                          Regulatory Impact Analysis
for the 2008 and 2009 Final Amendments to the Oil Pollution Prevention Regulations (40 CFR PART 112)
                                       
                                   Volume I


                                 Prepared for:
                     U. S. Environmental Protection Agency
                 Office of Solid Waste and Emergency Response
                        Office of Emergency Management
                                       
                       Prepared with the assistance of:
                              Abt Associates Inc.
                      under EPA Contract No. 68-W-03-020
                               October 22, 2009
                                       
                                     DRAFT

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                               Table of Contents

1	Executive Summary	3
1.1	Baseline for the Analysis	10
1.2	Universe of Affected Facilities	11
1.3	Baseline Compliance Cost and Cost Savings	12
1.4	Impacts on Human Health, Welfare and the Environment	19
1.5	Small Entity Impact and Executive Orders	20
1.6	Sensitivity Analyses	22
1.7	Key Assumptions and Limitations	25
2	Introduction	31
2.1	Statutory Authority	33
2.2	Regulatory Background	33
2.3	Statement of Need for Regulatory Action	34
2.4	Final Amendments to the Rule	34
2.5	Objectives of the Regulatory Impact Analysis	38
2.6	Organization of this Report	39
3	Methodology	45
3.1	Regulatory Baseline for the Analysis	45
3.2	Cost Savings from the Final Rule Amendments	47
4	Estimation of the SPCC-Regulated Universe of Facilities	53
4.1	Data Sources and Industry Sectors	53
4.2	Facility Categories	55
4.3	Comparison with EPA's 1991 Facilities Study	56
4.4	SPCC Universe Estimation Using State Databases	58
4.5	SPCC Universe Estimation Using Industry-Specific Data Sources	63
4.6	Estimates of the Total SPCC Universe	67
4.7	Advantages and Limitations of the Updated SPCC Universe Estimate	71
4.8	Projecting SPCC Universe Estimates Using Derived Industry Growth Rates	72
5	Facility Compliance Costs	77
5.1	SPCC Plan and Records	78
5.2	Capital and Operation and Maintenance (O&M) Activities Costs	93
5.3	Final Alternative Compliance Option for Tier I Qualified Facilities	106
5.4	State Overlap	107
5.5	Annualizing Estimated Changes in Compliance Costs	108
6	Compliance Costs and Savings by Rule Component	113
6.1	Hot-Mix Asphalt	113
6.2	Pesticide Application Equipment and Related Mix Containers	124
6.3	Applicability of Mobile Refueler Requirements to Farm Nurse Tanks	129
6.4	Residential Heating Oil Containers	132
6.5	Definition of "Facility"	139
6.6	Facility Diagram	139
6.7	Loading/Unloading Racks	143
6.8	General Secondary Containment	144
6.9	General Secondary Containment for Non-Transportation-Related Tank Trucks	144
6.10	Security	145
6.11	Integrity Testing	149
6.12	Integrity Testing Requirements for Animal Fats and Vegetable Oils	152
6.13	Oil Production Facilities	158
6.14	Man-Made Structures	185
6.15	Wind Turbines	185
6.16	Tier I Qualified Facilities	185
6.17	Underground Emergency Diesel Generator Tanks at Nuclear Power Stations	195
6.18	Overall Compliance Cost Savings	201
7	Impacts on Human Health, Welfare and the Environment	207
7.1	Oil Discharge Threat	207
7.2	Distributional Analysis	214
8	Small Entity Impacts, Executive Orders, and Other Required Analyses	217
8.1	Regulatory Flexibility Act and Small Business Regulatory Enforcement Fairness Act	217
8.2	Executive Order 13132 - Federalism	218
8.3	Executive Order 13175 - Consultation and Coordination with Indian Tribal Governments	219
8.4	Executive Order 13045 - Protection of Children from Environmental Health & Safety Risks	219
8.5	Executive Order 13211 - Actions that Significantly Affect Energy Supply, Distribution, or Use	219
8.6	National Technology Transfer and Advancement Act	220
8.7	Paperwork Reduction Act	220
8.8	Executive Order 12898: Federal Actions to Address Environmental Justice in Minority Populations and Low-Income Populations	221
8.9	Congressional Review Act	222
9	Key Limitations and Assumptions	225
9.1	General Limitations	225
9.2	Hot-Mix Asphalt	227
9.3	Pesticide Application Equipment and Related Mix Containers	227
9.4	Residential Heating Oil	228
9.5	Tier I Qualified Facilities	228
9.6	Security	228
9.7	Animal Fats and Vegetable Oils (AFVO)	229
9.8	Oil Production Facilities	229
9.9	Integrity Testing	230
9.10	Key Assumptions	230
Bibliography	235

                               List of Exhibits

Exhibit 1-1 Summary of Key SPCC Rule Final Amendments	5
Exhibit 1-2 Estimated Number of Existing SPCC-Regulated Facilities by Size Category (2010)	12
Exhibit 1-3 Total Cost Savings for Farms from the Final Rule Amendments (2007$, Millions)	16
Exhibit 1-4 Total Cost Savings for Oil Production Facilities from the Final Rule Amendments (2007$, Millions)	17
Exhibit 1-5  Total Cost Savings for the Final Amendments (2007$, Millions)	18
Exhibit 1-6  Annualized Cost Savings for the Final Rule Provisions for Partial Compliance Scenarios	24
Exhibit 2-1  Crosswalk with the Preamble	41
Exhibit 3-1  Main Steps for Estimating the Economic Effects of the Final Rule Changes	49
Exhibit 4-1  Industry Sectors and Databases Used to Estimate SPCC-Regulated Facilities	54
Exhibit 4-2  Estimated Number of SPCC-Regulated Facilities by Size Category	56
Exhibit 4-3  Comparison with EPA's 1991 Facilities Study	57
Exhibit 4-4  Summary of State Databases Used in the Analysis	59
Exhibit 4-5  Percentage of Matched Facilities after Automated and Manual Matching	62
Exhibit 4-6  SPCC Universe Estimates Using State Databases	63
Exhibit 4-7  Summary of Federal and Proprietary Data Sources and Methodologies Used in the Analysis	65
Exhibit 4-8  SPCC Universe Estimate Using Federal Databases	67
Exhibit 4-9  Estimated Universe of SPCC-Regulated Facilities	68
Exhibit 4-10  Estimated Universe of SPCC-Regulated Facilities	70
Exhibit 4-11  Estimated Growth Rates for Total and New Facilities by Industry Sector	73
Exhibit 5-1  SPCC Plan Preparation and Maintenance (In-House Labor, New Production Facility)	85
Exhibit 5-2  SPCC Plan Preparation and Maintenance (In-House Labor, New Storage Facility)	86
Exhibit 5-3  SPCC Plan Preparation and Maintenance (Professional Labor, New Production Facility)	87
Exhibit 5-4  SPCC Plan Preparation and Maintenance (Professional Labor, New Storage Facility)	88
Exhibit 5-5  SPCC Plan Preparation and Maintenance (In-House Labor, Existing Production Facility)	89
Exhibit 5-6  SPCC Plan Preparation and Maintenance (In-House Labor, Existing Storage Facility)	90
Exhibit 5-7  SPCC Plan Preparation and Maintenance (Professional Labor, Existing Production Facility)	91
Exhibit 5-8  SPCC Plan Preparation and Maintenance (Professional Labor, Existing Storage Facility)	92
Exhibit 5-9  Capital Costs of Sized Secondary Containment (New Facilities)[1]	94
Exhibit 5-10  Capital Costs for Secondary Containment for Bulk Storage Containers (New Facilities)[1]	95
Exhibit 5-11  Facility-Level Integrity Testing Costs (New & Existing Storage Facilities)[1]	97
Exhibit 5-12  Monthly Inspection and Testing Costs (New & Existing Facilities)[1]	99
Exhibit 5-13  Liquid Level Sensing Device Testing Costs (New & Existing Storage Facilities)	99
Exhibit 5-14  2002 Baseline Capital Costs of Anti-Corrosive Measures (New Storage Facilities)[1]	101
Exhibit 5-15  Capital Costs of Drainage Measures (New Facilities[1])	101
Exhibit 5-16  Security Costs (New Storage Facilities)	102
Exhibit 5-17  Annual Training Costs (New & Existing Facilities)[1]	102
Exhibit 5-18  Other Costs (New Storage Facilities)	103
Exhibit 5-19  Costs for All Compliance Measures (New Facilities)	104
Exhibit 5-20  Costs for All Measures (Existing Facilities)	105
Exhibit 5-21  Estimated Costs for Preparing a Template Plan to Tier I Qualified Facilities Introduced by the Final Amendment	107
Exhibit 5-22  Estimated Percentage Reduction in Total Burden due to State Overlap	108
Exhibit 6-1  Industry Categories with Hot-Mix Asphalt Storage	113
Exhibit 6-2  Distribution of Asphalt Facilities by Capacity Category  (10-year Average)	114
Exhibit 6-3  Projected Number of New and Existing Asphalt Facilities	115
Exhibit 6-4  Percentage of HMA Facilities Expected to Move Across Size Categories	116
Exhibit 6-5  Projected Number of New and Existing Facilities Affected by the Final Option of Exempting HMA Containers	117
Exhibit 6-6 Annual Cost Impact of Exempting Hot-Mix Asphalt (2007$)[1]	118
Exhibit 6-7 Assumptions Used for Estimating Hot-Mix Asphalt Facility Compliance Cost	119
Exhibit 6-8 Projected Baseline Annual Compliance Cost for Facilities with Hot-Mix Asphalt Containers (2007$ Millions)	120
Exhibit 6-9 Projected Annual Compliance Cost Savings from Exempting Hot-Mix Asphalt Containers (2007$ Millions)[1]	123
Exhibit 6-10  Projected Total Number of New and Existing Farms Affected by the Pesticide Application Equipment Exemption	126
Exhibit 6-11  Annual Farm-level Baseline Cost of Compliance and Cost Impact of Exempting Pesticide Application Equipment (2007$)[1]	127
Exhibit 6-12  Projected Annual Compliance Cost Savings from Exempting Pesticide Application Equipment (2007$ Millions)[1]	128
Exhibit 6-13  Estimated Aggregate Annual Cost Savings for Farms from Multiple Rule Components (2007$ Millions)	130
Exhibit 6-14  Projected Total Number of New and Existing Farms Affected by the Residential Oil Exemption	134
Exhibit 6-15  Annual Baseline Compliance Cost and Cost Savings to Farms from the Final Amendment to Exempt Residential Oil (2007$)[1]	136
Exhibit 6-16  Projected Annual Compliance Cost Savings from the Final Amendment to Exempt Residential Heating Oil (2007$ Millions)[1]	138
Exhibit 6-17  Projected Number of New Facilities Affected by the Facility Diagram Amendment	140
Exhibit 6-18  Annual Cost Savings from Final Amendments to Facility Diagram Requirements (2007$)[1]	141
Exhibit 6-19  Projected Annual Compliance Cost Savings from Final Amendments to Facility Diagram Requirements (2007$ Millions)[1]	142
Exhibit 6-20  Projected Total Number of New Affected Storage Facilities	146
Exhibit 6-21  Cost of Demonstrating Environmental Equivalence (2007$)[1]	146
Exhibit 6-22  Projected Annual Compliance Cost Savings from Final Amendments to Security Requirements (2007$ Millions)[1]	148
Exhibit 6-23  Projected Number of New Storage Facilities Affected by the Integrity Testing Amendment	149
Exhibit 6-24  Total Projected Compliance Cost Savings from Integrity Testing Amendment (2007$ Millions)[1,2]	151
Exhibit 6-25  Projected Total Number of New and Existing AFVO Facilities Affected by the Final Amendment	153
Exhibit 6-26  Estimated Baseline Facility-Level Integrity Testing by Facility Size Category (2007$)	153
Exhibit 6-27  Total Projected Baseline Compliance Cost for Integrity Testing Requirement at AFVO Facilities (2007$ Millions)	154
Exhibit 6-28  Estimated Facility-Level Integrity Testing by Facility Size Category (2007$)	156
Exhibit 6-29  Total Projected Compliance Cost Savings for AFVO Facilities from Final Amendments (2007$ Millions)[1]	157
Exhibit 6-30  Projected Total Number of New Oil Production Facilities Affected by the  Final Amendment to SPCC Plan Preparation and Implementation[1]	160
Exhibit 6-31 Annual Cost of Compliance with 2002 SPCC Rule Requirements (2007$)	160
Exhibit 6-32  Assumptions on Production Facility Characteristics	161
Exhibit 6-33 Annual Cost of Plan Amendment  for Production Facilities (2007$)	162
Exhibit 6-34 Projected Annual Baseline Compliance Costs of 2002 SPCC Requirements for Oil Production Facilities (2007$ Millions)	163
Exhibit 6-35  Annual Cost of Plan Amendment for Oil Production Facilities (2007$)	164
Exhibit 6-36 Projected Annual Compliance Cost Savings from Final Amendment to SPCC Plan Preparation and Implementation (2007$ Millions)[1]	166
Exhibit 6-37  Projected Number of New Oil Production Facilities[1]	171
Exhibit 6-38  Annual Baseline Compliance Cost of Secondary Containment at Flow-through Process Vessels Requirements  (2007$ Millions)	173
Exhibit 6-39  Projected Annual Compliance Cost Savings from Final Amendment to Flow-through Process Vessels Requirements (2007$ Millions)[1]	176
Exhibit 6-40  Projected Annual Total Compliance Cost Savings for the EPA Approach for Marginal Oil Production Facilities (2007$ Millions)	179
Exhibit 6-41 Oil Storage Containers at a Typical Oil Production Facility in Size Category II	180
Exhibit 6-42 Estimated Unit Cost/Cost Savings for New Facilities	181
Exhibit 6-43  Estimated Aggregate Annual Cost Savings for Oil Production Facilities from Multiple Rule Components (2007$ Millions)	184
Exhibit 6-44  Projected Number of New Facilities Affected by the Final Amendment for Tier I Qualified Facilities	187
Exhibit 6-45  Annual Baseline Facility-Level Compliance Costs for Tier I Qualified Facility	188
Exhibit 6-46  Total Projected Baseline Compliance Cost for New Tier I Qualified Facilities with No Containers Greater than 5,000 Gallons (2007$ Millions)	190
Exhibit 6-47  Annual Compliance Costs and Potential Compliance Cost Savings per Tier I Qualified Facility (2007$)	191
Exhibit 6-48  Estimated Additional Costs to New Tier I Qualified Facilities Introduced by the Final Amendment	192
Exhibit 6-49  Total Projected Compliance Cost Savings for New Tier I Qualified Facilities with No Individual Aboveground Oil Storage Containers Greater than 5,000 Gallons (2007$ Millions)[1]	194
Exhibit 6-50 Projected Number of New Generating Units at Nuclear Power Plants, Assuming Full Compliance in the Baseline	198
Exhibit 6-51 Projected Annual Compliance Cost Savings from the Final Amendment for Nuclear Power Plants (2007$)[1]	200
Exhibit 6-52  Summary of Estimated Cost Savings Associated with the Final Amendments (2007$ Millions)	202

                          Acronyms and Abbreviations

AFVO	Animal Fats and Vegetable Oils
API	American Petroleum Institute
AST	Aboveground storage tank
ATSDR	Agency for Toxic Substances and Disease Registry
Bbl	Barrel
BLS	Bureau of Labor Statistics
BTEX	Benzene, toluene, ethylbenzene, and xylenes
CBECS	Commercial Buildings Energy Consumption Survey
CERCLA	Comprehensive Environmental Response, Compensation, and Liability Act
CFR	Code of Federal Regulations
CWA	Clean Water Act
D&B	Dun & Bradstreet
DEC	Department of Environmental Conservation (New York State)
DEQ	Department of Environmental Quality (Virginia)
DOE	U.S. Department of Energy
DOI	U.S. Department of the Interior
DOT	U.S. Department of Transportation
EDG	Emergency diesel generator
EIA	Energy Information Administration
EO	Executive Order
ERS	Economic Research Service (USDA)
FDA	U.S. Food and Drug Administration
FDEP	Florida Department of Environmental Protection
FERC	Federal Energy Regulatory Commission
FIFRA	Federal Insecticide, Fungicide, and Rodenticide Act
FR	Federal Register
FRP	Facility Response Plan
FRS	Facility Registry System
GAO	Government Accountability Office
GIS	Geographic information system
HMA	Hot-mix asphalt
IARC	International Agency for Research on Cancer
ICIS	Integrated Compliance Information System
ICR	Information Collection Request
IDEA	Integrated Data for Enforcement Analysis
IOGCC	Interstate Oil and Gas Compact Commission
IPPA	Independent Petroleum Association of America
IRIS	Integrated Risk Information System
KDH&E	Kansas Department of Health and the Environment
LP	Liquefied petroleum
MDE	Maryland Department of the Environment
MnPCA	Minnesota Pollution Control Agency
MOU	Memorandum of Understanding
NAICS	North American Industry Classification System
NPV	Net present value
NRC	National Response Center; Nuclear Regulatory Commission
NTTAA	National Technology Transfer and Advancement Act
O&M	Operation and maintenance
OCC	Oklahoma Corporation Commission
OMB	Office of Management and Budget 
OPA	Oil Pollution Act
OPEI	Office of Policy, Economics, and Innovation
OPP	Oil Pollution Prevention; Office of Pesticide Programs
OSLTF	Oil Spill Liability Trust Fund
PAH	Polycyclic aromatic hydrocarbon
PE	Professional Engineer(ing)
PHMSA	Pipelines and Hazardous Materials Safety Administration
POLREP	Pollution report
PRA	Paperwork Reduction Act
RFA	Regulatory Flexibility Act
RIA	Regulatory impact analysis
RMA	Risk Management Association
SBA	U.S. Small Business Administration
SBREFA	Small Business Regulatory Enforcement Fairness Act
SIC	Standard Industrial Classification
STI	Steel Tank Institute
SPCC	Spill Prevention, Control, and Countermeasure
USDA	U.S. Department of Agriculture
UST	Underground storage tank
USWAG	Utility Solid Waste Activities Group
Chapter 1

Executive Summary
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Executive Summary
The Oil Pollution Prevention regulation at 40 CFR part 112 requires and establishes procedures for the preparation and implementation of Spill Prevention, Control, and Countermeasure (SPCC) Plans. SPCC Plans help minimize the potential for oil discharges by non-transportation-related onshore and offshore facilities into or upon the navigable waters of the United States or adjoining shorelines or from affecting certain natural resources.
The U.S. Environmental Protection Agency (EPA or the Agency) published amendments to the SPCC rule portion of the Oil Pollution Prevention regulation on December 5, 2008, and they were to become effective on February 3, 2009. These amendments to the SPCC rule provide increased clarity, tailor requirements to particular industry sectors, and streamline certain requirements for facility owners and operators subject to the rule. While EPA is ensuring environmental protection, the final rule is expected to significantly reduce the burden imposed on the regulated community by the SPCC requirements.
However, the effective date of the December 2008 rulemaking was delayed for 60 days from February 3, 2009 to April 4, 2009, in accordance with the January 20, 2009, White House memorandum entitled, "Regulatory Review," and the memorandum from the Office of Management and Budget entitled "Implementation of Memorandum Concerning Regulatory Review" (M-09-08, January 21, 2009 OMB memorandum). The Agency took this action to ensure that the rule properly reflects consideration of all relevant facts. EPA requested public comment on the delay of the effective date and its duration, and on the regulatory amendments contained in the final rule (74 FR 5900, February 3, 2009). On April 1, 2009, the Agency further delayed the effective date of the December 2008 rulemaking until January 14, 2010 (74 FR 14736). The Agency took this action to allow sufficient time to address the comments received on the February 3, 2009 notice. 
In this 2009 action, EPA is finalizing certain provisions with no revisions, making technical corrections to several provisions, and removing three provisions from the December 5, 2008 rule. This RIA provides estimates of the combined impact of the 2008 and 2009 final amendments (hereafter referred to as the "final amendments"). For provisions finalized with no revisions, the economic impacts remain the same as reported in the RIA that supported the 2008 rule amendments. Technical corrections provide additional clarity and are intended to help facility owners and operators understand and comply with the rule requirements. Therefore, for provisions with technical corrections, the economic impacts are reported as "No monetized cost impact." For provisions that are being removed, the associated costs or savings are also removed. 
After consideration of all relevant facts and public comments on the regulatory amendments published in the December 2008 final rule, EPA is removing three provisions published in December 2008: (1) the exclusion of farms and production facilities from loading and unloading rack requirements, (2) alternative criteria for marginal wells, and (3) exemption of certain produced water containers. This action will result in reduced risk of oil spills and elimination of the cost savings that would have been achieved with those provisions. 
EPA is also making a correction to the cost savings estimate that appears in the RIA for the 2008 final rule. The total cost savings estimated for the 2008 rule was $176 million annualized.  Of the total, $51 million of the annualized cost savings were estimated to result from excluding oil production facilities and farms from the loading/unloading rack requirements. Although it is possible that some farms or oil production facilities may have loading/unloading equipment, further assessment indicates that the majority, if not all, of these facilities are unlikely to have equipment that meets the final, more specific, definition of a loading/unloading rack as specified in the 2008 rule (see Chapter 6, Section 6.7). Because these facilities are not expected to have loading/unloading racks according to the 2008 rule's definition, these facilities would not be eligible for the cost savings from the exclusion outlined in the 2008 rule. Therefore, for the 2008 rule the $51 million annualized cost savings for loading/unloading racks is eliminated and the 2008 rule cost savings are corrected from $176 million annualized down to $125 million annualized.
Compared to the compliance cost of the 2002 SPCC rule amendments, the cost savings from the final amendments are estimated at about $95 million annualized. Given that the corrected cost savings from the 2008 amendments are estimated at about $125 million annualized, the final amendments represent a reduction of cost savings of about $30 million annualized.
Exhibit 1-1 presents the key final amendments, by the type of amendment and impact on cost savings. This table sets the framework for the regulatory impact analysis by identifying specific final amendments that result in cost savings as opposed to those that are not expected to affect facilities' compliance costs.

Exhibit 1-1
Summary of Key SPCC Rule Final Amendments
Action
Clarifications or Streamlining Requirements
No Monetized Cost Savings
Exemptions from the Rule
Cost Savings
Streamlining Requirements
Cost Savings
 Final Amendments-No Regulatory Modifications
Clarified the applicability of mobile refueler requirements to farm nurse tanks
Amended the definition of "facility" to clarify that contiguous or non-contiguous parcels can be considered separate facilities
Reaffirmed that the "facility" definition governs applicability of the SPCC rule
Amended the definition of "production facility"
Defined the term "loading/unloading racks" and clarified the applicability of the requirements
Amended the general secondary containment requirements to clarify the scope of secondary containment
Exempted non-transportation-related tank trucks from sized secondary containment requirements
Provided specific requirements for a flowline/intra-facility gathering line maintenance program and an alternative compliance option of contingency planning for flowlines and intra-facility gathering lines in lieu of the general secondary containment requirements
Defined the term "produced water containers", and provided an alternative compliance option for produced water containers at oil production facilities requiring general secondary containment, a process or procedure certified by a PE designed to remove free-phase oil on the surface of the produced water container and compliance with additional oil spill prevention measures in lieu of sized secondary containment requirements.
Clarified the definition of "permanently closed" as it applies to oil production facilities
Clarified that it may be appropriate for a facility owner or operator to consider man-made structures to determine how to comply with the SPCC rule
Clarified that wind turbines can use alternative compliance option provided for oil-filled operational equipment
Clarified the applicability of SPCC rule on natural gas production facilities
Hot-mix asphalt and hot-mix asphalt containers
Pesticide application equipment and related mix containers
Residential heating oil containers
Amended the facility diagram requirements to clarify how containers are identified on the diagram
Amended facility security requirements to allow flexibility to tailor security measures to facilities' specific characteristics and locations 
Amended integrity testing requirements to provide flexibility to rely on industry standards
Provided flexibility on integrity testing to owner/operator of facility that handles certain AFVO
Allowed a new oil production facility a period of six months to prepare and implement an SPCC Plan 
Provided an alternative compliance option for flow-through process vessels at oil production facilities 
 Final Amendments with Technical Corrections
Amended compliance date for new oil production facilities to November 10, 2010, to align with the current compliance date
Underground oil storage tanks at NRC facilities that meet NRC design and quality criteria 
Designated a subset of qualified facilities ("Tier I") with a set of streamlined requirements and the option to complete a self-certified SPCC Plan template
 Removed Amendments
None
Exemption for certain produced water containers (no monetized cost savings);
Exclusion for onshore production facilities and farms from loading/unloading rack requirements
Alternative criteria for marginal oil production facilities to be eligible to self-certify an SPCC Plan as qualified facilities
 

Key Final Amendments to the SPCC Rule
The key regulatory actions finalized without any changes, amendments finalized with technical corrections, and removed provisions are presented below. However, not all regulatory actions are expected to have a measurable economic impact on regulated facilities. Some provisions provide a clarification without changing the regulatory requirements. Therefore, for those amendments, EPA did not estimate cost savings.
Final Amendments- No Regulatory Modifications
On December 5, 2008, the EPA amended the SPCC rule to address a number of issues raised by the regulated community. The following provisions are finalized without modification for which no new economic analysis was conducted beyond that presented in the 2008 RIA:
         1. Hot-Mix Asphalt. EPA exempted hot-mix asphalt and hot-mix asphalt (HMA) containers from SPCC requirements. This material is unlikely to flow as a result of the entrained aggregate, there would be very few circumstances in which a discharge of HMA would have the potential to reach navigable waters or adjoining shorelines. EPA modified §112.1(d)(2) so that the capacity of storage containers containing only hot-mix asphalt is not counted toward a facility's aggregate oil storage capacity. 
         2. Pesticide Application Equipment and Related Mix Containers. EPA exempted pesticide application equipment and related mix containers from SPCC requirements regardless of ownership or where used. EPA also modified §112.1(d)(2) so that the capacities of these containers are not counted toward a facility's aggregate oil storage capacity. 
         3. Applicability of Mobile Refueler Requirements to Farm Nurse Tanks. EPA clarified that nurse tanks used on farms are considered mobile refuelers, according to the definition found in §112.2. 
         4. Residential Heating Oil Containers. EPA exempted residential heating oil containers that are used to store oil for the sole purpose of heating a single-family residence (including a residence at a farm) by adding a new paragraph under the general applicability section, §112.1(d). EPA also modified §112.1(d)(2) so that the capacity of single-family residential heating oil containers is not counted toward a facility's oil storage capacity.
         5. Definition of "Facility." EPA modified the definition of "facility" to clarify that contiguous or non-contiguous properties, parcels, leases, and pipelines may be considered separate facilities when calculating aggregate storage capacity to determine applicability of the SPCC rule. This final amendment clarifies that facilities are allowed to choose how they aggregate or separate containers stored on contiguous or non-contiguous parcels within their operations. EPA also clarified that the definition of "facility" alone governs applicability of the SPCC rule.
         6. Facility Diagram. EPA amended §112.7(a)(3) to clarify that the facility diagram must include all fixed (i.e., not mobile or portable) containers. EPA also required that certain containers and piping, which are exempted from SPCC requirements in this final amendment, be identified on the facility diagram and marked as "exempt." Under this final amendment, the facility owner or operator must mark the area on the diagram where the mobile containers are stored, and can choose to indicate in the facility's SPCC Plan the average number of mobile or portable containers maintained at the facility and the anticipated contents and capacities of those containers, rather than on the diagram itself. The revision to the rule language simplifies the development of a facility diagram by allowing for a general indication of the location and contents of numerous mobile or portable oil storage containers (e.g., drums and totes) on the diagram, rather than a specific representation of each container. 
         7. Loading/Unloading Racks. EPA established a definition for the term "loading/unloading rack" and specified that this definition controls applicability of the provision at §112.7(h), Facility tank car and tank truck loading/unloading rack. This final amendment provides additional clarity to the regulated community about the applicability of this provision to regulated facilities. In the December 5, 2008, amendments, EPA had specifically excluded all onshore production facilities and farms from the requirements at §112.7(h). However, the final amendments remove this exclusion. 
         8. General Secondary Containment. EPA added clarity by amending the general secondary containment requirement at §112.7(c) in three ways: (1) by adding text regarding the method, design, and capacity of secondary containment; (2) by specifically allowing both active and passive measures of secondary containment; and (3) by including additional examples of prevention systems.
         9. General Secondary Containment for Non-Transportation-Related Tank Trucks. EPA extended the regulatory relief provided to mobile refuelers in 2006 to non-transportation-related tank trucks at facilities subject to the SPCC rule, because they operate similarly to mobile refuelers.
         10. Security. EPA amended the facility security requirements at §112.7(g) to allow owners and operators of all facilities to tailor security measures to their facilities' specific characteristics and locations. Under this final amendment, the facility owners/operators are required to describe how they secure and control access to the oil handling, processing, and storage areas; secure master flow and drain valves; prevent unauthorized access to starter controls on oil pumps; secure out-of-service and loading/unloading connections of oil pipelines; and address the appropriateness of security lighting to both prevent acts of vandalism and assist in the discovery of oil discharges.
         11. Integrity Testing. EPA amended the integrity testing requirements at §§112.8(c)(6) and 112.12(c)(6) to allow an owner or operator to consult and rely on industry standards to determine the appropriate qualifications for personnel performing tests and inspections, as well as the type and frequency of integrity testing required for a particular container size and configuration. This final amendment provides flexibility in complying with bulk storage container integrity testing requirements by extending the streamlined bulk storage container inspection requirement for qualified facilities provided in the December 2006 final rule (71 FR 77266, December 26, 2006) to all facilities subject to the integrity testing provision.
         12. Integrity Testing Requirements for Animal Fats and Vegetable Oils (AFVO). EPA amended the requirements found at §112.12(c)(6) to provide the Professional Engineer (PE) or owner/operator certifying an SPCC Plan with the flexibility to determine how integrity testing requirements should be met for eligible containers, based on compliance with certain FDA regulations and other criteria relating to container construction and configuration. 
         13. Oil Production Facilities. EPA clarified or streamlined requirements specific to this sector in the following ways: 
Amended the definition of "production facility" to be consistent with the amended definition of "facility."
Allowed a new oil production facility a period of six months to prepare and implement an SPCC Plan. 
Provided an alternative compliance option for flow-through process vessels at oil production facilities.
Exempted certain intra-facility gathering lines subject to requirements of the U.S. Department of Transportation's (DOT's) pipeline regulations in 49 CFR parts 192 or 195.
Provided specific requirements for a flowline/intra-facility gathering line maintenance program and an alternative compliance option for flowlines and intra-facility gathering lines at oil production facilities.
Clarified the definition of "permanently closed" as it applies to oil production facilities and containers present at an oil production facility.
Defined the term "produced water containers", and provided an alternative compliance option for these containers at oil production facilities requiring general secondary containment, a process or procedure certified by a PE designed to remove free-phase oil on the surface of the produced water container and compliance with additional oil spill prevention measures. 
         14. Man-Made Structures. EPA clarified that certain man-made structures such as building walls, basement structures, and drainage systems may be considered when determining how to comply with SPCC requirements. If an oil container at a regulated facility is located inside a building, the PE or facility owner/operator certifying the SPCC Plan may take into consideration the ability of the building walls and/or drainage systems to serve as secondary containment for the container. 
         15. Wind Turbines. EPA clarified the applicability of the SPCC rule to wind turbines used to produce electricity; specifically, these wind turbines meet the definition of oil-filled operational equipment promulgated in the December 2006 SPCC rule amendments (71 FR 77266, December 26, 2006) to the extent that the wind turbines meet the oil storage capacity threshold in the rule. Therefore, owners and operators of wind turbines can take advantage of the alternative compliance option provided to oil-filled operational equipment. 
Final Amendments with Technical Corrections
The following provisions are finalized with technical corrections for which no new economic analysis was conducted as there were no cost implications of the corrections:
         1. Tier I Qualified Facilities. EPA streamlined SPCC requirements for Tier I qualified facilities -- a subset of Tier II qualified facilities (i.e., facilities less than 10,000 gallons aggregate aboveground storage capacity) having no oil storage containers with a capacity greater than 5,000 gallons. Under this final amendment, owners or operators of Tier I qualified facilities have the alternative to complete an SPCC Plan template (promulgated as Appendix G to 40 CFR part 112) in lieu of a full SPCC Plan and self-certify that the facility complies with a set of streamlined SPCC rule requirements. In the 2009 final action, this amendment is being finalized with technical corrections (e.g., clarifications and corrections of typographical and formatting errors.
         2. Underground Emergency Diesel Generator Tanks at Nuclear Power Stations. EPA exempted underground oil storage tanks including below-grade vaulted tanks, deferred under 40 CFR part 280, that supply emergency diesel generators at nuclear power generation facilities and that are subject to design criteria under the Nuclear Regulatory Commission (NRC) regulations.
         3. Oil Production Facilities-Compliance Date for New Facilities. Amended the compliance date for new oil production facilities to November 10, 2010.
Removed Provisions
 Additionally, after consideration of all relevant facts and public comments, EPA is removing the following December 5, 2008 provisions from the SPCC regulation. These revisions have a cost impact that is discussed in Chapter 6:
         1. Loading/Unloading Rack Exclusions. EPA is removing the exclusion of oil production facilities and farms from the loading/unloading rack requirements at §112.7(h).
         2. Produced Water Containers. EPA is removing the exemption for certain produced water containers that do not contain oil in quantities that may be harmful as certified by a PE..
         3. Alternative Qualified Facility Criteria for Oil Production Facilities. Removed the alternative criteria for a marginal oil production facility to be eligible to self-certify an SPCC Plan as a qualified facility.
Baseline for the Analysis
This regulatory impact analysis compares the compliance costs for facilities affected by the final amendments to the costs associated with the 2002 SPCC rule revisions. The results of this analysis are that regulated facilities will have lower costs, i.e., cost savings, for these final revisions compared to the 2002 baseline. The Agency followed the best economic practices in EPA's "Guidelines for Preparing Economic Analyses" (EPA 2000) and assumed that regulated facilities are in full compliance with the 2002 SPCC rule amendments.
In response to comments from the Government Accountability Office (GAO), the Office of Management and Budget (OMB), and from the EPA Office of Policy, Economics, and Innovation (EPA/OPEI), the Agency conducted a sensitivity analysis to examine the impact of several alternative compliance assumptions. The first alternative assumption is that there is partial compliance in both the baseline and after the final rule amendments. The second assumption is that there is partial compliance in the baseline and full compliance after the final rule amendments. The sensitivity analysis appears in Volume II and is conducted for farms and oil production facilities as the Agency has some additional information on the current compliance rates for these sectors.
Regulated facilities may implement oil spill prevention measures for many reasons. Since certain SPCC requirements may be similar in nature to those imposed by state regulations or industry standards, compliance activities and their associated costs cannot be fully attributed to the SPCC rule. The regulatory impact analysis takes into consideration state oil spill prevention requirements. For details of the state overlap analysis, refer to Section 5.4 of this report. 
EPA has limited data on compliance with industry standards, so the regulatory impact analysis was conducted without accounting for possible overlap of SPCC requirements with industry standards. EPA generally allows the application of industry standards where the standards are both specific and objective, and their application may reduce the threat of discharges to and impact on the environment. EPA believes that industry standards represent good engineering practice and generally are environmentally protective. As technology advances, specific standards change, and therefore by referencing industry standards, EPA anticipates that the underlying requirements of the rule itself will change as new technology comes into use without the need for further amendments. If owners and operators of facilities follow industry standards that are equivalent or more stringent than the current SPCC rule requirements, these facilities would not incur any additional cost (or savings) from the SPCC rule (or final amendments). If the industry standards are equivalent or less stringent than the requirements in the amended SPCC rule, then the estimates for the cost savings would be accurate. For provisions that do not have industry standards, the baseline compliance cost estimate and the cost savings would not present an overestimate. 
EPA obtained the data for the facility unit cost of compliance (hereinafter called `compliance cost' or `facility compliance cost') with the 2002 SPCC requirements from a professional engineering firm with experience in preparing, reviewing, and certifying SPCC Plans. The PE firm also has experience with construction and operation and maintenance of structures for oil spill prevention measures. In addition to data and information from the PE firm, EPA interviewed five regulated facilities to: (1) obtain additional information on activities that facility owners and operators undertake to comply with SPCC requirements and their associated costs, and (2) validate the estimates obtained from the PE firm (see Appendix H in Volume II for more details). EPA also compared the unit costs used in its analyses to similar estimates produced by the U.S. Department of Energy (DOE), the American Petroleum Institute (API), and the Steel Tank Institute (STI) (see Appendix H in Volume II for more details). Most of the figures provided by DOE, API, and STI fall within the broad ranges of cost estimates that EPA developed.
Universe of Affected Facilities
For the purpose of this regulatory impact analysis, EPA used the universe estimates for the number of regulated facilities as a starting point. The universe estimates were originally developed for the RIA for the 2006 SPCC final rule amendments, which were updated using industry-specific growth rates for this analysis. EPA estimated the universe of SPCC-regulated facilities in each of 30 industry sectors and four oil storage capacity categories. For 18 of these 30 industry sectors, EPA used state databases that report data on oil storage, handling, and use. For the remaining 12 sectors, which represent the highest proportion of affected facilities (e.g., farms and oil and gas production), federal and proprietary data were used to estimate the number of facilities. 
For the purpose of this regulatory impact analysis, EPA classified facilities into oil storage capacity categories to (1) improve understanding of the universe of regulated facilities, (2) account for differences in the facility unit compliance costs for facilities of different sizes and characteristics; and (3) determine the number of facilities affected by each of the final amendments to the SPCC rule, based on the facility's storage capacity. The four oil storage capacity categories are:
Category I: total oil storage capacity greater than 1,320 gallons but less than or equal to 10,000 gallons;
Category II: total oil storage capacity greater than 10,000 gallons but less than or equal to 42,000 gallons;
Category III: total oil storage capacity greater than 42,000 gallons but less than or equal to 1,000,000 gallons; and
Category IV: total oil storage capacity greater than 1,000,000 gallons. Exhibit 1-2 summarizes the estimated number of regulated facilities for each size category in the analysis. While these projected estimates are for 2010 (the first year of the analysis period), Chapter 6 reports the number of affected facilities for the entire analysis period, 2010 through 2019. 
Exhibit 1-2
Estimated Number of Existing SPCC-Regulated Facilities by Size Category (2010)
Size Category
Aggregate Capacity
Estimated Number of Facilities[1]
I
                            1,320 to 10,000 gallons
                                                                       318,000 
II
                           10,001 to 42,000 gallons
                                                                       205,000 
III
                          42,001 to 1 million gallons
                                                                       115,000 
IV
                        Greater than 1 million gallons
                                                                         3,000 
Total
                                                                       640,000 
[1] 	Individual values may not sum to the total due to rounding.

The facilities in the universe were divided into two categories: oil production facilities and storage facilities. The analysis estimates that approximately 215,000 oil production facilities and 425,000 storage facilities will be subject to SPCC requirements in 2010. (In 2005 the regulatory impact analysis estimated that the regulated universe had 571,000 facilities, of which 166,000 facilities were production and 405,000 storage facilities.) As a result, the Agency developed separate estimates for the facility level unit compliance cost for oil production and storage facilities in Categories I through IV (Chapter 5). 
Baseline Compliance Cost and Cost Savings
EPA estimated the annualized baseline cost of compliance with the 2002 SPCC rule amendments and the compliance cost impact resulting from the final amendments using 3 percent and 7 percent discount rates. EPA used the 3 percent and 7 percent discount rates to adjust the estimates for differences in timing, according to OMB Circular A-4. The analysis estimates the cost savings for each rule provision and each regulatory alternative expected to have a measurable cost impact. 
For those final amendments whose cost savings could result only from the reduced burden of understanding the rule, EPA did not have sufficient information to quantify cost savings. Those amendments are included in the regulatory impact analysis and assessed as "No monetized cost impact" in Exhibit 1-5. Technical clarifications of existing rule provisions that do not result in changes in the regulatory requirements are not expected to alter facility owner/operator behavior. Thus, such clarifications are not expected to result in cost changes and not included in the cost impact analysis. Below is a list of the final amendments included in the economic impact analysis. 
      1. Hot-Mix Asphalt. EPA estimated the expected cost savings of exempting HMA and HMA containers.
      2. Pesticide Application Equipment and Related Mix Containers. EPA estimated the cost impact of exempting pesticide application equipment and related mix containers.
      3. Applicability of Mobile Refueler Requirements to Farm Nurse Tanks. EPA recognizes that there could be cost savings that result from the reduced burden of understanding the rule, but did not have sufficient information to quantify these savings.
      4. Residential Heating Oil Containers. EPA estimated the cost impact of exempting residential heating oil containers.
      5. Definition of "Facility." EPA assessed that there could be cost savings that result from the reduced burden of understanding the rule, but did not have sufficient information to quantify these savings.
      6. Facility Diagram. EPA estimated the cost savings from clarification of the facility diagram requirements.
      7. Loading/Unloading Racks. EPA estimated the cost impact of a definition of the term "loading/unloading rack." 
      8. General Secondary Containment. EPA assessed that there could be cost savings that result from the reduced burden of understanding the rule, but did not have sufficient information to quantify these savings.
      9. Non-Transportation-Related Tank Trucks. EPA assessed potential cost savings from exempting these trucks from sized secondary containment requirements but did not have sufficient information to quantify the savings associated with the exemption.
      10. Security. EPA estimated the cost savings from allowing owners and operators of all facilities to tailor security measures to their facility's specific characteristics.
      11. Integrity Testing. EPA estimated the cost savings from allowing facilities to use specific tank inspection standards on portable containers.
      12. Integrity Testing Requirements for Animal Fats and Vegetable Oils. EPA estimated the cost savings for providing more flexibility on integrity testing for qualified containers.
      13. Oil Production Facilities. EPA estimated the cost savings from the final amendments on several issues -- allowing a six-month delay in preparation and implementation of the SPCC Plan; providing an alternative compliance option for flowlines and intra-facility gathering lines for contingency planning in lieu of the general secondary containment requirements, and establishing more specific requirements for a flowline/intra-facility gathering maintenance program; providing an alternative to the sized secondary containment requirements for flow-through process vessels at oil production facilities; and providing alternative compliance measures for produced water containers.. 
      14. Man-Made Structures. EPA assessed that there could be cost savings that result from the reduced burden of understanding the rule, but did not have sufficient information to quantify these savings.
      15. Wind Turbines. EPA assessed that there could be cost savings that result from the reduced burden of understanding the rule, but did not have sufficient information to quantify these savings. 
      16. Tier I Qualified Facilities. EPA estimated cost savings for streamlined requirements for qualified facilities that have no oil storage containers with a capacity greater than 5,000 gallons. EPA also calculated costs savings for the alternative option of defining qualified facilities as those with total oil storage capacity no greater than 5,000 gallons.
      17. Underground Emergency Diesel Generator Tanks at Nuclear Power Stations. EPA estimated the cost savings from exempting underground oil storage tanks (including completely buried tanks and tanks that are below-grade and vaulted) located at nuclear power plants licensed by the NRC that are subject to the NRC design criteria.
The regulatory impact analysis calculated the cost savings by estimating the number of facilities affected by each provision of the final rule; identifying the specific behavioral changes that may occur at the affected facilities (e.g., choosing to prepare a self-certified template-based Plan rather than a full SPCC Plan); estimating the unit costs of the affected compliance measures under the baseline and policy scenarios; and applying the change in costs to the projected number of affected facilities. Total resulting cost savings were annualized over a 10-year period (2010 through 2019) . The main steps in the analysis are summarized below:
      18. Estimate the universe of facilities affected by the final rule. EPA first developed a baseline universe of SPCC-regulated facilities by industry sector and range of oil storage capacities. For each major component of the final amendments, EPA then estimated the number of facilities that might be affected by the changes. EPA then projected the anticipated annual change in the number of affected facilities over the 10-year analysis period, using industry-specific growth rates. 
      19. Estimate the baseline compliance cost. EPA developed the baseline compliance cost for each rule provision. 
      20. Estimate changes in facility level compliance cost from the final rule amendments. EPA estimated the change in facility costs resulting from the final amendments by identifying the provisions that will affect facility compliance costs and examining specific compliance measures associated with those provisions.
      21. Estimate total reduction in compliance costs (i.e., cost savings) to all potentially affected facilities. EPA estimated the cost savings for owners and operators of each type of affected facility, and multiplied these estimates by the total number of facilities that are expected to take advantage of each alternative or final provision. Finally, the regulatory impact analysis estimates the net change in compliance costs and annualized it over a 10-year period using 3 percent and 7 percent discount rates. The analysis does not estimate cost savings for non-substantive changes to the requirements such as those that only provide additional clarity on the intent of existing SPCC rule requirements.
The cost savings expected from each of these final amendments were calculated from the baseline cost of compliance with the 2002 SPCC rule amendment. Farms and the oil production sector will benefit from multiple components of the final rule. Both sectors will benefit from the new requirements for Tier I qualified facilities. In addition to the exemption of pesticide application equipment, farms will benefit from the final amendments to the security, integrity testing, and facility diagram requirements, as well as the exemption for single-family residential heating oil containers. The oil production sector will benefit from final amendments specific to this industry, such as the six-month delay in preparation and implementation of SPCC Plans and the alternative to the sized secondary containment requirement for flow-through separation and treating equipment. 
Total Annual Cost Savings
As summarized in Exhibit 1-3, at the 7 percent discount rates, the combined impact of the final amendments to the SPCC rule are expected to yield annualized cost savings to farm owners and operators of The total annual cost savings to farm owners and operators are estimated at approximately $13 million ($2007) at the 7 percent discount rate.
approximately $4 million from the exemption of pesticide application equipment, $2 million from the exemption of residential heating oil containers, less than $1 million from the clarification to the facility diagram requirements, $1 million from the final amendments to the security requirements, $1 million from the final amendments to integrity-testing requirements, and $4 million from the streamlined requirements for Tier I qualified facilities. The total annual cost savings to farm owners and operators are estimated at approximately $13 million at the 7 percent discount rate (see Exhibit 1-3). Exhibit 1-3
Total Cost Savings for Farms from the Final Rule Amendments (2007$, Millions)
Rule Provision
Annualized Cost Savings 
(Discounted at 7%) [2]
Pesticide Application Equipment
 Exempted pesticide application equipment and related mix containers
                                                                            $4 
Residential Heating Oil Containers
 Exempted residential heating oil containers
                                                                            $2 
Facility Definition
 Clarified the definition of "facility"
                           No monetized cost impact 
Facility Diagram
 Revised facility diagram requirement
                                 Less than $1
Security Requirements[1]
 Revised security requirements
                                                                             $1
Integrity Testing
 Provided greater flexibility in the use of industry standards for integrity testing requirements
                                                                             $1
Tier I Qualified Facilities
 Provided streamlined requirements for Tier I qualified facilities
                                                                            $4 
Total 
                                                                            $13
1 	Midpoint estimate (75% of farms affected). Cost savings might be higher or lower using different assumptions.
2	Individual values may not sum to the total due to rounding. Cost savings were estimated for both 3% and 7% discount rates (see Chapter 6); for simplicity in presentation only 7% discounted values are presented here.

The total annual cost savings to owners and operators of oil production facilities are estimated at $35 million ($2007) at the 7 percent discount rate.
As summarized in Exhibit 1-4, at the 7 percent discount rate, the final amendments to the SPCC rule are expected to yield annualized cost savings to oil production facility owners and operators of approximately $2 million from the clarification to the facility diagram requirements, $24 million from the six-month delay in SPCC Plan preparation and implementation, $7 million from the alternative compliance measure in lieu of sized secondary containment of flow-through process vessels, and $2 million from the streamlined requirements for Tier I qualified facilities. The total annual cost savings to owners and operators of oil production facilities from all of the final amendments that affect this sector are estimated at $35 million at the 7 percent discount rate (see Exhibit 1-4).Exhibit 1-4
Total Cost Savings for Oil Production Facilities from the Final Rule Amendments (2007$, Millions)
Regulatory Provision
Annualized Cost Savings 
(Discounted at 7%) [1]
Facility Definition
 Clarify the definition of "facility"
                           No monetized cost impact 
Facility Diagram
 Revise facility diagram requirement
                                                                             $2
General Secondary Containment
 Revised the general secondary containment provision 
                           No monetized cost impact 
General Secondary Containment for Non-Transportation-Related Tank Trucks
 Extended regulatory relief for mobile refuelers to non-transportation-related tank trucks
                           No monetized cost impact 
Plan Preparation and Implementation
 Provided six-month delay for Plan preparation and implementation at new oil production facilities
                                                                            $24
Flowlines and Intra-facility Gathering Lines
 Provided an alternative compliance option of contingency planning for flowlines and intra-facility gathering lines at oil production facilities in lieu of secondary containment requirements 
                           No monetized cost impact 
Flow-Through Process Vessels
 Provided alternative compliance measures for flow-through process vessels in lieu of sized secondary containment
                                                                            $7 
Alternative Compliance Measures for Produced Water Containers
 Provided alternative compliance measures for produced water containers in lieu of sized secondary containment
                           No monetized cost impact
Tier I Qualified Facilities
 Provided streamlined requirements for Tier I qualified facilities
                                                                            $2 
Total
                                                                            $35
1 	Cost savings were estimated for both 3% and 7% discount rates (see Chapter 6); for simplicity in presentation only 7% discounted values are presented here.

Aside from farms and oil production facilities, other facilities will have $47 million of annualized cost savings.
Exhibit 1-5 summarizes the cost savings expected from each of the final amendments. At the 7 percent discount rate, they range from an annualized savings of less than $1 million (exempting buried oil storage tanks at nuclear power plants) to $24 million (streamlined requirements for Tier I qualified facilities). The total cost savings across all the final amendments to the SPCC rule are expected to be about $95 million annualized at the 7 percent discount rate. The estimates do not account for interactions among the various components of the final amendments.

Exhibit 1-5 
Total Cost Savings for the Final Amendments (2007$, Millions)
Regulatory Provision[1]
Annualized Cost Savings 
(Discounted at 7%) [2]
Hot-Mix Asphalt
 Exempted HMA containers
                                                                            $8 
Pesticide Application Equipment
 Exempted pesticide application equipment and related mix containers
                                                                            $4 
                                                                               
Applicability of Mobile Refueler Requirements to Farm Nurse Tanks
 Clarified that nurse tanks used on farms are considered mobile refuelers
                           No monetized cost impact 
Residential Heating Oil Containers
 Exempted residential heating oil containers
                                                                            $2 
Facility Definition
 Clarified the definition of "facility"
                           No monetized cost impact
Facility Diagram
 Revised facility diagram requirement
                                                                             $3
Loading/Unloading Racks
 Defined "loading/unloading rack"
                           No monetized cost impact 
General Secondary Containment
 Provided final revisions to the general secondary containment provision
                           No monetized cost impact
General Secondary Containment for Non-Transportation-Related Tank Trucks
 Extended relief for mobile refuelers to non-transportation-related tank trucks 
                           No monetized cost impact
Security 
 Revised security requirements[3]
                                                                             $9
Integrity Testing
 Provided greater flexibility in the use of industry standards for integrity testing 
                                                                            $11
Animal Fats and Vegetable Oil
 Amended integrity testing requirements for AFVO containers that meet certain criteria[4]
                                                                            $2 
Oil Production Facilities
 Provided six-month delay for Plan preparation and implementation
                                                                            $24
 Alternative compliance option for flowlines and intra-facility gathering lines in lieu of secondary containment
                           No monetized cost impact
 Alternative compliance option for flow-through process vessels
                                                                            $7 
   Alternative compliance measures for produced water containers
                           No monetized cost impact
Man-Made Structures
 Allowed to consider man-made structures in determining SPCC rule applicability
                           No monetized cost impact
Wind Turbines 
 Clarified applicability of the rule to wind turbines used to produce electricity
                           No monetized cost impact
Tier I Qualified Facilities 
 Provided streamlined requirements for Tier I qualified facilities
                                     $24 
Nuclear Power Stations
 Exempted underground oil storage tanks at nuclear power generation facilities
                                 Less than $1
Total
                                                                           $95 
1 	Cost impacts are presented by rule component; impacts across industries are not separated out. 
2	Individual values may not sum to the total due to rounding. Cost savings were estimated for both 3% and 7% discount rates (see Chapter 6); for simplicity in presentation only 7% discounted values are presented here.
[3] 	Midpoint estimate (75% of farms affected). Cost savings might be higher or lower using different assumptions.
4 	Midpoint estimate (65% of facilities affected). Cost savings might be higher or lower using different assumptions.
5 	Total cost savings are expected to range from about $92 million to $100 million on an annualized basis.

