Regulatory Impact Analysis

for the Final Amendment to the Oil Pollution 

Prevention Regulations to Exempt Milk and Milk 

Product Containers, Associated Piping and 

Appurtenances (40 CFR PART 112)

U. S. Environmental Protection Agency

Office of Solid Waste and Emergency Response

Office of Emergency Management

Regulation and Policy Development Division

April 04, 2011
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i

Table of Contents

Chapter 1: Executive Summary ............................................................................................ 1

Chapter 2: Introduction......................................................................................................... 3

2.1 Statutory Authority................................................................................................. 4

2.2 Regulatory Background......................................................................................... 5

2.3 Statement of Need for Regulatory Action .............................................................. 7

2.4 Final Amendments to the Rule .............................................................................. 7

2.5 Objectives of the Economic Analysis..................................................................... 7

2.6 Organization of this Report.................................................................................... 8

Chapter 3: Methodology........................................................................................................ 9

3.1 Regulatory Baseline for the Analysis ..................................................................... 9

3.2 Cost Savings from the Final Amendment .............................................................. 9

Chapter 4: Cost Impact Analysis ........................................................................................ 11

4.1 Background..........................................................................................................11

4.2 Universe of Affected Facilities ..............................................................................11

4.3 Cost Savings Estimates .......................................................................................17

4.4 Alternative Option: No Action ...............................................................................28

Chapter 5: Impacts on Human Health, Welfare, and the Environment............................. 29

Chapter 6: Small Entity Impacts, Executive Orders, and Other Required Analyses....... 31

6.1 Regulatory Flexibility Act and Small Business Regulatory Enforcement Fairness 

Act........................................................................................................................31

6.2 Executive Order 13132–Federalism .....................................................................32

6.3 Executive Order 13175–Consultation and Coordination with Indian Tribal 

Governments........................................................................................................33

6.4 Executive Order 13045–Protection of Children from Environmental Health & Safety 

Risks ....................................................................................................................33

6.5 Executive Order 13211–Actions that Significantly Affect Energy Supply, 

Distribution, or Use...............................................................................................33

6.6 National Technology Transfer and Advancement Act...........................................33

6.7 Paperwork Reduction Act.....................................................................................34

6.8 Executive Order 12898: Federal Actions to Address Environmental Justice in 

Minority Populations and Low-Income Populations ..............................................34

Chapter 7: Key Assumptions and Limitations................................................................... 35

7.1 General Limitations and Assumptions ..................................................................35

7.2 Key Assumptions .................................................................................................36

Chapter 8: Conclusions....................................................................................................... 38

Bibliography........................................................................................................................... 39
ii

List of Exhibits

Exhibit 1 Summary of Estimated Cost Savings for the Dairy Farms, and Milk Manufacturing 

Facilities ($2009 Millions) ............................................................................................... 2

Exhibit 2 Number of Facilities in Industries Affected by the Amendment (2009)

1

......................12

Exhibit 3 Total Number of New and Existing Facilities in All Affected Industries........................13

Exhibit 4 Number of New and Existing Facilities Affected by the Final Amendment ..................13

Exhibit 5 Impact of Final Amendment to Exempt Milk and Milk Product Containers by Size 

Category for Dairy Farms and Milk Processing Facilities ...............................................16

Exhibit 6 Annual Growth Rate, New and Existing Dairy Farms and Milk Manufacturing Facilities

......................................................................................................................................17

Exhibit 7 Estimated Facility-Level Cost Savings for the Final Amendment to Exempt Milk Bulk 

Storage Containers (2009$) ..........................................................................................20

Exhibit 8 Other Savings for New Dairy Farms ...........................................................................21

Exhibit 9 Other Savings for Existing Dairy Farms......................................................................22

Exhibit 10 Other Savings for New Milk Manufacturing and Processing Facilities.......................23

Exhibit 11 Other Savings for Existing Milk Manufacturing and Processing Facilities..................24

Exhibit 12 Total Projected Compliance Cost Savings from the Final Amendment to Exempt Milk 

and Milk Product Containers (2009$ Millions) 1..............................................................26
1

Chapter 1: Executive Summary

The Environmental Protection Agency (EPA or the Agency) is finalizing an amendment to the 

Spill Prevention, Control, and Countermeasure (SPCC) rule in order to tailor and streamline 

requirements for owners or operators with milk and milk product containers. Specifically, EPA is 

exempting all milk and milk product containers, and associated piping and appurtenances from

the SPCC requirements. The Agency is also removing the compliance date requirements for the 

exempt containers. As a result, the capacity of exempted milk and milk product containers 

would not be included toward a facility’s total oil storage capacity calculation. This could result in 

either: (1) facilities that were subject to full SPCC compliance to now be able to qualify to self 

certify the facility’s Plan as a Tier II qualified facility, (2) Tier II qualified facilities to now be 

eligible for Tier I option to complete the SPCC Plan template, and (3) other facilities to now be 

excluded entirely from SPCC regulation when their aggregate oil storage capacity is less than 

the minimum capacity regulated. The argument behind this amendment is that the sanitation 

requirements in existing standards and ordinances for milk and milk product containers yield a 

similar spill prevention outcome as that intended by the SPCC requirements. EPA believes that 

the rule amendments continue to protect the environment and, at the same time, provide the 

opportunity for regulated facilities to reduce the cost of SPCC compliance.

The U.S. Department of Agriculture (USDA) surveys milk and milk product industries each year. 

The trend data over the past twenty years indicates that the number of dairy farms continues to 

decline. The latest estimates, for 2009, are used in this economic analysis. USDA data indicate 

that there are 65,000 dairy farms and 1,178 milk manufacturing facilities in the U.S. These data 

provide key input into the economic analysis.

In January 2009, EPA proposed to exempt milk containers, their associated piping and 

appurtenances from the SPCC rule provided they are also constructed in accordance with the 

current applicable 3-A Sanitary Standards, and are subject to the current applicable Grade “A” 

Pasteurized Milk Ordinance (PMO) sanitation requirements or a State dairy regulatory 

equivalent to the current applicable PMO. The Agency requested comment on an exemption for 

milk product containers, their associated piping and appurtenances from the SPCC rule 

provided they met the same criteria proposed for the milk containers. For that proposal, EPA 

reported cost savings for both dairy farms and milk manufacturing facilities with milk containers. 

The Agency is finalizing the proposed exemption to exempt milk containers, associated piping 

and appurtenances and is further extending the exemption to also include milk product 

containers, associated piping and appurtenances. The exemption for all milk product containers, 

piping and appurtenances is based on these containers being generally constructed to the 3-A 

Sanitary Standards, and subject to the PMO, the U.S. Department of Agriculture (USDA) 

Recommended Requirements for Milk for Manufacturing Purposes and Its Production and 

Processing (Milk for Manufacturing Purposes and Its Production and Processing; Requirements 

Recommended for Adoption by State Regulatory Agencies), or State dairy regulatory 

equivalents. Cost savings for milk manufacturing facilities with milk product containers were not 
2

applicable for the proposal. These costs savings are applicable for the final rule, because the 

Agency has extended the exemption to include these containers.

EPA estimates that dairy farms incur an average annualized savings of about $133 million 

(2009$, 7% discount rate) and milk product manufacturing plants incur an annualized savings of 

about $13 million. In aggregate, the total annualized savings will be about $146 million (Exhibit 

1). The estimated cost savings reflect a decrease in the number of dairy farms from about 

75,000 farms to 65,000 farms between 2006 and 2009, as well as additional milk product 

manufacturing facilities with containers eligible for the expanded exemption. 

Exhibit 1

Summary of Estimated Cost Savings for the Dairy Farms, and Milk Manufacturing Facilities 

($2009 Millions)

Cost Savings Incurred

Annualized Cost Savings

Discounted at 3% Discounted at 7%

Dairy Farms $130 $133

 New Dairy Farms $2 $2

 Existing Dairy Farms $128 $131

Milk Manufacturing Facilities $13 $13

 New Manufacturing Facilities $2 $2

 Existing Manufacturing Facilities $11 $11

Total $143 $146
3

Chapter 2: Introduction 

EPA is finalizing an amendment to the Spill Prevention, Control, and Countermeasure (SPCC) 

rule to exempt all milk and milk product containers associated piping and appurtenances. The 

capacity of exempt milk and milk product containers, associated piping and appurtenances is

not to be included in a facility’s oil storage capacity calculation. The Agency is also removing the 

compliance date requirements for the exempt containers. 

The Agency believes the combination of sanitary standards and ordinances satisfactorily 

address the prevention of oil discharges from the exempted milk and milk product containers, 

associated piping and appurtenances. The 3-A Sanitary Standards for equipment construction 

require the use of durable materials and sanitary construction criteria that can be easily 

maintained and kept clean and free of defects when appropriate cleaning procedures and 

chemicals are used. The PMO sanitation requirements include construction and sanitation 

standards and frequent State and Federal inspections for these containers, piping and 

appurtenances. These containers, associated piping and appurtenances are also subject to the 

USDA Recommended Requirements which establish criteria similar to that of the PMO for milk 

for manufacturing purposes, including its processing, use, labeling, storage, inspection, 

certification and facility licensing. For the exempt containers, equivalent State dairy 

requirements for permits/licenses, operations and inspections are as stringent as the current 

applicable PMO requirements and/or USDA Recommended Requirements.

The final amendment provides relief from certain regulatory mandates to owners or operators of 

affected facilities, and could change the manner in which they comply with other, still applicable 

mandates. Under the terms of Executive Orders 12866 and 13563, this action has been judged 

a “significant regulatory action” because it would have an annual effect on the economy of $100 

million or more. The order defines “significant regulatory action” as one that is likely to result in a 

rule that may do one or more of the following:

1. Have an annual effect on the economy of $100 million or more, or adversely affect in 

a material way the economy, a sector of the economy, productivity, competition, jobs, 

the environment, public health or safety, or state, local, or tribal governments or 

communities.

2. Create a serious inconsistency or otherwise interfere with an action taken or planned 

by another agency.

3. Materially alter the budgetary impact of entitlements, grants, user fees, or loan 

programs or the rights and obligations of recipients thereof.

4. Raise novel legal or policy issues arising out of legal mandates, the President’s 

priorities, or the principles set forth in the Executive Orders.

Once an action is deemed subject to Executive Orders 12866 and 13563, agencies are required 

to assess all costs and benefits of regulatory activities, including quantitative and qualitative 
4

measures. The Executive Orders also require assessment of benefits and costs, including but 

not limited to those related to the environment, public health and safety, distributive impacts, 

and issues of equity. This action was submitted to OMB for review, and the Agency prepared 

this regulatory impact analysis (RIA) in support of the regulatory requirements.

