General Practice, Solo & Small Firm DivisionMagazine

American Bar Association
General Practice, Solo, and Small Firm Division
The Compleat Lawyer
Spring 1997
copyright American Bar Association. All rights reserved.

Underground Storage Tanks
The EPA's Deadline Looms

BY JAMES B. WITKIN AND DUANE J. DESIDERIO

December 22, 1998: Commercial and industrial property owners, lenders, lawyers, and consultants should circle this date in red. It is already marked on the calendars of environmental regulators across the country.

By that date, thousands of underground storage tanks (USTs) must conform to stringent regulatory requirements imposed by the U.S. Environmental Protection Agency (EPA) and state environmental protection agencies. UST owners and operators must upgrade their existing USTs, take them out of service, and/or remove them from the ground altogether.

The EPA regulations apply to any regulated UST that was installed before December 22, 1988, and contains petroleum products. While the federal regulations do not apply to typical heating oil USTs, such as those used to hold fuel for boilers of commercial properties, some states do regulate such tank systems. Owners must therefore check state requirements to determine if the upgrade requirements apply to heating oil tanks in a particular jurisdiction. In addition, USTs containing hazardous substances also must meet other requirements by 1998.

The EPA's Office of Underground Storage Tanks reports that 2.1 million UST systems were in use as of 1988, when the EPA issued the current underground storage tank regulations. Many of these systems have been closed over the past nine years. Currently, the EPA estimates that about 1 million USTs remain in use that are subject to the 1998 deadline. These tanks are found in gas stations, shopping malls, factories, convenience stores, and at refueling facilities for truck, bus, and taxi fleets. They have the potential to cause severe environmental damage. The EPA's records reveal that approximately 317,000 UST releases have been confirmed over the past nine years.

Legislative Background
In 1984, Congress became concerned that petroleum and other pollutants leaking from UST systems were contaminating groundwater supplies. It enacted the Hazardous and Solid Waste Amendments of 1984, which added Subtitle I to the Resource Conservation and Recovery Act (RCRA). Subtitle I required the EPA to develop regulations establishing a program for UST release prevention and remediation. The regulations require UST owners and operators to meet standards for tank operation and design, leak detection and reporting, corrective action, and UST closure.

The EPA's UST regulations became effective on December 22, 1988, and were to be phased in over the next ten years (thus the deadline of December 22, 1998). While the EPA, a federal agency, promulgated the Subtitle I regulations, it has delegated authority to the states, which may manage their own UST programs. A state with a federally approved UST program must at least meet the requirements of the EPA's regulations. Presently, all states and territories have operating and enforcement agreements with the EPA, although not all state UST program have received formal federal approval.

State UST programs may not be less stringent than the federal program, but may include standards that go beyond the federal "floor" in terms of protecting human health and the environment. Accordingly, different states may impose different requirements that must be met by December 22, 1998, and a few states have even imposed requirements that must be satisfied before the federal deadline. A list of state UST Program Offices is available from the RCRA/Superfund Hotline (800/424-9346). To complicate matters, some cities and counties have their own laws and regulations governing tanks.

Compliance Requirements
Tank owners and operators must implement one of the following options by the deadline for any existing tank system installed before December 22, 1988: (1) add corrosion protection to currently unprotected steel UST systems, and protection against spills and overfills to all steel and fiberglass systems that do not already have it; (2) replace the existing tank; or (3) close the existing tank. The requirements for protection against corrosion, spills, and overfills are already effective for tanks installed after December 22, 1988.

Spill, Overfill, and Corrosion Protection
Tank owners who decide to keep a UST installed prior to December 22, 1988 (referred to as a "pre-1988 tank") in operation must add spill, overfill, and corrosion protection to their systems. Spill protection. Petroleum spills are common occurrences during delivery of product to a tank system. Product is transferred through a delivery truck's hose; when the hose is disconnected, petroleum may spill onto the ground, leach into surrounding soils, and contaminate groundwater supplies. Small spills of this sort can cumulatively cause significant environmental damage.

Upgrade or Replace?
Many environmental consultants and engineers believe it is more expensive over the long run to completely upgrade a pre-1988 steel UST than to close and/or replace it. Costs of upgrading tanks will depend upon the size of the tank, the depth of its installation, and other site-specific factors, such as whether the system is enclosed beneath a concrete surface or a grassy area. Purchasing and installing a new 10,000 gallon UST that conforms with the latest Subtitle I regulations will cost between $20,000 and $50,000. If a pre-1988 tank made of fiberglass or other noncorrodible material only requires the addition of spill and overfill protections, the EPA estimates that those upgrade costs would be significantly less than purchasing a brand new system.

