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Old 12-14-2011, 09:04 PM
 
Location: Princeton, New Jersey
223 posts, read 332,989 times
Reputation: 221
Default Underground Storage Tank Information

Hi all.

I've been surfing the forums again after a long absence and have seen many posts regarding Underground Storage Tanks (USTs) and their associated problems.

There seems to be a lot of confusion and lack of information regarding the regulations, timeframes, costs, etc. and since I am an environmental consultant in the State of NJ and I remediate USTs.... I figured I'd provide you guys with my knowledge. The following is the basic framework for a simple case, i.e. soil and small-scale ground water contamination.

I hope you find it useful. Sorry it's so long, but I'm trying to be thorough. PM me with any questions and I'll be happy to help you!

Most Important Things
1. Contract with a reputable company that is certified under the Unregulated Heating Oil Tank Program (UHOT) and sends licensed subsurface evaluators to conduct the work.
2. Get all the paperwork related to the UST removal. More details at the end of this monster.
3. If you have a question, ask. Make sure you understand everything, every step of the way.


Funding Sources and Issues

First, tank removal costs are typically always the responsibility of the homeowner. Some tank policies will cover the removal costs but they typically require the installation of another tank or other requirements you may not agree to. So count on the UST removal bill to be yours.

1. State Funding
Yes, the UST Fund, a funding source provided by the NJ Department of Environmental Protection (NJDEP), is no more. They still accept applications, but these will be approved first come, first serve and when funds become available. You should read this as "never going to happen" or as near as.

2. Tank Policies
If you have a tank policy you may be able use this towards tank removal and remediation. Many tank policy providers, such as Proguard, only cover the costs of soil removal related to soils above the water table. So, those of you in South Jersey will very likely have contaminated soils below the water table.

3. Homeowners Insurance
Another funding source may your homeowner's policy. Most insurance companies today have put into effect the "Fuel Oil Exclusion Policy" which states they will not pay for environmental damage, i.e. contamination, resulting from the release of fuel oil. However, this policy was put into place around 2005-2006, depending on the insurance company, so if you've maintained insurance at the same company from pre-2005 to present, you may be covered for a percentage of the remediation costs.

Before the Fuel Oil Exclusion Policy, insurance companies would cover the following costs:
1. Ground water investigation: the ground water investigation involves a licensed environmental consulting firm conducting investigation on your property to determine whether ground water has been impacted above the State's standards. A ground water investigation typically involves the installation of soil borings and temporary well points in the former UST footprint or, if the tank has not yet been removed, in the down-slope direction of the existing UST. It's down-slope because ground water typically flows in the direction of the surface topography, i.e. flows downhill. Therefore, the most likely place to find ground water contamination is down-slope of the UST location.

2. If ground water was determined to be impacted, insurance companies would cover the costs for the remediation of contaminated soil. This is because, once the UST has been removed, the soil becomes the source of ground water contamination. Remove the source (contaminated soil)=clean up ground water.

3. If ground water is deemed clean, that would typically be the end of the insurance company's involvement and the homeowner would bear the bill for soil remediation on their own.

After the Fuel Oil Exclusion Policy, insurance companies take the following actions:
1. Best case, they pay for the ground water investigation, using their own environmental consulting firm. The environmental consultant will retain a licensed driller and will proceed to collect ground water and soil samples from your property.

2. They may deny your claim straight out, citing the Fuel Oil Exclusion Policy. However, like I said above, if you had a policy pre-2005/2006 and it covered your UST, you can fight this, though you will need to pay for the cost to do so.

If they deny you, you will need to pay for your own ground water investigation. If ground water is not impacted, you know you are responsible for the bill. If ground water is impacted, it is possible to fight your insurance companies denial if you can prove the leak started during a time period when they did cover the UST.

There are a variety of methods to determine when a UST started leaking.

1. You could pay for a corrosion dating test in which a section of the UST which has the largest holes is tested to determine how long it would take to create holes of that size in the material of the UST under the specific environmental conditions present on your property. Note: USTs submerged in ground water=faster corrosion. USTs with higher voltage power lines over them (central air power lines, etc.) often display a line of corrosion holes directly under that power line, caused by the electromagnetic field of the electricity interacting with the metal of the UST. Tree roots can damage the UST.

2. Soil age dating. This method involves collecting soil samples and analyzing the chemical makeup of the released oil. Oil will degrade over time, causing changes to its chemical makeup which can be compared to typical fresh oil chemical makeup. Based on specific environmental conditions, a professional judgement can be made as to when the UST started leaking.

