EO12866_UST Revisions 2050-AG46_NPRM_ EA-RIA_20110914

        Assessment of the Potential Cost, Benefits, and Other Impacts
                         of the Proposed Revisions to
                  EPA's Underground Storage Tank Regulations

                                 Prepared for:

      Policy and Standards Division, Office of Underground Storage Tanks,
        U.S. Environmental Protection Agency, 1200 Pennsylvania Ave NW,
                             Washington, DC 20460

                                 Prepared by:

                      Industrial Economics, Incorporated
                           2067 Massachusetts Avenue
                             Cambridge, MA  02140
                                 617/354-0074

                                  August 2011

                     [This page intentionally left blank.]
Acronyms And Terms
AHFDS  -  Airport Hydrant Fuel Distribution System
ASTSWMO  -  Association of State and Territorial Solid Waste Management Officials
ATG  -  Automatic Tank Gauge / Gauging  -  an automated process that monitors product level and provides inventory control
BLS  -  United States Bureau of Labor Statistics
BTEX  -  Benzene, Toluene, Ethylbenzene, and Xylenes
CFR  -  Code of Federal Regulations
CITLD  -  Continuous In-Tank Leak Detection
EGT  -  Emergency Generator Tank
EPA  -  United States Environmental Protection Agency
EPAct  -  Energy Policy Act of 2005
FCT  -  Field-Constructed Tank
Fill pipe  -  The access by which the tank is filled
IRS  -  United States Internal Revenue Service
LLD  -  Line Leak Detector / Detection  -  a device that alerts the tank operator to the presence of a leak in underground piping by restricting or shutting off the flow of product through the piping, or by triggering an audible or visible alarm
LUST  -  Leaking Underground Storage Tank
MIDAS - Modeling of Infection Diseases Agents Study
NACS  -  National Association of Convenience Stores
NAICS  -  North American Industry Classification System
NRDA  -  Natural Resource Damage Assessment
OMB  -  United States Office of Management and Budget
OUST  -  Office of Underground Storage Tanks, United States Environmental Protection Agency
PAHs  -  Polycyclic Aromatic Hydrocarbons
Pd  -  Probability of detection
Pfa  -  Probability of false alarm
RFA  -  Regulatory Flexibility Act
SBA  -  United States Small Business Administration
SBREFA  -  Small Business Regulatory Enforcement Fairness Act of 1996
SDWA  -  Safe Drinking Water Act
SIR  -  Statistical Inventory Reconciliation  -  a leak detection method where inventory, delivery, and dispensing data is statistically analyzed
SISNOSE  -  Significant Impact on a Substantial Number of Small Entities
SPA  -  State Program Approval
SPCC  -  Spill Prevention, Control, and Countermeasure
Spill bucket  -  A contained sump installed at the fill and/or vapor recovery connection points to contain drips and spills that can occur during delivery
Sump  -  A subsurface area pit designed to provide access to equipment located below ground, and, when contained, to prevent liquids from releasing into the environment
TPH  -  Total Petroleum Hydrocarbons
Turbine sump  -  A sump designed to provide access to the turbine area above the tank
TVM  -  Time value of money
UDC  -  Under-Dispenser Containment  -  a device for collecting fluids spilled beneath a dispenser (pump) (e.g. dispenser pan)
UMRA  -  Unfunded Mandates Reform Act
UST  -  Underground Storage Tank
VSL  -  Value of a Statistical Life
WA  -  Work Assignment
WTP  -  Willingness to Pay

                               Table Of Contents
Executive Summary
Chapter 1.  Introduction
1.1  Background	1-1
1.2  Need for Regulatory Action	1-2
1.3  Summary of the Proposed Rule	1-3
1.4  Alternative Regulatory Options	1-5
1.5  Scope of Analysis	1-8
1.6  Report Organization	1-8

Chapter 2. Universe of UST Systems Affected by the Proposed Rule

2.1  Types of Entities Affected by the Proposed Rule	2-1
2.2  Configuration of Average Conventional UST System	2-2
2.3  UST Universe Size and Distribution Across Sectors	2-4
2.4  Universe of Facilities and Systems Potentially Affected by Proposed Rule	2-7
2.5  Facilities and Systems Affected by Proposed Rule	2-10

Chapter 3.  Assessment of Social Costs
3.1  Introduction	3-1
3.2  Compliance Cost Methodology	3-1

        3.2.1  Categories of Compliance Costs Analyzed	3-3
        3.2.2  Estimation of System-Level Compliance Costs for UST Systems	3-5

3.3  Calculation of Incremental Compliance Costs	3-8

        3.3.1. Calculation of Incremental Compliance Costs Using an Alternative Baseline.......	3-10

3.4  Results of Assessment of Compliance Costs	3-11

        3.4.1  Assessment of Compliance Costs under the Alternative Baseline
                  Scenario......................................................................................	3-17

3.5  Sensitivity Analysis	3-17

       3.5.1  Compliance Costs of the Proposed Rule Using Alternative Estimates of Labor
                 Rates Overhead Costs, and Fringe Benefits	3-18
       3.5.2  Sensitivity Analysis of Distribution of Technologies Tested for Overfill
                 Operability, Spill Prevention Equipment Tightness, and Interstitial Integrity	3-21
       3.5.3  Sensitivity Analysis of Compliance Costs for Interstitial Integrity Testing	3-22
       3.5.4  Summary of Sensitivity Findings	3-22

3.6  Administrative Compliance Costs	3-23

       3.6.1  State Government Administrative Compliance Costs	3-23
       3.6.2  Costs to Regulated Universe to Review Regulations	3-24

3.7  Summary  -  Total Social Costs	3-24

       3.7.1  Summary  -  Total Social Costs under the Alternative Baseline
                 Scenario........................................................................................	3-26

Chapter 4.  Assessment of Benefits and Cost Savings

4.1  Introduction	4-1
4.2  Investigation of Empirical Methods for Measuring Benefits and Cost Savings	4-1

       4.2.1  Engineering Estimates and Literature	4-1
       4.2.2  Statistical Analysis of State Release Data	4-3

4.3  Final Methodology for Assessment of Positive Impacts:  Expert Consultation	4-6

       4.3.1  Avoided Remediation Costs	4-7
       4.3.2  Calculating Avoided Remediation Costs	4-8

4.4  Establishing Avoided Releases	4-10

       4.4.1 Avoided Releases Using an Alternative Baseline..................................	4-13

4.5  Benefits from Avoided Releases and Reduced Release Severity	4-15

       4.5.1  Avoided Release Remediation	4-16
       4.5.2  Reduction in Release Severity	4-16
       4.5.3 Total Avoided Remediation Costs from Avoided Releases and
        Reduced Release Severity.........................................................	4-18
       4.5.4  Benefits from Avoided Releases  and Reduced Release Severity
                 under the Alternative Baseline Scenario....................................................	4-18
       4.5.5  Avoided Costs by Proposed Requirement	4-20

4.6  Avoided Vapor Intrusion Damages	4-25
4.7  Product Loss	4-25
4.8  Human Health Benefits	4-27

       4.8.1  Avoided Benzene Cancer Risk	4-27
       4.8.2  Other Human Health Benefits	4-29

4.9    Avoided Acute Exposure Events and Large-Scale Releases	4-30
4.10  Ecological Benefits	4-31
4.11  Conclusions	4-34

       4.11.1   Summary of Positive Impacts under the Alternative Baseline Scenario..............4-35

Chapter 5.  Distributional Impacts and Considerations

5.1  Introduction	5-1
5.2  Economic Impacts	5-1

       5.2.1  Distribution of UST Systems by Industry Sector	5-3
       5.2.2  Market Dynamics in the Retail Motor Fuels Sector	5-4
       5.2.3  Assessment of Market Exits and Employment Impacts	5-8
       5.2.4  Assessment of Public Sector Cost Savings Related to Avoided Releases	5-14
       5.2.5  Economic Impact Summary	5-17

5.3  Energy Impact Analysis	5-17
5.4  Regulatory Flexibility Analysis	5-19

       5.4.1  Small Business Screening Analysis	5-20
       5.4.2  Small Business Supplemental Analysis	5-21
       5.4.3  Impacts to Small Governments	5-22

5.5  Screening Analysis to Inform Impacts on Minority and Low-Income Populations	5-24

       5.5.1  Risk Assessment Population Analysis	5-25
       5.5.2  Demographic Analysis	5-26
       5.5.3  Summary and Limitations of the Analysis	5-30

5.6  Children's Health Protection Analysis	5-30

Chapter 6.  Other Statutory and Executive Order Analyses

6.1  Regulatory Planning and Review	6-1
6.2  Unfunded Mandates Analysis	6-2
6.3  Federalism Analysis	6-3
6.4  Tribal Government Analysis	6-4
6.5  Joint Impacts of Rules	6-5

Chapter 7.  Comparison of Costs, Benefits, and Other Impacts

7.1  Cost Benefit Comparison	7-2

       7.1.1  Cost-Benefit Comparison under the Alternative Baseline Scenario.....................7-4

7.2  Cost-Effectiveness Analysis	7-5
7.3  Costs and Beneficial Effects Under Alternative Discount Rates	7-5

Appendices:

Appendix A: 	Configuration and Cost Assumptions for Airport Hydrant Fuel Distribution
                        Systems and Field-Constructed Tanks.
Appendix B:  	Estimation of Affected UST Universe and Baseline State Regulations.
Appendix C:   	Analysis of Piping Replacement Thresholds
Appendix D:	Methodology for Calculating Compliance Costs
Appendix E:	Access Model Structure and Specifications
Appendix F: 	Analysis of Statistical Relationship between State Regulatory Programs and
                        Confirmed Release Data
Appendix G: 	Expert Consultation:  Selection and Data Collection Methodology
Appendix H:	Expert Consultation:  Responses
Appendix I: 	Methodology for Calculating Avoided Cleanup Costs
Appendix J: 	Estimation of Future UST System and Release Universes for the Alternative Baseline Scenario
Appendix K:	Methodology for Estimating Upper Bound Market Exit Scenario
Appendix L:	Screening Analysis of Impacts on Small Entities
Appendix M:	Screening Analysis to Inform Impacts on Minority and Low-Income Populations
Appendix N:	Cost Savings to State Financial Assurance Funds
Appendix O:	UMRA Written Statement

                              Executive Summary

Overview

	In 1984, Congress responded to the increasing threat to groundwater from leaking underground storage tank (UST) systems by adding Subtitle I to the Solid Waste Disposal Act (SWDA).  SWDA required the U.S. Environmental Protection Agency (EPA) to protect the environment and human health from UST releases by developing a comprehensive regulatory program for UST systems storing petroleum or certain hazardous substances.  In 1986, Congress amended Subtitle I of SWDA and created the Leaking Underground Storage Tank Trust Fund (LUST Trust Fund) to oversee and pay for cleanups at sites where the owner or operator is unknown, unwilling to pay, or unable to pay.