This RIA provides an estimate of reduced compliance costs for owners or operators of certain 

types of facilities and equipment as a result of the amendment to the rule. EPA believes that the 

amendments to SPCC in this final rule satisfactorily address the prevention of oil discharges

without reducing the level of environmental protection. Thus, this analysis focuses on estimating 

the incremental change in compliance costs resulting from the final rule amendments. 

There are many uncertainties underlying this analysis, including the estimates of unit cost 

savings and the number of affected facilities. While EPA did not have large samples of data for 

various components of the analysis, the Agency has tried to make the best use of the available 

data to make informed decisions regarding the assumptions and estimates used in the analysis.

The remainder of this chapter provides background information on the Oil Pollution Prevention 

regulation, identifies the statutory authority for the regulation, summarizes the regulatory 

changes, and describes the organization of this report. 

2.1 Statutory Authority

Section 311(j)(1)(C) of the Clean Water Act (CWA or the Act), 33 U.S.C. 1321(j)(1)(C), requires 

the President to issue regulations establishing procedures, methods, equipment, and other 

requirements to prevent discharges of oil to navigable waters or adjoining shorelines from 

vessels and facilities and to contain such discharges. The President delegated the authority to 

regulate non-transportation-related onshore facilities to EPA in Executive Order 11548 (35 FR 

11677, July 22, 1970), which was replaced by Executive Order 12777 (56 FR 54757, October 

22, 1991). A Memorandum of Understanding (MOU) between the U.S. Department of 

Transportation (DOT) and EPA (36 FR 24080, November 24, 1971) established the definitions 

of transportation-related and non-transportation-related facilities. An MOU between EPA, the 

U.S. Department of the Interior (DOI), and DOT (59 FR 34102, July 1, 1994) re-delegated the 

responsibility to regulate certain offshore facilities from DOI to EPA.

In 1995, Congress enacted the Edible Oil Regulatory Reform Act (EORRA), 33 U.S.C. 2720, 

which mandates that most Federal agencies differentiate between and establish separate 

classes for various types of oils, specifically: animal fats and oils and greases, and fish and 

marine mammal oils; oils of vegetable origin; petroleum oils, and other non-petroleum oils and 

greases. In differentiating between these classes of oils, Federal agencies are directed to 

consider differences in the physical, chemical, biological, and other properties, and in the 

environmental effects of the classes.
5

2.2 Regulatory Background

EPA has promulgated a series of amendments to the SPCC rule.1 Farms and manufacturing 

facilities handling animal fats and vegetable oils (AFVOs), including milk containers, may benefit 

from several of those amendments. In December 2006, EPA amended the SPCC rule to provide 

an option for “qualified facilities” to prepare a self-certified SPCC Plan instead of one that is 

reviewed and certified by a Professional Engineer (PE). In December 2008, EPA revised the 

SPCC rule to further streamline the SPCC requirements for a subset of qualified facilities, 

designated “Tier I qualified facilities,” which meet the qualified facilities eligibility criteria and 

have no individual aboveground oil storage containers with a storage capacity greater than 

5,000 gallons. The revised rule allows Tier I qualified facility owners or operators to complete a 

self-certified SPCC Plan template in lieu of a full SPCC Plan. All other qualified facilities are 

designated “Tier II qualified facilities.”

Milk and milk products typically contain a percentage of animal fat, which is non-petroleum oil. 

Thus, milk and milk product containers are subject to the SPCC rule when they meet the 

applicability criteria set forth in §112.1. In the SPCC rule, the term “bulk storage container” is 

defined at §112.2 as “any container used to store oil.” Therefore, bulk storage containers storing 

milk and milk products are subject to applicable provisions under §112.12. Additionally, vessels 

for milk pasteurization and for milk and milk product processing, while not bulk containers, are 

considered oil filled-manufacturing equipment and are subject to the general provisions of the 

SPCC rule under §112.7. 

In response to EPA’s October 2007 proposal for amendments to the SPCC rule (72 FR 58378, 

October 15, 2007), several comments requested an exemption for milk storage and processing 

containers. These comments suggested milk containers be exempted from SPCC based on 

sanitation requirements and identified the PMO, which specifically addresses milk intended for 

human consumption. On January 15, 2009 the Agency published a proposal to amend the 

SPCC rule to tailor and streamline the requirements for the dairy industry, specifically for those 

facilities that have milk containers, associated piping and appurtenances constructed and 

subject to specific standards and ordinances [74 FR 2461]. The Agency proposed an exemption 

for milk product containers and their associated piping and appurtenances from the SPCC rule 

provided they are also constructed in accordance with the current applicable 3-A Sanitary 

Standards, and are subject to the current applicable Grade “A” PMO sanitation requirements or 

a State dairy regulatory equivalent to the current applicable PMO. The Agency also requested 

comment on an exemption for milk product containers and their associated piping and 

appurtenances from the SPCC rule provided they met the same criteria as the one proposed for 

the milk containers. 

Basis for the Final Rule

PMO is a model ordinance maintained through a cooperative agreement between the States, 

the FDA, and the regulated community. States typically adopt it either by reference, or by 

 

1

40 CFR Part 112 Oil Pollution Prevention; Spill Prevention, Control, and Countermeasure Rule Requirements—

Amendments; Final Rules. 73 FR 74236, December 5, 2008 and 74 FR 58784, November 13, 2009.
6

directly incorporating similar requirements into their statutes or regulations. All milk handling 

operations subject to the PMO are required to have an operating permit, and are subject to 

inspection by state dairy regulatory agencies. The PMO model code establishes criteria for the 

permitting, inspection and enforcement of milk handling equipment and operations that govern 

all processes for milk intended for human consumption.

Milk and milk product containers and their associated piping and appurtenances are generally 

constructed according to an industry standard established by the 3-A Sanitary Standards 

organization (3-A Sanitary Standards, Inc., McLean, VA, http://www.3-a.org) which satisfy the 

PMO model code construction requirements for milk and milk product containers and associated 

piping and appurtenances.

These containers, associated piping and appurtenances are also subject to the USDA 

Recommended Requirements (Milk for Manufacturing Purposes and Its Production and 

Processing; Requirements Recommended for Adoption by State Regulatory Agencies; see 

http://www.ams.usda.gov/AMSv1.0/getfile?dDocName=STELDEV3004791). These model 

regulations relate to quality and sanitation requirements for the production and processing of 

manufacturing grade milk, which are recommended for adoption and enforcement by the 

various States that regulate manufacturing grade milk. The purpose of the model requirements 

is to promote uniformity in State dairy laws and regulations relating to manufacturing grade milk. 

Milk and milk product containers, associated piping and appurtenances are generally

constructed in accordance with current applicable 3-A Sanitary Standards, and are subject to 

the current applicable PMO sanitation requirements, USDA Recommended Requirements for 

Milk for Manufacturing Purposes and its Production and Processing, or equivalent State dairy 

regulations The 3-A Sanitary Standards for equipment construction require the use of durable 

materials and sanitary construction criteria that can be easily maintained and kept clean and 

free of defects when appropriate cleaning procedures and chemicals are used. The PMO 

sanitation requirements include construction and sanitation standards and frequent State and 

Federal inspections for these containers, piping and appurtenances, and provide definitions and 

a list of those milk products to which it applies. The USDA Recommended Requirements 

establish criteria similar to that of the PMO for milk for manufacturing purposes, including its 

processing, use, labeling and storage. Furthermore, these requirements include provisions for 

inspections, certification and licensing of facilities that handle and process milk for 

manufacturing purposes and its products. These requirements serve as basis for the exemption 

of milk and milk product containers and their associated piping and appurtenances from the 

SPCC rule. The Agency believes the combination of these standards and ordinances

satisfactorily address the prevention of oil discharges. 

After the Agency’s review of comments and consideration of all relevant facts, these 

amendments expand the proposed exemption to include milk product containers, associated 

piping and appurtenances because they are constructed and subject to the same specific 

standards and ordinances as those proposed for milk containers. The Agency is also removing 

compliance date requirements for the exempt containers.
7

2.3 Statement of Need for Regulatory Action 

EPA has identified opportunities to improve the efficiency of the SPCC regulatory program. To 

that end, the Agency proposed a series of revisions to the rule in 2005 (70 FR 73524), and 

received comments on these proposed revisions from regulated parties, professional 

associations, environmental interest groups, and others. Several comments requested an 

exemption for milk storage and processing containers. In response, EPA proposed to exempt 

from the SPCC rule milk containers, associated piping and appurtenances, and sought 

comments on exempting milk product containers, constructed and subject to specific standards 

and ordinances (74 FR 2461, January 15, 2009). EPA reviewed the comments from this 

proposal and evaluated new data relevant to the operations of milk and milk product 

manufacturing facilities regulated under the rule. As a result, EPA has determined that these 

final amendments are appropriate, provide an effective approach to meet statutory 

requirements, and prevent oil discharges while reducing the costs of compliance. Thus the final 

amendments improve efficiency of the SPCC regulatory program. 

2.4 Final Amendments to the Rule 

EPA is finalizing an exemption from SPCC requirements for milk and milk product containers,

associated piping and appurtenances because they are constructed according to current 

applicable 3-A Sanitary Standards, and are subject to the currently applicable PMO, USDA 

Recommended Requirements, or equivalent State dairy regulatory requirements. The capacity 

of exempt milk and milk product containers is not to be included in a facility’s total oil storage 

capacity calculation. The Agency is also removing compliance date requirements for the exempt 

containers.

2.5 Objectives of the Economic Analysis

The purpose of this RIA is to analyze and present the costs and benefits of the final milk and 

milk product containers exemption. The RIA also meets the requirements for economic analysis 

of Executive Order 12866–Regulatory Planning and Review2; Executive Order 13563-Improving 

Regulation and Regulatory Review3; the Regulatory Flexibility Act (RFA)4and Small Business 

Regulatory Enforcement Fairness Act (SBREFA)5; Executive Order 13132–Federalism6; 

Executive Order 13175–Consultation and Coordination with Indian Tribal Governments7; 

Executive Order 13045–Protection of Children from Environmental Health & Safety Risks8; 

Executive Order 13211–Actions That Significantly Affect Energy Supply, Distribution, or Use9; 

the National Technology Transfer and Advancement Act; and the Paperwork Reduction Act 

 

2

58 FR 51735; October 4, 1993. 

3

76 FR 3821; January 21, 2011. 

4

5 U.S.C. Sec. 603; 5 U.S.C. Sec. 604.

5

Public Law 104-121, March 29, 1996.

