*** E.O. 12866 Review - Draft - Do Not Cite, Quote or Release During Review ***

EO12866_UST Revisions 2050-AG46_NPRM_ EA-RIA_20110914

Assessment of the Potential Cost, Benefits, and Other Impacts 

of the Proposed Revisions to

EPA's Underground Storage Tank Regulations

Prepared for:

Policy and Standards Division, Office of Underground Storage Tanks,

U.S. Environmental Protection Agency, 1200 Pennsylvania Ave NW,

Washington, DC 20460

Prepared by:

Industrial Economics, Incorporated

2067 Massachusetts Avenue

Cambridge, MA 02140

617/354-0074

August 2011
*** E.O. 12866 Review - Draft - Do Not Cite, Quote or Release During Review ***

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Acronyms And Terms

AHFDS – Airport Hydrant Fuel Distribution System

ASTSWMO – Association of State and Territorial Solid Waste Management Officials

ATG – Automatic Tank Gauge / Gauging – an automated process that monitors product level 

and provides inventory control

BLS – United States Bureau of Labor Statistics

BTEX – Benzene, Toluene, Ethylbenzene, and Xylenes

CFR – Code of Federal Regulations

CITLD – Continuous In-Tank Leak Detection

EGT – Emergency Generator Tank

EPA – United States Environmental Protection Agency

EPAct – Energy Policy Act of 2005

FCT – Field-Constructed Tank

Fill pipe – The access by which the tank is filled

IRS – United States Internal Revenue Service

LLD – Line Leak Detector / Detection – a device that alerts the tank operator to the presence of a 

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

or by triggering an audible or visible alarm

LUST – Leaking Underground Storage Tank

MIDAS - Modeling of Infection Diseases Agents Study

NACS – National Association of Convenience Stores

NAICS – North American Industry Classification System

NRDA – Natural Resource Damage Assessment

OMB – United States Office of Management and Budget

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

PAHs – Polycyclic Aromatic Hydrocarbons
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Pd – Probability of detection

Pfa – Probability of false alarm

RFA – Regulatory Flexibility Act

SBA – United States Small Business Administration

SBREFA – Small Business Regulatory Enforcement Fairness Act of 1996

SDWA – Safe Drinking Water Act

SIR – Statistical Inventory Reconciliation – a leak detection method where inventory, delivery, 

and dispensing data is statistically analyzed

SISNOSE – Significant Impact on a Substantial Number of Small Entities

SPA – State Program Approval

SPCC – Spill Prevention, Control, and Countermeasure

Spill bucket – A contained sump installed at the fill and/or vapor recovery connection points to 

contain drips and spills that can occur during delivery

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

and, when contained, to prevent liquids from releasing into the environment

TPH – Total Petroleum Hydrocarbons

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

TVM – Time value of money

UDC – Under-Dispenser Containment – a device for collecting fluids spilled beneath a dispenser 

(pump) (e.g. dispenser pan)

UMRA – Unfunded Mandates Reform Act

UST – Underground Storage Tank

VSL – Value of a Statistical Life

WA – Work Assignment

WTP – Willingness to Pay
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iii

Table Of Contents

Executive Summary

Chapter 1. Introduction

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

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

1.3 Summary of the Proposed Rule ............................................................................................ 1-3

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

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

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

Chapter 2. Universe of UST Systems Affected by the Proposed Rule

2.1 Types of Entities Affected by the Proposed Rule................................................................. 2-1

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

2.3 UST Universe Size and Distribution Across Sectors............................................................ 2-4

2.4 Universe of Facilities and Systems Potentially Affected by Proposed Rule ........................ 2-7

2.5 Facilities and Systems Affected by Proposed Rule ............................................................ 2-10

Chapter 3. Assessment of Social Costs 

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

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

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

 3.2.2 Estimation of System-Level Compliance Costs for UST Systems............................ 3-5

3.3 Calculation of Incremental Compliance Costs ..................................................................... 3-8

 3.3.1. Calculation of Incremental Compliance Costs Using an Alternative Baseline.......3-10

3.4 Results of Assessment of Compliance Costs...................................................................... 3-11

 3.4.1 Assessment of Compliance Costs under the Alternative Baseline

 Scenario........................................................................................ 3-17

3.5 Sensitivity Analysis ............................................................................................................ 3-17

 3.5.1 Compliance Costs of the Proposed Rule Using Alternative Estimates of Labor 

 Rates Overhead Costs, and Fringe Benefits.............................................................. 3-18

 3.5.2 Sensitivity Analysis of Distribution of Technologies Tested for Overfill 

 Operability, Spill Prevention Equipment Tightness, and Interstitial Integrity ......... 3-21
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iv

 3.5.3 Sensitivity Analysis of Compliance Costs for Interstitial Integrity Testing............. 3-22

 3.5.4 Summary of Sensitivity Findings.............................................................................. 3-22

3.6 Administrative Compliance Costs ...................................................................................... 3-23

 3.6.1 State Government Administrative Compliance Costs.............................................. 3-23

 3.6.2 Costs to Regulated Universe to Review Regulations ............................................... 3-24

3.7 Summary – Total Social Costs............................................................................................ 3-24

 3.7.1 Summary – Total Social Costs under the Alternative Baseline

 Scenario........................................................................................ 3-26

Chapter 4. Assessment of Benefits and Cost Savings

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

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

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

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

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

 4.3.1 Avoided Remediation Costs ....................................................................................... 4-7

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

4.4 Establishing Avoided Releases........................................................................................... 4-10

 4.4.1 Avoided Releases Using an Alternative Baseline............................................ 4-13

4.5 Benefits from Avoided Releases and Reduced Release Severity ....................................... 4-15

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

 4.5.2 Reduction in Release Severity .................................................................................. 4-16

 4.5.3 Total Avoided Remediation Costs from Avoided Releases and 

Reduced Release Severity......................................................... ............. 4-18

 4.5.4 Benefits from Avoided Releases and Reduced Release Severity

 under the Alternative Baseline Scenario.................................................... 4-18

 4.5.5 Avoided Costs by Proposed Requirement ................................................................ 4-20

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

4.7 Product Loss........................................................................................................................ 4-25

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

 
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v

 4.8.1 Avoided Benzene Cancer Risk ................................................................................. 4-27

 4.8.2 Other Human Health Benefits................................................................................... 4-29

4.9 Avoided Acute Exposure Events and Large-Scale Releases............................................ 4-30

4.10 Ecological Benefits........................................................................................................... 4-31

4.11 Conclusions....................................................................................................................... 4-34

 4.11.1 Summary of Positive Impacts under the Alternative Baseline Scenario..............4-35

Chapter 5. Distributional Impacts and Considerations

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

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

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

 5.2.2 Market Dynamics in the Retail Motor Fuels Sector ................................................... 5-4

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

 5.2.4 Assessment of Public Sector Cost Savings Related to Avoided Releases................ 5-14

 5.2.5 Economic Impact Summary...................................................................................... 5-17

5.3 Energy Impact Analysis...................................................................................................... 5-17

5.4 Regulatory Flexibility Analysis.......................................................................................... 5-19

 5.4.1 Small Business Screening Analysis.......................................................................... 5-20

 5.4.2 Small Business Supplemental Analysis.................................................................... 5-21

 5.4.3 Impacts to Small Governments................................................................................. 5-22

5.5 Screening Analysis to Inform Impacts on Minority and Low-Income Populations........... 5-24

 5.5.1 Risk Assessment Population Analysis...................................................................... 5-25

 5.5.2 Demographic Analysis.............................................................................................. 5-26

 5.5.3 Summary and Limitations of the Analysis................................................................ 5-30

5.6 Children’s Health Protection Analysis................................................................................ 5-30

Chapter 6. Other Statutory and Executive Order Analyses

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

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

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

6.4 Tribal Government Analysis................................................................................................. 6-4

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

Chapter 7. Comparison of Costs, Benefits, and Other Impacts

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

 7.1.1 Cost-Benefit Comparison under the Alternative Baseline Scenario.....................7-4

7.2 Cost-Effectiveness Analysis ................................................................................................. 7-5

7.3 Costs and Beneficial Effects Under Alternative Discount Rates.......................................... 7-5

Appendices:

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

 Systems and Field-Constructed Tanks.

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

Appendix C: Analysis of Piping Replacement Thresholds

Appendix D: Methodology for Calculating Compliance Costs

Appendix E: Access Model Structure and Specifications

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

 Confirmed Release Data

Appendix G: Expert Consultation: Selection and Data Collection Methodology

Appendix H: Expert Consultation: Responses

Appendix I: Methodology for Calculating Avoided Cleanup Costs

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

Baseline Scenario

Appendix K: Methodology for Estimating Upper Bound Market Exit Scenario

Appendix L: Screening Analysis of Impacts on Small Entities

Appendix M: Screening Analysis to Inform Impacts on Minority and Low-Income Populations

Appendix N: Cost Savings to State Financial Assurance Funds

Appendix O: UMRA Written Statement
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ES-1

Executive Summary 

Overview 

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

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

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

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

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

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

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

unknown, unwilling to pay, or unable to pay.

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

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

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

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

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

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

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

developed grant guidelines for states regarding operator training, inspections, delivery

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

public record, and state compliance reports on government UST systems. 

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

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

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

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

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

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

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

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

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

Strategy (August 2006) in which both EPA and tribes recognized it is important to ensure parity

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

country.

1

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

While EPA has issued many guidance documents and used various implementation approaches 

and techniques over the last twenty years, we have not made significant changes to the original 

1988 regulation. Indeed, most states have passed requirements that go far beyond the original 

federal regulation. These regulations fully implement provisions of the EPAct and improve 

important aspects of the existing (outdated) regulations. Furthermore, while information on 

sources and causes of releases show that releases from tanks are less common than they once 

 

1

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

were, releases from piping and spills and overfills associated with deliveries have emerged as 

more common problems.2 Releases at the dispenser have also emerged as one of the leading 

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

cause of release from these areas. The proposed revisions focus on ensuring equipment is 

properly maintained and working, and highlight the importance of operating and maintaining 

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

potential soil and groundwater contamination.

EPA worked diligently to ensure our proposed regulation development process was open 

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

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

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

environmental and community groups – an opportunity to share their ideas and concerns through 

a variety of meetings, conference calls, and email exchanges. EPA thoroughly considered all 

input as we developed the proposed UST regulation changes.

Proposed Regulatory Changes

EPA is proposing to revise the 1988 UST regulation in order to: establish federal 

requirements similar to certain key provisions of the EPAct; ensure owners and operators 

perform proper operation and maintenance; address deferrals; update the regulation to current 

technology and practices; and make technical and editorial corrections. Specifically, EPA is 

proposing these revisions (hereafter the Preferred Option): 

 Establish federal requirements for secondary containment and operator training 

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

money

 Add operation and maintenance requirements 

o Walkthrough inspections 

o Spill prevention equipment tests 

o Overfill prevention equipment tests

o Interstitial integrity tests 

o Operability tests for release detection methods 

 Address existing 40 CFR 280 deferrals 

o Require release detection for emergency generator UST systems 

o Remove deferrals and regulate airport hydrant fuel distribution systems 

(AHFDSs) and UST systems with field-constructed tanks (FCTs) with 

alternate release detection requirements 

o Remove deferrals for wastewater treatment tanks 

 

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

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

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

Storage Tank Facilities in Florida,” draft, March 2005.
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ES-3

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

program implementation 

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

interstices 

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

all new tanks and when overfill devices are replaced 

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

of practice 

o Address responses to interstitial monitoring alarms 

o Notification requirement of ownership change

o Eliminate groundwater and vapor monitoring as release detection methods 

o Establish requirements for determining compatibility

Make general updates to the regulation 

o Reference newer technologies, including explicitly adding statistical 

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

(CITLD) as release detection methods 

o Update codes of practice listed in the regulation 

o Remove old upgrade and implementation deadlines 

o Make editorial and technical corrections 

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

revisions 

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

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

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

summarizes the requirements under each alternative. 

EPA designed this assessment to satisfy the Office of Management and Budget’s (OMB) 

requirements for regulatory review under Executive Order 12866 (as amended by Executive 

Order 13258), which applies to any significant regulatory action. This document also fulfills 

these requirements:

 Regulatory Flexibility Act, as amended by Small Business Regulatory

Enforcement Fairness Act of 1996 

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

Minority Populations and Low-Income Populations

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

and Safety Risks

 Unfunded Mandates Reform Act of 1995 

 Executive Order 13175, Consultation and Coordination With Indian Tribal 

Governments

 Executive Order 13132, Federalism
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ES-4

 Executive Order 13211, Actions Concerning Regulations That Significantly Affect 

Energy Supply, Distribution, or Use

Exhibit ES-1

Options Considered For The Proposed Rule

Requirement Description Options

Preferred Alternative 1 Alternative 2

Release Prevention

Walkthrough inspections Monthly Monthly Quarterly

Overfill prevention equipment tests 3 year 1 year 3 year

Spill prevention equipment tests 1 year Require replacement 

every 3 years, no testing 1 year

Interstitial integrity tests 3 year 1 year Not required

Testing after repairs to spill and overfill 

prevention equipment, and interstices Required Required Required

Elimination of flow restrictors in vent lines 

for all new tanks and when overfill devices 

are replaced

Required Required Not required

Release Detection

Operability tests for release detection 

methods 1 year 1 year 3 year

Change leak rate probabilities from 95/5 to 

99/1 (Pd/Pfa) Not required Required Not required

Add SIR and CITLD to regulation with 

performance criteria Required Required Required

Response to interstitial monitoring alarms Required Required Required

Eliminate groundwater and vapor monitoring 

as release detection methods Eliminate in 5 years Eliminate immediately Not required

Remove deferral for emergency generator 

tanks Required Required Required

Other

Require notification of ownership change Required Required Required

Closure of lined tanks that cannot be repaired 

according to a code of practice Required Required Required

Requirements for determining compatibility Required Required Required

Remove deferrals for airport hydrant fuel 

distribution systems and UST systems with 

field-constructed tanks

Regulate under 

alternative release 

detection 

requirements 

Regulate under release 

detection requirements for 

conventional UST 

systems

Maintain deferrals

EPAct-related Provisions

Operator training Required Required Required

Secondary containment Required Required Required

Summary of Findings 

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

and qualitative impacts for this proposed rule. EPA obtained sufficient data to identify, by state, 

the number of units likely to be affected by each proposed change in the proposed rule. In our 

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

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

assumptions. Separately, the analysis monetizes a number of impacts of the proposed rule 

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

avoided product loss; avoided vapor intrusion damages; and a subset of human health benefits. 
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ES-5

This analysis quantifies, but does not value, groundwater impacts. Finally, due to data and 

resource limitations, EPA in this analysis was unable to quantify or value a subset of human 

health benefits and ecological impacts, but addressed these qualitatively.

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

the economic and distributional impacts of the proposed rule. The economic impact analysis 

includes the proposed rule’s effect on facility closures, employment, and energy output and cost. 

In the analysis of the proposed rule’s distributional impacts, we examined small business 

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

potential impacts on state financial assurance funds. Finally, EPA’s analysis considered the 

proposed rule’s impacts related to certain executive orders and statutes, including Unfunded 

Mandates Reform Act, tribal governments, and federalism. 

The main conclusions of this analysis are:

 Social costs – EPA estimated $210 million in annual social costs for the proposed 

rule. Costs range from approximately $130 million under Alternative 2 to $520 

million under Alternative 1.

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

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

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

ownership changes, and one-time notifications for previously deferred systems are 

approximately $9 million. These range from approximately $7 million under 

Alternative 2 to $19 million under Alternative 1.3

 Avoided costs – Avoided remediation costs form the majority of positive impacts 

from the proposed rule. EPA estimated the proposed rule will avoid total costs of 

$300 million per year to $740 million per year under the Preferred Option. This 

includes: $300 million to $700 million in avoided remediation costs from avoided 

releases and avoided groundwater contamination incidents; $0.4 million to $26

million in avoided vapor intrusion remediation costs; and approximately $2 

million to $7 million in avoided product loss. Total avoided costs range from

$310 million to $770 million under Alternative 1 and from $110 million to $590 

million under Alternative 2.

 Benefits – Due to data and resource constraints, EPA only quantified human 

health benefits from avoided benzene-related cancer and was unable to quantify

or monetize many of the proposed rule’s benefits. The benefits from avoided 

benzene-related cancer total less than $5,000 per year. In addition, EPA 

 

3

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

discounted, state and local governments would incur approximately $7 million in costs under the Preferred Option. 

This includes $0.9 million for states to apply for state program approval and to read the regulations, $0.6 million for 

states to process one-time notifications of EGTs, AHFDSs, and FCTs, and ownership changes that occur in the first 

year, and $5.6 million for state and local government owners and operators of UST systems to comply with 

requirements that come into effect in the first year (approximately 47% of which would be for state and local 

government owners and operators to read the proposed regulation). 
*** E.O. 12866 Review - Draft - Do Not Cite, Quote or Release During Review ***

ES-6

estimated the proposed rule could potentially protect 110 billion to 350 billion 

gallons of groundwater each year.4 Categories of nonmonetizable or 

nonquantifiable benefits that are qualitatively discussed in this analysis include: 

avoidance of nonbenzene health risks, mitigation of acute exposure events and 

large-scale releases (e.g., releases from airport hydrant fuel distribution systems 

and UST systems with field-constructed tanks5), and protection of ecological 

biota.

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

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

systems and releases over time, EPA estimated $200 million in annual social costs 

for the proposed rule. Annual social costs in the alternative baseline scenario 

range from $120 million under Alternative 2 to $510 million under Alternative 1. 

EPA also estimated total avoided costs of $180 million to $440 million under the 

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

from $64 million to $360 million under Alternative 2 to $180 million to $460 

million under Alternative 1. 

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

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

total costs under the Preferred Option. To establish how the proposed rule may

impact the market, EPA examined whether it imposes a cost greater than the 

average after-tax profit margin of 1.5 percent for motor fuel retailers.7 Using this 

benchmark, we estimate approximately 560 firms may exit the market if they

cannot pass costs through to customers. This number represents less than one 

percent of the total universe of facilities.8

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

decrease payments required of state financial assurance funds by $150 million per 

year or more under the Preferred Option. To the extent that these funds are 

maintained by taxes other than those assessed on UST operators, decreases in 

these payments effectively represent a reallocation of costs from public entities to 

the private entities responsible for releases. 

 

4

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

5

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

field-constructed tank at a fuel depot in Portsmouth, VA. Free product was found within 20 feet of a nearby creek in 

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

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

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

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

product found under the apron at closure.

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

8

In comparison, between 2005 and 2008, the number of gas station facilities decreased an average of 1.4 percent per 

year (or 2,400 stations per year).
*** E.O. 12866 Review - Draft - Do Not Cite, Quote or Release During Review ***

ES-7

Assessment of Social Costs 

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

provide a reasonable proxy to assess the proposed rule’s social costs for the following reasons:

 The regulatory requirements generally focus on additional testing and inspection 

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

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

affected by the proposed rule are distributed with relative geographic uniformity

for consumers and producers. 

 Given the relatively small facility costs of less than $900 per year for the average 

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

the proposed rule. According to the 2002 Economic Census, average revenues in 

the retail motor fuel sales sector were approximately $2.1 million; the 

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

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

consumer behavior will affect social costs. 

 The short- and long-run impacts of the proposed rule are not likely to differ 

significantly. Testing and inspection requirements may offer some opportunities 

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

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

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

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

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

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

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

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

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

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

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

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

configurations – for example, airport hydrant fuel distribution systems or UST systems with 

field-constructed tanks – while others are consistent across all system types. Exhibit ES-2

summarizes the findings of our analysis of social costs. 
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ES-8

Exhibit ES-2

Total Annual Social Costsd

Category

Preferred 

Option

($ millions)

Alternative 1

($ millions)

Alternative 2

($ millions)

Conventional UST systems a$180 $360 $120

Emergency generator tanks (EGTs) $2.2 $2.2 $2.1

Airport hydrant fuel distribution systems (AHFDSs) $18 $120 $0.0

UST systems with field-constructed tanks (FCTs) $4.6 $33 $0.0

Cost to owners and operators to read regulations $5.1 $5.1 $5.1

State government administrative costs b$0.2 $0.2 $0.2

Total Annual Social Costs c

$210 $520 $130

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

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

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

for state governments to read the regulations, apply for state program approval, process notifications of ownership changes, 

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

c

 Totals may not add up due to rounding.

d

 Cost estimates were derived using a seven percent discount rate.

Assessment of Benefits and Cost Savings

Avoided remediation costs provide the basis for a substantial portion of the beneficial 

impacts associated with the proposed rule. Avoided remediation costs of the proposed rule 

represent cost savings that accrue to owners, operators, and public entities charged with 

remediating releases at regulated facilities. EPA obtained remediation costs from a survey of 

state leaking UST programs and estimates of the distribution of releases by UST system area 

from internal research.9 EPA identified five UST technical experts who provided professional 

judgment regarding the proposed rule’s effects on reduction in release frequency (number of 

releases per year) and release severity (as measured by groundwater incidents averted). This 

body of knowledge allowed EPA to estimate total avoided costs, as well as avoided costs per 

requirement. EPA also estimated avoided costs associated with vapor intrusion and product loss,

though these avoided costs are not allocated across requirements.10 

In addition to avoided costs, the analysis monetized avoided benzene cancer risks from 

avoided contaminated groundwater and quantified volume of groundwater protected. These 

benefits assume that exposure risk is eliminated at the time of discovery and cleanup, and are 

therefore additive to avoided cleanup costs. Finally, the analysis provided a qualitative 

discussion of avoided acute events and exposure (including large-scale releases, such as those 

from airport hydrant fuel distribution systems and UST systems with field-constructed tanks), 

 

9

Office of Underground Storage Tanks, Evaluation of Releases from New and Upgraded Underground Storage 

Tank Systems – Peer Review Draft, U.S. EPA, August 2004.

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

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

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

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

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

data from Florida and other sources for typical release sizes and are mapped to the estimates of avoided releases. 
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ES-9

ecological benefits, and avoided nonbenzene human health risks. These findings are summarized 

in Exhibit ES-3 below.

Exhibit ES-3

Summary Of Annual Positive Impactse

Type Of Impact Preferred Option

(2008$ millions)

Alternative 1

(2008$ millions)

Alternative 2

(2008$ millions)

Monetized Benefits

Avoided cancer risksa,c $0.001 - $0.005 $0.002 - $0.005 $0.001 - $0.003

Monetized Avoided Costs

Releases and groundwater incidentsb$300 - $700 $300 - $740 $110 - $570

Vapor intrusion $0.4 - $26 $0.5 - $28 $0.2 - $19

Product loss $2.0 - $7.2 $2.6 - $7.6 $0.4 - $5.3

Totalc$300 - $740 $310 - $770 $110 - $590

Nonmonetized Impact

d

Groundwater protected 

(billion gallons) 110 - 350 120 - 370 41 – 250

Acute events and large-scale releases 

(e.g., AHFDS and FCT releases) Not estimated Not estimated Not estimated

Ecological benefits Not estimated Not estimated Not estimated

Nonbenzene human health risks Not estimated Not estimated Not estimated

a

 The pathway assessed to evaluate avoided cancer risk is benzene exposure through contaminated groundwater.

b

 Monetized avoided costs are substantially lower in Alternative 2 relative to the Preferred Option due to differing 

requirements between these options, particularly walkthrough inspections. Alternative 2, overall, is less stringent than the 

Preferred Option, and therefore prevents fewer releases because systems do not require the same frequency of inspection 

and repair. For additional information, see Chapter 4.

c

 Avoided cancer risks and avoided costs are separate and additive (i.e., these estimates do not overlap). Avoided cancer 

risks are the benefits associated with reducing cancer cases prior to discovery of the release. Avoided remediation costs 

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

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

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

d Due to data and resource constraints, EPA was unable to monetize some of the positive impacts of the proposed rule. 

Chapter 4 provides a qualitative discussion of these benefits.

e

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

Comparison of Social Costs and Positive Impacts 

Exhibit ES-4 summarizes the social costs and positive impacts of the proposed rule. The 

majority of measurable positive effects occur as avoided remediation costs. Monetized social 

benefits occur only in the form of avoided cancer cases from groundwater contamination and 

constitute only a very small part of overall effects. Nevertheless, as discussed in Chapter 4, 

avoided costs provide a reasonable measure of the positive effects of the proposed rule.
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ES-10

Exhibit ES-4

Comparison Of Annual

Social Costs, Cost Savings And Monetized Benefitsg

Preferred Option

(2008$ millions)

Alternative 1

(2008$ millions)

Alternative 2

(2008$ millions)

Annual Monetized Benefits

Avoided cancer risksa,e $0.001 - $0.005 $0.002 - $0.005 $0.001 - $0.003

Annual Avoided Costse

Releases and groundwater incidents $300 - $700 $300 - $740 $110 - $570

Vapor intrusion $0.4 - $26 $0.5 - $28 $0.2 - $19

Product loss $2.0 - $7.2 $2.6 - $7.6 $0.4 - $5.3

Annual Social Costs

Conventional UST systemsb $180 $360 $120 

Emergency generator tanks (EGTs)

$2 $2 $2 

Airport hydrant fuels distribution systems 

(AHFDSs)

c

$18 $120 N/A

UST systems with field-constructed tanks 

(FCTs)

c

$5 $33 N/A

Cost to owners and operators to read 

regulations

$5 $5 $5 

State government administrative costsd $0.2 $0.2 $0.2 

Total Annual Benefits and Avoided Costs $300 - $740 $310 - $770 $110 - $590

Total Annual Social Costs $210 $520 $130 

Net Cost (Savings) To Society

[Total Social Costs less

Total Benefits and Avoided Costs]

($530) - ($90) ($250) - $210 ($460) - $20

Nonmonetized Benefitsf

Groundwater protected (billion gallons) 110 - 350 120 - 370 41 - 250

Acute events and large-scale releases

(e.g., AHFDS and FCT releases)

Not estimated Not estimated Not estimated

Ecological benefits Not estimated Not estimated Not estimated

Nonbenzene human health risks Not estimated Not estimated Not estimated

a

 The pathway for avoided cancer risk is contaminated groundwater.

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

c

 We estimate there are 239 UST systems with FCTs and 162 AHFDSs that could be affected by the proposed regulation. For 

additional information regarding the assumptions and costs used in this analysis for these systems, see Appendix A.

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

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

to read the regulation, apply for state program approval, process notifications of ownership changes, and process one-time 

notifications of EGT, AHFDS, and FCT existence.

e Avoided cancer risks and avoided costs are separate and additive (i.e., these estimates do not overlap). Avoided cancer risks are 

the benefits associated with reducing cancer cases prior to discovery of the release. Avoided remediation costs from releases and 

groundwater incidents are the costs related to site remediation. Avoided vapor intrusion costs include additional avoided costs 

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

intrusion. Avoided product loss costs are also separate and additive.

f Due to data and resource constraints, EPA was unable to monetize some of the positive impacts of the proposed rule. Chapter 4 

provides a qualitative discussion of these benefits.

g

 Totals may not add up due to rounding. Cost estimates were derived using a seven percent discount rate.
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ES-11

Exhibit ES-5 summarizes the social costs and positive impacts of the proposed rule under 

an alternative baseline where universes of UST systems and releases are assumed to decrease at a 

declining rate over time. Social costs decline slightly under the alternative baseline relative to 

the primary analysis due to a small decrease in affected systems. Avoided costs decline by

approximately 40 percent, as the universe of releases contracts substantially under the alternative 

baseline. 

Exhibit ES-5 

Comparison Of Annual

Social Costs, Cost Savings And Monetized Benefits Using An Alternative Baseline

Preferred Option

(2008$ millions)

Alternative 1

(2008$ millions)

Alternative 2

(2008$ millions)

Total Annual Benefits and Avoided Costs $180 - $440 $180 - $460 $64 - $360

Total Annual Social Costs $200 $510 $120 

Net Cost (Savings) to Society

[Total Social Costs less

Total Benefits and Avoided Costs] ($240) - $20 $50 - $330 ($240) - $56

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

Economic Impacts 

EPA’s assessment of the economic impacts associated with this proposed rule focused on 

the retail motor fuels sector, which accounts for approximately 80 percent of UST owners or 

operators. In this analysis, EPA described supply and demand dynamics within the retail motor 

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

assessment found that average estimated facility-level costs of $890 may result in the market exit 

of approximately 560 facilities, if these facilities cannot pass any regulatory costs through to 

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

and an even smaller fraction of all facilities affected by the proposed rule. 

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

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

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

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

up to 6,100 facilities (roughly four percent of existing retail motor fuel facilities) may exit the 

market in this unlikely worst-case scenario. The limited magnitude of impacts even in the worst 

case scenario suggest that the proposed rule will not affect existing consolidation trends in the 

retail motor fuels industry, or retail motor fuel prices or consumption.

In addition, EPA’s analysis suggests that the proposed rule could result in a reallocation 

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

11 The prevention of releases 

under this rule would increase compliance costs to facility owners, but the avoided releases 

would in many cases reduce remediation demand for taxpayer-funded state funds. This is likely

to improve behavioral incentives, as the parties most likely to cause releases will also be 

 

11 For additional information regarding this issue, see Chapter 5.
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ES-12

responsible for preventing them. As discussed in Chapter 5, this reallocation could result in 

savings to state financial assurance funds in excess of $150 million per year. 

Other Regulatory and Distributional Issues

As part of our analysis, we also assessed the proposed rule’s potential impacts related to: 

 Energy impacts – The proposed rule will not have significant adverse effects on energy

supply, distribution, or use, including impacts on price and foreign supplies. It is, 

therefore, not a significant energy action under Executive Order 13211, Actions 

Concerning Regulations That Significantly Affect Energy Supply, Distribution, or Use

(May 18, 2001). 

 Regulatory flexibility – EPA’s analysis determined that approximately 1,350 small 

entities (roughly one percent of the universe of affected small entities) may experience 

economic impacts that exceed one percent of revenues. For various reasons, and 

especially due to different system configurations for smaller facilities, the actual number 

of affected entities is likely to be even fewer than the number estimated by the analysis. 

In comparison, this number is smaller than the recent industry consolidation rate of 

approximately 2,400 facilities per year in the retail motor fuels sector. The proposed rule 

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

businesses or small governments.

 Small government impacts – The proposed rule is not expected to have significant small 

government impacts. EPA’s assessment of costs to state and local governments indicated 

that no government-owned UST facilities will experience costs that exceed one percent of 

revenues. 

 Impacts on minority and low-income populations – Because the proposed rule would 

increase regulatory stringency and reduce the number and size of releases, the proposed 

rule is not expected to have any disproportionately high and adverse human health or

environmental effects on minority or low income populations, or on any community.

 Children’s health protection –While the risk assessment did not specifically measure 

exposure to children, adults are the more sensitive receptor for cancer effects of 

contaminated groundwater due to the longer potential exposure from showering

(inhalation of vapors) compared to children (ingestion of water while bathing), 

particularly those under five who are assumed to take more baths and fewer showers. 

Therefore, EPA has no reason to believe that the proposed rule would have a 

disproportionate environmental health risk effect on children, as defined in Executive 

Order 13045, Protection of Children From Environmental Health Risks and Safety Risks

(62 FR 19885, April 23, 1997). Moreover, because the proposed rule is expected to 

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

releases, EPA does not expect the proposed rule to have any adverse impact on children.
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ES-13

 Regulatory planning and review – Pursuant to the terms of Executive Order 12866 [58 

FR 51735 (October 4, 1993)], EPA determined the proposed rule is an economically

significant regulatory action because it may have an annual effect on the economy of 

$100 million or more, as defined in section 3(f)(1) of the order. Findings of the 

regulatory cost analysis in Chapter 3 indicate the rule, as proposed, is projected to result 

in aggregate annual social costs of approximately $210 million under the Preferred 

Option, $520 million under Alternative 1, and $130 million under Alternative 2.

 Unfunded mandates analysis – The proposed rule is subject to the requirements of 

sections 202 and 205 of the Unfunded Mandates Reform Act (UMRA) because it 

contains federal mandates that may result in the expenditure by state, local, and tribal 

governments or by the private sector of $100 million or more in any one year. Exhibit 

ES-6 provides references for EPA’s analyses responding to UMRA requirements under 

which this proposed rule is subject.

Exhibit ES-6

Location Of Analyses Responding To UMRA Requirements

Requirement Location In This Document

Identification of federal law provision under which the proposed rule is being 

promulgated Chapter 1

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

the private sector of the proposed rule Chapters 3 and 4

Assessment of the effect of the proposed rule on health, safety, and the 

natural environment

Chapter 4

Assessment of the extent to which such costs of the proposed rule may be 

paid with federal financial assistance

Chapter 3; no federal assistance is 

anticipated

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

carry out this mandate

Chapter 3; no federal resources 

are anticipated

Estimates of future compliance costs of the proposed rule Chapter 3

Estimates of disproportionate budgetary effects of the proposed rule on any 

type of government or private sector segment Chapter 5

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

 Federalism – Executive Order 13132, Federalism (64 FR 43255, August 10, 1999), 

defines policies that have federalism implications to include regulations with substantial 

direct effects on states, on the relationship between the national government and states, or 

on the distribution of power and responsibilities among the various levels of government. 

EPA typically considers a policy to have federalism implications if it results in aggregate

expenditures by state and/or local governments of $25 million or more in any one year.

As Exhibit ES-7 below indicates, EPA does not expect any of the proposed options to 

have significant federalism implications. 
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ES-14

Exhibit ES-7

Summary Of Annual Governmental Costs By Elementb

Element Preferred Option

($ millions)

Alternative 1

($ millions)

Alternative 2

($ millions)

Local compliance costsa$7.3 $15.0 $5.0 

State compliance costsa$1.8 $3.7 $1.3 

State government administrative costs $0.2 $0.2 $0.2 

Total Costs To State And Local Governments $9.3 $19.0 $6.5 

a

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

b

 Cost estimates were derived using a seven percent discount rate.

 Tribal governments analysis – Executive Order 13175, Consultation and Coordination 

With Indian Governments (65 FR 67249, November 9, 2000), requires EPA to develop a

process to ensure meaningful and timely input by tribal officials in the development of 

regulatory policies that have tribal implications. EPA consulted with tribal officials early

in the process of developing this proposed regulation to welcome meaningful and timely

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

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

addition to our early consultation with tribes, EPA also reached out again to tribes as we 

started the official rulemaking process and throughout the development of this proposed 

rule. EPA sent letters to leaders of over 500 tribes as well as to tribal regulatory staff to 

invite their participation in the development of the regulation. EPA heard from both 

tribal officials who work as regulators as well as representatives of owners and operators 

of UST systems in Indian country. The tribal regulators raised concerns about ensuring 

parity of environmental protection between states and Indian country. Today’s proposed 

changes to the UST regulation are needed to ensure parity between UST systems in states 

and in Indian country. This regulation will ensure installed equipment is working 

properly to protect the environment from potential releases. 

As part of this analysis, EPA concluded the proposed rule will have tribal implications to 

the extent that tribally-owned entities with UST systems on Indian country would be 

affected. However, it will neither impose substantial direct compliance costs on tribal 

governments, nor preempt tribal law. Total costs to owners and operators of triballyowned UST systems are approximately $0.7 million.

 Joint impacts of rules – Facilities in the UST system universe are affected by a number of 

existing regulations, including state regulations and Spill Prevention, Control, and 

Countermeasure (SPCC) rules. At the time of the 1988 UST regulation, completely

buried tanks greater than 42,000 gallons and located near navigable waters of the U.S. or 

adjoining shorelines were subject to both UST rules and SPCC rules. Since then, SPCC 

rules have been amended and the rule exempts completely buried storage tanks, as well 

as connected underground piping, underground ancillary equipment, and containment 

systems, when subject to the technical requirements of 40 CFR part 280. In today's 

proposal, EPA proposes to continue to defer the aboveground components associated 

with airport hydrant systems and USTs with field-constructed tanks. These aboveground 
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ES-15

components will be subject to SPCC requirements. EPA is proposing to regulate the 

underground components associated with airport hydrant systems and USTs with fieldconstructed tanks. Once the proposal becomes final, these underground components will 

no longer be subject to SPCC requirements. In addition, previously deferred wastewater 

treatment tank systems and UST systems that store fuel solely for use by emergency 

power generators will now be regulated under the UST regulation and will no longer be 

subject to SPCC. EPA does not believe the proposed rule creates a serious inconsistency

or interferes with any other actions planned or undertaken by other agencies. 
*** E.O. 12866 Review - Draft - Do Not Cite, Quote or Release During Review ***

1-1

Chapter 1. Introduction

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

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

the proposed targeted changes to the Underground Storage Tank (UST) regulations. The 

proposed rule serves the purpose of strengthening the existing underground storage tank 

regulations by increasing the emphasis on proper operation and maintenance of UST systems and 

improved maintenance of release detection equipment. The proposed changes also acknowledge 

improvements in technology over the last twenty years, including the ability to perform release

detection for many tank systems that were previously deferred.

1.1 Background 

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

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

(SWDA). SWDA required EPA to protect the environment and human health from UST releases 

by developing a comprehensive regulatory program for UST systems storing petroleum or 

certain hazardous substances. In 1986, Congress amended Subtitle I of SWDA and created the 

Leaking Underground Storage Tank Trust Fund (LUST Trust Fund) to oversee and pay for 

cleanups at sites where the owner or operator is unknown, unwilling to pay, or unable to pay.

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

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

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

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

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

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

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

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

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

owners and operators were required to have financial responsibility (phased in through 1998) to 

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

have been made to these requirements since 1988.

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

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

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

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

regulations operate in lieu of the federal regulation.

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

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

requirements. EPA developed grant guidelines for states regarding operator training, 

inspections, delivery prohibition, secondary containment, financial responsibility for 
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1-2

manufacturers and installers, public record and state compliance reports on government UST

systems. 

1.2 Need for Regulatory Action

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

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

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

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

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

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

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

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

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

Strategy (August 2006) in which both EPA and tribes recognized it is important to ensure parity

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

country.

1

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

EPA has issued many guidance documents and used various implementation approaches and 

techniques over the last twenty years, we have not made significant changes to the original 1988 

regulation. Indeed, most states have passed requirements that go far beyond the original federal 

regulation.

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

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

associated with deliveries have emerged as more common problems.2 In addition, releases at the 

dispenser have emerged as one of the leading sources of releases. The lack of proper operation 

and maintenance of UST systems is a main cause of release from these areas. Data also indicate 

that release detection only detects about one quarter of all releases.3 While some of those 

releases occur in areas not required to have release detection, other releases that should be 

detected are not because of problems with the operation and maintenance of the release detection 

equipment.

 

1

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

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

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

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

Storage Tank Facilities in Florida,” draft, March 2005.

3 3

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

required (and therefore is not designed to detect a release). Of the 50 percent that should be detected, 25 percent still 

go undetected partly because of issues with operation and maintenance of the release detection equipment. (Office 

of Underground Storage Tanks, U.S. EPA, “Petroleum Releases at Underground Storage Tank Facilities in Florida,” 

U.S. EPA, draft, March 2005, p. 26..)
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1-3

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

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

major progress in reducing the number of new releases, but over 7,000 releases are still 

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

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

not bear the full costs of their actions.4Petroleum releases thus represent a negative externality

caused by UST system operators, as the individuals and firms that cause releases do not bear 

their full costs. This represents a failure of the market to fully internalize the cost to society of 

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

technical standards and inspection and testing requirements represents the most appropriate 

method for reducing the number of future releases and mitigating the impact of existing negative 

externalities.

EPA wanted to make sure the rule development process was open and transparent and that all 

stakeholders had an opportunity to share their ideas as well as their concerns. From the 

beginning of this process, EPA recognized the concerns about costs on owners and operators and 

was committed to limiting the requirements for retrofits. We reached out to all stakeholders, 

including state and tribal regulators, federal facilities, members of the petroleum industry

including representatives of owners and operators as well as equipment manufacturers, small 

businesses, local governments, and environmental and community groups. Over a two-year 

period, we held conference calls, solicited comments and gave stakeholders multiple 

opportunities to share their ideas as well as kept them informed of where we were in the process. 

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

the UST regulations. EPA shared all of these ideas with the stakeholders and gave them an 

opportunity to comment on each idea that was submitted to us. We then revised and added items 

to the list as necessary based on data, analysis and consideration of costs and benefits. 

Ultimately, EPA identified the items in this proposed rule as the needed regulatory changes at 

this time.

1.3 Summary of the Proposed Rule

EPA is proposing to revise the UST regulations in order to: establish federal requirements 

that are similar to certain key provisions of the Energy Policy Act; ensure owners and operators 

perform proper operation and maintenance; address deferrals; update the regulations to current 

technology and practices; and make technical and editorial corrections. Specifically, EPA is 

proposing the following set of revisions (hereafter referred to as the Preferred Option):

 

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

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

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

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

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

externality will not be rectified.
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1-4

 Establish federal requirements for secondary containment and operator training 

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

money

 Add operation and maintenance requirements 

o Walkthrough inspections 

o Spill prevention equipment tests 

o Overfill prevention equipment tests

o Interstitial integrity tests 

o Operability tests for release detection methods 

 Address existing 40 CFR 280 deferrals 

o Require release detection for emergency generator UST systems 

o Remove deferrals and regulate airport hydrant fuel distribution systems 

(AHFDSs) and UST systems with field-constructed tanks (FCTs) with 

alternate release detection requirements 

o Remove deferrals for wastewater treatment tanks 

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

program implementation 

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

interstices 

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

all new tanks and when overfill devices are replaced 

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

of practice 

o Address responses to interstitial monitoring alarms 

o Notification requirement of ownership change

o Eliminate groundwater and vapor monitoring as release detection methods 

o Establish requirements for determining compatibility

 Make general updates to the regulation 

o Reference newer technologies, including explicitly adding statistical 

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

(CITLD) as release detection methods 

o Update codes of practice listed in the regulation 

o Remove old upgrade and implementation deadlines 

o Make editorial and technical corrections 

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

revisions 
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1-5

1.4 Alternative Regulatory Options

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

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

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

two alternatives.

Under each of these alternatives, EPA evaluated variations of a subset of the proposed 

changes, while some of the proposed regulatory requirements remained in effect across all 

options. The differences between the three regulatory options considered in this regulatory

impact analysis are described in Exhibit 1-1.

