*       Unfunded mandates: examines the implications of the regulation with respect to unfunded mandates.

            *       Federalism: considers potential issues related to state sovereignty.

            *       Tribal governments: extends the discussion of federal unfunded mandates to include impacts on tribal governments and their communities.

            *       Joint impacts of rules: discusses how other regulations, together with the final UST regulation, will likely affect the universe of regulated facilities.
6.1	Regulatory Planning and Review
Under Executive Order 12866 (58 FR 51735, October 4, 1993), EPA, in conjunction with the Office of Management and Budget's (OMB's) Office of Information and Regulatory Affairs (OIRA), must determine whether a regulatory action is "significant" and therefore subject to OMB review and the full requirements of the Executive Order. The Order defines "significant regulatory action" as one that is likely to result in a regulation that may:
      (1) 	Have an annual effect on the economy of $100 million or more or adversely affect in a material way the economy, a sector of the economy, productivity, competition, jobs, the environment, public health or safety, or State, local, or tribal governments or communities;
      (2) 	Create a serious inconsistency or otherwise interfere with an action taken or planned by another agency;
      (3) 	Materially alter the budgetary impact of entitlements, grants, user fees, or loan programs or the rights and obligations of recipients thereof; or
      (4) 	Raise novel legal or policy issues arising out of legal mandates, the President's priorities, or the principles set forth in the Executive Order.
Pursuant to the terms of Executive Order 12866, the Agency has determined that this regulation is an economically significant regulatory action because it may have an annual effect on the economy of $100 million or more, as defined under part 3(f)(1) of the Order. Findings of the regulatory cost analysis (Chapter 3) indicate that the regulation will have aggregate annual compliance costs of approximately $160 million under the Selected Option, $290 million under Alternative 1, and $70 million under Alternative 2. Separately, this analysis concludes that the regulation is expected to have cost savings related to avoided costs of $120 million to $530 million under the Selected Option, $210 million to $670 million under Alternative 1, and $45 million to $420 million under Alternative 2. These cost savings effectively offset the entire cost of the regulation, resulting in a net beneficial impact on the economy. However, for the purpose of addressing Executive Order 12866, these cost savings are considered to be separate impacts rather than direct reductions in the total cost of the regulation.
6.2	Unfunded Mandates Analysis
Signed into law on March 22, 1995, the Unfunded Mandates Reform Act (UMRA) calls on all federal agencies to provide a statement supporting the need to issue any regulation containing an unfunded federal mandate and describing prior consultation with representatives of affected state, local, and tribal governments.
The final UST regulation is subject to the requirements of sections 202 and 205 of UMRA. In general, a regulation is subject to the requirements of these sections if it contains "Federal mandates" that may result in the expenditure by State, local, and tribal governments, in the aggregate, or by the private sector, of $100 million or more in any one year. Because roughly 95 percent of conventional UST systems are privately owned, EPA estimates that the regulation will have approximately $130 million of costs to the private sector under the Selected Option, $270 million under Alternative 1, and $67 million under Alternative 2 in expenditures for the private sector and is thus subject to the following requirements of these sections.
   *       An identification of the provision of Federal law under which the regulation is being promulgated.

   *       A qualitative and quantitative assessment of the anticipated costs and benefits of the Federal mandate;

         o             Costs and benefits to State, local, and tribal governments and the private sector
         o             Effect on health, safety, and the natural environment
         o             Analysis of extent to which such costs may be paid with Federal financial assistance (or otherwise paid for by the Federal government)
         o             Analysis of the extent to which there are available Federal resources to carry out this mandate

   *       Estimates of future compliance costs with the mandate.

   *       Estimates of disproportionate budgetary effects on any type of government or segment of the private sector.

   *       Estimates of the effect on the national economy (if relevant and possible).

Exhibit 6-1 provides references for the analyses that EPA has performed that respond to these requirements.
Exhibit 6-1
             Location Of Analyses Responding To UMRA Requirements
                                  Requirement
                           Location In This Document
Identification of provision of federal law under which rule is being promulgated
Chapter 1
Assessment of costs and benefits to state, local, and tribal governments and the private sector
Chapters 3 and 4
Assessment of the effect on health, safety, and the natural environment
Chapter 4
Assessment of the extent to which such costs may be paid with federal financial assistance
Chapter 3; no Federal assistance is anticipated
Assessment of the extent to which there are available federal resources to carry out this mandate
Chapter 3; no Federal resources are anticipated
Estimates of future compliance costs
Chapter 3
Estimates of disproportionate budgetary effects on any type of government or private sector segment
Chapter 5
Estimates of the effect on the national economy
Chapters 3 and 5

6.3	Federalism Analysis
Executive Order 13132, Federalism (64 FR 43255, August 10, 1999), requires EPA to develop an accountable process to ensure "meaningful and timely input by state and local officials in the development of regulatory policies that have federalism implications." "Policies that have federalism implications" is defined in the Executive Order to include regulations that have "substantial direct effects on the states, on the relationship between the national government and the states, or on the distribution of power and responsibilities among the various levels of government." EPA typically considers a policy to have federalism implications if it results in the expenditure by State and/or local governments in the aggregate of $25 million or more in any one year.
Under Executive Order 13132, EPA may not issue a regulation that has federalism implications, that imposes substantial direct compliance costs, and that is not required by statute, unless the Federal government provides the funds necessary to pay the direct compliance costs incurred by State and local governments, or EPA consults with State and local officials early in the process of developing the regulation.
      Exhibit 6-2 summarizes annual government costs. Direct compliance costs for local and State governments reflect average costs per UST system; the analysis assumes that states collectively own one percent of total UST systems (5,780), and local governments own 23,119 UST systems (four percent).
      In addition, under the final UST regulation, each state will incur labor costs for reading the new regulations, applying for State Program Approval (SPA), and processing one-time notification of existence for AHFDSs, and FCTs. States that do not already require notification of UST ownership change will also incur costs to process and review all ownership change notifications. (See discussion in Chapter 3, Section 3.6.)
      In this scenario, total costs to all affected state and local governments (including direct compliance costs, notification costs, and state program costs) are approximately $6.8 million under the Selected Option, $14 million under Alternative 1, and $3.6 million under Alternative 2 in 2012 dollars; this is not considered to be a substantial compliance cost under federalism requirements.
Exhibit 6-2

Summary Of Annual State And Local Government Costs [b]
                                    Element
                         Selected Option
($ millions)
                          Alternative 1
($ millions)
                          Alternative 2
($ millions)
Local Compliance Costs [a]
                                                                          $5.4
                                                                         $11.0
                                                                          $2.8
State Compliance Costs [a]
                                                                          $1.3
                                                                          $2.9
                                                                         $0.70
State Government Administrative Costs
                                                                         $0.12
                                                                         $0.12
                                                                         $0.12
Total State and Local Governments Costs [c]
                                                                          $6.8
                                                                         $14.0
                                                                          $3.6
[a] State and local government compliance costs are included in the total compliance costs presented in Exhibit 3-8.
[b] Cost estimates were derived using a seven percent discount rate.
[c] Total may not sum due to rounding.
6.4	Tribal Governments Analysis
	Executive Order 13175, Consultation and Coordination With Indian Tribal Governments (65 FR 67249, November 9, 2000), requires EPA to develop an accountable process to ensure "meaningful and timely input by tribal officials in the development of regulatory policies that have tribal implications." EPA has concluded that this action will have tribal implications to the extent that tribally-owned entities with UST systems on Indian country would be affected. However, it will neither impose substantial direct compliance costs on tribal governments, nor preempt Tribal law.
	The data sources for the Indian country analysis are the same as those used in the small business analysis. Based on a review of information available about the types of business entities in Indian country, it is assumed that UST systems in Indian country represent a subset of the rest of the universe and are distributed similarly across the same sectors. The total number of UST systems in Indian country is distributed proportionally among the NAICS sectors.
	The cost per UST system is higher in Indian country, as the universe is smaller, and all UST systems are assumed to incur costs associated with all the requirements of the final UST regulation. At a 2012 cost of $734 per UST system, the total cost for UST systems in Indian country is approximately $1.9 million. EPA data indicates that 35 percent of all UST systems in Indian country are tribally-owned; correspondingly, the total cost to owners and operators of tribally-owned UST systems is approximately $0.67 million.
	EPA consulted with tribal officials early in the process of developing this regulation to engage them to have meaningful and timely input into its development. EPA began its consultation with tribes on possible changes to the UST regulation shortly after the passage of the Energy Policy Act of 2005 (EPAct). EPAct directed EPA to coordinate with tribes to develop and implement an UST program strategy in Indian country to supplement the program's existing approach. EPA and the tribes worked collaboratively to develop this tribal strategy.
	EPAct also included key provisions that apply to states receiving federal funding but the Act did not specify Indian country. Nonetheless, EPA's goal is to implement the objectives of these provisions in Indian country as an important step in achieving more consistent program results in release prevention. Both EPA and tribes recognize the importance of having policies that can help to ensure parity in program implementation between states and in Indian country. EPA committed to the tribes that we would fully implement the new provisions of the EPAct, and the final UST regulation will realize that commitment.
	In addition to our early consultation with the tribes, EPA again reached out to the tribes as we started the official regulatory process and throughout the development of the UST regulation. EPA sent letters to leaders of over 500 tribes, as well as to tribal regulatory staff, inviting their participation in developing the regulation. EPA heard from both tribal officials who work as regulators as well as representatives of owners and operators of UST systems in Indian country. The tribal regulators raised concerns about ensuring parity of environmental protection between states and Indian country.
	The changes to the UST regulation under this regulation are needed to ensure parity between sites in states and in Indian country. The final UST regulation will ensure equipment is not just installed but is working properly and protects the environment from potential releases.
6.5	Joint Impacts of Rules
	Executive Order 12866 requires that the Agency review whether the regulation creates "a serious inconsistency" or otherwise interferes "with an action taken or planned by another agency." We do not believe that the regulation creates a serious inconsistency or interferes with any other actions planned or undertaken by other agencies. The following are the existing regulations that currently affect UST systems:

            *       State UST Regulations: A number of states have existing UST regulations that are more demanding than existing regulations under 40 CFR Part 280. To the extent that these policies are at least as demanding as the regulations under consideration, the systems in these states may already be in partial or full compliance with portions of the regulation. Chapter 2 identifies the number of UST systems in states with existing (baseline) regulations; cost estimates in Chapter 3 reflect the state regulatory programs that exist in the baseline.

            *       SPCC Regulation: Currently, a subset of UST systems in the universe is regulated by the Spill Prevention, Control, and Countermeasure regulation (SPCC); these include emergency generator tanks, airport hydrant fuel distribution systems and UST systems with field-constructed tanks. Specifically, the SPCC regulation in 40 CFR Part 112 apply to above-ground containers and completely buried tanks that are not otherwise covered by 40 CFR Part 280. SPCC regulation does not specify particular leak detection protocols, but require that plans conform to industry standards, which can often be consistent with the requirements of the regulation. To the extent that the requirements imposed on these UST systems via the regulation are more or less stringent than the SPCC regulation currently governing them, the regulation may cause an increase or a reduction in overall inspection and monitoring requirements (and costs) for these UST systems. To account for this, EPA has generated baseline assumptions for these systems using information from the Department of Defense (the owner of the majority of all FCTs and AHFDSs). EGTs are assumed to incur all incremental costs beyond state regulatory baseline costs; to the extent that these systems are regulated under SPCC, this may overstate costs.

 Chapter 7.	Comparison of Costs, Benefits, and Other Impacts
      This chapter compares the costs, cost savings, and benefits of the final UST regulation. Cost-benefit analysis is a useful tool for economic assessments. It is used to evaluate the economic efficiency of environmental policies by measuring their costs and benefits, and hence their net impacts on society. However, adherence to a strict cost-benefit approach provides an incomplete assessment of the effects of the final regulation for two reasons, described below.
      A traditional cost-benefit comparison weighs society's willingness to pay for the benefits of a regulation against the opportunity costs of the regulation. In the case of leaking USTs, though, cleanup of releases is required under RCRA Subtitle I. Therefore, although avoided remediation costs are not a measure of willingness to pay, under the current statutory and regulatory baseline, a sufficient condition for the final UST regulation to improve economic efficiency would be if the expected avoided remediation costs exceed the costs. As discussed in Chapter 4, avoided costs provide a reasonable measure of one set of positive effects of the final UST regulation. Even if avoided remediation costs do not exceed the cost of the regulation, economic efficiency could be enhanced because this analysis does not quantify additional social benefits such as improved water quality.
      A traditional cost-benefit comparison also does not consider important distributional issues (e.g., what particular groups of people bear specific benefits or costs). A key effect of the final UST regulation is to reallocate costs from the public to responsible parties. As we discussed in Chapter 5, avoided remediation costs could reduce demand on state financial assurance funds by over $160 million per year.
	This chapter uses two approaches to assess the effectiveness of the requirements. First, we compare the compliance costs of the final UST regulation with its total monetized avoided costs (section 7.1). We then consider cost-effectiveness measures which provide estimates of expenditures per unit reduction of releases achieved by the final UST regulation (section 7.2).
      EPA's analysis shows that the final UST regulation will likely provide a net cost savings to society, but the cost-benefit and cost-effectiveness analyses presented here provide an incomplete estimate of benefits, because the final UST regulation is expected to provide other benefits that are not expressed in monetary terms. In addition, the avoided remediation costs associated with the regulation represent an equity-enhancing effect because the demand for publicly-funded remediation is reduced; all else held constant, the increased compliance costs will fall on the specific operators who are not currently implementing the practices and technologies identified in the regulation. This may result in some facilities bearing additional costs, but should improve overall equity and efficiency by ensuring that operators who are adhering to best practices already (in the baseline) are not at a competitive disadvantage because other operators rely on the availability of publicly-funded remediation.
      OMB Circular A-4, numerous statutes, and Executive Orders require EPA to consider not only the costs and benefits of the regulation but also distributional impacts (e.g., impacts on minority and low-income populations, children's health, and energy distribution). As such, the final regulatory decision is a policy judgment that must take into account a number of factors in addition to the benefits and costs.
      In addition, the selection of a discount rate for estimating the present value of future costs and benefits is a complex issue. To reflect a range of possible future costs and benefits, we present two estimates of discounted costs and benefits (section 7.3); one based on a seven percent discount rate, and one based on a three percent discount rate.
7.1 	Cost Benefit Comparison
In this section, we compare the total costs of the regulation with its total monetized and non-monetized avoided costs and benefits. Exhibit 7-1 summarizes total costs and monetized avoided costs of the final UST regulation. The costs in the exhibit represent the compliance costs of the final UST regulation, including state government administrative costs.
The exhibit also identifies the social benefits of the proposed requirements that are not captured in avoided costs. As discussed in Chapter 4, a number of benefits could not be monetized. These include groundwater protection, mitigation and avoidance of acute events, ecological benefits, and human health risks compared to the baseline in which the releases occur and are remediated. Finally, EPA did not estimate benefits or avoided costs associated with changes in regulation at facilities with FCTs or AHFDSs.
Exhibit 7-1 demonstrates that the final UST regulation will likely avoid more costs than it creates, generating cost savings to society. EPA estimates that the Selected Option could generate $160 million per year in savings to society (reflecting the average of four estimates:  $39 million in net costs, and $120 million, $180 million, and $370 million in savings). Alternatives 1 and 2 could also have a net benefit of $160 million (reflecting the average of four estimates for each alternative: $81 million in net costs and $140 million, $220 million, and $380 million in savings for Alternative 1; or $25 million in net costs and $150 million, $150 million, and $350 million in savings for Alternative 2). These estimates only include cost savings for conventional UST systems and EGTs.

Exhibit 7-1
          Comparison Of Annual Compliance Costs And Cost Savings[f,d]

                       Selected Option
(2012$ millions)
                        Alternative 1
(2012$ millions)
                        Alternative 2
(2012$ millions)
Annual Avoided Costs[a]

Releases and groundwater incidents: average value
(range of all values in italics)
                                                                          $300
                                                                    ($110-$510)
                                                                          $440
                                                                    ($200-$650)
                                                                          $220
                                                                     ($44-$410)
Vapor intrusion: average value
(range of all values in italics)
                                                                          $4.5
                                                                    ($1.7-$7.9)
                                                                          $5.9
                                                                    ($2.5-$9.1)
                                                                          $3.1
                                                                   ($0.56-$6.0)
Product loss
(range of all values in italics)
                                                                          $3.1
                                                                   ($0.86-$6.5)
                                                                          $3.8
                                                                   ($0.78-$7.6)
                                                                          $2.4
                                                                   ($0.36-$5.2)
Annual Compliance Costs