Impacts on Human Health, Welfare and the Environment 
The principal combined impact of the final amendments is lower compliance costs for owners and operators of certain types of facilities due to modifications in the spill prevention measures they are required to implement. EPA believes that the final rule amendments provide the opportunity for regulated facilities to reduce the cost of SPCC compliance while maintaining protection of the environment. Throughout the process of developing these amendments, EPA has relied on its own technical staff, including Regional inspectors, and outside consultants to identify changes that will reduce the compliance costs and burden of the regulations while maintaining protection of public health and the environment. 
Moreover, EPA believes that certain provisions finalized in the 2008 rule amendments may have an adverse impact to human health, welfare and the environment and is therefore removing the following provisions:
Loading/Unloading Rack Exclusions. In the December 2008 amendments, EPA specifically excluded onshore oil production facilities and farms from the loading/unloading rack requirements at §112.7(h). The reason for the exclusion was that the Agency and commenters believe that loading and unloading racks are not typically associated with these types of facilities. If production facilities or farms do have loading and unloading racks, exclusion from the regulations could increase the threat of oil discharges and spills.  EPA agrees with comments received on this amendment that stated that certain facilities (i.e., farms and oil production facilities) should not be treated differently than other facilities, even if loading/unloading racks are not typically associated with these types of facilities. Therefore, EPA is removing the provision published in December 2008 that would have excluded onshore oil production facilities and farms from the loading/unloading rack requirements at §112.7(h).
Alternative Qualified Facility Criteria for Oil Production Facilities. EPA is removing the alternative criteria for a marginal oil production facility to be eligible to self-certify an SPCC Plan as a qualified facility. EPA believes that the alternative qualified facility eligibility criteria for onshore oil production facilities would not effectively protect the environment from discharges of oil in quantities that may be harmful. The Agency also believes a PE should be involved in the development and implementation of an SPCC Plan, unless the oil production facility is eligible to self-certify its Plans based on the qualified facilities criteria finalized in December 2006, at most oil production facilities because they typically have complex equipment and store large quantities of oil. These facilities are of further concern because they typically have operations in which oil flows continuously in unattended, remote locations and therefore pose an environmental threat. The alternative qualified facility eligibility criteria was based on the flow rate of oil at the facility, and undermines the existing capacity based criteria. Allowing unrestricted total oil storage capacity increases the likelihood that relatively high-volume facilities, including some facilities above the threshold for which a Facility Response Plan is required, will self-certify their Plan. Furthermore, the alternative qualified facility criteria include oil production facilities that may be complex, such as those with injection wells, that may pose a greater threat of oil discharge.
Produced Water Containers. EPA is removing the exemption for certain produced water containers that do not contain oil in quantities that may be harmful as certified by a PE. EPA believes that produced water containers present a threat of discharge that can cause harm to the environment and human health. The separation equipment found at onshore oil production facilities are not perfectly efficient at separating oil from the produced fluids and become progressively less efficient with age. Furthermore, in the event of a discharge, the aqueous phase of the produced water mixture may serve to carry the oil farther overland and into waters than cases where crude oil alone is discharged. The spill data shows that produced water containers are indeed a common source of oil discharges from onshore oil production facilities. Finally, produced water containers may be equally or even more likely to fail than other containers in the tank battery because the higher salt content of produced water fluids and the resulting corrosion of the metallic components of the produced water storage system. Produced water containers remain subject to the SPCC rule and must comply with either the sized secondary containment requirements; or general secondary containment, a process or procedure certified by a PE designed to remove free-phase oil on the surface of the produced water container, and additional spill prevention measures.
Small Entity Impact and Executive Orders 
EPA considered whether the final amendments to the SPCC rule impact the financial condition of small entities, as required by the Regulatory Flexibility Act (RFA) and Small Business Regulatory Enforcement Fairness Act (SBREFA). In addition, the analyses required under Executive Order (EO) 13132 - Federalism; EO 13175 - Consultation and Coordination With Indian Tribal Governments; EO 13045 - Protection of Children From Environmental Health & Safety Risks; EO 13211 - Actions That Significantly Affect Energy Supply, Distribution, or Use; the National Technology Transfer and Advancement Act (NTTAA); and the Paperwork Reduction Act (PRA) were conducted.
Small Entity Impact. RFA, as amended by SBREFA, requires federal agencies to determine whether their regulatory actions will have a significant adverse economic impact on a substantial number of small entities. Thus, the Agency may certify that a rule will not have a significant economic impact on a substantial number of small entities if the rule relieves regulatory burden, or otherwise has a positive economic effect on all of the small entities subject to the rule. 
The final amendments to the SPCC rule will reduce the compliance costs and burden on small businesses, and is not expected to increase the cost for any small entity. These provisions provide small businesses with several regulatory alternatives, such as those offered to oil production facilities, facilities that store or handle animal fats and vegetable oils, Tier I qualified facilities, and others. Because the SPCC rule categorizes affected entities based on oil storage capacity, while the U.S. Small Business Administration (SBA) defines small businesses based on the business' total number of employees or total annual revenue, EPA does not know how many SPCC-regulated facilities are also SBA-defined small businesses. Nevertheless, given their resource constraints, owners and operators of small businesses are likely to take advantage of, and benefit from, the regulatory burden relief offered by the final amendments. 
Executive Order 13045  -  Protection of Children from Environmental Health & Safety Risks. EPA expects that the final rule amendments will not have a disproportionate adverse effect on children nor adversely affect a large number of children (EO 13045). EPA interprets Executive Order 13045 as applying only to those regulatory actions that are based on health or safety risks, such that the analysis required under section 5-501 of the Order has the potential to influence the regulation. This final rule amendment is not subject to Executive Order 13045 because it does not establish an environmental standard intended to mitigate health or safety risks.
Executive Order 13211  -  Actions That Significantly Affect Energy Supply, Distribution, or Use. In response to EO 13211, EPA concludes that since the final amendments to the SPCC rule reduce the burden on owners and operators of regulated facilities; EPA does not expect an adverse impact of the rule on energy supply, distribution, or use. 
Executive Orders 13132 and 13175 and National Technology Transfer and Advancement Act. EPA concludes that the final rule amendment does not have federalism implications; therefore, EO 13132 does not apply to this action. In addition, it does not significantly or uniquely affect communities of Indian tribal governments; thus, EO 13175 does not apply to this action. EPA also concludes that the NTTAA does not apply because the rulemaking does not set or incorporate by reference any one specific technical standard. 
The final amendments will reduce the reporting and recordkeeping burden by about 1.3 million hours and capital, operating and maintenance (O&M) costs by about $7.5 million. 
Paperwork Reduction Act. Agencies must provide information to OMB on the parties affected, the annual reporting burden, and the annualized cost of responding to the information collection. Owners and operators of regulated facilities must prepare SPCC Plans in accordance with good engineering practices and have them approved by a person with the authority to commit the resources necessary to implement the SPCC Plan. EPA estimates that approximately 640,000 facilities will incur paperwork-related burden in the first year of the Information Collection Request (ICR) and estimates the total reporting and recordkeeping burden for these facilities at approximately 8 million hours in each year of this ICR. The Agency estimates that as a result of the final amendments to clarify and streamline certain SPCC requirements, the reporting and recordkeeping burden will decrease by 1.3 million hours on an annualized basis. The final rule amendments will reduce capital and operating and maintenance costs by approximately $7.5 million on an annualized basis.Executive Order 12898: Federal Actions to Address Environmental Justice in Minority Populations and Low-Income Populations. EPA has determined that this final rule will not have disproportionately high and adverse human health or environmental effects on minority or low-income populations because it does not affect the level of protection provided to human health or the environment. The overall effect of the action is to decrease the regulatory burden on facility owners or operators subject to its provisions.
Sensitivity Analyses
This regulatory impact analysis estimates the cost savings resulting from the final rule amendments compared to 2002 baseline, which assumes full compliance with the SPCC rule requirements under 40 CFR part 112, as amended in 2002 (67 FR 47042). The cost savings may in fact be greater or lower (for details, see Chapter 9).
EPA is aware of industry concerns regarding non-compliance (both now and after the amendments are effective) among owners and operators of facilities of certain sizes or industry sectors. Although no statistically valid data exist to assess the extent or magnitude of such non-compliance, inspections by EPA regions have found non-compliance in the SPCC regulated community. In response to comments from the Office of Management and Budget (OMB), the Government Accountability Office (GAO), and the EPA Office of Policy, Economics and Innovation (EPA / OPEI), EPA conducted sensitivity analysis to examine the impact of various non-compliance assumptions. The sensitivity analysis considered two scenarios. In the first sensitivity analysis scenario, EPA considered partial compliance both in the baseline and after the final rule amendments (i.e., the partial compliance rate did not change between the baseline and the post-rule period in this scenario). The results for this scenario are presented below. In the second scenario, EPA considered partial compliance in the baseline and full compliance after the final rule amendments, and included an estimate of the cost of compliance incurred by facilities that will come into compliance during the analysis period. The results for the second scenario are presented in Appendix B of Volume II..
Estimated Change in Cost Savings for the Alternative Baseline
This alternative analysis presents cost saving estimates for owners and operators of facilities resulting from the final rule assuming partial compliance (25 percent, 50 percent, or 75 percent compliance) with both the 2002 and 2009 final rule amendments. In other words, these scenarios assume that 75, 50, or 25 percent of the facilities, respectively, are not in compliance with the existing rule, will not do anything different under the amendments, and will not incur any cost savings. 
Under the partial compliance scenarios, anticipated cost savings will be less than the total cost savings presented in the primary regulatory impact analysis in direct proportion to the assumed compliance rates. There is less cost savings under those scenarios because the fraction of SPCC-regulated facilities whose owners and operators are assumed to be in non-compliance will not be affected by the rule changes, and will not be able to lower their costs. The estimated cost savings under the three partial compliance scenarios on an annualized basis are presented in Exhibit 1-6.

Exhibit 1-6 
Annualized Cost Savings for the Final Rule Provisions for Partial Compliance Scenarios 
(2007$, Millions)

Final Rule Component[1]

Partial Compliance in the Baseline and after the Final Rule (25%, 50%, 75%)

25% Compliance
50% Compliance
75% Compliance

Not Discounted
3% Discounted
7% Discounted
Not Discounted
3% Discounted
7% Discounted
Not Discounted
3% Discounted
7% Discounted
Exempt Hot-Mix Asphalt Containers
                                                                         $2.10 
                                                                         $2.09 
                                                                         $2.09 
                                                                         $4.19 
                                                                         $4.19 
                                                                         $4.18 
                                                                         $6.29 
                                                                         $6.28 
                                                                         $6.27 
Exempt Pesticide Application Equipment 
                                                                        $0.890 
                                                                        $0.891 
                                                                        $0.892 
                                                                         $1.78 
                                                                         $1.78 
                                                                         $1.78 
                                                                         $2.67 
                                                                         $2.67 
                                                                         $2.68 
Exempt Residential Heating Oil Containers
                                                                        $0.577 
                                                                         $0.578
                                                                         $0.579
                                                                          $1.15
                                                                          $1.16
                                                                          $1.16
                                                                          $1.73
                                                                          $1.73
                                                                          $1.74
Facility Diagram
                                                                        $0.843 
                                                                        $0.838 
                                                                        $0.830 
                                                                         $1.69 
                                                                         $1.68 
                                                                         $1.66 
                                                                         $2.53 
                                                                         $2.51 
                                                                         $2.49 
Tier I Qualified Facilities
                                                                         $6.07 
                                                                         $6.03 
                                                                         $5.98 
                                                                         $12.1 
                                                                         $12.1 
                                                                         $12.0 
                                                                         $18.2 
                                                                         $18.1 
                                                                         $17.9 
Security Requirements[2]
                                                                         $2.35 
                                                                         $2.33 
                                                                         $2.31 
                                                                         $4.69 
                                                                         $4.66 
                                                                         $4.62 
                                                                         $7.04 
                                                                         $6.99 
                                                                         $6.93 
Integrity Testing
                                                                         $2.81 
                                                                         $2.79 
                                                                         $2.76 
                                                                         $5.61 
                                                                         $5.57 
                                                                         $5.53 
                                                                         $8.42 
                                                                         $8.36 
                                                                         $8.29 
Animal Fats and Vegetable Oils[3]
                                                                        $0.483 
                                                                        $0.482 
                                                                        $0.482 
                                                                        $0.966 
                                                                        $0.965 
                                                                        $0.963 
                                                                         $1.45 
                                                                         $1.45 
                                                                         $1.45 
Oil Production: Six-Month Delay for Plan Preparation and Implementation
                                                                         $6.06 
                                                                         $6.02 
                                                                         $5.96 
                                                                         $12.1 
                                                                         $12.0 
                                                                         $11.9 
                                                                         $18.2 
                                                                         $18.1 
                                                                         $17.9 
Oil Production: Alternative Measures for Flow-through Process Vessels in lieu of Sized Secondary Containment
                                                                         $1.84 
                                                                         $1.83 
                                                                         $1.81 
                                                                         $3.68 
                                                                         $3.66 
                                                                         $3.62 
                                                                         $5.52 
                                                                         $5.48 
                                                                         $5.43 
Exempt Underground USTs at Nuclear Power Generation Facility
                                                                     $0.000507 
                                                                     $0.000484 
                                                                     $0.000452 
                                                                      $0.00101 
                                                                     $0.000968 
                                                                     $0.000904 
                                                                      $0.00152 
                                                                      $0.00145 
                                                                      $0.00136 
Total
                                                                         $24.0 
                                                                         $23.9 
                                                                         $23.7 
                                                                         $48.0 
                                                                         $47.8 
                                                                         $47.4 
                                                                         $72.0 
                                                                         $71.6 
                                                                         $71.1 
[1] 	Impacts are presented by rule component; impacts across industries are not separated out. 
[2] 	Midpoint estimate (75% of farms affected). Cost savings might be higher or lower using different assumptions.
[3] 	Midpoint estimate (65% of facilities affected). Cost savings might be higher or lower using different assumptions.

Key Assumptions and Limitations
According to Executive Order 12866, agencies are required to assess all costs and benefits of regulatory activities, including quantitative and qualitative measures. The Executive Order also requires assessment of benefits and costs including, but not limited to, those related to the environment, public health and safety, distributive impacts, and issues of equity. 
This regulatory impact analysis estimates the cost savings that accrue to owners and operators of facilities from reductions in compliance costs resulting from the final amendments to the rule. In addition, the Agency considered whether the streamlined requirements in the final rule might affect human health, welfare, and the environment. EPA qualitatively assessed the change in threat of discharge and believes that the final rule amendments will maintain environmental protection. 
Many of the assumptions, as well as the estimates of unit cost savings and the number of affected facilities, presented in this RIA are based upon available data. EPA made the best use of the available data to make informed decisions regarding the assumptions used in the analysis. To address uncertainties involved in estimating the total cost savings from the final amendments, the Agency used a sensitivity analysis approach to estimate the range of cost savings by examining up to three scenarios for several components of the final rule (e.g., final amendments to the security requirements, and flexibility for AFVO facilities). 
The baseline estimate for the number of SPCC-regulated facilities does not take into account a possible change in behavior of facility owners and operators with respect to redefining their facility boundaries when the facility is located on multiple, non-contiguous parcels. EPA recognizes that the baseline estimate for the number of SPCC-regulated facilities and the baseline compliance cost are likely to represent an overestimate. The Agency potentially overestimates the regulated universe because facility owners and operators might have redefined their boundaries and divided the parcels in order to reduce regulatory burden. This behavioral change will reduce the number of regulated facilities, leaving a certain number of facilities outside of the SPCC universe. Facilities in the following industries are expected to be most affected by this rule flexibility: farms, large oil production facilities, military bases, airports, and large universities.
General Assumptions and Limitations
Assumptions
EPA made four major assumptions in the analysis. First, the Agency assumes that cost minimization behavior applies to all owners and operators of facilities that qualify for reduced regulatory requirements, whereby all those eligible will take advantage of burden relief. Second, EPA assumes that all existing owners and operators of facilities are in full compliance with the July 2002 amendments to the SPCC rule (67 FR 47042). It is important to note that insofar as certain owners/operators of facilities are not in compliance with the 2002 rule because of the compliance date extension (November 10, 2010), this assumption may imply that cost savings are an under-estimate. Third, EPA assumes that owners and operators of existing SPCC-regulated facilities will forgo compliance activities offered as alternatives to activities that required one-time initial investments because they would have already incurred the one-time cost. For example, EPA assumes that an owner or operator of an existing facility who will qualify for reduced security requirements under the final rule will have already provided the security measures as per the 2002 rule amendments or demonstrated environmental equivalence for tailored security measures. Thus, owners and operators of existing facilities will not take advantage of the provided alternative, while owners and operators of new facilities will. Fourth, EPA assumes that compliance is nationally consistent despite variability in state regulations and the distribution of affected facilities. In addition, EPA made several assumptions when estimating the cost savings for the different options. These are described in greater detail in Chapter 8.
Limitations
 One of the main constraints on the regulatory impact analysis is limited data on the number of facilities regulated under the SPCC program. The rule does not include a notification requirement and, with certain exceptions, regulated entities do not need to submit any information to EPA. The absence of notification data means that, without conducting a statistically valid survey, EPA is limited to data already collected by state or federal agencies or by proprietary sources. Such data are collected for diverse purposes and are not ideal for identifying SPCC-regulated facilities, as the data do not normally provide information on smaller storage tanks or non-petroleum oils. Because the collected data may miss certain portions of the regulated universe or lack detail about certain facility characteristics, the evaluation of regulatory options using those data involves some uncertainty. Some additional uncertainty may also be introduced by the knowledge of how owners and operators will use the flexibility to define the facility boundaries for contiguous and non-contiguous parcels. 
Compliance costs incurred by owners and operators of facilities in the baseline depend not only on the volume of oil stored and handled, but also on the types of oil at a site, the number of containers (and their capacity), and the locations of the tanks across the site. Given the wide range of industries and facility sizes affected by the SPCC rule -- as well as geographical and climatic conditions that affect a facility's configuration and operation patterns -- a realistic baseline against which regulatory changes are measured is difficult to establish. Therefore, uncertainty is involved in estimating the changes in compliance costs that could occur under the final regulatory actions.
Another limitation concerns many of the cost estimates used in the analysis, which are based on the expert opinion of a PE firm and on interviews with a limited number of regulated facilities. The data provided by the PE firm represent informed professional judgment based on the firm's service to the 48 contiguous states, but are not statistically representative of the entire country. The PE firm indicated the variability of costs across the country with higher costs in certain geographic areas such as the North East and California. Therefore, extrapolation to a larger universe is appropriate but does not necessarily represent the actual compliance costs incurred by facilities of different types and sizes. The PE firm personnel were hesitant to provide "typical" costs when the costs of compliance depend significantly on site-specific factors. The PE firm provided the cost estimates for various types of equipment and industry type. Ideally, a regulatory analysis would explicitly account for such variability in costs. However, in this analysis EPA was unable to differentiate compliance costs due to the lack of information on the site characteristics of facilities affected by the final SPCC rule.
In addition, due to the lack of data on the extent to which facilities adopt industry standards, in this analysis the Agency estimated the baseline compliance costs and cost savings associated with the SPCC requirements without accounting for possible overlap with industry standards.
EPA did not have quantitative data on the number of regulated facilities that use in-house professionals to design and implement SPCC compliance measures versus the facilities that primarily hire an outside contractor for those tasks. Site visits suggested that in any size category there are facilities that use in-house labor as well as facilities relying on outside engineering firms. Therefore, when estimating per-facility costs of compliance, EPA used the assumption that within each size category 50 percent of facilities will use in-house labor and 50 percent of facilities will hire a PE firm.
Furthermore, the cost of compliance was calculated for each of the amendments separately, assuming that there were no changes in other aspects of the rule. Therefore, the analysis does not take into account the ways in which different amendments interact with each other and how these possible interactions might reduce or increase the total cost. The estimates do not account for interactions among the various components of the amendments.
Finally, the Agency did not calculate a final cost of compliance with the SPCC rule that adds the cost savings from the 2006 final amendments with the cost savings from the 2008 and 2009 final amendments.




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Chapter 2

Introduction

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Introduction 
The Environmental Protection Agency (EPA or the Agency) amended the Spill Prevention, Control, and Countermeasure (SPCC) requirements of the Oil Pollution Prevention regulation at 40 CFR part 112 on December 5, 2008. In this action, the Agency is finalizing certain amendments, providing technical correction to others, and removing three amendments. These amendments are intended to provide clarity, tailor requirements to particular industry sectors, and streamline certain requirements. The regulatory changes reduce the compliance costs and burden to the regulated community.

Based on public comments provided to EPA and after consideration of all relevant facts, EPA is removing the following amendments from the 2008 rule: exclusion for farms and oil production facilities from loading/unloading rack requirements because it is inappropriate to provide exclusions for specific industry sectors; exemption for certain produced water containers at an oil production facility; and alternative Qualified Facilities eligibility criteria for an oil production facility. For the remaining provisions in the December 2008 rule, EPA is either taking no action or providing technical corrections. 

The final amendments provide relief to owners and operators of affected facilities from certain regulatory provisions, and could change the manner in which they comply with other, still applicable provisions. Under the terms of Executive Order 12866 (58 FR 51735, October 4, 1993), EPA must determine whether a regulatory action is "significant" and subject to Office of Management and Budget (OMB) review. The order defines "significant regulatory action" as one that is likely to result in a rule that may do one or more of the following:
      22. Have an annual effect on the economy of $100 million or more, or adversely affect in a material way the economy, a sector of the economy, productivity, competition, jobs, the environment, public health or safety, or state, local, or tribal governments or communities.
      23. Create a serious inconsistency or otherwise interfere with an action taken or planned by another agency.
      24. Materially alter the budgetary impact of entitlements, grants, user fees, or loan programs or the rights and obligations of recipients thereof.
      25. Raise novel legal or policy issues arising out of legal mandates, the President's priorities, or the principles set forth in the Executive Order.
When an action is determined to be a "significant regulatory action," agencies are required to assess all costs and benefits of regulatory provisions, including quantitative and qualitative measures. Under the terms of Executive Order 12866, this notice is a "significant regulatory action" because it may have an annual effect on the economy of about $100 million. This action has been submitted to OMB for review, and the Agency prepared this regulatory impact analysis (RIA) in support of this 2009 final regulatory action for the SPCC rule.
This RIA provides an estimate of reduced compliance costs for certain types of facilities and equipment as a result of the amendments to the rule. EPA believes that the rule amendments protect the environment while, at the same time, providing alternatives and additional regulatory flexibility to clarify, streamline, and tailor requirements. This regulatory impact analysis focuses on estimating the incremental change in compliance costs as a result of the final rule amendments. Therefore, this report is in compliance with the Executive Order 12866 in all respects.
The assumptions underlying this analysis are appropriate and consistent with best practices in conducting regulatory impact analysis. The data supporting the analysis are the best available, although, as in all economic analyses, there are uncertainties, limited precision, and statistical variability. While EPA did not have statistically significant samples of data for various components of the analysis, the Agency has made the best use of the available data to make informed decisions regarding the assumptions and estimates used in the analysis.
EPA has received a number of comments on the rule revisions finalized in 2008 from regulated parties, professional associations, environmental interest groups, and others. Aside from public comments, the U.S. Government Accountability Office (GAO) published a report on the SPCC rule, specifically commenting on the uncertainty aspect of the analysis. While the Agency recognizes the comments received, it believes that the fundamental assumptions used in the RIA are reasonable and does not find the comments compelling enough to modify those assumptions. However, EPA conducted a set of sensitivity analyses that provide alternative estimates for the number of SPCC-regulated facilities that are in full compliance with the rule. To address the cost variability issue, EPA developed ranges for compliance costs. The regulatory impact analysis considers the variability associated with various methods of compliance and individual facility storage capacities.
For the final rulemaking, EPA employed new approaches to enhance the existing analyses, while maintaining the original analytical concepts. In addition to changes made in response to comments and recommendations from GAO, OMB, and other federal agencies, EPA made improvements to the analysis compared to the RIA for the proposed 2007 rule. Throughout the rulemaking process, EPA actively used the knowledge and expertise of the SPCC Economic Subgroup that consists of economic and technical experts.
The remainder of this chapter provides background information on the Oil Pollution Prevention regulation, identifies the statutory authority for the regulation, and summarizes the final regulatory actions, technical corrections, and removed provisions. 
Statutory Authority
Section 311(j)(1)(C) of the Clean Water Act (CWA or the Act), 33 U.S.C. 1321(j)(1)(C), requires the President to issue regulations establishing procedures, methods, equipment, and other requirements to prevent discharges of oil to navigable waters or adjoining shorelines from vessels and facilities. The President delegated the authority to regulate non-transportation-related onshore facilities to EPA in Executive Order 11548 (35 FR 11677, July 22, 1970), which was superseded by Executive Order 12777 (56 FR 54757, October 22, 1991). An MOU between DOT and EPA (36 FR 24080, November 24, 1971) established the definitions of transportation-related and non-transportation-related facilities. An MOU between EPA, the U.S. Department of the Interior (DOI), and DOT (59 FR 34102, July 1, 1994) re-delegated the responsibility to regulate certain offshore facilities from DOI to EPA. 
Regulatory Background
The Oil Pollution Prevention regulation, 40 CFR part 112, outlines requirements for prevention of, preparedness for, and response to oil discharges. The amendments in this action affect existing requirements related to prevention that are collectively known as the Spill Prevention, Control, and Countermeasure (SPCC) rule. 
The SPCC rule was originally promulgated on December 11, 1973, at 38 FR 34164, under the authority of §311(j)(1)(C) of the CWA. The SPCC regulation establishes procedures, methods, equipment, and other requirements to prevent the discharge of oil from non-transportation-related onshore and offshore facilities with aboveground oil storage capacity greater than 1,320 gallons, or with completely buried underground oil storage capacity greater than 42,000 gallons. Regulated facilities are also limited to those that, because of their location, could reasonably be expected to discharge oil into the navigable waters of the United States or adjoining shorelines.
Amendments to the rule finalized in July 2002 contained revisions to the original 1973 regulations such as exempting certain completely buried tanks and wastewater treatment facilities. The changes to the rule also eliminated the provision that required an owner or operator of a facility having an aboveground tank greater than 660 gallons to prepare an SPCC Plan. 
Amendments to the rule finalized in 2006 addressed additional issues raised by the 2002 final rule, including those pertaining to facilities with smaller oil storage capacities, qualified oil-filled operational equipment, motive power containers, and mobile refuelers. EPA also removed sections of the rule that are not appropriate for facilities with animal fats and vegetable oils, and extended the compliance dates for farms. Since then, on several occasions, EPA delayed the effective date and extended the compliance dates to provide additional time for the regulated community to understand, amend or prepare, and implement SPCC Plans. 
Statement of Need for Regulatory Action 
EPA has identified opportunities to improve the efficiency of the SPCC regulatory program. To that end, the Agency proposed a series of revisions to the rule in 2007 (72 FR 58378), and received comments on these revisions from regulated parties, professional associations, environmental interest groups, and others. EPA reviewed these comments and evaluated new data about the operations of various industries regulated under the rule, and determined that amending the rule will provide an effective approach to meeting statutory requirements. 
Final Amendments to the Rule 
On December 5, 2008, EPA amended the SPCC requirements of the Oil Pollution Prevention regulation at 40 CFR part 112. In the current 2009 action, relative to the 2008 rule, the Agency is taking no action on most amendments (i.e., finalizing provisions), making technical corrections to some amendments, and removing three amendments. Based on comments received and consideration of all relevant facts, EPA is removing provisions to: exclude farms and oil production facilities from loading/unloading rack requirements; exempt certain produced water containers at oil production facilities; and provide alternative Qualified Facilities eligibility criteria for oil production facilities. Following is a summary of the December 5, 2008 final amendments that are, after public comments and consideration of all facts, finalized in this action, including several amendments to which EPA has made technical corrections. 
Finalized Amendments
The following provisions will become effective without modification on January 14, 2010:
   1. Hot-Mix Asphalt. EPA exempted hot-mix asphalt and hot-mix asphalt (HMA) containers from SPCC requirements. Since this material is unlikely to flow as a result of the entrained aggregate, there would be very few circumstances in which a discharge of HMA would have the potential to reach navigable waters or adjoining shorelines. EPA modified §112.1(d)(2) so that the capacity of storage containers containing only hot-mix asphalt is not counted toward the facility's aggregate oil storage capacity. 
   2. Pesticide Application Equipment and Related Mix Containers. EPA exempted pesticide application equipment and related mix containers from SPCC requirements regardless of ownership or where used. EPA also modified §112.1(d)(2) so that the capacities of these containers are not counted toward a facility's aggregate oil storage capacity. 
   3. Applicability of Mobile Refueler Requirements to Farm Nurse Tanks. EPA clarified that nurse tanks used on farms are considered mobile refuelers, according to the definition found in §112.2. 
   4. Residential Heating Oil Containers. EPA exempted residential heating oil containers that are used to store oil for the sole purpose of heating a single-family residence (including a residence at a farm) by adding a new paragraph under the general applicability section, §112.1(d). EPA also modified §112.1(d)(2) so that the capacity of single-family residential heating oil containers is not counted toward a facility's oil storage capacity.
   5. Definition of "Facility." EPA modified the definition of "facility" to clarify that contiguous or non-contiguous properties, parcels, leases, and pipelines may be considered separate facilities when calculating aggregate storage capacity to determine applicability of the SPCC rule. This amendment clarifies that facilities are allowed to choose how they aggregate or separate containers stored on contiguous or non-contiguous parcels within their operations. EPA also clarified that the definition of "facility" alone governs applicability of the SPCC rule.
   6. Facility Diagram. EPA amended §112.7(a)(3) to clarify that the facility diagram must include all fixed (i.e., not mobile or portable) containers. EPA also required that certain containers and piping, exempted from SPCC requirements in this final amendment, be identified on the facility diagram and marked as "exempt." Under this amendment, the facility owner or operator must mark the area on the diagram where the mobile containers are stored, and can choose to indicate in the facility's SPCC Plan the average number of mobile or portable containers maintained at the facility and the anticipated contents and capacities of those containers, rather than on the diagram itself. The revision to the rule language simplifies the development of a facility diagram by allowing for a general indication of the location and contents of numerous mobile or portable oil storage containers (e.g., drums and totes) on the diagram, rather than a specific representation of each container. 
   7. Loading/Unloading Racks. EPA established a definition for the term "loading/unloading rack" and specified that this definition controls applicability of the provision at §112.7(h), Facility tank car and tank truck loading/unloading rack. This amendment provides additional clarity to the regulated community about the applicability of this provision to regulated facilities. EPA also is finalizing editorial revisions to the provision at §112.7(h) for clarity.
   8. General Secondary Containment. EPA added clarity by amending the general secondary containment requirement at §112.7(c) in three ways: (1) by adding text regarding the method, design, and capacity of secondary containment; (2) by specifically allowing both active and passive measures of secondary containment; and (3) by including additional examples of prevention systems.
   9. General Secondary Containment for Non-Transportation-Related Tank Trucks. EPA extended the regulatory relief provided to mobile refuelers in 2006 to non-transportation-related tank trucks at facilities subject to the SPCC rule, because they operate similarly to mobile refuelers.
   10. Security. EPA amended the facility security requirements at §112.7(g) to allow owners and operators of all facilities to tailor security measures to their facilities' specific characteristics and location. Under this final amendment, the facility owners/operators are required to describe how they secure and control access to the oil handling, processing, and storage areas; secure master flow and drain valves; prevent unauthorized access to starter controls on oil pumps; secure out-of-service and loading/unloading connections of oil pipelines; and address the appropriateness of security lighting to both prevent acts of vandalism and assist in the discovery of oil discharges.
   11. Integrity Testing. EPA amended the integrity testing requirements at §§112.8(c)(6) and 112.12(c)(6) to allow an owner or operator to consult and rely on industry standards to determine the appropriate qualifications for personnel performing tests and inspections, as well as the type and frequency of integrity testing required for a particular container size and configuration. This amendment provides flexibility in complying with bulk storage container integrity testing requirements by extending the streamlined bulk storage container inspection requirement for qualified facilities provided in the December 2006 final rule (71 FR 77266, December 26, 2006) to all facilities subject to the integrity testing provision.
   12. Integrity Testing Requirements for Animal Fats and Vegetable Oils (AFVO). EPA amended the requirements found at §112.12(c)(6) to provide the PE or owner/operator certifying an SPCC Plan with the flexibility to determine how integrity testing requirements should be met for eligible containers, based on compliance with certain FDA regulations and other criteria relating to container construction and configuration. 
   13. Oil Production Facilities. EPA streamlined requirements specific to this sector in the following ways: 
Amended the definition of "production facility" to be consistent with the amended definition of "facility."
Allowed a new oil production facility a period of six months to prepare and implement an SPCC Plan. 
Provided an alternative compliance option for flow-through process vessels at oil production facilities that requires general secondary containment and additional oil spill prevention measures in lieu of the sized secondary containment requirements that apply for this equipment.
Exempted certain intra-facility gathering lines subject to requirements of the U.S. Department of Transportation's (DOT's) pipeline regulations in 49 CFR parts 192 or 195.
Provided specific requirements for a flowline/intra-facility gathering line maintenance program and an alternative compliance option for flowlines and intra-facility gathering lines at oil production facilities for contingency planning in lieu of the general secondary containment requirements.
Defined the term "produced water containers", and provided an alternative compliance option for these containers at oil production facilities requiring general secondary containment, a process or procedure certified by a PE designed to remove free-phase oil on the surface of the produced water container and compliance with additional oil spill prevention measures in lieu of sized secondary containment requirements. 
Clarified the definition of "permanently closed" as it applies to oil production facilities and containers present at an oil production facility.
   14. Man-Made Structures. EPA clarified that certain man-made structures such as building walls, basement structures, and drainage systems may be considered when determining how to comply with SPCC requirements. If an oil container at a regulated facility is located inside a building, the PE or facility owner/operator certifying the SPCC Plan may take into consideration the ability of the building walls and/or drainage systems to serve as secondary containment for the container. 
   15. Wind Turbines. EPA clarified the applicability of the SPCC rule to wind turbines used to produce electricity; specifically, these wind turbines meet the definition of oil-filled operational equipment promulgated in the December 2006 SPCC rule amendments (71 FR 77266, December 26, 2006) to the extent that the wind turbines meet the oil storage capacity threshold in the rule. Therefore, owners and operators of wind turbines can take advantage of the alternative compliance option provided to oil-filled operational equipment. 
Finalized Amendments with Technical Corrections
The following provisions will become effective with technical corrections on January 14, 2010:
   1. Tier I Qualified Facilities. EPA streamlined SPCC requirements for Tier I qualified facilities -- a subset of Tier II qualified facilities (i.e., facilities less than 10,000 gallons aggregate aboveground storage capacity) having no oil storage containers with a capacity greater than 5,000 gallons. Tier II qualified facilities were addressed in the 2006 amendment to the SPCC rule (71 FR 77266, December 26, 2006). Under this amendment, owners or operators of Tier I qualified facilities have the alternative to complete an SPCC Plan template (promulgated as Appendix G to 40 CFR part 112) in lieu of a full SPCC Plan. An owner or operator of a Tier I qualified facility may, as an alternative, complete the SPCC Plan template and may self-certify that the facility complies with a set of streamlined SPCC rule requirements. In the 2009 final action, this amendment is being finalized with technical corrections (e.g., clarifications and corrections of typographical and formatting errors.
   2. Underground Emergency Diesel Generator Tanks at Nuclear Power Stations. EPA exempted underground oil storage tanks including below-grade vaulted tanks, deferred under 40 CFR part 280, that supply emergency diesel generators at nuclear power generation facilities and that are subject to design criteria under the Nuclear Regulatory Commission (NRC) regulations.
   3. Oil Production Facilities-Compliance Date for New Facilities. Amended the compliance date for new oil production facilities to November 10, 2010.
Removed Provisions
 Additionally, after consideration of all relevant facts and public comments, EPA is removing the following December 5, 2008 provisions from the SPCC regulation:
         1.       Loading/Unloading Rack Exclusions. EPA is removing the exclusion of oil production facilities and farms from the loading/unloading rack requirements at §112.7(h).
         2.       Produced Water Containers. EPA is removing the exemption for certain produced water containers that do not contain oil in quantities that may be harmful as certified by a PE.
         3.       Alternative Qualified Facility Criteria for Oil Production Facilities. Removed the alternative criteria for a marginal oil production facility to be eligible to self-certify an SPCC Plan as a qualified facility.
Objectives of the Regulatory Impact Analysis
The purpose of this report is to present the regulatory impact analysis for the SPCC final amendments. The report also meets the requirements for regulatory impact analysis of Executive Order 12866 - Regulatory Planning and Review; the Regulatory Flexibility Act (RFA) and Small Business Regulatory Enforcement Fairness Act (SBREFA); Executive Order 13132 - Federalism; Executive Order 13175 - Consultation and Coordination with Indian Tribal Governments; Executive Order 13045 - Protection of Children from Environmental Health & Safety Risks; Executive Order 13211 - Actions That Significantly Affect Energy Supply, Distribution, or Use; the National Technology Transfer and Advancement Act; and the Paperwork Reduction Act (PRA).
Organization of this Report
The remainder of this report is organized as follows:
Chapter 3 describes the methodology for the analysis.
Chapter 4 describes the estimation method of the SPCC-regulated universe.
Chapter 5 discusses the compliance costs associated with the rule requirements (i.e., unit costs).
Chapter 6 analyzes the impacts of the final rule on compliance costs and resulting savings by rule component.
Chapter 7 describes the projected impact of the final rule on human health, welfare, and the environment.
Chapter 8 presents a summary of small business impacts and responds to Executive Orders.
Chapter 9 provides key limitations and assumptions of the analysis.
Volume II contains the following appendices to this report:
Appendix A presents the results of the questionnaires that were sent to regulated facilities.
Appendix B provides the sensitivity analysis for the annual cost savings that examines the impact of alternative compliance assumptions.
Appendix C presents the data sources used to estimate the universe of facilities regulated by the SPCC rule.
Appendix D presents details on the methodology used to determine the industry categories for regulated facilities using state databases and Dun & Bradstreet (D&B) data.
Appendix E describes how the universe of SPCC-regulated facilities was estimated using industry-specific data.
Appendix F analyzes the proximity of facilities to navigable waters or adjoining shorelines using geographic information systems (GIS).
Appendix G describes the use of industry growth rates to project the universe of SPCC-regulated facilities.
Appendix H briefly compares the unit costs from various sources with EPA estimates.
Appendix I provides the details of the unit cost inventory.
Appendix J presents the detailed formulae used in calculating cost savings in Chapter 6.
Appendix K provides the hypothetical SPCC facility profiles.
Exhibit 2-1 shows the correspondence between the preamble of the final rule and this RIA for each provision in the final rule. 
Exhibit 2-1 
Crosswalk with the Preamble 
Final Amendment
Preamble Section
RIA Section
Hot-Mix Asphalt
V.A.1
6.1
Pesticide Application Equipment and Related Mix Containers
V.A.2
6.2
Applicability of Mobile Refueler Requirements to Farm Nurse Tanks
V.A.3
6.3
Residential Heating Oil Containers
V.A.4
6.4
Definition of Facility
V.A.5
6.5
Facility Diagram
V.A.6
6.6
Loading/Unloading Racks 
V.A.7
6.7
General Secondary Containment
V.A.8
6.8
General Secondary Containment for Non-Transportation-Related Tank Trucks
V.A.9
6.9
Security
V.A.10
6.10
Integrity Testing
V.A.11
6.11
Integrity Testing Requirements for Animal Fats and Vegetable Oils
V.A.12
6.12
Oil Production Facilities
V.A.13
6.13
  Definition of Production Facility
V.A.13.a
6.13.3
  Modifications to §112.9 for Drilling and Workover Facilities
V.A.13.b
6.13.4
  SPCC Plan Preparation and Implementation for New Oil Production Facilities
V.B.3
6.13.5
  Exemption for Certain Intra-facility Gathering Lines
V.A.13.c
6.13.6
  Flowlines and Intra-facility Gathering Lines 
V.A.13.d
6.13.6
  Compliance Alternative in Lieu of Secondary Containment for Flowlines and Intra-facility Gathering Lines
V.A.13.d.i
6.13.6
  Contingency Plan for Flowlines and Intra-facility Gathering Lines
V.A.13.d.ii
6.13.6
  Requirements for a Flowline and Intra-Facility Gathering Line Maintenance Program
V.A.13.d.iii
6.13.6
  Exemption from Sized Secondary Containment for Flow-Through Process Vessels
V.A.13.e.i
6.13.7
  Alternative compliance requirements in Lieu of Sized Secondary Containment for Flow-Through Process Vessels 
V.A.13.e.ii
6.13.7
  Reportable Discharge from Flow-Through Process Vessels
V.A.13.e.iii
NA
  Alternative Qualified Facility Eligibility Criteria for an Oil Production Facility
V.C.2
6.13.8
  Alternative Compliance Measures for Produced Water Containers
V.A.13.f
6.13.9
  Exemption for Produced Water Containers
V.C.3
6.13.9
  Clarification of the Definition of Permanently Closed Containers
V.A.13.g
6.13.10
  Oil and Natural Gas Pipeline Facilities
V.D
6.13.11
Man-Made Structures
V.A.14
6.14
Wind Turbines
V.A.15
6.15
Tier I Qualified Facilities
V.B.1
6.16
Underground Emergency Diesel Generator Tanks at Nuclear Power Generation Facilities
V.B.2
6.17





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Chapter 3

Methodology

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Methodology
Executive Order 12866 requires agencies to assess all costs and benefits of regulatory activities, including quantitative and qualitative measures. This chapter presents the methodology used to estimate the economic impacts of the final amendments to the SPCC regulations and the total cost of compliance with the rule requirements. This action addresses the amendments finalized in 2008 (but did not take effect), after consideration of further public comments and all relevant facts. Section 3.1 describes the regulatory and economic baseline for the analysis; Section 3.2 outlines the basic framework for estimating cost savings from the final amendments to the SPCC rule. Subsequent chapters of the report provide greater detail on specific steps and calculations involved in the estimation of cost savings, including relevant equations that could be used to replicate the analysis.
Regulatory Baseline for the Analysis
The impacts of rule amendments in this action are estimated by comparing costs in the baseline with those associated with the finalized amendments. For the regulatory impact analysis of the combined impact of the 2008 and 2009 final amendments to the SPCC rule, EPA used as its baseline the SPCC rule requirements under 40 CFR part 112, as amended in 2002 (71 FR 77266-77293). The 2002 amendments are used as the baseline because these amendments were the first revisions to the regulations since the original regulations were published in 1973. The 2002 amendments were the culmination of a process that included three proposals to the 1973 regulations. Moreover, the 2002 amendments were substantive revisions to the original oil spill regulations. As recommended by EPA's "Guidelines for Preparing Economic Analyses," September 2000, the Agency assumed that facilities are in full compliance with the SPCC rule prior to the 2002 amendments. The regulatory impact analysis also contains a sensitivity analysis with partial compliance scenarios.
However, there is widespread concern among industry and others regarding potential non-compliance among owners and operators of facilities of certain sizes and industry sectors. For the RIA supporting the 2002 amendments, EPA was unable to locate statistically valid data to assess the extent or magnitude of such non-compliance. EPA considered compliance issues in the 2002 economic analysis of the SPCC rule: 
      "It is possible that [owners and operators of] some facilities have misinterpreted the existing regulation and are not currently in full compliance with existing requirements, but there is no practical way to measure the level of non-compliance. Moreover, the costs of coming into compliance with the clarified requirements are not properly attributed to this final [2002] regulation."
This regulatory impact analysis considers the reductions in compliance costs resulting from the final amendments to the SPCC rule. EPA recognizes, however, that actual changes in expenditures depend on the degree of compliance with SPCC requirements by owners and operators of the facilities affected by this rule. Owners and operators of existing facilities that are out of compliance with the existing rule will not benefit from the reduced requirements offered by the final rule. 
To better understand the impacts of potential non-compliance on the estimated cost savings, and in response to comments from OMB and GAO, EPA conducted two sensitivity analyses that examine the economic impact of the rule under different compliance scenarios. In the first analysis, EPA assumed three partial compliance scenarios (25 percent, 50 percent, and 75 percent compliance) in the baseline and after the final amendments (see Appendix B in Volume II). In the second sensitivity analysis, EPA assumed three partial compliance scenarios in the baseline and full compliance after the final amendments. EPA estimated the net impact on owners and operators of facilities in the oil production sector and farm sector that comply with the rule. Compliance in the agricultural community may be low or close to zero compliance, as reported by the U.S. Department of Agriculture. EPA assumed partial compliance rates of 0 percent, 25, percent, and 75 percent for the farm sector. The compliance rate of the oil production sector may be higher; the U.S. Department of Energy (DOE) estimates that about 67 percent of oil production facilities comply with the secondary containment requirement. For the oil production sector, EPA assumed partial compliance rates of 25 percent, 50 percent, 67 percent, and 75 percent for this sector. 
Industry compliance activities and their associated costs cannot be fully attributed to the SPCC rule. Data on the extent that facilities adopt industry standards is uncertain, and, in this analysis, the compliance costs and cost savings are not adjusted for possible overlap with industry standards. As a result, the analysis may overestimate the compliance costs. The Agency plans to consider industry standards in future economic analyses. The regulatory impact analysis takes into account requirements in state regulations that are similar to the SPCC requirements. For details of the state overlap analysis, refer to Section 5.4 of this report and additional information in the docket. In sum, when reporting the compliance cost and cost savings, EPA accounted for potential overlap with state regulations but not with industry standards.
It is important to note that the overlap with industry standards is relevant for only a few final amendments -- e.g. the 6-month delay in the implementation of an SPCC Plan for oil production facilities. The cost savings for these amendments depend on the total facility-level cost of complying with the SPCC rule; however, some of that total cost may actually be attributable to industry standards rather than SPCC requirements. For all other cases, EPA expects that the cost savings will not be affected by industry standards: either the final amendment provides flexibility so that facilities have the option to implement the current industry standard instead of the more stringent requirement in the existing SPCC rule (e.g., integrity testing, AFVO, security), or the Agency expects that industry standards are not necessarily adopted by the facilities (e.g., farms). 
Cost Savings from the Final Rule Amendments
This section outlines a general approach for estimating economic impacts on the regulated community as a result of the final amendments to the SPCC rule. The approach involves the following key steps: estimating the number of regulated facilities affected by each provision of the final rule; identifying the specific behavioral changes that may occur (e.g., choosing to prepare a template-based Plan rather than a full SPCC Plan); estimating the facility-specific unit costs of affected compliance measures under the baseline and policy scenarios; and applying the change in facility-specific unit costs to the projected number of affected facilities. Total resulting cost savings were annualized over a 10-year analysis period using both 3 percent and 7 percent discount rates. EPA used these discount rates to adjust the estimates for different years used in the analysis, according to OMB Circular A-4. 
Exhibit 3-1 outlines this approach. The key steps in the analysis are summarized below:
      1. Estimate the universe of facilities affected by the final rule. EPA developed a baseline universe of SPCC-regulated facilities by industry sector and range of oil storage capacities (e.g., facilities with oil storage capacity between 1,320 and 10,000 gallons of oil). For each major component of the final amendments, EPA estimated the number of facilities affected by the amendments. These entities include, for example, Tier I qualified facilities that have a maximum of 10,000 gallons of oil in total aboveground storage capacity and do not have any containers greater than 5,000 gallons; facilities that are likely to redefine facility boundaries; farms; facilities handling AFVO; oil and gas production facilities; facilities handling hot-mix asphalt; facilities with shop-built or portable containers with less than 5,000 gallons storage capacity; and facilities of various industries having alternative security measures. EPA then projected the anticipated annual change in the number of affected facilities over the 10-year analysis period, using industry-specific growth rates (see Section 4.8). 
      2. Estimate changes in compliance costs resulting from the final rule. EPA developed facility-specific cost estimates for specific baseline requirements expected to be affected by the final amendments to the SPCC rule. The baseline for the regulatory impact analysis is the 2002 SPCC rule. EPA also developed facility-specific unit cost estimates for compliance measures introduced by the final SPCC rule, such as the cost of preparing a template SPCC Plan. EPA did not analyze cost savings for revisions that only provide additional clarity on the intent of certain requirements. For example, EPA did not analyze the cost savings from the clarifications regarding the consideration of man-made structures as secondary containment and wind turbines, as these clarifications did not change the SPCC regulatory requirements. For completeness, the RIA lists and describes all actions in the final regulatory notice.
      3. Estimate total increase or reduction in compliance costs to potentially affected facilities. EPA estimated compliance costs and the cost savings for owners and operators of each type of affected facilities. These costs and cost savings were multiplied by the total number of facilities that are expected to take advantage of a given regulatory provision. Finally, EPA calculated the net change in compliance costs that were annualized over a 10-year period using 3 percent and 7 percent discount rates. 
For conducting the regulatory impact analysis, a unit cost inventory containing compliance cost estimates for each of the 2002 SPCC rule requirements was developed. The unit costs are compliance costs that each regulated facility would incur if they complied with the regulations. The Agency obtained estimates from a professional engineering (PE) firm with experience in preparing and reviewing SPCC Plans and constructing structures according to SPCC requirements across a broad spectrum of industries for the 48 contiguous states of the United States. To produce cost estimates, the PE firm staff relied on their best professional judgment.
In addition, in order to cross-check the estimates and develop a better understanding of the ranges and distributions of compliance costs, EPA conducted site visits and conducted interviews with five regulated facilities. These facilities provided data on their compliance measures and their associated costs, in order to cross-check the estimates and develop a better understanding of the ranges and distributions of compliance costs. A summary of the facility visits and major findings are described in Appendix A in Volume II of this report.
Exhibit 3-1 
Main Steps for Estimating the Economic Effects of the Final Rule Changes






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Chapter 4

Estimation of the SPCC-Regulated Universe of Facilities

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Estimation of the SPCC-Regulated Universe of Facilities
This chapter represents the Agency's estimate for the universe of affected entities. Using information contained within previous studies and new information, this analysis estimates that, in 2010, 640,000 facilities will be regulated under the SPCC rule. This chapter provides an overview of the data sources used to estimate the universe of regulated facilities, industry sectors, and oil storage capacities, and a summary of the universe of facilities. Appendices C through G in Volume II of this report provide additional detail on the methodology employed in the analysis, as well as detailed results.
Data Sources and Industry Sectors
Based on the availability and relevance of existing data on production, storage, handling, and use of oil in the United States, EPA used multiple data sources to estimate the number of SPCC-regulated facilities in different industries. Exhibit 4-1 presents the 30 industry sectors examined in the analysis, the corresponding North American Classification System (NAICS) codes for these industries, and the data source(s) used to estimate the number of SPCC-regulated facilities contained within each industry category.
Exhibit 4-1 
Industry Sectors and Databases Used to Estimate SPCC-Regulated Facilities
Industry Sector
NAICS Code
Data Source[1]
Oil Production
                                    211111
EIA, 2006
Farms
                                   111, 112
Census of Agriculture, 2002
Electric Utility Plants
                                     2211
EIA,[2] FERC,[3] 2002
Petroleum Refining and Related Industries
                                      324
Economic Census, 2002
Chemical Manufacturing
                                      325
State Databases, 2005
Food Manufacturing
                                   311, 312
State Databases, 2005
Manufacturing facilities using and storing AFVO
                                   311, 325
Economic Census, 2002
Metal Manufacturing
                                   331, 332
State Databases, 2005
Other Manufacturing
                                     31-33
State Databases, 2005
Real Estate Rental and Leasing
                                    531-533
State Databases, 2005
Retail Trade
                             441-446, 448,451-454
State Databases, 2005
Contract Construction
                                      23
State Databases, 2005
Wholesale Trade
                                      42
State Databases, 2005
Other Commercial
                              492,541,551,561-562
State Databases, 2005
Transportation
                                    481-488
State Databases, 2005
Arts Entertainment & Recreation
                                    711-713
State Databases, 2005
Other Services (Except Public Administration)
                                    811-813
State Databases, 2005
Petroleum Bulk Stations and Terminals
                                     4247
Economic Census, 2002
Education 
                                      61
CBECS,[4] 2005
Hospitals & Other Health Care
                                   621, 622
State Databases, 2005
Accommodation and Food Services
                                   721, 722
State Databases, 2005
Fuel Oil Dealers
                                     45431
Economic Census, 2002
Gasoline stations 
                                     4471
Economic Census, 2002
Information, Finance, and Insurance
                                    51, 52
State Databases, 2005
Mining
                                      212
State Databases, 2005
Warehousing and Storage
                                      493
State Databases, 2005
Religious Organizations
                                    813110
CBECS,[4] 2005
Military Installations
                                    928110
Department of Defense, 2005
Pipelines
                                  4861, 48691
Economic Census, 2002
Government
                                      92
CBECS,[4] 2005
NAICS = North American Industry Classification System; EIA = U.S. Energy Information Administration; FERC = Federal Energy Regulatory Commission; CBECS = Commercial Buildings Energy Consumption Survey.
[1] 	See Appendix C in Volume II for a detailed description of data sources. 
[2] 	EPA used EIA data on oil stocks at each electric utility plant to estimate the number of power plants in each oil storage capacity category.
[3] 	EPA used FERC information on substations by major utilities to estimate the number of substations.
[4] 	The CBECS is a nationwide survey that contains information on fuel storage and use by commercial buildings that EPA used to generate estimates of the number of government, religious, and educational establishments that are SPCC regulated.

As shown in Exhibit 4-1, EPA used eight state databases to estimate SPCC-regulated facilities in 17 of the 30 industry sectors studied in the analysis: chemical manufacturing; food manufacturing; metal manufacturing; other manufacturing; real estate rental and leasing; retail trade; contract construction; wholesale trade; other commercial; transportation; arts, entertainment, and recreation; other services (except public administration); hospitals and other health care; accommodation and food services; information, finance, and insurance; mining; and warehousing and storage. These databases are discussed in more detail in Appendix C in Volume II.
Although state databases were the primary data source for the majority of industry sectors, federal and proprietary data were available and used to estimate the number of facilities in the sectors with the most facilities regulated by the SPCC rule: farms; oil and gas production; petroleum bulk stations and terminals, fuel oil dealers, pipelines, and petroleum refinery and related industries; electric utilities; airports; military installations; AFVO industry; and education facilities, government establishments, and religious organizations. These data sources are discussed in more detail in Appendix C in Volume II. 
Facility Categories
For the purpose of this analysis, EPA estimated the number of regulated facilities for four size categories based on oil storage capacity at a facility. EPA classified facilities into capacity categories to (1) account for differences in the potential compliance costs experienced by facilities of different sizes; and (2) determine the number of facilities affected by each of the final amendments in the SPCC rule, based on a facility's storage capacity. EPA categorized SPCC-regulated facilities into the following four oil storage capacity categories:
         * Category I: total oil storage capacity greater than 1,320 gallons but less than or equal to 10,000 gallons.
Category II: total oil storage capacity greater than 10,000 gallons but less than or equal to 42,000 gallons
Category III: total oil storage capacity greater than 42,000 gallons but less than or equal to 1,000,000 gallons
Category IV: total oil storage capacity greater than 1,000,000 gallons.
Exhibit 4-2 summarizes the estimated number of SPCC-regulated facilities by size category for 2010.
Exhibit 4-2 
Estimated Number of SPCC-Regulated Facilities by Size Category
                                    (2010)
Size Category
Aggregate Capacity
Estimated Number of Facilities[1]
Category I
                            1,320 to 10,000 gallons
                                                                       318,000 
Category II
                           10,001 to 42,000 gallons
                                                                       205,000 
Category III
                          42,001 to 1 million gallons
                                                                       115,000 
Category IV
                        Greater than 1 million gallons
                                                                         3,000 
Total
                                                                     640,000[2]
[1] 	Individual values may not sum to the total due to rounding.
[2] 	The estimated analysis period is 2010-2019. At the time of preparing the RIA report for the 2007 SPCC proposed amendments, EPA did not have information on the exact date the proposed amendments would go into effect and assumed the analysis period from 2008 through 2017. As a result, for the proposed rule RIA, the number of affected facilities was estimated at 571,000.

All the facilities included in the analysis were further divided in two categories: production facilities (facilities whose operations and oil storage activities primarily involve oil and gas production) and storage facilities (all other industry groups). EPA estimated that, in 2010, approximately 215,000 production facilities and 425,000 storage facilities will be subject to SPCC requirements. The Agency developed separate estimates for the unit cost of compliance for production and storage facilities in Categories I through IV.
Additionally, all SPCC-regulated facilities are divided into existing and new facilities, to reflect the differences in compliance activities between the two groups. Existing facilities include facilities that initiated operations prior to initiation of this final rule. New facilities include those facilities that will initiate operations after this rule goes into effect. 
Comparison with EPA's 1991 Facilities Study 
While the current analysis follows the same general methodology as EPA's 1991 study, the two analyses differ in four ways: (1) the specific state databases used; (2) the number of industry sectors and the method used to group facilities into industry sectors; (3) the oil storage capacity categories; and (4) the methodology used to extrapolate state data to the entire universe of SPCC-regulated facilities. Exhibit 4-3 summarizes these differences.

Exhibit 4-3 
Comparison with EPA's 1991 Facilities Study
Element of Analysis
1991
2006
Notes
Number of
State Database Sources
                                       4
                                       8
EPA's 1991 study used Illinois, California, Maryland, and New York databases to estimate the universe of medium and large facilities, and the New York database alone to estimate the universe of small facilities.
The current analysis does not use the Illinois data because the latest version of the database does not include capacity information for two-thirds of the records. The current analysis also does not use the California database because it lacks capacity information for one-fifth of the records and does not differentiate aboveground storage tanks (ASTs) from underground storage tanks (USTs). 
In EPA's 1991 study, the estimate for the small facilities category was calculated separately for most industry sectors using the New York Major Facilities database, because this database contains a reliable representation of these facilities. EPA was not able to use this database to estimate the overall universe because it did not provide complete industry sector information. 
The current analysis matches industry sector data from the Dun & Bradstreet (D&B) database with state database information. EPA is able to use the New York database (along with the other state databases) to estimate the number of SPCC-regulated facilities in all capacity categories. 
Number of Industry Sectors
                                      16
                                      30
The current analysis examines 30 industry sectors, using D&B data to help derive more detailed information on affected industries. However, because previous estimates grouped a large number of facilities into the broad industry sector of "Other Commercial Facilities," it is difficult to determine the extent to which the new figures include previously omitted industries. 
The 1991 study focused solely on petroleum and petroleum-related oils. The current analysis attempts to include facilities that may be regulated because of their use or storage of AFVO. 
Number of Oil Storage Capacity Categories
                                       3
                                       4
EPA's 1991 study examined the following oil storage capacity categories:
   # Small facilities: total oil storage capacity greater than 1,320 gallons but less than or equal to 42,000 gallons.
   # Medium facilities: total oil storage capacity greater than 42,000 gallons but less than or equal to one million gallons.
   # Large facilities: total oil storage capacity greater than one million gallons.
The current analysis differentiates the characteristics of facilities with storage capacities between 1,320 and 10,000 gallons from those facilities with storage capacities between 10,001 and 42,000 gallons.
Extrapolation to the SPCC-Regulated Universe
                                   Midpoint
                                 Average Ratio
The current analysis uses the average ratio because the universe extrapolation is based on a larger number of facilities combining data from more than one state.


SPCC Universe Estimation Using State Databases 
The estimation methodology employed was similar to that used in EPA's 1991 facilities study: SPCC-regulated facilities were identified in the state databases based on oil storage capacity, corresponding industry categories for all facilities were identified, and state data were extrapolated to the entire country to represent the SPCC-regulated universe nationwide. In total, EPA identified approximately 140,000 SPCC-regulated facilities in the eight state databases. Some 41,000 of those facilities were matched to specific industry categories and then extrapolated to the entire universe using U.S. Census data, yielding a total of 177,000 regulated facilities. The following sections expand upon each methodological step used to calculate the universe estimate.
Identification of SPCC-Regulated Facilities in State Databases
In the current analysis, EPA used eight state databases (Florida, Kansas, Maryland, Minnesota, New York, Oklahoma, Virginia, and Wisconsin) to determine the number of SPCC-regulated facilities in the given state for each industry sector by capacity category. EPA selected these particular state databases because they contain necessary information on the total number of containers at each facility, the capacity of each container, and container contents. The databases also contain name and address information for each facility. EPA identified SPCC-regulated facilities in each oil storage capacity category using these data. In total, EPA identified 140,000 SPCC-regulated facilities in the eight state databases. Exhibit 4-4 summarizes details of the eight state databases used.

