New York’s Quirky Rules for Heating Oil Storage Tanks

Storage tanks used for the storage of heating oil for on-site consumptive use are excluded from federal underground storage tank (UST) program.  However, a number states including New York regulate heating oil tanks.

There are approximately 3 million residential heating oil tanks in New York State. While home heating oil tanks for single family homes typically range from 275-to 1,000-gallons.  However, heating tanks for multi-family or commercial properties frequently have capacities up to 20,000-gallons.

The New York Petroleum Bulk Storage Act (PBSA) program generally regulates USTs and aboveground storage tanks (ASTs) that are used to store petroleum and have a combined storage capacity (either individually or collectively) of more than 1,100 gallons. If the combined total capacity of all petroleum storage tanks at a property that have least 110 gallon capacity exceeds 1100 gallons, then all the tanks at the property are subject to the PBS program.

However, there are special rules for heating oil tanks. For purposes of determining if the property exceeds the 1100 gallon threshold for regulation, the volume of heating oil tanks with a capacity less than 1,100 gallons are not included in the calculation. Thus, if a property has a 1,000-gallon gasoline USTs and a 500-gallon heating oil tank, none of the tanks will be subject to regulation. Likewise, a property with four 500-gallon heating oil tanks will also not be subject to the PBS program even though the total capacity of the tanks at the property is 2000-gallons.

The performance and operating standards for regulated USTs under the PBS program are considerably more extensive than those for ASTs. Thus, it is particularly important to ensure that tanks in multi-family or commercial buildings are properly registered. However, the rules for classifying a tank as an UST or AST are-yes quirky. A tank located in a basement could be regulated as an UST under some circumstances which means it could be subject to periodic testing and other performance standards.

NYSDEC has commenced numerous enforcement actions against residential buildings for failing to properly register tanks, report spills and remediating contamination. Indeed, a number of multi-family buildings in NYC have been required to pay in excess of $1MM for tank violations and cleanup. One of the recurring themes I have seen in the cases involving significant fines or cleanup costs has been when the property or building management has hired a “tank” company to repair a failed tank system. The building manager believes that the “tank” company will deal with all of the issues associated with the failed tank system and are then shocked when they get a notice of a hefty fine from NYSDEC for failing to properly close out a spill. See our prior post on the importance of hiring the right kind of consultants for leaking heating oil tanks.

Another quirk of the NYSDEC PBS program is the closure requirements for heating oil tanks. Regulated PBS tanks that are out-of-service for more than one year must undergo closure. Unlike the federal UST program, though, the NYSDEC PBS program does not require an environmental assessment to close heating oil tanks. The tank has to be cleaned out and visually inspected for holes but soil or groundwater samples are not ordinarily required to achieve closure of heating oil tanks unless there is visual evidence or a leak.

Thus, it is possible that a heating oil tank that was closed in place and obtained regulatory closure by the NYSDEC may have impacted the property. Accordingly, it is advisable for purchasers of property with abandoned heating oil tanks to review the closure documentation to see if sampling was conducted. In the absence of such documentation, the purchaser should consider conducting its own sampling since the purchaser could be strictly liable under the state Navigation Law if an abandoned tank that was closed in place has impacted the environment.

In New York City, chapter 34 of the Fire Code establishes requirements for Out-of-Service Storage Systems storage tanks (3 RCNY §3404-01.  Closure of storage tank systems that have not been used for one year must be closed a certain licensed individuals. The owner or operator of a permanently out-of-service storage system or the permit holder for the tank system must also file an affidavit with the Fire Department certifying that the tank system was removed and disposed or abandoned in place in compliance with the requirements of Fire Code. If an environmental site assessment is required by federal or state law or regulations, the owner/ operator of the storage system, the permit holder for the system or the person filing the affidavit of compliance must submit a written statement to the Fire Department that such environmental site assessment has been performed in accordance with such law and regulations.

Finally, the New York City Department of Environmental Protection (NYDEP) has issued regulations to phase-out the use of Number 6 oil (No. 6) and Number 4 oil (No. 4) fuel oil that is burned at approximately 10,000 buildings to reduce the quantity of fine particulates emitted by buildings. Studies had shown that 1% of the buildings in the city produce 86% of the total soot pollution from buildings.

Effective May 23, 2001, all newly-installed/permitted boilers may only burn low sulfur No. 2 oil, natural gas, or the equivalent from an emissions standpoint. For existing boilers, the regulations provide for a phase-out of No. 6 oil. Beginning July 1, 2012, building owners are required to convert to a cleaner fuel (No. 4 oil or cleaner) before their three-year certificate of operation expires. Building owners will not be able to renew Certificate of Operation for a boiler burning #6 heating oil unless the applicant demonstrates that the No. 6 fuel that will be used will emit the same or less PM and NOx than No. 4 on an annual basis. All boilers must be converted to low sulfur No. 4 heating oil or an equivalent cleaner fuel by mid-2015. By 2030, existing boilers that have not been replaced must be modified to meet the equivalent emissions of burning low sulfur No. 2 oil or natural gas. The regulations are available here.

Financing and other incentives are available for building owners required to convert to cleaner-burning fuels.  NYC has established a webpage that provides information on financing options  and incentives available to building owners. Click here for Information on the permitting process