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Contaminated soil excavation is required at 88% of all heating oil tank sites.

Responsibility and Liability

Because tank ownership and cleanup responsibility is defined by the North Carolina Statues and by Federal law, ownership and responsibility is not necessarily "common sense."   

For example:  If I sold you a house with termite damage, once you bought the house … it is now your problem and I'm "off the hook."  It is the buyer's responsibility to protect themselves by having the home inspected to know exactly what they are buying.  With inspection information, buyers can negotiate repairs or offer a discounted price for the property.   

However, oil tanks are more similar to hazardous waste.  Every person that touches a hazardous waste (the generator, the transporter, and the waste disposal facility) is responsible for the waste until proper disposal is documented. 

 

Selling the property does not necessarily release the seller from the tank and cleanup responsibility. 

Property buyers may become responsible for the tank and contamination (even if they never used the tank and even if they did not know a tank was present on the property). 

Tank and contamination responsibility is further complicated by the "use history" of the tank. 

According to definitions established in Federal law and in North Carolina statutes, tank and cleanup responsibility is defined differently for two scenarios. 

1) For tanks in use on or after November 8, 1984, the "tank owner" (responsible and liable for the tank, contamination, and related impacts or damages) is any and all property owners.  By policy, the State pursues the current property owner to conduct the tank removal and any required contamination cleanup, but the State can hold any previous property owner responsible. 

Implications:

Buyer Beware! Once a buyer purchases a property, they are fully responsible for the tank/contamination even if they never used the tank, … even if they didn't know there was a tank on the property.  Buyers beware!

A property seller is not released from tank/contamination responsibility by simply selling the property.  Once you are a property owner, you remain a tank owner until the tank and contamination is brought into compliance. 

Every person who has owned the property remains responsible for the tank and contamination until the tank is properly removed, assessed for soil contamination, and cleaned up as required. 

Hazardous material may be in your own backyard.

This responsibility applies to everyone who legally owned or owns the property including mortgage companies (i.e. foreclosed properties), re-location companies, or other property holding companies.  Just like in a private law suit, the State may have to search for the "deep pockets" to conduct the required cleanup. 

Tank Removers Beware!  If you are a current property owner and you remove the tank without conducting a proper assessment or reporting to the State as required, you will forever be the last tank owner.  If contamination is discovered at a later date by a different party, you will be the person the State looks for to take cleanup responsibility.  Depending how the Trust Fund judges your actions during the tank removal event, you may be disqualified from receiving Trust Fund assistance.  However, you will be required to conduct contamination cleanup.  This could cost you $15,000 to $20,000. 

According to current State policy, the State requires the current property owner to comply with State and Federal regulations and conduct the required contamination investigation and cleanup.  However, if this person can not be found or is deceased or documents that they are unable to proceed, the State can enforce any and all previous property owners and require them to conduct the necessary tank removal and contamination cleanup.  Previous property owners may find themselves paying for a tank cleanup on a property they haven't owned for several years. 

Fines and civil penalties can be levied against responsible persons who fail to comply with the State's directives and cleanup requirements. 

(Please remember that being defined as a "tank owner" does allow a person to obtain Trust Fund reimbursement with a zero deductible.  Therefore, a current property owner who never used the underground oil tank may be defined as a "tank owner" and can qualify for the Trust Fund's zero deductible.  Please see our Trust Fund Page)

2) For tanks not in use on or after November 8, 1984, the "tank owner" is the last person that used the tank.  This last person to use the tank is legally responsible whether they still own the property or not.

Implications:

The last person to use the tank is forever, responsible for the tank and contamination cleanup.  This (previous property owner) tank owner never knows when a release may be reported to the State requiring cleanup.  Cleanup costs are going up and Trust Fund coverage is going down.  Cleaning up later may cost more than cleaning up sooner. 

Because this "tank owner" (previous property owner) is the only one who can qualify for the Trust Fund's zero deductible, any person who is forced to deal with the tank and associated contamination is going to be looking for this previous property owner.  In fact once the State is notified of the release and is shown the identity of the "tank owner," the State may also search for the previous property owner who last used the oil tank. 

