Assessment Of The Potential Costs, Benefits, And Other Impacts

Of The Final Revisions To 

EPA’s Underground Storage Tank Regulations

Prepared for:

Release Prevention Division, Office of Underground Storage Tanks

U.S. Environmental Protection Agency

1200 Pennsylvania Avenue NW

Washington, DC 20460

Prepared by:

Industrial Economics, Incorporated

2067 Massachusetts Avenue

Cambridge, MA 02140

617/354-0074

April 2015
[This page intentionally left blank.]
iii

Acronyms And Terms

AHFDS – Airport hydrant fuel distribution system

ASTSWMO – Association of State and Territorial Solid Waste Management Officials

ATG – Automatic tank gauge / gauging – an automated process that monitors product level and 

provides inventory control

BLS – United States Bureau of Labor Statistics

BTEX – benzene, toluene, ethylbenzene, and xylenes

CFR – Code of Federal Regulations

CITLD – continuous in-tank leak detection

EGT – emergency generator tank

EPA – United States Environmental Protection Agency

EPAct – Energy Policy Act of 2005

FCT – field-constructed tank

Fill pipe – access by which a tank is filled

IRS – United States Internal Revenue Service

LLD – line leak detector / detection – a device that alerts the tank operator to the presence of a 

leak in underground piping by restricting or shutting off the flow of product through the piping, 

or by triggering an audible or visible alarm

LUST – leaking underground storage tank

MIDAS – modeling of infectious diseases agents study

NACS – National Association of Convenience Stores

NAICS – North American Industry Classification System

NRDA – natural resource damage assessment

OMB – United States Office of Management and Budget

OUST – Office of Underground Storage Tanks, United States Environmental Protection Agency

PAHs – polycyclic aromatic hydrocarbons
iv

RFA – Regulatory Flexibility Act

SBA – United States Small Business Administration

SBREFA – Small Business Regulatory Enforcement Fairness Act of 1996

SIR – statistical inventory reconciliation – a leak detection method where inventory, delivery, 

and dispensing data is statistically analyzed

SISNOSE – significant impact on a substantial number of small entities

SPA – state program approval

SPCC – Spill Prevention, Control, and Countermeasure

Spill bucket – contained sump installed at the fill or vapor recovery connection points to contain

drips and spills that can occur during delivery

Sump – subsurface area pit designed to provide access to equipment located below ground, and, 

when contained, to prevent liquids from releasing into the environment

SWDA – Solid Waste Disposal Act

TPH – total petroleum hydrocarbons

Turbine sump – sump designed to provide access to the turbine area above the tank

TVM – time value of money

UDC – under-dispenser containment – a device for collecting fluids spilled beneath a dispenser 

(pump) (e.g. dispenser pan)

UMRA – Unfunded Mandates Reform Act

UST – underground storage tank

WTP – willingness to pay
v

Contents

EXECUTIVE SUMMARY .................................................................................................... ES-1

CHAPTER 1. INTRODUCTION ........................................................................................ 1-1

1.1 Background...................................................................................................................... 1-1

1.2 Need for Regulatory Action............................................................................................. 1-2

1.3 Summary of the Final UST regulation............................................................................. 1-3

1.4 Alternative Regulatory Options....................................................................................... 1-5

1.5 Scope of Analysis ............................................................................................................ 1-8

1.6 Report Organization......................................................................................................... 1-8

CHAPTER 2. UNIVERSE OF UST SYSTEMS AFFECTED BY THE FINAL UST 

REGULATION ........................................................................................................................ 2-1

2.1 Types of Entities Affected by the Final UST regulation ................................................. 2-1

2.2 Configuration of Average Conventional UST System .................................................... 2-2

2.3 UST Universe Size and Distribution Across Sectors....................................................... 2-3

2.4 Universe of Facilities and Systems Potentially Affected by Final UST regulation......... 2-7

2.5 Facilities and Systems Affected by Final UST regulation............................................. 2-11

CHAPTER 3. ASSESSMENT OF COMPLIANCE COSTS ............................................ 3-1

3.1 Introduction...................................................................................................................... 3-1

3.2 Compliance Cost Methodology ....................................................................................... 3-1

3.2.1 Categories of Compliance Costs Analyzed.......................................................... 3-3

3.2.2 Estimation of System-Level Compliance Costs for UST Systems...................... 3-6

3.3 Calculation of Incremental Compliance Costs .............................................................. 3-11

3.3.1. Calculation of Incremental Compliance Costs Using an Alternative Baseline ... 3-13

3.4 Results of Assessment of Compliance Costs................................................................. 3-14

3.4.1 Assessment of Compliance Costs under the Alternative Baseline Scenario ..... 3-20

3.5 Sensitivity Analyses....................................................................................................... 3-20

3.5.1. Compliance Costs of the Final UST regulation Using Alternative Estimates of 

Labor Rates, Overhead Costs, and Fringe Benefits........................................... 3-20

3.5.2 Sensitivity Analysis of Distribution of Technologies for Overfill Prevention 

Equipment Inspections, Spill Prevention Equipment Testing, and Containment 

Sump Testing ..................................................................................................... 3-24

3.5.3 Summary of Sensitivity Findings....................................................................... 3-24
vi

3.6 State Government Administrative Compliance Costs.................................................. 3-25

3.7 Summary – Total Annual Compliance Costs................................................................. 3-26

CHAPTER 4. ASSESSMENT OF COST SAVINGS AND BENEFITS .......................... 4-1

4.1 Introduction...................................................................................................................... 4-1

4.2 Investigation of Empirical Methods for Measuring Cost Savings................................... 4-1

4.2.1 Engineering Estimates and Literature.................................................................. 4-1

4.2.2 Statistical Analysis of State Release Data ........................................................... 4-3

4.3 Final Methodology for Assessment of Positive Impacts: Expert Consultation ............... 4-6

4.3.1 Avoided Remediation Costs ................................................................................ 4-8

4.3.2 Calculating Avoided Remediation Costs............................................................. 4-8

4.4 Establishing Avoided Releases...................................................................................... 4-11

4.4.1 Avoided Releases Using an Alternative Baseline.............................................. 4-14

4.5 Benefits from Avoided Releases and Reduced Release Severity .................................. 4-16

4.5.1 Avoided Release Remediation........................................................................... 4-16

4.5.2 Reduction in Release Severity ........................................................................... 4-17

4.5.3 Total Avoided Remediation Costs from Avoided Releases and Reduced 

Release Severity................................................................................................. 4-19

4.5.4 Benefits from Avoided Releases and Reduced Release Severity under the 

Alternative Baseline Scenario............................................................................ 4-20

4.5.5 Avoided Costs by Requirement ......................................................................... 4-22

4.6 Avoided Vapor Intrusion Damages ............................................................................... 4-25

4.7 Avoided Product Loss.................................................................................................... 4-26

4.8 Human Health Benefits.................................................................................................. 4-27

4.9 Avoided Acute Exposure Events and Large-Scale Releases......................................... 4-29

4.10 Ecological Benefits........................................................................................................ 4-30

4.11 Measuring Benefits through Housing Price Changes.................................................... 4-34

4.12 Conclusion ..................................................................................................................... 4-35

4.12.1 Summary of Positive Impacts under the Alternative Baseline Scenario ........... 4-36

CHAPTER 5. DISTRIBUTIONAL IMPACTS AND CONSIDERATIONS .................. 5-1

5.1 Introduction...................................................................................................................... 5-1

5.2 Economic Impacts............................................................................................................ 5-1

5.2.1 Distribution of UST Systems by Industry Sector ................................................ 5-3

5.2.2 Market Dynamics in the Retail Motor Fuels Sector ............................................ 5-3
vii

5.2.3 Assessment of Market Exits and Employment Impacts ...................................... 5-8

5.2.4 Assessment of Public Sector Cost Savings Related to Avoided Releases......... 5-16

5.2.5 Economic Impact Summary............................................................................... 5-19

5.3 Energy Impact Analysis................................................................................................. 5-20

5.4 Regulatory Flexibility Analysis..................................................................................... 5-21

5.4.1 Small Business Screening Analysis................................................................... 5-22

5.4.2 Small Business Supplemental Analysis............................................................. 5-23

5.4.3 Impacts to Small Governments.......................................................................... 5-24

5.5 Screening Analysis to Inform Impacts on Minority and Low-Income Populations...... 5-26

5.5.1 Risk Assessment Population Analysis............................................................... 5-27

5.5.2 Demographic Analysis....................................................................................... 5-29

5.5.3 Summary and Limitations of the Analysis......................................................... 5-33

5.6 Children’s Health Protection Analysis........................................................................... 5-34

CHAPTER 6. OTHER STATUTORY AND EXECUTIVE ORDER ANALYSES........ 6-1

6.1 Regulatory Planning and Review..................................................................................... 6-1

6.2 Unfunded Mandates Analysis.......................................................................................... 6-2

6.3 Federalism Analysis......................................................................................................... 6-3

6.4 Tribal Governments Analysis.......................................................................................... 6-4

6.5 Joint Impacts of Rules...................................................................................................... 6-5

CHAPTER 7. COMPARISON OF COSTS, BENEFITS, AND OTHER IMPACTS .... 7-1

7.1 Cost Benefit Comparison................................................................................................. 7-2

7.1.1 Net Costs of the Regulation: Potential Underestimates of Cost Savings and 

Benefits................................................................................................................ 7-4

7.1.2 Net Costs of the Regulation: Cost Savings to Public and Private Entities.......... 7-4

7.1.3 Alternative Baseline: Potential Decreases in Future Cost Savings...................... 7-6

7.2 Cost-Effectiveness Analysis ............................................................................................ 7-7

7.3 Costs and Beneficial Effects Under Alternative Discount Rates..................................... 7-7

Sources Cited

Appendices:

Appendix A: Configuration and Cost Assumptions for Airport Hydrant Fuel Distribution 

 Systems (AHFDSs) and Field-Constructed Tanks (FCTs)
viii

Appendix B: Estimation of Affected UST Universe and Baseline State Regulations

Appendix C: Analysis of Piping Replacement Thresholds

Appendix D: Methodology for Calculating Compliance Costs

Appendix E: Access Model Structure and Specifications

Appendix F: Analysis of Statistical Relationship between State Regulatory Programs and 

 Confirmed Release Data

Appendix G: Expert Consultation: Selection and Data Collection Methodology

Appendix H: Expert Consultation: Responses and Interpretation

Appendix I: Methodology for Calculating Avoided Cleanup Costs and Summary Tables

Appendix J: Estimation of Future UST System and Release Universes for the Alternative 

Baseline Scenario

Appendix K: Methodology for Estimating Upper Bound Market Exit Scenario

Appendix L: Screening Analysis of Impacts on Small Entities

Appendix M: Screening Analysis of Environmental Justice Impacts

Appendix N: Cost Savings to State Financial Assurance Funds

Appendix O: UMRA Written Statement
ES-1

Executive Summary

Overview 

In 1984, Congress responded to the increasing threat to groundwater from leaking 

underground storage tank (UST) systems by adding Subtitle I to the Solid Waste Disposal Act 

(SWDA). SWDA required the U.S. Environmental Protection Agency (EPA) to protect the 

environment and human health from UST releases by developing a comprehensive regulatory

program for UST systems storing petroleum or certain hazardous substances. In 1986, Congress 

amended Subtitle I of SWDA and created the Leaking Underground Storage Tank Trust Fund 

(LUST Trust Fund) to oversee and pay for cleanups at sites where the owner or operator is 

unknown, unwilling to pay, or unable to pay.

EPA promulgated the UST regulation in 1988 (40 CFR Part 280). This regulation set 

minimum standards for new tanks and required owners and operators of existing tanks to 

upgrade, replace, or close them. The 1988 regulation set deadlines for owners and operators to 

meet the new requirements. In 1988, EPA also promulgated a regulation for state program 

approval (40 CFR Part 281). EPA has not significantly changed these regulations since 1988. In 

2005, the Energy Policy Act (EPAct) further amended Subtitle I of SWDA. EPAct requires states 

that receive federal Subtitle I money from EPA to meet certain requirements. EPA developed 

grant guidelines for states regarding: operator training; inspections; delivery prohibition; 

secondary containment; financial responsibility for manufacturers and installers; public record;

and state compliance reports on government UST systems. 

After Congress passed EPAct, EPA decided to revise the 1988 UST regulation (at 40 

CFR Part 280), primarily to ensure parity in Indian country. Key EPAct provisions (such as 

secondary containment and operator training) apply to all states receiving federal Subtitle I 

money, regardless of their state program approval status. However, these key provisions do not 

apply in Indian country (or in states and U.S. territories that do not meet EPA’s operator training 

or secondary containment grant guidelines). In order to establish federal UST requirements 

similar to the UST secondary containment and operator training requirements of EPAct, EPA 

needed to revise the 1988 UST regulation. Without these changes, EPAct provisions will not 

apply in Indian country. These revisions will also fulfill the objectives of the EPA-Tribal UST 

Strategy (August 2006) in which both EPA and tribes recognized the importance of ensuring 

parity in implementing UST program requirements in states and territories, as well as in Indian 

country.

1

EPA decided now is also an appropriate time to change the 1988 UST regulation to 

reflect technology improvements, address outdated requirements, and place a stronger emphasis 

on operations and maintenance. While EPA has issued many guidance documents and used 

various implementation approaches and techniques over the last 25 years, we have not made 

significant changes to the original 1988 UST regulation. Indeed, most states have passed 

requirements that go far beyond the 1988 UST regulation that provide greater environmental 

protection. These state regulations fully implement provisions of the EPAct and improve other 

 

1

See http://www.epa.gov./oust/fedlaws/Tribal%20Strategy_08076r.pdf. 
ES-2

important areas of the 1988 UST regulation that have become outdated. Furthermore, while 

information on sources and causes of releases show that releases from tanks are less common 

than they once were, releases from piping and spills and overfills associated with deliveries have 

emerged as more common problems.2 Dispenser-related failures have also emerged as a leading 

source of releases. The lack of proper operation and maintenance of UST systems is a main 

cause of release from these areas. The final UST regulation places an emphasis on ensuring that 

equipment is properly maintained and working. It highlights the importance of operating and 

maintaining UST equipment so releases are prevented and detected early in order to avoid or 

minimize potential soil and groundwater contamination. 

EPA worked diligently to ensure our regulatory development process was open and 

transparent. Over a two year period, we provided all stakeholders – state and tribal regulators; 

federal facilities; petroleum industry members, including representatives of owners and 

operators; equipment manufacturers; small businesses; local governments; and environmental 

and community groups – an opportunity to share their ideas and concerns through a variety of 

meetings, conference calls, and email exchanges. EPA thoroughly considered all input we 

received.

From this extensive stakeholder outreach, EPA compiled potential proposed changes to 

the UST regulation. EPA shared all ideas with stakeholders and gave them an opportunity to 

comment on each idea submitted. We then revised the list of potential changes and added items 

based on data, analysis, and consideration of costs and benefits. Ultimately, EPA identified the 

items in the proposed UST regulation as those which needed regulatory changes at the time; the 

proposed UST regulation was issued in November 2011 for a 90-day public comment period. 

EPA then extended this public comment period for an additional 60 days. EPA received 

submissions from over 190 commenters. Based on these comments, EPA has revised the 2011

proposed UST regulation and is now finalizing the UST regulation, as described below.

Regulatory Changes 

EPA is revising the 1988 UST regulation to: establish federal requirements similar to 

certain key provisions of the EPAct; ensure owners and operators perform proper operation and 

maintenance; address UST systems deferred in the 1988 UST regulation; update the regulation to 

encompass current technology and practices; and make technical and editorial corrections. 

Specifically, EPA is requiring the following set of revisions (hereafter referred to as the Selected 

Option):

 Establish federal requirements for secondary containment and operator training 

similar to those established by EPAct for states that receive federal Subtitle I 

money

 Add operation and maintenance requirements 

 

2 U.S. Environmental Protection Agency, Office of Underground Storage Tanks, “Evaluation of Releases 

from New and Upgraded Underground Storage Tank Systems – Peer Review Draft,” U.S. EPA, August 2004, and 

U.S. Environmental Protection Agency, Office of Underground Storage Tanks, “Petroleum Releases at Underground 

Storage Tank Facilities in Florida,” Peer Review Draft, March 2005.
ES-3

o Walkthrough inspections 

o Overfill prevention equipment inspections 

o Spill prevention equipment tests 

o Containment sump tests

o Operability tests for release detection equipment 

 Address UST systems deferred in the 1988 UST regulation3

o Remove release detection deferral for emergency generator tanks (EGTs)

o Remove deferrals for airport hydrant fuel distribution systems (AHFDSs) 

and UST systems with field-constructed tanks (FCTs) 

 Provide for other changes to improve release prevention and detection and 

program implementation 

o Require testing after repairs to spill and overfill prevention equipment and 

secondary containment

o Eliminate flow restrictors in vent lines as an overfill prevention option for 

all new tanks and when overfill prevention equipment is replaced 

o Require closure of lined tanks that cannot be repaired according to a code 

of practice 

o Address responses to interstitial monitoring alarms

o Retain vapor monitoring and groundwater monitoring as methods of 

release detection for tanks and piping (for those installed before the 

effective date of today’s final UST regulation) only if owners and 

operators demonstrate proper installation and performance through a site 

assessment 

o Require notification of ownership change 

o Establish requirements for demonstrating compatibility with fuels 

containing greater than E10 and greater than B20 

 Make general updates to the UST regulation 

o Reference newer technologies, including explicitly adding statistical 

inventory reconciliation (SIR) and continuous in-tank leak detection 

(CITLD) as release detection methods 

o Update codes of practice listed in the UST regulation 

o Remove old upgrade and implementation deadlines 

o Make editorial and technical corrections 

 Revise the state program approval regulation (40 CFR Part 281) to be consistent 

with the above revisions 

 

3

In the final UST regulation, EPA is also addressing the 1988 UST regulatory deferrals of wastewater 

treatment tank systems that are not part of a wastewater treatment facility regulated under sections 402 or 307(b) of 

the Clean Water Act, USTs containing radioactive material, and emergency generator UST systems at nuclear power 

generation facilities regulated by the Nuclear Regulatory Commission. However, because these regulatory changes 

will not result in any incremental costs to the regulated community, this RIA does not factor these systems into any 

part of the analysis.
ES-4

In addition to the Selected Option, EPA considered two other regulatory alternatives, 

described as Alternative 1 and Alternative 2. Alternative 1 is overall more stringent than the 

Selected Option. Alternative 2 is overall less stringent than the Selected Option. Exhibit ES-1

summarizes the requirements under each alternative. 

Exhibit ES-1

Options Considered For The Final UST regulation

Requirement Description

Options

Selected Alternative 1 Alternative 2

Release Prevention

Walkthrough inspections 30-day 30-day 

(as proposed in Nov 2011)* Quarterly

Overfill prevention equipment 

inspections 3 year Annual Not required

Spill prevention equipment tests 3 year Annual 3 year

Containment sump testing 3 year Annual Not required

Testing after repairs to spill and 

overfill prevention equipment, and 

secondary containment

Required Required Required

Eliminate flow restrictors in vent lines 

for all new tanks and when overfill 

prevention equipment is replaced

Required Required No change from existing 

regulation

Release Detection

Operability tests for release detection 

equipment

Annual (plus annual 

check of sumps)

Annual 

(as proposed in Nov 2011) *

Annual (plus annual 

check of sumps)

Add SIR/CITLD to regulation with 

performance criteria Required Required Required

Response to interstitial monitoring 

alarms Required Required Required

Groundwater and vapor monitoring for 

release detection

Continue to allow with 

site assessment 

5-year phase out

(as proposed in Nov 2011)*

No change from existing 

regulation

Remove release detection deferral for 

emergency generator tanks Required Required (as proposed in Nov 2011)* Required

Other

Require notification of ownership 

change Required Required Required

Closure of lined tanks that cannot be 

repaired according to a code of 

practice

Required Required Required

Requirements for demonstrating

compatibility with fuels >E10 and 

>B20

Required Required 

(as proposed in Nov 2011)*

No change from existing 

regulation

Remove deferrals for airport hydrant 

fuel distribution systems and UST 

systems with field-constructed tanks

Regulate under 

alternative release 

detection requirements 

Require AHS/FCT notify 

implementing agency and 

report releases (with no 

other requirements)

Maintain deferral

EPAct-related Provisions

Operator training Required Required Required

Secondary containment Required Required Required

*

In the 2011 proposed UST regulation, these changes generally consisted of more or stricter requirements than what is in the 

final UST regulation. For example, the 30-day walkthrough inspections in the 2011 proposed UST regulation included monthly 

check of sumps. Please see the 2011 proposed UST regulation for details.

EPA designed this assessment in accordance with the Office of Management and 

Budget’s (OMB) requirements for regulatory review under Executive Order 12866 (as amended 

by Executive Order 13258), which applies to any significant regulatory action. This document 

also fulfills these requirements:
ES-5

 Regulatory Flexibility Act, as amended by Small Business Regulatory

Enforcement Fairness Act of 1996 

 Executive Order 12898, Federal Actions to Address Environmental Justice in 

Minority Populations and Low-Income Populations

 Executive Order 13045, Protection of Children From Environmental Health Risks 

and Safety Risks

 Unfunded Mandates Reform Act of 1995 

 Executive Order 13175, Consultation and Coordination With Indian Tribal 

Governments

 Executive Order 13132, Federalism

 Executive Order 13211, Actions Concerning Regulations That Significantly Affect 

Energy Supply, Distribution, or Use

Summary Of Findings 

Within the constraints of data availability, EPA in this analysis identified all quantifiable 

and qualitative impacts for the UST regulation. EPA obtained sufficient data to identify, by state, 

the number of units likely to be affected by each change in the final UST regulation. In our 

analysis, we use these data to assess the compliance costs imposed upon units and relevant state 

governments. In conducting these analyses, EPA also assessed the sensitivity of outcomes to key

assumptions. Separately, the analysis monetizes a number of impacts of the final UST regulation 

including: avoided costs generated by avoided releases and reduction in severity of releases; 

avoided product loss; and avoided vapor intrusion damages. This analysis quantifies, but does 

not value, groundwater impacts. Finally, due to data and resource limitations, EPA was unable to 

quantify or value in this analysis human health benefits or ecological impacts, but addresses

these qualitatively.

In addition to identifying costs and positive impacts, EPA in this analysis also examined 

the economic and distributional impacts of the final UST regulation. The economic impact 

analysis includes the final UST regulation’s effect on facility closures, employment, and energy

output and cost. In the analysis of the final UST regulation’s distributional impacts, we examined 

small business impacts, effects on minority and low-income populations, impacts on children’s 

health, and potential impacts on state financial assurance funds. Finally, EPA’s analysis 

considered the final UST regulation’s impacts related to certain executive orders and statutes, 

including the Unfunded Mandates Reform Act, tribal governments, and federalism. 

The main conclusions of this analysis are:

 Compliance costs4– EPA estimates $160 million in annual compliance costs for 

the final UST regulation, including costs of $130 million for conventional UST 

systems and EGTs; $10 million for AHFDSs; $11 million for FCTs; $5.5 million 

 

4 Compliance costs include direct compliance costs and state oversight costs. For this regulatory impact 

analysis, direct compliance costs and state oversight costs provide a reasonable proxy to assess the final UST 

regulation’s social costs. See Chapter 3.1 for further discussion.
ES-6

for owners and operators to read the final UST regulation; and less than $1.0 

million in state government administrative costs. Compliance costs range from 

approximately $70 million under Alternative 2 to $290 million under Alternative 

1.

 State and local government costs – Annual state and local government costs, 

including compliance costs to UST systems owned or operated by state and local 

governments, state program approval costs, state costs for processing ownership 

changes, and one-time notification costs for previously deferred systems, are 

approximately $6.8 million. These costs range from approximately $3.6 million 

under Alternative 2 to $14 million under Alternative 1.5

 Avoided costs – Avoided remediation costs associated with conventional UST 

systems form the majority of positive impacts from the final UST regulation.6

EPA estimates that the final UST regulation will avoid total costs of $310 million 

per year (range: $120 million per year to $530 million per year) under the 

Selected Option. This includes: $300 million (range: $110 million to $510 

million) in avoided remediation costs from avoided releases and avoided 

groundwater contamination incidents; $4.5 million (range: $1.7 million to $7.9 

million) in avoided vapor intrusion remediation costs; and $3.1 million (range: 

$860,000 to $6.5 million) in avoided product loss. Total avoided costs are $450 

million (range: $210 million to $670 million) under Alternative 1 and $230 

million (range: $45 million to $420 million) under Alternative 2.7

 Benefits – Due to data and resource constraints, EPA was unable to quantify or 

monetize many of the final UST regulation’s benefits, including human health and

ecological benefits. EPA estimates that the final UST regulation could potentially

protect 50 billion to 240 billion gallons of groundwater each year.8 Categories of 

nonmonetizable or nonquantifiable benefits that are qualitatively discussed in this 

analysis include: avoidance of human health risks, mitigation of acute exposure 

 

5

If all applicable state and local government costs were incurred in the first year, rather than annualized 

and discounted, state and local governments would incur approximately $3.8 million in costs under the Selected 

Option. This includes $0.2 million for states to apply for state program approval and to read the regulations, $0.2 

million for states to process one-time notifications of AHFDSs and FCTs and ownership changes that occur in the 

first year, and $3.6 million for state and local government owners and operators of UST systems to comply with 

requirements that come into effect in the first year (approximately 80 percent of which would be for state and local 

government owners and operators to read the final UST regulation). 

6

For purposes of this analysis, “avoided remediation costs” include avoided administrative, response, 

remediation, and oversight costs.

7 Note that due to modeling and data limitations, EPA was unable to estimate avoided remediation costs 

associated with avoided releases and avoided groundwater contamination from AHFDSs and FCTs. In addition, 

EPA’s estimates of avoided remediation costs do not include non-use values that individuals may place on the 

existence of uncontaminated water supply.

8

See chapter 4.10 for details on how this estimate was derived.
ES-7

events and large-scale releases (e.g., releases from AHFDSs and FCTs9), 

protection of ecological biota, and avoided property devaluation.

 Compliance costs and avoided costs under the alternative baseline – Under 

the alternative baseline scenario that assumes declines in the universes of both 

UST systems and releases over time, EPA estimates $160 million in annual 

compliance costs for the final UST regulation. Estimated costs do not change 

substantially under the alternative baseline scenario and range from $70 million 

under Alternative 2 to $290 million under Alternative 1. EPA also estimates total 

avoided costs of $210 million (range: $81 million to $360 million) under the 

Selected Option in the alternative baseline scenario. These avoided costs range 

from $160 million (range: $31 million to $290 million) under Alternative 2 to 

$310 million (range: $140 million to $460 million) under Alternative 1. 

 Average economic impacts – Motor fuel retailers, which account for roughly 80 

percent of UST systems, are expected to bear approximately 70 percent of the 

total costs under the Selected Option. To establish how the final UST regulation 

may impact the market, EPA examined whether the final UST regulation imposes 

a cost greater than the average after-tax profit margin of 1.8 percent for motor fuel 

retailers.10 Using this benchmark, we estimate approximately 19 firms may exit 

the market if they cannot pass costs through to customers. This number represents 

less than 0.1 of one percent of the total universe of 148,000 facilities. In 

comparison, between 2005 and 2013, the number of gas station facilities 

decreased by an average of 2,024 stations per year.

 State financial assurance funds – Decreases in release frequency and severity

may decrease payments required of state financial assurance funds by $160 

million or more per year under the Selected Option.11 To the extent that these 

funds are maintained by taxes other than those assessed on UST operators, 

decreases in these payments effectively represent a reallocation of costs from 

public entities to the private entities responsible for releases. 

 

9

For example, an estimated 300,000 to 500,000 gallons of fuel were released from a 2.1 million gallon 

underground FCT at a fuel depot in Portsmouth, VA. Free product was found within 20 feet of a nearby creek in 

1987. The release was attributed to tank or piping failures. Another example is Pease Air Force Base, where jet fuel 

was delivered to the runway apron via an underground fueling system. Historical leakage from the system 

contaminated soil and groundwater, forming groundwater plumes at many sites along the system. A site release 

study identified 60 to 70 release points with varying degrees of severity along the refueling system line with free 

product found under the apron at closure.

10 When costs exceed facility profits, it is likely that in the long-term, the facility would exit the market.

After-tax profit margin based on 2009 data reported to the IRS (see chapter 5.2.3).

11 See chapter 5.2.4 for details on how this estimate was derived.
ES-8

Assessment Of Compliance Costs 

For this regulatory impact analysis, direct compliance costs and state oversight costs 

provide a reasonable proxy to assess the final UST regulation’s social costs for the following 

reasons: 

 The regulatory requirements generally focus on additional testing and inspection 

of existing equipment and do not reflect large-scale investments in equipment or 

significant changes to operations at the facility level. In addition, the facilities 

affected by the final UST regulation are distributed with relative geographic 

uniformity for consumers and producers. 

 Given the small per-facility costs (approximately $715 per year for the average 

facility), closures or changes in market structure represent an unlikely response to 

the final UST regulation. According to the 2007 Economic Census, average 

revenues in the retail motor fuel sales sector were approximately $3.8 million; the 

corresponding cost-to-sales ratio for the average facility is less than one-tenth of 

one percent. Therefore, it is unlikely that significant changes to production or 

consumer behavior will affect social costs. 

 The short- and long-run impacts of the final UST regulation are not likely to differ 

significantly. Testing and inspection requirements may offer some opportunities 

for owners and operators to reduce costs by learning over time, but they are not 

likely to reduce costs enough to facilitate large-scale equipment upgrades. 

EPA’s calculation of total incremental compliance costs for UST facilities reflects two 

key components: identifying specific measures necessary for compliance at individual facilities 

and calculating costs associated with each of these measures. To estimate these costs, EPA 

developed a compliance cost model that identifies incremental equipment and labor requirements 

for an individual system. Based on the baseline equipment use profile, existing state regulations, 

and anticipated responses to the final UST regulation, the model then generates system-specific 

estimates of compliance costs. Compliance costs include labor and capital costs associated with 

new equipment and installation, inspection, testing, and recordkeeping. The model also includes 

other compliance costs, such as those associated with more frequent detection of equipment 

failure and repair of equipment. Some component costs are specific to individual UST system 

configurations – for example, AHFDSs or FCTs – while others are consistent across all system 

types. Exhibit ES-2 summarizes the findings of our analysis of compliance costs. 
ES-9

Exhibit ES-2

Total Annual Compliance Costsa,b

Category

Selected 

Option

($ millions)

Alternative 1

($ millions)

Alternative 2

($ millions)

Conventional UST systems c$130 $280 $63

Emergency Generator Tanks (EGTs) $2.0 $2.3 $2.0

Airport Hydrant Fuels Distribution Systems (AHFDSs) $10 $0.017 $0.0

UST systems with Field-Constructed Tanks (FCTs) $11 $0.066 $0.0

Cost to Owners/Operators to Read Regulation $5.5 $5.5 $5.5

State Government Administrative Costs d$0.12 $0.12 $0.12

Total Annual Compliance Costs e

$160 $290 $70

a Cost estimates were derived using a seven percent discount rate.

b Compliance costs include direct compliance costs and state oversight costs. For this regulatory impact analysis, direct 

compliance costs and state oversight costs provide a reasonable proxy to assess the final UST regulation’s social costs. See 

Chapter 3.1 for further discussion.

c Conventional UST systems include all systems that are not AHFDSs, FCTs, or EGTs.

d The costs for UST systems directly owned or operated by local, state, and federal government entities are included in the 

estimates of compliance costs within the other categories (see Exhibit ES-6). Costs shown here reflect the administrative costs 

for state governments to read the final UST regulation, apply for state program approval, process notifications of ownership 

changes, and process one-time notifications of EGT, AHFDS, and FCT existence.

e Totals may not add up due to rounding.

Assessment Of Cost Savings And Benefits 

Avoided remediation costs among conventional UST systems and EGTs provide the basis 

for a substantial portion of the beneficial impacts associated with the final UST regulation. 

Avoided remediation costs of the final UST regulation represent cost savings that accrue to 

owners, operators, and public entities charged with remediating releases at regulated facilities. 

EPA obtained remediation costs from a survey of state UST cleanup programs and estimates of 

the distribution of releases by UST system area from internal research.12 EPA identified four 

UST technical experts who provided professional judgment regarding the final UST regulation’s 

effects on reduction in release frequency (number of releases per year) and release severity (as 

measured by groundwater incidents averted). This body of knowledge allowed EPA to estimate 

total avoided costs, as well as avoided costs per requirement. EPA also estimated avoided costs 

associated with vapor intrusion and product loss, though these avoided costs are not allocated 

across requirements.13 Finally, the analysis provides qualitative discussion of avoided acute 

events and exposure (including large-scale releases, such as those from AHFDSs and FCTs), 

avoided human health risks, ecological benefits, and avoided property devaluation. These 

findings are summarized in Exhibit ES-3 below.

 

12 U.S. Environmental Protection Agency Office of Underground Storage Tanks, “Evaluation of Releases 

from New and Upgraded Underground Storage Tank Systems – Peer Review Draft,” U. S. EPA, August 2004.

13 These costs were not allocated because we did not ask the experts to estimate quantitatively how different 

regulatory requirements would specifically affect vapor intrusion or product loss. Vapor intrusion frequency and 

cost data rely on general information we received from several states and are typically recorded as additional 

remedial activities at some groundwater sites. The likelihood of vapor intrusion, however, is driven by proximity of 

receptors and by geology and is not predictably related to the size or age of a plume. Product loss estimates rely on 

data from Florida and other sources for typical release sizes and are mapped to the estimates of avoided releases.
ES-10

Exhibit ES-3

Summary Of Positive Impacts

SELECTED OPTION

Type Of Impact Expert 1 Expert 2 Expert 3 Expert 4 Average Range

Monetized Avoided Costs Associated With Conventional USTs And EGTs ($ millions, present value 2012$)a

Releases and groundwater incidentsb$330 $110 $260 $510 $300 $110 - $510

Vapor intrusion $4.3 $1.7 $4.1 $7.9 $4.5 $1.7 - $7.9

Product loss $2.3 $0.86 $2.9 $6.5 $3.1 $0.86 - $6.5

Totalc

$330 $120 $270 $530 $310 $120 - $530

Non-Monetized Impactsd

Groundwater protected 

(billion gallons) 130 50 120 240 130 50 - 240 

Acute events and large-scale releases 

(e.g., releases from AHFDSs and 

FCTs)en/e n/e n/e n/e n/e n/e

Ecological benefitsen/e n/e n/e n/e n/e n/e

Human health risksen/e n/e n/e n/e n/e n/e

ALTERNATIVE 1

Type Of Impact Expert 1 Expert 2 Expert 3 Expert 4 Average Range

Monetized Avoided Costs Associated With Conventional USTs And EGTs ($ millions, present value 2012$)a

Releases and groundwater incidentsb$490 $200 $410 $650 $440 $200 - $650

Vapor intrusion - low assumptions $5.9 $2.5 $5.9 $9.1 $5.9 $2.5 - $9.1

Product loss $2.6 $0.78 $4.1 $7.6 $3.8 $0.78 - $7.6

Totalc

$500 $210 $420 $670 $450 $210 - $670

Non-Monetized Impactsd

Groundwater protected 

(billion gallons) 180 74 180 270 170 74 - 270 

Acute events and large-scale releases 

(e.g., releases from AHFDSs and 

FCTs)en/e n/e n/e n/e n/e n/e

Ecological benefitsen/e n/e n/e n/e n/e n/e

Human health risksen/e n/e n/e n/e n/e n/e

ALTERNATIVE 2

Type Of Impact Expert 1 Expert 2 Expert 3 Expert 4 Average Range

Monetized Avoided Costs Associated With Conventional USTs And EGTs ($ millions, present value 2012$)a

Releases and groundwater incidentsb$210 $44 $220 $410 $220 $44 - $410

Vapor intrusion - low assumptions $2.6 $0.56 $3.2 $6.0 $3.1 $0.56 - $6.0

Product loss $1.5 $0.36 $2.5 $5.2 $2.4 $0.36 - $5.2

Totalc

$220 $45 $220 $420 $230 $45 - $420

Non-Monetized Impactsd

Groundwater protected 

(billion gallons) 78 17 96 180 92 17 - 180 

Acute events and large-scale releases 

(e.g., releases from AHFDSs and 

FCTs)en/e n/e n/e n/e n/e n/e

Ecological benefitsen/e n/e n/e n/e n/e n/e

Human health risksen/e n/e n/e n/e n/e n/e

a Avoided remediation costs from releases and groundwater incidents are the costs related to site remediation. Avoided vapor 

intrusion costs include additional avoided costs associated with the remediation of vapor intrusion cases; the RIA does not 

address human health risk associated with vapor intrusion. Avoided product loss costs are also separate and additive.
ES-11

Exhibit ES-3

Summary Of Positive Impacts

b Expert 2 provided responses that generate benefits that are relatively low compared to estimated costs, unlike the other three 

experts. Conversations with this expert indicated that this discrepancy may be due to his assumptions about partial 

noncompliance. See Section 4.5.3 and Appendix H for additional discussion.

c Totals may not add up due to rounding. Cost estimates were derived using a seven percent discount rate.

d Due to data and resource constraints, EPA was unable to monetize some of the positive impacts of the final UST regulation. 

Chapter 4 provides a qualitative discussion of these benefits.

e Benefits not estimated are denoted by n/e.

Comparison Of Compliance Costs And Positive Impacts 

Exhibit ES-4 summarizes the compliance costs and positive impacts of the final UST 

regulation. The majority of measurable positive effects occur as avoided remediation costs. As 

discussed in Chapter 4, avoided costs provide a reasonable measure of the positive effects of the 

final UST regulation. 

Exhibit ES-4

Comparison Of Annual Compliance Costs And Cost Savingsf,d

Selected Option

(2012$ millions)

Alternative 1

(2012$ millions)

Alternative 2

(2012$ millions)

Annual Avoided Costsa

Releases and groundwater incidents: average value

(range of all values in italics)

$300 

($110-$510)

$440 

($200-$650)

$220 

($44-$410)

Vapor intrusion: average value

(range of all values in italics)

$4.5 

($1.7-$7.9)

$5.9 

($2.5-$9.1)

$3.1 

($0.56-$6.0)

Product loss

(range of all values in italics)

$3.1 

($0.86-$6.5)

$3.8 

($0.78-$7.6)

$2.4 

($0.36-$5.2)

Annual Compliance Costs

Conventional UST systemsb$130 $280 $63 

Emergency generator tanks (EGTs) $2.0 $2.3 $2.0 

Airport hydrant fuel distribution systems (AHFDSs) $10 < $0.1 N/A

UST systems with field-constructed tanks (FCTs) $11 < $0.1 N/A

Cost to owners/operators to read UST regulation $5.5 $5.5 $5.5 

State government administrative costsc$0.12 $0.12 $0.12

Total Annual Avoided Costs

(range of all values in italics)

$310 

($120-$530)

$450 

($210-$670)

$230 

($45-$420)

Total Annual Compliance Costsd$160 $290 $70 

Net Cost (Savings) To Societyd,g

[Total Compliance Costs Less Total Avoided Costs]

(range of all values in italics)

($160)

$39 - ($370)

($160)

$81 - ($380) 

($160)

$25 - ($350)

Non-Monetized Benefitse

Groundwater protected (billion gallons) 130 

(50-240)

170 

(74-270)

92 

(17-180)

Acute events and large-scale releases

(e.g., releases from AHFDSs and FCTs) Not estimated Not estimated Not estimated

Ecological benefits Not estimated Not estimated Not estimated

Human health risks Not estimated Not estimated Not estimated

a Avoided costs are estimated for conventional UST systems and emergency generator tanks only. Avoided remediation costs 

from releases and groundwater incidents are the costs related to site remediation. Avoided vapor intrusion costs include 

additional avoided costs associated with the remediation of vapor intrusion cases; the RIA does not address human health risk

associated with vapor intrusion. Avoided product loss costs are also separate and additive.

b Conventional UST systems include all systems that are not AHFDSs, FCTs, or EGTs.

c The costs for UST systems directly owned or operated by local, state, and federal government entities are included in the 

estimates of compliance costs within the other categories. Costs shown here reflect the administrative costs for state 
ES-12

Exhibit ES-4

Comparison Of Annual Compliance Costs And Cost Savingsf,d

governments to read the final UST regulation, apply for state program approval, process notifications of ownership changes, 

and process one-time notifications of existence for AHFDS and UST systems with FCTs. 

d Compliance costs include direct compliance costs and state oversight costs. For this regulatory impact analysis, direct 

compliance costs and state oversight costs provide a reasonable proxy to assess the final UST regulation’s social costs. See 

Chapter 3.1 for further discussion. 

e Due to data and resource constraints, EPA is unable to monetize some of the positive impacts of the final UST regulation. 

Chapter 4 of this document provides a qualitative discussion of these benefits.

f Totals may not add up due to rounding. Cost estimates were derived using a seven percent discount rate.

g The results show that all but one of the four estimates of cost savings for conventional systems exceed total regulatory costs 

(including FCT and AHFDS systems). As explained in Chapter 4 and Appendix H, one of the four experts provided estimates of 

avoided releases and averted groundwater incidents that do not result in net cost savings to society from the Selected Option. 

However, this expert also assumed a high level of noncompliance with the final UST regulation that is not consistent with the 

assumption of 100 percent compliance in the cost estimates. As a result, this low-end estimate of potential cost savings likely 

understates the cost savings that would be associated with a consistent, 100 percent compliance scenario. See Chapter 4 and 

Appendix H for detailed discussion of how these assumptions affect net benefits of the final UST regulation as calculated using 

responses from Expert 2.

Exhibit ES-5 summarizes the compliance costs and positive impacts of the final UST 

regulation under an alternative baseline where universes of UST systems and releases are 

assumed to decrease at a declining rate over time. Compliance costs do not change substantially 

under the alternative baseline, while estimates of avoided costs decrease by approximately 31 

percent, as the universe of releases contracts substantially under the alternative baseline. In this 

scenario, annual net savings to society for the Selected Option average $60 million per year.

Exhibit ES-5

Comparison Of Annual Compliance Costs And Cost Savings Under Alternative Baselinec,e

Selected Option

(2012$ millions)

Alternative 1

(2012$ millions)

Alternative 2

(2012$ millions)

Total Annual Avoided Costsa,b

(range of all values in italics)

$220 

($81-$360)

$310 

($140-$460)

$160 

($31-$290)

Total Annual Compliance Costsc

$160 $290 $70 

Net Cost (Savings) To Societyc,d

[Total Compliance Costs Less Total Avoided 

Costs] (range of all values in italics)

($60)

$74 - ($210)

($25)

$140 - ($170) 

($87)

$39 - ($220)

a Avoided costs are estimated for conventional UST systems and emergency generator tanks only.

b Due to data and resource constraints, EPA is unable to monetize some of the positive impacts of the final UST regulation. 

Chapter 4 of this document provides a qualitative discussion of these benefits.

c Compliance costs include direct compliance costs and state oversight costs. For this regulatory impact analysis, direct 

compliance costs and state oversight costs provide a reasonable proxy to assess the final UST regulation’s social costs. See 

Chapter 3.1 for further discussion. 

d The results show that all but one of the four estimates of cost savings for conventional systems exceeded total regulatory costs 

(including FCT and AHFDS systems). As explained in Chapter 4 and Appendix H, one of the four experts provided estimates of 

avoided releases and averted groundwater incidents that do not result in net cost savings to society from the Selected Option. 

However, this expert also assumed a high level of noncompliance with the final UST regulation that is not consistent with the 

assumption of 100 percent compliance in the cost estimates. As a result, this low-end estimate of potential cost savings likely 

understates the cost savings that would be associated with a consistent, 100 percent compliance scenario. See Chapter 4 and 

Appendix H for detailed discussion of how these assumptions affect net benefits of the final UST regulation as calculated using 

responses from Expert 2.

e Totals may not add up due to rounding. Cost estimates were derived using a seven percent discount rate.
ES-13

Economic Impacts 

EPA’s assessment of the economic impacts associated with this final UST regulation 

focused on the retail motor fuels sector, which accounts for approximately 80 percent of UST 

owners or operators. In this analysis, EPA describes supply and demand dynamics within the 

retail motor fuels market and the likely economic responses to increased compliance costs. Our 

screening assessment finds that average estimated facility-level costs of $715 may result in the 

market exit of approximately 19 firms, if these firms cannot pass any regulatory costs through to 

customers. This represents less than 0.1 of one percent of existing retail motor fuel facilities, and 

an even smaller fraction of all facilities affected by the final UST regulation.14 In comparison, 

approximately 2,024 facilities per year closed over the period between 2005 and 2013.

To address uncertainty related to the distribution of costs among UST facilities, we also 

constructed a worst-case sensitivity analysis, which identified the maximum number of facilities 

that could face significant economic impacts due to regulatory costs. We defined the worst case 

as the scenario where the highest possible cost occurred for the smallest facilities. We found that 

up to 4,500 facilities may exit the market in this unlikely worst-case scenario, representing 3

percent of existing retail motor fuel facilities and a similar rate to annual historical market exits. 

The limited magnitude of impacts even in the worst-case scenario suggests that the final UST 

regulation will not affect existing consolidation trends in the retail motor fuels industry, retail 

motor fuel prices, or consumption.

In addition, EPA’s analysis suggests that the final UST regulation could result in a 

reallocation of costs from the public to private parties responsible for releases.15 Preventing

releases under this UST regulation would increase compliance costs to facility owners, but the 

avoided releases would in many cases reduce remediation demand for taxpayer-funded state 

funds. This is likely to improve behavioral incentives, as the parties most likely to cause releases 

will also be responsible for preventing them. As discussed in Chapter 5, this reallocation could 

result in savings to state financial assurance funds in excess of $160 million per year. 

Other Regulatory And Distributional Issues 

As part of our analysis, we assessed the final UST regulation’s potential impacts related 

to: 

 Energy impacts – The final UST regulation will not have significant adverse 

effects on energy supply, distribution, or use, including impacts on price and 

foreign supplies. It is, therefore, not a significant energy action under Executive 

Order 13211, Actions Concerning Regulations That Affect Energy Supply, 

Distribution, or Use (May 18, 2001). 

 

14 Census data on number of facilities per firm indicate that virtually all firms earning less than $250,000 

per year in 2007 had only one facility. We therefore use “firm” and “facility” interchangeably in this context. See 

chapter 5.2.3 for details.

15 For additional information regarding this issue, see Chapter 5.
ES-14

 Regulatory flexibility – EPA’s analysis determined that approximately 634 small 

entities (less than 1 percent of the universe of affected small entities) may

experience economic impacts that exceed 1 percent of revenues, but only 19 of 

these entities would exit the market as a result of incurring costs greater than or 

equal to total profits. For various reasons, and especially due to different system 

configurations for smaller facilities, the actual number of affected entities is likely

to be even fewer than the number estimated by the analysis. In comparison, this 

number is smaller than the recent industry consolidation rate of approximately

2,024 facilities per year in the retail motor fuels sector. The final UST regulation 

is unlikely to have a significant economic impact on a substantial number of small 

businesses or small governments.

 Small government impacts – The final UST regulation is not expected to have 

significant small government impacts. EPA’s assessment of costs to state and 

local governments indicated that no government-owned UST facilities will 

experience costs that exceed 1 percent of revenues. 

 Impacts on minority and low-income populations – Because the final UST 

regulation would increase regulatory stringency and reduce the number and size 

of releases, the final UST regulation is not expected to have any 

disproportionately high and adverse human health or environmental effects on 

minority or low-income populations, or on any community.

 Children’s health protection – Because the final UST regulation is expected to 

reduce exposure to contaminated groundwater by reducing the number and size of 

releases, EPA does not expect the final UST regulation to have a disproportionate 

environmental health risk effect on children, as defined in Executive Order 13045, 

Protection of Children from Environmental Health Risks and Safety Risks (62 FR 

19885, April 23, 1997). Moreover, while the risk assessment did not specifically

measure exposure to children, it is unclear that children are disproportionately

affected in the baseline. For example, adults could be the more sensitive receptor 

for cancer effects of contaminated groundwater due to the longer potential 

exposure from showering (inhalation of vapors) compared to children (ingestion 

of water while bathing), particularly those under age 5 who are assumed to take 

more baths and fewer showers. 

 Regulatory planning and review – Pursuant to the terms of Executive Order 

12866 (58 FR 51735, October 4, 1993), EPA determined the final UST regulation 

is an economically significant regulatory action because it may have an annual 

effect on the economy of $100 million or more, as defined under part 3(f)(1) of 

the Order. Findings of the regulatory cost analysis in Chapter 3 indicate the final 

UST regulation is projected to result in aggregate annual compliance costs of 

approximately $160 million under the Selected Option, $290 million under 

Alternative 1, and $70 million under Alternative 2. 
ES-15

 Unfunded mandates analysis – The final UST regulation is subject to the 

requirements of sections 202 and 205 of the Unfunded Mandates Reform Act 

(UMRA), because it contains federal mandates that may result in the expenditure 

by state, local, and tribal governments or by the private sector of $100 million or 

more in any one year. Exhibit ES-6 provides references for EPA’s analyses 

responding to UMRA requirements under which this final UST regulation is 

subject. 

Exhibit ES-6

Location Of Analyses Responding To UMRA Requirements

Requirement Location In This 

Document

Identification of provision of federal law under which rule is being promulgated Chapter 1 

Assessment of costs and benefits to state, local, and tribal governments and the 

private sector

Chapters 3 and 4 

Assessment of the effect on health, safety, and the natural environment Chapter 4 

Assessment of the extent to which such costs may be paid with federal financial 

assistance

Chapter 3; no Federal 

assistance is anticipated

Assessment of the extent to which there are available federal resources to carry out 

this mandate

Chapter 3; no Federal 

resources are anticipated

Estimates of future compliance costs Chapter 3 

Estimates of disproportionate budgetary effects on any type of government or 

private sector segment

Chapter 5 

Estimates of the effect on the national economy Chapters 3 and 5 

 Federalism – Executive Order 13132, Federalism (64 FR 43255, August 10, 

1999), defines policies that have federalism implications to include regulations 

with substantial direct effects on states, on the relationship between the federal

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

the various levels of government. EPA typically considers a policy to have 

federalism implications if it results in aggregate expenditures by state or local 

governments of $25 million or more in any one year. As Exhibit ES-7 below 

indicates, EPA does not expect any of the regulatory options to have significant 

federalism implications. 

Exhibit ES-7

Summary Of Annual State And Local Government Costsb

Element

Selected Option

($ millions)

Alternative 1

($ millions)

Alternative 2

($ millions)

Local Compliance Costsa$5.4 $11.0 $2.8 

State Compliance Costsa$1.3 $2.9 $0.70 

State Government Administrative Costs $0.12 $0.12 $0.12 

Total State And Local Governments Costsc$6.8 $14.0 $3.6 

a

State and local government compliance costs are included in the total compliance costs presented in Exhibit ES-2.

b Cost estimates were derived using a seven percent discount rate.

c Total may not sum due to rounding. 
ES-16

 Tribal governments analysis – Executive Order 13175, Consultation and 

Coordination With Indian Tribal Governments (65 FR 67249, November 9, 

2000), requires EPA to develop an accountable process to ensure meaningful and 

timely input by tribal officials in the development of regulatory policies that have 

tribal implications. EPA consulted with tribal officials early in the process of 

developing this UST regulation to welcome meaningful and timely input into its 

development. EPA began its consultation with tribes on possible changes to the 

UST regulation shortly after the passage of the Energy Policy Act of 2005. In 

addition to our early consultation with tribes, EPA again reached out to the tribes 

as we started the official regulatory process and throughout the development of 

the UST regulation. EPA sent letters to leaders of over 500 tribes, as well as to 

tribal regulatory staff, inviting their participation in developing the regulation. 

