59 FR 9604-9607 Monday, Feb. 28, 1994 Underground Storage Tanks Containing Petroleum; Financial Responsibility Requirements
ENVIRONMENTAL PROTECTION AGENCY
40 CFR Part 280
Underground Storage Tanks Containing Petroleum;
Financial Responsibility Requirements
AGENCY: Environmental Protection Agency (EPA).
ACTION: Final rule.
SUMMARY: The Environmental Protection Agency (EPA) is today promulgating a rule to amend the financial responsibility requirements for underground storage tanks (USTS) containing petroleum that appear in subpart H of 40 CFR part 280.
Specifically, this rule modifies the financial responsibility compliance date under 40 CFR 280.91(e) for one category of UST owners. Under this modification, Federally-recognized Indian tribes that own USTs on Indian lands are required to comply with Federal Financial Responsibility requirements of 40 CFR part 280 subpart H-Financial Responsibility-by December 31,1998 if those USTs are in compliance with applicable technical requirements for USTs in 40 CFR part 280. Today's rule extends the deadline for certain USTs owned by Indian tribes from the previous date of February 18, 1994. This change will allow EPA, the Bureau of Indian Affairs and Indian tribes additional time to explore options for solving the root problem of lack of funding for past contamination on Indian lands and further assist tribes with future technical requirements, such as tank upgrading. EPA is not changing the financial responsibility deadline for rural petroleum marketers or local governments. A discussion of the Agency rationale behind this decision can be found in section IH. C. under "SUPPLEMENTARY INFORMATION".
EFFECTIVE DATE: This rulemaking is effective on February 28, 1994.
ADDRESSES: The public docket for this rule is in room M2616, U.S. Environmental Protection Agency, 401 M Street SW., Washington, DC 20460. Call (202) 260-9720 for an appointment to review docket materials.
FOR FURTHER INFORMATION CONTACT: The RCRA/Superfund Hotline at (800) 4249346 (toll free) or (703) 412-9810 in Virginia. For technical questions, contact Sammy Ng in the Office of Underground Storage Tanks at (703) 308-8882.
SUPPLEMENTARY INFORMATION: EPA is today finalizing a rule that would allow certain Federally-recognized Indian tribes that own USTs containing petroleum on Indian lands additional time to comply with the financial responsibility requirements.
Specifically, this rule modifies the compliance date under 40 CFR 280.91(e). Under this modification, Indian tribes that own USTs containing petroleum on Indian lands must comply with the financial responsibility requirements by December 31, 1998. To qualify for the 1998 financial responsibility deadline, tribally-owned USTs must be in compliance with the technical requirements for USTs described in 40 CFR part 280. Technical compliance for USTs includes, for example, leak detection and reporting. The technical requirements criterion has been included to protect human health and the environment on Indian lands. EPA is not changing the financial responsibility deadline for rural petroleum marketers or local governments. A discussion of Agency rationale behind this decision can be found in section III C.
The contents of today's preamble are listed in the following outline:
II. Effective Date
IV. Final Rule
A. Indian Tribes
B. Implementation of Final Rule
C. Discussion of Options Proposed but Not Finalized for Petroleum Marketers and Local Governments.
V. Economic Impacts
A. Economic Impact Analysis
B. Regulatory Flexibility Analysis
C. Regulatory Impact Analysis
D. Paperwork Reduction Act
These regulations are issued under the authority
of sections 2002, 9001, 9002, 9003, 9004, 9005, 9006, 9007, and
9009 of the Solid Waste Disposal Act, as amended (42 U.S.C. 6912,
6991, 6991a, 6991b, 6991c, 6991d, 6991e, 6991f, and 6991h).
II. Effective Date
This rule will be effective on February 28, 1994,
pursuant to 5 U.S.C. 553(d). This rule may be made effective immediately
because it extends an existing compliance date and there is good
cause to make that extension immediately effective within the
meaning of 28 U.S.C. 553(d)(1) and (3).
On October 26,1988, EPA promulgated financial responsibility requirements applicable to owners and operators of underground storage tanks (USTS) containing petroleum (53 FR 43322). To meet the requirements, owners and operators must demonstrate that they can pay for the costs of cleanups and third-party damages resulting from any leaks that may occur. In the final rule, EPA established a phased compliance schedule for owners and operators of petroleum USTS. The principal reason for adopting the phased compliance approach was to provide the time necessary for providers of financial assurance mechanisms (including private insurance companies and states intending to establish state assurance funds) to develop new policies and programs or conform their policies and programs with EPA requirements. See 53 FR 43324.
