It is important to note that the overlap with industry standards is relevant for only a few final amendments -- e.g. the 6-month delay in the implementation of an SPCC Plan for oil production facilities. The cost savings for these amendments depend on the total facility-level cost of complying with the SPCC rule; however, some of that total cost may actually be attributable to industry standards rather than SPCC requirements. For all other cases, EPA expects that the cost savings will not be affected by industry standards: either the final amendment provides flexibility so that facilities have the option to implement the current industry standard instead of the more stringent requirement in the existing SPCC rule (e.g., integrity testing, AFVO, security), or the Agency expects that industry standards are not necessarily adopted by the facilities (e.g., farms).
Cost Savings from the Final Rule Amendments
This section outlines a general approach for estimating economic impacts on the regulated community as a result of the final amendments to the SPCC rule. The approach involves the following key steps: estimating the number of regulated facilities affected by each provision of the final rule; identifying the specific behavioral changes that may occur (e.g., choosing to prepare a template-based Plan rather than a full SPCC Plan); estimating the facility-specific unit costs of affected compliance measures under the baseline and policy scenarios; and applying the change in facility-specific unit costs to the projected number of affected facilities. Total resulting cost savings were annualized over a 10-year analysis period using both 3 percent and 7 percent discount rates. EPA used these discount rates to adjust the estimates for different years used in the analysis, according to OMB Circular A-4.
Exhibit 3-1 outlines this approach. The key steps in the analysis are summarized below:
      1. Estimate the universe of facilities affected by the final rule. EPA developed a baseline universe of SPCC-regulated facilities by industry sector and range of oil storage capacities (e.g., facilities with oil storage capacity between 1,320 and 10,000 gallons of oil). For each major component of the final amendments, EPA estimated the number of facilities affected by the amendments. These entities include, for example, Tier I qualified facilities that have a maximum of 10,000 gallons of oil in total aboveground storage capacity and do not have any containers greater than 5,000 gallons; facilities that are likely to redefine facility boundaries; farms; facilities handling AFVO; oil and gas production facilities; facilities handling hot-mix asphalt; facilities with shop-built or portable containers with less than 5,000 gallons storage capacity; and facilities of various industries having alternative security measures. EPA then projected the anticipated annual change in the number of affected facilities over the 10-year analysis period, using industry-specific growth rates (see Section 4.8).
      2. Estimate changes in compliance costs resulting from the final rule. EPA developed facility-specific cost estimates for specific baseline requirements expected to be affected by the final amendments to the SPCC rule. The baseline for the regulatory impact analysis is the 2002 SPCC rule. EPA also developed facility-specific unit cost estimates for compliance measures introduced by the final SPCC rule, such as the cost of preparing a template SPCC Plan. EPA did not analyze cost savings for revisions that only provide additional clarity on the intent of certain requirements. For example, EPA did not analyze the cost savings from the clarifications regarding the consideration of man-made structures as secondary containment and wind turbines, as these clarifications did not change the SPCC regulatory requirements. For completeness, the RIA lists and describes all actions in the final regulatory notice.
      3. Estimate total increase or reduction in compliance costs to potentially affected facilities. EPA estimated compliance costs and the cost savings for owners and operators of each type of affected facilities. These costs and cost savings were multiplied by the total number of facilities that are expected to take advantage of a given regulatory provision. Finally, EPA calculated the net change in compliance costs that were annualized over a 10-year period using 3 percent and 7 percent discount rates.
For conducting the regulatory impact analysis, a unit cost inventory containing compliance cost estimates for each of the 2002 SPCC rule requirements was developed. The unit costs are compliance costs that each regulated facility would incur if they complied with the regulations. The Agency obtained estimates from a professional engineering (PE) firm with experience in preparing and reviewing SPCC Plans and constructing structures according to SPCC requirements across a broad spectrum of industries for the 48 contiguous states of the United States. To produce cost estimates, the PE firm staff relied on their best professional judgment.
In addition, in order to cross-check the estimates and develop a better understanding of the ranges and distributions of compliance costs, EPA conducted site visits and conducted interviews with five regulated facilities. These facilities provided data on their compliance measures and their associated costs, in order to cross-check the estimates and develop a better understanding of the ranges and distributions of compliance costs. A summary of the facility visits and major findings are described in Appendix A in Volume II of this report.
Exhibit 3-1
Main Steps for Estimating the Economic Effects of the Final Rule Changes

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Chapter 4

Estimation of the SPCC-Regulated Universe of Facilities

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Estimation of the SPCC-Regulated Universe of Facilities
This chapter represents the Agency's estimate for the universe of affected entities. Using information contained within previous studies and new information, this analysis estimates that, in 2010, 640,000 facilities will be regulated under the SPCC rule. This chapter provides an overview of the data sources used to estimate the universe of regulated facilities, industry sectors, and oil storage capacities, and a summary of the universe of facilities. Appendices C through G in Volume II of this report provide additional detail on the methodology employed in the analysis, as well as detailed results.
Data Sources and Industry Sectors
Based on the availability and relevance of existing data on production, storage, handling, and use of oil in the United States, EPA used multiple data sources to estimate the number of SPCC-regulated facilities in different industries. Exhibit 4-1 presents the 30 industry sectors examined in the analysis, the corresponding North American Classification System (NAICS) codes for these industries, and the data source(s) used to estimate the number of SPCC-regulated facilities contained within each industry category.
Exhibit 4-1
Industry Sectors and Databases Used to Estimate SPCC-Regulated Facilities
Industry Sector
NAICS Code
Data Source[1]
Oil Production
                                    211111
EIA, 2006
Farms
                                   111, 112
Census of Agriculture, 2002
Electric Utility Plants
                                     2211
EIA,[2] FERC,[3] 2002
Petroleum Refining and Related Industries
                                      324
Economic Census, 2002
Chemical Manufacturing
                                      325
State Databases, 2005
Food Manufacturing
                                   311, 312
State Databases, 2005
Manufacturing facilities using and storing AFVO
                                   311, 325
Economic Census, 2002
Metal Manufacturing
                                   331, 332
State Databases, 2005
Other Manufacturing
                                     31-33
State Databases, 2005
Real Estate Rental and Leasing
                                    531-533
State Databases, 2005
Retail Trade
                             441-446, 448,451-454
State Databases, 2005
Contract Construction
                                      23
State Databases, 2005
Wholesale Trade
                                      42
State Databases, 2005
Other Commercial
                              492,541,551,561-562
State Databases, 2005
Transportation
                                    481-488
State Databases, 2005
Arts Entertainment & Recreation
                                    711-713
State Databases, 2005
Other Services (Except Public Administration)
                                    811-813
State Databases, 2005
Petroleum Bulk Stations and Terminals
                                     4247
Economic Census, 2002
Education
                                      61
CBECS,[4] 2005
Hospitals & Other Health Care
                                   621, 622
State Databases, 2005
Accommodation and Food Services
                                   721, 722
State Databases, 2005
Fuel Oil Dealers
                                     45431
Economic Census, 2002
Gasoline stations
                                     4471
Economic Census, 2002
Information, Finance, and Insurance
                                    51, 52
State Databases, 2005
Mining
                                      212
State Databases, 2005
Warehousing and Storage
                                      493
State Databases, 2005
Religious Organizations
                                    813110
CBECS,[4] 2005
Military Installations
                                    928110
Department of Defense, 2005
Pipelines
                                  4861, 48691
Economic Census, 2002
Government
                                      92
CBECS,[4] 2005
NAICS = North American Industry Classification System; EIA = U.S. Energy Information Administration; FERC = Federal Energy Regulatory Commission; CBECS = Commercial Buildings Energy Consumption Survey.
[1] 	See Appendix C in Volume II for a detailed description of data sources.
[2] 	EPA used EIA data on oil stocks at each electric utility plant to estimate the number of power plants in each oil storage capacity category.
[3] 	EPA used FERC information on substations by major utilities to estimate the number of substations.
[4] 	The CBECS is a nationwide survey that contains information on fuel storage and use by commercial buildings that EPA used to generate estimates of the number of government, religious, and educational establishments that are SPCC regulated.

