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Section 3: Petroleum Storage Tanks (PSTs) and Leaking Petroleum Storage Tank (LPST) Facilities

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TxDOT's Perspective (Overview)

When encountered during construction, underground storage tank systems can cause delays and contractor downtime. Any tank system located in the existing or proposed right-of-way and easements should be removed prior to construction, if possible.

In the event that the identity of the tank system owner and/or operator is unclear, unknown or in dispute, the fee simple property owner may ultimately be held responsible for any contamination. If acquired parcels contain underground storage tanks or contamination, TxDOT may be held responsible for corrective action if the tank owner or operator becomes insolvent or does not fulfill his/her obligations. If the contamination is not discovered until after the property has been acquired, then it may be difficult to assign responsibility for the corrective action to the former owner or operator without a prior negotiated agreement.

TxDOT should avoid liability for corrective action where possible. Agreements for tank system removal and possible corrective action should be negotiated with the property owner or tank owner/operator. Known contamination should also be accounted for during the appraisal and negotiation and acquisition process. However, it may be necessary for TxDOT to perform corrective action for an LPST site in the following situations:

  • the tank system owner or operator is unclear, unknown or in dispute
  • the property owner provides innocent landowner documentation in accordance with Section 361.752 of the Texas Health and Safety Code
  • the transportation project would significantly interfere with the responsible party’s ability to perform corrective action
  • the responsible party, property owner or tank owner/operator becomes or is likely to become insolvent (bankrupt) or abandon his/her financial obligations.

Situations in which it is likely that TxDOT will be held responsible for corrective action include those where a tank owner/operator is displaced due to the transportation project and subsequently abandons his/her obligations. Although TxDOT may conduct corrective action, attempts for cost recovery or compensation from responsible parties should be pursued when appropriate. Districts should contact ENV, ROW and OGC when deciding if performing corrective action is in the best interest of TxDOT or the State.

If possible, TxDOT should confirm that the tanks have been removed and required corrective action has been completed as required by TCEQ prior to finalizing the Plans, Specification & Estimates (PS&E). Often, cleanup or remediation cannot or does not occur prior to acquisition or even to construction. Additionally, regulatory agencies may allow contamination under a risk-based closure. Therefore, any necessary preventive action during construction activities should be communicated and coordinated with district planning, environmental, design and construction staff, and affected divisions. Any post-closure responsibility should be communicated and transferred to the district maintenance sections.

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Regulation and Liability Summary

Underground and aboveground petroleum storage tanks (PST) are regulated by 30 TAC Chapter 334. Per 30 TAC §334.7, relating to Registration for Underground Storage Tanks (USTs) and UST Systems on or after September 1, 1987, no person shall own or operate an underground storage tank which contains or has contained a regulated substance unless it has been properly registered. There are statutory and TCEQ exemptions in 30 TAC §334.3 and 30 TAC §334.4 for certain tanks or types of storage. Also exempt from registration are underground storage tanks that:

  • are permanently out of service and were removed from the ground before May 8, 1986
  • remain in the ground, but were emptied, cleaned and filled with solid inert materials on or before January 1, 1974, in accordance with accepted industry practices in effect at the time the underground storage tank was taken out of operation.

Registration is not required of underground storage tanks that are out of operation and empty of regulated substances at the time of their discovery, provided that the facility owner can reasonably demonstrate no prior knowledge and the underground storage tanks are permanently removed from service within 60 days of their discovery (see 30 TAC §334.6(a)(1)(E)). Removal of underground PST systems is to be performed in accordance with 30 TAC §334.55 (Permanent Removal from Service).

The Texas Water Code (TWC) §26.351 and 30 TAC §334.12 assign liability for corrective action for a LPST to the entity that owned or operated the tank system at the time the release occurred. Per 30 TAC §334.2 (definitions), an operator is "any person in day-to-day control of, and having responsibility for the daily operation of the UST system or the AST system, as applicable." An owner is "any person who holds legal possession or ownership of an interest in an UST system or an AST if the actual ownership of an UST system or an AST is uncertain, unknown, or in dispute, the fee simple owner of the surface estate of the tract on which the UST system or AST is located is considered the UST system or AST owner unless that person can demonstrate by appropriate documentation, including a deed reservation, invoice, bill of sale, or by other legally-acceptable means that the UST system or AST is owned by another person. A person that has registered as an owner of an UST system or AST with the commission under §334.7 of this title (relating to Registration for Underground Storage Tanks (USTs) and UST Systems) (or a preceding rule section concerning tank registration) after September 1, 1987, shall be considered the UST system owner and/or AST owner until such time as documentation demonstrates to the executive director's satisfaction that the legal interest in the UST system or AST was transferred to a different person subsequent to the date of the tank registration

The purchaser does not automatically become the responsible party for tank compliance at a site; he/she must willingly accept that responsibility. However, according to guidance from the TCEQ, the purchaser of the property could become responsible for the cleanup should the previous owner of the tanks become insolvent or disappear.