EPA heard from both tribal officials who work as regulators as well as 

representatives of owners and operators of UST systems in Indian country. The 

tribal regulators raised concerns about ensuring parity of environmental protection 

between states and Indian country. The changes to the UST regulation are needed 

to ensure parity between UST systems in states and in Indian country. This final 

UST regulation will ensure installed equipment is working properly and protects

the environment from potential releases. 

As part of this analysis, EPA concluded that the final UST regulation will have 

tribal implications to the extent that tribally-owned entities with UST systems on 

Indian country would be affected. However, it will neither impose substantial 

direct compliance costs on tribal governments, nor preempt tribal law. Total costs 

to owners and operators of tribally-owned UST systems are approximately $0.67 

million. 

 Joint impacts of regulations – Facilities in the UST system universe are affected 

by a number of existing regulations, including state regulations and Spill 

Prevention, Control, and Countermeasure (SPCC) regulations. At the time of the 

1988 UST regulation, completely buried tanks greater than 42,000 gallons and 

located near navigable waters of the United States or adjoining shorelines were 

subject to both the UST regulation and SPCC regulation. Currently, a subset of 

UST systems in the universe is regulated by SPCC; these include EGTs, 

AHFDSs, and FCTs. To the extent that the requirements imposed on these UST 

systems via the final UST regulation are more or less stringent than the SPCC 

regulation currently governing them, the final UST regulation may cause an 

increase or a reduction in overall inspection and monitoring requirements and 

costs for these UST systems. To account for this, EPA generated baseline 

assumptions for these systems using information from the Department of Defense, 

the owner of the majority of all AHFDSs and FCTs. EGTs are assumed to incur 

all incremental costs beyond state regulatory baseline costs; to the extent that 

these systems are regulated under SPCC, this may overstate costs. EPA does not 

believe that the final UST regulation creates a serious inconsistency or interferes 

with any other actions planned or undertaken by other agencies.
1-1

Chapter 1. Introduction

This document presents an analysis by the U.S. Environmental Protection Agency (EPA) 

Office of Underground Storage Tanks (OUST) of the costs, benefits, and economic impacts of 

the final targeted changes to the underground storage tank (UST) regulation. The final UST 

regulation serves the purpose of strengthening the existing UST regulation by increasing the 

emphasis on proper operation and maintenance of UST systems and improved maintenance of 

release detection equipment. The changes anticipated under this final UST regulation also 

acknowledge improvements in technology over the last 25 years, including the ability to perform 

release detection for many tank systems that were previously deferred.

1.1 Background 

In 1984, Congress responded to the increasing threat to groundwater from leaking UST 

systems by adding Subtitle I to the Solid Waste Disposal Act (SWDA). SWDA required EPA to 

protect the environment and human health from UST releases by developing a comprehensive 

regulatory program for UST systems storing petroleum or certain hazardous substances. In 1986, 

Congress amended Subtitle I of SWDA and created the Leaking Underground Storage Tank 

Trust Fund (LUST Trust Fund) to oversee and pay for cleanups at sites where the owner or 

operator is unknown, unwilling to pay, or unable to pay.

EPA promulgated the UST regulation in 1988 (40 CFR Part 280). This regulation set 

minimum standards for new tanks and required owners and operators of existing tanks to 

upgrade, replace, or close their existing tanks. The 1988 regulation set deadlines for owners and 

operators to meet the new requirements. By 1998, owners and operators had to meet new UST 

system requirements, upgrade their existing UST systems, or close them. Owners and operators 

who chose to upgrade had to ensure that every UST system had spill prevention equipment (e.g., 

spill buckets), overfill prevention equipment, and was protected from corrosion. In addition, 

owners and operators were required to monitor their UST systems for releases using release 

detection (phased in during the 1990s depending on the year of installation of each UST system).

Finally, owners and operators were required to have financial responsibility (phased in through 

1998) to ensure that they are financially able to pay for any releases that occur. No significant 

changes have been made to these requirements since 1988.

In 1988, EPA also promulgated a regulation for state program approval (40 CFR Part 

281). Since states are the primary implementers of the UST program, EPA wanted to set up a 

process where state programs could operate in lieu of the federal program if certain requirements 

were met. This regulation describes the minimum requirements states must meet to have their 

regulations operate in lieu of the federal regulation.

In 2005, the Energy Policy Act (EPAct) further amended Subtitle I of SWDA. The EPAct 

requires states that receive federal Subtitle I money from EPA to meet certain requirements. EPA 

developed grant guidelines for states regarding: operator training; inspections; delivery

prohibition; secondary containment; financial responsibility for manufacturers and installers;

public record; and state compliance reports on government UST systems.
1-2

1.2 Need for Regulatory Action

After Congress passed EPAct, EPA decided to revise the 1988 UST regulation (at 40 

CFR Part 280), primarily to ensure parity in Indian country. Key EPAct provisions (such as 

secondary containment and operator training) apply to all states receiving federal Subtitle I 

money, regardless of their state program approval status; but these key provisions do not apply in 

Indian country (or in states and U.S. territories that do not meet EPA’s operator training or 

secondary containment grant guidelines). In order to establish federal UST requirements similar 

to the UST secondary containment and operator training requirements of EPAct, EPA decided to 

revise the 1988 UST regulation. Without these changes, EPAct provisions will not apply in 

Indian country. These revisions will also fulfill the objectives of the EPA-Tribal UST Strategy

(August 2006) in which both EPA and tribes recognized the importance of ensuring parity in 

implementing UST program requirements in states and territories, as well as in Indian country.

16

EPA decided that this is also an appropriate time to change the 1988 UST regulation to 

reflect technology improvements, address outdated requirements, and place a stronger emphasis 

on operations and maintenance. While EPA has issued many guidance documents and used 

various implementation approaches and techniques over the last 25 years, we have not made 

significant changes to the original 1988 UST regulation. Indeed, most states have passed 

requirements that go far beyond the 1988 UST regulation that provide greater environmental 

protection. These state regulations fully implement provisions of the EPAct and improve other 

important areas of the 1988 UST regulation that have become outdated.

Furthermore, while information on sources and causes of releases show that releases from 

tanks are less common than they once were, releases from piping and spills and overfills 

associated with deliveries have emerged as more common problems.17 In addition, failures of 

equipment and operations at the dispenser have emerged as one of the leading sources of 

releases. The lack of proper operation and maintenance of UST systems is a main cause of 

release from these areas. Data also indicate that release detection equipment only detects about 

one quarter of all releases.18 While some of those releases occur in areas not required to have 

release detection equipment, other releases that should be detected are not because of problems 

with the operation and maintenance of the release detection equipment.

 

16 See: U.S. Environmental Protection Agency, Office of Underground Storage Tanks. Strategy for an 

EPA/Tribal Partnership to Implement Section 1529 of the Energy Policy Act of 2005. August 2006. Accessed at: 

http://www.epa.gov./oust/fedlaws/Tribal%20Strategy_08076r.pdf. 

17 U.S. Environmental Protection Agency, Office of Underground Storage Tanks. “Evaluation of Releases 

from New and Upgraded Underground Storage Tank Systems (peer review draft).” August 2004; and U.S. 

Environmental Protection Agency, Office of Underground Storage Tanks. “Petroleum Releases at Underground 

Storage Tank Facilities in Florida.” March 2005.

18 About 50 percent of all releases go undetected because they occur in areas where release detection is not 

required (and therefore is not designed to detect a release). Approximately half of the remaining 50% that should be 

detected still go undetected partly because of issues with operation and maintenance of the release detection 

equipment. (U.S. Environmental Protection Agency, Office of Underground Storage Tanks. “Petroleum Releases at 

Underground Storage Tank Facilities in Florida.” March 2005. p. 26.)
1-3

Since the beginning of the UST program, preventing petroleum releases into the 

environment has been one of the program’s primary goals. EPA and our partners have made 

major progress in reducing the number of new releases, but over 5,000 releases are still 

discovered each year. Because existing publicly-funded mechanisms and institutions frequently

cover at least part of the costs of release remediation, many owners and operators of UST 

systems do not bear the full costs of their actions. Petroleum releases thus represent a negative 

externality caused by UST system operators, as the individuals and firms that cause releases do 

not bear their full costs. This represents a failure of the market to fully internalize the cost to 

society of operating an UST system: private costs do not equal social costs.19 A combination of 

revised technical standards and inspection and testing requirements represents the most 

appropriate method for reducing the number of future releases and mitigating the impact of 

existing negative externalities.

In revising the 1988 regulation, EPA wanted to make sure the regulation development

process was open and transparent and that all stakeholders had an opportunity to share their ideas 

as well as their concerns. From the beginning of this process, EPA recognized the concerns about 

costs on owners and operators and was committed to limiting the requirements for retrofits. We 

reached out to all stakeholders, including state and tribal regulators, federal facilities, members 

of the petroleum industry including representatives of owners and operators as well as equipment 

manufacturers, small businesses, local governments, and environmental and community groups.

Over a two-year period, we held conference calls, solicited comments and provided multiple 

opportunities for stakeholders to share their ideas as well as for us to keep them informed of 

where we were in the process.

From this extensive stakeholder outreach, EPA compiled potential proposed changes to 

the UST regulation. EPA shared all ideas with stakeholders and gave them an opportunity to 

comment on each idea. We then revised the list of potential changes and added items based on 

data, analysis, and consideration of costs and benefits. Ultimately, EPA identified the items in 

the proposed UST regulation as those which needed regulatory changes at the time; the proposed 

UST regulation was issued in November 2011 for a 90-day public comment period. EPA then 

extended this public comment period for an additional 60 days. EPA received submissions from 

over 190 commenters. Based on these comments, EPA revised the 2011 proposed UST 

regulation and is now finalizing the UST regulation, as described below.

1.3 Summary of the Final UST regulation

EPA is revising the UST regulation to: establish federal requirements that are similar to 

certain key provisions of the Energy Policy Act; ensure owners and operators perform proper 

operation and maintenance; address UST systems deferred in the 1988 UST regulation; update 

the regulation to current technology and practices; and make technical and editorial corrections.

 

19 We refer here to mechanisms other than those whose specific purpose is to fund remediation for new 

releases from UST systems. For example, if owners and operators in a particular state are compelled to participate in 

a fund operated by a public (or private) entity, and the contributions made directly by the owners and operators are 

equal to all the remediation costs, such a policy overcomes the market failure. However, when taxpayers are 

required to cover any portion of remediation costs through general funds or revenues obtained for other purposes, 

the negative externality will not be rectified.
1-4

Specifically, EPA is requiring the following set of revisions (hereafter referred to as the Selected

Option):

 Establish federal requirements for secondary containment and operator training 

similar to those established by EPAct for states that receive federal Subtitle I 

money

 Add operation and maintenance requirements 

o Walkthrough inspections 

o Overfill prevention equipment inspections 

o Spill prevention equipment tests 

o Containment sump tests

o Operability tests for release detection equipment 

 Address UST systems deferred in the 1988 UST regulation 20

o Remove release detection deferral for emergency generator tanks

o Remove deferrals for airport hydrant fuel distribution systems (AHFDSs) 

and UST systems with field-constructed tanks (FCTs) 

 Provide for other changes to improve release prevention and detection and 

program implementation

o Require testing after repairs to spill and overfill prevention equipment, and 

secondary containment

o Eliminate flow restrictors in vent lines as an overfill prevention option for 

all new tanks and when overfill prevention equipment is replaced 

o Require closure of lined tanks that cannot be repaired according to a code 

of practice 

o Address responses to interstitial monitoring alarms

o Retain vapor monitoring and groundwater monitoring as methods of 

release detection for tanks and piping (for those installed before the 

effective date of today’s final UST regulation) only if owners and 

operators demonstrate proper installation and performance through a site 

assessment

o Require notification of ownership change

o Establish requirements for demonstrating compatibility with fuels 

containing greater than E10 and greater than B20

 Make general updates to the UST regulation

 

20 In the final UST regulation, EPA is also addressing the 1988 regulatory deferrals of wastewater treatment 

tank systems that are not part of a wastewater treatment facility regulated under sections 402 or 307(b) of the Clean 

Water Act, USTs containing radioactive material, and emergency generator UST systems at nuclear power 

generation facilities regulated by the Nuclear Regulatory Commission. However, because these regulatory changes 

will not result in any incremental costs to the regulated community, this RIA does not factor these systems into any 

part of the analysis.
1-5

o Reference newer technologies, including explicitly adding statistical 

inventory reconciliation (SIR) and continuous in-tank leak detection 

(CITLD) as release detection methods 

o Update codes of practice listed in the UST regulation

o Remove old upgrade and implementation deadlines

o Make editorial and technical corrections 

 Revise the state program approval regulation (40 CFR Part 281) to be consistent 

with the above revisions

1.4 Alternative Regulatory Options

In addition to assessing the impacts of the Selected Option, this document assesses the 

costs, benefits, and economic impacts of two regulatory alternatives, as outlined in Exhibit 1-1. 

Please refer to the preamble for a discussion of the rationale behind the development of these two 

alternatives.

While some of the regulatory requirements remain constant across all alternatives, EPA 

evaluated variations in the subset of proposed requirements that change across alternatives. The 

differences between the three regulatory options considered in this regulatory impact analysis are 

described in Exhibit 1-1.

Note that each option (i.e., Selected, Alternative 1, and Alternative 2) considered by EPA 

contains a set of new requirements that does not vary across these options. EPA believes the 

requirements in this set represent, at a minimum, changes that need to be included in the final 

UST regulation. Specifically, these requirements are:

 Testing after repairs to spill and overfill prevention equipment, and interstitial 

spaces

 Adding SIR/CITLD to regulation with performance criteria

 Reporting and testing for interstitial alarms

 Removing the deferral for release detection for emergency generator tanks

 Notification of ownership change

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

 Requiring operator training and secondary containment21

 

21 As explained in the introduction, operator training and secondary containment are being finalized in 

order to ensure parity in program implementation among states and in Indian country.
1-6

Exhibit 1-1

Options Considered For The Final UST regulation

Requirement Description

Options

Selected Alternative 1 Alternative 2

Release Prevention

Walkthrough inspections 30-day 30-day

(as proposed in Nov 2011)

Quarterly

Overfill prevention equipment 

inspections 3 year Annual Not required

Spill prevention equipment tests 3 year Annual 3 year

Containment sump testing 3 year Annual Not required

Testing after repairs to spill and overfill 

prevention equipment, and secondary 

containment

Required Required Required

Eliminate flow restrictors in vent lines for 

all new tanks and when overfill 

prevention equipment is replaced

Required Required No change from 

existing regulation

Release Detection

Operability tests for release detection 

equipment

Annual (plus annual 

check of sumps)

Annual

(as proposed in Nov 2011)

Annual (plus annual 

check of sumps)

Add SIR/CITLD to regulation with 

performance criteria Required Required Required

Response to interstitial monitoring alarms Required Required Required

Groundwater and vapor monitoring for 

release detection

Continue to allow with 

site assessment

5-year phase out

(as proposed in Nov 2011)

No change from 

existing regulation

Remove release detection deferral for

emergency generator tanks Required Required(as proposed in Nov 2011)

Required

Other

Require notification of ownership change Required Required Required

Closure of lined tanks that cannot be 

repaired according to a code of practice Required Required Required

Requirements for demonstrating

compatibility with fuels >E10 and >B20 Required Required(as proposed in Nov 2011)

No change from 

existing regulation

Remove deferrals for airport hydrant fuel 

distribution systems and UST systems 

with field-constructed tanks

Regulate under 

alternative release 

detection requirements 

Require AHS/FCT notify

implementing agency and 

report releases (with no 

other requirements)

Maintain deferral

EPAct-related Provisions

Operator training Required Required Required

Secondary containment Required Required Required

*

In the 2011 proposed regulation, these changes generally consisted of more or stricter requirements than what is in the final 

UST regulation. For example, the 30-day walkthrough inspections in the 2011 proposed UST regulation included monthly 

check of sumps. Please see the 2011 proposed UST regulation for details.

Many of the requirements in the final UST regulation will not immediately impose new 

costs upon UST owners or operators. For example, new requirements for periodic testing of 

equipment do not require owners or operators to perform those tests at the time the regulation

comes into effect; depending on the requirement, owners or operators may have up to three years 

to satisfy the new requirements.

22 EPA’s analysis accounts for this delay in its estimate of costs 

by discounting the costs associated with each requirement as shown in Exhibit 1-2. EPA 

 

22 Please refer to the preamble section for each requirement for a discussion of the implementation periods.
1-7

assumes that the monetized positive impacts associated with these requirements accrue at the end 

of the year in which costs occur since some beneficial impacts may lag requirements.23

Exhibit 1-2

Years Until Final Requirements Become Effective

Requirement

Number of years until 

effective

Release Prevention

Walkthrough inspections 3

a

Overfill prevention equipment inspections 3

Spill prevention equipment tests 3

Containment sump testing73

Release Detection

Operability tests for release detection methods 3

b

Remove deferral for emergency generator tanks 3

c

Other

Remove deferral for airport hydrant fuel distribution 

systems (Subparts B, C, D and H)

24 3

Remove deferral for UST systems with fieldconstructed tanks (Subparts B, C, D and H)

9

3

EPAct-related Provision

Operator training 3

Please refer to the preamble section for each requirement for a discussion on the 

rationale behind the delayed implementation periods.

a This requirement is effective immediately under Alternative 1.

b This requirement is effective after one year under Alternative 1. In addition, under 

Alternative 1, groundwater and vapor monitoring are eliminated as release detection 

methods and must be phased out within five years.

c This requirement is effective after one year under Alternative 1.

Finally, EPA is including a set of revisions and clarifications that are not expected to 

have any economic impact, due to either the nature of the requirement or the interaction between 

the new UST regulation and existing regulation. The only cost associated with these 

clarifications and changes is the cost of reading the new regulation. These revisions include:

 Updating the regulation to reference newer technologies

 Updating the codes of practice listed in the regulation

 

23 EPA does not have data to suggest any particular length of lag for each requirement; for this analysis, we 

assume that benefits accrue at the end of the year in which costs occur. Chapters 3 and 4 provide detailed 

descriptions of the methods used to assess costs and beneficial impacts.

24 Removing deferrals for airport hydrant fuel distribution systems and field-constructed tanks will require 

these systems to comply with Subpart B, C, D, E, G, H, and J of 40 CFR Part 280 (as described in Subpart K). The 

final UST regulation requires these systems to comply with Subparts B, C, D, H, and J after 3 years, while 

compliance with Subparts E and G would be required immediately.
1-8

 Updating the regulation to remove old upgrade and implementation deadlines

 Updating the regulation for editorial and technical corrections

 Revising the State Program Approval regulation (40 CFR Part 281) to be 

consistent with the above revisions

1.5 Scope of Analysis

Within the constraints of data availability, this analysis attempts to capture all 

quantifiable and qualitative impacts of the final UST regulation. EPA obtained sufficient data to 

identify, by state, the number of units likely to be affected by each change in the regulation. The 

analysis uses these data to assess the compliance costs on these units and relevant state 

governments. In conducting these analyses, EPA also assessed the sensitivity of outcomes to key

assumptions. Separately, the analysis monetizes a number of positive impacts of the regulation, 

including the avoided costs generated by avoided releases and reduction in severity of releases, 

avoided product loss, and avoided vapor intrusion damages. This analysis quantifies, but does 

not value, groundwater impacts. Finally, due to data and resource limitations, this analysis was 

unable to quantify or value human health benefits or ecological impacts, but addresses these 

qualitatively.

In addition to identifying costs and the positive impacts of the regulation, this analysis 

also examines the economic and distributional impacts of the regulation. The economic impact 

analysis includes the final UST regulation’s effect on facility closures, employment, and energy

output and cost. The analysis of the distributional impacts of the regulation examines the effect 

of a reduction in releases on state financial assurance funds, impacts on children’s health, small 

business impacts, and impacts on low-income and minority populations. Finally, this analysis 

considers the final UST regulation’s impacts related to certain executive orders and statutes, 

including the Unfunded Mandates Reform Act, tribal governments, and federalism. 

1.6 Report Organization

To support the development of the final UST regulation, EPA designed and conducted 

this analysis of the regulation’s costs, benefits, and economic impacts consistent with the 

requirements of Executive Order 12866, and OMB Circular A-4.25 Data, methods, and results of 

this analysis are presented in the following chapters:

 Chapter 2: Universe of UST Systems Affected by the Final UST regulation. This 

chapter identifies a profile of the entities that may be affected by the final UST 

regulation. 

 Chapter 3: Assessment of Compliance Costs. This chapter summarizes the

methods employed by EPA to assess the cost impacts of the final UST regulation.

 

25 Executive Order 12866. “Regulatory Planning and Review.” October 4, 1993; and U.S. Office of 

Management and Budget. Circular No. A-4. September 17, 2003.
1-9

 Chapter 4: Assessment of Benefits and Cost Savings. This chapter presents 

estimates of the benefits and avoided costs of the final UST regulation.

 Chapter 5: Distributional Impacts and Considerations. This chapter summarizes 

the assessment of distributional impacts of the final UST regulation, including 

economic and energy impacts, effects on small businesses and governments, 

impacts on low-income and minority populations, and children's health effects.

 Chapter 6: Other Statutory and Executive Order Analyses. This chapter 

summarizes analyses required by certain statutes or executive orders, including 

regulatory planning and review, impacts created by unfunded mandates, 

federalism implications, effects on tribal governments, and joint impacts of the 

final UST regulation in the context of existing regulations.

 Chapter 7: Comparison of Costs, Benefits, and Other Impacts. This chapter 

summarizes and compares the costs, cost savings, and benefits of the final UST 

regulation.

 Appendices. We present the details of methods and assumptions we employ in a 

number of appendices.
2-1

Chapter 2. Universe of UST Systems Affected by the Final UST regulation

This regulatory impact analysis addresses the effects of the final regulatory changes on 

four types of UST systems: conventional UST systems with prefabricated tanks that store and 

dispense petroleum products; emergency generator tank systems that store fuel for occasional 

use; UST systems with field-constructed tanks that are typically designed to store large volumes 

of fuel; and airport hydrant fuel distribution systems that provide large volumes of fuel to aircraft 

using underground distribution systems.

This chapter describes the universe of systems, facilities, firms, and sectors that are likely 

to be affected by the final regulatory changes, and documents the extent to which state 

regulations already require compliance with the final UST regulation.

2.1 Types of Entities Affected by the Final UST regulation

The four types of UST systems that are potentially affected by the final UST regulation

are characterized as follows:

 Conventional UST systems (conventional USTs): These systems include the 

universe of facilities and tanks that are currently subject to existing regulations, 

along with ancillary equipment (e.g., piping, dispensers, sumps, spill prevention 

equipment, and release detection equipment). The majority of these systems store 

and dispense petroleum products and are typically found at gas stations. A limited 

number store other hazardous substances, but the regulatory impact analysis does 

not consider these UST systems separately.

26 These UST systems are subject to 

all requirements under 40 CFR Part 280.

 Emergency generator tank systems (EGTs): Emergency generator tank systems 

refer to the tanks and piping for systems that provide longer-term storage of fuel 

for occasional use as a back-up fuel supply. These tanks are currently deferred 

from 40 CFR Part 280 Subpart D (release detection) but are subject to all other 

requirements under 40 CFR Part 280. The final UST regulation does not address 

emergency tanks at nuclear power plants, which are regulated by the Nuclear 

Regulatory Commission under 10 CFR Part 50, appendix A.27

 UST systems with field-constructed tanks (FCTs): Field-constructed tanks are 

underground bulk storage tanks that are built on-site because they are too large to 

be pre-fabricated. All identified field-constructed tanks currently in operation are 

owned by federal facilities and mainly serve operations at military bases. These 

tanks are currently deferred from all regulation under 40 CFR Part 280, except for 

Subparts A and F, but are typically subject to regulation under the Oil Pollution 

 

26 Because tanks storing hazardous substances are also currently subject to the 1988 UST regulation under 

40 CFR Part 280, this analysis assumes that incremental costs and benefits associated with the final UST regulation

will be comparable to the costs and benefits associated with other conventional UST systems. Although hazardous 

substance tanks are not included in the total number of active petroleum UST systems, EPA roughly estimates that 

less than one percent of all active regulated UST systems contain hazardous substances.

27 See 40 CFR 280.10 Subpart A – Applicability.
2-2

Act of 1990, 40 CFR Part 112 (EPA’s Spill Prevention, Control, and 

Countermeasure regulation).

 Airport Hydrant Fuel Distribution Systems (AHFDSs): Airport hydrant fuel 

distribution systems are systems that include one or more tanks (either aboveground or underground), underground piping, and underground ancillary

equipment used to fuel aircraft. These systems do not typically have a dispenser at 

the end of the piping run, but instead have a pressurized hydrant (fill stand). Large 

commercial and military airports employ these systems, but most commercial 

systems have only above-ground storage tanks and are thus not affected by the 

final UST regulation.

28 These systems are currently deferred from all regulation 

under 40 CFR Part 280, except for Subparts A and F, but are typically subject to 

regulation under 40 CFR Part 112.

2.2 Configuration of Average Conventional UST System

Conventional UST systems reflect a relatively consistent configuration of standard 

equipment. While facility size and complexity vary significantly, this analysis assumes that a 

typical (average) conventional UST system is configured as follows (Exhibit 2-1):29

Exhibit 2-1

Assumed Average Configuration For A Conventional UST System

System Component Configuration

Pipes per tank 1

Feet per pipe 100

Fill pipes (per tank) 1

Spill prevention equipment (per fill pipe) 1

Under-Dispenser Containment (UDC) (per tank) 2

Turbine sumps (per tank) 1

These assumptions best characterize motor fuel retailers, which represent approximately

80 percent of the 577,981 conventional UST systems in operation in 2013.

30 EGT systems and 

other conventional UST systems used to store fuel or hazardous substances are likely to have 

 

28 Industrial Economics, Inc. “Preliminary Assessment and Scoping of Data Related to Potential Revisions 

to the UST Regulations.” Work Assignment 1-25, Tasks 2-4 November 20, 2008.

29 Assumptions based on data collected from pipe installation companies, state data, and EPA professional 

judgment. See: Industrial Economics, Inc. "Methodology for Secondary Containment for Piping." Work Assignment 

1-19, Task 5, October 3, 2008; and E2, Incorporated. Memoranda and analyses submitted under Contract EP-W-05-

018, “U.S. Environmental Protection Agency. Underground Storage Tanks/Leaking Underground Storage Tanks 

Analytical and Technical Support.” Where gaps existed in the analyses, EPA used the best professional judgment of 

its UST system technical experts. All supporting materials not included in the appendices can be found in the docket 

for the final UST regulation.

30 The remaining 20 percent of conventional UST systems consist of EGTs and tanks used for storing and 

dispensing fuel in commercial settings, hospitals, manufacturing, transportation, communications and utilities, and 

agriculture. See Exhibit 2-3 for details.
2-3

systems with similar components but less complex dispenser systems. The configurations of 

FCTs and AHFDSs are considered separately, and are described in detail in Appendix A. 

Exhibit 2-2 provides an illustration of an UST system at a retail motor fuel establishment. Note 

that in this exhibit, the “dispenser sump” is a specific form of under-dispenser containment, and 

the “spill bucket” is an example of spill prevention equipment.

Exhibit 2-2

Configuration of Retail Motor Fuel UST System

2.3 UST Universe Size and Distribution Across Sectors

The December 2013 Semi-Annual Report of UST Performance Measures reports a 

universe of 577,981 active petroleum tanks (UST systems) in the United States and its 

territories.31,32 This total includes conventional UST systems and emergency generator tank 

 

31 U.S. Environmental Protection Agency, Office of Underground Storage Tanks. Semi-Annual Report of 

UST Performance Measures End of Fiscal Year 2013 – As Of September 2013. Accessed at: 

http://www.epa.gov/oust/cat/ca-13-34.pdf. State and territory underground storage tank programs report to EPA 

periodically throughout the year with data on their UST performance. EPA compiles the data for all states, 

territories, and Indian country and makes the data publicly available at 

http://www.epa.gov/OUST/cat/camarchv.htm. 

32 Data indicate that the universe of UST systems has declined steadily over the past two decades. To 

consider the impacts of declining universe sizes on the results of this analysis, we construct and evaluate an 

alternative baseline for compliance costs and avoided costs in Chapters 3.4.1 and 4.4.1, respectively.
2-4

systems. Estimates based on state data suggest that approximately 3.0 percent, or 17,339 of the 

577,981 active UST systems, are emergency generator tanks.33

In addition to EGT and conventional UST systems, the final UST regulation addresses 

UST systems with FCTs and AHFDSs. While these two types of systems are deferred under 

current EPA regulation, a subset may be regulated by individual states and included in the total 

estimate of tanks provided by those states. For the purpose of this analysis, however, these two 

universes are considered to be separate from the 577,981 tanks identified in the 2013 EPA report. 

The total universe of UST systems with FCTs and AHFDSs includes approximately 334 UST 

systems with FCTs, and 74 AHFDSs (each hydrant system is supported by an average of roughly 

eight linked tanks) operated by the U.S. Department of Defense (DoD), 12 FCTs operated by the 

U.S. Department of Energy (DoE) and 10 AHFDSs operated at commercial airports.34

Most UST systems in the United States are located at motor fuel retail establishments 

(i.e., gas stations), and virtually all retail motor fuel establishments use UST systems. 

Approximately 148,000 (147,902) retail fueling sites operated in the United States in 2013.

35 Of 

these, approximately 127,000 included convenience stores.36

An analysis of state data by EPA concludes that the average retail motor fuel 

establishment has 3.07 tanks (UST systems).37 Assuming approximately 3.07 UST systems per 

facility and 147,902 facilities, 454,774 UST systems, or 79 percent of all active UST systems, 

are associated with retail motor fuel establishments.

In addition to traditional motor fuel retailers, big-box retailers, or hypermarkets, represent 

a growing segment of the retail motor fuel seller market. This category (NAICS code 452910) 

includes stores operated by Wal-Mart, Costco, and other large companies. Collectively, these 

 

33 See: Industrial Economics, Inc. “Detailed Assessment of UST Universe by Tank Use and Industry 

Sector,” Work Assignment 1-25, Task 6, January 23, 2009. The number of EGTs is assumed to be approximately 

3.0 percent of all active UST systems based on the weighted average from four state databases.

34 Based on a meeting with Department of Defense in March 2013 and supplemental information provided 

to EPA in April 2013. In addition, EPA identified 10 commercial airports with AHFDSs subject to the final UST 

regulation. DoE FCTs were identified from: U.S. Department of Energy. “U.S. Department of Energy Underground 

Storage Tank (UST) Compliance Strategy Report,” July 31, 2006. This report identifies 12 DoE FCTs in South 

Carolina. See Appendix A for additional information.

35 National Association of Convenience Stores. Who Sells America’s Fuel? Accessed at: 

http://www.nacsonline.com/YourBusiness/FuelsReports/GasPrices_2014/Retail-Operations/Pages/Who-SellsAmericas-Fuel.aspx. According to NACS, there were 152,995 total retail motor fuel sites in the United States in 

2013. Of these, 5,093 were “hypermarketers,” which are big-box stores and other merchandisers that also sell motor

fuels.

36 Ibid.

37 A 2006 analysis of 13 state UST databases performed for EPA estimated that the average retail motor 

fuel establishment (i.e., facility) has 3.13 tanks. Adjustments to reconcile various estimates of the current universe of 

USTs with industry estimates of the number of UST systems currently in place at retail motor fuel facilities further 

decreases the number of tanks per UST system operating in retail motor fuel settings to 3.07 tanks per retail motor 

fuel facility. See: Industrial Economics, Inc. “Small Entities Screening Analysis of UST Universe by Industry 

Sector.” Work Assignment 3-25, Task 4, February 4, 2010.
2-5

firms operate approximately 5,100 filling stations; each station is likely to have at least three 

UST systems.38

Other industry sectors that report use of UST systems include agriculture (crop 

production and animal production), commercial (wholesale trade, retail trade, accommodation, 

and food services), communications and utilities (wired telecommunications carriers and electric 

power generation, transmission, and distribution), hospitals, manufacturing, transportation, local 

and state government operations, and federal facilities run by the U.S. Departments of Defense 

and Energy. Collectively these sectors comprise approximately 120,000 UST systems, including 

those in the government sector (Exhibit 2-3). In many cases, firms in these sectors use UST 

systems for fueling fleets of vehicles such as school buses, delivery trucks, or rental cars. In 

other cases, UST systems store fuel for operations or emergency use, used oil, or hazardous 

substances.

Facilities in sectors other than retail motor fuel have, on average, between 1.5 and 2.0 

UST systems at the facilities that use UST systems. The actual number of UST systems at a 

specific facility, however, is likely to vary significantly depending on facility size and focus.39

Results of an analysis of public UST records of 54 states and territories performed for 

EPA suggest that the average number of UST systems per facility (across all sectors that use 

conventional UST systems or EGTs), is approximately 2.71.

40

 

38 National Association of Convenience Stores. Who Sells America’s Fuel? Accessed at: 

http://www.nacsonline.com/YourBusiness/FuelsReports/GasPrices_2014/Retail-Operations/Pages/Who-SellsAmericas-Fuel.aspx.

39 E2

, Incorporated. Review of state databases, “Draft Industry and Facility Profiles,” Task Order No. 1010 

– General Technical and Programmatic Support in Implementing the Energy Policy Act of 2005. December 18, 

2006.

40 Skeo Solutions. “Summary of Key Data from State Public Record Postings,” Work Order 1006, Table 1, 

October 25, 2013. 
2-6

Exhibit 2-3

Summary Of Universe Of UST Systems By Sector

Industry Sector NAICS

2009 a2013

b

Number of 

Facilities 

with UST 

Systems

Number 

of UST 

Systems

Number of 

Facilities 

with UST 

Systems

Number 

of UST 

Systems

Retail Motor Fuel Sales 447 161,768 481,108 147,902 454,774

Commercial (wholesale trade, retail trade, 

accommodation, and food services) 

42, 44-45, 72 (excluding 

447) 21,652 49,793 27,356 47,068

Institutional (hospitals only) 622 2,220 3,631 2,098 3,432

Manufacturing 31-33 8,822 14,536 8,339 13,740

Transportation

(air, water, truck, transit, pipeline, and airport 

operations) 481, 483-486, 48811 8,153 14,422 7,707 13,633

Communications and Utilities (wired 

telecommunications carriers; and electric 

power generation, transmission, and 

distribution) 5171, 2211 6,641 9,738 6,278 9,205

Agriculture (crop and animal production) 111, 112 847 1,534 801 1,450

Local governments c Government jurisdiction n/e 24,458 n/e 23,119

State governments c Government jurisdiction n/e 6,114 n/e 5,780

Federal government c Government jurisdiction n/e 6,114 n/e 5,780

Total: Conventional UST systems and 

EGTs 210,103d611,449 200,480d577,981

FCTs: Department of Defense Government jurisdiction 239 239 334 334

FCTs: Department of Energy Government jurisdiction -- -- 12 12

AHFDSs: Department of Defense Government jurisdiction 162 1,296e71 592e

AHFDSs: Commercial Airports 4581 -- -- 10 64

Total: FCTs and AHFDSs 401 1,535 430 1,002

a Analysis based on E2

, Incorporated. Review of state databases, “Draft Industry and Facility Profiles,” Task Order No. 1010 –

General Technical and Programmatic Support in Implementing the Energy Policy Act of 2005, Amendment 1, TDD #11. 

December 18, 2006. Estimate of 168,987 retail motor fuel facilities with UST systems from “2005 U.S. motor fuel station 

count: 168,987,” National Petroleum News, May 19, 2005 (annual survey of states to collect data on number of stations), 

adjusted to reflect 2009 universe of 611,449 UST systems. All sector adjustments proportional except retail motor fuel sales, 

which reflects the 2008 estimate of 161,768 facilities with UST systems from National Petroleum News. "MarketFacts 2008 

Overview." August 2008, used as a proxy for the number of such facilities in 2009. (See also: Industrial Economics, Inc. 

“Preliminary Assessment and Scoping of Data Related to Potential Revisions to the UST Regulations.” Work Assignment 1-25, 

Tasks 2-4 November 20, 2008.)

b Analysis based on 2009 column (see note a above), adjusted to reflect 2013 universe of 577,981 UST systems. All sector 

adjustments proportional except retail motor fuel sales, which reflects the 2013 estimate of 147,902 facilities with UST systems 

from National Association of Convenience Stores. Who Sells America’s Fuel? Accessed at: 

http://www.nacsonline.com/YourBusiness/FuelsReports/GasPrices_2014/Retail-Operations/Pages/Who-Sells-AmericasFuel.aspx. The NACS Retail Fuels report noted 152,995 total facilities dispensing motor fuel commercially, of which 5,093 are 

hypermarketers and not included in the retail motor fuel sales category. (See also: Industrial Economics, Inc. “Preliminary 

Assessment and Scoping of Data Related to Potential Revisions to the UST Regulations.” Work Assignment 1-25, Tasks 2-4 

November 20, 2008.)

c

See: ICF. "Economic Impact Analysis of Additional Mechanisms for Local Government Entities to Demonstrate Financial 

Responsibility for Underground Storage Tanks." December 1992. Exhibit 3-1. Estimates of local government UST systems 

adjusted using the 1987 Census of Governments. Consistent with this analysis, the number of government UST systems is 

assumed to be two percent of all 2013 UST systems owned by state and federal governments and four percent of all 2013 UST 

systems owned by local governments.

d The totals shown are the sum of the number of facilities of the rows above. These estimates are used only to establish 

distribution of facilities across sectors based on available data.

e This number assumes that there are eight tanks per AHFDS. For more detail on assumptions for AHFDSs, see Appendix A.
2-7

2.4 Universe of Facilities and Systems Potentially Affected by Final UST regulation

EPA expects that all facilities or UST systems in the universe of conventional UST 

systems will be required to comply with one or more regulatory changes in the final UST 

regulation, but the number of facilities and systems affected by each specific regulatory change 

will vary depending on the extent of current (baseline) state regulations and the type of 

equipment currently in use. 

To estimate the number of systems that will be required to comply with each regulatory

change, EPA reviewed publicly available data about state regulations, combined with data from a 

limited sample of states and equipment providers about the use of different technologies for 

release prevention and detection.41

Exhibit 2-4 identifies the total number of UST systems that could potentially be affected 

by each regulatory change in the final UST regulation, based on the baseline technology

currently in place in the universe of systems. Exhibit 2-4 identifies the number of UST systems 

or facilities with relevant technologies, the type of system (i.e., conventional UST and EGT 

systems, facilities with conventional UST systems or EGTs, AHFDSs, or FCTs), the proportion 

of the relevant universe of UST systems with the technology, a summary of the assumptions that 

define the number of affected units, and the source of those assumptions. Note that changes for 

AHFDSs, EGTs, and FCTs affect only those universes of facilities, and EPAct-related provisions 

affect only facilities and UST systems in Indian country.

42 See Appendix B for detailed 

descriptions of the values and sources used in each calculation. The estimates in Exhibit 2-4 do 

not reflect baseline state regulations (e.g., whether a state already requires spill prevention 

equipment testing). As discussed later in this chapter, some baseline state requirements satisfy 

requirements of the final UST regulation. 

 

41 E2

, Incorporated. Memoranda and analyses submitted under Contract EP-W-05-018, “U.S. 

Environmental Protection Agency. Underground Storage Tanks/Leaking Underground Storage Tanks Analytical and 

Technical Support.” Where gaps existed in the analyses, EPA used the best professional judgment of its UST system 

technical experts. All supporting materials not included in the appendices can be found in the docket for the final 

UST regulation.

42 EPA assumes that all states have adopted EPAct-related provisions in the baseline, consistent with 

existing guidance.
2-8

Exhibit 2-4

Potential Number And Type Of Units Affected By Each Requirement

Regulatory Change Universe

Proportion 

of Total 

Universe 

Affected 

Annually

Number of 

Potentially 

Affected 

Systems

(Annual) a Assumptions Source

Release Prevention

Walkthrough inspections Facilities with 

Conventional UST 

systems and EGTs

100.0% 213,277 

facilities

All facilities require periodic 

walkthrough inspections.

Not applicable – all 

facilities require 

inspections.

Overfill prevention 

equipment inspections

Conventional UST 

systems and EGTs

100.0% 577,981 

systems

Percentage of UST systems with 

overfill prevention equipment.

E

2

, Incorporated, Task 

Order No. 3003, TDD #7: 

across 10 states, 99.8% of 

systems had overfill 

prevention equipment; EPA 

conservatively assumes all 

UST systems have overfill 

prevention equipment.

Spill prevention 

equipment tests

Conventional UST 

systems and EGTs

90.0% 520,183 

systems

One-to-one spill prevention 

equipment to tank ratio; 10 percent 

have self-monitoring mechanism and 

do not need monitoring.

EPA estimate based on 

information discussions 

with service contractors and 

inspectors.

Containment sump 

testing

Conventional UST 

systems and EGTs

18.3% 105,771

systems

Pipes that use interstitial monitoring 

and do not use continuous sensors, 

pressure, vacuum, or liquid-filled leak 

detection monitoring mechanisms. 

E

2

, Incorporated, Task 

Order No. 3003, TDD #5, 

Table 13.

Spill prevention 

equipment inspection 

after repair

Conventional UST 

systems and EGTs

2.5% 14,450 systems Spill prevention equipment requires 

fix once every four years; repairs are 

used as the fix 10 percent of the time.

E

2

, Incorporated, Task 

Order No. 3003, TDD #7: 

across 10 states, 99.8% of 

systems had overfill 

prevention equipment; EPA 

conservatively assumes all 

UST systems have overfill 

prevention equipment; 

repair/replace frequencies 

are EPA assumptions.

Overfill prevention 

equipment test after 

repair

Conventional UST 

systems and EGTs

2.0% 11,560 systems Overfill prevention equipment 

requires fix once every five years; 

repairs are used as the fix 10 percent 

of the time.

EPA estimated that only a 

small (10%) percentage of 

overfill devices were 

repaired rather than 

replaced based on verbal 

conversations with service 

contractors. PEI provided 

the five-year estimate based 

on information compiled 

from their members. This 

was also supported by 

answers from 3 vendors 

dated 11/8/12.

Secondary containment 

test after repair

Conventional UST 

systems and EGTs

3.3% 19,324 systems Tanks and pipes that use interstitial 

monitoring and do not use continuous 

sensors, pressure, vacuum, or liquidfilled leak detection monitoring 

mechanisms. Includes five percent of 

tanks and 90 percent of piping that 

use interstitial monitoring. Assumes 

20 percent of pipes and five percent 

of tanks require repair every year.

E

2

, Incorporated, Task 

Order No. 3003, TDD #5, 

Table 13; repair/replace 

frequencies are EPA 

assumptions.
2-9

Exhibit 2-4

Potential Number And Type Of Units Affected By Each Requirement

Regulatory Change Universe

Proportion 

of Total 

Universe 

Affected 

Annually

Number of 

Potentially 

Affected 

Systems

(Annual) a Assumptions Source

Eliminate flow restrictors 

in vent lines for all new 

tanks and when overfill 

prevention equipment is 

replaced 

Conventional UST 

systems and EGTs

13.5% 78,256 

systemsb

13 percent of new UST systems 

would have installed flow restrictors 

in vent lines, and 13 percent of 

existing UST systems with replaced 

overfill prevention equipment would 

have installed flow restrictors in vent 

lines. Assumes five percent turnover 

of UST systems, a 19 percent test fail 

rate for flow restrictor, and that 90 

percent of fixes require replacement 

of the flow restrictor.

Information on number of 

new UST systems that 

would install flow 

restrictors provided by 

Robert Penkes, PEI, in 

August 2009; remainder 

from E2, Incorporated, Task 

Order No. 3003, TDD #21.

Release Detection

Operability tests – ATG Conventional UST 

systems and EGTs

33.7% 194,548 

systems

UST systems that use automatic tank 

gauges.

E

2

, Incorporated, Task 

Order No. 3003, TDD #5, 

Table 11.

Operability tests –

interstitial monitoring

Conventional UST 

systems and EGTs

18.8% 108,499 

systems

UST systems that use interstitial 

monitoring (excluding five percent 

that conduct manual testing of the 

interstice).

E

2

, Incorporated, Task 

Order No. 3003, TDD #5, 

Table 11.

Operability tests – line 

leak detection

Conventional UST 

systems and EGTs

27.5% 159,221 

systems

Pressurized piping systems that use 

electronic line leak detectors.

E

2

, Incorporated, Task 

Order No. 3003, TDD #5, 

Table 11.

Operability tests –

groundwater and vapor 

monitoring

Conventional UST 

systems and EGTs

4.5% 25,968 systems UST systems that use vapor 

monitoring and/or groundwater 

monitoring as their sole release 

detection method(s). 

E

2

, Incorporated, Task 

Order No. 3003, TDD #5.

Eliminate groundwater 

and vapor monitoring as 

release detection methods 

(Alternative 1 only)

Conventional UST 

systems and EGTs

4.5% 25,968 systems UST systems that use vapor 

monitoring and/or groundwater 

monitoring as their sole release 

detection method(s). Universe 

affected phases in over five years.

E

2

, Incorporated, Task 

Order No. 3003, TDD #5.

Add SIR/CITLD to 

regulation with 

performance criteria

Conventional UST 

systems and EGTs

0.5% 2,809 systems 13 percent of UST systems use SIR; 

15 percent of these use qualitative 

methods. Of these, 25 percent are 

assumed to incur costs to comply.

E

2

, Incorporated, Task 

Order No. 3003, TDD #5, 

Table 11.

Response to interstitial 

monitoring alarms 

Conventional UST 

systems and EGTs

2.4% 14,003 systems Weighted average annual percentage 

of UST systems and piping that 

experience an interstitial monitoring 

alarm. Assumes 20 percent of tanks 

and 18 percent of pipes use interstitial 

monitoring, and that three percent of 

tanks and 10 percent of pipes 

experience an alarm in a given year.

E

2

, Incorporated, Task 

Order No. 3003, TDD #5, 

Tables 11 and 13.

Remove release detection 

deferral for emergency 

generator tanks

EGTs 3.0% 17,339 systems UST systems assumed to be 

emergency generator tanks.

Based on review of over 15 

state databases and 

discussions with several 

state UST program 

representatives.

Other

Remove deferral for 

airport hydrant fuel 

AHFDSs 100.0% 81 facilities All airport hydrant fuel distribution 

systems, including 71 DoD systems 

Meeting with U.S. 

Department of Defense 
2-10

Exhibit 2-4

Potential Number And Type Of Units Affected By Each Requirement

Regulatory Change Universe

Proportion 

of Total 

Universe 

Affected 

Annually

Number of 

Potentially 

Affected 

Systems

(Annual) a Assumptions Source

distribution systems and 10 commercial airport systems. (DoD) in March 2013 and 

supplemental information 

provided to EPA in April 

2013, plus information 

based on public comments 

and additional EPA 

research to identify 

commercial airport systems 

potentially affected. See 

Appendix A for additional 

information.

Remove deferral for UST 

systems with fieldconstructed tanks

FCTs 100.0% 346 systems All UST systems with fieldconstructed tanks, including 334 DoD 

systems and 12 DoE systems.

Meeting with U.S. 

Department of Defense 

(DoD) in March 2013 and 

supplemental information 

provided to EPA in April 

2013 and U.S. Department 

of Energy, “U.S. 

Department of Energy 

Underground Storage Tank 

(UST) Compliance Strategy 

Report,” August 2006, p. A32 to A-34. See Appendix 

A for additional 

information.

Require notification of 

ownership change 

Facilities with 

Conventional UST 

systems and EGTs

10.1% 21,505 

facilities

Annual number of facilities that 

change ownership. 

E

2

, Incorporated, Task 

Order No. 3003, TDD #27.

Closure of lined tanks 

that cannot be repaired 

according to a code of 

practice

Conventional UST 

systems and EGTs

<0.1% 80 systems Annual number of lined UST systems 

that cannot be repaired

E

2

, Incorporated, Task 

Order No. 3003, TDD #17, 

Table 1 and E2, 

Incorporated, Task Order 

No. 3003, TDD #5.

Requirements for 

demonstrating 

compatibility with fuels 

> E10 and > B20

Conventional UST 

systems and EGTs

0.04% 234 systems 0.4 percent of conventional UST 

systems and EGTs use fuels E >10 or 

B > 20, assume 10 percent can 

demonstrate compatibility

Based on the count of UST 

systems from OUST’s midyear and end-year reports, 

plus the U.S. Department of 

Energy’s (DoE’s) 

Alternative Fuels Data 

Center listing the amount of 

stations selling E85 fuel.

EPAct-related Provisions

Operator training UST Facilities in 

Indian country

100.0% 966 facilities All facilities in Indian country. Not applicable – applies to 

all facilities in Indian 

country.

Secondary containment -

new and replaced tanks

UST systems in 

Indian country

36.2% 947 systemsb Approximately 72.4 percent of 

systems in Indian country are singlewalled. Analysis assumes midpoint of 

time horizon until all units are 

replaced (year 10, 50 percent of 

universe affected).

E

2

, Incorporated, Tribal 

Data Analysis, July 2007.

Threshold for pipe UST systems in 30.2% 789 systemsbPiping replaced every five years, E

2

, Incorporated, Tribal 
2-11

Exhibit 2-4

Potential Number And Type Of Units Affected By Each Requirement

Regulatory Change Universe

Proportion 

of Total 

Universe 

Affected 

Annually

Number of 

Potentially 

Affected 

Systems

(Annual) a Assumptions Source

replacement rather than 

repair

Indian country where 60.3% are single-walled. 

Analysis assumes midpoint of time 

horizon until all units are replaced 

(year 10, 50 percent of universe 

affected).

Data Analysis, July 2007.

Under-dispenser 

containment for all new 

dispensers

UST systems in 

Indian country

48.5% 1,270 systemsb Approximately 97 percent of systems 

require under-dispenser containment. 

Analysis assumes midpoint of time 

horizon until all units are replaced 

(year 10, 50 percent of universe 

affected). 

E

2

, Incorporated, Tribal 

Data Analysis, July 2007, 

Industrial Economics, 

“Preliminary Assessment 

and Scoping of Data 

Related to Potential 

Revisions to the UST 

Regulations; Tasks 2-4, 

Work Assignment 1-25,” 

November 20, 2008, 

Appendix A, and OUST 

End-of-Year reports.

a

Figures in this column are calculated assuming that the average number of UST systems per facility is approximately 2.71, per: Skeo Solutions. 

“Summary of Key Data from State Public Record Postings,” Work Order 1006, Table 1, October 25, 2013.

b The affected universes presented for these items reflect 50 percent of ultimately affected systems or facilities. Because these requirements take effect over 

time and future costs are discounted, we present the universe affected at year 10 as a central estimate. In addition, we adjust unit costs to reflect the fact 

that the total cost of these requirements grows as the number of affected systems or facilities increases.

