MEMORANDUM | 3 October 2008

TO Cho Yi Kwan and Timothy Roberts, U.S. EPA

FROM Neal Etre and Cynthia Manson, Industrial Economics, Inc.

SUBJECT Methodology for Secondary Containment for Piping (Work Assignment 1-19, Task 5)

The Environmental Protection Agency's (EPA's) Office of Underground Storage Tanks 

(OUST) is currently exploring options related to federal rulemaking action(s) associated 

with implementing provisions of Title XV, Subtitle B of the Energy Policy Act of 2005 

(entitled the Underground Storage Tank Compliance Act of 2005). The Energy Policy 

Act expands eligible uses of the Leaking Underground Storage Tank (LUST) Trust Fund 

and includes provisions regarding inspections, operator training, delivery prohibition, 

secondary containment and financial responsibility, and cleanup of releases that contain 

oxygenated fuel additives.

Concerning secondary containment, the Energy Policy Act (EPAct) specifically amends 

Section 9003 of the SWDA to require states receiving Subtitle I funding to implement 

secondary containment measures for USTs located within 1,000 feet of any existing 

community water system or any existing potable drinking water well (secondary 

containment provision). Currently, EPA is exploring options associated with 

implementing the secondary containment provision or requiring financial responsibility 

for manufactures and installers. 

One option under consideration requires secondary containment for “replaced” piping, 

but not for “repaired” piping. In order to implement this requirement, EPA needs a clear 

definition for when piping is considered to be “replaced.” Currently, EPA’s “Grant 

Guidelines to States for Implementing the Secondary Containment Provisions of the 

Energy Policy Act of 2005”, published in November 2006, allows states to determine the 

definition of “replaced” piping. An EPA definition of replaced piping would in some 

cases take the place of state definitions.

To assist EPA in exploring this option, Industrial Economics, Incorporated (IEc) is 

developing an approach for assessing the cost to a typical UST facility based on 

following definitions for “replaced” piping:

Piping replacement defined by a fixed footage of piping;

Piping replacement defined by a fixed percentage of the overall piping length; and 

Piping replacement defined by a fixed percentage of the cost of replacing the 

entire piping run with secondary containment.

This memorandum outlines a draft methodology for assessing costs to a typical UST 

facility based on the three options for defining “replaced” piping. After a brief discussion 

on the secondary containment provision and owner/operator behavior, we outline a 

BACKGROUND AND 

INTRODUCTION 
2

preliminary methodology to analyze the differences in potential costs to a “typical” UST 

facility associated with the different definitions of “replaced” piping. To explain the 

methodology, we use previously collected EPA data and additional research conducted 

under this effort. Finally, we present some initial findings based on available cost data, 

and note key limitations, uncertainties, and potential next steps. 

Note that we developed this memorandum as a companion to an Excel-based model that 

will allow EPA to explore the potential costs associated with the definitions for 

“replaced” piping. The model will provide EPA with the flexibility to adjust the various 

assumptions, including costs, length of piping, and the definition triggers for “replaced” 

piping.

Secondary containment for piping refers to release prevention and release detection 

systems for piping connected to UST systems. The 2006 Grant Guidelines state that 

release prevention involves piping having an inner and outer barrier. The release 

detection system involves monitoring the interstitial space between the inner and outer 

barriers for evidence of a leak or release of regulated substances.1 Many UST facilities

that do not have secondary containment use “single-walled” piping. Without the 

additional leak barrier and opportunity for straightforward monitoring, single-walled 

piping presents a higher potential for releases of regulated substances to the environment. 

The EPAct secondary containment provision requires the installation of secondary 

containment for “replaced” piping, but not “repaired” piping. If an owner/operator’s 

actions trigger the definition of “replaced” at a facility with single-wall piping, then the 

owner would be required to install secondary containment for the entire piping run, and 

not just replace the portion that required maintenance. For the replacement definitions 

investigated in this analysis, EPA has determined that a piping run includes the piping 

from a single tank to its associated dispensers. A typical facility has multiple piping runs. 

If a replacement was triggered, the owner/operator would only be required to replace the 

affected piping run.2 For a repair of single-walled piping, an owner would not install 

secondary containment. Therefore, the key determent in both cost to facilities and the 

number of facilities affected by the secondary containment provision is the definition of 

“replaced” piping. 

This initial effort focuses on the cost to a typical facility that may result from a secondary 

containment requirement; therefore, it is important to understand the factors that drive 

owner/operator decisions related to repairing UST piping. In some cases, 

owner/operators choose to repair damaged sections of piping, and at other times, they 

decide to replace the entire piping run (i.e., the run of piping from one tank to one or 

more dispensers) or all of the piping at the facility, regardless of regulatory requirements. 

