could avail himself of the streamlined requirements for a ``qualified
facility'' at Sec.  112.6, if the facility meets all four of the
proposed criteria, notwithstanding the total aboveground oil storage
capacity at the facility. That is, a qualified facility owner/operator
would have the option to prepare a self-certified SPCC Plan in lieu of
a Plan certified by a PE. An oil production facility owner or operator
exercising this option may be required to make available production or
shipping records to support his eligibility. Records may be kept under
usual and customary business practices, and must be kept for a period
of three years, in accordance with Sec.  112.7(e).
    EPA based this potential qualified production facility approach on
input from the oil production sector regarding concerns for the burden
of preparation of a PE-certified Plan for small oil producers. As
stated above, EPA notes that this option would be available to those
oil production facilities with up to four stripper wells per tank
battery; each well producing 10 barrels or less of crude oil per day;
and no injection wells or other wells associated with secondary or
tertiary recovery techniques. EPA is

considering a maximum of four wells per tank battery in identifying a
``qualified oil production facility'' based on discussions with EPA
regional personnel and the Texas Railroad Commission who suggest that
this number of wells is fairly typical of oil production facilities.\5\
EPA, therefore, believes that the maximum of four stripper wells per
tank battery adequately captures the smaller operators targeted by the
self-certification option. EPA believes that these facilities are less
complex than other oil production facilities based on the limited
number of wells per tank battery operating at a low flow rate.
---------------------------------------------------------------------------

    \5\ EPA assumed an average of four wells per tank battery at a
facility to estimate the number of oil production facilities that
are subject to the SPCC requirements (see Regulatory Impact Analysis
for the Proposed Amendments to the Oil Pollution Prevention
Regulations). DOE also conducted an analysis of the impact of the
SPCC rule on the oil production sector and assumed an average of
three stripper wells per oil production facility.
---------------------------------------------------------------------------

    As discussed in the preamble to the December 2006 rule amendments,
in which EPA finalized the qualified facility approach, the basis for
the exemption from the requirement for a PE certification is that
facilities with smaller oil volumes tend to be less complex (71 FR
77270, December 26, 2006). The Agency believes that a facility meeting
the potential criteria for a ``qualified oil production facility'' as
described above (i.e., no more than four stripper wells to one tank
battery, no injection wells, and meets the current spill history
criterion for qualified facilities) would be less complex than other
oil production facilities for the following reasons. At oil production
facilities with no more than four wells per tank battery, the flowlines
and the stripper well(s) are commonly co-located within the immediate
area of the tank battery therefore reducing the length of flowlines.
Additionally, it is likely that an oil production facility that meets
the proposed qualification criteria would have fewer valves, less
piping, smaller separation equipment, and fewer locations where
transfers and discharges could occur because there are fewer wells
associated with one tank battery.
    The underground injection process adds complexity to the design of
an oil production facility; consequently, EPA has included a ``no
injection wells'' criterion for an oil production facility to qualify
for this alternative option. The injection well process adds complexity
because the flowlines from a produced water container to the injection
wellhead adds valves, pumps and piping to the facility. In addition,
the produced water tanks associated with injection may have high level
indicators, floats and actuators/switches that further add complexity.
At small production facilities, these systems may not be automated due
to cost. The design of the production facility is based on the ability
to inject the produced water; generally no extra storage capacity is
available to contain fluids if there is a failure or system upset. This
leads to a greater likelihood of a discharge. Finally, the water in the
produced oil/water mixture is usually corrosive, especially if it is
saline, leading to a greater potential for discharge from injection
equipment as a result of this corrosion which would be present at more
complex facilities.
    This alternative set of criteria for identifying a qualified oil
production facility would only be available to oil production
facilities, and not oil drilling or workover facilities. Due to the
nature of its operations, a drilling facility has not yet established
an oil production flow rate, and thus a well at such a facility cannot
be determined to meet the definition of a ``stripper well.'' However,
the owner/operator of an oil drilling and/or workover facility
considers the capacity of oil that is maintained for his operations to
determine applicability of the SPCC rule and therefore may still be
eligible for qualified facility status based on the current criteria in
Sec.  112.3(g), i.e., the 10,000-gallon total facility oil storage
capacity threshold and discharge history criteria.
    It should also be noted that under the current regulations, the
owner or operator of an oil production facility can make a
determination that sized secondary containment is impracticable. The
owner or operator of an oil production facility that meets the proposed
criteria for a Tier II qualified facility (as described elsewhere in
this proposed rulemaking) would still be able to determine that
secondary containment is impracticable and implement the alternative
measures under Sec.  112.7(d) (i.e., develop a contingency plan and a
written commitment of resources and conduct integrity testing of the
bulk storage container and associated piping) if a PE certifies that
the secondary containment is impracticable, under the ``hybrid''
approach in which a PE certifies a portion of the SPCC Plan.
    EPA is requesting comment on this approach, including the specific
criteria identified and whether changes to these criteria would
properly assess the complexity of such small oil production facilities.
This proposed action may provide a reduction in regulatory burden to
those oil production facilities with no more than four stripper
extraction wells per tank battery that nonetheless is likely to exceed
the current qualified facility threshold criterion of 10,000 gallons.
For example, the difference in compliance costs between an oil
production facility that prepares an SPCC Plan requiring PE-
certification and one that can be self-certified is about $950.
    EPA is also requesting comment on whether a small oil production
facility may be further eligible for the Tier I qualified facility
status, as described elsewhere in today's preamble, if the facility
meets the criterion proposed in the rulemaking for a Tier I qualified
facility--i.e., the facility has no oil storage containers with an
individual storage capacity greater than 5,000 gallons, notwithstanding
the total aboveground oil storage capacity at the facility. That is, at
a Tier I oil production qualified facility, the owner or operator could
avail himself of the streamlined Tier I Qualified Facility SPCC Plan
template, as found in the proposed Appendix G to the SPCC rule. An
owner or operator of an oil production facility qualifying for and
opting to use the Tier I Qualified Facility SPCC Plan template would
not be able to make an impracticability determination for secondary
containment requirements. Instead, the owner or operator may choose the
Tier II approach and develop a ``hybrid'' Plan in which the P.E.
certifies the portion of the Plan pertaining to impracticability of
secondary containment.
    Finally, the Agency specifically solicits comment on the number of
oil production facilities that would be able to take advantage of this
approach.
b. Alternative Approaches for Addressing Small Oil Production
Facilities as Suggested by the Department of Energy (DOE)
    The Department of Energy (DOE) requested that the Agency seek input
on several approaches that DOE believes may be more suited to address
the concerns of small oil production facilities. One approach would
have different eligibility criteria to enable the owner or operator of
a small oil production facility to be considered a ``qualified
facility'' under Sec.  112.6, and allow for the development of a self-
certified SPCC Plan, or a ``Tier I Qualified Facility,'' and allow the
use of a streamlined SPCC Plan template, similar to that found in the
proposed Appendix G to the SPCC rule. Under the existing qualified
facilities criteria at Sec.  112.3(g), a facility that has an

aggregate aboveground storage capacity of 10,000 gallons or less and
has not had a single discharge exceeding 1,000 U.S. gallons or two
discharges each exceeding 42 U.S. gallons within any twelve-month
period in the three years prior is eligible for the qualified facility
Plan requirements at Sec.  112.6 (i.e., a self-certified Plan in lieu
of a PE certified Plan). DOE suggests that because of the unique
characteristics of small oil production facility operations, such
facilities may merit the establishment of small oil production
facility-specific eligibility criteria, including a different aggregate
oil storage capacity threshold \6\ or stripper well definition \7\ for
identifying qualified facilities. In light of this request, EPA seeks
comment on whether there are unique circumstances at small or
marginally economic oil production facilities and the alternative
criteria based on these circumstances for the possible establishment of
a ``qualified facility'' provision specific to small oil production
facilities that would serve to increase SPCC compliance and reduce the
likelihood of a harmful oil discharge. Any alternative approaches
submitted must include an appropriate rationale in order for the Agency
to be able to consider it for final action.
---------------------------------------------------------------------------

    \6\ The Oklahoma Independent Petroleum Association and the
Independent Petroleum Association of America suggest an aggregate
oil capacity threshold of 50,000 gallons.
    \7\ DOE suggests that a stripper well be defined using the
Internal Revenue Service (IRS) tax code definition of 15 barrels or
less of oil per day equivalence (see 26 U.S.C. 613A).
---------------------------------------------------------------------------

    The other approach DOE requested that EPA take comment on is to
outright exempt existing stripper oil and natural gas wells from all
SPCC requirements, except those applicable to crude oil and condensate
tanks (e.g., tanks which store gas condensate (which is an oil) at oil
and gas production facilities). The eligibility criteria for the
exemption would include those facilities that meet the Internal Revenue
Service (IRS) Tax Code definition of stripper well property at 26
U.S.C. 613A, which defines a stripper well property, with respect to
any calendar year, as any property producing 15 barrel equivalents or
less per day, where this rate is calculated by dividing:
    (i) The average daily production of domestic crude oil and domestic
natural gas from producing wells on such property for such calendar
year, by
    (ii) The number of such wells.
    DOE, states and industry have raised concerns that the SPCC
regulation has the potential to result in the premature abandonment of
stripper wells. They argue that stripper wells are marginally economic
and can be particularly burdened by increased regulatory compliance and
other operating costs. These wells are often operated by small
independent producers in mature oil and gas producing regions, have low
oil productivity and low oil volumes, and thus could be viewed as
presenting a low oil spill risk. According to DOE, stripper wells are
vital to sustaining production from conventional oil and natural gas
resources in the United States. More than 321 million barrels of oil
and 1.7 trillion cubic feet of natural gas were produced from stripper
wells in 2005, representing 17 percent of domestic oil production and 9
percent of domestic natural gas production respectively. The Interstate
Oil and Gas Compact Commission has estimated that if oil production
from stripper wells active in 2005 did not exist, imports would have to
increase 6.7 percent to make up for this shortage.\8\
---------------------------------------------------------------------------

    \8\ See Interstate Oil and Gas Compact Commission, 2006:
``Marginal Wells: Fuels for Economic Growth.''
---------------------------------------------------------------------------

    Eligibility criteria for relief would not be limited to the
presence of injection wells or the use of secondary and tertiary
recovery techniques which are common in more mature oil and gas
producing regions. DOE has commented that such criteria have no direct
relationship to the spill risk posed by marginal well facilities and
may serve as a disincentive to enhanced oil and gas recovery and well
maintenance. Production and injection operations for disposal or
enhanced recovery may be regulated under existing Federal and State
regulatory programs, e.g., under Clean Water Act NPDES, Safe Drinking
Water Act underground injection control, and state production or
environmental permits to reduce or manage pollutants that could be
introduced into the environment. For NPDES and underground injection
control, these regulatory programs are intended to address the
discharge of known pollutants that are to be introduced to navigable
waters (in the case of NPDES) or to underground sources of drinking
water (in the case of UIC). In contrast to these measures, SPCC is
designed to prevent the non-routine accidental discharge of oil that
might be held in an oil container at a facility. DOE has suggested that
these regulations may accomplish certain SPCC objectives in a different
manner, such as prohibiting pollution or unlawful discharges rather
than requiring an SPCC Plan. Therefore, the Agency specifically
solicits comment on the extent that these regulatory programs,
particularly state production or environmental permits, address the
objectives of the SPCC rules, and if so, how they are achieved.
Finally, EPA would note that under this approach, new facilities and
existing non-marginal facilities would not be exempted from the SPCC
regulation, but once their production declines below the marginal level
as defined above, these wells would be excluded from continuing or
periodic SPCC requirements under this approach.
    EPA requests comments on the scope of a stripper well exemption,
including the eligibility criteria, and whether such an exemption can
reduce the regulatory burden on marginally economic properties while
protecting the environment. Any alternative approaches must include an
appropriate rationale and supporting data in order for the Agency to be
able to consider these for a final action.
6. Produced Water Storage Containers
    At an oil or natural gas production facility, ``produced water'' is
the oil and water mixture resulting from the separation of marketable
crude oil from the fluid extracted from the geological formation.
Produced water chemical and physical characteristics vary considerably
depending on the geologic formation, usually being commingled with oil
and gas at the wellhead, and changing in composition as the oil or
natural gas fraction is separated and sent to market. The management of
produced water may typically entail the use of separation and treatment
process vessels, tanks both near the point of separation and at the
point of its disposal or reuse (e.g., in an injection well for disposal
or enhanced oil recovery, discharge to a stream, or agricultural water
resource), and flowlines and gathering lines.
    In the current SPCC rule, the term ``bulk storage container'' is
defined as ``any container used to store oil.'' EPA considers a
produced water container that also contains oil to be a bulk storage
container, and therefore subject to applicable provisions under Sec.
112.9(c). Produced water containers are typically located within a tank
battery at a production facility where they are used to store well
fluids after separation and prior to subsequent use (e.g., re-injection
or re-use), further treatment, or disposal. Because the separation
process is not completely effective, under normal operating conditions,
a layer of oil may be present above the produced water in the
container. The amount of oil by volume observed in produced water
storage containers varies, but based on EPA's assessment, is generally
estimated to range from less than one to