Conventional UST systems[b]
                                                                          $130
                                                                          $280
                                                                           $63
Emergency generator tanks (EGTs)
                                                                          $2.0
                                                                          $2.3
                                                                          $2.0
Airport hydrant fuels distribution systems (AHFDSs)
                                                                           $10
                                                                     < $0.1
                                                                            N/A
UST systems with field-constructed tanks (FCTs)
                                                                           $11
                                                                     < $0.1
                                                                            N/A
Cost to owners/operators to read regulation
                                                                          $5.5
                                                                          $5.5
                                                                          $5.5
State government administrative costs[c]
                                                                         $0.12
                                                                          $0.12
                                                                          $0.12
Total Annual Avoided Costs
(range of all values in italics)
                                                                          $310
                                                                    ($120-$530)
                                                                          $450
                                                                    ($210-$670)
                                                                          $230
                                                                     ($45-$420)
Total Annual Compliance Costs[d]
                                                                          $160
                                                                          $290
                                                                           $70
Net Cost (Savings) to Society[d,g]
[Total Compliance Costs less Total Avoided Costs]
(range of all values in italics)
                                                                         ($160)
                                                                    $39- ($370)
                                                                         ($160)
                                                                  $81 - ($380)
                                                                         ($160)
                                                                  $25 - ($350)
Non-Monetized Benefits[e]

Groundwater protected (billion gallons)
                                                                           130
                                                                       (50-240)
                                                                           170
                                                                       (74-270)
                                                                            92
                                                                       (17-180)
Acute events and large-scale releases
(e.g., releases from AHFDSs and FCTs)
                                                                  Not estimated
                                                                  Not estimated
                                                                  Not estimated
Ecological benefits
                                                                  Not estimated
                                                                  Not estimated
                                                                  Not estimated
Human health risks
                                                                  Not estimated
                                                                  Not estimated
                                                                  Not estimated
[a] Avoided costs are estimated for conventional UST systems and emergency generator tanks (EGTs) only. Avoided remediation costs from releases and groundwater incidents are the costs related to site remediation. Avoided vapor intrusion costs include additional avoided costs associated with the remediation of vapor intrusion cases; the RIA does not address human health risk associated with vapor intrusion. Avoided product loss costs are also separate and additive.
[b] Conventional UST systems include all systems that are not AHFDSs, FCTs, or EGTs.
[c] The costs for UST systems directly owned or operated by local, state, and federal government entities are included in the estimates of compliance costs within the other categories. Costs shown here reflect the administrative costs for state governments to read the regulation, apply for state program approval, process notifications of ownership changes, and process one-time notifications of existence for AHFDS and UST systems with FCTs.
[d] Compliance costs include direct compliance costs and state oversight costs. For this regulatory impact analysis, direct compliance costs and state oversight costs provide a reasonable proxy to assess the final UST regulation's social costs. See Chapter 3.1 for further discussion.
[e] Due to data and resource constraints, EPA is unable to monetize some of the positive impacts of the final UST regulation. Chapter 4 of this document provides a qualitative discussion of these benefits.
[f] Totals may not add up due to rounding. Cost estimates were derived using a seven percent discount rate.
g The results show that all but one of the four estimates of cost savings for conventional systems exceed total regulatory costs (including FCT and AHFDS systems). As explained in Chapter 4 and Appendix H, one of the four experts provided estimates of avoided releases and averted groundwater incidents that do not result in net cost savings to society from the Selected Option. However, this expert also assumed a high level of noncompliance with the final UST regulation that is not consistent with the assumption of 100 percent compliance in the cost estimates. As a result, this low-end estimate of potential cost savings represents likely understates the cost savings that would be associated with a consistent, 100 percent compliance scenario. See Chapter 4 and Appendix H for detailed discussion of how these assumptions affect net benefits of the final UST regulation as calculated using responses from Expert 2.

7.1.1	Net Costs of the Regulation: Potential Underestimates of Cost Savings and Benefits
The results show that three of the four estimates of cost savings for conventional systems exceed total regulatory costs for all systems, including both costs to conventional systems and costs to FCT and AHFDS systems (for which cost savings were not estimated). As explained in Chapter 4 and Appendix H, one of the four experts provided estimates of avoided releases and averted groundwater incidents that do not result in net cost savings to society from the Selected Option. However, this expert also assumed a high level of noncompliance with the final UST regulation that is not consistent with the assumption of 100 percent compliance in the cost estimates. As a result, this low-end estimate of potential cost savings likely understates the cost savings that would be associated with a consistent, 100 percent compliance scenario.
In addition, this analysis may understate avoided costs for the following reasons:
         * This analysis does not monetize benefits associated with groundwater protection, mitigation and avoidance of acute events, ecological benefits, human health risks, and avoided property devaluation relative to the baseline.
         * This analysis does not monetize avoided costs associated with FCT and AHFDS systems. Compliance costs for these systems are monetized.
         * This analysis does not quantify avoided remediation costs associated with reductions in release size (i.e., extent), other than the change in incidence of groundwater contamination. The same reductions in release volume that lower the incidence of groundwater contamination would likely also reduce the number of large extent releases of all types and decrease the average size of smaller releases.
7.1.2	Net Costs of the Regulation: Cost Savings to Public and Private Entities
While EPA opted to express all cost savings as "benefits to society" in this analysis, it is also common practice in RIAs to calculate the costs of a regulation by subtracting cost savings from cost increases to affected entities. Under this regulation, the cost savings of avoided releases would in some cases reduce burden on state funds, but a portion of the remediation costs would also be borne directly by regulated entities. One option for presenting total costs of the regulation, therefore, would have been to present the net costs to regulated facilities after accounting for avoided remediation costs. However, because it is impossible to predict which facilities would enjoy cost savings, EPA opted to present industry costs and industry-related avoided costs separately in the main analysis.
This section considers the net cost impact on facilities when accounting for avoided remediation costs. Exhibit 7-2 provides a more detailed breakout of the estimated cost savings for conventional systems and EGTs. The exhibit compares cost savings directly to the private-sector compliance costs of the regulation for those systems.
The exhibit shows that, in general, the net cost of the regulation to private-sector entities falls well below $100 million in the Selected Option and Alternative 2 when avoided costs to the private sector are considered. Only under Alternative 1 do net costs to the private sector exceed $100 million under expert estimates.
Exhibit 7-2

Summary Of Net Costs To Private Sector for Conventional Systems and EGTs (2012$ millions)
                                Selected Option

Expert 1
Expert 2
Expert 3
Expert 4
Average
Private Sector Compliance Cost
                                     $130
Total Cost Savings[a]
                                                                           $330
                                                                           $120
                                                                           $270
                                                                           $530
                                                                           $310
Public Sector Cost Savings[b]
                                                                           $190
                                                                            $65
                                                                           $150
                                                                           $290
                                                                           $170
Private Sector Cost Savings
                                                                           $150
                                                                            $52
                                                                           $120
                                                                           $240
                                                                           $140
Net Cost to Private Sector
[Private Sector Compliance Cost  -  Private Sector Cost savings]
                                                                          ($17)
                                                                           $77
                                                                            $6
                                                                         ($110)
                                                                          ($11)
                                 Alternative 1

Expert 1
Expert 2
Expert 3
Expert 4
Average
Private Sector Compliance Cost
                                     $280
Total Cost Savings[a]
                                                                           $500
                                                                           $210
                                                                           $420
                                                                           $670
                                                                           $450
Public Sector Cost Savings[b]
                                                                           $290
                                                                           $120
                                                                           $240
                                                                           $370
                                                                           $250
Private Sector Cost Savings
                                                                           $210
                                                                            $88
                                                                           $190
                                                                           $300
                                                                           $200
Net Cost to Private Sector
[Private Sector Compliance Cost  -  Private Sector Cost savings]
                                                                           $67
                                                                          $190
                                                                           $93
                                                                          ($15)
                                                                           $85
                                 Alternative 2

Expert 1
Expert 2
Expert 3
Expert 4
Average
Private Sector Compliance Cost
                                     $65
Total Cost Savings[a]
                                                                           $220
                                                                            $45
                                                                           $220
                                                                           $420
                                                                           $230
Public Sector Cost Savings[b]
                                                                           $130
                                                                            $26
                                                                           $120
                                                                           $240
                                                                           $130
Private Sector Cost Savings
                                                                            $92
                                                                            $19
                                                                            $99
                                                                           $190
                                                                            $99
Net Cost to Private Sector
[Private Sector Compliance Cost  -  Private Sector Cost savings]
                                                                          ($28)
                                                                           $45
                                                                          ($34)
                                                                         ($120)
                                                                          ($35)
Notes:
[a] As explained in Chapter 4 and Appendix H, one of the four experts provided estimates of avoided releases and averted groundwater incidents that do not result in net cost savings to society from the Selected Option. This expert also assumed a high level of noncompliance with the final UST regulation that is not consistent with cost modeling. See Chapter 4 and Appendix H for detailed discussion of how these assumptions affect net benefits of the final UST regulation as calculated using responses from Expert 2.
[b] Values are estimated in Chapter 5.2.4. To provide a conservative estimate of net costs to the private sector, this table presents the low deductible scenario results. These values represent potential reductions in public expenditures in states with active state funds. We note that to realize the savings in public expenditures in the near term, state government action would be required to lower petroleum fees. Alternatively, to the extent that funds are not constrained in their use, a redistribution of funds (e.g., to existing sites awaiting cleanup) could also represent a significant public benefit through more rapid completion of existing sites.

