Deadline near for businesses with leaking gasoline storage tanks to file for state aid.

Thousands of landowners in Los Angeles County have leaking gasoline storage tanks sitting underneath their properties. Like voracious profit-eating gremlins, these subterranean leaks silently cause millions of dollars in damages each year in the form of land and groundwater contamination.

The State of California is about to start helping property owners in their battle against these costly gremlins. Through the State Water Resources Control Board, hundreds of millions of dollars will be disbursed over the next six years to help property owners pay for the cost of cleaning up subterranean petroleum contamination.

Property owners will have to act quickly if they wish to be near the front of what promises to be a long line of people seeking some of the estimated $480 million the state plans to shell out under its Underground Storage Tank Cleanup Fund, otherwise known as SB 2004. To be eligible for "first priority" status, property owners must submit their claims by Jan. 17.

"All claims will be considered on a first-come, first-served basis," explained Peter J. Niemiec, an attorney who heads the environmental practice at the Century City law firm of Greenberg, Glusker, Fields, Claman & Machtinger. "But to avoid a crazy rush, the (State Water Resources Control Board) decided anyone submitting a claim within the first 45 days will be considered as having submitted claims at the same time."

Regulations implementing SB 2004 became effective Dec. 2, 1991, meaning the 45-day deadline arrives Jan. 17.

"Since (Dec. 2), we've been fielding between 300 and 500 calls a day from property owners wanting application forms or instructions on how to fill them out," said Dave Deaner, program manager of the state's cleanup fund. "We've sent out more than 8,000 applications since mid-December."

The Los Angeles Regional Water Quality Control Board, the local branch of the state's water-quality agency, already has cases pending for more than 2,000 leaking underground petroleum storage tanks in the Los Angeles area. Statewide, about 15,000 leaking petro tanks have been identified so far, reported state program manager Deaner, who works out of Sacramento.

Only petroleum-contaminated sites are covered under SB 2004. Those contaminated with non-petroleum substances, such as dry cleaning solvents, are not eligible.

"The real raison d'etre of this fund is to keep the independents (independent oil refiners and marketers) in business," attorney Niemiec explained. "The federal government has very stringent 'financial assurance' rules for owner/operators of underground petroleum tanks. The rules stipulate that owner/operators must maintain an assured source of payment to pay for any damages that might occur from leaking tanks."

"Independents have had a very rough time meeting this requirement because commercial insurers won't touch it," Niemiec added. "The big operators, the Arcos and Chevrons of the world, are going to self-insure. So the state Legislature passed SB 2004 as a means of helping the independents meet their financial assurance requirements."

Money for the Petroleum Underground Storage Tank Cleanup Fund is being generated by a special "fee" assessed on tank owner/operators. The fee is six-tenths of a cent for each gallon of gasoline stored in the state. For example, if a gas station owner had 5,000 gallons delivered to his underground storage tank, the state would assess a $30 storage fee.

"It's essentially a tax," Niemiec pointed out. "But SB 2004 calls it a 'fee' to get around Prop. 13 (tax limits). It's a classic Sacramento dodge."

The state estimates its new "fee" will generate about $20 million a quarter, or $80 million a year. SB 2004 is currently slated to expire on Jan. 1, 1998. After that, the state will stop collecting storage fees -- unless state lawmakers decide to extend the legislation. Hence, the state has some $480 million available to distribute to tank owner/operators over the next six years.

Owner/operators can obtain up to $990,000 for each leaking tank.

Many businesses other than gas stations have subterranean petroleum tanks on site. Typical owners of such tanks are major manufacturing concerns and businesses with their own vehicle fleets.

In general, the older the tank, the more likely it is to be leaking. Until the mid-1980s, subterranean petroleum tanks were single-walled and constructed of bare steel. But increasing realization that these tanks were corroding led tank manufacturers to start coating the steel tanks with Fiberglas. Today, most new tanks are double-walled steel, with the outer wall having a Fiberglas coat.

Not all leaks are caused by corroded tanks, however. Many leaks result from ill-fitting pipes leading from the subterranean tanks to gas pumps. More leakage results from tanker truck drivers overfilling the tanks.

Any tank owner/operator who has owned his property for a long time, and has good documentation, can probably complete all the necessary state claim forms without assistance. But owners of property that has changed hands several times in recent years, or has poor documentation, might need legal assistance to apply for state clean-up funds.

Each owner/operator will be required to submit at least the following: a full description of the leak, certification of all costs that have been or will be incurred to clean up the contamination, and multiple bids from certified clean-up contractors.

Claim awards will be granted on a first-come, first-served basis, with those submitted by Jan. 17 given first priority. The state will also use other criteria to prioritize claims.

First priority will be given to owners of tanks on residential property. Second priority will be given to owner/operators that qualify as "small businesses" as defined by the California Small Business Procurement and Contracts Act. Third priority will be given to other "small" owner/operators who do not employ more than 500 workers, are independently owned and operated, and operate only in California. Such third-priority owner/operators cannot be "dominant in their field of operation."

Final consideration will be given to claims submitted by large petroleum companies and government agencies.