### Appendix A

Configuration and Cost Assumptions for Airport Hydrant Fuel Distribution Systems (AHFDSs) and UST S ystems with Field

- Constructed Tanks (FCTs)A

- 1



### This appendix provides detailed descriptions of the costs of the final regulation as they pertain to UST systems with field

- constructed tanks (FCTs) and airport hydrant fuel distribution systems (AHFDSs) . The appendix begins with a broad overview of these two tank types and the costs they will incur as a result of the regulation , and then provides a detai led breakdown of cost

calculat ions.

A.1 Universe Description and Cost Summary for FCTs and AH FD S s

In addition to conventional underground storage tank (UST) systems, the final regulation would

affect two additional classes of tanks:

 Underground storage tank systems and ancillary equipment that are a part of an airport hydrant fuel distribution system (AHFDSs).

 UST systems with field

- constructed tanks (FCTs )

.

EPA believes that l arge commercial and military airports employ AHFDS s , but most commercial

syste ms typically use aboveground storage tanks for these systems

. Based on a meeting with the U.S. Department of Defense (DoD) in March 2013 and supplemental information provided to EPA in April 2013, EPA identified 7 1 DoD facilities with AHFDSs subject to the final regulation . In addition, EPA identified ten commercial airports with AHFDSs potentially subject

to the final regulation

, 1 

### bringing the total number of affected AHFDSs to 8 1

. Similarly, existing underground FCTs appear to be used only by federal faci lities (primarily DoD )

. Based on the

same March 2013 meeting with DoD and supplemental information provided to EPA in April 2013, EPA identified 334 DoD FCTs subject to the final regulation

. In addition, EPA identified 12 FCTs owned by the U.S. Department of Energy (DoE) subject to the final regulation. 2



### A review of existing state regulations suggests that 44 percent of DoD

- owned FCT s and 3 9 percent of DoD

- owned AHFDSs are currently located in states that regulate these systems in a

manner consistent with the regulatory revisions of the final regulation (i.e., these state programs already require compliance with state regulations that are roughly consistent with the final regulation )

. 3 

### We therefore assume that 56 percent of DoD

- owned FCTs and 6 1 percent of DoD

owned AHFDS s will incur additional costs due to the removal of the 1988 deferral

. We also

assume that each of the ten commercial airports with an AHFDS subject to the final regulation

will incur additional costs due to the removal of the 1988 deferral , as will each of the 12 DoE

-

1 Based on public comments submitted and subsequent research conducted by EPA, EPA identified eight airports that would be subject to the final regulation: IND (Indianapolis International Airport), LCK (Rickenbacker International Airport), MCI (Kansas City Interna tional Airport), MKE (General Mitchell International Airport), ORD (O’Hare International Airport), RSW (Southwest Florida International Airport), STL (Lambert

- St. Louis International Airport), and TUS (Tucson International Airport). In addition, EPA was unable to collect specific information regarding GUM (Antonio B. Won Pat International Airport) and SJU (Luis Munoz Marin International Airport), but have included them in the analysis as a conservatism.

2 See U.S. Department of Energy, ―U.S. Department of Energy Underground Storage Tank (UST) Compliance Strategy Report,‖ August 2006, p. A

- 32 to A

- 34. Note that the 12 tanks identified as FCTs on these pages are all in South Carolina, and are the only FCTs identified in this report.

3 Industrial Economics, I nc., ―Preliminary Assessment and Scoping of Data Related to Potential Revisions to the UST Regulations,‖ Work Assignment 1

- 25, Tasks 2

- 4, February 21, 2009, Appendix A, Exhibits 4 and 5.A

- 2



### owned FCTs

. 4 

### For simplicity, however, detaile d cost discussions in this appendix adjust for baseline regulatory compliance only after calculation of all costs

.

Exhibit A

- 1a presents a breakdown of costs incurred by AHFDSs and F CTs as a result of the final regulation.

Exhibit A

- 1a

– Cost Summary, Selected Option

REQUIREMENT COSTS

ASSOCIATED WITH

DOD AHFDSS ($ MILLIONS) COSTS

ASSOCIATED

WITH DOD FCTS ($ MILLIONS) COSTS ASSOCIATED

WITH COMMERCIAL

AIRPORT AHFDSS ($ MILLIONS) COST S

ASSOCIATED

WITH DOE FCTS ($ MILLIONS) TOTAL COSTS

($ MILLIONS)

Release detection $8.9 $10.0 $1.1 $0.018 $20.0

All other requirements associated

with the removal of the 1988
deferral (Subparts B, C, E, G, and H) $0.031 $0.072 $0.0035 $0.0060 $0.11

Oth er requirements of the final rule (Walkthrough inspections; overfill prevention equipment tests; spill prevention equipment tests; testing after repairs to spill and overfill prevention equipment, and interstices; operator training;

one

- time notification o f existence) $0.35 $0.56 $0.055 $0.017 $0.99

Total $9.3 $11.0 $1.1 $0.041 $21.0

Note: These figures are adjusted for baseline regulatory compliance (i.e., only 56 percent of DoD

- owned FCTs and 61 percent of

DoD

- owned AHFDSs incur costs associated with th e removal of the 1988 deferral ) and discounted to reflect the three

- year implementation delay associated with the removal of the 1988 deferral

. Compliance costs associated with all requirements other than compliance with Subparts E and G of 40 CFR 280 and one

- time notification of existence are discounted by three years, whereas those three requirements take effect immediately.

Columns and/or rows may not sum exactly due to rounding.



### Alternative Option 1 imposes limited requirements associated with the re moval of the 1988

deferral on both FCTs and AHFDSs, compared to the Selected Option. Specifically, under Alternative 1, AHFDSs and FCTs must provide one

- time notification of existence to the implementing agency and report releases (40 CFR 280 Subpart E), but are not subject to any other requirements under the final regulation. Correspondingly, compliance costs for AHFDSs and FCTs under Alternative 1 are simply the sum of those components, as described below in this appendix in the appropriate sections. Exh ibit A

- 1b provides the breakdown of these costs

under Alternative 1.

4 All 12 DoE

- owned FCTs are located in South Carolina; a review of ex isting state regulations does not suggest that these systems are currently regulated in a manner consistent with the regulatory revisions of the final regulation.A

- 3



### Exhibit A

- 1b

– Cost Summary, Alternative 1

REQUIREMENT COSTS

ASSOCIATED WITH

DOD AHFDSS ($ MILLIONS) COSTS

ASSOCIATED

WITH DOD FCTS ($ MILLIONS) COSTS ASSOCIATED

WITH COMMERCIAL

AIRPO RT AHFDSS ($ MILLIONS) COSTS

ASSOCIATED

WITH DOE FCTS ($ MILLIONS) TOTAL COSTS

($ MILLIONS)

Release reporting (Subpart E) $0.014 $0.062 $0.0029 $0.0040 $0.083

One

- time notification
of existence $0.00015 $0.00073 $0.000020 $0.000026 $0.00093

Total $0.01 4 $0.062 $0.0029 $0.0040 $0.084

Note: These figures are adjusted for baseline regulatory compliance (i.e., only 56 percent of DoD

- owned FCTs and 61 percent of DoD

- owned AHFDSs incur costs associated with the removal of the 1988 deferral)

.

Columns and/or rows may not sum exactly due to rounding.



### A.2 Key Cost Components Associated With Removing the 1988 Deferral

– Selected Option for DoD

- O wned FCTs and AHFDSs

Both AHFDSs and FCTs are currently deferred from most of the requirements in 40 CFR Part

280. T he majority of costs associated with the removal of the 1988 deferral from both these type s of tank systems are associated with meeting the release detection requirements. The following sections correspond only to the key cost components and assumptions made for DoD

- owned FCTs and AHFDSs; further sections in this appendix detail the cost components and assumptions

for DoE

- owned FCTs and commercial airport AHFDSs.

Release Detection Requirements

Our analysis assumes that 50 percent of FCTs do not use an automa tic tank gauge (ATG) for

release detection

, and would be required to conduct annual precision testing under the final regulation

. W e also assume that the remaining 50 percent of FCTs that do use ATGs do not currently conduct either monthly release detectio n monitor ing or annual o perability test s of their ATGs. Therefore, we assume that the final regulation will impose costs associated with both of

these activities on owners and operators of FCTs . In addition, of those FCTs with ATGs that are operating at > 0.2 gph, we assume those operating at a leak rate between 0.3 and 1.0 gallon per hour and between 1.0 and 2.0 gallons per hour will be required to conduct triennial (i.e., every three years) and b i e nn i al (i.e., every two years) precision testing , respectiv ely, to achieve the

release detection requirements of the final regulation

. EPA provides various options for owners and operators to meet the release detection requirement. In this analysis , EPA assumes the most conservative option.

Our a nalysis assumes t hat no release detection methods are currently installed in the piping

associated with FCTs . We assume that all piping associated with FCTs will need to undergo semiannual precision testing to achieve the final regulation ’s release detection requirements

.

For the tanks associated with AHFDSs , our analysis assumes that 50 percent do not currently

have ATGs installed and will need to install them to achieve the release detection requirementsA

- 4



### of the final regulation . In addition, we assume that the remaining 5 0 percent of tanks with ATGs

installed do not curr ently conduct either monthly release detection monitor ing or annual operability test s of their ATGs . T he final regulation will impose costs associated with these

activities on all owners and operators of A HFDSs

.

Finall y, we assume that while most AHFDSs currently have release detection installed for the ir piping , these systems are not testing at the frequencies and rates that will be required under the final regulation

. We therefore assume that all AHFDS pi ping will undergo semiannual precision testing to achieve the final regulation’s release detection requirements

. EPA provides various options for owners and operators to meet the release detection requirement. In this analysis

, EPA assumes the most conser vative option.

The two following e xhibits provide summary diagrams fo r the release detection (i.e., s ubpart D of 40 CFR Part 280) requirements associated with the removal of the 1988 deferral

. Exhibit A

- 2 pertains to the tank and piping components of FCTs; Exhibit A

- 3 shows the requirements for the tanks and piping associated with AHFDSs. These diagrams are intended to provide a visual overview of the release detection requirements and assumptions modeled in this RIA; detailed explanations of the compliance costs associated with release detection requirements for FCTs

and AHFDSs can be found in Section A.4 below.

Exhibit A

- 2 : Release Detection Requirements and Assumptions Summary for DoD

- Owned FCTs (universe = 334 FCTs, with size ranging between 50,000 and 6 ,000,000 gallons)A

- 5



### Exhibit A

- 3 : Release Detection Requirements and Assumptions Summary for DoD

- Owned AHFDSs (universe = 7 1 AHFDSs)

Other Requirements

Removing the 1988 deferral for AHFDSs and FCTs will also require these sy stems to comply

with s ubparts B, C, E, G , and H of 40 CFR Part 280 (through the newly created s ubpart K)

. Furthermore, AHFDSs and FCTs will incur costs associated with other requirements of the final regulation that will apply to all UST systems . These i nclude: walkthrough inspections; overfill prevention equipment inspections ; spill prevention equipment tests; testing after repairs; notification of ownership change; and operator training (subpart J)

. 5 

### Lastly, these systems will

have to incur costs with a one

- time notification of existence to the implementing agency , as well as a recordkeeping cost

.

5 While EPA plans on requiring secondary containment on new tanks and piping, based on EPA’s discussion with various parties, EPA is assuming no new installations of underground FCTs are planned, and that all tanks being installed at AHFDSs are abov eground storage tanks (ASTs). As a result, we assume that there are no costs associated with requiri ng secondary containment for new tanks (since no new underground tanks are assumed to be installed for these systems). For AHFDS and FCT piping, EPA does not believe secondary containment with interstitial monitoring is appropriate due to the extreme leng th of AHFDS piping runs, which complicates the need to slope piping back to a containment sump, and the need for steel piping given the high pressures (since corrosion due to water in the interstitial space is hard to prevent or control). As a result, EPA is not requiring secondary containment for piping associated with these systems, and there are no c osts associated with requiring secondary containment for new piping.A

- 6



### A.4 Detailed Cost Analysis

– Release Detection at DoD

- O wned FCTs and AHFDSs

This section pertains to the compliance costs associated with release detection f or DoD

- owned FCTs and AHFDSs. For AHFDSs at commercial airports, compliance costs associated with

release detection are discussed in Section A.5

.

Release detection requirements represent a majority of all costs pertaining to DoD

- owned FCTs

and AHFDSs. It is also the most complex part of the cost calculations, with numerous inp uts and

parameters. Exhibit A

- 4 displays these values as well as the assumptions or basis behind them. 6



### Exhibit A

- 4

– Inputs and Parameters for Release Detection Compliance Cost Est imation at

DoD

- O wned AHFDSs and FCTs

INPUT / PARAMETER VALUE SOURCE / BASIS

Number of FCTs 334 See Chapter 2

Percent of FCTs without existing ATGs 50% EPA assumption

Percent of FCTs with existing ATGs 50% 100% less 50% of FCTs without existing ATGs

Percent of FCTs with existi ng ATGs operating at 0.2 gallon per hour 25% EPA assumption

Monthly release detection monitoring
cost for ATGs $ 4 6 0.07 hours of technical labor , based on 0.05 hours of technical labor to record results monthly and 0.02 hours
of techni cal labor to record daily inventory volume

measurements

Annual operability test cost for ATGs $ 19 6 1.5 hours of technical labor, plus the full time value of money (TVM) cost to repair/replace components as needed (see Appendix D)

Percent of FCTs with exi sting ATGs operating at more than 0.2 gallon per hour 75% 100% less 25% of FCTs with existing ATGs operating at

0.2 gallon per hour

Percent of FCTs with existing ATGs operating at more than 0.2 gallon per hour operating at 0.3

– 1.0 gallon per hour 50% EP A assumption

Percent of FCTs with ATGs operating at
more than 0.2 gallon / hour operating

at 1.0

– 2.0 gallons /h our 50% 100% less 50% of FCTs with existing ATGs operating at
more than 0.2 gallon per hour operating at 0.3

– 1.0 gallon per hour

Average FCT size 1,105,750 gallons Weighted average of FCT sizes based on information

provided by DoD

Percent of FCTs with “long” associated piping of one mile 100% EPA assumption

Percent of FCTs with “short” associated piping of 300 feet 0% 100 % less 100% of FCTs w ith “long” associated piping of

one mile

6 Due to major data limitations, except otherwise indicated, the assumptions used to mo del these systems are based on EPA’s best professional judgment.A

- 7 INPUT / PARAMETER VALUE SOURCE / BASIS

Percent of FCTs with “short” associated piping using electronic line
leak detectors 50% EPA assumption

Percent of FCTs with “short” associated piping using mechanical line

leak detectors 50% 100% less 50% of FCTs with “short” associated piping installing electronic line leak detectors

Electronic line leak detector
installation cost (annualized) $ 82 TO 3003 TDD#9, page 8, inflated to 2012 dollars and annualized over 20 years with a 7 percent discount rate

Mechanic al line leak detector
installation cost (annualized) $ 2 5 TO 3003 TDD#9, page 8, inflated to 2012 dollars and annualized over 20 years with a 7 percent discount rate

Annual line leak detector line tightness

cost $ 121 EPA Information Collection Request Numb er 1360.08, page 63, Exhibit 1, inflated to 2012 dollars

Line leak d etector annual operability

test cost $ 27 9 1.5 hours of technical labor, plus the full time value of money (TVM) cost to repair/replace components as needed (see Appendix D)

Number of DoD

- owned AHFDSs 7 1 See Chapter 2

Number of tanks per AHFDS 8 See Chapter 2

Percent of tanks associated with AHFDSs with existing ATGs 50% EPA assumption

Percent of tanks associated with AHFDSs without existing ATGs 50% 100% less 50% of tanks associated wi th AHFDSs with existing ATGs

Installation cost for an ATG with eight probes (suitable for an AHFDS with eight associated tanks) (annualized) $1, 360 Cost of :

 ATG cost from TO 3003 TDD#9, p. 8; plus

 8 hours of technical labor at $75 for installation; plus

 $ 1,352 per probe for 7 additional probes;

 Inflated to 2012 dollars

 Annualized over 20 years with a 7 percent discount

rate

Percent of AHFDSs using precision testing of piping as their release
detection mechanism 100% EPA assumption

Number of miles per AHF DS (piping run) 5 EPA assumption

Number of “sections” per mile of piping in an AHFDS 2 EPA assumption

Percent of AHFDSs using an automatic line leak detector at 3.0 gallons per

hour as their release detection
mechanism 0% 100% less 100% of AHFDSs using precision test of piping

as their release detection mechanism

Percent of AHFDSs needing to install
double block

- and

- bleed (DBB) valves to comply with release detection requirements 5% EPA assumption

Amortized cost of DBB valve
installation for 9 valves $ 127,430 Assumes a $150,000 cost (2012 dollars) per valve (9 total valves), annualized over 20 years with a 7 percent
discount rateA

- 8 INPUT / PARAMETER VALUE SOURCE / BASIS

Average p recision test cost

– tanks $ 22

, 823 Average of the estimated precision testing costs for a 1,105

, 75 0 gallon tank as provided via three methods: Vista, Mass. Tech., and Varec. Vista costs $6,500 per tank, Mass. Tech. costs $2,000

- $25,000 depending on the size of the tank ($ 27

, 549 for a 1,105,750 gallon tank), and Varec costs $8,200

- $28,000 depending on

the size of th e tank ($ 30

, 158 for a 1,105,750 gallon tank). Cost inflated to 2012 dollars from 2008 dollars.

Average precision test cost

– piping run $ 103

, 012 Average of the estimated precision testing costs for a piping run of five miles, with two sections per mile,

p rovided via three methods: HCNA, Vista, and Varec. HCNA costs $5,500 per section, Vista costs $5,000 per section, and Varec costs $7 per foot. * Cost inflated to

2012 dollars from 2008 dollars.

* The regulation differentiates release detection requirements by requiring precision testing and ATGs to monitor tanks and piping systems at a certain gallon per hour standard. Although it takes longer to complete a precision test at a lower leak rate, we do not cost out the downtime associated with these precision tests. Since many FCTs and AHFDSs are located at Department of Defense (DoD) facilities, it is likely that these facilities both have a plan in place to prevent the loss of essential functions during routine maintenance such as a precision test and
do not have perpetual operations that would incur costs when forced to stop for a precision test. In addition, we
believe it is reasonable to assume these DoD facilities will have backup systems in place such that routine maintenance would not impede operations. Similarly, for the few commercial airport facilities with AHFDSs, we assume the precision testing can be scheduled during facility downtime, so no additional costs associated with a longer precision test are incurred.



### Release Detection for DoD

- Owned FCT s

Release detection costs for DoD

- owned FCTs can be broken down into costs related to tanks and

costs related to the piping associated with the FCTs

. Under the final release detection requirements for FCTs , FCTs are required to u s e an acceptable release de tection method , which entails any of the following:

 a n ATG operating at a leak rate of 0.2 gallon per hour ;

 a nnual precision testing at a leak rate of 0.5 gallon per hour ;

 a n ATG operating at a leak rate of less than 1.0 gallon per hour, and precision

test ing at 0. 2 gallon per hour every three years;

 an ATG operating at a leak rate of between 1.0 and 2.0 gallons per hour, and precision testing at 0. 2 gallon per hour every two years ;

 active vapor monitoring using chemical tracer at a leak rate of 0.1 gallon per hour

every two years; orA

- 9



###  inventory control at 0.50 percent of flow

- through every 30 days; and (1) precision testing at a leak rate of 0.50 gallon per hour every two years; or (2) passive vapor monitoring or groundwater monitoring every 30 days

. 7



### We us e the assum ptions described in Exhibit A

- 4 to calculate the release detection costs
associated with DoD

- owned FCTs.

Given the assumptions that 50 percent of all DoD

- owned FCTs have existing ATGs, and of these, 25 percent operate at a leak rate of 0.2 gallo n per hour, we calculate monthly release

detection monitoring costs of $ 2 3

, 212 ( 334 * 0.5 * 0.25 * $ 4 6 * 12) and annual operability test costs of $ 8,171 ( 334 * 0.5 * 0.25 * $ 195

. 71 ). Thus, FCTs with ATGs currently operating at a

leak rate of 0.2 gallon per hour incur a cost of $ 31

, 383 annually.

We assume t h at the remain ing 75% of DoD

- owned FCTs with existing ATGs operate at leak

rates of either 0.3 to 1.0 gallon per hour or 1.0 to 2.0 gallons per hour, and must therefore also

include a triennial or biennial precision test , respectively

. We assume that the remaining universe of FCTs with existing ATGs is divided evenly between the se two groups (i.e., 50 percent test every two years, and 50 percent test every three years) . For those with existing ATGs operatin g at a leak rate of 0.3 to 1.0 gallon per hour, we calculate monthly release detection monitoring costs of $ 3 4

, 818 ( 334 * 0.5 * 0.75 * 0.5 * $ 4 6 * 12), annual operability test costs of $ 12

, 257 ( 334 * 0.5 * 0.75 * 0.5 * $ 195.71 ) and bi ennial precision testi ng costs of $ 714

, 633 ( 334 * 0.5 *

0.75 * 0.5 * $ 22

, 823 * 0.5 ). Thus, FCTs with ATGs currently operating at a leak rate of 0.3 to

1.0 gallon per hour incur a cost of $ 761

, 708 annually in total

.

For FCTs with existing ATGs operating at a leak rate of 1.0 to 2.0 gallons per hour, we calculate similar monthly release detection monitor ing and annual operability test costs, and triennial precision testing costs of $ 476

, 422 (334 * 0.5 * 0.75 * 0.5 * $ 22

, 823 * 1/3) . Thus, FCTs with ATGs currently operating at a lea k rate of 1.0 to 2.0 gallons per hour incur a cost of $ 523,497 ($ 476

, 422 + $ 34,818 + $ 12,257 ) annually

.

For t he 50 percent of FCTs without ATGs currently installed , we assume that an annual precision

test is conducted . The total cost incurred by these DoD

- owned FCTs annually is $ 3, 811

, 379 ( 334

* 0.5 * $ 22

, 823 )

.

We assume that all DoD

- owned FCTs have one mile of associated piping , which is subject to the release detection requirements applicable to AHFDSs (see below). The total annual costs incurred by the p iping associated with FCTs are $ 13

, 762

, 396 (334 * $ 103

, 012 * 0.2 * 2). 8



### Total annual DoD

- owned FCT release detection costs are $ 18

, 890

, 362 , of which over 7 2 percent

are related to the piping associated with these systems

. However, as only 56 percent of FC Ts

7 Under the final regulation, FCTs can also use any other monitoring method approved by the implementing agency as a method of release detection. For modeling purposes, however, we assume, th at owners or operators will only use the methods listed above.

8 Specifically, this formula multiplies the piping testing cost by 0.2 because the te sting cost listed in Exhibit

A

- 4 pertains to a five

- mile piping run, while FCT

- associated piping is assumed to be one mile length. The resulting cost is then doubled to account for semiannual testing.A

- 10



### incur costs associated with the removal of the 1988 deferral , actual DoD

- owned FCT release detection costs applied in this RIA total approximately $ 10 million, rather than $1 9 million.

Release Detection for DoD

- Owned AHFDSs

Release detection costs for DoD

- owned AHFDSs can be divided into tank costs and associated piping costs. For DoD

- owned AHFDSs, we assume each hydrant system is supported by an average of roughly eight linked tanks.

We assume that 50 percent of the DoD

- owned AHFDS s will have ATGs alre ady installed, while

ATGs would have to be installed on the remainder. For those systems with existing ATGs, we calculate monthly release detection monitoring costs to be $ 157

, 897 ( 71 * 8 [tanks] * 0.5 * $ 46 * 12) and annual operability test costs for the ATGs to be $ 55

, 583 ( 71 * 8 [tanks] * 0.5 * $ 195.71 ).

Total annual costs for these tanks are thus $ 213,480

.

For the 50 percent of existing tanks associated with DoD

- owned AHFDSs that lack ATGs, we

calculate annualized ATG installation costs to be $ 48,294 ( 7 1 * 0.5 * $1, 360 ). Monthly release

detection monitoring and annual operability test costs for the ATGs are identical to those stated

above. Tota l annual costs for these tanks are thus $ 261

, 774 ($ 48,294 + $157,897 + $ 55,583 )

. Overall, t otal annual costs f or all tanks associated with DoD

- owned AHFDSs are $ 475

, 254 ($ 213

, 480 + $ 261

, 774 )

.

One option of the final rule requires that the piping of AHFDSs undergo semiannual precision testing

. 9 

### EPA is assuming the most conservative option in making this assumption. Total annual costs for the precision testing of piping associated with AHFDSs are $ 14

, 627

, 696 (71 * 2 * $ 103

, 012 )

.

Finally , we assume that five percent of DoD

- owned AHFDSs will need to install double block

and

- bleed valves (we assume nine valves to equip average piping runs of ten segments) to comply with release detection requirements. Total annualized costs associated with this component are $ 452,378 (71 * 0.05 * $127,430).

We calculate total annual release detection costs incurred by DoD

- owned AHFDSs t o be $ 15

, 918

, 432 , of which over 9 4 percent are related to the piping associated with AHFDSs. However, as only 61 percent of DoD

- owned AHFDSs incur costs associated with the removal of

the 1988 deferral, actual DoD

- owned AHFDS release detection costs applie d in this RIA total approximately $ 9 million, rather than $1 6 million.

Management Costs Associated with Release Detection

– Selected Option

In addition to the direct costs of the final release detection requirements, we also estimate

management costs assoc iated with complying with the release detection component of the final regulation for DoD

- owned FCTs and AHFDSs . These management costs consist of five percent overhead costs associated with government/contractor program management, ten percent

9 The final regulation also allows for another method appro ved by the implementing agency.A

- 11



### government contracting costs , and one percent base support costs. 10 

### Altogether, we estimate a

sixteen percent management cost associated with release detection

.

16 percent of total FCT release detection costs totals $ 3

, 002

, 458 ($ 18

, 890,362 * 0.16)

. 16 percent of total AHFDS release detection costs totals $2, 488

, 852 ($ 15

, 555,328 * 0.16)

. T otal

annual management costs associated with release detection thus total $5, 551

, 310

. In sum

, under

the Selected Option, release detection costs for DoD

- owned FCTs and AHFDSs, includi ng management costs

, are $ 39

, 957

, 001 . Again, as only a portion of DoD

- owned FCTs and AHFDSs

incur costs associated with the removal of the 1988 deferral, actual annualized release detection

costs for DoD

- owned FCT and AHFDS in this RIA total approximately $ 19 million ($10 million

for Dod

- owned FCTs and $ 9 million for DoD

- owned AHFDSs) million, rather than $ 40 million.

All release detection costs for DoD

- owned FCTs and AHFDSs are discounted three years when applied in the RIA to accommodate the three

- year i mplementation period in the final regulation for these systems

.

A.5 Detailed Cost Analysis

– Subparts B, C, E, and G for DoD

- O wned FCTs and

AHFDSs 11



### Subpart B

Subpart B concerns the design, construction, installation, and notification of new FCTs and

AHFDS s. We assume, however, that no new underground DoD

- owned FCTs or AHFDSs will be

installed

. Thus, the requirements associated with Subpart B incur no costs. 12



### Subpart C

EPA assumes that both DoD

- owned FCTs and AHFD S s are already equipped with corrosion

prot ection (i.e., constructed of: non

- corrodible material, coated and cathodic ally protected steel according to a code of practice developed by a nationally recognized association or independent testing laboratory, fiberglass reinforced plastic (FRP), or steel tank clad with FRP). 13 

### EPA

assumes continual monthly and annual inspections for corrosion protection. As a result, EPA assumes no incremental costs will occur associated with the cathodic protection inspection of Subpart C. However, we do assume that Do D

- owned AH FD Ss and FCTs will incur a nnual recordkeeping cost s associated with these inspections.

To estimate recordkeeping costs, we assume that each owner/oper ator will incur approximately $ 4.01 in labor cost (0.1 clerical hours) and approximately $0.0 9 in operation and maintenance costs. As each FCT is required to comply with this requirement, the annual cost for FCTs is

10 Bulk Field Construct UST Testing Summary and Pipeline Testing Cost Sum mary provided by Defense Energy Support center (DESC) March 8, 2010, spreadsheet titled ―EPA Cost Summary.xlsx.‖

11 Where not otherwise cited, cost estimates and labor estimates in this section come from EPA Information Collection Request Number 1360.12.

12 EPA assumes that existing systems already meet spill, overfill, and corrosion protection requirements (based on meeting with DESC on February 18, 2010).

13 Based on a meeting between EPA/OUST and DESC on February 18, 2010.A

- 12



### $ 1,369.64 (approximately $4.1 0 * 334 FCTs). AHFDSs incur similar costs for maintaining records, which total $ 291

. 1 5 per year ($4.1 0 * 7 1 AHFDSs) (note that minor rounding affects these calculations)

.

Subpart C also requires owners and operators to conduct activities associated with the

maint enance of repair records. T his consists of: (1) gathering information on each repair; (2)

conduct ing a tightness test 30 days after repair; and (3) actually maintaining records. EPA

assumes three percent of FCTs and AHFDSs require repair annually. 14 

### Gathering information on repair requires one technical hour of labor ($7 0

. 33 ), while maintaining record s require s 0.1 clerical hour of labor ($ 4

. 01 ) and $0. 09 in operation and maintenance costs.

For FCTs, w e assume that tightness testing performed after a repair costs $1, 866.16

. 15 

### The total

costs for FCTs to test and maintain records , based on an assumptio n of three percent of FCTs needing to undergo repair each year, are $ 19,444.72 [(334 * 0.03 * $74.34) + (334 * 0.03 * $1,866. 16 ) + (334 * 0.03 * $ 0.09) ]

. Total FCT cost s for Subpart C are then $ 20,814.36 ($19,444.72 + $1,370)

.

For AHFDSs, tightness testin g following a repair must occur for every tank within the system. Given our assumption of an average of eight tanks associated with each AHFDS, we calculate costs associated with this portion of su bpart C for AHFDSs , based on an assumption of three

percent of tanks associated with AHFDSs to undergo repair each year, to be $ 31,957.88 [ ( 7 1 * 0.03 * $74.34) + ( 7 1 * 0.03 * 8 * $1,866,16) + (74 * 0.03 * $0.09)]

. Total AHFDS co sts for Subpart C are then $ 32

, 249.03

.

Total Subpart C costs across DoD

- owned AHFDSs an d FCTs amount to approximately $53 ,000 annually . However, given that only a portion of these systems incur costs associated with the

removal of the 1988 deferral, actual Subpart C costs applied i n this RIA are approximately $31 ,000 instead. These costs are then discounted three years when applied in the RIA, to accommodate the three year implementation period in the final regulation for these systems , for a final Subpart C cost of approximately $2 5 ,000

.

Subpart E

Subpart E requires owners and operators to r eport to the implementing agency suspected or actual releases of regulated substances, release investigation and confirmation, and reporting and cleanup of spills and overfills. Gathering i nformation occurs on two levels

– the facility level and

the contra ctor level. Facilities are assumed to use one managerial hour and four technical hour s on gathering information ($ 373

. 72 total), as well as $2, 921.83 in operation and maintenance

costs. 16

14 See EPA Information Collection R equest Number 1360.08.

15 Email from George Thuemling at Varec, October 23, 2009. Tightness cost estimates range from $1,000 to $2,500, leading to an average of $1,750. This average was inflated to 2012 dollars, yielding approximately $1,866.16 for a tightn ess test.

16 Facility costs for gathering information include approximately $2,775, according to PCCI, ―Summary of the Preliminary Assessment of Baseline and Cost Impacts Associated with Deferred UST Systems,‖ July 2008, p. 56, inflated to 2012 dollars.A

- 13



### We assume c ontractors use five managerial hours, 31 technical hours, and 15 cleric al hours ($3, 243

. 15 total) with no operation and maintenance costs. We assume f ive percent of all FCTs suspect a release each year. 17 

### In addition, we assume 8 0 percent of suspected releases are reported (i.e., they meet reportable quantity re quirements). Each report requires 0.25 managerial

hours ($ 23

. 10 ) and $ 1 .43 in operation and maintenance costs. Three percent of all FCTs are assumed to report a fill or overfill, and three percent are also assumed to notify the agency in the

event that the y are unable to clean up a spill. These notification costs are iden tical: 0.5 managerial hours ($ 46

. 20 and $3. 20 in operation and maintenance costs).

Total DoD

- owned FCT costs for Subpart E are then $ 110, 843.89 :

 $60, 710.31 in labor costs for reporting su spected releases ($373.72 * 0.05 * 334 + $3,243.15 * 0.05 * 334 + $23.10 * 0.04 * 334 ) ;

 $48,813.75 in operations and maintenance costs for reporting suspected releases ($2,92 1.83 * 0.05 * 334 + $1.43 * 0.04 * 334);

 $ 1,234

. 35 in labor costs for reporting a nd cleanup of sp ills and overfills ($46.2 * 0.04 * 334 * 2); and

 $ 85.48 in operations and maintenance costs for reporting and cleanup of sp ills and overfills ($3.20 * 0.04 * 334 * 2).

AHFDSs incur identical costs to FCTs for compliance with Subpart E ; thes e costs apply to the 7 1 existing DoD

- owned AHFDS s ( compared to 334 existing FCTs )

. T otal DoD

- owned A HFDS costs for Subpart E are $ 23,562.62 :

 $ 12

, 905.48 in labor costs for reporting suspect ed releases ($373.72 * 0.05 * 71 + $3,24 3.15 * 0.05 * 71 + $23.10 * 0.04 * 71 );

 $10, 376.58 in operations and maintenance costs for reporting suspected releases ($2,921.83 * 0.05 * 71 + $1.43 * 0.0 4 * 71 );

 $ 262.39 in labor costs for reporting and cleanup of sp ills and overfills ($46.2 * 0.04 * 71 * 2); and

 $ 18.17 in operat ions and maintenance costs for reporting and cleanup of sp ills and overfills ($3.20 * 0.04 * 71 * 2).

Total Subpart E costs across DoD

- owned AHFDSs and FCTs amount to approximately $130,000. However, given that only a portion of these systems incur costs a ssociated with the

removal of the 1988 deferral, actual Subpart E costs applied i n this RIA are approximately $76 ,000 instead.

17 Industrial Economics, Inc., ―Preliminary Assessment and Scoping of Data Related to Potential Revisions to the UST Regulations; Tasks 2

- 4, Work Assignment 1

- 25,‖ November 20, 2008. See specifically Attachments 6
and 11, Note 3.A

- 14



### Subpart G

Subpart G requires owners and operators conduct a site assessment of the excavation zone, as well as provide notificat ion of closure or change

- in

- service. In addition, owners and operators must maintain records after permanent closure or change

- in

- service for at least three years, and mail records to the implementing agency if they are unable to maintain them on site. We assume that one DoD

- owned FCT will close every five years. Notification of closure or change

- in

service requir es 0.25 managerial hours ($ 23

. 10 ) and $ 1

. 43 for operation and maintenance costs

. Site assessment of the excavation zone takes place on two levels

— the facility level and the contractor level. The facility level requ ires 2.75 managerial hours ($ 254

. 08 ) and $2, 679.66 for operation and maintenance costs. The contractor level requires 6 managerial hours, 40 technical hours, and 18 clerical hours ($ 4

, 088

. 71 ). Maintaining records require s 0.1 hours of clerical time ($ 4

. 0 1 ) and $0. 09 for opera tion and maintenance costs. We assume that closing FCTs cannot

maintain records on site, and will have to mail them to implementing agency at a cost of 0.5

clerical ho urs ($20.03) and $3.20 in operation and maintenance costs. T otal DoD

- owned FCT

costs for Su bpart G are calculated as $1, 414.86 : [ ($ 23

. 1 + $ 1

. 43 + $ 254.08 + $ 2,679

. 6 6 + $ 4,088.71 + $4

. 0 1 + $0.09 + $20.03 + $3.20 ) * 0.000 6] . Note that this calculation multip lies the costs enumerated above by approximately 0. 0006 , or the number of FCTs closing every five

years [ 1/( 334 *5) ]

.

Subpart G for DoD

- owned AHFDSs is similar to that for FCTs. We assume that one DoD

- owned AHFDS will close every five years. In addition

, we assume that closing AHFDSs cannot maintain records on site, and will have to mail them to the ir implementing agency at a co st of 0.5 clerical hours ($ 20

. 03 ) and $3. 20 in operation and maintenance costs. Thus, total DoD

- owned

AHFD S costs for Subpart G are $1, 414

. 86: [ ( $ 23

. 10 + $ 1

. 43 + $2, 679.66 + $ 254.08 + $ 4,088.71

+ $4.01 + $0.09 + $ 20

. 03 + $3. 2 0 ) * 0. 0027 ] . Note that this calculation multiplies the costs enumerated above by approximately 0. 0027 , or the number of AHFDSs closing every five years
[ 1/( 74 *5) ]

.

Total Subpart G costs across DoD

- owned AHFDSs and FCTs amount to approximately $2,800. However, given that only a portion of these systems incur costs associated with the removal of

the 1988 deferral, actual Subpart G costs applied in this RIA are appro ximat ely $1,6 00 instead.

A.6 Detailed Cost Analysis

– Other New Regulatory Requirements for DoD

- O wned

FCTs and AHFDSs

AHFDS and FCT systems will also have additional requirements under the final regulation . This section summarizes the methodology for val uing those requirements. Note that the estimates in this section are generally consistent with the timing and costs required for other types of tanks (see Chapter 3 and Appendix D ), but reflect a different labor rate more consistent with work performed at DoD facilities.

Unlike the costs estimated for the s ubparts of 40 CFR 280 described above , we assume that the requirements below are required for all DoD

- owned FCTs and AHFDSs, and that costs apply to each affected system, rather than a subset of systems i n those states that have not yet removed the deferral for these system types.A

- 15



### Walkthrough Inspections

The final regulation requires monthly walkthrough inspections for all tanks, including FCTs and AHFDSs. For FCTs, we assume the walkthrough inspection, wh ich includes the cost of repairs, if necessary, requires 50 minu tes of technical labor ($ 5 8

. 61 ) plus $ 10. 66 in time value of money

costs

. 18 

### In addition, record keeping for this requirement cost s $4. 12 in total (0.1 hour of clerical

labor at $ 4

. 01 plus $0. 1 2 in operation and maintenance costs). As walkthrough in spections are required on a 30

- day basis , the annual cost of this re quirement for DoD

- owned FCTs is $ 298,459.97: ($5 8.61 + $10.66 + $4.01 + $0.12) * (334 * 12.175)

.

For DoD

- owned AHFDSs, we assume the w alkthrough inspection requires 115 minutes of technical labor ($ 134

. 80 ) as well as $ 10. 66 in time value of money costs

. In addition, recordkeeping for walkthrough inspections for AHFDSs are identical to those for FCTs. The

annual cost of this requirement f or AHFDSs is $ 129,308.42 : ($134.80 + $10.66 + $4.01 + $0.12) * (7 1 * 12.175).

These costs are then discounted three years when applied in the RIA, to accommodate the three year implementation period in the final regulation for these systems.

Overfill P reve ntion E quipment Inspections

Under the Selected O ption, t he final regulation requires o verfill prevention equipment inspections for all tanks, including FCTs and AHFDSs , every three years

. We assume 8 hours of technical labor ($562.66) plus a testing cost o f $ 228.20 per tank. 19 

### In addition, there is a time value of money cost of $ 374

. 67 , applied to the inspection cost

. R ecordkeeping for this requirement amounts to $4

. 12 ($ 4

. 0 1 for 0.1 hours of clerical labor and $0. 12 in operation and maintenance costs). We c alculate total annual costs for FCTs for the requirement to be $ 130

, 220

. 95 : ($562.66 + $ 602.87 + $4.01 + $0.12) * (334 / 3). The overall cost is divided by three as the test is required for a given system only in every third year.

Costs for o verfill p rev ention e quipment inspections are similar for AHFDSs, except that overfill prevention equipment inspections take place on a by

- tank basis. Since we assume eight tanks per AHFDS, the total testing cost at one DoD

- owned AHFDS is $ 9

, 324

. 22 : ($562.66 + $ 602.87 ) * 8

. Correspondingly, total annual costs for AHFDSs for this requirement are $ 220

, 770

. 74 : ($ 9

, 3 2 4.2 2 * 71 / 3) + ($4.01 + $0.12) * 7 1 / 3.

18 This is an annual cost stem ming from costs incurred due to finding problems earlier under the regulatory requirements as compared with the baseline. See Appendix D for discussion on the time value of money. We assume that DoD facilities are not currently conducting any baseline tes ting or inspections of their systems analogous to the requirements modeled in this appendix associated with the removal of the 1988 deferral ; correspondingly, we assess the entire weighted

- average repair or replace cost on failure with each test or inspect ion. By contrast, for conventional UST systems, the RIA only applies the incremental portion of a weighted

- average repair or replace costs based on how much sooner the owner or operator would have to acquire the repair or replacement. In other words, the R IA applies a partial time value of money cost to conventional UST systems, because tests or inspections only move up the schedule for incurring those repairs or replacements, while for DoD

owned FCTs and AHFDSs, the RIA applies a full repair or replacement cost, as we assume that absent the requirement, the repair or replacement would never occur.

19 See Appendix D; the testing cost is the same as that applied to conventional UST systems.A

- 16



### These costs are then discounted three years when applied in the RIA, to accommodate the three year implementation pe riod in the final regulation for these systems.

Spill Prevention E quipment T ests

Under the Selected Option, t he final regulation requires spill prevention equipment tests for all tanks, including FCTs and AHFDSs , every three years . The testing component i ncludes a cost of $ 133.30 per spill prevention equipment uni t , as well as $ 307

. 34 in time value of money costs

. 20



### As with the other requirement s, there is a $4. 12 recordkeeping component ($ 4

. 01 for 0.1 hours of clerical labor and $0. 12 in operation and main tenance costs). For DoD

- owned FCTs, the total

annual cost of this requirement is $ 49

, 516

. 51 : ( $ 133.30 + $ 307

. 34 + $4. 0 1 + $0.12 * 334 / 3 )

. We assume that the USTs associated with DoD

- owned AHFDSs do not have spill prevention equipment , and therefore do n ot require any spill prevention equipment tests

. 21



### These costs are then discounted three years when applied in the RIA, to accommodate the three year implementation period in the final regulation for these systems.

Testing after Repairs to S pill and O verfi ll Prevention E quipment

The final regulation requires spill prevention equipment testing , overfill prevention equipment inspection , and the recordkeeping associated with both of these activities for all tanks that have undergone repairs, including FCTs and AHFDSs. We assume that 15.6 percent of all spill prevention equipment require s repairs every year, as the average spill prevention equipment test pass rate is 84.4 percent. 22 

### We also assume that 21.4 percent of all overfills require repairs every

year, as the average overfill equipment test pass rate is 78.6 percent. 23 

### The testing costs
associated with these tests include a cost of $358.33 for spill prevention equipment, and $400 .00 for overfill prevention equipment

. 24 

### For DoD

- owned FCTs, the total annual cos t for testing spill prevention equipment after repairs is $ 18,885.36: ( $ 358.33 +$4. 12 ) * (334 * 0.156). T he total

annual cost for inspecting overfill prevention equipment after repairs for DoD

- owned FCTs is $ 28

, 885

. 01: ( $ 400 .00 + $4. 12 ) * (334 * 0.214)

. The total cost for this requirement for DoD

owned FCTs adds to $47,770.37.

We assume the USTs associated with DoD

- owned AHFDSs do not have spill prevention equipment . However, since the overfill prevention equipment inspections is performed on a per

tank basi s, each DoD

- owned AHFDS requiring a repair incurs the inspection cost for each of its tanks. We assume an average of eight tanks associated with each DoD

- owned AHFDS. Thus, for

20 See Appendix D; the testing cost is the same as that applied to conv entional UST systems.

21 The underground storage tanks associated with AHFDSs are typically intermediate tanks that are fed by larger tanks through permanently connected piping.

22 Based on information on test pass rates for spill bucket sumps.

23 Based on in formation on test pass rates for overfill alarms, flow restrictors, and automatic shutoff

devices.

24 See Appendix D; the testing cost is the same as that applied to conventional UST systems.A

- 17



### DoD

- owned AHFDSs, the total annual cost for inspecting overfill prevention equi pment after repairs is $ 48

, 683

. 43 : ( $400 .00 * 71 * 8 * 0.214) + ($4.12 * 71 ).

These costs are then discounted three years when applied in the RIA, to accommodate the three year implementation period in the final regulation for these systems.

Ownership Chan ge Notification & One

- Time Notification of Existence

The final regulation requires notification of ownership changes from all facilities changing ownership

. Each of these notifications requir es 0.25 managerial hours, or $ 23

. 10 . We assume that one percent o f all DoD

- owned FCTs ( 3

. 34 FCTs) will change ownership every year

. Thus,

the total annual cost for DoD

- owned FCTs pertaining to this requirement is $ 77

. 15: $ 23

. 10 *

3 .3 4

.

In addition, the final regulation requires a one

- time notification from all affected systems. This is simply the cost of notification ($23.10) amortized over 20 years using a seven percent discount rate, or $2.18, applied to each of the 334 FCTs. The total annual cost for DoD

- owned FCTs for these requirements is $805.36: ($23.10 * 3.34) + ($2.18 * 334).

The costs incurred under these requirement s are identical for DoD

- owned AHFDSs. The total

annual cost for AHFDS s for these requirements is $ 171.20: ($23.10 * 0.71) + ($2.18 * 71 ).

Recordkeeping Associated with Compatibility

EPA assumes that existing DoD

- owned AHFDSs and FCTs are not storing regulated substances blended with more than ten percent alcohol, and therefore, owners and operators of these systems

would not need to demonstrate compatibility with those fuel blends. As a result, no c osts are assumed to be incurred due to this requirement.

Operator Training

The o perator t raining requirement includes both the costs of testing and training operators, as

well as as sociated recordkeeping. Testing and training costs include both annual and one

- time,

first

- year costs. First

- year costs are initial training costs incurred by all facilities. Annual costs are costs of training new staff necessary to serve as operators. These costs are calculated

a ccording to the methodology below.

W e assume that e ach facility will require one Class A (managerial labor), one Class B (technical labor), and t hree Class C (military pay grade of E

- 6 with over 3 years of service ) operators. For Class A and B operators, we assume 20 percent ―test out‖ and do not require training. For those testing out, the facility incurs the cost of a test ( assume d to be $6 3.98 in 2012 dollars, inflated from $60 in 2008 dollars ) , as well as the 1.5 hours necessary to take the test

. 25

, 26 

### Because only 20

25 See Industrial Economics, Inc. ―Draft Methodology for Assessin g Cost

- Effectiveness of Operator Training Options,‖ Work Assignment 1

- 19, Task 4, December 30, 2008, page 12, Exhibit 2. Tests range from $45 to $75; $60 is the average test cost.

26 See http://www.iccsafe.org/certification/ust

- ast/2009UST

- AST.pdf , 1.5 hours is the length of California’s

test.A

- 18



### percent of operators ―test out

, ‖ th e test costs are , on average, $ 40

. 51 for Class A operators and $ 33

. 90 for Class B operators , or $ 63.98 + (1.5 * the labor rate) * 0.2

. For the 80 percent that cannot ―test out,‖ each operator must take a no

- cost online training that culminates in a final

exa m. The final exam costs $ 180.22 (inflated from $169 in 2008 dollars) , and the training process requires ten hours of time. 27 

### Thus, the cost for operator training f or those not testing out is $ 883

. 31 for Class A operators and $ 706

. 83 for Class B operators, o r $ 180.22 + (10 * the labor rate) * 0.8.

Class C operators are assumed to be trained by Class B operators. This training is assumed to take one hour of time for the Class B operator, as well as one hour each for the Class C operators being trained. Thus, t he costs per facility for training Class C operators are $ 138

. 91 , or $ 70

. 33 (Class B operator hourly rate) plus $ 68 .5 7 (the hourly rate for three Class C operators). The total

one

- year cost for a facility then, incurred in the first year that the Operator Training requirement goes into effect, is $1,80 3 .4 6 , which, in its annuali zed form (over 20 years with a 7 percent discount rate) and including annual recordkeeping costs of $4.12 , is $170. 62

.

Annual costs stem from turnover among operators, and the need t o train new operators. Assuming a turnover rate of 22 percent per year for all operators

, and that 20 percent of new Class A and Class B operators continue to ―test‖ out while all new Class C operators must receive initial training , we obtain annual costs of $ 3 17

. 82 : 28



###  For Class A operators, 0.22 * ($883.31 * 0.8) + 0.22 * ($40.51 * 0.2); plus

 For Class B operators, 0.22 * ($706.83 * 0.8) + 0.22 * ($33.90 * 0.2); plus

 For Class C operators, 0.66 * $46.30; plus

 Annual recordkeeping costs of $4.12.

For DoD

- o wned FCTs, o perator t raining incurs a total annual cost of $ 16 3

, 139

. 65 : ($170.62 + $3 17

. 82 ) * 334

. For DoD

- owned AHFDSs, o perator t raining incurs a total annual cost of $ 3 4

, 679.39 : ($170.62 + $ 317

. 82 ) * 71

.

These costs are then discounted three years when applied in the RIA, to accommodate the three year implementation period in the final regulation for these systems.

A.7 AHFDSs Located at Commercial Airports

In addition to AHFDSs located at DoD

- owned facilities, EPA also identified ten commercial airports with AHFDSs potentially affected by the removal of the 1988 deferral in the final regulation

. Based on discussions with these commercial airports, EPA compiled a set of

27 See http://www.petroleumtrainingsolutions.com/resources /ColoradoAB.pdf , the Colorado ―webinar.‖ The exam requires approximately two hours, and the training consists of two four

- hour sessions, for a total of ten

hours.

28 We assume turnover rates for all classes to be between 20 and 24 percent per year; 22 perc ent is the average turnover rate. For Class C operators, this means that there is an annual turnover of 66 percent since we assume three Class C operators per FCT/AHFDS.A

- 19



### information regarding the structural set

- up of these airports, and estimated compliance costs for the release detection requirements of the final regulation as they pertained to each individual airport.

This section discusses the compliance costs associated with the removal of the 1988 deferral for

these ten commercial airports. First, Sect ion A.7.1 provides unique cost estimates for each of the

ten airports identified as potentially subject to the final regulation . Then, Section A.7.2 explains the cost calculations for the additional requirements of the final regulation , as well as the

addi tional subparts of 40 CFR 280 applicable to these airports.

Section A.7.1

– Release Detection Compliance Costs for AHFDSs Located at Commercial Airports

In order to estimate release detection compliance costs for commercial airport AHFDSs, we use a slightl y

- modified approach similar to that used to estimate release detection compliance costs

for DoD

- owned AHFDSs. Specifically, we model release detection for commercial airport AHFDSs in the following way:

 Determine whether the AHFDS has any tanks associated with it; if so, these tanks must comply with annual precision testing requirements;

 Determine the number of piping sections associated with the AHFDS; the piping must comply with semi annual precision testing requirements; and

 Determine whether any double b lock

- and

- bleed valves need to be installed to comply with release detection requirements, and if so, how many.

Parameters used for this analysis are similar to those in Exhibit A

- 4 , with the following exceptions:

 For tanks, precision testing costs are $5,9 35 per tank, based on an average tank size of 50,000 gallons, rather than upwards of the 1 million gallon average size used for the

DoD

- owned FCTs;

 Due to availability of information about the actual lengths and/or piping segments of commercial airport AHF DSs, specific per

- segment testing costs can be applied ($5,598 per segment) ; and

 Due to availability of information about baseline precision testing conducted by airports, only costs associated with incremental testing frequencies are applied.A

- 20



### STL

Lambert

- St. Louis International Airport has an AHFDS with 12 associated tanks and 4 total piping sections. The tanks are tested every 5 years in the baseline.

Annual p recision testing costs for tanks are $71,222.71 ($5,935 * 12), but incremental precision testing costs are $56.978.17 ($71,222.71 * 0.8). Annual precision testing costs for piping are $ 44,787.80 ($5,598 * 4 * 2). Total incremental costs for this AHFDS are $ 101,765.97 ($ 56,978.17 + $44,787.80 ).

ORD

O’Hare International Airport (Chicago, IL) has 2 AHF DS s with 22 associated tanks and 24 total piping sections. 3 of the piping sections are tested semiannually in the baseline. 29



### Annual precision testing costs for tanks are $130,574.97 ($5,935 * 22). Annual precision testing costs for piping are $268,726.81 ($5,598 * 24 * 2), but incremental precision testing costs are $235,135.96 ($268,726.81 * 21 / 24). In addition, the AHFDS must install 9 dual block

- and

bleed valves, with a total annualized cost of $127.430.45. Total incremental costs for this AHFDS are $ 493,141.38.

MCI

Kansas City International Airport has an AHFDS with 3 total piping sections.

Annual precision testing costs for piping are $33,59 0 .85 ($5,59 1 * 3 * 2). In addition, the

AHFDS must install a dual block

- and

- bleed valve, with a total annualize d cost of $14,158.94. Total costs for this AHFDS are $47,749.79 ($33,59 0 .85 + $14,158.94).

MKE

General Mitchell International Airport (Milwaukee, WI) has an AHFDS with 2 associated tanks

and 10 total piping sections.

Annual precision testing costs for tank s are $11,870.45 ($5,935 * 2). Annual precision testing costs for piping are $ 111,969.50 ($5,598 * 10 * 2). Total costs for this AHFDS are $ 123,8 3 9.9 6 ($11,870.45 + $ 111,969.50 ).

TUS

Tucson International Airport has an AHFDS with 4 associated tanks and 6 t otal piping sections.

Annual precision testing costs for tanks are $23,740.90 ($5,935 * 4). Annual precision testing costs for piping are $67,181.70 ($5,598 * 6 * 2). Total costs for this AHFDS are $90,922.61 ($23,740.90 + $67,181.70).

29 18 tanks will be removed from this AHFDS in 5 years; this removal is not accounted for in the cost

calculations as a conservatism.A

- 21



### IND

Indianapolis In ternational Airport has an AHFDS, where total release detection costs are estimated at $10,000 based on information provided to the EPA

.

RSW

Southwest Florida International Airport has an AHFDS with 5 total piping sections. Annual precision testing costs f or piping are $55,984.75 ($5,598 * 5 * 2), and are the only release

detection costs for this AHFDS.

LCK

Rickenbacker International Airport (Columbus, OH) has an AHFDS with 8 associated tanks and 2 total piping sections.

Annual precision testing costs for tanks are $47,481.81 ($5,935 * 8). Annual precision testing costs for piping are $22,393.90 ($5,598 * 2 * 2). Total costs for this AHFDS are $69,875.71 ($47,481.81 + $22,393.90).

GUM

Antonio B. Won Pat International Airport (Guam) has an AHFDS. EPA was una ble to collect specific information regarding the associated tanks, piping segments, or baseline practices

associated with this AHFDS. To ensure that we do not understate costs , we apply the standard DoD facility template to this airport, as the average Do D

- owned AHFDS modeled in this appendix appears to contain more tanks and piping segments than most commercial airports

AHFDSs examined.

Using a value of 8 associated tanks, total tank precision testing costs are $47,481.81 ($5,935 * 8). Using a value of 10 total piping segments, total piping precision testing costs are $111,969.50 ($5,598 * 10 * 2). Total costs for this AHFDS are correspondingly assumed to be $159,451.31.

SJU

Luis Munoz Marin International Airport (Puerto Rico) has an AHFDS. EPA was unable to collect specific information regarding the associated tanks, piping segments, or baseline practices

associated with this AHFDS. To ensure that we do not understate costs , we apply the standard DoD facility template to this airport, as the average DoD

- ow ned AHFDS modeled in this appendix appears to contain more tanks and piping segments than most commercial airports

AHFDSs examined.

Using a value of 8 associated tanks, total tank precision testing costs are $47,481.81 ($5,935 * 8). Using a value of 10 tot al piping segments, total piping precision testing costs are $111,969.50 ($5,598 * 10 * 2). Total costs for this AHFDS are correspondingly assumed to be $159,451.31.

Total release detection costs for the 10 commercial airport AHFDSs consist of approximatel y $0.37 mil lion in tank testing costs, $1.4 million in piping testing costs, and $0.14 million inA

- 22



### double block

- and

- bleed valve installation costs. Total release detection costs for thes e systems are approximately $1.3 million. These costs are discounted th ree years when applied in the RIA, to accommodate the three year implementation period in the final rule pertaining to this regulatory requirement, for total Subpart D costs of approximately $1.1 million.

Section A.7.2

– Subparts B, C, E, G and H for AHFDS s Located at Commer c i al Airports

Subpart B

Subpart B concerns the design, construction, installation, and notification of new AHFDSs. We assume, however, that no new commercial airport AHFDS with sufficient underground piping to be affected by the final re gulation will be installed. Thus, the requirements associated with Subpart B incur no costs.

Subpart C

Commercial airports already follow SPCC requirements. §§112.8(d) and 112.12(d) require that owners and operators of facilities generally protect buried storage containers and piping against corrosion. As a result, EPA assumes that commercial AHFDSs are already equipped with corrosion protection (i.e., constructed of: non

- corrodible material, coated and cathodic ally protected steel according to a code of practice developed by a nationally recognized association or independent testing laboratory, fiberglass reinforced plastic (FRP), or steel tank clad with FRP). EPA assumes continual monthly and annual inspections for corrosion protection. As a result, EP A assumes no incremental costs will occur associated with the cathodic protection inspection of Subpart C. However, we do assume that AHFDSs will incur a recordkeeping cost associated with these inspections.

To estimate recordkeeping costs, we assume tha t each owner/operator will incur approximately $2.88 in labor cost (0.1 clerical hours) and approximately $0.09 in operation and maintenance costs. As each AHFDS is required to comply with this requirement, the annual cost for is $29.73 (approximately $2. 97 * 10 AHFDSs).

Subpart C also requires owners and operators to conduct activities associated with the

maint enance of repair records. This consists of: (1) gathering information on each repair; (2) conducting a tightness test 30 days after repair; and ( 3) actually maintaining records. EPA assumes three percent of AHFDSs require repair annually. 30 

### Gathering information on repair requires one technical hour of labor ($51.39 ), while maintaining records require s 0.1 clerical hour of labor ($2.88 ) and $0. 09 i n operation and maintenance costs.

For AHFDSs , we assume that tightness testing performed after a repair costs $1, 866.16

. 31 

### The

total costs for AHFDSs to test and maintain records , assuming three percent of associated tanks undergo repair each year, are $ 576.16 [(10 * 0.03 * $ 54

. 27 ) + ( 10 * 0.03 * $1,866.16) + ( 10 *

0.03 * $ 0.09)] . Total AHFDS cost s for Subpart C are then $ 605.88 ($ 29.73 + $ 576.16 )

.

30 See EPA Information Collection Request Number 1360.08.

31 Email from George Thuemling at Varec, October 23, 2009. Tightness cost estimates range from $1,000 to $2,500, leading to an average of $1,750. This a verage was inflated to 2012 dollars, yielding approximately $1,866.16 for a tightness test.A

- 23



### These costs are discounted three years when applied in the RIA, to accommodate the three year implementatio n period in the final rule pertaining to this regulatory requirement , for total Subpart C costs of approximately $500

.

Subpart E

Subpart E requires owners and operators to report to the implementing agency suspected or actual releases of regulated substan ces, release investigation and confirmation, and reporting and cleanup of spills and overfills. Gathering information occurs on two levels

– the facility level and the contractor level. Facilities are assumed to use one managerial hour and four technical h ours on gathering information ($291.90 total), as well as $2,921.83 in operation and maintenance

costs. 32



### We assume contractors use five managerial hours, 31 technical hours, and 15 clerical hours ($2,456.52 total) with no operation and maintenance costs. We assume five percent of all AHFDSs suspect a release each year. 33 

### In addition, we assume 8 0 percent of facilities with suspected releases report them, which requires 0.25 managerial hours ($21.58) and $1.43 in operation and maintenance costs. Three perce nt of all AHFDSs are assumed to report a fill or overfill, and three percent are also assumed to notify the agency in the event that they are unable to clean up a spill. These notification costs are identical: 0.5 managerial hours ($43.17 and $3.20 in oper ation and maintenance costs).

Total AHFDS costs for Subpart E are then $2, 881.43 :

 $1,382.85 in labor costs for reporting suspected releases ($291.90 * 0.05 * 10 + $2,456.52 * 0.05 * 10 + $21.58 * 0.0 4 * 10);

 $1,461. 49 in operations and maintenance costs for reporting suspected releases ($2,921.83 * 0.05 * 10 + $1.43 * 0.0 4 * 10 );

 $ 34.54 in labor costs for reporting and cleanup of spills and overfills ($43.17 * 0.0 4 * 10 * 2); and

 $2.56 in operations and maintenance costs for reporting and cleanup of sp il ls and overfills ($3.20 * 0.04 * 10 * 2).

Subpart G

Subpart G pertains to requirements upon closure of an AHFDS. We do not assume that any commercial airport AHFDSs with sufficient underground piping to be affected by the final

32 Facility costs for gathering information include approximately $2,775, according to PCCI, ―Summary of the Preliminary Assessment of Baseline and Cost Impacts Asso ciated with Deferred UST Systems,‖ July 2008, p.
56, inflated to 2012 dollars.

33 PCCI, ―Summary of the Preliminary Assessment of Baseline and Cost Impacts Associated with Deferred UST Systems,‖ July 2008, Attachments 6 and 11, Note 3.A

- 24



### regulation will undergo clos ure. Correspondingly, there are no compliance costs associated with Subpart G for commercial airport AHFDSs.

Subpart H

Subpart H pertains to obtaining financial assurance, and keeping proof of it on file. It is possible the commercial airports with AHFDSs already meet this requirement due to other financial assurance requirements and obligations. However, as a conservatism, we estimate the costs associated with using a financial test to self

- insure as a means of satisfying the financial assurance requiremen t. According to EPA Information Collection Request Number 1360.12, obtaining and keeping on file proof of financial responsibility requires 0.25 hours of technical labor and 0.1 hours of clerical labor, plus approximately $0.09 in operations and maintenanc e costs. Correspondingly, total costs for Subpart H for the commercial airport AHFDSs are $158.21 ($15.73 * 10 + $0.09 * 10). These costs are discounted three years when applied in the RIA, to accommodate the three year implementation period in the final r ule pertaining to this regulatory requirement, for total Subpart H costs of approximately $130.

Section A.7.3

– Other New Regulatory Requirements for Commercial Airport AHFDSs

C ommercial airport AHFDSs will also have to comply with additional requirements under the

final regulation . This section summarizes the methodology for valuing those requirements. Note that the estimates in this section are generally consistent with the timing and costs required for other types of tanks (see Chapter 3 and Appendix D ), but reflect a different labor rate more consistent with work performed at commercial airport facilities.

Walkthrough Inspections

The final regulation requires monthly walkthrough inspections for AHFDSs. F or DoD

- owned AHFDSs, we assume the walkthrough in spection requires 115 minutes of technical labor for a standard facility (i.e., 8 associated tanks, 5 miles of piping, with 2 sections of piping per mile of piping run). However, g iven that EPA obtained actual system information for the commercial airport AHFDSs, EPA was able to model walkthrough inspection costs for commercial airport

AHFDSs as follows:

First, we calculated the total number of associated tanks and miles of piping run for each commercial airport AHFDS, then summed these two figures together . At a standard DoD

- owned AHFDS, the total number of tanks plus miles was 13 (8 tanks plus 5 miles of piping run). We then scaled the time needed to complete a walkthrough inspection based on the sum of tanks and miles of piping at a given commercial airpo rt AHFDS, using 115 minutes as the ―baseline‖ value for a system with some combination of 13 tanks and miles of piping run. Using this method, we determined that the most conservative estimate for a commercial airport AHFDS walkthrough inspection was appro ximately 301 minutes, based on 22 associated tanks and 12 miles of piping at one commercial airport AHFDS (34 / 13 * 115 = 301 ).

301 minutes of technical labor yields a labor cost of approximately $ 268.28 , to which we add the time value of money costs of $ 10.66. To ensure that we do not understate costs, we then apply

this cost to each of the ten commercial airport AHFDSs to yield 30

- day walkthrough inspection costs of $ 32,663.19 ($ 268.28 + $10.66 * 10 * 12.175). We also add 0.1 hours of clerical laborA

- 25



### ($2. 88) and $0.12 in recordkeeping operations and maintenance costs ($2.99 * 10 * 12.175 = $364.49) to arrive at a total walkthrough inspection cost of $ 33,027.68

. These costs are discounted three years when applied in the RIA, to accommodate the three year im plementation period in the final rule pertaining to this regulatory requirement, for total costs of approximately $ 27,000

.

Overfill P revention E quipment Inspections

Under the Selected Option, the final regulation requires overfill prevention equipment insp ections for all tanks, including AHFDSs

- associated tanks, every three years. We assume 8 hours of technical labor ($411.13) plus a testing cost of $228.20 per tank. 34 

### In addition, there is a time value of money cost of $ 374.67 , applied to the testing cost. Recordkeeping for this requirement amounts to $2.99 ($2.88 for 0.1 hours of clerical labor and $0.12 in operation and maintenance costs). We calculate total annual costs for the 64 tanks associated with the 10 commercial airport AHFDSs for this requirement to be $ 21

. 642

. 04 : [($411.13 + $ 602.87 ) * 64 / 3] + [$2.99 * 10 / 3]. The overall cost is divided by three as the test is required for a given sy stem only in every third year. These costs are discounted three years when applied in the RIA, to

accommodate t he three year implementation period in the final rule pertaining to this regulatory requirement, for total costs of approximately $18,000.

Spill Prevention E quipment T ests

We assume that the USTs associated with AHFDSs, including commercial airport AHFDSs , do not have spill prevention equipment, and therefore do not require any spill prevention equipment

tests. 35



### Testing after Repairs to S pill and O verfill Prevention E quipment

The final regulation requires spill prevention equipment testing, overfill preve ntion equipment inspections , and the recordkeeping associated with both of these activities for all tanks that have undergone repairs, including FCTs and AHFDSs. We assume t he USTs associated with AHFDSs do not have spill prevention equipment. However, sin ce the overfill prevention equipment inspections is performed on a per

- tank basis, each AHFDS requiring a repair incurs the inspection cost for each of its tanks . U sing the total of 64 tanks across the ten commercial airport AHFDSs, w e assume that 21.4 of all overfills require repairs every year, as the average overfill equipment test pass rate is 78.6 percent. 36 

### The testing costs associated with these tests include a cost of $400 for overfill prevention equipment. 37 

### Thus, for commercial airpot AHFDSs, th e to tal

annual cost for overfill prevention equipment inspections after repairs is $5,484.81: ($400 * 64 * 0.214) + ($ 2.99 * 10 ). These costs are discounted three years when applied in the RIA, to

34 See Appendix D; th e testing cost is the same as that applied to conventional UST systems.

35 The underground storage tanks associated with AHFDSs are typically intermediate tanks that are fed by larger tanks through permanently connected piping.

36 Based on information on tes t pass rates for overfill alarms, flow restrictors, and automatic shutoff

devices.

