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Section 4: Petroleum Storage Tank Systems (PSTS)

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The release of environmental contaminants from petroleum storage tank systems is the most common problem involving hazardous materials encountered during project development. Water Code, Section 26.351 and 30TAC Section 334.12 assigns liability for corrective action for discharges or spills of hazardous substances to the owner of a PSTS at the time the discharge or spill occurs. If the release is not discovered until after TxDOT has acquired the property, it may be difficult to assign responsibility for corrective action to the former property owner. The responsibility would then default to TxDOT in accordance with Water Code, Section 26.121.

Commonly encountered problems include the following:

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  • An offsite plume has migrated into existing ROW, with possible negative impact on subsurface utilities or proposed construction.
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  • A portion of contaminated property is acquired for ROW, the contamination source is on the remainder, and there is the possibility of negative impact on subsurface utilities or proposed construction.
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  • A contaminated property, including the contamination source, is acquired for ROW, and there is the possibility of negative impact on subsurface utilities or proposed construction. Moreover, the displacee, and any PSTS declared as personal property, is eligible for relocation assistance.
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Petroleum Storage Tank Systems Treated as Personal Property

PSTS may be, under certain limited circumstances, declared as personal property eligible for relocation payments under the Uniform Relocation Assistance and Real Property Acquisition Policies Act of 1970 (42 USC Sections 4601-4665). The basis for the declaration could be that the system has been recently installed and can be re-certified prior to reinstallation. Payment to the displacee for relocation is made on an actual cost basis. Use the form ROW-N-PSTRA Petroleum Storage Tank Removal Agreement when a system is declared as personal property.

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Petroleum Storage Tank Systems Treated as Real Property

In the majority of ROW acquisitions involving PSTS, the systems are considered to be real property. Real property is acquired either through negotiation, donation, or by eminent domain proceedings.

Negotiation or Donation. Once an approved value has been determined for the land and improvements of a ROW parcel, the owner(s) of the real property is (are) presented with an offer of just compensation. The amount of compensation is based on an unimpaired or "as if clean" valuation. If PSTS are located wholly or partially within the acquired parcel, ask the owner to sign a form ROW-N-PSTRA Petroleum Storage Tank Removal Agreement. This agreement provides the owner the opportunity to retain title to the PSTS and to be reimbursed the eligible costs of system removal. The owner is not, however, obliged to sign the agreement, even though failure to sign may constitute failure of acquisition negotiation.

When the offer of compensation is accepted and the agreement executed, normal closing of the transaction can occur. The owner must remove the PSTS before expiration of the time allowance stated in the agreement.

The remaining issue of payment from TxDOT is based on the status of the PSTS site, as determined by the Texas Commission on Environmental Quality. If the site does not have a negative impact on public health and safety, and is not a threat to the environment, then TCEQ issues a "no further action" letter based on the closure information at the conclusion of the removal phase of the work performed.

If the site is identified with a Leaking Petroleum Storage Tank Identification Number (LPST ID No.), the owner must take corrective action subsequent to PSTS removal. In this case, TxDOT reimbursement to the owner will be based on an uncontested Fund Payment Report showing the amount that TCEQ will consider for reimbursement, ineligible expenses, and the owner's deductible amount. Reimbursement can then be made for the ineligible expenses and deductible amount for the PSTS removal. TxDOT's obligation and involvement terminates at this point. Subsequent land use must be considered for a risk-based assessment and closure.

When the owner or his agent is pursuing mitigation activities, an Indemnification Agreement can be offered outlining each party's responsibilities and obligations after TxDOT has taken possession of the ROW.

It is not in the interest of TxDOT to accept donation of real property without an assessment of the property's condition. PSTS owners are often willing to donate contaminated land because they believe doing so will end their liability. Minimizing the risk associated with prior land use will reduce the costs incurred by corrective action.

Contact the ROW Division for assistance regarding any use of an Indemnification Agreement or a Petroleum Storage Tank Removal Agreement.

Eminent Domain. When condemnation proceedings are initiated for parcels that have PSTS located within or close to the area needed for ROW, process the review of the parcel for eminent domain proceedings with appropriate notation to the OAG.

Once the parcel has been processed through the ROW Division to the OAG, a Petition or Statement of Condemnation is filed in the court having jurisdiction in the county where the subject parcel is located. At the Special Commissioners hearing, the property is considered to be unimpaired or "as if clean," unless adequate information is available to the appraiser or a technical expert in support of an impacted valuation.

An objection to the Award of the Special Commissioners can be filed if adequate information exists that indicates the property may suffer a reduction in value due to the presence of a PSTS. After deposit of funds into the registry of the court, the state takes possession of the property. TxDOT can then employ the necessary consultant for an environmental assessment, in order to provide technical data, cost estimates, and testimony for trial. TxDOT can also employ a contractor for removal of the PSTS.

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