7.1.3	Alternative Baseline: Potential Decreases in Future Cost Savings
In addition to the primary analysis presented above, we also consider the comparison of costs and benefits of the final UST regulation in the alternative baseline scenario, where the universes of releases and UST systems decline over time in accordance with historical trends. In this alternative baseline, the universe of releases is smaller relative to the original baseline than the universe of UST systems; as described in Chapters 3 and 4, estimates of compliance costs do not change substantially under the alternative baseline, while estimates of avoided costs decrease by approximately 31 percent. However, even in this scenario, the final UST regulation may avoid more costs than it creates, potentially generating cost savings to society. EPA estimates that the Selected Option in the alternative baseline could generate $60 million per year in savings to society (reflecting the average of four estimates: $74 million in net costs, $32 million, $75 million, and $210 million). Alternative 1 could generate $25 million per year in savings to society (reflecting the average of four estimates: $140 million in net costs, $7 million, $61 million, and $170 million), while Alternative 2 could generate savings of $87 million (reflecting the average of four estimates: $39 million in net costs, $81 million, $84 million, and $220 million). These results are presented in Exhibit 7-3.
Exhibit 7-3

Comparison Of Annual Compliance Costs And Cost Savings Under Alternative Baseline[c,][e]

                       Selected Option
(2012$ millions)
                        Alternative 1
(2012$ millions)
                        Alternative 2
(2012$ millions)
Total Annual Avoided Costs[a,b]
(range of all values in italics)
                                                                          $220
                                                                     ($81-$360)
                                                                          $310
                                                                    ($140-$460)
                                                                          $160
                                                                     ($31-$290)
Total Annual Compliance Costs[c]
                                                                          $160
                                                                          $290
                                                                           $70
Net Cost (Savings) to Society[c,d]
[Total Compliance Costs less Total Avoided Costs]
(range of all values in italics)
                                                                          ($60)
                                                                    $74- ($210)
                                                                          ($25)
                                                               $140  -  ($170)
                                                                          ($87)
                                                                  $39 - ($220)
[a] Avoided costs are estimated for conventional UST systems and emergency generator tanks (EGTs) only.
[b] Due to data and resource constraints, EPA is unable to monetize some of the positive impacts of the final UST regulation. Chapter 4 of this document provides a qualitative discussion of these benefits.
[c] Compliance costs include direct compliance costs and state oversight costs. For this regulatory impact analysis, direct compliance costs and state oversight costs provide a reasonable proxy to assess the final UST regulation's social costs. See Chapter 3.1 for further discussion.
d The results show that all but one of the four estimates of cost savings for conventional systems exceeded total regulatory costs (including FCT and AHFDS systems). As explained in Chapter 4 and Appendix H, one of the four experts provided estimates of avoided releases and averted groundwater incidents that do not result in net cost savings to society from the Selected Option. However, this expert also assumed a high level of noncompliance with the final UST regulation that is not consistent the assumption of 100 percent compliance in the cost estimates. As a result, this low-end estimate of potential cost savings represents likely understates the cost savings that would be associated with a consistent, 100 percent compliance scenario. See Chapter 4 and Appendix H for detailed discussion of how these assumptions affect net benefits of the final UST regulation as calculated using responses from Expert 2.
[e] Totals may not add up due to rounding. Cost estimates were derived using a seven percent discount rate.

7.2	Cost-Effectiveness Analysis
We measure cost-effectiveness by considering the expected cost per release avoided. This cost-effectiveness measure is useful for comparing the resources required to eliminate a single release under each alternative. For the purpose of this analysis, we consider avoided releases to be both releases altogether avoided and groundwater incidents averted due to the final UST regulation. As presented in Exhibit 7-4, we find that the cost per release avoided is approximately $43,000 to $200,000 under the Selected Option, compared with $68,000 to $250,000 under Alternative 1 and $25,000 to $270,000 under Alternative 2. In general, this compares favorably with average release remediation costs presented in Exhibit 4-2 in Chapter 4, which range between $98,000 and $210,000.
This regulatory impact analysis suggests that, in addition to improving the alignment of incentives, release prevention is likely to be less costly than release remediation under the Selected Option and Alternative 2 and in some instances under Alternative 1.
Exhibit 7-4

 Cost-Effectiveness:  Number Of Avoided Releases And Groundwater Incidents[a]

                                Selected Option
                                 Alternative 1
                                 Alternative 2
Avoided releases and groundwater incidents
                                                                         2,073
                                                                    (772-3,646)
                                                                          2,708
                                                                  (1,148-4,213)
                                                                          1,427
                                                                    (257-2,753)
Compliance cost[b] ($ million)
                                                                           $160
                                                                           $290
                                                                            $70
Cost per release avoided ($ million)
                                                                          $0.08
                                                                ($0.04 - $0.20)
                                                                          $0.11
                                                                ($0.07 - $0.25)
                                                                          $0.05
                                                                ($0.03 - $0.27)
[a] Cost estimates were derived using a seven percent discount rate.
[b] Compliance cost includes direct compliance costs and state oversight costs. For this regulatory impact analysis, direct compliance costs and state oversight costs provide a reasonable proxy to assess the final UST regulation's social costs. See Chapter 3.1 for further discussion.

7.3	Costs and Beneficial Effects Under Alternative Discount Rates
The selection of the rate at which to discount future costs and benefits is complex. To assess the sensitivity of our results to our choice of discount rate, Exhibit 7-5 presents a summary of total compliance costs and avoided remediation costs considering an alternate discount rate of three percent. Costs change little because a reduction in interest rates both reduces time value of money (TVM) costs and increases costs that have a delay before implementation.[,] The net result of a change from a discount rate of seven percent to a discount rate of three percent is an overall increase in the cost of the regulation of less than $10 million per year, indicating that TVM and delayed-implementation cost effects essentially offset each other.
Discount rates are also involved in our estimate of annual avoided costs. In particular, we use them to obtain constant annual avoided costs for those requirements in which the affected universe grows over time and to calculate the delay until positive impacts accrue. Here, the effect of lowering interest rate is more significant, as all requirements are discounted by at least one period. As Exhibit 7-5 shows, a change in the discount rate increases avoided costs from a range of $120 million - $530 million using a seven percent discount rate to $130 million - $610 million using a three percent discount rate. This increase is largely due to the fact that we discount all avoided costs by at least one year, as outlined in Exhibit 1-2.
We conclude that, while a reduction in the discount rate to three percent leaves annual compliance costs essentially unchanged at $160 million, avoided costs increase by $16 million to $84 million per year. As such, annual savings to society would increase from a range of $39 million in net costs to $370 million in net savings, to a range of $25 million in net costs to $450 million in net savings if EPA relies on a three percent discount rate.

Exhibit 7-5

Compliance Costs And Beneficial Impacts Under Alternative Discount Rates[d,e]
Avoided Cost
             Selected Option
7 percent discount rate ($ millions)
             Selected Option
3 percent discount rate ($ millions)
Annual Avoided Costs[a]

Releases and groundwater incidents
                                                                          $300
                                                                    ($110-$510)
                                                                          $350
                                                                    ($130-$590)
Vapor intrusion
                                                                          $4.5
                                                                    ($1.7-$7.9)
                                                                          $4.7
                                                                    ($1.7-$8.2)
Product loss
                                                                          $3.1
                                                                   ($0.86-$6.5)
                                                                          $3.3
                                                                   ($0.89-$6.8)
Annual Compliance Costs

Conventional UST systems[b]
                                                                          $130
                                                                          $130
Emergency generator tanks (EGT)
                                                                          $2.0
                                                                          $2.1
Airport hydrant fuels distribution systems (AHFDSs)
                                                                           $10
                                                                           $12
UST systems with field-constructed tanks (FCTs)
                                                                           $11
                                                                           $12
Cost to owners/operators to read regulation
                                                                          $5.5
                                                                          $3.9
State government administrative costs[c]
                                                                          $0.1
                                                                          $0.1
Total Annual Avoided Costs
                                                                          $310
                                                                    ($120-$530)
                                                                          $360
                                                                    ($130-$610)
Total Annual Compliance Costs[d]
                                                                          $160
                                                                          $160
Net Cost (Savings) to Society[d,f]
[Total Compliance Costs less Total Avoided Costs]
                                                                         ($160)
                                                                   $39 - ($370)
                                                                         ($200)
                                                                  $25 - ($450)
[a] Avoided costs are estimated for conventional UST systems and emergency generator tanks (EGTs) only.
[b] Conventional UST systems include all systems that are not AHFDSs, FCTs, or EGTs.
[c] The costs for UST systems directly owned or operated by local, state, and federal government entities are included in the estimates of compliance costs within the other categories. Costs shown here reflect the administrative costs for state governments to read the regulation, apply for state program approval, process notifications of ownership changes, and process one-time notifications of existence for AHFDS and UST systems with FCTs.
[d] Compliance costs include direct compliance costs and state oversight costs. For this regulatory impact analysis, direct compliance costs and state oversight costs provide a reasonable proxy to assess the final UST regulation's social costs. See Chapter 3.1 for further discussion.
[e] Totals may not add up due to rounding.
f As explained in Chapter 4 and Appendix H, one of the four experts provided estimates of avoided releases and averted groundwater incidents that do not result in net cost savings to society from the Selected Option. This expert also assumed a high level of noncompliance with the final UST regulation that is not consistent with cost modeling. See Chapter 4 and Appendix H for detailed discussion of how these assumptions affect net benefits of the final UST regulation as calculated using responses from Expert 2.