Exhibit 1-1

Options Considered For The Proposed Rule

Requirement Description

Options

Preferred Alternative 1 Alternative 2

Release Prevention

Walkthrough inspections Monthly Monthly Quarterly

Overfill prevention equipment tests 3 year 1 year 3 year

Spill prevention equipment tests 1 year Require replacement 

every 3 years, no testing 1 year

Interstitial integrity tests 3 year 1 year Not required

Testing after repairs to spill and overfill 

prevention equipment, and interstices Required Required Required

Eliminate flow restrictors in vent lines for all 

new tanks and when overfill devices are 

replaced

Required Required Not required

Release Detection

Operability tests for release detection 

methods 1 year 1 year 3 year

Change leak rate probabilities from 95/5 to 

99/1 (Pd/Pfa) Not required Required Not required

Add SIR/CITLD to regulations with 

performance criteria Required Required Required

Response to interstitial monitoring alarms Required Required Required

Eliminate groundwater and vapor monitoring 

as release detection methods Eliminate in 5 years Eliminate immediately Not required

Remove deferral for emergency generator 

tanks Required Required Required

Other

Require notification of ownership change Required Required Required

Closure of lined tanks that cannot be repaired 

according to a code of practice Required Required Required

Requirements for determining compatibility Required Required Required

Remove deferrals for airport hydrant fuel 

distribution systems and UST systems with 

field-constructed tanks

Regulate under 

alternative release 

detection 

requirements 

Regulate under release 

detection requirements for 

conventional UST 

systems

Maintain deferrals

EPAct-related Provisions

Operator training Required Required Required

Secondary containment Required Required Required
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1-6

Note that each option considered by EPA contains a set of new requirements that does 

not vary across options. As explained in the introduction, operator training and secondary

containment are being proposed in order to ensure parity in program implementation among 

states and in Indian country. Therefore, these requirements are necessary across all options. 

Based on input EPA received from stakeholders, EPA believes the other proposed requirements 

in this set represent the minimum necessary changes for its proposed rule. Specifically, these 

requirements are:

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

spaces

 Adding SIR/CITLD to regulations with performance criteria

 Reporting and testing for interstitial alarms

 Removing the deferral for release detection for emergency generator tanks

 Notification of ownership change

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

 Requirements for determining compatibility, and

 Requiring operator training and secondary containment

Many of the requirements proposed in this rule will not immediately impose new costs 

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

do not require owners or operators to perform those tests at the time the rule comes into effect; 

depending on the requirement, they may have up to three years to satisfy the new requirements.

7

EPA’s analysis accounts for this delay in its estimate of costs by discounting the costs associated 

with each requirement as shown in Exhibit 1-2. EPA assumes that the monetized positive 

impacts associated with these requirements accrue at the end of the year in which costs occur to 

incorporate an assumption that some beneficial impacts may lag requirements.8

 

7

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

behind the delayed or phase-in implementation periods.

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

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

descriptions of the methods used to assess costs and beneficial impacts.
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1-7

Exhibit 1-2

Years Until Proposed Requirements Become Effective

Requirement

Number of years until 

effective

Release Prevention

Overfill prevention equipment test93

Spill prevention equipment test 1

Interstitial integrity test83

Release Detection

Operability tests for release detection methods 1

Eliminate groundwater and vapor monitoring as 

release detection methods (for Preferred Option)

5

Remove deferral for emergency generator tanks 1

Other

Remove deferral for airport hydrant fuel distribution 

systems (Subparts B, C, and D)10 3

Remove deferral for UST systems with fieldconstructed tanks (Subparts B, C, and D)9

3

EPAct-related Provision

Operator training 3

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

the rationale behind the delayed or phase-in implementation periods.

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

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

interaction of UST regulations with existing regulations. The only cost associated with these 

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

 Removing deferrals for wastewater treatment tanks11

 

9 As part of this analysis, we assume that overfill prevention equipment tests and interstitial integrity tests 

will begin after a three-year delay. Phasing in these costs over a three-year period would increase total costs by 

approximately $5.1 million compared to a three-year delay; this does not affect the total cost estimate presented in 

the RIA for the proposed rule.

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

these systems to comply with Subparts B, C, D, E, G, and H of 40 CFR Part 280. The proposed regulation requires 

these systems to comply with Subparts B, C, and D after 3 years, while compliance with Subparts E, G, and H 

would be required immediately.

11 While this represents a new requirement, based on conversations with the Georgia Environmental 

Protection Division, the National Association of Clean Water Agencies (NACWA), Highland Tank, and the 

Automobile Recyclers Association, EPA believes that all active wastewater treatment tanks, including tanks at most 

publicly owned treatment works and many private treatment facilities, are currently regulated by either section 402 

or section 307(b) of the Clean Water Act and therefore excluded from 40 CFR 280. As a result, EPA believes that 

there are no wastewater treatment tank systems currently deferred. Therefore, we assume that the removal of the 

deferral will have no impact on the regulated universe.
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1-8

 Updating the regulations to reference newer technologies

 Updating the codes of practice listed in the regulations

 Updating the regulations to remove old upgrade and implementation deadlines

 Updating the regulations for editorial and technical corrections, and

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

consistent with the above revisions

1.5 Scope of Analysis

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

quantifiable and qualitative impacts for this proposed rule. EPA obtained sufficient data to 

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

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

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

assumptions. Separately, the analysis monetizes a number of impacts of the rule, including the 

avoided costs generated by avoided releases, reduction in severity of releases, avoided product 

loss, avoided vapor intrusion damages, and a subset of human health benefits. This analysis 

quantifies, but does not value, groundwater impacts. Finally, this analysis is unable to quantify or 

value a subset of human health benefits and ecological impacts, but addresses these qualitatively.

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

examines the economic and distributional impacts of the rule. The economic impact analysis 

includes the proposed rule’s effect on facility closures, employment, and energy output and cost. 

The analysis of the distributional impacts of the rule examines the effect of a reduction in 

releases on state financial assurance funds, impacts on childrens’ health, small business impacts, 

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

the rule related to certain executive orders and statutes, including the Unfunded Mandates 

Reform Act, impacts on Tribal Governments, and Federalism impacts. 

1.6 Report Organization

To support the development of the proposed rule, EPA designed and conducted this 

analysis of the rule’s costs, benefits, and economic impacts consistent with the requirements of 

Executive Order 12866, and OMB Circular A-4.12 Data, methods, and results of this analysis are 

presented in the following chapters:

 

12 Executive Order 12866, Regulatory Planning and Review, October 4, 1993; Office of Management and 

Budget, Circular A-4, September 17, 2003.
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1-9

 Chapter 2: Universe of UST Systems Affected by the Proposed Rule. This 

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

rule. 

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

employed by EPA to assess the cost impacts of the proposed rule. 

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

estimates of the benefits and avoided costs of the proposed rule.

 Chapter 5: Distributional Impacts and Considerations. This chapter 

summarizes the assessment of distributional impacts of the proposed rule, 

including economic and energy impacts, effects on small businesses and 

governments, impacts on low-income and minority populations, and children's 

health effects.

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

summarizes analyses required by certain statutes or executive orders, including 

regulatory planning and review, impacts created by unfunded mandates, 

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

proposed rule in the context of existing rules.

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

summarizes and compares the costs, cost savings, and benefits of the proposed 

rule.

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

number of appendices.
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2-1

Chapter 2. Universe of UST Systems Affected by the Proposed Rule

This regulatory impact analysis addresses the effects of the proposed regulatory changes 

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

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

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

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

using underground distribution systems.

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

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

regulations already require compliance with the proposed regulations.

2.1 Types of Entities Affected by the Proposed Rule

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

are characterized as follows:

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

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

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

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

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

limited number store other hazardous substances, but the regulatory impact 

analysis does not consider these UST systems separately.

1

 These UST systems 

are subject to all requirements under 40 CFR Part 280.

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

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

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

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

other requirements under 40 CFR Part 280. The proposed regulation does not 

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

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

2

 

 

1 Because tanks storing hazardous substances are also currently subject to the 1988 UST regulations under 

40 CFR Part 280 this analysis assumes that incremental costs and benefits associated with the proposed rule will be 

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

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

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

2

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

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

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

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

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

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

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

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

Countermeasure regulations).

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

distribution systems are systems that include one or more tanks (either aboveground or underground), underground piping, and underground ancillary

equipment used to fuel aircraft. These systems do not have a dispenser at the end 

of the piping run, but instead have a pressurized hydrant (fill stand). Large 

commercial and military airports employ these systems, but most commercial 

systems have only above-ground storage tanks and are thus not affected by the 

proposed regulation.3These systems are currently deferred from all regulation 

under 40 CFR Part 280, except for Subparts A and F, but are typically subject to 

regulation under 40 CFR Part 112.

2.2 Configuration of Average Conventional UST System

Conventional UST systems reflect a relatively consistent configuration of standard 

equipment. While facility size and complexity vary significantly, this analysis assumes that a 

typical (average) conventional UST system is configured as follows (Exhibit 2-1):

4

Exhibit 2-1

Assumed Average Configuration For A Conventional UST System

System Component Configuration

Pipes per tank 1

Feet per pipe 100

Fill pipes (per tank) 1

Spill prevention equipment (per fill pipe) 1

Under-Dispenser Containment (UDC) (per tank) 2

Turbine sumps (per tank) 1

 

3

Industrial Economics, Inc., “Preliminary Assessment and Scoping of Data Related to Potential Revisions 

to the UST Regulations; Tasks 2-4, Work Assignment 1-25,” November 20, 2008.

4 Assumptions based on data collected from pipe installation companies, state data, and EPA professional 

judgment. See Industrial Economics, Inc., “Methodology for Secondary Containment for Piping,” Work Assignment 

1-19, Task 5, October 3, 2008 and E

2

, Incorporated, memoranda and analyses submitted under Contract EP-W-05-

018, “U.S. Environmental Protection Agency. Underground Storage Tanks/Leaking Underground Storage Tanks 

Analytical and Technical Support.” Where gaps existed in the analyses, EPA used the best professional judgment of 

its UST system technical experts. All supporting materials not included in the appendices can be found in the 

docket for the proposed rule.
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2-3

These assumptions best characterize motor fuel retailers, which represent approximately

80 percent of the 611,449 conventional UST systems in operation in 2009.

5

EGT systems and 

other conventional UST systems used to store fuel or hazardous substances are likely to have 

systems with similar components and less complex dispenser systems. The configurations of 

FCTs and AHFDSs are considered separately, and are described in detail in Appendix A. 

Exhibit 2-2 provides an illustration of an UST system at a retail motor fuel establishment. Note 

that in this exhibit, the “dispenser sump” is a specific form of under-dispenser containment, and 

the “spill bucket” is an example of spill prevention equipment.

Exhibit 2-2

Configuration of Retail Motor Fuel UST System

 

5 The remaining 20 percent of conventional UST systems consist of EGTs and tanks used for storing and 

dispensing fuel in commercial settings, hospitals, manufacturing, transportation, communications and utilities, and 

agriculture. See Exhibit 2-3 for details.
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2-4

2.3 UST Universe Size and Distribution Across Sectors

The September 30, 2009 Semi-Annual Report of UST Performance Measures reports a 

universe of 611,449 active petroleum tanks (UST systems) in the United States and its 

territories.6,7This total includes conventional UST systems and emergency generator tank

systems. Estimates based on state data suggest that approximately 3.0 percent, or 18,343 of the 

611,449 active UST systems, are emergency generator tanks.8

In addition to emergency generator and conventional UST systems, the proposed rule 

addresses UST systems with field-constructed tanks and airport hydrant fuel distribution 

systems. While these two types of systems are deferred under current EPA regulations, a subset 

may be regulated by individual states and included in the total estimate of tanks provided by 

those states. For the purpose of this analysis, however, these two universes are considered to be 

separate from the 611,449 tanks identified in the 2009 EPA report. The total universe of UST 

systems with field-constructed tanks and airport hydrant fuel distribution systems is small, 

including approximately 239 UST systems with field-constructed tanks, and 162 airport hydrant 

fuel distribution systems (each hydrant system is supported by an average of roughly eight linked 

tanks).9

Most UST systems in the United States are located at motor fuel retail establishments 

(i.e., gas stations), and virtually all retail motor fuel establishments use UST systems. 

Approximately 162,000 (161,768) retail fueling sites operated in the United States in 2008.10 Of

these, approximately 115,000 included convenience stores.11 

 

6 U.S. Environmental Protection Agency, Office of Underground Storage Tanks, Semi-Annual Report of 

UST Performance Measures End of Fiscal Year 2009 – As Of September 30, 2009, 

http://www.epa.gov/OUST/cat/ca_09_34.pdf. State and territory underground storage tank programs report to EPA 

periodically throughout the year with data on their UST performance. EPA compiles the data for all states, 

territories, and Indian country and makes the data publicly available at 

http://www.epa.gov/OUST/cat/camarchv.htm. 

7

FY2010 data indicate that the universe of tanks has contracted to 597,333 UST systems. To consider the 

impacts of declining universe sizes on the results of this analysis, we construct and evaluate an alternative baseline 

for social costs and avoided costs in Chapters 3.4.1 and 4.4.1, respectively.

8

See Industrial Economics, Inc. “Detailed Assessment of UST Universe by Tank Use and Industry Sector,” 

Work Assignment 1-25, Task 6, January 23, 2009. The number of EGTs is assumed to be approximately 3.0 percent 

of all active UST systems based on the weighted average from four state databases.

9

See Industrial Economics, Inc., “Preliminary Assessment and Scoping of Data Related to Potential 

Revisions to the UST Regulations; Tasks 2-4, Work Assignment 1-25,” November 20, 2008. There are 201 airport 

hydrant fuel distribution systems owned by the Department of Defense and 40 airport hydrant fuel distribution

systems located at commercial airports. Of these, 162 are not fueled by above-ground storage tanks (two commercial 

airport facilities have UST systems, along with 160 of the 201 Department of Defense systems).

10 Based on NPN MarketFacts 2008, cited in National Petroleum News, “MarketFacts 2008 Overview,” 

July/August 2008.

11 National Association of Convenience Stores (NACS), “U.S. Petroleum Industry: Statistics, Definitions,” 

http://www.nacsonline.com/NACS/Resources/campaigns/GasPrices_2009/Pages/StatisticsDefinitions.aspx.
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2-5

An analysis of state data by EPA concludes that the average retail motor fuel establishment has 

2.97 tanks (UST systems).12 Assuming approximately 2.97 UST systems per facility and 161,768 

facilities, 481,108 UST systems, or 79 percent of all active UST systems, are associated with 

retail motor fuel establishments.

In addition to traditional motor fuel retailers, big-box retailers, or hypermarkets, represent 

a growing segment of the retail motor fuel seller market. This category (NAICS code 452910) 

includes stores operated by Wal-Mart, Costco, and other large companies. Collectively, these 

firms operate approximately 4,500 filling stations; each station is likely to have at least three 

UST systems.

13

Other industry sectors that report use of UST systems include agriculture (crop 

production and animal production), commercial (wholesale trade, retail trade, accommodation, 

and food services), communications and utilities (wired telecommunications carriers and electric 

power generation, transmission, and distribution), hospitals, manufacturing, transportation, local 

and state government operations, and federal facilities run by the U.S. Departments of Defense 

and Energy. These sectors comprise approximately 130,000 UST systems, including those in the 

government sector (Exhibit 2-3). In many cases, firms in these sectors use UST systems for 

fueling fleets of vehicles such as school buses, delivery trucks, or rental cars. In other cases, 

UST systems store fuel for operations or emergency use, used oil, or hazardous substances.

Facilities in sectors other than retail motor fuel have, on average, between 1.5 and 2.3 

UST systems at the facilities that use UST systems. The actual number of UST systems at a 

specific facility, however, is likely to vary significantly depending on facility size and focus.

14

Results of an analysis of public UST records of 45 states performed for EPA’s Office of 

Underground Storage Tanks suggest that the average number of UST systems per facility (across 

all sectors that use conventional UST systems or EGTs), is approximately 2.74.15

 

12 A 2006 analysis of 13 state UST databases performed for EPA estimated that the average retail motor 

fuel establishment (i.e., facility) has 3.13 tanks. Further adjustments to reconcile various estimates of UST use by 

industry total universe decrease the number of tanks per UST system operating in retail motor fuel settings to 2.97 

tanks. See Industrial Economics, Inc., “Small Entities Screening Analysis of UST Universe by Industry Sector,” WA 

3-25, Task 4, February 4, 2010.

13 National Association of Convenience Stores (NACS), “U.S. Petroleum Industry: Statistics, Definitions,” 

http://www.nacsonline.com/NACS/Resources/campaigns/GasPrices_2009/Pages/StatisticsDefinitions.aspx.

14 “Summary of Key Data from State Public Record Postings,” E2

, Incorporated, Task Order No. 1010 –

Subtask A1-06C Technical Directive No. 36. All supporting materials not included in the appendices can be found 

in the docket for the proposed rule.

15 “Summary of Key Data from State Public Record Postings,” E2

, Incorporated, Task Order No. 1010 –

Subtask A1-06C Technical Directive No. 36, Table 1.
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2-6

Exhibit 2-3

Summary Of Universe Of UST Systems By Sector

Industry Sector NAICS

2006 a2009 b

Number of 

Facilities 

with UST 

Systems

Number 

of UST 

Systems

Number of 

Facilities 

with UST 

Systems

Number 

of UST 

Systems

Conventional UST Systems and EGTs

Retail Motor Fuel Sales 447 168,987 526,008 161,768 481,108

Commercial 

(wholesale trade, retail trade, accommodation, and food 

services) 

42, 44-45, 72 

(excluding 

447) 22,730 52,271 21,652 49,793

Institutional (hospitals only) 622 2,330 3,812 2,220 3,631

Manufacturing 31-33 9,261 15,259 8,822 14,536

Transportation

(air, water, truck, transit, pipeline, and airport operations)

481, 483-486, 

48811 8,559 15,140 8,153 14,422

Communications and Utilities

(wired telecommunications carriers; and electric power 

generation, transmission, and distribution) 5171, 2211 6,972 10,223 6,641 9,738

Agriculture (crop and animal production) 111, 112 889 1,610 847 1,534

Local governments c Government 

jurisdiction N/E N/E N/E 24,458

State governments c Government 

jurisdiction N/E N/E N/E 6,114

Federal government c Government 

jurisdiction N/E N/E N/E 6,114

Total: Conventional UST systems and EGTs 219,728d624,323 210,103d611,449

UST systems with Field Constructed Tanks and Airport Hydrant Fuel Distribution Systems

FCTs: Department of Defense

Government 

jurisdiction 239 239

AHFDSs: Department of Defense 

Government 

jurisdiction 162 1,296e

Total: FCTs and AHFDSs 401 1,535

a

Sources: December 18, 2006 review of state databases, “Draft Industry and Facility Profiles,” E2, Incorporated, Task Order No.

1010 – General Technical and Programmatic Support in Implementing the Energy Policy Act of 2005, Amendment 1, TDD #11.

Estimate of 168,987 retail motor fuel facilities with UST systems from “2005 U.S. motor fuel station count: 168,987,” National 

Petroleum News, May 19, 2005 (annual survey of states to collect data on number of stations).

b Analysis based on 2006 column (see note a above), adjusted to reflect 2009 universe of 611,449 UST systems. All sector 

adjustments proportional except retail motor fuel sales, which reflects the 2008 estimate of 161,768 facilities with UST systems

from "MarketFacts 2008 Overview," National Petroleum News, August 2008, used as a proxy for the number of such facilities in 

2009. (See also Industrial Economics, Inc., “Preliminary Assessment and Scoping of Data Related to Potential Revisions to the 

UST Regulations; Tasks 2-4, Work Assignment 1-25,” November 20, 2008.)

c

See United States Environmental Protection Agency, “Economic Impact Analysis of Additional Mechanisms for Local 

Government Entities to Demonstrate Financial Responsibility for Underground Storage Tanks,” December 1992, Exhibit 3-1. 

Estimates of local government UST systems adjusted using the 1987 Census of Governments. Consistent with this analysis, the 

number of government UST systems is assumed to be two percent of all 2009 UST systems owned by state and federal 

governments and four percent of all 2009 UST systems owned by local governments.

d The totals shown are the sum of the number of facilities of the rows above. These estimates are used only to establish distribution 

of facilities across sectors based on available data.

e This number assumes that there are eight tanks per AHFDS. For more detail on assumptions for AHFDSs, see Appendix A.
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2.4 Universe of Facilities and Systems Potentially Affected by Proposed Rule

EPA expects that all facilities or UST systems in the universe of conventional UST

systems will be required to comply with one or more regulatory changes in the proposed rule, but 

the number of facilities and systems affected by each specific regulatory change will vary

depending on the extent of current (baseline) state regulations and the type of equipment 

currently in use. 

To estimate the number of systems that will be required to comply with each regulatory

change, EPA reviewed publicly available data about state regulations, combined with data from a 

limited sample of states and equipment providers about the use of different technologies for 

release prevention and detection.16

Exhibit 2-4 identifies the total number of UST systems that could potentially be affected 

by each regulatory change in the proposed regulations, based on the baseline technology

currently in place in the universe of systems. Exhibit 2-4 identifies the number of UST systems 

or facilities with relevant technologies, the type of system (i.e., conventional UST and EGT 

systems, facilities with conventional UST systems or EGTs, AHFDSs, or FCTs), the proportion 

of the relevant universe of UST systems with the technology, and a summary of the assumptions 

that define the number of affected units. Note that proposed changes for AHFDSs, EGTs, and 

FCTs affect only those universes of facilities, and Energy Policy Act-related provisions affect 

only facilities and UST systems in Indian country.

17

 See Appendix B for detailed descriptions of 

the values and sources used in each calculation. These estimates do not reflect baseline state 

regulations (e.g., whether a state already requires interstitial integrity testing). As discussed later 

in this chapter, some baseline state requirements satisfy requirements of the proposed rule.

 

16 E2

, Incorporated, memoranda and analyses submitted under Contract EP-W-05-018, “U.S. Environmental 

Protection Agency. Underground Storage Tanks/Leaking Underground Storage Tanks Analytical and Technical 

Support.” Where gaps existed in the analyses, EPA used the best professional judgment of its UST system technical 

experts. All supporting materials not included in the appendices can be found in the docket for the proposed rule.

17 EPA assumes that all states have adopted Energy Policy Act-related provisions in the baseline, consistent 

with existing guidance.
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Exhibit 2-4

Potential Number And Type Of Units Affected By Each Regulation

Regulatory Change Universe

Proportion 

of Total 

Universe 

Affected

Annually

Number of 

Potentially 

Affected 

Systems

(Annual) a Assumptions

Release Prevention

Walkthrough 

inspections

Facilities with 

Conventional UST

systems and EGTs 100.0%

223,157 

facilities

All facilities require periodic walkthrough 

inspections.

Overfill prevention 

equipment tests

Conventional UST

systems and EGTs 100.0%

611,449 

systems

Percentage of UST systems with overfill prevention 

equipment.

Spill prevention 

equipment tests

Conventional UST

systems and EGTs 90.0%

550,304 

systems

One-to-one spill prevention equipment to tank ratio, 

10 percent have self-monitoring mechanism and do 

not need monitoring.

Interstitial integrity 

tests

Conventional UST

systems and EGTs 17.5%

106,747

systems

Tanks and pipes that use interstitial monitoring and 

do not use continuous sensors, pressure, vacuum, or 

liquid-filled leak detection monitoring mechanisms. 

Includes five percent of tanks and 90 percent of 

piping that use interstitial monitoring.

Spill prevention 

equipment test after 

repair

Conventional UST

systems and EGTs 6.3%

38,216 

systems

Spill prevention equipment requires fix once every 

four years; repairs are used as the fix 25 percent of 

the time.

Overfill prevention 

equipment test after 

repair

Conventional UST

systems and EGTs 5.0%

30,572 

systems

Overfill prevention equipment requires fix once 

every five years; repairs are used as the fix 25 

percent of the time.

Interstitial integrity 

test after repair

Conventional UST

systems and EGTs 3.3%

20,443 

systems

Tanks and pipes that use interstitial monitoring and 

do not use continuous sensors, pressure, vacuum, or 

liquid-filled leak detection monitoring mechanisms. 

Includes five percent of tanks and 90 percent of 

piping that use interstitial monitoring. Assumes 25 

percent of pipes and five percent of tanks require 

repair every year.

Eliminate flow 

restrictors in vent 

lines for all new tanks 

and when overfill 

devices are replaced 

Conventional UST

systems and EGTs 6.5%

39,744 

systemsb

13% of new UST systems would have installed flow 

restrictors in vent lines. 

Release Detection

Operability tests –

ATG

Conventional UST

systems and EGTs 33.7%

205,814 

systems UST systems that use automatic tank gauges.

Operability tests –

interstitial monitoring

Conventional UST

systems and EGTs 18.8%

114,781 

systems

UST systems that use interstitial monitoring

(excluding five percent that conduct manual testing 

of the interstice).

Operability tests – line 

leak detection

Conventional UST

systems and EGTs 27.5%

168,440 

systems

Pressurized piping systems that use electronic line 

leak detectors.

Operability tests –

mechanical LLDs

Conventional UST

systems and EGTs 54.9%

335,628 

systems

Proportion of pressurized piping that already 

performs a LLD test, but which will require 

additional capital expenditures to comply with new 

regulations.

Operability tests –

groundwater and 

vapor monitoring

Conventional UST

systems and EGTs 5.17%

31,612 

systems

UST systems that use vapor monitoring and/or 

groundwater monitoring as their sole release 

detection method(s). Universe affected phases out in 

equal parts over initial five years of proposed rule.
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Exhibit 2-4

Potential Number And Type Of Units Affected By Each Regulation

Regulatory Change Universe

Proportion 

of Total 

Universe 

Affected

Annually

Number of 

Potentially 

Affected 

Systems

(Annual) a Assumptions

Eliminate 

groundwater and 

vapor monitoring as 

release detection 

methods

Conventional UST

systems and EGTs 5.17%

31,612 

Systems

UST systems that use vapor monitoring and/or 

groundwater monitoring as their sole release 

detection method(s). Universe affected phases in 

over five years.

Add SIR/CITLD to 

regulations with 

performance criteria

Conventional UST

systems and EGTs 0.5%

2,972 

systems

13 percent of UST systems use SIR; 15 percent of 

these use qualitative methods. Of these, 25 percent 

are assumed to incur costs to comply.

Change release 

detection leak rate 

probabilities – ATG

Conventional UST

systems and EGTs 33.7%

205,814 

systems UST systems that use automatic tank gauges.

Change release 

detection leak rate 

probabilities – LLD

Conventional UST

systems and EGTs 27.5%

168,440 

systems

Pressurized piping systems that use electronic line 

leak detectors.

Change release 

detection leak rate 

probabilities – SIR

Conventional UST

systems and EGTs 1.9%

11,887 

systems UST systems that use qualitative SIR.

Change release 

detection leak rate 

probabilities – CITLD

Conventional UST

systems and EGTs 25.2%

154,360 

systems

33.7 percent of systems use ATG; of these, 75 

percent employ CITLD.

Response to 

interstitial monitoring 

alarms 

Conventional UST

systems and EGTs 2.4%

14,814 

systems

Weighted average annual percentage of UST 

systems and piping that experience an interstitial 

monitoring alarm.

Remove deferral for 

emergency generator 

tanks EGTs 3.0%

18,343 

systems

UST systems assumed to be emergency generator 

tanks.

Other

Remove deferral for

airport hydrant fuel 

distribution systems AHFDSs 100.0%

162 

facilities All airport hydrant fuel distribution systems.

Remove deferral for

UST systems with 

field-constructed 

tanks FCTs 100.0%

239 

systems All UST systems with field-constructed tanks.

Require notification of 

ownership change 

Facilities with 

Conventional UST

systems and EGTs 10.1%

22,502 

facilities Annual number of facilities that change ownership. 

Closure of lined tanks 

that cannot be 

repaired according to 

a code of practice

Conventional UST

systems and EGTs <0.1%

84 

systems

Annual number of lined UST systems that cannot be 

repaired

Requirements for 

determining 

compatibility

Conventional UST

systems and EGTs 100.0% 611,449 All conventional UST systems and EGTs

EPAct-related Provisions

Operator training

UST Facilities in 

Indian country 100.0%

958 

facilities

All facilities in Indian country. Universe affected 

phases in over three years.

Secondary 

containment - new 

and replaced tanks

UST systems in 

Indian country 36.2%

950 

systemsb

Approximately 72.4 percent of systems in Indian 

country are single-walled. Analysis assumes 

midpoint of time horizon until all units are replaced

(year 10, 50 percent of universe affected).
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2-10

Exhibit 2-4

Potential Number And Type Of Units Affected By Each Regulation

Regulatory Change Universe

Proportion 

of Total 

Universe 

Affected

Annually

Number of 

Potentially 

Affected 

Systems

(Annual) a Assumptions

Threshold for pipe 

replacement rather 

than repair

UST systems in 

Indian country 6.0%

158 

systemsb

Piping replaced every five years, where 60.3% are 

single-walled. Analysis assumes midpoint of time 

horizon until all units are replaced (year 10, 50 

percent of universe affected).

Under-dispenser 

containment for all 

new dispensers

UST systems in 

Indian country 48.5%

1,273 

systemsb

Approximately 97 percent of systems require underdispenser containment. Analysis assumes midpoint 

of time horizon until all units are replaced (year 10, 

50 percent of universe affected). 

a

Figures in this column are calculated assuming that the average number of UST systems per facility is approximately 2.74, per

“Summary of Key Data from State Public Record Postings,” E2, Incorporated, Task Order No. 1010 – Subtask A1-06C

Technical Directive No. 36, Table 1.

b

 The affected universes presented for these items reflect 50 percent of ultimately affected systems or facilities. Because these 

requirements take effect over time and future costs are discounted, we present the universe affected at year 10 as a central 

estimate. In addition, we adjust unit costs to reflect the fact that the total cost of these requirements grows as the number of 

affected systems or facilities increases.

2.5 Facilities and Systems Affected by Proposed Rule

Many states currently have baseline regulations consistent with one or more requirements 

in the proposed regulations. As a result, only a portion of the universe of potentially affected 

facilities will be required to change practices to comply with each regulatory change. Whereas 

Exhibit 2-4 displays the number of units that may potentially be subject to each requirement,

Exhibit 2-5 identifies, based on EPA’s review of baseline state regulations, the number of units 

that will be subject to these requirements as a result of the proposed regulations. For nearly all 

requirements, some portion of the potentially affected universe is already in compliance with the 

proposed regulatory changes.

Alternative Option 2 will affect the smallest number of systems. Among the specific 

changes proposed, walkthrough inspections and spill prevention equipment tightness testing 

affect the largest number of UST systems in all scenarios.

18

 In contrast, several regulatory 

changes (e.g., closure of irreparable lined tanks and pipe replacement requirements) are likely to 

affect only a small number of systems. 

The distribution of incremental impacts of the rule also depends on the distribution of 

baseline technologies across states with different baseline regulations. Facilities and systems in 

states with fewer current regulations may bear a greater proportion of costs and benefits than 

facilities and systems in states with extensive baseline regulations. A key limitation of available 

baseline data is that baseline technology data is not available at the state level. For example, it is 

possible that facilities and systems with specific release detection technologies (e.g., automatic 

tank gauges, (ATGs)) may not be distributed evenly across all states. However, estimates of the 

 

18 Walkthrough inspections are estimated at a facility level; the number of UST systems estimated as 

affected by these regulations is 440,817.
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2-11

percentage of systems using ATGs are available only at the national level. As a result, the 

regulatory scenarios in Chapters 3 (Social Costs) and Chapter 4 (Benefits and Cost Savings) 

reflect regulatory changes required by an “average” facility in a state under the proposed rule, 

assuming that all systems reflect the national profile of existing technologies. Analyses of 

economic impacts and small businesses in Chapter 5 (Distributional Analyses) assess the 

possible distribution of compliance impacts related to this uncertainty.

Exhibit 2-5

Estimated Systems Not Currently Regulated By States

Description

Universe of 

Potentially 

Affected 

Systems

Systems 

Affected by 

Preferred 

Option

Systems

Affected by 

Alternative 

Option 1

Systems 

Affected by 

Option 

Alternative 

Option 2

Release Prevention

Walkthrough inspections

223,157

(facilities)

160,882 

(facilities)

160,882 

(facilities)

141,505 

(facilities)

Overfill prevention equipment tests a611,449 378,672 421,137 378,672

Spill prevention equipment tests a550,304 460,696 550,304 460,696

Interstitial integrity tests 106,747 76,157 93,538 N/A

Spill prevention equipment test after repair 38,216 37,847 37,847 37,847

Overfill prevention equipment test after repair 30,572 29,844 29,844 29,844

Interstitial integrity test after repair 20,443 14,585 14,585 14,585

Eliminate flow restrictors in vent lines for all new tanks and 

when overfill devices are replaced b39,744 32,460 32,460 N/A

Release Detection

Operability tests – ATG 205,814 201,874 201,874 201,874

Operability tests – interstitial monitoring 114,781 112,584 112,584 112,584

Operability tests – line leak detection 168,440 165,216 165,216 165,216

Operability tests – mechanical LLDs 335,628 335,628 335,628 335,628

Operability tests – groundwater and vapor monitoring 31,612 31,612 31,612 31,612

Eliminate groundwater and vapor monitoring as release 

detection methods c31,612 31,612 31,612 31,612

Add SIR/CITLD to regulations with performance criteria 2,972 2, 882 2, 882 2, 882

Change release detection leak rate probabilities – ATG 205,814 N/A 201,874 N/A

Change release detection leak rate probabilities – LLD 168,440 N/A 165,216 N/A

Change release detection leak rate probabilities – SIR 11,887 N/A 11,659 N/A

Change release detection leak rate probabilities – CITLD 154,360 N/A 151,406 N/A

Response to interstitial monitoring alarms 14,814 10,569 10,569 10,569

Remove deferral for emergency generator tanks 18,343 11,704 11,704 N/A

Other

Remove deferral for airport hydrant fuel distribution 

systems 162 d97 97 N/A

Remove deferral for UST systems with field-constructed 

tanks 239 102 102 N/A

Require notification of ownership change

22,502

(facilities)

3,265

(facilities)

3,265

(facilities)

3,265

(facilities)

Closure of lined tanks that cannot be repaired according to a 

code of practice 84 59 59 59

Requirements for determining compatibility 611,449 611,449 611,449 611,449

EPAct-related Provisions

Operator training

958

(facilities)

958

(facilities)

958

(facilities)

958

(facilities)

Secondary containment - new and replaced tanks b950 950 950 950

Threshold for pipe replacement rather than repair e158 0 0 0
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Exhibit 2-5

Estimated Systems Not Currently Regulated By States

Description

Universe of 

Potentially 

Affected 

Systems

Systems 

Affected by 

Preferred 

Option

Systems

Affected by 

Alternative 

Option 1

Systems 

Affected by 

Option 

Alternative 

Option 2

Under-dispenser containment for all new dispensers b1,273 1,273 1,273 1,273

a The universe of affected systems for these requirements varies because some states have current requirements that differ in 

frequency and ensure baseline compliance in some regulatory scenarios but not others.

b

 The affected universes presented for these items reflect 50 percent of ultimately affected systems or facilities. Because these 

requirements take effect over time and future costs are discounted, we present the universe affected at year 10 as a central 

estimate. In addition, we adjust unit costs to reflect the fact that the total cost of these requirements grows as the number of 

affected systems or facilities increases.

c Universe affected phases in over five years.

d The universe of potentially affected units is 162 systems, or 1,296 tanks (at eight tanks per system).

e EPA’s screening analysis shows that a requirement to replace piping if more than 50 percent of it requires repairs would 

likely generate no net costs, as owners or operators would ordinarily pursue replacement under those circumstances. See 

Appendix C for details.
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3-1

Chapter 3. Assessment of Social Costs

3.1 Introduction

This chapter describes EPA’s analysis of the social costs associated with the proposed 

rule. OMB guidance suggests that an analysis that relies on measures of opportunity cost and 

willingness to pay provides a holistic basis for assessing the total cost of any proposed rule.

Specifically, a social cost analysis should focus on measuring changes in consumer and producer 

surplus by considering the market responses to compliance costs (e.g., changes in demand and 

supply). Along with the administrative costs incurred by the government, changes in producer 

and consumer surplus reflect the true cost to society of adopting a set of proposed measures. 

For this regulatory impact analysis, EPA uses a combination of direct compliance costs 

and state oversight costs to approximate social costs. In this context, compliance costs represent

a reliable indicator of social costs for the following reasons:

 The regulatory requirements generally focus on additional testing and inspection 

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

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

affected by the rule are distributed with relative geographic uniformity for 

consumers and producers.

 Given the small per-facility costs of the rule (less than $900 for the average 

facility, as documented in this chapter), closures or changes in market structure 

represent an unlikely response to the rule. Therefore, it is unlikely that significant 

changes to production or consumer behavior will affect social costs.

 The short- and long-run impacts of the rule are not likely to differ significantly. 

Testing and inspection requirements under the rule may offer some opportunities 

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

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

For these reasons, compliance costs are likely to be a reasonable approximation for social 

costs over both the short- and long-run. This chapter presents EPA’s compliance cost 

methodology and results, and summarizes the calculation of government oversight costs. The 

chapter also provides a discussion of key uncertainties and several brief sensitivity analyses. An 

analysis of the potential economic impacts of the proposed rule is presented in Chapter 5, and a 

sensitivity analysis that evaluates the effects of alternative interest rates is presented in Chapter 

7.

3.2 Compliance Cost Methodology

In this chapter, EPA presents its methodology for estimating incremental compliance 

costs of the proposed rule beyond the current baseline costs of existing federal and state 
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3-2

regulation of underground storage tanks. EPA’s analysis focuses on the specific incremental 

costs that occur as a consequence of the proposed rule.1Throughout this chapter, the analysis 

distinguishes between three types of costs:

 System-level: Costs that occur at the individual UST tank level, including 

ancillary equipment.

 Facility-level: Costs that occur at the level of a facility that owns several USTs; 

typically 2.74 times the system-level cost to reflect UST ownership by the 

average facility. 

 Unit costs: System-level costs related to a particular proposed requirement. For 

example, the requirement to test spill prevention equipment after repairs has a unit 

cost of approximately $130.

Calculation of total incremental compliance costs for UST facilities reflects two key

components: identification of specific measures necessary for compliance at individual facilities,

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

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

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

anticipated responses to the proposed regulation, the model then generates system-specific 

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

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

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

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

system configurations – for example, airport hydrant fuel distribution systems or UST systems 

with field-constructed tanks – while others are consistent across all system types.

We calculate the compliance costs of the proposed rule by measuring three factors: the 

regulations already in place in each state (i.e., baseline regulations); the proportion of facilities or 

UST systems with specific technologies (i.e., the portion of systems that require specific types of 

upgrades or tests); and the unit cost to comply with each proposed element of the proposed 

regulation. Chapter 2 of this regulatory impact analysis discusses the baseline state regulations 

and the proportion of facilities affected by this rule (see Exhibit 2-5). 

An important limitation of our analysis is that we do not have data on the distribution of 

UST technologies. Consider the following from Exhibit 2-5: we estimate that overfill prevention 

tests will be a new requirement for 378,672 systems, and spill prevention equipment tests will be 

a new requirement for 460,696 systems. These requirements could together affect as few as 

460,696 systems if all systems that are affected by overfill prevention testing are a subset of the 

systems that are affected by spill prevention testing. In the absence of additional information, it 

 

1

For this proposed rule, EPA does not specifically attempt to measure baseline regulatory costs. However, 

costs identified in the 1988 EPA regulation that set original technical standards under 40 CFR Part 280 provide an 

indication of baseline costs. The 1988 RIA calculated per-tank costs of $28,770, equivalent to $44,450 in 2009 

dollars. See August 24, 1988 RIA entitled Regulatory Impact Analysis of Technical Standards for Underground 

Storage Tanks, Volume 1, page ES-7, Exhibit ES-1).
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3-3

is equally plausible that these two requirements affect the entire universe of USTs if they overlap 

as little as possible. 

EPA has not identified any information that could allow us to reliably narrow the 

universe of affected USTs to a number smaller than the entire universe. Further, EPA’s review of 

state data suggests that facilities in all states will be subject to some cost under the proposed 

rule.2 Consequently, when considering the total cost of the proposed rule on a facility or UST 

system basis, we divide the total cost by the number of facilities or systems in the entire 

universe.3

3.2.1 Categories of Compliance Costs Analyzed

This analysis includes the following categories of compliance costs: operations and 

maintenance costs; capital costs; and implicit capital costs, or “time value of money costs” 

associated with earlier detection of equipment failure. Because the proposed rule focuses on 

operational improvements, operations and maintenance costs constitute the majority of the 

compliance costs identified in this analysis. These costs are relatively frequent, recurring costs 

that mainly involve a service activity. Operations and maintenance activities include the labor 

and materials costs associated with maintenance of equipment, routine testing, and inspection 

(whether performed by the owner, operator, or a contractor). This analysis assumes that UST 

facility owners and operators pay in full for these costs when they occur (that is, they do not 

obtain financing and pay over time).

4

Because the proposed rule does not focus on broad equipment requirements, capital costs 

represent a small portion of the total compliance costs for this proposed rule. Capital costs 

address the purchase and installation of new equipment, such as installing a new double-walled 

UST or under-dispenser containment. Total capital costs typically include installation labor and 

initial service required to ensure the new equipment is fully functioning. EPA assumes that UST 

owners and operators finance these compliance costs over the life of the equipment; all capital 

costs are calculated over a regulatory time horizon of 20 years.5 The following examples 

characterize the three types of capital cost calculations that are relevant to this regulatory

analysis:

 

2 The discounted cost per UST system ranges from less than $100 in one state to over $700, with costs in 

54 states and territories falling between $200 and $450.

3 We address uncertainty in the distribution of technology and costs with a set of sensitivity analyses in 

section 3.5 of this chapter, and we consider the economic impacts of different distributions of costs in Chapter 5.

4 Certain one-time costs that occur only once over the regulatory time horizon (e.g., one-time spending on 

initial operator training for personnel at existing facilities) are also annualized over 20 years.

5 EPA assumes that owners and operators amortize all capital costs over a 20-year expected regulatory 

horizon to be consistent with the 20-year expected lifetime of an UST system. For equipment with a lifetime shorter 

than 20 years, EPA assumes that a proportion of the universe is affected per year; for example, EPA assumes that 

piping is replaced every five years, such that one-fifth of the universe must replace it every year. The central 

analysis uses a seven percent discount rate, consistent with Office of Management and Budget Circular No. A-94, 

Revised, October 29, 1992. Other discount rates are considered in Chapter 7.
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3-4

Existing equipment replacements: An UST system owner or operator must upgrade an 

existing system with new equipment to comply with a requirement under the proposed rule (e.g., 

facilities with EGTs may be required to install release detection equipment if the deferral is 

removed). The incremental compliance cost is the total cost of the new equipment and 

installation (including removal of existing equipment).6 Any additional (incremental) operation 

and maintenance costs are also included.

