Despite urbanization, about 14% of urban and rural residents in Canada use fuel oil for heating. As per Statistics Canada (2011), there are approximately 1,026,081 residential oil tanks in Canada, half of which are located in Ontario. As a result, residential oil spills can have devastating consequences.
Consequences of Oil Spills
- Environmental Contamination
- Penetrates the soil
- Groundwater contamination
- Eventually flows to water sources
- Property Damage
- Fuel oil permeates into the wood, concrete, drywall, etc.
- Damages fabrics and textiles
- Fuel vapors can contaminate the entire home
- Health Risks
- Exposure to fuel oil can lead to respiratory issues
- Skin irritation
- High Clean-up Costs
- Excavation of soil and conducting tests to determine the degree of oil spill
- Water treatment
- Extensive testing
- Structural reinforcements
- High Litigation Costs
- Greater contention
- Requirement of a sophisticated counsel
- Longer resolution time
Types of Oil Tanks
The most commonly found oil tank in Canadian residential settings is the vertical oil tank. Oil tanks in Canada require certification and meet specific regulations and specifications. The Canadian Standard Association outlines these specifications, and the tanks are usually certified by underwriters laboratories.
There are a few variations of oil tanks available. Figure 1. depicts the most commonly encountered oil tank, i.e., the vertical one. The image on the left represents the outlet port on the side which is considered a design deficiency and is a primary cause of oil spills. The right image shows a less encountered version of the vertical tank with the burner supply connection located at the top.
Figure 2.
Certain oil storage tanks are designed for horizontal installation, especially if they are to be installed indoors or in crawl spaces. Like vertical tanks, horizontal tanks also have outlet pipes located either on the side or at the bottom.
Figure 3
Oil tanks can also be installed in series or parallel, provided the installation follows the specific codes in Ontario regarding the handling and storage of fuel. It is governed under the Technical Standards, and Safety Act (TSSA) under Ontario regulation 213 and is administered under the Canadian Standard Association Standard B-139 Ontario Installation Code for Oil Burning Equipment.
Figure 4
As of November 9, 2012, all above-ground tanks, including indoors and outdoors, must be constructed with double bottoms, double wall, or secondary containment due to an increase in the number of oil spills from single-walled tanks according to an amendment issued by the TSSA in Ontario.
These tanks come with a double bottom and a leak detection system. Some of these tanks are built to hold at least 100% of the inner tank’s volume, providing optimum protection in the event of a leak. Fiberglass appears to be approved for usage in Canada. However, we have not been involved in any oil spills involving double-wall or fiberglass tanks.
The Most Common Causes of Oil Spills
Bottom Perforation by Microbiologically Induced Corrosion (MIC)
Figure 5
Stagnant water at the bottom of the oil tank is one of the most common causes of internal corrosion. The degradation is due to the water accumulated inside and at the bottom of the oil tanks—the water forms inside the tank due to condensation. In addition, stagnant water containing organic material, including diesel fuel, makes for a conducive environment for microbial growth. Microbial growth is related to water, and diesel fuel acts as a source of nutrition for the bacteria.
As bacteria inside the tank releases corrosive compounds, the tank’s steel begins to erode from the inside out, finally perforating the bottom wall. However, a visual examination from the outside does not reveal MIC.
Figure 5 depicts a close-up image of an oil tank’s bottom perforation as seen from the outside. As you can see, the hole is hidden behind a layer of paint. The bulging of the paint indicated the position of the hole at the bottom of the tank in this case. It’s not uncommon for many holes to form at the bottom of the tanks.
Figure 6
As seen from the exterior of the tank, Figure 6 depicts a typical appearance of bottom hole perforation. As previously stated, MIC corrosion begins inside the tank.
Figure 7
Figure 7 is a rare image produced using a scanning electron microscope. The image was captured at a magnification of 3500x and depicted an actual bacterial colony found in one of the pits at the bottom hole.
Design Deficiency
Figure 8
MIC is caused by stagnant water accumulated at the bottom of the tank. Sometimes the design deficiencies are a contributing factor to these degradation mechanisms. Figure 8 depicts an oil tank sectioned in half to expose the bottom and the side. There is usually a water line formation when there is water inside the tank, which is clear evidence of water present. If the outlet port is located on the side and above the bottom, as seen in the right image, the water cannot be completely drained from the tank and will stay inside the tank. It will eventually lead to favorable conditions for corrosion to occur. The right image clearly shows the water line distinguishable within the brown pattern.
Improper Installation / Maintenance Issues
Figure 9
Oil spills are not necessarily associated with design issues. They could be related to improper installations and maintenance matters. Figure 9 shows the tank is incorrectly sloped away from the outlet port, contrary to the applicable regulations.
The oil spill did not occur from internal corrosion but from a defective valve. If the faulty valve had been replaced with the proper one, the oil spill would most likely not have happened, but in this instance, the owner decided to patch the valve himself by wrapping tape and insulation. This form of improvisation did not last long and the oil was discharged into the environment.