In fact, insurance companies use these methods to determine the age of a spill so they can allocate total costs between you, themselves, and any previous insurance companies which once insured the UST. For example, the UST has been leaking for 20 years. In that time, Insurance Co. A insured the UST for 10 years. Insurance Co. B insured the UST for 5 years and then implemented the Fuel Oil Exclusion Policy, leaving you responsible for 5 years. A claims adjuster examines the current and previous policies and determines what percentages you, Insurance Co. B, and Insurance Co. A are responsible for and then divides the total cost of remediation by those percentages.

Of course, if the ground water is clean or if age-dating proves the UST started leaking after the Fuel Oil Exclusion Policy was put into place you are out that money. However, at this point, that policy is only 5 years old so it's still a good bet that the UST was leaking for longer than that. Of course, a shallow water table, power lines, etc. can and will accelerate UST corrosion so under certain conditions, the UST could corrode in less than 5 years.


UST Removal Activities
You decided to remove your UST. First, make sure you contract with a reputable company that is certified in the Unregulated Heating Oil Tank Program (UHOT). You can find a list on the NJDEP website. Just google NJDEP UHOT. Always remember that every ton of soil removed from your property is money in the contractor's pocket. There are sheisty firms out there who tell homeowners it's dirty just to make a buck. Be sure you trust the people you deal with and be there to observe! Believe me, you'll know what impacted soil smells like. Ask to smell it, straight from the excavator's bucket, if need be, ESPECIALLY if you are contracting for them to remove impacted soils as well as the UST.

Always obtain the soil disposal receipt, UST disposal receipt, and the disposal receipts for any fluids removed from the UST or ground water removed from the UST excavation.

As to types of firms, there are those who only do UST removal, no sampling or reporting. These will be cheaper, but may complicate matters down the road (getting paperwork, etc). You could also contract with a comprehensive environmental firm that can handle everything from the UST removal, soil and/or ground water sampling, to final reporting to the NJDEP. It's often easier to go this route, especially if ground water is clean and your insurance company is not involved, because you're not contracting with many firms and different people. Just always remember to read their proposal carefully and be there to observe.

Undamaged UST and No Corrosion Holes
You've removed the UST and there are no holes. The township inspector will come and OK the UST. Congrats, really! ;-D

Holes in the UST
Alright, you've got holes... Your tank contractor will notify the NJDEP hotline and will be assigned a case number. The township inspector will fail the tank. Now you've got to determine the extent, if any, of the soil contamination. If you've got sandy soil, it's likely the soil impact is widespread. In tight clayey soils, it can stay contained to a small area.

Your contractor should advise you of their professional opinion, as they've seen a lot of tanks with holes in them. You might want to let them dig a couple feet deeper to see if that finds the end of the contamination. Or maybe you just have them remove the tank, backfill the excavation, and wait to see what your insurance company says. It depends on the situation, though unless you have expendable money, I suggest the latter option.

Ground Water Investigation
A ground water investigation is conducted, whether by you or by your insurance company. Typically these take no more than a day with the analytical results available after 2-3 weeks, depending on the laboratory. The environmental consulting firm will collect one or more ground water and/or soil samples. Every firm does ground water investigations differently and those representing insurance companies may not collect soils as they are only there to determine whether there is a claim, i.e. impacted ground water.

Based on the ground water investigation, it will be determined whether the insurance company will be responsible for remediation costs.

Further Investigation
Before starting remediation, i.e. soil excavation, further environmental investigation is warranted. Additional work, the same as the ground water investigation, will be conducted to determine the limits of the contamination in soil and/or ground water.

Soil Remediation
You're ready for a dig. Ok. I've included at the end of this monstrous post, some standard rates for soil disposal, ground water disposal, analytical costs, etc. so you know what's reasonable in the cost estimate. This is particularly important when you are footing the bill, though also when you only need to put up a percentage.

Depending on the complexity of the job an excavation can take from a day to several weeks or longer to complete. Do you need structural support of your residence? Is ground water accumulation going to be a problem, requiring a discharge permit? These issues should be clearly addressed by the environmental consultant. Timing will be complicated by these issues.

Soil samples must be collected from the excavation (called pos-excavation soil samples). There are NJDEP guidelines dictating the sampling frequency. For every 30 linear feet of an excavation sidewall, one soil sample must be collected. For every 900 square feet, one base sample must be collected. So if your excavation is 35x15, that's 4 sidewalls and 1 base. Use these regulations when you're looking at the excavation cost estimate.

The contractor/environmental firm will field screen the soils using an instrument to determine where the contaminated soils end. This should be similar to the area defined during the investigation activities.

