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Ky.gov An Official Website of the Commonwealth of Kentucky

Energy and Environment Cabinet

Division of Waste Management
Underground Storage Tank Branch

Operational Compliance
Financial Responsibility

Owners or operators of underground storage tanks (USTs) are required by law to demonstrate financial responsibility (FR). This is the ability to pay for cleanup or third-party liability compensation resulting from a release from a petroleum UST. 

The Petroleum Storage Tank Environmental Assurance Fund (PSTEAF) can be used by owners and operators to demonstrate FR. If the cabinet deems that the owner or operator can use the PSTEAF to meet the FR requirements, that means the owner or operator is eligible at that time to participate in one of two PSTEAF subaccounts--the Financial Responsibility Account (FRA) or the Petroleum Storage Tank Account (PSTA).

Of these two PSTEAF subaccounts only the FRA provides the ability to pay for third-party liability compensation resulting from a release from a petroleum UST. This is required to demonstrate FR. It is the only account that can provide for reimbursement of up to $1 million for costs of compensating third parties for bodily injury and property damage and up to $1 million for eligible corrective action costs that result from leaking USTs.

If the facility is not eligible for the FRA, eligibility for the PSTA will be considered. The PSTA will only provide for reimbursement of up to $1 million for eligible corrective action costs. Clearly, this is not adequate coverage to meet the FR requirements due to the lack of third-party liability coverage. In this case the owner or operator must seek other means of meeting all requirements of demonstrating FR.