Exhibit 4-4 
Summary of State Databases Used in the Analysis
State
Data Source
Database Name
Regulatory Requirement
Data Fields
Number of Records
Florida
Florida Department of Environmental Protection (FDEP)
Storage Tank Facility Information
FDEP's Storage Tank Program regulates USTs larger than 110 gallons and ASTs greater than 550 gallons that store petroleum products and hazardous substances at non-residential facilities.
Tank capacity
Material stored
Facility name & address
Industry sector
22,800 ASTs and 61,000 USTs at 20,900 facilities
Kansas
Kansas Department of Health & the Environment (KDH&E)
Permitted Tanks Database
KDH&E regulates petroleum ASTs and USTs larger than 1,100 gallons for farm and residential use, and petroleum ASTs and USTs larger than 660 gallons for other industries.
Tank capacity
Material stored
Tank status
Facility name & address
6,450 USTs at 2,380 facilities
9,580 ASTs at 3,360 facilities
Maryland
Maryland Department of the Environment (MDE)
AST Oil Operations Database
MDE's Oil Control Program regulates petroleum storage tanks. Registration required for ASTs at facilities with at least 10,000 gallons of storage capacity or at least 1,000 gallons of storage capacity for used oil.
Tank capacity
Material stored
Facility name & address
Facility four-digit Standard Industrial Classification (SIC) 
6,330 ASTs at 691 facilities
Includes only tanks currently in use or temporarily closed.


UST Oil Operations Database
Registration required for all petroleum USTs with the exception of farm and residential USTs smaller than 1,100 gallons.
Tank capacity
Material stored
Facility name & address
Industry sector
13,000 USTs at 5,660 facilities
Includes only tanks currently in use or temporarily closed.
Minnesota
Minnesota Pollution Control Agency (MnPCA)
Tanks Database
Registration required for petroleum ASTs larger than 500 gallons and petroleum USTs covered by EPA's UST program.
Tank capacity
Material stored
Facility name & address
Industry sector
13,700 USTs at 7,570 facilities
22,900 ASTs at 6,010 facilities
Includes only tanks currently in use or temporarily closed.
New York
New York State Department of Environmental Conservation (DEC)
Petroleum Bulk Storage Database
DEC's Petroleum Bulk Storage Program regulates petroleum storage at facilities with at least 1,100 gallons of storage capacity.
Tank capacity
Material stored
Tank status
Facility name & address
65,500 tanks at 55,800 facilities


Major Oil Storage Facilities Database
DEC's Major Oil Storage Facilities Program regulates petroleum terminals and transport vessels operating in New York waters with a total storage capacity of 400,000 gallons or more.
Tank capacity
Material stored
Tank status
Facility name & address
9,180 tanks at 344 facilities
Oklahoma
Oklahoma Corporation Commission (OCC)
Petroleum Storage Tank Database
Registration required for petroleum USTs over 1,100 gallons for residential and noncommercial agricultural use, and over 110 gallons for all other uses. Petroleum ASTs larger than 110 gallons at certain specified facilities and all petroleum ASTs at bulk plants and commercial facilities require registration. 
Tank capacity
Material stored
Tank status
Facility name & address
4,780 ASTs at 2,020 facilities
Virginia
Virginia Department of Environmental Quality (DEQ)
Registered Tanks Database
Registration required for petroleum ASTs over 660 gallons or facilities with a total capacity greater than 1,320 gallons. USTs regulated under EPA's UST Program are included in the database.
Tank capacity
Material stored
Tank status
Facility name & address
Industry sector
8,010 ASTs at 3,000 facilities
27,000 USTs at 10,500 facilities
Wisconsin
Wisconsin Department of Commerce
Storage Tank Database
Registration required for all USTs larger than 60 gallons and storing petroleum or CERCLA hazardous substances. Farm and residential ASTs larger than 1,100 gallons, and all other ASTs larger than 110, gallons, are registered and included in the database.
Tank capacity
Material stored
Tank status
Facility name & address
70,500 currently in-use tanks
7,960 ASTs and 60,200 USTs at 44,900 facilities


Matching Methodology
While each state database used in the analysis contained sufficient information to allow identification of SPCC-regulated facilities, these databases did not contain information on the specific industry sector to which each facility belongs. Therefore, in order to determine the industry associated with each SPCC-regulated facility identified in the state databases, EPA employed a "fuzzy matching" method in which facility information such as name and address from the state databases were matched to D&B Market Spectrum data to assign specific industries to facilities.,  Appendix D in Volume II discusses the "fuzzy matching" methodology in greater detail. 
The matching approach allowed EPA to classify regulated facilities into 30 industry sectors used in the analysis. Since the state databases contained the information on facility's storage capacity, the industry matching was performed for each size category and state. Of the 140,000 SPCC-regulated facilities in the eight states, approximately 31 percent were matched successfully. Exhibit 4-5 summarizes the percentage of matched facilities in each state database used in the analysis. As shown, these percentages range from 21 percent for the Wisconsin database to 81 percent for the Kansas database. Unmatched records are primarily explained by missing records and record inaccuracies. 
EPA does not have quantitative data showing whether or not there is a statistically significant difference between facilities for which the industry code could be determined and facilities for which the industry code could not be determined. The Agency assumed that there was no systematic difference between for the two groups -- there were not any specific characteristics of the unmatched facilities. Assuming that the matched facilities are not systematically different from the unmatched ones, the distribution of matched facilities in each industry sector was applied to all facilities in that industry sector at the national level. 
The Agency used the scale factor to get to the total number of SPCC-regulated facilities estimated from each state database. The scale factor is calculated as one divided by the percentage of matched facilities, and reflects the proportion of facilities that were matched relative to the total number of SPCC-regulated facilities from the state databases. The number of matched facilities is multiplied by the scale factor to estimate the total number of SPCC-regulated facilities for each industry within each state database. By using the scale factor, EPA assumed that the distribution of facilities across industries is identical for matched and unmatched facilities. To the extent this assumption is incorrect, the estimate of total facilities per industry in each state may be over- or underestimated.
Exhibit 4-5 
Percentage of Matched Facilities after Automated and Manual Matching
State
Total Number of Records
Percentage Matched
Scale Factor
Florida
                                    24,600
                                      35%
                                      2.9
Kansas
                                     3,060
                                      81%
                                      1.2
Maryland
                                     6,430
                                      53%
                                      1.9
Minnesota
                                     6,930
                                      43%
                                      2.4
New York
                                    38,700
                                      28%
                                      3.6
Oklahoma
                                     1,190
                                      45%
                                      2.3
Virginia
                                    11,900
                                      36%
                                      2.8
Wisconsin
                                    47,500
                                      21%
                                      4.8

Extrapolation of Results to the Entire Universe
EPA extrapolated results to the entire country by multiplying the total number of establishments in each industry sector in the United States as contained within the 1997 U.S. Economic Census by a facility ratio, as shown in the equation below. The facility ratio is estimated as the number of SPCC-regulated facilities in the eight states for an industry sector divided by the total number of facilities reported for that industry sector in those states. Exhibit 4-6 summarizes the results of the analysis.
Calculation of Total Universe of SPCC-Regulated Facilities
--------------------------------------------------------------------------------
Total Universe of SPCC-Regulated Facilities =  [(Fi * (RFi,c / TFi )]
--------------------------------------------------------------------------------
where,
--------------------------------------------------------------------------------
F = the total number of facilities in the United States by industry sector, i
--------------------------------------------------------------------------------
RF = the total number of SPCC-regulated facilities in the eight state databases by facility size category, c, and industry sector, i
--------------------------------------------------------------------------------
TF = the total number of facilities in the eight state databases by industry sector, i
--------------------------------------------------------------------------------
i = facility industry sector
--------------------------------------------------------------------------------
c = facility size category

Exhibit 4-6 
SPCC Universe Estimates Using State Databases 
(2010)
Industry Sector
Category I
Category II
Category III
Category IV
Total
Petroleum Refining and Related Industries
                                                                            87 
                                                                           218 
                                                                         1,300 
                                                                           437 
                                                                          2,000
Chemical Manufacturing
                                                                         1,100 
                                                                           954 
                                                                           583 
                                                                            26 
                                                                          3,000
Food Manufacturing
                                                                         1,700 
                                                                         1,400 
                                                                           526 
                                                                            24 
                                                                          4,000
Metal Manufacturing
                                                                         1,700 
                                                                           727 
                                                                           406 
                                                                             - 
                                                                          3,000
Other Manufacturing
                                                                         8,900 
                                                                         5,200 
                                                                         1,600 
                                                                           106 
                                                                         16,000
Real Estate Rental and Leasing
                                                                        26,000 
                                                                         3,300 
                                                                           235 
                                                                             - 
                                                                         29,000
Retail Trade
                                                                        15,000 
                                                                         2,700 
                                                                           830 
                                                                            51 
                                                                         18,000
Contract Construction
                                                                        12,000 
                                                                         4,100 
                                                                           772 
                                                                            21 
                                                                         17,000
Wholesale Trade
                                                                         9,600 
                                                                         3,000 
                                                                         2,100 
                                                                            98 
                                                                         15,000
Other Commercial
                                                                        13,000 
                                                                         3,500 
                                                                           946 
                                                                             - 
                                                                         17,000
Transportation
                                                                         8,800 
                                                                         4,900 
                                                                           719 
                                                                           722 
                                                                         15,000
Arts Entertainment & Recreation
                                                                        13,000 
                                                                         1,400 
                                                                           107 
                                                                             - 
                                                                         14,000
Other Services
                                                                         6,500 
                                                                           682 
                                                                           169 
                                                                             - 
                                                                          7,000
Hospitals and Other Health Care
                                                                         5,500 
                                                                         1,270 
                                                                           208 
                                                                            29 
                                                                          7,000
Accommodation and Food Services
                                                                         4,700 
                                                                           409 
                                                                            36 
                                                                             - 
                                                                          5,000
Information Finance and Insurance
                                                                         3,800 
                                                                           578 
                                                                            35 
                                                                             - 
                                                                          4,000
Mining
                                                                         1,300 
                                                                         1,500 
                                                                           320 
                                                                            40 
                                                                          3,000
Warehousing and Storage
                                                                         1,400 
                                                                           650 
                                                                           596 
                                                                            54 
                                                                          3,000
Total
                                                                       133,000 
                                                                        36,000 
                                                                        12,000 
                                                                         2,000 
                                                                        182,000

SPCC Universe Estimation Using Industry-Specific Data Sources
Where federal government or proprietary data specific to certain industry sectors were available, EPA did not rely on the state databases to estimate the universe of SPCC-regulated facilities. Instead, EPA used different methodologies based on the composition of the specific industry data. Industry-specific data were used to estimate the number of SPCC-regulated facilities in 12 industry sectors, which EPA grouped as follows: 
Farms 
Other petroleum-related (petroleum bulk station and terminals, fuel oil dealers, pipelines, and petroleum refinery and related industries)
Oil and gas production
Electric utilities
Military installations
The animal fats and vegetable oils (AFVO)
Education facilities, government establishments, and religious organizations. 
Exhibit 4-7 summarizes the federal government and proprietary data sources used in the analysis; Appendix C in Volume II presents a detailed description of all data sources used in the analysis.

Exhibit 4-7 
Summary of Federal and Proprietary Data Sources and Methodologies Used in the Analysis
Industry Sector
Data Source
Database Name
Primary Data Fields Used
General 
Methodology
Farms
USDA Census of Agriculture

Farm Production Expenses, 2002 and 1997 Gasoline, fuels, and oils
Fuel production expenses
Identify the number of farms and fuel production expense ranges for gasoline and diesel.
Convert production expense ranges to quantity ranges using fuel price data.
Estimate the quantity of purchased fuel that is stored on farms.
Estimate the percentage of farms in each quantity range that are regulated.
Project estimated number of farms from 2002 to 2005.


Petroleum Products Expenses, 1997, 1992, and 1987
Cost ranges for gasoline and diesel



1982 Census, Volume 1, County Table 6[1]
Quantity of stored fuel



NASS, Number of Farms 1996 to 2005
Number of farms

Petroleum Bulk Station and Terminals, Fuel Oil Dealers, Pipelines, and Petroleum Refinery and Related Industries
U.S. Census Bureau
2002 U.S. Economic Census
Total number of facilities
Assume all facilities in these industries are SPCC-regulated.
Project number of facilities to 2005.
Oil and Gas Production 
Personal Communication
Personal communication with EPA Region 6 and Texas Railroad Commission
Assumption of four wells per facility[2]
Assume all active oil wells and gas wells producing condensate oil in 2004 are SPCC-regulated.
Assume four wells per facility.
Project number of facilities to 2005.

Department of Energy
Energy Information Administration, Distribution and Production of Oil and Gas Wells by State
Number of active wells producing oil and oil condensate in 2004

Electric Utilities
U.S. Energy Information Administration
Form EIA-906
Oil stock at each power plant with generation capacity greater than 1 megawatt
Estimate SPCC-regulated power plants based on oil stocks as a proxy for oil capacity.
Assume each unique substation filing Form EIA-906 is SPCC-regulated.
Extrapolate to universe of regulated substations using ratio of electric power sold by Form EIA-906 substations to electric power sold nationally.


March 2005 Electric Power Monthly
Total retail megawatt hours of electricity sold nationwide


Federal Energy Regulatory Commission
Form No. 1
Number of electric substations

Military Installations
Department of Defense
Total Military Installations (1995)
Total number of military Installations
Assume all military installations are SPCC-regulated.
Animal Fats and Vegetable Oils (AFVO)
U.S. Census Bureau
2005 US Census of Manufacturing
Number of manufacturing establishments
Assume a percentage of manufacturing facilities that produce, use, or store AFVO and may be SPCC-regulated.
Apply these percentages to the number of facilities in manufacturing NAICS code categories.
Assume all corn refining plants are SPCC-regulated.
Use specific information on soy ink from industry to assume the proportion of facilities that are SPCC-regulated.


2002 US Economic Census
Number of facilities by NAICS code


Corn Refiners Association
N/A
Number of corn refining plants


Soy Ink
US manufacturers producing soy ink
Number of US manufacturers producing soy ink

Education, Religious Organizations, and Government Establishments
U.S. Department of Energy
Energy Information Administration, 1995 and 2003 Commercial Buildings Energy Consumption Survey (CBECS)
Total tank capacity in 1995
Square footage of buildings in 1995 and 2003
Project tank capacity in 1995 to 2003, using the growth in square footage of buildings from 1995 to 2003 as a proxy for growth in tank capacity.
Project 2003 estimates to 2005.
[1]	EPA used the 1982 data for on-farm fuel storage in one of the steps of the estimation process to estimate a fraction of purchased diesel and gasoline that is stored on farms (the Census of Agriculture did not collect these data after 1982). The estimate for the number of farms from which the estimate of the regulated farms is derived is taken from the 2002 Census of Agriculture. This section of Chapter 4 and Appendix E of Volume II provide detailed description of the steps involved.
[2]	Personal communication with Richard Franklin, Federal On-Scene Coordinator for EPA Region 6, 2006,.and with Mark England, Texas Railroad Commission, May 2005.

Exhibit 4-8 summarizes the results of the analysis for the industries discussed in this section. As shown, EPA estimated that approximately 640,000 facilities are regulated in these industries. Details of the industry-specific estimation methodology used for each industry are presented in Appendix D in Volume II.
Exhibit 4-8 
SPCC Universe Estimate Using Federal Databases 
(2010)
Industry Sector
Category I
Category II
Category III
Category IV
Total
Farms
                                                                       141,000 
                                                                         6,900 
                                                                           557 
                                                                           111 
                                                                        148,568
Petroleum Bulk Stations and Terminals
                                                                           423 
                                                                           635 
                                                                         3,280 
                                                                           600 
                                                                          4,938
Fuel Oil Dealers
                                                                           301 
                                                                         1,610 
                                                                         2,210 
                                                                           201 
                                                                          4,322
Pipelines
                                                                           662 
                                                                             - 
                                                                              -
                                                                              -
                                                                            662
Petroleum Refining and Related Industries
                                                                            87 
                                                                           218 
                                                                         1,310 
                                                                           437 
                                                                          2,052
 Oil and Gas Production
                                                                        27,500 
                                                                       148,000 
                                                                        39,000 
                                                                            382
                                                                        215,000
Electric Utility Plants
                                                                        22,700 
                                                                        23,000 
                                                                        15,000 
                                                                           361 
                                                                         61,061
Military Installations
                                                                           159 
                                                                           159 
                                                                           319 
                                                                           127 
                                                                            765
Manufacturing Facilities Using and Storing AFVO
                                                                         2,670 
                                                                         3,510 
                                                                         1,620 
                                                                              -
                                                                          7,800
Education
                                                                         2,320 
                                                                         6,240 
                                                                              -
                                                                              -
                                                                          8,560
Government 
                                                                           595 
                                                                              -
                                                                              -
                                                                              -
                                                                            595
Religious Organizations
                                                                         1,520 
                                                                              -
                                                                              -
                                                                               
                                                                          1,520
Total
                                                                        183,000
                                                                        167,000
                                                                        104,000
                                                                          1,840
                                                                        456,000
Note: Numbers in this exhibit present a mix of rounded and non-rounded figures. 
For example, for Oil and Gas Production facilities, the figures are rounded to three significant digits. The total number of 215,000 represents the value of 215,063 rounded to three significant digits. 

Estimates of the Total SPCC Universe
Exhibit 4-9 presents the 2010 projected estimate of the number of facilities regulated by the SPCC rule for each industry group considered in the analysis. As shown, EPA estimates that approximately 640,000 facilities will be regulated by the SPCC rule. The majority of the regulated facilities are in Category I (52 percent), followed by Category II (36 percent) and Category III (12 percent). Facilities in Category IV account for less than 1 percent of the total facilities regulated by the SPCC. 
Oil and gas production (34 percent) and farms (23 percent) account for the largest percentages of the SPCC-regulated facilities. The electric utility plant industry (10 percent) is the only other industry sector that accounts for more than 5 percent of the total SPCC-regulated facilities.

Exhibit 4-9 
Estimated Universe of SPCC-Regulated Facilities 
(2010)
Industry Category
NAICS
Facility Oil Storage Capacity Category
Total
Percentage (%)


Category I
Category II
Category III
Category IV


Oil and Gas Production
                                    211111
                                                                         27,500
                                                                        148,000
                                                                         39,000
                                                                            382
                                                                        215,000
                                                                          33.60
Farms
                                    111,112
                                                                        141,000
                                                                          6,900
                                                                            557
                                                                            111
                                                                        149,000
                                                                          23.28
Electric Utility Plants
                                     2211
                                                                         22,700
                                                                         22,800
                                                                         15,100
                                                                            361
                                                                         61,000
                                                                           9.52
Real Estate Rental and Leasing
                                    531-533
                                                                         25,700
                                                                          3,250
                                                                            235
                                                                              0
                                                                         29,200
                                                                           4.56
Retail Trade
                              441-446,448,451-454
                                                                         14,500
                                                                          2,710
                                                                            830
                                                                             51
                                                                         18,100
                                                                           2.82
Contract Construction
                                      23
                                                                         11,800
                                                                          4,080
                                                                            772
                                                                             21
                                                                         16,700
                                                                           2.61
Other Commercial
                              492,541,551,561-562
                                                                         12,800
                                                                          3,510
                                                                            946
                                                                              0
                                                                         17,200
                                                                           2.69
Other Manufacturing
                                     31-33
                                                                          8,940
                                                                          5,210
                                                                          1,580
                                                                            106
                                                                         15,800
                                                                           2.47
Wholesale Trade
                                      42
                                                                          9,630
                                                                          2,990
                                                                          2,140
                                                                             98
                                                                         14,900
                                                                           2.32
Transportation
                                    481-488
                                                                          8,750
                                                                          4,910
                                                                            719
                                                                            722
                                                                         15,100
                                                                           2.36
Arts Entertainment & Recreation
                                    711-713
                                                                         12,800
                                                                          1,390
                                                                            107
                                                                              0
                                                                         14,300
                                                                           2.23
Education
                                      611
                                                                          2,310
                                                                          6,240
                                                                              0
                                                                              0
                                                                          8,560
                                                                           1.34
Manufacturing facilities using and storing AFVO
                                    311,325
                                                                          2,670
                                                                          3,510
                                                                          1,620
                                                                              0
                                                                          7,790
                                                                           1.22
Other Services
                                    811-813
                                                                          6,510
                                                                            682
                                                                            169
                                                                              0
                                                                          7,370
                                                                           1.15
Hospitals and Other Health Care
                                    621-624
                                                                          5,530
                                                                          1,270
                                                                            208
                                                                             29
                                                                          7,040
                                                                           1.10
Accommodation and Food Services
                                    721-722
                                                                          4,740
                                                                            409
                                                                             36
                                                                              0
                                                                          5,180
                                                                           0.81
Petroleum Bulk Stations and Terminals
                                     4247
                                                                            423
                                                                            635
                                                                          3,280
                                                                            600
                                                                          4,940
                                                                           0.77
Information Finance and Insurance
                                     51,52
                                                                          3,770
                                                                            578
                                                                             35
                                                                              0
                                                                          4,380
                                                                           0.68
Fuel Oil Dealers
                                     45431
                                                                            301
                                                                          1,610
                                                                          2,210
                                                                            201
                                                                          4,320
                                                                           0.67
Gasoline stations
                                     4471
                                                                          1,850
                                                                          1,160
                                                                            749
                                                                             38
                                                                          3,800
                                                                           0.59
Food Manufacturing
                                    311,312
                                                                          1,730
                                                                          1,360
                                                                            526
                                                                             24
                                                                          3,640
                                                                           0.57
Mining
                                    212-213
                                                                          1,290
                                                                          1,500
                                                                            320
                                                                             40
                                                                          3,150
                                                                           0.49
Metal Manufacturing
                                    331,332
                                                                          1,670
                                                                            727
                                                                            406
                                                                              0
                                                                          2,800
                                                                           0.44
Warehousing and Storage
                                      493
                                                                          1,410
                                                                            650
                                                                            596
                                                                             54
                                                                          2,710
                                                                           0.42
Chemical Manufacturing
                                      325
                                                                          1,080
                                                                            953
                                                                            583
                                                                             27
                                                                          2,640
                                                                           0.41
Petroleum Refining and Related Industries
                                      324
                                                                             87
                                                                            218
                                                                          1,310
                                                                            436
                                                                          2,050
                                                                           0.32
Religious Organizations
                                    813110
                                                                          1,520
                                                                              0
                                                                              0
                                                                              0
                                                                          1,520
                                                                           0.24
Military Installations
                                    928110
                                                                            159
                                                                            159
                                                                            319
                                                                            127
                                                                            766
                                                                           0.12
Pipelines
                                  4861, 48691
                                                                            663
                                                                              0
                                                                              0
                                                                              0
                                                                            663
                                                                           0.10
Government
                                      92
                                                                            595
                                                                              0
                                                                              0
                                                                              0
                                                                            595
                                                                           0.09
Total
                                                                        335,000
                                                                        228,000
                                                                         74,300
                                                                          3,430
                                                                        640,000
                                                                            100
Size Distribution
                                                                          52.3%
                                                                          35.6%
                                                                          11.6%
                                                                           0.5%
                                                                           100%
                                                                              


Exhibit 4-10 presents the projected estimate of the number of facilities regulated by the SPCC rule for each industry group considered in the analysis, averaged over the analysis period 2010-2019. As shown, EPA estimates that approximately 704,000 facilities will be regulated by the SPCC rule on average each year during the analysis period. The majority of the regulated facilities are in Category I (50 percent), followed by Category II (37 percent) and Category III (12 percent). Facilities in Category IV account for less than 1 percent of the total facilities regulated by the SPCC. 

Exhibit 4-10 
Estimated Universe of SPCC-Regulated Facilities 
(Average, 2010-2019)
Industry Category
NAICS
Facility Oil Storage Capacity Category
Total
Percentage (%)


Category I
Category II
Category III
Category IV


Oil and Gas Production
                                    211111
                                                                        32,600 
                                                                        176,000
                                                                        46,200 
                                                                           453 
                                                                       255,000 
                                                                          36.23
Farms
                                    111,112
                                                                        139,000
                                                                         6,770 
                                                                           546 
                                                                           109 
                                                                       146,000 
                                                                          20.75
Electric Utility Plants
                                     2211
                                                                        26,200 
                                                                        26,400 
                                                                        17,400 
                                                                           418 
                                                                        70,500 
                                                                          10.01
Real Estate Rental and Leasing
                                    531-533
                                                                        28,200 
                                                                         3,570 
                                                                           258 
                                                                             - 
                                                                        32,000 
                                                                           4.55
Retail Trade
                              441-446,448,451-454
                                                                        14,600 
                                                                         2,740 
                                                                           840 
                                                                            51 
                                                                        18,300 
                                                                           2.60
Contract Construction
                                      23
                                                                        12,900 
                                                                         4,440 
                                                                           842 
                                                                            23 
                                                                        18,200 
                                                                           2.58
Other Commercial
                              492,541,551,561-562
                                                                        15,600 
                                                                         4,300 
                                                                         1,200 
                                                                             - 
                                                                        21,100 
                                                                           2.99
Other Manufacturing
                                     31-33
                                                                         8,870 
                                                                         5,160 
                                                                         1,570 
                                                                           105 
                                                                        15,700 
                                                                           2.23
Wholesale Trade
                                      42
                                                                         9,670 
                                                                         3,000 
                                                                         2,150 
                                                                            99 
                                                                        14,900 
                                                                           2.12
Transportation
                                    481-488
                                                                         9,770 
                                                                         5,480 
                                                                           803 
                                                                           807 
                                                                        16,900 
                                                                           2.40
Arts Entertainment & Recreation
                                    711-713
                                                                        14,400 
                                                                         1,570 
                                                                           121 
                                                                             - 
                                                                        16,100 
                                                                           2.29
Education
                                      611
                                                                         2,820 
                                                                         7,610 
                                                                             - 
                                                                             - 
                                                                        10,400 
                                                                           1.48
Manufacturing facilities using and storing AFVO
                                    311,325
                                                                         2,720 
                                                                         3,580 
                                                                         1,650 
                                                                             - 
                                                                         7,950 
                                                                           1.13
Other Services
                                    811-813
                                                                         6,770 
                                                                           709 
                                                                           175 
                                                                             - 
                                                                         7,660 
                                                                           1.09
Hospitals and Other Health Care
                                    621-624
                                                                         5,890 
                                                                         1,360 
                                                                           222 
                                                                            31 
                                                                         7,500 
                                                                           1.07
Accommodation and Food Services
                                    721-722
                                                                         5,050 
                                                                           436 
                                                                            38 
                                                                             - 
                                                                         5,520 
                                                                           0.78
Petroleum Bulk Stations and Terminals
                                     4247
                                                                           332 
                                                                           498 
                                                                         2,570 
                                                                           470 
                                                                         3,870 
                                                                           0.55
Information Finance and Insurance
                                     51,52
                                                                         4,200 
                                                                           644 
                                                                            39 
                                                                             - 
                                                                         4,890 
                                                                           0.69
Fuel Oil Dealers
                                     45431
                                                                           287 
                                                                         1,530 
                                                                         2,100 
                                                                           191 
                                                                         4,110 
                                                                           0.58
Gasoline stations
                                     4471
                                                                         1,760 
                                                                         1,110 
                                                                           714 
                                                                            36 
                                                                         3,620 
                                                                           0.51
Food Manufacturing
                                    311,312
                                                                         1,780 
                                                                         1,400 
                                                                           542 
                                                                            24 
                                                                         3,750 
                                                                           0.53
Mining
                                    212-213
                                                                         1,290 
                                                                         1,490 
                                                                           318 
                                                                            40 
                                                                         3,140 
                                                                           0.45
Metal Manufacturing
                                    331,332
                                                                         1,700 
                                                                           742 
                                                                           414 
                                                                             - 
                                                                         2,860 
                                                                           0.41
Warehousing and Storage
                                      493
                                                                         2,770 
                                                                         1,280 
                                                                         1,170 
                                                                           106 
                                                                         5,320 
                                                                           0.76
Chemical Manufacturing
                                      325
                                                                         1,090 
                                                                           960 
                                                                           590 
                                                                            27 
                                                                         2,670 
                                                                           0.38
Petroleum Refining and Related Industries
                                      324
                                                                            90 
                                                                           224 
                                                                         1,340 
                                                                           448 
                                                                         2,110 
                                                                           0.30
Religious Organizations
                                    813110
                                                                         1,620 
                                                                             - 
                                                                             - 
                                                                             - 
                                                                         1,620 
                                                                           0.23
Military Installations
                                    928110
                                                                           171 
                                                                           171 
                                                                           342 
                                                                           136 
                                                                           820 
                                                                           0.12
Pipelines
                                  4861, 48691
                                                                           628 
                                                                             - 
                                                                             - 
                                                                             - 
                                                                           628 
                                                                           0.09
Government
                                      92
                                                                           637 
                                                                             - 
                                                                             - 
                                                                             - 
                                                                           637 
                                                                           0.09
Total
                                                                       353,000 
                                                                       263,000 
                                                                        84,200 
                                                                         3,570 
                                                                       704,000 
                                                                            100
Size Distribution
                                                                          50.2%
                                                                          37.4%
                                                                          12.0%
                                                                           0.5%
                                                                           100%
                                                                               

Advantages and Limitations of the Updated SPCC Universe Estimate
This analysis for 2010 improves upon the earlier estimates of the SPCC-regulated universe developed in 1991 and 1995 in several ways. First, this analysis is based on the most recent data available, capturing changes in industry structure since 1995. Second, the analysis relies on information from more state databases than were used in EPA's 1991 facilities study (eight compared to four). Further, in the 1991 study, EPA assumed that all electric utility plants were SPCC-regulated; the current estimates are based on oil capacity data, as reported by EIA.
Another advantage of the current estimates is that they provide information for more narrowly defined industry sectors. The 1991 and 1995 studies primarily focused on petroleum and petroleum-related oils. The updated estimate attempts to include facilities that may be regulated because of their use or storage of non-petroleum oils such as AFVO.
The updated estimates are based upon the best information and date available. State and federal databases are useful, but are not specifically designed to capture information on the full range of facilities covered by the SPCC rule. A statistically-based survey would be required to obtain complete coverage of all industries with SPCC-regulated facilities. Nevertheless, EPA previously concluded that schedule and resource constraints would prohibit such an effort at this time. Moreover, a rigorous survey may not be worthwhile for industries that contain a small percentage of the total number of SPCC-regulated facilities. Therefore, the Agency utilized the best available data to develop a universe of regulated facilities, and used a range of estimates to assess the impacts of the final regulatory changes on the regulated community. 
One limitation of the approach is that it did not consider the spatial location of facilities to determine the number of facilities that present a reasonable expectation of oil discharge in quantities that may be harmful to navigable waters or adjoining shorelines. Some of these facilities may not be regulated if they do not pose a reasonable potential to discharge to navigable waters or adjoining shorelines. Instead, EPA assumed that all non-transportation-related facilities satisfying the capacity threshold are regulated by the SPCC rule, which may be an overestimate. A geographic information system (GIS) screening analysis could help identify facilities that are less likely to be regulated, but was not feasible given the lack of spatial information for many facilities. However, EPA conducted an analysis to assess the percentage of facilities in the Integrated Data for Enforcement Analysis (IDEA) system that contains environmental performance data on EPA-regulated facilities that are near navigable waters or adjoining shorelines. The IDEA system includes facilities in SPCC-regulated industries; it does not include all the SPCC-regulated facilities and is likely to contain facilities that are not SPCC regulated. However, to the extent that this system includes the industries regulated by SPCC, it provides a reasonable assessment of the proximity of these facilities to navigable waters or adjoining shorelines. It is important to note that the Agency did not consider jurisdictional determinations in its estimate of the universe of facilities. The results suggest that approximately 44 percent of facilities are within a quarter mile of a water body, 71 percent are within half a mile of a water body, and as many as 90 percent are within a mile of a water body. This suggests that the assumption that all the facilities may reasonably discharge into navigable waters or adjoining shorelines is reasonable (see Appendix F in Volume II for more details). 
Projecting SPCC Universe Estimates Using Derived Industry Growth Rates
To project the number of existing and new facilities regulated under the SPCC rule over the period of analysis (2010 through 2019), EPA developed separate estimates of industry-specific growth rates for existing and new facilities using the data for 1992-2002. For existing facilities, EPA used U.S. Economic Census data for all industries except for farms and oil and gas production, for which alternative data sources were used. For new facilities, EPA used information obtained from the D&B Market Spectrum database for all industries except for oil and gas production, for which a specific methodology was employed. The methodologies used to develop the industry growth rate estimates are described in detail in Appendix H in Volume II. Exhibit 4-11 summarizes the growth rates calculated for each industry following these methodologies. 
Exhibit 4-11 
Estimated Growth Rates for Total and New Facilities by Industry Sector
                 (Average Annual Growth Rates, 2010  -  2019)
SPCC Industry Sector
NAICS Code
Estimated Growth Rates (%)


Total Facilities
New Facilities
Oil and Gas Production[1]
                                    211111
                                     -2.13
                                     0.66
Farms
                                    111112
                                     -0.44
                                     0.89
Electric Utility Plants
                                     2211
                                     3.19
                                     3.19
Petroleum Refining and Related Industries
                                      324
                                     0.59
                                     1.81
Chemical Manufacturing
                                      325
                                     0.27
                                     2.43
Food Manufacturing
                                   311, 312
                                     0.65
                                     2.34
Manufacturing facilities using and storing AFVO[2]
                                   311, 325
                                     0.44
                                     2.33
Metal Manufacturing
                                   331, 332
                                     0.44
                                     1.47
Other Manufacturing[3]
                                     31-33
                                     -0.18
                                     2.32
Real Estate Rental and Leasing
                                    531-533
                                     2.06
                                     2.16
Retail Trade
                             441-446, 448, 451-454
                                     0.27
                                     2.31
Contract Construction
                                      23
                                     1.91
                                     2.83
Wholesale Trade
                                      42
                                     0.10
                                     2.03
Other Commercial 
                            492, 541, 551, 561-562
                                     4.42
                                     4.42
Transportation
                                    481-488
                                     2.43
                                     3.07
Arts Entertainment & Recreation
                                    711-713
                                     2.68
                                     2.68
Other Services (Except Public Administration)
                                    811-813
                                     0.87
                                     1.88
Education
                                      61
                                     4.34
                                     4.34
Petroleum Bulk Stations and Terminals
                                     4247
                                     -5.56
                                     1.61
Hospital & Other Health Care
                                   621, 622
                                     1.42
                                     1.42
Accommodations and Food Services
                                   721, 722
                                     1.40
                                     1.67
Fuel Oil Dealers
                                     45431
                                     -1.10
                                     1.62
Gasoline Stations
                                     4471
                                     -1.07
                                     1.03
Information Finance and Insurance
                                    51, 52
                                     2.39
                                     2.68
Mining
                                      212
                                     -0.10
                                     1.50
Religious Organizations[4]
                                    813110
                                     1.51
                                     1.51
Warehousing and Storage
                                      493
                                     14.30
                                     14.30
Military Installations[4]
                                    928110
                                     1.51
                                     1.51
Pipelines
                                  4861, 48691
                                     -1.21
                                     0.86
Government[4]
                                      92
                                     1.51
                                     1.51
All Industries 
                                       
                                     1.51
                                     2.24
[1]	The estimated annual growth rates for the production sector vary by year.
2 	Growth rates are based on data for two NAICS sectors that were identified as key industries expected to produce, use, or store AFVO.
3 	Growth rates are based on data for all manufacturing sectors due to a large number of various manufacturing sectors included in this category.
[4]	Growth rates are based on all entities, due to the lack of census data for specific industries.





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Chapter 5

Facility Compliance Costs

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Facility Compliance Costs
EPA developed estimates for the compliance costs that SPCC-regulated facilities incur in order to comply with the rule requirements. Estimates of facility compliance costs (hereinafter called compliance costs or unit costs) serve as a major input for assessing the economic impacts of this final action. In particular, compliance cost estimates were used to estimate the economic impact of the final rule amendments. For this analysis, EPA developed a unit cost inventory with cost estimates for each of the SPCC rule requirements for each regulated facility. EPA relied on the most recent cost estimates from an earlier, preliminary effort to develop a unit cost inventory. To complete this inventory, the Agency developed a detailed list of the SPCC requirements that are expected to have a cost impact, and developed unit costs for each of these requirements from a professional engineering (PE) firm that has experience across a broad spectrum of industries and that serves the 48 contiguous states of the United States. In addition, EPA also conducted interviews of five regulated entities to obtain data on compliance measures at facilities and their associated costs to cross-check the estimates and develop a better understanding of the ranges of cost estimates. EPA also used information from site visits to regulated facilities for data and information. Facility compliance costs were developed separately for production and non-production facilities. A summary of the facility visits and major findings is given in Appendix A in Volume II of this report, and the unit cost inventory is described in Appendix J in Volume II.
In response to GAO recommendations for the 2002 and 2006 SPCC RIAs, EPA undertook an effort to compile additional data to develop a range and statistical distribution of SPCC compliance costs rather than presenting point estimates. As a result, EPA compiled a detailed requirement-by-requirement cost inventory that reflects potential distributions of estimates based on unit cost estimates provided by SCS Engineers. 
To address the cost variability issue, EPA took into account the following two factors that have a significant effect on the magnitude of costs estimates within size categories and industry sectors:
Method variability: For rule requirements that allow different methods or materials (e.g., for the secondary containment requirement, a concrete structure versus an earthen berm around an oil storage tank), EPA estimated the cost of compliance for each method/material separately and generated a range of estimates based on multiple options.
Size variability: For rule requirements where unit costs are provided for a different number of storage containers and/or containers of different sizes within the same facility size category, EPA developed ranges of cost estimates based on the variability of a storage configuration at SPCC-regulated facilities.
This chapter describes compliance activities required by the SPCC rule, and presents unit cost estimates for the rule requirements affected by the final rule amendments, along with the underlying assumptions for facility owners and operators behavior. Section 5.1 addresses recordkeeping and reporting activities and their respective cost estimates, and Section 5.2 addresses the capital and operation and maintenance (O&M) activities and their respective cost estimates. Section 5.3 presents estimated costs for Tier I Qualified Facilities introduced by the final amendments. Section 5.4 presents estimates developed for the burden reduction associated with similarities in requirements between state regulations and the SPCC rule. The costs of compliance presented in forthcoming chapters account for these overlaps in requirements. However, the costs presented in this chapter provide total compliance costs before factoring in any burden reduction due to overlap with state requirements. Finally, Section 5.5 outlines the approach taken to annualize estimated cost savings over a 10-year analysis period.
SPCC Plan and Records 
The primary recordkeeping and reporting activities required by the SPCC rule are the preparation and maintenance of the SPCC Plan along with the preparation of records of inspections and tests. In preparing a Plan, a facility owner or operator must follow the provisions outlined in the regulation, and include a discussion of the measures taken to meet the SPCC requirements. The main provisions are summarized in this section; for more detailed requirements, see the Oil Pollution Prevention regulation (40 CFR part 112). Section 5.1.1 focuses on primary inputs into recordkeeping and reporting activities such as wage rates, PE certification costs, and capital paperwork-related costs; Section 5.1.2 describes those activities and provides estimated costs. 
Recordkeeping and Reporting Activities
Wage Rates
EPA used hourly wage rates for specific labor categories to calculate the per-facility cost associated with the rule's paperwork requirements and other SPCC-related activities that require labor hours. For typical new and existing facilities, unit time estimates for management, technical, and clerical personnel were multiplied by the appropriate hourly wage rate and then added to paperwork-related capital costs and PE certification costs to calculate paperwork-related costs. To calculate costs of other SPCC related requirements, such as inspections and training, the labor costs were added to their respective capital costs. The overall approach used to develop a wage rate estimate is described in this section.
The labor wage rates for private industry were derived from the December 2007 U.S. Department of Labor's Employment Cost Indices and Levels. The 2007 wage rates include wages and salaries, as well as benefit costs, which include paid leave, supplemental pay, insurance, retirement and savings, legally required benefits, severance pay, and supplemental unemployment benefits. These wage rates reflect private industry averages, which were estimated by the Bureau of Labor Statistics (BLS) based on a survey of 58,000 occupations within 12,200 establishments in the private sector. These wage rates reflect industry averages, which may underestimate the actual wages received by some SPCC-regulated facility personnel, but overestimate the actual wages received by other facility personnel. EPA further adjusted these rates to reflect associated overhead costs. The estimated wage rates used in the analysis are as follows:
Management: $61.45/hour
Technical: $53.61/hour
Clerical: $26.76/hour
EPA assumed the above labor rates will apply to all scenarios when facilities use in-house personnel to satisfy requirements involving labor burden. While owners and operators of all facilities would contract with a PE to certify their Plans (except owners and operators of qualified facilities that self-certify the Plan), not all facility owners and operators are expected to contract with a PE for activities that can be conducted by in-house personnel. On the one hand, a small facility may need PE expertise because in-house expertise may not be available to comply with the SPCC requirements. On the other hand, a small facility may not have the resources to hire PE expertise and may be in a better position to use in-house labor; the owner may be closely involved with all of the facility's operations. A similar two-sided argument can also be made for larger facilities. 
As a result, EPA estimated cost of compliance with the SPCC requirements for two scenarios: (1) facilities employing outside labor by hiring a PE and (2) facilities providing compliance measures using in-house labor. EPA also assumed that the cost to a facility owner or operator to retain an outside PE to certify the SPCC Plan varies by the size of the facility. EPA used this assumption because a larger facility is likely to have a more complex SPCC Plan, and more complex Plan amendments, than a smaller facility. The burden associated with certifying SPCC Plans and amendments to SPCC Plans, however, accounts for PEs. The estimated wages for PE labor used in this analysis are as follows:
Management: $150/hour
Technical: $120/hour
Drafter: $75/hour
Clerical: $55/hour
Contractor: $70/hour
 To estimate the total compliance costs, EPA multiplied these wage rates by the estimated number of hours for each compliance activity.
Professional Engineer Certification Cost
Unless a facility owner or operator has a self-certified Plan, he or she is expected to incur costs associated with retaining a PE to certify his or her SPCC Plan, along with any subsequent technical amendments that are made to the Plan. In certifying the Plan, the PE attests to having examined the facility and that the Plan has been prepared in accordance with good engineering practices. Furthermore, whenever an owner or operator amends an SPCC Plan, a PE must certify each technical amendment.
For this analysis, EPA used the estimates from the facility unit cost inventory. The facility unit cost inventory is a detailed cost analysis of all the requirements of the SPCC rule such as the cost of preparing and amending the SPCC Plan.
Exhibit 5-1 through Exhibit 5-8 summarize the expected costs for owners or operators of typical SPCC-regulated facilities to retain a PE and to have a PE certify a new Plan, as well as any subsequent amendments.
Other Paperwork-Related Costs 
The owners and operators of facilities will incur costs to comply with the SPCC requirements to maintain Plans and keep records (40 CFR 112.3 and 112.7(e)), and to submit required information to EPA in the event of certain discharges of oil (40 CFR 112.4). The regulatory impact analysis estimates that to maintain files, owners and operators of new production facilities would purchase file cabinets at a cost of $300. Existing production facilities of all sizes would also incur four hours of technical recordkeeping work annually. For oil storage facilities, recordkeeping work would comprise an estimated annual burden of 2.5, 3, 5, and 8.5 hours of technical labor for Category I through Category IV facilities, respectively. In addition, EPA estimated a one-time labor burden of two technical labor hours for Category I & II storage facilities to organize recordkeeping; for Category III & IV facilities, EPA estimated a one-time expenditure of $200 for these facilities to purchase tank database software.
In the event of certain discharges, the owner or operator must submit required information to the Regional Administrator and to the implementing state or local agency in charge of oil pollution control activities for the area in which the facility is located. Consequently, the owner or operator would incur costs for photocopying and postage, which are classified as O&M costs. EPA estimated these mailing costs to be $14 for Category I & II facilities, $16 for Category III facilities, and $21 for Category IV facilities. Variation in these estimates is based upon the increased cost of photocopying longer SPCC Plans at larger facilities. In addition, all applicable facilities would incur an estimated burden of one hour of managerial labor and one hour of technical labor. Because only 0.15 percent of facilities are expected to experience oil discharges that trigger an information submission, the expected annual capital costs to an owner or operator of a typical facility are negligible.
Recordkeeping and Reporting Activities
Recordkeeping and reporting activities required by the SPCC regulation include preparing new Plans, as well as modifying and maintaining existing Plans. This section describes the assumptions used by EPA when estimating the per-facility cost associated with the rule's paperwork requirements. Exhibit 5-1 through Exhibit 5-8 present the cost related to recordkeeping and reporting activities described below for new and existing facilities.
Prepare an SPCC Plan (New Facilities)
The owner or operator of a new facility must prepare and implement an SPCC Plan. This is a one-time cost incurred at the time a facility begins operations; only new facilities incur this cost. The actual preparation of the Plan involves several separate tasks. These tasks are usually conducted by the facility's technical personnel. These tasks include:
Field investigations, which are conducted by technical personnel in order to better understand the design of the facility and to accurately predict the areas or equipment most likely to discharge oil (this involves predicting the flow paths of discharged oil) (§112.7(b)).
A regulatory review conducted by management personnel, such that the technical and clerical personnel in charge of actually preparing the Plan are fully aware of all requirements in 40 CFR part 112 and any applicable more stringent state rules, regulations, and guidelines (§112.7(j)).
A review of existing procedures conducted by technical personnel to determine the effectiveness of the current discharge prevention and control practices employed by the facility owner or operator. 
Preparation of the Plan, which involves both technical and clerical time, as well as a final review by facility management personnel prior to submission (§112.3). Components of the Plan include a facility diagram and description of storage areas (§112.7(a)(3)) and organizing portions of the Plan to be used in reporting a discharge (§112.7(a)(4) and §112.7(a)(5)).
Certification by a licensed PE, which must be conducted for each new Plan (unless a facility owner or operator has a self-certified Plan). A Plan must also be re-certified by a PE whenever technical amendments are made (§112.3(d)).
Plan preparation costs affect owners and operators of new facilities that become subject to the SPCC rule. New facilities are those that will initiate operations during the 10-year period considered in the analysis. Owners and operators of such facilities are required to prepare and implement their SPCC Plans within one year of initiating facility operations. Therefore, owners and operators of new facilities are assumed to incur the total cost of preparing a Plan in the first year, but these costs may be financed over a longer period.
Review the SPCC Plan (Existing Facilities)
Owners or operators of an SPCC-regulated facility are required to review and evaluate their Plans at least once every five years (§112.5(b)). This review is estimated to involve mostly technical personnel, who will evaluate discharge prevention and control procedures being implemented under the current Plan, and management personnel, who will conduct a regulatory review. In order to complete the necessary paperwork, the involvement of clerical personnel will also be necessary. An owner or operator is required to amend the facility's SPCC Plan within six months of the review to include more effective prevention and control technology if: (1) such technology will significantly reduce the likelihood of a discharge as described in §112.1(b) from the facility; and (2) such technology has been field-proven at the time of the review. A PE must also certify any technical amendments to the Plan prior to implementation. EPA applied cost estimates for reviewing SPCC Plans only to existing facilities, since an owner or operator of a new facility will not be required to conduct the review until five years after starting operation.
The total cost incurred by owners and operators of existing facilities for this review is greater if, following the review, they must amend their Plan. 
Submit Information in the Event of Certain Discharges of Oil (New and Existing Facilities)
In the event of certain discharges of oil into navigable waters, within 60 days of the discharges, a facility owner or operator must submit to the Regional Administrator information described in §112.4(a). Either of the following types of discharges of oil occurring within any 12-month period triggers the §112.4 reporting requirements: 
      1. A single discharge as described in §112.1(b) of more than 1,000 U.S. gallons into or upon navigable waters or adjoining shorelines
      2. Two or more discharges as described in §112.1(b), each of which is over 42 U.S. gallons, into or upon navigable waters or adjoining shorelines
Submission of information after a discharge of oil is estimated to involve both technical personnel time for collecting the required information, as well as time for review by management personnel before the information is submitted. Section 112.4(c) also requires that the facility owner or operator submit a copy of this information to the state agency in charge of oil pollution control activities for the area in which the facility is located. The Regional Administrator may require the owner or operator of the facility to amend the SPCC Plan to prevent and contain discharges from the facility. Such amendments, if uncontested by the facility owner or operator, must become part of the Plan 30 days after the Regional Administrator responds to the facility owner or operator concerning the final amendments. A PE must then certify the amended Plan prior to implementation. As required by §112.4(e), amendments to the Plan must be implemented as soon as possible, but no later than six months after the amendments become part of the Plan. Section 112.4(f) allows a facility owner or operator to appeal a decision made by the Regional Administrator requiring a Plan amendment.
Training a designated person who is accountable for discharge prevention and who reports to facility management is estimated to take a burden of two technical hours of labor annually. EPA assumed that this burden applies to all types and sizes of regulated facilities.
Revise the SPCC Plan (New and Existing Facilities)
The facility owner or operator must amend the facility's Plan in accordance with §112.7 whenever there is a change in the facility's design, construction, operation, or maintenance that materially affects the facility's potential to discharge oil into navigable waters or adjoining shorelines. Such changes may include the dismantling and removal of a container; the addition of a new or rebuilt container; a change in the service of a container; any physical changes or improvements to the facility; or the construction of a new well and associated piping. The activities to amend the SPCC Plan as a result of these facility changes are estimated to involve mostly facility technical personnel, as well as some clerical personnel. A PE must also certify the amended Plan prior to implementation (§112.5(c)). Such amendments to the SPCC Plan must be implemented as soon as possible, but not later than six months after the change occurs.
Owners and operators of some fraction of SPCC-regulated facilities (new and existing) will be required to amend their Plans as a result of discharging oil or modifying their facility (§112.5(a)).
Maintain the SPCC Plan and Keep Records (New and Existing Facilities)
Section §112.3 requires the owner or operator to maintain a copy of the SPCC Plan at the facility, if the facility is normally attended for at least four hours per day or, if not, at the nearest field office. The Plan must be available to the Regional Administrator for review during normal working hours (40 CFR 112.3(e)). In addition, a facility owner or operator is required to maintain (and update) Plan-specific records as outlined under §112.7(e), §112.8(c)(6), and §112.12(c)(6). A facility owner or operator is also required to maintain records of events such as drainage of uncontaminated wastewater by bypassing facility treatment systems (§112.8(c)(3)(iv), §112.12(c)(3)(iv)). Plan maintenance and recordkeeping activities are estimated to involve almost entirely technical personnel time, although a small amount of clerical personnel time may also be required for these activities. 
Per-facility burden hour estimates are based primarily on the information from a PE firm. These estimates were developed for production and storage facilities of various sizes, and for clerical, technical/engineering, and management hours. The burden included new Plan preparation (site work, regulatory review, review of existing procedures, formulating new procedures, and preparing the Plan); Plan modification (site work, regulatory review, review of existing procedures, formulating new or changed procedures or recommendations, and preparing the amendment); formal review (site work, regulatory review, review of existing procedures, and preparing the review report); submittal of information after a discharge; and recordkeeping requirements (maintaining the Plan, and maintaining records of inspections and of equipment maintenance).
Estimated Paperwork-Related Activity Burden
EPA relied on the unit cost inventory analysis for the estimates of paperwork-related activity burden. Exhibit 5-1 through Exhibit 5-8 present cost estimates for recordkeeping and reporting activities for production and non-production facilities separately, as unit costs for the two types of facilities vary significantly. For new facilities, Exhibit 5-1 and Exhibit 5-2 present the estimated activity burden for individual compliance items in the baseline using in-house labor estimates; Exhibit 5-3 and Exhibit 5-4 present the estimated burden for individual items assuming that PEs will be used to satisfy the requirements. For existing facilities, these costs are presented in Exhibit 5-5 through Exhibit 5-8. In all cases, EPA assumed that drafting work using in-house labor will incur the same hourly costs as clerical work completed by facility personnel. 

Exhibit 5-1 
SPCC Plan Preparation and Maintenance (In-House Labor, New Production Facility)
Type of Facility[1]
Burden Hours
Burden Cost (2007$)

Managerial
Technical
Drafter
Clerical
Contractor
Labor Hours[2]
Travel and Other Expenses
PE Certification Cost[3]
Labor Cost
Total Cost[4]

$61/hour
$52/hour
$75/hour
$27/hour
$70/hour





Preparation of New Plan[5]
Category I
                                       1
                                      16
                                       8
                                       2
                                      --
                                                                             27
                                                                             --
                                                                           $748
                                                                         $1,550
                                                                         $2,300
Category II
                                       3
                                      32
                                      15
                                       4
                                      --
                                                                             54
                                                                             --
                                                                         $1,500
                                                                         $3,100
                                                                         $4,500
Category III
                                       5
                                      64
                                      30
                                       8
                                      --
                                                                            107
                                                                             --
                                                                         $2,990
                                                                         $6,200
                                                                         $9,190
Category IV
                                       8
                                      96
                                      45
                                      12
                                      --
                                                                            161
                                                                             --
                                                                         $4,490
                                                                         $9,300
                                                                        $13,800
Recordkeeping and Oil Discharge Reporting[6]
Category I
                                       1
                                       1
                                      --
                                      --
                                      --
                                                                              2
                                                                           $314
                                                                             --
                                                                           $115
                                                                           $429
Category II
                                       1
                                       1
                                      --
                                      --
                                      --
                                                                              2
                                                                           $314
                                                                             --
                                                                           $115
                                                                           $429
Category III
                                       1
                                       1
                                      --
                                      --
                                      --
                                                                              2
                                                                           $316
                                                                             --
                                                                           $115
                                                                           $431
Category IV
                                       1
                                       1
                                      --
                                      --
                                      --
                                                                              2
                                                                           $321
                                                                             --
                                                                           $115
                                                                           $436
[1]	See Chapter 4 for a definition of the facility types.
2 	Due to rounding, total labor hours may not be an exact sum of the labor hours listed.
3 	PE costs represent the cost of hiring an outside engineer for certification of the Plan.
4 	Due to rounding, total costs may not be an exact sum of the component costs listed.
5 	A one-time cost. This item includes the cost of assessing areas at the facility for the potential of an oil discharge to determine appropriate prevention measures; preparing a facility diagram; preparing a discussion of conformance with applicable more stringent state rules, regulations, and guidelines in the SPCC Plan; and organizing parts of the SPCC Plan to be used in reporting a discharge and during an emergency (if the facility has not submitted a Facility Response Plan).
6 	The compliance burden for oil discharge reporting activities includes mailing costs ($14 for Category I & II facilities, $16 for Category III facilities, and $21 for Category IV facilities) and one hour of both managerial and technical labor (for all categories of facilities). These costs are expected to affect only 0.15% of facilities annually (see Section 5.1.1.3). Additional costs for all facilities include a one-time expenditure of $300 for purchasing a file cabinet and setting up the office. Source: site visits to oil production and non-production facilities: Hector Cavazos, regulatory advisor for Chevron oil production facilities, Humble, TX, February 2007.


Exhibit 5-2 
SPCC Plan Preparation and Maintenance (In-House Labor, New Storage Facility)
Type of Facility
Burden Hours
Burden Cost (2007$)

Managerial
Technical
Drafter
Clerical
Contractor
Labor Hours[1]
Travel and Other Expenses
PE Certification Cost[2]
 Labor Cost
Total Cost[3]

$61/hour
$52/hour
$75/hour
$27/hour
$70/hour





Preparation of New Plan[4]
Category I
                                                                              2
                                                                             30
                                                                             12
                                                                              4
                                                                             --
                                                                             48
                                                                             --
                                                                         $1,500
                                                                         $2,740
                                                                         $4,230
Category II
                                                                              4
                                                                             60
                                                                             24
                                                                              8
                                                                             --
                                                                             96
                                                                             --
                                                                         $2,990
                                                                         $5,480
                                                                         $8,470
Category III
                                                                              7
                                                                             90
                                                                             30
                                                                             12
                                                                             --
                                                                            139
                                                                             --
                                                                         $4,490
                                                                         $7,830
                                                                        $12,500
Category IV
                                                                             12
                                                                            135
                                                                             40
                                                                             20
                                                                             --
                                                                            207
                                                                             --
                                                                         $6,730
                                                                        $11,500
                                                                        $18,200
Recordkeeping and Oil Discharge Reporting[5]
Category I
                                                                              1
                                                                              3
                                                                             --
                                                                             --
                                                                             --
                                                                              4
                                                                           $314
                                                                             --
                                                                           $222
                                                                           $536
Category II
                                                                              1
                                                                              3
                                                                             --
                                                                             --
                                                                             --
                                                                              4
                                                                           $314
                                                                             --
                                                                           $222
                                                                           $536
Category III
                                                                              1
                                                                              1
                                                                             --
                                                                             --
                                                                             --
                                                                              2
                                                                           $516
                                                                             --
                                                                           $115
                                                                           $631
Category IV
                                                                              1
                                                                              1
                                                                             --
                                                                             --
                                                                             --
                                                                              2
                                                                           $521
                                                                             --
                                                                           $115
                                                                           $636
1 	Due to rounding, total labor hours may not be an exact sum of the labor hours listed.
[2]	PE costs represent the cost of hiring an outside engineer for certification of the Plan.
3 	Due to rounding, total costs may not be an exact sum of the component costs listed.
4 	A one-time cost. This item includes the cost of assessing areas at the facility for the potential of an oil discharge to determine appropriate prevention measures; preparing a facility diagram; preparing a discussion of conformance with applicable more stringent state rules, regulations, and guidelines in the SPCC Plan; and organizing parts of the SPCC Plan to be used in reporting a discharge and during an emergency (if the facility has not submitted a Facility Response Plan).
5 	The compliance burden for oil discharge reporting activities includes mailing costs ($14 for Category I & II facilities, $16 for Category III facilities, and $21 for Category IV facilities) and one hour of both managerial and technical labor (for all categories of facilities). These costs are expected to affect only 0.15% of facilities annually (see Section 5.1.1.3). Additional costs for all facilities include a one-time expenditure of $300 for purchasing a file cabinet and setting up the office. In addition, all Category III and IV facilities incur a one-time expenditure of $200 for purchasing database software. Source: site visits to oil production and non-production facilities: Hector Cavazos, regulatory advisor for Chevron oil production facilities, Humble, TX, February 2007.