Sources Cited
40 CFR 280.10 Subpart A  -  Applicability.
Association of State and Territorial Solid Waste Management Officials. State Fund Survey Results 2008.
Association of State and Territorial Solid Waste Management Officials. State Fund Survey Results 2012.
Berman, E. and L. T. M. Bui (2001). "Environmental Regulation and Labor Demand: Evidence from the South Coast Air Basin." Journal of Public Economics 79(2): 265-295.
Committee on Vehicle Emission Inspection and Maintenance Programs. Evaluating Vehicle Emissions Inspection and Maintenance Programs. National Academy Press, 2001.
Dahl, Carol and Thomas Sterner. "Analyzing Gasoline Demand Elasticities: A Survey." Energy Economics, July 1991.
Davis, Robin V. "Petroleum Hydrocarbon Vapor Intrusion Investigations: Current General Practice." Leaking Underground Storage Tanks, Utah Department of Environmental Quality, February 9, 2010.
E[2], Incorporated. Memoranda and analyses submitted under Contract EP-W-05-018, "U.S. Environmental Protection Agency. Underground Storage Tanks/Leaking Underground Storage Tanks Analytical and Technical Support."
E[2], Incorporated. Review of state databases, "Draft Industry and Facility Profiles," Task Order No. 1010  -  General Technical and Programmatic Support in Implementing the Energy Policy Act of 2005. December 18, 2006.
Eckert, Andrew and Douglas S. West. "A Tale of Two Cities: Price Uniformity and Price Volatility in Gasoline Retailing." Annals of Regional Science, 2004, vol. 38, issue 1, p. 25-46.
Ehrenberg, Ronald G., and Robert S. Smith. 2000. Modern Labor Economics: Theory and Public Policy (Addison Wesley Longman, Inc.), Chapters 3 and 4.
ESRI. "2009 Methodology Statement: ESRI Data -- Business Locations and Business Summary." ESRI, Redlands, CA. Accessed at: http://www.esri.com/library/whitepapers/pdfs/infousa-business-database.pdf.
Executive Order 12866. "Regulatory Planning and Review." October 4, 1993.
Fischer, Jeffrey. "The Economics of Price Zones and Territorial Restrictions in Gasoline Marketing." Federal Trade Commission. 2004. Accessed at: http://www.ftc.gov/be/workpapers/wp271.pdf.
Freeman, A.M. III. The Measurement of Environmental and Resource Values: Theory and Methods. Resources for the Future: Washington, DC. 2003.
Geyer, Wayne. "Where Has Our Petroleum Storage Capacity Gone?" Steel Tank Institute. Accessed at: https://www.steeltank.com/LinkClick.aspx?fileticket=h8g9YO5y%2BfI%3D&tabid=108&mid=502.
Greenstone, M. 2002. "The Impacts of Environmental Regulations on Industrial Activity:  Evidence from the 1970 and 1977 Clean Air Act Amendments and the Census of Manufactures," Journal of Political Economy 110(6): 1175-1219.
Guignet, Dennis. "The impacts of pollution and exposure pathways on home values: A stated preference analysis." Ecological Economics, 2012, 82, 53-63.
Guignet, Dennis. "What Do Property Values Really Tell Us? A Hedonic Study of Underground Storage Tanks." Land Economics, 2013, 89(2), 211-226.
Hamermesh. 1993. Labor Demand (Princeton, NJ: Princeton University Press), Chapter 2.
Hilton, Scott. Site Summaries Pease Air Force Base Newington/Portsmouth. 2008. New Hampshire Department of Environmental Services. 10 March 2010. Accessed at: http://des.nh.gov/organization/divisions/waste/hwrb/fss/superfund/summaries/pease.htm.
Hoch et al. "Determinants of Store-level Price Elasticity." Journal of Marketing Research, Vol. 32 (1), 1995: p. 17  -  29.
ICF. "Economic Impact Analysis of Additional Mechanisms for Local Government Entities to Demonstrate Financial Responsibility for Underground Storage Tanks." December 1992.
Industrial Economics, Inc. "Approaches to Assessing the Benefits, Costs, and Impacts of the RCRA Subtitle C Program." October 2000. Accessed at: http://www.epa.gov/oswer/docs/rcradocs/rcra.pdf.
Industrial Economics, Inc. "Detailed Assessment of UST Universe by Tank Purpose and Design." Work Assignment 1-25, Task 6, March 24, 2009.
Industrial Economics, Inc. "Detailed Assessment of UST Universe by Tank Use and Industry Sector," Work Assignment 1-25, Task 6, January 23, 2009.
Industrial Economics, Inc. "Methodology for Secondary Containment for Piping." Work Assignment 1-19, Task 5, October 3, 2008.
Industrial Economics, Inc. "Methodology to Estimate Avoided Costs Associated with a Typical UST Leak." October 27, 2008.
Industrial Economics, Inc. "Preliminary Assessment and Scoping of Data Related to Potential Revisions to the UST Regulations." Work Assignment 1-25, Tasks 2-4 November 20, 2008.
Industrial Economics, Inc. "Small Entities Screening Analysis of UST Universe by Industry Sector." Work Assignment 3-25, Task 4, February 4, 2010.
Isakson, H. and M.D. Ecker. "The Effect of Leaking Underground Storage Tanks on the Values of Nearby Homes." Technical Report. Department of Mathematics. University of Northern Iowa. 2010. Accessed at: http://faculty.cns.uni.edu/~ecker/research.html.
Kleit, Andrew N. "The Economics of Gasoline: Retailing Petroleum Distribution and Retailing Issues in the U.S." December 2003.
Layard, P.R.G., and A. A. Walters. 1978. Microeconomic Theory (McGraw-Hill, Inc.), Chapter 9.
List, J. A., D. L. Millimet, P. G. Fredriksson, and W. W. McHone. 2003. "Effects of Environmental Regulations on Manufacturing Plant Births: Evidence from a Propensity Score Matching Estimator." The Review of Economics and Statistics 85(4): 944-952.
Morgenstern, Richard D., William A. Pizer, and Jhih-Shyang Shih. "Jobs Versus the Environment: An Industry-Level Perspective." Journal of Environmental Economics and Management 43 (2002):  412-436.
Musgrave, M. "The Illinois Underground Storage Tank Fund: Tanks for Nothing," Politics & Policy 41(5): 765-787. October 2013.
National Association of Convenience Stores. 2013 Fact Book.
National Association of Convenience Stores. 2013 NACS Retail Fuels Report. Accessed at: http://www.nacsonline.com/YourBusiness/FuelsReports/GasPrices_2013/Pages/default.aspx.
National Association of Convenience Stores. 2014 NACS Retail Fuels Report. Accessed at: http://www.nacsonline.com/YourBusiness/FuelsReports/GasPrices_2014/Pages/default.aspx.
National Association of Convenience Stores. "Consumer Research: Price Still Dominates Gas Purchasing Decisions" Accessed at: http://www.nacsonline.com/YourBusiness/FuelsReports/GasPrices_2014/Consumer-Research/Pages/Consumer-Research-Price-Still-Dominates-Gas-Purchasing-Decisions.aspx.
National Association of Convenience Stores. "U.S. Petroleum Industry: Statistics, Definitions." Accessed at: http://www.nacsonline.com/YourBusiness/FuelsReports/GasPrices_2014/Retail-Operations/Pages/Who-Sells-Americas-Fuel.aspx.
National Association of Convenience Stores. "Who Sells America's Fuel?" Accessed at: http://www.nacsonline.com/YourBusiness/FuelsReports/GasPrices_2014/Retail-Operations/Pages/Who-Sells-Americas-Fuel.aspx.
National Petroleum News. "MarketFacts 2008 Overview." August 2008.
National Petroleum News. "MarketFacts 2013." Accessed at: http://www.npnweb.com/.
National Petroleum News. Market Pulse. "2005 U.S. Motor Fuel Station Count: 168,987."
New Hampshire Department of Environmental Services, Air Resources Division. 2007. Permit Application Review Summary, Former Pease AFB Remediation Project, FY04-0453. 10 March 2010. Accessed at: http://www2.des.state.nh.us/OneStopPub/Air/3301590780FY04-0453TypeSummary.pdf.
New Hampshire Department of Environmental Services, Air Resources Division. 2009. Permit Application Review Summary, Former Pease AFB Remediation Project, 09-0113. 10 March 2010. Accessed at: http://www2.des.state.nh.us/OneStopPub/Air/330159094909-0113TypeSummary.pdf.
New Hampshire Department of Environmental Services. "Underground Storage Tank Program." November 18, 2008.
