Universe of Affected Facilities
Existing facilities will not be affected by this amendment since they would already have SPCC Plans in place. Potentially, all new facilities with mobile or portable containers and all new facilities with containers or piping exempt from this action will be affected by this amendment. However, the Agency expects that new facilities will not be affected by the requirement to mark the exempt containers and piping as the cost of doing this should not be different from including them in the Plan, as required earlier. The Agency did not have information on the number of facilities with mobile portable containers, but assumed that all facilities would reasonably have mobile or portable containers. Exhibit 6-17 presents the projected number of new storage and production facilities affected by this amendment over the analysis period.
Exhibit 6-17
Projected Number of New Facilities Affected by the Facility Diagram Amendment

Number of New Storage Facilities
10-Year Average

2010
Year 1
2011
Year 2
2012
Year 3
2013
Year 4
2014
Year 5
2015
Year 6
2016
Year 7
2017
Year 8
2018
Year 9
2019
Year 10

New Storage Facilities
                                                                          8,960
                                                                          9,170
                                                                          9,390
                                                                          9,630
                                                                          9,880
                                                                         10,200
                                                                         10,400
                                                                         10,800
                                                                         11,100
                                                                         11,500
                                                                         10,100
New Production Facilities
                                                                          8,420
                                                                          6,290
                                                                          9,050
                                                                          9,400
                                                                          9,770
                                                                          8,950
                                                                         12,200
                                                                          7,950
                                                                          9,120
                                                                         10,900
                                                                          9,210

Estimated Cost Savings
The cost savings to the facilities will result from a simpler facility diagram and providing a general list of the mobile and portable containers, rather than providing a description of each. The cost reduction will result in a lower labor burden to prepare and review a facility diagram. The cost reduction will also be greater for facilities with a larger number of mobile and portable containers. The Agency does not have data on the distribution of the number of mobile/portable containers at facilities of different types. However, it is reasonable to expect that the number of mobile or portable containers would be positively correlated with the total capacity of the facility: facilities in larger size categories would have larger number of mobile/portable containers. This suggests that the cost savings would be higher for larger facilities and lower for smaller facilities.
The Agency assumes that the amendment will result in approximately 80 percent reduction of the labor burden in preparing and reviewing the mobile/portable containers component of the facility diagram. Since the Agency did not have very accurate estimates on this reduction, the analysis would normally involve presenting results from a sensitivity analysis using high, medium, and low scenarios. However, since the magnitude of savings was expected to be very small, these differences in assumptions would not result in a wide range of estimates and therefore, a sensitivity analysis was not conducted for this provision.
Based on input a PE firm, EPA assumed that the 10 percent of the cost related to preparing and reviewing facility diagram can be attributed to the mobile/portable containers component. Thus, the cost savings were estimated to be 8 percent of the total labor burden cost of preparing, reviewing, and certifying the facility diagram. Exhibit 6-18 provides the facility-specific cost savings from the final amendments to the facility diagram.
Exhibit 6-18
Annual Cost Savings from Final Amendments
to Facility Diagram Requirements (2007$)[1]
Facility Size
Facility-Level Cost Savings

Storage Facilities
Production Facilities
Category I
                                                                           $144
                                                                            $94
Category II
                                                                           $288
                                                                           $188
Category III
                                                                           $392
                                                                           $377
Category IV
                                                                           $547
                                                                           $565
1 	Cost estimates are based on an 80 percent reduction in the labor burden for preparing, reviewing and certifying the mobile/portable container portion of the facility diagram.
Source: SCS Engineers.

EPA calculated the total compliance cost savings using the projected number of new production and storage facilities and their corresponding per-facility compliance cost savings estimates. EPA estimated that the final amendment to the 2002 SPCC final rule will reduce compliance costs by $3.35 million and $3.32 million per year, discounted at 3 percent and 7 percent, respectively. Exhibit 6-19 presents the total annual cost savings for each year.

