Tank Talk - Alaska's Bulk Fuel Podcast

Out of Service or Permanently Closed

• Integrity Environmental • Season 3 • Episode 7

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What really happens to a tank at the end of its life? In this episode, we take a deep dive into what it means for a tank to be “out of service” or “permanently closed,” and how those terms differ depending on the regulation in play - especially between 40 CFR 112 and Alaska’s 18 AAC 75. Shannon breaks down what’s required when tanks are removed or left in place, what documentation is needed, and how terms like “grandfathering” can complicate things for facilities hoping to avoid costly upgrades. Whether you manage a single tank or a whole tank farm, this episode is a must-listen for staying compliant through a tank’s final days.

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Haley Hall:

Welcome to Tank Talk with Integrity Environmental. Join us as we sit down with founder, principal consultant and bulk fuel storage expert, Shannon Oelkers, to explore regulations, safety and essential tips for navigating the bulk fuel storage industry. Join us as we explore the unique joys of work and life in Alaska with industry experts, including our team, vendors we work with and the companies we support.

Haley Hall:

Shannon, I'm curious what happens to a tank at the end of its life?

Shannon Oelkers:

What do you mean Haley? Like when it's no longer useful, when it goes to that big tank Heaven in the sky?

Haley Hall:

Yes, so I heard about a client of ours recently taking a tank out of service, but I wondered exactly what that meant.

Shannon Oelkers:

Oh, okay. Well, out of service is a little tricky, depending on what regulation we're operating under.

Haley Hall:

Okay, so this term out of service. It has different meanings under different regulations?

Shannon Oelkers:

Yeah, it sure does, Just like everything we do. It cannot be just one simple answer. Do you want me to bring it down for you and maybe our listeners to just go through?

Haley Hall:

Absolutely, where do we start?

Shannon Oelkers:

Okay? Well, let's start first with the difference between out of service and permanently closed, because there is two terms for what I would consider the same thing. First, permanently closed is used by 40 CFR 112. And then, where a lot of our listeners are, in the state of Alaska, the regulation 18 AAC 75 uses the term out of service, which is often shortened to OOS. You may see that in other places. And then Haley, there's real life where most people just call tanks out of service or closed. I swear almost nobody uses the permanently closed term because that's the EPA. Bless their hearts. They always like to pick something. Nobody uses.

Haley Hall:

So does the out of service or permanently closed terminology just mean that the tank's empty?

Shannon Oelkers:

No, no, and we got to be careful about this because empty does not correlate to closure status, and this is a really important distinction. Out of service or permanently closed are terms that are from the regulations that indicate the tank's no longer in use, no longer meets regulatory requirements or it doesn't meet inspection criteria for continued service. Lots of tanks are in service but kept empty for a bunch of different operating factors like reduced usage during winter months, economics. They just don't need to use the tank because they're not buying as much fuel. It's tricky because if a tank has been empty for a while, there's a tendency for the yard operators to just start saying the tank's out of service. But that's not correct. In the eyes of the regulation, as long as the tank is being routinely maintained and inspected, it's considered in service, even if it's been empty for a while.

Haley Hall:

I'm getting the feeling that using the term out of service should be done a little bit more carefully.

Shannon Oelkers:

Yes, absolutely, because it carries great regulatory weight. Haley, If you were to have a state or federal inspector on your facility and you casually referred to a tank as out of service, they would perk their ears up and want to know a lot more if the tank was maybe in service in your permitting. So tanks that are considered out of service have to meet certain requirements and tanks that are in service have to meet certain requirements. So even in death, the state and the EPA want to say how your tank is managed, which makes me laugh.

Haley Hall:

So which specific regulations impact a tank's service status?

Shannon Oelkers:

It's a short and powerful list. For most of the United States, Haley, it's just going to be 40 CFR 112. But some states, like Alaska, have additional requirements. If you qualify so in Alaska that'd be 18 AAC 75. And that's only if you store over 420,000 gallons. And we'll get to that later. But maybe for the rest of this discussion let's focus on the 40 CFR 112 and then bring the state of Alaska in later, since we have listeners all over the place. I do want to briefly mention that there are also very specific regulations for the service status of underground storage tanks at the state and federal level. But I would really like to stay above ground today. That also could be its own podcast. There's a lot there.

Haley Hall:

Got it, so leaving USTs buried for now. Earlier you mentioned inspection standards. Do they apply as well?