	EPA promulgated the UST regulation in 1988 (40 CFR Part 280).  This regulation set minimum standards for new tanks and required owners and operators of existing tanks to upgrade, replace, or close them.  The 1988 regulation set deadlines for owners and operators to meet the new requirements.  In 1988, EPA also promulgated a regulation for state program approval (40 CFR Part 281).  EPA has not significantly changed these regulations since 1988.  In 2005, the Energy Policy Act (EPAct) further amended Subtitle I of SWDA.  EPAct requires states that receive federal Subtitle I money from EPA to meet certain requirements.  EPA developed grant guidelines for states regarding operator training, inspections, delivery prohibition, secondary containment, financial responsibility for manufacturers and installers, public record, and state compliance reports on government UST systems.

	After Congress passed EPAct, EPA decided to revise the 1988 UST regulation (at 40 CFR Part 280), primarily to ensure parity in Indian country.  Key EPAct provisions (such as secondary containment and operator training) apply to all states receiving federal Subtitle I money, regardless of their state program approval status; but these key provisions do not apply in Indian country (or in states and U.S. territories that do not meet EPA's operator training or secondary containment grant guidelines).  In order to establish federal UST requirements  similar to the UST secondary containment and operator training requirements of EPAct, EPA decided to revise the 1988 UST regulation.  Without these changes, EPAct provisions will not apply in Indian country.  These proposed revisions will also fulfill the objectives of the EPA-Tribal UST Strategy (August 2006) in which both EPA and tribes recognized it is important to ensure parity in implementing UST program requirements in states and territories, as well as in Indian country.

	EPA decided now is also an appropriate time to change the 1988 UST regulation.  While EPA has issued many guidance documents and used various implementation approaches and techniques over the last twenty years, we have not made significant changes to the original 1988 regulation. Indeed, most states have passed requirements that go far beyond the original federal regulation.  These regulations fully implement provisions of the EPAct and improve important aspects of the existing (outdated) regulations.  Furthermore, while information on sources and causes of releases show that releases from tanks are less common than they once were, releases from piping and spills and overfills associated with deliveries have emerged as more common problems.  Releases at the dispenser have also emerged as one of the leading sources of releases.  The lack of proper operation and maintenance of UST systems is a main cause of release from these areas.

      The proposed revisions focus on ensuring equipment is properly maintained and working, and highlight the importance of operating and maintaining UST equipment so releases are prevented and detected early in order to avoid or minimize potential soil and groundwater contamination.

      EPA worked diligently to ensure our proposed regulation development process was open and transparent.  Over a two year period, we provided all stakeholders  -  state and tribal regulators; federal facilities; petroleum industry members, including representatives of owners and operators; equipment manufacturers; small businesses; local governments; and environmental and community groups  -  an opportunity to share their ideas and concerns through a variety of meetings, conference calls, and email exchanges.  EPA thoroughly considered all input as we developed the proposed UST regulation changes.

Proposed Regulatory Changes

EPA is proposing to revise the 1988 UST regulation in order to: establish federal requirements similar to certain key provisions of the EPAct; ensure owners and operators perform proper operation and maintenance; address deferrals; update the regulation to current technology and practices; and make technical and editorial corrections.  Specifically, EPA is proposing these revisions (hereafter the Preferred Option):

   *       Establish federal requirements for secondary containment and operator training similar to those established by the EPAct for states that receive federal Subtitle I money

   *       Add operation and maintenance requirements
         o             Walkthrough inspections
         o             Spill prevention equipment tests
         o             Overfill prevention equipment tests
         o             Interstitial integrity tests
         o             Operability tests for release detection methods

   *       Address existing 40 CFR 280 deferrals
         o             Require release detection for emergency generator UST systems
         o             Remove deferrals and regulate airport hydrant fuel distribution systems (AHFDSs) and UST systems with field-constructed tanks (FCTs) with alternate release detection requirements
         o             Remove deferrals for wastewater treatment tanks

   *       Provide for other changes to improve release prevention and detection and program implementation
         o             Require testing after repairs to spill and overfill prevention equipment, and interstices
         o             Eliminate flow restrictors in vent lines as an overfill prevention option for all new tanks and when overfill devices are replaced
         o             Require closure of lined tanks that cannot be repaired according to a code of practice
         o             Address responses to interstitial monitoring alarms
         o             Notification requirement of ownership change
         o             Eliminate groundwater and vapor monitoring as release detection methods
         o             Establish requirements for determining compatibility

   *       Make general updates to the regulation
         o             Reference newer technologies, including explicitly adding statistical inventory reconciliation (SIR) and continuous in-tank leak detection (CITLD) as release detection methods
         o             Update codes of practice listed in the regulation
         o             Remove old upgrade and implementation deadlines
         o             Make editorial and technical corrections

   *       Revise state program approval (40 CFR Part 281) to be consistent with the above revisions

      In addition to the Preferred Option, EPA considered two other regulatory alternatives, described as Alternative 1 and Alternative 2.  Alternative 1 is overall more stringent than the Preferred Option.  Alternative 2 is overall less stringent than the Preferred Option.  Exhibit ES-1 summarizes the requirements under each alternative.

      EPA designed this assessment to satisfy the Office of Management and Budget's (OMB) requirements for regulatory review under Executive Order 12866 (as amended by Executive Order 13258), which applies to any significant regulatory action.  This document also fulfills these requirements:

   *       Regulatory Flexibility Act, as amended by Small Business Regulatory Enforcement Fairness Act of 1996
   *       Executive Order 12898, Federal Actions to Address Environmental Justice in Minority Populations and Low-Income Populations
   *       Executive Order 13045, Protection of Children From Environmental Health Risks and Safety Risks
   *       Unfunded Mandates Reform Act of 1995
   *       Executive Order 13175, Consultation and Coordination With Indian Tribal Governments
   *       Executive Order 13132, Federalism
   *       Executive Order 13211, Actions Concerning Regulations That Significantly Affect Energy Supply, Distribution, or Use

Exhibit ES-1
                   Options Considered For The Proposed Rule

                            Requirement Description
                                    Options

                                   Preferred
                                 Alternative 1
                                 Alternative 2
                              Release Prevention

Walkthrough inspections
Monthly
Monthly
Quarterly
Overfill prevention equipment tests
3 year
1 year
3 year
Spill prevention equipment tests
1 year
Require replacement every 3 years, no testing
1 year
Interstitial integrity tests
3 year
1 year
Not required
Testing after repairs to spill and overfill prevention equipment, and interstices
Required
Required
Required
Elimination of flow restrictors in vent lines for all new tanks and when overfill devices are replaced
Required
Required
Not required
                               Release Detection

Operability tests for release detection methods
1 year
1 year
3 year
Change leak rate probabilities from 95/5 to 99/1 (Pd/Pfa)
Not required
Required
Not required
Add SIR and CITLD to regulation with performance criteria
Required
Required
Required
Response to interstitial monitoring alarms
Required
Required
Required
Eliminate groundwater and vapor monitoring as release detection methods
Eliminate in 5 years
Eliminate immediately
Not required
Remove deferral for emergency generator tanks
Required
Required
Required
                                     Other

Require notification of ownership change
Required
Required
Required
Closure of lined tanks that cannot be repaired according to a code of practice
Required
Required
Required
Requirements for determining compatibility
Required
Required
Required
Remove deferrals for airport hydrant fuel distribution systems and UST systems with field-constructed tanks
Regulate under alternative release detection requirements
Regulate under release detection requirements for conventional UST systems
Maintain deferrals
                           EPAct-related Provisions

Operator training
Required
Required
Required
Secondary containment
Required
Required
Required

Summary of Findings

      Within the constraints of data availability, EPA in this analysis identified all quantifiable and qualitative impacts for this proposed rule.  EPA obtained sufficient data to identify, by state, the number of units likely to be affected by each proposed change in the proposed rule.  In our analysis, we used these data to assess the compliance costs imposed upon units and relevant state governments.  In conducting these analyses, EPA also assessed the sensitivity of outcomes to key assumptions.  Separately, the analysis monetizes a number of impacts of the proposed rule including:  avoided costs generated by avoided releases; reduction in severity of releases; avoided product loss; avoided vapor intrusion damages; and a subset of human health benefits. This analysis quantifies, but does not value, groundwater impacts.  Finally, due to data and resource limitations, EPA in this analysis was unable to quantify or value a subset of human health benefits and ecological impacts, but addressed these qualitatively.

	In addition to identifying costs and positive impacts, EPA in this analysis also examined the economic and distributional impacts of the proposed rule.  The economic impact analysis includes the proposed rule's effect on facility closures, employment, and energy output and cost.  In the analysis of the proposed rule's distributional impacts, we examined small business impacts, effects on minority and low-income populations, impacts on children's health, and potential impacts on state financial assurance funds.  Finally, EPA's analysis considered the proposed rule's impacts related to certain executive orders and statutes, including Unfunded Mandates Reform Act, tribal governments, and federalism.