Exhibit 6-19
Projected Annual Compliance Cost Savings from Final Amendments to Facility Diagram Requirements (2007$ Millions)[1]

Compliance Cost Savings

2010
Year 1
2011
Year 2
2012
Year 3
2013
Year 4
2014
Year 5
2015
Year 6
2016
Year 7
2017
Year 8
2018
Year 9
2019
Year 10
10- Year Present Value
Annualized
Not Discounted
                                                                          $3.04
                                                                          $2.69
                                                                          $3.23
                                                                          $3.33
                                                                          $3.44
                                                                          $3.34
                                                                          $3.98
                                                                          $3.26
                                                                          $3.53
                                                                          $3.91
                                                                          $33.7
                                                                          $3.37
3% Discounted
                                                                          $2.95
                                                                          $2.53
                                                                          $2.95
                                                                          $2.96
                                                                          $2.97
                                                                          $2.79
                                                                          $3.23
                                                                          $2.57
                                                                          $2.70
                                                                          $2.91
                                                                          $28.6
                                                                          $3.35
7% Discounted
                                                                          $2.84
                                                                          $2.35
                                                                          $2.63
                                                                          $2.54
                                                                          $2.45
                                                                          $2.22
                                                                          $2.48
                                                                          $1.90
                                                                          $1.92
                                                                          $1.99
                                                                          $23.3
                                                                          $3.32
1 	See Appendix J in Volume II for more details on the calculation of cost savings.

