U.S. GOVERNMENT PRINTING OFFICE

61–131 WASHINGTON : 1999

EPA’S EXPANSION OF 112(r) OF THE 1990 CLEAN

AIR ACT AMENDMENTS TO INCLUDE PROPANE

HEARING

BEFORE THE

COMMITTEE ON SMALL BUSINESS

HOUSE OF REPRESENTATIVES

ONE HUNDRED SIXTH CONGRESS

FIRST SESSION

WASHINGTON, DC, JULY 29, 1999

Serial No. 106–26

Printed for the use of the Committee on Small Business

(

(II)

COMMITTEE ON SMALL BUSINESS

JAMES M. TALENT, Missouri, Chairman

LARRY COMBEST, Texas

JOEL HEFLEY, Colorado

DONALD A. MANZULLO, Illinois

ROSCOE G. BARTLETT, Maryland

FRANK A. LOBIONDO, New Jersey

SUE W. KELLY, New York

STEVEN J. CHABOT, Ohio

PHIL ENGLISH, Pennsylvania

DAVID M. MCINTOSH, Indiana

RICK HILL, Montana

JOSEPH R. PITTS, Pennsylvania

JOHN E. SWEENEY, New York

PATRICK J. TOOMEY, Pennsylvania

JIM DEMINT, South Carolina

EDWARD PEASE, Indiana

JOHN THUNE, South Dakota

MARY BONO, California

NYDIA M. VELA ́ZQUEZ, New York

JUANITA MILLENDER-MCDONALD,

California

DANNY K. DAVIS, Illinois

CAROLYN MCCARTHY, New York

BILL PASCRELL, New Jersey

RUBE ́N HINOJOSA, Texas

DONNA M. CHRISTIAN-CHRISTENSEN,

Virgin Islands

ROBERT A. BRADY, Pennsylvania

TOM UDALL, New Mexico

DENNIS MOORE, Kansas

STEPHANIE TUBBS JONES, Ohio

CHARLES A. GONZALEZ, Texas

DAVID D. PHELPS, Illnois

GRACE F. NAPOLITANO, California

BRIAN BAIRD, Washington

MARK UDALL, Colorado

SHELLEY BERKLEY, Nevada

HARRY KATRICHIS, Chief Counsel

MICHAEL DAY, Minority Staff Director

(III)

C O N T E N T S

Page

Hearing held on July 29, 1999 ............................................................................... 1

WITNESSES

Makris, Jim Director, Chemical Emergency Preparedness & Prevention Office, U.S. Environmental Protection Agency ...................................................... 4

Blunt, Roy, a Representative in Congress from the State of Missouri ............... 22

Densmore, Mary and John, Geldbach Petroleum Co ............................................ 24

Lindsey, Paul, CEO, All Star Gas Company ......................................................... 26

APPENDIX

Opening statements:

Talent, Hon. James M ...................................................................................... 33

Vela ́zquez, Hon. Nydia ..................................................................................... 37

Sweeney, Hon. John E ..................................................................................... 38

Prepared statements:

Makris, Jim ....................................................................................................... 39

Blunt, Roy ......................................................................................................... 50

Densmore, Mary and John ............................................................................... 57

Lindsey, Paul .................................................................................................... 60

(1)

THE ENVIRONMENTAL PROTECTION AGENCY’S EXPANSION OF 112(r) OF THE 1990

CLEAN AIR ACT AMENDMENTS TO INCLUDE

PROPANE

THURSDAY, JULY 29, 1999

HOUSE OF REPRESENTATIVES,

COMMITTEE ON SMALL BUSINESS,

Washington, DC.

The Committee met, pursuant to notice, at 10:47 a.m., in room

2360, Rayburn House Office Building, Hon. James M. Talent

(Chairman of the Committee) presiding.

Chairman TALENT. The hearing will come to order. Good morning. Today, the Committee will examine how the Environmental

Protection Agency’s inclusion of propane within the Clean Air Act

Amendment of 1990 impacts small businesses. The Committee will

also focus on Congressman Blunt’s bill, H.R. 1301, and S. 880,

which the Senate and House passed, which remove propane from

the list of covered chemicals.

In December 1984, a storage tank in Bhopal, India, accidentally

released a toxic chemical into the atmosphere. This accidental release killed over 3,000 people and injured more than 200,000 individuals. In response, Congress amended the Clean Air Act to require the EPA to promulgate a ‘‘list of 100 substances which in the

case of accidental release are known to cause or may reasonably be

anticipated to cause death, injury, or serious adverse effects to

human health or the environment.’’ Congress required EPA to include 16 chemicals on the list.

These chemicals all share a similar characteristic—they are all

toxic. The intent to include flammable, but non-toxic, materials in

the regulated list is conspicuously absent from the legislative history. Recently, Senator Max Baucus, a conference committee member to the 1990 Clean Air Act Amendments, noted that, ‘‘Congress

did not intend that propane or flammables used as fuels would be

listed. Congress was focused on preventing major toxic catastrophes, such as occurred in Bhopal, not the type of accidents that

are covered by existing Federal or State fire safety or transportation laws.’’

Nevertheless, in 1993, the outgoing Bush administration EPA

proposed expansive regulations that brought flammables, including

propane, within Section 112(r) of the 1990 amendments, and the

EPA has continued its attempt to promulgate those regulations for

the last six years, at least up until very recently.

2

It is uncontested that propane is not toxic or poisonous, while all

the chemicals Congress listed are toxic. In fact, the EPA has commented that methyl chloride, one of the Congressionally mandated

listed chemicals, ‘‘is extremely toxic. Acute exposure to high concentrations of methyl chloride in humans has caused severe neurological effects, including convulsions, coma, and death. Methyl chloride has also caused effects on the heart rate, blood pressure, liver,

and kidney.’’ Propane, however, presents no such threat. In fact, as

Mr. Blunt’s bill recognizes and S. 880 recognized, the Clean Air Act

and the Energy Policy Act of 1992 list propane as a clean alternative fuel. In other words, it is a fuel that is favored under our

other environmental laws.

All of this would be of little concern if the burden caused by the

proposed regulation was a minor one. However, the EPA regulation

as originally drafted would have covered any business that stored

more than 10,000 pounds or 2,300 gallons of propane, which would

have included the average family farmer, greenhouse, or restaurant

using propane, as well as small propane dealers. These businesses

would have been required, at a minimum, to develop a worst-case

scenario impact of a propane explosion and a plan for dealing with

that scenario and to bring equipment and personnel up to EPA

standards for executing such a plan. The draft risk management

program guidance for propane storage facilities, I hold in my hand.

The Committee can take a look at the size of it.

The use of propane is already regulated by OSHA, the Department of Transportation, and every State, as well as local fire departments. The additional EPA regulation would have given propane users the perverse incentive to do one of two things, either

switch to an environmentally unfriendly fuel, but unregulated fuel,

like fuel oil, or store less than the threshold 10,000 pounds on site,

which would have required more frequent deliveries of propane to

replenish the smaller amount that was being stored and, therefore,

more transportation of flammable fuels on the highways.

As a result of these obvious problems with the regulation, after

six years and under extreme Congressional pressure, EPA raised

the threshold for application of its regulation from 10,000 pounds

to 67,000 pounds, thus exempting most small business end users.

This welcome change, however, may be too late to save the regulation, as both the House and the Senate have unanimously passed

bills clearly removing propane from the list of covered chemicals.

That bill is in conference and, of course, we expect it will come out

of conference and be passed.

I appreciate the EPA’s responsiveness to Congressional inquiries

and to this Committee. I participated in informal meetings with the

EPA in which they did make an effort to respond to the concerns

of small business people and, I think, did so in a cordial and responsive fashion and I am grateful for that. That has not always

been the case in dealing with agencies.

I have to say, however, that this whole regulation is another example of the kind of wasted time and effort that is the least damage done by regulations which would hurt small businesses without

accomplishing anything. I want to repeat what I have often said in

this Committee. The whole problem can be avoided if agencies will

take the procedures mandated by SBREFA to heart, if they will lisVerDate 20-MAR-2000 14:41 Apr 13, 2000 Jkt 010199 PO 00000 Frm 00005 Fmt 6633 Sfmt 6633 E:\HEARINGS\61131 pfrm02 PsN: 61131
3

ten to the small business stakeholders early in the process, credit

them with being genuine and having some understanding of the

impact on their small business, and then try to be responsive to

concerns expressed through that process.

Had the agency done that four or five years ago and simply

raised the threshold, the regulation would probably be law now

whether it is necessary or not. I think it probably would be. I think

it is the unanimous judgment of both bodies that propane is adequately regulated by other regulatory schemes and probably does

not need to be included here. But it is a shame that we have spent

six years and it looks like we are going to come up with nothing.

I am happy now to recognize my friend, the gentlelady from New

York.

[Mr. Talent’s statement may be found in the appendix.]

Ms. VELAZQUEZ. Good morning and thank you, Mr. Chairman, for

holding this hearing today. This hearing is a continuation of this

Committee’s ongoing review of government regulations and its effects on small businesses. Let us keep that in mind as we examine

how EPA’s inclusion of propane within the Clean Air Act Amendments and associated regulations affects small businesses. It is an

issue well worth looking at and reviewing.

Mr. Chairman, what we have before us are small businesses that

may have fallen victim to the law of unintended consequences, consequences that small businesses have had to live with for some

time now and a solution is long overdue. This issue came into light

over a decade ago when a disastrous escape of toxic gases killed

and injured thousands of Indians. Unfortunately, it took a tragedy

to look for better management of toxic substances.

However, in response to this disaster and bipartisan Congressional legislation, President Bush on his last day in office proposed

new regulations. I believe that these regulations, while written to

protect the public, disregarded how small businesses will be affected, and that is at odds with our purpose here on the Small

Business Committee and in Congress. We need to look at the challenges that entrepreneurs face and make it easier, not harder, for

them to succeed. I believe that these regulations, while drafted in

good faith, have hurt small businesses, but they have also shown

all of us how important and necessary the SBREFA process is.

EPA was not always a part of the SBREFA process. As a matter

of fact, I would like to remind my colleagues that it was not until

1996 that this Committee expanded SBREFA to require the EPA

to sit down with small businesses on this rule. Had there been a

quicker response to small business needs, we might not be here

today. But we are, and we are fortunate to have Congressman

Blunt with us. He has introduced legislation to protect small businesses from these indiscriminatory rules. His legislation will exempt propane from EPA regulations, thereby protecting those small

businesses.

I thank the Chair for holding this hearing and I look forward to

hearing from today’s witnesses. Thank you, Mr. Chairman.