up to ten percent, and can be greater. This estimate is based on a
review of National Response Center (NRC) spill reports, observations
from EPA inspectors, and comments made by industry representatives and
the accompanying document ``Consideration for the Regulation of Onshore
Oil Exploration and Production Facilities Under the Spill Prevention,
Control, and Countermeasures Regulation'' (May 30, 2007), in the docket
for today's rulemaking. The Department of Energy (DOE) and the industry
believe that the oil layer may be much less.
    Many production sites operate in geographically remote areas and
are typically unattended. At these production sites, fluids extracted
from the well flow through the production and separation equipment and
into various storage containers provided at the facility. The produced
water storage containers are usually the last containers in the
separation process stream where fluids accumulate; consequently,
produced water containers are a potential source of discharge due to
overfill when there is an upset in operations (e.g., such as separator
failure) or when an operator is delayed in making a scheduled visit to
the facility to empty the produced water containers. In an overfill
situation, the oil floating at the surface of the water may be first to
be discharged, followed by water which could serve to transport the oil
for longer distances. Oil discharges to navigable waters or adjoining
shorelines from an oil/water mixture in a produced water container may
cause harm. Such mixtures are regulated as oil under the SPCC rule.
    The regulated community has expressed concern regarding the
regulation of produced water containers under the SPCC rule, suggesting
that the cost of complying with the SPCC requirements is
disproportionate to the risk these containers pose to the environment.
For this reason, EPA is considering whether there are regulatory
options for produced water containers that can protect the environment
at lesser cost than the current rule requirements along with the
amendments proposed in this action. The Agency is requesting comments
on three options, as described below.
    EPA requests comment on the characteristics of produced water
containers at production facilities that may uniquely distinguish these
containers from containers used at other types of facilities that hold
oil mixtures. EPA also requests comment on whether the approaches
outlined below appropriately address industry concerns, while
protecting the environment. In particular, EPA requests comment on an
approach that would require general secondary containment combined with
additional requirements in lieu of sized secondary containment. A
second approach, advanced by DOE, would require inspection,
maintenance, and periodic oil skimming of produced water storage
containers in lieu of both sized and general secondary containment.
    Finally, comment is requested on whether a third approach, advanced
by DOE, that exempts produced water treatment facilities altogether
would be appropriate. In connection with this approach, the regulated
community and DOE have suggested that produced water containers should
be exempt from all SPCC requirements, arguing that these containers
have only incidental amounts of oil and a low risk of discharge.
Published data used to establish national effluent limitations for
coastal oil and gas production facilities show that the oil content of
produced water in tanks after initial separation is low, e.g.,
averaging 50 parts per million, with a maximum of 200 parts per million
in samples taken.\9\
---------------------------------------------------------------------------

    \9\ SAIC, 1993, draft ``Coastal Oil and Gas Production Sampling
Summary Report'' April 30, and SAIC 1994, ``Statistical Analysis of
Effluent from Coastal Oil and Gas Extraction Facilities'' September
30.
---------------------------------------------------------------------------

    Data EPA received in the past suggest that produced water
containers may hold up to 10% of free-phase oil floating on the surface
of the produced water. EPA is asking that commenters provide additional
data on the amount of oil commonly observed in produced water
containers. EPA is primarily interested in data on the amount of free-
phase oil present in produced water containers, for example as a layer
of oil floating at the surface of the produced water, rather than oil
present in solution, suspension or emulsion within the produced water
mixture. EPA also requests comment, and supporting data, on the
efficiency of oil and water separation and treatment at onshore
production facilities, how the efficiency of oil-water separators
changes over time as equipment ages and production of oil from the
formation evolves, the efficiency of oil skimming on oil volume, and
the frequency and consequences of equipment failure. Finally, EPA
requests data on oil spills, the source, and the cause of such oil
spills from these produced water containers.
    Any suggestions on alternative approaches must include an
appropriate rationale and information and data in order for the Agency
to be able to consider it for final action.
a. General Secondary Containment, Inspection, Integrity Testing &
Maintenance of Produced Water Bulk Storage Containers
    One approach on which EPA requests comment would allow an owner/
operator of a production facility to comply with the general secondary
containment requirements along with additional measures for existing
produced water containers as an option in lieu of the current
regulatory requirement for sized secondary containment for these
containers. That is, a production facility owner/operator would provide
general secondary containment and comply with additional measures for
existing produced water containers, or the owner/operator could choose
to comply with the current sized secondary containment requirements for
produced water containers and not be subject to the new additional set
of measures. Under this approach, an owner/operator that chooses to
carry out additional measures in addition to the general secondary
containment requirement for existing produced water containers (see
Sec.  112.7(c)) would be exempted from the sized secondary containment
requirement at Sec.  112.9(c)(2). The general secondary containment
requirements (Sec.  112.7(c)) apply to all parts of a facility that
could be involved in a discharge. If an owner or operator has already
provided sized secondary containment for the facility produced water
bulk storage container, the owner or operator may choose not to select
this new option. EPA expects many operators may be in this situation,
as a recent DOE report stated that over two-thirds of produced water
tanks ``were assumed to be already contained within existing SPCC Plans
and have secondary containment.'' \10\
---------------------------------------------------------------------------

    \10\ See ``Assessment of the Potential Costs and Energy Impacts
of Spill Prevention, Control, and Countermeasure Requirements for
U.S. Oil and Natural Gas Production'' prepared for U.S. DOE Office
of Fossil Energy by Advance Resources International, Inc., August
17, 2006 (Revised). Available at http://www.fossil.energy.gov/programs/oilgas/publications/environment_otherpubs/SPCC_Impact_Exploration_and_Production_8.pdf
.

---------------------------------------------------------------------------

    This approach would be limited to existing produced water
containers because this approach is intended to balance the cost of
retrofitting existing containers with EPA's belief that sized secondary
containment is the most effective method to prevent oil discharges from
these containers. Existing produced water containers would be those at
oil production facilities in operation on the effective date of the
final rule addressing this approach. Newly constructed oil

production facilities and newly installed produced water containers at
existing facilities would not be eligible to use these alternative
measures in lieu of sized secondary containment because it is EPA's
best professional judgment that because construction crews and
equipment are already present at a facility during the installation of
new produced water containers, the incremental cost for adding/
installing sized secondary containment for these containers would not
be significant.
    In addition, if a facility experiences a discharge reportable to
EPA under Sec.  112.4, then sized and general secondary containment
would be required for all produced water containers at the facility
within six months from the discovery of the spill(s).\11\ When
determining spill history, the gallon amount specified in the criterion
(either 1,000 or 42) refers to the amount of oil that actually reaches
navigable waters or adjoining shorelines, or in connection with
specified activities in waters and not the total amount of oil spilled.
Discharges as described in Sec.  112.1(b) that are the result of
natural disasters, acts of war, or terrorism will not disqualify a
facility owner or operator from the alternative measures described
above.
---------------------------------------------------------------------------

    \11\ See the similar discussion in Section V.L.4 of this
proposal pertaining to flow-through process vessels.
---------------------------------------------------------------------------

    To maintain environmental protection under this approach, the
following additional measures for produced water containers would be
required:
     Periodic inspections on a regular schedule of equipment
and appurtenances that typically cause spills from produced water
containers (e.g. piping, valves, pumps and the container itself). A
requirement for periodic inspection of the produced water containers
and associated appurtenances on a regular schedule for leaks,
corrosion, or other conditions that could lead to a discharge as
described in Sec.  112.1(b) would increase the likelihood that a
discharge will be prevented or detected promptly, especially for
appurtenances that typically cause spills. Inspection of produced water
containers and appurtenances would be consistent with the inspection
requirements for bulk storage containers under Sec.  112.9(c)(3).
Facilities would outline, in writing, procedures for routine inspection
and keep records of these inspections in accordance with Sec.
112.7(e).
     Conduct a condition examination \12\ and integrity testing
of produced water containers on a regular schedule and after completing
material repairs. In lieu of the protection offered by sized secondary
containment, this approach would require a formal integrity inspection/
condition examination of the produced water bulk storage container(s)
on a regular schedule. The frequency, inspector qualifications and the
scope of the inspections, integrity testing, and condition examinations
must be in accordance with good engineering practice and documented in
the SPCC Plan. For condition examinations and integrity testing, the
industry recommended practices for tanks in production service provide
the scope and frequency of examinations necessary to ensure the
suitability of tanks for continued service, based on the type of tank,
fluid stored, and service conditions. For an example of such practices,
a facility owner or operator may refer to American Petroleum Institute,
Recommended Practice 12R1, fifth edition, August 1997. These practices
include the routine visual operational examination of produced water
bulk storage containers by facility personnel according to written
procedures, and external and/or internal condition examination of these
same containers according to a schedule and following an operational
alert, malfunction, or other condition noted during the routine
operational examination. The external condition examination \13\ would
cover the tank exterior, and check for leaks, shell distortion, and
evidence of corrosion; it would also look at the condition of the
foundation, pad, drainage, coatings, appurtenances and connections. The
internal condition examination would check for leaks, shell distortion,
cracks, condition of any internal coating, and evidence and severity of
internal corrosion. The external and internal condition examinations
would be complemented by integrity testing (e.g., using non-destructive
evaluation methods, such as ultrasonic thickness measurements of the
shell) used to assess the suitability of the container for continued
production service, as appropriate for the type of container.
Facilities would outline in writing procedures for routine visual
examination, external condition examination, internal condition
examination, and integrity testing and keep records of the examinations
and testing in accordance with Sec.  112.7(e).
---------------------------------------------------------------------------

    \12\ ``Condition examination'' is defined in API Recommended
Practice 12R1 as a review of history and physical observation of a
tank and its adjacent equipment by a competent person.
    \13\ API Recommended Practice 12R1 provides guidelines on
developing the scope of a program for condition examination and
integrity testing for tanks at production facilities. While the RP
does not include mandatory requirements, this approach would include
a mandatory requirement to conduct a condition examination and
integrity testing for produced water containers.
---------------------------------------------------------------------------

