indicating the need for more equitable enforcement. The transfer of money to the Highway Trust Fund or other government program reduces the ability of the program to address this backlog. Preserving the purpose of future tax revenues will help keep the program operational. A healthy federal program will help reduce the potential for additional revenue collection strategies at the state level that will negatively affect retailers.