Do Underground Oil Tanks Have To Be Removed?

For years, underground oil tanks have been a practical way to free up aboveground space while maintaining reliable fuel access.

But these tanks don’t last forever. Over time, corrosion, structural wear, and regulatory changes can turn an asset into a liability. 

If you manage an industrial or commercial property, you may be wondering: Do underground oil tanks have to be removed? The answer depends on a combination of factors, from legal requirements to operational needs.

When Underground Oil Tank Removal Is Required

Underground oil tanks are common in industrial, commercial, and municipal operations, often storing heating oil, diesel, or other petroleum products out of sight and away from surface operations. 

For industrial and commercial sites, there are clear situations where underground oil tank removal is needed.

Leaks or Suspected Leaks

If a storage tank is leaking or even suspected of leaking, removal is typically required under state and federal environmental laws. Petroleum leaks can cause severe soil and groundwater contamination, leading to costly remediation, operational shutdowns, and potential legal action. 

Environmental agencies often require removal before contaminated soil can be accessed and treated.

Regulatory Non-Compliance

Older tanks may not meet current standards for leak detection, secondary containment, or corrosion protection. Many states have strict upgrade or closure deadlines for tanks that fail to meet these requirements. For example, tanks installed before modern corrosion-protection rules may have to be removed even if no leak is detected.

End of Operational Use

If a facility is decommissioning, switching to a new energy source, or relocating operations, unused tanks must often be removed to avoid future liability. Some jurisdictions prohibit abandoning unused tanks underground, even if they’re emptied and cleaned.

Property Redevelopment or Sale

If you plan to sell or redevelop your property, removal may be a prerequisite for closing the deal. Buyers, lenders, and insurers often require the elimination of potential environmental liabilities before finalizing contracts. In some cases, state disclosure laws compel owners to remove tanks before transferring property.

When Removal Might Not Be Immediately Necessary

While many industrial tanks do eventually need removal, there are situations where you may be able to keep an underground oil tank in service or decommission it in place, provided you follow the applicable regulations.

• The tank is in good condition and meets current standards. If the tank has corrosion protection, functional leak detection systems, and no history of leaks, and if it passes regular inspections, it may be allowed to stay in operation. Many jurisdictions permit continued use with proper documentation and maintenance.
• In-place decommissioning is allowed. In certain cases — such as when a tank is located under a building foundation or in a position where excavation could damage critical infrastructure — authorities may allow in-place abandonment. This involves pumping out the contents, cleaning the tank, and filling it with an inert material such as sand or foam. However, this option is not available in all regions and may still carry future liability if contamination occurs.
• You need a temporary deferral while planning a replacement. If removal isn’t urgent and a replacement project is already planned, you may be able to defer removal for a set period while continuing to monitor the tank’s integrity. This requires working closely with environmental regulators and maintaining compliance records.

Risks of Leaving an Underground Oil Tank in Place

Even if regulations don’t force you to remove a tank immediately, there are serious considerations to weigh before deciding to leave it underground:

• Corrosion Risk: Many industrial USTs are made of bare steel, which corrodes over time. Once corrosion starts, leaks can follow quickly.
• Operational Disruption: A leak investigation or emergency removal can halt operations unexpectedly, causing costly downtime.
• Environmental Liability: Under “polluter pays” laws, you may be responsible for cleanup costs years after a leak occurs — even if you no longer own the property.
• Insurance and Financing Challenges: Some insurers refuse to cover sites with active USTs over a certain age, and lenders may view them as a liability in financing or refinancing deals.

From a risk management standpoint, proactive removal often costs less than dealing with a contamination incident later.

Underground Oil Tank Removal Process

Removing underground oil tanks at an industrial site is a complex, high-risk operation that must be handled by licensed professionals. Here’s what the process typically involves:

1. Site Assessment: A licensed contractor evaluates the tank’s size, contents, condition, and location, and checks for potential hazards such as utilities, unstable soil, or prior contamination.
2. Permitting and Notifications: Removal usually requires state or local permits, and regulators must be notified before work begins.
3. Tank Cleaning and Degassing: Before excavation, the tank is pumped out and cleaned to remove any oil, sludge, or vapors. This step ensures safety and meets hazardous waste transport regulations.
4. Excavation and Removal: Heavy equipment carefully exposes the tank, which is then lifted from the ground and transported to a licensed disposal or recycling facility.
5. Soil Sampling: Soil around the excavation site is tested for contamination. If contamination is found, remediation work is performed before backfilling.
6. Documentation: The contractor provides closure reports, manifests, and disposal receipts, which are essential for regulatory compliance and future property transactions.

Why You Need a Qualified Removal Partner

Underground oil tank removal at an industrial or commercial site is not a routine construction task. It involves environmental compliance, hazardous materials handling, and safety risks that demand specialized expertise.

When selecting environmental services, look for:

• Proper licensing
• Regulatory knowledge
• Specialized equipment
• Environmental focus
• Complete documentation

A qualified removal partner will also help identify potential risks before work begins, avoiding costly surprises.

Bottom Line for Industrial and Commercial Facilities

Do underground oil tanks have to be removed? In many industrial and commercial contexts, the answer is yes, particularly if the tank is leaking, non-compliant, unused, or stands in the way of property development. Even when removal isn’t immediately required, proactive action often makes financial and operational sense.

An unused or aging tank is more than just buried equipment — it’s a potential liability that can jeopardize environmental compliance, disrupt operations, and drive up long-term costs. Working with an experienced removal contractor ensures the job is done safely, legally, and with minimal disruption to your facility.

Whether you need immediate removal due to a regulatory order or you’re planning ahead to avoid future risk, addressing underground oil tanks is an investment in the safety, compliance, and future value of your property.