Exhibit 5-3 
SPCC Plan Preparation and Maintenance (Professional Labor, New Production Facility)
Type of Facility
Burden Hours
Burden Cost (2007$)

Managerial
Technical
Drafter
Clerical
Contractor
Labor Hours[1]
Travel and Other Expenses
PE Certification Cost[2]
Labor Cost
Total Cost[3]

$150/hour
$120/hour
$75/hour
$55/hour
$70/hour





Preparation of New Plan[4]
Category I
                                                                              1
                                                                             16
                                                                              8
                                                                              2
                                                                             --
                                                                             27
                                                                             --
                                                                           $748
                                                                         $2,780
                                                                         $3,530
Category II
                                                                              3
                                                                             32
                                                                             15
                                                                              4
                                                                             --
                                                                             54
                                                                             --
                                                                         $1,500
                                                                         $5,560
                                                                         $7,060
Category III
                                                                              5
                                                                             64
                                                                             30
                                                                              8
                                                                             --
                                                                            107
                                                                             --
                                                                         $2,990
                                                                        $11,100
                                                                        $14,100
Category IV
                                                                              8
                                                                             96
                                                                             45
                                                                             12
                                                                             --
                                                                            161
                                                                             --
                                                                         $4,490
                                                                        $16,700
                                                                        $21,200
Recordkeeping and Oil Discharge Reporting[5]
Category I
                                                                              1
                                                                              1
                                                                             --
                                                                             --
                                                                             --
                                                                              2
                                                                           $314
                                                                             --
                                                                           $115
                                                                           $429
Category II
                                                                              1
                                                                              1
                                                                             --
                                                                             --
                                                                             --
                                                                              2
                                                                           $314
                                                                             --
                                                                           $115
                                                                           $429
Category III
                                                                              1
                                                                              1
                                                                             --
                                                                             --
                                                                             --
                                                                              2
                                                                           $316
                                                                             --
                                                                           $115
                                                                           $431
Category IV
                                                                              1
                                                                              1
                                                                             --
                                                                             --
                                                                             --
                                                                              2
                                                                           $321
                                                                             --
                                                                           $115
                                                                           $436
1 	Due to rounding, total labor hours may not be an exact sum of the labor hours listed.
2 	PE costs represent the cost of hiring an outside engineer for certification of the Plan.
3 	Due to rounding, total costs may not be an exact sum of the component costs listed.
4 	A one-time cost. This item includes the cost of assessing areas at the facility for the potential of an oil discharge to determine appropriate prevention measures; preparing a facility diagram; preparing a discussion of conformance with applicable more stringent state rules, regulations, and guidelines in the SPCC Plan; and organizing parts of the SPCC Plan to be used in reporting a discharge and during an emergency (if the facility has not submitted a Facility Response Plan).
5 	The compliance burden for oil discharge reporting activities includes mailing costs ($14 for Category I & II facilities, $16 for Category III facilities, and $21 for Category IV facilities) and one hour of both managerial and technical labor (for all categories of facilities). These costs are expected to affect only 0.15% of facilities annually (see Section 5.1.1.3). Additional costs for all facilities include a one-time expenditure of $300 for purchasing a file cabinet and setting up the office. Source: site visits to oil production and non-production facilities: Hector Cavazos, regulatory advisor for Chevron oil production facilities, Humble, TX, February 2007.


Exhibit 5-4 
SPCC Plan Preparation and Maintenance (Professional Labor, New Storage Facility)
Type of Facility
Burden Hours
Burden Cost (2007$)

Managerial
Technical
Drafter
Clerical
Contractor
Labor Hours[1]
Travel and Other Expenses
PE Certification Cost[2]
Labor Cost
Total Cost[3]

$150/hour
$120/hour
$75/hour
$55/hour
$70/hour





Preparation of New Plan[4]
Category I
                                                                              2
                                                                             30
                                                                             12
                                                                              4
                                                                             --
                                                                             48
                                                                             --
                                                                         $1,500
                                                                         $5,020
                                                                         $6,520
Category II
                                                                              4
                                                                             60
                                                                             24
                                                                              8
                                                                             --
                                                                             96
                                                                             --
                                                                         $3,290
                                                                        $10,000
                                                                        $13,000
Category III
                                                                              7
                                                                             90
                                                                             30
                                                                             12
                                                                             --
                                                                            139
                                                                             --
                                                                         $4,490
                                                                        $14,800
                                                                        $19,000
Category IV
                                                                             12
                                                                            135
                                                                             40
                                                                             20
                                                                             --
                                                                            207
                                                                             --
                                                                         $6,730
                                                                        $22,100
                                                                        $28,800
Recordkeeping and Oil Discharge Reporting[5]
Category I
                                                                              1
                                                                              3
                                                                             --
                                                                             --
                                                                             --
                                                                              4
                                                                           $314
                                                                             --
                                                                           $222
                                                                           $536
Category II
                                                                              1
                                                                              3
                                                                             --
                                                                             --
                                                                             --
                                                                              4
                                                                           $314
                                                                             --
                                                                           $222
                                                                           $536
Category III
                                                                              1
                                                                              1
                                                                             --
                                                                             --
                                                                             --
                                                                              2
                                                                           $516
                                                                             --
                                                                           $115
                                                                           $631
Category IV
                                                                              1
                                                                              1
                                                                             --
                                                                             --
                                                                             --
                                                                              2
                                                                           $521
                                                                             --
                                                                           $115
                                                                           $636
1 	Due to rounding, total labor hours may not be an exact sum of the labor hours listed.
2 	PE costs represent the cost of hiring an outside engineer for certification of the Plan.
3 	Due to rounding, total costs may not be an exact sum of the component costs listed.
4 	A one-time cost. This item includes the cost of assessing areas at the facility for the potential of an oil discharge to determine appropriate prevention measures; preparing a facility diagram; preparing a discussion of conformance with applicable more stringent state rules, regulations, and guidelines in the SPCC Plan; and organizing parts of the SPCC Plan to be used in reporting a discharge and during an emergency (if the facility has not submitted a Facility Response Plan).
5 	The compliance burden for oil discharge reporting activities includes mailing costs ($14 for Category I & II facilities, $16 for Category III facilities, and $21 for Category IV facilities) and one hour of both managerial and technical labor (for all categories of facilities). These costs are expected to affect only 0.15% of facilities annually (see Section 5.1.1.3). Additional costs for all facilities include a one-time expenditure of $300 for purchasing a file cabinet and setting up the office. Source: site visits to oil production and non-production facilities: Hector Cavazos, regulatory advisor for Chevron oil production facilities, Humble, TX, February 2007.


Exhibit 5-5 
SPCC Plan Preparation and Maintenance (In-House Labor, Existing Production Facility)
Type of Facility
Burden Hours
Burden Cost (2007$)

Managerial
Technical
Drafter
Clerical
Contractor
Labor Hours[1]
Travel and Other Expenses
PE Certification Cost[2]
Labor Cost
Total Cost[3]

$61/hour
$52/hour
$75/hour
$27/hour
$70/hour





Plan Amendment[4]
Category I
                                                                          1.25 
                                                                           7.5 
                                                                            -- 
                                                                             1 
                                                                             --
                                                                            10 
                                                                             --
                                                                         $1,010
                                                                           $506
                                                                         $1,520
Category II
                                                                           2.5 
                                                                            15 
                                                                            -- 
                                                                             2 
                                                                             --
                                                                            20 
                                                                             --
                                                                         $2,010
                                                                         $1,010
                                                                         $3,020
Category III
                                                                             5 
                                                                            30 
                                                                            -- 
                                                                             4 
                                                                             --
                                                                            39 
                                                                             --
                                                                         $4,030
                                                                         $2,020
                                                                         $6,050
Category IV
                                                                             8 
                                                                            45 
                                                                            -- 
                                                                             6 
                                                                             --
                                                                            59 
                                                                             --
                                                                         $6,040
                                                                         $3,030
                                                                         $9,070
Five-Year Review[5]
Category I
                                                                           0.5 
                                                                           7.5 
                                                                             --
                                                                           0.5 
                                                                             --
                                                                             9 
                                                                             --
                                                                             --
                                                                           $446
                                                                           $446
Category II
                                                                             1 
                                                                            15 
                                                                             --
                                                                             1 
                                                                             --
                                                                            17 
                                                                             --
                                                                             --
                                                                           $892
                                                                           $892
Category III
                                                                             2 
                                                                            30 
                                                                             --
                                                                             2 
                                                                             --
                                                                            34 
                                                                             --
                                                                             --
                                                                         $1,790
                                                                         $1,790
Category IV
                                                                             3 
                                                                            45 
                                                                             --
                                                                             3 
                                                                             --
                                                                            51 
                                                                             --
                                                                             --
                                                                         $2,680
                                                                         $2,680
Recordkeeping and Oil Discharge Reporting[6]
Category I
                                                                              1
                                                                              5
                                                                             --
                                                                             --
                                                                             --
                                                                              6
                                                                            $14
                                                                             --
                                                                           $329
                                                                           $343
Category II
                                                                              1
                                                                              5
                                                                             --
                                                                             --
                                                                             --
                                                                              6
                                                                            $14
                                                                             --
                                                                           $329
                                                                           $343
Category III
                                                                              1
                                                                              5
                                                                             --
                                                                             --
                                                                             --
                                                                              6
                                                                            $16
                                                                             --
                                                                           $329
                                                                           $345
Category IV
                                                                              1
                                                                              5
                                                                             --
                                                                             --
                                                                             --
                                                                              6
                                                                            $21
                                                                             --
                                                                           $329
                                                                           $350
1 	Estimates represent the average of a small range of possible labor burden hours and costs. For example, an estimate for amending a Plan for a Category I facility could vary from $1,360 to $2,160, depending on the scale of changes required by the amendment. 
2 	Due to rounding, total labor hours may not be an exact sum of the labor hours listed.
3 	PE costs represent the cost of hiring an outside engineer for certification of the Plan.
4 	Due to rounding, total costs may not be an exact sum of the component costs listed.
5 	A review of the SPCC Plan every five years is required by 40 CFR 112.5(b). Changes are also required when technical amendments are made; and EPA estimated that 10% of facilities make technical changes every year; in addition, 3% of facilities make changes each year based on 5-year review. Thus, the annual cost burden reflects an estimate that 13% of facilities will incur these changes annually. Source: SCS Engineers; 2002 SPCC ICR.
[6]	The compliance burden for oil discharge reporting activities includes mailing costs ($14 for Category I & II facilities, $16 for Category III facilities, and $21 for Category IV facilities) and one hour of both managerial and technical labor (for all categories of facilities). These costs are expected to affect only 0.15% of facilities annually (see Section 5.1.1.3). In addition, all facilities require four hours of technical labor for recordkeeping annually. (Source: site visits to production facilities: see Appendix A.)


Exhibit 5-6 
SPCC Plan Preparation and Maintenance (In-House Labor, Existing Storage Facility)
Type of Facility
Burden Hours
Burden Cost (2007$)

Managerial
Technical
Drafter
Clerical
Contractor
Labor Hours[1]
Travel and Other Expenses
PE Certification Cost[2]
Labor Cost
Total Cost[3]

$61/hour
$52/hour
$75/hour
$27/hour
$70/hour





Plan Amendment[4]
Category I
                                                                             3 
                                                                            15 
                                                                             --
                                                                             2 
                                                                             --
                                                                            20 
                                                                             --
                                                                         $2,010
                                                                         $1,010
                                                                         $3,020
Category II
                                                                             5 
                                                                            30 
                                                                             --
                                                                             4 
                                                                             --
                                                                            39 
                                                                             --
                                                                         $4,030
                                                                         $2,020
                                                                         $6,050
Category III
                                                                           7.5 
                                                                            45 
                                                                             --
                                                                             6 
                                                                             --
                                                                            59 
                                                                             --
                                                                         $6,040
                                                                         $3,030
                                                                         $9,070
Category IV
                                                                          11.5 
                                                                          67.5 
                                                                             --
                                                                             9 
                                                                             --
                                                                            88 
                                                                             --
                                                                         $9,140
                                                                         $4,570
                                                                        $18,300
Five-Year Review[5]
Category I
                                                                             2 
                                                                            15 
                                                                             --
                                                                             2 
                                                                             --
                                                                            19 
                                                                             --
                                                                             --
                                                                           $981
                                                                           $981
Category II
                                                                             2 
                                                                            30 
                                                                             --
                                                                             2 
                                                                             --
                                                                            34 
                                                                             --
                                                                             --
                                                                         $1,790
                                                                         $1,790
Category III
                                                                             3 
                                                                            45 
                                                                             --
                                                                             3 
                                                                             --
                                                                            51 
                                                                             --
                                                                             --
                                                                         $2,680
                                                                         $2,680
Category IV
                                                                             5 
                                                                            68 
                                                                             --
                                                                           4.5 
                                                                             --
                                                                            77 
                                                                             --
                                                                             --
                                                                         $4,040
                                                                         $4,040
Recordkeeping and Oil Discharge Reporting[6]
Category I
                                                                              1
                                                                            3.5
                                                                             --
                                                                             --
                                                                             --
                                                                            4.5
                                                                            $14
                                                                             --
                                                                           $249
                                                                           $263
Category II
                                                                              1
                                                                              4
                                                                             --
                                                                             --
                                                                             --
                                                                              5
                                                                            $14
                                                                             --
                                                                           $276
                                                                           $290
Category III
                                                                              1
                                                                              6
                                                                             --
                                                                             --
                                                                             --
                                                                              7
                                                                            $16
                                                                             --
                                                                           $383
                                                                           $399
Category IV
                                                                              1
                                                                             10
                                                                             --
                                                                             --
                                                                             --
                                                                             11
                                                                            $21
                                                                             --
                                                                           $571
                                                                           $592
1 	Estimates represent the average of a small range of possible labor burden hours and costs. For example, an estimate for amending a Plan for a Category I facility could vary from $2,520 to $3,930, depending on the scale of changes required by the amendment. 
2 	Due to rounding, total labor hours may not be an exact sum of the labor hours listed.
3 	PE costs represent the cost of hiring an outside engineer for certification of the Plan.
4 	Due to rounding, total costs may not be an exact sum of the component costs listed.
5 	A review of the SPCC Plan every five years is required by 40 CFR 112.5(b). Changes are also required when technical amendments are made; and EPA estimated that 10% of facilities make technical changes every year; in addition, 3% of facilities make changes each year based on 5-year review. Thus, the annual cost burden reflects an estimate that 13% of facilities will incur these changes annually. Source: SCS Engineers/2002 SPCC ICR.
[6] 	The compliance burden for oil discharge reporting activities includes mailing costs ($14 for Category I & II facilities, $16 for Category III facilities, and $21 for Category IV facilities) and one hour of both managerial and technical labor (for all categories of facilities). These costs are expected to affect only 0.15% of facilities annually (see Section 5.1.1.3). In addition, all facilities require four hours of technical labor for recordkeeping annually. (Source: site visits to production facilities: see Appendix A.)

Exhibit 5-7 
SPCC Plan Preparation and Maintenance (Professional Labor, Existing Production Facility)
Type of Facility
Burden Hours
Burden Cost (2007$)

Managerial
Technical
Drafter
Clerical
Contractor
Labor Hours[1]
Travel and Other Expenses
PE Certification Cost[2]
Labor Cost
Total Cost[3]

$150/hour
$120/hour
$75/hour
$55/hour
$70/hour





Plan Amendment[4]
Category I
                                                                          1.25 
                                                                           7.5 
                                                                             --
                                                                             1 
                                                                             --
                                                                            10 
                                                                           $200
                                                                         $1,010
                                                                         $1,140
                                                                         $2,350
Category II
                                                                           2.5 
                                                                            15 
                                                                             --
                                                                             2 
                                                                             --
                                                                            20 
                                                                           $200
                                                                         $1,910
                                                                         $1,790
                                                                         $3,900
Category III
                                                                             5 
                                                                            30 
                                                                             --
                                                                             4 
                                                                             --
                                                                            39 
                                                                           $200
                                                                         $4,030
                                                                         $4,570
                                                                         $8,800
Category IV
                                                                             8 
                                                                            45 
                                                                             --
                                                                             6 
                                                                             --
                                                                            59 
                                                                           $200
                                                                         $6,040
                                                                        $13,700
                                                                        $19,900
Five-Year Review[5]
Category I
                                                                           0.5 
                                                                           7.5 
                                                                             --
                                                                           0.5 
                                                                             --
                                                                             9 
                                                                           $200
                                                                             --
                                                                         $1,000
                                                                         $1,200
Category II
                                                                             1 
                                                                            15 
                                                                             --
                                                                             1 
                                                                             --
                                                                            17 
                                                                           $200
                                                                             --
                                                                         $2,010
                                                                         $2,210
Category III
                                                                             2 
                                                                            30 
                                                                             --
                                                                             2 
                                                                             --
                                                                            34 
                                                                           $200
                                                                             --
                                                                         $4,010
                                                                         $4,210
Category IV
                                                                             3 
                                                                            45 
                                                                             --
                                                                             3 
                                                                             --
                                                                            51 
                                                                           $200
                                                                             --
                                                                         $6,020
                                                                         $6,220
Recordkeeping and Oil Discharge Reporting[6]
Category I
                                                                              1
                                                                              5
                                                                             --
                                                                             --
                                                                             --
                                                                              6
                                                                            $14
                                                                             --
                                                                           $329
                                                                           $343
Category II
                                                                              1
                                                                              5
                                                                             --
                                                                             --
                                                                             --
                                                                              6
                                                                            $14
                                                                             --
                                                                           $329
                                                                           $343
Category III
                                                                              1
                                                                              5
                                                                             --
                                                                             --
                                                                             --
                                                                              6
                                                                            $16
                                                                             --
                                                                           $329
                                                                           $345
Category IV
                                                                              1
                                                                              5
                                                                             --
                                                                             --
                                                                             --
                                                                              6
                                                                            $21
                                                                             --
                                                                           $329
                                                                           $350
1 	Estimates represent the average of a small range of possible labor burden hours and costs. For example, an estimate for amending a Plan for a Category I facility could vary from $2,010 to $3,090, depending on the scale of changes required by the amendment. 
2 	Due to rounding, total labor hours may not be an exact sum of the labor hours listed.
[3]	PE costs represent the cost of hiring an outside engineer for certification of the Plan.
4 	Due to rounding, total costs may not be an exact sum of the component costs listed.
5 	A review of the SPCC Plan every five years is required by 40 CFR 112.5(b). Changes are also required when technical amendments are made; and EPA estimated that 10% of facilities make technical changes every year; in addition, 3% of facilities make changes each year based on 5-year review. Thus, the annual cost burden reflects an estimate that 13% of facilities will incur these changes annually. Source: SCS Engineers/2002 SPCC ICR.
[6] 	The compliance burden for oil discharge reporting activities includes mailing costs ($14 for Category I & II facilities, $16 for Category III facilities, and $21 for Category IV facilities) and one hour of both managerial and technical labor (for all categories of facilities). These costs are expected to affect only 0.15% of facilities annually (see Section 5.1.1.3). In addition, all facilities require four hours of technical labor for recordkeeping annually. (Source: site visits to production facilities: see Appendix A.)


Exhibit 5-8 
SPCC Plan Preparation and Maintenance (Professional Labor, Existing Storage Facility)
Type of Facility
Burden Hours
Burden Cost (2007$)

Managerial
Technical
Drafter
Clerical
Contractor
Labor Hours[1]
Travel and Other Expenses
PE Certification Cost[2]
Labor Cost
Total Cost[3]

$150/hour
$120/hour
$75/hour
$55/hour
$70/hour





Plan Amendment[4]
Category I
                                                                             3 
                                                                            15 
                                                                             --
                                                                             2 
                                                                             --
                                                                            20 
                                                                           $200
                                                                         $2,010
                                                                        $1,790 
                                                                        $4,000 
Category II
                                                                             5 
                                                                            30 
                                                                             --
                                                                             4 
                                                                             --
                                                                            39 
                                                                           $200
                                                                         $4,030
                                                                         $4,570
                                                                        $8,800 
Category III
                                                                           7.5 
                                                                            45 
                                                                             --
                                                                             6 
                                                                             --
                                                                            59 
                                                                           $200
                                                                         $6,040
                                                                         $6,860
                                                                       $13,100 
Category IV
                                                                          11.5 
                                                                          67.5 
                                                                             --
                                                                             9 
                                                                             --
                                                                            88 
                                                                           $200
                                                                         $9,140
                                                                        $10,300
                                                                       $19,600 
Five-Year Review[5]
Category I
                                                                             2 
                                                                            15 
                                                                             --
                                                                             2 
                                                                             --
                                                                            19 
                                                                           $200
                                                                             --
                                                                         $2,210
                                                                         $2,410
Category II
                                                                             2 
                                                                            30 
                                                                             --
                                                                             2 
                                                                             --
                                                                            34 
                                                                           $200
                                                                             --
                                                                         $4,010
                                                                         $4,210
Category III
                                                                             3 
                                                                            45 
                                                                             --
                                                                             3 
                                                                             --
                                                                            51 
                                                                           $200
                                                                             --
                                                                         $6,020
                                                                         $6,220
Category IV
                                                                             5 
                                                                            68 
                                                                             --
                                                                           4.5 
                                                                             --
                                                                            77 
                                                                           $200
                                                                             --
                                                                         $9,080
                                                                         $9,280
Recordkeeping and Oil Discharge Reporting[6]
Category I
                                                                              1
                                                                            3.5
                                                                             --
                                                                             --
                                                                             --
                                                                            4.5
                                                                            $14
                                                                             --
                                                                           $249
                                                                           $263
Category II
                                                                              1
                                                                              4
                                                                             --
                                                                             --
                                                                             --
                                                                              5
                                                                            $14
                                                                             --
                                                                           $276
                                                                           $290
Category III
                                                                              1
                                                                              6
                                                                             --
                                                                             --
                                                                             --
                                                                              7
                                                                            $16
                                                                             --
                                                                           $383
                                                                           $399
Category IV
                                                                              1
                                                                             10
                                                                             --
                                                                             --
                                                                             --
                                                                             11
                                                                            $21
                                                                             --
                                                                           $571
                                                                           $592
1 	Estimates represent the average of a small range of possible labor burden hours and costs. For example, an estimate for amending a Plan for a Category I facility could vary from $3,620 to $5,780, depending on the scale of changes required by the amendment. 
2 	Due to rounding, total labor hours may not be an exact sum of the labor hours listed.
3 	PE costs represent the cost of hiring an outside engineer for certification of the Plan.
4 	Due to rounding, total costs may not be an exact sum of the component costs listed.
5 	A review of the SPCC Plan every five years is required by 40 CFR 112.5(b). Changes are also required when technical amendments are made; and EPA estimated that 10% of facilities make technical changes every year; in addition, 3% of facilities make changes each year based on 5-year review. Thus, the annual cost burden reflects an estimate that 13% of facilities will incur these changes annually. Source: SCS Engineers/2002 SPCC ICR.
[6] 	The compliance burden for oil discharge reporting activities includes mailing costs ($14 for Category I & II facilities, $16 for Category III facilities, and $21 for Category IV facilities) and one hour of both managerial and technical labor (for all categories of facilities). These costs are expected to affect only 0.15% of facilities annually (see Section 5.1.1.3). In addition, all facilities require four hours of technical labor for recordkeeping annually. (Source: site visits to production facilities: see Appendix A.)

Capital and Operation and Maintenance (O&M) Activities Costs
Below are descriptions of capital and operation and maintenance (O&M) activities followed by a discussion of their estimated costs.
Capital and O&M Activities
Secondary Containment Requirements
Various sections of the rule require capital investment and O&M such as secondary containment to prevent discharges of oil to navigable waters or adjoining shorelines. Section 112.7(c) requires secondary containment at a transfer area (other than a loading/unloading rack). Oil-filled electrical equipment and piping are also subject to §112.7(c). Oil spill prevention measures may include active and passive measures to comply with these requirements. For facilities with loading/unloading racks, §112.7(h) requires containment of at least the maximum capacity of any single compartment of a tank car or tank truck loaded or unloaded at the rack. Sections 112.8(c)(2) and 112.12(c)(2) require sized secondary containment for the entire capacity of the largest single bulk storage container and sufficient freeboard to contain precipitation. Other secondary containment provisions apply to mobile or portable containers (§§112.8(c)(11) and 112.12(c)(11)). At oil production facilities, the tank battery, separation, and treating facility installations are subject to sized secondary containment for the entire capacity of the largest single container and sufficient freeboard to contain precipitation. This includes heater-treaters, and other separation equipment as well as produced water containers and oil storage containers (§112.9(c)(2)). Piping at oil production facilities, including flowlines and intra-facility gathering lines, are subject to the secondary containment requirements of §112.7(c).
Cost Estimates for Secondary Containment 
Compliance costs for each regulated and affected facility to provide secondary containment were also estimated using the facility unit cost inventory. The cost of constructing a secondary containment structure is a one-time capital expenditure that new facilities may incur in the first year of operation. The capital investment may be incurred at a fixed point but may be financed over time, much like a home mortgage. The compliance cost secondary containment may include maintenance such as debris removal. The cost estimate does not contain an accounting line item for this type of operation and maintenance activity; the cost for these activities is embedded in the overall facility maintenance costs and is not significant. Exhibit 5-9 presents itemized capital costs for secondary containment measures. Secondary containment construction is a one-time cost incurred by a new facility in the first year of its operation and may be financed over time; cost is not incurred by existing facilities.
Exhibit 5-9 presents the compliance costs for secondary containment measures, assuming that each facility has several sized secondary containment obligations, a conservative scenario. 


Exhibit 5-9 
Capital Costs of Sized Secondary Containment (New Facilities)[1]
Type of Facility
Cost (2007$)[2]

Bulk Storage Containers
Loading Racks
Mobile/ Portable Storage Containers
Spill Kits
Piping[3]
Transfer Areas
Flowlines[4]
Intra-Facility Gathering Lines
Oil-Filled Equipment
Total[5]
Storage
Category I
                                                                        $10,500
                                                                            N/A
                                                                        $2,020 
                                                                          $850 
                                                                               
                                                                        $1,060 
                                                                         $6,700
                                                                            N/A
                                                                            N/A
                                                                         $4,500
                                                                       $25,700 

Category II
                                                                       $21,500 
                                                                        $6,140 
                                                                               
                                                                               
                                                                               
                                                                               
                                                                               
                                                                               
                                                                               
                                                                       $42,700 

Category III
                                                                       $95,400 
                                                                       $12,300 
                                                                               
                                                                        $1,700 
                                                                         $6,050
                                                                               
                                                                               
                                                                               
                                                                               
                                                                      $129,000 

Category IV
                                                                      $227,200 
                                                                       $18,400 
                                                                               
                                                                        $2,550 
                                                                         $8,860
                                                                               
                                                                               
                                                                               
                                                                               
                                                                       $270,000
Production
Category I
                                                                       $10,500 
                                                                            N/A
                                                                            N/A
                                                                           $550
                                                                        $3,900 
                                                                         $6,700
                                                                         $1,010
                                                                           $833
                                                                         $1,500
                                                                       $25,000 

Category II
                                                                       $19,700 
                                                                               
                                                                               
                                                                               
                                                                               
                                                                               
                                                                         $2,020
                                                                         $2,500
                                                                               
                                                                       $36,800 

Category III
                                                                       $53,700 
                                                                               
                                                                               
                                                                               
                                                                       $44,800 
                                                                               
                                                                         $4,030
                                                                               
                                                                               
                                                                      $114,000 

Category IV
                                                                      $282,000 
                                                                               
                                                                               
                                                                               
                                                                        $46,800
                                                                               
                                                                         $6,060
                                                                        $15,000
                                                                               
                                                                      $359,000 
[1]	Applies to new facilities only, because existing facilities have already installed appropriate secondary containment.
2 	Ranges of cost estimates depend on method/type of construction and on size of containment required. In addition, impracticability determination cost varies according to whether a facility hires a PE firm or uses in-house labor.
[3]	Category III and IV facilities choose to determine that secondary containment for some of their piping is impracticable.
[4]	All production facilities choose to determine that secondary containment for flowlines is impracticable.
[5]	Totals may not sum correctly due to rounding. 

All of the estimates presented in Exhibit 5-9 are the average of a range and distribution of capital cost estimates developed by EPA. Exhibit 5-10 presents ranges for the baseline cost of secondary containment for bulk storage containers. EPA received inputs on cost estimates for secondary containment from Richard Franklin of EPA Region 6, who estimates that an earthen berm around a single container or a heater-treater costs approximately $900 to $1,000. EPA's estimates that have been used in this analysis are based on a containment structure around a tank battery, which is likely to cost more than that for a single container. Further, for facilities with smaller storage capacities, the unit cost inventory reports an estimate of $1,300 for a sized secondary containment structure, which is close to the estimate provided by Richard Franklin. The estimates presented in this RIA reflect the cost of concrete sized containment structures that are likely to be used around tank batteries. In the cost impact analysis, EPA used an average value with a range established by the cost of earthen and concrete structures, assuming that approximately 50 percent of the oil storage facilities use either kind of material. 
Exhibit 5-10 
Capital Costs for Secondary Containment for Bulk Storage Containers (New Facilities)[1]
Type of Facility
Cost (2007$)[2]

Earthen Berms
Concrete Berms
Storage
Category I
                                                                $1,320 - $3,300
                                                               $3,300 - $19,800

Category II
                                                                $4,650 - $7,320
                                                              $23,000 - $38,300

Category III
                                                              $10,100 - $39,400
                                                             $40,200 - $181,000

Category IV
                                                              $65,700 - $85,000
                                                            $308,000 - $389,000
Production
Category I
                                                               $1,320 - $3,300 
                                                              $3,270 - $19,800 

Category II
                                                               $4,320 - $6,000 
                                                              $23,000 - $35,000

Category III
                                                              $10,100 - $21,200
                                                              $40,200 - $97,200

Category IV
                                                             $85,000 - $106,000
                                                            $389,000 - $480,000
[1]	Applies to new facilities only, because existing facilities are assumed to have already installed appropriate secondary containment.
[2]	Ranges of cost estimates depend on method/type of construction and on size of containment required. In addition, impracticability determination cost varies according to whether a facility hires a PE firm or uses in-house labor. 

The estimated ranges for providing secondary containment for other equipment and the contributing factors to the variations in costs are as follows: 
Loading racks: ranges from $570 (using asphalt curbing) to $11,700 (using concrete berms) per loading area.
Mobile or portable storage containers: ranges from $270 (using asphalt curbing) to $3,775 (using concrete berms) per facility. 
Spill kits: $100 to $1,000. Storage facilities require one spill kit per loading area, in addition to a drain cover ($100 to $500). 
A transfer area: ranges from $4,530 to $8,570, depending on the size and type (manual/automatic) of doorway spill barrier installed. 
Intra-facility gathering lines at Category IV facilities: ranges from $10,000 to $20,000, depending on the length of the lines. 
Inspections and Testing Requirements
Sections 112.8(c)(6) and 112.12(c)(6) require the integrity testing of bulk storage containers at storage facilities on a regular schedule and whenever material repairs are done. Additionally, facilities must conduct an inspection of the container's supports and foundations and frequently inspect the outside of the container for signs of deterioration, discharges, or accumulation of oil inside diked areas. Under the SPCC rule, the integrity testing requirement does not apply to oil production facilities. Section 112.7(d) requires that if the installation of secondary containment is not practicable, the owner or operator must, among other measures, conduct periodic integrity tests for bulk storage containers and periodic integrity and leak testing of associated valves and piping.
The following inspections are also required by the SPCC rule:
Storage facilities: All of the following compliance activities must be conducted monthly: inspect the lowermost drain and all outlets (if a loading rack is present at the facility) (§112.7(h)(3)); evaluating field-constructed containers for risk of brittle fracture (§112.7(i)); inspect pumps, ejectors, dikes, and containers for oil discharge (§§112.8(b)(1) and 112.12(b)(1)); monitor the steam return and exhaust lines for contamination (§§112.8(c)(7) and 112.12(c)(7)); test liquid level sensing devices (§§112.8(c)(8)(v) and 112.12(c)(8)(v)); inspect piping for deterioration and corrosion (§§112.8(d)(1) and 112.12(d)(1)); inspect all aboveground valves, piping and appurtenances (§§112.8(d)(4) and 112.12(d)(4)); and observe effluent treatment facilities frequently enough to detect possible system upsets (§112.8(c)(9)).
Production facilities: All of the following compliance activities must be conducted monthly: inspect the lowermost drain and all outlets (if a loading rack is present at the facility) (§112.7(h)(3)); inspect oil traps sumps and skimmers for oil that may have come from a discharge and removing accumulated oil (§112.9(b)(2)); periodically visually inspect each containment for oil including the foundation and support area on or above the surface of the ground (§112.9(c)(3)); inspect saltwater disposal facilities (§112.9(d)(2)); inspect diked areas (§112.9(b)(1)); inspect all aboveground valves and piping associated with transfer operations (§112.9(d)(1)).
Cost Estimates for Inspections and Testing
EPA estimated the cost of conducting external integrity testing per event at approximately $500 to $1,000 for Category I storage facilities, $2,000 to $4,000 for Category II facilities, $4,000 to $8,000 for Category III facilities, and $8,000 to $40,000 for Category IV facilities (Exhibit 5-10). These estimates were based on a unit cost of external integrity testing for all types of facilities of $500 to $1,000 per tank from EPA's unit cost inventory analysis. EPA also estimated the cost of hydrostatic testing per event at approximately $500 to $2,500 for Category I storage facilities, $2,000 to $10,000 for Category II facilities, $4,000 to $20,000 for Category III facilities, and $8,000 to $40,000 for Category IV facilities (Exhibit 5-11). These estimates were based on a unit cost of $500 to $2,500 per tank. The cost of performing integrity testing could vary significantly depending on the container type, capacity, type of oil, and other site-specific factors. EPA assumed integrity testing of these containers will be conducted once every 12 years.
The 2002 SPCC rule allows the use of environmentally equivalent measures in lieu of inspection and integrity testing, consistent with good engineering practice. Such measures may have lower operational costs. For example, for shop-built containers with a shell capacity of 30,000 gallons or under, an environmentally equivalent measure might be to combine appropriate visual inspection with elevation of the container such that all sides are visible and corrosion is minimized. As a result, EPA's analysis may overestimate the cost of integrity testing incurred by an owner or operator of an average facility. 
Exhibit 5-11 
Facility-Level Integrity Testing Costs (New & Existing Storage Facilities)[1]
Type of Facility
Annual Equivalents, Integrity Testing Costs (2007$)

Aboveground Storage Tanks
Buried Storage Tanks
Buried Piping[2]
Field-Constructed Containers
Total[3]



New Facilities
Existing Facilities

New Facilities
Existing Facilities
Category I
                                                                           $125
                                                                           $375
                                                                            N/A
                                                                            N/A
                                                                            N/A
                                                                           $500
                                                                           $500
Category II
                                                                           $500
                                                                               
                                                                            $57
                                                                            $80
                                                                               
                                                                           $932
                                                                           $955
Category III
                                                                         $1,000
                                                                               
                                                                           $114
                                                                           $179
                                                                           $238
                                                                         $1,490
                                                                         $1,500
Category IV
                                                                         $2,000
                                                                               
                                                                               
                                                                               
                                                                               
                                                                         $2,490
                                                                         $2,550
[1]	EPA assumed that most integrity tests will be conducted once every 12 years, and that field-constructed containers will be tested every 20 years. Unit costs range from $500 to $2,500 per tank for hydrostatic testing and $500 to $1,000 for external testing. EPA assumed that the number of tanks per typical facility would be 1, 4, 8, and 16 for Category I, II, II, and IV facilities, respectively. This assumption was based on estimates obtained from SCS Engineers as well as state oil tank databases. EPA also assumed that Category I facilities would have no buried piping and that Category I and II facilities would have no field-constructed containers, based on estimates from SCS Engineers.
[2]	Estimates actually represent the average a range of values for testing buried piping, depending on the length of piping. For Category II facilities, this cost could range from $38 to $76 for new facilities and from $47 to $113 for existing facilities. For Category III facilities, this cost could range from $76 to $152 for new facilities and from $113 to $245 for existing facilities.
[3]	Totals may not sum correctly due to rounding. 

In addition to integrity testing requirements for storage tanks, the SPCC rule requires owners or operators of regulated storage facilities to conduct integrity and leak testing of buried piping at the time of installation, modification, construction, relocation, or replacement. EPA assumed that Category I storage facilities would not have any buried piping; Category II facilities would have 50 feet of buried piping per facility; and Category III & IV facilities would each have 500 feet of buried piping per facility. EPA estimated that the labor burden associated with conducting integrity and leak testing for buried piping would be higher for existing facilities than for new facilities. EPA assumed that the estimated costs of integrity testing for buried piping, per event, would be $0, $57, and $114 for new Category I, Category II, and Category III & IV facilities, respectively. For existing facilities, EPA estimated these costs at $0, $80, and $179, respectively. EPA assumed these tests would be conducted once every 12 years (Exhibit 5-11).
The SPCC rule also stipulates leak-testing requirements for completely buried metallic storage tanks at storage facilities. EPA assumed Category I facilities would have no completely buried storage tanks, and Category II, III, & IV facilities would each have a 1,000 gallon buried tank and a 10,000 gallon buried tank. EPA estimated the cost for Category II, III, & IV facilities to be $4,500 per testing event. As with other integrity testing requirements, EPA assumed leak testing of buried storage tanks would be conducted once every 12 years (Exhibit 5-11).
Finally, the SPCC rule requires the brittle-fracture evaluation of field-constructed storage containers at storage facilities. EPA assumed that only Category III and IV facilities will have field-constructed containers, due to their size. EPA estimated the cost of brittle-fracture evaluation for 20,000-gallon containers at $4,750 per event, and assumed that this procedure will be conducted once every 20 years (Exhibit 5-11).
Other than integrity testing costs, all the testing and inspection costs are incurred monthly, by both new and existing facilities. For storage facilities, the monthly inspection and testing costs include estimates for inspecting the lowermost drain and all outlets; inspecting pumps, ejectors, dikes, and containers for oil discharge; monitoring the steam return and exhaust lines for contamination; testing liquid level sensing devices; inspecting piping for deterioration and corrosion; and inspecting all aboveground valves, piping and appurtenances. For oil production facilities, the monthly inspection and testing costs include inspecting the lowermost drain and all outlets; inspecting oil traps, sumps, and skimmers; periodically visually inspecting each containment for oil; inspecting saltwater disposal facilities; inspecting diked areas; and inspecting all aboveground valves and piping associated with transfer operations. The cost estimates associated with monthly inspections and testing are presented in Exhibit 5-12.
Exhibit 5-12 
Monthly Inspection and Testing Costs (New & Existing Facilities)[1]
Type of Facility
Cost (2007$)

Monthly Cost
Annual Equivalent Cost
Storage
Category I
                                                                           $255
                                                                         $3,060

Category II
                                                                           $515
                                                                         $6,780

Category III
                                                                         $1,560
                                                                        $18,700

Category IV
                                                                         $2,800
                                                                        $33,600
Production
Category I
                                                                           $161
                                                                         $1,930

Category II
                                                                           $322
                                                                         $3,860

Category III
                                                                           $643
                                                                         $7,720

Category IV
                                                                           $965
                                                                        $11,600
1 	Please see Section 5.2.1.4 for a description of required monthly inspections and testing procedures.

The costs presented above for monthly inspection and testing costs for storage facilities incorporate the average of a range of estimates for testing liquid level sensing devices; the number of liquid level sensing devices depends upon the number of tanks at a facility, and the testing costs associated with those ranges are shown in Exhibit 5-13.
Exhibit 5-13 
Liquid Level Sensing Device Testing Costs (New & Existing Storage Facilities) 
Type of Facility
Cost (2007$)

Monthly Cost
Annual Equivalent Cost
Storage
Category I
                                                                            $54
                                                                           $643

Category II
                                                                    $107 - $214
                                                                $1,290 - $2,570

Category III
                                                                    $322 - $858
                                                               $3,860 - $10,300

Category IV
                                                                $1,290 - $1,720
                                                              $15,400 - $20,600

Other Capital and O&M Activities
EPA estimated costs associated with other major compliance activities. These costs consist of one-time initial costs of purchasing and installing equipment (incurred only by new facilities) as well as costs of ongoing maintenance, upkeep, and training (incurred by both new and existing facilities). These compliance activities include:
Anti-Corrosive Measures. These measures include providing coatings or cathodic protection to protect partially buried tanks from corrosion (§§112.8(c)(4) and 112.12(c)(4) and §§112.8(c)(5) and 112.12(c)(5)); providing coatings or cathodic protection to protect buried piping from corrosion (§§112.8(d)(1) and 112.12(d)(1); and designing pipe supports to minimize abrasion and corrosion and allow for expansion and contraction (§§112.8(d)(3) and 112.12(d)(3)). These provisions do not apply to oil production facilities.
Drainage Measures. These measures include providing drainage systems for associated tank truck loading/unloading areas or loading racks if a loading rack is present at the facility (§112.7(h)(1)). For storage facilities, compliance activities also include restraining drainage from diked storage areas and designing facility drainage systems from undiked areas with a potential for discharge (§§112.8(b)(2) and 112.12(b)(2) and §§112.8(b)(3) and 112.12(b)(3), respectively).
Security Measures. These measures require that the Plan include a description of how oil handling, processing and storage areas are secured and access to this equipment is controlled; master flow and drain valves are secured; unauthorized access to starter controls on oil pumps is prevented; out-of-service and loading/unloading connections of oil pipelines are secured; and the appropriateness of security lighting to both prevent acts of vandalism and assist in the discovery of oil discharges is addressed. These measures do not apply to oil production facilities.
Training. Section 112.7(f)(1) requires oil-handling personnel to be trained in the operation and maintenance of equipment to prevent discharges; discharge procedure protocols; applicable pollution control laws, rules, and regulations; general facility operations; and the contents of the facility SPCC Plan. Section 112.7(f)(2) requires each facility to designate a person accountable for discharge prevention. Section 112.7(f)(3) requires owners and operators to schedule and conduct discharge prevention briefings for facility personnel to ensure adequate understanding of the SPCC Plan.
Other Measures. For storage facilities, these measures include installing liquid level sensing devices (§§112.8(c)(8) and 112.12(c)(8)); equipping the final discharge of ditches inside the facility with a diversion system (§§112.8(b)(4) and §112.12(b)(4)); warning all vehicles entering the facility to be sure that no vehicle will endanger aboveground piping or other oil transfer operations (§§112.8(d)(5) and 112.12(d)(5)); and providing two pumps if the facility has drainage waters treated in more than one treatment unit continuously (§§112.8(b)(5) and 112.12(b)(5)). Oil production facilities are required to have a program of flowline maintenance to prevent discharges from each flowline (§112.9(d)(3)).
Cost Estimates for Other Capital and O&M Activities 
This section presents cost estimates for other capital and O&M compliance activities affected by the final amendments. The requirements vary between storage and production facilities. 
Exhibit 5-14 presents the estimated cost of providing anti-corrosive measures at a typical storage facility. These are one-time capital costs that EPA assumed would be incurred in the first year of operations. Therefore, only new facilities incur these costs.
Exhibit 5-14 
2002 Baseline Capital Costs of Anti-Corrosive Measures (New Storage Facilities)[1]
Type of Facility
Cost (2007$)

Partially or Fully Buried Tanks[2]
Buried Piping[3]
Pipe Supports[4]
Total[5]
Category I
                                    $5,460
                                      N/A
                                     $690
                                    $6,150
Category II
                                       
                                    $1,320
                                       
                                    $7,470
Category III
                                       
                                    $6,010
                                    $14,375
                                    $25,800
Category IV
                                       
                                       
                                    $21,600
                                    $33,100
[1]	The requirement is not applicable to production facilities.
[2]	Provide coatings for one 1,000 and one 10,000-gallon tank, both either partially or fully buried. $5,460 is the average cost; protection would cost $3,640 for partially buried tanks, and double this ($7,280) for fully buried tanks.
[3]	Provide coatings. Depending on the length of piping, cost ranges from $297 to $908 for Category II; and from $908 to $2,270 for Category III and IV. In addition, facilities could utilize the American Petroleum Institute (API) 570 inspection program ($1,630 for Category II and $4,040 for Category III and IV) or install double wall fiberglass fuel piping ($2,110 and $11,100, respectively) as environmental equivalence. Cost presented is the mean of the low and high estimate for compliance with this measure, overall.
[4]	Design pipe supports to minimize abrasion and corrosion and allow for expansion and contraction. Cost ranges from $5 to $225 per pipe support (needed every 8 feet). 
[5]	Totals may not sum correctly due to rounding. 

Exhibit 5-15 presents the estimated cost of providing drainage measures at a typical facility. 
Exhibit 5-15 
Capital Costs of Drainage Measures (New Facilities[1])
Type of Facility
Cost (2007$)[2]

Loading Rack[3]
Diked Storage Areas[4]
Production/
Separation Area[5]
Total[6]
Storage
Category I
                                                                            N/A
                                                                         $5,240
                                                                            N/A
                                                                         $5,240

Category II
                                                                         $4,160
                                                                               
                                                                               
                                                                         $9,400

Category III
                                                                               
                                                                        $10,500
                                                                               
                                                                        $14,600

Category IV
                                                                               
                                                                        $15,700
                                                                               
                                                                        $19,900
Production
Category I
                                                                            N/A
                                                                            N/A
                                                                           $232
                                                                           $232

Category II
                                                                               
                                                                               
                                                                               
                                                                               

Category III
                                                                               
                                                                               
                                                                           $464
                                                                           $464

Category IV
                                                                               
                                                                               
                                                                           $695
                                                                           $695
[1]	Applies to new facilities only, because existing facilities have already installed appropriate drainage measures.
[2]	Range of cost estimates determined by facility's decision to hire a PE firm or use in-house labor and by choice of drainage system.
[3]	Facilities are required to use a quick drainage system for loading/unloading areas where drainage does not flow into a catchment basin or treatment facility. Production facilities and Category I non-production facilities are assumed not to have a loading rack.
[4]	Facilities are required to use valves of manual, open-and-closed design, for the drainage of diked storage areas. This cost, per drainage area, ranges from $480 for a manual valve up to $10,000 for a hydrophobic/oleophilic drain shutoff system. 
[5]	Production facilities are required to design production/separation area drainage to flow into drainage ditches. Drains are required to be closed and sealed at all times except when draining rainwater.
[6]	Totals may not sum correctly due to rounding. 

Security costs for new storage facilities are summarized in Exhibit 5-16. As per the SPCC requirement, these costs do not apply to production facilities. These are one-time capital costs that EPA assumed would be incurred in the first year of operations. Therefore, only new facilities incur these costs. EPA estimated capital security costs to be same for Category I and Category II facilities, which must meet certain baseline capital requirements. EPA estimated security costs to be substantially greater for Category III and Category IV facilities, which are significantly larger in size and complexity. 
Exhibit 5-16 
Security Costs (New Storage Facilities)
Type of Facility
Cost (2007$)

Facility Fencing[1]
Facility Lighting
Security Measures for Valves
Security Measures for Piping[2]
Total Security Cost[3]
Category I
                                                                        $4,290 
                                                                        $2,240 
                                                                           $410
                                                                           $154
                                                                        $7,100 
Category II
                                                                         $4,900
                                                                               
                                                                               
                                                                               
                                                                         $7,710
Category III
                                                                       $17,800 
                                                                       $22,400 
                                                                         $1,360
                                                                           $680
                                                                       $42,200 
Category IV
                                                                       $27,300 
                                                                       $33,600 
                                                                         $2,040
                                                                           $922
                                                                        $63,900
[1]	Estimates are for fencing only oil storage/transfer areas.
2 	Security measures for piping could also be incurred by existing facilities; other security measures only apply to new facilities.
[3]	Totals may not sum correctly due to rounding. 

Exhibit 5-17 details costs associated with training facility workers. These costs are ongoing costs and incurred by both new and existing facilities. The costs vary depending on whether the training activities are conducted by in-house personnel or by a PE firm. 
Exhibit 5-17 
Annual Training Costs (New & Existing Facilities)[1]
Type of Facility
Cost (2007$)

Training for Facility Personnel
Discharge Prevention Briefings
Train Person Responsible for Discharge Prevention
Total Training Cost[2]
Storage and Production
Category I
                                                                         $1,110
                                                                           $717
                                                                           $107
                                                                         $1,930

Category II
                                                                         $2,160
                                                                         $1,390
                                                                               
                                                                         $3,650

Category III





Category IV




[1]	The costs presented are an average of the cost incurred by using in-house personnel to conduct training or hiring a PE firm. 
[2]	Totals may not sum correctly due to rounding. 

Exhibit 5-18 presents the compliance costs required for storage facilities not elsewhere presented.
Exhibit 5-18 
Other Costs (New Storage Facilities)
Type of Facility
Cost (2007$)

Install Liquid Level Sensing Devices[1]
Equip with Diversion System[2]
Vehicle Warning[3]
Provide Two Pumps[4]
Category I
                                                                       $12,000 
                                                                         $1,240
                                                                         $2,600
                                                                           $191
Category II
                                                                               
                                                                               
                                                                               
                                                                               
Category III
                                                                        $24,000
                                                                         $2,420
                                                                         $5,420
                                                                               
Category IV
                                                                        $36,000
                                                                         $6,100
                                                                         $8,110
                                                                               
[1]	Depending on the type of liquid level sensing device installed, the cost per loading area can range from $2,400 (for a magnetorestrictive fuel monitoring system for inventory purposes) to $21,600 (for a Scully Signal system). Costs presented here are an average.
[2]	Equip the final discharge of ditches inside the facility with a diversion system (§§112.8(b)(4) and §112.12(b)(4)).
[3]	Warn all vehicles entering the facility to be sure that no vehicle will endanger aboveground piping or other oil transfer operations (§§112.8(d)(5) and 112.12(d)(5)). Ranges from a minimum of $200 per storage area for warning signs to a maximum of $5,000 for bollards at Category I and II facilities, or up to $7,380 for guard rails at Category III and IV facilities. Costs presented are an average.
[4]	Provide two pumps if the facility has drainage waters treated in more than one treatment unit continuously (§§112.8(b)(5) and 112.12(b)(5)).

Exhibit 5-19 and Exhibit 5-20 present the estimated total cost of compliance with SPCC requirements for generic storage and production facilities, by storage capacity size category. 

Exhibit 5-19 
Costs for All Compliance Measures (New Facilities) 
Facility Type
Cost (2007$)

Plan Preparation and Maintenance[1]
Secondary Containment[2]
Integrity Testing[3]
Monthly Inspections[4]
Anti-Corrosive[5]
Drainage[6]
Security[7]
Training[8]
Other[9]
Total[10]
Storage
Category I
                                                                         $7,080
                                                                        $25,660
                                                                           $500
                                                                         $3,060
                                                                         $6,150
                                                                         $5,240
                                                                         $7,100
                                                                         $1,930
                                                                        $16,000
                                                                        $73,100

Category II
                                                                        $13,800
                                                                        $42,700
                                                                           $932
                                                                         $6,180
                                                                         $7,470
                                                                         $9,400
                                                                         $7,710
                                                                         $3,650
                                                                               
                                                                       $108,000

Category III
                                                                        $19,800
                                                                       $129,000
                                                                         $1,490
                                                                        $18,700
                                                                        $25,800
                                                                        $14,600
                                                                        $42,200
                                                                               
                                                                        $32,000
                                                                       $287,000

Category IV
                                                                        $28,900
                                                                       $270,000
                                                                         $2,490
                                                                        $33,600
                                                                        $33,100
                                                                        $19,900
                                                                        $63,900
                                                                               
                                                                        $50,400
                                                                       $507,000
Production
Category I
                                                                         $4,590
                                                                        $25,024
                                                                            N/A
                                                                         $1,930
                                                                            N/A
                                                                           $232
                                                                            N/A
                                                                         $1,930
                                                                         $3,930
                                                                        $37,600

Category II
                                                                         $8,870
                                                                        $36,800
                                                                               
                                                                         $3,860
                                                                               
                                                                               
                                                                               
                                                                         $3,650
                                                                         $5,000
                                                                        $58,400

Category III
                                                                        $17,400
                                                                       $113,762
                                                                               
                                                                         $7,720
                                                                               
                                                                           $464
                                                                               
                                                                               
                                                                               
                                                                       $148,000

Category IV
                                                                        $26,000
                                                                       $359,123
                                                                               
                                                                        $11,600
                                                                               
                                                                           $695
                                                                               
                                                                               
                                                                         $9,830
                                                                       $411,000
[1]	For more details, refer to Exhibit 5-1 through Exhibit 5-8.
[2]	For more details, refer to Exhibit 5-9 and Exhibit 5-10.
[3]	For more details, refer to Exhibit 5-11.
[4]	For more details, refer to Exhibit 5-12 and Exhibit 5-13.
[5]	For more details, refer to Exhibit 5-14.
[6]	For more details, refer to Exhibit 5-15.
[7]	For more details, refer to Exhibit 5-16.
[8]	For more details, refer to Exhibit 5-17.
[9]	For more details on other measures for storage facilities, refer to Exhibit 5-18. For production facilities, this cost reflects the cost of a flowline maintenance program.
[10]	Totals may not sum correctly due to rounding. 


Exhibit 5-20 
Costs for All Measures (Existing Facilities)
Facility Type
Cost (2007$)

Plan Preparation and Maintenance[1]
Secondary Containment[2]
Integrity Testing[3]
Monthly Inspections[4]
Anti-Corrosive[5]
Drainage[6]
Security[7]
Training[8]
Other[9]
Total[10]
Storage
Category I
                                                                           $929
                                                                             $0
                                                                           $500
                                                                         $3,060
                                                                             $0
                                                                             $0
                                                                           $154
                                                                         $1,930
                                                                             $0
                                                                         $6,570

Category II
                                                                         $1,700
                                                                               
                                                                           $955
                                                                         $6,180
                                                                               
                                                                               
                                                                               
                                                                         $3,650
                                                                               
                                                                        $12,600

Category III
                                                                         $2,570
                                                                               
                                                                         $1,550
                                                                        $18,700
                                                                               
                                                                               
                                                                           $680
                                                                               
                                                                               
                                                                        $27,200

Category IV
                                                                         $3,920
                                                                               
                                                                         $2,550
                                                                        $33,600
                                                                               
                                                                               
                                                                           $922
                                                                               
                                                                               
                                                                        $44,700
Production
Category I
                                                                           $453
                                                                             $0
                                                                            N/A
                                                                         $1,930
                                                                            N/A
                                                                             $0
                                                                            N/A
                                                                         $1,930
                                                                           $751
                                                                         $5,210

Category II
                                                                           $691
                                                                               
                                                                               
                                                                         $3,860
                                                                               
                                                                               
                                                                               
                                                                         $3,650
                                                                         $1,820
                                                                        $10,300

Category III
                                                                         $1,170
                                                                               
                                                                               
                                                                         $7,720
                                                                               
                                                                               
                                                                               
                                                                               
                                                                               
                                                                        $14,900

Category IV
                                                                         $1,640
                                                                               
                                                                               
                                                                        $11,600
                                                                               
                                                                               
                                                                               
                                                                               
                                                                         $6,650
                                                                        $24,400
[1]	For more details, refer to Exhibit 5-1 through Exhibit 5-8.
[2]	For more details, refer to Exhibit 5-9 and Exhibit 5-10.
[3]	For more details, refer to Exhibit 5-11.
[4]	For more details, refer to Exhibit 5-12 and Exhibit 5-13.
[5]	For more details, refer to Exhibit 5-14.
[6]	For more details, refer to Exhibit 5-15.
[7]	For more details, refer to Exhibit 5-16.
[8]	For more details, refer to Exhibit 5-17.
[9]	For more details on other measures for storage facilities, refer to Exhibit 5-18. For production facilities, this cost reflects the cost of a flowline maintenance program.
[10]	Totals may not sum correctly due to rounding.