37 See Appendix D; the testing cost is the same as that applied to conventional UST systems.A

- 26



### accommodate the three year implementation period in the final r ule pertaining to this regulatory requirement, for total costs of approximately $4,500.

Ownership Change Notification & One

- Time Notification of Existence

The final regulation requires notification of ownership changes from all facilities changing

ownershi p. We do not assume that any commercial airports with AHFDSs with sufficient underground piping to be affected by the final regulation will change ownership.

In addition, the final regulation requires a one

- time notification from all affected systems. Thi s is simply the cost of notification ($21.58) amortized over 20 years using a seven percent discount rate, or $2.04, applied to each of the 10 commercial airport AHFDSs. The total annual cost for this requirement is $20.37: $2.04 * 10.

Recordkeeping Associ

ated with Compatibility

EPA assumes that existing commercial airport AHFDSs and FCTs are not storing regulated substances blended with more than ten percent alcohol, and therefore, owners and operators of these systems would not need to demonstrate compati bility with those fuel blends. As a result, no costs are assumed to be incurred due to this requirement.

Operator Training

The operator training requirement includes both the costs of testing and training operators, as well as associated recordkeeping. Te sting and training costs include both yearly and first

- year costs. First

- year costs are initial training costs incurred by all facilities. Annual costs are costs of training new staff necessary to serve as operators. These costs are calculated according to the methodology below.

We assume that each facility will require one Class A (managerial labor) and three Class B (technical labor) operators. For Class A and B operators, we assume 20 percent ―test out‖ and do not require training. For those testing out, the facility incurs the cost of a test (assumed to be $63.98 in 2012 dollars, inflated from $60 in 2008 dollars), as well as the 1.5 hours necessary to

take the test. 38

, 39 

### Because only 20 percent of operators ―test out,‖ the test costs are, on average, $ 38

. 70 for Class A operators and $ 28

. 21 for Class B operators, or $63.98 + (1.5 * the labor rate) * 0.2. For the 80 percent that cannot ―test out,‖ each operator must take a no

- cost online training that culminates in a final exam. The final exam costs $180.22 (inflated from $169 in 2008 dollars), and the training process requires ten hours of time. 40 

### Thus, the cost for operator training for those not testing out is $ 834

. 88 for Class A operators and $ 1,665

. 92 for Class B operators, or

38 See Industrial Economics, Inc. ―Draft Methodology for Assessing Cost

- Effectiven ess of Operator Training Options,‖ Work Assignment 1

- 19, Task 4, December 30, 2008, page 12, Exhibit 2. Tests range from $45 to $75; $60 is the average test cost.

39 See http://www .iccsafe.org/certification/ust

- ast/2009UST

- AST.pdf , 1.5 hours is the length of California’s

test.

40 See http://www.petroleumtrainingsolutions.com/resources/ColoradoAB.pdf

, the Colorado ―webinar.‖ The exam requires approximately two hours, and the training consists of two four

- hour sessions, for a total of ten

hours.A

- 27



### $180.22 + (10 * the labor ra te) * 0.8 * 3

. Annualizing these costs over a 20

- year period using a seven percent discount rate yields annual initial training costs of $247.98.

Annual costs stem from turnover among operators, and the need to train new operators. Assuming a turnover rat e of 22 percent per year and that 20 percent of new Class A and Class B operators continue to ―test‖ out

, we obtain yearly costs of $ 448

. 57 : 41



###  For Class A operators, 0.22 * ($ 834

. 88 * 0.8) + 0.22 * ($ 38

. 70 * 0.2); plus

 For Class B operators, 0. 66 * ($ 555

. 31 * 0.8) + 0. 66 * ($ 28.21 * 0.2); plus

 Annual recordkeeping costs of $4.12.

For commercial airport AHFDSs, operator training incurs a total annual cost of $ 6

, 965

. 38 : ($ 247

. 98 + $ 448

. 56 ) * 10

. These costs are discounted three years when applied in the RIA, to accommodate the three year implementation period in the final rule pertaining to this regulatory requirement, for total annual costs of approximately $5,700.

A.8 DoE

- Owned FCTs

This section discusses the compliance costs associated with the removal of the 1988 deferral for

the 12 DoE

- owned FCTs identified by EPA. First, Section A.8.1 provides cost estimates for the release detection requirement of the final regulation associated with the removal o f the 1988

deferral

. Then, Section A. 8 .2 explains the cos t calculations for the additional requirements of the final regulation, as well as the additional subparts of 40 CFR 280 applicable to these 12 DoE

owned FCTs.

A.8.1. Release Detection Costs for DoE

- Owned FCTs

Unlike the DoD

- owned FCTs discussed in Section A.4 , the DoE UST Compliance Strategy Report indicates that the 12 DoE

- owned FCTs are relatively small, with capacities between 2,000 and 10,000 gallons. Correspondingly, we assume that unlike the larger DoD

- owned FCTs,

the DoE

- owned FCTs will install ATGs to meet their release detection requirements.

We assume that all 12 DoE

- owned FCTs will install ATGs. From Exhibit A

- 4 , the annualized cost of installing an ATG is $1,360; however, that cost corresponds to an ATG with 8 probes (to

accommodate one for each tank associated with a DoD

- owned AHFDS). Since each DoE

- owned FCT must install an ATG with just one probe, the corresponding cost is $408.77 . The total cost for installing ATGs for these 12 DoE

- owned tanks is $4,893.20 ($408.77 * 12).

These FCTs must also conduct monthly monitoring and annual operability checks associated

with the ATGs. Similar to the costs associated with DoD

- owned FCTs and AHFDSs from

Exhibit A

- 4 , annual costs for monthly monitoring are $55.98 ($46.33 * 12) and annual costs for operabili ty checks are $751.69 ($195.71 * 12). Total costs for the annual monitoring and checks

for these 12 DoE

- owned FCTs are thus $9,020.28 ( [$195.71 + $555.98] * 12).

41 We assume turnover rates for all classes to be between 20 and 24 percent per year; 22 percent is the

averag e turnover rate.A

- 28



### For release detection associated with piping, we assume that the DoE

- owned FCTs have 300

- foot piping runs and will install automatic line leak detectors (LLDs) to meet release detection requirements. LLD installation costs are $53 .50 per FCT, based on an average of the annualized installation costs for electronic LLDs and mechanical LLDs (see Exhi bit A

- 4 ). These FCTs must also conduct annual operability checks and line tightness tests with annual costs of $278.89 and $121.10, respectively. Total costs associated with LLDs for these DoE

- owned FCTs are $5,441.86: ( [$53.50 + $278.89 + $121.10] * 12).

Total release detection costs for the 12 DoE

- owned FCTs amount to $19,355.35. Similar to the

DoD

- owned FCTs, we apply management costs of 16 percent, or $3,096.86. Correspondingly, total release detection costs, inclusive of management costs, are $22,452. 20. These costs are discounted three years when applied in the RIA, to accommodate the three year implementation period in the final rule pertaining to this regulatory requirement, for total costs of approximately $18,000.

A.8.2 Additional Compliance Costs for DoE

- Owned FCTs

In general, the costs discussed below are similar to those applied to DoD

- owned FCTs.

Subpart B

Subpart B concerns the design, construction, installation, and notification of new FCTs. We assume, however, that no new underground FCTs w ill be installed by DoE.

Subpart C

EPA assumes that the DoE

- owned FCTs, similar to the DoD

- owned FCTs, are already equipped with corrosion protection (i.e., constructed of: non

- corrodible material, coated and cathodic ally protected steel according to a co de of practice developed by a nationally recognized association or independent testing laboratory, fiberglass reinforced plastic (FRP), or steel tank clad with FRP). EPA assumes continual monthly and annual inspections for corrosion protection. As a

resu lt, EPA assumes no incremental costs will occur associated with the cathodic protection inspection of Subpar t C. However, we do assume the FCTs will incur a recordkeeping cost associated with these inspections.

To estimate recordkeeping costs, we assume that each owner/operator will incur approximately $4.01 in labor cost (0.1 clerical hours) and approximately $0.09 in operation and maintenance costs. As each FCT is required to comply with this requirement, the annual cost for FCTs is $49.21 (approximate ly $4.10 * 12 FCTs).

Subpart C also requires owners and operators to conduct activities associated with the

maint enance of repair records. This consists of: (1) gathering information on each repair; (2) conducting a tightness test 30 days after repair; a nd (3) actually maintaining records. EPA assumes three percent of FCTs require repair annually. 42 

### Gathering information on repair requires one technical hour of labor ($70.33 ), while maintaining records require s 0.1 clerical hour of labor ($4.01 ) and $0. 09 in operation and maintenance costs.

42 See EPA Information Collection Request Number 1360.08.A

- 29



### W e assume that tightness testing performed after a repair costs $1, 866.16

. 43 

### The total costs for

FCTs to test and maintain records, based on an assumption of three percent of FCTs needing to undergo repair each year, a re $698.61 [(12 * 0.03 * $74.34) + (12 * 0.03 * $1,866.16) + (12 * 0.03 * $0.09)] . Total DoE

- owned FCT cost s for Subpart C are then $747.82 ($698.61 + $49.21)

. These costs are then discounted three years when applied in the RIA, to accommodate the three

ye ar implementation period in the final regulation for these systems, for a final Subpart C cost of approximately $610.

Subpart E

Subpart E requires owners and operators to report to the implementing agency suspected or actual releases of regulated substance s, release investigation and confirmation, and reporting and cleanup of spills and overfills. Gathering information occurs on two levels

– the facility level and the contractor level. Facilities are assumed to use one managerial hour and four technical hou rs on gathering information ($373.72 total), as well as $2,921.83 in operation and maintenance

costs. 44



### We assume contractors use five managerial hours, 31 technical hours, and 15 clerical hours ($3,243.15 total) with no operation and maintenance costs. W e assume five percent of all FCTs suspect a release each year. 45 

### In addition, we assume 80 percent of suspected releases are reported (i.e., they meet reportable quantity requirements). Each report requires 0.25 managerial hours ($23.10) and $1.43 in operat ion and maintenance costs. Three percent of all FCTs are assumed to report a fill or overfill, and three percent are also assumed to notify the agency in the event that they are unable to clean up a spill. These notification costs are identical: 0.5

manage rial hours ($46.20 and $3.20 in operation and maintenance costs).

Total DoE costs for Subpart E are then $3,982.42:

 $2,181.21 in labor costs for reporting suspected releases ($373.72 * 0.05 * 12 + $3,243.15 * 0.05 * 12 + $23.10 * 0.04 * 12);

 $1,753.79 in operations and maintenance costs for reporting suspected releases ($2,921.83 * 0.05 * 12 + $1.43 * 0.04 * 12);

 $ 44 .35 in labor costs for reporting and cleanup of spills and overfills ($46.2 * 0.04 * 12 * 2); and

43 Email from George Thuemling at Varec, October 23, 2009. Tightness cost estimates range from $1,000 to $2,500, leading to an average of $1,750. This average was inflated to 2012 do llars, yielding approximately $1,866.16 for a tightness test.

44 Facility costs for gathering information include approximately $2,775, according to PCCI, ―Summary of the Preliminary Assessment of Baseline and Cost Impacts Associated with Deferred UST Syste ms,‖ July 2008, p.
56, inflated to 2012 dollars.

45 Industrial Economics, Inc., ―Preliminary Assessment and Scoping of Data Related to Potential Revisions to the UST Regulations; Tasks 2

- 4, Work Assignment 1

- 25,‖ November 20, 2008. See specifically Attachm ents 6 and 11, Note 3.A

- 30



###  $ 3.07 in operations and maintenance costs for reporting and cleanup of spills and overfills ($3.20 * 0.04 * 12 * 2).

Subpart G

Subpart G requires owners and operators conduct a site assessment of the excavation zone, as well as provide notification of closure or change

- in

- service. In addition, ow ners and operators must maintain records after permanent closure or change

- in

- service for at least three years, and mail records to the implementing agency if they are unable to maintain them on site. We assume one FCT will close every five years. Notifica tion of closure or change

- in

- service requires 0.25 managerial hours ($23.10) and $1.43 for operation and maintenance costs. Site assessment of the excavation zone takes place on two levels

— the facility level and the contractor level. The facility level req uires 2.75 managerial hours ($254.08) and $2,679.66 for operation and maintenance costs. The contractor level requires 6 managerial hours, 40 technical hours, and 18 clerical hours ($4,088.71). Maintaining records requires 0.1 hours of clerical time ($4.01 ) and $0.09 for operation and maintenance costs. We assume that closing FCTs cannot maintain records on site, and will have to mail them to implementing agency at a cost of 0.5 clerical hours ($20.03) and $3.20 in operation and maintenance costs. Total DoE costs for Subpart G are calculated as $1,414.86: [($23.1 + $1.43 + $254.08 + $2,679.66 + $4,088.71 + $4.01 + $0.09 + $20.03 + $3.20) * 0.017 ]. Note that this calculation multiplies the costs enumerated above by approximately 0. 017 , or the number of FCTs c losing every five years [1/( 12 *5)].

Walkthrough Inspections

Unlike DoD

- owned FCTs, which are larger, we assume the walkthrough inspection for the DoE

owned FCTs , which includes the cost of repairs, if necessary, requires 25 minutes of technical

labor , cons istent with the cost of a walkthrough inspection for conventional USTs (see Appendix D). This cost is $ 29

. 3 1 plus $10.66 in time value of money costs. In addition, recordkeeping for this requirement costs $4.12 in total (0.1 hour of clerical labor at $4.01 plus $0.1 2 in operation and maintenance costs). As walkthrough inspections are required on a 30

- day basis , the annual cost of this requirement is $ 6,441.64 : ($ 29.3 1 + $10.66 + $4.01 + $0.12) * ( 12 * 12.175)

.

These costs are then discounted three years wh en applied in the RIA, to accommodate the three year implementation period in the final regulation for these systems.

Overfill Prevention Equipment Inspections

Under the Selected Option, the final regulation requires overfill prevention equipment inspectio ns for all tanks, including FCTs, every three years. We assume 8 hours of technical labor ($562.66) plus a testing cost of $228.20 per tank. 46 

### In addition, there is a time value of money cost of $374.67, applied to the inspection cost. Recordkeeping for thi s requirement amounts to $4.12 ($4.01 for 0.1 hours of clerical labor and $0.12 in operation and maintenance costs). We calculate total annual costs for the requirement to be $ 4

, 678

. 60 : ($562.66 + $602.87 + $4.01 + $0.12) * ( 12 / 3). The overall cost is di vided by three as the test is required for a given system only in every third year.

46 See Appendix D; the testing cost is the same as that applied to conventional UST systems.A

- 31



### These costs are then discounted three years when applied in the RIA, to accommodate the three year implementation period in the final regulation for these systems.

Spill Prevention Equipment Tests

Under the Selected Option, the final regulation requires spill prevention equipment tests for all tanks, including FCTs and AHFDSs, every three years. The testing component includes a cost of $133.30 per spill prevention equipme nt unit, as well as $307.34 in time value of money costs. 47 

### As with the other requirements, there is a $4.12 recordkeeping component ($4.01 for 0.1 hours of clerical labor and $0.12 in operation and maintenance costs). The total annual cost of this requirem ent is $ 1

, 779

. 04 : ($133.30 + $307.34 + $4.01 + $0.12 * 12 / 3).

These costs are then discounted three years when applied in the RIA, to accommodate the three year implementation period in the final regulation for these systems.

Testing after Repairs to S pill and Overfill Prevention Equipment

The final regulation requires spill prevention equipment testing, overfill prevention equipment inspection , and the recordkeeping associated with both of these activities for all tanks that have undergone repairs, inc luding FCTs. We assume that 15.6 percent of all spill prevention equipment requires repairs every year, as the average spill prevention equipment test pass rate is 84.4 percent. 48 

### We also assume that 21.4 percent of all overfills require repairs every year, as the average overfill equipment test pass rate is 78.6 percent. 49 

### The testing costs associated with these tests include a cost of $358.33 for spill prevention equipment, and $400.00 for overfill prevention equipment. 50 

### The total annual cost for testing sp ill prevention equipment after repairs is $ 678.52 : ($358.33+$4.12) * ( 12 * 0.156). The total annual cost for inspecting overfill prevention equipment after repairs is $ 1,037.78 : ($400.00 + $4.12) * ( 12 * 0.214). The total cost for this requirement for DoE

- owned FCTs adds to $ 1,716.30

.

These costs are then discounted three years when applied in the RIA, to accommodate the three year implementation period in the final regulation for these systems.

Ownership Change Notification & One

- Time Notification of Exist ence

The final regulation requires notification of ownership changes from all facilities changing ownership. Each of these notifications requires 0.25 managerial hours, or $23.10. We assume that one percent of all FCTs ( 0

. 12 FCTs) will change ownership eve ry year. Thus, the total

annual cost for DoE

- owned FCTs pertaining to this requirement is $ 2

. 77 : $23.10 * 0

. 12.

47 See Appendix D; the testing cost is the same as that applied to conventional UST systems.

48 Based on information on test pass rates for spi ll bucket sumps.

49 Based on information on test pass rates for overfill alarms, flow restrictors, and automatic shutoff

devices.

50 See Appendix D; the testing cost is the same as that applied to conventional UST systems.A

- 32



### In addition, the final regulation requires a one

- time notification from all affected systems. This is simply the cost of notification ($23.10) amortized over 20 years using a seven percent discount rate, or $2.18, applied to each of the 12 DoE

- owned FCTs. The total annual cost for these requirements is $ 28.94: ($23.10 * 0.12) + ($2.18 * 12 ).

Recordkeeping Associated with Compatibility

EPA assumes that existing DoE

- owned FCTs are not storing regulated substances blended with more than ten percent alcohol, and therefore, owners and operators of these systems would not

need to demonstrate compatibility with those fuel blends. As a result, no costs a re assumed to be incurred due to this requirement.

Operator Training

The operator training requirement includes both the costs of testing and training operators, as well as associated recordkeeping. Testing and training costs include both yearly and first

- year costs. First

- year costs are initial training costs incurred by all facilities. Yearly costs are costs of training new staff necessary to serve as operators. These costs are calculated according to the methodology below.

We assume that each facility wi ll require one Class A (managerial labor), one Class B (technical labor), and three Class C (military pay grade of E

- 6 with over 3 years of service) operators. For Class A and B operators, we assume 20 percent ―test out‖ and do not require training. For th ose testing out, the facility incurs the cost of a test (assumed to be $63.98 in 2012 dollars, inflated from $60 in 2008 dollars), as well as the 1.5 hours necessary to take the test. 51

, 52 

### Because only 20 percent of operators ―test out,‖ the test costs are, on average, $40.51 for Class A operators and $33.90 for Class B operators, or $63.98 + (1.5 * the labor rate) * 0.2. For the 80 percent that cannot ―test out,‖ each operator must take a no

- cost online training that culminates in a final

exam. The final exa m costs $180.22 (inflated from $169 in 2008 dollars), and the training process requires ten hours of time. 53 

### Thus, the cost for operator training for those not testing out is $883.31 for Class A operators and $706.83 for Class B operators, or $180.22 + (10 * the labor rate) * 0.8.

Class C operators are assumed to be trained by Class B operators. This training is assumed to take one hour of time for the Class B operator, as well as one hour each for the Class C operators being trained. Thus, the costs per fac ility for training Class C operators are $138.91, or $70.33 (Class B operator hourly rate) plus $68.57 (the hourly rate for three Class C operators). The total

one

- year cost for a facility then, incurred in the first year that the Operator Training require ment

51 See Industrial Economics, Inc. ― Draft Methodology for Assessing Cost

- Effectiveness of Operator Training Options,‖ Work Assignment 1

- 19, Task 4, December 30, 2008, page 12, Exhibit 2. Tests range from $45 to $75; $60 is the average test cost.

52 See http://www.iccsafe.org/certification/ust

- ast/2009UST

- AST.pdf , 1.5 hours is the length of California’s

test.

53 See http://www.petroleumt rainingsolutions.com/resources/ColoradoAB.pdf , the Colorado ―webinar.‖ The exam requires approximately two hours, and the training consists of two four

- hour sessions, for a total of ten

hours.A

- 33



### goes into effect, is $1,803.46, which, in its annualized form (over 20 years with a 7 percent discount rate) and including annual recordkeeping costs of $4.12, is $170.62.

Yearly costs stem from turnover among operators, and the need to train new oper ators. Assuming a turnover rate of 22 percent per year for all operators, and that 20 percent of new Class A and Class B operators continue to ―test‖ out while all new Class C operators must receive initial training, we obtain yearly costs of $317.82: 54



###  Fo r Class A operators, 0.22 * ($883.31 * 0.8) + 0.22 * ($40.51 * 0.2); plus

 For Class B operators, 0.22 * ($706.83 * 0.8) + 0.22 * ($33.90 * 0.2); plus

 For Class C operators, 0.66 * $46.30; plus

 Annual recordkeeping costs of $4.12.

O perator training for DoE

- owned FCTs will incur a total annual cost of $ 5

, 861

. 30 : ($170.62 + $317.82) * 12

.

These costs are then discounted three years when applied in the RIA, to accommodate the three year implementation period in the final regulation for these systems.

54 We assume turnover rates for all classes to be between 20 an d 24 percent per year; 22 percent is the average turnover rate. For Class C operators, this means that there is an annual turnover of 66 percent since we assume three Class C operators per FCT/AHFDS.

### Appendix B

Estimation of Affected UST Universe and Baseline State RegulationsB

- 1



### B.1 Assumptions u sed for Universe Affected by Each Requirement

For each requirement, only facilities in states that do not already require it will be required to comply. Th is appendix present s EPA ’ s assumption s regarding the proportion of facilities that will be subject to additional costs in these states.

The proportions presented below include all conventional UST facilities and EGTs. A irport hydrant fuel distribution system s (AH FDSs ) and underground storage tank (UST) systems with

field

- constructed tanks ( FCTs ) exist in addition to the number of systems presented in this Appendix. See Appendix A for assumptions used related to AHFDSs and FCTs.

B.1.1 Release Prevention

Walk through Inspections

 Requirement applies per facility.

 All facilities will be required to comply.

 In states where some walkthrough inspections are already required

, owners and operators will be required to conduct additional walkthrough inspections. For exa mple, if a state currently requires owners/operators to do one walkthrough inspection per year, they will

now be required to conduct 11 additional walkthrough inspections per year.

 The requirement specifies a walkthrough inspection every 30 days. Many stat es currently require owners/operators to do one walkthrough inspection monthly, rather than every 30 days. They will be required to conduct a fraction of one inspection over an annual period, to account for the possibility that in some years, a 30

- day insp ection schedule would yield 13 total inspections, whereas a monthly inspection schedule would always yield 12 total inspections.

Overfill prevention equipment inspections

 Requirement applies per UST system.

 One overfill device per UST system.

 All facilitie s with overfill devices (i.e., all facilities) are required to comply.

Spill prevention equipment tests

 Requirement applies per UST system.

 One set of spill prevention equipment (e.g. , spill bucket) per UST system.

 EPA assumes that 10 percent of existing s pill prevention equipment is double

- walled and

has a self

- monitoring mechanism to detect potential releases.B

- 2



###  Remaining 90 percent of spill prevention equipment will need to test.

Containment sump test ing

 Requirement applies per UST system. For the analysis , each UST system has two under

dispenser containment sump s , and one turbine sump

.

 According to an analysis performed by E 2 

### Inc. under TO 3003, TDD 5, 18.30 percent of piping uses interstitial monitoring. This percent of systems will need to test.

Spill pr evention equipment test after repair

 Requirement applies per UST system.

 EPA assumes that 90 percent of spill prevention equipment is replaced, rather than repaired.

 EPA assumes that spill prevention equipment requires repair every 4 years, such that 25

pe rcent of the universe is affected each year.

 Implies 2 .5 percent of UST systems require testing each year.

Overfill prevention equipment inspection after repair

 Based on an analysis performed by E 2 

### Inc. under TO 3003, TDD 7, EPA assumes that 100 percent of tanks have an overfill device.

 EPA assumes that 90 percent of these repairs result in replacement rather than repair.

 EPA assumes that these devices require repairs every 5 years. This implies 20 percent of the universe is affected each year.

 Implies two percent of UST systems require testing each year.

Secondary containment test after repair

 According to an analysis performed by E 2 

### Inc. under TO 3003, TDD 5 , 19.76 percent of

tanks use interstitial monitoring. EPA assumes that 95 percent of these use conti nuous sensors, pressure, vacuum, or liquid filled leak detection monitoring mechanisms, and therefore do not need to perform an integrity test. Thus, the remaining 0.99 percent of

tanks use a type of monitoring that would require integrity testing.

 EPA ass umes that an UST requires repair once every 20 years. This means five percent of the universe is affected each year

 Together these assumptions imply 0.05 percent of tanks require secondary containment testing each year.B

- 3



###  The same analysis shows that 18.30 p ercent of piping uses interstitial monitoring. EPA assumes that 10 percent of pipes using interstitial monitoring use continuous pressure, vacuum, or liquid filled leak detection monitoring mechanisms, and therefore do not need to perform an integrity test

. Thus

, the remaining 16.47 percent of piping uses a type of monitoring that would require secondary containment testing each year

.

 EPA assumes that piping requires repair once every 5 years, which means 20 percent of the universe is affected each year.

 To gether, these assumptions imply 3.29 percent of piping systems require this type of testing each year.

Eliminate flow restrictors in vent lines as release prevention for all new tanks and when overfill prevention equipment is replaced

 Requirement applies p er UST system.

 EPA assumes that UST system s are replaced every 20 year s . This means five percent of

the universe is replaced each year.

 EPA assumes that 13 percent of all new tanks would have installed flow restrictors. This implies that the total univer se of new tanks affected by this requirement each year is 0.65

percent. 1



###  In addition, based on analysis performed by E2 Inc. under TO 3003, TDD 21, EPA assumes that 19 percent of tests of flow restrictors fail during testing (overfill prevention equipment is inspected every three years), and that in 90 percent of these cases, the fix requires replacement of the flow restrictor (also see overfill prevention equipment inspections in Appendix D)

.

 Correspondingly, at the midpoint of population turnover, which occurs in Year 10, 13.5 percent of the universe will be affected by this requirement.

B.1.2 Release Detection

Operability test for automatic tank gauges (ATGs)

 Requirement applies per UST system.

 According to an analysis performed by E 2 

### Inc. under TO 3003 , TDD 5, 33.66 percent of the universe of UST systems uses an ATG as their release detection method.

 Each UST system using an ATG is required to comply.

1 Based on information provided by Robert Renkes, PEI.B

- 4



### Operability testing for interstitial monitoring

 Requirement applies per UST system.

 According to an ana lysis performed by E 2 

### Inc. under TO 3003, TDD 5, 19.76 percent of the universe of UST systems uses interstitial monitoring. However, EPA assumes that five percent of tanks relying on interstitial monitoring use manual testing and therefore

would not be re quire d to conduct operability tests

. As a result

, we estimate that 18.77 percent of the universe of UST systems is required to comply with this requirement.

Operability testing for vapor and groundwater monitoring as release detection methods ( applicable for Selected Option and Alternative 1 )

 Requirement applies per UST system.

 According to an analysis performed by EPA based on state data of groundwater monitoring and vapor monitoring currently in us e by USTs, 2.31 percent of the universe of UST systems us es vapor monitoring, and 2

. 19 percent of the universe of UST systems uses groundwater monitoring. Of these, 0

. 39 percent use only groundwater monitoring;

0 .5 0 percent use only vapor monitoring; and 1

. 80 percent use both groundwater and vapor monitoring.

 Ea ch UST system using vapor or groundwater monitoring as their primary or sole release

detection method is required to comply

.

 A percentage of systems using these methods must perform a site assessment and/or a well verification to continue using these metho ds as release detection to meet the requirements of the regulation

. Based on EPA’s estimate of the distribution of systems using vapor monitoring and whether site assessments would be required under the final regulation, we estimate that approximately 12 p ercent of systems using vapor monitoring and 13 percent of systems using groundwater monitoring would need to conduct a site assessment, and, in addition 15 percent of systems using vapor monitoring and eight percent of systems using groundwater monitoring would need to conduct well

verification.

Operability test for line leak detection (LLD)

 Requirement applies per UST system

.

 This requirement applies to all UST systems that use pressurized piping delivery systems.

 According to an analysis performed by E 2 

### Inc. under TO 3003, TDD 5, 82.44 percent of the universe of UST systems uses a pressurized piping product delivery system . Of these, 33.42 percent use electronic line leak detection , and 66.58 percent use mechanical line

leak detection

. As a result, EPA estimates that 27.55 percent of all UST systems use

electronic line leak detection for their pressurized piping delivery system

. EPA therefore

assumes that all of t hese systems (i.e., 27.55 percent of all UST system) will incur theB

- 5



### cost of operability tes ting and the associated costs related to necessary repairs that may result from the testing

.

Add SIR / CITLD to regulations with performance criteria

 Requirement applies per UST system

 According to an analysis performed by E 2 

### Inc. under TO 3003, TDD 5, 12.96 percent of the universe of UST systems uses statistical inventory reconciliation.

 EPA assumes 15 percent of these UST systems will be affected because they currently

use methods that report only qualitative SIR results. Furthermore, EPA assumes that of

t hese, only 25 percent will incur costs to comply with this requirement (i.e., these will need to change service providers to obtain quantitative SIR results)

. As a result , this requirement affects 0.5 percent of the universe of UST systems.

R esponse to i nterstitial monitoring alarms

 Requirement applies per UST system

.

 According to an analysis performed by E 2 

### Inc. under TO 3003, TDD 5, 19.76 percent of the universe of UST systems contains tanks using interstitial monitoring, and 18.30 percent of the unive rse of UST systems contains piping using interstitial monitoring.

 EPA assumes that three percent of alarms associated with tanks and ten percent of alarms associated with piping activate annually. This implies that each year, 0.59 percent of the

UST univ erse consists of tanks using interstitial monitoring with alarms activating, and 1.83 percent of the UST universe consists of piping using interstitial monitoring with alarms activating.

 Correspondingly, 2.42 percent of the UST universe must comply with th is requirement.

Remove release detection deferral for EGTs

 All EGTs in states that have not already removed deferrals must comply with this requirement.

 EPA estimates that three percent of all UST systems are EGTs. This does not include

nuclear EGTs.

B.1. 3 Other

Remove deferral for AHFDSs

 All AHFDSs with associated UST systems must comply with this requirement.B

- 6



###  EPA estimates that 8 1 AHFDSs (7 1 DoD

- owned AHFDSs and 10 AHFDSs at commercial airports) have associated UST systems and will be affected by this

r equirement. (see Appendix A )

Remove deferral for FCTs

 All FCTs must comply with this requirement.

 EPA estimates that 334 DoD

- owned and 12 DoE

- owned FCTs will be affected by this requirement. (see Appendix A )

Require n otification of ownership change

 Require ment applies per facility

.

 According to an analysis performed by E 2 

### Inc. under TO 3003, TDD 27, on average, approximately ten percent of facilities undergo an ownership change each year.

Closure of lined tanks that cannot be repaired according to a code of practice

 Requirement applies per UST system

.

 According to an analysis performed by E 2 

### Inc. under TO 3003, TDD 5, five percent of all UST systems are lined tanks.

 According to an analysis performed by E 2 

### Inc. under TO 3003, TDD 17, twelve percent
of UST systems with lined tanks do not pass an inspection per year. Furthermore

, 23 percent of the UST systems that cannot pass an inspection cannot be repaired in

accordance with a code of practice.

 EPA assumes that 10 percent of lined tanks are inspected each year.

 As a result , 0.01 percent of the universe of UST systems must comply with this requirement.

Requirements for demonstrating compatibility with fuels > E10 and > B20

 For existing UST systems, owners must use an UST system made of or lined with

mater ials compatible with the fuel stored. In order to do this, owners must have existing records indicating what equipment has already been installed, and that equipment is compatible with alcohol blends greater than ten percent. EPA assumes that ten percent of existing owners would have adequate installation records. EPA also assumes these

owner s would maintain records and demonstrate compatibility on a per UST system

basis.

 EPA assumes that 0.41 percent of USTs store fuel > E10, based on an analysis of tot al stations selling E85 fuel relative to total USTs.B

- 7



###  Under Alternative 1, f or all new and replaced equipment, owners must maintain records for the life of the UST system, including date of installation or replacement, manufacturer, and model. EPA assumes one instance of equipment replacement per

system storing fuels > E10 and > B20 per year.

B.1.4 Energy Policy Act

- related Provisions

Operator training

 Requirement applies per facility

.

 Requirement applies to all facilities in Indian country. EPA estimates that there are currently 966 facilities in Indian country.

Secondary containment for new and replaced tanks

 Requirement applies per UST system

.

 Requirement applies to all UST systems in Indian country.

 EPA assumes that UST s are replaced every 20 years. T his implies five percent of the universe is replaced each year.

 According to a Tribal Data Analysis performed by E 2 

### Inc., 72.36 percent of tanks in Indian country are single

- walled.

 This means that in year 10, at the midpoint of population turnover, 36.18 percent of all tanks will have been required to comply with this requirement.

Threshold at which piping must be replaced rather than repaired

 Requirement applies per UST system

.

 Requirement applies to all UST systems in Indian country.

 EPA assumes that int erstitial piping needs to be repaired every five years.

 According to a Tribal Data Analysis performed by E 2 

### Inc., 60.30 percent of piping associated with UST systems is single

- walled.

 Because EPA’s supplemental piping analysis suggests that no systems woul d incur incremental costs under a requirement to replace all piping if more than 50 percent of piping is replaced, no systems in Indian country are affected.

Under

- dispenser containment for all new dispensers

 Requirement applies per UST system

.B

- 8



###  Two under

- dispenser containment devices per UST system.

 Requirement applies to all UST systems in Indian country.

 EPA assumes that an UST system is replaced every 20 years. This means five percent of the universe is replaced each year.

 According to an analysis per formed by E 2 

### Inc

, if 5 percent of the universe is replaced each year, 4.85 percent of the UST systems in Indian country must comply with this requirement each year. (4.85 percent is roughly 97 percent of 5 percent, and we assume that EGTs, which are 3 perc ent of the universe, do not have under

- dispenser containment devices.)

 This means that at year 10, the midpoint of population turnover, 48.50 percent of the UST systems in Indian country will meet this requirement.

B. 2 Assessment of State Regulatory Univ erses

This section provides information on current state regulatory environments as they pertain to the final requirements . Within the tables below, each requirement of the final regulation has a value for each state. Where the cell for a given state and requirement pair contains a zero, this indicates that the state does not have a similar requirement already in place. Where the cell for a given state and requirement pair contains a value, the meaning of this value varies according to the requirement in question:

 Walkthrough inspections

– the monthly frequency within which inspections are required (a “12” in a cell indicates that the state requires annual walkthrough inspections, a “1” in a cell indicates that the state requires monthly walkthrough insp ections)

.

- Because the final regulation requires walkthrough inspections every 30 days, whereas most states require owners/operators to conduct monthly walkthrough inspections, the tables below note a walkthrough inspection every “1.0146 months” if a state require s monthly walkthrough inspections. This is because EPA’s modeling now assumes that 30

- day inspections are equivalent to one “month unit,” and correspondingly, monthly inspections occur every 1.014583333 month units. Correspondingly, all other states requiring owners/operators to conduct inspections on a monthly schedule (e.g., every 3 months, every 6 months) have had their frequencies scaled appropriately to reflect the incremental difference between state regulatory

baseline schedules and a 30

- day i nspection schedule.

 Overfill prevention equipment inspections

– the frequency in months within which testing is required

.

 Spill prevention equipment tests

- the frequency in months within which testing is required

.B

- 9



###  Containment sump test ing

- the frequency in months within which testing is required

.

 Spill prevention equipment test after repair

– a “1” in a cell indicates that the state requires testing after repair

.

 Overfill prevention equipment test after repair

- a “1” in a cell indicates that the state

re quires testing after repair

.

 Secondary containment test after repair

- a “1” in a cell indicates that the state requires testing after repair

.

 Eliminate flow restrictors in vent lines as release prevention for all new tanks and when

overfill devices are re placed

– a “1” in a cell indicates that the state has this requirement in place

.

 Operability test for ATGs

- the frequency in months within which testing is required

.

 Operability test for interstitial monitoring

- the frequency in months within which testi ng is required

.

 Operability test for vapor monitoring

- the frequency in months within which testing is required

.

 Operability test for groundwater monitoring

- the frequency in months within which testing is required

.

 Operability test for line leak detecti on

– the frequency in months within which testing is required

.

 Adding SIR/CITLD to regulations with performance criteria

- a “1” in a cell indicates that the state has this requirement in place

.

 Deferrals removal for EGTs

- a “1” in a cell indicates that t he state has this requirement in place

.

 Deferrals removal for AHFDSs

- a “1” in a cell indicates that the state has this requirement in place

.

 Deferrals removal for FCTs

- a “1” in a cell indicates that the state has this requirement in place

.

 Notification of ownership change

- a “1” in a cell indicates that the state has this requirement in place

.

 Closure of lined tanks that cannot be repaired according to a code of practice

- a “1” in a cell indicates that the state has this requirement in place

.B

- 10



###  Response to interstitial monitoring alarms

- a “1” in a cell indicates that the state has this requirement in place

.

 Operator training

- a “1” in a cell indicates that the state has this requirement in place ; for modeling purposes EPA is applying this requirement only to Indian country

.

 Secondary containment for new and replaced tanks

– a “1” in a cell indicates that the state has this requirement in place; “0” indicates that it does not ; f or modeling purposes, EPA is applying t his requirement only to Indian countr y

.

 Threshold for pipe replacement

- the percentage threshold for pipe replacement within the

state ; f or modeling purposes, EPA is applying this requirement only to Indian country.

 Under

- dispenser containment

- a “1” in a cell indicates that the state has t his requirement in place f or modeling purposes, EPA is applying this requirement only to Indian country.B

- 11 Select ed Option

State State name Walkthrough inspections Overfill

prevention equipment inspections Spill

prevention equipment

test s Containment

sump test ing Spill prevention

equipment inspection after repair Overfill prevention

equipment test after repair Secondary

containment

test after repair Elimination of

flow restrictors in

vent lines

AK Alaska 0 36 0 0 0 0 0 0

AL Alabama 0 0 12 0 0 0 0 0

AR A rkansas 0 0 0 0 0 0 0 0

AS American Samoa 0 0 0 0 0 0 0 0

AZ Arizona 0 0 0 0 0 0 0 0

CA California 1 .0146 12 12 36 0 0 1 0

CO Colorado 1 .0146 12 12 0 0 0 1 0

CT Connecticut 0 0 0 0 0 0 0 0

DC District of Columbia 0 0 0 0 0 0 0 0

DE Delaware 1.0146 0 12 0 0 0 0 1

FL Florida 0 0 12 0 0 0 0 0

GA Georgia 0 0 0 0 0 0 0 0

GU Guam 1.0146 0 0 0 0 0 0 0

HI Hawaii 0 0 0 0 0 0 0 0

IA Iowa 0 0 24 24 0 0 1 0

Tribal Tribal lands 0 0 0 0 0 0 0 0

ID Idaho 0 36 0 0 0 0 0 0

IL Illinois 0 0 0 36 0 0 1 1

IN Ind iana 0 0 0 36 0 0 1 0

KS Kansas 0 0 0 0 0 0 0 0

KY Kentucky 0 0 12 0 0 0 0 0

LA Louisiana 0 0 0 0 0 0 0 0

MA Massachusetts 1.0146 36 0 0 0 0 0 0

MD Maryland 0 0 12 0 0 0 0 0

ME Maine 0.2341 12 0 0 0 0 0 1

MI Michigan 0 0 0 0 0 0 0 0

MN Minnesota 1. 0146 0 0 1 0 0 0 0

MO Missouri 0 0 0 0 0 0 0 0

MP Northern Mariana

Islands 0 0 0 0 0 0 0 0

MS Mississippi 0 12 12 12 0 1 1 0B

- 12 Select ed Option

State State name Walkthrough inspections Overfill

prevention equipment inspections Spill

prevention equipment

test s Containment

sump test ing Spill prevention

equipment inspection after repair Overfill prevention

equipment test after repair Secondary

containment

test after repair Elimination of

flow restrictors in

vent lines

MT Montana 0 36 0 0 0 0 0 0

NC North Carolina 12.175 0 36 12 0 0 1 0

ND North Dakota 1 0 0 0 0 0 0 0

NE Nebraska 0 0 0 0 0 0 0 1

NH New Hampshire 1.0146 0 0 0 0 0 0 0

NJ New Jersey 1 0 0 0 0 0 0 0

NM New Mexico 1.0146 0 0 0 0 0 0 0

NV Nevada 0 0 0 0 0 0 0 0

NY New York 1.0146 1 0 0 0 0 0 0

OH Ohio 12 .175 12 0 12 0 0 1 0

OK Oklahoma 0 0 0 0 0 0 0 0

OR Oregon 0 0 0 0 1 1 0 0

PA Pennsylvania 0 36 0 0 0 0 0 1

PR Puerto Rico 0 0 0 0 0 0 0 0

RI Rhode Island 1.0146 6 0 0 0 0 0 1

SC South Carolina 1.0146 1 0 0 0 0 0 0

SD South Dakota 0 0 0 0 0 0 0 0

TN Tennessee 1.0146 0 0 0 0 0 0 0

TX Texas 2.0292 1 0 0 0 0 0 1

UT Utah 1 0 0 0 0 0 0 0

VA Virginia 0 0 0 0 0 0 0 0

VI Virgin Islands 0 0 0 0 0 0 0 0

VT Vermont 1.0146 0 0 0 0 0 0 0

WA Washington 0 0 0 0 0 0 0 0

WI Wisconsin 1.0146 12 0 0 0 0 0 0

WV West Virginia 0 0 0 36 0 0 1 0

WY Wyoming 1.0146 12 0 0 0 0 0 0B

- 13 Pref erred Option

State State name Operability

test

- ATGs Operability

test

- IM Operability test

-

vapor monitoring Operability test

-

groundwater monitoring Operability

test

- ELLD Operability

test

- MLLD Add SIR/

CITLD Deferrals

removal

- EGTs Deferrals

re moval

- AHFDSs Deferrals

removal

- FCTs

AK Alaska 0 0 0 0 0 1 0 1 1 1

AL Alabama 0 0 0 0 0 1 0 1 0 0

AR Arkansas 0 0 0 0 0 1 0 0 0 0

AS American Samoa 0 0 0 0 0 1 0 0 0 0

AZ Arizona 0 0 0 0 0 1 0 1 0 0

CA California 0 0 0 0 0 1 0 1 1 1

CO Colorado 0 0 0 0 0 1 0 0 0 0

CT Connecticut 0 0 0 0 0 1 0 0 0 0

DC District of

Columbia 0 0 0 0 0 1 0 1 0 0

DE Delaware 0 0 0 0 0 1 0 1 0 0

FL Florida 0 0 0 0 0 1 0 0 1 1

GA Georgia 0 0 0 0 0 1 0 0 0 0

GU Guam 0 0 0 0 0 1 0 1 1 1

HI Hawaii 0 0 0 0 0 1 0 0 0 0

IA Iowa 0 0 0 0 0 1 0 0 0 0

Trib

al Tribal lands 0 0 0 0 0 1 0 0 0 0

ID Idaho 0 0 0 0 0 1 0 1 1 1

IL Illinois 0 0 0 0 0 1 0 1 0 1

IN Indiana 0 0 0 0 0 1 0 0 0 0

KS Kansas 0 0 0 0 0 1 0 0 0 0

KY Kentucky 0 0 0 0 0 1 0 0 0 0

LA Louisiana 0 0 0 0 0 1 0 0 0 0

MA Massachusetts 0 0 0 0 0 1 0 0 1 1

MD Maryland 0 0 0 0 0 1 0 0 1 1

ME Maine 0 0 0 0 0 1 0 1 1 1

MI Michigan 0 0 0 0 0 1 0 0 0 0

MN Minnesota 0 0 0 0 0 1 0 0 0 1

MO Missouri 0 0 0 0 0 1 0 0 0 0

MP Northern

Mariana Islands 0 0 0 0 0 1 0 0 0 0B

- 14 Pref erred Option

State State name Operability

test

- ATGs Operability

test

- IM Operability test

-

vapor monitoring Operability test

-

groundwater monitoring Operability

test

- ELLD Operability

test

- MLLD Add SIR/

CITLD Deferrals

removal

- EGTs Deferrals

re moval

- AHFDSs Deferrals

removal

- FCTs

MS Mississippi 0 0 0 0 0 1 0 0 0 0

MT Montana 0 0 0 0 0 1 0 1 0 0

NC North Carolina 0 0 0 0 0 1 0 0 0 0

ND North Dakota 0 0 0 0 0 1 0 0 0 0

NE Nebraska 0 0 0 0 0 1 0 0 0 0

NH New Hampshire 0 0 0 0 0 1 0 1 1 1

NJ New Jersey 0 0 0 0 0 1 0 0 1 1

NM New Mexico 0 0 0 0 0 1 0 1 0 0

NV Nevada 0 0 0 0 0 1 0 0 0 0

NY New York 0 0 0 0 0 1 0 1 1 1

OH Ohio 0 0 0 0 0 1 0 0 0 0

OK Oklahoma 0 0 0 0 0 1 0 0 0 1

OR Oregon 0 0 0 0 0 1 0 0 0 0

PA Pennsylvania 0 0 0 0 0 1 0 0 1 1

PR Puerto Rico 0 0 0 0 0 1 0 1 0 1

RI Rhode Island 0 0 0 0 0 1 0 1 1 1

SC South Carolina 0 0 0 0 0 1 0 0 0 0

SD South Dakota 0 0 0 0 0 1 0 0 1 1

TN Tennessee 0 0 0 0 0 1 0 0 0 0

TX Texas 0 0 0 0 0 1 0 1 1 1

UT Utah 0 0 0 0 0 1 0 0 0 0

VA Virginia 0 0 0 0 0 1 0 0 0 0

VI Virgin I slands 0 0 0 0 0 1 0 0 0 0

VT Vermont 0 0 0 0 0 1 0 1 1 1

WA Washington 0 0 0 0 0 1 0 1 0 0

WI Wisconsin 0 0 0 0 0 1 0 1 1 1

WV West Virginia 0 0 0 0 0 1 0 0 0 0

WY Wyoming 0 0 0 0 0 1 0 1 0 0B

- 15 Preferred Option

State State name N otification of

o wnership change Closure of

irreparable lined

tanks Response to

interstitial monitoring

alarms Operator

training Secondary

containment

- new and replaced tanks (Indian Country Only) Threshold for

pipe replacement (%) Under

dispenser

containment

AK Alaska 1 0 0 1 N/A 0 1

AL Alabama 1 0 0 1 N/A 0.05 1

AR Arkansas 1 0 0 1 N/A 0.05 0

AS American Samoa 1 0 0 1 N/A 0 0

AZ Arizona 0 0 0 1 N/A 0.25 0

CA California 1 0 1 1 N/A 0 1

CO Colorado 1 0 0 1 N/A 0.5 0

CT Connecticut 1 1 0 1 N/A 0 0

DC District of C olumbia 1 0 0 1 N/A 1 0

DE Delaware 1 1 0 1 N/A 0 1

FL Florida 1 1 0 1 N/A 0 1

GA Georgia 0 0 0 1 N/A 0.25 0

GU Guam 1 0 0 1 N/A 0 0

HI Hawaii 1 0 0 1 N/A 0 0

IA Iowa 1 0 1 1 N/A 0.1 1

Tribal Tribal lands 0 0 0 0 0 1 0

ID Idaho 0 0 0 1 N/A 0 0

IL Illinois 1 1 1 1 N/A 0.2 1

IN Indiana 1 1 1 1 N/A 0.5 0

KS Kansas 1 0 0 1 N/A 0 0

KY Kentucky 1 0 0 1 N/A 0 0

LA Louisiana 1 0 0 1 N/A 0.25 1

MA Massachusetts 1 0 0 1 N/A 0 1

MD Maryland 1 1 0 1 N/A 0.4 1

ME Maine 1 1 0 1 N/A 0 1

MI Michigan 1 1 0 1 N/A 0.5 0

MN Minnesota 1 1 0 1 N/A 0.1 1

MO Missouri 1 0 0 1 N/A 0 0

MP Northern Mariana Islands 1 0 0 1 N/A 0 0B

- 16 Preferred Option

State State name N otification of

o wnership change Closure of

irreparable lined

tanks Response to

interstitial monitoring

alarms Operator

training Secondary

containment

- new and replaced tanks (Indian Country Only) Threshold for

pipe replacement (%) Under

dispenser

containment

MS Mississippi 1 0 1 1 N/A 1 1

MT Montana 1 0 0 1 N/A 0.5 1

NC North Carolina 0 0 1 1 N/A 0 0

ND North Dakota 0 0 0 1 N/A 0.1 1

NE Ne braska 1 0 0 1 N/A 0.1 0

NH New Hampshire 1 1 0 1 N/A 1 1

NJ New Jersey 1 0 0 1 N/A 0 0

NM New Mexico 1 0 0 1 N/A 0.05 1

NV Nevada 0 0 0 1 N/A 1 0

NY New York 1 0 0 1 N/A 1 0

OH Ohio 1 1 1 1 N/A 0 0

OK Oklahoma 1 1 0 1 N/A 0.2 1

OR Oregon 1 0 0 1 N /A 1 0

PA Pennsylvania 1 1 0 1 N/A 0.5 1

PR Puerto Rico 1 0 0 1 N/A 0 0

RI Rhode Island 1 0 0 1 N/A 1 0

SC South Carolina 0 0 0 1 N/A 0.25 0

SD South Dakota 1 0 0 1 N/A 0.25 1

TN Tennessee 1 0 0 1 N/A 1 0

TX Texas 1 0 0 1 N/A 0.2 1

UT Utah 1 0 0 1 N/A 0.99 0

VA Virginia 1 0 0 1 N/A 0.5 0

VI Virgin Islands 0 0 0 1 N/A 0 0

VT Vermont 1 1 0 1 N/A 0 1

WA Washington 1 0 0 1 N/A 0 0

WI Wisconsin 1 0 0 1 N/A 0.2 0

WV West Virginia 1 0 1 1 N/A 0.5 1

WY Wyoming 1 0 0 1 N/A 1 1

### Appendix C

Analysis of Piping Replacement ThresholdsC

- 1

Confidential / Not for Release | October 28, 2009 

### MEMORANDUM | December 31, 2009

TO 

### Cho

- Yi Kwan , EPA

FROM 

### Cynthia Manson, IEc

SUBJECT 

### Assessment of Piping Systems Affected (on Tribal Lands)Under Different Potential

Regulatory Thresholds (WA 2

- 25, Task 8)

This document outlines IEc’s method ology for estimating the number of units affected by secondary containment regulations on piping on Tribal Lands. The accompanying spreadsheet (“Calculations”) is organized to identify the distribution of p iping repairs of different lengths.

KEY ASSUMPTIONS AND INPUTS FOR REVIEW 

### Below we outline key elements and assumptions that drive the analysis . T he most important elements are the total number of pipes requiring repair in a year, and the patterns of repa irs for different piping types :

1. Number of Events: Based on information provided by EPA, 1 

### we estimate that 20 percent of Tribal piping systems ( 442 systems ) require repair in a year (piping repairs required once in five years). This differs significantly from our previous assumption that piping repairs occur when releases occur. Using end

- of

- year data and autopsy data, we previously estimated that approximately 2 4 releases

occur on Tribal lands and 31 percent of those releases are related to piping, for a
total of approximately 7 releases.

2. Distribution of Piping Systems by Type: Previous data provided by EPA indicate that, of the piping systems located on Tribal lands (2208), 54 percent are fiberglass systems, 22 percent are flex

- pipe systems, and 25 percen t are steel pipe

systems.



### 3. Fiberglass Repairs: Conversations with John Kneece and Marcel Moreau are
consistent with earlier information collected, and indicate that:

a. Fiberglass piping is “virtually always” damaged as a result of “trauma”

– or some accident that damages the pipe (e.g., a backhoe). We interpret this to mean that roughly 90 percent of fiberglass piping is repaired to

correct trauma.

b. Trauma

- related repairs to fiberglass pipe typically involve small (roughly

5

- foot or less) sections of pipe.

c. Re pairs not related to trauma are related to “failure”

– or structural issues related to the piping. For fiberglass this is nearly always a problem with glue, and the entire run must be replaced/repaired. We assume that 10

1 PEI indicated that repairs to the interstitial space of piping (including repairs of secondarily

- contained piping sumps)

occur once every five years . We assume this repair frequency for all piping systems.C

- 2

Confidential / Not for Release | October 28, 2009



### percent of fiberglass repairs the refore involve replacement of 100 feet
(100 percent) of piping.

4. Flex

- pipe Repairs: Conversations with John Kneece and Marcel Moreau are
also consistent with earlier information collected, and indicate that:

a. Flex

- piping is damaged as a result of trauma “mo st” of the time. We
interpret this to mean that roughly 80 percent of flex

- piping is repaired

to correct trauma.

b. Trauma

- related repairs to flex

- piping require replacement of an entire portion (section) of a piping run ; based on conversations with EPA, we estimate that a typical UST would have one section of 50 feet and three

section of 16.7 feet. We therefore assume that a typical repair would

involve 16.7 feet of flex

- piping.

c. Repairs due to failure in flex

- piping typically involve connection or compatibi lity issues ; in both cases the entire run must be replaced. We

assume that 2 0 percent of f lex

- piping repairs therefore involve replacement of 100 feet (100 percent) of piping.

5. Steel Pipe Repairs: A conversation with John Kneece on October 9, 2009 is agai n, consistent with earlier, more general conversations, and indicates that:

a. The majority (75 percent) of repairs to steel piping is associated with failure; only 25 percent of repairs to steel piping are related to trauma.

b. For all repairs to steel piping, the length of pipe requiring repair varies across lengths with equal probability , though trauma

- related repairs are typically smaller than failure

- related repairs. We therefore assume that 100 percent of trauma

- related repairs range from 10 to 50 feet in length. For failure related repairs, we assume that 50 percent of failure

- related repairs range from 10 to 50 feet in length. We assume that the remaining 50 percent of failure

- related repairs are greater than 50 feet
in length.

6. Full Replacement Threshol d: Consistent with earlier cost analysis, we assume that repairs over 50 feet would result in full replacement of pipes in the baseline.
Prior analysis suggested that the breakeven point was roughly 58 feet, but this is
subject to uncertainty, and we use 50 feet in this analysis.

KEY ANALYTIC ASSUMPT IONS 

### While we have information on the number of repairs required (see item 1 above) we must estimate the distribution of these repairs across piping types. To accomplish this, we assume the following:

 Trauma

- related repairs are distributed proportionately across facilities and
piping. We assume that these events occur random ly, and therefore, they would occur equally across piping types

. 

### To satisfy the proportions of trauma:failure repairs for
each piping ty pe (as described in items 3 through 5 above) , we determine that 54

percent of repairs (238) are trauma

- related.C

- 3

Confidential / Not for Release | October 28, 2009 

###  Based on the assumptions outlined above, we assume that the following pipes
would be replaced in the baseline, and are unaffected by the rule:

o All fiberglass failure

- related repairs;

o All flex

- pipe failure

- related repairs;

o All steel pipe failure

- related repairs over 50 feet (50 percent of all
steel pipe failure

- related repairs )

.

 Steel pipe replacement curve: to approximate steel pipe repairs wit hout
programming a continuous curve, we evenly distribute baseline repair lengths

across five 8

- foot intervals ranging from 10 feet to 50 feet.

RESULTS



### The analysis concludes the following:



###  Of 442 repairs to pipes on Tribal lands, 235 involve steel pipes , 142 involve fiberglass pipes, and the remaining 65 involve flex

- pipes.

 The 142 fiberglass pipe repairs (32 percent of all repairs) are unaffected by the rule, because they are either too short (i.e., five feet or less) to trigger a threshold,

or are alre ady replaced in the baseline.

 Another 101 repairs (23 percent) are unaffected by the rule because they represent full replacement in the baseline (13 flex

- pipe replacements and 88 steel pipe replacements).

 The remaining 199 (45 percent) repairs could p otentially trigger full replacements under the rule, depending on the threshold. At a threshold of 10 feet, all 199 repairs, including 52 trauma

- related repairs to flex

- pipe, would require replacement . At thresholds equal to or great than 20 feet, only s teel piping (88 piping systems) is affected by the rule.

Exhibit 1 below summarizes the number of systems affected (i.e., the number of systems that would require replacement instead of repair) at different regulatory thresholds.

EXHIBIT 1: ANNUAL NUMB ER OF SYSTEMS AFFECT ED UNDER DIFFERENT R EGULATORY THRESHOLDS

THRESHOLD NUMBER OF SYSTEMS AF FECTED TYPE OF SYSTEMS AFFE CTED

10 % threshold 199 (45%) Steel (147 systems)

Flex

- pipe (52 systems)

15 % threshold 170 ( 38% ) Steel (118 systems)

Flex

- pipe (52 s ystems)

20% threshold 88 ( 20% ) Steel (88 systems)

25% threshold 88 ( 20% ) Steel (88 systems)

40% threshold 29 ( 7% ) Steel (29 systems)

50% threshold 0 (0 %) None

### Appendix D

Methodology for Calculating Compliance CostsD

- 1



### D.1 Universal Assumptions Regarding a Typical UST Facility

For modeling purposes , EPA (based on its professional judgment) assumes that a typical (average) conventional UST system is configure d as follows:

Exhibit D

- 1: Universal cost model assumptions

Variable Total per Facility Tanks per facility: 2.7 1 tanks 2.7 1 tanks Pipes per tank: 1 pipe 2.7 1 pipes Feet per pipe: 100 feet 27 1 feet

# of under

- dispenser containment (UDC) per tank: 2 UDCs ~ 5.4 dispensers # of fill pipes per tank: 1 fill pipe 2.71 fill pipes

# of spill prevention equipment per fill pipe: 1 spill prevention equipment 2.71 spill prevention

equipment # of turbine sumps per tank: 1 turbine sump 2.71 turbine sumps



### In a ddition, we assume that the baseline number of existing tanks is 577

, 981 tanks (based on

FY20 13 data). 1 

### W e also assume that the baseline number of tanks remain constant over time (i.e., new facilities will replace closures ). 2 

### This assumption simplifies t he analysis by establishing a constant nominal compliance cost per year.

D

. 2 Labor Rates

The facility labor costs presented herein reflect labor, overhead, and fringe benefits rates that EPA

believes best reflect a “ typical ” UST facility

. These labor rates are representative of skilled labor costs at motor fuel retailers, which own and operate roughly 80 percent of the universe of UST systems. 3 

### We present these calculations in Exhibit D

- 2.

1 Assuming 2.7 1 tanks per facility, this is equivalent to a total of 213

, 277 facilities that have USTs nationwide. (See “ Summary of Key Data from State Public Record Postings,” Skeo Solutions, Work Order 1006,
Table 1, October 25, 2013. )

2 Recent trends in the number of active USTs reported to EPA have shown a declining trend; in most recent years the net decline in the UST system population has been roughly 1. 2 percent, with closures more than offsetting replacements and new installations

. If this trend continues, the annual costs of the reg ulation will likely decrease over time as fewer systems require compliance

. Ho wever, in absence of other data, we assume that new installations and upgrades will offset all closures, and that annual compliance costs will remain constant

.

3 These rates are based on data from the Bureau of Labor Statistics ( “ BLS ” ) and the Office of Management and Budget ( “ OMB ” )

. These rates differ from the labor rates contained in OUST’s 2007 Information Collection Request (ICR) 1360.08 or OUST’s 2011 ICR 1360.12. The labor rates listed in the ICR are reflective of economy

wide average wages, benefits, and overhead, and may overstate costs because they reflect industries with highly skilled labor requirements and benefits (e.g., law firms.)D

- 2



### Exhibit D

- 2: Labor Rates Used in Central Cost Estimates

Lab or Category SOC Code Labor Rates Before Overhead and

Benefits (2011 dollars) Loaded Labor Rate 1

(2012 dollars)

Legal 2 23

- 1011 $ 62.74 $ 100.76

Managerial 3 11

- 0000 $ 35.54 $5 7.08

Technical 2 53

- 1021 $ 22.52 $ 36.17

Clerical 3 43

- 9061 $ 11.28 $ 18.12

Techn ical for operability tests 2 49

- 2094 $ 25.20 $ 40.47

OMB overhead 4 12%

BLS fringe benefits 5 28. 82 %

Notes: 1. Rates are calculated according to (labor rate)*(1/(1

- benefits factor))*(1+overhead factor)

. 2. Legal wages, technical wages, and tech nical wages to conduct operability tests are based on the May 2011 National Occupational Employment and Wage Estimates

– United States from the U.S. Bureau of Labor Statistics ( http://www.bls.gov/o es/2011/may/oes_nat.htm )

. EPA uses the national wage estimates for legal labor (23

- 1011) and technical

labor for operability testing (49

- 2094) because they were unavailable under the industry

- specific wage estimates for NAICS

447000. EPA uses the national wage estimates for the technical labor category (53

- 1021) as a conservative (i.e., central

- to

- high cost) estimate; the lower

- end sector

- specific technical labor cost is included in the lower

- end cost estimates in Exhibit D

- 4. 3. Managerial and clerical wa ges are based on the May 2011 National Industry

- Specific Occupational Employment and Wage

Estimates for NAICS 447000

– Gasoline Stations from the U.S. Bureau of Labor Statistics ( http://www.bls.gov/oes/20 11 /may/naics3_447000.htm ). For the managerial labor category, EPA uses the standard occupational category (SOC) code for all management occupations (11

- 0000) to capture all types of managers that may work at gas stations (e.g., chief executives, marketing managers, food service managers). For the clerical l abor category, EPA uses SOC code 43

- 9061 (general office clerks).

4 . Overhead factor comes from Office of Management and Budget Circular A

- 76, p. D

- 7

. 5 . Fringe benefits factor comes from Bureau of Labor Services Employer Costs for Employee Compensation, December 20 12

. Table 10: All workers, service

- providing industries

.



### The costs presented in this appendix reflect our central cost estimates. For sensitivity analyses, we recalculated costs using the labor rates presented in Exhibit s D

- 3 and D

- 4

. A dis cussion of these labor rates, and the results of the sensitivity analyses can be found in Chapter 3.5 of the main text.D

- 3



### Exhibit D

- 3: Labor Rates Used in Upper Cost Estimates

Labor Category BLS Labor Category 1 Labor Rates Before

Overhead (2012 dollars) Loaded Labor Rate 2

(2012 dollars)

Legal SOC 23

- 1011

- Lawyers $ 62.74 $100. 76

Managerial Management, professional, and related (service industries) : Management, business, and

financial $ 58.72 $ 92.39

Technical Professional and technical services $44. 70 $ 70.33

Clerical Office and administrative support $ 25.46 $ 40.06

Technical for operability tests Professional and technical services $44 .70 $ 70.33

OMB overhead 3 12%

BLS fringe benefits 4 28.82%

Notes:

1. Upper Estimate relies on BLS Employe r Costs For Employee Compensation , December 20 12 for Managerial (Table 9, Management, Professional, and Related); Technical and Technical for operability testing (Table 10, Professional and

T echnical S ervices ( S ervice I ndustries) ); and Clerical (Table 11, Office and A dministrative S upport ); and BLS National Occupational Employment and Wages

, May 2011 for Legal ( 23

- 1011 Lawyers )

. http://www.bls.gov/news.release/archives/ecec_03122013.p df

2 . Rates are calculated according to (1 + benefits and overhead rate)*(labor rate).

3

. Overhead factor comes from Office of Management and Budget Circular A

- 76, p. D

- 7. Fringe benefits factor comes from Bureau of Labor Services Employer Costs for Emp loyee Compensation, December 2012. Table 10: All workers, service

providing industries

. 4. Overhead factor comes from Office of Management and Budget Circular A

- 756, p. D

- 7. 5. Fringe benefits factor comes from Bureau of Labor Services Employer Costs for E mployee Compensation, December 2012. Table 10: All workers, service

- providing industries.



### Exhibit D

- 4: Labor Rates Used in Lower Cost Estimates

Labor Category BLS Labor Category 1 Labor Rates Before

Overhead and Benefits (201 2 dollars) Loaded BLS Labor Rate 2

(2012 dollars)

Legal 23

- 1011 $ 62.74 $89.09

Managerial 41

- 1011 $ 16.53 $23.26

Technical 53

- 1021 $ 18.01 $26.80

Clerical 53

- 6031 $9. 80 $13.70

Technical for operability tests 49

- 2094 $ 25.20 $35.17

OMB overhead 3 12%

BLS fringe benefits 4 2 5

. 0 6 %

Notes:

1. Lower Estimate relies on BLS Industry

- Specific Occupational Employment and Wages

, NAICS 447000

- Gasoline

Stations , May 2011 for : Managerial ( 41

- 1011 First

- Line Supervisors/Managers of Retail Sales Workers ): Technical ( 53

- 1021

First

- Line Su pervisors/Managers of Helpers, Laborers, and Material Movers, Hand ) ; Clerical ( 53

- 6031 Service Station

Attendants ) ; and BLS National Occupational Employment and Wages

, May 2011 for Technical for operability testing ( 49

- 2094 Electrical and Electronics Repai rers, Commercial and Industrial Equipment ) and Legal ( 23

- 1011 Lawyers ) . Benefits

rate is 25

. 1 percent of wages, as reported in BLS Employer Costs for Employee Compensation, December 2012 . Table 10: Trade, transportation, and utilities

- retail trade

. Assum es that service station attendants p erform walkthrough inspections. 2. Rates are calculated according to (labor rate)*(1/(1

- benefits factor))*(1+overhead factor)

. 3. Overhead factor comes from Office of Management and Budget Circular A

- 76, p. D

- 7.

4. Benef its rate is 2 5

. 0 6 percent of wages, as reported in BLS Employer Costs for Employee Compensation, December 2012

. Table 10: Trade, transportation, and utilities

- retail trade

.D

- 4



### D

. 3 Time Value of Money Costs

Time Value of Money ( “ TVM ” ) cost s are indirect costs to owners and operators that arise as a consequence of the final regulation . These costs arise because as more frequent testing of equipment leads to earlier identification and correction of problems related to UST systems, owners and operators incur costs earlier than they would in the absence of the rule. 4 

### In the near term , requir ements such as operability

tests of release detection methods are likely to identify equipment issues (i.e., technical problems that may or may not already have leaks assoc iated with them) tha t would not have been identified i n baseline

activities in the same time frame

. 5



### As an initial step toward estimating these costs, EPA used the model presented in Exhibit D

- 5 . When a test detects a problem, equipment can be replaced or repaired; when a test does not detect a problem , the owner or operator does not incur any cost s. It is clear that these costs depend on the proportion of the time

that each test or walkthrough inspection detects a problem . For each part of the final regul ation that requires a test, EPA calculates a weighted

- average expected cost that accounts for the types of equipment

tested

. These weighted

- average costs are assumed to reflect the expected annual costs of equipment repair or replacement associated with ea ch test; that is, they reflect the costs that an owner or operator would incur after operating their equipment for one year. We further assume that these costs scale linearly over time: if a test occurs every three years instead of annually, we assume that the repairs and replacement s identified by testing every three years will cost three times more than those identified by annual tests. 6



### Exhibit D

- 5: Calculation of Weighted

- Average Cost of Repairs and Replacement per Test

Aft er obtaining an expected cost for the repairs and replacements required per test

, we calculate the expected costs for repairs and replacement s under the baseline and the final regulation . We assume that

4 Note that t his is also true for the walkthrough inspections being required as part of the regulation

.

