Magazine article Journal of Property Management

Underground Tank Owners Beware

Magazine article Journal of Property Management

Underground Tank Owners Beware

Article excerpt

Underground storage tanks (USTs) remain an important tool for many businesses, but the owners of USTs should be aware that they face significant liability exposure from a variety of sources should leaks occur. In addition to remediation costs and statutory fines and penalties, the largest potential exposure for a leaking UST owner is tort liability brought on by a claim on behalf of an affected third-party landowner. There are numerous legal theories that have been used to hold property owners liable for pollution arising from leaking USTs, This article will provide a broad analysis of three theories with the intent of providing UST owners with concepts for limiting exposure. It is important for the reader to recognize that the law in this area is not consistent on a state by state basis. Therefore, prior to implementing any risk control strategies, a more focused assessment of the appropriate jurisdiction's law is necessary.

The primary tort theories that have been applied to find liability on the part of UST owners are: negligence; strict liability--abnormally dangerous activities; and nuisance. By considering the critical elements of each theory, the UST owner can be in a better position to avoid future exposure.

Negligence

A successful negligence case must prove four elements:

* the UST owner owed a duty to the plaintiff;

* the UST owner breached that duty;

* the breach caused harm to the plaintiff; and

* the resultant harm caused damages to the plaintiff.

Although there are numerous defenses to a negligence claim, this article will focus on how the UST owner can best avoid litigation. In the typical negligence case, it is often alleged that a UST leak led to the pollution of a neighbor's groundwater or soil. Courts have been willing to find the existence of a duty and a coinciding breach of that duty where the UST owner failed to install the UST in a reasonable manner, failed to regularly inspect the UST for leaks, or once the UST was known to be leaking, failed to properly remedy the problem.

In one particular case involving a service station, a duty and breach was found when the station owner failed to take precautions to avoid or contain leaks even though there was an unexplained monetary loss from gasoline sales [South Cent. Bell Tel. v. Gaines Petroleum, 499So.2d 521 (La. App. 2dCir. 1986)]. Essentially, that decision indicated that it was unreasonable for a service station owner not to at least investigate the possibility of a leak upon realizing that profits were down for the sale of supposedly the same quantity of gasoline as previous months.

In another case, a breach of a duty not to impair a neighbor's ownership rights has also been found when an oil company's USTs leaked and the company delayed in remedying the problem, allowing oil to reach and contaminate neighboring groundwater supplies [Exxon v. Yarema, 516 A.2d 990 (Md. App. 1986) cert. der,. 522 A.2d 392].

These examples demonstrate, in part, that it is in the UST owner's interest to create and retain a documentary record for both the installation and maintenance of USTs. By doing so the UST owner will be equipped with hard evidence documenting reasonable use of the USTs. Even if it is late in the game, and the USTs have been in the ground for years, the prudent UST owner will begin a pattern of taking reasonable steps to regularly inspect the UST for leaks and sample the soils and groundwater around the UST. Relatively little effort and cost are required to conduct these tests, particularly when compared with a potential jury verdict. If documentation efforts reveal signs of a leak, it will always be in the UST owner's interest to act quickly and effectively to stop the spread of contaminants.

One less obvious way to detect leakage is through inventory control. Whatever goes into a tank is documented, and whatever goes out of a tank is metered. …

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