2.5 Facilities and Systems Affected by Final UST regulation

Many states currently have baseline regulations consistent with one or more requirements 

in the final UST regulation. As a result, only a portion of the universe of potentially affected 

facilities will be required to change practices to comply with each regulatory change. Whereas 

Exhibit 2-4 displays the number of units that may potentially be subject to each requirement, 

Exhibit 2-5 identifies, based on EPA’s review of baseline state regulations, the number of units 

that will be subject to these requirements as a result of the final UST regulation. For nearly all 

requirements, some portion of the potentially affected universe is already in compliance with the 

final regulatory changes. For example, in cases where a state’s regulatory baseline already

requires activities commensurate with the regulatory requirement under a given regulatory option 

of this final regulation, UST systems within that state are not considered to be “systems affected” 

by the regulatory option in question, because these systems would not incur any incremental 

requirements or associated costs under the final regulation. Section B.2 of Appendix B, and the 

tabular summary of state regulatory requirements on pages B-10 through B-16, contain the 

complete set of information on state regulatory baselines as they pertain to the regulatory

requirements of the final regulation, and provide an accounting of which states are considered by

the cost estimation modeling in this RIA to have state regulatory baselines in full, partial, or noncompliance with each regulatory requirement of the final regulation. The tabular summary on 

pages B-10 through B-16 of Appendix B indicates the frequency or presence of the regulatory
2-12

requirement according to each state’s regulatory baseline. As indicated above, by comparing 

these frequencies or requirements with those in each regulatory option of the final regulation (as 

shown in Exhibit 1-1), it is possible to determine whether UST systems in a given state are 

subject to a particular regulatory requirement under a given regulatory option, based on whether 

the regulatory baseline of the state in question accords with the regulatory requirement under that 

regulatory option. If the state regulatory baseline is as stringent, or more stringent, than what is 

required under the regulatory option (Exhibit 1-1), then UST systems in that state are not 

considered affected by that particular regulatory requirement (and appear in Exhibit 2-4 but not 

in the “systems affected” column of Exhibit 2-5). Otherwise, the systems are considered to be 

affected (and appear in both Exhibit 2-4 and the “systems affected” column of Exhibit 2-5).

Alternative Option 2 will affect the smallest number of systems. Among the specific 

regulatory changes, walkthrough inspections and spill prevention equipment tightness testing 

affect the largest number of UST systems in all scenarios.43 In contrast, several regulatory 

changes (e.g., closure of irreparable lined tanks and pipe replacement requirements) are likely to 

affect only a small number of systems. 

The distribution of incremental impacts of the regulation also depends on the distribution 

of baseline technologies across states with different baseline regulations. Facilities and systems 

in states with fewer current regulations may bear a greater proportion of costs and benefits than 

facilities and systems in states with extensive baseline regulations. A key limitation of available 

baseline data is that baseline technology data is not available at the state level. For example, it is 

possible that facilities and systems with specific release detection technologies (e.g., automatic 

tank gauges (ATGs)) may not be distributed evenly across all states. However, estimates of the 

percentage of systems using ATGs are available only at the national level. As a result, the 

regulatory scenarios in Chapters 3 (Compliance Costs) and Chapter 4 (Benefits and Cost 

Savings) reflect regulatory changes required by an “average” facility in a state under the final 

UST regulation, assuming that all systems reflect the national profile of existing technologies. 

Analyses of economic impacts and small businesses in Chapter 5 (Distributional Analyses) 

assess the possible distribution of compliance impacts related to this uncertainty.

 

43 Walkthrough inspections are estimated at a facility level; the number of UST systems estimated as 

affected by these regulations is 555,003. Note that even those states that currently require walkthroughs do so on a 

monthly basis, rather than a 30-day basis. This RIA considers facilities in those states to be affected by this 

regulatory requirement; however, it applies to these facilities only the incremental cost between conducting monthly 

inspections over a one-year period and conducting 30-day inspections over a one-year period (i.e., a fraction of the 

cost of one inspection). 
2-13

Exhibit 2-5

Estimated Systems Not Currently Regulated By States

Description

Universe of 

Potentially 

Affected 

Systems

Systems 

Affected by 

Selected 

Option

Systems 

Affected by 

Alternative 

Option 1

Systems 

Affected by 

Option 

Alternative 

Option 2

Release Prevention

Walkthrough inspections a213,277

(facilities)

204,798

(facilities)

204,798

(facilities)

128,986

(facilities)

Overfill prevention equipment inspections a577,981 354,769 395,802 N/A

Spill prevention equipment tests a520,183 388,641 418,547 388,641

Containment sump testing 105,771 80,324 95,366 N/A

Spill prevention equipment inspection after repair 14,450 14,306 14,306 14,306

Overfill prevention equipment test after repair 11,560 11,280 11,280 11,280

Secondary containment test after repair 19,324 14,426 14,426 14,426

Eliminate flow restrictors in vent lines for all new tanks 

and when overfill prevention equipment is replaced b78,256 63,818 63,818 N/A

Release Detection

Operability tests – ATG c194,548 190,854 190,854 190,584

Operability tests – interstitial monitoring c108,499 106,438 106,438 106,438

Operability tests – line leak detection c159,221 156,197 156,197 156,197

Operability tests – groundwater and vapor monitoring c25,968 25,475 N/A 25,475

Eliminate groundwater and vapor monitoring as release 

detection methods c, d 25,968 N/A 25,968 N/A

Add SIR/CITLD to regulation with performance criteria 2,809 2, 756 2,756 2,756

Response to interstitial monitoring alarms 14,003 10,634 10,634 10,634

Remove release detection deferral for emergency 

generator tanks 17,339 10,977 10,977 10,977

Other

Remove deferral for airport hydrant fuel distribution 

systems 81 e56 56 N/A

Remove deferral for UST systems with field-constructed 

tanks 346 198 198 N/A

Require notification of ownership change 21,505

(facilities)

3,220

(facilities)

3,220

(facilities)

3,220

(facilities)

Closure of lined tanks that cannot be repaired according 

to a code of practice 80 57 57 57

Requirements for demonstrating compatibility with fuels 

> E10 and > B20 234 234 577,981f N/A

EPAct-related Provisions

Operator training 966

(facilities)

966

(facilities)

966

(facilities)

966

(facilities)

Secondary containment - new and replaced tanks b947 947 947 947

Threshold for pipe replacement rather than repair b, g789 0 0 0

Under-dispenser containment for all new dispensers b1,270 1,270 1,270 1,270

a The universe of affected systems for these requirements varies because some states have current requirements that differ in 

frequency and ensure baseline compliance in some regulatory scenarios but not others.

b The affected universes presented for these items reflect 50 percent of ultimately affected systems or facilities. Because these 

requirements take effect over time and future costs are discounted, we present the universe affected at year 10 as a central 

estimate. In addition, we adjust unit costs to reflect the fact that the total cost of these requirements grows as the number of 

affected systems or facilities increases.

c The number of affected systems differs from the universe of potentially affected systems for this requirement; however, as 

indicated in Appendix B, this RIA does not apply state baseline regulatory requirements to any system for this requirement. 

The number of affected systems is smaller than the number of potentially affected systems because some systems to which 

this requirement applies are EGTs, and the application of regulatory requirements to these systems is covered in the 

requirement for removing the release detection deferral for EGTs, and affects the numbers shown for this requirement as 
2-14

Exhibit 2-5

Estimated Systems Not Currently Regulated By States

Description

Universe of 

Potentially 

Affected 

Systems

Systems 

Affected by 

Selected 

Option

Systems 

Affected by 

Alternative 

Option 1

Systems 

Affected by 

Option 

Alternative 

Option 2

well.

d Universe affected phases in over five years.

e The universe of potentially affected units is 81 systems, or 632 tanks (at eight tanks per system for the 71 DoD-owned 

systems, plus an additional 64 tanks at the 10 commercial airport systems).

f As part of the requirements for demonstrating compatibility with fuels > E10 and > B20 proposed in November 2011, all 

UST systems must maintain equipment records. While 234 represents the number of UST systems subject to demonstrating 

compatibility with fuels > E10 and >B20 under the Selected Option, all (577,981) UST systems would are subject to the 

requirement to maintain equipment records under Alternative Option 1.

g EPA’s screening analysis shows that a requirement to replace piping if more than 50 percent of it requires repairs would 

likely generate no net costs, as owners or operators would ordinarily pursue replacement under those circumstances. See 

Appendix C for details.
3-1

Chapter 3. Assessment of Compliance Costs

3.1 Introduction

This chapter describes EPA’s analysis of the social costs associated with the final UST 

regulation. OMB guidance suggests that an analysis that relies on measures of opportunity cost 

and willingness to pay provides a holistic basis for assessing the total cost of any regulation. 

Specifically, a social cost analysis should focus on measuring changes in consumer and producer 

surplus by considering the market responses to compliance costs (e.g., changes in demand and 

supply). Along with the administrative costs incurred by the government, changes in producer 

and consumer surplus reflect the true cost to society of adopting a set of regulatory measures. 

For this regulatory impact analysis, EPA uses a combination of direct compliance costs 

and state oversight costs to approximate social costs. In this context, compliance costs represent 

a reliable indicator of social costs for the following reasons:

 The regulatory requirements generally focus on additional testing and inspection 

of existing equipment, and do not reflect large-scale investments in equipment or 

significant changes to operations at the facility level. In addition, the facilities 

affected by the regulation are distributed with relative geographic uniformity for 

consumers and producers.

 Given the small per-facility costs of the regulation (approximately $715 for the 

average facility, as documented in this chapter), closures or changes in market 

structure represent an unlikely response to the regulation. Therefore, it is unlikely

that significant changes to production or consumer behavior will affect social 

costs.

 The short- and long-run impacts of the regulation are not likely to differ 

significantly. Testing and inspection requirements under the regulation may offer 

some opportunities for owners and operators to reduce costs by learning over 

time, but they are not likely to reduce costs enough to facilitate large-scale 

equipment upgrades.

For these reasons, compliance costs are likely to be a reasonable approximation of social 

costs over both the short- and long-run. This chapter presents EPA’s compliance cost 

methodology and results, and summarizes the calculation of government oversight costs. The 

chapter also provides a discussion of key uncertainties and several brief sensitivity analyses. An 

analysis of the potential economic impacts of the final UST regulation is presented in Chapter 5, 

and a sensitivity analysis that evaluates the effects of alternative interest rates is presented in 

Chapter 7.

3.2 Compliance Cost Methodology

In this chapter, EPA presents its methodology for estimating incremental compliance 

costs of the final UST regulation beyond the current baseline costs of existing federal and state 
3-2

regulation of underground storage tanks. EPA’s analysis focuses on the specific incremental 

costs that occur as a consequence of the regulation.44 Throughout this chapter, the analysis 

distinguishes between three types of costs:

 System-level: Costs that occur at the individual UST tank level, including 

ancillary equipment.

 Facility-level: Costs that occur at the level of a facility that owns several USTs; 

typically 2.71 times the system-level cost to reflect UST ownership by the 

average facility. 

 Unit costs: System-level costs related to a particular requirement. For example, 

the requirement to provide notification of ownership change has a unit cost of 

approximately $14.

Calculation of total incremental compliance costs for UST facilities reflects two key

steps: identifying specific measures necessary for compliance at individual facilities, and 

calculating costs associated with each of these measures. To estimate these costs, EPA developed 

a compliance cost model that identifies incremental equipment and labor requirements for an 

individual system. Based on the baseline equipment, existing state regulations, and anticipated 

responses to the regulation, the model then generates system-specific estimates of compliance 

costs. Compliance costs include the labor and capital costs associated with new equipment and 

installation, inspection, testing, and recordkeeping. The model also includes other compliance 

costs, such as those associated with more frequent detection of equipment failure and repair of 

equipment. Some component costs are specific to individual UST system configurations – for 

example, airport hydrant fuel distribution systems or UST systems with field-constructed tanks –

while others are consistent across all system types. 

We calculate the compliance costs of the final UST regulation by measuring three 

factors: the proportion of facilities or UST systems with specific technologies (i.e., the portion of 

systems that require specific types of upgrades or tests, described in Exhibit 2-4 and Section B.1 

of Appendix B); the regulations already in place in each state (i.e., baseline regulations, 

described in Exhibit 2-5 and Section B.2 of Appendix B); and, the unit cost to comply with each 

element of the regulation (described in this Chapter, specifically Exhibit 3-1, as well as 

Appendix D).

An important limitation of our analysis is that we do not have data on the distribution of 

UST technologies. Consider the following from Exhibit 2-5: under the Selected Option, we 

estimate that overfill prevention tests will be a new requirement for 354,769 systems, and spill 

prevention equipment tests will be a new requirement for 388,641 systems. These requirements 

could together affect as few as 388,641 systems if all systems that are affected by overfill 

 

44 For this final UST regulation, EPA does not specifically attempt to measure baseline regulatory costs. 

However, costs identified in the 1988 EPA regulation that set original technical standards under 40 CFR Part 280 

provide an indication of baseline costs. The 1988 RIA calculated per-tank costs of $28,770, equivalent to $55,836 in 

2012 dollars. See: U.S. Environmental Protection Agency. "Regulatory Impact Analysis of Technical Standards for 

Underground Storage Tanks." August 24, 1988. Volume 1, page ES-7, Exhibit ES-1.
3-3

prevention testing are a subset of the systems that are affected by spill prevention testing. In the 

absence of additional information, it is equally plausible that these two requirements affect the 

entire universe of USTs if they overlap as little as possible. 

EPA has not identified any information that could allow us to reliably narrow the 

universe of affected USTs to a number smaller than the entire universe. Further, EPA’s review of 

state data suggests that facilities in all states will be subject to some cost under the final UST 

regulation.

45 Consequently, when considering the average cost of the regulation on a facility or 

UST system basis, we divide the total cost by the number of facilities or systems in the entire 

universe.46

3.2.1 Categories of Compliance Costs Analyzed

This analysis includes the following categories of compliance costs: operation and 

maintenance costs; capital costs; and implicit capital costs, or “time value of money costs” 

associated with earlier detection of equipment failure. Because the final UST regulation focuses 

on operational improvements, operation and maintenance costs constitute the majority of the 

compliance costs identified in this analysis. These costs are relatively frequent, recurring costs 

that mainly involve a service activity. Operation and maintenance activities include the labor and 

materials costs associated with maintenance of equipment, routine testing, and inspection 

(whether performed by the owner, operator, or a contractor). This analysis assumes that UST 

 

45 The discounted cost per UST system ranges from less than $100 in one state to over $310, with costs in 

20 states and territories falling between $290 and $320, costs in another 17 states and territories falling between 

$230 and $270, and costs in another six states and territories between $210 and $230. The remaining 13 states and 

territories have per-system costs between $75 and $200, with all but two states or territories having costs upwards of 

$130 per system. These costs are calculated by considering the regulatory baseline in each state, and the unit costs of 

each regulatory requirement not already required by the regulatory baseline in a given state. From the example 

above, states with low per-UST system costs are those with regulatory baselines that substantially overlap with the 

requirements of the final regulation, while those with the highest costs are those where most or all of the 

requirements of the final regulation are not already required by the state. Note that the figures presented here assume 

an average distribution of technologies across states, such that the only variant in UST system costs per state is the 

existing extent of each state's regulatory baseline.

46 We address uncertainty in the distribution of technology and costs with a set of sensitivity analyses in 

section 3.5 of this chapter, and we consider the economic impacts of different distributions of costs in Chapter 5. 

Our analysis indicates that approximately 81 percent of all facilities incur costs below the average per-facility cost 

(calculated by dividing total costs by total facilities) and 18 percent of facilities incur per-facility costs in excess of 

110 percent of this calculation of average per-facility cost. The remaining one percent of facilities incur costs within 

the range of 100-110 percent of average per-facility costs.

The cost estimates reported in the RIA and used in the analysis in this footnote do not incorporate high-end 

technology costs; they reflect the market costs for widely available technologies. The analysis in this footnote 

represents a worst-case cost scenario only as relates to impacts on small facilities, in order to consider potential 

business and employment impacts (see Section 5.2.3). To do this, it examines the combined impact of two distinct, 

high-cost assumptions: 1) that a given subset of UST systems are located in the state or states with the state 

regulatory baselines that overlap or accord least with the final regulation, and thus incur the highest compliance 

costs; and 2) that this same subset of UST systems has or uses the technologies for which regulatory costs are 

highest. The analysis concludes that even under this bounding scenario in which the smallest, oldest facilities are 

universally located in states with low baseline regulatory requirements, employment and business impacts are 

limited. The Chapter 3 cost analysis assumes that the technology distribution of UST systems is similar across states, 

reflecting standard turnover in facilities and equipment.
3-4

facility owners and operators pay in full for these costs when they occur (that is, they do not 

obtain financing and pay over time).47 Some of the operation and maintenance activities included 

in the final UST regulation take the form of recurring requirements occurring less frequently than 

once per year: for example, overfill prevention equipment inspections are required every three 

years under the Selected Option. We calculate the total incremental annual cost of these 

recurring requirements by assuming that an equivalent portion of the universe incurs the cost 

associated with each such recurring requirement every year: for overfill prevention equipment 

inspections, we assume one third of the affected universe of UST systems must undergo this 

inspection each year, such that all UST systems have complied within each three-year inspection 

period.48

Because the final UST regulation does not focus on broad equipment requirements, 

capital costs represent a small portion of the total compliance costs for this regulation. Capital 

costs address the purchase and installation of new equipment, such as installing a new doublewalled UST or under-dispenser containment. Total capital costs typically include installation, 

labor, and initial service required to ensure the new equipment is fully functioning. EPA assumes 

that UST owners and operators finance these compliance costs over the life of the equipment; all 

capital costs are calculated over a regulatory time horizon of 20 years.49 The following examples 

characterize the three types of capital cost calculations that are relevant to this regulatory

analysis:

Existing equipment replacements: An UST system owner or operator must upgrade an 

existing system with new equipment to comply with a requirement under the regulation (e.g., 

facilities with EGTs may be required to install release detection equipment when the deferral is 

removed). The incremental compliance cost is the total cost of the new equipment and 

installation (including removal of existing equipment).50 Any additional (incremental) operation 

and maintenance costs are also included.

 

47 Certain one-time costs that occur only once over the regulatory time horizon (e.g., one-time spending on 

initial operator training for personnel at existing facilities) are also annualized over 20 years.

48 As noted in Exhibit 1-2, a number of recurring operations and maintenance requirements will not 

immediately impose costs on UST owners and operators as they may have up to three years (depending on the 

requirement) to comply with the initial testing or inspection requirement. Where applicable, we discount the annual 

cost associated with each such requirement by the length of this implementation delay at a seven percent discount 

rate (consistent with OMB’s guidance on discount rate), to account for the fact that owners and operators are not 

required to conduct the first test or inspection immediately. Chapter 7 also presents results for the Selected Option 

using a three percent discount rate.

49 Due to a lack of data on the distribution of ages of UST systems and planned retirements/replacements of 

existing systems, EPA assumes that owners and operators amortize all capital costs over a 20-year expected 

regulatory horizon to be consistent with the 20-year expected lifetime of an UST system. Note that this 

annualization timeframe specifically applies only to UST system (i.e., tank) components; for other associated 

equipment with a lifetime other than 20 years, EPA assumes that a proportion of the universe is affected per year. 

For example, EPA assumes that piping is replaced every five years; i.e., one-fifth of the universe must replace it 

every year. The central analysis uses a seven percent discount rate, consistent with: U.S. Office of Management and 

Budget. Circular No. A-94. Revised October 29, 1992. Other discount rates are considered in Chapter 7.

50 This approach may overstate costs, as it does not account for the age of existing equipment 

(depreciation). Owners and operators typically plan for new capital expenditures over the lifetime of existing 

equipment, recording depreciation as operations consume its usefulness over time. If an owner or operator is close to 
3-5

New equipment requirements: An operator is installing new or replacement equipment 

as an ordinary business expense. Under baseline regulations, Equipment A is compliant. 

However, new regulations require a higher level of compliance for new tank systems that can be 

satisfied at lowest cost by Equipment B. The incremental compliance cost to the operator of the 

equipment is the additional cost (if any) of purchasing, installing and operating Equipment B

instead of Equipment A. The costs of this requirement reflect the timing of the normal 

replacement cycle for all equipment in the universe. For example, owners and operators 

installing new UST systems will be required to use technologies other than flow restrictors to 

ensure release prevention.

Time value of money (TVM) costs: Under baseline regulations, the average UST system 

requires inspection every three years. EPA estimates that the baseline three-year inspection, on 

average, identifies a hypothetical repair or replacement cost of $100 associated with certain 

equipment. For example, under the final UST regulation, a new annual test could discover the 

same issue sooner and require repair or replacement two years earlier than it would have been 

discovered in the baseline. In this example, while the repair expense is the same, the regulation 

generates a time value of money cost by requiring an owner or operator to incur the repair 

expenditure sooner.51

Costs to Regulated Universe to Review Regulation: This analysis assumes that all 

facility operators in the universe will be required to read the final UST regulation in order to 

comply with it. For conventional USTs and EGTs, we estimate that reading and understanding 

the final UST regulation will require 4.75 hours of labor from a manager at each facility. This 

equates to a one-time cost of approximately $271 for each facility, or $58 million. This is 

equivalent to an annual cost of $5.5 million under each regulatory option. For FCTs and 

AHFDSs, we assume these costs are subsumed in the management costs for these systems (see 

Appendix A for details). 

EPA estimates that the final UST regulation will impose capital costs on the following 

components due to earlier detection of problems as a result of the new testing requirements:

 Overfill prevention equipment;

 Spill prevention equipment;

 Interstitial areas; and

 

replacing certain equipment and is required to replace that equipment when the final UST regulation becomes 

effective, he or she incurs a lower incremental cost than an owner or operator who only recently installed that 

equipment. By not attempting to adjust for this factor, EPA assumes that owners and operators replace brand new

equipment, a conservatism that results in a higher cost. Using this approach, these annualized one-time costs 

comprise approximately 10 percent of annual costs under the Selected Option, approximately six percent of annual 

costs under Alternative 1, and approximately nine percent of annual costs under Alternative 2.

51 There is significant uncertainty regarding whether total expenditures would increase or decrease over 

time. More frequent inspections may lead to more frequent repairs and replacements but may also reduce the 

severity and cost of the problems discovered.
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 ATGs, interstitial monitors, vapor monitors, groundwater monitors, and line leak 

detectors.

The final UST regulation requires testing, in addition to inspections, for several UST 

system components. EPA assumes that testing adds value to baseline release prevention 

strategies in two ways: first, testing detects issues with an UST system that may not be detectable 

in inspections. Second, in some cases, testing will occur more frequently than baseline 

inspections and therefore may identify issues that occur between inspections. This analysis 

therefore considers two types of increased capital costs. First, EPA assumes that additional 

testing required under the final UST regulation will identify malfunctions that prior inspections 

would have overlooked, and will therefore mandate additional, incremental compliance costs 

related to equipment repair and replacement. Second, some baseline compliance costs will occur 

earlier than they would in the baseline, creating time value of money costs as owners and 

operators incur compliance costs earlier and forgo the use of such funds for other investments. 

The time value of money cost of incurring a repair sooner is estimated at seven percent, 

consistent with OMB’s guidance on discount rate. The use of a seven percent discount rate for 

these time value of money costs maintains consistency with the discount rates used for other cost 

and benefit calculations presented in this RIA, including amortization of capital costs and 

discounting costs associated with regulatory requirements with delayed implementations. For 

comparison, Chapter 7 presents results for the Selected Option using a three percent discount 

rate. See Appendix D for the detailed cost methodology.

The cost estimation methodology in this RIA focuses exclusively on the compliance costs 

incurred to comply with the regulatory requirements of the final regulation. This differs from the 

benefit estimation methodology (see Chapter 4), where benefits are monetized based on an 

estimated number of avoided releases, and the avoided remediation costs associated with those 

releases.

3.2.2 Estimation of System-Level Compliance Costs for UST Systems

Estimates of system-level compliance costs for each part of the final UST regulation are 

based on publicly available data on equipment, installation, and testing costs, information 

collected from professionals in industries that provide relevant equipment and services, and 

EPA’s professional judgment.52 Costs are estimated to occur according to the regulation 

implementation schedule identified in Exhibit 1-2; we use an annual discount rate of seven 

percent to adjust costs with compliance windows of more than one year.

Labor costs used in this analysis reflect labor-hour estimates from EPA Information 

Collection Request 1360.08 and EPA Information Collection Request 1360.12 for specific 

inspection and recordkeeping tasks. The cost of labor is based on Bureau of Labor Statistics 

(BLS) labor rates for skill categories appropriate to the retail sector and technical requirements of 

 

52 E2

, Incorporated. Memoranda and analyses submitted under Contract EP-W-05-018, “U.S. 

Environmental Protection Agency. Underground Storage Tanks/Leaking Underground Storage Tanks Analytical and 

Technical Support.” Where gaps existed in the analyses, EPA used the best professional judgment of its UST system 

technical experts. All supporting materials not included in the appendices can be found in Docket EPA-HQ-UST2011-0301. 
3-7

the final UST regulation.

53 In particular, EPA selected labor rates that correspond to categories of 

labor employed in the retail motor fuels sector (NAICS 447). EPA does not expect regulated 

entities to employ higher skilled workers to comply with this regulation.

The analysis adjusts these rates using a 12 percent overhead factor and a fringe benefits 

factor of 28.8 percent, which is specific to service-providing industries.54 For requirements that 

are likely to be satisfied by third-parties, such as testing, labor costs are included in the market 

prices (costs) of those services. 

A broad explanation of the functionality of the compliance cost estimation model is 

provided below:

 First, for each regulatory requirement of the rule, the model identifies the number of 

UST systems are affected. Systems are affected if they have the proper technical 

components affected by the requirement (seen in Exhibit 2-4) and are located within a 

state where compliance with this requirement is not already part of the regulatory

baseline (seen in Exhibit 2-5). To the extent that UST systems are located in states 

whose regulatory baselines are in partial compliance with the rule, the cost model makes 

an appropriate adjustment such that the correct set of incremental costs are applied.

 Then, the cost model derives a set of unit costs for compliance with each regulatory

requirement. These costs include labor costs as well as O&M (equipment) costs, and are 

broken down by one-time costs that are amortized versus annually-occurring costs. As 

described on page 3-2, some costs apply at the UST-system level, and others apply at the 

broader facility level (a facility may have more than one UST system). These costs can 

be seen in Exhibit 3-1. 

 To estimate costs, the model then applies unit costs for each regulatory requirement to 

each applicable system. In some cases, the unit costs in Exhibit 3-1 for a given 

regulatory requirement are simply applied to the set of affected systems or facilities for 

that requirement in Exhibit 2-5. However, in many cases, state regulatory baselines 

interact with the regulation’s requirements in complex ways, such that this methodology

must be adjusted. For example, UST facilities in states that require semiannual 

walkthrough inspections under their regulatory baselines incur lower costs than UST 

facilities in states that currently require no walkthrough inspections; the compliance cost

model tracks these cases and applies the appropriate incremental cost as necessary.

55

 

53 Labor rates reflect: U.S. Bureau of Labor Statistics. "Occupational Employment and Wages." May 2011. 

See Appendix D for the particular Standard Occupational Classification codes used. EPA does not use the costs in 

its Information Collection Request 1360.08 because those labor rates reflect all industries and do not represent 

typical costs to the majority of UST owners and operators. 

54 The overhead factor of 12 percent comes from: U.S. Office of Management and Budget. Circular No. A76. p. D-7. Although this rate reflects government overhead rates, we believe it is also representative of the lowoverhead structure of the retail motor fuels sector. The fringe benefits factor is from: U.S. Bureau of Labor 

Statistics. "Employer Costs for Employee Compensation." December 2012. See Table 10: All workers, serviceproviding industries.

55 For additional information on the derivation of the affected universe for each regulatory requirement, see 

Appendix B. Similarly, Appendix D contains derivations of the unit costs for each regulatory requirement, as well as 
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While the regulation’s impacts are not significant enough ($1 billion per year) to require a 

quantitative assessment of uncertainty, the RIA considers the uncertainty associated with key

variables. However, the regulatory requirements modeled in this RIA generally do not lend 

themselves to a probabilistic assessment of uncertainty because most requirements consist of a 

task, such as an inspection or test, that has an established cost and must be performed according 

to a given schedule. Correspondingly, the system is not subject to broad uncertainty related to 

options for compliance. Moreover, the regulation requires that each such task be performed with 

a given frequency. Probabilistic uncertainty analyses, which best apply in cases where one of 

multiple outcomes may occur with a different probability weight for each outcome, do not 

directly apply to the requirements of this regulation.

To the extent that certain aspects of the cost estimation methodology are uncertain, this RIA 

includes various sensitivity analyses to address these:

 Input cost uncertainties are addressed by the analysis of alternative labor rates (Exhibit 

3-6);

 Universe uncertainties, especially regarding the interaction between the uncertainty in 

which systems contain certain UST system components and which systems are located in 

states that do not currently require testing/inspection of those components, are addressed 

by the analysis of compliance cost scenarios (Exhibit 3-7); and

 Uncertainties regarding the potential of the rule to result in small business impacts are 

addressed via a “worst-case scenario” sensitivity analysis where the smallest (i.e., leastrevenue) firms are assumed to be located in the states with the least-rigorous state 

regulatory baselines (i.e., thus incurring the highest incremental costs) (Section 5.2.3).

Because of the deterministic nature of the regulation in requiring each UST system 

meeting a given criterion to perform a certain task or undergo a certain inspection, probabilistic 

assessments of uncertainty are not directly applicable.

In addition, specific requirements under the final UST regulation are addressed as 

follows:

 For regulatory changes that take effect over time as equipment ages, the analysis 

assumes a constant rate of equipment replacement, and calculates a constant 

annual payment for the net present value of 20 years of replacement. Appendix D 

discusses the specific assumptions made in the analysis.

 To identify the total system-level compliance cost of removing deferrals from 

airport hydrant fuel distribution systems (AHFDSs) and field-constructed tanks 

 

broader descriptions of how the compliance cost model handles labor costs, time value of money costs, and other 

items of specific relevance to cost estimation for this regulation.
3-9

(FCTs), the analysis calculates both the direct costs of removing the deferral of 

these systems from the regulation under 40 CFR Part 280, and the additional costs 

of complying with other new regulatory options that apply to all systems (and 

become relevant when deferrals are removed). For example, under the final UST 

regulation, owners and operators of these systems must perform annual bulk line 

testing at prescribed rates or use an automatic tank gauge at prescribed leak rates. 

Appendix A discusses specific assumptions related to these tank populations. 

 To estimate the total system-level compliance cost of removing the deferral from 

emergency generator tanks, the analysis calculates the cost of complying with 

specific changes that apply to the broader universe of conventional UST systems 

and become relevant when the deferral is removed. Removal of the deferral under 

the final UST regulation means that EGTs must comply with release detection 

requirements at 40 CFR Part 280, Subpart D.

Exhibit 3-1 presents the unit-level costs for the individual requirements in the final UST 

regulation.

56

 

56 See Appendix D for a detailed discussion of these costs.
3-10

Exhibit 3-1

Unit Costs For The Requirements In The Final UST regulation (Selected Option)a

ONE-TIME b

($)

O&M c

($)

REPAIR/REPLACEMENT

COST d

($)

Release Prevention

Walkthrough inspections $0.00 $16.99 $0.14

Overfill prevention equipment inspections $0.00 $228.91 $67.07

Spill prevention equipment tests $0.00 $138.38 $37.53

Containment sump testing $0.00 $669.32 $86.97

Spill prevention equipment inspection after 

repair $0.00 $363.42 $0.00

Overfill prevention equipment test after repair $0.00 $400.71 $0.00

Secondary containment test after repair $0.00 $188.23 $0.00

Eliminate flow restrictors in vent lines for all 

new tanks and when overfill prevention 

equipment is replaced

$420.37 $0.00 $0.00

Release Detection

Operability tests – ATG $0.00 $61.41 $9.40

Operability tests – interstitial monitoring $0.00 $10.83 $9.73

Operability tests – electronic LLDs $0.00 $61.41 < $0.01

Operability tests – vapor monitoring $0.00 $10.83 $1.20

Operability tests – groundwater monitoring $0.00 $10.83 $0.62

Site assessment – vapor monitoring e$1,111.17 $0.00 $0.00

Site assessment – groundwater monitoring e$935.56 $0.00 $0.00

Add SIR/CITLD to regulation with 

performance criteria $10.66 $0.00 $0.00

Response to interstitial monitoring alarmsf $0.00 $0.00 $0.00

Remove release detection deferral for 

emergency generator tanks g $296.94 $193.41

Other

Remove deferral for airport hydrant fuel 

distribution systems h $128,828.95

Remove deferral for UST systems with fieldconstructed tanks h $30,744.57

Require notification of ownership change $0.00 $14.27 $0.00

Closure of lined tanks that cannot be repaired 

according to a code of practice $41,802.90i

$0.00 $0.00

Requirements for demonstrating compatibility 

with fuels > E10 and > B20 $1.93 j

$0.00 j$0.00

Cost to owners/operators to read regulation $271.12 $0.00 $0.00

EPAct-related Provisions

Operator training $303.64 $139.36 $0.00

Secondary containment - new and replaced 

tanks $8,413.90 $0.00 $0.00

Threshold for pipe replacement rather than 

repair k $0.00 $0.00 $0.00

Under-dispenser containment for all new 

dispensers $1,914.27 $0.00 $0.00

a Cost estimates were derived using a seven percent discount rate.

b One-time costs presented here are not shown in annual terms. For the purposes of estimating total annual costs for the final 

UST regulation, these one-time expenditures are annualized over 20 years at a seven percent interest rate.

c Operation and maintenance costs presented here are not shown in annual terms, but rather on per-incident terms. In other 

words, the cost for walkthrough inspections above is the unit cost per walkthrough inspection; the annual cost is the total 
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Exhibit 3-1

Unit Costs For The Requirements In The Final UST regulation (Selected Option)a

cost conducting 30-day walkthrough inspections over an annual period.

d Time value of money costs due to earlier repair and replacement of equipment reflect costs of repair or replacement sooner 

than would have occurred in the baseline. For most requirements, these are costs that would occur and be identified by 

annual tests, i.e., they reflect one year's worth of accumulated issues that require equipment repairs or replacements. Three

requirements represent exceptions. TVM costs for overfill prevention and containment sump testing, which occur every 

three years under the Selected Option, represent the repairs and replacements over three years. In addition, TVM costs for 

walkthrough inspections represent the repairs and replacements identified on a monthly basis to match the requirement 

under the Selected Option. See Appendix D for additional details.

e The one-time cost presented is the cost of conducting a site assessment or well verification, weighted by the relatively 

likelihoods that a site assessment or well verification would be necessary to continue using vapor or groundwater 

monitoring as release detection. Note that a site assessment or well verification would be necessary for fewer than 25 

percent of systems using vapor monitoring, and for fewer than 30 percent of systems using groundwater monitoring; the 

one-time costs presented here do not downward adjust the unit cost estimate to account for the possibility that a site 

assessment or well verification may not be necessary.

f The cost associated with this requirement would be the incremental cost difference between a tightness test (required in the 

baseline) and an interstitial integrity test (required by the final UST regulation). However, because the cost of an interstitial 

integrity test is less than the cost of a tightness test, we do not assign any cost to this requirement. See Appendix D for 

additional information.

g

Because different subsets of EGTs are subject to different requirements, we present average unit costs that divide the total 

cost to the affected universe by the total number of affected units. O&M costs include any TVM costs associated with 

operability tests. See Appendix D for additional details. 

h Because different subsets of AHFDSs are subject to different requirements, and because different requirements applicable to 

AHFDSs and FCTs include various types of one-time and O&M costs, we present average unit costs that divide the total 

cost to the affected universe by the total number of affected units. These costs include any TVM costs associated with 

operability tests. See Appendix A for additional details.

i We assume that this cost occurs in full for the systems that require closure of lined tanks in a given year, rather than 

annualizing it as described in note b above. See Appendix D for additional details.

j

This includes an annualized cost of $0.01 related to the cost of storing records for the life of the UST system.

k We assume all facilities exceeding the 50 percent threshold for piping replacement would opt to replace piping in the 

baseline; costs are therefore zero. See Appendix C for detailed calculations.

3.3 Calculation of Incremental Compliance Costs

This analysis estimates the compliance cost of the final UST regulation by calculating the 

incremental cost of each regulatory change on the population of tank systems in every U.S. state 

and territory. This procedure relies on national estimates of the number of systems employing 

specific baseline technologies, as well as EPA’s assessment of the baseline regulatory

requirements in each state and territory.

57 The analysis categorizes compliance costs into onetime or operation and maintenance costs and amortizes one-time compliance costs over the 20-

year regulatory time horizon.58 As a final step, it discounts annual compliance costs associated 

with several of the regulatory changes to delayed compliance horizons specified in the final UST 

regulation (e.g., overfill prevention equipment inspections must be performed within three years 

of the date the final UST regulation becomes effective). 

To calculate compliance costs, EPA employs a number of assumptions, some of which 

likely overstate compliance costs:

 

57 For details regarding these assumptions, see Appendix B.

58 See footnote 49 for an explanation of the use of a 20-year time horizon.
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 Time value of money costs. This analysis does not assume the rate at which 

problems occur in UST systems will decline as a result of the final UST 

regulation. The number and severity of problems will likely fall due to more 

frequent testing and inspections, but the rate of decline is uncertain and the 

analysis does not attempt to adjust for these changes. This likely causes the 

analysis to overestimate the costs of the final UST regulation. 

 Size of universe. EPA’s analysis assumes that the number of UST systems in the 

universe remains constant over time, with new systems replacing closures. EPA’s 

end-of-year reporting data reveal that the universe of conventional UST systems 

has declined at a rate between one and three percent per year since 2000.59

Assuming this pattern continues, future annual compliance costs due to the final 

UST regulation are likely to be lower than estimated in this analysis. However, in 

absence of other data we assume new installations and upgrades will offset all 

closures, and annual compliance costs will remain constant. Impacts of assuming 

an alternative baseline universe of UST systems that declines over time are 

discussed in Sections 3.3.1 and 3.4.1. 

 Full compliance. EPA assumes all owners and operators subject to each 

requirement will come into compliance. This ensures a high estimate of costs, as 

each system subject to the regulation implements the required measures and 

consequently incurs the related costs. 

 Timeliness of repairs. EPA assumes all issues identified through testing of 

equipment will be properly addressed through immediate repair or replacement of 

equipment. This may overstate costs if owners or operators fail to address 

identified issues in a timely fashion.

 Date on which costs are incurred. EPA assumes all costs are incurred at the 

beginning of the year in which each requirement of the final UST regulation

becomes effective. This may overstate costs that occur at the end of the time 

frame.

These combined assumptions help ensure that the total costs estimated in each scenario below 

are not likely to be understated, even in cases where some uncertainty is associated with unit cost 

estimates for equipment or testing. Two key areas of uncertainty that affect the distribution of 

costs are noted below.

 Geographic distribution of technologies: EPA lacks information on how UST 

systems with specific equipment (e.g., ATG) are distributed nationally. If most 

are located within states with existing applicable requirements, then costs could 

be lower (conversely, if most are located in states with no existing applicable 

requirements, then costs could be higher). In the absence of this data, EPA 

 

59 See: U.S. Environmental Protection Agency, Office of Underground Storage Tanks. Semi-Annual Report 

of UST Performance Measures for fiscal years 1999 and 2013.
3-13

assumes a uniform distribution of technologies across all states. EPA assesses the 

extent to which this assumption creates cost uncertainty at the end of this chapter.

 Distribution of costs across systems: EPA does not have information on how 

costs are likely to be distributed among the systems that are subject to new 

requirements. For example, a correlation among systems that require overfill 

prevention equipment inspections, spill prevention equipment testing, and 

secondary containment testing after repair would concentrate costs on these 

systems in ways that EPA’s primary assessment of costs does not capture. While 

this does not affect total cost estimates, EPA assesses the distributional 

consequences of an outcome where costs are highly-concentrated in Chapter 5. 

3.3.1. Calculation of Incremental Compliance Costs Using an Alternative Baseline

EPA’s primary analysis assumes that the universe of UST systems stays constant over 

time. That is, the analysis assumes that when an UST system enters the universe, another exits, 

and vice versa. However, data show that the universe of UST systems has been declining over 

the past two decades (albeit at a slowing rate). Therefore, EPA also assesses compliance costs 

associated with the final UST regulation based on an alternative baseline that projects a declining 

universe.

To calculate the rate of universe decline, EPA mapped historical data on the universe of 

UST systems from 1991 through 2013 to an exponential one-phase decay function, which 

appears to most accurately represent the observed behavior of the UST system universe over 

time.60 Steep declines in the universe of UST systems in past years reflect increases in tank size 

as well as industry consolidation. However, these declines may be reaching functional limits, 

both because the number of fuel outlets needed to serve the population is considerable, and 

because tank sizes may be reaching a practical limit in their ability to be transported and 

installed.61,62

The function used to project future UST universe sizes indicates that over a 20-year time 

period, the annual number of affected UST systems gradually declines to 574,045 UST systems 

by year 20 under this alternative baseline.63 The number of UST systems affected under this 

alternative baseline is approximately 99.8 percent of the size of the original baseline, which 

 

60 To estimate future UST universe sizes, we used a single exponential decay function, which assumes that 

a quantity declines at a rate proportional to its value. This is an appropriate function given the singular and slowing 

rate of decline observed in the universe of UST systems over time. The equation for such an exponential singular 

decay function is Y = (Yo – P) * e(-k*X) + P, where P represents the “plateau,” or limit of the function and k 

represents the function’s half-life. (See Appendix J for additional details.)

61 See: Geyer, Wayne. “Where Has Our Petroleum Storage Capacity Gone?” Steel Tank Institute. Accessed 

at: https://www.steeltank.com/LinkClick.aspx?fileticket=h8g9YO5y%2BfI%3D&tabid=108&mid=502. This source 

indicates simultaneous trends in increasing average tank sizes as well as decreasing UST system totals. 

62 While this alternative baseline assumes a steady decline in the number of UST systems, it is possible that 

the number of UST systems may actually increase in the future to trend with population growth and economic 

expansion as more people living in more areas may necessitate more retail motor fuel outlets.

63 EPA assumes that owners and operators amortize all capital costs over a 20-year expected regulatory 

horizon to be consistent with the 20-year expected lifetime of an UST system.
3-14

assumes a constant universe size of 577,981 UST systems over this period. As a result, 

compliance costs associated with the final UST regulation are only marginally smaller under this 

alternative baseline. See Appendix J for additional details.

3.4 Results of Assessment of Compliance Costs

Exhibit 3-2 presents a summary of the estimated incremental compliance costs 

associated with the final UST regulation by type of UST system affected. In all options, it is 

clear that the category of conventional UST systems will bear the largest proportion of 

compliance costs under the regulation. While compliance costs associated with removal of 

deferrals from EGTs are constant across regulatory scenarios, other costs vary substantially

among the regulatory options. The model parameters used to produce the results discussed in this 

chapter are presented in Appendix E and were selected to reflect the selected and alternative 

options described in Chapter 1.

Exhibit 3-2

Annual Compliance Costs Of The Final UST regulation For UST Systems Affected a

Option

Selected Option

($ millions)

Alternative 1

($ millions)

Alternative 2 

($ millions)

Conventional UST systems b $130 $280 $63

Emergency Generator Tanks (EGTs) $2.0 $2.3 $2.0

Airport Hydrant Fuel Distribution Systems (AHFDSs) $10 $0.017 $0.0

UST systems with Field-Constructed Tanks (FCTs) $11 $0.066 $0.0

Cost to Owners/Operators to Read Regulation

(conventional UST systems and EGTs) $5.5 $5.5 $5.5

Total $160 $290 $70

a Cost estimates were derived using a seven percent discount rate.

b Conventional UST systems include all systems that are not AHFDSs, FCTs, or EGTs.

Exhibit 3-3 presents a disaggregation of compliance costs under each regulatory option. 

The following areas contribute significantly to the differences in compliance costs among the 

alternatives.

 Release prevention: The greatest difference in compliance costs between the 

Selected Option and Alternative 1 is related to release prevention; specifically, 

due to the combination of walkthrough inspections, overfill prevention equipment 

inspections, spill prevention equipment tests, and containment sump tests, testing 

after repairs, and the elimination of flow restrictors. These requirements account 

for 66 percent and 88 percent of compliance costs, respectively.

64 This variation is 

largely dependent on the testing or inspection frequency required under each 

alternative, as well as the fact that compliance costs for AHFDSs and FCTs are 

considerably lower in Alternative 1. Under Alternative 2, overfill prevention 

equipment inspections and containment sump tests are not required, and release 

 

64 Total release prevention costs are approximately $99 million under the Selected Option and $247 million 

under Alternative 1. Respectively, these costs round to $100 million, or 63 percent of total Selected Option costs, 

and $250 million, or 86 percent of total Alternative 1 costs.
3-15

prevention costs total $38 million, compared to roughly $100 million under the 

Selected Option.

 Removal of deferrals for AHFDSs and UST systems with FCTs: Removal of 

deferrals for AHFDSs and FCTs is accompanied by tightness testing of equipment 

under the Selected Option. This tightness test drives most of the compliance cost 

associated with these systems. Under the Selected Option, total costs for these 

systems are $21 million, or approximately 13 percent of compliance costs.65

Under Alternative 1, only notification of the implementing agency and reporting 

of releases are required for these systems; correspondingly, total costs for these 

systems under Alternative 1 are below $0.1 million. Alternative 2 maintains the 

deferrals and therefore has no incremental compliance cost.

In total, these categories represent approximately 50 percent to 90 percent of the total 

compliance costs, depending on the option. 

EPA determines average compliance costs per system by dividing the total cost of the 

final UST regulation by the total 577,981 systems in the regulated universe of conventional UST 

systems and EGTs. EPA’s analysis shows that the compliance cost for this final UST regulation

is approximately $232 per system, or approximately $715 per typical facility among motor fuel 

retailers, the sector with the highest average number of UST systems per facility.

66

Exhibit 3-4 presents the same total costs as Exhibit 3-3 but shows the number of systems 

affected and the cost of the requirement per affected system.67 The costs in Exhibit 3-4 reflect 

annualized one-time costs, discounting, and adjustments for the adoption of certain requirements 

over time (e.g., elimination of flow restrictors for new and replaced tanks), and therefore differ 

from the unit costs presented in Exhibit 3-1. It is important to note that the unit costs in Exhibit 

3-4 cannot be summed to obtain a cost per system, as nearly all systems are already in 

compliance with some requirements of the final UST regulation. 

 

65 Specifically, costs associated with AHFDSs total $10.4 million under the Selected Option, while costs 

associated with FCTs total $10.6 million. Together, these costs total to a rounded sum of roughly $21 million, or 13 

percent of total Selected Option costs.

66 The $232 estimate excludes costs associated with removal of deferrals for AHFDSs and UST systems 

with FCTs, assumes 3.07 systems per retail motor fuel facility, and includes the annualized cost of $26 per facility 

for them to review the regulation. This approach does not address variability of baseline compliance across systems; 

to assess uncertainty associated with this approach, EPA presents a sensitivity analysis in Chapter 5.

67 For exhibits that show the disaggregation of compliance costs under each regulatory option as well as 

systems affected, see Appendix D.
3-16

Exhibit 3-3 

Total Annual Compliance Costs Due To The Final UST regulation For UST Systems Affected

All values in $ thousands a

Description

Selected Option Alternative 1 Alternative 2

Capital Cost

(Annualized) O&M Total Cost

Capital Cost

(Annualized) O&M Total Cost

Capital Cost

(Annualized) O&M Total Cost

Release Prevention

Walkthrough inspections $0 $23,000 $23,000 $0 $53,000 $53,000 $0 $7,000 $7,000

Periodic testing/inspections 

of:

- Overfill 

prevention 

equipment

- Spill prevention 

equipment 

- Containment 

sumps

$0 $64,000 $64,000 $0 $180,000 $180,000 $0 $19,000 $19,000

Testing after repairs to spill 

and overfill prevention 

equipment, and secondary 

containment

$0 $12,000 $12,000 $0 $12,000 $12,000 $0 $12,000 $12,000

Elimination of flow 

restrictors in vent lines for 

all new tanks and when 

overfill prevention 

equipment is replaced

$2,500 $0 $2,500 $2,500 $0 $2,500 N/A N/A N/A

Subtotal – Release 

Prevention b $2,500 $99,000 $100,000 $2,500 $250,000 $250,000 $0 $38,000 $38,000

Release Detection

Operability tests for release 

detection methods (incl. 

groundwater and vapor 

monitoring)

$0 $21,000 $21,000 $0 $24,000 $24,000 $0 $21,000 $21,000

Groundwater and vapor 

monitoring for release 

detection c

$500 $0 $500 See note b See note b $1,000 $0 $0 $0

Add SIR/CITLD to 

regulation with performance 

criteria

$3 $0 $3 $3 $0 $3 $3 $0 $3
3-17

Exhibit 3-3 

Total Annual Compliance Costs Due To The Final UST regulation For UST Systems Affected

All values in $ thousands a

Description

Selected Option Alternative 1 Alternative 2

Capital Cost

(Annualized) O&M Total Cost

Capital Cost

(Annualized) O&M Total Cost

Capital Cost

(Annualized) O&M Total Cost

Remove release detection 

deferral for emergency 

generator tanks d

$250 $1,700 $2,000 $290 $2,000 $2,300 $250 $1,700 $2,000

Response to interstitial 

monitoring alarms e $0 $0 $0 $0 $0 $0 $0 $0 $0

Subtotal – Release 

Detection b $750 $23,000 $24,000 $290 $26,000 $27,000 $250 $23,000 $23,000

Other

Remove deferral for airport 

hydrant fuel distribution 

systems f

See note b See note b $10,000 See note b See note b $17 N/A

Remove deferral for UST 

systems with fieldconstructed tanks fSee note b See note b $11,000 See note b See note b $66 N/A

Require notification of 

ownership change $0 $46 $46 $0 $46 $46 $0 $46 $46

Closure of lined tanks that 

cannot be repaired 

according to a code of 

practice g

$0 $2,400 $2,400 $0 $2,400 $2,400 $0 $2,400 $2,400

Requirements for 

demonstrating compatibility 

with fuels > E10 and > B20

< $0.1 $0 < $0.1 < $0.1 $1,100 $1,100 N/A N/A N/A

Cost to owners/operators to 

read regulation $5,500 $0 $5,500 $5,500 $0 $5,500 $5,500 $0 $5,500

Subtotal – Other b

$5,500 $2,400 $29,000 $5,500 $3,500 $9,100 $5,500 $2,400 $7,900

EPAct-related Provisions

Operator training $23 $110 $130 $23 $110 $130 $23 $110 $130

Secondary containment $980 $0 $980 $980 $0 $980 $980 $0 $980

Subtotal – EPAct-related 

Provisions b $1,000 $110 $1,100 $1,000 $110 $1,100 $1,000 $110 $1,100

Subtotal b $9,800 $120,000 $160,000 $9,300 $280,000 $290,000 $6,700 $63,000 $70,000
3-18

Exhibit 3-3 

Total Annual Compliance Costs Due To The Final UST regulation For UST Systems Affected

All values in $ thousands a

Description

Selected Option Alternative 1 Alternative 2

Capital Cost

(Annualized) O&M Total Cost

Capital Cost

(Annualized) O&M Total Cost

Capital Cost

(Annualized) O&M Total Cost

Additions for new units 

(beyond those included 

above) h

$5 $0 $5 $5 $0 $5 $5 $0 $5

Total b $9,800 $120,000 $160,000 $9,300 $280,000 $290,000 $6,700 $63,000 $70,000

a Cost estimates were derived using a seven percent discount rate. 

b Totals may not add due to rounding. Costs associated with the removal of deferrals for FCTs and AHFDSs or groundwater and vapor monitoring for release detection under Alternative 1 are 

included in the total columns only.

c Costs under the Selected Option include the cost of conducting a site assessment or well verification, weighted by the probability that one of these is necessary, as a one-time cost. For 

Alternative 1, costs include a five-year phase out of groundwater and vapor monitoring as release detection methods. Capital and O&M costs are aggregated in this line item for Alternative 1 

because this requirement was modeled separately from the other requirements. See Appendix D for details. For Alternative 2, costs include only the cost of operability tests for these types of 

release detection. 

d Costs related to removal of deferrals for the regulation of emergency generator tanks include the cost of removal of deferrals, installation and maintenance of ATG on approximately seven 

percent of systems, installation and maintenance of SIR on 60 percent of systems, and performing operability tests on all EGT systems. See Appendix D for details. 

e The cost associated with this requirement would be the incremental cost difference between a tightness test (required in the baseline) and an interstitial integrity test (required by the final UST 

regulation). However, because the cost of an interstitial integrity test is less than the cost of a tightness test, we do not assign any cost to this requirement. See Appendix D for additional 

information.

f Airport hydrant fuel distribution systems include a capital cost because tanks associated with airport hydrant fuel distribution systems without existing ATGs are assumed to install ATGs to 

comply with the requirement. Similarly, the DoE UST systems with field-constructed tanks include a capital costs because these tanks are assumed to install ATGs to comply with the 

requirement. UST systems with field-constructed tanks without existing ATGs are assumed to conduct annual precision tightness tests to comply with the requirement. Capital and O&M costs 

are aggregated in these line items because various components of the compliance with release detection include both capital and O&M costs. See Appendix A for details.

g Although the closure of lined tanks represents a capital cost, we consider it an operation and maintenance cost as a modeling convenience. See Appendix D for details.

h As a simplifying assumption, EPA assumes that UST systems enter and exit the universe at a constant annual rate, such that the total number of UST systems in the universe does not change. 