New equipment requirements: An operator is installing new or replacement equipment 

as an ordinary business expense. Under baseline regulations, Equipment A is compliant. 

However, new regulations require a higher level of compliance for new tank systems that can be 

satisfied at lowest cost by Equipment B. The incremental compliance cost to the owner of the 

equipment is the additional cost (if any) of purchasing and installing and operating Equipment B

instead of Equipment A. The costs of this requirement reflect the timing of the normal 

replacement cycle for all equipment in the universe. For example, owners and operators 

installing new UST systems will be required to use technologies other than flow restrictors to 

ensure release prevention.

Time value of money (TVM) costs: Under baseline regulations, the average UST 

system requires inspection every three years. EPA estimates that the baseline three-year 

inspection, on average, identifies a hypothetical repair or replacement cost of $100 associated 

with certain equipment. Under the proposed rule, a new annual test would discover the repair 

sooner and require repair or replacement one-to-two years earlier. While the repair expense is 

the same, the proposed rule generates a time value of money cost by requiring an expenditure 

sooner.7

EPA estimates that the proposed regulations will impose capital costs on the following 

components due to earlier detection of problems as a result of the new testing requirements:

 Overfill prevention equipment;

 Spill prevention equipment;

 Interstitial areas; and

 

6 This approach may overstate costs, as it does not account for the age of existing equipment. Owners and 

operators typically plan for new capital expenditures over the lifetime of existing equipment, recording depreciation 

as operations consume its usefulness over time. If an owner or operator is close to replacing certain equipment and is 

required to replace that equipment when the proposed rule becomes effective, he or she incurs a lower incremental 

cost than an owner or operator who only recently installed that equipment. By not attempting to adjust for this 

factor, EPA assumes that owners and operators replace brand new equipment, a conservatism that results in a higher 

cost. Using this approach, these annualized one-time costs comprise approximately one percent of annual costs 

under Preferred Option and Alternative 2. Under Alternative 1, the requirement of three-year spill prevention 

equipment replacement increases these costs to 38 percent of total costs.

7 There is significant uncertainty regarding whether total expenditures would increase or decrease over 

time. More frequent inspections may lead to more frequent repairs and replacements but may also reduce the 

severity and cost of issues.
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3-5

 ATGs, interstitial monitors, vapor monitors, groundwater monitors, and line leak 

detectors.

The proposed rule requires testing, in addition to inspections, for several UST system 

components. EPA assumes that testing adds value to baseline release prevention strategies in two

ways: first, testing detects issues with an UST system that may not be detectable in inspections. 

In addition, in some cases, testing will occur more frequently than baseline inspections and 

therefore may identify issues that occur between inspections. This analysis therefore considers 

two types of increased capital costs. First, EPA assumes that additional testing required under the 

proposed rule will identify malfunctions that prior inspections would have overlooked, and will 

therefore mandate additional compliance costs related to repair and replacement of equipment. 

Second, some baseline compliance costs will occur earlier than they would in the baseline, 

creating time value of money costs as owners and operators forgo the use of funds for other 

investments. The time value of money cost of incurring a repair sooner is estimated at seven 

percent, consistent with OMB’s discount rate. See Appendix D for the detailed cost 

methodology.

3.2.2 Estimation of System-Level Compliance Costs for UST Systems

Estimates of system-level compliance costs for each part of the proposed rule are based 

on publicly available data on equipment, installation, and testing costs, information collected 

from professionals in industries that provide relevant equipment and services, and EPA’s 

professional judgment.8 Costs are estimated to occur according to the rule implementation 

schedule identified in Exhibit 1-2; we use an annual discount rate of seven percent to adjust 

costs with compliance windows of more than one year.

Labor costs used in this analysis reflect labor-hour estimates from EPA Information 

Collection Request 1360.08 for specific inspection and recordkeeping tasks. The cost of labor is 

based on Bureau of Labor Statistics (BLS) labor rates for skill categories appropriate to the retail 

sector and technical requirements of the proposed rule.9In particular, EPA selected labor rates 

that correspond to categories of labor employed in the retail motor fuels sector (NAICS 447). 

The analysis adjusts these rates using a 12 percent overhead factor and a fringe benefits factor of 

28.3 percent, which is specific to service-providing industries.10 For requirements that are likely 

 

8 E2

, Incorporated, memoranda and analyses submitted under Contract EP-W-05-018, “U.S. Environmental 

Protection Agency. Underground Storage Tanks/Leaking Underground Storage Tanks Analytical and Technical 

Support.” Where gaps existed in the analyses, EPA used the best professional judgment of its UST system technical 

experts. All supporting materials not included in the appendices can be found in the docket for the proposed rule. 

9 Labor rates reflect the May 2008 Occupational Employment and Wage publication by the Bureau of 

Labor Statistics. See Appendix D for the particular Standard Occupational Classification codes used. EPA does not 

use the costs in its Information Collection Request 1360.08 because those labor rates reflect all industries and do not 

represent typical costs to the majority of UST owners and operators.

10 The overhead factor of 12 percent comes from Office of Management and Budget Circular No. A-76, p. 

D-7. Although this rate reflects government overhead rates, we believe it is also representative of the low-overhead 

structure of the retail motor fuels sector. The fringe benefits factor is from Bureau of Labor Services, Employer 

Costs for Employee Compensation, September 2009. See Table 10: All workers, service-providing industries.
*** E.O. 12866 Review - Draft - Do Not Cite, Quote or Release During Review ***

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to be satisfied by third-parties, such as testing, labor costs are included in the costs of those 

services. 

In addition, specific requirements under the proposed regulation are addressed as follows:

 For proposed regulatory changes that take effect over time as equipment ages, the 

analysis assumes a constant rate of equipment replacement, and calculates a 

constant annual payment for the net present value of 20 years of replacements. 

Appendix D discusses the specific assumptions made in the analysis.

 To identify the total system-level compliance cost of removing deferrals from 

airport hydrant fuel distribution systems (AHFDSs) and field-constructed tanks 

(FCTs), the analysis calculates both the direct costs of removing the deferral of 

these systems from the regulations under 40 CFR Part 280, and the additional 

costs of complying with other new regulatory options that apply to all systems 

(and become relevant when deferrals are removed). Under the proposed 

regulations, owners and operators of these systems must perform annual bulk line 

testing at prescribed rates or use an automatic tank gauge at prescribed leak rates.

Appendix A discusses specific assumptions related to these tank populations. 

 To estimate the total system-level compliance cost of removing the deferral from 

emergency generator tanks, the analysis calculates the cost of complying with 

specific proposed changes that apply to the broader universe of conventional UST 

systems and become relevant when the deferral is removed. Removal of the 

deferral under the proposed rule means that EGTs must comply with release 

detection requirements at 40 CFR Part 280, Subpart D.

Exhibit 3-1 presents the unit-level costs for the individual requirements in the proposed rule.11 

 

11 See Appendix D for a detailed discussion of these costs.
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Exhibit 3-1

Unit Costs For The Requirements In The Proposed Rulei

ONE-TIME a

($)

O&M

($)

REPAIR/REPLACEMENT

COST b

($)

Release Prevention

Walkthrough inspections $0.00 $25.36 $0.13

Overfill prevention equipment tests $0.00 $214.69 $11.00

Spill prevention equipment tests $0.00 $125.68 $3.34

Interstitial integrity tests $0.00 $310.25 $126.10

Spill prevention equipment test after repair $0.00 $125.68 $0.00

Overfill prevention equipment test after 

repair $0.00 $214.68 $0.00

Interstitial integrity test after repair $0.00 $157.78 $0.00

Eliminate flow restrictors in vent lines for all 

new tanks and when overfill devices are 

replaced

$394.20 $0.00 $0.00

Release Detection

Operability tests – ATG $0.00 $56.17 $1.12

Operability tests – interstitial monitoring $0.00 $9.93 $1.16

Operability tests – electronic LLDs $0.00 $56.17 $2.15

Operability tests – mechanical LLDs $0.00 $0.00 $0.77

Eliminate groundwater and vapor 

monitoring as release detection methods $68.89 c

Add SIR/CITLD to regulations with 

performance criteria $10.00 $0.00 $0.00

Change release detection leak rate 

probabilities – ATG $2,431.37 -$8.00 f

$0.00

Change release detection leak rate 

probabilities – LLD $412.39 -$12.00 f

$0.00

Change release detection leak rate 

probabilities – SIR $15.00 -$2.40 f

$0.00

Change release detection leak rate 

probabilities – CITLD $80.00 -$1.60 f

$0.00

Response to interstitial monitoring alarms $0.00 $78.19 $0.00

Remove deferral for emergency generator 

tanks h $298.56 $172.74

Other

Remove deferral for airport hydrant fuel 

distribution systems $11,281.20 $229,837.14 $0.00

Remove deferral for UST systems with 

field-constructed tanks $12.83 $55,474.81 $0.00

Require notification of ownership change $0.00 $12.83 $0.00

Closure of lined tanks that cannot be 

repaired according to a code of practice $35,499 d

$0.00 $0.00

Requirements for determining compatibility $0.00 $1.89 g

$0.00

EPAct-related Provisions

Operator training $265.89 $130.80 $0.00

Secondary containment - new and replaced 

tanks $7,890.18 $0.00 $0.00

Threshold for pipe replacement rather than 

repair e $0.00 $0.00 $0.00

Under-dispenser containment for all new 

dispensers $1,795.11 $0.00 $0.00
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3-8

Exhibit 3-1

Unit Costs For The Requirements In The Proposed Rulei

ONE-TIME a

($)

O&M

($)

REPAIR/REPLACEMENT

COST b

($)

a One-time costs presented here are not shown in annual terms. For the purposes of estimating total annual costs for the 

proposed rule, these one-time expenditures are annualized over 20 years at a seven percent interest rate.

b Time value of money costs due to earlier repair and replacement of equipment reflect costs of repair or replacement sooner 

than would have occurred in the baseline. For most requirements, these are costs that would occur and be identified by 

annual tests, i.e., they reflect one year's worth of accumulated issues that require equipment repairs or replacements. Three

requirements represent exceptions. TVM costs for overfill prevention and interstitial integrity testing, which occur every 

three years under the Preferred Option, represent the repairs and replacements over three years. In addition, TVM costs for 

walkthrough inspections represent the repairs and replacements identified on a monthly basis to match the requirement 

under the Preferred Option. See Appendix D for additional details.

c The cost presented here is the average unit cost for the phasing out of groundwater and vapor monitoring and the phasing in 

of alternative compliance methods. It includes elements of annualized one-time costs and O&M costs.

d We assume that this cost occurs in full for the systems that require closure of lined tanks in a given year.

e We assume all facilities exceeding the 50 percent threshold for piping replacement would opt to replace piping in the 

baseline; costs are therefore zero. See Appendix C for detailed calculations.

f Operations and maintenance costs associated with the adjustment of release detection leak rate probabilities is negative 

because operators avoid costly testing related to false alarms.

g

This includes an annualized cost of $0.01 related to the cost of storing records for the life of the UST system.

h

Because different subsets of EGTs are subject to different requirements, we present average unit costs that divide the total 

cost to the affected universe by the total number of affected units. O&M costs include any TVM costs associated with 

operability tests. See Appendix D for additional details. 

i

 Cost estimates were derived using a seven percent discount rate.

3.3 Calculation of Incremental Compliance Costs

This analysis estimates the compliance cost of the proposed rule by calculating the 

incremental cost of each regulatory change on the population of tank systems in every U.S. state 

and territory. This procedure relies on national estimates of the universe of systems employing 

specific baseline technologies, as well as EPA’s assessment of the baseline regulatory

requirements in each state and territory.

12 The analysis categorizes compliance costs into onetime or operations and maintenance costs and amortizes one-time compliance costs over the 20-

year regulatory time horizon.13 As a final step, it discounts annual compliance costs associated 

with several of the proposed changes to delayed compliance horizons specified in the proposed 

rule (e.g., overfill operability testing must be performed within three years of the date the 

proposed rule becomes effective). 

To calculate compliance costs, EPA employs a number of assumptions, some of which 

likely overstate compliance costs:

 Time value of money costs. This analysis does not assume that the rate at which 

problems occur in UST systems will decline as a result of the proposed rule. The

number and severity of problems will likely fall due to more frequent testing and 

inspections, but the rate of decline is uncertain and the analysis does not attempt 

 

12 For details regarding these assumptions, see Appendix B.

13 See footnote 5 for an explanation of the use of a 20-year time horizon.
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3-9

to adjust for these changes. This likely causes the analysis to overestimate the 

costs of the proposed rule. 
*** E.O. 12866 Review - Draft - Do Not Cite, Quote or Release During Review ***

3-10

 Size of universe. EPA’s analysis assumes that the number of UST systems in the 

universe remains constant over time, with new systems replacing closures. EPA’s 

end-of-year reporting data reveal that the universe of conventional UST systems 

has declined at a rate over two percent per year since 1999.14 Assuming this 

pattern continues, future annual compliance costs due to the proposed rule are 

likely to be lower than estimated in this analysis. However, in absence of other 

data we assume that new installations and upgrades will offset all closures, and 

that annual compliance costs will remain constant. Impacts of assuming an 

alternative baseline universe of UST systems that declines over time are discussed 

in Sections 3.3.1 and 3.4.1. 

 Full compliance. EPA assumes that all owners and operators subject to each 

requirement will come into compliance. This ensures a high estimate of costs, as 

each system subject to the rule implements the required measures and 

consequently incurs the related costs. 

 Timeliness of repairs. EPA assumes that all issues identified through testing of 

equipment will be properly addressed through immediate repair or replacement of 

equipment. This may overstate costs if owners or operators fail to address 

identified issues in a timely fashion.

 Date on which costs are incurred. EPA assumes that all costs are incurred at the 

beginning of the year in which each requirement of the proposed rule becomes 

effective. This may overstate costs that occur at the end of the time frame.

These combined assumptions help ensure that the total costs estimated in each scenario below 

are not likely to be understated, even in cases where some uncertainty is associated with unit cost 

estimates for equipment or testing. Two key areas of uncertainty that affect the distribution of 

costs are noted below.

 Geographic distribution of technologies: EPA lacks information on how UST 

systems with specific equipment (e.g., ATG) are distributed nationally. If most 

are located within states with existing applicable requirements, then costs could 

be lower (conversely, if most are located in states with no existing applicable 

requirements, then costs could be higher). In the absence of this data, EPA 

assumes a uniform distribution of technologies across all states. EPA assesses the 

extent to which this assumption creates cost uncertainty at the end of this chapter.

 Distribution of costs across systems: EPA does not have information on how 

costs are likely to be distributed among the systems that are subject to new 

requirements. For example, a correlation among systems that require overfill 

operability testing, spill prevention equipment tightness testing, and interstitial 

integrity testing after repair would concentrate costs on these systems in ways that 

 

14 See U.S. Environmental Protection Agency, Office of Underground Storage Tanks, Semi-Annual Report 

of UST Performance Measures for Fiscal Years 1999 and 2009. In addition, industry data indicates that in recent 

years, the net decline in the population of facilities with UST systems has been roughly 1.4 percent per year.
*** E.O. 12866 Review - Draft - Do Not Cite, Quote or Release During Review ***

3-11

EPA’s primary assessment of costs does not capture. While this does not affect 

total cost estimates, EPA assesses the distributional consequences of an outcome 

where costs are highly-concentrated in Chapter 5. 

3.3.1. Calculation of Incremental Compliance Costs Using an Alternative Baseline

EPA’s primary analysis assumes that the universe of UST systems stays constant over 

time. That is, the analysis assumes that when an UST system enters the universe, another exits, 

and vice versa. However, data show that the universe of UST systems has been declining over 

the past two decades (albeit at a slowing rate). Therefore, EPA also assesses compliance costs 

associated with the proposed rule based on an alternative baseline that projects a declining 

universe.

To calculate the rate of universe decline, EPA mapped historical data on the universe of 

UST systems from 1991 through 2010 to an exponential one-phase decay function, which 

appears to most accurately represent the observed behavior of the UST system universe over 

time.15 Steep declines in the universe of UST systems in past years reflect increases in tank size 

as well as industry consolidation. However, these declines may be reaching functional limits, 

both because the number of fuel outlets needed to serve the population is considerable, and 

because tank sizes may be reaching a practical limit in their ability to be transported and 

installed.16,17

The function used to project future UST universe sizes indicates that over a 20-year time 

period, the annual number of affected UST systems gradually declines to 586,021 UST systems 

by year 20 under this alternative baseline.18 The number of UST systems affected under this 

alternative baseline is approximately 97 percent of the size of the original baseline, which 

assumes a constant universe size of 611,449 UST systems over this period. As a result, 

compliance costs associated with the proposed rule are only marginally smaller under this 

alternative baseline. See Appendix J for additional details.

 

15 To estimate future UST universe sizes, we used a single exponential decay function, which assumes that 

a quantity declines at a rate proportional to its value. This is an appropriate function given the singular and slowing 

rate of decline observed in the universe of UST systems over time. The equation for such an exponential singular 

decay function is Y = (Yo – P) * e

(-k*X) + P, where P represents the “plateau,” or limit of the function and k 

represents the function’s half-life. (See Appendix J for additional details.)

16 See Wayne Geyer, “Where Has Our Petroleum Storage Capacity Gone?” Steel Tank Institute, 

https://www.steeltank.com/LinkClick.aspx?fileticket=h8g9YO5y%2BfI%3D&tabid=108&mid=502. This source 

indicates simultaneous trends in increasing average tank sizes as well as decreasing UST system totals. 

17 While this alternative baseline assumes a steady decline in the number of UST systems, it is possible that 

the number of UST systems may actually increase in the future to trend with population growth and economic 

expansion as more people living in more areas may necessitate more retail motor fuel outlets.

18 EPA assumes that owners and operators amortize all capital costs over a 20-year expected regulatory 

horizon to be consistent with the 20-year expected lifetime of an UST system.
*** E.O. 12866 Review - Draft - Do Not Cite, Quote or Release During Review ***

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3.4 Results of Assessment of Compliance Costs

Exhibit 3-2 presents a summary of the estimated incremental compliance costs 

associated with the proposed rule by type of UST system affected. In all options, it is clear that 

the category of conventional UST systems will bear the largest proportion of compliance costs 

under the proposed rule. While compliance costs associated with removal of deferrals from 

EGTs are constant across regulatory scenarios, other costs vary substantially among the 

regulatory options. The model parameters used to produce the results discussed in this chapter 

are presented in Appendix E and were selected to reflect the preferred and alternative options 

described in Chapter 1.

Exhibit 3-2

Total Annual Compliance Costs Of The Proposed Rulec

Option

Preferred Option

($ millions)

Alternative 1

($ millions)

Alternative 2 

($ millions)

Conventional UST systems a $180 $360 $120

Emergency Generator Tanks (EGTs)

b $2.2 $2.2 $2.1

Airport Hydrant Fuel Distribution Systems (AHFDSs) $18 $120 $0.0

UST systems with Field-Constructed Tanks (FCTs) $4.6 $33 $0.0

Total $200 $520 $120

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

b Costs for EGTs are lower in Alternative 2 because operability testing is performed every 3 years versus every year under other 

options.

c

 Cost estimates were derived using a seven percent discount rate.

Exhibit 3-3 presents a disaggregation of compliance costs under each regulatory option. 

The following areas contribute significantly to the differences in compliance costs among the 

alternatives.

 Release prevention: The greatest difference in compliance costs between

Alternative 1 and the Preferred Option is related to release prevention; 

specifically, due to the combination of walkthrough inspections, overfill 

prevention equipment tests, spill prevention equipment tests, and interstitial 

integrity tests, and testing after repairs. These requirements account for 55

percent and 73 percent of total compliance costs, respectively. This variation is 

largely dependent on the testing or inspection frequency required under each 

alternative. 

 Removal of deferrals for AHFDSs and UST systems with FCTs: Removal of 

deferrals for AHFDSs and FCTs is accompanied by tightness testing of equipment 

that varies in frequency depending on the alternative. This tightness test drives 

most of the variation in compliance costs. Under the Preferred Option, total costs 

for these systems are $23 million, or approximately 11 percent of total 

compliance costs; under Alternative 1, total costs are $153 million or 
*** E.O. 12866 Review - Draft - Do Not Cite, Quote or Release During Review ***

3-13

approximately 29 percent of total compliance costs.19 Alternative 2 maintains the 

deferrals and therefore has no incremental compliance cost.

 Operability tests for release detection methods: The Preferred Option and 

Alternative 1 each require annual testing of the operability of release detection 

systems, while Alternative 2 requires these tests every three years. Operability

testing costs approximately $21 million under both the Preferred Option and 

Alternative 1, though they constitute 11 percent of total compliance costs for the 

Preferred Option and only four percent of total compliance costs for Alternative 1. 

Three-year testing under Alternative 2 (which includes operability tests for 

groundwater and vapor monitoring since they would remain as release detection 

methods) costs approximately $8 million, or about seven percent of total 

compliance costs for that option.

In total, these categories represent approximately 90 percent of the total compliance costs for 

each option. In addition, the adjustment of release detection leak rate probabilities under 

Alternative 1 constitutes most of the remaining 10 percent of costs for that option.

EPA determines average compliance costs per system by dividing the total cost of the 

proposed rule by the total 611,449 systems in the regulated universe of conventional UST 

systems and EGTs. EPA’s analysis shows that the compliance cost for this proposed rule is $300 

per system, or approximately $890 per typical facility among motor fuel retailers, the sector with 

the highest average number of UST systems per facility.

20

Exhibit 3-4 presents the same total costs as Exhibit 3-3 but shows the number of systems 

affected and the cost of the requirement per affected system. The costs in this exhibit reflect 

annualized one-time costs, discounting, and adjustments for the adoption of certain requirements 

over time (e.g., elimination of flow restrictors for new and replaced tanks), and therefore differ 

from the unit costs presented in Exhibit 3-1. It is important to note that the unit costs in Exhibit 

3-4 cannot be summed to obtain a cost per system, as nearly all systems are already in 

compliance with some requirements of the proposed rule. 

 

19 In addition, Alternative 1 calls for tightness testing testing at a lower leak rate. See Appendix A for 

details. 

20 The $300 estimate excludes costs associated with removal of deferrals for AHFDSs and UST systems 

with FCTs, assumes 2.97 systems per retail motor fuel facility, and includes the cost of $23 per facility for them to 

review the regulation. This approach does not address variability of baseline compliance across systems; to assess 

uncertainty associated with this approach, EPA presents a sensitivity analysis in Chapter 5.
*** E.O. 12866 Review - Draft - Do Not Cite, Quote or Release During Review ***

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Exhibit 3-3

Annual Compliance Costs Due To The Proposed Rule

All values in $ thousandsi

Description

Preferred Option Alternative 1 Alternative 2

Capital Cost

(Annualized) O&M Total Cost

Capital Cost

(Annualized) O&M Total Cost

Capital Cost

(Annualized) O&M Total Cost

Release Prevention

Walkthrough inspections $0.0 $46,000.0 $46,000.0 $0.0 $46,000.0 $46,000.0 $0.0 $14,000.0 $14,000.0

Periodic testing of:

- Overfill prevention 

equipment

- Spill prevention 

equipment a

- Interstitial integrity

$0.0 $87,000.0 $87,000.0 $0.0 $230,000.0 $230,000.0 $0.0 $78,000.0 $78,000.0

Testing after repairs to spill and 

overfill prevention equipment, 

and interstices b

$0.0 $13,000.0 $13,000.0 $0.0 $8,700.0 $8,700.0 $0.0 $13,000.0 $13,000.0

Elimination of flow restrictors in 

vent lines for all new tanks and 

when overfill devices are replaced

$1,200.0 $0.0 $1,200.0 $1,200.0 $0.0 $1,200.0 N/A N/A N/A

Subtotal – Release Prevention g

$1,200.0 $146,000.0 $147,200.0 $1,200.0 $284,700.0 $285,900.0 $0.0 $105,000.0 $105,000.0

Release Detection

Operability tests for release 

detection methods $0.0 $21,000.0 $21,000.0 $0.0 $21,000.0 $21,000.0 $0.0 $7,900.0 $7,900.0

Eliminate groundwater and vapor 

monitoring as release detection 

methods

$2,000.0 $2,300.0 N/A N/A N/A

Add SIR/CITLD to regulations 

with performance criteria $2.7 $0.0 $2.7 $2.7 $0.0 $2.7 $2.7 $0.0 $2.7

Remove deferral for emergency 

generator tanks c $310.0 $1,900.0 $2,200.0 $310.0 $1,900.0 $2,200.0 $310.0 $1,800.0 $2,100.0

Change release detection leak rate 

probabilities d N/A N/A N/A $53,000.0 -$3,800.0 $50,000.0 N/A N/A N/A

Response to interstitial monitoring 

alarms $0.0 $830.0 $830.0 $0.0 $830.0 $830.0 $0.0 $830.0 $830.0

Subtotal – Release Detection g

$312.7 $23,730.0 $26,032.7 $53,312.7 $19,930.0 $76,332.7 $312.7 $10,530.0 $10,832.7

Other

Remove deferral for airport 

hydrant fuel distribution systems e $85.0 $18,000.0 $18,000.0 $85.0 $120,000.0 $120,000.0 N/A N/A N/A
*** E.O. 12866 Review - Draft - Do Not Cite, Quote or Release During Review ***

3-15

Exhibit 3-3

Annual Compliance Costs Due To The Proposed Rule

All values in $ thousandsi

Description

Preferred Option Alternative 1 Alternative 2

Capital Cost

(Annualized) O&M Total Cost

Capital Cost

(Annualized) O&M Total Cost

Capital Cost

(Annualized) O&M Total Cost

Remove deferral for UST systems 

with field-constructed tanks $0.0 $4,600.0 $4,600.0 $0.0 $33,000.0 $33,000.0 N/A N/A N/A

Require notification of ownership 

change $0.0 $42.0 $42.0 $0.0 $42.0 $42.0 $0.0 $42.0 $42.0

Closure of lined tanks that cannot 

be repaired according to a code of 

practice f

$0.0 $2,100.0 $2,100.0 $0.0 $2,100.0 $2,100.0 $0.0 $2,100.0 $2,100.0

Requirements for determining 

compatibility $11.0 $1,200.0 $1,200.0 $11.0 $1,200.0 $1,200.0 $11.0 $1,200.0 $1,200.0

Subtotal – Other g

$96.0 $25,942.0 $25,942.0 $96.0 $156,342.0 $156,342.0 $11.0 $3,342.0 $3,342.0

EPAct-related Provisions

Operator training $23.0 $120.0 $140.0 $23.0 $120.0 $140.0 $23.0 $120.0 $140.0

Secondary containment $920.0 $0.0 $920.0 $920.0 $0.0 $920.0 $920.0 $0.0 $920.0

Subtotal – EPAct-related 

Provisions g $943.0 $120.0 $1,060.0 $943.0 $120.0 $1,060.0 $943.0 $120.0 $1,060.0

Subtotal g $2,600.0 $200,000.0 $200,000.0 $56,000.0 $460,000.0 $510,000.0 $1,300.0 $120,000.0 $120,000.0

Additions for new units (beyond 

those included above) h $4.6 $0.0 $4.6 $750.0 $0.0 $750.0 $4.6 $0.0 $4.6

Total g $2,600.0 $200,000.0 $200,000.0 $57,000.0 $460,000.0 $520,000.0 $1,300.0 $120,000.0 $120,000.0
*** E.O. 12866 Review - Draft - Do Not Cite, Quote or Release During Review ***

3-16

Exhibit 3-3

Annual Compliance Costs Due To The Proposed Rule

All values in $ thousandsi

Description

Preferred Option Alternative 1 Alternative 2

Capital Cost

(Annualized) O&M Total Cost

Capital Cost

(Annualized) O&M Total Cost

Capital Cost

(Annualized) O&M Total Cost

a Alternative 1 calls for spill prevention equipment replacement every three years. For analytical convenience, we annualize the cost of replacement over three years and incorporate it as an O&M 

cost. 

b Costs fall under Alternative 1 compared with the Preferred Option because replacement of spill prevention equipment every 36 months will eliminate the need for repairs to such equipment.

c Costs related to removal of deferrals for the regulation of emergency generator tanks include the cost of removal of deferrals, installation and maintenance of ATG on approximately seven percent 

of systems, installation and maintenance of SIR on 60 percent of systems, and performing operability testing on all EGT systems. See Appendix D for details. O&M costs for emergency generator 

tanks are lower in Alternative 2 because operability testing is performed every 3 years versus every year under other options.

d Operations and maintenance costs associated with the adjustment of release detection leak rate probabilities is negative because operators avoid costly testing related to false alarms. These avoided 

costs are the only items included in the O&M for this requirement.

e Airport hydrant fuel distribution systems include a capital cost because tanks associated with airport hydrant fuel distribution systems without existing ATGs are assumed to install ATGs to comply 

with the requirement. UST systems with field-constructed tanks without existing ATGs are assumed to conduct annual precision tightness tests to comply with the requirement. See Appendix A for 

details.

f Although the closure of lined tanks represents a capital cost, we consider it an operations and maintenance cost as a modeling convenience. See Appendix D for details.

g Total may not add correctly due to rounding.

h As a simplifying assumption, EPA assumes that UST systems enter and exit the universe at a constant annual rate, such that the total number of UST systems in the universe does not change. We 

assume that operations and maintenance costs associated with these systems offset each other, as the number of entries equals the number of exits; however, new systems entering the universe will 

still incur incremental capital costs associated with certain requirements (e.g., a new emergency generator tank would need to install a release detection method). For modeling purposes, we account 

for these new units in the “Additions for new units.” The costs shown reflect the capital costs associated with new units for all but the following requirements: elimination of flow restrictors for new 

tanks, requirement of secondary containment for new tanks, and requirement of under-dispenser containment for new dispenser systems.

i

 Cost estimates were derived using a seven percent discount rate. 
*** E.O. 12866 Review - Draft - Do Not Cite, Quote or Release During Review ***

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Exhibit 3-4

Discounted And Annualized Cost Per System Affected By Requirementg

Descriptiona

Preferred Option Alternative 1 Alternative 2

Cost per 

System f

Systems 

Affected

Cost per 

System f

Systems 

Affected

Cost per 

System f

Systems 

Affected

Release Prevention

Walkthrough inspections $104 440,817 $104 440,817 $37 387,724

Periodic testing of: b

$299 290,891 $681 335,750 $180 432,682 - Overfill prevention equipment

- Spill prevention equipment c

- Interstitial integrity

Testing after repairs to spill and overfill prevention equipment, and interstices [d] $164 82,276 $106 82,276 $164 82,276

Eliminate flow restrictors in vent lines for all new tanks and when overfill devices are 

replaced $37 32,460 $37 32,460 $0 32,460

Release Detection

Operability tests for release detection methods b$121 176,934 $121 176,934 $52 152,915

Eliminate groundwater and vapor monitoring as release detection methods $63 31,612 $74 31,612 $0 31,612

Add SIR/CITLD to regulations with performance criteria $1 2,882 $1 2,882 $1 2,882

Remove deferral for emergency generator tanks e$188 11,704 $188 11,704 $181 11,704

Change release detection leak rate probabilities b N/A N/A $251 197,532 N/A N/A

Response to interstitial monitoring alarms $78 10,569 $78 10,569 $78 10,569

Other

Remove deferral from airport hydrant fuel distribution systems $188,545 97 $1,193,506 97 N/A N/A

Remove deferral from UST systems with field-constructed tanks $45,344 102 $327,861 102 N/A N/A

Require notification of ownership change $5 8,946 $5 8,946 $5 8,946

Closure of lined tanks that cannot be repaired according to a code of practice $35,499 59 $35,499 59 $35,499 59

Requirements for determining compatibility $2 611,449 $2 611,449 $2 611,449

EPAct-related Provisions

Operator training $54 2,625 $54 2,625 $54 2,625

Secondary containment $415 2,224 $415 2,224 $415 2,224

a Requirements that apply at the facility level are converted to a system basis using a conversion factor of 2.74 systems per facility.

b Because the number of systems affected varies depending on the individual testing requirements, we estimate the number of systems affected by all three requirements by dividing their 

total cost by the sum of their unit costs. For example, if the three requirements had total unit costs of $100 and created new costs of $100,000, we would estimate that they affect 1,000 

systems.

c Alternative 1 calls for spill prevention equipment replacement every three years. For analytical convenience, we annualize the cost of replacement over three years and incorporate it as 

an O&M cost.

d Costs fall under Alternative 1 compared with the Preferred Option because replacement of spill prevention equipment every 36 months will eliminate the need for repairs to such 

equipment.

e Costs related to removal of deferrals for the regulation of emergency generator tanks include the cost of removal of deferrals, installation and maintenance of ATG on approximately 

seven percent of systems, installation and maintenance of SIR on 60 percent of systems, and performing operability testing on all EGT systems. See Appendix D for details. Costs for 

emergency generator tanks are lower in Alternative 2 because operability testing is performed every 3 years versus every year under other options.

f

It is important to note that these unit costs cannot be summed to obtain a total cost per system because nearly all systems are already in compliance with some requirements of the 

proposed rule.

g

 Cost estimates were derived using a seven percent discount rate. 
*** E.O. 12866 Review - Draft - Do Not Cite, Quote or Release During Review ***

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3.4.1 Assessment of Compliance Costs under the Alternative Baseline Scenario

Exhibit 3-5 presents total annual compliance costs of the proposed rule under the 

alternative baseline discussed in Section 3.3.1. Annual compliance costs are slightly less than 

those presented in Exhibit 3-2, reflecting the fact that the cumulative universe of affected 

systems in the alternative baseline is only marginally smaller than the universe in the original 

baseline.

Exhibit 3-5

Total Annual Compliance Costs Of The Proposed Rule Using an Alternative Baselined

Option

Preferred Option

($ millions)

Alternative 1

($ millions)

Alternative 2 

($ millions)

Conventional UST systems a $170 $350 $110

Emergency Generator Tanks (EGTs)

b $2.2 $2.2 $2.1

Airport Hydrant Fuel Distribution Systems (AHFDSs) $18 $120 $0.0

UST systems with Field-Constructed Tanks (FCTs) $4.6 $33 $0.0

Totalc$200 $500 $120

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

b Costs for EGTs are lower in Alternative 2 because operability testing is performed every 3 years versus every year under other 

options.

c

 Totals may not add exactly due to rounding.

d

 Cost estimates were derived using a seven percent discount rate.

3.5 Sensitivity Analyses

Certain aspects of EPA’s compliance cost estimates are characterized by significant 

uncertainty and are sufficiently large that deviations from chosen assumptions may have a 

measurable impact on cost estimates. In this section, the analysis evaluates the sensitivity of 

certain results to variation in key parameters. These sensitivity analyses include evaluations of:

 Total compliance costs to the proposed rule under an alternative estimate of labor 

costs. Specifically, the analysis evaluates the effect of using higher labor rates, 

overhead costs, and fringe benefits factors, and lower average labor costs.

 Highest and lowest compliance cost scenarios for the distribution of technologies 

tested for overfill prevention equipment operability, tightness of spill prevention 

equipment, and interstitial integrity. If facilities using these technologies are 

disproportionately located in states that do not already have similar regulations in 

place, costs could be higher than estimates presented in the earlier parts of this 

chapter. Similarly, if affected facilities are located in states that already have 

similar regulations in place, costs could be substantially lower than estimated.

 High-end and low-end estimates of possible compliance costs for interstitial 

integrity testing. EPA’s estimate of costs associated with interstitial integrity 

testing assumes a certain distribution of technologies, each of which carries a 

different testing cost. Variation in this distribution of technologies among 
*** E.O. 12866 Review - Draft - Do Not Cite, Quote or Release During Review ***

3-19

facilities can significantly affect the estimates of compliance costs associated with 

interstitial integrity testing.

3.5.1. Compliance Costs of the Proposed Rule Using Alternative Estimates of Labor Rates, 

Overhead Costs, and Fringe Benefits

For conventional UST facilities, EPA has selected labor, overhead, and fringe benefits 

rates that best reflect a “typical” UST facility. These labor rates are representative of skilled 

labor costs at motor fuel retailers, which own and operate roughly 80 percent of the universe of 

UST systems. The use of these rates has a material impact on the estimated compliance cost of 

the proposed rule because they drive the operations and maintenance costs associated with 

requirements for walkthrough inspections and operability tests.

To evaluate the impact of alternative labor rates on total compliance cost estimates, EPA 

considered two alternative scenarios. The first is consistent with the OUST Information 

Collection Request 1360.08 and reflects labor rates reflective of economy-wide average wages, 

benefits, and overhead. This represents a high-end estimate because it reflects industries with 

highly skilled labor requirements and benefits (e.g., law firms).1 The second uses specific labor 

categories and costs representative of retail motor fuel establishments, but assumes that lowerlevel staff may complete walkthrough inspections.2

Exhibit 3-6 presents the results for the three labor category scenarios. While one-time 

costs are not affected by the change in labor rates, operations and maintenance costs in the highcost scenario are roughly $100 million higher than EPA’s primary estimate, totaling $300 million 

rather than $200 million (an increase of 50 percent). The majority of this increase is due to 

higher operations and maintenance costs related to walkthrough inspections and operability tests.

In contrast, the low-end labor-rate cost estimate totals approximately $180 million, roughly $20 

million (or 10 percent) lower than EPA’s central estimate. In addition to lower benefits and labor 

rates, this estimate assumes that clerical-level personnel will perform walkthrough inspections. 

This is consistent with remarks by UST experts, who indicated these tasks were most likely to be 

completed by non-technical workers. For AHFDSs and systems with FCTs, EPA uses constant 

industry average labor rates across all scenarios.

 

1 These labor categories were reported in OUST Information Collection Request 1360.08, dated October

24, 2007. We used revised labor rates from those categories to reflect 2009 conditions. However, documentation in 

this analysis did not provide a reason for the use of economy-wide average labor rates, and our assessment of the 

universe suggests that retail-based rates are more appropriate.

2 Engineering experts consulted for this analysis suggest that walkthrough inspections are most likely to be 

performed by gas station clerks or service attendants, not technical personnel.
*** E.O. 12866 Review - Draft - Do Not Cite, Quote or Release During Review ***

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Exhibit 3-6

Compliance Cost Sensitivity Analysis: Alternative Labor Ratesi

Description

Proposed Rule

Lower 

Estimate

($ thousands) a

Primary Estimate 

used for Analysis

($ thousands) b

Upper Estimate

($ thousands) c

Release Prevention

Walkthrough inspections d

$23,000 $46,000 $120,000

Periodic testing of:

- Overfill prevention equipment

- Spill prevention equipment

- Interstitial integrity

$87,000 $87,000 $87,000

Testing after repairs to spill and overfill prevention 

equipment, and interstices $13,000 $13,000 $14,000

Elimination of flow restrictors in vent lines for all new tanks 

and when overfill devices are replaced $1,200 $1,200 $1,200

Subtotal - Release Prevention $124,200 $147,200 $222,200

Release Detection

Operability tests for release detection methods $20,000 $21,000 $42,000

Eliminate groundwater and vapor monitoring as release 

detection methods e $2,100 $2,000 $270

Add SIR/CITLD to regulations with performance criteria $3 $3 $3

Remove deferral for emergency generator tanks $2,100 $2,200 $3,200

Change release detection leak rate probabilities $0 $0 $0

Response to interstitial monitoring alarms $830 $830 $830

Subtotal - Release Detection $25,033 $26,033 $46,303

Other

Remove deferral for airport hydrant fuel distribution 

systemsf $18,000 $18,000 $18,000

Remove deferral for UST systems with field-constructed 

tanksf $4,600 $4,600 $4,600

Require notification of ownership change $19 $42 $74

Closure of lined tanks that cannot be repaired according to a 

code of practice $2,100 $2,100 $2,100

Requirements for determining compatibility $910 $1,200 $2,500

Subtotal – Other $25,629 $25,942 $27,274

EPAct-related Provisions

Operator training $130 $140 $230

Secondary containment $920 $920 $920

Subtotal - EPAct-related Provisions $1,050 $1,060 $1,150

Subtotal g

$180,000 $200,000 $300,000

Additions for new units (beyond those included above) h $5 $5 $5

Total g

$180,000 $200,000 $300,000
*** E.O. 12866 Review - Draft - Do Not Cite, Quote or Release During Review ***

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Exhibit 3-6

Compliance Cost Sensitivity Analysis: Alternative Labor Ratesi

Description

Proposed Rule

Lower 

Estimate

($ thousands) a

Primary Estimate 

used for Analysis

($ thousands) b

Upper Estimate

($ thousands) c

a Lower Estimate relies on BLS Industry-Specific Occupational Employment and Wages, NAICS 447000 - Gasoline Stations, 

May 2008 for: Managerial (41-1011 First-Line Supervisors/Managers of Retail Sales Workers): Technical (53-1021 First-Line 

Supervisors/Managers of Helpers, Laborers, and Material Movers, Hand); Clerical (53-6031 Service Station Attendants); and 

BLS National Occupational Employment and Wages, May 2008 for Technical for operability testing (49-2094 Electrical and 

Electronics Repairers, Commercial and Industrial Equipment) and Legal (23-1011 Lawyers). Benefits rate is 24.6 percent of 

wages, as reported in BLS Employer Costs for Employee Compensation, September 2008. Table 10: Trade, transportation, and 

utilities - retail trade. Overhead rate is 12 percent from OMB Circular A-76, p. D-7. Assumes that service station attendants 

perform walkthrough inspections, consistent with information from experts consulted for this analysis.

b

Primary Estimate relies on BLS Industry-Specific Occupational Employment and Wages, NAICS 447000 - Gasoline Stations, 

May 2008 for: Managerial (11-0000 Management Occupations (Major Group)); Technical (53-1021 First-Line 

Supervisors/Managers of Helpers, Laborers, and Material Movers, Hand); and Clerical (43-9061 Office Clerks, General); and 

BLS National Occupational Employment and Wages, May 2008 for Technical for operability testing (49-2094 Electrical and 

Electronics Repairers, Commercial and Industrial Equipment) and Legal (23-1011 Lawyers). Benefits rate is 28.3 percent (BLS 

Employer Costs for Employee Compensation, September 2009. Table 10: All workers, service-providing industries). Overhead 

rate is 12 percent from OMB Circular A-76, p. D-7.

c Upper Estimate relies BLS Employer Costs For Employee Compensation, September 2008 for Managerial (Table 9, 

Management, Professional, and Related); Technical and Technical for operability testing (Table 10, Professional and Technical 

Services (Service Industries)); and Clerical (Table 11, Office and Administrative Support); and BLS National Occupational 

Employment and Wages, May 2008 for Legal (23-1011 Lawyers). Overhead rate used is 67 percent from OUST Information 

Collection Request 1360.08 from October 24, 2007.

d Walkthrough inspections under the Lower Estimate rely on clerical labor rates estimated using BLS Standard Occupational 

Code 53-6031, Service Station Attendants; under other scenarios, we use technical labor rates estimated using BLS Standard 

Occupational Code 53-1021, First-Line Supervisors/Managers of Helpers, Laborers, and Material Movers, Hand. UST experts 

consulted for this analysis suggest that walkthrough inspections are most likely to be performed by gas station clerks or service 

attendants, not technical personnel (e.g. 3rd-party contractors).

e Baseline activities for operators of tanks that use groundwater or vapor monitoring include activities such as recording of 

monthly measurements, which rely on technical labor. By eliminating groundwater and vapor monitoring as release detection 

methods under the proposed rule, these activities will no longer be required. As a result, increasing labor rates reduces the 

incremental costs of the proposed rule.

f The labor rate used for these types of system is the latest ICR labor rate, except for a component of the Operator Training 

requirement, which uses the United States Air Force labor rate for pay grade E-6 over 3.

g Totals may not add exactly due to rounding.

h As a simplifying assumption, EPA assumes that UST systems enter and exit the universe at a constant annual rate, such that 

the total number of UST systems in the universe does not change. We assume that operations and maintenance costs associated 

with these systems offset each other, as the number of entries equals the number of exits; however, new systems entering the 

universe will still incur incremental capital costs associated with certain requirements (e.g., a new emergency generator tank 

would need to install a release detection method). For modeling purposes, we account for these new units in the “Additions for 

new units.” The costs shown reflect the capital costs associated with new units for all but the following requirements: 

elimination of flow restrictors for new tanks, requirement of secondary containment for new tanks, and requirement of underdispenser containment for new dispenser systems. 

i

 Cost estimates were derived using a seven percent discount rate. 
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3.5.2 Sensitivity Analysis of Distribution of Technologies Tested for Overfill Operability, 

Spill Prevention Equipment Tightness, and Interstitial Integrity

Because data on the distribution of UST technologies (including release detection and 

prevention technologies) is available only at a national level, EPA is not able to identify how 

facilities and systems with certain technologies are distributed across different states. As a 

result, the cost analysis assumes that technologies are distributed uniformly across all states and 

territories. For systems that require testing for overfill operability, spill prevention equipment 

tightness, and interstitial integrity, actual compliance costs may differ substantially from EPA’s 

estimates if this assumption does not hold. For example, if facilities using these technologies 

are disproportionately located in states that do not already have similar testing requirements in 

place in the baseline, compliance costs could be higher than the estimates based on a uniform 

distribution presented in Exhibit 3-2 and Exhibit 3-3. Similarly, if affected facilities are 

concentrated in states that already have similar regulations in place in the baseline, then actual 

compliance costs could be substantially lower than estimates based on a uniform distribution. 