Ideally, a well-focused regulation would require secondary containment in all cases 

where an owner-operator would have replaced piping under any circumstances, while 

minimizing the number of times that a small repair would trigger a total piping 

replacement. Based on EPA’s prior research and additional discussions with UST 

 

1 U.S. Environmental Protection Agency (EPA). “Grant Guidelines to States for Implementing the Secondary Containment 

Provisions of the Energy Policy Act of 2005.” November 2006

2 Cho Yi Kwan, EPA. Personal Communication. May 2008.

FACTORS THAT AFFECT 

OWNER/OPERATOR 

DECISION-MAKING 
3

equipment installers, we identified several factors that drive this decision-making process, 

including:3

Existing single-walled piping type. According to the installers the existing 

piping material is the most important factor in determining whether to repair a 

section of piping or to replace the entire piping run. In general, three types of 

single-walled piping exist:

o Fiberglass piping. Single-walled fiberglass piping is non-reactive

and relatively reliable. Leaks can occur at joints, if the piping was 

installed improperly. Problematic sections of single-walled 

fiberglass piping can be effectively repaired if the owner/operator 

chooses to do so. Typically, installers cut out the section in need of 

repair plus an extra margin, and then glue in a new piece of 

fiberglass piping. Secondarily contained fiberglass is commonly in 

use. 

o Flexible piping (flexpipe). Single-walled flexpipe is typically a 

polyurethane pipe coated with anti-corrosive material, installed as 

large continuous line between sumps (25 to 100 feet long). It can be 

installed within concrete conduit or imbedded in gravel; one 

installer estimated that the conduit was used at half of flexpipe sites 

he had evaluated. Single-walled flexpipe technology is not 

frequently installed and has been found to deteriorate when placed 

in long-term contact with fuel. Single-walled flexpipe may be 

repaired, but requires a transition sump at the repair site. Flexpipe 

in conduits may be slightly less expensive to repair than flexpipe 

installed without a conduit, because it requires less excavation. 

According to the installers contacted for this effort, they rarely 

repair single-walled flexpipe, as it is likely to fail in the future. 

Typically, the installers encourage replacing all of the single-walled 

flexpipe at the facility. One installer noted that repairing singlewalled flexpipe “is not an option.”4,5 Although less frequently 

installed than secondarily contained fiberglass piping, secondarily 

contained flexpipe is currently in use.

 

3 As part of this effort, IEc reviewed previous EPA research on the activities and costs associated with the installation, repair, 

and replacement of single and secondarily contained piping. The prior research reported on the results of interviews with 

UST equipment installers from the Petroleum Equipment Institute (PEI). E2(for EPA) conducted a series of phone surveys 

with seven installers located around the U.S under Task Order No. 1010 – General Technical and Programmatic Support in 

Implementing the Energy Policy Act of 2005 Task 1010-04 – Technical Research/Analysis And Summarize Information Subject 

4 – Secondary Containment Subtasks SC-03 and SC-04. June and July 2006. In addition, to supplement this research, IEc 

attempted to contact the same installers (and held discussions with three of them) in an effort to seek additional 

information and clarify their previous responses. We derive our description of the decision-making factors and later, cost 

data, from this research. 

4

For a discussion on the problems associated with flexible piping, see “Fact Sheet: Thermoplastic Flexible Piping in 

Underground Tank Systems.” Maryland Department of the Environment, Oil Control Program. 

http://www.mde.state.md.us/Programs/LandPrograms/Oil_Control/USThome/index.asp

5 Duane Grippe, O'Day Equipment LLC. Personal Communication. July/August 2008.
4

o Steel piping. Steel piping is typically found at older sites, often in 

rural areas. It is susceptible to corrosion when not adequately 

protected through cathodic protection methods. The installers

contacted for this effort indicated that they almost never repair steel 

piping; instead, they encourage replacement of all piping at the 

facility.

6

Cause and extent of the problem. One of the most common causes for piping 

damage is the accidental piercing of a pipe section by mechanical equipment such 

as a backhoe. For single-walled fiberglass piping damaged by equipment, 

installers typically repair the broken section. It is rarer for the installers to repair 

single-walled flexpipe damaged by equipment and more typical to replace all of 

the single-walled flexpipe at the facility. Depending on the extent of the issues, 

other problems such as leaking joints or in-pipe corrosion may require the 

replacement of the entire piping run, regardless of piping type. One installer noted 

that when a bad glue job is detected at a facility with fiberglass piping, he 

typically recommends replacing the entire run, because the poor glue job likely 

affects all of the joints and pipes in the system.