      The main conclusions of this analysis are:

   *       Social costs  -  EPA estimated $210 million in annual social costs for the proposed rule.  Costs range from approximately $130 million under Alternative 2 to $520 million under Alternative 1.
   *       State and local government costs  -  Annual state and local government costs, including compliance costs to UST systems owned or operated by state and local governments, state program approval costs, and state costs for processing ownership changes, and one-time notifications for previously deferred systems are approximately $9 million.  These range from approximately $7 million under Alternative 2 to $19 million under Alternative 1.
   *       Avoided costs  -  Avoided remediation costs form the majority of positive impacts from the proposed rule.  EPA estimated the proposed rule will avoid total costs of $300 million per year to $740 million per year under the Preferred Option. This includes:  $300 million to $700 million in avoided remediation costs from avoided releases and avoided groundwater contamination incidents; $0.4 million to $26 million in avoided vapor intrusion remediation costs; and approximately $2 million to $7 million in avoided product loss.  Total avoided costs range from $310 million to $770 million under Alternative 1 and from $110 million to $590 million under Alternative 2.
   *       Benefits  -  Due to data and resource constraints, EPA only quantified human health benefits from avoided benzene-related cancer and was unable to quantify or monetize many of the proposed rule's benefits.  The benefits from avoided benzene-related cancer total less than $5,000 per year.  In addition, EPA estimated the proposed rule could potentially protect 110 billion to 350 billion gallons of groundwater each year.  Categories of nonmonetizable or nonquantifiable benefits that are qualitatively discussed in this analysis include:  avoidance of nonbenzene health risks, mitigation of acute exposure events and large-scale releases (e.g., releases from airport hydrant fuel distribution systems and UST systems with field-constructed tanks), and protection of ecological biota.
   *       Social costs and avoided costs under the alternative baseline  -  Under the alternative baseline scenario that assumes declines in the universes of both UST systems and releases over time, EPA estimated $200 million in annual social costs for the proposed rule. Annual social costs in the alternative baseline scenario range from $120 million under Alternative 2 to $510 million under Alternative 1. EPA also estimated total avoided costs of $180 million to $440 million under the Preferred Option in the alternative baseline scenario. These avoided costs range from $64 million to $360 million under Alternative 2 to $180 million to $460 million under Alternative 1.
   *       Average economic impacts  -  Motor fuel retailers, which account for roughly 80 percent of UST systems, are expected to bear approximately 70 percent of the total costs under the Preferred Option.  To establish how the proposed rule may impact the market, EPA examined whether it imposes a cost greater than the average after-tax profit margin of 1.5 percent for motor fuel retailers.  Using this benchmark, we estimate approximately 560 firms may exit the market if they cannot pass costs through to customers.  This number represents less than one percent of the total universe of facilities.
   *       State financial assurance funds  -  Decreases in release frequency and severity may decrease payments required of state financial assurance funds by $150 million per year or more under the Preferred Option. To the extent that these funds are maintained by taxes other than those assessed on UST operators, decreases in these payments effectively represent a reallocation of costs from public entities to the private entities responsible for releases.

Assessment of Social Costs

For this regulatory impact analysis, direct compliance costs and state oversight costs provide a reasonable proxy to assess the proposed rule's social costs for the following reasons:

   *       The regulatory requirements generally focus on additional testing and inspection of existing equipment and do not reflect large-scale investments in equipment or significant changes to operations at the facility level.  In addition, the facilities affected by the proposed rule are distributed with relative geographic uniformity for consumers and producers.

   *       Given the relatively small facility costs of less than $900 per year for the average facility, closures or changes in market structure represent an unlikely response to the proposed rule.  According to the 2002 Economic Census, average revenues in the retail motor fuel sales sector were approximately $2.1 million; the corresponding cost-to-sales ratio for the average facility is less than one-tenth of one percent. Therefore, it is unlikely significant changes to production or consumer behavior will affect social costs.

   *       The short- and long-run impacts of the proposed rule are not likely to differ significantly.  Testing and inspection requirements may offer some opportunities for owners and operators to reduce costs by learning over time, but they are not likely to reduce costs enough to facilitate large-scale equipment upgrades.

EPA's calculation of total incremental compliance costs for UST facilities reflects two key components:  identifying specific measures necessary for compliance at individual facilities and calculating costs associated with each of these measures.  To estimate these costs, EPA developed a compliance cost model that identifies incremental equipment and labor requirements for an individual system.  Based on the baseline equipment use profile, existing state regulations, and anticipated responses to the proposed regulation, the model then generates system-specific estimates of compliance costs.  Compliance costs include labor and capital costs associated with new equipment and installation, inspection, testing, and recordkeeping.  The model also includes other compliance costs, such as those associated with more frequent detection of equipment failure and repair of equipment.  Some component costs are specific to individual UST system configurations  -  for example, airport hydrant fuel distribution systems or UST systems with field-constructed tanks  -  while others are consistent across all system types.  Exhibit ES-2 summarizes the findings of our analysis of social costs.

Exhibit ES-2
                         Total Annual Social Costs[d]
                                   Category
                         Preferred Option
($ millions)
                          Alternative 1
($ millions)
                          Alternative 2
($ millions)
Conventional UST systems [a]
                                                                           $180
                                                                           $360
                                                                           $120
Emergency generator tanks (EGTs)
                                                                           $2.2
                                                                           $2.2
                                                                           $2.1
Airport hydrant fuel distribution systems (AHFDSs)
                                                                            $18
                                                                           $120
                                                                           $0.0
UST systems with field-constructed tanks (FCTs)
                                                                           $4.6
                                                                            $33
                                                                           $0.0
Cost to owners and operators to read regulations
                                                                           $5.1
                                                                           $5.1
                                                                           $5.1
State government administrative costs [b]
                                                                           $0.2
                                                                           $0.2
                                                                           $0.2
Total Annual Social Costs c
                                                                           $210
                                                                           $520
                                                                           $130
[a] Conventional UST systems include all systems that are not AHFDSs, FCTs, or EGTs.
[b] 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 (see Exhibit ES-6).  Costs shown here reflect the administrative costs for state governments to read the regulations, apply for state program approval, process notifications of ownership changes, and process one-time notifications of EGT, AHFDS, and FCT existence.
[c]  Totals may not add up due to rounding.
[d]  Cost estimates were derived using a seven percent discount rate.

Assessment of Benefits and Cost Savings

Avoided remediation costs provide the basis for a substantial portion of the beneficial impacts associated with the proposed rule.  Avoided remediation costs of the proposed rule represent cost savings that accrue to owners, operators, and public entities charged with remediating releases at regulated facilities.  EPA obtained remediation costs from a survey of state leaking UST programs and estimates of the distribution of releases by UST system area from internal research.  EPA identified five UST technical experts who provided professional judgment regarding the proposed rule's effects on reduction in release frequency (number of releases per year) and release severity (as measured by groundwater incidents averted).  This body of knowledge allowed EPA to estimate total avoided costs, as well as avoided costs per requirement.  EPA also estimated avoided costs associated with vapor intrusion and product loss, though these avoided costs are not allocated across requirements.

In addition to avoided costs, the analysis monetized avoided benzene cancer risks from avoided contaminated groundwater and quantified volume of groundwater protected.  These benefits assume that exposure risk is eliminated at the time of discovery and cleanup, and are therefore additive to avoided cleanup costs. Finally, the analysis provided a qualitative discussion of avoided acute events and exposure (including large-scale releases, such as those from airport hydrant fuel distribution systems and UST systems with field-constructed tanks), ecological benefits, and avoided nonbenzene human health risks. These findings are summarized in Exhibit ES-3 below.

Exhibit ES-3
                    Summary Of Annual Positive Impacts[e]

                                Type Of Impact
                       Preferred Option
(2008$ millions)
                        Alternative 1
(2008$ millions)
                        Alternative 2
(2008$ millions)

Monetized Benefits

Avoided cancer risks[a][,c]
                                                               $0.001 - $0.005
                                                                $0.002 - $0.005
                                                               $0.001 - $0.003

Monetized Avoided Costs

Releases and groundwater incidents[b]
                                                                   $300 - $700
                                                                    $300 - $740
                                                                  $110 - $570

Vapor intrusion
                                                                    $0.4 - $26
                                                                     $0.5 - $28
                                                                     $0.2 - $19

Product loss
                                                                   $2.0 - $7.2
                                                                   $2.6 - $7.6
                                                                    $0.4 - $5.3
Total[c]
                                                                    $300 - $740
                                                                    $310 - $770
                                                                    $110 - $590
Nonmonetized Impact [d]

Groundwater protected
(billion gallons)
                                                                     110 - 350
                                                                      120 - 370
                                                                     41  -  250
Acute events and large-scale releases (e.g., AHFDS and FCT releases)
                                 Not estimated
                                 Not estimated
                                 Not estimated
Ecological benefits
                                 Not estimated
                                 Not estimated
                                 Not estimated
Nonbenzene human health risks
                                 Not estimated
                                 Not estimated
                                 Not estimated
[a]  The pathway assessed to evaluate avoided cancer risk is benzene exposure through contaminated groundwater.
[b]  Monetized avoided costs are substantially lower in Alternative 2 relative to the Preferred Option due to differing requirements between these options, particularly walkthrough inspections. Alternative 2, overall, is less stringent than the Preferred Option, and therefore prevents fewer releases because systems do not require the same frequency of inspection and repair. For additional information, see Chapter 4.
[c]  Avoided cancer risks and avoided costs are separate and additive (i.e., these estimates do not overlap).  Avoided cancer risks are the benefits associated with reducing cancer cases prior to discovery of the release. 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.
[d] Due to data and resource constraints, EPA was unable to monetize some of the positive impacts of the proposed rule.  Chapter 4 provides a qualitative discussion of these benefits.
[e]  Totals may not add up due to rounding.  Cost estimates were derived using a seven percent discount rate.

Comparison of Social Costs and Positive Impacts

Exhibit ES-4 summarizes the social costs and positive impacts of the proposed rule.  The majority of measurable positive effects occur as avoided remediation costs.   Monetized social benefits occur only in the form of avoided cancer cases from groundwater contamination and constitute only a very small part of overall effects.  Nevertheless, as discussed in Chapter 4, avoided costs provide a reasonable measure of the positive effects of the proposed rule.

Exhibit ES-4
   Comparison Of Annual
Social Costs, Cost Savings And Monetized Benefits[g]

                       Preferred Option
(2008$ millions)
                        Alternative 1
(2008$ millions)
                        Alternative 2
(2008$ millions)
Annual Monetized Benefits

Avoided cancer risks[a][,e]
                                                               $0.001 - $0.005
                                                                $0.002 - $0.005
                                                                $0.001 - $0.003
Annual Avoided Costs[e]

Releases and groundwater incidents
                                                                    $300 - $700
                                                                    $300 - $740
                                                                    $110 - $570
Vapor intrusion
                                                                    $0.4 - $26
                                                                     $0.5 - $28
                                                                     $0.2 - $19
Product loss
                                                                    $2.0 - $7.2
                                                                    $2.6 - $7.6
                                                                    $0.4 - $5.3
Annual Social Costs

Conventional UST systems[b]
                                                                          $180
                                                                          $360
                                                                          $120
Emergency generator tanks (EGTs)
                                                                            $2
                                                                            $2
                                                                            $2
Airport hydrant fuels distribution systems (AHFDSs)[c]
                                                                           $18
                                                                          $120
                                                                            N/A
UST systems with field-constructed tanks (FCTs)[c]
                                                                            $5
                                                                           $33
                                                                            N/A
Cost to owners and operators to read regulations
                                                                            $5
                                                                            $5
                                                                            $5
State government administrative costs[d]
                                                                          $0.2
                                                                          $0.2
                                                                          $0.2
Total Annual Benefits and Avoided Costs
                                                                    $300 - $740
                                                                    $310 - $770
                                                                    $110 - $590
Total Annual Social Costs
                                                                          $210
                                                                          $520
                                                                          $130
Net Cost (Savings) To Society
[Total Social Costs less
Total Benefits and Avoided Costs]
                                                                 ($530) - ($90)
                                                                 ($250) - $210
                                                                   ($460) - $20
Nonmonetized Benefits[f]

Groundwater protected (billion gallons)
                                                                      110 - 350
                                                                      120 - 370
                                                                       41 - 250
Acute events and large-scale releases
(e.g., AHFDS and FCT releases)
                                 Not estimated
                                 Not estimated
                                 Not estimated
Ecological benefits
                                 Not estimated
                                 Not estimated
                                 Not estimated
Nonbenzene human health risks
                                 Not estimated
                                 Not estimated
                                 Not estimated
[a]  The pathway for avoided cancer risk is contaminated groundwater.
[b] Conventional UST systems include all systems that are not AHFDSs, FCTs, or EGTs.
[c]  We estimate there are 239 UST systems with FCTs and 162 AHFDSs that could be affected by the proposed regulation. For additional information regarding the assumptions and costs used in this analysis for these systems, see Appendix A.
[d] 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 EGT, AHFDS, and FCT existence.
[e] Avoided cancer risks and avoided costs are separate and additive (i.e., these estimates do not overlap).  Avoided cancer risks are the benefits associated with reducing cancer cases prior to discovery of the release. 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.
[f] Due to data and resource constraints, EPA was unable to monetize some of the positive impacts of the proposed rule.  Chapter 4 provides a qualitative discussion of these benefits.
[g]  Totals may not add up due to rounding. Cost estimates were derived using a seven percent discount rate.

