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Underground Tank Problems

Storage tanks at retail gasoline locations began to be placed underground early in the twentieth century. This was done both for aesthetic and fire safety reasons. Right from the start, there were problems with leakage. As early as the 1930s, there are reported legal cases involving groundwater contaminated by leaks and spills from underground gasoline storage tanks.

In the past, there were many more retail gasoline stations than there are today. It was not unusual for a busy intersection to have a gasoline station on each of the four corners. Such corner properties are often still very attractive locations for other types of retail establishments, but it is not uncommon to find that such locations have been contaminated with gasoline leaked from old underground tank systems.

It was not until the 1980s that legislation was passed on both the federal and state level specifically addressing the problem of leakage from underground storage tanks, and the cleanup of the resulting contamination. Although these new laws required upgrades of tanks and the filling and pumping lines associated with the tanks, it was not until 1998 that gas station operators were required to upgrade old tank systems with technology that substantially reduced the risk of leaks and spills. Even then, many tank owners and operators were late in meeting these requirements.

In California, it is clear that the owner of real property at which a leak has occurred from an underground tank can be liable for the cleanup, even if the property owner did not operate the tank. Although California law requires the owners and operators of a tank to cleanup any gasoline released from a tank system, there are many reasons why these requirements do not always solve the problem for property owners whose land has been contaminated by old gasoline tanks. For example, where service stations were closed before the modern tank laws of the 1980s, the passage of time can make it difficult to identify the former operators, and raise the possibility that claims against former owners and operators are barred by statutes of limitations.

Counselling a client whose property is contaminated from underground fuel storage tanks can require consideration of many different issues, including managing the investigation of the contamination and the history of tank use and ownership, evaluating the effect of current and past leases and purchase and sale agreements, analysis of eligibility for the Underground Storage Tank Cleanup Fund, negotiating cleanup requirements with government agencies, evaluating the possibility of insurance coverage, evaluating the impact of cleanup levels and schedules on redevelopment of the property, and obtaining agreements with former owners and operators (frequently major oil companies) that contain strong enough provisions to make financing, sale, and leasing of the property possible.

Peter Niemiec has been advising clients with respect to contamination from underground fuel storage tanks for over twenty years. During his years as in-house counsel for Unocal, his client group was responsible for addressing tank contamination issues. Peter has been involved in both the prosecution and defense of private litigation and government enforcement actions over responsibility for contamination caused by underground tanks. He has negotiated cleanup standards with government agencies, and successfully handled an appeal of a local agency's denial of a closure letter. He has negotiated many agreements between property owners and major oil companies concerning cleanup of contamination from underground fuel tanks.

Peter has also counseled clients over eligibility for the California Underground Storage Tank Cleanup Fund, structured the assignment of claims against the Fund, and handled appeals over access to the Fund. He filed amicus briefs in Kelsoe v. State Water Resources Control Board (2007), 153 Cal App. 4th 569, a case interpreting the statutes governing eligibility for the Fund. He found sponsors for, drafted, and negotiated changes to legislation that broadened eligibly for the Fund in the wake of the Kelsoe decision. That bill, AB 1437, became law on January 1, 2008.