Fire code deadline passes with many tanks still not upgraded

Ten years after stricter fire safety codes were enacted for propane storage tanks, most marketers appear to have met the July 1, 2011 compliance deadline for their own bulk plants.

State associations, insurance carriers, equipment providers and contractors doing valve change-outs say propane marketers have been diligent in getting their storage facilities up to code. An informal survey of propane marketers and wholesalers among LP Gas Magazine subscribers shows 92 percent of respondents said their bulk plants were brought up to code by the July 1 deadline.

The same cannot be said for the thousands of customer-owned vessels that fall under the same National Fire Protection Association (NFPA) 58 code requirements, however.

Ninety-four percent of survey respondents estimate that at least a quarter of their customers have not yet upgraded their storage facilities.

A recent Purvin & Gertz study indicates there are 15.6 million gallons of marketer bulk plant storage nationwide. Customer storage accounts for another 4.4 billion gallons, although most is in smaller vessels not covered by the code change.

“It’s open-ended as to how many customer tanks are out there. I don’t think anybody knows,” says Robert Barry, president of equipment distributor Bergquist Inc. “Nobody has good data, but we drive the countryside and see lots left to do out in the field.”

Barry estimates that 75-80 percent of marketers have done their upgrades. He puts the number of customer-owned tanks at just 50 percent.

The 2001 code changes were designed to improve product containment by requiring thermal activation and remote emergency shutdown capability in storage vessels with a water capacity of more than 4,000 gallons.

Existing plants were given two options. Either the liquid inlet and outlet openings of the container must have an internal valve capable of remote closure and thermal-actuated automatic shut-off, or the tank must have an emergency shut-off valve with remote closure and thermal actuation near the tank inlet or outlet.

The industry was given 10 years to retrofit an estimated 70,000 tanks in use by marketers, wholesalers or customers. The code does not address compliance, which is left to the state authority or local jurisdiction.

Penalties for non-compliance can range from simple warnings to monetary fines or restrictions in operations.
Authorities in states using NFPA 58 editions older than 2001 will not be able to enforce the provision. According to NPGA, there are just six states in that category – Alabama, Alaska, California, Connecticut, Hawaii and Louisiana.

Investing in safety
Bill Mahre has worked in the propane industry for 59 years, including four years as an independent owner and a stint as safety director for a regional company. The owner of Propane Technical Services, a firm that investigates propane accidents, thinks the tougher regulations will go a long way in preventing the devastating storage tank explosions that drove the code change.

“I can honestly say that in the BLEVEs [acronym for Boiling Liquid Expanding Vapor Explosion] that I have investigated, had there been internal valves that closed on the sensation of heat or fire – thermal operated – those incidents wouldn’t have happened,” Mahre says.

When ignited, a liquid propane spill and subsequent expansion into the atmosphere creates a fire that is virtually impossible to douse without halting the flow of fuel. Pressure inside a storage vessel engulfed in that intense heat mounts until the metal eventually fails and the tank ruptures violently.

“You have to shut the valve off. But often the valve is buried underneath the tank and not accessible to firefighters. These tanks with the new equipment allow that to happen without intervention. When it gets up to 200 degrees, the valve releases and the tank closes internally, shutting off the fire. So it’s an important feature,” Mahre explains.

“There has been a lot of discussion about this over the years. There are many different views [about the code change], but you can’t argue with a self-closing, thermal-operated valve that can shut the line off. You don’t even have to be there [for it to work].”

Greg Noll is the executive vice president of the Propane Marketers Association of Kansas (PMAK). Having worked as a marketer for 30 years, he knows the practical hurdles that retailers face getting into compliance.

The equipment needed for single tank change-outs costs $3,000 to $3,500 plus the cost of installation. The vessel needs to be purged of fuel while the work is done, limiting the job to periods where the tank can be taken out of service.

“I understand it’s a big challenge. But given the fact we were given 10 years to do this there’s not anybody in the country who was not aware of what had to be done,” he says.

“We try to put ourselves in their position, but we put safety at the very top of the priority list. It’s all about safety, and we cannot lose focus about why these changes were put in place in the first place. This should rank way up on the list of safety compliance.”

PMAK members tell Noll that compliance among the 135-140 retail propane companies operating 239 bulk plants is between 80-90 percent.

“I would like to think it’s even higher, although I know it’s not 100 percent. We certainly don’t want to see any interruption of business for failure to comply.”

The enforcement hammer
The fact that code enforcement varies greatly from state to state makes it virtually impossible to track compliance or project the consequences of not upgrading facilities. Some states (Texas) have been enforcing the new regulations for several years already; others (Pennsylvania) have chosen to push the deadline back beyond 2011.