Exhibit ES-5 summarizes the social costs and positive impacts of the proposed rule under an alternative baseline where universes of UST systems and releases are assumed to decrease at a declining rate over time.  Social costs decline slightly under the alternative baseline relative to the primary analysis due to a small decrease in affected systems. Avoided costs decline by approximately 40 percent, as the universe of releases contracts substantially under the alternative baseline.

Exhibit ES-5
Comparison Of Annual
Social Costs, Cost Savings And Monetized Benefits Using An Alternative Baseline

                       Preferred Option
(2008$ millions)
                        Alternative 1
(2008$ millions)
                        Alternative 2
(2008$ millions)
Total Annual Benefits and Avoided Costs
                                                                    $180 - $440
                                                                    $180 - $460
                                                                     $64 - $360
Total Annual Social Costs
                                                                          $200
                                                                          $510
                                                                          $120
Net Cost (Savings) to Society
[Total Social Costs less
Total Benefits and Avoided Costs]
                                                                   ($240) - $20
                                                                    $50 - $330
                                                                   ($240) - $56
Note: Cost estimates were derived using a seven percent discount rate.

Economic Impacts

EPA's assessment of the economic impacts associated with this proposed rule focused on the retail motor fuels sector, which accounts for approximately 80 percent of UST owners or operators.  In this analysis, EPA described supply and demand dynamics within the retail motor fuels market and the likely economic responses to increased compliance costs.  Our screening assessment found that average estimated facility-level costs of $890 may result in the market exit of approximately 560 facilities, if these facilities cannot pass any regulatory costs through to customers.  This represents less than half of one percent of existing retail motor fuel facilities, and an even smaller fraction of all facilities affected by the proposed rule.

To address uncertainty related to the distribution of costs among UST facilities, we also presented a worst case sensitivity analysis, which identified the maximum number of facilities that could face significant economic impacts due to regulatory costs.  We defined the worst case as the scenario where the highest possible cost occurred for the smallest facilities. We found that up to 6,100 facilities (roughly four percent of existing retail motor fuel facilities) may exit the market in this unlikely worst-case scenario.  The limited magnitude of impacts even in the worst case scenario suggest that the proposed rule will not affect existing consolidation trends in the retail motor fuels industry, or retail motor fuel prices or consumption.

In addition, EPA's analysis suggests that the proposed rule could result in a reallocation of costs from the public to private parties responsible for releases.  The prevention of releases under this rule would increase compliance costs to facility owners, but the avoided releases would in many cases reduce remediation demand for taxpayer-funded state funds. This is likely to improve behavioral incentives, as the parties most likely to cause releases will also be responsible for preventing them.  As discussed in Chapter 5, this reallocation could result in savings to state financial assurance funds in excess of $150 million per year.

Other Regulatory and Distributional Issues

	As part of our analysis, we also assessed the proposed rule's potential impacts related to:

   * Energy impacts  -  The proposed rule will not have significant adverse effects on energy supply, distribution, or use, including impacts on price and foreign supplies.  It is, therefore, not a significant energy action under Executive Order 13211, Actions Concerning Regulations That Significantly Affect Energy Supply, Distribution, or Use (May 18, 2001).

   * Regulatory flexibility  -  EPA's analysis determined that approximately 1,350 small entities (roughly one percent of the universe of affected small entities) may experience economic impacts that exceed one percent of revenues.  For various reasons, and especially due to different system configurations for smaller facilities, the actual number of affected entities is likely to be even fewer than the number estimated by the analysis.  In comparison, this number is smaller than the recent industry consolidation rate of approximately 2,400 facilities per year in the retail motor fuels sector. The proposed rule is unlikely to have a significant economic impact on a substantial number of small businesses or small governments.

   * Small government impacts  -  The proposed rule is not expected to have significant small government impacts.  EPA's assessment of costs to state and local governments indicated that no government-owned UST facilities will experience costs that exceed one percent of revenues.

   * Impacts on minority and low-income populations  -  Because the proposed rule would increase regulatory stringency and reduce the number and size of releases, the proposed rule is not expected to have any disproportionately high and adverse human health or environmental effects on minority or low income populations, or on any community.

   * Children's health protection  - While the risk assessment did not specifically measure exposure to children, adults are the more sensitive receptor for cancer effects of contaminated groundwater due to the longer potential exposure from showering (inhalation of vapors) compared to children (ingestion of water while bathing), particularly those under five who are assumed to take more baths and fewer showers.  Therefore, EPA has no reason to believe that the proposed rule would have a disproportionate environmental health risk effect on children, as defined in Executive Order 13045, Protection of Children From Environmental Health Risks and Safety Risks (62 FR 19885, April 23, 1997). Moreover, because the proposed rule is expected to reduce exposure to contaminated groundwater by reducing the number and size of releases, EPA does not expect the proposed rule to have any adverse impact on children.

   * Regulatory planning and review  -  Pursuant to the terms of Executive Order 12866 [58 FR 51735 (October 4, 1993)], EPA determined the proposed rule is an economically significant regulatory action because it may have an annual effect on the economy of $100 million or more, as defined in section 3(f)(1) of the order.  Findings of the regulatory cost analysis in Chapter 3 indicate the rule, as proposed, is projected to result in aggregate annual social costs of approximately $210 million under the Preferred Option, $520 million under Alternative 1, and $130 million under Alternative 2.

   * Unfunded mandates analysis  -  The proposed rule is subject to the requirements of sections 202 and 205 of the Unfunded Mandates Reform Act (UMRA) because it contains federal mandates that may result in the expenditure by state, local, and tribal governments or by the private sector of $100 million or more in any one year.  Exhibit ES-6 provides references for EPA's analyses responding to UMRA requirements under which this proposed rule is subject.

Exhibit ES-6
             Location Of Analyses Responding To UMRA Requirements
                                  Requirement
                           Location In This Document
Identification of federal law provision under which the proposed rule is being promulgated
Chapter 1
Assessment of costs and benefits to state, local, and tribal governments and the private sector of the proposed rule
Chapters 3 and 4
Assessment of the effect of the proposed rule on health, safety, and the natural environment
Chapter 4
Assessment of the extent to which such costs of the proposed rule 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 of the proposed rule
Chapter 3
Estimates of disproportionate budgetary effects of the proposed rule on any type of government or private sector segment
Chapter 5
Estimates of the effect of the proposed rule on the national economy
Chapters 3 and 5

   * Federalism  -  Executive Order 13132, Federalism (64 FR 43255, August 10, 1999), defines policies that have federalism implications to include regulations with substantial direct effects on states, on the relationship between the national government and 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 aggregate expenditures by state and/or local governments of $25 million or more in any one year. As Exhibit ES-7 below indicates, EPA does not expect any of the proposed options to have significant federalism implications.

Exhibit ES-7

Summary Of Annual Governmental Costs By Element[b]
                                    Element
                         Preferred Option
($ millions)
                          Alternative 1
($ millions)
                          Alternative 2
($ millions)
Local compliance costs[a]
                                                                          $7.3
                                                                         $15.0
                                                                          $5.0
State compliance costs[a]
                                                                          $1.8
                                                                          $3.7
                                                                          $1.3
State government administrative costs
                                                                          $0.2
                                                                          $0.2
                                                                          $0.2
Total Costs To State And Local Governments
                                                                          $9.3
                                                                         $19.0
                                                                          $6.5
[a] State and local government compliance costs are included in the total compliance costs presented in Exhibit ES-2.
[b]  Cost estimates were derived using a seven percent discount rate.

   * Tribal governments analysis  -  Executive Order 13175, Consultation and Coordination With Indian Governments (65 FR 67249, November 9, 2000), requires EPA to develop a process to ensure meaningful and timely input by tribal officials in the development of regulatory policies that have tribal implications.  EPA consulted with tribal officials early in the process of developing this proposed regulation to welcome 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.  In addition to our early consultation with tribes, EPA also reached out again to tribes as we started the official rulemaking process and throughout the development of this proposed rule.  EPA sent letters to leaders of over 500 tribes as well as to tribal regulatory staff to invite their participation in the development of 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.  Today's proposed changes to the UST regulation are needed to ensure parity between UST systems in states and in Indian country.  This regulation will ensure installed equipment is working properly to protect the environment from potential releases.

      As part of this analysis, EPA concluded the proposed rule 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.  Total costs to owners and operators of tribally-owned UST systems are approximately $0.7 million.

   * Joint impacts of rules  -  Facilities in the UST system universe are affected by a number of existing regulations, including state regulations and Spill Prevention, Control, and Countermeasure (SPCC) rules.  At the time of the 1988 UST regulation, completely buried tanks greater than 42,000 gallons and located near navigable waters of the U.S. or adjoining shorelines were subject to both UST rules and SPCC rules. Since then, SPCC rules have been amended and the rule exempts completely buried storage tanks, as well as connected underground piping, underground ancillary equipment, and containment systems, when subject to the technical requirements of 40 CFR part 280.  In today's proposal, EPA proposes to continue to defer the aboveground components associated with airport hydrant systems and USTs with field-constructed tanks.  These aboveground components will be subject to SPCC requirements.  EPA is proposing to regulate the underground components associated with airport hydrant systems and USTs with field-constructed tanks.  Once the proposal becomes final, these underground components will no longer be subject to SPCC requirements.  In addition, previously deferred wastewater treatment tank systems and UST systems that store fuel solely for use by emergency power generators will now be regulated under the UST regulation and will no longer be subject to SPCC.  EPA does not believe the proposed rule creates a serious inconsistency or interferes with any other actions planned or undertaken by other agencies.

   Chapter 1.		Introduction
This document presents an analysis by the U.S. Environmental Protection Agency (EPA) Office of Underground Storage Tanks (OUST) of the costs, benefits, and economic impacts of the proposed targeted changes to the Underground Storage Tank (UST) regulations.  The proposed rule serves the purpose of strengthening the existing underground storage tank regulations by increasing the emphasis on proper operation and maintenance of UST systems and improved maintenance of release detection equipment.  The proposed changes also acknowledge improvements in technology over the last twenty years, including the ability to perform release detection for many tank systems that were previously deferred.
1.1		Background
	In 1984, Congress responded to the increasing threat to groundwater from leaking underground storage tank (UST) systems by adding Subtitle I to the Solid Waste Disposal Act (SWDA).  SWDA required EPA to protect the environment and human health from UST releases by developing a comprehensive regulatory program for UST systems storing petroleum or certain hazardous substances.  In 1986, Congress amended Subtitle I of SWDA and created the Leaking Underground Storage Tank Trust Fund (LUST Trust Fund) to oversee and pay for cleanups at sites where the owner or operator is unknown, unwilling to pay, or unable to pay.

	EPA promulgated the UST regulation in 1988 (40 CFR Part 280).  This regulation set minimum standards for new tanks and required owners and operators of existing tanks to upgrade, replace, or close them.  The 1988 regulation set deadlines for owners and operators to meet the new requirements.  By 1998, owners and operators had to meet new UST system requirements, upgrade their existing UST systems, or close them.  Owners and operators who chose to upgrade had to ensure that every UST system had spill prevention equipment (e.g., spill buckets), overfill prevention equipment, and was protected from corrosion.  In addition, owners and operators were required to monitor their UST systems for releases using release detection (phased in in the 1990s depending on the year of installation of each UST system).  Finally, owners and operators were required to have financial responsibility (phased in through 1998) to ensure that they are financially able to pay for any releases that occur.  No significant changes have been made to these requirements since 1988.

	In 1988, EPA also promulgated a regulation for state program approval (40 CFR Part 281).  Since states are the primary implementers of the UST program, EPA wanted to set up a process where state programs could operate in lieu of the federal program if certain requirements were met.  This regulation describes the minimum requirements states must meet to have their regulations operate in lieu of the federal regulation.

	In 2005, the Energy Policy Act (EPAct) further amended Subtitle I of SWDA.  The EPAct requires states that receive federal Subtitle I money from EPA to meet certain requirements.  EPA developed grant guidelines for states regarding operator training, inspections, delivery prohibition, secondary containment, financial responsibility for manufacturers and installers, public record and state compliance reports on government UST systems.

1.2	Need for Regulatory Action

	After Congress passed EPAct, EPA decided to revise the 1988 UST regulation (at 40 CFR Part 280), primarily to ensure parity in Indian country.  Key EPAct provisions (such as secondary containment and operator training) apply to all states receiving federal Subtitle I money, regardless of their state program approval status; but these key provisions do not apply in Indian country (or in states and U.S. territories that do not meet EPA's operator training or secondary containment grant guidelines).  In order to establish federal UST requirements similar to the UST secondary containment and operator training requirements of EPAct, EPA decided to revise the 1988 UST regulation.  Without these changes, EPAct provisions will not apply in Indian country.  These proposed revisions will also fulfill the objectives of the EPA-Tribal UST Strategy (August 2006) in which both EPA and tribes recognized it is important to ensure parity in implementing UST program requirements in states and territories, as well as in Indian country.

	EPA decided now is also an appropriate time to change the 1988 UST regulation.  While EPA has issued many guidance documents and used various implementation approaches and techniques over the last twenty years, we have not made significant changes to the original 1988 regulation. Indeed, most states have passed requirements that go far beyond the original federal regulation.

      Furthermore, while information on sources and causes of releases show that releases from tanks are less common than they once were, releases from piping and spills and overfills associated with deliveries have emerged as more common problems.  In addition, releases at the dispenser have emerged as one of the leading sources of releases.  The lack of proper operation and maintenance of UST systems is a main cause of release from these areas.  Data also indicate that release detection only detects about one quarter of all releases.  While some of those releases occur in areas not required to have release detection, other releases that should be detected are not because of problems with the operation and maintenance of the release detection equipment.

      Since the beginning of the UST program, preventing petroleum releases into the environment has been one of the primary goals of the program. EPA and our partners have made major progress in reducing the number of new releases, but over 7,000 releases are still discovered each year. Because existing publicly-funded mechanisms and institutions frequently cover at least part of the costs of release remediation, owners and operators of UST systems do not bear the full costs of their actions. Petroleum releases thus represent a negative externality caused by UST system operators, as the individuals and firms that cause releases do not bear their full costs. This represents a failure of the market to fully internalize the cost to society of operating an UST system: private costs do not equal social costs. A combination of revised technical standards and inspection and testing requirements represents the most appropriate method for reducing the number of future releases and mitigating the impact of existing negative externalities.

      	  The lack of proper operation and maintenance of UST systems is a main cause of release from these areas.  indicate that release detection only detects about one quarter of all releases.  While some of those releases occur in areas not required to have release detection, other releases that should be detected are not because of problems with the operation and maintenance of the release detection equipment.

	EPA wanted to make sure the rule development process was open and transparent and that all stakeholders had an opportunity to share their ideas as well as their concerns.  From the beginning of this process, EPA recognized the concerns about costs on owners and operators and was committed to limiting the requirements for retrofits.  We reached out to all stakeholders, including state and tribal regulators, federal facilities, members of the petroleum industry including representatives of owners and operators as well as equipment manufacturers, small businesses, local governments, and environmental and community groups.  Over a two-year period, we held conference calls, solicited comments and gave stakeholders multiple opportunities to share their ideas as well as kept them informed of where we were in the process.

	From this extensive stakeholder outreach, EPA compiled potential proposed changes to the UST regulations.  EPA shared all of these ideas with the stakeholders and gave them an opportunity to comment on each idea that was submitted to us.  We then revised and added items to the list as necessary based on data, analysis and consideration of costs and benefits.  Ultimately, EPA identified the items in this proposed rule as the needed regulatory changes at this time.

1.3		Summary of the Proposed Rule
EPA is proposing to revise the UST regulations in order to: establish federal requirements that are similar to certain key provisions of the Energy Policy Act; ensure owners and operators perform proper operation and maintenance; address deferrals; update the regulations to current technology and practices; and make technical and editorial corrections.  Specifically, EPA is proposing the following set of revisions (hereafter referred to as the Preferred Option):
   *       Establish federal requirements for secondary containment and operator training similar to those established by the EPAct for states that receive federal Subtitle I money

   *       Add operation and maintenance requirements
         o             Walkthrough inspections
         o             Spill prevention equipment tests
         o             Overfill prevention equipment tests
         o             Interstitial integrity tests
         o             Operability tests for release detection methods

   *       Address existing 40 CFR 280 deferrals
         o             Require release detection for emergency generator UST systems
         o             Remove deferrals and regulate airport hydrant fuel distribution systems (AHFDSs) and UST systems with field-constructed tanks (FCTs) with alternate release detection requirements
         o             Remove deferrals for wastewater treatment tanks

   *       Provide for other changes to improve release prevention and detection and program implementation
         o             Require testing after repairs to spill and overfill prevention equipment, and interstices
         o             Eliminate flow restrictors in vent lines as an overfill prevention option for all new tanks and when overfill devices are replaced
         o             Require closure of lined tanks that cannot be repaired according to a code of practice
         o             Address responses to interstitial monitoring alarms
         o             Notification requirement of ownership change
         o             Eliminate groundwater and vapor monitoring as release detection methods
         o             Establish requirements for determining compatibility

   *       Make general updates to the regulation
         o             Reference newer technologies, including explicitly adding statistical inventory reconciliation (SIR) and continuous in-tank leak detection (CITLD) as release detection methods
         o             Update codes of practice listed in the regulation
         o             Remove old upgrade and implementation deadlines
         o             Make editorial and technical corrections

   *       Revise state program approval (40 CFR Part 281) to be consistent with the above revisions

1.4		Alternative Regulatory Options
In addition to assessing the impacts of the Preferred Option, this document assesses the costs, benefits, and economic impacts of two regulatory alternatives, as outlined in Exhibit 1-1. Please refer to the preamble for a discussion on the rationale behind the development of these two alternatives.
Under each of these alternatives, EPA evaluated variations of a subset of the proposed changes, while some of the proposed regulatory requirements remained in effect across all options.  The differences between the three regulatory options considered in this regulatory impact analysis are described in Exhibit 1-1.