When devising the phased compliance approach, the Agency wanted to achieve the best balance between the need to demonstrate financial responsibility for UST releases and the time necessary for owners and operators to obtain assurance mechanisms. The Agency attempted to establish compliance dates that were as early as possible, considering the type of assurance different types of facilities were likely to obtain. Petroleum marketers owning or operating 1,000 or more USTs and non-marketers with more than $20 million in tangible net worth were required to comply by January 24, 1989, based primarily on their ability to qualify for self-insurance. Petroleum marketers with 100 to 999 USTs were required to comply by October 26, 1989. These marketers were estimated to be relatively more likely to be able to obtain insurance; some of them were also expected to qualify as self-insurers. Petroleum marketers owning 13 to 99 USTs at more than one facility were originally required to comply by April 26, 1990. However, on May 2, 1990, the Agency published a rule (55 FR 18566) extending this compliance date to April 26, 1991. These marketers were thought to be less likely to be able to obtain insurance than members of the October 26, 1989, compliance group.
Petroleum marketers owning fewer than 13 USTs at more than one facility or owning only one facility with fewer than 100 USTS, as well as non-marketers with less than $20 million in net worth and local governments (including Indian tribes) were originally required to comply by October 26, 1990. This group was expected to rely primarily on state assurance funds for compliance. (State assurance funds provide money for cleanups to owners and operators in their states. Owners and operators in states with assurance funds are deemed to be in compliance with financial responsibility for the amount covered by the fund once the state submits the funds to EPA for approval unless and until EPA disapproves the fund.) On October 319 1990t EPA extended the compliance deadline for one year for small marketers (with fewer than 13 USTs or fewer than 100 USTs at a single facility) and small non-marketers (with less than $20 million in net worth), otherwise known as Category IV. This extension was based on the need for additional time for state assurance funds to be developed. hi addition, EPA extended the compliance deadline for local governments and Indian tribes until one year after publication of a final rule with additional self-insurance mechanisms for local governments to use to demonstrate compliance. This rule was published on February 18, 1993 (58 FR 9026).
On December 23, 1991, EPA once again extended the compliance deadline for the Category IV group (small marketers with fewer than 13 tanks at more than one facility or fewer than 100 tanks at a single facility as well as nonmarketers with net worth less than $20 million) to December 31, 1993 (56 FR 66369). EPA based the extension on its understanding that more members of this compliance group than the Agency had originally projected must rely on state assurance funds, rather than on insurance, to demonstrate compliance with the financial responsibility requirements. EPA believed that, in order for owners and operators to rely on state assurance funds as compliance mechanisms, states must have more time to submit their state assurance funds to EPA for approval. Currently, 31 state assurance funds have been approved by EPA and an additional eight state assurance funds have been submitted to EPA for approval. (It is important to note that upon submission of a state assurance fund to the EPA Regional Administrator, the fund is considered to be approved unless and until EPA disapproves it.) Additionally, the extension provided states with more time to develop and implement financial assistance programs (e.g., direct loan programs, loan guarantee programs, grant programs) which help owners and operators (especially small businesses) pay for technical requirements such as tank upgrading. These technical improvements, in turn, help USTs meet insurers' underwriting criteria.
The Agency, however, continued to be concerned about the effects of its regulations on the regulated community. By analyzing the costs of the requirements, EPA found that the affordability of financial responsibility compliance is often tied to early compliance with technical requirements such as tank upgrading, since, for example, private insurance companies may refuse to provide coverage unless they are certain that a site does not pose a high risk of leaking. EPA believed that the costs associated with the technical requirements are an important factor underlying the inability of some small owners and operators to meet the financial responsibility requirements. These costs coupled with the lack of a state assurance fund, grant, or loan program could force some gas stations to close their tanks when the 1993 financial responsibility compliance date fell. EPA believed that tank closure could be particularly problematic when those tanks provide essential services to rural communities.
