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Underground storage tank update.

Underground Storage Tank Update Millions of underground storage tanks (USTs) exist in the United STates. They vary in age, but many are old. The Environmental Protection Agency (EPA) estimates that 25 percent or more of all underground tanks have corroded and are leaking gasoline, oil, and other hazardous substances into the groundwater. This condition creates a significant environmental problem because more than half the people in the United States obtain their drinking water from groundwater wells.

To correct existing groundwater pollution and prevent further problems, Congress amended the Resource Conservation and Recovery Act (RCRAE) to create a comprehensive plan to regulate USTs. Under the authority granted by RCRA, the agency issued regulations in 1988 designed to gradually upgrade all regulated USTs within 10 years.

One important RCRA deadline is already upon us--the requirement that owners and operators of USTs in place before 1970 install leak-detection equipment by December 1990.

RCRA also allows states to enact laws regulating USTs so long as they are at least as strict as RCRA. Many states are presently drafting their own technical regulations to require leaf-detection equipment. However, until state regulations are adopted, only the federal regulations apply. Some states, such as New Jersey, have already proposed technical regulations that will require the installation of leak-detection equipment on a much quicker timetable than the EPA regulations.

The December 1990 deadline to install leak-detection equipment for certain USTs may require those who presently own or operate USTs, or who intend to become owners or operators in the near future, to decide whether to keep the USTs and pay to bring them into compliance or to remove them from the ground. Either decision may be costly.

Upgrading an existing

single-wall tank

EPA regulations define a tank "owner" as any person who owns a UST system, unless the USTs were taken out of use as of November 8, 1984, in which case the "owner" is the person who owned the tank immediately before the discontinuation of its use. The "operator" of a UST is any person in control of or responsible of the daily operation of the tank system. The definition might include property managers.

To upgrade an existing single-walled petroleum UST, the tank must be:

* protected from corrosion (unless it is a fiberglass tank),

* retrofitted with spill and overfill protection devices, and

* retrofitted with a leak-detection device.

To protect a UST from corrosion, the tank must be fitted with sacrificial anodes. Basically, these anodes are small pieces of metal attached to a bare steel UST and provided with an electrical current. Since tank corrosion is caused by electrical imbalances, sacrificial anodes are designed to attract that electrical imbalance so that the anodes corrodes instead of tha tank.

The new EPA regulations will not require corrosion protection on existing USTs and piping until December 1998, although some state regulations may require it sooner.

Environmental contamination may occur when USTs are overfilled product is spilled. To protect against such accidents, the tank must be retrofitted with either an automatic shut-off device or an alarm indicatimg that the tank is approaching 90-percent full. The tank fill pipe must also be fitted with a catch basin or berm designed to contain a spill or overfill. Some catch basins are actually designed as part of the tank and permit spilled product to be funnelled back into the tank.

The most common automatci shut-off valve is a floating ball inside the tank which rises as the tank is filled and plugs the tan's air vent when the product in the tank approaches the top, thus preventing further filling.

Spill and overfill protection devices are not required to be installed until December 1998, although somw state regulations may require installation sooner.

The goal of the EPA regulations is to upgrade all existing USTs and piping on a phased-in schedule so that existing USTs will allh have leak-detection devices installed on the tank and its piping by 1998. The 10-year phase-in schedule is designed to upgrade the leak-detection equipment on the oldest tanks first. The schedule is as follows:

Leak-detection options

A leak-detection device is the most expensive piece of equipment required to be installed in order to upgrade an existing single-walled tank. The EPA regulations permit leak detection to be done either externally or internally.

Existing tank owners and operators who must upgrade and install leak-detection equipment pursuant to the new regulations have the following options with regard to installation of internal or external leak-detection devices:

* monthly analysis of a ground-water sample,

* monthly analysis of a vapor sample,

* daily automatic tank gauging,

* monthly manual tank gauging plus an annual tank-tightness test,

* monthly manual tank gauging plus tank-tightness testing every five years (if the tank already has corrosion protection and spill/overfill protection).

A leaking UST can be detected externally by either grounwater monitoring wells. A ground water monitoring well is a 4-to-5-inch-diameter well drilled through the soil and into the groundwater located next to the tank. (Approximate cost of a 25-foot-deep well is $5,000 to $6,000). The well is lined with casing perforated at the water table, capped, and locked. The purpose of the well is to determine whether any petroleum product has leaked from the tank. Pursuant to regulation, this check must be done at least once a month, but equipment is available that will do the job continuously.