Shannon Oelkers:

They do, sort of. So STI SP-001 and API 653, which are the two most commonly used. They both address when a tank is suitable for continued service. So the whole point of that is to determine if the tank is suitable for continued service. But they don't necessarily say how to indicate that a tank is out of service. They just tell you when to quit using it. Essentially, so all of the regulations about what to do once a tank is taken out of service, they just tell you when to quit using it. Essentially so all of the regulations about what to do once a tank is taken out of service fall under 40 CFR 112, and then maybe some specific state layers over the top of that.

Haley Hall:

Yikes. So this is getting way more complex than I even originally thought.

Shannon Oelkers:

Yeah, don't worry, though, we'll break it down. For ease of this conversation, though, let's assume that we're talking about a tank that does need to be permanently closed. We're not all talk about tanks that are in good condition that we may not want to use anymore, but for now let's say that it had an inspection. The inspector found a fatal flaw, horrible corrosion, a through thickness hole, something bad enough that it's not coming back. The repair just does not make any financial sense. Once you've decided that a tank is going to go out of service at your facility, the 40 CFR 112 regulations kick in, and there are now two pathways before us. You can take it out of service and leave it in place, or you can take it out of service and remove it.

Haley Hall:

Shannon, I have a feeling that in Alaska the tanks get left in place way more often, and in the Pacific Northwest the tanks get removed more often.

Shannon Oelkers:

You would be correct, and that's just a logistics function In the lower 48, it's a lot easier to get somebody with a welding crew and a cutting crew and cranes and telehandlers and all that stuff to remove the tank out of there In Alaska. That's a very expensive proposition. So we definitely see a lot more in-place, out-of-service tanks up here in Alaska.

Haley Hall:

Well, let's just start with the first part. What do the regulations require for a tank that is taken out of service?

Shannon Oelkers:

So 40 CFR 112 has a section two with definitions, and in that section it talks about permanently closed as any container or facility for which, one, all liquid and sludge has been removed from each container and connecting line, and, two, all connecting lines andudge has been removed from each container and connecting line, and two, all connecting lines and piping have been disconnected from the container and blanked off. All valves, except for ventilation valves, have been closed and locked, and conspicuous signs have been posted on each container stating that it is a permanently closed container and noting the date of closure.

Haley Hall:

Okay, so that seems pretty straightforward. What about removing the tank? Do they just haul it off, maybe toss it off a cliff?

Shannon Oelkers:

It's almost like a trick question. If a tank that was in your SPCC plan is removed, you have to show documentation that it was removed in accordance with the definition that I just read. So you have to keep records from your contractor showing that all sludge and liquids were removed from the tank and the connecting lines and documenting where the tank was disposed of. So when you hire that contractor you're going to want to make sure that they are prepared to provide a report that shows the date the tank was cleaned, the method, the date of disposal and the location that the tank was taken to for disposal. So you can't throw it off a cliff, because that's not going to be a good answer.

Haley Hall:

Darn

Shannon Oelkers:

I know, I know, I know Some tanks I would love to throw off a cliff. They're just a difficult thing. So just giving you like a plain English answer, a compliant report would say something like this On June 8th, super contractor crew drew down all remaining liquids from the tank and associated piping Hot water or dry wings were used to remove any remaining oily residue. All liquids were disposed of at the local water treatment facility in accordance with our totally compliant waste management plan and a tank was hauled to the local metals landfill for disposal on June 9th and it should have a photo log of the tank being cleaned and removed and then any piping that was connected to that tank that still remains at your facility should have a blind flange on it.

Haley Hall:

Oh, why do I get the feeling like this doesn't happen very often.

Shannon Oelkers:

Because it doesn't. I mean the work happens, but the contractors aren't usually asked to provide a report like this and there isn't really a requirement for that report other than you must comply with your SPCC requirements. So hopefully everyone listening to this will remember to ask for a report like this in the deliverables the next time they do a project like this to take a tank out of service. It does not have to be complicated or long, it just needs to be a memo addressing the important bits with supporting photos. You can even make your own report if the contractor just is not capable or willing to do it. But if you take it out of service and then you're getting a federal inspection a few years later, they will literally ask where are your records for taking this tank out of service? Because what they're worried about is that you did throw that tank off a cliff and they want to know where it went and is it polluting the environment anymore?

Haley Hall:

That makes sense. Well, that covers destruction. What about the ones remaining in place?

Shannon Oelkers:

Well, that covers destruction. What about the ones remaining in place? Okay, well, let's go back to 40 CFR, 112. And that definition. There was some additional requirements that I read about tanks and this also applies to pipelines, by the way, that are buried, that are left in place but taken out of service. So let's go back and remember.