Location of the problem along the piping run. Problems located in the 

dispenser sump (found under the dispenser) or in the flex connector (found at the 

tank and the end of the piping run) may be easier to repair because they require 

less excavation. A leak found in the middle of the piping run may be difficult to 

find and require extensive excavation to locate the problem. When extensive 

excavation has already taken place, the marginal cost of installing piping with 

secondary containment is modest. 

Overall cost of repair. When the cost of replacement is comparable to the cost of 

repair, it often makes better fiscal sense for the owner/operator to replace the 

single-walled piping to reduce future repair costs and liability concerns. This is a 

personal decision made by the owner/operators, but the installers indicated that 

facilities typically replace single-walled piping during renovations.

Existing state regulation. Presently, at least 19 states require some form of 

secondary containment for piping. Depending on the state, owners may have

limited options to repair existing single-walled piping.7 It is expected that as a 

result of the EPAct Guidelines, more states will enact secondary containment 

provisions for piping. For example, Colorado’s secondary containment provision 

recently went into effect on August 1, 2008. The provision defines “replaced” as 

repairing over 50 feet in length or 50 percent of the costs of replacing the entire 

piping run with secondary containment.

 

6

In addition, 40 CFR part 280.33(c) does not allow the repair of steel piping that has released product. 

7 Underground Storage Tank Guide. Thomson Publishing Company. 2008.
5

The installers contacted for this effort stated that they strongly recommend the use of 

secondary containment (regardless of piping type) and stress to their clients its benefits, 

namely better leak protection and monitoring. The installers emphasize to clients that 

while the costs of installing secondary containment may be higher, the benefits associated 

with reduced leaks and the peace of mind provided by secondary containment far 

outweigh the additional costs. They estimate that secondary containment has become the 

industry standard for newly installed piping and that anytime they need to replace an 

entire piping run, they would install secondary containment. This implies that the use of 

single-walled piping will likely be phased out over time in most states.

8

 The rate at which 

the phase-out occurs will likely depend on EPA’s and states’ definition(s) of “replaced” 

piping established under the secondary containment provision. Since the industry 

generally rates single-walled steel and flexible piping as less effective products, it is 

likely that they will continue to be phased out regardless of EPA’s rulemaking. 

However, facilities may be less inclined to replace single-walled fiberglass piping, as it 

has a relatively low failure rate. In order to substantially reduce the number of facilities 

using single-walled fiberglass piping, EPA may wish to set a strict standard for the 

definition of “replaced” to target these facilities. An additional benefit of this approach 

would be that the stricter standard would likely catch facilities that use steel and flexpipe 

as well. EPA will have to weigh its options carefully, as a strict standard may result in an 

undue burden on some facilities. 

In this section, we present our preliminary methodology for assessing costs to a typical 

UST facility based on the three options for defining “replaced” piping. For each of the 

options presented below, we compare the cost of replacing the entire piping run to the 

baseline costs that the facility would incur in absence of the secondary containment for 

piping provision. As mentioned above, our discussions with installers suggest that for 

single-walled flexpipe and single-walled steel piping, a typical UST facility would 

replace its failed piping with secondary containment, regardless of how the standard 

defines “replaced.” Therefore, we focused our effort on developing an assessment for 

typical facilities that use single-walled fiberglass piping, since they are the group most 

likely to repair their piping.9

ASSUMPTIONS USED TO DEMONSTRATE THE METH ODOLOGY

EPA’s prior research gathered cost information from installers on various UST 

installation and repair practices. The installers caution that these cost estimates, based on 

specifications given to them by the researchers, are their best efforts given limited 

information about the facility.

10

 Given the wide variations in costs, we employ the midpoint values presented in the EPA research. Where values are not available, we 

supplement with information from our discussions with the installers. In practice, high 

variability in equipment costs and site specific conditions result in a wide range of costs. 

 

8 We talked with installers from California, Colorado, and South Dakota. California has required secondary containment for 

piping since the 1980s. Colorado recently (August 1, 2008) enacted new secondary containment requirements for piping. 

South Dakota currently does not require secondary containment for piping.

9 While a specific facility may decide to repair steel piping or single-wall flex-piping with a single-wall option, these 

facilities are likely to have fewer options for repair than a facility with fiberglass piping; therefore the difference between 

“repair” and “replace” is more important to facilities with fiberglass systems.

10 Researchers gave the installers the following specifications to base their costs on: three USTs per facility; 300 feet per 

piping run; and four dispensers. EPA gathered cost information in the summer of 2006. Given the wide variation and 

uncertainty in the cost estimates, we do not adjust the costs provided to EPA for inflation. 

