Jan 26, 2009 9:29 am US/Eastern
Some Gas Stations Face Closure Over New Tank Rule
TALLAHASSEE (CBS4) ―
Hundreds of gas stations around the state may be forced to shutdown because of a new insurance regulation which requires them to have a double-walled underground gas tank by the end of the year.
Even though the new tank deadline is not until December 31st, insurers have already begun cutting off station owners who won't or can't upgrade to the new tanks which can cost up to $400 thousand.
It's illegal to operate in Florida without pollution insurance and an estimated 20 percent of the state's approximately 8 thousand to 9 thousand gas stations have yet to make the change.
Larger, newer stations aren't likely to have a problem.
"With the smaller ones, the older ones with two or three bays, definitely the tanks are an issue," said real estate broker Marc Gomes, vice president of PetroProperties and Finance in Coral Gables. "They can't afford to get them done, or they cannot afford to get financing to get them done."
Real estate broker and consultant Ron Santicola, president of Highland Beach-based Condevco LLC, said: "There were people who had tank construction jobs lined up, and the banks pulled funding."
"If it is a mom-and-pop and the margins are slim, it's not worthwhile for them to spend $250,000 to $300,000 to upgrade the tanks. Some will shut that down and just run the convenience store," said Jack Barsin, president of Tank Insure Inc. in Merritt Island. "You will see more and more of it by the end of the year."
Another reason insurance companies are skittish is because of the risk of fuel spill during installation; clean up costs can run into the five figures.
Barsin said ACE Insurance, a Zurich based firm which provides pollution liability insurance, has already dropped at least 200 of his clients. The other two major providers have stopped writing policies for new customers.
Christina Lloren with the Florida Department of Environmental Protection said they were aware that insurers are not renewing policies for gas stations but they couldn't control the decisions of the insurance companies.
It's not just gas stations at risk. The tank rule affects hundreds of businesses with underground fuel tanks, whether the fuel is for a generator or lawn mowers.
Some Publix Super Markets have underground fuel tanks to run standby generators as do some hospitals, farms and nursing homes which are also subject to the regulation.
(© 2009 CBS Broadcasting Inc. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed. The Associated Press contributed to this report.)
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