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EO12866_RMP Modernization 2050

- AG82 NPRM RIA_20151217



# Regulatory Impact Analysis

Accidental Release Prevention Requirements: Risk Management Programs Under the Clean Air Act, Section 112(r)(7)

U.S. Environmental Protection Agency (EPA) Office of Land and Emergency Management (OLEM) Office of Emergency Management (OEM) 1200 Pennsylvania Avenue, NW (Mail Code 5104A) Washington, DC 20460 USA

December 2015***E.O. 12866 Review

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# ACRONYMS

Acronym Definition
CSB Chemical Safety Board
EO Executive Order
EPCRA Emergency Planning and Community Right to Know Act
FEMA Federal Emergency Management Agency
FTE Full Time Equivalent
IST Inherently Safer Technology
LEPC Local Emergency Planning Committee NAICS North American Industrial Classification System
OCA Offsite Consequence Analysis
OSHA Occupational Safety and Health Administration
P1 Program Level 1
P2 Program Level 2
P3 Program Level 3
PHA Process Hazard Analysis
PSM Process Safety Management
RFI Request for Information
RIA Regulatory Impact Analysis
RMP Risk Management Plan
SDS Safety Data Sheets
STAA Safer Technolog y and Alternative s Analysis TQ Threshold Quantity***E.O. 12866 Review

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# EXECUTIVE SUMMARY

INTRODUCTION

In response to catastrophic chemical facility incidents in the United States, President Obama issued EO 13650, “Improving Chemical Facility Safety and Security,” on August 1, 2013

. The EO establishes the Chemical Facility Safety and Security Working Group (Working Group), co

- chaired by the Secretary of Homeland Security, the Administrator of EPA, and the Secretary of Labor or their designated representatives at the Assistant Secretary level or higher, and comprised of senior representatives of other Federal departments, agencies, and offices. 1 

### The EO requires the Working Group to carry out a number of tasks whose overall goal is to prevent chemical accidents, such as the explosion that occurred at the West Fertilizer facility in West, Texas, on April 17, 20 13, which killed 15 people, most of whom were first responders, caused multiple injuries, and resulted in extensive building damage to the town. 2



### Section 6(a)(i) of EO 13650 requires the Working Group to develop options for improved chemical facility safe ty and security that identify “improvements to existing risk management practices through agency programs, private sector initiatives, Government guidance, outreach, standards, and regulations.’’ Section 6(c) of EO 13650 requires the Administrator of EPA to review the Risk Management Program

. As part of this effort to solicit comments and information from the public regarding potential changes to EPA’s RMP regulations (40 CFR part 68), on July 31, 2014, EPA published a “Request for Information” notice or “RFI” (79 FR 44604).

EPA believes that the RMP regulations have been effective in preventing and mitigating chemical
accidents in the United States ; however, EPA is proposing revisions in order to further protect human health and the environment from chem ical hazards through advancement of process safety management (PSM) based on lessons learned

. These revisions are a result of a review of the existing Risk Management Program and information gathered from the RFI and EO listening sessions, and are

propose d under the statutory authority provided by section 112(r) of the Clean Air Act (CAA) as amended (42 U.S.C. 7412(r)).



### DESCRIPTION OF PROPOSED RULE AND ALTERNATIVES

The RIA analyzed the proposed new requirements and revisions to existing requirements as wel l as several alternatives for each.

1 The White House. Executive Order

– Improving Chemical Facility Safety and Security. August, 2013. https://www.whitehouse.gov/the

- press

- office/2013/08/01/executive

- order

- improving

- chemical

- facility

- safety

and

- security

2 CSB. 2015. Final Investigation Report, West Fertilizer Plant Fire and Explosion, West, TX, April 17, 2013. REPORT 2013

- 02

- I

- TX. http://www.csb.gov/west

- fertilizer

- explosion

- and

- fire

- /***E.O. 12866 Review

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### Third

- Party Audits

— (proposed revisions apply to existing §§68.58 and 68.79 and new §§68.59 and 68.80)

The existing rule requires Program 2 and Program 3 processes to conduct a compliance audit at least once every 3 years

. The proposed rule would require facilities to contract with an independent third

party to conduct the next scheduled compliance audit following an RMP reportable accident or after an implementing agency determines that certain circumstances exist that s uggest a heightened risk for an
accident

. The third party would have to be someone with whom the facility does not have an existing or recent relationship and who meets specific qualification criteria

. The proposed alternative is the low

cost one and wou ld apply only for Program 2 and Program 3 processes after an RMP reportable accident or at the request of the implementing agency

. The medium cost alternative would apply every three years for all compliance audits conducted for all P3 processes

. The hig h cost alternative would apply every three years for all compliance audits conducted for Program 2 and Program 3 processes.

Root Cause Analysis

— (proposed revisions apply to §§68.60 and 68.81)

The proposed rule would require facilities to conduct a root cau se analysis as part of an incident investigation following an RMP reportable accident or an incident that could reasonably have resulted in an RMP reportable accident (i.e., “near miss”)

. A root cause analysis is a formal process to identify underlying re asons for failures that lead to accidental releases

. These analyses usually require someone trained in the technique

. The low cost alternative would apply the provision only to reportable accidents or near misses in P3 processes

. The proposed option is the higher cost alternative and would apply to reportable accidents or near misses involving Program 2 and Program 3 processes.

Safer Technology and Alternatives Analysis (STAA)

— (proposed revisions apply to §68.67)

Under the proposed rule, facilities in N AICS codes 322 (paper manufacturing), 324 (petroleum and coal products manufacturing), and 325 (chemical manufacturing) with P3 processes would be required to conduct a STAA for each process as part of their PHA, which occurs every 5 years

. The STAA requi rement includes two parts: the initial analysis to identify alternatives, and a feasibility study to determine the costs and assess the reasonableness of implementing technology alternatives

. The proposed rule is the low cost alternative, which would apply to all facilities with P3 processes in NAICS codes 322, 324, and 325

. The medium cost alternative would apply the requirement to all P3 processes

. The high cost alternative would apply the requirement to all P3 processes and require facilities to
i mplement feasible safer technology and alternatives.

Coordination Activities

— (proposed revisions apply to §§68.90, new 68.93, and 68.95)

Under the proposed rule, all facilities with Program 2 or Program 3 processes would be required to coordinate with loca l response agencies annually to determine response needs and ensure that response resources and capabilities are in place to respond to an accidental release of a regulated substance

. The owner or operator would also be required to document coordination a ctivities

. The proposed rule also includes a provision enabling the LEPC or local emergency response official to require that the RMP

- facility owner or operator comply with the emergency response program requirements of***E.O. 12866 Review

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### §68.95

. Section 68.95 requires the owner or operator to develop an emergency response program that includes an emergency response plan, procedures for use, inspection and maintenance of response equipment, training for responding employees, and procedures to review and update the program

. As a result of improved coordination between facility owners and operators and local emergency response officials, EPA believes that some facilities that are currently designated as non

- responding facilities may become responding facilities (i.e., develop an emergency response program in accordance with §68.95).

Alternatives to this provision are similar to the proposed requirements

. One alternative would eliminate the option for local officials to require that a facility owner or operator comply with th e requirements of §68.95

. This alternative, although the costs analyzed are the same as the proposed option , may result in
lower actual costs as l ocal officials ’ ability to require compliance with §68.95 may increase the likelihood of current non

- responding facilities converting to responding facilities

. These costs of converting are estimated in a sensitivity analysis in this RIA. A second alternative is a high cost alternative and would require all facili ties with Program 2 or Program 3 processes to comply with §68.95, regardless of local response capability

. This would be analogous to the requirements under the Oil Pollution Prevention regulation (40 CFR Part 112) where all facilities subject to the Faci lity Response Plan provisions at §112.20 are required to prepare and implement an emergency response plan for oil discharges into navigable waters or adjoining shorelines.

Exercises

— (proposed revisions apply to new §68.96)

Notification Exercises

. All faci lities with Program 2 or Program 3 processes would be required to conduct a notification exercise annually to ensure that the emergency contact list is complete, accurate, and up

- to

- date.

Tabletop and Field Exercises

. The proposed rule would require resp onding facilities to conduct annual exercises of their emergency response plans and invite local emergency response officials to participate

. Under the low cost alternative, facilities would conduct tabletop exercises annually

. Under the proposed option
, which is the medium cost alternative, facilities would conduct a full field exercise at least once every five years, and tabletop exercises annually in the interim years

. Facilities with a reportable accident would also have to conduct a full field exerc ise within a year of an RMP reportable accident, but this may not impose any additional burden under the medium alternative as it would count as the required field exercise for the next 5

- year period

. Under the high cost alternative, facilities would cond uct full field exercises annually.

Information Disclosure

— (proposed revisions apply to new §68.205 and existing §68.210)

The proposed rule would require all facilities to disclose certain chemical hazard information to the public

. The facility or its pare nt company, if applicable, would have to make the information available in an easily accessible manner, which might be presenting information on a company website, posting the information at public libraries, publishing it in local papers, or other means a ppropriate for particular
communities and facilities

. The information to be disclosed includes names and quantities of regulated***E.O. 12866 Review

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### substances at the facility; Safety Data Sheets (SDS); accident history information; emergency response program information; an d LEPC or local response agency contact information.

In addition, facility owners or operators would be required to provide the LEPC or other local response agencies with information annually on all of the following that apply to the facility: regulated

su bstances; five

- year reportable accident history; summaries of compliance audit reports; summaries of incident investigation reports; summaries of implementation of inherently safer technology (IST); and information on emergency response exercises, includin g schedules for upcoming exercises

. Public Meeting s
— (proposed revisions apply to §68.210)

The proposed rule would require facilities to hold a public meeting for the local community at least once every 5 years or within a year of a reportable accident

. The low cost alternative applies the requirement to facilities with Program 2 or Program 3 processes

. The proposed option is the higher cost alternative and would apply to all facilities (i.e., P1 facilities would also be affected).



### SUMMARY OF COSTS

Approximately 12,500 facilities have filed current RMPs with EPA and are potentially affected by the proposed rule changes

. These facilities range from petroleum refineries and large chemical manufacturers to water and wastewater treatment systems; chemic al and petroleum wholesalers and terminals; food manufacturers, packing plants, and other cold storage facilities with ammonia refrigeration systems; agricultural chemical distributors; midstream gas plants; and a limited number of other sources that use R MP

- regulated substances.

Exhibit A presents the number of facilities according to the latest RMP reporting as of February 2015 by
industrial sector and chemical use

. Exhibit A: Number of Affected Facilities by Sector

Sector NAICS Codes Total Facilities C hemical Uses

Administration of environmental quality programs (i.e., governments) 924 1,923 Use chlorine and other chemicals for

treatment

Agricultural chemical distributors/wholesalers 111, 112, 115, 42491 3,667 Store ammonia for sale; some in NAICS 111 and 115 use ammonia as a refrigerant

Chemical manufacturing 325 1,465 Manufacture, process, store

Chemical wholesalers 4246 333 Store for sale

Food and beverage manufacturing 311, 312 1,476 Use mostly ammonia as a refrigerant***E.O. 12866 Review

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Page 7 of 126 Oil and gas extraction 211 741 Intermediate processing (mostly regulated flammable substances and flammable mixtures)

Other 44, 45, 48, 54, 56, 61,
72 247 Use chemicals for wastewater treatment, refrigeration, store chemicals for sale

Other manufacturing 313, , 326, 327, 33 384 Use various chemicals in manufacturing process, waste

treatment

Other wholesale 423, 424 302 Use mostly ammonia as a refrigerant

Paper manufacturing 322 70 Use various chemicals in pulp and paper manufacturing

Petroleum and coal products manufacturing 324 156 Manufacture, process, store (mostly regulated flammable substances and flammable mixtures)

Petroleum wholesalers 4247 276 Store for sale (mostly regulated flammable substances and flammable mixtures)

Utilities 221 (except 22131, 22132) 343 Use chlorine (mostly for water treatment)

Warehousing and storage 493 1,056 Use mostly ammonia as a refrigerant

Water/wastewater Treatment Systems 22131,
22132 102 Use chlorine and other chemicals

Total 12,542



### Exhibit B presents a summary of the costs estimated in the analysis

. EPA estimates annualized costs of $162.6 million at a 3% discount rate, and $ 165.3 million at a 7% discount rate

. T otal undiscounted costs

are $1.6 billion over the ten year time period, or $1.4 billion and $1. 2 b illion when discounted at 3 and 7 percent, respectively

. Exhibit B presents some elements that are beyond the proposed rule provisions,
such as rule familiarization.***E.O. 12866 Review

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### Exhibit B: Summary of Costs ( M illions, 201 4 dollars)

Cost Elements Total Undiscounted Total Discounted (3%) Total Discounted (7%) Annualized (3%) * Annualized (7%)
Third Party Audits $49.5 $42.3 $34.8 $5.0 $5.0 Root Cause Analysis $8.4 $7.2 $5.9 $0.8 $0.8 Safer Technology and Alternatives $347.9 $296.7 $244.3 $34.8 $34.8

Coordination $62.7 $53.4 $44.0 $6.3 $6.3 New Responders  ̊ $311.1 $281.6 $250.3 $33.0 $35.6 Notification Drills $13.8 $11.8 $9.7 $1.4 $1.4
Exercise Costs $606.6 $517.4 $426.0 $60.7 $60.7 LEPC Disclosure $129.1 $100.1 $82.4 $11.7 $11.7 Public Disclosure $39.8 $33.9 $27.9 $4.0 $4.0 Public Meetings $47.5 $40.5 $33.3 $4.7 $4.7 Rule Familiarization $2.3 $2.3 $2.2 $0.2 $0.3 Total Cost + $1,618.8 $1,387.2 $1,161.1 $162.6 $165.3

* When annual costs for different years are equal to one another across the analysis time period, the annualized costs calculated using different discount rates (e.g., 3 and 7 percent) are equal

.
 ̊ Reflects costs for some facilities to convert from “non

- responding” to “responding” as a result of improved coordination with local emergency response officials

+ Values may not sum due to rounding



### SUMMARY OF POTENTIAL BENEFITS

EPA had no data to project the specific impact of each proposed rule element on the probability and magnitude of chemical accidents

. Indeed, the frequency and severity of the accidents themselves would be challenging to predict

. However, a review of t he RMP accident data and othe r data sources suggest ed that chemical accidents impose substantial costs on firms, employees, emergency responders, the community, and the broader economy

. This RIA constructs and presents data for a 10

- year baseline period, summarizing RMP accident impa cts and when possible monetizing them

. The average annual cost of RMP accidents during the baseline was $274 million

. However, the monetized impacts omit many important categories of accident impacts including lost productivity, the costs of

emergency re sponse, transaction costs, property value impacts in the surrounding community (that overlap with other benefit categories) , and environmental impacts

. Also not reflected in the 10

- year baseline costs are the impacts of non

- RMP accidents at RMP facilities and any potential impacts of rare high consequence catastrophes

. A final omission is related to the information disclosure provision

. Reducing the probability of chemical accidents and the severity of the ir impacts , and improving
information disclosure by chemical facilities , as the proposed provisions intend, would provide benefits to p otentially affected members of society.

Exhibit C summarizes all of the benefit categories qualitatively described in this RIA

. There are four broad benefit categories r elated to accident prevention and mitigation including prevention of RMP***E.O. 12866 Review

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### accidents, mitigation of RMP accidents, prevention and mitigation of non

- RMP accidents at RMP facilities, and prevention of major catastrophes

. The exhi bit explains each and identifi es ten associated specific benefit categories , ranging from avoided fatalities to avoided emergency response costs

. Exhibit
C also highlights and explains the information disclosu re benefit category and identifies two specific
benefits associated with it : improved efficiency of property markets and allocation of emergency

resources

.

Exhibit C: Summary of Social Benefits of Proposed Rule Provisions

Broad Benefit Category Explanation Specific Benefit Categories

Accident Prevention Prevention of future RMP facility accidents • Reduced Fatalities

• Reduced Injuries

• Reduced Property Damage

• Fewer People Sheltered in Place

• Fewer Evacuations

• Avoided Lost Productivity

• Avoided Emergency Response Costs

• Avoided Transaction Costs

• Avoided Property Value Impacts*

• Avoided Environmental Impacts Accident Mitigation Mitigation of future RMP facility accidents

Non

- RMP accident prevention and mitigation Prevention and mitigation of future non

- RMP
accidents at RMP facilities

Avoided Catastrophes Prevention of rare but extremely high
consequence events

Information Disclosure Provision of information to the public and
LEPCs • Improved efficiency of property markets

• Improved resource allocation

* These impacts partially overlap with several other categories, such as reduced health and environmental impacts***E.O. 12866 Review

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# TABLE OF CONTENTS

EXECUTIVE SUMMARY

................................ ................................ ................................ ........... 3
CHAPTER 1: INTRODUCTION AND BACKGROUND

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

1.1 H ISTO RY

................................ ................................ ................................ ................................ ................................ .......... 12 1.2 O RGANIZATIO N O F THE A NALYSIS

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


### CHAPTER 2: PROVISIONS AND ALTERNATIVES

................................ ........................... 19

2.1 A LTERNATIVES A NALYZED

................................ ................................ ................................ ................................ ........ 20 2. 2 A DDITIO NAL C HANGES A SSOCIATED WITH L OCAL C OORDINATIO N A CTIVITIES

................................ ......... 22 2.3 S UMMARY O F A LTERNATIVES

................................ ................................ ................................ ................................ .... 23 2.4 I MPACTS TO G OVERNMENTS

................................ ................................ ................................ ................................ ...... 25


### CHAPTER 3: UNIVERSE OF REGULATED FACILITIES

................................ ................. 26

3.1 C URRENT RMP F ACILITIES

................................ ................................ ................................ ................................ ....... 26 3.2 D IVISIO NS U SED IN A NALYSIS

................................ ................................ ................................ ................................ .... 29 3.3 G O VERNMENT E NTITIES A FFECTED BY THE R ULE

................................ ................................ ............................... 34 3.4 L IMITATIO NS

................................ ................................ ................................ ................................ ................................ .. 35 

### CHAPTER 4: COSTS OF PROPOSED REVISIONS

................................ ............................. 36

4.1. W AGE R ATES

................................ ................................ ................................ ................................ ................................ . 36 4.2 R ULE F A MILIARIZATIO N

................................ ................................ ................................ ................................ ............. 37 4.3 P REVENTIO N P ROGRAM R ULE P RO VISIONS

................................ ................................ ................................ ........... 37 4.4. E MERGENCY R ESPONSE P REPAREDNESS R ULE P RO VISIONS

................................ ................................ .............. 42 4.5. I NFO RMATION D ISCLOSURE R ULE P ROVISIONS

................................ ................................ ................................ .... 45 4.6 N EW R ESPONDERS

................................ ................................ ................................ ................................ ........................ 48


### CHAPTER 5: TOTAL COSTS

................................ ................................ ................................ . 52

5.1 A NALYTICAL A SSUMPTIONS

................................ ................................ ................................ ................................ ....... 52 5.2 R ULE F AMILIARIZATIO N

................................ ................................ ................................ ................................ ............. 53 5.3 P REVENTIO N P ROGRAM R ULE P RO VISIONS

................................ ................................ ................................ ........... 54 5.4 E MERGENCY R ESPONSE P REPAREDNESS R EQ UIREMENTS

................................ ................................ .................. 61 5.5 I NFO RMATION D ISCLOSURE R ULE P ROVISIONS

................................ ................................ ................................ .... 67 5.6 N EW R ESPONDERS

................................ ................................ ................................ ................................ ........................ 69 5.7 T O TAL C OSTS

................................ ................................ ................................ ................................ ................................ 75 

### CHAPTER 6: B ENEFITS

................................ ................................ ................................ .......... 77

6.1 B ENEFIT C ATEGO RIES

................................ ................................ ................................ ................................ ................. 77 6.2 N UMBER AND C OSTS O F B ASELINE A CCIDENTS

................................ ................................ ................................ ..... 82 6.3 B ENEFITS C O MPARED TO C OSTS

................................ ................................ ................................ ............................... 90 6.4 A VO IDED C ATASTRO PHES

................................ ................................ ................................ ................................ ........... 91 6.5 A DDITIO NAL B ENEFIT C ATEGO RIES A SSOCIATED WITH A CCIDENT P REVENTIO N AND M ITIGATIO N

...... 91 6.6 C O NCLUSIONS

................................ ................................ ................................ ................................ ................................ 95


### CHAPTER 7: SMALL ENTITY IMPACTS

................................ ................................ ............. 97

7.1 RMP A FFECTED S ECTO RS

................................ ................................ ................................ ................................ .......... 97 7.2 E S TIMATING THE N UMBER O F S MALL E NTITIES

................................ ................................ ................................ . 100 7.3 E CO NOMIC I MPACT O N S MALL E NTITIES

................................ ................................ ................................ .............. 105 7.4 C O NCLUSION

................................ ................................ ................................ ................................ ................................ 112 

### CHAPTER 8: ENVIRONMENTAL JUSTICE

................................ ................................ ...... 113***E.O. 12866 Review

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................................ ................................ ................................ ................................ .. 113 8.2 I DENTIFYING P O TENTIAL E NVIRO NMENTAL J USTICE C O NCERNS A SSOCIATED WITH RMP F ACILITIES 114 8.3 A CTIO NS T AKEN TO F ACILITATE “F AIR T REATMENT ”

................................ ................................ ..................... 116 8.4 A CTIO NS T AKEN TO F ACILITATE “M EANINGFUL I NVO LVEMENT ”

................................ ................................ . 116


### CHAPTER 9: OTHER ANALYSES AND CONCLUSIONS

................................ ................ 119

9.1 U NFUNDED M ANDATES R EFO RM A CT

................................ ................................ ................................ .................... 119 9.2 E MPLO YMENT I MPACTS

................................ ................................ ................................ ................................ ............ 119 9.3 L IMITATIO NS AND C ONCLUSIONS

................................ ................................ ................................ ........................... 120 

### APPENDIX A

................................ ................................ ................................ ............................ 122
APPENDIX B

................................ ................................ ................................ ............................ 124***E.O. 12866 Review

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# CHAPTER 1: INTRODUCTION AND BACKGROUND

1.1 History

Serious chemical accidents occurring in the 1970s and 1980s, including accidents in Bhopal, India,
Seveso , Italy, and Pasadena, Texas led to a series of legislative reforms relating to chemical safety in industrialized countries

. 3 4 

### In the United States, the Emergency Planning and Community Right to Know Act (EPCRA) was enacte d in 1986 to promote community emergency planning and pre paredness and provide local responders and the public with information about the chemical hazards in their community (42 U.S.C. 11002 et seq.)

. In 1990, s ections 112(r) and 304 of the Clean Air Act were enacted to help prevent severe chemical facility acc idents

. Section 304 required the Occupational Safety and Health Administration (OSHA) to publish a chemical process safety standard to prevent accidental releases of chemicals that could pose a threat to employees

. Section 112(r) required the Environmental Protection Agency (EPA) to publish Accidental Release Prevention Program regulations to prevent chemical releases or minimize their consequences if they occur

. Section 112(r) required EPA to develop a list of at least 100 regulated substances which, in the case of an accidental release, are known to cause or may reasonably be anticipated to cause death, injury, or
serious adverse effects to human health or the environment (42 U.S.C 7412(r) )

. EPA was also required

to establish threshold quanti ties (TQs) for these substances
, which would determine the applicability of
rules to prevent accidental releases of these substances

. Section 112(r ) ( 7)(B) required EPA to promulgate reasonable regulations and appropriate guidance to provide, to the greatest extent practicable, for the prevention and detection of accidental releases of regulated substances and for response to such releases by the owners or operators of the sources of such releases

. The section mandates that the regulations require th e owner or operator of a stationary source “to prepare and implement a risk management plan to detect and prevent or minimize accidental releases of such substances from the stationary source, and to provide a prompt emergency response to any such releases in order to protect human health and the environment

. ” The section further mandates that the plan include:

• A hazard assessment to assess the potential effects of an accidental release of any regulated
substance

. This assessment shall include an estimate of potential release quantities and a determination of downwind effects, including potential exposures to affected populations

. Such assessment shall include a previous release history of the past 5 years, including the size, concentration, and duration of releases, and shall include an evaluation of worst case accidental releases;

3 Federal Emergency Management Agency. Phillips Petroleum Chemical Plant Explosion and Fire. October 1989. https://www.usfa.fema.gov/downloads/pdf/publications/tr

- 035.pdf

4 Nature 281, 521 (18 October 1979). http://www.nature.com/nature/journal/v281 /n5732/pdf/281521a0.pdf***E.O. 12866 Review

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### • A program for preventing accidental releases of regulated substances, including safety precautions and maintenance, monitoring and employee training measures to be used at the source; and

• A response program providing for specific actions to be taken in response to an accidental release of a regulated substance so as to protect human health and the environment, including procedures for informing the public and local agencies responsible for re sponding to accidental releases, emergency health care, and employee training measures.

Finally, the section requires the owner or operator of an affected stationary source to develop and file a risk management plan with EPA, the Chemical Safety Board ( CS B) (also established under the section), the State, and local response agencies.

OSHA adopted its process safety management standard (PSM) ( codified at 29 CFR 1910.119) in 1992 (57 FR 6403, Feb. 24, 1992)

. The PSM standard requires facilities to develop and implement an integrated approach to chemical process safety including the following elements: accurate , up

- to

- date diagrams of all process equipment, an analysis of the process hazards, standard operating procedures, training, maintenance, pre

- startup reviews, management of change, compliance audits, incident investigation, employee participation, hot

- work permits, contractor training, and emergency response

. The applicability of the PSM standard is driven by the presence of specific chemicals in quant ities above threshold s set in the standard.

EPA published its section 112(r) regulations in two stages

− a list of regulated substances and TQs in 1994 (59 FR 4478, January 31, 1994)
, and the risk management program requirements in 1996 ( 61 FR
31731 , June 20, 1996 ) ; both are codified at 40 CFR part 68

. As required by section 112(r), p art 68 includes several major requirements that were not covered by the PSM standard

. These include a hazard assessment consisting of an offsite consequence analysis (OCA) and five

- year accident history, and the development and submission of a risk management plan (RMP) that summarizes a source’s risk management program

. EPA also required stationary sources to develop a management system to oversee the program and included emergency response program requirements beyond those contained in the PSM standard

. RMPs were first submitted to EPA in June 1999 and must be updated at least every 5 years

. EPA has amended the rule a number of times to modify the list of substances
, to alter data requirements
, and to address other issues

. T he primary requirements adopted in 1996 , however, remain in place.

The Risk Management Program rule establishes three program levels and requires facilit y owners or operators to conduct hazard assessm ents and submit RMPs regardless of the program level

. Program 1 (P1) requirements appl y to processes that would not affect the public in the case of a worst

- case release and with no accidents with specific off

- site consequences within the past five years

. P1 provisions impose limited hazard assessment requirements and emergency response requirements.

Program 2 (P2) applies to processes not eligible for P1 or subject to Program 3 (P3), and imposes streamlined prevention program requirements, including saf ety information, hazard review, operating***E.O. 12866 Review

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### procedures, training, maintenance, compliance audits, and incident investigation elements

. P2 provisions also impose hazard assessment, management, and emergency response requirements

. P2 processes are primarily chlorine use at publicly owned water and wastewater facilities
, in States with out OSHA

- approved State plans

. To further reduce the burden on facilities with P2 processes , EPA developed and published a number of industry

- specific guidance documents 5 

### and an OCA guidance document

. P3 requirements apply to processes not eligible for P1 and either subject to OSHA's PSM standard
, under
federal or S tate OSHA programs
, or classified in one of ten specified North American Industrial Classification System (NAICS) codes (1997 version) listed at 40 CFR 68.10(d)(1)

. The ten NAICS codes

are:

• 32211 (pulp mills) • 325192 (cyclic crude and intermediate manufacturing)

• 32411 (pet roleum refineries) • 325199 (all other basic organic chemical manufacturing)

• 32511 (petrochemical manufacturing) • 325211 (plastics material and resin manufacturing)

• 325181 (alkali and chlorine

manufacturing) • 325311 (nitrogenous fertilizer manufacturing)

• 325188 (all other basic inorganic

chemical manufacturing) • 32532 ( p esticide and other agricultural chemical manufacturing)

P3 requirements impose elements nearly identical to those in OSHA’s PSM standard as the accident prevention program

. The P3 prevention program includes requirements relating to the following :

• P rocess safety information

• Process Hazard A nalysis (PHA)

• O perating procedures

• Training

• M echanical integrity

• M anagement of change

• P re

- startup review

• C om pliance audits

• I ncident investigations

• E mployee participation

• H ot work permits , and

• C ontractors

.

5 There are guidance documents for propane storage, refrigeration, water/wastewater treatment, warehouses, chemical distributors, and others.***E.O. 12866 Review

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### P3 provisions also impose the same hazard assessment, management, and emergency response requirements that are required for P2.

The following flow chart demonstrates how facilit ies determine to which program level they are subject 6 

### :

Facilities 7 

### that are exempt from the OSHA PSM standard may be subject to EPA requirements under the
RMP rule

. This occurs for several reasons

. First, t he list s of substances regulated are not identical; for example, EPA lists aqueous ammonia at any solution that is 20 percent ammonia or more; OSHA covers it only at concentrations of 44 percent or more

. Second, b ecause federal OSHA has no authority over State and local governments, the OSH A PSM standard does not apply to publicly owned facilities (mainly water and wastewater treatment systems) in States where federal OSHA implements and enforces the standard (about half the States)

. Where States implement and enforce OSHA standards (referr ed to as
State

- plan States), 8 

### the State is required to impose OSHA standards on State and local government

6 http://www2.epa.gov/sites/production/files/2013

- 10/documents/chap

- 02

- final.pdf

7 Facilities are also commonly referred to as stationary sources, and the terms are used interchangeably throughout this document.

8 Twenty

- five states, Puerto Rico, and the Virgin Islands have OSHA

- approved State Plans. In these states, publicly owned water and wastewater treatment plants are typically in P2. Twenty

- two State Plans (21 states and one U.S.***E.O. 12866 Review

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### employees as a condition of delegation

. Lastly, regulatory exemptions are not identical; for example, the OSHA PSM standard exempts normally unoccup ied remote facilities, but the RMP rule does not.

A pproximately 12,500 currently regulated facilities have filed RMPs for approximately 17,000 processes

. Most facilities have only one process, but certain industries , such as chemical manufacturing and petroleum refining, often have more than one regulated process ; about 100 facilities have more than 10 regulated processes

. The population of RMP facilities is dynamic

. Several thousand facilities have either switched chemicals to non

- regulated substance s , reduced chemical inventories below threshold quantities, or ceased operations and subsequently deregistered from the program since the first RMPs were submitted in 1999

. However
, every year new facilities are registering and submitting new RMP s

. Although the accident histories submitted with RMPs have shown a reduction in the frequency of accidents since the beginning of the program, there continue to be serious chemical releases

. RMP data for 2004 through 2013, the most recent 10 year period wit h complete information, show s that there are an average of 150 accidents each year with reportable impacts.

In April 2013, the West Texas Fertilizer Company
, an RMP

- regulated facility in West, Texas, that stored anhydrous ammonia ( a n RMP

- and PSM

- regulated substance ) and ammonium nitrate ( not regulated under the RMP rule or the PSM standard) caught fire, which led to a massive explosion of the
ammonium nitrate

. Fifteen people, most of them firefighters, died and more than 160 members of the public were injured

. Two nearby school s , an apartment building
, a nursing home
, and much of the surrounding town were also damaged

. 9 

### In addition to this tragedy, a number of other serious incidents demonstrate a significant risk to the safety of American workers and communities

. On March 23, 2005, explosions at the BP Refinery in Texas City, Texas killed 15 and injured more than 170

. 10 

### On April 2, 2010, an explosion and fire at the Tesoro Refinery in Anacortes, Washington killed seven

. 11 

### On August 6, 2012, a fire at the Chevron Refinery in Richmond, California involving flammable fluid s endangered 19 Chevron employees and created a large plume of chemicals that traveled across the Ric hmond,

territory) cover both private and state and local government workplaces. Public water and wastewater plants in these states are in P3. The remaining five State Plans (four states and one U.S. territory) cover state and local government workers only. Their public water/wastewater plants are P2. https://www.osha.gov/dcsp/osp/

9 CSB. 2015. Final Investigation Report, West Fertilizer Plant Fire and Explosion, West, TX, April 17, 2013. REPORT 2013

- 02

- I

- TX. http://www.csb.gov/west

- fertilizer

- explosion

- and

- fire

- /

10 U.S. Chemical Safety and Hazard Investigation Board (CSB). March 2007. Investigation Report: Refinery Explosion and Fire, Texas City, Texas, March 23, 2005. http://www.csb.gov/assets/1/19/CSBFinalReportBP.pdf

. 11 CSB. May 2014. Investigation Report: Catastrophic Rupture of Heat Exchanger, Tesoro Anacortes Refinery, Anacortes, Washington, April 2, 2010. http://www.csb.gov/assets/1/7/Tesoro_Anacortes_2014

- May

- 01.pdf

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### California area

. Nearly 15,000 residents sought medical treatment due to the release

. 12 

### On June 6, 2013, a fire and explosion at Williams Olefins in Geismar, Louisiana killed two and injured many more. 13



### These incidents highlight the regulatory need that this proposed rule modernization is addressing

. Section 112(r) of the Clean Air Act aimed to address low frequency and high consequence chemical

events

. These are catastrophic incidents which have large societal impacts when they occur, but very
li ttle likelihood for any individual chemical facility

. As such, market forces may not provide an incentive for an y given company to invest in measures to prevent such accidents as they’re so unlikely to occur at
the individual level

. However, looking acro ss the United States and universe of regulated facilities, these accidents occur with sufficient frequency to warrant regulation.

In response to recent catastrophic chemical facility incidents such as the West explosion and others
, in
2013 President Obama issued Executive Order (EO) 13650 , entitled Improving Chemical Facility Safety and Security
, 14 

### which among other items, required EPA and OSHA to consider whether and how to update and modernize the RMP rule and PSM standard

. Both EPA and OSHA issued reque sts for information (RFI) to seek input from the public and the regulated community on potential revisions to the rules. 15 

### EPA received a total of 579 public submissions on the RFI

. Several public comments were the result of various mass mail campaigns 16 

### and contained numerous copies of letters or petition signatures

. Approximately 99,710 letters and signatures were contained in these several comments

. In general, members of the public that submitted comments supported imposing more stringent requirement s on facilities , including a requirement for industry to use inherently safer systems to prevent chemical disasters

. The regulated industry opposed most suggested revisions to the rule as unnecessary and costly

. The proposed rule is the result of EPA’s c onsideration of the comments
, as well
as of recommendations from the CSB
, the Agency’s experience gained through participation in EO 13650 listening sessions
, 17 

### and information gained by EPA through inspection of RMP facilities and
enforcement of the rule o ver the past six teen years

.


## 1.2 Organization of the Analysis

This regulatory impact analysis (RIA) is organized as follows:

12 CSB. January 2014. Regulatory Report: Chevron Richmond Refinery Pipe Rupture and Fire, Chevron Richmond Refinery #4 Crude Unit, Richmond, California, August 6, 2012. Report No. 2012

- 03

- I

- CA. http://www.csb.gov/assets/1/19/CSB_Chevron_Richmond_Refinery_Regulatory_Report.pdf

. 13 CSB. 2 013. Ongoing Investigation of Williams Olefins Plant and Fire, Geismar, LA. June 13, 2013. http://www.csb.gov/williams

- olefins

- plant

- explosion

- and

- fire

- /

. 14 https://www.whitehouse.gov/the

- press

- office/2013/08/01/executive

- order

- improving

- chemical

- facility

- safety

and

- security

15 OSHA’s RFI was published on December 9, 2013 (78 FR 73756) and EPA’s RFI was published on July 31, 2014 (79 FR 44604).

16 The terms “form letter campaign” and “mass mail campaign” are used interchangeably throughout this report.

17 In 2013 and 2014, as part of the EO 13650 activities, the federal government held a dozen listening sessions, supplemented by two online webinars. F or a list of locations and link to the notes for these sessions go to http://www.regulations.gov/#!docketDetail;D=DHS

- 2013

- 0075

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### • Chapter 2 describes the provisions that EPA is proposing to add or amend and the alternatives that EPA considered for each provision analyzed in this document.

• Chapter 3 discusses the universe of regulated entities and the various divisions used in the analysis.

• Chapter 4 discusses the basis for cost estimates for each of the provisions and alternative s and presents the unit costs.

• Chapter 5 presents the total costs and 10

- year costs.

• Chapter 6 discusses the potential benefits of the rule.

• Chapter 7 presents the small entity impacts

.

• Chapter 8 presents the environmental justice analysis

• Chapter 9 discusses other statutory and related analys e s

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# CHAPTER 2: PROVISIONS AND ALTERNATIVE S

This chapter presents a summary of the provisions in the proposed rule and the alternative s analyzed

. The provisions being proposed include revisions to existing prevention program and emergency response requirements as well as new requirements related to public disclosure of information

. For some provisions EPA considered three alternatives, which represent low, medium, and high costs.

The RIA analyzed the following proposed new requirements and revisions to existing requirements as well as several alternatives for each :

1. Third

- Party Audits

— (proposed revisions apply to existing §§68.58 and 68.79 and new §§68.59 and 68.80): Revising the co mpliance audit provisions by requiring the next compliance audit following an RMP reportable accident 18 

### to be conducted by a third

- party.
2. Root Cause Analysis

- (proposed revisions apply to §§68.60 and 68.81): Revising the incident investigation provisions to require a root cause analysis following an RMP reportable accident or an incident that could reasonably have resulted in a n RMP reportable accident ( i.e., “near miss”).
3. Safer Technology and Alternative s Analysis (STAA)

— (proposed revisions apply to §68.67) : Revising the PHA provisions to add a requirement to conduct a STAA

- defined as “the integration of a variety of risk reduction or risk management strategies that work toward making a facility and its chemical processes as safe as possible” 19



### - for a subs et of P3 processes in specific NAICS codes.
4. Coordination Activities

— (proposed revisions apply to §§68.90 , new 68.93
, and 68.95): Reorganizing and clarifying existing requirements for all facilities with P2 and P3 processes to coordinate emergency response capabilities with local response agencies and a dding a new requirement to coordinate annually , document these coordination activities, and allow the
LEPC to require that the chemical facility take responsibility for its own emergency response.
5. Exercises

— (proposed revisions apply to new §68.96): Adding new requirements for facilities to conduct exercises annually

. This includes an annual notification exercise that applies to both responding and non

- responding facilities

. Owners and operators of responding facilities must conduct a field exercise once every five years (and after a RMP reportable accident) and tabletop exercises annually, in the other years.
6. Public Disclosure

— (proposed revisions apply to new §68.205 and existing §68.210): A dding a new requirement to make certain information available to the L ocal E mergency P lanning

18 RMP reportable accident means any accident that must be reported under the five

- year accident history requirements of §68.42, which is an accidental release from a covered proces s that resulted in deaths, injuries, or significant property damage on

- site, or known offsite deaths, injuries, evacuations, sheltering in place, property damage, or environmental damage.

19 EPA Chemical Safety Alert: Safer Technology and Alternatives. Jun e 2015. http://www2.epa.gov/sites/production/files/2015

- 06/documents/alert_safer_tech_alts.pdf***E.O. 12866 Review

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### C ommittee (LEPC) or local response agencies

. In addition, the proposed rule would r evis e the public information availability requirements to simplify the presentation o f existing publicly available information and help the public better understand the risks at the facility.
7. Public Meeting

— (proposed revisions apply to §68.210): A dding a new requirement to hold a public meeting at least once every 5 years
, a s well as after an RMP reportable accident

.


## 2.1 Alternatives Analyzed

Third

- Party Audits

— (proposed revisions apply to existing §§68.58 and 68.79 and new §§68.59 and 68.80)

The existing rule requires P2 and P3 processes to conduct a compliance audit at least once e very 3 years

. The proposed rule would require facilities with P2 and/or P3 processes to contract with an independent
third

- party to conduct the next scheduled compliance audit following an RMP reportable accident or after an implementing agency 20 

### determine s that certain circumstances exist that suggest a heightened
risk for an accident

. The third party would have to be someone with whom the facility does not have an existing or recent relationship and who meets specific qualification criteria

. The low cost alternative (i.e., the proposed option) would apply only for P2 and P3 processes after an RMP reportable accident or at the request of the implementing agency

. The medium cost alternative would apply every three years for all compliance audit s conducted for all P3 processes

. The high cost alternative would apply every three years for all compliance audits conducted for P2 and P3 processes.

Root Cause Analysis

— (proposed revisions apply to §§68.60 and 68.81)

The proposed rule would require faci lities with P2 and/or P3 processes to conduct a root cause analysis as part of an incident investigation following an RMP reportable accident or an incident that could reasonably have resulted in an RMP reportable accident (i.e., “near miss”)

. A root caus e analysis is a formal process to identify underlying reasons for failures that lead to accidental releases

. These analyses usually require someone trained in the technique

. The low cost alternative would apply the provision only to reportable accidents or near misses in P3 processes

. The medium/high cost alternative (proposed option) would apply to reportable accidents or near misses involving P2 and P3 processes.

Safer Technology and Alternatives Analysis (STAA)

— (proposed revisions apply to §68.67)

Un der the proposed rule, facilities in NAICS codes 322 (paper manufacturing), 324 (petroleum and coal products manufacturing), and 325 (chemical manufacturing) with P3 processes would be required to conduct a STAA for each process as part of their PHA, which occurs every 5 years

. The STAA includes two parts: the initial analysis to identify alternatives, and a feasibility study to determine the costs and assess the reasonableness of implementing technology alternatives

. The proposed rule is the low cost
alt ernative, which would apply to all facilities with P3 processes in NAICS codes 322 (Paper Manufacturing), 324 (Petroleum and Coal Product Manufacturing), and 325 (Chemical Manufacturing)

.

20 The implementing agency is the federal state, or local agency that is taking the lead for implementation and enforcement of part 68 or the state or local equivalent.***E.O. 12866 Review

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### The medium cost alternative would apply the requirement to all P3 p rocesses

. The high cost alternative would apply the requirement to all P3 processes and require facilities to implement safer technology
and alternatives that are considered feasible

.

Coordination Activities

— (proposed revisions apply to §§68.90, new 68.93 , and 68.95)

Under the proposed rule, all facilities with P2 or P3 processes would be required to coordinate with local response agencies annually to determine response needs and ensure that response resources and capabilities are in place to respond to an accidental release of a regulated substance

. The owner or operator would also be required to document coordination activities

. The proposed rule also includes a provision enabling the LEPC or local emergency response official to require that the RMP

- fac ility owner or operator comply with the emergency response program requirements of §68.95

. Section 68.95 requires the owner or operator to develop an emergency response program that includes an emergency response plan, procedures for use, inspection and maintenance of response equipment, training for responding employees, and procedures to review and update the program. As a result of improved coordination between facility owners and operators and local emergency response officials, EPA believes that some facilities that are currently designated as non

- responding facilities may become responding facilities (i.e., develop an emergency response program in accordance with §68.95). For the proposed alternative, EPA conducted a sensitivity analysis estima ting costs faced by RMP facilities that
converted from non

- responder to responder status (see Section 2.2 below)

. Alternatives to this provision are similar to the proposed requirements

. One alternative would eliminate the option for local officials to re quire that a facility owner or operator comply with the requirements of §68.95

. A second alternative is a high cost alternative and would require all facilities with P2 or P3 processes to comply with §68.95, regardless of local response capability 21



### . This would be analogous to the requirements under the Oil Pollution Prevention regulation (40 CFR Part 112) where all facilities subject to the Facility Response Plan provisions at §112.20 are required to prepare and implement an emergency response plan for oi l discharges into navigable waters or adjoining shorelines.

Exercises

— (proposed revisions apply to new §68.96)

Notification Exercises

. All facilities with P2 or P3 processes would be required to conduct a notification exercise annually to ensure that the contact list to be used in an emergency is complete, accurate, and

up

- to

- date.

Tabletop and Field Exercises

. The proposed rule would require responding facilities to conduct annual exercises of their emergency response plans and invite local emergency response officials to participate

. Under the low cost alternative, facilities would conduct tabletop exercises annually

. Under the proposed option , which is the medium cost alternative, responding facilities would conduct a full field exercise at least once every five years and tabletop exercises annually in the interim years

. Responding

21 For this alternative to the proposed option, the sensitivity analysis would not be relevant.***E.O. 12866 Review

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### f acilities with a reportable accident would also have to conduct a full field exercise within a year of an RMP reportable accident, but this may not impose any addition al burden under the medium alternative as it would count as the required field exercise for the next 5

- year period

. Under the high cost alternative, responding facilities would conduct full field exercises annually.

Public Disclosure

— (proposed revisions a pply to new §68.205 and existing §68.210)

The proposed rule would require all facility owners or operators to provide the LEPC or other local response agencies with information annually on all of the following that apply to the facility: regulated substanc es; five

- year reportable accident history; summaries of compliance audit reports; summaries of incident investigation reports; summaries of implementation of inherently safer technology (IST); and information on emergency response exercises, including sche dules for upcoming exercises

.
In addition, all facilities would be required to disclose certain chemical hazard information to the public

. The facility or its parent company, if applicable, would have to make the information available in an easily acces sible manner, which might be presenting information on a company website, posting the information at public libraries, publishing it in local papers, or other means appropriate for particular
communities and facilities

. The information to be disclosed inc ludes names and quantities of regulated substances at the facility; Safety Data Sheets (SDS); accident history information; emergency response program information; and LEPC or local response agency contact information.

Public Meeting

— (proposed revisions ap ply to §68.210)

The proposed rule would require facilities to hold a public meeting for the local community at least once every 5 years or within a year of a reportable accident

. The low cost alternative applies the requirement to facilities with P2 or P3 processes

. The medium/high cost alternative would apply it to all facilities (i.e., P1 facilities would also be affected).



## 2.2 Additional Changes Associated with Local Coordination Activities

As a result of improved coordination between facility owners and operators and local emergency response officials, EPA believes that some facilities that are currently designated as non

- responding facilities may become responding facilities

. Therefore, i n addition to the provisions listed above, the RIA estimates the costs associated with becoming a responding facility

. This includes the costs of developing an emergency re sponse program in accordance with §68.95, purchasing and maintaining appropriate equ ipment, training personnel, conducting exercises
, and preparing the associated exercise reports for LEPCs

. In earlier rulemakings, EPA specified that if a facility owner or operator determined that the local

emergency responders did not have the training a nd equipment to respond to a release of a n RMP regulated substance at the facility , the n the facility owner or operator must take responsibility for being able to respond ; however, it has become clear that in practice this has not always been the case

. Information from EPA regional offices, State emergency organizations, and local response agencies has***E.O. 12866 Review

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### shown that facilities are not always coordinating or communicating with local responders , as required
, and in some cases neither a facility n or its local response agency is prepared to respond to releases of regulated substances

. The proposed rule would explicitly require a facility owner or operator with a Program 2 or Program 3 process to coordinate annually with local emergency responders to determine re sponse needs and ensure that response resources and capabilities are in place to respond to an accidental release of a regulated substance

. When the outcome of the response coordination activities demonstrates that local response capabilities are not adeq uate to respond, or upon the request of local responders, the facility owner or operator must develop an emergency response program in accordance with §68.95.

EPA examined RMP data to estimate the percent of RMP facilities with Program 2 and/or 3 processes
that are non

- responders, which means they are relying on local authorities to respond to any releases of regulated substances at the facility. 22



### Approximately 57 percent of facilities fell into this category

. M any of the se facilities are smaller facilities in rural areas

. Unlike the other alternative s analyzed, the number and type of facilities that may convert from non

- responder status to responder is uncertain

. A previous FEMA analysis reported that approximately 76% of the population is cover ed by hazmat teams, which provides an indication of which
facilities might have to become respond ing facilities

. 23 

### However, the distribution of regulated facilities does not necessarily match the US population, so EPA used data from that FEMA report to cond uct a sensitivity analysis

. The RIA presents the costs associate d with 25 % , 50 % , and 75 % of the estimated number of non

- respond ing facilities becoming respond ing facilities who are located in counties that do
not have hazmat teams

. The high cost alternative for coordination would require all P2 and P3 facilities to become responders

.


## 2.3 Summary of Alternative s

Exhibit 2

- 1 presents the alternative s by rule requirement

. Where cells are merged, the requirements
are the same across the alternative s covered

. For provisions that include alternative options analyzed,

t he proposed rule provisions are highlighted in gray.

22 EPA. 2016. Technical Background Document for No tice of Proposed Rulemaking: Risk Management Programs under the Clean Air Act, Section 112(r)(7).

23 https://www.fema.gov/media

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### Exhibit 2

- 1: Alternative s by Regulatory Provision

Rule Provision Low Alternative Medium Alternative High Alternative Prevention Program Elements

Third

- party Audit (§§68.58, 68.59, 68.79, and 68.80)) Next compliance audit after RMP reportable accident (facilities with P2 and P3 processes) All compliance audits at facilities with P3 processes conducted every three years by a third

- party All compliance audits at facili ties with P2 and P3 processes conducted every three years by a third

- party

Root Cause Analysis (§§68.60 and 68.81) Applies to RMP

reportable accidents and “near misses” involving P3 processes Applies to all RMP

- reportable accidents and “near misses” involving P2 and P3 processes

STAA (§68.67) F acilities with P3
processes in NAICS codes 322, 324, 325 conduct STAA and feasibility analyses All facilities with P3 processes conduct STAA and feasibility analyses All P3 facilities conduct STAA and feasibility analyses and implement feasible alternatives

Emergency Planning and Response

Coordination (§§68.90 , 68.93 and 68.95) All facilities with P2 and P3 processes coordinate with local responders and document annually All P2 and P3 facilities coordinate and document annually; LEPC may require source to implement ER
program All P2 and P3 facilities must comply with ER Program (i.e.
, become responding facilities) regardless of local capability.
Notification Exercises (§68.96) All facilities with P2 and P3 processes must verify their emergency notification contact information annually

Tabletop and Field Exercises (§68.96) Responding facilities conduct tabletop exercise s annually Responding facilities conduct : a field exercise at least once every 5 years (and within one year of an RMP

reportable accident); tabletop exercises in the other four year s Responding facilities conduct a field exercise annually

Information Disclosure
Disclosure to LEPC (§68.205) All facilities make certain information available to the LEPC or local emergency response officials

. Disclosure to the Public (§68.210) All facilities make certain chemical hazard information available to the public in an easily accessible manner.

Public Meeting (§68.210) P2 and P3 facilities hold a public meeting at least once every 5 years and immediately after an RMP

- reportable accide nt. All facilities hold a public meeting once every 5 years and immediately after an RMP

- reportable accident***E.O. 12866 Review

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## 2.4 Impacts to Governments

The proposed rule imposes direct costs to local governments that own and operate RMP facilities (primarily water and wastewater systems, but also some power plants and swimming pools)

. The proposed rule also imposes indirect costs to local emergency response and planning agencies to review new information that would be submitted and to participate in exercises at the invitation of facility owners and operators

. Although local agencies are not required to participate in exercises or review documents, many will do so

. The RIA discusses and present s these costs separately

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# CHAPTER 3: UNIVERSE OF REGULATED FACILITIES

Approximately 12,500 facilities have filed current RMPs with EPA and are potentially affected by the proposed rule changes

. These facilities range from petroleum refineries and large chemical manufacturers to water and wastewater treatment sys tems ; chemical and petroleum wholesalers and terminals ; food manufacturers , packing plants, and other cold storage facilities with ammonia refrigeration systems ; agricultural chemical distributors ; midstream gas plants ; and a limited number of other source s that use RMP

- regulated substances

. This chapter describes these facilities and how they are categorized for the purposes of the economic analysis.



## 3.1 Current RMP Facilities

Exhibit 3

- 1 presents the number of facilities according to the latest RMP reporting as of February 2015 by industrial sector and chemical use.

Exhibit 3

- 1: Number of Affected Facilities by Sector

Sector NAICS Codes Total Facilities Chemical Uses Administration of environmental quality programs (i.e., governments) 924 1,923 Use chlorine and other chemicals for treatment

Agricultural chemical distributors/wholesalers 111, 112, 115, 42491 3,667 Store ammonia for sale; some in NAICS 111 and 115 use ammonia as a refrigerant Chemical manufacturing 325 1,465 Manufacture, process, st ore Chemical wholesalers 4246 333 Store for sale Food and beverage manufacturing 311, 312 1,476 Use (mostly ammonia as a refrigerant)

Oil and gas extraction 211 741 Intermediate processing (mostly regulated flammable substances and flammable mixtures)

Other 44, 45, 48, 54, 56, 61, 72 247 Use chemicals for wastewater treatment, refrigeration, store chemicals for sale

Other manufacturing 313, 326, 327, 33 384 Use various chemicals in manufacturing process, waste
treatment

Other wholesale 423, 424 302 Use (mostly ammonia as a refrigerant)
Paper manufacturing 322 70 Use various chemicals in pulp and paper manufacturing Petroleum and coal products manufacturing 324 156 Manufacture, process, store (mostly regulated flammable***E.O. 12866 Review

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Petroleum wholesalers 4247 276 Store for sale (mostly regulated flammable substances and flammable mixtures)

Utilities 221 (except 22131, 22132) 343 Use chlorine (mostly for water treatment)
Warehousing and storage 493 1,056 Use mostly ammonia as a refrigerant Water/wastewater Treatment Systems 22131, 22132 102 Use chlorine and other chemicals Total 12,54 2



### Exhibit 3

- 2: Chart of Affected Facilities by Sector

The RMP rule applies to processes (i.e., activities involving regulated substances including any use, storage, manufacturing, handling, or on

- site movement of such substances, or combination of these
activities ) at facilities with regulated substances above threshold amounts

. M any facilities may handle
other chemicals that are not RMP

- regulated or have processes that are not subject to the rule

. In general
, the cost of implementing the rule provisions varies primarily by the complexity of the processes
involved

. The chemical m anufacturers and refineries have more covered processes per facility and more complex issues to consider when evaluating hazards, designing exercises, conducting audits, 0 500 1,000 1,500 2,000 2,500 3,000 3,500 4,000***E.O. 12866 Review

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### investigating incidents, and explaining information to responders and the public compa red to facilities that simply store or use chemicals in simple processes (e.g., refrigeration systems and water and waste treatment systems)

. For the purposes of the cost analysis, therefore, all facilities in NAICS 324 and 325 (petroleum and coal product s manufacturing and chemical manufacturing) are considered complex ; all other facilities are considered simple.

The proposed STAA provision is limited to P3 processes in three sectors that have had a high frequency of accidental rele ases (NAICS codes 322, 324, and 325)

. These sectors were selected because they represent relatively complex processes that account for 49% of all reportable accidents. 24 

### Exhibit 3

- 3 presents the number of process es for all facilities by program level and for the three sectors
, as well as the number of facilities within each program level

.

Exhibit 3

- 3 : Number of Processes by Program Level and Sector

Program Level Facilities Processes

1 642 1,096
2 1
, 272 5,448
3 10
, 628 14,454
Total 12 , 542 2 0,998

STAA Sectors Processes NAICS 322 (P aper Manufacturing ) 97 NAICS 324 (Petroleum and Coal Products Manufacturing) 1,453 NAICS 325 (Chemical Manufacturing) 2,758
Total 4,308



### To analyze the STAA provision, EPA separated the processes in the three sectors into those that are more likely to involve manufacturing and reacting chemicals under more extreme conditions (i.e., high temperatures and pressures) from those that involve mixing and using chemicals under less extreme conditions

. The former are the pet roleum operations in NAICS 324, petrochemicals and other basic chemical manufacturing in NAICS 3251, and synthetics and resins in NAICS 3252

. All other chemicals manufacturing sectors (agricultural chemicals, drugs, paints, soaps, and others) were merged with pulp/paper mills in the cost analysis and are assumed to mix and use chemicals under less extreme conditions

. Exhibit 3

- 4 presents the number of processes for the three sectors; NAICS codes 324, 3251, and 3252 are further disaggregated by the facility size because the level of effort for a STAA is likely to increase as the size of these more complicated processes increases , as measured by the number of FTEs involved in the process at the facility

.

24 February 2015 RMP Database.***E.O. 12866 Review

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### Exhibit 3

- 4 : Number of Processes for STAA Sectors by Sector and Facility Size

Sector Processes Program 3 0

- 19 Full Time Equivalents ( FTE s) 20

- 99 FTE s 100+ FTE s NAICS 324 (Petroleum and Coal products M anufacturing ) 1,453 7 39 1,407
NAICS 325 (Chemical Manufacturing) NAICS 3251 (Basic chemicals) 1,664 144 644 876
NAICS 3252 (Synthetics/Resins) 400 14 151 235
NAICS 32XX (Other Chemicals) 694 NAICS 322 (Paper Manufacturing) 97



## 3.2 Divisions Used in Analysis

The RMP rule imposes different requirements on facilities based on Program levels

. P3 processes are those that are not eligible for P1 and are subject to the OSHA PSM standard or are in certain NAICS codes (refineries, a limited number of chemical manufacturers, and pulp mills)

. Of the 2,442 processes in the selected NA ICS codes, all but 10 are listed as subject to OSHA PSM; t wo of the non

- PSM processes
appear to have been misclassified ( a wastewater treatment facility and farm co

- op erative ) and three or four others may be subject to PSM (the substance listed is covered by OSHA at certain concentrations)

. 25

25 Some facilities listed only 5

- digit NAICS codes, so 10 other proce sses may be subject only to the RMP rule.***E.O. 12866 Review

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### Exhibit 3

- 5 : Number of Facilities by Program Level

In July 2015, OSHA issued a new interpretation of its retail exemption , a policy that exempted certain employers under O S HA’ s 1992 definition of “retail facility

. ” Prior to this change, most facilities that classified themselves as agricultural chemical distributors and many other wholesalers listed themselves
as P2 , because they were exempt from the OSHA PSM standard

. The effect of the chang e in interpretation will make all of these facilities subject to OSHA’s PSM standard and, therefore, subject to Program 3 of the RMP rule

. To take that into account for this RIA , EPA has rec lassified all P2 facilities that listed themselves in NAICS 11, 1 2, 15, 424 (wholesalers), and 493 (warehouses) as P3

. As a consequence almost 85 percent of all RMP facilities (10,6 28 ) are now subject to P3 (See Exhibit 3

- 6 )

.

Most P2 facilities ( 935 out of 945 ) are publicly owned water/wastewater treatment facilities in States where OSHA ( rather than the State) enforces OSHA rules 26



### . As a result of this difference , approximately half of the water/wastewater treatment facilities have processes that are subject to P3 and half that are in P2 although there is no differen ce in the processes covered

. The remaining P2 facilities are utilities that use aqueous ammonia and other facilities that use chemicals not subject to OSHA PSM. 27 

### Exhibit 3

-

26 For the reason why, please see Section 1.1 History above.

27 There are some facilities that list ed themselves as P2 that have either selected the wrong Program level on the RMP submission or have incorrectly indic ated that they are not subject to PSM, as they handle OSHA PSM chemicals in quantities far above the OSHA threshold. Because there are errors in the other direction among the public systems (i.e., facilities in States not subject to PSM that listed themse lves as P3,), the analysis did not attempt to correct the errors. P1 Facilities ( 642 ): Limited accident effects on public

P2 Facilities ( 1272 ): Not eligible for P1 or subject to P3

P3 Facilities ( 10628 ): Subject to OSHA PSM or in specified NAICS codes

Program 1 Program 2 Program 3***E.O. 12866 Review

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### 6 presents the number of facilities by sector and Program Level ; publicly owned wat er/wastewater treatment systems in the Exhibit are listed under governments (NAICS 92), while privately owned and operated systems are listed under NAICS 2213.

Exhibit 3

- 6 : Number of Facilities by Sector and Program Level

Sector P1 P2 P3 Totals
NAICS 311 , 312 Food and Beverage Manufacturer 3 11 1,462 1,476

NAICS 322 Pulp and Paper 1 1 68 70 NAICS 324 Petroleum 13 3 140 156 NAICS 325 Chemical 53 76 1,3 36 1,466 Other Manufacturing 62 73 249 384 NAICS 4246 Chemical Distributors 6 0 327 333
NAICS 4247 Petroleum Distributors 14 0 262 276 NAICS 11, 12, 15, 42491 Agricultural 10 0 3,657 3,667 NAICS 211 Oil and Gas Exploration 310 41 390 741 NAICS 2213 Water/Wastewater* 1 10 91 102 NAICS 221, 222 Utilities 38 72 233 343 NAICS 493 Warehousing 70 0 986 1,056 NAICS 423, 424 Other Wholesale 5 0 297 302
NAICS 92 Governments 15 935 973 1,923 Other 41 50 157 247 Total 642 1,272 10, 628 12,542 

### * Except gov ernment

- owned
, which appear as NAICS 92 Government.



### 3.2.1 Facilities A ffected by the STAA Requirement
For the medium cost alternative considered for the STAA (all P3 processes), processes outside of the
three NAICS sectors discussed above were classified based on the level of effort needed to conduct the analysis

. Moderate level of effort processes were those in other manufacturing sectors and refrigeration systems

. Refrigeration systems were considered as moderate because they are usually large facilities that cool, chill, refrigerate, or freeze various food or beverage products

. Refrigeration systems occur in multiple NAICS codes; the food and beverage manufacturers and refrigerated warehouse s (NAICS 49312) were the main sectors, but they also occur in agriculture, wholesale, terminals, and retail

. Exhibit 3

- 7 presents the number of processes in each of these categories

. Water treatment systems, utilities, and gas plants were estimated to require a relatively low level of effort

. Facilities that simply store chemicals for sale were estimated to require a very low level of effort to do an STAA because they generally have just tanks and loading/unloading equipment.***E.O. 12866 Review

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### Exhibit 3

- 7 : Number of Other P3 Processes for STAA Alternatives by Type

Process Type/Level of Effort Number of P3 Processes Manufacturing/Refrigeration Systems/moderate 3,460 Water/Gas/Utilities/low 1,899 Storage/very low 4,881



### 3.2.2 U niverse Breakdown for Emergency Response Coordination and Exercise Requirements.
The proposed requirements associated with emergency response depend on whether a facility responds to releases with its own personnel (or contractors) or relies on local public emergency responders

. As explained above, the responding facilities were identified by examining information provided related to the emergency response plan in the RMP database

. Exhibit 3

- 8 presents the numbers of responding and

non

- responding facilities by complexity of the facility (refineries/chemical manufacturers as complex, all other facilities as simple) and by the number of full

- time equivalent (FTE) employees on site, which
affec ts the number of people involved in exercises

. The large manufacturers were further divided because, unlike most of the facilities in the retail and wholesale sectors, they operate 24/7 and therefore have fewer workers at the facility at any one time than the FTE count listed in the RMP

. For the analysis, large manufacturers were considered those with more than 300 FTE or potentially 100 FTE or more per shift (in general swing and night shifts have fewer employees onsite than the day shift if only because administrative personnel are not usually present)

. Hence, the analysis assigns costs to the 773 manufacturers with 100 to 300 FTE the same as if they were in the 20

- 99 FTE category for the response provisions.

Exhibit 3

- 8 : Responding and Non

- responding F acilities by FTE and Complexity *

0

- 19 FTE 20

- 99 FTE 100+ FTE Total
Responding Facilities Simple 1
, 779 944 1
, 513 4,236 Complex (NAICS 324, 325) 145 480 545 1,170 Total 1,924 1,424 2,058 5,406 Non Responding Simple 4,943 963 775 6,681 Complex (NAICS 324, 325) 156 245 54 455 Total 5,099 1,208 829 7,136
Non

- Responding (not in County with Hazmat Team ) Simple 3,416 389 297 4,102 Complex 85 144 18 247 Total 3501 533 315 4349

* Note: Exhibit does not include RMP facilities with only P1 processes***E.O. 12866 Review

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### A different way to classify f acilities as small or large is based on the Small Business Administration’s standards for firms

. The classification of RMP facilities on that basis is presented in Chapter 7

.



### 3.2.3 Universe Breakdown for Provisions that Apply After an RMP Reportable Accident

Finally, the proposed third

- party audit and root cause analysis provisions would apply only to facilities that have a reportable accident (the root cause analysis provision would also apply to facilities that ha ve

a “near miss ” ). The existing rule requires reporting for accidental releases from covered processes with impacts that resulted in deaths, injuries, or significant property damage onsite, or known offsite deaths, injuries, evacuations, sheltering in pla ce, property damage, or environmental damage

. In practice, however, some facilities have reported accidental releases with no reported impacts

. For the purposes of this analysis, EPA used only the number of reportable accidents, which are those accidents with reported impacts

. EPA analyze d the number of accidents reported during the prior 10

- year period

. The reason is that prior to 2004, some facilities were still completing initial implementation of the rule; 2013
is the mos t recent year for which ther e are complete data 28



### . Exhibit 3

- 9 presents the number of reportable accidents per year for 2004 through 2013

. Exhibit 3

- 10 presents the number of reportable accidents by industry sector for the same total 10

- year timeframe.

Exhibit 3

- 9 : Reportable (Impact) Accident by Year

Year Impact Accidents

2004 197
2005 152
2006 140
2007 204
2008 168
2009 14 9
2010 128
2011 138
2012 118
2013 123
Total 1,51 7 Range 118

- 204 Average/Year 152

28 A more detailed explanation is provided in Chapter 6.***E.O. 12866 Review

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### Exhibit 3

- 10 : Reportable Accidents by Sector

Sector Total 10

- Year Accident Frequency per Facility (over 10 years) Refineries (NAICS 324) 169 1.08 Pulp and Paper (NAICS 322) 46 0. 66 Chemical Manufacturers (NAICS 325) 530 0.36
Food/Beverage Manufacturers (NAICS 311, 312) 2 70 0.18

Other Manufacturers (All other NAICS 31

- 33) 53 0. 14
Oil/Gas exploration (NAICS 211) 53 0. 07 Warehouses (NAICS 493) 72 0. 07

Other wholesalers ( All other NAICS 423, 424 ) 20 0. 07
Chemical/petroleum wholesalers (NAICS 4246, 4247 ) 38 0. 06 Water/POTW (NAICS 22131, 22132, 92) 75 0. 04 Agricultural Facilities (NAICS 11, 42491) 156 0. 04
All Other 35 0. 06



## 3.3 Government Entities Affected by the Rule

The rule affects governmental entities both directly and indirectly

. Most of the facilities are water or wastewater treatment facilities, but there are some large swimming pools covered as well

. Most of the government al entities are cities, but the universe includes larger special districts (e.g., the Metropolitan Water District of Southern California) as we ll as some federal facilities

. Of the governmental entities directly affected, 910 have one RMP facility, 268 have two regulated facilities, 60 have 3 facilities, 27 have 4 facilities, and 27 have 5 or more

. Not all facilities belonging to a governmental enti t y are located in the entity

. There are fewer than 1,200 “parent” companies listed for publicly owned systems

. Because facilities do not always list the owner or list variations of the owner’s name, it is not possible to develop an accurate estimate of the number of public entities affected by the rule

. It is clear, however, that some of the larger cities and counties have a substantial number of facilities

. For example, Los Angeles County owns and operates at least 33 facilities, which do not incl ude the facilities owned by cities within the county.

Additionally, local or county governments will receive new information filed by RMP

- regulated facilities as a result of the proposed rule and may voluntarily participate in exercises held by facilities

. Although this proposed rule doesn’t specify requirements for these government entities to review the information submitted or to take part in exercises, EPA expects that many of them will do so and therefore this analysis considers those indirect costs t o local governments

. The burden on any single local government will increase as the number of affected entities in its jurisdiction increases

. Our cost estimates will***E.O. 12866 Review

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### reflect this added burden

. There are 6,956 cities that have one or more RMP facilities

. Although most have only one RMP facilit y , a number have 20 or more
, and t here are counties with close to 200 RMP
facilities (e.g., Harris County, TX)

. Thus, those counties with many RMP facilities may have greater indirect costs due to the additional volume of submitted information and requests for participation in
exercises.



## 3.4 Limitation s
The analysis assumes that every facility subject to the RMP rule has registered with EPA and filed an
RMP

. EPA recognizes that this may not be true

. EPA and delegated implementing agencies search for
and occasionally identif y regulated facilities that have failed to submit RMPs. Historically, relatively few of these “non

- filers” have been found, but we have little basis for determining the full extent of such

non

- compliance.

T he RMP database may include facilities that are no longer operational

. For this analysis, we removed one refinery (and nine processes) from the data because the facility appears to ha ve closed in 2001 without following the requirements to deregister

. EPA recognizes there may be other facilities in the RMP database that are no longer operating.

The RMP facility population is dynamic

. The number of RMP facilities and processes is expec ted to change over the period of analysis because of firms that will grow, shrink, close, or open in the near or
distant future

. Despite these expected changes, the analysis relies on the number and nature of RMP facilities and processes that exist as of the February 2015 RMP database as a constant estimate of future RMP facilities/processes.

Finally, as discussed in more detail in Chapter 7, there are some problems with the data as filed with
EPA

. There are a number of facilities that list NAICS codes t hat are inaccurately applied, which means some facilities have misclassified themselves as P2 instead of P3, and for public facilities as P3 instead of
P1 or P2

. For example: EPA identified storage and terminal areas that were listed as refineries; agricu ltural co

- operatives and refrigerated warehouses listed in multiple sectors; and large terminals listed as wholesalers, support for transportation, and warehouses

. Although EPA has attempted to correct the most obvious problems, and the numbers in any cat egory are EPA’s best estimate, they should be viewed as approximations.***E.O. 12866 Review

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# CHAPTER 4: COSTS OF PROPOSED REVISIONS

This chapter outlines the assumptions used to estimate the incremental costs of the proposed revisions to the Risk Management Program and the alternative options under consider ation

. EPA does not estimate the baseline c osts incurred to comply with the existing RMP regulations

. The Agency sought to quantify and monetize costs where poss ible

. When we were unable to quantify
costs

– for example, due to a high level of uncertainty about what actions would be taken as a result of the proposed change

– we present a potential range of costs

. The time frame of analysis is 10 years

. As

s everal of the proposed rule elements are required on a five year period, w e include d a time span long enough to capture two full periods

. Specific assumptions are outlined for each rule provision below

. The analysis employs a model facility approach in which representative facility categories were developed to reflect a variety of features expected to influence costs (e.g., process complexity, number of full

- time employees, emergency response planning activities, etc.)

. Cost assumptions were developed f or each model facility type and address ed factors such as number of staff hours involved in implementing a provision, equipment costs, and fixed costs for contractor involvement

. P revailing wage rates were used to estimate per facility costs for rule prov isions

. With a model facility approach, the unit cost estimates represent averages that cover a wide variation in expected costs even within a single sector

. Given the high level of uncertainty associated with the costs of some of the provisions, however , attempting to project costs for a more disaggregated universe would imply a level of knowledge of future costs that does not exist.



## 4.1. Wage Rates

The Agency used the Bureau of Labor Statistics May 2014 Occupational Employment and Wage Estimates 29 

### to construct a weighted wage rate for different occupation categories

. For all rule provisions, labor hours were assumed to be distributed across six general labor categories: Management, Corporate Management, Attorneys, Engineers, Production Staff, and Local Responders

. The weighted wage rates for complex facilities (NAICS codes 324 and 325) were estimated separately from simple facilities because wages paid by these facilities are higher than in wholesale and government sectors, which dominate the simp le facilities category

. For each of the NAICS codes representing industries in the simple facilities category that are affected by the proposed rule provisions (Food and Beverage, Agricultural Facilities, etc.), standardized BLS Occupation Titles were ide ntified to correspond to the six general labor categories

. The wage rates for each BLS Occupation Title were multiplied by a fringe benefits factor of 1.5 to create a loaded wage rate. 30



### After loaded wage rates were established for each industry, they wer e combined to form a weighted average based on how prominent each industry wa s within its universe of facilities , either simple or complex

. Exhibit 4

- 1 presents the wage rates.

29 See http://www.bls.gov/oes/current/oes_nat.htm

. 30 The benefits multiplier is based on an average for the sectors as estimated by BLS in its Employer Costs for Employee Compensation. BLS includes items such as sick leave and vacation as benefits.***E.O. 12866 Review

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### Exhibit 4

- 1: Weighted

- Average Loaded Hourly Wage Rates (2014 Dollars)

Labor Category Simple Facilities Complex Facilities Management $74.99 $99.64 Corporate Management $82.47 $100.71 Attorneys $101.81 $113.33 Engineers $55.22 $76.21 Production Staff $28.51 $41.56 Local Responders $53.43 $53.43



## 4.2 Rule Familiarization

RMP facility staff would require some time to review the final rule and determine which provisions apply to the facility

. The time required for this review would be limited because most of the proposed provisions amend current requirements as opposed to intr oducing completely new provisions

. Many of the provisions are straightforward such as those regarding public disclosure

. Others apply only after a reportable accident or near miss such as root cause analysis ; relatively few facilities have reportable rel eases or near misses

. Still others such as the safer technology alternatives analysis are expected to take time to understand ; however, appl y to a limited number of facilities in sectors that are familiar with the issues associated with the rule provision

. In addition to affected facilities, the analysis also assumed that all affected LEPC’s would need to review the rule to familiarize themselves with rules that affect facilities in their jurisdiction

. EPA projects that all facilities with simple processes would need 2 hour s to review the rule as would the few complex facilities in P1 and P2

. Complex facilities in P3 are projected to spend 4 hours reviewing the rule

. LEPC’s are projected to spend 1 hou r reviewing the rule

. The unit costs are as follows:

• Simple facilities = 2 hour of management time or $ 149.97

• P1 and P2 complex facilities = 2 hour of management time or $ 199.28

.

• P3 complex facilities = 4 hours of management time or $ 398.56

.

• LEPC's = 1 ho ur of time or $53.43



## 4.3 Prevention Program Rule Provisions

Third Party Compliance Audits
The existing rule requires P2 and P3 facilities to conduct a compliance audit at least once every 3 years

. Th e proposed provision require s facilities that have had reportable accidents to contract with an independent third party to conduct the audit

. The analysis estimated the cost of hiring a third party to conduct the audit based on the public comments that EPA received through the July 3 1, 2014, Request for Information

. Of the 14 comments providing input on the potential economic impacts of third

- party audits , several comments specifically provided point estimates for the third

- party auditor fee. 31 

### These

31 See comments 0638 and 0667

– These two comments from ind ustry specifically provided point estimates on the costs of third party audits. One comment placed the cost of the audit between $36,000 and $40,000 and the other at approximately $10,000.***E.O. 12866 Review

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### estimates ranged between $10,000 a nd $20,000 for simpler facilities and up to $40,000 for complex facilities

. Thus, this RIA assumed $15,000 for simple facilities and $40,000 for complex facilities

. These expenses are considered incremental to the costs for compliance audits that are cov ered in the original rule, as similar levels of facility staffing would be required to work with the third

- party auditor (i.e., EPA does not expect the cost of the third

- party auditor to be offset by cost savings from reduced staff levels of effort related to auditing)

. In addition, the analysis projects that management time would be devoted to identifying auditors, selecting an auditor, and contracting with that entity for third

- party audit services.
The analysis estimates that the time required to contra ct for a third

- party audit would vary with the complexity of the processes to be covered and multiple facility staff would be involved, except for the smallest category of facilities

. At a minimum, one manager and one engineer would be involved to identif y potential auditors and write the statement of work on which the auditor would base its bid

. For larger firms that routinely contract and have contract departments, a contracts specialist and attorney would be part of the process

. Many large firms and a ll governments would have standard contract language

. Governments are estimated to spend more time on the contracting process, however, because most are required to solicit competitive bids and document the basis for the selection

. Private firms may use a similar process but are not required to do so

. Private firms are likely to spend time negotiating contract language after the award

. In total, hourly assumptions and costs for a third

- part y audit are shown in Exhibit 4

- 2 :

Exhibit 4

- 2 : Hourly Assumption s and Unit Costs for Hiring Third Party Auditors

Facility Type Total Hours for Contracting Process Facility Labor Cost Auditor Fee Total Facility Cost Management Attorneys Engineers Simple w/ 0

- 19 FTEs 32 4 0 $2,807 $15,000 $17,807
Simple w/ 20

- 99 FTEs 44 4 18 $4,701 $15,000 $19,701 Simple w/ 100+ FTEs 30 4 56 $5,749 $15,000 $20,749
Complex w/ 0

- 19 FTEs 32 4 0 $3,642 $40,000 $43,642 Complex w/ 20

- 99 FTEs 44 4 18 $6,209 $40,000 $46,209
Complex w/ 100+ FTEs 30 4 56 $7,710 $40,000 $47,710

Small Government 30 0 25 $3,630 $15,000 $18,630
Large Government 60 0 39 $8,951 $40,000 $48,951***E.O. 12866 Review

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### Incident Investigation (Root Cause Analysis and Near Miss Investigation)

This proposed provision requires that facilities in specific program levels that have had a reportable accident or near miss incident conduct a root cause analysis, as part of their accident investigation, to determine the underlying reasons for the (near) failure

. A root cause analysis is a structured process led by a person trained in the methodology

. The time required may vary considerably based on the complexity of the processes involved

. T his analysis assumes that complex facilities would require 48 total hours (entirely engineering time) for a root cause analysis and simple fa cilities would spend 8 total hours ( split evenly between engineering and production time)

. For near miss incidents, the analysis assumes that complex facilities would require 72 hours (12 hours of management, 36 hours of engineering, and 24 hours of produ ction) for a complete near miss incident investigation and 14 hours (6 hours of management, 4 hours of engineering, and 4 hours production) for simple facilities. 32 

### Root cause analyses for n ear miss incidents generally require more labor time across all ca tegories because there are already investigation activities occurring with baseline accidents.

There are fewer additional hours required for reportable accident root cause analyses because those accidents must a lready be investigated in the baseline and th us the effect of the proposed rule is only the net increase in labor for the root cause analysis

. The increased labor affects only the engineering category for complex facilities, and only the engineering and production labor categories for simple facilit ies . Root cause analyses for reportable accidents are not expected to require additional management time beyond that already required for reportable accidents. Management time is expected to be devoted primarily to decisions concerning resolution of corrective actions arising from the investigation, and these activities should require roughly the same amount of time whether corrective actions relate to root causes or other contributing causes. For simple facilit ies, additional labor for root cause analyses was assumed to be evenly distributed between production staff and engineers. For complex facilities, all additional labor for root cause analysis was placed in the engineer labor category as a conservative est imation approach, as this category has a higher labor rate than production.

F or near miss incidents that could reasonably have resulted in a catastrophic release, the existing rule already requires an incident investigation. However, EPA believes that in the baseline many facility owners and operators did not understand or comply with the existing near miss incident investigation requirements , so this analysis assumes some additional time will be required across all labor categories for near miss investiga tions

. The estimate of the time required for an incident investigation is based on estimates in the original RMP RIA, which relied on best professional judgement and comments on the original rule proposal received from industry 33 

### . The estimates in the orig inal RMP RIA involved development of a labor model that assumed investigations would involve a team of management, technical, and production staff, and that staff at larger and more complex facilities would require more hours to complete an investigation

. This analysis used reduced labor assumptions for near misses because investigations of incidents that do not damage equipment or harm workers would be less difficult to conduct than those that have to recreate conditions that existed prior to the release. Simple facility costs are estimated to include $1,000 for a

32 Assumptions based on EPA industry knowledge.

33 Economic Analysis in Support of the Final Rule on RMP Regulations for the Chemical Accident Release Prevention, as Required by Section 112(r) of the CAA, May 21, 1996.***E.O. 12866 Review

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### trained facilitator to assist with the investigation. Complex facilities generally have staff familiar with the methodology and would staff the root cause analysis in

- house. Exhibit 4

- 3 displa ys the hours assumed for each labor category for each type of facility, and the estimated cost per facility.

Exhibit 4

- 3: Unit Cost for Root Cause Analysis and Near Miss Investigation

Managers Engineers Production Other Costs Facility Cost Near Miss

- simple 6 4 4 $1,000 $1,785 Near Miss

- complex 12 36 24 $4,937 Accidents

- simple 0 4 4 $1,000 $1,335 Accidents

- complex 0 48 0 $3,658

Safer Technology and Alternatives Analysis (STAA)

This proposed provision requires facilities with P3 processes in NAICS codes 322, 324, and 325 to conduct an STAA as part of their process hazard analysis (PHA), which occurs every 5 years

. STAA is generally a process in which facility staff analyze their current processes and practices to determine if there are sa fer alternatives to their current operating practice

. This can range from small changes

– such as upgrading valves

– to large shifts like substituting less toxic or volatile chemicals

. This RIA divides the STAA process into three parts:

1. T he initial an alysis to identify alternatives;
2. A feasibility study to determine the costs and assess the reasonableness of implementing the change in light of other costs and programs; and 3. I mplementation of alternatives (implementation is not required under the propos ed provision)

. Hourly labor assumptions for the initial analysis and the feasibility study are based on guidelines published by the American Institute of Chemical Engineers / Center for Chemical Process Safety (AIChE/CCPS) and consultation with engineers who have extensive experience in performing hazard analyses. 34 

### AIChE/CCPS has published several guidelines addressing the subjects of hazard analysis and safer technologies. Among these are:

- Inherently Safer Chemical Processes

– A Life Cycle Approach, Se cond Edition (AIChE/CCPS,2009);

- Guidelines for Process Hazard Evaluation Methods, Second Edition (AIChE/CCPS, 1992); and,

- Guidelines for Hazard Evaluation Procedures, Third Edition (AIChE/CCPS, 2008).

In Guidelines for Hazard Evaluation Procedures, Third E dition , CCPS notes that “Inherent safety reviews can be conducted as separate studies using a form of HAZOP Study, or they can be incorporated into HAZOP studies conducted for other purposes.” 35 Inherently Safer Chemical Processes

– A Life Cycle Approach expands on this concept, and also provides information on additional approaches to incorporating safer technologies into process hazard analyses, including checklist, “What

- If”, Failure Mode and Effects A nalysis, and other analytical methods. Based on th is information, EPA developed a labor model for safer technologies

34 EPA consulted with engineers at ABS Consulting.

35 “HAZOP” is an acronym for “Hazard and Operability Stu dy,” which is one PHA methodology allowed under the RMP rule.***E.O. 12866 Review

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- If/Checklist approaches, which are PHA methods commonly used by facilities subject to this proposed provision

. 

### Guidelines for Process Hazard E valuation Methods, Second Edition contains information on the typical days of effort required to complete HAZOP and What

- If/Checklist PHAs for small/simple and large/complex facilities. 36 

### EPA adapted this information, and incorporated additional labor hour s to account for the proposed rule’s requirement to determine the feasibility of inherently safer designs considered.

The estimated labor hours assumed facilitator and scribe labor costs, as well as facility team and management participation that increas ed with process complexity. Facilities in NAICS 322, 324, and 325 are expected to have staff qualified to conduct the analysis in

- house. All other facilities would be expected to hire a consultant to lead the team. Most of these other facilities use che micals or store them, but often rely on engineering firms or maintenance contractors to design the equipment and do anything other than routine minor maintenance. They may not, therefore, have staff knowledgeable enough in the process and design to identi fy and evaluate alternatives. The technical feasibility assessment considers the extent of process redesign, its engineering implications, and possible costs. As stated, most facilities except the large facilities in NAICS 322, 324 and 325 are expected t o seek help from consultants (i.e., engineering firms). Storage and distribution facilities, which generally are very simple (mostly large tanks with loading/unloading equipment) are not expected to need a consultant to assess feasibility because chemical substitution is not as great a possibility (these facilities usually sell the chemical in question) and because the technical issues are limited. For example, most bulk anhydrous ammonia distributors are not likely to substitute another chemical for anhy drous ammonia

. Exhibit 4

- 4 displays the hours assumed for each task by labor category and type of facility, and the resulting per facility cost estimates.
Implementation of safer alternatives is not required under the proposed option. The high cost alter native would apply the requirement to all P3 processes and require facilities to implement feasible safer technologies and alternatives. However, EPA has not projected implementation costs for this option because of the high degree of uncertainty associat ed with such projections (see Chapter 5 for further explanation).

Exhibit 4

- 4: Hourly Assumptions and Unit Costs for STAA

Sector Labor Hours Facility Cost Initial Analysis Corporate Manager Engineer Consultant
Large facilities NAICS 324

- 325 608 $40,240 NAICS 322, Small/Medium 324, 325 252 $13,109 Other Manufacturers, Refrigeration Systems 100 $9,808 $17,429
Water/Gas Plants/Utilities 36 $6,000 $8,744 Storage Facilities 36 $6,000 $8,744 Feasibility Analysis Large facilities NAICS 324

- 325 24 80 $8,514 NAICS 322, Small/Medium 324, 325 16 80 $8,000 $15,708

36 See Guidelines for Process Hazard Evaluation Methods, Second Edition (AIChE/CCPS, 1992), Table 5.4.***E.O. 12866 Review

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### Other Manufacturers 16 32 $8,000 $12,050 Water/Gas Plants/Utilities and Refrigeration Systems 8 32 $5,200 $8,444
Storage Facilities 8 32 $3,244



## 4.4. Emergency Response Preparedness Rule Provisions

4.4.1 Emergency Response Program Coordination with Local Responders

This provision would require all facilities with P2 or P3 processes to coordinate with local responders annually to make them aware of the hazards at the facility

. If the facility is a non

- responder and relies on the local response force then the coordination would primarily focus on any changes that have occurred at the facility and confirm existing response strategies or develop new ones

. If the facility is a responder and in charge of responding to its own chemical emergencies then the coordination would primarily focus on informing local entities on what response capabilities are in place and how the community may be impacted. The analys is assumes that the coordination effort would average 4 hours of facility management time and 4 hours of time from LEPCs to participate in coordination activities. 37 

### EPA based this estimate on input from an EPA regional official 38 

### who regularly participated in emergency coordination meetings with local responders and regulated facilities. The time required for any particular facility may vary depending on a variety of factors including the familiarity of the local responders with the facility and its hazards. For many facilities, this coordination may already occur voluntarily in the baseline and would therefore not be an added cost; for others, it could take considerable time to arrange a personal meeting. In other words, EPA re cognizes that there will be variability across facilities in this cost but adopts two cost estimates that vary only depending on whether the facility is simple or complex

. In addition to the coordination effort, the proposed rule also requires documentati on of that effort. The analysis uses an average of 4 hours of management time and applies it across all applicable facilities, as opposed to estimating current compliance with this provision. The estimates of labor hours and unit cost estimates are shown in Exhibit 4

- 5.

Exhibit 4

- 5: Hourly Labor and Unit Costs for Coordination with Local Responders

Facility Type Management LEPCs Facility Labor Cost

Complex Facilities 4 4 $514 Simple Facilities 4 4 $612

This proposed provision may lead to some current facilities who are non

- responders to convert from

non

- responder to responder status

. To estimate a range of possible impacts of non

- responder conversions, the analysis conducts a sensitivity analysis of how many conversions may happen among the population of facilities in counties without existing hazardous materials (hazmat) teams a m ong local

38 September 01, 2015 email communication from Steve Mason, EPA Region 6 to Jim Belke, EPA Office of Emergency Management.***E.O. 12866 Review

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### emergency responders. The sensitivity analysis provides cost estimates for the conversion of 25 percent, 50 percent, and 75 percent of current facilities who are no n

- responders and located in counties without a hazmat team.



### 4.4.2 Notification Drills

The proposed rule requires all facilities with P2 or P3 processes to conduct a notification drill, during which a facility member checks each person and agency on its emergency action contact list, to ensure that the contact information is accurate (e.g., that the person listed is still in that position and the phone numbers and email addresses are correct)

. As the contact list is somewhat limited (the number of organi zations to be contacted must be small enough that the primary ones could be contacted quickly), the analysis estimated that it would take no more than 2 hours of engineering staff time to verify the information

. The unit costs are shown in Exhibit 4

- 6.

Ex hibit 4

- 6: Hourly Labor and Unit Costs for Notification Drills

Facility Type Engineers Facility Labor Cost
Complex Facilities 2 $152
Simple Facilities 2 $110



### 4.4.3 Facility Exercises
Responding facilities are facilities that intend to develop and implement the emergency response program required under §68.95 in order to respond to releases at their site

. The proposed rule requires such facilities to conduct an annual exercise of their emergency response program developed in accordance with §68.95 and in accordance with the community emergency response plan developed under 42 U.S. C. 11003. 39 

### At least once every 5 years, a full field exercise would be required; in other years, facilities may conduct a tabletop exercise where the participants work to gether to identify a scenario and then establish objectives for the response without actually mobilizing responders and employees. The objectives for both field and tabletop exercises would include:

1. I dentifying who would be contacted in an emergency, 2. P r ocedures and measures for emergency response after an accidental release of a regulated substance (e.g., what equipment would be deployed, who would be evacuated, how decisions on public notification would be made, who would contact the public, etc.), and 3. P roper first

- aid and emergency medical treatment necessary to treat accidental human
exposures. In a field exercise, all of the steps of a response are carried out (e.g., responders and equipment would be deployed). The purpose of a field exercise is t o evaluate the ability of the responders and other employees to implement the emergency response plan on which they have been trained.
The cost of both types of exercises vary with the size and complexity of a facility. Every phase of the
process
– planni ng, exercise, and post

- action evaluation

– would require more time for larger and more complex facilities. Smaller facilities have a limited number of possible scenarios (from leaks to slow

39 Section 303 of Emergency Planning and Community Right

- to

- Know Act. http://www.gpo.gov/fdsys/pkg/USCODE

- 2011

- title42/html/USCODE

- 2011

- title42

- chap116.htm.***E.O. 12866 Review

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### releases to total failure of a storage vessel)

. Larger facilitie s, and particularly those with complex chemical processes, have more possible failure modes and a greater possibility of the first release triggering additional releases or creating other risks. EPA developed estimates of the time associated with both types of exercises and the number of people who would be involved by seeking input from EPA re gional staff who have routinely participated in both types of exercises and by reviewing exercise reports provided by EPA region al office s. Labor hours and unit costs for tabletop and field exercises are presented in Exhibits 4

- 7 and 4

- 8, respectively.***E.O. 12866 Review

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### Exhibit 4

- 7: Hourly Labor and Unit Costs for Table

- Top Exercises

Facility Type Management Engineers Production Emergency Responders Facility Cost
Simple w/ 0

- 19 FTEs 24 34 11 26 $5,380
Simple w/ 20

- 99 FTEs 29 34 28 31 $6,507

Simple w/ 100+ FTEs 61 61 60 48 $12,218
Complex w/ 0

- 19 FTEs 24 34 11 26 $6, 829
Complex w/ 20

- 99 FTEs 29 34 28 31 $8,301
Complex w/ 100+ FTEs 84 92 98 78 $23,621

Exhibit 4

- 8: Hourly Labor for Field Exercises

Facility Type Management Engineers Production Emergency Responders Facility Cost

Simple w/ 0

- 19 FTEs 30 38 23 60 $8,209 Simple w/ 20

- 99 FTEs 48 64 72 87 $13,835

Simple w/ 100+ FTEs 78 68 232 129 $23,111 Complex w/ 0

- 19 FTEs 30 38 23 60 $10,047 Complex w/ 20

- 99 FTEs 48 64 72 87 $17,301
Complex w/ 100+ FTEs 136 136 760 192 $65,758



## 4.5. Information Disclosure Rule Provisions

Public Disclosure
This provision assumes two primary types of activities related to public disclosure: (1) disclosure to the community, and (2) disclosure to local emergency planning committees and other emergency responders.
For disclosure to the community, facilities would be required to make certain information available to the public either on the facility’s website
, through file sharing
, or through some other means (e.g., providing informat ion at a public library, or other public offices, or providing it via e

- mail upon request)

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### The proposed information elements should be readily available to facility managers because most of the information is already compiled for compliance with various health and safety regulations

. The Safety Data Sheets are documents that OSHA requires every facility to have available for its employees , and which contain chemical hazard information required under 29 CFR 1910.1200

. The names and quantities of chemical s and 5

- year accident history is already collected for reporting in the RMP

. Especially for simple facilities, this information is unlikely to change much from year to year; the only cost associated with this element is the time required to collect and re view the information for
accuracy

. The analysis estimates that simple facilities would spend 2 hours per year reviewing the information to ensure that it is up

- to

- date

. Complex facilities may have more information to review because they may manufacture, process, and use multiple regulated substances in multiple processes

. The analysis estimated that small complex facilities would spend 4 hours collecting and reviewing the information

. Large complex facilities were estimated to spend 16 hours per year be cause management and possibly counsel would need to ensure that the information was not subject to any restrictions related to security or confidential business concerns.
For disclosure to local emergency responders, the provision would require facilities to draft and provide summaries of certain activities

– compliance audits, any incident investigations, any implementation of IST, and exercise reports

. Facilities would also have to provide the 5

- year accident history, but this element is reported in the RMP and should require little effort beyond updating

. EPA estimates that the summaries would require corporate management and legal review to maintain organizational consistency (for corporations with multiple facilities) and removal of any legally sensit ive materials, such as Chemical

- terrorism Vulnerability Information (CVI) or Confidential Business Information (CBI)

. Complex facilities, which have more covered processes that are subject to provisions, are projected to spend more time developing and rev iewing information prior to submission to local agencies

. The analysis further estimates that LEPCs will require time to review materials as they are submitted. The amount of time required scales with the complexity of the facility. The labor hour assum ptions for each type of disclosure to the community and to local emergency responders are shown in Exhibit 4

- 9

. Exhibit 4

- 9 : Hourly Labor and Facility Costs

For Information Disclosure to the Community and to Local Emergency Responders

Provision/Facility Type Management Corporate Management Attorneys Engineers LEPCs Facility or Responder Costs Public Disclosure

– Small Complex 2 0 0 2 0 $352

Public Disclosure

– Large Complex 8 0 0 8 0 $1,407

Public Disclosure

– Simple 1 0 0 1 0 $130
Accident History

– Simple 0.5 0.5 0.5 1 0 $185
Accident History

– Complex 1 1 1 1 0 $390
Audit Report

– Simple 2 2 2 4 0 $739
Audit Report

– Complex 4 4 4 8 0 $1,864***E.O. 12866 Review

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### Investigation Reports

- Simple 4 4 2 4 0 $1,054
Investigation Reports

– Complex 8 4 8 12 0 $3,021

IST

– Simple 4 4 4 4 0 $1,258 IST

– Complex 8 4 8 16 0 $3,326 Exercise Reports

– Simple 2 1 1 4 0 $555
Exercise Reports

– Complex 2 2 2 8 0 $1,237

LEPC Review

– Simple 0 0 0 0 1 $53

LEPC Review

– Small Complex 0 0 0 0 2 $107

LEPC Review

– Large Complex 0 0 0 0 4 $214



### 4.5.1 Public Meeting

This provision would require all RMP facilities to hold a public meeting at least once every 5 years and immediately following an accident

. The analysis estimates that each facility would need to spend time planning for the meeting

– deciding when and where to hold the meeting, arranging the meeting space, developing and posting notices of the meeting, and developing materials to be presented and distributed. In addition, at least two people from the facility would attend the meeting, which was estimated to take 4 hours of the attendees’ time; even if the meeting is only 2 hours, attendees would have to arrive early and would stay after the of ficial ending to talk with people, collect extra materials, and close up the meeting space.
For simple and small complex facilities, the analysis estimated that total time for preparation would be 12 hours and attendance would be 8 hours (2 managers for 4 hours each)

. For large complex facilities, where the information presented may be more complicated and subject to legal concerns (security and confidentiality), the analysis estimated that the facility staff would spend 24 hours preparing and reviewing pr esentations and handouts; 4 facility staff (2 managers and 2 engineers) would attend the meeting

. The costs for space are expected to vary from nothing, when the meeting can be held in a public building, to between $500 and $1,000 when a meeting space mus t be rented or where the facility has to pay overtime to a custodian (e.g., at a public school)

. The materials distributed would also impose some costs, but most facilities may produce them in

- house

. It has been EPA’s experience after the passage of CSIS SFRRA 40 

### that most facilities conducted meetings less than 1 day in length and used public facilities

. To arrive at a point estimate for the cost of a meeting room, the analysis took a sample of meeting room costs from a variety of locations and used the av erage of $550. 41 

### The analysis further estimated that every facility would need to rent a meeting space, which likely overestimates the cost of

40 Chemical Safety Information, Site Security and Fuels Regulatory Relief Act

41 Meeting room price was determined using the average price of 17 meeting venues that could accommodate 20+ individuals. The analysis used meeting rooms fr om Chicago, Houston, Phoenix, Kansas City, Philadelphia, and Atlanta. Data were provided by evenues.com.***E.O. 12866 Review

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### this provision . Exhibit 4

- 10 displays the assumed hours by labor category and facility type, and the resulting es timated facility costs.

Exhibit 4

- 10 : Hourly Labor and Unit Costs for Public Meetings

Facility Type Management Engineers Production Other Costs Facility Cost

Simple Facilities 8 8 4 $550 $1,706

Small Complex Facilities 8 8 4 $550 $2,123

Large Complex Facilities 16 16 8 $550 $3,696



## 4 .6 New Responders

This cost provision is not a specific requirement of the proposed rule but addresses situations in which
current non

- responders may convert to being responders

. It also addresses one of the alternative options ( the High Option ) under Emergency Response Program Coordination with Local Responders

. EPA is aware that some facilities have assumed that the public responders could respond to accidents at the facility when the communities do not, in fact, have nearby responders with appropriate training and equipment for the hazards present at the facility (e.g., a hazardous materials or “hazmat” team)

. EPA used an existing analysis of hazmat team locations obtained from the Federal Emergency Management Agency (FEMA)

. Those data were compiled for the 2012 National Preparedness Report to characterize the existing coverage of hazmat teams 42



### . The 2012 report found that “the nation has developed a mature set of assets for addressing hazardous materials incidents. ” There were approximately 1,100 state and local hazmat teams identified, and the FEMA report concluded that 76% of the population is covered by these hazmat response teams 43



### . EPA used those data to estimate the number of RMP facilities that could potential ly be required to develop an emergency response program

. (See chapter 5 for more detail on this subject).
The cost estimate for facilities that need to become responders assumes seven types of activities:

• E mergency response plan development,

• T raining,

• Equipment purchase,

• T abletop exercises,

• F ield exercises,

• E mergency response program coordination with local emergency response officials, and

• P ublic disclosure of exercise reports.
For each activity category, the analysis categorizes facilities by comp lexity and size according to FTEs.
Emergency response plan development, training, and equipment purchase all use hourly assumptions estimated based on the requirements set by the OSHA Hazardous Waste Operations and Emergency

42 https://www.fema.gov/media

- library/assets/documents/26675

43 The approach for estimating the 76% was roughly based on the population in proximity to a hazmat team.***E.O. 12866 Review

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### Response (HAZWOPER) Standard ( 29 CFR 1910.120(q)), which any employer whose employees respond to releases of hazardous materials must meet. 44 

### Any employer whose employees would respond to the hazmat incidents must develop an emergency response plan and train the workers on responding to the particular hazards they may face

. Based on discussions with EPA staff involved in emergency response planning, complex facilities are assumed to require 32 hours of manager time, 40 hours of engineering time (5 engineers spending 8 hours each), and 32 hours of production staff time to develop an emergency response plan

. Simple facilities are assumed to require 16 hours of manager time, 16 hours of engineering time (4 engineers spending 4 hours each), and 8 hours of production staff time

. The analy sis estimates that all new responders will develop a plan in year 1, and then they will expend 10 percent of the initial costs every year thereafter to maintain the plan.
Equipment purchase cost estimates were based on publicly available equipment vendor c osts and EPA’s own experience of what would reasonably be required to respond to an incident

. The list of items and costs estimates is as follows:

Exhibit 4

- 11: New Responder Equipment Costs 45



### Item Cost Per Item Number of Items Total Cost Level A Suit $1,750 6 $10,500 Tyvek Suit (bulk pack) $200 1 $200 Cryogenic Gloves $180 10 $1,800 Chemical Resistance Boots $150 6 $900
Vinyl Boot Covers $7.00 6 $42 Neoprene Boot Covers $100 6 $600 Nitrile Rubber Gloves $12 6 $72 Viton Rubber Gloves $10 6 $60 PVC/Nitrile Gloves $56.95 6 $341.70 Self

- contained Breathing Apparatus $5,500 6 $33,000
Spare Bottles SCBA $800 6 $4,800 Chlorine Kit “A” $2,300 1 $2,300 Chlorine Kit “B” $2,500 1 $2,500 Non

- sparking Tool Kit $900 1 $900 Sledgehammer $55 3 $165 Bolt Cutter $85 1 $85 Sorbent Pad (100/bundle) $64 1 $64
Neutralizer (5 gallon bucket) $436 1 $436
Eye Wash Station $129 1 $129 Plastic Pools $10 3 $30
T otal $58,925

44 The HAZWOPER standard uses the phrase “hazardous substances” but defines it to cover all DOT hazmat; regulated substances are a small subset of DOT hazmat.

45 Facility equipment costs are based on an estimate developed by EPA Region 6 emerg ency responders. Costs assume open market pricing for equipment needed to equip a six

- person hazardous materials response team. See email from Steve Mason, EPA Region 6, to Jim Belke, EPA Office of Emergency Management, of June 2, 2015.***E.O. 12866 Review

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### The analysis used a point estimate for equipment costs of $60,000 for complex facilities and local government, and $50,000 for simple facilities, based on the number of staff who would be expected to use the equipment as fewer accidents occur at simple facilities relative to complex facilities

. In addition to plan development and eq uipment, the OSHA HAZWOPER Standard require s that any workers who may respond to hazmat releases to obtain training on proper procedures

. At a minimum, responders need 24 hours of classroom training; at least two responders in any team need more extensive training, 40 hours of classroom training, and 3 days of operational training

. A minimum hazmat team would include 5 responders; at least 4 responders are needed for any release 46 

### , and 1 other would need to be trained to ensure that a facility had a full complement at any time (to cover vacations/sick leave/travel)

. Complex facilities and governments are estimated to need at least 6 responders

. Because the training is generally available only in major cities, the analysis included travel time and per die m costs. Most of the RMP facilities outside of the manufacturing sector are staffed only during the day, 5 days a week

. The analysis estimates that they would, therefore, have only one hazmat team comprised of a single 5

- person team

. Manufacturing plan t s generally operate 24/7

. Based on EPA’s experience , the analysis estimated that chemical manufacturers and refineries would have hazmat teams of at least 6 people per shift, with 4 teams needed to cover the entire facility at all times. 47 

### Other manufactur ing and large facilities were estimated to have a single 6

- person team that is on

- call for the off hours. Based on EPA’s experience, the cost of training ranges from $450 (for the 24

- hour course) to $1,600 (for the 72

- hour course). 48 

### The analysis, therefore , used $450 and $800 for the training fees and $100 per day for travel and expenses

. Beyond the training fee, the facility would have to pay the employees for their time and travel costs

. Exhibits 4

- 12 and 4

- 13 present the hourly labor assumptions for em ergency response plan development and training, respectively:

Exhibit 4

- 12: Hourly Labor for New Responder Emergency Response Plan Development

Facility Type Management Attorney Engineers Production Emergency Responders Facility Cost Simple 16 0 16 8 0 $2,311 Complex and Local Government 32 0 40 32 0 $7,567

46 This is the min imum number of responders necessary to meet the emergency site entry team and backup personnel requirements specified under 29 CFR 1910.120(q)(3)(v) and (vi).

47 A 3

- shift schedule requires 5 shifts of workers to operate 24/7.

48 Some vendors provide trainin g that is exclusively on

- line and consequently considerably less expensive; OSHA has indicated in interpretation letters that such training is not sufficient to meet the requirements of the standard.***E.O. 12866 Review

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### Exhibit 4

- 13: Hourly Labor for New Responder Training

Facility Type Management Attorneys Engineers Production Training Fees and Travel Expenses Facility Cost Simple 0 0 72 80 $4,850 $11,107 Complex w/ 0

- 9 9 FTEs or Local Government 0 0 96 80 $5,600 $16,241

Complex w/ 100+ FTEs 0 0 384 320 $22,400 $64,964

New responders have ongoing costs that are different than the initial unit costs

. As required by OSHA, the analysis estimates that each of 5 trained staff, for simple facilities, will need to undergo a refresher course annually that costs $100 per person

. For large complex facilities, the analysis estimates that all 24 trained staff will undergo the training

. In addition, it is estimate d that staff turnover will create additional initial training needs

. All facilities are estimated to train one new responder per year.
Assumptions for Tabletop and Field Exercises, and disclosure activities can be found in those respective sections of th is chapter.
This portion of the analysis, although not a provision to itself, estimates the costs of non

- responders converting to responders

. Chapter 5 presents the total cost of the rule with a sensitivity analysis of 25 percent, 50 percent, and 75 percent of current non

- responders not in a county with a Hazmat team converting to responder status

. One of the proposed options (t he high option ) for coordination with local responders requires all facilities to be responders ( 100 percent conversions )

.***E.O. 12866 Review

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# CHAPTER 5: TOTAL COSTS

EPA considered multiple options representing a range of costs for m ost of the proposed rule provisions

. 49 

### This chapter pres ents the total costs of provisions by option, as well as total proposed rule

cost s , undiscounted , discounted, and annualized

. Costs are projected over 10 years and discounted at 3 percent and 7 percent

. The time period was chosen because it is long enough for two rotations of the least frequent required activities ( which occur every five years ).

This chapter is organized as follows:

• Section 5.1 presents the broad analytical assumptions used in the analysis focusing primarily on the annual frequ ency of rule provision activities.

• Section 5.2 shows the rule familiarization costs.

• Section 5. 3 describes the total costs associated with the proposed prevention program provisions

– third party compliance audits, incident investigation, and STAA.

• Sect ion 5. 4 describes the total costs associated with the proposed emergency response preparedness provisions

– emergency response program coordination with local responders, notification exercises, and facility exercises.

• Section 5. 5 describes the total cost s associated with the proposed information sharing provisions

– information sharing with LEPCs, information sharing with the public, and public meetings.

• Section 5. 6 describes the sensitivity analysis of total costs associated with the potential for

curre nt non

- responding facilities to convert to responding facilities as a result of the proposed changes to the emergency response program coordination provisions

. The analysis includes varying assumptions of the percentage of non

- responding facilities that m ay become responders.

• Section 5.7 shows the total costs for each rule provision option, as well as the total cost for the proposed rule.



## 5.1 Analytical Assumptions

Annual Frequency

The analysis generally divided total costs into initial year costs and on going costs

. For provisions or options in which the activity occurs in several year increments, the annual frequency is a fraction representing what portion of facilities would likely be implementing the provision in any given year

. For example, if an ac tivity is expected to happen once every 5 years, the annual frequency would be 0.2, as 20 percent of the applicable facilities would likely be completing the activity in any given year

. The assumption that implementation would be distributed evenly across time (i.e., if facilities are required to conduct an activity once every 5 years, that one fifth would do it in any one year) may overstate the

49 See Chapter 2 for detailed presentation of the options considered.***E.O. 12866 Review

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### costs for some years and understate them for others

. This issue primarily concerns the STAA and the medium and high options for third

- party audits

. The STAA is part of the PHA, which must be updated every 5 years

. If facilities have maintained that schedule from the first PHA they conducted (i.e., they have not had to update the PHA prior to the 5

- year anniversa ry, which would reset the clock for the next update), these costs may be concentrated over 1 to 3 years rather than distributed evenly over 5 years because facilities had 3 years to come into compliance with the original rule

. The same issue arises with

t hird

- party audits when applied to all compliance audits in the medium and high options; all of the costs could occur in a single year as facilities’ first audit may have occurred in 1999

. EPA, however, has no information on how frequently facilities have conducted PHAs or audits before the renewal date because of process or procedural changes, accidental releases, or information on risks that they thought
needed to be reconsidered.

Initial and Ongoing Costs

The analysis only used an ongoing cost when cost s for years 2

- 10 were not the same as the initial cost components

. If costs for years 2

- 10 were the same as the initial year (with some variation based on the annual frequency), then multiplying the initial cost by the annual frequency accounted for any

c ontinuing costs

. The only proposed rule provisions with ongoing costs different from the initial costs are found for new responders (Section 5.5).

Capital Costs

The analysis did not monetize any capital costs (see the discussion on STAA implementation cos ts)

. The costs of equipment purchased for facilities becoming new responders has not been amortized . Although individual items of response equipment are relatively low cost, the overall cost of purchasing response equipment may cause some facilities to c hoose to finance response equipment purchases in order to spread the costs over several years , while others may treat them as an operating expense and pay in a single year

. By not amortizing responder equipment costs in this analysis, EPA is making the

co nservative assumption that facilities will pay these initial costs in a single year

.


## 5. 2 Rule Familiarization

EPA did not analyze any options for rule familiarization, as this is not a provision of the rule, but rather a necessary cost of any rulemaking. All facilities and local governments are estimated to be affected by
rule familiarization.***E.O. 12866 Review

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### Exhibit 5

- 1 : Rule Familiarization

Facility Type Unit Cost Facilities Total Initial Cost

Simple $ 150 10
, 921 $ 1,637,844

P1 and P2 Complex $ 199 145 $ 28,896

P3 Complex $ 399 1476 $ 588,278

LEPCs $53 1724 $ 92,113 Total 1 4,266 $ 2, 347 ,130



## 5. 3 Prevention Program Rule Provisions

Third

- party Compliance Audits

EPA analyzed three options for the proposed requirement that a facility hire a third

- party to conduct the compliance audit required under the existing rule

. Under the existing rule, P2 and P3 facilities must conduct a compliance audit at least once every 3 years.

Low Option (Proposed) : Applicable to P2 and P3 Facilities Following an Accident

The low option would impose the requirement for a third

- party auditor only on P2 or P3 facilities that had a reportable accidental release

. These facilities would be required to contract with a third

- party for their next scheduled compliance audit

. Accid ent numbers are based on the RMP data from reportable accidents, referenced in Exhibit 3

- 9 , and are estimated based on the 10

- year annual average

. The RMP database contains data on accidents that have had reportable impacts, but also those without. Since this provision does not require third party audits for accidents without any reportable impacts, we deducted the number of accidents with no impacts from the total number of accidents in the RMP
database

. We also deducted the number of accidents that occ urred at P1 facilities, as the proposed provision would only apply to P2 and P3 facilities

. The analysis projects that the annual number and distribution of accidents among types of facilities will remain the same and that in any one year, the
number of f acilities conducting a third

- party audit will be equal to the number of accidents

. 50 

### That is, although the approximately 148 third

- party audits for the P2 and P3 facilities that have a reportable release in 2016 may occur up to 3 years after the releases, depending on when the previous audit

50 EPA recognizes that subsequent to the current rule taking effect, accident rates may decrease but wishes to calculate a conservative cost estimate so assumes a constant accident rate.***E.O. 12866 Review

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### occurred, the analysis projects that over time, about 148 facilities would conduct such an audit each

year. 51 

### The breakout fo r tot al costs is shown in Exhibit 5

- 2 :

Exhibit 5

- 2 : Total Annual Undiscounted Costs for Third

- party Compliance Audits (Low Option)

Facility Type Annual Frequency Unit Cost Facilities Total Initial Cost

Simple w/ 0

- 19 FTEs 1 $17,807 19 

### $338,329

Simple w/ 20

- 99 FTEs 1 $19,701 15 

### $295,509

Simple w/ 100+ FTEs 1 $20,749 39 

### $809,219

Complex w/ 0

- 19 FTEs 1 $43,642 3 

### $130,925

Complex w/ 20

- 99 FTEs 1 $46,209 13 $600,722

Complex w/ 100+ FTEs 1 $47,710 53 

### $2,528,654

Small Government 1 $18,630 3 

### $55,890

Large Government 1 $48,951 4 

### $195,803

Total 14 9 

### $4,955,052

Medium Option: Applicable to All P3 Facilities

Under the medium option, all P3 facilities would have to hire a third

- party to conduct compliance audits at the facility every three years. The analysis projects that a third of P3 facilities would, therefore, be conducting a third

- party audit every year. Facilit y numbers are based on the RMP data and can be found in Exhibit 3

- 6 . The breakout for total c osts is presented in Exhibit 5

- 3

.

Exhibit 5

- 3: Total Annual Undiscounted Costs for Third

- party Compliance Audits (Medium Option)

Facility Type Annual Frequency Unit Cost Facilities Total Initial Cost

Simple w/ 0

- 19 FTEs 0.33 $17,807 5
, 4 88 $3 2,248,846

Simple w/ 20

- 99 FTEs 0.33 $19,701 1
, 0 93 $ 7,105,816

Simple w/ 100+ FTEs 0.33 $20,749 1
, 5 82 $1 0,832,330

51 The number of audits may be overstated because the number of facilities that had reportable releases over the
ten

- year period considered (1272) is lower than the number of releases reported (1516), according to the RMP accident database, as some facilitie s may have multiple accidents.***E.O. 12866 Review

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Page 56 of 126 Facility Type Annual Frequency Unit Cost Facilities Total Initial Cost

Complex w/ 0

- 19 FTEs 0.33 $43,642 2 55 $3 ,672,460

Complex w/ 20

- 99 FTEs 0.33 $46,209 6 65 $10, 140,641

Complex w/ 100+ FTEs 0.33 $47,710 57 2 $ 9,005,826

Small Government 0.33 $18,630 451 $2,772,718

Large Government 0.33 $48,951 522 $8,432,251

Total 10, 628 $8 4,210,888



### High Option: Applicable to All P2 and P3 Facilities

Under the high option, all P2 and P3 facilities would have to hire a third

- party to conduct compliance audits at the facility every three years

. The analysis projects that a third of P2 and P3 facilities would, therefore, be conducting a third

- party audit every year

. Facility numbers are based on the RMP data and can be found in Exhibit 3

- 6

. The breakout for total c osts is presented in Exhibit 5

- 4

.

Exhibit 5

- 4 : Total Annual Undiscounted Costs for Third

- party Compliance Audits (High Option)

Facility Type Annual Frequency Unit Cost Facilities Total Initial Cost

Simple w/ 0

- 19 FTEs 0.33 $17,807 636 4 $37, 396,439

Simple w/ 20

- 99 FTEs 0.33 $19,701 807 $ 5,246,471

Simple w/ 100+ FTEs 0.33 $20,749 1
, 262 $ 8,641,214

Complex w/ 0

- 19 FTEs 0.33 $43,642 28 5 $ 4,104,515

Complex w/ 20

- 99 FTEs 0.33 $46,209 69 4 $ 10,582,865

Complex w/ 100+ FTEs 0.33 $47,710 5 80 $ 9,131,781

Small Government 0.33 $18,630 972 $5,975,791

Large Government 0.33 $48,951 936 $15,119,899

Total 11,900 $ 96,198,975***E.O. 12866 Review

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Page 57 of 126 

### Incident Investigation (Root Cause Analysis and Near Miss Investigation)

The RMP rule currently requires the owner or operator of a facility to investigate each incident which resulted in, or could reasonably have resulted in a catastrophic release (i.e., including a near miss)

. EPA is proposing to require a root cause analysi s be conducted as part of the incident investigation and analyzed three options:

Low Option: Applicable to P3 Accidents and Near Misses

The low option would require P3 facilities to conduct root cause analyses for any reportable incident and to investigat e and conduct a root cause analysis for near misses

. The current rule requires investigation of near misses as well, but due to significant non compliance with this provision , the costs of near miss investigations are being included in this analysis. The analysis estimates that there would be one near miss for each reportable incident

. The number of actual near misses is unknown and depends on a judgment of the seriousness of an incident and belief that it could reasonably have resulted in a catastrophic release

. Industry estimates for the cost of incident investigation s vary widely

.

Exhibit 5

- 5 : Total Annual Undiscounted Costs for Root Cause Incident Investigation (Low Option)

Facility Type Unit Cost Facilities Total Initial Cost

P3 Near Miss

– Simple $1,785 75 

### $133,863

P3 Near Miss

– Complex $4,937 68 

### $335,695

P3 Accident

– Simple $1,335 75 

### $100,119

P3 Accident

– Complex $3,658 68 

### $248,758

Total 28 6 

### $818,435

Medium/High Option (Proposed) : Applicable to P2 and P3 Accidents and Near Misses

The medium/high option would apply the requirements for root cause analysis and near miss investigation to all P2 and P3 facilities

. Accident numbers are drawn from the RMP data on reportable accidents, referenced in Exhibit 3

- 9

.

Exhibit 5

- 6: Total Undiscounted Costs for Root Cause Incident Investigation (Medium/High Option)

Facility Type Unit Cost Facilities Total Initial Cost

P2 Near Miss

– Simple $1,785 5 

### $8,924

P2 Near Miss

– Complex $4,937 1 

### $4,937***E.O. 12866 Review

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Page 58 of 126 P3 Near Miss

– Simple $1,785 75 

### $133,863

P3 Near Miss

– Complex $4,937 68 

### $335,695

P2 Accident

- Simple $1,335 5 

### $6,675

P2 Accident

- Complex $3,658 1 

### $3,658

P3 Accident

- Simple $1,335 75 

### $100,119

P3 Accident

- Complex $3,658 68 

### $248,758

Total 298 

### $842,629

Safer Technology Alternative s Analysis

EPA analyzed three options for the proposed requirement to conduct an STAA, but monetized costs for only two of the options.

Low Option (Pr oposed ) : Applicable to a Subset of P3 Facilities

The low option would apply the rul e provision to a subset of P3 processes

– those in NAICS codes 322 (pulp and paper manufacturing), 324 (petroleum and coal products manufacturing), and 325 (chemical manufacturing)

– and require owner/operators to conduct an initial evaluation and feasibil ity study of potential safer technologies every 5 years as part of the PHA

. EPA is not proposing to require implementation of any particular technology.

Exhibit 5

- 7: Total Undiscounted Costs for STAA (Low Option)

Facility Type Annual Frequency Unit Cost Processes Total Initial Cost

Paper and Small/Medium Complex 0.2 $2 8 ,817 1,783 $ 10,276,120

Large Complex 0.2 $48,754 2,514 $24,513,659

Total 4,297 $3 4,789, 7 79***E.O. 12866 Review

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Page 59 of 126 

### Medium Option: Applicable to all P3 processes

The medium option would impose the requirement to conduct the initial analysis and determine feasibility on all P3 processes every 5 years as part of the PHA

. Exhibit 5

- 8 presents the costs for the medium option

Exhibit 5

- 8: Total Undiscounted Costs for STAA (Medium Option)

Facility Type Annual Frequency Unit Cost Processes Total Initial Cost

Initial Phase Analysis
Paper and Small/Medium Complex 0.2 $13,109 1,783 $4,674,512

Large Complex 0.2 $40,240 2,514 $20,232,785
Simple Manufacturing 0.2 $17,429 455 $1,586,062

Water/POTW 0.2 $8,744 1
, 178 $2,060,004

Intermediate Gas Processing and Utilities 0.2 $8,744 721 $1,260,835

Refrigeration 0.2 $17,429 3
, 005 $10,474,982

Storage 0.2 $8,744 4
, 881 $8,535,553

Feasibility Analysis
Paper and Small/Medium Complex 0.2 $15,708 1,783 $5,601,609

Large Complex 0.2 $8,514 2,514 $4,280,874
Simple Manufacturing 0.2 $12,050 455 $1,096,566

Water/POTW 0.2 $8,444 1178 $1,989,522

Intermediate Gas Processing and Utilities 0.2 $8,444 721 $1,217,695

Refrigeration 0.2 $9

, 250 3005 $5, 559
, 357

Storage 0.2 $3,244 4881 $3,167,271

Total 14,537 $71, 737 , 62 8 *

* Total may not sum due to rounding***E.O. 12866 Review

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Page 60 of 126 

### High Option

The high option for STAA would require all P3 facilities to implement any STAA options that the facility determined are feasible

. Thus the costs for this option include the annual $ 71.7 million estimated above for initial and feasibility analyses plus implementation costs

. EPA has not projected implementation costs for this option because of several problems that result in a high degree of u ncertainty associated
with such projections. First, what exactly facilities consider to be a safer or inherently safer change ha s various interpretations . EPA reviewed the IST implementation reported by New Jersey (NJ) 52 

### and Contra Costa County 53 

### , where St ate and local laws require the analysis, to evaluate what types of changes might be expected from facilities

. Contra Costa County officials disagreed with categories made by oil
refineries and reclassified the majority of the items listed by three refiner ies from inherently safer to active or passive changes

– active being changes that require operator intervention and passive being those that are automatic

. NJ and commenters on the NJ program labeled the majority of changes that
facilities claimed as IST as not IST

. The descriptors applied to IST

– minimization, substitution, moderation, and simplification

– can often be applied to active and passive STAA measures, as well.

Second, the high option would require facilities to adopt feasible IST changes, and the judgement regarding feasibility is subjective and thus very difficult to predict. The proposed rule defines feasible to mean “capable of being successfully accomplished within a reasonable time, accounting for economic, environmental, legal, socia l, and technological factors

. Environmental factors would include consideration of potential transferred risks for new risk reduction measures .” For example, switching from chlorine to other water treatment methods is clearly technically possible; about half of the systems originally subject to the rule have made the switch away from chlorine and avoided continued coverage
under the RMP rule

. Whether it is feasible for a particular system would be driven by various factors, including the risk posed by t he facility (e.g., is it close to inhabited areas or at some distance)
, other demands on the operating government (e.g., does the system need to replace aging pipelines, install water monitors, increase sewage treatment capacity, etc.) , and perhaps other c onsiderations

. Most RMP facilities pose a variety of risks to workers and the public; any investment in risk reduction would be assessed at each facility in the context of those other risks

. For example, most of the facilities with refrigeration systems subject to the rule are involved in food processing and storage; the risks to the public of food contamination or spoilage from less effective refrigerant processes may outweigh the risk of an ammonia release when determining where to invest capital funds

. Many facilities subject to the rule have a wide range of environmental regulatory requirements, from reducing air emissions and avoiding spills, treating effluents, to reducing greenhouse gas emissions

. Facilities may also have

52 NJ DEP. January 15, 2010. Inherently Safer Technology (IST) Implementation Summary. New Jersey Department of Environmental Protection (NJDEP), Trenton, NJ. http://www.nj.gov/dep/rpp/brp/tcpa/downloads/IST_SUMWEB.pdf

53 CCHS. December 9, 2014. Annual Performance Review and Evaluation

- Industrial Safety Ordinance. Contra Costa County Health Services (CCHS), Contra Costa County, CA. http://cchealth.org/hazmat/pdf/iso/iso

- report.pdf

.***E.O. 12866 Review

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Page 61 of 126 

### requirements related to c hemical security

. Some alternative refrigerants, such as CFCs and HCFCs, cause

ozone deplet ion

. Changing to a different refrigerant such as carbon dioxide, a cheap and non

- toxic refrigerant, would require different equipment to accommodate higher working pressures involved and may only be cost effective for new systems

. All of these , as well as other concerns, might be factored
into a facility owner’s decisions on where best to spend resources.

Third, the costs of STAA changes range widely

. A study of some human factors in the chemical process industry, presented in 2001, reported on changes that reduced risks to humans

. The cost of these
reduction s ranged from less than $1,000 to about $100,000 (in current dollars). 54 

### The costs of replacing chlorine in water treatment systems are far higher 55



### . Construction costs ranged from $650,000 to $13 million and operating costs ranged from cost

- savings to positive costs of $2.4 million or more a year

. EPA obtained information on the cost of replacing hydrogen fluoride (HF) at the 47 refineries that use it for alkylation . It cost s approximately $100 million to convert a n HF alkylation unit to sulfuric acid

. Switching refrigerants from an anhydrous ammonia to an ammonia

- glycol sy stem appears to typically cost $4 to $6 million

. EPA has no t projected whether the larger quantity of sulfuric acid that a refinery would need to replace HF would increase costs or whether there would be other changes in the operating costs

. It is likely that any switch from ammonia, as the sole refrigerant, would increase the basic cost of refrigeration and increase other operating costs, as ammonia is generally more efficient (i.e., uses less energy) tha n other refrigerants

. Chemical substitution, in a ny case, would be possible at less than half the facilities; the rest either manufacture the regulated substances or store them for sale

. Some examples of lower cost measures include removing sampling stations, replacing vessel sight glasses with magnetic level indicators, removing dead

- leg piping, using smaller diameter pipe or seal

less pumps, lowering storage inventories, and moderating process conditions such as operating temperature and pressure.

EPA also has little information about the actual cost s associated with somewhat larger projects that would replace, for example, piping or pumps with those made with stronger materials

. The costs of these would be facility

- specific and could vary widely

. In short, as the previous examples indicate, a requi rement to implement feasible STAA could add substantially to the cost of the rule.



## 5. 4 Emergency Response Preparedness Requirements

5.4 .1 Emergency Response Program Coordination with Local Responders

EPA analyzed two options related to coordination

. The current rule requires owners or operators of regulated facilities with Program 2 or 3 processes to coordinate with local response authorities and in some cases develop an emergency response program in accordance with §68.95 except when the stationary s ource is included in the community emergency response plan developed under section 303

54 Attwood, Dennis and David Fennell, “Cost

- effective Human Factors Techniques for Process Safety,” CCPS International Conference and Workshop, October 2

- 5, 2001, Toronto, ON, CANADA

55 http://www.gpo.gov/fdsys/pkg/GAOREPORTS

- GAO

- 07

- 480/html/GAOREPORTS

- GAO

- 07

- 480.htm

.***E.O. 12866 Review

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### of EPCRA (for sources with regulated toxic substances) or has coordinated response actions with the local fire department (for sources with only regulated flammable subs tances)

Low/Medium Option (Proposed) : Applicable to Program 2 and 3 Facilities

The low/medium option enhances existing requirements by requiring Program 2 and 3 facilities to
coordinate annually with local emergency responders to ensure resources and capa bilities are in place to respond to an accidental release

. This provision also requires facilities to document th eir

c oordination activities including the names of individuals involved, organizational affiliations, and more

. The purpose of the proposed revisions to the coordination requirement is to improve responders ’
understand ing of the risks at the facility and to better prepare them for a safe and timely response

. Coordination activities may include a review of the facility’s emergency action plan, (for non

- responding facilities) the facility’s emergency response plans (for responding facilities), and local response capabilities including providing information for the local community emergency response plan

. Facility counts are drawn from Exhibit 3

- 6

. This analysis assumes that facilities are not conducting coordination activities annually in the baseline, nor are they documenting those activities. The costs for the low and medium options are the same (the low option eliminates the provision allow ing an LEPC to require that the facility comply with §68.95) 56



### . The low and medium option s may also cause a portion of current

non

- responding facilities to convert to responders

. We estimate this expected additional cost in a sensitivity analysis presente d in Section 5. 6

.

Exhibit 5

- 9: Total Undiscounted Costs for Coordination (Low/Medium Option)

Facility Type Annual Frequency Unit Cost Facilities Total Initial Cost

Simple P2/3 1 $ 514 10,345 $ 5,313,853

Complex P2/3 1 $ 612 1,555 $ 952,099

Total 11,900 $ 6,265,952



### High Option: Applicable to All Current Non

- responding Facilities

This high option would require all current non

- responding facilities to comply with §68.95 and develop emergency response capabilities and an emergency response plan

. The number of non

- responding facilities can be found in Exhibit 3

- 8

. EPA projects that all nonresponding facilities would develop the plan in year one, and then spend 10 percent of the initial development costs maintaining the plan annually in years 2

- 10

. EPA proj ects that all non

- responders would purchase the necessary equipment in the first year and then spend 10 percent of the initial purchase price annually for years 2

- 10 for maintenance and replacement. I n Exhibit 5

- 10, cost elements are presented by total initial costs, and

56 See Chapter 2 for a detailed description of alternative options for the coordination rule provision.***E.O. 12866 Review

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Page 63 of 126 

### maintenance costs, if applicable. If a sub

- provision has an ongoing maintenance cost, it is assumed that the initial cost will be incurred in year 1, and the ongoing cost will be incurred in years 2

- 10. For facilities that do not have an ongoing cost, the initial cost will be incurred with the annual frequency provided.

Exhibit 5

- 10: Total Undiscounted Costs for Coordination and Developing an ER Program (High Option)

Facility Type Annual Frequency Unit Cost Facilities Total Initial Cost Maintenance Costs Plan Development Simple <20 FTEs N/A $2,311 4
, 72 4 $10,9 1 8, 980 $1,09 1 ,8 98 Simple 20

- 99 FTEs N/A $2,311 899 $2,077,935 $207,793 Simple 100+ FTEs N/A $2,311 7 31 $1,6 89,622 $16 8,962 Complex <20 FTEs N/A $7,567 14 4 $1,0 89,621 $10 8,962 Complex 20

- 99 FTEs N/A $7,567 23 5 $1,7 78,200 $17 7,820 Complex 100+ FTEs N/A $7,567 47 $ 355,640 $ 35,564 Subtotal $17,909,997 $1,791,000 Training Simple <20 FTEs N/A $11,107 4
, 071 

### $45,215,184 $11,078,537 Simple 20

- 99 FTEs N/A $11,107 774 

### $8,596,549 $2,106,310 Simple 100+ FTEs N/A $11,107 721 

### $8,007,897 $1,962,079 Complex <20 FTEs N/A $16,241 144 

### $2,338,694 $446,191 Complex 20

- 99 FTEs N/A $16,241 235 

### $3,816,619 $880,824 Complex 100+ FTEs N/A $64,964 47 

### $3,053,295 $582,527
Local Government N/A $16,241 788 

### $12,797,855 $2,953,571
Subtotal 

### $83, 826,094 $20,010,039 Equipment Simple <20 FTEs N/A $50,000 4
, 071 

### $203,550,000 $20,355,000 Simple 20

- 99 FTEs N/A $50,000 774 

### $38,700,000 $3,870,000 Simple 100+ FTEs N/A $50,000 721 

### $36,050,000 $3,605,000 Complex <20 FTEs N/A $60,000 144 

### $8,640,000 $864,000 Complex 20

- 99 FTEs N/A $60,000 235 

### $14,100,000 $1,410,000 Complex 100+ FTEs N/A $60,000 47 

### $2,820,000 $282,000
Local Government N/A $60,000 788 

### $47,280,000 $4,728,000
Subtotal 

### $ 351,140,000 $35,114,000 Table Top Exercise Simple <20 FTEs 0.8 $5,380 

### 4
, 724 $20,331,928 $0 Simple 20

- 99 FTEs 0.8 $6,507 

### 899 $4,679,615 $0 Simple 100+ FTEs 0.8 $12,218 

### 731 $7,144,981 $0 Complex <20 FTEs 0.8 $6,829 

### 144 $786,690 $0 Complex 20

- 99 FTEs 0.8 $8,301 

### 235 $1,560,535 $0 Complex 100+ FTEs 0.8 $23,621 

### 47 $888,166 $0 Subtotal 

### $35,391,915
Field Exercise Simple <20 FTEs 0.2 $8,209 

### 4724 $7,756,324 $0 Simple 20

- 99 FTEs 0.2 $13,835 

### 899 $2,487,452 $0***E.O. 12866 Review

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Page 64 of 126 Facility Type Annual Frequency Unit Cost Facilities Total Initial Cost Maintenance Costs Simple 100+ FTEs 0.2 $23,111 

### 731 $3,378,766 $0 Complex <20 FTEs 0.2 $10,047 

### 144 $289,351 $0 Complex 20

- 99 FTEs 0.2 $17,301 

### 235 $813,139 $0 Complex 100+ FTEs 0.2 $65,758 

### 47 $618,121 $0 Subtotal 

### $15,343,153
LEPC Disclosure

– Exercise Report Simple <20 FTEs 1 $555 

### 4724 $2,622,482 $0 Simple 20

- 99 FTEs 1 $555 

### 899 $499,071 $0 Simple 100+ FTEs 1 $555 

### 731 $405,807 $0 Complex <20 FTEs 1 $1,237 

### 144 $178,138 $0 Complex 20

- 99 FTEs 1 $1,237 

### 235 $290,712 $0 Complex 100+ FTEs 1 $1,237 

### 47 $58,142 $0 Subtotal 

### $ 4,054,354

Total 6,7 80 

### $507,665,513 $56,915,039

The initial cost of $507,665,513 is the cost that all facilities will incur when they begin complying with this provision and convert from being non

- responders to responders. The $56,915,039 is the cost that
facilities will incur to maintain responder status in terms of maintaining equipment, response plans, and training

. Equipment costs make up approximately 70% of the costs of converting to an emergency responder

. It seems possible that some facilities will finance th e in itial costs and spread them across multiple years

. Thus the current assumption that facilities must pay thes e initial costs in a single initial

year is conservative

. The initial costs for becoming res ponders includes training costs

– such as course
fee s , labor hours, and travel costs

– plus the cost of acquiring equipment, all of which must occur in the first year in order to meet OSHA requirements. Maintenance costs include the cost of annual refresher training, the assumption that one new responder pe r year needs to be trained (to account for turnover), as well as costs for equipment that needs to be repaired or replaced.

For activities that have an annual frequency rate

– all pertaining to facility exercises

– the annual frequency represents how of ten facilities will need to implement that activity. As explained in section 5.1, an annual frequency of 0.2 for field exercises effectively means 20% of facilities will be implementing this requirement in the first year of becoming a responder. The tota l costs for these provisions represent the number of facilities that would be implementing that expenditure in the first year of becoming a responder.

Notification Exercises

EPA analyzed only one option for this provision.

Low/Medium/High Option: Applicable to all Program 2 and 3 Facilities***E.O. 12866 Review

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### This provision would require all P2 and P3 facilities to conduct an annual notification exercise to verify that emergency contact information is up

- to

- date

. This includes verifying that notification contact
inf ormation for emergency responders, Federal, state and local response agencies, and other accidental release notification contacts is correct and includes functional phone numbers

. The breakout of costs is
in Exhibit 5

- 11.

Exhibit 5

- 11: Total Undiscounted Costs for Notification Drills (All Options)

Facility Type Annual Frequency Unit Cost Facilities Total Initial Cost

Simple Facilities 1 $110 10,345 $1,142,519

Complex Facilities 1 $152 1
, 555 $237,021

Total 11,900 $1,379,540



### Facility Exercises

EPA analyzed three options for emergency response exercises.

Low Option : Applicable to All P2 and P3 Responding Facilities

The low option would require all P2 and P3 responding facilities to conduct an annual tabletop exercise

. The breakout of costs are in Ex hibit 5

- 12.

Exhibit 5

- 12: Total Undiscounted Costs for Facility Exercises (Low Option)

Facility Type Annual Frequency Unit Cost Facilities Total Initial Cost

Simple <20 FTEs 1 $5,380 

### 1640 $8,823,127

Simple 20

- 99 FTEs 1 $6, 507 

### 880 $5,725,892

Simple 100+ FTEs 1 $12,218 

### 1467 $17,923,542

Complex <20 FTEs 1 $6,829 

### 141 $962,875
Complex 20

- 99 FTEs 1 $8,301 

### 459 $3,810,029
Complex 100+ FTEs 1 $23,621 

### 533 $12,590,231
Total 5,120 

### $49,835,696***E.O. 12866 Review

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### Medium Option (Proposed) : Applicable to All P2 and P3 Responding Facilities

The medium option would require all responding P2 and P3 facilities to conduct a field exercise every 5 years and within one year after a reportable accident and conduct an annual table top exercise in the
other years

. Given this timeline, the analysis used an annual frequency rate of 0.2 for the field exercise and 0.8 for the tabletop exercises

. The analysis also assumed that facilities with an accident would have
met their 5

- year field exercise requirement by conducting an exercise within one year of the accident
, effectively pushing their next required field exercise out 5 more years . Therefore, post

- accident
exercises were assumed not to affect the cost s of this option

. The breakout of costs is in Exhibit 5

- 13.

Exhibit 5

- 13: Total Undiscounted Costs for Facility Exercises (Medium Option)

Facility Type Annual Frequency Unit Cost Facilities Total Initial Cost
Table Top Exercise Simple <20 FTEs 0.8 $5,380 

### 1
, 640 $7,058,502 Simple 20

- 99 FTEs 0.8 $6,507 

### 880 $4,580,713 Simple 100+ FTEs 0.8 $12,218 

### 1
, 467 $14,338,834 Complex <20 FTEs 0.8 $6,829 

### 141 $770,300 Complex 20

- 99 FTEs 0.8 $8,301 

### 459 $3,048,023 Complex 100+ FTEs 0.8 $23,621 

### 533 $10,072,185
Subtotal 

### $39,868,557
Field Exercise Simple <20 FTEs 0.2 $8,209 1,640 

### $2,692,712 Simple 20

- 99 FTEs 0.2 $13,835 880 

### $2,434,880 Simple 100+ FTEs 0.2 $23,111 1,467 

### $6,780,643 Complex <20 FTEs 0.2 $10,047 141 

### $283,322 Complex 20

- 99 FTEs 0.2 $17,301 459 

### $1,588,217 Complex 100+ FTEs 0.2 $65,758 533 

### $7,009,760
Total 5,120 

### $ 60,658,091

High Option: Applicable to All P2 and P3 Responding Facilities

The high option would require all P2 and P3 responding facilities to conduct an annual field exercise

. The breakout of costs are in Exhibit 5

- 14.

Exhibit 5

- 14: Total Undiscounted Costs for F acility Exercises (High Option)

Facility Type Annual Frequency Unit Cost Facilities Total Initial Cost
Simple <20 FTEs 1 $8,209 

### 1
, 640 $13,463,560 Simple 20

- 99 FTEs 1 $13,835 

### 880 $12,174,402 Simple 100+ FTEs 1 $23,111 

### 1
, 467 $33,903,213 Complex <20 FTEs 1 $10,047 

### 141 $1,416,612***E.O. 12866 Review

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Page 67 of 126 Facility Type Annual Frequency Unit Cost Facilities Total Initial Cost
Complex 20

- 99 FTEs 1 $17,301 

### 459 $7,941,083 Complex 100+ FTEs 1 $65,758 

### 533 $35,048,801
Total 5,120 

### $103,947,670



## 5. 5 Information Disclosure Rule Provisions

5.5 .1 Public Meeting

EPA analyzed two options for imposing a requirement to hold a public meeting at least once every 5

years.
Low/Medium Option: Applicable to All P2 and P3 Facilities

This option would require that all P2 and P3 facilities conduct a public meeting once every five years and immediately following an accident

. The analysis uses an annual frequency of 0.2 to account for this

. The breakout of costs is in Exhibit 5

- 15.

Exhibit 5

- 15: Total Undiscounted Costs for Public Meetings (Low/Medium Option)

Facility Type Annual Frequency Unit Cost Facilities Total Initial Cost

Small Complex 0.2 $2,123 528 $224,194

Large Complex 0.2 $3,696 1027 $759,179

Simple 0.2 $1,706 10345 $3,529,077

Total 11,900 $4,512,451



### High Option (Proposed) : Applicable to All Facilities

This option would require that all facilities conduct a public meeting once every 5 years and immediately following an accident (i.e., P1 facilities would also have to comply)

. The analysis uses an annual frequency of 0.2 to account for this

. The breakou t of costs is in Exhibit 5

- 16.

Exhibit 5

- 16: Total Undiscounted Costs for Public Meetings (High Option)

Facility Type Annual Frequency Unit Cost Facilities Total Initial Cost
Small Complex 0.2 $2,123 565 $ 239,905 Large Complex 0.2 $3,696 1056 $780,617 Simple 0.2 $1,706 10921 $3,725,573 Total 12,542 $4,746,094***E.O. 12866 Review

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### Information Sharing

EPA analyzed one option (with multiple cost outcomes depending on whether the STAA provision would apply to a subset of P3 facilities (STAA low option) or whether it would apply for all P3 facilities (medium and high options) ) for the information sharing provisions for the LEPC or emergency response officials and the public.

LEPC or Emergency Response O fficials

This proposed provision would require the facility owner or operator to make information on regulated substances
, compliance audit s , IST
, accident histor y , incident investigation s , and exercise s available annually to the LEPC or emergency response officials

. The provision to share compliance audit summaries applies to P2 and P3 facilities

. The provision for sharing IST implementation information is calculated based on the total number of processes for which this provision would apply

. The other provisions for providing accident histories and inves tigation report summaries to LEPCs or emergency response officials are based on a subset of P2 and P3 facilities that are expected to have reportable accidents. Costs of providing emergency response exercise information to LEPCs is based on the
number of P2 and P3 responding facilities. 57



### Information Sharing with the P ublic

This provision would require the facility to make information available annually in a manner that is easily accessible to the public including: the names, quantities, and Safety Data Sheets of regulated substances used at the facility
, the facility’s five

- year accident history
, a summary of the emergency response program information reported in the RMP
, a summary of emergency exercises conducted and a schedule for upcoming exercises
, a nd LEPC contact information.

Low/Medium/High Option: Applicable to All Facilities

This provision would require that all facilities collect information related to RMP compliance and disclose it to the public and local emergency response agencies

. This incl udes those with Program 1

processes . H owever, facilities in Program 1 are not required to generate some information ( e.g., they are not required to do compliance audits )

. The breakout of costs related to public disclosure and local

emergen cy responders i s in exhibit 5

- 17 :

57 The provision to share information on the names and quantities of regulated substances is the same as the public disclosure provision and no additional costs are estimated for sending this info rmation to the LEPCs or local emergency response officials.***E.O. 12866 Review

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### Exhibit 5

- 17 : Total Undiscounted Costs for Information Sharing Provisions (All Options)

Facility Type Annual Frequency Unit Cost Facilities (unless otherwise noted) Total Initial Cost

Public Disclosure

Small Complex 1 $459 565 $259,090

Large Complex 1 $1,621 1
, 056 $1,711,295

Simple 1 $184 10
, 921 $2,005,498

LEPC Disclosure

Accident History

– Simple 1 $185 372 $68,767

Accident History

- Complex 1 $390 350 $136,464

Audit Report

- Simple 0.33 739 10
, 345 $2,524,286

Audit Report

- Complex 0.33 $1,864 1
, 555 $956,740

Investigation Reports

- Simple 1 $1,054 372 $392,213

Investigation Reports

- Complex 1 $3,021 350 $1,057,418

STAA

– Simple 0.2 $1,258 1,783
processes $448,591

STAA

– Complex 0.2 $3,326 2,514
processes $1,672,335

Exercise Reports

– Simple 1 $555 3,987 $2,213,344

Exercise Reports

- Complex 1 $1,237 1,133 $1, 401,603

LEPC Review

- Simple 1 $53 10
, 921 $583,509

LEPC Review

- Small Complex 1 $107 565 $60,376

LEPC Review

- Large Complex 1 $214 1
, 056 $225,688

Total $11,741,335



## 5. 6 New Responders

The proposed provision to improve coordination with local responders includes the possibility that local emergency response officials with jurisdiction may require that the owner or operator of the stationary***E.O. 12866 Review

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### source maintain an in

- house emergency response capability. As a sensitivity analysis, EPA has examined different assumptions regarding the number of current non

- responding facilities (see Exhibit 3

- 8 for numbers) that might develop and maintain such in

- house capability and thereby convert to responding facilities

. EPA faced a lack of information regarding the number of nonresponding facilities that might develop their own emergency response programs to comply with the proposed rule’s coordination provision

. As a consequence, EPA performed a sensitivity analysis that examined a facility’s proximity to existing hazardous materials (hazmat) teams

. While this approach is less than ideal for a number of reasons explained below, the general idea was that proximity to an existing hazmat team reduces the likelihood that a facility will need to provide for its own emergency response

. EPA used an existing analysis of hazmat team locations obtained from the F ederal Emergency Management Agency (FEMA)

. Those data were compiled for the 2012 National Preparedness Report to characterize the existing coverage of hazmat teams. 58 

### The 2012 report found that “the nation has developed a mature set of assets for
addressin g hazardous materials incidents. ” There were approximately 1,100 state and local hazmat teams identified, and the FEMA report concluded that 76% of the population is covered by these hazmat response teams. 59



### Although the exact location of each hazmat team could not be identified from the FEMA data, it was possible to identify the county of each hazmat team (see Exhibit 5

- 18 )

. Using ArcGIS tools, the maps of

non

- responding facilities and hazmat team counties were merged and appear as Exhibit 5

- 19 . These
da ta provide the boundaries for a sensitivity analysis of the number of non

- responders that will become responders as a result of the proposed rule’s coordination requirements.

Approximately 38.5% of non

- responding facilities are located in counties with ha zmat teams

. Having a hazmat team within the same county makes it more likely th at the RMP facility can rely on that team and not need to convert to responder status

. However, this may be an overestimate of the percent that will not convert because being located in a county with a hazmat team does not necessarily mean that every chemical handled by a particular facility is covered by that team

. On the other hand, it might underestimate hazmat team coverage as there are several states that have expended si gnificant effort to have their whole state covered by hazmat response

. For instance, Florida takes into account the location of RMP facilities in the planning of its hazmat response capabilities. 60 

### EPA’s county analysis does not account for such statewide planning and coverage

. Since 38.5% of non

- responding facilities are in hazmat counties, 61.5% are not “covered ,” and might potentially have to become responders

. This represents the upper bound of our sensitivity analysis

. Full counts of facilities in and out of hazmat counties, broken down by the main facility categories, appear in Exhibit 5

- 20

.

58 https://www.fema.gov/media

- library/assets/documents/26675

59 The approach for estimating the 76% was roughly based on the population in proximity to a hazmat team

60 http://floridadisaster.org/hazmat/***E.O. 12866 Review

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### Exhibit 5

- 18 : Counties with Haz ardous Mat erial Teams***E.O. 12866 Review

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### Exhibit 5

- 19 Locations of Non

- Responding Facilities***E.O. 12866 Review

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### Exhibit 5

- 20 : Sensitivity Analysis of Percent of Non

- Responding Facilities that M ight Convert to Responder Status

Sector In a County with a Hazmat Team
Out In Percent All Non

- Responders 4,349 2,722 38.5% Food/Bev

. Manufacturers 204 294 59.0% Ag

. Facilities 2,328 742 24.2% Chem Wholesale 113 104 47.9% Warehouses 162 306 65.4% Other Wholesale 2,270 645 22.1% Oil Gas 262 75 22.3%
Water or POT W 654 703 51.8% Refineries 10 8 44.4% Chemical Manufacturers 237 184 43.7% Pulp and Paper 1 4 80.0%



### Using 61.5 percent on the high

- end, the sensitivity analysis used this portion of the non

- responding RMP facility universe (equivalent to 4112 facilities) to assume that 25%, 50%, and 75% of these non

respond ing facilities would need to become responding facilities

. The unit cost breakdown is the same as presented in Exhibit 5

- 10

. Exhibits 5

- 21 , 5

- 22 , and 5

- 23 present new responder costs for 25 percent, 50 percent, and 75 percent of current non

- responding facilities to become responders

. The components of the costs for this sensitivity analysis are described above in Section 5.3.1 under the High Option alternative

.

Exhibit 5

- 21 : Total Undiscounted Costs for New Responders : 25% Conversion (Millions , 2014 Dollars)

Provision Type 25% Conversion Facilities Total Initial Cost Ongoing Costs

Plan Development 1,028 $ 2.7 $ 0.3

Training 1,028 $ 12 .8 $ 3 .0

Equipment 1,028 $ 53 .9 $ 5 .4

Table Top Exercise 1,028 $ 5 .0 $0

Field Exercise 1,028 $ 2 .1 $0

LEPC Disclosure

– Exercise Report 1,028 $ 0.6 $0

Total * $ 77.1 $ 8 .7***E.O. 12866 Review

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### Exhibit 5

- 22 : Total Undiscounted Costs for New Responders : 50% Conversion (Millions , 2014 Dollars)

Provision Type 50% Conversion Facilities Total Initial Cost Ongoing Costs

Plan Development 2
, 056 $ 5.4 $ 0.5

Training 2
, 056 $ 25.7 $ 6.1

Equipment 2
, 056 $ 107.7 $ 10.7

Table Top Exercise 2
, 056 $ 10.1 $0

Field Exercise 2
, 056 $ 4.2 $0

LEPC Disclosure

– Exercise Report 2
, 0 56 $ 1.2 $0

Total * $ 154.3 $ 17.4
*Totals may not sum due to rounding



### Exhibit 5

- 23 : Total Undiscounted Costs for New Responders : 75% Conversion (Millions , 2014 Dollars)

Provision Type 75% Conversion Facilities Total Initial Cost Ongoing Costs

Plan Development 3
, 084 $ 8.0 $ 0.8

Training 3
, 084 $ 38.5 $ 9.2

Equipment 3
, 084 $ 161.6 $ 16.2

Table Top Exercise 3
, 084 $ 15.1 $0

Field Exercise 3
, 084 $ 6.3 $0

LEPC Disclosure

– Exercise Report 3
, 084 $ 1.8 $0

Total * $ 231.4 $ 26.2

*Totals may not add due to rounding

For the medium (proposed) option, the analysis assumed 50% conversion of non

- responders.***E.O. 12866 Review

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## 5. 7 Total Costs

The analysis presents total costs as total undiscounted costs over the 10 year period of analysis , total discounted (3 percent and 7 percent), and annualized (3 percent and 7 percent)

. When annual costs for different years are equal to one another across the analysis time period, the annualized costs calculated using different discount rates (e.g., 3 and 7 percent) are equal.

Exhibit 5

- 24 presents the total costs for all options

. Blue cells represent the proposed rule option

. Exhibit 5

- 25 presents the total cost for the proposed rule only.***E.O. 12866 Review

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### Exhibit 5

- 24 : Total Costs (Millions 2014 Dollars)

Cost Elements Low Option Medium Option High Option Annualized (3%) Annualized (7%) Annualized (3%) Annualized (7%) Annualized (3%) Annualized (7%) Third Party Audits $5.0 $5.0 $84.2 $84.2 $96.2 $96.2
Root Cause Analysis $0.8 $0.8 $0.8 $0.8 $0.8 $0.8
Safer Technology and Alternatives $34.8 $35.8 $71.7 $71.7 $71.7 $71.7

Coordination $6.3 $6.3 $6.3 $6.3 $108.2 $116.9 New Responders $16.5 $17.8 $33.0 $35.6 $49.5 $53.5
Notification Drills $1.4 $1.4 $1.4 $1.4 $1.4 $1.4
Exercise Costs $49.8 $49.8 $60.7 $60.7 $103.9 $103.9
LEPC Disclosure $11.7 $11.7 $11.7 $11.7 $11.7 $11.7
Public Disclosure $4.0 $4.0 $4.0 $4.0 $4.0 $4.0 Public Meetings $4.5 $4.5 $4.7 $4.7 $4.7 $4.7 Rule Familiarization $0.2 $0.3 $0.2 $0.3 $0.3 $0.3

Total Cost * $135.0 $136.4 $27 8.8 $281.5 $452.6 $465.2 * Totals may not sum due to rounding



### Exhibit 5

- 25 : Total Cost of Proposed Rule ( Millions, 2014 Dollars)

Cost Elements Total Undiscounted Total Discounted (3%) Total Discounted (7%) Annualized (3%) * Annualized (7%) Third Party Audits $49.5 $42.3 $34.8 $5.0 $5.0

Root Cause Analysis $8.4 $7.2 $5.9 $0.8 $0.8
Safer Technology and Alternatives $347.9 $296.7 $244.3 $34.8 $34.8

Coordination $62.7 $53.4 $44.0 $6.3 $6.3 New Responders

 ̊ $311.1 $281.6 $250.3 $33.0 $35.6

Notification Drills $13.8 $11.8 $9.7 $1.4 $1.4 Exercise Costs $606.6 $517.4 $426.0 $60.7 $60.7 LEPC Disclosure $129.1 $100.1 $82.4 $11.7 $11.7 Public Disclosure $39.8 $33.9 $27.9 $4.0 $4.0 Public Meetings $47.5 $40.5 $33.3 $4.7 $4.7 Rule Familiarization $2.3 $2.3 $2.2 $0.2 $0.3

Total Cost + $1,618.8 $1,387.2 $1,161.1 $162.6 $165.3

* Totals may not sum due to rounding


### In total, the proposed rule would cost $ 162,631,853 (annualized 3 percent) or $ 165,31 0 ,570 (annualized 7 percent) including 50 percent conversion of new responders

.***E.O. 12866 Review

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# CHAPTER 6: BENEFITS

Facilities subject to the RMP regulation pose significant risks to the public and the environment

. These risks stem from potential accidental chemical releases that can cause fires, explosions, and harmful vapor clouds

. Chemical accidents

- fires and exp losions in particular

- not only kill and injure people, but can do great damage to property. Property damage can include damage to goods produced, plant equipment and structures , and nearby industrial, commercial, and residential buildings , equipment, an d furnishings

. Damage can also occur to the natural environment and negatively affect nearby ecosystems
and wildlife

. Resources
, such as emergency personnel and equipment
, are diverted to address the fire, explosion
, or vapor cloud

. Properties located near the accident may lose value as a result of the perceived risks and other disamenities posed by proximity to the facility

. Risks posed by RMP facilities are reduced by lowering the probability and magnitude of accidents, which
is th e objective of the proposed rule

. Thus
, the benefits of the proposed rule include reductions in the number of people killed, injured, and evacuated or otherwise inconvenienced by sheltering in place; reductions in the damage caused to property on

- site and off

- site including product, equipment, and buildings; reductions in damages to the environment and ecosystems; and reductions in resources diverted to extinguish fires and clean up affected areas

. The proposed rule would also provide other benefits, such as increased public information, which in addition to helping to minimize the impacts of accidents on the offsite public, could also lead to more efficient property markets in areas near RMP facilities.



## 6 .1 Benefit Categories

Exhibit 6

- 1 illustrates the social benefits associated with each proposed rule provision. There are four primary social benefit categories identified by EPA . These include:

• Prevention of Future RMP Accidents : Several rule provisions would prevent accidents by triggering improvements in plant design, equipment, procedures, or operator training. Preventing serious accidents avoids numerous direct costs, including worker, responder, and public fatalities and injuries, public evacuations, public sheltering

- in

- plac e, and property and environmental damage. It also avoids indirect costs, such as lost productivity due to product damage and business interruption both on

- site and off

- site , expenditure of emergency response resources and attendant transaction costs, and reduced offsite property values.

• Mitigation of Future RMP Accidents : Several rule provisions would reduce the impacts of serious accidents by promoting a more rapid and efficient response to these incidents. If a
serious chemical accident or major catas trophe occurs, mitigating its impacts benefits society by reducing the number of fatalities and injuries, reducing the magnitude of property damage and***E.O. 12866 Review

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### lost productivity both on

- site and off

- site , and reducing the extent of public evacuations, sheltering, and expenditure of emergency response resources.

• Improved Information : T hree rule provisions would result in providing improved information to emergency planners, emergency responders
, and the public. Providing improved information to emergency planner s and responders is beneficial because it results in more efficient allocation of public response resources by improving the ability of planners and responders to make appropriate decisions concerning equipment, training, and procedures

. Improved informat ion will also improve local contingency planning and training of emergency responders

. Providing better information to members of the public will allow people to make better decisions about where to live and work, what to do when an emergency occurs, and how to account for the market value of property located near RMP facilities.

• Prevention and Mitigation of Future non

- RMP Accidents at RMP Facilities : Actions that prevent or reduce the severity of accidents in RMP

- covered processes are also likely to pre vent or mitigate non

- RMP accidents at the same facilities because the same or similar actions can be taken with regard to processes and equipment not subject to the regulation, often at minimal additional cost. For example, if an owner or operator impleme nts operational safety policies to prevent or respond to an RMP

- related emergency , it will also improve their ability to respond to any emergency or accident at the facility because of the new operational safety policies.***E.O. 12866 Review

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### Exhibit 6

- 1: Social Benefits of Proposed Rule Provisions

Rule Provision Social Benefits (primary social benefit in bold)

1. Third party audits Prevention of future RMP facility accidents Mitigation of future RMP facility accidents Prevention of future non

- RMP accidents at RMP facilities Mitigation of future non

- RMP accidents at RMP facilities 2. Root cause analysis

3. Safer technology and alternatives analysis

4. Emergency coordination Mitigation of future RMP facility accidents Improved information Mitigation of future non

- RMP accidents at RMP facilities 5. Emergency response exercises

6. LEPC information disclosure Improved information Mitigation of future RMP facility accidents Mitigation of future non

- RMP accidents at RMP facilities

7. Public information availability Improved information Mitigation of future RMP facility accidents

8. Public meetings Improved information Mitigation of future RMP facility accidents

As Exhibit 6

- 1 indicates, each rule provision would produce social benef its in multiple benefit categories. The primary social benefit category for each rule provision i s indicated in bold type

. Exhibit 6

- 1 indicates, for example, that performing accident root cause analysis primarily will help prevent future similar acciden ts and that improved emergency coordination will primarily help mitigate future accident impacts

. The table suggests that providing better information to neighboring residents and businesses may improve the efficiency of their decisions about where to loc at e

. Note that the table also identifies other benefit categories listed below the boldface primary one

. For example, better informed neighbors may have improved responses to warnings that lower their potential exposure and panic, thereby***E.O. 12866 Review

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### mitigating damages

. Additionally, residents who are extremely risk averse may decide to live further from RMP facilities after reviewing improved information, improving the efficiency of local real estate
markets.



### 6.1.1 Prevention

Proposed rule provisions 1, 2, and 3 involve changes to the rule’s accident prevention program elements and are intended to lower the likelihood of future accidents of the same or similar type. Rule provision 1, which would require certain compliance audits to be conducted by an independen t third party, should improve the objectivity of auditors and result in identification of safety problems and necessary process improvements before such deficie ncies can result in accidents

. Rule provision 2, the root cause analysis provision (that would apply after a reportable accident or near miss), should prevent future accidents by identifying the underlying causes and corrective actions for serious accidents and near misses

. Over time, implementing the corrective actions and lessons learned through root cause analyses should prevent future accidents and result in a reduction of on

- site and offsite impacts

. Rule provision 3, the STAA analysis, should result in identification of potential process changes that, if implemented, would result in owners or operators using less hazardous substances, minimizing the amount of regulated substances present in a process, moderating process conditions, o r reducing process complexity

. Such changes, if implemented, help prevent accidents by either eliminating the p ossibility of an accidental release entirely, by making a process more fault

- tolerant, such that a minor process upset or equipment malfunction does not result in a serious accidental release, and by making releases that may occur less

sev ere

. The STAA an alysis provision does not actually require the owner or operator to implement any changes, so it would only provide benefits if the facility voluntarily decides to implement changes

. EPA has not estimated the costs of implementation in the cost analysis. 61



### In addition to preventing future accidents, provisions 1, 2, and 3 have additional social benefits, including mitigation of future RMP facility accidents, prevention of future non

- RMP accidents at RMP facilities, and mitigation of future non

- RMP accidents at RMP facilities

. These provisions can identify process improvem ents that result in less severe releases (e.g., an audit or investigation that identifies improvements to a release detection or mitigation system).



### 6.1.2 Mitigation
Proposed rule provisions 4 and 5 are primarily focused on improving emergency response c apabilities

. F aster and better coordinated responses , including effective and efficient notification of the public, should reduce human health impacts and property damage, and limit the number of on

- site and off

- site impacts

. Bringing fires and releases under control more quickly and ensuring that workers and responders know the most effective actions to take for a particular facility under particular conditions could reduce the duration of incidents, the likelihood of injuries to emergency responders, and limit

61 Although the costs associated with those changes may in some cases be high, it is unlikely that a facility would implement costly changes unless it determined that its own private benefits (for example, there could be production efficiency improvements as well as safety enhancements) would equal or exceed those costs.***E.O. 12866 Review

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### exposures
— particularly for long

- duration events

. For example, a f ood plant in New Orleans in St. Tammany recently experienced an ammonia leak

. The plant, a nearby commercial facility, and an interstate highway were shu t down for hours while hazardous material crews worked to contain the leak

. 62



### Improved emergency response to control fires could also prevent knock

- on impacts, such as additional explosions at facilities that store highly flammable gases, potentially result ing in a release of a regulated substance

. For example, a propane fire at a Texas refinery in 2007 caused a chlorine release, four injuries, total refinery evacuation, and a shutdown. 63 

### A 2009 natural gas explosion at a food manufacturing plant led to rele ase of ammonia from the refrigeration system and 71 hospitalizations for toxic exposure. 64 

### Improving emergency response could also reduce the length of offsite exposures, which would lower the risk to the public.

The Emergency Coordination provision, numbe r 4
, would require RMP facilities to keep written records of coordination efforts with local response agencies including dates, names, and affiliations of
individuals contacted. This provision should improve emergency responses by ensuring that appropriate capabilities are establis hed to respond to emergencies

. The Exercise p rovision , number 5
, would require almost all RMP facilities to perform notification exercises, and all re sponding RMP facilities to perform tabletop and field exercises

. Such exercises increase emergency response readiness, both for RMP facility owners or operators and local responders, by testing emergency communications systems and emergency plans and by e nsuring local and facility response personnel know what actions to take duri ng various accident scenarios

. Together, rule provisions 4 and 5 should mitigate the impact of RMP facility accidents that may occur.

Improved coordination between facility owne rs and operators and the local emergency response officials and emergency exercises (when local responders are involved) also help s ensure that local officials know what to tell the public when real accidental releases occur

. This improved information
wil l lead to more efficient responses by the public.



### 6.1.3 Information Disclosure
Three of the proposed rule components (6, 7, and 8) directly target information provision

. Providing information to the public and local agencies has multiple benefits

. Better informing the public about chemicals at an RMP facility enables more efficient decisions in the mark etplace for nearby properties

. Nearby residents will be able to make more informed decisions about where to locate their homes and

62 Roberts, Faimon A. (2015) I

- 12 in St. Tammany and Tangipahoa Reopened After Ammonia Leak. The Advocate. Baton Rouge. October 16.

63 CSB Report, Valero Refinery Propane Fire , Final Report, July 9, 2008, http://www.csb.gov/valero

- refinery

propane

- fire/

. 64 CSB Report, ConAgra Natural Gas Explosion and Ammonia Release , Final Report, February 4, 2010, http://www.csb.gov/conagra

- natural

- gas

- explosion

- and

- ammonia

- release/

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### businesses

. Those peop le who are more risk averse may prefer locating further away compared to

pe ople who are less risk averse

. Better informing LEPCs enables more efficient decision

- making regarding expenditures on equipment and training for emergency preparedness. B y improving information available to the public and LEPCs about the chemicals stored and processes used at RMP facilities, equipment, materials and training will be better aligned with the risks presented by the RMP facility

. In addition, if local residen ts and businesses understand the potential risks from a facility accident, they will be better able to understand recommendations for sheltering in place or evacuation and take appropriate actions should an actual incident occur, thereby mitigating the imp acts of the event

. Such knowledge can also help develop trust between the facility and the community, which could limit unnecessary concern and make residents more willing to act on recommendations.



### 6.1.4 Conclusion

The discussion in this section has qual itatively explained how the proposed rule provisions could prevent and mitigate accidents and improve information available to the public and LEPCs

. EPA has no data or empirical estimates of the precise impact of each rule provision on the probability and magnitude of an accident, or on improved efficiency due to better information

. I n order to shed light on the existing landscape, however, in the next section EPA will describe in detail the number and costs of accidents currently associated with RMP faci lities. To the extent practica ble , the analysis monetizes the costs of damages to partially estimate the baseline costs that should decline due to the proposed rule

. It also qualitatively discusses other benefits that are expected outcomes of the propose d rule.



## 6. 2 Number and Costs of Baseline Accidents

As part of the RMP Program, owners or operators of facilities subject to the rule must submit information on accidents that occurred over the previous 5 years if they produced on

- site or offsite deaths, injuries, or property damage, or if they led to an evacuation, sheltering in place event, or offsite environmental damage

. The analysis reviewed these data for all facilities that reported accidents that occurred from 2004 through 2013 (the last year with complete data) to provide a 10

- year baseline. 65 

### The beginning of the 10

- year period was chosen as the earlies t date that would fully reflect the impacts of the most recent RMP rule update.

Some accidents that occurred at RMP facilities during the 10

- year period were not reported to EPA either because the facility closed subsequent to the accident , decommissioned the process, or removed the regulated substance from the process involved in the accident before it was requi red to submit a report to the RMP database

. For example, a Praxair facility in St. Louis, Missouri, had a fire involving

65 The accidents included those that occurred at facilities that subsequently deregistered from the RMP Program. As such, some a ccidents analyzed may have occurred at facilities no longer subject to the RMP rule. Offsetting this, however, is the registration of new facilities subsequent to 2013.***E.O. 12866 Review

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### propylene cylinders on June 24, 2005, that resulted in one fatality and significant offsite property damage. 66 

### MFG Chemical, in Dalton, Georgia, released a cloud of allyl alcohol on April 12, 2004, that led to 154 people being medically treated, 5 hospitalized for chemical exposure, and a community
evacuation. 67 

### Both of these facilities either closed or deregistered the affected process b efore the deadline for their subsequent RMP report

. Due to the omission of such accidents, the 10

- year baseline may under

- represent the number and magnitude of RMP chemical accidents.

The RMP data indicated that there were 1,517 reportable accidents among the 2, 291 total accidents in
the 10

- year baseline. Facilities provided information for 774 accidents that had no reportable impacts so EPA dropped them from the baseline database

. The RMP accident database contains information on the initiating event and contributing factors for each accident

. The impacts reported should be those attributable to, or resulting from, direct exposure to toxic concentrations, radiant heat, or overpressures from accidental releases or from indirect consequences of a vapor cloud explosion from the accidental release

. However, EPA determined that there we re some accidents where a release of a regulated substance was not the cause of the resulting impacts.

To address this difficulty, reportable accidents were reviewed in deta il based on industry knowledge and other resources, such as reports by the Chemical Safety Board, to ensure that only impacts attributable to the release of a regulated substance were included

. For example, for one accident, a review of the
Chemical Safet y Board report indicated that the initiating event was an explosion in a natural gas fuel line that led to a building collapse, the death of 4 workers, and in combination with a subsequent fire,
the eventual release of ammonia. 68 

### The analysis included the accident in the 10

- year baseline, and retained the injuries, but excluded the 4 deaths and the property damage because they preceded the regulated substance release

. In another case, EPA omits the accident and damages from the analyzed data because it app ears that a fire was deliberately set. 69



### We indicate that one potential benefit of the proposed rule is prevention of “non

- RMP” accidents at RMP facilities. Therefore, it is arguable that EPA should have counted these accidents and accident consequences i n the baseline. However, EPA chose not to do so because it is a conservative approach to estimating the potential benefits of the proposed rule.

66 CSB Report, Praxair Flammable Gas Cylinder Fire , Final Report, June 15, 2006, http://www.csb.gov/praxair

flammable

- gas

- cylinder

- fire/

. 67 CSB Report, MFG Chemical Inc. Toxic Gas Release , Final Report, April 11, 2006, http://www.csb.gov/mfg

chemical

- inc

- toxic

- gas

- release/

. 68 CSB Report, ConAgra Natural Gas Explosion and Ammonia Release , Final Report, February 4, 2010, http://www.csb.gov/conagra

- natural

- gas

- explosion

- and

- ammonia

- release/

. 69 Fire at Patrick Cudahy meat packing plant in Cudahy, WI on July 9, 2009, http://www.bizjournals.com/milwaukee/news/2011/12/23/navy

- sued

- for

- 326

- million

- in

- damages.html

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### 6. 2.1 On

- site Reportable Accidents in the 10

- Year Baseline

Exhibit 6

- 2 presents the 10

- year data, by year, for on

- site impacts of accidents

. Deaths and injuries are attributed to either employees or members of the public

.

Exhibit 6

- 2 : On

- site Impacts by Year

Year Impact Accidents Employee Deaths Employee Injuries Public Injuries Public Deaths Value of Property Damage

2004 197 6 211 46 0 $124,186,397

2005 152 16 370 6 0 $343,100,280
2006 140 3 193 11 0 $181,088,015

2007 204 5 188 60 0 $207,676,070

2008 168 6 194 11 0 $514,472,444
2009 149 5 221 6 2 $87,029,904

2010 128 9 130 5 0 $114,845,119

2011 138 2 127 0 0 $108,642,919
2012 118 1 159 0 0 $86,245,834

2013 123 3 162 3 0 $287,608,254 Annual Average 151.7 5.6 195.5 14.8 0 $205,489,524

Total Reportable 1,517 56 1,955 148 2 $2,054,895,236



### There were a total of 5 8 on

- site fatalities over the 10

- year analysis time period , which amounts to an annual ave r age of 6 fatalities

. Several accidents involved multiple fatalities

. The la rgest accident during the time period was a refinery explosion in Texas City, Texas, in 2005 that killed 15 employees. 70 

### In 2010, a Tesoro refinery explosion in Anacortes, Washington, killed 7 employees 71 

### , and a 2004 explosion at Formosa Plastics in Illiopolis, Illinois, killed 5 employees. 72 

### There were 5 accidents that killed 2 workers each
, and the remaining employee deaths were single

- fatality incidents

. There were two on

site deaths to members of the public who were truck drivers loading a tank truck with ammonia when a line failure occurred

. 73



### The RMP rule does not require facilities to di saggregate on

- site injuries by severity so it is not possible to determine from the RMP data alone, the severity of the on

- site injuries

. However, under the RMP

70 CSB. March 2007. Investigation Report: Refinery Explosion and Fire, Texas City, Texas, March 23, 2005. http://www.csb.gov/assets/1/19/CSBFinalReportBP.pdf

71 CSB. May 2014. Investigation Report: Catastrophic Rupture of Heat Exchanger, Tesoro Anacortes Refinery, Anacortes, Washington, April 2 , 2010. http://www.csb.gov/assets/1/7/Tesoro_Anacortes_2014

- May

- 01.pdf

72 CSB. April 2004. Investigation Report: Vinyl Chloride Monomer Explosion, Formosa Plastics Corp., Illiopolis, Illinois, April 23, 2004. http://www.csb.gov/assets/1/19/Formosa_IL_Re port.pdf.

73 http://www.startribune.com/rosemount

- oklahoma

- firms

- fined

- in

- 2

- deaths/95895109/***E.O. 12866 Review

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### accident history requirements, a reportable accident injury means “any effect on a human that results either from direct exposure to toxic concentration; radiant heat; or overpressure from accidental releases or from the direct consequences of a vapor cloud explosion (such as flying glass, debris, or other projectiles) from an accidental release an d that requires medical treatment or hospitalization. ”
Medical treatment means “treatment, other than first aid, administered by a physician or registered professional personnel under standing orders from a physician” (40 CFR 68.3)

. For some accidents,

w here accident reports could be located from other sources, it appears that serious injuries (i.e., those requiring hospitalization) range from none (e.g., Leprino Foods August 2013 and Tysons Meats 2012 where all workers were treated and released) to at le ast 50 percent of reported injuries (Delek Refining 2008); in the largest accident (BP 2005), 66 workers were hospitalized, and 110 others were treated for minor injuries. 74



### . Injuries described in reports varied from those that were treated with first aid alone at the scene to severe burns and permanent disability

. Although the RMP rule limits reportable injuries to those that require medical treatment other than first aid, in some accidents, minor injuries treated with first aid have been reported. Regar ding on

- site property damage, the property affected included buildings, machinery, equipment and other plant infrastructure

. Almost $677 million of the $ 2 billion in property damage reported occurred in accidents that had no other reportable impacts on

- site or offsite.



### 6.2 .2 Off

- Site Reportable Impacts in the 10

- Year Baseline

Exhibit 6

- 3 presents the reported offsite impacts for the 10

- year baseline including members of the public or em ergency responders who were injured or killed offsite, were required to evacuate or shelter

in

- place, or who incurred property damage as a result of the accident s

. Of the 1,517 reportable releases, 473 had reportable offsite impacts

. O ne member of the pu blic was killed as a result of a release of a regulated substance; that person drove into an ammonia cloud moving across a highway

. There were approximately 50 incidents that listed offsite environmental damage but no other impacts

. Because environmental damage is reported only as true/false, there is no basis for estimating the costs associated with the damage; they are not presented in either Exhibit 6

- 2 or 6

- 3

.

74 CSB, OSHA, and press reports were reviewed for larger accidents. CSB has investigated relatively few of the accidents in the database and does not always detail the severity of injuries. OSHA focuses investigations primarily on fatal accidents or those involving multiple hospitalizations.***E.O. 12866 Review

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### Exhibit 6

- 3 : Offsite Impacts by Year

Year Impact Accidents with Offsite Impacts Number of Deaths Hospital Visits People undergoing Other Medical Treatment Number of people Evacuated Number of people Sheltered

in place Value of Property Damage

2004 66 0 43 239 5,656 96,958 $1,414,834
2005 54 0 4 32 3,927 135,260 $687,996
2006 53 0 7 26 1,533 11,792 $833,000
2007 61 0 33 212 15,464 32,682 $122,980
2008 45 0 8 74 2,798 4,771 $318,191
2009 44 1 27 37 3,102 8,984 $7,750
2010 36 0 42 112 3,564 4,180 $2,475,500
2011 36 0 2 11 699 47,833 $235,104
2012 36 0 19 14,013 1,008 98,120 $1,536,600
2013 42 0 4 51 838 11,085 $3,720,150 Annual Average 47.3 0.1 18.9 1,480.7 3,859 45,167 $1,135,211

Total Reportable 473 1 189 14,807 38,589 451,665 $11,352,105



### In the 10

- year baseline, the total number of off

- site people seeking medical treatment, other than hospitalization, is skewed by a single incident where 14,000 people sought treatment for exposure to smoke and particles from a fire at a Chevron refinery in Richmond, CA
, in 2012

. 75 

### For sheltering in place,
six different accidents at the BP refinery in Texas City account for 257,000 people taking shelter which explains the high numbers for 2004 and 2005. 76



### 6 .2.3 Distribution of Accident Impacts across Sectors

In the 10

- year baseline, the data indicate that fatal accidents occurred primarily in the petroleum refining, chemical manufacturing
, and pulp and paper sectors . Accidents in these sectors account ed for
all but 10 of the fatalities and includ ed the three accidents with the greatest impacts. 77 

### These sectors also account for 87 percent of the on site property damage (refineries alone account for 59 percent of the total)

. This is not surprising as these facilities handle highly flammable gases that can explode and burn

. These are also large facilities with interconnected processes that can incur extensive damage in

75 CSB. January 2014. Regulatory Report: Chevron Richmond Refinery Pipe Rupture and Fire, Chevron Richmond Refinery #4 Crude Unit, Richmond, California, August 6, 2012. Report No. 2012

- 03

- I

- CA. http://www.csb.gov/assets/1/19/CSB_Chevron_Richmond_Refinery_Regulatory_Report.pdf

. 76 CSB. March 2007. Investigation Report: Refinery Explosion and Fire, Texas City, Texas, March 23, 2005. http://www.csb.gov/assets/1/19/CSBFinalReportBP.pdf

.

77 Footnote 51 identifies the three worst accidents.***E.O. 12866 Review

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### an explosion

. The fatalities reported as RMP reportable impacts at refineries represent one third of all employee on

- the

- job fatalities reported to the Bureau of Labor Statistics for that sector for the 10

- year period of 2004 to 2013. In the chemical manufacturing sector, RMP reported fatalities represent about 6 percent of worker on

- the

- job deaths in the se ctor for the period

. 78 

### Exhibit 6

- 4 presents a breakdown
of RMP reportable accidents, deaths, and injuries by sector

. The food and beverage manufacturers and warehouses are generally ammonia refrigeration systems; the agricultural chemical distributors store
ammoni a for use as a fertilizer.

Exhibit 6

- 4 : Accidents, Fatalities, and Injuries by Sector

Sector Total 10

- Year A ccidents Accidents per Facility Onsite Fatalities 79 Injuries Onsite Injuries Offsite NAICS 324

- Petroleum and Coal Products Manufacturing 169 1.08 29 325 14,026

NAICS 325

- Chemical Manufacturing 530 0.36 15 585 378

NAICS 311, 312

- Food/Beverage Manufacturers 270 0.18 3 598 326

NAICS 322

– Paper Manufacturing 46 0.66 1 59 2

NAICS 331, 332, 333, 334, 336, 339

- Other Manufacturing 53 0.14 1 66 14

NAICS 11, 12, 15, 42491

- Agricultural Chemical Distributors 156 0.04 2 157 161

NAICS 4246, 4247

- Chemical/petroleum wholesale 38 0.06 0 30 31

NAICS 4244, 4245

- Other wholesale 20 0.07 0 62 15

NAICS 493

– Warehouse 72 0.07 2 77 9 NAICS 22131, 22132

- Water/POTW 75 0.04 1 89 19

NAICS 211

- Oil/Gas exploration 53 0.07 1 25 11

Other 35 0.06 1 30 4
Total 1,517 56 2,103 14,996

78 The BLS data reflect only facility employees killed, not contractors, who are accounted for under other NAI CS codes. Therefore, these data understate the number of workers who died in refinery accidents.

79 Column excludes 3 public fatalities (see Exhibits 6

- 2 and 6

- 3).***E.O. 12866 Review

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### 6. 2.4 Monetized Costs of Chemical Accidents

While t he RMP data base provides values of property damage , it includes only counts of fatalities, non

fatal injuries, evacuations, and the number of people required to shelter

- in

- place

. EPA has applied estimates of the values of these impacts to better understand the magnitude of accident impacts during the 10

- year baseline

. To monetize fatalities
, EPA applied the value of statistical life (VSL) recommended
in EPA’ s Guidelines for Preparing Economic Analysis (2010) (hereafter the Guidelines )

. For non

- fatal injuries, EPA gathered data on hospital costs from the US Department of Health and Human Services (HHS) Agency for Healthcare and Research and Quality Data (20 1 2 )

. Finally, for evacuations and shelter

in

- place events, values of labor time were drawn from the Bureau of Labor Statistics (20 14 ).

6.2.4.1 Fatalities and Injuries
Fatalities were valued using the Guideline ’s value of a statistical life ($7.9 million in 2008 dollars) inflated to 2014 dollars ($8 .6 million ).

In principle, valuation of injuries includes multiple components

. The Guidelines explain that the willingness to pay ( WTP ) to reduce the risk of experien cing an illness is the preferred measure of value for morbidity effects : 

### “As described in Freeman (2003), this measure consists of four components:

• 

### “Averting costs” to reduce the risk of illness; • “Mitigating costs” for treatments such as medical car e and medication; • Indirect costs such as lost time from paid work, maintaining a home, and pursuing leisure activities; and • Less easily measured but equally real costs of discomfort, anxiety, pain, and suffering

. ”



### Unfortunately, data were not available to estimate the components identified in the first, third, and final bullets

. These cost categories are omitted from EPA’s estimates
, which rely solely on the costs of
medical care

. For on

- site injury and offsite hospitalization, the analysis r eviewed the accident data to determine the percentage of the accidents that involved explosions and fires and the percentage that
involved the release of toxics

. The analysis then used the HHS data 80 

### on the current costs for hospitalizations for poisoning (other than by medicinal substances) to transfer to injuries from toxic releases, for burns to transfer to injuries associated with fire, and for open wounds to transfer to injuries from explosions

. Because the costs for open wounds and poisoning were clo se ($37,700 and $35,300, respectively)
, the analysis used the average of these two value s for on

- site injuries; the costs for burns was $100,000

. The analysis then created a weighted value of an on

- site injury based on the propensity
for a burn

- related in jury versus other impacts (fires were involved in 18 percent of the injury incidents, open wounds were assumed to be the remainder of injury costs)

. This was approximately $50,000

. The analysis used the cost of hospitalization for poisoning (rounded to $ 3 5 ,000) for hospitalizations associated with offsite injuries because in the 10

- year baseline these injuries were usually related to exposure to toxic chemicals

. For medical treatment, other than hospitalization (offsite), the analysis

80 http://hcupnet.ahrq.gov/***E.O. 12866 Review

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Page 89 of 126 

### used an estimate of $1,000, which is above the $750 per person paid to the 14,000 people who sought medical treatment from the Richmond refinery fire, and slightly below the average emergency room cost; people offsite are generally seeking treatment for exposure to fumes, wh ich usually involves relatively low cost treatments (e.g., oxygen, eye washes, skin washes).

The $50,000 cost estimate for on

- site injuries is inaccurate for several reasons

. As mentioned above for all injuries, hospital costs are only one of four categor ies of social costs incurred. EPA’s estimates are conservative by omitting three of the four categories, due to a lack of data

. However, as an estimate of hospital costs , it is an over

- estimate for an unknown percentage of the injuries on

- site that did not require hospitalizations and may not involve any medical costs 81 

### Or for injuries and toxic exposures that led to hospitalizations and we re minor enough that the person wa s released within a day (the HHS cost estimates are based on 3

- day stays for poison ings and injuries, 8 days for burns)

. However, i n the

o pposite direction , the $50,000 cost estimate is understated for those workers who were severely injured, for whom the medical costs would certainly have involved more than hospitalization

. There
woul d be costs associated with further medical treatment, and physical and occupational therapy.

6

. 2.4 .2 Evacuations and Shelter

- in

- Place Events

The 10

- year baseline data do not provide any basis for estimating the time involved in the average
evacuation or sheltering

. EPA assumes that sheltering

- in

- place is less disruptive than evacuations

. To estimate costs for evacuations and sheltering

- in

- place, the analysis assum ed the value of time of affected people was $ 22.65 per hour, and that the sheltering s occupied 4 hours, and the evacuations 8 hours. 82



### 6

. 2.4 .3 Summar y of Monetized Accident Impacts
The dominant monetized element of RMP facility reportable accidents is on

- site property damage, followed by onsite fatalities

. The total monetized 10

- year cost of the accidents is about $2.7 billion

. $2.6 billion of that is caused by on

- site impacts, and a bout $2. 5 billion is attributed to property damage and fatalities

. Monetizing the values of accidents during the 10

- year baseline involved a high degree of uncertainty associated with the estimated unit values for on

- site injuries, off

- site hospitalization, evacuations, and sheltering

- in

- place. However, these components of cost are small relative to the total
cost of chemical accidents. Exhibit 6

- 5 summariz es the 10

- year baseline reportable accident impacts and Exhibit 6

- 6 presents the monetized 10

- year baseline accident costs.

81 Even for widely investigated accidents, few details on injury levels are available. For the most serious accident in the RMP data, the March 2005 BP explosion and fire, which killed 15 workers, the level of injury among the 170 listed (in the facility RM P) is not well described. The CSB report indicates that 180 people were injured in the accident, and that 114 of these received only first aid and the injuries for the remaining individuals were serious enough to require medical treatment, days away from work, and/or restricted work hours. One press report stated that several were severely injured.

82 BLS data put the mean hourly wage at $22.65 across all w orkers at the end of 2014. http://www.b ls.gov/news.release/ecec.t01.htm***E.O. 12866 Review

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### Exhibit 6

- 5 : Average Impacts per Year and Accident

10

- Year Total Ave rage /Year Average/Accident
Onsite Fatalities 5 8 5. 8 0 0.03 8 Injuries 2,103 210 1.386 Property Damage $2,054,895,236 $205,489,524 $1,354,578
Offsite
Fatalities 1 0.10 0.001 Hospitalizations 189 19 0.125 Medical Treatment 14,807 1,481 9.76
Evacuations 38,589 3,859 25.44 Sheltering in Place 451,665 45,167 298 Property Damage $11,352,105 $1,135,211 $7,483



### Exhibit 6

- 6 : Monetized Accident Costs per Year and Accident

Unit Value 10

- Year Total Ave rage /Year Average/Accident
Onsite Fatalities $8,583,113 $497,820,554 $49,782,055.40 $328,161.21 Injuries $50,000 $105,150,000 $10,515,000 $69,314 Property Damage $2,054,895,236 $205,489,524 $1,354,578
Onsite Total $2,657,865,790 $265,786,579 $1,752,053
Offsite
Fatalities $8,583,113 $8,583,113 $858,311 $5,658 Hospitalizations $36,000 $6,804,000 $680,400 $4,485
Medical Treatment $1,000 $14,807,000 $1,480,700 $9,761
Evacuations $181 $6,992,327 $699,233 $4,609 Sheltering in Place $91 $40,920,849 $4,092,085 $26,975 Property Damage $11,352,105 $1,135,211 $7,483
Offsite Total $89,459,394 $8,945,939 $58,971
Total $2,747,325,184 $274,732,518 $1,811,024



## 6.3 Benefits Compared to Costs

The 10

- year RMP baseline suggests that considering only the monetized impacts of RMP accidents
would mean that the rule’s costs likely outweigh the portion of impacts from improved prevention and mitigation that were monetized. The annualized cost of the proposed ru le (estimated to range from $ 130 millio n with no new responders to $ 162 million if 50 percent of non

- responders must become responders) is between 47 % and 6 0 % of the average annual monetized costs in the 10

- year baseline. However, the monetized impacts of RMP accidents omit important benefit categories including avoided***E.O. 12866 Review

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### impacts of non

- R MP accidents at RMP facilities; the information benefits described above ; and additional benefit categories not reported in the RMP data that result from accident prevention and mitigation

. Additional benefit categories include lost product ivity ; avoided responder costs; avoided transaction costs; protected property values; and avoided environmental impacts; In addition, the proposed rule may cause a reduction in the probability or magnitude of a major catastrophe such as the toxic gas release at Bhopal or the explosion at Phillips in Pasadena, TX in 1989 . No such major catastrophes are reflected in the 10

- year baseline. The following sections describe major catastrophes and additional benefit categories not covered by the RMP data that derive from accide nt prevention and mitigation.



## 6.4 Avoided Catastrophes

Congress, in enacting section 112(r), was focused on catastrophic accidents such as Bhopal, which are extremely rare, but very high consequence events. The large chemical facility accidents that have occurred in the US and Europe, since the beginning of the chemical era, have not approached this level of damage, although it is possible that one could do so. The single largest U.S. chemical accident, the explosion at Phillips, Pasadena, TX, in 1989 ki lled 23 workers ($197 million in current dollars), injured at least 150 more ($7.5 million), and did $1.4 billion in property damage. 83 

### The 10

- year baseline does not include a major catastrophe such as these. If the proposed revisions were to prevent or s ubstantially mitigate even one accident of this magnitude, the benefits generated would be dramatic.



## 6. 5 Additional Benefit Categories Associated with Accident Prevention and Mitigation

The sections below present a discussion of benefits from the propose d rule provisions for which there is either limited or no information in the RMP data

. EPA qualitatively describes each category as a cost of
accidents

. The proposed rule is expected to reduce costs in each of these categories by an uncertain

amount

. In each case, data were unavailable to quantify expected impacts of the rule.

6

. 5 .1.1 Avoided Lost Product ivity
A major cost associated with some chemical releases that is not captured in the 10

- year

- baseline estimates presented above, is lost productivit y that can result if a facility or process unit must be shut down or is destroyed

. The RMP data include estimates of property damage but specifically exclude estimates of lost productivity. 84 

### EPA has not estimated these costs because of a lack of data

. Such costs are highly variable based on the type of release, the extent of the damage, the location of the facility, and product being produced

. Marsh, a risk management and energy consultancy, has collected data on

83 Marsh, The 100 Largest Losses, 1974

- 2013, Large Property Damage Losses in the Hydrocarbon Industry, 23rd Edition.

84 EPA instructions for RMP submissions specifically direct the owner or operator not to include any losse s incurred as a result of business interruption. See page 74 of the RMP*eSubmit Users’ Manual (EPA, March 2014); http://www.epa.gov/rmp/rmpesubmit

- users

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### 10,000 accidents in the petrochemical s ector over 40 years and published 23 editions of its “100 Largest Losses” reports

. The se limited data suggest that lost productivity may range from zero to four to five times the cost of property damage. 85 

### M any releases of toxics do not result in property damage and, therefore, have a limited impact on business beyond the loss of the chemical itself

. Explosions and fires, however, can produce substantial damage.

The Marsh accident summaries provide examples of the extent of damage and the impact on produc tion, as well as on the variability in those impacts

. One refinery facility had $240 million in damage, but continued to operate; another with the same level of damage was shut down for 6 months

. Production units affected by major explosions have been sh ut down for weeks or months or more than a

year

. Some accident reports indicate production continued but at a reduced rate for weeks or months

. A refinery accident that shuts down one or more units will affect the firm involved , especially if it has no

o ther refinery in the area or its other units do not have the capacity to increase production

. Such reduced production may , however, be offset by increased production at other firms. Refining capacity in the US is located primarily in the Gulf Coast and W est Coast regions; accidents that shut down units in those areas are less likely to have economic impacts beyond the firm owning the refinery if other nearby refineries can increase production

. Accidents at refineries in other regions could impose social costs because even if other refineries can produce more, the re may be higher cost s of transporting products longer distances.

Broader losses could occur in the petrochemical sector where some facilities may be one of the only sources for some products

. E ven in that sector, however, losses may be limited to the firm involved

. For example, the 1989 explosion at the Phillips plant in Pasadena, TX, which destroyed two units at the facility appears to have had a limited impact on the economy even though it was the only domestic source for one product. 86 

### Appendix A provides a list of the major US accidents cited by Marsh in its 2013 publication, with losses adjusted by Marsh to 2013 dollars

. These accidents are limited to those that might have occurred at RM P facilities (offshore oil and distribution accidents were omitted) and to those that were not the result of natural disasters where the damage was the result of flooding or wind, rather than chemical releases

. The accident list does not include all serio us accidents because Marsh excluded any accident that produced less than $130 million in property damage

. ( T he publication covers accidents worldwide

. ) Nonetheless, the list indicates the range of property damage and the lost productivity

.

6

. 5 .1.2 Avoi ded Emergency Response Costs

EPA was unable to locate data summarizing the costs associated with responding to a chemical release, fire, or explosion

. Very likely t hese costs vary widely depending on the incident

. A response may involve facility fire brigades, community fire departments, volunteer fire departments, and mutual aid

85 Marsh, The 100 Largest Losses, 1974

- 2013, Large property damage losses in the Hydrocarbon I ndustry 23rd Edition. Marsh provides estimates of property damage in current dollars and in a few cases, business loss
costs.

86 http://www.ny times.com/1989/10/25/us/reverberations

- for

- industries

- but

- not

- for

- us

- households.html***E.O. 12866 Review

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### groups

. There is also the cost associated with equipment depreciation and fire suppressant used

. The level of effort and equipment use can be seen in two incidents reported by Marsh

. For a 1999 refinery fire in CA, approximately 300 firefighters and 33 fire trucks participated in the two

- and

- a

- half

- hour effort to control the fire

. Foam concentrate consumption totaled 3,200 gallons

. A 1989 explosion at a Louisiana refinery used approximately 48,000 gallons of foam concentrate, 200 fire brigade members, and 13 pumper units during the firefighting effort, which extinguished the fire approximately 14 hours after the initial explosion

. Foam concentrate costs between $20 and $60 per gallon; the cost of the fire suppressant alone for these two fires ranged from $64,000 to almost $2.9 million

. In sum, EPA expects that these costs are significant.

6

. 5 .1.3 Avoided Transaction Costs
One consequence of chemical accidents is often litigation. Particularly when the public is affected, facilities are often sued. For example, a 1988 refinery explosion led to more than 5,000 property claims 87 

### . There are substantial costs associated with making and responding to such claims and the
lit igation surround ing them, both on behalf of plaintiffs and defendants . Rule provisions that reduce the number or severity of accidents could reduce the number of lawsuits and the amount of resources directed toward litigation.

6

. 5 .1.4 Avoided Property Val ue Impacts
Following an explosion or other chemical release at an RMP facility, the marketplace for nearby properties will adjust to reflect changes in perceived risk, changes in the aesthetic appeal of the surrounding area
, and potentially reduced ecologi cal services

. An established literature in economics has estimated the impacts on nearby property values of a wide variety of contaminated, toxic, or potentially toxic sites. 88 

### A variety of paper s have specifically examined the impact on property prices of hazardous industrial facilities, usually finding that prices increase with distance from the facility. 89 

### To improve understanding of the benefits of the proposed rule, we targeted research on the property value impact of accidents , not simply proximity to hazardous facilities

. Several studies are particularly
relevant

. Carroll et al (1996) studied property prices in neighborhoods surrounding the Pepcon chemical facility in Nevada before and after a dramatic explosion in 1988

. Data were for almost 5,000 property transactions from 1986 to 1990. The explosion was followed by a 17.6% decline in property values in the two closest towns of Green Valley and Henderson (located a mean distance from the P epcon plant of 3.2 miles and 3.5 miles respectively)

. It was later announced that the Pepcon facility would be rebuilt over 100 miles away

. Local home prices rebounded by 38% after the announcement, suggesting that proximity to the plant prior to the exp losion was suppressing property values.

87 See Marsh, Shell Norco explosion.

88 See Boyle and Kiel (2001) or Banzhaf and McCormick (2007) for reviews of the literature.

89 See Grislain

- Letremy and Katossky (2014) f or a review of the literature. (Their Appendix A.1 summarizes findings.)***E.O. 12866 Review

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### Hansen et al. (2006) studied the effect of a 1999 fuel pipeline explosion in Bellingham, Washington

. While the explosion was not from a chemical facility, its property value impacts may be comparable. 90


### The data ana lyzed were a sample of Bellingham single family home sales located within a mile of two pipelines

. The sales transacted from 5 and a half years prior to the explosion to 5 years after

. Following the event, property prices were significantly adversely aff ected, with the mean property price discounted by 4.6% for a property 50 feet from the pipeline or 2.3% at 100 feet, 1.2% at 200 feet and 0.2% at 1,000 feet

. The authors concluded that the effect diminished over time.

These studies suggest that preventi ng or mitigating an accident at a chemical facility may prevent or mitigate property value losses in nearby neighborhoods

. Note that any avoided property value losses represent part of society’s combined valuation of reduced risks to human health, reduced ecosystem services, and negative impacts on aesthetic appeal

. Property value losses would represent only nearby homeowners, not any other affected parties such as employees who do not reside in the immediate neighborhood.

6

. 5 .1.5 Avoided Environmental Im pacts
In addition to information on deaths, injuries, property damage, evacuations, and sheltering in place, the RMP rule requires owners and operators to report within the five

- year accident history accidental releases that result in environmental damage. However, the environmental damage information contained in the RMP database is limited, for two reasons

. First, most releases of RMP

- regulated substances do not result in lingering contamination issues because most regulated substances are either highly volatile toxics that will rapidly disperse in air, or highly flammable substances that ignite if released in the presence of an ignition source. The other reason is that RMP accident history reports
indicate general categories of environmental damage (e. g., fish or animal kills, tree, l a wn, shrub, or crop damage, etc.), but do not contain any estimates of damage valuation, or other specific information on reported impacts.

Notwithstanding these limitations, some RMP accidents d o result in environmental damage

. For example, in the 10

- year baseline there were approximately 50 incidents in which offsite environmental damage was the only impact reported

. Rule provisions that prevent or mitigate the extent of accidental
releases are therefore likely to prevent or reduce the environmental impacts associated with those releases, but these benefits cannot be quantified using the available data.

90 An important difference between a pipeline and a chemical facility is that pipelines may not be as noticeable. Parts of the pipelines in Bellingham were buried. Unlike homes ne ar the Pepcon plant, for the five

- year period prior to the Bellingham pipeline explosion, nearby property prices showed no effect of proximity to a pipeline. However, we are interested here in the impact of accidents or, for evaluating the proposed rule, the impact of accident prevention, so the house price effects of a pipeline explosion seem informative.***E.O. 12866 Review

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## 6. 6 Conclusions

It is not possible to estimate quantitative benefits for the proposed rule

. EPA has no data to project the specific impact on accidents made by each proposed rule provision

. The accidents themselves have highly variable impacts that are difficult to predict. However, i t is clear from the RMP accident data and other data, such as that reported by Marsh, that chemical accidents can impose substantial costs on firms, employees, emergency responders, the community, and the broader economy. Reducing the risk of such accidents and the severity of the impacts when accidents occur, a nd improving information provision, as the proposed provisions intend, would provide benefits to the potentially affected members of society.

Exhibit 6

- 9 summarizes all of the benefit or accident cost categories described in this chapter

. There are
four b road benefit categories related to accident prevention and mitigation including RMP accidents,

non

- RMP accidents at RMP facilities, and potential major catastrophes

. The exhibit explains each and
identifies ten associated specific benefit categories

. Exh ibit 6

- 7 also highlights and explains the information disclosure benefit category and iden ti fies two specific benefits associated with it.

Exhibit 6

- 7 : Summary of Social Benefits

Broad Benefit Category Explanation Specific Benefit Categories

Accident Prevention Prevention of future RMP facility accidents • Reduced Fatalities

• Reduced Injuries

• Reduced Property Damage

• Fewer People Sheltered in Place

• Fewer Evacuations

• Avoided Lost Productivity

• Avoided Emergency Response Costs

• Avoided Transaction Costs

• Avoid ed Property Value Impacts*

• Avoided Environmental Impacts Accident Mitigation Mitigation of future RMP facility accidents

Non

- RMP accident prevention and mitigation Prevention and mitigation of future non

- RMP accidents at RMP facilities

Avoided Catastrophes Prevention of rare but extremely high
consequence events

Information Disclosure Provision of information to the public and
LEPCs • Improved efficiency of property markets

• Improved resource allocation * These impacts partially overlap with several other categories, such as reduced health and environmental impacts***E.O. 12866 Review

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### To get a sense of the size of the population affected by the proposed rule provisions, EPA determine d the number of people that would be affected by facility worst case scenarios and alternative release scenarios. A worst case scenario varies slightly depending on which program level a substance is managed under, but generally identifies the largest potential reach and effect of a hypothetical
accidental release. The a lternative release scenario identifies the potential reach and effect under more realistic circumstances than the worst

- case scenario. Using RMP data and MARPLOT, EPA was able to determine that the aggregate U.S. population impacted by worst case scenario s is approximately 177 million. The aggregate U.S. population impacted by alternative release scenarios is approximately 40
million. 91 

### Although the 10

- year baseline of accidents does not include a major catastrophe

– such as the Pasadena, TX explosion

– the population estimates do demonstrate that a significant portion of the U.S. population are at risk for these scenarios. Many of the provisions proposed in this rule are intended to reduce the risks and impacts for this large portion of the country.

91 EPA. 2016. Technical Background Document for Notice of Proposed Rulemaking: Risk Management Programs under th e Clean Air Act, Section 112(r) (7).***E.O. 12866 Review

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# CHAPTER 7: SMALL ENTITY IMPACTS

The Regulatory Flexibility Act as amended (RFA) (5 U.S.C. 601

- 612) requires agencies to determine
wheth er a proposed rule will have a “significant economic impact on a substantial number of small
entities. ” The Small Business Administration (SBA) sets the standard for defining a small entity by 5 or 6

- digit NAICS code, for businesses (13 CFR part 121); gov ernments are considered small if they serve fewer than 50,000 residents. 92 

### Although “significant economic impact” is not defined by either the RFA or SBA, EPA guidance considers thresholds of one percent and three percent of revenues. 93 

### This analysis,
howev er, uses the more stringent one percent threshold because almost 39 percent of the small entities affected by the rule are agricultural chemical distributors; data from the Department of Agriculture
indicates that net income in this sector is less than thr ee percent of sales. 94



### This chapter presents the analysis of potential impacts of the rule on small entities

. The first section discusses the industrial sectors reported by RMP facilities

. The second section describes the approach to determining how many facilities and firms subject to the rule are small based on SBA standards

. The third section discusses the economic impacts of the rule on small entities.



## 7.1 RMP Affected Sectors

The RMP rule affects a broad range of sectors (296 separate NAICS cod es are listed in RMP filings; 240 of these are associated with small entities)

. The primary sectors subject to the rule and the SBA standards for defining a small firm are shown in Exhibit 7

- 1

. A dollar value standard refers to firm revenues in millions; the full

- time

- equivalent (FTE) employees applies to the firm’s total FTE, not the number at any one location

. For governments, the standard is based on the population served

. The NAICS codes are presented at the 2 to 6

- digit level based on whether the S BA standard varies for the 5 and 6

- digit codes and whether there are a substantial number of RMP facilities in the sector. 95 

### For example, the SBA standard for the wholesale trade sector, NAICS code 42, is the same across all codes (100 FTE).

92 S ome small governments serve substantial populations associated with businesses, particularly irrigation districts that serve large farming areas, but few residences, and small cities that have large tourist

- related businesses.

93 See Chapter 2 of Final Guidance for EPA Rulewriters: Regulatory Flexibility Act, http://www.epa.gov/rfa/documents/Guidance

- RegFlexAct.pdf

. 94 http://www.usda.gov/wps/portal/usda/usdahome?contentid=2013/10/0199.xml

95 In some cases, NAICS codes are disaggregated to 5 digits and in others 6 digits. SBA does not i nclude all 6

- digit codes in its regulation.***E.O. 12866 Review

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### Exhibit 7

- 1: I ndustry Sector Small Entity Standards

NAICS Sector Standard NAICS Sector Standard

111 Crop Production $0.75m 3253 Pesticide, Fertilizer, and Other Agricultural Chemical Manufacturing 500 FTE

112 Animal Production and Aquaculture $0.75m

- $15m 3254 Pharmaceutical and Medicine Manufacturing 750 FTE

115 Support Activities for Agriculture and Forestry $7.5m 3255 Paint, Coating, and Adhesive Manufacturing 500 FTE

211111 Crude Petroleum and Natural Gas Extraction 500 FTE 3256 Soap, Cleaning Compound, and Toilet Preparation Manufacturing 500

- 750 FTE

221112 Fossil Fuel Electric Power Generation 750 FTE 3259 Other Chemical Product and Preparation Manufacturing 500

- 750 FTE

22131 Water Supply and Irrigation Systems $27.5m 326 Plastics and Rubber Products Manufacturing 500

- 1000 FTE

22132 Sewage Treatment Facilities $20.5m 327 Nonmetallic Mineral Product Manufacturing 500

- 1000 FTE

3111 Animal Food Manufacturing 500 FTE 331 Primary Metal Manufacturing 500

- 1000 FTE

3112 Grain and Oilseed Milling 500

- 1000 FTE 332 Fabricated Metal Product Manufacturing 500

- 1000 FTE

3113 Sugar and Confectionery Product Manufacturing 500

- 750 FTE 333 Machinery Manufacturing 500

- 1000 FTE

3114 Fruit and Vegetable Preserving and Specialty

Food Manufacturing 500

- 1000 FTE 334 Computer and Electronic Product

Manufacturing 500

- 1000 FTE

3115 Dairy Product Manufacturing 500 FTE 335 Electrical Equipment, Appliance, and

Component Manufacturing 500

- 1000 FTE

3116 Animal Slaughtering and Processing 500 FTE 336 Transportation Equipment Manufacturing 500

- 1000 FTE

3117 Seafood Product Preparation and Packaging 500 FTE 337 Furniture and Related Product Manufacturing 500 FTE

3118 Bakeries and Tortilla Manufacturing 500

- 750 FTE 339 Miscellaneous Manufacturing 500 FTE

3119 Other Food Manufacturing 500 FTE 42 Wholesale Trade 100 FTE***E.O. 12866 Review

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Page 99 of 126 3121 Beverage Manufacturing 500 FTE 44422 Nursery, Garden Center, and Farm

Supply Stores $11m

322 Paper Manufacturing 500

- 750 FTE 45431 Fuel Dealers 50 FTE

32411 Petroleum Refineries 1500 FTE 48691 Pipeline Transportation of Refined Product 1,500 FTE

32412 Asphalt Paving, Roofing, and Saturated Materials Manufacturing 500 FTE 48821 Support Activities for Rail Transportation $15m

32419 Other Petroleum and Coal Products Manufacturing 500

- 750 FTE 4931 General Warehousing and Storage $27.5m

3251 Basic Chemical Manufacturing 750

- 1000 FTE 56179 Other Services to Buildings and Dwellings $7.5m

3252 Resin and Synthetic Rubber Manufacturing 750

- 1000 FTE 5621 5622 Waste Management $38.5m

92 Governments < 50,000 residents

served



### The codes that some facilities listed in their RMP filings are problematic

. First, many firms list multiple
NAICS codes for their facilities

. Particularly for agricultural chemical distributors there is often no clear reason for assigning facilities to different NAICS codes when the activities appear to be the same (e.g., facilities named as agricultural co

- ops appear in NAICS 111, 115, 32531, 325312, 325313, 325314, 325193, 42451, 42459, 42491, 444, 453, and 493)

. For other fac ilities, the parent firm has listed its facilities in the code appropriate for activities occurring at a specific location, but not appropriate for the firm (e.g., integrated gas exploration, production, and distribution companies have facilities in NAICS 211, 424, 486, and 488; integrated oil firms list facilities in NAICS 211, 213, 221, 324, 325, 424, and 541)

. Second, not all of the NAICS codes listed exist; some are clearly earlier versions of current codes (42269 rather than 42469) and were recoded, b ut others represent subsectors that do not exist, making them difficult to define

. Third, checks of some facilities indicate that the sector listed is incorrect; the only facility with less than 5 FTEs listed for NAICS 32511 (petrochemicals) is variously described in Internet sources as an aerosol packager (an official Missouri report), a paperboard company, or an agricultural chemical distributor (it was recoded to NAICS 32599)

. Finally, almost all of the governmental entities,
which should be listed und er NAICS code 92, listed themselves under other codes, primarily 2213 (water and wastewater treatment), but also under chemical manufacturing and waste management; all of
these were recoded to NAICS 924

. Some of the other facilities listed under NAICS 221 3 belong to manufacturing plants

. The decision rules applied to re

- categorize firms into correct NAICS codes are
discussed below.***E.O. 12866 Review

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## 7.2 Estimating the Number of Small Entities

The RFA and the SBA standards apply to firms, not establishments, because the co sts of the rule are ultimately borne by the firm, rather than the facility

. Therefore, to determine the number of small entities, the analysis identified the number of firms and the size of those entities

. The RMP data include facility and parent company name as well as the number of full time equivalents (FTE) for the facility and the NAICS codes

. Although this information facilitates the small entity analysis, a review of the data
indicated a substantial number of issues

. Parent company information wa s often missing and when present, incorrect

. For example, for one company with 68 facilities, 15 listed no parent company, 52 listed the company name, and only 1 listed the name of the foreign firm that owns the company

. Two cooperatives with 20 and 30 R MP facilities listed zero FTEs for every facility; research indicated that one is among the largest firms in its sector, with revenues of about $1 billion and a senior management team of 15 people

. The size of the parent cooperative for the second could n ot be determined and, therefore, it was categorized as small

. Research on one facility determined that it was owned by another firm; that firm in turn was determined to own 8 companies, most of which have RMP facilities but none of which had identified th e parent company

. Particularly in the oil and gas sectors, where corporate structures include multiple divisions that are separate legal entities for management and tax purposes, and where mergers are frequent, facilities often list the intermediate entit ies rather than the actual parent company or the entity that purchased the site rather than the current owner.

To develop an estimate of the number of small entities, the analysis required a series of reviews of the data to identify the large entities and the small entities that were part of small firms owning multiple
facilities

. First, any facility that exceeded 1,500 FTE was categorized as large; 1,500 FTE is the highest threshold for large entities when the SBA standard is based on FTE

. Based on Econo mic Census data, it was determined that any facility of that size would also generate revenues high enough to exceed the highest revenue threshold of any covered sector

. Second, SBA sets its standards to ensure that while
most firms in a sector are classi fied as small, the largest firms in a sector are not

. Any facility that belonged to the largest firms in the sector were classified as large (e.g., each of the 96 facilities that belong to Tysons Foods)

. Industry data on the largest firms in each of the major sectors (agricultural chemical distributors, food manufacturers, chemical manufacturers, and oil and gas companies) were used to identify those firms

. The largest government entities were also identified in this screen (e.g., all federal entities; any State

- owned facility; water systems serving Los Angeles, New York City, Chicago, etc.).

The data were reviewed to identify parent companies that were clea r from the facility name, but not included in the parent company field

. That made it possible to determine the total FTE for facilities belonging to the same parent company and compare that number to the SBA standard (when in FTEs)

. If the total FTE exce eded the standard, all the facilities were classified as large

. Where the facilities listed different NAICS codes, the analysis applied either the code used for a majority of the facilities or, if no single code dominated, the code with the highest thresh old

. For example, if a firm had facilities in***E.O. 12866 Review

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### sectors where the standards were 500 and 1000 FTE, the 1000 FTE standard was used to determine if the firm was large.

For remaining facilities, if there were multiple facilities belonging to a single firm and the total FTE approached the threshold or if the name included “USA” or “US holdings”, which implied an international company, I nternet searches were conducted to identify whether the facilities belonged to a firm with other facilities or employees

. For example, a chemical company with 7 facilities with a total of less than 300 FTE was determined to belong to a Finnish firm with more 4,000 employees

. For oil and gas exploration facilities (NAICS 211), which often have general names (e.g., gas plant 1), E PA’s facility registry system was checked to determine which firm owned the facility

. 96



### The RFA defines small governments as governments of cities, counties, towns, townships, villages, school districts, or special districts, with a population of less tha n fifty thousand. 97 

### Most governmental RMP facilities are water and wastewater treatment systems and listed a city or county as the owning entity

. A check of budgets that were available for some of the smallest cities indicated that the systems (1) are sub agencies of the city/county and (2) obtain some revenues from the general fund although most of their revenues are derived from user fees

. To determine which facilities belong to small governments, the population for the associated city or county was dete rmined by checking the 2014 estimates from the Census

. For special water and irrigation districts, their Internet sites were checked for information on the population served

. Exhibit 7

- 2 presents the number of small and large facilities by program level

. Exhibit 7

- 3 presents the small/large breakdown by sectors.

Exhibit 7

- 2: Number of Facilities Owned by Small and Large Entities by Program Level

RMP Program Small Large Total

Program 3 3,996 6,619 10,615 Program 2 695 590 1285 Program 1 219 423 642

Total 4 , 910 7 , 632 12 , 542


### The number of small entities is likely to be overstated

. Particularly in the agricultural chemical distributor sector, it was not possible to determine common ownership among facilities with common names (e.g., Farmers Cooperative)

. Not all of these facilities have websites and, when they do, they do not always provide information on ownership or locations

. Unless the names were identical and the facilities located in the same State, the analysis assumed that they belo nged to separate firms

. It is also likely that for many of these facilities the FTE reported are too low

. A number of the agricultural chemical distributors listed multiple facilities at zero FTE even though they are open more than 8 hours a day, 5 days a week.

96 http://www.epa.gov/enviro/html/fii/index.html

97 5 U.S.C. 602.***E.O. 12866 Review

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### The classification of facilities as Program 1, 2, or 3 is based solely on the RMP data submitted, but, as explained in Chapter 3, EPA has reclassified the wholesale facilities and certain others based on OSHA’s revised interpretation of the PSM re tail exemption, which will move these facilities from Program 2 to Program 3

. A review of other facilities indicates that, in some cases, classifications in the RMP database are inappropriate

. For example, of the 701 water/wastewater facilities in State

- plan states, 661 listed themselves correctly as P3, but 40 (including those in a major city) listed themselves as P2. 98 

### Of the 1,194 publicly owned facilities in States where Federal OSHA implements the PSM standard, 893 listed themselves correctly as P2, but 301 said they are P3

. In addition, there are more than 500 other facilities that listed themselves as P2 (outside of the primary agricultural retail sectors); although many of these are, in fact, agricultural chemical distributors, others appear to be facilities that should be subject to P rogram 3

.

Exhibit 7

- 3: Program Level and Size by Sector

Program 1 Program 2 Program 3 Total NAICS Description Small Large Small Large Small Large

311 Food Mfr 1 2 6 5 357 1
, 014 1
, 385
312 Beverage/Ice 0 0 0 0 11 80 91
322 Paper/Pulp 0 1 0 1 5 63 70
324 Petroleum 5 8 0 3 21 119 156
325 Chemical 32 21 49 27 458 878 1
, 465 313, 321, 326, 327, 33 Other Manufacturing 33 29 34 39 113 136 384
4246 Chemical Distributors 2 4 0 0 91 236 333
4247 Petroleum Distributors 3 11 0 0 69 193 276 11, 12, 15, 42491 Agricultural 9 1 0 0 1
, 809 1
, 848 3
, 667
211 Oil and Gas Exploration 88 222 13 28 104 286 741
2213 Water/Wastewater 0 1 6 4 12 79 102
221 222 Utilities 22 16 35 37 80 153 343

493 Warehousing 11 59 0 0 267 719 1
, 056 423, 424 Other Wholesale 0 5 0 0 100 197 302
92 Governments 6 9 521 414 451 522 1
, 923 Other 7 34 31 32 48 96 248
Total 219 423 695 590 3 , 996 6 , 619 12 , 542

98 About half of the States have accepted delegation to enforce OSHA rules; OSHA refers to these as State

- plan States. As a condition of delegation, the State must impose OSHA standards on State and local governments. Federal OSHA has no authority over those governments, so in States where OSHA enforces the rules, they do not apply to gove rnments.***E.O. 12866 Review

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### 7.2.1. FIRMS
The RFA applies to firms, not facilities (or establishments, the term used by the Economic Census)

. For facilities owned by small firms, the analysis identified 1,296 parent companies and 1,184 facilities with no parent company, for a total of 2,480 firms that are small entities

. Because firms own facilities in different p rogram levels it is not possible to disaggregate firms by program level accurately

. Exhibit 7

- 4 presents the data on small firms, disaggregated by the total FTE for all the RMP facilities operated by the firms

. The exhibit presents firms in four groups: single locations where no parent company was identified; firms with single locations whose name indicated that it owned other presumably non

- RMP facilities at other locations; 99 

### facilities that listed a parent company, but had only one RMP location; and
fir ms that listed a parent company and have multiple RMP facilities

. Firms with multiple locations were separated because the FTE counts for these (and for parent companies) will understate the total FTE of the firm and, therefore, the revenue base

. Note th at this exhibit does not include small governments.

Exhibit 7

- 4: Small Firms by FTE Totals

Firms <5 FTE 5

- 19 FTE 20

- 99 FTE 100+ FTE Total Firms Total RMP Facilities

No Parent Company

Single Location 187 355 376 230 1,148 1,148 Multiple locations 30 2 5 1 38 38 Parent Company

Single RMP Location 67 238 325 188 818 818 Multiple RMP locations 53 154 193 76 476 1,928
Total 337 749 899 495 2480 3,932 * * Total RMP facilities excludes the 978 small government facilities.


### This analysis also divides facilities by responder status

. There are a total of 1,404 small responding facilities and 3,289 small non

- responding facilities (includes governments, but excludes P1 facilities)

. Exhibit 7

- 5 breaks down the number of small non

- government f acilities that indicated in their RMPs that they are not responders, by FTE

. (Government facilities are excluded because FTEs do not reflect the size of the governmental entity. ) If any current non

- responding facilities should become responders as a

resu lt of the proposed revisions to the regulation, then costs to purchase and maintain equipment, train personnel, and conduct exercises increase based on the number of people at the facility

. Appendix A provides a breakdown of the number of facilities by 3 and 5/6

- digit NAICS code by FTE and responder
status for non

- governmental facilities.

99 For example, X Cooperative, Y terminal/plant/location.***E.O. 12866 Review

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### Exhibit 7

- 5: Non

- Governmental Non

- Responding Facilities by FTE

Non

- Responders
0

- 19 FTE 1,869
20

- 99 FTE 489
100+ FTE 179

Total 2,537


### The proposed rule would impose the STAA requirements on facilities with P3 processes in three NAICS
codes

– 322 (paper and pulp), 324 (petroleum), and 325 (chemicals)

. Exhibit 7

- 6 presents the breakdown of facilities owned by small firms in those sectors by facility FTE.

Exhibit 7

- 6: P3 Facilities Owned by Small Firms and Subject to STAA by Facility Size and Sector

Facility Size
STAA Facilities 0

- 19 FTE 20

- 99 FTE 100+
NAICS 322 5
NAICS 324 1 9 11 NAICS 3251/3252 39 222 54
NAICS 3253

- 3259 40 66 37



### 7.2.2 GOVERNMENTS

As shown in Exhibit 7

- 3, there are a combined total of 972 facilities with P2 and P3 processes that are owned and operated by small governments (i.e., the government serves less than 50,000 residents)

. Because governments that serve populations above 15,000 have reve nues well above $10 million so that the costs of the rule would never exceed 1%, the analysis focused on those that served fewer than 15,000 people

. Exhibit 7

- 7 presents the number of all small governments and the number serving less than 15,000 by the nu mber of RMP facilities they operate

. Three government facilities included in the number of small governments and number of small government non

- responders could not be classified by population; each is a special district for which information could not be located to determine residents served

. Two are in very small rural areas and likely serve fewer than 5,000; the third is in a suburb of Salt Lake City and appears to serve at least 25,000 residents.

Exhibit 7

- 7: Small Governments by the Number of RMP Fac ilities (P2 and P3) Operated

Category Number of Governments Number of Facilities

All Small Governments 689 972 Non Responders 524 750 Non Responders <15,000 Residents 257 364 Non Responders <10,000 Residents 165 210 Non Responders <5,000 Residents 58 75***E.O. 12866 Review

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### Unlike the facilities operated by small firms that have multiple RMP facilities, water and wastewater systems operated by small governments are generally in the same town

. Where a small firm with multiple facilities may have to train response teams for each facility it operates, a small city or town is more likely to train a single response team to cover all of its facilities.

In addition to cities and local districts with RMP

- regulated facilities, cities and towns where other RMP

regulated facilities are located may also incur indirect costs associated with participation in exercises and with reviewing information submitted to the LEPCs or emergency response officials

. LEP Cs are organized at both the city and county level depending on the location

. RMP facilities are located in more than 1,000 counties and more than 5,000 cities/towns/villages

. The counties have from 1 to 187 facilities (the latter is Harris County, TX, which covers Houston)

. Although in general the smallest counties have only one or two facilities, there are a few small counties with more than five.



## 7.3 Economic Impact on Small Entities

7.3.1 Costs for Small Entities

Under the proposed rule, all facil ities would be required to make certain information available to the public and to the LEPC

. Practically, P1 facilities would not have to spend more than an hour a year on this disclosure because the information disclosed to the public is information ever y facility should have readily available and because the additional information disclosed to the LEPC relates to provisions that do not apply to P1 facilities

. Therefore, the RIA has not considered P1 small facilities in the analysis of impacts.

P2 and P3 facilities would incur the same costs for the other proposed provisions except the STAA

. Each facility would be required to disclose information annually, hold a public meeting at least once every 5 years, and coordinate with the local responders and con duct a notification drill annually

. If the facility is a responder, it would have to hold an annual exercise, including at least one full field exercise every 5

years

. P3 facilities in NAICS codes 322, 324, and 325 would have to conduct an STAA as part t heir PHA every 5 years.

If a facility has an accident, it would incur costs for obtaining a third

- party to conduct their next scheduled compliance audit

. It would also incur additional costs to conduct a root cause analysis as part of the incident investi gation

. Facilities would be required to conduct investigations of near misses, including a root cause analysis

. Finally, if a facility has to become a responder, it would incur costs to develop an emergency response plan, train personnel to respond, purc hase and maintain equipment,
and conduct exercises.

Exhibit 7

- 8 presents three sets of costs: low year, annualized, and high year (excludes costs incurred after an accident or a near miss)

. Low

- year costs represent costs for years in which routine annual costs apply

. These include costs for coordinating with local responders, conducting notification exercises (applies to all P2 and P3 facilities), conducting tabletop exercises (applies only to responders), and updating disclosure information to the LEPC and the public

. High

- year costs represent a year in which***E.O. 12866 Review

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### every applicable provision would occur, except costs incurred after an accident or “near miss .” This includes the routine annual costs and periodic costs that apply either every 3 or 5 years (i.e. , field exercise in lieu of a tabletop exercise, public meeting, all public disclosure requirements, and STAA)

. Because the STAA provisions would only apply to a subset of facilities (i.e., those in NAICS 322, 324, and 325), these facilities are broken ou t separately in the last two rows of the exhibit. Complex facilities are those categorized as NAICS 324 or 325 and simple facilities are all others. Annualized costs average the low costs incurred for four years with the high costs incurred every fifth y ear.

Exhibit 7

- 8: Low, Annualized, and High Year Combined Costs for Small Entities by Group

Low Year Cost Annualized High Year Cost P2 and P3 facilities (excludes P3 facilities subject to STAA) Simple Complex Simple Complex Simple Complex
Non Responder $548 $903 $1,182 $2,027 $3,217 $5,280 Responder 0

- 19 FTE $6,577 $8,969 $7,175 $9,471 $12,347 $20,357 Responder 20+ FTE $7,711 $10,442 $9,899 $13,490 $18,151 $24,437 P3 facilities subject to STAA Non Responder n/a $903 n/a $6,190 n/a $26,097 Responder <20 FTE n/a $8,969 n/a $13,635 n/a $41,174



### Exhibit 7

- 9 presents the incremental costs that current non

- responding facilities would incur to become responders

. These costs include developing an emergency response program pursuant to §68.95, employee training, and purchasing and maintain ing response and personal protective equipment, but do
not include the cost of exercises

. The incremental cost would be added to the responder costs shown in Exhibit 7

- 8

. The high

- year costs are the first year costs when the emergency response program would be developed, personnel trained, and equipment purchased

. The low

- year cost covers refresher training, training for new employees, and equipment maintenance and replacement

. The ann ualized cost is annualized over 10 years assuming the high year costs occur in the first year and the low year
costs in the nine subsequent years.

Exhibit 7

- 9: Incremental Costs to Become a Responder

Low Annualized High Year Simple < 20 $5,402 $9,799 $49,367 Simple 20+ $6,038 $10,689 $52,546 Complex <20 $8,657 $15,877 $80,853
Governments $8,010 $14,449 $72,405



### Governments are presented separately in Exhibit 7

- 9 because they would incur higher costs than other simple facilities as a consequence of operating a water treatment facility

. This is, in part, because they would need more equipment, specifically chlorine cylinder repair kits as well as personal protective equipment for a higher number of people

. Governments are expected to train more people to ensure that an adequate number of personnel are available at all times; firefighters may be busy with other***E.O. 12866 Review

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### critical responses when a release occurs so backups would be needed

. Governments also have fewer options than other RMP facili ty owners/operators

. A privately owned facility that is a non

- responder
can choose to remain a non

- responder if the local government is cap able to respond or if the owner/operator can help fund the local government to develop hazmat response capability

. If a public water system is operated by a city or town that does not have appropriate response capability (e.g., a hazardous materials, or hazmat, response team), the local government would need to develop a hazmat response capability unless the town is cl ose to another community that has a hazmat team and is willing to respond

. Both public and private facilities could hire emergency response

- action contractors to respond, but many and perhaps most of the small RMP facilities are in rural areas that are to o far from contractors to make that a realistic option for releases that require a rapid response

. As discussed in Chapter 6, more than three quarters of reportable incidents last less than an hour.

As can be seen in Exhibit 7

- 8, a non

- responder with a si mple process 100 

### would only need revenues of $118,000 for the annualized costs to be below one percent of its revenues; the high

- year cost would require revenues above $320,000

. If that facility had to become a responder it would need revenues of $1 million to $5 million to have revenues that exceed one percent of costs (based on annualized and high

- year costs)

. As seen in Exhibits 7

- 8 and 7

- 9, small governments would need revenues of $700,000 to $1.33 million if they are already responders, but $2.1 million to $8.5 million if they have to become responders

. Small chemical companies subject to STAA would need revenues above $600,000 to $4 million if they do not need to become responders and $10 million if they do become responders.

If a simple facility has a n accident its one

- year cost could be as high $20,696; for a complex facility, the cost could be as high as $53,979

. Because the third

- party audit would not necessarily occur in the same year as the accident, however, these costs could be distributed over time.



### 7.3.2 Estimating Revenues for Small Entities

As is the case for most rules that affect small entities, almost all of the small entities are privately held and little if any information is available on their revenues

. To determine revenues, Census d ata on revenue per establishment from the 2007 Economic Census were calculated (by dividing total revenue by the number of establishments) and a deflator applied to increase revenues to 2013 dollars

. (The Economic Census uses “establishment” to describe s ingle locations and presents data on establishment and firm levels; it does not, however, provide firm

- level data for all sectors.)

Exhibit 7

- 10 presents the data for the sectors with entities small enough to have revenues that might fall below the one pe rcent threshold

. For some sectors, the Economic Census provides data only for 0

- 4 FTE; for others, it provides data for 1 FTE establishments, 2 FTE, and 3

- 4 FTE

. The Economic Census does not cover the agricultural sectors

. As noted above, most of the fa cilities in the agricultural sector appear to be agricultural wholesalers
, so the analysis used the revenue estimate for NAICS 42491 for these

. The values listed for NAICS 325199 are for the chemical sector as a whole (NAICS 325) because the Census

100 There are no simple processes at very small facilities that are subject to STAA.***E.O. 12866 Review

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### did no t include data for establishments this small for this sector

. Where cells are blank in the Exhibit, either there are no facilities that fall into the category or the Census does not list revenue data for the category. 101 

### Shaded cells indicate revenues that would exceed costs of the proposed rule by a factor of 100 or more even in the highest cost year for facilities that needed to become responders
, so any facility in that size category or above would not be potentially subject to a cost that would exceed on e percent of revenues

. Because the revenues for NAICS 211 are so high for the smallest facilities, no other data
are listed for that sector

. One percent of the highlighted revenues would exceed the cost of the proposed rule even in the highest cost year for facilities that needed to become responders, so any facility in that size category or above would not be potentially subject to a cost that would exceed one percent of revenues.

Column 2 provides two numbers: first, the number of facilities in the sec tor that are in size categories with revenues low enough that the cost of the rule could exceed one percent of revenues; and, second, the number of non

- responders out of that total

. For example, there are 1,174 small agricultural
chemical distributors in NAICS 42491 with fewer than 10 FTE; 1,062 of them are non

- responders

. Any

non

- responder that remains a non

- responder in that sector or any current responder should have revenues above the one percent threshold

. Any non

- responder that has to become a resp onder, however, would incur first year costs that exceed one percent of revenues.

The analysis used facility rather than firm

- level revenue for two reasons

. First, firm

- level data are not available for all sectors, particularly manufacturing

. Second, it is not possible to determine firm sizes for many of the facilities

. Focusing on facility level revenue is conservative

. If the costs for individual facilities that a firm owns do not exceed one percent of the facility revenues, the costs will not exceed one percent at the firm level

. For example, if a firm owns three facilities, each of which has costs that do not exceed one percent of the revenue generated by the facility, the cost will not exceed one percent at
the firm level where revenues will be at least the total of revenues from each facility

. It may not be the case, however, that if a firm owns facilities where the cost of the rule would exceed one percent at some facilities but not others that the costs would exceed one percent at the firm level

. The Census Bureau has not published recent data on revenues for cities (the most recent data are from 2002) and does not cover cities of less than 25,000 population

. The Census provides revenue data for total local government revenues by county (covering all governmental entities including special districts within the country) and a per capita revenue estimate

. The Census data indicated that the lowest per capita revenue for a covered county was about $1,024 in 2002 dollars ( DeKalb County, MO, w ith 2 facilities) ($1350 in 2014 dollars). 102 

### Two other sources (one of which covers all Massachusetts cities and

101 Usually data are not presented because there are too few establishments in the size category and listin g the data could reveal confidential information.

102 https://www.census.gov/statab/ccdb/cc07_tabB13.pdf***E.O. 12866 Review

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Page 109 of 126 

### towns) indicated a range of $900 to more than $2,500 for expenditures per person. 103 

### The smallest town covered by the rule has about 150 residents and a number of others have fewer than 1,000, but in many of these cases it is not clear whether the town owns and operates the facility or whether it is operated by a district that serves multiple communities

. In a few cases, EPA was able to locate budg et data from small towns and special districts

. Revenues per resident ranged from $196 for a special district that serves 9,200 people to $1400

. The sample, however, is so small that it would not be appropriate to generalize from it

. There are some exce ptions on the high end as well

. One city with a population of less than 8,000 has revenues of close to $200 million (based on tourist business); another small city operates a combined water system, power system, and cable system; although the water system produces revenues of $2.5 million, the combined system reported revenues of $190 million

. For the purpose of the RFA determination, EPA has assumed that revenues per person would not exceed $1,000 and that any city of less than 10,000 that might need to become a responder could incur costs in the high cost year that would exceed one percent of revenues

. As shown in Exhibit 7

- 7, there are 165 small governments operating 210 facilities that are non

- responders and that serve fewer than 10,000 people.

There are a number of small governments that operate multiple RMP facilities

. Although government revenues do not increase based on the number of facilities, costs to local governments are not likely to scale in the same way as they do for private companies

. A local government that operates two or more water and wastewater treatment plants would, if needed, develop a single hazmat team because the facilities are generally in the same town

. The government could hold a single public meeting, issue combined publi c information, and hold joint exercises.

Small cities and counties may also participate in emergency response exercises held by RMP facilities and may review information provided by these facilities to LEPCs or other local agencies

. These
activities are v oluntary, but it is reasonable to assume that local agencies will spend some time on them

. Involvement in exercises would generally require less than 8 hours of any participant’s time or considerably less than one percent of any person’s annual working ho urs

. Reviewing information disclosed would take only one to four hours per facility

. Unless a city has a substantial number of RMP facilities the effort required would not impose significant costs.

103 http://parca.samford.edu/LocalGovernment/municipal/Report%20Montgomery%20Revenue%20Comparisons%20 2010%204.2.10.pdf?AspxAutoDetectCookieSupport=1 http://www.mass.gov/dor/local

- officials/municipal

- data

- and

- financial

- management/data

- bank

- reports/municipal

actual

- revenues

- and

- expenditures.html (expenditures per resident)***E.O. 12866 Review

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### Exhibit 7

- 10: Average Revenue/Establishment for FTE Class (Economic Census)

Total # facilities/ # of

non responders where rule costs could > 1% rev FTEs

NAICS Code 0

- 4 1 2 3

- 4 5

- 9 10

- 19 20

- 49 50

- 99

111 75/62 $1,495,000 $3,329,000 $5,960,000 $11,640,000 $22,735,000

112 1/1 $1,495,000 $3,329,000 $5,960,000 $11,640,000 $22,735,000

115 130/85 $1,495,000 $3,329,000 $5,960,000 $11,640,000 $22,735,000
211112 0 $13,888,000

221119 17/7 $1,837,168 $3,330,268 $6,225,566 $9,896,888

22121 0 $7,505,716 $22,926,662
32512 3/2 $2,692,000 $6,941,000 $13,381,000 $23,392,000

32518 7/2 $1,652,000 $6,207,000 $11,475,000 $23,285,000

325181 0 $1,652,000 $6,606,000
325188 1/1 $2,257,000 $6,207,000 $11,475,000 $23,285,000

32519 0 $1,424,000 $11,437,000 $34,910,000

325193 0 $14,208,000 $21,051,000 $88,511,000
325199 2/1 $1,424,000 $11,437,000 $34,910,000

325314 18/15 $1,192,000 $3,424,000 $6,211,000 $15,952,000

32532 4/1 $942,000 $28,422,000
32551 4/2 $662,000 $2,381,000 $5,342,000 $13,223,000

32552 1/1 $854,000 $3,099,000 $6,545,000 $16,207,000

32599 6/3 $720,000 $2,507,000 $6,907,000 $14,578,000
325998 6/4 $1,424,000 $3,329,000 $8,379,000 $17,995,000

42399 2/1 $851,039 $1,428,979

42451 11/11 $4,744,000 $9,671,000 $18,349,000 $42,265,000 $74,456,000***E.O. 12866 Review

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Page 111 of 126 Total # facilities/ # of

non responders where rule costs could > 1% rev FTEs

NAICS Code 0

- 4 1 2 3

- 4 5

- 9 10

- 19 20

- 49 50

- 99

42459 20/16 $1,148,000 $5,184,000 $6,655,000 $15,718,000 $17,531,000 $56,881,000
42469 46/33 $1,973,000 $4,949,000 $5,806,000 $18,120,000 $28,325,000

42471 $11,807,000 $15,665,000 $11,807,000 $19,088,000 $37,556,000 $127,559,000

42491 1174/1062 $1,495,000 $3,329,000 $5,960,000 $11,640,000 $22,735,000
44422 6/5 $305,000 $595,000 $991,000 $1,798,000 $3,681,000 $6,247,000

453998 9/7 $478,000 $675,000 $1,134,000 $2,223,000

49311 14/13 $208,000 $378,000 $529,000 $836,000 $1,422,000 $2,477,000 $3,550,000
49312 53/53 $279,000 $420,000 $579,000 $1,125,000 $2,418,000 $4,516,000 $6,666,000

49313 37/28 $725,000 $781,000 $1,673,000 $2,373,000 $4,018,000

49319 25/12 $444,000 $736,000 $949,000 $1,220,000 $1,906,000
56179 14/14 $132,642 $239,000 $366,000 $661,000 $1,393,000 $3,176,000 Highlighted cells indicate facility categories where 1 percent of revenues, for any facility in that size category, or above, would exceed the costs of the proposed rule even in the highest cost year (including costs for non

- responders to become responders).***E.O. 12866 Review

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## 7.4 Conclusion

It is possible that the costs of the rule would exceed one percent of revenues for some RMP small entities that are currently not responders

. The maximum number affected would be 1,442 . In years where the STAA analysis occurs or a field exercise occurs, the cost could exceed the threshold for a large r number of facilities

. The most significant cost for small entities, however, will be incurred by those that have to become responders; in the first year of compliance, when they have to pay for training and response equipment, the costs are likely to ex ceed one percent of revenues for many of the facilities with fewer than 20 FTE

. Facilities owned and operated by governments serving fewer than 10,000 people may incur costs above one percent of their revenues in the initial year if the government has to train and equip a hazmat team

. These governments may be able to obtain funding to cover some training costs through grants from the Pipeline and Hazardous Materials Safety Administration of the U.S. Department of Transportation; local responders may also attend training course s offered by the Federal Emergency Management Agency at no cost (other than travel and expenses).

In developing the proposed rule, EPA considered alternatives to reduce the impacts on small entities

. The proposal limits the STAA provision to high risk sectors, removing what could be a substantial burden on other sectors that would probably have to hire consultants to conduct the analyses

. EPA considered limiting applicability of some provisions to P3 facilities, but with the shif t in OSHA’s interpretation of the
retail facility exemption under the PSM standard , the effect of such a change was reduced (most P2 facilities will shift to P3)

. A substantial majority of P2 facilities that will remain are government water
and wastewater treatment systems; because the only difference between those systems in P2 and those in P3 is the applicability of OSHA PSM (i.e., there is no difference in the risk posed), EPA could not justify providing regulatory relief to these facilities who are in P3

. EPA did not consider exempting small facilities or governments from the requirement to become responders if the local agencies are not capable of responding or ask the facility to handle any accidents in

- house

. The smallest facilities that

are not re sponders are too often in rural areas where there may be no hazmat response capability within a reasonable distance and, in some cases, in areas with no local fire department

. When it enacted section 112(r)
, Congress clearly required facilities to ensure that there was a capability to respond to releases.***E.O. 12866 Review

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# CHAPTER 8: ENVIRONMENTAL JUSTICE

8.1 Background and Context

Executive Order 12898, “Federal Actions to Address Environmental Justice in Minority Populations and
Low

- Income Populations” (February, 1994) places a responsibility on federal agencies for “identifying and addressing, as appropriate, disproportionately h igh and adverse human health or environmental effects of its programs, policies, and activities on minority populations and low

- income populations in the United States[.]” This section explains how EPA has addressed environmental justice issues
associated with this rulemaking.

Environmental risks may result from industrial or commercial activities by private actors, or from governmental activities or programs. When those risks are disproportionately borne by particular subpopulations, environmental just ice is achieved through Fair Treatment and Meaningful Involvement. 104



### Fair treatment refers to efforts to prevent environmental risks and harms from disproportionately affecting a particular group of people.

Meaningful involvement refers to inclusion of potentially affected populations in decisions about activities or programs to address those risks. Meaningful involvement may include facilitating the involvement of populations potentially affected by those activities or programs.
It also entails ensuri ng that potentially affected populations have an opportunity to participate in decisions and influence decisions about those activities or programs. “Empowering communities” is a specific goal established by the OSWER Environmental Justice Task Force 105



### E PA used the se principles in identifying and ameliorating environmental justice issues associated with RMP facilities.

104 Guidance on Considering Environmental Justice During the Development of Regulatory Actions, US EPA, May 2015.

105 “OSWER Environmental Justice Task Force Draft Final Report”, EPA 540/R

- 94/004, April 1994. Also see

“ Integration of Environmental Justice into OSWER Policy, Guidance, and Regulatory Development” (OSWER directive No. 9200, 3

- 17, Sept 21, 1994)***E.O. 12866 Review

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## 8.2 Identifying Potential Environmental Justice Concerns Associated with RMP Facilities

At all facilities regulated under the Risk Management Program, an accidental release of a regulated substance create s a hazard to surrounding communities and environments. These hazards include, for example, exposure to toxic substances, fires, explosions , and noxious gas clouds.

In undertaking actions in response to Executive Order 13650 106 

### , EPA sought to determine if there were environmental justice concerns associated with these risks from stationary sources regulated under the
RMP rule. We assessed da ta using EPA tools and census information, and reviewed existing academic and gray literature on risks to populations of concern.



### 8.2.1 Assessment of risks to relevant populations, based on proximity

Facilities that are regulated under the Risk Managemen t Program pose risks of fire, explosion, and /or exposure to hazardous chemicals . Chemical hazards include burns
, corrosive damage to people and property, as well as exposure associated with acute toxicity. Exposure from these facilities may put local

pop ulations at risk through inhalation , ingestion, or dermal contact.

Exhibit 8

- 1 shows the demographics in the vicinity of RMP sites, using locational data from the RMP database and demographic data from EPA’s EJSCREEN tool 107 

### . The analysis shows that minority and low

income populations are more likely to be in proximity to those facilities (and thus at greater risk) than other populations 108



### .

Exhibit 8

- 1: Demographic Profile of Key Populations

Location Population Low

- income Minority Linguistically isolated Total near RMP facilities 109 31.27 million 13,757,000 14,770,000 2,482,000

US Total 309.14 million 104,256,000 112,235,000 15,905,000

Demographics of population near RMP facilities 110 44% 47% 8%

Demographics of overall US population 34% 36% 5%

106 “Impro ving Chemical Facility Safety and Security,” August 2013.

107 See http://www2.epa.gov/sites/production/files/2015

- 05/documents/ejscreen_technical_document_20150505.pdf.

108 Demographic data on populations are from the American Community Survey 2008

- 2012, US Census Bureau

109 Not including facilities in Puerto Rico and Guam

110 This analysis counts each person for once for each RMP facility they are near. There is a likelihood of a small degree of double

- counting, therefore, for those who are in close proximity to two or more facilities. However, this effect is likely to be small, as the data shows that less than 5% of the US population is in close proximity to two or more RMP facilities.***E.O. 12866 Review

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Page 115 of 126 Difference in populations near RMP sites 29% greater 31% greater 60% greater



### 44% of people in proximity (defined as living within a one

- mile radius) to RMP sites are low

- income; the average in the US population is 34%

. Low

- income is defined here as less than twice the Census Bureau’s poverty threshold.

47% of people in proximity to RMP sites are ethnic minorities, including any designation except for “Non

- Hispanic, White .” It therefore includes those identifying as Hispanic white or as multiracial white. The average in the US population (overall) is 36%.

The other demographic indicator we examined was “linguistic isolation. ” This category consists of households where n o one over age 14 speaks English well, and some other language is spoken at home. 8% of populations in proximity to RMP facilities are linguistically isolated, compared to only 5% in the general US population. This characteristic is important for underst anding disproportionate impact, inasmuch as these people are less likely to be aware of risks, to understand them, and to know what to do to help protect themselves.

In comparison to the general US population, therefore, we can conclude that populations surrounding
RMP facilities are

• 2 9% more likely to be low

- income

• 3 1% more likely to be minorities, and

• 60% more likely to be linguistically isolated.
To the extent that populations living closer to facilities are more likely to be exposed if a release occurs, RMP facilities pose a greater risk to these key demographic groups.



### 8.2.2 Assessment of risks to relevant populations, in existing literature

Studies external to EPA have also examined these issues. A 2004 analysis by the University of Pennsylva nia 111 

### examined risk to surrounding minority communities, based on an assessment of the potential for releases and property damages and injuries at RMP facilities. The writers also compared those risks with the demographics of surrounding communities. They found significant correlations between riskier facilities (larger and featuring more complex chemical processes) with location in counties with larger African American populations. They concluded :

111 Elliott, M.R., et al, “Environmental Justice: frequency and severity of US chemical industry accidents and the socioeconomic status of surrounding communities” Journal of Epidemiology and Community Health 2004; 58:24

- 30.***E.O. 12866 Review

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### “ Thus, higher risk facilities are more likely to be foun d in counties with sizeable poor and/or minority populations that disproportionately bear the collateral environmental, property, and
health risks. ”

In 2014, the Environmental Justice and Health Alliance for Chemical Policy Reform 112 

### found that the populati ons vulnerable to releases from chemical facilities are disproportionately black or Latino. Compared to the US population as a whole, these vulnerable populations have higher rates of poverty, lower incomes, and education levels. In particular, this repo rt focuses on the communities closest to the facilities (at the “ fence line ”).



### 8.2.3 Conclusions
Based on analysis of RMP data and other studies, EPA concludes that there is evidence that risks from RMP facilities fall on minority and low

- income populat ions, to a significantly greater degree than those risks affect other populations.



## 8.3 Actions Taken to Facilitate “Fair Treatment”

Chapter 6 describes the reductions in risk that EPA anticipates to result from this rule. These include reducing the f requency of releases and accidents at RMP facilities, mitigating the damages when releases do occur, and improved information for affected communities and for emergency planners and responders.

To the extent that this rule results in reductions of risk to US populations overall, EPA anticipates that it will result in greater risk reductions for minority communities and lower

- income communities, since they bear a larger portion of the risk. Note that this reduces the absolute disparity in risks, but not the relative disparity in risk that is associated with proximity to RMP facilities. Thus, EPA believes that this proposed rule will not have potential disproportionately high and adverse human health or environmental effects o n minority, low income, or indigenous populations because it increases the level of environmental protection for all affected populations without having any disproportionately high and adverse human health or environmental effects on any population, includ ing any minority, low

- income or indigenous populations.



## 8.4 Actions Taken to Facilitate “Meaningful Involvement”

Addressing environmental justice concerns entails meaningful involvement by affected communities.
EPA has taken actions to ensure that these communities have a significant role in characterizing the risks

112 Who’s in Danger? A Demographic Analysis of Chemical Disaster Vulnerability Zones , May 2014. The rep ort was produced in collaboration with Coming Clean and The Center for Effective Government. http://comingcleaninc.org/whats

- new/whos

- in

- danger

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### associated with RMP facilities . In addition, EPA has facilitated communities’ involvement in assessing problems concerning RMP facilities and policy options for addressing these problems.

EPA took a variety of steps to consult with communities that might be threatened by hazardous substances. In coordination with other agencies undertaking reviews regarding EO 13650, EPA , along with other key federal agencies, conducted a series of listeni ng sessions and public communication efforts regarding addressing potential hazards from RMP stationary sources and other facilities.

EPA participated in public sessions b etween November 2013 and January 2014 on the following dates :

• 

### November 5, 2013, Texas City, TX

• 

### November 15, 2013, Washington, DC

• 

### November 19, 2013, Springfield, IL

• 

### December 11, 2013, Orlando, FL

• 

### January 9, 2014, Los Angeles CA

• 

### January 14, 2014, Washington DC

• 

### January, 2014 in Sacramento, CA

• 

### February 27, 2014 in N ewark, NJ

In addition, EPA participated in a webinar on the topic in November, 2013.

Representatives from a variety of stakeholder organizations presented information and statements to the federal agencies convening these sessions. Many of those giving testimony represented neighborhood and community groups, and especially groups with information regarding minority, low

income, and indigenous populations. P resenters from the following organizations provided information

on the risk to those populations from chemical facilities :

• Center for Health Environment and Justice

• Center for the Urban Environment

• Louisiana Bucket Brigade

• Louisiana Environmental Justice Community Organizing Coalition

• Louisiana Environmental Action Network

• Mossville (LA) Environmental Action Now

• Just Transition Alliance

• East Yard Communities for Environmental Justice

• Communities for a Better Environment

• Public Citizen

• Citizens for Clean Air and Clean Water

• Texas Environmental Justice Advocacy Service

• Environmental Justice Health Alliance

• Community In

- Power and Development Association***E.O. 12866 Review

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### • Coalition for a Safe Environment

• Air Alliance Houston

• People not Pozos

– Esperanza Community Housing Corporation

• San Pedro Homeowners United

• Citizens for Responsible & Equal Environmental Protection

• Ironbound Community Corporation

As a result of these consultations, EPA gathered important information regarding environmental justice at communities impacted by RMP facilities. 113



### Topics addressed included:

• The associati on between high

- risk areas and low

- income areas

.

• Insufficient information received by local communities about hazards presented by nearby facilities, and the need for enhanced information sharing.

• Cumulative effects of risks in communities affected by m ultiple RMP facilities.

• The need for local communities to be able to participate in planning activities, and problems that occur when those opportunities not available.

• The need to help communities with information and planning to enable them to better
und erstand chemical facility hazards and know what to do when a release of hazardous materials occurs.

• Emphasizing the particular vulnerability of EJ communities to detrimental effects of disasters, especially r egarding racial discrimination.

• The effects of existing health disparities, cumulative impacts of facilities, and limited resources available to community members to understand and help solve the risk problems.

• The process of n otif ying local communities when a chemical accident occurs is poor and irregular. Alarm and siren systems are often not effective.

• Inadequate communication between Local Emergency Planning Committees and local citizens.

• The need for addressing and incorporating environmental justice issues within disaster plans, such as evacuation, return and rebuilding, and understanding and addressing health

consequences.

These consultations provided invaluable information about impacts on poor and minority communities, directly from affected community members and envir onmental justice groups. They also provided a means for involvement of these communities in developing policy options to address those risks. Several of the components of this proposed rule

– and their concomitant benefits

– are based on the
information and issues brought to EPA’s attention in these sessions.

113 Notes from the consultation s and public comments can be found at: http://www.regulations.gov/#!documentDetail;D=DHS

- 2013

- 0075

- 0001***E.O. 12866 Review

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# CHAPTER 9: OTHER ANALYSES AND CONCLUSIONS

9 .1 Unfunded Mandates Reform Act

The Unfunded Mandates Reform Act of 1995 ( 2 U.S.C. 1531

– 1538) requires agencies to conduct a cost benefit analysis of any rulemaking that may impose a net costs of $ 100 million or more for state, local and tribal governments, in the aggregate, or the private sector in any one year

. It is possible that this proposal may result in expenditures of $ 100 million or more in a year

. The cost

- benefit analysis presented in this document meets the requirement of the Act.



## 9 .2 Employment Impacts

Executive Order 13563 “Improving Regulation and Regulatory Review” (76 FR 3821; January 18, 2011) requires Federal agencies to consider the employment impacts of regulatory policy

. Specifically, Executive Order 13563 states, “Our regulatory system must protect public health, welfare, safety, and our environment while promoting economic growth, innovation, competitiveness, and job creation

. ” Economic research evaluating the employment impacts of environmental regulation has shown that the net employment effect is ambiguous. Several impacts are incurred by firms in regulated industries, and the net effect of the impacts should be evaluated jointly to determine the overall effect. Increasing production costs raise the cost of business operations; some of these new regulatory costs are labor costs, while others are capital costs. As production costs increase and firms pass along costs to

co nsumers, output may decrease, which could cause a decrease in labor demand. There are also operational impacts incurred by regulated firms as they modify operations to comply with new regulatory requirements; the direction of that impact on labor demand i s a function of the interaction between the regulatory requirements and the firm’s labor intensity of production. In general, the net effect of an environmental regulation on employment in regulated sectors and the overall economy is
indeterminate

. See B erman and Bui (2001) for a theoretical model of employment effects of environmental regulation.

This RIA does not include a complete analysis of labor market effects of the proposed rule

. In general, an environmental regulation can be understood as an i ncrease in demand for a particular output: environmental quality

. Meeting this new demand can result in increased demand for the various factors of production (including labor)

. EPA has determined that the proposed rule is unlikely to have significant im pacts on employment. Even in a year where a large complex facility would have to conduct a field exercise, a third

- party audit, a root cause analysis, and a near miss investigation, the total labor hours would represent about one FTE, but those hours woul d be distributed across many employees. About half of the total labor hours of that scenario is for the field exercise, which is estimated to involve more than 60 facility staff. For simple non

- responding facilities the annual labor cost would average le ss than 10 hours distributed among several workers. At most, perhaps a facility might need to hire another employee to comply with the rule or to cover the work that would otherwise have been done by those***E.O. 12866 Review

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Page 120 of 126 

### workers involved in compliance activities. The t hird

- party audit and root cause analysis provisions may generate work for consultants, but the number of hours involved per facility is less than a single FTE.



## 9

. 3 Limitations and Conclusions

As discussed in detail in Chapters 3 and 7, the data on which this analysis is based are necessarily
limited

. EPA has attempted to correct obvious errors, such as removing accidents reported more than once and reclassifying some facilities to more appropriate NAICS codes, but some issues related to facility employment size and ownership could not be resolved

. EPA could not add accidents that had not been reported or correct accident impact data where they may have been inaccurate.

The estimated costs for third

- party audits and root cause analysis project pa st accident rates into the
future

. The near miss estimates assume one near miss for each accident, but whether this is accurate will depend on how individual facilities interpret what constitutes a near miss

. Some industry publications project much highe r ratios of near misses to actual releases

. EPA has not defined near miss, but even if it had, deciding whether a series of events could have produced a release that would meet the definition of catastrophic release will always be a matter of opinion

. Si milarly
, what constitutes safer technology is open to interpretation as is what is considered to be feasible

. In these circumstances, some operators may adopt a narrow interpretation
, while others may adopt a broad interpretation

. Questions related to in terpretation apply to most performance

- based rules where there are few if any bright lines that define what constitutes compliance

. The result is that some facilities may spend far more than estimated , while others may spend less

.

The number of non

- respo nding facilities that may become responders and the costs they will incur are unknown

. For the former, the analysis provides a range of conversion estimates to indicate the potential total costs

. In order to assess the cost to any individual facility for coming into compliance, however, EPA necessarily had to use estimates of the number of people who would be trained and the amount of equipment that would be purchased

. The analysis does not address the possibility that a facility might have to acquire fi re

- fighting expertise and equipment, which would impose additional

costs

. The sensitivity analysis conducted in Chapter 5 analyzed costs for 25 percent, 50 percent, and 75 percent of current non

- responders in counties without a Hazmat team to become responders.

Finally, the analysis used a model facility approach so that each estimate represents the average for a group of facilities, not a point estimate for any one facility

. This analysis has attempted to develop reasonable central estimates recogni zing that the range of costs incurred by individual facilities could be
wide

. For example, the third

- party auditor cost for a complex facility is the same for all complex facilities, but it is unlikely that an auditor would charge the largest facility, wh ich has more than 30 covered processes, the same amount as it would a facility with only one or two covered processes

. The number of people who would participate in field exercises will vary considerably based on facility size and location

. Facilities of any size and complexity in urban industrial areas may involve more people in a
field exercise than the same facilities would if located at a considerable distance from other facilities.***E.O. 12866 Review

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### The benefits analysis is qualitative

. There were no data to connect the specific rule elements with specific reductions in expected probabilities or magnitudes of RMP chemical accidents

. In addition, many of the accident impacts expected to be reduced by the rule, such as lost productivity or
emergency response costs , co uld not be quantified even for the 10

- year baseline accident record

. Lack of data also meant that other benefits of the rule such as improved information could not be quantified.***E.O. 12866 Review

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# APPENDIX A

PROPERTY AND BUSINESS LOSSES IN THE PETROCHEMICAL INDUSTRY***E.O. 12866 Review

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### APPENDIX A

— PROPERTY AND BUSINESS LOSSES IN THE PETROCHEMICAL INDUSTRY

Location Date Property Damage $M (20 13 Dollars) Business Loss $M Notes

Refinery Texas City 5/30/1978 $190
Petrochemical Delaware 10/29/1980 $140 Refinery Romeoville 7/23/1984 $450
Petrochemical Pampa 11/14/1987 $480 $240
Petrochemical Henderson 5/4/1988 $640 plant destroyed Refinery Norco 5/5/1988 $610 Refinery Richmond 4/10/1989 $190 25% of capacity lost for 5 months
Petrochemical Pasadena 10/23/1989 $1,400 full production not restored for 2 years Refinery Baton Rouge 12/24/1989 $140 refinery shut for 3 days, reduced capacity for 3 weeks Petrochemical Sea Drift 3/12/1991 $180 $165 production reduced for a year
Petrochemical Sterlington 5/1/1991 $240 $270 one unit destroyed Refinery Wilmington 10/8/1992 $150 production reduced by more than half for 7 months Petrochemical Belpre 5/27/1994 $330 production unit destroyed Petrochemical Cedar Bayou 10/20/1994 $240 includes business loss

Petrochemical Port Neal 12/13/1994 $370
Petrochemical Deer Park 9/22/1997 $230 Refinery Richmond 3/25/1999 $190 unit shut down for year Refinery Carson City 4/23/2001 $190 unit shut down for 2 months Refinery Lemont IL 8/14/2001 $370 unit shut down for year
Petrochemical Illiopolis 4/23/2004 $200 most of plant destroyed Refinery BP/TX 3/23/2005 $260
Petrochemical TX 4/29/2006 $250 plant closed for 6 months Refinery TX 2/28/2008 $240 plant continued to operate Petrochemical Geismar 6/13/2013 $510 plant closed for almost a year

Source: Marsh, The 100 Largest Losses, 1974

- 2013, Large P roperty D amage L osses in the Hydrocarbon Industry, 23rd Edition

. The table includes 24 accidents that reflect only U.S. incidents in the refinery and petrochemical sectors from 1978 forward, only incidents that may have been related to a release of a regulated substance, and only damage unrelated to natural disasters

.***E.O. 12866 Review

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# APPENDIX B Number of Small Entities by NAICS Code and Facility FTE

Total and Non

- Responders***E.O. 12866 Review

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### Number of Small Entities by Facility FTE and NAICS Code, Total and Non Responders

All Non

- Responders
NAICS 0

- 4 FTE 5

- 9 FTE 10

- 19 FTE 20

- 99 FTE NAICS 0

- 4 FTE 5

- 9 FTE 10

- 19 FTE 20

- 99 FTE 111 41 34 14 7 111 34 28 12 6
112 1 0 0 0 112 1
115 61 69 53 53 115 42 43 36 44
211 56 18 22 27 211 36 8 8 11
213 1 1 2 2 213 1
221 8 11 22 70 221 4 11 17 35
2213 9 0 6 2 2213 4 0 4 1
236 1 236 0 0 0 0
311 3 4 9 114 311 1 3 6 52
312 0 0 1 5 312 0 0 1 1
313 1 313 0 0 0 0
324 1 9 324 2
32512 1 2 0 1 32512 1 1 0 0
32518 4 3 6 21 32518 1 1 1 1
325181 0 0 2 3 325181 0 0 2 0
325188 0 1 4 15 325188 0 1 2 4
32519 0 0 2 5 32519 0 0 0 2
325193 0 0 2 110 325193 0 0 1 87
325199 1 1 6 39 325199 0 1 3 11
325314 4 6 8 5 325314 3 6 6 5
32532 2 1 1 7 32532 1 0 0 2
32551 1 1 2 9 32551 0 1 1 1
32552 0 0 1 5 32552 0 0 1 2
32599 1 2 3 6 32599 0 1 2 1
325998 0 1 5 24 325998 0 1 3 9

326 0 1 3 35 326 0 0 1 18
327 1 327 0 0 0 0
331 0 1 2 8 331 1 0 1 4
332 0 0 6 9 332 0 0 4 4
333 0 0 0 2 333 0 0 0 1
334 0 0 0 4 334 0 0 0 2
335 0 0 0 1 335 0 0 0 0
336 0 0 0 1 336 0 0 0 0
339 2 8 339 0 0 1 2
423 2 0 0 2 423 1 0 0 1
424 42 32 18 4 424 33 25 14 4
4246 21 25 21 24 4246 17 16 12 12***E.O. 12866 Review

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All Non

- Responders
NAICS 0

- 4 FTE 5

- 9 FTE 10

- 19 FTE 20

- 99 FTE NAICS 0

- 4 FTE 5

- 9 FTE 10

- 19 FTE 20

- 99 FTE 4247 34 15 13 7 4247 18 6 8 3
4249 766 408 212 79 4249 711 351 189 64
444 4 2 1 444 4 1 0 0
447 1 447 0 0 1 0
453 4 2 3 453 4 1 2 0
484 1 1 5 5 484 0 1 3 1
486 0 0 2 2 486 0 0 0 0
488 0 3 1 1 488 0 1 0 0
49311 3 3 3 5 49311 3 3 3 4
49312 9 5 17 52 49312 9 5 17 52
49313 18 10 3 5 49313 15 5 2 3
49319 6 5 6 12 49319 2 2 2 6

541 0 2 0 2 541 0 1 0 2
561 10 0 4 0 561 10 0 4 0
562 0 1 0 2 562 0 0 0 0