Proper tank management

Feature Story

Inspection, testing, maintenance, repair and replacement are the ways to reduce liability

by jonathon r. black, esq.

A recurring question facing fuel-oil dealers is how to approach the issue of the homeowner’s fuel-oil storage tank. Some oil dealers accept responsibility for maintaining and servicing the oil tank in their maintenance contract, while others attempt to exclude responsibility for the tank. Some oil dealers prefer to ignore the customer’s oil tank altogether out of a fear that they may face increased liability if they offer to service the storage tank along with the heating system.

There are right ways and wrong ways for the home heating oil dealer to approach the oil-tank issue and it has never been more important than now to get this right.

The main obstacle for some dealers is the misconception that proper tank management practices may actually increase the oil dealer’s environmental liability. We know that there are circumstances that result in oil dealer liability when oil spills occur from mishaps. These sudden and accidental spills are very different, however, from the type of release that occurs when a tank starts to leak due to corrosion or fails due to thinning. The real question is how should the dealer approach the homeowner’s fuel-oil storage tank so as to minimize his liability while providing a meaningful and much-needed service to the homeowner?

Ignoring the tank is not a solution. This approach does not work from a liability perspective and it certainly does not work from a quality-of-service perspective.

Fortunately, the model for effective tank inspection, testing and maintenance has existed in the commercial sector for decades. This proactive approach recognizes that tank inspection, testing, maintenance, repair and replacement are the proper ways to reduce liability. Engineering and tank management standards have been established in virtually all industries that handle, store and convey fuel oil or other potentially hazardous materials.

Regular inspections, at appropriate intervals, and data gathering are key to any effective proactive tank management program. Inspector training is one of three critical elements in the process. The other two elements involve developing the tank repair or replacement data and implementing a system that translates the tank data into real corrective action.

Recognized and accepted tank testing and inspection methodologies, such as those developed by the American Petroleum Institute and the Environmental Protection Agency, include inspection, testing and record-keeping guidelines. Ultrasonic tank testing, for example, has been applied in a variety of industries that own or operate aboveground storage tanks and pipelines. By using a proactive ultrasonic tank testing approach, the oil dealer can develop real-time information about the condition of his customer’s tank. This tank test information can be utilized to recommend replacement before the homeowner or oil dealer has to deal with the consequences of a leaking tank.

The tank data resulting from tank tests and inspections form the foundation of an effective tank management program for the oilheat industry. Such proactive tank management programs make as much sense for the oilheat industry as they do for the other industries that have improved their business processes, customer service, and reduced risk and liability by implementing these programs.
Equally important, the oil tank has been targeted as an issue by competing energy sources, such as natural gas, in marketing campaigns against oilheat. Dealing effectively with the oil tank can actually create opportunity for oil dealers who want to retain and expand their customer base and reduce their liability.

The liability associated with managing the customer’s oil tank, and the perceived competitive disadvantage of oil tanks, can be mitigated by the oil dealer. Implementing logical and proactive ‘best practices” programs in managing customers’ oil tanks are an essential step forward. This is what is required of most industries that store and handle hazardous materials. Doing nothing or adopting a ‘leak-first” program can actually create liability and does little to improve the competitive position of the oilheat industry or to improve the relationship with the homeowner after a leak occurs.

Oil dealers should consider inspecting, testing and replacing oil tanks and other components of the heating system that need repair or upgrade. The technology, engineering standards, and overall inspection and record-keeping processes are established and have been successfully utilized in similar applications in many industries. Dealers should also adopt a pre-inspection process before delivering oil to a new account.

Taking the right step and providing real solutions to the homeowner by offering an effective tank inspection and maintenance program is not difficult. It is simply a matter of adopting a tank management program that gets to the oil tank before the tank gets to the oil dealer, or the customer.

Jonathan R. Black, Esq. has over 25 years experience in environmental and contract law and served as senior vice president and general counsel for one of the largest environmental services companies in the country for over a decade. He is currently in private practice and prepared the warranty and terms and conditions for Boston Environmental’s TankSure Program. These documents protect the oil dealer. He can be reached at (781) 740-4250 or at jonathan.black@lawyer.com.