PRELIMINARY 

METHODOLOGY 

AND EXAMPLE 

RESULTS
6

The Excel-based model that accompanies this memorandum provides the flexibility to 

adjust these cost estimates and other facility-based assumptions. Exhibit 1 present 

assumptions used to characterize a typical UST facility. We selected these assumptions 

based on those previously developed by EPA.11 To verify the reasonableness of these 

assumptions, we presented them to the installers, who generally agreed that they 

represented a typical site.

EXHIBIT 1 ASSUMPTIONS USED TO DESCRIBE A TYPICAL UST FACIILTY 

METRIC ASSUMPTION

Number of tanks per facility (i.e., number of piping runs) 3

Typical length of single-walled fiberglass piping per facility (feet) 300

Typical length of piping run per tank (feet) 100

Source:

Task Order No. 1010 – General Technical and Programmatic Support in Implementing the Energy 

Policy Act of 2005 Task 1010-04 – Technical Research/Analysis And Summarize Information 

Subject 4 – Secondary Containment Subtasks SC-03 and SC-04. June and July 2006.

The baseline cost to repair a section of single-walled fiberglass piping depends largely on 

two factors:

The location of the section of pipe in need of repair. According to the 

installers, if the repair is in the area of the dispenser sump or flex connector, the 

costs associated with repair ranges from $250 to $1,500, an average of $667.12 

Typically, these repairs do not require extensive (or expensive) excavation. Since 

the annualized costs over 10 years for these repairs ($95) are relatively low and 

they impact a relatively small area at the facility, they will not likely trigger the 

“replaced” requirement under the definition options explored in this 

memorandum. We therefore assume that the only repairs that may trigger the 

“replaced” definition involve pipe buried in concrete.

The size of the repair. The larger the damaged section of piping, the more 

expensive the repair job. Installation requires additional excavation, piping length, 

equipment, and paving. 

Exhibit 2, below, presents the assumptions used to develop estimates of baseline repair 

costs and the cost to replace the entire piping run with secondary containment (i.e., 

secondarily contained fiberglass piping plus interstitial monitoring costs). Based on 

previous EPA research, we estimate annualized cost to repair 10 feet of single-walled 

fiberglass piping to be $641. For each additional 5-foot section, we estimate the 

annualized cost to run an additional $214. Therefore, for example, the annualized cost to 

repair a 25 foot section of single-walled fiberglass pipe totals $1,283 [(3 x $214) + $641].

 

11 Task Order No. 1010 – General Technical and Programmatic Support in Implementing the Energy Policy Act of 2005 Task 

1010-04 – Technical Research/Analysis And Summarize Information Subject 4 – Secondary Containment Subtasks SC-03 and 

SC-04. June and July 2006.

12 Task Order No. 1010 – General Technical and Programmatic Support in Implementing the Energy Policy Act of 2005 Task 

1010-04 – Technical Research/Analysis And Summarize Information Subject 4 – Secondary Containment Subtask SC-04. June 

2006.
7

EXHIBIT 2 ASSUMPTIONS USED TO CALCULATE POTENTIAL COSTS OF S ECONDARY CONTAINMENT

The baseline assumes that a typical facility, in the absence of a secondary containment 

provision, would repair existing single-walled fiberglass piping up to a certain length. At 

a threshold length, the owner determines that it is more cost effective to replace the run of 

single-walled piping with secondary containment. Because of variations in 

owner/operator preferences and tolerance for risk, the installers had difficulty identifying 

a specific length pipe or cost point that would trigger the replacement of the piping run. 

For this exercise, we make an initial screening-level assumption that if repairs cost more

than 75 percent of the cost to replace the piping run, then owner/operator would chose 

ACTIVITY COST RANGE AVERAGE ANNUALIZEDa

BASELINE

Baseline repair costs (for replacing 10 

feet of single-walled fiberglass piping)b,c $1,200 - $12,500 $4,500d

$641

Baseline repair costs for additional five 

feet of single wall piping $1,000 - $2,000 $1,500 $214

CAPITAL COSTS ASSOCIATED WITH REPLACING ENTIRE 100 FOOT PIPING RUN WITH SECONDARY CONTAINMENT

Excavation costs $1,600 - $2,000 $1,800 $698

Material costse$3,400 - $6,400 $4,900 $648

Labor costs $3,900 - $5,200 $4,550 $256

Paving $2,200 - $2,800 $2,500 $356

Electrical $1,100 - $3,200 $2,150 $306

Interstitial monitoring equipmentf - $3,000 $427

Total Annualized Costs $2,691

Notes:

a Capital costs were annualized over 10 years (i.e., the expected time required to pay off the project) 

using OMB’s approved discount rate of seven percent. OMB Circular A-94.

