New Rules & Regulations On Oil Tanks Intensify Fuel Battle

NEW state regulations governing underground fuel tanks and the rising concern over the cost and supply of oil have thrust homeowners into the middle of an intensified feud between home heating oil suppliers and distributors of natural gas.

Targets of Gas Companies’ Campaign

The natural gas companies, however, while acknowledging that they are indeed trying to persuade customers to switch from oil to gas, say that the targets of their current campaign, which draws attention to the new regulations, are commercial and industrial users. Residents who do switch from oil to gas, they say, do so out of economic and environmental concerns.

The new regulations, scheduled to take effect on Tuesday, are ”just another nail in the coffin,” said Paul Spatz, owner of the Grant Oil Company in Newark, which serves more than 2,500 oil customers in northern New Jersey. ”Every time a new problem arises, another customer yanks his tank out and converts to gas,” he said.

But converting from oil to gas may create new problems for homeowners when they stop using their underground storage tanks, heating contractors and tank removal specialists say.

By failing to regulate abandonment of the smaller tanks, they say, the new regulations perpetuate the current practice of allowing local officials to determine, often on an ad hoc basis, the methods used to close tanks that are no longer in use.

That practice, they say, has resulted in a hodgepodge of regulations that can cause problems for homeowners if abandonment of a tank is not properly completed. An improperly closed tank can corrode because of condensation, for example, and can leak at the bottom or collapse at the top if someone walks over it.

In addition, prospective home buyers, concerned with the potential for problems with an abandoned tank, might require a seller to have the tank removed as a condition of the sale.

”This could be the beginning of the end of our business,” Mr. Spatz said, referring to the current convergence of factors facing the home heating oil industry. Oil merchants, he said, who have long been subject to price and supply factors beyond their control, are now faced with convincing an increasingly cautious public that oil heat will remain economical.

Concern Called Unwarranted

That task is made more difficult, Mr. Spatz said, by customers’ heightened yet often unwarranted concern that an underground tank may be a source of problems in the future.

”The fact of the matter is that oil is a more efficient energy source with a higher B.T.U. output than gas,” Mr. Spatz said. In addition, he said, it would take either many years or a huge jump in the price of oil for a homeowner to recoup the conversion costs, which average about $2,200.

Nevertheless, he said, gas industry advertisements highlighting concerns over underground tanks ”have struck fear in the hearts of homeowners.” And the new regulations, he said, though not targeted at the smaller tanks, will only intensify that fear.

The regulations, which were mandated by the Legislature in 1986, apply to new and existing tanks with a capacity of 2,000 gallons or more. They require corrosion protection, continuous monitoring for corrosion and systems that guard against spills and overfilling. In addition, any such tank that is abandoned must be removed from the ground in accordance with strict standards set by the Department of Environmental Protection.

”If the abandoned oil tank isn’t sealed and cleaned properly,” said Robert Frezzo, vice president of Frezzo Oil Service Inc. in Union City, ”water can leak in, corrode the bottom, and the next thing you know you have contaminated soil.”

Corrosion Could Cause Cave-In

Another danger, he said, is that corrosion on the top of the tank may cause someone walking above the tank to fall through into the empty tank.

On the other hand, he said, if the tank is sealed too tightly, and is empty, it might eventually rise out of the ground in an area that has a high water table.

And finally, Mr. Frezzo said, an empty, improperly sealed tank may be accidentally filled with oil by a dealer who was unaware that the tank was abandoned. Computer-driven automatic filling schedules based upon ”degree days” make that a distinct possibility, he said.

So even though cleaning and filling an abandoned tank is usually safe if done properly, he said, ”if this were a perfect world every underground tank would be ripped out.”

Though the new regulations require just that for large abandoned commercial tanks, they do not extend to the tens of thousands of smaller tanks in basements and under front lawns in towns across the state. The authority to determine what must be done with those tanks rests with local officials.

Disposal Required Sometimes

While most municipalities require contractors to clean, fill and seal abandoned tanks, some require that they be removed and disposed of.

”Anything larger than 550 gallons we want them to yank out,” said Robert G. Michelin, a fire subcode official for Union City. Smaller tanks, he said, can be cleaned and filled. But in West New York, all tanks, regardless of size, must be removed. Ronald Franco, the township’s fire inspector, said West New York also required the soil under the tank to be inspected and tested if it appeared to be contaminated.

”And if we find there’s contamination,” he said, ”we bring in the regional health commission.” Contaminated soil, he said, would have to be removed and replaced with clean soil at the homeowner’s expense.

Mr. Frezzo, who has customers in both towns, said that since there was no consistent policy in effect, prospective purchasers who discovered that there was an abandoned underground tank in a home they were considering buying often required the seller to have the tank removed, ”just to be on the safe side.”