As shown in Exhibit 4-1, EPA used eight state databases to estimate SPCC-regulated facilities in 17 of the 30 industry sectors studied in the analysis: chemical manufacturing; food manufacturing; metal manufacturing; other manufacturing; real estate rental and leasing; retail trade; contract construction; wholesale trade; other commercial; transportation; arts, entertainment, and recreation; other services (except public administration); hospitals and other health care; accommodation and food services; information, finance, and insurance; mining; and warehousing and storage. These databases are discussed in more detail in Appendix C in Volume II.
Although state databases were the primary data source for the majority of industry sectors, federal and proprietary data were available and used to estimate the number of facilities in the sectors with the most facilities regulated by the SPCC rule: farms; oil and gas production; petroleum bulk stations and terminals, fuel oil dealers, pipelines, and petroleum refinery and related industries; electric utilities; airports; military installations; AFVO industry; and education facilities, government establishments, and religious organizations. These data sources are discussed in more detail in Appendix C in Volume II.
Facility Categories
For the purpose of this analysis, EPA estimated the number of regulated facilities for four size categories based on oil storage capacity at a facility. EPA classified facilities into capacity categories to (1) account for differences in the potential compliance costs experienced by facilities of different sizes; and (2) determine the number of facilities affected by each of the final amendments in the SPCC rule, based on a facility's storage capacity. EPA categorized SPCC-regulated facilities into the following four oil storage capacity categories:
         * Category I: total oil storage capacity greater than 1,320 gallons but less than or equal to 10,000 gallons.
Category II: total oil storage capacity greater than 10,000 gallons but less than or equal to 42,000 gallons
Category III: total oil storage capacity greater than 42,000 gallons but less than or equal to 1,000,000 gallons
Category IV: total oil storage capacity greater than 1,000,000 gallons.
Exhibit 4-2 summarizes the estimated number of SPCC-regulated facilities by size category for 2010.
Exhibit 4-2
Estimated Number of SPCC-Regulated Facilities by Size Category
                                    (2010)
Size Category
Aggregate Capacity
Estimated Number of Facilities[1]
Category I
                            1,320 to 10,000 gallons
                                                                       318,000
Category II
                           10,001 to 42,000 gallons
                                                                       205,000
Category III
                          42,001 to 1 million gallons
                                                                       115,000
Category IV
                        Greater than 1 million gallons
                                                                         3,000
Total
                                                                     640,000[2]
[1] 	Individual values may not sum to the total due to rounding.
[2] 	The estimated analysis period is 2010-2019. At the time of preparing the RIA report for the 2007 SPCC proposed amendments, EPA did not have information on the exact date the proposed amendments would go into effect and assumed the analysis period from 2008 through 2017. As a result, for the proposed rule RIA, the number of affected facilities was estimated at 571,000.

All the facilities included in the analysis were further divided in two categories: production facilities (facilities whose operations and oil storage activities primarily involve oil and gas production) and storage facilities (all other industry groups). EPA estimated that, in 2010, approximately 215,000 production facilities and 425,000 storage facilities will be subject to SPCC requirements. The Agency developed separate estimates for the unit cost of compliance for production and storage facilities in Categories I through IV.
Additionally, all SPCC-regulated facilities are divided into existing and new facilities, to reflect the differences in compliance activities between the two groups. Existing facilities include facilities that initiated operations prior to initiation of this final rule. New facilities include those facilities that will initiate operations after this rule goes into effect.
Comparison with EPA's 1991 Facilities Study
While the current analysis follows the same general methodology as EPA's 1991 study, the two analyses differ in four ways: (1) the specific state databases used; (2) the number of industry sectors and the method used to group facilities into industry sectors; (3) the oil storage capacity categories; and (4) the methodology used to extrapolate state data to the entire universe of SPCC-regulated facilities. Exhibit 4-3 summarizes these differences.

Exhibit 4-3
Comparison with EPA's 1991 Facilities Study
Element of Analysis
1991
2006
Notes
Number of
State Database Sources
                                       4
                                       8
EPA's 1991 study used Illinois, California, Maryland, and New York databases to estimate the universe of medium and large facilities, and the New York database alone to estimate the universe of small facilities.
The current analysis does not use the Illinois data because the latest version of the database does not include capacity information for two-thirds of the records. The current analysis also does not use the California database because it lacks capacity information for one-fifth of the records and does not differentiate aboveground storage tanks (ASTs) from underground storage tanks (USTs).
In EPA's 1991 study, the estimate for the small facilities category was calculated separately for most industry sectors using the New York Major Facilities database, because this database contains a reliable representation of these facilities. EPA was not able to use this database to estimate the overall universe because it did not provide complete industry sector information.
The current analysis matches industry sector data from the Dun & Bradstreet (D&B) database with state database information. EPA is able to use the New York database (along with the other state databases) to estimate the number of SPCC-regulated facilities in all capacity categories.
Number of Industry Sectors
                                      16
                                      30
The current analysis examines 30 industry sectors, using D&B data to help derive more detailed information on affected industries. However, because previous estimates grouped a large number of facilities into the broad industry sector of "Other Commercial Facilities," it is difficult to determine the extent to which the new figures include previously omitted industries.
The 1991 study focused solely on petroleum and petroleum-related oils. The current analysis attempts to include facilities that may be regulated because of their use or storage of AFVO.
Number of Oil Storage Capacity Categories
                                       3
                                       4
EPA's 1991 study examined the following oil storage capacity categories:
   # Small facilities: total oil storage capacity greater than 1,320 gallons but less than or equal to 42,000 gallons.
   # Medium facilities: total oil storage capacity greater than 42,000 gallons but less than or equal to one million gallons.
   # Large facilities: total oil storage capacity greater than one million gallons.
The current analysis differentiates the characteristics of facilities with storage capacities between 1,320 and 10,000 gallons from those facilities with storage capacities between 10,001 and 42,000 gallons.
Extrapolation to the SPCC-Regulated Universe
                                   Midpoint
                                 Average Ratio
The current analysis uses the average ratio because the universe extrapolation is based on a larger number of facilities combining data from more than one state.

SPCC Universe Estimation Using State Databases
The estimation methodology employed was similar to that used in EPA's 1991 facilities study: SPCC-regulated facilities were identified in the state databases based on oil storage capacity, corresponding industry categories for all facilities were identified, and state data were extrapolated to the entire country to represent the SPCC-regulated universe nationwide. In total, EPA identified approximately 140,000 SPCC-regulated facilities in the eight state databases. Some 41,000 of those facilities were matched to specific industry categories and then extrapolated to the entire universe using U.S. Census data, yielding a total of 177,000 regulated facilities. The following sections expand upon each methodological step used to calculate the universe estimate.
Identification of SPCC-Regulated Facilities in State Databases
In the current analysis, EPA used eight state databases (Florida, Kansas, Maryland, Minnesota, New York, Oklahoma, Virginia, and Wisconsin) to determine the number of SPCC-regulated facilities in the given state for each industry sector by capacity category. EPA selected these particular state databases because they contain necessary information on the total number of containers at each facility, the capacity of each container, and container contents. The databases also contain name and address information for each facility. EPA identified SPCC-regulated facilities in each oil storage capacity category using these data. In total, EPA identified 140,000 SPCC-regulated facilities in the eight state databases. Exhibit 4-4 summarizes details of the eight state databases used.

Exhibit 4-4
Summary of State Databases Used in the Analysis
State
Data Source
Database Name
Regulatory Requirement
Data Fields
Number of Records
Florida
Florida Department of Environmental Protection (FDEP)
Storage Tank Facility Information
FDEP's Storage Tank Program regulates USTs larger than 110 gallons and ASTs greater than 550 gallons that store petroleum products and hazardous substances at non-residential facilities.
Tank capacity
Material stored
Facility name & address
Industry sector
22,800 ASTs and 61,000 USTs at 20,900 facilities
Kansas
Kansas Department of Health & the Environment (KDH&E)
Permitted Tanks Database
KDH&E regulates petroleum ASTs and USTs larger than 1,100 gallons for farm and residential use, and petroleum ASTs and USTs larger than 660 gallons for other industries.
Tank capacity
Material stored
Tank status
Facility name & address
6,450 USTs at 2,380 facilities
9,580 ASTs at 3,360 facilities
Maryland
Maryland Department of the Environment (MDE)
AST Oil Operations Database
MDE's Oil Control Program regulates petroleum storage tanks. Registration required for ASTs at facilities with at least 10,000 gallons of storage capacity or at least 1,000 gallons of storage capacity for used oil.
Tank capacity
Material stored
Facility name & address
Facility four-digit Standard Industrial Classification (SIC)
6,330 ASTs at 691 facilities
Includes only tanks currently in use or temporarily closed.

