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Oil Tank Liability

Take Steps to Prevent Costly Leaks

Article written by Jack Carr, P.E., R.S., LEED AP, Criterium Engineers
Published in Condo Media, December 2013

Concern for condo fuel storage safety and liability significantly jumped in New England this year after a massive propane gas explosion leveled a condominium building in southern Maine killing one of its occupants and seriously damaging nearby condo units. As dramatic as this gas explosion was, from a liability point of view, it is dwarfed by the quantity and widespread damage caused by 500 leaking oil tanks in Maine each year.
Though fuel types are rapidly changing in Maine, with condos switching to propane and natural gas as well as electric heat pumps and wood pellets, seven of 10 Maine homes are still heated by oil. Adding to the potential of oil leaks is Maine having the sixth oldest housing in the nation, meaning the oil heating systems - including the tanks - are similarly aging. The majority of leaking tanks are located outside raising the liability of ground contamination even higher.
This presents condo boards with incurring potential liability for groundwater contamination on its common land from a leaking unit owner's tank. When these leaks are reported, the state's Department of Environmental Protection (DEP) steps in and controls the mitigation efforts. In 2011 and 2012, the costs for groundwater cleanup after a fuel oil spill was $2,316,389 and 51,201,866, respectively. Serious leaks can cost 540,000 to $50,000 to remove the Contaminated soil and return the groundwater to its original condition.
Low-income homes experiencing a serious oil leak can receive financial assistance for these cleanup costs from a groundwater cleanup fund established in Maine from a small fee on heating oil sales. In this respect, Maine is well ahead of Massachusetts, which does not have a dedicated fund for home heating oil spills. If the homeowner can't afford the cleanup work, Massachusetts' Division of Response and Remediation steps in and places a lien on the property to recover the costs.

10-Point Inspection Program

So what should a condo board do to reduce this potential liability? Maine has no state permit for tank installation or a requirement for oil tanks to be inspected or monitored. It is up to the board to remind unit owners to have their service companies inspect the oil tanks on each service call. The building committee may be tasked to inspect all outdoor fuel tanks for the two most serious causes of leaking tanks - namely, corrosion and physical damage to outdoor tank's fuel filter from falling ice.

Other Steps

States are trying to incentivize homeowners to bring their tanks up to code. In New Hampshire, where 150 oil spills occur per year, owners have until 2015 to bring their tank installation up to code or they ,will have less access to New Hampshire's groundwater cleanup fund. Massachusetts recently enacted a law requiring homeowners to upgrade their tank installations with oil safery valves and insurance companies offer an optional coverage for oil leak damage.
Some Maine oil dealers offer their customers an optional "TankSure' program, which uses sound waves to measure the thickness of the tank in key places during the normal annual service visit. The program acts like an insurance policy as the $55 annual fee will earn $1,000 toward a tank replacement, if needed.
Though the basic 250 gallon steel tank is still the norm in the industry and meets most plumbing codes, many states are encouraging the use of the new double wall tanks with a polyethylene inner shell and a galvanized sheet metal outer jacket designed to contain leaking oil and signal when a leak has occurred.
Oil leaks are preventable, but they can be very expensive when they do occur. To paraphrase an old saying, "An ounce of prevention is worth an oil barrel of cure."