Shannon Oelkers:

There was a second part that said all connecting lines and piping have been disconnected from the container and blanked off. All the valves have been closed and locked, except for ventilation valves, and then conspicuous signs have been posted on each container stating that it is a permanently closed container and noting the date of closure. This means the tank has to have signs stating that it's permanently closed. You got to put that date of closure on it and that sounds easy enough, and it is the day you take it out of service. But remember, these tanks are outside right, so the signage can fall off, it can fade or peel as coatings fail.

Shannon Oelkers:

And the key part about permanently closed tanks is that you have to have documentation of the first part as well, the part where you remove the liquids and sludge, and then you have to maintain the signs and the isolation of the second part, the liquids and sludge, and then you have to maintain the signs and the isolation of the second part. So, folks, the epa requires us to maintain tanks even in death. It's a super useful requirement, though, hayley, because unless the tank is labeled like, how do you know if it's out of service or just not being maintained correctly? And I think that's why the epa has such specific language about this, because it's easy to be like oh yeah, that tank's out of service, but if you open it up and there's fuel in it and it's not isolated and it's not labeled, is it out of service? So it's a mechanism for the regulation to be like is this tank something we're going to regulate or not?

Haley Hall:

Right, that makes sense. Well, are there common compliance issues with maintaining the permanently closed or out of service status of a tank or a pipeline?

Shannon Oelkers:

Yeah, yeah, there are. I can just go over a few of them if you want me to right now.

Haley Hall:

Yeah.

Shannon Oelkers:

Okay, I mentioned the big one already label failure. It just fades, peels, falls off. The second biggest one is failing to keep records of the removal of liquids or sludge, like they did it, but they didn't keep any evidence of it or a statement or a memo or anything. And then the next one is that they did not remove the liquids or the sludge. You open the tank up and there's still junk in the bottom.

Shannon Oelkers:

And as a side note on this one, especially for buried pipelines, which kind of applies to this whole conversation, we have definitely seen in our history in integrity, where lines that have been taken out of service, especially more complex ones, there's lots of low points, especially older lines. There's a lot of fuel that is entrained in, like the walls of the piping, and so they may have taken it out of service and drained it down, but 10 or 20 years later there's fuel that's relaxed out of the steel or maybe it was trapped in a low point, and so we have seen tanks and piping that were cleaned but then 10 or 20 years later there's some junk that has just come out of different places in the tank or the piping. So I do want to say that sometimes that failure to remove all liquids or sludge is not necessarily like it can happen anyway, even if you do it all right, I guess. So you do want to kind of take a peek in there every once in a while and make sure nothing's building up. And then there's just a couple more common ones just failing to isolate the tank or piping segment properly.

Shannon Oelkers:

The most common version of this is that it's in line with an active piping system and they close the valve but they don't physically isolate the tank and over time that valve degrades and you can get a leak internally. So the fuel is moving from one side of the valve to the other within the pipeline it's not outside of the pipeline and that tank can slowly fill up with fuel because it's getting fuel every time the pipeline's pressurized A little bit gets into the tank. That isolation failure is not as common as the others, but it does happen. And then this one's super common a buried pipeline that's been capped off and taken out of service isn't labeled at all, so nobody knows what it is where it goes when it was taken out of service.

Shannon Oelkers:

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Haley Hall:

Shannon, so far we've talked about 40 CFR 112, which applies across the US, but you also mentioned 18 AAC 75. What does that regulation have to say about service?

Shannon Oelkers:

Okay, so that one only applies to facilities within the state of Alaska that store over 420,000 gallons of fuel. So start there. So if you're listening to this and your facility does not meet these requirements, you can turn the podcast off now or skip ahead.

Shannon Oelkers:

We've got more stuff at the end. You want to hear. So this regulation, there's two different sections. This one specifically has service or out of service requirements for tanks and then another one for piping. So I'll start with the piping. It's the regulation for those of you who like to look these things up on your own is 18 AEC 75-75-080-O and it states that the owner or operator of a facility oil piping that is removed from service for more than one year and that for more than one year is important and that again maybe could be another podcast Ensure that the facility oil piping is free of accumulated oil identified as to origin, marked on the exterior with the words out of service and the date taken out of service. Okay, so what does the state of Alaska say about tanks? Almost the same thing by this subsection are completed.

Haley Hall:

Okay, so what does the state of Alaska say about tanks?

Shannon Oelkers:

Almost the same thing but a little bit different.