5 Baseline activities include periodic regulatory inspections, and other requirements that exist before the final regulation becomes effective. These activities also include anything th at owners and operators might do in the

absence of the regulation

.

6 The underlying assumption of linear growth for the equipment damage function is that wear

- and

- tear of capital equipment accrues at a constant rate over time. We assume this form for the d amage function for analytical

convenience. Test Equipment

No cost Repair Cost Replacement Cost Fail Test Pass TestD

- 5



### testing under the final regulation will identify any equipment in disrepair with absolute certainty, i.e., every test performed under the final regulation identifies issues with 100 percent probability. In the

baseline , we assume that baseline activities do not identify all issues that requi re repair or repl acement. As a consequence, owners and operators enjoy a benefit under the baseline: a problem not identified in the

baseline can be addressed farther in the future , which allows the owner or operator to employ those funds

in some other manner.

To calculate the cost of repairs and replacement s under the baseline, we assume that baseline activ i ties succeed in identifying issues a percent of the time per year ; they fail to do so with b = 1

- a probability

. Such a setup is commonly known as a binomial or Bernoul li experiment and is described by a binomial

distribution. In these types of problems, only two outcomes (referred to as “ successes ” and “ failures ” ) are possible. In this case, success implies that a problem is detected, while failure implies that a proble m is

not detected

.

Since we assume that testing under the final regulation always identifies all issues and that costs

accumulate over time , the outcome is certain : every test causes the owner or operator to incur the weighted

- average cost of repairs or re placement associated with that test

. For example

, if we calculate a weighted

- average cost of repair or replacement of $100 cost per annual test for a hypothetical requirement

, each annual test under the final regulation will generate $100 in cost

.

Under th e baseline, existing activities lead to a chance of catching issues every year that is less than 100

percent

. Suppose that baseline activities detect problem s with probability of a = 60 percent. We can describe the expected cost under the baseline as the s um of the follow ing infinite series :

 Year 1: the odds that existing issues are identified are Pr(detection) = 0. 60. Since the total cost of repairs and replacements is $100, the expected cost in year one is $60 = 0.60 x $100.

 Year 2: the odds of detection are Pr(not detecting problems in the first year) x Pr (detection in second year) = 0.40 x 0. 60 = 24 percent

. Since the total cost of repairs and replacements is $100, we obtain $24 = 0.24 x $100. However, because the cost is delayed by one year, we must als o discount this amount by the prevailing rate to reflect the opportunity cost of funds (i.e., the time value of money ) . If we assume a discount rate of seven percent, the expected cost in year two is $22.43 = $24/(1.07)

.

 Year 3: the odds of detection are P r(not detecting in the first year) x Pr(not detecting in second year) x Pr(detection in third year) = 0.40 x 0.40 x 0.60 = 10 percent. Again, since the total cost of repairs and replacements is $100, we obtain $10 = 0.10 x $100. However, because the cost i s delayed by two years, we must also discount this amount to reflect the time value of money. Again assuming a discount rate of seven percent, the expected cost in year three is $10 = $10/(1.07) 2



### .

We repeat this calculation for a number of years large enou gh such that approximately 100 percent of the probability of detection and its associated costs are captured

. In this example, the cumulative probability

of detection is close to 100% after only the sixth period, i.e., baseline activities will virtually al ways identify the issues by the sixth year. Exhibit D

- 6 illustrates the calculation of the probabilities for the example described above.D

- 6



### Exhibit D

- 6 : Annual and Cumulative Probability of Detecting Issues under the Baseline

a = Pr(detection) 60%

b = Pr( no detection) 40%

Period Pr(detection) in current

period Annual Pr(detection) Cumulative Pr(detection)

1 A 60% 60%

2 a x b 24% 84%

3 a x b x b 10% 94%

4 a x b x b x b 4% 97%

5 a x b x b x b x b 2% 99%

6 a x b x b x b x b x b 1% 100%



### We combi ne the annual probabilities of detection with the discounted cost of repair or replacement to obtain the expected weighted

- average baseline repair or replacement cost . This cost incorporates both the expected cost per year and the discounting of costs that occur in the future, as shown in Exhibit D

- 7

. The bottom line represents the sum of the present value of the cash flows expected under baseline activities

. I n this example

, actions performed under the baseline have an expected cost of $ 95.56. This outcome is, of course, dependent on the cost of $100 per test and 60 percent probability of identifying problems.

Exhibit D

- 7 : Expected Cost per Baseline Inspection

Period Annual Pr(detection) PV cost ($100, 7% discount) Expected cost

per year

1 60% $100.00 $60 .00

2 24% $93.46 $22.43

3 10% $87.34 $8.39

4 4% $81.63 $3.13

5 2% $76.29 $1.17

6 1% $71.30 $0.44

Expected cost per inspection (sum of expected costs in each year) $95.56



### Given that a test under the final regulation would produce a c ost of $100 , the difference of $4.44

represents an incremental cost of the final regulation over the baseline , and is referred to as the “ t ime

v alue of m oney ” (TVM) cost.

Note that this calculation is particularly dependent upon the probability of detecti on: the lower the probability, the larger the proportion of costs that occur in the future and the lower the expected cost

under the baseline

. Exhibit D

- 8 illustrates the sensitivity of the above results to change s in the probability

of detection under the baseline . In general, for probabilities of detection above 40 percent , a small change in probability of detection produces a relatively small change in TVM costs. For probabilities below 40

percent, marginal changes become larger as the probability of det ection approaches zero.D

- 7



### Exhibit D

- 8: Change in Expected Cost as a Function of Probability of Detection

EPA assumes the following for the number of years to identify a problem in the baseline :

 For walkthrough inspections, operability testing for vapo r monitoring, and operability testing for groundwater monitoring, baseline activities would identify all issues in, at most, three years. This implies annual probability of successfully identifying issues of 83 percent. 7



###  For overfill operability inspection s, baseline activities would identify all issues in, at most, eight years. This implies annual probability of successfully identifying issues of 49 percent. 8



###  For spill prevention equipment testing and containment sump testing, baseline activities would

id entify all issues in, at most, 6 years. This implies annual probability of successfully identifying issues of 59 percent. 9

7 We selected the lowest probability of detection that would guarantee that 99.5 percent of problems would be identified by the third year to satisfy the condition that all problems are found by that time. If we u se 99 percent

as the threshold for “ all issues, ” a probability of detection of 79 percent is sufficient. In general, lowering the threshold increases TVM costs. The overall impact of TVM costs on the total cost of the rule depends on the choice

of threshol d, the expecte d cost per test, and the number of years until all issues are found.

8 If we use 99 percent as the threshold for “all issues,” a probability of detection of 44 percent is sufficient to identify the time frame for finding all problems

.

9 If we use 99 percent as the threshold for “all issues,” a probability of detection of 5 4 percent is sufficient to identify the time frame for finding all problems

.D

- 8



###  For operability testing of ATGs and interstitial monitoring, baseline activities would identify all issues, in, at most, 12 years. (B ased on assumptions of three percent of all potentially

- affected systems upgrading software every year, five percent installing new tanks every year, and eight percent interacting with an ATG or interstitial monitoring component in some way every year, an UST system would only go as long as 12 years without having any issues discovered)

. This implies annual probability of successfully identifying issues of 36 percent. 10



### D. 4 Calculation of Constant Annual Cash Flows for Requirements with Variable Affected

U niverses

Certain regulatory changes, including regulations related to flow restrictors for new tanks and secondary containment, differ from other requirements in that they apply only to new or replaced systems rather than existing systems . This introduces two dynamic elements into the calculation. First, the annual payment of

costs associated with these changes increase s with each additional year that the final regulation is in effect

because additional operators become subject to them as prior operators co ntinue to make payments

. 11


### Second, because a discount rate is in effect, the first units subject to these requirements also experience the highest (i.e., least discounted) costs ( and most immediate cost savings) . These characteristics cause

the costs and av oided releases associated with these regulatory changes to change over time.

To obtain a constant measure of the costs and benefits associated with changes that involve affected population of changing sizes, EPA proceeded as follows: 12



###  Assuming an average l ife of 20 years for an UST system, turnover is approximately five percent annually. The analysis assumes that new installations and replacements are covered under this rate of turnover, and the affected universe thus grows at a constant increment each year . A turnover rate of five percent also implies that the universe will have been completely replaced by year 20, such that all systems that could be affected by the regulatory change will be subject to it by that time. After year 20, the affected universe w ill be constant, as will be the associated costs and positive impacts ; however, we do not assess costs in perpetuity, instead accounting only for

costs over the initial 20

- year horizon.

 EPA assembled 20

- year schedules of costs and benefits that reflect the growth of each affected universe. For each year, the analysis calculates the present value of cash flows based on the

system cost or avoided cost due to compliance . The present values of the cash flows are summed to obtain the total benefit over 20 years

. Th is sum of cash flows is annualized into constant cash flows over a 20 year period , which creates an adjusted unit cost of compliance that distributes the effect of the phase

- in of costs and benefits uniformly over the affected universe.

These constant c ash flows are used as the basis for the cost and avoided cost calculations presented in Chapters 3 and 4 of this RIA . Along with these values, EPA relies on the ultimately

- affected universe (i.e., the universe affected at year 20) when calculating total co sts or benefits associated with the final regulation

. Exhibit D

- 9 shows an example calculation, including the nominal values of cash flows at each period. In the example, assuming a turnover rate of five percent per year, 64, 439 systems (over 20 years)

10 If we use 99 percent as the threshold for “ all issues, ” a probability of detection of 32 percen t is sufficient to identify the time frame for finding all problems

.

11 EPA assumes that this phase

- in period will last 20 years, the average life of a UST system

. Note that

cost

- savings associated with avoided releases follow the same pattern of growth as the population of system upgrades.

12 While the example that follows relies on a 20

- year time horizon, EPA also uses other time horizons where appropriate, e.g., five years to phase out groundwater and vapor monitoring as release detection methods

under Alt ernative 1

.D

- 9



### wil l be subject to the requirement that flow restrictors in vent lines will be eliminated as overfill prevention . Before adjusting for growth in the affected universe, the cost of compliance is $ 945 , or $ 89

. 18 per year when amortized at a seven percent discou nt rate over 20 years (see “ Eliminate Flow Restrictors

for in Vent Lines as Overfill Prevention for All New Tanks ” below for details)

. After accounting for changes in the size of the universe and greater discounting for future costs, the annual cost of the requirement falls to $ 39

. 68

.

Exhibit D

- 9 : Example Calculation of Constant Annual Unit Costs, Overfill Protection for New

Units

Cumulative number of

tanks affected Year Nominal value at year PV at year 1

3, 322 1 $ 287

, 344 $287,344

6, 444 2 $ 574

, 688 $53 7,092

9, 666 3 $ 862

, 033 $752,933

12, 888 4 $1,149,377 $938,234

16, 110 5 $1,436,721 $1,096,068

19, 332 6 $1,724,065 $1,229,235

22, 554 7 $2,011,409 $1,340,287

25, 776 8 $2,298,754 $1,431,548

2 8

, 988 9 $2,586,098 $1,505,132

32, 22 0 10 $2,873,442 $1 ,562,962

35, 441 11 $3,160,786 $1,606,783

38, 663 12 $3,448,130 $1,638,182

4 1

, 885 13 $3,735,474 $1,658,595

45, 107 14 $4,022,819 $1,669,327

48, 329 15 $4,310,163 $1,671,555

51, 551 16 $4,597,507 $1,666,348

5 4

, 773 17 $4,884,851 $1,654,668

5 7

, 995 18 $5,172,195 $1,637,385

61, 217 19 $5,459,540 $1,615,281

64, 439 20 $5,746,884 $1,589,061

Total cost $ 2 7

, 088

, 019

Annualized cost $2, 556

, 917

Annualized cost per system $ 39

. 68

Notes:

1

. EPA assumes that the entire affected universe wil l be affected after 20 years. In this example, 13 percent of

495

, 685 tanks in unregulated states will have to eventually install another overfill protection device

.
2

. Unit cost before adjusting for phase

- in effects is $83.63.



### As noted in Exhibit 2

- 4 in Chapter 2, EPA uses the affected universe in the tenth year to represent a central tendency for the cost of requirements such as these.

We note that t his approach does not capture two significant factors. First, it assumes that current declining

trends i n the number of UST facilities do not continue and the universe size remains constant. If the approach incorporated trends of declining numbers of UST systems, it woul d commensurately decrease the costs and positive impacts for each regulatory change. Seco nd, this approach does not consider the possibility that new technologies may reduce compliance costs while achieving equal or greater positive impacts. For example, problems related to steel tanks are less frequent today partly because owners and

operator s have switched to materials such as fiberglass. It is possible that similar shifts could occur in relation to flow restrictors and secondary containment , leading to substantially lower compliance costs.D

- 10



### D.5 Cost s for Individual Regulatory Requirements

E stimates of costs for individual regulatory requirements are based on publicly available data on equipment, installation, and testing costs, and information collected from professionals in industries that provide relevant equipment and services

. To the bes t of its ability, where data are limited or not available, EPA uses its professional expertise and judgment to make assumptions for cost modeling purposes

.

D.5.1 Release Prevention

Walkthrough Inspections

Exhibit D

- 10 summarizes the items EPA expects to be covered by the walk through inspection

. Based on

Exhibit D

- 10 , we estimate the per

- unit cost of a walkthrough inspection to be 25 minutes ( 0

. 42 hours) of technical labor, or $ 15

. 07 ( 20 12 $), plus recordkeeping

. We apply this cost on a per

- facility basi s for all facilities. Recordkeeping costs include 0.1 hour of clerical labor costs, or $ 1. 81 ( 20 12 $) and $0. 1 1 in material costs (based on 2007 OUST ICR for maintaining records , inflated to 2012$ ).

Exhibit D

- 10 : Minimum Walkthrough Inspection to be Condu cted by Owner/Operator (Based on the PEI RP900)

Category Description Time

Tank Fill Area All items listed under Tank Fill Area on the Daily checklist (p. 42) 10 minutes

Release Detection Items listed under Leak Detection Recordkeeping on the Monthly che cklist (p. 43)

. PEI

estimates it would take 51 minutes to complete all items under this section

. EPA takes this total, and based on the seven release detection methods listed, estimates that it would take 7.3 minutes per method to complete the items listed for the method. EPA then multiplies this by two to assume that the walkthrough would cover one tank and one pipe. 15 minutes

Total: 25 minutes

Note: The time estimates shown above are based on information provided by PEI and a ssumes a four

- tank instal lation (i.e., 4 tanks, fill ports, spill buckets, overfill devices and tanks sumps) and four dispensers

. Since the walkthrough inspections primarily focus on sumps and dispensers, EPA believes that on average, these estimates provide a reasonable indicatio n of the amount of time it would take to inspect a facility (a typical facility is likely to have more than four dispensers, but less than four sumps).



### The TVM cost for walkthrough inspections assumes that 10 percent of all walkthrough inspections will encounter a problem in one of the dispensers, sumps, gauges, piping alarms, or other equipment. On average, EPA assumes that this repair will cost $10 7 ($100 in 2008$ inflated to 2012$) . We estimate that this repair cost would have been incurred within thr ee years without this requirement. The weighted

average cost of repairs and replacements is $ 1 1 , and the incremental annual TVM cost between the proposed rulemaking and the baseline is $ 0

. 1 4

.

Under Alternative 1, the final rule requires a walkthrough ins pection that involves checking all of the categories listed in Exhibit D

- 10

. We estimate the per

- unit cost of this type of inspection to be 50 minutes of technical labor, rather than 25 minutes, or $30.14 (2012$), plus recordkeeping.

Overfill Prevention E quipment Inspections

The unit costs associated with requiring an overfill prevention equipment inspection include the cost of conducting the inspection , plus recordkeeping. We estimate the average cost of conducting an overfill equipment inspection at $ 22 8

. 91 ( $214 in 2008$ inflated to 2012$ ) per tank (TDD No. 21

– Overfill Testing). Recordkeeping costs include 0.1 hours of clerical labor costs, or $ 1. 81 ( 20 12 $), and $0. 1 1 inD

- 11



### material costs at a facility level (based on 2007 OUST ICR for maintaining record s inflated to 2012$ ) , for a total of $0. 7 1 per system.

The TVM cost for an overfill prevention equipment inspection assumes that across all overfill components (alarms, flow restrictors, and automatic shutoff devices), about 21 percent of all overfill

pre vention equipment inspections will encounter a problem (21 percent of alarms, 19 percent of flow restrictors, and 24 percent of automatic shutoff devices will encounter a problem when tested; roughly 15.5 percent of overfills use alarms, and 42.3 percent o f overfills each use flow restrictors and automatic

shutoff devices ) . The analysis assumes that 10 percent of overfills will be repaired, at a cost of $10 7 ($100 in 2008$ inflated to 2012$) , and 90 percent of overfills will be replaced, at a cost of $1, 9 3 1 (the weighted average cost of replacement of the overfill components). W e assume that in the baseline (i.e., without this regulatory requirement), a problem with the overfill prevention equipment will be detected

within eight years

. The weighted

- average c ost of repairs and replacements is $ 375

, which implies an

incremental TVM cost of $ 23

. 88 per year

. Because testing occurs on a three

- year basis under the Selected Option, we use the present value of three years ’ worth of this cost, which equal s $ 67

. 07 at a seven percent
discount rate

.

Spill Prevention Equipment Tests

The unit costs associated with requiring spill prevention equipment tests include the cost of conducting the test, water disposal costs associated with testing, and recordkeeping

. We estimate the average cost of conducting tightness testing on spill buckets by vacuum at $ 133

. 30 per spill bucket ( $125 in 2008$ inflated to 2012$ )

. Recordkeeping costs include 0.1 hours of clerical labor costs, or $ 1. 81 ( 2012$ ), and $0. 1 1 in material costs (based on 2007 OUST ICR for maintaining records inflated to 2012$ ) at a facility

level , for a total of $0. 7 1 per system

.

We estimate water disposal costs associated with testing at $4.38 per spill bucket, based on a total facility water disposal service cost of $700, where three spill buckets contribute 45 gallons of disposed water out of a total of 600 gallons for the facility (7.5 percent). 13 

### This entails $52.50 in total spill bucket costs for water disposal, or $17.50 per spill bucket. However, we also assume that only half of all spill buckets undergo hydrostatic testing, and that of those, only half of the hydrostatic tests require the owner/operator to dispose of water independently. Correspondingly, per

- spill bucket costs are $4.38, or $17.50 * 0.5 *

0.5.

The TVM cost for spill prevention equipment test assumes that across the country, approximately 16 percent of all spill prevention equipment tests will encounter a problem

. This is a weighted average of the 13 percent chance to encounter a problem during s uch a test in states that already require tightness testing of spill prevention equipment and the 30 percent chance to encounter a problem during such a test in states that do not currently require such te sting

. The analysis assumes that 10 percent of spil l prevention equipment will be repaired, at a cost of $ 507 ($475 in 2008$ inflated to 2012$) , and 90 percent will be replaced, at a cost of $ 2, 133 ($2000 in 2008$ inflated to 2012$)

. We estim ate that these costs would have

been incurred within six years w ithout this requirement, but are incurred immediately as a result of the final regulation

. The weighted

- average cost of repairs and replacements is $ 307

. 34

, which implies a n annual TVM cost of $ 1 3. 36

. Because testing occurs on a three

- year basis under the Selected Option, we use the present value of three years’ worth of this cost, which equals $37.53 at a seven percent discount

rate

.

13 Estimate of water disposal cost and volumes provided by Ed Kubinsky, Crompco.D

- 12



### Containment Sump Test ing

The per

- unit costs associated with requiring containment sump tes ts include the cost of conducti ng the

test

, water disposal costs associated with testing, and recordkeeping

. Given the standard UST system configuration, tanks have three total sumps: two dispenser sumps, and one tank

- top sump. We estimate average cost of conducting an interstitial inte grity test on a tank

- top sump at $ 209

. 25 (2012$) . We then estimate the average cost of conducting a tightness te st on a dispenser sump at $140

. 30 (2012$). ( These

costs are based on E 2 

### Inc., TO 3003, TD #9; and SC

- 05 State Periodic Interstitial Testing Requ irements

. )

Correspondingly, t otal sump testing costs are $ 489

. 85 (2012$), based on one tank

- top sump and two dispenser sumps tested.

We estimate water disposal costs associated with testing at $ 9 7.50 per sump, based on a total facility water disposal s ervice cost of $700, where seven sumps contribute 585 gallons of disposed water out of a total of 600 gallons for the facility (97.5 percent). This entails $682.50 in total sump costs for water disposal, or $ 9 7.50 per sump. However, we also assume that onl y half of the hydrostatic tests require the owner/operator to dispose of water independently. Correspondingly, average per

- sump costs for water disposal are $ 48 .75, or $ 97 .50 * 0.5.

Recordkeeping costs include 0.1 hours of clerical labor costs, or $ 1

. 81 ( 2012$ ), and $0. 1 1 in material costs (based on 2007 OUST ICR for maintaining records , inflated to 2012$ ) , for a total of $0. 7 1 per system.

The TVM cost of containment sump tests assumes that approximately 25 percent of all tests involving the turbine sump will encounter a problem, and that 21 percent of all tests on dispensers will encounter a problem

. The analysis assumes that 75 percent of turbine sumps and dispensers will require a repair; the rest will require replacement. Replacement costs are assumed to be $3, 199 ($3,000 in 2008$ inflated to 2012$) for turbine s umps, and $2, 132 ($2,000 in 2008$ inflated to 2012$) for dispensers; repair costs are assumed $ 720 ($675 in 2008$ inflated to 2012$) for turbine sumps, and $ 480 ($450 in 2008$ inflated to
2012$ ) for dispensers

. This yields a total weighted average of $ 287 for repairs and $ 425 for replacement

. We estimate that the repair/replacement costs would be incurred within six years without this requirement

but immediately under each test under the final r egulation . The weighted

- average cost of repairs and replacements is approximately $ 712 , or $ 30 .9 7 per year

. Because testing occurs on a three

- year basis

under the Selected Option, we use the present value of three years ’ worth of this cost, which equal s $ 8 6

. 97 at a seven percent discount rate

.

Spill Prevention Equipment Test After Repair

Because a spill prevention equipment test after repair would necessitate a trip to the facility by the contractor conducting the test, we assume that the owner/operator w ould incur a minimum site cost from the contractor, which includes the cost of the spill prevention equipment test . U nlike the spill prevention equipment test mentioned above ( which we assume is scheduled and takes place as contractors conduct

other on

- sit e activities ) , we assume that this activity is unscheduled and involves only the site visit and

the test

.

We estimate minimum site costs of $358.33 (2012$), based on an average of minimum site costs of $300

- $400, $250

- $300, and $450. 14 

### In addition, we add the water disposal costs for spill buckets from the spill prevention equipment test section above ($4.38 per spill bucket) , as well as recordkeeping ($0.7 1 per UST system) , for a total test cost of $ 363.42 (2012$).

14 Based on information provided by Crompco, Tanknology, and Tait.D

- 13



### Overfill Prevention Equipment Inspection After Repair

Because an overfill prevention equipment inspection after repair would necessitate a trip to the facility by

the contractor conducting the test, we assume that the owner/operator would incur a minimum site cost from the contractor, which inc ludes the cost of the overfill prevention equipment inspection

. U nlike the

overfill prevention equipment inspection mentioned above, (which we assume is scheduled and takes place as contractors conduct other on

- site activities), we assume that this activit y is unscheduled and involves only the site visit and the test.

We estimate minimum site costs of $400 (2012$), based on an average of minimum site costs of $300

- $400 and $450. In addition, we add recordkeeping costs, for a total test cost of $400.71 (201 2$). 15



### Secondary Containment Test After Repair

The per

- unit costs associated with requiring secondary containment tests include the cost of conducting the test, plus recordkeeping

. We estimate the average cost of conducting a secondary containment test on a tank at $ 156

. 59 ( 2012$ ) per tank

. We estimate the average cost of conducting a secondary containment test on piping at $11 1

. 4 9 ( 2012$ ) per line

. We estimate the average cost of conducting a secondary

containment test on sumps at $ 163

. 28 ( 2012$ ) per sump ($ 489

. 85 divided by 3) . (These costs are based on E2 Inc., TO 3003, TD #9; and SC

- 05 State Periodic Interstitial Testing Requirements.)

To estimate the cost of a secondary containment test after repair , we first average the cost of the tests for piping and sumps; we assume that a secondary containment test of piping will include sumps : ( $ 11 1

. 4 9 + $163

. 28 )/2 = $ 146

. 50

. We then weight the costs of the test for tank and the test for piping/sump by the frequency of repairs

. We assume that on average there would be approximately four piping/sump repairs for every tank repair

. Therefore, the cost of a secondary containment test after repair is ( 0.8 * $ 146

. 50 ) + (0.2 * $ 156

. 59 ) = $ 148

. 52 , plus recordkeeping ($0. 71 )

. We also add the probability

- weighted chance (i.e., 80 percent) that water disposal costs would be required for testing sumps. We include the cost for water disposal associated with one sump test, given that this requirement occurs after repair and does not require testing of all sumps. Adding the $ 4 8 .75 associated with water disposal for one sump brings the total cost for this requirement to $ 188

. 23 ($148.31 + $0.70 + $ 48 .75 * 0.8).

Eliminate Flow Restrictors for in Vent Lines as Overfill Prevention for All New Tanks and When

Overfill Devices are Re placed

The cost for this requirement is the incremental cost between what would have been installed (i.e., ball float) and the least

- cost alternative (i.e., automatic shutoff valve), or $ 945 ( $ 88 6 in 2008$ inflated to 2012$ ) per tank (= $1,042

- $156 in 2 008$ , cost of automatic shutoff value less cost of new ball float). ( Based on E 2 

### , Inc., TO3003 TDD7, Table 1) This cost phases in over time and is adjusted as shown in

Exhibit D

- 11

.

15 Based on i nformation provided by Crompco and Tait.D

- 14 Exhibit D

- 11

Adjustment for Phase in: Eliminate Flow Restrictors in Ve nt Lines as Overfill

Protection for New and Replaced Tanks

Number of tanks

affected Year Nominal value at

year PV at year 1

7,826 1 $697,910.63 $697,910.63

15,651 2 $1,395,821.25 $1,304,505.84

23,477 3 $2,093,731.88 $1,828,746.51

31,302 4 $2,7 91,642.51 $2,278,811.85

39,128 5 $3,489,553.13 $2,662,163.38

46,953 6 $4,187,463.76 $2,985,603.79

54,779 7 $4,885,374.39 $3,255,331.23

62,605 8 $5,583,285.01 $3,476,989.30

70,430 9 $6,281,195.64 $3,655,713.05

78,256 10 $6,979,106.27 $3,796,171. 39

86,081 11 $7,677,016.89 $3,902,606.10

93,907 12 $8,374,927.52 $3,978,867.74

101,732 13 $9,072,838.15 $4,028,448.64

109,558 14 $9,770,748.77 $4,054,513.37

117,384 15 $10,468,659.40 $4,059,926.61

125,209 16 $11,166,570.03 $4,047,278.86

133,0 35 17 $11,864,480.65 $4,018,910.08

140,860 18 $12,562,391.28 $3,976,931.36

148,686 19 $13,260,301.91 $3,923,244.85

156,511 20 $13,958,212.53 $3,859,562.08

Total $ 65,792,236.67
PV cost per tank $ 420.37

Annual cost over 20

years $ 39.68



### T hese costs only apply to new tanks that would have installed ball floats ( based on PEI estimate of percent of new installs over the last three years that use ball floats as overfill protection

– see Appendix

B ).

D.5.2 Release Detection

Operability tests

Note: We assume no state currently has this requirement for any of the release detection methods below (i.e., all systems in all states will incur costs).

Operability test for ATGs

The cost for the operability test would be the technical labor involved ( 1.5 hours) in conducting the test, or $ 60

. 71 ( 20 12 $), plus recordkeeping equal to $0. 7 1 (clerical labor of 0.1 hours and materials that cost $0. 11 )

.

The time value of money cost of operability testing for ATGs assumes that five percent of all testing of probes and 10 percent of all testing of floats identifies a problem. The analysis assumes all ATG probes

and floats are replaced, with a cost of $1, 442 ($1,352 in 2008$ inflated to 2012$) for probes and $ 181D

- 15



### ($170 in 2008$ inflated to 2012$) f or floats. Th e average cost of replacement, weighted by the probabilities of requiring replacement and the number of each component is $ 90

. 22 (each ATG has both components)

. We estimate that this repair cost would have been incurred within 12 years without this require ment, but is incurred immediately as a result of the final regulation

. This implies an annual TVM cost of $ 9

. 40

.

Operability test for Interstitial Monitoring (IM) Systems

The cost for the operability test would be the technical labor involved (0.25 hours) in conducting the test, or $ 10

. 12 ( 2012$ ), plus recordkeeping equal to $0. 7 1 (clerical labor of 0.1 hours and materials that cost $0. 11 )

.

The time value of money cost of operability testing for interstitial monitoring systems assumes that 20 percent of all testing of liquid point sensor s and UDC/sump sensors and seven percent of all testing of

pressure or vacuum sensors identifies a problem

. The analysis assumes that these components are always replaced, with a cost of $ 485 ($455 in 2008$ inflated to 201 2$) for the former and $1, 066 ($1,000 in 2008$ inflated to 2012$) for the latter. The average cost of replacement, weighted by the probabilities of requiring replacement and the number of existing interstitial monitoring systems with each type of

component , is $ 93

. 41 (86 percent of interstitial monitoring systems use liquid point sensor s and UDC/sump sensors , 14 percent use pressure or vacuum sensor s )

. We estimate that these costs would have

been incurred within 12 years without this requirement, but are in curred immediately as a result of the final regulation

. This implies an annual TVM cost of $ 9

. 73

.

Operability test for LLDs

The cost for the operability test for a LLD would be the technical labor involved (1.5 hours) in conducting the test, or $ 60

. 71 ( 20 12$ ), plus recordkeeping equal to $0. 7 1 (clerical labor of 0.1 hours and materials that cost $0. 11 )

.

We assume that in the baseline, all issues would be identified within one year, which is also the schedule

for LLD operability testing under the requirem ents of the final regulation . Correspondingly, there are no time value of money costs associated with this requirement, as the schedule for identifying issues and making repairs or replacements as necessary has not been altered.

Operability test for Vapo r Monitoring Systems

The cost for the operability test for vapor monitoring would be the technical labor involved (0.25 hours) in conducting the test, or $ 10

. 12 ( 2012$ ), plus recordkeeping equal to $0. 71 (clerical labor of 0.1 hours

and materials that cost $0. 11 )

.

The time value of money cost fo r operability testing of vapor monitoring systems assumes that 20 percent of all testing will encounter a problem

. All sensors are assumed to be replaced at a cost of $ 454 ($426 in 2008$ inflated to 2012$) , which i mplies an expected cost per inspection of $ 90

. 86

. We estimate that these costs would have been incurred within three years without this requirement, but are incurred immediately

as a result of the final regulation

. This implies an annual TVM cost of $1. 20

.

Operability test for Groundwater Monitoring Systems

The cost for the operability test would be the technical labor involved (0.25 hours) in conducting the test, or $ 10

. 1 2 ( 2012$ ), plus recordkeeping equal to $0. 71 (clerical labor of 0.1 hours and materia ls that cost $0. 11 )

.

The time value of money cost of operability testing for groundwater monitoring systems assumes that 20 percent of all testing of sensors and 10 percent of all testing of the bailers identifies a problem

. The analysis assumes that the se components are always replaced, with a cost of $ 454 ($426 in 2008$ inflated to 2012$) for the former and $ 32 ($30 in 2008$ inflated to 2012$) for the latter

. The average cost of replacement, weighted by the probability of requiring replacement and the n umber of existing interstitialD

- 16



### monitoring systems with each type of component, is $ 47 .0 3 (half of all groundwater monitoring systems use sensors while the other half use bailers)

. We estimate that these costs would have been incurred within three years wit hout this requirement, but are incurred immediately as a result of the proposed rulemaking

. This implies an annual TVM cost of $0. 62

.

Vapor and Groundwater Monitoring for Release Detection (Selected Option only) Under the Selected Option, systems using va por monitoring may also need to undergo a site assessment (under Alternative 2, use of vapor monitoring can continue with annual operability check without the owner/operator conducting a site assessment). We assume an average site assessment cost of $1,500 (2012$) per UST system (based on a $1,000 per tank cost from Leak Detection Technology and a $2,000 per tank cost from the Missouri DNR 16 

### ), which when annualized over 20 years using a seven percent discount rate yields an amortized cost of $141.59. In addi tion, where necessary, we also apply a well verification cost of $500 (2012$) per system (from Leak Detection Technology), leading to an additional amortized cost of $47.20. Based on EPA’s estimate of the distribution of systems using vapor monitoring

and whether site assessments would be required under the final regulation, we estimate that approximately 12 percent of systems using vapor monitoring would need to conduct a site assessment, and, in addition 15 percent of systems using vapor monitoring would need to conduct well verification. Correspondingly, we estimate total additional site assessment/well verification costs at $ 24

. 18 per system,

on average.

Under the Selected Option, systems using groundwater monitoring may also need to undergo a site

asse ssment (under Alternative 2, use of groundwater monitoring can continue with annual operability check without the owner/operator conducting a site assessment). We assume an average site assessment cost of $1,779 (2012$) per UST system (based on a $1,225 pe r tank cost from the South Carolina DHEC and a $2,333 per tank cost from the Missouri DNR 17 

### ), which when annualized over 20 years using a seven percent discount rate yields an amortized cost of $167.94. In addition, where necessary, we also apply a

well ver ification cost of $280 (2012$) per system (from Leak Detection Technology), leading to an additional amortized cost of $26.43. Based on EPA’s estimate of the distribution of systems using groundwater monitoring and whether site assessments would be require d under the final regulation, we estimate that approximately 13 percent of systems using groundwater monitoring would need to conduct a site assessment and, in addition 8 percent of systems using groundwater monitoring would need to

conduct well verificati on as well. Correspondingly, we estimate total additional site assessment/well verification costs at $ 24

. 20 per system, on average.

Elimination of Groundwater Monitoring and Vapor Monitoring as Release Detection Methods (Alter n ative 1 only)

The cost to el iminat e groundwater monitoring includes the cost of switching to SIR ($2 7 one

- time cost plus $ 16 per month for monthly reconciliation , $25 and $15 in 2008$ inflated to 2012$, respectively ) less

the one

- time cost of groundwater monitoring equipment ($ 517, b ased on $491 , from p.63 in OUST ICR

1360. 12 inflated to 2012$ ) and $ 68 in annual costs to record monthly monitoring ( 1.67 hours of technical labor, from p. 63 in OUST ICR 1360.08)

. This leads to a net cost of approximately $78 (2012$) per system ($194 in S IR costs, including SIR equipment costs, less $116 in groundwater monitoring costs, including equipment costs). It is the higher monthly reconciliation cost of SIR that causes a net cost when groundwater monitoring is eliminated as a release detection opti on.

16 Leak Detection Technology provided an estim ate of between $1,000 and $3,000 per three tank site. Missouri DNR provided an estimate of $5,000 to $6,000 per three tank site. We divided the $3,000 estimate and the $6,000 estimate by three tanks to get a per UST system cost estimate of $1,000 and $2,00 0, respectively.

17 South Carolina DHEC provided an estimate of $3, 675 per three tank site

. Missouri DNR provided an estimate of $ 6,000 to $7 ,000 per three tank site. We divided the $3, 675 estimate and the $ 7 ,000 estimate by three tanks to get a per UST sy stem cost estimate of $ 1,225 and $2 ,333 , respectively

.D

- 17



### The cost of eliminating vapor monitoring includes the cost of switching to SIR ($ 27 one

- time cost plus $ 16 per month for monthly reconciliation , $25 and $15 in 2008$ inflated to 2012$, respectively ) less the cost of vapor monitoring equipment ($ 807 , f rom $767 p.63 in OUST ICR 1360. 12 inflated to 2012$ ) and $ 68 in annual costs to record monthly monitoring ( 1.67 hours of technical labor, from p.63 in OUST ICR 1360.08)

. This leads to a net cost of approximately $51 (2012$) per system ($194 in SIR costs, i ncluding SIR equipment costs, less $144 in vapor monitoring costs, including equipment costs). It is the higher monthly reconciliation cost of SIR that causes a net cost when vapor monitoring is eliminated as a release detection option.

Bec ause the requir ement is phased

- in over five years, we also account for the cost of groundwater or

vapor mo nitoring operability tests , including TVM costs, but without site assessment/well verification costs, as the ability to use these methods for release detection is be ing eliminated, as described in the

“ Operability test for Vapor Monitoring Systems ” and “ Operability test for Groundwater Monitoring Systems ” sections above

.

Add S IR/CITLD to Regulations with Performance Criteria

We assume that CITLD users will be able t o meet the performance criteria with no additional cost.

Certain SIR users w ould incur a one

- time $ 11 ( $10 in 2008 $ inflated to 2012$ ) cost for a new service

agreement to switch to a SIR vendor that would be capable of providing quantitative results neces sary to meet this requirement

.

Require Response to Interstitial Monitoring Alarm

The cost associated with this requirement would be the incremental cost difference between a tightness
test ( $ 418

, currently required) and an interstitial integrity test ( $ 208 )

, which yields a net savings ( based on

E 2 

### , Inc., TO 3003, TDD#9, SC

- 05 State Periodic Int erstitial Testing Requirements and OUST ICR 2011, p. 52 and p. 59 ). Because the cost of an interstitial integrity test is less than the cost of a tightness test, we do not assign any cost to this requirement

.

Removal of deferrals for E mergency G enerator T ank s (EGTs) 18



### Based on FY20 12 data, the total number of active USTs is 577

, 981

. EPA assumes that three percent of

these tanks , or 17

, 339

, are EGTs. Among these, 10

, 977 are in states that currently defer release detection regulations on this type of UST (and therefore would be affected by the deferral removal)

.

EPA assume s that one

- third of the universe of tanks in states with deferrals in place (the left branch i n the figure below ) already voluntarily employ release detection technologies that are distributed as other operability testing requirements . This subset of EGTs accrues only the incremental testing costs

associated with operability testing . The other two

- thirds of the EGT universe in states with deferrals in place accrue both the costs to install new release detection equipment (apportioned as 60 percent of the universe to SIR and 6.7 percent to ATG) and operability tests

. 19 

### We assume that the proportion of EGTs

18 The final regulation does not address emergency tanks at nuclear power plants, which are regulated by the Nuclear Regulatory Commission under 10 CFR Part 50.

19 For modeling purposes, we assume the m ajority of EGTs would use SIR as the release detection method ($2 7, based on a 2008$ cost of $25 inflated to 2012$ ) because it is the least

- cost method

. However, EPA assumesD

- 18



### that switch to SIR also incur the costs associated with the addition of SIR/CITLD with performance

criteria.



### Allocation of Costs to the Universe of EGTs

Costs are assigned as follows:

 The cost for the operability tes t for tanks that already use automatic tank gauge systems would be the technical labor involved (1.5 hours) in condu cting the test, or $ 60

. 71 (20 12 $), recordkeeping cost of $0. 7 1 , and annual TVM cost of $ 9

. 40

. We apply this cost to the percentage of tanks that currently use ATG as their leak detection method.

 The cost for the operability test for tanks that already use interstitial monitoring systems would be the technical labor involved (0.25 hours) in conducting the test, or $ 10

. 12 (20 12 $), recordkeeping cost of $0. 71 , and annual TVM cost of $ 9

. 73

. We apply this cost to the percentage of tanks that currently use IM as their leak detection method.

 The cost for the operability test for tanks that already use vapor monitoring systems would be the

technical labor involved (0.25 hours) in conducting the test, or $ 10

. 12 ( 20 12 $), site assessment/well verification cost of $52.87, recordkeeping cost of $0. 71 , and annual TVM cost of $1. 20

. We apply this cost to the percentage of tanks that currently use vapor monit oring as their

leak detection method.

that ten percent of EGTs would be in remote locations, and would therefore use ATG s as their release detection

method. 10,977 EGTs in states with deferrals in place

Incur testing costs identically to other operability testing Incur installation and O&M (removal of deferral) and

ope rability testing costs subject to distribution shown

below.

All percentages refer to the entire affected universe of 10,977 EGTs. 

## SIR ATG 60% 6.7%

• ATG

• SIR

• Int. monit. Release detection
for these tanks are

assumed to be the

same as nationa l

distribution. 

### 33.3% 33.3% 66.7%D

- 19



###  The cost for the operability test for tanks that already use groundwater monitoring systems would be the technical labor involved (0.25 hours) in conducting the test, or $ 10

. 1 2 (20 12 $), site

assessment/well verificati on cost of $60.77, recordkeeping cost of $0. 71 , and annual TVM cost of $0. 62

. We apply this cost to the percentage of tanks that currently use GW monitoring as their

leak detection method.

 We estimate the cost of installing new automatic tank gauge system s at $ 4,098 ( $3,843 in 2008$ inflated to 2012$ ) (TO3003 TDD #9). We estimate the annual monitoring costs associated with these systems at $ 285

. 72 per unit , based on monthly monitoring requiring 0.05 hours of technical labor, and daily inventory volume meas urements requiring 0.02 hours of technical labor

.

 We estimate the cost of installing new SIR systems at $ 27 ($25 in 2008$ inflated to 2012$) . We

estimate the annual monitoring costs associated with SIR at $ 192 ($180 in 2008$ inflated to 2012$)

.

 Current qu alitative SIR users would incur a one

- time $ 11 ( $10 in 2008$ inflated to 2012$ ) cost for a new service agreement to switch to a SIR vendor capable of providing quantitative results.

 EGTs will also be required to perform annual line tightness tests (1.5 ho urs of technical labor every three years) and maintain associated records (1 hour of clerical labor annually) ( based on OUST’s ICR 1360.08, ) for a total cost of $45 .25 (2012$)

.

The foregoing requirements affect various subsets of the universe, many of wh ich do not overlap. For example, systems are generally subject to only one operability test requirement, and relatively few systems will be required to install an ATG. If we sum the bulleted costs without accounting for the universe affected, we significan tly overstate the cost per EGT system. We thus estimate the unit cost of this group of requirements by dividing the total cost of the affected universe by the total universe of units affected. Doing so produces an average one

- time cost per system of $29 6

. 9 4 and average O&M cost per
system of $ 193

. 41

.



### D.5.3 Other

Notification of Ownership Changes

The cost associated with this requirement is the managerial labor (0.25 hour s ) , or $ 14

. 27 (2012$)

, required to notify the implementing agency (based on OUST ICR 1360.12 )

. O nly facilities that change ownership will incur the cost.

Closure of Irreparable Lined Tanks

The cost associated with this requirement is the incremental cost between what an owner/operator would be able to do instead of replacement (i.e., sw itch to cathodic protection) and what the owner/operator needs to do as a result of the requirement (i.e., close the tank, and replace with a double

- walled tank )

. 20



### We assume that this requirement will cause owners or operators to replace their systems, on average, 10 years earlier (i.e. incur costs over years one through 20, rather than years 10 through 30, following the final regulation ’s implementation )

. Incremental costs are $ 85

, 026 [ $ 92

, 544 ( based on $81,260 2008$
inflated to 2012$ ) to install a double

- walled system minus $7, 518 (2008$ inflated to 2012$) for the cost of switching to cathodic protection, based on SC

- 03 UST Cost Comparison and EPA professional judgment]

. T he difference between these two stream s of discounted cash flows (i.e., cash flows f or years one to 20 and cash flows from years 10 to 30 ) is $ 41

, 803

.

20 EPA assumes that the owner/operator will choose to continue operations by installing a new double

walled tank instead of closing the tank and discontinuing operations.D

- 20



### Recordkeeping Associated with Compatibility

For existing UST systems, owners and operators must use an UST system made of or lined with materials compatible with the fuel stored

. In order to do this, owners and operators must have existing records indicating what equipment has already been installed, and that equipment is compatible with fuel blends greater than E10 and/or B20 (or any other regulated substance identified by the implementin g agency)

. EPA assumes that a portion of existing owners of UST systems would have adequate installation records (see Appendix B)

. EPA also assumes each owner would maintain records and demonstrate compatibility on a per UST system basis. The cost associat ed with this is a one

- time cost of $1.92 (2012$) , plus $0.01 to permanently store the record (based on OUST ICR 1360.12), annualized over 20 years using a seven percent discount rate.

Under the final regulation, owners and operators will also need to noti fy the implementing agency at least 30 days prior to switching to store fuel blends greater than E10 and/or B20 (or any other regulated substance identified by the implementing agency)

. However, because owners and operators have a choice

about whether to s tore these substances and there is a lack of information as to how many owners and operators would choose to switch each year, EPA d oes not include an estimate of this reporting cost in the analysis

.

U nder Alternative 1 only

, owners and operators must ma intain retain equipment records for all new and replaced equipment

. All records must be maintained for the life of the equipment

. This recordkeeping cost is $1. 92 (2012$) per record ( “ Maintain records, ” under “ UST systems: design, construction, installatio n and notification, ” p. 61

, OUST ICR 1360.08 ) , plus $0.01 to permanently store the record

. EPA assumes

that all owner s and operator s will incur this cost annually as part of annual maintenance and replacement of UST system components.

Removal of deferrals for Airport Hydrant Fuel Distribution Systems (AH FD Ss)

For details on how costs are estimated for AHFDSs, s ee Appendix A

. The unit costs presented in Exhibit

3

- 1 and Exhibit 3

- 4 are derived from taking the total costs associated with removing the deferra l and dividing them by the number of systems that would be affected by the proposed rule.

Removal of deferrals for UST systems with Field

- Constructed Tanks (FCTs)

For details on how costs are estimated for FCTs, see Appendix A

. The unit costs presented i n Exhibit 3

- 1

and Exhibit 3

- 4 are derived from taking the total costs associated with removing the deferral and dividing them by the number of systems that would be affected by the proposed rule.



### D.5.4 Energy Policy Act (Indian country only)

Operator Tra ining

We model this requirement only for facilities located in Indian country

. EPA assume s that there is 1 Class A operator and 1 Class B operator for every 5 facilities, and 3 Class C operators per facility

.

The costs for operator training includes one

- time costs associated with training all existing operators, and annual costs associated with retraining as a result of operator turnover

.

One

- time costs: For Class A and B operators, we assume 20 percent of these operators test out. The costs for these operators consist of the fee to take the test and the time it takes to take the test, or $ 29

. 92 for Class A operators and $ 23

. 65 for Class B operators ($ 64 test fee based on average test of $60, based on exampleD

- 21



### test costs of $45 and $75 in 2008$, inflate d to 2012$ plus 1.5 hours of test time, based on California’s test length). The other 80 percent are required to take training. In the model, this consists of taking a online webinar and then paying for a final exam, or $ 600 .7 9 for Class A operators and $ 4 33

. 51 for Class B operators ($ 180 test fee based on $169 in 2008$ inflated to 2012$ + 10 hours of webinar and test time, based on Colorado’s training webinar cost).

For Class C operators, we assume all of them will be trained by Class A/B operators

. For m odeling purposes, we assume the trainer to be a Class B operator because of the slightly lowe r labor rate. We calculate costs to be $ 84

. 1 5 , or one hour for a Class B operator and one hour for each of three Class C

operators. The total one

- time cost comes t o $ 301

. 73 (2012$) plus $1. 92 (2012$) of recordkeeping (clerical labor of 0.1 hours and materials that cost $0. 11 )

.

Recurring cost: Each year, we assume that Class A and Class B operators will turnover at an average rate of 22 percent

. The same assumption of 20 percent testing out and 80 percent taking training applies

. We assume Class C operators turnover at an average rate of 119.5 percent . We assume they are trained by Class A or B operators. We calculate total retraining costs at $ 1 3 7

. 44 (2012$) given t he above assumptions , plus $1. 92 (2012$) of recordkeeping (clerical labor of 0.1 hours and materials that cost $0. 11 )

.

R equire Secondary Containment of new/replaced tanks and piping

We model this only for facilities in Indian country

. The cost associate d with this requirement would be

the incremental cost difference between the installation of a single

- walled tank ($72,102 in 2006$) and piping and the installation of a double

- walled tank and piping ($88,707 in 2006$), or $16,605 .17 (2006 $) (the cost of installing a double

- walled tank and piping less the cost of installing a single

- walled tank and pip ing , from SC

- 03 UST Cost Comparison, Table 1) , or $ 18

, 910

. 95 in 2012$

. Because the universe affected by this facility grows over time due to equipment turnov er, we amortize this cost over 20 years at

a seven percent discount rate and incorporate the growing universe to obtain a more accurate estimate of

costs.

EPA data indicate that approximately 72.4 percent of tanks in In dian Country are single

- walled

. As a result, EPA assume s that 1, 895 of the 2, 618 total tanks in Indian Country will be affected by this regulation after 20 years for modeling purposes

. This implies that about 95 tanks will be replaced each

year.D

- 22



### This cost phases in over time and is adjuste d as shown in Exhibit D

- 16

.

Exhibit D

- 16 Require Secondary Containment of new/replaced tanks and piping

Number of tanks

affected Year Nominal PV at

year PV at year 1

95 1 $169,173 $169,173

190 2 $338,346 $316,211

284 3 $507,519 $443,287

379 4 $676 ,692 $552,382

474 5 $845,865 $645,306

569 6 $1,015,038 $723,708

663 7 $1,184,211 $789,090

758 8 $1,353,384 $842,819

853 9 $1,522,556 $886,142

948 10 $1,691,729 $920,189

1042 11 $1,860,902 $945,988

1137 12 $2,030,075 $964,474

1232 13 $2,19 9,248 $976,493

1327 14 $2,368,421 $982,810

1422 15 $2,537,594 $984,123

1516 16 $2,706,767 $981,057

1611 17 $2,875,940 $974,180

1706 18 $3,045,113 $964,005

1801 19 $3,214,286 $950,991

1895 20 $3,383,459 $935,555

Total $15, 947,982

Co st per tank $ 8,413.90

Annualized cost per tank $7 9 4 .21



### Require Replacement of Piping if Repairs Exceed Certain Threshold

We model this cost only for facilities in Indian country

. The cost associated with this requirement would

be the incremental cos t difference between the repair of single

- walled piping and the installation of new secondarily

- contained piping. This cost occurs only if, during the course of repairing a piping run, an owner or operator is required to repair more than a certain proporti on of the entire piping run (as determined in the proposed rule). Further, the cost depends on the particular threshold: the lower the threshold, the greater the incremental cost of replacement (compared with repair) and the larger the proportion of facili ties affected.

EPA estimated incremental costs for three thresholds: 10 percent (Choice 1) , 25 percent (Choice 2) , and 50 percent (Choice 3)

. We calculate the costs associated with each threshold requirement to be $ 1 5

, 356

, $ 10

, 557 , and $2, 559 , respectivel y (20 12 $) (the installation of new piping less the cost of repairing single

walled piping, from Secondary Containment for Piping Calculator). We assume, however, that no owners or operators would incur incremental costs under a 50 percent replacement thres hold, as they would otherwise replace their piping in the baseline if repairs exceed that proportion (see Appendix C)

.

In Indian country , 60.3 percent of pipes are single

- walled

. For modeling purposes, we assume that 20

percent are affected per year. We a lso assume that 45 percent of pipes are affected per year under Choice
1, 20 percent are affected per year under Choice 2, and zero percent are affected per year under Choice 3

. This implies that 2, 842 , 1, 2 63 , and zero pipes are affected after 20 years, re spectively

, and that theD

- 23



### number of pipes affected grows uniformly over time

. We assume that pipes have lifetimes of 10 years, but amortize their costs over 20 years.

This cost phases in over time and is adjusted as shown in subsequent exhibits. Because c osts depend on the particular replacement threshold, we calculate costs for all three different scenarios.

Exhibit D

- 17

Secondary containment: Replace all piping if 10 percent requires repairs

Number of tanks

affected Year Nominal PV at

year PV at year 1

142 1 $205,941 $205,941

284 2 $411,881 $384,936

426 3 $617,822 $539,629

568 4 $823,762 $672,435

710 5 $1,029,703 $785,555

852 6 $1,235,643 $880,997

995 7 $1,441,584 $960,588

1137 8 $1,647,524 $1,025,995

1279 9 $1,853,465 $1,078,733

1421 10 $2,0 59,405 $1,120,180

1563 11 $2,265,346 $1,151,587

1705 12 $2,471,287 $1,174,090

1847 13 $2,677,227 $1,188,721

1989 14 $2,883,168 $1,196,412

2131 15 $3,089,108 $1,198,009

2273 16 $3,295,049 $1,194,277

2415 17 $3,500,989 $1,185,906

2557 18 $3,706,930 $ 1,173,519

2699 19 $3,912,870 $1,157,677

2842 20 $4,118,811 $1,138,886

Total $ 19,414,074.69
Cost per tank $6, 832

. 15

Annualized cost per tank $ 644.91D

- 24 Exhibit D

- 18 Secondary containment: Replace all piping if 25 percent requires repairs

Number of tanks

affected Year Nominal PV at

year PV at year 1

63 1 $62,926 $62,926

126 2 $125,853 $117,619

189 3 $188,779 $164,887

253 4 $251,705 $205,466

316 5 $314,631 $240,031

379 6 $377,558 $269,193

442 7 $440,484 $293,513

505 8 $503,410 $313, 499

568 9 $566,336 $329,613

631 10 $629,263 $342,277

695 11 $692,189 $351,874

758 12 $755,115 $358,750

821 13 $818,042 $363,220

884 14 $880,968 $365,570

947 15 $943,894 $366,058

1010 16 $1,006,820 $364,918

1073 17 $1,069,747 $362,360

1137 18 $1,1 32,673 $358,575

1200 19 $1,195,599 $353,735

1263 20 $1,258,526 $347,993

Total $5, 932

, 078.38
Cost per tank $4, 697

. 10

Annualized cost per tank $ 443 .37



### Require Under

- Dispenser Containment

We model this only for facilities in Indian count ry

. We calculate the cost associated with this requirement as $ 4

, 302 ( 20 12 $) (=$1,500 of installation costs + $517 for equipment in 2008$ per dispenser, of which there are two per system, inflated to 2012$ )

. We assume that over 20 years, 96.98 percent of tanks will require under

- dispenser containment

. This implies 127 tanks will require under

- dispenser containment each year. Because the universe affected by this facility grows over time due to equipment turnover, we amortize this cost over 20 years at a se ven percent discount rate and incorporate the growing universe to

obtain a more accurate estimate of costs. This cost phases in over time and is adjusted as shown in

Exhibit D

- 19

.D

- 25 Exhibit D

- 19 Secondary containment: Require under

- dispenser containment for all new dispensers

Number of tanks

affected Year Nominal PV at

year PV at year 1

12 7 1 $51,556.02 $51,556.02

25 4 2 $103,112.04 $96,366.39

38 1 3 $154,668.06 $135,093.07

50 8 4 $206,224.08 $168,340.28

63 5 5 $257,780.10 $196,659.21

76 2 6 $309, 336.12 $220,552.38

88 9 7 $360,892.14 $240,477.67

1 ,027 8 $412,448.16 $256,851.99

1

, 14 3 9 $464,004.18 $270,054.66

1

, 269 10 $515,560.20 $280,430.59

1,396 11 $567,116.22 $288,293.13

1 ,523 12 $618,672.25 $293,926.73

1 ,650 13 $670,228.27 $297,589. 37

1 ,777 14 $721,784.29 $299,514.82

1 ,904 15 $773,340.31 $299,914.70

2 ,031 16 $824,896.33 $298,980.39

2 ,158 17 $876,452.35 $296,884.73

2 ,285 18 $928,008.37 $293,783.68

2 ,412 19 $979,564.39 $289,817.76

2 ,539 20 $1,031,120.41 $285,113.39

Total $ 4, 960

, 200.96
Cost per tank $ 1

, 914

. 27

Annualized cost

per tank $ 180

. 69



### D.6 Results of Assessment of Compliance Cost s

Exhibits D

- 20 through D

- 22 present a disaggregation of compliance costs under each regulatory option

. The exhibits also present the number of systems affected by each regulatory requirement.D

- 26 Exhibit D

- 20

Total Annual Compliance Costs Due To The Final UST regulation For UST Systems Affected Selected Option All values in $ thousands a

Description Systems

Affected Capital Cost

(Annualized) O&M Total Cost

Release Prevention

Walkthrough inspections 555,003 $0 $23,000 $23,000

Periodic testing/inspections of:

- Overfill prevention equipment

- Spill prevention equipment

- Containment sumps 190,623 $0 $64,000 $64,000

Testing after repairs to spill and overfill prevention equipment, and secondary

containment 40,011 $0 $12,000 $12,000

Elimination of flow restrictors in vent lines for all new tanks and when overfill prevention equipment is replaced 63,818 $2,500 $0 $2,500

Subtotal

– Release Prevention b n/a $2,500 $99,000 $100,000

Release Detection

Operability tests for release detection methods (incl. groundwater and vapor monitoring) 165,492 $0 $21,000 $21,000

Groundwater and vapor monitoring for release detection c 25,4 75 $500 $0 $500

Add SIR/CITLD to regulation with performance criteria 2,756 $3 $0 $3

Remove release detection deferral for emergency generator tanks d 10,977 $250 $1,700 $2,000

Response to interstitial monitoring alarms e 10,634 $0 $0 $0

Subtotal

– Rel ease Detection b n/a $750 $23,000 $24,000

Other

Remove deferral for airport hydrant fuel distribution systems f 81 See note b See note b $10,000

Remove deferral for UST systems with field

- constructed tanks f 346 See note b See note b $11,000

Req uire notification of ownership change 8,726 $0 $46 $46

Closure of lined tanks that cannot be repaired according to a code of practice g 57 $0 $2,400 $2,400

Requirements for demonstrating compatibility with fuels > E10 and > B20 234 < $0.1 $0 < $0.1

Cost to owners/operators to read regulation 577,981 $5,500 $0 $5,500

Subtotal

– Other b n/a $5,500 $2,400 $29,000

EPAct

- related Provisions

Operator training 2,618 $23 $110 $130

Secondary containment 2,217 $980 $0 $980

Subtotal

– EPAct

- related Provi sions b n/a $1,000 $110 $1,100

Subtotal b n/a $9,800 $120,000 $160,000

Additions for new units (beyond those included above) h n/a $5 $0 $5

Total b n/a $9,800 $120,000 $160,000D

- 27 Exhibit D

- 20

Total Annual Compliance Costs Due To The Final UST regulation For UST Systems Affected Selected Option All values in $ thousands a

Description Systems

Affected Capital Cost

(Annualized) O&M Total Cost

a Cost estimates were derived using a seven percent discount rate.

b Total s may not add due to rounding. Costs associated with the removal of deferrals for FCTs and AHFDSs or groundwater and vapor mo nitoring for release detection under Alternative 1 are included in the total columns only.

c Costs under the Selected Option includ e the cost of conducting a site assessment or well verification, weighted by the probability that one of these is

necessary, as a one

- time cost. For Alternative 1, costs include a five

- year phase out of groundwater and vapor monitoring as release detection methods. Capital and O&M costs are aggregated in this line item for Alternative 1 because this requirement was modeled separately from the other requirements. See Appendix D for details. For Alternative 2, costs include only the cost of operability tests for these types of release detection.

d Costs related to removal of deferrals for the regulation of emergency generator tanks include the cost of removal of deferral s, installation and maintenance of ATG on approximately seven percent of systems, installa tion and maintenance of SIR on 60 percent of systems, and performing operability tests on all EGT systems. See Appendix D for details.

e The cost associated with this requirement would be the incremental cost difference between a tightness test (required in the baseline) and an interstitial integrity test (required by the final UST regulation ). However, because the cost of an interstitial integrity test is less than the cost of a tightness test, we do not assign any cost to this requirement. See Appendix D for additional information.

f Airport hydrant fuel distribution systems include a capital cost because tanks associated with airport hydrant fuel distribut ion systems without existing ATGs are assumed to install ATGs to comply with the requirement. Simila rly, the DoE UST systems with field

- constructed tanks include a capital costs because these tanks are assumed to install ATGs to comply with the requirement. UST systems with field

- constructed tanks without existing ATGs are assumed to conduct annual preci sion tightness tests to comply with the requirement. Capital and O&M costs are aggregated in these line items because various components of the compliance with release detection include both capital and O&M costs. See Appendix A for details.

g Although the closure of lined tanks represents a capital cost, we consider it an operation and maintenance cost as a modeling convenience. See Appendix D for details.

h As a simplifying assumption, EPA assumes that UST systems enter and exit the universe at a constant annual rate, such that the total number of UST systems in the universe does not change. We assume that operation and maintenance costs associated with these systems offset each other, as the number of entries equals the number of exits; however, new syste ms entering the universe will still incur incremental capital costs associated with certain requirements (e.g., a new emergency generator tank would need to install a release detection method). For modeling pu rposes, we account for

these new units in the “ Additions for new units.” The costs shown reflect the capital costs associated with new units for all but the following requirements: elimination of flow restrictors for new tanks, requirement of secondary containment for new tanks, and requirem ent of unde r

- dispenser containment for new dispenser systems.D

- 28 Exhibit D

- 21

Total Annual Compliance Costs Due To The Final UST regulation For UST Systems Affected

Alternative 1 All values in $ thousands a

Description Systems

Affected Capital Cost

(Annualized) O &M Total Cost

Release Prevention

Walkthrough inspections 555,003 $0 $53,000 $53,000

Periodic testing/inspections of:

- Overfill prevention equipment

- Spill prevention equipment

- Containment sumps 210,266 $0 $180,000 $180,000

Testing after repairs to spill and overfill prevention equipment, and secondary

containment 40,011 $0 $12,000 $12,000

Elimination of flow restrictors in vent lines for all new tanks and when overfill prevention equipment is replaced 63,818 $2,500 $0 $2,500

Subtotal

– Release Prevent ion b n/a $2,500 $250,000 $250,000

Release Detection

Operability tests for release detection methods (incl. groundwater and vapor monitoring) 165,492 $0 $24,000 $24,000

Groundwater and vapor monitoring for release detection c 25,968 See note b Se e note b $1,000

Add SIR/CITLD to regulation with performance criteria 2,756 $3 $0 $3

Remove release detection deferral for emergency generator tanks d 10,977 $290 $2,000 $2,300

Response to interstitial monitoring alarms e 10,634 $0 $0 $0

Subtotal

– Rel ease Detection b n/a $290 $26,000 $27,000

Other

Remove deferral for airport hydrant fuel distribution systems f 81 See note b See note b $17

Remove deferral for UST systems with field

- constructed tanks f 346 See note b See note b $66

Require not ification of ownership change 8,726 $0 $46 $46

Closure of lined tanks that cannot be repaired according to a code of practice g 57 $0 $2,400 $2,400

Requirements for demonstrating compatibility with fuels > E10 and > B20 577,981 < $0.1 $1,100 $1,100

Cost to owners/operators to read regulation 577,981 $5,500 $0 $5,500

Subtotal

– Other b n/a $5,500 $3,500 $9,100

EPAct

- related Provisions

Operator training 2,618 $23 $110 $130

Secondary containment 2,217 $980 $0 $980

Subtotal

– EPAct

- related Provis ions b n/a $1,000 $110 $1,100

Subtotal b n/a $9,300 $280,000 $290,000

Additions for new units (beyond those included above) h n/a $5 $0 $5

Total b n/a $9,300 $280,000 $290,000D

- 29 Exhibit D

- 21

Total Annual Compliance Costs Due To The Final UST regulation For UST Systems Affected

Alternative 1 All values in $ thousands a

Description Systems

Affected Capital Cost

(Annualized) O &M Total Cost

a Cost estimates were derived using a seven percent discount rate.

b Totals may not add due to rounding. Costs associated with the removal of deferrals for FCTs and AHFDSs or groundwater and vapor moni toring for release detection under Alternative 1 are included in the total columns only.

c Costs under the Selected Option include the cost of conducting a site assessment or well verification, weighted by the probability that one of these is

necessary, as a one

- time cost. For Alternative 1, costs include a five

- year phase out of groundwater and vapor monitoring as release detection methods. Capital and O&M costs are aggregated in this line item for Alternative 1 because this requirement was modeled separately from the other requirements. See Appendix D for details. For Alternative 2, costs include only the cost of operability tests f or these types of release detection.

d Costs related to removal of deferrals for the regulation of emergency generator tanks include the cost of removal of deferral s, installation and maintenance of ATG on approximately seven percent of systems, installat ion and maintenance of SIR on 60 percent of systems, and performing operability tests on all EGT systems. See Appendix D for details.

e The cost associated with this requirement would be the incremental cost difference between a tightness test (required i n the baseline) and an interstitial integrity test (required by the final UST regulation ). However, because the cost of an interstitial integrity test is less than the cost of a tightness test, we do not assign any cost to this requirement. See Appendix D for additional information.

f Airport hydrant fuel distribution systems include a capital cost because tanks associated with airport hydrant fuel distribut ion systems without existing ATGs are assumed to install ATGs to comply with the requirement. Similar ly, the DoE UST systems with field

- constructed tanks include a capital costs because these tanks are assumed to install ATGs to comply with the requirement. UST systems with field

- constructed tanks without existing ATGs are assumed to conduct annual precis ion tightness tests to comply with the requirement. Capital and O&M costs are aggregated in these line items because various components of the compliance with release detection include both capital and O&M costs. See Appendix A for details.

g Although the closure of lined tanks represents a capital cost, we consider it an operation and maintenance cost as a modeling convenience. See Appendix D for details.

h As a simplifying assumption, EPA assumes that UST systems enter and exit the universe at a constant annual rate, such that the total number of UST systems in the universe does not change. We assume that operation and maintenance costs associated with these systems offset each other, as the number of entries equals the number of exits; however, new system s entering the universe will still incur incremental capital costs associated with certain requirements (e.g., a new emergency generator tank would need to install a release detection method). For modeling pu rposes, we account for

these new units in the “A dditions for new units.” The costs shown reflect the capital costs associated with new units for all but the following requirements: elimination of flow restrictors for new tanks, requirement of secondary containment for new tanks, and requirem ent of under

- dispenser containment for new dispenser systems.D

- 30 Exhibit D

- 22

Total Annual Compliance Costs Due To The Final UST regulation For UST Systems Affected

Alternative 2 All values in $ thousands a

Description Systems

Affected Capital Cost

(Annualized) O& M Total Cost

Release Prevention

Walkthrough inspections 349,551 $0 $7,000 $7,000

Periodic testing/inspections of:

- Overfill prevention equipment

- Spill prevention equipment

- Containment sumps 388,641 $0 $19,000 $19,000

Testing after repairs to spill and overfill prevention equipment, and secondary

containment 40,011 $0 $12,000 $12,000

Elimination of flow restrictors in vent lines for all new tanks and when overfill prevention equipment is replaced n/a n/a n/a n/a

Subtotal

– Release Prevention b n/a $0 $38,000 $38,000

Release Detection

Operability tests for release detection methods (incl. groundwater and vapor monitoring) 165,492 $0 $21,000 $21,000

Groundwater and vapor monitoring for release detection c 25,475 $0 $0 $0

Add SIR/CITLD to regul ation with performance criteria 2,756 $3 $0 $3

Remove release detection deferral for emergency generator tanks d 10,977 $250 $1,700 $2,000

Response to interstitial monitoring alarms e 10,634 $0 $0 $0

Subtotal

– Release Detection b n/a $250 $23,000 $23,0 00

Other

Remove deferral for airport hydrant fuel distribution systems f n/a n/a n/a n/a

Remove deferral for UST systems with field

- constructed tanks f n/a n/a n/a n/a

Require notification of ownership change 8,726 $0 $0 n/a

Closure of lined ta nks that cannot be repaired according to a code of practice g 57 $0 $0 $0

Requirements for demonstrating compatibility with fuels > E10 and > B20 n/a n/a n/a n/a

Cost to owners/operators to read regulation 577,981 $5,500 $5,500 $5,500

Subtotal

– Other b n/a $5,500 $5,500 $5,500

EPAct

- related Provisions

Operator training 2,618 $23 $110 $130

Secondary containment 2,217 $980 $0 $980

Subtotal

– EPAct

- related Provisions b n/a $1,000 $110 $1,100

Subtotal b n/a $6,700 $63,000 $70,000

Additions for new units (beyond those included above) h n/a $5 $0 $5

Total b n/a $6,700 $63,000 $70,000D

- 31 Exhibit D

- 22

Total Annual Compliance Costs Due To The Final UST regulation For UST Systems Affected

Alternative 2 All values in $ thousands a

Description Systems

Affected Capital Cost

(Annualized) O& M Total Cost

a Cost estimates were derived using a seven percent discount rate.

b Totals may not add due to rounding. Costs associated with the removal of deferrals for FCTs an d AHFDSs or groundwater and vapor monitoring for release detection under Alternative 1 are included in the total columns only.

c Costs under the Selected Option include the cost of conducting a site assessment or well verification, weighted by the probab il ity that one of these is

necessary, as a one

- time cost. For Alternative 1, costs include a five

- year phase out of groundwater and vapor monitoring as release detection methods. Capital and O&M costs are aggregated in this line item for Alternative 1 becaus e this requirement was modeled separately from the other requirements. See Appendix D for details. For Alternative 2, costs include only the cost of operability tests for these types of release detection.

d Costs related to removal of deferrals for the re gulation of emergency generator tanks include the cost of removal of deferrals, installation and maintenance of ATG on approximately seven percent of systems, installation and maintenance of SIR on 60 percent of systems, a nd performing operability tests on all EGT systems. See Appendix D for details.

e The cost associated with this requirement would be the incremental cost difference between a tightness test (required in the baseline) and an interstitial integrity test (required by the final UST regulation ). However, because the cost of an interstitial integrity test is less than the cost of a tightness test, we do not assign any cost to this requirement. See Appendix D for additional information.

f Airport hydrant fuel distribution systems include a capita l cost because tanks associated with airport hydrant fuel distribution systems without existing ATGs are assumed to install ATGs to comply with the requirement. Similarly, the DoE UST systems with field

- constructed tanks include a capital

costs because the se tanks are assumed to install ATGs to comply with the requirement. UST systems with field

- constructed tanks without existing ATGs are assumed to conduct annual precision tightness tests to comply with the requirement. Capital and O&M costs are aggreg ated in these line items because various components of the compliance with release detection include both capital and O&M costs. See Appendix A for details.

g Although the closure of lined tanks represents a capital cost, we consider it an operation and mainte nance cost as a modeling convenience. See Appendix D for details.

h As a simplifying assumption, EPA assumes that UST systems enter and exit the universe at a constant annual rate, such that th e total number of UST systems in the universe does not change. We assume that operation and maintenance costs associated with these systems offset each other, as the number of entries equals the number of exits; however, new systems entering the universe will still incur incremental capital costs associated with

certa in requirements (e.g., a new emergency generator tank would need to install a release detection method). For modeling purpose s, we account for these new units in the “Additions for new units.” The costs shown reflect the capital costs associated with new u nits for all but the following requirements: elimination of flow restrictors for new tanks, requirement of secondary containment for new tanks, and requirem ent of under

- dispenser containment for new dispenser systems.