We assume that operation and maintenance costs associated with these systems offset each other, as the number of entries equals the number of exits; however, new systems entering the 

universe will still incur incremental capital costs associated with certain requirements (e.g., a new emergency generator tank would need to install a release detection method). For modeling 

purposes, we account for these new units in the “Additions for new units.” The costs shown reflect the capital costs associated with new units for all but the following requirements: elimination 

of flow restrictors for new tanks, requirement of secondary containment for new tanks, and requirement of under-dispenser containment for new dispenser systems.
3-19

Exhibit 3-4

Discounted And Annualized Cost Per System Affected By Requirement a

Description b

Selected Option Alternative 1 Alternative 2

Cost per 

System c

Systems 

Affected

Cost per 

System c

Systems 

Affected

Cost per 

System c

Systems 

Affected

Release Prevention

Walkthrough inspections $42 555,003 $96 555,003 $20 349,551

Periodic testing/inspections of: 

$334 190,623d$860 210,266d$48 388,641d

- Overfill prevention equipment

- Spill prevention equipment

- Containment sumps

Testing after repairs to spill and overfill prevention equipment, and secondary containment $311 40,011 $311 40,011 $311 40,011

Eliminate flow restrictors in vent lines for all new tanks and when overfill prevention 

equipment is replaced $40 63,818 $40 63,818 N/A N/A

Release Detection

Operability tests for release detection methods d$126 165,492 $144 165,492 $126 165,492

Groundwater and vapor monitoring for release detection e$59 25,475 $40 25,968 $19 25,475

Add SIR/CITLD to regulation with performance criteria $1 2,756 $1 2,756 $1 2,756

Remove release detection deferral for emergency generator tanks f$181 10,977 $207 10,977 $180 10,977

Response to interstitial monitoring alarms h$0 10,634 $0 10,634 $0 10,634

Other

Remove deferral from airport hydrant fuel distribution systems g$128,829 81 $214 81 N/A N/A

Remove deferral from UST systems with field-constructed tanks g$30,745 346 $192 346 N/A N/A

Require notification of ownership change $5 8,726 $5 8,726 $5 8,726

Closure of lined tanks that cannot be repaired according to a code of practice $41,803 57 $41,803 57 $41,803 57

Requirements for demonstrating compatibility with fuels > E10 and > B20 $0 234 $2 577,981 N/A N/A

Cost to owners/operators to read regulation $9 577,981 $9 577,981 $9 577,981

EPAct-related Provisions

Operator training $51 2,618 $51 2,618 $51 2,618

Secondary containment $443 2,217d$443 2,217d$443 2,217d

a Cost estimates were derived using a seven percent discount rate. 

b Requirements that apply at the facility level are converted to a system basis using a conversion factor of 2.71 systems per facility.

c

Important: these unit costs cannot be summed to obtain a total cost per system because nearly all systems are already in compliance with some requirements of the final UST regulation.

d Because the number of systems affected varies depending on the individual testing requirements, we estimate the number of systems affected by all three requirements by dividing their 

total cost by the sum of their unit costs. For example, if the three requirements had total unit costs of $100 and created new costs of $100,000, we would estimate that they affect 1,000 

systems.

e Costs under the Selected Option include the cost of operability tests for these types of release detection as the operation and maintenance cost, as well as the cost of conducting a site 

assessment or well verification, weighted by the probability that one of these is necessary, as a one-time cost. For Alternative 1, costs include a five-year phaseout of groundwater and 

vapor monitoring as release detection methods. For Alternative 2, costs include only the cost of operability tests for these types of release detection. 

f Costs related to removal of deferrals for the regulation of emergency generator tanks include the cost of removal of deferrals, installation and maintenance of ATG on approximately 

seven percent of systems, installation and maintenance of SIR on 60 percent of systems, and performing operability tests on all EGT systems. See Appendix D for details. Costs for 

emergency generator tanks are lower in Alternative 2 because operability tests are performed every 3 years versus every year under other options.

g Because different subsets of AHFDSs are subject to different requirements, and because different requirements applicable to AHFDSs and FCTs include various types of one-time and 

O&M costs, we present average unit costs that divide the total cost to the affected universe by the total number of affected units. These costs include any TVM costs associated with 

operability tests. See Appendix A for additional details.

h The cost associated with this requirement would be the incremental cost difference between a tightness test (required in the baseline) and an interstitial integrity test (required by the final 

UST regulation). However, because the cost of an interstitial integrity test is less than the cost of a tightness test, we do not assign any cost to this requirement. See Appendix D for more 

information.
3-20

3.4.1 Assessment of Compliance Costs under the Alternative Baseline Scenario

Exhibit 3-5 presents total annual compliance costs of the final UST regulation under the 

alternative baseline discussed in Section 3.3.1. Annual compliance costs are slightly less than 

those presented in Exhibit 3-2, reflecting the fact that the cumulative universe of affected 

systems in the alternative baseline is only marginally smaller than the universe in the original 

baseline. However, as Exhibit 3-5 shows, most cost reductions are within the rounding error of 

EPA’s estimates for annual compliance costs of the regulation.

Exhibit 3-5

Annual Compliance Costs Of The Final UST regulation

Using an Alternative Baseline For UST Systems Affected a 

Option

Selected Option

($ millions)

Alternative 1

($ millions)

Alternative 2 

($ millions)

Conventional UST systems b $130 $280 $62

Emergency Generator Tanks (EGTs) $2.0 $2.3 $2.0

Airport Hydrant Fuel Distribution Systems (AHFDSs) $10 $0.017 $0.0

UST systems with Field-Constructed Tanks (FCTs) $11 $0.066 $0.0

Cost to owners/operators to read regulation $5.4 $5.4 $5.4

Total c

$160 $290 $70

a Cost estimates were derived using a seven percent discount rate.

b Conventional UST systems include all systems that are not AHFDSs, FCTs, or EGTs.

c Totals may not add exactly due to rounding.

3.5 Sensitivity Analyses

Certain aspects of EPA’s compliance cost estimates are characterized by significant 

uncertainty and are sufficiently large that deviations from chosen assumptions may have a 

measurable impact on cost estimates. In this section, the analysis evaluates the sensitivity of 

certain results to variation in key parameters. These sensitivity analyses include evaluations of:

 Total compliance costs to the final UST regulation under an alternative estimate 

of labor costs. Specifically, the analysis evaluates the effect of using higher labor 

rates, overhead costs, and fringe benefits factors, and lower average labor costs.

 Highest and lowest compliance cost scenarios for the distribution of technologies 

for overfill prevention equipment inspections, spill prevention equipment tests, 

and containment sumps tests. If facilities using these technologies are 

disproportionately located in states that do not already have similar regulations in 

place, costs could be higher than estimates presented in the earlier parts of this 

chapter. Similarly, if affected facilities are located in states that already have 

similar regulations in place, costs could be substantially lower than estimated.

3.5.1. Compliance Costs of the Final UST regulation Using Alternative Estimates of Labor 

Rates, Overhead Costs, and Fringe Benefits

For conventional UST facilities, EPA has selected labor, overhead, and fringe benefits 

rates that best reflect a “typical” UST facility. These labor rates are representative of skilled 
3-21

labor costs at motor fuel retailers, which own and operate roughly 80 percent of the universe of 

UST systems. The use of these rates has a material impact on the estimated compliance cost of 

the final UST regulation because they drive the operation and maintenance costs associated with 

requirements for walkthrough inspections and operability tests.

To evaluate the impact of alternative labor rates on total compliance cost estimates, EPA 

considered two alternative scenarios. The first scenario is consistent with the OUST Information 

Collection Request 1360.12 and reflects labor rates reflective of economy-wide average wages, 

benefits, and overhead. This represents a high-end estimate because it also includes industries 

with highly skilled labor requirements and benefits (e.g., law firms).68

The second scenario uses specific labor categories and costs representative of retail motor 

fuel establishments, but assumes that lower-level staff may complete walkthrough inspections.

Exhibit 3-6 presents the results for the three labor category scenarios. While one-time 

costs are not affected by the change in labor rates, operation and maintenance costs in the highcost scenario are roughly $40 million higher than EPA’s primary estimate, totaling $200 million 

rather than $160 million (an increase of 25 percent). The majority of this increase is due to 

higher operation and maintenance costs related to walkthrough inspections and operability tests. 

In contrast, the low-end labor-rate cost estimate totals approximately $140 million, roughly $20 

million (or 13 percent) lower than EPA’s central estimate. In addition to lower benefits and labor 

rates, this low-end estimate assumes that clerical-level personnel will perform walkthrough 

inspections. For AHFDSs and systems with FCTs, EPA uses constant industry average labor 

rates across all scenarios.

69

 

68 These labor categories were reported in U.S. Environmental Protection Agency. Information Collection 

Request Number 1360.12. February 2011. We used revised labor rates from those categories to reflect 2012 

conditions. However, documentation in this analysis did not provide a reason for the use of economy-wide average 

labor rates, and our assessment of the universe suggests that retail-based rates are more appropriate.

69 This sensitivity analysis examines only the cost of obtaining labor with the skill sets needed to comply 

with the regulations. While it is possible that an owner/operator may opt to hire more highly-skilled workers to 

provide a range of skills beyond what is required for compliance, the broad availability of lower-priced labor and 

professional services in the market to achieve compliance render this unnecessary for compliance with the rule. 

Therefore, any acquisition of higher-skilled labor would represent a business decision that incorporates 

consideration of other factors not related to direct compliance, and is therefore not a cost imposed by the rule. While 

it may be beneficial for businesses to obtain workers with additional skills to improve their operations, EPA 

considers only the potential uncertainty of the cost of labor required to perform the required tasks under the rule. In 

other words, the alternate labor rates sensitivity analyses do not examine whether higher or lower labor rates include 

the acquisition or procurement or staff with different skill levels; rather, this sensitivity analysis assumes that staff 

skills are held constant at the level required for compliance with the rule, and that the uncertainty lies within the 

price at which these staff are available.
3-22

Exhibit 3-6

Compliance Cost Sensitivity Analysis: Alternative Labor Rates a

Description

Final UST regulation

Lower Estimate

($ thousands) b

Primary Estimate 

used for Analysis

($ thousands) c

Upper Estimate

($ thousands) d

Release Prevention

Walkthrough inspections e$11,000 $23,000 $45,000

Periodic testing/inspections of:

- Overfill prevention equipment

- Spill prevention equipment

- Containment sumps

$63,000 $64,000 $64,000

Testing after repairs to spill and overfill 

prevention equipment, and secondary 

containment

$12,000 $12,000 $12,000

Elimination of flow restrictors in vent lines 

for all new tanks and when overfill 

prevention equipment is replaced

$2,500 $2,500 $2,500

Subtotal - Release Prevention i$89,000 $100,000 $120,000

Release Detection

Operability tests for release detection 

methods (incl. groundwater and vapor 

monitoring)

$20,000 $21,000 $35,000

Groundwater and vapor monitoring for 

release detection f $500 $500 $500

Add SIR/CITLD to regulation with 

performance criteria $3 $3 $3

Remove release detection deferral for 

emergency generator tanks $1,900 $2,000 $2,700

Response to interstitial monitoring alarms g$0 $0 $0

Subtotal - Release Detection i$22,000 $24,000 $38,000

Other

Remove deferral for airport hydrant fuel 

distribution systems h $10,000 $10,000 $10,000

Remove deferral for UST systems with 

field-constructed tanks h $11,000 $11,000 $11,000

Require notification of ownership change $20 $46 $74

Closure of lined tanks that cannot be 

repaired according to a code of practice $2,400 $2,400 $2,400

Requirements for demonstrating

compatibility with fuels > E10 and > B20 < $0.1 < $0.1 < $0.1

Cost to owners/operators to read regulation $2,400 $5,500 $8,900

Subtotal – Other i$26,000 $29,000 $32,000

EPAct-related Provisions

Operator training $120 $130 $190

Secondary containment $980 $980 $980

Subtotal - EPAct-related Provisions i$1,100 $1,100 $1,200

Subtotal i$140,000 $160,000 $200,000

Additions for new units (beyond those 

included above) j $5 $5 $5

Total i$140,000 $160,000 $200,000
3-23

Exhibit 3-6

Compliance Cost Sensitivity Analysis: Alternative Labor Rates a

a Cost estimates were derived using a seven percent discount rate. 

b Lower Estimate relies on BLS Industry-Specific Occupational Employment and Wages, NAICS 447000 - Gasoline Stations, 

May 2011 for: Managerial (41-1011 First-Line Supervisors/Managers of Retail Sales Workers): Technical (53-1021 First-Line 

Supervisors/Managers of Helpers, Laborers, and Material Movers, Hand); Clerical (53-6031 Service Station Attendants); and 

BLS National Occupational Employment and Wages, May 2011 for Technical for operability tests (49-2094 Electrical and 

Electronics Repairers, Commercial and Industrial Equipment) and Legal (23-1011 Lawyers). Benefits rate is 25.1 percent of 

wages, as reported in BLS Employer Costs for Employee Compensation, December 2012. Table 10: Trade, transportation, and 

utilities - retail trade. Overhead rate is 12 percent from: U.S. Office of Management and Budget. Circular No. A-76. p. D-7. 

Assumes that service station attendants perform walkthrough inspections.

c

Primary Estimate relies on BLS Industry-Specific Occupational Employment and Wages, NAICS 447000 - Gasoline Stations, 

May 2011 for: Managerial (11-0000 Management Occupations (Major Group)); and Clerical (43-9061 Office Clerks, General); 

and BLS National Occupational Employment and Wages, May 2011 for Technical for operability tests (49-2094 Electrical and 

Electronics Repairers, Commercial and Industrial Equipment); Technical (53-1021 First-Line Supervisors/Managers of Helpers, 

Laborers, and Material Movers, Hand); and Legal (23-1011 Lawyers). Benefits rate is 28.8 percent (BLS Employer Costs for 

Employee Compensation, December 2012. Table 10: All workers, service-providing industries). Overhead rate is 12 percent 

from: U.S. Office of Management and Budget. Circular No. A-76. p. D-7.

d Upper Estimate relies on BLS Employer Costs For Employee Compensation, December 2012 for Managerial (Table 9, 

Management, Professional, and Related); Technical and Technical for operability tests (Table 10, Professional and Technical 

Services (Service Industries)); and Clerical (Table 11, Office and Administrative Support); and BLS National Occupational 

Employment and Wages, May 2011 for Legal (23-1011 Lawyers). Benefits rate is 28.8 percent (BLS Employer Costs for 

Employee Compensation, December 2012. Table 10: All workers, service-providing industries). Overhead rate is 12 percent 

from: U.S. Office of Management and Budget. Circular No. A-76. p. D-7.

e Walkthrough inspections under the Lower Estimate rely on clerical labor rates estimated using BLS Standard Occupational 

Code 53-6031, Service Station Attendants; under other scenarios, we use technical labor rates estimated using BLS Standard 

Occupational Code 53-1021, First-Line Supervisors/Managers of Helpers, Laborers, and Material Movers, Hand. 

f Costs under the Selected Option consist of the cost of conducting a site assessment or well verification, weighted by the 

probability that one of these is necessary, as a one-time cost.

g The cost associated with this requirement would be the incremental cost difference between a tightness test (required in the 

baseline) and an interstitial integrity test (required by the final UST regulation). However, because the cost of an interstitial 

integrity test is less than the cost of a tightness test, we do not assign any cost to this requirement. See Appendix D for additional 

information.

h The labor rate used for these types of systems, where they are DoD-owned, is the latest ICR labor rate (similar to the upper 

estimate rate), except for a component of the Operator Training requirement, which uses the United States Air Force labor rate 

for pay grade E-6 over 3. For AHFDSs located at commercial airports, the labor rates used originate from BLS National 

Occupational Employment and Wages, May 2011 for NAICS 481100 (Scheduled Air Transportation) for Legal (23-1011), 

Managerial (11-000), Technical (53-0000), and Clerical (43-000), except for a component of the Operator Training Requirement, 

which uses the hourly rate for a Fuel Distribution System Worker from December 2012, according to USAjobs.gov.

i Totals may not add exactly due to rounding.

j As a simplifying assumption, EPA assumes that UST systems enter and exit the universe at a constant annual rate, such that the 

total number of UST systems in the universe does not change. We assume that operation and maintenance costs associated with 

these systems offset each other, as the number of entries equals the number of exits; however, new systems entering the universe 

will still incur incremental capital costs associated with certain requirements (e.g., a new emergency generator tank would need 

to install a release detection method). For modeling purposes, we account for these new units in the “Additions for new units.” 

The costs shown reflect the capital costs associated with new units for all but the following requirements: elimination of flow 

restrictors for new tanks, requirement of secondary containment for new tanks, and requirement of under-dispenser containment 

for new dispenser systems. 
3-24

3.5.2 Sensitivity Analysis of Distribution of Technologies for Overfill Prevention 

Equipment Inspections, Spill Prevention Equipment Testing, and Containment Sump 

Testing

Because data on the distribution of UST technologies (including release detection and 

prevention technologies) is available only at a national level, EPA is not able to identify how 

facilities and systems with certain technologies are distributed across different states. As a result, 

the cost analysis assumes that technologies are distributed uniformly across all states and 

territories. For systems that require overfill prevention equipment inspections, spill prevention 

equipment tests, and containment sump tests, actual compliance costs may differ substantially 

from EPA’s estimates if this assumption does not hold. For example, if facilities using these 

technologies are disproportionately located in states that do not already have similar 

inspection/testing requirements in place in the baseline, compliance costs could be higher than 

the estimates based on a uniform distribution presented in Exhibit 3-2 and Exhibit 3-3. 

Similarly, if affected facilities are concentrated in states that already have similar regulations in 

place in the baseline, then actual compliance costs could be substantially lower than estimates 

based on a uniform distribution. 

To investigate the impact of the assumption of uniform distribution of technologies, EPA 

performed a bounding analysis of the two extreme cases of distribution. Exhibit 3-7 reports the 

possible range of values for three scenarios: one where compliance cost is the lowest (i.e., 

facilities are located in states that already satisfy the final UST regulation), the actual model 

scenario based on uniform distribution of technologies, and the scenario in which compliance 

costs are highest. Variation between the minimum and maximum cost scenarios totals 

approximately $30 million, or approximately 20 percent of the total compliance costs estimated 

for the regulation. EPA’s primary estimate of these costs is near the mid-point of the range of 

estimates.

Exhibit 3-7

Discounted Highest And Lowest Compliance Cost Scenarios For Technologies For Overfill Prevention 

Equipment Inspections, Spill Prevention Equipment Tests, And Containment Sump Testsa

Regulatory change

Lower

($ millions)

Primary

($ millions)

Upper

($ millions)

Overfill prevention equipment

inspections b$29 $29 $29

Spill prevention equipment testing $17 $19 $25

Containment sump testing $0 $17 $22

Total c

$45 $64 $75

a Cost estimates were derived using a seven percent discount rate. 

b Because the entire universe of systems will be required to perform overfill prevention equipment inspections, EPA does not 

expect any uncertainty related to the locations of affected systems.

c Totals may not sum due to rounding.

3.5.3 Summary of Sensitivity Findings

EPA’s sensitivity findings suggest that possible variation in labor rates is likely to 

produce the most significant impact on the estimated cost of the final UST regulation: plausible 
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selections for labor rates may reduce selected option costs by approximately $20 million (13 

percent) or increase them by $40 million (25 percent). Separately, EPA has identified potential 

variation of approximately 20 percent related to the distribution of technologies involved in 

overfill prevention equipment inspections, containment sump testing, and spill prevention 

equipment testing. We note that each of these sensitivity analyses reflects variation compared 

with the primary estimates of costs presented throughout this chapter. 

The estimates presented in the body of this chapter represent reasonable, conservative 

central tendencies for the costs of the final UST regulation. 

3.6 State Government Administrative Compliance Costs

In addition to compliance costs related to the operation of UST systems, the final UST 

regulation will also impose new UST program administration requirements on state government 

agencies.70 Specifically, state government agencies will incur costs associated with new 

notification requirements, and costs associated with obtaining and reading the regulation. This 

section reviews state government costs associated with these activities. 

Costs associated with obtaining and reading the regulation assume that 10 people will 

each take six hours to read the regulation in each state (using the legal labor rate for states of $47 

per hour from OUST’s ICR 1360.08 inflated to 2012 dollars). In addition, based on the ICR, we 

assume that the reporting and recordkeeping burden for states to apply for State Program 

Approval (SPA) is approximately 28.5 hours (using the clerical labor rate for states of $26 per 

hour inflated to 2012 dollars). The total compliance cost in nominal terms is therefore 

approximately $219,000; the annualized compliance cost assuming the 20-year regulatory time 

horizon is approximately $21,000.71

State agencies that do not currently have a requirement for notification of changes in UST 

ownership or for at least an annual UST registration must also process a certain number of 

notices due to annual turnover in facility ownership. State government compliance costs for this 

activity assume a typical nominal recordkeeping cost of $32 per facility, based on OUST’s ICR 

1360.08 inflated to 2012 dollars; compliance costs assume the use of existing recordkeeping 

systems. Eight states and territories do not currently have recordkeeping requirements consistent 

with the final UST regulation.

72 These eight states and territories will incur approximately

$100,000 per year, due to an annual turnover rate of approximately 10 percent in UST facility

ownership. 

Lastly, each state agency will incur costs to process the one-time notifications of 

existence for AHFDSs and FCTs. State government compliance costs for this activity assume a 

 

70 In some cases, UST systems are directly owned or operated by local, state, and federal government 

entities. These costs are subsumed in the estimates of compliance costs presented earlier in this chapter.

71 Consistent with other parts of this regulatory impact analysis, we amortize one-time or capital costs over 

the regulatory time horizon of 20 years. If these costs are phased in over a three-year period, annual costs decrease 

to approximately $19,000.

72 These states are Arizona, Georgia, Idaho, North Carolina, North Dakota, Nevada, and South Carolina. 

The Virgin Islands will also incur these costs.
3-26

typical nominal recordkeeping cost of $32 per facility, based on OUST’s ICR 1360.08 inflated to 

2012 dollars; compliance costs assume the use of existing recordkeeping systems. Based on the 

estimated universe of AHFDSs and FCTs, the total state processing cost in nominal terms is 

approximately $14,000; the annualized processing cost assuming the 20-year regulatory time 

horizon is approximately $1,300.

Total annualized state government administrative compliance costs sum to $120,000 per 

year. Note that under alternative baseline assumptions, these costs would decline by a very small 

percentage (less than one percent) as the universe of affected systems declines. 

3.7 Summary – Total Annual Compliance Costs

In total, EPA estimates that the Selected Option for the final UST regulation will produce 

incremental costs of approximately $160 million per year compared to the current regulatory 

baseline. Exhibit 3-8 summarizes these costs per category. Regardless of the option, 

conventional UST systems will incur over 80 percent of these costs. Costs to AHFDSs and FCTs 

comprise approximately 14 percent and 0.03 percent of total costs under the Selected Option and 

Alternative 1, respectively.

Exhibit 3-8

Total Annual Compliance Costs a,b

Category

Selected 

Option

($ millions)

Alternative 1

($ millions)

Alternative 2

($ millions)

Conventional UST systems c$130 $280 $63

Emergency Generator Tanks (EGTs) $2.0 $2.3 $2.0

Airport Hydrant Fuels Distribution Systems (AHFDSs) $10 $0.017 $0.0

UST systems with Field-Constructed Tanks (FCTs) $11 $0.066 $0.0

Cost to Owners/Operators to Read Regulation $5.5 $5.5 $5.5

State Government Administrative Costs d$0.12 $0.12 $0.12

Total Annual Compliance Costs e

$160 $290 $70

a Cost estimates were derived using a seven percent discount rate.

b Compliance costs include direct compliance costs and state oversight costs. For this regulatory impact analysis, direct 

compliance costs and state oversight costs provide a reasonable proxy to assess the final UST regulation’s social costs. See 

Chapter 3.1 for further discussion.

c Conventional UST systems include all systems that are not AHFDSs, FCTs, or EGTs.

d The costs for UST systems directly owned or operated by local, state, and federal government entities are included in the 

estimates of compliance costs within the other categories. Costs shown here reflect the administrative costs for state 

governments to read the regulation, apply for state program approval, process notifications of ownership changes, and process 

one-time notifications of EGT, AHFDS, and FCT existence.

e Totals may not add up due to rounding.

Under the alternative baseline universe assumption described in Section 3.3.1, EPA 

estimates that the Selected Option for the final UST regulation will produce incremental 

compliance costs of approximately $155 million per year compared to $156 million in annual 

costs in the primary analysis; the results of both the primary and alternative scenario round to 

$160 million in total annual social costs. Under Alternative 1, the alternative baseline universe 

assumption yields an estimate of approximately $286 million per year in incremental compliance 

costs, compared to $287 million in the primary analysis; the results in both the primary and 
3-27

alternative scenarios round to $290 million in total annual social costs. Similarly, under 

Alternative 2, total annual social costs are approximately $70 million in both the alternative 

baseline scenario and the primary analysis.

Limitations of Compliance Cost Analysis

While EPA has taken steps to present a sound analysis of compliance costs, it recognizes 

that certain assumptions and limitations are inherent to this assessment.

Tank configuration: This analysis assumes that a particular configuration of equipment 

represents the average UST system. This assumption affects the compliance costs of the final 

UST regulation because systems with different configurations (e.g., more sumps per tank) could 

have different costs. Mischaracterizing this configuration may under- or overstate total costs as 

well as system-level costs. 

System-level compliance costs: As discussed in Section 3.3, system-level compliance 

costs are based on public information, input from UST industry professionals, and EPA 

professional judgment, all of which are assumed to provide the most accurate available data at 

the time of this regulatory action. EPA recognizes that these data sometimes reflect only a small 

number of sources, and are therefore characterized by uncertainty. 

As a result of these uncertainties, the precise cost of the final UST regulation may differ 

from the estimate generated by EPA’s analysis. The above sensitivity analyses, though not 

strictly additive, suggest that the outside range of cost uncertainty is less than 35 percent from 

EPA’s central estimates.73 Moreover, because EPA’s estimate is framed by a number of 

conservative assumptions (outlined in section 3.3), it is unlikely that this analysis understates the 

costs of the final UST regulation significantly. 

 

73 The alternative labor rates sensitivity analysis in Exhibit 3-6 indicates that compliance costs may 

decrease by up to $20 million or increase by up to $40 million, depending on the set of labor rates specified. This 

reflects a range spanning from a total decrease of up to 13 percent ($20 million / $160 million) to a total increase of 

up to 25 percent ($40 million / $160 million). In addition, the technology distribution sensitivity analysis in Exhibit 

3-7 indicates that compliance costs may be overstated by up to $19 million, or understated by up to $11 million. 

This reflects a range spanning from a total decrease of up to 12 percent ($19 million / $160 million) to a total 

increase of up to seven percent ($11 million / $160 million). Combining these ranges yields a total outside range of 

cost uncertainty of less than 35 percent around EPA’s central estimates: a potential total decrease of 25 percent (13 

percent + 12 percent) to a potential total increase of 32 percent (25 percent + seven percent).
4-1

Chapter 4. Assessment of Cost Savings and Benefits 

4.1 Introduction 

The beneficial impacts of a regulatory change are typically measured in one of two ways:

as “social benefits” or as avoided costs. Social benefits usually take the form of reduced 

environmental damage, reduced human health risk, and improvements in the value of 

environmental amenities. Benefits also include avoided costs associated with reduced need for 

cleanup and avoided costs of “averting behavior” (e.g., obtaining replacement water supplies). 

Ideally, social benefits reflect accurate measures of the total “willingness to pay” (WTP) of 

consumers to obtain improvements in environmental quality. In other cases, avoided costs (e.g., 

medical care) can be used to inform proxy estimates of WTP when direct estimates of WTP are 

unavailable. In the context of this regulation, EPA considers the avoided costs associated with 

reduced need for remediation (cleanup) of releases because avoided costs represent a real 

economic cost savings, and because reliable WTP estimates for the value of an avoided cleanup 

are not available. While avoided costs, or cost savings, could be subtracted from total costs and 

reported in Chapter 3, they do not typically accrue to the same parties that incur compliance 

costs. Therefore, for clarity of presentation, we examine them with other benefits and beneficial 

impacts in this chapter. 

This chapter describes the approaches used to evaluate avoided remediation costs and 

other benefits. It first outlines several different methods attempted for measuring benefits and 

cost savings in the context of the proposed regulation, and describes the final selected method 

(expert consultation) in detail. Next, it provides a description of monetized cost savings, 

including avoided cleanup costs, avoided vapor damage cleanup estimates, and avoided product 

loss associated with anticipated reductions in releases and reductions in severity of releases. The 

chapter then presents a screening-level analysis of the quantity of groundwater potentially

protected by the regulation. Finally, we provide a qualitative discussion of ecological, human 

health, and other social benefits.

4.2 Investigation of Empirical Methods for Measuring Cost Savings

The cost savings of the final UST regulation result from the reduced incidence and size of 

releases that would occur due to the new requirements. EPA examined a number of ways to use 

quantitative, empirical data on release rates, inspection effectiveness, and program performance 

to directly estimate the changes in releases that could be expected under the final UST 

regulation. This section describes the different data sources and methods considered, and the 

limitations of each.

4.2.1 Engineering Estimates and Literature

One approach to estimating the benefits of this regulation would be to develop an 

engineering model of the release rates associated with equipment and practices before and after 

the implementation of the regulation requirements. However, this approach would address only a 

small number of the final UST regulation components because most of the requirements are not 

focused on equipment modifications, but instead call for inspections, testing, and maintenance. 
4-2

These are requirements for changes in human behavior, and are not easily measured using 

equipment testing. 

This suggests that EPA could best measure benefits empirically by examining studies of 

how release rates change in response to more frequent inspection and testing. Therefore, in the 

context of the proposed regulation, EPA conducted a targeted review of engineering literature 

and studies on the effectiveness of testing and inspection programs. While we were unable to 

identify any studies directly applicable to the proposed UST regulation, we did identify several 

studies that examined the effects of better inspection and testing rates more generally. We 

summarize three key studies below. 

 California study of impact of secondary containment on UST system releases 

(2002):74 This study examined whether use of secondary containment throughout 

UST systems resulted in differences in release rates. The study’s conclusions were 

hampered by a limited sample size, and authors note that releases from other parts 

of the systems may have affected results. The study did not find a significant 

relationship between secondary containment and release rates at sites, but did find 

that facility-level factors (e.g., improper installations) made it more likely than 

expected that all systems at a facility would either have or lack releases. While the 

study cannot be used to directly estimate the benefits associated with the proposed 

or final UST regulation, its conclusions suggest that regulations focusing on 

effective facility-level inspections may be well-targeted.

 National Research Council study of effectiveness of state vehicle emissions 

inspection and maintenance programs (2001):75 This study reviewed four state 

programs and one city program aimed at reducing motor vehicle emissions by

requiring inspections and maintenance. While the study did not address UST 

systems, the structure of vehicle inspection programs is similar to the UST 

regulation in that both require owners/operators to undertake routine inspections 

and perform maintenance as needed. The study found that the programs had a 

measureable impact on ambient air quality, but did not identify whether the 

differences were statistically significant.76 The results do not provide a 

quantitative basis for estimating the impacts of the final UST regulation, but the 

study suggests that mandatory inspection programs can reduce emissions. 

 

74 Young, Thomas M. and Randy D. Golding. Underground Storage Tank Field-Based Research Project 

Report. Submitted to the California State Water Resources Control Board under contract to the University of 

California, Davis. May 31, 2002.

75 Committee on Vehicle Emission Inspection and Maintenance Programs. Evaluating Vehicle Emissions 

Inspection and Maintenance Programs. National Academy Press, 2001.

76 The study also concluded that the programs had more modest impacts than those predicted by air quality 

modeling, but this finding is of limited relevance to the current regulation, since no ambient conditions modeling has 

been conducted.
4-3

 Environmental Results Program (ERP) data:77 Data from several 

environmental results programs (ERPs) show a statistically significant 

improvement in verified compliance as a result of a combination of selfcertification, technical assistance, and inspections. While these programs do not 

isolate the impact of specific regulatory changes, the results are consistent with 

other findings that programs that rely in part on self-implemented inspections and 

reporting can reduce noncompliance.

In general, the literature does not address UST inspection programs directly, and does not 

provide quantitative results that can be used to estimate the impacts of the final UST regulation. 

However, the literature does provide data that generally indicate that self-implementing 

inspection programs (with external validation) do have an impact on equipment maintenance, 

and generally lead to a reduction in environmental impacts. This suggests that some positive 

impact should be expected from the final UST regulation.

78

4.2.2 Statistical Analysis of State Release Data 

A different approach to a robust analysis of benefits would be to develop a database of 

state UST regulations and reported release rates before and after the effective dates of regulations 

similar to the final UST regulation. With good quality data, it is possible to combine these 

regulations and reported release rates, and isolate the marginal impacts of various components of 

the final UST regulation. To collect detailed data at the facility level, however, would require 

visiting state UST programs individually and collecting detailed site inspection data from state 

case files and archives. Not only would such an effort be prohibitive in terms of available 

resources, but our current knowledge of the state programs suggests that variable inspection 

practices and changes in record-keeping practices over time may limit the ability of the exercise 

to provide robust results.

In the absence of site-specific data, however, we collected and examined data on state 

regulatory programs and reported releases from available aggregate sources at the time of the 

proposed regulation. Specifically, we identified and evaluated data from the following sources: 

 

77 See: Vermont Department of Environmental Conservation. “Final Report – Environmental Results 

Project – Vermont: Underground Storage Tank Facilities.” March 17, 2010; Rhode Island Department of 

Environmental Management. Underground Storage Tank Environmental Results Program, Final Report, Tables IIV; U.S. Environmental Protection Agency. “Evaluation of Three Environmental Results Programs (ERPs).” August 

31, 2009; and U.S. Environmental Protection Agency. “ERP States Produce Results.” December 2007.

78 EPA conducted an updated targeted literature review in October and November 2013 to determine 

whether additional studies examining the impacts of testing and inspection programs on environmental outcomes 

had been published. The conclusions of these additional studies are consistent with those described in this section. 

Additional studies reviewed include: Yin, H. “The environmental and economic impacts of environmental 

regulations: The case of underground storage tank regulations.” January 1, 2006; and Musgrave, M. “The Illinois 

Underground Storage Tank Fund: Tanks for Nothing,” Politics & Policy 41(5): 765-787. October 2013. The 

additional studies reviewed did not directly comment on specific outcomes, in terms of environmental impacts, from 

UST inspection programs, but did discuss the effects of risk-based insurance and financial assurance programs, 

which require a degree of regular inspection and maintenance, on avoiding leaks from USTs.
4-4

 Leak Autopsy Reports: In 2004 and 2005, EPA released two draft “leak 

autopsy” studies (“the draft 23-state Autopsy Report” and a separate study 

examining the State of Florida). These studies examined the sources and extent of 

releases that occurred in systems that were compliant with the 1998 standards, 

and identifies the extent to which different baseline releases are associated with 

failures of equipment in different parts of the UST system (e.g., piping, overfill 

protection equipment).79

 State Regulatory and Report Data: State programs are required to report 

aggregated information to EPA on the number of active UST systems, the number 

of inspections, and the number of confirmed releases reported in each six-month 

period.80 In addition, EPA obtained information about state regulatory programs 

and the effective dates for state requirements that are similar to the requirements 

of the proposed regulation. 

Using the available data, EPA examined several different statistical approaches, focusing 

on regression analysis, to compile and examine a set of state-level data that included the number 

of UST systems in each state in a given year, the number of releases from UST systems in each 

year, the number of UST inspections conducted in each year, and the presence or absence of 

regulations designed to prevent releases.

Before conducting regression analysis on the data set of state USTs and releases, EPA 

first adjusted the data to account for a number of data quality concerns. Of particular concern 

was the relationship between states with low-frequency inspections and states reporting small 

numbers of confirmed releases. To ensure that the reported UST releases accurately reflected 

most or all releases taking place, EPA developed an index that scored each state based on the 

frequency of inspections. States that reported inspection rates less frequent than every five years, 

and/or inconsistent inspection frequencies over time, were removed from the sample, based on 

the assumption that release data from those states may be less reliable due to less frequent third 

party verification (i.e., state inspection) of system operations. In other words, we assume that 

owners/operators may be less inclined to report releases or properly maintain their equipment if 

they are in a state where inspections occur infrequently or inconsistently.

In conducting the analysis, however, EPA identified several fundamental problems with 

the available data, further limiting the value of a regression analysis approach. These include 

significant data availability and reliability issues related to the limited number of observations 

and programmatic changes among states that prevent the isolation of regulation-related impacts. 

Specifically:

 

79 U.S. Environmental Protection Agency, Office of Underground Storage Tanks. “Evaluation of Releases 

from New and Upgraded Underground Storage Tank Systems (peer review draft).” August 2004; and U.S. 

Environmental Protection Agency, Office of Underground Storage Tanks. “Petroleum Releases at Underground 

Storage Tank Facilities in Florida.” March 2005. 

80 Data can be accessed at: http://www.epa.gov/oust/cat/camar chv.htm.
4-5

 Consistent, accurate release data are not available. It is likely that 

measurement error exists in the recording of confirmed releases across states (the 

dependent variable) and that it is related in some systematic way to the regulatory

structure of the state or other explanatory variables (as opposed to random 

reporting error) in the analysis. In addition, state inspections vary in timing and 

focus across states; this, in turn, affects the consistency of third-party verified 

compliance and release information. While EPA attempted to account for this by

selecting only states with a high frequency of inspections for inclusion in the 

analysis, the interaction between inspection frequency and degree and 

effectiveness of regulation creates sample selection problems (i.e., states with 

higher release rates due to limited regulation may also be states that do not 

conduct frequent inspections and therefore have less reliable data).81 Therefore, 

normal regression properties do not hold, and results may be biased in ways that 

do not allow for a reliable interpretation.82

 Many regulations consistent with the proposed UST regulation are currently 

in place in only a small number of states. EPA addressed limited variation in 

the presence of regulations by dropping several regulatory variables from the 

analysis, but the resulting lack of variation and the small number of observations 

make it likely that regulatory indicators will proxy for other relevant 

characteristics of that state.

 Study design is limited by available data. Ideally, an analysis of the 

effectiveness of UST leak prevention regulations would employ observations 

from a large number of states over a time period that includes years before and 

after regulations were in place. Such “panel” data would allow for identification 

of impacts temporally and spatially. Panel data would also allow for fixed-effects 

estimation, which controls for any unobserved characteristics of states that might 

affect release rates (such as soil pH or climate), independent of any effect of 

regulation. Available data superficially appear to be panel data, since they provide 

information on the number or rate of releases from different states in multiple 

time periods, along with information on the presence or absence of UST 

regulations by state. However, for many regulations it is unclear both when the 

regulation was first promulgated and when the effects of the regulation would be 

expected to be fully realized (e.g., through inspections). 

As discussed in more detail in Appendix F, quantitative analysis of annual UST releases 

by state did not reveal a consistent measure of the potential impact of release prevention 

regulations. The data limitations noted above prevented the use of the preferred method of fixed 

effects estimation using panel data. In the absence of fixed-effects estimation, the analysis cannot 

 

81 As noted above, the only reliable approach to identify the relationship between inspection frequency, 

compliance, and number of releases would require a large-scale data collection effort. In absence of this, we use 

inspection frequency as an indicator of reliable data.

82 For example, several regressions found an apparent positive, statistically significant relationship between 

secondary containment requirements and the number of releases per year. However, empirical data from Florida 

indicate that secondary containment contributes to release reductions of as much as 50 percent.
4-6

reliably draw conclusions about the impacts of regulations on releases, independent of any 

unmeasured characteristics of states that could be affecting the number of releases in each state. 

In other words, in addition to data quality issues discussed above, the small number of states with 

specific UST release prevention regulations prevents identification of robust relationships 

between individual regulations and the number of releases per year.

However, through cross-sectional analysis, EPA was able to estimate that release rates in 

California and Florida – two states with mature UST regulation regimes – were about 55-65 

percent less than one would expect based on release rates at other states during the time period 

examined. This difference could serve as an upper bound for the potential of leak prevention 

regulations to reduce the rate of UST releases.83

4.3 Final Methodology for Assessment of Positive Impacts: Expert Consultation

In the absence of applicable engineering models and limited empirical state data, we 

resorted to a consultation with four experts with experience in regulation of USTs and 

implementation of state inspection programs to estimate the individual effects of each regulatory

change. The remainder of this chapter describes in detail the final methodology used to identify

reductions in releases associated with the final UST regulation, and the calculation of cost 

savings associated with those avoided releases.

For the proposed regulation, to ensure that the assessment of regulatory effects relied on 

broad expertise in regulatory implementation, EPA developed a pool of technical experts with 

national reputations for leadership in implementation of underground storage tank regulatory

programs, or with extensive expertise in assessing spill causation at UST sites. From this pool, 

several experts were interviewed and five experts were identified. Each of these identified 

experts has over 20 years of experience in the regulation, assessment, and/or remediation of 

underground storage tanks, including direction of state programs and implementation of 

regulations similar to some aspects of the proposed regulation. One of the five experts did not 

provide input consistent with EPA’s analytical methods, and as a result his quantitative estimates 

were not usable for the evaluation of the proposed regulation.84 As a result, for the final UST 

regulation, EPA consulted the remaining four experts to evaluate avoided costs.

 

83 Exhibit 6 in Appendix F shows the degree to which the actual number of releases in Florida and 

California in 2009, 2005, and from 2002 to 2006 is less than the number of releases that would be expected based on 

the release rates observed at other states. In 2005 and 2009, the years in which the dummy variable for California 

was statistically significant from zero, California had between 56 and 63 percent fewer releases than would be 

expected based on the regression analysis. In 2002-2006, when the period in which the dummy variable for Florida 

was statistically significant from zero, Florida had between 60 and 65 percent fewer releases than would be 

expected. EPA strongly cautions against generalizing these results beyond the states included in the analysis. 

However, these numbers do suggest an upper bound of potential avoided leaks associated with the operation of the 

mature, relatively stringent programs in both California and Florida.

84 This expert’s baseline estimate of releases was not consistent with EPA’s, and he was not able to provide 

information on how to extrapolate to EPA’s universe. In addition, his responses included apparent internal 

inconsistencies that could not be reconciled without collecting more information about baseline releases. The expert 

also provided clear opinions about the optimal regulatory structure and suggested that his answers were not reliable 

unless the regulatory language was amended to include specific technical requirements. This created additional 

uncertainty in the interpretation of his results.
4-7

EPA provided an identical set of written questions separately to each expert and 

conducted individual follow-up telephone interviews to clarify and verify responses. Appendix G 

provides a detailed explanation of the process EPA followed in identifying experts, more detailed 

information about the qualifications of the experts, the questions distributed to experts, and an 

explanation of the factors EPA considered when including and excluding expert feedback. 

Appendix H provides the experts’ responses to EPA’s questions.

Avoided Costs as a Measure of Beneficial Impacts

Avoided remediation costs represent the key beneficial impacts associated with the 

regulations. Avoided remediation costs represent cost savings that accrue to owners, operators 

and public entities charged with remediating releases at regulated facilities.85 While avoided 

remediation costs are not a direct measure of total willingness to pay for environmental 

improvements, and are therefore not equivalent to social benefits, they represent real cost savings 

due to reduced demand for baseline remediation.86

Calculation of Annual Positive Impacts 

The analysis presents the positive effects of the final UST regulation as a constant, 

recurring, annual value for analytical convenience. The timing of the positive impacts of the 

regulation is uncertain for several reasons:

 As shown in Exhibit 1-2 in Chapter 1, the regulatory changes do not take effect 

simultaneously. 

 Irrespective of when they take effect, the changes may require varying lengths of 

time to achieve full effect. 

 EPA relies on its reported confirmed releases to calculate the reductions due to 

the final UST regulation. Confirmed releases recorded in a particular evaluation 

year vary significantly in severity and length of time undetected, which introduces 

variability in the extent to which costs are avoided each year. 

 The final UST regulation includes activities such as: frequent inspections and 

equipment testing to prevent, identify and address releases; near-term shifts in 

technology; and long-term changes in technology. Each class of changes 

necessarily focuses on release avoidance and mitigation over different time 

horizons. 

In the absence of detailed data characterizing releases by age and type, EPA assumes that 

implementation of the final UST regulation will have a uniform annual impact, with beneficial 

impacts realized on the last day of the year in which costs are incurred (i.e., a one-year delay). 

For equipment that is phased in over a period of time, we assume that positive impacts accrue at 

 

85 Chapter 5 provides a more detailed discussion on the potential positive effect of the final UST regulation

on state financial assurance funds.

86 Economists commonly define social benefits as the sum of individuals’ willingness to pay to obtain a 

good or service or avoid an unwanted outcome. Avoided remediation costs may not equal willingness to pay.
4-8

the same rate as installation and adjust those impacts so that they are constant over time, 

maintaining the one-year delay.

87

4.3.1 Avoided Remediation Costs 

This section explains how EPA arrives at its estimates of avoided remediation costs.88

EPA first explains how it calculates avoided remediation costs based on the source of a release.

This is followed by a discussion of the methods used to calculate the number of releases avoided 

and the number of releases for which severity is mitigated. Finally, the two elements are 

combined to estimate the total avoided remediation cost due to the final UST regulation.

4.3.2 Calculating Avoided Remediation Costs

This analysis values avoided releases according to their cost of remediation. EPA 

developed average remediation costs for the four general release size categories reported in the 

draft 23-state Autopsy Report. The four categories generally conform with classification 

conventions used by state LUST offices, and the autopsy reports presented leak frequency data 

for different UST system components for each of the categories. The four categories include:

 Local site extent with soil contamination;

 Local site extent with water contamination;89

 Large site extent with soil contamination; and

 Large site extent with water contamination.90

 

87 Although remediation costs at a specific site may vary widely across years (if they extend past a year), 

available data do not support characterization of a typical cost stream that could be applied to each site. For 

example, some sites may require immediate and expensive response actions, while other sites may require multiyear remediation with a long initial planning phase. We do not have any national or state-level data that could be 

used to characterize an “average” cost stream: a review of available state-by-state and national level data under 

Contract Number EP-W-07-011, Work Assignment 3-42 indicated that site-by-site data do not contain payment 

stream information, and furthermore, due to a multitude of factors influencing time-to-closure or remediation 

duration at a given site (e.g., groundwater contamination, MTBE contamination, eligibility for state funding, state 

priority ranking for site, etc.), an “average” cost stream cannot be effectively generalized. As a result, this analysis 

calculates an average annual cost based on total site remediation cost. Thus, benefits associated with avoided 

remediation are expressed in annual terms. See Appendix I for detailed explanation of the methodology used to 

develop remediation cost estimates.

88 We refer to avoided cleanup costs and avoided remediation costs interchangeably throughout this 

document.

89 Water contamination refers to both groundwater and surface water contamination, though groundwater 

contamination is more common than surface water contamination.

90 While no specific definition exists for a large site, the LUST Autopsy survey instruments used by the 

states generally define large sites as those with contamination that extends beyond the extent of construction 

excavation. In addition, EPA classified sites with off-site contamination as large sites.
4-9

EPA obtained remediation costs aligned with each of these size categories from a survey

of state LUST offices and calculated average expected remediation costs for each of the release 

categories outlined in the draft 23-state Autopsy Report (Exhibit 4-1).91 Remediation costs 

associated with groundwater remediation are generally higher than costs for soil remediation. 

Administrative, response, and oversight costs were provided by New Hampshire, and 

remediation costs reflect an average of the costs provided by New Hampshire and Utah.92,93

Exhibit 4-1

Remediation Costs By Release Extenta, b

Remediation Cost Category

Site Size And Contamination Type

Small 

extent, soil 

only

Large 

extent, 

soil only

Small 

extent, 

Groundwater 

Contamination

Large 

extent, 

Groundwater 

Contamination

Typical administrative cost (public notification, 

fines, fees, etc)c$0 $0 $500 $3,700 

Typical response cost (e.g., alerting and 

sending personnel, assessments and planning, 

immediate actions to stop the release)c$10,000 $10,000 $10,000 $10,000 

Typical remediation costd$14,800 $103,000 $98,500 $409,500 

Typical oversight cost (e.g., monitoring)c$500 $1,000 $1,500 $5,000 

Total typical cost per LUST category $25,300 $114,000 $110,500 $428,200 

Notes:

a Costs shown are one-time costs associated with a site remediation and have been rounded to the nearest hundred dollars.

b Costs are presented here in 2008 dollars. EPA inflates these costs to 2012 dollars for use in the analysis.

c The costs presented for administrative, response, and oversight costs are based on New Hampshire data only.

d The remediation costs shown represent the average costs from data provided by New Hampshire and Utah. Although New 

Mexico also reported costs, we excluded it for two reasons. First, groundwater cleanup cost estimates from New Mexico are 

much higher than those for other states ($2.5 million compared with $0.6 million or less for other states) but the state did not 

provide data on the number or type of sites that resulted in this high estimate of costs. Second, New Mexico has a relatively 

small number of UST systems (3,773 UST systems as of fiscal year 2013). As a result, New Mexico’s costs may be atypical 

and could skew results to overstate avoided costs.

Sources:

1. New Hampshire Department of Environmental Services, Underground Storage Tank Program, November 18, 2008.

2. Utah Department of Environmental Quality, Underground Storage Tank Program, November 18, 2008.

 

91 U.S. Environmental Protection Agency Office of Underground Storage Tanks, “Evaluation of Releases 

from New and Upgraded Underground Storage Tank Systems,” draft, August 2004.

92 To develop an avoided cleanup cost estimate, EPA collected data from Montana, New Hampshire, New

Mexico, South Carolina, Utah, and Virginia, all of which use state financial assurance funds to pay for LUST 

remediation. Each state UST program office received a questionnaire requesting data on typical cleanup costs 

broken out by the four general release types; New Hampshire, New Mexico, South Carolina, Utah and Virginia

provided responses. New Hampshire provided the most comprehensive set of information, including cleanup costs 

by category (i.e., administrative, response, remediation, and oversight), while New Mexico and Utah could only 

provide estimates of remediation costs. Virginia and South Carolina were unable to provide the detail required for 

this analysis, as neither state was able to break out costs by the extent of release (i.e., large or small).