     Prompt removal of any oil discharges from produced water
containers and appurtenances. This approach also would require prompt
removal upon discovery of any spills, discharges, or accumulations of
oil associated with the produced water containers. EPA considers the
removal of oil-contaminated soil as a method to prevent oil from
becoming a discharge as described in Sec.  112.1(b). Disposal of oil
must be in accordance with applicable Federal, State, and local
requirements; under Sec.  112.7(a)(3)(v), a facility owner or operator
is required to describe the methods of disposal of recovered materials
in accordance with applicable legal requirements. For the purposes of
this provision, removal of recoverable oil may be combined with
physical, chemical, and/or biological treatment methods to address any
residual oil. These treatment methods must be consistent with other
Federal, state or local requirements as applicable, and must be
properly managed to prevent a discharge as described in Sec.  112.1(b).
     Corrective action to repair or replace any container, or
associated equipment and appurtenances in order to prevent a discharge
from occurring, as well as in response to a discharge. Finally, this
approach would require the owner/operator of an oil production facility
to take corrective action to repair any produced water container, and
associated equipment and appurtenances as indicated by regularly
scheduled inspections or tests. This requirement could be implemented
in conjunction with the requirement for periodic inspection and
testing; the results of the inspection or test would inform the owner/
operator of any corrections or repairs that need to be made. Corrective
action is necessary in order to prevent a discharge from occurring, as
well as in response to a discharge. This measure would prevent
discharges as described in Sec.  112.1(b) by ensuring that produced
water containers are well maintained.
    In evaluating this potential regulatory approach, the Agency
examined oil production operations as they relate to the storage,
treatment, and handling of these oil/water mixtures. EPA conducted a
study of the exploration and production sector (see Considerations for
the Regulation of Onshore Oil Exploration and Production Facilities
Under the Spill Prevention, Control, and Countermeasure Regulation (May
30, 2007), in the docket

for this rulemaking). In this study, EPA reviewed the spills reported
to the National Response Center (NRC) during calendar years 2000
through 2005. The NRC spill reports specifically attribute 3% of the
spill incidents from oil production facilities to produced water
containers. Some of the spill incidents attributed to unspecified tank
batteries (4%) or unspecified tanks (6%) may also involve produced
water containers. Based on these reports, 5% of the volume of oil
spills from oil production facilities is attributed specifically to
produced water containers, 6% is attributed to unspecified tank
batteries, and 20% is attributed to unspecified tanks. The NRC reports
also attribute 3% of the spill incidents to water disposal, which is
16% of the total volume of oil and oil mixtures discharged from oil
production facilities. The NRC data does not show the ratio of oil and
water in spills. Incidents associated with water disposal may involve
produced water containers, although the review found that water
disposal piping frequently suffers from corrosion damage and accidental
impacts and incidents associated with water disposal may also be
associated with the water disposal piping. Based on the information
reported to the NRC, the most common causes of oil spill incidents from
oil production facilities were equipment failure (18%), corrosion
(20%), and leaks, holes and ruptures (20%). Twenty-four percent of the
spill reports have unspecified causes.
    Many onshore production facilities already locate produced water
containers within the same containment structure as other oil
containers, and size this containment structure to the capacity of the
largest oil container plus freeboard for precipitation. Therefore,
those oil production facilities that include sufficient containment
already meet the existing sized secondary containment requirement and
would not need to comply with these additional measures. A review of
spill incident reports from the NRC and selected state data sources
shows that containment structures are an effective means of containing
oil spills within the facility and preventing discharges to navigable
waters and adjoining shorelines.
    EPA requests comment on whether this approach, an exemption from
the sized secondary containment requirement, with additional measures
for produced water containers (including integrity testing and
condition examinations), appropriately addresses industry concerns,
while preserving environmental protection. Additionally, EPA requests
comment on whether there are other measures that should be considered
in developing this alternative approach in lieu of the sized secondary
containment requirements. Finally, as EPA previously indicated, the
Agency also requests comment on the characteristics of produced water
containers at production facilities that may uniquely distinguish these
containers from containers used at other types of facilities to hold
oil mixtures.
b. Inspection and Maintenance of Produced Water Storage Containers
    DOE has requested that EPA take comment on a second approach which
would allow an owner/operator of a production facility to comply with
additional measures for produced water storage containers in lieu of
both sized and general secondary containment requirements. That is, a
production facility owner/operator would be able to comply with these
specific tailored measures for produced water containers, or the owner/
operator could choose to comply with the current sized secondary
containment requirements for produced water containers and not be
subject to an additional set of measures. Under this approach, an
owner/operator that chose to comply with these tailored requirements
would be exempted from the sized secondary containment requirement at
Sec.  112.9(c)(2) and the general secondary containment requirements at
Sec.  112.7(c).
    However, if a facility experiences a discharge reportable to EPA
under Sec.  112.4, then sized and general secondary containment would
be required for all produced water containers at the facility within
six months from the discovery of the spill(s).\14\ When determining
spill history, the gallon amount specified in the criterion (either
1,000 or 42) refers to the amount of oil that actually reaches
navigable waters or adjoining shorelines, or in connection with
specified activities in waters and not the total amount of oil spilled.
Discharges as described in Sec.  112.1(b) that are the result of
natural disasters, acts of war, or terrorism will not disqualify a
facility owner or operator from using these tailored requirements in
lieu of sized and general secondary containment.
---------------------------------------------------------------------------

    \14\ See the similar discussion in Section V.L.4 of this
proposal pertaining to flow-through process vessels.
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    This approach is based on input DOE received from the production
sector that suggested that an inspection and maintenance approach may
be more appropriate for these containers. Additionally, DOE believes
that the volume of oil in the storage container can be significantly
reduced further after separation by periodic skimming of the oil layer
that may reside in the top of the container.
    To maintain environmental protection under this approach, the
following additional measures for produced water containers would be
required:
     Visually inspect on a regular schedule the equipment and
appurtenances which typically cause spills from produced water
containers (e.g., piping, valves, pumps, and the container itself) to
assess the suitability of the equipment for continued service, as
appropriate for the type of fluids. Facility owners and operators must
outline in writing procedures for routine visual inspection and keep
records of these inspections in accordance with Sec.  112.7(e).
     Implement a program to periodically skim the fluids in the
produced water container as necessary to prevent an oil layer that
would increase the potential for a discharge of oil as described in
Sec.  112.1(b). The skimming program must be appropriate for the fluids
stored, the rate of production, the container size, and the facility
configuration.
     Promptly remove any oil discharges from produced water
containers and appurtenances. This approach would require prompt
removal upon discovery of any spills, discharges, or accumulations of
oil associated with produced water containers that are subject to these
tailored requirements. As noted previously, EPA considers the removal
of oil-contaminated soil as a method to prevent oil from becoming a
discharge as described in Sec.  112.1(b). Disposal of oil must be in
accordance with applicable Federal, State, and local requirements;
under Sec.  112.7(a)(3)(v), a facility owner or operator is required to
describe the methods of disposal of recovered materials in accordance
with applicable legal requirements. For the purposes of this provision,
removal of recoverable oil may be combined with physical, chemical,
and/or biological treatment methods to address any residual oil. These
treatment methods must be consistent with other Federal, State, or
local requirements as applicable, and must be properly managed to
prevent a discharge as described in Sec.  112.1(b).
     Corrective action to repair or replace any produced water
container, or associated equipment and appurtenances in order to
prevent an oil discharge from occurring, as well as in response to a
discharge. This approach would require the owner or operator of an oil
production facility to take corrective action to repair any produced
water container and associated

equipment or appurtenances as indicated by regularly scheduled
inspections. This requirement could be implemented in conjunction with
the requirement for periodic inspection; the results of the inspection
would inform the owner or operator of any corrections or repairs that
need to be made. Corrective action is necessary in order to prevent a
discharge from occurring, as well as in response to a discharge. This
measure is intended to prevent discharges as described in Sec.
112.1(b) by ensuring that produced water equipment is well maintained.
    The requirement for periodic inspection of produced water equipment
on a regular schedule is intended to increase the likelihood that a
discharge as described in Sec.  112.1(b) will be prevented or detected
promptly. The inspection requirements for produced water equipment
would be consistent with the inspection requirements for oil containers
at oil production tank batteries under Sec.  112.9(c)(3). The
requirement for periodic skimming of the container should reduce the
impact of a spill by limiting the amount of oil held in a produced
water storage container.
    The Agency seeks comments on this approach, including comment on
the proper methodology, procedures, industry standards/practices,
equipment and frequency for an oil ``skimming program.'' Any
suggestions on alternative approaches or language must include an
appropriate rationale in order for the Agency to be able to consider it
for final action.
c. Exemption for Produced Water Treatment
    Due to several factors including the growing interest in produced
water for beneficial uses, and the understanding that the increased use
of produced water for beneficial uses will reduce the potential for oil
spills, DOE also requested that EPA consider alternatives to current
SPCC requirements for produced water at oil and natural gas operations.
In the July 2002 (67 FR 47139; July 17, 2002) amendments to the SPCC
rule under Sec.  112.1(d)(6), EPA exempted wastewater treatment
facilities or parts thereof from the SPCC rule. In the amended
regulation, EPA defined wastewater treatment as not including oil
production, recovery, or recycling of oil, and clarified that treatment
of produced water was not considered wastewater treatment.
    Since the 2002 amendments were issued, industry, states, and DOE
have commented on the low incremental environmental benefit of
regulating produced water under the SPCC regulation. Concern has also
been expressed by the regulated community regarding the perceived
inequity of the SPCC regulation relative to oil production wastewater
treatment, because the wastewater treatment facilities of publicly
owned treatment works and other industries were exempted from the SPCC
rule in 2002. Therefore, DOE has requested that EPA request comment on
an exemption from the SPCC rule for produced water altogether, similar
to that previously provided to wastewater treatment systems.
    Produced water treatment facilities or parts thereof may be subject
to the National Pollutant Discharge Elimination System (NPDES), Safe
Drinking Water Act (SDWA), Underground Injection Control (UIC), or
State permitting requirements that limit the level of pollutants in
produced water that could be introduced into the environment. For
example, under 40 CFR 122.41(e), NPDES permits require permittees to
properly operate and maintain all facilities and systems of treatment
or control. 40 CFR 122.41(d) requires the NPDES permit holder to take
all reasonable steps to minimize or prevent any discharge in violation
of a permit that has a reasonable likelihood of adversely affecting
health or the environment. Underground sources of drinking water are
protected under 40 CFR 144.12, whereby any underground injection,
except into wells authorized by rule or authorized by permit issued
under the UIC program, is prohibited. These measures are intended to
address the discharge of known pollutants contained in water that is to
be introduced to water bodies (in the case of NPDES) or to groundwater
(in the case of UIC). In contrast to these measures, SPCC is designed
to prevent the non-routine accidental discharge of oil that might be
held in an oil container at a facility.
    Produced water treatment facilities or parts thereof are often
regulated under state laws and regulations applicable to oil and
natural gas production which address operations and pollution
prevention. Oil and natural gas operations, including produced water
treatment facilities on Federal lands managed by the Department of the
Interior Bureau of Land Management are subject to environmental review,
lease stipulations, and operational guidelines that include best
management practices for reducing environmental impacts.\15\
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    \15\ For example, see Argonne National Laboratory, 2007,
``Produced Water Management Information System'' at http://web.evs.anl.gov/pwmis/
 and U.S. Department of the Interior, 2007,

Bureau of Land Management Best Management Practices for Fluid
Minerals Web site at http://www.blm.gov/wo/st/en/prog/energy/oil_and_gas/best_management_practices.html
.

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    The characteristics of produced water in the United States vary
widely, ranging from produced water that is potable to produced water
that can be discharged, injected underground or used as a beneficial
water resource following varying levels of treatment to remove oil,
salt, or other chemical constituents. Similarly, factors such as high
energy prices, advances in water treatment technology, and changing
perspectives on the value of produced water for beneficial uses
including agriculture irrigation, livestock watering, recreation,
aquifer recharge, and enhanced oil recovery are factors that may
encourage the industry to separate oil and natural gas fluids from
produced water and to manage the produced water in a manner that will
reduce oil spills. The docket of this proposed rule contains several
documents relating to produced water provided to EPA by DOE.\16\
---------------------------------------------------------------------------

    \16\ Relevant documents include:
    Interstate Oil and Gas Compact Commission and ALL Consulting,
2006, ``A Guide to Practical Management of Produced Water from
Onshore Oil and Gas Operations in the United States.'' Available at
http://www.iogcc.state.ok.us.

    Veil, J.A., M.G. Puder, D. Elcock, and R.J. Redweik, Jr., 2004,
``A White Paper Describing Produced Water from Production of Crude
Oil, Natural Gas, and Coal Bed Methane,'' prepared by Argonne
National Laboratory for the U.S. Department of Energy, National
Energy Technology Laboratory, January. Available at: http://www.ead.anl.gov/pub/dsp_detail.cfm?PubID=1715
.