### Appendix E

Access Model Structure and SpecificationsE

- 1



### EPA relies on a cost model designed in Access to compute most of the costs of the regulation . The first section of this appendix explains the general process by which the model works. The subsequent se ction provide s detailed explanations of the mechanics of the model, including the content and purpose of its underlying tables, queries, and macros. The final part of this appendix provides a brief user’s guide to

the model.

E. 1 Introduction

The purpose of this document is to briefly describe the contents and functionality of the underground storage tank (UST) regulatory cost model. This memo randum is organized in five parts. The first four parts explain the contents of the model: 1) tables; 2) queries; 3) forms; 4) reports. These categories are analogous to the categories of objects in Access 2003. The final part briefly outlines model use

.

The model operates by performing a series of queries on various tables to arrive at cost estimates for the regulation s under consideration. The model requires four major steps to calculate the costs associated with each regulation. In order to arrive at its final output, t he model:

1. Determine s which states have regulations that are less stringent than those selected by th e user.

2. Calculate s the incremental frequency imposed by the more stringent requirement upon units in each state. The increment depends on the particular type of regulation considered, but in general

refers to: A ) the additional number of inspections requir ed per year, B ) a binary increment for whether a state requires a regulation, or C ) a variable indicating whether the threshold set in a state is less stringent than that chosen by the user.

3. Calculate s the incremental cost in terms of capital and O&M. The model considers these costs by unit type (facility, tank, or certain special tank types) and aggregates the costs at a state and national regulation. The costs included in the calculation are incremental to the regulations already in place.

4. Present s a ser ies of reports that display costs aggregated in several formats.

E. 2 Identification Of Regulatory Changes

T o track the costs associated with each regulation, we use a three

- tiered identification system.

1. The regulation is the most aggregated level and is tr acked by the RegulationID field. While the regulation level sometimes contains only one regulation, it often has a number of sub

- regulations

within it.

2. The sub

- regulations, which we call sub

- options , are tracked within RegulationID by the OptionID field. I n most cases the RegulationID

- OptionID pair tracks a single regulatory option throughout the model. For example, the pair 5

- 1 refers to sub

- option one of regulation five: spill prevention equipment test after repair.

3. In some cases, the RegulationID

- Option ID pair will not uniquely track a record . In these cases,

the ChoiceID field is used to create a unique identifier for the calculation. For example, sub

option 17

- 3 has a ChoiceID associated with each of its possible user selections. Even if a regulation d oes not need the ChoiceID field, we assign ChoiceID = 1 to it by default for completenessE

- 2



### The three fields described above create a basis for tracking calculations throughout the model and its

tables. Thus, the example from point two above is tracked by th e identifier RegulationID = 5, OptionID = 1, and ChoiceID = 1. We associate this unique identifier to each state to track the effect each regulation will have at the state level. To arrive at national figures, we sum the effects of regulations

across indiv idual states.

E. 3 Tables

The following information is tabulated and used in the model.

 Calculate number of EGTs: computes the number of emergency generator tanks for every model run. We assume that three percent of the UST universe is comprised of EGTs

 go vt_costs_reg12_and_rewrite: costs of reading regulations and applying for SPA (field: general_costs), per tank cost of complying with regulation 12 (field: reg_12_costs), and cost of

re

- writing any regulations (field: cost_of_re

- writing_regs), by state.

 LU _affected_portion: percentages of the universe affected by each regulation. These factors adjust for all possible effects, including personnel turnover, unit conversions, etc. for each regulation. For details on the specific aspects that are adjusted in ea ch regulation, see the Excel input spreadsheet.

 LU_Cost_Types: cost type codes ; used to track one

- time and operations and maintenance costs.

 LU_Cost_Unit_Types: unit types ; can be tank, facilities, or special tank types: emergency generator tanks (EGT), ai rport hydrant systems, field

- constructed tanks, and wastewater

treatment tanks

.

 LU_new_and_closed_units: rates at which units are added or closed in the universe.

 LU_number_of_options_by_reg: number of sub

- options by regulation.

 LU_Reg_Categories: regulati on numbers and labels; used in reports.

 LU_reg_opts_costs: regulation costs categorized by cost type; reflects input data from Excel.

 LU_reg10_dropdown_list: user choices for regulation 10 ( this is no longer relevant to the rule )

.

 LU_reg10_RD_probs: percen t age of tanks affected at each probability option for regulation 10 ( this is no longer relevant to the rule )

.

 LU_Reg11_special_tank_universe: universe of special tanks used only for regulation 11; reflects input data from Excel.

 LU_reg17_dropdown: user c hoices for regulation 17, option 3.

 LU_Reg17_opt2_dropdown: user choices for regulation 17, option 2.

 LU_reg17_opt2_piping: thresholds and universe affected at each threshold for piping repair versus replacement.E

- 3



###  LU_Reg17_opt3_dropdown: other regulation 17 , option 3 dropdown.

 LU_regs_without_duped_options: options per regulat ion excluding redundant options

.

 LU_Selections_Y_N: user choices for Yes/No regulations

.

 LU_Selections_Y_N_Defer: Maintain deferral/Remove deferral user choice table.

 LU_States: list of states

.

 LU_states_cost_types: list of states associated with cost types.

 LU_unit_affected_by_reg: regulations and which unit types they affect.

 LU_Y_N_Defer_singular: choices for regulation 11, option 1.

 Model_Assumptions: model assumptions; only life o f tanks and discount rate are currently used.

 Reg 7 ID conversion for EGT calc: converted regulation identifiers used for the calculation of costs in regulation 11.1.

 Reg_Opts: regulatory options and their types. The preliminary model includes only frequen cy and record

- keeping.

 reg11_EGT_costs: generated by the macro reg11_EGT_costs. This table is updated during every model run to capture the costs from regulations 7.1

- 7.6, 9, and 10.1

- 10.4 attributable to emergency generator tanks. The query set that compu te costs for emergency generator tanks (regulation 11.1) draws on the values from this table as part of its calculation.

 Results_calc_national_unit_cost : used to calculate the cost of each regulation per tank.

 Results_cost_per_unit: table that underlies Co sts_per_unit, the report of the cost of regulations per unit.

 Results_final_table: final output table from which all the reports are generated.

 Results_govt_costs: output that underlies Govt_costs, the report of government costs.

 Results_regulation_option_ table_for_costs: output that underlies Regulation_option_costs, the report of national costs by sub

- option.

 Results_regulation_option_table_for_units: output that underlies Regulation_option_units, the report of national numbers of units affected by each s ub

- option.

 Results_regulation_table: output that underlies Regulation_Costs, the report of national costs by major regulation.

 Results_state_reg_only_table: output that underlies State_regulation_costs, the report of state costs by major regulation.E

- 4



###  Result s_state_reg_option_table_for_costs: output that underlies State_regulation_option_costs, the report of state costs by sub

- option.

 Results_state_reg_option_table_for_units: output that underlies S tate_regulation_option_units, the report of state numbers of units affected by each sub

- option.

 Results_user_inputs: output that underlies User_inputs, the report of the user’s choice of input.

 Selections_User_Defined user input accepted through the user interface.

 State_Baseline_Descriptives: numbers of each unit b y state; includes tanks and facilities; reflects input data directly from Excel.

 state_costs_table: output that contains Boolean values to determine which regulations a state has; used as part of the calculation of government costs.

 State_Frequencies: reco rds of whether a state has a regulation; if the regulation involves some measure of rate (i.e. months between inspections), that is recorded here. A frequency of zero is recorded if a state does not have a regulation in place; reflects input data from Exce l.

 Temp_All_Costs: interim model cost output.

E. 4 Queries

The model contains 31 sets of core queries , each of which performs the calculations for a regulatory option. Each query set is named according to the template myReg_[regulation number]_Opt_[option

n umber]_Choice_[choice number]_step_[step number] ; regulation, option, and choice numbers, along with regulations’ descriptions, can be found in the Reg_Opts table, and step refers to the element of the calculation performed by the query. As outlined above in the “Summary and Purpose” section of this memorandum, these queries:

1. Find the states that have regulations that are less stringent than those entered by the user.

2. Calculate the incremental frequency imposed upon each state by the more stringent requirem ent. The increment depends on the particular type of regulation considered, but in general refers to 1) the additional number of inspections required per year, 2) a binary increment for whether a state requires a regulation, or 3) in the case of regulation s like regulation 17, option 2, an increment

calculated from tables within the model.

3. Solve for the incremental cost in terms of capital and O&M. The model considers these costs by unit type (facility or tank; in the case of regulation 11, the model consid ers only populations of emergency generator tanks, airport hydrant systems, field

- constructed tanks, and wastewater treatment tanks).

Results_final_qry generates Results_final_table, the table of final output, the remaining queries that begin with Results _[...] are use d to generate the reports of model results. Model results used for reports are stored in tables that begin with Results_[...]

. Throughout the model, additional queries refine or adjust results to report them in the manner most useful for EPA

.E

- 5



### W e amended the queries as the model evolved to match EPA’s regulatory development process , but the procedures performed by the queries can be categorized as follows:

 Regulations 1, 7.1

- 7.6 : calculates the number of incremental inspections or tests in states that do not have inspection frequency that at least equals the user’s selection. The model multiplies by the cost per inspection or test and the number of facilities or tanks in the state. Regulation 7.6 also includes the cost of additional equipment rela ted to piping, which requires several extra queries.

 Regulations 2

- 6, 9, 11.2, 11.3, 12

- 14, 16, and 17.1 : multiplies the cost of compliance per unit by the number of units in each state that does not already have the regulation in place. Regulation 17.1 ap plies only to tribal lands.

 Regulations 10.1

- 10.4 : multiplies the per

- unit cost of compliance with the P d 

### /P fa 

### chosen by the user by the number of tanks in states that do not already have P d 

### /P fa 

### at the user’s chosen level ( this is no longer relevant to the rule )

. [Note this was only used for the proposed rule.]

 Regulation 11.1 : The model uses the queries in the macro reg11_EGT_costs to calculate the cost of compliance for the population of emergency generator tanks by applying the cost of compliance with ce rtain regulations only to the EGT population (see Appendix D for a detailed explanation of this calculation).

 Regulation 17.2 : relates the user’s chosen threshold to a factor that determines the proportion of

units in each state that are affected. T he calc ulation multiplies this factor by the cost of compliance per unit and the number of units in states that do not already have the regulation in place. This regulation only applies to Tribal lands.

 Regulation 17.3 : multiplies the cost of compliance per unit by the number of units in each state that does not already have the regulation in place. The user’s choice of “all dispensers” or “motor fuel dispensers only” changes the proportion of units affected. This regulation only applies to

Tribal lands.

T he quer ies for each of the above regulations are grouped in Access and labeled with the associated macros that link them together with similar names. In addition to sets of queries that compute costs as described above, other sets of queries were grouped into mac ros. T he procedures they comprise are described below by the name of the macro that contains them; refer to the model for the specific queries

included in each macro.

 Max : maximizes model window when the model is launched.

 reg11_EGT_costs : calculate the no n

- deferral costs associated with regulation 11.1.

 Results_cost_per_unit_macro : calculates the cost per unit associated with the scenario parameterized by the user. This is done using tanks as the unit and converting all other units to

tanks. 1

1 For example, suppose the universe has 100 tanks and consider two regulations: regulat ion A, which applies to 50% of the universe at a total cost of $500; and regulation B, which applies to 25% of the universe at a cost of $250. Each regulation has a cost of $10 if applied only to the units it affects; if we apply them to the entire univers e, regulation A costs $5, while regulation B costs only $2.50. Thus, using the described methodologies, the cost per unit would be: 1) lower boundE

- 6



### o The lower bou nd assumes the total costs for a regulation are divided acro ss the entire

universe of tanks . This approach does not adjust costs to reflect the fact that each regulation applies only to a subset of tanks , but provides a national estimate of average

costs.

o The hybrid costs evaluates whether a particular regulation applies to over 50 percent of tanks. If this is the case, it divides the total cost of the regulation by the number of units i t actually affects and applies that cost to all of the units in the u niverse. Otherwise, it divides the cost of the regulation across the entire universe and considers that to be the

per

- unit cost attributable to the regulation.

o The upper bound assumes that all tanks incur the per

- unit cost found by divi di ng a regulation’s cost by the number of tanks it affects (not the entire universe).

 Results_final_table_macro: generates table of final output.

 Results_regulation_only_costs_macro : calculate s costs by regulation.

 Results_states_reg_only_macro : calculate s costs by state and regulation.

 Results_regulation_option_table_for_costs_macro : calculate s costs by regulatory sub

- option.

 Results_states_reg_option_for_costs_macro : calculate s costs by state and regulatory sub

option.

 Results_regulation_option_table_for_units_macro : calcula te s units affected by regulatory

sub

- option.

 Results_states_reg_option_for_units_macro : calculate s units affected by state and regulatory

sub

- option.

 Costs_per_unit_macro : calculate s cost of compliance per unit.

 Results_govt_costs_macro : calculates costs a ccrued to state governments.

 Results_user_inputs_macro : tabulates parameters chosen by the user.

 state_costs_table_macro: generates table used to determine which states have which regulations in place.

 Warnings : turns off warnings and other messages that w ould have occurred during the normal course of using Access.

E. 5 Forms

The Main_page form contains the user interface of the model and is launched by default. The remaining

forms either connect to Main_page through the user interface or were previously use d to generate queries.

cost = $5 (A) + $2.50 (B) = $7.50; hybrid cost = $10 (A) + $2.50 = $12.50 (B); and upper bound cost = $10 (A) + $10 (B) =
$20.E

- 7



### E. 6 Reports

Reports display the final cost output in a user

- friendly format. The following reports are available :

1. Regulation_Costs : c osts by regulation.

2. State_regulation_costs : c osts by state and regulation.

3. Regulation_option_costs : c osts by regulatory sub

- option.

4. State_regulation_option_costs : c osts by state and regulatory sub

- option.

5. Regulation_option_units : u nits affected by regulatory sub

- option.

6. State_regulation_option_units : u nits affected by state and regulatory sub

- option.

7. Co sts_per_unit : c ost of compliance per unit.

8. Govt_costs : c osts accrued to state governments.

9. User_inputs : p arameters chosen by the user.

Note that the report of units affected by regulatory sub

- option cannot be aggregated to a total number of

units at the re gulatory or state level: regulatory sub

- options affect different universes in many cases. In addition, in order to avoid possible confusion over the reported output, reports should not be run separately from the model.

E. 7 Using This Model

To use this mod el, do as follows:

1. Open the Access database project file. If presented with a security warning, click Open

.

2. If not immediately presented with the main page, navigate to the Forms heading under Objects.

Double

- click the Main_page form to open the model.

3. Rea d the information in the yellow box at the top of the model window to identify key caveats and current status updates.

4. Select the regulatory options you wish to run using the input buttons.

5. Click the Run Model button to calculate the costs. This may take a moment; you will be notified by a message when the model is done

.

6. Click any report button to display the results in that format. One should print the user input report as a cover sheet to any cost results that so that they may be later cross

- reference d with

costs.

7. A report that contains a summary of the costs will appear. Click the Close button near the upper left area of the screen to return to the previous window.E

- 8



### 8. If you would like to run the model with different parameters, click the Return to Scenar io

Selection Screen button to return to the main model input screen.

9. When you are finished with the model, simply close Access.

E. 8 Parameters Used for Calculating Cost to Final Rule in Access Model

Exhibit E

- 1 presents a summary of the parameters used as input to the Access model designed to obtain the costs presented in the body of this report.E

- 9



### Exhibit E

- 1: Input Used in Access Model for Selected Option

DESCRIPTION Selected Option Alternative 1 Alternative 2 Input Type

Release Prevention

Walkth rough inspections 1 1 3 Months Between Inspections

Overfill prevention equipment inspections 36 12 N/A Months Between Tests

Spill prevention equipment tests 36 12 36 Months Between Tests

Containment sump test s 36 12 N/A Months Between Tests Spill preve ntion equipment inspection after repair 1 1 1 1 For Yes; 0 For No

Overfill prevention equipment test after repair 1 1 1 1 For Yes; 0 For No

Secondary containment test after repair 1 1 1 1 For Yes; 0 For No

Eliminate flow restrictors for all new tanks

an d when overfill prevention equipment is replaced 1 1 0 1 For Yes; 0 For No

Release Detection

Operability test

– ATG 12 12 12 Months Between Tests

Operability test

- interstitial monitoring 12 12 12 Months Between Tests

Operability test

- line leak detection 12 12 12 Months Between Tests

Operability test

– groundwater monitoring 12 12 12 Months Between Tests

Operability test

– vapor monitoring 12 12 12 Months Between Tests

Eliminate vapor and groundwater monitoring

as release detection methods (A lternative 1 only) Add SIR/CITLD to regulations with performance criteria 1 1 1 1 For Yes; 0 For No

Release detection d eferral removed for emergency generator tanks 1 1 1 1 For Yes; 0 For No

Other Requirements for demonstrating compatibility with fuels > E10 and > B20 Deferral removed for airport hydrant fuel distribution systems Deferral removed for UST systems with

field

- constructed tanks

N otification of ownership change 1 1 1 1 For Yes; 0 For No

Closure of irreparable lined tanks that cannot be repaired according to a code of practice 1 1 1 1 For Yes; 0 For No

Response to interstitial monitoring alarms 1 1 1 1 For Yes; 0 For No

Energy Policy Act

- related Provisions

Operator training 1 1 1 1 For Yes; 0 For No Secondary containment

- new & replaced

tanks 1 1 1 1 For Yes; 0 For No Threshold for pipe replacement rather than repair 0.5 0.5 0.5 Piping Replacement Threshold

Under

- dispenser contain ment (UDC) for all new dispensers 1 1 1 1 If Applies T o All UDCs ; 0

Otherwise

Notes:

1. Entries shown in gray denote items not calculated in the Access model.

2. Entries marked "N/A" denote an item not included in this alternative.

### Appendix F

Analysis of Statistical Relationship between

State Regulatory Programs and Confirmed Release DataF

- 1 Confidential / Not for Release | July 16, 2010 

### MEMORANDUM | Ju ly 1 6 , 2010

TO 

### Cho

- Yi Kwan, U.S. EPA

FROM 

### Nadav Tanners, Cynthia Manson, and Robert Paterson, IEc

SUBJECT 

### Documentation of Empirical Investigations of UST Data to Support Regulatory Analysis

EMRAD Work Assignment 3

- 25, Task 5

In 2009, Industrial Economics ( IEc ) examined available data from EPA’s Office of
Underground Storage tanks to determine whether it would suppo rt an empirical analysis of the impact of selected UST regulations on the rate of UST releases using multivariate regression analysis. As part of this effort, IEc used a set of state

- level data that included the number of USTs in each state in a given yea r, the number of releases from USTs in each year, the number of UST inspections conducted in each year, and the presence or absence of regulations designed to prevent leaks. The results of this analysis were presented in an August 2009 memorandum (hereaft er “2009 Memo”). This memorandum
updates the 2009 analysis and discusses the implications of its findings.

Before conducting regression analysis on the data set of state USTs and releases, IEC first adjusted the data to account for a number of data qu ality concerns. A key data concern was the relationship between states with low frequency inspections and states report ing small numbers of confirmed releases. To ensure that the reported UST releases accurately reflected most or all releases taking plac e, EPA developed an index that scored each state based on the frequency of inspections. A detailed description of the inspection frequency index used to remove states suspected of having unreliable release data is provided in the 2009 Memo , attached to th is Appendix

. 1



### States that reported inspection rates less frequent than every five years, and/or inconsistent inspection frequencies over time, were removed from the sample, based on the assumption that release data from those states may be less reliable du e to less frequent third party verification (i.e., state inspection) of system operations. In other words, we assume that owners/operators may be less inclined to report releases or be fully compliant if they are in a state where inspections occur infrequ ently or inconsistently.

1 “Work Assignment 2

- 25, Task 5. Summary of Regression Analysis of UST Regulations by State.” August 3, 2009. INTRODUCTION

UPDATE OF

PREVIOUS

ANALYSISF

- 2 Confidential / Not for Release | Ju ly 1 6 , 2010 

### Using the inspection frequency index, IEc ran regressions on the 2 9 states with the highest inspection frequency scores (index value = 5) and on the 38 states with the two

h ighest scores (index value > 3). IEc ran three cross

- sec tional regressions on each group: one on releases in 2008 (the most recent year for which release data were available), one on releases in 2005 (the year in which the Energy Policy Act was passed), and one on the average number of releases from 2002 to 200 6 (meant to represent the number of releases before and shortly after passage of the 2005 Energy Policy Act).

The results of th e 2009 regressions were limited . Some regulatory variables (periodic interstitial integrity testing and periodic tightness tes ting of spill buckets) had a statistically significant, negative relationship with the number of releases, some variables (secondary containment and periodic tightness testing of dispenser pans) demonstrated a positive relationship with the number of relea ses, and other variables (STP sumps, continuous interstitial monitoring, and periodic tightness testing of sumps) did not demonstrate a consistent relationship with the number of releases. 2



### To update the analysis described in the 2009 Memo, IEc obtained m ore complete data on the presence of UST regulations by state, including whether or not states conducted walk

through inspections at least once per year, as well as data on the number of tanks and

releases in each state in 2009. In addition, IEc made the following changes:

1. Regulatory variables that only applied to a single state

– namely periodic interstitial integrity testing (only applied to California) and periodic tightness testing of dispenser pans (only applied to Delaware) were dropped.

2. In their pla ce, dummy variables for California and Florida were added.

These changes were implemented in order to facilitate interpretation of the results of the regression analysis. If a regulatory variable only applies to a single state, then for purposes of regr ession it essentially serves as a dummy variable that measures the unique impact of that state on the number of releases

– all other variables held constant. Dummy variables for California and Florida were added in order to explicitly measure the

differen ce in the number of releases in each state from the number that would be expected

based on average release rates at other states. Note that the variable representing the requirement of STP sumps was dropped in regressions 1

- 3 due to insufficient variabili ty but included in regressions 4

- 6.

Exhibit s 1

- 5 reproduce the information presented in the 2009 Memo, updated to reflect the latest analysis. Exhibit 1 lists and defines each of the variables used in the regressions, while Exhibit 2 summarizes the six r egressions run. Exhibits 3 and 4 present summary statistics for each of the variables used in the regressions and note which states

2 I Ec also considered examining the rate of releases by state (i.e., the number of releases divided by the number of USTs in each state). However, screening analyses showed that specifying the regressions in this way did not account for the fact that the num ber of USTs varies widely by state. States with mature UST regulatory programs

– specifically California and Florida

– have far more USTs than the average across states with frequent inspections. Accordingly IEc included the number of USTs as an explanat ory variable in the regression analysis.F

- 3 Confidential / Not for Release | July 16, 2010 

### have each of the UST regulations represented by regulatory dummy variables. Exhibit 5 presents the results of the regressi on analysis, noting which regression coefficients are statistically significant at the 0.1, 0.05, and 0.01 levels. As the exhibit shows, even in the updated regression analysis, there is not a consistent, statistically significant relationship

between the regulatory variables and the number of releases by state. For example,

s econdary containment requirements are consistently associated with an above

- average number of releases (though this relationship is not always statistically significant) . In

addition

, STP sump requirements

– when included in the analysis

– are consistently

associated with a below

- average number of releases. Continuous interstitial monitoring and periodic tightness testing of sumps do not appear to have either a positive or a negative correlation with the number of releases by state. Periodic spill bucket testing and walkthrough inspections are consistently associated with below

- average and above

average numbers of releases, respectively, though in neither case is this correlation sig nificant. The only variables to show statistically significant, large and negative correlations with the number of releases are the dummy variables for California and Florida, but even then those relationships were not consistently statistically significa nt across all of the years examined.

Exhibit 6 shows the degree to which the actual number of releases in Florida and
California in 2009, 2005, and from 2002 to 2006 is less than the number of releases that would be expected based on the release rates ob served at other states. In 2005 and 2009, the years in which the dummy variable for California was statistically significant from
zero, California had between 5 6 and 6 3 percent fewer releases than would be expected based on the regression analysis. In 20 02

- 2006, when the period in which the dummy variable for Florida was statistically significant from zero, Florida had between 6 0 and 65 percent fewer releases than would be expected. As will be discussed below, IEc strongly cautions against generalizing t hese results beyond the states included in the analysis. However, these numbers do suggest an upper bound of potential avoided leaks associated with the operation of the mature, relatively stringent programs in both California and

Florida

.F

- 4 Confidential / Not for Release | Ju ly 1 6 , 2010

EXHIBIT 1

. VARIABLES USED IN RE GRESSION ANALYSIS

VARIABLE NAME SOURCE DESCRIPTION

t200 9 , t2005 RawData Number of USTs in each state in year 200 9 and 2005, respectively

r200 9 , r2005 RawData Number of releases from USTs in each state in year 200 9 and 2005, respectiv ely

tavg0206 RawData Average number of USTs in each state from 2002 to 2006

ravg0206 Rawdata Average number of releases from USTs in each state from 2002 to 2006

mapseccon Map Dummy variable: 1 if a state has secondary containment regulation in place by
November 2005

e2stpsump 1 E 2 Dummy variable: 1 if a state has a requirement for STP sumps

e2contmonit 1 E 2 Dummy variable: 1 if a state has continuous interstitial monitoring

e2persump 3 E 2 Dummy variable: 1 if a state has a requirement for periodic tight ness testing of sumps

e2persbtest E 2 Dummy variable: 1 if a state has a requirement for periodic tightness testing of spill
buckets

walkthrough E 2 Dummy variable: 1 if a state has a requirement for periodic (i.e., more than annual) walkthrough checks

d um_ca n/a Dummy variable: 1 if the state is California

dum_fl n/a Dummy variable: 1 if the state is Florida

e2perinteg 1,3 E 2 Dummy variable: 1 if a state has a requirement for periodic interstitial integrity testing

IEc perdptest 3 DPRA Dummy variable: 1 if a state has a requirement for periodic tightness testing of dispenser pans

insfreqind Insp,

RawData Index variable: 0

- 5 scale that grades each state based on the following scale:

1. If the state’s 2008 UST inspection frequency is once every five years or more often : two points.

2. If the state’s 2008 UST inspection frequency is between once every five years and once every ten years: one point.

3. If the state’s average UST inspection frequency from 2003 to 2005 is once every five

years or more often : two points.

4. If the state’s average UST inspection frequency from 2003 to 2005 is between once every five years and once every ten years: two points.

5. If the standard deviation of the state’s UST inspection frequencies in 2003, 2004, 2005, and 2008 is three or less: on e point.

Notes :
1. We assume that a state without secondary containment regulation in November 2005 would also not have regulations for stp sumps, continuous interstitial monitoring, or periodic interstitial integrity testing at that time. Thus, values for e2stpsump, e2contmonit, and e2perinteg are all set to zero for states where the value of mapseccon is zero.

2. On the suggestion of Tim Roberts, we also adjusted the index scores of Minnesota and Washington upward by one point.

3. Due to a lack of variability in these variables, they were not included in the regression analysis. e2stpsump was included in regressions 4

- 6 but not in regressions 1

- 3.F

- 5 Confidential / Not for Release | July 16, 2010

EXHIBIT 2 . SUMMARY OF REGRESS IONS RUN

REGRESSION

# DEPENDENT

VARIABLE INDEPENDENT VARIABLE S RESTRICTIONS

(1) r 2009 t2009, mapseccon, e2contmonit, e2persump,

IEc persbtest, walkthrough, dum_ca, dum_fl insfreqind = 5

(2) r2005 t2005, mapseccon, e2contmonit, e2persump,

IEc persbtest, walkthrough, dum_ca, dum_fl insfreqind = 5

(3) ravg0206 tavg0206, mapseccon, e2contm onit, e2persump,

IEc persbtest, walkthrough, dum_ca, dum_fl insfreqind = 5

(4) r2009 t2009, mapseccon, e2stpsump, e2contmonit, e2persump,

IEc persbtest, walkthrough, dum_ca, dum_fl insfreqind > 3

(5) r2005 t2005, mapseccon, e2stpsump, e2contmonit, e2persum p, IEc persbtest, walkthrough, dum_ca, dum_fl insfreqind > 3

(6) ravg0206 tavg0206, mapseccon, e2stpsump, e2contmonit, e2persump, IEc persbtest, walkthrough, dum_ca, dum_fl insfreqind > 3

EXHIBIT 3 . SUMMARY STATISTICS OF VARIABLES USED IN REGRESSIONS 1

- 3

VARIABLE OBS MEAN STD. DEV. MIN MAX STATES (DUMMIES ONLY )

t2009 2 9 9,757 8,738 1,191 36,899

t2005 2 9 10,219 9,406 1,065 38

, 753

tavg0206 2 9 10,429 9,652 1,111 40

, 14 2

r2009 2 9 95 84 6 330

r2005 2 9 121 123 1 536

ravg0206 2 9 146 169 1 617

mapsecc on 2 9 0.172 0.384 0 1 CA, FL, HI, ME, NH

e2stpsump 1 2 9 0.0690 0.258 0 1 FL, NH

e2contmonit 2 9 0. 103 0. 310 0 1 CA, ME, NH

e2persump 2 9 0.276 0.455 0 1 AL, DE, IA, MS, ND, TN, UT, WY

IEc persbtest 2 9 0. 172 0.3 84 0 1 AL, CA, DE , FL, MS

walkthrough 29 0.27 6 0.455 0 1 CA, CO, NH, NM, SC, TN, UT, WI

dum_ca 29 0.0345 0.186 0 1 CA

dum_fl 2 9 0.0345 0.186 0 1 FL

Note:

1 e2stpsump was excluded from regressions 1

- 3 because in the presence of dum_fl it only applies to NH.F

- 6 Confidential / Not for Release | July 16, 2010 EXHIBIT 4 . SUMMARY STATISTICS OF VARIA BLES USED IN REGRESS IONS 4

- 6

VARIABLE OBS MEAN STD. DEV. MIN MAX STATES (DUMMIES ONLY )

t2009 38 10,389 8,514 1,191 36,899

t2005 38 10,916 9,179 1,065 38

, 753

tavg0206 38 11,108 9,404 1,111 40

, 14 2

r2009 38 106 89 5 330

r2005 38 125 120 1 536

ravg 0206 38 151 165 1 617

mapseccon 38 0.158 0.370 0 1 CA, FL, HI, ME, NH, RI

e2stpsump 38 0.0789 0.273 0 1 FL, NH, RI

e2contmonit 38 0.0 789 0.273 0 1 CA, ME, NH

e2persump 38 0.2 89 0.4 60 0 1 AL, DE, IA, MN, MS, NC, ND, TN, UT, WV, WY

IEc persbtest 38 0. 15 8 0.370 0 1 AL, CA, DE , FL, MS, NC

walkthrough 38 0.237 0.431 0 1 CA, CO, MN, NH, NM, SC, TN, UT, WI

dum_ca 0.0263 0.162 0 1 CA

dum_fl 38 0.0263 0.162 0 1 FLF

- 7 EXHIBIT 5 . REGRESSION RESULTS

REGRESSION

# DEPENDENT

VARIABLE N REGRESSION COEFFICIE NTS

CONST

ANT T200 9 T2005 TAVG0206 MAPSECCON E2STPS

UMP E2CONTM

ONIT E2PERSU

MP IEC PERS

BTEST WALKTH

ROUGH DUM_CA DUM_FL

(1) r2009 29 6.74 0.0104*** 9.82 ^

- 6.3

- 11.9

- 9.83 8.98

- 2 45 ***

- 105

(2) r2005 29

- 30.7 0.0157*** 39.6 * ^

- 8.18 7.45

- 4 6.8 32.4

- 3 41 **

- 1 9 8

(3) ravg0206 29

- 45.5 0.02 00 *** 5 1.7 ** ^

- 6.72 1.49

- 4 8.6

- 0.743

- 137

- 3 75 **

(4) r2008 38 8.64 0.0104*** 9.6

- 31.1** 5.97

- 3.73

- 29.5 13.3

- 244***

- 55.1

(5) r2005 38

- 20.7 0.0141*** 43*

- 36.4* 1.11

- 1.25

- 53.3 34.1

- 293***

- 116

(6) ravg0206 38

- 46.6** 0.0187*** 58.7**

- 26.3* 1.95

- 2.67

- 39.4 4.9

- 114

- 323***

Notes : Regressions used hederoskedasticity

- robust standard errors.

^ Variable was not included in the regression because it only applies to one state. * Coefficient is significantly different from zero at the 0.1 level. ** Coefficient is significantly different from zero at the .05 level. *** Coefficient is significantly different from zero at the .01 level.

EXHIBIT 6 . COMPARISON BETWEEN ACTUAL AND EXPECTED RELEASES IN CALIFORN IA AN D FLORIDA, BASED ON REGRESSION ANALYSIS

YEAR REGRESSION

NUMBER CALIFORNIA FLORIDA

ACTUAL NUMBER

OF RELEASES EXPECTED # OF RELEASES
( DUM_CA = 0) PERCENT

DIFFERENCE ACTUAL NUMBER OF

RELEASES EXPECTED # OF RELEASES
( DUM_FL = 0) P ERCENT

DIFFERENCE

2009 (1) 148 39 0 **

- 6 3 % 169 2 73

- 3 8 %

(4) 392**

- 62 % 2 75

- 2 0 %

2005 (2) 256 597 *

- 57 % 254 45 9

- 4 3 %

(5) 524 **

- 5 6 % 417

- 28 %

2002

- 2006 (3) 617 75 8

- 18 % 206 5 78 * *

- 65 %

(6) 7 05

- 16% 5 36 **

- 6 0 %

Notes : * Coefficient for the dumm y variable is significantly different from zero at the .05 level. ** Coefficient for the dummy variable is significantly different from zero at the .01 level.F

- 8 Confidential / Not for Release | July 16, 2010 STATISTICAL CHALLENG ES



### A number of fundamental problems limit the value of the regre ssion analysis conducted in 2009, and these problems persist with the updated analysis described above. In particular, data availability and reliability seriously limit, if not preclude, measurement of the effectiveness of UST leak prevention regulations in reducing releases in this context.

Estimation and Aggregation Problems 

### As described above, consistent, accurate release data are not available. It is likely that measurement error exists in the recording of confirmed releases across states (the depen dent variable) and that it is related in some systematic way to the regulatory structure of the state or other explanatory variables (as opposed to random reporting error) in the analysis. 3 

### In addition, state inspections vary in timing and focus across

s tates; this, in turn, affects the consistency of third

- party verified compliance and release

information. IEc attempted to account for this by selecting only states with a high frequency of inspections for inclusion in the analysis. Unfortunately, intera ction between inspection frequency and degree and effectiveness of regulation creates sample selection problems ( (i.e., states with higher release rates due to limited regulation may also be states that do not conduct frequent inspections and therefore hav e less reliable data )

. 4



### Therefore, normal regression properties do not hold, and regression analysis may provide unreliable results. As an example, Exhibit 5 shows that regressions 2, 3, 5, and 6 found a positive, statistically significant relationship between secondary containment requirements and the number of releases per year, in contrast to empirical data from

Flori d a which suggest that secondary containment may reduce releases by roughly 50

percent. 5



### Another obstacle to measuring the efficacy of U ST regulations, as shown in Exhibit 4, is that many regulations are present only in a small number of states. In the cross

- sectional analysis described above, IEc dealt with limited variation in the presence of regulations by dropping several regulatory v ariables from the analysis. Given this lack of variation, and the small number of potential observations, it is likely that regulatory indicators will proxy for other relevant characteristics of that state.

This lack of variation can shed some light on the negative, statistically significant relationship between the number of releases per year and STP sumps requirements found in regressions 4

- 6. Since only three states included in the analysis require STP sumps (Florida, New Hampshire, and Rhode Island) , it is likely that the regression analysis actually measured the effect of other characteristic s of one or more of those states, rather

3 As shown in Exhibit 9, release rates in Alabama and Florida spiked in 1993 after release detection requirements were implemented, indicating that the reported number of releases in a particular year might include releases that occurred in prior years.

4 The only reliable approach to identify the relationship between inspection frequency, compliance, and number of releases would require a large

- scale data collection effort. In absence of this, we use inspection f requency as an indicator of reliable data

5 U.S. EPA, Petroleum Releases at Underground Storage Tanks in Florida (Draft). 2005. DISCUSSIONF

- 9 Confidential / Not for Release | July 16, 2010 

### than the regulation itself. Indeed, when regressions 4 and 5 are run without the variable e2stpsump, the coefficient f or the dummy variable for Florida becomes significant at the 0.1 level, suggesting that some unmeasured characteristic of Florida was responsible for the apparent relationship between STP sump requirements and the number of releases
observed in Florida, Ne w Hampshire, and Rhode Island

. Taken together, these issues create serious estimation and inference problems, and prohibit generalizing any results beyond the sample states. In short, the data do not support a national analysis of the effectiveness of sta te regulation.

Appropriate Study Design 

### Ideally, given accurate release data, an analysis of the effectiveness of UST leak prevention regulations would employ observations from a large number of states over a time period the includes years before and after regulations were in place. Such “panel”
data would allow for identification of impacts temporally and spatially. Panel data would
also allow for fixed effects estimation, which controls for any unobserved characteristics of states that might affect rele ase rates (such as soil pH or climate), independent of any effect of regulation. The data used in this analysis superficially appear to be panel data, since they provide information on the number or rate of releases from different states in multiple time periods, along with information on the presence or absence of UST regulations by state. However, accuracy issues aside, for most UST regulations, it is unclear both when the regulation was first promulgated and when the effects of the regulation would be expected to be fully realized. As noted in Exhibit 2 (and explained
in more detail in the 2009 Memorandum), the cross

- sectional analysis dealt with this uncertainty by assuming that states without secondary containment in November 2005 would also lack req uirements for STP sumps, continuous interstitial monitoring, or periodic interstitial integrity testing. Aggregation of regulatory measures in this fashion further exacerbates identification problems across states in the cross

- sectional analysis

described above.

Exhibit 7 summarize s some of the statistical challenges described above, explaining why the data used in this analysis limit its ability to measure the effectiveness of UST leak prevention regulations. Because of these limitations, IEc cautions ag ainst drawing strong conclusions from the results of the regression analysis described in this appendix.

EXHIBIT 7. STATISTIC AL CHALLENGES TO ANA LYZING THE EFFECTIVE NESS OF RELEASE

- PREVENTION UST

REGULATIONS

STATISTICAL

CONSIDERATION WHY IMPORTANT? REQUI REMENT ACTUAL DATA

Panel Data Panel Data allows for

fixed effects estimation,
which controls for
unobserved variation
between states. 1. Data must distinguish between periods before regulation and periods after regulation.

2. Sufficient variation in 1. Difficult to determine before and after periods for most regulations

2. Too few states have many regulations. Because ofF

- 10 Confidential / Not for Release | July 16, 2010 EXHIBIT 7. STATISTIC AL CHALLENGES TO ANA LYZING THE EFFECTIVE NESS OF RELEASE

- PREVENTION UST

REGULATIONS

STATISTICAL

CONSIDERATION WHY IMPORTANT? REQUI REMENT ACTUAL DATA

regulatory status must be present, both
between states and between time periods limited variation in regulatory status among states, some regulatory variables may serve as a proxy for other state
characteristics that
affect release rates.

Random Sampling In the absence of panel

data, random sampling ensures that the sample

is not a biased selection of the general population The sampling process must
not create bias By selecting states based on the frequency of inspections, the analysis conducted a convenience sample, which likely excludes the worst

performing states.

Exogeneity Exogeneity ensures that

any correlation between
release rates and UST

reg ulations actually
reflects a causal relationship. In the absence of exogeneity, traditional regression analysis produces invalid
results. The presence or absence of UST regulations must not be related to pre

existing release rates. Some states likely impl ement regulations in response to

pre

- existing release rates.

Measurement

Error If there is measurement

error in the dependent variable being analyzed,

then the results of regression analysis will
not reflect the actual relationship between the dependent v ariable and the explanatory variable. Variables must accurately
measure the information they are meant to
represent. Reported releases in a given year may not represent
releases that occurred in that year. Trends in release data suggest that implementing release detection requirements leads
to detection of releases from previous years.

ADDITIONAL ANALYSIS 

### Recognizing the limitation s to the regression analysis described above, IE c employed a different approach to estimating the potential impact of proposed UST leak prevention regulations. Having identified California and Florida as two states with more mature regulatory systems in place, IEc compared the release rates in these two states from 2005 to 2009 to release rates in states without any of the propo sed UST regulations during that time period. IEc first identified 12 states with no UST regulations and with inspection frequency index scores of 4 or 5

, and then used t

- tests to compare release rates between the two groups of states.

The results of thi s comparison are presented in Exhibit 8 . The analysis found that release rates in California and Florida were significantly lower than release rates at states with no regulations in 2005 (p = 0.051) and in 2009 (p = 0.041), but not in 2006, 2007, or 2008.F

- 11 Confidential / Not for Release | July 16, 2010 

### In 2006 and 2007, reported releases in California and Florida actually occurred at higher rates than in states without UST regulations . Across all five years, California and Florida had an average release rate lower than the other group of states, but t his difference was not statistically significant (p = 0.171). The results in Exhibit 8 suggest that there is no consistent, statistically significant difference between release rates in California and

Florida and release rates in the twelve states with a high frequency of inspections and no other UST regulations.

EXHIBIT 8. COMPARISON OF RELEAS E RATES AT CALIFORNI A AND FLORIDA TO REL EASE RATES AT

STATES WITH NO UST R EGULATIONS

2005 2006 2007 2008 2009 AVERAGE

Mean Release Rates

C alifornia and
Fl orida 0.74% 1.22% 0.81% 0.73% 0.53% 0.81%

States with no UST Regulations 1.05% 0.98% 0.81% 0.97% 1.17% 1.00%

T

- test p value 0.051 n/a n/a 0.156 0.041 0.171

Notes:

One

- tailed t

- tests were performed on release rates in 2005, 2006, 2009, and the average r ate across all five years. T

- tests were not performed on release rates in 2006 and 2007 because mean release rates in California and Florida were equal to or higher than release rates in states with no UST regulations.

IMPLICATIONS



### As discussed in this a ppendix, quantitative analysis of annual UST releases by state was unable to find a consistent measure of the potential impact of leak prevention regulations. Due to a number of data limitations, including limited variation in the presence of regulations across states and time periods, IEC was not able to use the preferred method of fixed effects estimation using panel data. In the absence of fixed effects estimation, the analysis cannot reliably draw conclusions about the impacts of regulations on
releas es , independent of any unmeasured characteristics of states that could be affecting

the number of releases in each state

. In other words, in addition to data quality issues
discussed above, the small number of states with specific UST release prevention

r egulations prevents identification of robust, relationships between individual regulations and the number of releases per year.

However, through cross

- sectional analysis, IEC was able to estimate that release rates in

California and Florida

– two states wi th mature UST regulation regimes

– were about 5 5

- 65 percent less than one would expect based on release rates at other states during theF

- 12 Confidential / Not for Release | July 16, 2010 

### time period examined

. 6 

### This difference could serve as an upper bound for the potential of leak prevention regulations to reduce the rate of UST releases.

Comparing release rates from 2005 to 2009 in California and Florida to release rates in states without any UST regulations, IEC did not find a consistent, statistically significant difference. However, by looking only a t states with a high frequency of inspections, this comparison likely did not capture the full range of release rates at states without effective UST regulatory systems. The fact that release rates at states with frequent inspections and no other UST regu lations was not significantly greater than release rates at California and Florida could even suggest that the inspections themselves are effective at limiting

releases (frequent inspections are, in fact, a key component of the new regulations under

consid eration)

. This conclusion is supported by the trend shown in Exhibit 8, where after an initial spike in detected releases upon implementing inspection requirements, release rates in California, Florida, and Alabama show gradual, steady declines. Additio nally, a s noted by the coefficients for t2009, t2005, and tavg0206 in Exhibit 5, the average release rate

for the states examined in the cross

- sectional regression analysis

– all of which have frequent inspections

– appears to be decreasing over time, from between 1.87 and 2.0 percent in 2002

- 2006 to 1.04 percent in 2009.

6 IEC further tested these results with a supplementary analysis using binary variables for states that share regulations with C alifornia and Florida. That analysis also found that California and Florida had fewer releases than other states, even those that also had significantly fewer releases than the average state.F

- 13

EXHIBIT 9 . RELEASE RATES IN C ALIFORNIA, ALABAMA, AND FLORIDA OVER TIM E

### Appendix G

Expert Consultation: Selection and Data Collection MethodologyG

- 1



### Industrial Economics, Inc. (IEc) undertook an expert consultation process to obtain estimates of the likely change in confirmed releases as a result of elements of the final regu lation . This effort was designed to obtain data not available in literature or broad empirical studies, and relied on four independent estimates based on expert judgment.

While this effort is not intended to be a forma l expert elicitation, IEc and EPA s ought to ensure that the process of identifying and consulting experts was transparent and consistent in order to obtain results that would be as robust as possible.

This appendix documents the expert consultation process, including the identification of a ppropriate experts, the materials distributed to the participating experts, and documentation of the decision to exclude the findings from one of the five experts because his findings could not be internally validated or reconciled with EPA’s regulatory ba seline.



### G .1 Identification and Selection o f Experts

The four experts relied upo n in this analysis of benefits f or the final regulation also provided responses for the analysis of benefits of the proposed rule. This section, therefore, describes the initia l process of identifying and selecting the experts for the analysis of the proposed rule

. To ensure that experts identified were independent of EPA and represented a range of experiences and geographic regions, IEc followed a protocol similar to that used for identifying peer reviewers. Specifically, the process involved:

 Development of a master list of potential experts . IEc developed a list of potential experts based on research of literature, review of published conference proceedings, consultation wi th engineering experts at other firms , and professional experience and contacts. In addition, EPA identified experts for consideration; these were included in the list for review but not prioritized. In total, IEc compiled a list of thirteen experts.

 Scr eening review of specific experts. IEc reviewed publicly available information to prioritize experts that had multi

- state regulatory experience, state

- level knowledge of regulation implementation, and engineering and inspection expertise. This initial re view also flagged potential conflicts of interest (e.g., significant work for regulated industry groups) and geographic location to ensure distribution.

 Phone interview and conflict of interest ( COI ) checks

. Based on the screening review, IEc

contacted seven experts to identify whether they were available, interested in consulting on the project, and operating without any specific conflicts of interest (COI) . Ultimately five experts were available and provided input. Of the remaining two experts, one was unavailable and one

had near

- term work with a company that, while not a specific conflict of interest, would violate a

contract provision under which IEc operates. Following consultation with the five selected experts associated with the proposed rule, IEc exclude d the responses from one of the five experts because his responses and universe assumptions could not be internally validated or reconciled with EPA’s regulatory baseline (see section G.3) . As a result, the remaining four experts provided respo nses for the analysis of benefits for this final regulation

.

Exhibit G

- 1 provides a summary of the four experts selected as a result of the process described above.G

- 2



### Exhibit G

- 1: Summary of Experts Selected

Name Affiliation Potential Conflict of

Interest s Rationale for Selecting Expert

John Kneece Former UST

Branch Chief with

South Carolina’s Department of

Health and

Environmental

Control Operator training Worked extensively on UST prevention issues

while in SC. Was member of the National Work

Grou p on Leak Detection Evaluations. Strong state regulatory experience in South Carolina; Familiarity with specific rule provisions.

Available.

Marcel

Moreau Marcel Moreau

Associates Operator training Conducts training and research and has been an expert witnes s. Strong state regulatory experience in Vermont. Familiarity with specific rule provisions. Experience with EPA/state regulatory requirements, interface. Available.

Marshall

Mott

- Smith Mott

- Smith

Consulting Group Represents Steel Tank

Institute, as well as other equipment

manufacturers Head of the UST program in Florida for 20 years; also active in the national tanks program. Also worked with the National Institute for Storage Tank Management. Involved in development of Florida autopsy data. Noted exp erience with industry, but no current conflict or work relevant to specific requirements under proposed regulations. Other experience exceptional. Currently independent consultant on UST issues. Steve Purpora Purpora

Engineering LLC Operator training a nd

possibly O&M requirements Conducts training and is a consultant. Insurance experience helpful; Midwestern location provides geographic variation. Multi

- state experience in leak autopsy.G

- 3



### G .2 Charge a nd Follow

- Up Questions

To ensure consistent input from each of the experts, IEc provided written charge questions, and a blank, formatted spreadsheet to complete as a final product. Exhibits G

- 2 and G

- 3 provide the initial materials given to each expert between December 2012 and March 2013

. During the summer of 2013, at the request of EPA, IEc provided additional charge questions and blank response sheets. These materials are

included in Exhibit s G

- 4 and G

- 5

. Responses from the experts are provided in Appendix H.

Note that in addition to the standard c harge questions, IEc had a t least one follow

- up call with each expert to consider any areas of significant internal discrepancy and any areas where initial responses were not

clear. In particular, IEc asked each expert to restate clearly the universe of f acilities and releases they considered when estimating benefits under each regulatory requirement , to be sure that their responses could be accurately applied to only the 5,674 releases confirmed by OUST in its FY 2012 annual report. The unique clarificati ons from each of these calls are incorporated into the exhibits in Appendix H.



### Exhibit G

- 2: Charge f

or Experts, Submitted December 2012 a nd March 2013

CHARGE FOR EXPERTS F OR OUST RULEMAKING

INTRODUCTION

Industrial Economics, Inc. (IEc) is assisting EPA’s Office of Underground Storage Tanks’ (OUST) effort to

evaluate the benefits of several regulatory revisions that are currently under consideration. The revisions are being
undertaken in two parallel efforts:

1) EPA is considering implementing certain UST provisions outlined under Subtitle B of Title XV of the

Energy Policy Act of 2005

– specifically related to operator training requirements and additional

secondary containment requirements

– in Indian Country and in states that do not have State Program

Ap proval (SPA); and

2) EPA is also considering targeted changes to the existing UST regulations at 40 CFR 280 to address

release prevention, release detection, deferrals, and other items.

EPA is evaluating the benefits and costs associated with each proposed re gulatory requirement and with the full set

of proposed changes. EPA first examined options for implementing these changes in 2009; the Agency is now
considering revisions to the scenarios identified at that time.

The purpose of this charge is to update and revise the 2009 and 2010 independent professional assessments of the

potential impact of proposed changes on the incidence and severity of UST releases.G

- 4

PROFILE OF CURRENT U ST RELEASES

According to the Office of Underground Storage Tanks (OUST)’s 2008 End of Year Activity Report, 7,364

confirmed releases were identified in 2008 in th e U.S. and U.S. territories [ 5,998 releases in FY2011 ]. Data from

23 states indicate that releases from UST systems range in number and potential severity depending on what part
of the system they come from. Releases from piping and dispenser pans appear to be the most frequent. The table

below summarizes the distribution of releases by source, extent, and soil/water impact, according to the data

(which are based on releases discovered between September 1999 and February 2003).

DISTRIBUTION OF UST RELEASE S

LOCAL EXTENT LARGE EXTENT

TOTAL

SOURCE SOIL WATER SOIL WATER

Piping 12.6% 6.8% 1.4% 10.2% 31.0%

Dispenser 22.9% 3.1% 1.7% 4.3% 32.0%

Tank 4.9% 2.8% 2.8% 5.5% 16.0%

STP Area 2.0% 1.2% 0.0% 0.8% 4.0%

Delivery Problems 9.5% 2.7% 0.3% 3.6% 16.0%

Tot al 51.9% 16.7% 6.2% 24.3% 99.0% 1

Note : 1. One percent of releases came from other sources, for which data on extent and soil/water impact were not available.

INFORMATION REQUEST

Because the proposed regulatory changes address both release prevention and release detection, we are seeking
your estimates of the national

- level impacts of the proposed regulatory requirements on both the incidence and

severity of confirmed UST releases. In addition, we are interested in how sensitive the expected impacts o f each

requirement are to the regulatory specifications and if any interaction effects might exist between any of the
proposed requirements. Specifically, we would like you to:

1. Review and, if necessary, update your analysis of the 2010 proposed regulatory requirements.

Specifically, this is an opportunity to revise assumptions or incorporate new information you have

received since 2010 that would lead you to revise your original answers. The charge is that you review

and, if necessary, revise your prior estimates to provide:

 An updated estimate of the number (or percentage) of annual confirmed releases that would be avoided by

each of the regulatory changes identified;

 An updated estimate of the change in the severity of an average release that would res ult from each

regulatory change (this could be expressed as a change in the average release size, a change in the average

spill duration, or a change in the percentage of releases that reach groundwater);

 Updates, as necessary, to:

o Document the sensitivity of your estimates to the specific components of each regulatory change

(i.e., how much impacts would change if the frequency of inspection requirements changes);

o Document interactions between proposed requirements, such as whether any requirements are

re dundant with each other or whether the efficacy of a requirement depends on the presence of

another requirement; andG

- 5 o Identify the change in the incidence and severity of releases resulting from the full set of

proposed requirements when considered toge ther. This ―total‖ estimate would account for any

interactions and redundancies noted for individual regulatory changes.

o Finally, for Operator Training and Secondary Containment (under the Energy Policy Act

- Related

Requirements section), we would also li ke your estimate of the impact of the regulations

specifically on the approximately 2,500 tanks on Tribal Lands.

To complete this effort, we will provide you with your original responses in Excel format. We ask that you focus

your thinking on the specif ic regulatory changes identified. If you do not have any changes to your previous
estimate, then you may just notify us that your answers remain unchanged. If you have changes, we anticipate that

the majority of the new information you provide will be in cluded in this spreadsheet in new columns, but we invite

you also to provide observations in other formats (e.g., Word).

Note, consistent with the original task, we seek your estimate of the national

- level impact of these regulatory

changes. This should reflect your institutional knowledge of current practice by industry, and, if relevant, current

state regulations. For example, if you know that half of all tanks in the U.S. already comply with a requirement,
then your estimate of the national impact of that regulatory change should reflect the assumption that minimal

change would occur at these facilities. However, if you do NOT have information about baseline practices or state

regulations, you may still provide answers, by describing clearly impacts on whatever portion of the population
you know (e.g., certain types of systems that do not comply with a requirement in the baseline). Please be clear

about any responses that apply only to certain system or regulatory settings, and we will verify with yo u our interpretation and application of your values as appropriate to the universe of facilities and technologies that we

have.

Note also that we expect your estimates to reflect your existing institutional knowledge and information that is

readily availab le to you; we do not anticipate that your response to this charge will require significant field or
primary research. Also, while you may contact sources to collect or confirm new data, please do not discuss the

project or methodology. We have framed th is charge as an independent expert opinion and not a collaborative

effort.

* Note that Task 1 was completed as of February 2013. *

2. Develop estimates of the impacts of new or revised regulatory requirements developed by EPA in

2012/2013, and document key assumptions.

EPA is in the process of revising the standards that were proposed after your prior effort. We seek input on the

impact of these new revisions.

Consistent with the methods and information outlined in Item 1, we expect to provide you with sp ecific new
regulatory options, and ask that you provide:

 For each regulatory requirement (or bundle of requirements):

o An estimate of the percentage of annual confirmed releases, or the number of annual confirmed

releases, that would be avoided by each of the regulatory changes identified (column [3] of

response spreadsheet) ;G

- 6 o A n estimate of the change in the severity of an average release that would result from each

regulatory change (this could be expressed as a change in the average release size, or a change in

the percentage of releases that reach groundwater) (columns [4] and [5] of response

spreadsheet) ;

o Documentation of the sensitivity of your estimates to the specific components of each regulatory

change (i.e., how much impacts would change if the frequency of inspection requirements

changes) (column [7] of response spreadsheet) ;

o Documentation of interactions between proposed requirements, such as whether any

requirements are redundant with each other or whether the efficacy of a requirement depend s on the presence of another requirement (column [8] of response spreadsheet) ; and

 Estimates of the change in the incidence and severity of releases resulting from the full set of proposed

requirements when considered together. This ―total‖ estimate woul d account for any interactions and

redundancies noted for individual regulatory requirements. (Row 28 of response spreadsheet.)

 For Operator Training and Secondary Containment (under the Energy Policy Act

- Related Requirements

section), we would also like your estimate of the impact of the regulations specifically on the

approximately 2,500 tanks on Tribal Lands. (Where noted in column [6] of response spreadsheet.)

 Finally, please describe key assumptions you are making that drive your answer (e.g., assump tions about

facility size or personnel) or any key uncertainties that would affect your answer. In addition, note any

other regulatory requirements under consideration (not as part of this proposed rule) that might interact

with these changes. (column [9] of response spreadsheet)

Note that, consistent with the original task, we seek your estimate of either:

 Option 1 (preferred): The national

- level impact of these regulatory changes. This should reflect

your institutional knowledge of current practice by in dustry, and, if relevant, current state

regulations. For example, if you know that half of all tanks in the U.S. already comply with a

requirement, then your estimate of the national impact of that regulatory change should reflect

the assumption that mini mal change would occur at these facilities.

OR

 Option 2: The impact on a particular universe that you specify. This option may be relevant if

you do NOT have information about baseline practices or state regulations. Under this option,

you should provide answers by describing clearly the impacts on whatever portion of the

population you know (e.g., certain types of systems that do not comply with a requirement in the

baseline). Please be clear about any responses that apply only to certain system or regu latory

settings, and we will verify with you our interpretation and application of your values as

appropriate to the universe of facilities and technologies that we have.

For budgeting purposes, we expect that EPA will have three requests about specific re gulatory requirements

following your general updates.

Note also that we expect your estimates to reflect your existing institutional knowledge and information that is

readily available to you; we do not anticipate that your response to this charge will r equire significant field or

primary research. Also, while you may contact sources to collect or confirm new data, please do not discuss the
project or methodology. We have framed this charge as an independent expert opinion and not a collaborative

effort.G

- 7



### Exhibit G

- 3: Table for Expert Responses Proposed Regulatory

Requirement Description of Proposed Regulatory Requirement Incidence

Measure Severity Measures

(choose at least one) Sensitivity Question: Would results differ if the following change were made? Sensitivi ty Answer Interaction - is this requirement dependent on or redundant to other requirements? Comments Percent Reduction in Annual Releases (or number of releases avoided) Reduction In The Percentage Of Releases That Reach Groundwater Percent Reduction In The Average Quantity Released

Column [1] [2] [3] [4] [5] [6] [7] [8] [9] Release Prevention Walkthrough

inspections 30

- day inspections with the following minimum

components: • Spill buckets

– open and visual ly check for any damage; remove any liquid or debris; and check each fill cap to make sure it is securely on the fill pipe (or check before each delivery if deliveries less frequent than 30 days) • Release Detection Systems

– make sure system is on and ope rating with no alarm conditions or other unusual operating conditions present; ensure records of release detection testing are reviewed monthly and current (1) Quarterly inspections (2) Annual inspections

Overfill prevention equipment inspection Onc e every three years:

Require inspection to ensure overfill equipment is set to activate at the appropriate level in the tank and the equipment will activate when the regulated substance reaches that height. The inspection must be conducted according to a code of practice, manufacturer’s instructions or according to the implementing agency. Annual overfill prevention equipment inspectionG

- 8 Proposed Regulatory Requirement Description of Proposed Regulatory Requirement Incidence

Measure Severity Measures

(choose at least one) Sensitivity Question: Would results differ if the following change were made? Sensitivi ty Answer Interaction - is this requirement dependent on or redundant to other requirements? Comments Percent Reduction in Annual Releases (or number of releases avoided) Reduction In The Percentage Of Releases That Reach Groundwater Percent Reduction In The Average Quantity Released

Column [1] [2] [3] [4] [5] [6] [7] [8] [9]

Spill prevention equipment testing Once every three years:

Require testing to ensure spill prevention equipment is liquid tight by performing a vacuum, pressure or liquid test according to manufacturer's requirement or code of practice (does not apply to

double

- walled spill buckets with interstitial monitoring) (1) Annual spill prevention equipment testing (2) Tes ting of new spill prevention equipment within 3 years of

installation and then annually afterwards

Containment sump testing Once every three years:

For containment sumps used for piping interstitial monitoring, require testing using vacuum, pressure

or liquid methods (except for double

- walled containment sumps with interstitial monitoring) Annual containment sump testing

Repairs Within 30 days of a repair:

• Require spill prevention equipment testing after repair to spill prevention equipment

• Require overfill prevention equipment inspection after repair to overfill prevention equipment • Require secondary containment testing after repair to the secondary containment area for tanks, sumps, or piping

Overfill preventio n equipment • Eliminate flow restrictors as an overfill

prevention option for new tanks (and when overfill prevention equipment is replaced)G

- 9 Proposed Regulatory Requirement Description of Proposed Regulatory Requirement Incidence

Measure Severity Measures

(choose at least one) Sensitivity Question: Would results differ if the following change were made? Sensitivi ty Answer Interaction - is this requirement dependent on or redundant to other requirements? Comments Percent Reduction in Annual Releases (or number of releases avoided) Reduction In The Percentage Of Releases That Reach Groundwater Percent Reduction In The Average Quantity Released

Column [1] [2] [3] [4] [5] [6] [7] [8] [9]

Replacement of

lined tanks that

cannot be repaired according to a code of practice Require replacement of lined tanks that cannot be

repaired according to a code of practice

Release Detection O&M for release

detection equipment Require annual operation and maintenance tests

for release detection equipment and containment

sumps: • ATG

- test alarm; veri fy system configuration; and test battery back

- up • Vacuum pumps and pressure gauges

- ensure communication with sensors and controller

• Probes and sensors

- inspect for residual buildup, ensure floats move freely; ensure shaft is not damaged; ensure cabl es are free of kinks, bends, and breaks; test communication with controller

• Line leak detector

- simulate leak to determine capability to detect a leak • Vapor monitoring

- calibrate handheld electronic devices; test operability of sensors

• Groundwater monitoring

- check handheld bailers for functionality; test operability of sensors • Check tank gauge sticks • Containment sumps (tank, dispenser, etc.)