93 New Mexico data are excluded from the calculation for two reasons. First, large-extent groundwater 

cleanup cost estimates from New Mexico are much higher than those for other states ($2.5 million compared with 

$0.6 million or less for other states) but the state did not provide data on the number or type of sites that resulted in 

this high estimate of costs. Second, New Mexico has a relatively small number of UST systems (3,773 UST systems 

as of fiscal year 2013). As a result, we believe that New Mexico may be atypical and could skew results to overstate 

avoided costs. We therefore do not include its results among the average avoided costs of remediation.
4-10

EPA then used the average cost data from states to develop weighted average costs 

associated with remediation of releases from different portions of the UST system, based on 

release frequency data for each source. Exhibit 4-2 presents, for each of the release sources 

identified in the draft 23-state Autopsy Report, the probability of a release by LUST category.

94

Using the cost data from Exhibit 4-1, inflated to 2012 dollars, EPA estimates a weighted average 

avoided cost per release size by multiplying the cost per site by the probability of each release 

type. These are summed across the categories to obtain the weighted average cost by release 

source.95, 96 The following section describes how this information is used to generate an estimate 

of incremental avoided costs.

 

94 U.S. Environmental Protection Agency, Office of Underground Storage Tanks. “Evaluation of Releases 

from New and Upgraded Underground Storage Tank Systems (peer review draft).” August 2004. Release 

probabilities were calculated using data for 580 spill events collected from 23 states during the development of 

EPA’s Autopsy report effort. Specifically, Figures 3, 16, 17, and 18 in the Autopsy Report provide data on the 

percent of releases by source, by extent, and by media affected for each extent (local or large). By multiplying the 

percent of total releases from a given source (e.g., piping), the percent of those releases affecting a given media type 

(e.g., soil), and the percent of releases affecting that medium that are of a given extent (e.g., local soil), EPA is able 

to generate the probability distributions in Exhibit 4-2. Note that these sources include California and Florida 

releases, and may therefore be skewed slightly if those more stringent and established programs have smaller 

releases. We are unable to adjust the data to correct for this, but its impact, if any, would likely be to reduce the 

average size and cost of baseline releases slightly, leading to an understatement of regulation-related cost savings.

95 For more information on this approach and the draft 23-state Autopsy report, see: Industrial Economics, 

Inc. "Methodology to Estimate Avoided Costs Associated with a Typical UST Leak." October 27, 2008.

96 If we calculate a weighted-average cost per release where sources are weighted proportionally by their 

contribution to total releases, we obtain an overall average cost per release of approximately $152,000 in 2012 

dollars (See Appendix I for details). This is generally consistent with ASTSWMO’s annual average cost estimate for 

site remediation of roughly $124,000 in 2012. ASTSWMO’s average site remediation value may understate typical 

remediation costs because co-pays, deductibles, and other costs not paid by state funds are excluded. Additionally, 

because the ASTSWMO estimates depend on expenditures in a given year, these estimates tend to vary substantially 

over time. See: Association of State and Territorial Solid Waste Management Officials. State Fund Survey Results 

2012.
4-11

Exhibit 4-2

Probability And Weighted Average Of Avoided Costs Per Release Source And Extent

Release Source (as identified in 

23-state Autopsy Report)

Small extent, 

soil only

Small extent, 

groundwater 

contamination 

Large extent, 

soil only

Large extent, 

groundwater 

contamination

Total/ 

Weighted 

Average

Piping Probability 40.5% 22.0% 4.5% 33.0% 100.0%

Cost $10,900 $25,900 $5,500 $150,700 $193,000 

Dispenser Probability 71.6% 9.7% 5.4% 13.3% 100.0%

Cost $19,300 $11,400 $6,600 $60,900 $98,100 

Tank Probability 30.7% 17.7% 17.3% 34.3% 100.0%

Cost $8,300 $20,800 $21,000 $156,700 $206,800 

STP Area Probability 50.0% 31.0% 0.0% 19.0% 100.0%

Cost $13,500 $36,500 $0 $86,800 $136,700 

Delivery Problems Probability 59.2% 16.8% 1.8% 22.2% 100.0%

Cost $15,900 $19,800 $2,200 $101,500 $139,400 

Note: Costs shown have been rounded to the nearest hundred dollars. Costs have been inflated to 2012 dollars.

Sources:

1. U.S. EPA, Evaluation of Releases from New and Upgraded Underground Storage Tanks (Draft). 2004. (“23-state Autopsy Report”) 

2. New Hampshire Department of Environmental Services, Underground Storage Tank Program, November 18, 2008.

3. Utah Department of Environmental Quality, Underground Storage Tank Program, November 18, 2008.

4.4 Establishing Avoided Releases

To estimate the number of baseline releases that would be either avoided completely or 

reduced in severity as a result of the final UST regulation, experts responded to a common set of 

questions about potential impacts of the regulatory changes under consideration and participated 

in subsequent individual discussions of specific areas of uncertainty. 

Each expert reviewed the requirements under consideration for the final UST regulation

and estimated how they would affect the following dimensions of releases:97

1. Changes in total frequency (number) of annual confirmed releases;

2. Changes in the number of remaining releases that reach groundwater; and/or

3. Changes in the average quantity released among remaining releases.

Experts had the option of expressing reductions in release severity in terms of the percent 

reaching groundwater or volume (quantity) of product, depending on how they typically 

collected and reviewed release data. In addition, experts were given the option of expressing 

these changes either: 1) as a total national estimate that accounted for variation in existing 

regulation and technology among states and facilities, or 2) as a change applied to a specific 

 

97 EPA did not provide experts with information about the universe of facilities or costs associated with 

remediation; experts did, however, have access to information about the number of confirmed releases in 2008, 

2011, and 2012 and their distribution across different parts of the UST system (e.g., tanks, pipes, and STP areas). 

EPA uses confirmed releases as the baseline estimate of total releases because high quality data on total releases 

are not available, and release confirmation triggers the remediation costs that would be avoided. 
4-12

subset of the tank universe (e.g., 10 percent change among tanks with a certain technology that 

are not currently regulated).

Experts also estimated the sensitivity of results to changes in the frequency of regulatory

requirements (e.g., the impact of inspections occurring at different intervals, consistent with 

different regulatory options) and noted synergies or dependencies between requirements, such as: 

 Dependency between equipment upgrades and walkthrough inspections: Experts 

consistently noted that simply replacing equipment with newer technologies (e.g., 

requiring that new systems have secondary containment) is insufficient for 

preventing all releases. Regular visual inspections are necessary to identify

potential problems and ensure timely maintenance when a release has not yet 

occurred. 

 Synergy between equipment maintenance and walkthrough inspections: Experts 

noted that the combination of operability tests and visual (walkthrough) 

inspections would result in more avoided releases by identifying equipment 

problems quickly and ensuring effective maintenance. 

 Dependency between operator training and walkthrough inspections: Experts 

noted that training alone is not adequate to ensure effective site maintenance, and 

walkthrough inspection requirements are not effective without trained staff. 

Experts provided separate estimates of impacts for each regulatory requirement. EPA 

then used these requirement-specific estimates to calculate total avoided costs for the final UST 

regulation.

98 It is important to note, however, that when considering relationships among 

regulatory requirements, experts differed in how they isolated and/or “allocated” impacts across 

specific requirements because the allocation of impacts across different regulatory requirements 

could potentially be interpreted in several ways (e.g., one expert might decide that inspections 

drove all impacts, while another might decide that testing was the primary factor). EPA therefore 

avoids emphasis on the requirement-specific estimates provided by each expert, and considers 

their results in total.99

 

98 Experts were also asked to provide an estimate of the “total cumulative impact” for the final UST 

regulation in aggregate. This general estimate was used only to verify that the experts’ logic was internally 

consistent, and to identify areas of overlap or synergy among the regulatory requirements. Because of adjustments 

required to align expert responses with the combination of regulatory requirements ultimately selected for the final 

UST regulation (e.g., using experts’ sensitivity responses for tanks on tribal lands rather than their responses for 

tanks overall), we are unable to assess the magnitude of overlap or synergy. However, the fact that the average of the 

experts’ cumulative estimates is higher than the average of their requirement-specific totals indicates that they do 

not believe there is significant overlap among requirements. As a result, benefits are unlikely to be overstated due to 

overlap. 

99 Note that EPA carefully examined and reviewed each requirement-specific estimate from each expert, 

and verified the results and assumptions with each expert, particularly in cases where results reflect a wide range. 

For detailed information on expert responses, see Appendix H.
4-13

In general, EPA applies the estimates presented by the experts to the number of affected 

units. In cases where reductions involved a range of values, EPA selected the midpoint of the 

range of values identified by each expert. Where experts’ comments reflect qualitative 

assumptions that substantially affect their quantitative estimates, the analysis acknowledges 

those factors as caveats to estimated rates of release avoidance. If these assumptions assume 

regulatory language more stringent or significantly different than the final language, the analysis 

does not include any benefits for that requirement.100

To calculate the number of releases completely avoided as a result of potential regulatory

changes, EPA combines the estimated reductions as identified by experts with a release 

distribution based on data from the draft 23-state Autopsy Report (see Appendix I for more 

detail). To estimate changes in release severity, the analysis uses the distribution of releases from 

the same report to quantify the number of groundwater releases avoided due to reduced release 

volume. Exhibit 4-3 provides a summary of our findings with respect to avoided releases. 

Experts’ responses suggest that the Selected Option will avoid approximately nine percent to 50 

percent of 6,128 annual releases, or roughly 560 to 3,000 releases in the first evaluation year. In 

addition, as summarized in Exhibit 4-4, of the remaining releases, approximately 210 to 900 

releases would be reduced in severity (i.e., these releases would occur but instead of reaching 

groundwater they would remain soil contamination only).101

Exhibit 4-3

Avoided Releases

Expert Selected Option Alternative 1 Alternative 2

Expert 1 1,100 1,600 590

Expert 2 560 690 170

Expert 3 1,600 2,400 1,200

Expert 4 3,000 3,700 2,200

Average

(Range)

1,600

(560-3,000)

2,100

(690-3,700)

1,000

(170-2,200)

Note: See Appendices H and I for inputs and methods for calculating these values. Estimates were 

validated with experts to ensure they accurately capture their opinions. 

 

100 For example, Experts 1, 2, and 3 attributed reductions to the groundwater and vapor monitoring site 

assessment requirements; however, these experts also noted that they assumed the requirements would lead users to 

switch to another leak detection method. Because EPA’s cost analysis does not assume that users will necessarily 

switch methods, we conservatively removed the experts’ assumed reductions for this requirement.

101 EPA assumes that these groundwater releases will instead become soil releases. Hypothetically, if 

releases are proportionally split as 50 percent groundwater and 50 percent soil before the regulation takes effect, and 

if the regulation reduces groundwater contamination by 20 percent, releases would be split 40 percent groundwater 

and 60 percent soil after the regulation.
4-14

Exhibit 4-4

Avoided Groundwater Contamination Incidents

Expert Selected Option Alternative 1 Alternative 2

Expert 1 900 1,100 620

Expert 2 210 460 88

Expert 3 320 310 280

Expert 4 600 480 570

Average

(Range)

510

(210-900)

600

(310-1,100)

390

(88-570)

Note: See Appendices H and I for inputs and methods for calculating these values. Estimates were 

validated with experts to ensure they accurately capture their opinions.

4.4.1 Avoided Releases Using an Alternative Baseline

EPA’s primary analysis assumes that the universe of confirmed releases from UST 

systems remains constant over the time frame of the analysis. However, both the universe of 

UST systems and the release rate (defined as the number of confirmed releases divided by the 

number of UST systems in a given year) have declined over the last two decades.102 This is 

consistent with the regulatory context of the past 20 years, in which two key factors have been 

driving the number of releases. First, the universe of UST systems has been declining as older, 

smaller tanks have been replaced by newer, larger systems. Second, many of the confirmed 

releases reported in the 1990s and early 2000s were “legacy” releases associated with older 

systems that did not meet the technical standards under 40 CFR Part 280 (e.g., tanks that were 

installed prior to the promulgation of the UST regulation at 40 CFR Part 280). Many of these 

legacy releases are discovered when tanks are removed during property transactions and other 

development projects. 

As the number of legacy releases has declined, the declining trend in total releases has 

“flattened” – trend data suggest that release rates have been approximately one confirmed release 

per hundred tanks in recent years. In addition, it is possible that confirmed releases may increase

in future years, as UST systems continue to age, and as new fuel blends with potentially higher 

corrosivity are introduced into the industry. Given this uncertainty, EPA assumes in the primary

analysis that release rates remain constant. 

However, to address the uncertainty associated with the number of confirmed releases, 

EPA also assesses avoided costs under the final UST regulation using an alternative baseline that 

projects a continued decline in the release rate consistent with the recent historical trend, and also 

captures the decline in the number of UST systems as estimated in Chapter 3, Section 3.3.1.103

This represents a conservative avoided cost scenario because it does not account for the 

possibility that aging systems or changes in fuel could result in increases in the number of 

confirmed releases reported, or that the number of UST systems could increase (if, for example, 

an expanding economy or population growth demands more service locations). 

 

102 See Appendix J for charts and data sources that demonstrate these two trends.

103 This decline in UST systems also captures the effects of declining gasoline use in recent years.
4-15

To estimate the rate of universe decline, EPA mapped historical data on the number of 

UST systems from 1991 through 2013 to an exponential one-phase decay function, which 

appears to most accurately represent the observed behavior of the UST system universe over 

time.104 EPA also mapped historical data on the release rate to a similar decay function. 105 These 

two functions were then used to project future UST universe sizes as well as future release rates. 

We used the results from these two projections to estimate future number of confirmed 

releases.106

The cumulative universe of releases over 20 years under this alternative baseline is 

approximately 69 percent of the number of cumulative releases over 20 years in the primary

analysis. The alternative baseline contains proportionally fewer releases than UST systems 

because two separate declining trends, UST systems and release rate, are used to estimate the 

future decline in releases. This compounds the projected decline in releases.

Exhibits 4-5 and 4-6 provide a summary of our findings with respect to avoided releases 

and avoided groundwater contamination events, respectively, assuming the alternative baseline 

releases occur. The alternative baseline results in a reduction of roughly 31 percent of both 

avoided releases and avoided groundwater contamination relative to the original baseline. 

Correspondingly, in the alternative baseline scenario, approximately 390 to 2,100 releases are 

avoided under the Selected Option, compared to 480 to 2,600 under Alternative 1 and 120 to 

1,500 under Alternative 2. Under the alternative baseline, approximately 140 to 620 groundwater 

contamination incidents would be avoided under the Selected Option, 210 to 790 under 

Alternative 1, and 61 to 430 under Alternative 2.

Exhibit 4-5

Avoided Releases Under Alternative Baseline

Expert Selected Option Alternative 1 Alternative 2

Expert 1 760 1,100 410

Expert 2 390 480 120

Expert 3 1,100 1,700 840

Expert 4 2,100 2,600 1,500

Average

(Range)

1,100

(390-2,100)

1,500

(480-2,600)

720

(120-1,500)

Note: See Appendices H and I for inputs and methods for calculating these values. Estimates were validated 

with experts to ensure they accurately capture their opinions. 

 

104 See Section 3.3.1.

105 To estimate future release rates, we used a single exponential decay function, which assumes that a 

quantity declines at a rate proportional to its value. This is an appropriate function given the singular and slowing 

rate of decline observed in the release rate over time. The equation for such an exponential singular decay function 

is Y = (Yo – P) * e(-k*X) + P, where P represents the “plateau,” or limit of the function and k represents the function’s 

half-life. See Appendix J for additional details.

106 We use release rates to project future number of releases (rather than use past trends in the number of 

confirmed releases) for two reasons: First, as the UST universe and release rate both appear to decline in a way 

approximating a single-decay exponential function, these projections can be used to estimate future number of 

releases without the added uncertainty of whether the release trend is truly a single-decay exponential function. In 

addition, using the release rate projections to estimate future releases yields a more conservative (lower) total 

number of releases than if we were to use the past trend in the number of releases, which leads to more conservative 

(lower) avoided remediation cost estimates in the alternative baseline.
4-16

Exhibit 4-6

Avoided Groundwater Contamination Incidents Under Alternative Baseline

Expert Selected Option Alternative 1 Alternative 2

Expert 1 620 790 430

Expert 2 140 320 61

Expert 3 220 210 190

Expert 4 420 330 390

Average

(Range)

350

(140-620)

410

(210-790)

270

(61-430)

Note: See Appendices H and I for inputs and methods for calculating these values. Estimates were validated 

with experts to ensure they accurately capture their opinions. 

4.5 Benefits from Avoided Releases and Reduced Release Severity

Two sources of avoided costs constitute the majority of quantifiable positive impacts 

from the final UST regulation. First, some costs related to release remediation do not occur 

because a number of releases are altogether avoided. Second, some remaining releases are 

reduced in severity because of the regulatory requirements (e.g., through earlier detection from 

walkthrough inspections and improved operability of release detection equipment). To capture 

this dimension of avoided costs, the analysis relies on incremental avoided groundwater 

remediation costs—the cost to remediate a groundwater release less the cost to remediate a soil 

release—as groundwater releases are generally more costly to remediate than soil releases. 

In addition to avoiding remediation costs, release prevention and mitigation results in a 

variety of other beneficial impacts, including:

 Avoided vapor intrusion damages;

 Avoided product loss;

 Human health benefits;

 Avoided acute exposure events and large-scale releases; and

 Ecological benefits (including protection of groundwater quality).

The following sections monetize, quantify, or otherwise describe these impacts.

4.5.1 Avoided Release Remediation

To determine the benefits of avoided releases, the analysis relies on the draft 23-state 

Autopsy Report’s distribution of releases by source (i.e., the part of the UST system that 

produces the release), and applies the reduction associated with each regulation to the 
4-17

appropriate source to reduce the number of releases avoided by source.107,108 Each avoided 

release is valued according to the weighted average of remediation costs shown in Exhibit 4-

2.

109

Exhibit 4-7 presents the total avoided remediation costs under each regulatory option. 

We estimate that discounted benefits from avoided remediation costs range between 

approximately $68 million and $380 under the Selected Option, while avoided costs amount to 

between $82 million and $530 million under Alternative 1 and between $24 million and $290 

million under Alternative 2. Consistent with OMB’s guidance on discount rates, this chapter 

presents results using a seven percent annual discount rate; for comparison, Chapter 7 presents 

results for the Selected Option using a three percent discount rate.

Exhibit 4-7

Discounted Avoided Release Remediation Costs

Expert

Selected Option

($ millions)

Alternative 1

($ millions)

Alternative 2

($ millions)

Expert 1 $140 $210 $80

Expert 2 $68 $82 $24

Expert 3 $190 $330 $160

Expert 4 $380 $530 $290

Average

(Range)

$190

($68-$380)

$290

($82-$530)

$140

($24-$290)

Note: Cost estimates reflect a seven percent discount rate. 

4.5.2 Reduction in Release Severity 

EPA expects that the regulatory requirements will reduce the volume and duration of 

releases. As a result of the smaller quantity released and the shorter duration of the release, 

releases are assumed to be less likely to reach groundwater, thus reducing release severity. To 

assess the impact on remediation costs associated with reduced release severity, the analysis 

focuses on changes in the number of releases that would have involved groundwater in the 

baseline, but because of the final UST regulation, involve only soil. While this metric does not 

capture all of the release mitigation effects of the regulatory requirements, avoided groundwater 

contamination is likely to be among the most significant effects of the regulation. The difference 

in remediation costs between soil and groundwater releases is substantial: remediation cost for an 

average groundwater release is approximately $290,000, while an average soil release costs 

 

107 We exclude the ‘Other’ category of releases from the draft 23-state Autopsy Report because it does not 

map to the reductions designated by the experts. Because ’Other’ accounts for only 1 percent of releases in the 

study, we distribute those releases proportionally across the remaining release sources.

108 We use five system sources to identify release types: piping, dispenser, tank, sump turbine pump area, 

and delivery problems. We then assign each regulation’s effect to source types based on the regulation (e.g. spill 

bucket tightness tests are assumed to affect releases from delivery problems). 

109 This approach assumes that avoided releases are well-represented by the distribution of release severity 

that is identified in the draft 23-state Autopsy Report.
4-18

approximately $74,000 to remediate.110 Remediation costs across release extent and medium 

contaminated range from $27,000 to $460,000 based on typical site remediation costs from New 

Hampshire and Utah.111

To estimate the number of releases that are reduced in severity, we use experts’ estimates 

of reductions in groundwater involvement and distribute them across release source, medium 

contaminated, and release extent.112 We distribute remaining releases according to the draft 23-

state Autopsy Report results and calculate additional benefits from remediation due to reductions 

in groundwater contamination following the regulation. We calculate avoided costs from reduced 

release severity by subtracting the cost to remediate all remaining releases after the final UST 

regulation is in effect from the cost to remediate all remaining releases in the baseline. In both 

cases, we remove from consideration the same number of fully-avoided releases and consider 

only the avoided costs from shifting releases from groundwater to soil.

A key limitation of this approach may lead to a conservative estimate of the effects of the 

final UST regulation. The analysis assumes that the distribution of releases across size (i.e., 

extent) does not change as a consequence of changes in groundwater contamination. In reality, 

changes in the likelihood of groundwater contamination are probably (at least in part) a 

consequence of reductions in release volume and duration. The same reductions in release 

volume that lower the incidence of groundwater contamination would likely also reduce the 

number of large extent releases of all types and decrease the average size of smaller releases. 

That is, new requirements should both reduce the number of groundwater contamination events 

and large extent events of all types. Our model captures only changes in the number of times that 

groundwater would be contaminated, and does not consider cost savings associated with smaller 

soil-only sites or small groundwater contamination incidents. We therefore likely understate 

avoided remediation costs.113

Exhibit 4-8 displays EPA’s findings regarding discounted avoided costs due to the 

mitigation of groundwater incidents. The analysis calculates avoided remediation costs by taking 

the difference between estimated remediation costs before and after the regulatory changes are 

implemented. This difference accounts for both the reduction in groundwater release incidents as 

well as the increase in soil contamination events.114 EPA estimates that benefits from averted 

 

110 These costs reflect a simple average of the costs to remediate a large extent and local extent release of 

each medium.

111 Release extent is classified in the draft 23-state Autopsy Report as either local or large. Releases that do 

not extend beyond the area excavated during remediation are considered local, while releases that extend beyond 

property lines are considered large. Extent does not explicitly involve a measure of release volume. 

112 See Appendix I for details on the calculation of avoided costs.

113 A change in the distribution of releases could also potentially cause the “average size” and cost of soilonly releases to increase (because larger groundwater releases are eliminated but become “large” local soil-only

releases). While this could result in higher average costs for local releases, (i.e., the cost savings for avoiding a 

groundwater release might be less than the difference between “average” groundwater and soil releases), the 

analysis also does not consider the cost savings associated with reducing the size of groundwater releases that still 

reach groundwater or the cost savings associated with reducing the size of soil releases. 

114 This occurs because the analysis maintains the total number of releases constant: every groundwater 

release that is avoided still requires remediation as a soil release.
4-19

groundwater releases range from approximately $46 million to $190 million under the Selected 

Option, $80 million to $290 million under Alternative 1, and $20 million and $130 million under 

Alternative 2. Avoided costs from reduced groundwater contamination are additive to avoided 

costs from avoided releases. 

Exhibit 4-8

Discounted Avoided Groundwater Remediation Costs

Expert

Selected Option

($ millions)

Alternative 1

($ millions)

Alternative 2

($ millions)

Expert 1 $190 $290 $130

Expert 2 $46 $120 $20

Expert 3 $71 $80 $61

Expert 4 $130 $120 $120

Average

(Range)

$110

($46-$190)

$150

($80-$290)

$84

($20-$130)

Note: Cost estimates reflect a seven percent discount rate. 

4.5.3 Total Avoided Remediation Costs from Avoided Releases and Reduced Release 

Severity

Exhibit 4-9 displays the sum of avoided remediation costs across both avoided releases 

and mitigated groundwater incidents for all four experts. Because experts with the lowest 

estimate in one of these categories did not necessarily have similarly low estimates in the other, 

the range of total avoided costs is not equal to the sum of the ranges from Exhibits 4-7 and 4-8.

Exhibit 4-9

Total Discounted Avoided Remediation Costsa

Expert

Selected Option

($ millions)

Alternative 1

($ millions)

Alternative 2

($ millions)

Expert 1 $330 $490 $210

Expert 2b$110 $200 $44

Expert 3 $260 $410 $220

Expert 4 $510 $650 $410

Average

(Range)

$300

($110-$510)

$440

($200-$650)

$220

($44-$410)

a Cost estimates were derived using a seven percent discount rate. 

b Expert 2 provided responses that generate benefits that are relatively low compared to the other 

experts. Conversations with this expert indicated that he assumed partial noncompliance of at least 

25 percent (that is, a compliance rate of at most 75 percent). To evaluate the potential magnitude of 

this inconsistency, we examined the impact of scaling Expert 2’s avoided remediation costs from 75 

percent compliance to 100 percent compliance. This adjustment resulted in avoided remediation 

costs of greater than $150 million annually under the Selected Option, assuming a seven percent 

discount rate. See Appendix H for additional discussion.

Although the values generated by the experts’ responses cover a wide range, we note that 

the avoided cost estimates tend to spread evenly around the mean. Expert 4 consistently

represents the high-end estimate of avoided costs, and Expert 2 consistently represents the low-
4-20

end. While we are not able to explain why Expert 4’s estimates are consistently higher than those 

of the other experts, we do note one source of uncertainty that applies to Expert 4’s estimates. 

The experience of most experts is related to implementing state regulatory programs, which 

directly consider the universe of confirmed releases evaluated in this analysis. However, the 

experience of Expert 4 considers system engineering and changes in UST-related equipment. As 

a result, Expert 4’s estimates consider all potential releases and then align these to EPA’s 

universe of confirmed releases. While this approach is methodologically sound, it requires one 

more assumption on the part of the expert to derive a total estimate.115

In contrast, Expert 2’s responses generate benefits estimates that are low compared to the 

responses of other experts. Comments provided by the expert indicated, and subsequent 

conversations with him verified, that he assumed a significant level of noncompliance with the 

regulations in deriving his estimates. His estimates assume that at least 25 percent of facilities 

will not correctly implement the requirements (that is, a compliance rate of at most 75 percent). 

The expert noted that this assumed level of compliance did not include intentional 

noncompliance, but did attempt to account for a lack of awareness or human error by 

owners/operators. This assumption is methodologically sound, but is not consistent with the full 

compliance assumed in our cost analysis. As a result, the values provided by Expert 2 may

significantly understate benefits relative to costs. To evaluate the potential magnitude of this

inconsistency, we scale Expert 2’s avoided remediation costs from 75 percent compliance to 100 

percent compliance as a sensitivity analysis. This adjustment results in total avoided remediation 

costs greater than $150 million annually under the Selected Option, assuming a seven percent 

discount rate. Appendix H provides additional discussion of the effect of assumed 

noncompliance on the experts’ responses and potential net benefits of the final UST regulation.

4.5.4 Benefits from Avoided Releases and Reduced Release Severity under the Alternative 

Baseline Scenario

Exhibits 4-10 and 4-11 present avoided remediation costs associated with the avoided 

releases and avoided groundwater incidents shown in Exhibits 4-5 and 4-6 under the alternative 

baseline scenario. In the alternative baseline scenario, avoided release remediation costs range 

from $47 million to $260 million under the Selected Option, between $56 million and $370 

million under Alternative 1, and between $17 million and $200 million under Alternative 2. 

Averted groundwater remediation costs, meanwhile, range from $32 million to $130 million 

under the Selected Option, $55 million to $200 million under Alternative 1, and $14 million to 

$92 million under Alternative 2. These alternative estimates represent conservative estimates of 

the potential value of avoided releases, because they do not consider possible factors that may

lead to increases in the number of releases reported or the number of UST systems in the future.

 

115 The type of universe adjustment conducted by Expert 4 will not necessarily result in estimates that are 

overstated, and could instead result in estimates that are understated. The adjustment is noted here simply as an 

additional source of uncertainty unique to this expert. 
4-21

Exhibit 4-10

Discounted Avoided Release Remediation Costs Under Alternative Baseline

Expert

Selected Option

($ millions)

Alternative 1

($ millions)

Alternative 2

($ millions)

Expert 1 $94 $140 $56

Expert 2 $47 $56 $17

Expert 3 $130 $230 $110

Expert 4 $260 $370 $200

Average

(Range)

$130

($47-$260)

$200

($56-$370)

$95

($17-$200)

Note: Cost estimates reflect a seven percent discount rate. 

Exhibit 4-11

Discounted Avoided Groundwater Remediation Costs Under Alternative Baseline

Expert

Selected Option

($ millions)

Alternative 1

($ millions)

Alternative 2

($ millions)

Expert 1 $130 $200 $92

Expert 2 $32 $84 $14

Expert 3 $49 $55 $42

Expert 4 $89 $83 $85

Average

(Range)

$75

($32-$130)

$100

($55-$200)

$58

($14-$92)

Note: Cost estimates reflect a seven percent discount rate. 

Exhibit 4-12 displays the sum of avoided remediation costs across both avoided releases 

and mitigated groundwater incidents under the alternative baseline scenario. Because experts 

with relatively lower estimates in one of these categories did not necessarily have similarly low 

estimates in the other, the range of avoided costs presented is not the sum of lower and higher 

bounds in Exhibits 4-10 and 4-11. As the cumulative release universe in the alternative baseline 

scenario is roughly 69 percent of cumulative releases in the original baseline, total avoided costs 

in the alternative baseline are approximately 31 percent lower than they are in the primary

analysis.

Exhibit 4-12

Total Discounted Avoided Remediation Costs Under Alternative Baseline

Expert

Selected Option

($ millions)

Alternative 1

($ millions)

Alternative 2

($ millions)

Expert 1 $230 $340 $150

Expert 2 $79 $140 $31

Expert 3 $180 $290 $150

Expert 4 $350 $450 $280

Average

(Range)

$210

($79-$350)

$300

($140-$450)

$150

($31-$280)

Note: Cost estimates reflect a seven percent discount rate. 
4-22

4.5.5 Avoided Costs by Requirement

Exhibit 4-13 presents overall avoided remediation costs by requirement for the Selected 

Option. The exhibit shows the avoided costs for each requirement based on experts’ responses to 

the effects of the individual requirements in the final UST regulation. Beneficial impacts are 

concentrated similarly to costs: the majority of avoided costs are captured by walkthrough 

inspections, overfill prevention equipment tests, spill bucket tightness tests, containment sump 

tests, and operability tests.116 Estimates in Exhibit 4-13 assume that cost savings associated with 

each regulatory requirement occur one year after implementation and reflect discounting. Similar 

exhibits presenting overall avoided remediation costs by requirement for Alternative 1 and 

Alternative 2 are included in Appendix I. 

The model used by EPA to estimate avoided remediation costs is not designed to measure 

avoided costs from large-scale releases such as those typically associated with UST systems with 

FCTs and AHFDSs. Releases from these types of systems constitute a small portion of total 

releases, but may be large in volume and can result in significant groundwater impacts. Our 

analysis does not estimate the benefits associated with changes in operation of these systems. 

However, we include a qualitative discussion of these acute events later in this chapter. 

Exhibit 4-13

Total Discounted Avoided Costs By Requirement For Conventional UST Systems

a,b ($ millions)

Selected Option

Descriptionc Expert 1 Expert 2 Expert 3 Expert 4 Average 

Release Prevention

Walkthrough inspections $140 $44 $130 $270 $150 

Overfill prevention equipment inspection $23 $1.1 $19 $25 $17 

Spill prevention equipment testing $16 $7.3 $36 $21 $20 

Containment sump testing $9.3 $18 $1.0 $9.7 $9.4 

Testing after repairs to spill and overfill prevention equipment, and secondary 

containment $2.7 $11 $1.9 $7.9 $5.9 

Eliminate flow restrictors in vent lines for all new tanks and when overfill 

prevention equipment is replaced $2.2 $7.5 $0.85 $1.5 $3.0 

Subtotal - Release Prevention $190 $89 $190 $330 $200 

Release Detection

Operability tests for release detection methods $130 $13 $61 $170 $92 

Groundwater monitoring site assessmentd$0.00 $0.00 $0.00 $0.00 $0.00 

Vapor monitoring site assessmentd$0.00 $0.00 $0.00 $0.00 $0.00 

Add SIR and CITLDS usagee$0.21 $0.00 $0.94 $0.56 $0.43 

 

116 Some requirements, particularly those that target narrow subpopulations of the UST system universe, 

may generate higher avoided costs than this analysis suggests. Three sources of uncertainty drive these smaller 

universe results. First, EPA's model is calibrated to estimate avoided costs for broad-based national changes at 

average facilities; extrapolation of these results to small populations may not reflect specific subpopulations (e.g., 

UST systems in Indian country). Second, several experts stated that their estimates of impacts for requirements 

affecting narrow subsets of UST populations are more uncertain than broader estimates. Finally, experts emphasized 

that equipment replacement, inspection, training, and testing are all essential to ensure release reductions, and they 

used judgment to emphasize the different roles of these different activities. Therefore, the assignment of specific 

impacts to each of the requirements is potentially less accurate than the aggregate estimates of avoided impacts.
4-23

Exhibit 4-13

Total Discounted Avoided Costs By Requirement For Conventional UST Systems

a,b ($ millions)

Selected Option

Response to interstitial monitoring alarms $0.80 $10 $0.21 $0.78 $2.9 

Remove release detection deferral for EGTs $0.68 $2.2 $7.6 $5.9 $4.1 

Subtotal - Release Detection $130 $25 $70 $170 $99 

Other

Notification of ownership changesf$0.00 $0.00 $0.00 $0.00 $0.00 

Replacement of lined tanks that cannot be repaired according to a code of 

practiceg $0.00 $0.00 $0.01 $0.00 $0.00 

Requirements for demonstrating compatibility with fuels >E10 and >B20h$0.00 $0.11 $0.00 $0.12 $0.06 

Subtotal – Other $0.00 $0.11 $0.01 $0.12 $0.06 

EPAct-related Provisions

Operator Training $1.0 $0.04 $0.60 $1.5 $0.80 

Secondary containment $1.0 $0.66 $7.6 $2.4 $2.9 

Subtotal - EPAct-related Provisions $2.1 $0.69 $8.2 $3.9 $3.7 

TOTAL $330 $110 $260 $510 $300 

a Cost estimates were derived using a seven percent discount rate.

b Reductions in frequency and release severity (as measured by changes in groundwater contamination) do not adequately capture the 

positive impacts of preventing releases from very large systems such as AHFDSs and UST systems with FCTs. Releases from these types of 

systems constitute a small portion of total releases, but may be large in volume and can result in significant groundwater impacts. Especially 

in the case of AHFDSs, even minor problems can create large releases due to the significant pressure under which contents are stored. The 

model used by EPA to estimate avoided remediation costs is not designed to measure avoided costs from very large releases such as those 

typically associated with AHFDSs and FCTs, and we therefore do not offer an estimate of avoided costs for requirements that apply to these 

systems.

c

Some requirements, particularly those that target narrow subpopulations of the UST system universe, may generate higher avoided costs 

than this analysis suggests. Three sources of uncertainty drive these smaller universe results: First, EPA's model is calibrated to estimate 

avoided costs for broad-based national changes at average facilities; extrapolation of these results to small populations may not reflect 

specific subpopulations (e.g., UST systems in Indian country). Second, several experts stated that their estimates of impacts for requirements 

affecting narrow subsets of UST populations are more uncertain than broader estimates. Finally, experts emphasized that equipment 

replacement, inspection, training, and testing are all essential to ensure release reductions, and they used judgment to emphasize the different 

roles of these different activities. Therefore, the assignment of specific impacts to each of the requirements is potentially less accurate than 

the aggregate estimates of avoided impacts. 

d Experts 1, 2, and 3 attributed reductions to the groundwater and vapor monitoring site assessment requirements; however, these experts also 

noted that they assumed the requirements would lead users to switch to another leak detection method. Because EPA does not assume that 

users will necessarily switch methods, we conservatively removed the experts’ assumed reductions for this requirement. Expert 4 did not 

attribute reductions to these requirements.

e Expert 2 assumed negligible effect of the requirement to add SIR and CITLDS usage on release frequency and severity.

f All experts assumed no effect, or in the case of Expert 3, a negligible effect, of the requirement for notification of ownership changes on 

reductions in release frequency or severity.

g Although all experts attributed some reduction in release frequency or severity to this requirement, the number of tanks that cannot be 

repaired according to a code of practice is assumed to be so small that estimated benefits are negligible.

h Experts 1 and 3 attributed reductions to the compatibility requirement but noted that the majority of the benefit should be attributed to E10 

users, which are not included in this requirement. As a result, we conservatively removed these experts’ assumed reductions for this 

requirement.

As noted in Exhibit 4-1, EPA excluded the highest state-level remediation cost values 

from its calculation of average cost of release remediation. While this step contributes toward a 

conservative (low) estimate of avoided costs, the possibility remains that the average remediation 

costs used in Exhibit 4-13 overestimate the positive impacts of the final UST regulation if state 

data provided are not representative of national average remediation costs. In Exhibit 4-14, we 

therefore estimate the positive effects of the final UST regulation using only the lowest 
4-24

remediation costs available.117 As shown in Exhibit 4-14, EPA’s estimate of the avoided 

remediation costs of the final UST regulation using the lowest state cost estimates is $73 million 

to $330 million per year under the Selected Option. While this is not a true “lower bound” 

estimate, these estimates reflect costs that lead to lower than average costs when compared to 

figures reported by ASTSWMO.118 Similar exhibits presenting overall avoided remediation costs 

by requirement for Alternative 1 and Alternative 2 are included in Appendix I.

Exhibit 4-14

Sensitivity Analysis: Total Discounted Avoided Costs By Requirement 

Based On New Hampshire Remediation Costsa,b ($ millions)

Selected Option

Descriptionc Expert 1 Expert 2 Expert 3 Expert 4 Average 

Release Prevention

Walkthrough inspections $86 $27 $81 $170 $92 

Overfill prevention equipment inspection $15 $0.74 $13 $16 $11 

Spill prevention equipment testing $11 $5.0 $24 $14 $14 

Containment sump testing $6.1 $13 $0.68 $6.5 $6.5 

Testing after repairs to spill and overfill prevention equipment, and secondary 

containment $1.7 $6.9 $1.2 $5.1 $3.7 

Eliminate flow restrictors in vent lines for all new tanks and when overfill 

prevention equipment is replaced $1.3 $5.1 $0.57 $0.97 $2.0 

Subtotal - Release Prevention $120 $58 $120 $220 $130 

Release Detection

Operability tests for release detection methods $77 $7.3 $38 $100 $56 

Groundwater monitoring site assessmentd$0.00 $0.00 $0.00 $0.00 $0.00 

Vapor monitoring site assessmentd$0.00 $0.00 $0.00 $0.00 $0.00 

Add SIR and CITLDS usagee$0.13 $0.00 $0.58 $0.36 $0.27 

Response to interstitial monitoring alarms $0.49 $6.2 $0.13 $0.50 $1.8 

Remove release detection deferral for EGTs $0.42 $1.2 $4.7 $3.6 $2.5 

Subtotal - Release Detection $78 $15 $43 $110 $61 

Other

Notification of ownership changesf$0.00 $0.00 $0.00 $0.00 $0.00 

 

117 These were provided by the State of New Hampshire’s UST program.

118 If we calculate a weighted-average cost per release where sources are weighted proportionally by their 

contribution to total releases using the lowest remediation cost data available (i.e., from New Hampshire), we obtain 

an overall average cost per release of approximately $103,000 (See Appendix I for details). Under the alternative 

baseline, total avoided costs based on New Hampshire remediation costs range from $51 million to $230 million in 

the Selected Option. This represents an extreme lower bound analysis of avoided remediation costs.

Additionally, we consider whether the remediation costs used in this analysis are consistent with those 

reported by ASTSWMO. As noted above, ASTSWMO estimates the annual average remediation cost per site to be 

roughly $124,000 in 2012. If we value the releases and groundwater incidents avoided under each option using the 

ASTSWMO average site remediation cost, we obtain total avoided costs that are consistent with the primary 

estimates used in this analysis. Specifically, avoided remediation costs are approximately $96 million to $450 

million under the Selected Option, $140 million to $520 million under Alternative 1, and $32 million to $340 

million under Alternative 2. However, ASTSWMO’s average site remediation value may understate typical 

remediation costs because co-pays, deductibles, and other costs not paid by state funds are excluded.
4-25

Exhibit 4-14

Sensitivity Analysis: Total Discounted Avoided Costs By Requirement 

Based On New Hampshire Remediation Costsa,b ($ millions)

Selected Option

Replacement of lined tanks that cannot be repaired according to a code of 

practiceg $0.00 $0.00 $0.00 $0.00 $0.00 

Requirements for demonstrating compatibility with fuels >E10 and >B20h$0.00 $0.07 $0.00 $0.08 $0.04 

Subtotal – Other $0.00 $0.07 $0.00 $0.08 $0.04 

EPAct-related Provisions

Operator Training $0.66 $0.02 $0.38 $1.0 $0.52 

Secondary containment $0.67 $0.44 $4.8 $1.5 $1.9 

Subtotal - EPAct-related Provisions $1.3 $0.46 $5.2 $2.5 $2.4 

TOTAL $200 $73 $170 $330 $190 

a Cost estimates were derived using a seven percent discount rate.

b Reductions in frequency and release severity (as measured by changes in groundwater contamination) do not adequately capture the positive 

impacts of preventing releases from very large systems such as AHFDSs and UST systems with FCTs. Releases from these types of systems 

constitute a small portion of total releases, but may be large in volume and can result in significant groundwater impacts. Especially in the case 

of AHFDSs, even minor problems can create large releases due to the significant pressure under which contents are stored. The model used by 

EPA to estimate avoided remediation costs is not designed to measure avoided costs from very large releases such as those typically associated 

with AHFDSs and FCTs, and we therefore do not offer an estimate of avoided costs for requirements that apply to these systems.

c

Some requirements, particularly those that target narrow subpopulations of the UST system universe, may generate higher avoided costs than 

this analysis suggests. Three sources of uncertainty drive these smaller universe results: First, EPA's model is calibrated to estimate avoided 

costs for broad-based national changes at average facilities; extrapolation of these results to small populations may not reflect specific 

subpopulations (e.g., UST systems in Indian country). Second, several experts stated that their estimates of impacts for requirements affecting 

narrow subsets of UST populations are more uncertain than broader estimates. Finally, experts emphasized that equipment replacement, 

inspection, training, and testing are all essential to ensure release reductions, and they used judgment to emphasize the different roles of these 

different activities. Therefore, the assignment of specific impacts to each of the requirements is potentially less accurate than the aggregate 

estimates of avoided impacts.

d Experts 1, 2, and 3 attributed reductions to the groundwater and vapor monitoring site assessment requirements; however, these experts also 

noted that they assumed the requirements would lead users to switch to another leak detection method. Because EPA does not assume that 

users will necessarily switch methods, we conservatively removed the experts’ assumed reductions for this requirement. Expert 4 did not 

attribute reductions to these requirements.

e Expert 2 assumed negligible effect of the requirement to add SIR and CITLDS usage on release frequency and severity.

f All experts assumed no effect, or in the case of Expert 3, a negligible effect, of the requirement for notification of ownership changes on 

reductions in release frequency or severity.

g Although all experts attributed some reduction in release frequency or severity to this requirement, the number of tanks that cannot be 

repaired according to a code of practice is assumed to be so small that estimated benefits are negligible.

h Experts 1 and 3 attributed reductions to the compatibility requirement but noted that the majority of the benefit should be attributed to E10 

users, which are not included in this requirement. As a result, we conservatively removed these experts’ assumed reductions for this 

requirement.

4.6 Avoided Vapor Intrusion Damages

Vapor intrusion generally occurs when petroleum or highly-dissolved concentrations of 

free product come into direct contact with building sumps and foundations, elevator shafts, and 

preferential pathways (e.g. improperly sealed utility lines). Intrusion can also occur when these 

substances come close to building foundations.119 The cost to remediate vapor intrusion is 

typically incremental to the cost to remediate a LUST site. Based on information provided by

four states, EPA estimates that, on average, 5.5 percent of all releases cause vapor intrusion 

 

119 Davis, Robin V. “Petroleum Hydrocarbon Vapor Intrusion Investigations: Current General Practice.” 

Leaking Underground Storage Tanks, Utah Department of Environmental Quality, February 9, 2010. Accessed at: 

http://www.epa.gov/oust/pviwebinar_approach.pdf.
4-26

issues. Each of these instances requires additional remedial actions valued at approximately

$42,000 beyond ordinary release remediation costs.120 As reported in Exhibit 4-15, given 770 to 

3,600 avoided releases and mitigated groundwater incidents, we estimate between 42 and 200 

avoided vapor intrusion incidents under the Selected Option. This reduction would avoid 

between $1.7 million and $7.9 million per year in avoided remediation costs related to vapor 

intrusion. Under Alternative 1, this range increases to $2.5 million to $9.1 million, and under 

Alternative 2, this range decreases to $0.6 million to $6.0 million per year.

Exhibit 4-15

Avoided Vapor Intrusion Costs ($ millions)

Expert 1 Expert 2 Expert 3 Expert 4

Average

(Range)

Selected Option

Total avoided releases and avoided groundwater incidents 2,000 770 1,900 3,600 2,100

(770-3,600)

Avoided vapor intrusion incidents 110 42 100 200 110

(42-200)

Avoided vapor intrusion costs $4.3 $1.7 $4.1 $7.9 $4.5

($1.7-$7.9)

Alternative 1

Total avoided releases and avoided groundwater incidents 2,700 1,100 2,700 4,200 2,700

(1,100-4,200)

Avoided vapor intrusion incidents 150 63 150 230 150

(63-230)

Avoided vapor intrusion costs $5.9 $2.5 $5.9 $9.1 $5.9

($2.5-$9.1)

Alternative 2

Total avoided releases and avoided groundwater incidents 1,200 260 1,500 2,800 1,400

(260-2,800)

Avoided vapor intrusion incidents 66 14 82 150 78

(14-150)

Avoided vapor intrusion costs $2.6 $0.6 $3.2 $6.0 $3.1

($0.6-$6.0)

Under the alternative baseline, avoided vapor intrusion costs fall due to the smaller 

universe of releases. In the Selected Option, avoided costs are $1.2 million to $5.5 million. 

Under Alternative 1, avoided costs range from $1.7 million to $6.3 million; under Alternative 2, 

they range between $0.4 million and $4.1 million. 

4.7 Avoided Product Loss

Releases into the environment cause operators to lose otherwise marketable fuel products. 

Exhibit 4-16 presents costs avoided due to product loss. The analysis calculates the product loss 

associated with avoided releases by multiplying the average volume associated with each release 

source by the number of releases of that type before and after the final UST regulation is in 

effect. Based on the estimates of avoided releases presented by the experts, the draft 23-state 

Autopsy Report’s distribution of releases, and average release volumes reported in the Florida 

 

120 New Hampshire, Utah, South Carolina, Virginia, and New Mexico were contacted for LUST 

remediation costs, but only New Hampshire was able to provide a cost for cleanup actions related to vapor 

intrusion. Other state programs contributed data to the frequency of incidents, but not to costs.
4-27

study, EPA estimates that approximately 0.25 million gallons to 1.9 million gallons per year of 

diesel and gasoline releases are avoided as a consequence of the Selected Option. At an average 

price of $3.73 per gallon, owners and operators avoid losing approximately $0.9 million to $6.5

million in product due to releases.121 These values range from 0.22 million gallons to 2.2 million 

gallons, or $0.8 million to $7.6 million, under Alternative 1. Under Alternative 2, these values 

decrease to a range of 0.10 million gallons to 1.5 million gallons, or $0.4 million to $5.2 million. 

Limited data on release size do not support an analysis of avoided product loss associated with 

releases that are reduced in severity. This estimate of avoided product loss there understates total 

likely avoided product losses. 

Exhibit 4-16

Value Of Avoided Product Loss

Expert Selected Option Alternative 1 Alternative 2

Thousand 

gallons $ millions

Thousand 

gallons $ millions

Thousand 

gallons $ millions

Expert 1 650 $2.3 750 $2.6 440 $1.5

Expert 2 250 $0.9 220 $0.8 100 $0.4

Expert 3 830 $2.9 1,200 $4.1 710 $2.5

Expert 4 1,900 $6.5 2,200 $7.6 1,500 $5.2

Average

(Range)

900

(250-1,900)

$3.1

($0.9-$6.5)

1,100

(220-2,200)

$3.8

($0.8-$7.6)

690

(100-1,500)

$2.4

($0.4-$5.2)

Releases are valued using an average price of motor fuel in 2012. Prices per gallon for all grades of retail motor 

gasoline and No. 2 diesel fuel (all concentrations of sulfur) were $3.63 and $3.97, respectively, as reported by: U.S. 

Bureau of Transportation Statistics. “Sales Price of Transportation Fuel to End-Users.” National Transportation 

Statistics 2013. Table 3-11. Accessed at: http://www.rita.dot.gov/bts/sites/rita.dot.gov.bts/files/NTS_Entire_0.pdf.

We weight these prices according to prime supplier sales volumes in 2012 published by the Energy Information 

Administration, which summed to 347,234.5 thousands of gallons per day for gasoline and 143,270.6 thousands of 

gallons per day for all grades of diesel fuel (U.S. Energy Information Administration. Petroleum & Other Liquids. 

Prime Supplier Sales Volumes. Accessed at: http://www.eia.gov/dnav/pet/pet_cons_prim_dcu_nus_a.htm.).

Under the alternative baseline, avoided costs due to product loss are lower than in the 

original baseline as there are relatively fewer releases. Under the Selected Option, avoided costs 

due to product loss are $0.6 million to $4.5 million. Under Alternative 1, avoided costs range 

from $0.5 million to $5.2 million; under Alternative 2, they range from $0.3 million to $3.6

million. 

4.8 Human Health Benefits

Exposure to petroleum through ingestion, dermal contact, and inhalation can cause a 

range of health effects, including cancer and non-cancer impacts associated with benzene, and 

 

121 Releases are valued using an average price of motor fuel in 2012. Prices per gallon for all grades of 

retail motor gasoline and No. 2 diesel fuel (all concentrations of sulfur) were $3.63 and $3.97, respectively, as 

reported by: U.S. Bureau of Transportation Statistics. “Sales Price of Transportation Fuel to End-Users.” National 

Transportation Statistics 2013. Table 3-11. Accessed at: 

http://www.rita.dot.gov/bts/sites/rita.dot.gov.bts/files/NTS_Entire_0.pdf. We weight these prices according to prime 

supplier sales volumes in 2012 published by the Energy Information Administration, which summed to 347,234.5 

thousands of gallons per day for gasoline and 143,270.6 thousands of gallons per day for all grades of diesel fuel 

(U.S. Energy Information Administration. Petroleum & Other Liquids. Prime Supplier Sales Volumes. Accessed at: 

http://www.eia.gov/dnav/pet/pet_cons_prim_dcu_nus_a.htm.). 
4-28

non-cancer impacts (e.g., neurological impacts) associated with other petroleum constituents 

such as toluene.122 In addition, exposure to jet fuel, such as that stored in AHFDSs and FCTs at 

commercial and military airports, can result in non-cancer impacts to skin, nervous, and 

respiratory systems.123 The types of health risks that may be avoided by the final UST regulation

are described in more detail below. 

The complex nature of petroleum mixtures and the limited toxicological data available 

both for petroleum mixtures and for individual component compounds of petroleum limits EPA’s 

ability to comprehensively document the health effects associated with the most significant 

releases. However, the toxicological testing that has been conducted on some common 

components of total petroleum hydrocarbons (TPH) suggests that exposures to TPH through 

inhalation or ingestion of gasoline or diesel could result in the following effects:

 Neurological effects, such as central nervous system depression, have been 

associated with acute and chronic exposures to toluene and xylenes; n-hexane 

exposure has been associated with effects on peripheral neuropathy;

 Hematological effects associated with oral and inhalation exposure to benzene 

and with oral and inhalation exposure to naphthalene;

 Renal and hepatic effects associated with BTEX compounds and other aromatic 

hydrocarbon compounds;

 Developmental effects associated with intermediate exposures to ethylbenzene 

and xylenes; and 

 Carcinogenic effects of oral exposures to certain polycyclic aromatic 

hydrocarbons (PAHs) including benzo(a)pyrene, benz(a)anthracene, and 

dibenz(a,h)anthracene.124

Health risks may also be associated with exposure to kerosene, which may be stored in 

USTs or used as a component in jet fuel. Although risks associated with kerosene have not been 

studied as widely as those associated with petroleum, existing data suggest that these risks 

primarily include non-cancer impacts to the skin, nervous, and respiratory systems.125 In the 

baseline, some of these risks may be reduced due to existing monitoring standards under the 

 

122 For example, see: Paustenbach, D J, et. al. “Benzene toxicity and risk assessment, 1972-1992: 

implications for future regulation.” Environ Health Perspect, December 1993, 101(Suppl 6):177–200.

123 U.S. Department of Labor Occupational Safety and Health Administration. “Safety and Health Topics: 

Jet Fuel (JP8).” Accessed at: http://www.osha.gov/dts/chemicalsampling/data/CH_248748.html.

124 U.S. Department of Health and Human Services. Public Health Service. Agency for Toxic Substances 

and Disease Registry. “Toxicological Profile for Polycyclic Aromatic Hydrocarbons.” August 1995. 

125 See, for example: U.S. Department of Labor Occupational Safety and Health Administration. “Safety 

and Health Topics: Jet Fuel (JP8).” Accessed at: http://www.osha.gov/dts/chemicalsampling/data/CH_248748.html; 

and U.S. Department of Health and Human Services. Public Health Service. Agency for Toxic Substances and 

Disease Registry. “Toxic Substances Portal – Jet Fuels JP-5 and JP-8.” Accessed at: 

http://www.atsdr.cdc.gov/phs/phs.asp?id=771&tid=150.
4-29

Occupational Safety and Health Administration (OSHA).

126 However, because the final UST 

regulation includes new requirements for AHFDSs and UST systems with FCTs located at 

commercial and military airports, avoidance of health risks from kerosene could represent an 

additional benefit of the final UST regulation.

The magnitude of health benefits associated with avoiding exposure to petroleum and jet 

fuel components depends on multiple factors. These factors include the number of cancer cases 

and non-cancer impacts per average UST release, which in turn depends on the number of 

groundwater users surrounding UST sites; the number of releases prevented through 

implementation of the final UST regulation; and the willingness-to-pay to avoid a fatal cancer 

(e.g., the value of a statistical life) or willingness-to-pay to avoid non-cancer impacts. In 

addition, assumptions about baseline behaviors, such as the assumption that individuals will limit 

their own exposure in certain cases (e.g., when petroleum contamination exceeds a “taste/odor 

threshold” and water is no longer palatable), affect the estimated magnitude of health benefits. 

Based on available information on average plume volumes and ages and the distribution of 

groundwater users, these benefits are expected to be small.127 Nevertheless, some larger releases 

may have significant cancer and non-cancer risks associated with them. Although these health 

effects are not able to be reliably quantified with available data, they represent additional 

potential benefits of the regulation.

4.9 Avoided Acute Exposure Events and Large-Scale Releases

Most health effects associated with leaking underground storage tanks reflect long-term 

exposures, but some releases from UST systems relate to acute events such as fire or explosion. 

These releases can involve acute exposures, large volumes of free product, extensive ecological 

damage, and injuries and death, depending on the circumstances of the event. Because these 

events are both infrequent and difficult to predict, it is not possible to quantify or monetize the 

impact associated with avoiding them, but the response, remediation, and medical costs 

associated with a single acute incident could be significant. The final UST regulation is designed 

to ensure effective maintenance of UST systems, and one benefit will be to reduce the chances of 

an acute event that could result in a large-scale release and its associated damages (e.g., a wellmaintained UST system is less likely to be in a condition where it may explode).

Acute events are especially important in the case of UST systems such as AHFDSs and 

UST systems with FCTs, which can hold large volumes of fuel. Releases from these systems can 

result in extensive groundwater and other environmental and health impacts. For instance, an 

estimated 300,000 to 500,000 gallons of fuel was released from a 2.1 million gallon underground 

field-constructed tank at a fuel depot in Portsmouth, VA that was in operation from the 1950s to 

 

126 U.S. Department of Labor Occupational Safety and Health Administration. “Safety and Health Topics: 

Jet Fuel (JP8).” Accessed at: http://www.osha.gov/dts/chemicalsampling/data/CH_248748.html.

127 U.S. Environmental Protection Agency, Office of Underground Storage Tanks. “Petroleum Releases at 

Underground Storage Tank Facilities in Florida.” March 2005. See also: RTI International. “Risk Analysis to 

Support Potential Revisions to Underground Storage Tank (UST) Regulations.” December 22, 2010.
4-30

mid-1980s. Free product was found within 20 feet of a nearby creek in 1987. As of 2011, 

approximately 143,000 gallons of product had been recovered.128

In addition, the final UST regulation may large-scale releases associated with AHFDSs 

and FCTs. An example of the potential magnitude of the releases from these systems is the 

pattern of releases at Pease Air Force Base, where jet fuel was delivered to the runway apron via 

an underground fueling system.129 Historical leakage from the system contaminated soil and 

groundwater, forming groundwater plumes at many sites along the system.130 A site release study

identified 60 to 70 release points with varying degrees of severity along the refueling system line 

with free product found under the apron at closure.131 While there are no historical records 

available indicating the amount of leaked fuel or leak origins, the presence of residual soil and 

groundwater contamination poses a significant threat to human health and the environment. 

While the analytical procedure used by EPA to estimate monetized benefits was unable to 

capture the positive impacts of preventing releases from these types of systems, we note that 

preventing or mitigating these releases may generate substantial reductions in remediation costs

and public exposure. 

4.10 Ecological Benefits

A document prepared for EPA outlines the types of ecological damages that can result 

from land-based pollution releases:132

Measurable damage to ecological resources from land releases generally occurs when groundwater 

or overland flow of water carry contaminants to a nearby surface water body. Flood events and 

other acute incidents can cause releases of waste that have an immediate and significant effect on 

ecological resources (e.g., a surface impoundment dike fails and releases contaminants into a river, 

killing fish and other biota). More common are gradual increases in contaminant levels due to 

long-term releases to groundwater. These may have a broad array of impacts on both resources 

used by humans (such as fish populations) and on “non-use value” such as the value of preserving 

habitat and species diversity. In addition, biota can be affected by uptake of contaminants from 

soil, particularly in wetlands or areas where the water table is high.

Because releases from USTs typically reach soil before reaching groundwater, such releases 

would likely be classified as land releases. Any releases avoided due to the final UST regulation

 

128 Phone conversation and email from Lynne Smith, geologist, and Russ Ellison, Virginia Department of 

Environmental Quality.

129 New Hampshire Department of Environmental Services, Air Resources Division. 2007. Permit 

Application Review Summary, Former Pease AFB Remediation Project, FY04-0453. 10 March 2010. Accessed at: 

http://www2.des.state.nh.us/OneStopPub/Air/3301590780FY04-0453TypeSummary.pdf.

130 New Hampshire Department of Environmental Services, Air Resources Division. 2009. Permit 

Application Review Summary, Former Pease AFB Remediation Project, 09-0113. 10 March 2010. Accessed at: 

http://www2.des.state.nh.us/OneStopPub/Air/330159094909-0113TypeSummary.pdf.

131 Hilton, Scott. Site Summaries Pease Air Force Base Newington/Portsmouth. 2008. New Hampshire 

Department of Environmental Services. 10 March 2010. Accessed at: 

http://des.nh.gov/organization/divisions/waste/hwrb/fss/superfund/summaries/pease.htm.

132 Industrial Economics, Inc. “Approaches to Assessing the Benefits, Costs, and Impacts of the RCRA 

Subtitle C Program.” October 2000. Accessed at: http://www.epa.gov/oswer/docs/rcradocs/rcra.pdf. p. 3-17
4-31

may result in ecological benefits. A complete assessment of ecological benefits, however, 

requires significant location-specific data, and it is often difficult to identify sufficient data to 

support valuation of both use and non-use values of preserving habitat and species diversity. 

The ecological benefits that accrue from the final UST regulation are likely to occur as a 

consequence of averted groundwater contamination. The resource economics literature contains 

numerous examples of studies that value these services, as demonstrated by the public’s willingto-pay (WTP) for groundwater protection programs (e.g., see Poe et al. 2001).133 However, these 

values are largely context-specific in terms of location, scale, and the specific threat to 

groundwater considered and do not provide broadly-applicable information on the value of 

groundwater. 

Some attempts have been made to develop standardized values for groundwater, often for 

purposes of Natural Resource Damage Assessment (NRDA).134 For instance, the State of New 

Jersey currently employs a replacement cost approach to determine interim economic losses 

associated with injuries to groundwater.135 Even so, replacement cost methods do not constitute a 

proper WTP valuation. The replacement costs of natural resources and their services capture 

WTP only when they meet three criteria: 1) replacement provides equivalent quality and quantity 

of services; 2) the public is actually willing to pay for the replacement; and 3) replacement is the 

most cost-effective means of restoring the lost services.136 Even if these conditions are true, this 

approach may overestimate groundwater values in urban areas, as land is typically more 

expensive, and underestimate groundwater values in areas where land is less expensive.

Because an assessment of the value of groundwater protected by the final UST regulation

is affected by spatial heterogeneity, it requires information about the public’s WTP for protection 

in all states and territories. These data are not available, and EPA is therefore unable to place a 

value on the groundwater protected. Instead, we provide an estimate below of the total quantity

of groundwater that may be protected by the regulation. We note, though, that a portion of the 

value of restoring groundwater is captured as part of the cost to remediate each release discussed 

earlier in this chapter. However, while the cost of restoring groundwater to a higher quality after 

 

133 Poe, Gregory L., K.J. Boyle, and J.C. Bergstrom. “A Preliminary Meta Analysis of Contingent Values 

for Ground Water Revisited.” In The Economic Value of Water Quality, edited by Bergstrom, J.C., K.J. Boyle and 

G.L. Poe, Cheltenham, United Kingdom: Edward Elgar Publishing Limited. 2001.

134 Natural Resource Damage Assessment (NRDA) is the process of estimating the monetary cost of 

restoring natural resources injured by discharges of oil or releases of hazardous substances. Monetary costs, or 

damages, are estimated by identifying the services provided by the injured natural resources, determining the 

baseline level of the services provided by the resources, and quantifying the reduction in services that result from 

the natural resource injury. See: U.S. Environmental Protection Agency. Natural Resource Damage Assessment. 

Accessed at: www.epa.gov/ superfund/ programs/nrd/nrda2.htm.

135 New Jersey’s approach follows three steps. First, the approach determines the total present value of 

potential yield from the contaminated area over the relevant period of impairment, typically based on a site-specific 

or regional recharge rate for the area in question. Second, again considering regional recharge rates, it estimates the 

amount of land required to protect an equivalent present value total volume of groundwater. Finally, the approach 

identifies and appraises candidate parcels. The cost of acquiring such a parcel for purposes of protecting a volume of 

groundwater equivalent to what was lost represents the measure of damages.

136 Freeman, A.M. III. The Measurement of Environmental and Resource Values: Theory and Methods. 

Resources for the Future: Washington, DC. 2003. p. 460.
4-32

contamination is captured as part of the cost to remediate each release, it cannot be assumed that 

remediation captures WTP. In many cases, performing remediation to “safe” levels does not 

fully eliminate contamination, and therefore does not restore the resource to its original value. 

Therefore, while a significant portion of the value of the quantity of groundwater protected may

be captured by the avoided remediation costs, it may not reflect the full WTP of groundwater 

protection. 

Exhibit 4-17 summarizes a screening assessment of the volume of groundwater 

contamination potentially avoided because of reductions in releases and groundwater 

contamination incidents. The analysis relies on the EPA risk assessment, which describes typical 

volumes of groundwater affected by releases of different sizes over various discovery time 

frames.137 EPA’s analysis estimates that, under the Selected Option, 19 billion gallons to 88

billion gallons of groundwater per year are protected under conservative assumptions of 10-

gallon release volumes that migrate for only one year before discovery. Under the upper bound 

conditions of 5,000-gallon release volumes and 100-year lifetimes, up to 3.9 trillion gallons of 

groundwater per year would be potentially protected by the Selected Option.138 We also calculate 

the impact of 50-gallon releases over one- and five-year time frames. These releases appear most 

consistent with empirical data in the draft 23-state Autopsy Report. Assuming that 50-gallon 

releases and one- to five-year time frames represent the average parameters of avoided releases, 

we estimate that approximately 50 to 240 billion gallons of groundwater would be protected 

annually from LUST-related releases due to the regulatory changes.139

 

137 RTI International. “Risk Analysis to Support Potential Revisions to Underground Storage Tank (UST) 

Regulations.” December 22, 2010.

138 The risk assessment on which this analysis is based did not estimate groundwater contamination 

volumes outside of a one-mile radius about the point of release. The assessment notes that groundwater may be 

contaminated outside that radius, but it does not estimate this quantity. Generally, only releases greater than 1,000 

gallons are affected by this phenomenon, i.e., groundwater contamination is likely underestimated for the 5,000 

gallon, 100-year release scenario.

139 The release volume data used in the groundwater protection assessment differs from the data used to 

calculate product loss and may lead to apparent inconsistencies. For instance, under the Selected Option, prevention 

of 900,000 gallons of product loss over 1,600 releases implies an average of over 500 gallons per release; however, 

in the groundwater protection analysis, EPA relies on estimates of groundwater contaminated based on releases of 

50 gallons for the following two reasons: (1) the volumes of product loss based on Florida data are based on actual 

data, while the risk analysis relies on a simulation; and (2) the simulation assumes that product is released over a 

relatively short period of time (approximately one month), which likely overstates the effect of groundwater 

contamination for any given volume. Given these circumstances, EPA selected an average release volume to 

characterize groundwater contamination that is significantly lower than the volume implied by the analysis of 

product loss, but which reduces the risk of overstating positive impacts from groundwater protection.
4-33

Exhibit 4-17

Volume Of Groundwater Protected (billion gallons per year)

Expert 1 Expert 2 Expert 3 Expert 4

Average

(Range)

Selected Option

Total avoided releases and avoided groundwater incidents 2,000 770 1,900 3,600 2,100

(770-3,600)

1 year until discovery, 10 gal. release

(24,068,183 gal. GW contaminated)* 48 19 45 88 50(19-88)

1 year until discovery, 50 gal. release

(48,785,436 gal. GW contaminated)* 97 38 92 180 100(38-180)

5 years until discovery, 50 gal. release

(80,192,581 gal. GW contaminated)* 160 62 150 290 170(62-290)

100 year until discovery, 5,000 gal. release

(1,056,971,192 gal. GW contaminated)* 2,100 820 2,000 3,900 2,200(820-3,900)

Primary estimate (average of 50 gal. release over 1 and 5 years) 130 50 120 240 130

(50-240)

Alternative 1

Total avoided releases and avoided groundwater incidents 2,700 1,100 2,700 4,200 2,700

(1,100-4,200)

1 year until discovery, 10 gal. release

(24,068,183 gal. GW contaminated)* 66 28 66 100 65(28-100)

1 year until discovery, 50 gal. release

(48,785,436 gal. GW contaminated)* 130 56 130 210 130(56-210)

5 years until discovery, 50 gal. release

(80,192,581 gal. GW contaminated)* 220 92 220 340 220(92-340)

100 year until discovery, 5,000 gal. release

(1,056,971,192 gal. GW contaminated) * 2,900 1,200 2,900 4,500 2,900(1,200-4,500)

Primary estimate (average of 50 gal. release over 1 and 5 years) 180 74 180 270 170

(74-270)

Alternative 2

Total avoided releases and avoided groundwater incidents 1,200 260 1,500 2,800 1,400

(260-2,800)

1 year until discovery, 10 gal. release

(24,068,183 gal. GW contaminated)* 29 6 36 66 34(6-66)

1 year until discovery, 50 gal. release

(48,785,436 gal. GW contaminated)* 59 13 73 130 70(13-130)

5 years until discovery, 50 gal. release

(80,192,581 gal. GW contaminated)* 97 21 120 220 110(21-220)

100 year until discovery, 5,000 gal. release

(1,056,971,192 gal. GW contaminated)* 1,300 270 1,600 2,900 1,500(270-2,900)

Primary estimate (average of 50 gal. release over 1 and 5 years) 78 17 96 180 92

(17-180)

* Release time to discovery and volume (average groundwater volume contaminated). Average groundwater volume contaminated per release 

based on: RTI International. “Risk Analysis to Support Potential Revisions to Underground Storage Tank (UST) Regulations.” December 22, 

2010.

Under the alternative baseline, assuming that 50 gallon releases and one- to five-year 

time frames represent the average parameters of avoided releases, approximately 34 to 160 

billion gallons of groundwater would be protected annually under the Selected Option. 
4-34

4.11 Measuring Benefits through Housing Price Changes

A growing body of literature documents the effect that leaking USTs may have on local 

housing prices. Under certain assumptions, these price changes may serve as a proxy for 

households’ willingness-to-pay (WTP) to avoid UST releases. The impact of avoiding or 

reducing releases on housing prices will, at least in part, overlap with some of the benefits 

discussed above, including avoided human health risks, ecological benefits, and groundwater 

quality protection (to the extent that the effects are borne by the private households). However, 

other factors not previously discussed may also contribute to property devaluation (e.g., 

aesthetics) due to UST releases. By avoiding releases and groundwater contamination incidents, 

the final UST regulation may generate benefits that could at least partially be reflected by 

avoided declines in property values. 

To estimate the effect of leaking USTs on housing prices, existing studies rely on hedonic 

property value models, and examine how house prices vary with proximity to a leaking UST, or 

how prices respond to a release should one occur. Under certain assumptions, the change in price 

can be interpreted as a measure of WTP to avoid potential contamination. Hedonic property 

value models isolate the effect of UST leaks on housing prices by controlling for housing and 

neighborhood characteristics as well as the presence of the UST facility itself. Several previous 

studies have found that property values were approximately 10 percent to 17 percent lower, all 

else constant, at homes in the vicinity of leaking or “high-risk” UST systems.140 Statedpreference studies on the effect of groundwater contamination from a leaking UST on housing 

values have found similar results.

141

Two recent hedonic analyses of UST sites in Maryland attempt to provide insight into the 

effects of leaking USTs at various stages of the cleanup process by using panel data of home 

sales in three Maryland counties over 11 years. This dataset includes information on home sales 

prior to the discovery of UST leaks, as well as during and after leak investigation and cleanup. 

One of these two studies incorporated home-specific data on the level of groundwater 

contamination and the extent to which information about the leak was received.142 Although this 

study found little impact of leaking USTs on home values in general, the study did find 9 percent 

to 12 percent depreciation at homes where the private groundwater well was tested for 

contamination after an UST leak. This depreciation occurred regardless of whether the well 

water was found to be contaminated. The second study, which relied on the same sales dataset 

 

140 See, for example: Simons, Robert A., William Bowen, and Arthur Sementelli. “The Effect of 

Underground Storage Tanks on Residential Property Values in Cuyahoga County, Ohio.” Journal of Real Estate 

Research, 1997, 14(1), 29-42; Simons, Robert A., William Bowen and Arthur Sementelli. “The Price and Liquidity 

Effects of UST Leaks from Gas Stations on Adjacent Contaminated Property.” The Appraisal Journal, 1999, 67, 

186-194; and Isakson, H. and M.D. Ecker. “The Effect of Leaking Underground Storage Tanks on the Values of 

Nearby Homes.” Technical Report. Department of Mathematics. University of Northern Iowa. 2010. Accessed at: 

http://faculty.cns.uni.edu/~ecker/research.html.

141 See: Guignet, Dennis. “The impacts of pollution and exposure pathways on home values: A stated 

preference analysis.” Ecological Economics, 2012, 82, 53-6; Simons, Robert A. and Kimberly Winson-Geideman. 

2005. “Determining Market Perceptions on Contamination of Residential Property Buyers Using Contingent 

Valuation Surveys,” Journal of Real Estate Research, 27(2), 193-220. 

142 Guignet, Dennis. “What Do Property Values Really Tell Us? A Hedonic Study of Underground Storage 

Tanks.” Land Economics, 2013, 89(2), 211-226.
4-35

but used information on publicity following the leak rather than the testing of private wells, also 

found little impact of leaking USTs on home values in general. However, this study found that 

highly publicized releases decreased surrounding home values by more than 10 percent.143 Both 

studies found that property devaluation was most likely to occur when homeowners were aware 

of the actual or potential contamination.

As a result, we expect that in the presence of adequate information, such as with highly

publicized UST releases, there is the potential for property devaluation from releases due to

environmental, human health, and aesthetic changes. Studies that examine those price changes 

could provide valuable insight into the WTP for avoiding such releases. However, because of the 

small body of available literature characterizing the potential magnitude of these effects, its 

limited geographic scope, and the large degree of spatial heterogeneity in the characteristics that 

would drive the benefits of avoided releases, a benefits transfer to estimate avoided property

devaluation from UST releases nationwide would not be appropriate. Therefore, we are unable to 

quantify the potential benefit of the final UST regulation using hedonic property value studies.

4.12 Conclusion

Exhibit 4-18 summarizes the monetized avoided costs and benefits due to the final UST 

regulation. In total, EPA estimates approximately $120 million to $530 million in costs will be 

avoided as a consequence of the Selected Option. Although their value cannot be reliably 

monetized, roughly 50 billion to 240 billion gallons of groundwater per year will avoid 

contamination due to new requirements. Finally, the regulation will avoid costs associated with 

acute events, large-scale releases (for example, releases from AHFDSs and FCTs), and property 

devaluation, and will generate reductions in human health risks and ecological benefits that we 

could not quantify in our analysis.

Exhibit 4-18

Summary Of Positive Impacts

SELECTED OPTION

Type Of Impact Expert 1 Expert 2 Expert 3 Expert 4 Average Range

Monetized Avoided Costs Associated With Conventional USTs and EGTs ($ millions, present value 2012$)a

Releases and groundwater incidentsb$330 $110 $260 $510 $300 $110 - $510

Vapor intrusion $4.3 $1.7 $4.1 $7.9 $4.5 $1.7 - $7.9

Product loss $2.3 $0.86 $2.9 $6.5 $3.1 $0.86 - $6.5

Totalc

$330 $120 $270 $530 $310 $120 - $530

Non-Monetized Impactsd

Groundwater protected (billion gallons) 130 50 120 240 130 50 - 240 

Acute events and large-scale releases 

(e.g., releases from AHFDSs and FCTs)en/e n/e n/e n/e n/e n/e

Ecological benefitsen/e n/e n/e n/e n/e n/e

Human health risksen/e n/e n/e n/e n/e n/e

 

143 Zabel, Jeffrey E. and Dennis Guignet. “A hedonic analysis of the impact of LUST sites on house 

prices.” Resource and Energy Economics, 2012, 34, 549-564.
4-36

Exhibit 4-18

Summary Of Positive Impacts

ALTERNATIVE 1

Type Of Impact Expert 1 Expert 2 Expert 3 Expert 4 Average Range

Monetized Avoided Costs Associated With Conventional USTs and EGTs ($ millions, present value 2012$)a

Releases and groundwater incidentsb$490 $200 $410 $650 $440 $200 - $650

Vapor intrusion - low assumptions $5.9 $2.5 $5.9 $9.1 $5.9 $2.5 - $9.1

Product loss $2.6 $0.78 $4.1 $7.6 $3.8 $0.78 - $7.6

Totalc

$500 $210 $420 $670 $450 $210 - $670

Non-Monetized Impactsd

Groundwater protected (billion gallons) 180 74 180 270 170 74 - 270

Acute events and large-scale releases 

(e.g., releases from AHFDSs and FCTs)en/e n/e n/e n/e n/e n/e

Ecological benefitsen/e n/e n/e n/e n/e n/e

Human health risksen/e n/e n/e n/e n/e n/e

ALTERNATIVE 2

Type Of Impact Expert 1 Expert 2 Expert 3 Expert 4 Average Range

Monetized Avoided Costs Associated With Conventional USTs and EGTs ($ millions, present value 2012$)a

Releases and groundwater incidentsb$210 $44 $220 $410 $220 $44 - $410

Vapor intrusion - low assumptions $2.6 $0.56 $3.2 $6.0 $3.1 $0.56 - $6.0

Product loss $1.5 $0.36 $2.5 $5.2 $2.4 $0.36 - $5.2

Totalc

$220 $45 $220 $420 $230 $45 - $420

Non-Monetized Impactsd

Groundwater protected (billion gallons) 78 17 96 180 92 17 - 180

Acute events and large-scale releases (e.g., 

releases from AHFDSs and FCTs)en/e n/e n/e n/e n/e n/e

Ecological benefitsen/e n/e n/e n/e n/e n/e

Human health risksen/e n/e n/e n/e n/e n/e

a Avoided remediation costs from releases and groundwater incidents are the costs related to site remediation. Avoided vapor 

intrusion costs include additional avoided costs associated with the remediation of vapor intrusion cases; the RIA does not address 

human health risk associated with vapor intrusion. Avoided product loss costs are also separate and additive.

b Expert 2 provided responses that generate benefits that are relatively low compared to estimated costs, unlike the other three experts. 

Conversations with this expert indicated that this discrepancy may be due to his assumptions about partial noncompliance. See 

Section 4.5.3 and Appendix H for additional discussion.

c Totals may not add up due to rounding. Cost estimates were derived using a seven percent discount rate.

d Due to data and resource constraints, EPA was unable to monetize some of the positive impacts of the final UST regulation. Chapter 

4 provides a qualitative discussion of these benefits.

e Benefits not estimated are denoted by n/e.

4.12.1 Summary of Positive Impacts under the Alternative Baseline Scenario

Exhibit 4-19 summarizes the monetized avoided costs and benefits due to the final UST 

regulation under the alternative baseline. In total, EPA estimates approximately $81 million to 

$360 million in costs will be avoided as a consequence of the Selected Option under the 

alternative baseline. Approximately 34 billion to 160 billion gallons of groundwater per year will 

avoid contamination due to the proposed requirements in the Selected Option. Overall, positive 

impacts under the alternative baseline are roughly 69 percent of positive impacts when the 

original baseline is assumed.
4-37

Exhibit 4-19

Summary Of Positive Impacts Under Alternative Baseline

SELECTED OPTION

Type Of Impact Expert 1 Expert 2 Expert 3 Expert 4 Average Range

Monetized Avoided Costs Associated With Conventional USTs and EGTs ($ millions, present value 2012$)a

Releases and groundwater incidentsb$230 $79 $180 $350 $210 $79 - $350

Vapor intrusion $3.0 $1.2 $2.8 $5.5 $3.1 $1.2 - $5.5

Product loss $1.6 $0.59 $2.0 $4.5 $2.2 $0.59 - $4.5

Totalc

$230 $81 $190 $360 $220 $81 - $360

Non-Monetized Impactsd

Groundwater protected (billion gallons) 89 34 84 160 92 34 - 160

Acute events and large-scale releases 

(e.g., releases from AHFDSs and FCTs)en/e n/e n/e n/e n/e n/e

Ecological benefitsen/e n/e n/e n/e n/e n/e

Human health risksen/e n/e n/e n/e n/e n/e

ALTERNATIVE 1

Type Of Impact Expert 1 Expert 2 Expert 3 Expert 4 Average Range

Monetized Avoided Costs Associated With Conventional USTs and EGTs ($ millions, present value 2012$)a

Releases and groundwater incidentsb$340 $140 $290 $450 $300 $140 - $450

Vapor intrusion $4.1 $1.7 $4.1 $6.3 $4.1 $1.7 - $6.3

Product loss $1.8 $0.54 $2.9 $5.2 $2.6 $0.54 - $5.2

Totalc

$350 $140 $290 $460 $310 $140 - $460

Non-Monetized Impactsd

Groundwater protected (billion gallons) 120 51 120 190 120 51 - 190

Acute events and large-scale releases 

(e.g., releases from AHFDSs and FCTs)en/e n/e n/e n/e n/e n/e

Ecological benefitsen/e n/e n/e n/e n/e n/e

Human health risksen/e n/e n/e n/e n/e n/e

ALTERNATIVE 2

Type Of Impact Expert 1 Expert 2 Expert 3 Expert 4 Average Range

Monetized Avoided Costs Associated With Conventional USTs and EGTs ($ millions, present value 2012$)a

Releases and groundwater incidentsb$150 $31 $150 $280 $150 $31 - $280

Vapor intrusion $1.8 $0.39 $2.2 $4.1 $2.1 $0.39 - $4.1

Product loss $1.1 $0.25 $1.7 $3.6 $1.7 $0.25 - $3.6

Totalc

$150 $31 $150 $290 $160 $31 - $290

Non-Monetized Impactsd

Groundwater protected (billion gallons) 54 11 67 120 64 11 - 120

Acute events and large-scale releases 

(e.g., releases from AHFDSs and FCTs)en/e n/e n/e n/e n/e n/e

Ecological benefitsen/e n/e n/e n/e n/e n/e

Human health risksen/e n/e n/e n/e n/e n/e

a Avoided remediation costs from releases and groundwater incidents are the costs related to site remediation. Avoided vapor 

intrusion costs include additional avoided costs associated with the remediation of vapor intrusion cases; the RIA does not address 

human health risk associated with vapor intrusion. Avoided product loss costs are also separate and additive.

b Expert 2 provided responses that generate benefits that are relatively low compared to estimated costs, unlike the other three 

experts. Conversations with this expert indicated that this discrepancy may be due to his assumptions about partial noncompliance. 

See Section 4.5.3 and Appendix H for additional discussion.

c Totals may not add up due to rounding. Cost estimates were derived using a seven percent discount rate.

d Due to data and resource constraints, EPA was unable to monetize some of the positive impacts of the final UST regulation. 

Chapter 4 provides a qualitative discussion of these benefits.

e Benefits not estimated are denoted by n/e.
5-1

Chapter 5. Distributional Impacts and Considerations 

5.1 Introduction

This chapter considers specific impacts that may be created by the distribution of the 

costs and benefits of the final UST regulation. EPA has undertaken several analyses to examine 

how the pattern of costs and benefits may affect specific populations and sectors of the economy. 

Specifically, the chapter considers:

 Economic impacts associated with the costs of the final UST regulation: 

These could include changes in facility operation and closure of facilities due to 

cost increases under the regulation. In addition, the final UST regulation may

create negative and positive employment impacts, including both reductions in 

employment to reduce costs and increases in employment to ensure 

implementation of regulatory provisions. Finally, the regulation may affect public 

spending related to cleanup of contaminated sites.

 Energy impacts associated with the final UST regulation: EPA considers the 

potential for this regulation to affect the supply, distribution, or use of energy, 

including changes in the price of fuel.

 Impacts on small business and governments: EPA’s regulatory flexibility

analysis considers the potential for regulatory costs to have a significant impact 

on a substantial number of small entities (SISNOSE).

 Impacts on minority and low-income populations: EPA considers the potential 

for the final UST regulation to have disproportionate impacts on minority or lowincome populations.

 Children’s health impacts: EPA considers the potential for the final UST 

regulation to have a significant or disproportionate impact on the health of 

children.

Note that the analyses in this chapter employ data and results from EPA’s primary analysis 

assuming a constant number of tanks and releases over 20 years. This chapter does not consider 

impacts under the alternative baseline scenarios. In general, impacts under alternative baseline 

assumptions would be slightly smaller, reflecting the smaller universe of affected facilities over 

time. 

5.2 Economic Impacts

In the context of regulatory analysis, an economic impact is an effect on the economic 

wellbeing, or welfare, of any stakeholder due to compliance with the final UST regulation. 

Direct economic impacts can be borne by producers (i.e., those who produce, distribute, or sell 

products associated with the regulation), by consumers (i.e., those who purchase products 

associated with the regulation), or both. 
5-2

The economic impacts of the final UST regulation result from increases in compliance 

costs due to new regulation. In the short run, producers (i.e., owners or operators of facilities 

with UST systems) can respond to cost increases in one of two ways: by passing through some or 

all costs to customers (consumers) through increases in price, or by absorbing costs and reducing 

profitability. If producers cannot pass on to consumers any of their increased compliance costs, 

the regulation will chiefly affect producers in the short run, and economic impacts may include 

reduced profits, changes in operation, and in extreme cases, facility closure. If producers are able 

to increase prices on products to recover some or all compliance costs, the regulation will affect 

consumers by raising prices. The extent to which producers can pass through costs depends on 

the structure of the markets in which they operate. 

As we discuss in subsequent sections, we do not believe that many firms will be able to 

pass increases in prices on to consumers through higher fuel prices. While local-level motor fuel 

retail stations may face similar increases in costs of compliance, consumers’ sensitivity to 

changes in gasoline prices provides a significant disincentive for station operators to increase 

fuel prices.144 Instead, compliance costs are likely to be passed on through cross-marketed goods 

whose demand is less sensitive to changes in prices, such as items for sale at gas station 

convenience stores.

EPA’s assessment of the economic impacts associated with this regulation is presented as 

follows:

 Distribution of affected facilities. We first discuss the universe of affected 

facilities, with a focus on the retail motor fuels sector. This section also describes 

supply and demand dynamics within the retail motor fuels market and the likely

economic responses to increased compliance costs. 

 Screening level economic impact analysis of average costs on facilities. EPA 

presents a screening assessment of the impacts of average estimated facility-level 

costs on the facilities affected by the regulation.

 Sensitivity analysis of economic impacts. To address uncertainty related to the 

distribution of costs among UST facilities, we present a “worst-case” sensitivity

analysis that identifies the maximum number of facilities that could face 

significant economic impacts due to regulatory costs. This section also briefly

discusses implications for facility closures and changes in employment.

 Impacts on public funding for cleanups. The final UST regulation is estimated 

to result in significant cost savings associated with avoided cleanup requirements 

as releases decline. A significant portion of cleanup costs are currently borne by 

the public sector, using taxes and fees to fund state cleanup efforts. EPA examines 

 

144 A high degree of consumer sensitivity to changes in gasoline prices does not imply that prices are equal 

across gasoline stations in the same area. Factors that affect retail motor fuel prices at the station-level include traffic 

flows, population density, and intensity of local retail competition on the demand side, while supply can be affected 

by land cost, station setup, labor costs, and taxes. See: Fischer, Jeffrey. “The Economics of Price Zones and 

Territorial Restrictions in Gasoline Marketing.” Federal Trade Commission. 2004. Accessed at: 

http://www.ftc.gov/be/workpapers/wp271.pdf. p. 15 – 16
5-3

the potential reduction in public sector liabilities associated with the broader 

reduction in releases.

5.2.1 Distribution of UST Systems by Industry Sector

As shown in Exhibit 2-3 in Chapter 2, the majority of UST systems are located at motor 

fuel retailers (i.e., gas stations). EPA estimates that, of the 577,981 UST systems active in 2013, 

454,774 (roughly 80 percent) were located at approximately 148,000 motor fuel locations in the 

United States.145 The remaining 123,207 UST systems (roughly 20 percent of the total) are 

spread across several industries, including the commercial sector (wholesale, retail, 

accommodation, and food services), manufacturing, transportation, communications and utilities, 

and hospitals.146 Notably, the sectors other than retail motor fuels are difficult to characterize 

with regard to UST systems; depending on their uses, UST systems may occur in varying 

numbers at facilities of varying size and purpose across all sectors. Only in the retail motor fuel 

sector do UST systems serve a similar, central function at virtually all facilities in the sector. 

In addition to comprising approximately 80 percent of all UST systems, establishments in 

the retail motor fuels sector also have the highest average number of UST systems per facility, 

with a facility average of 3.07 (roughly three systems per facility). In comparison, facilities in 

other sectors have, on average, between 1.47 and 1.81 systems.147 Because many requirements in 

the final UST regulation occur at the UST system level, establishments in the retail motor fuels 

sector have the highest average compliance costs per facility. In total, this sector is likely to bear 

roughly 70 percent of total costs associated with the final UST regulation.

148

Because the costs of the final UST regulation will primarily affect the retail motor fuels 

sector, and because this sector is characterized by a large number of independently-owned 

facilities and companies, this economic impact analysis focuses on the retail motor fuels sector. 

5.2.2 Market Dynamics in the Retail Motor Fuels Sector

This section provides an overview of the U.S. wholesale and retail motor fuels markets, 

including market concentration, fuel distribution practices, and the implications of market 

structure for pricing. 

 

145 EPA’s count of UST systems includes states and territories, while the estimate of retail motor fuel 

locations includes only facilities in the continental U.S., Hawaii, and Alaska. Because only 4,963 UST systems 

(approximately 0.9 percent) are located in other U.S territories, we use 148,000 facilities as the total population.

146 See Chapter 2.1 for more detail.

147 See Exhibit 2-3. For example, we calculate 1.81 systems per commercial facility by dividing 1,450 

systems by 801 facilities (agriculture sector).

148 Total costs under the Selected Option are $160 million, with $130 million directly related to 

conventional USTs and EGTs (including the cost to read the regulations). Motor fuel retailers will bear 

approximately 80 percent of these $130 million in costs, which represent roughly 70 percent of total costs under the 

Selected Option. 
5-4

Supply-side Characteristics: Ability of Producers to Pass Through Costs

The North American Industrial Classification System (NAICS) code for retail motor fuel 

sales (i.e., gasoline stations) is 447, and specifically applies to retailers of automotive fuel and 

automotive oils. Establishments classified under NAICS code 447 include facilities with and 

without convenience stores, and all have specialized equipment for the storing and dispensing of 

automotive fuels.149

According to the 2007 Economic Census, average revenues for establishments in NAICS 

sector 447 were approximately $3.8 million. On average, each establishment employed 

approximately eight employees.150

Market Concentration

Market concentration is an indicator of the ability of firms to raise prices in response to 

changes in the costs of doing business: in markets with fewer, larger companies (i.e., highly 

concentrated markets), large firms typically have greater ability to pass through price increases to 

consumers. One indicator of market concentration is the proportion of total sales made by 

individual firms within a particular market. In markets where concentration is high, few firms 

earn a relatively large proportion of the total revenues in a market and are sometimes able to pass 

price increases through to consumers because of limited competition from smaller firms. 

The retail motor fuels sector is representative of the broader retail sector in market 

concentration. Specifically, 41 percent of all sales made by NAICS sector 447 are made by 

establishments owned by the fifty largest firms in the sector, compared with one-third of sales to 

the largest 50 firms in the broader retail sector.151 This level of market concentration does not 

suggest that retailers will easily pass through price increases.152

 

149 2007 Economic Census, Retail Trade, Industry series. Gasoline Stations: 2007. Accessed at: 

http://www.factfinder2.census.gov.

150 While EPA relies on 2007 Economic Census figures for values per facility, this analysis relies on more 

recent and focused National Petroleum News Survey values for a count of the number of facilities.

151 2007 Economic Census, Retail Trade, Industry series. Gasoline Stations: 2007. Accessed at: 

http://www.factfinder2.census.gov.

152 A common measure of market concentration can be obtained through the Herfindahl-Hirschman Index 

(“HHI”), which is calculated by squaring the market share of each firm competing in the market and then summing 

the resulting numbers. For example, if only two firms operate in a market and each has 50 percent of sales, then the 

index would register 502+ 502= 5,000. The U.S. Department of Justice’s merger guidelines categorize markets in 

which HHI is between 1,000 and 1,800 points as moderately concentrated, and those in which the HHI is in excess 

of 1,800 points as concentrated. Because the four largest firms in NAICS sector 447 generate only 10 percent of the 

sales in that market, the HHI will be well below 1,000 for this sector. We conclude that firms’ relatively small 

market share translates into weak pricing power. For additional information, see: U.S. Department of Justice. 

Herfindahl-Hirschman Index. Accessed at: http://www.justice.gov/ atr/public/testimony/hhi.htm. 
5-5

Geographical Concentration

Gasoline stations are generally distributed across the United States in proportion to 

population. The most populous states have more establishments and higher proportions of 

gasoline sales.153 While no data are available regarding the distribution of facilities by size, the 

retail gasoline market is relatively homogeneous nationwide, and it is likely that facilities of 

different sizes are distributed according to population as well.

Ownership Structure

The 2013 NACS Retails Fuel Report published by the National Association of 

Convenience Stores (NACS) classifies motor fuel retailers into three broad categories, depending 

on the manner in which they obtain their wholesale product:154

 Refinery-Owned: Less than one percent of facilities are retail operations directly 

owned by large oil producers. These stations receive wholesale product directly 

from the oil company’s refinery, and their profit is part of the oil company’s 

profit. At these facilities, the parent corporation manages all aspects of the 

customer experience and establishes a consistent brand identity. 

 Branded Independent Retailers: Approximately 50 percent of facilities are 

branded independent retailers. These facilities are owned by independent 

operators and contract with a refinery to sell a particular brand of gasoline. This 

owner leverages the supplier’s marketing and ensures constant supply in exchange 

for a surcharge per gallon paid to the supplier. Branded retailers’ contracts with 

refiners typically contain clauses that specify the margins retailers can charge 

above wholesale prices.

 Unbranded Independent Retailers: Approximately 50 percent of facilities are 

unbranded independent retailers. These retailers purchase gasoline on the open 

market, without committing to a particular supplier.

Wholesale gasoline is a commodity, but varies in price regionally based on a combination 

of refinery locations, specific fuel mixes (e.g., to meet air quality standards), and the type of 

distributors in a region. Types of wholesalers include:155

 Refinery-owned wholesalers: Refiners (typically large oil companies) distribute 

directly to their own retail outlets in all regions, and in some areas may also 

 

153 U.S. Census Bureau. Industry Statistics Sampler: NAICS 447, Geographic Distribution - Gasoline 

Stations: 1997. Accessed at: http://www.census.gov/epcd/ec97/industry/E447.HTM.

154 National Association of Convenience Stores. “Who Sells America’s Fuel?” Accessed at: 

http://www.nacsonline.com/YourBusiness/FuelsReports/GasPrices_2014/Retail-Operations/Pages/Who-SellsAmericas-Fuel.aspx

155 Kleit, Andrew N. "The Economics of Gasoline: Retailing Petroleum Distribution and Retailing Issues in 

the U.S." December 2003.
5-6

distribute directly to independent branded and unbranded retailers (competing 

with other suppliers in the unbranded market).

 Area Franchisees: Otherwise known as “jobbers,” these firms obtain the right 

from oil companies to franchise a brand of motor fuel in a particular area. Jobbers 

are responsible for siting and building new facilities and marketing the brand, 

which further removes refiners from operating activities. The term is also used to 

describe wholesale distributors of motor fuels that offer multiple brands. 

While some regions have significant competition among distributors, the market power of 

refiners and the contract structure of many retailers means that retailers in general have little 

control over the price of their fuel supply.

156 As a consequence, any cost increases must be 

absorbed by retailers or passed through to customers.

Demand-side Characteristics: Consumer Response to Price Increases

Consumer reactions to price changes are critical in determining whether a producer (i.e., 

retailer) can pass on costs. The degree to which consumers change the quantity they consume 

when the price of a good increases is known as the price elasticity of demand. Economists define 

demand as inelastic if the quantity demanded changes less than price (e.g., quantity demanded 

changes by one percent when prices rise (or fall) by 1.4 percent). Similarly, demand is said to be 

elastic if quantity demanded changes proportionally more for a relative change in price.

Motor fuel retailers rely on sales of gasoline for most revenues, though most also sell 

other automobile-related or convenience products. Research has documented that broad 

(national) market demand for gasoline is relatively price-inelastic in the short-run: consumers do 

not make immediate, significant changes in gasoline purchases if prices increase.157 On its face, 

this dynamic would suggest that a retailer could pass through any cost increases to consumers. 

However, the structure of the market for gasoline prohibits significant price fluctuations at the 

facility level. While national demand is relatively consistent, consumers are highly sensitive to 

price differences within local markets.158 Small increases in price at one location can produce 

relatively large changes in quantity demanded for a particular facility as consumers seek other 

local retailers with lower costs. 

 

156 Other suppliers, e.g. for convenience store items, may be easier with which to negotiate but may not be 

available to all motor fuel retailers.

157 Dahl, Carol and Thomas Sterner. “Analyzing Gasoline Demand Elasticities: A Survey.” Energy 

Economics, July 1991. p. 203 – 210.

158 As noted above, a high degree of consumer sensitivity to changes in gasoline prices does not imply that 

prices are equal across gasoline stations in the same area. See: Fischer, Jeffrey. “The Economics of Price Zones and 

Territorial Restrictions in Gasoline Marketing.” Federal Trade Commission. 2004. Accessed at: 

http://www.ftc.gov/be/workpapers/wp271.pdf.
5-7

A recent National Association of Convenience Stores (NACS) survey provides insights 

into the price pressures faced by local retailers:159

 66 percent of respondents stated that price was the most important factor in their 

gasoline-purchasing choices.

 67 percent stated that they would take the time to make a left turn on a busy street 

to save five cents per gallon of gasoline.

 39 percent said they would drive 10 minutes out of their way (a 20-minute round 

trip plus cost of fuel) to save five cents per gallon. This amounts to savings of less 

than one dollar in terms of fuel for nearly all passenger vehicles on the road today.

Local competition for price-sensitive customers discourages retailers from increasing 

gasoline prices, except in cases such as wholesale price increases or tax increases where changes 

are uniform across facilities.160 Because compliance costs may vary by facility depending on 

existing technology and practice, it is not likely that retailers will opt to pass through compliance 

costs by raising gasoline prices. While retailers may be able to increase the prices of other 

products (e.g., motor oil or convenience store products), it is also likely that some retailers will 

be forced to absorb some or all of the costs associated with the regulation. 

Retailers in relative isolation may be better positioned to pass on increases in cost to 

consumers. Research shows that store-level pricing is sensitive to the concentration of 

competition. In areas where motor fuel retailers are relatively sparse, facilities may be better able 

to pass cost increases on to consumers, for whom the opportunity cost of finding an alternative 

store is higher when they must travel farther.161

However, because consumers are especially price sensitive about gasoline and it is not 

clear what other options owners or operators have to increase prices, we assume that owners or 

operators will likely bear the economic impacts of the regulation. We therefore examine 

producer impacts, including the possibility that some facilities may close due to cost increases.162

 

159 National Association of Convenience Stores. “Consumer Research: Price Still Dominates Gas 

Purchasing Decisions.” Accessed at: 

http://www.nacsonline.com/YourBusiness/FuelsReports/GasPrices_2014/Consumer-Research/Pages/ConsumerResearch-Price-Still-Dominates-Gas-Purchasing-Decisions.aspx.

160 This may vary, depending on the region. For example, in Vancouver, gasoline prices are uniform and 

rigid (due to tacit collusion among wholesalers), while prices in Ottawa are dispersed and volatile (due to the pricedisrupting behavior of “maverick” firms). See: Eckert, Andrew and Douglas S. West. "A Tale of Two Cities: Price 

Uniformity and Price Volatility in Gasoline Retailing." Annals of Regional Science, 2004, vol. 38, issue 1, p. 25-46.

161 See: Hoch et al. “Determinants of Store-level Price Elasticity.” Journal of Marketing Research, Vol. 32 

(1), 1995: p. 17 – 29.

162 A more detailed analysis of consumer impacts is prohibitively difficult for two reasons. First, the precise 

set of goods and services whose prices may increase is difficult to characterize. Second, gasoline aside, the main 

draw to products sold at retail motor fuel facilities is convenience, i.e., ease of access. Most non-fuel products can be 

purchased for lower prices at grocery stores, for example. Consumers can therefore shop at other types of facilities 

for the same goods, but typically opt to pay a premium for purchases at a convenient location. Note that, even 
5-8

5.2.3 Assessment of Market Exits and Employment Impacts

In a market setting where producers cannot reliably pass through costs, the most 

significant economic impacts are related to reduced facility profits. In some cases, managers can 

cut supply or employment costs (this could result in smaller worker paychecks). In cases where 

costs exceed facility profits, it is likely that in the long term a facility would exit the market. A 

critical factor, therefore, is an estimate of average firm or facility profits. 

It is difficult to estimate the profitability of retail motor fuel stations because many are 

small and privately held and are not required to report profits publicly. However, some evidence 

suggests that profit margins are below five percent, and data suggest that average after-tax profit 

margins reported to the IRS for gas stations are roughly 1.8 percent.163 Holding all other things 

equal, an annual cost greater than 1.8 percent of gross sales (i.e., a cost greater than $1,800 for a 

firm earning $100,000 a year) would exceed average reported profits and would therefore cause 

a motor fuel retailer to operate at a loss. If the facility cannot adjust its prices or lower costs, it 

will eventually exit the market.164

Consistent with the assessment of small business impacts in Section 5.4 of this chapter, 

EPA considers the impact of the final UST regulation on small facilities in order to identify the 

most likely facilities to exit the market. Assuming that all motor retail facilities, regardless of 

income, have an “average” configuration of approximately three tanks, EPA calculates the 

average total cost per facility to be $715 (2012 dollars), or $658 in 2007 dollars, under the 

Selected Option (reflecting a cost of approximately $232 per UST system in 2012 dollars, or 

$214 per system in 2007 dollars).165,166

 

though consumers will be able to purchase equivalent goods at different locations, there is a reduction in consumer 

surplus associated with the loss of convenience in the purchase.

163 For corporations reporting net income, profit margins before non-cash items (depreciation and 

amortization) and income tax (or credits) were approximately 1.8 percent (2.4 percent less amortization and 

depreciation, but not taxes paid). Earnings before depreciation and amortization account for the fact that firms can 

postpone capital expenditures to save cash, and would likely do so while adapting to higher costs. If non-cash items 

and taxes are included, earnings drop to roughly one (1.3) percent. Our approach averages the two options (2.4 

percent, before amortization and discounting, and 1.3 percent, after including non-cash items and taxes) to yield a 

margin of 1.8 percent, reflecting an assumption that firms will do something to adapt to higher costs while they sort 

out how to adjust prices, and that firms typically minimize profits reported to the IRS. See: U.S. Internal Revenue 

Service. SOI TaxStats. Table 7: Corporation Returns with Net Income for 2009. Accessed at: 

http://www.irs.gov/taxstats/article/0,,id=170693,00.html. See also 2002 - 2012 RMA Statement Studies, Sector 447, 

for a range of profitability data from facilities of different sizes.

164 Throughout this chapter, EPA refers interchangeably to reductions in net profit and the proportion of 

revenues that the costs of the final UST regulation will create. In both cases, we refer to the impact of the cost of the 

final UST regulation on the profitability of a facility. 

165 Specifically, we assume 3.07 UST systems per facility.

166 Under Alternative 1 the average retail motor fuel facility cost would be $1,509, and under Alternative 2 

it would be $369 (2012 dollars). In Indian country, where facilities are required to meet more requirements than 

elsewhere; average cost per facility is $2,257 under the Selected Option, $3,326 under Alternative 1, and $1,801 

under Alternative 2 (2012 dollars).
5-9

Using data from the 2007 Economic Census and the regulatory flexibility screening 

analysis methodology described in Section 5.4, EPA concludes that a facility-level cost of $658 

($715 in 2012 dollars) would exceed 1.8 percent of total reported 2007 revenues (i.e., be equal to 

or greater than total profits) for 19 firms, representing less than one-tenth of one percent of the 

universe of 148,000 motor fuel retail facilities.167 In comparison, approximately 2,024 facilities 

per year closed over the period between 2005 and 2013.