A common method of monthly groundwater monitoring is to retrieve a groundwater sample from the well using a bailer and to submit the sample to a laboratory to determine whether a petroleum product is present. (Approximate laboratory costs are $50 to $1,500 per sample.) A less expensive technique is to lower a testing maker coated with a petroleum-sensitive paste into the well until it reaches the groundwater and then retrieve it. If it changes color, a tank leak is suspected, and further investigation is required.

Some equipment can continuously monitor the conditon of the groundwater. For example, a pressurized tube made of material that dissolves on contact with pertoleum, but not water, can be lowered into the well and left to sit on top of the water table. If petroleum impacts the palstic, it dissoves, releases the pressure inside the tube, and setts off an alarm.

Groundwater monitoring is nor a recommended method for leak dectection because by the time the leak is detected, it is too late to avoid cleanup expenses. The cost of remediating groundwater can be exorbitant ($53,000 to $100,000, or more).

Similar, to a groundwater monitoring well, a vapor monitoring well is also drilled into the soil near the tank. However, this well does not enter the groundwater zone. The casing is perforated from top to bottom. The purpose of the well is to determine whether the soil around the tank contains the vapors of product (e.g., gasoline) which might indicate a tank leak. This method does not woek well in tightly compacted soils or with tanks containing oil because oil does not give off enough vapor. (Approximate cost of a 10-foot-deep well is $3,500 to $4,500.)

A vapor well can be montiored by monthly sampling, either by hand or automatically. (Approximate cost is $75 to $500 per sample.) For example, each month the vapors in the well could be examined by hand using various "sniffer" instruments, such as a combustible-Gas detector, flame-ionization detector.

The alternative is to monitor the vapors in the well continuously using automatic instruments, such as a catalytic sensor, a diffusion sensor, or a metaloxide semiconductor. These instruments can be rigged to set off an alarm if product vapor is detected.

Vapor monitoring is not a recommended approach because again, by the time the leak is detected, it will be too late to avoid cleanup is required, the method may detect a leak before a groundwater cleanup is required, the soil contamination which will have already occured may be expensive to remediate.

The average cost to dispose of contaminated soil properly is approximately $100 per cubic yard. It is not unusual to have 400 to 500 yards of contaminated soil caused by a tank leak. In that case, the cost of removing that soil woul be $40,000 to $50,000--without including the cost to remove the leaking tank, to sample and analyze the soild, to install and operate a groundwater monitoring well (if required), or to hire an environmental consultant provide these services.

Internal leak-detection methods are tests designed to detech a change in the volume product in the tank over a certain period of time, which may indicate a leak. These methods i nclude daily inventory contol, manual or automatic tank gauging, and tank-Tightness testing. The probles with all of these methods is that by the time the leak is detected, there will be environmental contamination, which may need to be remediated at great expense.

With an inventory-control method, the product level of the tank is measured each day using a properly calibrated stick and reconciled with delivery receipts at the end of the month. If a loss is detected above a certain level set by EPA regulation, a leak is suspected.

Tanks of less than 2,000 gallons may use manual tank gauging. A measuring stick is used to dtermine the volume of product twice over a period of time, with no product removed during the interim (cost of the stick is $25 to $125). If the variaton between the beginning and ending measurement exceeds certain standards set by EPA regulation, a leak is suspected.

An automatic tank-gauging device, which can detect a 0.2 gallon-per-hour leak rate from any portion of the tank with 95-percent accuracy, may be installed. (Approximate cost of installing the device is $5,000 to $11,000.) This instrument is used in conjunction with daily inventory-control measurements.

Tank-tightness testing provides a "snapshot" of the integrity of a tank on the day the test is given. (Approximate cost is $500 to $1,000 per tank.) The machine used must be capable of detecting a 0.1 gallon-per-hour leak rate from any portion of the tank with 95-percent accuracy. The test is sperformed over a period of a few houes. The machine must be able to account for the effects of thermal expansion of the product, vapor pockets, tank deformation, evaporation, condensation, and other physical parameters of the tank and product.

Recently, 25 manufacturers of tank-tightness testing instruments voluntarily submitted their machines to the EPA for a product evaluation. The study concluded that only 3 of the 25 tank-tightness instruments evaluated were able to detect a leak rate of 0.1 gallons per hour or better with 95-percent accuracy. Nevertheless, the EPA concluded that the equipment from the other 22 manufacturers could meet EPA standards with only minor modifications. The EPA still strongly recommends the use of tank-tightness testing as a reliable leak-detection method.

If a leak is detected

EPA regulations require the owner and operator to report a suspected leaking UST to the state environmental agency within 24 hours of discovery and to take steps to ivestigate and confirm the leak by performing a tank tightness test. (State laws may require immediate notification.)