Final Alternative Compliance Option for Tier I Qualified Facilities
A qualified facility is a facility subject to the SPCC rule that, as described in §112.3(g), meets the aboveground storage capacity threshold and discharge history criteria. The final rule provisions provide additional flexibility for qualified facilities that have no individual aboveground oil storage container with a capacity greater than 5,000 gallons. These facilities are Tier I qualified facilities and are eligible to complete an SPCC Plan template. 
 The following requirements present key paperwork compliance activities associated with the completion of the Plan template for Tier I qualified facilities in lieu of preparing a full SPCC Plan. While additional requirements apply to Tier I Qualified Facilities (e.g., review drainage control methods to ensure they meet the requirements of 40 CFR part 112), the list focuses on those requirements that are expected to account for a potentially significant hour burden when completing the SPCC Plan template (i.e., those requirements that necessitate more complex technical involvement such as developing procedures or assessing applicable industry standards).
Assessing aboveground storage tanks for potential discharge on a regular basis or whenever changes are made. This includes taking an inventory of the oil storage containers and assessing each container with regards to potential modes of failure and discharge volume, direction that the oil would travel, and the adequacy of the secondary containment method, as documented in Table G-4 of the template at 40 CFR part 112, Appendix G. 
Providing each container with a system or documented procedure to prevent overfills; developing an integrity testing program. This involves, for each storage container, identifying procedures to prevent overfills.
Developing a flow-line maintenance program to prevent discharges from each flowline (applies to oil production facilities only). This includes assessing the flowlines present at the facility and determining, based on industry standards, the appropriate set of procedures, responsible personnel, performance schedule, and recordkeeping.
Developing a program of integrity testing and inspections of bulk storage containers. This includes, for each storage container, identifying the applicable industry standards for inspections and testing, and outlining the appropriate procedures, responsible personnel, performance schedule, and recordkeeping.
Filling out the SPCC Plan template. This involves completing all sections of the template provided in Appendix G of 40 CFR part 112.
The regulatory impact analysis contains an estimate of the number of burden hours for each requirement, developed by contacting nine PEs and asking them a series of questions regarding potential costs associated with complying with the new requirements. EPA chose to contact PEs because they have expertise with the SPCC requirements within a wide range of industry sectors. EPA calculated a simple mean of the reported values to estimate the technical burden hours necessary to complete each task. Based on the requirements, only technical personnel are expected to perform the work associated with the required activities. The regulatory impact analysis contains estimates for the cost for each activity calculated by multiplying burden hours by the hourly wage rate for the facility's technical personnel. Exhibit 5-21 presents the list of activities for qualified facilities, and associated labor burden and estimated costs.
Exhibit 5-21 
Estimated Costs for Preparing a Template Plan to Tier I Qualified Facilities Introduced by the Final Amendment
Template SPCC Plan Elements
Total Hours[1]
Cost ($/Year)
($52/hr)
Assess Potential for Discharge
                                                                           1.07
                                                                          $57.2
Provide Systems or Procedures for Preventing Overfills
                                                                           0.86
                                                                          $46.0
Develop Flowline Maintenance Program[2]
                                                                           8.00
                                                                           $429
Develop Integrity Testing Program
                                                                           0.86
                                                                          $46.0
Fill out SPCC Plan Template
                                                                           0.09
                                                                           $4.7
Total Cost - Storage Facility (98.9% of qualified facilities)
                                                                           2.87
                                                                           $154
Total Cost - Production Facility (1.1% of qualified facilities)
                                                                          10.90
                                                                           $583
Total Cost  -  Weighted Average
                                                                           $157
1 	All hours are for technical personnel.
2 	Applies to production facilities only.

State Overlap
Each state has oil spill prevention regulations regarding the storage, handling, and containment of oil. In some cases, the effort required by these state regulations may be similar to or the same as what is required by the SPCC rule (e.g., Alaska, California, Colorado, Delaware, Georgia, Hawaii). Without taking into account similar requirements imposed by state regulations, the cost of compliance and cost savings associated with the regulatory changes could be overestimated. 
The economic analysis of the 2002 SPCC rule attempted to account for overlap between the state requirements and that rule. The analysis revealed that 19 states had prevention planning requirements pursuant to state law. In certain cases, state regulations closely track or incorporate by reference federal SPCC requirements. In other cases, the degree of overlap is less complete but is still substantial. Based on a comparison of state regulations with a list of major SPCC planning requirements, EPA divided the 19 states into three overlap groups (complete, substantial, or partial), depending on the degree of overlap between the federal and state requirements. Based on the findings from the 19 states, EPA developed a nationwide estimate for the degree of overlap between federal and state requirements. 

Exhibit 5-22 
Estimated Percentage Reduction in Total Burden due to State Overlap
Degree of Overlap
Categories I and II
Category III
Category IV
Total
Complete Overlap
                                                                           4.4%
                                                                          11.2%
                                                                          15.1%
                                                                           5.9%
Substantial Overlap
                                                                           3.1%
                                                                           7.8%
                                                                          10.8%
                                                                           4.2%
Partial Overlap
                                                                           2.1%
                                                                           5.3%
                                                                           7.6%
                                                                           2.8%
Total
                                                                           9.6%
                                                                          24.2%
                                                                          33.4%
                                                                          13.0%
Source: Economic Analysis for the 2002 SPCC rule

As part of the regulatory analysis for the 2008 final SPCC amendments, EPA studied the overlap of state regulations to determine whether an adjustment of the estimate would more accurately account for recent changes in state requirements and/or refine the previously generated estimates. As a result of this review, the Agency concluded that there was not compelling evidence to adjust the overlap estimate between the SPCC rule and existing state regulations. When assessing cost savings resulted from the reduced SPCC requirements, EPA takes into account the estimated degree of overlap to avoid double counting. The reduced burden due to state overlap was estimated by applying the percentages presented in Exhibit 5-22 to the total burden associated with each paperwork compliance activity. 
Annualizing Estimated Changes in Compliance Costs
                        NPV = NB0+ d1NB1 + d2NB2 + ... + dnNBn
 where,
 NBt is the net benefits that accrue at the end of period, t, and the discounting weights are given by:
                                   dt = 1/(1+r)[t]
 where r is the discount rate, and n is the last year of the analysis.
Changes in compliance costs presented in subsequent chapters (Chapter 6) are estimated in annualized net present values over a 10-year period. First, EPA calculated the net present value of a projected stream of future cost savings in 2010 using the 3 percent and 7 percent discount rates. EPA defined the 10-year period of analysis as 2010 through 2019. The net present value (NPV) of a projected stream of cost savings is calculated by multiplying the estimated savings in each year by a time-dependent weight, dt, and adding all of the weighted values as follows:Net Present Value 
After the present value of costs is calculated using the NPV formula above, this present value is then annualized according to the following formula:
                                          
 where,
 AC = annualized cost accrued at the end of each of n periods
 PVC = present value of costs
 r = the discount rate per period
 n = the analysis period.
Annualized Cost Saving
Note that the annualized cost is the amount one would have to pay at the end of each period to add up to the same cost in present value terms as the stream of costs being annualized.





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Chapter 6

Compliance Costs and Savings by Rule Component

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Compliance Costs and Savings by Rule Component
The following sections present the estimated cost savings for each of the key final amendments and the alternative options considered by the Agency. EPA calculated cost savings only for cases that are expected to result in non-negligible cost savings; for the other final amendments or options that do not have a cost impact, there is a discussion of the reasons EPA expects that the option will not result in a cost impact. 
Hot-Mix Asphalt
Hot-mix asphalt (HMA) is a mixture of asphalt cement and aggregate material (e.g., stone, sand or gravel), which is formed into final paving products for use on roads and parking lots. All types of asphalt, including hot-mix asphalt, are petroleum oil products. As a result, a facility with hot-mix asphalt may currently be regulated under the SPCC rule, if applicability criteria are met (e.g., storage capacity thresholds and potential for a discharge into navigable waters or adjoining shorelines), and secondary containment and other SPCC requirements apply to the hot-mix asphalt containers. 
EPA revised the rule to exempt HMA from SPCC rule applicability so that the capacity of storage containers solely containing HMA is not counted toward the facility's oil storage capacity calculation. EPA took this action based on the fact that this material is unlikely to flow as a result of the entrained aggregate, such that there would be very few circumstances in which a discharge of HMA would have the potential to reach navigable waters or adjoining shorelines. EPA will continue to regulate asphalt cement, asphalt emulsions, and cutbacks that are not hot-mix asphalt. However, hot-mix asphalt manufacturers and other facilities that use, store, distribute, or otherwise handle hot-mix asphalt may still be subject to SPCC requirements due to their storage capacity of other types of oils.
Universe of Affected Facilities
Facilities within two NAICS industry sectors are expected to store hot-mix asphalt (see Exhibit 6-1). Facilities in the "Asphalt Paving Mixture and Block Manufacturing" and "Asphalt Shingle and Coating Materials Manufacturing" sectors primarily handle hot-mix asphalt. 
Exhibit 6-1 
Industry Categories with Hot-Mix Asphalt Storage
NAICS Sector
NAICS Name
HMA as Output
Number of Facilities
Percent of Total
324121
Asphalt Paving Mixture and Block Manufacturing
                                       X
                                                                          3,350
                                                                            93%
324122
Asphalt Shingle and Coating Materials Manufacturing
                                       X
                                                                            242
                                                                             7%
Total
                                                                          3,590
                                                                           100%

The estimate was based on queries performed on EPA's Envirofacts database, which contains data on permits held by asphalt facilities under the Clean Air Act. The estimation was part of a 2005 analysis characterizing the applicability of the SPCC rule to the asphalt industry. To verify the obtained estimates, EPA researched readily available data sources. As a result, EPA estimated a universe of approximately 3,590 active asphalt plants that store hot-mix asphalt in the United States, based on data obtained from the Emission Factor Documentation for asphalt plants. This finding was consistent with the previously estimated number of asphalt facilities by EPA. Facilities in the "Asphalt Paving Mixture and Block Manufacturing" sector represent the largest fraction of all asphalt facilities (93 percent).
Distribution of Facilities by SPCC Size Category
Since the cost impact of the change on the affected facilities is likely to vary by the facility capacity storage, the Agency examined a sample of SPCC-regulated facilities to obtain information regarding the storage capacity distribution of asphalt facilities. EPA analyzed information from the eight state databases (Florida, Kansas, Maryland, Minnesota, New York, Oklahoma, Virginia, and Wisconsin) that were used to estimate the SPCC universe of regulated facilities as part of the regulatory impact analysis for the 2008 final amendments to the SPCC rule. EPA estimated the number of regulated asphalt facilities by capacity category for each of the three affected industry groups. The total number of affected facilities in the analyzed sample was 60. A key assumption employed (and used in the SPCC universe estimation process) is that those eight states are representative of the national universe of SPCC-regulated facilities. Given this assumption, the estimated size distribution is applicable to all regulated asphalt facilities. Exhibit 6-2 presents the distribution of asphalt facilities by storage capacity category. Most asphalt facilities (52 percent) fall under Category II, with the total storage capacity of 10,001 to 42,000 gallons. A total of 70 percent of all asphalt facilities have oil storage capacity of 42,000 gallons or less (Category I and Category II combined).
Since the determination of a reasonable expectation to discharge oil in quantities that may be harmful to navigable waters or adjoining shorelines is based on location (§112.1(b)), rather than the size of the facility, the Agency assumed that the distribution of size categories was similar across the facilities where the asphalt containers posed an imminent threat to navigable waters or adjoining shorelines.
Exhibit 6-2 
Distribution of Asphalt Facilities by Capacity Category 
(10-year Average)
Size Category
Number of Facilities
Percentage
Category I
                                                                           709 
                                                                          18.3%
Category II
                                                                         2,000 
                                                                          51.7%
Category III
                                                                           903 
                                                                          23.3%
Category IV
                                                                           258 
                                                                           6.7%
Total
                                                                         3,870 
                                                                           100%

Exhibit 6-3 presents the total projected number of new and existing asphalt facilities from 2010 through 2019. The projected average annual number of new asphalt facilities is 69, and the number of existing asphalt facilities is 3,800. EPA projected the number of new and existing asphalt facilities over the 10-year analysis period using the estimated number of SPCC-regulated asphalt facilities and industry-specific growth rates. 
Exhibit 6-3 
Projected Number of New and Existing Asphalt Facilities

Number of Facilities Affected 
10-Year Average

2010
Year 1
2011
Year 2
2012
Year 3
2013
Year 4
2014
Year 5
2015
Year 6
2016
Year 7
2017
Year 8
2018
Year 9
2019
Year 10

Existing Facilities
                                                                         3,700 
                                                                         3,720 
                                                                         3,740 
                                                                         3,770 
                                                                         3,790 
                                                                         3,810 
                                                                         3,830 
                                                                         3,860 
                                                                         3,880 
                                                                         3,900 
                                                                         3,800 
Category I
                                                                           678 
                                                                           682 
                                                                           686 
                                                                           690 
                                                                           695 
                                                                           699 
                                                                           703 
                                                                           707 
                                                                           711 
                                                                           715 
                                                                           697 
Category II
                                                                         1,910 
                                                                         1,920 
                                                                         1,930 
                                                                         1,950 
                                                                         1,960 
                                                                         1,970 
                                                                         1,980 
                                                                         1,990 
                                                                         2,000 
                                                                         2,020 
                                                                         1,960 
Category III
                                                                           863 
                                                                           868 
                                                                           874 
                                                                           879 
                                                                           884 
                                                                           889 
                                                                           895 
                                                                           900 
                                                                           905 
                                                                           911 
                                                                           887 
Category IV
                                                                           247 
                                                                           248 
                                                                           250 
                                                                           251 
                                                                           253 
                                                                           254 
                                                                           256 
                                                                           257 
                                                                           259 
                                                                           260 
                                                                           253 
New Facilities
                                                                            67 
                                                                            67 
                                                                            68 
                                                                            68 
                                                                            69 
                                                                            69 
                                                                            69 
                                                                            70 
                                                                            70 
                                                                            71 
                                                                            69 
Category I
                                                                            12 
                                                                            12 
                                                                            12 
                                                                            13 
                                                                            13 
                                                                            13 
                                                                            13 
                                                                            13 
                                                                            13 
                                                                            13 
                                                                            13 
Category II
                                                                            35 
                                                                            35 
                                                                            35 
                                                                            35 
                                                                            35 
                                                                            36 
                                                                            36 
                                                                            36 
                                                                            36 
                                                                            37 
                                                                            36 
Category III
                                                                            16 
                                                                            16 
                                                                            16 
                                                                            16 
                                                                            16 
                                                                            16 
                                                                            16 
                                                                            16 
                                                                            16 
                                                                            17 
                                                                            16 
Category IV
                                                                             4 
                                                                             4 
                                                                             5 
                                                                             5 
                                                                             5 
                                                                             5 
                                                                             5 
                                                                             5 
                                                                             5 
                                                                             5 
                                                                             5 

It is important to note that even though the final amendment exempts hot-mix asphalt containers from the SPCC requirements, facilities will still be subject to SPCC requirements if they store other types of oil. To estimate the effect of the final amendment on asphalt facilities, the Agency took the following steps:
      * Analyzed three SPCC Plans obtained from EPA regions and data presented in air permits and on HMA equipment sales Web pages to estimate a fraction of the total oil storage capacity at a facility that accounts for HMA storage. At both temporary and stationary plants, HMA accounted for approximately 34 percent of total storage, on average. The Agency assumed that this estimate is applicable to HMA facilities of all sizes.
      * Assessed facility's potential movement across size categories based on reduced storage capacities caused by exempt HMA containers. As a result, EPA estimated that 30 percent of Category I facilities drop out of the SPCC universe, 30 percent of Category II facilities move one size category down and become Category I, 30 percent of Category III facilities move one size category down and become Category II, and 60 percent of Category IV facilities move one size category down and become Category III.
Exhibit 6-4 presents the estimated fraction of HMA facilities that move across size categories as a result of the final amendment.
Exhibit 6-4 
Percentage of HMA Facilities Expected to Move Across Size Categories
Size Category
Percentage of Facilities Exempt from SPCC
Percentage of Facilities that Move Down One Size Category
Category I
                                      30%
                                       -
Category II
                                       -
                                      30%
Category III
                                       -
                                      30%
Category IV
                                       -
                                      60%

Exhibit 6-5 presents the projected number of new and existing facilities affected by this amendment over the analysis period.


Exhibit 6-5 
Projected Number of New and Existing Facilities Affected by the Final Option of Exempting HMA Containers
Category
Number of Affected Facilities
10-Year Average

2010
Year 1
2011
Year 2
2012
Year 3
2013
Year 4
2014
Year 5
2015
Year 6
2016
Year 7
2017
Year 8
2018
Year 9
2019
Year 10

Existing[1]
Category I
                                                                           204 
                                                                           205 
                                                                           206 
                                                                           207 
                                                                           208 
                                                                           210 
                                                                           211 
                                                                           212 
                                                                           213 
                                                                           215 
                                                                           209 
Category II
                                                                           574 
                                                                           577 
                                                                           580 
                                                                           584 
                                                                           587 
                                                                           591 
                                                                           594 
                                                                           598 
                                                                           601 
                                                                           605 
                                                                           589 
Category III
                                                                           259 
                                                                           261 
                                                                           262 
                                                                           264 
                                                                           265 
                                                                           267 
                                                                           268 
                                                                           270 
                                                                           272 
                                                                           273 
                                                                           266 
Category IV
                                                                           148 
                                                                           149 
                                                                           150 
                                                                           151 
                                                                           152 
                                                                           152 
                                                                           153 
                                                                           154 
                                                                           155 
                                                                           156 
                                                                           152 
New[2]
Category I
                                                                             7 
                                                                             7 
                                                                             7 
                                                                             7 
                                                                             8 
                                                                             8 
                                                                             8 
                                                                             8 
                                                                             8 
                                                                             8 
                                                                             8 
Category II
                                                                            21 
                                                                            21 
                                                                            21 
                                                                            21 
                                                                            21 
                                                                            21 
                                                                            21 
                                                                            22 
                                                                            22 
                                                                            22 
                                                                            21 
Category III
                                                                             9 
                                                                             9 
                                                                             9 
                                                                            10 
                                                                            10 
                                                                            10 
                                                                            10 
                                                                            10 
                                                                            10 
                                                                            10 
                                                                            10 
Category IV
                                                                             3 
                                                                             3 
                                                                             3 
                                                                             3 
                                                                             3 
                                                                             3 
                                                                             3 
                                                                             3 
                                                                             3 
                                                                             3 
                                                                             3 
[1]	The numbers are not rounded to three significant figures to show the variation of the estimates over the analysis period.
[2]	The number of new affected facilities does not vary significantly across years.


Baseline Compliance Cost and Cost Savings
Baseline Compliance Cost
EPA calculated the baseline cost of compliance for HMA facilities using the projected number of new and existing HMA facilities and the corresponding per-facility cost of compliance estimates before the final amendments (Exhibit 6-6). The per-facility compliance cost estimates are based on specific assumptions developed from a review of five SPCC Plans, such as the number of tanks per facility by size category, the total capacity, and other facility characteristics, such as length of piping (see Exhibit 6-7). EPA recognizes that there is wide variability in the characteristics of facilities across the United States. The facility-level costs, however, are calculated for illustrative purposes. 
Exhibit 6-6
Annual Cost Impact of Exempting Hot-Mix Asphalt (2007$)[1]
Size Category
Facility-Level Cost Savings[2]
Cost Savings from Exempt Containers[3]

Existing[4]
New[4]
Existing
New
Category I
                                                                         $6,030
                                                                        $60,900
                                                                           $653
                                                                           $653
Category II
                                                                        $10,900
                                                                        $83,200
                                                                         $2,070
                                                                         $2,070
Category III
                                                                        $23,800
                                                                       $254,000
                                                                         $6,860
                                                                         $6,860
Category IV
                                                                        $38,700
                                                                       $463,000
                                                                        $17,000
                                                                        $17,000
[1]	The facility-level cost of compliance with the SPCC rule for a new facility is based on specific assumptions on the number of tanks, the total capacity and other facility characteristics. These costs are meant to be illustrative and not representative of average cost at a facility. The cost estimates do not take into account the adjustment for state overlap.
[2]	Cost savings for facilities that would be no longer subject to the SPCC rule.
[3]	Cost savings for facilities that stay within their size category.
[4]	Existing facilities would save on the recurring cost of compliance with the SPCC rule, while new facilities would save on the one-time capital costs and the recurring cost.

It is important to note that since certain SPCC requirements may be similar in nature to those imposed by state regulations, and facility owner/operators of many industries may follow specific industry standards, compliance activities and their associated costs cannot be fully attributed to the SPCC rule. Since regulations vary widely across states and industries, there is no single adjustment factor that could be developed to address this issue for the universe of regulated facilities. However, due to the lack of data on the extent to which facilities adopt industry standards, in this analysis the Agency estimated the baseline compliance costs and cost savings associated with the SPCC requirements without accounting for possible overlap with industry standards. EPA did take into account requirements imposed by state regulations that are similar to the SPCC requirements. As a result, the estimated compliance costs are likely to present an overestimate of the costs attributed to the SPCC rule. For details of the state overlap analysis, refer to Section 5.4 of this report. 
Exhibit 6-7
Assumptions Used for Estimating Hot-Mix Asphalt Facility Compliance Cost
Cost Item
Size Category

Category I
Category II
Category III
Category IV
Labor Burden 
Labor burden of certifying an existing SPCC Plan: 

PE
6 hours
PE
12 hours
PE
24 hours
PE
36 hours

Clerical worker
0.5 hour
Clerical worker
1 hour
Clerical worker
2 hours
Clerical worker
3 hours
Loading Racks
None
None
None
None
AST Number & Size
(1) 1,000-gallon tank 

OR

(1) 10,000-gallon tank
(1) 1,000-gallon tank + (1) 10,000-gallon tank 

OR 

(1) 1,000-gallon tank + (3) 10,000-gallon tanks
(3) 20,000-gallon tanks in a single containment area 

OR

Area 1: (2) 25,000-gallon tanks + (3) 50,000-gallon tanks; Area 2: (3) 100,000-gallon tanks
4 containment areas, each with (3) 100,000-gallon tanks

OR

Area 1: (4) 25,000-gallon tanks + (2) 50,000-gallon tanks
Area 2: (4) 50,000-gallon tanks + (1) 100,000-gallon tank
Area 3: (5) 100,000-gallon tanks
Total AST Capacity
                           1,000  -  10,000 gallons
                           11,000  -  31,000 gallons
                          60,000  -  500,000 gallons
                        1,000,000  -  1,200,000 gallons
Partially Buried Tanks
                                     None
                                     None
                                     None
                                     None
Total Tank Capacity
                           1,000  -  10,000 gallons
                           11,000  -  31,000 gallons
                          60,000  -  500,000 gallons
                        1,000,000  -  1,200,000 gallons
AST Integrity Testing
                              Hydrostatic testing
                              Hydrostatic testing
                              Hydrostatic testing
                              Hydrostatic testing
Underground Piping
                                     None
                             50 - 200 feet 4" pipe
                            200 - 500 feet 4" pipe
                            200 - 500 feet 4" pipe

EPA estimated that the baseline cost of compliance before the final amendments to the SPCC rule is $53.5 million and $53.4 million per year, discounted at 3 percent and 7 percent, respectively. Exhibit 6-8 presents the total annual compliance cost estimates for HMA facilities each year. 

Exhibit 6-8
Projected Baseline Annual Compliance Cost for Facilities with Hot-Mix Asphalt Containers (2007$ Millions)

Compliance Costs

2010
Year 1
2011
Year 2
2012
Year 3
2013
Year 4
2014
Year 5
2015
Year 6
2016
Year 7
2017
Year 8
2018
Year 9
2019
Year 10
10- Year Present Value
Annualized
Not Discounted
                                                                          $52.2
                                                                          $52.5
                                                                          $52.8
                                                                          $53.1
                                                                          $53.4
                                                                          $53.7
                                                                          $54.0
                                                                          $54.4
                                                                          $54.7
                                                                          $55.0
                                                                           $536
                                                                          $53.6
3% Discounted 
                                                                          $50.6
                                                                          $49.4
                                                                          $48.3
                                                                          $47.2
                                                                          $46.1
                                                                          $45.0
                                                                          $43.9
                                                                          $42.9
                                                                          $41.9
                                                                          $40.9
                                                                           $456
                                                                          $53.5
7% Discounted 
                                                                          $48.7
                                                                          $45.8
                                                                          $43.1
                                                                          $40.5
                                                                          $38.1
                                                                          $35.8
                                                                          $33.6
                                                                          $31.6
                                                                          $29.7
                                                                          $28.0
                                                                           $375
                                                                          $53.4


Compliance Cost Savings
EPA assumed that cost savings from the final amendment to exempt hot-mix asphalt containers from SPCC requirements consists of the following: 
Cost savings for facilities moving down a capacity category that would imply lower cost of compliance and for facilities that would be no longer subject to SPCC requirements that would imply no cost of compliance (see Facility-Level Cost Savings in Exhibit 6-6).
Cost savings for facilities that do not move down a size category but incur lower costs from not having the hot-mix asphalt containers to comply with SPCC requirements (see Cost Savings from Exempt Containers in Exhibit 6-6).
The estimates for facility-level cost savings (see Exhibit 6-6) are based on specific assumptions developed from a review of five SPCC Plans, such as the number of tanks per facility by size category, the total capacity, and other facility characteristics, such as length of piping (see Exhibit 6-7). The cost savings estimates from exempt containers are based on the assumption of a 34 percent reduction in capacity due to removal of HMA tanks. EPA recognizes that there is wide variability in the characteristics of facilities across the United States. The facility-level costs, however, are calculated for illustrative purposes. 
EPA calculated the total compliance cost savings for asphalt facilities using the projected number of new and existing asphalt facilities affected by the amendments and their corresponding per-facility cost savings estimates, which are summarized in the equation below (see Appendix J in Volume II for more details on the calculation):
Total Cost Savings =  
where i = I, II, III, IV represents Category I, j = 1, 2 represents whether a facility is existing or new, and k = 1, 2, 3 represents if the facility is no longer subject to SPCC, moved down a size category, or stayed in its size category.
NFacijk = the projected number of asphalt facilities in size category i, type j, after the proposed amendments with savings of type k (see Exhibit 6-5). EPA assumes that after the proposed amendment, 30 percent of the facilities in Category I would no longer be subject to the SPCC rule; 30 percent of the facilities in Category II would move to Category I; 30 percent of the facilities in Category III would move to Category II; and 60 percent of facilities in Category IV would move to Category III (see Exhibit 6-4). 
NCostSavingijk = Facility-level cost savings in size category i, type j, and with savings of type k (see Exhibit 6-6).
Overlapi = 1 - estimated percentage reduction in total burden due to state overlap for size category i (see Exhibit 5-22).


(see Exhibit 5-20).
Calculation of Total Cost Savings
Using the equation above, EPA estimated that the final amendment to the SPCC rule reduces compliance costs by $8.37 million and $8.36 million per year, discounted at 3 percent and 7 percent, respectively. Exhibit 6-9 presents the total annual cost savings for HMA facilities each year. 


Exhibit 6-9
Projected Annual Compliance Cost Savings from Exempting Hot-Mix Asphalt Containers (2007$ Millions)[1]

Compliance Cost Savings

2010
Year 1
2011
Year 2
2012
Year 3
2013
Year 4
2014
Year 5
2015
Year 6
2016
Year 7
2017
Year 8
2018
Year 9
2019
Year 10
10- Year Present Value
Annualized
Not Discounted
                                                                          $8.17
                                                                          $8.21
                                                                          $8.26
                                                                          $8.31
                                                                          $8.36
                                                                          $8.41
                                                                          $8.46
                                                                          $8.51
                                                                          $8.56
                                                                          $8.61
                                                                          $83.9
                                                                          $8.39
3% Discounted 
                                                                          $7.93
                                                                          $7.74
                                                                          $7.56
                                                                          $7.38
                                                                          $7.21
                                                                          $7.04
                                                                          $6.88
                                                                          $6.72
                                                                          $6.56
                                                                          $6.41
                                                                          $71.4
                                                                          $8.37
7% Discounted 
                                                                          $7.63
                                                                          $7.17
                                                                          $6.74
                                                                          $6.34
                                                                          $5.96
                                                                          $5.60
                                                                          $5.27
                                                                          $4.95
                                                                          $4.66
                                                                          $4.38
                                                                          $58.7
                                                                          $8.36
[1] 	See Appendix J in Volume II for more details on the calculation of cost savings.


Pesticide Application Equipment and Related Mix Containers 
EPA exempted from the SPCC rule all pesticide application equipment and related mix containers. This equipment is used to mix, store, and apply pesticides whose formulation may include petroleum- or vegetable-based oils, which could therefore otherwise be subject to SPCC requirements. This exemption applies to all pesticide application equipment and certain related mix containers, regardless of ownership or where used, because the application of pesticides through the use of this equipment is the same at any location. Under this amendment, containers (55 gallons or greater in capacity) storing oil prior to blending it with the pesticide or used to store any pesticides after they have been mixed with oil, are considered bulk storage containers and continue to be regulated as such under the SPCC rule.
This amendment will potentially benefit farms and other facilities that use pesticide formulations where adjuvant oil or crop oil is added to the mix formulation and have pesticide application equipment with a storage capacity of 55 gallons or greater, by reducing the compliance costs that would otherwise be associated with this equipment. 
EPA could not obtain detailed data on the number of farms and facilities of other industries where such equipment is used and the capacity of this equipment. However, some reports provided information on the possible use of this equipment on farms in the United States. The Virginia Cooperative Extension conducted an economic analysis of pesticide application equipment which concludes that for farms less than 500 acres, the per-acre cost of using a custom applicator is lower than purchasing pesticide application equipment. This suggests that farms smaller than 500 acres would not have pesticide application equipment on site. Further, the report concludes that 300-gallon capacity on pesticide application equipment would be the cost-minimizing choice for farms of 500-1,000 acres. Another report has similar analysis for 2,000 and 3,000-acre farms and concludes that 750 gallon capacity container on pesticide application equipment would be cost minimizing for a 2,000 acre farm, and 1,200 gallon capacity equipment would be cost minimizing for a 3,000 acre farm. 
These studies are based on regional data, and their findings may not necessarily apply to all farms in the United States, especially because the cost effectiveness of purchasing this equipment would depend on the number of plantings, which is likely to vary by crop and region. However, these are the only data available to EPA to estimate the possible capacity of pesticide application equipment at farms in the United States. In the absence of data that are representative of the United States, EPA relied on these studies and estimated that the average capacity of pesticide application equipment is 400 gallons at farms between 500 and 1,000 acres, 625 gallons at farms between 1,000 and 2,000 acres and 1,200 gallons at farms greater than 2,000 acres. These estimates are based on a simplifying assumption that all farms mix oil with pesticide.
Since the data on the average capacity of pesticide application equipment were based on farm size, the next step involved estimating the distribution of farm size by oil storage capacity. EPA used data from the Census of Agriculture to obtain the farm size distribution by farm production expenses on oil. Using these data, EPA estimates that 23 percent of farms in Category I are between 500 and 1,000 acres, 22 percent are between 1,000 and 2,000 acres, and 18 percent are greater than 2,000 acres. For farms in Categories II, III, and IV, 11 percent of farms are between 200 and 1,000 acres, 19 percent of farms are between 1,000 and 2,000 acres, and 45 percent of farms are greater than 2,000 acres. This implies that 64 percent of farms in Category I and 75 percent of farms in Category II, III, and IV have pesticide application equipment and will be affected by the final amendment to exempt this equipment. Exhibit 6-10 presents the projected number of new and existing farms affected by this amendment over the analysis period.

Exhibit 6-10 
Projected Total Number of New and Existing Farms Affected by the Pesticide Application Equipment Exemption
Category
Number of Farms Affected
10-Year Average

2010
Year 1
2011
Year 2
2012
Year 3
2013
Year 4
2014
Year 5
2015
Year 6
2016
Year 7
2017
Year 8
2018
Year 9
2019
Year 10

Existing Farms
                                                                        95,600 
                                                                        95,200 
                                                                        94,700 
                                                                        94,300 
                                                                        93,900 
                                                                        93,500 
                                                                        93,100 
                                                                        92,700 
                                                                        92,300 
                                                                        91,800 
                                                                        93,700 
Category I
                                                                        89,900 
                                                                        89,500 
                                                                        89,100 
                                                                        88,700 
                                                                        88,300 
                                                                        87,900 
                                                                        87,500 
                                                                        87,100 
                                                                        86,800 
                                                                        86,400 
                                                                        88,100 
Category II
                                                                         5,190 
                                                                         5,170 
                                                                         5,140 
                                                                         5,120 
                                                                         5,100 
                                                                         5,080 
                                                                         5,050 
                                                                         5,030 
                                                                         5,010 
                                                                         4,990 
                                                                         5,090 
Category III & IV
                                                                            502
                                                                            500
                                                                            498
                                                                            496
                                                                            493
                                                                            491
                                                                            490
                                                                            487
                                                                            483
                                                                            482
                                                                            492
New Farms
                                                                           850 
                                                                           847 
                                                                           843 
                                                                           839 
                                                                           835 
                                                                           832 
                                                                           828 
                                                                           824 
                                                                           821 
                                                                           817 
                                                                           834 
Category I
                                                                           799 
                                                                           796 
                                                                           793 
                                                                           789 
                                                                           786 
                                                                           782 
                                                                           779 
                                                                           775 
                                                                           772 
                                                                           768 
                                                                           784 
Category II
                                                                            46 
                                                                            46 
                                                                            46 
                                                                            46 
                                                                            45 
                                                                            45 
                                                                            45 
                                                                            45 
                                                                            45 
                                                                            44 
                                                                            45 
Category III & IV
                                                                              4
                                                                              4
                                                                              4
                                                                              4
                                                                              4
                                                                              4
                                                                              4
                                                                              4
                                                                              4
                                                                              4
                                                                              4


Cost savings to farms from exempting pesticide application equipment will result from not having to comply with the SPCC requirements for this equipment. Therefore, the cost savings will be equal to the baseline cost of compliance with this requirement. Since the pesticide application equipment is portable, there will be no savings from secondary containment requirement, but farms will save from not having to perform periodic integrity testing of the equipment. Exhibit 6-11 presents the cost savings to farms by size category. Since the average size of a pesticide application container ranges between 400 gallons and 1,200 gallons, EPA estimates that the integrity testing cost for these equipment units will be the same. 
Exhibit 6-11 
Annual Farm-level Baseline Cost of Compliance and Cost Impact of Exempting Pesticide Application Equipment (2007$)[1]
Size Category
Farm-level Cost (New and Existing)

Annual Integrity Testing Cost[2]
Category I
                                                                            $42
Category II
                                                                            $42
Category III and IV
                                                                            $42
1 	The cost savings will be equal to the baseline cost of compliance with the pesticide application equipment requirement.
2 	Based on integrity testing cost of $500 per tank every 12 years. 

The total cost savings (and the baseline cost of compliance) from the final amendments were calculated by multiplying the farm-level cost with the total number of farms affected by this amendment as summarized in the equation below.
Using the equation below, EPA estimated that the final amendment will reduce compliance costs by $3.56 million and $3.57 million per year, discounted at 3 percent and 7 percent, respectively (see Exhibit 6-12). Since this amendment will exempt all pesticide application equipment and related mix containers, regardless of ownership or type of facility on which the equipment and containers are used, facilities from other industry categories (in addition to farms) may also incur cost savings. It is important to note that EPA did not have adequate data to quantify these savings. Therefore, this estimate represents a lower bound of the potential savings from the final amendment. 
                                Cost Savings =	
Where i = I, II, III, and IV represents the size category, and j = 1,2 represents the new or existing farms.
NFacij = the projected number of affected farms in size category i of type j (see Exhibit 6-11).
NCostSavingij = per-farm cost savings for size category i of type j. (see Exhibit 6-11).
Overlapi = 1 - estimated percentage reduction in total burden due to state overlap for size category i (see Exhibit 5-22).
Calculation of Total Cost Savings


Exhibit 6-12 
Projected Annual Compliance Cost Savings from Exempting Pesticide Application Equipment (2007$ Millions)[1]

Compliance Cost Savings [2]

2010
Year 1
2011
Year 2
2012
Year 3
2013
Year 4
2014
Year 5
2015
Year 6
2016
Year 7
2017
Year 8
2018
Year 9
2019
Year 10
10- Year Present Value
Annualized
Not Discounted
                                                                          $3.63
                                                                          $3.61
                                                                          $3.60
                                                                          $3.58
                                                                          $3.57
                                                                          $3.55
                                                                          $3.54
                                                                          $3.52
                                                                          $3.50
                                                                          $3.49
                                                                          $35.6
                                                                          $3.56
3% Discounted
                                                                          $3.52
                                                                          $3.41
                                                                          $3.29
                                                                          $3.18
                                                                          $3.08
                                                                          $2.97
                                                                          $2.87
                                                                          $2.78
                                                                          $2.69
                                                                          $2.60
                                                                          $30.4
                                                                          $3.56
7% Discounted
                                                                          $3.39
                                                                          $3.16
                                                                          $2.94
                                                                          $2.73
                                                                          $2.54
                                                                          $2.37
                                                                          $2.20
                                                                          $2.05
                                                                          $1.91
                                                                          $1.77
                                                                          $25.1
                                                                          $3.57
[1] 	The baseline cost of compliance is the same as the compliance cost savings.
[2] 	See Appendix J in Volume II for more details on the calculation of cost savings.


Applicability of Mobile Refueler Requirements to Farm Nurse Tanks
In the October 2007 proposed rule, EPA clarified that the definition of mobile refueler, as promulgated in the December 2006 amendments to the SPCC rule (71 FR 77266, December 26, 2006), includes a nurse tank, which is a mobile/portable container used at farms to store and transport fuel for transfers to or from farm equipment (such as tractors and combines) to other bulk storage containers (such as containers used to provide fuel to wellhead/relift pumps) at the farm. A nurse tank is often mounted on a trailer for transport around the farm; thus, EPA believes that this function is consistent with that of a mobile refueler. A nurse tank, like other types of mobile refuelers, is exempt from the sized secondary containment requirements at §§112.8(c)(2) and 112.12(c)(2), but is still subject to the general secondary containment requirements at §112.7(c).

Because this is strictly a clarification regarding existing provisions for this class of equipment, and does not change the regulatory requirements, the amendment is not anticipated to have an economic impact on regulated farms. Conceivably, there could be cost savings that result from the reduced burden of understanding the rule, but EPA does not have sufficient information to quantify these savings.
Aggregate Cost Savings for Farms
In addition to the farm-specific clarification for the applicability of mobile refueler requirements to nurse tanks discussed above, EPA also made other amendments to the SPCC rule that, although they apply to the SPCC-regulated universe as a whole, will represent significant cost savings for the farm sector in particular. Farms will benefit from the exemption of pesticide application equipment, the new requirements for Tier I qualified facilities, amendments to the security requirements, integrity testing, and facility diagram requirements; and the exemption for single-family residential heating oil containers. The total annualized cost savings to farm owners and operators from these amendments in aggregate are estimated at $13.3 million and $13.3 million at the 3 percent and 7 percent discount rate, respectively. The aggregated cost savings for farms are presented in Exhibit 6-13. 

Exhibit 6-13 
Estimated Aggregate Annual Cost Savings for Farms from Multiple Rule Components (2007$ Millions)
Option
%
Total Cost Savings for Farms[1]


Year


2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
10- Year Present Value
Annualized[2]


1
2
3
4
5
6
7
8
9
10


Tier I Qualified Facilities
 
                                                                             0%
                                                                          $4.57
                                                                          $4.55
                                                                          $4.53
                                                                          $4.51
                                                                          $4.49
                                                                          $4.47
                                                                          $4.45
                                                                          $4.43
                                                                          $4.41
                                                                          $4.39
                                                                          $44.8
                                                                          $4.48
 
                                                                             3%
                                                                          $4.44
                                                                          $4.29
                                                                          $4.15
                                                                          $4.01
                                                                          $3.88
                                                                          $3.75
                                                                          $3.62
                                                                          $3.50
                                                                          $3.38
                                                                          $3.27
                                                                          $38.3
                                                                          $4.49
 
                                                                             7%
                                                                          $4.27
                                                                          $3.98
                                                                          $3.70
                                                                          $3.44
                                                                          $3.20
                                                                          $2.98
                                                                          $2.77
                                                                          $2.58
                                                                          $2.40
                                                                          $2.23
                                                                          $31.6
                                                                          $4.49
Security
High Estimate (100% of Facilities Affected)
 
                                                                             0%
                                                                          $1.51
                                                                          $1.50
                                                                          $1.50
                                                                          $1.49
                                                                          $1.48
                                                                          $1.48
                                                                          $1.47
                                                                          $1.46
                                                                          $1.46
                                                                          $1.45
                                                                          $14.8
                                                                          $1.48
 
                                                                             3%
                                                                          $1.46
                                                                          $1.42
                                                                          $1.37
                                                                          $1.32
                                                                          $1.28
                                                                          $1.24
                                                                          $1.20
                                                                          $1.16
                                                                          $1.12
                                                                          $1.08
                                                                          $12.6
                                                                          $1.48
 
                                                                             7%
                                                                          $1.41
                                                                          $1.31
                                                                          $1.22
                                                                          $1.14
                                                                          $1.06
                                                                          $0.98
                                                                          $0.92
                                                                          $0.85
                                                                          $0.79
                                                                          $0.74
                                                                          $10.4
                                                                          $1.48
Midpoint Estimate (75% of Facilities Affected)
 
                                                                             0%
                                                                          $1.13
                                                                          $1.13
                                                                          $1.12
                                                                          $1.12
                                                                          $1.11
                                                                          $1.11
                                                                          $1.10
                                                                          $1.10
                                                                          $1.09
                                                                          $1.09
                                                                          $11.1
                                                                          $1.11
 
                                                                             3%
                                                                          $1.10
                                                                          $1.06
                                                                          $1.03
                                                                         $0.992
                                                                         $0.959
                                                                         $0.927
                                                                         $0.896
                                                                         $0.866
                                                                         $0.837
                                                                         $0.810
                                                                          $9.48
                                                                          $1.11
 
                                                                             7%
                                                                          $1.06
                                                                         $0.985
                                                                         $0.916
                                                                         $0.852
                                                                         $0.793
                                                                         $0.737
                                                                         $0.687
                                                                         $0.639
                                                                         $0.594
                                                                         $0.553
                                                                          $7.81
                                                                          $1.11
Low Estimate (50% of Facilities Affected)
 
                                                                             0%
                                                                         $0.754
                                                                         $0.752
                                                                         $0.748
                                                                         $0.745
                                                                         $0.741
                                                                         $0.738
                                                                         $0.735
                                                                         $0.732
                                                                         $0.728
                                                                         $0.725
                                                                          $7.40
                                                                         $0.740
 
                                                                             3%
                                                                         $0.732
                                                                         $0.708
                                                                         $0.685
                                                                         $0.662
                                                                         $0.639
                                                                         $0.618
                                                                         $0.598
                                                                         $0.578
                                                                         $0.558
                                                                         $0.540
                                                                          $6.32
                                                                         $0.741
 
                                                                             7%
                                                                         $0.705
                                                                         $0.656
                                                                         $0.611
                                                                         $0.568
                                                                         $0.529
                                                                         $0.492
                                                                         $0.458
                                                                         $0.426
                                                                         $0.396
                                                                         $0.369
                                                                          $5.21
                                                                         $0.742
Integrity Testing
 
                                                                             0%
                                                                          $1.47
                                                                          $1.47
                                                                          $1.46
                                                                          $1.45
                                                                          $1.45
                                                                          $1.44
                                                                          $1.44
                                                                          $1.43
                                                                          $1.42
                                                                          $1.42
                                                                          $14.4
                                                                          $1.44
 
                                                                             3%
                                                                          $1.43
                                                                          $1.38
                                                                          $1.34
                                                                          $1.29
                                                                          $1.25
                                                                          $1.21
                                                                          $1.17
                                                                          $1.13
                                                                          $1.09
                                                                          $1.05
                                                                          $12.3
                                                                          $1.45
 
                                                                             7%
                                                                          $1.38
                                                                          $1.28
                                                                          $1.19
                                                                          $1.11
                                                                          $1.03
                                                                          $0.96
                                                                          $0.89
                                                                          $0.83
                                                                          $0.77
                                                                          $0.72
                                                                          $10.2
                                                                          $1.45
Facility Diagram
 
                                                                             0%
                                                                         $0.182
                                                                         $0.181
                                                                         $0.180
                                                                         $0.179
                                                                         $0.178
                                                                         $0.178
                                                                         $0.177
                                                                         $0.176
                                                                         $0.175
                                                                         $0.175
                                                                          $1.78
                                                                         $0.178
 
                                                                             3%
                                                                         $0.176
                                                                         $0.171
                                                                         $0.165
                                                                         $0.159
                                                                         $0.154
                                                                         $0.149
                                                                         $0.144
                                                                         $0.139
                                                                         $0.134
                                                                         $0.130
                                                                          $1.52
                                                                         $0.178
 
                                                                             7%
                                                                         $0.170
                                                                         $0.158
                                                                         $0.147
                                                                         $0.137
                                                                         $0.127
                                                                         $0.118
                                                                         $0.110
                                                                         $0.103
                                                                         $0.095
                                                                         $0.089
                                                                          $1.25
                                                                         $0.179
Residential Oil
 
                                                                             0%
                                                                          $2.36
                                                                          $2.35
                                                                          $2.34
                                                                          $2.33
                                                                          $2.31
                                                                          $2.30
                                                                          $2.29
                                                                          $2.28
                                                                          $2.27
                                                                          $2.26
                                                                          $23.1
                                                                          $2.31
 
                                                                             3%
                                                                          $2.29
                                                                          $2.21
                                                                          $2.14
                                                                          $2.07
                                                                          $2.00
                                                                          $1.93
                                                                          $1.87
                                                                          $1.80
                                                                          $1.74
                                                                          $1.68
                                                                          $19.7
                                                                          $2.31
 
                                                                             7%
                                                                          $2.20
                                                                          $2.05
                                                                          $1.91
                                                                          $1.77
                                                                          $1.65
                                                                          $1.54
                                                                          $1.43
                                                                          $1.33
                                                                          $1.24
                                                                          $1.15
                                                                          $16.3
                                                                          $2.32
Pesticide Application Equipment
 
                                                                             0%
                                                                          $3.63
                                                                          $3.61
                                                                          $3.60
                                                                          $3.58
                                                                          $3.57
                                                                          $3.55
                                                                          $3.54
                                                                          $3.52
                                                                          $3.50
                                                                          $3.49
                                                                          $35.6
                                                                          $3.56
 
                                                                             3%
                                                                          $3.53
                                                                          $3.41
                                                                          $3.29
                                                                          $3.18
                                                                          $3.08
                                                                          $2.97
                                                                          $2.87
                                                                          $2.78
                                                                          $2.69
                                                                          $2.60
                                                                          $30.4
                                                                          $3.56
 
                                                                             7%
                                                                          $3.39
                                                                          $3.16
                                                                          $2.94
                                                                          $2.73
                                                                          $2.54
                                                                          $2.37
                                                                          $2.20
                                                                          $2.05
                                                                          $1.91
                                                                          $1.77
                                                                          $25.1
                                                                          $3.57
Total

                                                                             0%
                                                                          $13.3
                                                                          $13.3
                                                                          $13.2
                                                                          $13.2
                                                                          $13.1
                                                                          $13.1
                                                                          $13.0
                                                                          $12.9
                                                                          $12.9
                                                                          $12.8
                                                                           $131
                                                                          $13.1

                                                                             3%
                                                                          $13.0
                                                                          $12.5
                                                                          $12.1
                                                                          $11.7
                                                                          $11.3
                                                                          $10.9
                                                                          $10.6
                                                                          $10.2
                                                                          $9.87
                                                                          $9.54
                                                                           $112
                                                                          $13.1

                                                                             7%
                                                                          $12.5
                                                                          $11.6
                                                                          $10.8
                                                                          $10.0
                                                                          $9.35
                                                                          $8.70
                                                                          $8.09
                                                                          $7.53
                                                                          $7.01
                                                                          $6.52
                                                                          $92.1
                                                                          $13.1
[1] 	See Appendix J in Volume II for more details on the calculation of cost savings.
[2] 	Estimates at 3 percent and 7 percent discount rates are the same at this level of precision.

Residential Heating Oil Containers
Many regulated facilities, including farms, may include the residence of the owner or operator within the geographical confines of the facility. EPA did not intend to regulate residential uses of oil (that is, those at non-commercial buildings) under the SPCC rule. Therefore, EPA exempted residential heating oil containers at single family residences from the SPCC requirements. EPA also modified §112.1(d)(2) so that the capacity of single-family residential heating oil containers is not counted toward facility oil storage capacity.
The final rule removes from SPCC applicability containers (both aboveground and completely buried) located at a single-family residence that are used solely to store heating oil used to heat the residence. Under the final amendments, the owner or operator is not required to count any residential heating oil container as part of the facility's aggregate storage capacity for the purposes of determining SPCC applicability, and no SPCC requirements will apply to the exempted containers. The SPCC requirements will continue to apply, however, to bulk storage containers for oil used to heat other non-residential buildings within a facility, because the exemption covers only residential heating oil containers. 
Universe of Affected Facilities
All regulated facilities where the residences are co-located with businesses will be affected by this change. Therefore, the industries that are likely to be affected by this change include farms, universities, and military bases. EPA did not have adequate data to determine the extent of residential oil storage at universities and military bases, but had relatively comprehensive information for farms. EPA estimates that potentially all new and existing farms that store residential heating oil will be affected by this amendment. The Agency estimated the number of family farms that have residences on the farms and calculated the percentage of family farms that are SPCC regulated. To estimate the number of farms affected by this amendment the Agency took the following steps:
Estimated the total number of SPCC-regulated family farms using the 2005 Family Farm Report, which indicates that approximately 90 percent of the SPCC-regulated farms are family farms. 
Estimated the percentage of SPCC-regulated family farms that use heating oil for heating purposes. To estimate this percentage, the Agency obtained data from DOE on the percentage of households that use heating oil used relative to propane by four regions in the United States: Northeast, Midwest, West, and South. The data suggests that 80 percent of households in the Northeast, 28 percent in the Midwest, 19 percent in the West, and 12 percent in the South use residential oil. EPA applied the same percentage to SPCC-regulated farms in the four regions to estimate the total number of SPCC-regulated farms that will be affected by this final amendment. 
Exhibit 6-14 presents the projected number of new and existing farms that could be affected by this final amendment from 2010 through 2019. The projected average annual number of new farms is 328, and the number of existing farms is 36,900. EPA projected the number of new and existing farms over the 10-year analysis period using the estimated number of SPCC-regulated farms and farm-specific growth rates.

Exhibit 6-14 
Projected Total Number of New and Existing Farms Affected by the Residential Oil Exemption
Number of Farms Affected 
Number of Farms Affected 
10-Year Average

2010
Year 1
2011
Year 2
2012
Year 3
2013
Year 4
2014
Year 5
2015
Year 6
2016
Year 7
2017
Year 8
2018
Year 9
2019
Year 10

Existing Farms
                                                                        37,600 
                                                                        37,500 
                                                                        37,300 
                                                                        37,100 
                                                                        37,000 
                                                                        36,800 
                                                                        36,600 
                                                                        36,500 
                                                                        36,300 
                                                                        36,200 
                                                                        36,900 
Category I
                                                                        35,900 
                                                                        35,700 
                                                                        35,600 
                                                                        35,400 
                                                                        35,300 
                                                                        35,100 
                                                                        34,900 
                                                                        34,800 
                                                                        34,600 
                                                                        34,500 
                                                                        35,200 
Category II
                                                                         1,590 
                                                                         1,580 
                                                                         1,570 
                                                                         1,560 
                                                                         1,560 
                                                                         1,550 
                                                                         1,540 
                                                                         1,540 
                                                                         1,530 
                                                                         1,520 
                                                                         1,550 
Category III & IV
                                                                            154
                                                                            153
                                                                            152
                                                                            151
                                                                            151
                                                                            150
                                                                            150
                                                                            149
                                                                            148
                                                                            148
                                                                            150
New Farms
                                                                           335 
                                                                           333 
                                                                           332 
                                                                           330 
                                                                           329 
                                                                           327 
                                                                           326 
                                                                           324 
                                                                           323 
                                                                           322 
                                                                           328 
Category I
                                                                           319 
                                                                           318 
                                                                           316 
                                                                           315 
                                                                           314 
                                                                           312 
                                                                           311 
                                                                           309 
                                                                           308 
                                                                           307 
                                                                           313 
Category II
                                                                            14 
                                                                            14 
                                                                            14 
                                                                            14 
                                                                            14 
                                                                            14 
                                                                            14 
                                                                            14 
                                                                            14 
                                                                            14 
                                                                            14 
Category III & IV
                                                                             1 
                                                                             1 
                                                                             1 
                                                                             1 
                                                                             1 
                                                                             1 
                                                                             1 
                                                                             1 
                                                                             1 
                                                                             1 
                                                                             1 

Baseline Compliance Cost and Cost Savings
EPA specifically exempted from SPCC applicability containers that are used to store oil for the sole purpose of heating a single-family residence (including a residence at a farm). Therefore the cost savings to farms will be the baseline cost of compliance with this requirement. Existing farms will save on the annual expenditure for meeting SPCC requirements for regulated tanks. New farms will save on the fixed costs that include the cost of secondary containment and installing liquid sensing device on the container. These cost savings depend on the capacity of the tank. To estimate the total capacity of a residential heating oil tank by size category, the Agency took the following steps:
Estimated the average capacity of a residential heating oil tank. EPA relied on estimates from DOE that indicate that a typical residence either has a 275-gallon tank or a 550-gallon tank. Further, EPA made a simplifying assumption that residences in Categories I and II have one 275-gallon tank each, and residences in Categories III and IV have a 550-gallon tank. 
Estimated the average number of residences by size category and calculated the average capacity of residential oil tanks by size category. EPA relied on the 2005 Family Farm Report and estimated that farms in Category I have 1.5 residences, farms in Category II have 1.6, farms in Category III have 1.7, and farms in Category IV have 1.9. Thus, given the assumption on the capacity of each heating oil tank, EPA estimates that the average capacity of residential oil tanks at farms in Categories I, II, and III is 413 gallons, 440 gallons, and 935 gallons, respectively. 
Estimated the average cost savings by size category given the average capacity of farms in each category.
Exhibit 6-15 provides the farm-specific cost savings for new and existing farms from the final amendments. EPA estimates that farms in Category I and Category II will save approximately $3,100, and farms in Category III will save approximately $3,760 annually from the final amendments. 
Exhibit 6-15 
Annual Baseline Compliance Cost and Cost Savings to Farms from the Final Amendment to Exempt Residential Oil (2007$)[1]
Size Category

Farm-level Cost

Residential Oil Tanks Capacity
(gallons)[2]
Existing
New


Integrity Testing[3]
Secondary Containment[4]
Liquid Sensing Device[5]
Integrity Testing[3]
Total
Category I
                                                                            413
                                                                            $42
                                                                           $661
                                                                         $2,400
                                                                            $42
                                                                         $3,100
Category II
                                                                            440
                                                                            $42
                                                                           $661
                                                                         $2,400
                                                                            $42
                                                                         $3,100
Category III, IV
                                                                            935
                                                                            $42
                                                                         $1,320
                                                                         $2,400
                                                                            $42
                                                                         $3,760
1 	Rounded to three significant digits.
2 	Assumes that farms in Categories I and II have 275-gallon tanks and farms in Category III have 550-gallon tanks, and the average number of residences is 1.5, 1.6, 1.7, and 1.9 for the four size categories, respectively.
3 	Based on integrity testing cost of $500 per tank every 12 years. 
4 	The PE firm estimates the secondary containment cost for a 1,000-gallon tank to be $1,320. EPA assumed that the cost will be half for Categories I and II, which have less than half the capacity of a 1,000-gallon tank.
5 	Cost for spill cover and drain kit.

