Dan's Papers - March 28, 2008 - Oil Tanks: The Danger Lurking Below

Many of the East End's older homes, though quaint and picturesque on the outside, are actually sitting on unseen, ticking time bombs: aging, underground oil tanks.

Older tanks, typically more than 15 years old, will start to corrode over time, posing both a risk to the environment as well as a financial liability to the homeowner, who would be held responsible in the event of an oil spill. A spill, no matter how small, could flow into a local waterway or seep into a village's water supply. Dangerous for many reasons, including the fact that chronic exposure to oil products can affect the nervous system, blood and kidneys.

And though people often associate oil spills with gas stations, or barges and trucks shipping oil, nearly two-thirds of fuel spills on Long Island each year happen on residential property. The Department of Environmental Conservation estimates that, on average, cleaning up such a spill could cost a homeowner $20,000.

These days, the cost of cleaning up an oil spill from an underground tank probably wouldn't be covered by homeowners' insurance. Over the past five years, many insurance companies have either declined to issue new policies for homes with underground tanks or include a pollution exclusion clause. This means a homeowner would have to dig deep into his own pocket to pay for the clean up of a spill.

"It's very difficult to get insurance to cover the leaking of an underground oil tank. The trend is that most companies are excluding coverage," said Kirsten Squires, personal lines manager at Maran Corporate Risk Associates in Southampton. "It's definitely a local issue. There are a lot of people with underground oil tanks in this area."

Also, as the effects of the declining national housing market are felt across Long Island, even on the East End, homeowners looking to sell need to do everything they can to be competitive. That includes making any necessary changes that would make their house a more attractive option than the next.

Homeowners can take the initiative to empty and abandon underground oil tanks prior to putting their homes on the market, since the issue has the capability of delaying or squashing a potential sale. In fact, many buyers expect the homeowner to empty underground tanks prior to a sale, or they request financial compensation if they are required take care of it on their own.

The first thing necessary for remediation is to find a company that is properly licensed to handle underground tanks, such as Schenk Fuel, Inc. in East Hampton or Quogue Sinclair Fuel, Inc. in Quogue. The tank can both be excavated and removed from the property, with the oil still in it, or it can be abandoned.

It's often easiest to simply abandon a tank. First the tank needs to be drained of all usable oil, via the pipe used to fill the tank, then it is flushed with a detergent solution before it is pumped, once again, of any remaining sludge or oil residue. There are two options after this. The tank can either be filled with foam or with sand. Joel Freedman, manager of the tank department at Schenk, says that the cost of abandoning oil tanks starts at $1,100, with the price increasing depending on the size of the tank. After this, a new tank should be installed, aboveground, ideally in a house's basement.

"There have been quite a number of people coming to us, either because of their concern about the environment and ground water or with the changing real estate market here," Freedman said. "If you're trying to sell your house, it will probably come up in the negotiation of the sale. A prospective buyer doesn't want to foot the bill a couple of years down the road."

"What we recommend when we take a listing is, if the oil tank is in the ground, [the homeowners] should call the appropriate authorities, check out the tank, retire the tank and put one in the basement," said Judi Desiderio, president of Town and Country in East Hampton. "A seller should not assume a buyer is willing to take on a potential risk."

Local municipalities are also relieving some of the financial burden from homeowners. In June 2004, following a year-long campaign by the Group for the East End, the Town of East Hampton began offering a $500 rebate to any individual, trust, estate, corporation or legal entity that removes or abandons an underground tank under 1,100 gallons, replacing it with an above-ground tank. Around the same time, Suffolk County began offering homeowners a $100 rebate, following in 2005 by the Town of Southampton, which offers homeowners a rebate up to $700.

Underground oil tanks pose a very real threat to homeowners' bank accounts, as well as the local environment and should be taken care of before it's too late. "If we haven't scared the pants off every seller, maybe they'll do it sooner rather than later," Desiderio said. "We don't want to scare them, but something could pop up and stop a closing - and that's the last thing you want."