UST Oil Operations Database
Registration required for all petroleum USTs with the exception of farm and residential USTs smaller than 1,100 gallons.
Tank capacity
Material stored
Facility name & address
Industry sector
13,000 USTs at 5,660 facilities
Includes only tanks currently in use or temporarily closed.
Minnesota
Minnesota Pollution Control Agency (MnPCA)
Tanks Database
Registration required for petroleum ASTs larger than 500 gallons and petroleum USTs covered by EPA's UST program.
Tank capacity
Material stored
Facility name & address
Industry sector
13,700 USTs at 7,570 facilities
22,900 ASTs at 6,010 facilities
Includes only tanks currently in use or temporarily closed.
New York
New York State Department of Environmental Conservation (DEC)
Petroleum Bulk Storage Database
DEC's Petroleum Bulk Storage Program regulates petroleum storage at facilities with at least 1,100 gallons of storage capacity.
Tank capacity
Material stored
Tank status
Facility name & address
65,500 tanks at 55,800 facilities

Major Oil Storage Facilities Database
DEC's Major Oil Storage Facilities Program regulates petroleum terminals and transport vessels operating in New York waters with a total storage capacity of 400,000 gallons or more.
Tank capacity
Material stored
Tank status
Facility name & address
9,180 tanks at 344 facilities
Oklahoma
Oklahoma Corporation Commission (OCC)
Petroleum Storage Tank Database
Registration required for petroleum USTs over 1,100 gallons for residential and noncommercial agricultural use, and over 110 gallons for all other uses. Petroleum ASTs larger than 110 gallons at certain specified facilities and all petroleum ASTs at bulk plants and commercial facilities require registration.
Tank capacity
Material stored
Tank status
Facility name & address
4,780 ASTs at 2,020 facilities
Virginia
Virginia Department of Environmental Quality (DEQ)
Registered Tanks Database
Registration required for petroleum ASTs over 660 gallons or facilities with a total capacity greater than 1,320 gallons. USTs regulated under EPA's UST Program are included in the database.
Tank capacity
Material stored
Tank status
Facility name & address
Industry sector
8,010 ASTs at 3,000 facilities
27,000 USTs at 10,500 facilities
Wisconsin
Wisconsin Department of Commerce
Storage Tank Database
Registration required for all USTs larger than 60 gallons and storing petroleum or CERCLA hazardous substances. Farm and residential ASTs larger than 1,100 gallons, and all other ASTs larger than 110, gallons, are registered and included in the database.
Tank capacity
Material stored
Tank status
Facility name & address
70,500 currently in-use tanks
7,960 ASTs and 60,200 USTs at 44,900 facilities

Matching Methodology
While each state database used in the analysis contained sufficient information to allow identification of SPCC-regulated facilities, these databases did not contain information on the specific industry sector to which each facility belongs. Therefore, in order to determine the industry associated with each SPCC-regulated facility identified in the state databases, EPA employed a "fuzzy matching" method in which facility information such as name and address from the state databases were matched to D&B Market Spectrum data to assign specific industries to facilities.,  Appendix D in Volume II discusses the "fuzzy matching" methodology in greater detail.
The matching approach allowed EPA to classify regulated facilities into 30 industry sectors used in the analysis. Since the state databases contained the information on facility's storage capacity, the industry matching was performed for each size category and state. Of the 140,000 SPCC-regulated facilities in the eight states, approximately 31 percent were matched successfully. Exhibit 4-5 summarizes the percentage of matched facilities in each state database used in the analysis. As shown, these percentages range from 21 percent for the Wisconsin database to 81 percent for the Kansas database. Unmatched records are primarily explained by missing records and record inaccuracies.
EPA does not have quantitative data showing whether or not there is a statistically significant difference between facilities for which the industry code could be determined and facilities for which the industry code could not be determined. The Agency assumed that there was no systematic difference between for the two groups -- there were not any specific characteristics of the unmatched facilities. Assuming that the matched facilities are not systematically different from the unmatched ones, the distribution of matched facilities in each industry sector was applied to all facilities in that industry sector at the national level.
The Agency used the scale factor to get to the total number of SPCC-regulated facilities estimated from each state database. The scale factor is calculated as one divided by the percentage of matched facilities, and reflects the proportion of facilities that were matched relative to the total number of SPCC-regulated facilities from the state databases. The number of matched facilities is multiplied by the scale factor to estimate the total number of SPCC-regulated facilities for each industry within each state database. By using the scale factor, EPA assumed that the distribution of facilities across industries is identical for matched and unmatched facilities. To the extent this assumption is incorrect, the estimate of total facilities per industry in each state may be over- or underestimated.
Exhibit 4-5
Percentage of Matched Facilities after Automated and Manual Matching
State
Total Number of Records
Percentage Matched
Scale Factor
Florida
                                    24,600
                                      35%
                                      2.9
Kansas
                                     3,060
                                      81%
                                      1.2
Maryland
                                     6,430
                                      53%
                                      1.9
Minnesota
                                     6,930
                                      43%
                                      2.4
New York
                                    38,700
                                      28%
                                      3.6
Oklahoma
                                     1,190
                                      45%
                                      2.3
Virginia
                                    11,900
                                      36%
                                      2.8
Wisconsin
                                    47,500
                                      21%
                                      4.8

Extrapolation of Results to the Entire Universe
EPA extrapolated results to the entire country by multiplying the total number of establishments in each industry sector in the United States as contained within the 1997 U.S. Economic Census by a facility ratio, as shown in the equation below. The facility ratio is estimated as the number of SPCC-regulated facilities in the eight states for an industry sector divided by the total number of facilities reported for that industry sector in those states. Exhibit 4-6 summarizes the results of the analysis.
Calculation of Total Universe of SPCC-Regulated Facilities
--------------------------------------------------------------------------------
Total Universe of SPCC-Regulated Facilities =  [(Fi * (RFi,c / TFi )]
--------------------------------------------------------------------------------
where,
--------------------------------------------------------------------------------
F = the total number of facilities in the United States by industry sector, i
--------------------------------------------------------------------------------
RF = the total number of SPCC-regulated facilities in the eight state databases by facility size category, c, and industry sector, i
--------------------------------------------------------------------------------
TF = the total number of facilities in the eight state databases by industry sector, i
--------------------------------------------------------------------------------
i = facility industry sector
--------------------------------------------------------------------------------
c = facility size category

Exhibit 4-6
SPCC Universe Estimates Using State Databases
(2010)
Industry Sector
Category I
Category II
Category III
Category IV
Total
Petroleum Refining and Related Industries
                                                                            87
                                                                           218
                                                                         1,300
                                                                           437
                                                                          2,000
Chemical Manufacturing
                                                                         1,100
                                                                           954
                                                                           583
                                                                            26
                                                                          3,000
Food Manufacturing
                                                                         1,700
                                                                         1,400
                                                                           526
                                                                            24
                                                                          4,000
Metal Manufacturing
                                                                         1,700
                                                                           727
                                                                           406
                                                                             -
                                                                          3,000
Other Manufacturing
                                                                         8,900
                                                                         5,200
                                                                         1,600
                                                                           106
                                                                         16,000
Real Estate Rental and Leasing
                                                                        26,000
                                                                         3,300
                                                                           235
                                                                             -
                                                                         29,000
Retail Trade
                                                                        15,000
                                                                         2,700
                                                                           830
                                                                            51
                                                                         18,000
Contract Construction
                                                                        12,000
                                                                         4,100
                                                                           772
                                                                            21
                                                                         17,000
Wholesale Trade
                                                                         9,600
                                                                         3,000
                                                                         2,100
                                                                            98
                                                                         15,000
Other Commercial
                                                                        13,000
                                                                         3,500
                                                                           946
                                                                             -
                                                                         17,000
Transportation
                                                                         8,800
                                                                         4,900
                                                                           719
                                                                           722
                                                                         15,000
Arts Entertainment & Recreation
                                                                        13,000
                                                                         1,400
                                                                           107
                                                                             -
                                                                         14,000
Other Services
                                                                         6,500
                                                                           682
                                                                           169
                                                                             -
                                                                          7,000
Hospitals and Other Health Care
                                                                         5,500
                                                                         1,270
                                                                           208
                                                                            29
                                                                          7,000
Accommodation and Food Services
                                                                         4,700
                                                                           409
                                                                            36
                                                                             -
                                                                          5,000
Information Finance and Insurance
                                                                         3,800
                                                                           578
                                                                            35
                                                                             -
                                                                          4,000
Mining
                                                                         1,300
                                                                         1,500
                                                                           320
                                                                            40
                                                                          3,000
Warehousing and Storage
                                                                         1,400
                                                                           650
                                                                           596
                                                                            54
                                                                          3,000
Total
                                                                       133,000
                                                                        36,000
                                                                        12,000
                                                                         2,000
                                                                        182,000

SPCC Universe Estimation Using Industry-Specific Data Sources
Where federal government or proprietary data specific to certain industry sectors were available, EPA did not rely on the state databases to estimate the universe of SPCC-regulated facilities. Instead, EPA used different methodologies based on the composition of the specific industry data. Industry-specific data were used to estimate the number of SPCC-regulated facilities in 12 industry sectors, which EPA grouped as follows:
Farms
Other petroleum-related (petroleum bulk station and terminals, fuel oil dealers, pipelines, and petroleum refinery and related industries)
Oil and gas production
Electric utilities
Military installations
The animal fats and vegetable oils (AFVO)
Education facilities, government establishments, and religious organizations.
Exhibit 4-7 summarizes the federal government and proprietary data sources used in the analysis; Appendix C in Volume II presents a detailed description of all data sources used in the analysis.

Exhibit 4-7
Summary of Federal and Proprietary Data Sources and Methodologies Used in the Analysis
Industry Sector
Data Source
Database Name
Primary Data Fields Used
General
Methodology
Farms
USDA Census of Agriculture

Farm Production Expenses, 2002 and 1997 Gasoline, fuels, and oils
Fuel production expenses
Identify the number of farms and fuel production expense ranges for gasoline and diesel.
Convert production expense ranges to quantity ranges using fuel price data.
Estimate the quantity of purchased fuel that is stored on farms.
Estimate the percentage of farms in each quantity range that are regulated.
Project estimated number of farms from 2002 to 2005.