6

64 FR 43255, August 10, 1999.

7

65 FR 67249, November 9, 2000.

8

62 FR 19885; April 23, 1997.

9

66 FR 28355, May 22, 2001.
8

(PRA);

10 Environmental Justice Executive (EJ) Order 12898 – Federal Actions to Address 

Environmental Justice In Minority Populations and Low-income Populations.

2.6 Organization of this Report

The remainder of this report is organized as follows:

 Chapter 3: describes the methodology for the analysis.

 Chapter 4 describes the affected universe of facilities, the unit compliance costs 

savings, and the total economic impact of the final rule on affected facilities.

 Chapter 5: presents a qualitative discussion on the human health and welfare 

impacts. 

 Chapter 6: presents a summary of small business impacts and responds to 

Executive Orders.

 Chapter 7: provides key limitations and assumptions of the analysis.

 Chapter 8: presents conclusions of the analysis.

 

10 44 U.S.C. Sec. 3501. 
9

Chapter 3: Methodology

This chapter presents the overall methodology used to estimate the economic impacts of the 

final amendment to the SPCC regulations. Section 3.1 describes the regulatory and economic 

baseline for the analysis; Section 3.2 outlines the basic framework for estimating cost savings 

from the final amendment to the SPCC rule. 

3.1 Regulatory Baseline for the Analysis

The impacts of the rule amendment depend on the assumed baseline of industry behavior in the 

absence of the new rule. For the economic impact analysis of the 2008 final amendments to the 

SPCC rule, EPA used as its baseline the SPCC rule requirements under 40 CFR part 112, as

amended in 2002 (71 FR 77266-77293). As recommended by EPA’s “Guidelines for Preparing 

Economic Analyses”, (2000), the Agency assumed that facilities were in full compliance with the 

2002 amended SPCC rule. For this analysis, EPA is changing the baseline of 2002 for the milk 

and milk products container proposal to 2008 for the final rule. SPCC rule amendments in 2006 

and 2008 contained provisions that provided additional flexibility for regulated facilities including 

milk and milk production facilities. Assuming full compliance with the new 2008 baseline, all 

eligible milk and milk product manufacturing facilities have taken advantage of the additional 

flexibility under the regulations.

Since certain SPCC requirements are similar in nature to those imposed by state regulations 

and facility owner/operators of many industries follow specific industry standards, compliance 

activities and their associated costs cannot be fully attributed to the SPCC rule. Because of the 

lack of data on the extent to which facilities adopt industry standards, in this RIA the Agency 

estimated the cost savings associated with the SPCC requirements without accounting for 

possible overlap with industry standards. As a result, the estimated compliance cost savings are 

likely to present an overestimate of the savings attributed to the SPCC rule. However, EPA did 

take into account requirements imposed by state regulations that are similar to the SPCC 

requirements. For details of the state overlap analysis, refer to Section 5.4 of the Regulatory 

Impact Analysis for the 2008 SPCC Rule.11 In sum, when reporting the compliance cost 

savings, EPA accounted for potential overlap with state regulations but not with industry 

standards.

3.2 Cost Savings from the Final Amendment

This section outlines a general approach for estimating economic impacts on the regulated 

community as a result of the final amendment to the SPCC rule. The approach involves the 

following key steps: estimating the number of facilities affected by the final amendment; 

identifying the specific behavioral changes that may occur; estimating the unit costs of affected 

compliance measures under the baseline and amended regulatory scenarios; and applying the 

change in unit costs to the projected number of affected facilities. The analysis estimates the 

 

11 U.S. Environmental Protection Agency (EPA). November 2008. Regulatory Impact Analysis for the Final 

Amendments to the Oil Pollution Prevention Regulations (40 CFR PART 112).
10

present value (PV) of cost savings over the 10-year period and the PV of the cost savings are 

annualized with a payment (PMT) function.

12

The key steps in the analysis are summarized below:

1. Estimate the universe of facilities affected by the final rule. EPA estimated a baseline 

universe of SPCC-regulated milk and milk product manufacturing facilities and range 

of oil storage capacities (e.g., facilities with oil storage capacity between 1,321 and 

10,000 gallons of oil). EPA then estimated the number of facilities that might be 

affected by the amendment. EPA then projected the anticipated annual change in 

the number of affected facilities over the 10-year analysis period, using industryspecific growth rates.

2. Estimate changes in compliance cost elements resulting from the final rule. EPA 

used the unit cost estimates developed for specific baseline requirements and 

compliance measures expected to be affected by the final amendment to the SPCC 

rule. Baseline requirements are based on the 2008 SPCC rule. 

3. Estimate total reduction in compliance costs to potentially affected facilities. EPA 

derived the cost savings for owners or operators of affected facilities, and multiplied 

these estimates by the total number of affected facilities. Finally, EPA estimated the 

net present value (NPV) of the net change in compliance costs and the NPV is 

annualized with a payment (PMT) function over a 10-year period using 3 percent and 

7 percent discount rates.

Note: The NPV formula and annualization formula are described in EPA’s 

“Guidelines for Preparing Economic Analyses, September 2000.

 

12 “For regulatory analysis, you should provide estimates of net benefits using both 3 percent and 7 percent.” OMB, 

September 17, 2003, OMB Circular A-4, p. 33-34. Available at http://www.whitehouse.gov/omb/circulars/a004/a4.pdf.
11

Chapter 4. Cost Impact Analysis

4.1 Background

EPA is finalizing an amendment to the Spill Prevention, Control, and Countermeasure (SPCC) 

rule that exempts milk and milk product containers, associated piping and appurtenances EPA 

is exempting these containers because they are constructed in accordance with currently

applicable 3-A Sanitary Standards, USDA Recommended Requirements, or equivalent State 

dairy regulatory requirements.

The 3-A Sanitary Standards for equipment construction require the use of durable materials and 

sanitary construction criteria that can be easily maintained and kept clean and free of defects. 

Both the PMO sanitation requirements and the USDA Recommended Requirements include 

construction and sanitation standards and frequent State and/or Federal inspections for these 

containers, piping and appurtenances, and provide definitions and/or list those milk and milk 

products to which they apply. Equivalent State dairy requirements for permits/licenses, 

operations and inspections are those that are at least as stringent as the current applicable 

PMO requirements and/or USDA Recommended Requirements. The Agency believes the 3-A

Sanitary Standards along with the PMO requirements, USDA Recommended Requirements, or 

State dairy regulatory equivalent satisfactorily address the prevention of oil discharges for milk 

and milk product containers, associated piping and appurtenances. 

4.2 Universe of Affected Facilities

Dairy farms, milk, and milk product manufacturing facilities are affected by this exemption 

(Exhibit 2). Both new and existing facilities are affected, although the cost savings would be 

different across the two types of facilities. Exhibit 2 shows the industry codes for the affected 

facilities based on the North American Industry Classification System (NAICS).13 While the 

preamble for this final rule uses the 3-digit level NAICS codes, the exhibit also presents 6-digit 

codes for the purpose of the economic analysis. NAICS 112120, Dairy Cattle and Milk 

Production, includes dairy cattle farms and milk production facilities. NAICS 31151, Dairy 

Product Manufacturing, includes manufacturing dairy products (except frozen) from raw milk 

and/or processed milk products and manufacturing dry, condensed, concentrated, and 

evaporated dairy. NAICS 311511, Fluid Milk Manufacturing, includes facilities that manufacture 

processed milk products, such as pasteurized milk or cream and sour cream. NAICS 

311512,Creamery Butter Manufacturing, includes manufacturing creamery butter from milk 

and/or processed milk products. NAICS 311513, Cheese Manufacturing, includes facilities that 

manufacture cheese products from raw milk and/or processed milk products. NAICS 311514 

Dry, Condensed, and Evaporated Dairy Product Manufacturing, includes facilities that 

manufacture dry, condensed, and evaporated milk products. Finally, NAICS 311520 Ice Cream 

and Frozen Dessert Manufacturing, includes manufacturing ice cream, frozen yogurts, and other 

frozen desserts.

 

13 NAICS was developed as the standard for use by Federal statistical agencies in classifying business 

establishments for the collection, analysis, and publication of statistical data related to the business economy of 

the U.S.
12

Exhibit 2

Number of Facilities in Industries Affected by the Amendment (2009) 1

Industry NAICS Code

(3-digit)

NAICS Code

(6-digit) SIC Code Number of Facilities 

Dairy Cattle and Milk Production, 112 112120 0241 65,000 

Fluid Milk Manufacturing;

Cheese Manufacturing;

Dry, Condensed, and Evaporated 

Dairy Product Manufacture

311

311511

311512

311513

311514

311520

2023 

2024

2026

1,178

Total 66,178 

1 U.S. Department of Agriculture, 2009. 

2

3-digit NAICS codes are presented in the preamble for the Final rule; 6-digit NAICS codes provide additional level of 

detail necessary for the economic analysis.

Exhibit 3 presents the total number of facilities in the affected industries, projected over a tenyear analysis period (2010 – 2019). A certain number of dairy farms are not SPCC-regulated in 

the baseline (those facilities do not store enough oil to be regulated given the distribution of the 

universe of SPCC facilities), so they are not affected by the final amendment. The analysis 

assumes that all eligible milk and milk product manufacturing facilities that are SPCC regulated 

have taken advantage of the additional flexibility provided by the Tier I / II options via the 2006 

and 2008 SPCC amendments. 