b Includes the cost of excavation, cutting damaged pipe, installing new pipe, and repaving. This analysis 

assumes that no additional sumps have been added to the system during the repair.

c

EPA research estimated the average repair for fiberglass piping is seven feet. To simplify this analysis, 

we round up to 10 feet. Discussions with installers confirm that the cost range is comparable.

d

Based on the average repair cost reported for single-walled fiberglass piping with excavation of 

concrete with rebar. 

e Material costs include 100 feet of secondarily contained fiberglass, and all necessary pipe fittings, 

connections, and valves.

f This may overestimate costs of installing interstitial monitoring, as many facilities may already have 

adequate leak detection in place.

Sources:

Task Order No. 1010 – General Technical and Programmatic Support in Implementing the Energy Policy 

Act of 2005 Task 1010-04 – Technical Research/Analysis And Summarize Information Subject 4 –

Secondary Containment Subtasks SC-01, 03 and 04. June/July 2006.

Robert Renkes. Petroleum Equipment Institute. Personal Communication. June 2008. 

Duane Grippe, O'Day Equipment LLC. Personal Communication. July/August 2008.

Jerry Thomas. C.E. Thomas Company. Personal Communication. July 2008.

Ken Korneychuck, Eaton Sales and Service Co. Personal Communication. August 2008.
8

replacement (with secondary containment) regardless of regulations.13 Therefore, if the 

total cost of repair exceeds the 75 percent threshold, we assume no incremental costs to 

the facility would result from the secondary containment provision. For example, if the 

annualized cost of repair exceeds $2,018 [0.75 x $2,691], we assume the owner/operator 

chooses to replace the entire piping run with secondary containment in the baseline, and 

the regulation would cause no change in costs. 

We estimate the annualized cost to replace single-walled fiberglass piping with secondary 

containment to be $2,691. This includes the cost to excavate, install secondarily 

contained piping, and repave the site. We also include the potential costs of installing 

interstitial monitoring equipment, as this is a requirement for secondary containment. 

Note that we investigated the most recent OUST ICR in an attempt to gather the 

operations and maintenance (O&M) costs associated with interstitial monitoring. The 

ICR does not clearly identify O&M costs specific to interstitial monitoring for piping. 

Moreover, it is not clear that a requirement for interstitial monitoring would represent an 

additional monitoring requirement, or a replacement for some current monitoring activity. 

As a result, for this illustrative effort, we assume no O&M costs attributable to interstitial 

monitoring. The Excel model contains a placeholder (set at 0) should EPA wish to test 

scenarios with O&M costs for interstitial monitoring for piping.14

METHODOLOGICAL APPRO ACH AND EXAMPLE RESULTS

We define the costs of the secondary containment provision for piping as the incremental 

cost associated with triggering the definition of “replaced.” Simply put, if the repair 

triggers the regulatory requirement for replacement of the piping run, the incremental cost 

is the difference between the replacement costs and the baseline repair costs. However, 

if, as stated previously, the baseline cost exceeds 75 percent of the replacement costs, we 

then assume that a facility would have replaced the piping regardless of the rule. 

Therefore, no incremental cost is assigned to the facility.15

In contrast to most regulatory analyses, in this case, the baseline cost of repairs drives the 

incremental costs, since replacement costs remain constant and it is the difference 

between these replacement costs and the repair costs that would have been incurred 

without the regulation that is measured. Below, we present the preliminary methodology 

for calculating the incremental cost to a typical facility for the three “replaced” piping 

definitions. We use the example data derived from EPA research to demonstrate our 

approach. 

Option 1: Piping repl acement defined by a fixed footage of piping

Under the first definition option, “replaced” piping is determined by a fixed footage of 

piping. In this case, the trigger to require the installation of secondary containment is 

based on the length of the piping section in need of repair. We first select a threshold 

value that triggers the definition of “replaced” piping. For this exercise, we chose a 

threshold value of 25 feet – that is, once a piping repair job spans 25 feet in length, a 

 

13 We select 75 percent because one installer indicated that this was a reasonable threshold. Note that in the Excel model 

that will accompany this memorandum, the user will have the flexibility to adjust the point at which the facility chooses to 

replace piping and instead of repair.

14 Underground Storage Tanks: Technical and Financial Requirements, and State Program Approval Procedures, EPA ICR 

Number 1360.08.