Petroleum Products Expenses, 1997, 1992, and 1987
Cost ranges for gasoline and diesel

1982 Census, Volume 1, County Table 6[1]
Quantity of stored fuel

NASS, Number of Farms 1996 to 2005
Number of farms

Petroleum Bulk Station and Terminals, Fuel Oil Dealers, Pipelines, and Petroleum Refinery and Related Industries
U.S. Census Bureau
2002 U.S. Economic Census
Total number of facilities
Assume all facilities in these industries are SPCC-regulated.
Project number of facilities to 2005.
Oil and Gas Production
Personal Communication
Personal communication with EPA Region 6 and Texas Railroad Commission
Assumption of four wells per facility[2]
Assume all active oil wells and gas wells producing condensate oil in 2004 are SPCC-regulated.
Assume four wells per facility.
Project number of facilities to 2005.

Department of Energy
Energy Information Administration, Distribution and Production of Oil and Gas Wells by State
Number of active wells producing oil and oil condensate in 2004

Electric Utilities
U.S. Energy Information Administration
Form EIA-906
Oil stock at each power plant with generation capacity greater than 1 megawatt
Estimate SPCC-regulated power plants based on oil stocks as a proxy for oil capacity.
Assume each unique substation filing Form EIA-906 is SPCC-regulated.
Extrapolate to universe of regulated substations using ratio of electric power sold by Form EIA-906 substations to electric power sold nationally.

March 2005 Electric Power Monthly
Total retail megawatt hours of electricity sold nationwide

Federal Energy Regulatory Commission
Form No. 1
Number of electric substations

Military Installations
Department of Defense
Total Military Installations (1995)
Total number of military Installations
Assume all military installations are SPCC-regulated.
Animal Fats and Vegetable Oils (AFVO)
U.S. Census Bureau
2005 US Census of Manufacturing
Number of manufacturing establishments
Assume a percentage of manufacturing facilities that produce, use, or store AFVO and may be SPCC-regulated.
Apply these percentages to the number of facilities in manufacturing NAICS code categories.
Assume all corn refining plants are SPCC-regulated.
Use specific information on soy ink from industry to assume the proportion of facilities that are SPCC-regulated.

2002 US Economic Census
Number of facilities by NAICS code

Corn Refiners Association
N/A
Number of corn refining plants

Soy Ink
US manufacturers producing soy ink
Number of US manufacturers producing soy ink

Education, Religious Organizations, and Government Establishments
U.S. Department of Energy
Energy Information Administration, 1995 and 2003 Commercial Buildings Energy Consumption Survey (CBECS)
Total tank capacity in 1995
Square footage of buildings in 1995 and 2003
Project tank capacity in 1995 to 2003, using the growth in square footage of buildings from 1995 to 2003 as a proxy for growth in tank capacity.
Project 2003 estimates to 2005.
[1]	EPA used the 1982 data for on-farm fuel storage in one of the steps of the estimation process to estimate a fraction of purchased diesel and gasoline that is stored on farms (the Census of Agriculture did not collect these data after 1982). The estimate for the number of farms from which the estimate of the regulated farms is derived is taken from the 2002 Census of Agriculture. This section of Chapter 4 and Appendix E of Volume II provide detailed description of the steps involved.
[2]	Personal communication with Richard Franklin, Federal On-Scene Coordinator for EPA Region 6, 2006,.and with Mark England, Texas Railroad Commission, May 2005.

Exhibit 4-8 summarizes the results of the analysis for the industries discussed in this section. As shown, EPA estimated that approximately 640,000 facilities are regulated in these industries. Details of the industry-specific estimation methodology used for each industry are presented in Appendix D in Volume II.
Exhibit 4-8
SPCC Universe Estimate Using Federal Databases
(2010)
Industry Sector
Category I
Category II
Category III
Category IV
Total
Farms
                                                                       141,000
                                                                         6,900
                                                                           557
                                                                           111
                                                                        148,568
Petroleum Bulk Stations and Terminals
                                                                           423
                                                                           635
                                                                         3,280
                                                                           600
                                                                          4,938
Fuel Oil Dealers
                                                                           301
                                                                         1,610
                                                                         2,210
                                                                           201
                                                                          4,322
Pipelines
                                                                           662
                                                                             -
                                                                              -
                                                                              -
                                                                            662
Petroleum Refining and Related Industries
                                                                            87
                                                                           218
                                                                         1,310
                                                                           437
                                                                          2,052
 Oil and Gas Production
                                                                        27,500
                                                                       148,000
                                                                        39,000
                                                                            382
                                                                        215,000
Electric Utility Plants
                                                                        22,700
                                                                        23,000
                                                                        15,000
                                                                           361
                                                                         61,061
Military Installations
                                                                           159
                                                                           159
                                                                           319
                                                                           127
                                                                            765
Manufacturing Facilities Using and Storing AFVO
                                                                         2,670
                                                                         3,510
                                                                         1,620
                                                                              -
                                                                          7,800
Education
                                                                         2,320
                                                                         6,240
                                                                              -
                                                                              -
                                                                          8,560
Government
                                                                           595
                                                                              -
                                                                              -
                                                                              -
                                                                            595
Religious Organizations
                                                                         1,520
                                                                              -
                                                                              -

                                                                          1,520
Total
                                                                        183,000
                                                                        167,000
                                                                        104,000
                                                                          1,840
                                                                        456,000
Note: Numbers in this exhibit present a mix of rounded and non-rounded figures.
For example, for Oil and Gas Production facilities, the figures are rounded to three significant digits. The total number of 215,000 represents the value of 215,063 rounded to three significant digits.

Estimates of the Total SPCC Universe
Exhibit 4-9 presents the 2010 projected estimate of the number of facilities regulated by the SPCC rule for each industry group considered in the analysis. As shown, EPA estimates that approximately 640,000 facilities will be regulated by the SPCC rule. The majority of the regulated facilities are in Category I (52 percent), followed by Category II (36 percent) and Category III (12 percent). Facilities in Category IV account for less than 1 percent of the total facilities regulated by the SPCC.
Oil and gas production (34 percent) and farms (23 percent) account for the largest percentages of the SPCC-regulated facilities. The electric utility plant industry (10 percent) is the only other industry sector that accounts for more than 5 percent of the total SPCC-regulated facilities.

Exhibit 4-9
Estimated Universe of SPCC-Regulated Facilities
(2010)
Industry Category
NAICS
Facility Oil Storage Capacity Category
Total
Percentage (%)