As a result of this concern about the availability of fuel in rural areas, EPA proposed a December 31, 1998 compliance date for certain petroleum marketers, local governments, and Indian tribes, that meet Federally determined criteria (58 FR 43770). The objective of the August 17, 1993 proposed rule was to obtain data on whether an additional extension of the financial responsibility requirements was needed, and for whom. The Agency intended to limit any additional extension to, at most, a small sub-group of marketers currently in Category IV, as well as certain local governments and Indian tribes; EPA did not want to change compliance dates for all Category IV marketers or local governments on the belief that most of these tank owners were already in compliance with the financial responsibility requirements due to the existence of state assurance funds and reliance on self-insurance mechanisms. The August 17, 1993 proposed rule included eligibility criteria limiting the proposed 1998 compliance group to rural petroleum marketers that met a hardship criterion of annual profit on gasoline sales of $15,000 or less, rural local governments that use tanks for essential services such as police and fire departments, and Indian tribes. (The definition of rural was obtained from the Farmers Home Administration within the U.S. Department of
Agriculture.) In addition, all owners in the new
1998 compliance group would have to ensure that their tanks were
in compliance with applicable technical requirements, such as
leak detection. The technical compliance criterion was included
to protect human health and the environment regardless of a change
in the financial responsibility deadline. EPA also stressed the
fact that any change in the financial responsibility compliance
date would not remove the liability on the part of the owner or
operator to clean-up a leak.
Current Financial Responsibility Deadlines
January 24, 1989:
Marketers With 1000 or More Tanks;
Non-Marketers With Net Worth Greater Than $20 Million. October 26, 1989:
Marketers With l00-999 Tanks.
April 26, 1991:
Marketers With 13-99 Tanks at More Than One Facility
December 31, 1993:
Marketers With 1-12 Tanks at More Than One Facility
or Fewer Than 100 Tanks at One Site; NonMarketers With Net Worth
Less Than $20 Million.
Local Governments and Indian Tribes
IV. Final Rule
EPA received 58 comments on the August 18, 1993 proposed extension. 34 commenters supported an extension for one or more groups. 21 commenters opposed any extension of the financial responsibility requirements. No commenters objected to an extended compliance deadline for Indian tribes while one commenter supported it. One commenter remained neutral on the subject and two additional comments were received regarding the proposed definition of rural, as defined by the Farmers Home Administration.
Based on EPA analysis of the comments received as
well as the rest of the administrative record from the proposal,
the Agency is finalizing an extension to 1998 for Federally- ,
recognized Indian tribes that own USTs on Indian lands. No other
entity (petroleum marketer or local government) has been included
in this 1998 compliance group. A discussion of comments relating
to a 1998 compliance deadline for petroleum marketers and local
governments can be found in section HI C.
A. Indian Tribes
Based on an analysis of the administrative record
for this rulemaking and lack of opposition to an extension for
tribes, EPA is extending the compliance deadline for Tribally
owned USTs on Indian lands to December 31, 1998 if the USTs meet
the technical compliance criterion. The Agency is sensitive to
the lack of funding available to help Indian tribes pay for environmental
problems and acknowledges that mechanisms used by other owners,
such as state assurance funds or private insurance, may be inaccessible
to tribes. The Agency has retained the technical compliance criterion
in order to protect human health and the environment on Indian
lands and expects that inclusion of this criterion may prompt
some owners to come into compliance with the technical requirements
in order to qualify for the extension. (Tanks owned by Indian
tribes which are out of compliance with applicable technical requirements
would not be eligible for the 1998 deadline.)
The additional time will also allow the Agency to
work with the Bureau of Indian Affairs (BIA) at the U.S. Department
of the Interior to explore options for solving the root problem
of lack of funding for past contamination on Indian lands and
further assist tribes with future technical requirements, such
as tank upgrading.
A compliance date of December 31, 1998 was selected
for Indian tribes because this date corresponds with the final
technical compliance date for tank upgrading. Tribes unable to
comply with the financial responsibility requirements at that
time face the more costly technical requirement of upgrading their
USTS. At that point, tanks not in technical compliance would be
forced to close with or without the financial assurance coverage.
Conversely, owners able to meet the technical requirements at
that time would be more likely to obtain an affordable assurance
mechanism, such as private insurance, since the tanks would be
considered an insurable, reasonable risk.
B. Implementation of Final Rule
EPA intends to promulgate
regulations that pose the least burden to the affected regulated
community while protecting human health and the environment. Therefore,
no change in reporting requirements or recordkeeping procedures
from the October 26, 1988 rule is incorporated into this rule.
