How do we run a shared propane system that our HOA owns?

By OurHOA · General information · Revised October 21, 2026

When an HOA propane tank and piping serving 10 or more homes falls under federal pipeline safety rules, who the operator is, and how to contract and bill owners.

Part of the HOA board handbook: vendors, projects and upkeep.

The short answer

A propane tank, or a bank of tanks piped together, that feeds 10 or more homes through underground mains is usually a regulated gas pipeline, not just a big tank. The federal pipeline safety rules in 49 CFR Part 192 exempt petroleum gas systems only when they serve fewer than 10 customers and no part of the system is in a public place, or serve a single customer on that customer's own premises (49 CFR 192.1(b)(5)). Everything else must meet Part 192 and NFPA 58 or NFPA 59 (49 CFR 192.11). Federal guidance for small LP gas operators says the tank's location does not matter once 10 or more customers are served. Somebody has to be the operator of that pipeline, with written plans, trained people and inspection records. For a volunteer board, the right answer is almost always a licensed propane company that owns the gas until it reaches each home's meter and accepts the operator role in writing. Rules vary by state and by your governing documents, so treat this as education, not legal advice.

Find out who owns what, and who the operator is

Make a one-page map of the system: the tanks, the regulators, the buried mains, the service line to each house, and the meters. For each piece, write down who owns it, according to the declaration, the plat, the supplier contract or the bill of sale from the developer. Then settle the operator question. The federal guidance manual for small LP gas systems explains that the propane company is often the operator, but if ownership of the gas changes hands at the tank, from the supplier to an entity such as a condominium association, that entity becomes the operator. An association that buys propane by the tankful and resells it to owners has likely made itself the operator without knowing it. The same manual says the regulated system ends at the outlet of the customer's meter or the connection to the customer's piping, whichever is further downstream. Piping inside the lot past that point is the owner's. In Texas, the Railroad Commission applies Part 192 to LPG distribution systems and master metered systems (16 Tex. Admin. Code 8.1), so ask its pipeline safety staff whether your system is on file and under whose name.

What the operator has to do

These duties fall on whoever operates the system, which is why the board wants a professional holding them. Before gas flows, the operator needs written plans for operations and maintenance, emergency response, damage prevention, operator qualification, public awareness and distribution integrity management. The manual must be reviewed at least once each calendar year, at intervals not exceeding 15 months. Leak surveys of a residential system happen at least every five years, and every year for any part in a business district. Public awareness messages go to customers twice a year and cover how to recognize and respond to a leak and the 24-hour number to call. The operator also checks odorant levels, keeps maps and construction records, and belongs to the state one-call (811) system so the mains get marked before anyone digs. Ask your supplier to show you each of these plans. If it cannot, it is not acting as the operator, and the association may be.

Write a supplier contract that names the operator

Put the operator role in the contract in plain words: the supplier is the operator of the system from the tank through each customer meter and is responsible for compliance with 49 CFR Part 192 and state rules. Then list what the association gets: copies of the plans on request, every leak survey and odorant test, a current system map, and notice within one business day of any leak, incident or regulator inspection. Add a 24-hour emergency number with a response time, the meter reading schedule, the price formula (a published index plus a stated margin is easier to audit than 'market price'), the term, and who owns the tanks and lines when the contract ends. Require liability insurance with the association named as additional insured. Check the license. Texas Natural Resources Code 113.081 bars anyone from installing, servicing or repairing LP-gas systems, or laying the pipe that serves them, without a Railroad Commission license. Florida Statutes 527.02 requires a license from the Department of Agriculture and Consumer Services, and a Category V installer under 527.01(10) is the class that designs and services piping and tanks. In Colorado, plans for installations with containers over 2,000 gallons water capacity go to the Division of Oil and Public Safety for approval before construction (C.R.S. 8-20-406), and accidents at LP-gas installations are reported to the division within 24 hours (C.R.S. 8-20-407).

Billing owners for gas

The cleanest setup has the supplier read each home's meter and bill the owner directly, so gas never touches the association's books. If the association buys the gas and bills owners, three things follow. First, recheck the operator question above. Second, read the declaration to confirm the association can charge for utilities and, if you ever need to, collect unpaid gas charges the way it collects assessments. Third, adopt the rate method by board resolution: meter readings on a fixed day each month, cost per gallon passed through at the supplier's invoice price, a stated administrative charge if any, and a separate line on the owner statement. Do not fold gas into regular dues as a flat amount. Owners who heat with propane and owners who only run a range will rightly complain, and the budget swings with the price of propane every winter.

Leaks, digging and what to tell owners

Post the operator's 24-hour emergency number on the tank fence, in the welcome packet and on the community website, and repeat it in the twice-yearly safety message. A notice the board can adapt: 'Our homes are served by a shared propane system operated by [company]. If you smell gas inside, leave the house right away without using switches or phones, then call 911 and [company] at [number] from outside. If you smell gas outdoors, move away and call [company]. Before you dig for a fence, mailbox or garden, call 811. The mains run under the common area and your front yard.' Our guide on responding to a gas leak at an HOA clubhouse or pool heater covers the first 30 minutes of an incident. Give the landscaper and every contractor working on common area the same map, and make an 811 ticket a condition of the work.

A sample year and the mistakes to avoid

January: confirm the supplier contract, insurance certificate and license are current, and get the year's inspection schedule. Spring: first safety message to owners, and a walk of the tank site to check the fence, signs, bollards and clearance around the tanks. Summer: price review against the contract formula. Fall: second safety message and a pre-winter delivery plan. Each year: ask for the annual plan review. Every fifth year, or sooner if the operator's plan calls for it: leak survey report. The mistakes boards make are predictable. They let the supplier contract say nothing about who the operator is. They buy gas at the tank to save a few cents a gallon and inherit a federal compliance program. They let a handyman tap a new house into the main. They keep the only system map in a former director's garage. They treat the twice-yearly safety notice as optional because nobody has smelled gas in years.

Sources

These guides are general education for HOA boards and residents, not legal, tax, or financial advice. Rules vary by state and by your community's governing documents - check with a professional for your situation.

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