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    Therefore, as requested by DOE, EPA seeks comment on an exemption
for produced water treatment facilities or parts thereof from the SPCC
regulation. At oil or natural gas drilling, production, recovery, or
recycling facilities, produced water treatment facilities or parts
thereof that would be exempted from SPCC regulation include the
storage, treatment, or beneficial use of produced water in containers,
pits, ponds, piping, flowlines, and injection or discharge systems
including pumps and other appurtenances necessary for the operation of
these systems. Specifically, this approach would amend Sec.
112.1(d)(iii)(6) pertaining to the general applicability of the SPCC
rule, to read, ``Any facility or part thereof used exclusively for
waste water treatment and not used to satisfy any requirement of this
part. This would include produced water treatment in oil or natural gas
production, recovery, or recycling.''
    Produced water managed prior to the initial separation of co-
mingled oil or natural gas fluids that are produced

from the wellhead would not be exempted from the SPCC regulation.
    Whether a produced water treatment facility or part thereof is used
exclusively for wastewater treatment (i.e., not storage or other use of
oil) or used to satisfy a requirement of part 112 will often be a
facility-specific determination based on the activity associated with
the facility or part thereof. Only the portion of the facility
(including produced water treatment associated with production,
recovery, or recycling of oil or natural gas) used exclusively for
produced water treatment and not used to meet any part 112 requirement
would be exempt from part 112 under this approach. Examples of produced
water treatment facilities or parts thereof used to meet a part 112
requirement which would not be part of this exemption include an oil/
water separator.
    It should also be noted that under this approach, a discharge of
produced water containing oil to navigable waters or adjoining
shorelines in a ``harmful quantity'' (40 CFR part 110) is still
prohibited. Thus, to avoid such discharges, EPA would expect owners or
operators to comply with the applicable permitting requirements under
Federal or State statutes, including best management practices and
operations and maintenance provisions contained therein. EPA would
require that if a facility experiences a discharge reportable to EPA
under Sec.  112.4, then the facility would no longer be exempt and
sized and general secondary containment would be required for all
produced water containers at the facility within six months from the
discovery of the spill(s).
    The Agency seeks comments on whether exempting produced water
treatment facilities from the SPCC regulation is appropriate. In
particular, EPA requests comment on the rationale for this approach,
i.e., the assumption that the oil content of equipment handling
produced water (e.g., tanks, piping, and related appurtenances) after
initial separation is low. Any suggestions on alternative approaches or
language must include an appropriate rationale in order for the Agency
to be able to consider it for final action.
7. Clarification of the Definition of Permanently Closed Containers
    The SPCC rule exempts from applicability and from capacity
threshold determinations any oil storage container that is permanently
closed. EPA seeks to clarify concerns expressed by the regulated
community over the requirements for permanently closing a container, as
described in the definition of ``permanently closed'' at Sec.  112.2.
According to the definition, for a container to be permanently closed,
all liquid and sludge must be removed from the container and connecting
lines, all connecting lines and piping must be disconnected from the
container and blanked off, all valves (except ventilation valves) must
be closed and locked, and conspicuous signs must be posted on each
container stating that it is a permanently closed container and noting
the date of closure. Once permanently closed, a container is no longer
required to be counted toward the total facility storage capacity, nor
is it subject to the other requirements under the SPCC rule.
    Variable economic conditions and production rates at an oil
production facility may cause certain containers to be unused for long
periods of time. Regulated community members have indicated that
permanent closure of such containers is undesirable because the
requirements for closing a container makes it costly and difficult to
return a container to use if production rates surge or if economic
conditions become more favorable.
    Members of the regulated community have suggested that EPA provide
an option to ``temporarily'' close a container, to exempt it from SPCC
applicability, but allow it to be returned to service if needed.
Specifically, ``temporary closure'' would have less stringent
requirements than permanent closure, and would be intended for
situations where containers would only be closed for short periods of
time. The significant difference in closure requirements between EPA's
current ``permanent'' requirements and the suggested ``temporary''
requirements appears to be the removal of liquid and sludge from the
container and connecting lines. EPA believes that allowing liquid and
sludge to remain in the container, without the benefit of the SPCC rule
protections, such as containment and inspection, creates the potential
for a discharge. Therefore, EPA does not believe that it is appropriate
to exempt containers without requiring that all liquid and sludge be
removed.
    EPA reiterates the statement that the Agency made in the preamble
to the July 2002 amendment to the SPCC rule: ``If a tank is not
permanently closed, it is still available for storage and the
possibility of a discharge as described in Sec.  112.1(b), remains. Nor
does a short time period of storage eliminate the possibility of such a
discharge. Therefore, a prevention plan is necessary. A tank closed for
a temporary period of time may contain oil mixed with sludge or
residues of product, which could be discharged. Discharges from these
facilities could cause severe environmental damage during such
temporary storage and are therefore subject to the rule.'' (67 FR
47059)
    EPA notes, however, that the definition of permanently closed does
not require a container to be removed from a facility; permanently
closed containers may be brought back into use as needed for variations
in production rates and economic conditions. (A facility owner or
operator should review state and local requirements, which may require
removal of a container when it is taken out service.)
    Furthermore, EPA wants to clarify that permanent closure
requirements under the SPCC rule are separate and distinct from the
closure requirements in regulations promulgated under Subtitle C of the
Resource Conservation and Recovery Act (RCRA), i.e., the Standards For
Owners and Operators of Hazardous Waste Treatment, Storage, And
Disposal Facilities at 40 CFR part 264 and Interim Status Standards for
Owners and Operators of Hazardous Waste Treatment, Storage, and
Disposal Facilities at 40 CFR part 265. These regulations describe the
requirements for operators of facilities that use tank systems for
storing or treating hazardous waste, as well as requirements for tank
closure and post-closure care (Sec. Sec.  264.197 and 265.197).
However, these requirements generally do not apply to an oil production
facility. According to the applicability provision in Sec.  264.1(b),
``the standards in this part apply to owners and operators of all
facilities which treat, store, or dispose of hazardous waste, except as
specifically provided otherwise in this part or part 261 of this
chapter'' (emphasis added). Part 261 states that ``Drilling fluids,
produced waters, and other wastes associated with the exploration,
development, or production of crude oil, natural gas or geothermal
energy'' are not hazardous waste (Sec.  261.4(b)(5)). Therefore, an oil
production facility does not have to undergo the expense of permanent
closure under part 264 or part 265 of RCRA, because these wastes--that
is, drilling fluids, produced waters, and other wastes associated with
the exploration, development, or production of crude oil are not
subject to these regulations. In addition, the owner or operator of the
oil production facility could transport such wastes to a non-hazardous
waste disposal or treatment facility, as opposed to a permitted
Subtitle C hazardous waste facility. (The reasons why regulation under
Subtitle C of RCRA for wastes associated with oil

production was determined to be unwarranted are described in the
Federal Register notice ``Regulatory Determination for Oil and Gas and
Geothermal Exploration, Development, and Production Wastes'' (July 6,
1988; 53 FR 25446).)
    Given the clarifications provided here, EPA does not believe that
further regulatory action is needed to address this issue.
Nevertheless, EPA welcomes comments on whether further clarification
regarding the definition of permanently closed is necessary. Any
suggestions for alternative approaches must include an appropriate
rationale and supporting data in order for the Agency to be able to
consider it for final action.
8. Oil and Natural Gas Pipeline Facilities
    In developing this proposed rulemaking, questions have been raised
concerning the jurisdictional lines between EPA and the Department of
Transportation (DOT) in relation to oil and gas pipeline systems and
associated equipment. Our objective, in keeping with the Executive
Order 12777 and earlier executive orders, as well as the 1971 DOT and
EPA Memorandum of Understanding (MOU), is to differentiate between
``transportation'' and ``non-transportation'' facilities in a manner
that provides clear and definitive standards, while eliminating
regulatory gaps, and overlapping regulation and oversight. To these
ends, EPA and DOT have committed to revise or augment their 1971 MOU to
more clearly define the jurisdictional scope over oil and gas-related
infrastructure by delineating the specific equipment and appurtenances
that are part of the pipeline system subject to DOT jurisdiction. In
the case of a natural gas pipeline, EPA and DOT will evaluate the
appropriate jurisdictional divide for equipment such as compressor
stations, lubricating systems and tanks. EPA and DOT have committed to
diligently pursue resolution of this issue and, early next year, to
make available for public comment the document memorializing the
culmination of this effort. EPA, intends to give notice of completion
of this process in connection with publication of the final version of
this rule by incorporating by reference or otherwise a provision
outlining the agencies' relative jurisdiction in this area.

M. Man-Made Structures

    The SPCC rule is applicable to a facility that, due to its
location, could reasonably be expected to have a discharge of oil as
described in Sec.  112.1(b). As described in a 1976 amendment to the
rule (41 FR 34164, December 11, 1976), this determination must be based
solely upon consideration of the geographical aspects of the facility,
and excludes consideration of manmade features such as dikes,
equipment, or other structures that may serve to restrain, hinder,
contain, or otherwise prevent a discharge as described in Sec.
112.1(b). As EPA noted in the 1976 rule preamble, ``manmade features,
such as drainage control structures and dikes, are not to be used in
concluding there is no reasonable expectation that a discharge will
reach navigable waters. If there is a reasonable expectation that a
discharge from the facility would reach navigable waters but for or in
the absence of such containment or other structures, the facility is
subject to the requirements of this part.'' (41 FR 34164, December 11,
1976). This policy has been an important foundation for the
applicability of the SPCC rule for over 30 years.
    Although the issue was addressed in 1976, members of the regulated
community continue to raise questions regarding the use of man-made
structures. In the preamble to the 2002 SPCC rule revisions, EPA
responded to comments by explaining that, ``To allow consideration of
manmade structures (such as dikes, equipment, or other structures) to
relieve a facility from being subject to the rule would defeat its
preventive purpose. Because manmade structures may fail, thus putting
the environment at risk in the event of a discharge, there is an
unacceptable risk in using such structures to justify relieving a
facility from the burden of preparing a prevention plan.'' (67 FR
47062, July 17, 2002). However, members of the regulated community
continue to suggest that man-made features, such as basements or
containment structures, should be taken into consideration when
determining whether the SPCC requirements apply.
    EPA continues to uphold this applicability criterion, but seeks to
clarify that certain man-made features, such as building walls,
basement structures, and drainage systems may be taken into
consideration in determining how to comply with the SPCC requirements.
1. Secondary Containment
    If an oil storage container at a regulated facility is located
inside a building, the PE or facility owner/operator certifying the
SPCC Plan may take into consideration the ability of the building walls
and/or drainage systems to serve as secondary containment for the
container. The SPCC regulation is performance-based and provides
flexibility to the facility owner or operator in terms of the design
and implementation of the secondary containment system that will
provide adequate protection. Secondary containment may be achieved by
use of dikes, berms, or other barriers, engineered drainage structures,
or other active or passive containment methods. The regulation provides
general design criteria for secondary containment of bulk storage
containers by requiring simply that the containment be of a size
sufficient to contain the capacity of the largest container, with
freeboard for precipitation, as appropriate. EPA does not require the
use of specific sizing criteria to account for precipitation (e.g., 110
percent of capacity); instead it allows the facility owner or operator,
or the PE certifying the Plan, to consider location specific
conditions, including the possibility that a bulk storage container is
located indoors where precipitation does not occur. The SPCC rule also
requires that the containment structure provided around bulk storage
containers be sufficiently impervious to oil. Therefore, the
containment structure must not be equipped with open floor drains
unless the drainage system has been purposefully equipped to treat any
discharge, for example by use of an adequately sized oil-water
separator (any indoor drainage system that leads directly to a sewer
authority, Publicly Owned Treatment Works (POTW), or a waterbody may
serve as a conduit for a discharge to navigable waters). Additionally,
any doorways, windows, or other openings thatwould permit a discharge
to flow out of the building must also be taken into consideration. To
the extent that an existing building structure meets the SPCC
performance criteria for secondary containment, the owner/operator can
consider such a building as an appropriate containment structure. In
cases where the building walls may be used for secondary containment,
it should be noted, that the calculation of the capacity of the
secondary containment structure would need to consider the displacement
by other containers, equipment, and items sharing the containment
structure.
    Where applicable, containers may be subject to the National Fire
Protection's Flammable and Combustible Liquids Code (NFPA 30) in
addition to the SPCC requirements. In these situations, the building
may serve as both general and sized secondary containment. For
containers located in buildings, NFPA 30 prescribes specific
requirements to control fire hazards involving