To investigate the impact of the assumption of uniform distribution of technologies, EPA 

performed a bounding analysis of the two extreme cases of distribution. Exhibit 3-7 reports the 

possible range of values for scenarios where compliance cost is the lowest (i.e., facilities are 

located in states that already satisfy the proposed rule), the actual model scenario based on 

uniform distribution, and the scenario in which compliance costs are highest. Variation between 

the minimum and maximum cost scenarios totals approximately $21 million, or eleven percent of 

the total compliance costs estimated for the rule. EPA’s primary estimate of these costs is near

the mid-point of the range of estimates.

Exhibit 3-7

Discounted Highest And Lowest Compliance Cost Scenarios For Technologies Tested For Overfill 

Operability, Spill Prevention Equipment Tightness, And Interstitial Integrityb

Regulatory change

Lower

($ millions)

Primary

($ millions)

Upper

($ millions)

Overfill operability testinga$23 $23 $23

Spill prevention equipment testing $54 $55 $62

Interstitial integrity testing $0 $9 $13

Total $77 $87 $98

a Because the entire universe of systems will be required to test overfill operability, EPA does not expect any uncertainty related 

to the locations of affected systems.

b Cost estimates were derived using a seven percent discount rate. 
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3.5.3 Sensitivity Analysis of Compliance Costs for Interstitial Integrity Testing

EPA’s estimates of compliance costs associated with interstitial integrity tests are 

weighted to exclude tanks and piping that are continuously monitored using vacuum, pressure, or 

liquid-filled methods.3 In addition, tanks using continuous interstitial monitoring sensors are 

excluded. For the purpose of this analysis, EPA assumes that five percent of tanks and 90 

percent of piping with interstices will require such testing.4 Costs may vary to the extent that the 

actual number of facilities with these types of equipment differs from these estimates.

To establish a range of possible values, EPA investigated the scenarios outlined in 

Exhibit 3-8. For relatively large changes in EPA’s choices of parameters for universe affected, 

total costs for this proposed change vary between $5 million and $12 million. This uncertainty 

of $7 million represents four percent of the total estimated compliance costs of the rule.

Exhibit 3-8

Sensitivity Analysis Of Interstitial Integrity Testing Universe

Estimate Universe Affected

Discounted Cost

($ millions)

Lower

Tanks 5% $5

Piping 50%

Primary

Tanks 5% $9

Piping 90%

Upper

Tanks 50% $12

Piping 95%

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

3.5.4 Summary of Sensitivity Findings

EPA’s sensitivity findings suggest that possible variation in labor rates is likely to 

produce the most significant impact on the estimated cost of the proposed rule: plausible 

selections for labor rates may reduce preferred option costs by approximately $20 million (10

percent) or increase them by $100 million (50 percent). Separately, EPA has identified potential 

variation of approximately eleven percent related to the distribution of technologies involved in 

overfill operability testing, integrity testing of interstitial areas, and spill prevention equipment 

tightness testing, and approximately four percent related to assumptions regarding interstitial 

 

3

Secondary containment areas include tank and piping interstitial areas as well as containment sumps used 

as part of the piping secondary containment or interstitial monitoring. Under the proposed rule, EPA will allow the 

following exceptions to interstitial integrity tests: (1) Tanks: Owners and operators using continuous interstitial 

monitoring on their tanks will not be required to perform periodic interstitial integrity tests; (2) Piping: Owners and 

operators using vacuum monitoring, pressure monitoring, or liquid-filled interstitial space monitoring on their 

underground piping will not be required to perform periodic interstitial integrity tests; and (3) Containment Sumps –

Owners and operators using containment sumps which have two walls and continuously monitor the interstitial 

space between the walls for releases are not required to perform interstitial integrity tests.

4 An interstitial integrity test is performed in the space between tank walls, pipe walls, or in a secondary 

containment sump area and ensures the area being tested has integrity and will contain a leak. 
*** E.O. 12866 Review - Draft - Do Not Cite, Quote or Release During Review ***

3-24

integrity testing. We note that each of these sensitivity analyses reflects variation compared with 

the primary estimates of costs presented throughout this chapter. 

These analyses only illustrate the uncertainty surrounding certain elements of the 

proposed rule. The estimates presented in the body of this chapter represent reasonable, 

conservative central tendencies for the costs of the proposed rule. 

3.6 Administrative Compliance Costs

In addition to compliance costs related to the operation of UST systems, the proposed 

rule will also impose certain administrative costs on affected entities. We outline these costs 

below.

3.6.1 State Government Administrative Compliance Costs

The proposed rule imposes new Underground Storage Tank program administration 

requirements on state government agencies.5 Specifically, state government agencies will incur 

costs associated with new notification requirements, and costs associated with obtaining and 

reading the regulations. This section reviews state government costs associated with these 

activities. 

Costs associated with obtaining and reading the regulations assume that 10 people will 

each take six hours to read the regulation in each state (using the legal labor rate for states of $47 

per hour from OUST’s ICR 1360.08). In addition, based on the ICR, we assume that the 

reporting and recordkeeping burden for states to apply for State Program Approval (SPA) is 

approximately 28.5 hours (using the clerical labor rate for states of $26 per hour). The total 

compliance cost in nominal terms is therefore approximately $205,000; the annualized 

compliance cost assuming the 20-year regulatory time horizon is approximately $19,000.6States 

that already require ownership change notifications will incur compliance costs associated with 

these activities. 

State agencies that do not currently have a requirement for notification of changes in UST 

ownership or for at least an annual UST registration must also process a certain number of 

notices due to annual turnover in facility ownership. State government compliance costs for this 

activity assume a typical nominal recordkeeping cost of $30 per facility, based on OUST’s ICR 

1360.08; compliance costs assume the use of existing recordkeeping systems. Eight states and 

territories do not currently have recordkeeping requirements consistent with the proposed 

 

5

In some cases, UST systems are directly owned or operated by local, state, and federal government 

entities. These costs are subsumed in the estimates of compliance costs presented earlier in this chapter.

6 Consistent with other parts of this regulatory impact analysis, we amortize one-time or capital costs over 

the regulatory time horizon of 20 years. If these costs are phased in over a three-year period, annual costs decrease 

to approximately $18,000.
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3-25

regulation.7 These eight states and territories will incur approximately $100,000 per year, due to 

an annual turnover rate of approximately 10 percent in UST facility ownership. 

Lastly, each state agency will incur costs to process the one-time notifications of 

existence for EGTs, AHFDSs, and FCTs. State government compliance costs for this activity

assume a typical nominal recordkeeping cost of $30 per facility, based on OUST’s ICR 1360.08; 

compliance costs assume the use of existing recordkeeping systems. Based on the estimated 

universe of EGTs, AHFDSs, and FCTs, the total state processing cost in nominal terms is 

approximately $560,000; the annualized processing cost assuming the 20-year regulatory time 

horizon is approximately $53,000.

Total state government administrative compliance costs sum to $170,000 per year. Note 

that under alternative baseline assumptions, these costs would decline by a very small percentage 

(roughly 2 percent) as the universe of affected systems declines. These costs are reflected in 

Exhibit 3-10.

3.6.2 Costs to Regulated Universe to Review Regulations

This analysis assumes that all facility operators in the universe will be required to read 

the proposed rule in order to comply with it. For conventional USTs and EGTs, we estimate that 

reading and understanding the proposed rule will require 4.75 hours of labor from a manager at 

each facility. This equates to a one-time cost of approximately $244 for each facility, or $54 

million. This is equivalent to an annual cost of $5.1 million under each proposed option. For 

FCTs and AHFDSs, we assume these costs are subsumed in the management costs for these 

systems (see Appendix A for details). 

3.7 Summary – Total Social Costs

In total, EPA estimates that the Preferred Option for the proposed rule will produce 

incremental costs of approximately $210 million per year compared to the current regulatory

baseline. Exhibit 3-9 summarizes these costs per category. Regardless of the option, 

conventional UST systems will incur over 65 percent of these costs. Costs to AHFDSs and 

FCTs comprise approximately 11 percent and 29 percent of total costs under the Preferred 

Option and Alternative 1, respectively.

 

7 These states are Arizona, Georgia, Idaho, North Carolina, North Dakota, Nevada, and South Carolina. The 

Virgin Islands will also incur these costs.
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Exhibit 3-9

Total Social Costse

Category

Preferred 

Option

($ millions)

Alternative 1

($ millions)

Alternative 2

($ millions)

Conventional UST systemsa$180 $360 $120

Emergency Generator Tanks (EGTs) b$2.2 $2.2 $2.1

Airport Hydrant Fuels Distribution Systems (AHFDSs) $18 $120 $0.0

UST systems with Field-Constructed Tanks (FCTs) $4.6 $33 $0.0

Cost to Owners/Operators to Read Regulations $5.1 $5.1 $5.1

State Government Administrative Costs c$0.2 $0.2 $0.2

Total Social Costs d

$210 $520 $130

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

b Costs for EGTs are lower in Alternative 2 because operability testing is performed every 3 years versus every year under 

other options.

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

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

governments to read the regulations, apply for state program approval, process notifications of ownership changes, and process 

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

d Totals may not add up due to rounding.

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

Limitations of Compliance Cost Analysis

While EPA has taken steps to present a sound analysis of compliance costs, it recognizes

that certain assumptions and limitations are inherent to this assessment.

Tank configuration: This analysis assumes that a particular configuration of equipment 

represents the average UST system. This assumption affects the compliance costs of the 

proposed rule because systems with different configurations (e.g., more sumps per tank) could 

have different costs. Mischaracterizing this configuration may under- or overstate total costs as 

well as system-level costs. 

System-level compliance costs: As discussed in Section 3.3, system-level compliance 

costs are based on public information, input from UST industry professionals, and EPA 

professional judgment, all of which are assumed to provide the most accurate available data at 

the time of this proposal. EPA recognizes that these data sometimes reflect only a small number 

of sources, and are therefore characterized by uncertainty. 

As a result of these uncertainties, the precise cost of the proposed rule may differ from 

the estimate generated by EPA’s analysis. The above sensitivity analyses, though not strictly

additive, suggest that the outside range of cost uncertainty is approximately 50 percent from 

EPA’s central estimates. Moreover, because EPA’s estimate is framed by a number of 

conservative assumptions (outlined in section 3.3), it is unlikely that this analysis understates the 

costs of the proposed rule significantly.
*** E.O. 12866 Review - Draft - Do Not Cite, Quote or Release During Review ***

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3.7.1 Summary – Total Social Costs under the Alternative Baseline Scenario

Under the alternative baseline universe assumption described in Section 3.3.1, EPA 

estimates that the Preferred Option for the proposed rule will produce incremental costs of 

approximately $200 million per year compared to $210 million in annual costs in the primary

analysis. Exhibit 3-10 summarizes these costs per category. Regardless of the option, 

conventional UST systems will incur over 65 percent of these costs. Costs to AHFDSs and 

FCTs comprise approximately 11 percent and 30 percent of total costs under the Preferred 

Option and Alternative 1, respectively.

Exhibit 3-10

Total Social Costs Using an Alternative Baselinee

Category

Preferred 

Option

($ millions)

Alternative 1

($ millions)

Alternative 2

($ millions)

Conventional UST systemsa$170 $350 $110

Emergency Generator Tanks (EGTs) b$2.2 $2.2 $2.1

Airport Hydrant Fuels Distribution Systems (AHFDSs) $18 $120 $0.0

UST systems with Field-Constructed Tanks (FCTs) $4.6 $33 $0.0

Cost to Owners/Operators to Read Regulations $5.1 $5.1 $5.1

State Government Administrative Costs c$0.2 $0.2 $0.2

Total Social Costs d

$200 $510 $120

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

b Costs for EGTs are lower in Alternative 2 because operability testing is performed every 3 years versus every year under 

other options.

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

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

governments to read the regulations, apply for state program approval, process notifications of ownership changes, and process 

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

d

 Totals may not add up due to rounding.

e Cost estimates were derived using a seven percent discount rate. 
*** E.O. 12866 Review - Draft - Do Not Cite, Quote or Release During Review ***

4-1

Chapter 4. Assessment of Benefits And Cost Savings

4.1 Introduction 

The beneficial impacts of a regulatory change are typically measured in two ways: as 

“social benefits” that usually take the form of reduced environmental damage, reduced human 

health risk, and improvements in the value of environmental amenities. Benefits also include 

avoided costs associated with reduced need for cleanup and avoided costs of “averting behavior” 

(e.g., obtaining replacement water supplies). Ideally, social benefits reflect accurate measures of 

the total “willingness to pay” (WTP) of consumers to obtain improvements in environmental 

quality. In other cases, avoided costs (e.g., medical care) can be used to inform proxy estimates 

of WTP when direct estimates of WTP are unavailable. In the context of this rule, EPA 

examines social benefits and separately considers the avoided costs associated with reduced need 

for cleanup of releases because reliable WTP estimates for the value of an avoided cleanup are 

not available, and because avoided costs represent a real economic cost savings. 

This chapter describes the approaches used to evaluate avoided remediation (cleanup)

costs and other benefits. It first outlines several different methods attempted for measuring 

benefits and cost savings, and describes the final selected method (expert consultation) in detail. 

Next, it provides a description of monetized cost savings and other benefits, including avoided 

cleanup costs, avoided vapor damage cleanup estimates, avoided product loss, and the value of 

avoided cancer risk associated with anticipated reductions in releases and reductions in severity

of releases. The chapter then presents a screening-level analysis of the quantity of groundwater 

potentially protected by the regulations. Finally, we provide a qualitative discussion of 

ecological and other human health benefits.

4.2 Investigation of Empirical Methods for Measuring Benefits and Cost Savings

The benefits and cost savings of the proposed rule result from the reduced incidence and 

size of releases that would occur due to the new requirements. EPA examined a number of ways 

to use quantitative, empirical data on release rates, inspection effectiveness, and program 

performance to estimate directly the changes in releases that could be expected under the 

proposed rule. This section describes the different data sources and methods considered, and the 

limitations of each.

4.2.1 Engineering Estimates and Literature

One approach to estimating the benefits of the proposed rule would be to develop an 

engineering model of the release rates associated with equipment and practices before and after 

the implementation of the rule requirements. However, this approach would address only a small 

number of the proposed rule components because most of the requirements are not focused on 

equipment modifications, but instead call for inspections, testing, and maintenance. These are 

requirements for changes in human behavior, and are not easily measured using equipment 

testing. 
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4-2

This suggests that EPA could best measure benefits empirically by examining studies of 

how changing frequencies in inspection and testing would lead to different leak rates. Therefore, 

EPA conducted a targeted literature review of engineering literature and studies of the 

effectiveness of testing and inspection programs. We were unable to identify any studies directly 

applicable to the proposed UST regulations, but we did identify EPA and published literature on 

the effects of better inspection and testing rates more generally. We summarize several key 

studies below. 

 California study of impact of secondary containment on UST system releases 

(2002):1 This study examined whether use of secondary containment throughout 

UST systems resulted in differences in release rates. The study’s conclusions 

were hampered by a limited sample size, and authors note that releases from other 

parts of the systems may have affected results. The study did not find a 

significant relationship between secondary containment and release rates at sites, 

but did find that facility-level factors (e.g., improper installations) made it more 

likely than expected that all systems at a facility would either have or lack 

releases. While the study cannot be used to directly estimate the benefits 

associated with the proposed regulation, its conclusions suggest that regulations 

focusing on effective facility-level inspections may be well-targeted.

 National Research Council study of effectiveness of state vehicle emissions 

inspection and maintenance programs (2001):2 This study reviewed four state 

programs and one city program aimed at reducing motor vehicle emissions by 

requiring inspections and maintenance. While the study did not address UST 

systems, the structure of vehicle inspection programs is similar to the proposed 

regulations in that both require owners/operators to undertake routine inspections 

and undertake maintenance as needed. The study found that the programs had a 

measureable impact on ambient air quality, but did not identify whether the 

differences were statistically significant.3 While the results do not provide a 

quantitative basis for estimating the impacts of the proposed rule, the study

suggests that mandatory inspection programs can reduce emissions. 

 Environmental Results Program (ERP) data:4 Data from several 

environmental results programs (ERPs) show a statistically significant 

 

1 Thomas M. Young and Randy D. Golding, Underground Storage Tank Field-Based Research Project 

Report, submitted to the California State Water Resources Control Board under contract to the University of 

California, Davis, May 31, 2002

2 Committee on Vehicle Emission Inspection and Maintenance Programs, Evaluating Vehicle Emissions 

Inspection and Maintenance Programs, National Academy Press, 2001.

3 The study also concluded that the programs had more modest impacts than those predicted by air quality 

modeling, but this finding is of limited relevance to the current regulation, since no ambient conditions modeling has 

been conducted.

4

See: Vermont Department of Environmental Conservation, “Final Report – Environmental Results Project 

– Vermont: Underground Storage Tank Facilities,” March 17, 2010; Rhode Island Department of Environmental 

Management, Underground Storage Tank Environmental Results Program, Final Report, Tables I-IV; U.S. 
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4-3

improvement in verified compliance as a result of a combination of selfcertification, technical assistance, and inspections. While these programs do not 

isolate the impact of specific regulatory changes, the results are consistent with 

other findings that programs that rely in part on self-implemented inspections and 

reporting can reduce noncompliance.

In general, the literature does not address UST inspection programs directly, and does not 

provide quantitative results that can be used to estimate the impacts of the proposed rule. 

However, the literature does provide data that generally indicate that self-implementing 

inspection programs (with external validation) do have an impact on equipment maintenance, 

and generally lead to a reduction in environmental impacts. This suggests that some positive 

impact should be expected from the proposed rule.

4.2.2 Statistical Analysis of State Release Data

A different approach to a robust analysis of benefits would be to develop a database of 

State UST rules and reported release rates before and after the effective dates of rules similar to 

the proposed rule. With good quality data, one could combine these rules and reported release 

rates and isolate the marginal impacts of various components of the proposed rule. To collect 

detailed data at the facility level, however, would require visiting state UST programs 

individually and collecting detailed site inspection data from state case files and archives. Not 

only would such an effort be prohibitive in terms of available resources, but our current 

knowledge of the state programs suggests that variable inspection practices and changes in 

record-keeping practices over time may limit the ability of the exercise to provide robust results.

In the absence of site-specific data, however, we collected and examined data on state 

regulatory programs and reported releases from available aggregate sources. Specifically, we 

identified and evaluated data from the following sources: 

 Leak Autopsy Reports: In 2004 and 2005, EPA released two draft “leak 

autopsy” studies (“the draft 23-state Autopsy Report” and a separate study 

examining the State of Florida). These studies examined the sources and extent of 

releases that occurred in systems that were compliant with the 1998 standards, 

and identifies the extent to which different baseline releases are associated with 

failures of equipment in different parts of the UST system (e.g., piping, overfill 

protection equipment).5 

 State Regulatory and Report Data: State programs are required to report 

aggregated information to EPA on the number of active UST systems, the number 

of inspections, and the number of confirmed releases reported in each six-month 

 

Environmental Protection Agency, “Evaluation of Three Environmental Results Programs (ERPs),” August 31, 

2009; and U.S. Environmental Protection Agency, “ERP States Produce Results,” December 2007.

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

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

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

Storage Tank Facilities in Florida,” draft, March 2005. 
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4-4

period.6 In addition, EPA obtained information about state regulatory programs 

and the effective dates for state requirements that are similar to the requirements 

of the proposed rule. 

Using the available data, EPA examined several different statistical approaches, focusing on 

regression analysis, to compile and examine a set of state-level data that included the number of 

UST systems in each state in a given year, the number of releases from UST systems in each 

year, the number of UST inspections conducted in each year, and the presence or absence of 

regulations designed to prevent releases. 

Before conducting regression analysis on the data set of state USTs and releases, EPA

first adjusted the data to account for a number of data quality concerns. A key data concern was 

the relationship between states with low-frequency inspections and states reporting small 

numbers of confirmed releases. To ensure that the reported UST releases accurately reflected 

most or all releases taking place, EPA developed an index that scored each state based on the 

frequency of inspections. States that reported inspection rates less frequent than every five years, 

and/or inconsistent inspection frequencies over time, were removed from the sample, based on 

the assumption that release data from those states may be less reliable due to less frequent third 

party verification (i.e., state inspection) of system operations. In other words, we assume that 

owners/operators may be less inclined to report releases or properly maintain their equipment if 

they are in a state where inspections occur infrequently or inconsistently.

In conducting the analysis, however, EPA identified several fundamental problems with 

available data that limit the value of a regression analysis approach. These include significant 

data availability and reliability issues related to the limited number of observations and 

programmatic changes among states that prevent the isolation of regulation-related impacts. 

Specifically: 

 Consistent, accurate release data are not available. It is likely that measurement 

error exists in the recording of confirmed releases across states (the dependent 

variable) and that it is related in some systematic way to the regulatory structure 

of the state or other explanatory variables (as opposed to random reporting error) 

in the analysis. In addition, state inspections vary in timing and focus across 

states; this, in turn, affects the consistency of third-party verified compliance and 

release information. While EPA attempted to account for this by selecting only

states with a high frequency of inspections for inclusion in the analysis, the

interaction between inspection frequency and degree and effectiveness of 

regulation creates sample selection problems (i.e., states with higher release rates 

due to limited regulation may also be states that do not conduct frequent 

inspections and therefore have less reliable data).7 Therefore, normal regression 

 

6

 Data can be accessed at http://www.epa.gov/oust/cat/camarchv.htm.

7 As noted above, the only reliable approach to identify the relationship between inspection frequency, 

compliance, and number of releases would require a large-scale data collection effort. In absence of this, we use 

inspection frequency as an indicator of reliable data.
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properties do not hold, and results may be biased in ways that do not allow for a 

reliable interpretation.8 

 Many regulations consistent with the proposed rule are currently in place in only a 

small number of states. EPA addressed limited variation in the presence of 

regulations by dropping several regulatory variables from the analysis, but the 

resulting lack of variation and the small number of observations make it likely

that regulatory indicators will proxy for other relevant characteristics of that state.

 Study design is limited by available data. Ideally, an analysis of the effectiveness 

of UST leak prevention regulations would employ observations from a large 

number of states over a time period that includes years before and after 

regulations were in place. Such “panel” data would allow for identification of 

impacts temporally and spatially. Panel data would also allow for fixed-effects 

estimation, which controls for any unobserved characteristics of states that might 

affect release rates (such as soil pH or climate), independent of any effect of 

regulation. Available data superficially appear to be panel data, since they

provide information on the number or rate of releases from different states in 

multiple time periods, along with information on the presence or absence of UST 

regulations by state. However, for many regulations it is unclear both when the 

regulation was first promulgated and when the effects of the regulation would be 

expected to be fully realized (e.g., through inspections). 

As discussed in more detail in Appendix F, quantitative analysis of annual UST releases 

by state did not reveal a consistent measure of the potential impact of release prevention 

regulations. The data limitations noted above prevented the use of the preferred method of fixed 

effects estimation using panel data. In the absence of fixed-effects estimation, the analysis 

cannot reliably draw conclusions about the impacts of regulations on releases, independent of 

any unmeasured characteristics of states that could be affecting the number of releases in each 

state. In other words, in addition to data quality issues discussed above, the small number of 

states with specific UST release prevention regulations prevents identification of robust 

relationships between individual regulations and the number of releases per year.

However, through cross-sectional analysis, EPA was able to estimate that release rates in 

California and Florida – two states with mature UST regulation regimes – were about 55-65 

percent less than one would expect based on release rates at other states during the time period 

examined. This difference could serve as an upper bound for the potential of leak prevention 

regulations to reduce the rate of UST releases.9

 

8 For example, several regressions found an apparent positive, statistically significant relationship between 

secondary containment requirements and the number of releases per year. However, empirical data from Florida 

indicate that secondary containment contributes to release reductions of as much as 50 percent.

9 Exhibit 6 in Appendix F shows the degree to which the actual number of releases in Florida and California 

in 2009, 2005, and from 2002 to 2006 is less than the number of releases that would be expected based on the 

release rates observed at other states. In 2005 and 2009, the years in which the dummy variable for California was 

statistically significant from zero, California had between 56 and 63 percent fewer releases than would be expected 

based on the regression analysis. In 2002-2006, when the period in which the dummy variable for Florida was 

statistically significant from zero, Florida had between 60 and 65 percent fewer releases than would be expected. 

EPA strongly cautions against generalizing these results beyond the states included in the analysis. However, these 
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4.3 Final Methodology for Assessment of Positive Impacts: Expert Consultation

To estimate the individual effects of each proposed regulatory change, and in light of the 

absence of applicable engineering models and limited empirical state data, we resorted to a 

consultation with five experts with experience in regulation of USTs and implementation of state 

inspection programs. The remainder of this chapter describes in detail the final methodology

used to identify reductions in releases associated with the proposed rule, and the calculation of 

cost savings associated with those avoided releases.

To ensure that the assessment of regulatory effects relied on broad expertise in regulatory

implementation, EPA developed a pool of technical experts with national reputations for 

leadership in implementation of underground storage tank regulatory programs, or with extensive 

expertise in assessing spill causation at UST sites. From this pool, several experts were 

interviewed and five experts were identified. Each of the identified experts has over 20 years of 

experience in the regulation, assessment, and/or remediation of underground storage tanks, 

including direction of state programs and implementation of regulations similar to some aspects 

of the proposed regulation.

EPA provided an identical set of written questions separately to each expert and 

conducted individual follow-up telephone interviews to clarify and verify responses. Appendix 

G provides a detailed explanation of the process EPA followed in identifying experts, more 

detailed information about the qualifications of the experts, and an explanation of the factors 

EPA considered when including and excluding expert feedback. Appendix H provides the 

questions distributed to experts and their responses.

One of the five experts did not provide input consistent with EPA’s analytical methods, 

and as a result his quantitative estimates were not usable. Specifically, his baseline estimate of 

releases was not consistent with EPA’s, and he was not able to provide information on how to 

extrapolate to EPA’s universe. In addition, his responses included apparent internal 

inconsistencies that could not be reconciled without collecting more information about baseline 

releases.10 We therefore believe the opinions of the remaining four experts provide the best 

available data on the expected impact of the proposed rule.

Avoided Costs as a Measure of Beneficial Impacts

Avoided remediation costs provide the basis for a substantial portion of the beneficial 

impacts associated with the proposed rule. Avoided remediation costs represent cost savings that 

accrue to owners, operators and public entities charged with remediating releases at regulated 

facilities.11 While avoided remediation costs are not a direct measure of total willingness to pay

 

numbers do suggest an upper bound of potential avoided leaks associated with the operation of the mature, relatively 

stringent programs in both California and Florida. 

10 The expert also provided clear opinions about the optimal regulatory structure and suggested that his 

answers were not reliable unless the regulatory language was amended to include specific technical requirements. 

This created additional uncertainty in the interpretation of his results.

11 Chapter 5 provides a more detailed discussion on the potential positive effect of the proposed rule on 

state financial assurance funds.
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for environmental improvements, and are therefore not equivalent to social benefits, they

represent real economic cost savings due to reduced demand for baseline remediation.12

Calculation of Annual Positive Impacts 

The analysis presents the positive effects of the proposed rule as a constant, recurring, 

annual value for analytical convenience. The timing of the positive impacts of the rule is

uncertain for several reasons:

 As shown in Exhibit 1-2 in Chapter 1, the proposed changes do not take effect 

simultaneously. 

 Irrespective of when they take effect, the changes may require varying lengths of 

time to achieve full effect. 

 EPA relies on its reported confirmed releases to calculate the reductions due to 

the proposed rule. Confirmed releases recorded in a particular evaluation year 

vary significantly in severity and length of time undetected, which introduces 

variability in the extent to which costs are avoided each year. 

 The proposed rule includes activities such as: frequent inspections and equipment 

testing to prevent, identify and address releases; near-term shifts in technology; 

and long-term changes in technology. Each class of changes necessarily focuses 

on release avoidance and mitigation over different time horizons. 

In the absence of detailed data characterizing releases by age and type, EPA assumes that 

implementation of the proposed regulations will have a uniform annual impact, with beneficial 

impacts realized on the last day of the year in which costs are incurred (i.e., a one-year delay).

For equipment that is phased in over a period of time, we assume that positive impacts accrue at 

the same rate as installation and adjust those impacts so that they are constant over time.13 

4.3.1 Avoided Remediation Costs 

This section explains how EPA arrives at its estimates of avoided remediation costs.14

EPA first explains how it calculates avoided remediation costs based on the source of a release. 

This is followed by a discussion of the methods used to calculate the number of releases avoided 

and the number of releases for which severity is mitigated. Finally, the two elements are 

combined to estimate the total avoided remediation cost due to the proposed rule.

 

12 Economists commonly define social benefits as the sum of individuals’ willingness to pay to obtain a 

good or service or avoid an unwanted outcome. Avoided remediation costs may not equal willingness to pay.

13 See Appendix I for detailed explanation of this methodology.

14 We refer to avoided cleanup costs and avoided remediation costs interchangeably throughout this 

document.
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4.3.2 Calculating Avoided Remediation Costs

This analysis values avoided releases according to their cost of remediation. EPA 

developed average remediation costs for the four general release size categories reported in the 

draft 23-state Autopsy Report. The four categories generally conform with classification 

conventions used by state LUST offices, and the autopsy reports presented leak frequency data 

for different UST system components for each of the categories. The four categories include:

 Local site extent with soil contamination;

 Local site extent with water contamination;15

 Large site extent with soil contamination; and

 Large site extent with water contamination.16

EPA obtained remediation costs aligned with each of these size categories from a survey

of state LUST offices and calculated average expected remediation costs for each of the release 

categories outlined in the draft 23-state Autopsy Report (Exhibit 4-1).

17 Remediation costs 

associated with groundwater remediation are generally higher than costs for soil remediation. 

Administrative, response, and oversight costs were provided by New Hampshire, and 

remediation costs reflect an average of the costs provided by New Hampshire and Utah.18,19 

 

15 Water contamination refers to both groundwater and surface water contamination, though groundwater 

contamination is more common than surface water contamination.

16 While no specific definition exists for a large site, the LUST Autopsy survey instruments used by the 

states generally define large sites as those with contamination that extends beyond the extent of construction 

excavation. In addition, EPA classified sites with off-site contamination as large sites.

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

from New and Upgraded Underground Storage Tank Systems,” draft, August 2004.

18 To develop an avoided cleanup cost estimate, EPA collected data from Montana, New Hampshire, New

Mexico, South Carolina, Utah, and Virginia, all of which use state financial assurance funds to pay for LUST 

remediation. Each state UST program office received a questionnaire requesting data on typical cleanup costs 

broken out by the four general release types; New Hampshire, New Mexico, South Carolina, Utah and Virginia

provided responses. New Hampshire provided the most comprehensive set of information., including cleanup costs 

by category (i.e., administrative, response, remediation, and oversight), while New Mexico and Utah could only 

provide estimates of remediation costs. Virginia and South Carolina were unable to provide the detail required for 

this analysis, as neither state was able to break out costs by the extent of release (i.e., large or small).

19 New Mexico data are excluded from the calculation for two reasons. First, large-extent groundwater 

cleanup cost estimates from New Mexico are much higher than those for other states ($2.5 million compared with 

$0.6 million or less for other states) but the state did not provide data on the number or type of sites that resulted in 

this high estimate of costs. Second, New Mexico has a relatively small number of UST systems (3,958 UST 

systems as of September 30, 2009). As a result, we believe that New Mexico may be atypical and could skew 

results to overstate avoided costs. We therefore do not include its results among the average avoided costs of 

remediation.
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Exhibit 4-1

a

Remediation Costs By Release Extent

Remediation Cost Category

Site Size And Contamination Type

Small 

extent, soil 

only

Large 

extent, 

soil only

Small 

extent, 

Groundwater 

Contamination

Large 

extent, 

Groundwater 

Contamination

Typical administrative cost (public 

notification, fines, fees, etc)b$0 $0 $500 $3,700 

Typical response cost (e.g., alerting and 

sending personnel, assessments and planning, 

immediate actions to stop the release)

b

$10,000 $10,000 $10,000 $10,000 

Typical remediation costc$14,800 $103,000 $98,500 $409,500 

Typical oversight cost (e.g., monitoring)b$500 $1,000 $1,500 $5,000 

Total typical cost per LUST category $25,300 $114,000 $110,500 $428,200 

Notes:

a Costs shown are one-time costs associated with a site remediation and have been rounded to the nearest hundred dollars.

b The costs presented for administrative, response, and oversight costs are based on New Hampshire data only.

c The remediation costs shown represent the average costs from data provided by New Hampshire and Utah. Although New 

Mexico also reported costs, we excluded it for two reasons. First, groundwater cleanup cost estimates from New Mexico are 

much higher than those for other states ($2.5 million compared with $0.6 million or less for other states) but the state did not 

provide data on the number or type of sites that resulted in this high estimate of costs. Second, New Mexico has a relatively 

small number of UST systems (3,958 UST systems as of September 30, 2009). As a result, New Mexico’s costs may be 

atypical and could skew results to overstate avoided costs.

Sources:

1. New Hampshire Department of Environmental Services, Underground Storage Tank Program, November 18, 2008.

2. Utah Department of Environmental Quality, Underground Storage Tank Program, November 18, 2008.

EPA then used the average cost data from states to develop weighted average costs 

associated with remediation of releases from different portions of the UST system, based on 

release frequency data for each source. Exhibit 4-2 presents, for each of the release sources 

identified in the draft 23-state Autopsy Report, the probability of a release by LUST category.

20

 

Using the cost data from Exhibit 4-1, EPA estimates a weighted average avoided cost per release 

size by multiplying the cost per site by the probability of each release type. These are summed 

across the categories to obtain the weighted average cost by release source.21, 22

 

20 Office of Underground Storage Tanks, “Evaluation of Releases from New and Upgraded Underground 

Storage Tank Systems – Peer Review Draft,” U.S. EPA, August 2004. Note that these sources include California 

and Florida releases, and may therefore be skewed slightly if those more stringent and established programs have 

smaller releases. We are unable to adjust the data to correct for this, but its impact, if any, would likely be to reduce 

the average size and cost of releases slightly.

21 For more information on this approach and the draft 23-state Autopsy report, see “Methodology to 

Estimate Avoided Costs Associated with a Typical UST Leak,” IEc Memorandum to EPA, prepared by Aaron 

Kamholtz, Neal Etre, and Cynthia Manson, October 27, 2008.

22 If we calculate a weighted-average cost per release where sources are weighted proportionally by their 

contribution to total releases, we obtain an overall average cost per release of approximately $143,000 (See memo in 

Appendix I for details). For reference, ASTSWMO estimates the average cost per site to be roughly $127,000 in 

2009. See Association of State and Territorial Solid Waste Management Officials, State Fund Survey Results 2009.
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Exhibit 4-2

Probability And Weighted Average Of Avoided Costs Per Release Source And Extent

Release Source (as identified in 

23-state Autopsy Report)

Small 

extent, soil 

only

Large 

extent, soil 

only

Small extent, 

groundwater 

contamination

Large extent, 

groundwater 

contamination

Total/ 

Weighted 

Average

Piping Probability 40.50% 22.00% 4.50% 33.00% 100.00%

Cost $10,200 $24,300 $5,100 $141,300 $181,000 

Dispenser Probability 71.60% 9.70% 5.40% 13.30% 100.00%

Cost $18,100 $10,700 $6,100 $57,100 $92,000 

Tank Probability 30.70% 17.70% 17.30% 34.30% 100.00%

Cost $7,800 $19,500 $19,700 $147,000 $194,000 

STP Area Probability 50.00% 31.00% 0.00% 19.00% 100.00%

Cost $12,600 $34,300 $0 $81,400 $128,200 

Delivery Problems Probability 59.20% 16.80% 1.80% 22.20% 100.00%

Cost $14,900 $18,500 $2,100 $95,200 $130,700 

Note: Costs shown have been rounded to the nearest hundredth dollar.

Sources:

1. U.S. EPA, Evaluation of Releases from New and Upgraded Underground Storage Tanks (Draft). 2004. (“23-state Autopsy 

Report”) 

2. New Hampshire Department of Environmental Services, Underground Storage Tank Program, November 18, 2008.

3. Utah Department of Environmental Quality, Underground Storage Tank Program, November 18, 2008.

4.4 Establishing Avoided Releases

To estimate the number of baseline releases that would be either avoided completely or 

reduced in severity as a result of the proposed rule, experts responded to a common set of 

questions about potential impacts of the regulatory changes under consideration and participated 

in follow-on discussions on specific areas of uncertainty. 

Each expert reviewed the proposed requirements and estimated how they would affect the 

following dimensions of releases: 23

1. Changes in total frequency (number) of annual confirmed releases;

2. Changes in the number of remaining releases that reach groundwater;

3. Changes in the average quantity released among remaining releases; and,

4. Changes in the average duration of release among remaining releases.

Experts had the option of expressing reductions in release size in terms of duration or 

volume (quantity) of product, depending on how they typically collected and reviewed release 

data. In addition, experts were given the option of expressing these changes either: 1) as a total 

 

23 EPA did not provide experts with information about the universe of facilities or costs associated with 

remediation; experts did, however, have access to information about the number of confirmed releases and their 

distribution across different parts of the UST system (e.g., tanks, pipes, and STP areas). EPA uses confirmed 

releases as the baseline estimate of total releases because high quality data on total releases are not available, and 

release confirmation triggers the remediation costs that would be avoided. 
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4-11

national estimate that accounted for variation in existing regulation and technology among states 

and facilities, or 2) as a change applied to a specific subset of the tank universe (e.g., 10 percent 

change among tanks with a certain technology that are not currently regulated).

Experts also estimated the sensitivity of results to changes in the frequency of regulatory

requirements (e.g., the impact of inspections occurring at different intervals, consistent with 

different regulatory options) and noted synergies or dependencies between requirements, such as:

 Dependency between equipment upgrades and walkthrough inspections: Experts 

consistently noted that simply replacing equipment with newer technologies (e.g., 

requiring that new systems have secondary containment) is insufficient for 

preventing all releases. Regular visual inspections are necessary to identify

potential problems and ensure timely maintenance when a release has not yet 

occurred. 

 Synergy between equipment maintenance and walkthrough inspections: Experts 

noted that the combination of operability testing and visual (walkthrough) 

inspections would result in more avoided releases by identifying equipment 

problems quickly and ensuring effective maintenance. 

 Dependency between operator training and walkthrough inspections: Experts 

noted that training alone is not adequate to ensure effective site maintenance, and 

walkthrough inspection requirements are not effective without trained staff. As a 

result, all experts assumed that impacts related to walkthrough inspections 

reflected trained staff and did not separately identify release reductions associated 

with training.