Loading/Unloading Racks
In the December 2008 amendments, EPA finalized a definition for the term "loading/unloading rack," which governs whether a facility's oil transfer equipment and areas are subject to §112.7(h). Under this amendment, the requirements described at §112.7(h) only apply to oil transfer areas of a regulated facility where a loading/unloading rack, as defined in §112.2, is located.
EPA clarified the applicability of the SPCC rule to loading/unloading racks associated with USTs. The preamble for this final rule states that "...because a loading/unloading rack, or other transfer area, associated with the UST is not typically part of the UST system, it is not subject to all of the technical requirements of 40 CFR part 280 or 281, and is therefore regulated under SPCC in the same manner as any other transfer equipment or transfer activity located at an otherwise regulated SPCC facility." However, the preamble for the 2002 SPCC rule amendments erroneously included a conflicting statement regarding loading/unloading racks associated with USTs. Since EPA did not make any amendments to regulatory language for loading/unloading racks associated with USTs, there will not be any change in facility compliance costs.
The existing loading/unloading rack requirements at §112.7(h) excludes all offshore facilities. In 2008, EPA specifically excluded onshore oil production facilities and farms from the loading/unloading rack requirements at §112.7(h). EPA estimated that regulated facilities would incur about $51 million annualized in cost savings from this amendment. This estimate was based on information from Region 8 that oil production facilities can have loading/unloading racks. Thus, based on information available at the time, EPA conservatively estimated that the percentage of affected facilities would not have been greater than 33 percent of all SPCC-regulated oil production facilities. Therefore, EPA had considered a range of potentially affected facilities from 0 percent to 33 percent of the total number of oil production facilities. EPA had estimated that a minimum of 2 percent and maximum of 14 percent of regulated Category III and IV farms would be affected by this amendment because smaller farms tend not to have loading racks on site.
Further consultation from EPA regional staff and field visits by EPA staff, however, suggest that very few, if any, oil production facilities and farms are likely to have loading/unloading racks that meets the final (finalized in December 2008 at §112.2), more specific, definition of a loading/unloading rack. Consequently, EPA believes that these facilities would not have been complying with SPCC loading/unloading rack requirements and would not incur cost savings from an exclusion from such requirements. Therefore, EPA is making a correction to the 2008 estimate for loading/unloading racks that eliminates the $51 million in annualized cost savings from this amendment.
In the final amendments, EPA is removing the exclusion of oil production facilities and farms from the loading/unloading rack requirements of §112.7(h). Since these facilities are not expected to have a loading/unloading rack as defined in §112.2, the provisions at §112.7(h) do not apply. Therefore, a specific exclusion for facilities based on the assumption that they do not have loading/unloading racks is unnecessary.
While EPA believes that the loading/unloading equipment at farms and oil production facilities likely does not fall under the SPCC definition of loading/unloading racks, EPA acknowledges that this might not hold true in all cases. Farms and oil production facilities that have loading/unloading racks that do meet the definition would continue to be subject to the requirements. If there are such facilities, EPA does not believe there is any basis to exclude such loading/unloading racks from the requirements at §112.7(h) simply because they are located at a facility within a specific industry sector.
Since EPA is removing the exclusion for loading/unloading racks in the 2008 amendments, there is no cost impact of the combined 2008 and 2009 final amendments.
General Secondary Containment
At a facility subject to the SPCC rule, all areas with the potential for a discharge are subject to the general secondary containment provision. These areas may include loading/unloading areas (also referred to as transfer areas), piping, and/or mobile refuelers, and other areas of a facility where oil is present. The general secondary containment provision requires that these areas be designed with appropriate containment and/or diversionary structures to prevent a discharge that may be harmful (a discharge as described in 40 CFR part 110 into or upon navigable waters of the United States or adjoining shorelines; see §112.1(b)).
EPA amended the general secondary containment requirement in three ways: (1) by adding text regarding the method, design, and capacity of secondary containment; (2) by specifically allowing both active and passive measures of secondary containment; and (3) by including additional examples of prevention systems. This revision clarifies the applicability of general secondary containment consistent with the explanation found in SPCC Guidance for Regional Inspectors (Volume 1, December 2005) regarding the method, design, and capacity of secondary containment. Since this amendment only provides a clarification and does not change the existing regulatory requirements, it is not expected to result in any change in facility compliance costs. Conceivably, there could be cost savings that result from the reduced burden of understanding the rule, but EPA does not have sufficient information to quantify these savings.
General Secondary Containment for Non-Transportation-Related Tank Trucks
In the December 2006 amendments to the SPCC rule, EPA exempted mobile refuelers from the sized secondary containment requirements applicable to bulk storage containers. In recognition of the fact that non-transportation-related tanker trucks are similar to mobile refuelers, and may have the same difficulty in complying with the sized secondary containment requirements, EPA extended the regulatory amendment provided to mobile refuelers in 2006 to non-transportation-related tank trucks at a facility subject to the SPCC rule. Such tank trucks include those used to store for short periods of time and transport fuel, crude oil, condensate, non-petroleum, or other oils for transfer to or from bulk storage containers (e.g., a truck used to refill oil-filled equipment at an electrical substation or a pump truck at an oil production facility). Under this approach, the general secondary containment requirements at §112.7(c) still applies. However, this exemption to sized secondary containment will not apply to a vehicle used primarily for the bulk storage of oil in a stationary location, in place of a fixed oil storage container.
Although certain facilities operate non-transportation-related tanker trucks storing oil for short periods of time, EPA does not have sufficient information to quantify the savings associated with the exemption of these trucks from sized secondary containment of §§112.8(c)(2) and 112.12(c)(2).
Security
EPA amended the rule to allow facility owner/operators to tailor their security measures to the facility's specific characteristics and location, rather than comply with the existing, more prescriptive set of requirements. This will provide a facility owner/operator with the flexibility to determine the most adequate security measures to protect the facility from vandalism and to assist in the discovery of oil discharges. For example, the final amendment relaxes the requirement to have fencing around the entire facility; to secure and control access to the oil handling, processing, and storage areas of a facility, an owner/operator may choose to install fencing around only these areas.
Because the security requirements, found at §112.7(g), are currently subject to environmental equivalence under §112.7(a)(2), a facility owner/operator currently has flexibility to provide tailored security measures, if he or she can demonstrate how the measures are environmentally equivalent to the required measures in §112.7(g). The final amendment reduces this hurdle of demonstrating environmental equivalence; facilities would save costs from not having to determine environmental equivalence.
Universe of Affected Facilities
The Agency estimated that all new storage facilities would potentially be affected by this change. Oil production facilities would not be affected by this amendment because the security requirements in §112.7(g) do not apply to these facilities. Since existing facilities would have already installed the security measures as per the 2002 rule amendments or demonstrated environmental equivalence for tailored security measures, they would not be affected by the rule. EPA does not have data to determine the exact number of facilities but expects that facilities in all industry categories would use the flexibility in tailoring the security measures. In the absence of data, EPA developed cost estimates assuming that a low (50 percent), medium (75 percent), or high (100 percent) percentage of facilities would be affected (see Exhibit 6-20).
Exhibit 6-20
Projected Total Number of New Affected Storage Facilities