15 For facilities with steel and single-walled flexible piping, we assume that operators would replace their piping regardless 

of whether it is required by EPA.
9

facility is required to replace the entire run of piping (in this case, we assume the piping 

run is 100 feet in length). Based on this trigger threshold, Exhibit 3 presents our 

approach to estimating the incremental costs associated with Option 1.

EXHIBIT 3 ILLUSTRATIVE RESULTS: REPLACEMENT IS DETERMINED BY A FIXED FOOTAGE (25 FEET)

LENGTH OF REPAIR RELATIVE TO 

A 25 FOOT THRESHOLD

LENGTH 

OF REPAIR 

(FEET)

ANNUALIZED COST OF 

REPLACING PIPING RUN

WITH SECONDARY 

CONTAINMENT

ANNUALIZED COST 

TO REPAIR SINGLE 

WALLED 

FIBERGLASS PIPING

ANNUALIZED 

INCREMENTAL COST 

OF SECONDARY 

CONTAINMENT

Repair length is below threshold 10 $2,691 $641a$0a

Repair length is at threshold 25 $2,691 $1,281 $1,410

Repair length is above threshold 35 $2,691 $1,709 $982

Repair length is substantially above 

threshold

50 $2,691 $2,349 $0b

Notes:

a

This scenario assumes that the owner/operator would choose to repair the single-walled piping and, therefore, would 

incur no incremental costs for secondary containment.

b In this scenario, the annualized cost of a 50-foot repair would be $2,349, which represents more than 75 percent of the 

annualized cost to replace piping run with secondary containment. We assume that this facility would replace the entire 

piping run in the absence of the rule and, therefore, incurs no incremental costs for secondary containment.

Exhibit 3 demonstrates the cost to a typical facility when “replaced” piping is determined 

by a fixed footage. The facility with a short repair length of 10 feet does not trigger the 

replacement standard; thus it incurs no incremental costs. On the contrary, the facility 

with the length of repair at the threshold realizes a high incremental cost, because it 

would be forced to replace its piping, while the cost of repairs remains relatively low. 

When repair length is beyond the threshold (e.g., the facility with the 35 foot repair), the 

incremental cost of replacement is lower, because its repair costs would have been 

relatively high. Finally, when repair length is substantially greater than 25 feet, the repair 

cost exceeds the point at which the operator would likely have chosen to replace the pipes 

in absence of the rule. In this case the annualized cost of a 50-foot repair would be 

$2,349, which represents more than 75 percent of the cost of replacement. Therefore, we 

assume that this facility would have replaced pipes in the absence of the rule and incurs 

no incremental costs. This example shows that the incremental costs are sensitive to the 

change in repair length, particularly around the threshold value. 

Option 2: Piping replacement defined by a fixed percentage of the overall piping 

length

Under the second definition option, “replaced” piping is determined when a certain 

percentage of the total piping run is replaced. Our approach to this option is very similar 

to Option 1, only we add a step to the calculation. The first step is to convert the 

threshold percentage to a length of piping. For example, we assume under Option 1 that a 

typical piping length is 100 feet. The incremental cost calculation first converts the 

percentage of piping to feet by multiplying the length of the piping run by the percentage. 

As a result, under the previous example, a 25 percent threshold is equivalent to 25-foot 

threshold. In the Excel based model, the user will have option to change the typical 
10

length of a piping run to explore how this definition differs from Option 1. To highlight 

the change in pipe run length, Exhibit 4 illustrates Option 2 based on a 25 percent 

threshold for “replaced” piping and typical pipe run length of 125 feet. Note that because 

we increase the length of the piping run, the annualized cost of replacing the entire run 

with secondary containment also increases.16

EXHIBIT 4 ILLUSTRATIVE RESULTS: REPLACEMENT IS DETERMINED BY A FIXED PERCENTAGE OF 

OVERALL PIPING LENGTH (25%) WITH A PIPING LENGTH OF 125 FEET

PERCENTAGE OF PIPING REPAIRED 

RELATIVE TO A 25 PERCENT 

THRESHOLD

PERCENTAGE 

OF PIPING 

LENGTH

ANNUALIZED COST OF 

REPLACING PIPING RUN

WITH SECONDARY 

CONTAINMENTa

ANNUALIZED COST 

TO REPAIR SINGLE 

WALLED 

FIBERGLASS PIPING

ANNUALIZED 

INCREMENTAL COST 

OF SECONDARY 

CONTAINMENT

Percentage of piping length is 

below threshold

10% $3,364 $747b$0b

Percentage of piping length is at 

threshold

25% $3,364 $1,548 $1,815

Percentage of piping length is 

above threshold

30% $3,364 $1,815 $1,548

Percentage of piping length is 

substantially above threshold

50% $3,364 $2,883 $0c

Notes:

a We assume a linear relationship between annualized replacement costs and piping length.

b This scenario assumes that the owner/operator would choose to repair the single-walled piping and, therefore, would 

incur no incremental costs for secondary containment.

c

In this scenario, the annualized cost of repairing 50 percent of the piping run would be $2,883, which represents more 

than 75 percent of the annualized cost to replace piping run with secondary containment. We assume that this facility 

would replace the entire piping run in the absence of the rule and, therefore, incurs no incremental costs for secondary 

containment.

