NPGA advocates for update to residential propane tank regulation

March 10, 2020 By    

The Housing & Urban Development (HUD) Department published a final rule that updates a regulation concerning loans for residential properties with propane tanks.

The regulation stated that residential properties within 300 feet of a 1,000-gallon propane tank were ineligible for Federal Housing Administration (FHA)-backed loans, which many first-time homebuyers use.

The HUD regulation was based on studies from 1975 and 1982 and was the justification for the following provision in the FHA Single Family Housing Policy Handbook relied on by FHA home appraisers:

“If the subject property line is located within 300 feet of an aboveground or subsurface stationary storage tank with a capacity of 1,000 gallons or more of flammable or explosive material, then the Property is ineligible for FHA insurance, and the Appraiser must notify the Mortgagee of the deficiency of MPR or MPS. This includes domestic and commercial uses as well as automotive service station tanks.”

A member marketer who worked with a residential developer on a propane system for a new housing community brought this issue to the attention of the National Propane Gas Association (NPGA). The association engaged FHA and HUD to identify the outdated regulation and advocate for the incorporation of NFPA 58 standards for separation distances between propane tanks and structures.

“NPGA members are on the frontlines in experiencing these sort of changes in routine operations,” says Sarah McLallen, vice president of communications and member services for NPGA. “Communicating with NPGA enables us to advocate to regulatory leaders quickly.”

Initially, HUD proposed to allow 250-gallon propane tanks within 300 feet of an FHA-backed property. NPGA continued to push for a higher container volume to accommodate homes using propane for multiple appliances.

Ultimately, HUD changed the regulation to exclude all underground propane tanks and aboveground propane tanks of 1,000 gallons or less if they comply with theĀ National Fire Protection Association (NFPA) 58 2017 Edition. HUD also incorporated by reference the NFPA 58 2017 Edition in the updated regulation and instructed FHA to update the Single Family Housing Policy Handbook to reflect these changes.

“Due to the final rule-making, propane marketers can continue work with residential and commercial developers that use propane community systems to fuel homes and businesses,” says McLallen on what propane marketers can expect going forward.

NPGA plans to follow up with the FHA staff on the update to the handbook. The new regulatory language and text of the final rule are available online here.

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About the Author:

Sarah Peecher was a digital media content producer at LP Gas.

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