Number of New Facilities Affected by the Amendment
10-Year Average

2010
Year 1
2011
Year 2
2012
Year 3
2013
Year 4
2014
Year 5
2015
Year 6
2016
Year 7
2017
Year 8
2018
Year 9
2019
Year 10

Low Scenario (50 percent of facilities)
                                                                         4,480
                                                                         4,590
                                                                         4,700
                                                                         4,810
                                                                         4,940
                                                                         5,080
                                                                         5,220
                                                                         5,380
                                                                         5,550
                                                                         5,730
                                                                         5,050
Medium Scenario (75 percent of facilities)
                                                                         6,720
                                                                         6,880
                                                                         7,050
                                                                         7,220
                                                                         7,410
                                                                         7,620
                                                                         7,830
                                                                         8,070
                                                                         8,320
                                                                         8,600
                                                                         7,570
High Scenario (100 percent of facilities)
                                                                         8,960
                                                                         9,170
                                                                         9,390
                                                                         9,630
                                                                         9,880
                                                                        10,200
                                                                        10,400
                                                                        10,800
                                                                        11,100
                                                                        11,500
                                                                        10,100

Baseline Compliance Cost and Cost Savings
EPA assumed that under the existing rule, given the high cost of fencing, all facilities would use tailored security measures and demonstrate how these measures are environmentally equivalent to the required measures in §112.7(g). Therefore, the cost savings to the facility would result from not having to determine environmental equivalence and will be equal to the baseline cost of compliance with the security requirements. EPA estimates that the cost savings per facility (and the baseline cost of compliance with security requirements) would range from $1,230 to $2,530, depending on facility size (see Exhibit 6-21). The difference in cost estimates across the facility size categories is explained by the difference in labor hours to demonstrate environmental equivalence.
Exhibit 6-21
Cost of Demonstrating Environmental Equivalence (2007$)[1]
Facility Size
Facility-Level Cost of Demonstrating Environmental Equivalence

Storage Facilities
Category I
                                    $1,230
Category II
                                    $1,840
Category III
                                    $1,840
Category IV
                                    $2,530
1 	Cost estimates based on labor burden for explaining why secondary containment is impracticable. Cost estimates do not include adjustment for state overlap.
Source: SCS Engineers.

EPA calculated the total compliance cost savings using the projected number of new production and storage facilities and their corresponding per-facility compliance cost savings estimates, which is summarized in the equation below:
Calculation of Total Cost Savings
                             Total Cost Savingsj =
Where i = I,II,III, and IV are the facility size categories, and j = low, medium, and high estimates of facilities affected by the proposed amendments.
NFacij = the projected number of affected facilities for size category i  (see Exhibit 6-20).
NCostSavingij = the medium estimate for the per-facility cost savings for size category i (see Exhibit 6-21).
Overlapi = 1 - estimated percentage reduction in total burden due to state overlap for size category i  (see Exhibit 5-22).
Using the equation above, EPA estimated that the final amendment to the 2002 SPCC final rule will reduce compliance costs by $6.21 million and $6.16 million per year, discounted at 3 percent and 7 percent, respectively in the low scenario (50 percent); $9.32 million and $9.24 million per year, discounted at 3 percent and 7 percent, respectively in the midpoint scenario (75 percent) and $12.4 million and $12.3 million per year, discounted at 3 percent and 7 percent, respectively in the high scenario (100 percent). Exhibit 6-22 presents the total annual cost savings for each year.