168 In some cases, any exits related to 

regulatory costs may coincide with exits that would have occurred in the baseline. Furthermore, 

it is likely that many of the affected facilities will also have options to pass through at least a 

portion of costs, and many small facilities may have fewer than three UST systems. Therefore, 

EPA concludes that the market impacts associated with this regulation are likely to be diffuse 

and minimal, assuming a relatively uniform distribution of costs nationwide. 

Sensitivity Analysis: Considering Impacts of a “Worst-Case Scenario”

EPA’s finding of minimal market impacts rests on an assessment of average facilities 

with average regulatory compliance costs. If the costs of the final UST regulation are 

concentrated on certain facilities, it is possible that additional impacts (e.g., market exits) could 

occur. EPA therefore employs several sensitivity analyses to consider alternative, “worst-case” 

distributions of regulatory costs across facilities.

To examine the extent to which the distribution of regulatory costs can be “concentrated”

on specific facilities, EPA constructs a “worst-case distribution” in which regulatory costs are 

concentrated on a subset of facilities.169 To obtain this distribution, we artificially assign costs to 

create the largest cost for the largest number of facilities, by assuming that the same facilities in 

the state make every regulatory change.170 We further assume that the smallest facilities in the 

U.S. are the facilities that must make the regulatory changes.171

 

167 An analogous statement of this outcome is that all facilities with revenues below approximately $36,300 

per year would incur new costs equal to or in excess of profits of 1.8 percent of total revenue. Note that U.S. Census 

data indicate that all firms in the motor fuel sector that earn less than $36,300 are single-location firms.

168 NPN reported a station count of 147,902 in 2013, compared with 164,094 in 2005. Note that 168,987 

represents the total number of establishments offering gas filling services reported by NACS. We adjusted this 

number downward by the 4,893 “hypermarketer” facilities reported in existence by NACS in 2012 to reach the 

164,094 retail motor fuel stations nationally. For the purposes of these calculations, we adjust both station counts 

downward for the number of “hypermarketers” providing retail motor fuel in 2013, which are not gas stations but 

rather supermarkets or wholesalers with filling stations. These figures imply a decrease of approximately 16,000 

stations over eight years, or approximately 2,024 (1.2 percent) per year. See: National Petroleum News. 

"MarketFacts 2013"; and National Petroleum News. Market Pulse. "2005 U.S. Motor Fuel Station Count: 168,987,"

both accessed at: http://www.npnweb.com/. Additionally, see “The U.S. Petroleum Industry: Statistics, Definitions” 

from the National Association of Convenience Stores (NACS), accessed at:

http://www.nacsonline.com/YourBusiness/FuelsReports/GasPrices_2014/Retail-Operations/Pages/Who-SellsAmericas-Fuel.aspx. 

169 Ideally, EPA would evaluate which facilities are likely to incur significant impacts by examining the 

specific changes each will be required to make to achieve compliance. These costs would be compared with the 

facility’s revenue and profit margin to establish whether it can incur the additional costs and remain in business. To 

EPA’s knowledge, no data of this resolution are available for the large population of facilities with UST systems.

170 For example, consider a state with 850 UST facilities that will be subject to three hypothetical technical 

requirements: Requirement A will affect 500 facilities and cost $50 per facility; Requirement B will affect 250 

facilities and cost $100 per facility; and Requirement C will affect 100 facilities and cost $200 per facility. The 
5-10

Exhibit 5-1 displays the universe of retail motor fuel UST facilities in the United States 

when costs are allocated to concentrate impacts. This creates an allocation of costs that varies 

broadly, from as little as $30 to over $4,500 per facility.

172

 

average cost for all of these facilities is $82 (((50*500) + (250*100) + (100*200))/850). However, the highest cost 

possible in this state is $350 (costs of $50 from Requirement A, $100 from Requirement B, and $200 from 

Requirement C), and the largest number of facilities that could incur this cost is 100 (the smallest of the universes 

affected by Requirements A, B, or C). The next highest cost is $150 (costs of $100 from Requirement B and $50 

from Requirement A), which affect 150 facilities, excluding those also affected by Requirement C. The last group 

would be affected only by Requirement A, with 250 facilities at a cost of $50 per facility. Such an allocation of costs 

creates an unlikely outcome with a high potential for market exits. Appendix K provides the detailed summary of 

this threshold calculation.

171 EPA also examined a sensitivity analysis that would specifically consider the effects of "front-loading" 

capital cost requirements, but this scenario would have no effect on the results of the "worst-case" sensitivity 

analysis. The “worst-case” scenario examined here already assumes simultaneous implementation of all 

requirements under the final UST regulation, including several which actually have delayed implementation 

schedule (e.g., secondary containment tests). In addition, the analysis includes annualized costs for capital 

requirements for Indian country systems (e.g., secondary containment). The “worst-case” scenario does not address 

the replacement of closure of lined tanks that cannot be repaired according to a code of practice, and does not 

assume that full capital costs are incurred in a single year for affected tanks, but the facilities that would be affected 

by these changes are already among the highest cost facilities identified, and are already therefore included in the 

number of facilities potentially affected under this worst-case assumption.

172 One possible concern is whether facilities that are likely to face high costs are geographically 

concentrated in certain states or regions. To assess this, we examined the geographic distribution of the six percent 

of facilities that would incur the highest costs if costs were artificially concentrated (specifically, 9,310 facilities 

incurring costs greater than $1,500). Our analysis includes 4,681 firms incurring costs between $1,500 and $1,600. 

For simplicity and to preserve a conservative estimate, we assume that these firms all incur costs of $1,600.) The 

proportion of “highest-cost facilities” does not vary substantially by state, because several regulatory requirements 

affect only a small percentage of the entire UST universe in any state. The concentration (percentage) of facilities 

that could be subject to costs over $1,600 is highest in American Samoa, where 6.3 percent of facilities could be 

affected at that cost. In the remaining 55 states and territories, facilities that could, in a worst-case scenario, incur 

costs over $1,600 represent less than 3.7 percent of total facilities within each state. Differential economic impacts

across states are not likely to occur as a result of disproportionate state-level impacts from this regulation, even in a 

scenario of maximum concentration of costs across the fewest firms. 
5-11

Exhibit 5-1

Distribution Of Retail Motor Fuel UST Facility Costs 

Using “Worst-Case” Distribution

To assess economic impacts using this unlikely worst-case scenario, EPA pairs the 

distributions of facility size and costs to maximize the number of situations in which estimated 

costs would exceed 1.8 percent of gross sales (the average reported retail motor fuel facility

profit). Facilities with costs exceeding 1.8 percent of revenues would potentially face a 

significant economic impact under worst-case assumptions. 

Market Exits

Even under the artificially adverse scenario presented above, economic impacts to 

affected entities are limited. The least compliant facilities in the least regulated states would 

incur costs under $4,600 in the worst case.173 This represents less than 1.8 percent of revenues 

for facilities earning more than $250,000 per year, suggesting that even these facilities could 

 

173 Facility costs of roughly $4,300 or less are representative of approximately 99 percent of worst-case, 

high-end cost outcomes. Facilities in Indian country are the only exception, as they will also be required to comply 

with additional regulations for operator training and secondary containment. Because this group of facilities 

represents only roughly one percent of facilities with costs at or above $4,300, we do not present them as the main 

highest-cost scenario.

0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

40,000

45,000

50,000

Facilities

Cost range ($)
5-12

absorb all worst-case costs without becoming unprofitable.174 To assess the worst-case potential 

impact, EPA assumed that the facilities with the highest costs (those in the right-hand tail of the 

distribution in Exhibit 5-1) are also the facilities with the lowest revenues and allocated costs to 

those facilities to maximize the number of potential exits. EPA estimates that 4,500 facilities 

earning less than $250,000 per year in the U.S. (in 2007 dollars) would be subject to costs 

exceeding 1.8 percent of revenues in the worst-case scenario.175,176 To the extent that those 

facilities could not increase prices to offset higher costs, it is likely that at least some of them 

would exit the market. If all of these facilities exited the market, the closures would constitute 

roughly three percent of existing facilities.177 However, this scenario imposes several unlikely 

assumptions, including:

 All facilities with income less than $250,000 have average configurations of 

three UST systems. In fact, small facilities likely have fewer than three tanks and 

would therefore be subject costs that are much lower than the facility-level costs 

estimated here. It is likely that the smallest facilities also operate only a single 

UST system, which would reduce their compliance costs by approximately 67 

percent.178 Under such circumstances, most small operators would not be subject 

to a significant economic impact even in the worst-case scenario.

 No facility has any option to increase prices on any goods or services or to 

identify any options for savings. While gasoline prices are unlikely to rise in 

response to this regulation, consumers may be willing to pay marginal cost 

 

174 For simplicity, we assume that all facilities earning less than $250,000 per year (in 2007 dollars) earn 

less than $243,000, in order to enable the use of Census data to estimate the number of facilities subject to costs 

exceeding 1.8 percent of revenues. This is a conservative estimate; in reality, there are likely some facilities earning 

between $243,000 and $250,000 per year that would not be subject to costs exceeding 1.8 percent of revenues.

175 The 2007 Economic Census identified 3,463 facilities that earned less than $250,000 in 2007. For the 

purposes of its SBA analysis, EPA revised this estimate upward by 38 percent to reconcile disparities between 

Census gas stations counts from 2007 and NACS gas station counts from 2013. Of the estimated 4,781 facilities 

earning less than $250,000 per year in 2007, we arrayed the highest cost facilities with the highest revenue facilities, 

to ensure an estimate of as many exits as possible, which yielded an estimate of approximately 4,500 facilities that 

could exit the market. See Appendix K for a detailed explanation of our methods.

176 Census data on number of facilities per firm indicate that virtually all firms earning less than $250,000 

per year in 2007 had only one facility. We therefore use “firm” and “facility” interchangeably in this context.

177 In other words, of the 4,781 facilities earning less than $250,000 per year in 2007, EPA estimates that up 

to 4,500 facilities may incur compliance costs that exceed 1.8 percent of revenues (i.e., costs greater than $4,600 per 

facility). To the extent that those facilities could not increase prices to offset higher costs, it is likely that at least 

some of them would exit the market. See Appendix K for a detailed explanation of our methods.

178 According to the 2013 NACS Convenience Store Industry Fact Book, the average motor fuel retailing 

facility has monthly throughput of approximately 128,000 gallons. As discussed in Chapter 2, we believe that the 

average motor fuel retailer operates approximately 3 UST systems. This equates to roughly 42,700 gallons of 

monthly throughput per system. In addition, based on information from a mid-size retail fuel marketer, EPA believes 

that a facility requires a minimum throughput of approximately 30,000 gallons per month to remain economically 

viable, which equates to upward of $50,000 in revenues per month given gasoline prices in excess of $2.00 since 

2005. See: U.S. Energy Information Administration. Petroleum & Other Liquids. Retail prices for Regular Gasoline. 

Accessed at: http://www.eia.gov/dnav/pet/pet_pri_gnd_a_epmr_pte_dpgal_a.htm.
5-13

increases on other products and services. Moreover, in remote rural areas, retailers 

may be able to directly pass costs on to consumers. 

 A profit margin of 1.8 percent is standard. The worst-case scenario uses the 

average profits reported to the IRS to determine typical profitability. However, 

privately-held companies have a clear incentive to minimize taxable profits when 

filing income taxes with the IRS. Because net income (profit) is taxable, 

corporations that are not publicly traded typically take legitimate steps (e.g., yearend investments in equipment, employee bonuses) to reduce both net income and 

tax burdens. As a result, a 1.8 percent after-tax profit estimate based on IRS data 

is likely to understate average profitability. 

Finally, this analysis does not adjust the 2007 Economic Census data on facility revenues for 

inflation, though costs are presented in 2012 dollars. Due to the variability of gasoline pricing, 

we adopt a conservative assumption that revenues have remained static in nominal terms since 

2007.

While our sensitivity analysis suggests that an extreme worst-case scenario could impose 

significant economic impacts on as many as 4,500 facilities, it is unlikely that a significant 

number of actual market exits would result from the final UST regulation. It is more likely that 

closures will occur in specific cases where facilities with high upgrade costs also face high levels 

of local competition. These closures would likely be consistent with the current rate of industry

consolidation of 1.2 percent per year. 

Price Impacts

The high sensitivity of local demand to changes in retail motor fuel prices makes it 

unlikely that firms will react to the final UST regulation by raising gasoline prices. However, the 

cost of other goods and services could potentially increase as firms seek to offset regulatory costs 

through sales of other products. Retailers will likely increase the prices of goods that are 

relatively price inelastic, such as tobacco products, auto service charges, or snack foods and 

other convenience items. 

Employment Impacts

In addition to addressing the costs and benefits of the final UST regulation, EPA has 

analyzed the impacts of this regulation on employment. While a standalone analysis of 

employment impacts is not included in a standard cost-benefit analysis, such an analysis is of 

particular concern in the current economic climate of sustained high unemployment. Executive 

Order 13563, “Improving Regulation and Regulatory Review” (January 18, 2011), states, “Our 

regulatory system must protect public health, welfare, safety, and our environment while 

promoting economic growth, innovation, competitiveness, and job creation.” For this reason, we 

are examining the effects of these requirements on employment in the regulated sectors. A 

discussion of costs associated with this regulation (including labor costs) is included in Chapter 

3, Section 3.2.2, with a sensitivity analysis regarding labor cost assumptions in Chapter 3, 

Section 3.5.1.
5-14

The employment effects of environmental regulation are difficult to disentangle from 

other economic changes and business decisions that affect employment over time and across 

regions and industries. In light of these difficulties, economic theory provides a constructive 

framework for approaching these assessments and for better understanding the inherent 

complexities in such assessments. Neoclassical microeconomic theory describes how profitmaximizing firms adjust their use of productive inputs in response to changes in their economic 

conditions.179 In this framework, labor demand impacts for regulated sectors can be decomposed 

into output and substitution effects. For the output effect, by affecting the marginal cost of 

production, regulation affects the profit-maximizing quantity of output. The substitution effect 

describes how, holding output constant, regulation affects the labor-intensity of production. 

Because the output and substitution effects may be both positive, both negative or some 

combination, standard neoclassical theory alone does not point to a definitive net effect of 

regulation on labor demand at regulated firms.

In the labor economics literature, there is an extensive body of peer-reviewed empirical 

work analyzing various aspects of labor demand, relying on the above theoretical framework.180

This work focuses primarily on the effects of employment policies (e.g. labor taxes, minimum 

wage).

181 In contrast, the peer-reviewed empirical literature specifically estimating employment 

effects of environmental regulations is very limited. Several empirical studies, including Berman 

and Bui (2001) and Morgenstern et al (2002), suggest that net employment impacts may be zero 

or slightly positive but small even in the regulated sector.182 Other research suggests that more 

highly regulated counties may generate fewer jobs than less regulated ones.183 However, since 

these latter studies compare more regulated to less regulated counties, they overstate the net 

national impact of regulation to the extent that regulation causes plants to locate in one area of 

the country rather than another. List et al. (2003) find some evidence that this type of geographic 

relocation may be occurring.184 Overall, the peer-reviewed literature does not contain evidence 

that environmental regulation has a large impact on net employment (either negative or positive) 

in the long run across the whole economy.

 

179 For a discussion, see: Layard, P.R.G., and A. A. Walters. 1978. Microeconomic Theory (McGraw-Hill, 

Inc.), Chapter 9.

180 For a detailed treatment, see: Hamermesh. 1993. Labor Demand (Princeton, NJ: Princeton University 

Press), Chapter 2.

181 For a concise overview, see: Ehrenberg, Ronald G., and Robert S. Smith. 2000. Modern Labor 

Economics: Theory and Public Policy (Addison Wesley Longman, Inc.), Chapters 3 and 4.

182 Berman, E. and L. T. M. Bui (2001). “Environmental Regulation and Labor Demand: Evidence from the 

South Coast Air Basin.” Journal of Public Economics 79(2): 265-295; and Morgenstern, Richard D., William A. 

Pizer, and Jhih-Shyang Shih. “Jobs Versus the Environment: An Industry-Level Perspective.” Journal of 

Environmental Economics and Management 43 (2002): 412-436.

183 Greenstone, M. 2002. “The Impacts of Environmental Regulations on Industrial Activity: Evidence 

from the 1970 and 1977 Clean Air Act Amendments and the Census of Manufactures,” Journal of Political 

Economy 110(6): 1175-1219; and Walker, Reed. (2011).“Environmental Regulation and Labor Reallocation." 

American Economic Review: Papers and Proceedings 101(3): 442-447.

184 List, J. A., D. L. Millimet, P. G. Fredriksson, and W. W. McHone. 2003. “Effects of Environmental 

Regulations on Manufacturing Plant Births: Evidence from a Propensity Score Matching Estimator.” The Review of 

Economics and Statistics 85(4): 944-952.
5-15

Analytic challenges make it very difficult to accurately produce net employment 

estimates for the whole economy that would appropriately capture the way in which costs, 

compliance spending, and environmental benefits propagate through the macro-economy.

Quantitative estimates are further complicated by the fact that macroeconomic models often have 

very little sectoral detail and usually assume that the economy is at full employment. The EPA is 

currently in the process of seeking input from an independent expert panel on modeling 

economy-wide impacts, including employment effects.185

As described in detail in Chapter 2, Section 2.3, this regulation affects sectors using 

active UST systems. Most UST systems in the United States are located at motor fuel retail 

establishments (i.e., gas stations), and virtually all motor fuel retail establishments use UST 

systems. EPA estimates that this sector employs approximately 1.1 million workers.186

The increased operating costs incurred by facilities in this sector to comply with this 

regulation may result in slightly increased prices for their goods and services, as previously 

discussed. These potential price increases may result in reduced demand and thus reduced output 

of the facilities' goods and services. This could translate into lower demand for labor, a result 

commonly referred to as the output, or demand, effect.187 As discussed earlier, the price effect is 

expected to be small, and given the relatively inelastic demand for gasoline, the demand effect is 

likely to be small as well. The final UST regulation may also contribute to a small number of 

market exits, which could cause a temporary negative employment effect as these workers look 

for other positions. However, as noted above and discussed below, these exits are consistent with 

exits that are already occurring in the baseline.188 In addition, given the competitive nature of the 

retail motor fuel sector and the similar regulatory costs faced by each facility, many of these 

facilities may be able to pass through at least a portion of these costs (see Price Impacts section 

above).189 As a result, the potential employment effect of market exits from the final UST 

regulation is likely small. 

While the final UST regulation is unlikely to have measurable employment impacts 

related to market exits, it is possible that some facilities will attempt to offset regulatory costs by 

reducing hours or staff. Even under worst-case conditions, it is unclear whether facilities would 

reduce employment. Because most personnel employed at retail motor fuel facilities earn hourly 

wages rather than salaries, facilities have little to gain from eliminating positions and laying off 

 

185 For more information, see: U.S. Environmental Protection Agency. Comment Request; Draft Supporting 

Materials for the Science Advisory Board Panel on the Role of Economy-Wide Modeling in U.S. EPA Analysis of 

Air Regulations. February 5, 2014. Accessed at: https://www.federalregister.gov/articles/2014/02/05/2014-

02471/draft-supporting-materials-for-the-science-advisory-board-panel-on-the-role-of-economy-wide-modeling.

186 The 2011 County Business Patterns report states that NAICS sector 447 employs 847,516 workers at 

110,830 facilities. EPA extrapolated this value to the approximately 148,000 facilities counted by the 2012 NACS 

survey.

187 See, for example: Berman, E. and L. T. M. Bui (2001). “Environmental Regulation and Labor Demand: 

Evidence from the South Coast Air Basin.” Journal of Public Economics 79(2): 265-295.

188 See footnote 169. 

189 Note that small marginal facilities are also likely to have fewer than three UST systems and thus face 

lower than average facility-level compliance costs.
5-16

employees: operations require a particular number of people-hours, and the owner or operator 

will still need to allocate those tasks among the remaining workers. 

Some requirements of the final UST regulation may have a positive impact on 

employment. For example, walkthrough inspections require labor as a primary input; this may

lead to small increases in employment at regulated facilities.190 In addition, the increased demand 

for testing services and training under the final UST regulation may also increase demand for 

labor. Since the final UST regulation could potentially affect the demand for labor both 

positively and negatively, the overall direction of net employment impacts is unclear, but is most 

likely very small relative to the size of the industry. 

Long-run Economic Impacts

The final UST regulation is unlikely to generate substantial additional impacts in the long 

run. In an unlikely worst-case scenario it could accelerate ongoing consolidation trends in the 

retail motor fuel sector, but only if market exits result. NACS reports that 164,094 motor fuel 

stations operated in the United States in 2005.191 By 2013, this number had fallen to 147,902, a 

decrease of 9.9 percent compared with 2005, or approximately 1.2 percent per year.192 While 

broader market consolidation is related to ownership strategies among oil companies and general 

economic patterns, facilities facing significant periodic costs (e.g. UST system replacement) may

be among those most likely to close. Similarly, facilities that face higher operating costs as a 

result of the regulation may opt to close. In such cases, exits caused by the regulation are likely 

to affect the most marginal firms and would likely coincide to some extent with exits that would 

have occurred in the absence of the regulation. These closures will occur in the context of the 

national decline in the number of facilities, such that the regulation is unlikely to cause a 

significant number of closures beyond those that will occur as part of the existing trend. 

5.2.4 Assessment of Public Sector Cost Savings Related to Avoided Releases

A major positive effect of the final UST regulation derives from its impact on state funds 

created for the purpose of providing a financial responsibility mechanism to UST owners and 

operators.193 Among 56 state and territory governments, 35 state funds are active and continue to 

accept claims.194 In many of these states, owners and operators are required to pay for a portion 

 

190 For example, EPA estimates that monthly walkthrough inspections of a facility will take roughly half an 

hour to complete, on average. A compliant owner or operator in a state that does not currently have this requirement 

will need to allocate roughly six man-hours of incremental effort per year to satisfy this portion of the final UST 

regulation.

191 Note that 168,987 represents the total number of establishments offering gas filling services reported by 

NACS. We have adjusted this number downward by the 4,893 “hypermarketer” facilities reported in existence by

NACS in 2012 to reach the 164,094 retail motor fuel stations nationally.

192 See footnote 169.

193 State funds are created by state legislation and are submitted to EPA for approval before they can be 

used as financial responsibility mechanisms.

194 At the time of this assessment, Connecticut had not fully sunsetted its state fund. It was therefore 

included in this assessment; in other words, this assessment is based on 36 state funds. U.S. Environmental 

Protection Agency. "State UST Financial Assurance Funds." Accessed at: 

http://www.epa.gov/oust/states/fndstatus.htm.
5-17

of remedial actions through deductibles that generally range from zero to $100,000.195 Given an 

average state-fund cost of remediation per site of $124,488 in 2012, however, state funds are 

frequently required to finance some portion of remediation costs.196 In most cases, states 

generate money for their funds by levying tank registration and petroleum fees, which are then 

used to provide payments for remediation of releases beyond the deductibles paid by responsible 

parties. In states where funds rely on gas taxes and accept claims related to releases, these 

expenditures represent subsidies from the public to owners or operators responsible for releases. 

The extent to which this regulation reduces the occurrence of new releases produces two 

welcome effects: 

 Assignment of costs. Fewer releases imply lower expenditures from state funds. 

This represents a reduction in this public subsidy and a reassignment of costs 

from the public remediation costs to private entity prevention costs. This 

improves market signaling and efficiency by requiring owners and operators to 

focus on release prevention. 

 Competitive effects. High-performing owners or operators are less likely to incur 

significant regulatory costs than low-performing owners or operators. As a result, 

the regulatory costs and cost savings improve the alignment of incentives to focus 

on private-sector prevention costs and reduce public-sector remediation costs. 

To illustrate the potential magnitude of the public expenditures that could be affected by the 

regulation (i.e., distributional effects), we examine states that have active state funds and 

categorize them into those that finance their funds via petroleum and tank fees (“Tier 1”), or via 

only a tank fee (“Tier 2”).197

We assume that states that are required to comply with a larger number of the new 

requirements will experience a greater reduction of releases, all other things equal. To estimate 

the distribution of avoided releases, we calculate the average number of requirements with which 

the systems in each state will need to comply.

198 We assign avoided releases based on both the 

 

195 Association of State and Territorial Solid Waste Management Officials. State Fund Survey Results 2012.

Table 1: Design Characteristics of State Financial Assurance Funds. Accessed at: 

http://www.astswmo.org/Files/Policies_and_Publications/Tanks/2012_State_Funds_Survey/2012-Table1-Part1.pdf. 

196 Association of State and Territorial Solid Waste Management Officials. State Fund Survey Results 2012.

Summary of State Fund Survey Results. Accessed at: 

http://www.astswmo.org/Files/Policies_and_Publications/Tanks/2012_State_Funds_Survey/2012-

SummaryTable.pdf. For example, representatives of the state of New Hampshire indicated that in most cases, the 

State Fund incurs remediation costs, except that the owner or operator typically bears the cost of immediately 

stopping the leak. In addition, New Hampshire indicated the owner or operator typically pays a $5,000 deductible 

towards the final remediation cost, and in New Mexico, the owner or operator typically pays a deductible between 

$0 and $10,000. 

197 For states with active financial assurance funds, see: U.S. Environmental Protection Agency. "Status of 

State Fund Programs." Accessed on August 12, 2014. Accessed at: http://www.epa.gov/oust/states/fndstatus.htm. 

198 We use the number of times a system is affected rather than the actual number of systems affected 

because we lack the data to determine which units are affected by each requirement. For example, if two 

requirements each affect 1,000 and 500 units, respectively, they may ultimately affect between 1,000 and 1,500 

units, depending upon whether any overlap exists among the two regulated universes. 
5-18

number of systems in a state and the average number of requirements on each system, and we 

value releases based on the national profile of avoided releases and avoided groundwater 

incidents.199 Using ASTSWMO data, we subtract from our estimate of the potential cost borne 

by the public the deductible that owners or operators would be expected to pay.

200 See Appendix 

N for a discussion of the methodology used.

Exhibit 5-2 presents the results of our screening-level assessment. Among states with 

active state funds that fall into Tier 1 or Tier 2, we find that the potential reduction in public 

expenditures could reach $65 million to $290 million ($170 million on average) under the 

Selected Option, with $50 million to $220 million ($130 million on average) in Tier 1 and $14

million to $64 million ($38 million on average) in Tier 2.201 Reductions in public expenditures 

would equal approximately $120 million to $370 million ($250 on average) under Alternative 1 

and $26 million to $240 million ($130 on average) under Alternative 2. These savings would be 

slightly lower in a scenario where deductibles are in the upper end of their ranges. We note that, 

to realize the savings in public expenditures in the near term, state government action would be 

required to lower petroleum fees. Alternatively, to the extent that funds are not constrained in 

their use, a redistribution of funds (e.g., to existing sites awaiting cleanup) could also represent a 

significant public benefit through more rapid completion of existing sites. The values presented 

in this table reflect discounting to account for regulatory compliance schedules.

This screening-level analysis is intended only to identify the potential magnitude of 

impacts on state fund liabilities. A more detailed analysis of specific state program costs and the 

likely distribution of avoided releases would be necessary to precisely measure potential savings. 

Overall, the values in Exhibit 5-2 suggest that requiring owners and operators to focus on 

prevention reduces costs to state financial assurance funds, on average, by over $160 million 

under the Selected Option, $230 million for Alternative 1, and $120 million for Alternative 2.

 

199 We calculate this as avoided costs due to avoided releases divided by number of releases avoided. The 

procedure is similar for avoided groundwater remediation costs. 

200 We rely on the ASTSWMO Fund Survey Results 2012 for the data that underlie our construction of 

tiers. These data are available at: http://www.astswmo.org/publications_tanks.htm.

201 Due to our calculation methods, two states with very high deductibles (Minnesota and Virginia) showed 

deductible amounts and avoided releases that exceed their estimated avoided release costs. We exclude them from 

our calculations, such that our estimates for likely underestimate the potential for redistributive effects.
5-19

Exhibit 5-2

Summary Of State Financial Assurance Fund Distributional Effects

Fund Revenue Mechanisms

Selected 

Option

($ millions)

Alternative 1

($ millions)

Alternative 2

($ millions)

Low deductible scenario (High distributional effects)

Tier 1 (petroleum & tank fee): average value

(range of all values in italics)

$130

($50 - $220)

$200

($91 - $290)

$96

($19 - $180)

Tier 2 (tank fee only): average value

(range of all values in italics)

$38

($14 - $64)

$58

($27 - $85)

$32

($6.5 - $59)

Total

(range of all values in italics)

$170

($65 - $290)

$250

($120 - $370)

$130

($26 - $240)

High deductible scenario (Low distributional effects)

Tier 1 (petroleum & tank fee): average value

(range of all values in italics)

$120

($46 - $200)

$180

($86 - $260)

$88

($18 - $160)

Tier 2 (tank fee only): average value

(range of all values in italics)

$36

($14 - $59)

$55

($26 - $80)

$30

($6.1 - $55)

Total

(range of all values in italics)

$160

($60 - $260)

$230

($110 - $340)

$120

($24 - $210)

5.2.5 Economic Impact Summary

EPA’s sensitivity analyses show that it is unlikely that the final UST regulation will have 

substantial negative economic impacts on the regulated community, in part because the costs of 

the regulation appear to be evenly distributed across a large population of facilities, and remain 

modest at the facility level. Even under a highly improbable worst-case scenario in which the 

smallest facilities incur the highest possible costs and would have no options for passing through 

any cost increases, approximately three percent of the universe of retail motor fuel facilities 

would face costs surpassing publicly-reported (and therefore likely understated) industry average 

profit margins. Any market exits under even this scenario would likely coincide with the current 

market exit rate of approximately 2,024 facilities annually, and would likely affect out-of-date 

facilities that are on the brink of exiting. Therefore, the regulation will not likely create a 

significant additional contraction of the total market. 

A more likely response by affected firms will be to adapt by increasing prices on higher 

margin products and services. While overall employment impacts are unclear, it is possible that 

there may be an increase in labor demand due to the additional requirements placed on owners 

and operators, and additional demand for third-party testing services. 

Finally, it appears that the final UST regulation could have a positive impact on state 

governments that currently fund a portion of UST-related remediation costs through gasoline 

taxes and fees. A decrease in the number and severity of releases represents cost savings to states 

due to decreased demand on state financial assurance funds. Our initial screening assessment 

suggests that annual costs to states could be reduced by over $160 million. This represents a 

reduction in a public subsidy and an improvement in market signaling.
5-20

5.3 Energy Impact Analysis

Executive Order 13211, Actions Concerning Regulations That Affect Energy Supply, 

Distribution, Or Use (May 18, 2001), addresses the need for regulators to consider the potential 

energy impacts of the final UST regulation and resulting actions. Under Executive Order 13211, 

agencies are required to prepare a Statement of Energy Effects when a regulatory action may

have significant adverse effects on energy supply, distribution, or use, including impacts on price 

and foreign supplies. Additionally, the requirements obligate agencies to consider reasonable 

alternatives to regulatory actions with adverse effects and the impacts that such alternatives 

might have on energy supply, distribution, or use.

The final UST regulation affects underground storage tanks used in the storage of motor 

fuel or emergency generator fuel. However, it is unlikely that this regulation will have significant 

impacts on energy supply, distribution, or use. To assess the energy impacts of the final UST 

regulation, EPA considers potential changes in energy supply and use associated with the total 

costs estimated in Chapter 3. The following summarizes EPA’s assessment of the energy impacts 

that the final UST regulation will have in energy supply, distribution, and use. 

Energy Supply and Distribution

The final UST regulation consists of additional regulatory requirements that apply to the 

owners and operators of underground storage tanks. To the extent that the final UST regulation

affects the motor fuel sector, it does so at the retail motor fuel sales level, rather than the level of 

refineries or distributors who supply the retail stations with motor fuel. Correspondingly, we do 

not expect the final UST regulation to have any impacts on energy supply or distribution.

In terms of local motor fuel availability, we believe two outcomes are possible. If a motor 

fuel station is located in an area where competition from other stations exists, fuel prices will not 

likely be affected. Rather, owners and operators will seek to recover the costs of the final UST 

regulation by increasing the prices of services or convenience items. If a station does not sell 

other products or services through which it can recover these costs, it may become subject to a 

significant economic impact. If this impact exceeds the profit margin of the facility, it may 

become unprofitable in the long term and exit the market. EPA’s analyses suggests that the 

number of facilities likely to be affected is small, and supply will not be disrupted because 

sufficient supply from other competitors exists to meet demand.

We do not expect market exits to occur in low-competition environments due to the 

market power of stations and the marginal nature of the increase in cost. If a motor fuel station is 

located in an area where competition is not intense (e.g., a rural setting), it may opt to directly

pass on higher costs through increases in fuel or convenience goods prices. As we discuss below, 

even if the entire cost of the regulation is priced through to consumers, the change in fuel prices 

is not likely to be measurable. 

Energy Use

The additional regulatory requirements contained in the final UST regulation may

increase compliance costs for owners and operators of retail motor fuel stations. If the owners 

and operators of retail motor fuel stations affected by the final UST regulation can successfully
5-21

pass through their increased compliance costs, energy use may be affected through higher energy

prices caused by the final UST regulation. However, we do not expect a significant change in 

retail gasoline prices to result from this regulation for the following reasons:

 Economic analyses of retail fuel prices have revealed that demand for gasoline is 

highly sensitive to price (elastic) within localized geographic areas. As a result, 

individual retailers are unlikely to raise gasoline prices because local customers 

will select other stations. Because the regulations do not affect facilities 

uniformly, widespread price increases are unlikely, and raising the price of 

gasoline can put individual retailers at a significant competitive disadvantage in 

local markets.

 Retail motor fuel stations often have associated stores and/or services, such as car 

washes, repair operations, and convenience outlets, on which they can more 

successfully pass through increases in compliance costs. 

When considered in the context of total fuel consumption in the United States, the final 

UST regulation would represent a tiny fraction of motor fuel prices even if it was fully passed 

through to consumers. According to the Bureau of Transportation Statistics, the United States 

consumed 168,597,000,000 gallons of motor fuel (including gasoline and diesel) in 2011 at an 

average price of $3.73.202 This implies that U.S. consumers spent $629 billion in 2012 on motor 

fuel. The overall cost of the final UST regulation is roughly $160 million, less than one-tenth of 

one percent of the amount spent by end-users on motor fuel in 2012. In comparison, an increase 

of $0.01 in the average price of motor fuel in 2012 would have increased the total cost to 

consumers by approximately $1.7 billion. Given these circumstances, the final UST regulation

should not have a measurable impact on retail prices. 

5.4 Regulatory Flexibility Analysis

The Regulatory Flexibility Act (RFA) as amended by the Small Business Regulatory

Enforcement Fairness Act of 1996 (SBREFA), 5 USC 601 et seq., generally requires EPA to 

prepare a regulatory flexibility analysis of any regulation subject to notice and comment 

rulemaking requirements under the Administrative Procedure Act or any other statute. This 

analysis must be completed unless the agency certifies that the regulation will not have a 

significant economic impact on a substantial number of small entities. If a regulation is found to 

have a significant impact on a substantial number of small entities, further analysis must be 

 

202 2011 is the latest year data available from Bureau of Transportation Statistics for gallons of motor fuel 

consumed, as reported by: U.S. Department of Transportation, Research and Innovative Technology Administration, 

Bureau of Transportation Statistics. Accessed at: 

http://www.rita.dot.gov/bts/sites/rita.dot.gov.bts/files/publications/national_transportation_statistics/html/table_04_0

9.html. The 2012 prices per gallon for all grades of retail motor gasoline and No. 2 diesel fuel (all concentrations of 

sulfur) were $3.63 and $3.97, respectively, as reported by: U.S. Energy Information Administration. Short-Term

Energy Outlook - Real and Nominal Energy Prices for 2012. Accessed at: 

http://www.eia.gov/forecasts/steo/realprices/. We weight these prices according to prime supplier sales volumes in 

2012 published by the Energy Information Administration, which summed to 347,234.5 thousands of gallons per 

day for gasoline and 143,270.6 thousands of gallons per day for all grades of diesel fuel (U.S. Energy Information 

Administration. Petroleum & Other Liquids. Prime Supplier Sales Volumes. Accessed at: 

http://www.eia.gov/dnav/pet/pet_cons_prim_dcu_nus_a.htm.).
5-22

performed to determine what can be done to lessen the impact. Small entities include small 

businesses, small organizations, and small governmental jurisdictions. EPA developed a 

screening analysis and supplemental analysis consistent with the requirements under RFA; this 

section presents a summary of these findings, and Appendix L provides the detailed screening 

analysis.203

For purposes of assessing the impacts of this regulation on small entities, a small entity is 

defined as: (1) a small business as defined by the Small Business Administration’s (SBA) 

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

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

(3) a small organization that is any not-for-profit enterprise which is independently owned and 

operated and is not dominant in its field. For the purposes of this analysis, EPA considered costs 

in excess of one percent and three percent of revenues as indications that the final UST 

regulation may have a significant impact on a given small entity, and estimates of greater than 20 

percent of total small firms or 1,000 total small firms affected as indications that a substantial 

number of small entities may be affected by the final UST regulation. 

5.4.1 Small Business Screening Analysis

We estimate that there are approximately 79,700 firms operating roughly 148,000 

facilities in the U.S. retail motor fuel sales sector. 204,205 This analysis assumes that all retail 

motor fuels firms operate underground storage tanks (UST systems) at all of their facilities. 

Based on the distribution of firms across revenue categories published by the 2007 Economic 

Census, and SBA’s revenue thresholds for NAICS 447110 and 447190, approximately 77,400 

 

203 This section focuses on the retail motor fuel sector. As discussed in Appendix L, EPA’s screening 

assessment indicates that the proposed regulation would not have a significant impact on a substantial number of 

small entities (SISNOSE) across all affected sectors. Because the cost per tank associated with the final UST 

regulation ($232, in 2012 dollars) is lower than that associated with the proposed regulation ($309, in 2008 dollars), 

this conclusion also applies to the final UST regulation. However, because 80 percent of all UST systems are in the 

retail motor fuel sector, we refined the screening assessment to further examine the potential impacts of the final 

UST regulation on this sector.

204 There was a significant discrepancy between the number of establishments reported by the 2007 

Economic Census by the U.S. Census Bureau and the 2008 station count published by National Petroleum News. 

The Census reported 118,756 stations operating in any capacity, while NPN counted 161,768 stations. EPA 

contacted the Census Bureau, which offered three possible reasons for this discrepancy. First, grocery stores with 

gas stations and wholesale truck stops with gas stations may be categorized under grocery stores or wholesale retail 

instead of gas stations. Second, the count reported by the Census excludes non-employer establishments (10,131), 

which are family-owned and only employ family members. Third, for those establishments that do not report back to 

the Census regularly, the Bureau is not likely to record changes in establishments that have happened at the location 

(personal communication with the Office of Underground Storage Tanks, November 3, 2010). NPN likely provides 

a more accurate reflection of the number of stations because it is an industry publication specific to the petroleum 

sector. This rationale has been carried forward to employ the 2013 station count published by NPN.

205 NAICS code 447 is comprised of 447110 (Gasoline stations with convenience stores) and 447190 

(Other gasoline stations). To reconcile differing estimates of the number of retail motor fuel facilities (roughly 

148,000 estimated by NACS in 2012 and roughly 119,000 estimated by the Census, excluding roughly 12,000 

facilities reported as not operating for the full year), a 1.38 adjustment factor was applied to the Census data to 

inflate the number of retail motor fuel facilities to 148,000, distributed proportionately across revenue ranges. This 

approach preserves the distribution of firms by size according to Census data. As a result of this approach, we 

estimate that there are a total of approximately 79,700 firms and 455,000 tanks in the retail motor fuel sector. 
5-23

(97 percent) of these firms meet SBA’s definition of a small entity.

206 Approximately 4,781 of 

these firms report revenues between $0 and $250,000 (the smallest revenue range published by 

the 2007 Economic Census), with average sales of approximately $144,000.207

To determine whether firms reporting revenues within a given revenue range would incur 

costs exceeding one percent or three percent of total revenue, EPA compares the average total 

compliance cost per firm with the average revenue reported by firms in the revenue range. Based 

on a compliance cost per system of $232 (in 2012 dollars), and assuming that firms in the 

smallest revenue range own one facility with three UST systems, we estimate that the 4,781

small firms in the $0-$250,000 revenue range would face average total compliance costs of $715

per firm (or $658 in 2007 dollars).208 Any firm with annual revenues above $65,800 (in 2007 

dollars) (i.e., the revenue threshold at which compliance costs would exceed one percent of the 

firm’s revenue) is not expected to experience a significant impact. The average revenue for the 

4,781 firms in the $0-$250,000 revenue bin is $144,000, suggesting that on average, firms in this 

category will not experience significant impacts due to estimated compliance costs. 

However, because the lowest range reported by the U.S. Census reflects a distribution of 

firms with revenues between $0 and $250,000, it is possible that some of the 4,781 firms in this 

category may be significantly affected. EPA also considers estimates of greater than 20 percent 

of total small firms or 1,000 total small firms affected as indications that a substantial number of 

small entities may be affected by the final UST regulation. While the 4,781 small firms in the 

lowest revenue range represent only six percent of all potentially affected small firms, EPA 

conducted a supplemental analysis that focuses on this group of small firms in an attempt to 

refine the estimated number of small firms potentially affected by the final UST regulation.

5.4.2 Small Business Supplemental Analysis

The purpose of this supplemental analysis is to refine the results of the small business 

screening analysis. The U.S. Census Bureau provided additional data on firms in the lowest 

revenue bins for NAICS sectors 447110 (gasoline stations with convenience stores) and 447190 

(other gasoline stations), identifying the percentage of firms with revenues in three ranges: (1) 

 

206 For 447110, the SBA revenue threshold is $27 million; for 447190, the SBA revenue threshold is $9 

million. To ensure that we do not underestimate the number of small entities, we assume that all firms within a 

revenue bin that contains a specific SBA revenue threshold value are small. For example, if the SBA small business 

size threshold for a sector is $7 million, we assume that all firms in the revenue range of $5 to $10 million are small.

207 For simplicity we identify size categories in this document as described by the 2007 Census (e.g., 

revenues up to $250,000 in 2007 dollars), and identify compliance costs in 2012 dollars. However, in the actual 

screening analysis, compliance costs have been adjusted from 2012 dollars to 2007 dollars using the GDP implicit 

deflator. The estimated compliance cost is $232 per system in 2012 dollars, or $214 per tank in 2007 dollars. These 

costs exclude compliance costs associated with the removal of deferrals for AHFDSs and UST systems with FCTs. 

AHFDS and FCT systems are primarily owned by the Department of Defense and not by any small entities.

208 Census data on number of facilities per firm indicate that virtually all firms earning less than $250,000 

per year in 2007 had only one facility. We therefore use “firm” and “facility” interchangeably in this context.
5-24

$0-$50,000; (2) $50,000-$150,000; and (3) $150,000-$250,000.209 Based on this information, we 

estimate the number of firms in the retail motor fuel sales sector (i.e., NAICS 447) for these three 

revenue groups at approximately 320, 2,000, and 2,500, respectively and use these data to refine 

our estimate of the number of significantly affected facilities.210,211

Given compliance costs of $658 per firm ($715 in 2012 dollars), any firm making less 

than $65,800 and $22,000 would be considered significantly affected at the one percent and three 

percent revenue thresholds, respectively. Under these assumptions, EPA estimates that 634 firms 

would be affected at the one percent threshold, and no firms would be affected at the three 

percent threshold.212 The number of firms that would be significantly affected at the one percent 

threshold under these assumptions does not exceed the one thousand-firm substantial effect 

benchmark. Furthermore, this conclusion rests on the assumption that even these small firms 

operate the industry average of three tank systems.

5.4.3 Impacts to Small Governments

The 1992 Local Government Economic Impact Analysis provides the best readilyavailable data on the number of governments owning UST systems, total UST systems owned by 

governments, average UST systems per government, and UST systems per owning government. 

The data include size and revenue for both general purpose (i.e., counties, municipalities, and 

townships) and special district governments (i.e., school districts and other special districts), 

dividing these governments into four size categories: very large, large, medium and small. The 

1992 analysis defines a “very large” government as one that serves over 50,000 people; 

therefore, all other entities are considered to be small governmental jurisdictions according to the 

RFA/SBREFA definition. Using the data from the 1992 analysis, we estimate the number of 

 

209 The information provided by the U.S. Census Bureau is considered an “unpublished data request.” As 

such, the Census Bureau included a letter noting that “these are not ‘official data’ from the Census Bureau, since 

they do not meet the Census Bureau’s quality standards. These data should be used with extreme caution, realizing 

the severe quality limitations that may exist.” However, absent another source of information, we use this as the best 

data available. (This information was provided in January 2010 and relates to the 2002 Economic Census data. We 

use the 2002 distribution within this revenue range as a proxy for the 2007 Economic Census data.)

210 The analysis interpolates between the lower and upper bounds of each range and assumes a uniform 

distribution of facilities within each range. The lowest revenue interval is bounded at $39,600, which EPA obtains 

from estimating the linear trend between the zero and $250,000 in revenues. The implicit assumption is that no 

facilities earn less than that level of revenue 

211 Although the U.S. Census Bureau reports several hundred facilities with annual revenues less than 

$100,000, market economics suggest that it would be difficult for a firm that relies solely on gasoline sales to be 

viable if earning less than $100,000 in annual revenues. Assuming $2 per gallon in sales, a facility earning $100,000 

would sell less than 4,200 gallons of gasoline per month, compared with the monthly industry average throughput of 

approximately 130,000 gallons. Based on information from a mid-size retail fuel marketer, EPA believes that a 

facility requires a minimum throughput of approximately 30,000 gallons per month to remain economically viable. 

In addition, a facility would need $108,000 to generate enough gross profit to cover the direct cost of the wages of 

one full-time employee at minimum wage ($15,080 at $7.25 per hour and 2,080 hours, before accounting for 

employment taxes). This does not consider other costs, such as electricity, property taxes, or franchise fees.

212 EPA estimates a total of approximately 104,000 small firms with USTs across all affected sectors; 634 is 

0.6 percent of these. In NAICS 447, the 634 firms represent 0.8 percent.
5-25

small governments that own UST systems based on the total universe of UST systems today. See 

Appendix L for additional detail.

EPA assumes that local governments collectively own four percent of active tanks. This 

equates to 23,119 tanks, based on the fiscal year 2013 universe of 577,981 tanks.213 These 23,119

tanks are distributed among all local governments, based upon the percentage of tanks owned in 

1992 by local governments in each size category (the average number of tanks owned by a 

government varies with the size of the government from one tank for small governments to 10 or 

more tanks for the largest governments). 

EPA then calculates, using the 1992 data on government ownership of UST systems, the 

average compliance cost per government entity. This is done by multiplying the cost per tank by

the number of UST systems per government by size category. The average annual revenue for 

each size of general purpose government is calculated using 2007 Census of Governments Data 

and weighted-average contributions that depend on type of entity (i.e., towns, municipalities, and 

counties). EPA extrapolates Census data on revenues for 4,128 townships to the 16,519 

townships in the country. These weighted averages are combined to obtain annual revenues in 

2007 dollars for general purpose governments, then inflated to 2012 dollars. Detailed 

information at the special district level is not available for later years, so budget expenditures 

from the 1992 analysis were inflated into 2012 dollars.214

To calculate how many small governments face significant compliance costs exceeding 

one or three percent of their revenues, we compared the average compliance cost per government 

with the average annual revenues to determine how many exceed either threshold. At a cost of 

$232 (2012 dollars) per UST system, no small governments are affected under either the one 

percent or three percent revenue threshold (see Exhibit 5-3). Correspondingly, EPA does not 

find that the final UST regulation has any significant impact on a substantial number of small 

governments.

 

213 We adjusted the estimates of local government UST systems from the 1992 Local Government 

Economic Impact Analysis using the 2007 Census of Governments. See: ICF. "Economic Impact Analysis of 

Additional Mechanisms for Local Government Entities to Demonstrate Financial Responsibility for Underground 

Storage Tanks." December 1992. Exhibit 3-1. Consistent with this analysis, the number of government UST systems 

is assumed to be one percent of all 2013 UST systems for state and federal governments and four percent of all 2013 

UST systems for local governments.

214 Typically, a RFA/SBREFA screening assessment uses revenues to assess economic impact measures for 

small governments. In the absence of detailed 2007 data, we use 1992 budget expenditures as a proxy for revenues. 
5-26

Exhibit 5-3

Compliance Costs To Systems Owned By Governments

Type of 

Gov’t

Size of 

Gov’tb

UST 

Systems Per 

Owning 

Gov’tc

Number of 

Gov’ts 

Owning 

Tanksd

2007 Est. 

Number of 

Gov’ts e

Average 

Annual 

Revenue

($2007) f

Average 

Cost Per 

Gov’t 

($2007) g

Gov’ts 

Exceeding 

1% of 

Revenue

Gov’ts

Exceeding 

3% of 

Revenue

General 

Purposea

Very Large 10.2 505 1,463 $363,822,312 $2,182 0 0

Large 2.5 1,429 4,044 $41,098,521 $535 0 0

Medium 1.4 1,365 7,832 $10,029,870 $300 0 0

Small 1.1 990 25,706 $2,045,340 $235 0 0

Subtotal 2.7 4,289 39,044

Special 

Purpose

Very Large 3.7 317 970 $496,958,943 $792 0 0

Large 3.6 1,798 5,546 $60,843,018 $770 0 0

Medium 1.4 2,503 14,127 $2,918,747 $300 0 0

Small 1.0 244 29,789 $147,494 $214 0 0

Subtotal 2.4 4,863 50,432 0 0

Overall Total 2.5 9,152 89,476 0 0

a General Purpose governments include counties, municipalities and townships. Special Purpose governments include public school

systems and special districts. 

b Very large governments are considered to serve more than 50,000 people. Large governments are considered to be those that serve 

between 10,000 and 50,000 people, medium governments as those that serve between 2,500 and 10,000 people, and small 

governments as those that serve 2,500 or fewer people. According to RFA/SBREFA, small governmental jurisdictions have 

populations under 50,000. Therefore, all sizes of governments except for “very large” are considered to be small. 

c From 1992 Local Government Impact Analysis data. 

d Calculated as number of tanks (adjusted 1992 distribution in each size category to reflect FY 2013 tank numbers) divided by UST 

systems per owning government (c). 

e General purpose and Special Purpose total number of entities from 2007 Census of Governments, size distribution extrapolated from 

1992 Local Government Impact Analysis data. 

f General purpose estimates from 2007 Census of Governments; Special Purpose estimates inflated from 1992 Local Government 

Impact Analysis data.

g Calculated as number of systems per government (c) * estimated cost per tank ($215 in $2007 or $232 in $2012). 

5.5 Screening Analysis to Inform Impacts on Minority and Low-Income Populations

Executive Order 12898, Federal Actions to Address Environmental Justice in Minority 

Populations and Low-Income Populations (59 FR 7629, February 16, 1994) directs federal 

agencies, to the greatest extent practicable and permitted by law, to identify and address, as 

appropriate, disproportionately high and adverse human health or environmental effects of their 

programs, policies, and activities on minority populations and low-income populations in the 

United States. 

To inform us about the socioeconomic characteristics of communities potentially affected 

by the regulation, EPA conducted a screening analysis in 2010 to examine whether a statistically

significant disparity exists between socioeconomic characteristics of populations located near 

UST facilities and those that are not.215 The results indicate that minority and low-income 

populations are slightly more likely to be located near UST facilities. An environmental justice 

analysis would then require an assessment of whether there would be disproportionate and 

 

215 Note that the affected populations identified in the screening analysis summarized here are simply 

defined by specific demographics surrounding UST locations. These affected populations are not necessarily 

equivalent to communities that others have specifically identified as “environmental justice communities.” 
5-27

adverse impacts on these populations. However, because all regulatory options considered in this 

regulation would increase regulatory stringency and reduce the number and size of releases, EPA 

does not anticipate that the final UST regulation will have any disproportionately high and 

adverse human health or environmental effects on these minority or low-income communities, or 

on any community. While resource constraints make it impractical to update this analysis with 

newer location data, it is unlikely that marginal changes in sample facility locations would affect 

the results of the analysis.