Exhibit 4 presents the number of facilities affected by the exemption for the 2010 - 2019 

analysis period using the industry sector specific growth rates. The number of milk and milk 

product manufacturing facilities regulated by SPCC is expected to be less than the number of 

facilities in the universe; some facilities have less than 1,320 gallons of milk and milk products 

and petroleum products. The National Milk Producers Federation advised, for the proposed 

rule, that there are milk producers with less than 1,320 gallons of milk and petroleum oil in 

total.14 While the trend of decreasing numbers of dairy farms over the past twenty years is 

expected to continue, the number of milk manufacturing facilities has been and is expected to 

continue to be relatively stable

 

14 Some dairy farms have as few as 32 head of dairy cattle. Based on an average milk production of 6.31 gallons per 

head per day, total milk production for such small dairy farms is estimated at 202 gallons per day.
13

Exhibit 3

Estimates of Total Number of New and Existing Facilities in All Affected Industries

Facilities with Milk Containers 2010

Year 1

2011

Year 2

2012

Year 3

2013

Year 4

2014

Year 5

2015

Year 6

2016

Year 7

2017

Year 8

2018

Year 9

2019

Year 10

Ten-Year 

Average

Dairy Farms1

New Facilities 109 116 124 133 143 153 164 176 188 202 151

Existing Facilities 51,400 48,500 45,800 43,300 40,900 38,700 36,700 34,800 33,100 31,500 40,500 

Milk Manufacturing Facilities with Milk and Milk Product Containers2

New Facilities 27 27 27 27 27 27 27 27 27 27 27

Existing Facilities 1,178 1,178 1,180 1,180 1,180 1,182 1,182 1,182 1,185 1,187 1,181

Total352,714 49,819 47,131 44.640 42,350 40,164 38,109 36,185 34,500 32,911 41,858 

1 Dairy farms (NAICS 112120).

2 Milk manufacturing (NAICS 311511, 311512, 311513, 311514, and 311520).

3 Individual figures may not add up due to rounding.

Exhibit 4

Estimates of New and Existing Facilities Affected by the Final Amendment

(Excludes facilities estimated to have total oil storage less than 1,320 gallons)

Facilities with Milk Containers

Number of Facilities Affected by the Final Amendment Ten-Year 

Average 2010

Year 1

2011

Year 2

2012

Year 3

2013

Year 4

2014

Year 5

2015

Year 6

2016

Year 7

2017

Year 8

2018

Year 9

2019

Year 10

Dairy Farms1

New Facilities 109 116 124 133 143 153 164 176 188 202 151

Existing Facilities 36,100 34,200 32,300 30,700 29,100 27,600 26,300 25,000 23,900 22,900 28,800 

Milk Manufacturing with Milk and Milk Product Containers2

New Facilities 27 27 27 27 27 27 27 27 27 27 27

Existing Facilities 1,178 1,178 1,180 1,180 1,180 1,182 1,182 1,182 1,185 1,187 1,181

Total337,414 35,521 33,631 32,040 30,450 28,960 27,673 26,385 25,300 24,316 30,158

1 Dairy farms (NAICS 112120). 

2 Milk manufacturing (NAICS 311511, 311512, 311513, 311514, and 311520).

3 Individual figures may not add up due to rounding.
14

Facility Size Distribution

EPA classified facilities into oil storage capacity categories to (1) account for differences in the 

potential compliance costs incurred by facilities of different sizes; and (2) determine the number 

of affected facilities. EPA considers “qualified” facilities as those with oil storage capacity equal 

to or less than 10,000 gallons and that meet the spill history criterion15. The four oil storage 

capacity categories are:

 Category I: total oil storage capacity greater than 1,320 gallons but less than or equal 

to 10,000 gallons: Tier I – no storage containers greater than 5,000 gallons, Tier II –

has at least one container greater than 5,000 gallons.

 Category II: total oil storage capacity greater than 10,000 gallons but less than or 

equal to 42,000 gallons;

 Category III: total oil storage capacity greater than 42,000 gallons but less than or 

equal to 1,000,000 gallons; and

 Category IV: total oil storage capacity greater than 1,000,000 gallons.

Since cost impact of the final amendment is expected to be different depending on the storage 

capacity of these facilities, EPA estimated the distribution of the facilities by storage size 

capacity. To determine the storage capacity at dairy farms, EPA used information on annual 

milk production by size of dairy cattle herds from the U.S. Department of Agriculture National 

Agricultural Statistics Service (USDA NASS)

16 and calculated the total volume of milk produced 

in a year assuming that these farms are seven-day-a-week operations.17 To estimate milk 

storage capacity from the total volume of production, EPA assumed that farms fill milk storage 

containers to 80 percent capacity18 and that large facilities with greater than 1,000 heads of 

dairy cattle store milk for one day and smaller facilities (with less than 1,000 heads of cattle) 

store milk for two days.19

To determine total oil storage at dairy farms, including milk and other types of oil, EPA used 

USDA data and assumed that all facilities with more than 1,400 heads of cattle would store

more than 10,000 gallons of non-milk oil. Dairy farms with more than 700 heads of cattle but 

less than 1,400 would store more than 1,320 gallons and no more than 10,000 gallons of non-

 

15

 The facility must not have had (1) a single discharge of oil to navigable waters exceeding 1,000 U.S. gallons or 

(2) two discharges of oil to navigable waters each exceeding 42 U.S. gallons within any twelve-month period, in 

the three years prior to the SPCC Plan certification date, or since becoming subject to the SPCC rule if facility has 

been in operation for less than three years.

16 http://www.nass.usda.gov. Accessed July 1, 2008. Milk Cows and Production, All States. 2006.

17 Clay Detlefsen, International Dairy Foods Association, Phone conversation, July 14, 2008 indicated that diary 

farms are a seven-day-a week-operation.

18 Mike Kelley (Dairy Farm Equipment Product Manager, Paul Mueller Company ) and Kelley Burgess (Dairy Farm 

Equipment Service Manager, Paul Mueller Company), phone conversation, July 2, 2008.

19 Estimates on other oil storage provided by Jamie Jonker via personal conversation, Regulatory Affairs Director, 

National Milk Producers Federation, July 15, 2008.
15

milk oil.20 Further, EPA assumed that dairy farms with less than 700 head of dairy cattle would 

not have enough oil storage to be SPCC-regulated. Based on data from EPA site visits to dairy 

farms in New York in 2006, the Agency assumed that 75 percent of farms with less than 700 

heads of cattle would store no more than 1,320 gallons of fuel oil and the remaining 25 percent 

would store more than 1,320 gallons of fuel oil.21 Exhibit 5 shows an estimate of the number of 

facilities distributed by size of cattle herd, and the effect of the rule amendment on those 

facilities. The National Milk Producers Federation advised that small dairies exist that would not 

meet the minimum oil storage capacity under the SPCC regulations. The Agency estimates 

11,700 milk producers with less than 32 head of dairy cattle; these dairies likely have less than 

1,320 gallons of combined milk and oil storage capacity and would not be covered by the SPCC 

regulations. 

 

20 Jamie Jonker, Regulatory Affairs Director, National Milk Producers Federation, noted that almost all facilities with 

greater than 700 head of cattle are likely to have oil storage greater than 1,320 gallons, larger farms with 1,400 

heads of cattle would have more than 10,000 gallons of oil, and a large majority of dairy farms with less than 700 

heads of cattle would also have oil storage greater than 1,320 gallons of oil. Phone conversation, July 14, 2008.

21 Site visits conducted by Troy Swackhammer, U.S. EPA, OEM/RPDD, June 27-28, 2006.
16

Exhibit 5

Impact of Final Amendment to Exempt Milk and Milk Product Containers by Size Category for Dairy Farms and Milk 

Processing Facilities (Excludes facilities with total oil storage less than 1,320 gallons)

Milk Capacity1 Non-Milk Oil 

Capacity2

Number of 

New

Facilities -

10 Year 

Average 

(2010-

2019)

Number of 

Existing 

Facilities -

10 Year 

Average 

(2010-

2019)

SPCC Status Excluding Milk Capacity

Dairy Farms

32 - 549

Cattle <8,670 gallons

75% have 

<1,320 gallons; 

25% have 1,320 

– 10,000 gallons

0 25,300

Depending on non-milk oil capacity, some: 1) 

become exempt, and 2) become Tier I or Tier 

II qualified facilities

550 –

699 Cattle

8,670 – 11,000 

gallons

75% have 

<1,320 gallons; 

25% have 1,320 

– 10,000 gallons

0 400

Depending on non-milk oil capacity, some: 1) 

become exempt, and 2) become Tier I or Tier 

II qualified facilities

700 - 999 

Cattle

8,670 – 15,800

gallons

1,320-10,000

gallons 0 900 All farms continue to be SPCC regulated but become Tier I or Tier II qualified facilities

1,000 -

1,399 

Cattle

7,880-11,000

gallons

(stored in at 

least 5,000

gallon mobile 

containers)

1,320-10,000 

gallons 16 400 All farms continue to be SPCC regulated but become Tier I or Tier II qualified facilities

> 1,400 

Cattle

> 11,000 gallons

(stored in at 

least 5,000

gallon mobile 

containers)

> 10,000 gallons 135 1,800 All remain SPCC regulated as before

Milk Manufacturing Facilities

All 

Facilities

30,000-40,000 

gallons (size of 

largest milk 

container)

50 % with

< 1,320 gallons;

50% with 

>1,320-gallons

27 1,181

50% exempt; the rest remain SPCC regulated 

and may become Tier I or Tier II qualified

facilities

1 Milk capacity estimated using USDA estimate (2006) that a cow produces approximately 6.31 gallons of milk per day, and based 

on inputs from National Milk Producers Association that farms with less than 1,000 cattle store milk for 2 days, farms with more 

than 1,000 cattle store milk for 1 day, and typically there is 20% excess capacity.

2 Non-milk oil capacity estimated based on site visits to dairy farms in New York conducted by Troy Swackhammer, EPA, 2007, and 

information received from Clay Detlefson, International Dairy Foods Association, July 15, 2008 (non-farms). Detlefson later 

suggested that the ratio could be 60% of facilities with less than 1,320 gallons and 40% of facilities with more than 1,320 gallons. 

However, the cost savings difference between these estimates is minimal because the difference between the facility level cost 

estimate across being exempt and not being exempt and being qualified is only the cost of recordkeeping.

3 

 Average annual growth rate based on USDA report: “Profits, Costs, and the Changing Structure of Dairy Farming”, 2007. 

http://www.ers.usda.gov/publications/err47/err47.pdf

Exhibit 6 presents the average growth rate for new and existing milk production facilities. EPA 

assumed that no new farms would come into existence for size categories where overall growth 

is negative. The number of milk manufacturing facilities is relatively stable over time and the 

analysis assumes that there are about 1,180 of existing facilities, based upon USDA NASS 

2009 data.
17

4.3 Cost Savings Estimates

Cost savings are estimated by comparing unit costs in the 2008 baseline with the cost impacted 

by the rule exemption. Exhibit 7 provides a list of requirements and the unit costs impacted by 

the exemption. The cost savings from exempting milk and milk product containers, associated 

piping and appurtenances22 would vary depending on whether a facility is new or existing. 