Most assign enforcement to their respective fire marshal’s office. But there are other regulatory bodies – specific LP gas agencies, Department of Agriculture, even the state Highway Patrol – that handle those duties elsewhere.

“Very few states have regulatory bodies that are proactive when it comes to looking at sites that are already in use and also have the capability to write citations for code violations and shut a plant down if it doesn’t comply,” Mahre says.

“For the most part, they are not proactive. But then they have this knee-jerk reaction after an accident, and the investigation finds that they are in violation of the code.”

Baron Glassgow, who is spread thin as director of propane associations representing 11 different states, agrees.

“So much depends on what state you are dealing with,” says Glassgow, who estimates that 95 percent of marketers in his western and southwestern regions have upgraded their bulk plants.

“There are some with enforcement agencies specifically for propane, but there are others where you can’t even determine who is doing the enforcing. It appears to us that several logical groups won’t be doing the enforcement [of the new code]. It’s really kind of peculiar.”

Even if the local authorities aren’t hammering marketers for compliance, insurance carriers likely are pressing for the changes to get done.

“From our standpoint, we always want to see marketers in full compliance with the current edition of NFPA 58 that their state has adopted,” says Eric Kuster, a loss control specialist with Fairmont Specialty insurance.

Kuster says he’s unaware of insurance coverage being canceled for companies that missed the July 1 deadline.

“It’s going to vary by insur
ance underwriter on how stringent they want to enforce. Every company has different guidelines. It’s definitely something that’s on our radar for those safety reasons,” he says.

“Plants that have been retrofitted are much safer. The new regulations greatly diminish the likelihood of incident or accident, so we want them done.”

Since much of the tank inventory in the field is more than 30 years old, the valve changes for code compliance come at a good time for many.

“A lot of marketers seem to have taken the view that this is probably a good thing. It gives them a chance to up-size the piping to make pumping faster, so this is a good time to get it done. I understand the hesitancy from those guys who waited too long and are now facing a crunch. But I think everyone is basically on board with it,” Kuster says.

“The private tanks are the ones we’ll have a larger issue with,” he warns.

Whose responsibility?
There is much speculation as to what – if any – duty propane transporters have to verify that the customer-owned tanks they are filling meet the new code.

“That’s the thousand-dollar question: Where does transport driver responsibility end and facility owner begin?” Kuster says.

Many retailers have notified their customers of the requirements and explained the safety considerations behind the mandate. But they say they can’t be expected to track the upgrades done to hundreds – or even thousands – of tanks owned by their customers.

“I don’t know if we even could track customer-owned tank upgrades, since they often shift suppliers,” notes Heritage Propane CEO Paul Grady.

The nation’s third-largest propane retailer has spent more than $6 million on its bulk plant retrofits for 2011 compliance over the last five years, Grady says. It also reached out to educate customers and recommend service contractors to do the needed work.

Should a transport driver refuse to deliver a scheduled product load to farms, orchards, terminals, commercial accounts, utility peak-shaving and standby systems if the customer-owned vessel has not been upgraded? There are business answers and legal answers.

In this era of aggressive gallon stealing, marketers are loathe to refuse a delivery to customers since some competitors won’t hesitate to take the order.

“At some point it comes down to making a prudent business decision. Competitors will certainly be willing to steal those gallons – especially with these large accounts,” Grady says.

Yet 72 percent of the marketers responding to the LP Gas Magazine survey said they plan to withhold delivery to those customers with deficient tanks.

Experts agree that a bulk plant explosion at a facility that has not been upgraded (including those owned by a customer) likely will result in the fuel provider being dragged into litigation alleging negligence.

John McCoy, president of the law firm McCoy & Hofbauer that specializes in defending propane companies, says it all comes down to interpretation.

“You do open yourself up to that liability claim. But depending on the facts of the case, you would have a good defense,” McCoy says.

“In my view, there is no legal duty to inquire. The onus is on the tank owner. All people are presumed to know the law, and so he [transporter] is entitled to assume that those people follow the law.”

The insurance companies that are on the hook for accident liabilities understand the dilemma facing marketers.

“It’s easy for me to tell a marketer not to fill a non-compliant customer-owned tank because it’s not my pocketbook,” Kuster admits.

He believes propane marketers need to sell it to customers as more than just a code change.

“Propane guys understand propane and how it works. Non-propane people think propane is this magic genie in a bottle. They know that if it’s not handled right it can lead to unpleasant results.

“If you approach them from a safety perspective, you can get good results. It’s for the safety of customers and the transport professionals as much as anything else because the likelihood of a problem is during the loading or unloading of the vehicles. So it’s in their interest to make it as safe as can be.”

Photo above courtesy of the Propane Education & Research Council