Shannon Oelkers:

So I will say the state of Alaska addresses both shop built and field constructed tanks in their regulations, but the out of service piece is only found in the field erected section of the 18AC-75. I believe that's because your horizontals, or the shot belts, they're going to be covered by your SPCC regulations already. So the state chose to focus on the larger tanks. So for field-constructed tanks that's 18AC-75-065, also O, because the state likes to be neat and tidy like that. A field-constructed above-ground oil storage tank removed from service for more than one year must be free of accumulated oil, marked with the words out of service and the date taken out of service, secured in a manner to prevent unauthorized use, and otherwise blank-flanged or otherwise disconnected from facility piping. The owner or operator shall notify the department when a tank is removed from service and when the actions required by the subsection are completed. And then they have an addition that says in this subsection removed from service means not in regular use for the service intended and not included in a regular maintenance and inspection program in accordance with this section.

Haley Hall:

Wow Well this might be silly, but we've heard the two terms there's permanently closed and out of service. Do you have to label the tanks or piping with both of those terms?

Shannon Oelkers:

That's not silly, but I'm imagining the stencil for permanently closed would be ridiculously long. For most facilities using the label permanently closed is sufficient because we're trying to meet 40 CFR 112. I do see a lot of out of service stencils. Almost everybody uses out of service. But I feel like the regulation it does require labeling saying it's permanently closed or indicating that it's permanently closed. But if you operate within the state of Alaska and have that larger facility, the state's pretty specific that you need to label it as out of service.

Shannon Oelkers:

I haven't seen the state or the EPA go down that road of pettiness yet, but if you wanted to be extra compliant, extra, extra compliant, I would probably just slap both of them out there, create the stencil once and then just keep reapplying it every couple years.

Shannon Oelkers:

What both regulations are consistent about, though, across the board, is that you have to include the date taken out of service and the origin if it's piping. And just a note on origin for piping if you have piping that's buried between a marine header and tank farm and you're going to take it out of service and cap it where the pipe daylights, so where it comes up above ground, you need to label it with the end location at the other end. So if you're standing at the marine header, it needs to say tank farm, and if it's for origin, and if you're standing at the tank farm, it needs to say marine header, and the reason for that is where you are standing. Clearly, that's where the pipe starts, but you need to know where it goes, and so I have seen quite a few that just say tank farm at the tank farm and I'm like, well, yes, I know on origin. And then Haley, I do want to talk about something we have to talk about grandfathering. If we're going to talk about out of service.

Haley Hall:

Did you just say grandfathering? What on earth does grandpa have to do with tanks?

Shannon Oelkers:

okay. So it's a weird, a weird term. I know it's weird. It's used in multiple ways. It's really common in real estate as well.

Shannon Oelkers:

In general, grandfathering is a term for a facility component that was compliant at the time it was installed. And keep in mind we work with tanks from every decade that are still in service, from 1914 all the way to last year. So we have lots of different installation dates. It's not like every tank was installed in the 70s or something. As these regulations change, they create grandfathered infrastructure where if a tank is in continuous service it does not need to meet modern requirements for leak detection, foundation style gauging etc. So both federal and state regulations have grandfathering built into them and these kinds of clauses are fairly common in zoning laws and houses and stuff.

Shannon Oelkers:

So, like I said, you might have heard it in a real estate and you'll see this in regulations a lot If piping was installed prior to this or after that.

Shannon Oelkers:

And those are all acknowledging the grandfathered status of the infrastructure between those states and they are often part of new regulatory packages as they get issued. So if you issue something on May 10th of 2024, it'll say tanks in service after May 10th of 2024. And then the next reg will start when it's issued. So if you take a tank out of service or designated as permanently closed but there's nothing wrong with the tank, let's say well, federal and state regulations would treat that tank as a brand new install if you decided you wanted to pursue either the repairs or just bringing the tank back into service. And keep in mind a lot of people an in-service tank requires frequent inspections, so sometimes people are tempted to take a tank out of service to avoid those ongoing inspection and maintenance costs. If that tank is an older tank, you will lose your grandfathering, and so there are quite a few tanks in this world that are in service but not necessarily being used for fuel storage right now, because the facility just does not want to lose that grandfathered status.

Haley Hall:

Okay, I'm having trouble picturing this in my mind. Can we maybe get an example of what this would look like?

Shannon Oelkers:

Yeah, and this is very complicated and we're getting deep in the weeds here, Haley, but I do think it's important to go through this because there are consequences to taking a tank out of service and I want to make sure all of our listeners know what those consequences are.