[Ms. Velazquez’ statement may be found in the appendix.]

Chairman TALENT. I thank the gentlelady.

Mr. Blunt is going to be testifying. The markup ran longer than

I thought, so I released him to go to another markup or meeting

4

he had and he will be coming back in a few minutes. We will just

put him on the second panel, which will actually save the time of

the Committee anyway.

The first witness is Mr. Jim Makris, who is the Director of the

Chemical Emergency Preparedness and Prevention Office in the

Office of Solid Waste and Emergency Response of the U.S. Environmental Protection Agency.

Mr. Makris, I want to welcome you, and I do want to say again,

from my perspective, that when I dealt with your people in your

office, they were always very cordial and very responsive. I am

grateful for that and I want to compliment the agency on that. Obviously, I disagree with the amount of time it took to adjust the

regulation, but your people were always very good and I want to

compliment you on that. Welcome to the Committee.

STATEMENT OF JAMES MAKRIS, DIRECTOR, CHEMICAL EMERGENCY PREPAREDNESS AND PREVENTION OFFICE, OFFICE

OF SOLID WASTE AND EMERGENCY RESPONSE, UNITED

STATES ENVIRONMENTAL PROTECTION AGENCY

Mr. MAKRIS. I hope I can live up to the reputation that my staff

has already established with you. I do remember the meeting that

we had in Congressman Emerson’s office where we set up the

meeting that we later held in the Midwest. I think that it is an important point, and I think that, as you recall, during that discussion, the law of unintended consequences did emerge. There were

some issues that came to much of our surprise.

My name is Jim Makris and I direct the Chemical Emergency

Preparedness Intervention Office. My responsibilities include the

implementation of the Accidental Release Provisions of Section 112,

implementation of several sections of the Community Right to

Know Act of 1986, SARA Title 3. I also serve, incidentally, as

EPA’s emergency coordinator for issues such as national security

and counterterrorism.

I am accompanied today principally by my Director of Program

Development, David Speights, and also behind me is Senior Chemical Engineer Craig Matthiessen.

I am really pleased to be able to talk about the importance of

chemical safety, accident prevention, and community right to know.

I ask that my written testimony be included in the record and I

will summarize and try to tell a fairly short story that takes us to

where we are.

The Chairman mentioned the issue of the world’s largest chemical accident in Bhopal, India, which led quite promptly to the creation of a series of activities both within the agency and within the

chemical industry to finally recognize the right of people to know

that they are exposed to risk. It is pretty hard to recognize that for

generations in this nation, there was no specific program geared to

providing people, the public, with data on risks that may be confronting them. But SARA Title 3, the Community Right to Know

Act of 1986, modified that. It immediately said that companies that

had one of a list of 400-and-some-odd hazardous substances or had

inventories of hazardous substances or had inventories of a substantial nature of substances that might be dangerous in the workplace had, indeed, to provide this information to the general public.

5

It is really shocking that until 1986, the entire reliance of information on risk in manufacturing facilities was either dependent

upon disclosure by the company itself or protection under the labor

laws, for worker protection under OSHA. It is important to remember, Bhopal did not injure or kill workers. Bhopal went outside the

fence line and went into the community.

So it was quite a different situation, and, frankly, it changed the

paradigm of how we all thought about risks. Originally, we felt if

we protected the worker with good workplace safety laws and good

process safety management, we, indeed, were protecting the community, but Bhopal modified that.

A few years after the passage of SARA Title 3, the Congress took

another major step with Section 112, the Clean Air Act, where it

recognized the need for facilities to develop or improve their planning or accident prevention programs to reduce the risk of accidents. It also again recognized that citizens should have access to

information about hazards that these facilities presented. It assured that the public would have much more information on risk

with extensive details on the company’s, large and small, obligation

to deal with process safety. It provided accident history and information on contingency planning.

Chairman TALENT. Go ahead. This happens all the time here.

Mr. MAKRIS. I do not want to get in your way of doing other business.

EPA finally issued final regulations that dealt with the risk management planning. We followed the processes that were required on

submission to the Congress in advance. Keep in mind that throughout this effort, we were dealing with the issue of risk. Whether it

was a large company or a small company, if the issue was a chemical that could cause harm in accordance with the definition of the

law, we felt that we had an obligation to put it on the table and

let the community understand that the risk was there and cause

the company to take such steps as were necessary to assure that

the populations were protected.

It is the very people in these communities that have the jobs,

that work in the facilities, that are also at risk, and we felt that

the intention of 112(r), and the legislative history supports it, was

to provide the broadest amount of information on the listed chemicals to the community and to cause companies to introspect on

their safety practices.

It was not a casual determination. As you know, one of the most

costly and devastating vapor cloud explosions in the United States

was at the Phillips Petroleum Plant in Pasadena in 1989, where 23

deaths occurred, the plant was destroyed, and business interruption costs were in excess of $700 million. That was an explosion of

ethylene and isobutane, both of which have flammable characteristics similar to propane.

The United States has experienced devastating accidents due to

propane, and, of course, the second largest accident in industrial

chemical industry history was the event in Mexico City, where 650

people died as a result of an explosion and a fire at a propane terminal. Six-hundred-and-fifty people died and 6,400 were injured.

In the United States, on New Year’s Eve in 1998, an accidental

propane release and fire near Des Moines, Iowa, resulted in the

6

evacuation of 10,000 people. Two firefighters were killed. At an Albert City, Iowa, poultry farm in 1998, a propane storage tank exploded, and seven other major accidents occurred during 1998 involving four deaths, 22 injuries, and thousands of dollars of property damage.

We listened. We had thousands of letters from the propane industry asking us to reconsider. We listened carefully, and eventually, after we got some further insight and recognized that perhaps

there was an unintended consequence, we tried to draw a line between the facilities that warranted Federal regulation and those

that did not. We issued a six-month administrative stay. The stay

applied to any process that did not contain more than 67,000

pounds of the fuel, which is the maximum amount you can hold in

an 18,000-gallon tank, does not manufacture flammable hydrocarbons, does not contain more than a threshold quantity of another non-fuel-related substance, is not connected or collocated. We

also issued a notice proposing to revise the RMP rule to exempt

processes that met that criteria.

In our effort to lessen the burden for the small and medium-sized

enterprise, we worked with the State of Delaware to devise guidance, and you showed guidance that was thicker than the one I am

going to show. It is a little narrower. We also developed some automated methods of completing the RMP for facilities that were burdened by this issue.

To ease the burden, we prepared model plans for a number of industrial sectors, including large propane distributors, users, and

small propane users. The models make compliance with risk management program rules relatively easy. They recognize the safe

practices embodied in existing industry standards, such as NFPA

58, and encouraged propane facilities to take credit for those practices.

To the extent that companies were in full compliance with NFPA

58 in its latest form, with the exception of providing information

to the public and publishing accident history, the completion of an

RMP would not have been a very substantial burden. The allegations go from $1 billion to the industry. Our records say it is more

like a couple hundred dollars per company, unless there were deficiencies that in the inspection of the facility they needed to fix, in

which case it would cost more.

But to fundamentally complete the obligations of the RMP for a

small user would not have been the substantial burden that some

have indicated that it was, and we went the extra mile to provide

consulting services, assistance, meetings in the field. We have

asked lots of people to come in and provide advice and guidance to

them and to try to, in many ways, make it easier for a small and

medium-sized enterprise using propane or other flammable fuels to

comply.

We began the rule like everything at EPA. One size fits all. We

immediately changed to a phased situation, where if somebody presented a small amount of propane that did not create a risk, their

activity was relatively small. If you had a huge production facility

that was manufacturing substantial amounts of propane, obviously,

that was a large risk. That is what happened in Mexico City, a

large propane producer and distributor. Six-hundred-and-fifty peoVerDate 20-MAR-2000 14:41 Apr 13, 2000 Jkt 010199 PO 00000 Frm 00009 Fmt 6633 Sfmt 6602 E:\HEARINGS\61131 pfrm02 PsN: 61131
7

ple died. We tried to scale it so that we would have a much heavier

burden on that larger organization than the smaller organization.

I think that risk management programs that are implemented by

facilities will improve safety in two ways. They will encourage facilities to identify and address the hazards posed by their handling

of flammable substances, and it will provide information to the

public about the potential risk of accidental releases and facilities’

efforts to prevent and mitigate any other releases.

From the beginning of this program following Bhopal, our emphasis has been almost Jeffersonian. Jefferson said, people are inherently capable of making proper judgments when they are properly informed. It was our view, I think it was the view of the Congress as expressed in the SARA Title 3 EPCRA legislation and in

the 112 legislation, that the agency should not say what companies

specifically should do. The laws said and the agency implemented

a program which provided information to a public that might be affected by the possibility of an accident, an accident that could be

the release of a toxic or the release of a blevy or a vapor cloud explosion.

With those ideas in hand, providing this information to a public

allowed a dialogue to take place, keeping pressure on businesses

large and small to comply with what is regarded as safe practice.

We responded to small business concerns. We issued regulations

recognizing existing industry standards. We produced tailored and

detailed guidance, model plans, free RMP software, and working

with the small business community to ease the compliance concerns.

We believe the efforts have eased the reporting burden. Our goal

remains, has been, hopefully will continue to be to protect human

health and the environment by providing information to populations that might be affected by an accident that could be prevented through careful process safety practices. Thank you, Mr.

Chairman.

[Mr. Makris’ statement may be found in the appendix.]

Chairman TALENT. Thank you for your testimony.

We have got a vote on and I think it is probably better just to

recess, pending the vote. Mr. Makris, by the way, has put Thomas

Jefferson in play, so members who want to think of counter-Jeffersonian quotes have the recess in which to do it. We will come right

back and then get to the question period.

[Recess.]

Chairman TALENT. We will reconvene the hearing. I think I will

hold my questions for a couple of minutes and recognize the

gentlelady from New York for her questions.

Ms. VELAZQUEZ. Thank you, Mr. Chairman.

Mr. Makris, welcome to this Committee. I understand that these

regulations were promulgated prior to the effective date of the

small entity review process under SBREFA. My question to you is

if you were proceeding in this area today, do you believe that the

SBREFA process would have been appropriately invoked?

Mr. MAKRIS. Absolutely. We did follow the fundamental process

of REG FLEX, but we did not have an obligation under SBREFA.

We did send the bills up, though. We did send the regulations up.

8

Ms. VELAZQUEZ. Do you believe that the SBREFA process might

have helped in the formation of the regulations and the means

through which they would be implemented?