– check for any damage, leaks to the containment area, or releases to the environment; and remove any l iquid or debris

Add SIR and CITLDS usage Require SIR and CITLDS users to submit

quantitative results only (with leak rate)G

- 10 Proposed Regulatory Requirement Description of Proposed Regulatory Requirement Incidence

Measure Severity Measures

(choose at least one) Sensitivity Question: Would results differ if the following change were made? Sensitivi ty Answer Interaction - is this requirement dependent on or redundant to other requirements? Comments Percent Reduction in Annual Releases (or number of releases avoided) Reduction In The Percentage Of Releases That Reach Groundwater Percent Reduction In The Average Quantity Released

Column [1] [2] [3] [4] [5] [6] [7] [8] [9]

Response to

interstitial monitoring

alarms Require secondary containment testing in response

to an interstitial monit oring alarm (if warranted after initial investigation)

Groundwater monitoring/vapor monitoring Require owners/operators that use this method to

have a site assessment in accordance with 280.43(e) or 280.43(f) and maintain the assessment as long as they use GW or VP, respectively, as

their release detection method

Other Deferrals Remove release detection deferral for emergency generator USTs, assuming they would now be required to meet existing regulations (note: estimate of roughly 20,000 ta nks nationally)

Notification Require notification to implementing agency by

owner/operator of ownership change

Require one

- time notification for existing FCT and AHS systems

Compatibility O/os storing regulated substances >10% etha nol or

>20% biodiesel or another substance identified by the implementing agency must: i. demonstrate compatibility through one of the following methods: (1) UL listing; (2) Manufacturer certification; (3) Another method determined by the implementing age ncy; or ii. use an UST system that has secondary containment with interstitial monitoringG

- 11 Proposed Regulatory Requirement Description of Proposed Regulatory Requirement Incidence

Measure Severity Measures

(choose at least one) Sensitivity Question: Would results differ if the following change were made? Sensitivi ty Answer Interaction - is this requirement dependent on or redundant to other requirements? Comments Percent Reduction in Annual Releases (or number of releases avoided) Reduction In The Percentage Of Releases That Reach Groundwater Percent Reduction In The Average Quantity Released

Column [1] [2] [3] [4] [5] [6] [7] [8] [9]

Energy Policy Act - Related Requirements Operator

Training Institute Operator Training as Follows:

• One

- time training for Class A operator (technical and regula tory) or opt

- out test within 30 days of assuming duties

• One

- time training for Class B operator (technical) or opt

- out test within 30 days of assuming duties.

• One

- time training for Class C operator (limited technical) prior to assuming duties.

• Re

- trai ning for Class A and B operators if the facility is determined to be out of compliance. Retraining within 30 days of documented non

compliance. Effects specific to Indian country?

Secondary

Containment Install secondary containment on piping upon

r eplacement . Replacement defined as: Removal of 50 percent or more of piping, excluding connectors, connected to a single underground tank. For underground storage tanks with multiple piping runs, the replace definition applies independently to each pipin g run. Effects specific to Indian country?

Require secondary containment and interstitial monitoring on all tanks and piping installed or replaced after effective date of rule Effects specific to Indian country?

Require under

- dispenser cont ainment on all new dispenser systems Effects specific to Indian country?

TOTAL IMPACTS OF ALL REQUIREMENTS TOGETHER (considering any overlaps/interactions you have identified in column [I]):G

- 12



### Exhibit G

- 4: Continuation o f Charge f or Experts

CONTINUATION OF CHARGE FOR EXPERTS F OR OUST RULEMAKING

Industrial Economics, Inc. (IEc) is assisting EPA’s Office of Underground Storage Tanks’ (OUST’s) effort to evaluate the benefits of several regulatory revisions that are currently under considerati on. This work assignment follows up on previous effort to evaluate the benefits of potential regulatory revisions.

ALTERNATIVE REGULATO RY REQUIREMENTS In addition to the regulatory requirements considered in the previous tasks, EPA is now considering two alternative requirements. As previously, for each of these alternatives, we ask that you provide:

o An estimate of the percentage of annual confirmed releases that would be avoided by each of the

regulatory changes identified;

o An estimate of the change in the severity of an average release that would result from each

regulatory change (this could be expressed as a change in the average release size, or a change in

the percentage of releases that reach groundwater);

o Documentation of interactions between pro posed requirements (considering the full set of

requirements provided for the previous task), such as whether any requirements are redundant

with each other or whether the efficacy of a requirement depends on the presence of another

requirement; and

o Any ot her notes to help clarify your assumptions about the requirements and associated

reductions in releases or groundwater contamination.

The following page includes a table, similar to the Excel version used for earlier tasks, where you may enter your

respons es.

The first of these alternative requirements considers the elimination of groundwater and vapor monitoring as

release detection methods for UST systems. These methods will be phased out over five years and are assumed to

be replaced with SIR.

The secon d alternative requirement considers documentation of compatibility with fuels >E10 and >B20. Under

this alternative, documentation requirements remain unchanged from the option presented previously. However,

owners/operators are also required to maintain e quipment records for all new or replaced equipment, for the life of
that equipment.

Following receipt of your responses, we will ask you to review our calculations using your numbers. As was done

previously, we will send a summary table of your responses, any adjustments we made, a description of the subset
of tanks to which we applied your estimates, and the resulting reductions in release frequency and severity. In

addition, we may follow up on previously submitted responses for clarification purposes.G

- 13



### Exhibit G

- 5: Table for Expert Responses

– C harge C ontinuation

Proposed Regulatory Requirement Description of Proposed Regulatory Requirement Incidence Measure Severity Measures (choose at least one)

Interaction

- is this requirement dependent on or redundant to

other requirements? Comments

Percent Reduction

in Annual Releases (or number of releases avoided) Reduction In The

Percentage Of

Releases That

Reach

Groundwater Percent

Reduction In The Average Quantity

Released

Groundwater monitoring /vapor monitoring Require owners/operators that use

groundwater and vapor monitoring

for release detection to phase

- out use of these methods over five years.

These methods are assumed to be replaced with SIR.

Compatibility O/os storing regulated su bstances

>10% ethanol or >20% biodiesel or another substance identified by the implementing agency must: i. demonstrate compatibility through one of the following methods: (1) UL listing; (2) Manufacturer certification; (3) Another method determined by

th e implementing agency; or ii. use an UST system that has secondary containment with interstitial monitoring. In addition,

o/os must maintain equipment records for the life of all new and replaced equipment.G

- 14



### G.3 Exclusion o f Responses f rom One Exp ert

While EPA obtained input from five experts in assessing the impacts of the proposed rule

, we chose to exclude the responses of one expert, for the following reasons:

 Inconsistent internal logic: IEc requested from each respondent an estimate of the tot al effects of
the proposed rule in addition to estimates of the effects of individual parts to the proposed rule.
The analysis then compared the effects of simultaneously applying all individual regulations with
the separate estimate of the overall effect of the potential rule . This was performed to verify the experts’ logic and identify areas of overlap or synergy among the regulatory requirements

. The
results provided b y this expert , when applying his unit changes to the universe of confirmed
releases (se e bullet below on universe inconsistencies) indicated an avoided cost of roughly $132

million when considering rule elements separately. However, his cumulative estimate of impacts

led to an estimate of over $517 million ; representing a difference of o ver $350 million, and a

factor of three . Moreover, subsequent discussions with the expert about the source of this
discrepancy did not resolve it ( the expert felt that cumulative impacts should reflect significant
overlap in individual estimates, suggesting that he believed that they should be lower). However, he agreed with IEc’s method and example calculations for interpreting his results

. 1 

### We ha ve

identified some of the factors that may contribute to this discrepancy . F or example, the expert

believes th at high

- quality operator training is a necessary condition for effective regulations, and it
is possible that this effect is captured in his statement of total effect , but is not one of the
regulatory requirements measured, except in Indian country. Howev er, it is not clear how to

correct for this.

 Alternate universe of releases: The expert estimates that over half of all releases are not
included in the confirmed releases reported by states, and was unwilling to state that his estimated

reductions in rel eases could be scaled to the universe of confirmed releases specified in the charge,
due to the complexity of the relationship between release and reporting. Specifically, he believes
confirmed release figures reported by EPA fail to reflect releases that are detected, but are too
small to report; and releases that go undetected. Further, he believes that some releases that are
counted as single releases are, in fact, the product of multiple smaller releases. Because of this

structure of release universe, a relatively small proportional reduction in total releases can lead to a
relatively large number of avoided releases relative to the universe of confirmed releases. The
expert was not able to estimate the total number of undetected releases or translate t he avoidance
of undetected or unconfirmed releases into avoidance of confirmed releases. Different options for
scaling the results were proposed, but he was clear that linear scaling would not be accurate, and
could not propose an alternative scaling meth od. As a result, IEc wa s unable to adjust the
percentage reductions reported by the expert to apply them to a smaller universe. Without any

1 Note that while his individual estimate of impacts is lower than others pro vided by other experts, his cumulative estimate, which he felt was stronger, is mid

- range when applied to the current universe of confirmed releases. Overall, if his results were incorporated as proportionate to confirmed releases, the impact on the

estim ated cost savings of the rule would still exceed the estimated costs. However, he felt strongly that it is not valid to apply his results to the universe of confirmed releases, and this effort would require making a number of other adjustments that would limit which specific regulations could be compared.G

- 15



### adjustment, his estimates are likely to significantly understate and misrepresent the effect of the
proposed rule.

 Specificity of regulatory requirements : The expert specifi ed a number of conditions under
which his answers would be difficult to app ly, and expressed clear recommendations about
specific requirements that should be included in the regulations. The curre nt regulatory language
lacks the specificity he recommended on several issues, and he noted that his answers were
therefore uncertain, though he also noted that in some cases he incorporated conditions into his
responses. One example is his emphasis on th e d ifferential benefits between facultative versus

finite tests or checks. Facultative tests and checks determine whether equipment operates within
manufacturer specifications, while finite tests and checks determine whether equipment will
operate under an y circumstances. The proposed rule does not always require facultative tests or
checks; for example

, owners and operators need only ensure that systems are on and operating as
part of their walkthrough inspections. The e xpert stated that a system can be operational but not

effective at alerting owners and about releases , and noted that whole

- system testing

— in which all
components of a system are tested at once

— is required to ascertain that an UST system ’s release

detect ion systems are fully operational ; t hat is, testing individual components is not sufficient

. His
argument further extends to operator training, where he argued that training must be recurring

, hands

- on, and performed in a classroom setting to be truly effective. His estimates included

assum ptions incorporating these conditions, which differ from the specific regulatory wording. He
was not able to give an alternative estimate eliminating these conditions.

 Alternate estimates of repair rates for spill buckets: The e xpert believes that basel ine repair

rates to spill buckets are extremely low

— close to zero

— while EPA and the other experts agree

that approximately 75 percent of repair s result in replacement while the remaining 25 percent
require only repairs. This affects the potential costs and cost savings that could accrue as a result
of the rule change : replacements are more costly, but they may also result in higher avoided

release s. The analysis cannot adjust costs to correspond with the estimates given by this expert
without affecting outc omes for the other experts. While a sensitivity analysis could address this
particular discrepancy, the other integration issues identified above add to the limited use of the

results.

Finally, the expert expressed input on specific regulatory changes tha t would be effective, and suggested specific changes that would have a material impact on his estimates. While this type of input is extremely valuable in a stakeholder process and will be provided to EPA in that context, it complicated IEc’s ability

to e nsure that his results were best estimates. Ultimately, because it was not possible to reconcile these

inconsistencies without making unfounded assumptions about the universe of releases and the definitions provided by the expert, IEc recommended that EP A ex clude these responses from the q uantitative

assessment of avoided costs

. This expert was not used in the analysis of benefits of the final regulation

for the above reasons.

### Appendix H

Expert Consultation: Responses and InterpretationH-1 

### This appendix summarizes the responses EPA received to the questions outlined in Appendix G. The questions and responses for each expert are presented in Exhibit H-1 . In addition to the experts’ respons es, the exhibit includes annotati ons by IEc for the purpose of clarifying or interpreting responses . The experts’ responses to both sets of charge questions are integrated into the exhibit.

This appendix also includes a summary of the adjustments made to the experts’ responses. These adjustments include the application of reductions to the relevant portions of the UST universe, as well as other ad justments made to ensure cons istency with cost modeling and the intent of proposed requirements. We summar ize these adjustments for each expert and each regulatory alternative.

Finally, this appendix includes discussion of the experts’ as sumptions about regulatory compliance. In order to provide a conservative es timate of net benefits of the final regulation, EPA relies on different compliance assumptions fo r the analyses of cost s and benefits. This appendix provides additional detail on the potential magnitude of un certainty introduced by these assumptions and the implicati ons for EPA’s policy decision.H-2 

### Exhibit H-1. Expert ResponsesEXPERT 1 RESPONSESIncidence MeasureProposed RegulatoryRequirementDescription of Proposed Regulatory RequirementPercent Reduction inAnnual Releases (ornumber of releasesavoided)Reduction In ThePercentage OfReleases ThatReachGroundwaterPercentReduction In TheAverage QuantityReleasedSensitivity Question:Would results differif the followingchange were made?Sensitivity AnswerInteraction - is this requirementdependent on or redundant to otherrequirements?CommentsColumn[1][2][3][4][5][6][7][8][9]Walkthrough inspections30-dayinspections with the following minimum components:• Spill buckets – open and visually check for any damage; remove any liquid or debris; and check each fillcap to make sure it is securely on the fill pipe (or check before each delivery if deliveries less frequent than30 days)• Release Detection Systems – make sure system is on and operating with no alarm conditions or otherunusual operating conditions present; ensure records of release detection testing are reviewed monthly andcurrent10%30%(1) Quarterly inspections(2) Annual inspections(1)Quarterly inspectionswould yield someimprovement...I estimate3% reduction in annualreleases and 15% reductionin releases that reachgroundwater (2)Annualinspections would be toolittle, too late. I expectno significant impact fromthis option. (For Alt 1, IEcuses previous response forproposed requirement:15% (releases), 50% (GW))Dependent on the knowledge and motivation of theowner/operator and emphasis from the implementingagency. For this requirement to be most effective, thequality of the inspections must be improved throughwell trained operators and implementing agencyemphasis on conduct and accuracy through complianceemphasis, education, and inspections.Disappointed not to see previous elements of thisrequirement retained (sumps, under dispensercontainment, dispenser cabinets, etc.) On-going smallreleases from submersible turbine systems, line leakdetectors, and dispenser piping and components willcontinue to be a hazard. This hazard is consistent insingle walled and secondarily contained systems.Overfill prevention equipment inspectionOnce every three years:Require inspection to ensure overfill equipment is set to activate at the appropriate level in the tank and theequipment will activate when the regulated substance reaches that height. The inspection must beconducted according to a code of practice, manufacturer’s instructions or according to the implementingagency.20% of releases due to deliveries 30% Annual overfill preventionequipment inspectionAnnual inspections in thisarea would potentiallyreduce number of releasesduring delivery by 30% andreduce impacts togroundwater by 50%Dependent on the overfill prevention devices beinginplace and verified by implementing agency and beingcompatible with other UST system components (i.e.suction system piping; single point coax vapor recovery)and the delivery system being used (gravity orpumped).Delivery practices that routinely activate the overfillprevention devices will most likely cause releases nomatter what prevention device is installed.Spill prevention equipment testingOnce every three years:Require testing to ensure spill prevention equipment is liquid tight by performing a vacuum, pressure orliquid test according to manufacturer's requirement or code of practice (does not apply to double-walledspill buckets with interstitial monitoring)15%small percent of overallnumber that go to GW...don't know specificnumber (revised on 5-14-13: 15% reduction inreleases from spillcontainment impactinggroundwater)(1) Annual spill preventionequipment testing(2) Testing of new spillprevention equipment within3 years of installation andthen annually afterwards(1) 40% reduction inreleases from thisequipment. (2) 30%reduction in releases fromthis equipmentContainment sump testingOnce every three years:For containment sumps used for piping interstitial monitoring, require testing using vacuum, pressure orliquid methods (except for double-walled containment sumps with interstitial monitoring)20% reduction in that portion ofthe population that is tested.30% reduction in thatportion of the populationthat is testedAnnual containment sumptesting50% and 50% respectivelyWithin 30 days of a repair:• Require spill prevention equipment testing after repair to spill prevention equipment10% from repaired equipment 10% from repairedequipmentMost "repair" in this area is replacement...but testing is agood idea• Require overfill prevention equipment inspection after repair to overfill prevention equipmentno opinion...no opinionNever seen a repair of overfill• Require secondary containment testing after repair to the secondary containment area for tanks, sumps,or piping10% reduction where repairs aredone10% reduction whererepairs are doneReplacement of lined tanks that cannotbe repaired according to a code ofpracticeRequire replacement of lined tanks that cannot be repaired according to a code of practice<5% <5%small percentage of overall tank population....but forlined tanks...every replacement reduces likelihood ofrelease at that site significantlyO&M for release detection equipmentRequireannualoperation and maintenance tests for release detection equipment and containment sumps:• ATG - test alarm; verify system configuration; and test battery back-up• Vacuum pumps and pressure gauges - ensure communication with sensors and controller• Probes and sensors - inspect for residual buildup, ensure floats move freely; ensure shaft is not damaged;ensure cables are free of kinks, bends, and breaks; test communication with controller• Line leak detector - simulate leak to determine capability to detect a leak• Vapor monitoring - calibrate handheld electronic devices; test operability of sensors• Groundwater monitoring - check handheld bailers for functionality; test operability of sensors• Check tank gauge sticks• Containment sumps (tank, dispenser, etc.) – check for any damage, leaks to the containment area, orreleases to the environment; and remove any liquid or debrisATG - noneVacuum pumps and pressuregauges, probes and sensors - 5%.Line leak detector - noneVapor monitoring - noneGroundwater monitoring - noneCheck tank gauge sticks - noneContainment sumps - as much as50% from secondarily containedsystems50% - Releases that dooccur will be much morelikely to be discoveredbefore they reachgroundwaterDependent on trained and compliant owners andoperators and implementing agency emphasis,education, and training.ATG - should also verify tank parameters and leakthreshhold in program Lineleak detectors - shouldn't the leak be simulated at thethreshhold value or at a minimum at the regulatorystandard, that should be spelled out! (phone call4/11/13: GW avoidance benefit should not be attributedto GW or vapor monitoring, but should be attributed toother methods. Reductions in number of releases resultfrom the fact that in double-walled systems, functioningRD can find release before it gets to the environment.General maintenance finds other problems just bepaying more attention.)Add SIR and CITLDS usageRequire SIR and CITLDS users to submit quantitative results only (with leak rate)<5%<5%Response to interstitial monitoring alarmsRequire secondary containment testing in response to an interstitial monitoring alarm (if warranted afterinitial investigation)5%<5%Groundwater monitoring/vapormonitoringRequire owners/operators that use this method to have a site assessment in accordance with 280.43(e) or280.43(f) and maintain the assessment as long as they use GW or VP, respectively, as their release detectionmethod<5%<5%Anticipate "discovery" of up to 30% of these systemsalready have an undiscoverd release. (IEc: zeroed outbenefits for consistency with cost estimates; i.e., do notapply assumption about users changing methods)Groundwater monitoring/vapormonitoring (EPA added line item in July2013)Require owners/operators that use groundwater and vapor monitoring for release detection to phase-out useof these methods over five years. These methods are assumed to be replaced with SIR.No reduction in number ofreleases50% reduction in releases thatreach groundwater fromsystems that currently aremonitored using groundwateror vapor monitoringNoChanging release detection methods will not reduce the numberof releases; however, my opinion is that SIR will moreeffectively find releases BEFORE they impact groundwater thaneither of the “external” methods (groundwater or vapormonitoring).DeferralsRemove release detection deferral for emergency generator USTs, assuming they would now be required tomeet existing regulations(note: estimate of roughly 20,000 tanks nationally)5% 5%Require notification to implementing agency by owner/operator of ownership changenone none

Release DetectionSeverity Measures(choose at least one)

Release PreventionRepairsOverfill prevention equipment• Eliminate flow restrictors as an overfill prevention option fornewtanks (and when overfill preventionequipment is replaced)10% for new systems and systemswith replacement devices50% in releases due todeliveriesEXPERT 1 RESPONSESIncidence MeasureProposed RegulatoryRequirementDescription of Proposed Regulatory RequirementPercent Reduction inAnnual Releases (ornumber of releasesavoided)Reduction In ThePercentage OfReleases ThatReachGroundwaterPercentReduction In TheAverage QuantityReleasedSensitivity Question:Would results differif the followingchange were made?Sensitivity AnswerInteraction - is this requirementdependent on or redundant to otherrequirements?CommentsColumn[1][2][3][4][5][6][7][8][9]Severity Measures(choose at least one)Require one-time notification for existing FCT and AHS systemsnone noneIf notification requires information about known failuresor releases there will be a large spike in reportedreleases and in releases to groundwaterCompatibilityO/os storing regulated substances >10% ethanol or >20% biodiesel or another substance identified by theimplementing agency must:i. demonstrate compatibility through one of the following methods: (1) UL listing; (2) Manufacturercertification; (3) Another method determined by the implementing agency; orii. use an UST system that has secondary containment with interstitial monitoring15% from this population 50% from this populationAnd, what happens when certification of compatibility isnot forthcoming...? (phone call 4/1/13: benefit appliesto tanks storing E-10 as well; tanks storing >E-10 aregenerally compatible; IEc zeroed out for consistencywith reg)Compatibility (EPA added line item inJuly 2013)O/os storing regulated substances >10% ethanol or >20% biodiesel or another substance identified by theimplementing agency must:i. demonstrate compatibility through one of the following methods: (1) UL listing; (2) Manufacturercertification; (3) Another method determined by the implementing agency; orii. use an UST system that has secondary containment with interstitial monitoring. In addition, o/os mustmaintain equipment records for the life of all new and replaced equipment.As much as 50% reduction inreleases from systems storingethanol or biodiesel blends in theproposed ratios...especially in thejurisdictions where the currentimplementing agencies do notrequire compatibilitydocumentation.80% in that populationwhere implementingagencies do not currentlyrequire compatibilitydocumentation for thelevels of ethanol orbiodiesel blends coveredunder this proposal.If the O/os choose secondarily contained systems withinterstitial monitoring, annual releases will be reducedby 95%. Similarly, releases that reach ground water willbe reduced by 90% +.Operator TrainingInstitute Operator Training as Follows:•One-timetraining for Class A operator (technical and regulatory) or opt-out test within 30 days ofassuming duties•One-timetraining for Class B operator (technical) or opt-out test within 30 days of assuming duties.•One-timetraining for Class C operator (limited technical) prior to assuming duties.•Re-trainingfor Class A and B operators if the facility is determined to be out of compliance. Retrainingwithin 30 days of documented non-compliance.Many states already require somesort of operator training; in theremaining states, 20%same Effects specific to Indiancountry?Initial results in Indiancountry will be a spike inreported releases and inreported releases togroundwater due tooperator knowledge andimproved operating andmaintenance activities.Install secondary containment on piping uponreplacement. Replacement defined as:Removal of 50 percent or more of piping, excluding connectors, connected to a single underground tank. Forunderground storage tanks with multiple piping runs, the replace definition applies independently to eachpiping run.15% from this population 50% from this population Effects specific to Indiancountry?Require secondary containment and interstitial monitoring on all tanks and piping installed or replaced aftereffective date of rule50% in those states whererequirement does not alreadyexist (this is compared to releaserate from existing systems inthose states.50% in those states whererequirement does notalready existEffects specific to Indiancountry?Same as expectations fromrest of population. Thenet result will be systemsthat contain "leaks" and donot result in releases.Require under-dispenser containment on all new dispenser systems80% in those states whererequirement does not alreadyexist80% in those states whererequirement does notalready existEffects specific to Indiancountry?Same as expectations fromrest of population. Thenet result will be systemsthat contain "leaks" and donot result in releases.optimiistic 30% close to same... 35% (alsooptimistic)TOTAL IMPACTS OF ALL REQUIREMENTS TOGETHER (considering any overlaps/interactions you have identified in column [I]):

Energy Policy Act-Related RequirementsSecondary Containment

OtherNotificationEXPERT 2 RESPONSESIncidence MeasureProposed RegulatoryRequirementDescription of Proposed Regulatory RequirementPercent Reduction inAnnual Releases (ornumber of releasesavoided)Reduction In ThePercentage OfReleases ThatReachGroundwaterPercent ReductionIn The AverageQuantity ReleasedSensitivity Question:Would results differif the followingchange were made?Sensitivity AnswerInteraction - is this requirementdependent on or redundant toother requirements?CommentsColumn[1][2][3][4][5][6][7][8][9]Walkthrough inspections30-dayinspections with the following minimum components:• Spill buckets – open and visually check for any damage; remove any liquid or debris; and check each fillcap to make sure it is securely on the fill pipe (or check before each delivery if deliveries less frequent than30 days)• Release Detection Systems – make sure system is on and operating with no alarm conditions or otherunusual operating conditions present; ensure records of release detection testing are reviewed monthly andcurrentThis might reduce the severity ofreleases, but I don't see it havingmuch effect in terms of reducingthe number of releases. Maybe 2 or3 percent in terms of releasesavoided. This would be limited toincidents where the damage to aspill bucket was noted (and repairconducted) before the next deliverythat included some amount ofspillage into the spill bucket. Also,omitting dispenser inspectionsreduces effectiveness of inspectionsconsiderably. Monthly checking ofrelease detection is the currentrequirement (unless I'm missingsomething here), so I don't see thisimproving anything over the statusquo.There is tremendousgeographic variability inthe depth to groundwater(Florida versus Kansas, forexample), so I won'tventure any estimates inthis column.Lots of variables toconsider here. How oftendeliveries occur, how soonafter a defective spillbucket is noticed before itgets replaced, and howeffective is a visualinspection in detectingspill bucket problems.Overall I'd say 25 %reduction in spill bucketreleases as compared tothe status quo whereinspections are infrequentto nonexistent. I don'tsee any reductionstemming from themonthly inspection of leakdetection equipmentbecause this is supposedto be occurring already.And this measure doesnothing to addressdispenser and relatedpiping releases.(1) Quarterly inspections(2) Annual inspectionsReducing spill bucket inspection frequency toquarterly or annually would reduceeffectiveness to something approaching zero.With regard to leak detection inspection, thiswould be less than the current requirement.(For Alt 1, IEc uses previous response forproposed requirement: 1% (releases), 70-80%(GW))II don't see much interaction.If spill buckets are conscientiusly inspected, the damageis easily observed, and the repair happens soon afterdamage is noted, then the severity of releases from spillbuckets might be reduced somewhat. But this is a longchain of "ifs" so I believe its effectiveness will belimited. Industry recommended practice is to inspectspill buckets DAILY. Most active facilities today getseveral deliveries a week, and many get deliveriesnearly every day. A month is way too long an inspectioninterval. Leaving dispensers out of the inspectionseverely reduces the effectiveness of inspections.Monthly dispenser inspections are the industryrecommended practice. Current rules rely on industrypractices for installation, cathodic protection, andinternal lining, why not inspection and maintenance?Overfill prevention equipment inspectionOnce every three years:Require inspection to ensure overfill equipment is setto activate at the appropriate level in the tank andthe equipment will activate when the regulated substance reaches that height. The inspection must beconducted according to a code of practice, manufacturer’s instructions or according to the implementingagency.Minimal. Maybe 1%. Minimal. Maybe 1%. Annual overfill preventionequipment inspectionAnnual inspections would help improveeffectiveness somewhat, perhaps to 5%reduction in releases. (in both number andquantity of releases, update 5-17-13)I don't see much interaction. As I stated before, overfill equipment today does littleto prevent overfills because it is not effective.Spill prevention equipment testingOnce every three years:Require testing to ensure spill prevention equipment is liquid tight by performing a vacuum, pressure orliquid test according to manufacturer's requirement orcode of practice (doesnot apply to double-walledspill buckets with interstitial monitoring)Life expectancy of spill buckets isshort (say 5 years) and deliveriesare frequent (every few days).Testing every three years is notenough to detect problems beforethey occur. Reduction might be 5to 10 %.Reduction in quantitiyreleased would be 5 to 10%. This would be due todetection of defects thatare not readily observableduring the visualinspection.(1) Annual spill preventionequipment testing(2) Testing of new spillprevention equipment within3 years of installation andthen annually afterwardsAnnual inspections would improveeffectiveness significantly. Testing within 3years of installation and annually thereafterwould be a good compromise position, butthen you have to track the installation date ofthe spill bucket. Annual testing might reducethe number of incidents by 25% and thequantity released by 30 to 40 % because ofearlier detection. (Added 5-17-13: Notbeginning the testing until 3 years after installwould decrease effectiveness only a bitbecause I assume most spill buckets will lastthree years before they leak, so the number ofincidents might be reduced by 20% and thequantity by 25%. But I would emphasize thattracking the age of spill buckets is notcurrently done and will pose substantialheadaches for both regulators and tankowners.)No significant interaction. Spill bucket testing should have a significant effect onnumber of releases and quantity released. Three yearsis too long an interval. Annual testing would also makeit more likely that spill buckets will get cleaned out atleast once a year. Do not exempt double-wall spillbuckets from testing!! A sensor in the interstitial spaceof the spill bucket will not monitor the integrity of theouter wall of the bucket. When the outer wall fails, theability of the sensor to detect liquid is severelycompromised. Double-wall spill buckets must be testedto verify the integrity of the outer wall. If everythingelse in the UST system is going to be double-walleventually, why not the spill bucket? Single-wall spillbuckets are known sources of releases and are known tobe prone to failure. Replacement spill buckets shouldbe double-walled.Containment sump testingOnce every three years:For containment sumps used for piping interstitial monitoring, require testing using vacuum, pressure orliquid methods (except for double-walled containment sumps with interstitial monitoring)30% of piping related releases. Iinclude STPs as part of the pipingfor purposes of this estimate butnot dispensers. If dispenser sumpsare not to be tested, this is a bighole in the program and manydispenser leaks will not be detectedbecause the dispenser sumps arenot liquid tight. (50-60% ifdispenser sumps are tested; followup phone call 4/4/13)30% of all piping and STPrelated releases. Manydispenser releases will goundetected. (50-60% ifdispenser sumps aretested; follow up phonecall 4/4/13)Annual containment sumptestingAnnual testing would improve performance astesting data show 10% failure rate per year.Annual testing would improve performance interms of detecting releases and reducing thevolume released to 60%.Performance could be improved significantly if othersecondary containment components were tested aswell. Omitting dispenser and piping secondarycontainment testing reduces effectiveness substantially.Also, only double-wall containment where both wallsare monitored for integrity (using pressure or vacuumtypically) should be exempt from periodic testing. Mostof these sumps are in CA where monitoring both walls isthe rule, so this should not be a big deal.Within 30 days of a repair:• Require spill prevention equipment testing after repair to spill prevention equipmentThis is good protocol to follow, butI don't think many releases will beavoided. Repair could be anythingfrom replacing a leaky drain valvein a spill bucket (which would haveno effect on environmental releasesbecause the leaky valve drains intothe tank) to inserting new, smallerspill bucket inside the old one(which definitely should be testedbut is not likely to stay liquid tightfor very long). I don't have anyinformation on which to base anopinion here.Testing after a repair isgood protocol to follow,but I don't have any basisfor an opinion here.My sense is that most spill buckets that are actuallyleaking to the environment today are being replacedrather than repaired. But increased testing activitypromoted by regulations would create a market forcheap (but not necessarily effective) spill bucket repairproducts.Severity Measures(choose at least one)

Release PreventionEXPERT 2 RESPONSESIncidence MeasureProposed RegulatoryRequirementDescription of Proposed Regulatory RequirementPercent Reduction inAnnual Releases (ornumber of releasesavoided)Reduction In ThePercentage OfReleases ThatReachGroundwaterPercent ReductionIn The AverageQuantity ReleasedSensitivity Question:Would results differif the followingchange were made?Sensitivity AnswerInteraction - is this requirementdependent on or redundant toother requirements?CommentsColumn[1][2][3][4][5][6][7][8][9]Severity Measures(choose at least one)• Require overfill prevention equipment inspection after repair to overfill prevention equipmentOverfill prevention equipment isreplaced rather than repaired.When replaced, it should beinspected as part of the installationprocedure. I don't see this ashaving any measurable effect onthe number of releases avoided.I don't see this as havingany measurable effect onthe quantity of productreleased.Most overfill prevention devices will be replaced, notrepaired.• Require secondary containment testing after repair to the secondary containment area for tanks,sumps, or pipingTightness testing after repairs toany secondary containmentcomponent is a critical part of anyrepair. In the currently proposedscenario, only piping sumps wouldget tested, so they are likely theonly secondary containmentcomponent that will ever see anyrepair activity. This will limit thenumber of releases avoided toperhaps 30% of all piping relatedreleases. (50% if dispenser sumpsare tested; follow up phone call4/4/13)Because this is only likelyto affect piping sumps,the effect will be limited.Quantity released mightbe reduced by 20%. (50%if dispenser sumps aretested; follow up phonecall 4/4/13)The effectiveness of this requirement wouldbe limited by the absenceof periodic testingfor dispenser sumps and secondarilycontained piping. If these components arenot tested, they will likely not be repaired(because defects will not be detected) andso the issue of post-repair testing will hardlyever come up. More testing of morecomponents, coupled with post-repairtesting, would boost the effectiveness of thistype of requirement substantially, up to 80or 90% reduction in number and volume ofreleases from secondarily contained systems.This is a good requirement, but it will have limitedeffectiveness unless secondarily contained piping anddispenser sumps are subject to periodic tightnesstesting as well as tank-top (piping) sumps.Replacement of lined tanks that cannotbe repaired according to a code ofpracticeRequire replacement of lined tanks that cannotbe repaired according to a code of practice5% among the lined tankpopulation.5% among releases fromlined tanksMy suspicion is that the code of practice is loose enoughthat few tanks will not be able to be repaired.O&M for release detection equipmentRequireannualoperation and maintenance tests for release detection equipment and containment sumps:• ATG - test alarm; verify system configuration; and test battery back-up• Vacuum pumps and pressure gauges - ensure communication with sensors and controller• Probes and sensors - inspect for residual buildup, ensure floats move freely; ensure shaft is not damaged;ensure cables are free of kinks, bends, and breaks; test communication with controller• Line leak detector - simulate leakto determine capability to detect a leak• Vapor monitoring - calibrate handheld electronic devices; test operability of sensors• Groundwater monitoring - check handheld bailers for functionality; test operability of sensors• Check tank gauge sticks• Containment sumps (tank, dispenser, etc.) – checkfor any damage, leaks to the containment area, orreleases to the environment; and remove any liquid or debrisThis is an attempt to improve leakdetection rather than leakprevention, so the number ofreleases should not be affected.The quantity of releases should bereduced.25%. No solid basis forthis number. Just a sensethat the duration ofreleases should bereduced if leak detectionequipment is functional.Effectiveness of these measures would be greater ifowner/operators could be relied upon to respond torelease detection equipment alarms. We shall see ifoperator training requirements improve operatorresponse to alarms or not. Sensors should be tested byexposing them to conditions they are supposed todetect - e.g., float sensors should be put in water tomake sure they send an alarm signal. This is notindicated in the list in column 2. Also, rules should notspecifiy details of how to check out equipment. Rulesget updated every quarter century (maybe) andtechnology changes faster than that. Rules shouldspecify manufacturer procedures or industryrecommended practices (e.g. PEI RP900 and RP500) toset out the specifics of how equipment should betested. PEI updates Recommended Practices every 5years, so they can be kept up to date and provide muchmore detailed and relevant guidance than EPAregulations. (IEc: assume GW and vapor monitoring donot result in reductions in quantity released to GW sodid not apply benefit to those methods)Add SIR and CITLDS usage Require SIR and CITLDS users to submit quantitative results only (with leak rate)Negligible effect. Less than 1%. Negligible effect, Lessthan 1%Issues with these methods are much greater than havingquantitative results. Few SIR vendors today arequalitative. Issues have to do with how results arereported, timeliness of reporting, and separating outthese two methods because they are radically differentfrom one another. Lumping them together in the rulewill only further the confusion.RepairsOverfill prevention equipment• Eliminate flow restrictors as an overfill prevention option fornewtanks (and when overfill preventionequipment is replaced)5%. 5%This requirement is very dependent on theoverfill prevention equipment inspectionrequirement. If this equipment is neverinspected, no one will know whether the ballfloat is working or not, and ball floats willnever be replaced.Replacement of existing ball floats will be very slowunless there is an inspection requirement for overfillprevention equipment.EXPERT 2 RESPONSESIncidence MeasureProposed RegulatoryRequirementDescription of Proposed Regulatory RequirementPercent Reduction inAnnual Releases (ornumber of releasesavoided)Reduction In ThePercentage OfReleases ThatReachGroundwaterPercent ReductionIn The AverageQuantity ReleasedSensitivity Question:Would results differif the followingchange were made?Sensitivity AnswerInteraction - is this requirementdependent on or redundant toother requirements?CommentsColumn[1][2][3][4][5][6][7][8][9]Severity Measures(choose at least one)Response to interstitial monitoringalarmsRequire secondary containment testing in response to an interstitial monitoring alarm (if warranted afterinitial investigation)I'm assuming that "if warranted"means any type of liquid (fuel orwater) is found in the sump asopposed to an alarm due to somesensor malfunction. This wouldpoint to a lack of integrity thatwould need to be investigated bytesting and then presumablyrepaired. I think this could be veryeffective in reducing releasesbecause it would gradually improvethe quality of existing containmentand reduce the water intrusionproblems that cause "false" alarmsand that result in operators ignoringalarms. I'd say a 60% reduction inreleases from systems withsecondary containment. I think thereduction could be even higherexcept that a number of owners arelikely to switch to another methodof leak detection (line leakdetector + testing) rather than goto the expense of testing andrepairing their secondarycontainment.The quantity releasedfrom UST systems withsecondary containmentcould be reduced by 75%This requirement is a bit redundant to thecontainment sump testing, but if sumps areonly tested every three years as proposed,then this is a good backup plan to test thosesumps that are showing indications of havingissues.This is a good requirement. If the alarm is set off byproduct, the test will help establish whether anenvironmental release has occurred. If the alarm is setoff by water, then hopefully the water intrusionproblem will be addressed, limiting "false" alarms andincreasing the likelihood that appropriate responses toalarms will occur in the future at that facility.Groundwater monitoring/vapormonitoringRequire owners/operators that use this method to have a site assessment in accordance with 280.43(e) or280.43(f) and maintain the assessment as long as they use GW or VP, respectively, as their releasedetection methodThere are very few UST systemsusing these methods of leakdetection, so effects will beminimal on the national scale, butmight be effective in getting thosewho are using this method to usesomething else. I'd say 50%reduction in releases among usersof groundwater or soil vapormonitoring.50% reduction in quantityreleased from thosesystems using thesemethods of leakdetection.This requirement is really already a part ofthe rule, except that the documentation ofthe assessment must be kept indefinitely inthe proposed revision.Hardly anybody using groundwater or soil vapormonitoring had this assessment conducted as per therule. And even those that had it done at some pointwould have a hard time locating it today. Be sure toadd the requirement that the assessment be conductedby a "qualified groundwaterprofessional" or somethingsimilar, otheriwse any Tom, Dick, or Sally will be signingoff on some bogus assessment and we will back wherewe started. (IEc: zeroed out benefits for consistencywith cost estimates; i.e., do not apply assumption aboutusers changing methods)Groundwater monitoring/vapormonitoring (EPA added line item in July2013)Require owners/operators that use groundwater and vapor monitoring for release detection to phase-outuse of these methods over five years. These methods are assumed to be replaced with SIR.This is replacing one leak detectionmethod by another leak detectionmethod. This will not reduce thenumber of releases, just hopefullyhave the releases detected sooner.Because groundwatermonitoring only applieswhen the depth togroundwater is 20 feet orless, I don't believe thepercentage of releasesreaching groundwater willchange for this methodbecause you aren't goingto detect the release soonenough to keep thecontaminant out of thegroundwater. At placeswhere soil vapormonitoring is in use,groundwater will likely bedeeper, but I really don'thave enough informationto say whether a switch toSIR will better protectgroundwater at theselocations.Groundwater monitoringas defined in the federalrule is pretty worthless.Soil vapor monitoring hadpotential to be anexcellent leak detectionmethod, but as defined inthe federal rule, it ispretty useless as well.SIR also has greatpotential as a leakdetection method, but itis cursed with aninadequate evaluationprotocol. In the end, Imight expect for SIR toyield a slightimprovement overgroundwater or soil vapormonitoring, reducing thequantity released by 10percent.Ideally this requirement would be linked to asubstantial improvement in how SIR isevaluated so ineffective SIR methods couldbe weeded out, but I don't believe this is oneof the regulatory proposals. Tightening upthe SIR reporting requirement (which isunder consideration) would yield a slightimprovement over the status quo, but is notnearly enough to fix the problems with SIR asa leak detection method.I think eliminating groundwater and soil vapormonitoring is a good thing, if only because it shortensthe list of inadequate leak detection methods that tankowners can use. It might prompt some owners torethink things and go to automatic tank gauging ratherthan SIR, which would be a significant improvement.DeferralsRemove release detection deferral for emergency generator USTs, assuming they would now be required tomeet existing regulations(note: estimate of roughly 20,000 tanks nationally)This would not reduce the numberof releases, only detect themsooner and presumably reduce thequantity released.Amount released fromemergency generatorsystems that do notcurrently have leakdetection could bereduced by 75% or more.My sense is a great manygenerator systems alreadyhave release detection, sothe overall effect mightbe 20% reduction in termsof ALL generator systems.How does this requirement interact with the2005 Energy Act? If states choose thesecondary containment route from theEnergy Act, does this mean new generatortanks would need to be secondarilycontained?Many generator tanks already have release detection, sothis requirement may have limited effect.Require notification to implementing agency by owner/operator of ownership change0% 0%Knowing who owns a tank and is responsible for it iscertainly important from a program point of view, but Idon't see how it will affect the number or volume ofreleases.

Release DetectionEXPERT 2 RESPONSESIncidence MeasureProposed RegulatoryRequirementDescription of Proposed Regulatory RequirementPercent Reduction inAnnual Releases (ornumber of releasesavoided)Reduction In ThePercentage OfReleases ThatReachGroundwaterPercent ReductionIn The AverageQuantity ReleasedSensitivity Question:Would results differif the followingchange were made?Sensitivity AnswerInteraction - is this requirementdependent on or redundant toother requirements?CommentsColumn[1][2][3][4][5][6][7][8][9]Severity Measures(choose at least one)Require one-time notification for existing FCT and AHS systems0% 0%I'm assuming FCT are "field constructed tanks" and AHSare "airport hydrant systems." Knowing who owns theseis important from a program point of view, but I don'tsee how this would reduce the number or volume ofreleases. These types of systems don't change handsthat often, but I think in addition to the one timenotice, any changes in information (such as ownershipor change of address of the owner) should be requiredto be reported to the implementing agency.CompatibilityO/os storing regulated substances >10% ethanol or >20% biodiesel or another substance identified by theimplementing agency must:i. demonstrate compatibility through one of the following methods: (1) UL listing; (2) Manufacturercertification; (3) Another method determined by the implementing agency; orii. use an UST system that has secondary containment with interstitial monitoringThe number of existing tanks thatfit into this category is pretty smalland I have no direct experiencewith them, so I really can't put apercentage on this. Plus it willdepend on how many USTs end upcontaining these higher levels ofethanol or biodiesel as time goeson. Ethanol continues to be acontroversial additive so my crystalball is very fuzzy as to how muchethanol is in our fuel future. (Email8/30: use numerical responsesgiven for new compatibility lineitem for this item as well)The number of existingtanks that fit into thiscategory is pretty smalland I have no directexperience with them, soI really can't put apercentage on this. Plusit will depend on howmany USTs end upcontaining these higherlevels of ethanol orbiodiesel as time goes on.(Email 8/30: usenumerical responses givenfor new compatibility lineitem for this item as well)Compatibility is already part of the rule.This just spells out how to documentcompatibility, so this is a good thing.Do not confuse apples and oranges. Secondarycontainment has NOTHING to do with compatibility. Ifthe first wall of the containment is not compatible andleaks, what reason do you have to believe that thesecond wall is not going to leak? At the very least theleak sensors in the secondary containment would haveto be compatible with the substance stored. I think thethree methods of determining compatibility listed (in"i") are enough. Throwing secondary containment intothe mix is a big mistake.Compatibility (EPA added line item inJuly 2013)O/os storing regulated substances >10% ethanol or >20% biodiesel or another substance identified by theimplementing agency must:i. demonstrate compatibility through one of the following methods: (1) UL listing; (2) Manufacturercertification; (3) Another method determined by the implementing agency; orii. use an UST system that has secondary containmentwith interstitial monitoring. In addition, o/os mustmaintain equipment records for the life of all new and replaced equipment.Limiting the UST populationaffected by this requirement tothose USTs that might contain thesefuels, and assuming that the EPApolicy of June 2011 has had someeffect in getting UST onwers tothink about compatibility issues, Ithink the percentage reduction ofreleases would be fairly modest,say around 20 percent for thoseUSTs storing these fuels.Because there are a lot ofvariables that determinewhether a release willreach groundwater, Ithink I'll steer clear of thisquestion.Limiting this question tothose releases that aredue exclusively to sometype of incompatibility,then the reductiontheoretically should beclose to 100 percent.However, given that thereare likley to be somecompatibility surprises(things that were thoughtto be compatible butwere not) and thedifficulty of identifyingevery component of anexisting UST system thatmight have compatibilityissues, the percentagereduction will besomewhat less, say in therealm of 80 percent.This proposal treads on very thin ice byconfusing the compatibility issue with leakdetection issues (secondary containment). Abetter method of leak detection will notcompensate for incompatible materials. Doyou really want to be putting 95% ethanol ina steel tank, regardless of how many walls ithas?? At the very least, putting higherethanol or biodiesel blends into double-wallUSTs is going to require that leak detectionsensors installed in the interstitial spaces becompatible with the fuel, otherwise thealarms will never go off and fuel from apiping leak can overflow the containment.Line leak detectors would also need to becompatible with the substance stored. Somy vote is against confusing secondarycontainment with compatibility, but if thedecision is made to go ahead with thisproposal, then the leak detection equipmentmust have a UL listing or manufacturercertification for the substance stored.The big unknown here is the percentage of the USTpopulation that will be storing these higher bioblends.Another unknown is what "other methods" a regulatoryagency might get pushed into by the alternative fuelslobby. This proposal seems to essentially codify theJune 2011 memo from EPA concerning the same subjectexcept that the secondary containment option has beenadded. I think throwing secondary containment intothis mix is dangerous business and do not support thispart of the proposal. See "interaction" column at leftfor my reasoning.The maintenance of "equipment records" is good (I'd liketo see it applied to all fuels), but "equipment records"will need to be clearly defined. What I think will beimportant is both the documentation of the equipmentthat is present and what the subsequent maintenanceactivities on the UST system consist of.Operator TrainingInstitute Operator Training as Follows:•One-timetraining for Class A operator (technical and regulatory) or opt-out test within 30 days ofassuming duties•One-timetraining for Class B operator (technical) or opt-out test within 30 days of assuming duties.•One-timetraining for Class C operator (limited technical) prior to assuming duties.•Re-trainingfor Class A and B operators if the facility is determined to be out of compliance. Retrainingwithin 30 days of documented non-compliance.This will not reduce the number ofreleases. Hopefully, the quantityreleased will be reduced because ofimproved operator behavior whenthe alarm sounds.I'm pretty pessimistic thattraining is going to changeoperator behavior bymuch. I'd say releasequantity would only bereduced 5 to 10%.Effects specific to Indiancountry?I don’t know that operators in Indian Countryare any better or worse than operatorselsewhere. I don’t expect that the effects ofthe training would be significantly different.Training could be used to inform owners andoperators of the rule changes presented inthis document, except that those operatorswho are already trained would only receivethis training after being cited for being outof compliance and so be required to beretrained. Doesn't sound very efficient tome.Training all UST owners and operators is a hugeundertaking and there is a great deal of variability inhow states have chosen to do it and how they plan toenforce it. I don't see a lot of behavior changehappening because of operator training, but we aredoing the experiment, so let's see what happens.Install secondary containment on piping uponreplacement. Replacement defined as:Removal of 50 percent or more of piping, excluding connectors, connected to a single underground tank.For underground storage tanks with multiple pipingruns, the replace definition applies independently toeach piping run.Getting to secondary containmentwould be helpful in avoidingreleases, but we'll be a long timegetting there with this definition.I'll replace 49% of my piping thisyear and 49% next year and stillhave single-wall piping. Not manypeople currently replace half apiping run, but this rule willencourage this approach to avoidingsecondary containment. In theshort term I see perhaps a 5%reduction in piping releases. Overthe long term (20+ years) thiswould gradually increase to a 50 to60% reduction in piping releases.In the short term, a 10 to20% reduction in volumereleased from piping. Inthe long term (20+ years)perhaps 75% reduction inpiping releases.Effects specific to Indiancountry?I don't have any basis for expecting things tobe any different in Indian Country thanelsewhere.I can see the need to define replacement, but thisapproach encourages people to game the system. Iwould say anything other than a simple repair involvinga few feet of pipe would qualify as a replacement.E.g., someone drives a stake through a fiberglass pipe,so a small section needs to be replaced - this is a repair.Anything much bigger than this (say involving over 5 ftof pipe) is a replacement.

Related Requirements OtherNotificationEXPERT 2 RESPONSESIncidence MeasureProposed RegulatoryRequirementDescription of Proposed Regulatory RequirementPercent Reduction inAnnual Releases (ornumber of releasesavoided)Reduction In ThePercentage OfReleases ThatReachGroundwaterPercent ReductionIn The AverageQuantity ReleasedSensitivity Question:Would results differif the followingchange were made?Sensitivity AnswerInteraction - is this requirementdependent on or redundant toother requirements?CommentsColumn[1][2][3][4][5][6][7][8][9]Severity Measures(choose at least one)Require secondary containment and interstitial monitoring on all tanks and piping installed or replaced aftereffective date of ruleSmall effect initially becausetransition to secondary containmentwill be slow - say a couple percent.Over several decades should beable to reduce number of releasesby 80 to 90 percent - ifcontainment is properly installedand operated.Small effect initiallybecause transition tosecondary containmentwill be slow - say a couplepercent. Over severaldecades should be able toreduce the volume ofreleases by 80 to 90percent - if containmentis properly installed andoperated.Effects specific to Indiancountry?Should be the same in Indian Country aselsewhere.Success of this measure would be heavilydependent on other measures to 1) verifythat all components of the secondarycontainment are liquid tight at installationand throughout the operatonal life of theUST system, 2) all leak detecton sensors areoperational, and 3) operators know what todo when the alarm sounds. Each of thesemeasures is addressed to some degree inthese proposed changes, but not ascompletely as I would like.I believe secondary containment is our best long termhope of managing releases from UST systems. It justlooks like it's going to take us 50 years to get there. Ibelieve that most states have already chosen thesecondary containment option (as opposed to theinsurance option) in the 2005 Energy Act, so if thisbecomes a federal requirement it will primarilyinfluence Indian Country and two states (Kansas andMissouri). My percentage estimates are looking at theeffect on the whole country, so they may be overstated,but I think there is value in having a uniform standardfor the entire country.Require under-dispenser containment on all new dispenser systemsSmall effect initially becausetransition to secondary containmentwill be slow - say a couple percent.Over several decades should beable to reduce number of dispenserreleases by 80 to 90 percent - ifcontainment is properly installedand operated.Small effect initiallybecause transition tosecondary containmentwill be slow - say a couplepercent. Over severaldecades should be able toreduce the volume ofdispenser releases by 80to 90 percent - ifcontainment is properlyinstalled and operated.Effects specific to Indiancountry?Should be the same in Indian Country aselsewhere.Success of this measure would be heavilydependent on other measures to 1) verifythat dispenser sumps are liquid tight atinstallation and throughout the operatonallife of the UST system, and 2) all leakdetecton sensors are installed in dispensersumps (not just in STP sumps) and areoperational, and 3) operators know what todo when the alarm sounds. Each of thesemeasures is addressed to some degree inthese proposed changes, but not ascompletely as I would like.I believe secondary containment is our best long termhope of managing releases from UST systems. It justlooks like it's going to take us 50 years to get there.Most states are already heading in the direction ofdispenser containment for new dispensers, so thefederal requirement may havethe most effect in IndianCountry, Kansas, and Missouri. My percentage estimatesare looking at the effect on the whole country, so theymay be overstated, but I think there is value in having auniform standard for the entire country.I don't see any silver bullets herethat are going to solve the releaseproblem overnight. I see acontinuing decrease in releases,primarily due to gradual transitionto secondary containment. I wouldestimate reduction in releases of afew percent per year to a pointwhere we have 80 to 90 percentfewer releases than we now have atsome point 20 to 30 years down theroad. This assumes all themeasures described here achieve an80 to 90% compliance rate.As for the number ofreleases, I see acontinuing decrease in thevolume of releases,primarily due to gradualtransition to secondarycontainment. I wouldestimate reduction inreleases of a few percentper year to a point wherewe have 80 to 90 percentreduction in the volume ofreleases than we nowhave at some point 20 to30 years down the road.This assumes the all themeasures described hereachieve an 80 to 90%compliance rate.All measures that work towards 1) secondarycontainment of all components (spillbuckets, dispensers, piping, STPs, tanks), 2)periodically testing the integrity of all of thesecondary containment, 3) periodicallyverifying the operation of all leak detectionsensors, and 4) getting operators to respondin a timely and appropriate fashion to alarmswill eventually bring about a dramaticreduction in the number and volume ofreleases.Achieving compliance with maintenance and operationalrequirements will be key to maximizing reduction ofreleases in the short and long term. This will be anincreasing challenge as major oil companies exit retailmarketing and are replaced with smaller operators wholack the financial resources and technical expertise ofmajor oil companies. The path forward should includeassessments of the effectiveness of operator training inachieving compliance with operation and maintenancerequirements of the rules.TOTAL IMPACTS OF ALL REQUIREMENTS TOGETHER (considering any overlaps/interactions you have identified in column [I]):

Energy Policy Act

-Secondary ContainmentEXPERT 3 RESPONSESIncidence MeasureProposed RegulatoryRequirementDescription of Proposed Regulatory RequirementPercent Reduction inAnnual Releases (ornumber of releasesavoided)Reduction In ThePercentage OfReleases ThatReachGroundwaterPercentReduction InThe AverageQuantityReleasedSensitivityQuestion: Wouldresults differ if thefollowing changewere made?Sensitivity AnswerInteraction - is thisrequirementdependent on orredundant to otherrequirements?CommentsColumn[1][2][3][4][5][6][7][8][9]Walkthrough inspections30-dayinspections with the following minimum components:• Spill buckets – open and visually check for any damage; remove any liquid or debris; and check eachfill cap to make sure it is securely on the fill pipe (or check before each delivery if deliveries lessfrequent than 30 days)• Release Detection Systems – make sure system is on and operating with no alarm conditions or otherunusual operating conditions present; ensure records of release detection testing are reviewed monthlyand current1. 50% for spill bucket checks;2. 40% for release detection1. 35% for SB checks; 2.25% for RD reviews1. 45% for SB checks;2. 35% for RD reviews(1) Quarterly inspections(2) Annual inspections1. 10% increase indischarges from monthly;2. 30% increase indischarges from monthly(For Alt 1, IEc usesprevious response forproposed requirement:60%, 30%, 20%, 1%, 2%,40% (releases, associatedwith spill buckets,sumps, dispensers,monitoring/observationwells, impressed currentrectifiers, and RDsystems, respectively);40%, 15%, 10%, 1%, 1%,25% (GW, associatedwith same components))Neither dependent or redundantto other requirements. Thisrequirement alone will have asignificant reduction on thenumber and severity ofreleases.This requirement has reduced since the previous version. It would be serious mistake notto include at least quarterly checks of piping sumps and UDC's. A lot can go wrong in ashort amount of time within these sumps, and frequent visual observations can helpprevent small problems from becoming big problems. The adverse effects of ethanolcorrosion exacerbate the problems within these sumps. I stronglyrecommend that atleast quarterly visual inspections of sumps be included in the walk-through inspections.Overfill prevention equipmentinspectionOnce every three years:Require inspection to ensure overfill equipment is set to activate at the appropriate level in the tankand the equipment will activate when the regulated substance reaches that height. The inspectionmust be conducted according to a code of practice, manufacturer’s instructions or according to theimplementing agency.15% 10% 15% Annual overfill preventionequipment inspection20% (phone call 5/15/13:sensitivity responses aregiven for annual releases,but relationship to GWavoidance will stay thesame as in originalanswers--i.e., GWreductions are usually 5%less than releasereductions)Neither dependent or redundantto other requirements.This requirement could be performed at the time of annual operability testing of leakdetection devices and LLD's. The cost would not be prohibitive and would go a long wayto prevent overfills, particularly considering how ethanol is corroding ball floats andflapper valves.Spill prevention equipment testingOnce every three years:Require testing to ensure spill prevention equipment is liquid tight by performing a vacuum, pressure orliquid test according to manufacturer's requirement or code of practice (does not apply to doublewalled spill buckets with interstitial monitoring)30%25%30%(1) Annual spill preventionequipment testing(2) Testing of new spillprevention equipmentwithin 3 years ofinstallation and thenannually afterwards1. 50% for annual2. 45% (phone call5/15/13: sensitivityresponses are given forannual releases, butrelationship to GWavoidance will stay thesame as in originalanswers--i.e., GWreductions are usually 5%less than releasereductions)Neither dependent or redundantto other requirements.Item (2) in the Sensitivity Question Column a good idea. New spill buckets don't usuallyhave "infant mortality", and if they test tight at installation, they should be good forthree years. Otherwise, annual testing for spill buckets is inexpensive and can beperformed with other required annual tests that are currently requiredContainment sump testingOnce every three years:For containment sumps used for piping interstitial monitoring, require testing using vacuum, pressure orliquid methods (except for double-walled containment sumps with interstitial monitoring)2% 2% 2% Annual containment sumptesting3%Neither dependent or redundantto other requirements.Leaking sumps are not a relatively significant source of leaks compared to othercomponents, but they are the most problematic with operation and maintenance.Within 30 days of a repair:• Require spill prevention equipment testing after repair to spill prevention equipment25% 10% 20%Neither dependent or redundantto other requirements.Common sense. It should be tested before going back into operation• Require overfill prevention equipment inspection after repair to overfill prevention equipment10%5%10%Neither dependent or redundantto other requirementsIt should be tested before going back into operation• Require secondary containment testing after repair to the secondary containment area for tanks,sumps, or piping3%1%2%Neither dependent or redundantto other requirements.It should be tested before going back into operationReplacement of lined tanks that cannotbe repaired according to a code ofpracticeRequire replacement of lined tanks that cannot be repaired according to a code of practice50%40%50%Neither dependent or redundantto other requirements.These reductions of course are relative to the universe of internally lined tanksO&M for release detection equipmentRequireannualoperation and maintenance tests for release detection equipment and containmentsumps:• ATG - test alarm; verify system configuration; and test battery back-up• Vacuum pumps and pressure gauges - ensure communication with sensors and controller• Probes and sensors - inspect for residual buildup, ensure floats move freely; ensure shaft is notdamaged; ensure cables are free of kinks, bends, and breaks; test communication with controller• Line leak detector - simulate leak to determine capability to detect a leak• Vapor monitoring - calibrate handheld electronic devices; test operability of sensors• Groundwater monitoring - check handheld bailers for functionality; test operability of sensors• Check tank gauge sticks• Containment sumps (tank, dispenser, etc.) – check for any damage, leaks to the containment area, orreleases to the environment; and remove any liquid or debris1. 15%2. 2%3. 5%4. 15%5. 1%6. 1%7. 1%8. 10%1. 10%2. 1%3. 4%4. 12%5. <1%6. <1%7. <1%8. 8%1. 12%2. 1%3. 4%4. 15%5. <1%6. <1%7. <1%8. 10%Neither dependent or redundantto other requirements.These are all good requirements, but those dealing with sumps, LLD's, and ATG's will havethe most beneficial reduction. Nevertheless, gauges are frequently so glazed over thatthey are hard to read, and many gauge sticks are in terrible condition. (phone call5/16/13: Reductions in number of releases result from the fact that in double-walledsystems, functioning RD can find release before it gets to the environment. Generalmaintenance finds other problems just be paying more attention.)Add SIR and CITLDS usageRequire SIR and CITLDS users to submit quantitative results only (with leak rate)25%20%25%Neither dependent or redundantto other requirements.SIR continues to be the least expensive and least effective method of leak detectionBetter requirement than previous one, and ethanol damage to ball floats makes this moreimportant.Severity Measures(choose at least one)Overfill prevention equipment5%Repairs• Eliminate flow restrictors as an overfill prevention option fornewtanks (and when overfillprevention equipment is replaced)10%Neither dependent or redundantto other requirements.