         *
         *
         *
         *
         *
         *
         *
         *

                                  Exhibit 1-1

                   Options Considered For The Proposed Rule

                            Requirement Description
                                    Options

                                   Preferred
                                 Alternative 1
                                 Alternative 2
                              Release Prevention

Walkthrough inspections
Monthly
Monthly
Quarterly
Overfill prevention equipment tests
3 year
1 year
3 year
Spill prevention equipment tests
1 year
Require replacement every 3 years, no testing
1 year
Interstitial integrity tests
3 year
1 year
Not required
Testing after repairs to spill and overfill prevention equipment, and interstices
Required
Required
Required
Eliminate flow restrictors in vent lines for all new tanks and when overfill devices are replaced
Required
Required
Not required
                               Release Detection

Operability tests for release detection methods
1 year
1 year
3 year
Change leak rate probabilities from 95/5 to 99/1 (Pd/Pfa)
Not required
Required
Not required
Add SIR/CITLD to regulations with performance criteria
Required
Required
Required
Response to interstitial monitoring alarms
Required
Required
Required
Eliminate groundwater and vapor monitoring as release detection methods
Eliminate in 5 years
Eliminate immediately
Not required
Remove deferral for emergency generator tanks
Required
Required
Required
                                     Other

Require notification of ownership change
Required
Required
Required
Closure of lined tanks that cannot be repaired according to a code of practice
Required
Required
Required
Requirements for determining compatibility
Required
Required
Required
Remove deferrals for airport hydrant fuel distribution systems and UST systems with field-constructed tanks
Regulate under alternative release detection requirements
Regulate under release detection requirements for conventional UST systems
Maintain deferrals
                           EPAct-related Provisions

Operator training
Required
Required
Required
Secondary containment
Required
Required
Required

	Note that
         *
         *
         *
         *
         *
         *
         *
         *
         *

            *
            *
            *
            *
            *
            *
            *
            *
            *
	each option considered by EPA contains a set of new requirements that does not vary across options. As explained in the introduction, operator training and secondary containment are being proposed in order to ensure parity in program implementation among states and in Indian country.  Therefore, these requirements are necessary across all options.  Based on input EPA received from stakeholders, EPA believes the other proposed requirements in this set represent the minimum necessary changes for its proposed rule. Specifically, these requirements are:
          *       Testing after repairs to spill and overfill prevention equipment, and interstitial spaces
          *       Adding SIR/CITLD to regulations with performance criteria
          *       Reporting and testing for interstitial alarms
          *       Removing the deferral for release detection for emergency generator tanks
          *       Notification of ownership change
          *       Closure of lined tanks that cannot be repaired according to a code of practice
          *       Requirements for determining compatibility, and
          *       Requiring operator training and secondary containment
Many of the requirements proposed in this rule will not immediately impose new costs upon UST owners or operators. For example, new requirements for periodic testing of equipment do not require owners or operators to perform those tests at the time the rule comes into effect; depending on the requirement, they may have up to three years to satisfy the new requirements. EPA's analysis accounts for this delay in its estimate of costs by discounting the costs associated with each requirement as shown in Exhibit 1-2. EPA assumes that the monetized positive impacts associated with these requirements accrue at the end of the year in which costs occur to incorporate an assumption that some beneficial impacts may lag requirements.

Exhibit 1-2

              Years Until Proposed Requirements Become Effective
                                  Requirement
                        Number of years until effective
Release Prevention

Overfill prevention equipment test
                                       3
Spill prevention equipment test
                                       1
Interstitial integrity test[8]
                                       3
Release Detection

Operability tests for release detection methods
                                       1
Eliminate groundwater and vapor monitoring as release detection methods (for Preferred Option)

5

Remove deferral for emergency generator tanks
                                       1
Other

Remove deferral for airport hydrant fuel distribution systems (Subparts B, C, and D)
                                       3
Remove deferral for UST systems with field-constructed tanks (Subparts B, C, and D)[9]
                                       3
EPAct-related Provision

Operator training
                                       3
Please refer to the preamble section for each proposed requirement for a discussion on the rationale behind the delayed or phase-in implementation periods.

Finally, EPA is including a set of proposed revisions and clarifications that are not expected to have any economic impact, due either to the nature of the requirement or to the interaction of UST regulations with existing regulations.  The only cost associated with these clarifications and changes is the cost of reading the new regulations.  These revisions include:
          *       Removing deferrals for wastewater treatment tanks
          *       Updating the regulations to reference newer technologies
          *       Updating the codes of practice listed  in the regulations
          *       Updating the regulations to remove old upgrade and implementation deadlines
          *       Updating the regulations for editorial and technical corrections, and
          *       Revising the State Program Approval (40 CFR Part 281) regulations to be consistent with the above revisions
1.5		Scope of Analysis
	Within the constraints of data availability, this analysis attempts to capture all quantifiable and qualitative impacts for this proposed rule. EPA obtained sufficient data to identify, by state, the number of units likely to be affected by each proposed change in the rule. The analysis uses these data to assess the compliance costs on these units and relevant state governments. In conducting these analyses, EPA also assessed the sensitivity of outcomes to key assumptions.  Separately, the analysis monetizes a number of impacts of the rule, including the avoided costs generated by avoided releases, reduction in severity of releases, avoided product loss, avoided vapor intrusion damages, and a subset of human health benefits. This analysis quantifies, but does not value, groundwater impacts. Finally, this analysis is unable to quantify or value a subset of human health benefits and ecological impacts, but addresses these qualitatively.

	In addition to identifying costs and the positive impacts of the rule, this analysis also examines the economic and distributional impacts of the rule. The economic impact analysis includes the proposed rule's effect on facility closures, employment, and energy output and cost. The analysis of the distributional impacts of the rule examines the effect of a reduction in releases on state financial assurance funds, impacts on childrens' health, small business impacts, and impacts on low-income and minority populations.  Finally, this analysis considers impacts of the rule related to certain executive orders and statutes, including the Unfunded Mandates Reform Act, impacts on Tribal Governments, and Federalism impacts.

1.6		Report Organization
To support the development of the proposed rule, EPA designed and conducted this analysis of the rule's costs, benefits, and economic impacts consistent with the requirements of Executive Order 12866, and OMB Circular A-4.  Data, methods, and results of this analysis are presented in the following chapters:
   *       Chapter 2: Universe of UST Systems Affected by the Proposed Rule.  This chapter identifies a profile of the entities that may be affected by the proposed rule.
   *       Chapter 3: Assessment of Social Costs.  This chapter summarizes the methods employed by EPA to assess the cost impacts of the proposed rule.
   *       Chapter 4: Assessment of Benefits and Cost Savings.  This chapter presents estimates of the benefits and avoided costs of the proposed rule.
   *       Chapter 5: Distributional Impacts and Considerations.  This chapter summarizes the assessment of distributional impacts of the proposed rule, including economic and energy impacts, effects on small businesses and governments, impacts on low-income and minority populations, and children's health effects.
   *       Chapter 6: Other Statutory and Executive Order Analyses. This chapter summarizes analyses required by certain statutes or executive orders, including regulatory planning and review, impacts created by unfunded mandates, federalism implications, effects on tribal governments, and joint impact of the proposed rule in the context of existing rules.
   *       Chapter 7:  Comparison of Costs, Benefits, and Other Impacts.  This chapter summarizes and compares the costs, cost savings, and benefits of the proposed rule.
   *       Appendices. We present the details to methods and assumptions we employ in a number of appendices.

   Chapter 2.	Universe of UST Systems Affected by the Proposed Rule
This regulatory impact analysis addresses the effects of the proposed regulatory changes on four types of UST systems: conventional UST systems with prefabricated tanks that store and dispense petroleum products; emergency generator tank systems that store fuel for occasional use; UST systems with field-constructed tanks that are typically designed to store large volumes of fuel; and airport hydrant fuel distribution systems that provide large volumes of fuel to aircraft using underground distribution systems.
This chapter describes the universe of systems, facilities, firms, and sectors that are likely to be affected by the proposed regulatory changes, and documents the extent to which state regulations already require compliance with the proposed regulations.
2.1	Types of Entities Affected by the Proposed Rule
      The four types of UST systems that are potentially affected by the proposed regulation are characterized as follows:
      Conventional UST systems (conventional USTs): These systems include the universe of facilities and tanks that are currently subject to existing regulations, along with ancillary equipment (e.g., piping, dispensers, sumps, spill prevention equipment, and release detection equipment).  The majority of these systems store and dispense petroleum products and are typically found at gas stations.  A limited number store other hazardous substances, but the regulatory impact analysis does not consider these UST systems separately.  These UST systems are subject to all requirements under 40 CFR Part 280.
      Emergency generator tank systems (EGTs):  Emergency generator tank systems refer to the tanks and piping for systems that provide longer-term storage of fuel for occasional use as a back-up fuel supply.  These tanks are currently deferred from 40 CFR Part 280 Subpart D (release detection) but are subject to all other requirements under 40 CFR Part 280.  The proposed regulation does not address emergency tanks at nuclear power plants, which are regulated by the Nuclear Regulatory Commission under 10 CFR Part 50, appendix A.
      UST systems with field-constructed tanks (FCTs):  Field-constructed tanks are underground bulk storage tanks that are built on-site because they are too large to be pre-fabricated.  All identified field-constructed tanks currently in operation are owned by Federal facilities and mainly serve operations at military bases.  These tanks are currently deferred from all regulation under 40 CFR Part 280, except for Subparts A and F, but are typically subject to regulation under the Oil Pollution Act of 1990, 40 CFR Part 112 (EPA's Spill Prevention, Control, and Countermeasure regulations).
      Airport Hydrant Fuel Distribution Systems (AHFDSs):  Airport hydrant fuel distribution systems are systems that include one or more tanks (either above-ground or underground), underground piping, and underground ancillary equipment used to fuel aircraft.  These systems do not have a dispenser at the end of the piping run, but instead have a pressurized hydrant (fill stand).  Large commercial and military airports employ these systems, but most commercial systems have only above-ground storage tanks and are thus not affected by the proposed regulation. These systems are currently deferred from all regulation under 40 CFR Part 280, except for Subparts A and F, but are typically subject to regulation under 40 CFR Part 112.
 2.2	Configuration of Average Conventional UST System
Conventional UST systems reflect a relatively consistent configuration of standard equipment.  While facility size and complexity vary significantly, this analysis assumes that a typical (average) conventional UST system is configured as follows (Exhibit 2-1):
                                  Exhibit 2-1

          Assumed Average Configuration For A Conventional UST System
                               System Component
                                 Configuration
Pipes per tank
                                       1
Feet per pipe
                                      100
Fill pipes (per tank)
                                       1
Spill prevention equipment (per fill pipe)
                                       1
Under-Dispenser Containment (UDC) (per tank)
                                       2
Turbine sumps (per tank)
                                       1

These assumptions best characterize motor fuel retailers, which represent approximately 80 percent of the 611,449 conventional UST systems in operation in 2009. EGT systems and other conventional UST systems used to store fuel or hazardous substances are likely to have systems with similar components and less complex dispenser systems.  The configurations of FCTs and AHFDSs are considered separately, and are described in detail in Appendix A. Exhibit 2-2 provides an illustration of an UST system at a retail motor fuel establishment.  Note that in this exhibit, the "dispenser sump" is a specific form of under-dispenser containment, and the "spill bucket" is an example of spill prevention equipment.
                                  Exhibit 2-2