flammable or combustible liquids, particularly in the areas of design,
construction, ventilation, and ultimately facility drainage. More
specifically, NFPA 30 requires curbs, scuppers, drains or similar
features to prevent the flow of liquids in emergencies to adjacent
buildings, including provisions to handle water from fire protection
systems. In the area of facility drainage, NFPA 30 requires that a
facility be designed and operated to prevent the discharge of liquids
to public waterways, public sewers, or adjoining property. Thus, if a
facility is designed, constructed and maintained to applicable fire
codes, such as NFPA 30, the building may serve as secondary containment
under the SPCC rule.
    Given the clarifications provided here, EPA does not believe that
further regulatory action is needed to address this issue. EPA welcomes
comments on whether further clarification regarding the use of building
structures to meet the SPCC secondary containment requirements is
necessary.
2. Integrity Testing
    The SPCC rule requires that bulk storage containers be made of
compatible materials and are appropriate for the conditions of storage,
such as pressure and temperature (Sec. Sec.  112.8(c)(1) and
112.12(c)(1)), and are tested for integrity on a regular schedule
(Sec. Sec.  112.8(c)(6), and 112.12(c)(6)). If, at a regulated
facility, indoor conditions are such that they reduce external
corrosion and potential for discharges, these operating conditions may
be considered in the development of a site-specific inspection program.
Tank inspection standards, such as the American Petroleum Institute's
(API) Standard 653 and the Steel Tank Institute's (STI) SP001, detail
the appropriate inspection scope and frequency depending on container
type and configuration. However, in developing a regulated facility's
inspection program, it should be recognized that although indoor oil
storage containers are generally shielded from precipitation,
precipitation is only one of the many factors that promote corrosion.
Even indoors, high humidity acidic dust settling on the container
surface or some other factor may promote external corrosion.
Furthermore, indoor containers may be comparatively more susceptible to
accidental impacts from mobile equipment (e.g., forklifts) given the
more restricted space. Indoor containers also remain subject to
internal corrosion that can lead to pitting and leaking.
    The SBA requested that EPA consider whether there should be
differentiated integrity testing requirements for containers located
indoors. With respect to integrity testing of aboveground storage tanks
located indoors, applicable industry inspection standards, such as API
653 and STI SP001 do not specifically differentiate inspection
requirements for indoor versus outdoor containers. However, SP001, for
example, does differentiate based on container size and configuration,
and, for tanks with storage capacities up to 5,000 gallons provided
with sized secondary containment and a release prevention barrier (such
as a liner, concrete pad, or an elevated tank in secondary
containment), the standard requires visual inspection and recordkeeping
by the owner/operator per the SP001 schedule. For tanks greater than
5,000 gallons in the same configuration, SP001 requires visual
inspection by the owner/operator coupled with a formal external
inspection by a certified inspector on a 20-year cycle versus a more
stringent inspection scope and schedule for tanks located outdoors in
earthen secondary containment. Therefore, the Agency believes that the
industry standards already provide flexibility to the owner/operator of
the facility based on tank size and configuration. Additionally, the
owner/operator in conjunction with the certifying PE has the
flexibility under the SPCC regulation to develop an alternate container
inspection program.
    Given the clarifications provided here, EPA does not believe that
further regulatory action is needed to address this issue.
Nevertheless, EPA welcomes comments on whether further clarification
regarding requirements for integrity testing of containers located
indoors, or a regulatory amendment is necessary.

N. Underground Emergency Diesel Generator Tanks at Nuclear Power
Stations

    Under the U.S. Nuclear Regulatory Commission (NRC) regulations, a
nuclear power generation facility must meet certain design criteria to
ensure that the plant will be operated in a manner protective of the
public's health and safety (10 CFR part 50, Appendix A). The NRC design
criteria cover the design, fabrication, installation, testing and
operation of structures, systems, and components important to safety.
Nuclear power stations are required to provide redundant on-site
electric power system and an off-site power system to allow functioning
of structures, systems, and components important to safety. These on-
site power systems typically consist of diesel-powered emergency or
standby generators, which may include day fuel tanks, either integral
to the generator or immediately adjacent to the unit. Additional
reserve capacity may also be provided by aboveground and/or underground
storage tanks (USTs) to meet the NRC requirement to provide a seven-day
supply of fuel oil on-site. Each utility develops its particular
systems and procedures for ensuring their operability and integrity;
these elements become part of the safety program that is reviewed and
approved by NRC in granting an operating license for the utility.
    EPA currently exempts from the SPCC requirements any completely
buried storage tank that is subject to all of the technical
requirements for USTs under 40 CFR part 280 or a state program approved
under part 281. However, as discussed in the preamble to the final rule
for parts 280 and 281 (53 FR 37082, September 23, 1988), the Agency
chose to defer the requirements of Subparts B, C, D, E, and G for these
tanks pending completion of a review of the NRC regulations (10 CFR
part 50, Appendix A) governing these tanks to determine whether further
regulation under the UST regulations is necessary to protect human
health and the environment or whether such regulation would be
inconsistent with the NRC regulations. Thus, UST tanks that are part of
an emergency generator system at a nuclear power generation facility
regulated by the NRC are still subject to some of the UST regulations.
For example, deferred tanks must still comply with the release response
and corrective action requirements under Subpart F (Sec. Sec.  280.60
through 280.67). Consequently, because these tanks are not subject to
all of the UST requirements, they are currently subject to the SPCC
requirements.
    Nuclear power plant stakeholders have provided comments to the
Agency questioning whether dual regulation of these USTs under relevant
NRC requirements and SPCC requirements is appropriate or necessary. The
industry has also indicated that to comply with SPCC requirements, the
unit would need to be shut down to properly address secondary
containment and integrity testing and inspection requirements; to do so
otherwise would violate stringent NRC operating safety requirements. A
shutdown to address SPCC requirements is costly and jeopardizes public
power supply needs. To further analyze the potential overlap and
concerns relative to the SPCC requirements in light of NRC
requirements, EPA conducted a site visit to a nearby nuclear power
station and consulted NRC.

    EPA compared the NRC regulations and guidelines with the relevant
SPCC requirements. Under 10 CFR Part 50, Appendices A and B, nuclear
power generation facility operators must identify the relevant codes
and standards, develop and implement a quality assurance program, and
maintain appropriate records of the design, fabrication, erection, and
testing throughout the life of the nuclear unit. The quality assurance
program required per Appendix B must be documented by written policies,
procedures or instructions and implemented as documented. To assist
nuclear power unit licensees in complying with the license
requirements, the NRC has developed a number of guidance documents,
including documents pertaining to the operation of standby diesel
generators. Specifically, NRC Regulatory Guide 1.137, ``Fuel-Oil
Systems for Standby Diesel Generators'' details the requirements for
inspection and testing of fuel oil systems, corrosion protection, and
the periodic cleaning of fuel supply tanks. These measures are similar
to the measures required under the SPCC regulation for completely
buried tanks, which include corrosion protection of buried tanks (Sec.
112.8(c)(4)) and of buried piping (Sec.  112.8(d)(1)), and inspection
and testing of buried piping (Sec.  112.8(d)(4)). According to NRC,
this guideline represents one acceptable method to meet the NRC
requirements for these standby systems. If a licensee chooses an
alternative approach then equivalency must be demonstrated through an
engineering review by the NRC as part of the licensing process.
    In conducting the site visit to a nearby nuclear power station, EPA
observed that the standby generators had both aboveground and
underground storage tanks on-site to meet the requisite fuel demands.
The USTs were installed in 1973 and consist of single-walled steel
tanks equipped with automatic tank gauging and are subjected to
nondestructive evaluation (ultrasonic thickness testing) every 10
years. Associated piping is tested every 10 years. EPA then reviewed
the relevant SPCC requirements associated with USTs that meet the
definition of completely buried tanks in Sec.  112.2 of the SPCC rule
and conducted a comparative analysis as detailed below.
     All containers: Sec.  112.8(c)(2): Sized secondary
containment requirements.
     Buried Tanks: Sec.  112.8(c)(4): Protection and leak
testing of buried metallic tanks.
     All Containers: Sec.  112.8(c)(8): Engineering of each
container to prevent overfills.
     Buried Piping: Sec.  112.8(d): Protection and leak testing
of buried piping.
    Since the USTs are single-walled steel tanks, the tanks may not
meet the secondary containment requirements at Sec.  112.8(c)(2);
however, an argument could be made that secondary containment is
impracticable under Sec.  112.7(d). Since these USTs remain subject to
Subpart F of Part 280 (Release Response and Corrective Action for UST
Systems Containing Petroleum or Hazardous Substances), the requirements
of Sec.  112.7(d)(1) and 112.7(d)(2) may be met. Additionally, since
the tanks were installed prior to January 10, 1974, the completely
buried tanks are not subject to the cathodic protection requirements at
Sec.  112.8(c)(4). However, since the tanks are subjected to a non-
destructive evaluation on a 10-year cycle, the leak testing requirement
under Sec.  112.8(c)(4) would be met. Completely buried tanks are also
subject to the engineering requirement at Sec.  112.8(c)(8) to prevent
overfills. The observed tanks were equipped with automatic tank
gauging. Buried piping associated with the completely buried tanks is
subjected to pressure testing on a 10-year cycle; however, since the
piping was installed prior to 2002, the buried piping is not subject to
the coating, wrapping and cathodic protection requirements at Sec.
112.8(d)(1).
    The case summarized above illustrates the similarities between UST
safety measures implemented under the NRC regulations and SPCC
requirements applicable to completely buried tanks. EPA believes that
nuclear power plants have unique characteristics that differentiate
them from other types of regulated facilities. Thus, EPA understands
that certain actions necessary to comply with the SPCC rule could be
impracticable at NRC facilities because they may compromise the
availability of the emergency diesel generation tank and consequently
affect the reliability of the nuclear power supply and result in the
shut down of a nuclear power plant. EPA believes that the NRC operating
safety requirements best address the specific and unique operational
challenges represented by completely buried tanks at nuclear power
plants. EPA is, therefore, proposing to exempt completely buried oil
storage tanks at NRC-regulated facilities that are subject to the
safety requirements under the NRC regulations. The exemptions would
apply only to completely buried tanks as defined in Sec.  112.2 of the
SPCC regulation. Similar to completely buried tanks subject to all the
technical requirements of 40 CFR part 280 or a State program approved
under 40 CFR part 281, completely buried tanks at NRC-regulated
facilities would not be counted as part of the aggregate aboveground
storage capacity of the facility, but the tanks would need to be marked
on the facility diagram as provided in Sec.  112.7(a)(3) if the
facility is otherwise subject to the SPCC rule.
    EPA seeks comments on the proposed exemption of completely buried
oil storage tanks at NRC facilities. Any alternative approach presented
must include an appropriate rationale and supporting data in order for
the Agency to be able to consider it for final action.

