Underground Storage Tanks: Regulations, Requirements and Expectations

by | Oct 19, 2017 | Assessments, EPA, Guides

UST Regulatory History

In 1984, Congress directed the United States Environmental Protection Agency (EPA) to develop regulations for Underground Storage Tanks (UST) containing petroleum. The EPA issued federal regulations, effective December 1988, that delegated UST regulatory authority to State Program Approval (SPA).  State UST regulatory programs were required to meet federal UST regulations; however, many states developed programs that were more stringent than the federal regulations.

In the July 15, 2015 edition of the Federal Register, the EPA published the first major revision to the federal UST regulation issued in 1988. The 2015 UST regulation and SPA regulation enhanced the 1988 UST rules with the addition of new operation and maintenance requirements for UST equipment.  The revised regulations are intended to help prevent and detect releases from UST systems and ensure that all USTs in the United States meet the same minimum requirements.

Changes to the regulations included specific additions to the following original UST requirements:

The changes also included removal of the 1988 deferrals for emergency generator tanksfield constructed tanks, and airport hydrant systems; updated codes of practice; and provided some editorial and technical corrections to the original UST regulatory requirements. As of March 2017, 38 states (in addition to Puerto Rico and the District of Columbia) had EPA-approved programs and the lead role in UST regulatory program enforcement. These states have three years to reapply in order to retain their SPA status.

What does all this mean to the Bank?

An Overview of UST Due Diligence Information Reviewing UST compliance documentation can be an intimidating task, but should be conducted as part of the bank’s environmental due diligence process.   If USTs are located on a property proposed as collateral for a loan, the bank will want to know that the UST system is not leaking, the leak detection system is working properly, and the system complies with the requirements set forth by the state. As mention above, in states that do not have an approved UST regulatory program, the UST system must comply with the federal EPA UST regulations. Depending on the use of the UST system, multiple components such as USTs, product lines, fuel dispensers, sumps, line leak detectors (automatic or electronic), various sensors, cathodic protection, vapor recovery, etc., may be present.

Monthly leak detection records, tank tightness and line tightness test results, annual compliance inspection results, regulatory agency inspections, as well as any previous Phase II subsurface investigations completed near the UST system should be reviewed.  The type of monitoring methods used for the UST system and state requirements will dictate the necessary testing.  However, the bank may require additional integrity tightness testing (tank tightness and line tightness tests) to ensure petroleum releases from the UST and associated piping have not occurred.

Depending on the age of the UST system and/or the test results and compliance documentation submitted, the bank may also require a Phase II subsurface investigation to determine if a release has occurred. This Phase II investigation will include sampling around the USTs, dispensers and lines. Although equipment and various tests have been developed to aid in the detection of leaks from UST systems, very small leaks in the system can occur that are not detected by the monthly leak detection or annual compliance testing.

Over a long period of time, these small, undetected leaks can result in soil and groundwater contamination.  Therefore, it is common for banks to require a Phase II subsurface investigation for UST systems that are older than 10 to 15 years when a recent Phase II has not been conducted.  In addition, since leaks can also occur from non-regulated UST systems, such as heating oil USTs and some farm USTs, banks generally require similar information and assessment for these USTs.

It is also important to note that due to limited funding or an insufficient number of UST program inspectors, annual UST compliance inspections are not always conducted by state regulatory agencies.  In many states, the issuance of a permit is not an indicator that the UST system is not leaking or that the UST system is in compliance with the regulatory requirements.  Since many states use a self-reporting system for compliance, as long as the required documents and the associated permit fee is submitted to the regulatory agency, the UST operating permit is issued.

Conducting the appropriate due diligence on proposed collateral containing UST systems should include review of documentation related to the integrity and compliance status of a UST system and documentation related to the likely presence or absence of contamination. This will enable the bank to be better informed of any potential risks and anticipated challenges associated with the collateral property and assist the bank in making a lending decision.