Paustenbach, D J, et. al. "Benzene toxicity and risk assessment, 1972-1992: implications for future regulation." Environ Health Perspect, December 1993, 101(Suppl 6):177 - 200.
Phone conversation and email from Lynne Smith, geologist, and Russ Ellison, Virginia Department of Environmental Quality.
Poe, Gregory L., K.J. Boyle, and J.C. Bergstrom. "A Preliminary Meta Analysis of Contingent Values for Ground Water Revisited." In The Economic Value of Water Quality, edited by Bergstrom, J.C., K.J. Boyle and G.L. Poe, Cheltenham, United Kingdom: Edward Elgar Publishing Limited. 2001.
Rhode Island Department of Environmental Management. Underground Storage Tank Environmental Results Program, Final Report, Tables I-IV.
Risk Management Association. Statement Studies, Sector 447.
RTI International. "Risk Analysis to Support Potential Revisions to Underground Storage Tank (UST) Regulations." December 22, 2010.
Skeo Solutions. "Summary of Key Data from State Public Record Postings," Work Order 1006, Table 1, October 25, 2013.
Simons, Robert A. and Kimberly Winson-Geideman. 2005. "Determining Market Perceptions on Contamination of Residential Property Buyers Using Contingent Valuation Surveys," Journal of Real Estate Research, 27(2), 193-220.
Simons, Robert A., William Bowen, and Arthur Sementelli. "The Effect of Underground Storage Tanks on Residential Property Values in Cuyahoga County, Ohio." Journal of Real Estate Research, 1997, 14(1), 29-42.
Simons, Robert A., William Bowen and Arthur Sementelli. "The Price and Liquidity Effects of UST Leaks from Gas Stations on Adjacent Contaminated Property." The Appraisal Journal, 1999, 67, 186-194.
U.S. Bureau of Labor Statistics. "Employer Costs for Employee Compensation." December 2012.
U.S. Bureau of Labor Statistics. "Occupational Employment and Wages." May 2011.
U.S. Bureau of Transportation Statistics. "Sales Price of Transportation Fuel to End-Users." National Transportation Statistics 2013. Table 3-11. Accessed at: http://www.rita.dot.gov/bts/sites/rita.dot.gov.bts/files/NTS_Entire_0.pdf.
U.S. Census Bureau. 1987 Census of Governments.
U.S. Census Bureau. 2007 Census of Governments.
U.S. Census Bureau. 2007 Economic Census, Retail Trade. Industry Series. Gasoline Stations: 2007.
U.S. Census Bureau. 2011 County Business Patterns.
U.S. Census Bureau. Industry Statistics Sampler: NAICS 447, Geographic Distribution - Gasoline Stations: 1997. Accessed at: http://www.census.gov/epcd/ec97/industry/E447.HTM.
U.S. Department of Energy. "U.S. Department of Energy Underground Storage Tank (UST) Compliance Strategy Report," July 31, 2006.
U.S. Department of Health and Human Services. Public Health Service. Agency for Toxic Substances and Disease Registry. "Toxic Substances Portal  -  Jet Fuels JP-5 and JP-8." Accessed at: http://www.atsdr.cdc.gov/phs/phs.asp?id=771&tid=150.
U.S. Department of Health and Human Services. Public Health Service. Agency for Toxic Substances and Disease Registry. "Toxicological Profile for Polycyclic Aromatic Hydrocarbons." August 1995.
U.S. Department of Justice. Herfindahl-Hirschman Index. Accessed at: http://www.justice.gov/ atr/public/testimony/hhi.htm.
U.S. Department of Labor Occupational Safety and Health Administration. "Safety and Health Topics: Jet Fuel (JP8)." Accessed at: http://www.osha.gov/dts/chemicalsampling/data/CH_248748.html.
U.S. Energy Information Administration. Petroleum & Other Liquids. Prime Supplier Sales Volumes. Accessed at: http://www.eia.gov/dnav/pet/pet_cons_prim_dcu_nus_a.htm.
U.S. Energy Information Administration. Petroleum & Other Liquids. Retail prices for Regular Gasoline. Accessed at: http://www.eia.gov/dnav/pet/pet_pri_gnd_a_epmr_pte_dpgal_a.htm.
U.S. Energy Information Administration. Short-Term Energy Outlook - Real and Nominal Energy Prices for 2012. Accessed at: http://www.eia.gov/forecasts/steo/realprices/.
U.S. Environmental Protection Agency. Comment Request; Draft Supporting Materials for the Science Advisory Board Panel on the Role of Economy-Wide Modeling in U.S. EPA Analysis of Air Regulations. February 5, 2014. Accessed at: https://www.federalregister.gov/articles/2014/02/05/2014-02471/draft-supporting-materials-for-the-science-advisory-board-panel-on-the-role-of-economy-wide-modeling.
U.S. Environmental Protection Agency. "ERP States Produce Results." December 2007.
U.S. Environmental Protection Agency. "Evaluation of Three Environmental Results Programs (ERPs)." August 31, 2009.
U.S. Environmental Protection Agency. Information Collection Request Number 1360.08. October 24, 2007.
U.S. Environmental Protection Agency. Information Collection Request Number 1360.12. February 2011.
U.S. Environmental Protection Agency. Natural Resource Damage Assessment. Accessed at: www.epa.gov/ superfund/ programs/nrd/nrda2.htm.
U.S. Environmental Protection Agency, Office of Underground Storage Tanks. "Evaluation of Releases from New and Upgraded Underground Storage Tank Systems (peer review draft)." August 2004.
U.S. Environmental Protection Agency, Office of Underground Storage Tanks. "Petroleum Releases at Underground Storage Tank Facilities in Florida." March 2005.
U.S. Environmental Protection Agency, Office of Underground Storage Tanks. Semi-Annual Report of UST Performance Measures End of Fiscal Year 2009  -  As Of September 30, 2009.
U.S. Environmental Protection Agency, Office of Underground Storage Tanks. Semi-Annual Report of UST Performance Measures End of Fiscal Year 1999  -  As Of September 30, 1999.
U.S. Environmental Protection Agency, Office of Underground Storage Tanks. Semi-Annual Report of UST Performance Measures End of Fiscal Year 2013  -  As Of September 2013. Accessed at: http://www.epa.gov/oust/cat/ca-13-34.pdf.
U.S. Environmental Protection Agency, Office of Underground Storage Tanks. Strategy for an EPA/Tribal Partnership to Implement Section 1529 of the Energy Policy Act of 2005. August 2006. Accessed at: http://www.epa.gov./oust/fedlaws/Tribal%20Strategy_08076r.pdf.
U.S. Environmental Protection Agency. "Regulatory Impact Analysis of Technical Standards for Underground Storage Tanks." August 24, 1988.
U.S. Environmental Protection Agency. "Status of State Fund Programs." Accessed on August 12, 2014. Accessed at: http://www.epa.gov/oust/states/fndstatus.htm.
U.S. Internal Revenue Service. SOI TaxStats. Table 7: Corporation Returns with Net Income for 2009. Accessed at: http://www.irs.gov/taxstats/article/0,,id=170693,00.html.
U.S. Office of Management and Budget. Circular No. A-4. September 17, 2003.
U.S. Office of Management and Budget. Circular No. A-76.
U.S. Office of Management and Budget. Circular No. A-94. Revised October 29, 1992.
Utah Department of Environmental Quality. "Underground Storage Tank Program." November 18, 2008.
Vermont Department of Environmental Conservation. "Final Report  -  Environmental Results Project  -  Vermont: Underground Storage Tank Facilities." March 17, 2010.
Walker, Reed. (2011)."Environmental Regulation and Labor Reallocation." American Economic Review: Papers and Proceedings 101(3): 442-447.
Yin, H. "The environmental and economic impacts of environmental regulations: The case of underground storage tank regulations." January 1, 2006.
Young, Thomas M. and Randy D. Golding. Underground Storage Tank Field-Based Research Project Report. Submitted to the California State Water Resources Control Board under contract to the University of California, Davis. May 31, 2002.
Zabel, Jeffrey E. and Dennis Guignet. "A hedonic analysis of the impact of LUST sites on house prices." Resource and Energy Economics, 2012, 34, 549-564.