Experts provided separate estimates of impacts for each regulatory requirement. EPA 

then used these requirement-specific estimates to calculate total avoided costs for the proposed 

rule.24 It is important to note, however, that when considering inter-relationships among 

regulatory requirements, experts differed in how they isolated and/or “allocated” impacts across 

specific requirements because the allocation of impacts across different regulatory requirements 

could potentially be interpreted in several ways (e.g., one expert might decide that inspections 

drove all impacts, while another might decide that testing was the primary factor). EPA 

 

24 Experts were also asked to provide an estimate of the “total cumulative impact” for the proposed rule in 

aggregate as well. The analysis then compared the effects of simultaneously applying the requirement specific 

estimates with their total estimate of the overall effect of the proposed rule. This was performed to verify the 

experts’ logic and identify areas of overlap or synergy among the regulatory requirements. However, subsequent to 

receiving responses from experts, EPA made slight modifications to the list of regulatory requirements (e.g., experts

were asked to consider impacts of an annual overfill prevention equipment test, but EPA is now proposing 3-year 

tests). While EPA was able to adjust the requirement specific estimate of these slight revisions based on the 

sensitivity responses from the experts and follow-up questioning, the original “total cumulative impact” estimates 

provided by the experts are no longer representative of the current proposed rule as a whole. We note, though, that 

the average of cumulative estimates was generally consistent with (i.e., within 10 percent of) the equivalent 

requirement-specific impacts.
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therefore avoids emphasis on the requirement-specific estimates provided by each expert, and 

considers their results in total.25,26

In general, EPA applies the most conservative estimates presented by the experts and 

adjusts for the number of affected units where appropriate. In cases where reductions involved a 

range of values, EPA typically selected the low end of the range. Where experts’ comments 

reflect qualitative assumptions that substantially affect their quantitative estimates, the analysis 

acknowledges those factors as caveats to estimated rates of release avoidance. 

To calculate the number of releases completely avoided as a result of potential regulatory

changes, EPA combines the estimated reductions as identified by experts with a release 

distribution based on data from the draft 23-state Autopsy Report (see Appendix I for more 

detail). To estimate changes in release severity, the analysis uses the distribution of releases 

from the same report to quantify the number of groundwater releases avoided due to reduced 

release volume. Exhibit 4-3 provides a summary of our findings with respect to avoided 

releases. Experts’ responses suggest that the Preferred Option of the proposed rule will avoid 

approximately 20 percent to 60 percent of 7,168 annual releases, or roughly 1,400 to 4,300

releases in evaluation year 2009. In addition,as summarized in Exhibit 4-4, of the remaining 

releases, approximately 330 to 1,100 releases would be reduced in severity (i.e., these releases 

would remain soil contamination only). ).

28

Exhibit 4-3

Avoided Releases

Expert Preferred Option Alternative 1 Alternative 2

Expert 1 1,400 2,100 610

Expert 2 1,400 1,500 420

Expert 3 1,800 2,000 1,400

Expert 4 4,300 4,600 3,300

Range 1,400 – 4,300 1,500 – 4,600 420 – 3,300

Note: See Appendices H and I for inputs and methods for calculating these values. Estimates were 

validated with experts to ensure they accurately capture their opinions. Specifically, Expert 4 

verified that he believed the rule would result in avoidance of over half of confirmed releases.

 

25 Note that EPA carefully examined and reviewed each requirement-specific estimate from each expert, 

and verified the results and assumptions with each expert, particularly in cases where results reflect a wide range.

26 Consistent with the approach adopted for the cost analysis, EPA asked experts to estimate reductions in 

releases and release severity assuming that owners/operators would comply fully with all new regulations under the 

proposed rule. To the extent that non-compliance occurs, both costs and cost savings estimated in this RIA may be 

overstated. It is also possible that some expert opinions on specific rule impacts may not completely capture full 

compliance (and may therefore understate the impacts of the proposed rule), because the experience of most experts 

is related to implementing state regulatory programs and one issue encountered has been non-compliance. However, 

experts asserted that their estimates approximate full compliance, and we do not therefore attempt to adjust for noncompliance in either cost or cost-savings calculations.

28 EPA assumes that these groundwater releases will instead become soil releases. Hypothetically, if 

releases are proportionally split as 50 percent groundwater and 50 percent soil before the rule takes effect, they will 

be split 38 percent groundwater and 62 percent soil after the rule.
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Exhibit 4-4

Avoided Groundwater Contamination Incidents

Expert Preferred Option Alternative 1 Alternative 2

Expert 1 1,100 1,200 380

Expert 2 470 470 210

Expert 3 330 320 260

Expert 4 560 510 530

Range 330 – 1,100 320 – 1,200 210 - 530

Note: See Appendices H and I for inputs and methods for calculating these values. Estimates were 

validated with experts to ensure they accurately capture their opinions. Specifically, Expert 1 

verified that he believed the rule would result in a significant number of avoided groundwater 

releases.

4.4.1 Avoided Releases Using an Alternative Baseline

EPA’s primary analysis assumes that the universe of confirmed releases from UST 

systems remains constant over the time frame of the analysis. However, both the universe of 

UST systems and the release rate (defined as the number of confirmed releases divided by the 

number of UST systems in a given year) have declined over the last two decades.

29 This is 

consistent with the regulatory context of the past 20 years, in which two key factors have been 

driving the number of releases. First, the universe of UST systems has been declining as older, 

smaller tanks have been replaced by newer, larger systems. Second, many of the confirmed 

releases reported in the 1990s and early 2000s were “legacy” releases associated with older 

systems that did not meet the technical standards under 40 CFR Part 280 (e.g., tanks that were 

installed prior to the promulgation of the UST regulation at 40 CFR Part 280). Many of these 

legacy releases are discovered when tanks are removed during property transactions and other 

development projects. 

As the number of legacy releases has declined, the declining trend in total releases has 

“flattened” – trend data suggest that release rates have been approximately one confirmed release 

per hundred tanks in recent years. In addition, it is possible that confirmed releases may increase

in future years, as UST systems continue to age, and as new fuel blends with potentially higher 

corrosivity are introduced into the industry. Given this uncertainty, EPA assumes in the primary 

analysis that release rates remain constant. 

However, to address the uncertainty associated with the number of confirmed releases, 

EPA also assesses avoided costs under the proposed rule using an alternative baseline that 

projects a continued decline in the release rate consistent with the recent historical trend, and also 

captures the decline in the number of UST systems as estimated in Chapter 3, Section 3.3.1. 

This represents a conservative avoided cost scenario because it does not account for the 

possibility that aging systems or changes in fuel could result in increases in the number of 

 

29 See Appendix J for charts and data sources that demonstrate these two trends.
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4-14

confirmed releases reported, or that the number of UST systems could increase (if, for example, 

an expanding economy or population growth demands more service locations). 

To estimate the rate of universe decline, EPA mapped historical data on the number of 

UST systems from 1991 through 2010 to an exponential one-phase decay function, which 

appears to most accurately represent the observed behavior of the UST system universe over 

time.30 EPA also mapped historical data on the release rate to a similar decay function. 31 These

two functions were then used to project future UST universe sizes as well as future release rates. 

We used the results from these two projections to estimate future number of confirmed 

releases.32

The cumulative universe of releases over 20 years under this alternative baseline is 

approximately 60 percent of the number of cumulative releases over 20 years in the primary

analysis. The alternative baseline contains proportionally fewer releases than UST systems 

because two separate declining trends, UST systems and release rate, are used to estimate the 

future decline in releases. This compounds the projected decline in releases.

Exhibits 4-5 and 4-6 provide a summary of our findings with respect to avoided releases

and avoided groundwater contamination events, respectively, assuming the alternative baseline 

releases occur. The alternative baseline results in a reduction of roughly 40 percent of both 

avoided releases and avoided groundwater contamination relative to the original baseline. 

Correspondingly, in the alternative baseline scenario, approximately 810 to 2,600 releases are 

avoided under the Preferred Option, compared to 900 to 2,800 under Alternative 1 and 250 to 

2,000 under Alternative 2. Under the alternative baseline, there are approximately 200 to 650 

avoided groundwater contamination incidents under the Preferred Option, 190 to 700 under 

Alternative 1, and 130 to 320 under Alternative 2.

 

30 See Section 3.3.1.

31 To estimate future release rates, we used a single exponential decay function, which assumes that a 

quantity declines at a rate proportional to its value. This is an appropriate function given the singular and slowing 

rate of decline observed in the release rate over time. The equation for such an exponential singular decay function 

is Y = (Yo – P) * e(-k*X) + P, where P represents the “plateau,” or limit of the function and k represents the function’s 

half-life. See Appendix J for additional details.

32 We use release rates to project future number of releases (rather than use past trends in the number of 

confirmed releases) for two reasons: First, as the UST universe and release rate both appear to decline in a way 

approximating a single-decay exponential function, these projections can be used to estimate future number of 

releases without the added uncertainty of whether the release trend is truly a single-decay exponential function. In 

addition, using the release rate projections to estimate future releases yields a more conservative (lower) total 

number of releases than if we were to use the past trend in the number of releases, which leads to more conservative 

(lower) avoided remediation cost estimates in the alternative baseline.
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Exhibit 4-5

Avoided Releases, Alternative Baseline

Expert Preferred Option Alternative 1 Alternative 2

Expert 1 810 1,200 370

Expert 2 860 900 250

Expert 3 1,100 1,200 810

Expert 4 2,600 2,800 2,000

Range 810 – 2,600 900 – 2,800 250 – 2,000

Note: See Appendices H and I for inputs and methods for calculating these values. Estimates were 

validated with experts to ensure they accurately capture their opinions. Specifically, Expert 4 

verified that he believed the rule would result in avoidance of over half of confirmed releases.

Exhibit 4-6

Avoided Groundwater Contamination Incidents, Alternative Baseline

Expert Preferred Option Alternative 1 Alternative 2

Expert 1 650 700 230

Expert 2 280 280 130

Expert 3 200 190 150

Expert 4 330 310 320

Range 200 – 650 190 – 700 130 - 320

Note: See Appendices H and I for inputs and methods for calculating these values. Estimates were 

validated with experts to ensure they accurately capture their opinions. Specifically, Expert 1 

verified that he believed the rule would result in a significant number of avoided groundwater 

releases.

4.5 Benefits from Avoided Releases and Reduced Release Severity

Two sources of avoided costs constitute the majority of quantifiable positive impacts 

from the proposed rule. First, some costs related to release remediation costs do not occur 

because a number of releases are altogether avoided. Second, some remaining releases are 

reduced in severity because of the proposed requirements (e.g., through earlier detection through 

via walkthrough inspections and improved operability of release detection equipment). To 

capture this dimension of avoided costs, the analysis relies on incremental avoided groundwater 

remediation costs—the cost to remediate a groundwater release less the cost to remediate a soil 

release—as groundwater releases are generally more costly to remediate than soil releases. 

In addition to avoiding remediation costs, release prevention and mitigation results in a 

variety of other beneficial impacts, including:

 Avoided vapor intrusion damages;

 Avoided product loss;

 Human health benefits;
*** E.O. 12866 Review - Draft - Do Not Cite, Quote or Release During Review ***

4-16

 Ecological benefits; and

 Protection of groundwater quality.

This section monetizes, quantifies, or otherwise describes these impacts.

4.5.1 Avoided Release Remediation

To determine the benefits of avoided releases, the analysis relies on the draft 23-state 

Autopsy Report’s distribution of releases by source (i.e., the part of the UST system that 

produces the release), and applies the reduction associated with each regulation to the 

appropriate source to reduce the number of releases avoided by source.33,34 Each avoided release 

is valued according to the weighted average of remediation costs shown in Exhibit 4-2.

35

Exhibit 4-7 presents the total avoided remediation costs under each regulatory option. 

We estimate that discounted benefits from avoided remediation costs range between

approximately $170 million and $570 under the Preferred Option, while avoided costs amount to 

between $190 million and $610 million under Alternative 1 and between $54 million and $440

million under Alternative 2.

Exhibit 4-7

Discounted Avoided Release Remediation Costs

Expert

Preferred Option

($ millions)

Alternative 1

($ millions)

Alternative 2

($ millions)

Expert 1 $170 $250 $75

Expert 2 $180 $190 $54

Expert 3 $230 $250 $170

Expert 4 $570 $610 $440

Range $170 - $570 $190 - $610 $54 - $440

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

4.5.2 Reduction in Release Severity 

To assess the impact on remediation costs associated with reduced release severity, the 

analysis focuses on changes in the number of releases that would have involved groundwater in 

the baseline, but because of the proposed rule, involve only soil. While this metric does not 

capture all of the release mitigation effects of the proposed requirements, groundwater avoidance 

 

33 We exclude the ‘Other’ category of releases from the draft 23-state Autopsy Report because it does not 

map to the reductions designated by the experts. Because ’Other’ accounts for only 1 percent of releases in the 

study, we distribute those releases proportionally across the remaining release sources.

34 We use five system sources to identify release types: piping, dispenser, tank, sump turbine pump area, 

and delivery problems. We then assign each regulation’s effect to source types based on the regulation (e.g. spill 

prevention equipment tests are assumed to affect releases from delivery problems). 

35 This approach assumes that avoided releases are well-represented by the distribution of release severity 

that is identified in the draft 23-state Autopsy Report.
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is likely to be among the most significant effects of the rule. The difference in remediation costs 

between soil and groundwater releases is substantial: remediation cost for an average 

groundwater release is approximately $270,000, while an average soil release costs 

approximately $70,000 to remediate.36 Remediation costs across release extent and medium 

contaminated range from $25,250 to $428,200 based on typical site remediation costs from New 

Hampshire and Utah.37

To estimate the number of releases that are reduced in severity, we use experts’ estimates 

of reductions in groundwater involvement and distribute them across release source, medium 

contaminated, and release extent.38 We distribute remaining releases according to the draft 23-

state Autopsy Report results and calculate additional benefits from remediation due to reductions 

in groundwater contamination following the regulation. We calculate avoided costs from reduced 

release severity by subtracting the cost to remediate all remaining releases after the proposed rule 

is in effect from the cost to remediate all remaining releases in the baseline. In both cases, we 

remove from consideration the same number of fully-avoided releases and consider only the 

avoided costs from shifting releases from groundwater to soil.

A key limitation of this approach may lead to a conservative estimate of the effects of the 

proposed rule. The analysis assumes that the distribution of releases across size (i.e., extent) does 

not change as a consequence of changes in groundwater contamination. In reality, changes in the 

likelihood of groundwater contamination are probably (at least in part) a consequence of 

reductions in release volume and duration. The same reductions in release volume that lower the 

incidence of groundwater contamination would likely also reduce the number of large extent 

releases of all types and decrease the average size of smaller releases. That is, new requirements 

should both reduce the number of groundwater contamination events and large extent events of 

all types. Our model captures only changes in the rates of groundwater contamination, and does 

not consider cost savings associated with smaller soil-only sites. We therefore likely understate 

avoided remediation costs.

39

Exhibit 4-8 displays EPA’s findings regarding discounted avoided costs due to the 

mitigation of groundwater incidents. The analysis calculates avoided remediation costs by taking 

the difference between estimated remediation costs before and after the proposed changes are 

implemented. This difference accounts for both the reduction in groundwater release incidents as 

 

36 These costs reflect a simple average of the costs to remediate a large extent and local extent release of 

each medium.

37 Release extent is classified in the draft 23-state Autopsy Report as either local or large. Releases that do 

not extend beyond the area excavated during remediation are considered local, while releases that extend beyond 

property lines are considered large. Extent does not explicitly involve a measure of release volume. 

38 See Appendix I for details on the calculation of avoided costs.

39 A change in the distribution of releases could also potentially cause the “average size” and cost of soilonly releases to increase (because larger groundwater releases are eliminated but become “large” local soil-only

releases). While this could result in higher average costs for local releases, (i.e., the cost savings for avoiding a 

groundwater release might be less than the difference between “average” groundwater and soil releases), the 

analysis also does not consider the cost savings associated with reducing the size of groundwater releases that still 

reach groundwater or the cost savings associated with reducing the size of soil releases. 
*** E.O. 12866 Review - Draft - Do Not Cite, Quote or Release During Review ***

4-18

well as the increase in soil contamination events.

40 EPA estimates that benefits from averted 

groundwater releases range from approximately $61 million to $270 million across regulatory

options. Avoided costs from reduced groundwater contamination are additive to avoided costs

from avoided releases.

Exhibit 4-8

Discounted Avoided Groundwater Remediation Costs

Expert

Preferred Option

($ millions)

Alternative 1

($ millions)

Alternative 2

($ millions)

Expert 1 $260 $270 $93

Expert 2 $110 $110 $52

Expert 3 $78 $75 $61

Expert 4 $130 $120 $130

Range $78 - $260 $75 - $270 $61 - $130

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

4.5.3 Total Avoided Remediation Costs from Avoided Releases and Reduced Release 

Severity

Exhibit 4-9 displays the sum of avoided remediation costs across both avoided releases 

and mitigated groundwater incidents for all four experts. Because experts with relatively lower 

estimates in one of these categories did not necessarily have similarly low estimates in the other, 

the range of total avoided costs is not the sum of the low and high ranges in Exhibits 4-7 and 4-

8.

Exhibit 4-9

Total Discounted Avoided Remediation Costs

Expert

Preferred Option

($ millions)

Alternative 1

($ millions)

Alternative 2

($ millions)

Expert 1 $430 $520 $170

Expert 2 $300 $300 $110

Expert 3 $310 $330 $230

Expert 4 $700 $740 $570

Range $300 - $700 $300 - $740 $110 - $570

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

4.5.4 Benefits from Avoided Releases and Reduced Release Severity under the Alternative 

Baseline Scenario

Exhibits 4-10 and 4-11 present avoided remediation costs associated with the avoided 

releases and avoided groundwater incidents shown in Exhibits 4-5 and 4-6. In the alternative 

baseline scenario, avoided release remediation costs range from $100 million to $340 million 

 

40 This occurs because the analysis maintains the total number of releases constant: every groundwater 

release that is avoided still requires remediation as a soil release.
*** E.O. 12866 Review - Draft - Do Not Cite, Quote or Release During Review ***

4-19

under the Preferred Option, between $110 million and $370 million under Alternative 1, and 

between $32 million and $260 million under Alternative 2. Averted groundwater remediation

costs, meanwhile, range from $47 million to $160 million under the Preferred Option, $45 

million to $160 million under Alternative 1, and $32 million to $77 million under Alternative 2. 

These alternative estimates represent conservative estimates of the potential value of avoided 

releases, because they do not consider possible factors that may lead to increases in the number 

of releases reported or the number of UST systems in the future.

Exhibit 4-10

Discounted Avoided Release Remediation Costs, Alternative Baseline

Expert

Preferred Option

($ millions)

Alternative 1

($ millions)

Alternative 2

($ millions)

Expert 1 $100 $150 $45

Expert 2 $110 $110 $32

Expert 3 $140 $150 $100

Expert 4 $340 $370 $260

Range $100 - $340 $110 - $370 $32 - $260

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

Exhibit 4-11

Discounted Avoided Groundwater Remediation Costs, Alternative Baseline

Expert

Preferred Option

($ millions)

Alternative 1

($ millions)

Alternative 2

($ millions)

Expert 1 $160 $160 $56

Expert 2 $68 $68 $32

Expert 3 $47 $45 $37

Expert 4 $79 $73 $77

Range $47 - $160 $45 - $160 $32 - $77

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

Exhibit 4-12 displays the sum of avoided remediation costs across both avoided releases 

and mitigated groundwater incidents under the alternative baseline scenario. Because experts 

with relatively lower estimates in one of these categories did not necessarily have similarly low 

estimates in the other, the range of avoided costs presented is not the sum of lower and higher 

bounds in Exhibits 4-10 and 4-11. As the cumulative release universe in the alternative baseline 

scenario is roughly 60 percent of cumulative releases in the original baseline, total avoided costs 

in the alternative baseline are approximately 40 percent lower than they are in the primary

analysis.
*** E.O. 12866 Review - Draft - Do Not Cite, Quote or Release During Review ***

4-20

Exhibit 4-12

Total Discounted Avoided Remediation Costs, Alternative Baseline

Expert

Preferred Option

($ millions)

Alternative 1

($ millions)

Alternative 2

($ millions)

Expert 1 $260 $310 $100

Expert 2 $180 $180 $64

Expert 3 $190 $200 $140

Expert 4 $420 $440 $340

Range $180 - $420 $180 - $440 $64 - $340

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

4.5.5 Avoided Costs by Proposed Requirement

Exhibit 4-13 presents overall avoided costs by proposed requirement and regulatory

option. The exhibit shows ranges of the avoided costs for each proposed requirement based on 

experts’ responses to the effects of the individual requirements in the proposed rule. Beneficial 

impacts are concentrated similarly to costs: the majority of avoided costs are captured by 

walkthrough inspections, overfill prevention equipment tests, spill prevention equipment tests, 

interstitial integrity tests, and operability tests.

41 Estimates in Exhibit 4-13 assume that cost 

savings associated with each regulatory requirement occur one year after the implementation and 

reflect discounting. 

Under the Preferred Option, total avoided costs are approximately $300 million to $700

million per year. Avoided costs increase to $300 million to $740 million under Alternative 1,

largely due to more frequent overfill prevention equipment tests and interstitial integrity tests. 

Avoided costs under Alternative 2 are $110 million to $570 million per year, where less frequent 

walkthrough inspections and no requirement for interstitial integrity tests reduce beneficial 

impacts by approximately 19 percent to 65 percent compared to the Preferred Option. 

We note that the model used by EPA to estimate avoided remediation costs is not 

designed to measure avoided costs from large-scale releases such as those typically associated 

with FCTs and AHFDSs. We, therefore, do not offer an estimate of avoided costs for 

 

41 Some proposed requirements, particularly those that target narrow subpopulations of the UST system 

universe, may generate higher avoided costs than this analysis suggests. Three sources of uncertainty drive these 

smaller universe results. First, EPA's model is calibrated to estimate avoided costs for broad-based national changes 

at average facilities; extrapolation of these results to small populations may not reflect specific subpopulations (e.g., 

UST systems in Indian country). Second, several experts stated that their estimates of impacts for requirements 

affecting narrow subsets of UST populations are more uncertain than broader estimates. Finally, experts 

emphasized that equipment replacement, inspection, training, and testing are all essential to ensure release 

reductions, and they used judgment to emphasize the different roles of these different activities. Therefore, the 

assignment of specific impacts to each of the proposed requirements is potentially less accurate than the aggregate 

estimates of avoided impacts.
*** E.O. 12866 Review - Draft - Do Not Cite, Quote or Release During Review ***

4-21

requirements that apply to these systems. However, we include a qualitative discussion of these 

acute events later in this chapter.

Exhibit 4-13

Total Discounted Avoided Cost By Proposed Requirementa, h

Description b, c

Preferred Option

($ millions)

Alternative 1

($ millions)

Alternative 2

($ millions)

Release Prevention

Walkthrough inspections $94.0 - $570 $93.0 - $550 $44.0 - $480

Periodic testing of:

- Overfill prevention equipment

- Spill prevention equipment

- Interstitial integrity

$70.0 - $140 $91.0 - $170 $35.0 - $70.0

Testing after repairs to spill and overfill prevention equipment, and 

interstices $1.50 - $13.0 $1.50- $12.0 $1.50 - $13.0

Elimination of flow restrictors in vent lines for all new tanks and 

when overfill devices are replaced $0.170 - $12.0 $0.150 - $12.0 $0

Subtotal - Release Preventiond

$260 - $660 $270 - $670 $92.0 - $550

Release Detection

Operability tests for release detection methods $25.0 - $43.0 $25.0 - $43.0 $8.60 - $17.0

Eliminate groundwater and vapor monitoring as release detection 

methods Not estimated. See note e.

Add SIR/CITLD to regulations with performance criteria $0.140 - $1.80 $0.140 - $1.80 $0.140 - $1.90

Remove deferral for emergency generator tanks $0.530 - $6.20 $0.530 - $6.20 $0.530 - $6.30

Change release detection leak rate probabilities $0 $0 - $21.0 $0

Response to interstitial monitoring alarms $0 - $0.850 $0 - $0.820 $0 - $0.890

Subtotal - Release Detectiond

$32.0 - $49.0 $32.0 - $70.0 $10.0 - $24.0

Other

Remove deferral for airport hydrant fuel distribution systems Not estimated. See note f.

Remove deferral for UST systems with field-constructed tanks Not estimated. See note f.

Require notification of ownership change $0 $0 $0

Closure of lined tanks that cannot be repaired according to a code 

of practice $0.001 - $0.240 $0.001 - $0.240 $0.001 - $0.250

Requirements for determining compatibility Not estimated. See note g.

Subtotal – Otherd

$0.001 - $0.240 $0.001 - $0.240 $0.001 - $0.250

EPAct-related Provisions

Operator training $0.015 - $1.20 $0.015 - $1.10 $0.018 - $1.30

Secondary containment $0.370 - $1.10 $0.360 - $1.10 $0.470 - $1.10

Subtotal - EPAct-related Provisionsd

$1.00 - $2.00 $1.00 - $1.90 $1.10 - $2.10

Totald$300 - $700 $300 - $740 $110 - $570

a

For each proposed requirement, this exhibit presents a range of discounted avoided costs. This range represents the lowest avoided cost 

estimate for the proposed requirement among the four experts and the highest avoided cost estimate for the proposed requirement 

among the four experts.

b

For some requirements, such as removing the deferral for emergency generator tanks, avoided costs under Alternative 2 are higher 

than under the Preferred Option or Alternative 1. This occurs because: 1) these requirements create groundwater contamination

reductions; and 2) fewer releases are altogether avoided under Alternative 2. This combination of factors implies that groundwater 

reductions have a greater effect under Alternative 2, as they affect a larger number of releases. This effect is very small compared to the 

magnitude of changes in other requirements.
*** E.O. 12866 Review - Draft - Do Not Cite, Quote or Release During Review ***

4-22

Exhibit 4-13

Total Discounted Avoided Cost By Proposed Requirementa, h

Description b, c

Preferred Option

($ millions)

Alternative 1

($ millions)

Alternative 2

($ millions)

c

Some proposed requirements, particularly those that target narrow subpopulations of the UST system universe, may generate higher 

avoided costs than this analysis suggests. Three sources of uncertainty drive these smaller universe results: First, EPA's model is

calibrated to estimate avoided costs for broad-based national changes at average facilities; extrapolation of these results to small 

populations may not reflect specific subpopulations (e.g., UST systems in Indian country). Second, several experts stated that their 

estimates of impacts for requirements affecting narrow subsets of UST populations are more uncertain than broader estimates. Finally, 

experts emphasized that equipment replacement, inspection, training, and testing are all essential to ensure release reductions, and they 

used judgment to emphasize the different roles of these different activities. Therefore, the assignment of specific impacts to each of the 

proposed requirements is potentially less accurate than the aggregate estimates of avoided impacts.

d

Subtotals and totals presented in this table do not represent the sums of the ranges across the proposed requirements because experts 

with relatively lower estimates for one proposed requirement did not necessarily have similarly low estimates for other requirements. 

Instead, the subtotals and totals shown represent the lowest and highest estimates among the four experts for each subtotal group and for 

the total across all proposed requirements.

e Experts were not asked to estimate avoided costs resulting from the elimination of groundwater and vapor monitoring. EPA decided to 

include this requirement after consulting with its experts.

f Reductions in frequency and release severity (as measured by changes in groundwater contamination) do not adequately capture the 

positive impacts of preventing releases from very large systems such as AHFDSs and UST systems with FCTs. Releases from these 

types of systems constitute a small portion of total releases, but may be large in volume and can result in significant groundwater 

impacts. Especially in the case of AHFDSs, even minor problems can create large releases due to the significant pressure under which 

contents are stored. The model used by EPA to estimate avoided remediation costs is not designed to measure avoided costs from very 

large releases such as those typically associated with AHFDSs and FCTs, and we therefore do not offer an estimate of avoided costs for 

requirements that apply to these systems.

g Experts were not asked to estimate avoided costs resulting from requirements for determining compatibility. EPA decided to include 

this requirement after consulting with its experts.

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

As noted in Exhibit 4-1, EPA excluded the highest state-level remediation cost values from its 

calculation of average cost of release remediation. While this step contributes toward a more 

conservative estimate of avoided costs, the possibility remains that the average remediation costs

used in Exhibit 4-13 overestimate the positive impacts of the proposed rule if state data provided 

are not representative of national average remediation costs. In Exhibit 4-14, we therefore 

estimate the positive effects of the proposed rule using only the lowest remediation costs 

available.42 As shown in Exhibit 4-14, EPA’s estimate of the avoided costs of the proposed rule

using the lowest state cost estimates is $190 million to $460 million per year under the Preferred 

Option. This estimate increases to a range of $190 million to $480 million per year under 

Alternative 1 and decreases to a range of $66 million to $370 million per year under Alternative 

2. While this is not a true “lower bound” estimate, these estimates reflect costs that lead to lower 

than average costs when compared to figures reported by ASTSWMO.43

 

42 These were provided by the State of New Hampshire’s UST program.

43 If we calculate a weighted-average cost per release where sources are weighted proportionally by their 

contribution to total releases using the lowest remediation cost data available (i.e., from New Hampshire), we obtain 

an overall average cost per release of approximately $96,000 (See memo in Appendix I for details). For reference, 

ASTSWMO estimates the average cost per site to be roughly $127,000 in 2009. See Association of State and 

Territorial Solid Waste Management Officials, State Fund Survey Results 2009.
*** E.O. 12866 Review - Draft - Do Not Cite, Quote or Release During Review ***

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Exhibit 4-14

Sensitivity Analysis: Total Discounted Avoided Cost By Proposed Requirement

Based On New Hampshire Remediation Costsa, h

Description b, c

Preferred Option

($ millions)

Alternative 1

($ millions)

Alternative 2

($ millions)

Release Prevention

Walkthrough inspections $55.0 - $370 $54.0 - $360 $25.0 - $310

Periodic testing of:

- Overfill prevention equipment

- Spill prevention equipment

- Interstitial integrity

$46.0 - $96.0 $61.0 - $110 $24.0 - $47.0

Testing after repairs to spill and overfill prevention equipment, and 

interstices $1.00 - $8.00 $1.00 - $8.00 $1.00 - $8.20

Elimination of flow restrictors in vent lines for all new tanks and 

when overfill devices are replaced $0.120 - $8.10 $0.100 - $8.10 $0

Subtotal - Release Preventiond

$170 - $430 $170 - $440 $57.0 - $350

Release Detection

Operability tests for release detection methods $15.0 - $27.0 $15.0 - $27.0 $5.00 - $10.0

Eliminate groundwater and vapor monitoring as release detection 

methods Not estimated. See note e.

Add SIR/CITLD to regulations with performance criteria $0.090 - $1.10 $0.090 - $1.10 $0.090 - $1.20

Remove deferral for emergency generator tanks $0.340 - $3.80 $0.340 - $3.80 $0.340 - $3.90

Change release detection leak rate probabilities $0 $0 - $13.0 $0

Response to interstitial monitoring alarms $0 - $0.520 $0 - $0.500 $0 - $0.540

Subtotal - Release Detectiond

$20.0 - $31.0 $20.0 - $44.0 $6.00 - $15.0

Other

Remove deferral for airport hydrant fuel distribution systems Not estimated. See note f.

Remove deferral for UST systems with field-constructed tanks Not estimated. See note f.

Require notification of ownership change $0 $0 $0

Closure of lined tanks that cannot be repaired according to a code 

of practice $0.001 - $0.150 $0.001 - $0.150 $0.001 - $0.150

Requirements for determining compatibility Not estimated. See note g.

Subtotal – Otherd

$0.001 - $0.150 $0.001 - $0.150 $0.001 - $0.150

EPAct-related Provisions

Operator training $0.009 - $0.750 $0.009 - $0.700 $0.011 - $0.810

Secondary containment $0.240 - $0.760 $0.230 - $0.760 $0.300 - $0.770

Subtotal - EPAct-related Provisionsd

$0.670 - $1.30 $0.640 - $1.20 $0.760 - $1.40

Totald$190 - $460 $190 - $480 $66.0 - $370
*** E.O. 12866 Review - Draft - Do Not Cite, Quote or Release During Review ***

4-24

Exhibit 4-14

Sensitivity Analysis: Total Discounted Avoided Cost By Proposed Requirement

Based On New Hampshire Remediation Costsa, h

Description b, c

Preferred Option

($ millions)

Alternative 1

($ millions)

Alternative 2

($ millions)

a

For each proposed requirement, this exhibit presents a range of discounted avoided costs. This range represents the lowest avoided cost 

estimate for the proposed requirement among the four experts and the highest avoided cost estimate for the proposed requirement 

among the four experts.

b

For some requirements, such as removing the deferral for emergency generator tanks, avoided costs under Alternative 2 are higher 

than under the Preferred Option or Alternative 1. This occurs because: 1) these requirements create groundwater contamination 

reductions; and 2) fewer releases are altogether avoided under Alternative 2. This combination of factors implies that groundwater 

reductions have a greater effect under Alternative 2, as they affect a larger number of releases. This effect is very small compared to the 

magnitude of changes in other requirements.

c

Some proposed requirements, particularly those that target narrow subpopulations of the UST system universe, may generate higher 

avoided costs than this analysis suggests. Three sources of uncertainty drive these smaller universe results: First, EPA's model is 

calibrated to estimate avoided costs for broad-based national changes at average facilities; extrapolation of these results to small 

populations may not reflect specific subpopulations (e.g., UST systems in Indian country). Second, several experts stated that their 

estimates of impacts for requirements affecting narrow subsets of UST populations are more uncertain than broader estimates. Finally, 

experts emphasized that equipment replacement, inspection, training, and testing are all essential to ensure release reductions, and they 

used judgment to emphasize the different roles of these different activities. Therefore, the assignment of specific impacts to each of the 

proposed requirements is potentially less accurate than the aggregate estimates of avoided impacts.

d

Subtotals and totals presented in this table do not represent the sums of the ranges across the proposed requirements because experts 

with relatively lower estimates for one proposed requirement did not necessarily have similarly low estimates for other requirements. 

Instead, the subtotals and totals shown represent the lowest and highest estimates among the four experts for each subtotal group and for 

the total across all proposed requirements.

e Experts were not asked to estimate avoided costs resulting from the elimination of groundwater and vapor monitoring. EPA decided to 

include this requirement after consulting with its experts.

f Reductions in frequency and release severity (as measured by changes in groundwater contamination) do not adequately capture the 

positive impacts of preventing releases from very large systems such as AHFDSs and UST systems with FCTs. Releases from these 

types of systems constitute a small portion of total releases, but may be large in volume and can result in significant groundwater 

impacts. Especially in the case of AHFDSs, even minor problems can create large releases due to the significant pressure under which 

contents are stored. The model used by EPA to estimate avoided remediation costs is not designed to measure avoided costs from very 

large releases such as those typically associated with AHFDSs and FCTs, and we therefore do not offer an estimate of avoided costs for 

requirements that apply to these systems.

g Experts were not asked to estimate avoided costs resulting from requirements for determining compatibility. EPA decided to include 

this requirement after consulting with its experts.

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

For reference, we also estimate avoided costs using ASTSWMO’s reported average cleanup cost 

of $127,216 for 2009. If we value the releases and groundwater incidents avoided under each 

option using this estimate, we obtain total avoided costs of approximately $250 million to $610

million under the Preferred Option, $250 million to $640 million under Alternative 1, and $87 

million to $490 million under Alternative 2. Note that these values fall between our primary

estimates and sensitivity analyses.44

 

44 Under the alternative baseline, total avoided costs based on New Hampshire remediation costs range 

from $110 million to $280 million in the Preferred Option. This represents an extreme lower bound analysis of 

avoided remediation costs.
*** E.O. 12866 Review - Draft - Do Not Cite, Quote or Release During Review ***

4-25

4.6 Avoided Vapor Intrusion Damages

Vapor intrusion generally occurs when petroleum or highly-dissolved concentrations 

come into direct contact with building sumps and foundations, elevator shafts, and preferential 

pathways (e.g. improperly sealed utility lines). Intrusion can also occur when these substances 

come close to building foundations.45 The cost to remediate vapor intrusion is typically 

incremental to the cost to remediate a LUST site. Based on information provided by four states, 

EPA estimates that from one to 10 percent of all releases cause vapor intrusion issues. Each of 

these instances requires additional remedial actions valued between $27,000 and $52,000 beyond 

ordinary release remediation costs.46 As reported in Exhibit 4-15, given 1,680 to 5,370 avoided 

releases and mitigated groundwater incidents, we estimate between 17 and 540 avoided vapor 

intrusion incidents under the Preferred Option. This reduction would avoid between $0.4 million 

and $26 million per year in avoided remediation costs related to vapor intrusion. While the lower 

end of this range does not vary significantly among the options, EPA estimates savings of up to 

$28 million under Alternative 1 and $19 million under Alternative 2.

Exhibit 4-15

Avoided Vapor Intrusion Costs

Scenario

Preferred Option

($ millions)

Alternative 1

($ millions)

Alternative 2

($ millions)

Total avoided releases and avoided groundwater 

incidents 1,680 - 5,370 1,820 - 5,780 630 - 3,860

Low

 1% of releases involve vapor intrusion

 $27,000 per release to remediate

$0.4 - $1.4 $0.5 - $1.5 $0.2 - $1.0

High

 10% of releases involve vapor intrusion

 $52,000 per release to remediate

$8.2 - $26.0 $8.9 - $28.0 $3.1 - $19.0

Under the alternative baseline, avoided vapor intrusion costs fall due to the smaller 

universe of releases. In the Preferred Option, avoided costs are $0.3 million to $16.0 million. 

Under Alternative 1, avoided costs range from $0.3 million to $17 million; under Alternative 2, 

they range between $0.1 million and $11.0 million. See Exhibit 4-20 for a full accounting of 

avoided costs in the alternative baseline. 

4.7 Product Loss

Releases into the environment cause operators to lose otherwise marketable fuel products. 

Exhibit 4-16 presents costs avoided due to product loss. The analysis calculates the product loss 

 

45 Davis, Robin V. February 9, 2010. “Petroleum Hydrocarbon Vapor Intrusion Investigations: Current 

General Practice,” Leaking Underground Storage Tanks, Utah Dept. of Environmental Quality, 

http://www.epa.gov/oust/pviwebinar_approach.pdf.

46 New Hampshire, Utah, South Carolina, Virginia, and New Mexico were contacted for LUST remediation 

costs, but only New Hampshire was able to provide a cost for cleanup actions related to vapor intrusion. Other state 

programs contributed data to the frequency of incidents, but not to costs.
*** E.O. 12866 Review - Draft - Do Not Cite, Quote or Release During Review ***

4-26

associated with avoided releases by multiplying the average volume associated with each release 

source by the number of releases of that type before and after the proposed rule is in effect. 

Based on the estimates of avoided releases presented by the experts, the draft 23-state Autopsy 

Report’s distribution of releases, and average release volumes reported in the Florida study, EPA 

estimates that approximately 0.64 million gallons to 2.3 million gallons per year of diesel and 

gasoline releases are avoided as a consequence of the Preferred Option. At an average price of 

$3.27 per gallon, owners and operators avoid losing approximately $2.0 million to $7.2 million

in product due to releases.47 These values increase to a range of 0.84 million gallons to 2.5 

million gallons and $2.6 million to $7.6 million under Alternative 1 and decrease to a range of 

0.13 million gallons to 1.7 million gallons and $0.4 million to $5.3 million under Alternative 2. 

Limited data on release size do not support an analysis of avoided product loss associated with 

releases that are reduced in severity. 

Exhibit 4-16

Value of Avoided Product Loss

Expert Preferred Option Alternative 1 Alternative 2

Thousand 

gallons $ millions

Thousand 

gallons $ millions

Thousand 

gallons $ millions

Expert 1 640 $2.0 950 $2.9 200 $0.6

Expert 2 800 $2.5 840 $2.6 130 $0.4

Expert 3 810 $2.5 860 $2.6 570 $1.7

Expert 4 2,300 $7.2 2,500 $7.6 1,700 $5.3

Range 640 – 2,300 $2.0 - $7.2 840 - 2,500 $2.6 - $7.6 130 – 1,700 $0.4 - $5.3

Releases are valued using an average price of motor fuel for 2008. Prices per gallon for all grades of retail motor 

gasoline and No. 2 diesel fuel (all concentrations of sulfur) were $3.32 and $3.15, respectively, as reported by the 

Bureau of Transportation in Table 3-8: Sales Price of Transportation Fuel to End-Users in National Transportation 

Statistics 2010 (at http://www.bts.gov/publications/national_transportation_statistics/pdf/entire.pdf). We weight 

these prices according to prime supplier sales volumes in 2009 published by the Energy Information 

Administration, which summed to 362,798.5 thousands of gallons per day for gasoline and 132,489.3 thousands of 

gallons per day for all grades of diesel fuel (at http://www.eia.gov/dnav/pet/pet_cons_prim_dcu_nus_a.htm).

Under the alternative baseline, avoided costs due to product loss are lower than in the 

original baseline as there are relatively fewer releases. In the Preferred Option, avoided costs due 

to product loss are $1.2 million to $4.3 million. Under Alternative 1, avoided costs range from 

$1.6 million to $4.6 million; under Alternative 2, they range between $0.2 million and $3.2

million. See Exhibit 4-20 for a full accounting of avoided costs in the alternative baseline

scenario. 

 

47 Releases are valued using an average price of motor fuel for 2008. Prices per gallon for all grades of 

retail motor gasoline and No. 2 diesel fuel (all concentrations of sulfur) were $3.32 and $3.15, respectively, as 

reported by the Bureau of Transportation in Table 3-8: Sales Price of Transportation Fuel to End-Users in National 

Transportation Statistics 2010 (at http://www.bts.gov/publications/national_transportation_statistics/pdf/entire.pdf). 

We weight these prices according to prime supplier sales volumes in 2009 published by the Energy Information 

Administration, which summed to 362,798.5 thousands of gallons per day for gasoline and 132,489.3 thousands of 

gallons per day for all grades of diesel fuel (at http://www.eia.gov/dnav/pet/pet_cons_prim_dcu_nus_a.htm)
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4.8 Human Health Benefits

Exposure to petroleum through ingestion, dermal contact, and inhalation can cause a 

range of health effects, including cancer and non-cancer impacts associated with benzene, and 

non-cancer impacts (e.g., neurological impacts) associated with other petroleum constituents 

such as toluene.48 Reductions in the number and severity of releases will reduce these exposures 

and associated morbidity and mortality impacts. This benefits assessment examines the impacts 

of the regulations under consideration on population cancer risks associated with benzene 

exposures through groundwater. Other health impacts, including benzene-related risks through 

inhalation of vapor and nonbenzene health effects, are not able to be reliably quantified with 

available data, but represent additional potential benefits of the rule.

4.8.1 Avoided Benzene Cancer Risk

To address human health benefits associated with avoided exposure to benzene through 

groundwater, EPA performed a screening analysis using data on: 

 Expected number of cancer cases per underground storage tank release;

 Estimated number of releases prevented through implementation of the regulatory

revisions; and,

 Estimated WTP to avoid a fatal cancer, expressed as the value of a statistical life 

(VSL). 