Category I
Category II
Category III
Category IV

Oil and Gas Production
                                    211111
                                                                         27,500
                                                                        148,000
                                                                         39,000
                                                                            382
                                                                        215,000
                                                                          33.60
Farms
                                    111,112
                                                                        141,000
                                                                          6,900
                                                                            557
                                                                            111
                                                                        149,000
                                                                          23.28
Electric Utility Plants
                                     2211
                                                                         22,700
                                                                         22,800
                                                                         15,100
                                                                            361
                                                                         61,000
                                                                           9.52
Real Estate Rental and Leasing
                                    531-533
                                                                         25,700
                                                                          3,250
                                                                            235
                                                                              0
                                                                         29,200
                                                                           4.56
Retail Trade
                              441-446,448,451-454
                                                                         14,500
                                                                          2,710
                                                                            830
                                                                             51
                                                                         18,100
                                                                           2.82
Contract Construction
                                      23
                                                                         11,800
                                                                          4,080
                                                                            772
                                                                             21
                                                                         16,700
                                                                           2.61
Other Commercial
                              492,541,551,561-562
                                                                         12,800
                                                                          3,510
                                                                            946
                                                                              0
                                                                         17,200
                                                                           2.69
Other Manufacturing
                                     31-33
                                                                          8,940
                                                                          5,210
                                                                          1,580
                                                                            106
                                                                         15,800
                                                                           2.47
Wholesale Trade
                                      42
                                                                          9,630
                                                                          2,990
                                                                          2,140
                                                                             98
                                                                         14,900
                                                                           2.32
Transportation
                                    481-488
                                                                          8,750
                                                                          4,910
                                                                            719
                                                                            722
                                                                         15,100
                                                                           2.36
Arts Entertainment & Recreation
                                    711-713
                                                                         12,800
                                                                          1,390
                                                                            107
                                                                              0
                                                                         14,300
                                                                           2.23
Education
                                      611
                                                                          2,310
                                                                          6,240
                                                                              0
                                                                              0
                                                                          8,560
                                                                           1.34
Manufacturing facilities using and storing AFVO
                                    311,325
                                                                          2,670
                                                                          3,510
                                                                          1,620
                                                                              0
                                                                          7,790
                                                                           1.22
Other Services
                                    811-813
                                                                          6,510
                                                                            682
                                                                            169
                                                                              0
                                                                          7,370
                                                                           1.15
Hospitals and Other Health Care
                                    621-624
                                                                          5,530
                                                                          1,270
                                                                            208
                                                                             29
                                                                          7,040
                                                                           1.10
Accommodation and Food Services
                                    721-722
                                                                          4,740
                                                                            409
                                                                             36
                                                                              0
                                                                          5,180
                                                                           0.81
Petroleum Bulk Stations and Terminals
                                     4247
                                                                            423
                                                                            635
                                                                          3,280
                                                                            600
                                                                          4,940
                                                                           0.77
Information Finance and Insurance
                                     51,52
                                                                          3,770
                                                                            578
                                                                             35
                                                                              0
                                                                          4,380
                                                                           0.68
Fuel Oil Dealers
                                     45431
                                                                            301
                                                                          1,610
                                                                          2,210
                                                                            201
                                                                          4,320
                                                                           0.67
Gasoline stations
                                     4471
                                                                          1,850
                                                                          1,160
                                                                            749
                                                                             38
                                                                          3,800
                                                                           0.59
Food Manufacturing
                                    311,312
                                                                          1,730
                                                                          1,360
                                                                            526
                                                                             24
                                                                          3,640
                                                                           0.57
Mining
                                    212-213
                                                                          1,290
                                                                          1,500
                                                                            320
                                                                             40
                                                                          3,150
                                                                           0.49
Metal Manufacturing
                                    331,332
                                                                          1,670
                                                                            727
                                                                            406
                                                                              0
                                                                          2,800
                                                                           0.44
Warehousing and Storage
                                      493
                                                                          1,410
                                                                            650
                                                                            596
                                                                             54
                                                                          2,710
                                                                           0.42
Chemical Manufacturing
                                      325
                                                                          1,080
                                                                            953
                                                                            583
                                                                             27
                                                                          2,640
                                                                           0.41
Petroleum Refining and Related Industries
                                      324
                                                                             87
                                                                            218
                                                                          1,310
                                                                            436
                                                                          2,050
                                                                           0.32
Religious Organizations
                                    813110
                                                                          1,520
                                                                              0
                                                                              0
                                                                              0
                                                                          1,520
                                                                           0.24
Military Installations
                                    928110
                                                                            159
                                                                            159
                                                                            319
                                                                            127
                                                                            766
                                                                           0.12
Pipelines
                                  4861, 48691
                                                                            663
                                                                              0
                                                                              0
                                                                              0
                                                                            663
                                                                           0.10
Government
                                      92
                                                                            595
                                                                              0
                                                                              0
                                                                              0
                                                                            595
                                                                           0.09
Total
                                                                        335,000
                                                                        228,000
                                                                         74,300
                                                                          3,430
                                                                        640,000
                                                                            100
Size Distribution
                                                                          52.3%
                                                                          35.6%
                                                                          11.6%
                                                                           0.5%
                                                                           100%

Exhibit 4-10 presents the projected estimate of the number of facilities regulated by the SPCC rule for each industry group considered in the analysis, averaged over the analysis period 2010-2019. As shown, EPA estimates that approximately 704,000 facilities will be regulated by the SPCC rule on average each year during the analysis period. The majority of the regulated facilities are in Category I (50 percent), followed by Category II (37 percent) and Category III (12 percent). Facilities in Category IV account for less than 1 percent of the total facilities regulated by the SPCC.

Exhibit 4-10
Estimated Universe of SPCC-Regulated Facilities
(Average, 2010-2019)
Industry Category
NAICS
Facility Oil Storage Capacity Category
Total
Percentage (%)

Category I
Category II
Category III
Category IV

Oil and Gas Production
                                    211111
                                                                        32,600
                                                                        176,000
                                                                        46,200
                                                                           453
                                                                       255,000
                                                                          36.23
Farms
                                    111,112
                                                                        139,000
                                                                         6,770
                                                                           546
                                                                           109
                                                                       146,000
                                                                          20.75
Electric Utility Plants
                                     2211
                                                                        26,200
                                                                        26,400
                                                                        17,400
                                                                           418
                                                                        70,500
                                                                          10.01
Real Estate Rental and Leasing
                                    531-533
                                                                        28,200
                                                                         3,570
                                                                           258
                                                                             -
                                                                        32,000
                                                                           4.55
Retail Trade
                              441-446,448,451-454
                                                                        14,600
                                                                         2,740
                                                                           840
                                                                            51
                                                                        18,300
                                                                           2.60
Contract Construction
                                      23
                                                                        12,900
                                                                         4,440
                                                                           842
                                                                            23
                                                                        18,200
                                                                           2.58
Other Commercial
                              492,541,551,561-562
                                                                        15,600
                                                                         4,300
                                                                         1,200
                                                                             -
                                                                        21,100
                                                                           2.99
Other Manufacturing
                                     31-33
                                                                         8,870
                                                                         5,160
                                                                         1,570
                                                                           105
                                                                        15,700
                                                                           2.23
Wholesale Trade
                                      42
                                                                         9,670
                                                                         3,000
                                                                         2,150
                                                                            99
                                                                        14,900
                                                                           2.12
Transportation
                                    481-488
                                                                         9,770
                                                                         5,480
                                                                           803
                                                                           807
                                                                        16,900
                                                                           2.40
Arts Entertainment & Recreation
                                    711-713
                                                                        14,400
                                                                         1,570
                                                                           121
                                                                             -
                                                                        16,100
                                                                           2.29
Education
                                      611
                                                                         2,820
                                                                         7,610
                                                                             -
                                                                             -
                                                                        10,400
                                                                           1.48
Manufacturing facilities using and storing AFVO
                                    311,325
                                                                         2,720
                                                                         3,580
                                                                         1,650
                                                                             -
                                                                         7,950
                                                                           1.13
Other Services
                                    811-813
                                                                         6,770
                                                                           709
                                                                           175
                                                                             -
                                                                         7,660
                                                                           1.09
Hospitals and Other Health Care
                                    621-624
                                                                         5,890
                                                                         1,360
                                                                           222
                                                                            31
                                                                         7,500
                                                                           1.07
Accommodation and Food Services
                                    721-722
                                                                         5,050
                                                                           436
                                                                            38
                                                                             -
                                                                         5,520
                                                                           0.78
Petroleum Bulk Stations and Terminals
                                     4247
                                                                           332
                                                                           498
                                                                         2,570
                                                                           470
                                                                         3,870
                                                                           0.55
Information Finance and Insurance
                                     51,52
                                                                         4,200
                                                                           644
                                                                            39
                                                                             -
                                                                         4,890
                                                                           0.69
Fuel Oil Dealers
                                     45431
                                                                           287
                                                                         1,530
                                                                         2,100
                                                                           191
                                                                         4,110
                                                                           0.58
Gasoline stations
                                     4471
                                                                         1,760
                                                                         1,110
                                                                           714
                                                                            36
                                                                         3,620
                                                                           0.51
Food Manufacturing
                                    311,312
                                                                         1,780
                                                                         1,400
                                                                           542
                                                                            24
                                                                         3,750
                                                                           0.53
Mining
                                    212-213
                                                                         1,290
                                                                         1,490
                                                                           318
                                                                            40
                                                                         3,140
                                                                           0.45
Metal Manufacturing
                                    331,332
                                                                         1,700
                                                                           742
                                                                           414
                                                                             -
                                                                         2,860
                                                                           0.41
Warehousing and Storage
                                      493
                                                                         2,770
                                                                         1,280
                                                                         1,170
                                                                           106
                                                                         5,320
                                                                           0.76
Chemical Manufacturing
                                      325
                                                                         1,090
                                                                           960
                                                                           590
                                                                            27
                                                                         2,670
                                                                           0.38
Petroleum Refining and Related Industries
                                      324
                                                                            90
                                                                           224
                                                                         1,340
                                                                           448
                                                                         2,110
                                                                           0.30
Religious Organizations
                                    813110
                                                                         1,620
                                                                             -
                                                                             -
                                                                             -
                                                                         1,620
                                                                           0.23
Military Installations
                                    928110
                                                                           171
                                                                           171
                                                                           342
                                                                           136
                                                                           820
                                                                           0.12
Pipelines
                                  4861, 48691
                                                                           628
                                                                             -
                                                                             -
                                                                             -
                                                                           628
                                                                           0.09
Government
                                      92
                                                                           637
                                                                             -
                                                                             -
                                                                             -
                                                                           637
                                                                           0.09
Total
                                                                       353,000
                                                                       263,000
                                                                        84,200
                                                                         3,570
                                                                       704,000
                                                                            100
Size Distribution
                                                                          50.2%
                                                                          37.4%
                                                                          12.0%
                                                                           0.5%
                                                                           100%