Post-Soil Remediation
Once the soil excavation is complete, a permanent monitoring well is installed in the excavation, or sometimes just outside it in the down-slope direction. The permanent monitoring well is very similar to the temporary wells installed during the ground water investigations(s), except that these will stay in the ground until your case is closed. This monitoring well will need to be sampled to make sure that soil is no longer impacting ground water (as it's all been removed). You need two consecutive rounds of clean sampling before you can submit everything to the NJDEP.

By NJDEP regulation, you must wait for 2 weeks after installation before you can collect the first round of samples. If these are clean, then one month after the first, a second round is collected. If this is clean as well, it's time to write the report.

If ground water remains impacted, due to the initial presence of free product (oil floating on the ground water) additional ground water remediation activities may be needed.

Report Writing and Timeframe
The final report, called a Remedial Action Report (RAR), summarizes all the activities conducted on your property, from UST removal to the final ground water sample collection.

You will need the following documentation for the RAR. The environmental consultant will gather these together, but for expediency, try to get a copy of these items from your UST removal contractor:
1. Tank disposal receipt
2. Tank contents disposal receipt (if there was any oil, sludge, etc in the UST at the time of removal)
3. Any soil disposal receipts from UST removal
4. Clean fill certification receipts for the clean fill used to fill in the hole after UST removal (if any).

The rest of the information will be gathered by the environmental consultant.

If you qualify for the UHOT program, the report will be submitted with a questionnaire and the NJDEP will review this report and, if everything is ok, will issue a No Further Action Letter (NFA), typically within a couple months of receiving the report. If you do not qualify for the UHOT program, or if you used a contractor who was not certified in the UHOT program, you will go through the old, traditional review process and an NFA takes upwards of a year, if not longer, to receive.

Once you receive an NFA, the permanent monitoring well will be abandoned and that's that. You're done.


Costs

Soil disposal: ~$65 per ton
Ground water disposal: ~$0.75 per gallon
Senior project manager: ~$85 per hour
Field Tech: ~$55 per hour
Field Manager: ~$75 per hour

Alright, to bed with me. Hope you find this informative and feel free to ask me any questions.
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Old 12-15-2011, 06:32 AM
 
572 posts, read 883,041 times
Reputation: 306
Just an FYI on the insurance. As contracts change so does your policy when it renews. The companies do not simply renew your policy with the old contract language or state filings. All of the policies that covered any type of oil tank damage for first party coverage are long gone and anyone who had the coverage no longer does.

Some policies give a tiny bit back for third party damage but once you apply the deductible it is next to nothing and would only apply if the leak affects someone elses property.
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Old 12-15-2011, 06:50 AM
 
Location: Princeton, New Jersey
223 posts, read 332,989 times
Reputation: 221
Quote:
Originally Posted by JCK7778 View Post
Just an FYI on the insurance. As contracts change so does your policy when it renews. The companies do not simply renew your policy with the old contract language or state filings. All of the policies that covered any type of oil tank damage for first party coverage are long gone and anyone who had the coverage no longer does.

Some policies give a tiny bit back for third party damage but once you apply the deductible it is next to nothing and would only apply if the leak affects someone elses property.
Yes, insurance policies do change and many homeowners lost their coverage when they didn't see that they had to manually renew their tank coverage. And after 2005-2006 there was no renewal option.

However, you are incorrect in your last paragraph. As ground water is under the protection of the State, it is considered a third party. As such, any impact to ground water, on or off the property, triggers third party coverage. I'm not sure why you're saying the third party pays next to nothing. I make my bread and butter on this work and I know that insurance policies often have upwards of $200,000 limits or higher. Therefore, they will cover costs up to that point. Most jobs fall under this limit so the potential for homeowners insurance to cover a lot of the cost is high.

I wouldn't be in business if insurance companies only covered next to nothing.
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Old 12-15-2011, 06:57 AM
 
2,854 posts, read 2,669,681 times
Reputation: 2025
Great post Kiru.

I'd just add a little about tank policies. If you have one, read it carefully and then read it again. There can be very important exclusions or actions that could void the policy. Don't start the process until you fully understand the policy. For example, some policies may require that you install a new (above ground) oil tank before you start the removal, and it may require that you stay with your oil company for a year (changing your oil dealer to save a few bucks could also void the policy) -- so if you were planning to switch to gas, you face complications.
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Old 12-15-2011, 07:06 AM
 
Location: Princeton, New Jersey
223 posts, read 332,989 times
Reputation: 221
Quote:
Originally Posted by HalfFull View Post
Great post Kiru.

