mike media

Fueling a crisis:
Regulations catch up with tank farm owners

July 15, 1993

Michael Gerhardt
Arctic Sounder

Aging fuel tank farms in Alaska villages, and the environmental and health problems they pose, have long been ignored by state and federal regulatory agencies.

Until now.

In the wake of a crackdown by the U.S. Coast Guard, regulations are beginning to be enforced, and a $400 million problem is emerging.

Last March, the U.S. Coast Guard threatened to shut down more than 70 bulk fuel tank farms throughout rural Alaska. The Coast Guard, which has jurisdiction over all facilities which receive fuel from barges, said they took the action hoping to become a catalyst of improvement.

After traveling throughout the state last year to inspect facilities, the Coast Guard found wide-spread problems with aging tanks and piping systems, most of which were installed back in the 1950s and 1960s. Just about every village in rural Alaska has one or more tank farms that are not in compliance with regulations, according to state officials.

When villages received suspension orders from the Coast Guard, Gov. Walter Hickel's office was flooded with calls from rural Alaska. The governor negotiated a one-year grace period to give the state time to find a solution to a problem that extends beyond Coast Guard regulations.

The Coast Guard, the Alaska Department of Environmental Protection, the Alaska Fire Marshal, and the U.S. Environmental Protection Agency all have regulations that affect fuel storage facilities.

Fuel tank farms are a familiar sight in rural Alaska. There is at least one such facility in most villages, and usually more than one. Typically, the town government or traditional council, the local school and the local electric utility operate tank farms. There are relatively few privately owned tank farms in rural Alaska.

A state task force estimates that bringing fuel facilities in more than 200 villages into compliance with all applicable regulations could cost as much as $400 million.

The problems facing fuel storage tanks are nothing new to those in the Bush who have been dealing with them for years.

"The regulations are finally catching up with us," said Walter Sampson, of the Alaska Village Electric Cooperative, which owns dozens of tank farms in rural Alaska. Sampson also works for NANA Corp., which has fuel projects in several villages in the NANA region.

Problems with aging tank farms in rural Alaska have been largely ignored by federal and state regulators. Traveling to villages to inspect and enforce regulations is expensive and most regulatory agencies have neither the funding nor the personnel to cover the whole state.

The EPA does not have sufficient staff in Alaska to travel to rural Alaska, according to Scott Smith of the EPA's Alaska office. Because of the staff shortage, the EPA does not plan to start enforcing regulations in rural Alaska anytime soon, Smith said at a workshop in Kotzebue last May.

In the past, the Coast Guard had been unable to inspect facilities in rural Alaska in the past because of budget constraints, according to Lt. Jerry Wilson, chief of port operations.

Other agencies are expected to follow the Coast Guard's action, seen as a wake-up call to regulatory agencies.

"In the past, they've never really been enforced, basically because no one has really pushed it," Sampson said.

But Sampson and others, such as AVEC operations and maintenance manager John Lions, believe the time is right for the problem to be resolved.

"The overwhelming majority of people probably don't understand what the impact of this means," Lions said. "Nor do they have an idea of what it's going to cost. "I think somehow the word needs to get out that this really is a problem."

In villages where fuel prices are already two to three times as high as in urban areas, the cost of repairing or replacing tank farms could drive fuel prices even higher. In some villages, there are concerns that the cost of repairs will drive prices so high, fuel will no longer be available.

In response to the Coast Guard's action, the governor created the Bulk Fuel Task Force. In May, after being ordered by Hickel to find solutions that would keep fuel flowing to rural Alaska, the task force held workshops in seven communities.

The workshops were well attended, according to task force coordinator Sue White of the Alaska Industrial Development and Export Authority.

In Bethel, organizers had to find a more spacious location to hold the workshop after almost 100 participants showed up.

In every community, workshop participants were briefed by task force staff and by different regulatory agencies. Even more important than informing the communities was having the communities inform the task force, according to those involved.

"The people who have attended the bulk fuel workshops are the people who are actually in the field. And they have good suggestions and good recommendations," said Edgar Blatchford, commissioner of the Department of Community and Regional Affairs and task force chairman.

Funding was the biggest concern at the workshops, White said. People wanted to know where the money would come from to fix the aging fuel facilities and bring them into compliance with regulations.

Having to deal with complicated and often conflicting regulations was another big concern.

At the workshop in Kotzebue, the task force was asked to consider how the costs of complying with regulations would affect private operations in rural Alaska. Since most of the fuel facilities are connected with the state or federal governments, private business owners are worried they will be left out of any funding solution.

Following the workshops, task force staff have been working on a report to present at the upcoming task force summit, scheduled for July 28 in Anchorage.

Participants from around the state, many of whom attended the community workshops, are expected to be at the Anchorage summit.

A draft copy of the task force report, which will be presented at the summit, contains many of the recommendations heard during the workshops.

Any commitment to solving the problems of the aging tank farms must come as a joint effort between the state and federal governments and the private sector, according to the draft report.

Blatchford said the state is planning to ask the federal government to match state funding, much in the same fashion as the funding partnership between the two to deal with safe water and sewer concerns in many rural villages.

The report also says that funding must be made available to the private sector. Blatchford said that any solution would likely include funding for private businesses but that it would probably be in the form of low-interest loans rather than grants.

Also recommended in the draft report was the consolidation of regulations. One comprehensive set of regulations would cut down on the confusion and frustration of having to deal with multiple agencies, tank farm operators said.