It is important to note that since certain SPCC requirements may be similar in nature to those imposed by state regulations and facility owner/operators of many industries may follow specific industry standards, compliance activities and their associated costs cannot be fully attributed to the SPCC rule. Since regulations vary widely across states and industries, there is no single adjustment factor that could be developed to address this issue for the universe of regulated facilities. However, due to the lack of data on the extent to which facilities adopt industry standards, in this analysis the Agency estimated the baseline compliance costs and cost savings associated with the SPCC requirements without accounting for possible overlap with industry standards. EPA did take into account requirements imposed by state regulations that are similar to the SPCC requirements. As a result, the estimated compliance costs are likely to present an overestimate of the costs attributed to the SPCC rule. For details of the state overlap analysis, refer to Section 5.4 of this report. 
The total cost savings from the final amendments (and the baseline cost of compliance) were calculated by multiplying the farm-level cost with the total number of farms affected by this amendment, as summarized in the equation below.
Using the equation below, EPA estimated that the final amendment will reduce compliance costs by $2.31 million and $2.32 million per year, discounted at 3 percent and 7 percent, respectively (see Exhibit 6-16). It is important to note that facilities from other industry categories may also incur cost savings but EPA did not have adequate data to quantify these savings. Therefore, this estimate represents a lower bound of the potential savings from the final amendment.


Calculation of Total Cost Savings
                              Net Cost Savings =	
Where i = I, II, III and IV represent the size category and j = 1, 2 represent the new or existing farms.
NFacij = the projected number of affected farms in size category i of type j (see Exhibit 6-14).
NCostSavingij = per farm cost savings for size category i of type j. (see Exhibit 6-15).
Overlapi = 1- estimated percentage reduction in total burden due to state overlap for size category i  (see Exhibit 5-22).





Exhibit 6-16 
Projected Annual Compliance Cost Savings from the Final Amendment to Exempt Residential Heating Oil (2007$ Millions)[1]

Compliance Cost Savings[2]

2010
Year 1
2011
Year 2
2012
Year 3
2013
Year 4
2014
Year 5
2015
Year 6
2016
Year 7
2017
Year 8
2018
Year 9
2019
Year 10
10- Year Present Value
Annualized
Not Discounted
                                                                          $2.36
                                                                          $2.35
                                                                          $2.34
                                                                          $2.32
                                                                          $2.31
                                                                          $2.30
                                                                          $2.29
                                                                          $2.28
                                                                          $2.27
                                                                          $2.26
                                                                          $23.1
                                                                          $2.31
3% Discounted
                                                                          $2.29
                                                                          $2.21
                                                                          $2.14
                                                                          $2.07
                                                                          $2.00
                                                                          $1.93
                                                                          $1.87
                                                                          $1.80
                                                                          $1.74
                                                                          $1.68
                                                                          $19.7
                                                                          $2.31
7% Discounted
                                                                          $2.20
                                                                          $2.05
                                                                          $1.91
                                                                          $1.77
                                                                          $1.65
                                                                          $1.54
                                                                          $1.43
                                                                          $1.33
                                                                          $1.24
                                                                          $1.15
                                                                          $16.3
                                                                          $2.32
1 	Baseline compliance cost is the same as the cost savings.
2 	See Appendix J in Volume II for more details on the calculation of cost savings. 


Definition of "Facility"
Background
EPA amended the definition of facility in three ways: (1) to clarify that this definition alone governs the applicability of 40 CFR part 112; (2) to clarify that containers can be aggregated or disaggregated (i.e. counted separately), based on various factors in defining "facility" (in other words, the owner or operator has the discretion to identify which contiguous or non-contiguous buildings, properties, parcels, leases, structures, installations, pipes, or pipelines make up the facility); and (3) to add the qualifier "oil" before the term "waste treatment." EPA had defined both "facility" and "production facility" in 2002 and is clarifying that even for production facilities the definition of "facility" will govern the meaning of a facility for determining applicability of the SPCC. EPA also amended the definition of facility to clarify that non-contiguous parcels may be considered separate facilities because the regulated community (especially farms, military bases, airports, and large universities) has raised concerns over how to aggregate buildings, structures, installations, equipment, piping, and other containers for the purpose of SPCC applicability. Since these changes only seek to provide clarification and do not change the existing regulatory requirements, they are not expected to result in any change in facility compliance costs. Conceivably, there could be cost savings that result from the reduced burden of understanding the rule, but EPA does not have sufficient information to quantify these savings.
It is important to note that the baseline estimate for the number of SPCC-regulated facilities does not take into account a possible change in behavior of facility owners and operators with respect to redefining their facility boundaries when the facility is located on multiple non-contiguous parcels. EPA recognizes that the baseline estimate for the number of SPCC-regulated facilities and the baseline compliance cost are likely to represent an overestimate. The Agency potentially overestimates the regulated universe because facility owners and operators might have redefined their boundaries and divided the parcels in order to reduce regulatory burden. This behavioral change would reduce the number of regulated facilities, leaving a certain number of facilities outside of the SPCC universe. Facilities in the following industries are expected to be most affected by this rule flexibility: farms, large oil production facilities, military bases, airports, and large universities.
Facility Diagram
EPA amended the SPCC rule to provide additional flexibility to the requirement that the facility diagram include the location and contents of each container. EPA also required that certain containers and piping, exempted from SPCC requirements in this action, be identified on the facility diagram and marked as "exempt." This includes intra-facility gathering lines subject to the requirements of 49 CFR part 192 or 195 as described in §112.1(d)(11). Under the final amendments, a facility owner or operator must include all fixed containers in the facility diagram (that is, those containers that are not mobile or portable). For any mobile or portable containers (such as drums or totes), a facility owner or operator must mark the storage area on the facility diagram for these containers. For the purposes of this provision, "storage area" means the location of their out-of-service or designated storage area, primary storage area, or areas where they are most frequently located. The facility owner or operator may mark the number of containers, contents and capacity of each container either on the facility diagram or in a separate description in the SPCC Plan. If the total number of mobile or portable containers changes, the owner or operator need only include an estimate in the Plan of the number of mobile or portable containers, the anticipated contents, and capacities of the mobile or portable containers maintained at the facility in the Plan.
This revision to the rule language will simplify the process for developing a facility diagram by allowing for a general description of the location and contents of numerous mobile or portable oil storage containers (e.g., drums and totes) rather than representing each container individually on the diagram. The amendment provides flexibility to the facility owner/operator or certifying PE to determine how best to represent mobile/portable containers on the facility diagram, such as by including a descriptive table or indicating primary storage areas.
Universe of Affected Facilities
Existing facilities will not be affected by this amendment since they would already have SPCC Plans in place. Potentially, all new facilities with mobile or portable containers and all new facilities with containers or piping exempt from this action will be affected by this amendment. However, the Agency expects that new facilities will not be affected by the requirement to mark the exempt containers and piping as the cost of doing this should not be different from including them in the Plan, as required earlier. The Agency did not have information on the number of facilities with mobile portable containers, but assumed that all facilities would reasonably have mobile or portable containers. Exhibit 6-17 presents the projected number of new storage and production facilities affected by this amendment over the analysis period. 
Exhibit 6-17 
Projected Number of New Facilities Affected by the Facility Diagram Amendment

Number of New Storage Facilities
10-Year Average

2010
Year 1
2011
Year 2
2012
Year 3
2013
Year 4
2014
Year 5
2015
Year 6
2016
Year 7
2017
Year 8
2018
Year 9
2019
Year 10

New Storage Facilities
                                                                          8,960
                                                                          9,170
                                                                          9,390
                                                                          9,630
                                                                          9,880
                                                                         10,200
                                                                         10,400
                                                                         10,800
                                                                         11,100
                                                                         11,500
                                                                         10,100
New Production Facilities
                                                                          8,420
                                                                          6,290
                                                                          9,050
                                                                          9,400
                                                                          9,770
                                                                          8,950
                                                                         12,200
                                                                          7,950
                                                                          9,120
                                                                         10,900
                                                                          9,210

Estimated Cost Savings
The cost savings to the facilities will result from a simpler facility diagram and providing a general list of the mobile and portable containers, rather than providing a description of each. The cost reduction will result in a lower labor burden to prepare and review a facility diagram. The cost reduction will also be greater for facilities with a larger number of mobile and portable containers. The Agency does not have data on the distribution of the number of mobile/portable containers at facilities of different types. However, it is reasonable to expect that the number of mobile or portable containers would be positively correlated with the total capacity of the facility: facilities in larger size categories would have larger number of mobile/portable containers. This suggests that the cost savings would be higher for larger facilities and lower for smaller facilities. 
The Agency assumes that the amendment will result in approximately 80 percent reduction of the labor burden in preparing and reviewing the mobile/portable containers component of the facility diagram. Since the Agency did not have very accurate estimates on this reduction, the analysis would normally involve presenting results from a sensitivity analysis using high, medium, and low scenarios. However, since the magnitude of savings was expected to be very small, these differences in assumptions would not result in a wide range of estimates and therefore, a sensitivity analysis was not conducted for this provision. 
Based on input a PE firm, EPA assumed that the 10 percent of the cost related to preparing and reviewing facility diagram can be attributed to the mobile/portable containers component. Thus, the cost savings were estimated to be 8 percent of the total labor burden cost of preparing, reviewing, and certifying the facility diagram. Exhibit 6-18 provides the facility-specific cost savings from the final amendments to the facility diagram. 
Exhibit 6-18 
Annual Cost Savings from Final Amendments
to Facility Diagram Requirements (2007$)[1]
Facility Size
Facility-Level Cost Savings

Storage Facilities
Production Facilities
Category I
                                                                           $144
                                                                            $94
Category II
                                                                           $288
                                                                           $188
Category III
                                                                           $392
                                                                           $377
Category IV
                                                                           $547
                                                                           $565
1 	Cost estimates are based on an 80 percent reduction in the labor burden for preparing, reviewing and certifying the mobile/portable container portion of the facility diagram.
Source: SCS Engineers.

EPA calculated the total compliance cost savings using the projected number of new production and storage facilities and their corresponding per-facility compliance cost savings estimates. EPA estimated that the final amendment to the 2002 SPCC final rule will reduce compliance costs by $3.35 million and $3.32 million per year, discounted at 3 percent and 7 percent, respectively. Exhibit 6-19 presents the total annual cost savings for each year.

Exhibit 6-19 
Projected Annual Compliance Cost Savings from Final Amendments to Facility Diagram Requirements (2007$ Millions)[1]

Compliance Cost Savings

2010
Year 1
2011
Year 2
2012
Year 3
2013
Year 4
2014
Year 5
2015
Year 6
2016
Year 7
2017
Year 8
2018
Year 9
2019
Year 10
10- Year Present Value
Annualized
Not Discounted
                                                                          $3.04
                                                                          $2.69
                                                                          $3.23
                                                                          $3.33
                                                                          $3.44
                                                                          $3.34
                                                                          $3.98
                                                                          $3.26
                                                                          $3.53
                                                                          $3.91
                                                                          $33.7
                                                                          $3.37
3% Discounted
                                                                          $2.95
                                                                          $2.53
                                                                          $2.95
                                                                          $2.96
                                                                          $2.97
                                                                          $2.79
                                                                          $3.23
                                                                          $2.57
                                                                          $2.70
                                                                          $2.91
                                                                          $28.6
                                                                          $3.35
7% Discounted
                                                                          $2.84
                                                                          $2.35
                                                                          $2.63
                                                                          $2.54
                                                                          $2.45
                                                                          $2.22
                                                                          $2.48
                                                                          $1.90
                                                                          $1.92
                                                                          $1.99
                                                                          $23.3
                                                                          $3.32
1 	See Appendix J in Volume II for more details on the calculation of cost savings.


Loading/Unloading Racks
In the December 2008 amendments, EPA finalized a definition for the term "loading/unloading rack," which governs whether a facility's oil transfer equipment and areas are subject to §112.7(h). Under this amendment, the requirements described at §112.7(h) only apply to oil transfer areas of a regulated facility where a loading/unloading rack, as defined in §112.2, is located.
EPA clarified the applicability of the SPCC rule to loading/unloading racks associated with USTs. The preamble for this final rule states that "...because a loading/unloading rack, or other transfer area, associated with the UST is not typically part of the UST system, it is not subject to all of the technical requirements of 40 CFR part 280 or 281, and is therefore regulated under SPCC in the same manner as any other transfer equipment or transfer activity located at an otherwise regulated SPCC facility." However, the preamble for the 2002 SPCC rule amendments erroneously included a conflicting statement regarding loading/unloading racks associated with USTs. Since EPA did not make any amendments to regulatory language for loading/unloading racks associated with USTs, there will not be any change in facility compliance costs. 
The existing loading/unloading rack requirements at §112.7(h) excludes all offshore facilities. In 2008, EPA specifically excluded onshore oil production facilities and farms from the loading/unloading rack requirements at §112.7(h). EPA estimated that regulated facilities would incur about $51 million annualized in cost savings from this amendment. This estimate was based on information from Region 8 that oil production facilities can have loading/unloading racks. Thus, based on information available at the time, EPA conservatively estimated that the percentage of affected facilities would not have been greater than 33 percent of all SPCC-regulated oil production facilities. Therefore, EPA had considered a range of potentially affected facilities from 0 percent to 33 percent of the total number of oil production facilities. EPA had estimated that a minimum of 2 percent and maximum of 14 percent of regulated Category III and IV farms would be affected by this amendment because smaller farms tend not to have loading racks on site. 
Further consultation from EPA regional staff and field visits by EPA staff, however, suggest that very few, if any, oil production facilities and farms are likely to have loading/unloading racks that meets the final (finalized in December 2008 at §112.2), more specific, definition of a loading/unloading rack. Consequently, EPA believes that these facilities would not have been complying with SPCC loading/unloading rack requirements and would not incur cost savings from an exclusion from such requirements. Therefore, EPA is making a correction to the 2008 estimate for loading/unloading racks that eliminates the $51 million in annualized cost savings from this amendment. 
In the final amendments, EPA is removing the exclusion of oil production facilities and farms from the loading/unloading rack requirements of §112.7(h). Since these facilities are not expected to have a loading/unloading rack as defined in §112.2, the provisions at §112.7(h) do not apply. Therefore, a specific exclusion for facilities based on the assumption that they do not have loading/unloading racks is unnecessary. 
While EPA believes that the loading/unloading equipment at farms and oil production facilities likely does not fall under the SPCC definition of loading/unloading racks, EPA acknowledges that this might not hold true in all cases. Farms and oil production facilities that have loading/unloading racks that do meet the definition would continue to be subject to the requirements. If there are such facilities, EPA does not believe there is any basis to exclude such loading/unloading racks from the requirements at §112.7(h) simply because they are located at a facility within a specific industry sector. 
Since EPA is removing the exclusion for loading/unloading racks in the 2008 amendments, there is no cost impact of the combined 2008 and 2009 final amendments. 
General Secondary Containment
At a facility subject to the SPCC rule, all areas with the potential for a discharge are subject to the general secondary containment provision. These areas may include loading/unloading areas (also referred to as transfer areas), piping, and/or mobile refuelers, and other areas of a facility where oil is present. The general secondary containment provision requires that these areas be designed with appropriate containment and/or diversionary structures to prevent a discharge that may be harmful (a discharge as described in 40 CFR part 110 into or upon navigable waters of the United States or adjoining shorelines; see §112.1(b)). 
EPA amended the general secondary containment requirement in three ways: (1) by adding text regarding the method, design, and capacity of secondary containment; (2) by specifically allowing both active and passive measures of secondary containment; and (3) by including additional examples of prevention systems. This revision clarifies the applicability of general secondary containment consistent with the explanation found in SPCC Guidance for Regional Inspectors (Volume 1, December 2005) regarding the method, design, and capacity of secondary containment. Since this amendment only provides a clarification and does not change the existing regulatory requirements, it is not expected to result in any change in facility compliance costs. Conceivably, there could be cost savings that result from the reduced burden of understanding the rule, but EPA does not have sufficient information to quantify these savings.
General Secondary Containment for Non-Transportation-Related Tank Trucks
In the December 2006 amendments to the SPCC rule, EPA exempted mobile refuelers from the sized secondary containment requirements applicable to bulk storage containers. In recognition of the fact that non-transportation-related tanker trucks are similar to mobile refuelers, and may have the same difficulty in complying with the sized secondary containment requirements, EPA extended the regulatory amendment provided to mobile refuelers in 2006 to non-transportation-related tank trucks at a facility subject to the SPCC rule. Such tank trucks include those used to store for short periods of time and transport fuel, crude oil, condensate, non-petroleum, or other oils for transfer to or from bulk storage containers (e.g., a truck used to refill oil-filled equipment at an electrical substation or a pump truck at an oil production facility). Under this approach, the general secondary containment requirements at §112.7(c) still applies. However, this exemption to sized secondary containment will not apply to a vehicle used primarily for the bulk storage of oil in a stationary location, in place of a fixed oil storage container. 
Although certain facilities operate non-transportation-related tanker trucks storing oil for short periods of time, EPA does not have sufficient information to quantify the savings associated with the exemption of these trucks from sized secondary containment of §§112.8(c)(2) and 112.12(c)(2). 
Security
EPA amended the rule to allow facility owner/operators to tailor their security measures to the facility's specific characteristics and location, rather than comply with the existing, more prescriptive set of requirements. This will provide a facility owner/operator with the flexibility to determine the most adequate security measures to protect the facility from vandalism and to assist in the discovery of oil discharges. For example, the final amendment relaxes the requirement to have fencing around the entire facility; to secure and control access to the oil handling, processing, and storage areas of a facility, an owner/operator may choose to install fencing around only these areas. 
Because the security requirements, found at §112.7(g), are currently subject to environmental equivalence under §112.7(a)(2), a facility owner/operator currently has flexibility to provide tailored security measures, if he or she can demonstrate how the measures are environmentally equivalent to the required measures in §112.7(g). The final amendment reduces this hurdle of demonstrating environmental equivalence; facilities would save costs from not having to determine environmental equivalence.
Universe of Affected Facilities
The Agency estimated that all new storage facilities would potentially be affected by this change. Oil production facilities would not be affected by this amendment because the security requirements in §112.7(g) do not apply to these facilities. Since existing facilities would have already installed the security measures as per the 2002 rule amendments or demonstrated environmental equivalence for tailored security measures, they would not be affected by the rule. EPA does not have data to determine the exact number of facilities but expects that facilities in all industry categories would use the flexibility in tailoring the security measures. In the absence of data, EPA developed cost estimates assuming that a low (50 percent), medium (75 percent), or high (100 percent) percentage of facilities would be affected (see Exhibit 6-20).
Exhibit 6-20 
Projected Total Number of New Affected Storage Facilities

Number of New Facilities Affected by the Amendment
10-Year Average

2010
Year 1
2011
Year 2
2012
Year 3
2013
Year 4
2014
Year 5
2015
Year 6
2016
Year 7
2017
Year 8
2018
Year 9
2019
Year 10

Low Scenario (50 percent of facilities)
                                                                         4,480 
                                                                         4,590 
                                                                         4,700 
                                                                         4,810 
                                                                         4,940 
                                                                         5,080 
                                                                         5,220 
                                                                         5,380 
                                                                         5,550 
                                                                         5,730 
                                                                         5,050 
Medium Scenario (75 percent of facilities)
                                                                         6,720 
                                                                         6,880 
                                                                         7,050 
                                                                         7,220 
                                                                         7,410 
                                                                         7,620 
                                                                         7,830 
                                                                         8,070 
                                                                         8,320 
                                                                         8,600 
                                                                         7,570 
High Scenario (100 percent of facilities)
                                                                         8,960 
                                                                         9,170 
                                                                         9,390 
                                                                         9,630 
                                                                         9,880 
                                                                        10,200 
                                                                        10,400 
                                                                        10,800 
                                                                        11,100 
                                                                        11,500 
                                                                        10,100 

Baseline Compliance Cost and Cost Savings
EPA assumed that under the existing rule, given the high cost of fencing, all facilities would use tailored security measures and demonstrate how these measures are environmentally equivalent to the required measures in §112.7(g). Therefore, the cost savings to the facility would result from not having to determine environmental equivalence and will be equal to the baseline cost of compliance with the security requirements. EPA estimates that the cost savings per facility (and the baseline cost of compliance with security requirements) would range from $1,230 to $2,530, depending on facility size (see Exhibit 6-21). The difference in cost estimates across the facility size categories is explained by the difference in labor hours to demonstrate environmental equivalence.
Exhibit 6-21 
Cost of Demonstrating Environmental Equivalence (2007$)[1]
Facility Size
Facility-Level Cost of Demonstrating Environmental Equivalence

Storage Facilities
Category I
                                    $1,230
Category II
                                    $1,840
Category III
                                    $1,840
Category IV
                                    $2,530
1 	Cost estimates based on labor burden for explaining why secondary containment is impracticable. Cost estimates do not include adjustment for state overlap.
Source: SCS Engineers.

EPA calculated the total compliance cost savings using the projected number of new production and storage facilities and their corresponding per-facility compliance cost savings estimates, which is summarized in the equation below:
Calculation of Total Cost Savings
                             Total Cost Savingsj =
Where i = I,II,III, and IV are the facility size categories, and j = low, medium, and high estimates of facilities affected by the proposed amendments.
NFacij = the projected number of affected facilities for size category i  (see Exhibit 6-20).
NCostSavingij = the medium estimate for the per-facility cost savings for size category i (see Exhibit 6-21).
Overlapi = 1 - estimated percentage reduction in total burden due to state overlap for size category i  (see Exhibit 5-22).
Using the equation above, EPA estimated that the final amendment to the 2002 SPCC final rule will reduce compliance costs by $6.21 million and $6.16 million per year, discounted at 3 percent and 7 percent, respectively in the low scenario (50 percent); $9.32 million and $9.24 million per year, discounted at 3 percent and 7 percent, respectively in the midpoint scenario (75 percent) and $12.4 million and $12.3 million per year, discounted at 3 percent and 7 percent, respectively in the high scenario (100 percent). Exhibit 6-22 presents the total annual cost savings for each year.


Exhibit 6-22 
Projected Annual Compliance Cost Savings from Final Amendments to Security Requirements (2007$ Millions)[1]

Cost Savings[2]

2010
Year 1
2011
Year 2
2012
Year 3
2013
Year 4
2014
Year 5
2015
Year 6
2016
Year 7
2017
Year 8
2018
Year 9
2019
Year 10
10- Year Present Value
Annualized
Low Scenario (50%)
Not Discounted
                                                                          $5.55
                                                                          $5.68
                                                                          $5.82
                                                                          $5.97
                                                                          $6.12
                                                                          $6.29
                                                                          $6.47
                                                                          $6.67
                                                                          $6.88
                                                                          $7.10
                                                                          $62.6
                                                                          $6.26
3% Discounted
                                                                          $5.39
                                                                          $5.36
                                                                          $5.33
                                                                          $5.30
                                                                          $5.28
                                                                          $5.27
                                                                          $5.26
                                                                          $5.26
                                                                          $5.27
                                                                          $5.28
                                                                          $53.0
                                                                          $6.21
7% Discounted
                                                                          $5.19
                                                                          $4.96
                                                                          $4.75
                                                                          $4.55
                                                                          $4.37
                                                                          $4.19
                                                                          $4.03
                                                                          $3.88
                                                                          $3.74
                                                                          $3.61
                                                                          $43.3
                                                                          $6.16
Midpoint Scenario (75%)
Not Discounted
                                                                          $8.33
                                                                          $8.52
                                                                          $8.73
                                                                          $8.95
                                                                          $9.18
                                                                          $9.44
                                                                          $9.71
                                                                          $10.0
                                                                          $10.3
                                                                          $10.7
                                                                          $93.8
                                                                          $9.38
3% Discounted
                                                                          $8.09
                                                                          $8.03
                                                                          $7.99
                                                                          $7.95
                                                                          $7.92
                                                                          $7.91
                                                                          $7.89
                                                                          $7.89
                                                                          $7.91
                                                                          $7.93
                                                                          $79.5
                                                                          $9.32
7% Discounted
                                                                          $7.78
                                                                          $7.45
                                                                          $7.13
                                                                          $6.83
                                                                          $6.55
                                                                          $6.29
                                                                          $6.05
                                                                          $5.82
                                                                          $5.61
                                                                          $5.42
                                                                          $64.9
                                                                          $9.24
High Scenario (100%)
Not Discounted
                                                                          $11.1
                                                                          $11.4
                                                                          $11.6
                                                                          $11.9
                                                                          $12.2
                                                                          $12.6
                                                                          $12.9
                                                                          $13.3
                                                                          $13.8
                                                                          $14.2
                                                                           $125
                                                                          $12.5
3% Discounted
                                                                          $10.8
                                                                          $10.7
                                                                          $10.7
                                                                          $10.6
                                                                          $10.6
                                                                          $10.5
                                                                          $10.5
                                                                          $10.5
                                                                          $10.5
                                                                          $10.6
                                                                           $106
                                                                          $12.4
7% Discounted
                                                                          $10.4
                                                                          $9.93
                                                                          $9.50
                                                                          $9.10
                                                                          $8.73
                                                                          $8.39
                                                                          $8.06
                                                                          $7.76
                                                                          $7.48
                                                                          $7.22
                                                                          $86.6
                                                                          $12.3
[1] 	The baseline cost of compliance is the same as the cost savings.
[2] 	See Appendix J in Volume II for more details on the calculation of cost savings.


Integrity Testing
EPA amended the integrity testing requirements at §§112.8(c)(6) and 112.12(c)(6) to provide flexibility in complying with the bulk storage container integrity testing requirements. Specifically, EPA modified the provision to allow an owner or operator to consult and rely on industry standards to determine the appropriate qualifications for tank inspectors/testing personnel and the type and frequency of integrity testing required for a particular container size and configuration. Thus, this action extended the streamlined bulk storage container integrity testing requirement that EPA provided to qualified facilities in the December 2006 SPCC rule amendments (71 FR 77266, December 26, 2006) to all facilities subject to the integrity testing provision.
Universe of Affected Facilities
Since the integrity-testing requirement applies only to storage facilities (and not production facilities), EPA estimates that all new storage facilities will be affected by this amendment. Only containers with storage capacity of less than 5,000 gallons that are portable or shop-built would be affected because industry standards for these containers are different from the SPCC requirements; therefore, containers of 5,000 gallons and larger would not be affected by the final change. For this cost estimate, EPA assumed that all existing facilities are currently using the STI SP-001 standard and performing only external inspections for small portable containers and shop-built tanks up to 5,000 gallons in capacity, instead of visual inspection plus a system of non-destructive shell testing such as hydrostatic testing, radiographic testing, ultrasonic testing, etc., as required under the integrity-testing requirement. Therefore, existing facilities would not be affected because they would have already certified the environmental equivalence of their inspection standards. Exhibit 6-23 presents the projected number of new facilities that would be affected by this final amendment from 2010 through 2019. The projected average annual number of new storage facilities is 10,100. EPA projected the number of new storage facilities over the 10-year analysis period using the estimated number of SPCC-regulated facilities and industry-specific growth rates. 
Exhibit 6-23 
Projected Number of New Storage Facilities Affected by the Integrity Testing Amendment

Number of New Storage Facilities Affected by the Amendment
10-Year Average

2010
Year 1
2011
Year 2
2012
Year 3
2013
Year 4
2014
Year 5
2015
Year 6
2016
Year 7
2017
Year 8
2018
Year 9
2019
Year 10

New Facilities
                                                                         8,960 
                                                                         9,170 
                                                                         9,390 
                                                                         9,630 
                                                                         9,880 
                                                                        10,200 
                                                                        10,400 
                                                                        10,800 
                                                                        11,100 
                                                                        11,500 
                                                                        10,100 

Baseline Cost of Compliance and Cost Savings
EPA assumed that all facilities would use the STI SP-001 standard and perform external inspections only for portable containers and for small shop-built tanks up to 5,000-gallons, instead of visual inspection, plus a form of non-destructive shell testing as required under the integrity-testing provision. This implies that facilities would save the cost incurred for preparing an environmental equivalence statement and having a PE certify environmental equivalence statements in SPCC Plans, equal to the baseline cost of compliance with integrity testing requirements for small shop-built tanks. Since existing facilities would have already incurred this cost, only new facilities would have cost savings from this amendment. The Agency estimates that the cost savings per facility for all size categories for not having to claim environmental equivalence would be $1,230. 
EPA calculated the total compliance cost savings (and the baseline cost of compliance) using the projected number of new facilities and their corresponding per-facility compliance cost savings estimates, which is summarized in the equation below:
                                Total Cost Savings = 
 Where i = I, II, III and IV are facility size categories.
 NFaci = the projected number of new non-production facilities affected by the amendment (see Exhibit 6-23).
 NCostSaving = Facility level cost savings (see this section).
 Overlapi = 1 - estimated percentage reduction in total burden due to state overlap for size category i  (see Exhibit 5-22).
Calculation of Total Cost Savings
Using the equation above, EPA estimated that the final amendment to the 2002 SPCC final rule would reduce compliance costs by $11.1 million and $11.1 million per year, discounted at 3 percent and 7 percent, respectively. Exhibit 6-24 presents the total annual cost savings for the integrity testing amendments each year.


Exhibit 6-24 
Total Projected Compliance Cost Savings from Integrity Testing Amendment (2007$ Millions)[1,2]

Compliance Cost Savings
10- Year Present Value
Annualized

2010
Year 1
2011
Year 2
2012
Year 3
2013
Year 4
2014
Year 5
2015
Year 6
2016
Year 7
2017
Year 8
2018
Year 9
2019
Year 10


Not Discounted
                                                                          $9.96
                                                                          $10.2
                                                                          $10.4
                                                                          $10.7
                                                                          $11.0
                                                                          $11.3
                                                                          $11.6
                                                                          $12.0
                                                                          $12.3
                                                                          $12.7
                                                                           $112
                                                                          $11.2
3% Discounted
                                                                          $9.67
                                                                          $9.61
                                                                          $9.56
                                                                          $9.51
                                                                          $9.48
                                                                          $9.46
                                                                          $9.44
                                                                          $9.44
                                                                          $9.46
                                                                          $9.48
                                                                          $95.1
                                                                          $11.1
7% Discounted
                                                                          $9.31
                                                                          $8.90
                                                                          $8.52
                                                                          $8.17
                                                                          $7.83
                                                                          $7.52
                                                                          $7.23
                                                                          $6.96
                                                                          $6.71
                                                                          $6.48
                                                                          $77.6
                                                                          $11.1
[1] 	Baseline compliance cost is the same as the cost savings.
[2] 	See Appendix J in Volume II for more details on the calculation of cost savings. 


Integrity Testing Requirements for Animal Fats and Vegetable Oils
Background
EPA amended the rule requirements by providing differentiated integrity testing requirements for facilities that handle certain types of animal fats and vegetable oils. EPA provided the PE or an owner/operator self-certifying an SPCC Plan with the flexibility to use a visual inspection program for integrity testing that is appropriate for containers that store AFVOs that meet certain criteria. This flexibility applies to those bulk storage containers that are subject to the applicable sections of the Food and Drug Administration (FDA) regulation 21 CFR part 110, Current Good Manufacturing Practice in Manufacturing, Packing or Holding Human Food, and that meet the following additional criteria: (1) the containers are elevated; (2) the containers are made from austenitic stainless steel; (3) the containers have no external insulation; and (4) the containers are shop-built. 
Universe of Affected Facilities
In the regulatory impact analysis (RIA) of the final rule amendments published on December 26, 2006, EPA estimated that 7,640 facilities produce or store AFVOs, comprising approximately one percent of the regulated universe. Of the 7,640 facilities that EPA estimates to be AFVO facilities, the Agency excluded the facilities that process food for pets or use vegetable oil in non-food production related activities. The remaining 7,390 are assumed to store food oils in addition to other non-food oils that are used for heating or manufacturing processes and therefore are affected by the final amendments. Further, all new facilities would be affected by this amendment.
In addition to the requirement that the containers should store food oils, the final amendment also requires that the containers be shop-built, made of austenitic stainless steel, elevated with no external insulation, and be covered by 21 CFR part 110. The amendment relies on the judgment of a PE to determine if the tank should be eligible for differentiated integrity testing requirements. To account for this, the Agency assumed that only a certain percentage of food oil storage tanks would be affected by the final amendments. To simplify the analysis, EPA assumed that all food oil containers at a facility are subject to the same integrity testing requirements. The Agency contacted industry experts, who determined that 40 percent to 90 percent of containers at AFVO facilities are made of stainless steel. Further, they noted that 21 CFR part 110 applies to many AFVO facilities. Therefore, based on professional judgment, the Agency assumed that 40 percent (low), 65 percent (medium), and 90 percent (high) of the 7,390 facilities would have food oil tanks that are eligible (see Exhibit 6-25). 
Exhibit 6-25 
Projected Total Number of New and Existing AFVO Facilities Affected by the Final Amendment
Percent of Facilities Affected
Number of AFVO Facilities Affected by the Amendment
10-Year Average

2010
Year 1
2011
Year 2
2012
Year 3
2013
Year 4
2014
Year 5
2015
Year 6
2016
Year 7
2017
Year 8
2018
Year 9
2019
Year 10

Existing Facilities
100%
                                                                         7,790 
                                                                         7,820 
                                                                         7,860 
                                                                         7,890 
                                                                         7,930 
                                                                         7,960 
                                                                         8,000 
                                                                         8,030 
                                                                         8,070 
                                                                         8,100 
                                                                         7,950 
90%
                                                                         7,010 
                                                                         7,040 
                                                                         7,070 
                                                                         7,100 
                                                                         7,130 
                                                                         7,170 
                                                                         7,200 
                                                                         7,230 
                                                                         7,260 
                                                                         7,290 
                                                                         7,150 
65%
                                                                         5,060 
                                                                         5,090 
                                                                         5,110 
                                                                         5,130 
                                                                         5,150 
                                                                         5,180 
                                                                         5,200 
                                                                         5,220 
                                                                         5,240 
                                                                         5,270 
                                                                         5,160 
40%
                                                                         3,120 
                                                                         3,130 
                                                                         3,140 
                                                                         3,160 
                                                                         3,170 
                                                                         3,180 
                                                                         3,200 
                                                                         3,210 
                                                                         3,230 
                                                                         3,240 
                                                                         3,180 
New Facilities
100%
                                                                           181 
                                                                           182 
                                                                           183 
                                                                           184 
                                                                           185 
                                                                           185 
                                                                           186 
                                                                           187 
                                                                           188 
                                                                           189 
                                                                           185 
90%
                                                                           163 
                                                                           164 
                                                                           165 
                                                                           165 
                                                                           166 
                                                                           167 
                                                                           168 
                                                                           168 
                                                                           169 
                                                                           170 
                                                                           166 
65%
                                                                           118 
                                                                           118 
                                                                           119 
                                                                           119 
                                                                           120 
                                                                           120 
                                                                           121 
                                                                           122 
                                                                           122 
                                                                           123 
                                                                           120 
40%
                                                                            72 
                                                                            73 
                                                                            73 
                                                                            74 
                                                                            74 
                                                                            74 
                                                                            75 
                                                                            75 
                                                                            75 
                                                                            75 
                                                                            74 

Baseline Compliance Cost and Cost Savings
Baseline Compliance Cost
EPA calculated the baseline cost of compliance for integrity testing requirements at AFVO facilities using the projected number of new and existing AFVO facilities and the corresponding per-facility cost of compliance estimates for integrity testing before the final amendments. The estimates for facility-level compliance cost (see Exhibit 6-26) are based on specific assumptions developed from a review of SPCC Plans, such as the number of tanks per facility by size category, the total capacity, and other facility characteristics, such as the type of secondary containment used. 
Exhibit 6-26 
Estimated Baseline Facility-Level Integrity Testing by Facility Size Category (2007$)
Cost Item
Category I
Category II
Category III
Category IV
Integrity Testing[1]
                                                                         $1,500
                                                                         $6,000
                                                                        $12,000
                                                                        $24,000
Test Frequency[2]
                                Every 12 years
Annual Baseline Cost of Compliance
                                                                           $125
                                                                           $500
                                                                         $1,000
                                                                         $2,000
[1]	The cost estimate reflects hydrostatic testing, non-destructive shell thickness testing.
[2]	Estimated as an average time period over which facility owner/operators conduct integrity testing. 
Source: Facility visits; SCS Engineers.

The Agency estimates that the baseline cost of compliance for integrity testing requirements at AFVO facilities is $2.97 million and $2.96 million discounted at 3 percent and 7 percent, respectively (see Exhibit 6-27).


Exhibit 6-27 
Total Projected Baseline Compliance Cost for Integrity Testing Requirement at AFVO Facilities (2007$ Millions)

Compliance Costs 
10- Year Present Value
Annualized

2010
Year 1
2011
Year 2
2012
Year 3
2013
Year 4
2014
Year 5
2015
Year 6
2016
Year 7
2017
Year 8
2018
Year 9
2019
Year 10


Not Discounted
                                                                          $2.91
                                                                          $2.93
                                                                          $2.94
                                                                          $2.95
                                                                          $2.96
                                                                          $2.98
                                                                          $2.99
                                                                          $3.00
                                                                          $3.02
                                                                          $3.03
                                                                          $29.7
                                                                          $2.97
3% Discounted
                                                                          $2.83
                                                                          $2.76
                                                                          $2.69
                                                                          $2.62
                                                                          $2.56
                                                                          $2.49
                                                                          $2.43
                                                                          $2.37
                                                                          $2.31
                                                                          $2.25
                                                                          $25.3
                                                                          $2.97
7% Discounted
                                                                          $2.72
                                                                          $2.56
                                                                          $2.40
                                                                          $2.25
                                                                          $2.11
                                                                          $1.98
                                                                          $1.86
                                                                          $1.75
                                                                          $1.64
                                                                          $1.54
                                                                          $20.8
                                                                          $2.96


Compliance Cost Savings
EPA differentiated the integrity testing requirements for facilities that handle food oils stored in containers that are corrosion free and are austenitic stainless steel tanks or tanks made with equally corrosion-resistant materials that are in good repair and have smooth, impervious, corrosion-free, easily cleanable food oil contact surfaces. In addition, the containers must be elevated to facilitate complete drainage of the container to prevent corrosion.
Although it is possible that a PE would require that the qualified AFVO firms conduct integrity testing but a less costly type, the Agency assumed that all facilities that meet the above criteria would, in effect, be eligible to conduct visual inspections for these containers. Further, EPA assumed that facilities would not incur any additional cost for visual inspection of these containers.
However, AFVO facilities that produce or store food oils are likely to also store other non-food and petroleum oil. Facilities would have to comply with integrity testing requirements for the non-food oil containers. To assess the ratio of food oil storage to total oil storage capacity, the Agency relied on SPCC Plans obtained from AFVO facilities. Although these facilities are not representative of the entire AFVO universe, in the absence of other data, these Plans provide a range of possible values for the ratio of food oil to non-food oil at these facilities. 
The SPCC Plans suggest that on average, 93 percent of an AFVO facility's total storage is for AFVO. Therefore, EPA assumed that facilities eligible for these differentiated requirements for visual inspection would save 93 percent of their total cost of integrity testing. To make this assumption, EPA also assumed that the integrity testing costs are proportional to the storage capacity. Given the data from a PE firm, this seems to be a reasonable assumption on average. It should be noted that EPA also assumed that all the vegetable oil stored at a facility is food grade and is not waste oil; the SPCC Plans considered did not distinguish between the two grades. 
Exhibit 6-28 lists the average cost of integrity testing of tanks by facility category.
Exhibit 6-28 
Estimated Facility-Level Integrity Testing by Facility Size Category (2007$)
Cost Item
Category I
Category II
Category III
Category IV
Integrity Testing[1]
                                                                         $1,500
                                                                         $6,000
                                                                        $12,000
                                                                        $24,000
Test Frequency[2]
                                Every 12 years
Annual Cost Savings
                                                                           $125
                                                                           $500
                                                                         $1,000
                                                                         $2,000
[1]	The cost estimate reflects hydrostatic testing, non-destructive shell thickness testing. Unit costs range from $500 to $2,500 per tank for hydrostatic testing. EPA assumed that the number of tanks per typical facility would be 1, 4, 8, and 16 for Category I, II, III, and IV facilities, respectively. This assumption was based on estimates obtained from SCS Engineers as well as state oil tank databases.
[2]	Estimated as an average time period over which facility owner/operators conduct integrity testing. 
Source: Facility visits; SCS Engineers.

EPA calculated the total compliance cost savings for AFVO facilities using the projected number of facilities affected by the final amendments and their corresponding per-facility compliance cost savings estimates, as summarized in the equation below:
                             Total Cost Savings = 
 Where i = I,II,III, and IV are the facility size categories, and j = low, medium, and high estimates of facilities affected by the proposed amendments.
 NFaci = the projected number of affected AFVO qualified facilities by size category (see Exhibit 6-25). 
 NCostSavingi = the per facility cost savings based on compliance options available to AFVO facilities storing food oils by size category (see Exhibit 6-28).
 Overlapi = 1 - estimated percentage reduction in total burden due to state overlap for size category i  (see Exhibit 5-22).
Calculation of Total Cost Savings
The Agency estimates that the AFVO facilities would save $1.19 million and $1.19 million discounted at 3 percent and 7 percent discount rate, respectively (low estimate) to $2.67 million and $2.67 million, discounted at 3 percent and 7 percent discount rate, respectively (high estimate) from the final amendments (see Exhibit 6-29). 



Exhibit 6-29 
Total Projected Compliance Cost Savings for AFVO Facilities from Final Amendments (2007$ Millions)[1]
Percent of Facilities Affected
Compliance Cost Savings
10- Year Present Value
Annualized

2010
Year 1
2011
Year 2
2012
Year 3
2013
Year 4
2014
Year 5
2015
Year 6
2016
Year 7
2017
Year 8
2018
Year 9
2019
Year 10


Low Scenario (40%)
Not Discounted
                                                                          $1.17
                                                                          $1.17
                                                                          $1.18
                                                                          $1.18
                                                                          $1.19
                                                                          $1.19
                                                                          $1.20
                                                                          $1.20
                                                                          $1.21
                                                                          $1.21
                                                                          $11.9
                                                                          $1.19
3% Discounted
                                                                          $1.13
                                                                          $1.10
                                                                          $1.08
                                                                          $1.05
                                                                          $1.02
                                                                         $0.998
                                                                         $0.973
                                                                         $0.948
                                                                         $0.925
                                                                         $0.902
                                                                          $10.1
                                                                          $1.19
7% Discounted
                                                                          $1.09
                                                                          $1.02
                                                                         $0.960
                                                                         $0.901
                                                                         $0.846
                                                                         $0.794
                                                                         $0.745
                                                                         $0.699
                                                                         $0.656
                                                                         $0.616
                                                                          $8.33
                                                                          $1.19
Midpoint Scenario (65%)
Not Discounted
                                                                          $1.89
                                                                          $1.90
                                                                          $1.91
                                                                          $1.92
                                                                          $1.93
                                                                          $1.94
                                                                          $1.94
                                                                          $1.95
                                                                          $1.96
                                                                          $1.97
                                                                          $19.3
                                                                          $1.93
3% Discounted
                                                                          $1.84
                                                                          $1.79
                                                                          $1.75
                                                                          $1.70
                                                                          $1.66
                                                                          $1.62
                                                                          $1.58
                                                                          $1.54
                                                                          $1.50
                                                                          $1.47
                                                                          $16.5
                                                                          $1.93
7% Discounted
                                                                          $1.77
                                                                          $1.66
                                                                          $1.56
                                                                          $1.46
                                                                          $1.37
                                                                          $1.29
                                                                          $1.21
                                                                          $1.14
                                                                          $1.07
                                                                          $1.00
                                                                          $13.5
                                                                          $1.93
High Scenario (90%)
Not Discounted
                                                                          $2.62
                                                                          $2.63
                                                                          $2.65
                                                                          $2.66
                                                                          $2.67
                                                                          $2.68
                                                                          $2.69
                                                                          $2.70
                                                                          $2.72
                                                                          $2.73
                                                                          $26.7
                                                                          $2.67
3% Discounted
                                                                          $2.55
                                                                          $2.48
                                                                          $2.42
                                                                          $2.36
                                                                          $2.30
                                                                          $2.24
                                                                          $2.19
                                                                          $2.13
                                                                          $2.08
                                                                          $2.03
                                                                          $22.8
                                                                          $2.67
7% Discounted
                                                                          $2.45
                                                                          $2.30
                                                                          $2.16
                                                                          $2.03
                                                                          $1.90
                                                                          $1.79
                                                                          $1.68
                                                                          $1.57
                                                                          $1.48
                                                                          $1.39
                                                                          $18.7
                                                                          $2.67
[1]	See Appendix J in Volume II for more details on the calculation of cost savings.


Oil Production Facilities
Background
Since its original promulgation in 1973, the SPCC rule has included differentiated requirements for oil production facilities, which are provided in §112.9. Under this final rulemaking, EPA is finalizing specific modifications for oil production facilities. In particular, EPA is finalizing the following modifications: revising the definition of "production facility"; extending the timeframe by which the owner or operator of a new oil production facility must prepare and implement an SPCC Plan; providing an alternative option for flow-through process vessels at oil production facilities to comply with the general secondary containment requirement and additional oil spill prevention measures in lieu of sized secondary containment requirements; providing an exemption for certain intra-facility gathering lines from the SPCC requirements; establishing specific requirements for a flowline/intra-facility gathering line maintenance program and providing an alternative compliance option for flowlines and intra-facility gathering lines at oil production facilities for contingency planning in lieu of the general secondary containment requirements; defining produced water container and providing an alternative compliance option for produced water containers at oil production facilities requiring general secondary containment, a process or procedure certified by a PE designed to remove free-phase oil on the surface of the produced water container and additional oil spill prevention measures in lieu of sized secondary containment requirements; and clarifying the definition of "permanently closed" as it applies to an oil production facility. 
 In the December 5, 2008 amendments EPA exempted certain produced water containers and any associated piping and appurtenances downstream of the container from the SPCC requirements, and provided alternative qualified facilities criteria for oil production facilities. Under this final rulemaking, EPA is removing both provisions.  EPA is also removing the exclusion for oil production facility from the loading/unloading rack requirements.. 
Universe of Affected Facilities
EPA estimated that 215,000 oil and gas production facilities would be subject to the SPCC rule in 2010. The number of production facilities affected varies for each individual final rule amendment. Therefore, the universe of affected facilities is discussed separately for each of the amendments in the sections below. 
Definition of "Production Facility"
EPA modified the definition of "production facility" to clarify which specific provisions of the rule may apply, consistent with the definition of "facility." Because the Agency is only providing clarity on the applicability of the rule, no cost impact is monetized as a result of the amended definition of "production facility." 
Modifications to §112.9 for Drilling and Workover Facilities
To clarify that drilling and workover activities are not subject to the provisions at §112.9, EPA amended the title of §112.9 to read "Spill Prevention, Control, and Countermeasure Plan requirements for onshore oil production facilities (excluding drilling and workover facilities)." EPA also amended the introductory sentence of the section accordingly. Because the Agency is only providing clarity on the applicability of the rule, no cost impact is monetized as a result of the specified exclusion of drilling and workover facilities. 
SPCC Plan Preparation and Implementation for New Oil Production Facilities
Background
EPA amended §112.3(b) to extend the timeframe by which a production facility that becomes operational after November 10, 2010, must prepare and implement an SPCC Plan. Under the existing rule, any facility that becomes operational after November 10, 2010 (a "new facility"), must prepare an SPCC Plan before beginning operations. However, oil production facilities have unique characteristics during the start-up period of their operations, which lead to variability in the amount and type of oil handled. This would imply that oil production facilities must continually amend Plans until operations stabilize, and have a licensed Professional Engineer (PE) certify each amendment. To alleviate this burden, EPA gave a new production facility six months to prepare and implement an SPCC Plan.
Universe of Affected Facilities
EPA assumed that only 75 percent of oil production facilities would be affected by the rule change and would save the cost to amend the Plan and the PE certification cost. The remaining 25 percent of the facilities were assumed to be correct in their original predictions of the oil well's flow, and would therefore not need to amend the Plan. 
Exhibit 6-30 presents the projected number of new oil production facilities that would be affected by this final amendment from 2010 through 2019. The projected average annual number of new oil production facilities is 6,910. EPA projected the number of new production facilities over the 10-year analysis period using the estimated number of SPCC-regulated production facilities and industry-specific growth rates. 
Exhibit 6-30 
Projected Total Number of New Oil Production Facilities Affected by the 
Final Amendment to SPCC Plan Preparation and Implementation[1]
Oil Production Industry
Number of New Oil Production Facilities Affected by the Amendment
10-Year Average

2010
Year 1
2011
Year 2
2012
Year 3
2013
Year 4
2014
Year 5
2015
Year 6
2016
Year 7
2017
Year 8
2018
Year 9
2019
Year 10

Category I
                                                                            807
                                                                            603
                                                                            868
                                                                            901
                                                                            937
                                                                            858
                                                                          1,170
                                                                            763
                                                                            875
                                                                          1,050
                                                                            883
Category II
                                                                          4,350
                                                                          3,250
                                                                          4,680
                                                                          4,860
                                                                          5,050
                                                                          4,630
                                                                          6,310
                                                                          4,110
                                                                          4,720
                                                                          5,640
                                                                          4,760
Category III
                                                                          1,140
                                                                            854
                                                                          1,230
                                                                          1,280
                                                                          1,330
                                                                          1,220
                                                                          1,660
                                                                          1,080
                                                                          1,240
                                                                          1,480
                                                                          1,250
Category IV
                                                                             11
                                                                              8
                                                                             12
                                                                             13
                                                                             13
                                                                             12
                                                                             16
                                                                             11
                                                                             12
                                                                             15
                                                                             12
Total
                                                                          6,310
                                                                          4,720
                                                                          6,790
                                                                          7,050
                                                                          7,330
                                                                          6,710
                                                                          9,160
                                                                          5,960
                                                                          6,840
                                                                          8,180
                                                                          6,910
[1] 	The number of affected new production facilities represents 75 percent of the total new production facilities.

Baseline Compliance Cost and Cost Savings
Baseline Cost of Compliance
The baseline compliance cost incurred by oil production facilities for preparing and implementing the SPCC Plan is the same as the total cost of compliance with the SPCC rule. For 75 percent of the facilities, the baseline cost also includes the cost the oil production facilities might incur in having to amend the Plan and have it certified by a PE after operations have stabilized in the first year. 
EPA calculated the baseline cost of compliance for oil production facilities using the projected number of new production facilities and the corresponding per-facility cost of compliance estimates before the final amendments. EPA estimated that the total cost of complying with the 2002 SPCC rule for a new production facility is $37,600 for facilities in size Category I, $58,400 for Category II, $148,000 for Category III, and $411,000 for Category IV (Exhibit 6-31). Exhibit 6-32 presents the assumptions for oil production facilities in Categories I, II, III, and IV.
Exhibit 6-31
Annual Cost of Compliance
with 2002 SPCC Rule Requirements (2007$)
Facility Size
Facility-Level Compliance Cost[1]

Average Cost
Category I
                                                                        $37,600
Category II
                                                                        $58,400
Category III
                                                                       $148,000
Category IV
                                                                       $411,000
[1] 	See Appendix K in Volume II for details on the assumptions for arriving at these costs. 
Source: SCS Engineers.

Exhibit 6-32 
Assumptions on Production Facility Characteristics
Cost Item
Category I
Category II
Category III
Category IV
Labor Burden of Certifying an Existing SPCC Plan[1]
PE
                                                                        6 hours
                                                                       12 hours
                                                                       24 hours
                                                                       36 hours

Clerical Worker
                                                                       0.5 hour
                                                                         1 hour
                                                                        2 hours
                                                                        3 hours
Number of Tank Batteries[2]
                                       1
                                       1
                                       1
                                       4
                                       8
Number of Tanks per Tank Battery[3]
Minimum Capacity
                             (1) 1,000-gallon tank
               (1) 1,000-gallon tank and (1) 10,000-gallon tank
                            (3) 20,000-gallon tanks
                           (3) 100,000-gallon tanks
                            (3) 50,000-gallon tanks

Maximum Capacity
                            (1) 10,000-gallon tank
               (1) 1,000-gallon tank and (3) 10,000-gallon tanks
                           (3) 100,000-gallon tanks
                                       
                                       
Total Tank Capacity[4]
                           1,000  -  10,000 gallons
                           11,000  -  31,000 gallons
                          60,000  -  300,000 gallons
                               1,200,000 gallons
[1]	Assumes that facility uses in-house labor when a PE is not required. A production facility will incur labor costs roughly proportional to the size of the facility. The labor hours needed to complete a task at a Category II, III, and IV size facility are assumed to be 2, 4, and 6 times the labor hours needed at a Category I size facility, respectively. Assumptions provided by SCS Engineers.
[2]	Estimates provided by SCS Engineers; assumption used to develop universe estimates.
3 	Estimates provided by SCS Engineers.
[4]	Estimates provided by SCS Engineers.

It is important to note that since certain SPCC requirements may be similar in nature to those imposed by state regulations and facility owner/operators of many industries may follow specific industry standards, compliance activities and their associated costs cannot be fully attributed to the SPCC rule. Since regulations vary widely across states and industries, there is no single adjustment factor that could be developed to address this issue for the universe of regulated facilities. However, due to the lack of data on the extent to which facilities adopt industry standards, in this analysis the Agency estimated the baseline compliance costs and cost savings associated with the SPCC requirements without accounting for possible overlap with industry standards. EPA did take into account requirements imposed by state regulations that are similar to the SPCC requirements. As a result, the estimated compliance costs are likely to present a significant overestimate of the costs attributed to the SPCC rule. For details of the state overlap analysis, refer to Section 5.4 of this report. 
About 75 percent of facilities face an additional cost of amending and certifying the Plans after the operations are stabilized (see Exhibit 6-33). While a facility owner/operator must have the Plan certified by a PE, the cost of amending the Plan depends on whether a facility uses in-house labor or hires outside PEs, where the latter is more expensive. On the one hand, a small facility is more likely to hire outside engineers because it may not have the in-house expertise to comply with the SPCC requirements. On the other hand, a small facility may not have the resources to hire outside engineers and may be in a better position to use in-house labor because the owner may be closely involved with all the operations. A similar two-sided argument can also be made for larger facilities. Therefore, EPA assumed that 50 percent of the facilities of all size categories use in-house labor and the remaining 50 percent use outside professional labor. The unit costs of amending and certifying the SPCC Plan also depend on whether the technical amendment is minor or major. EPA calculated the cost savings for each facility using the average PE certification cost of a minor and major technical amendment. 
Exhibit 6-33
Annual Cost of Plan Amendment 
for Production Facilities (2007$)
Facility Size
Facility-Level Cost of Plan Amendment[1]

Average Cost[3]
Category I
                                                                         $1,830
Category II
                                                                         $3,660
Category III
                                                                         $7,320
Category IV
                                                                        $11,000
[1]	Includes the cost of amending the Plan and the cost of having a PE certify the Plan. Numbers are rounded to the nearest ten.
[2]	Average of the cost for major and minor changes. 
Source: SCS Engineers.

Based on the facility-level costs, EPA estimated that the baseline cost of compliance for oil production facilities is $563 million and $558 million per year, discounted at 3 percent and 7 percent, respectively (see Exhibit 6-34).


Exhibit 6-34
Projected Annual Baseline Compliance Costs of 2002 SPCC Requirements for Oil Production Facilities (2007$ Millions)

Compliance Costs

2010
Year 1
2011
Year 2
2012
Year 3
2013
Year 4
2014
Year 5
2015
Year 6
2016
Year 7
2017
Year 8
2018
Year 9
2019
Year 10
10- Year Present Value
Annualized
Not Discounted
                                                                           $518
                                                                           $387
                                                                           $558
                                                                           $579
                                                                           $602
                                                                           $551
                                                                           $752
                                                                           $490
                                                                           $562
                                                                           $672
                                                                         $5,670
                                                                           $567
3% Discounted 
                                                                           $503
                                                                           $365
                                                                           $510
                                                                           $514
                                                                           $519
                                                                           $462
                                                                           $612
                                                                           $386
                                                                           $431
                                                                           $500
                                                                         $4,800
                                                                           $563
7% Discounted 
                                                                           $484
                                                                           $338
                                                                           $455
                                                                           $441
                                                                           $429
                                                                           $367
                                                                           $469
                                                                           $285
                                                                           $306
                                                                           $342
                                                                         $3,920
                                                                           $558


Compliance Cost Savings
As a result of the final rule change, the main cost savings for a facility will result from not having to amend the Plan and have it certified by a PE after operations have stabilized. EPA assumed that there will be no cost savings related to Plan preparation and implementation because there will be no change in the cost in the first year. Facilities may find it economical to construct the containment structures at the time of construction, regardless of the implementation date.
The cost savings from this final amendment include the cost of amending the Plan and having the Plan certified by a PE. The Agency assumed that a production facility owner or operator would have a PE certify technical amendments to the facility's Plan once in the first six months of operation, for the changes made at the facility that materially affect its potential for a discharge. As discussed above, the unit costs of amending and certifying the SPCC Plan also depend on whether the technical amendment is minor or major. EPA calculated the cost savings for each facility using the average PE certification cost of a minor and major technical amendment. The unit costs for amending and certifying the SPCC Plan are provided in Exhibit 6-35.
Exhibit 6-35 
Annual Cost of Plan Amendment for Oil Production Facilities (2007$)
Facility Size
Facility-Level Cost of Plan Amendment[1]

Average Cost[2]
Category I
                                                                         $1,830
Category II
                                                                         $3,660
Category III
                                                                         $7,320
Category IV
                                                                        $11,000
[1]	Includes the cost of amending the Plan and the cost of having a PE certify the Plan. Numbers are rounded to the nearest ten.
[2]	Average of the cost for major and minor changes. 
Source: SCS Engineers.