I'd just add a little about tank policies. If you have one, read it carefully and then read it again. There can be very important exclusions or actions that could void the policy. Don't start the process until you fully understand the policy. For example, some policies may require that you install a new (above ground) oil tank before you start the removal, and it may require that you stay with your oil company for a year (changing your oil dealer to save a few bucks could also void the policy) -- so if you were planning to switch to gas, you face complications.
Yes, very true. Tank policies are tricky. Many are voided if you stop automatic delivery, which you may do if you know the tank is leaking but can't afford to do anything about it.

Another issue with them is that, because they typically only cover soil contamination above the ground water table, you should be onsite to verify where ground water is. Otherwise they may say it's feet above the actual depth to lower their costs. Your or your insurance company's environmental contractor should stick up for you on this issue.
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Old 12-15-2011, 07:51 AM
 
572 posts, read 883,041 times
Reputation: 306
I get my information from being a Senior Underwriter for a very large insurance company that specializes in Personal Insurance and there is not a homeowners policy out there that covers $200,000 for anything environmental...in fact most policies specifically exclude that coverage all together.

This is straight from the ISO form which most companies use:

[SIZE=2][SIZE=2]
[LEFT]"Pollution or Contamination
We do not cover any loss, directly or
indirectly, and regardless of any cause or
event contributing concurrently or in any
sequence to the loss, caused by the
discharge, dispersal, seepage, migration or
release or escape of pollutants. Nor do we
cover the cost to extract pollutants from
land or water, or the cost to remove, restore
or replace polluted or contaminated land or
water. A “pollutant” is any solid, liquid,
gaseous or thermal irritant or contaminant,
including smoke, vapor, soot, fumes, acids,
alkalis, chemicals and “waste”. A
“contaminant” is an impurity resulting from
the mixture of or contact with a foreign
substance. “Waste” includes materials to be
disposed of, recycled, reconditioned or[/LEFT]
reclaimed."
[/SIZE]
[/SIZE]

Quote:
Originally Posted by Kiru View Post
Yes, insurance policies do change and many homeowners lost their coverage when they didn't see that they had to manually renew their tank coverage. And after 2005-2006 there was no renewal option.

However, you are incorrect in your last paragraph. As ground water is under the protection of the State, it is considered a third party. As such, any impact to ground water, on or off the property, triggers third party coverage. I'm not sure why you're saying the third party pays next to nothing. I make my bread and butter on this work and I know that insurance policies often have upwards of $200,000 limits or higher. Therefore, they will cover costs up to that point. Most jobs fall under this limit so the potential for homeowners insurance to cover a lot of the cost is high.

I wouldn't be in business if insurance companies only covered next to nothing.
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Old 12-15-2011, 07:57 AM
 
572 posts, read 883,041 times
Reputation: 306
Hit send early...that is for first party which is defined in a homeowners policy as your property. Third party would be covered up to the liability limit on the policy with no deductible for some policies and otehr limit it to around $100,000. While the water table would be considered third parrty, the actual damage to your property (ground, soil, structures that need to be moved) as well as the actual oil tank itself are not covered.

That is where most of the damage generally is. It is in a small amoutn of cases, at least with the claims I have seen, where the leak has dcaused any damage to the actual water that would be considered third party.

Quote:
Originally Posted by JCK7778 View Post
I get my information from being a Senior Underwriter for a very large insurance company that specializes in Personal Insurance and there is not a homeowners policy out there that covers $200,000 for anything environmental...in fact most policies specifically exclude that coverage all together.

This is straight from the ISO form which most companies use:

[SIZE=2][SIZE=2] [/SIZE]
[SIZE=2][LEFT]"Pollution or Contamination[/SIZE]
[SIZE=2]We do not cover any loss, directly or[/SIZE]
[SIZE=2]indirectly, and regardless of any cause or[/SIZE]
[SIZE=2]event contributing concurrently or in any[/SIZE]
[SIZE=2]sequence to the loss, caused by the[/SIZE]
[SIZE=2]discharge, dispersal, seepage, migration or[/SIZE]
[SIZE=2]release or escape of pollutants. Nor do we[/SIZE]
[SIZE=2]cover the cost to extract pollutants from[/SIZE]
[SIZE=2]land or water, or the cost to remove, restore[/SIZE]
[SIZE=2]or replace polluted or contaminated land or[/SIZE]
[SIZE=2]water. A “pollutant” is any solid, liquid,[/SIZE]
[SIZE=2]gaseous or thermal irritant or contaminant,[/SIZE]
[SIZE=2]including smoke, vapor, soot, fumes, acids,[/SIZE]
[SIZE=2]alkalis, chemicals and “waste”. A[/SIZE]
[SIZE=2]“contaminant” is an impurity resulting from[/SIZE]
[SIZE=2]the mixture of or contact with a foreign[/SIZE]
[SIZE=2]substance. “Waste” includes materials to be[/SIZE]
[SIZE=2]disposed of, recycled, reconditioned or[/LEFT][/SIZE]
[SIZE=2]reclaimed."[/SIZE]
[SIZE=2][/SIZE]
[/SIZE]
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Old 12-15-2011, 09:23 AM
 