The EPA risk assessment provides population risk estimates on a per-release basis, 

expressed as the expected number of cancer cases per release. That analysis estimated population 

risk for releases of varying volumes and plume ages.49 To estimate the benefits of avoided cancer 

cases, EPA uses the estimated number of releases avoided and releases reduced in severity and 

applies the 2009 EPA estimated value of a statistical life (VSL) of $8.9 million as the value 

associated with avoiding one terminal cancer.50,51 

Exhibit 4-17 presents EPA’s findings for four avoided release scenarios. The analysis 

shows that, even under unlikely assumptions of 100-year plumes and 5,000 gallon releases, total

upper bound human health benefits due to avoided cancer cases are limited to approximately

 

48 For example, see "Benzene toxicity and risk assessment, 1972-1992: implications for future regulation," 

D J Paustenbach, R D Bass, and P Price, Environ Health Perspect. 1993 December; 101(Suppl 6):177–200.

49 “Risk Analysis to Support Potential Revisions to Underground Storage Tank (UST) Regulations,” 

prepared by RTI International, December 22, 2010.

50 “Summary of the updated Regulatory Impact Analysis (RIA) for the Reconsideration of the 2008 Ozone 

National Ambient Air Quality Standard (NAAQS),” U.S. EPA, http://www.epa.gov/ttn/ecas/regdata/RIAs/s1-

supplemental_analysis_full.pdf

51 This screening analysis also does not address the issue of latency, or discounting the VSL to reflect 

health effects that occur many years after exposure.
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$850,000 per year under the Preferred Option. This value changes little when considering 

Alternatives 1 or 2. EPA’s central estimate of the benefits associated with avoided cancer 

incidence uses avoided costs from scenarios in which plume ages are one and five years and 

average release volume is 50 gallons, consistent with release data from available studies.52 These

assumptions suggest human health benefits of approximately $1,400 to $4,500 per year

associated with avoided benzene-related cancer risk. 

These modest findings reflect a number of assumptions that may provide an incomplete picture 

of the risks associated with leaks from underground storage tanks. First, they reflect the 

frequency of confirmed releases, and (except in the 100-year spill time frame) the assumption 

that the existing UST cleanup program eliminates all exposure immediately upon release 

discovery. In addition, the risk assessment did not consider larger-scale releases over 5,000 

gallons in any scenario, though a number of these are reported annually. Finally, exposure 

scenarios generally reflect behavioral assumptions that exposed individuals will limit their own 

exposure in certain cases (e.g., when petroleum contamination exceeds a “taste/odor threshold” 

and water is no longer palatable). Any or all of these assumptions may not hold in all cases, and 

other risks and health benefits are not reflected at all in this screening level risk assessment (see 

below). However, it is also not unreasonable to assume that health impacts under this proposed 

rule would be limited, given the baseline existence of technical and cleanup requirements 

designed to minimize human exposure. 

 

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

Underground Storage Tank Facilities in Florida,” draft, March 2005. Note that this estimate differs from the 

calculated avoided product loss based on average release volumes in the Florida autopsy data. We use a more 

conservative estimate of release volumes (consistent with median release volumes from Florida’s autopsy study) to 

reflect uncertainty regarding exposure and to offset the risk analysis assumption that releases occur over a very short 

time frame.
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Exhibit 4-17

Discounted Benefits From Benzene Cancer Avoidanced

Release time to discovery and volume a,b, c

Preferred 

Option

($ thousands)

Alternative 1

($ thousands)

Alternative 2

($ thousands)

Total releases 1,680 - 5,370 1,820 - 5,780 630 - 3,860

1 year until discovery, 10 gals. release

 Prob(Cancer Case) = 0.000000012

$0.15 - $0.49 $0.17 - $0.53 $0.06 - $0.35

1 year until discovery, 50 gals. released

Prob(Cancer Case) = 0.000000032

$0.43 - $1.4 $0.47 - $1.5 $0.16 - $0.99

5 years until discovery, 50 gals. released

Prob(Cancer Case) = 0.00000017 $2.4 - $7.6 $2.6 - $8.2 $0.89 - $5.5

100 year until discovery, 5,000 gals. release

 Prob(Cancer Case) = 0.000019

$270 - $850 $290 - $910 $100 - $610

Primary estimate (average of 50 gal. release 

over 1 and 5 years)

$1.4 - $4.5 $1.5 - $4.8 $0.53 - $3.2

a

 The pathway assessed to evaluate avoided cancer risk is benzene exposure through contaminated groundwater.

b Calculations based on a value of statistical life of $8.9 million, as presented in U.S. EPA, “Summary of the updated 

Regulatory Impact Analysis (RIA) for the Reconsideration of the 2008 Ozone National Ambient Air Quality Standard 

(NAAQS).”

c

Probability of cancer cases per release based on RTI International, “Risk Analysis to Support Potential Revisions to 

Underground Storage Tank (UST) Regulations,” December 22, 2010.

d Estimates were derived using a seven percent discount rate. 

Under the alternative baseline, the total upper bound human health benefits due to 

avoided cancer cases are limited to approximately $510,000 per year under the Preferred Option. 

The central estimate of the benefits associated with avoided cancer incidence suggests human 

health benefits of approximately $840 to $2,700 per year associated with avoided benzenerelated cancer risk. See Exhibit 4-20 for a full accounting of avoided costs in the alternative 

baseline scenario. 

4.8.2 Other Human Health Benefits

The foregoing benefits from avoided benzene cancer avoidance represent only one 

portion of the health risk associated with releases from leaking UST systems. The risk 

assessment examined only benzene risks through groundwater ingestion and shower inhalation 

and focused on average population risks. Such risks are limited in part because the analysis 

concluded that many sites do not have residents using groundwater near the area affected by a 

plume. Nevertheless, the risk assessment concluded that some larger releases may have 

significant human health risks associated with them. 

Inhalation risks associated with direct exposure to vapor and other petroleum-related 

chemicals were not evaluated.53 While EPA does not expect most instances of these risks to be 

 

53 Neither cancer nor non-cancer risks of these types were evaluated.
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large, significant risks remain for a subset of releases. To the extent that the proposed rule would 

prevent or mitigate the most significant releases, this analysis may understate the avoided human 

health impacts associated with the rule. 

More broadly, the complex nature of petroleum mixtures and the limited toxicological 

data available both for petroleum mixtures and for individual component compounds of 

petroleum limits EPA’s ability to comprehensively document the health effects associated with 

the most significant releases. However, the toxicological testing that has been conducted on 

some common components of total petroleum hydrocarbons (TPH) suggests that exposures to 

TPH through inhalation or ingestion could result in the following effects:

 Neurological effects, such as central nervous system depression, have been 

associated with acute and chronic exposures to toluene and xylenes; n-hexane 

exposure has been associated with effects on peripheral neuropathy;

 Hematological effects associated with oral and inhalation exposure to benzene 

and with oral and inhalation exposure to naphthalene;

 Renal and hepatic effects associated with BTEX compounds and other aromatic 

hydrocarbon compounds;

 Developmental effects associated with intermediate exposures to ethylbenzene 

and xylenes; and 

 Carcinogenic effects of oral exposures to certain polycyclic aromatic 

hydrocarbons (PAHs) including benzo(a)pyrene, benz(a)anthracene, and 

dibenz(a,h)anthracene.54

Reduced exposure to TPH as a result of the proposed rule could therefore have nonquantified 

benefits related to reducing the risks of one or more of the above health effects.

4.9 Avoided Acute Exposure Events and Large-Scale Releases

Most health effects associated with leaking underground storage tanks reflect long-term 

exposures, but some releases from UST systems relate to acute events such as fire or explosion. 

These releases can involve acute exposures, large volumes of free product, extensive ecological 

damage, and injuries and death, depending on the circumstances of the event. Because these 

events are difficult to predict and infrequent, it is not possible to quantify or monetize the impact 

associated with avoiding them, but the response, remediation, and medical costs associated with 

a single acute incident could be significant. The proposed regulations are designed to ensure 

effective maintenance of UST systems, and one benefit will be to reduce the chances of an acute 

event that could result in a large-scale release and its associated damages (e.g., a well-maintained 

UST system is less likely to be in a condition where it may explode).

 

54 United States Department of Health and Human Services, Public Health Service, Agency for Toxic 

Substances and Disease Registry, “Toxicological Profile for Polycyclic Aromatic Hydrocarbons,” August 1995. 
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Acute events are especially important in the case of UST systems such as airport hydrant 

fuel distribution systems and UST systems with field-constructed tanks, which can hold large 

volumes of fuel. Releases from these systems can be large in volume and can result in significant 

groundwater and other environmental and health impacts. For instance, an estimated 300,000 to 

500,000 gallons of fuel was released from a 2.1 million gallon underground field-constructed 

tank at a fuel depot in Portsmouth, VA that was in operation from the 1950s to mid-1980s. Free 

product was found within 20 feet of a nearby creek in 1987. To date, approximately 143,000 

gallons of product have been recovered.55 

Another example of the potential magnitude of the releases from these systems is Pease 

Air Force Base, where jet fuel was delivered to the runway apron via an underground fueling 

system.56 Historical leakage from the system contaminated soil and groundwater, forming 

groundwater plumes at many sites along the system.58 A site release study identified 60 to 70 

release points with varying degrees of severity along the refueling system line with free product 

found under the apron at closure.59 While there are no historical records available indicating the 

amount of leaked fuel or leak origins, the presence of residual soil and groundwater 

contamination poses a significant threat to human health and the environment. 

While the analytical procedure used by EPA to estimate benefits was unable to capture 

the positive impacts of preventing releases from these types of systems, we note that preventing 

or mitigating these releases may generate substantial reductions in remediation costs. 

4.10 Ecological Benefits

A document prepared for EPA outlines the types of ecological damages that can result 

from land-based pollution releases:60

Measurable damage to ecological resources from land releases generally occurs when groundwater 

or overland flow of water carry contaminants to a nearby surface water body. Flood events and 

other acute incidents can cause releases of waste that have an immediate and significant effect on 

 

55 Phone conversation and email from Lynne Smith, Geologist, VA DEQ and Russ Ellison, VA DEQ.

56 New Hampshire Department of Environmental Services, Air Resources Division. 2007. Permit 

Application Review Summary, Former Pease AFB Remediation Project, FY04-0453. 10 March 2010 < 

http://www2.des.state.nh.us/OneStopPub/Air/3301590780FY04-0453TypeSummary.pdf>.

58 New Hampshire Department of Environmental Services, Air Resources Division. 2009. Permit 

Application Review Summary, Former Pease AFB Remediation Project, 09-0113. 10 March 2010, see: 

http://www2.des.state.nh.us/OneStopPub/Air/330159094909-0113TypeSummary.pdf.

59 Hilton, Scott. Site Summaries Pease Air Force Base Newington/Portsmouth. 2008. NH Department of 

Environmental Services. 10 March 2010 see: 

http://des.nh.gov/organization/divisions/waste/hwrb/fss/superfund/summaries/pease.htm.

60 “Approaches to Assessing the Benefits, Costs, and Impacts of the RCRA Subtitle C Program,” prepared 

by Industrial Economics, Inc. for U.S. EPA Office of Solid Waste, October 2000, p. 3-17, accessed at 

http://www.epa.gov/oswer/docs/rcradocs/rcra.pdf.
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ecological resources (e.g., a surface impoundment dike fails and releases contaminants into a river, 

killing fish and other biota). More common are gradual increases in contaminant levels due to 

long-term releases to groundwater. These may have a broad array of impacts on both resources 

used by humans (such as fish populations) and on “non-use value” such as the value of preserving 

habitat and species diversity. In addition, biota can be affected by uptake of contaminants from 

soil, particularly in wetlands or areas where the water table is high.

Because of their locations, releases from underground storage tanks would likely be classified as 

land releases. Thus, any releases avoided due to the proposed rule may result in ecological 

benefits. A complete assessment of ecological benefits, however, requires significant locationspecific data, and it is often difficult to identify sufficient data to support valuation of both use 

and non-use values of preserving habitat and species diversity. 

The ecological benefits that accrue from the proposed rule are likely to occur as a 

consequence of averted groundwater contamination. The resource economics literature contains 

numerous examples of studies that value these services, as demonstrated by the public’s WTP for 

groundwater protection programs (e.g., see Poe et al. 2001).61 However, these values are largely 

context-specific in terms of location, scale, and the specific threat to groundwater considered and 

do not provide broadly-applicable information on the value of groundwater. 

Some attempts have been made to develop standardized values for groundwater, often for 

purposes of Natural Resource Damage Assessment (NRDA).62 For instance, the State of New 

Jersey currently employs a replacement cost approach to determine interim economic losses 

associated with injuries to groundwater.63 Even so, replacement cost methods do not constitute a 

proper WTP valuation. The replacement cost of natural resources and their services capture 

WTP only when they meet three criteria: 1) replacement provides equivalent quality and 

quantity of services; 2) the public is actually willing to pay for the replacement; and 3) 

replacement is the most cost-effective means of restoring the lost services.64 Even if these 

conditions are true, this approach may overestimate groundwater values in urban areas, as land is 

typically more expensive, and underestimate groundwater values in areas where land is less 

expensive.

 

61 Poe, Gregory L., K.J. Boyle, and J.C. Bergstrom. “A Preliminary Meta Analysis of Contingent Values 

for Ground Water Revisited.” Chapter 8 in The Economic Value of Water Quality. Bergstrom, J.C., K.J. Boyle and 

G.L. Poe (eds.), Cheltenham, United Kingdom: Edward Elgar Publishing Limited. 2001.

62 Natural Resource Damage Assessment (NRDA) is the process of estimating the monetary cost of 

restoring natural resources injured by discharges of oil or releases of hazardous substances. Monetary costs, or 

damages, are estimated by identifying the services provided by the injured natural resources, determining the 

baseline level of the services provided by the resources, and quantifying the reduction in services that result from 

the natural resource injury. U.S. EPA. Natural Resource Damage Assessment. www.epa.gov/ superfund/

programs/nrd/nrda2.htm.

63 New Jersey’s approach follows three steps. First, the approach determines the total present value of 

potential yield from the contaminated area over the relevant period of impairment, typically based on a site-specific 

or regional recharge rate for the area in question. Second, again considering regional recharge rates, it estimates the 

amount of land required to protect an equivalent present value total volume of groundwater. Finally, the approach 

identifies and appraises candidate parcels. The cost of acquiring such a parcel for purposes of protecting a volume 

of groundwater equivalent to what was lost represents the measure of damages.

64 Freeman, A.M. III.. The Measurement of Environmental and Resource Values: Theory and Methods.

Resources for the Future: Washington, DC. 2003. p. 460.
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Because an assessment of the value of groundwater protected by the proposed rule is 

affected by spatial heterogeneity, it requires information about the public’s WTP for protection 

in all states and territories. These data are not available, and EPA is therefore unable to place a 

value on the groundwater protected. Instead, we provide an estimate below of the total quantity

of groundwater that may be protected by the rule. We note, though, that a portion of the value of 

restoring groundwater is captured as part of the cost to remediate each release discussed earlier 

in this chapter. However, while the cost of restoring groundwater to a higher quality after 

contamination is captured as part of the cost to remediate each release, it cannot be assumed that 

remediation captures WTP. In many cases, performing remediation to “safe” levels does not 

fully eliminate contamination, and therefore does not restore the resource to its original value. 

Therefore, while a significant portion of the value of the quantity of groundwater protected may

be captured by the avoided remediation costs, it may not reflect the full WTP of groundwater 

protection. 

Exhibit 4-18 summarizes a screening assessment of the volume of groundwater 

contamination potentially avoided because of reductions in releases and groundwater 

contamination incidents. The analysis relies on the EPA risk assessment, which describes typical 

volumes of groundwater affected by releases of different sizes over various discovery time 

frames.65 EPA’s analysis estimates that 40 billion gallons to 130 billion gallons of groundwater 

per year are protected under conservative assumptions of 10 gallon release volumes that migrate 

for only one year before discovery. Under the upper bound conditions of 5,000 gallon release 

volumes and 100 year lifetimes, up to 5.7 trillion gallons of groundwater per year would be

potentially protected by the regulatory changes.66 We also calculate the impact of 50 gallon 

releases over one- and five-year time frames. These releases appear most consistent with 

empirical data in the draft 23-state Autopsy Report. Assuming that 50 gallon releases and oneto five-year time frames represent the average parameters of avoided releases, we estimate that 

approximately 110 to 350 billion gallons of groundwater would be protected annually from 

LUST-related releases due to the potential regulatory changes.67

 

65 “Risk Analysis to Support Potential Revisions to Underground Storage Tank (UST) Regulations,” 

prepared by RTI International, December 22, 2010.

66 The risk assessment on which this analysis is based did not estimate groundwater contamination volumes 

outside of a one-mile radius about the point of release. The assessment notes that groundwater may be contaminated 

outside that radius, but it does not estimate this quantity. Generally, only releases greater than 1,000 gallons are 

affected by this phenomenon, i.e., groundwater contamination is likely underestimated for the 5,000 gallon, 100-

year release scenario.

67 The release volume data used in the groundwater protection assessment differs from the data used to 

calculate product loss and may lead to apparent inconsistencies. For instance, under the Preferred Option, prevention 

of 1.2 million gallons of product loss over 2,200 releases implies an average of over 500 gallons per release; 

however, in the groundwater protection analysis, EPA relies on estimates of groundwater contaminated based on 

releases of 50 gallons for the following two reasons: (1) the volumes of product loss based on Florida data are based 

on actual data, while the risk analysis relies on a simulation; and (2) the simulation assumes that product is released 

over a relatively short period of time (approximately one month), which likely overstates the effect of groundwater 

contamination for any given volume. Given these circumstances, EPA selected an average release volume to 

characterize groundwater contamination that is significantly lower than the volume implied by the analysis of 

product loss, but which reduces the risk of overstating positive impacts from groundwater protection.
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Exhibit 4-18

Volume Of Groundwater Protected

Release time to discovery and volume *

(average groundwater volume 

contaminated)

Preferred Option

(billion gal. per year)

Alternative 1

(billion gal. per year)

Alternative 2

(billion gal. per year)

Total releases 1,680 - 5,370 1,820 - 5,780 630 - 3,860

1 year until discovery, 10 gal. release

(24,068,183 gal. GW contaminated)

 

40 - 130

 

44 - 140

 

15 - 93

1 year until discovery, 50 gal. release

(48,785,436 gal. GW contaminated)

 

82 - 260 

 

89 - 280

 

31 - 190

5 years until discovery, 50 gal. release

(80,192,581 gal. GW contaminated)

 

130 - 430

 

150 - 460

 

51 - 310

100 year until discovery, 5,000 gal. release

(1,056,971,192 gal. GW contaminated)

 

1,800 - 5,700

 

1,900 - 6,100

 

670 – 4,100

Primary estimate (average of 50 gal. 

release over 1 and 5 years)

 

110 - 350

 

120 - 370

 

41 - 250

*Average groundwater volume contaminated per release based on RTI International, “Risk Analysis to Support Potential Revisions to 

Underground Storage Tank (UST) Regulations,” December 22, 2010.

Under the alternative baseline, assuming that 50 gallon releases and one- to five-year 

time frames represent the average parameters of avoided releases, approximately 65 to 210

billion gallons of groundwater would be protected annually in the Preferred Option. See Exhibit 

4-20 for a full accounting of avoided costs in the alternative baseline. 

4.11 Conclusion

Exhibit 4-19 summarizes the monetized avoided costs and benefits due to the proposed 

rule. In total, EPA estimates approximately $300 million to $740 million in costs will be avoided 

as a consequence of the Preferred Option. In addition, the proposed rule will generate modest 

benefits due to avoided cancer risks. Although their value cannot be reliably monetized, roughly 

110 billion to 350 billion gallons of groundwater per year will avoid contamination due to new 

requirements. Finally, the proposed rule will generate ecological benefits and reductions in 

nonbenzene morbidity and mortality risks that we could not quantify in our analysis.
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Exhibit 4-19

Summary Of Positive Impactsd

Type of Impact Preferred Option Alternative 1 Alternative 2

Monetized Benefits ($ millions, present value 2008$)

Avoided cancer risksa $0.001 - $0.005 $0.002 - $0.005 $0.001 - $0.003

Monetized Avoided Costs ($ millions, present value 2008$)

Releases and groundwater incidents $300 - $700 $300 - $740 $110 - $570

Vapor intrusion $0.4 - $26 $0.5 - $28 $0.2 - $19

Product loss $2.0 - $7.2 $2.6 - $7.6 $0.4 - $5.3

Totalb$300 - $740 $310 - $770 $110 - $590

Nonmonetized Impactsc

Groundwater protected (billion gallons) 110 - 350 120 - 370 41 - 250

Acute events and large-scale releases 

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

Ecological benefits Not estimated Not estimated Not estimated

Nonbenzene human health risks Not estimated Not estimated Not estimated

a

 The pathway assessed to evaluate avoided cancer risk is benzene exposure through contaminated groundwater.

b

 Avoided cancer risks and avoided costs are separate and additive (i.e., these estimates do not overlap). Avoided cancer risks are 

the benefits associated with reducing cancer cases prior to discovery of the release. Avoided remediation costs from releases and 

groundwater incidents are the costs related to site remediation. Avoided vapor intrusion costs include additional avoided costs 

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

intrusion. Avoided product loss costs are also separate and additive.

c Due to data and resource constraints, EPA was unable to monetize some of the positive impacts of the proposed rule. Chapter 4 

provides a qualitative discussion of these benefits.

d

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

4.11.1 Summary of Positive Impacts under the Alternative Baseline Scenario

Exhibit 4-20 summarizes the monetized avoided costs and benefits due to the proposed 

rule under the alternative baseline. In total, EPA estimates approximately $180 million to $440

million in costs will be avoided as a consequence of the Preferred Option under the alternative 

baseline. The proposed rule will also generate modest benefits due to avoided cancer risks.

Approximately 65 billion to 210 billion gallons of groundwater per year will avoid 

contamination due to the proposed requirements in the Preferred Option. Overall, positive 

impacts under the alternative baseline are roughly 60 percent of positive impacts when the 

original baseline is assumed.
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Exhibit 4-20

Summary Of Positive Impacts Using Alternative Baselined

Type of Impact Preferred Option Alternative 1 Alternative 2

Monetized Benefits ($ millions, present value 2008$)

Avoided cancer risksa $0.001 - $0.003 $0.001 - $0.003 $0.0003 - $0.002 

Monetized Avoided Costs ($ millions, present value 2008$)

Releases and groundwater incidents $180 - $420 $180 - $440 $64 - $340 

Vapor intrusion, average $0.3 - $16 $0.3 - $17 $0.1 - $11 

Product loss $1.2 - $4.3 $1.6 - $4.6 $0.2 - $3.2

Totalb$180 - $440 $180 - $460 $64 - $360

Nonmonetized Impactsc

Groundwater protected (billion gallons) 65 - 210 71 - 220 25 - 150

Acute events and large-scale releases 

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

Ecological benefits Not estimated Not estimated Not estimated

Nonbenzene human health risks Not estimated Not estimated Not estimated

a

 The pathway assessed to evaluate avoided cancer risk is benzene exposure through contaminated groundwater.

b

 Avoided cancer risks and avoided costs are separate and additive (i.e., these estimates do not overlap). Avoided cancer risks are 

the benefits associated with reducing cancer cases prior to discovery of the release. Avoided remediation costs from releases and 

groundwater incidents are the costs related to site remediation. Avoided vapor intrusion costs include additional avoided costs 

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

intrusion. Avoided product loss costs are also separate and additive.

c Due to data and resource constraints, EPA was unable to monetize some of the positive impacts of the proposed rule. Chapter 4 

provides a qualitative discussion of these benefits.

d

 Totals may not add up due to rounding. Cost estimates were derived using a seven percent discount rate.
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Chapter 5. Distributional Impacts and Considerations 

5.1 Introduction

This chapter considers specific impacts that may be created by the distribution of the 

costs and benefits of the proposed rule. EPA has undertaken several analyses to examine how 

the pattern of costs and benefits may affect specific populations and sectors of the economy. 

Specifically, the chapter considers:

 Economic impacts associated with the costs of the proposed rule: These could 

include changes in facility operation and closure of facilities due to cost increases 

under the regulation. In addition, the proposed rule may create negative and 

positive employment impacts, including both reductions in employment to reduce 

costs and increases in employment to ensure implementation of rule provisions. 

Finally, the proposed rule may affect public spending related to cleanup of 

contaminated sites.

 Energy impacts associated with the proposed rule: EPA considers the potential 

for this proposed rule to affect the supply, distribution, or use of energy, including 

changes in the price of fuel.

 Impacts on small business and governments: EPA’s regulatory flexibility analysis 

considers the potential for rule-related costs to have a significant impact on a 

substantial number of small entities (SISNOSE).

 Impacts on minority and low-income populations: EPA considers the potential 

for the proposed rule to have disproportionate impacts on minority or low-income 

populations.

 Children’s health impacts: EPA considers the potential for the proposed rule to

have a significant or disproportionate impact on the health of children.

Note that the analyses in this chapter employ data and results from EPA’s primary analysis 

assuming a constant number of tanks and releases over 20 years. This chapter does not consider 

impacts under the alternative baseline scenarios. In general, impacts under alternative baseline 

assumptions would be slightly smaller, reflecting the smaller universe of affected facilities over 

time. 

5.2 Economic Impacts

In the context of regulatory analysis, an economic impact is an effect on the economic 

wellbeing, or welfare, of any stakeholder due to compliance with the proposed rule. Direct 

economic impacts can be borne by producers (i.e., those who produce, distribute, or sell products 
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5-2

associated with the proposed rule), by consumers (i.e., those who purchase products associated 

with the proposed rule), or both. 

The economic impacts of the proposed rule result from increases in compliance costs due 

to new regulation. In the short run, producers (i.e., owners or operators of facilities with UST

systems) can respond to cost increases in one of two ways: by passing through some or all costs 

to customers (consumers) through increases in price, or by absorbing costs and reducing 

profitability. If producers cannot pass on to consumers any of their increased compliance costs, 

the proposed rule will chiefly affect producers in the short run, and economic impacts may

include reduced profits, changes in operation, and in extreme cases, facility closure. If producers 

are able to increase prices on products to recover some or all compliance costs, the proposed rule 

will affect consumers by raising prices. The extent to which producers can pass through costs 

depends on the structure of the markets in which they operate. 

As we discuss in subsequent sections, we do not believe that many firms will be able to 

pass increases in prices on to consumers through higher fuel prices. While local level motor fuel 

retail stations may face similar increases in costs of compliance, consumers’ sensitivity to 

changes in gasoline prices provides a significant disincentive for station operators to increase 

fuel prices.1Instead, compliance costs are likely to be passed on through cross-marketed goods 

whose demand is less sensitive to changes in prices, such as items for sale at gas station 

convenience stores.

EPA’s assessment of the economic impacts associated with this rule is presented as 

follows:

 Distribution of affected facilities. We first discuss the universe of affected 

facilities, with a focus on the retail motor fuels sector. This section also describes 

supply and demand dynamics within the retail motor fuels market and the likely

economic responses to increased compliance costs. 

 Screening level economic impact analysis of average costs on facilities. EPA 

presents a screening assessment of the impacts of average estimated facility-level 

costs on the facilities affected by the rule.

 Sensitivity analysis of economic impacts. To address uncertainty related to the 

distribution of costs among UST facilities, we present a “worst case” sensitivity

analysis that identifies the maximum number of facilities that could face 

significant economic impacts due to regulatory costs. This section also briefly

discusses implications for facility closures and changes in employment.

 

1 A high degree of consumer sensitivity to changes in gasoline prices does not imply that prices are equal 

across gasoline stations in the same area. Factors that affect retail motor fuel prices at the station-level include traffic 

flows, population density, and intensity of local retail competition on the demand side, while supply can be affected 

by land cost, station setup, labor costs, and taxes. See p. 15 – 16, Fischer, Jeffrey. “The Economics of Price Zones 

and Territorial Restrictions in Gasoline Marketing,” 2004, Federal Trade Commission, accessed at 

http://www.ftc.gov/be/workpapers/wp271.pdf
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 Impacts on public funding for cleanups. The proposed rule is estimated to 

result in significant cost savings associated with avoided cleanup requirements as 

releases decline. A significant portion of cleanup costs are currently borne by the 

public sector, using taxes and fees to fund state cleanup efforts. EPA examines 

the potential reduction in public sector liabilities associated with the broader 

reduction in releases.

5.2.1 Distribution of UST Systems by Industry Sector

As shown in Exhibit 2-3 in Chapter 2, the majority of UST systems are located at motor 

fuel retailers (i.e., gas stations). EPA estimates that, of the 611,449 UST systems active in 2009, 

481,108 (roughly 80 percent) were located at approximately 162,000 motor fuel locations in the 

United States.2The remaining 130,341 (roughly 20 percent) of facilities are spread across several

industries, including the commercial sector (wholesale, retail, accommodation, and food 

services), manufacturing, transportation, communications and utilities, and hospitals.3 Notably, 

the sectors other than retail motor fuels are difficult to characterize with regard to UST systems; 

depending on their uses, UST systems may occur in varying numbers at facilities of varying size 

and purpose across all sectors. Only in the retail motor fuel sector do UST systems serve a 

similar, central function at virtually all facilities in the sector. 

In addition to comprising 80 percent of all UST systems, establishments in the retail 

motor fuels sector also have the highest average number of UST systems per facility, with a 

facility average of 2.97 (roughly three systems per facility). In comparison, facilities in other 

sectors have, on average, between 1.47 and 2.30 systems.4 Because many requirements in the 

proposed rule occur at the UST system level, establishments in the retail motor fuels sector have 

the highest average compliance costs per facility. In total, this sector is likely to bear roughly 70 

percent of total costs associated with the proposed rule.5

Because the costs of the proposed rule will primarily affect the retail motor fuels sector, 

and because this sector is characterized by a large number of independently-owned facilities and 

companies, this economic impact analysis focuses on the retail motor fuels sector. 

 

2 EPA’s count of UST systems includes states and territories, while the estimate of retail motor fuel 

locations includes only facilities in the continental U.S., Hawaii, and Alaska. Because only 7,619 UST systems 

(approximately 1.1 percent) are located in other U.S territories, we use 162,000 facilities as the total population.

3

See Chapter 2.1 for more detail.

4

See Exhibit 2-3. For example, we calculate 2.30 systems per commercial facility by dividing 52,271 

systems by 22,730 facilities.

5 Total costs under the Preferred Option are $210 million, with $180 million directly related to conventional 

USTs and EGTs. Motor fuel retailers will bear approximately 80 percent of these $180 million in costs, which

represents roughly 70 percent of social costs under the Preferred Option. 
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5.2.2 Market Dynamics in the Retail Motor Fuels Sector

This section provides an overview of the U.S. wholesale and retail motor fuels markets, 

including market concentration, fuel distribution practices, and the implications of market 

structure for pricing. 

Supply-side Characteristics: Ability of Producers to Pass Through Costs

The North American Industrial Classification System (NAICS) code for retail motor fuel 

sales (i.e., gasoline stations) is 447, and specifically applies to retailers of automotive fuel and 

automotive oils. Establishments classified under NAICS code 447 include facilities with and 

without convenience stores, and all have specialized equipment for the storing and dispensing of 

automotive fuels.6

According to the 2002 Economic Census, average revenues for establishments in NAICS 

sector 447 were approximately $2.1 million. On average, each establishment employed 

approximately eight employees.7

Market Concentration

Market concentration is an indicator of the ability of firms to raise prices in response to 

changes in the costs of doing business: in markets with fewer, larger companies (i.e., highly 

concentrated markets), large firms typically have greater ability to pass through price increases to 

consumers. One indicator of market concentration is the proportion of total sales made by 

individual firms within a particular market. In markets where concentration is high, few firms 

earn a relatively large proportion of the total revenues in a market and are sometimes able to pass 

price increases through to consumers because of limited competition from smaller firms. 

The retail motor fuels sector is representative of the broader retail sector in market 

concentration. Specifically, one-third of all sales made by NAICS sector 447 are made by

establishments owned by the fifty largest firms in the sector, compared with 32 percent of sales 

to the largest 50 firms in the broader retail sector.8This level of market concentration does not 

suggest that retailers will easily pass through price increases.9

 

6

2002 Economic Census, Retail Trade, Industry series. Gasoline Stations: 2002. Issued November 14, 

2004. Accessed online at: http://www.census.gov/epcd/www/concentration.html

7 While EPA relies on 2002 Economic Census figures for values per facility, this analysis relies on more 

recent and focused National Petroleum News Survey values for a count of the number of facilities.

8

2002 Economic Census, Retail Trade, Industry series. Gasoline Stations: 2002. Issued November 14, 

2004. Accessed online at: http://www.census.gov/prod/ec02/ec0244i14.pdf

9 A common measure of market concentration can be obtained through the Herfindahl-Hirschman Index 

(“HHI”), which is calculated by squaring the market share of each firm competing in the market and then summing 

the resulting numbers. For example, if only two firms operate in a market and each has 50 percent of sales, then the 

index would register 502+ 502= 5,000. The U.S. Department of Justice’s merger guidelines categorize markets in 

which HHI is between 1,000 and 1,800 points as moderately concentrated, and those in which the HHI is in excess 

of 1,800 points as concentrated. Because the four largest firms in NAICS sector 447 generate only eight percent of 
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5-5

Geographical Concentration

Gasoline stations are generally distributed across the United States in proportion to 

population. The most populous states have more establishments and higher proportions of 

gasoline sales.10 While no data are available regarding the distribution of facilities by size, the 

retail gasoline market is relatively homogeneous nationwide, and it is likely that facilities of 

different sizes are distributed according to population as well.

Ownership Structure

The 2009 Gas Price Kit published by the National Association of Convenience Stores 

classifies motor fuel retailers into three broad categories, depending on the manner in which they

obtain their wholesale product:11

 Refinery-Owned: Fewer than two percent of facilities are retail operations 

directly owned by large oil producers. These stations receive wholesale product 

directly from the oil company’s refinery, and their profit is part of the oil 

company’s profit. At these facilities, the parent corporation manages all aspects of 

the customer experience and establishes a consistent brand identity. 

 Branded Independent Retailers: Approximately 55 percent of facilities are 

branded independent retailers. These facilities are owned by independent 

operators and contract with a refinery to sell a particular brand of gasoline. This 

owner leverages the supplier’s marketing and ensures constant supply in exchange 

for a surcharge per gallon paid to the supplier. Branded retailers’ contracts with 

refiners typically contain clauses that specify the margins retailers can charge 

above wholesale prices.

 Unbranded Independent Retailers: Approximately 45 percent of facilities are 

unbranded independent retailers. These retailers purchase gasoline on the open 

market, without committing to a particular supplier.

Wholesale gasoline is a commodity, but varies in price regionally based on a combination 

of refinery locations, specific fuel mixes (e.g., to meet air quality standards), and the type of 

distributors in a region. Types of wholesalers include:12

 

the sales in that market, the HHI will be well below 1,000 for this sector. We conclude that firms’ relatively small 

market share translates into weak pricing power. For additional information, see: http://www.justice.gov/ 

atr/public/testimony/hhi.htm

10 U.S. Census Bureau, Industry Statistics Sampler: NAICS 447, Geographic Distribution—Gasoline 

Stations: 1997. Accessed online at: http://www.census.gov/epcd/ec97/industry/E447.HTM

11 National Association of Convenience Stores, 2009 NACS Gas Price Kit, 

http://www.nacsonline.com/NACS/Resources/campaigns/GasPrices_2009/Pages/HowRetailersGetSellGas.aspx

12 Kleit, Andrew N., 2003. "The Economics of Gasoline Retailing Petroleum Distribution and Retailing 

Issues in the U.S."
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 Refinery-owned wholesalers: Refiners (typically large oil companies) distribute 

directly to their own retail outlets in all regions, and in some areas may also 

distribute directly to independent branded and unbranded retailers (competing 

with other suppliers in the unbranded market).

 Area Franchisees: Otherwise known as “jobbers,” these firms obtain the right 

from oil companies to franchise a brand of motor fuel in a particular area. Jobbers 

are responsible for siting and building new facilities and marketing the brand, 

which further removes refiners from operating activities. The term is also used to 

describe wholesale distributors of motor fuels that offer multiple brands. 

While some regions have significant competition among distributors, the market power of 

refiners and the contract structure of many retailers means that retailers in general have little 

control over the price of their fuel supply.

13 As a consequence, any cost increases must be 

absorbed by retailers or passed through to customers.

Demand-side Characteristics: Consumer Response to Price Increases

Consumer reactions to price changes are critical in determining whether a producer (i.e., 

retailer) can pass on costs. The degree to which consumers change the quantity they consume 

when the price of a good increases is known as the price elasticity of demand. Economists define 

demand as inelastic if the quantity demanded changes less than price (e.g., quantity demanded 

changes by one percent when prices rise (or fall) by 1.4 percent). Similarly, demand is said to be 

elastic if quantity demanded changes proportionally more for a relative change in price.

Motor fuel retailers rely on sales of gasoline for most revenues, though most also sell 

other automobile-related or convenience products. Research has documented that broad 

(national) market demand for gasoline is relatively price-inelastic in the short-run: consumers do 

not make immediate, significant changes in gasoline purchases if prices increase.14  On its face, 

this dynamic would suggest that a retailer could pass through any cost increases to consumers. 

However, the structure of the market for gasoline prohibits significant price fluctuations at the 

facility level. While national demand is relatively consistent, consumers are highly sensitive to 

price differences within local markets.15 Small increases in price at one location can produce 

relatively large changes in quantity demanded for a particular facility as consumers seek other 

local retailers with lower costs. 

 

13 Other suppliers, e.g. for convenience store items, may be easier with which to negotiate but may not be 

available to all motor fuel retailers.

14 Dahl, Carol and Thomas Sterner, 1991. “Analyzing Gasoline Demand Elasticities: A Survey,” Energy 

Economics, July: p. 203 – 210.

15 As noted above, a high degree of consumer sensitivity to changes in gasoline prices does not imply that 

prices are equal across gasoline stations in the same area. See: Fischer, Jeffrey. “The Economics of Price Zones and 

Territorial Restrictions in Gasoline Marketing,” 2004, Federal Trade Commission, accessed at 

http://www.ftc.gov/be/workpapers/wp271.pdf
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A recent National Association of Convenience Stores (NACS) survey provides insights 

into the price pressures faced by local retailers:16

 73 percent of respondents stated that price was the most important factor in their 

gasoline-purchasing choices.

 32 percent stated that they would take the time to make a left turn on a busy street 

to save a penny per gallon of gasoline.

 20 percent said they would drive ten minutes out of their way (a 20-minute round 

trip plus cost of fuel) to save two cents per gallon. This amounts to savings of less 

than one dollar in terms of fuel for nearly all passenger vehicles on the road today.

Local competition for price-sensitive customers discourages retailers from increasing 

gasoline prices, except in cases such as wholesale price increases or tax increases where changes 

are uniform across facilities.

17

 Because compliance costs may vary by facility depending on 

existing technology and practice, it is not likely that retailers will opt to pass through compliance 

costs by raising gasoline prices. While retailers may be able to increase the prices of other 

products (e.g., motor oil or convenience store products), it is also likely that some retailers will 

be forced to absorb some or all of the costs associated with the regulation. 

Retailers in relative isolation may be better positioned to pass on increases in cost to 

consumers. Research shows that store-level pricing is sensitive to the concentration of 

competition. In areas where motor fuel retailers are relatively sparse, facilities may be better able 

to pass cost increases on to consumers, for whom the opportunity cost of finding an alternative 

store is higher when they must travel farther.18

However, because consumers are especially price sensitive about gasoline and it is not 

clear what other options owners or operators have to increase prices, we assume that owners or 

operators will likely bear the economic impacts of the rule. We therefore examine producer 

impacts, including the possibility that some facilities may close due to cost increases.19

 

16 National Association of Convenience Stores, “Consumer Fuels Report,” February 2008, as cited in 

“Testimony of Bill Douglass, Douglass Distributing Company, on behalf of The National Association of 

Convenience Stores before the House Judiciary Committee, Anti-Trust Task Force Hearing to Examine the 

Consumer Effects of Rising Gas Prices,” May 7, 2008.

17 This may vary, depending on the region. For example, in Vancouver, gasoline prices are uniform and 

rigid (due to tacit collusion among wholesalers), while prices in Ottawa are dispersed and volatile (due to the pricedisrupting behavior of “maverick” firms). See Eckert, Andrew and Douglas S. West, “A tale of two cities: Price 

uniformity and price volatility in gasoline retailing, “2003, The Annals of Regional Science 38:25–46.

18 See Hoch et al., 1995. “Determinants of Store-level Price Elasticity,” Journal of Marketing Research, 

Vol. 32 (1): p. 17 – 29.

19 A more detailed analysis of consumer impacts is prohibitively difficult for two reasons. First, the precise 

set of goods and services whose prices may increase is difficult to characterize. Second, gasoline aside, the main 

draw to products sold at retail motor fuel facilities is convenience, i.e., ease of access. Most non-fuel products can 

be purchased for lower prices at grocery stores, for example. Consumers can therefore shop at other types of 
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5.2.3 Assessment of Market Exits and Employment Impacts

In a market setting where producers cannot reliably pass through costs, the most 

significant economic impacts are related to reduced facility profits. In some cases, managers can 

cut supply or employment costs (this could result in smaller worker paychecks). In cases where 

costs exceed facility profits, it is likely that in the long term a facility would exit the market. A 

critical factor, therefore, is an estimate of average firm or facility profits. 

It is difficult to estimate the profitability of retail motor fuel stations because many are 

small and privately held and are not required to report profits publicly. However, some evidence 

suggests that profit margins are below five percent, and data suggest that average after-tax profit 

margins reported to the IRS for gas stations are roughly 1.5 percent.20 Holding all other things 

equal, an annual cost greater than 1.5 percent of gross sales (i.e., a cost greater than $1,500 for a 

firm earning $100,000 a year) would exceed average reported profits and would therefore cause 

a motor fuel retailer to operate at a loss. If the facility cannot adjust its prices or lower costs, it 

will eventually exit the market.21 

Consistent with the assessment of small business impacts in Section 5.4 of this chapter, 

EPA considers the impact of the proposed rule on small facilities in order to identify the most 

likely facilities to exit the market. Assuming that all motor retail facilities, regardless of income,

have an “average” configuration of approximately three tanks, EPA calculates the average total 

cost per facility to be $892 under the Preferred Option (reflecting a cost of approximately $300 

per UST system).22,23 

Using data from the 2002 Economic Census and the regulatory flexibility screening 

analysis methodology, EPA concludes that a facility-level cost of $892 would exceed 1.5 percent 

 

facilities for the same goods, but typically opt to pay a premium for purchases at a convenient location. Note that, 

even though consumers will be able to purchase equivalent goods at different locations, there is a reduction in 

consumer surplus associated with the loss of convenience in the purchase.