If the leak is confirmed, then corrective action will be required. Normally, the state environmental agency will supervise the cleanup effort. Many states will require the owner and operator to take soils samples, install a groundwater monitoring well, remove or repair the leaking tank, and remediate contaminated soil and groundwater. This cost is typically $30,000 to $100,000, but it can be much more.

Recommended approach

As discussed above, although internal and external leak detection is all that will be required by EPA regulations, those methods do not detect a leak until after the environmental contamination has occured.

Although not required by the regulations, there is a way to avoid that problem. That is to remove the single-walled tanks from the ground and replace them with double-walled tanks. Such tanks are equipped with a device, located between the two walls fo the tank, which sets off an alarm when ether wall has been reachedc. That way, if one wall leaks, the other wall prevents the product in the tank fro contacting the environment.

By taking immediate action, all that will have to be done is to repair or replace the tank. No environmental remediation is necessary. While removal of the old tank and installation of a new double-walled tank will be expensive, in many cases it may be less than the cost to retrofit a single-walled tank with leak-detection devices and, later, to clean up contamination caused by the ineffectiveness of those devices.

Dealing with USTs in

real estate transactions

While RCRA and state UST laws require owners and operators of USTs to comply with their provisions, UST issues must be addressed by those involved in the sale, purchase, or lease of real estate because those parties may become owners or operators as defined in the UST laws.

For someone purchasing a property on which tanks are located, an investigation of the tanks should be part of an environmental audit performed prior to closing. To be on the safe side, the purchaser should test the tanks for leaks and analyze the soil below the bottom of the tanks to determine if the UST has leaked in the past. The purchaser must also analyze the cost of upgrading the USTs to comply with EPA and state regulations, as these costs may be quite significant.

The contract should give the purchaser the right to cancel the transaction if the seller is unwilling or unable to demonstrate that environmental problems detected by the audit will be properly addressed before or after closing.

The seller of a property on which USTs are located should anticipate before a contract is signed that the purchaser will do an environmental audit, including an investigation of the tanks. To prevent the deal from being voided because of unfavorable audit results, the seller may want to investigate the tanks and correct any problem before beginning the negotiations with the purchaser.

For example, many sellers of properties with USTs which are not necessary for the use of the property have opted to remove the tanks before beginning contract negotiations. This action helps prevent a significant deal breaker from occurring.

A person or firm negotiating a lease to become a tenant at a property on which USTs are located needs to be concerned about acquiring liability protection for both leaking USTs and the cost to upgrade the tanks to comply with UST laws. The best protection for a tenant is to do an environmental audit that includes tank testing and soil sampling to determine the current condition of the site before signing a lease.

The lease should hold the tenant liable only for environmental problems created during its possession of the property. Further, the prospective tenant must analyze what needs to be done to upgrade the tanks and negotiate lease provisions that specify who will pay for and perform that work.

As far as UST issues are concerned, the owner's goal is to prevent UST cleanup and upgrade costs from impacting on the rate of return from the particular property. The lease should be drawn to make the tenant responsible for as much of the costs as possible. Ideally, an owner should do (perhaps at tenant's expense) an environmental audit of the property, including the USTs, at the inception and termination of the lease to determine what environmental damage has been cause by the tenant. By holding each tenant responsible for the damage it causes, the owner can best protect the investment.

Gordon C. Duus heads the environmental law department of Margolis Chase in Verona, New Jersey. After graduating magna cum laude from the University of Pennsylvania with a major in marine biology, he graduated with honors from the George Washington University Law School. He is admitted to practice in New Jersey, California, and the District of Columbia. Much of his time is spent counseling clients who are buying, selling, leasing or mortgaging real estate on compliance with the complex regulatory maze created by federal and state governmental agencies.

Mr. Duus has also assisted the developers of industrial, commercial, and residential real estate in obtaining the federal, state, and local permits needed to develop in freshwater and coastal wetlands, in waterfront and coastal areas, near streams, on floodplains, and in areas subject to riparian claims by the state.

Albert I. Telsey specializes in environmental law with the environmental law department of Maggolis Chase. Prior to private practice, he was a deputy attorney general in the Environmental Prosecutions Task Force within the New Jersey Division of Criminal Justice.

Mr. Telsey's time is spent counseling clients on compliance with environmental laws such as the New JErsey Water Pollution Control Act, right-to-know laws, underground storage tank laws, solid and hazardous waste management laws, and the Air Pollution Control Act. He also defends clients charged with violating environmental laws and handles insurance and bankruptcy matters involving environmental laws.
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No portion of this article can be reproduced without the express written permission from the copyright holder.
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Author:Duus, Gordon C.; Telsey, Albert I.
Publication:Journal of Property Management
Date:Mar 1, 1990
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