Failing an Underground Oil Tank Test

Fuel oil dealers primarily respond to change by reacting to competing market forces. First it was the COD discounters, then it was the gas companies and we reacted to each in kind. Now with the underground tank subject looming, dealers are again buffeted by forces that affect our markets. Will we react as before or will we promote programs to derail threats? In New York and New Jersey, The Homeowner's Environmental Loss Protection Program
set a precedent, becoming a valuable tool to thwart gas conversions, but more tools are needed, especially to lug the uncontrollable leak of accounts that occur at the time of a
property transaction.

As vice president and founder of Annis Fuel Oil Service (AFOS), in the early 1980's I recognized underground oil tanks as an area of opportunity. With passage of the New Jersey Hazardous Substance Storage Act and amendments to the Spill Act, tank work began to overlap with environmental science. Four years of college chemistry paid off. While spinning off ANCO Environmental in 1991, I remained loyal to my oil industry beginnings. As a small oil dealer I am sensitive to the
threat UST hysteria poses. With diplomacy I market UST services to local fuel dealers who otherwise compete with my family's oil company. Instincts say deny or minimize the UST problem. But the distant environmental storm is looming and must be addressed. Our
customer's financial interests are at stake and they seek leadership. Fuel dealers must address and deflect the public relations damage caused by leaking underground tanks, learn how to select an appropriate tank test, define the true adversary behind the oil tank debacle and finally, find solutions. I hope the material presented herewith will help in these areas, and prevent the loss of oil heat customers to other forms of fuel at the point of real estate transfer. As both of my companies operate primarily in New Jersey, many references are made to New Jersey Department of Environmental Protection (NJDEP) regulations. These regulations may be mirrored by similar regulations in other states. Check your state Environmental Protection Department for specific regulations governing your area.

Misinformation

The gas companies have spearheaded marketing campaigns implying that oil heat causes underground pollution. Our observations support the opposite conclusion. Statistically more remediation projects involve abandoned or improperly closed tanks than active tanks. Homeowner insurance policies decline most UST pollution claims, therefore the leaking tank owner who converted to gas heat finds himself in a greater bind today than he who stayed with oil. But where the gas heated homeowner gets stuck with the remediation bill the oil industry shoulders the negative fallout. To win the public relations game, it behooves the fuel industry to deflect the problem. Redirect the emphasis from 'oil heat' to 'underground tanks,' and take a proactive stand.

A fuel oil account is most vulnerable at the point of a property transaction. Tank testing and site certification is becoming more commonplace. Driven by liability concerns and the 'due diligence' audit requirement defining the innocent purchaser, buyer's attorneys secure their client's the right to test around an oil tank. Due largely to public misconceptions, this mechanism will continue to bash oil heat far into the future.

Know Your Adversary

Recently a fuel dealer told me "...it's the lawyers. They've blown this out of proportion." Others say it's the gas companies, or the gas heating contractors, or the Realtors, or the yank-a-tankers. All these parties are a vocal reaction to the true, silent adversary; corrosion. Low pH soils coupled with a high water table enable a high ion exchange rate with the tank. Non homogenous backfill concentrates the resulting electrochemical reaction at points of greatest electrical conductivity. Therefore, soil particles with conducive mineral content or construction debris that touches the tank completes the corrosion circuit. Over time, this reaction dissolves a hole into the tank. Laws of chemistry and physics are accelerated by poor construction practices. This is the underlying force behind the tank problem.

If we look at the history of environmental regulations, the foundation was the 1977 Federal Clean Water Act. This legislation focused on industrial polluters. In 1984 with the passage of the New Jersey Environmental Cleanup Responsibility Act (ECRA),
regulation-driven liability made the presence of an UST a headache for industrial property owners. This was the distant thunder of today's UST debacle. Stricter industrial environmental regulations have trickled down to residential situations.

In June of 1993 ECRA was amended and renamed ISRA, Industrial Site Recovery Act. Many positive changes made the regulations more "user friendly", and even compassionate with the creation of a spill fund. Virtually unnoticed in these amendments, however, was a companion change to the Spill Compensation and Control Act (Spill Act), introducing a principle significantly affecting all current and future owners of real property in New Jersey. The new principle promulgates that future owners of polluted property are liable for contamination they did not cause. The potentially devastating language of this amendment makes buyers responsible for any discharge of a hazardous substance unless they can satisfy certain criteria: