Documentation of changes made during OMB review under EO 12866 Subpart J_NPRM_RIA_OMBRedlined_20141203



## REGULATORY IMPACT ANALYSIS

FOR PROPOSED REVISIONS TO THE NATIONAL OIL AND

HAZARDOUS SUBSTANCES POLLUTION CONTINGENCY PLAN

REGULATIONS (40 CFR PART 300 Subpart J )

DRAFT

U. S. Environmental Protection Agency Office of Solid Waste and Emergency Response Office of Emergency Management Regulat ion s Implementation Division

May 22 December 3 , 2014Documentation of changes made during OMB review under EO 12866 Subpart J_NPRM_RIA_OMBRedlined_20141203



## Table of Contents

Acronyms

................................ ................................ ................................ ................................ .... 6 Executive Summary

................................ ................................ ................................ .................... 7

1.0 Introduc tion

................................ ................................ ................................ ................... 1 2

1.1 Statutory Authority

................................ ................................ ................................ ..... 13

1.2 Regulatory Background

................................ ................................ ............................. 13

1. 3 Statement of Need for Regulatory Action

................................ ................................ ... 14

1.4 Proposed Changes to the Rule

................................ ................................ .................. 15

1.5 Organization of this Report

................................ ................................ ........................ 21

2.0 Methodology

................................ ................................ ................................ ................. 23

2.1 General Approach to the Economic Analysis

................................ ............................. 23

3.0 Government Entities and the Universe of Regulated Facilities

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

3.1 Government Entities Impacted by the Proposed Rule

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

3.2 Universe of Product Manufacturers

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

3.3 Universe of Offshore Platforms, Authorities, and Responders

................................ ... 30

4.0 Regulatory Baseline for the Economic Analysis

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

5.0 Government and Private Sector Total Cost of Compliance

................................ ............ 40

5.1 Labor Hours and Costs

................................ ................................ .............................. 40

5.2 Data and Test Requirements

................................ ................................ ..................... 43

5.3 Total Estimated Compliance Costs for Manufacturers

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

5.3.1 Derivation of Wage Rates

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

5.3.2 Estimated Testing Costs for Product Manufacturers

................................ .......... 54

5.4 Estimated Total Annual Burden and Costs

................................ ................................ 56

5.5 Total Incremental Costs for Product Manufacturers

................................ ................... 63

6.0 Benefits of the Proposed Rule

................................ ................................ ....................... 65

8.0 Key Limitations of the Analysis

................................ ................................ ...................... 79 Appendix A: NCP Subpart J Schedule June 28, 2011

................................ ............................... 80 Appendix B: North American Industrial Classification System

................................ ................... 87 Appendix C: NCP Product Schedule Manufacturer Profile and Expected Impacts

.................... 90 Appendix D: Estimating Per Gallon Response Cost by Discharge Size

................................ .... 91

References

................................ ................................ ................................ ............................... 94 Acronyms

................................ ................................ ................................ ................................ .... 6 Executive Summary

................................ ................................ ................................ .................... 7

1.0 Introduction

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

1.1 Statutor y Authority

................................ ................................ ................................ ..... 13

1.2 Regulatory Background

................................ ................................ ............................. 13

1.3 Statement of Need for Regulatory Action

................................ ................................ ... 14

1.4 Proposed Changes to the Rule

................................ ................................ .................. 15

1.5 Organization of this Report

................................ ................................ ........................ 21

2.0 Methodology

................................ ................................ ................................ ................. 23

2.1 General Approach to the Economic Analysis

................................ ............................. 23

3.0 Government Entities and the Universe of Regulated Facilities

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

3.1 Government Entities Impacted by the Proposed Rule

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

3.2 Universe of Product Manufacturers

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

May 22 December 3 , 2014 2Documentation of changes made during OMB review under EO 12866 Subpart J_NPRM_RIA_OMBRedlined_20141203

3.3 Universe of Offshore Platforms, Authorities, and Responders

................................ ... 30

4.0 Regulatory Baseline for the Economic Analysis

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

5.0 Government and Private Sector Total Cost of Compliance

................................ ............ 40

5.1 Labor Hours and Costs

................................ ................................ .............................. 40

5.2 Data and Test Requirements

................................ ................................ ..................... 43

5.3 Total Estimated Compliance Costs for Manufacturers

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

5.3.1 Derivation of Wage Rates

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

5.3.2 Estimated Testing Costs for Product Manufacturers

................................ .......... 54

5.4 Estimated Total Annual Burden and Costs

................................ ................................ 56

5.5 Total Incremental Costs for Product Manufacturers

................................ ................... 63

6.0 Benefits of the Proposed Rule

................................ ................................ ....................... 65 7.0 Small Business Analysis

................................ ................................ ................................ ..... 68

8.0 Key Limitations of the Analysis

................................ ................................ ...................... 79 Appendix A: NCP Subpart J Schedule June 28, 2011

................................ ............................... 80 Appendix B: North American Industrial Classification System

................................ ................... 87 Appendix C: NCP Product Schedule Manufacturer Profile and Expected Impacts

.................... 90

References

................................ ................................ ................................ ............................... 91

May 22 December 3 , 2014 3Documentation of changes made during OMB review under EO 12866 Subpart J_NPRM_RIA_OMBRedlined_20141203



## Table s and Exhibits

1 Summary of the Economic Costs and Benefits: Subpart J Proposed Rule Requirements ( $ 2 01 1 )

................................ ................................ ................................ ..... 8

3

- 1 Subpart J Three Digit NAICS Codes and Description, June 28, 2011 Schedule

............ 2 3

3

- 2 Past Trends for New Listings on the NCP Product Schedule (1996

– 201 1 Select ed Years)

................................ ................................ ....................... 2 5

3

- 3 Assumptions Used for the Listing of P roducts on the NCP Product Schedule (201 2

– 203 1 )

................................ ................................ ................................ 2 6

3

- 4 Off s hore Oil Platforms, Authorities, and Service Providers

................................ ............ 29

3

- 5 Off s hore Oil Platforms and Petroleum and Petroleum Products in Water b orne Commerce (2001

– 2010)

................................ ................................ ............................. 3 0

4

- 1 A Baseline Labor Costs

................................ ................................ ................................ ... 33

4

- 1B Baseline Testing, Labor, Annual and Total Costs

................................ .......................... 34

5

- 1 EPA Burden

................................ ................................ ................................ .................. 3 6

5

- 2 Data Items Required Under NCP Subpart J

................................ ................................ .. 40

5

- 3 Respondent Burden to P repare and Submit Information to EPA Under Proposed Subpart J

................................ ................................ ................................ ....................... 4 2

5

- 4 Unit Burden Associated with Infrequent Burden Items

................................ ................... 4 4

5

- 5 Proposed Subpart J Rule Revisions: Existing and Proposed Testing Requirements

..... 4 5

5

- 6 Derivation of Hourly Labor Cost Used in the Analysis

................................ .................... 4 7

5

- 7 A Labor Costs for Existing Products

................................ ................................ ................. 51

5

- 7B Labor Costs for New Products

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

5

- 7C Aggregate Costs for Existing Products

................................ ................................ .......... 53

5

- 7D Aggregate Costs for New Products

................................ ................................ ............... 54

5

- 8 Incremental Costs of the Proposed Rule for Existing and New Product Manufacturers

. 56

6

- 1 Overview of Subpart J Benefits

................................ ................................ ..................... 58

6

- 2 Water Oil Spills, 1990

- 2011 (Gallons vs. Years)

......... .......................................... 59

6

- 3 Oil Spill Causes, 1990

- 2011

................................ ................................ ......................... 6 0

6

- 4 Oil Products Spilled to W a ter, 1990

- 2011 (Gallons vs. Years)

................................ ...... 6 1

6

- 5 Incremental Benefits of the Subpart J Rule

................................ ................................ ... 6 3

7

- 1 A Per

- Product Costs of the Proposed Revisions to the NCP Subpart J Rule

................ 65 60

7

- 1B NCP Product Schedule Manufacturer Profile and Expected Impacts Associated with the Proposed Revisions to the NCP Subpart J Rule for the Most Exp ensive Product to List (Dispersants)

................................ ................................ ................................ .. 66 6 1

7

- 2 Potential Impacts Associated with Proposed Revisions to NCP Subpart J for Existing Very Small NCP Product June 2011 Schedule Manufacturers

................................ . 68 6 4

A

- 1 NCP Subpart J Product Schedule, June 28, 2011

................................ ..................... 7 0 66

B

- 1 Subpart J NAICS Codes and Descriptions

................................ ................................ 7 7 73

B

- 2 Subpart J NAICS Codes, Descriptions and Small Business Criteria

.......................... 78 7 4

B

- 3 Off s hore Oil Platforms, Res p onders, and Service Providers

................................ ...... 79 7 5

C

- 1 NCP Product Schedule Manufacturer Profile and Expected Impact s Associated with Proposed Revision to NCP product Schedule (40 CFR 300.900)

.............................. 80 76

D

- 1 P er

- Gallon Response Cost by Discharge Size

................................ .............................. 8 3

May 22 December 3 , 2014 4Documentation of changes made during OMB review under EO 12866 Subpart J_NPRM_RIA_OMBRedlined_20141203

May 22 December 3 , 2014 5Documentation of changes made during OMB review under EO 12866 Subpart J_NPRM_RIA_OMBRedlined_20141203



## A cronyms

ACP Area Contingency Plan

ANS Alaska North Slope

BFT Baffled Flask Test

BLS Bureau of Labor Statistics

BOEM Bureau of Ocean Energy Management

D&B Dun and Bradstreet

EO Executive Order

CBI Confidential Business Information

CFR Code of Federal Regulations

CWA Clean Water Act

DfE Design for the Environment

DOI Department of the Interior

ECEC Employer Costs for Employee Compensation

EPA U nited S tates Environmental Protection Agency

FR Federal Register

GC/MS G as Chromatography/Mass Spectrometry

HAZCOM Hazard Communication Standard

ICR Information Collection Request

IFO Intermediate Fuel Oil

LCL Lower Confidence Limit

MOSCA Miscellaneous Oil Spill Control Agent

NAICS North American Industrial C lassification System

NCP National Oil and Hazardous Substance s Pollution Contingency Plan

NRC National Response Ce nter

O&M Operation and Maintenance

OCS Outer Continental Shelf

OMB Office of Management and Budget

OSC On

- Scene Coordinators

OSHA Occupational Safety and Health Administration

PAH Polynuclear Aromatic Hydrocarbons

PCB Polychlorinated Biphenyls

PHMSA Pipeline and Hazardous Materials Administration

RCP Regional Contingency Plan

RIA Regulatory Impact Analysis

RP Responsible Party

RRT Regional Response Team

SBA Small Business Administration

SDS Safety Data Sheet

SFT Swirling Flask Test

SIC Standard Industrial Classification System

SISNOSE S ignificant I mpact on a S ubstantial N umber of S mall E ntities

SONS Spill of National Significance

SPCC Spill Prevention, Control and Countermeasure

T/V Tank/Vessel

USACE United States Army Corps of Engineers

USCG United States Coast Guard

WCUS Waterborne Commerce of the United StatesDocumentation of changes made during OMB review under EO 12866 Subpart J_NPRM_RIA_OMBRedlined_20141203



## Executive Summary

The U.S. Environmental Protection Agency (EPA) propos es to amend the National Oil

and Hazardous Substance s Pollution Contingency Plan (NCP)

, 40 CFR Part 300 Subpart J

– Use of Dispersants and Other Chemicals

. Se ction 311(d)(2)(G) of the Clean Water Act ( CWA )

, delegated to EPA by Executive Order (EO) 12777

, requir es a s chedule that identifi es dispersants, other chemicals , and other spill mitigating devices and substances

, if any, that may be used in carrying out the NCP

. Subpart J makes provision s for such a schedule (Schedule)

and applies to the navigable waters of the United States and adjoining shorelines , the waters of the contiguous zone, and t he high seas beyond the contiguous zone. S ubpart J applies to the use of any chemical and biological agents or other substances as defined in Subpart A of the NCP that may be used to remove

, control , or otherwise mitigate oil discharges.

Th e propos ed rul e reorganizes existing Subpart J requirements , revises certain requirements, adds new provisions, and updates the product listing and authorization requirements to reflect scientific advances and lessons learned from application of products in
response to oil discharges. The tragic Deepwater Horizon explosion and fire in the Gulf of

Mexico in 2010 led to the use of approximately 1 million gallons of dispersants on the surface

and approximately three quarters of a million gallons applied subsurface on a reported discharge of approximately 5 million barrels (about 200 million gallons) 1

. The application of dispersants

, both at the surface and sub surface levels, raised the concern of state, local and

federal officials and the public about the use of these products

. EPA anticipates that the proposed requirements w ill provide incentives to develop , monitor, and manufacture effective products while, at the same time, reduc ing the risks to public health and the environment.

This R egulatory I mpact A nalysis (RIA) examines the costs and benefits of the proposed

amendments to Subpart J and Appendix C to part 300 as well as proposed revisions to

definitions in Subpart A and 40 CFR Part 110 . Th e RIA also a nalyzes the impacts of the proposed requirements on small businesses. The economic analysis began in 2011, and uses the June 28, 2011 Product Schedule as the starting point for assessing economic costs of the proposed rule requirements

. T he re were 86 domestically and internationally located

manufacturers with pro ducts on the June 28, 2011 Schedule and 81 of the se m anufacturers

we re small businesses

. Subpart J businesses manufacture d 99 different products as of June

2011

. S everal of the se businesses are diversified product companies that manufacture or

m arket a range of products. Other businesses with products on the Schedule may only manufacture or market one product. The Schedule contains information on products,
manufacturers, listing dates

, and related product information. The Schedule is updated as
manufactu rers submit new products that are approved for listing

, or need to make changes to existing listings

.

The economic analysis uses the existing regulat ion s as the baseline

. The baseline analysis examines the costs and benefits for manufacturers or submitters to comply with the existing re gulations

. The economic analysis then estimates the costs and benefits of the

1 Ramseur, Jonathan L. Deepwater Horizon Oil Spill: The Fate of the Oil. CRS Report# R41531, 2010.

May 22 December 3 , 2014 7Documentation of changes made during OMB review under EO 12866 Subpart J_NPRM_RIA_OMBRedlined_20141203

proposed rule. The small business analysis was conducted following EPA’s Final Guidance for EPA Rulewriters: Regulatory Flexibility Ac t as Amended by the Small Business and Regulatory Enforcement Fairness Act, November 30, 2006 ( http://www.epa.gov/rfa/documents/Guidance

RegFlexAct.pdf ).

Subpart J establishes a Sc hedule of chemical and biological agents, testing requirements, and authorization of procedures that when taken together address the types of waters and the quantities of listed agents that may be used in response to discharges of oil and

hazardous substan ces. The proposed r ule amends sections on authorization of use, including preauthorization of use of these products ; revise s analytical laboratory testing methods and establishes listing criteria; and establishes monitoring requirements by the responsible party (RP ) for certain discharges

. Appendix C to part 300 of the proposal regulatory package contains the analytical methods and criteria for laboratory testing of oil

, chemical

, and biological agents

.

The Subpart J regulated community includes market e ntities that test, manufacture,

market , import and export, use and monitor oil spill mitigating products under the proposal

. The se businesses make up the supply chain for Subpart J products . They include

manufacturers and businesses in the marketplace that sell

, stockpile or apply Subpart J products on oil spills

. In addition, chemical laboratories provide analytical s ervices to

manufacturers to analyz e chemical and biological agents and provid e results to the

manufacturers for submission to EPA. In certain cases, manufacturer s may hire an agent

, attorney, or marketing representative or pay a laboratory to prepare the submission package for EPA. The proposal also contains requirements for the RP to monitor surface and subs urface dispersant use for certain di scharges

. This economic analysis focuses mainly on the manufacturers of Subpart J products , because most of the requirements and costs of this proposal appl y to the manufacturers

.

The North American Industrial Classification System (NAICS) is a system of industrial

codes maintained by the U.S. Census Bureau, U.S. Department of Commerce

, to categoriz e companies and industries by specific codes

. The NAICS system succeeds the Standard Industrial Classification (SIC) System that continues to be used in transition with the NAICS
system. The most frequently reported NAICS code reported by manufacturers on the June 28,

2011 Product Schedule is NAICS 325 Chemical Manufacturing. Twenty

- six out of 65 manufacturers that reported their NAICS code to Dun and Brad street ( D&B ) reported NAICS

325. Other significant three digit codes in terms of number of manufacturers reported were 424 Merchant Wholesalers, Nondurable Goods and 541 Professional, Scientific and T echnical

Services

. This is a heterogeneous industry in t erms of NAICS code coverage with companies reporting twelve different three digit and 32 different six digit NAICS codes. At the six

- digit NAICS code level, there were a number of NAICS codes with only one firm reporting the code.

In addition to helping de fin e the characteristics of the industry, NAICS codes are used in

combination with Small Business Administration ( SBA ) information to identify the criteria in terms of annual revenue or employment for small businesses.

Exhibit 1 provides a summary of the costs, benefits, and small business analysis fo r the Subpart J proposed rule. The baseline annual costs to manufacturers for existing testing and

May 22 December 3 , 2014 8Documentation of changes made during OMB review under EO 12866 Subpart J_NPRM_RIA_OMBRedlined_20141203

labor requirements are approximately $ 91,000 . T he proposed rule will add to these testing an d labor costs as well as introduce costs for required RP monitoring and government administration. The proposed rule ’s incremental annual cos t s to manufacturers for testing and

labor are estimated at approximately $ 154,000 annual ized at 3%

, or $177,000 a t 7%

. For

certain discharges, the proposed rule requires the RP to in cur costs for monitoring

, roughly estimated as $500,000 per year. Annual government ( EPA ) incremental costs are estimated a t $ 13, 000 (annualized at 3%) or $17, 000 (7%)

. Thus

, total annual incremental cost s of the rule are estimated as $ 668,000 (at 3%) or $ 694, 000 (at 7%).

The benefits are analyzed as the avoided costs of oil spill response and cleanup. For large spills, EPA estimated that the full opportunity cost of oil spill cleanup i s about $40 per gallon. This value is from an analysis of oil spill cleanup costs for the Spill Prevention

, Control and Countermeasures (SPCC) 2008 and 2009 regulatory amendments

. The analysis was developed from oil spill cleanup costs reported to the Pipeline and Hazardous Materials Safety

Administration (PHMSA) , U.S. Department of Transport at ion

. Although it is a simple avoided

cost estimate and based on limited and highly aggregated data, EPA believes the benefits analysis provides useful information by illustrating the magnitude of the potential benefits of the proposed rule. For the average current amount of oil spill ed each year that would be affected by

the rule , the benefits are estimated at about $ 2.3 m illion each year

. The annual benefit

- cost r atio

is approximately 3.3 to 3. 5 ; t he cost effectiveness ratio i s approximately $ 12 per gallon of spilled

oil that will not reach shore as a result of the proposed rule

. T he net benefits for the proposed

rule are estimated a t $ 1.6 to $1.7 million each year

.

In addition to providing annual values, Exhibit 1 also summarizes the total present value

of baseline and increm ental costs of the rule as well as incremental benefits discounted at 3% and 7% over a 20 year period of analysis. Net national benefits are estimated as $ 26.6 million (3%) or $ 14.0 million (7%). Some The benefits of the rule are not monetized including Subpart J

amendments are assessed qualitatively. Such benefits includ e , for example, greater clarity of regulatory requirements , as well as less toxic products . Finally, as highlighted in Exhibit 1, the small business analysis in Chapter 7 of this RIA concludes the rule will have no significant impact on a substantial number of small entities.

EPA has determined , subject to Office of Manag ement and Budget ( OMB ) agreement, that the proposal is a significant regulatory action , because it raises novel legal or policy issues arising out of legal mandates, the President’s priorities, or the principles set forth in EO 12866

and confirmed in E O 1 3 563

. The proposal is not an economically significant regulation under

EO 12866 and EO 13563 based upon the incremental costs and benefits of the regulation

.

May 22 December 3 , 2014 9Documentation of changes made during OMB review under EO 12866 Subpart J_NPRM_RIA_OMBRedlined_20141203



### Exhibit 1

. Summary of Economic Costs and Benefits: Subpart J Proposed Rule Requirements ($ 2011 ) 1


### Costs, Benefits, and
Small Business Analysis Total Present
Value (3%)

20 Years 1 

### Total Present
Value (7%)

20 Years 1 

### Annual
Value (3%) 1 

### Annual
Value (7%) 1

Baseline Costs of Existing Subpart J Testing and Labor $ 1,389,197 $ 1,027,642 $90,656

Incremental Costs of the Proposed Rule : Testing and Labor $ 2,339,511 $ 1,948,041 $ 154,408 $ 177,245 RP Monitoring (SONS) 2 $ 7,661,900 $ 5,667,798 $500,000

Government (EPA) $196,406 $181,140 $13,202 $17,098

Total National
Incremental Costs of
the Proposed Rule $ 10, 197,817 $ 7,796,979 $ 667,610 $694,343

Total National

Incremental Benefits of the Proposed Rule $ 36,792,921 $ 21,766,300 $ 2,317,303

Net National Benefits
of the Proposed Subpart J Rule $ 26,595,104 $ 13,969,321 $ 1,649,693 $ 1,622,960

Benefits not
monetized - The Less toxic products w ould reduce potential economic, human
health environmental , and ecosystem impacts of more stringent toxicity testing. from oil spill cleanup.

- Reorganization Improved efficacy of products w ould decrease

costs a ssociated with oil spill clean

- up and remediation in water and adjoining shorelines. Since increased efficacy reduces the probability that oil reaches the shoreline, it w ould also decrease potential human, environmental, and ecosystem impacts.

- More efficie nt use of planning and response resources would
result from r eorganization and clarification of rule requirements

.

- I mproved, Improved information about the efficacy, toxicity, and application of listed products for planners and responders.

- Improved planning and response from more effective preauthorization requirements and plans

.

- L ower quantities of products used and targeted use s

.

- Benefits of the T he monitoring program , including provides critical
data that provide information on the oil spill and p roducts used to disperse the spill for improved overall effectiveness of dispersant use and informs response actions for more effective and efficient

May 22 December 3 , 2014 10Documentation of changes made during OMB review under EO 12866 Subpart J_NPRM_RIA_OMBRedlined_20141203

incident management decisions that minimize potential environmental and ecosystem impacts

. Small Business Analysis There is n o significant impact on a substantial number of small entities (SISNOSE) from this proposed regulation

. Note s : 1. For the calculation of total present values, discount rates of 3% and 7% are used to bring future values to the present. A higher discount rate reduces total present values , ceteris paribus . On the other hand, since some of

the costs are assumed to be financed , those costs were annualized over 20 years using 3% and 7% interest rates. A higher interest rate increases annual co sts.

2. This is a rough calculation that does not try to account for baseline spending on monitoring. Baseline costs are assumed to be $0, likely a significant underestimate.

May 22 December 3 , 2014 11Documentation of changes made during OMB review under EO 12866 Subpart J_NPRM_RIA_OMBRedlined_20141203



## 1.0 Introduction

The U.S. Environmental Protection Agency (EPA) proposes to amend the National Oil and Hazardous Substances Pollution Contingency Plan (NCP), 40 CFR Part 300 Subpart J

– Use of Dispersants and Other Chemicals. Section 311(d)(2)(G) of the Clean Water Act (CW A), delegated to EPA by Executive Order (EO) 12777, requires a product schedule (Schedule) that identifies dispersants, other chemicals, and other spill mitigating devices and substances, if any, that may be used in carrying out the NCP. Subpart J makes pr ovisions for and applies to the use of any chemical and biological agents or other additives as defined in Subpart A of the NCP that may be used to remove or control oil discharges. This proposal amends the existing regulation for authorizing, using and te sting Subpart J products. In addition, the proposal amends definitions in Subpart A (part 300.5), limitations in 40 CFR Part 110 and adds new requirements for subsurface and surface dispersant monitoring by the responsible party (RP) as directed by the On

- Scene Coordinator ( OSC )

.

The p roposal also reorganizes sections in Subpart J for improved understanding, revises other sections to clarify the requirements, and adds new sections based upon the best science available. EPA anticipates that a reorganized, clarified, and tailored Subpart J rule with new requirements will provide more complete information about these products to the public and to federal, state and local agencies. The regulatory proposal, if finalized, will improve

communication between the A gency, manufacturers and laboratories and increase the efficiency in processing the requests to list products on the Schedule.

The proposal addresses the public and government agencies’ concerns about the unprecedented use of 1 million gallons of dispers ants on the surface and approximately three quarters of a million gallons applied subsurface on a reported oil discharge of approximately 5 million barrels (about 200 million gallons) of oil during the 2010 Deepwater Horizon spill in the

Gulf of Mexico (Ra mseur, 2010) . These requirements will encourage manufacturers to develop and manufacture more effective and less toxic (i.e., green products) products and will better target the use of these products to reduce the risks to public health and the environment

. Additionally, these amendments will ensure that OSC s , Regional Response Teams (RRT), and Area Planners have complete information to make preauthorization decisions and to develop plans to preauthorize the use of dispersants or other chemical agents for a n oil spill emergency response. RRT’s will have the option to request that the manufacturer conduct additional efficacy and toxicity tests due to existing site

- specific or area

- specific concerns.

T his Regulatory Impact Analysis ( RIA ) contains the cost

- b enefit analysis of the proposed

re gulations and the impacts on small businesses and considers alternatives to the proposed regulatory requirements. The existing Subpart J regulation was last amended in 1994 and is the baseline for the economic analysis

. The baseline analysis assumes “no change” in the regulatory program consistent with guidance in Office of Management and Budget ( OMB )

Circular A

- 4 (September 17, 2003)

. The Schedule contains the list of oil spill mitigation products

, and identifies the man ufacturer

, listing date s and other information about a product. The

May 22 December 3 , 2014 12Documentation of changes made during OMB review under EO 12866 Subpart J_NPRM_RIA_OMBRedlined_20141203

Schedule is updated routinely , on average about once each month, to add new products and

manufacturers or to make changes to existing listing s

.

Chapter 1 provides background information on the existing Subpart J regulation, summarizes the proposed regulatory changes, and describes the organization of this report. As a convention, the RIA uses Subpart J titles and section numbers as they appear in both the existing regulation and in the proposed regulation.



## 1.1 Statutory Authority

Section 311(d)(2)(G) of the CWA requires that EPA prepare a schedule of dispersants, other chemicals, and other spill mitigating devices and substances , if any, that ma y be used in carrying out the NCP

. Subpart J makes provision for such a schedule. Subpart J applies to the navigable waters of the United States and adjoining shorelines, the waters of the contiguous zone, and the high seas beyond the contiguous zone in co nnection with activities under the Outer Continental Shelf Lands Act, activities under the Deepwater Port Act of 1974, or activities that may affect natural resources belonging to, appertaining to, or under the exclusive management authority of the United States, including resources under the Magnuson Fishery Conservation and Management Act of 1976. The authority of the President to implement the

CWA was delegated to the EPA Administrator by EO 12777 (56 FR 54757, October 18, 1991).



## 1.2 Regulatory Backgr ound

Section 300.910 of Subpart J addresses the authorization of the use of products on the Schedule and specifies the conditions under which OSCs may authorize the use of dispersants, other chemicals, and other spill mitigating substances. Sections 300.915 and 300.920 describe the data requirements and the process for adding products to the Schedule. To list a product on the Schedule, S ubpart J currently requires the submission of technical data on the product to

EPA. Data on dispersants, surface col lecting agents, surface washing agents, and miscellaneous oil spill control agents must include the results of the toxicity test set for these products in Appendix C to part 300 of the NCP. Data on dispersants must also include the results of the dispersan t effectiveness test , while bioremediation agents must include results of

the bioremediation effectiveness test , also set forth in Appendix C to part 300

. These tests are conducted at the expense of the product manufacturers and must be performed by labora tories experienced with Appendix C to part 300 protocols.

The raw data and a summary of the results from these tests are then submitted to EPA, where they are reviewed to confirm that the data are complete and that the specified procedures were followed. The data requirements for placement of a product on the Sch edule are designed to provide sufficient data for the OSCs to judge whether and in what quantities a product may be used to control a particular discharge. Inclusion of a product on the Schedule means only that the data submission requirements have been sa tisfied. The listing of a product on the Schedule

does not mean that the product is recommended or authorized for use on any specific oil

May 22 December 3 , 2014 13Documentation of changes made during OMB review under EO 12866 Subpart J_NPRM_RIA_OMBRedlined_20141203

discharge nor does it imply that EPA has in any other way endorsed the product for the use

listed or for other uses. T he standardized testing procedures set forth in Appendix C to part 300 provide OSCs comparable data regarding the toxicity, effectiveness, and other characteristics of different products. Under the current 300.910(a) regulation, RRTs and the Area Committee s are required to address, as part of their planning activities, the desirability of using appropriate dispersants, and other chemical or biological agents. The RRTs and Area Committees generally develop “preauthorization plans” which a ddress the specific context in which products can be

used

.

The Schedule is available for use by OSCs, RRTs, and A rea C ommittee s for preauthorization decisions and plans and to determine the most appropriate products to use for different oil discharge sizes and in different r egions, areas and waters. Under 40 CFR 300.910(a), RRTs and A rea C ommittee s are required to address the desirability of using the products on the Schedule in their Regional Contingency Plans (RCP) and Area Contingency Plans (ACP), respectively. The Subpart J proposed revisions would ensure that OSCs, RRTs, and Area Committees have the necessary data on toxicity, effectiveness, and use of different chemical and biological agents to make informed decisions. The proposal revises part 300.910

to make clear the statutory and regulatory authorities and use of products on spills for different types of oil, locations, and waters.



## 1.3 Statement of Need for Regulatory Action

The OMB January 11, 1996 guidance for conduct i ng economic analys e s requires a description o f the market failure. The main market failures that this rule addresses relate to damages from oil spills and dispersant use. The many costs borne by nearby populations after oil spills are not always accounted for in the financial statements of oil produc ers. Furthermore, when dispersants are used to clean up oil spills, their toxic effects are borne by local populations and ecosystems and not always accounted for by the oil and dispersant producers. Since the existing competitive markets do not properly p rice and allocate these impacts, there is

a market failure.

T he testing and us e of these products has been an issue of concern to the public and businesses and federal, state and local governments. In addition to reflecting scientific

advances

, t he pro posed amendments w ill improve the availab i l ity of information about these products and the ability of federal and state agencies to respond more effectively to oil spills. The proposal requires that manufacturers submit additional information to EPA for listing a product on the Schedule and for using the product in the field to mitigate oil spills.

Under the proposed amendments, oil spill responders and decision makers will have more accurate and complete information to choos e appropriate oil spill mitigating product s

. Better information may have both direct and indirect benefits in the process of remediating oil spill s

. EPA and other federal agencies recognize that environmental tradeoffs may be necessary to achieve t he best outcome . We anticipate that providing the best information available when selecting products for use on an oil discharge will support decision making

May 22 December 3 , 2014 14Documentation of changes made during OMB review under EO 12866 Subpart J_NPRM_RIA_OMBRedlined_20141203

during emergency response s to oil spill s. The Agency projects that better toxicological and efficacy information will lead to a reduction in the risk of harm to the environment and human

health that might result from the application of these products.



## 1.4 Proposed Changes to the Rule

EPA propo s es to revis e Subpart J to clarify the authorization of use provisions (40 CFR part 300.910) , add new monitoring requirements (40 CFR part 300.913)

, and revise efficacy and toxicity tests and criteria (40 CFR part 300.915)

. The proposal renumbers Subpart J to include new, consolidated, and revised sections. Some of the rule sections have been retained,

removed

, or moved in their entirety. The revised analytical tests and criteria will help ensure that products that perform effectively

, while minimizing toxi city

, will be listed on the Schedule. The proposed rule also contains subsea and surface monitoring requirements for the responsible
party . EPA considered regulatory alternatives before deciding on a preferred requirement.

The proposed amendments to Subpart J would require that manufacturers conduct efficacy and toxicity tests for each chemical and biological agent consistent with the analytical test methods and criteria in the revised Appendix C to part 300 . The proposal both revises existing analyti cal tests and criteria and adds new efficacy and toxicity tests in Appendix C to part 300 . EPA will make product listing determination s based on a technical evaluation of all data and information submitted, relevant information on impacts or potential impa cts of the product or any of its components on human health or the environment, and the intended use of the product . A disclaimer must be reproduced on the product label that states that the listing of a product on the Schedule does not mean that EPA endor ses or approves the product; listing means only that the data requirements are met. The agency requires that manufacturers place a specific disclaimer on all product labels, advertisement or technical literature. The proposal

clarifies that information wit hin electronic media including website pages also reflect this disclaimer. Overall, the Subpart J proposed revisions would increase the costs for existing rule requirements. In addition, manufacturers will incur additional costs for the totality of the

pro posed amendments for reading and understanding the proposed rule and taking action to comply with the proposed requirements. This RIA estimates that the monetized environmental

benefits exceed the incremental costs , yielding a positive net benefit.

Specif ically, the Agency proposes to:

• Definitions. Amend definitions for B ioremediation agents, Burning agents, Chemical agents, Dispersants, Sinking agents, Sorbents, and Surface washing agents; add new definitions for Bioaccumulation, Bioconcentration, Biodegr adation, Biological agents, Bioremediation, Herding agents, Products, and Solidifiers; and remove definitions for Miscellaneous Oil Spill Control Agents (MOSCA) and Surface C ollecting A gents.

• General Requirements. Revise to reflect new and amended regulato ry definitions.

• Authorization of Use. Revise to clarify planning and preauthorization responsibilities, establish limitations and prohibitions on the use of certain agents, establish requirements for storage and use of agents, clarify authorities for requiring supplemental testing,

May 22 December 3 , 2014 15Documentation of changes made during OMB review under EO 12866 Subpart J_NPRM_RIA_OMBRedlined_20141203

monitoring and information on agents, establish requirements for agent recovery from the environment, and establish reporting requirements for agent use.

• Monitoring the Use of Dispersant. Establish monitoring requirements for dispersant use in response to major disc harges and/or certain dispersant use situations.

• General Product Information for Schedule Listing. Revise and establish requirements, including designation of and testing for all product categories under which the listing is requested, Material Safety Da ta Sheets, sample product labels, shelf life, collection and recovery, persistence in the environment, storage and use conditions, physical and chemical properties, component identities, concentration limits on National Water Quality

Criteria and Standards contaminants, laboratory accreditations, submission of all testing data and calculations, production capabilities, and any other data or certification informing the product’s performance capabilities or environmental benefits.

• Dispersant Testing and Listing Requirements. Revise the efficacy testing methodology using a baffled flask test, establish new developmental and sub

- chronic toxicity testing requirements, revise the acute toxicity testing methodologies, revise the listing criteria,

and establish use limitations to saltwater environments.

• Surface Washing Agent Testing and Listing Requirements. Revise the acute toxicity testing methodology and listing requirements, establish efficacy testing requirements and listing criteria, and establish use limi tations based on product testing for salt and/or

freshwater environments.

• Bioremediation Agent Testing and Listing Requirements. Revise the efficacy and acute toxicity testing methodologies and listing criteria, establish exceptions for specified non

propr ietary products, and establish use limitations based on product testing for salt and/or

freshwater environments.

• Solidifier and Herding Agent Testing and Listing Requirements. Revise the acute toxicity testing methodology and listing criteria, and establis h use limitations based on product testing for salt and/or freshwater environments.

• Sorbent Requirements. Establish a list of known, non

- proprietary sorbents to be made publicly available in lieu of listing sorbents on the Schedule, and requirements for da ta and information for sorbent products with components other than those specifically

identified in the rule.

• Submissions of Confidential Business Information

. Revise the allowable confidential business information claims and reporting procedures.

• Addition of a Product to the Schedule. Revise the submission requirements including the package contents, EPA’s review of submission package, request s for review of decision, changes to a product listing, and transitioning of listed products from the current Sched ule

to the new Schedule.

• Mandatory Product Disclaimer

. Revise the product disclaimer requirements.

May 22 December 3 , 2014 16Documentation of changes made during OMB review under EO 12866 Subpart J_NPRM_RIA_OMBRedlined_20141203

• Removal of a Product from the Schedule

. Revise the basis for removal and appeals

process.

• Appendix C to part 300. Revise the requirements for product testing protocols and summary test data including new dispersant baffled flask efficacy and toxicity tests; new standard acute toxicity tests for bioremediation agents, surface washing agents, herding agents, and solidifiers; and revised bioremediation agent effi cacy test.

• Appendix E to p art 300

– Oil Spill Response. Remove this appendix from the NCP.

The Table s below provide an overview of the existing rule and proposed rule citations for a quick reference of the proposed changes.

40 CFR part 100 Disch arge of Oil

Current Citation Proposed Rule Citation 110.4 Dispersants 110.4 Chemical and Biological Agents

40 CFR part 300

– National Oil and Hazardous Substa nces Pollution Contingency Plan

Current Citations Proposed Rule Citations §300.5 Definitions §300.5 Definitions Subpart J

– Use of Dispersants and
Other Chemicals Subpart J

– Use of Dispersants, and Other Chemical and Biological Agents §300.900 General §300.900 General §300.900(a) §300.900(a) §300.900(c) §300.900(c) §300.905 NCP Product Schedule Deleted §300.910 Authorization of Use §300.910 Authorization for Agent Use §300.910(a) §300.910(a) Use of Agents Identified on the Schedule on Oil Discharges Addressed by a Preauthorization

Plan §300.910(b) §300.910(b) Use of Agents Identified on the Schedule on Oil Discharges Not Addressed by a

Preauthorization Plan §300.910(c) §300.910(c) Burning Agents §300.910(d) §300.910(d) Exceptions §300.910(e) §300.910(e) Prohibited Agents §300.910(f) §300.910(g) Supplemental Testing, Monitoring, and
Inform ation §300.910(f) Storage and Use of Agents §300.910(h) Recovery of Oil and Agents from the

Environment §300.910(i) Reporting of Agent Use §300.913 Monitoring the Use of Dispersants §300.913(a) §300.913(b) §300.913(c)

May 22 December 3 , 2014 17Documentation of changes made during OMB review under EO 12866 Subpart J_NPRM_RIA_OMBRedlined_20141203

Current Citations Proposed Rule Citations §300.913(d) §300.913(e) §300.913(f) §300.915 Data Requirements §300.915 Data and Information Requirements for Product Schedule Listing §300.915(a)(1)

- (12) Dispersants §300.915(a)(1)

- (21) General Product Information §300.915(b) Dispersant Testing and Listing Requirements §300.915(b) Surface Washing Agents §300.915(a)(1)

- (21) General Product Information §300.915(c) Surface Washing Agent Testing and Listing Requirements §300.915(c) Surface Collecting Agents Deleted $300.915(d) Bioremediation Agents §300.915(a )(1)

- (21) General Product Information §300.915(d) Bioremediation Agent Testing and Listing Requirements. §300.915(e) Burning Agents Deleted §300.915(f) Miscellaneous Oil Spill Control Agents Deleted

§300.915(g) Sorbents §300.915(g) Sorbent Listing Requirements §300.915(h) Mixed Products Deleted §300.915(e) Solidifier Testing and Listing Requirements, including §300.915(a)(1)

- (21) General
Product Information §300.915(f) Herding Agent Testing and Listing Requirements, including §300.915(a)(1)

- (21 ) General
Product Information §300.920 Addition of Products to
Schedule §300.955 Addition of a Product to the Schedule

§300.920(a)(1) Dispersants §300.955(a) Submission §300.915(b) Dispersant Testing and Listing Requirements §300.920(a)(2) §300.955(c) EPA Review §300.920(a)(3) §300.955(d) Request for Review of Decision §300.955(b) Package Contents §300.920(b)(1) Surface Washing Agents, Surface Collecting Agents, Bioremediation Agents, and Miscellaneous Oil Spill Control Agents §300.955(a) Submission

§300.920(b)(2) §300.955(c) EPA Review §300.920(c) §300.950 Submission of Confidential Business Information (CBI) §300.920(d) §300.955(e) Changes to a Listed Product §300.955(f) Transitioning Listed Products from the
Current Schedule to the New Schedule §300.920(e) §300.965 Mandatory Product Disclaimer §300.970 Removal of a Product from the Schedule

May 22 December 3 , 2014 18Documentation of changes made during OMB review under EO 12866 Subpart J_NPRM_RIA_OMBRedlined_20141203

Section 300.900 General makes clear that Section 311(d)(2)(G) of the CWA , as delegated to EPA by EO 12777 provides for a “schedule identifying c hemical and biological agents, and procedures that when taken together, identify water and quantities in which such dispersants, other chemicals, or other mitigating devices and substances may be used.” Section 300.910 Authorization for Agent Use clarifies the preauthorization plans and delegation of authority for the use of oil spill mitigating agents

. This section also describes the authority of the OSC for oil spill situations not addressed in a preauthorization plan, burning agents

, prohibited agents, storage and use of agents, supplemental testing, monitoring and information, recovery of agents

, and reporting of agent use

. Section 300.913 Monitoring the Use of Certain Agents contains new requirements for monitoring dispersant use fo r surface and subsurface waters for

certain oil discharges

.

Section 300.915 has been reorganized with data and product i nformation requirements for listing products on the Schedule. I n section (a) , the general requirements are listed for all products. Su b sections ( b ) through (g) contain specific requirements for each product category

. In the existing requirements, general product category information and product specific category

information were both listed for each agent category section. The reorganized section is intended to clarify for product manufacturers the requirements for submission packages and

facilitate listing products on the Schedule

.

R evisions are intended to clarify requirements and to reflect scient i fic advances

available

. The reorganization and clarification of the rule will result in applicants submitting a better package with fewer requests by the agency for additional information

.

The f ollowing list provides brief descriptions of the proposed efficacy and toxicity test s
and criteria requirements . The existing test requirements are contained in the regulations including Appendix C to part 300

. An important proposed requirement is a new, peer reviewed

Baffle d Flask Test (BFT) to conduct efficacy testing for dispersants. The BFT was developed by EPA for testing dispersant efficacy. The BFT replaces the existing Swirling Flask Test (SFT).

The final report “Analysis of Dispersant Effectiveness of Heavy Fuel Oils and Weathered Crude Oils at Two Different Temperatures Using the B affled Flask,” by Percin ( 2005) provides

additional information

. T he proposed rule identifies specific crude oils and temperatures for

each test , identifies species for toxicity tests, and the criteria that each product must meet for

each test

. The Agency considered a set of testing options and thresholds before selecting a set of preferred alternatives

.

Dispersant Testing and Listing Requirements (part 300.915(b))

• Dispersant Efficacy test and listing criteria

. Manufacturers or other submitters of dispersants are required to test the dispersant product for efficacy using the method in Appendix C to part 300

.

• Dispersant Toxicity test and listing criteria

. Manufacturers or other submitters would be required to use the methods specified in Appendix C to p art 300 to test the dispersant alone, the dispersant mixed with Alaska North Slope ( ANS ) and the dispersant mixed with

May 22 December 3 , 2014 1 9Documentation of changes made during OMB review under EO 12866 Subpart J_NPRM_RIA_OMBRedlined_20141203

Intermediate Fuel Oil ( IFO )

- 120 for acute toxicity using Amer i camysis b ahia and Menidia beryllina

, for development toxicity using a sea urc h in assay, and for sub

- chronic effects.

• Limitations. Product listing would be for use only in saltwater environments.

Sur face Washing Agent Efficacy t est and l isting r equirements (part 300.915(c))

• Surface Washing Agent Efficacy test and listing criteria

. Using a standard recognized methodology, a surface washing agent must meet an efficacy of 3 0% in either fresh water

or salt water or both depending on the intended product use.

• Surface Washing Agent Toxicity test and listing criteria

. Using the toxicity test methodology in Append ix C to part 300 , test the surface washing agent for acute toxicity against freshwater species Ceriodaphnia dubia and Pimephales promelas , or saltwater species Americamysis bahia and Menidia beryllina , or both, depending on the intended product use.

• Limitation s

. Based on testing, product listin g would be for use only in freshwater and/or saltwater environments for which it was tested and for which it met the efficacy and toxicity listing criteria.

Bioremediation Agent T esting and Listing Requirements (part 300.915(d))

• Bioremediation Agent Efficacy test and listing criteria. To be listed on the Schedule, a bioremediation agent must successfully d e grade both al kanes and aromatics as determined by gas chromatography/mass spectrometry (GC/MS) in s a lt water or
freshwater or both , depending o n the intended product use. Test the bioremediation agent using the method specified in Appendix C to part 300.

• Bioremediation Agent Toxicity test and listing criteria

. The bioremediation agent must be tested for acute toxicity in saltwater, freshwater or both, depending on the intended product use, following the method specified in Appendix C to part 300.

• Limitations. Based on testing, product listing would be for use only in freshwater and/or saltwater environments for which it was tested and for which it met the efficacy and toxicity listing criteria.

• Exceptions

. If the product consists solely of: ammonium nitrate, ammonium phosphate, ammonium sulfate, calcium ammonium nitrate, sodium nitrate , potassium nitrate

, synthetically

- derived urea, sodium triphosphate (or tripolyphosphate) , sodium phosphate, potassium phosphate (mono

- or dibasic)

, triple super phosphate, potassium sul phate or any combination thereof, no technical product data are required , are generically listed as

non

- proprietary nutrients on the Schedule, and no further action is necessary.

Solidifier T esting and Listing Requirements (part 300.915(e))

• Solidifiers must be tested for acute toxicity in saltwater, freshwater or both, depending on the intended product use, following the method specified in Appendix C to part 300.

• Limitations. Based on testing, product list i ng would be for use only in fres h water and/or

saltwater environments for which it was tested and f o r which it met the toxicity listing

criteria.

May 22 December 3 , 2014 20Documentation of changes made during OMB review under EO 12866 Subpart J_NPRM_RIA_OMBRedlined_20141203

Herding Agent T esting and Listing Requirements (part 300.915(f))

• Herding agents must be tested for acute toxicity in saltwater, freshwater or both, depending on the intended product use, following the method specified in Appe n dix C to

p art 300.

• Limitations. Based on testing, product listing would be for use only in fresh and/or saltwater environments for which it was tested and for which it met the toxicity listing

criteria.

Sorbent Listing Requirements (part 300.915(g))

• For sorbent products that consis ts solely of the following materials : feathers, cork, peat moss, and cellulose fibers such as bagasse, corncobs, and straw; volcanic ash, perlite,
vermiculite, zeolite , and clay ; and polypropylene, polyethylene, polyurethane, and polyester, or any combinat ion thereof, no technical dat a are required and no further action is necessary for use as a sorbent

.

• If the product consists of one or more natural organic substance s, inorganic/mineral compounds, and/or synthetic compounds not specifically identified in par agraph ( g )(1) of

this section but the manufacturer believes the product meets the definition of a sorbent

then

, as applicable under §300.955(a) and (b), then the manufacturer has to submit

information for listing it as a sorbent on the Sorbent P roduct List

.

In addition to the efficacy and toxicity testing requirements (part 300.915 and Appendix

C to part 300 ) for products to be listed on the S c hedule , EPA is proposing to revise authorization for agent use (part 300.910(a)

– (i)), add subsea and surface d ispersant monitoring requirements (part 300.913) for certain oil discharge situations , and revise submission requirements (part 300.950 Submission of Confidential Business Information (CBI), part 300.955 Addition of a product to the Schedule

. )



## 1.5 Organ ization of this Report

This RIA quantifies and monetizes the baseline costs , total compliance costs , and

incremental costs for the propos al

. The report also monetizes the benefits and calculates the

benefit

- cost and cost effectiveness ratios. The report also contains a descri ption of the non

quantifie d and non

- monetized benefits such as improved efficiency in processing submission packages and public health and environmental protection

. In addition, the analysis examines the potential impacts o n small businesses. The report is organized as follows:

• Chapter 2 summarizes the economic methods used for the regulatory impact analysis

• Chapter 3 describes the universe of regulated entities

• Chapter 4 estimates the baseline costs for the existing regulat ions

.

• Chapter 5 discusses the estimated changes in compliance costs for the proposed

revisions

.

• Chapter 6 monetizes qualitatively describes the benefits of the proposed rule

.

May 22 December 3 , 2014 21Documentation of changes made during OMB review under EO 12866 Subpart J_NPRM_RIA_OMBRedlined_20141203

• Chapter 7 presents a summary of the impacts of the proposed revisions on small

businesses

.

• Chapter 8 discusses key limitations of the analysis.

• Appendix A is the list of products on the June 28, 2011 Schedule.

• Appendix B contains three digit and six digit NAICS for manufacturers.

• Appendix C contains small business sensitivity analys es.

• Appendix D contains cost of response by oil discharge size.

• References contain economic literature, EPA and OMB guidance documents, and oil spill science and technology references.

May 22 December 3 , 2014 22Documentation of changes made during OMB review under EO 12866 Subpart J_NPRM_RIA_OMBRedlined_20141203



## 2.0 Methodology

EPA believes, subject to agreement by OMB, that the propos al i s a significant regulatory

action consistent with provision f(4) of E O 12866 “Regulatory Planning and Review” (58 FR 51735; October 4, 1993) and EO 13563 (January 2011)

. EO 12866 (f) (4) define s a rule as significant if it raises "novel legal or policy issues arising out of legal mandates, the President's priorities, or the principles set fo rth in this Executive Order." Given the total costs of the action,

EPA has determined that the proposed rule is not an economically significant regulatory acti on consistent with EO 12866 ( f ) (1) ; it is a significant regulatory action , which require s a more rigorous analysis of the costs and benefits of the rule and of feasible alternatives. Nevertheless, to the extent possible with available data, this regulatory impact analysis is consistent with EO ’ s
12866 and 13563

, EPA's "Guidelines for Preparing Economic Analyses" ( September 2000

, revised December 2010 ) and the OMB's Circular A

- 4 ("Regulatory Analysis"). The analysis also addresses the requirements of the Regulatory Flexibility Act and the Small Business Regulatory

Enforcement Fairness Act.

The remainder of this chapter presents the overall methodology used to estimate the regulatory impacts of the proposed Subpart J rule. Section 2.1 outlines the major st eps of the analysis, and Section 2.2 describes the regulatory baseline for the analysis. Subsequent sections provide greater detail on sp ecific steps and calculations.



## 2.1 General Approach to the Economic Analysis

The general approach to th e economic an alysis is to c alculate the regulatory compliance

costs and benefits for manufacturers or other submitters to comply with the proposed regulatory requirements

. The analysis also contains costs for the RP to monitor subsea and surface dispersant s for certain oil discharge situations. In addition to manufacturers for testing and responsible parties for monitoring , the costs to governmental entities, in this case EPA, are analyzed to implement and manage the program

. The current regulations serve as the baseline

for the economic analysis. The manufacturers with products that are on the current Schedule will be required to retest their products using the new efficacy and toxicity tests. The manufacturers of new products will be required to test their products using the new test methods and meet the new testing criteria. Attempts to quantify and monetize the benefits of the rule

were limited by the lack of data o n actual oil spill quantities and whether a credible and measurable increase in product perf ormance under the proposed criteria could be estimated

. The benefits section therefore attempts to comprehensively describe the potential benefits of

the rule.

The benefit

- cost analysis contains a series of discrete economic analyses for the proposed rule. The first analysis examines the universe of regulated facilities and the number of existing businesses that manufacture Subpart J products. Another analysis estimates the unit costs for each efficacy and toxicity test for the proposed rule. The RIA also provides information on the number of manufacturers that are projected to submit products for listing on the Schedule over the next 20 years. Information is provided for a 2 0

- year period, a time horizon that will

May 22 December 3 , 2014 23Documentation of changes made during OMB review under EO 12866 Subpart J_NPRM_RIA_OMBRedlined_20141203

include the 24

- month transition period during which the final rule is fully implemented and that estimates the time span over which the revised regulations will be relevant. The 20

- year time frame coincides with comp rehensive changes in the Subpart J testing requirements. The original rules were written in 1968 and then comprehensive changes to the required tests occurred in 1994. Twenty years beyond 1994 brings us to the present and the current proposed
rule, which i nstitutes a major change in the testing requirements. Thus, a 20

- year time frame appears reasonable in the context of the Subpart J program, although a much shorter

alternative of 5 years is also used to annualize the efficacy and toxicity testing costs

.

One possible time horizon to consider in the analysis would be the average length of time that a product is listed on the Schedule. This average is difficult to estimate because products can remain on the Schedule for an unlimited length of time. Many prod ucts will

continue to be on the S chedule past the current year, yet we can only observe the length of time on the schedule up to the present. As of December 2010, approximately 9 years w as the average time a product had been on the S chedule. This is a conse rvative estimate because out of approximately 200 products that had ever appeared on the S chedule (as of December 2010), just under half were still on the S chedule at that time , which was the end point of the data set. Thus, just under half of the products will have lives longer than the number of years they existed

on the Sc hedule when the average was calculated. Since December 2010, and as of March 2014, 28 new products have been accepted to and one product has been voluntarily removed

from the S chedule. Another criteria for the time horizon c ould be the duration for a potential

loan. T his analysis uses a relatively conservative length of only 5 years for the sensitivity analysis to annualize the efficacy and toxicity testing costs

.

Th is part of the analysis assesses the number of existing businesses that must retest their products and the businesses that must test new products using the new efficacy and toxicity tests in the proposed rule

. Another analysis project s the number of new produ cts that

manufacturers will submit to EPA over the next twenty years for listing on the Schedule . The number of manufacturers and products projected over the 20

- year time horizon was based on background h istorical and existing data available for the Subpar t J program and program experience managing the Product Schedule

. The analytical testing costs were obtained from historical program data and limited survey s of laboratories and manufacturers

.

In addition to testing costs, l aboratories and manufacturers also provided information on

the time required to read and understand the rule and prepare the submission packages for

EPA. Labor

- hour figures provided by the laboratories and manufacturers were multiplied by the corresponding fully loaded wage rates from the Bureau of Labor Statistics (BLS) to estimate

total labor costs . Non

- labor unit costs or laboratory testing costs were multiplied by the number of products and manufacturers to calculate the compliance costs for the 1994 baseline requirements and for t he proposed rule. Total l abor and laboratory testing costs were summed to estimate total compliance costs.

The difference in total regulatory compliance costs bet ween the baseline and total regulatory compliance costs is the incremental cost of the prop osed rule. Total regulatory compliance c osts were estimated over a 20

- year projection period

. As described elsewhere, the

May 22 December 3 , 2014 24Documentation of changes made during OMB review under EO 12866 Subpart J_NPRM_RIA_OMBRedlined_20141203

20

- year time horizon is a period of time over which the market effects of the final rule including

the 24

- month transition period shou ld be complete and the market should have returned to long term market equilibrium. The total present value of the stream of annual compliance costs was

calculated and discounted at 3% and 7% rate s . In the transition period ( part 300.955(f))

, manufacturers of existing products already on the Schedule will remain conditionally listed until

24 months from the effective date

. A t the end of the 24

- month period, all products that have not

been tested in accordance with the final rule will be remov ed from the Schedule

. Products that complete their testing will be transitioned from the current Schedule to the new Schedule after a new, complete application package is submitted and EPA makes a favorable finding to list the product on the new Schedule. New product m anufacturers who apply for placement on the

Schedule during the transition period will also conduct analytical tests using the new test

methods and criteria in the proposed rule and Appendix C to part 300

. After the first 24 months following t he effective date of the final rule , only manufacturers of new products that conducted the new efficacy and toxicity tests will be listed on the Schedule

.

All manufacturers incur costs on a one

- time only basis to list products on the Schedule

. For exam ple, manufacturers with products on the Schedule incur costs during the transition period (part 300.955(f)) . Manufacturers of new products incur costs for the required efficacy and toxicity tests in the year that they apply to list products on the Schedule. Although the costs for analytical testing are one

- time costs, manufacturers benefit from having products on the

Schedule for long periods. As discussed earlier

, the truncated data on the number of years on

the Schedule indicate th at t he average time for a product in December 2010 was roughly 9

years

. T his analysis annualizes the efficacy and toxicity testing costs using a more conservative alternative time frame as part of a sensitivity analysis , which should bound most reasonable
scenarios, at a 5 year duration

. The incremental annualized cost for each manufacturer i s used in the small business analysis discussed later in the report. Please see the Small Business Analysis in Chapter 7 for additional information.



## 3.0 Government Entities and the Universe of Regulated Facilities

The universe of affected entities includes, but is not limited to, government entities and manufacturers of bioremediation agents, dispersants, surface

- washing agents, solidifiers, herding agen ts, and sorbents used as countermeasures against oil spills. Other affected entities are those in the product supply chain such as privately contracted oil spill response organizations

, vendors, analytical laboratories

, and RP ’s

. The primary focus of this economic analysis is on the manufacturer of oil spill mitigating products. The manufacturer or manufacturer’s representative is often the entity that submits an application package to EPA to list a product. In some cases, a labor atory may be hired by the manufacturer to complete and submit the application package in addition to laboratory analyt i cal services . EPA is the principal government entity affected by the proposed testing and listing requirements . EPA receives the applicat ion package submitted by a manufacturer, reviews these materials and makes the decision to list the product.

May 22 December 3 , 2014 25Documentation of changes made during OMB review under EO 12866 Subpart J_NPRM_RIA_OMBRedlined_20141203



## 3.1 Government Entities Impacted by the Proposed Rule

EPA, as a government entity affected by this proposed rule , has the responsibility for

m anaging the NCP Subpart J Product Schedule. In this capacity, EPA review s submission packages and makes the listing decision. The labor burden to EPA under the existing regulations is reported in the OMB

- approved ICR, EPA #1664.07, OMB 2050

- 0141.

In th e OMB

- approved ICR, the analysis of the burden to EPA is to administer the Product Schedule under the existing regulations. Since the proposed regulations are not covered by ICR, EPA #1664.07, OMB 2050

- 0141

, the labor burden to EPA under the proposed regulations is an incremental or additional burden above and beyond the OMB

- approved ICR

. This economic analysis will analyze the incremental burden to EPA to administer the requirements of the proposed rule.



## 3. 2 Universe of Product Manufacturers

The analysis of the universe of regulated facilities contains four parts: (1) manufacturers of Subpart J products; (2) offshore oil and platform owners and operators, (3) oil spill response

authori ti es

, and (4) oil spil l response companies and laboratories

. The analysis of the universe

of manufacturers uses the June 28, 2011 Schedule. The analysis of NAICS codes requires an

extraction of data from D&B

, a financial information publication company that charges for their

se rvices. EPA pulled data one time only for the June 28, 2011 Schedule at the time of the analysis

. Manufacturers are not required to submit NAIC S codes

, employment and revenue
data to EPA. However, this economic information is important to conduct economic and small business analysis. Therefore

, EPA purchased a one

- time extraction of data that provides important economic and small business information about the regulated industry. Affected Subpart J manufacturers on the June 28, 2011 Schedule reported 12 dif ferent three

- digit NAICS

codes and 32 different six

- digit NAICS codes.

For about one

- half of the six digit NAICS codes, only one or two businesses reported the

code. The predominant three digit NAICS codes, indicated by the number of manufacturers reporting the codes, are :

• Support Activities for Mining (NAICS 213 );

• Chemical Manufacturing ( 325);

• Merchant Wholesalers, Nondurable Goods (NAICS 424 );

• Professional, Scientific and Technical Services (NAI CS 541 );

• Administrative and Support Services (NAICS 561); and

• Waste Management and Remediation Services (562 )

.

The three

- digit code reported by most manufacturers is NAICS 325 Chemical Manufacturing ; 26 of the 65 manufacturers report ing their NAICS code to D &B reported NAICS

325

. Exhibit 3

- 1 contains the NAICS codes for 65 of the 86 manufacturers in the universe of
facilities. Twenty

- one of the manufacturers that did not report their NAICS codes are assumed

May 22 December 3 , 2014 26Documentation of changes made during OMB review under EO 12866 Subpart J_NPRM_RIA_OMBRedlined_20141203

to follow a similar distribution. The list of three digit and six digit NAICS codes rep orted by companies on the June 28, 2011 Schedule are contained in Appendix B of this report.

In addition to regulated manufacturers impacted by the proposed rule, offshore oil and gas facilit y responsible parties are potentially impacted by the proposal if they have an oil spill by part 300.913 Monitoring the Use of Dispersants . Section 3.3 Universe of Off s hore Platforms, Authorities and Responders provide more information on these entities

, the NAICS codes , and
the universe of offshore platforms and waterborne petroleum and petroleum products

. Waterborne petroleum and petroleum products provides information that indicates the waterborne traffic by self

- propelled vessels and barges.

Exhibit 3

- 1 Subpart J Three Digit NAICS Codes and Descriptions

June 28, 2011 Schedule (65 of 86 manufacturing reporting facilities)
NAICS (Three Digit Codes) Number of

Manufacturers NAICS Descriptions

213 2 Support Activities for Mining

237 1 Heavy and Civil Engineering Construction

325 2 6 Chemical Manufacturing

333 2 Machinery Manufacturing

336 1 Transportation Equipment Manufacturing

423 3 Merchant Wholesalers, Durable Goods

424 9 Merchant Wholesalers, Nondurable Goods

453 1 Miscellaneous Store Retailers

541 9 Professional, Scientific and Technical Services

561 2 Administrative and Support Services

562 7 Waste Management and Remediation Services

Other 2 Incorrect codes

Total 65 Manufacturers with NAICs codes

Additional 21 Manufacturers without NAICS codes

Grand Total 86 Total manufacturers

Sources: Dun and Bradstreet (D&B), SRA International , Inc.

, and EPA. D&B had NAICS codes for 65 of 86

manufacturers on the June 28 , 2011 Schedule. Two of the 65 manufacturers reported in correct NAICS codes.

The analysis of manufacturers on the Schedule provides the basis for estimating the economic impact of the proposed rule. The proposed testing and listing requirements apply primarily to manufacturers. Certain requirements also apply to the owners and operators of offshore oil platforms and vessels , responsible parties, and authorities that decide which products should be used on a particular oil spill. Most of the compliance costs apply to

manufacturers that must test or retest their products for efficacy and toxicity.

This report contains data on the products listed on the Schedule each year over the past fifteen years and on the current Schedule. Past data o n products on the S chedule provides

May 22 December 3 , 2014 27Documentation of changes made during OMB review under EO 12866 Subpart J_NPRM_RIA_OMBRedlined_20141203

background for describing the progression of products and projecting the number of products that may b e added to the Schedule in the next 20 years

. This background data shows that 3.3 products on average were listed each year between 1996 and 2009. If 2010 and 2011 product submissions are included, the average number is 5.2 products listed each year. This comparison appears to show that the Deepwater Horizon spill had an effect on product submissions and listings in 2010 and 2011. This was a market shock that ha d a temporary

effect on submissions. After the market stabilize d

, the submissions return ed to a new equilibrium.

For the June 28, 2011 Schedule used for the economic analysis , there were 86

manufacturers and 99 products ( 2 2 bioremediation agents, 1 5 dispersants, 13 MOSCAs, and 4 9

surface washing agents) listed on the Schedule. In a comparison snapshot from the later May

10 , 2012 Schedule , there were 108 products (25 bioremediation agents, 18 dispersants, 14 MOSCAs, and 51 surface washing agents) submitted by 9 4 manufacturers. This comparison

shows an increase of 10 products and 8 manufacturers

, and includes one voluntary product
removal, in less than one year

. A detailed list of manufacturers and products on the June 28,

2011 Product Schedule is included in Appendix A of this document.

The Subpart J total compliance baseline and proposal cost s fo r each efficacy and toxicity test depend on the number and types of products manufacturers submit for listing on the

Schedule. The costs for efficacy and toxicity tests are different and vary by product and the number of products

. Exhibit 3

- 2 presents the number of listed products for selected years

between 1996 and 2011.

Between 1996 and 2011

, 72 products were listed on the Schedule. Also during this time, 27 products that were on the Schedule prior to the 1994 amendments were relisted on the

Schedule. During 2010, there were 25 new products submitted and listed on the Schedule. Given the profit motive , s uppliers wanted to market products for the Deepwater Horizon oil spill.

M anufacturers capitalizing on these types of opportunit ies may do so again if there is another

SONS.

May 22 December 3 , 2014 28Documentation of changes made during OMB review under EO 12866 Subpart J_NPRM_RIA_OMBRedlined_20141203

Exhibit 3

- 2 Past Trends for New Listings on the NCP Product Schedule (1996

– 2011 Selected Years)

Year Dispersants Surface Washing

Agents Bioremediation Agents Miscellaneous Oil Spill Control Agents (MOSCA) Total

1996 1 1

1998 1 2 3

1999 1 1 2 4

2000 1 1 1 1 4

2001 1 3 1 5

2002 3 1 1 5

2003 1 1 2

2005 2 1 3

2006 2 1 3

2007 2 2

2008 1 1 1 1 4

2009 1 1

2010 18 4 3 25

2011 1 7 3 11

Total 11 38 16 8 73

Relisted 4 11 7 5 27

Grand

Total 15 49 23 13 100

Note: This assumes that 27 products on the list before 1994 were relisted following the 1994 rule amendments.

Source : NCP Product Schedule database. The database is an informal data collection for the Subpart J program.

Based on past and current Schedule activity and program experience

, EPA estimates

that manufacturers on average will submit 10 new products to be listed on the Schedule each

year . The estimate contains a n assumption for a specific mix of products f or list ing on the Schedule each year

. It is assumed that t he re will be 2 bioremediation agents, 2 dispersants, 3

solidifiers , and 3 surface washing agents listed yearly ( Exhibit 3

- 3 )

. Solidifiers are currently

listed under MOSCA. As noted, t he definition s for MOSCA and surface collecting agents will be

removed and product specific categories will be substituted ( e.g., solidifier , herding agent)

. The mix of products and projections are based upon past trends during years after the Exxon Valdez oil spills, but before t he Deepwater Horizon oil spill

. The Deepwater Horizon spill created a market shock with a spike in submissions for several years and the market is return ing to market equilibrium. The projection assumes that each product is submitted by a discrete

manufact urer and that each manufacturer is required to comply with the amended requirements. The mix of products and the total number of products projected over the next twenty years may be the high end of the range for submission of products to be listed on the S chedule during a period of market stability and equilibrium ( i.e., without a SONS )

.

May 22 December 3 , 2014 29Documentation of changes made during OMB review under EO 12866 Subpart J_NPRM_RIA_OMBRedlined_20141203

Exhibit 3

- 3 Assumptions Used for the Listing of Products

on the N C P Subpart J Schedule (201 2

– 203 1 )

Year (201 5

- 2031) Dispersants Bioremediation Agents Solidifiers Surface Washing

Agents

2012 2 2 3 3

2013 2 2 3 3

2014 2 2 3 3

201 5 2 2 3 3

201 6 2 2 3 3

201 7 2 2 3 3

201 8 2 2 3 3

201 9 2 2 3 3

20 20 2 2 3 3

20 2 1 2 2 3 3

20 22 2 2 3 3

202 3 2 2 3 3

202 4 2 2 3 3

202 5 2 2 3 3

202 6 2 2 3 3

202 7 2 2 3 3

202 8 2 2 3 3

202 9 2 2 3 3

20 30 2 2 3 3

20 31 2 2 3 3

Note: This is a n EPA projection based upon historical trends and program experience for listings on the Subpart J

NCP Product Schedule

. T he market shock caused by the Deepwater Horizon oil spill in the Gulf of Mexico affected

the number of actual submissions and listings for several years

.

The efficacy and toxicity testing cost and the costs to prepar e and submit a product for listing on the Schedule remain the same whether or not EPA lists the product. Therefore, compliance costs are determined for all manufacturers that submit an application package to list a product on the Schedule, rather than just for those that are listed by EPA. Products that meet

the data requirements in the Subpart J rule are listed on the Schedule.



## 3. 3 Universe of Off s hore Platforms, Authorities, and Responders

Exhibit 3

- 4 contains the description and lists the NAICS codes for offshore oil production platforms owners and operator s and oil spill authorities and responders regulated by

May 22 December 3 , 2014 30Documentation of changes made during OMB review under EO 12866 Subpart J_NPRM_RIA_OMBRedlined_20141203

the proposed rule. Exhibit 3

- 5 lists the number of offshore oil platforms and the volume of petroleum and petroleum waterborne commerce in the United States.

Monitoring the Use of Dispersants

40 CFR Part 300.913 contains proposed monitoring requirements i ncluding a description of potential ecological and wildlife impacts. The U.S. Geological Survey incident data indicate

that there were 21 spills greater than 100,000 gallons between 1990 and 20 11 , or approximately

one per year

, some of which would have used dispersants, and some of which might also have

been monitored . The trend of the frequency and volume of oil spills in the past, along with other appropriate information, informs forecasts of oil spills in the future.

T he proposed rule contains the following new monitoring requirements:

As directed by the OSC, the responsible party must monitor any subsurface use of dispersant in response to an oil discharge, surface use of dispersant in response to oil discharges of more than 100,000 U.S. gallons occurring within 24 hours, and continuous surface use of dispersant for more than 96 hours in response to an oil discharge. Upon initiation and for the duration of dispersant use under these conditions, the responsible party
shall: (a ) Document the characteristics of the source oil; best estima te of the oil discharge flow rate, periodically reevaluated as conditions dictate, including a description of the method, associated uncertainties, and materials; dispersant(s) product used, rationale for dispersant product choice(s) including the results of any efficacy and toxicity tests specific to area or site conditions, reco mmended dispersant

- to

- oil ratio ; and the application method and procedures, including a description of the equipment to be used, hourly application rates, capacities, and total amo unt of dispersant needed. For subsurface discharges also document the best estimate of the discharge flow rate of any associated volatile petroleum hydrocarbons, periodically reevaluated as conditions dictate, including a description of the method, associa ted uncertainties, and materials.

(b) Collect a representative set of background water column samples , following standard operating and quality assurance procedures, at the closest safe distance as determined by the OSC from the discharge and in any dir ection of likely transport considering surface and subsurface currents and oil properties for the parameters listed
below. Collect daily water column samples daily in the dispersed oil plume , following standard operating and quality assurance procedures, a t such depths and locations where dispersed oil may be present and test for:

(1) In

- situ oil droplet size distribution, including mass or volume mean diameter for particle sizes ranging from 2.5 to 2,000 micrometers, with the majority of data

collected be tween the 2.5 and 100 micrometer size; (2) In

- situ fluorometry and fluorescence signatures targeted to the type of oil discharged and referenced against the source oil; (3) Dissolved oxygen;

May 22 December 3 , 2014 31Documentation of changes made during OMB review under EO 12866 Subpart J_NPRM_RIA_OMBRedlined_20141203

(4) Total petroleum hydrocarbons, individual resolvable constituents including volatile organic compounds, aliphatic hydrocarbons, mono

- cyclic, polycyclic, and other aromatic hydrocarbons including alkyl ated homologs, and hopane and sterane biomarker compounds; (5) Carbon Dioxide (subsurface only) ; (6) Methane, if present (subsurface only) ; ( 7 ) Heavy metals, including nickel and vanadium; ( 8 ) Turbidity; ( 9 ) Water temperature; ( 10 ) pH; and ( 11 ) Conductivity.

(c) In consultation with the OSC, characterize the dispersant effectiveness and oil distribution, consid ering the condition of oil, dispersant, and dispersed oil compone nts from the discharge location.

(d) In consultation with the OSC, characterize the ecological receptors (e.g. aquatic species, wildlife, and/or other biological resources) and their habitats that may be present in the discharge area and their exposure pathways. Include those species that may be in sensitive life stages, transient or migratory species, breeding or breeding

related activities (e.g., embryo and larvae development), and t hreatened and/or endangered species that may be exposed to the oil that is not dispersed, the dispersed oil, and the dispersant alone. Estimate an acute toxicity level of concern for the dispersed oil using available dose/response information relevant to p otentially exposed species.

(e) Immediately r eport to the OSC any: (1) Deviation of more than 10 percent from the mean hourly dispersant use rate for subsurface application, based on the dispersant volume authorized for 24 hours use, and the reason for the de viation; and (2) Ecological receptors, including any threatened or endangered species that may be exposed based on dispersed plume trajectory modeling and level of concern
information.

(f) Report daily to the OSC water sampling and data analyses collected in ( b ) and

include: (1) Specific hourly dispersant application rate and the total amount of dispersant used for the previous reporting period established by the OSC with concurrence from the EPA representative to the RRT; (2) All collected data and analysis of that d ata within a time frame necessary to make operational decisions (e.g., within 24 hours of collection), including documented observations, photographs, video, and any other information related to dispersant use, unless an alternate time frame is authorized by the OSC; (3) For analyses that take more than 24 hours due to analytical methods, provide such data and results within 5 days, unless an alternate time frame is authorized by the OSC; and

May 22 December 3 , 2014 32Documentation of changes made during OMB review under EO 12866 Subpart J_NPRM_RIA_OMBRedlined_20141203

(4) Estimates of the daily transport of dispersed and non

- dispersed oil and associated volatile petroleum hydrocarbons, and dispersants, using the best available trajectory modeling.

May 22 December 3 , 2014 33Documentation of changes made during OMB review under EO 12866 Subpart J_NPRM_RIA_OMBRedlined_20141203

Exhibit 3

- 4

Off s hore Oil Platforms, Authorities , and Service Providers

Description NAICS Codes Crude petroleum and natural gas extraction 211111

Petroleum refineries 324110 Petroleum and petroleum products merchants

wholesalers 424720

Environmental consulting services 541620

Remediation services 562910

Note: Offshore oil platforms are located on the Outer Continental Shelf (OCS). The OCS is all submerged lands lying seaward of state coastal waters

, which are under U.S. jurisdiction. (Source: DOI / BOEM)

O il spills and oil discharges can occur at any point in the “life cycle” of petroleum

– during exploration and production; transport by vessel, pipeline, railroad, or tanker truck, refining; storage, consumption or usage as fuel or raw material for manufacturing; or waste disposal (Fingas 2011)

. P roducts on the Schedule would likely be used on the largest spills. The largest worldwide oil spills that would likely use these products would occur in offshore waters, such as offshore oil platforms or vessels that have a significant discharge in open waters. In the United States, there have been t wo: T/V Mandoil (42, 8 57 tons

– 1968), T/V Exxon Valdez (37,415 tons

– 1989) 2 . The Deepwater Horizon (2010

– 200 million gallons) in the Gulf of

Mexico is a recent large worldwide oil spill . Thus, a large vessel or oil platform could be the

source of an oil discharge that requires the use of a product on the Schedule or monitoring by

the RP

.

EPA consulted a number of sources to provide information on the number of platforms

and vessels that could discharge oil and whe re the use of products listed on the Schedule could

be authorized. The U.S

. Department of Transportation (2001) grouped oil spill sources into five categories: oil

- laden tankers underway, oil

- laden

- barges underway, tanker lightering operations,

all offshore facilities and onshore marine transportation

- related facilities, and bunker fuel tanks

. The U.S. Army Corps of Engineers ( US ACE) Waterborne Commerce of the United States (WCUS) Part 5 National Summaries provides statistics on waterborne commerce b y commodity groups through their National Data Center. The U.S. Department of Interior (DOI) issues permits for offshore oil platforms and maintains the database for the facilities. Information on the number of platforms and vessels that could discharge oi l can be found in these sources.

Certain discharges originating from offshore oil platforms or vessels, including barges

, self

- propelled vessels and oil transport tankers meet the criteria proposed at part 300.913 for subsurface and surface dispersant mo nitoring

. Exhibit 3

- 5 shows the number of oil platforms o n the Gulf and Pacific Outer Continental Shelf (OCS) from 2001 to 2010 from the U.S. Department of the Interior, Bureau of Ocean Energy Management (BOEM). BOEM ( http://www.boem.gov )
reports in “Offshore Stats and Facts” that no production facilities have been installed on the

Atlantic or Alaska OCS. The exhibit also contains the amount of petroleum and petroleum

2 Fingas, Mervin (2011). Oil Spill Science and Technology, Chapter 2, p 15

May 22 December 3 , 2014 34Documentation of changes made during OMB review under EO 12866 Subpart J_NPRM_RIA_OMBRedlined_20141203

products in waterborne commerce each year from the U SACE database and report “Waterborne Commerce of the United States, Calendar Year 2010.”

Exhibit 3

- 5

Offshore Oil Platforms and Petroleum and Petroleum Products in Waterborne

Commerce (2001

- 2010)

Year Offshore Oil Platforms 1 ( c ount) Petroleum and Petroleum Products 2 (million short tons)

2001 4,045 1,055.3

2002 4,025 1,017.9

2003 3,977 1,080.5

2004 3,909 1,127.1

2005 3,886 1,111.4

2006 3,887 1,122.2

2007 3,815 1,133.0

2008 3,739 1,086.3

2009 3,547 1,016.4

2010 3,409 1,018.8

Note s :
1. U.S. Department of Interior, Bureau of Ocean Energy Management (BOEM)

, “Offshore Stats and Facts,” accessed August 3, 2012, http://www.boemre.gov

. 2

. U.S. Army Corps of Engineers (USACE), Institute for Water Resources “Waterborne Commerce of the United
States, Calendar Year 2012 Part 5

– National Summaries.”

Chapter 6 provides additional information on the volume of oil spills reported to the National Response Center (NRC), maintained by the U.S. Coast Guard ( USCG) . E PA has conducted an analysis of the oil spills reported to the National Response Center (NRC). The

data compiled and maintained by the USCG, DOI /BOEM, and USAC E can help inform the population of platforms and vessels with waterborne petroleum and petroleum products and the possible frequency and volume of future oil spills

, based upon past oil spill s where the use of products listed on the Schedule could be authorized

.



## 4.0 Regulatory Baseline for the Economic Analysis

OMB Circular A

- 4 (OMB, September 17, 2003) states that the benefits and costs are defined in comparison with a clearly stated alternative. This will normally be a “no action”

b aseline : what the world will be like if the proposed rule is not adopted . The ba seline assumes no change in the regulatory program under consideration. The baseline serves as the primary point of comparison for an analysis of a proposed regulatory or policy action. In this analysis,

the baseline for proposed requirements includes the existing requirements, which were last

amended on September 15, 1994 ( 59 FR 47453 ) and codified at 40 CFR Part 300 Subpart J

– Use of Dispersants and Other Chemicals

.

There are several key areas in the proposed rule for economic analysis. The first is the

revisions to p art 300.910 (a)

- (i) Authorization for Agent use requirements. The second is a new

May 22 December 3 , 2014 35Documentation of changes made during OMB review under EO 12866 Subpart J_NPRM_RIA_OMBRedlined_20141203

section on Monitoring the Use of Dispersants, p art 300.913. The third is part 300.915 Data and Information Requirements for Product Schedule Listing. The second and third areas impose

costs and all three areas generate benefits under the proposed rule.

Baseline for Government Entities

EPA is the government entity impacted by the proposed rule. The existing OMB

approved ICR for the NCP Subpart J Product Schedule (EPA #1664.07, OMB 2050

- 0141) is the baseline for impacts on EPA. The ICR shows that the labor burden is 280 hours under the assumption that EPA will receive 14 products each year. Under the assumptions of this RIA, there will be 10 new products per year, resulting in a baseline of 200 hours of labor.

Baseline for Proposed Monitoring Requirements

The proposed rule requires the RP to m onitor the use of dispersants, a completely new requirement under Subpart J (section 300.913). At present, monitoring is sometimes carried out jointly by USCG and other government entities . The rule will shift the burden of these costs to

RPs

, thereby inte rnalizing them. While some monitoring of dispersant use has occurred in past spills without being required by Subpart J, we have no estimates of the frequency of monitoring or associated expenditures. Therefore, we do not estimate baseline monitoring costs and essentially assume they are zero which is likely a significant underestimate.

Baseline for Proposed Revision of Authorization of Agent Use

The proposal also contains revisions to part 300.910 Authorization for agent use requirements. These revisions impose no additional costs on Regional Response Teams and
Area Committees. Part 300.910(h) Recovery of Oil and Agents from the Environment impose s
costs , if any, on RP s :

(h) Recovery of Agents from the Environment. Depending on factors such as the safety of response personnel and harm to the environment, and as directed by the OSC , the responsible party shall ensure that any removal action adequately contains, collects, stores and disposes of agents that are intende d to be recovered from the environment.

The recovery of Subpart J products would likely include sorbents

, solidifiers, and surface washing agents

. Recovery of such agents used on an oil spill is a cost associated with the response to the spill, not a n incremental cost imposed by th e Subpart J proposed rule. Thus, there are no incremental costs to RPs for part 300.910(h) requirements.

Baseline for Product Manufacturers

The proposal contains new requirements for efficacy and toxicity testing for existing and new product s

. Under the new rule, t he full costs of re

- testing are incurred by product

manufacturers with existing products on the Schedule

. T he re

- testing costs are incremental to the proposed rule. For n ew products

, their incremental cost is only the difference between the existing testing cost s and the new testing costs. Thu s for product manufacturers, the

May 22 December 3 , 2014 36Documentation of changes made during OMB review under EO 12866 Subpart J_NPRM_RIA_OMBRedlined_20141203

incremental costs of the proposed rule are the su m of re

- testing costs for existing products on

the Schedule and the incremental costs of testing new products submitted by manufacturers in

the future.

To determine the regulatory baseline for manufacturers , EPA estimated the administrative and paperwork costs and the efficacy and toxicity testing costs for each product

under the existing ru le

. The costs for efficacy and toxicity test s in the baseline were compiled from data submitted to EPA as part of Schedule submissions

, from a limited sample survey of

nine manufacturers and nine laboratories , and past Agency experience.

Exhibit 4

- 1 A summarizes the baseline labor costs to manufacturers of preparing and submitting documentation for bioremediation agents, dispersants, MOSCAs

, and surface washing, collecting agents. Estimates of labor hours needed vary from low to high. Three labor
categ ories are included: technical, managerial, and clerical. The final column illustrates the

estimated average total labor cost per manufacturer per product is $1,100 for all products except surface washing, collecting agents for which the average total labor cost is $1,047.

Exhibit 4

- 1 A also reports the estimated baseline labor costs to manufacturers of infrequent burden items such as sorbent documentation

, and reformulation of product and

resubmission of data. The estimated average total labor cost per manufacturer per item varies between $129 and $1,877.

Exhibit 4

- 1 B summarizes the baseline cost analysis of the existing S ubpart J rule requirements for product manufacturers

. In addition to the costs of preparing and submitting documentation and infrequent burden items, Exhibit 4

- 1 B shows the costs of efficacy and saltwater toxicity tests. The annual number of manufacturers facing each of these cost categories varies between 1 and 10. The bottom row of Exhibit 4

- 1 B shows estimates of t he total regulatory baseline compliance cost

, projected over the 20

- year time horizon

, of $ 1.4

million discounted at 3% and $ 1.0 million discounted at 7%

. T he total baseline annual cost for

manufacturers is estimated a s $ 91,000

. The total and annual baseline costs also appear in Exhibit 1 in the Executive Summary. ( Refer to Exhibit 1 for a summary of the economic analysis. )

May 22 December 3 , 2014 37Documentation of changes made during OMB review under EO 12866 Subpart J_NPRM_RIA_OMBRedlined_20141203

Exhibit 4

- 1A

Baseline Labor Costs Hours Per Respondent Per Product Total Hours Per Respondent Per Product Total Labor Cost Per Respondent

Per Product Technical Managerial Clerical

Low High Avg. Low High Avg. Low High Avg. Low High Avg. Low High Avg.
Prepare and Submit Documentation

Bioremediation Agents 7 18 12.5 1.4 3.6 2.5 5 10 7.5 13.4 31.6 22.5 $639 $1,561 $1,100

Dispersants 7 18 12.5 1.4 3.6 2.5 5 10 7.5 13.4 31.6 22.5 $639 $1,561 $1,100

MOSCA 7 18 12.5 1.4 3.6 2.5 5 10 7.5 13.4 31.6 22.5 $639 $1,561 $1,100
Surface Washing, Collecting Agents 6.5 17 11.75 1.3 3.4 2.35 5 10 7.5 12.8 30.4 21.6 $604 $1,491 $1,047

Infrequent Burden Items

Sorbent

Documentation 2 2 2 0.25 0.25 0.25 0.75 0.75 0.75 3 3 3 $153 $153 $153

Re

- test 2 2 2 0 0 0 0.5 0.5 0.5 2.5 2.5 2.5 $129 $129 $129 Request for

review of EPA

Decision 5 5 5 5 5 5 0 0 0 10 10 10 $624 $624 $624

Reformulate

Product and

Re

- Submit Data 11.63 32.5 22.06 2.33 6.5 4.41 7 15 11 20.95 54 37.48 $1,024 $2,731 $1,877

May 22 December 3 , 2014 38Documentation of changes made during OMB review under EO 12866 Subpart J_NPRM_RIA_OMBRedlined_20141203

Exhibit 4

- 1 B

Baseline Testing, Labor, Annual and Total Costs

Cost Number of

Annual Respondents Annual Cost Total Costs

- 20 Years

(3%) Total Costs

- 20 Years

(7%) Prepare and Submit Documentation Bioremediation Agents $1,100 2 $2,200 $33,719 $24,943 Dispersants $1,100 2 $2,200 $33,719 $24,943

MOSCA $1,100 3 $3,301 $50,578 $37,415 Surface Washing , Collecting Agents $1,047 3 $3,141 $48,139 $35,610 Efficacy Tests Bioremediation Agents $15,000 2 $30,000 $459,714 $340,068 Dispersants $1,850 2 $3,700 $56,698 $41,942

Saltwater Toxicity Tests Dispersants $5,150 2 $10,300 $157,835 $116,757

MOSCA $5,150 3 $15,450 $236,753 $175,135 Surface Washing , Collecting Agents $5,150 3 $15,450 $236,753 $175,135 Infrequent Burden Items

Sorbent Documentation $153 10 $1,529 $23,435 $17,336

Re

- test $129 2 $258 $3,948 $2,920 Request for Review of EPA Decision $624 2 $1,249 $19,137 $14,157

Reformulate Product and Re

- Submit Required Data $1,877 1 $1,877 $28,770 $21,282

TOTAL BASELINE COSTS OF

TESTING AND LABOR $90,656 $1,389,197 $1,027,642

The economic analysis estimates the incremental impacts of the changes to the existing requirements by the proposed rule. The proposal contains changes and revisions to the existing regulatory requirements. Changes in efficacy and toxicity testing requirements are contained in the Subpart J proposed rul e and specified in Appendix C to part 300. Manufacturers will also need additional time to read and understand changes to the Subpart J rule and complete the submission package. All of these costs are calculated relative to the baseline and are the

increme ntal costs of the rule , as discussed in the next chapter

.

May 22 December 3 , 2014 39Documentation of changes made during OMB review under EO 12866 Subpart J_NPRM_RIA_OMBRedlined_20141203



## 5.0 Government and Private Sector T otal Cost of Compliance

There are impacts and incremental compliance costs under the proposed rule that may be incurred by government entities and different regulated facilities. Chapter 3 describes the government entities and universe of regulated facilities that may be impacted by the proposed

rule. The government entity affected by the action is EPA. The universe of regulated facilities

contains d omestically and internationally located product manufacturers and offshore platform owners and operators, authorities, and oil spill responders. Indirectly, analytical laboratories, vendors, wholesalers and manufacturing representatives may be impacted by the proposed regulations. Please see Chapter 3 for additional information on the universe of Subpart J regulated facilities.

In discussing the costs of the proposed rule updates, it is important to distinguish between new and existing product manufacturers. For the existing manufacturers, to keep existing products on the list in the baseline , no action ( or costs) would be required with respect

to the S ubpart

- J rule. So all of their testing and labor costs are incremental to the proposed update to the Subpart J rule. On the other hand, new manufacturers would still be required to do tests and other requirements to be listed on the Subpart

- J list in the baseline. For them, the incremental costs are due to the differences between the baseline listing requirements and the proposed listing requirements (which now require more actions and costs).



## 5.1 Labor Hours and Cos ts

Government Costs

EPA is the government entity that is impacted by the proposed rule. The OMB

- approved ICR (EPA#1664.07, OMB 2050

- 0141) shows that the EPA burden under the existing regulations is 280 hours each year , with approximately 20 hours per pr oduct . At the estimated f ederal employee hourly rate to manage the Subpart J Product Schedule , this is about $18,909 each year. The proposed rule will increase the labor burden and costs to EPA, because the Agency

will have to review more material in each submission package. In addition, the Agency will have to review more packages in the 24

- month transition period, because manufacturers must re

- test each product on the Schedule.

The ICR indicates that the average EPA burden to implement a product listing on the Subpart J list is, on average 7 hours to process submitted data, 6 hours to review data to make a listing determination , 4 hours to notify a respondent of decision and 3 ho urs to store data (yielding an average of 20 hours). The latter two categories should not be affected by the new requirements. However, we assume that the new rule requirements will increase the first two categories by 50%, increasing the total EPA burden to 26.5 hours per product . The following table illustrates the incremental EPA labor burden. Since all existing product resubmission costs are incremental, the full cost of $84,953 for existing products is added to the incremental cost of new products. The incremental cost of new products is a result of the additional 6.5 hours per product. After year 2 there are no longer any existing products listing, so the incremental costs

May 22 December 3 , 2014 40Documentation of changes made during OMB review under EO 12866 Subpart J_NPRM_RIA_OMBRedlined_20141203

are solely the result of new products. Consequently, the annualized costs of EPA ’s burden over 20 years is $13,202 (at 3%) or $17,098 (at 7%).

Exhibit 5

- 1 EPA Burden

Year 1 Year 2 Years 3

- 20 Existing Product Applicants 59 40 0 Existing Products Baseline Cost 0 0 0 Existing Products Proposed cost $84,953 $57,595 $0

New Product Applicants 10 10 10

New Products Baseline Cost $10,867 $10,867 $10,867
New Products Proposed C ost $14,399 $14,399 $14,399

Total Incremental Cost $88,485 $61,127 $3,532

Authorization of Agent Use (part 300.910)

40 CFR Part 300.910 (a)

- (i) clarifies the existing requirements. The RRTs and Area

Committees are required to address in a preauthorization plan whether the use of chemical and biological agents listed on the Schedule on certain oil discharges is appropriate (part 300.910(a)) . They a re also required

, as appropriate , to include the preauthorization plans in RCPs and ACPs. The OSC may use the agents for their intended purpose when they are included in the preauthorization plan without obtaining specific concurrences.

40 CFR Parts 300 .910 (a)(1), (2), and (3) provide for preauthorization plan

, approval and

reviews

. 40 CFR Part 300.910(b) provides for agent use on oil discharges not addressed by a preauthorization plan. Part 300.910(c) provides for the authorization of burning agents and 300.910(d) provides exceptions for agent use to substantially reduce threats to human life, (e) prohibited agents, (f) storage and use of agents, (g) supplementary testing, monitoring and
information, (h) recovery of agents from the environment, and (i) r eporting of agent use.

The incremental burden for members of the RRTs and Area Committees requires labor

hours to participate in the development of preauthorization plans and to add them to RCPs and

ACPs. The incremental estimate for these activities is 2 hours

.

Monitoring Costs (part 300.913)

The total cost of the monitoring requirements by the responsible party, described in Section 3.2, is incremental to the proposed rule. There are no monitoring requirements in the existing regulations. While monitoring of dispersant use has probably occurred in past spills and

t h us in the baseline, we have no information on frequency or costs of baseline monitoring. Thus

, we assume it is $0

, which causes our monitoring cost estimates to be conservative.

Two methods were used to analyze the monitoring costs: (a) identify prices for equipment and processes for monitoring dispersants , and (b) identify literature t h a t can inform the costs of dispersant monitoring program s

. In the first approach, websites for manufacturers of monitoring equipment were accessed to identify prices for different types of equipment to

May 22 December 3 , 2014 41Documentation of changes made during OMB review under EO 12866 Subpart J_NPRM_RIA_OMBRedlined_20141203

monitor dispersants ( e.g., fluorometer ) . Other equipment and prices were identified that established a range of costs to monitor dispersants. For th e literature, two books contained

method s monitoring

, equipment and equipment prices for monitoring : (1) NRC ( 2005 ) ; and (2) Fingas ( 2011 )

. Both books contain information on monitoring for dispersants and the prices of equipment.

The monitoring provisions include, among other requirements, in

- situ oil droplet size

distribution and in

- situ fluorometry and fluorescence signatures targeted to the type of oil discharged and referenced against the source oil. The N ational R esearch C ouncil (NRC) report on oil spill dispersants estimates that a monitoring program costs for a field trial of dispersant

effectiveness is about $500,000

. Prices and detailed information in Fingas (2011) appear to support this estimate. 40 CFR Part 300.913 is limited to in

- situ monitoring (part 300.913(b)(2) and Fingas (2011) and NRC (2005) costs are higher than the expected incremental costs for the proposed rule requirements

. Moreover, the research of equipment prices on fluoro

- sensor supplier websites estimate costs, subject to price quotes, that range from $5,000 to $10,000

each

. A large oil spill, such as Deepwater Horizon, would require multiple fluoro

- sensors and other monitoring and laboratory equipment (GC/MS) to provide adequate and timely data. This equipment may be av ailable after a spill or the life cycle may be exhausted during a specific spill. The exact cost depends upon the size and location of an oil spill and the life of the equipment. ( For additional information on in

- situ fluorometry

, please see paper #246, 19 99 International Oil Spill Conference, “A Primer on In S itu Fluorometry to Monitor Disperse Oil.” )

For this analysis, we have estimate d that monitoring an oil discharge for dispersants is about $500,000 annually

, the estimated costs for fi e ld trial monitoring in NRC

, to be

conservative

. These costs can vary significantly depending upon the frequency, volume and

location of oil discharge s

. The incremental costs of monitoring for a dispersant by a responsible party depends upon the frequency and volume of oil spills that would meet the criteria in part 300.913: (1) any subsurface use of dispersant to an oil discharge, (2) surface use of dispersant in response to an oil discharge of more than 100,000 gallons occurring within 24 hours, and (3)

surface use of dispersant for more than 96 hours in response to an oil discharge. The U.S. Coast Guard ( USCG ) i ncident data contain 21 spills (approximately one per year over the 1990 to 2010 period ) above 100,000 gallons that would be required to m onitor for dispers ants

. Th e s e oil spills would result in a cost of monitoring of approximately $500,000 each year. Assuming baseline costs are $0 and thus being conservative, t h e total incremental compliance cost would

be approximately $ 7,700,000 ( $5, 7 00,000 ) discounted at 3% (7%) , respectively

. These cost estimates appear in Exhibit 1. Please see Chapter 6 for additional information on the frequency and size of oil spills reported to the NRC

.

Product Testing Costs (part 300.915)

There are two types of costs that product manufacturers may incur to comply with the proposed rule : (1) administrative and paperwork costs; and (2) efficacy and toxicity test cost s

. Existing m anufacturers will incur c osts for the additional paperwork requirements to review the rule changes

, to understand the new listing requirements

, and prepare product application packages consistent with the amended requirements

. New manufacturers require time to

understand the rule and prepare packages bas ed upon the entire rule requirements. May 22 December 3 , 2014 42Documentation of changes made during OMB review under EO 12866 Subpart J_NPRM_RIA_OMBRedlined_20141203

Exhibit 5

- 2 list s the required administrative and paperwork data element s and labor

hours for each data element by product category. The required data elements and labor hours

are used in combination with labor costs from the U.S. Bureau of Labor Statistics (BLS) to analyze the administrative and paperwork costs of the proposed rule

. The largest incremental

costs for complianc e with the proposed rule are the efficacy and toxicity re

- testing costs for existing products on the Schedule and testing new products with the revised analytical laboratory protocols in part 300.915 and Appendix C to part 300

.



## 5. 2 Data and Test Requirements

Under the proposed revisions to Subpart J

, manufacturers who wish to list a product on the Schedule need to report data items listed in Exhibit 5

- 2 . Exhibit 5

- 2 presents requirements under the existing Subpart J rule (baseline scenario) and additional requirements under the proposed rule. General product information is required for all product types (part 300.915(a))

. Requirements that differ across product types are reflected

.

G eneral product information is currently required to be submit ted under Subpart J . T he Agency is proposing revisions to several of the existing general requirements

. These revisions

propose new data and information requirements to better characterize the nature of the product

. To assist EPA in product listing decisio ns the list of proposed changes to the list of general product information requirements includes:

• Identification and documentation by the submitter of its status in relationship to the product as the manufacturer, vendor, importer, distributor, or other designated agent of

the manufacturer.

• Chemical or biological agent categories under which the product is submitted for listing, including information on the specific process(es) through which the product affects the oil, and the specific environment(s) (w ater and/or adjoining shorelines) on which it is intended

to be used.

• Copy of the Safety Data Sheet ( SDS ) required by the Occupational Safety and Health Administration (OSHA) under their Hazard Communication Standard (HAZCOM) for the product.

• Sample prod uct label for all names, brands, or trademarked versions of the product that include the manufacture and expiration dates of the product, as well as the conditions for
storage.

• Environmental fate information on any known and available measured data and

su pporting documentation on the persistence, bioconcentration factor, bioaccumulation factor, and biodegradability of the product and/or all of its components.

• New physical/chemical properties and removal of the incorporation by reference of the

measurement standards.

• Chemical Abstract Service (CAS) Registry Numbers for each component in a product.

May 22 December 3 , 2014 43Documentation of changes made during OMB review under EO 12866 Subpart J_NPRM_RIA_OMBRedlined_20141203

• Certification that bioremediation agents do not contain, at levels that exceed the National Ambient Water Quality Criteria lowest density value, bacterial, fungal, viral or opportunistic pathogens.

• Certification that the product does not contain levels t hat exceed the National Water Quality Standards lowest acute value for aquatic life of the following contaminants: arsenic, cadmium, chromium, copper, lead, mercury, nickel, zinc, or any other heavy metal reasonably expected to be in the product; cyanide; chlorinated hydrocarbons; pesticides; polychlorinated biphenyls (PCBs); and polynuclear aromatic hydrocarbons (PAHs).

• Removal of the requirement for laboratories performing the efficacy and toxicity testing for products to have prior experience specific to the required methodology in lieu of recognized national or international accreditations.

• Estimated annual product production volume, average and maximum amounts that could be produced per day, and time frame needed to reach maximum production rate (da ys).

• Recognition received from EPA’s Design for the Environment (DfE). I nternational product certification, testing or use data informing the performance capabilities or environmental benefits of the product.

May 22 December 3 , 2014 44Documentation of changes made during OMB review under EO 12866 Subpart J_NPRM_RIA_OMBRedlined_20141203

EXHIBIT 5

- 2 Data Items Required Under NCP Subpart J

Response Form Items Respondent Activity Oil Spill Mitigating Agent

BA D MA * SCA * SWA

Existing Data Requirements

Name, brand, or trademark, if any, under which the product is sold

Simple Information X X X X X

Name, address, and telephone number of the manufacturer, importer or vendor X X X X X

Name, address and telephone number of primary distributors or sales outlets X X X X X

Special handling information and worker precautions for storage and field application, including maximum and minimum storage temperatures Short Answer X X X X X

Shelf life information Simple Information X X X X X

Recommended application procedures, concentrations, and conditions for use Short Answer X X X X X

Results of the effectiveness test set forth in Appendix C of the NCP Narrative Answer X X

Result of the toxicity test set forth in Appendix C of the NCP Narrative Answer X X X X

Physical properties covered by the American Society for Testing and Materials (ASTM)

reference standards Short Answer X X X X

Test results for distinguishing surface collecting agents from other chemical agents Short Answer X

List of product components Narrative Answer X X X X

The concentrations or upper limits of any heavy metals, cyanide, and chlorinated hydrocarbons Short Answer X X X X

Information on microbiological cultures, enzyme additives, and nutrient additives Narrative Answer X X

Identity of laboratory performing tests, the qualifications of the laboratory staff, and laboratory experience with similar tests Narrative Answer X X X X X

Proposed Data Requirements

SDS form review and submission Simple Information X X X X X

May 22 December 3 , 2014 45Documentation of changes made during OMB review under EO 12866 Subpart J_NPRM_RIA_OMBRedlined_20141203

Sample product label Simple Information X X X X X

Chemical and biological agent category Short Answer X X X X X

Product use Narrative Answer X X X X X

Information on persistence, bioconcentration, bioaccumulation, and biodegradability Narrative Answer X X X X X

Certification that the product meets the National Ambient Water Quality Criteria and does

not contain prohibited agents Narrative Answer X X X X X

Product volume capacity Simple Information X X X X X

Recognition under EPA’s Design for the Environment (DfE) Simple Information X X X X X

International product testing, use data or certifications Short Answer X X X X X

Results of new and revised efficacy tests set forth in Appendix C of the NCP: dispersants, surface washing agents, bioremediation agents Narrative Answer X X X X X

Results of revised toxicity tests set forth in Appendix C of the NCP: dispersants, surface washing agents, bioremediation agents, solidifiers, herding agents Narrative Answer X X X X X

Key: BA = Bioremediation Agent, D = Dispersant, MA = Miscellaneous Agent, SCA = Surface Collecting Agent and SWA = Surface washing Agent

* The definitions for MOSCA and SCA would be removed under the proposed rule. Herders and Solidifiers would be added ; the proposed data requirements are the same.

Note: Manufacturers of s orbents with one or more substances not identified in 300.915(g)(1) would submit information.

May 22 December 3 , 2014 46Documentation of changes made during OMB review under EO 12866 Subpart J_NPRM_RIA_OMBRedlined_20141203

In addition to the data requirements listed in Exhibit 5

- 2 , the proposed Subpart J rule would also require manufacturers to read and understand the proposed Subpart J rule. While manufacturers that are new to the Schedule may incur more burden than existing manufacturers

in order to orient and familiarize themsel ves with NCP Subpart J as a whole, for this analysis EPA assumes that on average manufacturers of existing and new products would spend 2 .5 hours ( 1 .0 hour of technical time

, 0.5 hours of managerial time and 1.0 hour of clerical time ) to

read and understan d the relevant sections of the Subpart J requirements. M anufacturers of products already on the Schedule would also incur the burden of submitting data to EPA associated with the additional proposed general and agent

- specific revision s, as detailed in

Exhi bit 5

- 2

.

Manufacturers that apply to list a new product on the Schedule would incur the 2 .5

- hour burden to familiarize themselves with the Subpart J requirements and would also incur the burden of preparing and submitting all existing and additional proposed data requirements

detailed in Exhibit 5

- 2

. Exhibit 5

- 3 presents the labor hour estimat es to read and understand the Subpart J rule and to submit required data listed in Exhibit 5

- 2 by labor type (managerial, technical, clerical) for each product type . In addition, Exhibit 5

- 3 distinguishes between existing products already on the Schedule w ith the option to submit a new package for transitioning into

the new Schedule based on the proposed classification categories

, and for new products applying for listing

.

Exhibit 5

- 3

Respondent Burden to Prepare and Submit Information to EPA Under Proposed NCP Subpart J

Subpart J Rule

Requirement Oil Spill Mitigating Agent Unit Burden (hours)

Managerial Technical Clerical Total

Low High Low High Low High Low High

Existing Products

– Required Product Data

Read and understand Subpart J Rule All 0.5 0.5 1.5 1.5 0.5 0.5 2.5 2.5

Prepare and submit

documentation to EPA ( Requirements Listed in

Exhibit 5

- 2 ) Bioremediation Agents 1.00 3.00 5.00 15.00 2 5 8 23

Dispersants 1.40 4.00 7.00 20.00 2 5 10.4 29

MOSCA 1 0.80 2.60 4.00 13.00 2 5 6.8 20.6
Surface Washing / Collecting Agents 0.60 2.20 3.00 11.00 2 5 5.6 18.2

Average 0.95 2.95 4.75 14.75 2.00 5.00 7.70 22.70

New Products

- Required Product Data

Read and understand Subpart J Rule All 0.5 0.5 1.5 1.5 0.5 0.5 2.5 2.5

Prepare and submit

documentation to EPA (Requirements Listed in

Exhibit 5

- 2 ) Bioremediation Agents 2.4 6.6 12.00 33.00 7.00 15.00 21.4 54.6

Dispersants 2.8 7.6 14.00 38.00 7.00 15.00 23.8 60.6

MOSCA 1 2.2 6.2 11.00 31.00 7.00 15.00 20.2 52.2

Surface Washing / Collecting Agents 1.9 5.6 9.50 28.00 7.00 15.00 18.4 48.6

Average 2.3 6.5 11.6 32.5 7 15 21 54

1

– MOSCA is proposed to be deleted; these are typically Herders and Solidifiers in the proposed rule.

May 22 December 3 , 2014 47Documentation of changes made during OMB review under EO 12866 Subpart J_NPRM_RIA_OMBRedlined_20141203

Infrequent Respondent Burden Items

In addition to the data requirements listed in Exhibits 5

- 2 an d 5

- 3 , there are a number of infrequent respondent burden items in the existing Subpart J rule that would continue under the proposed rule. The infrequent items are sorbent s (part 300.915(g)(2)) , review of EPA’s decision, and retesting for changes to a listed product. Exhibit 5

- 4 presents the burden hours for these infrequent items.

The proposal changes the requirement for sorbents. Under the existing rule, sorbents

were not listed on the Schedu le

. That remains unchanged in the proposal, however it does establish a publicly available Sorbent Product List in which known sorbent materials and products will be identified for their use when responding to an oil discharge. For sorbent products that co nsist solely of the following materials, or any combination thereof, no technical data will be required and no further action will be necessary for use as a sorbent:

• Feathers, cork, peat moss, and cellulose fibers such as bagasse, corncobs, and straw;

• Vol c anic ash, perlite, vermiculite, zeolite, and clay; and

• Polypropylene, polyethylene, polyurethane, and polyester.

If the product consists of one or more natural organic substances, inorganic/mineral compounds , and/or synthetic compounds not specifically i dentified in the regulation, but the manufacturer believes the product meets the definition of a sorbent, then the manufacturer must submit the following information for consideration for list i ng it on the Sorbent Product List. T he

labor hours for submission of sorbents and other infrequent items are summarized in Exhibit 5

- 4

and described in the paragraphs that follow.

For products consisting of one or more substances not specifically identified in the proposed listing, the Agency proposes submi ssion requirements that include general and product characterization information required under paragraphs (a)(1) through (8), and

par a graph (a)(13) of proposed § 300.915. The submitter would also be required to include information to support the claim that the product meets the sorbent definition. The Agency will review the submission and make a determination to include the product as a sorbent on the

Sorbent Product list. The unit burden for sorbent submission is estimated at 3 hours (0.25 hours of manager ial time, 2 hours of technical time, and 0.75 hours of clerical time). EPA assumes that manufacturers of approximately 10 sorbents per year would submit data specified in part

300.915 (g) (2)

.

EPA w ill continue to allow manufacturers to request a review of EPA’s decision not to list

or re

- list a product on the Schedule (part 300.955(d)) and to reformulate their product and resubmit information to EPA if a product fails to be listed (part 300.955(c)(4)) . EPA will also continue to require manufacturers to re

- t est and resubmit supporting documentation if information is missing or contains errors.

May 22 December 3 , 2014 48Documentation of changes made during OMB review under EO 12866 Subpart J_NPRM_RIA_OMBRedlined_20141203

Manufacturers of products on the current Schedule 3 who would be required to prepare

and submit additional documentation for re

- testing are estimated to require 2.5 h ours of labor

burden. The re

- testing burden for changes to a listed product is estimated to require 2 hours of

technical time and 0.5 hours of clerical time . The appeal process to request a review of EPA’s decision not to list a product on the Schedule is expected to require approximately 5 hours of managerial and 5 hours of technical time. Preparing and submitting documentation for a reformulated product is assumed to require on average the same burden as for an original application. For this reason, the t echnical, managerial, and clerical burden for reformulated products are assumed to be equivalent to the average hours for data submission for all product types. Based on historical experience, EPA anticipates that there would be two re

- test s each

year ; appealing EPA’s non

- listing decision to occur twice annually; and submitting data for reformulated products to occur once annually.

Exhibit 5

- 4 Unit Burden Associated with Infrequent Items

Infrequent Burden Item Agent Unit Burden (Hours)

Managerial Technical Clerical Total

Low High Low High Low High Low High
Existing products

Sorbent Manufacturer Submission /

Information Sorbents 0.25 0.25 2 2 0.75 0.75 3 3

Re

- Test 1

All 0 0 2 2 0.5 0.5 2.5 2.5

Request for Review of EPA Decision 2 5 5 5 5 0 0 10 10

Reformulate Product and Re

- Submit Required Data 3 2.3 6.5 11.6 32.5 7.0 15.0 21.0 54.0

Notes:

1 Re

- testing burden for new products may be necessary i f EPA determines there is missing information or errors in the supporting materials for the required effectiveness and/or toxicity tests (See section 300.920(a)(2)).

2 Manufacturers may request a review of EPA’s decision to not list a product on the Schedule (See section

300.9 55 ( d )).

3 If necessary, reformulating a product and re

- submitting the required data is assumed to require the same burden as preparing and submitting documentation for an ori ginal application (See section 300.9 55 ( e )); the burden presented represents the average of all oil spill mitigating agents.

In addition to the data requirements listed in Exhibit s 5

- 3 and 5

- 4 , the proposed revisions to Subpart J also involve changes to the effectiveness and toxicity tests currently required in part 300.915 and Appendix C to part 300 of the NCP. Exhibit 5

- 5 summarizes the existing and

new tests would need to be performed for e xisting and new chemical and biological agents

, by
type

, under the proposed revisions to Subpart J.

3 Analyses based on the June 28, 2011 Schedule, when 86 manufacturers had 99 products listed on the NCP

Schedule. The June 28, 2011 Schedule included: 22 bioremediation agents, 1 5 dispersants, 13 MOSCAs, and 49 surface washing a gents. May 22 December 3 , 2014 49Documentation of changes made during OMB review under EO 12866 Subpart J_NPRM_RIA_OMBRedlined_20141203

Exhibit 5

- 5 Proposed Subpart J Rule Revisions: Existing and Proposed Testing Requirements

Product Type Existing Rule Testing Requirement Proposed Requirement s for all products 1

Bioremediation Agents Current product Efficacy test; Appendix C

Toxicity test:

Reserved Effi c acy Testing : Degrade both alkanes and aromatics as determined by GC/MS in salt water

, freshwater or both depending on use. The percentage reduction of total alkanes must be greater than or equal to 9 5 % at day 28 and the percentage reduction of total aromatics must be greater than or equal to 7 0% at day 28 for salt water and greater than or equal

to 40% for freshwater based UCL 9 5

. Toxicity Testing : The bioremediation agent must be tested for acute toxicity in saltwater, freshwater or both , depending upon intended product use

. To be listed on the Schedule, th e bioremediation agent must demonstrate an LC 50 at the lower 95% confidence interval of greater than 1 0 ppm in either fresh or salt water for all tested species.

Dispersants Current product Eff i c acy test:

SWT>45%

T oxicity test : Certification of results Efficacy Testing :
Baffle d Flask Test. Dispersant Eff icacy at the lower 95% confidence level ( LCL 95 ) greater than: i) 55% for IFO

- 120 at

5 ° C, ii) 65% for IFO

- 120 at 25 ° C, iii) 70% for ANS crude oil at 5 ° C, and iv) 75% for ANS at 25 ° C.

T oxicity testing : Test dispersant alone, dispersant mixed with ANS and mixed with IFO

- 120 for acute toxicity, for development toxicity, and for sub

- chronic effects. Acute LC 50 >10 ppm, developmental toxicity IC 50 >10 ppm and sub

- chronic NOEC=>1 ppm.

Solidifiers Current product Efficacy test:

NA

Toxicity test: Appendix C Efficacy Testing:

NA Toxicity Testing:
To be listed on the Schedule, the solidifier must demonstrate an LC 50 at the lower 95% confidence interval greater than 10 ppm in either freshwater, saltwater or bo th, depending upon the intended use, for all tested species.

H erding

A gents Current product Efficacy test:

NA

Toxicity test: Appendix C Effectiveness Testing:

NA Toxicity Testing:
To be listed on the Schedule, the herding agent must demonstrate an LC 50 at the lower 95% confidence interval greater than 10 ppm in either fresh water, saltwater or both , depending upon intended use, for all tested species.

Surface Washing Agents Current product Efficacy test:

NA

Toxicity test: Appendix C Efficacy test : Using a standard recognized methodology, product must meet efficacy of 3 0% in fresh or saltwater or both depending on intended use.

T oxicity test : Acute toxicity using fresh water, saltwater species depending upon use. LC 50 at the lower 95% confidence interval of equal to or greater than 1 0 ppm in either fresh water, saltwater or both , depending upon intended use, for all

test ed species.

May 22 December 3 , 2014 50Documentation of changes made during OMB review under EO 12866 Subpart J_NPRM_RIA_OMBRedlined_20141203

1 The propos al requires tests in addition to the existing 1994 rule requirements . These tests are incremental additions to the existing rule. EPA is not removing any existing requirements for product testing under the Subpart J rule ; the Agency is also revising certain tests

.

May 22 December 3 , 2014 51Documentation of changes made during OMB review under EO 12866 Subpart J_NPRM_RIA_OMBRedlined_20141203



## 5. 3 Total Estimated Compliance Costs for Manufacturers

This section presents both the estimated administrative and paperwork and the efficacy and toxicity tests compliance costs for product manufacturers. The administrative and paperwork costs reflect the labor hours for company personnel to read the regulations and to complet e the application packages to submit to EPA . The laboratory testing costs are based upon the prices charged to manufacturers by analytical laboratories for efficacy and toxicity testing costs services

. The prices charged by laboratories were compiled from submission packages, limited survey data from laboratories and manufacturers, and anecdotal information. There is no complete set of data on the costs to prepar e and submit an application package for

l isting a product on the Schedule.



## 5. 3 .1 Derivation of Wage Rates

To estimate hourly labor costs, EPA used March 2011 Employer Costs for Employee Compensation (ECEC) data in Table 11 reported by the BLS of the U.S. Department of Labor. 4

ECEC measures t he average cost per employee hour worked that a manufacturer pay s for

wages

, salaries and benefits. Hourly ECEC include wages

, salaries, and benefit costs, including paid leave, supplemental pay, insurance, retirement and savings, and legally required bene fits. These compensation costs reflect private industry averages, which were estimated by the BLS based on a sample survey of 58,700 occupations within 12,400 establishments in the private sector. To derive the hourly labor costs used in this analysis, EPA applied an overhead rate of 17 percent to hourly ECEC for management, technical, and clerical employees as summarized

in Exhibit 5

- 6

. 5

4 United States Department of Labor, Bureau of Labor Statistics, Employer Costs for Employee Compensation, Employment Cost Trends, Table 11

-- Private industry, by occupational group and full

- time and part

- time status, March

2011 , accessed at http://www.bls.gov/news.release/pdf/ecec.pdf July 21, 2011

. 5 Overhead costs were computed separately from BLS data and were assumed to be an additional 17 percent of the total wage rate, which is comprised of direct wages and salaries and employee benefits, as reported by BLS. Adjustments to wage rates for overhea d costs are based on the results of several earlier Information Collection Requests that adjusted wage rates by an additional 17 percent based on the results of a survey of chemical industries and trade associations. (See, for example, Information Collect ion Request for the Toxic Chemical Release Report for the Proposed Lead Rule, EPA ICR #1363.08.) May 22 December 3 , 2014 52Documentation of changes made during OMB review under EO 12866 Subpart J_NPRM_RIA_OMBRedlined_20141203

Exhibit 5

- 6 Derivation of Hourly Labor Cost Used in the Analysis

Occupational Category Ma rch 201 1 Hourly ECEC 1 Overhead

Cost 2 Hourly Labor Cost Used in the Analysis 3

Managerial $ 57.84 $ 9.83 $ 67.67

Technical $ 48.90 $ 8.31 $57. 21

Clerical $ 24.60 $ 4.18 $ 28.78

Notes:

1 Hourly Employer Costs for Employee Compensation (ECEC) for March 201 1 include wages and salaries, benefit costs, including paid leave, supplemental pay, insurance, retirement and savings, and legally required benefits.

2 An overhead rate of 17 percent is applied to the March 201 1 hourly ECEC costs to derive the overhead costs. Overhead costs were computed separately from BLS data and were assumed to be an additional 17 percent of the total wage rate, which is comprised of direct wages and salaries and employee benefits, as reported by BLS. Adjustments to wage rates for overhead costs are based on the results of several earlier Information Collection Requests that adjusted wage rates by an additional 17 percent based on the results of a survey of chemical industries

and trade associ ations. (See, for example, Information Collection Request for the Toxic Chemical Release Report for the Proposed Lead Rule, EPA ICR #1363.08.)

3 The hourly labor cost used in the analysis represents the sum of the March 201 1 hourly ECEC costs and derived

overhead costs. Source: United States Department of Labor, Bureau of Labor Statistics, Employer Costs for Employee Compensation, Employment Cost Trends, Table 11

-- Private industry, by occupational group and full

- time and part

- time status,

March 201 1 , ac cessed at http://www.bls.gov/news.release/pdf/ecec.pdf July 21 , 2011

.

May 22 December 3 , 2014 53Documentation of changes made during OMB review under EO 12866 Subpart J_NPRM_RIA_OMBRedlined_20141203



## 5. 3

. 2 Estimated Testing Costs for Product Manufacturers

Laboratory incremental costs are incurred when a manufacturer must test or re

- test a product for efficacy and toxicity consistent with the proposed rules and Appendix C to part 300

. Based upon information from manufacturers and laboratories, EPA anticipates that

manufacturers wi ll purchase these services (laboratory testing) for a price , rather than invest in physical capital (e.g., computers, machinery, or laboratory equipment) to conduct the tests

themselves

. Several companies have invested in laboratory capital to conduct thei r own tests; most companies purchase these services at the price set in the marketplace. Therefore, testing

costs are incurred through purchased services

. In order to provide the necessary test result information to EPA, manufacturers typically have their product tested at a laboratory but

, at their option, they could conduct tests in a company owned laboratory if the laboratory is certified under existing standards

.

• Dispersant Efficacy Test : The Swirling Flask Test ( SFT ) required by the existing Subpart J regulations is priced in the market at about $1, 850 for each test

. We assume that the new, proposed BFT would require additional equipment (e.g., flasks, stopcocks for the first such test) ) and new l aboratory procedures. L ab oratories would recover the cost of new equipment and laboratory procedures by increasing their prices and passing these through to the manufacturers for these analytical laboratory services

. In addition, the

market for the analytical laboratory industry appears to have changed with a shift (increase) in demand for laboratory services after the Deepwater Horizon oil spill in the

Gulf of Mexico

. Market forces also influence analytical testing prices in addition to the

costs for additional procedures and equipment. T he total price for the dispersant efficacy

test is about $ 2

, 2 00 for each BFT , reflecting the change in the test and the change in the

market

. Manufacturers may be able to recover some of these costs by increasing prices and passing these through to the mar ket

. Th e pressure on prices is more likely to be
greater during a SONS event.

To estimate the total present value costs and the annualized total costs for all dispersant products for the BFT

, the economic analysis a ssumes that all manufacturers with dispersants on the Schedule will retest their product s and dispersant manufacturers will require their analytical laboratories to us e the BFT (part 300.9 15 ( b ))

. The economic analysis also assumes that m anufacturers that apply to list new dispersants will a lso require their laboratories to use the BFT

.

• Bioremediation Saltwater Efficacy Test : EPA estimates that the bioremediation saltwater efficacy test for new bioremediation agents would cost $10,750 per product. This cost reflects the following savings and increases over the previous estimate of $15,000 for

each test under the existing requirements that is associated with the following proposed changes to the efficacy testing requirements:

Savings

o Elimination of the microbiological test ($650);

May 22 December 3 , 2014 54Documentation of changes made during OMB review under EO 12866 Subpart J_NPRM_RIA_OMBRedlined_20141203

o Elimination of the GC/MS test with nutrient control (nine samples at $400 per sample, or $3,600); and

o Elimination of intermediate/day

- 7 sampling (six samples at $400 per sample, or $2,400).

Increases

o Addition of positive controls (flasks containing seawater, oil, nutrients, and a culture of oil degrading bacteria) at days 0 and 28 (six samples at $400 per sample, or $2,400).

o One potentially minor cost increase associated with the bioremediation agent efficacy test is not considered because EPA assume s this would result in insignificant change to the cost estimate. This cost increase is the proposal to require manufacturers that may need to provide a nutrient solution in the correct ratio to the laboratory performing the efficacy test, which would incr ease the testing costs slightly

for certain manufacturers.

EPA will require the revised saltwater efficacy testing costs for manufacturers with bioremediation products currently on the Schedule. Because manufacturers applying to place new products on the Schedule would be required to test their product for efficacy in

the waters that the product will be used , EPA assumes that half of these manufacturers would test their product with the revised saltwater efficacy test for use in saltwater, while

the other half would test their product using the freshwater efficacy test (described below)

for use in freshwater.

• Bioremediation Freshwater Efficacy Test : EPA estimates that the cost of the

bioremediation freshwater efficacy test will be roughly equivalent to the revised saltwater efficacy test. Therefore, EPA estimates that the freshwater efficacy test will cost $10,750.

EPA assumes that half of the manufacturers with bioremediation agents currently on the Schedule will test their product with the freshwater efficacy test for use in freshwater. Similarly, EPA assumes that half of the manufacturers applying to have a new

bi oremediation agent placed on the Schedule will test their product with the freshwater efficacy test for use in freshwater.

• Freshwater and Saltwater Toxicity Test : EPA estimates that the freshwater and saltwater toxicity tests required for solidifiers

, her ding agents, surface

- washing agents, and certain bioremediation agents would cost $ 5,15 0 each per product.

EPA assumes half of the manufacturers with bioremediation agents listed on the Schedule

would conduct both salt water and freshwater toxicity test ing, and the other half would only conduct one of the tests. EPA uses this same assumption for manufacturers applying to have new bioremediation agents listed on the Schedule.

EPA assumes that manufacturers of solidifiers and surface

- washing agents on th e Schedule would all conduct freshwater toxicity testing in addition to the existing saltwater

May 22 December 3 , 2014 55Documentation of changes made during OMB review under EO 12866 Subpart J_NPRM_RIA_OMBRedlined_20141203

toxicity test requirement. EPA uses this same assumption for manufacturers applying to

have new solidifiers and surface

- washing agents listed on the Schedule.

Manufacturers of bioremediation agents, dispersants, herding agents, solidifiers or
surface washing agents listed on the Schedule are required to notify the EPA if their product changes in composition, formulation, or application (part 300.955(e)) . EP A assumes that such notifications would be rare after the first year of the revised NCP Subpart J regulations, since most products would be re

- tested in the initial two year s to comply with the proposed new requirements. In addition, most manufacturers are not expected to incur any capital/start

- up costs as a result of the proposed revisions to NCP Subpart J , because manufacturers are likely to purchase these services from existing analytical laboratories

. There are several companies

th at may have their own in

- house analytical laboratories. These in

- house laboratories would have to be certified ju st as a commercial laboratory. I n those cases, the fully loaded capital

, and operation and maintenance ( O&M ) costs for each test should be similar to the prices charged by analytical laboratories in the marketplace.



## 5. 4 Estimated Total Annual Burden and Costs

The average annual costs and total costs for the 20

- year projection period are illustrated

in Exhibit s 5

- 7 A

- D

. The labor cost s represent the average hourly labor burden for

administrative and paperwork requirements. In addition, the labor costs also contain the costs for reading and understanding the regulations. Manufac t urers with products on the Schedule are

familiar with the e xisting regulations and will have to invest less time reading and understanding the proposed regulations than new manufacturers submitting products for listing. New manufacturers will have to become familiar with the revised regulations without the advanta ge of familiarity with the existing requirements. New manufacturers will have to spend more time reading and understanding the requirements than manufacturers with products on the Schedule. These differential labor requirements are reflected in the analysi s.

The labor hours are multiplied by the wage category (management, technical, or clerical)

labor rates to estimate the total labor costs

. Efficacy and toxicity testing costs vary by product type and the test(s) required. Testing assumptions used for costs are detailed in Section 5. 3 .3 of this report.

Exhibit 5

- 7 A contains labor costs for the existing product category, while 5

- 7 B has similar figures for new products, as well as some infrequent burden items. The average total labor cost per responde nt per product is used in the next tables to calculate aggregate costs over the 20 year period of analysis for all manufacturers . Exhibit 5

- 7 C contains estimates of the aggregate costs for existing products, which are required to perform all actions withi n the first two years of the rule, as discussed above. Since none of these costs are required in the baseline, all of them are incremental to this proposed update to the Subpart

- J rule. These labor, testing, and other costs for existing products are aggreg ated in the last two columns of the table, resulting in total cost estimate s of $878,002 (3% discount rate) and $864,960 (7%). Exhibit 5

- 7 D illustrates the aggregate costs for new producers resulting from the proposed updates to the Subpart

- J rule. These costs do not represent the incremental costs of the rule for new

May 22 December 3 , 2014 56Documentation of changes made during OMB review under EO 12866 Subpart J_NPRM_RIA_OMBRedlined_20141203

producers, however, since the costs that would have been faced in the baseline (from Exhibit 4

- 1) need to be sub tracted. The final two columns of Exhibit 5

- 7 D indicate the estimated
aggregat e costs to new manufacturers, including both incremental and baseline costs, as $2,669,250 (3% discount rate) or $1,974,545 (7%).

May 22 December 3 , 2014 57Documentation of changes made during OMB review under EO 12866 Subpart J_NPRM_RIA_OMBRedlined_20141203

Exhibit 5

- 7 A Labor Costs for Existing Products

Technical Managerial Clerical Total Hours per Respondent Total Labor Cost per Respondent per Product

Low High Avg Low High Avg Low High Avg Low High Avg Low High Avg Read and understand Subpart Rule Bioremediation Agents 1.5 1.5 1.5 0.5 0.5 0.5 0.5 0.5 0.5 2.5 2.5 2.5 $134 $134 $134 Dispersants 1.5 1.5 1.5 0.5 0.5 0.5 0.5 0.5 0.5 2.5 2.5 2.5 $134 $134 $134
Solidifiers, MOSCAs 1.5 1.5 1.5 0.5 0.5 0.5 0.5 0.5 0.5 2.5 2.5 2.5 $134 $134 $134 Surface Washing, Collecting Agents 1.5 1.5 1.5 0.5 0.5 0.5 0.5 0.5 0.5 2.5 2.5 2.5 $134 $134 $134

Prepare and Submit Documentation Bioremediation Agents 5 15 10 1 3 2 2 5 3.5 8 23 15.5 $411 $1,205 $808 Dispersants 7 20 13.5 1.4 4 2.7 2 5 3.5 10.4 29 19.7 $553 $1,559 $1,056

Solidifiers

, MOSCAs 4 13 8.5 0.8 2.6 1.7 2 5 3.5 6.8 20.6 13.7 $341 $1,064 $702

Surface Washing, Collecting Agents 3 11 7 0.6 2.2 1.4 2 5 3.5 5.6 18.2 11.9 $270 $922 $596

May 22 December 3 , 2014 58Documentation of changes made during OMB review under EO 12866 Subpart J_NPRM_RIA_OMBRedlined_20141203

Exhibit 5

- 7 B

Labor Costs for New Products

Technical Managerial Clerical Total Hours per Respondent per Product Total Labor Cost Per Respondent Per Product

Low High Avg Low High Avg Low High Avg Low High Avg Low High Avg Read and Understand Subpart Rule Bioremediation Agents 2 2 2 0.5 0.5 0.5 0 0 0 2.5 2.5 2.5 $148 $148 $148 Dispersants 2 2 2 0.5 0.5 0.5 0 0 0 2.5 2.5 2.5 $148 $148 $148

Solidifiers , etc. 2 2 2 0.5 0.5 0.5 0 0 0 2.5 2.5 2.5 $148 $148 $148 Surface Washing, Herding Agents 2 2 2 0.5 0.5 0.5 0 0 0 2.5 2.5 2.5 $148 $148 $148

Prepare and Submit Documentation Bioremediation Agents 12 33 22.5 2.4 6.6 4.5 7 15 11 21.4 54.6 38 $1,050 $2,766 $1,908 Dispersants 14 38 26 2.8 7.6 5.2 7 15 11 23.8 60.6 42.2 $1,192 $3,120 $2,156

Solidifiers , etc. 11 31 21 2.2 6.2 4.2 7 15 11 20.2 52.2 36.2 $980 $2,625 $1,802 Surface Washing, Herding Agents 9.5 28 18.75 1.9 5.6 3.75 7 15 11 18.4 48.6 33.5 $874 $2,413 $1,643

Infrequent Burden Items

Sorbent Review 2 2 2 0.25 0.25 0.25 0.75 0.75 0.75 3 3 3 $140 $140 $140

Re

- test 2 2 2 0 0 0 0.5 0.5 0.5 2.5 2.5 2.50 $53 $53 $53 Request for Review of

EPA Decision 5 5 5 5 5 5 0 0 0 10 10 10 $436 $436 $436

Reformulate Product and

Re

- Submit Required

Data 11.63 32.5 22.06 2.33 6.5 4.41 7 15 11 20.95 54 37.48 $924 $2,197 $1,561

May 22 December 3 , 2014 59Documentation of changes made during OMB review under EO 12866 Subpart J_NPRM_RIA_OMBRedlined_20141203

Exhibit 5

- 7 C Aggregate Costs for Existing Products

Unit Cost* Year 1 Respondents Year 2 Respondents Year 1

Costs Year 2

Costs Total Cost (3%) Total Cost (7%) Read and understand Subpart Rule Bioremediation Agents $134 13 9 $1,743 $1,206 $2,914 $2,870 Dispersants $134 9 6 $1,206 $804 $1,987 $1,958
Solidifiers, MOSCAs $134 8 5 $1,072 $670 $1,723 $1,699 Surface Washing, Collecting Agents $134 29 20 $3,887 $2,681 $6,490 $6,393 Prepare and Submit Documentation Bioremediation Agents $808 13 9 $10,507 $7,274 $17,569 $17,305 Dispersants $1,056 9 6 $9,502 $6,335 $15,653 $15,423
Solidifiers, MOSCAs $702 8 5 $5,617 $3,510 $9,025 $8,898 Surface Washing, Collecting Agents $596 29 20 $17,283 $11,919 $28,855 $28,423 Efficacy Tests

Bioremediation Salt/ Freshwater Efficacy $10,750 13* 9* $69,875 * $48,375 * $116,841 $115,085 Revised Dispersant Efficacy $2,200 9 6 $19,800 $13,200 $32,616 $32,136 Toxicity Tests Bioremediation Agents Salt/Freshwater Toxicity $5,150 13* 9* $100,425 * $69,525 * $167,925 $165,402 Dispersant Developmental Sea Urchin Test $3,000 9 6 $27,000 $18,000 $44,476 $43,822 Dispersant Sub

- chronic Test $3,350 9 6 $30,150 $20,100 $49,665 $48,935 Dispersant to Oil Mixture Test $4,500 9 6 $40,500 $27,000 $66,714 $65,734
Solidifiers, MOSCAs Freshwater Toxicity $5,150 8 5 $41,200 $25,750 $66,200 $65,265 Surface Washing Agents Freshwater Toxicity $5,150 29 20 $149,350 $103,000 $249,350 $245,612

Total Cost $529,118 $359,351 $878,002 $864,960

* As explained above, f or some tests, some respondents are assumed to have to do multiple tests, so the annual cost is not simply equal to the unit cost tim es the no. of respondents

May 22 December 3 , 2014 60Documentation of changes made during OMB review under EO 12866 Subpart J_NPRM_RIA_OMBRedlined_20141203

Exhibit 5

- 7 D Aggregate Costs for New Products

Unit Cost* No. of Annual Respondents Annual

Cost Total Cost (3%) Total Cost (7%)
Read and understand Subpart Rule
Bioremediation Agents $148 2 $297 $4,544 $3,361
Dispersants $148 2 $297 $4,544 $3,361

Solidifiers, etc. $148 3 $445 $6,816 $5,042
Surface Washing , Herding Agents $148 3 $445 $6,816 $5,042

Prepare and Submit Documentation
Bioremediation Agents $1,908 2 $3,817 $58,489 $43,266
Dispersants $2,156 2 $4,312 $66,077 $48,880

Solidifiers, etc. $1,802 3 $5,407 $82,854 $61,290
Surface Washing , Herding Agents $1,643 3 $4,929 $75,536 $55,877

Infrequent Burden Items

Sorbent Review $140 10 $1,403 $21,499 $15,904

Re

- test $53 2 $106 $1,623 $1,201
Request for Review of EPA Decision $436 2 $872 $13,368 $9,889

Reformulate Product and Re

- Submit Required Data $1,561 1 $1,561 $23,917 $17,692

Efficacy Tests
Bioremediation Agents Salt/Freshwater Efficacy $10,750 2* $32,250 $494,193 $365,573

Revised Dispersant Efficacy $2,200 2* $8,800 $134,849 $99,753

Toxicity Tests
Bioremediation Agents Salt/Freshwater Toxicity $5,150 2* $15,450 $236,753 $175,135
Dispersant Saltwater Toxicity $5,150 2* $10,300 $157,835 $116,757
Dispersant Developmental Sea Urchin Test $3,000 2* $6,000 $91,943 $68,014
Dispersant Sub

- chronic Test $3,350 2* $6,700 $102,669 $75,948
Dispersant to Oil Mixture Test $4,500 2* $9,000 $137,914 $102,020

Solidifiers, etc. Saltwater & Freshwater Toxicity $5,150 3* $30,900 $473,505 $350,270

Surface Washing Agents, Herding Agents Saltwater &

Freshwater Toxicity $5,150 3* $30,900 $473,505 $350,270

Total Cost $174,190 $2,669,250 $1,974,545

* As explained above, f or some tests, some respondents are assumed to have to do multiple tests, so the annual cost is not simply equal to the unit cost tim es the no. of respondents

May 22 December 3 , 2014 61Documentation of changes made during OMB review under EO 12866 Subpart J_NPRM_RIA_OMBRedlined_20141203

May 22 December 3 , 2014 62Documentation of changes made during OMB review under EO 12866 Subpart J_NPRM_RIA_OMBRedlined_20141203



## 5. 5 T otal Incremental Costs for Product Manufacturers

Exhibit 5

- 8 presents the total incremental costs of the proposed rule for manufacturers

. The proposed rule also contains government costs and monitoring costs ( Section 5.1) that are added to the total manufacturer’s costs and appear in Exhibit 1. Exhibit 5

- 8 contains the
estimated total annual incremental labor and testing costs for manufacturers for the 24

- month transition period as well as for the 20

- year projection period

.

The incremental cost of the proposed rule is the total cost of all requirements minus the
b aseline or existing costs. The baseline annual costs for manufacturers are approximately $91,000 (from Exhibit 4

- 1) and the pr o posed rule adds combined costs to existing and new products of approximately $ 154,000 or $1 77,000 , annualized at 3% and 7%, respectively. Existing producers face annual costs of approximately $ 60 ,000 (3%) or $ 82 ,000 (7%) , while new producers face annual costs of approximately $ 95 ,000

. The proposed rule also adds costs for governmental entities ( i.e., EPA ) to implement the new requirements. The incremental government costs (EPA) to manage the program is about $ 13 ,000 (3%) or $17,000 (7%) each year for the proposed rule. In addition, the proposed rule requires the responsible party to monitor for dispers ants ( p art 300.913) with monitoring costs of roughly $500,000 each year, assuming one oil spill each year. ( Refer to Chapter 6 for more information on the frequency of oil spills that may require monitoring by the RP

. ) The estimated annual incremental cost s of the current proposal to the Subpart J rule are approximately $ 667,610 or $ 694,343 annualized at 3% and 7%, respectively, for all affected entities. These values appear in Exhibit 1.

The total present value of incremental cost s of the propos al for all existing and new product manufacturers on the S chedule is estimated at $ 2,339,511 or $ 1,948,041, discounted at 3% and 7%, respectively . The total present value of monitoring cost s for the Subpart J proposed rule (of $500,000 per year) is approximat ely $7,661,900 (3%) or $5,667,798 (7%)

. T he total incremental costs for government are $ 196,406 (3%) or $ 181,140 ( 7% )

. Thus, the total national incremental costs of the proposed rule are estimated as $10, 197,817 (3%) or $ 7,796,979 (7%). Exhibit 1 presents a summary of these values.

The annualized costs for each manufacturer can provide additional information about the impacts of a regulation. As presented in Section 3.0 Universe of Facilities, the June 28, 2011 Schedule contained 99 different products manu factured by 86 different manufacturers. The Small Business Analysis in Section 7.0 will show slightly different annualized compliance costs per manufacturer, because that analysis focuses on the smallest subset , indicated by the number of employees and annual sales, of manufacturers from D&B data

. Refer to Chapter 7.0 Small Business Analysis for additional information. The impact of the monitoring requirements will be incurred by large oil production companies a nd are unlikely to adversely impact these
firms.

A different time horizon may also be considered appropriate, one that is more closely associated with the length of life of a product on the schedule (approximately 9 years if we truncate the length of li fe at the year 2010) , or the duration of a loan (expected to be longer than 10 years) . To conduct a sensitivity analysis of annualized costs of efficacy and toxicity testing , EPA adopts the very conservative 5 year horizon. The model run results for 5 year s

appear s in Appendix C.

May 22 December 3 , 2014 63Documentation of changes made during OMB review under EO 12866 Subpart J_NPRM_RIA_OMBRedlined_20141203

The total compliance costs of the proposed rule may appear small in comparison to the total compliance costs or cost savings f or other EPA federal rules and regulations. Part of the
difference is that the universe of businesses regulated by the Subpart J proposed rule total to
less than 100 manufacturing firms and the number of products on the Schedule is about 100

. Based upon the D&B data described in Chapter 3 and analyzed in Chapter 7, approximately 94 percent of product manufacturers are small businesses. Please see Chapters 3 and 7 for
additional information on the small business analysis

.

Exhibit 5

- 8 Incremental Costs of the Proposed Rule for Existing and New

Product Manufacturers Existing Prod ucts New Products

Year 1

Labor 981 172.2

Labor Costs $50,818 $9,105 Testing and other costs $478,300 $85,700

Year 1 Costs $529,118 $94,805

Year 2

Labor 664 172.2

Labor Costs $34,401 $9,105 Testing and other costs $333,950 $85,700

Year 2 Costs $368,351 $94,805

Years 3

- 20 (annual)

Labor 0 172.2

Labor Costs 0 $9,105 Testing and other costs 0 $85,700

Annual Costs Years 3

- 20 0 $94,805

All Years Average Annual Costs (3%) $59,603 $94,805* Average Annual Costs (7%) $82,440 $94,805* Total 20 Year Costs (3%) $886,740 $1,452,771 Total 20 Year Costs (7%) $873,371 $1,074,670

* Since annual costs for new products are constant across years 1

- 20, they are not annualized like the existing products.

May 22 December 3 , 2014 64*** E.O. 12866 Review

– Draft

- Do Not Cite, Quote, or Release During Review ***



## 6.0 Benefits of the Proposed Rule

Due to it s targeting of multiple substances, as well as its use of a range of testing improvements, the pr o posed rule has a variety of benefits. Stricter testing requirements will result in less toxic and more effective products on the Sch edule. With dispersants, for example,

this will result in less oil reaching shorelines and the shoreline ecosystems. Fu r thermore, OSC s

, RRTs, A rea C ommittee s, and the oil spill response community use the Schedule to determine the most appropriate oil spill mitigating products to use in various oil spill scenarios. The information provided by manufacturers enables OSCs, RRTs, and Area Committees to make

informed decision s about the most appropriate products to use in oil spill situations. The

pr o posed rule is intended to provide better information on the efficacy, toxicity and application of oil spill mitigation products. Responders can make more appropriate choices on th e best product to use in a given situation. Increased monitoring requirements will also improve

response capabilities and provide valuable information and dat a for future efforts.

Additional benefits are the results of using more effective less toxic products. Human health may be better protected both in terms of workers who apply these products and the general population. Protection of the environment and reduction in social and economic impacts may be expected when lower quantities of these product s are applied and with reduction in exposure to oil, which is dispersed or degraded with these products. The proposed requirements to improve the efficacy and reduce the toxicity of oil spill
response agents w ould provide a range of benefits. With improved efficacy , the probability of oil reaching shorelines would decrease , reducing the potential for ecological and h uman health impacts. For example, r ecent oil spills highlight the breadth of occupations and activities potential ly impact ed by a spill

, such as recreational and commercial boaters, swimmers, and

recreational and commercial fishers. 6 Further , local environmental and ecosystem impacts

w ould be reduced if less oil and less toxic spill agents and oil/agent mixtures reach animal s

, plant s , and other living organisms along shorelines

.

Exhibit 6

- 1 highlights benefits from improvements in efficacy and toxicity testing for Subpart J products. The sources cited in the Table illustrate examples of the described benefits.

Due to a lack of high qual ity data availability and other concerns, some of the the se benefits are easier to quantify than others. not quantif ied

. Data on oil spill is spill s are difficult to obtain and spill reports are not easily verified. Monetizing oil spill damages is al s o quite difficult. Although the Exxon Valdez spill in the late 1980’s resulted in several estimates of the public’s willingness to pay to avoid oil spill damages, these estimates are somewhat dated now and o nly focus on a

remote area in Alaska. Furthermore , since accurate data on the size of past oil spills is quite limited, only rudimentary forecasts of the distribution of future oil spills can be made. This severely limits the ability to quantify the benefits of the rule.

6 For instance, the Smithsonian Institution describes a range of impacts and related research at http://ocean.si.edu/gulf

- oil

- spill

. May 22 December 3 , 2014 65*** E.O. 12866 Review

– Draft

- Do Not Cite, Quote, or Release During Review ***

EPA believes the benefits analyses discussed in this chapter provide useful information. Although they are based on limited data and simplified modeling, they nonetheless illustrate the magnitude scope of the potential benefits of the proposed rule.

May 22 December 3 , 2014 66*** E.O. 12866 Review

– Draft

- Do Not Cite, Quote, or Release During Review ***

Exhibit 6

- 1

Overview Of Subpart J Benefits Due to Stricter

Efficacy and Toxicity Testing R e quirements

Benefits More Information Sources
Improved Product Performance

Improved product dispersion

effectiveness

. W ith improved test results the

identification of better dispersant

effectiveness may be expected. Percin, et al

. ( 2005 )

.

Improved Human Health Reduced primary contact

with Improved product

exposure

. effectiveness

. Listed and preauthorized products will be

more effective and less toxic

, both of

which could reduce human health impacts from primary contact exposure.

See the R eference section for past studies that illustrate the public’s willingness to pay to avoid exposure to oil and mitigation products. Testing requirements w ould improve product efficacy resul t ing in oil spills being more effectively remediated

. Th ere are also

benefits of using more effective products

on oil spills on land and in other applications

. Percin, et al

. ( (Carson et al., 2003; Garza

- Gil
et al., 2006; Loureiro et al., 2009) 2005 )

Impr oved Reduced Impacts on the Environment and Ecosystem Minimizing Reduced adverse

effects to fish, shellfish, and

other marine animals and

wildlife

. See the Reference section for d iscussion

of non

- use values that have been estimated in this category. A range of water, coastal, migratory, and other

wildlife are potentially impacted by oil spills. Improvements in product efficacy and toxicity, as well as monitoring requirements for more effective

responses , can reduce the potential impacts to these popul ations. ( Gunkel and Gassmann, ( 1980 ; ), Carson et al., ( 2003 )

Minimizing the Reduced impacts on water quality

. See Reference section for a variety of

sources that estimate the value of improved water quality for recreation

activities. Decreased water quality resulting from oil spills has the potential

for a range of ecosystem impacts, especially on local plant and animal populations. Water quality is essential to key ecosystem functions. Improvements in efficacy and reduced toxicity of oil spill ( Van Houtven et al., ( 2007 )

May 22 December 3 , 2014 67*** E.O. 12866 Review

– Draft

- Do Not Cite, Quote, or Release During Review ***

mitiga tion products w ould reduce the potential impacts to water quality.

Minimize Reduced impact on

tourism

. Potential for a small Oil spills can impact

on the tourism industry ; effective spill remediation would reduce this impact

. ( Garza

- Gil et al., ( 2006 )

Ecological Improvements Other Benefit Categories

Market Reduced impact on

m arket products

. Harvest Reduced potential damages from oil spills that reach shorelines that could impact h arvest or extraction production of:

Food f ood

, fuel, fiber, timber, fur and

leather. US EPA ( December

2010 )

Recreation Reduced impact

on r ecreation al activities and

aesthetics

. Wildlife viewing More effective oil spill remediation would reduce impact on

w ildlife observation, hunting

, fish i ng, boating, swimming, hiking, scenic views

, reduced odors. US EPA ( December

2010 ; ), Freeman ( 1993

. )

.

Non

- use values

. Relevant Enhanced non

- use values of

r elevant species

, populations, communities, or ecosystems US EPA ( December

2010 ; ), Freeman ( 1993

. )

. Smaller impact on

commercial C ommercial harvesting

. As the efficacy of listed products
increases, Less impact on commercial harvesting, including smaller areas designated restricted consumption zones. ( Goodlad, ( 1996 ; ),
Law and Hellou, ( 1999 )

Aesthetic improvement s

. Visibility, taste, odor EPA December

2010 Reduced materials damage

. Reduced soiling, reduced corrosion US EPA ( December

2010 )

The principal benefit modeled here is the improvement in dispersion of oil into the water column using more effective and less toxic dispersants. The present analysis estimates the benefits of improved dispersant efficacy using past RIA’s from the USCG and DOI . Given the paucity of data and benefits estimates, this represents the most tangible benefit. As mentioned previo usly however, there are many other benefits that are not quantified and monetized.



## 6.1 Estimating Oil Spills

In order to estimate the benefits of improved dispersant efficacy, an estimate of future oil spills is needed. This is an inherently difficult process since future oil spills depend on a variety of unobservable factors, including future oil demand, growth rates, technology, safety compliance rates, operator error, as well as other influences. Instead of trying to forecast future oil spills in eac h year, this analysis takes the approach of USCG (2009) , and uses an annual average of recent oil spills.

Although there is not a compr ehensive database of oil spills, the USCG’s NRC has data on reported spill incidents. These data contain information on all oil and chemical spills reported to the NRC. Although these data represent the best available data, there are some important caveats associated with them. Chief among these concer n s is that data are based on incident

May 22 December 3 , 2014 68*** E.O. 12866 Review

– Draft

- Do Not Cite, Quote, or Release During Review ***

reports. Not all incidents are r eported, incidents cannot always be verified, and reports may be inaccurate. Nonetheless, when looking at annual averages the d ata represent the best located by EPA for the current analysis

.

EPA downloaded and cleaned NRC data from 1990

- 2011 for the pu rposes of this analysis. Each spill is accompanied by a description, which can be used to eliminate some data

errors. Exhibit 6

- 2 contains a graph of the total oil spills in water throughout the 1990

– 2011 period. After cleaning the data and elim in ating errors, the av e r a ge annual amount of oil spilled in
water is 1,641,818 gallons per year

. 7

Exhibit 6

- 2 : Water Oil Spills, 1990

- 2011 (Gallons vs. Years)

7 Errors include double entries, entries for internal tests, and inputting errors, among others. 0 1000000 2000000 3000000 4000000 5000000 6000000 70000001990199119921993199419951996199719981999200020012002200320042005200620072008200920102011

May 22 December 3 , 2014 69*** E.O. 12866 Review

– Draft

- Do Not Cite, Quote, or Release During Review ***

Exhibit 6

- 3 presents causes of oil spills on water from 1990 to 2011. Each cause lists the frequency and percent of occurrence. During the 1990 to 2011 period, 50,505 spills were reported in water. Over half the spills (54.49%) were caused by equipment failure.

Exhibit 6

- 3 : Oil Spill Causes, 1990

– 2011

INCIDENT / CAUSE Freq uency Percent

AIRCRAFT DIVERSION 1 0

DERAILMENT 4 0.01

DUMPING 209 0.41

EARTHQUAKE 1 0

EQUIPMENT FAILURE 27,521 54.49

EXPLOSION 13 0.03

FLOOD 31 0.06

HIJACKING 1 0

HURRICANE 2,080 4.12

NATURAL PHENOMENON 1,756 3.48

OPERATOR ERROR 4,554 9.02

OTHER 4,873 9.65

OVER PRESSURING 41 0.08

TORNADO 5 0.01

TRANSPORT ACCIDENT 167 0.33

UNKNOWN 9,236 18.29

VESSEL SINKING 12 0.02

Total 50,505 100

The volume of reported oil spills can provide information about the potential volume of dispersants and other products applied to oil spills. The potential products for application on an oil spill are dispersants, bioremediation agents and solidifiers, for example. Surface washing agents may be used to re m ove oil from shorelines, rocks, and other natural or man

- made
featur es. Exhibit 6

- 4 provides additional details about the volume of oil spilled. This chart provides details on the volume of gasoline product s , crude oil and diesel products that are spilled each year.

May 22 December 3 , 2014 70*** E.O. 12866 Review

– Draft

- Do Not Cite, Quote, or Release During Review ***

Exhibit 6

- 4 : Oil Products Spilled to Water, 1990

- 20 11 (Gallons vs. Years)

The total volume of oil spilled and the volume spilled by product line provides additional information about the volume of dispersants and other Subpart J products that may be used on spilled oil. Subpart J products are not used on every oil spill, thus the key to the analysis is determining the proportion of spills that have Subpart J products applied to them. Most dispersants are used on offshore crude oil spill s

. Thus

, information that distinguishes spills offshore compared to oil spills on land provides additional information. The crude oil component
is shown in blue in the Exhibit 6

- 4

.

Fingas (2011) contains four chapters on modeling the movement of spilled oil

. Data is available to analyze the increase in effectiveness in oil spill products under the proposed rule

. Venosa et al

. in their 2005 report on dispersant effectiveness

, state that “Evidence from spills treated with dispersants shows that dispersion of oil can reduce overall environmental impacts by reducing exposure to water fowl at the sea surface and shoreline. At the same time, dispersant use for cleanup of an oil sli ck on the water may reduce intrusiveness, duration, and cost of cleanup.”



## 6. 2 Dispersant U se and Effectiveness

The NRC annual spill average of 1

. 64 million gallons represents an estimate of the total gallons of oil spill ed in water each year. However, dispersants will not be used on all of these spills. Data on dispersant use is scarcer than oil spill data; there are no known databases of dispersant use. To overcome this data gap, a past USCG RIA involving dispersants and o ther oil spill mitigation techniques (USCG, 2009) convened a panel of experts. The expert panel estimated that the proportion of oil spilling in either a pre authorized area or greater than 3 nautical miles from shore is approximately 50%. Dispersants are n ot typically used in areas less than 3 nautical miles from shore, or in non

- preauthorized areas. Given that a spill occurs in one of these areas, the expert panel projected that the probability authorization for dispersant use is granted is 0.55. Also, the panel estimated that the probability a dispersant is used once authorized is 0

. 8050. The probability that dispersants are used on a spill is therefore 0.2214. Applying this probability to the annual average obtained in the last section yields an estimate of 363,49 9 gallons of oil per year that dispersants are used on. 0 2000000 4000000 6000000 8000000 10000000 12000000 1400000019901992199419961998200020022004200620082010 Gal Oil Spill Water

Gal Gas Prod. Spill

Water

Gal Diesel Prod. Spill

Water

May 22 December 3 , 2014 71*** E.O. 12866 Review

– Draft

- Do Not Cite, Quote, or Release During Review ***

The incremental change monetized in this analysis is the change in dispersant efficacy resulting from stricter efficacy testing. The revised toxicity test will also generate benefits for

e xposed populations and ecosystems. However, the benefits would be difficult to quantify as an incremental change since the exposure pathways are spill specific and much more difficult to

characterize. The dispersant efficacy tests in the existing rule requ ired a dispersant to display an effectiveness value of 45% or greater average dispersion efficacy of two crude oils (South
Louisiana Cr ude and Prudhoe Bay Crude ) at room temperature (20

- 23 degrees Celsius ) . The

pr o posed rule requires the following efficacy tests to be demonstrated using BFT:

• ≥ 55% for Intermediate Fuel Oil 120 (IFO

- 120) at 5 0 C;

• ≥ 65% for IFO

- 120 at 25 0 C;

• ≥ 70% for Alaska North Slope (ANS) crude oil at 5 0 C; and

• ≥ 7 5% for ANS at 25 0 C

.

The required dispersant efficacy has increased by an average of 21.25%. U sing the annual average of 363,49 9 gallons computed above for the amount of oil dispersed each year,
the increase in effectiveness should result in an increase of 7 7,243 gallons of oil dispersed each

year

. However, due to uncertainty regarding what types of oil will be spilled in the future and

where

, as well as uncertainty in changes in actual product efficacy since exact product blends are unknown, EPA calculates two ad ditional

, more conservative

, estimates of increased product efficacy

. S ome of the existing dispersants may operate at a more efficient rate than the minimum 45%, while it is also possible that the dispersants on the new list may also operate at
a more eff icient rate than the new minimum. To reflect this uncertainty, EPA estimate s two
alternatives assum ing that the average dispersant efficacy only improves by either 15.94% or 10.63% (which correspond to 75% and 50% of the original 21.25%). Using these value s would result in an increase in 57,932 or 38,622 gallons of oil dispersed each year under the rule
relative to the baseline.



## 6.3 Estimated Incremental Benefits

There are several potential methods to use in assigning benefits to the incremental change in dispersant effectiveness. In an ideal situation, an original study would be formulated, that would attempt to measure the welfare change to the affected populatio ns. This type of study would focus on the effects summarized in Table 6.1. Unfortunately, time and monetary constraints prevent the use of an original study and benefits transfer of avoided cost estimates
must be used instead. Benefits transfer refers to t he use of estimates from one study to evaluate the benefits of a different policy. 8 EPA believes the benefits analyses in this chapter provide useful information . Although they are based on limited and highly aggregated data on response costs, they nonethe less illustrate the magnitude of the potential benefits of the proposed rule.

The benefit transfer for the present policy analysis uses avoided costs as a proxy for welfare measures, such as willingness to pay (WTP). 9 Cost estimates are derived from U. S. Department of Transportation ’s Pipeline and Hazardous Material Safety Administration

8 For additional information on benefit transfer, see US EPA (2010e).

9 There are certain caveats for this approach, summarized in EPA’s Guidelines for Preparing Economics Analysis

. A lthough avoided costs are only equal to WTP under strict circumstances, they can still provide an informative

estimate.

May 22 December 3 , 2014 72*** E.O. 12866 Review

– Draft

- Do Not Cite, Quote, or Release During Review ***

( P H MSA ) data

. 10 The PHMSA data contain information on cleanup costs for oil spills from 2002

to 2007. The costs of a variety of oil spills

— which vary in size, location, and affected habitats

—

were analyzed to develop estimates of the avoided costs per gallon spilled. The analysis included direct response cost categories in the PHMSA data on spills from pipelines for spills containing crude oil. 11 For the category of large spills (over 10,000 gallons) that dispersants are used on, there is an average avoided cost of $40 per gallon. 12 (See Appendix D of this report for more details.) Applying this figure to the incremental estimate s of oil dispersed by the present
rule from th e last section (77,243

, 57,932

, or 38,622 gallons) yields average annual benefit s of $3,089,737

, $2,317,303 , and $1,544,869 , respectively

. Although the SPCC analysis has some notable caveats, it is comparable to other recent estimates of avoided costs. For instance, a
recent RIA from the Bureau of Ocean Energy Management, Regulation, and Enforcement calculated the avoided costs (of similar oil spill response and damage assessment costs) of a catastrophic oil spill to be $70.74 per gallon

. Since some of the costs of a catastrophic spill would not apply to the average spill in the present analysis, it is expected to be somewhat higher. Nonetheless, it provide s support to the SPCC estimate of $40 per gallon. EPA’s preferred estimate of benefits is the middle es timate corresponding to an increase in average efficacy of 15.94%, yielding $2,317,303

.

There are some notable caveats to this estimate. First, although the analysis was as comprehensive as possible, the data on oil spill damages is limited. In many cas es oil spill damages are not fully tracked or recorded. Additionally, the SPCC analysis is of avoided costs

and does estimate ecological and human health impacts nor does it estimate non

- use benefits

. Previous studies from the environmental economics liter ature have found that non

- use benefits can be a substantial portion of total benefits ( Carson et al., 2003; Garza

- Gil et al., 2006; Loureiro et al., 2009). These are benefits that do not have a price in the marketplace.

The total benefits of the rule o ver 20 years (which are summarized in Exhibit 6

- 5 ), when discounted at 3% and 7%, are $ 36,792,921 and $21,766,300 at 15.94% improved efficacy,
EPA’s preferred estimates

.

Exhibit 6

- 5: Incremental Benefits of the Subpart

- J Rule Efficacy Improvement Annual Benefits Total Benefits (20 years)

3% Discount rate Total Benefits (20 years)

7% Discount rate

10.63% $1,544,869 $24,528,614 $14,510,866

15.94% $2,317,303 $36,792,921 $21,766,300

21.25% $3,089,737 $49,057,228 $35,822,459

Note : These figures do not account for several categories of benefits, such as property benefits, human health benefits, or the full range of ecological benefits. 

## 7.0 7.0 Small Business Analysis

This section estimates the impact of the proposed rule on small enti ties using EPA’s Regulatory Flexibility Guidance (November 2006) . To estimate the impacts of the proposed rule

10 U.S. Department of Transportation, Pipeline and Hazardous Materials Administration. (http://ops.dot.gov/stats/IA98.htm

11 The PHMSA cos t categories are the public and private property damage, cost of emergency response, cost of environmental remediation, other public costs, value of product lost, value of operator property damage, other operator costs, and the total cost of cleanup. (See Appendix D)

12 Note that this is the cost of cleaning up an additional gallon that has reached the shore, which is only a rough estimate of the costs that are avoided by dispersing a gallon of oil. May 22 December 3 , 2014 73*** E.O. 12866 Review

– Draft

- Do Not Cite, Quote, or Release During Review ***

on entities that apply to list products on the Schedule, we started with employment and revenue information for manufacturers with products listed on the June 28, 2011 Schedule. This information was queried from the D&B Market Spectrum database, a proprietary data source for financial company information. Total annual sales (revenue) data were available for 6 0 out of 86 manufacturers; the total number of employees w as available from D&B for 62 out of 86

manufacturers. NAICS codes were available for 65 out of the 86 manufacturers on the June 28,

2011 Schedule. We used these data to model th e number of employees for the 86

manufacturers.

Manufacturers were classified as small or large businesses consistent with SBA criteria,

which a re organized by NAICS code s and based on the number of employees or annual sales

revenue for each NAICS indu stry sector of interest. Product manufacturers and corresponding NAICS codes were mapped into the SBA small business definitions. As a result, each

manufacturer was matched with the appropriate NAICS code and SBA criteri a to determine if it

was a small bus iness

. The small business category was then sub

- divided into four sizes based on the number of employees, 1 to 9, 10 to 19, 20 to 99, and 100 to 499. About 9 4 percent of the

65 manufacturers with listed products on the June 28, 2011 Schedule and with adequ ate D&B

data are small businesses.

For the purposes of this analysis, the manufacturers with products listed on the June 28,

2011 Schedule without D&B data were modeled using the distribution of data f or the 65

manufacturers with data in D&B. EPA also modeled the size distribution for manufacturers of new products over the 20

- year projection period

. Exhibits 7

- 1 (A and B) and 7

- 2 present the results of the small business analysis. Exhibit 7

- 1 A contains the incremental costs for each product from the pr oposed updates to the Subpart

- J rule, as well as the two alternate scenarios

for annual costs , based on either 20 or 5 year periods

. Exhibit 7

- 1 A indicates (and highlights in yellow) that the most expensive product to list is a dispersant, with $1,841 in annual costs per new product and $1,3 44 for existing products over a 20 year horizon ; or $4,757 in annual costs per new product and $3,473 for existing products over a 5 year horizon

.

Exhibit 7

- 1 B uses the costs of listing a dispersant to illustrate th e costs to existing and new manufacturers and analyzes the impacts on an aggregate basis for five different

manufacturer size categories. EPA’s Regulatory Flexibility Guidance suggests using annualized compliance costs as a percentage of annual sales to determine the impacts on small businesses. In analyzing previous rules, EPA has often defined the lower threshold as incremental compliance costs of 1% of sales and the higher threshold as compliance costs of

3% of sales. The costs presented in the table a re from the most expensive product (dispersants). Other products would therefore be expected to have less impact , so this is therefore a conservative figure for most products

. Finally, Exhibit 7

- 2 presents the impacts on a

business

- by

- business basis for 30 of the smallest existing businesses.

The result of the small business analysis, with the 1% and 3% sales tests, is less than one percent of the annual sales for each product manufacturer size category in Exhibit 7

- 1 B

. EPA expects that the proposed regulation will not impose a significant adverse impact on a
substantial number of small entities (SISNOSE).

May 22 December 3 , 2014 74*** E.O. 12866 Review

– Draft

- Do Not Cite, Quote, or Release During Review ***

Exhibit 7

- 1 A

Per

- Product Costs of the Proposed Revisions to the NCP Subpart J Rule

Per

Product Testing

C osts Per

Product

Labor

Costs Per

Product

Costs Annualized (7%) 20

Years Annualized (7%) 5

years

New Producers Dispersants $18,550 $956 $19,506 $1,841 $4,757 Bioremediation Agents $8,850 $1,204 $10,054 $949 $2,452
Solidifiers, etc. $5,150 $850 $6,000 $566 $1,463 Surface Washing , Herding Agents $5,150 $744 $5,894 $556 $1,437
Existing Producers
Dispersants $13,050 $1,190 $14,240 $1,344 $3,473 Bioremediation Agents $13,100 $942 $14,042 $1,325 $3,425
Solidifiers, MOSCAs $5,150 $836 $5,986 $565 $1,460 Surface Washing, Collecting Agents $5,150 $730 $5,880 $555 $1,434

May 22 December 3 , 2014 75*** E.O. 12866 Review

– Draft

- Do Not Cite, Quote, or Release During Review ***

Exhibit 7

- 1 B

NCP Product Schedule Manufacturer Profile and Expected Impacts Associated with the Proposed Revisions to the NCP Subpart J Rule for the Most Expensive Product to List (Dispersants)
Company

Size Manufacturer Profile Using

Dun & Bradstreet Data a Impact on Existing Manufacturers b Impact on New Manufacturers c

Number of Employees Number of Companies Annual Revenue per Company d Number Average

Annual

Incremental Change in

Cost of Listing

a Dispersant per Company e Impact (Cost to Revenue) Number Average Annual Incremental Change in Cost of Listing a Dispersant per Company e Impact (Cost to Revenue)

Small Businesses

1 to 9 35 $1,953,786 46 $1,344 0.07% 5 $1,841 0.09%

10 to 19 11 $1,699,803 15 $1,344 0.08% 2 $1,841 0.11%

20 to 99 11 $9,879,764 15 $1,344 0.01% 2 $1,841 0.02%

100 to 499 4 $50,624,645 5 $1,344 0.00% 1 $1,841 0.00%

Total 61 81 9 Large Businesses

500+ 4 $4,560,366,000 5 $1,344 0.00% 1 $1,841 0.00%

a. Manufacturers of products currently on the Product Schedule were categorized according to size based on availability of D&B data (i.e., annual revenue and number of employees) and SBA company size definitions.

b

. Manufacturers of existing products on the Schedule total 86, based on the June 2011 NCP Product Schedule. The 21 manufacture rs with products currently on the Schedule that were not classified according to company size due to insufficient D&B information were allocat ed across the five company size categories in proportion to the distribution of manufacturers with sufficient D&B company size information. (Note: 65 companies have reportabl e data, 21 companies did not)

c. EPA assumes the size distribution for the estimated 10 manufacturers of new products to be considered for listing on the Prod uct Schedule will be

similar to the size and revenue distribution of existing product manufacturers.

d

. Five companies were missing revenue information in the 1 to 9 number of employees size category, and one company was missing revenue information in the 100 to 499 number of employees size category.

e

. These estimates are based on average incremental cost estimates per manufacturer for existing and new manufacturers presented in Exhibit 7

- 1 A

.

May 22 December 3 , 2014 76*** E.O. 12866 Review

– Draft

- Do Not Cite, Quote, or Release During Review ***

EPA conducted a more detai led analys i s in which current manufacturers in t he smallest company size category (1 to 9 employees) were classified by their product types and their

annual sales revenue . The incremental annualized compliance cost s (from Exhibit 7

- 1 A) were compared to the annual sales revenue for each manufacturer . Th is analysis in Exhibit 7

- 2

revealed that 3 manufacturers out of 30 in the smallest size category could have incremental compliance costs greater than one percent of their annual sales

. No manufacturers could have incremental costs that exceed three percent of annual sales

. Given that the remaining 2 7

small est businesses would fall under the one

- percent threshold, EPA believes that the proposed revisions to Subpart J regulations will not cause a significant economic impact on a substantial

number of small ma nufacturers (SISNOSE)

, that manufacture products on the June 28, 201 1

Schedule.

In addition to the analysis in Exhibit 7

- 2, EPA also conducted a sensitivity analysis using

5 years as a substitute for 20 years

, as discussed in Section s 2.1 and 5.4. The sensitivity analysis is in Appendix C of this report and replicates Exhibit 7

- 1 B with 5 years for the time

horizon. The substitution of 5 years for 20 years increases the annualized costs and the

annualized cost to annual sales revenue ratio. Fo r example, the incremental annualized costs for dispersants

— the most expensive product

— in crease from $1, 344 to $ 3,473 for existing facilities. For new facilities, the annualized costs increase from $ 1,841 to $4, 757 . The

annualized costs to annual sales rev enue ratio increases for each small business category.
However, Appendix C indicates that these ratios do not , on average, approach the 1% and 3%

thresholds in EPA’s small business guidance (EPA 2006)

.

There are further considerations that would sugges t that manufacturers of Subpart J products would not incur and absorb the full costs of additional requirements. Subpart J products may be in demand to respond to oil spills, often o n an emergency basis . In those cases, manufacturers may be asked to provid e products manufactured on a short turn around basis. For these conditions, the manufacturer may charge a higher price thus passing through

the costs for additional testing and for additional information about the product. The ability to pass costs through depends on the elasticity of demand for the specific product.

In the case of a SONS for example , an inelastic demand could be imposed on the

market for dispersants because of increased demand for the product . In th e s e situation s , to respond to the demand the product manufacturer may face the potential market condition s that

would allow them to impose a higher price for the product. This may be necessary to change the production and supply function in order to produce a product an d make it available when and

where it is needed. The higher price could increase the manufacturer’s annual sales revenues, reducing the impacts of the costs of efficacy and t oxicity test requirements. Th e s e change s in market and price equilibrium ensure th at products are made available where they are needed

most.

All Subpart J products may not be used in emergency responses . These products are sold for general oil spill cleanups such as small local spills . For these products, the capability to pass through prices to their customers is not so clear. Generally, we would conclude that cost pass through may be more likely for products used in oil spill cleanup in emergency responses.

May 22 December 3 , 2014 77*** E.O. 12866 Review

– Draft

- Do Not Cite, Quote, or Release During Review ***

Exhibit 7

- 2
Potential Impacts Associated with the Proposed Revisions to NCP Subpart J for Existing Very Small NCP Product June 2011 Schedule Manufacturers (1 to 9 Employees)

Company 1 Number of Employees Annual
Revenue (2011$) Product Type Annualized Cost
of Revisions 2 Impact ( Annualized

Cost to Revenue)

1 1 62,000.00 Solidifiers, etc. (2) $1,130 1.8227%

2 1 1,000,000.00 Surface Washing Agent $555 0.0555%

3 1 160,000.00 Surface Washing Agent $555 0.35%

4 2 2,500,000.00 Bioremediation Agent $1,325 0.0530%

5 2 120,000.00 Solidifier, etc. $565 0.4709%

6 2 200,000.00 Solidifier, etc. $565 0.2825%

7 2 30,000.00 Solidifier, etc. $565 1.8835%

8 2 10,000,000.00 Solidifier, etc. $565 0.0057%

9 2 120,000.00 Surface Washing Agent $555 0.4625%

10 3 280,000.00 Surface Washing Agent $555 0.1982%

11 3 1,300,000.00 Surface Washing Agent $555 0.0427%

12 3 150,000.00 Surface Washing Agent (2) $1,110 0.7400%

13 3 5,000,000.00 Surface Washing Agent $555 0.0111%

14 4 559,000.00 Bioremediation Agent $1,325 0.2371%

15 4 1,000,000.00 Dispersant (2) & Surface Washing Agent (1) $3,243 0.3243%

16 4 730,000.00 Solidifier, etc. $565 0.0774%

17 4 500,000.00 Surface Washing Agent $555 0.1110%

18 4 187,000.00 Surface Washing Agent $555 0.2968%

19 4 350,000.00 Surface Washing Agent (2) $1,110 0.3172%

20 5 5,000,000.00 Bioremediation Agent $1,325 0.0265%

21 5 290,000.00 Bioremediation Agent $1,325 0.4571%

22 6 120,000.00 Bioremediation Agent $1,325 1.1046%

23 6 15,000,000.00 Dispersant (1) & Surface Washing Agent $1,899 0.0127%

24 6 500,000.00 Surface Washing Agent $555 0.1110%

25 6 5,000,000.00 Surface Washing Agent $555 0.0111%

26 7 660,000.00 Surface Washing Agent $555 0.0841%

27 8 3,054,214.00 Bioremediation Agent $1,325 0.0434%

28 8 2,500,000.00 Surface Washing Agent $555 0.0222%

29 8 1,500,000.00 Surface Washing Agent $555 0.0370%

30 9 2,500,000.00 Surface Washing Agent $555 0.0222%

Notes : a Company names withheld to avoid disclosure of sensitive business inform a tion

. Thirty manufacturers of products currently on the June 28,

2011 Schedule were categorized as very small businesses (1 to 9 employees) and are considered based on the availability of sufficient D&B data (i.e., annual revenue and number of employees) and SBA company size definitions. b These estimates are based on averag e incremental cost estimates per manufacturer for existing manufacturers presented in Exhibit 7

- 1

. Accordingly, the estimate for the average cost of revisions for a company producing one product is $ 1,325 . Two of the very small companies each currently pro duce two products that are on the Schedule; for these companies, the estimate of $1,325 is multiplied by two.

Note: Products in red have incremental costs to annual sales revenue over 3 1 %

.

May 22 December 3 , 2014 78*** E.O. 12866 Review

– Draft

- Do Not Cite, Quote, or Release During Review ***



## 8.0 Key Limitations of the Analysis

This RIA involves several sources of uncertainty that may lead analyses to differ from actual compliance costs and benefits

. . The A gency is projecting the impacts of the propos ed rule. The values of variables that support the analysis may be different in the future than are at the time of analysis. For example, compliance costs will depend on the types of oil spill mitigating agents manufacturers seek to add to the NCP Product Schedule. EPA has based its assumptions on historical Subpart J product submissions to the Schedule, but future trends might be affected by market conditions, field experience, and testing costs. For example

, for bioremediation agents, EPA does not know the extent to which manufacturers would conduct

freshwater and/or saltwater eff i c acy testing; for this reason, the analysis presents a range of potential costs associated with bioremediation eff icacy testing.

M any of the cost estimates used in the regulatory analysis are based on a limited
number of consultations with commercial laborato ries and manufacturers . The data provided by these consultations represent , in most cases, anecdotal information and may not capture the full range of costs faced by manufacturers and laboratories . In addition, labor hours and wage rates
estimated for each information collection activity may vary across manufacturers. Nevertheless, they represent a reasonable average for the purposes of the analysis.

This RIA estimates the addition of labor hours ( 6,369 over 20 years) and labor costs faced by the regulated sector to comply with this rule, but does not include a complete analysis
of labor market effects. Neither the data nor methods were available to conduct such an analysis. In general, an environmental r egulation can be understood as an increase in demand
for a particular out put: environmental quality. Meeting this new demand can result in increased
demand fo r the various factors of production (including labor). However, the regulated sector generally ha s to rely on revenues generated by their market outputs (e.g., dispersants) to cover the costs of satisfying society’s demand for environmental quality (e.g., cleaner water) . This can
lead to reduced demand for labor and other factors of production. In gene ral, the net effect of an environmental regulation on employment in regulated sectors and the overall economy is
indeterminate. See Berman and Bui (2001) for a theoretical model of employment effects of environmental regulation.

Finally, t here are uncertainties in the small business analysis conduct ed in this regulatory impact analysis. For example, D&B data w ere not available for 21 of the 86 manufacturers that currently have products on the June 2011 Schedule. These manufacturers

may or m ay not follow the size distribution of manufacturers that reported data to D&B. In addition, the analysis assumes that manufacturers will submit 10 new product s for listing each year for the next twenty years . To the extent that there are more or less than 10 new product s each year and that the manufacturers of these products will follow the size distribution of existing manufacturers, small business impacts will be similar to those estimated in the analysis

. If the size distribution is different from histo rical trends, the impacts may be different.

May 22 December 3 , 2014 79*** E.O. 12866 Review

– Draft

- Do Not Cite, Quote, or Release During Review ***



## Appen dix A : NCP Subpart J Schedule June 28, 2011

Exhibit A

- 1

NCP Subpart J Product Schedule, June 28, 2011

Product
Number Product Type Product Name Name of Manufacturer City State

B61 BA/MC/NA SOIL RX (aka BIO

- REGEN HYDROCARBON) 3 Tier Technologies LLC Orlando FL

M26 M ELASTOL (aka SEPARATE, LIQUID ELASTOL) Action Additives, Inc. Ducktown NJ

SW42 SWA MARINE GREEN CLEANTM AGS Solutions, Inc. Houston TX

SW43 SWA MARINE GREEN CLEAN PLUSTM AGS Solutions, Inc. Houston TX

D10 Dispersant SEA BRAT #4 Alabaster Corp. Pasadena TX

SW23 SWA PETRO

- CLEAN Alabaster Corporation Pasadena TX

SW54 SWA SAFE

- KLEEN Anti Slip Solution Ltd Worcestershire UK

B43 BA/MC STEP ONE (aka B&S INDUSTRIAL) B & S Research, Inc. Embarrass MN

D15 Dispersant SUPERSPERSE TM WAO2500 Baker Petrolite Corporation Sugar Land TX

B48 BA/MC BET BIOPETRO (formerly BET BIOPETRO HEAVY) BioEnviroTech Tomball TX

SW32 SWA BG

- CLEANTM 401 BioGenesis Enterprises, Inc Oak Creek WI

B42 BA/NA VB591 TM, VB997 TM, BINUTRIX® (formerly MYCOBAC

TX

- 20) BioNutraTech Inc. Branson MO

B59 BA/MC BIOWORLD BIOREMEDIATION HYDROCARBON TREATMENT PRODUCTS (BioWorld BHTP) BioWorld Products Visalia CA

M28 M OPFLEX® THE GREEN STUFFTM Cellect Plastics, LLC West Hyannisport MA

May 22 December 3 , 2014 80*** E.O. 12866 Review

– Draft

- Do Not Cite, Quote, or Release During Review ***

Exhibit A

- 1

NCP Subpart J Product Schedule, June 28, 2011

Product
Number Product Type Product Name Name of Manufacturer City State

SW9 SWA CN

- 110 (formerly D

- 37) Chemex, Inc. Broussard LA

M17 M

- Solidifier CIAGENT (formerly CHEAP INSURANCE and PETRO

CAPTURE CIAGENT Solutions, LLC Louisville KY

B63 BA/MC BIOREM

- 2000 OIL DIGESTERTM (aka BIOREM

- 2000 SC) Clift Industries, Inc. Charlotte NC

SW55 SWA CORIBA 700 SR (aka, CORIBA 700ER, CORIBA 700OS) Coriba Technologies, LLC North Little Rock AR

SW56 SWA CORIBA 713 SR (aka, CORIBA 713ER, CORIBA 713OS) Coriba Technologies, LLC North Little Rock AR

SW19 SWA CYTOSOL CytoCulture International, Inc. Point Richmond CA

B64 MC DRYLET TM MB BIOREMEDIATION DryLet Technologies, Inc. Prosper TX

SW31 SWA EnviroClean (formerly Enviro Clean 165) Enviro Clean Products, LLC Oklahoma City OK

M19 M

- Solidifier WASTE

- SET 3200 ® Environmental & Fire Technology, LLC Grand Rapids MI

M20 M

- Solidifier WASTE

- SET 3400 ® Environmental & Fire Technology, LLC Grand Rapids MI

B45 BA/MC SYSTEM E.T. 20 (formerly MCW.B 20) Environmental Restoration Services Windsor CA

M22 M PX700TM Enviro

- Tech Cape Coral FL

SW50 SWA EO ALL PURPOSE SOAP

- LAVENDER EO Product/Small World Trading Company Corte Madera CA

SW35 SWA PROCLEANS Eximco International, Inc. Houston TX

B54 BA/MC PRISTINE SEA II (formerly MicroPro D) No longer manufactured Fluid Tech, Inc. Las Vegas NV

May 22 December 3 , 2014 81*** E.O. 12866 Review

– Draft

- Do Not Cite, Quote, or Release During Review ***

Exhibit A

- 1

NCP Subpart J Product Schedule, June 28, 2011

Product
Number Product Type Product Name Name of Manufacturer City State

SW25 SWA SC

- 1000 TM GEMTEK® Products Pheonix AZ

D6 Dispersant JD

- 109 GlobeMark Resources Ltd Atlanta GA

D7 Dispersant JD

- 2000 TM GlobeMark Resources Ltd Atlanta GA

M24 M

- Solidifier RAPIDGRAB 2000TM GlobeMark Resources Ltd Atlanta GA

SW12 SWA PREMIER 99 (formerly D

- 41) Gold Coast Chemical Products Pembroke Park FL

SW26 SWA GOLD CREW SW (AKA ECP RESPONDER

- SW) Gold Crew Products & Services, LLC Environmental Chemical Solutions (ECS) Orange Gig Harbor CA

WA

SW40 SWA GREEN BEASTTM OIL SPILL & ODOR REMEDIATOR (aka GREEN BEAST WASHING AGENT) Green Bridge Industries, Inc. Ridgewood NJ

SW39 SWA G

- MARINE OSC

- 1809 (aka OIL SPILL CLEANUP) Green Earth Technologies Celebration FL

SW41 SWA TULXA Grupo Arthuriana S.A. de C.V. Delegación

Cuauhtémec Mexico

SW30 SWA F

- 500 Hazard Control Technologies, Inc Fayetteville GA

SW18

B56 SWA

BA/NA NATURE'S WAY HS (aka NATURE'S WAY PC; POWERCLEAN, MICRO CLEAN)

S

- 200 (aka S

- 200C, SHEENCLEAN, BILGE CLEAR) Integra Environmental, Ltd. Houston TX

International Environmental Products, LLC RBI Environmental, LLC Villanova PA

SW47 SWA ENVIRONMENTAL 1 CRUDE OIL CLEANER (aka ENVIRONMENTAL 1 WASHING AGENT) J and J Technology, LLC Nashville TN

B58 BA/NA JE1058BS Japan Energy Corporation Saitama Japan

B66 NA REMEDIADE TM (aka, SP 7010) JDMV Holdings, LP Houston TX

May 22 December 3 , 2014 82*** E.O. 12866 Review

– Draft

- Do Not Cite, Quote, or Release During Review ***

Exhibit A

- 1

NCP Subpart J Product Schedule, June 28, 2011

Product
Number Product Type Product Name Name of Manufacturer City State

B55 BA/NA LAND AND SEA RESTORATION PRODUCT 001 (VELITE) Land and Sea Restoration LLC San Antonio TX

B65 MC DUALZORB ® (aka, WHITZORB, TRAILZORB) LBI Renewable Buffalo WY

SW16 SWA AQUACLEAN (formerly D

- 52) Madison Chemical Company, Inc. Madison IN

SW58 SWA ETHOS CLEAN MAG7 Venture Group, LLC Rochester NY

SW59 SWA OSR

- 10 MAG7 Venture Group, LLC Rochester NY

SW22 SWA SPLIT DECISION SC (aka DUO

- SPLIT; CLEAN SPLIT; formerly SPLIT DECISION) Mantek Division of NCH Corporation Dallas TX

D14 Dispersant NOKOMIS 3

- AA Mar

- Len Supply Inc Hayward CA

D8 Dispersant NOKOMIS 3

- F4 Mar

- Len Supply Inc Hayward CA

SW38 SWA NOKOMIS 5

- W Mar

- Len Supply Inc Hayward CA

SW48 SWA SANDKLENE 950 MDEChem, Inc. Floresville TX

SW53 SWA NATURAMA G3 A

- 5 Merlin

- Tao, Ltd Tel Aviv Israel

D1 Dispersant COREXIT EC9527A (formerly COREXIT 9527) Nalco Energy Services, LP Sugar Land TX

D4 Dispersant COREXIT EC9500A (formerly COREXIT 9500) Nalco Energy Services, LP Sugar Land TX

SW1 SWA COREXIT EC7664A (formerly COREXIT 7664, formerly D

- 4) Nalco Energy Services, LP Sugar Land TX

SW10 SWA COREXIT EC9580A (formerly COREXIT 9580 SHORELINE CLEANER, formerly D

- 38) Nalco Energy Services, LP Sugar Land TX

May 22 December 3 , 2014 83*** E.O. 12866 Review

– Draft

- Do Not Cite, Quote, or Release During Review ***

Exhibit A

- 1

NCP Subpart J Product Schedule, June 28, 2011

Product
Number Product Type Product Name Name of Manufacturer City State

D2 Dispersant NEOS AB 3000 NEOS Company Limited Chuo

- ku, Kobe JAPAN

SW57 SWA JEP

- MARINE CLEAN (aka, ECOVOOM

- MARINE) Nuance Solutions Chicago IL

SW45 SWA SOC 10 (SURFACE OIL CLEANER) Oil Treatment International AG Zug Switzerland

B36 BA/MC OPPENHEIMER FORMULA (aka THE OPPENHEIMER
FORMULA 1, NATURAL ENVIRO 8000, MIGHTY MIKE BPT) Oppenheimer Biotechnology, Inc. Austin TX

SW11 SWA DE

- SOLV

- IT INDUSTRIAL CLEANER Orange

- Sol Packaging and Blending Gilbert AZ

SW49 SWA DE

- SOLV

- IT CLEAN AWAY APC SUPER

CONCENTRATE Orange

- Sol Packaging and Blending Gilbert AZ

B53 BA/EA OIL SPILL EATER II (OSEI II) OSEI Corporation (Formerly Sky Blue Chems) Dallas TX

B60 BA/MC MUNOX SR® Osprey Biotechnics Sarasota FL

D9 Dispersant BIODISPERS (Formerly PETROBIODISPERS) Petrobiotech LLC Newport NH

SW17 SWA PETRO

- GREEN ADP

- 7 (formerly D

- 14) Petro

- Green, Inc. Dallas TX

SW21 SWA PETROTECH 25 Petrotech America Corporation Newport NH

SW33 SWA E

- SAFE© PLUTUS Environmental Technologies,

Inc. Sevierville TN

SW34 SWA SHEEN

- MAGIC© PLUTUS Environmental Technologies,

Inc. Sevierville TN

M12 M PES

- 51 Practical Environmental Solutions (formerly Petroleum Environmental San Antonio TX

May 22 December 3 , 2014 84*** E.O. 12866 Review

– Draft

- Do Not Cite, Quote, or Release During Review ***

Exhibit A

- 1

NCP Subpart J Product Schedule, June 28, 2011

Product
Number Product Type Product Name Name of Manufacturer City State

B62 BA/MC/NA PRO

- ACT (aka OILCLEAN w/ACTIVATOR) Pro

- Act Microbial, Inc. Warren RI

SW46 SWA BIOGRASS® EXTRA Química del Desierto S. de R.L. de C.V. Chihuahua City,

Chihuahua Mexico

SW24 SWA DO

- ALL #18 Radcob Solutions, Inc. Lauderdale Lakes FL

M23 M

- Solidifier ALSOCUP REVCOM Associates Corona CA

M25 M

- Solidifier AQUA N

- CAPTM POLYMER (aka OIL SOLUTIONS POWDER, SPILL GREEN LS) RTA Systems, Inc. Oklahoma City OK

B57 BA/MC SPILLREMED (MARINE)® Sarva Bio Remed, LLC Trenton NJ

B10 BA/NA INIPOL EAP 22 No longer manufactured Société CECA S.A. 92062 Paris

- la

Défense France

M27 M

- Solidifier OIL BOND® Solidification Products International, Inc. Northford CT

SW28 SWA NALE

- IT SPL Control LLC Elemore City OK

SW2 SWA TOPSALL #30 (formerly D

- 20; AKA SUPERALL #38) Stutton North Corporation Superall Products LLP Mandeville

Tomball LA

TX

SW15 SWA SIMPLE GREEN® (formerly D

- 46) Sunshine Makers, Inc Huntington Harbor CA

SW36 SWA SPILLCLEAN OR SPILLCLEAN ["CONCENTRATE"] (aka FIREMAN'S BRAND SPILLCLEAN) Super Sat Ventures, Inc. Thiensville WI

D12 Dispersant Saf

- Ron Gold (aka SF

- GOLD DISPERSANT) Sustainable Environmental Technologies,

Inc. Mesa AZ

D3 Dispersant MARE CLEAN 200 (formerly MARE CLEAN 505) Taiho Industries Co. Ltd. Minatoku, Tokyo JAPAN

SW37 SWA TXCHEM HE

- 1000TM Texas EnviroChem, Inc. Houston TX

May 22 December 3 , 2014 85*** E.O. 12866 Review

– Draft

- Do Not Cite, Quote, or Release During Review ***

Exhibit A

- 1

NCP Subpart J Product Schedule, June 28, 2011

Product
Number Product Type Product Name Name of Manufacturer City State
SW20 SWA BIOSOLVE ® HYDROCARBON MITIGATION

TECHNOLOGY TM The BioSolve® Company Lexington MA

D11 Dispersant FINASOL® OSR 52 (aka SEACARE ECOSPERSE 52) TOTAL FLUIDES Paris

- La

Devense De f ense FRANCE

SW44 SWA CLEAN GREEN (aka CLEANGREEN® PLANET WASH) U.S. AG, LLC Luthersville GA

D5 Dispersant DISPERSIT SPC 1000 TM (aka SEACARE E.P.A. ( Ecosperse ECOSPERSE TM Pollution Abatement)) U.S. Polychemical Corp. Chestnut Ridge NY

M29 M

- Solidifier GELCO 200 UESS, Ltd Drayton Valley, AB Canada

M18 M ZYME

- FLOW (aka ZYME

- TREAT; MARI

- ZYME; UNITED

658 PETRO

- ZYME) United Laboratories, Inc. St. Charles IL

B41 BA/MC MICRO

- BLAZE® Verde Environmental, Inc. Houston TX

SW52 SWA VERU

- SOLVETM 200 HP VeruTEK® Technologies Bloomfield CT

SW51 SWA DYNAMIC GREENTM Wechem, Inc. Harahan LA

B19 BA/MC WMI

- 2000 WMI International, Inc. Houston TX

D13 Dispersant ZI

- 400 (aka ZI

- 400 OIL SPILL DISPERSANT) ZI Chemicals Los Angeles CA

Note : Exhibit A

- 1 is organized alphabetically by product manufacturer.

May 22 December 3 , 2014 86*** E.O. 12866 Review

– Draft

- Do Not Cite, Quote, or Release During Review ***



## Appendix B : North American Industrial Classification System

Exhibit B

- 1 Subpart J NAICS Codes and Descriptions
NAICS (Three Digit Codes) Number of

Manufacturers NAICS Descriptions

213 2 Support Activities for Mining

237 1 Heavy and Civil Engineering Construction

325 2 6 Chemical Manufacturing

333 2 Machinery Manufacturing

336 1 Transportation Equipment Manufacturing

423 3 Merchant Wholesalers, Durable Goods

424 9 Merchant Wholesalers, Nondurable Goods

453 1 Miscellaneous Store Retailers

541 9 Professional, Scientific and Technical

Services

561 2 Administrative and Support Services

562 7 Waste Management and Remediation

Services

Other 2 In valid codes

Sources: Dun and Bradstreet (D&B), SRA International and EPA. D&B ha d NA I CS

codes for 65 of 86 manufacturers on the June 28 , 2011 Schedule. Two of the 65

manufacturers reported in valid NAICS codes

.

May 22 December 3 , 2014 8 7*** E.O. 12866 Review

– Draft

- Do Not Cite, Quote, or Release During Review ***

Exhibit B

- 2 Subpart J NAICS Codes, Descriptions and Small Business Criteria

NAICS Codes (Six Digit

Level) Number of

Manufacturers Small Business Criteria ($ millions

or e mployees) NAICS Descriptions

213112 2 $7.0 Support Activities for Oil and Gas Operations

237990 1 $33.5 Other Heavy and Civil Engineering Construction

325188 5 1,000 All Other Basic Inorganic Chemical Manufacturing

325199 2 1,000 All Other Basic Organic Chemical Manufacturing

325320 1 500 Pesticide and Other Agricultural Chemical Manufacturing

325412 1 750 Pharmaceutical Preparation Manufacturing

325414 4 500 Biological Product (except Diagnostic) Manufacturing

325611 2 750 Soap and Other Detergent Manufacturing

325612 5 500 Polish and Other Sanitation Goods Manufacturing

325620 1 500 Toilet Preparation Manufacturing

325998 5 500 All Other Miscellaneous Chemical Product and Preparation Manufacturing

333131 1 500 Mining, Machinery and Equipment Manufacturing

333319 1 500 Other Commercial and Service Industry Machinery Manufacturing

336399 1 750 All Other Motor Vehicle Parts Manufacturing

423830 1 100 Industrial Machinery and Equipment Merchant

Wholesalers

423840 1 100 Industrial Supplies Merchant Wholesalers

423850 1 100 Service Establishment Equipment and Supplies

Merchant Wholesalers

424610 2 100 Plastics Materials and Basic Forms and Shapes

Merchant Wholesalers

424690 5 100 Other Chemical and Allied Products Merchant

Wholesalers

424990 2 100 Other Miscellaneous Nondurable Goods Merchant

Wholesalers

453998 1 $7.0 All Other Miscellaneous Store Retailers (except Tobacco Stores)

541330 1 $4.5 Engineering Services

541611 1 $7.0 Administrative Management and General Management Consulting Service

541620 2 $7.0 Environmental Consulting Services

541711 1 500 Research and Development in Biotechnology

541712 3 500 Research and development in Physical Engineering and Life Science (except Biotechnology)

541990 1 $7.0 All Other professional, Scientific and Technical

Services

561720 1 $16.5 Janitorial Services

561990 1 $7.0 All Other Support Services

562211 1 $12.5 Hazardous Waste Treatment and Disposal

May 22 December 3 , 2014 88*** E.O. 12866 Review

– Draft

- Do Not Cite, Quote, or Release During Review ***

562219 1 $12.5 Other Nonhazardous Waste Treatment and Disposal

562910 5 $14.0 Bioremediation Services

Other 2 Incorrect codes

Sources: Dun and Bradstreet (D&B), SRA International , Inc.

, and EPA. D& B had NAICS codes for 65 of 86
manufacturers on the June 28, 2011 Schedule. The codes for two of the 65 manufacturers were in valid

.

Exhibit B

- 3

Off s hore Oil Platforms, Responders , and Service Providers

Description NAICS Codes Crude petroleum and natural gas extraction 211111

Petroleum refineries 324110 Petroleum and petroleum products merchants

wholesalers 424720

Environmental consulting services 541620

Remediation services 562910

May 22 December 3 , 2014 89*** E.O. 12866 Review

– Draft

- Do Not Cite, Quote, or Release During Review ***



## Appendix C: NCP Product Schedule Manufacturer Profile and Expected Impacts

Table C

- 1 NCP Product Schedule Manufacturer Profile and Expected Impacts Associated with the Proposed Revisions to NCP Subpart J (40 CFR 300.900)

5 Year Annualization
Company

Size Manufacturer Profile Using Dun &

Bradstreet Data a Impact on Existing Manufacturers b Impact on New Manufacturers c

Number of Employees Number of Companies Annual Revenue per Company d Number Average Annual Incremental Change in

Cost per Company e Impact (Cost to Revenue) Number Average Annual Incremental Change in

Cost per Company e Impact (Cost to Revenue)

Small Businesses

1 to 9 35 $1,953,786 46 $3,473 0.18% 5 $4,757 0.24%

10 to 19 11 $1,699,803 15 $3,473 0.20% 2 $4,757 0.28%

20 to 99 11 $9,879,764 15 $3,473 0.04% 2 $4,757 0.05%

100 to 499 4 $50,624,645 5 $3,473 0.01% 1 $4,757 0.01%

Total 61 81 9 Large Businesses

500+ 4 $4,560,366,000 5 $3,473 0.00% 1 $4,757 0.00%

a

. Manufacturers of products currently on the Product Schedule were categorized according to size based on availability of D&B d ata (i.e., annual revenue and number of employees) and SBA company size definitions.

b

. Manufacturers of existing products on the Schedule total 86, based on the June 2011 NCP Product Schedule. The 21 manufacturers with products currently on the Schedule that were not classified according to company size due to insufficient D&B information were allocat ed across the five company size categories in proportion to the distribution of manufacturers with sufficient D&B company size information. (Note: 65 compan ies have reportable data, 21 companies did not)

c

. EPA assumes the size distribution for the estimated 10 manufacturers of new pro ducts to be considered for listing on the Product Schedule will be similar to the size and revenue distribution of existing product manufacturers.

d

. Five companies were missing revenue information in the 1 to 9 number of employees size category, and one c ompany was missing revenue information in the 100 to 499 number of employees size category.

e

. These estimates are based on average incremental cost estimates per manufacturer for existing and new manufacturers presented in Exhibit 7

- 1 A

.

May 22 December 3 , 2014 90*** E.O. 12866 Review

– Draft

- Do Not Cite, Quote, or Release During Review ***



## A ppendix D: Estimating Per G allon Response Cost by Discharge Size

EPA identified oil discharge data that are compiled at the federal level and maintained by the Pipeline and Hazardous Materials Safety Administration (PHMSA), Department of Transportation. 13 These data have the advantage of including both the volume of each oil discharge and selected elements of the associated costs of cleanup. These data provide information on discharges originating from pipelines from 1986 to p resent. Beginning in 2002, the data contain information on the volume of discharges, along with an itemized cost of cleanup. 14 Thes e data include the public and pr i vate property damage, cost of emergency response, cost of environmental remediation, other pu blic costs, value of product lost, value of operator property damage, other operator costs, and the total cost of cleanup. The PHMSA data provide the most comprehensive information available on responsible party cost. However,
these costs exclude other soc ial costs because of third party claims. The cost also excludes indirect costs. However, to the extent that most oil discharge responses are conducted by the responsible party, and al s o comprise the majority of the total cost s, these data provide a

reasona ble estimate. 15

, 16

The Agency notes the drawbacks associated with using the PHMSA data to estimate the cost of oil spills affected by the proposed revisions to Subpart J. First, the PHMSA data are compiled based on accident incident reports that pipeline facilities are required to submit to PHMSA for discharges greater than 5 gallons. Therefore, as with any database that is based on facility reports (e.g., NRC), the database may not capture the entire universe of pipeline discharges, and the values may ref lect differences across facilities on how they report the values of the damages. 17 The results suggest that there is a large amount of variability in the

per

- gallon cost estimates. Some of this variability may be explained by the fact that the response cost would vary significantly depending on the nature and location of the discharge: whether it was near an ecologically sensitive area, whether there was discharge into water, if private property was affected, etc. However, some of this variability might refl ect the differences in reporting across facilities. Second, using data from pipeline discharges implicitly assumes that the response cost does not depend on the source of the discharge, and that the response cost of discharges from other sources, such as o il platforms and vessels, is similar to response cost of discharges from pipeline. Also like oil spills affected by the proposed revisions to Subpart J, pipelines are located in a variety of geographical areas, and the cost of cleanup may reasonable depend on the volume of the discharge, the product discharged, and the type of aquatic environment affected. However, pipelines are often underground and may run across

13 Data are available at http://ops.dot.gov/stats/IA98.htm.

14 The data from 1986 to 2001 only provide information on the value of property damage resulting from the discharges.

15 GAO estimated that responsible parties paid between 72 and 78 percent of oil spill removal costs and compensation damages, respectively, for 51 spills it considered in its review (September 2007, “Major Spills Occur Infrequently, but Risks to the Federal Oil Spill Fund Remain,” GAO Report #GAO

- 07

- 1085). While GA focused on spills from vessels, responses to spills from inland facilities are also typically conducted at least in part by the responsible party.

16 Douglas Helton and Tony Penn, 1999, “Putting Response and Natural Damage Assessment Cost in Perspective,” International Spills Conference.

17 As with any data that rely on reporting by facilities, the data on cost and total number of spills in the PHMSA database may not be complete, as pointed out by the National Transportation Safety Board and Charles Batten (Charles Batten, “PHMSA’s Data Coll ection

– Does it Tell us Anything?” Safe Pipelines, Volume 3, Number 2,

available at http://pstrust.org/library/docs/vol3no1/pstnewsletter vol3no1.pdf)

May 22 December 3 , 2014 91*** E.O. 12866 Review

– Draft

- Do Not Cite, Quote, or Release During Review ***

difficult terrain that would imply higher cost of cleanup for accessing the pipelines. 18 If th is is the

case, o ne would expect high fixed cost of accessing the pipeline regardless of the size of the discharge. The per

- gallon cost estimate suggests that this is true

– the per

- gallon cost for discharge ranging from 5 to 30 gallons is $747 and $723 fo r crude oil and gasoline discharges, respectively, while the discharges greater than 10,000 gallons, the per

- gallon cost is as low as $40 and $22 for crude oil and gasoline dischargers, respectively. Finally, it is important to note

that insofar as the dat a do not include the cost of environmental damage and other indirect costs such as higher insurance costs or decreased stock valuation, this cost is an underestimate of the social cost of discharge. 19

The Agency used the observations on 1,857 discharges i n the years 2002 to 2008 for 45 states across the United States in the PHMSA data to estimate the average response cost per gallon

. 20 The Agency estimates that the per

- gallon average cleanup cost is $1,114 for crude oil and $1,414 for gasoline and other pet roleum oils , including diesel and fuel oils (Exhibit). 21 The results suggest that the per

- gallon cost is as high as $19,631 and $40,615 for crude oil and gasoline discharges less than 5 gallons, respectively, and $447 and $244 for crude oil and gasoline dis charges greater than 5 gallons, respectively. Within the latter category, the per

gallon cost also decreases significantly by discharge size. For the purpose of this analysis, EPA used the per

- gallon estimate for crude oil discharges greater than 10,000 ga llons because dispersants are expected to be used only for large spills.

18 An option to correct for this c ould have been to deduct the cost associated with reaching the pipeline. However,

information was not collected on this.

19 See Department of Interior (2010) for additional information on these other costs.

20 The data were accessed in April 2008 and includ e 64 cases for 2008.

May 22 December 3 , 2014 92*** E.O. 12866 Review

– Draft

- Do Not Cite, Quote, or Release During Review ***

Exhibit D

- 1
Per

- Gallon Response Cost by Discharge Size

Type of
Oil Discharge Size

Less Than
5 Gallons Greater than 5 Gallons

Overall Average 5 to 30
Gallons 30 to 99
Gallons 100

- 499
Gallons 500

- 1499
Gallons 1500

- 10,000
Gallons >10,000
Gallons >5 Gallons (Average)

Crude O i l $19,631 $747 $750 $251 $218 $79 $40 $447 $1,114

Gasoline

and other
Fuels $40,614 $723 $287 $140 $57 $41 $22 $244 $1,414

Average $29,589 $737 $504 $192 $126 $56 $30 $341 $1,270

May 22 December 3 , 2014 93*** E.O. 12866 Review

– Draft

- Do Not Cite, Quote, or Release During Review ***



## References

Antle, J. M. (1999). "Benefits and costs of food safety regulation." Food Policy 24 (6): 605

- 623.

Batten, Charles. "PHMSA's Data Collection

- Does it Tell us Anything?" Dafe Pipelines, Volume 3, Number 2, Available at: http//pstrust.org/library/docs/vol3no1/pstnewsletter_vol3no1.pdf

Berman, Eli and L. Bui (2001). "Environmental Regulation and Labor Demand: Evidence from
the South Coast Air Basin." Journal of Public Economics, February.

Boyd, James W. (2011) “The Risk of Ecosystem Service Losses, Ecological Hedging Strategies, " Resources . Summer 2011. No. 178.

Carson, R. T., R. C. Mitchell, M. Hanemann, R. J. Kopp, S. Presser and P. A. Ruud (2003).
"Conti ngent Valuation and Lost Passive Use: Damages from the Exxon Valdez Oil Spill."
Environmental and Resource Economics 25 (3): 257

- 286.

Fingas, Mervin (2011)

. Oil Spill Science and Technology . Gulf Professional Publishing.

Freeman, A. Myrick. (1993) The Measurement of Environmental and Resource Values, Theory
and Methods. Resources for the Future

.

Garza

- Gil, M. D., A. Prada

- Blanco and M. X. Vázquez

- Rodríguez (2006). "Estimating the short

term economic damages from the Prestige oil spill in the Galician fisheries and tourism." Ecological Economics 58 (4): 842

- 849.

Garza

- Gil, M. D., J. C. Surís

- Regueiro and M. M. Varela

- Lafuente (2006). "Assessment of economic damages from the Prestige oil spill." Marine Policy 30 (5): 544

- 551.

Goodlad, J. (1996). "Effect s of the Braer oil spill on the Shetland seafood industry." Science of

The Total Environment 186 (1

- 2): 127

- 133.

Gunkel, W. and G. Gassmann (1980). "Oil, oil dispersants and related substances in the marine

environment." Helgoland Marine Research 33 (1): 16 4

- 181.

Helton, Douglas and Tony Penn, 1999. "Putting Response and Natural Damage Assessment Cost in Perspective." International Spills Conference.

International Oil Spill Conference, "A Primer on Insitu Fluorometry to Monitor Dispersed Oil."
Charles B. Henry, Paulene O. Roberts and Edward B Overton. Louisian a State University. 1999.

Law, R. J. and J. Hellou (1999). "Contamination of Fish and Shellfish Following Oil Spill

Incidents." Environmental Geosciences 6 (2): 90

- 98.

Loureiro, M., J. Loomis and M. Vázquez (2009). "Economic Valuation of Environmental Damages due to the Prestige Oil Spill in Spain." Environmental and Resource
Economics 44 (4): 537

- 553.

May 22 December 3 , 2014 94*** E.O. 12866 Review

– Draft

- Do Not Cite, Quote, or Release During Review ***

National Academy of Sciences (2011)

. " Approaches for Ecosystem Servi ces Valuation for the Gulf of Mexico After the Deepwater Ho rizon Oil Spill: Interim Report".

National Research Council of the National Academies (2005)

. Oil Spill Dispersants, Efficacy and
Effects.

Office of Management and Budget (2003)

. " Circular A

- 4, Regulatory Analysis "

. http://www.whitehouse.gov/omb/circulars a004 a

- 4, September 2003.

Office of Management and Budget. (1996) " Economic Analysis of Federal Regulations Under
Executive Order 12866 "

. http://www.whitehouse.gov/omb/inforeg_riaguide, January 11,

1996.

Percin, Paul de, Albert D. Venosa, Markram T. Suidan, and George Sorial, "Analysis of Dispersant Effectiveness of Heavy Fuel Oils and Weathered Crude Oils at Two Different Temperatures Using the Baffled Flask," Final Report, U.S. Environ mental Protection Agency, National Risk Management Research Laboratory. March 16, 2005

- July 15,

2005.

Ramseur, Jonathan L. (2010) "Deepwater Horizon Oil Spill: The Fate of the Oil." CRS Report

R41531.

Small Business Administration. " Table of Small Bu siness Size Standards Matched to North American Industry Classification System Codes. " http://www.sba.gov/content/table

small

- business

- size

- standards Effective November 5, 2010.

U.S. Army Corps of Engineers ( 2012 )

. " Waterborne Commerce of the United St ates (WCUS)
Part 5 National Summaries , Calendar Year 2012. " http://www.ndc.iwr.usace.army.mil/wcsc/wcsc.htm

U.S. Department of the Interior (2010) , "Benefit

- Cost Analysis for the Interim Final Rule on Increased Safety Measures for Energy Development o n the Outer Continental Shelf."
Bureau of Oce a n Energy Management, Regulation and Enforcement. September 30,

2010.

U.S. Department of the Interior, (2010a). "Installations and Removals

- Offshore Production
Facilities in Federal Waters." Offshore Stats and Facts. Bureau of Ocean Energy Management (BOEM)

. http:www.boemre.gov/stats/PDFs/OCSPlatformActivity.pdf

U.S. Department of Transportation (2001) . "OPA 90 Programmatic Regulatory Assessment (PRA), Benefit, Cost and Cost Effectiveness of Eleven Major Rulemakings of the Oil Pollution Act of 1990" Research and Special Programs Administration. May 2001.

U.S. Environmental Protection Agency (2006)

. " EPA's Action Development Process, Final
Guid ance for EPA Rulewriters: Regulatory Flexibility Analysis as amended by the Small Business Regulatory Enforcement Fairness Act

. " November 30, 2006.

U

, . S. Environmental Protection Agency (20 10 )

. Guidelines for Preparing Economic Analyses.
Office of the Administrator. Washington, DC. (EPA 240

- R

- 10

- 001)

. http://yosemite.epa.gov/ee/epa/eed.nsf/webpages/Guidelines.html/$file/Guidelines.pdf

May 22 December 3 , 2014 95*** E.O. 12866 Review

– Draft

- Do Not Cite, Quote, or Release During Review ***

U .S. Environmental Protection Agency (2011)

. " Handbook on the Benefits, Costs, and Impacts of Land Cleanup and Reuse. " Office of P olicy and Office of Solid Waste and Emergency Response. EPA

- 240

- R

- 11

- 001.

U .S. Environmental P rotection Agency (2005) . "An alysis of Dispersant Effectiveness of Heavy Fuel Oils and Weathered Crude Oils at Two Different Temperatures Using the Baffled

Flask." National Risk Management Laboratory. Paul De Percin, Project Officer; Albert D. Venosa, EPA Task Manager. Submitted b y Makram, Project Officer; George A. Sorial, Task Order Leader, University of Civil and Environmental Engineering, University of Cincinnati. March 16, 2005

- July 15, 2005.

U.S. Government Accountability Office (GAO)(2007). Major Spills Occur Infreque ntly, but Risks to the Federal Oil Spill Fund Remain, GAO Report #GAO

- 07

- 1085, page 27. September,

Van Houtven, G., J. Powers and S. K. Pattanayak (2007). "Valuing Water Quality Improvements in the United States Using Meta

- Analysis: Is the Glass Half

- Ful l of Half

- Empty for National Policy Analysis?" Resource and Energy Economics 29 (3): 206

- 228.

May 22 December 3 , 2014 96