Cross-threading In-Line Filter
Figure 10
Oil tank installations are provided with in-line filters located downstream from the outlet port to prevent sediments from the tank from traveling to the furnace. These filters are required by their manufacturers to be replaced at least once a year. For specific types of filters, it is done by unscrewing the cylinder canister from the lid and replacing the filter inside with a new one. The canister is then screwed back onto the lid.
In this case (Figure 10), the person who replaced the filter damaged the threads during the installation. This damage is called cross-threading, and in this particular case, the threads do not fit in each other and cause damage to each other, thereby creating pathways for oil discharge.
Manufacturing Defects: Welds
Figure 11
Figure 11 depicts an outlet port as seen from inside the tank. The outlet port is welded onto the tank’s shell, and you can see in this image, as highlighted by the red arrow, that the weld was not made properly. As a result, there is a gap between the tank’s shell and the outlet port. This gap allowed stagnant water to accumulate and eventually corroded the steel leading to oil being discharged into the environment. We have seen various spills where the cause was improper installation.
Installation Issues
Figure 12
We have seen numerous cases where the oil spill was due to an installation issue. The code requires that the oil tank be installed on a solid foundation and safeguarded from falling ice or toppling over. In this case (Figure 12), the oil tank was installed on patio stones but with an improper foundation.
So, over time, due to rain and ground settling, the tank’s front legs collapsed, and consequently, the tank collapsed. In the process, the outlet valve was completely ruptured. The gap formed due to a complete valve fracture, allowing the oil to discharge into the environment.
Installation Issues: Shut Off Valve
Figure 13
Figure 13 shows the oil supply line from the outlet port that consists of a steel pipe. Had it been anchored properly, the valve would probably not have failed. We didn’t know if it failed due to overload by falling ice or by someone stepping accidentally on the valve. However, this installation should have been done according to the code.
Flare Fitting Failure – Accidental
Figure 14
Fail accidents can happen to other components associated with an oil tank, such as this flare-fitting fail connection. A flare fitting is connected downstream from an oil tank, and it connects the oil supply line to the inline filter.
During a renovation project around the property, some of the workers accidentally lifted the tank from the ground, and they did so by raising it by the old supply line. Unfortunately, the old supply line was not designed to withstand the weight of the oil tank, and it ruptured. Consequently, an oil spill occurred in an area highlighted by the red arrow in this image. (Figure 14)
Tipping Over – Improper Installation
Figure 15
As mentioned earlier, the regulations are particular on installing a tank. Figure 15 is a typical example of rules broken in terms of the installation of the tank. There was no secure foundation, and the tank was not secured. Consequently, shortly after installation, it toppled over, allowing a significant amount of oil to discharge into the environment.
Tank Collapse: Saddle Corrosion
Figure 16
External corrosion on other components under that oil tank could also lead to oil spills. For example, figure 16 shows two saddles used to support oil tanks. Significant deterioration is visible and wall thinning on one of the two saddles. Under this condition, it was no longer capable of withstanding the tank’s weight and the oil inside. Consequently, the tank toppled over, allowing significant oil to spill into the environment.
These are some of the common causes of oil spills in residential areas. For a more comprehensive understanding, you can watch our detailed webinar delivered by Origin and Cause’s team of experts on the subject matter.
The Do’s and Don’ts of Oil Spill Investigation
Oil spill investigations are lengthy and complex. They necessitate the involvement of many parties, including insurance companies, adjusters, TSSA, oil suppliers, tank manufacturers, cleanup company experts employed by various parties, lawyers, etc. As a result, knowing what to do and what not to do is critical.
By law, a homeowner is required to report an oil spill if:
- They have caused or permitted the release of the oil
- They had control of the substance just before the spill occurred
- They are a member of a public agency, and the spill has not been reported
An oil spill must be reported to:
- The Ministry of the Environment and Climate Changes’ Spills Action Center
- The municipality
- The person in control of the substance is known and not already aware
The Do’s in Oil Spill Investigations
- Ensure the Ministry of Environment and Climate Changes’ Spills Action Center has been notified. Until the TSSA in Ontario attends the site of damage, you cannot change the site or remove the tank.
- Take lots of pictures of the incident, including tank fittings, pipes, various components, legs, the underside of the tank, foundation, manufacturer label, etc., including close-ups. The pictures are worth a lot of money because the engineers are assigned to the case, the tank is removed, and remediation has already begun.
- Before the cleanup crew arrives and modifies the site, contact a forensic engineer specializing in oil spills to come to the site as soon as possible. Seek advice on what you should document and preserve.
- Retrieve relevant information and documents associated with the tank, installation, inspection, maintenance, and fuel oil history delivery from the owner.
The Don’ts in Oil Spill Investigations
- Never tamper or misplace evidence, do not move any components at the site.
- Do not forget to document the fuel oil tank condition and position. It includes the foundation and the surrounding environment.
- Do not forget to document the chain of custody. Once the TSSA releases the site, it is unlikely that all parties will examine the tank. Until the tank is removed, it’s important to document its condition, journey, and companies engaged, including people who handled it during its journey from the site to the off-site.
- Don’t forget to collect necessary information and documents associated with the tank, installation, inspection, maintenance, and fuel oil history delivery from the owner.