                 Configuration of Retail Motor Fuel UST System

 2.3	UST Universe Size and Distribution Across Sectors
       The September 30, 2009 Semi-Annual Report of UST Performance Measures reports a universe of 611,449 active petroleum tanks (UST systems) in the United States and its territories.[,]  This total includes conventional UST systems and emergency generator tank systems.  Estimates based on state data suggest that approximately 3.0 percent, or 18,343 of the 611,449 active UST systems, are emergency generator tanks.
       In addition to emergency generator and conventional UST systems, the proposed rule addresses UST systems with field-constructed tanks and airport hydrant fuel distribution systems.  While these two types of systems are deferred under current EPA regulations, a subset may be regulated by individual states and included in the total estimate of tanks provided by those states.  For the purpose of this analysis, however, these two universes are considered to be separate from the 611,449 tanks identified in the 2009 EPA report.  The total universe of UST systems with field-constructed tanks and airport hydrant fuel distribution systems is small, including approximately 239 UST systems with field-constructed tanks, and 162 airport hydrant fuel distribution systems (each hydrant system is supported by an average of roughly eight linked tanks).
      Most UST systems in the United States are located at motor fuel retail establishments (i.e., gas stations), and virtually all retail motor fuel establishments use UST systems. Approximately 162,000 (161,768) retail fueling sites operated in the United States in 2008.  Of these, approximately 115,000 included convenience stores.
       An analysis of state data by EPA concludes that the average retail motor fuel establishment has 2.97 tanks (UST systems). Assuming approximately 2.97 UST systems per facility and 161,768 facilities, 481,108 UST systems, or 79 percent of all active UST systems, are associated with retail motor fuel establishments.
      In addition to traditional motor fuel retailers, big-box retailers, or hypermarkets, represent a growing segment of the retail motor fuel seller market. This category (NAICS code 452910) includes stores operated by Wal-Mart, Costco, and other large companies.  Collectively, these firms operate approximately 4,500 filling stations; each station is likely to have at least three UST systems.
      Other industry sectors that report use of UST systems include agriculture (crop production and animal production), commercial (wholesale trade, retail trade, accommodation, and food services), communications and utilities (wired telecommunications carriers and electric power generation, transmission, and distribution), hospitals, manufacturing, transportation, local and state government operations, and federal facilities run by the U.S. Departments of Defense and Energy. These sectors comprise approximately 130,000 UST systems, including those in the government sector (Exhibit 2-3). In many cases, firms in these sectors use UST systems for fueling fleets of vehicles such as school buses, delivery trucks, or rental cars.  In other cases, UST systems store fuel for operations or emergency use, used oil, or hazardous substances.
      Facilities in sectors other than retail motor fuel have, on average, between 1.5 and 2.3 UST systems at the facilities that use UST systems.  The actual number of UST systems at a specific facility, however, is likely to vary significantly depending on facility size and focus.
Results of an analysis of public UST records of 45 states performed for EPA's Office of Underground Storage Tanks suggest that the average number of UST systems per facility (across all sectors that use conventional UST systems or EGTs), is approximately 2.74.

Exhibit 2-3

                 Summary Of Universe Of UST Systems By Sector
                                Industry Sector
                                     NAICS
                                    2006 a
                                    2009 b

                     Number of Facilities with UST Systems
                             Number of UST Systems
                     Number of Facilities with UST Systems
                             Number of UST Systems
Conventional UST Systems and EGTs
Retail Motor Fuel Sales
                                      447
                                    168,987
                                    526,008
                                    161,768
                                    481,108
Commercial
(wholesale trade, retail trade, accommodation, and food services)
                         42, 44-45, 72 (excluding 447)
                                    22,730
                                    52,271
                                    21,652
                                    49,793
Institutional (hospitals only)
                                      622
                                     2,330
                                     3,812
                                     2,220
                                     3,631
Manufacturing
                                     31-33
                                     9,261
                                    15,259
                                     8,822
                                    14,536
Transportation
(air, water, truck, transit, pipeline, and airport operations)
                              481, 483-486, 48811
                                     8,559
                                    15,140
                                     8,153
                                    14,422
Communications and Utilities
(wired telecommunications carriers; and electric power generation, transmission, and distribution)
                                  5171, 2211
                                     6,972
                                    10,223
                                     6,641
                                     9,738
Agriculture  (crop and animal production)
                                   111, 112
                                      889
                                     1,610
                                      847
                                     1,534
Local governments c
                            Government jurisdiction
                                      N/E
                                      N/E
                                      N/E
                                    24,458
State governments c
                            Government jurisdiction
                                      N/E
                                      N/E
                                      N/E
                                     6,114
Federal government c
                           Government jurisdiction
                                      N/E
                                      N/E
                                      N/E
                                     6,114
Total:  Conventional UST systems and EGTs

                                  219,728[d]
                                    624,323
                                  210,103[d]
                                    611,449
UST systems with Field Constructed Tanks and Airport Hydrant Fuel Distribution Systems
FCTs: Department of Defense
                            Government jurisdiction

                                      239
                                      239
AHFDSs:  Department of Defense
                            Government jurisdiction

                                      162
                                   1,296[e]
Total:  FCTs and AHFDSs

                                      401
                                     1,535
[a]	Sources: December 18, 2006 review of state databases, "Draft Industry and Facility Profiles," E[2], Incorporated, Task Order No. 1010  -  General Technical and Programmatic Support in Implementing the Energy Policy Act of 2005, Amendment 1, TDD #11. Estimate of 168,987 retail motor fuel facilities with UST systems from "2005 U.S. motor fuel station count: 168,987," National Petroleum News, May 19, 2005 (annual survey of states to collect data on number of stations).
[b]	Analysis based on 2006 column (see note a above), adjusted to reflect 2009 universe of 611,449 UST systems.  All sector adjustments proportional except retail motor fuel sales, which reflects the 2008 estimate of 161,768 facilities with UST systems from "MarketFacts 2008 Overview," National Petroleum News, August 2008, used as a proxy for the number of such facilities in 2009. (See also Industrial Economics, Inc., "Preliminary Assessment and Scoping of Data Related to Potential Revisions to the UST Regulations; Tasks 2-4, Work Assignment 1-25," November 20, 2008.)
[c]	See United States Environmental Protection Agency, "Economic Impact Analysis of Additional Mechanisms for Local Government Entities to Demonstrate Financial Responsibility for Underground Storage Tanks," December 1992, Exhibit 3-1. Estimates of local government UST systems adjusted using the 1987 Census of Governments. Consistent with this analysis, the number of government UST systems is assumed to be two percent of all 2009 UST systems owned by state and federal governments and four percent of all 2009 UST systems owned by local governments.
[d]	The totals shown are the sum of the number of facilities of the rows above.  These estimates are used only to establish distribution of facilities across sectors based on available data.
[e]	This number assumes that there are eight tanks per AHFDS. For more detail on assumptions for AHFDSs, see Appendix A.

2.4	Universe of Facilities and Systems Potentially Affected by Proposed Rule
EPA expects that all facilities or UST systems in the universe of conventional UST systems will be required to comply with one or more regulatory changes in the proposed rule, but the number of facilities and systems affected by each specific regulatory change will vary depending on the extent of current (baseline) state regulations and the type of equipment currently in use.
      To estimate the number of systems that will be required to comply with each regulatory change, EPA reviewed publicly available data about state regulations, combined with data from a limited sample of states and equipment providers about the use of different technologies for release prevention and detection.
      Exhibit 2-4 identifies the total number of UST systems that could potentially be affected by each regulatory change in the proposed regulations, based on the baseline technology currently in place in the universe of systems. Exhibit 2-4 identifies the number of UST systems or facilities with relevant technologies, the type of system (i.e., conventional UST and EGT systems, facilities with conventional UST systems or EGTs, AHFDSs, or FCTs), the proportion of the relevant universe of UST systems with the technology, and a summary of the assumptions that define the number of affected units.  Note that proposed changes for AHFDSs, EGTs, and FCTs affect only those universes of facilities, and Energy Policy Act-related provisions affect only facilities and UST systems in Indian country.  See Appendix B for detailed descriptions of the values and sources used in each calculation. These estimates do not reflect baseline state regulations (e.g., whether a state already requires interstitial integrity testing). As discussed later in this chapter, some baseline state requirements satisfy requirements of the proposed rule.