Release Prevention5%EXPERT 3 RESPONSESIncidence MeasureProposed RegulatoryRequirementDescription of Proposed Regulatory RequirementPercent Reduction inAnnual Releases (ornumber of releasesavoided)Reduction In ThePercentage OfReleases ThatReachGroundwaterPercentReduction InThe AverageQuantityReleasedSensitivityQuestion: Wouldresults differ if thefollowing changewere made?Sensitivity AnswerInteraction - is thisrequirementdependent on orredundant to otherrequirements?CommentsColumn[1][2][3][4][5][6][7][8][9]Severity Measures(choose at least one)Response to interstitial monitoringalarmsRequire secondary containment testing in response to an interstitial monitoring alarm (if warrantedafter initial investigation)1%<1%<1%Dependent on interstitialmonitoringRoutine testing of tank interstices is completely unnecessary, and is more likely to createa problem than find one. The real world data does not show that double-wall tanks arefailing. If there is a problem, it will show up in the interstice. 90% of the time theproblem with an interstitial alarm is a bad sensor, and the 10% when its not a bad sensor,the problem is condensation. Testing should only be required after a repair is made,because if there is an interstitial alarm and its not a bad sensor, you can determine if andwhat kind of liquid is in the tank. Repairs will be required, and it would be better to testafter the repairs.Groundwater monitoring/vapormonitoringRequire owners/operators that use this method to have a site assessment in accordance with 280.43(e)or 280.43(f) and maintain the assessment as long as they use GW or VP, respectively, as their releasedetection method5%5%5%Neither dependent or redundantto other requirements.Not a bad idea. Another approach would be to require an assessment of the ability of thewells to detect a leak within 30 days with a demonstration of the transmissiveness of thesoils that is certified by a PG. (IEc: zeroed out benefits for consistency with costestimates; i.e., do not apply assumption about users changing methods)Groundwater monitoring/vapormonitoring (EPA added line item in July2013)Require owners/operators that use groundwater and vapor monitoring for release detection to phaseout use of these methods over five years. These methods are assumed to be replaced with SIR.Less than one percentLess than one percent.No significant reductionin severity.One percentNot dependent on or redundantto other requirements. Peoplewill choose other method ofmonitoring their single-walltanksThis requirement is a good idea, but it will have a minimal effect on reducing releases togroundwater. Less than 5% of owners use it for leak detection, and it is an ineffectivemethod to begin with because if it detects a leak, the leak has already caused damage.Notes: Eliminating groundwater and vapor monitoring as a method of release detection isa great idea. However, it will have a minimal effect on reducing releases to groundwaterbecause less than 5% of owners currently use it for leak detection. It is an ineffectivemethod of release detection because it is difficult to discriminate between an old releaseand a new release. It is problematic in areas where groundwater levels fluctuateseasonally and periodically between flood and drought. They are easily broken into, andhave been subject to sabotage from disgruntled employees and even estranged spouses.Additionally, it is very labor intensive. If groundwater or vapor monitoring wells detect aleak, the “horse is already out of the barn” because the leak has already likely to havecaused damage in the environment. Many of these monitoring wells have beenimproperly installed and maintained, and may have become conduits for contamination.For example, the soils may not be transmissive enough for leaks to migrate from therelease to the monitoring well within the 30 day period required by rule. Bottomline...most people have stopped using this method of release detection. Eliminating itmakes good sense and is easy to defend, yet don’t consider it a way to significantlyreduce the number of leaks to the environment.DeferralsRemove release detection deferral for emergency generator USTs, assuming they would now berequired to meet existing regulations(note: estimate of roughly 20,000 tanks nationally)40%30%35%Neither dependent or redundantto other requirements.This will close a loopholeRequire notification to implementing agency by owner/operator of ownership change1% 1% 1%Neither dependent or redundantto other requirements.No significant positive or negative effect, but it will help the implementing agenciesRequire one-time notification for existing FCT and AHS systems3% 3% 3%Neither dependent or redundantto other requirements.Not many of these systems to be regulated but finding out where they are will help EPAmake more informed decisions about the need to regulateCompatibilityO/o's storing regulated substances >10% ethanol or >20% biodiesel or another substance identified bythe implementing agency must:i. demonstrate compatibility through one of the following methods: (1) UL listing; (2) Manufacturercertification; (3) Another method determined by the implementing agency; orii. use an UST system that has secondary containment with interstitial monitoring20%15%20%Neither dependent or redundantto other requirements.I strongly concur with this approach. Ethanol is DESTROYING our UST infrastructure atgreat cost to owners and operators. This requirement will provide a deterrent for E-15systems, and that will help prevent releases. ETHANOL SHOULD BE REMOVED FROMGASOLINE. (Benefit drops to zero if E-10 users are excluded (phone call 4/2/2013))Compatibility (EPA added line item inJuly 2013)O/os storing regulated substances >10% ethanol or >20% biodiesel or another substance identified bythe implementing agency must:i. demonstrate compatibility through one of the following methods: (1) UL listing; (2) Manufacturercertification; (3) Another method determined by the implementing agency; orii. use an UST system that has secondary containment with interstitial monitoring. In addition, o/osmustmaintain equipment records for the life of all new and replaced equipment.Less than one percent (for allscenarios)Less than one percent(for all scenarios)One percent (for allscenarios)Not dependent on or redundantto other requirements (for allscenarios)Another good idea that will have a minimal positive effect on reducing the number andseverity of releases. Keep for common sense, but don’t have high expectations. Notes:This is another good idea, yet like the other, will have little effect on reducing releasesto the environment. First of all, while almost all states have documented problems withalternative fuel damage to petroleum storage system infrastructure, there is no data toprove a direct correlation to an increase in releases. For example, there are tens ofthousands of rusty submersible turbine pumps located in piping sumps all over the countrythat appear to be on verge of an imminent catastrophic release, but most of my directobservations of problems with ethanol-corroded STPs have been small weeps that havebeen retained within the piping sump. And that’s for storage tank systems containing E10! Systems with ethanol levels greater than 10% are far fewer in number, and the sameapplies to biodiesel systems greater than 20%. The different scenarios {(1) UL listing; (2)Manufacturer certification; (3) Another method determined by the implementing agency;or ii. use an UST system that has secondary containment with interstitial monitoring} willhave little effect on the reduction of groundwater releases as well. Almost all owners useUL-listed equipment from manufacturers that are concerned about product performanceand product liability. It’s very unusual to see systems without UL listings or that havebeen field fabricated. Secondary containment systems should perform better to preventreleases, but most owners will choose the single-wall option available in (i) instead of (ii)if they probably changed the products stored in their existing single wall tanks fromgasoline or diesel to alternative fuels instead of closing their tanks and installing newdouble-wall systems. This is particularly true in light of the fact that ethanol andbiodiesel were not in widespread use until after the Energy Act of 2005, and new storagetank systems installed after then would have had to install secondary containment.However, the recordkeeping requirement in option (i) will create more expensivepaperwork for the regulated and the regulators, and there may be no significant costbenefit for this additional paperwork burden. I would recommend retaining therequirement, but do not expect any significant reduction in releases.Operator TrainingInstitute Operator Training as Follows:•One-timetraining for Class A operator (technical and regulatory) or opt-out test within 30 days ofassuming duties•One-timetraining for Class B operator (technical) or opt-out test within 30 days of assuming duties.•One-timetraining for Class C operator (limited technical) prior to assuming duties.•Re-trainingfor Class A and B operators if the facility is determined to be out of compliance.Retraining within 30 days of documented non-compliance.1. 20%2. 20%3. 15%4. 5%1. 15%2. 15%3. 10%4. 5%1. 20%2. 20%3. 15%4. 5%Effects specific to Indiancountry?Why should they betreated differently? I donot believe the effectswill be any different thanthey are for facilitiesthat are not in IndianCountryNeither dependent or redundantto other requirements.Operator Training is one of the most helpful requirements of the Energy Act of 2005. Ihave trained over 250 Class A & B Operators, and the classroom program is effective if itlasts at least a half day. One hour courses online are useless. The course should be statespecific, and there must be a test with a standard score for passing (70%), with theability to retest if a passing score is not attained. I have also written the program for anOperator C online course, and the need for training C operators is also an important partof the rule. I don't believe retesting is that useful unless an implementing agency's ruleshave changed significantly.

s OtherNotification

Release DetectionEXPERT 3 RESPONSESIncidence MeasureProposed RegulatoryRequirementDescription of Proposed Regulatory RequirementPercent Reduction inAnnual Releases (ornumber of releasesavoided)Reduction In ThePercentage OfReleases ThatReachGroundwaterPercentReduction InThe AverageQuantityReleasedSensitivityQuestion: Wouldresults differ if thefollowing changewere made?Sensitivity AnswerInteraction - is thisrequirementdependent on orredundant to otherrequirements?CommentsColumn[1][2][3][4][5][6][7][8][9]Severity Measures(choose at least one)Install secondary containment on piping uponreplacement. Replacement defined as:Removal of 50 percent or more of piping, excluding connectors, connected to a single undergroundtank. For underground storage tanks with multiple piping runs, the replace definition appliesindependently to each piping run.50%40%50%Effects specific to Indiancountry?Why should they betreated differently? I donot believe the effectswill be any different thanthey are for facilitiesthat are not in IndianCountryNeither dependent or redundantto other requirements.Many states have this requirement. It is a time-tested and effective method forminimizing the risk from piping systemsRequire secondary containment and interstitial monitoring on all tanks and piping installed or replacedafter effective date of rule50% 40% 50% Effects specific to Indiancountry?Why should they betreated differently? I donot believe the effectswill be any different thanthey are for facilitiesthat are not in IndianCountryNeither dependent or redundantto other requirements.Florida now has nearly 100% compliance with secondary containment statewide. The riskis less and discharges have diminished. This is the most effective thing that EPA can doto minimize leaks from UST systems. Period.Require under-dispenser containment on all new dispenser systems15% 10% 15% Effects specific to Indiancountry?Why should they betreated differently? I donot believe the effectswill be any different thanthey are for facilitiesthat are not in IndianCountryNeither dependent or redundantto other requirements.I've increased my percentages based on the national data.70% 65% 70%All of my responses in this spreadsheet are based on national-level effects. Collectivelythese changes will have significant beneficial effects on reducing releases. Thepercentages will increase as more owners install secondary containment, but you can stilloverfill a double-wall tank, equipment still fails, humans still make mistakes, andalternative fuels continue to undermine the integrity of the system infrastructure.Nevertheless, the rule revisions are needed, and will go a long way in protectinggroundwater and surface water resources.TOTAL IMPACTS OF ALL REQUIREMENTS TOGETHER (considering any overlaps/interactions you have identified in column [I]):

Energy Policy Act-Related Requirement sSecondary ContainmentEXPERT 4 RESPONSESIncidence MeasureProposed RegulatoryRequirementDescription of Proposed Regulatory RequirementPercent Reduction inAnnual Releases (ornumber of releasesavoided)Reduction In ThePercentage OfReleases ThatReachGroundwaterPercentReduction In TheAverage QuantityReleasedSensitivity Question:Would results differif the followingchange were made?Sensitivity AnswerInteraction - is this requirementdependent on or redundant to otherrequirements?CommentsColumn[1][2][3][4][5][6][7][8][9]Walkthrough inspections30-dayinspections with the following minimum components:• Spill buckets – open and visually check for any damage; remove any liquid or debris; and check each fillcap to make sure it is securely on the fill pipe (or check before each delivery if deliveries less frequent than30 days)• Release Detection Systems – make sure system is on and operating with no alarm conditions or otherunusual operating conditions present; ensure records of release detection testing are reviewed monthly andcurrent50% (revised to 40% in states notalready implementing, phone call4.29.13)40%40%(1) Quarterly inspections(2) Annual inspections1) Yes to 30% 2) 20%(Email 5/23/13: same forGW as for releases) (ForAlt 1, IEc uses response forproposed requirement:50% (releases), 40% (GW),email 8/20/13)YES with the Annual testing Requirement of thesesystems A Montlhly Walk Thru would actually get usclose to the 65% range of stopping realeases. So itneeds these parts tested. The part of RealeaseDetection THIS NEEDS A CORRECIVE ACTION to it, likeyou have in Sumps, If Alarm exists " Correct and Clearall Alarms" It says check but not what to do, in SpillBuckets it says "Remove any Liquid or debris"This is the most important to prevention and releasedetection. It is MY expereince in the field that MOSTleaks occur where owners/operators can see the leak,fewer and fewer leaks occur underground, mostly at theends of the systems or connection points, SO NOTHAVING DISPENSERS AND SUMPS looked at willNEGATIVELY impact this number.Overfill prevention equipment inspectionOnce every three years:Require inspection to ensure overfill equipment is set to activate at the appropriate level in the tank and theequipment will activate when the regulated substance reaches that height. The inspection must beconducted according to a code of practice, manufacturer’s instructions or according to the implementingagency.30% (specific to states notalready implementing, phone call4.29.13)30% 30% Annual overfill preventionequipment inspection65% (Email 5/23/13: thisnumber applies only toreleases; use 45% for GWreduction) (email8/20/13: revised to 35%(frequency) and 25% (GW)to make reductions morerealistic when combinedwith other requirements)Yes with Inpsections they go hand in handThis regulation is Important as it is our defense againstthe Unregulated Driver (DOT) not EPA handels drivers asa young man I watched Hundreds of Delivries wheredriver spilled hundreds of gallons and sometimes just ranit into the ground.Spill prevention equipment testingOnce every three years:Require testing to ensure spill prevention equipment is liquid tight by performing a vacuum, pressure orliquid test according to manufacturer's requirement or code of practice (does not apply to double-walledspill buckets with interstitial monitoring)30% (revised to 25% in states notalready implementing, phone call4.29.13)20% 20% (1) Annual spill preventionequipment testing(2) Testing of new spillprevention equipment within3 years of installation andthen annually afterwards1) 65% 2)60%(Email 5/23/13: thisnumber applies only toreleases; use 45% and 40%for GW reductions in 1 and2) (Email 8/20/13: revisedannual reductions to 30%(frequency) and 25% (GW)to make reductions morerealistic when combinedwith other requirements.IEc did not ask forreconsideration ofsensitivity question 2.)Goes well with Montlh InspectionsThe if New test within 3 year presupposes its beentested at time of installation, I would encourage anyNew Install after being tested, will then be retestedevery 3 years. It must START tightContainment sump testingOnce every three years:For containment sumps used for piping interstitial monitoring, require testing using vacuum, pressure orliquid methods (except for double-walled containment sumps with interstitial monitoring)15-18%30%Annual containment sumptesting60% (Email 5/23/13: thisnumber applies only toreleases; use 40% for GWreduction)Within 30 days of a repair:20% (but use specific #s below,phone call 4/9/13)30% (but use specific #sbelow, phone call 4/9/13)• Require spill prevention equipment testing after repair to spill prevention equipment23-28%0%• Require overfill prevention equipment inspection after repair to overfill prevention equipment29%65%• Require secondary containment testing after repair to the secondary containment area for tanks, sumps,or piping33%0%Replacement of lined tanks that cannotbe repaired according to a code ofpracticeRequire replacement of lined tanks that cannot be repaired according to a code of practice15%0%O&M for release detection equipmentRequireannualoperation and maintenance tests for release detection equipment and containment sumps:• ATG - test alarm; verify system configuration; and test battery back-up• Vacuum pumps and pressure gauges - ensure communication with sensors and controller• Probes and sensors - inspect for residual buildup, ensure floats move freely; ensure shaft is not damaged;ensure cables are free of kinks, bends, and breaks; test communication with controller• Line leak detector - simulate leak to determine capability to detect a leak• Vapor monitoring - calibrate handheld electronic devices; test operability of sensors• Groundwater monitoring - check handheld bailers for functionality; test operability of sensors• Check tank gauge sticks• Containment sumps (tank, dispenser, etc.) – check for any damage, leaks to the containment area, orreleases to the environment; and remove any liquid or debris60% (reduced to 50% for universeof reported releases only, phonecall 4/9/13)65% (reduced to 55% foruniverse of reportedreleases only, phone call4/9/13)65%BE NICE TO HAVE " Must be a certifeid technicanperform this"By adding the extra components to the list of AnnualYOU WILL SEE INCREASED of leaks found sooner withSmaller realeases to the environment, it actually does alot, if a tester fails the part, he will take that part toMFG, if MFG can improve or make better that techimproves. Next if he pays for repiars and is shown whatto inpesct visually he wont let it happen again, it isperhapas the single thing to IMPACT the environment.(IEc: assume GW and vapor monitoring do not result inreductions in releases or groundwater contamination.General maintenance finds other problems just bypaying more attention.)Add SIR and CITLDS usageRequire SIR and CITLDS users to submit quantitative results only (with leak rate)22%0%YES its part of Leak Detection and it should be checked,if NOT an ANNUAL Line Test should be required.The SIR is part of the Leak Detection Method if theSystem cannot be checked by Introducing a leak thenthey should at least have an Annual Line Test on thesesystems. Most Satelites in US are NOT COVERED by SIR.IF a Leak Exists and no test is conducted the leak willbecome part of the formula and go Undetected. Its wayto Cheap to be taken seriously. Not only that manyleakjs arent found for a few months.Response to interstitial monitoring alarmsRequire secondary containment testing in response to an interstitial monitoring alarm (if warranted afterinitial investigation)5-7%10%Severity Measures(choose at least one)15%20%30%

Release Detection Release PreventionRepairsOverfill prevention equipment• Eliminate flow restrictors as an overfill prevention option fornewtanks (and when overfill preventionequipment is replaced)EXPERT 4 RESPONSESIncidence MeasureProposed RegulatoryRequirementDescription of Proposed Regulatory RequirementPercent Reduction inAnnual Releases (ornumber of releasesavoided)Reduction In ThePercentage OfReleases ThatReachGroundwaterPercentReduction In TheAverage QuantityReleasedSensitivity Question:Would results differif the followingchange were made?Sensitivity AnswerInteraction - is this requirementdependent on or redundant to otherrequirements?CommentsColumn[1][2][3][4][5][6][7][8][9]Severity Measures(choose at least one)Groundwater monitoring/vapormonitoringRequire owners/operators that use this method to have a site assessment in accordance with 280.43(e) or280.43(f) and maintain the assessment as long as they use GW or VP, respectively, as their release detectionmethod0%0%Groundwater monitoring/vapormonitoring (EPA added line item in July2013)Require owners/operators that use groundwater and vapor monitoring for release detection to phase-out useof these methods over five years. These methods are assumed to be replaced with SIR.30%40%Provided the results are turned in formally as part ofannual certification and there are consequences forInconclusive SIR results as other states have employed.An Inconclusive is treated as abnormal operatingcondition and requires a test to confirm no leak. I thinkabout 30% due to the fact there is lots of human errorinvolved in SIR. But run well SIR, should allow the leaksto seen earlier therefore the 40% severity of leaks foundby Groundwater and vapor monitoring.DeferralsRemove release detection deferral for emergency generator USTs, assuming they would now be required tomeet existing regulations(note: estimate of roughly 20,000 tanks nationally)30% 45%Require notification to implementing agency by owner/operator of ownership changelittle impact little impactRequire one-time notification for existing FCT and AHS systemslittle impact little impactCompatibilityO/os storing regulated substances >10% ethanol or >20% biodiesel or another substance identified by theimplementing agency must:i. demonstrate compatibility through one of the following methods: (1) UL listing; (2) Manufacturercertification; (3) Another method determined by the implementing agency; orii. use an UST system that has secondary containment with interstitial monitoring20% 40% 30%This is rather substantial due to the fact that mostrealeases occur at the ends of systems where mostcompatabilty issues occur, THIS IS NEEDED, Add ShearValves to this as this will become a MAJOR issue inFuture. This could cause a fatality, the fuels are makingthese systems not work.Compatibility (EPA added line item inJuly 2013)O/os storing regulated substances >10% ethanol or >20% biodiesel or another substance identified by theimplementing agency must:i. demonstrate compatibility through one of the following methods: (1) UL listing; (2) Manufacturercertification; (3) Another method determined by the implementing agency; orii. use an UST system that has secondary containment with interstitial monitoring. In addition, o/os mustmaintain equipment records for the life of all new and replaced equipment.10% (phone call 8/28/13: useprevious compatibility responseof 20%)(phone call 8/28/13: useprevious compatibilityresponse of 40%)30%This will be important on an Ongoing basis so its realimpact to annual releases will be minimal, but itsimpact will be felt on the Quantity released thats whythe larger number. These are maintenance issues.Operator TrainingInstitute Operator Training as Follows:•One-timetraining for Class A operator (technical and regulatory) or opt-out test within 30 days ofassuming duties•One-timetraining for Class B operator (technical) or opt-out test within 30 days of assuming duties.•One-timetraining for Class C operator (limited technical) prior to assuming duties.•Re-trainingfor Class A and B operators if the facility is determined to be out of compliance. Retrainingwithin 30 days of documented non-compliance.20% 25% Effects specific to Indiancountry?35%Having just trained some Indian Nations they are Hungryfor the training and I see a large Impact if we impact tothem and allow them to come up with it so its theirplan, They are being hurt by what they don’t know atthe sites. I know this for a fact.Install secondary containment on piping uponreplacement. Replacement defined as:Removal of 50 percent or more of piping, excluding connectors, connected to a single underground tank. Forunderground storage tanks with multiple piping runs, the replace definition applies independently to eachpiping run.25%30%Effects specific to Indiancountry?30%Require secondary containment and interstitial monitoring on all tanks and piping installed or replaced aftereffective date of rule15% 20% Effects specific to Indiancountry?Require under-dispenser containment on all new dispenser systems40%30%30%Effects specific to Indiancountry?45% (email follow up, 4/15/2013) 50% (email follow up,4/15/2013)50% (email follow up,4/15/2013)TOTAL IMPACTS OF ALL REQUIREMENTS TOGETHER (considering any overlaps/interactions you have identified in column [I]):

OtherNotification

Energy Policy Act-Related RequirementsSecondary ContainmentH-15 

### Summary of Adjustments to Expert Responses

This section describes the adjustments made to the experts’ responses to ensure that the responses were correctly applied to relevant univers es of facilities and rele ases. We first describe general adjustments and considerations releva nt to each expert. We then provide detail on specific adjustments made to in dividual experts’ responses.

General Adjustments and Methodological Considerations

 Where experts provided a range of values fo r a single requirement, we use the midpoint of the given range. We confirmed this approach with the experts, and they agreed that this was appropriate.

 For requirements for which experts were una ble to provide a numerical response, we conservatively assume that the regulatory re quirement has no (zero) effect on release frequency and severity.

 Where experts provided a combined numerical response for operabili ty testing of all types of release detection systems, we apply th at estimate only to certain types of systems to avoid double-counting benefits. Specifica lly, we do not apply reductions to testing pumps and gauges or probes and sensors unless the expert provided estimates specific to those types of equipment. The subset of tanks using these types of equipment represents a portion of the universe of tanks covered by other release dete ction systems.

 For the Selected Option, we do not include reductions associated with the groundwater and vapor monitoring site assessment requirem ents if experts assumed that reductions resulted from users switching to other methods . Such an assumption is not consistent with the approach used to model costs. Because we cannot isolate and remove the portion of

the reduction that is due to switching release detection methods, we conservatively assume that the switch has no (zero) effect.

 For Alternative 1, we do not attribute reductions to release detection system operability testing of pumps and gauges or probes and se nsors because these types of equipment are not included in the proposed requirement for that alternative. We also do not include reductions for operability testing of groundwat er and vapor monitori ng release detection systems because those reductions are assu med to be captured by the phase-out of groundwater and vapor monitoring systems.

Expert-Specific Adjustments

Expert 1:

 Expert 1 provided responses only for the univ erse of tanks in states without existing regulation.

 Expert 1 clarified that his re ductions in release severity s hould not apply to operability testing of vapor monitoring or groundwater monitoring release detection systems. TheseH-16 

### methods are assumed to identify releases only after groundwater contamination has already occurred. Estimated reductions do a pply to other release detection methods.

 Expert 1 attributed reductions associated with the documen tation of compatibility to tanks storing E10, as well as those stori ng >E10 and >B20. Because the expert believed that the largest share of the estimated reduction would result from compatibility improvements in tanks storing E10, and because the regulatory requirement focuses only on tanks storing >E10 and >B20, we conservativ ely assumed that the expert estimated no (zero) effect for this requirement.

Expert 2:

 Expert 2 provided responses for the entire national universe of tanks, including tanks in states with existing regulation.

 Based on conversations with EPA and other ex perts, we conclude that reductions in release severity should not apply to oper ability testing of vapor monitoring or groundwater monitoring releas e detection systems. These methods are assumed to identify releases only after groundwater co ntamination has already occurred. Estimated reductions do apply to other release detection methods.

Expert 3:

 Expert 3 provided responses for the entire national universe of tanks, including tanks in states with existing regulation.

 Expert 3 provided responses for walkthr ough inspections by component inspected. We

calculate the overall reducti on as the weighted average of each component, according to a standard UST system configuration (that is , one spill bucket, one sump, two dispenser pans, one monitoring/observation well, one im pressed current rectifier, and one release detection system). Where components are not included in the proposed walkthrough inspection requirement, we assume that the inspection has no (zero) effect for that

component.

 Expert 3 provided responses for operator trai ning by type of traini ng. To be consistent with the cost analysis, we calculate the ove rall reduction according to the percentage of

costs associated with each t ype of training (that is, 33.3 perc ent are associated with retraining, and of the remaining 66.7 percent, 20 percent are associated with Class A training, 20 percent with Cla ss B training, and 60 percent with Class C training).

 Expert 3 attributed reductions associated with the documen tation of compatibility to tanks storing E10, as well as those stori ng >E10 and >B20. The expert clarified that reductions would drop to zero if E10 user s were excluded from the requirement. We

therefore assume that this re quirement has no (zero) effect.H-17 

### Expert 4:

 Expert 4 generally provided responses fo r the entire national universe of tanks, not

limited to those in states without existing regulation. For walkthrough inspections, overfill functionality testing, and spill bucke t tightness testing, the expert provided responses for only the universe of tank s in states without existing regulation.

 Based on conversations with EPA and other expe rts, we assume that reductions in release severity should not apply to operability testing of vapor monitoring or groundwater monitoring release detection sy stems. These methods are assumed to identify releases only after groundwater contamination has al ready occurred. Estim ated reductions do apply to other release detection methods.

 For operator training and secondary contai nment requirements, Expert 4 provided

different estimates of reductions for US T systems on tribal lands. We use these

responses.

Consideration of Regulatory Compliance Assumptions

Although the approach adopted for the cost analysis assumes that owners/operators would comply fully with all new regulations und er the final regulation, EPA did not provide the experts with instruction regardi ng compliance assumptions. By not specifying that experts should assume full compliance, EPA allowed experts to incorporate their judgment about the frequency

and effect of unintentional error as well as deliberate noncompliance. EPA believes that this approach provides more realistic estimates of the reductions that can be expected from the requirements of the final regulation. However, this approach differs from that used in the cost analysis and may therefore affect the interpre tation of net benefits of the final regulation.

To the extent that noncompliance occurs, cost s estimated in this RIA may be overstated. It is also possible that some expert opinions on specific regulatory impacts may not completely capture full compliance (and may therefore unders tate the beneficial impacts of the final regulation), because the experience of most expert s is related to implementing state regulatory programs and one issue encountered has been noncompliance. Therefore, because compliance assumptions mean that costs may be oversta ted compared to the positive impacts of the regulation, this RIA presents a conservative estimat e of net benefits. Becau se three of the four experts provided responses that result in net cost savings to society under the Selected Option, even under these conservative assumptions, we do not attempt to adjust their estimates for noncompliance.

Expert 2, however, provides responses that lead to a net cost to soci ety under the Selected Option. In his responses, Expert 2 also explicitly raised the issue of compliance, noting that the cumulative estimate of all requirements together assumes at least 80 percent compliance with the regulations (other respondents did not make specific notes about noncompliance). Additionally, this expert’s cumulative benefits were substantia lly higher than the sum of avoided costs of each individual requirement. In subsequent conversati on, this expert explained that, on average, heH-18 

### believes compliance rates will be at most 75 percent nationally for requirements that depend on behavioral change, rather than technological ch ange, and the long-term and cumulative benefits

would result from a combination of behavioral and technological change encouraged by the regulation. Expert 2 noted that his assumed le vel of 75 percent compliance did not include intentional noncompliance, but did attempt to ac count for a lack of awareness or human error by owners/operators.

To evaluate the sensitivity of avoided cost estimates to compliance assumptions, we scale Expert 2’s avoided remediation costs from 75 percent compliance to 100 percent compliance, to be consistent with the assumptions in the cost analysis. This adjustme nt results in avoided remediation costs greater than $150 million a nnually under the Selected Option, assuming a seven percent discount rate. In comparison, the value presented in this RIA, which does not adjust for Expert 2’s noncompliance assump tions, is approximately $110 million. Using the higher value scaled to assume full compliance, as would be consistent with the cost analysis, results in avoided costs greater than complian ce costs for conventional UST systems and EGTs (for which costs are estimated to be approximate ly $130 million), or net cost savings to society. Similarly, scaling costs to assume at most 75 per cent compliance, to be consistent with Expert 2’s assumptions, results in net cost savings.

As noted above, we did not follow up with the remaining three expert s to clarify assumed compliance rates because their estimates generated net cost savings even under conservative compliance assumptions. That is, if the expert s assumed full compliance, their assumptions would be consistent with EPA’s assumptions in the cost analysis, and would generate net cost savings to society. If the e xperts assumed any level of nonc ompliance, we would expect estimated avoided costs to be higher under full co mpliance assumptions, and the net benefits of the regulation would be greater. As a result of the different compliance assumptions used in the cost and avoided cost analyses, the central analysis in this RIA likely under states net benefits of the regulation.

### Appendix I

Methodology for Calculating Avoided Cleanup Costs and Summary TablesI

- 1



### This appendix presents EPA ’s detailed methodology for the calculation of avoided costs and summary tables of the overall avoided costs by regulatory requirement

. The steps t hat EPA

took to calculate avoided costs are as follows:

 Tabulation of release reductions per requirement as provided within expert

responses

 Weighting of reductions according to the universe affected by each regulation

 Calculation of avoided releases

 Econo mic valuation of avoided releases to yield avoided costs

The sections below describe each of these steps in detail.

I.1 Tabulation of Release Reductions per R equirement

EPA sent each expert a set of questions , as described in Appendi ces G and H . The

purp ose of these questions was to obtain measures of two aspects of the regulatory requirements:

1. Reductions in release frequency, i.e., what portion of releases might be avoided

due to the final regulation

.

2. Reduction in release severity, i.e.

, how might releas es become less harmful as a consequence of the final regulation

.

Each expert respond ed to a number of questions that focused on the effects of each regulatory requirement on both the incidence of releases and the severity of releases. For the

incidence of releases, each expert was asked to provide a percent reduction in the number of

annual releases. F or the severity of releases, each expert was asked to provide either the percent
reduction in the number of releases that reach groundwater , or the percent r eduction in the average quantity released.

All expert s directly estimated the anticipated changes in the incidence of releases. T o estimate reductions in release severity

, three of the four experts directly estimated the percent

reduction in the number of releases that reach groundwater. EPA translated the reductions in volume estimated by the remaining expert (Expert 2) into reductions in groundwater contamination; the methods for that calculation are explained later in this A ppendix. In the

sections below , the calculations of avoided groundwater incidents for Expert 2 correspondingly

u se a different methodology than those for other experts.

In responding to the questions about release severity, other e xperts also provided

estimates of reductions in relea se volume in addition to explicit reductions in groundwater

contamination , though we do not incorporate these into our measures of reduced severity. Where experts provided explicit reductions in groundwater contamination incidents, we used th o seI

- 2



### estimates rather than estimates of volume reductions to avoid introducing uncertainty associated

with those calculations. 1



### In a few cases, experts provided responses that had to be averaged in order to yield a

usable value. For example, one expert did not provide an aggregate figure for the effects of the walkthrough inspection requirements on release incidence and release severity, instead providing disaggregated reduction values for each UST system component that would be address ed by a walkthrough inspection. In s uch case, we calculated a weighted average of the reductions provided based on the number of units of each component in an average UST system as

described in Exhibit 2

- 1.

I.2 Adjustment of Reductions According to the Universe Affected by R e quirement

As ea ch distinct requirement of the final regulation affects only a certain percentage of the universe of UST systems, we weighted the reductions provided by the experts based on two
elements:

1. T he percentage of UST systems affected by a given requirement ; and

2. T he area of an UST system that the requirement would affect

.

For example, walkthrough inspections will affect 69. 3 percent of the universe of UST

systems and are expected to affect all areas of a typical UST system (see Exhibit I

- 1 )

. 2


### According to Expert 1’s responses, walkthrough inspections will reduce the frequency of releases by 10 percent, and the percentage of releases reaching groundwater by 30 percent , for systems that are not currently subject to state

- level monthly walkthrough inspection requirem ents . We weight these figures by 69. 3 percen t and calculate that according to Expert 1, total release frequency will reduce by 6.9 3 percent and the percentage of releases reaching groundwater will reduce by 20.8 percent as a result of the walkthrough inspe ction requirement. The full list of the UST universe affected by each requirement of the final regulation is available

in Exhibit 2

- 4

.

Experts considered different universes when developing estimates of impacts. Expert 1 estimated changes in release rates likely at facilities that are not currently subject to the requirement s (i.e., the percentage reductions could only be applied to the subset of facilities whose practices would be affected )

. E xpert s 2 and 3 , however, provided overall “national”

reductions that apply to the entire universe of UST systems ; these estimates incorporate baseline

1 Some experts did not provide percent reductions in the number of releases reaching groundwater for certain requirements. In these cases, we treated their responses as indicati ng that there would be no reduction in the number of releases reaching groundwater.

2 The universe affected by walkthrough inspections used in benefits calculations differs slightly from the universe used in cost calculations (see Chapter 2). For modeling costs, EPA considers that states currently conducting monthly inspections will be required to switch to 30

- day inspections. For modeling benefits, we assume that those states will not incur additional benefits because of the switch from monthly to 30

- day i nspections. Therefore, the universe affected does not include tanks in states conducting monthly inspections in the baseline.I

- 3



### variation in practice and apply to all systems

. For example, for walkthrough inspections, we would apply estimated reductions given by Experts 2 and 3 to 100 percent of UST systems,

rather than the 69. 3 percent that are not currently subject to monthly inspection requirements. Expert 4 considered a national universe for a subset of the requirements , and for other requirements considered only the universe of systems that w ould see changes in practice

. We present the universe values in both scenarios and the area of the UST system affected by each requirement in Exhibit I

- 1

.I

- 4 Exhibit I

- 1 UST System Area and Proportion of Universe Affected by Regulatory Requirement

Descript ion Area of UST Affected Proportion of Universe Affected Experts 1, 4 a Experts 2, 3, 4 a

Release Prevention Walkthrough inspections b all sources 69. 3 % a 100% Overfill prevention equipment inspections c delivery problems 61. 4 % a 100% Spill preventi on equipment tests d delivery problems 67. 2 % a 90.0% Containment sump testing e dispensers, STP 13.9% 18.3% a
Spill prevention equipment tightness test after repair delivery problems 2.48% 2.50% a
Overfill prevention equipment test after repair delivery prob lems 1.95% 2.00% a
Secondary containment test after repair tank, piping 2. 50 % 3.34% a

Eliminate flow restrictors in vent lines for all new tanks and when

overfill prevention equipment is replaced delivery problems 11.0% 13.5% a

Release Detection Ope rability test

– ATG t ank 33.0% 33.7% a
Operability test

– vacuum pumps and pressure gauges tank, piping 18.4% 18.8% a
Operability test

– probes and sensors tank, piping 5 5.9 % 5 6.9 % a
Operability test

- line leak detection p iping 27.5% 27.5% a
Operability t est

– vapor monitoring t ank 2. 31 % 2. 31 % a
Operability test

– groundwater monitoring t ank 2. 19 % 2. 19 % a
Operability test

– tank gauge sticks t ank 22.3% 22.7% a
Operability test

– containment sumps tank, piping 18.4% 18.8% a
Add SIR/CITLDS to regulations wit h performance criteria tank, piping 0.477% 0.477% a
Response to interstitial monitoring alarms tank, piping 1.84% 2.42% a
Groundwater monitoring for release detection t ank 0.286 % 0.286 % a
Vapor monitoring for release detection t ank 0.276 % 0.27 6% a

Remove r elease detection deferral for emergency generator tanks tank, piping 1.90% 3.00% a

Other Require notification of ownership change n one 1.5 1 % 10.1% a
Closure of lined tanks that cannot be repaired according to a code of practice t ank <0.001% < 0.001% a

Req uirements for demonstrating compatibility with fuels > E10 and

> B20 all sources 0.041% 0.041% a

Deferrals removed for airport hydrant fuel distribution systems not estimated not estimated not estimated Deferrals removed for UST systems with field

- constru cted tanks not estimated not estimated not estimated

EPAct

- related Provisions Operator training all sources 0.4 53 % 0.4 53 % a

Secondary containment

- new and replaced tanks tank, piping, dispensers, STP 0.016% 0.16 4 % a

Secondary containment

- threshold for pipe replacement rather than repair p iping <0.001% <0.001% a

Under

- dispenser containment for all new dispensers dispenser 0.2 20 % 0.2 20 % a

Notes:

a Expert 4 provide d responses for different universes affected for different requirements. T he specific univer se considered by Expert

4 for each requirement is denoted by this footnote

. b The proportion applied to responses from Expert 1 and Expert 4 decreases to 60. 5 percent under Alternative 2. The universe affected by walkthrough inspections used in benefits ca lculations differs slightly from the universe used in cost calculations (see Chapter 2). For modeling costs, EPA considers that states currently conducting monthly inspections will be required to switch to 30

- day inspections. For modeling benefits , we assu me that those states will not incur additional benefits because of the switch from monthly to 30

- day inspections. Therefore, the universe affected does not include tanks in states conducting monthly inspections in

the baseline.

c The proportion applied to responses from Expert 1 and Expert 4 increases to 6 6.1 percent under Alternative 1. Under Alternative 2, the proportion applied to all experts’ responses decreases to zero.

d The proportion applied to responses from Expert 1 and Expert 4 increases to 7 0.5 percent under Alternative 1.

e The proportion applied to responses from Expert 1 and Expert 4 increases to 1 5.6 percent under Alternative 1. Under Alternative 2, the proportion applied to all experts’ responses decreases to zero.I

- 5



### I.3 Calculation of Avoi ded Releases

The methodology calculates releases in two parts:

 Total releases avoided due to a reduction in release frequency ; and

 Groundwater releases averted due to a reduction in the percentage of releases reaching groundwater.

I.3.1 Total releases avo ided due to a reduction in release frequency

To assess how the requirements of the final regulation affect the number of releases, we rely on a n evaluation of r elease s performed by EPA

. 3 

### This study considered over 500 releases in

23 states and classified t hem by whether they reached groundwater, as well as which part of the UST system (i.e., piping, dispenser, tank, etc.) was responsible for the release. Exhibit I

- 2

summarizes the data we use in our calculations.

Exhibit I

- 2

Release Incidence, Extent, and Media Contamination Type by Source

Source of

Release % of All

Releases Local

Extent Large

Extent Soil

Affected Water

Affected Soil Only Water Only

Local

Extent Large

Extent Local

Extent Large

Extent Piping 31% 65% 35% 45% 55% 90% 10% 40% 60% Disp enser 32% 83% 18% 77% 23% 93% 7% 42% 58%

Tank 16% 54% 46% 48% 52% 64% 36% 34% 66%

STP Area 4% 83% 17% 50% 50% 100% 0% 62% 38% Delivery

Problems 16% 72% 28% 61% 39% 97% 3% 43% 57%

Others 1% No

data No

data No data No data No

data No

data No

data No

data Source: Office of Underground Storage Tanks, “Evaluation of Releases from New and Upgraded Underground Storage Tank Systems

– Peer Review Draft,” U.S. EPA, August 2004.



### We apply the reductions estimated by the experts to these sources as mapped by Exh ibit

I

- 1 ; for example, walkthrough inspections would affect releases from all sources, whereas

overfill prevention equipment inspections would affect only those releases arising from delivery problems. We similarly consider how each requirement of the fina l regulation affects releases reaching groundwater from each source.

To calculate the proportion of releases avoided :

 W e consider the percentage of all releases coming from each source in an UST system, as well as the percentage of all releases reaching gr oundwater coming

from each source as described in the autopsy study data.

3 Office of Underground Storage Tanks, “Evaluation of Releases from New and Upgraded Underground Storage Tank Systems

– Peer Revie w Draft,” U.S. EPA, August 2004.I

- 6



###  We sum the reductions, weighted by the universe affected by each requirement

, across each source for reductions in overall release frequency and reductions in the percentage of grou ndwater releases.

 We reduce the proportion of releases from each source by the total estimated

reductions

. 4



### To determine the number of actual releases avoided :

 W e obtain the difference between the percentage of releases from each source prior to the impl ementation of the final regulation and the percentage of releases

from each source after the implementation of the final regulation

.

 We then multiply this difference by the total number of confirmed releases according to the OUST 201 3 End

- of

- Year Annual Re port to obtain a numerical

value for releases avoided.

 We sum th ese figure s across all release sources to obtain a figure for total releases

avoided.

I.3.2 Groundwater releases averted due to a reduction in the percentage of releases reaching groundwater

To assess the reduction in severity of releases

, we obtain the difference between the proportion of releases affecting groundwater for each area of an UST system prior to and following the implementation of the final regulation

. To obtain a distribution o f releases before

the regulatory changes, we allocate confirmed releases from the EPA’s FY 201 3 End

- of

- Year Report according to the distribution in the Florida study. We obtain the total reduction in groundwater incidents due to the final regulation and red uce the proportion of groundwater

releases and redistribute these r eleases to increase the proportion of soil releases (recognizing that all of these releases would still happen under the regulation , but a smaller percentage will reach groundwater due to t he regulation )

. To calculate the number of groundwater releases

averted

, we compare the number of groundwater releases before and after the regulatory requirements.

Due to a lack of data from experts on changes in severity and cost of releases

, EPA

calcul ates only the difference between average remediation costs of a soil

- only release and average remediation costs of a groundwater release.

The Agency does not estimate cost savings for reducing the severity of releases that

involve the same medium in both s cenarios. That is, we do not measure the cost savings associated with small groundwater contamination releases that would have been larger and more

4 These new percentages do not sum to 100 percent across sources; rather, these percentages present the ratio of remaining releases after the reductions stemming from the requirements of the final regulation go into e ffect from a given source to the overall ratio of releases prior to the implementation of the final regulation

.I

- 7



### expensive in the baseline, or with small soil contamination events that would have been larger in

the baseli ne, but would still not have reached groundwater. The analysis therefore provides only

a partial estimate of the avoided cleanup costs associated with reduced release severity. If release

extent is associated with volume

– as the 23

- state autopsy report da ta suggest

– then reductions in release volume should result in both smaller extent releases regardless of media contaminated and fewer incidents of groundwater involvement, not just the latter. Our partial analysis thus likely underestimates the positive impacts and cost savings associated with reduc ed release severity under the regulation

.

I.3.3 Calculations for groundwater releases averted for Expert 2

Because Expert 2’s responses address changes in volume rather than the number of releases reaching gro undwater resources
, we use a groundwater contamination index from the

risk assessment developed for EPA to translate reductions in average release volume to reductions in the proportion of releases reaching groundwater. 5 

### In particular:

 We use average relea se volume per release source from the autopsy study data to
estimate the baseline proportion of releases that reach groundwater , based on the groundwater contamination model.

 We reduce baseline volumes by the weighted volume reductions in the same way

as r eductions in percentage of releases reaching groundwater to obtain post

regulation average release volumes and rates of groundwater contamination for

each release source

. 6



###  We calculate the difference between the rates of groundwater contamination

between t he baseline and post

- regulation scenarios.

Exhibit I

- 3 reports the volumes used to calculate avoided groundwater releases for

E xpert 2

.

5 RTI International, “Risk Analysis to Support Revisions to Underground Storage Tank (UST) Regulations,” December 22, 2009.

6 This method may underest imate avoided groundwater release s for release sources for which the average release i s relatively small in volume (e.g., the STP area, delivery problems). This occurs because the process for translating volume reductions in to reductions in groundwater c on tamination probabilities applies a linear scaling factor (in addition to a constant). Correspondingly, relatively fewer gallons will be reduced for a release source for

which the average release is relatively small (i.e., a 10% reduction of a 1,000

- gallon release is much larger than a

10% reduction of a 10

- gallon release). With a small difference between pre

- reduction and post

- reduction average release sizes, the effect on groundwater contamination probabilities for these release sources is also small

.I

- 8 Exhibit I

- 3

Average Volume by Release Source

Source of Release Average release (gal)
Piping 1,152

Tank 696

Other 408
Dispenser 260
Fuel Delivery 126
Pump (Turbine) 33
Fill Pipe 93 Office of Underground Storage Tanks, U.S. EPA, “Petroleum Releases at Underground Storage Tank Facilities in Florida,” U.S. EPA, March 2005.



### Once these values are derived, our metho dology for calculating avoided costs using Expert 2’s responses proceeds similarly to our methodology for calculating avoided costs via the responses of all other experts.

The risk assessment simulation of groundwater involvement may also overstate the

pro bability of groundwater contamination, especially at relatively low release volumes (approximately 50 gallons or less). The simulation assumes that modeled volumes are released at a single time, which increases the probability of rapid soil transport and g roundwater contamination. Experts with whom we spoke indicated that some releases involve low throughput over an extended period of time; these releases are more likely to be affected by attenuation and less likely to reach groundwater rapidly. The impact of this assumption means that the reduction in groundwater events is likely understated (e.g., because small releases still reach groundwater in large numbers). This produces a relatively conservative (i.e., low) estimate of the number of groundwater relea ses avoided.

I.4 Economic Valuation of Avoided Releases to Obtain Avoided Costs

Our valuation of avoided releases assigns values to two kinds of avoided costs:

 Costs avoided due to avoided releases ; and

 Costs avoided due to the avoidance of a groundwater contamination incident

, which effectively replaces a groundwater release with a less costly soil release

.

I.4.1 Economic valuation of costs avoided due to avoided releases

To assign an economic value to avoided releases, we consider the autopsy study dat a, which breaks down releases by release source, extent (local or large), and whether or not the release reached groundwater (media affected)

.I

- 9



### We use average release remediation costs that consist of a weighted average of cost data across release types fr om both New Hampshire and Utah. 7 

### These costs vary by extent of the

release (local or large) , as well as by the media affected by that release (soil or groundwater)

. We calculate an average cost per release from each source by calculating a weighted average cost based on the type of release (large or small extent, soil or groundwater contamination) generated by that source. We multiply the number of avoided releases from each release source by the

average cost of releases from that source to obtain avoided c osts by release source. We sum these

to obtain total avoided co sts across all avoided releases.

I.4.2 Economic valuation of costs avoided due to avoided groundwater releases

Because groundwater releases tend to be more costly to remediate than releases t hat

affect only soil, the conversion of groundwater releases into soil releases represents a cost savings . The magnitude of cost avoidance depends on the number of groundwater releases

averted: every groundwater release averted means lower groundwater reme diation costs and

additional soil remediation costs

. To calculate the costs avoided due to the aversion of groundwater releases, we calculate the differen ce in the total cost of remediation prior to and after the implementation of the final regulation

.

Un der both scenarios, we use the same number of releases; that is, we alter only the distribution of releases, not their total number. In both cases, we use the total number of releases remaining after we exclude those releases that are completely avoided. W e distribute releases according to the release source

, media affected

, and extent shown in Exhibit I

- 2 and calculate the total cost to remediate those releases. After accounting for changes in rates of groundwater contamination, we repeat the process and c alculate the cost to remediate all releases after the

final regulation

. While the distribution across extent and release source does not change, the reductions in the percentage of groundwater releases alter the number of groundwater and soil

releases from each release source. The difference in the total cost of remediation in the pre

implementation and post

- implementation scenarios represents our measure of reduced severity of

releases

.

Total avoided costs can be calculated by summing the avoided costs fr om avoided releases and the avoided costs from averted groundwater releases.

I.5 Results of the Economic Valuation of Avoided Costs

Exhibits I

- 4 through I

- 6 present the results of this analysis for the Selected Option, Alternative 1, and Alternative 2. T hese exhibits summarize avoided costs by regulatory requirement for each expert, as well as noting the average of the experts’ responses. Exhibits I

- 7 through I

- 9 present the results of the sensitivity analysis using only the lowest remediation costs

avail able , provided by the State of New Hampshire. Discussion of the results of both the primary and sensitivity analyses can be found in Chapter 4

.

7 We also calculate these costs using data from New Hampshire to evaluate the sensitivity of our results.I

- 10 Exhibit I

- 4 Total Discounted Avoided Costs By Requirement For Conventional UST Systems a,b ($ millions)

Selec ted Option

Description c Expert 1 Expert 2 Expert 3 Expert 4 Average

Release Prevention Walkthrough inspections $140 $44 $130 $270 $150 Overfill prevention equipment inspection $23 $1.1 $19 $25 $17 Spill prevention equipment testing $16 $ 7.3 $36 $21 $20 Containment sump testing $9.3 $18 $1.0 $9.7 $9.4 Testing after repairs to spill and overfill prevention equipment, and secondary

containment $2.7 $11 $1.9 $7.9 $5.9

Eliminate flow restrictors in vent lines for all new tanks and when overfill prevention equipment is replaced $2.2 $7.5 $0.85 $1.5 $3.0

Subtotal

- Release Prevention $190 $89 $190 $330 $200

Release Detection Operability tests for release detection methods $130 $13 $61 $170 $92

Groundwater monit oring site assessment d $0.00 $0.00 $0.00 $0.00 $0.00 Vapor monitoring site assessment d $0.00 $0.00 $0.00 $0.00 $0.00 Add SIR and CITLDS usage e $0.21 $0.00 $0.94 $0.56 $0.43 Response to interstitial monitoring alarms $0.80 $10 $0.21 $0. 78 $2.9

Remove release detection deferral for EGTs $0.68 $2.2 $7.6 $5.9 $4.1

Subtotal

- Release Detection $130 $25 $70 $170 $99

Other Notification of ownership changes f $0.00 $0.00 $0.00 $0.00 $0.00 Replacement of lined tanks that can not be repaired according to a code of practice g $0.00 $0.00 $0.01 $0.00 $0.00 Requirements for demonstrating compatibility with fuels >E10 and >B20 h $0.00 $0.11 $0.00 $0.12 $0.06

Subtotal

– Other $0.00 $0.11 $0.01 $0.12 $0.06

EPAct

- relat ed Provisions Operator t raining $1.0 $0.04 $0.60 $1.5 $0.80 Secondary containment $1.0 $0.66 $7.60 $2.4 $2.9

Subtotal

- EPAct

- related Provisions $2.1 $0.69 $8.2 $3.9 $3.7

TOTAL $330 $110 $260 $510 $300

a Cost estimates were derived using a seven percent discount rate.

b Reductions in frequency and release severity (as measured by changes in groundwater contamination) do not adequately capture the positive impacts of preventing releases from very large systems such as AHFDSs and UST systems with FCTs. Releases from these types of systems constitute a small portion of total releases, but may be large in volume and can result in significant groundwater impacts. E specially in the case of AHFDSs, even minor problems can create large relea ses due to the significant pressure under which contents are stored. The model used by EPA to estimate avoided remediation costs is not designed to measure avoided costs from very large releases such as those typical ly associated with AHFDSs and FCTs, and we therefore do not offer an estimate of avoided costs for requirements that apply to these systems.

c Some requirements, particularly those that target narrow subpopulations of the UST system universe, may generate higher avoid ed costs than this analysis suggests. Three sources of uncertainty drive these smaller universe results: First, EPA's model is calibrated to estimate avo ided costs for

broad

- based national changes at average facilities; extrapolation of these results to small populations may not refl ect specific subpopulations (e.g., UST systems in Indian country). Second, several experts stated that their estimates of impacts for requirements affecting nar row subsets of UST populations are more uncertain than broader estimates. Finally, experts empha sized that equipment replacement, inspection, training, and testing are all essential to ensure release reductions, and they used judgment to emphasize the different roles of these different ac tivities. Therefore, the assignment of specific impacts to each of the requirements is potentially less accurate than the aggregate estimates of avoided impacts.

d Experts 1, 2, and 3 attributed reductions to the groundwater and vapor monitoring site assessment requirements; however, thes e experts also

noted that the y assumed the requirements would lead users to switch to another leak detection method. Because EPA does not assume that user s will necessarily switch methods, we conservatively removed the experts’ assumed reductions for this requirement. Expert 4 did not attribute reductions to these requirements.

e Expert 2 assumed negligible effect of the requirement to add SIR and CITLDS usage on release frequency and severity.

f All experts assumed no effect, or in the case of Expert 3, a negligible effect, of the req uirement for notification of ownership changes on reductions in release frequency or severity.

g Although all experts attributed some reduction in release frequency or severity to this requirement, the number of tanks that cannot be repaired according to a code of practice is assumed to be so small that estimated benefits are negligible.

h Experts 1 and 3 attributed reductions to the compatibility requirement but noted that the majority of the benefit should be attributed to E10 users, which are not include d in this requirement. As a result, we conservatively removed these experts’ assumed reductions for this requirement.I

- 11 Exhibit I

- 5 Total Discounted Avoided Costs By Requirement For Conventional UST Systems a,b ($ millions)

Alternative 1

Description c Ex pert 1 Expert 2 Expert 3 Expert 4 Average

Release Prevention Walkthrough inspections $260 $110 $280 $370 $250 Overfill prevention equipment inspection $32 $5.4 $22 $27 $22 Spill prevention equipment testing $39 $24 $50 $25 $35

Contain ment sump testing $21 $19 $1.4 $24 $16 Testing after repairs to spill and overfill prevention equipment, and secondary

containment $2.6 $11 $1.7 $7.7 $5.8

Eliminate flow restrictors in vent lines for all new tanks and when overfill prevention e quipment is replaced $1.5 $7.4 $0.75 $1.3 $2.7

Subtotal

- Release Prevention $360 $170 $350 $460 $330

Release Detection Operability tests for release detection methods $130 $15 $45 $180 $93 Groundwater monitoring phase

- out $0.05 $0.00 $0.00 $0.05 $0.03 Vapor monitoring phase

- out $0.04 $0.00 $0.00 $0.05 $0.02 Add SIR and CITLDS usage d $0.21 $0.00 $0.91 $0.56 $0.42 Response to interstitial monitoring alarms $0.80 $10 $0.20 $0.78 $2.9

Remove release detection deferral for EGTs $0.77 $2.5 $8.4 $6.4 $4.5

Subtotal

- Release Detection $130 $27 $55 $190 $100

Other Notification of ownership changes e $0.00 $0.00 $0.00 $0.00 $0.00 Replacement of lined tanks that cannot be repaired according to a code of prac tice f $0.00 $0.00 $0.01 $0.00 $0.00 Requirements for demonstrating compatibility with fuels >E10 and >B20 g $0.34 $0.11 $0.01 $0.11 $0.14

Subtotal

– Other $0.34 $0.11 $0.01 $0.11 $0.14

EPAct

- related Provisions Operator t raining $1.0 $0.0 4 $0.56 $1.5 $0.77 Secondary containment $1.0 $0.66 $7.3 $2.2 $2.8

Subtotal

- EPAct

- related Provisions $2.0 $0.69 $7.8 $3.7 $3.6

TOTAL $490 $200 $410 $650 $440

a Cost estimates were derived using a seven percent discount rate.

b Redu ctions in frequency and release severity (as measured by changes in groundwater contamination) do not adequately capture the positive impacts of preventing releases from very large systems such as AHFDSs and UST systems with FCTs. Releases from these types of systems constitute a small portion of total releases, but may be large in volume and can result in significant groundwater impacts. E specially in the case of AHFDSs, even minor problems can create large releases due to the significant pressure under wh ich contents are stored. The model used by EPA to estimate avoided remediation costs is not designed to measure avoided costs from very large releases such as those typical ly associated with AHFDSs and FCTs, and we therefore do not offer an estimate of avo ided costs for requirements that apply to these systems.

c Some requirements, particularly those that target narrow subpopulations of the UST system universe, may generate higher avoid ed costs than this analysis suggests. Three sources of uncertainty drive these smaller universe results: First, EPA's model is calibrated to estimate avoided costs for

broad

- based national changes at average facilities; extrapolation of these results to small populations may not reflect specific su bpopulations (e.g., UST syste ms in Indian country). Second, several experts stated that their estimates of impacts for requirements affecting narrow subse ts of UST populations are more uncertain than broader estimates. Finally, experts emphasized that equipment replacement, inspection , training, and testing are all essential to ensure release reductions, and they used judgment to emphasize the different roles of these different ac tivities. Therefore, the assignment of specific impacts to each of the requirements is potentially less acc urate than the aggregate estimates of avoided impacts.

d Expert 2 assumed negligible effect of the requirement to add SIR and CITLDS usage on release frequency and severity.

e All experts assumed no effect, or in the case of Expert 3, a negligible effect, of the requirement for notification of ownership changes on reductions in release frequency or severity.

f Although all experts attributed some reduction in release frequency or severity to this requirement, the number of tanks that cannot be repaired

acc ording to a code of practice is assumed to be so small that estimated benefits are negligible.

g In comparison to the compatibility requirement included in the Selected Option, this requirement differs by requiring owners/ operators to maintain equipment re cords for the life of all new and replaced equipment

. Expert 3 assumed a negligible effect of the requirement on release frequency and severity.I

- 12 Exhibit I

- 6 Total Discounted Avoided Costs By Requirement For Conventional UST Systems a,b ($ millions)

Alt ernative 2

Description c Expert 1 Expert 2 Expert 3 Expert 4 Average

Release Prevention Walkthrough inspections $57 $0.00 $96 $190 $85 Overfill prevention equipment inspection d $0.00 $0.00 $0.00 $0.00 $0.00 Spill prevention equipment testi ng $18 $7.3 $40 $25 $23 Containment sump testing d $0.00 $0.00 $0.00 $0.00 $0.00 Testing after repairs to spill and overfill prevention equipment, and secondary

containment $2.8 $11 $1.9 $8.3 $6.0

Eliminate flow restrictors in vent lines f or all new tanks and when overfill prevention equipment is replaced d $0.00 $0.00 $0.00 $0.00 $0.00

Subtotal

- Release Prevention $77 $18 $140 $220 $110

Release Detection Operability tests for release detection methods $130 $13 $62 $180 $96 Groundwater monitoring site assessment e $0.00 $0.00 $0.00 $0.00 $0.00 Vapor monitoring site assessment e $0.00 $0.00 $0.00 $0.00 $0.00 Add SIR and CITLDS usage f $0.21 $0.00 $0.95 $0.56 $0.43 Response to interstitial monitoring alarms $0 .82 $10 $0.21 $0.78 $3.0

Remove release detection deferral for EGTs $0.69 $2.2 $7.7 $6.3 $4.2

Subtotal

- Release Detection $130 $25 $71 $180 $100

Other Notification of ownership changes g $0.00 $0.00 $0.00 $0.00 $0.00 Replacement of lined tanks that cannot be repaired according to a code of practice h $0.00 $0.00 $0.01 $0.00 $0.00 Requirements for demonstrating compatibility with fuels >E10 and >B20 d $0.00 $0.00 $0.00 $0.00 $0.00

Subtotal

– Other $0.00 $0.00 $0.01 $0.00 $0.00

EPAct

- related Provisions Operator t raining $1.1 $0.04 $0.61 $1.7 $0.85 Secondary containment $1.1 $0.66 $7.6 $2.5 $3.0

Subtotal

- EPAct

- related Provisions $2.2 $0.70 $8.3 $4.2 $3.8

TOTAL $210 $44 $220 $410 $220

a Cost est imates were derived using a seven percent discount rate.

b Reductions in frequency and release severity (as measured by changes in groundwater contamination) do not adequately capture the positive impacts of preventing releases from very large systems such as AHFDSs and UST systems with FCTs. Releases from these types of systems constitute a small portion of total releases, but may be large in volume and can result in significant groundwater impacts. E specially in the case of AHFDSs, even minor problems can create large releases due to the significant pressure under which contents are stored. The model used by EPA to estimate avoided remediation costs is not designed to measure avoided costs from very large releases such as those typical ly associated with

AH FDSs and FCTs, and we therefore do not offer an estimate of avoided costs for requirements that apply to these systems.

c Some requirements, particularly those that target narrow subpopulations of the UST system universe, may generate higher avoid ed costs than this analysis suggests. Three sources of uncertainty drive these smaller universe results: First, EPA's model is calibrated to est imate avoided costs for

broad

- based national changes at average facilities; extrapolation of these results to small popul ations may not reflect specific subpopulations (e.g., UST systems in Indian country). Second, several experts stated that their estimates of impacts for requirements affecting nar row subsets of UST populations are more uncertain than broader estimates. Fin ally, experts emphasized that equipment replacement, inspection, training, and testing are all essential to ensure release reductions, and they used judgment to emphasize the different roles of these different ac tivities. Therefore, the assignment of speci fic impacts to each of the requirements is potentially less accurate than the aggregate estimates of avoided impacts.

d These requirements are not included under Alternative 2.

e Experts 1, 2, and 3 attributed reductions to the groundwater and vapor monit oring site assessment requirements; however, these experts also noted that they assumed the requirements would lead users to switch to another leak detection method. Because EPA does not as sume that users will necessarily switch methods, we conservatively removed the experts’ assumed reductions for this requirement. Expert 4 did not attribute reductions to these requirements.

f Expert 2 assumed negligible effect of the requirement to add SIR and CITLDS usage on release frequency and severity.

g All experts assumed no effect, or in the case of Expert 3, a negligible effect, of the requirement for notification of ownership changes on reductions in release frequency or severity.

h Although all experts attributed some reduction in release frequency or severity t o this requirement, the number of tanks that cannot be repaired according to a code of practice is assumed to be so small that estimated benefits are negligible.I

- 13 Exhibit I

- 7 Sensitivity Analysis: Total Discounted Avoided Costs By Requirement

Based On Ne w Hampshire Remediation Costs a,b ($ millions) Selected Option Description c Expert 1 Expert 2 Expert 3 Expert 4 Average

Release Prevention Walkthrough inspections $86 $27 $81 $170 $92 Overfill prevention equipment inspection $15 $0.74 $13 $16 $11 Spill prevention equipment testing $11 $5.0 $24 $14 $14 Containment sump testing $6.1 $13 $0.68 $6.5 $6.5 Testing after repairs to spill and overfill prevention equipment, and secondary

containment $1.7 $6.9 $1.2 $5.1 $3.7

Elimina te flow restrictors in vent lines for all new tanks and when overfill prevention equipment is replaced $1.3 $5.1 $0.57 $0.97 $2.0

Subtotal

- Release Prevention $120 $58 $120 $220 $130

Release Detection Operability tests for release detection m ethods $77 $7.3 $38 $100 $56 Groundwater monitoring site assessment d $0.00 $0.00 $0.00 $0.00 $0.00 Vapor monitoring site assessment d $0.00 $0.00 $0.00 $0.00 $0.00 Add SIR and CITLDS usage e $0.13 $0.00 $0.58 $0.36 $0.27 Response to i nterstitial monitoring alarms $0.49 $6.2 $0.13 $0.50 $1.8

Remove release detection deferral for EGTs $0.42 $1.2 $4.7 $3.6 $2.5

Subtotal

- Release Detection $78 $15 $43 $110 $61

Other Notification of ownership changes f $0.00 $0.00 $0.00 $0.00 $0.00 Replacement of lined tanks that cannot be repaired according to a code of practice g $0.00 $0.00 $0.00 $0.00 $0.00

Requirements for demonstrating compatibility with fuels >E10 and >B20 h $0.00 $0.07 $0.00 $0.08 $0.04

Subtotal

– O ther $0.00 $0.07 $0.00 $0.08 $0.04

EPAct

- related Provisions Operator t raining $0.66 $0.02 $0.38 $1.0 $0.52 Secondary containment $0.67 $0.44 $4.8 $1.5 $1.9

Subtotal

- EPAct

- related Provisions $1.3 $0.46 $5.2 $2.5 $2.4

TOTAL $200 $ 73 $170 $330 $190

a Cost estimates were derived using a seven percent discount rate.

b Reductions in frequency and release severity (as measured by changes in groundwater contamination) do not adequately capture the positive impacts of preventing rele ases from very large systems such as AHFDSs and UST systems with FCTs. Releases from these types of systems constitute a small portion of total releases, but may be large in volume and can result in significant groundwater impacts. E specially in the case o f AHFDSs, even minor problems can create large releases due to the significant pressure under which contents are stored. The mo del used by EPA to estimate avoided remediation costs is not designed to measure avoided costs from very large releases such as t hose typically associated with AHFDSs and FCTs, and we therefore do not offer an estimate of avoided costs for requirements that apply to these systems.

c Some proposed requirements, particularly those that target narrow subpopulations of the UST system un iverse, may generate higher avoided costs than this analysis suggests. Three sources of uncertainty drive these smaller universe results: First, EPA's model is c alibrated to estimate

avoided costs for broad

- based national changes at average facilities; ext rapolation of these results to small populations may not reflect specific subpopulations (e.g., UST systems in Indian country). Second, several experts stated that their estimates of impacts for requ irements affecting narrow subsets of UST populations are more uncertain than broader estimates. Finally, experts emphasized that equipment replacement, inspection, training, and testing are all essential to ensure release reductions, and they used judgment to emphasize the dif ferent roles of these

different acti vities. Therefore, the assignment of specific impacts to each of the proposed requirements is potentially less accurate than the aggregate estimates of avoided impacts.

d Experts 1, 2, and 3 attributed reductions to the groundwater and vapor monitoring sit e assessment requirements; however, these experts also noted that they assumed the requirements would lead users to switch to another leak detection method. Because EPA does not as sume that users will necessarily switch methods, we conservatively removed t he experts’ assumed reductions for this requirement. Expert 4 did not attribute reductions to these requirements.

e Expert 2 assumed negligible effect of the requirement to add SIR and CITLDS usage on release frequency and severity.

f All experts assumed n o effect, or in the case of Expert 3, a negligible effect, of the requirement for notification of ownership changes on reductions in release frequency or severity.

g Although all experts attributed some reduction in release frequency or severity to this re quirement, the number of tanks that cannot be repaired according to a code of practice is assumed to be so small that estimated benefits are negligible.

h Experts 1 and 3 attributed reductions to the compatibility requirement but noted that the majority of the benefit should be attributed to E10 users, which are not included in this requirement. As a result, we conservatively removed these experts’ assumed reductions for this requirement.I

- 14 Exhibit I

- 8 Sensitivity Analysis: Total Discounted Avoided Costs By Requirement Based On New Hampshire Remediation Costs a,b ($ millions)

Alternative 1 Description c Expert 1 Expert 2 Expert 3 Expert 4 Average

Release Prevention Walkthrough inspections $160 $62 $180 $240 $160 Overfill prevention equipment inspect ion $21 $3.7 $15 $18 $14 Spill prevention equipment testing $26 $17 $34 $17 $23 Containment sump testing $14 $14 $0.98 $17 $12 Testing after repairs to spill and overfill prevention equipment, and secondary

containment $1.6 $6.9 $1.1 $ 5.0 $3.7

Eliminate flow restrictors in vent lines for all new tanks and when overfill prevention equipment is replaced $0.94 $5.1 $0.51 $0.87 $1.9

Subtotal

- Release Prevention $220 $110 $230 $300 $220

Release Detection Operability tests fo r release detection methods $78 $8.5 $28 $110 $57 Groundwater monitoring phase

- out $0.03 $0.00 $0.00 $0.03 $0.02 Vapor monitoring phase

- out $0.03 $0.00 $0.00 $0.03 $0.01 Add SIR and CITLDS usage d $0.13 $0.00 $0.56 $0.36 $0.26
Respon se to interstitial monitoring alarms $0.49 $6.3 $0.12 $0.50 $1.8

Remove release detection deferral for EGTs $0.47 $1.4 $5.2 $4.0 $2.8

Subtotal

- Release Detection $80 $16 $34 $120 $62

Other Notification of ownership changes e $0.00 $0.00 $0.00 $0.00 $0.00 Replacement of lined tanks that cannot be repaired according to a code of practice f $0.00 $0.00 $0.00 $0.00 $0.00

Requirements for demonstrating compatibility with fuels >E10 and >B20 g $0.21 $0.07 $0.00 $0.07 $0.09

Subto tal

– Other $0.21 $0.07 $0.01 $0.07 $0.09

EPAct

- related Provisions Operator t raining $0.64 $0.02 $0.36 $0.94 $0.49 Secondary containment $0.66 $0.44 $4.7 $1.4 $1.8

Subtotal

- EPAct

- related Provisions $1.3 $0.46 $5.0 $2.4 $2.3

TOTAL $300 $130 $270 $420 $280

a Cost estimates were derived using a seven percent discount rate.

b Reductions in frequency and release severity (as measured by changes in groundwater contamination) do not adequately capture the positive impacts of preven ting releases from very large systems such as AHFDSs and UST systems with FCTs. Releases from these types of systems constitute a small portion of total releases, but may be large in volume and can result in significant groundwater impacts. E specially in t he case of AHFDSs, even minor problems can create large releases due to the significant pressure under which contents are stored. The mo del used by EPA to estimate avoided remediation costs is not designed to measure avoided costs from very large releases such as those typically associated with AHFDSs and FCTs, and we therefore do not offer an estimate of avoided costs for requirements that apply to these systems.

c Some proposed requirements, particularly those that target narrow subpopulations of the UST system universe, may generate higher avoided costs than this analysis suggests. Three sources of uncertainty drive these smaller universe results: First, EPA's model is c alibrated to estimate

avoided costs for broad

- based national changes at average facili ties; extrapolation of these results to small populations may not reflect specific subpopulations (e.g., UST systems in Indian country). Second, several experts stated that their estimates of impacts for requ irements affecting narrow subsets of UST populat ions are more uncertain than broader estimates. Finally, experts emphasized that equipment replacement, inspection, training, and testing are all essential to ensure release reductions, and they used judgment to emphasize the dif ferent roles of these

diffe rent activities. Therefore, the assignment of specific impacts to each of the proposed requirements is potentially less accur ate than the aggregate estimates of avoided impacts.

d Expert 2 assumed negligible effect of the requirement to add SIR and CITLDS usage on release frequency and severity.

e All experts assumed no effect, or in the case of Expert 3, a negligible effect, of the requirement for notification of owners hip changes on reductions in release frequency or severity.

f Although all experts attri buted some reduction in release frequency or severity to this requirement, the number of tanks that cannot be repaired according to a code of practice is assumed to be so small that estimated benefits are negligible.

g In comparison to the compatibility re quirement included in the Selected Option, this requirement differs by requiring owners/operators to maintain equipment records for the life of all new and replaced equipment. Expert 3 assumed a negligible effect of the requir ement on release frequency and severity.I

- 15 Exhibit I

- 9 Sensitivity Analysis: Total Discounted Avoided Costs By Requirement Based On New Hampshire Remediation Costs a,b ($ millions)

Alternative 2 Description c Expert 1 Expert 2 Expert 3 Expert 4 Average

Release Prevention

Walkthrou gh inspections $34 $0.00 $62 $120 $54 Overfill prevention equipment inspection d $0.00 $0.00 $0.00 $0.00 $0.00 Spill prevention equipment testing $12 $5.0 $26 $16 $15 Containment sump testing d $0.00 $0.00 $0.00 $0.00 $0.00 Testing af

ter repairs to spill and overfill prevention equipment, and secondary

containment $1.7 $6.9 $1.3 $5.4 $3.8

Eliminate flow restrictors in vent lines for all new tanks and when overfill prevention equipment is replaced d $0.00 $0.00 $0.00 $0.00 $0.0 0

Subtotal

- Release Prevention $47 $12 $90 $140 $73

Release Detection Operability tests for release detection methods $79 $7.5 $38 $110 $59 Groundwater monitoring site assessment e $0.00 $0.00 $0.00 $0.00 $0.00 Vapor monitoring site as sessment e $0.00 $0.00 $0.00 $0.00 $0.00 Add SIR and CITLDS usage f $0.13 $0.00 $0.59 $0.36 $0.27 Response to interstitial monitoring alarms $0.50 $6.3 $0.13 $0.50 $1.9

Remove release detection deferral for EGTs $0.43 $1.3 $4.8 $3.9 $2. 6

Subtotal

- Release Detection $81 $15 $44 $110 $63

Other Notification of ownership changes g $0.00 $0.00 $0.00 $0.00 $0.00 Replacement of lined tanks that cannot be repaired according to a code of practice h $0.00 $0.00 $0.00 $0.00 $0.00

Requirements for demonstrating compatibility with fuels >E10 and >B20 d $0.00 $0.00 $0.00 $0.00 $0.00

Subtotal

– Other $0.00 $0.00 $0.00 $0.00 $0.00

EPAct

- related Provisions Operator t raining $0.69 $0.02 $0.39 $1.1 $0.54 Secondary conta inment $0.68 $0.44 $4.9 $1.6 $1.9

Subtotal

- EPAct

- related Provisions $1.4 $0.46 $5.3 $2.7 $2.4

TOTAL $130 $27 $140 $260 $140

a Cost estimates were derived using a seven percent discount rate.

b Reductions in frequency and release severit y (as measured by changes in groundwater contamination) do not adequately capture the positive impacts of preventing releases from very large systems such as AHFDSs and UST systems with FCTs. Releases from these types of systems constitute a small portion of total releases, but may be large in volume and can result in significant groundwater impacts. Especially in the case of AHFDSs, even minor problems can create large releases due to the significant pressure under which contents are stored. The mo del used by EPA to estimate avoided remediation costs is not designed to measure avoided costs from very large releases such as those typical ly associated with AHFDSs and FCTs, and we therefore do not offer an estimate of avoided costs for requirements that apply to these systems.

c Some proposed requirements, particularly those that target narrow subpopulations of the UST system universe, may generate hig her avoided costs than this analysis suggests. Three sources of uncertainty drive these smaller universe result s: First, EPA's model is calibrated to estimate

avoided costs for broad

- based national changes at average facilities; extrapolation of these results to small populations may not reflect specific subpopulations (e.g., UST systems in Indian country). Second, several experts stated that their estimates of impacts for requirements affecting narrow subsets of UST populations are more uncertain than broader estimates. Finally, experts emphasized that equipment repla cement, inspection, training, and testing are al l essential to ensure release reductions, and they used judgment to emphasize the different roles of these different activities. Therefore, the assignment of specific impacts to each of the proposed requirements is potentially less accurate than the

aggreg ate estimates of avoided impacts.

d These requirements are not included under Alternative 2.

e Experts 1, 2, and 3 attributed reductions to the groundwater and vapor monitoring site assessment requirements; however, thes e experts also noted that they assum ed the requirements would lead users to switch to another leak detection method. Because EPA does not assume that users will necessarily switch methods, we conservatively removed the experts’ assumed reductions for this requirement. Expert 4 did not attrib ute reductions to these requirements.

f Expert 2 assumed negligible effect of the requirement to add SIR and CITLDS usage on release frequency and severity.

g All experts assumed no effect, or in the case of Expert 3, a negligible effect, of the requiremen t for notification of ownership changes on reductions in release frequency or severity.

h Although all experts attributed some reduction in release frequency or severity to this requirement, the number of tanks that cannot be repaired according to a code o f practice is assumed to be so small that estimated benefits are negligible.