Mr. MAKRIS. We consulted with an awful lot of small business

entities as we went through this process. We had an advisory committee that included small business. We had a lot of national meetings and small businesses were invited to attend. There are several

actions that we took over the period of time involved in the development of this rule, including completely changing it from, as I

said earlier, a one-size-fits-all to trying to tailor it. I think we got

a lot of input. No doubt, the SBREFA process would have focused

specifically on a few of the unintended consequences.

Ms. VELAZQUEZ. Mr. Makris, I understand that a propane terminal explosion in Mexico City in 1994 was one of the events which

was cited as a reason for the United States to pay more attention

to hazardous substances and to preventing or alleviating the harm

they might cause. To your knowledge, did Congress take that event

into account in fashioning its approach to this manner?

Mr. MAKRIS. It was a very, very well publicized propane event

and I think the language of the law and then some of the legislative history, including the idea that ethylene oxide and vinyl chloride were included, suggests that people were concerned with

flammables. Clearly, even S. 880 does not take all flammables out.

It just takes the fuel flammables out. So the debate about why do

we have flammables is not even totally being addressed because

there are explosives and flammables which are not even being

touched by the S. 880 legislation.

Ms. VELAZQUEZ. Did EPA take that into account when including

propane among the substances to be covered by its regulations?

Mr. MAKRIS. I am sorry, would you repeat that?

Ms. VELAZQUEZ. Did EPA take that into account, that event in

Mexico City?

Mr. MAKRIS. It was pretty hard to ignore the second largest

chemical industrial accident in history. One of the concerns we

have, and, frankly, if there was anything that I could redo, it would

have been to avoid the possibility that large facilities having substantial amounts of propane might now become exempt as a result

of S. 880.

Ms. VELAZQUEZ. Does the NFPA have the same requirements as

EPA’s regulation? If not, what are the major differences?

Mr. MAKRIS. First, NFPA is largely not a maintenance standard.

It is a standard by which the propane systems are installed. It does

not deal with maintenance. It does not deal with regular reporting.

It does not have formal information to publics. And, I guess most

of all, there are several NFPA 58s. It sounds as if NFPA 58 is some

magical thing that is in place in States throughout the country. It

turns out that NFPA 58 is in various forms based on how various

State legislatures have inserted it. So there are several NFPA 58s.

And, in addition, as you may have noted from the Chemical Safety

Board’s review of a propane accident, there is pretty casual enforcement of NFPA 58 in a lot of jurisdictions.

Ms. VELAZQUEZ. In your testimony, you mentioned a propane accident in Iowa where two firefighters were killed. I understand that

the Chemical Safety Board has done a report on that accident in

9

which they cite low enforcement at the State level as a problem.

Would you care to comment?

Mr. MAKRIS. No, I think that is right. I think the CSB report

noted that the fire marshal did not detect the deficiencies in the

design and the installation, nor did they have a program to monitor

and to come back on a regular basis to see if the systems are being

maintained.

A lot of users, it is kind of like the way we use propane barbecues at home. You assume that the tank is intact, that the systems are right, that the fittings are working, and, therefore, there

is not going to be an explosion. But if you allow them to get rusty

or if you do not attach them correctly, then there is one, or if there

is a deficiency in the tank itself, you are going to possibly have an

accident.

For example, a few weeks ago, I had a propane tank for my barbecue and it was cross-threaded. So when I turned it on, not only

did the gas go into the barbecue but it also was coming out the

side. All of those things are very unlikely, but any of them could

occur, and, obviously, the larger amount of chemical or propane you

have, the more likely they are to have devastating consequences.

Ms. VELAZQUEZ. Why do you list propane on this regulation but

not other flammables, such as gasoline?

Mr. MAKRIS. Gasoline is one step lower in the NFPA standards.

We just took gasoline off the EPCRA list because we used to have

gasoline stations covered, and one of our efforts to help small business, for example, was to take gasoline stations off the obligation

to report under the Community Right to Know Act of 1986. Believe

it or not, we believe that most people knew that gas stations had

gas and it probably was not necessary for them to report in that

that was their situation.

However, when we were trying to deregulate gasoline from the

EPCRA rule, when you are trying to say gasoline stations have gas

and we do not need to have a report on it, some people came back

and said that there were disadvantages to deregulating it. One was

that it was not obvious that there were 24-hour contacts, who they

would call in case there was an accident at night. It was not clear

how much gasoline were at each of these stations. Some States argued that they were collecting revenues from the reports of gasoline stations. So there was a tremendous amount of resistance

when we decided that gasoline reporting under EPCRA was a burden to small business and worked with the Small Business Administration to take it off the EPCRA list.

Ms. VELAZQUEZ. Thank you, Mr. Chairman.

Chairman TALENT. Thank you. I will follow up a little bit on that

line. When I looked at the NFPA evaluation of propane, they give

it as a health hazard, which I think is their word for toxicity. They

give it a one on a scale of one to four. On flammability, they give

it a four, and reactivity, which in my lay person’s understanding

means can it join with some other substance and become something

poisonous, they gave it a zero. That is about your evaluation of propane, too, is it not?

Mr. MAKRIS. Yes, and if Mr. Matthiessen is nodding his head yes,

it is an even better one.

10

Chairman TALENT. Then when you look at natural gas, its health

hazard or is toxicity is one, like propane. Its flammability is four,

like propane, and its reactivity is zero, like propane. So you would

agree with that, too, right?

Mr. MAKRIS. Yes.

Chairman TALENT. And yet your regulation covers propane and

does not cover natural gas. You may want to look behind you.

Mr. MAKRIS. Yes. Methane is covered.

Chairman TALENT. Now, wait a minute. Methane and natural

gas are different, are they not?

Mr. MAKRIS. Craig?

Chairman TALENT. Why do you not just come on up and testify,

sir, if you want to, and just state your name for the record.

Mr. MATTHIESSEN. My name is Craig Matthiessen, EPA. Methane is natural gas, or natural gas is methane, predominately.

Chairman TALENT. This is a real fundamental misunderstanding,

because my understanding is that natural gas includes methane

but it also includes other substances, so that a natural gas storage

tank would not be covered under the regulation, is that correct?

Mr. MATTHIESSEN. No, that is not correct. A natural gas storage

tank would be covered because it is an NFPA four flammable on

that list. It includes predominately methane. It may also have propane and butane, ethane, all of which are listed substances under

the RMP rule.

Chairman TALENT. I have a Federal Register here which says,

explain, then, what this exemption is. EPA considers the transportation exemption to include storage fields for natural gas, where

gas taken from pipelines is stored during non-peak periods to be

returned to the pipelines when needed.

Mr. MATTHIESSEN. Right, because——

Chairman TALENT. For purposes of this regulation, this type of

storage is incident to transportation and, therefore, is not subject

to the RMP rule.

Mr. MATTHIESSEN. That is correct. In other words, naturally occurring hydrocarbon mixtures, the material that comes out of the

ground from exploration wells, for example, that is held and then

distributed interstate, is covered by the Department of Transportation and so we sought not to double-up on that. The transportation requirements, we are not subjecting facilities that are already covered by those transportation regulations to the RMP requirement.

Chairman TALENT. So the exemption covers the transportation of

natural gas but not the storage of it?

Mr. MATTHIESSEN. Well, if you are storing it for use other than

transportation, then you are covered.

Chairman TALENT. Okay.

Mr. MATTHIESSEN. So, for example, if you are a chemical facility

or a fuel distributorship and you have large amounts of natural

gas, propane, butane, common fuels, you are covered by the RMP.

Chairman TALENT. So a farmer who used natural gas instead of

propane would be covered by this regulation to the same extent as

if he was using propane?

Mr. MATTHIESSEN. That is correct, if he had more than the

threshold quantity.

11

Chairman TALENT. I will recognize Ms. Kelly.

Mrs. KELLY. Thank you, Mr. Chairman. I have a couple of questions here. On page three in your testimony, you estimate that

about 33,000 propane facilities nationwide would be affected by the

regulation, is that correct?

Mr. MATTHIESSEN. Yes, ma’am.

Mrs. KELLY. Just out of curiosity, I looked in the 19th Congressional District in New York. We have estimates there that there

are about 25,000 to 30,000 commercial and residential propane

users in my district. Now, if we have about 30,000 commercial people in my district and they are using it for agriculture and so on,

we also have a number of gas marketers that will have fairly large

tanks.

My concern is we also have some fairly large greenhouses. We

also have a situation where we are constantly losing energy and

people are beginning in residences, because I live in an area where

there are very large homes and there are a lot of outbuildings and

there are other golf courses and things like that and they are putting in very large propane tanks because then they run generators

off these tanks and they run their kitchens off these tanks and

they do not have to worry about power outages, which we do have.

I am thinking that this 33,000 figure may be very low and I just

would like to test that figure with you a little bit. Are you talking

about only those people that have tanks of, what——

Mr. MAKRIS. Ten thousand pounds or more.

Mrs. KELLY. Ten thousand or more?

Mr. MAKRIS. Ten thousand pounds or more.

Mrs. KELLY. What about joined tanks? What if somebody has a

tank, like a series of three tanks?

Mr. MAKRIS. Part of our effort to try to ease the burden on primarily users who might have had two or three under-10,000-pound

tanks connected, we put out a revision or a discussion and guidance on the separation distance. So if they were separated by an

amount that would not cause them to interact, they would be

counted as individual under-10,000-pound tanks.

Mrs. KELLY. So if there is some sort of, for want of a better use,

I am going to say a firewall, some kind of a way that they are

walled off from each other, they are individualized tanks and the

succession of tanks does not count as a unit, one unit, is that correct?

Mr. MAKRIS. Yes, when we began, but we moved, certainly after

Mr. Talent and others raised issues with us. It was one of the early

steps that we could take within our own authority to simply say

that separation distance assisted in easing the regulatory burden

for those who had multiple tanks of small size.

Mrs. KELLY. When you looked at this regulation, obviously, the

security risks were a problem. Are they still a problem? I am going

to ask this in a generalized way because I think we can get into

the specifics without having it public forum.

Mr. MAKRIS. Propane tanks usually contain propane. Certainly,

the small propane tanks, disclosure of that was not going to create

a major security risk different than what mischief makers might

have gone to anyway. In our judgment, we are very concerned with

the issue of terrorism and environmental crime and mischief makVerDate 20-MAR-2000 14:41 Apr 13, 2000 Jkt 010199 PO 00000 Frm 00014 Fmt 6633 Sfmt 6602 E:\HEARINGS\61131 pfrm02 PsN: 61131
12

ers and hoodlums, as the FBI calls them, who are anxious to do

harm to us all. I also have the counterterrorism responsibility in

EPA and so I live that side of the world most of the time, as well.