The total cost savings from the final amendments were calculated by multiplying the facility-level cost by facility size category with the total number of new production facilities affected by this amendment in each facility category, as summarized in the equation below.
EPA estimated that the final amendment to the SPCC rule would reduce compliance costs by $24.1 million and $23.8 million per year, discounted at 3 percent and 7 percent, respectively (see Exhibit 6-36). 
                              Total Cost Savings =
 Where,
 i = I, II, III, and IV are the facility size categories.
 NFaci = the projected number of new production facilities affected by size category (see Exhibit 6-30).
NCostSi = the annualized cost of amending and certifying SPCC plan (see Exhibit 6-35).
Overlapi = 1 - estimated percentage reduction in total burden due to state overlap for size category i (see Exhibit 5-22).
Calculation of Total Cost Savings


Exhibit 6-36
Projected Annual Compliance Cost Savings from Final Amendment to SPCC Plan Preparation and Implementation (2007$ Millions)[1]

Total Cost Savings

2010
Year 1
2011
Year 2
2012
Year 3
2013
Year 4
2014
Year 5
2015
Year 6
2016
Year 7
2017
Year 8
2018
Year 9
2019
Year 10
10- Year Present Value
Annualized
Not Discounted
                                                                          $22.2
                                                                          $16.6
                                                                          $23.8
                                                                          $24.7
                                                                          $25.7
                                                                          $23.6
                                                                          $32.2
                                                                          $20.9
                                                                          $24.0
                                                                          $28.7
                                                                           $242
                                                                          $24.2
3% Discounted 
                                                                          $21.5
                                                                          $15.6
                                                                          $21.8
                                                                          $22.0
                                                                          $22.2
                                                                          $19.7
                                                                          $26.2
                                                                          $16.5
                                                                          $18.4
                                                                          $21.4
                                                                           $205
                                                                          $24.1
7% Discounted 
                                                                          $20.7
                                                                          $14.5
                                                                          $19.5
                                                                          $18.9
                                                                          $18.3
                                                                          $15.7
                                                                          $20.0
                                                                          $12.2
                                                                          $13.1
                                                                          $14.6
                                                                           $167
                                                                          $23.8
[1]	See Appendix J in Volume II for more details on the calculation of cost savings.


Flowlines and Intra-facility Gathering Lines 
Background
In 2008, EPA finalized a conditional exemption from secondary containment requirements under the SPCC rule for flowlines and intra-facility gathering lines. That is, in lieu of general secondary containment, an owner or operator may opt to prepare a contingency plan and written commitment of manpower, equipment, and materials. Additionally, EPA finalized specific requirements for a flowlines and intra-facility gathering lines maintenance program. EPA also exempted intra-facility gathering lines that are subject to the regulatory requirements at 49 CFR parts 192 or 195 from the SPCC requirements.
The 2002 SPCC rule required secondary containment for all areas of a facility where there is a potential for a discharge, as described in §112.1(b). This requirement applied to flowlines and intra-facility gathering lines. However, if secondary containment is determined impracticable, facility owners/operators had the option to explain why it was not practicable and provide a written commitment of manpower, equipment, and materials required to expeditiously control and remove any quantity of discharged oil that may be harmful. Owners/operators were also required to provide an oil spill contingency plan prepared in accordance with 40 CFR part 109. 
EPA recognizes that gathering lines are often outside of the Agency's jurisdiction because they "transport" oil outside of an oil production facility. Based on a 1971 Memorandum of Understanding (MOU) with the Department of Transportation (DOT), EPA has jurisdiction only over non-transportation-related facilities, which includes pipelines that transport oil within a facility. Any pipeline, including a gathering line, that transports oil between facilities or from a facility to a vessel, is considered transportation-related and is therefore outside the jurisdiction of EPA and not subject to the SPCC rule. However, the definition of "facility" as it applies to the SPCC rule is flexible, and some gathering lines may be within the boundaries of a non-transportation-related facility.
Although it is likely that some oil production facilities could have secondary containment around flowlines and intra-facility gathering lines (double walled pipes qualify as secondary containment), EPA assumed that all existing and new facilities would determine impracticability because of the difficulty in building secondary containment around flowlines and intra-facility gathering lines. As a result of the 2008 amendment, facility owners/operators would no longer need to explain why secondary containment is not practicable, but they would still need to prepare an oil spill contingency plan. Intra-facility gathering lines are those lines that connect tank batteries located inside the facility. Based on information from EPA regions, it is likely that each production facility has one tank battery. However, the definition of "facility" is flexible, and a facility owner/operator is able to include any number of tank batteries -- and the intra-facility gathering lines that connect them -- within the boundaries of the facility. Given the uncertainty of how frequently facility owners/operators would aggregate tank batteries, for the purposes of this analysis, EPA assumed one tank battery per production facility. This implies that the final rule clarifications would not result in any impact on intra-facility gathering lines and would only affect facility's flowlines.
EPA recognizes that a contingency plan provides environmental protection in response to a discharge, but in order to implement such a plan, a discharge detection mechanism is necessary. Furthermore, EPA believes that with the elimination of the requirement for secondary containment, a strong program of flowline or intra-facility gathering line maintenance would provide additional preventative measures for these pipelines and increase discharge detection ability. Therefore, in 2008 EPA added specificity to the existing flowline maintenance program requirements and clarifying that the requirement applies to intra-facility gathering lines as well as flowlines at a production facility. The flowline maintenance program must address procedures to:
   * Ensure that flowlines and intra-facility gathering lines and associated valves and equipment are compatible with the type of production fluids, their potential corrosivity, volume, and pressure, and other conditions expected in the operational environment.
   * Visually inspect and/or test flowlines and intra-facility gathering lines and associated appurtenances on a periodic and regular schedule for leaks, oil discharges, corrosion, or other conditions that could lead to a discharge as described in Sec. 112.1(b). For flowlines and intra-facility gathering lines that are not provided with secondary containment in accordance with Sec. 112.7(c), the frequency and type of testing must allow for the implementation of a contingency plan as described under part 109 of this chapter.
   * Take corrective action or make repairs to any flowlines and intra-facility gathering lines and associated appurtenances as indicated by regularly scheduled visual inspections, tests, or evidence of a discharge.
   * Promptly remove or initiate actions to stabilize and remediate any accumulations of oil discharges associated with flowlines, intra-facility gathering lines, and associated appurtenances.
This provision would continue to be subject to the "environmental equivalence" provision at §112.7(a)(2), meaning that a facility owner/operator can substitute alternative measures if he or she demonstrates that the alternate measures would achieve equivalent environmental protection. 
Universe of Affected Facilities
Since EPA assumed that all facilities would determine impracticability of secondary containment around flowlines and develop an oil spill contingency plan instead and existing facilities would already have a contingency plan in place. Therefore, only new oil production facilities would be affected by the 2008 final amendment that gave conditional exemption to the secondary containment requirement around flowlines. However, both new and existing facilities may be affected by the more prescriptive flowlines and gathering lines maintenance plan. 
Compliance Cost Savings
EPA expects that majority of the facilities with flowlines would choose impracticability determination because of the difficulty involved in installing secondary containment around flowlines. It is likely that some facilities have such secondary containment in the form of double walled pipelines. However, EPA does not have information on the number of such facilities and therefore EPA assumed that, in the baseline, all the facilities with flowlines would choose impracticability determination. Therefore, as a result of the final amendment, the conservative estimate is that the facility owners/operators would not benefit from cost savings on secondary containment. Instead, owners/operators would save from not having to determine impracticability. In order to determine impracticability, the current SPCC rule requires the facility owner or operator to (1) explain why it is impracticable, (2) develop a contingency plan, and (3) have a written commitment of resources in case of a discharge. Since the final amendment requires that a facility have a contingency plan and written commitment of resources, the facility would only save the cost of not needing to explain why secondary containment is impracticable. 
In addition to exempting secondary containment for flowlines, the 2008 final amendments provided prescriptive requirements for a flowline and gathering line maintenance program. The 1973 SPCC rule had prescriptive requirements for the flowline maintenance program, and the 2002 rule only required that the facility owners and operators have a maintenance program without a prescriptive requirement. However, a PE had to certify the maintenance program.
EPA expects that for the majority of owners and operators of facilities the current maintenance program that they have in place incorporates most of the prescriptive requirements finalized in the 2008 amendment. For these owners and operators there will be no cost of the prescriptive requirement. Only owners and operators of facilities whose current plan does not have the four elements will incur additional cost. These facilities would have the choice to either incorporate the additional elements of the prescriptive requirement or demonstrate that their program is environmentally equivalent. Since the 2002 SPCC rule required a maintenance program, EPA assumed that production facilities would choose the lower-cost option and would demonstrate that their program is environmentally equivalent to the prescriptive requirements of the final amendment, rather than adopt the new requirements. Thus, the upper bound of the cost that facility owners and operators would incur is the cost increase for having to demonstrate environmental equivalence, as a result of the 2008 amendments. 
EPA recognizes that some facilities may have maintenance programs that are more stringent than the prescriptive requirements and will not incur any additional cost. However, the Agency did not have information to estimate the distribution of existing facilities that will incur a cost a result of this prescriptive plan and those that will not. Further, some facilities may already have secondary containment around flowlines and gathering lines and these facilities will not have any cost savings from the changed requirement. However, EPA expects that the cost of demonstrating environmental equivalence to the prescriptive requirements is likely to be similar to the cost of explaining why secondary containment is impracticable for flowlines and gathering lines. Therefore, even if facilities incur an additional cost, on balance, a large majority of the facilities would not face any significant cost change because of this amendment. 
DOT-Regulated Gathering Lines
To clarify the scope of the SPCC rule's applicability to gathering lines, in 2008 the Agency also finalized an amendment that would exempt the few "intra-facility" gathering lines that are subject to both EPA and DOT regulatory requirements. Some intra-facility gathering lines may be regulated by DOT because DOT may limit the boundary of a facility to the central tank battery, thereby including under regulation intra-facility gathering lines that are also regulated by EPA. EPA's exemption of DOT-regulated gathering lines from SPCC regulation is likely to only have a small impact on compliance costs, because the gathering lines subject to DOT's authority under the "technical requirements" of 49 CFR parts 192 and 195 would be subject to similar requirements as under the SPCC rule. The only cost increase would be related to the cost of adding the DOT regulated gathering lines in the SPCC Plan. The Agency did not have data to estimate the additional cost resulting from this but expects that the cost would be minimal. 
Flow-through Process Vessels
Flow-through process vessels at an oil production facility typically include equipment such as horizontal or vertical separation vessels (e.g., free-water knockout, gun-barrel, heater-treater) that are used to separate the well fluid into its marketable or waste fractions (oil, gas, wastewater, and solids), and to treat the crude oil as needed for further storage and shipping. Under the existing SPCC requirements, flow-through process vessels are required to have secondary containment for the entire capacity of the largest single container and sufficient freeboard to contain precipitation (§112.9(c)(2)). EPA modified the requirements at §112.9(c) to provide an alternative to the sized secondary containment requirements for flow-through process vessels at oil production facilities. This amendment removes the requirement to provide sized secondary containment for flow-through process vessels at oil production facilities without making an impracticability determination, and allows the facility owner or operator the option to comply with the alternate requirements in §112.9(c)(5) instead. However, because this equipment at a production facility typically operates unattended, EPA also amended the rule to require the inspection of process vessel components including ancillary equipment, prompt removal of any oil accumulations, and corrective action should a discharge occur. 
Universe of Affected Facilities
Because the Agency assumed full compliance with the current SPCC rule requirements, existing facilities will not be affected by this amendment; only new production facilities will be affected. The amendment has an eligibility clause, requiring facilities that have a single oil discharge to navigable waters or adjoining shorelines exceeding 1,000 gallons or two discharges to navigable waters or adjoining shorelines exceeding 42 gallons within a 12-month period to revert back to the sized secondary containment requirement within six months of the discharge date. However, the discharge history from the process vessels suggests that the percentage of such facilities would be few. The Agency analyzed the National Response Center (NRC) data for the period of 2000 through 2005 and found only 120 discharge cases originating from process vessels, which is equivalent to approximately 20 discharges a year. Even assuming that these discharges originated from 20 individual facilities and exceeded 1,000 gallons each, it would result in an insignificant percentage of the total number of oil production facilities (215,000). The final amendment also includes measures that are likely to further reduce the threat of an oil discharge from these vessels. Therefore, the Agency assumed that all new facilities will be exempt from the sized secondary containment requirements. 
Exhibit 6-37 presents the projected number of new production facilities from 2010 through 2019. The projected average annual number of new production facilities is estimated to be 9,210. EPA projected the number of new oil production facilities over the 10-year analysis period using the estimated number of SPCC-regulated oil production facilities and industry-specific growth rates. 
Exhibit 6-37 
Projected Number of New Oil Production Facilities[1]
Oil Production Industry
Number of New Facilities Affected by the Amendment
10-Year Average

2010
Year 1
2011
Year 2
2012
Year 3
2013
Year 4
2014
Year 5
2015
Year 6
2016
Year 7
2017
Year 8
2018
Year 9
2019
Year 10

Category I
                                                                         1,080 
                                                                           804 
                                                                         1,160 
                                                                         1,200 
                                                                         1,250 
                                                                         1,140 
                                                                         1,560 
                                                                         1,020 
                                                                         1,170 
                                                                         1,400 
                                                                         1,180 
Category II
                                                                         5,800 
                                                                         4,330 
                                                                         6,240 
                                                                         6,480 
                                                                         6,730 
                                                                         6,170 
                                                                         8,420 
                                                                         5,480 
                                                                         6,290 
                                                                         7,520 
                                                                         6,350 
Category III
                                                                         1,520 
                                                                         1,140 
                                                                         1,640 
                                                                         1,700 
                                                                         1,770 
                                                                         1,620 
                                                                         2,210 
                                                                         1,440 
                                                                         1,650 
                                                                         1,980 
                                                                         1,670 
Category IV
                                                                            15 
                                                                            11 
                                                                            16 
                                                                            17 
                                                                            17 
                                                                            16 
                                                                            22 
                                                                            14 
                                                                            16 
                                                                            19 
                                                                            16 
Total
                                                                         8,420 
                                                                         6,290 
                                                                         9,050 
                                                                         9,400 
                                                                         9,770 
                                                                         8,950 
                                                                        12,200 
                                                                         7,950 
                                                                         9,120 
                                                                        10,900 
                                                                         9,210 

Baseline Compliance Cost and Cost Savings
Baseline Compliance Cost
EPA calculated the baseline compliance cost incurred by new production facilities for complying with the secondary containment requirements for flow-through process vessels. EPA assumed that all facilities would locate their separation and treatment containers within the tank battery with the possible exception of the heater-treater; EPA's site visits and the review of several SPCC Plans suggest that some facilities have at least one heater-treater outside the tank battery. Therefore, EPA assumed that the baseline cost of compliance would be the cost of providing sized secondary containment around one heater-treater outside the tank battery. The Agency estimated that the cost of sized containment (earthen berm) around a heater-treater is $4,000 for all size categories. 
The total baseline cost of compliance was calculated by multiplying this facility-level cost with the total number of production facilities affected by this amendment.
EPA estimated that the baseline cost of compliance with the flow-through process vessels requirements is $36.6 million and $36.2 million per year, discounted at 3 percent and 7 percent, respectively (see Exhibit 6-38).


Exhibit 6-38 
Annual Baseline Compliance Cost of Secondary Containment at Flow-through Process Vessels Requirements 
(2007$ Millions)

Compliance Costs

2010
Year 1
2011
Year 2
2012
Year 3
2013
Year 4
2014
Year 5
2015
Year 6
2016
Year 7
2017
Year 8
2018
Year 9
2019
Year 10
10- Year Present Value
Annualized
Not Discounted
                                                                          $33.7
                                                                          $25.2
                                                                          $36.2
                                                                          $37.6
                                                                          $39.1
                                                                          $35.8
                                                                          $48.9
                                                                          $31.8
                                                                          $36.5
                                                                          $43.6
                                                                           $368
                                                                          $36.8
3% Discounted
                                                                          $32.7
                                                                          $23.7
                                                                          $33.1
                                                                          $33.4
                                                                          $33.7
                                                                          $30.0
                                                                          $39.7
                                                                          $25.1
                                                                          $28.0
                                                                          $32.5
                                                                           $312
                                                                          $36.6
7% Discounted
                                                                          $31.5
                                                                          $22.0
                                                                          $29.6
                                                                          $28.7
                                                                          $27.9
                                                                          $23.9
                                                                          $30.4
                                                                          $18.5
                                                                          $19.9
                                                                          $22.2
                                                                           $254
                                                                          $36.2


Compliance Cost Saving
EPA assumed that all new production facilities will save on the cost of sized secondary containment, but still incur the cost of general secondary containment. While providing relief from sized secondary containment, EPA is requiring that facilities inspect components, remove oil accumulations, and take corrective action. Under the current SPCC rule, facilities are already required to periodically inspect containers under §112.9(c)(3). The Agency believes that facilities will remove oil accumulations and take corrective action as part of their normal maintenance operations, and expects no effect on cost because of these additional requirements. Therefore, the cost savings to the facility would be the difference in the cost of sized secondary containment and general secondary containment. 
Given the current SPCC requirements, facilities would save the cost of sized secondary containment only if the separation process vessels are located outside of the tank battery, which generally has one secondary containment dike or berm around all of the containers. If the vessels are inside the tank battery, the sized secondary containment that is required for oil stock tanks would likely provide sufficient containment for the process vessels. EPA assumed that all facilities would locate their separation and treatment containers within the tank battery with the possible exception of the heater-treater; EPA's site visits and the review of several SPCC Plans suggest that some facilities have at least one heater-treater outside of the tank battery. Therefore, the amendments present no compliance cost savings for secondary containment of separation process vessels.
The Agency assumed that the cost of general secondary containment is approximately 80 percent of the cost of sized secondary containment. This is based on the fact that, unlike sized secondary containment, which must be designed to hold the capacity of the largest container, general secondary containment should be sized only to contain the most likely discharge (which may be caused by overfill, etc.). The Agency estimated that the cost of sized secondary containment (earthen berm) around a heater-treater is $4,000 for all size categories. The affected facilities would save the difference in cost between sized and general secondary containment (i.e., 20 percent of the total cost for sized secondary containment). Thus, the per-facility cost savings were estimated at $800.
The total cost savings from the final amendments were calculated by multiplying the facility-level cost with the total number of oil production facilities affected by this amendment, as summarized in the equation below.
Using the equation below, EPA estimated that the final amendment to exempt the facilities from sized secondary containment for flow-through process vessels would reduce compliance costs by $7.31 million and $7.24 million per year, discounted at 3 percent and 7 percent, respectively (see Exhibit 6-39).
                             Total Cost Savings =	
 where, i = I, II, III, and IV are the size categories.
 NFaci = the projected number of production facilities in size category i  (see Exhibit 6-37).
NCostSavingi = the per-facility cost savings for size category i  (see Section 6.13.7.2).
Overlapi = 1 - estimated percentage reduction in total burden due to state overlap for size category i  (see Exhibit 5-22).
Calculation of Total Cost Savings


Exhibit 6-39 
Projected Annual Compliance Cost Savings from Final Amendment to Flow-through Process Vessels Requirements
(2007$ Millions)[1]

Compliance Cost Savings

2010
Year 1
2011
Year 2
2012
Year 3
2013
Year 4
2014
Year 5
2015
Year 6
2016
Year 7
2017
Year 8
2018
Year 9
2019
Year 10
10- Year Present Value
Annualized
Not Discounted
                                                                          $6.73
                                                                          $5.03
                                                                          $7.24
                                                                          $7.52
                                                                          $7.81
                                                                          $7.16
                                                                          $9.77
                                                                          $6.36
                                                                          $7.30
                                                                          $8.73
                                                                          $73.7
                                                                          $7.37
3% Discounted
                                                                          $6.54
                                                                          $4.74
                                                                          $6.63
                                                                          $6.68
                                                                          $6.74
                                                                          $6.00
                                                                          $7.95
                                                                          $5.02
                                                                          $5.59
                                                                          $6.49
                                                                          $62.4
                                                                          $7.31
7% Discounted
                                                                          $6.29
                                                                          $4.39
                                                                          $5.91
                                                                          $5.73
                                                                          $5.57
                                                                          $4.77
                                                                          $6.09
                                                                          $3.70
                                                                          $3.97
                                                                          $4.44
                                                                          $50.9
                                                                          $7.24
[1]	See Appendix J in Volume II for more details on the calculation of cost savings.


Alternative Qualified Facilities Criteria for Oil Production Facilities
In the December 5, 2008 amendments, EPA allowed owner/operators of certain oil production facilities to prepare a self-certified SPCC Plan rather than a Plan certified by a PE based on alternative qualifying criteria. Some stakeholders, in their public comments on the October 2007 proposed SPCC amendments, expressed concern about the regulation of small oil production facilities under the SPCC rule, suggesting that the costs of the SPCC requirements are disproportionate to the threat that these small oil production facilities pose to the environment. EPA believes that discharges from small oil production facilities can pose a threat of an oil discharge to navigable waters or adjoining shorelines. The Agency also believes a PE should be involved in the development and implementation of an SPCC Plan at most oil production facilities because they typically have complex equipment and store large quantities of oil. These facilities are of further concern because they typically have operations that are unattended and in remote locations and therefore pose an environmental threat. Therefore, EPA is removing the alternative qualified facility eligibility criteria provision for oil production facilities finalized in the December 2008 rule. As a result, there is no cost impact of the combined 2008 and 2009 final amendments. Below we review the cost savings that were estimated for the 2008 amendment but that are no longer expected below.
Compliance Cost Savings
In 2008, EPA assessed the cost savings of this alternative option that allows for owners/operators of certain oil production facilities to prepare self-certified SPCC Plans. EPA calculated the cost savings by estimating the number of affected facilities and the facility-level cost savings for these facilities. EPA also accounted for an overlap of cost-savings between production facilities and small production facilities to avoid double-counting. 
Number of Affected Facilities. EPA first estimated the number of qualified oil production facilities that would have no injection wells at the facility and no more than four producing wells per single tank battery or would have one or more injection wells at the facility and no more than two producing wells per single tank battery. EPA projected the number of new and existing production facilities affected by the alternative facilities criteria option for each year of 10-year analysis period (2010 through 2019.) The average yearly number of new and existing facilities that would have been affected is 96,400. 
Facility-Level Cost Savings for Affected Qualified Facilities. A small oil production facility owner/operator would be able to take advantage of the relief offered by the alternative qualified facility criteria and have the option to prepare a self-certified SPCC Plan rather than a Plan certified by a PE. Another potential impact of the regulatory relief approach is that facility operators with both marginal wells and non-marginal wells within the same facility could choose to redefine their facility. This could be done by splitting the facility in order to meet compliance requirements as long as the marginal and non-marginal wells are not in the same tank battery. EPA calculated the cost savings for each facility size using the average PE certification cost for a new Plan, and for minor and major technical amendments. 
Further, EPA assumed that a total of 13 percent of existing facilities amend their Plan each year due to a required 5-year review (10 percent of all facilities) and technical amendments to the facility (3 percent of all facilities). The average unit costs incurred for certifying a new and re-certifying an amended SPCC Plan were calculated as well. Also EPA assumed that a certain number of new and existing facilities with a total aboveground oil storage capacity of 10,000 gallons or less are already eligible to self-certify SPCC Plans as qualified facilities and are receiving these savings. The average number of qualified facilities before this rule amendment is 32,600, over the analysis period 2010-2019. The average number of all oil production facilities over the analysis period is 255,066.
Overlap. EPA determined that there was a certain degree of overlap between the relaxed requirements for production facilities introduced by the six-month delay amendment and the amendment for small production facilities. As a result, EPA accounted for the common cost savings in the section for the six-month delay amendment and removed the double counting effect from the cost savings for the small production facilities. 
Calculation of Total Cost Savings
             Total Cost Savings =	NFac * (NCost Saving Qualified)*Overlap
 where,
 NFac = the projected number of affected facilities.
 NCost Saving Qualified = Facility-level cost savings for affected qualified facilities. 
 Overlap = 1 - estimated percentage reduction in total burden due to state overlap for affected facilities.
EPA estimated the total cost savings by multiplying the facility-level cost by facility size category with the total number of new and existing production facilities affected by this amendment in each size category, and only counting the overlapping facilities once. 
Using the equation above, EPA estimated that this alternative option for small production facilities with marginal wells would reduce compliance costs by approximately $30.2 million and $29.9 million per year, discounted at 3 percent and 7 percent, respectively (see Exhibit 6-40).

Exhibit 6-40 
Projected Annual Total Compliance Cost Savings for the EPA Approach for Marginal Oil Production Facilities (2007$ Millions)

Total Cost Savings

2010
Year 1
2011
Year 2
2012
Year 3
2013
Year 4
2014
Year 5
2015
Year 6
2016
Year 7
2017
Year 8
2018
Year 9
2019
Year 10
10- Year Present Value
Annualized
Not Discounted
                                                                          $26.1
                                                                          $25.5
                                                                          $28.0
                                                                          $29.1
                                                                          $30.3
                                                                          $30.7
                                                                          $33.9
                                                                          $32.1
                                                                          $33.7
                                                                          $35.8
                                                                           $305
                                                                          $30.5
3% Discounted 
                                                                          $25.4
                                                                          $24.0
                                                                          $25.6
                                                                          $25.9
                                                                          $26.1
                                                                          $25.7
                                                                          $27.5
                                                                          $25.3
                                                                          $25.8
                                                                          $26.6
                                                                           $258
                                                                          $30.2
7% Discounted 
                                                                          $24.4
                                                                          $22.2
                                                                          $22.9
                                                                          $22.2
                                                                          $21.6
                                                                          $20.4
                                                                          $21.1
                                                                          $18.7
                                                                          $18.3
                                                                          $18.2
                                                                           $210
                                                                          $29.9



Produced Water Storage Containers
Under the final rulemaking, EPA is removing all rule elements associated with the exemption for produced water containers in the December 2008 amendments.  Since EPA is removing an exemption provided in the 2008 rule, there is no cost impact of the combined 2008 and 2009 final amendments.  The Agency has determined that the exemption for produced water containers would not effectively protect the environment from discharges of quantities of oil that may be harmful.  
EPA is not making any changes to the definition of produced water container in §112.2 or the alternative compliance measures for produced water containers in lieu of sized secondary containment as finalized in the December 5, 2008 amendments. The alternative measures to sized secondary containment requirements and inspections under §112.9(c)(2) and (c)(3) for produced water containers include: compliance with general secondary containment requirements; implementation of a procedure or process to remove free-phase oil (e.g., skimming program) as certified by a PE; visual inspection; corrective action or repairs to the container; and prompt removal or remediation of oil discharges. 
Consistent with the assumption of full compliance with the SPCC requirements, EPA expects that existing production facilities would have already constructed the sized secondary containment and would not be affected by this amendment.  Further, EPA determined that it is a common engineering practice to co-locate stock tanks and a produced water container in one tank battery and provide sized secondary containment that has the capacity of the largest single oil container and sufficient freeboard to contain precipitation (see Exhibit 6-41).   Therefore, new facility owner/operator would continue to provide sized secondary containment around the tank battery for stock and other tanks within the battery. Since the produced water containers are typically the largest, the owner/operator would save from constructing a lower height sized secondary containment around the tank battery, which would serve as general containment for the produced water containers.  
Exhibit 6-41
Oil Storage Containers at a Typical Oil Production Facility in Size Category II
Oil Storage Containers
Capacity (Gallons)
(Average, Range)
Percentage of Total
(Average, Range)
Produced Water Container (1)
                           21,000, (17,000- 23,000)
                               37%, (30%-40%)[1]
Stock Tanks (2)
                         33,600, ( 30,000  -  35,000)
                                59%, (52%-61%)
Heater-Treater (1) 
                              2,310, (1,700-2500)
                                  4%, (3%-4%)
Total
                           57,000, (49,000- 61,000)
                                     100%
[1]	This percentage could vary depending on oil well productivity. Some Regions have higher fractions for produced water. For example, from personal communication with Vincent Zenone, Region 3: "70% of the storage capacity for any of the size-categorized facilities would be required for produced water in PA.  WV would have a similar percent of recovered produced water as a function of oil production."
Source: A set of SPCC Plans obtained from EPA Regions in December 2006-January 2007
The estimated cost of sized secondary containment for a facility with the maximum tank capacity of 66,600 gallons (Category III facility) ranges from $5,430 for an earthen berm to approximately $24,300 for a concrete berm. The Agency assumed that the size of the largest stock tank is 80 percent of the size of the produced water tank (based on model facility developed using SPCC Plans obtained by EPA regions). EPA's research shows that a 20 percent reduction in capacity of the largest tank would lead to approximately 8 percent to 11 percent reduction in cost of the sized secondary containment with associated cost savings from $434 to $2,670 for earthen and concrete berms respectively. 
Exhibit 6-42 presents the estimates of the facility-level cost savings associated with the reduced cost for providing secondary containment for the produced water container.
Exhibit 6-42
Estimated Unit Cost/Cost Savings for New Facilities
Size Category
Capacity of Produced Water Container[1]
Cost of Sized Secondary Containment
Cost Savings



Earthen Berm
Concrete Berm
Earthen Berm
Concrete Berm
Category I
                                                                  2,090 gallons
                                                                         $1,560
                                                                         $5,270
                                                                           $125
                                                                           $580
Category II
                                                                  7,770 gallons
                                                                         $2,810
                                                                        $15,700
                                                                           $225
                                                                         $1,720
Category III
                                                                 66,600 gallons
                                                                         $5,430
                                                                        $24,300
                                                                           $434
                                                                         $2,670
Category IV
                                                                444,000 gallons
                                                                        $23,200
                                                                       $114,000
                                                                         $1,860
                                                                        $12,600
[1]	Firms incur cost savings only if the largest container in the tank battery is the produced water container. It is also important to note that this is the size of the largest container; a facility may have additional containers within the tank battery. 

In addition to general secondary containment, the owners/operators of the facilities need to implement a procedure or process to remove free-phase oil.  EPA estimated the cost of the skimming or a similar oil removing procedure at $1,020 in the first year and $322 in subsequent years (includes the effort to develop and implement the procedure). An oil skimmer ranges in price from approximately $130 to $1,260 with an average of about $700. Based on EPA's judgment, facilities would incur technical labor costs of six hours ($322) per year to operate the skimming devices.  
Although the final rule incorporates additional flexibility regarding secondary containment requirements for produced water containers, the following additional measures are required in order to maintain environmental protection under this approach: (1) scheduled inspections/testing of the produced water container and associated piping; (2) corrective action to repair the container or associated piping, and (3) prompt removal of or actions to stabilize and remediate oil discharges associated with the produced water container.  None of these measures are expected to result in an additional cost beyond baseline costs for conducting scheduled inspections/testing, corrective action, and removing oil discharges from the produced water containers.  
Clarification of the Definition of Permanently Closed Containers
The SPCC rule exempts from applicability and from capacity threshold determinations any oil storage container that is "permanently closed." EPA sought to address concerns expressed by the regulated community over the definition of a "permanently closed" container, as described in §112.2. According to the definition, in order to permanently close a container: all liquid and sludge must be removed from the container and connecting line; all connecting lines and piping must be disconnected from the container and blanked off; all valves (except ventilation valves) must be closed and locked; and conspicuous signs must be posted on each container stating that it is a permanently closed container and noting the date of closure. Once permanently closed, containers are no longer required to be counted in facility storage capacity calculation, nor are they subject to the other requirements under the SPCC rule. 
Variable economic conditions and production rates at oil production facilities may result in certain containers at a facility going unused for long periods of time. Regulated community members have suggested that permanent closure of such tanks is costly and undesirable because closing a container impedes bringing it back into use if production rates surge or if economic conditions become more favorable. Members of the regulated community have suggested that EPA provide an option to "temporarily" close tanks, in order to exempt the containers from SPCC applicability. However, EPA maintains that if a tank is not permanently closed, it is still available for storage and the possibility of a discharge, as described in §112.1(b), remains. Accordingly, EPA does not believe that a regulatory action is warranted to address this issue. 
Since the amendment only seeks to provide clarification on the SPCC rule and does not change the regulatory requirements, no cost impact is monetized as a result of this clarification.
Oil and Natural Gas Pipeline Facilities
EPA sought to provide clarification regarding SPCC rule applicability at natural gas production facilities. Under the SPCC rule, EPA does not regulate natural gas. Although the SPCC rule requirements do not apply to such facilities because natural gas does not meet the definition of oil, natural gas facilities may store other products that are considered oil, and thus could be subject to the requirements of the SPCC rule. Because natural gas condensate that can be drawn off of tanks, containers, or other equipment is liquid at atmospheric pressures and temperatures, any accumulations of drip or condensate from natural gas production is considered oil. Therefore, for the purposes of determining SPCC applicability, containers 55 gallons or more in capacity that store condensate must be included in a natural gas facility's total oil storage capacity calculation (ancillary oil storage in other areas of the facility, such as fuel or lubrication oil storage, is also counted). EPA sought to clarify the applicability of the SPCC rule to oil containers at a natural gas facility, and the different SPCC provisions to which a natural gas facility may be subject. The final rule makes no change in these provisions and is not otherwise intended to impose new requirements on DOT-regulated oil and natural gas pipelines. Rather, by granting operators new flexibility in delineating facility boundaries, the final rule should reduce uncertainty and minimize, if not eliminate, overlapping enforcement.
Since the amendment only seeks to provide clarification on the SPCC rule, and does not change the regulatory requirements, no cost impact is monetized as a result of this clarification. Conceivably, there could be cost savings that result from the reduced burden of understanding the rule, but EPA does not have sufficient information to quantify these savings.
Aggregate Cost Savings for Oil Production Facilities
The oil production sector would benefit from the new requirements for Tier I qualified facilities, revisions to the facility diagram requirements, in addition to amendments specific to the oil production sector such as the six-month delay in preparation and implementation of SPCC Plans and the alternative compliance requirements in lieu of sized secondary containment of flow-through separation and treating equipment. The total annualized savings to owners and operators of oil production facilities from all of the final amendments that affect this sector are estimated at $35.5 million and $35.2 million at the 3 percent and 7 percent discount rate (see Exhibit 6-43).


Exhibit 6-43 
Estimated Aggregate Annual Cost Savings for Oil Production Facilities from Multiple Rule Components (2007$ Millions)
Option
%
Total Cost Savings for Oil Production Facilities


Year


2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
10- Year Present Value
Annualized


1
2
3
4
5
6
7
8
9
10


Tier I Qualified Facilities
 
                                                                             0%
                                                                          $2.31
                                                                          $1.73
                                                                          $2.49
                                                                          $2.58
                                                                          $2.68
                                                                          $2.46
                                                                          $3.36
                                                                          $2.18
                                                                          $2.51
                                                                          $3.00
                                                                          $25.3
                                                                          $2.53
 
                                                                             3%
                                                                          $2.24
                                                                          $1.63
                                                                          $2.28
                                                                          $2.29
                                                                          $2.31
                                                                          $2.06
                                                                          $2.73
                                                                          $1.72
                                                                          $1.92
                                                                          $2.23
                                                                          $21.4
                                                                          $2.51
 
                                                                             7%
                                                                          $2.16
                                                                          $1.51
                                                                          $2.03
                                                                          $1.97
                                                                          $1.91
                                                                          $1.64
                                                                          $2.09
                                                                          $1.27
                                                                          $1.36
                                                                          $1.52
                                                                          $17.5
                                                                          $2.49
Six Month Delay for SPCC Plan Preparation and Implementation
 
                                                                             0%
                                                                          $22.2
                                                                          $16.6
                                                                          $23.8
                                                                          $24.7
                                                                          $25.7
                                                                          $23.6
                                                                          $32.2
                                                                          $20.9
                                                                          $24.0
                                                                          $28.7
                                                                           $242
                                                                          $24.2
 
                                                                             3%
                                                                          $21.5
                                                                          $15.6
                                                                          $21.8
                                                                          $22.0
                                                                          $22.2
                                                                          $19.7
                                                                          $26.2
                                                                          $16.5
                                                                          $18.4
                                                                          $21.4
                                                                           $205
                                                                          $24.1
 
                                                                             7%
                                                                          $20.7
                                                                          $14.5
                                                                          $19.5
                                                                          $18.9
                                                                          $18.3
                                                                          $15.7
                                                                          $20.0
                                                                          $12.2
                                                                          $13.1
                                                                          $14.6
                                                                           $167
                                                                          $23.8
Additional Requirements in Lieu of Sized Secondary Containment of Process Vessels 
 
                                                                             0%
                                                                          $6.73
                                                                          $5.03
                                                                          $7.24
                                                                          $7.52
                                                                          $7.81
                                                                          $7.16
                                                                          $9.77
                                                                          $6.36
                                                                          $7.30
                                                                          $8.73
                                                                          $73.7
                                                                          $7.37
 
                                                                             3%
                                                                          $6.54
                                                                          $4.74
                                                                          $6.63
                                                                          $6.68
                                                                          $6.74
                                                                          $6.00
                                                                          $7.95
                                                                          $5.02
                                                                          $5.59
                                                                          $6.49
                                                                          $62.4
                                                                          $7.31
 
                                                                             7%
                                                                          $6.29
                                                                          $4.39
                                                                          $5.91
                                                                          $5.73
                                                                          $5.57
                                                                          $4.77
                                                                          $6.09
                                                                          $3.70
                                                                          $3.97
                                                                          $4.44
                                                                          $50.9
                                                                          $7.24
Facility Diagram
 
                                                                             0%
                                                                          $1.52
                                                                          $1.14
                                                                          $1.64
                                                                          $1.70
                                                                          $1.77
                                                                          $1.62
                                                                          $2.21
                                                                          $1.44
                                                                          $1.65
                                                                          $1.97
                                                                          $16.6
                                                                          $1.66
 
                                                                             3%
                                                                          $1.48
                                                                          $1.07
                                                                          $1.50
                                                                          $1.51
                                                                          $1.52
                                                                          $1.36
                                                                          $1.80
                                                                          $1.13
                                                                          $1.26
                                                                          $1.47
                                                                          $14.1
                                                                          $1.65
 
                                                                             7%
                                                                          $1.42
                                                                          $0.99
                                                                          $1.34
                                                                          $1.30
                                                                          $1.26
                                                                          $1.08
                                                                          $1.38
                                                                          $0.84
                                                                          $0.90
                                                                          $1.00
                                                                          $11.5
                                                                          $1.64
Total

                                                                             0%
                                                                          $32.7
                                                                          $24.5
                                                                          $35.2
                                                                          $36.5
                                                                          $38.0
                                                                          $34.8
                                                                          $47.5
                                                                          $30.9
                                                                          $35.5
                                                                          $42.4
                                                                           $358
                                                                          $35.8

                                                                             3%
                                                                          $31.8
                                                                          $23.1
                                                                          $32.2
                                                                          $32.5
                                                                          $32.8
                                                                          $29.1
                                                                          $38.6
                                                                          $24.4
                                                                          $27.2
                                                                          $31.6
                                                                           $303
                                                                          $35.5

                                                                             7%
                                                                          $30.6
                                                                          $21.4
                                                                          $28.7
                                                                          $27.9
                                                                          $27.1
                                                                          $23.2
                                                                          $29.6
                                                                          $18.0
                                                                          $19.3
                                                                          $21.6
                                                                           $247
                                                                          $35.2


Man-Made Structures 
The Agency sought to clarify that certain man-made features, such as building walls, basement structures, and drainage systems, may be taken into consideration in determining how to comply with SPCC requirements. If an oil container at a regulated facility is located inside a building, the PE or facility owner/operator certifying the SPCC Plan may take into consideration the ability of the building walls and/or drainage systems to serve as secondary containment for the container. 
Since this amendment only sought to provide clarification and does not change the regulatory requirements, it is not expected to result in any change in cost. Conceivably, there could be cost savings that result from the reduced burden of understanding the rule, but EPA does not have sufficient information to quantify these savings. 
Wind Turbines
The Agency provided clarity on the applicability of the rule to wind turbines used to produce electricity. EPA believes that these wind turbines meet the definition of oil-filled operational equipment promulgated in the December 2006 SPCC rule amendments (71 FR 77266, December 26, 2006) and thus may be eligible for the alternative compliance option provided to qualified oil-filled operational equipment. Since the Agency is only providing clarity on the applicability of the rule, no cost impact is monetized as a result of this clarification. Conceivably, there could be cost savings that result from the reduced burden of understanding the rule, but EPA does not have sufficient information to quantify these savings.
Tier I Qualified Facilities 
Background
EPA amended the SPCC rule to provide an option for owners and operators of certain qualified facilities with maximum individual aboveground oil container storage capacity of 5,000 gallons (designated as Tier I qualified facilities), to complete and implement a streamlined, self-certified SPCC Plan template in order to comply with the requirements of 40 CFR part 112. These Tier I qualified facilities are a subset of Tier II qualified facilities, which are those that meet these qualifying criteria: (1) aggregate aboveground storage capacity of 10,000 gallons or less; (2) no single discharge exceeding 1,000 U.S. gallons or no two discharges each exceeding 42 U.S. gallons within any 12-month period in the three years prior to the SPCC Plan self-certification date, or since becoming subject to 40 CFR part 112 if the facility has been in operation for less than three years (this criterion does not include discharges as described in §112.1(b) that are the result of natural disasters, acts of war, or terrorism). 
EPA developed the template to cover, in a simple, user-friendly format, all requirements applicable to these facilities. Through this option, EPA also eliminated certain requirements, such as the need for a facility diagram, and streamlined other requirements. However, if the facility owner or operator chooses to use the template SPCC Plan for his/her facility SPCC Plan, he/she is not eligible to use "environmentally equivalent" measures that differ from the required Plan elements, as allowed under §112.7(a)(2), or impracticability determinations with respect to any secondary containment requirements, as provided under §112.7(d). 
The Agency assumed that owners and operators of existing facilities would not use this option because they are expected to have an SPCC Plan in place and completing the template would present an additional expense for those facilities. Correspondingly, EPA assumed that owners and operators of all new facilities that meet the Tier I qualifying criterion would take advantage of the reduced requirements to complete and implement a template Plan. 
Universe of Affected Facilities
To estimate the number of Tier I qualified facilities, EPA analyzed the data from state agencies that contain information on storage capacities of individual containers. The Agency estimated that 77 percent of the facilities with total storage capacity of 10,000 gallons or less have no storage containers greater than 5,000 gallons in volume and meet the additional qualifying criteria. 
Exhibit 6-44 presents the projected number of new Tier I qualified facilities from 2010 through 2019. The projected average annual number of new Tier I qualified facilities is 5,780. EPA projected the number of Tier I qualified facilities over the 10-year analysis period using the estimated number of SPCC-regulated facilities with no storage containers greater than 5,000 gallons in volume and industry-specific growth rates.
To estimate the number of Tier I qualified facilities, EPA analyzed the data from state agencies that contain information on storage capacities of individual containers. As a result of this analysis, the Agency estimated the fraction of facilities with the total storage capacity of 10,000 gallons or less that have no individual aboveground oil storage containers with a capacity greater than 5,000 gallons.


Exhibit 6-44 
Projected Number of New Facilities Affected by the Final Amendment for Tier I Qualified Facilities
New Facilities
Number of New Facilities Affected by the Amendment
10-Year Average

2010
Year 1
2011
Year 2
2012
Year 3
2013
Year 4
2014
Year 5
2015
Year 6
2016
Year 7
2017
Year 8
2018
Year 9
2019
Year 10

Facilities with 10,000 gallons or less of aboveground oil storage
                                                                         6,780 
                                                                         6,630 
                                                                         7,100 
                                                                         7,280 
                                                                         7,460 
                                                                         7,510 
                                                                         8,080 
                                                                         7,710 
                                                                         8,040 
                                                                         8,470 
                                                                         7,510 
Tier I Qualified Facilities (No individual aboveground containers greater than 5,000 gallons)
                                                                         5,220 
                                                                         5,100 
                                                                         5,470 
                                                                         5,600 
                                                                         5,750 
                                                                         5,780 
                                                                         6,220 
                                                                         5,940 
                                                                         6,190 
                                                                         6,520 
                                                                         5,780 


The facility estimates presented in Exhibit 6-44 above represent the projected number of facilities that could potentially be "Tier I qualified facilities" based on the capacity of their largest container. Eligibility for the alternative rule requirements, however, also considers the facility's discharge history. According to the amended requirements, a qualified facility cannot have had a single discharge (as described in §112.1(b)) greater than 1,000 gallons or two discharges each greater than 42 gallons during any 12-month period in the past three years. Since only new facilities would be able to take advantage of the final action, EPA assumed that those facilities would have a discharge-free history and, thus, qualify for this option.
Facility owners or operators would have the choice of complying with the existing SPCC rule (as amended in 2006) or taking advantage of the alternative requirements for Tier I qualified facilities. EPA assumed that facility owners and operators would likely choose the alternative requirements if their facility meets the qualifying criteria because it would be less costly than following the requirements that apply to all other facilities. Additionally, new facilities will not likely need to determine impracticability of secondary containment at the facility because the final rule also includes an alternative compliance option for flowlines and intra-facility gathering lines at oil production facilities in lieu of secondary containment. Therefore, new facilities will not be affected by the impracticability restriction for owners or operators of Tier I qualified facilities. As a result, in this analysis, EPA assumed that owners and operators of all new facilities that meet the Tier I qualified facilities criteria would take advantage of the relief provided by the final amendment.
Baseline Compliance Cost and Cost Savings
Baseline Compliance Cost
EPA estimated the baseline compliance cost for new Tier I qualified facilities using the projected number of new Tier I qualified facilities and the corresponding per-facility cost of compliance estimates before the final amendment. Exhibit 6-45 itemizes the individual cost components Tier I qualified facilities could be required to fulfill based on the 2002 SPCC final rule.
Exhibit 6-45 
Annual Baseline Facility-Level Compliance Costs for Tier I Qualified Facility
Compliance Requirements
2002 Baseline Annual Cost 
(before additional cost for template preparation) 
New Facilities
New Plan - 112.3(a)
                                                                         $4,550
Oil Discharge Reporting - 112.4(c)
                                                                          $0.19
Modification of Plan - 112.5(a)
                                                                           $254
Recordkeeping
                                                                           $371
Total
                                                                         $5,170
Source: SCS Engineers (cost estimates for activities performed by an engineering firm) and RIA for the Final 2006 rule (cost estimates for activities performed by facility personnel, such as information submission in case of an oil discharge and recordkeeping). 

EPA estimated the baseline compliance cost for new Tier I qualified facilities at $26.9 million and $26.7 million per year, discounted at 3 percent and 7 percent, respectively. Exhibit 6-46 presents the total annual baseline compliance cost for Tier I qualified facilities each year.

Exhibit 6-46 
Total Projected Baseline Compliance Cost for New Tier I Qualified Facilities with No Containers Greater than 5,000 Gallons (2007$ Millions)

Compliance Costs
10- Year Present Value
Annualized

2010
Year 1
2011
Year 2
2012
Year 3
2013
Year 4
2014
Year 5
2015
Year 6
2016
Year 7
2017
Year 8
2018
Year 9
2019
Year 10


Not Discounted
                                                                          $24.4
                                                                          $23.9
                                                                          $25.6
                                                                          $26.2
                                                                          $26.9
                                                                          $27.0
                                                                          $29.1
                                                                          $27.8
                                                                          $29.0
                                                                          $30.5
                                                                           $270
                                                                          $27.0
3% Discounted
                                                                          $23.7
                                                                          $22.5
                                                                          $23.4
                                                                          $23.3
                                                                          $23.2
                                                                          $22.6
                                                                          $23.7
                                                                          $21.9
                                                                          $22.2
                                                                          $22.7
                                                                           $229
                                                                          $26.9
7% Discounted
                                                                          $22.8
                                                                          $20.8
                                                                          $20.9
                                                                          $20.0
                                                                          $19.2
                                                                          $18.0
                                                                          $18.1
                                                                          $16.2
                                                                          $15.8
                                                                          $15.5
                                                                           $187
                                                                          $26.7


Compliance Cost Savings
To assess the impact of the final amendment, EPA estimated the difference in compliance costs for Tier I qualified facilities between the current SPCC rule and the final amendment. Under the amendment, owners and operators of Tier I qualified facilities would have an overall reduction in the burden associated with preparing and modifying an SPCC Plan.
Based on the different compliance requirement options available to Tier I qualified facilities, EPA estimated that annual cost savings for new facilities would be $4,800. Exhibit 6-47 itemizes the individual cost savings that Tier I qualified facilities could incur resulting from the final reduced requirements. The costs savings do not account for the additional paperwork activities associated with the template preparation that partially offset the savings of not preparing a Plan. These costs are averaged over all Tier I qualified facilities, accounting for the probability that individual facilities would incur the cost. As a result, low probability costs (e.g., complying with §112.4(c)) distributed across many facilities yield only nominal per-facility costs. 
Exhibit 6-47 
Annual Compliance Costs and Potential Compliance Cost Savings per Tier I Qualified Facility (2007$)
Compliance Requirements
Final Amendment
Annual Cost Savings
(before additional cost for template preparation)


Final Amendment
New Facilities
New Plan - 112.3(a)
                                                                          $0.00
                                                                         $4,550
Oil Discharge Reporting - 112.4(c)
                                                                          $0.19
                                                                              -
Modification of Plan - 112.5(a)
                                                                          $0.00
                                                                           $254
Recordkeeping
                                                                           $371
                                                                              -
Total
                                                                           $371
                                                                         $4,800


       The following requirements present key paperwork compliance activities associated with the completion of the Plan template for Tier I qualified facilities in lieu of preparing a full SPCC Plan. While additional requirements apply to Tier I Qualified Facilities (e.g., review drainage control methods to ensure they meet the requirements of 40 CFR part 112), the list focuses on those requirements that are expected to account for a potentially significant hour burden when completing the SPCC Plan template (i.e., those requirements that necessitate more complex technical involvement such as developing procedures or assessing applicable industry standards). 
 Assessing aboveground storage tanks for potential discharge on a regular basis or whenever changes are made. This includes taking an inventory of the oil storage containers and assessing each container with regards to potential modes of failure and discharge volume, direction that the oil would travel, and the adequacy of the secondary containment method, as documented in Table G-4 of the template at 40 CFR part 112, Appendix G. 
Providing each container with a system or documented procedure to prevent overfills; developing an integrity testing program. This involves, for each storage container, identifying procedures to prevent overfills.
Developing a flow-line maintenance program to prevent discharges from each flowline (applies to oil production facilities only). This includes assessing the flowlines present at the facility and determining, based on industry standards, the appropriate set of procedures, responsible personnel, performance schedule, and recordkeeping.
Developing a program of integrity testing and inspections of bulk storage containers. This includes, for each storage container, identifying the applicable industry standards for inspections and testing, and outlining the appropriate procedures, responsible personnel, performance schedule, and recordkeeping.
Filling out the SPCC Plan template. This involves completing all sections of the template provided in Appendix G of 40 CFR part 112.. 
Exhibit 6-48 presents the estimated number of hours, and associated cost, involved in meeting each of the key elements of the template SPCC Plan option.
Exhibit 6-48 
Estimated Additional Costs to New Tier I Qualified Facilities Introduced by the Final Amendment
Template SPCC Plan Elements
Total Burden
Hours ($52.2/hr)[1]
Cost ($/Year)[3]
Assess Potential for Discharge
                                     1.07
                                                                          $57.2
Provide Systems or Procedures for Preventing Overfills
                                     0.86
                                                                          $46.0
Develop Flowline Maintenance Program[2]
                                     8.00
                                                                           $429
Develop Integrity Testing Program
                                     0.86
                                                                          $46.0
Fill out SPCC Plan Template
                                     0.09
                                                                           $4.7
Total Cost - Storage Facility (98.9% of Tier I qualified facilities)
                                     2.87
                                                                           $154
Total Cost - Oil Production Facility (1.1% of Tier I qualified facilities)
                                     10.9
                                                                           $583
Total Cost  -  Weighted Average
                                                                           $159
1 	All hours are for technical personnel.
2 	Applies to oil production facilities only.
[3]	Cost estimates do not include adjustment for state overlap.

EPA estimated that owners and operators of new Tier I qualified facilities would save $4,800, due to not having to prepare a full SPCC Plan, and would incur an additional cost of $159 when preparing and self-certifying their template SPCC Plan (included in Appendix G of the rule). As a result, Tier I qualified facilities would experience compliance cost savings of $4,640. Because the compliance costs associated with the template SPCC Plan alternative offset a portion of the compliance cost savings estimated for new Tier I qualified facilities, the overall net compliance cost savings for these facilities would be $4,640 per facility.
EPA calculated the total compliance cost savings for Tier I qualified facilities using the projected number of new Tier I qualified facilities and their corresponding per-facility compliance cost savings estimates, which are summarized in the equation below:
        Total Net Cost Savings = Nfac * (NCost Saving-NcostIncrease)*Overlap1
 where,
 NFac = the projected number of new affected Tier I qualified facilities (see Exhibit 6-44).
 NCostSaving = Facility level cost savings for affected Tier I qualified facilities (see Exhibit 6-47).
 NCostIncrease = Facility level cost increase for affected Tier I qualified facilities (see Exhibit 6-48).
OverlapI = 1- estimated percentage reduction in total burden due to state overlap for affected Tier I qualified facilities -- Category I (see Exhibit 5-22). 
EPA estimated that the final amendment to the 2002 SPCC final rule would reduce compliance costs by $24.1 million and $23.9 million per year, discounted at 3 percent and 7 percent, respectively. Exhibit 6-49 presents the total annual cost savings for Tier I qualified facilities each year.

Exhibit 6-49 
Total Projected Compliance Cost Savings for New Tier I Qualified Facilities with No Individual Aboveground Oil Storage Containers Greater than 5,000 Gallons (2007$ Millions)[1]

Compliance Cost Savings
10- Year Present Value
Annualized

2010
Year 1
2011
Year 2
2012
Year 3
2013
Year 4
2014
Year 5
2015
Year 6
2016
Year 7
2017
Year 8
2018
Year 9
2019
Year 10


Not Discounted
                                                                          $21.9
                                                                          $21.4
                                                                          $23.0
                                                                          $23.5
                                                                          $24.1
                                                                          $24.3
                                                                          $26.1
                                                                          $24.9
                                                                          $26.0
                                                                          $27.4
                                                                         $242.6
                                                                          $24.3
3% Discounted
                                                                          $21.3
                                                                          $20.2
                                                                          $21.0
                                                                          $20.9
                                                                          $20.8
                                                                          $20.3
                                                                          $21.2
                                                                          $19.7
                                                                          $19.9
                                                                          $20.4
                                                                         $205.7
                                                                          $24.1
7% Discounted
                                                                          $20.5
                                                                          $18.7
                                                                          $18.7
                                                                          $17.9
                                                                          $17.2
                                                                          $16.2
                                                                          $16.3
                                                                          $14.5
                                                                          $14.1
                                                                          $13.9
                                                                         $168.1
                                                                          $23.9
[1] See Appendix J in Volume II for more details on the calculation of cost savings.