The previous property owner / "tank owner" can grant a limited power of attorney to the current property owner which enables the current property owner to access the Trust Fund with the zero deductible.  When this "tank owner" is deceased and their estate is closed, it may be very difficult for anyone to qualify for the Trust Fund with a zero deductible.  If this describes for your property, the only way to obtain the zero deductible may be to reopen the estate and for the estate to "conduct" the tank removal and required contamination cleanup.  The estate will have to apply directly to the Trust Fund for reimbursement.  An estate can not grant a power of attorney to another party. 

The buyer (current property owner) may not be buying legal responsibility for the tank and contamination, but they may still have to deal with the tank when it is their turn to sell the property.  Furthermore, if the tank contamination causes damages to irrigation wells, underground utilities, or other items, the buyer (current property owner) could still be exposed to third party law suits.  (Other State and Federal regulations can require a property owner to clean up petroleum contamination on property that they own.) 

Although the buyer (current property owner) does not become legally responsible for a leaking tank on the property, they will have a more costly situation if contamination is discovered.  For this tank scenario, the buyer (the new property owner) can only access the Trust Fund with a $5000 deductible plus 10% of costs after $5000.  This could drive the total out of pocket expense to approximately $6000 plus tank removal costs (~$1900) plus consultant costs above the amount that will be reimbursed by the Trust Fund.  A general estimate for this total out-of-pocket cost is approximately $11,000.

Leaking fuel oil can contaminate irrigation wells exposing you and neighbors to harmful contamination.

Because of this high cost, the current property owner has a high incentive to find the "last person to use the tank" and have this previous property owner assist in the cleanup.  The person who last used the tank is ultimately responsible (financially and legally) for the tank and any necessary cleanup. 

If a current property owner discovers a leak for the tank, they could simply identify the last tank owner to the State and then the State may legally pursue that last tank user.  Therefore, if you were the last person to use the oil tank, you will forever be solely responsible for that tank until cleanup is completed according to State regulations. 

Private law suits could also be brought against the "tank owner" (previous property owner) when the person suing (current property owner) believes that they have been damaged by that "tank owner."  As the non-reimbursable costs increase on contamination cleanup projects, law suits may become more advantageous for current property owners to pursue. 

(Please be aware: other State statues and regulations can require a land owner to cleanup a contamination problem regardless of tank ownership.) 

3) For tanks where the last use can not be documented.

The State may not force any party to take action.  However, if the next property buyer or their realtor understands issues surrounding oil tanks, the new buyer may force the current property owner (seller) to take action regardless of Trust Fund coverage. 

Any property owner can access the Trust Fund as a "property owner."  Currently, persons applying to the Trust Fund as a "property owner" are subject to a $5000 deductible and a 10% co-pay for all additional cost above the $5000 deductible.  Typically this cost will be in the $6000 to $7000 range.     

Solution for Buyers: remove tank and investigate for petroleum contamination before buying the property.

Solution for Sellers:  remove tank and investigate for petroleum contamination before selling the property.

The only way for a current property owner (seller) to end their liability for an underground storage tank and contamination is to have the tank removed and carefully check for petroleum contamination.  The Trust Fund can be accessed to assist with the cleanup cost and the situation can be resolved. 

This is also in the best interest of the property buyer.  Once a tank is removed from a property and a release is reported to the State of North Carolina, responsibility remains with the seller even after a property sale. 

88% of all homes built before 1975 (particular those built from the mid 1940's through the 1960's) have a leaking tank petroleum contamination problem.  That's just the reality of these properties. 

If you own one of these properties, the best you can do is resolve this contamination problem while you have financial assistance from the Trust Fund and before you are trying to sell the house. 

If you are a buyer of this type of property, you can require the seller to remove the tank and to conduct a thorough contamination assessment.  If contamination is found, the seller must report these findings to the State and take cleanup responsibility.  This limits the buyer's legal liability. 

Please realize that not every company who can remove an underground oil tank is qualified to assess for contamination.  The State requires a licensed professional to conduct the assessment. 

Practical Environmental Solutions has over 20 years experience with underground storage tanks and has removed over 200 tanks in the Wilmington area since 2001.  We are licensed, fully insured, and offer free, no-obligation estimates.

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