Advantages and Limitations of the Updated SPCC Universe Estimate
This analysis for 2010 improves upon the earlier estimates of the SPCC-regulated universe developed in 1991 and 1995 in several ways. First, this analysis is based on the most recent data available, capturing changes in industry structure since 1995. Second, the analysis relies on information from more state databases than were used in EPA's 1991 facilities study (eight compared to four). Further, in the 1991 study, EPA assumed that all electric utility plants were SPCC-regulated; the current estimates are based on oil capacity data, as reported by EIA.
Another advantage of the current estimates is that they provide information for more narrowly defined industry sectors. The 1991 and 1995 studies primarily focused on petroleum and petroleum-related oils. The updated estimate attempts to include facilities that may be regulated because of their use or storage of non-petroleum oils such as AFVO.
The updated estimates are based upon the best information and date available. State and federal databases are useful, but are not specifically designed to capture information on the full range of facilities covered by the SPCC rule. A statistically-based survey would be required to obtain complete coverage of all industries with SPCC-regulated facilities. Nevertheless, EPA previously concluded that schedule and resource constraints would prohibit such an effort at this time. Moreover, a rigorous survey may not be worthwhile for industries that contain a small percentage of the total number of SPCC-regulated facilities. Therefore, the Agency utilized the best available data to develop a universe of regulated facilities, and used a range of estimates to assess the impacts of the final regulatory changes on the regulated community.
One limitation of the approach is that it did not consider the spatial location of facilities to determine the number of facilities that present a reasonable expectation of oil discharge in quantities that may be harmful to navigable waters or adjoining shorelines. Some of these facilities may not be regulated if they do not pose a reasonable potential to discharge to navigable waters or adjoining shorelines. Instead, EPA assumed that all non-transportation-related facilities satisfying the capacity threshold are regulated by the SPCC rule, which may be an overestimate. A geographic information system (GIS) screening analysis could help identify facilities that are less likely to be regulated, but was not feasible given the lack of spatial information for many facilities. However, EPA conducted an analysis to assess the percentage of facilities in the Integrated Data for Enforcement Analysis (IDEA) system that contains environmental performance data on EPA-regulated facilities that are near navigable waters or adjoining shorelines. The IDEA system includes facilities in SPCC-regulated industries; it does not include all the SPCC-regulated facilities and is likely to contain facilities that are not SPCC regulated. However, to the extent that this system includes the industries regulated by SPCC, it provides a reasonable assessment of the proximity of these facilities to navigable waters or adjoining shorelines. It is important to note that the Agency did not consider jurisdictional determinations in its estimate of the universe of facilities. The results suggest that approximately 44 percent of facilities are within a quarter mile of a water body, 71 percent are within half a mile of a water body, and as many as 90 percent are within a mile of a water body. This suggests that the assumption that all the facilities may reasonably discharge into navigable waters or adjoining shorelines is reasonable (see Appendix F in Volume II for more details).
Projecting SPCC Universe Estimates Using Derived Industry Growth Rates
To project the number of existing and new facilities regulated under the SPCC rule over the period of analysis (2010 through 2019), EPA developed separate estimates of industry-specific growth rates for existing and new facilities using the data for 1992-2002. For existing facilities, EPA used U.S. Economic Census data for all industries except for farms and oil and gas production, for which alternative data sources were used. For new facilities, EPA used information obtained from the D&B Market Spectrum database for all industries except for oil and gas production, for which a specific methodology was employed. The methodologies used to develop the industry growth rate estimates are described in detail in Appendix H in Volume II. Exhibit 4-11 summarizes the growth rates calculated for each industry following these methodologies.
Exhibit 4-11
Estimated Growth Rates for Total and New Facilities by Industry Sector
                 (Average Annual Growth Rates, 2010  -  2019)
SPCC Industry Sector
NAICS Code
Estimated Growth Rates (%)

Total Facilities
New Facilities
Oil and Gas Production[1]
                                    211111
                                     -2.13
                                     0.66
Farms
                                    111112
                                     -0.44
                                     0.89
Electric Utility Plants
                                     2211
                                     3.19
                                     3.19
Petroleum Refining and Related Industries
                                      324
                                     0.59
                                     1.81
Chemical Manufacturing
                                      325
                                     0.27
                                     2.43
Food Manufacturing
                                   311, 312
                                     0.65
                                     2.34
Manufacturing facilities using and storing AFVO[2]
                                   311, 325
                                     0.44
                                     2.33
Metal Manufacturing
                                   331, 332
                                     0.44
                                     1.47
Other Manufacturing[3]
                                     31-33
                                     -0.18
                                     2.32
Real Estate Rental and Leasing
                                    531-533
                                     2.06
                                     2.16
Retail Trade
                             441-446, 448, 451-454
                                     0.27
                                     2.31
Contract Construction
                                      23
                                     1.91
                                     2.83
Wholesale Trade
                                      42
                                     0.10
                                     2.03
Other Commercial
                            492, 541, 551, 561-562
                                     4.42
                                     4.42
Transportation
                                    481-488
                                     2.43
                                     3.07
Arts Entertainment & Recreation
                                    711-713
                                     2.68
                                     2.68
Other Services (Except Public Administration)
                                    811-813
                                     0.87
                                     1.88
Education
                                      61
                                     4.34
                                     4.34
Petroleum Bulk Stations and Terminals
                                     4247
                                     -5.56
                                     1.61
Hospital & Other Health Care
                                   621, 622
                                     1.42
                                     1.42
Accommodations and Food Services
                                   721, 722
                                     1.40
                                     1.67
Fuel Oil Dealers
                                     45431
                                     -1.10
                                     1.62
Gasoline Stations
                                     4471
                                     -1.07
                                     1.03
Information Finance and Insurance
                                    51, 52
                                     2.39
                                     2.68
Mining
                                      212
                                     -0.10
                                     1.50
Religious Organizations[4]
                                    813110
                                     1.51
                                     1.51
Warehousing and Storage
                                      493
                                     14.30
                                     14.30
Military Installations[4]
                                    928110
                                     1.51
                                     1.51
Pipelines
                                  4861, 48691
                                     -1.21
                                     0.86
Government[4]
                                      92
                                     1.51
                                     1.51
All Industries

                                     1.51
                                     2.24
[1]	The estimated annual growth rates for the production sector vary by year.
2 	Growth rates are based on data for two NAICS sectors that were identified as key industries expected to produce, use, or store AFVO.
3 	Growth rates are based on data for all manufacturing sectors due to a large number of various manufacturing sectors included in this category.
[4]	Growth rates are based on all entities, due to the lack of census data for specific industries.

