Who Really Pays to Clean Up Leaks from Petroleum Tanks?

Excellent article by Thomas B. Langhorne in the Evansville Courier-Press about leaking underground storage tanks (or "LUSTs" as we call them in the trade) (hat tip to the Indiana Law Blog).  Recommended reading for anyone who suddenly finds themself responsible for a leaking tank, and anyone else with an interest in the topic. 

I do have one small bone to pick, though.  The article discusses how LUST cleanups are funded, and notes that a great deal of the money comes from the excess liability trust fund, or ELTF (what we usually refer to as "the elf" around here.)  The ELTF is funded mostly by the penny-per-gallon tax paid by distributors for petroleum products.  Bruce Palin of IDEM is quoted as saying that that tax is almost certainly passed on to customers at the pump.  So based on that, the article makes the following statement: "Who pays for the cleanups?  To a large extent the burden is on taxpayers."  I don't think this is quite accurate.  It's not "taxpayers" in the abstract who fund the ELTF.  The tax is paid directly by distributors.  So it's not like the sales tax you pay on your normal purchases, or even the sales tax you pay on the gas you buy, goes to the ELTF. 

Instead, the ELTF tax is passed on to you in higher gasoline prices.  Which, if you think about it, is exactly as it should be.  Your and my appetite for gasoline and other fuels is what has caused the USTs to be there in the first place, and if they weren't there, they wouldn't be there to leak.  The tax on distributors is a very efficient way of internalizing an externality.  You want gasoline, fine, but part of the price you're going to pay for it is the cost of cleaning up the problems it causes.  To the extent that depresses demand for gasoline (which I doubt is very much) that means fewer LUST problems. 

And to the extent that the owners of the tanks have benefited more from the sale of gasoline than has the rest of society, I can assure you that in my experience, those owners pay a lot more, in both dollars and in time and anxiety, than the penny a gallon they (probably) pass on to us.

But that quibble aside, it's a very good article and a welcome introduction to the way environmental problems play out in the real world.  Read the whole thing.