Mrs. KELLY. And have you built things into this that are comfortable? I mean, who in Congress knows what you have built in?

Is there any Congressional oversight that you have built in into the

security aspects of this?

Mr. MAKRIS. No. As a matter of fact, that was one of the issues

that we have been working under Presidential Directive Decision

No. 63, which is dealing both with cyber and physical security. As

you know, S. 880 does require that actions be taken—that a study

be done on the security of the facilities that are covered by this

rule. In addition, we have made it very clear to the chemical industry that security of their facility is consistent with their obligation

under general duty requirements of this law. It is also pretty clearly under their obligations under common law that they need to attend to the issue of security.

We have not laid down standards and there is no direct oversight. There have not been any efforts of direct oversight on our security action at chemical facilities to this time. Our concern is that

the companies have got to recognize that they are creating a risk,

and that is not only propane companies but that is big guys and

small guys, in the same way as if I have a—it is not a great story,

but if I have a swimming pool, I am obligated to build a fence to

keep people out of it. If I have a risky, hazardous substance, I need

to protect people from being able to get to it to do harm. Similarly,

I guess, if I have a dangerous dog, I have to build a fence to keep

him in, and I think, similarly, the chemical companies have an obligation, large and small, to protect their facilities.

Mrs. KELLY. Since you brought up the issue of small, the small

dealers, how many small businesses would fall into the regulated

category? What are we talking about here?

Mr. MAKRIS. I cannot give you the final answers, but I can tell

you, based on what we have got so far, as of this week, we have

14,250 facilities that have submitted RMPs, keeping in mind now

that we have told propane they do not have to submit. Sixteen-hundred-and-thirty-three facilities did report fuels. Of all of the facilities that came in, 10,637 out of the 13,445 would be regarded as

a small business. So it is a substantial number of small businesses

that are affected here, 79 percent of the database.

Mrs. KELLY. What did you calculate their cost is to comply with

the rule? What is your calculation on cost?

Mr. MAKRIS. A few hundred to a few thousand dollars.

Mrs. KELLY. A few hundred to a few thousand dollars?

Mr. MAKRIS. Yes.

Mrs. KELLY. Okay. Did you——

Mr. MAKRIS. That is assuming, if I may, and I made this comment earlier in my testimony and I will just restate it, if you do

not mind, a few hundred to a few thousand dollars, particularly if

you want to say the propane industry, with the facilities that are

already in compliance with NFPA and their only obligation would

have been to review their system, to check out the offsite consequences, be sure that there is no probability of a vapor cloud explosion or a release that would affect them, and there were no defiVerDate 20-MAR-2000 14:41 Apr 13, 2000 Jkt 010199 PO 00000 Frm 00015 Fmt 6633 Sfmt 6602 E:\HEARINGS\61131 pfrm02 PsN: 61131
13

ciencies in their systems that they would have to fix before they

could certify that they were safe. I mean, that is the big package.

Now, obviously, if any of these facilities have major failures in

safe practice, if they do not have adequate prevention measures as

has been established by the normal codes of practice of NFPA and

the chemical industry and the Center for Chemical Process Safety

and others, then they have got work to do and that is going to cost

a lot more money before the CEO or the owner puts his signature

on the piece of paper saying, ‘‘We are in compliance.’’ We are not

sure how much that might cost. We do know that, hearing from

large companies and small, they have said as a result of their activity under this program, they have improved their safety.

Mrs. KELLY. But you really have not kind of given me an idea

about what the cost of their documentation might be. In a small

business, the business owners themselves or somebody who works

as a secretary, somebody who works in the office is going to have

to document all this stuff. Did you figure that in as a part of the

cost?

Mr. MAKRIS. It is part of our economic analysis, but let me comment on what three propane industry consultants have told us,

that they charge propane facilities from $200 to $700 to complete

a program one RMP and up to a couple thousand for a program two

RMP. That is experts speaking to us. Our own input suggests that

that is about the range of time and our economic analysis talked

about how many hours we felt it would require. We gave them free

software. We gave them free guidance.

Mrs. KELLY. Wait a minute. Small business owners do not all

have computers.

Mr. MAKRIS. And if they did not have——

Mrs. KELLY. Free software does not help somebody who does not.

What have you done for them?

Mr. MAKRIS. First, we were surprised to find out how many

small and medium-sized enterprises do have computers, because a

relatively small amount, I think about five percent of the 14,000

that were submitted, were not submitted electronically. But we

also provided in our regulation that if a company or firm, large or

small, was unable to do it electronically, they could do it in paper

and we would put it into the computers at the Federal level. But

we did provide software tools, guidance tools, guidance manuals,

and, frankly, reduced it to a largely question and answer format.

Mrs. KELLY. One other—I am sorry. Go ahead.

Mr. MATTHIESSEN. Thank you. I just was going to add that for

a company that does not have a computer, if they were to take this

guidance and walk through it, and, in fact, our regional offices

have done this with a number of States and a number of small

business owners in those States who have come in to what we call

a session that is plan in hand, and at the end of that session, in

roughly a half an hour, companies have been able to fill out their

RMP and either leave with a completed RMP or a nearly complete

RMP using this guide right here without a computer.

We think, on the basis of that information, with people that are

actually operating facilities coming to the session and leaving with

a completed RMP, that the process is not all that difficult. Again,

I think the key point, as Jim mentioned, is it is building on what

14

they are already doing. It is not creating anything new. It is capturing what they are already doing and making sure that it is

being done right.

Mrs. KELLY. I want the United States population to be safe and

I understand what you are trying to do here, but I also know, as

a former small business owner, that if you are calling me out of my

business and you are making me sit down for a half an hour of my

time to learn how to fill out one more form, I had better be sure

that that form is something that is really essential to the United

States of America because you are taking my time and that is cost.

I want to say that we are going to have some people come to

speak to us, John and Mary Densmore, and I, in reading their testimony, realized something when they said that they are going to

testify that their drivers have had to make more deliveries and

they drive more miles if they have to use this new EPA rule. Now,

my question to you, when I ask you about the figures of this, did

you figure the cost of the air quality to have those people making

those extra trips?

Mr. MAKRIS. I suspect that we did not figure the cost of emissions from automobiles or trucks making extra deliveries. Yes, I

think we did not do that.

Mrs. KELLY. But you are the EPA. You are supposed to be in

charge of our air quality.

Mr. MAKRIS. That is right. I would guess we blew that one. I

doubt very much if our economic analysis would have included—

and I am saying that intuitively. Did it?

Mr. MATTHIESSEN. No, and you are exactly right. The issue was

not considered because it was our belief that a company that is already complying with all these requirements under NFPA 58——

Mr. MAKRIS. There is no change, really.

Mr. MATTHIESSEN. Yes. There is very little additional information other than providing facts to the community that they are operating safely. The concern that there would be a risk around this

facility is minimized and, in fact, a number of small companies

have said, as Jim mentioned, that the idea of preventing an accident saves a considerable amount of money.

Mrs. KELLY. Are you saying—I do not mean to interrupt you, but

I have been talking for a little time here and I do not want to dominate when other people need to talk, but what you are looking at

is from one direction and what I am looking at is from the small

business owner’s direction, which is you are going to put more people on the roads driving probably diesel fueled trucks putting particulate matter in the air and you have not calculated that factor

in because you are having those drivers make more trips and they

are going to have to drive more miles in order to comply with what

your new regulation has done. That is an overlaying within your

own organization and I just simply would ask you, please, to take

a look at the net effect. Too often in an agency as large as the EPA,

one hand does not know what the other hand is doing, and I think

this is an example of it right here.

Mr. MATTHIESSEN. If I might add, we think that our new proposal to raise the threshold minimizes the number of extra deliveries because there will not be deliveries to small facilities that

often. There would only be deliveries to large facilities. And again,

15

we just believe that it is possible to achieve safety and environmental protection at the same time.

Mrs. KELLY. I would ask you to read the Densmores’ testimony

yourself and then come back and make that statement, because I

think they are very clear on the face of their testimony, and unless

they have something more, and they probably will have a lot more

to say about this, I think they are exactly the kind of people that

we need to try to help maintain their family businesses, and one

way we have to do that is to take a look at this cost versus benefit

analysis.

The other thing I wanted to ask you, and this is my last question

to you, is are you holding back and waiting until the court decides

on the case or are you just going to go ahead and promulgate this

rule and put it into law before the courts make their decision?

Mr. MAKRIS. At the moment, of course, S. 880 takes it pretty

much out of the jurisdiction. If S. 880 stays in either of the forms

that it has passed the House and Senate, it would render a good

much of what the court did as moot.

We are very happy to proceed with a detailed study, and I think

S. 880 is going to require us to take a close examination of some

of these issues that have been put forward, but we are not hanging

around just waiting for the court to make its final ruling and then

we are going to follow through. We have legitimately raised, not because we do not think anything under 67,000 pounds is safe, it is

not inherently safe, but we have listened, we have heard, and we

have found a practical place to which we can go.

Now, let me just say that I would suggest that the small and medium-sized enterprise, whether or not they are covered by this regulation, would still benefit from reviewing the material that is in

this and just not reporting it to me but introspecting on the safety

that they have at their location. I think that would be a terrific voluntary activity for us all to work on, because I think there is some

useful information in the material that we put out as part of our

regulatory package for propane users that would still benefit them.

Mrs. KELLY. I thank you, and I understand what you are saying.

I would also suggest that people who deal with flammable and the

types of materials you are talking about here are people who do not

want to have accidents and they are going to do this anyway. My

only question here is whether or not it is an efficient use of their

time and of government’s time and whether or not we put in all

of the cost-benefit factors here before this rule becomes actual law.

I thank you for your testimony.

Mr. MAKRIS. Thank you for your questions.

Chairman TALENT. I will go to Mr. Sweeney.

Mr. SWEENEY. Thank you, Mr. Chairman. I would like to ask

unanimous consent to submit into the record a formal statement in

an effort to expedite my questions.

[Mr. Sweeney’s statement may be found in the appendix.]

Mr. SWEENEY. I want to thank Mr. Makris and Mr. Matthiessen

for their testimony. I wanted you to know first that I am a former

regulator of probably the largest regulatory agency in the State of

New York, the Department of Labor. Different health and safety

issues were attendant to the work that I did and the work I

oversaw. Oftentimes, there was interaction with EPA, there was

16

interaction with my State Department of Environmental Conservation. As I understand, your charge and your mission is to place the

highest priority on safety and I respect and thank you for that.