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Chapter 5

Facility Compliance Costs

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Facility Compliance Costs
EPA developed estimates for the compliance costs that SPCC-regulated facilities incur in order to comply with the rule requirements. Estimates of facility compliance costs (hereinafter called compliance costs or unit costs) serve as a major input for assessing the economic impacts of this final action. In particular, compliance cost estimates were used to estimate the economic impact of the final rule amendments. For this analysis, EPA developed a unit cost inventory with cost estimates for each of the SPCC rule requirements for each regulated facility. EPA relied on the most recent cost estimates from an earlier, preliminary effort to develop a unit cost inventory. To complete this inventory, the Agency developed a detailed list of the SPCC requirements that are expected to have a cost impact, and developed unit costs for each of these requirements from a professional engineering (PE) firm that has experience across a broad spectrum of industries and that serves the 48 contiguous states of the United States. In addition, EPA also conducted interviews of five regulated entities to obtain data on compliance measures at facilities and their associated costs to cross-check the estimates and develop a better understanding of the ranges of cost estimates. EPA also used information from site visits to regulated facilities for data and information. Facility compliance costs were developed separately for production and non-production facilities. A summary of the facility visits and major findings is given in Appendix A in Volume II of this report, and the unit cost inventory is described in Appendix J in Volume II.
In response to GAO recommendations for the 2002 and 2006 SPCC RIAs, EPA undertook an effort to compile additional data to develop a range and statistical distribution of SPCC compliance costs rather than presenting point estimates. As a result, EPA compiled a detailed requirement-by-requirement cost inventory that reflects potential distributions of estimates based on unit cost estimates provided by SCS Engineers.
To address the cost variability issue, EPA took into account the following two factors that have a significant effect on the magnitude of costs estimates within size categories and industry sectors:
Method variability: For rule requirements that allow different methods or materials (e.g., for the secondary containment requirement, a concrete structure versus an earthen berm around an oil storage tank), EPA estimated the cost of compliance for each method/material separately and generated a range of estimates based on multiple options.
Size variability: For rule requirements where unit costs are provided for a different number of storage containers and/or containers of different sizes within the same facility size category, EPA developed ranges of cost estimates based on the variability of a storage configuration at SPCC-regulated facilities.
This chapter describes compliance activities required by the SPCC rule, and presents unit cost estimates for the rule requirements affected by the final rule amendments, along with the underlying assumptions for facility owners and operators behavior. Section 5.1 addresses recordkeeping and reporting activities and their respective cost estimates, and Section 5.2 addresses the capital and operation and maintenance (O&M) activities and their respective cost estimates. Section 5.3 presents estimated costs for Tier I Qualified Facilities introduced by the final amendments. Section 5.4 presents estimates developed for the burden reduction associated with similarities in requirements between state regulations and the SPCC rule. The costs of compliance presented in forthcoming chapters account for these overlaps in requirements. However, the costs presented in this chapter provide total compliance costs before factoring in any burden reduction due to overlap with state requirements. Finally, Section 5.5 outlines the approach taken to annualize estimated cost savings over a 10-year analysis period.
SPCC Plan and Records
The primary recordkeeping and reporting activities required by the SPCC rule are the preparation and maintenance of the SPCC Plan along with the preparation of records of inspections and tests. In preparing a Plan, a facility owner or operator must follow the provisions outlined in the regulation, and include a discussion of the measures taken to meet the SPCC requirements. The main provisions are summarized in this section; for more detailed requirements, see the Oil Pollution Prevention regulation (40 CFR part 112). Section 5.1.1 focuses on primary inputs into recordkeeping and reporting activities such as wage rates, PE certification costs, and capital paperwork-related costs; Section 5.1.2 describes those activities and provides estimated costs.
Recordkeeping and Reporting Activities
Wage Rates
EPA used hourly wage rates for specific labor categories to calculate the per-facility cost associated with the rule's paperwork requirements and other SPCC-related activities that require labor hours. For typical new and existing facilities, unit time estimates for management, technical, and clerical personnel were multiplied by the appropriate hourly wage rate and then added to paperwork-related capital costs and PE certification costs to calculate paperwork-related costs. To calculate costs of other SPCC related requirements, such as inspections and training, the labor costs were added to their respective capital costs. The overall approach used to develop a wage rate estimate is described in this section.
The labor wage rates for private industry were derived from the December 2007 U.S. Department of Labor's Employment Cost Indices and Levels. The 2007 wage rates include wages and salaries, as well as benefit costs, which include paid leave, supplemental pay, insurance, retirement and savings, legally required benefits, severance pay, and supplemental unemployment benefits. These wage rates reflect private industry averages, which were estimated by the Bureau of Labor Statistics (BLS) based on a survey of 58,000 occupations within 12,200 establishments in the private sector. These wage rates reflect industry averages, which may underestimate the actual wages received by some SPCC-regulated facility personnel, but overestimate the actual wages received by other facility personnel. EPA further adjusted these rates to reflect associated overhead costs. The estimated wage rates used in the analysis are as follows:
Management: $61.45/hour
Technical: $53.61/hour
Clerical: $26.76/hour
EPA assumed the above labor rates will apply to all scenarios when facilities use in-house personnel to satisfy requirements involving labor burden. While owners and operators of all facilities would contract with a PE to certify their Plans (except owners and operators of qualified facilities that self-certify the Plan), not all facility owners and operators are expected to contract with a PE for activities that can be conducted by in-house personnel. On the one hand, a small facility may need PE expertise because in-house expertise may not be available to comply with the SPCC requirements. On the other hand, a small facility may not have the resources to hire PE expertise and may be in a better position to use in-house labor; the owner may be closely involved with all of the facility's operations. A similar two-sided argument can also be made for larger facilities.
As a result, EPA estimated cost of compliance with the SPCC requirements for two scenarios: (1) facilities employing outside labor by hiring a PE and (2) facilities providing compliance measures using in-house labor. EPA also assumed that the cost to a facility owner or operator to retain an outside PE to certify the SPCC Plan varies by the size of the facility. EPA used this assumption because a larger facility is likely to have a more complex SPCC Plan, and more complex Plan amendments, than a smaller facility. The burden associated with certifying SPCC Plans and amendments to SPCC Plans, however, accounts for PEs. The estimated wages for PE labor used in this analysis are as follows:
Management: $150/hour
Technical: $120/hour
Drafter: $75/hour
Clerical: $55/hour
Contractor: $70/hour
 To estimate the total compliance costs, EPA multiplied these wage rates by the estimated number of hours for each compliance activity.
Professional Engineer Certification Cost
Unless a facility owner or operator has a self-certified Plan, he or she is expected to incur costs associated with retaining a PE to certify his or her SPCC Plan, along with any subsequent technical amendments that are made to the Plan. In certifying the Plan, the PE attests to having examined the facility and that the Plan has been prepared in accordance with good engineering practices. Furthermore, whenever an owner or operator amends an SPCC Plan, a PE must certify each technical amendment.
For this analysis, EPA used the estimates from the facility unit cost inventory. The facility unit cost inventory is a detailed cost analysis of all the requirements of the SPCC rule such as the cost of preparing and amending the SPCC Plan.
Exhibit 5-1 through Exhibit 5-8 summarize the expected costs for owners or operators of typical SPCC-regulated facilities to retain a PE and to have a PE certify a new Plan, as well as any subsequent amendments.
Other Paperwork-Related Costs
The owners and operators of facilities will incur costs to comply with the SPCC requirements to maintain Plans and keep records (40 CFR 112.3 and 112.7(e)), and to submit required information to EPA in the event of certain discharges of oil (40 CFR 112.4). The regulatory impact analysis estimates that to maintain files, owners and operators of new production facilities would purchase file cabinets at a cost of $300. Existing production facilities of all sizes would also incur four hours of technical recordkeeping work annually. For oil storage facilities, recordkeeping work would comprise an estimated annual burden of 2.5, 3, 5, and 8.5 hours of technical labor for Category I through Category IV facilities, respectively. In addition, EPA estimated a one-time labor burden of two technical labor hours for Category I & II storage facilities to organize recordkeeping; for Category III & IV facilities, EPA estimated a one-time expenditure of $200 for these facilities to purchase tank database software.
In the event of certain discharges, the owner or operator must submit required information to the Regional Administrator and to the implementing state or local agency in charge of oil pollution control activities for the area in which the facility is located. Consequently, the owner or operator would incur costs for photocopying and postage, which are classified as O&M costs. EPA estimated these mailing costs to be $14 for Category I & II facilities, $16 for Category III facilities, and $21 for Category IV facilities. Variation in these estimates is based upon the increased cost of photocopying longer SPCC Plans at larger facilities. In addition, all applicable facilities would incur an estimated burden of one hour of managerial labor and one hour of technical labor. Because only 0.15 percent of facilities are expected to experience oil discharges that trigger an information submission, the expected annual capital costs to an owner or operator of a typical facility are negligible.
Recordkeeping and Reporting Activities
Recordkeeping and reporting activities required by the SPCC regulation include preparing new Plans, as well as modifying and maintaining existing Plans. This section describes the assumptions used by EPA when estimating the per-facility cost associated with the rule's paperwork requirements. Exhibit 5-1 through Exhibit 5-8 present the cost related to recordkeeping and reporting activities described below for new and existing facilities.
Prepare an SPCC Plan (New Facilities)
The owner or operator of a new facility must prepare and implement an SPCC Plan. This is a one-time cost incurred at the time a facility begins operations; only new facilities incur this cost. The actual preparation of the Plan involves several separate tasks. These tasks are usually conducted by the facility's technical personnel. These tasks include:
Field investigations, which are conducted by technical personnel in order to better understand the design of the facility and to accurately predict the areas or equipment most likely to discharge oil (this involves predicting the flow paths of discharged oil) (§112.7(b)).
A regulatory review conducted by management personnel, such that the technical and clerical personnel in charge of actually preparing the Plan are fully aware of all requirements in 40 CFR part 112 and any applicable more stringent state rules, regulations, and guidelines (§112.7(j)).
A review of existing procedures conducted by technical personnel to determine the effectiveness of the current discharge prevention and control practices employed by the facility owner or operator.
Preparation of the Plan, which involves both technical and clerical time, as well as a final review by facility management personnel prior to submission (§112.3). Components of the Plan include a facility diagram and description of storage areas (§112.7(a)(3)) and organizing portions of the Plan to be used in reporting a discharge (§112.7(a)(4) and §112.7(a)(5)).
Certification by a licensed PE, which must be conducted for each new Plan (unless a facility owner or operator has a self-certified Plan). A Plan must also be re-certified by a PE whenever technical amendments are made (§112.3(d)).
Plan preparation costs affect owners and operators of new facilities that become subject to the SPCC rule. New facilities are those that will initiate operations during the 10-year period considered in the analysis. Owners and operators of such facilities are required to prepare and implement their SPCC Plans within one year of initiating facility operations. Therefore, owners and operators of new facilities are assumed to incur the total cost of preparing a Plan in the first year, but these costs may be financed over a longer period.
Review the SPCC Plan (Existing Facilities)
Owners or operators of an SPCC-regulated facility are required to review and evaluate their Plans at least once every five years (§112.5(b)). This review is estimated to involve mostly technical personnel, who will evaluate discharge prevention and control procedures being implemented under the current Plan, and management personnel, who will conduct a regulatory review. In order to complete the necessary paperwork, the involvement of clerical personnel will also be necessary. An owner or operator is required to amend the facility's SPCC Plan within six months of the review to include more effective prevention and control technology if: (1) such technology will significantly reduce the likelihood of a discharge as described in §112.1(b) from the facility; and (2) such technology has been field-proven at the time of the review. A PE must also certify any technical amendments to the Plan prior to implementation. EPA applied cost estimates for reviewing SPCC Plans only to existing facilities, since an owner or operator of a new facility will not be required to conduct the review until five years after starting operation.
The total cost incurred by owners and operators of existing facilities for this review is greater if, following the review, they must amend their Plan.
Submit Information in the Event of Certain Discharges of Oil (New and Existing Facilities)
In the event of certain discharges of oil into navigable waters, within 60 days of the discharges, a facility owner or operator must submit to the Regional Administrator information described in §112.4(a). Either of the following types of discharges of oil occurring within any 12-month period triggers the §112.4 reporting requirements:
      1. A single discharge as described in §112.1(b) of more than 1,000 U.S. gallons into or upon navigable waters or adjoining shorelines
      2. Two or more discharges as described in §112.1(b), each of which is over 42 U.S. gallons, into or upon navigable waters or adjoining shorelines
Submission of information after a discharge of oil is estimated to involve both technical personnel time for collecting the required information, as well as time for review by management personnel before the information is submitted. Section 112.4(c) also requires that the facility owner or operator submit a copy of this information to the state agency in charge of oil pollution control activities for the area in which the facility is located. The Regional Administrator may require the owner or operator of the facility to amend the SPCC Plan to prevent and contain discharges from the facility. Such amendments, if uncontested by the facility owner or operator, must become part of the Plan 30 days after the Regional Administrator responds to the facility owner or operator concerning the final amendments. A PE must then certify the amended Plan prior to implementation. As required by §112.4(e), amendments to the Plan must be implemented as soon as possible, but no later than six months after the amendments become part of the Plan. Section 112.4(f) allows a facility owner or operator to appeal a decision made by the Regional Administrator requiring a Plan amendment.
Training a designated person who is accountable for discharge prevention and who reports to facility management is estimated to take a burden of two technical hours of labor annually. EPA assumed that this burden applies to all types and sizes of regulated facilities.
Revise the SPCC Plan (New and Existing Facilities)
The facility owner or operator must amend the facility's Plan in accordance with §112.7 whenever there is a change in the facility's design, construction, operation, or maintenance that materially affects the facility's potential to discharge oil into navigable waters or adjoining shorelines. Such changes may include the dismantling and removal of a container; the addition of a new or rebuilt container; a change in the service of a container; any physical changes or improvements to the facility; or the construction of a new well and associated piping. The activities to amend the SPCC Plan as a result of these facility changes are estimated to involve mostly facility technical personnel, as well as some clerical personnel. A PE must also certify the amended Plan prior to implementation (§112.5(c)). Such amendments to the SPCC Plan must be implemented as soon as possible, but not later than six months after the change occurs.
Owners and operators of some fraction of SPCC-regulated facilities (new and existing) will be required to amend their Plans as a result of discharging oil or modifying their facility (§112.5(a)).
Maintain the SPCC Plan and Keep Records (New and Existing Facilities)
Section §112.3 requires the owner or operator to maintain a copy of the SPCC Plan at the facility, if the facility is normally attended for at least four hours per day or, if not, at the nearest field office. The Plan must be available to the Regional Administrator for review during normal working hours (40 CFR 112.3(e)). In addition, a facility owner or operator is required to maintain (and update) Plan-specific records as outlined under §112.7(e), §112.8(c)(6), and §112.12(c)(6). A facility owner or operator is also required to maintain records of events such as drainage of uncontaminated wastewater by bypassing facility treatment systems (§112.8(c)(3)(iv), §112.12(c)(3)(iv)). Plan maintenance and recordkeeping activities are estimated to involve almost entirely technical personnel time, although a small amount of clerical personnel time may also be required for these activities.
Per-facility burden hour estimates are based primarily on the information from a PE firm. These estimates were developed for production and storage facilities of various sizes, and for clerical, technical/engineering, and management hours. The burden included new Plan preparation (site work, regulatory review, review of existing procedures, formulating new procedures, and preparing the Plan); Plan modification (site work, regulatory review, review of existing procedures, formulating new or changed procedures or recommendations, and preparing the amendment); formal review (site work, regulatory review, review of existing procedures, and preparing the review report); submittal of information after a discharge; and recordkeeping requirements (maintaining the Plan, and maintaining records of inspections and of equipment maintenance).
Estimated Paperwork-Related Activity Burden
EPA relied on the unit cost inventory analysis for the estimates of paperwork-related activity burden. Exhibit 5-1 through Exhibit 5-8 present cost estimates for recordkeeping and reporting activities for production and non-production facilities separately, as unit costs for the two types of facilities vary significantly. For new facilities, Exhibit 5-1 and Exhibit 5-2 present the estimated activity burden for individual compliance items in the baseline using in-house labor estimates; Exhibit 5-3 and Exhibit 5-4 present the estimated burden for individual items assuming that PEs will be used to satisfy the requirements. For existing facilities, these costs are presented in Exhibit 5-5 through Exhibit 5-8. In all cases, EPA assumed that drafting work using in-house labor will incur the same hourly costs as clerical work completed by facility personnel.

