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Gasoline Station Owners and Buyers – Here’s a Brain Teaser For You

 

If you think owning or buying a gasoline service station is easy, think again.

Consider this conundrum. You are projecting capital expenses and you know that your single-walled tanks must be removed, as early as 2015, depending on the type and date of installation. (See current regulations.) But the regulator may be throwing you a life line, as it is considering postponing that date until 2020.

Good deal, right? Well, not so fast.

What Does Stage II Have To Do With It?

The reason the regulator is thinking about postponing that date is because new tank installation requires all pumps to have Stage II Vapor Recovery, which is required by the EPA and is not inexpensive.

But the EPA is reconsidering requiring Stage II because it is incompatible with newer cars, many of which have internal vapor recovery systems. Because of this incompatibility, use of Stage II on newer cars actually releases MORE gasoline vapors to the atmosphere—exactly what it was designed to prevent.

So there’s the first problem. If you replace the tanks early, you will be required to install Stage II, and if you wait, perhaps the EPA will have removed the requirement, saving you that money.

Well, it could get worse. Perhaps you replace the tanks early, install Stage II, the EPA eliminates the requirement for Stage II and goes even further, and requires all Stage II systems to be removed. So you paid for it, now you have to pay to remove it!

So, easy decision—simply wait to remove the tanks until absolutely required to do so, and see what the regulatory requirements are at the time—right?

Again, not so fast.

Is a Tight Tank Really Tight?

You will be required to periodically test your single walled-tanks. If they don’t pass, you may have a leak requiring tank removal, and you of course have to deal with the leakage and remediation. You just cross your fingers and hope there is enough money in the Underground Storage Tank Reimbursement Fund to fix your problem and that you qualify for reimbursement.

But if the tanks pass, you are all set, right? Well, not exactly.

You see, your tanks could pass the tightness test and not really be tight—they could still be leaking, albeit at a low rate. But what if the replacement deadline is extended until 2020, you wait and unknown to you, your tanks are leaking for ten years. That could be a lot of contamination to be remediated, perhaps even more that would be covered by the UST Reimbursement Fund.

So what do you do?

If there was a good answer, I would give it to you. There isn’t.

However, there may be a good argument for being proactive, removing the single-walled tanks early, nipping in the bud any leakage issues but absorbing the cost of Stage II installation, and perhaps the additional cost of  being required to remove it in the future.

That is, of course, the non-gambler’s approach!

Many thanks.

Kudos to Rick Mandile of Sage Environmental for his insight on this issue and his thoughtful comments.