Further, the cost savings would vary for the following cases: 1) the facility becomes exempt from 

SPCC after excluding milk and milk product containers (such facilities no longer face any costs 

due to SPCC requirements); 2) the facility continues to be SPCC regulated but its status 

changes (qualifies as Tier I and no longer faces costs from a full SPCC Plan or as Tier II and 

no longer must pay for PE certification but can self certify their SPCC Plan); or 3) the facility 

continues to be SPCC regulated but does not have to comply with SPCC requirements for any 

milk or milk product containers. Specifically, owners or operators of SPCC-regulated facilities, 

the cost savings would be from not having to provide sized or general secondary containment

for milk and milk product containers; from avoiding PE certification (for those that become either 

Tier I or II qualified facilities); and from Tier I qualified facilities not having to prepare a full SPCC 

Plan but rather complete the Plan template in Appendix G of the rule.

23

 EPA used a unit costs 

inventory prepared by a PE firm to estimate cost savings for the proposed rule. A unit costs 

inventory was also used to conduct cost savings analysis from the milk and milk product 

exemption for the final rule.

The assumption of full compliance with the 2008 SPCC regulations suggest that only new 

facilities would incur cost savings from avoiding construction of secondary containment since 

existing facilities would have already built the containment. Facilities may also avoid 

 

22

 For simplicity, EPA further refers to milk and milk product containers, associated piping and appurtenances as 

“milk and milk product containers”.

23 It is important to note that dairy farms typically have drainage systems under PMO that lead to lagoons that can 

retain the entire capacity of the largest milk and milk product container. However, typically neither the structure 

within which these containers are stored nor the drainage systems themselves are equipped to handle the capacity 

of the largest container. Therefore these drainage systems are not equivalent to sized secondary containment. In 

addition, EPA assumed that these facilities would become Tier I qualified facilities. 

Exhibit 6

Annual Growth Rate, New and Existing Dairy Farms and Milk Manufacturing 

Facilities

Type of Facility Growth Rate

New Facilities

Growth Rate

Existing Facilities

Dairy Farms

32 – 549 Cattle 0% -6.2%

550 –999 Cattle 0% 0%

1,000 – 1,400 Cattle 3.7% 3.7%

> 1,400 Cattle 7.5% 7.5%

Milk Manufacturing Facilities 2.3% 2.3%

Average annual growth rate derived from the number of facilities reported in USDA report: 

“Profits, Costs, and the Changing Structure of Dairy Farming”, 2007. 

http://www.ers.usda.gov/publications/err47/err47.pdf
18

construction of sized secondary containment for new containers. However, if a facility meets 

the criteria for a Tier I or Tier II qualified facility, both new and existing facilities would incur cost 

savings. The new facilities that become Tier I qualified facilities would incur cost savings from 

preparation of a Plan template in lieu of a full SPCC Plan, and initial self-certification of the Plan 

(rather than the cost of a PE certification), while the existing facilities would incur cost savings 

from not incurring the costs of PE certification of their amendments. The new facilities that 

become Tier II qualified facilities would only incur cost savings from initial self-certification of the 

Plan (rather than the cost of a PE certification) like Tier I qualified facilities, would incur cost 

savings from not requiring PE certification of their amendments. Exhibit 7 presents the perfacility cost savings for new and existing facilities depending on their status after excluding the 

milk and milk product containers under this option. 

The cost savings estimate depends on the capacity of the largest milk bulk storage container 

since the sized secondary containment is ‘sized’ to the largest milk bulk storage container. 

Using the average daily production per cow of 6.31 gallons,

24 EPA estimated that medium-sized 

farms, with 550-1,000 head of cattle, would have daily milk production of approximately 3,470-

6,310 gallons. Assuming that farms fill milk bulk storage containers to 80 percent capacity25 and 

that the milk is stored for two days at large facilities,26 the capacity of milk bulk storage container 

would approximately be 8,670 -15,800 gallons. Thus, on average, it implies a total milk storage 

capacity of 12,200 gallons for farms with 550-1,000 head of cattle. At larger facilities, with 

greater than 1,000 head of cattle, milk is typically only stored for up to one day, and filled 

directly into milk transport trucks that are typically 5,000-6,500 gallons in size. 27 Thus, these 

milk transport trucks will be eligible for the relief provided to tank trucks in the 2008 final 

amendments to the SPCC rule that requires only general secondary containment instead of 

sized secondary containment. Therefore, the cost savings to these existing facilities would be 

from not having to provide general secondary containment. 

Further, since EPA estimated that all dairy farms with 1,400 or fewer cattle would store less than 

10,000 gallons of fuel oil on-site, these farms would become eligible as Tier I or Tier II qualified 

facilities, with Plan preparation, certification, and maintenance savings in addition to secondary 

containment savings. EPA estimated that 77 percent of all farms with 1,400 or fewer cattle 

would be Tier I facilities.28 The facilities with more than 1,400 cattle are likely to store oil in 

quantities greater than 10,000 gallons and would only save the cost of secondary containment

for these containers. Since small dairy farms storing less than 500 gallons of milk, are unlikely 

 

24 USDA National Agricultural Statistics Service. Milk Cows and Production, All States, 2006.

25 Mike Kelley (Dairy Farm Equipment Product Manager, Paul Mueller Company) and Kelley Burgess (Dairy Farm 

Equipment Service Manager, Paul Mueller Company), phone conversation, July 2, 2008.

26 Phone conversations with Jamie Jonker, Regulatory Affairs Director, National Milk Producers Federation, July 14, 

2008 and Senior Vice President of Scientific and Regulatory Affairs, Rob Byrne.

27 Phone conversations with Jamie Jonker, Regulatory Affairs Director, National Milk Producers Federation, July 14, 

2008 and Senior Vice President of Scientific and Regulatory Affairs, Rob Byrne.

28 Estimated based on two state databases; farms data were not available for these, so EPA used the general 

estimate applied to facilities of all industries in the analysis for the 2008 SPCC Rule. Of all facilities with less than 

10,000 gallons (Tier II facilities), 77 percent would have no containers greater than 5,000 gallons, making them 

Tier I facilities.
19

to store more than 1,320 gallons of fuel and other oils (including milk), these farms would be 

exempt from SPCC regulation. 

There was less information available on the milk and milk product storage at milk product 

manufacturing facilities. EPA estimated that these facilities are likely to store milk in large 

quantities and could have containers with capacity as large as 50,000 to 100,000 gallons, with 

the most common storage range of 30,000 to 40,000.29 Therefore, EPA assumed that on 

average, these manufacturing facilities can have milk storage containers with capacity between 

30,000 to 40,000 gallons. EPA assumed that 50 percent of those facilities have other fuel oil 

storage less than 1,320 gallons and they would incur cost savings from being exempt from the 

SPCC rule and 50 percent of the facilities have more than 1,320 gallons of storage so that they 

would incur cost savings either from becoming qualified facilities or from secondary containment 

no longer required for these 30,000 to 40,000 gallon tanks.30

Milk product manufacturing facilities that produce milk products (e.g., evaporated milk, ice 

cream, cheese) also have milk product containers at the facility. By extending the exemption in 

the final rule to milk product containers, the facility owner or operator would not be required to 

comply with any SPCC requirement (e.g., secondary containment, integrity testing) for the 

exempt milk product containers. The facilities would save all of the unit costs associated with 

the SPCC requirements for these containers. However, the Agency does not have data on the 

number of milk product containers at milk product manufacturing facilities to determine the 

overall cost savings for the exemption. Therefore, EPA expects that the total cost savings for 

the final rule is underestimated.

Exhibit 7 lists the facility-level average (1) cost of sized and general secondary containment for 

milk storage containers, (2) cost of Plan preparation, initial certification of the SPCC Plan, (3) 

the cost of Plan preparation for Tier I qualified facilities using the Plan template in Appendix G of 

the rule, and (4) the additional costs saved by a facility when changing size category or 

becoming exempt from SPCC regulation. Existing facilities incur only the savings associated 

with PE certification of Plan amendments. It is estimated that no dairy farms would be Category 

IV. Based on the expectation that the most common range of storage at these facilities is 30,000 

to 40,000 gallons, and given the likely overlap between PMO planning requirements and SPCC 

planning requirements, EPA assumed that all affected food manufacturing facilities would have 

Plan costs of a Category II facility, regardless of total storage capacity. 

Exhibit 7 presents cost saving components for milk and milk products manufacturing facilities. 

Exhibit 8 through Exhibit 11 show additional details for the cost savings components, by facility 

type. 

 

29 Personal communication with Clay Detlefson, International Dairy Foods Association, telephone conversation, July 

14, 2008.

30 Based on inputs from Clay Detlefsen, International Dairy Foods Association, Email July 15, 2008.
20

Exhibit 7

Estimated Facility-Level Cost Savings for the Final Amendment to Exempt Milk and Milk Product Containers (2009$)

Cost Savings Incurred Facilities that 

become Exempt 

Facilities that 

become Tier I 

Qualified

Facilities that 

become Tier II 

Qualified

Facilities that 

Continue to be 

SPCC Regulated

New Dairy Farms

Average number of new farms 

affected 0 12 4 135

Sized Secondary Containment1$12,000 $12,000 $12,000 -

General Secondary Containment1- $9,6002$9,6002$9,6002

Plan Preparation $4,000- $8,100 $4,000 - $8,100 - -

PE Certification $1,600 - $3,100 $1,600 - $3,100 $1,600 - $3,100 -

Additional Cost of Preparing Plan 

Template $0 ($160 - $320) $0 -

Other Savings (see Exhibit 8). $33,600 -$34,200 Up to $600 Up to $600 -

Total Facility-Level Savings: New 

Farms $51,200 - $57,400 $15,100 - 23,500

3

$11,200-$15,700 $9,600

Existing Dairy Farms

Average number of existing farms 

affected 19,300 6,000 1,700 1,800

PE certification of amendments $300 - $600 $300 - $600 $300 - $600 -

Other Savings (see Exhibit 9). $5,800 - $9,500 Up to $3,700 Up to $3,700 -

Total Facility-Level Savings: Existing 

Farms $6,100 - $10,100 $300 - $4,300 $300 - $4,300 $0

New Manufacturing Facilities

Average number of new 

manufacturing facilities affected 14 9 4 0

Sized Secondary Containment 4$41,300 $41,300 $41,300 $41,300

Plan Preparation 5$8,100 $8,100 - -

PE Certification 5

$3,100 $3,100 $3,100 -

Additional Cost of Preparing Plan 

Template - ($300) - -

Other Savings (see Exhibit 10). $60,100 $18,300 $18,300 -

Total Facility-Level Savings: New 

Manufacturing Facilities $112,600 $70,400 $62,700 $41,300

Existing Manufacturing Facilities

Average number of manufacturing 

facilities affected 591 455 135 0

PE certification of amendments $600 $600 $600 -

Other Savings (see Exhibit 11). $12,200 $6,100 $6,100 -

Total Facility-Level Savings: Existing 

Manufacturing Facilities $12,800 $6,700 $6,700 $0

1 Dairy farms with more than 1,000 heads of cattle are expected to have mobile bulk storage only, and are required to install 

general secondary containment instead of sized secondary containment (SPCC Final Rule RIA, 2008). 