20 For corporations reporting net income, profit margins before non-cash items (depreciation and

amortization) and income tax (or credits) were approximately 1.8 percent. Earnings before depreciation and 

amortization account for the fact that firms can postpone capital expenditures to save cash, and would likely do so 

while adapting to higher costs. If non-cash items and taxes are included, earnings drop to roughly one percent. Our 

approach averages of the two options, reflecting an assumption that firms will do something to adapt to higher costs 

while they sort out how to adjust prices, and that firms typically minimize profits reported to the IRS. See SOI 

TaxStats, Table 7: Corporation Returns with Net Income for 2007, accessed at 

http://www.irs.gov/taxstats/article/0,,id=170693,00.html. See also 2002 - 2010 RMA Statement Studies, Sector 447, 

for a range of profitability data from facilities of different sizes.

21 Throughout this chapter, EPA refers interchangeably to reductions in net profit and the proportion of 

revenues that the costs of the proposed rule will create. In both cases, we refer to the impact of the cost of the 

proposed rule on the profitability of a facility. 

22 Specifically, we assume 2.97 UST systems per facility.

23 Under Alternative 1 the average retail motor fuel facility cost would be $1,801, and under Alternative 2 it 

would be $613. In Indian country, where facilities are required to meet more requirements than elsewhere; average 

cost per facility is $2,364 under the Preferred Option, $3,333 under Alternative 1, and $1,999 under Alternative 2.
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of total reported revenues (i.e., be equal to or greater than total profits) for 561 firms, 

representing less than one percent of the universe of motor fuel retail facilities.

24 In comparison, 

approximately 2,400 facilities per year closed over the period between 2005 and 2008.25,26 In

some cases, any exits related to regulatory costs may coincide with exits that would have 

occurred in the baseline. Furthermore, it is likely that many of the affected facilities will also 

have options to pass through at least a portion of costs, and many small facilities may have fewer 

than three UST systems. Therefore, EPA concludes that the market impacts associated with this 

proposed rule are likely to be diffuse and minimal, assuming a relatively uniform distribution of 

costs nationwide. 

Sensitivity Analysis

EPA’s finding of minimal market impacts rests on an assessment of “average” facilities 

with “average” rule-related costs. If the costs of the proposed rule are concentrated on certain 

facilities, it is possible that additional impacts (e.g., market exits) could occur. EPA therefore 

employs several sensitivity analyses to consider alternative, “worst case” distributions of 

regulatory costs across facilities.

To examine the extent to which the distribution of regulatory costs can be “concentrated”

on specific facilities, EPA constructs a “worst case distribution” in which regulatory costs are 

concentrated on a subset of facilities.27 To obtain this distribution, we artificially assign costs to 

create the largest cost for the largest number of facilities, by assuming that the same facilities in 

 

24 An analogous statement of this outcome is that all facilities with revenues below approximately $59,500 

per year would incur new costs equal to or in excess of profits of 1.5 percent of total revenue. Note that U.S. Census 

data indicate that all firms in the motor fuel sector that earn less than $59,500 are single-location firms.

25 NPN reported a station count of 161,768 in 2008, compared with 168,987 in 2005. These figures imply a 

decrease of approximately 2,400 stations, or 1.4 percent, per year. See National Petroleum News, “MarketFacts 

2008,” and NPN MarketPulse, “2005 U.S. motor fuel station count: 168,987,” both accessed at 

http://www.npnweb.com/. 

26 There is a significant discrepancy between the number of establishments reported by the 2007 Economic 

Census by the U.S. Census Bureau and the 2008 station count published by National Petroleum News. The Census

reported 118,756 stations operating in any capacity, while NPN counted 161,768 stations. EPA contacted the Census 

Bureau, which offered three possible reasons for this discrepancy. First, grocery stores with gas stations and 

wholesale truck stops with gas stations may be categorized under grocery stores or wholesale retail instead of gas 

stations. Second, the count reported by the Census excludes non-employer establishments (10,131), which are 

family-owned and only employ family members. Third, for those establishments that do not report back to the 

Census regularly, the Bureau is not likely to record changes in establishments that have happened at the location

(personal communication with the Office of Underground Storage Tanks, November 3, 2010). NPN likely provides 

a more accurate reflection of the number of stations because it is an industry publication specific to the petroleum 

sector.

27 Ideally, EPA would evaluate which facilities are likely to incur significant impacts by examining the 

specific changes each will be required to make to achieve compliance. These costs would be compared with the 

facility’s revenue and profit margin to establish whether it can incur the additional costs and remain in business. To 

EPA’s knowledge, no data of this resolution are available for the large population of facilities with UST systems.
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the state make every regulatory change.28 We further assume that the smallest facilities in the 

U.S. are the facilities that bear the highest cost.29

Exhibit 5-1 displays the universe of retail motor fuel UST facilities in the United States 

when costs are allocated to concentrate impacts. This creates an allocation of costs that varies 

broadly, from as little as $30 to just over $3,400 per facility. 

 

28 For example, consider a state with 1,000 UST facilities that will be subject to three hypothetical technical 

requirements: Requirement A will affect 500 facilities and cost $50 per facility; Requirement B will affect 250 

facilities and cost $100 per facility; and Requirement C will affect 100 facilities and cost $200 per facility. The 

average cost for all of these facilities is $70 (((50*500) + (250*100) + (100*200))/1000). However, the highest cost 

possible in this state is $350 (costs of $50 from Requirement A, $100 from Requirement B, and $200 from 

Requirement C), and the largest number of facilities that could incur this cost is 100 (the smallest of the universes 

affected by Requirements A, B, or C). The next highest cost is $150 (costs of $100 from Requirement B and $50 

from Requirement A), which affect 150 facilities, excluding those also affected by Requirement C. The last group 

would be affected only by Requirement C, with 250 facilities at a cost of $50 per facility. Such an allocation of costs 

creates an unlikely outcome with a high potential for market exits. Appendix K provides the detailed summary of 

this threshold calculation.

29 EPA also examined a sensitivity analysis that would specifically consider the effects of "front-loading" 

capital cost requirements, but this scenario would have no effect on the results of the "worst case" sensitivity 

analysis. The “worst case” scenario examined here already assumes simultaneous implementation of all 

requirements under the proposed rule, including several that actually have delayed implementation schedule (e.g., 

interstitial integrity tests). In addition, the analysis includes annualized costs for capital requirements for Indian 

country systems (e.g., secondary containment). The “worst case” scenario does not address the replacement of 

closure of lined tanks that cannot be repaired according to a code of practice, and does not assume that full capital 

costs are incurred in a single year for affected tanks, but the facilities that would be affected by these changes are 

already among the highest cost facilities identified, and are already therefore included in the number of facilities 

potentially affected under this worst-case assumption.
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Exhibit 5-1

Distribution Of Retail Motor Fuel UST Facility Costs 

Using “Worst Case” Distribution

0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

40,000

0 - 100

100 - 200200 - 300300 - 400400 - 500500 - 600600 - 700700 - 800800 - 900

900 - 1,000

1,000 - 1,1001,100 - 1,2001,200 - 1,3001,300 - 1,4001,400 - 1,5001,500 - 1,6001,600 - 1,7001,700 - 1,8001,800 - 1,9001,900 - 2,0002,000 - 2,1002,100 - 2,2002,200 - 2,3002,300 - 2,4002,400 - 2,5002,500 - 2,6002,600 - 2,7002,700 - 2,8002,800 - 2,9002,900 - 3,0003,000 - 3,1003,100 - 3,2003,200 - 3,3003,300 - 3,4003,400 - 3,500

Cost range ($)

Number of Facilities

One possible concern is whether facilities that are likely to face high costs are 

geographically concentrated in certain states or regions. To assess this, we examined the 

distribution of the five percent of facilities incurring the highest costs if costs were concentrated 

(specifically, 8,135 facilities incurring costs greater than $1,800). The proportion of highest-cost 

facilities does not vary substantially by state. The highest concentration of high-cost facilities 

would be 6.4 percent (in Guam); 53 of the remaining 56 states and territories (accounting for 91 

percent of retail motor fuel facilities) have roughly 5.0 percent to 6.5 percent of their facilities 

with this cost (OR, CA, and MS have fewer than four percent high-cost facilities). Differential 

economic impacts across states are not likely to occur as a result of disproportionate state-level 

impacts from this rule, even in a scenario of maximum concentration of costs across the fewest 

firms. 

To assess economic impacts in this worst case scenario, EPA pairs the distributions of 

facility size and costs to identify situations in which estimated costs would exceed 1.5 percent of 

gross sales (the average reported retail motor fuel facility profit). Facilities with costs exceeding 

1.5 percent of revenues may face a significant economic impact under worst case assumptions. 
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Market Exits

Even under the adverse scenario presented above, economic impacts to affected entities 

are relatively small. The least compliant facilities in the least regulated states would incur costs 

of $3,415 in the worst case.30 This represents less than 1.5 percent of revenues for facilities 

earning more than $228,000 per year. To assess the worst-case potential impact, EPA assumed 

that the facilities with the highest costs (those in the right-hand tail of the distribution in Exhibit 

5-1) are also the facilities with the lowest revenues and allocated costs to those facilities to 

maximize the number of potential exits. EPA estimates that 6,100 facilities earning less than 

$250,000 per year in the U.S. (in 2002 dollars) would be subject to costs exceeding 1.5 percent 

of revenues in the worst case scenario.

31 To the extent that those facilities could not increase 

prices to offset higher costs, it is likely that at least some of them would exit the market. If all of 

these facilities exited the market, the closures would constitute roughly four percent of existing 

facilities. Note that this scenario relies on a highly unlikely confluence of assumptions, 

including:

 All facilities with income less than $250,000 have average configurations of 

three UST systems. In fact, it is likely that small facilities have fewer than three 

tanks and would therefore not be subject to the facility-level costs estimated here 

It is likely that the smallest facilities also operate only a single UST system, 

which would reduce their compliance costs by approximately 67 percent.32 Under 

such circumstances, most small operators would not be subject to a significant 

economic impact even in the worst-case scenario.

 No facility has any option to increase prices on goods or services or to 

identify options for savings. While gasoline prices are unlikely to rise in 

response to this proposed rule, consumers may be willing to pay marginal cost 

increases on other products and services. Moreover, in remote rural areas, 

retailers may be able to directly pass costs on to consumers. 

 

30 Facility costs of roughly $3,400 or less are representative of approximately 99 percent of worst-case, 

high-end cost outcomes. Facilities in Indian country are the only exception, as they will also be required to comply 

with additional regulations for operator training and secondary containment. Because this group of facilities 

represents only roughly one percent of facilities with costs at or above $3,400, we do not present them as the main 

highest-cost scenario.

31 The U.S. Census identified 5,142 facilities that earned less than $250,000 in 2002. For the purposes of its 

SBA analysis, EPA revised this estimate upward by 46 percent to reconcile disparities between Census gas stations 

counts from 2002 and NACS gas station counts from 2008. Of the estimated 7,520 facilities earning less than 

$250,000 per year in 2002, we arrayed the highest cost facilities with the highest revenue facilities, to ensure an 

estimate of as many exits as possible. See Appendix K for a detailed explanation of our methods.

32 According to the 2009 NACS Convenience Store Industry Fact Book, the average motor fuel retailing 

facility has monthly throughput of approximately 118,500 gallons. As discussed in Chapter 2, we believe that the 

average motor fuel retailer operates approximately 3 UST systems. This equates to roughly 39,500 gallons of 

monthly throughput per system. In addition, based on information from a mid-size retail fuel marketer, EPA believes 

that a facility requires a minimum throughput of approximately 30,000 gallons per month to remain economically 

viable, which equates to upward of $50,000 in revenues per month given gasoline prices in excess of $2.00 since 

2005. See http://www.eia.gov/dnav/pet/pet_pri_gnd_a_epmr_pte_dpgal_a.htm.
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 A profit margin of 1.5 percent is standard. Companies have a clear incentive 

to minimize taxable profits when filing income taxes with the IRS. Because net 

income (profit) is taxable, corporations that are not publicly traded typically take 

legitimate steps (e.g., year-end investments in equipment, employee bonuses) to 

reduce both net income and tax burdens. As a result, a 1.5 percent after-tax profit 

estimate based on IRS data is likely to understate average profitability. 

Finally, this analysis does not adjust the Census data on facility revenues for inflation, though 

costs are presented in 2008 dollars. Due to the variability of gasoline pricing, we adopt a 

conservative assumption that revenues have remained static in nominal terms since 2002.

While our sensitivity analysis suggests that just over 6,100 facilities may be at risk of significant 

economic impacts in a worst case scenario, it is unlikely that a significant number of actual 

market exits would result from the proposed regulation. A plausible exception to this finding 

exists in cases where a facility with high upgrade costs faces high levels of local competition. 

Even in these cases, closures would likely be consistent with the recent rate of industry

consolidation of 1.4 percent per year.

Price Impacts

The high sensitivity of local demand to changes in retail motor fuel prices makes it 

unlikely that firms will react to the proposed rule by raising gasoline prices, However, the cost of 

other goods and services could potentially increase as firms seek to offset regulatory costs 

through sales of other products. Retailers will likely increase the prices of goods that are 

relatively price inelastic, such as tobacco products, auto service charges, or snack food and other 

convenience items. 

Employment Impacts

The increased operating costs incurred by facilities to comply with this proposed rule 

may result in very slightly increased prices for their goods and services, as previously discussed. 

These potential price increases may result in reduced demand and thus reduced output of the 

facilities' goods and services. This could translate into lower demand for labor, a result 

commonly referred to as the demand effect. As discussed earlier, the price effect is expected to 

be small though, and given the relatively inelastic demand for gasoline, the demand effect is 

likely to be small as well. There is also the potential for the proposed rule to result in a small 

number of facilities exiting the market, which could result in a temporary negative employment 

effect as these workers look for other positions. However, as noted earlier and in the next 

section below, these exits may coincide with exits that would already occur in the baseline.33 In

addition, given the competitive nature of the retail motor fuel sector and the similar regulatory

costs faced by each facility, many of these facilities may be able to pass through at least a portion 

 

33 See footnote 25. 
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of these costs (see Price Impacts section above).34 As a result, the potential employment effect 

of market exits from the proposed rule is likely small.

Furthermore, some of the requirements of the proposed rule may have a positive impact 

on employment. For example, walkthrough inspections require labor as a primary input which 

may lead to small increases in employment at regulated facilities.35 In addition, the increased 

demand for testing services and training under the proposed rule may also lead to increased 

demand for labor. Since the proposed rule could potentially affect the demand for labor both 

positively and negatively, the overall direction of net employment impacts is unclear, but is most 

likely very small relative to the size of the industry. 

Long-run Economic Impacts

The proposed rule is unlikely to generate substantial additional impacts in the long run, 

but in a worst-case scenario it could accelerate ongoing consolidation trends in the retail motor 

fuel sector if market exits result. NPN reports that 168,987 motor fuel stations operated in the 

United States in 2005. By 2008, this number had fallen to 161,768, a decrease of 4.3 percent 

compared with 2005, or approximately 1.4 percent per year.36 While broader market 

consolidation is related to ownership strategies among oil companies and general economic 

patterns, facilities facing significant periodic costs (e.g. UST system replacement) may be most 

likely to close. Similarly, facilities with higher operating costs as a result of the rule may opt to 

close. In such cases, exits caused by the rule are likely to affect the most marginal firms and 

would likely coincide to some extent with exits that would have occurred in the absence of the 

proposed rule. These closures will occur in the context of the national decline in the number of 

facilities, such that the rule is unlikely to cause a significant number of closures beyond those 

that will occur as part of the existing trend. 

5.2.4 Assessment of Public Sector Cost Savings Related to Avoided Releases

A significant positive effect of the proposed rule derives from its impact on state funds 

created for the purpose of providing a financial responsibility mechanism to UST owners and 

operators. Among 56 state and territory governments, 43 have an existing fund created for the 

purpose of remediating releases; of these, 36 are active and continue to accept claims.37 In many 

of these states, owners and operators are required to pay for a portion of remedial actions through 

 

34 Note that small marginal facilities are also likely to have fewer than three UST systems and thus face 

lower than average facility-level compliance costs.

35 For example, EPA estimates that monthly walkthrough inspections of a facility will take nearly an hour 

to complete, on average. A compliant owner or operator in a state that does not currently have this requirement will 

need to allocate 12 man-hours of incremental effort per year to satisfy this portion of the proposed rule.

36 See footnote 25. 

37 U.S. EPA, “Status of State Fund Programs,” accessed September 9, 2010 at http://www.epa.gov/ 

oust/states/fndstatus.htm 
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deductibles that generally range from zero to $100,000.38 Given an average cost of remediation 

of $127,216 in 2009, however, state funds are frequently required to finance some portion of 

remediation costs.39 These state funds are created by state legislation and must be submitted to 

EPA for approval before they can be used as financial responsibility mechanisms. In most cases,

states generate money for their funds by levying tank registration and petroleum fees, which are 

then used to provide payments for remediation of releases beyond the deductibles paid by

responsible parties. In states where funds rely on gas taxes and accept claims related to releases, 

these expenditures represent subsidies from the public to owners or operators responsible for 

releases. 

The extent to which the proposed regulations reduce the occurrence of new releases 

produces two welcome effects: 

 Assignment of costs. Fewer releases implies lower expenditures from state funds. 

This represents a reduction in this public subsidy and a reassignment of costs 

from the public remediation costs to private entity prevention costs. This 

improves market signaling and efficiency by requiring owners and operators to 

focus on release prevention. 

 Competitive effects. High-performing owners or operators are less likely to incur 

significant regulatory costs than low-performing owners or operators. As a result, 

the regulatory costs and cost savings improve the alignment of incentives to focus 

on private-sector prevention costs and reduce public-sector remediation costs. 

To illustrate the potential magnitude of the public expenditures that could be affected by the 

regulation (i.e., distributional effects), we examine states that have active state funds and 

categorize them into those that finance their funds via petroleum and tank fees (“Tier 1”), or via 

only a tank fee (“Tier 2”).40

We assume that states that are required to comply with a larger number of the new 

requirements will experience a greater reduction of releases, all other things equal. To estimate 

the distribution of avoided releases, we calculate the average number of requirements with which 

 

38 Association of State and Territorial Solid Waste Management Officials, State Fund Survey Results 2009, 

Table 1: Design Characteristics of State Financial Assurance Funds, accessed at http://astswmo.org/

files/publications/tanks/2009StateFundSurvey/2009-Table_1-Design-Characteristics-of-St-Financial-AssuranceFunds.pdf.

39 Association of State and Territorial Solid Waste Management Officials, State Fund Survey Results 2009, 

Summary of State Fund Survey Results, accessed at: http://astswmo.org/files/publications/tanks/

2009StateFundSurvey/2009-Summary.pdf. For example, representatives of the state of New Hampshire indicated 

that in most cases, the State Fund incurs remediation costs, except that the owner or operator typically bears the cost 

of immediately stopping the leak. In addition, New Hampshire indicated the owner or operator typically pays a 

$5,000 deductible towards the final remediation cost, and in New Mexico, the owner or operator typically pays a 

deductible between $0 and $10,000. 

40 States with active financial assurance funds can be found at http://www.epa.gov/

OUST/states/fndstatus.htm
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the systems in each state will need to comply.

41 We assign avoided releases based on both the 

number of systems in a state and the average number of requirements on each system, and we 

value releases based on the national profile of avoided releases and avoided groundwater 

incidents.42 Using ASTSWMO data, we subtract from our estimate of the potential cost borne by

the public the deductible that owners or operators would be expected to pay.

43 See Appendix N

for a discussion of the methodology used.

Exhibit 5-2 presents the results of our screening-level assessment. Among the 36 states 

with active state funds that fall into Tier 1 or Tier 2, we find that the potential reduction in public 

expenditures could reach $191 million to $431 under the Preferred Option, with $150 million to 

$338 million in Tier 1 and $41 million to $94 million in Tier 2.44 Reductions in public 

expenditures would equal approximately $198 million to $457 million under Alternative 1 and 

$80 million to $340 million under Alternative 2. These savings would be slightly lower in a 

scenario where deductibles are in the upper end of their ranges. We note that, to realize the 

savings in public expenditures, state government action would be required to lower petroleum 

fees. Alternatively, the extent that funds are not constrained in their use, a redistribution of funds 

(e.g., to backlog sites awaiting cleanup) could also represent a significant public benefit. The 

values presented in this table do not reflect discounting to account for regulatory compliance 

schedules.

Note that this screening-level analysis is intended only to identify the potential magnitude 

of impacts on state fund liabilities. A more detailed analysis of specific state program costs and 

the likely distribution of avoided releases would be necessary to precisely measure potential 

savings. Overall, the values in Exhibit 5-2 suggest that requiring owners and operators to focus 

on prevention reduces costs to state financial assurance funds by over $150 million under the 

Preferred Option and Alternative 1 and upward of $50 million for Alternative 2.

 

41 We use the number of times a system is affected rather than the actual number of systems affected 

because we lack the data to determine which units are affected by each requirement. For example, if two 

requirements each affect 1,000 and 500 units, respectively, they may ultimately affect between 1,000 and 1,500 

units, depending upon whether any overlap exists among the two regulated universes. 

42 We calculate this as avoided costs due to avoided releases divided by number of releases avoided. The 

procedure is similar for avoided groundwater remediation costs. 

43

 We rely on the ASTSWMO Fund Survey Results 2008 for the data that underlie our construction of 

tiers. These data are available at http://www.astswmo.org/publications_tanks.htm.

44 Due to our calculation methods, two states with very high deductibles (Minnesota and Virginia) showed 

deductible amounts and avoided releases that exceed their estimated avoided release costs. We exclude them from 

our calculations, such that our estimates for likely underestimate the potential for redistributive effects.
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Exhibit 5-2

Summary Of State Financial Assurance Fund Distributional Effects

Fund Revenue Mechanisms

Preferred 

Option

($ millions)

Alternative 

1

($ millions)

Alternative 

2

($ millions)

Low deductible scenario (High distributional effects)

Tier 1 (petroleum & tank fee) $150 - $338 $154 - $355 $53 - $275

Tier 2 (tank fee only) $41 - $94 $44 - $102 $27 - $65

Total $191 - $432 $198 - $457 $80 -$340

High deductible scenario (Low distributional effects) 

Tier 1 (petroleum & tank fee) $138 - $303 $142 - $318 $49 - $120

Tier 2 (tank fee only) $39 - $87 $42 - $95 $14 - $71

Total $177 - $390 $184 - $413 $63 - $191

5.2.5 Economic Impact Summary

This set of analyses shows that it is unlikely that the proposed rule will have substantial 

negative economic impacts on the regulated community, in part because the costs of the rule 

appear to be evenly distributed across a large population of facilities, and remain modest at the 

facility level. Even under a highly improbable worst case scenario in which the highest costs are 

incurred by the smallest facilities, roughly four percent of the universe of retail motor fuel 

facilities would potentially incur costs greater than publicly reported industry average profit 

margins. Market exits of roughly 2,400 facilities annually represent the current market trend. It 

is likely, therefore, that most or all market exits under this proposed rule would coincide with 

exits of specific out-of-date facilities that are on the brink of exiting, and would not create a 

significant additional contraction of the total market. 

A more likely response by many affected firms will be to adapt by increasing prices on 

higher margin products and services. While overall employment impacts are unclear, it is 

possible that there may be an increase in labor demand due to the additional requirements placed 

on owners and operators, and additional demand for third-party testing services.

In addition, it appears that the proposed rule could have a positive impact on state 

governments that currently fund a portion of UST-related remediation costs through gasoline 

taxes and fees. A decrease in the number and severity of releases represents cost savings to 

states due to decreased demand on state financial assurance funds. Our initial screening 

assessment suggests that annual costs to states could be reduced by over $150 million. This 

represents a reduction in a public subsidy and an improvement in market signaling.

5.3 Energy Impact Analysis

Executive Order 13211, “Actions Concerning Regulations that Affect Energy Supply, 

Distribution, or Use” (May 18, 2001), addresses the need for regulators to consider the potential 

energy impacts of the proposed rule and resulting actions. Under Executive Order 13211, 

agencies are required to prepare a Statement of Energy Effects when a regulatory action may
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have significant adverse effects on energy supply, distribution, or use, including impacts on price 

and foreign supplies. Additionally, the requirements obligate agencies to consider reasonable 

alternatives to regulatory actions with adverse effects and the impacts that such alternatives

might have on energy supply, distribution, or use.

The proposed rule affects underground storage tanks used in the storage of motor fuel or 

emergency generator fuel. However, it is not likely that this proposed rule will have significant 

impacts on energy supply, distribution, or use. To assess the energy impacts of the proposed 

rule, EPA considers potential changes in energy supply and use associated with the total costs 

estimated in Chapter 3. The following summarizes EPA’s assessment of the energy impacts that 

the proposed rule will have in energy supply, distribution, and use. 

Energy Supply and Distribution

The proposed rule consists of additional regulatory requirements that apply to the owners 

and operators of underground storage tanks. To the extent that the proposed rule affects the 

motor fuel sector, it does so at the retail motor fuel sales level, rather than the level of refineries 

or distributors who supply the retail stations with motor fuel. Correspondingly, we do not expect 

the proposed rule to have any impacts on energy supply or distribution.

In terms of local motor fuel availability, we believe two outcomes are possible. If a motor 

fuel station is located in an area where competition from other stations exists, we do not believe 

fuel prices will be affected. Rather, owners and operators will seek to recover the costs of the 

proposed rule by increasing the prices of convenience items. If a station does not also operate a 

convenience store through which it can recover these costs, it may become subject to a 

significant economic impact and exit the market. In such a case, however, supply will not be 

disrupted, as other competitors fill the void left by the former market participant.

We do not expect market exits to occur in low-competition environments due to the 

market power of stations and the marginal nature of the increase in cost. If a motor fuel station is 

located in an area where competition is not intense (e.g., a rural setting), it may opt to directly

pass on higher costs through increases in fuel or convenience goods prices. As we discuss below, 

even if the entire cost of the rule is priced through to consumers, the change in fuel prices is not 

likely to be measurable.
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Energy Use

The additional regulatory requirements contained in the proposed rule may increase 

compliance costs for owners and operators of retail motor fuel stations. If the owners and 

operators of retail motor fuel stations affected by the proposed rule can successfully pass through 

their increased compliance costs, energy use may be affected through higher energy prices 

caused by the proposed rule. However, we do not expect a significant change in retail gasoline 

prices to result from this proposed rule for the follow reasons:

 Economic analyses of retail fuel prices have revealed that demand for gasoline is 

highly sensitive to price (elastic) within localized geographic areas. 

 As a result, if one motor fuel retailer in an area passes through increases in 

compliance costs by increasing gasoline prices, while another does not, the one 

with higher prices is at a significant competitive disadvantage.

 Retail motor fuel stations often have associated stores and/or services, such as car 

washes, repair operations, and convenience outlets, on which they can more 

successfully pass through increases in compliance costs. 

When considered in the context of total fuel consumption in the United States, the proposed rule 

would represent only a very small fraction of motor fuel prices even if it was fully passed 

through to consumers. According to the Bureau of Transportation Statistics, the United States 

consumed 170,765,000,000 gallons of motor fuel (including gasoline and diesel) in 2008 at an 

average price of $3.27.45 This implies that U.S. consumers spent $558 billion in 2008 on motor 

fuel. The overall cost of the proposed rule is roughly $210 million, less than one-tenth of one 

percent of the amount spent by end-users on motor fuel in 2008. In comparison, an increase of 

$0.01 in the average price of motor fuel in 2008 would have increased the total cost to consumers 

by approximately $1.7 billion. Given these circumstances, the proposed rule should not have a 

measurable impact on retail prices. 

5.4 Regulatory Flexibility Analysis

The Regulatory Flexibility Act (RFA) as amended by the Small Business Regulatory

Enforcement Fairness Act of 1996 (SBREFA), 5 USC 601 et seq., generally requires EPA to 

prepare a regulatory flexibility analysis of any rule subject to notice and comment rulemaking 

requirements under the Administrative Procedure Act or any other statute. This analysis must be 

completed unless the agency certifies that the rule will not have a significant economic impact on 

a substantial number of small entities. If a regulation is found to have a significant impact on a 

 

45 The 2008 prices per gallon for all grades of retail motor gasoline and No. 2 diesel fuel (all concentrations 

of sulfur) were $3.32 and $3.15, respectively, as reported by the Bureau of Transportation Statistics in Table 3-8: 

Sales Price of Transportation Fuel to End-Users in National Transportation Statistics 2010 (at 

http://www.bts.gov/publications/national_transportation_statistics/pdf/entire.pdf). We weight these prices according 

to prime supplier sales volumes in 2009 published by the Energy Information Administration, which summed to 

362,798.5 thousands of gallons per day for gasoline and 132,489.3 thousands of gallons per day for all grades of 

diesel fuel (at http://www.eia.gov/dnav/pet/pet_cons_prim_dcu_nus_a.htm).
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substantial number of small entities, further analysis must be performed to determine what can 

be done to lessen the impact. Small entities include small businesses, small organizations, and 

small governmental jurisdictions. EPA developed a screening analysis and supplemental 

analysis consistent with the requirements under RFA; this section presents a summary of these 

findings, and Appendix L provides the detailed screening analysis.46

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

defined as: (1) a small business as defined by the Small Business Administration’s (SBA) 

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

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

(3) a small organization that is any not-for-profit enterprise which is independently owned and 

operated and is not dominant in its field. For the purposes of this analysis, EPA considered costs 

in excess of one percent and three percent of revenues as indications that the proposed rule may

have a significant impact on a given small entity, and estimates of greater than 20 percent of total 

small firms or 1,000 total small firms affected as indications that a substantial number of small 

entities may be affected by the proposed rule. 

5.4.1 Small Business Screening Analysis

We estimate that there are approximately 83,900 firms operating 162,000 facilities in the 

U.S. retail motor fuel sales sector.47 This analysis assumes that all retail motor fuels firms 

operate underground storage tanks (UST systems) at all of their facilities. Based on the 

distribution of firms across revenue categories published by the 2002 Census, and SBA’s 

revenue thresholds for NAICS 447110 and 447190, approximately 82,500 (98 percent) of these 

firms meet SBA’s definition of a small entity.

48

 Approximately 7,520 of these firms report 

revenues between $0 and $250,000 (the smallest revenue range published by the 2002 Census), 

with average sales of approximately $149,000.49 

 

46 This section focuses on the retail motor fuel sector. As discussed in Appendix L, EPA’s screening 

assessment indicates that the proposed rule will not have a significant impact on a substantial number of small 

entities (SISNOSE) across all affected sectors. However, because 80 percent of all UST systems are in the retail 

motor fuel sector, we refined the screening assessment to further examine the potential impacts of the proposed rule 

on this sector.

47 NAICS code 447 is comprised of 447110 (Gasoline stations with convenience stores) and 447190 (Other 

gasoline stations). To reconcile differing estimates of the number of retail fuel facilities (roughly 162,000 estimated 

by NPN, and 110,600 estimated by the Census), a 1.46 adjustment factor was applied to the Census data to inflate 

the number of retail motor fuel facilities to 162,000, distributed proportionately across revenue ranges. This 

approach preserves the distribution of firms by size according to Census data. As a result of this approach, we 

estimate that there are a total of approximately 83,900 firms and 481,000 tanks in the retail motor fuel sector. 

48 For 447110, the SBA revenue threshold is $27 million; for 447190, the SBA revenue threshold is $9 

million. To ensure that we do not underestimate the number of small entities, we assume that all firms within a 

revenue bin that contains a specific SBA revenue threshold value are small. For example, if the SBA small business 

size threshold for a sector is $7 million, we assume that all firms in the revenue range of $5 to $10 million are small.

49 Note that for simplicity we identify size categories in this document as described by the 2002 Census 

(e.g., revenues up to $250,000 in 2002 dollars), and identify compliance costs in 2008 dollars. However, in the 

actual screening analysis, compliance costs have been adjusted from 2008 dollars to 2002 dollars using the GDP 

implicit deflator. The estimated compliance cost is $300 per system in 2008 dollars, or $255 per tank in 2002 
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To determine whether firms reporting revenues within a given revenue range would incur 

costs exceeding one percent or three percent of total revenue, EPA compares the average total 

compliance cost per firm with the average revenue reported by firms in the revenue range. Based 

on a compliance cost per system of $300 (in 2008 dollars), and assuming that firms in the 

smallest revenue range own one facility with three UST systems, we estimate that the 7,520 

small firms in the $0-$250,000 revenue range would face total compliance costs of $892 per firm 

(or $757 in 2002 dollars).50 Any firm with annual revenues above approximately $75,700 (in 

2002 dollars) (i.e., the revenue threshold at which compliance costs would exceed one percent of 

the firm’s revenue) is not expected to experience a significant impact. The average revenue for 

the 7,520 firms in the $0-$250,000 revenue bin is $149,000, suggesting that on average, firms in 

this category will not experience significant impacts due to estimated compliance costs.

However, because the lowest range reported by the U.S. Census reflects a distribution of 

firms with revenues between $0 and $250,000, it is still possible that some of the 7,520 firms in 

this category may be significantly affected. As mentioned above, EPA also considered estimates 

of greater than 20 percent of total small firms or 1,000 total small firms affected as indications 

that a substantial number of small entities may be affected by the proposed rule. While the 7,520 

small firms in the lowest revenue range represent only nine percent of all potentially affected 

small firms, EPA conducted a supplemental analysis that focuses on this group of small firms in 

an attempt to refine the estimated number of small firms potentially affected by the proposed

rule.

5.4.2 Small Business Supplemental Analysis

The purpose of this supplemental analysis is to refine the results of the small business 

screening analysis. The Census Bureau provided additional data on firms in the lowest revenue 

bins for NAICS sectors 447110 (gasoline stations with convenience stores) and 447190 (other 

gasoline stations), identifying the percentage of firms with revenues in three ranges: (1) $0-

$50,000; (2) $50,000-$150,000; and (3) $150,000-$250,000.51 Based on this information, we 

estimate the number of firms in the retail motor fuel sales sector (i.e., NAICS 447) for these three 

 

dollars. These costs exclude compliance costs associated with the removal of deferrals for AHFDSs and UST 

systems with FCTs. AHFDS and FCT systems are primarily owned by the Department of Defense and not by any 

small entities.

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

per year in 2002 had only one facility. We therefore use “firm” and “facility” interchangeably in this context.

51 The information provided by the U.S. Census Bureau is considered an “unpublished data request.” As 

such, while the Census Bureau provided the data we requested, they also included a letter noting that “these are not 

‘official data’ from the Census Bureau, since they do not meet the Census Bureau’s quality standards. These data 

should be used with extreme caution, realizing the severe quality limitations that may exist.” However, given that 

we do not have another source of information, we use this as the best data available.
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revenue groups at approximately 550, 3,120, and 3,860, respectively and use these data to refine 

our estimate of the number of significantly affected facilities.

52

Given compliance costs of $892 per firm ($757 in 2002 dollars), any firm making less 

than $75,700 and $30,000 would be considered significantly affected at the one percent and three 

percent revenue thresholds, respectively. EPA estimates that 1,348 firms are affected at the one 

percent threshold, and no firms are affected at the three percent threshold. 

The number of firms that will be significantly affected at the one percent threshold 

exceeds the one thousand-firm substantial effect benchmark by 348 firms. However, it is likely

that this proposed rule will have no SISNOSE for three reasons. First, 1,348 firms represent 

roughly one percent of potentially affected small firms, which is significantly lower than the 20 

percent threshold (the other parameter considered in this analysis to determine a “substantial 

number”).53 Second, although the U.S. Census Bureau reports several hundred facilities with 

annual revenues less that $100,000, market economics suggest that it would be difficult for a 

firm that relies solely on gasoline sales to be viable if earning less than $100,000 in annual 

revenues, suggesting that some of these facilities may not be standalone entities.54 Finally, at 

least some of the smallest facilities are likely to have fewer than the three tanks used as a basis 

for facility-level costs. EPA thus finds that the proposed rule does not appear likely to have a 

significant economic impact on a substantial number of small businesses.

5.4.3 Impacts to Small Governments

The 1992 Local Government Economic Impact Analysis provides the best readilyavailable data on the number of governments owning UST systems, total UST systems owned by 

governments, average UST systems per government, and UST systems per owning government. 

The data include size and revenue for both general purpose (i.e., counties, municipalities, and 

townships) and special district governments (i.e., school districts and other special districts), 

dividing these governments into four size categories: very large, large, medium and small. The 

1992 analysis defines a “very large” government as one that serves over 50,000 people; 

 

52 The analysis interpolates between the lower and upper bounds of each range and assumes a uniform 

distribution of facilities within each range. The lowest revenue interval is bounded at $35,750, which EPA obtains 

from estimating the linear trend between the zero and $250,000 in revenues. The implicit assumption is that no 

facilities earn less than that level of revenue 

53 EPA estimates a total of roughly 116,000 small firms with USTs across all affected sectors; 1,348 is 

roughly 1.2 percent of these. In NAICS 447, the 1,348 affected facilities represent 1.6 percent of facilities.

54 Assuming $2 per gallon in sales, a facility earning $100,000 would sell less than 4,200 gallons of 

gasoline per month, compared with the monthly industry average throughput of approximately 130,000 gallons. 

Based on information from a mid-size retail fuel marketer, EPA believes that a facility requires a minimum 

throughput of approximately 30,000 gallons per month to remain economically viable. In addition, a facility would 

need $108,000 to generate enough gross profit to cover the direct cost of the wages of one full-time employee at 

minimum wage ($15,080 at $7.25 per hour and 2080 hours, before accounting for employment taxes). This does not 

consider other costs, such as electricity, property taxes, or franchise fees. As a result, while the supplemental 

analysis indicates that 1,348 firms will face costs that exceed the one percent revenue threshold, it is not clear 

whether all of these facilities represent average motor fuel retailers with full scale operations, three UST systems, 

and no other income.
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therefore, all other entities are considered to be small governmental jurisdictions according to the 

RFA/SBREFA definition. Using the data from the 1992 analysis, we estimate the number of 

small governments that own UST systems based on the total universe of UST systems today. 

See Appendix L for additional detail.

EPA assumes that local governments collectively own four percent of active tanks. This 

equates to 24,458 tanks, based on the fiscal year 2009 universe of 611,449 tanks.55 These 24,458 

tanks are distributed among all local governments, based upon the percentage of tanks owned in 

1992 by local governments in each size category (the average number of tanks owned by a 

government varies with the size of the government from one tank for small governments to 10 or 

more tanks for the largest governments). 

EPA then calculates, using the 1992 data on government ownership of UST systems, the 

average compliance cost per government entity. This is done by multiplying the cost per tank by

the number of UST systems per government by size category. The average annual revenue for 

each size of general purpose government is calculated using 2002 Census Data and weightedaverage contributions that depend on type of entity (i.e., towns, municipalities, and counties). 

EPA extrapolates Census data on revenues for 4,128 townships to the 16,504 townships in the 

country. These weighted averages are combined to obtain annual revenues in 2002 dollars for 

general purpose governments, then inflated to 2008 dollars. Detailed information at the special 

district level is not available for later years, so budget expenditures from the 1992 analysis were 

inflated into 2008 dollars.56 

To calculate how many small governments face significant compliance costs exceeding 

one or three percent of their revenues, we compared the average compliance cost per government 

with the average annual revenues to determine how many exceed either threshold. At a cost of 

$300 (2008 dollars) per UST system, no small governments are affected under either the one 

percent or three percent revenue threshold (see Exhibit 5-3). Correspondingly, EPA does not 

find that the proposed rule has any significant impact on a substantial number of small 

governments.

 

55 Estimates of local government UST systems adjusted from 1992 ICF Analysis using The 1987 Census of 

Governments. See “Economic Impact Analysis of Additional Mechanisms for Local Government Entities to 

Demonstrate Financial Responsibility for Underground Storage Tanks,” December 1992, Exhibit 3-1. Consistent 

with this analysis, the number of government UST systems is assumed to be one percent of all 2009 UST systems 

for state and federal governments and four percent of all 2009 UST systems for local governments.

56 Typically, a RFA/SBREFA screening assessment uses revenues to assess economic impact measures for 

small governments. In the absence of detailed 2002 data, we use 1992 budget expenditures as a proxy for revenues. 
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Exhibit 5-3

Compliance Costs To Systems Owned By Governments

Type of 

Gov’t

Size of 

Gov’tb

UST 

Systems Per 

Owning 

Gov’tc

Number of 

Gov’ts 

Owning 

Tanksd

2002 Est. 

Number of 

Gov’ts e

Average 

Annual 

Revenue 

($2008) f

Average 

Cost Per 

Gov’t ($)g

Gov’ts 

Exceeding 

1% of 

Revenue

Gov’ts

Exceeding 

3% of 

Revenue

General 

Purposea

Very Large 10.2 534 1,461 $316,129,836 $2,597 0 0

Large 2.5 1,512 4,040 $35,687,794 $637 0 0

Medium 1.4 1,444 7,822 $8,712,804 $356 0 0

Small 1.1 1,048 25,644 $1,779,216 $280 0 0

Subtotal 2.7 4,538 38,967

Special 

Purpose

Very Large 3.7 336

 

934 $431,319,166 $942 0 0

Large 3.6 1,902

 

5,340 $52,806,696 $917 0 0

Medium 1.4 2,648

 

13,602 $2,533,231 $356 0 0

Small 1.0 258

 

28,682 $128,013 $255 0 0

Subtotal 2.4 5,144 48,558 0 0

Overall Total 2.5 9,682 87,525 0 0

a General Purpose governments include counties, municipalities and townships. Special Purpose governments include public school

systems and special districts. 

b Very large governments are considered to serve more than 50,000 people. Large governments are considered to be those that serve 

between 10,000 and 50,000 people, medium governments as those that serve between 2,500 and 10,000 people, and small 

governments as those that serve 2,500 or fewer people. According to RFA/SBREFA, small governmental jurisdictions have 

populations under 50,000. Therefore, all sizes of governments except for “very large” are considered to be small.

c From 1992 Local Government Impact Analysis data.

d Calculated as number of tanks (adjusted 1992 distribution in each size category to reflect FY 2009 tank numbers) divided by UST 

systems per owning government (c).

e General purpose and Special Purpose total number of entities from 2002 Census of Governments, size distribution extrapolated from 

1992 Local Government Impact Analysis data. 

f General purpose estimates from 2002 Census of Governments; Special Purpose estimates inflated from 1992 Local Government 

Impact Analysis data.

g

 Calculated as number of systems per government (c) * estimated cost per tank ($255 in 2002$; $300 in 2008$). 