Exhibit 5-1
SPCC Plan Preparation and Maintenance (In-House Labor, New Production Facility)
Type of Facility[1]
Burden Hours
Burden Cost (2007$)

Managerial
Technical
Drafter
Clerical
Contractor
Labor Hours[2]
Travel and Other Expenses
PE Certification Cost[3]
Labor Cost
Total Cost[4]

$61/hour
$52/hour
$75/hour
$27/hour
$70/hour

Preparation of New Plan[5]
Category I
                                       1
                                      16
                                       8
                                       2
                                      --
                                                                             27
                                                                             --
                                                                           $748
                                                                         $1,550
                                                                         $2,300
Category II
                                       3
                                      32
                                      15
                                       4
                                      --
                                                                             54
                                                                             --
                                                                         $1,500
                                                                         $3,100
                                                                         $4,500
Category III
                                       5
                                      64
                                      30
                                       8
                                      --
                                                                            107
                                                                             --
                                                                         $2,990
                                                                         $6,200
                                                                         $9,190
Category IV
                                       8
                                      96
                                      45
                                      12
                                      --
                                                                            161
                                                                             --
                                                                         $4,490
                                                                         $9,300
                                                                        $13,800
Recordkeeping and Oil Discharge Reporting[6]
Category I
                                       1
                                       1
                                      --
                                      --
                                      --
                                                                              2
                                                                           $314
                                                                             --
                                                                           $115
                                                                           $429
Category II
                                       1
                                       1
                                      --
                                      --
                                      --
                                                                              2
                                                                           $314
                                                                             --
                                                                           $115
                                                                           $429
Category III
                                       1
                                       1
                                      --
                                      --
                                      --
                                                                              2
                                                                           $316
                                                                             --
                                                                           $115
                                                                           $431
Category IV
                                       1
                                       1
                                      --
                                      --
                                      --
                                                                              2
                                                                           $321
                                                                             --
                                                                           $115
                                                                           $436
[1]	See Chapter 4 for a definition of the facility types.
2 	Due to rounding, total labor hours may not be an exact sum of the labor hours listed.
3 	PE costs represent the cost of hiring an outside engineer for certification of the Plan.
4 	Due to rounding, total costs may not be an exact sum of the component costs listed.
5 	A one-time cost. This item includes the cost of assessing areas at the facility for the potential of an oil discharge to determine appropriate prevention measures; preparing a facility diagram; preparing a discussion of conformance with applicable more stringent state rules, regulations, and guidelines in the SPCC Plan; and organizing parts of the SPCC Plan to be used in reporting a discharge and during an emergency (if the facility has not submitted a Facility Response Plan).
6 	The compliance burden for oil discharge reporting activities includes mailing costs ($14 for Category I & II facilities, $16 for Category III facilities, and $21 for Category IV facilities) and one hour of both managerial and technical labor (for all categories of facilities). These costs are expected to affect only 0.15% of facilities annually (see Section <IP_ADDRESS>). Additional costs for all facilities include a one-time expenditure of $300 for purchasing a file cabinet and setting up the office. Source: site visits to oil production and non-production facilities: Hector Cavazos, regulatory advisor for Chevron oil production facilities, Humble, TX, February 2007.

Exhibit 5-2
SPCC Plan Preparation and Maintenance (In-House Labor, New Storage Facility)
Type of Facility
Burden Hours
Burden Cost (2007$)

Managerial
Technical
Drafter
Clerical
Contractor
Labor Hours[1]
Travel and Other Expenses
PE Certification Cost[2]
 Labor Cost
Total Cost[3]

$61/hour
$52/hour
$75/hour
$27/hour
$70/hour

Preparation of New Plan[4]
Category I
                                                                              2
                                                                             30
                                                                             12
                                                                              4
                                                                             --
                                                                             48
                                                                             --
                                                                         $1,500
                                                                         $2,740
                                                                         $4,230
Category II
                                                                              4
                                                                             60
                                                                             24
                                                                              8
                                                                             --
                                                                             96
                                                                             --
                                                                         $2,990
                                                                         $5,480
                                                                         $8,470
Category III
                                                                              7
                                                                             90
                                                                             30
                                                                             12
                                                                             --
                                                                            139
                                                                             --
                                                                         $4,490
                                                                         $7,830