2 General secondary containment cost savings for farms that have greater than 1,000 cattle as they store milk in mobile bulk 

storage containers for a day.

3 Range of cost savings for facilities becoming Tier I qualified accounts for the cost savings difference between farms initially 

classified as Category I or Category II facilities and for the cost savings difference between general and sized secondary 

containment (large farms with more than 1,000 cattle, and small farms, respectively).

4 Average of costs of secondary containment using earthen berm and concrete berm. 

5 All milk-using manufacturing facilities are expected to be Category II, for the purposes of Plan Preparation and Maintenance, 

and size of secondary containment.

Data sources for cost estimates: Unit Cost Inventory from SCS Engineers; site visits. 
21

Exhibit 8

Other Savings for New Dairy Farms

(include all SPCC compliance elements except those listed in Exhibit 7, 2009$)

Cost Savings Incurred

Category I 

facilities that 

become Exempt

Category II facilities 

that become 

Exempt

Category II facilities 

that become Category

I

New Dairy Farms

Install liquid-level sensing devices $2,500 $2,500 -

Secondary containment at a transfer area $7,000 $7,000 -

Restrain drainage from diked storage areas using 

valves of manual, open-closed design $5,470 $5,500 -

Fully fence the facility $4,480 $5,100 $640

Warn all vehicles entering the facility to be sure that no 

vehicle will damage aboveground piping or other oil 

transfer operations

$2,700 $2,700 -

Provide facility lighting to help discover discharges and 

prevent vandalism $2,340 $2,300 -

Training personnel and holding discharge prevention 

briefings $2,010 $3,800 $1,790

Inspections and Testing $1,670 $3,000 $1,350

Secondary containment for mobile/portable oil storage 

containers1 $1,690 - ($1,690)

Secondary containment for oil-filled operating 

equipment1 $1,570 - ($1,500)

Install drain covers and spill kits $890 $890 -

Security measures for valves $430 $430 -

Recordkeeping and discharge reporting $430 $430 -

Security requirements for piping $160 $160 -

Anti-Corrosive Measures $140 $200 $60

Secondary containment for piping $110 $110 -

Total 2

$33,600 $34,200 $650

1

In the baseline cost of compliance estimates for SPCC-regulated farms, EPA assumed that Category II farms have neither 

mobile/portable oil storage containers nor oil-filled operating equipment.

2 Individual figures may not add up due to rounding.

Data sources for cost estimates: Unit Cost Inventory from SCS Engineers; site visits.
22

Exhibit 9

Other Savings for Existing Dairy Farms

(include all SPCC compliance elements except those listed in Exhibit 7, 2009$)

Cost Savings Incurred

Category I 

facilities that 

become Exempt

Category II 

facilities that 

become Exempt

Category II 

facilities that 

become Category I

Existing Dairy Farms

Training personnel and holding discharge prevention 

briefings $2,100 $3,810 $1,790

Inspections and Testing $1,670 $3,030 $1,350

Equip the final discharge of ditches with a diversion 

system $1,290 $1,290 -

Perform a 5-year review of the SPCC Plan $330 $600 $270

Amend the SPCC Plan due to changes made at the 

facility or 5-year review of Plan $220 $450 $220

Recordkeeping and discharge reporting $140 $170 $30

Security requirements for piping $160 $160 -

Total 2

$5,800 $9,500 $3,700

1

In the baseline cost of compliance estimates for SPCC-regulated farms, EPA assumed that Category II farms have neither 

mobile/portable oil storage containers nor oil-filled operating equipment.

2 Individual figures may not add up due to rounding.

Data sources for cost estimates: Unit Cost Inventory from SCS Engineers; site visits.
23

Exhibit 10

Other Savings for New Milk Manufacturing and Processing Facilities

(include all SPCC compliance elements except those listed in Exhibit 7, 2009$)

Cost Savings Incurred Category II facilities that 

become Exempt

Category II facilities that 

become Category I

New Milk Manufacturing and Processing Facilities

Install liquid-level sensing devices $2,500 -

Inspections and Testing $7,000 $3,700

Secondary containment at a transfer area $7,000 -

Secondary containment for a loading/unloading rack $6,400 $6,400

Restrain drainage from diked storage areas using 

valves of manual, open-closed design $5,500 -

Fully fence the facility $5,100 $650

Secondary containment for oil-filled operating 

equipment $4,700 -

Drainage measures for tanker trucks $4,300 $4,300

Training personnel and holding discharge prevention 

briefings $3,800 $1,800

Warn all vehicles entering the facility to be sure that no 

vehicle will damage aboveground piping or other oil 

transfer operations

$2,700 -

Provide facility lighting to help discover discharges and 

prevent vandalism $2,300 -

Secondary containment for mobile/portable oil storage 

containers $2,100 -

Anti-Corrosive Measures $2,000 $1,300

Equip the final discharge of ditches with a diversion 

system $1,300 -

Secondary containment for piping $1,100 -

Install drain covers and spill kits $890 -

Security measures for valves $430 -

Recordkeeping and discharge reporting $430 -

Provide two pumps $200 -

Security requirements for piping $160 -

Total 1

$60,100 $18,300

1 Individual figures may not add up due to rounding.

Data sources for cost estimates: Unit Cost Inventory from SCS Engineers; site visits.
24

Exhibit 11

Other Savings for Existing Milk Manufacturing and Processing Facilities

(include all SPCC compliance elements except those listed in Exhibit 7, 2009$)

Cost Savings Incurred Category II facilities that 

become Exempt

Category II facilities that 

become Category I

Existing Milk Manufacturing and Processing Facilities

Inspections and Testing $7,100 $3,700

Training personnel and holding discharge prevention 

briefings $3,800 $1,800

Perform a 5-year review of the SPCC Plan $610 $270

Amend the SPCC Plan due to changes made at the 

facility or 5-year review of Plan $450 $220

Recordkeeping and discharge reporting $170 $30

Cap and blank-flange terminal connections at the 

transfer point $160 -

Total 1

$12,200 $6.100

1 Individual figures may not add up due to rounding.

Data sources for cost estimates: Unit Cost Inventory from SCS Engineers; site visits.

EPA calculated the total compliance cost savings for milk and milk product manufacturing 

facilities that store milk using the projected number of facilities affected by the final amendment 

and their corresponding per-facility compliance cost savings estimated, as summarized in the 

equation below:

Calculation of Total Cost Savings

Using a 7% discount rate, EPA estimated that milk production facilities would incur average

annualized savings of about $133 million and milk product manufacturing plants would incur 

average annualized savings of about $13 million (2009$). In aggregate, the total savings will be 

Total Cost Savings 

= 

i

ij ij

i j

ij ij

j

NFacNew * NCostSavingNew NFacExist * NCostSavingExist

Where i = I, II are the facility size categories, j = dairy farms (1-4, depending on total size of 

herd) or food manufacturing facilities (5) 

NFacNewij = the projected number of affected new facilities by size category i and type j 

(see Exhibit 4)

NFacExistij = the projected number of affected existing facilities by size category i and type 

j (see Exhibit 4)

NCostSavingNewij = the per-facility net cost savings for new facilities based on compliance 

options available to facilities with milk containers by size category and type (see Exhibit 7).

NCostSavingExistij = the per-facility net cost savings for existing facilities based on 

compliance options available to facilities with milk containers by size category and type 

(see Exhibit 7).
25

about $146 million (2009$). The analysis was conducted by calculating the NPV of annual cost 

savings and then annualizing that value using a payment (PMT) function.
26

Exhibit 12

Total Projected Compliance Cost Savings from the Final Amendment to Exempt Milk and Milk Product Containers (2009$ Millions) 1

Estimates of Compliance Cost Savings 10- Year 

Present 

Value

Annualized 2010

Year 1

2011

Year 2

2012

Year 3

2013

Year 4

2014

Year 5

2015

Year 6

2016

Year 7

2017

Year 8

2018

Year 9

2019

Year 10

Dairy Farms

Not Discounted $164.17 $154.25 $146.33 $137.42 $129.52 $122.62 $115.73 $109.85 $103.98 $98.11 $1,242 $129

3% Discounted $159.14 $146.18 $146.33 $122.26 $112.31 $102.36 $94.41 $86.36 $79.32 $72.87 $1,108 $130

7% Discounted $153.09 $135.09 $119.09 $105.08 $92.08 $81.68 $72.08 $63.68 $56.28 $49.77 $929 $133

New Dairy Farms

Not Discounted $1.17 $1.25 $1.33 $1.42 $1.52 $1.62 $1.73 $1.85 $1.98 $2.11 $16 $2

3% Discounted $1.14 $1.18 $1.22 $1.26 $1.31 $1.36 $1.41 $1.46 $1.52 $1.57 $13 $2

7% Discounted $1.09 $1.09 $1.09 $1.08 $1.08 $1.08 $1.08 $1.08 $1.08 $1.07 $11 $2

Existing Dairy Farms

Not Discounted $163 $153 $145 $136 $128 $121 $114 $108 $102 $96 $1,226 $127

3% Discounted $158 $145 $132 $121 $111 $101 $93 $84.9 $77.8 $71.3 $1,095 $128

7% Discounted $152 $134 $118 $104 $91 $80.6 $71.0 $62.6 $55.2 $48.7 $918 $131

Milk Manufacturing Facilities

Not Discounted $13.40 $13.40 $13.40 $13.40 $13.40 $13.40 $13.40 $13.40 $13.40 $13.40 $134 $13

3% Discounted $13.01 $12.63 $12.45 $11.90 $11.56 $11.22 $10.90 $10.58 $10.27 $9.97 $114 $13

7% Discounted $12.51 $11.69 $10.92 $10.21 $9.54 $8.92 $8.33 $7.79 $7.28 $6.80 $94 $13

New Manufacturing Facilities

Not Discounted $2.44 $2.44 $2.44 $2.44 $2.44 $2.44 $2.44 $2.44 $2.44 $2.44 $24 $2