### Appendix J

Estimation of Future UST System and Release Universes

for the Alternative Baseline ScenarioJ

- 1



### Estimation of Future UST System Universes

To estimate future UST system universes, data on the number of UST systems dating back to

1991 were used i n conjunction with a single exponential decay function. An exponential decay function is one where a quantity declines in proportion to its value; that is, the lower the value, the smaller the decline in the following period. Given the trend in UST system universes dating

back to 1991 as seen in Exhibit J

- 1 , a singular exponential decay function appropriately represents this trend.

Singular exponential decay functions take the form Y = (Yo

– P) * e (

- k*X) 

### + P, where P is the “plateau, ” or limit that the function eventually approaches asymptotically, and k is the function’s

half

- life. The specific parameters yielding the equation used to project future UST system

universes are as follows:

 Yo: 2,055,000

 P (“plateau”): 573,796

 k (half

- life): 0. 2013

The specific equation used to project UST system universes is Y = (2,055,000

– 573

, 796 ) * e (

-

0. 2013 *X) 

### + 573

, 796

. Exhibit J

- 2 shows the UST universe data from 1991 through 2012 used to estimate future UST system universes (data points in sma ller orange diamonds) , as well as the projections of the universes themselves (larger blue diamonds)

.

Actual Count of UST Systems Extrap olated Count of UST SystemsJ

- 2



### In EPA’s primary analysis, the annual number of affected systems is unchanged in future years, meaning that over a 20

- year period

, annual costs accrue to 11

, 559

, 620 UST systems , or ( 577

, 981 * 20). In the alternative baseline scenario, the annual number of affected systems declines in each year to 574

, 045 systems in year 20 , as in Exhibit J

- 2. Correspondingly, over a 20

- year period in the alternative baseline scenario, annual costs accrue to 11

, 537

, 417 UST systems (the

sum of t he annual estimate of UST universes in the years 201 4 through 203 3 ) . The ratio between

these two cumulative figures is approximately 99 .8 percent, or 11

, 537

, 417 / 11

, 559

, 62 0

.

Estimation of Future Release Universes

The estimation of f

uture release unive rses involves future projection of two components: UST system universes and “release rates,” or the ratio of confirmed releases to existing UST systems. UST system universes were projected as described above.

We use release rates to project future number of releases (rather than past trends in the number of releases) for two reasons: First, as the UST universe and release rate both appear to decline in a way approximating a single

- decay exponential function, and these are both "inputs" into Exhibit J

- 2

Actual and Projected U ST System Universes, 1991

– 2032

Year UST System Universe (Actual) a Year UST System Universe (Projected) b

1991 1 ,788,505 c 2014 585,213

1992 1,565,613 2015 583,131

1993 1,307,563 2016 581,429

1994 1,177,198 2017 580,037

1995 1,093,105 2018 578,899

1996 1,064,478 2019 577,969

1997 969,652 2020 577,208

1998 891,686 2021 576,586

1999 760,504 2022 576,077

2000 713,666 2023 575,661

2001 704,717 2024 575,321

2002 697,966 2025 575,043

2003 682,870 2026 574,816

2004 672,297 2027 574,630

2005 653,621 2028 574,478

2006 641,881 2029 574,353

2007 629,866 2030 574,252

2008 623,319 2031 574,169

2009 611,449 2032 574,101

2010 597,333 2033 574,045

2011 590,104

2012 583,508

2013 577,981

a Data regarding actual UST system universes obtained from reports from the Environmental Protection Agency, Office of Underground Storage Tanks, UST Performance Measures E nd

- of

- Year Reports.

b Projected UST system universe values estimated using a single exponential decay function.

c For consistency with the projection of releases below, we exclude this data point from the analysis when estimating future UST system universe s based on prior

- year data.J

- 3



### calculating t he universe of releases, these projections can be used to calculate future release universes without the added uncertainty of whether the release trend is truly a single

- decay exponential function. Second

, using the release rate projections to estimate fu ture releases yields a more conservative (lower) total number of releases, which leads to lower avoided costs/benefits

estimates in the alternative baseline. This is consistent with the intent of using the alternative baseline as a way of testing conservat ive assumptions regarding the avoided costs associated

with the final regulation

.

As seen in Exhibit J

- 3 , the trend in release rates is similar to the trend in UST systems in that it has generally declined at a decreasing rate over the last decade, albei t with significant variability (i.e., sharp upticks and falls ) in certain years , likely reflecting specific state program activities

and milestones

.

A single exponential decay function was also used to project future values o f release rates. The specific function is Y = (0.04566

– 0.005848 ) * e (

- 0. 1066 *X) 

### + 0.00 5848

.

Release rates are calculated by div id ing releases by the universe of UST systems; conversely, releases can be calculated by multiplying the total number of UST systems by the release rate. By projecting both UST universes and release rates using exponential decay functions, we then use each year’s values to calculate releases for that year. Exhibit J

- 4 plots actual and projected releases over time, while Exhibit J

- 5 displays UST systems, release rates, and releases in a

tabular format.J

- 4 Exhibit J

- 5

Actual and Projected Releases and Release Rates, 1992

- 203 1

Year UST

Systems a Releases

(Actual) Release Rate

(Calculated) b Release Ra te

(Projected) c Releases

(Calculated) d

1992 1,565,613 57,641 3.68%

1993 1,307,563 52,565 4.02%

1994 1,177,198 33,545 2.85%

1995 1,093,105 33,068 3.03%

1996 1,064,478 13,853 1.30%

1997 969,652 24,285 2.50%

1998 891,686 29,614 3.32%

1 999 760,504 26,434 3.48%

2000 713,666 14,571 2.04%

2001 704,717 6,526 0.93%

2002 697,966 8,389 1.20%

2003 682,870 12,078 1.77%

2004 672,297 7,848 1.17%

2005 653,621 9,061 1.39%

2006 641,881 8,361 1.30%

2007 629,866 7,570 1.20%

20 08 623,319 7,364 1.18%

2009 611,449 7,168 1.17%

2010 597,333 6,328 1.06%

2011 590,104 5,998 1.02%

2012 583,508 5,674 0.97%

2013 584,716 6,128 1.06%

2014 582,365 0.93% 5,429

2015 580,455 0.89% 5,208

2016 578,903 0.86% 5,011

2017 5 77,642 0.83% 4,837J

- 5 Exhibit J

- 5

Actual and Projected Releases and Release Rates, 1992

- 203 1

2018 576,617 0.81% 4,681

2019 575,784 0.79% 4,543

2020 575,107 0.77% 4,420

2021 574,557 0.75% 4,309

2022 574,110 0.73% 4,211

2023 573,747 0.72% 4,123

2024 573,452 0.70% 4,044

2025 573,212 0.69% 3,973

2026 573,0 17 0.68% 3,910

2027 572,859 0.67% 3,853

2028 572,730 0.66% 3,802

2029 572,625 0.65% 3,757

2030 572,541 0.65% 3,716

2031 572,471 0.64% 3,679

2032 574,101 0.64% 3,646

2033 574,045 0.63% 3,617

a Values obtained from Exhibit J

- 2

. b Calc ulated by dividing releases by UST systems.

c Projected release rates estimated using a single exponential decay function.

d Calculated by multiplying release rate by UST systems.



### In EPA’s primary analysis, the cumulative universe of releases is 122

, 56 0

, or ( 6

, 128 * 20). In the alternative baseline scenario, the cumulative universe of releases is 84

, 7 7 1 , or the sum of releases in the years 201 4 through 20 3 3 . The ratio between these two cumulative universes is approximately 69 percent, or 84,7 7 1 / 1 22

, 56 0

.

### Appendix K

Methodology for Estimating Upper Bound Market Exit ScenarioK

- 1



### To evaluate the implications of a highly unlikely worst

- case outcome, EPA evaluates a scenario in which the lowest revenue facilities incur the highest possible compliance costs. To obtain a

measure of the number of lowest

- revenue facilities and their revenue s , we rely on the 2007 Census data used in the analysis of small business impacts (see C hapter 5) . These are reproduced

in Exhibit K

- 1

.

Exhibit K

- 1

Summary of Census Data Used f or Analysis
Census Revenue Range Number of firms Assumed equivalent to establishments Lower Upper Average
$150,000 $250,000 $200,000 2,5 00
$50,000 $150,000 $100,000 1,9 55

$ 39

, 570 $50,000 $ 44

, 785 3 26

Total 4, 781



### As discussed in Chapter 5, h oldi ng all other things equal, an annual cost greater than 1. 8 percent of gross sales w ould exceed average reported profits, causing a motor fuel retailer to operate at a

loss . I f the facility cannot adjust its prices or lower costs, it will eventually exit t he market. Given the profit margins of 1. 8 percent identified in Chapter 5, facilities that earn more than approximately $ 250 ,000 per year will likely not exit the market. 1 

### As a result, we only evaluate the implications for the approximately 4, 800 facilit ies that earn less than $250,000 in revenues

per year. Exhibit K

- 2 reproduces the distribution of facilities we obtain under the worst

- case annual compliance cost scenario. EPA identified approximately 4

, 8 00 facilities that would incur annual compliance c osts between $ 1

, 500 and $ 4

, 6 00 in the worst

- case scenario. 2

1 Another way to articulate this is as follows: a compliance cost of approximately $4,500 per year does not constitute more than 1.8 perc ent of the revenues of a facility that earns at least $250,000 per year.

2 To clarify, because only 4,781 facilities are in the revenue range between $0 and $250,000, and 9,310 facilities have costs above $1,500, we exclude the remaining 4,529 facilities f rom the analysis in Exhibit K

- 3 , as we assume that these 4,529 facilities report revenues greater than $250,000.K

- 2 Exhibit K

- 2

Distribution of Facilities by Worst

- Case Annual Compliance Cost Cost range ($) UST Facilities

4,500

– 4,600 288

4,400

- 4,500 601

4,300

- 4,400 453

4,200

- 4,300 808

4,100

- 4,200 23

4,000

- 4,100 0

3,900

- 4,000 6

3,6 00

- 3,900 0

3,500

– 3,600 38

3,300

- 3,5 00 0

3,200

- 3,300 427

3,100

- 3,200 312

3,000

- 3,100 277

2,900

- 3,000 5

2,800

- 2,900 190

2,700

- 2,800 2

2,300

- 2,700 0

2,200

- 2,300 10

2,100

- 2,200 425

2,000

- 2,100 115

1,900

– 2,000 494

1,800

- 1,900 95

1,700

- 1,800 9

1,600

- 1,700 50

1,500

- 1,600 4, 681 a

Above 1,500 9, 310

Below 1,500 138,592

Total 147,902

a Because we calculate 4, 781 total facilities with revenues of $250,000 or less ac cording to Census data, we include only 1 52 of these 4, 681 facilities in our analysis.



### To obtain an estimate of the upper range of facilities that may be most impacted, we allocated the highest revenue facilities to the highest compliance cost ranges as shown in Exhibit K

- 3 . We allocated facilities to a compliance cost range from the highest Census revenue range until that compliance range was fully assigned, i.e., until all facilities in that compliance cost range were assigned to a Census revenue range. Similarly, if all of the facilities in a revenue range were fully assigned across cost ranges and a cost range was not exhausted, we assigned it facilities from the

next

- highest revenue range. 3

3 We map the highest

- cost facilities with the highest revenue facilities in order to maximize the number of facilities that would potentially f ace costs in excess of their profit margins, as shown in Exhibit K

- 3 . We do this to ensure that higher

- revenue facilities will be faced with higher costs; alternately, if higher

- revenue facilities were

faced with lower costs and lower

- revenue facilities we re faced with higher costs, there would exist the possibility that only the lower

- revenue facilities would face costs in excess of their profit margin.K

- 3



### We considered average revenues within each Census revenue r ange when assessing whether

facilities would hit 1. 8 percent: if the lower end of the cost range exceeded 1. 8 percent of the average revenue for a facilities in that range, we concluded that those facilities may potentially

exit the market. In the worst ca se, the threshold revenue exceeds the assumed average revenue

for all but 321 of the 4

, 781 facilities that earn between $ 39

, 570 and $250,000. 4 

### We thus conclude

that 4

, 460 facilities may exit the market if a highly

- adverse distribution of costs was

concentr ated on the smallest facilities. As we discussed in Chapter 5, such an outcome is probably impossible, because the smallest facilities are not likely to operate three UST systems

each and therefore would incur much lower costs. 5

4 Because only 4, 781 facilities are in the revenue range between $0 and $250,000, and 9, 310 facilities have costs above $1,500, we exclude the remaining 4, 529 facilities from the analysis in Exhibit K

- 3 , as we assume that these 4, 529 facilities report revenues greater than $250,000. See the note in Exhibit K

- 2

.

5 Even assuming a gasoline price at $2 per gal lon, a facility earning $5 0,000 annually would sell fewer than
2, 1 00 gallons of gasoline per month, compared with the monthly industry average throughput of approximately 130,000 gallons. Based on information from a mid

- size retail fuel marketer, EPA belie ves that a facility requirements a minimum throughput of approximately 30,000 gallons per month to remain economically viable. Correspondingly, annual revenues of $50,000, or even substantially higher amounts, would not support the operation

of more than o ne UST system per facility.K

- 4

Exhibit K

- 3

Allocatio n of Facilities Across Compliance Cost Ranges

Cost Range ($) Number of

Facilities in Range Allocation from Census Revenue Range a Revenue Req’d.

to be Below 1. 8 % Profit Margin Assumed

Average

Revenue 4,500

– 4,600 288 288 facilities with revenue range of $150,000

- $250,000 $250,000 $200,000
4,400

- 4,500 601 601 facilities with revenue range of $150,000

- $250,000 $244,444 $200,000
4,300

- 4,400 453 453 facilities with revenue range of $150,000

- $250,000 $238,889 $200,000
4,200

- 4,300 808 808 facili ties with revenue range of $150,000

- $250,000 $233,333 $200,000
4,100

- 4,200 23 23 facilities with revenue range of $150,000

- $250,000 $227,778 $200,000
4,000

- 4,100 0 0 facilities with revenue range of $150,000

- $250,000 $222,222 $200,000
3,900

- 4,000 6 6 facilities with revenue range of $150,000

- $250,000 $216,667 $200,000
3,800

- 3,900 0 0 facilities with revenue range of $150,000

- $250,000 $211,111 $200,000
3,700

- 3,800 0 0 facilities with revenue range of $150,000

- $250,000 $205,556 $200 ,000
3,600

- 3,700 0 0 facilities with revenue range of $150,000

- $250,000 $200,000 $200,000
3,500

- 3,600 38 38 facilities with revenue range of $150,000

- $250,000 $194,444 $200,000
3,400

- 3,500 0 0 facilities with revenue range of $150,000

- $250,0 00 $188,889 $200,000
3,300

- 3,400 0 0 facilities with revenue range of $150,000

- $250,000 $183,333 $200,000

3,200

- 3,300 427 283 facilities with revenue range of $150,000

- $250,000

144 facilities with revenue range of $50,000

- $100,000 $177,778 $200 ,000 $100,000
3,100

- 3,200 312 312 facilities with revenue range of $50,000

- $100,000 $172,222 $100,000
3,000

- 3,100 277 277 facilities with revenue range of $50,000

- $100,000 $166,667 $100,000
2,900

- 3,000 5 5 facilities with revenue range of $50, 000

- $100,000 $161,111 $100,000

2,800

- 2,900 190 190 facilities with revenue range of $50,000

- $100,000 $155,556 $100,000

2,700

- 2,800 2 2 facilities with revenue range of $50,000

- $100,000 $150,000 $100,000

2,600

- 2,700 0 0 facilities with revenu e range of $50,000

- $100,000 $144,444 $100,000

2,500

- 2,600 0 0 facilities with revenue range of $50,000

- $100,000 $138,889 $100,000

2,400

- 2,500 0 0 facilities with revenue range of $50,000

- $100,000 $133,333 $100,000

2,300

- 2,400 0 0 facilities with revenue range of $50,000

- $100,000 $127,778 $100,000

2,200

- 2,300 10 10 facilities with revenue range of $50,000

- $100,000 $122,222 $100,000
2,100

- 2,200 425 425 facilities with revenue range of $50,000

- $100,000 $116,667 $100,000

2,000

- 2,10 0 115 115 facilities with revenue range of $50,000

- $100,000 $111,111 $100,000

1,900

- 2,000 494 19 facilities with revenue range of $50,000

- $100,000 475 facilities with revenue range of $39,570

- $50,000 $105,556 $100,000 $44,785
1,800

- 1,900 95 95 facilities with revenue range of $39,570

- $50,000 $100,000 $44,875

1,700

- 1,800 9 9 facilities with revenue range of $39,570

- $50,000 $94,444 $44,785

1,600

- 1,700 50 50 facilities with revenue range of $39,570

- $50,000 $88,889 $44,785

1,500

- 1,600 152 b 160 facilities with revenue range of $39,570

- $50,000 $83,333 $44,785

N/A 4, 460 Facilities exceeding 1.8% profit margin N/A N/A

N/A 321 Facilities not exceeding 1.8% profit margin N/A N/A

Notes:

a Values may not equal total in "Number of facilit ies in Range" due to rounding.

b Because only 4, 781 facilities are in the revenue range between $0 and $250,000, and 9, 310 facilities have costs above $1,500, we exclude the remaining 4, 529 facilities from the analysis, as we assume that these 4, 529 facili ties report revenues greater than $250,000. This results in 152 facilities with costs in the $1,500 to $1,600 range.

### Appendix L

Screening Analysis of Impacts on Small Entities

This Appendix contains two memoranda that were prepared in February and March 2010, and document the methodology used to assess small entity impacts under the proposed rule. While the methods pr esented in these memoranda are accurate, the results presented in thes e memoranda were updated for the final regulation and are

supers eded by the results in Chapter 5

.L

- 1 

### MEMORANDUM | 4 February 20 1 0

TO 

### Cho

- Yi Kwan, EPA

FROM 

### Monish a Khurana and Cynthia Manson, Industrial Economics, Inc.

SUBJECT 

### Small Entities Screening Analysis of UST Universe by Industry Sector

(WA 3

- 25, Task 4 )

In promulgating regulations, the Office of Underground Storage Tanks (OUST) must

consider the effe cts of those regulations on small entities, as required by the Regulatory Flexibility Act, amended by the Small Business Regulatory Fairness Act (RFA/SBREFA). Under RFA/SBREFA, the regulating agency must certify whether a regulation has a “significant impa ct on a substantial number of small entities” (SISNOSE). Within reason, the definitions of “significant” and “substantial” are a matter
of Agency discretion. To inform the development of regulatory revisions, however

, Industrial Economics, Incorporated ( IE c ) has developed a spreadsheet that calculates the impacts of proposed rules on small entities (including businesses and governments). The calculator also evaluates Federalism impacts and total impacts on Tribal governments.

The calculator uses data from the Small Business Administration (SBA) and U.S. Census to identify governments and businesses by sector and size . We use data from E 2



### , Incorporated (E 2 

### ) an d from a 1992 EPA study of small governments with USTs to

estimate the number of small entities in each sector likely to have USTs. 1

, 2 

### Based on a

user

- entered per

- tank cost of compliance, t he spreadsheet estimates the number of small

entities that incur costs exceeding one and three percent of gross annual revenues.

The spreadsheet also eval uates tot al costs to tanks on Tribal lands , and provides specific results for state and local government costs, including both impacts on small entities and

a total estimate of costs addressed under Executive Order 13132 , addressing potential federalism impacts

. Th is memo describes an analysis using the spreadsheet, summarizes the data sources and outputs of the spreadsheet, and summarizes the methodology and

results

. 3



### IEc‟s small entity impact screening approach is intended to identify an initial estimate of

the n umber of small entities that may experience significant impacts associated with the regulations currently under consideration. To ensure that the analysis does not overlook potential impacts, we incorporate several conservative (i.e., high

- cost or low

- rev enue)

1 See TO 1010, TDD# 1 1, Appendix B, Draft Industry and Facility Profiles, 12.18.06, and Amendment 1, December 18, 2006

2 "Economic Impact Analysis of Additional Mechanisms for Local Government Entities to Demonstrate Financial Responsibility

for Underground Storage Tanks," Dec ember 1992

3 The spreadsheet contains an initial ―Notes‖ sheet with d etailed information about assumptions, inputs, and calculations.

The model also includes a summary table of key outputs (Output Summary) and more detailed analysis summaries ( ―Inputs

and Outputs‖ and ―Calculations by Major Sector‖ page s; the model also contains specific sheets to support analysis of

government and Tribal impacts

. INTRODUCTION AND

BACKGROUND

OVERVIEW AND

RESULTSL

- 2

K 

### assumptions that are documented in our methodology. This memorandum describes a spreadsheet tool that can be used to assess a range of different regulatory scenarios. The key features of the s preadsheet are as follows:

 The spreadsheet calculates t he number of small entities (firms and governments)

with estimated costs associated with the regulation that exceed either one percent
or three percent to total revenues. The per

- tank compliance cost currently
programmed in the model is based on estimates from the January 26 , 20 10 version

of IEc‟s cost model. The parameters used to run the cost model are included in the
spreadsheet and in Appendix 1 of this memo. The cost model output number is
currently adjusted to 2002 dollars

, to be consistent with reve nue data in this model

from SBA and U.S. Census is from 2002. Based on the January 26 , 20 10 version

of th e cost model, this value is $309 in 2008 dollars, or $262 in 2002 dollars. 4



###  The spreadsheet also evaluates cost results for tanks on T ribal lands , b ased on

model calculations specific to Tribal tanks

.

 The spreadsheet calculates the number of small entities with USTs that will
experienc e compliance costs equal to or greater than one percent and three percent
of annual revenue. The spreadsheet also cal culates the percentage of small entities
with USTs represented by the entities meeting the thresholds.

 Using these figures, the Agency can make an initial determination of whether a
regulation significantly affects a substantial number of small businesses or
governments.

The remainder of this memorandum describes in more detail the specific methods, data, and assumptions used in calculating costs associated with small businesses, small government entities, and tanks on Tribal lands.

For the analysis of im pacts on small business entities, we adopt a hybrid approach for estimating the distribution of USTs among facilities and firms. For the NAICS 447
(Retail Motor Fuels) sector , we distribute tanks proportionately by facility across all

facilities in the se ctor . For all other sectors, we distribute tanks proportionally by revenue among a subset of facilities in the sector

. We describe this approach in more detail below, outlining data sources and methodology. We also present the results of two sensitivity analyses (one that distributes tanks in all sectors proportionately by facility and one that distributes all tanks proportionately by revenue) in Appendix 2

. 5

DATA SOURCES



### IEc used E 2 

### data developed in 2006 to estimate the number of tanks and facilities i n each

of several key sectors that use USTs. 6 

### With the exception of hospitals (NAICS 622),
retail motor fuel establishments (NAICS 447) and communications and utilities (NAICS

4 Because the key output of the model is number of small entities affected, the results are not affected by year dollars used,

as long as data are internally consistent However, we note that we expect to update the model to incorporate 2007 Census

of Manufacturers data when this data set and the accompanying SBA data set become available.

5 The user can manuall y toggle the scenario by using the drop

- down menu on the ―Calculations by Major Sector‖ worksheet,

cell B2, which provides three options: original (hybrid), facility, and revenue.

6 See TO 1010, TDD# 11, Appendix B, Draft Industry and Facility Profiles, 12.18.06, and Amendment 1, December 18, 2006 SMALL BUSINESS

ANALYSISL

- 3 

### 5171 and 2211) , E 2 

### data on use of USTs specified only high leve l (e.g., 2

- digit ) NAICS sectors, such as “commercial” and “manufacturing” sectors.

SBA provides data on the number of firms, establishment s and receipts by size of firm

, categorized by 2

- digit NAICS sectors

. 7 

### SBA data allocate firms in each sector into the following annua l revenue ranges, or “ bins : ”

 $0 to $99,999,

 $100,000 to $499,999,

 $500,000 to $999,999,

 $1,000,000 to $4,999,999,

 $5,000,000 to $9,999,999,

 $10,000,000 to $49,999,999,

 $50,000,000 to $99,999,999 and

 $100,000,000 and above.

For 3

- digit sector infor mation (e.g., H ospitals a nd Retail Motor Fuel sales )

, IEc used U.S.

C ensus data to determine the number of firms, number of establishments

, and average

revenue s by firm

, because SBA does not provide data for the relevant 3

- digit NAICS

codes.

The U.S. Censu s publishes slightly different revenue bins for reporting data. The lowest

income revenue bin includes all firms that report annual revenues under $250,000 . A ll

intermediate revenue bins are the same between U.S. Census and SBA . SBA‟s highest

income revenu e bin is over $100 million, but U.S. Census breaks the largest categories down into $100 to $250 million, and then over $250 million.

SBA provides employment and revenue thresholds to define small entities in each sector of the economy. We summarize the size standards for the industries identified by E 2 

### in

Exhibit 1. 8

7 Small Business Administration, ― Employer Firms, Establishments, Employment, Annual Payroll, and Receipts by Receipts

Size of Firm and Major Industry, 2002 ,‖ as viewed at http://www.sba.gov/advo/research/data.html#us

8 The complete list of size thresholds can be found on the SBA website at

http://www.s ba.gov/idc/groups/public/documents/sba_homepage/serv_sstd_tablepdf.pdf

.L

- 4 EXHIBIT 1

. SMALL BUSINESS SIZE STANDARDS FOR INDUST RIES WITH UST S

INDUSTRY OR SECTOR NAICS THRESHOLD

Gasoline stations with convenience

stores 447110 $27 million (M)

Traditional service stations 447190 $9M

Wholesale trade 42 100 employees

Retail trade, accommodation and food

services 44

- 45, 72 (excluding 447) Varies: $7M to $29M or 50

employees

Wired telecommunications carriers 5171 1,500 employees

Hospitals 622 $34.5M

Manufacturing 31

- 33 Varies: 500 to 1,500 employees

Transportation and Warehousing 48 Varies: $7M to $34.5M or 500 to 1,500 employees
Source: U.S. Small Business Association, ―Table of Small Business Size Standards Matched to North American Industry Classification Sys tem Codes,‖ August 22, 2008, as viewed at http://www.sba.gov/idc/groups/public/documents/sba_homepage/serv_sstd_tablepdf.pdf

METHODOLOGY : SMALL BUSINESS ES (FIRMS)

Identification of Number of Small Firms and Average Revenues 

### The first step in our analysis identifies the number of small firms, average revenues, and

establishments in each sector. E 2 

### data from 2006 estimates the number of tanks in the

follow ing sectors: Commercial ( NAICS 42, 44

- 45, 72, excluding 447), Institutional (Hospitals only, NAICS 622), Manufacturing (NAICS 31

- 33), Transportation and Warehousing (NAICS 48 1, 483

- 486, and 48811 ), and Communi cation and Utilities
(NAICS 51 71 and 2211 ). To fit E 2 

### ‟s sector information t o SBA data, we group communications and utilities into the Information sector (NAICS 51). We also use the entire Transportation and Warehousing sector (NAICS 48), while E 2 

### breaks down the
sector into NAICS codes 481, 483

- 486, a nd 48811 for their analysis. We use EPA‟s

Semi

- Annual Report of UST Performance Measures, End of Fiscal Year 2009 Report to

estimate the total number of tanks

, and E 2 

### ‟s distribution of tanks across sectors t o identify the percentage and total number of ta nks in each sector

. 9



### IEc uses SBA employment and revenue thresholds as outlined in Exhibit 1 to define small entities in each sector of the economy

. To ensure that we are not underestimating the
number of small entities, we assume that all businesses with in a revenue bin that contain s a specific SBA revenue threshold value are small. In other words, if the SBA small

business size threshold for a sector is $7 million

, the model assumes that all firms in the

revenue range of $5 to $10 million are small

. Whe n SBA provides an employment threshold, we use total employment numbers for each revenue bin to calculate the average number of employees per firm, and assume that all businesses within a revenue bin that

9 Semi

- Annual Report of UST Performance Measures, End of Fiscal Year 2009

— As Of September 30, 2009. Accessed December

17, 2009 at < http://www.epa.gov/oust/cat/ca_09_34.pdf >L

- 5 

### contain the threshold value are small, similar to t he sectors whose thresholds are defined by revenue. The number of small firms in each sector is displayed in Exhibit 2

.
To estimate the number of retail motor fuel facilities, we consulted National Petroleum News‟ annual survey and U.S. Census of Manufact urers data. To reconcile differing
estimates of the number of retail fuel facilities ( roughly 162,000 estimated by NPN, and

1 10,600 estimated by the Census), and to account for roughly 37,000 tanks estimated to be owned by governments that were not includ ed in the E 2 

### data but are reflected in the total population of 611,449 tanks (FY 2009), we developed a 1.46 adjustment factor to

C ensus data to inflate the number of retail motor fuel fa cilities to 162,000, distributed proportionately across revenue ranges

. 10

, 11 

### To ensure that the total number tanks and
total number of facilities are consistent, we also revise E 2 

### 's estimate of tanks per facility

from 3.13 t o 2.97. This approach preserves the distribution of firms by size according to

Census data. As a resu lt of this approach, we estimate that there are a total of approximately 83,900 firms and 481,000 tanks in the retail motor fuel sector.

EXHIBIT 2

. NUMBER AND PERCENTAG E OF SMALL FIRMS BY NAICS CODE

INDUSTRY OR SECTOR NAICS NUMBER OF

SMALL FIRMS TOTAL

NUMB ER OF

FIRMS PERCENTAGE

OF FIRMS

THAT ARE

SMALL SMALL FIRMS

WITH USTs

Retail Motor Fuel Sales 447 82,462 83,869 98% 82,462

Commercial (wholesale trade, retail trade, accommodation, and food services) 42, 44

- 45, 72 (excluding 447) 1,434,363 1,451,645 99% 1 4,128

Institutional (hospitals only) 622 2,278 3,800 60% 2,105

Manufacturing 31

- 33 293,325 297,873 98% 6,725
Transportation (air, water, truck, transit, pipeline, and airport operations) 48 157,904 159,373 99% 5,848

Information 51 76,582 77,605 99% 3,8 80
Sources: Small Business Administration, ― Employer Firms, Establishments, Employment, Annual Payroll, and Receipts by Receipts Size of Firm and Major Industry, 2002 ,‖ as viewed at http://ww w.sba.gov/advo/research/data.html#us U.S. Census ―Table 4: Receipts/Revenue Size of Firms for the United States: 2002, as viewed at: http://www.census.gov/prod/ec02/ec0262sssz.pdf

.

10 NPN Mar ket Facts 2008. See: < http://www.npnweb.com/ME2/dirmod.asp?sid=A79131211D8846B1A33169AF72F78511&type=

gen&mod=Core+Pages&gid=CD6098BB12AF47B7AF6FFC9DF4DAE988 >

11 According to the Census, the term ―establishment‖ is defined as ―a single physical location whe re business transactions

take place and for which payroll and employment records are kept.‖ We therefore assume that an establishment is

equivalent to one facility. The terms facility and establishment are used interchangeably in this memorandum.L

- 6 Tank Dis tribution Across Revenue Bins (Except Retail Motor Fuel, NAICS 447) 

### The second step in our analysis is to distribute tanks among firms within each revenue bin

for each sector

. With the exception of the retail motor fuels sector, where we assume that

all f acilities have tanks, available data do not identify specific distributions of tanks across facilities in key sectors or sub

- sectors. In the absence of empirical data about the use of tanks at specific facilities, we assign tanks to facilities within broa d sectors assuming that tanks are distributed proportionately by revenue across all facilities in the

sector

. That is, w e assume that larger companies with more facilities are likely to have

more tanks (e.g., car rental companies with multiple locations)

.

To ensure that the number of small firms potentially affected is not undercounted, t he

model currently assumes that all t anks in these sectors are located at small firm s , and distributes tanks proportionately by revenue among small f irm size categories. For example, in a hypothetical sector in which ten firms report total revenues of $10 million,

and 20 more firms report revenues totaling $5 million, the model assumes that two

- thirds

of the tanks in that sector are distributed among the ten firms with r evenues totaling $10
million and the remaining one

- third of tanks are distributed among firms with revenues totaling $5 million. 12 

### The average number of tanks per facility is estimated using E 2 

### data,

and is held constant for each sector; the number of tank s per firm therefore increases with the average number of facilities per firm as firm size increases. Exhibit 3 provides an example calculation to illustrate this approach

. To calculate the cost of compliance for each firm with USTs, we multiply the averag e number of tanks per firm by the average cost per tank, as defined by user

- inputs to the model (in this case, cost model inputs). 13 

### We compare this number with the average receipts per firm in each revenue bin, and determine how many firms would face compl iance costs greater than one and three percent of their total revenue.

12 This a pproach reflects some uncertainty; to the extent that tanks are not distributed proportionately across firms within a

sector by revenue, it is possible that this approach could underestimate or over estimate impacts on small entities.

However, we do not h ave enough information about the actual distribution of tanks within sub

- sectors of these industries to

develop a more refined distribution process.

13 Cost per tank is calculated by running the cost model with the default parameters, and dividing the tota l cost across the

total universe of tanks to obtain a per tank cost. This calculator can be run with a user

- specified number by changing the

input in cell C2 on the ―Inputs and Outputs‖ worksheet.L

- 7 EXHIBIT 3

. TANK DISTRIBUTION IN TRANSPORTATION & WAR EHOUSING (NAICS 48)

[A]

SMALL

FIRMS [B]

REVENUE RANGE [C]

FIRMS [D]

FACILITIES [E]

RECEIPTS

($000) [F]

PERCENT

OF

TOTAL

SECTOR

RE CEIPTS [G]

FACILITIES

PER FIRM [H]

NUMBER

OF USTS [I]

TANKS

PER

FIRM [J]

NUMBER

OF

FIRMS

WITH

USTS

Yes $0 to $99,999 41,605 41,623 2,081,438 0.42% 1.00 190 1.77 107

Yes $100,000 to $499,999 65,261 65,383 15,545,929 3.11% 1.00 1,420 1.77 801

Yes $500 ,000 to $999,999 20,143 20,380 14,176,545 2.84% 1.01 1,295 1.79 724

Yes $1,000,000 to $4,999,999 24,091 26,174 50,211,290 10.06% 1.09 4,587 1.92 2,387

Yes $5,000,000 to $9,999,999 3,696 5,290 24,352,963 4.88% 1.43 2,225 2.53 879

Yes $10,000,000 to $49,9 99,999 3,108 8,707 51,486,660 10.31% 2.80 4,704 4.96 949

No $50,000,000 to $99,999,999 440 2,813 18,101,927 3.63% 6.39

No $100,000,000 to + 1,029 24,773 323,265,371 64.75% 24.07

TOTALS 159,373 195,143 $499,222,123 100% 14,422 5,848

Note s and S ources : [A]: Based on threshold from SBA. [B], [C], [D], [E],: Based on 2002 Census Data. Note that the terms ―establishments‖ and ―facilities‖ are assumed to be equ ivalent and are used interchangeably within this analysis. [F]: Calculated as each row in [E ] /∑[E]

. [G]: Calculated as [D]/[C]

. [H]: Calculated as [F]* total number of USTs per sector (e.g., 14,422 in NAICS 48)

. [I]: Calculated as [G] * E 2’s estimate of tanks per facility for each sector. [J]: Calculated as [H]/[I]

.

Tank Distribution for Motor Fuel Retailers (NAICS 447)



### For Retail Motor Fue l Sales (NAICS 447), we a ssume that all establishments (facilities)

have USTs . Moreover, we assume that the number of USTs is constant across all

facilities in the sector , and therefore varies directly with the number of facilities per

firm

. 14 

### This approach differs from the revenue

- based distribution used in other sectors in that we assume that even very small facilities have the same number of tanks (2.97) as larger facilities

. 15 

### In reality, it is prob able that some small facilities have fewer tanks and some larger facilities have more tanks, but our simplified distribution ensures that every facility has at least one tank and that costs to small facilities are not underestimated.

14 According to the Census, the term ―establishment‖ is de fined as ―a single physical location where business transactions

take place and for which payroll and employment records are kept.‖ We therefore assume that an establishment is

equivalent to one facility. The terms facility and establishment are used inte rchangeably in this memorandum.

1 5 Appendix 2 provides an alternative method of distributing tanks in NAICS 447 proportional to revenue as opposed to the

number of facilities per firm.L

- 8 RESULTS



### At a 2002 cos t of $ 262 ( $ 309 in 200 8 dollars) per tank, t he analysis concludes that no small entities in any sector will incur compliance costs that exceed either one or three percent of annual revenues (Exhibit 4)

.

LIMITATIONS AND UNCE RTAINTIES 

### By assuming that tanks are owned by small firms, (with the exception of retail motor fuel establishments (NAICS 447)), we may be overstating the number of small firms owning tanks. Available data do not provide information on how the number or existence of tanks

relates to the size of the business in a given industry. In certain industries such as fuel retailers, it is likely that all facilities have one or more USTs. In other industries such as hospitals, most facilities do not have any tanks, and it may be that larger hospital s are more likely to have tanks than smaller hospitals (rather than small hospitals, as assumed).

In addition, while Census and SBA revenue data are presented in ranges (or bins), the SBA size threshold, as well as the one or three percent of revenue thre sholds, typically fall in the middle of ranges. Because we assume that all firms in a bin earn “average”
revenues, the relationship between this average and the revenue impact thresholds determines whether all the facilities in that bin are “affected” by t he regulation. This approach is likely to under

- or over

- estimate the number of businesses affected. Finally,
we assume that when the small business threshold occurs in the middle of a revenue bin, all firms in that category are small; this might over

- esti mate the number of businesses

affected.L

- 9 EXHIBIT 4

. SUMMARY RESULTS OF CURRENT S MALL ENTITY SCREENIN G ANALYSIS

INDUSTRY OR

SECTOR SECTOR

(NAICS) SMALL

ENTITIES

(FIRMS)

WITH USTS SMALL

ENTITIES

WITH USTS

COSTS

EXCEED 1%

OF REVENUES PERCENT OF

SMALL ENTITI ES

WITH USTS

WITH COSTS

EXCEEDING 1%

OF REVENUES ENTITIES

WITH USTS

COSTS

EXCEED 3%

OF

REVENUES PERCENT OF

SMALL

ENTITIES WITH

USTS WITH

COSTS

EXCEEDING 3 %

OF REVENUES

Retail Motor Fuel
Sales 447 82,462 0 0.0% 0 0.0%

Commercial (wholesale trade,

retail trade, accommodation, and food services) 42, 44

- 45, 72 (excluding 447) 14,128 0 0.0% 0 0.0%

Institutional (hospitals only) 622 2,105 0 0.0% 0 0.0%

Manufacturing 31

- 33 6,725 0 0.0% 0 0.0%

Transportation (air, water, truck, transit, pipeline, and airport operations) 48 5,848 0 0.0% 0 0.0%

Information 51 3,880 0 0.0% 0 0.0%

TOTALS 115,148 0 0.0% 0 0.0%



### To map SBA revenue data to E 2 

### tank estimates, w e group com munications and utilities

into the I nformation sector (NAICS 51)

. We also use the entire Tran sportation and Warehousing sector (NAICS 48), while E 2 

### breaks down the sector into NAICS codes 481,

483

- 486, and 48811 for their analysis. Using larger sectors could potentially be skewing

the revenues and size of the firms in the smaller NAICS sub

- divisio ns.

A large number of governmental organizations use USTs. These governments include school districts, public utilities, local and county governments, and others. RFA/SBREFA requires agencies to consider the impacts on small government al jurisdictions as well as small businesses; small government al jurisdictions are defined as governments of cities, counties, towns, townships, villages, school districts, or special districts with a population

of less than 50,000 people. 16 

### In 2002, there were 87,525 local g overnments , including special districts, in the United States. 17 

### To assess impacts to small government al jurisdiction s, we evaluate compliance costs for all small governmental juris d ictions with

16 For the purposes of the RFA, s tates and tribal entities are not cons idered small.

< http://www.epa.gov/sbrefa/government.htm >

17 2002 Census of Governments SMALL

GOVERNMENT AND

FEDERALISM

ASSESSMENTL

- 10 

### tanks to determine what percentage would have expenses exceedi ng one or three percent

of total revenues.

We evaluate total costs to all non

- federal governments (including both direct compliance costs and program implementation costs) to determine whether the regulations under consideration would be likely to trigger requirements under E.O. 13132 (Federalism)

. Total annual state and local expenditures associated with the regulation of $25 million or
more, and/or compliance costs that are equal to or exceed one percent of their annual revenues, would trigger EPA‟s fede ralism requirements . This would require EPA to investigate approaches for ensuring that states have adequate discretion in implementing

the relevant regulation s

.

DATA SOURCES 

### The data sources we use for our small governments analysis include the follow ing:

 Economic Impact Analysis of Additional Mechanisms for Local Government
Entities to Demonstrate Financial Responsibility for Underground Storage Tanks,

December 1992 ( 1992 Local Government Economic Impact Analysis ), and

 2002 U.S. Census of Government s Data

.

METHODOLOGY AND RESULTS : SMALL G OVERNMENT A NALYSIS



### The 1992 Local Government Economic Impact Analysis data provide information on the

size and revenue of both general purpose (i.e. counties, municipalities, and townships) and special district gove rnments (i.e. school districts and other special districts) , dividing

these governments into four size categories: very large, large, medium and small. The analysis also provides data on the number of governments owning USTs, the number of

total USTs owned by governments, average USTs per government, USTs per owning government and the annual average budget expenditures, all broken out by size categories. The 1992 analysis defines a “very large” government as one that serves over
50,000 people; therefore, w e consider all other entities to be small governmental jurisdictions, according to the RFA/SBREFA definition

.

We assume that local governments collectively own four percent of active tanks. This

equates to 24,458 tanks, based on the FY 2009 universe of 61 1,449 tanks. We distribute

the 2 4,458 tanks among all local governments, based upon the percent of tanks owned in 1992 by local governments in each size category.

We then determine how many small governments own tanks, using the 1992 data for
USTs per own ing government. We determine the average compliance cost per government, calculated by the per tank cost multiplied by the number of USTs per owning government in each size category.

The average annual revenues for each size of general purpose governments are calculated using 2002 Census Data. We add the total number of very large, large, medium and small governments across town/townships, municipalities and counties, and weight their total revenues accordingly to reflect the total number of each type of go vernment (town, municipality, county) in each size category. In the United States, there are 16,504 townships but revenue data are available only for 4,128 townships , so we extrapolate toL

- 11 

### get revenue data for all townships. We then combine these weighted a verages to get a figure for annual revenues in 2002 dollars for general purpose governments. Detailed information at the special district level is not available for 2002, so we inflate the budget expenditures from the 1992 document into 2002 dollars. 18



### To calculate how many small governments face significant compliance costs exceeding

one or three percent of their revenue s , we compare the average compliance cost per

government with the average annual revenues to determine how many exceed either

threshold. At a cost of $309 ($2008) per tank, no small governments are affected under either the one percent or three percent revenue threshold (see Exhibit 5)

.

METHODOLOGY AND RESULTS : FEDERALISM A SSESSMENT 

### In addition to determining the impact on small government s, we calculate state and local costs to determine whether the proposed regulations would trigger an impact under

Executive Order 13132

, which address es potential federalism impacts

. We assume that

states collectively own one percent of total tanks (6 ,114 ) . This number is then multiplied by the per tank cost, as defined by the cost model/user

- inputs to the model. Under the proposed regulations, each state will incur labor costs for reading the regulations and applying for State Program Approval (SPA). In ad dition, under the proposed regulations

, facilities will be required to notify state s of each tank ownership change. Processing and reviewing these notifications represent costs to the states, and are included in total state

costs.

The model calculates loc al government costs by summing the number of tanks in local governments for both general purpose and special districts in all four size categories: very large, large, medium and small. We then apply the p er tank cost to the number of tanks

across all local governments

. Local and state costs are added together to determine if there will be a federalism impact.

In this scenario, we determine that total costs to both state and local governments (including direct compliance costs, notification co s ts, and stat e program costs) are approximately $10 million in 2008 dollars ; this is not considered to be a substantial compliance cost under federalism requirements.

LIMITATIONS AND UNCE RTAINTY 

### The data used for this analysis ( 1992 Local Government Economic Impact A nalysis data) use 1987 U.S. Census data. We are unable to find more recent data relating to the number of governments owning USTs, the average USTs per government, and USTs per owning governments. These numbers are likely outdated, and the current pattern of government ownership of USTs may be significantly different. Note, however, that because even very small governments earn over $1.5 million, it is not likely that any updates to the
distribution of tanks would affect the results of the analysis

.

18 Typically, in a RFA/SBREFA screening assessment, revenues are used as the metric to assess economic impact measures for

small governments. Without detailed 2002 data av ailable, we use the budget expenditures in the 1992 document as a proxy

for revenues.L

- 12

EX HIBIT 5

. SMALL GOVERNMENT ANA LYSIS

[A]

TYPE OF

GOVERNMENT [B]

SIZE OF

GOVERNMENT C [C]

USTS PER

OWNING

GOV’T [D]

NUMBER OF

GOV’TS

OWNING

TANKS [E]

2002 EST.

NUMBER OF

GOV’TS [F]

AVERAGE

ANNUAL

REVENUE

(2002 $) [G]

AVERAGE

COST PER

GOV’T

($) [H]

NUMBER OF

GO V’TS

EXCEEDING

1% OF

REVENUE [I]

NUMBER OF

GOV’TS

EXCEEDING

3% OF

REVENUE

General Purpose Very Large 10.2 534 1,461 $316,129,836 $ 2

, 676 0 0

Large 2.5 1,512 4,040 $35,687,794 $656 0 0

Medium 1.4 1,444 7,822 $8,712,804 $367 0 0

Small 1.1 1,048 25,644 $1,779,216 $289 0 0

Subtotal 2.7 4,538 38,967

Special Purpose Very Large 3.7 336 934 $431,319,166 $971 0 0

Large 3.6 1,902 5,340 $52,806,696 $945 0 0

Medium 1.4 2,648 13,602 $2,533,231 $367 0 0

Small 1 .0 258 28,682 $128,013 $262 0 0

Subtotal 2.4 5,144 48,558

Overall Total 2.5 9,682 87,525

Note s : [A] : G eneral Purpose governments include counties, municipalities and townships. Special Purpose governments include public school systems and special dis tricts. [B] : V ery large governments are considered to serve more than 50,000 people. We consider large governments as those that serve between 10,000 and 50,000 people, medium governments as those that serve between 2,500 and 10,000 people, and small

gove rnments as those that serve 2,500 or fewer people. According to RFA/SBREFA, small governmental jurisdictions have populations under 50,000. Therefore, we consider all sizes of governments except for ―very large‖ as small. [C] : From 1992 Local Government Im pact Analysis data [D] : Calcuated as number of tanks (adjusted 1992 distribution in each size category to reflect FY 2009 tank numbers) / [C] [E] : General purpose numbers from 2002 Census of Governments; Special Purpose total number of entities from 2002 Census of Governments, size distribution extrapolated from 1992 Local Government Impact Analysis data. [F] : General purpose estimates from 2002 Census of Governments; Special Purpose estimates inflated from 1992 Local Government Impact Analysis data

. [G ]: Calculated as [C] * mod el estimated cost per tank ($262 in 2002$).L

- 13 DATA SOURCES AND MET HODOLOGY 

### The data sources for the tribal lands analysis are the same as those used in the small business analysis. Based on a review of information available about the types of business
entities on Tribal Lands, we assume that t anks on T ribal lands represent a subset of the

rest of the universe and are distributed similarly across the same sectors. 19 

### We distribute the total number of tribal tanks proportionally among the NAICS sectors. Using the E 2



### data for tanks per facility and facilities per firm, we determine the total firms in each

sector in tribal lands.

RESULTS



### We run the cost model with the same paramet ers as the rest of the universe. T he per cost

tank i s higher in tribal country, as the universe is smaller , and there are no regulations currently in place, so all tanks incur all costs

. At a 2008 cost of $524 ($ 445 in 2002 dollars) per tank, t he total cost for all tanks on tribal lands is about $1

. 4 millio n.

LIMITATIONS AND UNCE RTAINTY 

### In order to determine the impacts on tribal entities, we assume the tank distribution across sectors in tribal country mirrors that of the rest of the United States. While we can

estimate the total number of firms in tribal lands with tanks, we do not have data about

the total number of firms

.

19 For more detail, s ee Detailed Assessment of UST Universe by Tank Purpose and Design (WA 1

- 25, Task 6), 24 March 2009.

Note that because Tribal ownership and operation is defined differently than other types of government ownership, we do

not attempt to isolate or identify ―government‖ tanks on Tribal lands. TRIBAL LANDS COSTL

- 14 

### APPENDIX 1

EXHIBIT A

- 1

. PARAMETERS USED TO R UN COST MODEL

RESULTS_USER_INPUTS

REGULATION

ID OPTION

ID CHOICE

ID OPTION_NAME SELECTIONS SELECTION TYPE

1 1 1 Walkthrough inspections by owner or operator 1 months between inspections

2 1 1 Overfill functionality testing 12 months between tests

3 1 1 Spill bucket tightness testing 12 months between tests

4 1 1 Integrity testing for
interstitial areas 12 months between tests

5 1 1 Sp ill bucket tightness test after repair 1 1 for yes; 0 for no

5 2 1 Overfill functionality test after repair 1 1 for yes; 0 for no

5 3 1 Interstitial integrity test after repair 1 1 for yes; 0 for no

6 1 1 Eliminate flow restrictors
for all new tanks 1 1 for yes; 0 for no

6 2 1 Replacement of existing
ball floats 0 1 for yes; 0 for no

7 1 1 Functionality test

- ATG 12 months between tests

7 2 1 Functionality test

- Sticking 12 months between tests

7 3 1 Functionality test

- interstitial monitoring 12 months between tests

7 4 1 Functionality test

- vapor monitoring 12 months between tests

7 5 1 Functionality test

- groundwater monitoring 12 months between tests

7 6 1 Functionality test

- line
leak detection 12 months between tests

9 1 1 Add SIR/CITL DS to regulations with

restrictions 1 1 for yes; 0 for no

11 1 1 Deferrals removed for emergency generator tanks 1 1 for yes; 0 for no

11 2 1 Deferrals removed for airport hydrants 0 1 for yes; 0 for no

11 3 1 Deferrals removed for

field

- constructed UST s 0 1 for yes; 0 for no

11 4 1 Deferrals removed for

wastewater treatment
tanks 0 1 for yes; 0 for noL

- 15 RESULTS_USER_INPUTS

REGULATION

ID OPTION

ID CHOICE

ID OPTION_NAME SELECTIONS SELECTION TYPE

12 1 2 Notification of ownership changes 1 1 for yes; 0 for no

13 1 1 Replacement of irrepairable lined tanks 1 1 for yes; 0 for no

14 1 1 Response to interstitial monitoring alarms on tanks and pipes 1 1 for yes; 0 for no

16 1 1 Operator training 1 1 for yes; 0 for no

17 1 1 Secondary containment

- new & replaced tanks 1 1 for yes; 0 for no

17 2 1 Threshold for pipe replacement rather than repair 0. 5 piping replacement

threshold

17 3 1 Under

- dispenser containers for all new dispensers 1 1 if applies to all under

dispenser containers; 0
otherwise

17 3 2 Under

- dispenser containers

for all new motor fuel dispensers only 0 1 if only applies to motor

fu el under

- dispenser containers; 0 otherwiseL

- 16 

### APPENDIX 2

SENSITIVITY ANALYSES

Our primary analysis assesses impacts to small businesses in non

- NAICS 447 sectors by distributing all USTs in each sector across small businesses , proportional to revenue. For
NAICS 447, however, we assume all facilities own USTs, and therefore distribute tanks by the number of facilities per firm. In this Appendix, we present two alternative scenarios: distribution of tanks in all sectors by firm revenue, and distribution of t anks in all sectors by number of facilities.

DISTRIBUTION BY REVE NUE 

### This sensitivity analysis presents the results of distributing tanks by revenue across all sectors, including NAICS 447. Using this methodology, t his analysis concludes that no

firms in any sector face compliance costs exceeding one or three percent of annual

revenues.

INDUSTRY OR

SECTOR NAICS SMALL

FIRMS WITH

USTS ENTITIES WITH

USTS

- COSTS

EXCEED 1% OF

REVENUES PERCENT OF

SMALL

ENTITIES

WITH USTS

WITH COSTS

EXCEEDING

1% OF

REVENUES EN TITIES

WITH USTS

COSTS

EXCEED 3%

OF

REVENUES PERCENT OF

SMALL

ENTITIES

WITH USTS

WITH COSTS

EXCEEDING

3 % OF

REVENUES

Retail Motor Fuel
Sales 447 82,462 0 0.0% 0 0.0%

Commercial (wholesale trade, retail trade, accommodation, and food services) 42, 44

- 45,

72 (excluding 447) 14,128 0 0.0% 0 0.0%

Institutional (hospitals only) 622 2,105 0 0.0% 0 0.0%

Manufacturing 31

- 33 6,725 0 0.0% 0 0.0%

Transportation (air, water, truck, transit, pipeline, and airport operations) 48 5,848 0 0.0% 0 0.0%

Information 51 3,880 0 0.0% 0 0.0%

TOTALS 115,148 0 0.0% 0 0.0%L

- 17 DISTRIBUTION BY FACI LITY 

### This sensitivity analysis presents the results of distributing tanks by number of facilities

across all sectors. Using this methodology, t his analysis concludes that no firms in any sector face compliance costs exceeding one or three percent of annual revenues.

INDUSTRY OR

SECTOR NAICS SMALL

FIRMS WITH

USTS ENTITIES

WITH USTS

COSTS

EXCEED 1%

OF REVENUES PERCENT OF

SMALL

ENTITIES

WITH USTS

WITH COSTS

EXCEEDING

1% OF

REVENUES S E NTITIES

WITH USTS

COSTS

EXCEED 3%

OF REVENUES PERCENT OF

SMALL

ENTITIES

WITH USTS

WITH COSTS

EXCEEDING

3 % OF

REVENUES

Retail Motor Fuel
Sales 447 82,462 0 0.0% 0 0.0%

Commercial (wholesale trade, retail trade, accommodation, and food services) 42, 44

- 45, 72 (excluding 447) 14,128 0 0.0% 0 0.0%

Institutional (hospitals only) 622 2,105 0 0.0% 0 0.0%

Manufacturing 31

- 33 6,725 0 0.0% 0 0.0%
Transportation (air, water, truck, transit, pipeline, and airport operations) 48

5,848 0 0.0% 0 0.0%

Information 51 3,880 0 0.0% 0 0.0%

TOTALS 115,148 0 0.0% 0 0.0%L

- 18 

### EPA SUPPLEMENTAL SMALL ENTITY ASSESSMENT BY OUST

MARCH 2010EPA internal deliberative draft

– do not cite or quote L

- 19 

### Supplemental Small Entity Assessment by EPA /OUST

March 23 , 2010

The initial screening assessment performed by I ndustrial Ec o nomics, Inc. (IEc) indicated t hat

there would not be a substantial number of small entities significantly impacted at the 1% or 3% revenue

threshold based on the estimated per tank compliance cost as of March 22 , 2010 (i.e., $3 78 per tank in
2008 dollars). 20 

### However, due to the large number of small firms with underground storage tanks (USTs) that are in the retail motor fuel sales sector (NAICS 447) and because the initial screening assessment uses the average revenue within a particular revenue range to d etermine whether the entire number of firms in that range would be included or excluded in the threshold determination, OUST undert ook a

closer examination of the small firms in this sector. This paper first summarizes the results from the

initial screeni ng assessment, and then details the supplemental analysis conducted to refine the conclusions from the initial screening assessment for the retail motor fuel sales sector.

Initial Screening Assessment

According to our analysis, it is estimated that ther e are approximately 83,900 firms in the retail

motor fuel sales sector. 21 

### All of these firms are assumed to own USTs at all their facilities. Based on the distribution of firms across revenue bins published by the 2002 Census and SBA‟s revenue thresholds for NAICS 447110 and 447190, it is estimated that 82,500 of these firms, or 98 percent of total firms, are considered “small” under SBA‟s definition of a small entity. 22 

### Approximately 7,500 of these small firms

are estimated to be in the smallest revenue r ange published by the 2002 Census (i.e., reporting sales receipts between $0 and $250,000), with average sales of approximately $149,000.

As mentioned above, the initial screening compared the total compliance cost per firm with the

average revenue repo rted by the firms of a given revenue range to determine whether those firms would be significantly impacted by the proposed rulemaking (i.e., exceed the 1% or 3% revenue threshold). Based on a per tank compliance cost of $321 (in 2002 dollars), 23 

### and assum ing that the firms in the smallest revenue range would own only one facility with three USTs, we estimate that the 7,500 small

20 See IEc, “Small Entities Screening Analysis of UST Universe by Industry Sector,” February 4, 2010 (WA 3

- 25, Tas k 4) for details

.

21 NAICS code 447 is comprised of 447110 (Gasoline stations with convenience stores) and 447190 (Other gasoline stations). To reconcile

differing estimates of the number of retail fuel facilities (roughly 162,000 estimated by NPN, and 110 ,600 estimated by the Census), a 1.46

adjustment factor was applied to the Census data to inflate the number of retail motor fuel facilities to 162,000, distributed proportionately across

revenue ranges. This approach preserves the distribution of firms b y size according to Census data. As a result of this approach, we estimate that

there are a total of approximately 83,900 firms and 481,000 tanks in the retail motor fuel sector.

22 For 447110, the SBA revenue threshold is $27 million; for 447190, the SBA r evenue threshold is $9 million. To ensure that we are not

underestimating the number of small entities, we assume that all businesses within a revenue bin that contains a specific SBA revenue threshold

value are small. In other words, if the SBA small bu siness size threshold for a sector is $7 million, we have assumed that all firms in the revenue

range of $5 to $10 million are small.

23 T o be consistent with 2002 revenue data from SBA and the U.S. Census Bureau , compliance costs have been adjusted from 20 08 dollars to

2002 dollars using the GDP implicit deflator . Based on the January 26, 2010 version of the cost model, the estimated compliance cost is $309 per

tank in 2008 dollars, or $262 per tank in 2002 dollars . (Total annualized compliance costs are estimated to be $190 million in 2008 dollars.

These costs exclude compliance costs associated with the removal of deferrals for airport hydrant systems and field

- constructed tanks. These

systems are assumed to be primarily owned by the Department of Defe nse; therefore, potential compliance costs for these systems are not

required to be included for the small business assessment.)EPA internal deliberative draft

– do not cite or quote L

- 20



### firms in the $0

- $250,000 revenue range would face total compliance costs of $963 per firm ($2002). As a
result, any firm earning less than $96,300 (i.e., the revenue threshold at which compliance costs would exceed 1% of the firm‟s revenue) would not be significantly impacted. Because the average revenue for
the 7,500 firms in the $0

- $250,000 revenue bin (i.e., $149,000) is more t han $96,300, the initial screening
assessment concluded that no firms would be significantly impacted from the estimated compliance cost
(based on an all

- in or all

- out assessment).

However, given that the lowest revenue bin reported by the U.S. Census ran ges from between $0 and $250,000, it is obvious that some of the 7,500 firms make less than the average, and therefore, may be
significantly impacted. At the same time, it is also apparent that a number of the 7,500 firms make more than the average, and th erefore would not be significantly impacted. Therefore, a more accurate conclusion from the initial screening assessment may be that, at best, we can conclude that between zero and 7,500 firms may be significantly impacted based on a 1

- or 3

- percent reven ue threshold.

EPA guidance used to determine whether a program can certify that a rulemaking will not have a significant impact on a substantial number of small entities (SISNOSE) provides an example cutoff of 1,000 small firms or 20 percent of small firm s affected as a measure of “substantial number.” While the
7,500 small firms in the lowest revenue range represents nine percent of all potentially affected small firms, this number exceeds the example 1,000 threshold. As a result, OUST attempted to furt her refine the number of small firms potentially affected by conducting a supplemental analysis that focuses on the 7,500 small firms that earn between $0 and $250,000 in revenues.

Supplemental Analysis

The main goal of the supplemental analysis is to d etermine whether we could estimate the distribution of the 7,500 within the $0

- $250,000 revenue range so that we could better identify the
number of firms that may be significantly impacted. As a first step, we contacted the U.S. Census Bureau

to see if t hey would be able to provide a further breakdown of the number of firms in the lowest revenue
bins for NAICS 447110 ( Gasoline stations with convenience stores) and 447190 (Other gasoline stations ). The Census Bureau was able to give us a percentage breakd own of the firms between three smaller revenue ranges: (1) $0

- $50,000; (2) $50,000

- $150,000; and (3) $150,000

- $250,000. 24 

### Based on this
information, we estimate that the number of firms in the retail motor fuel sales sector (i.e., NAICS 447)

for these thre e revenue groups is approximately 550, 3,120, and 3,860, respectively (see Exhibit 1).

Using these three additional data points, we plotted a curve that depicts the cumulative number of firms at each revenue threshold (see Exhibit 2). (For example, Exhi bit 2 shows that approximately 76,200 firms earn under $5 million in revenues). By fitting a straight

- line trend line at the lower end of this curve (see Exhibit 3), Excel generated the following formula for the curve: y = 0.0359x

– 1283.6 (R 2 

### =0.9985).

W e then use this formula to estimate the number of firms that would be impacted at the 1 percent and 3 percent revenue threshold.

24 The information provided by the U.S. Census Bureau is considered an “unpublished data request.” As such, while the Census Bu reau provided

the additional data we requested, they also included a letter noting that “these are not „official data‟ from the Census Bure au, since they do not

meet the Census Bureau‟s quality standards. These data should be used with extreme caution, re alizing the severe quality limitations that may

exist.” However, given that we do not have another source of information, we use t his as the best data available.EPA internal deliberative draft

– do not cite or quote L

- 21



### Given compliance costs of $963 per firm (in 2002 dollars), any firm making less than $96,300
and $32,100 would be considered significantly impacted at the 1% and 3% revenue threshold, respectively. By solving for y where x is $96,300 in the formula generated above, we estimate that
approximately 2,175 firms would be significantly impacted at the 1% threshold. Based on the for mula, there are no firms that make under $35,750 in revenue. As a result, we estimate that there would be no
firms significantly impacted at the 3% revenue threshold.

Our estimate of 2,175 firms that would be significantly impacted at the 1% revenue thre shold does exceed the 1,000 example cutoff provided in EPA guidance. However, we believe that we are able to certify that this proposed rulemaking will likely have no SISNOSE for the following three reasons. First, 2,175 firms represent less than three p ercent of all potentially affected small firms in this sector, which is much less than the 20 percent cutoff that is the other parameter typically used to determine “substantial number.” Second, assuming a minimum annual throughput of 120,000 gallons of g asoline sold at a gas station, compliance costs of $1,134 per firm would be equivalent to less than one cent per
gallon. This relatively low cost could theoretically be passed

- through to the consumer given the price inelasticity of gasoline demand. 25 

### Fina lly, as described in the next paragraph, while we use data reported by the U.S. Census Bureau to support our analysis, we find it difficult to imagine that a retail gas station would be a viable business if it earned less than $100,000 in annual revenues.

Assuming the firm sells only gasoline at $2 per gallon, if the firm only generates $100,000 in
annual revenues, then this would mean the firm is selling less than 4,200 gallons of gas per month, which appears extremely low compared to the monthly indust ry average throughput of approximately 130,000 gallons. In addition, given that the gross profit margin for gas stations with convenience stores averages
14 percent, 26 

### a quick back

- calculation of the amount of revenues that would be needed to generate enou gh gross profit to cover just the direct cost of the wages of one full

- time employee at minimum wage ($7.25 * 2080 hours = $15,080) results in an estimate of $108,000. This means a gas station with a convenience
store would need to make at least $108,000 in revenues in order to pay one person to work full

- time at minimum wage, exclusive of all other direct and indirect costs that a gas station may need to pay (e.g., electricity, property taxes, franchise fees). As a result, while our supplemental analysis indicates that 2,175 firms may be significantly impacted at the 1% revenue threshold, we find it hard to believe that any firm would be able to remain in continuing operation with annual revenues of less than $100,000.

25 A 2005 Federal Trade Commission report indicates that in the short run, a gasoline price in crease of 10 percent would reduce consumer

demand by just 2 percent. (See Federal Trade Commission, “Gasoline Price Changes: The Dynamic of Supply, Demand, and Competition,” 2005,

p. ii.) While we acknowledge that the competitive nature of the gasoline ma rket on an individual gas station basis may deter owners from passing

through the cost to consumers, we believe that a compliance cost equivalent to less than one cent per gallon is relatively mi nor compared to the

other costs and fees that are associated with the cost of gas to an owner.

26 See National Association of Convenience Stores (NACS), 2009 Fact Book, Table III

- 38, Benchmark Store Profit and Loss by Size Category

–

2008.EPA internal deliberative draft

– do not cite or quote L

- 22EPA internal deliberative draft

– do not cite or quote L

- 23 See Exhibit 3EPA internal deliberative draft

– do not cite or quote L

- 24

### Appendix M

Screening Analysis of Environmental Justice Impacts

### Date:

To:

From:

Copy:

Subject:

This me m vicinity o primary o racial mi n UST faci l justice c o environ m risks. Fa c outside o f

Method o

This anal y of potent i “potentia l

and “refe r potential l

facilities.

