Shortages in UST Supply are Driving New Regulatory Challenges

As if supply chain issues from the COVID-19 pandemic were not enough to disrupt business operations globally, extreme weather and environmental regulations have compounded an already challenging business climate for petroleum retailers and fuel station owners. 

While many states contemplate the future of their UST Cleanup Funds, tank owners with aging tank systems are beginning to look at the private insurance market for coverage should state funds cease to be an option for meeting federal financial responsibility requirements. As can be expected, the costs to insure tank systems that are coming out of their warranty expiration periods are often very high, leaving tank owners with the difficult decision about the timing of replacing tanks.

Scarcity around the availability of replacement underground storage tanks (USTs) has been making matters worse. Forced to contend with supply chain issues driven by a global resin shortage, coupled with regulatory compliance requirements for aging tanks, some tank owners are choosing to install refurbished used tanks. This approach poses new challenges for environmental regulators who are issuing new guidance to ensure tank age (and risk) metrics don’t become skewed and environmental risk is minimized. 

In mid-February 2021, Winter Storm Uri swept through Texas and caused an extended loss of power and the temporary closure of many petrochemical plants, where the resin for USTs is produced. Before the storm, UST owners could readily replace a tank within 30 days. Manufacturers are currently forecasting new UST orders to be unfulfilled for 6-9 months...or even longer. 

As supply drops and demand increases, some UST owners will inevitably find alternative methods to meet their needs. This could mean that more owners will turn to previously used tanks to ensure business continuity. Exacerbating this problem is the high demand for and limited availability of licensed tank installers to meet the demand for installation. 

In fact, in May 2021, the California State Water Resources Control Board issued an advisory that addressed the “non-compliant reuse of underground storage tanks (USTs),” as the State recognized the issues tank owners are managing. According to the Board, the advisory was prompted by a case in which a station owner had purchased used USTs in Texas to have the tanks reinstalled at his California location.

For most states, including California, there are specific guidelines about the reuse of USTs, many of which require a certification of the tanks by an independent testing organization before they can be installed. In California, where the documented reuse occurred, the state requires that all owners and operators seek to review and approval by the associated Unified Program Agency (UPA) before installing a previously- owned tank.

Following regulatory requirements for recertification and anticipating extended lead time for equipment and installation will be critical to maintaining compliance during these challenging times.