Couple Convert to Gas

Robert and Patricia Auth of the township of Union in Union County, though not under such pressure, decided recently to do just that by having their abandoned oil tank removed.

”We figured we would take the thing out and then we wouldn’t have to worry about it anymore,” Mr. Auth said. The Auths converted from oil to gas two years ago and were concerned that Union officials might someday require them to remove the abandoned tank.

Anthony Noce, president of the Environmental Clean-Up and Protection Association, the Verona-based company that removed the Auths’ tank, said business had increased recently as a result of concerns like the Auths’ and those expressed by Mr. Frezzo.

Mr. Noce said, ”We’re getting a lot of calls from real-estate people who can’t put the sale through until the tank is cleaned or removed.”

He said that while most towns required that underground tanks be cleaned and filled rather than completely removed, even the cleaning and filling often required considerable work.

To clean a tank properly, he said, workers have to dig down to the tank, cut the top off and get inside the tank to make sure that all the oil is removed. When the tank is clean, it is filled with sand and then covered again with dirt.

Average Cost of $1,000

The cost of cleaning an average residential tank, he said, is $1,000 to $1,500. Removal, he said, can cost up to twice as much but is preferred because the soil under the tank can be tested for contamination, an option not available when the tank is only cleaned.

In any event, he said, a consistent statewide policy is preferable to the current practice of letting local officials determine standards because then contractors and homeowners will specifically know what their responsibilities are.

Kenneth Goldstein, chief of the Bureau of Underground Storage Tanks in the State Department of Environmental Protection, agreed that the lack of a uniform policy could lead to confusion.

”I would prefer to have some type of consistent, minimum standard,” he said. ”But the Legislature decided that certain smaller homeowners’ tanks should not be regulated. As a result, we’re left with the possibility of 567 municipalities setting up their own requirements.”

Legislation sponsored by Assemblyman William E. Schluter, Republican of Pennington, would provide such guidelines. The bill, Mr. Schluter said, should it pass this year, allows for on-site abandonment if it can be proved that the empty tank will not pose a danger to ground water.

‘Tanks Leak’

Mr. Goldstein, however, said that if the decision were left to him, all abandoned tanks, regardless of size, would have to be removed. ”Tanks leak,” he said. ”Even small ones.” And that sentiment, oil dealers say, has led to the advertising campaign now being waged by the natural gas industry.

Fred J. Sacco, executive vice president of the Fuel Merchants Association of New Jersey, a Springfield-based trade association, said that the natural gas companies had capitalized upon, and indeed encouraged, homeowners’ fears about their underground tanks.

”You can clearly see how the government regulations have been a useful tool with respect to their advertising,” Mr. Sacco said, referring to a recent gas industry advertising campaign that refers to large underground storage tanks as potential ”financial time bombs.”

”It’s some pretty scary stuff,” Mr. Sacco said, ”and they have used it to extend those fears to homeowners. It’s clearly a scare tactic.”

Profit Set by State Agency

The fuel merchants’ resentment is further heightened by the fact that gas companies, as public utilities, are entitled to a profit set by the state’s Board of Public Utilities, that profit being determined after allowing for certain expenses.

James Divine, executive director of the Metropolitan Energy Council, a Norwood-based association of 750 fuel dealers in the New Jersey-New York-Connecticut area, said that as a result, gas companies had an unfair advantage over fuel dealers.

”Their advertising, being a cost of doing business, is built into their rate base,” he said. As a result, he said, those costs are passed directly to customers. And that, he said, allows the gas companies to spend more than four times the amount that fuel dealers spend for advertising and still generate a profit.

As is the case with most public utilities, he said, the gas companies do not have to spend any of that money advertising against other gas companies. Fuel dealers on the other hand, he said, spend millions of dollars each a year just advertising against one another.

That, however, does not seem to trouble the gas industry.

‘We’re Not Shy About Advertising’

”We’re not shy about advertising the benefits of natural gas,” said Neil Brown, a spokesman for the Public Service Electric and Gas Company in Newark, one of the state’s largest utilities. ”And we are not shy about pointing out some of the problems with oil heat,” he said.

Mr. Brown acknowledged that some of the company’s recent advertisements strongly addressed the safety aspects of underground tanks, but said that such advertising was limited to the industrial and commercial markets.

”I’m not aware of any advertising of that kind directed at the residential market,” he said.

Responding to fuel dealers’ contentions that customers ultimately pay for such advertising, Mr. Brown said that while such expenses were indeed included in the rate base, they must be approved by the Board of Public Utilities.

In addition, he said, ”It’s a pretty sure bet that the advertising costs incurred by oil distributors eventually find their way into oil prices as well.”

In any event, it appears that the state’s oil merchants are fighting an uphill battle. According to statistics compiled by the American Gas Association in Arlington, Va., there were approximately 105,000 oil-to-gas conversions nationwide in 1989; almost 17,000 of those were in New Jersey.


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