Potentia l



### The pote n within a r and othe r UST rele a UST syst e occurrin g

The refer e populatio

The coun

of data at larger ar e provide a July 22, 2

ChoYi K w

Michael L (RTI), Ja m

Cynthia M

Analysis o

m orandum d o

o f undergrou n

o bjective wa

n ority and l o l ities. This a

o ncerns rega r

m ental justic e

c ility-specifi c f the scope f

o logy

y sis is base d

i ally disadv a l ly affected c

r ence com m l y disadvant a

The variou s

l ly Affecte d



### n tially affec t

r adial buffer

r sources (B e

a ses typical l

e ms is gene r

g microbial c

e nce comm u ns. We utili z ty-level Ce n the Census

e a than the 1 0

a useful com p 010

w an (EPA)

L owry (RTI)

m ie Cajka ( R

M anson (IEc )

o f Statistics

o cuments R T

n d storage t a s to determi n

o w-income c

a nalysis is in

r ding the lo c

e analysis a n

c health ris k

f

or the analy

d on populat i

a ntaged pop u

c ommunitie s

m unities” (co u

a ged popula t

s data sourc e

d

and Refer e



### t ed commu n

distance of

e dient et al, 1

l y does not e

r ally limited

c ommunitie s

u nities were

z ed county- l

n sus parame t

b lock grou p 0 00 ft buffe r

p arative me a

1 , Gordon B r
R TI), and Ja m

)

for Populati

T I’s assess m

a nk (UST) fa

n e whether s

c ommunities

tended to p r

c ation of US

n d does not c k s were una v

sis.

i on statistic s

u lations (e.g

s ” in the vic

u nty-level p

t ions are lo c

e s and analy s

e nce Com m



### n ities in the v

1000 ft. Th i

1 994; Dooh e

e xceed this e

through bi o

s (Wilson et

used in this

l evel popula t

t er values w e

p level. Cou n

r s around U S

a sure of pop

1 r own (RTI),

m es Rineer (

ons Residin g

m ent of popu l

fa cilities (i.e

.

s ocioecono m ) are locate d

r ovide infor m

T facilities.

c ouple popu l

v ailable to s u

s from the 2 0 ., minorities inity of US T opulations).

c ated prefer e

s is methods

m unities



### v icinity of U

i s distance i s

e r, 1999), w h

xtent. The t r

o degradatio n

al, 1986).

analysis to c

t ion statisti c

e re produce d

n ty-level dat a S T facilities

ulations at a Brandon B e ( RTI)

g Near UST

l ation data f

. , retail mot o

m ically disa d

d preferentia

m ation relat e

However, t h

l ation infor m

u pport such a

0 00 Census t ). A compa r
T facilities ( p

This comp a

e ntially with i

are describ e

U ST facilitie s

s based on t h

h ich indicat e

r ansport of p

n of the cont a

c ompare wi t

c s to define t

d through p o

a represent a . As such, t h

a larger scal e e rgenroth

Facilities

f

or commun i

o r fuel estab l

d vantaged p o lly within t h

e d to potenti a h e analysis i s

m ation with p

a n evaluatio n

t hat indicat e

r ison is mad e

p opulations w

a rison indic a i n the vicini t

e d below.

s were defin e h e draft US T

e that conta m

p etroleum h y

a minants by

t h the poten t
he referenc e

o pulation w e

a ggregate c o h e county-le v

e than at the i ties in the

l ishments). T

o pulations ( e h e vicinity o f

a l environm e

s not a full

p otential he a

n , and it wa s

e the prevale n

e between

w ithin 1000

a tes whether

t y of UST

e d as people

T risk assess m

m ination fro m

y drocarbons

naturallyt ially affecte

e communiti e

e ighted aver a

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e .g., f

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d

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t hin a

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useful sc a

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These pa r (Environ m are avail a communi

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resolutio n

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### The sam e undergoi n communi “syntheti c Modelin g Health (s e househol d dasymetr i

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distributi o precision

statistics ( group da t
b ased on (defining

socioeco n However

, p arison indi c

n tly from co u d . However,

n ges in the p ties is small

a le for com p

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### w ing socioe

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e rcent mino r

e rcent white

n d did not s p

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e rcent unde r

r ameters are

m ental Justi c

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g roup data w a synthetic p

n than raw C

c

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### e population

n g EPA revi

ties in the v i

c populatio n

g of Infectio u

e e http://w w d (and indiv i

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n populatio n

at a much fi n dataset, h o

o n of house h population d ( e.g., perce n

t a (the small e the syntheti c a potentiall y

n omic result

, if a buffer e c ates wheth e

u nty popula t larger regio n

p opulation. G

(1000 ft bu f

p arison.

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### conomic pa r

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alone (the p

p ecify “hisp a

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5 years ol d 18 years ol d

selected to

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n the contig u

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w ith each ho u h the data ar e

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w ere entirel y

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e block gro u y affected c o

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r epresents a b

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m eans (refer e

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d analysis, i n

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### w e performe d

p otentially a

a tistics were

p ulation wit h

t ed as surve y

s is on facili t

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- value are th

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situations.

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.



### d a statistic a

a ffected and r

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t ies. The w e

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p otentially a b y the stand a

mean and m

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h e focus of t

t he T test a n

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a rd error of t

m edian valu e

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s between t ) to

o und

d

t he

n d the

t he

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### communi the poten t in the po t generatin

95% con f

conclude

b ounds li s

The resul small (le s (with the

present a t
values fo r percenta g The perc e (white) o c communi negative,

of childr e

Table 2 p errors of t
the mean

of the di ff

are statis t
in the me potential l

observin g hypothes i

conclude

of faciliti e significa n

Tables 3

the result s magnitu d The perc e differenc e weighted

more pro n reference

Conclu s

In summ a communi (county-l e b etween t ties. The di f

t ially affect e

t entially aff e g a distribut

f idence inte r with 95% c o

s ted in the t a

ts in Table 1

s s than 2 % i

exception o f

t slightly gr e

r each of th e

g e within th e

e nt white al o

c curs with m ties. The pe r indicating t h

e n.

p rovides ad d

t he mean (S E

of the refer e ff

erence in m

t ically signi f

ans. The T t

l y affected c o

g difference s i s is true. B e that the dif f

e s greatly i n

n t difference

and 4 prov i

s are simila r d es of the po p

e nt white al o

e ; however,

and unwei g

n ounced dif f , county lev e

s ion

a ry, this ana l

ties in the v i

e vel popula t

t he potentia l f ference val u

e d communi t

e cted comm u

ion of nearl y

r vals for the

o nfidence t h

a ble.

1 show that t
i n all cases).

f the percen t

e ater percen t

e following s

e potentially

o ne differen c

m ore predo m

r cent under a h at smaller p

d itional stati s

E ), a relativ e

e nce comm u

m eans (i.e., w

f icant), as w e est evaluate s

o mmunities

s large r than

e cause all of

f

erences in t h

n creases the s

s in the me a

i de results fr

r to the unw e

p ulation dif f

o ne was the o the magnitu

g hted results

f

erences b et w

e l communi t

l ysis compa r i cinity of U S

t ions). The d

l ly affected a

5 u es result fr o

t y values (s o

u nity). A di ff

y 60,000 di ff

mean differ e h at the diffe r

t he mean di f

However, t h

t under age 5

t ages in the v

s tatistics are

affected co m

c e result is n

m inance in th

a ge 5 and th

p ercentages

s tical results

e risk ratio ( m

u nities), res u

w hether the d

e ll as the es t

s the null h y are equal. T

the observe the p-value s h e means ar e

s tatistical p o

a ns even if t h

o m the pop u

e ighted resu l

f

erences are

o nly measu r de of the di f suggests th a

w een the lo c

t ies. .

r ed socioec o S T facilities

d ifferences i n

a nd the refe r

5 o m subtracti n

o that a posi t
ff

erence res u ff

erence val u

e nces. Base d

r ences in me a

f

ferences fo r h e differenc e 5 ) that the p o

v icinity of U positive (al b

m munities: p

n egative, ind i

e reference v e percent u n of the pote n

for the un w

m ean of pot e

u lts of a T te s d ifferences i n

t imated 95 %

y pothesis th a
T he resultin g

d difference

s are very lo w

e statisticall y

o wer of the t

h e magnitud e

u lation weig h

l ts (Tables 1 generally g r

r e that chan g f ference re m

a t facilities i n

c al, potentia l

o nomic Cen s

(within 100

n the mean p

r ence comm u n g the refer e

t ive result i n

u lt was prod u

u es. Table 1 a d on the stat i

a ns are bet w

r the unweig h

e s in the me

o tentially di s U ST facilitie s

b eit small) v

p ercent in p o i cating that t

v ersus the p o

n der age 18 d

n tially affect e

w eighted ana l

e ntially affe

s t evaluatin g

n the estima t

% confidence

a t the means

g p-values in d

s under the t

w , we can r e

y significant ests, allowi n

e s of the dif f

h ted statisti c and 2). Ho w

r eater for th e

g ed from a n e

m ains quite s m

n higher po p l ly affected c

s us data for p 0 ft) versus r

p ercentage s o

u nities are r e e nce comm u

n dicates a gr e

u ced for eac h

a lso provid e i stical evalu a

w een the upp

h ted analysi

ans do cons i

s advantage d

s . Specifical

v alues, indic a

o verty an d p e

t he majority

o tentially a ff

d ifference r e

e d populatio

l ysis, includ i

cted comm u

g the statisti c

t ed socioec o intervals fo r b etween th e d icate the p r

t est assump t

e

ject the nul l

. Note that t h

n g detection

f

erences are

c al analysis.

w ever, the r e

e weighted a

e gative to a

m all. Comp

p ulation are a

c ommunitie s

p otentially a

r eference c o

o cioecono m

e latively sm a u nity values f

e ater percen t
h facility, th u

e s the estim a

a tion, we ca n er and lowe r

s are relativ e i stently sug g d population s

ly, the diffe r

a ting a grea t

e rcent mino r population

ff

ected

e sults are sli g

ns are mad e

i ng standar d

u nities divid e

c al significa n

o nomic stati s

r the differe n

e reference a

r obability o f

t ion that the

l hypothesis

h e large nu m of statistica l

small.

The pattern s

e lative

a nalysis resu l

positive

arison of th e

a s tend to ha v

s and the

a ffected

o mmunities

m ic results

a ll (<2% f rom

t age

u s

a ted

n

r

e ly

g est

s are

r ence

t er

r ity.

g htly

e up

d

e d by

n ce

s tics

n ces

a nd

f

null

and

m

ber

l ly

s in

l ts.

e

v e

### differenc e analysis). potential l with resp e and perc e 18) was i n

Referen

Bedient, P

Re

Bhaduri, B

g e G e

Dooher, B

A s C a

ESRI. 20 0

S u h t

Wilson, J

w a

e in all case s However, t h

l y disadvant a

e ct to the fo l

e nt minority.

n most case s

ces

P .B., H.S. R

e mediation

.

B ., E. Brigh

e ospatial an d

e oJournal 6

B .P. 1999. P

s sessment o f

a nnon. Law r

0 9. 2009 M e

u mmary . ES R

t tp://www.e s

J .T., L.E. Le a

a ter remedi a s for the un w h e differenc

a ged popula t
l lowing Ce n The perce n

s smaller in t

ifai, and C. J Englewood

t, P. Colem a d temporal m 6 9 :103–117.

otential gro u f

the Use of E

r ence Liver m

e thodology S

R I, Redland

s ri.com/libr a

a ch, M. He n

a tion techni q

6 w eighted an a

es are statis t

t ions are lo c

n sus- b ased m

n tage of the p

t he vicinity o

J . Newell. 1 9

Cliffs, NJ: P

a n, and M. U

m odeling ap p

u nd and sur f

E thanol as a

m ore Nation a

S tatement: E

s, CA. avail a

a ry/whitepa p

n son, and J. N

q ue. Ground

6 a lysis; <5% i

t ically signi f

c ated prefer e

m easures: pe r

p opulation m

o f UST faci l

9 94. Groun d

P TR Prentic e

U rban. 2007.

p roach for p o

f

ace water i m

a Fuel Oxyg e

a l Laborato r

E

SRI Data— B

a ble at

p ers/pdfs/inf o

N . Jones. 19 8

Water Mon i i n all cases f

f icant, and t h

e ntially in th e

r cent white a

m ade up of c h

l ities.

d

Water Con t

e -Hall, Inc.

LandScan U

o pulation di s

m pacts. In H

e nate . Edite d

r y, Livermo r

B usiness Lo c

o usa- b usine s

8 6. In situ bi

i toring Revi e f

or the popu l

h e results d o

e vicinity o f

a lone, perce n h ildren (un d

t amination:

U SA: a high

s tribution a n

H

ealth and E n d by D.W. R

r e, CA.

c ations and B

s s-database. p

orestoration

e w 6 :56–64. l ation weig h

o suggest th a f UST facilit i

n t in povert y d er 5 and un d

Transport a

- resolution

n d dynamics

n vironment a R ice and G.

B usiness

p df.

as a groun d h ted

a t
i es

y
, d er

nd

.

a l

dNMsvrNaCePercent WhPercent UnPercent UnPercent inPPercent MinNote: Difference summMean values reflect thsimply by subtractingvalues do not necessaresults of the analysisPePePePePeNote: There are >56,0afraction of facilitieshensus Paramethite Aloneder Age 5der Age 18Povertynoritymary statistics (meanhe entire distribution,the reference commuarily match values desare based on meanercent White Aloercent UnderAgercent Under Agercent in Povertercent Minority033 degrees of freedohave no people livingTable 1. SuteraMnand median) were cawhereas the medianunity mean from theprived by subtractingtvalues, median resultTable 2. Standonege 5ge 18tyom for this test (i.e. nuwithin the 1000 footummary Result1000 ft Bufferaround FacilityMean Median70.3 81.36.7 6.524.7 24.913.3 10.324.0 14.6alculated from the disvalues are based onlpotentially affected cothe median values frots are provided for codard Error, TT1000 ftBufferaroundFacilityCwFaLSE ofMean0.1200.0100.1040.0450.104umber of facilities). Nbuffer.7ts for CensusPCounty whFacility isLocatednMean Med70.8 746.7 625.6 2512.2 1123.8 20stribution of differencey on the 50thpercentiommunitymean (e.g.,om the underlying distompleteness and asaTest, and RiskRCountywhereacility isLocatedSE ofMeanSEM0.088 0.0.004 0.0.071 0.0.023 0.0.071 0.ote that the total numParameters –Ueresddian MeanM4.8 -0.44.7 -0.055.5 -0.841.5 1.10.9 0.21evalues (i.e., one resile result. For this reafor mean percent povtributions (e.g., for mean alternative indicatoRatio Results–EofeanTStatist085 -5.23009 -5.18079 -10.5038 27.66079 2.71mber of facilities in theUnweightedDiffeMedian95%Lowe1.29--0.12 -0-0.54--0.640-1.480ult per facility, yieldinson, the mean differeverty 13.3 – 12.2 = 1.edian percent povertyr of the distributions’–UnweightedDifferenceticpvalueR3<0.0018<0.0019 <0.0016<0.0010.0067dataset (59,945) diffeerence%Confidenceof Mean Differer Bound Upp-0.610.068-0.990.990.06g a distribution of aboence results could also1). In contrast, the my10.3 – 11.5≠-.64).Acentral tendency.RatioSE ofRatio0.99 0.0010.99 0.0010.97 0.0011.09 0.0031.01 0.003ers from the degreesIntervalrenceper Bound-0.27-0.032-0.681.130.36out 60,000 results).obe calculatededian differenceAlthough the primaryfo33of freedom, becauseNMsvpNaCenPercent WhPercent UndPercent UndPercent inPPercent MinNote: Difference summMean values reflect thsimply by subtractingvalues do not necessaprimary results of thePePePePePeNote: There are >56,0afraction of facilitieshTabnsus Parameterite Aloneder Age 5der Age 18Povertynoritymary statistics (meanhe entire distribution,the reference commuarily match values deanalysis are basedoTableercent White Aloercent UnderAgercent Under Agercent in Povertercent Minority033 degrees of freedohave no people livingble 3. Summarr100aroMea53.86.924.716.236.6nand median) were cawhereas the medianunity mean from theprived by subtractington mean values, medie4. StandardEonege 5ge 18tyom for this test (i.e. nuwithin the 1000 footry Results forC00 ft Bufferund Facilityan Median88 59.631 6.7874 24.9122 13.3461 29.54alculated from the disvalues are based onlpotentially affected cothe median values froan results are provideError, T Test, an1000 ftBufferaroundFacilityCwFaLSE ofMean0.2880.0200.0650.1080.255umber of facilities). Nbuffer.8Census ParameCounty wherFacility isLocatedMean Media58.79 57.76.80 6.8525.36 25.513.33 12.833.16 31.9stribution of differencey on the 50thpercentiommunitymean (e.g.,om the underlying disted for completenessand Risk RatioRCountywhereacility isLocatedSE ofMeanSEM0.193 0.0.008 0.0.033 0.0.063 0.0.165 0.ote that the total numeters – Weighterean MeanM0 -4.6150.113 -0.623 2.892 3.45evalues (i.e., one resile result. For this reafor mean percent povtributions (e.g., for meand as an alternativeResults – WeigEofeanTStatist205 -22.4017 6.24058 -10.6085 34.02191 18.05mber of facilities in theed by PopulatiDiffeMedian95Lowe-2.55-0.040-1.57 -0.960.58ult per facility, yieldinson, the mean differeverty 16.2 – 13.3 = 2.edian percent povertyindicator of the distribghted by PopulDifferenceticpvalueR8 <0.0014<0.0012 <0.0012<0.0015<0.001dataset (59,945) diffeonrence% Confidenceof Mean Differer Bound Upp-5.00.0730.732.73.1g a distribution of aboence results could also9). In contrast, the my13.3 – 12.8≠-0.96).butions’ central tendeationRatioSE ofRatio0.92 0.00351.02 0.00260.98 0.00231.22 0.00641.10 0.0058ers from the degreesIntervalrenceper Bound-4.20.14-0.503.13.8out 60,000 results).obe calculatededian differenceAlthough theency.fo56348of freedom, because

### 9

### Appendix N

Cost Savings to State Financial Assurance Fund s

This Appendix document s the methodology used to assess cost savings to state financial assurance funds u nder the final regulation

. T he specific results of this analysis are presented in Chapter 5

.N

- 1



### The final regulation is expected to result in fewer releases from UST systems and is also expected to reduce the size of releases. This should result in cost savings due to reduced demand

for remediation. To the ext ent that states use financial assuran ce funds to remediate these releases, the regulation 

### should result in cost savings to these states. Moreover, if financial

assurance funds reflect broad

- based taxpayer contributions (e.g., through g asoline taxes ), the
regulation 

### cou ld represent reduced bur den on taxpayers. To assess the potential magnitude of a reduction in releases on distributions made by state financial assurance funds

, we employ the following screening

- level analytic approach :

1. Identify states with active financial assurance funds: Class ify each state or territory with an active financial assurance fund as Tier 1 (states that charge both a tank fee and a broad

- based gasoline tax) or Tier 2 (generally, states that charge a tank fee and a limited gasoline tax).

2. Develop rough estimates of pe r

- state avoided releases due to the final regulation : Count the number of instances in which UST systems in a state are affected by each requirement in the final regulation and assign avoided releases or avoided groundwater incidents across states based on this count.

3. Estimate avoided remediation costs per state: Multiply the number of releases avoided by the avoided cost per release or groundwater incident to obtain the gross

avoided cost.

4. Adjust for average deductible: Subtract the deductible paid by owne rs and operators from the gross avoided cost to obtain the net avoided cost to state funds.

5. Calculate state cost savings: Sum net gains to state funds from avoided releases and avoided groundwater incidents.

Below, we explain each step in greater detail. W hile we perform the steps below on all 56 states and

territories

, as well as Indian Country, only the results for states with active financial assurance programs are presented as candidates for potential cost savings in Chapter 5 of this RIA.



### Step 1: Assig n Each State to a Tier

Among the 56 U.S. states and territories and Indian country, the status of financial

assurance funds is as follows: 3 5 have active funds; five have funds but no longer accept claims;

and 1 6 do not have funds that provide all federal ly

- required coverage

. In general, states with active financial assurance funds charge a combination of gasoline taxes and recurring tank fees to generate revenues for their funds. 1 

### We classify active funds into two tiers. 2

1 At the time of this assessment, Connecticut had not fully sunsetted its state fund. It was therefore included in this assessment; in other words, this assessment is based on 36 state funds.

2 This classification is based on the status of state fund programs as reported by EPA at http://www.epa.gov/OUST/states/fndstatus.htm and the Association of State and Territorial Solid Waste Management Officials’ 2008 survey of state funds atN

- 2 

###  Tier 1 funds charge a broad

- based gasoline fee, which means that consumers in

those states or territories f und remediation via these fees. In many cases, these funds also charge a tank fee . Among the active funds, we classify 26 in this tier. 3



###  Tier 2 funds also levy gasoline fees, but the se are narrower in scope. As a consequence, fewer consumers pay into the funds for these states. All Tier 2 states also charge tank fees.

Exhibit N

- 1 summarizes the classification status for all states, territories, and Indian country

. For this analysis, w e consider only state s with active funds.

Exhibit N

- 1

Status of Financial Assurance Funds in the U.S.

Active funds Tier 2 if highlighted; otherwise, Tier 1 Fund exists, but no longer accepts claims No funds

Alabama Nebraska Arizona Alaska

Arkansas Neva da Florida Delaware

California New Hampshire Iowa District of Columbia

Colorado New Mexico Michigan Hawaii

Connecticut New York New Jersey Maryland
Georgia North Carolina Texas Oregon

Idaho North Dakota Wisconsin Washington

Illinois Ohio West Virgi nia

Indiana Oklahoma American Samoa

Kansas Pennsylvania Commonwealth of No. Mariana

Islands
Kentucky Rhode Island Guam

Louisiana South Carolina Commonwealth of Puerto Rico

Maine South Dakota Virgin Islands

Massachusetts Tennessee Indian c ountry

Minnesota Utah
Mississippi Vermont

Missouri Virginia

Montana Wyoming



### Step 2: Count Instances in Which Systems are Affected and Assign Releases for Each Expert

Because the data to determine the number of requirements that affect each system in each

state are not available , we use a simple allocation approach to approximate impacts for this screening analysis . First, we develop ed a count of the number of times each requirement affects

http://www.astswmo.org/files/publications/tanks/2008StateFundSurvey/Table2FundingforStateFinancialAssuranceF unds2008.pdf

.

3 We could not obtain cle ar information regarding funding mechanisms for Connecticut. We classify this

state under Tier 1.N

- 3



### an UST system in each state. 4 

### For example, if spill prevention equipment testing affects 10,000

systems per year, an d secondary containment testing affects 5,000 systems, these requirements together affect systems 15,000 times. Across all requirements of the Selected Option, systems are
affected appro ximately 2 .2 million times. Because there are 5 77,981 systems, this represents approximately 3.7 requirements per system. As a simplifying assumption, we treat all requirements as equally effective in preventing releases or groundwater contamination. This is not consistent with responses from the experts, which indicate that some requirements could be substantially more effective at reducing releases. However, for purposes of this screening analysis, and because this analysis does not affect the primary res ults presented in the RIA, we do not attempt to adjust for relative effectiveness of the requirements. The uncertainty introduced by this assumption is small compared to overall uncertainty about the state

- by

- state distribution

of the number of avoided rel eases.

We assign avoided releases by state by first dividin g the estimated total number of avoided releases and avoided groundwater incident s by the total number of instances in which systems are affected. We perform this calculation separately for each e xpert’s response s

. From

these calculations , we obtain the following slope factors:

 For each additional instance in which a requirement affects an UST system,

between 0. 0002 6 and 0.001 4 releases are avoided.

 For each additional instance in which a requirem ent affects an UST system,

between 0. 0000 97 and 0.000 42 groundwater incidents are avoided.

We multiply these factors by the number of times systems are affected per state to obtain a state

level distribution of avoided releases and avoided groundwater con tamination incidents , specific to each expert’s response

. Exhibit N

- 2 shows the average dis tribution of avoided releases across all experts for the Selected Option

, ranked from lowest to highest. Although calculations are conducted separately, this exhibit presents the average of the four experts’ results for demonstration purposes.

4 This includes all requirements except for removal of deferrals for FCTs and AHFDSs. We convert requirements tabulated on the basis of facilities to systems using a factor of 2.71.N

- 4 Exhibit N

- 2

Average Distribution of Avoided Releases

, by State



### For co mparison to the average , we present the descriptive statistics of the expert

- specific

calculati ons:

 Mean: Ranges between 9. 88 and 53.4

 Median: Ranges between 7.36 and 39.8

 Standard deviation: Ranges between 9.09 and 4 9.1

We note that this distribution can be misleading, as it does not normalize the data with respect to the number of systems located in each state or territory. Doing so results in the average distribution of systems per release avoided as a consequence of the final regulation

, shown i n Exhibit N

- 3

. States that already have a relatively large number of requirements have fewer

releases a voided per system (i.e., a greater number of systems per release avoided). For instance, compare the outcome in California, where many of the proposed requirements already exist, with Indian country, where few of the proposed requirements are in effect in the baseline.N

- 5 Exhibit N

- 3

Average Distribution of Systems per Release Avoided

, by State



### The slope factors calculated in this step substantially drive the results of our analysis. They are subject to two significant sources of uncertainty :

1. We do not know how many systems in each state will actually be affected by the final regulation

. For example, suppose that two requirements each affect 10,000 and 20,000 systems, respectively. It is possible that they could together affect as few as 20,000 o r as many as 30,000 total systems. For all states, w e assume the upper end of this range as the basis for our analysis. Our results are biased to the extent that requirement s in any state systematically overlap.

2. As described above, as a simplifying assumpt ion, we treat all requirements as equally effective in preventing releases or groundwater contamination. This assumption is not consistent with the experts’ responses; however, the uncertainty introduced by this assumption is small compared to uncertainty about the state

- by

- state distribution of

the number of avoided releases

.

T his distribution is too simplistic to be used to refine specific estimates of avoided costs

due to the regulation

. However, for the purpose of identifying the magnitude and distribut ion of cost impacts associated with state financial assurance funds, we believe this simple distribution i s valid.N

- 6



### Step 3: Obtain Gross Avoided Cost for Each Expert

We define gross avoided costs as the sum across all states of the cost to remediate the

re leases that would be avoided under the final regulation (including averted groundwater

contamination incidents ), before adjustments for deductibles paid by owners and operators.

Gross avoided cost is calculated according to the following steps:

 For eac h e xpert, we first estimate the number of avoided releases by state. We multiply the number of times systems are affected in each state (i.e., the distribution described in Step 2) by the slope factor (i.e., the expert

- specific value, ranging between 0.0002 6 and 0.001 4 , of how many releases are avoided per additional requirement).

 We then estimate the effective cost per avoided release f or each expert . W e sum avoided costs associated with avoided releases (as presented in Exhibit 4

- 7 ) and divide by the total n umber of avoided releases estimated by that expert. This

results in discounted effective cost s per avoided release for each expert , for the

Selected Option, ranging between $ 1 20

, 000 and $1 30 ,000

. 5



###  We multiply this effective avoided cost per release by the number of releases

avoided by state to obtain gross avoided costs for each state

. This calculation is performed separately for each expert.

 We then repeat the same procedure for groundwater incidents . This produces

discounted effective cost s per incident ranging from $ 2 1 0,000 to $2 20 ,000 acro ss experts

.

Step s 4: Adjust Gross Avoided Cost for Deductibles for Each Expert

To obtain the net avoided cost to state financial assurance funds, we reduce the gross

avoided cost for each state as reported in ASTSWMO by the minimum and maximum of the range of deductible s (i.e., contributions to cleanup by owner/operator) possible for that state. In states with active trust funds, deductibles generally range from zero to $100,000 . Lower

- end

deductible s average $8,114, w hile upper

- end deductible average $20,212. 6 

### Note that we do not make any adjustment to deductibles to reflect time value of money.

5 These effective costs rely on the remediation cost estimates provided by New Hampshire and Utah. The states provided cost data by release size (i.e., local soil, large soil, local groundwater, large groundwater). We adjust

these c osts by the relative probabilities of release size and release source, and apply these values to the experts’ estimates of avoided releases, by release source. We calculate effective costs by dividing total discounted avoided costs for each expert by that expert’s estimated number of avoided releases. As an alternative, to use the same cost per avoided release for each e xpert, we considered calculating the weighted average of the New Hampshire and Utah remediation costs according to the relative probabiliti es of release size. This weighted average cost is approximately $150,000 per release, compared to the expert

- specific range of $120,000 to $130,000 per release ($140,000 to $160,000 undiscounted). Therefore, use of t his value would not change results subst antially.

6 These averages exclude Virginia and Minnesota for reasons subsequently discussed. For comparison, the

median and mode deductibles for the lower

- end deductibles are $5,000 and $10,000, while upper

- end deductible median and mode are both $10,000

.N

- 7



### T wo states significantly exceed this range: Minnesota, with deductibles that can reach $2,000,000; and Virginia, where deduct ibles can reach $1,000,000. These levels of deductibles lead to negative estimates of savings for these particular states’ funds, an outcome that likely

follows from our approach in Step 2 . To conservatively correct for this anomaly, we remove

these states and their avoided releases f rom our calculation of net avoided costs. For all other states, we reduce gross avoided costs by the product of the lower

- or upper

- end deductible and

the number of releases avoided.

Steps 5: Sum Net Gains to State Funds f rom A voided Contamination for Each Expert

Exhibit N

- 4 summarizes the net cost savings to state financial assurance funds under the

Selected Option of the final regulation , averaged across the four experts for demonstration

purposes

. We repeat this process for A lternatives 1 and 2 , as summarized in Exhibits N

- 5 and

N

- 6

.

To calculate the values in Chapter 5, the values for states identified as having Tier 1 or

Tier 2 funds in Exhibits N

- 4 through N

- 6 are grouped and summed separately. However,

Exhibits N

- 4 throug h N

- 6 do not account for the assumption that benefits accrue at the end of the year in which compliance activities are undertaken

. As a result, simply summing the values for

the Tier 1 and Tier 2 state funds below cannot be directly compared to the cost sa vings presented in Chapter 5. To calculate the values in Chapter 5, we discount back one year to generate the present value of total cost savings for each expert . We then average those present values across the four experts. The exhibits below are provided for demonstration purposes.N

- 8 Exhibit N

- 4

Average Net Avoided Release and Avoided Groundwater Incident Remediation Costs for the Selected Option

State Avoided Release Costs 1
Releases avoided x (Cost per release

- deductible) Avoided Groundwater

Incident Costs Incidents avoided x Cost per

incident Total

Avoided release costs + Avoided

GW incidents costs Status

Avoided

Releases Low

Deductible High

Deductible Upper

- end Lower

- end Avoided

Incidents Avoided GW

Cost Upper

- end Lower

- end

AK 2.5 $0.00 $0. 00 $0.00 $0.00 0.83 $0.00 $0.00 $0.00 No longer exists

AL 47 $5,000 $5,000 $5,600,000 $5,600,000 15 $3,200,000 $8,800,000 $8,800,000 Tier 1

AR 29 $7,500 $7,500 $3,400,000 $3,400,000 9.3 $2,000,000 $5,400,000 $5,400,000 Tier 1

AS 0.05 $0.00 $0.00 $0.00 $ 0.00 0.02 $0.00 $0.00 $0.00 No longer exists

AZ 23 $10,000 $10,000 $0.00 $0.00 7.3 $0.00 $0.00 $0.00 Not accepting claims

CA 62 $0.00 $20,000 $7,700,000 $6,500,000 20 $4,300,000 $12,000,000 $11,000,000 Tier 1

CO 14 $10,000 $10,000 $1,600,000 $1,600,000 4.4 $950,000 $2,500,000 $2,500,000 Tier 1

CT 20 $0.00 $0.00 $2,500,000 $2,500,000 6.5 $1,400,000 $3,900,000 $3,900,000 Tier 1

DC 2.0 $0.00 $0.00 $0.00 $0.00 0.66 $0.00 $0.00 $0.00 No longer exists

DE 3.1 $2,500 $2,500 $0.00 $0.00 1.0 $0.00 $0.00 $0.00 N o longer exists

FL 58 $500 $30,000 $0.00 $0.00 19 $0.00 $0.00 $0.00 Not accepting claims

GA 97 $10,000 $10,000 $11,000,000 $11,000,000 31 $6,800,000 $18,000,000 $18,000,000 Tier 1

GU 0.82 $0.00 $0.00 $0.00 $0.00 0.26 $0.00 $0.00 $0.00 No longer exists

HI 5.2 $0.00 $0.00 $0.00 $0.00 1.7 $0.00 $0.00 $0.00 No longer exists

IA 16 $10,000 $10,000 $0.00 $0.00 5.3 $0.00 $0.00 $0.00 Not accepting claims

ID 8.6 $10,000 $10,000 $980,000 $980,000 2.8 $600,000 $1,600,000 $1,600,000 Tier 2

IL 60 $10,000 $100,000 $6,900,000 $1,500,000 19 $4,200,000 $11,000,000 $5,700,000 Tier 1

IN 40 $20,000 $35,000 $4,200,000 $3,600,000 13 $2,800,000 $7,000,000 $6,400,000 Tier 1

KS 21 $3,000 $3,000 $2,600,000 $2,600,000 6.9 $1,500,000 $4,100,000 $4,100,000 Tier 1

KY 27 $500 $13 ,000 $3,300,000 $3,000,000 8.6 $1,900,000 $5,200,000 $4,800,000 Tier 1

LA 37 $5,000 $5,000 $4,400,000 $4,400,000 12 $2,500,000 $6,900,000 $6,900,000 Tier 1

MA 26 $5,000 $10,000 $3,100,000 $3,000,000 8.5 $1,800,000 $5,000,000 $4,800,000 Tier 1

MD 20 $500 $1,000 $0.00 $0.00 6.6 $0.00 $0.00 $0.00 No longer exists

ME 4.7 $500 $97,000 $580,000 $130,000 1.5 $330,000 $900,000 $450,000 Tier 1

MI 60 $0.00 $0.00 $0.00 $0.00 19 $0.00 $0.00 $0.00 Not accepting claims

MN 39 $900,000 $2,000,000

- $30,000,000

- $73,00 0,000 13 $2,700,000

- $28,000,000

- $71,000,000 Dropped

MO 30 $10,000 $10,000 $3,400,000 $3,400,000 9.6 $2,100,000 $5,500,000 $5,500,000 Tier 1

MP 0.18 $0.00 $0.00 $0.00 $0.00 0.06 $0.00 $0.00 $0.00 No longer exists

MS 14 $0.00 $0.00 $1,700,000 $1,700,000 4.4 $950,000 $2,700,000 $2,700,000 Tier 1

MT 7.9 $5,000 $17,000 $940,000 $850,000 2.6 $550,000 $1,500,000 $1,400,000 Tier 1

NC 65 $20,000 $75,000 $6,800,000 $3,200,000 21 $4,500,000 $11,000,000 $7,800,000 Tier 1

ND 5.7 $5,000 $5,000 $680,000 $680,000 1 .9 $400,000 $1,100,000 $1,100,000 Tier 2

NE 21 $25,000 $25,000 $2,100,000 $2,100,000 6.7 $1,400,000 $3,500,000 $3,500,000 Tier 1

NH 10 $5,000 $30,000 $1,200,000 $920,000 3.1 $680,000 $1,800,000 $1,600,000 Tier 1

NJ 36 $0.00 $0.00 $0.00 $0.00 12 $0.00 $0 .00 $0.00 Not accepting claimsN

- 9 Exhibit N

- 4

Average Net Avoided Release and Avoided Groundwater Incident Remediation Costs for the Selected Option

State Avoided Release Costs 1
Releases avoided x (Cost per release

- deductible) Avoided Groundwater

Incident Costs Incidents avoided x Cost per

incident Total

Avoided release costs + Avoided

GW incidents costs Status

Avoided

Releases Low

Deductible High

Deductible Upper

- end Lower

- end Avoided

Incidents Avoided GW

Cost Upper

- end Lower

- end

NM 12 $0.00 $10,000 $1,500,000 $1,400,000 3.9 $850,000 $2,400,000 $2,200,000 Tier 2

NV 13 $10,000 $10,000 $1,400,000 $1,400,000 4.0 $870,000 $2,300,000 $2,300,000 Tier 2

NY 60 $0.00 $0.00 $7,400,000 $7,400,000 19 $4,200,00 0 $12,000,000 $12,000,000 Tier 2

OH 52 $11,000 $55,000 $5,900,000 $3,600,000 17 $3,600,000 $9,400,000 $7,200,000 Tier 2

OK 33 $0.00 $5,000 $4,100,000 $3,900,000 11 $2,300,000 $6,400,000 $6,200,000 Tier 1

OR 18 $0.00 $0.00 $0.00 $0.00 5.9 $0.00 $0.00 $0. 00 No longer exists

PA 55 $5,000 $5,000 $6,600,000 $6,600,000 18 $3,900,000 $10,000,000 $10,000,000 Tier 2

PR 15 $0.00 $0.00 $0.00 $0.00 4.7 $0.00 $0.00 $0.00 No longer exists

RI 3.8 $20,000 $20,000 $400,000 $400,000 1.2 $260,000 $660,000 $660,000 Tier 1

SC 30 $25,000 $25,000 $3,000,000 $3,000,000 9.8 $2,100,000 $5,100,000 $5,100,000 Tier 1

SD 9.3 $20,000 $20,000 $980,000 $980,000 3.0 $650,000 $1,600,000 $1,600,000 Tier 1

TN 53 $10,000 $10,000 $6,000,000 $6,000,000 17 $3,700,000 $9,700,000 $9,700,000 Tier 1 Indian country 12 $0.00 $0.00 $0.00 $0.00 3.9 $0.00 $0.00 $0.00 No longer exists

TX 120 $1,000 $80,000 $0.00 $0.00 40 $0.00 $0.00 $0.00 Not accepting claims

UT 9.4 $10,000 $10,000 $1,100,000 $1,100,000 3.0 $650,000 $1,700,000 $1,700,000 Tier 1

V A 59 $500 $1,000,000 $7,300,000

- $52,000,000 19 $4,100,000 $11,000,000

- $48,000,000 Dropped

VI 0.5 $0.00 $0.00 $0.00 $0.00 0.15 $0.00 $0.00 $0.00 No longer exists

VT 10 $250 $10,000 $1,300,000 $1,200,000 3.3 $710,000 $2,000,000 $1,900,000 Tier 2

WA 34 $ 0.00 $0.00 $0.00 $0.00 11 $0.00 $0.00 $0.00 No longer exists

WI 36 $2,500 $0.00 $0.00 $0.00 12 $0.00 $0.00 $0.00 Not accepting claims

WV 14 $0.00 $0.00 $0.00 $0.00 4.6 $0.00 $0.00 $0.00 No longer exists

WY 4.4 $30,000 $30,000 $420,000 $420,000 1.4 $310, 000 $730,000 $730,000 Tier 1
Total, Tier 1 770 N/A N/A $89,000,000 $77,000,000 250 $54,000,000 $140,000,000 $130,000,000 N/A Total, Tier 2 220 N/A N/A $26,000,000 $23,000,000 70 $15,000,000 $41,000,000 $38,000,000 N/A Total, No longer

exists 120 N/A N/A $0.00 $0.00 37 $0.00 $0.00 $0.00 N/A Total, Dropped 98 N/A N/A

- $23,000,000

- $130,000,000 32 $6,900,000

- $16,000,000

- $120,000,000 N/A
Total, Not accepting claims 350 N/A N/A $0.00 $0.00 110 $0.00 $0.00 $0.00 N/A

Notes: 1. Average cost of remediat ion for an avoided release is $1 60,000 before discounting and $12 0,000 after discounting each requirement by the appropriate number of periods. Similarly, average cost for an avoided groundwater incident is $28 0,000 before discounting and $2 20,000 after di scounting

.N

- 10 Exhibit N

- 5

Average Net Avoided Release and Avoided Groundwater Incident Remediation Costs for Alternative 1

State Avoided Release Costs 1
Releases avoided x (Cost per release

- deductible) Avoided Groundwater

Incident Costs

Incidents av oided x Cost per

incident Total

Avoided release costs + Avoided

GW incidents costs Status

Avoided

Releases Low

Deductible High

Deductible Upper

- end Lower

- end Avoided

Incidents Avoided GW

Cost Upper

- end Lower

- end

AK 4.2 $0.00 $0.00 $0.00 $0.00 1.2 0 $0.00 $0.00 $0.00 No longer exists

AL 62 $5,000 $5,000 $8,100,000 $8,100,000 17 $4,400,000 $13,000,000 $13,000,000 Tier 1

AR 36 $7,500 $7,500 $4,700,000 $4,700,000 10.0 $2,600,000 $7,300,000 $7,300,000 Tier 1

AS 0.07 $0.00 $0.00 $0.00 $0.00 0.02 $0.00 $0.00 $0.00 No longer exists

AZ 28 $10,000 $10,000 $0.00 $0.00 8.0 $0.00 $0.00 $0.00 Not accepting claims

CA 97 $0.00 $20,000 $13,000,000 $11,000,000 27 $7,000,000 $20,000,000 $18,000,000 Tier 1

CO 20 $10,000 $10,000 $2,500,000 $2,500,000 5.5 $1,400,00 0 $3,900,000 $3,900,000 Tier 1

CT 25 $0.00 $0.00 $3,500,000 $3,500,000 7.2 $1,800,000 $5,300,000 $5,300,000 Tier 1

DC 2.6 $0.00 $0.00 $0.00 $0.00 0.73 $0.00 $0.00 $0.00 No longer exists

DE 4.1 $2,500 $2,500 $0.00 $0.00 1.2 $0.00 $0.00 $0.00 No longer ex ists

FL 76 $500 $30,000 $0.00 $0.00 22 $0.00 $0.00 $0.00 Not accepting claims

GA 120 $10,000 $10,000 $15,000,000 $15,000,000 35 $8,800,000 $24,000,000 $24,000,000 Tier 1

GU 1.00 $0.00 $0.00 $0.00 $0.00 0.29 $0.00 $0.00 $0.00 No longer exists

HI 6.5 $0. 00 $0.00 $0.00 $0.00 1.8 $0.00 $0.00 $0.00 No longer exists

IA 28 $10,000 $10,000 $0.00 $0.00 7.8 $0.00 $0.00 $0.00 Not accepting claims

ID 14.0 $10,000 $10,000 $1,800,000 $1,800,000 3.9 $1,000,000 $2,700,000 $2,700,000 Tier 2

IL 80 $10,000 $100,000 $10 ,000,000 $2,900,000 23 $5,800,000 $16,000,000 $8,700,000 Tier 1

IN 53 $20,000 $35,000 $6,200,000 $5,400,000 15 $3,800,000 $10,000,000 $9,200,000 Tier 1

KS 27 $3,000 $3,000 $3,600,000 $3,600,000 7.6 $1,900,000 $5,500,000 $5,500,000 Tier 1

KY 35 $500 $13, 000 $4,800,000 $4,400,000 9.9 $2,500,000 $7,300,000 $6,900,000 Tier 1

LA 46 $5,000 $5,000 $6,100,000 $6,100,000 13 $3,300,000 $9,400,000 $9,400,000 Tier 1

MA 43 $5,000 $10,000 $5,600,000 $5,400,000 12.0 $3,100,000 $8,700,000 $8,500,000 Tier 1

MD 27 $500 $1,000 $0.00 $0.00 7.6 $0.00 $0.00 $0.00 No longer exists

ME 6.9 $500 $97,000 $930,000 $270,000 1.9 $490,000 $1,400,000 $760,000 Tier 1

MI 76 $0.00 $0.00 $0.00 $0.00 21 $0.00 $0.00 $0.00 Not accepting claims

MN 49 $900,000 $2,000,000

- $38,000,000

- $92, 000,000 14 $3,600,000

- $34,000,000

- $89,000,000 Dropped

MO 38 $10,000 $10,000 $4,800,000 $4,800,000 11.0 $2,700,000 $7,500,000 $7,500,000 Tier 1

MP 0.22 $0.00 $0.00 $0.00 $0.00 0.06 $0.00 $0.00 $0.00 No longer exists

MS 20 $0.00 $0.00 $2,800,000 $2,800, 000 5.7 $1,500,000 $4,200,000 $4,200,000 Tier 1

MT 13.0 $5,000 $17,000 $1,700,000 $1,500,000 3.6 $920,000 $2,600,000 $2,500,000 Tier 1

NC 100 $20,000 $75,000 $12,000,000 $6,400,000 30 $7,500,000 $20,000,000 $14,000,000 Tier 1

ND 7.6 $5,000 $5,000 $990,0 00 $990,000 2.1 $540,000 $1,500,000 $1,500,000 Tier 2

NE 26 $25,000 $25,000 $2,900,000 $2,900,000 7.4 $1,900,000 $4,800,000 $4,800,000 Tier 1N

- 11 Exhibit N

- 5

Average Net Avoided Release and Avoided Groundwater Incident Remediation Costs for Alternative 1

State Avoided Release Costs 1
Releases avoided x (Cost per release

- deductible) Avoided Groundwater

Incident Costs

Incidents av oided x Cost per

incident Total

Avoided release costs + Avoided

GW incidents costs Status

Avoided

Releases Low

Deductible High

Deductible Upper

- end Lower

- end Avoided

Incidents Avoided GW

Cost Upper

- end Lower

- end

NH 12 $5,000 $30,000 $1,600,000 $1,300,000 3.5 $880,000 $2,500,000 $2,200,000 Tier 1

NJ 47 $0.00 $0.00 $0.00 $0 .00 13 $0.00 $0.00 $0.00 Not accepting claims

NM 15 $0.00 $10,000 $2,100,000 $1,900,000 4.4 $1,100,000 $3,200,000 $3,100,000 Tier 2

NV 16 $10,000 $10,000 $2,000,000 $2,000,000 4.4 $1,100,000 $3,100,000 $3,100,000 Tier 2

NY 79 $0.00 $0.00 $11,000,000 $11 ,000,000 22 $5,700,000 $17,000,000 $17,000,000 Tier 2

OH 70 $11,000 $55,000 $8,700,000 $5,700,000 20 $5,000,000 $14,000,000 $11,000,000 Tier 2

OK 41 $0.00 $5,000 $5,600,000 $5,400,000 12 $3,000,000 $8,600,000 $8,400,000 Tier 1

OR 23 $0.00 $0.00 $0.00 $0 .00 6.6 $0.00 $0.00 $0.00 No longer exists

PA 92 $5,000 $5,000 $12,000,000 $12,000,000 26 $6,600,000 $19,000,000 $19,000,000 Tier 2

PR 18 $0.00 $0.00 $0.00 $0.00 5.2 $0.00 $0.00 $0.00 No longer exists

RI 5.1 $20,000 $20,000 $590,000 $590,000 1.4 $370,00 0 $960,000 $960,000 Tier 1

SC 40 $25,000 $25,000 $4,500,000 $4,500,000 11.0 $2,900,000 $7,400,000 $7,400,000 Tier 1

SD 12.0 $20,000 $20,000 $1,400,000 $1,400,000 3.3 $850,000 $2,200,000 $2,200,000 Tier 1

TN 66 $10,000 $10,000 $8,400,000 $8,400,000 19 $4 ,800,000 $13,000,000 $13,000,000 Tier 1 Indian country 15 $0.00 $0.00 $0.00 $0.00 4.1 $0.00 $0.00 $0.00 No longer exists

TX 160 $1,000 $80,000 $0.00 $0.00 47 $0.00 $0.00 $0.00 Not accepting claims

UT 12.0 $10,000 $10,000 $1,600,000 $1,600,000 3.5 $890,0 00 $2,500,000 $2,500,000 Tier 1

VA 75 $500 $1,000,000 $10,000,000

- $65,000,000 21 $5,400,000 $16,000,000

- $59,000,000 Dropped

VI 0.6 $0.00 $0.00 $0.00 $0.00 0.17 $0.00 $0.00 $0.00 No longer exists

VT 13 $250 $10,000 $1,700,000 $1,600,000 3.6 $920,000 $2 ,700,000 $2,500,000 Tier 2

WA 43 $0.00 $0.00 $0.00 $0.00 12 $0.00 $0.00 $0.00 No longer exists

WI 47 $2,500 $0.00 $0.00 $0.00 13 $0.00 $0.00 $0.00 Not accepting claims

WV 19 $0.00 $0.00 $0.00 $0.00 5.4 $0.00 $0.00 $0.00 No longer exists

WY 5.9 $30,000 $30,000 $630,000 $630,000 1.7 $420,000 $1,000,000 $1,000,000 Tier 1
Total, Tier 1 1,000 N/A N/A $130,000,000 $120,000,000 300 $75,000,000 $210,000,000 $190,000,000 N/A Total, Tier 2 310 N/A N/A $40,000,000 $37,000,000 87 $22,000,000 $62,000,000 $59,000 ,000 N/A Total, No longer

exists 150 N/A N/A $0.00 $0.00 42 $0.00 $0.00 $0.00 N/A Total, Dropped 120 N/A N/A

- $28,000,000

- $160,000,000 35 $8,900,000

- $19,000,000

- $150,000,000 N/A
Total, Not accepting claims 470 N/A N/A $0.00 $0.00 130 $0.00 $0.00 $ 0.00 N/A

Notes: 1. Average cost of remediation for an avoided release is $1 5 0,000 before discounting and $1 3 0,000 after discounting each requirement by the appropriate number of periods. Similarly, average cost for an avoided groundwater incident is $280, 000 before discounting and $2 6 0,000 after discounting.N

- 12 Exhibit N

- 6

Average Net Avoided Release and Avoided Groundwater Incident Remediation Costs for Alternative 2

State Avoided Release Costs 1
Releases avoided x (Cost per release

- deductible) Avo ided Groundwater

Incident Costs Incidents avoided x Cost per

incident Total

Avoided release costs + Avoided

GW incidents costs Status

Avoided

Releases Low

Deductible High

Deductible Upper

- end Lower

- end Avoided

Incidents Avoided GW

Cost Upper

- end Lo wer

- end

AK 2.3 $0.00 $0.00 $0.00 $0.00 0.85 $0.00 $0.00 $0.00 No longer exists

AL 29 $5,000 $5,000 $3,700,000 $3,700,000 11 $2,400,000 $6,100,000 $6,100,000 Tier 1

AR 20 $7,500 $7,500 $2,500,000 $2,500,000 7.5 $1,600,000 $4,100,000 $4,100,000 Tier 1

A S 0.04 $0.00 $0.00 $0.00 $0.00 0.01 $0.00 $0.00 $0.00 No longer exists

AZ 16 $10,000 $10,000 $0.00 $0.00 5.9 $0.00 $0.00 $0.00 Not accepting claims

CA 33 $0.00 $20,000 $4,300,000 $3,700,000 12 $2,600,000 $7,000,000 $6,300,000 Tier 1

CO 7 $10,000 $10,000 $810,000 $810,000 2.5 $540,000 $1,400,000 $1,400,000 Tier 1

CT 10 $0.00 $0.00 $1,300,000 $1,300,000 3.6 $780,000 $2,100,000 $2,100,000 Tier 1

DC 1.4 $0.00 $0.00 $0.00 $0.00 0.53 $0.00 $0.00 $0.00 No longer exists

DE 1.0 $2,500 $2,500 $0.00 $0.00 0.4 $0 .00 $0.00 $0.00 No longer exists

FL 36 $500 $30,000 $0.00 $0.00 13 $0.00 $0.00 $0.00 Not accepting claims

GA 68 $10,000 $10,000 $8,300,000 $8,300,000 25 $5,500,000 $14,000,000 $14,000,000 Tier 1

GU 0.39 $0.00 $0.00 $0.00 $0.00 0.15 $0.00 $0.00 $0.00 No longer exists

HI 3.6 $0.00 $0.00 $0.00 $0.00 1.3 $0.00 $0.00 $0.00 No longer exists

IA 11 $10,000 $10,000 $0.00 $0.00 4.0 $0.00 $0.00 $0.00 Not accepting claims

ID 7.7 $10,000 $10,000 $940,000 $940,000 2.9 $630,000 $1,600,000 $1,600,000 Tier 2

IL 43 $1 0,000 $100,000 $5,200,000 $1,400,000 16 $3,500,000 $8,700,000 $4,800,000 Tier 1

IN 29 $20,000 $35,000 $3,200,000 $2,800,000 11 $2,400,000 $5,600,000 $5,200,000 Tier 1

KS 15 $3,000 $3,000 $1,900,000 $1,900,000 5.5 $1,200,000 $3,100,000 $3,100,000 Tier 1

KY 17 $500 $13,000 $2,200,000 $2,000,000 6.2 $1,400,000 $3,500,000 $3,300,000 Tier 1

LA 25 $5,000 $5,000 $3,200,000 $3,200,000 10 $2,100,000 $5,300,000 $5,300,000 Tier 1

MA 16 $5,000 $10,000 $2,100,000 $2,000,000 6.0 $1,300,000 $3,400,000 $3,300,000 Tier 1

MD 13 $500 $1,000 $0.00 $0.00 4.8 $0.00 $0.00 $0.00 No longer exists

ME 4.0 $500 $97,000 $530,000 $140,000 1.5 $330,000 $860,000 $470,000 Tier 1

MI 42 $0.00 $0.00 $0.00 $0.00 16 $0.00 $0.00 $0.00 Not accepting claims

MN 19 $900,000 $2,000,000

- $14,0 00,000

- $35,000,000 7 $1,500,000

- $13,000,000

- $33,000,000 Dropped

MO 21 $10,000 $10,000 $2,500,000 $2,500,000 7.7 $1,700,000 $4,200,000 $4,200,000 Tier 1

MP 0.12 $0.00 $0.00 $0.00 $0.00 0.05 $0.00 $0.00 $0.00 No longer exists

MS 13 $0.00 $0.00 $1,700,0 00 $1,700,000 4.8 $1,000,000 $2,700,000 $2,700,000 Tier 1

MT 7.1 $5,000 $17,000 $900,000 $810,000 2.6 $570,000 $1,500,000 $1,400,000 Tier 1

NC 43 $20,000 $75,000 $4,900,000 $2,500,000 16 $3,500,000 $8,400,000 $6,000,000 Tier 1

ND 3.6 $5,000 $5,000 $460, 000 $460,000 1.3 $290,000 $750,000 $750,000 Tier 2

NE 14 $25,000 $25,000 $1,500,000 $1,500,000 5.3 $1,200,000 $2,700,000 $2,700,000 Tier 1N

- 13 Exhibit N

- 6

Average Net Avoided Release and Avoided Groundwater Incident Remediation Costs for Alternative 2

State Avoided Release Costs 1
Releases avoided x (Cost per release

- deductible) Avo ided Groundwater

Incident Costs Incidents avoided x Cost per

incident Total

Avoided release costs + Avoided

GW incidents costs Status

Avoided

Releases Low

Deductible High

Deductible Upper

- end Lower

- end Avoided

Incidents Avoided GW

Cost Upper

- end Lo wer

- end

NH 5 $5,000 $30,000 $590,000 $470,000 1.7 $380,000 $970,000 $850,000 Tier 1

NJ 22 $0.00 $0.00 $0.00 $0.00 8 $0.00 $0.00 $0.00 Not accepting claims

NM 6 $0.00 $10,000 $770,000 $710,000 2.2 $470,000 $1,200,000 $1,200,000 Tier 2

NV 9 $10,000 $10,000 $1,100,000 $1,100,000 3.3 $710,000 $1,800,000 $1,800,000 Tier 2

NY 37 $0.00 $0.00 $4,900,000 $4,900,000 14 $3,000,000 $7 ,900,000 $7,900,000 Tier 2

OH 49 $11,000 $55,000 $5,900,000 $3,800,000 18 $4,000,000 $9,900,000 $7,700,000 Tier 2

OK 23 $0.00 $5,000 $3,000,000 $2,900,000 9 $1,800,000 $4,800,000 $4,700,000 Tier 1

OR 13 $0.00 $0.00 $0.00 $0.00 4.7 $0.00 $0.00 $0.00 No l onger exists

PA 50 $5,000 $5,000 $6,300,000 $6,300,000 18 $4,000,000 $10,000,000 $10,000,000 Tier 2

PR 10 $0.00 $0.00 $0.00 $0.00 3.8 $0.00 $0.00 $0.00 No longer exists

RI 2.3 $20,000 $20,000 $260,000 $260,000 0.9 $190,000 $440,000 $440,000 Tier 1

SC 1 9 $25,000 $25,000 $2,000,000 $2,000,000 7.1 $1,500,000 $3,600,000 $3,600,000 Tier 1

SD 6.5 $20,000 $20,000 $730,000 $730,000 2.4 $530,000 $1,300,000 $1,300,000 Tier 1

TN 25 $10,000 $10,000 $3,100,000 $3,100,000 9 $2,000,000 $5,100,000 $5,100,000 Tier 1 Indian country 9 $0.00 $0.00 $0.00 $0.00 3.5 $0.00 $0.00 $0.00 No longer exists

TX 74 $1,000 $80,000 $0.00 $0.00 28 $0.00 $0.00 $0.00 Not accepting claims

UT 5.8 $10,000 $10,000 $710,000 $710,000 2.2 $470,000 $1,200,000 $1,200,000 Tier 1

VA 41 $500 $1,0 00,000 $5,400,000

- $36,000,000 15 $3,300,000 $8,700,000

- $32,000,000 Dropped

VI 0.3 $0.00 $0.00 $0.00 $0.00 0.12 $0.00 $0.00 $0.00 No longer exists

VT 5 $250 $10,000 $640,000 $590,000 1.8 $390,000 $1,000,000 $990,000 Tier 2

WA 23 $0.00 $0.00 $0.00 $0.00 9 $0.00 $0.00 $0.00 No longer exists

WI 22 $2,500 $0.00 $0.00 $0.00 8 $0.00 $0.00 $0.00 Not accepting claims

WV 10 $0.00 $0.00 $0.00 $0.00 3.9 $0.00 $0.00 $0.00 No longer exists

WY 2.7 $30,000 $30,000 $280,000 $280,000 1.0 $220,000 $500,000 $500,000 Ti er 1
Total, Tier 1 500 N/A N/A $61,000,000 $53,000,000 190 $41,000,000 $100,000,000 $94,000,000 N/A Total, Tier 2 170 N/A N/A $21,000,000 $19,000,000 62 $13,000,000 $34,000,000 $32,000,000 N/A Total, No longer

exists 79 N/A N/A $0.00 $0.00 29 $0.00 $ 0.00 $0.00 N/A Total, Dropped 60 N/A N/A

- $9,000,000

- $71,000,000 22 $4,900,000

- $4,100,000

- $66,000,000 N/A
Total, Not accepting claims 220 N/A N/A $0.00 $0.00 83 $0.00 $0.00 $0.00 N/A

Notes: 1. Average cost of remediation for an avoided release is $ 1 7 0,000 before discounting and $1 4 0,000 after discounting each requirement by the appropriate number of periods. Similarly, average cost for an avoided groundwater incident is $280,000 before discounting and $220,000 after discounting.

### A ppendix O

UMRA Written Statement

### O

- 1

1 . Introduction

Title II of the 1995 Unfunded Mandates Reform Act (UMRA; 2 U.S.C. 1531

- 1538) requires Federal agencies, unless otherwise prohibited by law, to assess the effects of their regulatory

actions on s tate, local, and tribal governments and the private sector. Sp ecifically, Section 202 of UMRA generally requires Federal agencies to prepare a written statement, including a cost

benefit analysis, for each proposed and final regulation with “Federal mandates” that may result in expenditures by s tate, local, and tribal governments, in the aggregate, or to the private sector, of $100 million or more in any one year. Section 202 requires that “Written Statements” contain

five elements of information:

1. An identification of the provision of Federal law under which t he regulation is being promulgated;

2. A qualitative and quantitative assessment of the anticipated costs and benefits of the Federal mandate, including the costs and benefits to s tate, local, and tribal governments or the private sector, as well as the ef fect of the Federal mandate on health, safety, and the natural

environment , including: (A) an analysis of the extent to which such costs to s tate, local, and tribal governments may be paid with Federal financial assistance (or otherwise paid for by the

Fed eral Government ) ; and (B) the extent to which there are available Federal resources to carry out the intergovernmental mandate ;

3. Estimates by the agency, if and to the extent that the agency determines that accurate estimates are reasonably feasible, of : (A) the future compliance costs of the Federal mandate; and (B) any disproportionate budgetary effects of the Federal mandate upon any particular regions of the nation or particular s tate, local, or tribal governments, urban or rural or other types

of com munities, or particular segments of the private sector;

4. Estimates by the agency of the effect on the national economy, such as the effect on productivity, economic growth, full employment, creation of productive jobs, and international competitiveness o f United States goods and services, if and to the extent that the agency in its sole discretion determines that accurate estimates are reasonably feasible and that such effect is relevant and material; and

5. Description of the extent of the agency’s prior consultation with elected representatives (under section 204) of the affected s tate, local, and tribal governments, including a summary of the comments and concerns that were presented by s tate, local, or tribal governments either orally or in writing to the agency; and a summary of the agency’s evaluation of those comments

and concerns.

This document constitutes the “Written Statement” to meet this requirement for the revisions to the UST Regulations. The Environmental Protection Agency (EPA) has conducte d a regulatory impact assessment (RIA) for this action, which has been submitted in the docket entitled

“Assessment O f T he Potential Costs, Benefits, And Other Impacts O f T he Final Revisions To

E PA’s Underground Storage Tank Regulations .”

2 . Summary of the Final Regulation

As stated in the Federal Register notice for the final regulation

, EPA is revising the 1988 underground storage tank (UST) technical, financial responsibility, and state program approval

### O

- 2

regulations. These changes impose f ederal requirements that are similar to certain key portions of the Energy Policy Act of 2005 and make important targeted changes to the 1988 UST regulations. Regulatory changes include: adding secondary containment requirements for new and replaced USTs a nd piping; adding operator training requirements for UST system owners and operators; adding periodic operation and maintenance requirements for UST systems; removing certain deferrals; adding new release prevention and detection technologies; updating

cod es of practice; closing gaps in the 1988 UST regulations; making editorial and technical corrections; and updating state program approval requirements to incorporate these new changes.

The final regulation presents three regulatory options, as summarized i n the table below:

Options Considered For The Final Regulation

Requirement Description Options

Selected Alternative 1 Alternative 2

Release Prevention

Walkthrough inspections 30

- day 30

- day (as proposed in Nov 2011) Quarterly

Overfill prevention equipment inspections 3 year Annual Not required

Spill prevention equipment tests 3 year Annual 3 year Containment sump testing 3 year Annual Not required Testing after repairs to spill and overfill prevention equipment, and

s econdary containment Required Required Required

Eliminate flow restrictors in vent

lines for all new tanks and when

overfill prevention equipment is replaced Required Required No change from existing regulation

Release Detection Operability tests for release detection equipment Annual (plus annual check of sumps) Annual (as proposed in Nov 2011) Annual (plus annual check of RD equipment and sumps) Add SIR/CITLD to regulations with performance criteria Required Required Required

Response to interstitial monitoring

alarms Required Required Required

Groundwater and vapor monitoring

for release detection Continue to a llow with site

assessment 5

- year phase out (as proposed in Nov 2011) No change from existing regulation

Remove release detection deferral for emergency generator tanks Required Required (as proposed in Nov 2011) Required

Other Require notification of ownership change Required Required Required

Closure of lined tanks that cannot be repaired according to a code of practice Required Required Required

Requirements for demonstrating compatibility with fuels > E10 and

> B20 Required Required (as proposed in Nov 2011) No change from existing regulation

Remove deferrals for airport hydrant fuel distribution systems and UST systems with field

constructed tanks Regulate under alternative

release detection requirements Require AHS/FCT notify implementing agency and report releases (with no other requirements) Maintain deferral

EPAct

- related Provisions Operator training Required Required Required Secondary containment Required Required Required

### O

- 3

3 . Legal Authority of Final Regulation

As stated in the Federal Register notice for this regulation , EPA is finalizing this regulation under the authority of sections 2002, 9001, 9002, 9003, 9004, 9005, 9006, 9007, and 9009 of the Solid Waste Disposal Act of 1970, as amended by the Resource Conservation and Recovery Act of 1976, as amended [42 U.S.C. 6912, 6991, 6991(a), 6991( b), 6991(c),6991(d), 6991(e), 6991(f), 6991(h), 6991(i), and 6991(k)].

4 . Summary of the Costs and Benefits

4A. Cost to State, L ocal, and Tribal Governments and the Private Sector

As estimated in the RIA, on an annualized basis, the total estimated regula tory compliance costs for the three options in today’s action are $ 160 million ( Selected Option), $ 290 million ( Alternative 1), and $ 7 0 million ( Alternative 2). Of this amount, annualized costs to s tate/local

governments total $ 6.8 million under the Selected Option, $ 1 4 million under Alternative 1, and $ 3.6 million under Alternative 2. These costs consist of estimated regulatory compliance costs

for s tate/local governments that currently own or operate UST systems and annualized costs of $120,000 for states to implement the final regulation

. EPA estimates that total annualized costs

to owners and operators of tribally

- owned UST systems are $0. 6 7 million under the Selected Option , $1 million under Alternative 1, and $0. 5 million under Alternative 2

. The estimated annualized cost to the private sector is approximately $ 1 3 0 million under the Selected Option, $ 2 7 0 million under Alternative 1, and $ 67 million under Alternative 2

.

4 B

. Extent to Which Costs to State, Local, and Tribal Governments May Be Pa id by EPA or Other Federal Agencies, or to Which There Are Available Federal/EPA Resources to Carry Out a Federal Intergovernmental Mandate

EPA has historically provided substantial support to states, territories and tribes to support implementation of the UST program. In 201 3 , EPA provided $ 28 .9 million in funding for UST release prevention program implementation in 50 states and 6 territories, and over $ 1.8 million in funding for tribal assistance. EPA does not anticipate providing additional UST release prevention funding for state/local/tribal governments

.

4C. Estimates of Future Compliance Costs and Budgetary Effects on Particular Regions of the Country, or Particular State, Local, or Tribal Governments or Communities, or Particular Segments of the Pri vate Sector

The RIA assessed a number of potential distributional effects of the final regulation cost impacts

on:

(a) Retail motor fuels market sector: potential exits and employment impacts (Chapter 5)

(b) Energy supply, distribution, and use (Chapter 5)

(c) Public sector cost savings related to avoided releases (Chapter 5)

### O

- 4

(d) Small entities (Chapter 5)

(e) Minority and low

- income populations living near UST systems (Chapter 5)

(f) State/local government costs (Chapter 6)

(g) Tribal government costs (Chapter 6)

4 D . Estimates of th e Potential Effect on the National Economy

OMB’s 1995 guidance states : “... macro

- economic effects tend to be measurable in nation

- wide

econo metric models, only if the economic impact of the regulation reaches 0.25 percent to 0.5 percent of Gross Domestic Product (GDP). A regulation with a smaller aggregate effect is highly unlikely to have any measurable impact in macro

- economic terms unless it is highly focused on a particular geographic region or economic sector.” 1 

### Based on the 20 12 US GDP of $1 6 trillio n, the 0.25 percent to 0.5 percent threshold is equal to $3 9 billion to $7 8 billion. The estimated

annualized cost for this regulation at $ 160 million does not exceed either threshold

.

5. Extent of EPA’s Prior Consultation with Elected Representatives of Affected State, Local, and Tribal Governments

Today’s final regulation is not expected to result in expenditures by s tate, local, and tribal governments, in the aggregate, of $100 million or more in any one year. As a result, EPA does

not believe Section 2 0 4 of UMRA applies, and did not consult with elected representatives of affected state, local, and tribal governments.

1 Source: Office of Management Budget, “Guidance for Implementing Title II of S. 1. [the Unfunded

Mandates Reform Act ] ,” March 31, 1995 memo.