The August 17, 1993 proposed rule included a requirement
that UST owners self-certify for an extension and keep a record
of the proposed compliance checklist on file for enforcement purposes.
Based on a review of the comments and the rest of the administrative
record for the proposal, the Agency has decided that this self-certification
is unnecessary for implementing this rule and has therefore decided
to delete the selfcertification and recordkeeping requirement.
C. Discussion of Options Proposed But Not Finalized
for Petroleum Marketers and Local Governments
As noted above, EPA received 58 comments on the August, 1993 proposed rule. Of the 34 comments received in support of a 1998 compliance deadline, 17 specifically supported an extension only for petroleum marketers. An additional seven comments were received in support of local governments, four for non-marketers (such as rental car companies, etc.), and one for Indian tribes. Five commenters supported an extension for all Category IV firms and local governments regardless of criteria, or not at all, concluding that a limited extension would be unfair to the entities not included in the 1998 compliance group.
Twenty-one commenters were against any additional extension to 1998. Of the 21 comments which disagreed with the proposed extension, eight were provided by state agencies that administer UST regulatory or state fund programs. One commenter was neutral, neither agreeing or disagreeing with the proposed compliance date, and two additional comments addressed only the definition of rural.
Commenters arguing for a 1998 compliance date for certain petroleum marketers and local governments stated that the additional time was needed to keep small businesses open. Several commenters said that compliance with financial responsibility was difficult in states without state assurance funds. In fact, of the commenters supporting a 1998 compliance date for one or more groups, 12 out of 35 were received from a state without a state assurance fund. In addition, some commenters said that insurance was not affordable, particularly when tanks have not been upgraded. Two commenters urged an extended compliance date in two states that plan to adopt a state assurance fund or loan program. One of those commenters felt that a 1996 compliance date would be acceptable since it would correspond to the date the state loan program plans to be operational. Another commenter noted that not all local governments can pass one of the four additional self-insurance mechanisms promulgated in February, 1993, and one additional commenter urged EPA to extend the financial responsibility compliance date for hospitals that use their tanks to fuel emergency generators.
Several commenters arguing against an additional extension to 1998 for local governments and petroleum marketers stated that most of these owners were already in compliance due to state assurance funds. Several commenters also stated that an extension would not be fair to those owners already in compliance with the financial responsibility requirements. Others felt an extended compliance group to 1998 would incorrectly imply that the remaining technical compliance dates would be extended by EPA as well. Other commenters noted that the criteria included in the proposed rule were difficult to implement and would prove burdensome to states with regard to enforcement since different petroleum marketers and local governments would have different compliance dates. Other commenters feared that adoption of a 1998 deadline for certain gas stations and local governments would hurt the environment, since the requirement was necessary to ensure that money would be available to pay for cleanups. One commenter stated that previous compliance date extensions reduced the volume of business available to private insurers trying to create a market for UST insurance, thereby increasing the price. Another commenter echoed that sentiment, saying that previous extensions had stopped private mechanisms, such as insurance, from developing fully. Finally, several commenters state that it was appropriate to exclude non-marketers from any additional extension since sales of petroleum were not crucial to their operations.
Based on a review of the comments and the administrative record, EPA has decided not to extend the financial responsibility compliance deadline for petroleum marketers, non-marketers, or local governments. While the Agency acknowledges that some of these owners, especially in those few states without a state assurance fund, may have difficulty complying with the financial responsibility requirements, EPA agrees with commenters that say that most owners and operators are already covered by either state assurance funds, self-insurance mechanisms or private insurance. Agency analysis indicates that compliance may be as high as 98% for local governments with the addition of the four self-assurance mechanisms promulgated in February, 1993. In addition, just 14% of all tanks are in states without legislation creating state assurance funds. The Agency also agrees that another extension hurts EPA credibility with regard to upcoming technical compliance dates and agrees that a later compliance date is unfair to owners and operators already in compliance. In addition, a 1998 compliance deadline for some local governments and petroleum marketers would create an administrative burden for states to implement, since some states would need to change their legislation or regulations in order to adopt the new deadline. EPA also acknowledges the difficulty in trying to define an appropriate subgroup and believes that inclusion of certain marketers and local governments in a new compliance group would create additional confusion in the regulated community.
