The bell tolls: Many retailers will miss the EPA tank compliance deadline

By Jim Bishop

Petroleum marketers who have been living on another planet since the 1980s may be surprised to learn that the 10-year-old deadline for complying with the U.S Environmental Protection Agencv's new underground storage tank (UST) regulations is at hand. However, according to EPA, even being absent from Earth for the last decade is not a valid excuse for missing the Dec. 22 compliance target, and violators should be prepared to pay dearly.

Dec. 22, 1998: It's history

In the 1980s, about half of the nation's drinking water had its source in groundwater, as it does today. Protecting this water supply is what the UST rules are all about. When the new regulations were issued in 1988, EPA estimated that there were up to 2 million petroleum USTs in the ground and that at least half were leaking and threatening groundwater resources. The agency issued the current UST regulations in 1988 under authority of the 1984 Hazardous and Solid Waste Amendments to the Resource Conservation and Recovery Act

(RCRA). Today, EPA says, there are about 1 million active petroleum USTs nationwide. About half of these are located at retail service stations, while the rest serve various commercial, government, agricultural and institutional facilities, including hospitals, fire stations, vehicle fleets and other operations. More than 1 million USTs have been closed since the UST rules were issued in 1988, and nearly 200,000 leaking UST sites have been cleaned up, the agency says.

EPA set an unprecedented 10-year deadline for compliance with most of the UST rules out of recognition that they would be costly to meet and could require substantial financial sacrifices for some UST owners. However, parts of the regulations were assigned an earlier compliance date in the interest of achieving better protection for groundwater as quickly as possible. Thus, USTs installed before December 1988 were required by December 1993 to have an approved leak-detection system. Once in compliance with this rule, such tanks can use the approved method for 10 years after upgrading. On the other hand, USTs installed after 1988 are required to use one of several approved monitoring methods.

As of Dec.22, all petroleum USTs must be equipped with approved spill and overfill protection devices which include a catthment basin and either an automatic shutoff device, an overfill alarm or a ball-float valve - and corrosion protection for the tank and its piping (see box). Fiberglass, steel coated with noncorrodible material or steel coated with corrosion-resistant material and equipped with a cathodic protection system are acceptable tank and piping materials. After Dec.22, existing tanks that have not been closed, replaced or upgraded to meet these requirements will be in violation of the regulations. In addition, any USTs that have leaked typically will be required to meet RCRA's UST corrective-action regulations, which may require tank closure and site remediation.

The next chapter: Beyond 1998

Although the UST rules are relatively simple compared to other environmental regulations, EPA appears to take them very seriously and seems prepared to enforce them to the hilt. EPA Administrator Carol M. Browner, in a May 1997 memo intended for tank owners and operators as well as enforcement personnel, emphasized that the agency

"will not extend the ... deadline and state, local, or tribal governments do not have the authority to extend the deadline" Browner and EPA staff have restated this position on several occasions, and it was reinforced further last December when the agency staged a joint press conference with state environmental officials and representatives of petroleum industry and marketing groups to express their unanimity in holding to the deadline and imposing harsh consequences on violators. The theme was repeated in August, when EPA officials reiterated that violators would be given neither leniency nor a grace period to correct violations. Penalties for noncompliance, which become progressively higher over time, are calculated by a formula making them retroactive to the deadline and may range up to $11,000 per day per violation.

Despite EPAs hard-line stance on enforcement, substantial numbers of marketers apparently could not or would not meet the deadline, in most cases probably for economic reasons. According to ongoing research conducted by Havill Consultants of Toledo, Ohio, as many as 92,000 facilities may still have tanks that will not meet the requirements on Dec.22. About 50,000 of the projected noncompliant sites are retail (independent oil and convenience store) facilities and the remaining 42,000 are industrial/commercial fueling facilities. (Major oil company facilities - about 32,000 in all - are virtually in total compliance with the regulations, according to the research.) These figures - based on Havill's benchmark studies of planned UST upgrades and closures in the retail and industrial/commercial fleet markets conducted periodically since 1993 (see accompanying tables) - suggest that large numbers of retailers currently are facing closure of their tanks or businesses, or both.

