The redefining of “Decommission” in the Model Toxics Control Act

Commercial property owners sometimes run across the unexpected on their property during excavations and/or renovations. One of the most difficult (and feared) situation is that of locating an underground fuel storage tank on your property. The reason why this can be challenging to a landowner is because of how stringent Washington State’s environmental regulations are. The Model Toxics Control Act (“MTCA”, or “MoTCA” as it is often called) provides the statutory authority to demand clean-up/remediation of these underground tanks. The Washington Administrative Code, section 173-340, outlines with specificity the limitations to remediation of these tanks. On March 3, 2010, according to a Board of Health Resolution No. 2010-4225, the manner in which tanks are “decommissioned” was altered.

Up until March 3, 2010, an option that property owners had in decommissioning these tanks was to extract whatever fuel remained, then fill it with inert material. The tank would stay underground, but it would be harmless as it would contain no fuel and would be full of soil. This is no longer an option. “Decommissioning” now means that the tank must be fully removed from the property. This is significant, as the costs involved in removing a tank vs. filling it with inert material, is substantial.

Court clarifies when property damage occurs

The Washington Construction Law blog submitted a recent post about a decision in Division III Court of Appeals.  In Walla Walla College v. Ohio Cas Ins. Co., No. 26647–8–III, the court had to decide when damage occurred to property from leaking of underground storage tanks.

Walla Walla College obtained an insurance policy with Ohio Cas Ins. Co. covering the installation of gas tanks on its property in the early 1990s.  Though the tanks failed in 2001 (leaking gas resulting in property damage) Walla Walla College claimed that the policy from the early 1990s should cover the cleanup costs because the tank failure was caused to faulty installation by an construction company.

Washington Construction Law blog sums it up as follows:

“Division III held that mere stress to the tank was not enough to constitute “property damage” and therefore denied coverage for the loss under the 1990-1992 policies.  First, the Court noted that the “your product” exclusion” negated any coverage for loss in value to the tank itself.  Next, the Court distinguished continuous trigger cases such asGroul Construction Co., Inc. v. Ins. Co. of North America, 11 Wn.App 632 (1974) by noting that while “a process began” in 1991, the “property damage did not occur until the tank failed in September 2001, long after the policies had expired.”