5.5.1 Risk Assessment Population Analysis

To characterize the extent of human health risk reductions anticipated under the final 

UST regulation, EPA conducted a screening-level analysis of the likely impact of the regulation 

on benzene-related cancer incidence.216 This analysis used location data for nearly 60,000 U.S. 

gas stations with UST systems using an ESRI Business Analyst database, and examined 

populations within a buffer distance of 1,000 feet of facilities with UST systems. The ESRI gas 

station location data are supplemented with 1,600 UST systems in Indian country, based on 

location information compiled from EPA regional Indian country databases. After elimination of 

duplicates, the data set contains 59,945 UST facilities (including 727 in Indian country) (see 

Exhibit 5-4). The total data set represents over 25 percent of the roughly 200,000 active facilities 

with UST systems.217

To estimate populations near sample facilities, the analysis uses a “synthetic population” 

dataset developed by the Modeling of Infection Diseases Agents Study (MIDAS) to provide 

population estimates at a finer spatial resolution than Census blocks, while maintaining the 

accuracy of aggregate demographic data at the 2000 Census block group level. For more detail 

on this method, see Appendix M.

The modeled fate and transport of pollutants under a range of scenarios indicates that the 

contamination from UST releases do not typically exceed 1,000 feet.218 The risk assessment 

considered population density within 1,000 feet of each UST, and incorporated estimates of the 

use of groundwater for drinking and bathing, along with typical exposure scenarios, to 

characterize the change in population risk likely to be associated with the reduction of 2,821 

releases and groundwater incidents that were estimated in 2010 (i.e., the total estimated number 

of avoided releases and groundwater incidents resulting from the final UST regulation). The risk 

assessment concluded that the final UST regulation will result in a very small reduction in 

 

216 RTI International. “Risk Analysis to Support Potential Revisions to Underground Storage Tank (UST) 

Regulations.” December 22, 2010.

217 ESRI. “2009 Methodology Statement: ESRI Data—Business Locations and Business Summary.” ESRI, 

Redlands, CA. Accessed at: http://www.esri.com/library/whitepapers/pdfs/infousa-business-database.pdf. ESRI data 

are derived from an infoUSA database. The approach for compiling business data for this database is documented on 

the infoUSA website (http://www.infousa.com), and includes systematic compilation of public record, phone books, 

business directories, and includes frequent review for new, updated, and relocated businesses. While this 

methodology does not capture all locations, it is not differentially focused on any specific region or information 

source, and therefore likely represents a reasonable spatial distribution of facilities.

218 RTI International. “Risk Analysis to Support Potential Revisions to Underground Storage Tank (UST) 

Regulations.” December 22, 2010.
5-28

population risk related to cancer from benzene exposure, based on the estimated number and 

volume of avoided releases and groundwater incidents.

Exhibit 5-4

UST Location Data Used In Analysis. (See Appendix M for details on data sources.)
5-29

5.5.2 Demographic Analysis

The demographic analysis expands on the population data near the 59,945 gas stations in 

the risk assessment by characterizing demographic features of populations at each site and 

comparing these populations to larger (county-level) reference populations.219 Specifically, the 

analysis examines the following demographic variables: percent in poverty, percent minority, 

and, as a verification step, percent white alone (the percentage of the population that specified 

their race as “white” and did not specify “Hispanic”). The analysis also identifies percent under 

five years old, percent under 18 years old to support the analysis required under Executive Order 

13045, “Protection of Children from Environmental Health Risks and Safety Risks” (see section 

5.6 below). The analysis considers the significance of the “difference in means” and “difference 

in median” values for each census parameter and each community. That is, the analysis identifies 

the differences between mean and median concentrations of each demographic group for the 

affected and reference populations at each of the 59,945 sites, and examines whether the 

differences identified across all sites are statistically different from what would be expected in a 

random distribution.220

The analysis considers the differences in demographics in two ways: unweighted (each 

site is given equal weight) and population weighted (results are weighted by affected persons, 

giving sites with larger populations more weight). A statistically significant positive difference 

indicates a greater percentage of target demographic in the affected population than in the larger 

reference population. A statistically significant negative difference indicates a smaller percentage 

of the target demographic in the affected population. Exhibit 5-5 provides the unweighted results 

of the analysis and generally finds that minority and low-income demographics constitute a 

slightly larger proportion of the population surrounding UST facilities. For example, poor 

populations account for 13.3 percent of the population near an UST, compared with 12.2 percent 

of the reference (county) population. As Exhibit 5-6 shows, although the difference is small, it is 

also highly statistically significant (with a p-value below .001), which suggests that the 

difference between the values is not a random occurrence. Exhibits 5-7 and 5-8 summarize the 

results of the population-weighted analysis, and generally find slightly larger (but still small) 

effects. 

 

219 County-level statistics provide a useful comparative measure for the populations at the local facility 

level. Given that the area of interest is small (i.e., 1000 feet of a facility), the county-level provides an appropriate 

scale for comparison. 

220 See Appendix M for the complete demographic screening analysis.
5-30

Exhibit 5-5

Summary Results For Census Parameters – Unweighted

Census 

Parameter

Characteristics of 

Affected 

Population (1,000 

ft Buffer around 

UST Facility)

Characteristics of 

Reference 

Population 

(Counties where 

UST Facilities are 

Located)

Difference between Affected Population 

and Reference Population

Mean Median Mean Median Mean Median

95% Confidence 

Interval 

of Mean Difference

Lower 

Bound

Upper 

Bound

Percent White 

Alone 70.3 81.3 70.8 74.8 -0.44 1.29 -0.61 -0.27

Percent Under 

Age 5 6.7 6.5 6.7 6.7 -0.05 -0.12 -0.068 -0.032

Percent Under 

Age 18 24.7 24.9 25.6 25.5 -0.84 -0.54 -0.99 -0.68

Percent in 

Poverty 13.3 10.3 12.2 11.5 1.1 -0.64 0.99 1.13

Percent 

Minority 24.0 14.6 23.8 20.9 0.21 -1.48 0.06 0.36

Note: Difference summary statistics (mean and median) were calculated from the distribution of difference values (i.e., 

one result per facility, yielding a distribution of about 60,000 results). Mean values reflect the entire distribution, whereas 

the median values are based only on the 50th percentile result. For this reason, the mean difference results could also be 

calculated simply by subtracting the reference community mean from the potentially affected community mean (e.g., for 

mean percent poverty 13.3 – 12.2 = 1.1). In contrast, the median difference values do not necessarily match values 

derived by subtracting the median values from the underlying distributions (e.g., for median percent poverty 10.3 – 11.5 ≠ 

-.64). Although the primary results of the analysis are based on mean values, median results are provided for 

completeness and as an alternative indicator of the distributions’ central tendency. 
5-31

Exhibit 5-6

Standard Error, T Test, And Risk Ratio Results – Unweighted

Census Parameter

Characteristics 

of Affected 

Population 

(1,000 ft 

Buffer around 

UST Facility)

Characteristics 

of Reference 

Population 

(Counties 

where UST 

Facilities are 

Located)

Difference between Affected Population and 

Reference Population

SE of Mean SE of Mean

SE of 

Mean

T 

Statistic

pvalue RatioSE of 

Ratio

Percent White Alone 0.120 0.088 0.085 -5.23 <0.001 0.99 0.001

Percent Under Age 5 0.010 0.004 0.009 -5.18 <0.001 0.99 0.001

Percent Under Age 18 0.104 0.071 0.079 -10.59 <0.001 0.97 0.001

Percent in Poverty 0.045 0.023 0.038 27.66 <0.001 1.09 0.003

Percent Minority 0.104 0.071 0.079 2.71 0.0067 1.01 0.003

Note: There are >56,033 degrees of freedom for this test (i.e. number of facilities). Note that the total number of facilities in 

the dataset (59,945) differs from the degrees of freedom, because a fraction of facilities have no people living within the 

1000 foot buffer.
5-32

Exhibit 5-7

Summary Results For Census Parameters – Weighted By Population

Census 

Parameter

Characteristics of 

Affected Population 

(1,000 ft Buffer 

around UST 

Facility)

Characteristics of 

Reference Population 

(Counties where UST 

Facilities are Located)

Difference between Affected Population 

and Reference Population

Mean Median Mean Median Mean Median

95% Confidence 

Interval 

of Mean Difference

Lower 

Bound

Upper 

Bound

Percent 

White Alone 53.88 59.63 58.79 57.70 -4.61 -2.55 -5.0 -4.2

Percent 

Under Age 5 6.91 6.78 6.80 6.85 0.11 0.04 0.073 0.14

Percent 

Under Age 

18

24.74 24.91 25.36 25.53 -0.62 -1.57 -0.73 -0.50

Percent in 

Poverty 16.22 13.34 13.33 12.83 2.89 0.96 2.7 3.1

Percent 

Minority 36.61 29.54 33.16 31.92 3.45 0.58 3.1 3.8

Note: Difference summary statistics (mean and median) were calculated from the distribution of difference values (i.e., 

one result per facility, yielding a distribution of about 60,000 results). Mean values reflect the entire distribution, whereas 

the median values are based only on the 50th percentile result. For this reason, the mean difference results could also be 

calculated simply by subtracting the reference community mean from the potentially affected community mean (e.g., for 

mean percent poverty 16.2 – 13.3 = 2.9). In contrast, the median difference values do not necessarily match values derived 

by subtracting the median values from the underlying distributions (e.g., for median percent poverty 13.3 – 12.8 ≠ -0.96). 

Although the primary results of the analysis are based on mean values, median results are provided for completeness and 

as an alternative indicator of the distributions’ central tendency.
5-33

Exhibit 5-8

Standard Error, T Test, And Risk Ratio Results – Weighted By Population

Census Parameter

Characteristics 

of Affected 

Population 

(1,000 ft 

Buffer around 

UST Facility)

Characteristics 

of Reference 

Population 

(Counties 

where UST 

Facilities are 

Located)

Difference between Affected Population and 

Reference Population

SE of Mean SE of Mean

SE of 

Mean

T 

Statistic

pvalue RatioSE of 

Ratio

Percent White Alone 0.288 0.193 0.205 -22.48 <0.001 0.92 0.0035

Percent Under Age 5 0.020 0.008 0.017 6.24 <0.001 1.02 0.0026

Percent Under Age 18 0.065 0.033 0.058 -10.62 <0.001 0.98 0.0023

Percent in Poverty 0.108 0.063 0.085 34.02 <0.001 1.22 0.0064

Percent Minority 0.255 0.165 0.191 18.05 <0.001 1.10 0.0058

Note: There are >56,033 degrees of freedom for this test (i.e. number of facilities). Note that the total number of facilities in the 

dataset (59,945) differs from the degrees of freedom, because a fraction of facilities have no people living within the 1000 foot 

buffer.

Overall, the demographic analysis identifies a small but statistically significant difference 

between minority and low-income populations near UST systems and in the reference 

communities. Minority and poverty-level demographics are present at greater percentages in the 

vicinity of UST facilities. In contrast, a small negative relationship suggests that “white alone” 

populations are less likely to be near UST systems, i.e., minority populations are marginally

more likely to reside near UST facilities. Moreover, while the unweighted analysis does not find 

clear patterns related to children under 18 and children under five, the population-weighted 

analysis finds that the distribution of all target demographics around UST facilities reflects small 

but significant differences from county-level populations. The population-weighted results show 

greater differences, suggesting that facilities in higher population areas tend to have more 

pronounced disparities between local, potentially affected communities and reference (countylevel) communities. These differences, while small, are statistically significant with p-values less 

than 0.01 in all cases. This result implies that any risk reductions associated with the final UST 

regulation will occur in the context of a baseline condition in which minority and low-income 

populations are disproportionately located near USTs.

5.5.3 Summary and Limitations of the Analysis

This section summarizes a screening assessment and does not present a complete 

environmental justice analysis. The assessment is limited by the fact that demographic data from 

the U.S. Census are at the block group level, and are not as precise as the spatial distribution of 

population. As a result, if the demographic distribution of populations within block groups is 

uneven, the block group-level data may not accurately characterize populations living nearest to 

UST locations. The large sample of 59,945 sites, however, reduces the potential that this 

uncertainty could skew the results of the analysis (relative to a smaller sample of sites).
5-34

Given the results of the screening analysis, because all regulatory options considered in 

this regulation would increase regulatory stringency and reduce the number and size of releases, 

EPA does not anticipate the final UST regulation to have any disproportionately high and 

adverse human health or environmental effects on these minority or low-income communities, or 

on any community. Since the final UST regulation is not anticipated to create any new adverse 

human health or environmental impacts, EPA did not conduct a complete environmental justice 

analysis. 

5.6 Children’s Health Protection Analysis

Executive Order 13045, Protection of Children from Environmental Health Risks and 

Safety Risks (62 FR 19885, April 23, 1997), applies to any regulation that: (1) is determined to be 

“economically significant” as defined under E.O. 12866, and (2) concerns an environmental 

health or safety risk that EPA has reason to believe may have a disproportionate effect on 

children. If the regulatory action meets both criteria, the Agency must evaluate the 

environmental health or safety effects of the planned regulation on children, and explain why the 

planned regulation is preferable to other potentially effective and reasonably feasible alternatives 

considered by the Agency. 

This action may be subject to Executive Order 13045 because it is economically

significant as defined in Executive Order 12866. EPA’s screening-level risk assessment 

examines potential impacts to groundwater and subsequent chemical transport, exposure and 

risk. While the risk assessment did not specifically measure exposure to children, the general 

exposure scenarios reflect four exposure pathways that have the most significant potential for 

human health impacts. These are: 

 ingestion of chemicals in groundwater that have migrated from the source area to 

residential drinking water wells

 inhalation of volatile chemicals when showering with contaminated groundwater

 dermal contact with chemicals while bathing or showering with contaminated 

groundwater

 inhalation of vapors that may migrate upward from contaminated groundwater 

into overlying buildings

Adults and children can potentially be exposed through all four exposure pathways considered. 

For adults, inhalation of vapors while showering is the most significant adult exposure pathway; 

for children, ingestion is the most significant pathway, because children are assumed to take 

baths and are therefore not exposed through shower vapor inhalation. As a result of the longer 

exposure from showering, adults may be the more sensitive receptor for cancer effects compared 

to children, particularly those under five who are assumed to take more baths and fewer 

showers.221

 

221 U.S. Department of Health and Human Services. Public Health Service. Agency for Toxic Substances 

and Disease Registry. “Toxicological Profile for Polycyclic Aromatic Hydrocarbons.” August 1995.
5-35

While the screening level risk assessment is limited in that it only examines benzene 

impacts, the final UST regulation would likely reduce other contaminant exposures to children in 

a similar pattern, and would not create significant adverse impacts on children’s health.

The screening-level demographic analysis described in section 5.5 finds a statistically

significant result that children under the age of 18 and children under the age of five are slightly

less likely to be found in the vicinity of UST facilities. This suggests that the impacts of the final 

UST regulation will not have a disproportionate impact on children’s health. Moreover, because 

all regulatory options would increase regulatory stringency and reduce the number and size of 

releases, EPA does not expect the final UST regulation to have any disproportionate adverse 

impact on children. 
6-1

Chapter 6. Other Statutory and Executive Order Analyses 

As required by applicable statutes and executive orders, this chapter summarizes our 

analysis of equity considerations and other regulatory concerns associated with the final UST 

regulation. This chapter assesses potential impacts, with respect to the following issues: 

 Regulatory planning and review: requires examination and quantification of 

costs and benefits of regulating with and without the regulation.

 Unfunded mandates: examines the implications of the regulation with respect to 

unfunded mandates.

 Federalism: considers potential issues related to state sovereignty.

 Tribal governments: extends the discussion of federal unfunded mandates to 

include impacts on tribal governments and their communities.

 Joint impacts of rules: discusses how other regulations, together with the final 

UST regulation, will likely affect the universe of regulated facilities.

6.1 Regulatory Planning and Review 

Under Executive Order 12866 (58 FR 51735, October 4, 1993), EPA, in conjunction with 

the Office of Management and Budget’s (OMB’s) Office of Information and Regulatory Affairs 

(OIRA), must determine whether a regulatory action is “significant” and therefore subject to 

OMB review and the full requirements of the Executive Order. The Order defines “significant 

regulatory action” as one that is likely to result in a regulation that may: 

(1) Have an annual effect on the economy of $100 million or more or adversely affect 

in a material way the economy, a sector of the economy, productivity, 

competition, jobs, the environment, public health or safety, or State, local, or 

tribal governments or communities; 

(2) Create a serious inconsistency or otherwise interfere with an action taken or 

planned by another agency; 

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

programs or the rights and obligations of recipients thereof; or 

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

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

Pursuant to the terms of Executive Order 12866, the Agency has determined that this 

regulation is an economically significant regulatory action because it may have an annual effect 

on the economy of $100 million or more, as defined under part 3(f)(1) of the Order. Findings of 
6-2

the regulatory cost analysis (Chapter 3) indicate that the regulation will have aggregate annual 

compliance costs of approximately $160 million under the Selected Option, $290 million under 

Alternative 1, and $70 million under Alternative 2. Separately, this analysis concludes that the 

regulation is expected to have cost savings related to avoided costs of $120 million to $530 

million under the Selected Option, $210 million to $670 million under Alternative 1, and $45

million to $420 million under Alternative 2. These cost savings effectively offset the entire cost 

of the regulation, resulting in a net beneficial impact on the economy. However, for the purpose 

of addressing Executive Order 12866, these cost savings are considered to be separate impacts 

rather than direct reductions in the total cost of the regulation. 

6.2 Unfunded Mandates Analysis

Signed into law on March 22, 1995, the Unfunded Mandates Reform Act (UMRA) calls 

on all federal agencies to provide a statement supporting the need to issue any regulation 

containing an unfunded federal mandate and describing prior consultation with representatives of 

affected state, local, and tribal governments. 

The final UST regulation is subject to the requirements of sections 202 and 205 of 

UMRA. In general, a regulation is subject to the requirements of these sections if it contains 

“Federal mandates” that may result in the expenditure by State, local, and tribal governments, in 

the aggregate, or by the private sector, of $100 million or more in any one year. Because roughly 

95 percent of conventional UST systems are privately owned, EPA estimates that the regulation 

will have approximately $130 million of costs to the private sector under the Selected Option, 

$270 million under Alternative 1, and $67 million under Alternative 2 in expenditures for the 

private sector and is thus subject to the following requirements of these sections.222

 An identification of the provision of Federal law under which the regulation is 

being promulgated.

 A qualitative and quantitative assessment of the anticipated costs and benefits of 

the Federal mandate;

o Costs and benefits to State, local, and tribal governments and the private 

sector

o Effect on health, safety, and the natural environment

o Analysis of extent to which such costs may be paid with Federal financial 

assistance (or otherwise paid for by the Federal government)

o Analysis of the extent to which there are available Federal resources to 

 

222 As described in Exhibit 2-3, the number of UST systems owned by state and federal governments is 

assumed to be two percent, and the number of UST systems owned by local governments is assumed to be four 

percent. Costs calculated as total compliance costs for conventional UST systems, and EGTs (including costs to 

read regulations), documented in Exhibit 3-8, net of local and state government compliance costs identified in 

Exhibit 6-2 below. As commercial airports are not typically privately-owned, we do not include them in private 

sector costs. However, commercial airports may be run by municipal or state-level organizations that are separately 

funded and/or may reflect public/private partnerships. Note that the costs to commercial airports are small enough 

($1.2 million per year) that including them in the private sector does not change the total rounded private cost 

figures shown above. 
6-3

carry out this mandate

 Estimates of future compliance costs with the mandate.

 Estimates of disproportionate budgetary effects on any type of government or 

segment of the private sector.

 Estimates of the effect on the national economy (if relevant and possible).

Exhibit 6-1 provides references for the analyses that EPA has performed that respond to 

these requirements.

Exhibit 6-1

Location Of Analyses Responding To UMRA Requirements

Requirement Location In This Document

Identification of provision of federal law under which rule is being 

promulgated

Chapter 1 

Assessment of costs and benefits to state, local, and tribal governments and 

the private sector

Chapters 3 and 4 

Assessment of the effect on health, safety, and the natural environment Chapter 4 

Assessment of the extent to which such costs may be paid with federal 

financial assistance

Chapter 3; no Federal assistance 

is anticipated

Assessment of the extent to which there are available federal resources to 

carry out this mandate

Chapter 3; no Federal resources 

are anticipated

Estimates of future compliance costs Chapter 3 

Estimates of disproportionate budgetary effects on any type of government 

or private sector segment

Chapter 5 

Estimates of the effect on the national economy Chapters 3 and 5 

6.3 Federalism Analysis

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

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

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

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

have “substantial direct effects on the states, on the relationship between the national government 

and the states, or on the distribution of power and responsibilities among the various levels of 

government.” EPA typically considers a policy to have federalism implications if it results in the 

expenditure by State and/or local governments in the aggregate of $25 million or more in any 

one year.

Under Executive Order 13132, EPA may not issue a regulation that has federalism 

implications, that imposes substantial direct compliance costs, and that is not required by statute, 

unless the Federal government provides the funds necessary to pay the direct compliance costs 

incurred by State and local governments, or EPA consults with State and local officials early in 

the process of developing the regulation.
6-4

Exhibit 6-2 summarizes annual government costs. Direct compliance costs for local and 

State governments reflect average costs per UST system; the analysis assumes that states 

collectively own one percent of total UST systems (5,780), and local governments own 23,119

UST systems (four percent). 

In addition, under the final UST regulation, each state will incur labor costs for reading 

the new regulations, applying for State Program Approval (SPA), and processing one-time 

notification of existence for AHFDSs, and FCTs. States that do not already require notification 

of UST ownership change will also incur costs to process and review all ownership change 

notifications. (See discussion in Chapter 3, Section 3.6.)

In this scenario, total costs to all affected state and local governments (including direct 

compliance costs, notification costs, and state program costs) are approximately $6.8 million 

under the Selected Option, $14 million under Alternative 1, and $3.6 million under Alternative 2 

in 2012 dollars; this is not considered to be a substantial compliance cost under federalism 

requirements.223

Exhibit 6-2

Summary Of Annual State And Local Government Costs b

Element

Selected Option

($ millions)

Alternative 1

($ millions)

Alternative 2

($ millions)

Local Compliance Costs a$5.4 $11.0 $2.8 

State Compliance Costs a$1.3 $2.9 $0.70

State Government Administrative Costs $0.12 $0.12 $0.12 

Total State and Local Governments Costs c$6.8 $14.0 $3.6 

a

State and local government compliance costs are included in the total compliance costs presented in Exhibit 3-8.

b Cost estimates were derived using a seven percent discount rate.

c Total may not sum due to rounding. 

6.4 Tribal Governments Analysis

Executive Order 13175, Consultation and Coordination With Indian Tribal Governments

(65 FR 67249, November 9, 2000), requires EPA to develop an accountable process to ensure 

“meaningful and timely input by tribal officials in the development of regulatory policies that 

have tribal implications.” EPA has concluded that this action will have tribal implications to the 

extent that tribally-owned entities with UST systems on Indian country would be affected. 

However, it will neither impose substantial direct compliance costs on tribal governments, nor 

preempt Tribal law. 

The data sources for the Indian country analysis are the same as those used in the small 

business analysis. Based on a review of information available about the types of business entities 

 

223 If all applicable state and local government costs were incurred in the first year, rather than annualized 

and discounted, state and local governments would incur approximately $3.8 million in costs under the Selected 

Option. This includes $0.2 million for states to apply for state program approval and to read the regulations, $0.2 

million for states to process one-time notifications of AHFDSs and FCTs and ownership changes that occur in the 

first year, and $3.6 million for state and local government owners and operators of UST systems to comply with 

requirements that come into effect in the first year (approximately 80% of which would be for state and local 

government owners and operators to read the final UST regulation). 
6-5

in Indian country, it is assumed that UST systems in Indian country represent a subset of the rest 

of the universe and are distributed similarly across the same sectors.224 The total number of UST 

systems in Indian country is distributed proportionally among the NAICS sectors. 

The cost per UST system is higher in Indian country, as the universe is smaller, and all 

UST systems are assumed to incur costs associated with all the requirements of the final UST 

regulation. At a 2012 cost of $734 per UST system, the total cost for UST systems in Indian 

country is approximately $1.9 million. EPA data indicates that 35 percent of all UST systems in 

Indian country are tribally-owned; correspondingly, the total cost to owners and operators of 

tribally-owned UST systems is approximately $0.67 million.

EPA consulted with tribal officials early in the process of developing this regulation to 

engage them to have meaningful and timely input into its development. EPA began its 

consultation with tribes on possible changes to the UST regulation shortly after the passage of 

the Energy Policy Act of 2005 (EPAct). EPAct directed EPA to coordinate with tribes to develop 

and implement an UST program strategy in Indian country to supplement the program’s existing 

approach. EPA and the tribes worked collaboratively to develop this tribal strategy.

EPAct also included key provisions that apply to states receiving federal funding but the 

Act did not specify Indian country. Nonetheless, EPA’s goal is to implement the objectives of 

these provisions in Indian country as an important step in achieving more consistent program 

results in release prevention. Both EPA and tribes recognize the importance of having policies 

that can help to ensure parity in program implementation between states and in Indian country. 

EPA committed to the tribes that we would fully implement the new provisions of the EPAct, 

and the final UST regulation will realize that commitment.

In addition to our early consultation with the tribes, EPA again reached out to the tribes 

as we started the official regulatory process and throughout the development of the UST 

regulation. EPA sent letters to leaders of over 500 tribes, as well as to tribal regulatory staff,

inviting their participation in developing the regulation. EPA heard from both tribal officials who 

work as regulators as well as representatives of owners and operators of UST systems in Indian 

country. The tribal regulators raised concerns about ensuring parity of environmental protection 

between states and Indian country.

The changes to the UST regulation under this regulation are needed to ensure parity 

between sites in states and in Indian country. The final UST regulation will ensure equipment is 

not just installed but is working properly and protects the environment from potential releases.

6.5 Joint Impacts of Rules

Executive Order 12866 requires that the Agency review whether the regulation creates “a 

serious inconsistency” or otherwise interferes “with an action taken or planned by another 

agency.” We do not believe that the regulation creates a serious inconsistency or interferes with 

 

224 For more detail, see: Industrial Economics, Inc. "Detailed Assessment of UST Universe by Tank 

Purpose and Design." Work Assignment 1-25, Task 6, March 24, 2009. Note that because tribal ownership and 

operation is defined differently than other types of government ownership, no attempts are made to isolate or 

identify “government” UST systems in Indian country.
6-6

any other actions planned or undertaken by other agencies. The following are the existing 

regulations that currently affect UST systems: 

 State UST Regulations: A number of states have existing UST regulations that 

are more demanding than existing regulations under 40 CFR Part 280. To the 

extent that these policies are at least as demanding as the regulations under 

consideration, the systems in these states may already be in partial or full 

compliance with portions of the regulation. Chapter 2 identifies the number of 

UST systems in states with existing (baseline) regulations; cost estimates in 

Chapter 3 reflect the state regulatory programs that exist in the baseline. 

 SPCC Regulation: Currently, a subset of UST systems in the universe is 

regulated by the Spill Prevention, Control, and Countermeasure regulation 

(SPCC); these include emergency generator tanks, airport hydrant fuel 

distribution systems and UST systems with field-constructed tanks. Specifically, 

the SPCC regulation in 40 CFR Part 112 apply to above-ground containers and 

completely buried tanks that are not otherwise covered by 40 CFR Part 280. 

SPCC regulation does not specify particular leak detection protocols, but require 

that plans conform to industry standards, which can often be consistent with the 

requirements of the regulation. To the extent that the requirements imposed on 

these UST systems via the regulation are more or less stringent than the SPCC 

regulation currently governing them, the regulation may cause an increase or a 

reduction in overall inspection and monitoring requirements (and costs) for these 

UST systems. To account for this, EPA has generated baseline assumptions for 

these systems using information from the Department of Defense (the owner of 

the majority of all FCTs and AHFDSs). EGTs are assumed to incur all 

incremental costs beyond state regulatory baseline costs; to the extent that these 

systems are regulated under SPCC, this may overstate costs.
7-1

Chapter 7. Comparison of Costs, Benefits, and Other Impacts

This chapter compares the costs, cost savings, and benefits of the final UST regulation. 

Cost-benefit analysis is a useful tool for economic assessments. It is used to evaluate the 

economic efficiency of environmental policies by measuring their costs and benefits, and hence 

their net impacts on society. However, adherence to a strict cost-benefit approach provides an 

incomplete assessment of the effects of the final regulation for two reasons, described below.

A traditional cost-benefit comparison weighs society’s willingness to pay for the benefits 

of a regulation against the opportunity costs of the regulation. In the case of leaking USTs,

though, cleanup of releases is required under RCRA Subtitle I. Therefore, although avoided 

remediation costs are not a measure of willingness to pay, under the current statutory and 

regulatory baseline, a sufficient condition for the final UST regulation to improve economic 

efficiency would be if the expected avoided remediation costs exceed the costs. As discussed in 

Chapter 4, avoided costs provide a reasonable measure of one set of positive effects of the final 

UST regulation. Even if avoided remediation costs do not exceed the cost of the regulation, 

economic efficiency could be enhanced because this analysis does not quantify additional social 

benefits such as improved water quality.

A traditional cost-benefit comparison also does not consider important distributional 

issues (e.g., what particular groups of people bear specific benefits or costs). A key effect of the 

final UST regulation is to reallocate costs from the public to responsible parties. As we discussed 

in Chapter 5, avoided remediation costs could reduce demand on state financial assurance funds 

by over $160 million per year.

This chapter uses two approaches to assess the effectiveness of the requirements. First, 

we compare the compliance costs of the final UST regulation with its total monetized avoided 

costs (section 7.1). We then consider cost-effectiveness measures which provide estimates of 

expenditures per unit reduction of releases achieved by the final UST regulation (section 7.2). 

EPA’s analysis shows that the final UST regulation will likely provide a net cost savings 

to society, but the cost-benefit and cost-effectiveness analyses presented here provide an 

incomplete estimate of benefits, because the final UST regulation is expected to provide other 

benefits that are not expressed in monetary terms. In addition, the avoided remediation costs 

associated with the regulation represent an equity-enhancing effect because the demand for 

publicly-funded remediation is reduced; all else held constant, the increased compliance costs 

will fall on the specific operators who are not currently implementing the practices and 

technologies identified in the regulation. This may result in some facilities bearing additional 

costs, but should improve overall equity and efficiency by ensuring that operators who are 

adhering to best practices already (in the baseline) are not at a competitive disadvantage because 

other operators rely on the availability of publicly-funded remediation. 

OMB Circular A-4, numerous statutes, and Executive Orders require EPA to consider not 

only the costs and benefits of the regulation but also distributional impacts (e.g., impacts on 

minority and low-income populations, children’s health, and energy distribution). As such, the 

final regulatory decision is a policy judgment that must take into account a number of factors in 

addition to the benefits and costs.
7-2

In addition, the selection of a discount rate for estimating the present value of future costs 

and benefits is a complex issue. To reflect a range of possible future costs and benefits, we 

present two estimates of discounted costs and benefits (section 7.3); one based on a seven 

percent discount rate, and one based on a three percent discount rate.

7.1 Cost Benefit Comparison

In this section, we compare the total costs of the regulation with its total monetized and 

non-monetized avoided costs and benefits. Exhibit 7-1 summarizes total costs and monetized 

avoided costs of the final UST regulation. The costs in the exhibit represent the compliance costs 

of the final UST regulation, including state government administrative costs. 

The exhibit also identifies the social benefits of the proposed requirements that are not 

captured in avoided costs. As discussed in Chapter 4, a number of benefits could not be 

monetized. These include groundwater protection, mitigation and avoidance of acute events, 

ecological benefits, and human health risks compared to the baseline in which the releases occur 

and are remediated. Finally, EPA did not estimate benefits or avoided costs associated with 

changes in regulation at facilities with FCTs or AHFDSs.

Exhibit 7-1 demonstrates that the final UST regulation will likely avoid more costs than 

it creates, generating cost savings to society. EPA estimates that the Selected Option could 

generate $160 million per year in savings to society (reflecting the average of four estimates: 

$39 million in net costs, and $120 million, $180 million, and $370 million in savings). 

Alternatives 1 and 2 could also have a net benefit of $160 million (reflecting the average of four 

estimates for each alternative: $81 million in net costs and $140 million, $220 million, and $380 

million in savings for Alternative 1; or $25 million in net costs and $150 million, $150 million, 

and $350 million in savings for Alternative 2). These estimates only include cost savings for 

conventional UST systems and EGTs.
7-3

Exhibit 7-1

Comparison Of Annual Compliance Costs And Cost Savingsf,d

Selected Option

(2012$ millions)

Alternative 1

(2012$ millions)

Alternative 2

(2012$ millions)

Annual Avoided Costsa

Releases and groundwater incidents: average value

(range of all values in italics)

$300 

($110-$510)

$440 

($200-$650)

$220 

($44-$410)

Vapor intrusion: average value

(range of all values in italics)

$4.5

($1.7-$7.9)

$5.9

($2.5-$9.1)

$3.1

($0.56-$6.0)

Product loss

(range of all values in italics)

$3.1

($0.86-$6.5)

$3.8

($0.78-$7.6)

$2.4

($0.36-$5.2)

Annual Compliance Costs

Conventional UST systemsb

$130 $280 $63 

Emergency generator tanks (EGTs) $2.0 $2.3 $2.0 

Airport hydrant fuels distribution systems (AHFDSs) $10 < $0.1 N/A

UST systems with field-constructed tanks (FCTs) $11 < $0.1 N/A

Cost to owners/operators to read regulation $5.5 $5.5 $5.5 

State government administrative costsc

$0.12 $0.12 $0.12

Total Annual Avoided Costs

(range of all values in italics)

$310 

($120-$530)

$450 

($210-$670)

$230 

($45-$420)

Total Annual Compliance Costsd

$160 $290 $70

Net Cost (Savings) to Societyd,g

[Total Compliance Costs less Total Avoided Costs]

(range of all values in italics)

($160)

$39- ($370)

($160)

$81 - ($380) 

($160)

$25 - ($350)

Non-Monetized Benefitse

Groundwater protected (billion gallons)

130 

(50-240)

170 

(74-270)

92

(17-180)

Acute events and large-scale releases

(e.g., releases from AHFDSs and FCTs) Not estimated Not estimated Not estimated

Ecological benefits Not estimated Not estimated Not estimated

Human health risks Not estimated Not estimated Not estimated

a Avoided costs are estimated for conventional UST systems and emergency generator tanks (EGTs) only. Avoided remediation costs from releases 

and groundwater incidents are the costs related to site remediation. Avoided vapor intrusion costs include additional avoided costs associated with the 

remediation of vapor intrusion cases; the RIA does not address human health risk associated with vapor intrusion. Avoided product loss costs are also 

separate and additive.

b Conventional UST systems include all systems that are not AHFDSs, FCTs, or EGTs.

c The costs for UST systems directly owned or operated by local, state, and federal government entities are included in the estimates of compliance 

costs within the other categories. Costs shown here reflect the administrative costs for state governments to read the regulation, apply for state 

program approval, process notifications of ownership changes, and process one-time notifications of existence for AHFDS and UST systems with 

FCTs. 

d Compliance costs include direct compliance costs and state oversight costs. For this regulatory impact analysis, direct compliance costs and state 

oversight costs provide a reasonable proxy to assess the final UST regulation’s social costs. See Chapter 3.1 for further discussion. 

e Due to data and resource constraints, EPA is unable to monetize some of the positive impacts of the final UST regulation. Chapter 4 of this 

document provides a qualitative discussion of these benefits.

f Totals may not add up due to rounding. Cost estimates were derived using a seven percent discount rate.

g The results show that all but one of the four estimates of cost savings for conventional systems exceed total regulatory costs (including FCT and 

AHFDS systems). As explained in Chapter 4 and Appendix H, one of the four experts provided estimates of avoided releases and averted groundwater 

incidents that do not result in net cost savings to society from the Selected Option. However, this expert also assumed a high level of noncompliance 

with the final UST regulation that is not consistent with the assumption of 100 percent compliance in the cost estimates. As a result, this low-end 

estimate of potential cost savings represents likely understates the cost savings that would be associated with a consistent, 100 percent compliance 

scenario. See Chapter 4 and Appendix H for detailed discussion of how these assumptions affect net benefits of the final UST regulation as calculated 

using responses from Expert 2.
7-4

7.1.1 Net Costs of the Regulation: Potential Underestimates of Cost Savings and Benefits

The results show that three of the four estimates of cost savings for conventional systems 

exceed total regulatory costs for all systems, including both costs to conventional systems and 

costs to FCT and AHFDS systems (for which cost savings were not estimated). As explained in 

Chapter 4 and Appendix H, one of the four experts provided estimates of avoided releases and 

averted groundwater incidents that do not result in net cost savings to society from the Selected 

Option. However, this expert also assumed a high level of noncompliance with the final UST 

regulation that is not consistent with the assumption of 100 percent compliance in the cost 

estimates. As a result, this low-end estimate of potential cost savings likely understates the cost 

savings that would be associated with a consistent, 100 percent compliance scenario. 

In addition, this analysis may understate avoided costs for the following reasons:

 This analysis does not monetize benefits associated with groundwater protection, 

mitigation and avoidance of acute events, ecological benefits, human health risks, 

and avoided property devaluation relative to the baseline.

 This analysis does not monetize avoided costs associated with FCT and AHFDS 

systems. Compliance costs for these systems are monetized.

 This analysis does not quantify avoided remediation costs associated with 

reductions in release size (i.e., extent), other than the change in incidence of 

groundwater contamination. The same reductions in release volume that lower the 

incidence of groundwater contamination would likely also reduce the number of 

large extent releases of all types and decrease the average size of smaller releases.

7.1.2 Net Costs of the Regulation: Cost Savings to Public and Private Entities

While EPA opted to express all cost savings as “benefits to society” in this analysis, it is 

also common practice in RIAs to calculate the costs of a regulation by subtracting cost savings 

from cost increases to affected entities.225 Under this regulation, the cost savings of avoided 

releases would in some cases reduce burden on state funds, but a portion of the remediation costs 

would also be borne directly by regulated entities. One option for presenting total costs of the 

regulation, therefore, would have been to present the net costs to regulated facilities after 

accounting for avoided remediation costs. However, because it is impossible to predict which 

facilities would enjoy cost savings, EPA opted to present industry costs and industry-related 

avoided costs separately in the main analysis. 

This section considers the net cost impact on facilities when accounting for avoided 

remediation costs. Exhibit 7-2 provides a more detailed breakout of the estimated cost savings 

 

225 The practice of subtracting cost savings from cost increases to estimate the net costs of a regulation is 

consistent with OMB Circular A-4. Circular A-4 explains: “You should also try to monetize any cost savings as a 

result of an alternative and either add it to the benefits or subtract it from the costs of that alternative.” (U.S. Office 

of Management and Budget. Circular No. A-4. September 17, 2003.)
7-5

for conventional systems and EGTs. The exhibit compares cost savings directly to the privatesector compliance costs of the regulation for those systems. 

The exhibit shows that, in general, the net cost of the regulation to private-sector entities 

falls well below $100 million in the Selected Option and Alternative 2 when avoided costs to the 

private sector are considered. Only under Alternative 1 do net costs to the private sector exceed 

$100 million under expert estimates. 

Exhibit 7-2

Summary Of Net Costs To Private Sector for Conventional Systems and EGTs (2012$ millions)

Selected Option

Expert 1 Expert 2 Expert 3 Expert 4 Average

Private Sector Compliance Cost $130 

Total Cost Savingsa

$330 $120 $270 $530 $310

Public Sector Cost Savingsb$190 $65 $150 $290 $170

Private Sector Cost Savings $150 $52 $120 $240 $140

Net Cost to Private Sector

[Private Sector Compliance Cost – Private Sector 

Cost savings] ($17) $77 $6 ($110) ($11)

Alternative 1

Expert 1 Expert 2 Expert 3 Expert 4 Average

Private Sector Compliance Cost $280 

Total Cost Savingsa

$500 $210 $420 $670 $450

Public Sector Cost Savingsb$290 $120 $240 $370 $250

Private Sector Cost Savings $210 $88 $190 $300 $200

Net Cost to Private Sector

[Private Sector Compliance Cost – Private Sector 

Cost savings] $67 $190 $93 ($15) $85 

Alternative 2

Expert 1 Expert 2 Expert 3 Expert 4 Average

Private Sector Compliance Cost $65 

Total Cost Savingsa

$220 $45 $220 $420 $230

Public Sector Cost Savingsb$130 $26 $120 $240 $130

Private Sector Cost Savings $92 $19 $99 $190 $99

Net Cost to Private Sector

[Private Sector Compliance Cost – Private Sector 

Cost savings] ($28) $45 ($34) ($120) ($35)

Notes: 

a As explained in Chapter 4 and Appendix H, one of the four experts provided estimates of avoided releases and averted groundwater incidents 

that do not result in net cost savings to society from the Selected Option. This expert also assumed a high level of noncompliance with the 

final UST regulation that is not consistent with cost modeling. See Chapter 4 and Appendix H for detailed discussion of how these 

assumptions affect net benefits of the final UST regulation as calculated using responses from Expert 2. 

b Values are estimated in Chapter 5.2.4. To provide a conservative estimate of net costs to the private sector, this table presents the low 

deductible scenario results. These values represent potential reductions in public expenditures in states with active state funds. We note that to 

realize the savings in public expenditures in the near term, state government action would be required to lower petroleum fees. Alternatively, 

to the extent that funds are not constrained in their use, a redistribution of funds (e.g., to existing sites awaiting cleanup) could also represent a 

significant public benefit through more rapid completion of existing sites.
7-6

7.1.3 Alternative Baseline: Potential Decreases in Future Cost Savings

In addition to the primary analysis presented above, we also consider the comparison of 

costs and benefits of the final UST regulation in the alternative baseline scenario, where the 

universes of releases and UST systems decline over time in accordance with historical trends. In 

this alternative baseline, the universe of releases is smaller relative to the original baseline than 

the universe of UST systems; as described in Chapters 3 and 4, estimates of compliance costs do 

not change substantially under the alternative baseline, while estimates of avoided costs decrease 

by approximately 31 percent. However, even in this scenario, the final UST regulation may

avoid more costs than it creates, potentially generating cost savings to society. EPA estimates 

that the Selected Option in the alternative baseline could generate $60 million per year in savings 

to society (reflecting the average of four estimates: $74 million in net costs, $32 million, $75

million, and $210 million). Alternative 1 could generate $25 million per year in savings to 

society (reflecting the average of four estimates: $140 million in net costs, $7 million, $61

million, and $170 million), while Alternative 2 could generate savings of $87 million (reflecting 

the average of four estimates: $39 million in net costs, $81 million, $84 million, and $220 

million). These results are presented in Exhibit 7-3.

Exhibit 7-3

Comparison Of Annual Compliance Costs And Cost Savings Under Alternative Baselinec,e

Selected Option

(2012$ millions)

Alternative 1

(2012$ millions)

Alternative 2

(2012$ millions)

Total Annual Avoided Costsa,b

(range of all values in italics)

$220 

($81-$360)

$310 

($140-$460)

$160 

($31-$290)

Total Annual Compliance Costsc

$160 $290 $70

Net Cost (Savings) to Societyc,d

[Total Compliance Costs less Total Avoided Costs]

(range of all values in italics)

($60)

$74- ($210)

($25)

$140 – ($170) 

($87)

$39 - ($220)

a Avoided costs are estimated for conventional UST systems and emergency generator tanks (EGTs) only.

b Due to data and resource constraints, EPA is unable to monetize some of the positive impacts of the final UST regulation. Chapter 4 of this 

document provides a qualitative discussion of these benefits.

c Compliance costs include direct compliance costs and state oversight costs. For this regulatory impact analysis, direct compliance costs and state 

oversight costs provide a reasonable proxy to assess the final UST regulation’s social costs. See Chapter 3.1 for further discussion. 

d The results show that all but one of the four estimates of cost savings for conventional systems exceeded total regulatory costs (including FCT and 

AHFDS systems). As explained in Chapter 4 and Appendix H, one of the four experts provided estimates of avoided releases and averted groundwater 

incidents that do not result in net cost savings to society from the Selected Option. However, this expert also assumed a high level of noncompliance 

with the final UST regulation that is not consistent the assumption of 100 percent compliance in the cost estimates. As a result, this low-end estimate 

of potential cost savings represents likely understates the cost savings that would be associated with a consistent, 100 percent compliance scenario. 

See Chapter 4 and Appendix H for detailed discussion of how these assumptions affect net benefits of the final UST regulation as calculated using 

responses from Expert 2.

e Totals may not add up due to rounding. Cost estimates were derived using a seven percent discount rate.
7-7

7.2 Cost-Effectiveness Analysis

We measure cost-effectiveness by considering the expected cost per release avoided. This 

cost-effectiveness measure is useful for comparing the resources required to eliminate a single 

release under each alternative. For the purpose of this analysis, we consider avoided releases to 

be both releases altogether avoided and groundwater incidents averted due to the final UST 

regulation. As presented in Exhibit 7-4, we find that the cost per release avoided is 

approximately $43,000 to $200,000 under the Selected Option, compared with $68,000 to 

$250,000 under Alternative 1 and $25,000 to $270,000 under Alternative 2. In general, this 

compares favorably with average release remediation costs presented in Exhibit 4-2 in Chapter 

4, which range between $98,000 and $210,000.226

This regulatory impact analysis suggests that, in addition to improving the alignment of 

incentives, release prevention is likely to be less costly than release remediation under the 

Selected Option and Alternative 2 and in some instances under Alternative 1.

Exhibit 7-4

Cost-Effectiveness: Number Of Avoided Releases And Groundwater Incidentsa

Selected Option Alternative 1 Alternative 2

Avoided releases and groundwater incidents

2,073

(772-3,646)

2,708

(1,148-4,213)

1,427

(257-2,753)

Compliance costb($ million) $160 $290 $70

Cost per release avoided ($ million)

$0.08

($0.04 - $0.20)

$0.11

($0.07 - $0.25)

$0.05

($0.03 - $0.27)

a Cost estimates were derived using a seven percent discount rate.

b Compliance cost includes direct compliance costs and state oversight costs. For this regulatory impact analysis, direct 

compliance costs and state oversight costs provide a reasonable proxy to assess the final UST regulation’s social costs. See 

Chapter 3.1 for further discussion. 

7.3 Costs and Beneficial Effects Under Alternative Discount Rates

The selection of the rate at which to discount future costs and benefits is complex. To 

assess the sensitivity of our results to our choice of discount rate, Exhibit 7-5 presents a 

summary of total compliance costs and avoided remediation costs considering an alternate 

discount rate of three percent. Costs change little because a reduction in interest rates both 

reduces time value of money (TVM) costs and increases costs that have a delay before 

implementation.227,228 The net result of a change from a discount rate of seven percent to a 

 

226 The one exception to this conclusion is Expert 2. As explained in Chapter 4 and Appendix H, one of the 

four experts provided estimates of avoided releases and averted groundwater incidents that do not result in net cost 

savings to society from the Selected Option. This expert also assumed a high level of noncompliance with the final 

UST regulation that is not consistent with the cost modeling, and likely understates the cost savings associated with 

the 100 percent compliance that is assumed in the cost analysis. See Chapter 4 and Appendix H for detailed 

discussion of how these assumptions affect net benefits of the final UST regulation as calculated using responses 

from Expert 2.

227 When amortizing a value over time, if all other factors are held constant, a reduction in the rate of 

interest decreases the annual payment.
7-8

discount rate of three percent is an overall increase in the cost of the regulation of less than $10 

million per year, indicating that TVM and delayed-implementation cost effects essentially offset 

each other. 

Discount rates are also involved in our estimate of annual avoided costs. In particular, we 

use them to obtain constant annual avoided costs for those requirements in which the affected 

universe grows over time and to calculate the delay until positive impacts accrue.229 Here, the 

effect of lowering interest rate is more significant, as all requirements are discounted by at least 

one period. As Exhibit 7-5 shows, a change in the discount rate increases avoided costs from a 

range of $120 million - $530 million using a seven percent discount rate to $130 million - $610 

million using a three percent discount rate. This increase is largely due to the fact that we 

discount all avoided costs by at least one year, as outlined in Exhibit 1-2.

We conclude that, while a reduction in the discount rate to three percent leaves annual 

compliance costs essentially unchanged at $160 million, avoided costs increase by $16 million to 

$84 million per year. As such, annual savings to society would increase from a range of $39

million in net costs to $370 million in net savings, to a range of $25 million in net costs to $450 

million in net savings if EPA relies on a three percent discount rate.

 

228 The rate of discount enters into our calculation of time value of money costs. Higher discount rates 

increase these costs, while lower discount rates cause them to decrease. See Appendix D for details.

229 Requirements for which the universe is assumed to grow over time are the elimination of flow restrictors 

as overfill prevention for new tanks and when overfill prevention equipment is replaced, closure of lined tanks that

cannot be repaired, and all Energy Policy Act requirements in Indian country, with the exception of operator 

training.
7-9

Exhibit 7-5

Compliance Costs And Beneficial Impacts Under Alternative Discount Ratesd,e

Avoided Cost

Selected Option

7 percent discount rate ($ 

millions)

Selected Option

3 percent discount rate ($ 

millions)

Annual Avoided Costsa

Releases and groundwater incidents

$300 

($110-$510)

$350 

($130-$590)

Vapor intrusion

$4.5 

($1.7-$7.9)

$4.7 

($1.7-$8.2)

Product loss

$3.1 

($0.86-$6.5)

$3.3 

($0.89-$6.8)

Annual Compliance Costs

Conventional UST systemsb$130 $130 

Emergency generator tanks (EGT) $2.0 $2.1 

Airport hydrant fuels distribution systems (AHFDSs) $10 $12 

UST systems with field-constructed tanks (FCTs) $11 $12 

Cost to owners/operators to read regulation $5.5 $3.9 

State government administrative costsc$0.1 $0.1 

Total Annual Avoided Costs

$310 

($120-$530)

$360 

($130-$610)

Total Annual Compliance Costsd$160 $160 

Net Cost (Savings) to Societyd,f

[Total Compliance Costs less Total Avoided Costs]

($160)

$39 - ($370)

($200)

$25 - ($450) 

a Avoided costs are estimated for conventional UST systems and emergency generator tanks (EGTs) only.

b Conventional UST systems include all systems that are not AHFDSs, FCTs, or EGTs.

c The costs for UST systems directly owned or operated by local, state, and federal government entities are included in the estimates of 

compliance costs within the other categories. Costs shown here reflect the administrative costs for state governments to read the regulation, 

apply for state program approval, process notifications of ownership changes, and process one-time notifications of existence for AHFDS and 

UST systems with FCTs.

d Compliance costs include direct compliance costs and state oversight costs. For this regulatory impact analysis, direct compliance costs and 

state oversight costs provide a reasonable proxy to assess the final UST regulation’s social costs. See Chapter 3.1 for further discussion. 

e Totals may not add up due to rounding.

f As explained in Chapter 4 and Appendix H, one of the four experts provided estimates of avoided releases and averted groundwater incidents 

that do not result in net cost savings to society from the Selected Option. This expert also assumed a high level of noncompliance with the final 

UST regulation that is not consistent with cost modeling. See Chapter 4 and Appendix H for detailed discussion of how these assumptions affect 

net benefits of the final UST regulation as calculated using responses from Expert 2.
1

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