3% Discounted $2.37 $2.30 $2.24 $2.17 $2.11 $2.05 $1.99 $1.93 $1.87 $1.82 $21 $2

7% Discounted $2.28 $2.13 $1.99 $1.86 $1.74 $1.63 $1.52 $1.42 $1.33 $1.24 $17 $2

Existing Manufacturing Facilities

Not Discounted $10.96 $10.96 $10,96 $10.96 $10.96 $10.96 $10.96 $10.96 $10.96 $10.96 $110 $11

3% Discounted $10.64 $10.33 $10.03 $9.73 $9.45 $9.17 $8.91 $8.65 $8.40 $8.15 $94 $11
27

7% Discounted $10.23 $9.56 $8.93 $8.35 $7.80 $7.29 $6.81 $6.37 $5.95 $5.56 $77 $11

Total Savings

Not Discounted $178 $168 $159 $151 $143 $136 $129 $123 $117 $111 $1,416 $142

3% Discounted $172 $158 $146 $134 $124 $114 $105 $97 $90 $83 $1,223 $143

7% Discounted $166 $147 $130 $115 $102 $91 $81 $72 $64 $57 $1,023 $146

1 See Appendix K in Volume II of the 2008 SPCC Rule RIA for more details on the calculation of cost savings. When estimating the universe of SPCC-regulated facilities for dairy farms and milk 

manufacturing facilities, containers storing petroleum-based oil were accounted for and not milk or related substances. Therefore, the baseline universe of facilities does not include facilities 

that would be regulated due to milk storage containers.
28

4.4 Alternative Option: No Action

The Agency considered the alternative option of no action, which would have no cost impact on 

the facilities. 
29

Chapter 5: Impacts on Human Health, Welfare, and the Environment

There would be environmental and human health impacts of the final rule amendments if they

result in a change in threat of discharge. In the absence of detailed data on oil discharges the 

Agency relied on available sources of information, including available data on historical oil 

discharges, to inform a qualitative evaluation of changes in oil discharge threat. EPA believes 

that changes at facilities that handle milk and milk products in response to the final rule 

amendment would not increase the risk of oil discharges which pose a risk to human health, 

welfare and the environment. At the same time, the final amendments will provide the 

opportunity for regulated facilities to reduce the cost of SPCC compliance.

Milk and milk product containers, associated piping and appurtenances are generally 

constructed according to an industry standard established by 3-A Sanitary Standards (McLean, 

VA), which satisfy PMO and USDA Recommended Requirements for construction of milk and 

milk product containers and associated piping and appurtenances. These standards include

American Iron and Steel Institute 300 Series stainless steel (i.e., austenitic stainless steel) or a 

metal that is at least as corrosion resistant. Milk and milk product containers, associated piping 

and appurtenances must have smooth and impervious surfaces that are free of breaks and 

corrosion, including at joints and seams. These standards further specify the requirements for 

easy access to inspect the container’s internal surfaces. The USDA also recognizes 3-A 

Sanitary Standards-compliant containers under 7 CFR part 58 for purposes of USDA milk and 

milk product grading and inspection programs. 

All milk and milk product handling operations subject to PMO and USDA Recommended 

Requirements must have an operating permit or license, and are subject to inspections by the 

state dairy regulatory agencies prior to its issuance. Both PMO and USDA Recommended 

Requirements establish criteria for the permitting/licensing, inspection and enforcement of milk 

and milk product handling equipment and operations that govern all processes for milk intended 

for human consumption and for milk produced for processing and manufacturing products for 

human consumption. These include, but are not limited to, specifications for the design and 

construction of milk and milk product handling equipment, equipment sanitation and 

maintenance procedures, temperature controls, and pasteurization standards. PMO and USDA 

Recommended Requirements also require inspections of the dairy farms or milk processing 

plants by the state-designated regulatory agency prior to issuing a permit or license, and routine 

inspections thereafter (for example, at dairy farms covered by PMO at least once every six 

months) by a state designated regulatory agency. Inspections at these facilities encompass 

those elements associated with the milk and milk product operation, including the milk and milk 

product containers, and associated piping and appurtenances. Violations of the permitting or 

licensing requirements may result in the suspension or revocation of the facility’s operating 

permit or license. 

Many kinds of harmful bacteria can grow rapidly in milk and milk products, therefore they are 

generally stored and handled differently than other oils to prevent spoilage. The sanitation 

measures required by PMO and USDA Recommended Requirements to suppress harmful 
30

bacteria, such as ensuring that milk and milk products are not exposed to container corrosion or 

that the container does not have leaks, may also serve to reduce the likelihood of an unintended 

discharge. Milk is quickly refrigerated (i.e., within hours) after milking. PMO and USDA 

Recommended Requirements also require that milk and milk product containers are frequently 

emptied, cleaned, and sanitized and that records of such events be maintained. Such frequent 

cleaning of the containers suggests that any leaks or deterioration of container integrity would 

be quickly noticed. EPA believes these unique handling parameters although not primarily 

intended for oil spill prevention, control and countermeasure purposes, would nonetheless 

adequately address the prevention of oil discharges into the environment. 
31

Chapter 6: Small Entity Impacts, Executive Orders, and Other Required Analyses

The purpose of this report is to present the final amendment and to analyze the respective costs 

and benefits. In addition to these analyses, several other types of impacts are important to 

consider in evaluating the effects of a regulation. This chapter presents analyses of whether 

this final amendment to the SPCC rule portion of the Oil Pollution Prevention regulations impact 

the financial condition of small entities, as required by the Regulatory Flexibility Act (RFA)31 and 

Small Business Regulatory Enforcement Fairness Act (SBREFA).32 It also responds to 

Executive Order 13132–Federalism33; Executive Order 13175–Consultation and Coordination 

With Indian Tribal Governments34; Executive Order 13045–Protection of Children From 

Environmental Health & Safety Risks35; Executive Order 13211–Actions That Significantly Affect 

Energy Supply, Distribution, or Use36; National Technology Transfer and Advancement Act; and 

the Paperwork Reduction Act (PRA).37

6.1 Regulatory Flexibility Act and Small Business Regulatory Enforcement Fairness Act

The Regulatory Flexibility Act generally requires an agency to prepare a regulatory flexibility 

analysis of any rule subject to notice and comment rulemaking requirements under the 

Administrative Procedure Act or any other statute unless the agency certifies that the rule would

not have a significant economic impact on a substantial number of small entities. Small entities 

include small businesses, small organizations, and small governmental jurisdictions. 

For purposes of assessing the impacts of this final rule on small entities, a small entity is defined 

as: (1) a small business as defined in the U.S. Small Business Administration (SBA)’s 

regulations at 13 CFR 121.201; (2) a small governmental jurisdiction that is a government of a 

city, county, town, school district or special district with a population of less than 50,000; and (3) 

a small organization that is any not-for-profit enterprise that is independently owned and 

operated and is not dominant in its field.

After considering the economic impacts of this final rule on small entities, the Agency certifies 

that this action would not have a significant economic impact on a substantial number of small 

entities. In determining whether a rule has a significant economic impact on a substantial 

number of small entities, the impact of concern is any significant, adverse economic impact on 

small entities, since the primary purpose of the regulatory flexibility analyses is to identify and 

address regulatory alternatives “which minimize any significant economic impact of the 

proposed rule on small entities” (5 U.S.C. 603 and 604). Thus, an agency may certify that a rule 

would not have a significant economic impact on a substantial number of small entities if the 

 

31 5 U.S.C. Sec. 603; 5 U.S.C. Sec. 604.

32 13 CFR part 121.

33 64 FR 43255, August 10, 1999.

34 65 FR 67249, November 9, 2000.

35 62 FR 19885; April 23, 1997.

36 66 FR 28355, May 22, 2001.

37 44 U.S.C. Sec. 3501.
32

rule relieves regulatory burden, or otherwise has a positive economic effect on all of the small 

entities subject to the rule. 

Under this final rule, EPA is exempting from SPCC rule requirements milk and milk product 

containers, associated piping and appurtenances because they are constructed according to the 

current applicable 3-A Sanitary Standards, and are subject to the current applicable Grade “A” 

PMO, USDA Recommended Requirements for Milk for Manufacturing Purposes and its 

Production and Processing, or an equivalent state dairy requirement. Overall, EPA estimates 

that this final action will reduce annual compliance costs by approximately $146 million for 

owners and operators of affected facilities. Total costs were annualized over a 10-year period 

using a 7 percent discount rate. To derive this savings estimate, EPA first estimated the 

number of dairy farms and milk and milk product processing facilities that would be affected 

each year (2010-2019) by the final rule. EPA next analyzed the expected milk and fuel oil 

storage capacity of dairy farms with varying numbers of cattle based on daily production rate per 

cow, the storage requirements for milk, and milk products and conversations with industry 

representatives. EPA also estimated the milk/milk product and fuel oil storage capacity of milk 

and milk product processing facilities, and estimated the cost savings associated with the 

exemption for milk/milk product storage containers at both dairy farms and milk processing 

facilities. These savings include secondary containment costs, cost savings from preparing and 

maintaining an SPCC Plan for a smaller facility, and, for qualified facilities, preparing only a Plan 

template and saving PE certification costs. A certain number of dairy farms are expected to 

become exempt from the SPCC regulations as a result of the amendments. 

EPA concludes that this final rule will relieve regulatory burden for small entities and certifies

that this action will not have a significant economic impact on a substantial number of small 

entities. EPA requested comment on potential impacts on small entities, but received no

comments specific to small entities.

6.2 Executive Order 13132–Federalism

Executive Order 13132, entitled “Federalism” (64 FR 43255, August 10, 1999), requires EPA to 

develop an accountable process to ensure “meaningful and timely input by State and local 

officials in the development of regulatory policies that have federalism implications.” “Policies 

that have federalism implications” is defined in the Executive Order to include regulations that 

have “substantial direct effects on the States, on the relationship between the national 

government and the States, or on the distribution of power and responsibilities among the

various levels of government.”

This final rule does not have federalism implications. It would not have substantial direct effects 

on the States, on the relationship between the national government and the States, or on the 

distribution of power and responsibilities among the various levels of government, as specified 

in Executive Order 13132. Under the Clean Water Act (CWA) section 311(o), States may 

impose additional requirements, including more stringent requirements, relating to the 

prevention of oil discharges to navigable waters or adjoining shorelines. EPA recognizes that 

some States have more stringent requirements (56 FR 54612, October 22, 1991). This final rule 
33

would not preempt State law or regulations. Thus, Executive Order 13132 does not apply to this 

final rule.

6.3 Executive Order 13175–Consultation and Coordination with Indian Tribal 

Governments

This action does not have tribal implications, as specified in Executive Order 13175 (65 FR 

67249, November 9, 2000). This final rule will not significantly or uniquely affect communities of 

Indian tribal governments. Thus, Executive Order 13175 does not apply to this final rule. EPA 

specifically solicited additional comment on this final action from tribal officials, but none was 

received.