I also, as a former regulator and someone who oversaw, a vast

agency with huge responsibilities, recognized that we never have

enough regulators. We never have enough personnel to absolutely

ensure health and safety. I do not know if it is humanly possible

to guarantee the kinds of safety that we all would like to see,

which is a totally risk-free environment. I also know that one of the

management tools that we often used to ensure we were focused

where we needed to most be focused, so we could fully meet our

charge and our obligations, was to look where duplication occurred

and existed with other State agencies, with the Federal Government, within our own agency, and within departments and bureaus. I know that is a never-ending job that you absolutely have

to be diligent about.

In your testimony, as I came into this process, I was going to

focus on the duplication issues. I understand DOT regulates the

transportation end of this. I understand OSHA has responsibilities.

I understand the States, through the NFPA, have their obligations,

as well. So I would like to focus, very specifically, on those areas

and look where I think my disagreement with your position exists.

You mentioned in your testimony, and in your questions and answers, the RMP requirements. I am interested to know, as it relates to toxicity, has the EPA conducted further studies on toxic

levels of any substances and is that an ongoing process? How do

you manage that?

Mr. MAKRIS. Well, we have not. The agency is continuously in

the process of reviewing toxic substances, toxics endpoints. We

have a major project within the Environmental Protection Agency

going right now with the National Academy of Sciences that is

international to try to come to grips with toxicity at certain

endpoints of ubiquitous chemicals.

Mr. SWEENEY. That answers the question, because——

Mr. MAKRIS. Do we do it fast enough? Heck, no.

Mr. SWEENEY. My follow-up question was going to be, out of

those studies, are there specific studies as it relates to propane?

Has there been a new bit of research or empirical data established

that says propane, while it is listed on the RMP requirements as

a one grade for toxicity, we believe it could, indeed, possess certain

elements that present—but you do not have that kind of data?

Mr. MAKRIS. We do not.

Mr. SWEENEY. That leads me to the next question, at what point

does the EPA make its determination as to what level of toxicity

must exist before you would regulate in this regard? I am confused,

because I, frankly, think you have overstepped here and that it is

OSHA who has the kinds of responsibilities. I listened to you very

carefully explain the safety issues you were concerned about and

those are OSHA issues, not EPA issues necessarily. They may be

connected in a cause and effect way, and OSHA and EPA probably

ought to be together on those issues. What toxic threat does propane provide that raises it to the level that it is, other than its

flammability?

Chairman TALENT. John, will you yield for just a second?

17

Mr. SWEENEY. I certainly will.

Chairman TALENT. That was a question that I was going to ask,

so let me piggyback just a second.

Mr. SWEENEY. Okay.

Chairman TALENT. The distinction here between toxicity and

flammability, it seems to me—I was not in the Congress in 1990,

but what Senator Baucus said recently makes perfect sense to me,

because what Congress is saying in that law, it seems to me, is we

are concerned not so much about the effects of the explosion itself,

which we understand is already regulated by other agencies, but

the effect of the explosion in putting into the air and in the surrounding environment toxic or poisonous agents which may hurt

people in a way that the explosion would not have. I think that is

what John is getting at, and he said it better than I said it, but

just answer both of our questions in that.

Mr. SWEENEY. No, Mr. Chairman. I do not——

Chairman TALENT. I can also see, if this came up now, why I

would, as a Congressman, want the effects of the explosion maybe

to be regulated by DOT or by OSHA or by some kind of fire-oriented agency, which might be local, whereas the toxicity and the

poison, I would say, yes, that is an EPA job. So you see what we

are getting at here, and answer us both, if you would.

Mr. MAKRIS. And that might be a reason why you would have

wanted to have another agency than EPA do this. On the other

hand, nobody is doing it.

I guess, first, the bill and the history talked about the obligation

for acute effects. There clearly is an acute effect from an explosion

like Phillips Petroleum, which basically had the equivalent of ten

tons of TNT and is probably eight times the 10,000-pound threshold we are talking about and it destroyed the whole building. It did

have offsite effects from glass, but not toxics.

None of this was toward long-term health effects. This was all toward immediate effect on surrounding populations, not only for

workers but for offsite consequences, and we felt that the history

and discussions with those who drafted the bill—not Senator Baucus, obviously, and I am not sure that we are all coming up with

some unintended consequences, perhaps, to some of the things we

said—would not recognize that there is an important issue around

explosivity and flammability.

I must say, and I want to say it again, even S. 880 does not take

all that away. S. 880 does not now limit the coverage of 112(r) only

to toxics. It leaves explosives and flammables still covered. So even

a new thought about the issue is putting us in the same place.

Mr. MATTHIESSEN. Thank you for allowing me to add that in the

discussion of general duty in the legislative history under the

Clean Air Act, under Section 112(r)(1), there is a clear statement

that says that there is a presumption that a chemical that by virtue of explosion or fire causes adverse health effects in the community, and it is not the combustion products of that explosion or fire,

it is the explosion or fire itself. That is a presumption confirming

that that chemical is extremely hazardous.

That, in combination with a couple of chemicals that, by virtue

of their accident history were added to the list of substances that

Congress said must be on the list, told us that flammability was

18

a concern in addition to toxicity that we ought to consider for protection of the public.

Mr. SWEENEY. Is your interpretation, Mr. Matthiessen, that any

one of those elements can elusively exist and that triggers the EPA

purview and authority over regulating in that area? Is that what

you are saying?

Mr. MATTHIESSEN. Yes. We are saying if there is——

Mr. SWEENEY. What products, that we could distinguish from

propane, would then not be covered by the EPA, that the EPA has

determined are not flammable and/or toxic enough for your review?

Mr. MATTHIESSEN. Well, for example, gasoline was not put on the

list because it is not flammable enough, and the concern here is not

fire. The concern——

Mr. SWEENEY. So flammability is the primary element that

triggers——

Mr. MATTHIESSEN. Yes, that triggered propane, and fire is not

the concern. I mean, if you burn your plant down and do not have

any offsite consequences, that is your problem, and OSHA, DOT,

and the fire services all cover that problem. What we are worried

about is the large-scale vapor release in the middle of the night——

Mr. SWEENEY. Under what authority, though? I am so confused.

Under what authority do those elements, that level of flammability,

trigger the EPA response? My fundamental disagreement with you

is that while an imminent health and safety risk might exist, it is

entirely a different debate, a different discussion, and a different

issue if OSHA is involved in that oversight, which I believe is accurate and proper.

Mr. MATTHIESSEN. They are.

Mr. SWEENEY. If OSHA is not carrying out those duties for whatever reason, whether it is funding or it is other priorities, that

ought to be more accurately focused upon rather than the notion

that a different Federal agency comes in and requires additional

paperwork and additional regulatory responses.

Mr. MATTHIESSEN. I would just say that our reading of the statute and the legislative history tells us that flammability is a concern that can have an acute health effect offsite, while OSHA is

predominately concerned with within the fence, and we have been

working very closely with OSHA. In fact, our regulation builds on

OSHA. It only builds on to the extent that we are trying to protect

the public and the environment from the risks of a vapor cloud explosion or fire.

Mr. SWEENEY. Let me conclude, and I will yield back to the

Chairman. Mr. Makris, you made a great example in which you

said, if I had a pool, I would have to have a fence around it for

safety concerns. I agree with you. It is not the EPA that is responsible for enforcing that regulation, however, it is another entity. I

think that is the core of our dispute here in terms of on what we

agree. I yield to the Chairman the balance of my time.

Chairman TALENT. I thank the gentleman. I am going to try and

be brief, in part because I think you both have been very responsive and I very much appreciate it. You clearly know what you are

doing and you have thought about all this stuff. We have been arguing, in essence, a point of law that nine years ago was a point

19

of policy, and I respect your interpretation of it, although I tend to

disagree, as well.

But let me go back to the question of the burden and try and get

at what Ms. Kelly was getting at. We constantly repeat this in this

Committee because we understand that you all are doing your jobs.

Your job is not to run small businesses. We do not blame you for

not instinctively understanding where the average small business

person is coming from unless you happen to have run one.

Here is a letter which the Committee has and it was sent on January 14 to a propane dealer in California by an Orange County

agency which is responsible for enforcing this kind of a requirement. I do not want to read it all, but I want to read enough of

it so you can get the flavor, and put yourself in the shoes of the

small business person getting this.

‘‘Your business has been identified as subject to the requirements

of the California Accidental Release Prevention Program found in

Chapter 6.9,’’ and so on. ‘‘In addition, your business is also subject

to the Federal program found in Section 112(r) of the Clean Air

Act. Your business is required to develop and implement a risk

management program to prevent accidental releases of regulated

substances that can cause serious harm to the public and the environment. You are also required to develop and submit a risk management program which includes a summary of your risk management program. The RMP must be submitted to this agency and an

electronic version submitted to U.S. EPA by June 21, 1999.’’

‘‘We are requesting that your business contact this agency to

schedule an RMP compliance meeting during the month of January

1999. These meetings are required pursuant to California regulatory requirements and to ensure that your business meets the

Federally mandated time line.’’

‘‘Should your business so choose, you may implement one of the

following options in lieu of developing an RMP: Eliminate or replace the regulated substance with a non-regulated substance; reduce the amount onsite to below the Federal threshold quantity. If

one of the above options is chosen, you will be required to verify

compliance prior to the June 21 deadline.’’

‘‘This agency is dedicated to assisting your business in meeting

these new regulatory requirements. In the near future, we will be

providing technical regulatory assistance, as well as RMP guidance

documents. However, failure to develop and submit an RMP as required will subject your business of penalties of up to $10,000 per

day. In addition, failure to contact and work with this agency during the development of your RMP could cause costly revisions to be

made during the agency review and evaluation period.’’

Now, I am not criticizing this letter——

Mr. MAKRIS. I am just glad my signature is not at the end of that

letter.

Chairman TALENT. I am really not criticizing it. In fact, they are

outreaching here. We know you have a problem. We want to give

you plenty of time to deal with this. This is not a bad letter. But

you are a small business person and you are trying to stay in business, and propane is a highly competitive business. Ten thousand

dollars a day, I mean, you do not make that much money in a

month in profits.