O. Wind Turbines

    The Agency was requested to address the applicability of the rule
to wind turbines used to produce electricity. In consultation with DOE,
EPA's research shows that the larger 1.5-mega watt (MW) turbines have
gearbox capacities typically ranging between 55 and 65 gallons.
Additionally, other wind turbine components, such as the gear reducers
within the turbine for yaw and pitch control may contain up to 10
gallons of lubricating oil. Based on these capacities, wind turbine
farms at locations where there is a reasonable expectation of a
discharge to navigable waters or adjoining shorelines could meet the
1,320-gallon aggregate aboveground oil storage capacity applicability
threshold for the SPCC rule and would be required to prepare a Plan.
The Agency believes that these wind turbines meet the definition of
oil-filled operational equipment promulgated in the December 2006 SPCC
rule amendments (71 FR 77266, December 26, 2006) and thus can take
advantage of the alternative compliance option provided for this type
of equipment.
    The amendments to the SPCC rule promulgated in December 2006 allow
owners and operators of facilities with eligible oil-filled operational
equipment the option to prepare an oil spill contingency plan and a
written commitment of manpower, equipment, and materials to
expeditiously control and remove any oil discharged that may be harmful
without having to make an individual impracticability determination as
required in Sec.  112.7(d). If an owner or operator takes this option,
he or she is also required to establish and document an inspection or
monitoring program for this qualified oil-filled operational equipment
to detect equipment failure and/or a discharge in lieu of providing
secondary containment.
    The Agency defined ``oil-filled operational equipment'' as
``equipment

that includes an oil storage container (or multiple containers) in
which the oil is present solely to support the function of the
apparatus or the device. Oil-filled operational equipment is not
considered a bulk storage container, and does not include oil-filled
manufacturing equipment (flow-through process). Examples of oil-filled
operational equipment include, but are not limited to, hydraulic
systems, lubricating systems (e.g., those for pumps, compressors and
other rotating equipment, including pumpjack lubrication systems), gear
boxes, machining coolant systems, heat transfer systems, transformers,
circuit breakers, electrical switches, and other systems containing oil
solely to enable the operation of the device.'' (71 FR 77290)
    These examples the Agency included in definition of oil-filled
operational equipment were intended to provide additional clarity and
not to exclude other such equipment. Based on their characteristics,
the Agency considers wind turbines to meet the definition of oil-filled
operational equipment. Wind farm facilities can take advantage of the
oil spill contingency plan compliance option as an alternative to
secondary containment requirements.
    In addition, in examining the design of a wind turbine, a PE (or
owner/operator of a qualified facility) may determine that it
inherently provides sufficient secondary containment for its oil
reservoirs. The nacelle, or structure that contains the key components
of the turbine, including the gearbox and the electrical generator, may
be determined to serve as sufficient secondary containment in the event
of an oil discharge. Thus, the PE or owner/operator of a qualified
facility may certify a wind turbine as being in compliance with the
Sec.  112.7(c) requirements for secondary containment. As such, the
alternative measures described in Sec.  112.7(k) (i.e., an oil spill
contingency plan, the commitment of resources and manpower, and an
inspection or monitoring program) would not be necessary.
    It is important to note that a wind farm that meets the criteria
for qualified facility status has additional compliance alternatives,
and flexibility is available, the most significant being the option for
self-certification of his SPCC Plan. EPA seeks comments on whether this
discussion provides adequate clarity on the applicability of the SPCC
rule to wind turbines, or whether further clarification is needed.

P. Technical Corrections

    EPA proposes a technical correction to the introductory paragraph
of Sec.  112.3, to move the phrase ``in writing'' after ``must
prepare'' and then insert the phrase ``and implement'' after the phrase
``in writing'', in order to provide an explicit requirement for a
facility owner to both prepare and implement an SPCC Plan. This
paragraph describes the requirement for an owner or operator of an
onshore or offshore facility subject to the rule to prepare an SPCC
Plan, in writing, and in accordance with Sec.  112.7 and any other
applicable section of the rule. Adding the term ``and implement'' to
this paragraph would be consistent with the subsequent subsections,
which provide compliance dates to both prepare or amend, and implement,
an SPCC Plan for various categories of facility owners and operators.
In describing the requirement to prepare a Plan in the introductory
paragraph of Sec.  112.3, the Agency inadvertently excluded the
explicit requirement to also implement that Plan. Clearly, a facility
owner or operator must implement his SPCC Plan in order for it to be
effective in preventing discharges of oil to navigable waters and
adjoining shorelines. In order to provide clarity, EPA will explicitly
include the word ``implement'' in Sec.  112.3 as a technical
correction, and seeks comment on this clarification.
    EPA also proposes a technical correction to the introductory
paragraph of Sec.  112.12, to delete the phrase ``(excluding a
production facility.)'' In the December 2006 amendments to the SPCC
rule (71 FR 77266, December 26, 2006), EPA amended Subpart C of part
112 by removing several sections because they were not appropriate for
animal fats and vegetable oils. At that time, as a point of
clarification, EPA also removed the phrase ``for onshore facilities
(excluding production facilities)'' from the title of Sec.  112.12,
because, having removed the inapplicable production facility
requirements from Subpart C, it was no longer necessary to
differentiate onshore oil production facilities from other facilities
in Sec.  112.12. However, EPA inadvertently neglected to remove the
corresponding phrase from the introductory paragraph of the section.
EPA currently seeks to correct this inadvertent omission. EPA seeks
comments on this proposed technical correction.

VII. Statutory and Executive Order Reviews

A. Executive Order 12866--Regulatory Planning and Review

    Under section 3(f)(1) of Executive Order (EO) 12866 (58 FR 51735,
October 4, 1993), this action is an ``economically significant
regulatory action'' because it is likely to have an annual effect on
the economy of $100 million or more. Accordingly, EPA submitted this
action to the Office of Management and Budget (OMB) for review under EO
12866 and any changes made in response to OMB recommendations have been
documented in the docket for this action. In addition, EPA prepared an
analysis of the potential costs and benefits associated with this
action. This analysis is contained in the regulatory impact analysis
(RIA) entitled, ``Regulatory Impact Analysis for the Proposed
Amendments to the Oil Pollution Prevention Regulations (40 CFR Part
112)'' (September 2007). A copy of the analysis is available in the
docket for this action and the analysis is briefly summarized here. EPA
requests comments from the public on the costs and benefits of any of
the proposed regulatory alternatives and preferred options discussed in
this proposed rulemaking action.
    For the economic impact analysis of these proposed amendments to
the SPCC rule, EPA used the SPCC rule requirements at 40 CFR part 112,
as amended in 2002 (67 FR 47042, July 17, 2002) as the baseline to
estimate the potential cost savings to regulated facilities from these
proposed amendments. The cost savings are not adjusted for the
estimated, potential cost savings for the final 2006 rule amendments
and may overestimate the cost savings for these proposed amendments,
particularly for proposed Tier 1 qualified facilities, proposed
revisions to the integrity testing requirement, and the proposed
amendments to delay SPCC Plan preparation and implementation for oil
production facilities. The regulatory impact analysis developed in
support of this proposal compares the compliance costs for owners and
operators of facilities affected by the proposed amendments to the
costs owners and operators would face under the 2002 SPCC rule
amendments. The proposed regulatory amendments have twelve major
components: (1) Exempt hot-mix asphalt; (2) exempt pesticide
application equipment and related mix containers used at farms; (3)
exempt heating oil containers at single-family residences; (4) amend
the definition of ``facility'' to clarify the flexibility

associated with defining a facility's boundaries; (5) amend the
facility diagram requirement to provide additional flexibility for all
facilities; (6) define ``loading/unloading rack'' to clarify the
equipment subject to the provisions for facility tank car and tank
truck loading/unloading racks; (7) provide streamlined requirements for
a subset of qualified facilities; (8) amend the general secondary
containment provision to provide more clarity; (9) amend the security
requirements for all facilities; (10) amend the integrity testing
requirements to allow a greater amount of flexibility in the use of
industry standards at all facilities; (11) amend the integrity testing
requirements for containers that store animal fats or vegetable oils
and meet certain criteria; (12) streamline a number of requirements at
oil production facilities; and (13) exempt completely buried oil
storage tanks at nuclear power generation facilities. EPA is also
providing clarification in the preamble to this proposed rule on three
additional issues identified by the regulated community: (1) the
consideration of man-made structures in determining how to comply with
the SPCC rule requirements; (2) the applicability of the rule to
underground emergency diesel generator tanks at nuclear power stations,
and (3) the applicability of the rule to wind turbines for electricity
generation.
    For each of these components, EPA estimated potential cost savings
to regulated facilities that may result from reductions in compliance
costs. The main steps used to estimate the compliance cost impacts of
the SPCC proposed rule are as follows:
     Develop the baseline universe of SPCC-regulated
facilities;
     Estimate the number of facilities affected by the proposed
rule amendments;
     Estimate changes in unit compliance cost for each
regulated facility affected by the proposed rule;
     Estimate total compliance cost savings to owners and
operators of potentially affected facilities; and
     Annualize compliance cost savings over a ten-year period,
2008 through 2017, and discount the estimates using 3 and 7 percent
discount rates.
    Based on these steps, EPA estimated the annualized compliance cost
savings to potentially affected facilities associated with each of the
major components of the proposed rule, and presents the results of the
economic analysis in Exhibit 1. EPA uses four key assumptions in its
regulatory impact analysis. First, the Agency assumes that cost
minimization behavior applies to all owners and operators of facilities
that qualify for reduced regulatory requirements, whereby all those
affected would seek burden relief. Second, EPA assumed, consistent with
EPA's guidelines for conducting economic analyses, that all existing
owners and operators of facilities are in full compliance with the July
2002 amendments to the SPCC rule (67 FR 47042). Third, EPA assumes that
owners and operators of existing SPCC-regulated facilities would forgo
compliance activities offered as alternatives to activities that
required one-time initial investments because they would have already
incurred a one-time cost. For example, EPA assumes that an owner or
operator of an existing facility who would qualify for reduced security
requirements under the proposed rule that allows facility owners/
operators to tailor their security measures to the facility's specific
characteristics and location, would have already provided the security
measures as per the 2002 rule amendments or demonstrated environmental
equivalence for tailored security measures. Thus, owners and operators
of existing facilities would not take advantage of the provided
alternative. Fourth, EPA assumes that compliance is nationally
consistent although variability in state regulations and the
distribution of affected facilities is recognized.
    Exhibit 1 presents the estimated cost savings for each rule
component and for the proposed rule amendments in total. For several
proposed rule amendments, such as the security requirements and
facilities handling AFVO, EPA did not have numeric data on the number
of affected facilities within a general industry sector; thus, it
developed three scenarios to evaluate a range of cost savings.\17\ The
exhibit below presents the estimated cost savings for the proposed
options for this proposed rule. The total potential cost savings are
calculated taking into account the mid-point values of the estimated
ranges of statistical distributions for unit costs. These estimates are
not necessarily additive, given that they do not account for
interactions among the various components of the proposed rule.\18\
---------------------------------------------------------------------------

    \17\ For example, to develop a range for the number of affected
AFVO facilities, EPA contacted industry experts who determined that
40 percent to 90 percent of containers at AFVO facilities are made
of stainless steel and almost all containers have bottom drainage.
Therefore, based on professional judgment, the Agency considered
three scenarios: 40% (low), 65% (medium) and 90% (high) of all AFVO
facilities would have food oil tanks that are eligible.
    \18\ Certain industry sectors are affected by multiple rule
components. For example, farms would benefit from the new
requirements for Tier I qualified facilities, amendments to the
definition of ``facility'', amendments to the security, integrity
testing, facility diagram requirements, amendments to the definition
of ``loading/unloading rack'', and the exemption for single-family
residential heating oil containers, in addition to the exemption of
pesticide application equipment. As a result, taking advantage of
one new requirement might preclude a facility from benefiting from
other proposed requirements.
---------------------------------------------------------------------------

    The oil production sector and farms would benefit from multiple
components of the proposed rule. Farms would benefit from the proposed
requirements for Tier I qualified facilities, amendments to the
definition of ``facility'', amendments to the security, integrity
testing, facility diagram requirements, amendments to the definition of
``loading/unloading rack'', and the exemption for single-family
residential heating oil containers, in addition to the exemption of
pesticide application equipment. The total cost savings to farm owners
and operators from these amendments are estimated at $263 million on an
annualized basis.
    The oil production sector would benefit from proposed revisions to
the facility diagram requirements, and amendments to the definition of
``loading/unloading rack'', and some would benefit from the new
requirements for Tier I qualified facilities, in addition to amendments
specific to the oil production sector such as the six-month delay in
preparation and implementation of SPCC Plans and the exemption of flow-
through separation and treating equipment from sized secondary
containment requirements. The total savings to owners and operators of
oil production facilities from all of the proposed amendments that
affect this sector are estimated at $83 million on an annualized basis.