[Federal Register Volume 85, Number 91 (Monday, May 11, 2020)]
[Rules and Regulations]
[Pages 27667-27670]
[FR Doc No: 2020-09938]

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

DEPARTMENT OF TRANSPORTATION

Federal Aviation Administration

14 CFR Part 39

[Docket No. FAA-2018-0833; Product Identifier 2018-CE-031-AD; Amendment
39-21121; AD 2020-10-03]
RIN 2120-AA64

Airworthiness Directives; Weatherly Aircraft Company

AGENCY: Federal Aviation Administration (FAA), DOT.

ACTION: Final rule.

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

SUMMARY: The FAA is adopting a new airworthiness directive (AD) for all
Weatherly Aircraft Company (Weatherly) Models 201, 201A, 201B, 201C,
620, 620A, 620B, 620B-TG, and 620TP airplanes. This AD was prompted by
reports of fatigue cracking of the center wing and outer wing spar
hinge brackets due to corrosion pitting. This AD requires repetitive
inspections of the wing hinge brackets, pins, and wing spar structure
with repair or replacement of parts as necessary. The FAA is issuing
this AD to address the unsafe condition on these products.

DATES: This AD is effective June 15, 2020.
    The Director of the Federal Register approved the incorporation by
reference of certain publications listed in this AD as of June 15,
2020.

ADDRESSES: For service information identified in this final rule,
contact Weatherly Aircraft Company, 2034 West Potomac Avenue, Chicago,
Illinois 60622-3152; telephone:<PHONE_NUMBER>; email:
<EMAIL_ADDRESS>You may view this service information at the FAA,
Airworthiness Products Section, Operational Safety Branch, 901 Locust,
Kansas City, Missouri 64106. For information on the availability of
this material at the FAA, call<PHONE_NUMBER>. It is also available on
the internet at https://www.regulations.gov by searching for and
locating Docket No. FAA-2018-0833.

Examining the AD Docket

    You may examine the AD docket on the internet at https://www.regulations.gov by searching for and locating Docket No. FAA-2018-
0833; or in person at Docket Operations between 9 a.m. and 5 p.m.,
Monday through Friday, except Federal holidays. The AD docket contains
this final rule, the regulatory evaluation, any comments received, and
other information. The address for Docket Operations is U.S. Department
of Transportation, Docket Operations, M-30, West Building Ground Floor,
Room W12-140, 1200 New Jersey Avenue SE, Washington, DC 20590.

FOR FURTHER INFORMATION CONTACT: Roger Durbin, Senior Engineer,
Airframe Section, Los Angeles Aircraft Certification Office, FAA, 3960
Paramount Blvd, Suite 100, Lakewood, California, 90712; phone: (562)
627-5233; fax:<PHONE_NUMBER>; email<EMAIL_ADDRESS>
SUPPLEMENTARY INFORMATION:

Discussion

    The FAA issued a notice of proposed rulemaking (NPRM) to amend 14
CFR part 39 by adding an AD that would apply to Weatherly Models 201,
201A, 201B, 201C, 620, 620A, 620B, 620B-TG, and 620TP airplanes. The
NPRM published in the Federal Register on September 18, 2018 (83 FR
47116). The

NPRM was prompted by notification the FAA received in 2015 of a fatal
accident caused by the in-flight structural failure of a wing on a
Weatherly Model 620B airplane. The accident investigation found
multiple fatigue cracks in the center wing front spar lower hinge
bracket. As a result of operator inspections, a cracked hinge bracket
in the center wing to outer wing joint was also reported on a different
airplane. The hinge bracket from the second report had completely
failed, and the airplane was relying on the second failsafe hinge
bracket to carry the wing loads.
    To correct this unsafe condition, the FAA issued AD 2016-07-11 (81
FR 18461, March 31, 2016) (``AD 2016-07-11''), which requires a one-
time visual inspection of the center and outer wing front spar lower
hinge brackets for cracks and corrosion and corrective action as
necessary. AD 2016-07-11 also requires sending a report of the
inspection results to the FAA.
    Since the FAA issued AD 2016-07-11, Weatherly has issued new
service information for repetitive visual and detailed inspections.
Since the cause of the fatigue cracks were attributed to corrosion pits
on the accident airplane, the NPRM proposed to require those repetitive
visual and detailed inspection actions. The FAA is issuing this AD to
address the unsafe condition on these products.
    The NPRM incorrectly stated that Weatherly had developed improved
center wing hinge brackets manufactured from corrosion resistant
material. The FAA has learned that those improved brackets were not
developed or approved. Therefore, improved brackets are not currently
available to correct the unsafe condition.

Comments

    The FAA gave the public the opportunity to participate in
developing this final rule. The following presents the comments
received on the NPRM and the FAA's response to each comment.

Request To Extend the Inspection Intervals

    Two individuals requested that the FAA allow more than 5 years for
the follow-up detailed inspection requirement. One commenter stated
that removing all fittings and hardware every five years is unnecessary
if corrosion preventative measures are taken during the initial
detailed inspection. The commenter stated that, for aircraft that are
20-30 years old, if no unacceptable corrosion is found and the aircraft
is reassembled with corrosion preventative measures, the detailed
inspection/disassembly intervals should be extended to 15 or more
years. The other commenter requested the FAA extend the requirement to
repeat the detailed inspection from 5 years to 10 years if an aircraft
owner proactively replaces the hinge brackets with Weatherly's improved
hinge brackets manufactured from corrosion resistant material. A third
commenter requested that the AD require a detailed visual inspection
within 50 hours of the effective date of the AD or within the next 6
months, whichever is sooner. According to the commenter, Weatherly's 3-
month compliance time did not seem well thought out. The commenter
further requested the AD allow installation of the Weatherly corrosion-
resistant hinge brackets as terminating action for the detailed
inspection requirements.
    The FAA does not agree with the requests to change the inspection
intervals. The hinge brackets are close-tolerance parts that are
subject to wear, and neither testing nor analysis has substantiated
longer inspection intervals when corrosion inhibiting compounds are
used. In addition, as stated earlier, no improved hinge brackets with
corrosion resistant material are currently available; therefore,
extending the compliance time based on improved brackets is not
possible. In determining the inspection intervals, the FAA considered
that corrosion growth is highly variable and that the failed parts do
not represent average life times. No changes were made to the AD based
on these comments.

Request To Change the Inspection Requirements

    One commenter requested the FAA reconsider the AD requirements
using the total time of the aircraft and the information in an AD
issued by the Australian Aviation Authority in 2002 regarding
retirement lives of the wing attachment fittings and lower spar cap.
The commenter did not identify the 2002 Australian AD by AD number.
However, the commenter did include a copy of Civil Aviation Safety
Authority AD/W620/2, Wing Hinge Pins, dated October 1996, which
requires a one-time inspection of the wing hinge pins for correct
length and installation.
    The total aircraft time was not a factor in the proposed AD because
it is not a reliable predictor of fatigue crack initiation in the
presence of corrosion. The FAA has reviewed the 2002 Australian AD and
finds that it does not address any contributing factors associated with
the Weatherly Model 620B accident on August 26, 2015. No changes were
made to the AD based on this comment.

Conclusion

    The FAA reviewed the relevant data, considered the comments
received, and determined that air safety and the public interest
require adopting this final rule as proposed except for minor editorial
changes. The FAA has determined that these minor changes:
     Are consistent with the intent that was proposed in the
NPRM for addressing the unsafe condition; and
     Do not add any additional burden upon the public than was
already proposed in the NPRM.

Related Service Information Under 1 CFR Part 51

    The FAA reviewed Weatherly 201/620 Service Bulletin SB-201/620-
18001, Revision C, dated May 21, 2018. The service information
describes procedures for initial and repetitive inspections of the wing
hinge brackets, pins, and wing spar structure for corrosion and/or
cracks with repair or replacement as necessary. This service
information is reasonably available because the interested parties have
access to it through their normal course of business or by the means
identified in the ADDRESSES section.