Shannon Oelkers:

So imagine you have a tank that was constructed after World War II. It was built to an API 12C standard because API 650 wasn't invented yet. It was built directly on the ground because that's what you did in 1958. And the tank is regularly inspected under API 653. It's been in use this whole time. It's stable, it's well maintained, it's not corroding. In fact, you know steel is thicker in the old days. So tank's actually pretty good shape. But it's been empty for a couple years. Economics just don't, aren't supporting putting fuel in it and you're having to pay for api 653 every five and cleaning it out. It's a lot.

Shannon Oelkers:

So you're like okay, you know what, I don't want to deal with this tank anymore. And you take it out of service. You play, you label it, you isolate it, but it's still sitting there, right? Well, a couple of years go by, economics change and all of a sudden that tank is looking really appealing to you because it's still in good condition. It's still sitting there, right. Maybe you want to put it back in service.

Shannon Oelkers:

But now, under state and federal regs, you're going to have to meet all of the current requirements for a modern tank and there's a lot I mean you'd have to do an engineered foundation, full liner leak detection, cathodic protection and there's a host of other additions that I'm going to side eye the EPA air regulations a little on this one. You're basically rebuilding a new tank and that gets really expensive. So I covered all of that, which was a lot and a little confusing. But I wanted to make sure that everybody was aware that if you have a tank and you're going to take it out of service and it's not for a suitability for service issue, you are going to lose whatever protected status and grandfathered status you've got with that. So it has to be taken into consideration.

Haley Hall:

Well, Shannon, thank you. I learned something new today about grandpas.

Shannon Oelkers:

It's such a weird term.

Haley Hall:

I have no idea why I called that.

Shannon Oelkers:

Maybe some of our listeners who are lawyers could enlighten us

Haley Hall:

Hopefully.

Haley Hall:

Well, I do have one last question. When you permanently close a tank, do you need to update your SPCC and your OD PCP, if that applies to you?

Shannon Oelkers:

Absolutely. Anytime a tank is removed from service you'll need to amend all your spill response plans to remove it from your active tank list and then you want to adjust your total storage volume down for the facility. But I will say, if the tank is going to remain on site it's a good idea to still list the tank in your plan, but note that it's permanently closed, with the date either in your tank table or, if you do an exempt container table, put it there. This is really helpful if the coding fails and you've got staff turnover. It's nice to have the out of service date somewhere besides on the tank itself, especially if you don't have a lot of records.

Haley Hall:

Gotcha. Well, I think it's time to permanently close this episode. Do you have any last thoughts or resources out there that you could point the listeners to for further information?

Shannon Oelkers:

Well, there's not a whole lot of resources out there for this. The regulations that I read are the bulk of it, but you could if you wanted to. In the 2013 EPA Guidance for Regional Inspectors, there's a section 2.8. And that section has a really nice overview of what permanent closure looks like, for tanks to be exempt from inclusion in the SPCC right, how to take it out of service. And then it also addresses some other things like seasonal closures under the SPCC and the differences in closure requirements for oil storage tanks versus hazardous materials tanks, and they're very different. So, dear listeners, if you have a hazardous material or hazardous substance tank, like methanol or solvent or something like that, nothing I just said in the last 30 minutes applies to that hazardous substance tank. There's a whole different RCRA requirements for hazardous materials. So just being aware that these requirements for oil tanks are a little different. And then, lastly, if you want Haley, I have a link to the Grandfather Clause's Wikipedia page, which is great page which is to go through it.

Haley Hall:

Perfect, I will definitely check that out. But thank you so much, shannon. I feel like I've learned a lot today.

Shannon Oelkers:

It's such a funky little section of the regs, but it becomes really important, especially when you are looking at managing tank storage. Volume you know what tanks to take out of service and what to do once they are out of service. I appreciate the opportunity. Haley, thanks everyone. Volume you know what tanks to take out of service and what to do once they are out of service. I appreciate the opportunity. Haley, thanks everyone.

Shannon Oelkers:

Hi there, this is Shannon Olkers and, as the owner of Integrity Environmental, I wanted to take a minute here at the end of the podcast to make sure that you knew the following this podcast is for informational purposes only and should not be considered legal or regulatory advice. We are not responsible for any losses, damages or liabilities that may arise from the use of this podcast. This podcast is not intended to replace professional regulatory or legal advice, and the views expressed in this podcast may not be those of the host that would be me or Integrity Environmental. Thank you very much for listening and if you do need professional regulatory advice, we'd be happy to help you as part of our consulting services.

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