Underground Emergency Diesel Generator Tanks at Nuclear Power Stations
Background
EPA exempted underground oil storage tanks located at nuclear power generation facilities licensed by the Nuclear Regulatory Commission (NRC). This exemption includes both tanks that are completely buried and tanks that are below-grade and vaulted. An underground storage tank or UST is defined in 40 CFR part 280 as "any one or combination of tanks ...the volume of which is 10 percent or more beneath the surface of the ground." Below-grade vaulted tanks and completely buried tanks that serve as underground emergency diesel generator tanks at nuclear power plants fall within this definition. EPA believes that the NRC operating safety requirements best address the specific and unique operational challenges at nuclear power plants. A site visit by EPA to a nearby nuclear power station provided information to demonstrate similarities between UST safety measures implemented under NRC regulations and SPCC requirements applicable to underground tanks.
Universe of Affected Facilities
Nuclear Power Plants Subject to SPCC
At nuclear power plants, each nuclear reactor unit is required to have at least two emergency diesel generators (EDGs) on site. The NRC requires that nuclear power plants have enough emergency diesel fuel available to run the EDGs for seven days. A site visit by EPA suggests that the backup diesel fuel for these EDGs is stored in aboveground and underground tanks on the site. EPA also assumes that all nuclear plants have USTs to supply diesel fuel for EDG systems. The Utility Solid Waste Activities Group (USWAG), a utility trade association, indicated that there are approximately 163 USTs at existing nuclear power plants. 
In addition, the Agency believes that all EDG systems at the nuclear power plants have day tanks, whose cumulatively storage capacity may exceed the 1,320-gallon capacity. EPA estimates that all nuclear power plants have cumulative aboveground oil storage capacities in excess of the 1,320-gallon threshold due to the presence of ASTs to supply USTs, day tanks and oil-filled operation equipment (EDGs), which comprise the EDG system at a nuclear power plant. Furthermore, since most nuclear plants are located in coastal areas or close to other navigable waters or adjoining shorelines, EPA infers that all nuclear power plants are subject to the SPCC regulation.
Although the Agency does not have comprehensive information on the storage capacity of underground tanks at nuclear power plants, the power plants contacted indicated total storage capacities under 1 million gallons. Therefore, EPA assumed that most nuclear power plants could be classified as Category III with total storage capacity between 42,000 gallons and 1 million gallons.
Number of Existing Nuclear Power Plants
To estimate the number of facilities affected by this final amendment, EPA used data sources described in this section. The Nuclear Regulatory Commission reports 104 operating nuclear power reactors in 31 states. Those 104 reactors are located at 65 sites; of these, 33 sites have two or more operating nuclear reactors. For the purpose of this analysis, the Agency used the number of sites as a proxy for the number of facilities since EDG systems that store oil are normally shared by the reactors. As a result, EPA estimated the total number of existing nuclear power plants at 65.
Number of New Generating Units at Nuclear Power Plants
An unfavorable business environment has prevented licensing and construction of new nuclear plants in the United States for more than three decades. No new nuclear plants have been built in the United States since 1974. The last new nuclear generating unit at an existing plant brought online in the United States began operation in 1996. Since then, changes in U.S. nuclear capacity have resulted only from up-rating of existing units and retirements. However, in "Annual Energy Outlook 2007 with Projections to 2030," DOE/EIA projects additions of new nuclear power plants. Upcoming construction of new nuclear plants is primarily attributed to the new tax credit allowing facility owners to reduce their tax liability. Because the earliest date at which the first new nuclear unit eligible for the tax credit could become operational is about 2015, the "de-indexing" of the tax credit has the effect of reducing its real value by about 25 to 30 percent.
Based on information provided by USWAG, each of the new units will have its own EDG system, including EDG fuel tanks. As a result, to assess an economic impact of the final option, EPA estimated the number of generating units at nuclear power plants. The NRC licenses all commercially owned nuclear power plants that produce electricity in the United States. As a result, the NRC reports the number of nuclear power plant applications it expects to receive each calendar year through 2009. EPA also consulted with USWAG on the number of expected construction/operating licenses for new units at nuclear power plants. Combining the information on the number of new units provided by NRC and USWAG, EPA estimated approximately 33 new generating units at 25 sites. Applications for those units are expected to be submitted in 2008-2009. Due to an extended period of licensing and construction, the first generating unit at a nuclear power plant is only expected to come online in 2015. Given the expected applications, EPA assumed that seven new units at nuclear plants would start operation in 2015, 22 units in 2016, and three units in 2017 and one unit in 2018. The time period considered in the regulatory impact analysis for the final amendments is 2010 through 2019. In the remaining years of the analysis, no new units at nuclear plants are projected to come online. 
Exhibit 6-50 presents the projected number of new generating units at nuclear power plants from the analysis period of 2010 through 2019. 


Exhibit 6-50
Projected Number of New Generating Units at Nuclear Power Plants, Assuming Full Compliance in the Baseline
Category
Number of New Generating Units at Nuclear Power Plants

2010
Year 1
2011
Year 2
2012
Year 3
2013
Year 4
2014
Year 5
2015
Year 6
2016
Year 7
2017
Year 8
2018
Year 9
2019
Year 10
Category I
                                       -
                                       -
                                       -
                                       -
                                       -
                                       -
                                       -
                                       -
                                       -
                                       -
Category II
                                       -
                                       -
                                       -
                                       -
                                       -
                                       -
                                       -
                                       -
                                       -
                                       -
Category III
                                       -
                                       -
                                       -
                                       -
                                       -
                                       7
                                      22
                                       3
                                       1
                                       -
Category IV
                                       -
                                       -
                                       -
                                       -
                                       -
                                       -
                                       -
                                       -
                                       -
                                       -

Baseline Compliance Cost and Cost Savings
As a result of the final amendment, EPA expects that owners and operators of nuclear power plants would lower their total compliance costs due to cost savings associated with the exemption of underground storage tanks. Primarily, a facility owner/operator would save the cost for installation and maintenance of secondary containment for underground tanks. The Agency assumed that this amendment would not change engineering practice with respect to tank inspections because the NRC Regulatory Guide requires inspection and testing of fuel oil systems.
To estimate cost savings associated with the final amendment for nuclear power plants, based on information provided by USWAG, EPA assumed that on average, underground storage tanks account for approximately one-third of the total oil storage capacity at a nuclear plant. Therefore, facility owners and operators would save about 33 percent of the compliance cost associated with the secondary containment requirement.
Based on information provided by USWAG, EPA assumed that most owners and operators of power plants determine "impracticability" of secondary containment for underground tanks and provide a written commitment of manpower, equipment, and materials, as well as a contingency plan prepared in accordance with 40 CFR part 109. Therefore, based on the final amendment, facility owners and operators would save the cost of determining impracticability of secondary containment for underground storage tanks. EPA assumes that, consistent with EPA and OMB economic guidelines, existing facilities are in full compliance with the existing SPCC requirements and only new facilities would incur cost savings from this final amendment. The Agency estimates that the cost savings for not having to determine impracticability would be $615 per generating unit. As a result, the cost savings to owners/operators of nuclear power plants would be equal to the baseline cost of compliance with this requirement.
The total cost savings from the final amendment were calculated by multiplying the unit cost savings with the total number of new generating units at nuclear power plants expected to become operational during the analysis period. EPA estimated that on average, the final amendment would reduce compliance costs by about $5,000 and $4,910 per year, discounted at 3 percent and 7 percent, respectively (see Exhibit 6-51).

Exhibit 6-51
Projected Annual Compliance Cost Savings from the Final Amendment for Nuclear Power Plants (2007$)[1]

Compliance Cost Savings

2010
Year 1
2011
Year 2
2012
Year 3
2013
Year 4
2014
Year 5
2015
Year 6
2016
Year 7
2017
Year 8
2018
Year 9
2019
Year 10
4- Year Present Value[2]
Annualized
Not Discounted
                                                                             - 
                                                                             - 
                                                                             - 
                                                                             - 
                                                                             - 
                                                                         $4,300
                                                                        $13,500
                                                                         $1,840
                                                                           $615
                                                                              -
                                                                        $20,300
                                                                         $5,070
3% Discounted
                                                                             - 
                                                                             - 
                                                                             - 
                                                                             - 
                                                                             - 
                                                                         $3,600
                                                                        $11,000
                                                                         $1,460
                                                                           $471
                                                                              -
                                                                        $19,200
                                                                         $5,000
7% Discounted
                                                                             - 
                                                                             - 
                                                                             - 
                                                                             - 
                                                                             - 
                                                                         $2,870
                                                                         $8,420
                                                                         $1,070
                                                                           $334
                                                                              -
                                                                        $17,800
                                                                         $4,910
[1]	The baseline cost of compliance is the same as the compliance cost savings.
[2] 	Cost savings are projected for four years only, based on the expected applications of new nuclear units.


Overall Compliance Cost Savings
The Agency estimates that the combined 2008 and 2009 final SPCC amendments that accounts for the removed provisions in 2009,would result in significant compliance burden reduction for industry as compared to the 2002 rule. The total cost savings ranges from a low estimate of $91.7 million and $91.0 million, a mid-point estimate of $95.5 million and $94.8 million and a high estimate of $99.4 million and $98.6 million at the 3 percent and the 7 percent discount rates respectively. The low estimate reflects the low estimate for security requirements (50 percent of all facilities affected) and AFVO (40 percent of AFVO facilities affected); high estimate reflects the high estimate for security requirements (75 percent of all facilities affected) and AFVO (90 percent of all AFVO facilities affected); and the mid-point estimate reflects the mid-point of the low and high estimates for security requirements (75 percent of all facilities affected) and AFVO (65 percent of AFVO facilities affected).
Exhibit 6-52 presents the costs savings by all the amendments at the 3 percent and 7 percent discount rate. At the 7 percent discount rate, the mid-point estimate of the annualized cost savings from final amendments to the SPCC rule are approximately $8 million from the exemption of hot-mix asphalt containers, $4 million from the exemption of pesticide application equipment and related mix containers, $2 million from the exemption of residential heating oil containers, $3 million from changes in facility diagram requirements, $24 million from the streamlined requirements for Tier I qualified facilities, $9 million from the amendments to the security requirements, $11 million from the amendments to integrity-testing requirements, $2 million for owners and operators of AFVO facilities, $24 million for owners and operators of oil production facilities from the six-month delay in SPCC Plan preparation and implementation, $7 million from the alternative compliance measures for flow-through process vessels in lieu of sized secondary containment, and less than $1 million from the exemption of underground oil storage tanks at nuclear power generation facilities. 

Exhibit 6-52 
Summary of Estimated Cost Savings Associated with the Final Amendments (2007$ Millions)
Rule Component/Scenario[1]
Annualized Cost Savings 

                               Discounted at 3%
                               Discounted at 7%
Hot-Mix Asphalt
Exempted HMA containers
                                                                            $8 
                                                                            $8 
Pesticide Application Equipment
Exempted pesticide application equipment and related mix containers
                                                                            $4 
                                                                            $4 
Applicability of Mobile Refueler Requirements to Farm Nurse Tanks
                                                                               
                                                                               
Clarified that nurse tanks used on farms are considered mobile refuelers
                                                       No monetized cost impact
                                                       No monetized cost impact
Residential Heating Oil Containers
Exempted residential heating oil containers
                                                                            $2 
                                                                            $2 
Facility Definition
Clarified the definition of "facility"
                           No monetized cost impact
                           No monetized cost impact
Facility Diagram
Revised facility diagram requirement
                                                                            $3 
                                                                            $3 
Tier I Qualified Facilities
Provided streamlined requirements for Tier I qualified facilities with aggregate storage capacity less than 10,000 gallons and no containers greater than 5,000 gallons
                                                                           $24 
                                                                           $24 
General Secondary Containment
Provided final revisions to the general secondary containment provision 
                           No monetized cost impact
                           No monetized cost impact
General Secondary Containment for Non-Transportation-Related Tank Trucks
Extended regulatory relief for mobile refuelers to non-transportation-related tank trucks 
                           No monetized cost impact
                           No monetized cost impact
Security Requirements
Low Estimate (50% of all facilities affected)
                                                                            $6 
                                                                            $6 
Mid-Point Estimate (75% of all facilities affected)
                                                                            $9 
                                                                            $9 
High Estimate (100% of all facilities affected)
                                                                           $12 
                                                                           $12 
Integrity Testing
Provided greater flexibility in the use of industry standards for integrity testing requirements
                                                                           $11 
                                                                           $11 
Animal Fats and Vegetable Oil
Amended integrity testing requirements for AFVO containers that meet certain criteria
Low Estimate (40% of facilities affected)
                                                                            $1 
                                                                            $1 
Mid Point Estimate (65% of facilities affected)
                                                                            $2 
                                                                            $2 
High Estimate (90% of facilities affected)
                                                                            $3 
                                                                            $3 
Oil Production Facilities
Provided six month delay for Plan preparation and implementation
                                                                           $24 
                                                                           $24 
Alternative compliance option for flowlines and intra-facility gathering lines in lieu of secondary containment
                           No monetized cost impact
                           No monetized cost impact
Provided an alternative compliance option for flow-through process vessels
                                                                            $7 
                                                                            $7 
Provided an alternative compliance option for produced water containers
                                                       No monetized cost impact
                                                       No monetized cost impact
Man-Made Structures
Allowed to consider manmade structures in determining SPCC rule applicability
                           No monetized cost impact
                           No monetized cost impact
Nuclear Power Stations
Exempted underground oil storage tanks at nuclear power generation facilities
                                 Less than $1
                                 Less than $1
Wind turbines
Clarified applicability of the rule to wind turbines used to produce electricity
                           No monetized cost impact
                           No monetized cost impact
Total: Low Estimate
                                                                         $91.7 
                                                                         $91.0 
Total: Mid-Point Estimate
                                                                         $95.5 
                                                                         $94.8 
Total: High Estimate
                                                                         $99.4 
                                                                         $98.6 
1 	Cost impacts are presented by rule component; impacts across industries are not separated out.





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Chapter 7

Impacts on Human Health, Welfare and the Environment

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Impacts on Human Health, Welfare and the Environment
The principal effect of the final amendments is to lower compliance costs for owners and operators of certain types of facilities, as discussed in detail in Chapter 6. There would be environmental and human health impacts of these rule amendments if the amendments result in a change in threat of discharge. Thus, the first step is to determine if the amendments have an impact on discharges. In the absence of detailed data on oil discharges, it is difficult to assess quantitatively the extent to which the final amendments are likely to affect the oil discharge threat, i.e., to estimate, for each amendment, the corresponding increase or decrease in both the incident frequency and volume of oil discharged. Therefore, the Agency relied on available sources of information, including available data on historical oil discharges, to inform a qualitative evaluation of changes in oil discharge threat. 
Oil Discharge Threat 
The following sections provide a qualitative assessment of the impact of the final rule amendments on the oil discharge threat, focusing on those factors most likely to affect either the frequency of incidents, or the volume of oil discharged. Final amendments that are intended only to provide clarity on rule requirements are not discussed here, as they are not expected to affect the oil discharge threat. As discussed in detail in the sections below, the Agency concludes that the final amendments provide relief in areas that are expected to be equally protective of the environment and are not likely to change the threat of discharge. For example, EPA exempted HMA containers since the properties of HMA make it unlikely to "flow" into navigable waters or adjoining shorelines; EPA is providing flexibility to owners and operators to determine the appropriate integrity testing of animal fat and vegetable oil (AFVO) containers that meet specific requirements (shop-built, bottom drainage) that reduce corrosion damage and therefore reduce the likelihood of an oil discharge. 
Hot-Mix Asphalt (HMA)
In 2008, EPA exempted HMA containers from SPCC requirements. Since HMA material (the mixture of asphalt cement and aggregates) is unlikely to flow as a result of the entrained aggregate, there is no reasonable expectation that any release of HMA would reach navigable waters or adjoining shorelines. This is illustrated by the lack of incidents reported either to the National Response Center (NRC) or in the news media of discharges of hot-mix asphalt mixtures to navigable waters or adjoining shorelines from fixed facilities regulated under SPCC. Further, Regional Administrators would continue to have the option under §112.1(f) to require an owner or operator of a facility, including one solely handling or storing HMA mixtures, to prepare or amend and implement an SPCC Plan or any applicable part, including HMA containers, if a determination is made that it is necessary in order to prevent a discharge of oil into waters of the United States or upon adjoining shorelines. Therefore, this change is not likely to affect the threat of an oil discharge. 
Pesticide Application Equipment and Related Mix Containers
In 2008, EPA exempted pesticide application equipment and related mix containers regardless of use location from SPCC requirements. As noted in Section 6.2, a couple of studies suggest that the capacity of pesticide application equipment can range from 500 gallons to 1,200 gallons depending on the farm size. However, in evaluating the threat posed by pesticide containers and application equipment when promulgating the Standards for Pesticide Containment Structures in 40 CFR part 165, Subpart E, under authority from the Federal Insecticide, Fungicide, and Rodenticide Act (FIFRA), EPA's Office of Pesticide Programs (EPA/OPP) noted that on-farm bulk storage of pesticides remains rare (71 FR 47422, August 16, 2006, as amended at 73 FR 64227, October 29, 2008). Further, EPA/OPP found that there was insufficient evidence of contamination occurring as a result of these containers or equipment to warrant their regulation under the pesticide container-containment rule. This may be the result of best management practices such as "Farm*A*Syst" programs (partnerships between government agencies and private business that foster pollution prevention on farms) that some states have, which suggest that farms: (1) adhere to pesticide label instructions and prepare only the necessary amount needed for immediate use; (2) prepare the pesticide mix immediately before application; (3) fill the equipment spray tank half full with water prior to mixing in the pesticide formulation; and (4) mix and load pesticides on a concrete pad. Therefore, EPA expects that the pesticide application equipment would not pose a significant threat of discharge and the rule amendment is not likely to change the discharge threat as compared to the baseline.
Residential Heating Oil Containers
In 2008, EPA exempted containers that are used to store oil for the sole purpose of heating a single-family residence. The residential oil containers are typically either 275 gallons or 550 gallons in size. To the extent that a smaller total storage capacity has lower threat of discharge (EPA's 1995 Survey of Oil Storage Facilities suggests that an important determinant of discharge threat is the total oil storage capacity), this amendment is not expected to have an impact on oil discharge threat. 
Security
In 2008, EPA amended the rule to allow facility owner/operators to tailor their security measures to the facility's specific characteristics and location, rather than comply with the current, more prescriptive set of requirements. This provides a facility owner/operator with the flexibility to determine the most adequate security measures to protect the facility from vandalism and to assist in the discovery of oil discharges. For example, the amendment tailors the requirement for fencing to allow an owner/operator to only install fencing around the oil handling, processing, and storage areas of facility, rather than install fencing around the entire facility.
Because the security requirements, found at §112.7(g), in the 2006 SPCC rule are subject to environmental equivalence under §112.7(a)(2), a facility owner/operator already has the flexibility to provide tailored security measures by demonstrating that the alternative measures are environmentally equivalent to the required measures in §112.7(g). Therefore, this amendment is not expected to affect the threat of an oil discharge.
Integrity Testing Requirements for Animal Fats and Vegetable Oils
The 2008 final rule allowed the PE or owner/operator certifying an SPCC Plan at a facility that is subject to the U.S. Food and Drug Administration (FDA) regulation found at 21 CFR part 110, Current Good Manufacturing Practice in Manufacturing, Packing, or Holding of Human Food, to determine the type of integrity testing appropriate for shop-built containers that store fully refined food oil and also satisfy other requirements. This rule amendment tailored the requirements in §112.12(c)(6) of the 2006 SPCC rule for eligible containers, which require containers to be tested on a regular schedule, using a combination of both visual inspection and another non-destructive testing technique. Instead, the Plan preparer can design a testing program and schedule that is best suited for these eligible food oil containers.
Because the integrity testing requirements, found at §112.12(c)(6), are already subject to environmental equivalence under §112.7(a)(2), a facility owner/operator already has the flexibility to specify an alternative integrity testing program by demonstrating that the alternative is environmentally equivalent to the required measures in §112.12(c)(6). Additionally, in developing this rule amendment, EPA determined the eligibility criteria for this streamlined requirement specifically to keep the threat of oil discharge that may occur from less stringent testing requirements the same. The regulation at 21 CFR part 110 specifies requirements for the design, construction, and use of equipment used at food processing facilities, including containers that hold oil. Other criteria, such as requiring that containers must be made from austenitic stainless steel and be self-draining, ensure that the containers are less likely to suffer from corrosion. Criteria such as the requirement for containers to be shop-built and have manholes for internal inspection are design elements that make visual inspection an effective inspection method, should the Plan preparer rely on visual inspection only. Therefore, this amendment is not likely to increase the threat of oil discharge.
Oil Production Facilities
In 2008 and 2009, EPA made several amendments that would affect oil production facilities. These include amendments to the Plan preparation and implementation date; alternative measures for flow-through process vessels; produced water containers and flowlines and intra-facility gathering lines. In 2008 EPA included alternative qualified facility criteria for oil production facilities and an exemption for certain produced water containers, which are being removed in 2009. 
Six-month delay: In 2008, EPA extended, by six months, the timeframe by which the owner or operator of a new oil production facility must prepare and implement an SPCC Plan. A facility owner or operator is likely to use this relief to develop an SPCC Plan and certify it after operations have stabilized. It is difficult to determine what the effect of this delay would be on the oil discharge threat and if there is a higher likelihood of threat in the initial months while operations are beginning. The data on oil discharges does not provide information on the age of the facility. 
Flow-through process vessels: In 2008, EPA provided an alternative option for flow-through process vessels at oil production facilities to comply with the general secondary containment requirement and additional oil spill prevention measures in lieu of sized secondary containment requirements. The Agency estimated that a large percentage of these installations are already within a facility's tank battery and therefore have adequate sized secondary containment; only heater-treaters are likely to be located outside the tank battery. The oil discharge threat would likely change only insofar as heater-treaters outside the tank battery would be subject to general containment rather than sized secondary containment, where the former are built to prevent a "typical" discharge. 

Since the relief provided by this amendment is subject to revocation if a facility has a reportable discharge, EPA expects that it would not have a significant negative effect on oil discharge threat. For flow-through process vessels, EPA also finalized the amendment to require the inspection of equipment components, including ancillary equipment; prompt removal of any oil accumulations; and corrective action should a discharge occur. These requirements are expected to provide further protection from oil discharges. 
Flowlines and intra-facility gathering lines: In 2008, EPA also amended the rule to allow contingency planning and written commitment of resources in lieu of secondary containment requirements for flowlines and intra-facility gathering lines, without the requirement for an impracticability determination. EPA provided more prescriptive requirements for a flowline/intra-facility maintenance program. Flowlines are certainly at threat of discharges. The flowline/gathering line maintenance is currently required by the existing 2002 SPCC rule and this final amendment is adding clarity and specificity to the existing requirements. In lieu of a secondary containment requirement, EPA is requiring a contingency plan and written commitment of manpower, equipment, and materials for flowlines and intra-facility gathering lines at an oil production facility, and is prescribing specific requirements for the existing flowline and intra-facility gathering line maintenance program. The requirements that are expected to prevent discharges, improve discharge detection, and mitigate discharges include: 
      1. Compatibility of flowlines and intra-facility gathering lines and associated valves and equipment with the type of production fluids and their potential corrosivity, volume, and pressure, and other conditions expected in the operational environment;
      2. Visual inspection for leaks, discharges, corrosion, etc.; 
      3. Corrective action/repairs; and
      4. Prompt removal of any accumulations of oil discharges. 
 Insofar as there are owners and operators of facilities with a maintenance that does not have these requirements and would follow a more prescriptive maintenance plan as required by the SPCC rule, the oil discharge threat would be reduced.
Alternative Qualified Facility Criteria for Oil Production Facilities: In 2009, EPA is removing the alternative criteria for an oil production facility with marginal wells to be eligible to self-certify an SPCC Plan as a qualified facility. EPA believes that the alternative qualified facility eligibility criteria for onshore oil production facilities would not effectively protect the environment from discharges of oil in quantities that may be harmful. The alternative qualified facility eligibility criteria is based on the flow rate of oil at the facility, and undermines the existing capacity based criteria. Additionally, small oil production facilities are more complex than other small facilities, and the amount of oil discharged from oil production facilities is increasing. EPA is removing the alternative criteria for oil production facilities because:
* Allowing unrestricted oil storage capacity undermines the existing qualified facility eligibility criteria and may pose an environmental threat, 
* The alternative qualified facility eligibility criteria for production facilities includes more complicated facilities that may pose a higher threat of oil discharge, and
* The volume of oil discharged from production facilities are increasing.
Many small oil production facilities produce low quantities of oil on a daily basis. Despite the daily low produced amount, the accumulated quantity stored can far exceed 10,000 U.S. gallons. Without a limit on storage capacity, the Agency is concerned this approach increases the likelihood that relatively high-volume facilities will self-certify their SPCC Plan without the spill prevention benefits afforded by PE review and certification. Finally, the production rate criterion does not include the associated fluids, such as produced water, which typically contains oil. Marginal or stripper wells are often older and near the end of their production life. The fraction of produced water generated by each stripper well may be far greater than that generated by other producing wells and will likely require significant storage container capacity prior to re-injection or removal from the facility. It is potentially possible that there may be containers storing produced water and oil in large quantities (e.g., up to one million gallons) at oil production facilities qualifying under these alternative criteria. The Agency believes that establishing a threshold for the production rate per well does not limit the amount of oil storage, including oils in associated fluids.
Upon reconsideration, EPA has concluded that the type and scale of operations and the equipment involved at those oil production facilities that may meet the alternative criteria, and that they are generally more complex than the non-production facilities eligible under the qualified facility approach in the December 26, 2006 amendments (71 FR 77266). Although there may be some similarities across production facilities, each is unique and tailored to address factors, such as the oil field, production rate, type of fluid, location on a platform or onshore, fluid viscosity, separation process, and type of water injection or disposal. Given these factors, an oil production facility's configuration and degree of complexity is variable, regardless of flow rate. 

The Agency believes that small oil production facilities (i.e., those comprised of marginal wells) have and can continue to pose a threat of an oil discharge to navigable waters and adjoining shorelines. EPA has reviewed the spill data for the oil production sector contained in its study of the exploration and production sector and while these data do not characterize the extent of environmental damage caused by oil discharges from small oil production facilities, it does demonstrate that the volume of oil discharged from onshore oil production facilities are increasing, and the number of oil discharges on a yearly basis has remained the same, despite a decline in crude oil production. In addition, oil production facilities are often unattended, and typically located in environmentally sensitive and remote environments, which potentially increase the threat of environmental damage of an oil discharge from these facilities. Therefore, EPA believes that removing this provision will reduce the threat of oil discharge.

Produced Water Containers. In 2009, EPA is removing the exemption for certain produced water containers that do not contain oil in quantities that may be harmful as certified by a PE.  EPA believes that produced water containers present a threat of discharge that can cause harm to the environment and human health.. The comments received by EPA generally confirm that the presence of oil in produced water is not exceptional, but rather is expected as a matter of regular operations. The separation equipment found at onshore oil production facilities are not perfectly efficient at separating oil from the produced fluids and become progressively less efficient with age. Furthermore, in the event of a discharge, the aqueous phase of the produced water mixture may serve to carry the oil farther overland and into waters than cases where crude oil alone is discharged. The spill data shows that produced water containers are indeed a common source of oil discharges from onshore oil production facilities. Even if a produced water container has a very small amount of oil, the container still holds the potential to cause harm. 
Finally, produced water containers may be equally or even more likely to fail than other containers in the tank battery. Corrosion as a common cause of oil and produced water discharges at onshore oil production facilities. The higher salt content of produced water fluids as compared to crude oil may lead to the increased corrosion rate of metallic components of the produced water storage system. The oil production process is configured to send continuously flowing and treated well fluids to the storage containers, with the produced water containers often located at the end of that process. The Agency's review of the circumstances of past oil discharges reported to the NRC shows that produced water containers often receive the additional well fluids when treatment equipment or appurtenances fail or when a pumper's scheduled visit is delayed, thereby increasing the amount of oil entering the produced water container and the threat that the tank will overflow, or otherwise discharge oil to navigable waters or adjoining shorelines.
Therefore, EPA believes that removing the exemption for produced water containers will reduce the threat of oil discharge.
Tier I Qualified Facilities
In 2008, EPA further streamlined requirements for a subset of qualified facilities. Under this option, EPA allows qualified facilities with a maximum individual oil storage container capacity of 5,000 gallons (called "Tier I qualified facilities") to complete and implement a self-certified SPCC Plan, following a template provided by EPA. Qualified facilities are not required to have their Plans certified by a Professional Engineer (PE). Additionally, the use of the simplified Tier I template does not allow for a "hybrid" approach whereby a PE certifies sections of the Plan that involve environmentally equivalent measures or determinations that secondary containment is impracticable. Therefore, minimal to no involvement of a PE is expected in the development of an SPCC Plan at a Tier I qualified facility. EPA designed the Tier I template to be straightforward and simple for a Tier I facility owner/operator to complete. The Plan is meant to cover relatively simple operations, such as those where only containers up to 5,000 gallons would be used, and for which appropriate discharge prevention measures are relatively standard and can more readily be selected and implemented.
In designing the template, EPA removed certain provisions that do not apply to Tier I qualified facilities (based on the criterion that they would not have oil containers with capacities greater than 5,000 gallons). For example, the requirement for brittle-fracture evaluation (§112.7(i)) has been removed. This provision is only applicable to field-constructed aboveground containers that would be potentially subject to brittle-fracture failure -- which are by their nature larger size containers greater than 5,000 gallons in capacity. Certain other provisions have been removed or tailored for Tier I qualified facilities directly the threat of discharge at a facility with only smaller size containers is expected to be low. For example, the requirement to prepare a facility diagram was removed for Tier I qualified facilities, because qualified facilities with a maximum container capacity of 5,000 gallons are expected to be small and simple in configuration -- most qualified facilities have only a few containers, since the facility total storage capacity for qualified facilities may not exceed 10,000 gallons. The benefit of a diagram for such simple facility layouts would be minimal, and removing this requirement is therefore not expected to increase the threat of oil discharge. Finally, EPA specifically set a single aboveground container capacity limit of 5,000 gallons by considering industry standards for integrity inspections of bulk storage containers, which make a distinction for this size container in terms of the level of expertise and inspection frequency needed to assess the continued integrity of an in-service container. 
Distributional Analysis 
The final amendments to the SPCC rule will result in direct and indirect effects that may precipitate the transfer of economic benefits among various industry sectors. One direct impact of the amendment is the alternative offered to owners and operators of qualified facilities that allows them to use a template SPCC Plan. Additionally, facilities that store animal fats and vegetable oils may not have to perform integrity testing on their tanks, and owners and operators of production facilities would experience decreases in compliance costs that differ from the decreases experienced by farms and other facilities. However, all facilities would have the flexibility to choose adequate site-specific security measures, for example, and would consequently have lower compliance costs. The final amendments also give flexibility to facilities to define non-contiguous parcels as different facilities in a way that minimizes their cost. The new option to self-certify the SPCC Plan decreases the demand for PE certification and/or SPCC Plan development.
There are likely to be many indirect effects of the final amendments that are not estimated or comprehensively discussed in this analysis. However, to illustrate how they might operate, some examples are as follows. The final amendments no longer require facility boundaries to be fenced. This could lead to changes in demand for fencing. The reduction in demand for fencing would result in a transfer of income from fence suppliers to owners and operators of facilities. In the same way, to the extent that AFVO facilities were relying on outside professionals to conduct integrity testing, the fee that was previously charged by professionals would instead be transferred back to owners and operators of AFVO facilities. Further, to the extent that the facilities would rely on PEs to determine the type of integrity testing that should be conducted, there could be a transfer of resources from the owners and operators of AFVO facilities to the engineers. 
Another aspect of the distributional analysis is the spatial impact of the rule with respect to the location of regulated facilities. While we lack information on the specifics of facility locations, EPA acknowledges that clustering of SPCC-regulated facilities exists (such as oil production facilities in the Gulf of Mexico coastal states). Therefore, nationally estimated impacts on owners and operators of regulated facilities may be spatially disproportional.


 
Chapter 8

Small Entity Impacts, Executive Orders, and Other Required Analyses

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Small Entity Impacts, Executive Orders, and Other Required Analyses
The purpose of this report is to present the final amendments and the alternatives considered and to analyze their respective costs and benefits. In addition to these analyses, several other types of impacts are important to consider in evaluating the effects of a regulation. This chapter presents analyses that report whether the amendments to the SPCC rule portion of the Oil Pollution Prevention regulations impact the financial condition of small entities, as required by the Regulatory Flexibility Act (RFA) and Small Business Regulatory Enforcement Fairness Act (SBREFA). It also responds to Executive Order 13132 - Federalism; Executive Order 13175 - Consultation and Coordination With Indian Tribal Governments; Executive Order 13045 - Protection of Children From Environmental Health & Safety Risks; Executive Order 13211 - Actions That Significantly Affect Energy Supply, Distribution, or Use; National Technology Transfer and Advancement Act; and the Paperwork Reduction Act (PRA).
Regulatory Flexibility Act and Small Business Regulatory Enforcement Fairness Act
The RFA requires federal agencies to determine whether their regulatory actions will have a significant economic impact on a substantial number of small entities, including businesses, non-profit organizations, and government. If an agency does not or cannot certify that a final regulation will not have a significant economic impact on a substantial number of small entities, it must prepare a regulatory flexibility analysis and examine alternatives to the regulation that may reduce adverse economic effects on significantly impacted small entities. 
In 1996, Congress enacted SBREFA, which amended the RFA to strengthen its analytical and procedural requirements and to expedite congressional review of rules. SBREFA amended the RFA to reference the definition of a "small entity" found in the Small Business Act, which itself authorizes the Small Business Administration (SBA) to further define "small business" by regulation. The SBA's small business definitions are codified at 13 CFR 121.601, and the SBA reviews and reissues these definitions every year. Size standards are given either in a revenue threshold (presented in thousands of dollars) or in an employee number standard (presented in number of employees). SBA defines a size standard as "the largest that a for-profit concern can be and still qualify as a small business for Federal Government programs," and the size standards are generally calculated using the average annual receipts or the average employment of the entity. 
In determining whether a rule has a significant economic impact on a substantial number of small entities, the impact of concern is any significant adverse economic impact on small entities, since the primary purpose of the regulatory flexibility analyses is to identify and address regulatory alternatives "which minimize any significant economic impact of the final rule on small entities." Thus, an agency may certify that a rule will not have a significant economic impact on a substantial number of small entities if the rule relieves regulatory burden, or otherwise has a positive economic effect on all of the small entities subject to the rule. 
The final amendments to the SPCC rule would reduce the burden on small businesses to the extent that these businesses are eligible for reduced regulatory requirements offered to hot-mix asphalt facilities, oil production facilities, facilities that produce or process AFVO, Tier I qualified facilities, and others. Because the SPCC rule categorizes affected entities based on oil storage capacity while SBA defines small businesses based on the business's total number of employees or total annual revenue, EPA does not know the number of SPCC-regulated facilities that are also SBA-defined small businesses. Nevertheless, given their resource constraints, owners and operators of small businesses are likely to take advantage of and benefit from the regulatory burden relief offered by the final amendments. 
Executive Order 13132 - Federalism
Executive Order 13132, entitled "Federalism" (64 FR 43255, August 10, 1999), requires EPA to develop an accountable process to ensure "meaningful and timely input by state and local officials in the development of regulatory policies that have federalism implications." "Policies that have federalism implications" is defined in the executive order to include regulations that have "substantial direct effects on the States, on the relationship between the national government and the States, or on the distribution of power and responsibilities among the various levels of government."
The SPCC rule amendments do not have federalism implications. They would not have substantial direct effects on the states, on the relationship between the national government and the states, or on the distribution of power and responsibilities among the various levels of government, as specified in Executive Order 13132. Under CWA section 311(o), states may impose additional requirements, including more stringent requirements, relating to the prevention of oil discharges to navigable waters and adjoining shorelines. EPA recognizes that some states have more stringent requirements (56 FR 54612, October 22, 1991). These rule amendments will not preempt state law or regulations. Thus, Executive Order 13132 does not apply to this action.
Executive Order 13175 - Consultation and Coordination with Indian Tribal Governments
Executive Order 13175, entitled "Consultation and Coordination With Indian Tribal Governments" (59 FR 22951, November 6, 2000), directs federal agencies to consider whether a rule has tribal implications (i.e., whether it has substantial direct effects on tribal governments, on the relationship between the federal government and the Indian tribes, or on the distribution of power and responsibilities between the federal government and Indian tribes). These rule amendments do not have tribal implications, as specified in Executive Order 13175. These rule amendments would not significantly or uniquely affect communities of Indian trial governments. Thus, Executive Order 13175 does not apply to this action.
Executive Order 13045 - Protection of Children from Environmental Health & Safety Risks
Executive Order 13045,"Protection of Children from Environmental Health Risks and Safety Risks" (62 FR 19885, April 23, 1997) applies to any rule that: (1) is determined to be "economically significant" as defined under Executive Order 12866, and (2) concerns an environmental health or safety risk that EPA has reason to believe may have a disproportionate effect on children. If the regulatory action meets both criteria, the Agency must evaluate the environmental health or safety effects of the planned rule on children, and explain why the planned regulation is preferable to other potentially effective and reasonably feasible alternatives considered by the Agency.
EPA interprets Executive Order 13045 as applying only to those regulatory actions that are based on health or safety risks, such that the analysis required under section 5-501 of the Order has the potential to influence the regulation. This rule amendment is not subject to Executive Order 13045 because it does not establish an environmental standard intended to mitigate health or safety risks.
Executive Order 13211 - Actions that Significantly Affect Energy Supply, Distribution, or Use
Executive Order 13211, entitled Actions Concerning Regulations that Significantly Affect Energy Supply, Distribution, or Use (66 FR 28355, May 22, 2001), directs federal agencies to identify actions that will have a significant adverse energy effect. Adverse effects are defined as:
Reductions in crude oil supply in excess of 10,000 barrels per day
Reductions in fuel production in excess of 4,000 barrels per day
Reductions in coal production in excess of 5 million tons per year 
Reductions in natural gas production in excess of 25 million cubic feet per year 
Reductions in electricity production in excess of 1 billion kilowatt-hours per year or in excess of 500 megawatts of installed capacity
Increases in energy use required by the regulatory action that exceed any of the thresholds above
Increases in the cost of energy production in excess of 1 percent
Increases in the cost of energy distribution in excess of 1 percent
Other similarly adverse outcomes 
The SPCC rule regulates owners and operators of facilities that comprise the energy sector  -  Oil and Gas Production, Electric Utility Companies, Petroleum Refineries, Petroleum Bulk Stations and Terminals, and owners and operators of facilities in alternate energy sectors including Biomass Refineries, Hydroelectric Power Plants, Wind Power Utilities, and Nuclear Powered Electric Utilities. Adverse effect on energy supply, distribution, and use would result if the rule imposes expenditures on the energy sector and these expenditures impact the profitability significantly. However, the final amendments to the SPCC rule reduce the burden on owners and operators of regulated facilities; EPA does not expect an adverse impact of the rule on energy supply, distribution, or use. 
National Technology Transfer and Advancement Act
Section 12(d) of the National Technology Transfer and Advancement Act of 1995 (NTTAA), Public Law No. 104-113, 12(d) (15 U.S.C. 272 note) directs federal agencies to use voluntary consensus standards in its regulatory activities unless to do so would be inconsistent with applicable law or otherwise impractical. Voluntary consensus standards are technical standards (e.g., materials specifications, test methods, sampling procedures, and business practices) that are developed or adopted by voluntary consensus standards bodies. The NTTAA directs federal agencies to provide Congress, through OMB, explanations when the Agency decides not to use available and applicable voluntary consensus standards.
The owner or operator of a facility subject to the SPCC rule has the flexibility to consider applicable industry standards in the development of an SPCC Plan, in accordance with good engineering practice. However, this rulemaking does not involve technical standards, as it does not set or incorporate by reference any one specific technical standard. Therefore, the NTTAA does not apply.
Paperwork Reduction Act
The Paperwork Reduction Act of 1995 (PRA) (superseding the PRA of 1980) is implemented by OMB and requires that agencies submit a supporting statement to OMB for any information collection that solicits the same data from more than nine parties. The PRA seeks to ensure that federal agencies balance their need to collect information with the paperwork burden imposed on the public by the collection.
The definition of "information collection" includes activities required by regulations, such as permit development, monitoring, recordkeeping, and reporting. The term "burden" refers to the "time, effort, or financial resources" the public expends to provide information to or for a federal agency, or to otherwise fulfill statutory or regulatory requirements. Under PRA, the paperwork burden is measured in terms of annual time and financial resources the public devotes to meet one-time and recurring information requests (44 U.S.C. 3502(2); 5 CFR 1320.3(b)).
Information collection activities may include:
Reviewing rule requirements
Using technology to collect, process, and disclose information
Adjusting existing practices to comply with requirements
Searching data sources
Completing and reviewing the response
Transmitting or disclosing information
Agencies must provide information to OMB on the parties affected, the annual reporting burden, and the annualized cost of responding to the information collection. The SPCC rule (40 CFR part 112) requires and establishes procedures for the preparation and implementation of SPCC Plans. As discussed in chapters above, owners and operators of regulated facilities must prepare SPCC Plans in accordance with good engineering practices and have them approved by a person with the authority to commit the resources necessary to implement the SPCC Plan. The Information Collection Request (ICR) Supporting Statement reports the estimated paperwork-related burden resulting from the SPCC rule and incorporates the amendments to the SPCC rule at 40 CFR part 112, expected to be finalized in fall 2008. EPA estimates that approximately 640,000 facilities will incur paperwork-related burden in the first year of the ICR and the total reporting and recordkeeping burden for these facilities will amount to approximately 8 million hours in each year of this ICR. The Agency estimates that as a result of the 2008 and 2009 final amendments to clarify and streamline certain SPCC requirements, the reporting and recordkeeping burden will decrease by 1.3 million hours. These rule amendments would reduce capital and operating and maintenance costs by an estimated $7.5 million on an annualized basis.
Executive Order 12898: Federal Actions to Address Environmental Justice in Minority Populations and Low-Income Populations
Executive Order 12898 (59 FR 7629, February 16, 1994) establishes Federal executive policy on environmental justice. Its main provision directs Federal agencies, to the greatest extent practicable and permitted by law, to make environmental justice part of their mission by identifying and addressing, as appropriate, disproportionately high and adverse human health or environmental effects of their programs, policies, and activities on minority populations and low-income populations in the United States. EPA has determined that this final rule will not have disproportionately high and adverse human health or environmental effects on minority or low-income populations because it does not affect the level of protection provided to human health or the environment. The overall effect of the action is to decrease the regulatory burden on facility owners or operators subject to its provisions.
Congressional Review Act 
The Congressional Review Act, 5 U.S.C. 801 et seq., as added by the Small Business Regulatory Enforcement Fairness Act of 1996, generally provides that before a rule may take effect, the agency promulgating the rule must submit a rule report, which includes a copy of the rule, to each House of the Congress and to the Comptroller General of the United States. EPA will submit a report containing this rule and other required information to the U.S. Senate, the U.S. House of Representatives, and the Comptroller General of the United States prior to publication of the rule in the Federal Register. A major rule cannot take effect until 60 days after it is published in the Federal Register. This action is a "major rule" as defined by 5 U.S.C. 804(2) because it will likely result in an annual effect on the economy close to $100 million.


 
Chapter 9

Key Limitations and Assumptions

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Key Limitations and Assumptions
According to Executive Order 12866, agencies are required to assess all costs and benefits of regulatory activities, including quantitative and qualitative measures. The EO also requires assessment of all benefits and costs including, but not limited to, those related to the environment, public health and safety, distributive impacts, and issues of equity. 
This regulatory impact analysis estimated the reductions in compliance costs resulting from the 2008 final amendments to the SPCC rule. The Agency also considered whether the streamlined requirements in the final rule might increase the threat of discharges, with adverse consequences for the environment, human health, and welfare. EPA believes that the rule amendments protect the environment and, at the same time, provide the opportunity for regulated facilities to reduce the cost of SPCC compliance. 
Many of the assumptions as well as the estimates of unit cost savings and the number of affected facilities presented in this RIA are based upon the available data. EPA made the best use of the available data to make informed decisions regarding the assumptions used in the analysis. To address uncertainties involved in estimating the total cost savings from the final amendments, the Agency used a sensitivity analysis approach to estimate the range of cost savings by examining up to three scenarios for several components of the final rule (e.g., final amendments to the security requirements, and flexibility for AFVO facilities). Major limitations of the analysis are described in this chapter. 
General Limitations 
For each Amendment, the cost savings estimated are limited by data and other considerations. We review the limitations here. For several of the specific amendments, we carried out sensitivity analysis by estimating costs under three alternative assumptions. We also conducted two sensitivity analyses for the entire set of cost estimates (see Appendix B, Volume II). We calculated these estimates for two discount rates (3 percent and 7 percent); and we calculated cost savings under three different compliance scenarios at baseline and after the 2009 amendments.

Estimated Number of Facilities
One of the main limitations of the regulatory analysis is limited data and information on the number of regulated facilities. The SPCC rule does not require regulated entities to identify themselves to EPA, and, with certain exceptions, regulated entities do not need to submit any information to EPA Without conducting a statistically valid survey, EPA is limited to data already collected by state or federal agencies or proprietary sources on the number and type of regulated facilities. Such data are collected for diverse purposes and can be used to identify SPCC-regulated facilities. Therefore, evaluating regulatory changes involves some uncertainties because the collected data often omit portions of the regulated universe or lack sufficient detail to ascertain the impacts of changes in certain requirements. As discussed in detail in Section 9.5, additional uncertainty is introduced in the estimate for the SPCC-regulated facilities because of lack of information on how owners and operators would use the flexibility to define the facility boundaries for contiguous and non-contiguous parcels.
Estimated Cost of Compliance
Compliance costs incurred by owners and operators of facilities in the baseline depend not only on the volume of oil stored and handled, but also on the types of oil at a site, the number of tanks (and their volume), and the locations of the tanks across the site. Given a wide range of industries and facility sizes affected by the SPCC rule -- as well as geographical and climatic conditions that affect a facility's configuration and operation patterns -- a realistic baseline against which regulatory changes are measured cannot be reliably determined. Therefore, uncertainty is involved in estimating the changes in compliance costs that could occur under the final regulatory actions.
The majority of the cost estimates used in the regulatory analysis were based on a detailed analysis by one professional engineering firm that operates in the 48 contiguous states of United States. The data provided by the firm represent information based on the experience of the Professional Engineers (PEs) employed by the firm. While the PE firm provided costs estimates by the key factors that affect cost -- facility type, facility size, container capacitythey did not provide the entire range of cost based on other factors that influence costs (e.g. location of the facility, complexity of the facility).
The cost of compliance is calculated for each of the amendments separately, holding other provisions constant, ceteris paribus. However, the interaction of different amendments might reduce or increase the total cost. Given this possibility, adding the cost changes from each amendment can introduce a bias in the estimate. For example, the amendments provide the flexibility to qualified facilities to complete an SPCC template in lieu of a full Plan, but restrict the owners and operators of facilities choosing to complete a template to claim environmental equivalence. Another amendment provides an alternative compliance option for flowlines and intra-facility gathering lines at oil production facilities in lieu of the secondary containment requirement but requires owners and operators of oil production facilities to follow the existing and more detailed flowline maintenance program. When calculating the cost saving from this amendment, EPA assumed that all facilities would claim environmental equivalence to their existing maintenance program. However, if EPA calculated the cost savings from this while taking into account the amendment to the qualified facilities, the Agency would also have to take into account the fact that qualified facilities that choose to complete a template would not be able to claim environmental equivalence. This example highlights the type and extent of interactions that can exist across different amendments. While our best estimate of the total effect of the amendments is the sum of the effects from the individual cost savings estimates, this sum should be understood with the above caveats in mind.
It is important to note that since certain SPCC requirements may be similar in nature to those imposed by state regulations and facility owner/operators of many industries may follow specific industry standards, compliance activities and their associated costs cannot be fully attributed to the SPCC rule. Since regulations vary widely across states and industries, there is no single adjustment factor that could be developed to address this issue for the universe of regulated facilities. However, due to the lack of data on the extent to which facilities adopt industry standards, in this analysis the Agency estimated the baseline compliance costs and cost savings associated with the SPCC requirements without accounting for possible overlap with industry standards. EPA did take into account requirements imposed by state regulations in 19 states with regulations that overlap with the SPCC requirements. As a result, the estimated baseline compliance costs are likely to present an overestimate of the costs attributed to the SPCC rule. For details of the state overlap analysis, refer to Section 5.4 of this report. 
Hot-Mix Asphalt
Even though EPA never intended to regulate HMA containers, the Agency assumed that owners and operators of certain HMA facilities interpreted the 2002 rule as being applicable to these containers. A key piece of data that EPA needed to estimate the cost savings for facilities with HMA containers is the fraction of HMA capacity as a percentage of total facility storage capacity. In the absence of other data, to determine this fraction, EPA relied on information from three SPCC Plans obtained from EPA regions, data presented in facility air permits, and information on HMA equipment sales Web pages. At both temporary and stationary plants, HMA accounted for approximately 34 percent of total storage, on average. Although these data do not represent a statistically valid sample, the Agency assumed that this estimate is applicable to HMA facilities of all sizes. As a result, the Agency estimated that HMA containers account for about 34 percent of total storage capacity at HMA facilities. 
EPA assumed that affected facilities would move across size categories as a result of a reduced total capacity based on the estimates for the fraction of the total capacity that accounts for HMA containers. EPA estimated that 30 percent of Category I facilities would leave the SPCC universe, 30 percent of Category II facilities would become Category I, 30 percent of Category III facilities would become Category II, and 60 percent of Category IV facilities would become Category III. These estimates are inherently uncertain since they are based on a small number of observations from various data sources. However, there were no additional data available to improve the reliability of these estimates.
Pesticide Application Equipment and Related Mix Containers
To estimate cost savings from exempting pesticide application equipment, EPA relied on two regional studies that conducted an economic analysis of pesticide application equipment. EPA used these studies to estimate the capacity of pesticide application equipment by different farm sizes and concluded that farms smaller than 500 acres would not have pesticide application equipment and would hire the services of custom applicator. Using agricultural census data, EPA estimated the distribution of farms by farm sizes for different categories of farms. The key limitation of this analysis is that it relies on regional data to calculate cost savings for the United States and assumes that all owners and operators of farms mix oil with pesticide when using pesticide application equipment or other mixers. 
Residential Heating Oil
EPA relied on data from DOE to estimate the average size of a heating oil container at households. To estimate the number of farms that have heating oil for residential use, EPA assumed that farms make a choice between only propane and heating oil (and face no other options) and relied on DOE estimates on the percentage of households that use heating oil as compared to propane. Further, EPA assumed that only family farms would have residences on a farm and used the USDA Family Farm Report to estimate that 98 percent of SPCC-regulated farms are family farms. The same report provided estimates on the average number of residences on farms. Using these data, EPA estimated the total capacity of heating oil at farms. These estimates are based on several simplifying assumptions; therefore, this approach provides only an approximate estimate of the possible cost savings and is not expected to capture the wide variability in residential heating oil storage across the United States.
Tier I Qualified Facilities
As described in Chapter 6, to identify facilities with total storage capacity of 10,000 gallons or less that had reportable discharges in the past three years, EPA used National Response Center (NRC) incident data. The main limitation of the NRC database for this analysis is the lack of information on the total amount of oil stored at a facility whose owner or operator reported an oil discharge. The Agency identified individual facilities whose owner or operator reported oil discharges of 10,000 gallons or less and used that figure as a proxy for the number of facilities with total storage capacity of 10,000 gallons or less. This approach likely results in overestimating the number of facilities with total storage capacity of 10,000 gallons or less that have had reportable discharges in the past three years, given that most facilities are not expected to discharge their total oil storage capacity. That is, a portion of the discharges of 10,000 gallons or less could have been from facilities with much larger oil storage capacities. Because it is not feasible to establish a relationship between the amount of oil discharged and total storage capacity at a facility, EPA examined three scenarios: 25 percent, 50 percent, and 75 percent of facilities that reported oil discharges of 10,000 gallons or less have total oil storage capacity of 10,000 gallons or less.
Security
The main assumption associated with the cost impact analysis for the 2008 rule changes to security requirements was that all existing facilities already have security measures in place as required by the 2002 SPCC rule and thus would not be affected by the rule change. 
Owners and operators of SPCC facilities may already provide major security measures as standard industry practice to protect their facilities from vandalism and terrorism, which are also required by the SPCC rule These facilities often have a complex engineering structure, multiple oil storage and other flammable liquid containers, and site-specific technological processes. Therefore, not all owners and operators of new facilities would opt for the rule change offered by the 2008 final amendments. 
These security measures usually include full facility fencing, lighting, and automatic shut-off valves. Because some facility owners and operators would provide these measures during construction, EPA assumed that not all new facilities coming online would prefer the alternative option offered by the 2008 rule. EPA's site visits suggested that facilities of the industries including but not limited to the following categories typically provide basic security measures: petroleum refineries, manufacturing, facilities handling AFVO, and asphalt production. Due to the lack of data on the number of facilities that have security measures in place as required by the SPCC regulations, EPA developed estimates for cost savings under the three scenarios: 50 percent (low), 75 percent (medium), and 100 percent (high) of all new facilities would use the flexibility in tailoring the security measures.
Animal Fats and Vegetable Oils (AFVO)
To estimate cost savings from the component of the 2008 rule affecting facilities that handle AFVO, EPA assumed that a facility owner or operator would have integrity testing conducted on oil storage containers every 12 years on average. This assumption was based on the industry standards that require integrity testing to be performed on storage tanks every 10-15 years depending on the standard and the tank structure. 
Another assumption EPA used in its analysis is that 93 percent of total oil storage capacity at a facility handling AFVO is devoted to food oil. This estimate was based on a limited number of SPCC Plans prepared by owners and operators of AFVO facilities and does not represent a statistically valid sample of facilities. 
In addition, EPA did not have data on the number of facilities handling AFVO that would have storage containers with food oil qualified for the different integrity testing requirements. Since background research indicated that most AFVO facilities would have qualified containers, EPA developed three scenarios to evaluate a range of cost savings where 40 percent, 65 percent, and 90 percent of all facilities handling AFVO would have qualified containers. 
The 2008 final rule gives the PE or owner/operator certifying the SPCC Plan the flexibility to determine whether integrity testing is appropriate for certain containers. The Agency assumed that the burden associated with making this determination would be insignificant and would not introduce any additional cost to facility's owner or operator. 
Oil Production Facilities 
Similar to the analyses of other elements of the final rule, EPA did not have numeric information on the number of oil production facilities that would be likely to make specific changes in their operating practices in response to the final rule. The Agency does not know whether new oil production facilities coming into business would change their facility configuration and place all oil/water separators, including a heater-treater, inside the tank battery. Background research of the oil production industry and site visits suggest that it is common for existing facilities to have a heater-treater outside of the tank battery. Therefore, the Agency assumed that due to the specific characteristics of the oil and gas production industry, new facilities would continue building at least one heater-treater outside of the tank battery and therefore take advantage of the changed requirements of the final rule. Cost savings would result from the difference in cost for sized and general secondary containment. 
Integrity Testing
To estimate cost savings from the component of the final rule that provides a more flexible integrity-testing requirement, EPA assumed that facilities are already using tailored integrity testing and claiming environmental equivalence. Therefore, the cost savings to owner and operators of storage facilities would be from not having to claim environmental equivalence. Furthermore, the Agency assumed that the cost of claiming environmental equivalence is the same across all size categories and not dependent on the number of containers that would qualify since the number of tanks should not affect the specific tank inspection standard that can be utilized.
Key Assumptions
EPA made four key assumptions in the analysis. First, the Agency assumed that cost minimization behavior applied to all owners and operators of facilities that qualify for reduced regulatory requirements, whereby all those affected would seek burden relief. Second, EPA assumed that owners and operators of existing SPCC-regulated facilities would forego compliance activities offered as alternatives to activities that required one-time initial investments because they would have already incurred the one-time cost. For example, an owner or operator of an existing Tier I facility qualified for reduced requirements under the final rule, who had an SPCC Plan in place, would not take advantage of the provided alternative to prepare a Plan template instead. Third, EPA assumed that compliance is nationally consistent despite variability in state regulations, political climate, and the distribution of affected facilities (though when estimating cost savings we do account for overlap with state regulations). 
Fourth, in accordance with EPA's guidelines to prepare economic analyses, in the main analysis EPA assumed that all existing owners and operators of facilities are in complete compliance with the 2002 SPCC rule. It is important to note that insofar as certain owners/operators of facilities are not in compliance with the 2002 rule because of the compliance date extension, this assumption may imply that cost savings are an under estimate or an over estimate. In several cases, owners and operators would not incur cost savings if they were already in compliance with the 2002 SPCC rule, implying that the cost saving is an overestimate. For example, existing facilities would not incur cost savings from a six month delay in Plan preparation and implementation. However, if facilities are not compliance with the 2002 rule because of the compliance date extension, these facilities would in fact incur cost savings, implying that the cost savings are an underestimate. EPA did not account for the compliance date extension when assuming full compliance with the 2002 SPCC rule, as it is unclear which facilities would comply at the time of establishment of the facility (since the cost of building secondary containment might be cheaper at the time of initial construction of the facility) and those that would delay compliance until the compliance date of the rule. Furthermore, since the compliance dates were extended on several occasions, it is unclear how many facilities may have come into compliance before new extension dates were announced. The Agency conducted a sensitivity analysis to examine the impact of several compliance assumptions. The first assumption is that there is partial compliance in both the baseline and after the final rule amendments. The second assumption is that there is partial compliance in the baseline and full compliance after the final rule amendments. 




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