The Petroleum Storage Tank Remediation (PSTR) Fund will cease to exist after August 31, 2008. Also, no expenses for corrective action performed after September 1, 2007 will be reimbursed. Filings for reimbursement must be received by the TCEQ on or before March 1, 2008. Regulated tanks not registered by December 31, 1995 and all releases discovered on or after December 23, 1998 are no longer covered under the PSTR Fund. Owners and operators of registered tanks who discovered and reported their releases prior to the December 23, 1998 date may be able to access the PSTR Fund for reimbursement of expenses until the final sunset date. With these deadlines it will be increasingly difficult, if not impossible, for right-of-way LPST sites to qualify for reimbursement from the PSTR fund.

Per 30 TAC §334.84(a), TCEQ may undertake corrective action in response to a release or a threatened release if the owner or operator of the underground storage tank is unwilling, cannot be found, or is unable to take the corrective action. The TCEQ may also undertake corrective action if more expeditious corrective action is necessary to protect the public’s health and safety or the environment.

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PST System or LPST Facility Acquisition

Appraisal: The majority of right-of-way acquisitions that involve PST systems located partially or wholly within additional right of way or in close proximity to the needed right of way include the value of the system as real property. Declaring PST systems as personal property is not recommended since there is a greater potential for the tank system and related responsibilities to be abandoned.

The condition of any underground storage tank should be evaluated in the appraisal. A real estate appraiser determines the value of the PST system based upon an inspection of the property, disclosure of information from the tank owner, and the current compliance status of the system. To accurately determine the value, on-site access to verify the regulatory status is required.

Acquisition of real property for highway purposes is addressed within three scenarios including negotiation, donation and eminent domain proceedings. The following discussion will provide guidance and options for each scenario.

Negotiation: Once an approved value has been determined for the real property and improvements located on a right-of-way parcel, the owner and/or operator of the property is presented with an offer of just compensation. The amount of compensation is based upon an unimpaired or "as if clean" valuation. TxDOT's offer also includes the value of the tank system, if any.

In order to appraise and value a site "as if clean" without testing, the offer to purchase must be conditioned upon execution of a Petroleum Storage Tank Removal Agreement (PSTRA). The PSTRA allows the owner to retain the title to the PST system and be reimbursed certain expenses for performing the removal. All reasonable and necessary costs of tank removal and backfill may be reimbursable by TxDOT upon completion. In the past, the TCEQ's PSTR fund deductibles were also reimbursed. With the sunset of the PSTR fund, these deductibles have increased and will probably not apply to a current site. TxDOT can continue to consider reimbursement of any deductibles in the negotiation. For active systems, the tank owner or operator should have insurance policies that cover underground storage tank liability for taking corrective action and compensating third parties for bodily injury and/or property damage caused by accidental releases per 30 TAC §37.801-37.895, Financial Assurance for Petroleum Underground Storage Tank Systems. It is not necessary for these insurance deductibles to be reimbursed by TxDOT. However, any insurance deductibles related to tank removal may be reimbursed. The reasonable deductible amount should be negotiated on a case-by-case basis.

With the PSTRA, the title to the PST system will not pass to the State; responsibility for corrective action, if necessary, remains with the tank owner/operator or displacee. The agreement should include not only the removal of the system, but contingencies if contamination is encountered. The PSTRA should do the following:

  • delegate responsibility for tank removal
  • provide for contingencies if contamination is encountered and delegate responsibility for release reporting, assessment, corrective action, closure and/or post-closure care.

If the site is an LPST facility with corrective action activities being pursued by the responsible party or is thought to be contaminated, an indemnification agreement can be offered that outlines responsibilities and obligations after acquisition of the right of way. This would be a valuable tool in ensuring that TxDOT is not the responsible party for all or any part of the site. If not previously addressed in a PSTRA, the indemnity agreement should do the following:

  • delegate responsibility for assessment, corrective action, closure and/or post-closure care
  • ensure that TxDOT’s project-specific design requirements and construction worker safety are addressed in the risk assessment and corrective action plan
  • allow TxDOT’s involvement in decisions regarding corrective action, closure and post-closure care requirements
  • allow TxDOT to recover costs, where appropriate.

