Thousands of aging underground oil tanks are buried beneath the lawns of homeowners on the eastern end of Long Island. These tanks, used to store home heating oil, can lead to serious problems for the unsuspecting homeowner. If not replaced, these tanks will eventually corrode and leak, especially those tanks located near the shore where the water table is high, and salt water mixes with fresh. If an underground storage tank begins to leak, the homeowner could be required to spend thousands of dollars to clean up the spill.
While you might think that the homeowners' insurer would pay for the clean-up costs, think again. Homeowners' insurance companies are increasingly reluctant to indemnify their insureds for environmental damages. Typically, they cite exclusions in their policies for their refusal to pay, even though these exclusions were not explained to the homeowner when they purchased the policy and the homeowner is unaware of their existence.
Facing a denial of coverage by their insurance company homeowners will seek recovery of their damages from those responsible for the leak. But, who is responsible? The New York Navigation Law ("The Nav Law"), that applies to discharges of petroleum, provides the answer. The Nav Law allows citizens who have been burdened with the clean up of a leaking underground storage tank to seek recovery from any person who contributed in any way to the discharge, regardless of fault.
Thus, the oil company who filled the tank on a regular basis could be liable if there is evidence that they contributed in any way to the discharge, such as when the leak occurs immediately after the tank is serviced or filled. In addition, the seller and the installer of the tank may be liable if their conduct contributed in any way to the discharge, such as where the installer fails to install a tank liner. The party responsible for the discharge may be liable for several types of damages. In addition to clean up costs, permanent property damages such as reduction in value caused by the contamination and loss due to "stigma" which remains even after the property is cleaned up may also be recoverable. Temporary damages may also be available to compensate the homeowner for decreased rental value of the property prior to clean up. Consequential damages such as business interruption, loss of profits, the costs of bottled water and the loss of "quality of life" may also be recoverable. Significantly, attorney's fees may also be recoverable.
Clearly the costs of a clean up are high, and best avoided if possible. Accordingly, homeowners purchasing a new storage tank should buy from a reputable company and pay close attention to the manufacturer’s recommendations regarding the tank’s life span and placement. Homeowners with existing storage tanks underground may wish to consider replacement.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.