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Timely Underground Storage Tank Indemnification Fund Claim Essential

Under Pennsylvania’s Storage Tank and Spill Prevention Act, owners, operators and installers of underground storage tanks who incur liability for cleanup of tank spills are entitled to reimbursement from the Underground Storage Tank  Indemnification Fund under certain circumstances, but only if they advise the Fund of a claim within 60 days “after the confirmation of a release.”

As the Commonwealth Court recently made clear in MKP Enterprises, Inc. v. Underground Storage Tank Indemnification Board, ___ A.3d ___ (Pa. Comwlth. 2012)(No. 2380 C.D. 2012, filed February 9, 2012) (Brobson, J), the 60 day limit is the law and will be enforced strictly.

In MKP Enterprises, Inc., the underground storage tank owner, EPI, discovered soil contamination, on November 7, 2007, believed to be the result of leaky spill buckets, but failed to immediately notify USTIF of a reimbursement claim, electing instead to wait until April 14, 2008 in order to confirm the release via soil samples.  USTIF denied the claim as beyond the 60-day notice period, despite the fact that EPI had given notice to the Pennsylvania Department of Environmental Protection (“PA DEP”) which in turn had provided notice to USTIF within the 60 day timeframe. EPI sought and obtained an administrative hearing before the Board. The Board’s hearing examiner concluded that EPI was ineligible for coverage because EPI failed to notify the Fund, directly, on a timely basis. The Board adopted the hearing examiner’s decision, and EPI appealed to the Commonwealth Court, attacking the Board’s order on numerous grounds.

Affirming the Board, the Commonwealth Court held that the Act permits the Board to establish eligibility criteria, and that the 60 day notification period, though not specified in the Act, was a reasonable exercise of the Board’s legislative rulemaking authority.  The Court also rejected EPI’s numerous factual arguments centered primarily on the degree of certainty that a spill has occurred in order to establish “confirmation of a release” that triggers the running of the 60 day notification period.  The Court affirmed the Board’s common-sense “reasonable person” standard, reasoning that if a reasonable person, based upon available evidence, would believe that a release occurred, the 60 day notification period begins to run.  In the case of EPI, the Court agreed with the Board that EPI knew that a release had occurred on November 7, 2007, when during the excavation process for the tanks, soil contamination was found which was believed to be the result of leaking around the spill buckets.

The Court also rejected EPI’s arguments that its notification of the Department of Environmental Protection that a spill had occurred within 60 days was sufficient notification to the Fund of a potential claim.  As the Court reasoned:  “the regulatory scheme adopted pursuant to the Act reflects two distinct concerns – notice to DEP for the purpose of its statutory and regulatory oversight responsibilities and notice to USTIF if an owner/operator/participant seeks to recover the costs of remediating releases.  As the Board notes, USTIF is not an interested entity unless and until an owner or operator seeks to recover the costs of remediating a release.  Notice of a release is not the same as notice of intent to pursue a claim against the Fund.”  Slip Op. at 19.

The take-away from MKP Enterprises is that underground storage tank owners and operators who plan to submit a claim to the USTIF must do so, as soon as they believe a spill has occurred and do so directly to USTIF.

A copy of the decision is attached here:
2-9-12 opinion and order.pdf 

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