Costs of Compliance

    The FAA estimates that this AD affects 94 airplanes of U.S.
registry.
    The FAA estimates the following costs to comply with this AD:

                                                 Estimated Costs
----------------------------------------------------------------------------------------------------------------
                                                                                Cost on U.S.
            Action                   Labor cost             Parts cost        Cost per product      operators
----------------------------------------------------------------------------------------------------------------
Detailed inspection for        50 work-hours x $85    Not applicable........  $4,250 per        $399,500 per
 corrosion and cracks with      per hour = $4,250                              inspection        inspection
 wing removed.                  per inspection cycle.                          cycle.            cycle.

Visual inspection for          4 work-hours x $85     Not applicable........  $340 per          $31,960 per
 corrosion with bolts and pin   per hour = $340 per                            inspection        inspection
 caps removed.                  inspection cycle.                              cycle.            cycle.
----------------------------------------------------------------------------------------------------------------

    The FAA estimates the following costs to do any necessary
replacements that would be required based on the results of the
inspection. The FAA has no way of determining the number of airplanes
that might need these replacements.

                                               On-Condition Costs
----------------------------------------------------------------------------------------------------------------
                                                                                Parts cost
                 Action                                 Labor cost                   (includes       Cost per
                                                                                hardware)        product
----------------------------------------------------------------------------------------------------------------
Replacement of the assembly if all       0 work-hours since part is already              $10,500         $10,500
 parts are found with corrosion.          removed from airplane.
----------------------------------------------------------------------------------------------------------------

    The on-condition costs reflects the cost to replace the entire
assembly. The scope of damage found in the required inspection and
which specific parts need replaced could vary significantly from
airplane to airplane. The FAA has no way of determining how much damage
may be found on each airplane or the cost to repair damaged parts on
each airplane or the number of airplanes that may require repair.

Authority for This Rulemaking

    Title 49 of the United States Code specifies the FAA's authority to
issue rules on aviation safety. Subtitle I, section 106, describes the
authority of the FAA Administrator. Subtitle VII: Aviation Programs,
describes in more detail the scope of the Agency's authority.
    The FAA is issuing this rulemaking under the authority described in
Subtitle VII, Part A, Subpart III, Section 44701: General requirements.
Under that section, Congress charges the FAA with promoting safe flight
of civil aircraft in air commerce by prescribing regulations for
practices, methods, and procedures the Administrator finds necessary
for safety in air commerce. This regulation is within the scope of that
authority because it addresses an unsafe condition that is likely to
exist or develop on products identified in this rulemaking action.

Regulatory Findings

    This AD will not have federalism implications under Executive Order
13132. This AD will not have a substantial direct effect on the States,
on the relationship between the national government and the States, or
on the distribution of power and responsibilities among the various
levels of government.
    For the reasons discussed above, I certify that this AD:
    (1) Is not a ``significant regulatory action'' under Executive
Order 12866,
    (2) Will not affect intrastate aviation in Alaska, and
    (3) Will not have a significant economic impact, positive or
negative, on a substantial number of small entities under the criteria
of the Regulatory Flexibility Act.

List of Subjects in 14 CFR Part 39

    Air transportation, Aircraft, Aviation safety, Incorporation by
reference, Safety.

Adoption of the Amendment

    Accordingly, under the authority delegated to me by the
Administrator, the FAA amends 14 CFR part 39 as follows:

PART 39--AIRWORTHINESS DIRECTIVES

0
1. The authority citation for part 39 continues to read as follows:

    Authority:  49 U.S.C. 106(g), 40113, 44701.

Sec.  39.13  [Amended]

0
2. The FAA amends Sec.  39.13 by adding the following new airworthiness
directive (AD):

2020-10-03 Weatherly Aircraft Company: Amendment 39-21121; Docket
No. FAA-2018-0833; Product Identifier 2018-CE-031-AD.

(a) Effective Date

    This AD is effective June 15, 2020.

(b) Affected ADs

    None.

(c) Applicability

    This AD applies to Weatherly Aircraft Company (Weatherly) Models
201, 201A, 201B, 201C, 620, 620A, 620B, 620B-TG, and 620TP
airplanes, all serial numbers, certificated in any category.

(d) Subject

    Joint Aircraft System Component (JASC)/Air Transport Association
(ATA) of America Code 5740, Wing Attach Hinge Fitting.

(e) Unsafe Condition

    This AD was prompted by reports of cracks found on the center
wing front spar lower hinge bracket. The FAA is issuing this AD to
detect and correct corrosion and cracks on the wing hinge brackets
and pin assemblies. The unsafe condition, if not addressed, could
result in failure of the wing front and rear spar lower hinge
brackets and lead to in-flight separation of the wing with
consequent loss of control of the airplane.

(f) Compliance

    Comply with this AD within the compliance times specified,
unless already done.

(g) Detailed Inspection

    (1) Within 3 months after June 15, 2020 (the effective date of
this AD) and thereafter at intervals not to exceed 5 years, inspect
each center and outer wing spar and spar cap, wing hinge bracket,
and hardware for corrosion and cracks by following paragraphs 7
through 22 under the Detailed Inspection section in Weatherly 201/
620 Service Bulletin SB-201/620-18001, Revision C, dated May 21,
2018 (Weatherly SB-201/620-18001, Revision C), except this AD does
not require you to contact Weatherly.
    (2) Serial numbers (S/N) 1155 and 1558 have already had the
initial detailed inspection required by paragraph (g)(1) of this AD
and only the 5-year repetitive detailed inspections are required for
these airplanes.
    (3) Any repair or replacement of parts with corrosion and any
replacement of parts with a crack as specified in paragraphs 7
through 13 under the Detailed Inspection section in Weatherly SB-
201/620-18001, Revision C, is required before further flight.

(h) Visual Inspection

    Within 12 months after the initial detailed inspection required
in paragraph (g) of this AD and thereafter at intervals not to
exceed 12 months, visually inspect each forward and rear wing hinge
bracket attachment pin, bolt, removed cap, spacer, and hardware for
corrosion by following paragraphs 4 through 7 under the Visual
Inspection section in Weatherly SB-201/620-18001, Revision C. Any
additional inspection, repair, and replacement of parts with
corrosion as specified in paragraphs 5 and 6 under the Visual
Inspection section of Weatherly SB-201/620-18001, Revision C, is
required before further flight. You may perform a detailed
inspection in accordance with paragraph (g) of this AD instead of
any visual inspection required by paragraph (h) of this AD.

(i) Alternative Methods of Compliance (AMOCs)

    (1) The Manager, Los Angeles ACO Branch, FAA, has the authority
to approve AMOCs for this AD, if requested using the procedures
found in 14 CFR 39.19. In accordance with 14 CFR 39.19, send your
request to your principal inspector or local Flight Standards
District Office, as appropriate. If sending information directly to
the manager of the certification office, send it to the attention of
the person identified in paragraph (j) of this AD.
    (2) Before using any approved AMOC, notify your appropriate
principal inspector, or lacking a principal inspector, the manager
of the local flight standards district office/certificate holding
district office.

(j) Related Information

    For more information about this AD, contact Roger Durbin, Senior
Engineer, Airframe Section, Los Angeles Aircraft Certification
Office, FAA, 3960 Paramount Blvd., Suite 100, Lakewood, California
90712; phone:<PHONE_NUMBER>; fax:<PHONE_NUMBER>; email:
<EMAIL_ADDRESS>
(k) Material Incorporated by Reference

    (1) The Director of the Federal Register approved the
incorporation by reference (IBR) of the service information listed
in this paragraph under 5 U.S.C. 552(a) and 1 CFR part 51.
    (2) You must use this service information as applicable to do
the actions required by this AD, unless the AD specifies otherwise.
    (i) Weatherly 201/620 Service Bulletin SB-201/620-18001,
Revision C, dated May 21, 2018.
    (ii) [Reserved]
    (3) For Weatherly Aircraft Company service information
identified in this AD, contact Weatherly Aircraft Company, 2034 West
Potomac Avenue, Chicago, Illinois 60622-3152; telephone: (424) 772-
1812; email<EMAIL_ADDRESS>    (4) You may view this referenced service information at the FAA,
Airworthiness Products Section, Operational Safety Branch, 901
Locust, Kansas City, Missouri 64106. For information on the
availability of this material at the FAA, call<PHONE_NUMBER>.
    (5) You may view this service information that is incorporated
by reference at the National Archives and Records Administration
(NARA). For information on the availability of this material at
NARA, email<EMAIL_ADDRESS>or go to: https://www.archives.gov/federal-register/cfr/ibr-locations.html.

    Issued on May 1, 2020.
Lance T. Gant,
Director, Compliance & Airworthiness Division, Aircraft Certification
Service.
[FR Doc. 2020-09938 Filed 5-8-20; 8:45 am]
 BILLING CODE 4910-13-P