20

So you get this letter, and you are not thinking that this is only

going to cost you four to five hours and $200 to prepare this plan,

because what you are thinking is, I have got to make certain I am

in compliance. So even if somebody who is already totally familiar

and comfortable with the plan could do it in four to five hours—

this person, if they are serious, if they are the kind of honest person that we want, they are going to react and say, I have got to

be in compliance. The first thing you do is call your lawyer, probably, and say, what about this? What is going on here? Or maybe

the trade association. Then you are going to worry. If all you look

at is that workbook, what if there is something that is not in the

workbook that I have got to do, because it is not like you guys

would say, ‘‘Well, it was not in the workbook and, therefore, we are

not going to enforce it.’’

This is what we are getting at here. I cannot believe the $200

estimate. I think it is going to cost a lot of money just to determine

whether they are in a program one or program two phase.

I try and be measured in chairing this Committee and recognize

when agencies have made an effort, but I also try and get their culture to change to understand that the average small business person, just to be safe, is going to spend a lot more than this. These

people have spent an enormous amount of time and money lobbying against your rule, and they are not doing that because they

think that your rule is only going to cost them $200.

I also do think the transportation questions that Ms. Kelly was

getting at, what I think, too, is they are going to have less than

the threshold amount, which means there are going to have to be

more deliveries, which means there are going to be increased costs.

Do you see what I mean? Tell me what you think in response to

that.

Mr. MAKRIS. I think I agree with virtually everything you said.

First, it was not a very user-friendly letter and it was not an inducement to cause folks to really want to not be afraid of the jackbooted thugs coming in and stomping on their company.

Small and medium-sized enterprises are becoming even more of

a concern to us because a lot of the big companies are easing off

some of their more toxic activities to small and medium-sized enterprises and, I think in some ways, shifting the risk from those

who are better able scientifically and technically to deal with it to

a smaller guy, where the liability will then be carried. We are pretty nervous about small and medium-sized enterprises perhaps having a more dangerous condition in the future as big guys try to

avoid some of these risks.

In terms of the $200, $400, $600, $800, I guess it depends upon

how one proceeds to evaluate the obligation that is put in here. I

am far more interested in the company reviewing its operation

under acceptable standards and concluding that they are operating

safely and then reporting on that than I am in the reporting on it.

The report is the way the Congress and the Federal Government

and State Governments assure compliance.

If we knew that everyone in small and medium-sized and large

enterprise was constantly and vigilantly pursuing safe practice,

using industry standards like NFPA 58, and were maintaining

those standards always, then we would not need any of this. We

21

would not probably be having some of the accidents that we have

been having.

But we do not know that, and so the Congress said, not specifically to propane but said generally, let us cause the American industrial sector dealing with chemicals that provide risks to communities to fess up. Do not tell EPA that they are or are not meeting

an EPA standard because there is no EPA standard. What they are

only doing is they are saying, we have reviewed what is a safe

practice and we have shared this with our community. We have

told the people that are possibly within the area of risk that we

have checked it over, we are in compliance with the regulation that

requires safe practice, and we are telling you what the risk is.

That does not sound like an unreasonable burden. It becomes unreasonable when it becomes a regulatory program. It is not an unreasonable burden to just do it. Maybe we can figure out a way to

just do it.

Chairman TALENT. So what we are saying is what we want is

common sense on the part of people. What we encounter in this

Committee is that trying to legislate or regulate common sense, one

of the problems with it is you see that the kind of people who

would not do on their own what common sense would tell them to

do are precisely the kind of people who would ignore this letter.

This is the other problem. We tend to overregulate the people

who do not need the regulation, as a practical impact, and underregulate that small layer of people who probably do need it.

I am not saying I have the answers to this. We are not going to

end big government tomorrow. It is going to be here, and should

be, for some purposes. But what I am saying is there have got to

be ways, and we are groping for them and finding them in some

contexts, to achieve what we want without presenting this jackboot

approach to people that demoralizes them, that causes a lot of

extra costs none of us want. I am not exactly sure how to get there.

I think what you are were trying to do was sincere. I think Congress is right in pulling you off propane for now and then we will

see where we go with some other things. I mean, that is my view

and I guess it is probably the view of most of my colleagues, because the bill has been passed.

Why don’t you get the last word in, and then we will bring the

next panel up, because we have other witnesses who have been

waiting.

Mr. MAKRIS. Mr. Matthiessen has something he must say on

this.

Chairman TALENT. Sure.

Mr. MATTHIESSEN. At the risk of making a commitment without

checking with the boss first, you mentioned about our proposal and

going forward blissfully without consideration of input. I would

submit that we are going to get comment on that proposal to raise

the threshold and reconsider what we are doing.

I would offer once again, as we did with you in the past, we

would welcome the opportunity to get outside the beltway and go

to some facilities and find out what it is that strikes fear and chill

in the hearts of small business operators when letters like that

come, that take away their self-confidence to be able to comply with

something they are already doing. That way, then, we can find out

22

if we really are wrong and try to improve our guidance so that it

is not so intimidating and that what we do really has meaning for

safety, as opposed to just a blatant, blind regulatory approach. If

that has any value at all, we will certainly commit to going and

doing that.

Chairman TALENT. The other thing that we have to get into the

process is a consideration of at least some indirect costs or effects.

I understand there is a certain point where you have to cut it off,

because you have more people out driving to deliver more things

and then they are going to stop and have to eat lunch more and

they are going to build that. I mean, there is a certain point where

you have to cut off the chain of estimation. But, obviously, if indirect effects are to be considered under SBREFA, and when you

have a bill or regulation which is so directly or so emphatically encouraging people to drop the amount that they have got stored,

they are going to have more deliveries and they are going to have

to pay for more deliveries and it is going to be a cost.

I did not see Mr. Bartlett come in. He has some more questions

and this is certainly a field where his scientific background would

be of great use and I am happy to recognize the gentleman.

Mr. BARTLETT. Thank you, Mr. Chairman. I do not have a scientific question, I have a Jefferson quote that I thought was particularly appropriate for our discussion here, and this was not an

offhand quote because it is in the Declaration of Independence.

When I read it, I thought, I could not have better described our

regulatory agencies. It says, ‘‘He has erected a multitude of new offices and sent hither swarms of officers to harass our people and

eke out their substance.’’

Mr. MAKRIS. I like mine better. [Laughter.]

Chairman TALENT. I thank the gentleman and I thank you all

and appreciate your patience. We will have the next panel of witnesses, then. If Mr. Blunt would not mind, perhaps he could just

testify first on the next panel, because I know he needs to go. So

everybody else who is left, come on up and sit together and we will

have Mr. Blunt go first.

STATEMENT OF HON. ROY BLUNT, A REPRESENTATIVE IN

CONGRESS FROM THE STATE OF MISSOURI

Mr. BLUNT. Mr. Chairman, if you do not mind, I will go ahead

and go first while everybody else is coming to the table.

Chairman TALENT. Go ahead. I appreciate the gentleman’s being

willing to wait on the Committee.

Mr. BLUNT. I am pleased to wait. I appreciate you having this

hearing. I will proceed for any number of reasons. One is I have

a vote downstairs in a couple of minutes, and two is I think it is

very important, as Ms. Kelly mentioned earlier, that we hear from

the folks here at the table with me who really are affected by these

regulations in ways that you just described.

I just want to thank the Chairman for not only being an original

cosponsor of my legislation, of H.R. 1301, but also for holding this

hearing, for looking at the process of how we approach these topics

of regulation, and, I think importantly, looking at the process of the

regulating agency deciding that there is a meritorious reason to

regulate, and no matter what the law said or what the CongresVerDate 20-MAR-2000 14:41 Apr 13, 2000 Jkt 010199 PO 00000 Frm 00025 Fmt 6633 Sfmt 6602 E:\HEARINGS\61131 pfrm02 PsN: 61131
23

sional intent was, that we are going to stretch that intent to cover

some other area that that agency thinks needs to be covered.

That is not the job of these regulatory agencies. Their job is to

come to the Congress and say, we know the law says toxic substances. We think it should also say, toxic substances and something else, and if the Congress agrees with that, then they should

regulate. If the Congress does not agree with that, that is our job.

The EPA is right now fighting a significant case about whether

they had the authority to do what they did with clean air standards because they wanted to both set the goal and figure out how

to achieve the goal. That is not their job.

I also want to say, at the same time, I want to acknowledge that

they have worked closely with us to try to solve this problem. I

think Mr. Makris and his staff have really done a good job of trying

to come forward, be willing to rethink and discuss what they did,

why they did it, what their thought process was, and, obviously, we

would not be at the point we are today with S. 880 and the House

bill that I sponsored, H.R. 1301, that had 145 cosponsors in the

House, if it had not been for the willingness of this agency, of this

part of the agency, to look at this again. So I have some appreciation for where the agency has been. I also think that this problem

is largely created by a misinterpretation of not only the law, but

their authority to decide what the law should say, and that is our

job, not their job.

You had some discussion while I have been sitting here about

whether or not there was already regulation, and I would like to

submit for the record a regulatory duplication chart of all the various regulations that already cover these areas. In fact, I think I

heard in some immediately previous testimony that if some of

these regulations were enforced, that this action might not have

been necessary. Well, enforce the regulations. Do not decide to legislate and regulate at the same time.

I am glad that, even though we seem a long way toward the final

determination on the propane issue, that you decided, Mr. Chairman, your Committee has decided to take how we got to this point

so seriously. I think it is an important area of Congressional oversight. I think it is a constitutional area, Mr. Bartlett, of Congressional responsibility, as opposed to the responsibility of regulators,

and I am certainly grateful you are having the hearing and grateful that you have asked this panel to come in, who really know

what happens when they get that letter in the mail and see the

$10,000–a-day fine as one of the consequences, and one of the other

alternatives is no longer distribute or use this substance, which if

you are in the propane business is not a very satisfactory alternative, I would think. So thank you, Mr. Chairman.

Chairman TALENT. Yes. When one of the alternatives is to end

your business, it is not much of an alternative.

I appreciate your testimony. I know you need to leave, Mr. Blunt,

and we will just let you go. I do not think there are probably any

questions for you.

[Mr. Blunt’s statement may be found in the appendix.]

Chairman TALENT. Our next witnesses, we will start on my left

and the panel’s right, are John and Mary Densmore, who represent

Geldbach Petroleum from the wonderful town of Valley Park, MisVerDate 20-MAR-2000 14:41 Apr 13, 2000 Jkt 010199 PO 00000 Frm 00026 Fmt 6633 Sfmt 6602 E:\HEARINGS\61131 pfrm02 PsN: 61131
24

souri, and it is only a coincidence that they are from the Second

Congressional District. Mr. and Mrs. Densmore, whichever of you

wants to go ahead with the testimony.