Exhibit 4 demonstrates how changing the length of a typical piping run alters incremental 

costs under Option 2. By extending the pipe length, we increase the size of the area in 

need of repair and the overall costs to replace the piping run with secondary containment. 

As expected the incremental cost of replacement increases as pipe length increases. 

Option 3: Piping replacement determined by a fixed percentage of the cost of 

replacing the entire piping run with secondary containment

Under the third definition option, “replaced” piping is determined by a fixed percentage 

of the cost of replacing the entire piping run with secondary containment. For this 

approach, we estimate a cost threshold to determine when a facility must install 

secondary containment. Exhibit 5 presents the results of our approach to this option. 

Based on a 25 percent cost threshold, we determine that any repairs over $673 [0.25 x 

$2,691], would trigger the secondary containment requirement. As in the previous 

options, those over the 75 percent cost threshold do not incur incremental costs associated 

with secondary containment provision, since we assume they replace their pipes in the 

absence of the rule. 

 

16 We assume a linear relationship between annualized replacement costs and piping length.
11

EXHIBIT 5 ILLUSTRATIVE RESULTS: REPLACEMENT IS DETERMINED BY A FIXED PERCENTAGE (25%) 

OF THE COST OF REPLACING THE ENTIRE PIPING RUN WITH SECONDARY 

CONTAINMENT

PERCENTAGE RELATIVE TO A 25 

PERCENT COST THRESHOLD

PERCENTAGE 

OF COST OF 

PIPING RUN

ANNUALIZED COST OF 

REPLACING PIPING RUN

WITH SECONDARY 

CONTAINMENT

ANNUALIZED COST 

TO REPAIR SINGLE 

WALLED 

FIBERGLASS PIPING

ANNUALIZED 

INCREMENTAL COST 

OF SECONDARY 

CONTAINMENT

Percentage of cost is below 

threshold

10% $2,691 $269a$0a

Percentage of cost is at threshold 25% $2,691 $673 $2,018

Percentage of cost is above 

threshold

30% $2,691 $807 $1,884

Percentage is substantially above 

threshold

80% $2,691 $2,153b$0b

Notes:

a

This scenario assumes that the owner/operator would choose to repair the single-walled piping and, therefore, would 

incur no incremental costs for secondary containment.

b Since 80 percent of the annualized costs of replacing the entire run ($2,153) exceeds the 75 percent cost-effectiveness 

threshold, we assume that this facility would replace the entire piping run in the absence of the rule and, therefore, incurs 

no incremental costs for secondary containment.

LIMITATIONS 

The three definitions for “replaced” piping provide EPA with several options as it 

considers the goals and scope of a proposed rulemaking action on secondary containment. 

As EPA considers the merits of each option, it is important recognize the key limitations 

of this methodological approach, including:

Data may not be representative of a typical UST facility. In 2006, EPA 

collected UST installation and cost data from seven UST equipment installers, 

several of which we followed up with as part of this effort. Since not all installers 

provided information for all cost areas, the sample size of the data is small and 

represents the experience of only a few equipment installers. The collection effort 

focused on one-on-one phone discussions, not a more systematic survey method to 

guarantee the installers received the same questions. As such, the cost data and 

other assumptions represent the experiences and opinions of a few installers 

contacted by EPA. To the extent that their experiences differ from the general 

population of equipment installers, the data may not adequately represent a typical 

UST facility.17

Data may not capture the site-specific costs. According to the installers, 

facility-specific conditions such as geographic location, soil type, and facility size 

determine the types of equipment installed at UST facilities. To account for site-

 

17 Similarly, other assumptions, such as the length of piping per facility, may not adequately represent the typical UST 

facility. In fact, some installers told EPA that facilities may contain substantially more piping than 300 feet presented in

this analysis.
12

specific variability, facilities may need to purchase different or additional 

equipment. For example, some states, such as Wisconsin and Montana, require 

the installation of interstitial monitoring for new sumps installed during a piping 

replacement job.18 Facilities in these states bear the additional costs of the 

installation and operation and maintenance costs of interstitial monitoring. The 

current methodology does not attempt to account for potential site-specific 

characteristics. To the extent that these characteristics drive costs at a facility, we 

may mischaracterize costs as typical.