     Exhibit 1.--Estimated Compliance Cost Savings for the Proposed
                          Regulatory Amendments
------------------------------------------------------------------------
                                              Annualized cost  savings
          Rule component/scenario             ($2006,  in millions,  7%
                                                   discount rate)
------------------------------------------------------------------------
Hot-Mix Asphalt:
    Exempt HMA containers.................  $7
Farms:
    Exempt pesticide application            $4
     equipment; clarification on nurse
     tanks being mobile refuelers.
Residential Heating Oil Containers:
    Exempt single-family residential        $2
     heating oil containers.
Definition of Facility:
    Revise the definition of ``facility''.  $251
Facility Diagram:
    Revise facility diagram requirement...  $1
Loading/Unloading Racks:
    Define ``loading/unloading rack''.....  $48
Tier I Qualified Facilities:
    Provide streamlined requirements for    $24
     Tier I qualified facilities.
General Secondary Containment:
    Amend the general secondary             No cost impact.
     containment provision to provide more
     clarity.
Security Requirements:
    Revise security requirements \1\......  $7
Integrity Testing:
    Amend the integrity testing             $9
     requirements to allow a greater
     amount of flexibility in the use of
     industry standards at all facilities.
Animal Fats and Vegetable Oil:
    Amend integrity testing requirements    $2
     for containers that store animal fats
     or vegetable oil and that meet
     certain criteria \2\.
Oil Production Facilities:
    Six month delay for Plan preparation    $25
     and implementation.
    Exempt flowlines and gathering lines    No net cost impact.
     from secondary containment.
    Flow-through separation and treatment   $8
     equipment.
Man-Made Structures:
    Consider manmade structures in          No cost impact.
     determining SPCC rule applicability.
Nuclear Power Stations:
    Exempt completely buried oil storage    Less than $1.
     tanks at nuclear power generation
     facilities..
Wind turbines:
    Clarify applicability of the rule to    No cost impact.
     wind turbines used to produce
     electricity.
                                           -----------------------------
        Total.............................  $387
------------------------------------------------------------------------
\1\ Mid-point estimate (17% of oil production facilities, 50% of AFVO
  facilities, and 8% of farms affected). Cost savings might be higher or
  lower using different assumptions.
\2\ Mid-point estimate (65% of facilities affected). Cost savings might
  be lower using different assumptions.

B. Paperwork Reduction Act

    The information collection requirements for this proposed rule have
been submitted for approval to OMB under the Paperwork Reduction Act,
44 U.S.C. 3501 et seq. The Information Collection Request (ICR)
document prepared by EPA has been assigned EPA ICR number 0328.14.
    EPA does not collect the information required by the SPCC rule on a
routine basis. SPCC Plans ordinarily need not be submitted to EPA, but
must generally be maintained at the facility. Preparation,
implementation, and maintenance of an SPCC Plan by the facility owner
or operator helps prevent oil discharges and mitigate the environmental
damage caused by such discharges. Therefore, the primary user of the
data is the facility personnel. While EPA may, from time to time,
request information under these regulations, such requests are not
routine.
    Although facility personnel are the primary data user, EPA also
uses the data in certain situations. EPA reviews SPCC Plans: (1) When
it requests a facility owner or operator to submit required information
in the event of certain discharges of oil or to evaluate an extension
request; and (2) as part of the EPA's inspection program. State and
local governments also use the data, which are not necessarily
available elsewhere and can greatly assist local emergency preparedness
efforts. Preparation of the information for affected facilities is
required under section 311(j)(1) of the Clean Water Act as implemented
by 40 CFR part 112.
    EPA estimates that in the absence of this proposed rulemaking,
approximately 592,000 existing facilities would be subject to the SPCC
rule in 2008 and have SPCC Plans. In addition, EPA estimates that
approximately 18,100 new facilities would become subject to the SPCC
requirements during that year, resulting in a total of about 610,000
regulated facilities in 2008.\19 \
---------------------------------------------------------------------------

    \19\ To estimate the number of SPCC-regulated facilities in
2008, EPA used the estimated number of facilities for 2005 (571,000)
and applied annual, industry-specific growth rates that resulted in
about 610,000 facilities.
---------------------------------------------------------------------------

    Under this proposed action, the storage capacity of containers
solely containing hot-mix asphalt would be exempt from the SPCC rule;
the proposal would also exempt all heating oil containers for single-
family residences; pesticide application equipment and related mix
containers used at farms would no longer be regulated; the definition
of ``facility'' would be amended to clarify that contiguous or non-
contiguous buildings, properties, parcels, leases, structures,
installations, pipes, or pipelines may be considered separate
facilities, and to specify that the ``facility'' definition governs the
applicability of 40 CFR part 112; EPA would amend the facility

diagram requirement to provide additional flexibility for all
facilities; EPA would provide a definition for the term ``loading/
unloading rack,'' which would determine whether a facility is subject
to the provisions at Sec.  112.7(h), as well as specifically exclude
onshore oil production facilities and farms from the requirements of
Sec.  112.7(h); a subset of qualified facilities (Tier I) would be
allowed to complete and implement an SPCC Plan template (proposed as
Appendix G to 40 CFR part 112) in order to comply with the SPCC rule
requirements; the security requirements at Sec.  112.7(g) would be
modified to allow an owner or operator to tailor his security measures
to the facility's specific characteristics and location; the current
integrity testing requirements at Sec. Sec.  112.8(c)(6) and
112.12(c)(6) would be replaced with the requirements provided for
qualified facilities, as promulgated in December 2006; the PE or an
owner/operator certifying an SPCC Plan would have the flexibility to
determine the scope of integrity testing that is appropriate for
containers that store animal fats or vegetable oil that is intended for
human consumption and that meet other criteria; lastly, this proposed
rulemaking would streamline the requirements for oil production
facilities by modifying the definition of production facility to be
consistent with the proposed amendments to the definition of facility,
extending the timeframe by which a new oil production facility must
prepare and implement an SPCC Plan, exempting flow-through process
vessels at oil production facilities from the sized secondary
containment requirements, while maintaining general secondary
containment requirements and requiring additional oil spill prevention
measures, establishing more specific requirements for contingency
planning and a flowline/intra-facility gathering line maintenance
program, while exempting such flowlines and intra-facility gathering
lines at oil production facilities from the secondary containment
requirements, clarifying the applicability of the SPCC rule to oil
containers at a natural gas facility, clarifying the SPCC provisions to
which a natural gas facility may be subject, and clarifying the
definition of ``permanently closed'' as it applies to an oil production
facility.
    Under this proposed action, an estimated 610,000 regulated
facilities would be subject to the SPCC information collection
requirements of this rule in 2008.\20\ The Agency estimates that as a
result of the proposed amendments to tailor, clarify, and streamline
certain SPCC requirements, the reporting and recordkeeping burden would
decrease by approximately 1.4 million hours. The proposed amendments
would reduce capital and O&M costs by approximately $43 million on an
annualized basis.
---------------------------------------------------------------------------

    \20\ To estimate the number of SPCC-regulated facilities in
2008, EPA used the estimated number of facilities for 2005 (571,000)
and applied annual industry-specific growth rates.
---------------------------------------------------------------------------

    Burden means the total time, effort, or financial resources
expended by persons to generate, maintain, retain, or disclose or
provide information to or for a Federal agency. This includes the time
needed to review instructions; develop, acquire, install, and utilize
technology and systems for the purposes of collecting, validating, and
verifying information, processing and maintaining information, and
disclosing and providing information; adjust the existing ways to
comply with any previously applicable instructions and requirements;
train personnel to be able to respond to a collection of information;
search data sources; complete and review the collection of information;
and transmit or otherwise disclose the information.
    An agency may not conduct or sponsor, and a person is not required
to respond to a collection of information unless it displays a
currently valid OMB control number. The OMB control numbers for EPA's
regulations in 40 CFR are listed in 40 CFR part 9.

C. Regulatory Flexibility Act

    The Regulatory Flexibility Act generally requires an agency 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 unless the agency certifies that the rule will
not have a significant economic impact on a substantial number of small
entities. Small entities include small businesses, small organizations,
and small governmental jurisdictions.
    For purposes of assessing the impacts of this proposed rule on
small entities, a small entity is defined as: (1) A small business as
defined in the U.S. Small Business Administration (SBA)'s regulations
at 13 CFR 121.201--the SBA defines small businesses by category of
business using North American Industry Classification System (NAICS)
codes, and in the case of farms and oil production facilities, which
constitute a large percentage of the facilities affected by this
proposed rule, generally defines small businesses as having less than
$0.5 million to $27.5 million per year in sales receipts, depending on
the industry, or 500 or fewer employees, respectively; (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 that is independently owned and operated and is not dominant
in its field.
    After considering the economic impacts of this proposed rule on
small entities, the Agency certifies that this action would not have a
significant economic impact on a substantial number of small entities.
In determining whether a rule has a significant economic impact on a
substantial number of small entities, the impact of concern is any
significant adverse economic impact on small entities, since the
primary purpose of the regulatory flexibility analyses is to identify
and address regulatory alternatives ``which minimize any significant
economic impact of the proposed rule on small entities'' (5 U.S.C. 603
and 604). Thus, an agency may certify that a rule would not have a
significant economic impact on a substantial number of small entities
if the rule relieves regulatory burden, or otherwise has a positive
economic effect on all of the small entities subject to the rule.
    Under this proposal, the following issues will be addressed: exempt
hot-mix asphalt from SPCC requirements; exempt specific oil storage
equipment on farms from the SPCC rule requirements; exempt heating oil
containers at single-family residences; clarify how containers, fixed
and mobile, are identified on the facility diagram; modify the
definition of ``facility'' to clarify that contiguous or non-contiguous
buildings, properties, parcels, leases, structures, installations,
pipes, or pipelines may be considered separate facilities and that the
definition of ``facility'' governs the applicability to the SPCC rule;
define ``loading/unloading rack'' to clarify whether a facility is
subject to the SPCC rule requirements of Sec.  112.7(h); streamline the
requirements for a subset of qualified facilities (Tier I qualified
facilities); amend the facility security requirements at Sec.  112.7(g)
to allow an owner or operator to tailor security measures to his
facility's specific characteristics and location; replace the current
integrity testing requirements at Sec. Sec.  112.8(c)(6) and
112.12(c)(6) with the current regulatory requirement for a qualified
facility; provide the PE or an owner/operator certifying an SPCC Plan
with the flexibility for integrity testing

for bulk storage containers that store animal fats or vegetable oil and
that meet other criteria; and initiate several amendments to streamline
the requirements for oil production facility to address concerns raised
by the production sector, respectively.
    Overall, EPA estimates that this proposed action would reduce
annual compliance costs by approximately $387 million for owners and
operators of affected facilities. Total costs were annualized over a
10-year period using a 7 percent discount rate. EPA derived these
savings by estimating the number of facilities affected by each
proposed amendment; identifying the specific behavioral changes that
may occur (e.g., choosing to prepare an SPCC Plan template instead of a
full SPCC Plan); estimating the unit costs of compliance measures under
the baseline and proposed scenarios; and applying the change in unit
costs to the projected number of affected facilities.
    EPA has therefore concluded that this proposed rule would relieve
regulatory burden for small entities and therefore, certify that this
proposed action will not have a significant economic impact on a
substantial number of small entities.

D. Unfunded Mandates Reform Act

    Title II of the Unfunded Mandates Reform Act of 1995 (UMRA), Public
Law 104-4, establishes requirements for Federal agencies to assess the
effects of their regulatory actions on State, local, and tribal
governments and the private sector. Under section 202 of UMRA, EPA
generally must prepare a written statement, including a cost-benefit
analysis, for proposed and final rules with ``Federal mandates'' that
may result in expenditures to State, local, and tribal governments, in
the aggregate, or to the private sector, of $100 million or more in any
one year. Before promulgating an EPA rule for which a written statement
is needed, section 205 of UMRA generally requires EPA to identify and
consider a reasonable number of regulatory alternatives and adopt the
least costly, most cost-effective, or least burdensome alternative that
achieves the objectives of the rule. The provisions of section 205 do
not apply when they are inconsistent with applicable law. Moreover,
section 205 allows EPA to adopt an alternative other than the least
costly, most cost-effective, or least burdensome alternative if the
Administrator publishes with the rule an explanation why that
alternative was not adopted.
    Before EPA establishes any regulatory requirements that may
significantly or uniquely affect small governments, including tribal
governments, it must have developed under section 203 of UMRA a small
government agency plan. The plan must provide for notifying potentially
affected small governments, enabling officials of affected small
governments to have meaningful and timely input in the development of
EPA regulatory proposals with significant Federal intergovernmental
mandates, and informing, educating, and advising small governments on
compliance with the regulatory requirements.
    EPA has determined that this proposed rule does not contain a
Federal mandate that may result in expenditures of $100 million or more
for State, local, and tribal governments, in the aggregate, or the
private sector in any one year. This proposed action would reduce
compliance costs on owners and operators of affected facilities by
approximately $387 million annually, although EPA acknowledges this
total estimate is derived from analyses of individual major components
of the proposed rule that are not necessarily additive, given that they
do not account for interactions among the various components. Thus,
this proposed rule is not subject to the requirements of sections 202
and 205 of the UMRA.
    EPA has determined that this proposed rule contains no regulatory
requirements that might significantly or uniquely affect small
governments. As explained above, the effect of the proposed rule would
be to reduce burden for facility owners and operators, including
certain small governments that are subject to the rule.