STATEMENT OF JOHN AND MARY DENSMORE, GELDBACH

PETROLEUM, VALLEY PARK, MI

Mrs. DENSMORE. We would like to thank the Chairman and the

Committee for listening to our views on this issue. Geldbach Petroleum is a family-owned business located in St. Louis County in Valley Park, Missouri. We have several other plants located in eastern

Missouri. We market mostly in eastern Missouri. We are not in Illinois or any other State. Geldbach is one of the few remaining independent propane marketers. Other independents, many others,

have been taken over by large companies and they are now nationally owned.

Geldbach has been in continual operation since 1920. Herbert

Geldbach, my father, began the business by building his first truck

in his daddy’s wagon shop. His father was a wagonwright and a

blacksmith. Herb first started as a one-man operation until he became large enough to buy more trucks and hire drivers. He continued in the business by being competitive and resourceful. He drove

a truck every day while expanding the business into serving gasoline stations and residences with fuel oil. He owned a few gas stations and he delivered to approximately 40 independent gas stations over the years.

Herb Geldbach expanded into propane gas in 1957. He saw the

advantages of propane for the consumer. Propane is a very

versatile, clean-burning fuel that has many applications in business and in the home. It is used in manufacturing plastics, providing temporary heat on construction sites, as well as powering

forklift trucks in manufacturing and warehouse industries. It has

also been designated a clean air alternative fuel by the Department

of Energy. Propane gas is the rural residents’ choice of fuel when

you compare it to a more expensive or an alternative fuel, such as

electric or fuel oil. Our farmers use propane to dry their crops and

operate their field equipment, such as generators.

After Herb Geldbach died in 1982, the family has continued the

operation and expanded into new locations in order to remain competitive.

In 1985, the EPA’s stage two vapor recovery regulation had a

devastating effect on our gasoline operation. Our independent service stations were forced out of business by the regulation and, due

to the aforementioned legislation, in 1991, we sold our service stations to another oil company.

In 1997, we were forced to sell the entire fuel oil and gasoline

division due to the Underground Storage Tank Insurance Fund,

which all tanks are required to be relined and/or removed. So after

71 years, we are now out of the oil business.

The propane industry is currently regulated by the National Fire

Protection Association Pamphlets 54 and 58. Our local reporting

authority is the Division of Weights and Measures under the Department of Agriculture. We also submit Tier Two reports to the

Missouri Emergency Response Commission under the Department

of Natural Resources. Our trucking operation falls under the DeVerDate 20-MAR-2000 14:41 Apr 13, 2000 Jkt 010199 PO 00000 Frm 00027 Fmt 6633 Sfmt 6602 E:\HEARINGS\61131 pfrm02 PsN: 61131
25

partment of Transportation. Our plant operations and facilities are

covered by OSHA.

Now we are faced with the EPA under 42 U.S.C. 7412(r), which

has plans to duplicate much of the aforementioned regulatory reporting information, plus add to it. The EPA’s risk management

plan is grossly over-burdening to the propane industry. The RMP

will put us into a non-competitive position. The hours of preparation and the staff involved would detract from our other safety considerations, which are consumer education and plant safety. Realistically, we would have to hire another non-revenue employee to

comply with the proposed regulations that we are discussing here

today.

We have heard from many of our customers regarding the RMP.

One greenhouse customer told me that he would refuse any more

propane than is required to stay below the threshold quantity. This

would mean more deliveries and more road miles for our trucks

and drivers.

Some customers have told us that we will have to keep and

maintain their RMPs or they will switch to an alternative fuel.

The larger customers that I am aware of are taking out their

stand-by systems. Natural gas, during peak usage, at times will cut

off to manufacturing facilities to provide home heat. To quote a letter directed to Ms. Carol Browner, Administrator of the EPA from

the Director of the Missouri Department of Agriculture, John Saunders, he says, ‘‘Currently, because of the forthcoming risk management plan requirement, many large bulk storage facilities are

being removed and smaller ones put into place. The redesign of

these systems will create performance and safety problems because

the systems’ capacity is too small for the load placed upon it. Extremely cold winters are of a major concern if this trend continues.’’

Propane plants are designed to prevent accidents and to remain

in safe operation. The annual inspections from the Division of

Weights and Measures are all inclusive. We work very closely with

the Department of Weights and Measures to keep all of our equipment running safely and properly. The percentage of fires and/or

explosions occurring at a propane plant or a storage facility are a

fraction of what this legislation will cost companies like Geldbach

Petroleum and the industry in general, but the taxpayer, as well.

We do not believe it was the intent of Congress through the

Clean Air Act to include a clean-burning home heating fuel while

putting additional burdens on small business.

This regulation will stop our expansion into new areas. We will

not add another propane plant to our business if the RMP is implemented. If we cannot expand, we cannot acquire new customers.

Our existing customer base will eventually diminish through competition with natural gas and electric.

In addition to not expanding, adding another compliance cost to

our margin of profit will put us into a non-competitive position. We

have absorbed many of the regulatory costs over the years in the

interest of supplying safe and prompt service to our customers.

However, adding another non-revenue employee will prohibit any

hopes of remaining competitive with the larger, nationally-owned

conglomerates. We will become another statistic of how the government has squeezed out the small businessman. It is imperative to

26

our company’s viability that H.R. 1301 is enacted to exempt propane from EPA’s risk management plan. Thank you, ladies and

gentlemen.

Chairman TALENT. Thank you, ma’am. That about says it all.

[Mr. and Mrs. Densmore’s statement may be found in the appendix.]

Chairman TALENT. Our next witness is Paul Lindsey, who is the

Chief Executive Officer of the All Star Gas Company,

headquartered in Lebanon, Missouri. We are glad to have you and

appreciate your patience, Paul. Please go ahead.

STATEMENT OF PAUL LINDSEY, ALL STAR GAS, LEBANON, MO

Mr. LINDSEY. Thank you, and good afternoon. My name is Paul

Lindsey and I am the CEO of All Star Gas Company based in Lebanon, Missouri. My company is primarily in the business of retail

marketing of propane gas to thousands of residential, agricultural,

and commercial customers.

Today, I appear before you as the immediate past Governmental

Affairs Committee Chairman of the National Propane Gas Association, NPGA. The NPGA membership includes approximately 3,700

companies that market propane gas and equipment in all 50 States

and in nearly every Congressional district. The majority of our

members are small, independent business men and women. Propane gas is widely used for home and commercial heating, cooling,

and agricultural and industrial processing, and as a clean air alternative engine fuel for vehicles and forklifts. It is often the fuel of

choice for rural consumers.

My statement today reflects the impact EPA’s recent risk management program, RMP, would have had on thousands of propane

businesses, the majority of whom are mom and pop businesses with

well under 100, even under 20, employees. The EPA’s recent RMP

would have had serious consequences for consumers and farmers,

as well. I ask that my written statement and other materials be

entered into the record.

To summarize, the RMP rules duplicated an extensive, incredible

safety infrastructure that already exists in all 50 States. The RMP

rules would have decreased safety in the propane industry because

customers would have demanded more smaller deliveries to stay

under EPA’s threshold. The RMP rules would have stifled clean air

technology because of these new burdens upon propane. The RMP

rules would have harmed the environment because customers

would have switched to less environmentally sound alternatives.

And, the RMP rules would have harmed the economy, especially in

rural communities. Small businesses would have been hesitant to

come into these areas, since they normally do not have access to

natural gas.

Mr. Chairman, we are grateful for Congress’ recent activity on

this issue. I know you helped organize and participate in an industry forum in Missouri with the EPA on this issue. We are also

grateful for Representative Blunt’s introduction of and your support of H.R. 1301, which addressed our concerns.

Last week, the House passed legislation by unanimous consent

that closely tracked the intent of H.R. 1301. In June, the Senate

passed similar legislation with the full consent of the Senate, the

27

support of NPGA, the International Association of Fire Chiefs, the

International Association of Fire Fighters, and the National Fire

Protection Association. A recent letter of fire organization support

is attached, as well as a letter of support from a host of farm and

business organizations throughout the nation.

First, I would like to speak to our industry’s safety infrastructure. It might be important to understand a distinction about our

product. Propane is derived from natural gas processing and crude

oil refining, and in a natural state is odorless, does not contain any

odor. When it is used as a fuel for retail purposes, an odor is added

for the purpose of safety. I think it is important to understand that

even though S. 880 that has been passed will eliminate propane

from RMP, that is propane in the odorized state. Propane that is

still in the unodorized state, such as the Phillips plant incident

that was referred to earlier, is still very much under the RMP requirements.

All propane facilities are subject to regulation in all 50 States

through building and fire codes. These codes, without exception,

adopt or incorporate the substance of National Fire Protection Association Safety Standard 58. NFPA 58 contains strict requirements on the design, installation, inspection, approval, and operation of propane facilities. State agencies, code inspectors, and fire

marshals require propane storage facilities to be designed, constructed, and operated safely.

I might add, and it is my understanding that the NFPA rulemaking committee consists of 30 members and that that will soon

perhaps be expanded to 31 because I understand that EPA has

asked for a seat on that committee. I appreciate their efforts in

doing that. That is, in my opinion, absolutely a great role for EPA

to be involved with and to take part in the rulemaking process that

deals with NFPA 58.

The propane industry also complies with the following Federal

requirements: DOT hazardous material requirements and regulations, OSHA’s workplace safety rules, and EPA’s community right

to know rules.

Unfortunately, accidents do occasionally happen, and in our industry, more often than not, these are caused by or occur during

transportation activities—loading, actual transportation, unloading

activities—which would not have been covered by the RMP rules.

EPA’s own data demonstrate this.

This industry is concerned about safety, the environment, and

the impact on consumers and the economy, particularly small business owners. This industry voluntarily spends time and money

training local fire departments all over the nation. Emergency responders need to be as highly trained as possible, and we are putting our money where our mouth is. We are proud to report today

that the industry is spending just over $1 million this year alone

to develop a comprehensive training program for emergency response personnel.

The main or primary text of this training program, entitled ‘‘Propane Emergencies,’’ is being distributed to every fire department

and fire academy this summer, and I believe that members of Congress have also received a copy of this program. Perhaps if this program had been in place, part of the problem that was encountered

28

in Iowa in the incident that was referred to a few moments ago

would not have occurred.

Our industry is also proud to report completion this year of a negotiated rulemaking with the Department of Transportation to address the safety of our industry’s delivery trucks and operating procedures for the safe unloading of propane at the consumers’ tanks.

The improvements include new equipment, technologies on our vehicles, and enhanced safety operations and procedures. Over the

next five years, we estimate this will cost the industry over $50

million.