Data may not capture potential variability in operator behavior. To simplify 

the methods for this preliminary approach to secondary containment, we 

generalize operator behavior down to a few simple decision rules, based on the 

discussions with the installers. For example, we assume that, in general, operators 

will not attempt to repair damaged steel piping and single-walled flexpipe. To the 

extent owner/operators act differently than the installers suggested, the model may 

mischaracterize operator choices and behaviors.

Cost estimates do not include efforts to find leaks when owner suspects a 

problem. Several of the installers suggested that the costs associated with 

discovering the location of leaks can be an important factor in determining

whether an owner/operator decides to replace piping.19 To find leaks in piping, 

installers typically drill pilot holes or conduct more extensive excavations. If the 

cost to discover the leak is high enough, it may be more cost effective for the 

owner to replace the defective or damaged piping entirely. This effort does not 

account for these costs or their potential impact on owner/operator behavior. 

This approach provides EPA with a reasonable starting point as it considers a rulemaking 

under EPAct’s secondary containment provision. While the example data provide 

context to evaluate the options for defining “replaced” piping, the accompanying Excel 

tool, once completed, will give EPA the ability to evaluate how changes in key 

assumptions result in changes to expected costs to a facility. As EPA refines this

approach, it may wish to consider the following:

Importance of threshold values. An evaluation of the sample results shows that

the threshold value that triggers the replacement of piping in both the baseline and 

the regulatory scenario has a significant impact on the incremental cost to the 

facility. Facilities just under the threshold are not required to replace piping, 

therefore, do not bear any costs associated with a potential rule. A facility on the 

threshold bears the highest costs of a potential rule, as the difference between 

replacement cost and repair costs is greatest. As a facility’s repair costs increase 

(as a result of larger or more extensive repair), the incremental cost to replace 

piping decreases. At an higher threshold, it is practical for the facility to replace 

pipes rather than repair them. The magnitude of both threshold values will have a 

 

18 Duane Grippe, O'Day Equipment LLC. Personal Communication. July/August 2008.

19 It is important to note that one installer disagreed with this statement and felt that locating leaks was relatively simple 

and inexpensive. Ken Korneychuck, Eaton Sales and Service Co. Personal Communication. August 2008.

CONSIDERATIONS

AND POTENTIAL 

NEXT STEPS
13

significant impact on the number of facilities affected by a secondary containment 

rulemaking and the cost they bear as a result of the rule.

Refinement of data on operator behavior and potential costs. EPA may wish 

to consider a systematic data collection effort to gather more detailed information 

on the costs associated with repair and replacement of UST piping, and on the 

prevalence of different types of piping currently in place. The current cost data, 

derived from a relatively informal discussion with a small sample of equipment 

installers, may mischaracterize typical costs and behaviors at UST facilities. In 

addition, EPA may wish to conduct further analyses to improve estimates of the 

frequency in which facilities conduct piping repairs versus replacement when a 

problem is discovered. This effort could involve additional interviews or 

collection of information from a focus group of installers in different regions. 

Identification of the number of potentially affected facilities. The current 

effort focuses on isolating potential impacts of the secondary containment 

provision at a typical UST facility. The next logical step is to assess the number 

and location of facilities that may be affected by potential secondary containment 

requirements. This may be a challenging effort, as data categorizing the types of 

piping employed at facilities may not be readily available. Information on state 

regulations should inform this effort. 

Incorporation of behavior associated with finding leaks when owners suspect 

a problem. As stated above, for a facility with a suspected pipe leak, the cost 

associated discovering the location of the leak, while not part of the explicit repair 

or replacement cost, is likely a factor in determining whether an owner/operator 

decides to replace piping in the baseline scenario, regardless of regulation. 

Owner/operators who find it more cost-effective to replace piping due to the 

expense of finding a leaking pipe would incur no incremental costs resulting from 

the secondary containment provision. EPA may therefore wish to consider 

methods to incorporate this decision-making behavior into the cost model. This 

effort would likely require the collection of additional information, including: 

o Information on the processes used to locate suspected leaks in 

piping;

o Costs associated with efforts to find suspected pipe leaks;

o Information on the decision-making behavior of owner/operators 

and the extent to which the cost of locating suspected leaks 

influences their decision to repair or replace piping; and

o The typical number facilities that may suspect leaking pipes in a 

year.