Steps to take at the Onset of the Subrogation Process
- Subrogation starts immediately after the loss, so it is crucial to preserve evidence both from the technical and legal perspectives.
- Obtain critical documents, including
- Comprehensive inspection from the installation of tank
- Records of fuel oil deliveries to identify who delivered fuel oil and when
- Contracts and invoices from the tank installer
- Contracts and invoices from all maintenance on the tank and heating system
- Preserve your ability to recover
- The goal is to recover every dollar spent on remediation
- Independent oversight of the remediation process is crucial, so it is a good idea to hire an independent engineer to oversee the process.
- At an early stage, get a comprehensive expert report in order to support subrogation efforts. The report should outline
- The cause of failure
- Identify all deficiencies with the installation and condition of the tank at the time of the loss
- A discussion of what deficiencies should have been outlined and by whom
Litigation Strategies
Identifying Subrogation Targets
To consider prospective subrogation targets in any situation, we must first ask ourselves three questions. The three classes of targets are:
- Parties who caused the loss
- Parties who could have prevented the loss
- Parties who could have mitigated the loss
From a liability perspective, the first class of defendants will face the most liability, but the second and third classes will also face some liability. This is significant because, in the case of fuel oil, we may not have someone in the first class, so we must make do with what we have. The additional report we stated previously proves culpability against these parties. If the tank was installed incorrectly, the installer would be in this category, as would the maintenance contractor if required maintenance was not performed, and anyone who physically harmed the tank will be in this category as well.
However, there will be other qualified parties who should have discovered flaws in the second class. This can include the fuel oil supply firm and other on-site maintenance contractors, even if the fuel oil regulation didn’t require them to work under the tank. If a qualified party notices a code violation, the tank must be marked as an immediate or non-immediate hazard.
After the deadline for correcting the violation has passed, the tag out prevents further fuel oil supplies. The only viable solution for most steel tanks is tank replacement. For example, surface rust on an external tank is often considered a code violation, yet it has nothing to do with microbial-induced corrosion. It’s usually a non-immediate threat that only warrants a 90-day tag, but if a fuel oil supply company fails to provide that tag and the tank leaks, they can still be held accountable.
Retain Counsel Early
Experienced subrogation counsel can and do improve recoveries through
- Early identification of additional issues
- Figure out liability before remediation is complete
- Early steps were taken toward resolution
When these subrogation investigations are conducted early, it is common for liability issues to be resolved from our perspective before the remediation is accomplished.
At times we’ve been retained on the day of certain significant losses. Counselors are sometimes aware of difficulties that the adjusters and contractors are unaware of. It’s best to deal with such concerns as soon as they develop. It might be as simple as pointing out any misgivings the defendants may have with the repair procedure at the outset rather than later criticizing it or directing the expert on what areas they should cover in their report. The most significant expert reports we’ve seen are written after a conversation between counsel and the expert.
Because no subrogation case is ideal, it’s critical to seek legal advice. If your case has any flaws, you should be aware of them as soon as possible so that you may adequately account for them and satisfactorily establish your settlement expectations.
Identify Frailties Early
No case is perfect due to:
- Contributory negligence of the insured
- Excessive remediation costs
- Contractual impediments
It’s pretty usual for insurance companies and homeowners to fail to arrange regular tank maintenance. However, since 2007, regular maintenance of fuel oil tanks has been required, and it is the responsibility of the homeowners to ensure that it is completed. If they fail to do so, they will face severe contributory negligence for any fuel oil leak.
If the remediation costs are high, it’s best to consider what should or should not have been done at the outset of the case rather than waiting until further down the line.
Other contractual terms may come into effect at times. For example, there may be innocuous causes, such as liability limitations or subrogation waivers. These will prevent recovery against parties who would otherwise be liable or diminish the claim’s value by increasing risk. Some of these terms are easier to spot than others, which is another reason to hire legal counsel as soon as possible and send them the contracts to study.
Work Smarter
A collaborative approach to litigation:
- Produce all information immediately
- Discourse, not defenses
- Flexible use of litigation steps
Working with opposing counsel to make it easier for them to make us an offer is one of the key reasons our office, in particular, has been able to promote much earlier settlement of cases. It entails pre-loading files with work to produce all our information and documents right away. It includes all expert reports, which we don’t like to keep because we think it’s counterproductive. But, by providing them with that evidence, the initial investigation conducted by those defending adjusters may consider their stance and ours.
Furthermore, rather than demanding defenses, we usually try to participate in some dialogues with the parties to learn about their various perspectives to spot the flaws in both their and our arguments. But, again, this leads to exchanging information and documents so that everyone understands where we’re coming from, leading to settlement conversations rather than a discovery process.
Even if settlement is not achievable at the outset, we can try to use the litigation process in a way that leads to resolution rather than going straight to trial. We can accomplish this with some restricted discovery examinations, hot tubbing with experts, or some early mediations of viable possibilities.
Origin and Cause: Your Choice of Experts
Our team of forensic experts is well nuanced in the field of investigation, report preparation, and acting as expert witnesses in court testimonies. If you’re facing oil spill issues, contact us today at 1-888-624-3473 and we will conduct an unbiased investigation based purely on facts and evidence.