EPA agrees with commenters who feared that adoption of a 1998 deadline for certain gas stations and local governments might hurt the environment in the event that funds are not available to undertake corrective action. In adopting the phased compliance approach, the Agency wanted to achieve the best balance between the need to demonstrate financial responsibility for UST releases and the ability of different types of tank owners to obtain the assurance mechanisms. In deciding not to extend the compliance deadline for petroleum marketers and local governments, the Agency has decided that, since most marketers and local governments can comply, the balance has to be weighed in favor of demonstrating compliance. On the other hand, the current inability of Indian tribes to demonstrate compliance as explained in section IV.A above led the Agency to reach the opposite decision in that situation.
EPA also received comments with regard to the criteria
discussed in the proposed rule applicable to petroleum marketers
and local governments. Most commenters supported the use of the
Farmers Home Administration definition of rural, but felt that
a hardship determination based on profit should be replaced with
a measure of yearly throughput of gasoline through an UST system.
V. Economic Impacts
This section provides an estimate of the economic impacts of the proposed rule. Because the proposed rule will not cause an annual impact on the economy of $100 million or more and will not cause an increase in the costs of production or the prices charged by the affected community, a Regulatory Impact Analysis is not required. Instead, EPA has prepared an economic impact analysis to estimate the number of affected facilities that would benefit from this additional flexibility.
A. Economic Impact Analysis
The economic analysis examines the potential economic effects of adopting a new compliance category to 1998 and estimates the number of potentially affected entities.
Overall, approximately 1.3 million USTs are subject
to the technical and financial responsibility standards. The number
of tribally-owned USTs that could be eligible for the 1998 compliance
date numbers approximately 500. These 500 tribally owned USTs
represent approximately 10% of all active tanks on Indian lands.
(The remainder of the tanks on Indian lands are owned by private
individuals and firms, as opposed to Federally recognized tribes.)
The total number of tribes eligible for the 1998 compliance date
would be reduced, however, with the inclusion of the technical
B. Regulatory Flexibility Analysis Pursuant to the Regulatory Flexibility
Act of 1980,5 U.S.C. 601 et seq., when an Agency
publishes a notice of rulemaking, for a rule that will have a
significant effect on a substantial number of small entities,
the agency must prepare and make available for public comment
a regulatory flexibility analysis that considers the effect of
the rule on small entities (i.e.: Small businesses, small organizations,
and small goverrunental jurisdictions). EPA believes that this
rule will not, if promulgated, have a significant economic impact
on a substantial number of small entities. The new compliance
deadline to 1998 will provide relief to members of this compliance
group by allowing them additional time to comply with the financial
responsibility requirements. Accordingly, the Agency has concluded
that the law does not require a Regulatory Flexibility Analysis,
and certifies that this rule, if promulgated, will not have a
significant economic impact on a substantial number of small entities.
C. Regulatory Impact Analysis
1. Executive Order 12866
Pursuant to the terms of Executive Order 12866, OMB
has notified EPA that it considers this a "significant regulatory
action" within the meaning of the Executive Order. EPA has
submitted this action to OMB for review. Changes made in response
to OMB suggestions or recommendations will be documented in the
D. Paperwork Reduction Act
This rule does not contain any new information collection
requirements subject to review by the Office of Management and
Budget (OMB) under the provisions of the Paperwork Reduction Act,
44 U.S.C. 3501 et seq.
List of Subjects in 40 CFR Part 280
Environmental protection, Administrative practice and procedure, Hazardous materials insurance, Oil pollution, Penalties, Petroleum, Reporting and recordkeeping requirements, State program approval, Surety bonds, Underground storage tanks, Water pollution control.
Dated: February 18, 1994.
Carol M. Browner,
For the reasons set out in the preamble, part 280
of title 40 of the Code of Federal Regulations is amended as follows:
PART 280-TECHNICAL STANDARDS AND CORRECTIVE ACTION
REOUIREMENTS FOR OWNERS AND OPERATORS OF UNDERGROUND STORAGE TANKS
1. The authority citation for part 280 continues
to read as follows:
Authority: 42 U.S.C. 6912,
6991, 6991a, 6991b, 6991c, 6991d, 699le, 6991f, and 6991h.
2. Section 280.91 is amended by revising paragraph
(e) and adding paragraph (fl, to read as follows:
§ 280.91 Compliance dates.
* * * * *
(e) All local government entities (including Indian tribes) not included in paragraph (fl of this section; February 18, 1994.
(f) Indian tribes that own USTs on Indian lands which meet the applicable technical requirements of this part; December 31,1998.