If it is a close call between whether to upgrade or replace, the scale tips in favor of tank replacement. Installation of a new, state-of-the-art system will likely prove more cost effective over the long term, and will call for less monitoring and reporting compared to upgrading a pre-1988 system. In addition, under the EPA's "financial responsibility" requirements, tank owners must maintain insurance (or some other source of funds) to pay for the damages from a tank leak, and insurance costs less on state-of-the art tanks than on older tanks. Finally, a new system can buy greater peace of mind for owners and operators, who have less to fear that a release will raise the specter of increased compliance, enforcement, and litigation costs. However, upgrading may be a sensible and cost-effective compliance solution for tanks that cannot be economically removed, such as those which are buried beneath basements or underground parking garages, or for businesses that may not be in operation long enough after 1998 to amortize the cost of a new system. To protect against petroleum spills, pre-1988 tanks that remain in use must have catchment basins added by December 23, 1998. A catchment basin is a bucket sealed around the fill pipe designed to catch product that may be spilled while petroleum is delivered to the tank. Basins vary in size, and a standard catch-basin can hold approximately 5 gallons of spilled product. Obviously, a larger basin provides greater spill protection, but some engineers fear that basins with more holding capacity increase the risk of fire. The EPA regulations do not specify minimum design standards for basins, but require that their size must be sufficient to catch spills and prevent petroleum releases into the environment.

Overfill protection. Another common form of UST-related contamination arises when delivery hoses are not shut off in time. In this case, tanks are filled to their maximum volume, and then catchment basins are filled beyond their capacity. The EPA's regulations require that pre-1988 tanks remaining operable must be upgraded with one of the three main types of overfill protection devices: (1) automatic shut-off devices; (2) overfill alarms; or (3) ball float valves. If a system never receives more than 25 gallons of product at a time, then it is exempt from the requirement that overfill devices be installed.

Corrosion Protection. Corrosion protection is the third upgrade requirement that must be installed for tanks to remain in service. It is the most costly upgrade requirement confronting owners and operators as they strive to meet the deadline. However, corrosion protection need only be added to pre-1988 steel tanks. Older systems made of noncorrodible materials, such as fiberglass, do not require the addition of corrosion protection.

Corrosion results when damp soil and subterranean moisture come into contact with metals. The combination causes an underground electric current that destroys metallic surfaces such as steel; most older USTs are made of bare steel. Corrosive processes wear away the tank's surface and create holes through which petroleum leaks. To satisfy the requirements, UST owners and operators must choose one of the following options for adding corrosion protection to existing steel tanks: (1) add cathodic protection; (2) add an interior lining to the tank made of a noncorrodible material; or (3) combine the first two methods. Furthermore, if piping is made of metallic material, owners and operators must supply corrosion protection to those lines as well.

  • Cathodic protection. Cathodic protection reverses the electric current that causes corrosion. If only cathodic protection is added, the owner or operator must also satisfy EPA regulations to ensure that the UST system itself is structurally sound, and that regardless of corrosion, product will not leach into soils and groundwater from some other means.

    Once it is shown that the UST system is structurally sound, the cathodic protection can be installed in the tank. The EPA's regulations require that a qualified cathodic protection expert design, supervise, inspect, and install the corrosion-prevention mechanism. After the protection is installed, occasional tests and inspections are required, as well as accurate and frequent record-keeping.

  • Interior lining. A tank owner can avoid adding cathodic protection and choose instead to add an interior lining to the UST. This requires that the steel tank be lined with a thick layer of noncorrodible material, such as fiberglass. Should owners or operators elect to use this form of corrosion protection alone, they must undertake periodic internal inspection to ensure that the lined tank is not leaking, and that the lining still meets original design criteria.
  • Combination of corrosive protection. The EPA's regulations provide that corrosion protection can be supplied by a combination of cathodic protection and the addition of an interior lining. This combination provides more protection against corrosion, and also eliminates the need for and costs of ongoing interior lining inspections. However, periodic testing still must be conducted to assess the soundness of the corrosion protection system.

Closing and Replacing USTs
Owners and operators have the option of closing UST systems that do not comply with the 1998 requirements. The EPA estimates that closure costs can run between $5,000 and $11,000, not including any required site assessments or remediation. After aging USTs are closed, owners and operators may then choose to replace them with new installations.

UST closure. In the Subtitle I regulations, the EPA provides a procedure for safely removing a tank system from service. The EPA issued these UST closure guidelines because a number of systems had been improperly closed in the past, resulting in releases of petroleum products into the environment. Under the EPA regulations, closure can be either temporary or permanent. It bears repeating, however, that mandatory city, county, and state requirements may vary and expand upon the federal regulations, so state program requirements must be consulted before a system is closed.

To effect a temporary tank closure under the federal standard, owners and operators must continue operation and maintenance of corrosion protection and release detection as outlined in the Subtitle I regulations. Product may remain in the tank during temporary closure. However, if the system is emptied, release detection is not required but corrosion protection must be maintained. Where the UST system is temporarily closed for three months or longer, the EPA requires that all vent lines be left open and functioning, but all other lines and pumps must be capped and closed.