If the offer of compensation is accepted and the agreement is executed, normal closing of the transaction can occur. The owner removes the PST system in accordance with the terms, conditions and time allowance stated in the agreement. The remaining issue of payment from TxDOT is based upon the site status. The TCEQ requires a tank removal report to be submitted after removal has been completed. If the report proves that no release occurred and no further action is required by the TCEQ, then the case is closed. Payment for tank removal is made and TxDOT’s involvement and obligation are considered complete.

Before finalizing the PS&E, TxDOT should confirm that the tank system has been removed and corrective action as required by the TCEQ has been satisfactorily completed. The district should monitor the statuses of any assessment, investigation, corrective action and/or closure. If corrective action activities do not progress, then TxDOT should notify the TCEQ. The district must also monitor the site to determine whether preventive or corrective action is feasible prior to construction. Affected planning, environmental, design, and construction staff should be kept up-to-date on the status of corrective action. If a site's corrective action includes long-term controls, then additional coordination is required. For example, post-closure responsibility may need to be transferred to the TxDOT district maintenance section.

Donation: It is not in TxDOT’s best interest to accept donated land without first conducting an assessment, possibly an investigation, to determine the condition of the property. Many cases have revealed that property owners donate land to the State in an effort to end their potential liability because TxDOT is seen as having deep pockets. Minimizing the risks associated with prior land usage will reduce the potential costs of cleanup to accommodate roadway construction. Removal and indemnity agreements can also be used in donation cases.

Eminent Domain/Condemnation: Although negotiation of the right-of-way parcel may be contingent upon the execution of the PSTRA or indemnity agreement, the owner is not obligated to execute such an agreement. Rejection of the agreement may constitute rejection of the offer. If rejected, TxDOT should consider acquiring an easement until the tank system is removed or corrective action is accomplished.

At this stage, TxDOT may decide to re-evaluate the property to determine if it is contaminated. For confirmed or possible contaminated sites, an intrusive investigation is necessary to re-evaluate the property. The environmental condition of the property may not be determined definitively until an underground tank system has been removed. Right-of-entry is typically denied if the PSTRA or indemnity agreement is rejected. If the property owner refuses to execute a PSTRA, the department shall use as the basis for condemnation the "unknown environmental condition of the property." There have been instances where the owner has executed the PSTRA, but rejected the offer of just compensation. In these very rare cases, the reason for filing an objection to the Award of Special Commissioners has related to the value given to the land and improvements--not the known or possible contamination.

If the negotiation process fails because the owner of the proposed right-of-way declines the offer of just compensation or rejects an agreement, then condemnation or eminent domain proceedings are initiated. The eminent domain proceedings are processed through ROW with appropriate notation to the Attorney General. The Attorney General's Office files a Petition or Statement of Condemnation in the court with jurisdiction in the county where the property is located. After the Special Commissioners are appointed, a hearing over the issue of value for the acquisition takes place. At this stage, the property is discussed as if unimpaired or "as if clean," unless adequate information is available to the appraiser to support an impacted value. If adequate suspicion exists that the property is impaired and should be reduced in value, or if a PST system needs to be removed, then an objection to the Award of the Special Commissioners can be filed to investigate the property. Responsibility for corrective action may be addressed at this stage. After the funds have been deposited into the registry of the court, the State takes possession of the property. At this time, an assessment or removal of the PST system can be performed to provide technical data, cost estimates and testimony for trial purposes. Additional information about eminent domain proceedings should be obtained from ROW.

It is possible that unknown contamination may be encountered after the State acquires the property. If an indemnity agreement that assigns responsibility to a property owner or tank owner or operator is rejected, the original condemnation award to the District Court may be appealed. A jury then decides how much the property is worth. If the Jury decides that the property is worth less than the award, then the property owner must pay back the excess.

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PST Removal Steps

TxDOT staff, the acquiring agency and/or the appraiser should initiate most of the following steps as early as possible in project development.

Conducting a non-intrusive assessment of property with USTs:

  1. Determine if one or more underground storage tank systems or partial systems exist within the existing and proposed right of way or easements by conducting an initial site assessment (interviews, land use research, regulatory database list search, site visit, etc.).
  2. Identify the tank owner or operator through interviews, land use research, chain of title, registration or other legal documents.
  3. Determine the number of tanks, tank capacity, construction, volume of fluid remaining and product(s) stored in the tanks.
  4. Determine and/or confirm tank compliance including status of tank upgrades, registration and fees. For example, to determine registration requirements, obtain documentation of the tank system being emptied, cleaned and filled with solid inert materials on or before January 1, 1974, in accordance with accepted industry practices.
  5. Determine the potential for contamination, such as tank compliance, violations, enforcement, reported releases or LPST status.
  6. Determine whether the tank owner or operator is known and willing or financially able to remove tanks and obtain closure of the site. Obtain information on insurance or financial responsibility from 30 TAC §37.801-37.895, Financial Assurance for Petroleum Underground Storage Tank Systems. Insurance information includes, but is not limited to, policy number, period of coverage (current policy period), effective date of coverage, deductible amount, company name (insurer or risk retention group), company address (insurer or risk retention group), and name and address of insured.