Second, many propane customers would have sought to reduce

the quantity of propane they stored to levels below the EPA’s

threshold for coverage. This would not, however, have reduced

their demand for timely deliveries. Our industry delivery trucks

would have faced making many more small deliveries rather than

the safer alternative of making fewer larger deliveries. Complicating this situation would have been the bad weather that often

accompanies the industry’s busiest time, the winter heating season.

Customers also face the choice to switch to all the other consumer fuels which were not on EPA’s RMP list. Unfortunately, this

choice often led to less environmentally desirable fuels. Companies

who used propane began switching fuels because the RMP rules

were very complex and because they come with a high public relations price tag. These are the real-world impacts of the RMP rules.

Third, the reduction in air quality may be the most ironic aspect

of the RMP rules. Legislative and regulatory consistency are very

important to small business. Unfortunately, EPA’s RMP rules were

anything but consistent for propane. EPA’s RMP rules would have

stigmatized the use of clean burning, non-toxic propane as an alternative engine fuel in the very same law approved by Congress that

held it up as a clean burning fuel.

Finally, I want to address the costs we believe the RMP rules

would have had on our industry. Huge numbers of agricultural and

commercial facilities use propane in sufficient quantities to be covered by the RMP rules. The EPA compliance threshold for propane

was 10,000 pounds of fuel stored. At this level, we estimate the

total number of RMP-covered facilities was over one million for propane alone. Using a conservative $1,000-per-site estimate, the RMP

rules would have cost $330 million to the farm sector, $675 million

to all other covered propane customers, and $12 million to propane

marketers.

The National Propane Gas Association sought to prepare a risk

management program services directory for the benefit of its membership and the customers of its membership. Twenty-three of the

consultants involved would not specify a particular charge. Two of

the consultants indicated that the fee would be less than $2,000.

Eleven indicated more than $2,000, with one of them indicating

$20,000. The billing ranges were from $25 to $140 per hour, or

$500 to $2,000 per day.

Recently, EPA proposed to raise the RMP threshold level for propane up to 67,000 pounds. This change still would not have helped

many agricultural consumers or those larger commercial accounts

most able to switch to other fuels.

29

The bottom line is that the RMP rules were an expensive, duplicative paperwork exercise that would have had little or no discernible impact on safety but which would have drained a total of $1

billion out of the pockets of our customers and our industry.

In closing, EPA’s RMP rules never should have covered propane.

These rules would have been bad for consumers, particularly small

business owners, bad for the environment, and did nothing to improve safety.

Mr. Chairman, members of this Committee and other members

of Congress, I want to thank you again for unanimously passing S.

880 and thank you for your efforts to pull back the regulatory yoke

from this industry and its customers. We are grateful to Congress

for the swift action to bring consistency and common sense to regulations affecting small business throughout the nation, and we ask

the Committee’s support to see that the legislation before the Congress moves swiftly to the President. Thank you.

Mrs. KELLY [presiding]. Thank you very much, Mr. Lindsey.

[Mr. Lindsey’s statement may be found in the appendix.]

Mrs. KELLY. I want to thank both of you, Mr. and Mrs. Densmore

and Mr. Lindsey, for staying with us for as long as you have. I

have a couple of questions that I would like to ask you.

Mr. and Mrs. Densmore, you heard me, I am sure, questioning

the EPA about your statement about having more drivers making

more deliveries. That is caused by—I just want you to say again

what I think I read in your testimony—by what?

Mrs. DENSMORE. By the fact that they would not receive any—

we would have to deliver propane only so they could remain below

the threshold. We have one customer who has, like, 5,000 gallons

in storage tank capacity and he would only take a 2,000-gallon delivery from us. We would have to go twice and make sure he was

not over the threshold.

Mrs. KELLY. So you are saying that this would result in customer

avoidance so they will not have to file this. It is possible for

schools, universities, shopping centers, commercial buildings, it

would be possible for them, also, to reconstruct their tanks, if I understood the answer from the EPA to my earlier question to be correct, if they firewall off, they can just string out a whole lot of these

tanks in a sequence and, thus, avoid the EPA rule.

Mrs. DENSMORE. I think that is correct, yes.

Mr. DENSMORE. What you would have to do, you would have to

make some type of fire barrier or explosive barrier, which would be

ridiculous, also. Basically, what you are looking at a high peak

time in the industry—December, January, February, where demand for the product is high—our larger facilities that have standby heat, our nursing homes or hospitals, they have up to 30,000–

gallon storage tanks in their facilities. We count on that storage,

so at peak times, we can deliver them transport loads and we do

not run our smaller trucks.

Now, if we have to drop their storage quantity to a smaller tank

which would go into—well, to explain a little bit about propane,

most heating facilities all work on vapor, so a smaller tank cannot

handle the BTU load of that facility, so you would have to go into

a liquid transferal if you went to a smaller tank, which common

sense will tell you, if you are dealing with vapor and you are going

30

to liquid, there is a little more danger there. I feel that is more

dangerous. Then you need a vaporizer to heat that propane up to

where it could vaporize enough to take care of that facility.

So, usually, 30,000 is enough to get them through the month of

January and we do not have to worry about them, because we get

allocated during those peak seasons. We are only allowed so much

from our suppliers at that time. So the nursing homes, the factories, the hospitals, the greenhouses, everybody that counts on

these larger storage tanks, they are taken care of through this

peak time. We can demand all our concerns to residential heat and

the average customer.

If we have to deplete these storage facilities in our area, then

that means we are going to have to make more trips, we are going

to have to hire more drivers, we are going to have to build a larger

storage facility ourselves to compensate. It would be more trucks

on the road. Forty percent of our vehicles are diesel vehicles, like

you said, but most of our vehicles are propane, clean air, or are

powered by propane. But we would have more trucks on the road.

Like you said about the point of which you transfer liquid, dispersing it from your plant to your truck, that is your biggest hazard, whenever you go from your storage tank to your truck or your

truck to your storage tank. That is when you have the most probability of an accident. So any time you increase that, then you are

really increasing problems.

As far as the EPA was explaining about Pamphlets 54 and 58,

different States have different concerns on that. You cannot go

below the restrictions put in 58 or 54, but you can increase upon

them. Most cities or municipalities have higher regulations than

58. It is up to the fire department in that area. They can increase

the regulations to see fit, and most of them do. So we are getting

more restrictions at that point.

As far as toxin, it is not a toxin. Their definition of a toxin, I

guess if you poured enough water on your head, eventually, you

drown. I guess that would be a toxin. That is the only thing I want

to say about the toxin end of it. I cannot see where we fall into any

of this compliance.

Mrs. KELLY. So you agree with Mr. Lindsey that, in a sense,

what they are doing is they are degrading the safety, in a sense.

Mr. DENSMORE. Actually, they are degrading the safety at a

higher level. When you have to put these bigger operations on vaporizers, whenever you add more toys, you are going to have to

have more responsibility, which alleviates more problems. You are

not dispersing vapor anymore, you are dispensing liquid, and if you

had liquid dispersion, you are putting out more product than you

are with a vapor product because it expands it 240 times. If you

are dumping out liquid, well, a gallon of liquid will expand 240

times versus vapor, it would take an amount of time for that vapor

to expand 240 times. You might have an opportunity to stop a situation with the vapor problem.

Mrs. KELLY. Thank you. Mr. Lindsey, how accurate do you think

the EPA’s cost estimates for completing an RMP were?

Mr. LINDSEY. Based on our study, as I indicated a moment ago,

I think they were certainly low, because our indications are that

31

we are going to be looking at—11 of the consultants said it to be

in the range of $2,000 or more.

Mrs. KELLY. And they were factoring in the amount of money

that it is going to cost for the person to go and learn and then continually have to fill these things out, is that correct?

Mr. LINDSEY. That is correct.

Mrs. DENSMORE. I believe, is that not per location?

Mr. LINDSEY. That is per location.

Mr. DENSMORE. Per location.

Mrs. KELLY. Per location.

Mr. LINDSEY. And the real problem you will find here is you will

find that a lot of the customers will probably say, you are going to

add $2,000 of cost to my using this fuel? Then they have to begin

looking at the cost comparisons of does it make more sense for

them to switch to another fuel, or say to us as a propane supplier,

I am either going to be switching to another fuel unless you bear

the cost and burden of completing this. Then that adds one more

challenge, particularly to the small propane company.

Mrs. KELLY. Do we know the average profitability of the average

person dealing in propane? Are you working at a 10 percent, 20

percent, 50 percent markup, just margin? Usually, in small businesses, the margin of profitability is so small that if you talk about

$2,000 per location, you are eating into a big chunk of the profitability of that corporation. I look at you, Mr. and Mrs. Densmore,

knowing that regulatory problems have actually moved you out of

two ancillary businesses. I am very, very concerned that the cost

of this might move you out entirely.

Mrs. DENSMORE. One reason we are concerned about it is because it is an ongoing cost. Every time something changes in the

zone of receptors, you have to submit a new plan. This is an ongoing cost. We cannot just put it in place, spend the money, and be

done with it. It is ongoing for the rest of your life.

Mrs. KELLY. Thank you. Mr. Bartlett, I am sure you have a couple of questions.

Mr. BARTLETT. Thank you. Mrs. Densmore, you skipped one brief

paragraph in your written testimony. I was wondering if you

skipped that because you no longer believe it or because you were

trying to shorten your testimony to stay within our time limits.

Mrs. DENSMORE. Regarding the vapor cloud explosion?

Mr. BARTLETT. Yes.

Mrs. DENSMORE. No. I thought we had already covered that, so

I just thought I would hop over it.

Mr. BARTLETT. Okay. But for the record, you still believe that the

premise the EPA is using, a vapor cloud explosion, is so far fetched

that, to coin a phrase, we could all be struck by lightning simultaneously?

Mrs. DENSMORE. Yes, I do believe that.

Mr. BARTLETT. They have about the same odds of occurring, you

believe?

Mrs. DENSMORE. Yes.

Mr. BARTLETT. Thank you very much.

Mrs. KELLY. I guess there are no more questions. We really appreciate your being here. I think you have added a lot of information for all of us, and thank you very much.

32

Mrs. DENSMORE. Thank you.

Mrs. KELLY. I would like to leave the record open for ten days

for additional questions and comment, and I thank you very much.

The hearing is adjourned.

[Whereupon, at 12:57 p.m., the Committee was adjourned.]

33

34

35

36

37

38

39

40

41

42

43

44

45

46

47

48

49

50

51

52

53

54

55

56

57

58

59

60

61

62

63

64

65

66

67

68