   Exhibit 2-4
        Potential Number And Type Of Units Affected By Each Regulation
                               Regulatory Change
                                   Universe
                Proportion of Total Universe Affected Annually
                    Number of Potentially Affected Systems
                                  (Annual) a
                                  Assumptions
Release Prevention
Walkthrough inspections
                              Facilities with Conventional UST systems and EGTs
                                                                         100.0%
                                                             223,157 facilities
All facilities require periodic walkthrough inspections.
Overfill prevention equipment tests
                                              Conventional UST systems and EGTs
                                                                         100.0%
                                                                611,449 systems
Percentage of UST systems with overfill prevention equipment.
Spill prevention equipment tests
                                              Conventional UST systems and EGTs
                                                                          90.0%
                                                                550,304 systems
One-to-one spill prevention equipment to tank ratio, 10 percent have self-monitoring mechanism and do not need monitoring.
Interstitial integrity tests
                                              Conventional UST systems and EGTs
                                                                          17.5%
                                                                        106,747
                                                                        systems
Tanks and pipes that use interstitial monitoring and do not use continuous sensors, pressure, vacuum, or liquid-filled leak detection monitoring mechanisms. Includes five percent of tanks and 90 percent of piping that use interstitial monitoring.
Spill prevention  equipment test after repair
                                              Conventional UST systems and EGTs
                                                                           6.3%
                                                                 38,216 systems
Spill prevention equipment requires fix once every four years; repairs are used as the fix 25 percent of the time.
Overfill prevention equipment test after repair
                                              Conventional UST systems and EGTs
                                                                           5.0%
                                                                 30,572 systems
Overfill prevention equipment requires fix once every five years; repairs are used as the fix 25 percent of the time.
Interstitial integrity test after repair
                                              Conventional UST systems and EGTs
                                                                           3.3%
                                                                 20,443 systems
Tanks and pipes that use interstitial monitoring and do not use continuous sensors, pressure, vacuum, or liquid-filled leak detection monitoring mechanisms. Includes five percent of tanks and 90 percent of piping that use interstitial monitoring. Assumes 25 percent of pipes and five percent of tanks require repair every year.
Eliminate flow restrictors in vent lines for all new tanks and when overfill devices are replaced
                                              Conventional UST systems and EGTs
                                                                           6.5%
                                                              39,744 systems[b]
13% of new UST systems would have installed flow restrictors in vent lines.
Release Detection
Operability tests  -  ATG
                                              Conventional UST systems and EGTs
                                                                          33.7%
                                                                205,814 systems
UST systems that use automatic tank gauges.
Operability tests  -  interstitial monitoring
                                              Conventional UST systems and EGTs
                                                                          18.8%
                                                                114,781 systems
UST systems that use interstitial monitoring (excluding five percent that conduct manual testing of the interstice).
Operability tests  -  line leak detection
                                              Conventional UST systems and EGTs
                                                                          27.5%
                                                                168,440 systems
Pressurized piping systems that use electronic line leak detectors.
Operability tests  -  mechanical LLDs
                                              Conventional UST systems and EGTs
                                                                          54.9%
                                                                335,628 systems
Proportion of pressurized piping that already performs a LLD test, but which will require additional capital expenditures to comply with new regulations.
Operability tests  -  groundwater and vapor monitoring
                                              Conventional UST systems and EGTs
                                                                          5.17%
                                                                 31,612 systems
UST systems that use vapor monitoring and/or groundwater monitoring as their sole release detection method(s). Universe affected phases out in equal parts over initial five years of proposed rule.
Eliminate groundwater and vapor monitoring as release detection methods
                                              Conventional UST systems and EGTs
                                                                          5.17%
                                                                 31,612 Systems
UST systems that use vapor monitoring and/or groundwater monitoring as their sole release detection method(s). Universe affected phases in over five years.
Add SIR/CITLD to regulations with performance criteria
                                              Conventional UST systems and EGTs
                                                                           0.5%
                                                                  2,972 systems
13 percent of UST systems use SIR; 15 percent of these use qualitative methods. Of these, 25 percent are assumed to incur costs to comply.
Change release detection leak rate probabilities  -  ATG
                                              Conventional UST systems and EGTs
                                                                          33.7%
                                                                205,814 systems
UST systems that use automatic tank gauges.
Change release detection leak rate probabilities  -  LLD
                                              Conventional UST systems and EGTs
                                                                          27.5%
                                                                168,440 systems
Pressurized piping systems that use electronic line leak detectors.
Change release detection leak rate probabilities  -  SIR
                                              Conventional UST systems and EGTs
                                                                           1.9%
                                                                 11,887 systems
UST systems that use qualitative SIR.
Change release detection leak rate probabilities  -  CITLD
                                              Conventional UST systems and EGTs
                                                                          25.2%
                                                                154,360 systems
33.7 percent of systems use ATG; of these, 75 percent employ CITLD.
Response to interstitial monitoring alarms
                                              Conventional UST systems and EGTs
                                                                           2.4%
                                                                 14,814 systems
Weighted average annual percentage of UST systems and piping that experience an interstitial monitoring alarm.
Remove deferral for emergency generator tanks
                                                                           EGTs
                                                                           3.0%
                                                                 18,343 systems
UST systems assumed to be emergency generator tanks.
Other
Remove deferral for airport hydrant fuel distribution systems
                                                                         AHFDSs
                                                                         100.0%
                                                                 162 facilities
All airport hydrant fuel distribution systems.
Remove deferral for UST systems with field-constructed tanks
                                                                           FCTs
                                                                         100.0%
                                                                   239  systems
All UST systems with field-constructed tanks.
Require notification of ownership change
                              Facilities with Conventional UST systems and EGTs
                                                                          10.1%
                                                              22,502 facilities
Annual number of facilities that change ownership.
Closure of lined tanks that cannot be repaired according to a code of practice
                                              Conventional UST systems and EGTs
                                                                       <0.1%
                                                                     84 systems
Annual number of lined UST systems that cannot be repaired
Requirements for determining compatibility
                                              Conventional UST systems and EGTs
                                                                         100.0%
                                                                        611,449
All conventional UST systems and EGTs
EPAct-related Provisions
Operator training
                                               UST Facilities in Indian country
                                                                         100.0%
                                                                 958 facilities
All facilities in Indian country. Universe affected phases in over three years.
Secondary containment - new and replaced tanks
                                                  UST systems in Indian country
                                                                          36.2%
                                                                 950 systems[b]
Approximately 72.4 percent of systems in Indian country are single-walled. Analysis assumes midpoint of time horizon until all units are replaced (year 10, 50 percent of universe affected).
Threshold for pipe replacement rather than repair
                                                  UST systems in Indian country
                                                                           6.0%
                                                                 158 systems[b]
Piping replaced every five years, where 60.3% are single-walled. Analysis assumes midpoint of time horizon until all units are replaced (year 10, 50 percent of universe affected).
Under-dispenser containment for all new dispensers
                                                  UST systems in Indian country
                                                                          48.5%
                                                               1,273 systems[b]
Approximately 97 percent of systems require under-dispenser containment. Analysis assumes midpoint of time horizon until all units are replaced (year 10, 50 percent of universe affected).
[a]	Figures in this column are calculated assuming that the average number of UST systems per facility is approximately 2.74, per "Summary of Key Data from State Public Record Postings," E[2], Incorporated, Task Order No. 1010  -  Subtask A1-06C Technical Directive No. 36, Table 1.
[b]  The affected universes presented for these items reflect 50 percent of ultimately affected systems or facilities. Because these requirements take effect over time and future costs are discounted, we present the universe affected at year 10 as a central estimate. In addition, we adjust unit costs to reflect the fact that the total cost of these requirements grows as the number of affected systems or facilities increases.

2.5	Facilities and Systems Affected by Proposed Rule
      Many states currently have baseline regulations consistent with one or more requirements in the proposed regulations.  As a result, only a portion of the universe of potentially affected facilities will be required to change practices to comply with each regulatory change.  Whereas Exhibit 2-4 displays the number of units that may potentially be subject to each requirement, Exhibit 2-5 identifies, based on EPA's review of baseline state regulations, the number of units that will be subject to these requirements as a result of the proposed regulations.  For nearly all requirements, some portion of the potentially affected universe is already in compliance with the proposed regulatory changes.
      Alternative Option 2 will affect the smallest number of systems.  Among the specific changes proposed, walkthrough inspections and spill prevention equipment tightness testing affect the largest number of UST systems in all scenarios.  In contrast, several regulatory changes (e.g., closure of irreparable lined tanks and pipe replacement requirements) are likely to affect only a small number of systems.
      The distribution of incremental impacts of the rule also depends on the distribution of baseline technologies across states with different baseline regulations.  Facilities and systems in states with fewer current regulations may bear a greater proportion of costs and benefits than facilities and systems in states with extensive baseline regulations.  A key limitation of available baseline data is that baseline technology data is not available at the state level.  For example, it is possible that facilities and systems with specific release detection technologies (e.g., automatic tank gauges, (ATGs)) may not be distributed evenly across all states.  However, estimates of the percentage of systems using ATGs are available only at the national level.  As a result, the regulatory scenarios in Chapters 3 (Social Costs) and Chapter 4 (Benefits and Cost Savings) reflect regulatory changes required by an "average" facility in a state under the proposed rule, assuming that all systems reflect the national profile of existing technologies.  Analyses of economic impacts and small businesses in Chapter 5 (Distributional Analyses) assess the possible distribution of compliance impacts related to this uncertainty.
                                     Exhibit 2-5

              Estimated Systems Not Currently Regulated By States
                                  Description
                   Universe of Potentially Affected Systems
                     Systems Affected by Preferred Option
                   Systems Affected by Alternative Option 1
                Systems Affected by Option Alternative Option 2
Release Prevention
Walkthrough inspections
                                                                        223,157
                                                                   (facilities)
                                                           160,882 (facilities)
                                                           160,882 (facilities)
                                                           141,505 (facilities)
Overfill prevention equipment tests a
                                                                        611,449
                                                                        378,672
                                                                        421,137
                                                                        378,672
Spill prevention equipment tests a
                                                                        550,304
                                                                        460,696
                                                                        550,304
                                                                        460,696
Interstitial integrity tests
                                                                        106,747
                                                                         76,157
                                                                         93,538
                                                                            N/A
Spill prevention equipment test after repair
                                                                         38,216
                                                                         37,847
                                                                         37,847
                                                                         37,847
Overfill prevention equipment test after repair
                                                                         30,572
                                                                         29,844
                                                                         29,844
                                                                         29,844
Interstitial integrity test after repair
                                                                         20,443
                                                                         14,585
                                                                         14,585
                                                                         14,585
Eliminate flow restrictors in vent lines for all new tanks and when overfill devices are replaced [b]
                                                                         39,744
                                                                         32,460
                                                                         32,460
                                                                            N/A
Release Detection
Operability tests  -  ATG
                                                                        205,814
                                                                        201,874
                                                                        201,874
                                                                        201,874
Operability tests  -  interstitial monitoring
                                                                        114,781
                                                                        112,584
                                                                        112,584
                                                                        112,584
Operability tests  -  line leak detection
                                                                        168,440
                                                                        165,216
                                                                        165,216
                                                                        165,216
Operability tests  -  mechanical LLDs
                                                                        335,628
                                                                        335,628
                                                                        335,628
                                                                        335,628
Operability tests  -  groundwater and vapor monitoring
                                                                         31,612
                                                                         31,612
                                                                         31,612
                                                                         31,612
Eliminate groundwater and vapor monitoring as release detection methods [c]
                                                                         31,612
                                                                         31,612
                                                                         31,612
                                                                         31,612
Add SIR/CITLD to regulations with performance criteria
                                                                          2,972
                                                                         2, 882
                                                                         2, 882
                                                                         2, 882
Change release detection leak rate probabilities  -  ATG
                                                                        205,814
                                                                            N/A
                                                                        201,874
                                                                            N/A
Change release detection leak rate probabilities  -  LLD
                                                                        168,440
                                                                            N/A
                                                                        165,216
                                                                            N/A
Change release detection leak rate probabilities  -  SIR
                                                                         11,887
                                                                            N/A
                                                                         11,659
                                                                            N/A
Change release detection leak rate probabilities  -  CITLD
                                                                        154,360
                                                                            N/A
                                                                        151,406
                                                                            N/A
Response to interstitial monitoring alarms
                                                                         14,814
                                                                         10,569
                                                                         10,569
                                                                         10,569
Remove deferral for emergency generator tanks
                                                                         18,343
                                                                         11,704
                                                                         11,704
                                                                            N/A
Other
Remove deferral for airport hydrant fuel distribution systems
                                                                        162 [d]
                                                                             97
                                                                             97
                                                                            N/A
Remove deferral for UST systems with field-constructed tanks
                                                                            239
                                                                            102
                                                                            102
                                                                            N/A
Require notification of ownership change
                                                                         22,502
                                                                   (facilities)
                                                                          3,265
                                                                   (facilities)
                                                                          3,265
                                                                   (facilities)
                                                                          3,265
                                                                   (facilities)
Closure of lined tanks that cannot be repaired according to a code of practice
                                                                             84
                                                                             59
                                                                             59
                                                                             59
Requirements for determining compatibility
                                                                        611,449
                                                                        611,449
                                                                        611,449
                                                                        611,449
EPAct-related Provisions
Operator training
                                                                            958
                                                                   (facilities)
                                                                            958
                                                                   (facilities)
                                                                            958
                                                                   (facilities)
                                                                            958
                                                                   (facilities)
Secondary containment - new and replaced tanks [b]