The procedure to acquire real property with USTs is as follows:

  1. Appraise the site "as if clean."
  2. Negotiate a PSTRA with contingencies for contamination, corrective action and post-closure care. If the PSTRA is rejected, proceed with condemnation. If the PSTRA and offer are accepted, then proceed with normal acquisition.
  3. Monitor terms, conditions and deadlines of the PSTRA.
  4. Ensure that the tank owner or operator does not register the tank system in TxDOT's or the acquiring agency's name. In addition, neither TxDOT nor the acquiring agency's name should be identified as the owner on the construction notification form required for removal.
  5. The tank owner or operator should amend registrations of all removed tanks to avoid paying annual registration fees.
  6. Once the tank owner or operator obtains and forwards an amended registration and closure letter from TCEQ stating that no further action is required, the district or acquiring agency releases funds for removal of the tank and/or escrow account as negotiated in the PSTRA. If the tank system is closed with no further action, then TxDOT’s responsibility ends.
  7. If contamination is encountered, the tank owner or operator should report the release or LPST as required in the PSTRA. Confirm that neither the acquiring agency nor TxDOT is listed as the owner. If not already incorporated into a PSTRA agreement, a separate indemnity agreement should be negotiated. Once the indemnity agreement is signed and an amended registration is forwarded, the district or acquiring agency releases funds and/or escrow accounts for removal of the tank as negotiated in the PSTRA.
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LPST Facility Steps

The following steps for LPSTs may need to be incorporated with the above steps for petroleum storage tank removal.

To perform a non-intrusive assessment of a known or possible LPST Facility:

  1. Determine the party responsible for corrective action as listed with TCEQ.
  2. Determine or confirm the site's eligibility for TCEQ's PSTR fund.
  3. Determine if the property owner or tank owner or operator is willing or financially able to obtain site closure. Obtain information on insurance or financial responsibility from 30 TAC §37.801-37.895, Financial Assurance for Petroleum Underground Storage Tank Systems. Insurance information includes, but is not limited to, policy number, period of coverage (current policy period), effective date of coverage, deductible amount, company name (insurer or risk retention group), company address (insurer or risk retention group), and name and address of insured.
  4. Through file review and/or interviews, determine: the extent of contamination; affected adjacent property owners or receivers; status of investigation, risk-based assessment, corrective action, monitoring and closure; and post-closure care requirements.
  5. Determine the impact to proposed adjustments of subsurface utilities or proposed excavation for the construction project.
  6. Determine the potential for corrective action, monitoring and closure to be completed prior to acquisition, prior to finalization of PS&E, and prior to letting.
  7. Determine any preventive action required prior to or during construction.
  8. Determine monitoring or post-closure care required after acquisition or construction.
  9. Evaluate whether avoidance or minimization is feasible or practical at this stage of project development.

The procedures to acquire property containing an LPST Facility:

  1. Appraise the site "as if clean," contingent upon a negotiated indemnity agreement.
  2. Consider acquiring an easement until the tank system is removed or corrective action is accomplished. If the indemnity agreement is rejected, proceed with condemnation. If the indemnity agreement and offer are accepted, then proceed with normal acquisition.
  3. Monitor agreement terms, activity deadlines and corrective action status. If corrective action activities do not progress, then TxDOT should notify the party and copy correspondence to the TCEQ. Periodically confirm that the acquiring agency or TxDOT is not listed as the tank owner or operator on TCEQ LPST lists.
  4. Any post-closure responsibility should be communicated and transferred to the district maintenance section.
  5. Any requests for deed recordation should be coordinated with ENV and OGC.
  6. Coordinate any required preventive action or construction activities with the party performing corrective action.
  7. Any prior negotiated escrow accounts are released once the tank owner or operator obtains proof of closure, a copy of the closure report and a letter from the TCEQ stating that no further action is required.
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UST System Encroachments

If a UST or partial system is in the existing right-of-way without authorization (encroachment) and no acquisition is required, then the following steps apply for removal of the encroachment:

  1. Determine if the tank system may impact a proposed transportation, maintenance or utility adjustment project.
  2. Identify the adjacent property owner.
  3. Attempt to determine the tank owner or operator through interviews, land use research, chain-of-title, TCEQ registrations, TxDOT right-of-way files or other legal documents. There may be tank owners or operators (i.e., responsible parties) other than the property owner. Ownership may be disputed if a tank owner or operator abandoned the tanks and is not the current property owner. Any previous right-of-way acquisition files should be carefully reviewed to determine if TxDOT was aware of or assumed responsibility for the tank system.
  4. Initially contact and notify the tank owner or operator or adjacent property owner of the encroachment. It is recommended that the District Engineer follow up with a written letter requesting tank removal. The letter should state that the tank system was not authorized to be on state right of way. Additionally, regulatory citations for tank owner/operator obligations under 30 TAC §334.7: Registration for Underground Storage Tanks (USTs) and UST Systems, 30 TAC §334.6: Construction Notification for Underground Storage Tanks (USTs) and UST Systems, and 30 TAC §334.5: General Prohibitions for Underground Storage Tanks (USTs) and UST Systems should be provided. The letter should provide information about obtaining a temporary use agreement from the district to remove the tank system. Pertinent information acquired during the review of right-of-way acquisition files, or TCEQ registrations related to the tanks or tank system, may also be summarized. A signature block should be provided for the party to accept responsibility for removal and corrective action. The party should be asked to return a signed letter within 30 days. A copy of the letter should be sent to the state and regional TCEQ offices.
  5. If the tank owner or operator or adjacent property owner accepts responsibility, a standard temporary use agreement including both PSTRA and indemnity agreement issues should be presented to the party to sign.
  6. The terms of the agreement should be monitored and documentation of the closure should be obtained. If the site becomes an LPST site, the district should monitor its corrective action status and periodically re-evaluate the possibility of contamination impacting any proposed transportation project prior to finalization of the PS&E and letting.
  7. If no response is made or action taken to remove an abandoned tank system within 30 days of the request, then the district may arrange for the removal of any product in an abandoned tank to reduce the potential for releases. If the abandoned tank system may adversely impact a proposed project and the tank owner or operator, or property owner does not accept responsibility within a reasonable time frame, the district can arrange tank removal.
  8. If the tank owner or operator or property owner is unknown, unwilling or financially unable to remove tanks or perform corrective action, TxDOT should notify the TCEQ. If TCEQ directs TxDOT to perform the removal or corrective action, then TxDOT should pursue other responsible parties or the TCEQ State Lead Program before accepting full responsibility for corrective action. TxDOT should consider whether responsibility should be contested. TxDOT may only be able to perform corrective action within the existing right of way or easements. The district should coordinate these decisions with ENV and OGC.
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Underground Storage Tank Removal or Corrective Action Performed by TxDOT

If TxDOT removes a UST system, the following steps should be performed:

  1. Attempt to obtain information about the tanks, such as the number, size and contents, for a removal specification.
  2. Arrange for a purchase of service contract for tank removal. Some districts have pre-arranged blanket purchase order contracts in place. Professional engineering services are typically not needed. Districts can contact ENV-PPA if additional assistance is needed in editing a tank removal specification.
  3. If a portion of the tank system exists outside the existing right of way or if removal activities require access to adjacent properties, then the District should obtain written right of entry from the property owner(s). The district should notify the TCEQ in writing if right of entry is denied.
  4. If possible, avoid registering tanks by permanently removing them from service within 60 days of the date of acquisition or the date TxDOT became aware of the tanks on the existing right of way. 30 TAC §334.7(a)(1).
  5. Confirm that TxDOT is not identified as the tank owner on the construction notification form required prior to tank removal. The consultant and/or contractor can indicate on the form that TxDOT contracted them to monitor and/or remove the tank system.
  6. TxDOT should monitor the terms and conditions of the tank removal contract.
  7. The district should send a copy of the invoice for tank removal to the tank owner or operator or property owner for cost recovery. A decision about whether or not to pursue legal action for cost recovery should be coordinated with ENV and OGC.
  8. If the tank system is closed with no further action, then TxDOT’s responsibility ends.

If TxDOT performs corrective action on right of way or easements, the following steps should be performed:

  1. Procure the services of a statewide environmental engineering consultant. The district can contact ENV-PPA for assistance in determining the scope of services or developing requests for estimates. Additional information about work authorization management and statewide environmental engineering consultants is provided in Chapter 6, Hazardous Materials Services Contracts.
  2. Coordinate any required preventive action for construction activities with corrective action. Costs for preventive action and corrective action should be individually tracked to facilitate management decisions and possible cost recovery.
  3. Any requirements for deed recordation should be coordinated with ENV and OGC.
  4. Any post-closure responsibility should be communicated and transferred to the district maintenance sections.
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