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

Executive Order 12898 (Federal Actions to Address Environmental Justice in Minority

Populations and Low-Income Populations) (59 FR 7629, Feb. 16, 1994) directs federal agencies, 

to the greatest extent practicable and permitted by law, to identify and address, as appropriate, 

disproportionately high and adverse human health or environmental effects of their programs, 

policies, and activities on minority populations and low-income populations in the United States. 

To inform us about the socioeconomic characteristics of communities potentially affected 

by the rule, EPA conducted a screening analysis to examine whether there is a statistically

significant disparity between socioeconomic characteristics of populations located near UST 

facilities and those that are not.57 The results indicate that minority and low-income populations 

 

57 Note that the affected populations identified in the screening analysis summarized here are simply 

defined by specific demographics surrounding UST locations. These affected populations are not necessarily 

equivalent to communities that others have specifically identified as “environmental justice communities.” 
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5-25

are slightly more likely to be located near UST facilities. An environmental justice analysis 

would then require an assessment of whether there would be disproportionate and adverse 

impacts on these populations. However, because all regulatory options considered in this 

proposed rule would increase regulatory stringency and reduce the number and size of releases, 

EPA does not anticipate that the proposed rule will have any disproportionately high and adverse 

human health or environmental effects on these minority or low income communities, or on any

community.

5.5.1 Risk Assessment Population Analysis

To characterize the extent of human health risk reductions anticipated under the proposed 

regulation, EPA conducted a screening-level analysis of the likely impact of the rule on benzenerelated cancer incidence. This analysis used location data for nearly 60,000 U.S. gas stations 

with UST systems using an ESRI Business Analyst database, and examined populations within a 

buffer distance of 1,000 feet of facilities with UST systems. The ESRI gas station location data

are supplemented with 1,600 UST systems in Indian country, based on location information 

compiled from EPA regional Indian country databases. After elimination of duplicates, the data 

set contains 59,945 UST facilities (including 727 in Indian country) (see Exhibit 5-4). The total 

data set represents over 25 percent of the roughly 220,000 active facilities with UST systems.58

To estimate populations near sample facilities, the analysis uses a “synthetic population” 

dataset developed by the Modeling of Infection Diseases Agents Study (MIDAS) to provide 

population estimates at a finer spatial resolution than Census blocks, while maintaining the 

accuracy of aggregate demographic data at the Census block group level. For more detail on this 

method, see Appendix M.

The modeled fate and transport of pollutants under a range of scenarios indicates that the 

contamination from UST releases do not typically exceed 1,000 feet.59 The risk assessment 

considered population density within 1,000 feet of each UST, and incorporated estimates of the 

use of groundwater for drinking and bathing, along with typical exposure scenarios, to 

characterize the change in population risk likely to be associated with the reduction of 2,821 

releases and groundwater incidents (i.e., the total estimated number of avoided releases and 

groundwater incidents resulting from the proposed regulations). The risk assessment concluded 

that the proposed regulations will result in a very small reduction in population risk related to 

cancer from benzene exposure, based on the estimated number and volume of avoided releases 

and groundwater incidents.

 

58 2009 Methodology Statement: ESRI Data—Business Locations and Business Summary. ESRI, Redlands, 

CA. available at http://www.esri.com/library/whitepapers/pdfs/infousa-business-database.pdf. ESRI data are 

derived from an infoUSA database. The approach for compiling business data for this database is documented on the 

infoUSA website (http://www.infousa.com), and includes systematic compilation of public record, phone books, 

business directories, and includes frequent review for new, updated, and relocated businesses. While this 

methodology does not capture all locations, it is not differentially focused on any specific region or information 

source, and therefore likely represents a reasonable spatial distribution of facilities.

59 RTI International, “Risk Analysis to Support Revisions to Underground Storage Tank (UST) 

Regulations,” December 22, 2010.
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Exhibit 5-4

UST Location Data Used In Analysis. (See Appendix M for details on data sources.)

5.5.2 Demographic Analysis

The demographic analysis expands on the population data near the 59,945 gas stations in 

the risk assessment by characterizing demographic features of populations at each site and 

comparing these populations to larger (county-level) reference populations.60 Specifically, the 

analysis examines the following demographic variables: percent in poverty, percent minority, 

and, as a verification step, percent white alone (the percentage of the population that specified 

their race as “white” and did not specify “Hispanic”). The analysis also identifies percent under 

five years old, percent under 18 years old to support the analysis required under Executive Order 

13045, “Protection of Children from Environmental Health Risks and Safety Risks” (see section 

 

60 County-level statistics provide a useful comparative measure for the populations at the local facility 

level. Given that the area of interest is small (i.e., 1000 feet of a facility), the county-level provides an appropriate 

scale for comparison.
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5.6 below). The analysis considers the significance of the “difference in means” and “difference 

in median” values for each census parameter and each community. That is, the analysis 

identifies the differences between mean and median concentrations of each demographic group 

for the affected and reference populations at each of the 59,945 sites, and examines whether the 

differences identified across all sites are statistically different from what would be expected in a 

random distribution.61

The analysis considers the differences in demographics in two ways: unweighted (each 

site is given equal weight) and population weighted (results are weighted by affected persons, 

giving sites with larger populations more weight). A statistically significant positive difference 

indicates a greater percentage of target demographic in the affected population than in the larger 

reference population. A statistically significant negative difference indicates a smaller 

percentage of the target demographic in the affected population. Exhibit 5-5 provides the 

unweighted results of the analysis and generally finds that minority and low-income 

demographics constitute a slightly larger proportion of the population surrounding UST facilities. 

For example, poor populations account for 13.3 percent of the population near an UST, 

compared with 12.2 percent of the reference (county) population. As Exhibit 5-6 shows, 

although the difference is small, it is also highly statistically significant (with a p-value below 

.001), which suggests that the difference between the values is not a random occurrence. 

Exhibits 5-7 and 5-8 summarize the results of the population-weighted analysis, and generally

find slightly larger (but still small) effects. 

 

61 See Appendix M for the complete demographic screening analysis.
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Exhibit 5-5

Summary Results For Census Parameters – Unweighted

Census 

Parameter

1000 ft Buffer 

around Facility

County where 

Facility is Located Difference

Mean Median Mean Median Mean Median

95% Confidence 

Interval 

of Mean Difference

Lower 

Bound

Upper 

Bound

Percent White 

Alone 70.3 81.3 70.8 74.8 -0.44 1.29 -0.61 -0.27

Percent Under 

Age 5 6.7 6.5 6.7 6.7 -0.05 -0.12 -0.068 -0.032

Percent Under 

Age 18 24.7 24.9 25.6 25.5 -0.84 -0.54 -0.99 -0.68

Percent in 

Poverty 13.3 10.3 12.2 11.5 1.1 -0.64 0.99 1.13

Percent 

Minority 24.0 14.6 23.8 20.9 0.21 -1.48 0.06 0.36

Note: Difference summary statistics (mean and median) were calculated from the distribution of difference values (i.e., 

one result per facility, yielding a distribution of about 60,000 results). Mean values reflect the entire distribution, whereas 

the median values are based only on the 50th percentile result. For this reason, the mean difference results could also be 

calculated simply by subtracting the reference community mean from the potentially affected community mean (e.g., for 

mean percent poverty 13.3 – 12.2 = 1.1). In contrast, the median difference values do not necessarily match values 

derived by subtracting the median values from the underlying distributions (e.g., for median percent poverty 10.3 – 11.5 ≠ 

-.64). Although the primary results of the analysis are based on mean values, median results are provided for 

completeness and as an alternative indicator of the distributions’ central tendency. 

Exhibit 5-6

Standard Error, T Test, And Risk Ratio Results – Unweighted

1000 ft Buffer 

around 

Facility

County where 

Facility is 

Located

Difference

SE of Mean SE of Mean

SE of 

Mean

T 

Statistic

pvalue RatioSE of 

Ratio

Percent White Alone 0.120 0.088 0.085 -5.23 <0.001 0.99 0.001

Percent Under Age 5 0.010 0.004 0.009 -5.18 <0.001 0.99 0.001

Percent Under Age 18 0.104 0.071 0.079 -10.59 <0.001 0.97 0.001

Percent in Poverty 0.045 0.023 0.038 27.66 <0.001 1.09 0.003

Percent Minority 0.104 0.071 0.079 2.71 0.0067 1.01 0.003

Note: There are >56,033 degrees of freedom for this test (i.e. number of facilities). Note that the total number of facilities 

in the dataset (59,945) differs from the degrees of freedom, because a fraction of facilities have no people living within 

the 1000 foot buffer.
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Exhibit 5-7

Summary Results For Census Parameters – Weighted By Population

Census 

Parameter

1000 ft Buffer 

around Facility

County where Facility 

is Located Difference

Mean Median Mean Median Mean Median

95% Confidence 

Interval 

of Mean Difference

Lower 

Bound

Upper 

Bound

Percent 

White Alone 53.88 59.63 58.79 57.70 -4.61 -2.55 -5.0 -4.2

Percent 

Under Age 5 6.91 6.78 6.80 6.85 0.11 0.04 0.073 0.14

Percent 

Under Age 

18

24.74 24.91 25.36 25.53 -0.62 -1.57 -0.73 -0.50

Percent in 

Poverty 16.22 13.34 13.33 12.83 2.89 0.96 2.7 3.1

Percent 

Minority 36.61 29.54 33.16 31.92 3.45 0.58 3.1 3.8

Note: Difference summary statistics (mean and median) were calculated from the distribution of difference values (i.e., 

one result per facility, yielding a distribution of about 60,000 results). Mean values reflect the entire distribution, whereas 

the median values are based only on the 50th percentile result. For this reason, the mean difference results could also be 

calculated simply by subtracting the reference community mean from the potentially affected community mean (e.g., for 

mean percent poverty 16.2 – 13.3 = 2.9). In contrast, the median difference values do not necessarily match values derived 

by subtracting the median values from the underlying distributions (e.g., for median percent poverty 13.3 – 12.8 ≠ -0.96). 

Although the primary results of the analysis are based on mean values, median results are provided for completeness and 

as an alternative indicator of the distributions’ central tendency.

Exhibit 5-8

Standard Error, T Test, And Risk Ratio Results – Weighted By Population

1000 ft Buffer 

around 

Facility

County where 

Facility is 

Located

Difference

SE of Mean SE of Mean

SE of 

Mean

T 

Statistic

pvalue RatioSE of 

Ratio

Percent White Alone 0.288 0.193 0.205 -22.48 <0.001 0.92 0.0035

Percent Under Age 5 0.020 0.008 0.017 6.24 <0.001 1.02 0.0026

Percent Under Age 18 0.065 0.033 0.058 -10.62 <0.001 0.98 0.0023

Percent in Poverty 0.108 0.063 0.085 34.02 <0.001 1.22 0.0064

Percent Minority 0.255 0.165 0.191 18.05 <0.001 1.10 0.0058

Note: There are >56,033 degrees of freedom for this test (i.e. number of facilities). Note that the total number of facilities in 

the dataset (59,945) differs from the degrees of freedom, because a fraction of facilities have no people living within the 

1000 foot buffer.

Overall, the demographic analysis identifies a small but statistically significant difference 

between minority and low-income populations near UST systems and in the reference 

communities. Minority and poverty-level demographics are present at greater percentages in the 

vicinity of UST facilities. In contrast, a small negative relationship suggests that “white alone” 
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populations are less likely to be near UST systems, i.e., minority populations are marginally

more likely to reside near UST facilities. Moreover, while the unweighted analysis does not find 

clear patterns related to children under 18 and children under five, the population-weighted 

analysis finds that the distribution of all target demographics around UST facilities reflects small 

but significant differences from county-level populations. The population-weighted results show 

greater differences, suggesting that facilities in higher population areas tend to have more 

pronounced disparities between local, potentially affected communities and reference (countylevel) communities. These differences, while small, are statistically significant with p-values less 

than 0.01 in all cases. This result implies that any risk reductions associated with the proposed 

rule will occur in the context of a baseline condition in which minority and low-income 

populations are disproportionately located near USTs.

5.5.3 Summary and Limitations of the Analysis

This section summarizes a screening assessment and does not present a complete 

environmental justice analysis. The assessment is limited by the fact that demographic data from 

the U.S. Census are at the block group level, and are not as precise as the spatial distribution of 

population. As a result, if the demographic distribution of populations within block groups is 

uneven, the block group-level data may not accurately characterize populations living nearest to

UST locations. The large sample of 59,945 sites, however, reduces the potential that this 

uncertainty could skew the results of the analysis.

Given the results of the screening analysis, because all regulatory options considered in 

this proposed rule would increase regulatory stringency and reduce the number and size of 

releases, EPA does not anticipate the proposed rule to have any disproportionately high and 

adverse human health or environmental effects on these minority or low income communities, or 

on any community. Since the proposed rule is not anticipated to create any new adverse human 

health or environmental impacts, EPA did not conduct a complete environmental justice analysis. 

5.6 Children’s Health Protection Analysis

Executive Order 13045, “Protection of Children from Environmental Health Risks and 

Safety Risks” (62 FR 19885, April 23, 1997), applies to any rule that: (1) is determined to be 

“economically significant” as defined under E.O. 12866, and (2) concerns an environmental 

health or safety risk that EPA has reason to believe may have a disproportionate effect on 

children. If the regulatory action meets both criteria, the Agency must evaluate the 

environmental health or safety effects of the planned rule on children, and explain why the 

planned regulation is preferable to other potentially effective and reasonably feasible alternatives 

considered by the Agency. 

This action may be subject to Executive Order 13045 because it is economically

significant as defined in Executive Order 12866. EPA’s screening-level risk assessment 

examines potential impacts to groundwater and subsequent chemical transport, exposure and 

risk. While the risk assessment did not specifically measure exposure to children, the general 
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5-31

exposure scenarios reflect four exposure pathways that have the most significant potential for 

human health impacts. These are: 

 ingestion of chemicals in groundwater that have migrated from the source area to 

residential drinking water wells

 inhalation of volatile chemicals when showering with contaminated groundwater

 dermal contact with chemicals while bathing or showering with contaminated 

groundwater

 inhalation of vapors that may migrate upward from contaminated groundwater 

into overlying buildings

Adults and children can potentially be exposed through all four exposure pathways considered. 

For adults, inhalation of vapors while showering is the most significant adult exposure pathway; 

for children, ingestion is the most significant pathway, because children are assumed to take 

baths and are therefore not exposed via shower vapor inhalation. As a result of the longer 

exposure from showering, adults are the more sensitive receptor for cancer effects compared to 

children, particularly those under five who are assumed to take more baths and fewer showers.62

While the screening level risk assessment is limited in that it only examines benzene 

impacts, the proposed rule would likely reduce other contaminant exposures to children in a 

similar pattern, and would not create significant adverse impacts on children’s health.

The screening-level demographic analysis described in section 5.5 finds a statistically

significant result that children under the age of 18 and children under the age of five are slightly

less likely to be found in the vicinity of UST facilities. This suggests that the impacts of the 

proposed rule will not have a disproportionate impact on children’s health. Moreover, because all 

regulatory options proposed today would increase regulatory stringency and reduce the number 

and size of releases, EPA does not expect the proposed rule to have any disproportionate adverse 

impact on children. 

 

62 United States Department of Health and Human Services, Public Health Service, Agency for Toxic 

Substances and Disease Registry. “Toxicological Profile for Polycyclic Aromatic Hydrocarbons.” August 1995.
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6-1

Chapter 6. Other Statutory and Executive Order Analyses 

As required by applicable statutes and executive orders, this chapter summarizes our 

analysis of equity considerations and other regulatory concerns associated with the proposed 

rule. This chapter assesses potential impacts, with respect to the following issues: 

 Regulatory planning and review: requires examination and quantification of 

costs and benefits of regulating with and without the proposed rule.

 Unfunded mandates: examines the implications of the proposed rule with 

respect to unfunded mandates.

 Federalism: considers potential issues related to state sovereignty.

 Tribal governments: extends the discussion of federal unfunded mandates to 

include impacts on Native American tribal governments and their communities.

 Joint impacts of rules: discusses how other rules, together with the proposed 

rule, will likely affect the universe of facilities regulated by the proposed rule.

6.1 Regulatory Planning and Review 

Under Executive Order 12866 [58 FR 51735 (October 4, 1993)], EPA, in conjunction 

with the Office of Management and Budget’s (OMB’s) Office of Information and Regulatory

Affairs (OIRA), must determine whether a regulatory action is “significant” and therefore 

subject to OMB review and the full requirements of the Executive Order. The Order defines 

“significant regulatory action” as one that is likely to result in a rule that may: 

(1) Have an annual effect on the economy of $100 million or more or adversely affect 

in a material way the economy, a sector of the economy, productivity, 

competition, jobs, the environment, public health or safety, or State, local, or 

tribal governments or communities; 

(2) Create a serious inconsistency or otherwise interfere with an action taken or 

planned by another agency; 

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

programs or the rights and obligations of recipients thereof; or 

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

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

Pursuant to the terms of Executive Order 12866, the Agency has determined that this 

proposed rule is an economically significant regulatory action because it may have an annual 
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6-2

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

Findings of the regulatory cost analysis (Chapter 3) indicate that the rule, as proposed, is 

projected to result in aggregate annual social costs of approximately $210 million under the 

Preferred Option, $520 million under Alternative 1, and $130 million under Alternative 2. 

Separately, this analysis concludes that the proposed rule is expected to have cost savings related 

to avoided costs of $300 million to $740 million under the Preferred Option, $310 million to 

$770 million under Alternative 1, and $110 million to $590 million under Alternative 2, but for 

the purposes of addressing Executive Order 12866, these cost savings are considered to be 

separate impacts rather than direct reductions in the total cost of the rule. 

6.2 Unfunded Mandates Analysis

Signed into law on March 22, 1995, the Unfunded Mandates Reform Act (UMRA) calls 

on all federal agencies to provide a statement supporting the need to issue any regulation 

containing an unfunded federal mandate and describing prior consultation with representatives of 

affected state, local, and tribal governments. 

The proposed rule is subject to the requirements of sections 202 and 205 of UMRA. In

general, a rule is subject to the requirements of these sections if it contains “Federal mandates” 

that may result in the expenditure by State, local, and tribal governments, in the aggregate, or by

the private sector, of $100 million or more in any one year. The proposed rule results in 

approximately $180 million of costs to the private sector under the Preferred Option, $350 

million under Alternative 1, and $120 million under Alternative 2 in expenditures for the private 

sector and is thus subject to the following requirements of these sections.1

 An identification of the provision of Federal law under which the proposed rule is 

being promulgated.

 A qualitative and quantitative assessment of the anticipated costs and benefits of 

the Federal mandate;

o Costs and benefits to State, local, and tribal governments and the private 

sector

o Effect on health, safety, and the natural environment

o Analysis of extent to which such costs may be paid with Federal financial 

assistance (or otherwise paid for by the Federal government)

o Analysis of the extent to which there are available Federal resources to 

carry out this mandate

 Estimates of future compliance costs with the mandate.

 

1 Calculated as total compliance costs for conventional UST systems and EGTs (including costs to read 

regulations), documented in Exhibit 3-9, net of local and state government compliance costs identified in Exhibit 6-

2 below.
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6-3

 Estimates of disproportionate budgetary effects on any type of government or 

segment of the private sector.

 Estimates of the effect on the national economy (if relevant and possible).

Exhibit 6-1 provides references for the analyses that EPA has performed that respond to 

these requirements.

Exhibit 6-1

Location Of Analyses Responding To UMRA Requirements

Requirement Location

Identification of provision of Federal law under which proposed rule is being 

promulgated

Chapter 1 of this document

Assessment of costs and benefits to State, local, and tribal governments and 

the private sector

Chapters 3 and 4 of this document

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

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

financial assistance

Chapter 3 of this document; no 

Federal assistance is anticipated

Assessment of the extent to which there are available Federal resources to 

carry out this mandate

Chapter 3 of this document; no 

Federal resources are anticipated

Estimates of future compliance costs Chapter 3 of this document

Estimates of disproportionate budgetary effects on any type of government or 

private sector segment

Chapter 5 of this document

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

6.3 Federalism Analysis

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

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

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

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

have “substantial direct effects on the states, on the relationship between the national government 

and the states, or on the distribution of power and responsibilities among the various levels of 

government.” EPA typically considers a policy to have federalism implications if it results in the 

expenditure by State and/or local governments in the aggregate of $25 million or more in any

one year.

Under Executive Order 13132, EPA may not issue a regulation that has federalism 

implications, that imposes substantial direct compliance costs, and that is not required by statute, 

unless the Federal government provides the funds necessary to pay the direct compliance costs 

incurred by State and local governments, or EPA consults with State and local officials early in 

the process of developing the regulation.

Exhibit 6-2 summarizes annual government costs. Direct compliance costs for local and 

State governments reflect average costs per UST system; the analysis assumes that states 

collectively own one percent of total UST systems (6,114), and local governments own 24,458 

UST systems (four percent). 
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6-4

In addition, under the proposed rule, each state will incur labor costs for reading the new 

regulations, applying for State Program Approval (SPA), and processing one-time notification of 

existence for EGTs, AHFDSs, and FCTs. States that do not already require notification of UST 

ownership change will also incur costs to process and review all ownership change notifications 

of UST system ownership change. 

In this scenario, total costs to all affected state and local governments (including direct 

compliance costs, notification costs, and state program costs) are approximately $9.3 million 

under the Preferred Option, $19 million under Alternative 1, and $6.5 million under Alternative

2 in 2008 dollars; this is not considered to be a substantial compliance cost under federalism 

requirements. 

Exhibit 6-2

Summary Of Annual State And Local Government Costsb

Element

Preferred Option

($ millions)

Alternative 1

($ millions)

Alternative 2

($ millions)

Local Compliance Costsa$7.3 $15.0 $5.0 

State Compliance Costsa$1.8 $3.7 $1.3 

State Government Administrative Costs $0.2 $0.2 $0.2 

Total State and Local Governments Costs $9.3 $19.0 $6.5 

a

State and local government compliance costs are included in the total compliance costs presented in Exhibit 3-9.

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

6.4 Tribal Governments Analysis

Executive Order 13175, entitled “Consultation and Coordination with Indian Tribal 

Governments” (65 FR 67249, November 9, 2000), requires EPA to develop an accountable 

process to ensure “meaningful and timely input by tribal officials in the development of 

regulatory policies that have tribal implications.” EPA has concluded that this action will have 

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

would be affected. However, it will neither impose substantial direct compliance costs on tribal 

governments, nor preempt Tribal law. 

The data sources for the Indian country analysis are the same as those used in the small 

business analysis. Based on a review of information available about the types of business 

entities in Indian country, it is assumed that UST systems in Indian country represent a subset of 

the rest of the universe and are distributed similarly across the same sectors.2The total number of 

UST systems in Indian country is distributed proportionally among the NAICS sectors. 

The cost per UST system is higher in Indian country, as the universe is smaller, and all 

UST systems are assumed to incur costs associated with all the requirements of the proposed 

rule. At a 2008 cost of $795 per UST system, the total cost for UST systems in Indian country is 

 

2

For more detail, see Industrial Economics, Inc., "Detailed Assessment of UST Universe by Tank Purpose 

and Design," WA 1-25, Task 6, March 24, 2009. Note that because tribal ownership and operation is defined 

differently than other types of government ownership, no attempts are made to isolate or identify “government” 

UST systems in Indian country.
*** E.O. 12866 Review –Draft - Do Not Cite, Quote or Release During Review ***

6-5

approximately $2.1 million. EPA data indicates that 35 percent of all UST systems in Indian 

country are tribally-owned; correspondingly, the total cost to owners and operators of triballyowned UST systems is $0.7 million.

EPA consulted with tribal officials early in the process of developing this regulation to 

permit them to have meaningful and timely input into its development. EPA began its 

consultation with tribes on possible changes to the UST regulations shortly after the passage of 

the Energy Policy Act of 2005 (EPAct). EPAct directed EPA to coordinate with tribes to 

develop and implement an UST program strategy in Indian country to supplement the program’s 

existing approach. EPA and the tribes worked collaboratively to develop this tribal strategy.

EPAct also included key provisions that apply to states receiving federal funding but the 

Act did not specify Indian country. Nonetheless, EPA’s goal is to implement the objectives of 

these provisions in Indian country as an important step in achieving more consistent program 

results in release prevention. Both EPA and tribes recognize the importance of having policies 

that can help to ensure parity in program implementation between states and in Indian country. 

EPA committed to the tribes that we would fully implement the new provisions of the EPAct, 

and the proposed regulations will realize that commitment.

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

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

proposed regulations. EPA sent letters to leaders of over 500 tribes as well as to tribal regulatory

staff to invite their participation in the development of the regulations. EPA heard from both 

tribal officials who work as regulators as well as representatives of owners and operators of UST 

systems in Indian country. The tribal regulators raised concerns about ensuring parity of 

environmental protection between states and Indian country.

The proposed changes to the UST regulations are needed to ensure parity between sites in 

states and in Indian country. These regulations are also needed to ensure equipment is not just 

installed but is working properly to protect the environment from potential releases.

6.5 Joint Impacts of Rules

Executive Order 12866 requires that the Agency review whether the proposed rule 

creates “a serious inconsistency” or otherwise interferes “with an action taken or planned by

another agency.” We do not believe that the proposed rule creates a serious inconsistency or 

interferes with any other actions planned or undertaken by other agencies. The following are the 

existing regulations that currently affect UST systems: 

 State UST Regulations: A number of states have existing UST regulations that 

are more demanding than existing regulations under 40 CFR Part 280. To the 

extent that these policies are at least as demanding as the regulations under 

consideration, the systems in these states may already be in partial or full 

compliance with portions of the proposed rule. Chapter 2 identifies the number 

of UST systems in states with existing (baseline) regulations; cost estimates in 

Chapter 3 reflect the state regulatory programs that exist in the baseline. 
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6-6

 SPCC Regulations: Currently, a subset of UST systems in the universe is

regulated by Spill Prevention, Control, and Countermeasure rules (SPCC); these 

include emergency generator tanks, airport hydrant fuel distribution systems and 

UST systems with field-constructed tanks. Specifically, SPCC rules in 40 CFR 

Part 112 apply to above-ground containers and completely buried tanks that are 

not otherwise covered by the regulations of 40 CFR Part 280. SPCC rules do not 

specify particular leak detection protocols, but require that plans conform to 

industry standards, which can often be consistent with the requirements of the 

proposed rule. To the extent that the requirements imposed on these UST systems 

via the proposed rule are more or less stringent than the SPCC rules currently

governing them, the proposed rule may cause an increase or a reduction in overall 

inspection and monitoring requirements (and costs) for these UST systems. To 

account for this, EPA has generated baseline assumptions for these systems using 

information from the Department of Defense (the owner of the majority of all 

FCTs and AHFDSs). EGTs are assumed to incur all incremental costs beyond 

state regulatory baseline costs; to the extent that these systems are regulated under 

SPCC, this may overstate costs.
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7-1

Chapter 7. Comparison of Costs, Benefits, and Other Impacts

This chapter provides several analyses that compare the costs and beneficial impacts of 

the proposed rule. Cost-benefit analysis is a central feature of virtually all economic assessments 

and evaluates the economic efficiency of environmental policies by measuring their costs and 

benefits, and hence their net impacts on society. From an economic viewpoint, the proposed rule

would enhance economic efficiency if beneficial impacts exceed costs. 

A traditional cost-benefit comparison weighs society’s willingness to pay for the benefits 

of a regulation against the opportunity costs of the rule. Analyses of this type typically do not 

consider distributional issues, although they can be adapted to do so. Adherence to a strict 

benefit-cost approach provides an incomplete assessment of the effects of this proposed rule for 

two reasons:

 The majority of positive effects from new requirements occur as avoided 

remediation costs, not social benefits such as improved water quality. 

Monetizable social benefits occur only in the form of avoided cancer cases and 

constitute only a very small part of overall effects. Nevertheless, as discussed in 

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

the proposed rule.

 A key effect of the proposed rule is to reallocate costs from the public to 

responsible parties. This is likely to improve behavioral incentives, as the parties 

most likely to cause releases will also be responsible for preventing them. As we 

discussed in Chapter 5, savings to state financial assurance funds could exceed 

$150 million per year.

While this chapter presents a comparison of costs and benefits, the principal comparison 

is between avoided remediation costs and the cost of the proposed rule. This chapter uses two 

approaches to assess the effectiveness of the proposed requirements. First, we compare the 

social costs of the proposed rule with its total monetized avoided costs and benefits. We then 

consider cost-effectiveness measures which provide estimates of expenditures per unit reduction 

of releases and estimates of the cost per unit of benefit achieved by the proposed rule. 

Cost-benefit and cost-effectiveness analyses, however, should not be the only tools used 

in the establishment of any final regulatory action. The proposed rule is expected to provide 

other benefits that are not expressed in monetary terms. When these benefits are taken into 

account, along with equity-enhancing effects such as reduction in demand for publicly-funded 

remediation, the benefit-cost comparison becomes more complex. Consequently, the final 

regulatory decision becomes a policy judgment that takes into account efficiency as well as 

equity concerns.

In addition, the selection of a discount rate for estimating the present value of future costs 

and benefits is a complex issue. To reflect a range of possible future costs and benefits, we 

present two estimates of discounted costs and benefits; one based on a seven percent discount 

rate, and one based on a three percent discount rate.
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7-2

7.1 Cost Benefit Comparison

In this section, we compare the total costs of the rule with its total monetized and nonmonetized benefits and avoided costs. The total costs and monetized avoided costs of the 

proposed rule are summarized in Exhibit 7-1. The costs in the exhibit represent the social costs 

of the proposed rule, including state government administrative costs. 

The exhibit also shows the social benefits of the proposed requirements that are not 

captured in avoided costs. Monetized social benefits are calculated only for avoided cancer risks 

related to benzene due to the difficulty in measuring other types of benefits. Avoided cancer risks 

are estimated to be minimal, as they address only the uncontrolled human health risks that occur 

before discovery and remediation of a release under existing programs. EPA estimates less than 

$5,000 in measurable, monetized social benefits per year, regardless of the option. However, as 

Exhibit 7-1 notes and discussed in Chapter 4, a number of benefits could not be monetized, 

including groundwater protection, mitigation and avoidance of acute events, ecological benefits, 

and non-benzene human health risks.

Exhibit 7-1 demonstrates that the proposed rule may avoid more costs than it creates, 

potentially generating cost savings to society. EPA estimates that the Preferred Option could 

generate $90 million to $530 million per year in savings to society. Alternative 1 could have a 

net social benefit of $250 million to a net social cost of $210 million, while Alternative 2 could 

generate savings of $460 million to costs of $20 million.
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7-3

Exhibit 7-1

Comparison Of Social Costs, Cost Savings And Monetized Benefitsf

Preferred Option

(2008$ millions)

Alternative 1

(2008$ millions)

Alternative 2

(2008$ millions)

Annual Monetized Benefits

Avoided cancer risksa,d $0.001 - $0.005 $0.002 - $0.005 $0.001 - $0.003

Annual Avoided Costsd

Releases and groundwater incidents $300 - $700 $300 - $740 $110 - $570

Vapor intrusion $0.4 - $26 $0.5 - $28 $0.2 - $19

Product loss $2.0 - $7.2 $2.6 - $7.6 $0.4 - $5.3

Annual Social Costs

Conventional UST systemsb$180 $360 $120 

Emergency generator tanks (EGTs) $2 $2 $2 

Airport hydrant fuels distribution systems (AHFDSs) $18 $120 N/A

UST systems with field-constructed tanks (FCTs) $5 $33 N/A

Cost to owners/operators to read regulations $5 $5 $5 

State government administrative costsc$0.2 $0.2 $0.2 

Total Annual Benefits and Avoided Costs $300 - $740 $310 - $770 $110 - $590

Total Annual Social Costs $210 $520 $130 

Net Cost (Savings) to Society

[Total Social Costs less

Total Benefits and Avoided Costs]

($530) - ($90) ($250) - $210 ($460) - $20

Nonmonetized Benefits

e

Groundwater protected (billion gallons) 110 - 350 120 - 370 41 - 250

Acute events and large-scale releases

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

Ecological benefits Not estimated Not estimated Not estimated

Non-benzene human health risks Not estimated Not estimated Not estimated

a

 The pathway assessed to evaluate avoided cancer risk is benzene exposure through contaminated groundwater.

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

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

compliance costs within the other categories. Costs shown here reflect the administrative costs for state governments to read the regulation, 

apply for state program approval, process notifications of ownership changes, and process one-time notifications of EGT, AHFDS, and FCT 

existence.

d Avoided cancer risks and avoided costs are separate and additive (i.e., these estimates do not overlap). Avoided cancer risks are the 

benefits associated with reducing cancer cases prior to discovery of the release. Avoided remediation costs from releases and groundwater 

incidents are the costs related to site remediation. Avoided vapor intrusion costs include additional avoided costs associated with the 

remediation of vapor intrusion cases; the RIA does not address human health risk associated with vapor intrusion. Avoided product loss 

costs are also separate and additive.

e Due to data and resource constraints, EPA is unable to monetize some of the positive impacts of the proposed rule. Chapter 4 of this 

document provides a qualitative discussion of these benefits.

f Totals may not add up due to rounding. Cost estimates were derived using a seven percent discount rate. 
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7-4

7.1.1 Cost-Benefit Comparison under the Alternative Baseline Scenario

Exhibit 7-2 depicts the comparison of costs and benefits of the proposed rule in the 

alternative baseline scenario, where the universes of releases and UST systems decline over time 

in accordance with historical trends. In this alternative baseline, the universe of releases is 

smaller relative to the original baseline than the universe of UST systems; however, Exhibit 7-2

demonstrates that even in this case, the proposed rule may avoid more costs than it creates, 

potentially generating cost savings to society. EPA estimates that the Preferred Option in the 

alternative baseline could generate between $240 million per year in savings to $20 million per 

year in costs to society. Alternative 1 could have a net social cost of $50 million to $330 million, 

while Alternative 2 could generate savings of $240 million to costs of $56 million.

Exhibit 7-2

Comparison Of Social Costs, Cost Savings And Monetized Benefits, Considering an Alternative Baselinef

Preferred Option

(2008$ millions)

Alternative 1

(2008$ millions)

Alternative 2

(2008$ millions)

Annual Monetized Benefits

Avoided cancer risksa,d $0.001 - $0.003 $0.001 - $0.003 $0.0003 - $0.002

Annual Avoided Costsd

Releases and groundwater incidents $180 - $420 $180 - $440 $64 - $340

Vapor intrusion $0.3 - $16 $0.3 - $17 $0.1 - $11

Product loss $1.2 - $4.3 $1.6 - $4.6 $0.2 - $3.2

Annual Social Costs

Conventional UST systemsb$170 $350 $110 

Emergency generator tanks (EGT) $2.2 $2.2 $2.1

Airport hydrant fuels distribution systems (AHFDSs) $18 $120 N/A

UST systems with field-constructed tanks (FCTs) $4.6 $33 N/A

Cost to owners/operators to read regulations $5.1 $5.1 $5.1

State government administrative costsc$0.2 $0.2 $0.2 

Total Annual Benefits and Avoided Costs $180 - $440 $180 - $460 $64 - $360

Total Annual Social Costs $200 $510 $120 

Net Cost (Savings) to Society

[Total Social Costs less

Total Benefits and Avoided Costs]

($240) - $20 $50 - $330 ($240) - $56

Nonmonetized Benefitse

Groundwater protected (billion gallons) 65 - 210 71 - 220 25 - 150

Acute events and large-scale releases

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

Ecological benefits Not estimated Not estimated Not estimated

Non-benzene human health risks Not estimated Not estimated Not estimated

a

 The pathway assessed to evaluate avoided cancer risk is benzene exposure through contaminated groundwater.

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

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

compliance costs within the other categories. Costs shown here reflect the administrative costs for state governments to read the regulation, 

apply for state program approval, process notifications of ownership changes, and process one-time notifications of EGT, AHFDS, and FCT 

existence.

d Avoided cancer risks and avoided costs are separate and additive (i.e., these estimates do not overlap). Avoided cancer risks are the 

benefits associated with reducing cancer cases prior to discovery of the release. Avoided remediation costs from releases and groundwater 

incidents are the costs related to site remediation. Avoided vapor intrusion costs include additional avoided costs associated with the 
*** E.O. 12866 Review - Draft - Do Not Cite, Quote or Release During Review ***

7-5

remediation of vapor intrusion cases; the RIA does not address human health risk associated with vapor intrusion. Avoided product loss 

costs are also separate and additive.

e Due to data and resource constraints, EPA is unable to monetize some of the positive impacts of the proposed rule. Chapter 4 of this 

document provides a qualitative discussion of these benefits.

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

7.2 Cost-Effectiveness Analysis

We measure cost-effectiveness by considering the expected cost per release avoided. 

This cost-effectiveness measure is useful for comparing the resources required to eliminate a 

single release under each alternative. For the purpose of this analysis, we consider avoided 

releases to be both releases altogether avoided and groundwater incidents averted due to the 

proposed rule. As presented in Exhibit 7-3, we find that the cost per release avoided is 

approximately $38,000 to $120,000 under the Preferred Option, compared with $90,000 to 

$290,000 under Alternative 1 and $33,000 to $200,000 under Alternative 2. This compares 

favorably with average release remediation costs presented in Exhibit 4-2 in Chapter 4, which 

range between $92,000 and $194,000. This regulatory impact analysis suggests that, in addition 

to improving the alignment of incentives, release prevention is likely to be less costly than 

release remediation under the Preferred Option and Alternative 2 and in some instances under 

Alternative 1.

Exhibit 7-3

Cost-Effectiveness: Number Of Avoided Releases And Groundwater Incidents

Preferred Option Alternative 1 Alternative 2

Avoided releases and groundwater incidents 1,680 - 5,370 1,820 - 5,780 630 - 3,860

Social Cost ($ million) $210 $520 $130

Cost per release avoided ($ million) $0.038 - $0.12 $0.09 - $0.29 $0.033 - $0.20

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

7.3 Costs and Beneficial Effects Under Alternative Discount Rates

The selection of the rate at which to discount future costs and benefits is complex. To 

assess the sensitivity of our results to our choice of discount rate, Exhibit 7-4 presents a 

summary of total social costs and avoided remediation costs considering alternate discount rates 

of three percent and zero percent (i.e., no discounting). Costs change little because a reduction in 

interest rates both reduces time value of money (TVM) costs and increases costs that have a 

delay before implementation.

1,2

The net result of a change from a discount rate of seven percent 

to a discount rate of zero percent is an overall increase in the cost of the rule of less than $10 

million per year, indicating that TVM and delayed-implementation cost effects essentially offset 

each other.

 

1 When amortizing a value over time, if all other factors are held constant, a reduction in the rate of interest 

decreases the annual payment.

2 The rate of discount enters into our calculation of time value of money costs. Higher discount rates 

increase these costs, while lower discount rates cause them to decrease. See Appendix D for details.
*** E.O. 12866 Review - Draft - Do Not Cite, Quote or Release During Review ***

7-6

Discount rates are also involved in our estimate of annual avoided costs. In particular, we 

use them only to obtain constant annual avoided costs for those requirements in which the 

affected universe grows over time and calculate the delay until positive impacts accrue.

3 Here, 

the effect of lowering interest rate is more significant, as all requirements are discounted by at 

least one period. As Exhibit 7-4 shows, a change in the rate of discount from seven percent to 

zero percent increases avoided costs from a range of $300 million - $740 million to $340 million 

- $810 million. This increase is largely due to the fact that we discount all avoided costs by at 

least one year, as outlined in Exhibit 1-2.

We conclude that, while a reduction in the discount rate leaves annual social costs 

essentially unchanged at $210 million, avoided costs increase from by $40 million to $70 million 

per year. As such, annual savings to society would increase from a range of $90 million - $530

million to $130 million - $600 million if EPA relies on a zero rate of discount.

Exhibit 7-4

Social Costs And Beneficial Impacts Under Alternative Discount Ratesd

Avoided Cost

Preferred Option

7 percent discount 

rate ($ millions)

Preferred Option

3 percent discount 

rate ($ millions)

Preferred Option

Undiscounted 

($ millions)

Annual Monetized Benefits

Avoided cancer risksa$0.001 - $0.005 $0.001 - $0.005 $0.002 - $0.005

Annual Positive Impacts (Avoided Costs)

Releases and groundwater incidents $300 - $700 $320 - $740 $340 - $770

Vapor intrusion $0.4 - $26 $0.4 - $27 $0.5 - $28

Product loss $2.0 - $7.2 $2.0 - $7.4 $2.1 - $7.7

Annual Social Costs

Conventional UST systemsb$180 $180 $180

Emergency generator tanks (EGT) $2.2 $2.2 $2.2 

Airport hydrant fuels distribution systems (AHFDSs) $18 $21 $22

UST systems with field-constructed tanks (FCTs) $4.6 $5.2 $5.6 

Cost to owners/operators to read regulations $5.1 $3.7 $2.7 

State government administrative costsc$0.2 $0.2 $0.2 

Total Annual Avoided Costs $300 - $740 $330 - $770 $340 - $810

Total Annual Social Costs $210 $210 $210

Net Cost (Savings) to Society

[Total Social Costs less Total Avoided Costs] ($530) - ($90) ($560) - ($120) ($130) - ($600)

a

 The pathway assessed to evaluate avoided cancer risk is benzene exposure through contaminated groundwater.

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

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

compliance costs within the other categories. Costs shown here reflect the administrative costs for state governments to read the regulation, 

apply for state program approval, process notifications of ownership changes, and process one-time notifications of EGT, AHFDS, and FCT 

existence.

d Totals may not add up due to rounding.

 

3 These requirements are the elimination of flow restrictors as overfill prevention for new tanks and when 

overfill devices are replaced, closure of lined tanks which cannot be repaired, and all Energy Policy Act 

requirements in Indian country, with the exception of operator training.
*** E.O. 12866 Review - Draft - Do Not Cite, Quote or Release During Review ***

1

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*** E.O. 12866 Review - Draft - Do Not Cite, Quote or Release During Review ***

5

Young, Thomas M. and Randy D. Golding. Underground Storage Tank Field-Based Research 

Project Report. Submitted to the California State Water Resources Control Board under 

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