E. Executive Order 13132--Federalism

    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.''
    This proposed rule does not have federalism implications. It would
not 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,
as specified in Executive Order 13132. Under CWA section 311(o), States
may impose additional requirements, including more stringent
requirements, relating to the prevention of oil discharges to navigable
waters and adjoining shorelines. EPA recognizes that some States have
more stringent requirements (56 FR 54612, October 22, 1991). This
proposed rule would not preempt State law or regulations. Thus,
Executive Order 13132 does not apply to this proposed rule.

F. Executive Order 13175--Consultation and Coordination With Indian
Tribal Governments

    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.'' This proposed rule does not
have tribal implications, as specified in Executive Order 13175. This
proposed rule would not significantly or uniquely affect communities of
Indian trial governments. Thus, Executive Order 13175 does not apply to
this proposed rule.

G. Executive Order 13045 Protection of Children From Environmental
Health & Safety Risks

    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 Executive Order 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.
    EPA interprets Executive Order 13045 as applying only to those
regulatory actions that are based on health or safety risks, such that
the analysis required under section 5-501 of the Order has the
potential to influence the regulation. This proposed rule is not
subject to Executive Order 13045 because it does not establish an
environmental standard intended to mitigate health or safety risks.

H. Executive Order 13211--Actions That Significantly Affect Energy
Supply, Distribution, or Use

    This proposed rule is not a ``significant energy action'' as
defined in Executive Order 13211, ``Actions Concerning Regulations that
Significantly Affect Energy Supply, Distribution, or Use'' (66 FR
28355, May 22, 2001) because it is not likely to have a significant
adverse effect on the supply, distribution, or use of energy. The
overall effect of the proposed rule is to decrease the regulatory
burden on facility owners or operators subject to its provisions.

I. National Technology Transfer and Advancement Act

    Section 12(d) of the National Technology Transfer and Advancement
Act of 1995 (``NTTAA''), Public Law 104-113, section 12(d) (15 U.S.C.
272 note) directs EPA to use voluntary consensus standards in its
regulatory activities unless to do so would be inconsistent with
applicable law or otherwise impractical. Voluntary consensus standards
are technical standards such as materials specifications, test methods,
sampling procedures, and business practices that are developed or
adopted by voluntary consensus standards bodies. The NTTAA directs EPA
to provide Congress, through OMB, explanations when the Agency decides
not to use available and applicable voluntary consensus standards.
    The owner or operator of a facility subject to the SPCC rule has
the flexibility to consider applicable industry standards in the
development of an SPCC Plan, in accordance with good engineering
practice. However, this proposed rulemaking does not involve technical
standards, as it does not set or incorporate by reference any one
specific technical standard. Therefore, the NTTAA does not apply. EPA
welcomes comments on this aspect of the proposed rulemaking and,
specifically, invites the public to identify potentially applicable
voluntary consensus standards and to explain why such standards should
be used in this regulation.

List of Subjects in 40 CFR Part 112

    Environmental protection, Animal fats and vegetable oils, Hot-mix
Asphalt, Farms, Flammable and combustible materials, Integrity testing,
Loading racks, Materials handling and storage, Natural gas, Oil
pollution, Oil and gas exploration and production, Oil spill response,
Penalties, Petroleum, Reporting and recordkeeping requirements,
Secondary containment, Security, Tanks, Unloading racks, Water
pollution control, Water resources.

    Dated: October 1, 2007.
Stephen L. Johnson,
Administrator.

    For the reasons stated in the preamble, title 40, chapter I, part
112 of the Code of Federal Regulations is proposed to be amended as
follows:

PART 112--OIL POLLUTION PREVENTION

    1. The authority citation for part 112 continues to read as
follows:

    Authority: 33 U.S.C. 1251 et seq.; 33 U.S.C. 2720; and E.O.
12777 (October 18, 1991), 3 CFR, 1991 Comp., p. 351.

Subpart A--[Amended]

    2. Amend Sec.  112.1 as follows:
    a. By revising paragraphs (d)(2)(i) and (d)(2)(ii).
    b. By revising paragraph (d)(4).
    c. By adding paragraphs (d)(8) through (d)(10).

Sec.  112.1  General applicability.

* * * * *
    (d) * * *
    (2) * * *
    (i) The completely buried storage capacity of the facility is
42,000 gallons or less of oil. For purposes of this exemption, the
completely buried storage capacity of a facility excludes the capacity
of a completely buried tank, as defined in Sec.  112.2, and connected
underground piping, underground ancillary equipment, and containment
systems, that is currently subject to all of the technical requirements
of part 280 of this chapter or all of the technical requirements of a
State program approved under part 281 of this chapter, or which, in the
case of a nuclear power generation facility, meets the Nuclear
Regulatory Commission design criteria at 10 CFR part 50, Appendices A
and B. The completely buried storage capacity of a facility also
excludes the capacity of a container that is ``permanently closed,'' as
defined in Sec.  112.2.
    (ii) The aggregate aboveground storage capacity of the facility is
1,320 gallons or less of oil. For the purposes of this exemption, only
containers with a capacity of 55 gallons or greater are counted. The
aggregate aboveground storage capacity of a facility excludes: the
capacity of a container that is ``permanently closed'' and the capacity
of a ``motive power container'' as defined in Sec.  112.2; the capacity
of hot-mix asphalt or any hot-mix asphalt container; the capacity of a
container for heating oil used solely at a single-family residence; and
the capacity of pesticide application equipment and related mix
containers used at farms.
* * * * *
    (4) Any completely buried storage tank, as defined in Sec.  112.2,
and connected underground piping, underground ancillary equipment, and
containment systems, at any facility, that is subject to all of the
technical requirements of part 280 of this chapter or a State program
approved under part 281 of this chapter or which, in the case of a
nuclear power generation facility, meets the Nuclear Regulatory
Commission design criteria at 10 CFR part 50, Appendices A and B,
except that such a tank must be marked on the facility diagram as
provided in Sec.  112.7(a)(3), if the facility is otherwise subject to
this part.
* * * * *
    (8) Hot-mix asphalt, or any hot-mix asphalt container.
    (9) Any container for heating oil used solely at a single-family
residence.
    (10) Any pesticide application equipment or related mix containers
used at farms.
* * * * *
    3. Amend Sec.  112.2 by revising the definitions for ``Facility'',
``Production facility'', and adding a definition for ``Loading/
unloading rack'' in alphabetical order to read as follows:

Sec.  112.2  Definitions.

* * * * *
    Facility means any mobile or fixed, onshore or offshore building,
property, parcel, lease, structure, installation, equipment, pipe, or
pipeline (other than a vessel or a public vessel) used in oil well
drilling operations, oil production, oil refining, oil storage, oil
gathering, oil processing, oil transfer, oil distribution, and oil
waste treatment, or in which oil is used, as described in Appendix A to
this part. The boundaries of a facility depend on several site-specific
factors, including but not limited to, the ownership or operation of
buildings, structures, and equipment on the same site and types of
activity at the site. Contiguous or non-contiguous buildings,
properties, parcels, leases, structures, installations, pipes, or
pipelines under the ownership or operation of the same person may be
considered separate facilities. Only this definition governs whether a
facility is subject to this part.
* * * * *
    Loading/unloading rack means a structure necessary for loading or
unloading a tank truck or tank car, which is located at a facility
subject to

the requirements of this part. A loading/unloading rack includes a
platform, gangway, or loading/unloading arm; and any combination of the
following: piping assemblages, valves, pumps, shut-off devices,
overfill sensors, or personnel safety devices.
* * * * *
    Production facility means all structures (including but not limited
to wells, platforms, or storage facilities), piping (including but not
limited to flowlines or gathering lines), or equipment (including but
not limited to workover equipment, separation equipment, or auxiliary
non-transportation-related equipment) used in the production,
extraction, recovery, lifting, stabilization, separation or treating of
oil, or associated storage or measurement, and may be located in a
single geographical oil or gas field operated by a single operator.
This definition governs whether a facility is subject to a specific
section of this part.
* * * * *
    4. Amend Sec.  112.3 as follows:
    a. By revising the introductory text.
    b. By revising paragraph (b)(1).
    c. By adding paragraph (b)(3).
    d. Revising paragraph (g).

Sec.  112.3  Requirement to prepare and implement a Spill Prevention,
Control, and Countermeasure Plan.

    The owner of operator of an onshore or offshore facility subject to
this section must prepare in writing and implement a Spill Prevention
Control and Countermeasure Plan (hereafter ``SPCC Plan'' or ``Plan),''
in accordance with Sec.  112.7 and any other applicable section of this
part.
* * * * *
    (b)(1) If you are the owner or operator of an onshore or offshore
facility (excluding oil production facilities) that becomes operational
after July 1, 2009, and could reasonably be expected to have a
discharge as described in Sec.  112.1(b), you must prepare and
implement a Plan before you begin operations.
* * * * *
    (3) If you are the owner or operator of an oil production facility
that becomes operational after July 1, 2009, and could reasonably be
expected to have a discharge as described in Sec.  112.1(b), you must
prepare and implement a Plan within six months after you begin
operations.
* * * * *
    (g) Qualified Facilities. The owner or operator of a qualified
facility as defined in this subparagraph may self certify his or her
facility's Plan, as provided in Sec.  112.6. A qualified facility is
one that meets the following Tier I or Tier II qualified facility
criteria:
    (1) A Tier I qualified facility meets all of the qualification
criteria in paragraph (g)(2) of this section and has no individual oil
storage container with a capacity greater than 5,000 U.S. gallons.
    (2) A Tier II qualified facility is one that:
    (i) Has an aggregate aboveground oil storage capacity of 10,000
U.S. gallons or less; and
    (ii) Has had no single discharge as described in Sec.  112.1(b)
exceeding 1,000 U.S. gallons or no two discharges as described in Sec.
112.1(b) each exceeding 42 U.S. gallons within any twelve month period
in the three years prior to the SPCC Plan self-certification date, or
since becoming subject to this part if the facility has been in
operation for less than three years (other than discharges as described
in Sec.  112.1(b) that are the result of natural disasters, acts of
war, or terrorism).
    5. Revise Sec.  112.6 to read as follows:

Sec.  112.6  Qualified Facilities Plan Requirements.

    Qualified facilities meeting the Tier I applicability criteria in
Sec.  112.3(g)(1) are subject to either all of the requirements in
paragraph (a) of this section or all of the requirements in paragraph
(b) of this section. Facilities meeting the Tier II applicability
criteria in Sec.  112.3(g)(2) are subject to the requirements in
paragraph (b) of this section.
    (a) Tier I Qualified Facilities--(1) Preparation and Self-
Certification of the Plan. If you are an owner or operator of a
facility that meets the Tier I qualified facility criteria in Sec.
112.3(g)(1), you may choose to prepare an SPCC Plan that meets the
requirements of paragraph (a)(3) of this section to serve as the Plan
for your facility, instead of preparing a Plan meeting requirements of
paragraph (b) of this section or the general Plan requirements in Sec.
112.7 and applicable requirements in subparts B and C of this part,
including having the Plan certified by a Professional Engineer as
required under Sec.  112.3(d). The template in Appendix G to this part
has been developed to meet the requirements of 40 CFR part 112 and must
be used as the SPCC Plan. To complete the template in Appendix G, you
must certify that:
    (i) You are familiar with the applicable requirements of 40 CFR
part 112;
    (ii) You have visited and examined the facility;
    (iii) You prepared the Plan in accordance with accepted and sound
industry practices and standards;
    (iv) Procedures for required inspections and testing have been
established in accordance with industry inspection and testing
standards or recommended practices;
    (v) You will fully implement the Plan;
    (vi) The facility meets the qualification criteria in Sec.
112.3(g)(1);
    (vii) The Plan does not deviate from any requirement of this part
as allowed by 112.7(a)(2) and 112.7(d); and
    (viii) The Plan and individual(s) responsible for implementing this
Plan have the approval of management, and the facility owner or
operator has committed the necessary resources to fully implement this
Plan.