According to Havill's previous research findings, up to 11,000 retail facilities and 25,000 industrial/commercial facilities may dose because compliance costs in relation to gasoline throughput and other economic factors are too high to bear. Comparing results from Havill's 1998 research and its previous studies, it is clear that numerous retailers who earlier reported plans to upgrade, replace or close tanks to achieve compliance changed their minds or could not accomplish the task, says Tamara Guzowski, project manager for the study. However, she notes, "the number of retail facilities that are reported to be out of compliance are not necessarily completely out of compliance with each regulation. Our research found that many (noncompliant) retail facilities were in compliance with some of the regulations; however, they were all not in full compliance."

If there is a silver lining on the other side of this cloud, it is for marketers that have remained in the game and can take advantage of some of the opportunities it offers. Compliance in the industrial/commercial sector is higher than in the retail segment, Guzowski notes. "Many privatelv owned [industrial/commercial] UST5 have been closed since 1989," she says. "In fact, the present private UST population is only 44 percent of the population that existed in 1989.... The closing of 2,998 retail and private facilities this year will present opportunities for marketers, both from the possibility of acquiring private facilities and from increased demand for fuel from retail facilities. As a result of decisions by private fleet operators to close their facilities and refuel offsite, the 1995 study estimates that potentially 5 billion gallons of fuel will be available to retail marketers."

Failing to meet the Dec.22 deadline undoubtedly will have varying consequences for petroleum retailers, depending on such factors as geography and agency resources. EPA officially places a high priority on state enforcement of UST regulations wherever possible, although the agency says it is ready to step in if states are unenthusiastic about the task or if state resources will not bear the enforcement burden. (Only half of the states have EPA approval to operate their own UST regulatory programs.)

Source: Havill Consultants

Stopping the dock

The last thing owners of noncompliant facilities should be thinking about is waiting to get caught by EPA or state authorities. In fact, in many states, such as California, the point is moot, because suppliers effectively will be barred from delivering fuel to noncompliant USTs without incurring penalties themselves, and at least one major oil company has said it will refuse to make such deliveries, even in states where no such regulations are in force.

For some marketers who have missed the deadline, temporary closure of noncompliant tanks will offer the most reasonable solution, short of permanently closing their businesses. This option, while it has its own costs and takes tanks out of service, at least can put the enforcement clock on hold while decisions about continuing in business are made. Whatever those decisions may be, tank owners will be forced to face the fact that noncompliant tanks must be replaced, upgraded or closed properly to stop the enforcement clock permanently.

According to EPA, a tank may be closed temporarily for up to 12 months as long as the tank owner continues to monitor for leaks by maintaining leak detection and monitors and maintains any corrosion-protection systems. (Leak detection is unnecessary if the tank is empty.) If a release is discovered during temporary closure, the owner or operator must stop the release, notify the appropriate regulatory agency and clean up the site. If a tank is closed temporarily for more than three months, vent lines must be left open, hut all other lines, pumps, manways and ancillary equipment must be capped and secured.

After 12 months of temporary closure, tank owners have three options:

· Permanently' close the tank if it does not meet the regulatorv requirements (except for spill and overfill protection);

· Provide the regulatory authority with an assessment of whether contamination exists at the site and ask for an extension; or

· Leave the tank closed without requesting an extension if the tank meets requirements for new or upgraded USTs (except for spill and overfill protection), as well as temporary closure requirements.

Retailers who decide to close their tanks permanently' must:

· Notify' the appropriate regulatory authority at least 30 days before closure occurs;

· Determine whether the tank has leaked and caused contamination to soil or groundwater and, if so, prepare to rake corrective action (if contamination has occurred, a record of actions taken to determine its existence must be kept for three years or submitted to the regulatory authority); and

· Empty the tank and remove all liquids, dangerous vapor levels and sludge, then remove the tank or fill it with a chemically inert solid, such as sand, and leave it in the ground (these procedures should be performed by a trained professional).

The information contained in this article is not intended to be a substitute for official guidance. Additional requirements may' apply in some states. Before choosing and carrying out any option, owners of noncompliant tanks should contact the appropriate state agency or regional EPA authorities and follow specified procedures for replacing, upgrading or closing their tanks. One of the best and most comprehensive sources of information is available on EPA's Office of Underground Storage Tanks site on the World Wide Web at http://www.epa.gov/swerust1 (choose the button marked "1998 Deadline"). This site includes links to information on specific state UST regulations. For additional information and to order EPA guidance on all aspects of compliance with the UST regulations, call EPA's RCRA/Superfund Hotline at (800) 424-9346.