Location: Princeton, New Jersey
223 posts, read 332,989 times
Reputation: 221
Quote:
Originally Posted by JCK7778 View Post
Hit send early...that is for first party which is defined in a homeowners policy as your property. Third party would be covered up to the liability limit on the policy with no deductible for some policies and otehr limit it to around $100,000. While the water table would be considered third parrty, the actual damage to your property (ground, soil, structures that need to be moved) as well as the actual oil tank itself are not covered.

That is where most of the damage generally is. It is in a small amoutn of cases, at least with the claims I have seen, where the leak has dcaused any damage to the actual water that would be considered third party.
I have to disagree with you. All of the insurance companies and claims I've handled, if there is coverage under prior policies which did cover the UST, have covered the costs of the structural support, digging, etc.

I gather all the costs involved with the project, sans the tank removal cost, and tally it all up, from ground water investigation costs to final reporting costs. I submit this to the insurance company or their adjustment firm and they break up the cost by the percentage they are responsible for. As stated in my original post, they determine these percentages based on the age of the spill. Once the homeowner provides the insurance company with their share of the costs, approval is given to begin the remediation work.

Maybe your company was vastly ahead of the pack when it came to environmental claims, but I assure you, my company receives its funds from the insurance company directly. Of course, every insurance company differs, but I'm speaking from my years of experience handling residential UST insurance claims.

In any case, it is still the best advice for a homeowner to contact their insurance company and, if they did at one time have a policy which covered the UST (pre-2005/2006), they can fight a denial of their claim if they can prove the release started while their UST was still covered.

The shame is that many homeowners don't understand that aspect of their insurance and they take their insurance company at their word, accepting a denial when they potentially could get coverage for at least a percentage. And often that percentage is 80% the total cost. Just depends on the prior policies and the age of the release.
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Old 12-15-2011, 11:28 AM
 
572 posts, read 883,041 times
Reputation: 306
It also depends on the contract language as many policies have statutes of limitation. I am not saying people shouldn't try their insurance, but the fact of the matter is 8 out of 10 claims are going to be denied.

Quote:
Originally Posted by Kiru View Post
I have to disagree with you. All of the insurance companies and claims I've handled, if there is coverage under prior policies which did cover the UST, have covered the costs of the structural support, digging, etc.

I gather all the costs involved with the project, sans the tank removal cost, and tally it all up, from ground water investigation costs to final reporting costs. I submit this to the insurance company or their adjustment firm and they break up the cost by the percentage they are responsible for. As stated in my original post, they determine these percentages based on the age of the spill. Once the homeowner provides the insurance company with their share of the costs, approval is given to begin the remediation work.

Maybe your company was vastly ahead of the pack when it came to environmental claims, but I assure you, my company receives its funds from the insurance company directly. Of course, every insurance company differs, but I'm speaking from my years of experience handling residential UST insurance claims.

In any case, it is still the best advice for a homeowner to contact their insurance company and, if they did at one time have a policy which covered the UST (pre-2005/2006), they can fight a denial of their claim if they can prove the release started while their UST was still covered.

The shame is that many homeowners don't understand that aspect of their insurance and they take their insurance company at their word, accepting a denial when they potentially could get coverage for at least a percentage. And often that percentage is 80% the total cost. Just depends on the prior policies and the age of the release.
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Old 12-15-2011, 04:08 PM
 
Location: Princeton, New Jersey
223 posts, read 332,989 times
Reputation: 221
Quote:
Originally Posted by JCK7778 View Post
It also depends on the contract language as many policies have statutes of limitation. I am not saying people shouldn't try their insurance, but the fact of the matter is 8 out of 10 claims are going to be denied.
Yea, I got the feeling we were kind of talking at cross-purposes. What I mean to say is that even if the claim is denied there is a very good chance that the homeowner can get that denial revoked through age-dating. Most leaking tanks have been leaking much longer than the 5-6 years since the Fuel Oil Exclusion Policy.
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