6.4 Executive Order 13045–Protection of Children from Environmental Health & Safety 

Risks

EPA interprets Executive Order 13045 as applying only to those regulatory actions that are 

based on health or safety risks, such that the analysis required under section 5-501 of the Order 

has the potential to influence the regulation. This final rule is not subject to Executive Order 

13045 because it does not establish an environmental standard intended to mitigate health or 

safety risks.

6.5 Executive Order 13211–Actions that Significantly Affect Energy Supply, 

Distribution, or Use

This action is not a “significant energy action” as defined in Executive Order 13211 (66 FR 

18355 (May 22, 2001)), because it is not likely to have a significant adverse effect on the 

supply, distribution, or use of energy. The overall effect of the final rule is to decrease the 

regulatory burden on certain facility owners or operators subject to its provisions.

6.6 National Technology Transfer and Advancement Act

Section 12(d) of the National Technology Transfer and Advancement Act of 1995 (“NTTAA”), 

Public Law No. 104-113 (15 U.S.C. 272 note) directs EPA to use voluntary consensus 

standards in its regulatory activities unless to do so would be inconsistent with applicable law or 

otherwise impractical. Voluntary consensus standards are technical standards (e.g., materials 

specifications, test methods, sampling procedures, and business practices) that are developed 

or adopted by voluntary consensus standards bodies. NTTAA directs EPA to provide Congress, 

through OMB, explanations when the Agency decides not to use available and applicable 

voluntary consensus standards. 

The owner or operator of a facility subject to the SPCC rule has the flexibility to consider 

applicable industry standards in the development of an SPCC Plan, in accordance with good 

engineering practice. EPA solicited comments on this aspect of the rulemaking and, 

specifically, invited the public to identify potentially- applicable voluntary consensus standards 

and to explain why such standards should be used in this regulation. The single comment 

submitted agreed with the use of the 3-A Sanitary Standards and the PMO model code as a 

basis for exempting milk and milk product containers, associated piping and appurtenances 
34

from the SPCC requirements. However, this rulemaking does not involve technical standards, 

as it does not set or incorporate by reference any one specific technical standard. Therefore, the 

NTTAA does not apply.

6.7 Paperwork Reduction Act

This final action does not impose any new information collection burden. The final rule 

amendment exempts from the SPCC rule milk and milk product containers, associated piping 

and appurtenances. The Office of Management and Budget (OMB) has previously approved 

the information collection requirements contained in the existing regulations, 40 CFR part 112, 

under the provisions of the Paperwork Reduction Act, 44 U.S.C. 3501 et seq. Burden is defined 

at 5 CFR 1320.3(b).

An Agency may not conduct or sponsor, and a person is not required to respond to, a collection 

of information unless it displays a currently valid OMB control number. The OMB control 

numbers for EPA’s regulations in 40 CFR are listed in 40 CFR part 9. 

6.8 Executive Order 12898: Federal Actions to Address Environmental Justice in 

Minority Populations and Low-Income Populations

Executive Order (EO) 12898 (59 FR 7629 (February 16, 1994)) establishes federal executive 

policy on environmental justice. Its main provision directs federal agencies, to the greatest 

extent practicable and permitted by law, to make environmental justice part of their mission by 

identifying and addressing, as appropriate, disproportionately high and adverse human health or 

environmental effects of their programs, policies, and activities on minority populations and lowincome populations in the United States. 

EPA has determined that this final rule will not have disproportionately high and adverse human 

health or environmental effects on minority or low-income populations because it does not affect 

the level of protection provided to human health or the environment. 
35

Chapter 7: Key Assumptions and Limitations 

According to Executive Orders 12866 and 13563, agencies are required to assess all costs and 

benefits of regulatory activities, including quantitative and qualitative measures. The EO also 

requires assessment of all benefits and costs including, but not limited to, those related to the 

environment, public health and safety, distributive impacts, and issues of equity. 

This regulatory impact analysis estimated the reductions in compliance costs resulting from the

final amendment to the SPCC rule. The Agency also considered whether the streamlined 

requirements in the final rule might increase the threat of discharges, with adverse 

consequences for the environment, human health, and welfare. EPA believes that the rule 

amendment protects the environment and, at the same time, provides the opportunity for 

regulated facilities to reduce the cost of SPCC compliance. 

Many of the assumptions as well as the estimates of unit cost savings and the number of 

affected facilities presented in this RIA are inherently uncertain. EPA made the best use of the 

available data to make informed decisions regarding the analysis. Major limitations of the 

analysis are described in this chapter. 

7.1 General Limitations and Assumptions

Estimated Number of Facilities

One of the main limitations of the regulatory analysis is EPA’s lack of data on the milk and milk 

product manufacturing facilities regulated under the SPCC program. SPCC provisions do not 

include a notification requirement, and, with certain exceptions, regulated entities do not need to 

submit any information to EPA. Without conducting a statistically valid survey, EPA is limited to 

data already collected by state or federal agencies or by proprietary sources. Such data are 

collected for diverse purposes and are not ideal for identifying SPCC-regulated facilities, as the 

data do not normally provide information on smaller storage tanks or non-petroleum oil. 

Therefore, evaluating regulatory changes involves some uncertainties because the collected 

data often omit portions of the regulated universe or lack sufficient detail to ascertain the 

impacts of changes in certain requirements. Additional uncertainty is introduced in the estimate 

for the number of SPCC-regulated facilities because of lack of information on how owners or 

operators would use the flexibility to define the facility boundaries for contiguous and noncontiguous parcels, i.e., consider buildings, properties, parcels, leases, structures, installations, 

pipes, or pipelines as separate facilities.

Estimated Cost of Compliance

Compliance costs incurred by owners or operators of facilities in the baseline depend not only 

on the volume of oil stored and handled, but also on the types of oil at a site, the number of 

tanks (and their volume), and the locations of the tanks across the site. Given the wide range of

facility sizes affected by the SPCC rule—as well as geographical and climatic conditions that 

affect a facility’s configuration and operation patterns—a realistic baseline against which 

regulatory changes are measured cannot be reliably determined. Therefore, uncertainty is 
36

involved in estimating the changes in compliance costs that could occur under the final 

regulatory actions.

The cost estimates used in this regulatory analysis are based on a detailed analysis by one 

professional engineering firm. The data provided by the firm represent information based on the 

experience of the Professional Engineers (PEs) employed by the firm, and may not be fully 

representative of costs faced by facilities with different characteristics, so there is uncertainty 

when they are extrapolated to the universe of affected entities. In addition, the PEs were 

hesitant to provide “typical” costs when the costs of compliance depend significantly on sitespecific factors, and emphasized that the cost estimates are illustrative. Ideally, a regulatory 

analysis would explicitly account for such variability in costs. However, in this analysis, EPA was 

unable to differentiate compliance costs due to the lack of information on site characteristics of 

the entities affected by the final amendment to the SPCC rule. The PE firm provided average 

compliance costs within discrete categories for oil storage capacity at SPCC regulated facilities. 

Under ideal conditions, costs curves would be developed to precisely conduct engineering costs 

analysis. The data limitations do not provide this opportunity to develop precise engineering cost 

curves and the Agency is considering how to develop improved data and compliance cost 

analysis.

It is important to note that since certain SPCC requirements may be similar in nature to those 

imposed by state regulations and facility owner/operators of many industries may follow specific 

industry standards, compliance activities and their associated costs cannot be fully attributed to 

the SPCC rule. Since regulations vary widely across states and industries, there is no single 

adjustment factor that could be developed to address this issue for the universe of regulated 

facilities. However, due to the lack of data on the extent to which facilities adopt industry 

standards, in this analysis the Agency estimated the cost savings associated with the SPCC 

requirements without accounting for possible overlap with industry standards. EPA did take into 

account requirements imposed by state regulations that are similar to the SPCC requirements. 

As a result, the estimated compliance cost savings are likely to present an overestimate of the 

costs attributed to the SPCC rule. For details of the state overlap analysis, refer to Section 5.4 

of the Regulatory Impact Analysis for 2008 SPCC Rule.38

7.2 Key Assumptions

EPA made four key assumptions in the analysis. First, the Agency assumed that cost 

minimization behavior applied to all owners or operators of facilities that qualify for reduced 

regulatory requirements, whereby all those affected would seek burden relief. Second, EPA 

assumed that owners or operators of existing SPCC-regulated facilities would forego 

compliance activities offered as alternatives to activities that required one-time initial 

investments because they would have already incurred the one-time cost. Third, EPA assumed 

that compliance is nationally consistent despite variability in state regulations, political climate, 

and the distribution of affected facilities. Fourth, in accordance with EPA’s guidelines to prepare 

 

38 U.S. Environmental Protection Agency (EPA). November 2008. Regulatory Impact Analysis for the Final 

Amendments to the Oil Pollution Prevention Regulations (40 CFR PART 112).
37

economic analysis EPA assumed that all existing owners or operators of facilities are in 

complete compliance with the 2008 SPCC rule.39 It is important to note that insofar as certain 

owners or operators of facilities are not in compliance with the 2008 rule because of the 

compliance date extension, this assumption may imply that cost savings are an underestimate. 

If facilities are not in compliance with the 2008 rule because of the compliance date extension, 

these facilities would in fact incur cost savings implying that the cost savings are an 

underestimate. EPA did not account for compliance date extension when assuming full 

compliance with the 2008 SPCC rule. Furthermore, since the compliance dates were extended 

on several occasions it is unclear how many facilities may have come into compliance before 

new extension dates were announced.

 

39 U.S. Environmental Protection Agency (EPA). September 2000. “Guidelines for Preparing Economic Analyses.”
38

Chapter 8: Conclusions

EPA is finalizing an exemption for milk and milk product containers, associated piping and 

appurtenances because they are typically subject to a combination of 3-A Sanitary Standards

with either PMO or USDA requirements or state equivalent dairy regulations EPA estimated that 

dairy farms and milk product manufacturing facilities would incur average annualized savings of 

about $146 million. The Agency also considered an option of no action that would result in no 

cost savings. EPA believes that this final rule amendment protects the environment and, at the

same time, provides the opportunity for regulated facilities to reduce the cost of SPCC 

compliance.
39

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American Industry Classification System Codes,” March 11, 2008. Available at: 

http://www.sba.gov/idc/groups/public/documents/sba_homepage/serv_sstd_tablepdf.pdf