Temporary closure is effective for only 12 months. After that time, the tank must be either permanently closed or upgraded. At the end of the 12-month temporary closure period, some jurisdictions that have assumed oversight of the federal UST program may grant an extension to continue temporary closure for an extra year. Should a tank owner opt to pursue this extension, it must perform a site assessment showing that the system has released no petroleum products into the environment.

Permanent closure contemplates that a system be removed from service so that it no longer holds a regulated petroleum substance. Owners and operators must notify the relevant environmental agency 30 days prior to the date of the UST's permanent closure. They must also conduct a site assessment to determine if contaminants have leaked into surrounding soils. If such contamination exists, a remedial cleanup may be required as part of the permanent closure process, depending on the extent of the contamination.

Permanent closure can be effected by one of two means. First, the tank must be emptied of all product, and all liquids and sludge must be cleaned and disposed of properly. The tank must then be either removed from the ground or filled with an inert substance such as concrete. Some jurisdictions require that permanently closed systems be excavated altogether. The office of the local building official or fire marshal, rather than the EPA or state environmental agency, is typically responsible for deciding whether a tank can be closed in place.

The second alternative for permanent closure is known as "change-in-service." This allows an owner or operator to continue using the UST system with a non-regulated, benign substance. As with other types of permanent closure, the system must be cleaned of all liquids and sludge, and a site assessment must be conducted. Generally, the site assessment will initially require two soil samples within the tank's "excavation zone." Based on the results of the soil tests, regulators may require a more comprehensive environmental study, including groundwater assessments. If tests reveal soil or groundwater contamination, the owner or operator may be required to fund a cleanup for the site, depending on the severity of the contamination. Closure reports must then be filed with the relevant regulatory agencies, and the owner must maintain files documenting the closure efforts for a specified period of time.

Once permanent closure is achieved, an owner or operator may decide to replace the pre-1988 tank with a new, state-of-the-art system. The new system must meet all federal and applicable state performance standards for UST installations. These performance standards generally include the same requirements necessary to upgrade an aging tank, including protection of steel tanks against corrosion, uses of tanks made of noncorrodible material, and spill and overfill protection for all tanks.

Advantages to Acting Early
While less than two years remain to satisfy the deadline, there are advantages to acting before the last minute. The likelihood of a tank leak will diminish the sooner an aging and corroding UST system is upgraded or removed. Therefore, tank owners can reduce their exposure to costly enforcement actions brought by environmental regulators, and protect themselves from litigation brought by neighbors suing because their adjacent properties were contaminated by a leaking tank. Additionally, demand for consultants and contractors will increase, and their fees may rise, as the deadline approaches. It may simply be impossible to engage contractors in the months leading up to December 22, 1998.

Some state agencies provide low-cost loans to tank owners to upgrade or remove USTs, and those funds may dry up by December 1998. Furthermore, some state programs have established reimbursement funds devoted to spill and leak remediation. Tank owners and operators may be ineligible to tap such funds if they fail to meet the December 1998 requirements. Indeed, these funds may become depleted as the deadline approaches.

Owners and operators must understand the logistics that are necessary to comply with the 1998 deadline. Upgrading or removing a tank does not happen overnight. Environmental regulators must review and signoff on all plans for closing UST systems, and other approvals may also be required from other state and local agencies. For example, in many jurisdictions, a local construction permit is needed before a tank is excavated. The necessary delays associated with procuring regulatory approvals must be factored into an owner's or operator's efforts to meet the deadline.

Finally, some tank owners who replace their old tanks are going to discover contamination from leaks, and will have to pay for cleanups. While some of those costs may be covered by insurance, and other costs may be reimbursable from state cleanup funds, many owners will have to pay for the entire cleanup from their own pockets. If those costs are high enough, owners may be left with insufficient funds in their budgets to both clean up and upgrade.

To ensure compliance with the upcoming deadline, EPA officials appear willing to speak loudly enough to notify tank owners and operators, and carry a big stick to use on those who refuse to comply. The agency and many states already have mounted outreach campaigns to notify the regulated community of the 1998 deadline. The EPA and the states also have vowed to implement an UST enforcement initiative this year. UST owners can face harsh consequences if they ignore the deadline or other UST regulations. Administrative orders and penalties, litigation, and field citations comprise the environmental regulators' arsenal in their charge to enforce Subtitle I requirements. The RCRA statute (and many state analogs) also allow an aggrieved citizen group or neighbor to institute a civil lawsuit against owners or operators in order to bring them into compliance with applicable regulations. Tank owners could find themselves as defendants in lawsuits if they fail to meet the upcoming deadline.

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