Storage Compactor Functional Under Water

I would not consider this as a bug. This mechanic is one of the only ways to safely store sublimating materials such as slime or bleach stone, and is an integral part of the way many players operate with mushroom farms and melting ice into storage tanks.

 

They better not change that.

you can encase your storage compactor in igneous and it will still work.  I've made volcano stairs before, and filed a bug report called Honeybadger Compactor because they don't require a floor, or even clear cells in front of them, they don't care they work regardless of their condition.