Exhibit 6-22
Projected Annual Compliance Cost Savings from Final Amendments to Security Requirements (2007$ Millions)[1]

Cost Savings[2]

2010
Year 1
2011
Year 2
2012
Year 3
2013
Year 4
2014
Year 5
2015
Year 6
2016
Year 7
2017
Year 8
2018
Year 9
2019
Year 10
10- Year Present Value
Annualized
Low Scenario (50%)
Not Discounted
                                                                          $5.55
                                                                          $5.68
                                                                          $5.82
                                                                          $5.97
                                                                          $6.12
                                                                          $6.29
                                                                          $6.47
                                                                          $6.67
                                                                          $6.88
                                                                          $7.10
                                                                          $62.6
                                                                          $6.26
3% Discounted
                                                                          $5.39
                                                                          $5.36
                                                                          $5.33
                                                                          $5.30
                                                                          $5.28
                                                                          $5.27
                                                                          $5.26
                                                                          $5.26
                                                                          $5.27
                                                                          $5.28
                                                                          $53.0
                                                                          $6.21
7% Discounted
                                                                          $5.19
                                                                          $4.96
                                                                          $4.75
                                                                          $4.55
                                                                          $4.37
                                                                          $4.19
                                                                          $4.03
                                                                          $3.88
                                                                          $3.74
                                                                          $3.61
                                                                          $43.3
                                                                          $6.16
Midpoint Scenario (75%)
Not Discounted
                                                                          $8.33
                                                                          $8.52
                                                                          $8.73
                                                                          $8.95
                                                                          $9.18
                                                                          $9.44
                                                                          $9.71
                                                                          $10.0
                                                                          $10.3
                                                                          $10.7
                                                                          $93.8
                                                                          $9.38
3% Discounted
                                                                          $8.09
                                                                          $8.03
                                                                          $7.99
                                                                          $7.95
                                                                          $7.92
                                                                          $7.91
                                                                          $7.89
                                                                          $7.89
                                                                          $7.91
                                                                          $7.93
                                                                          $79.5
                                                                          $9.32
7% Discounted
                                                                          $7.78
                                                                          $7.45
                                                                          $7.13
                                                                          $6.83
                                                                          $6.55
                                                                          $6.29
                                                                          $6.05
                                                                          $5.82
                                                                          $5.61
                                                                          $5.42
                                                                          $64.9
                                                                          $9.24
High Scenario (100%)
Not Discounted
                                                                          $11.1
                                                                          $11.4
                                                                          $11.6
                                                                          $11.9
                                                                          $12.2
                                                                          $12.6
                                                                          $12.9
                                                                          $13.3
                                                                          $13.8
                                                                          $14.2
                                                                           $125
                                                                          $12.5
3% Discounted
                                                                          $10.8
                                                                          $10.7
                                                                          $10.7
                                                                          $10.6
                                                                          $10.6
                                                                          $10.5
                                                                          $10.5
                                                                          $10.5
                                                                          $10.5
                                                                          $10.6
                                                                           $106
                                                                          $12.4
7% Discounted
                                                                          $10.4
                                                                          $9.93
                                                                          $9.50
                                                                          $9.10
                                                                          $8.73
                                                                          $8.39
                                                                          $8.06
                                                                          $7.76
                                                                          $7.48
                                                                          $7.22
                                                                          $86.6
                                                                          $12.3
[1] 	The baseline cost of compliance is the same as the cost savings.
[2] 	See Appendix J in Volume II for more details on the calculation of cost savings.

Integrity Testing
EPA amended the integrity testing requirements at §§112.8(c)(6) and 112.12(c)(6) to provide flexibility in complying with the bulk storage container integrity testing requirements. Specifically, EPA modified the provision to allow an owner or operator to consult and rely on industry standards to determine the appropriate qualifications for tank inspectors/testing personnel and the type and frequency of integrity testing required for a particular container size and configuration. Thus, this action extended the streamlined bulk storage container integrity testing requirement that EPA provided to qualified facilities in the December 2006 SPCC rule amendments (71 FR 77266, December 26, 2006) to all facilities subject to the integrity testing provision.
Universe of Affected Facilities
Since the integrity-testing requirement applies only to storage facilities (and not production facilities), EPA estimates that all new storage facilities will be affected by this amendment. Only containers with storage capacity of less than 5,000 gallons that are portable or shop-built would be affected because industry standards for these containers are different from the SPCC requirements; therefore, containers of 5,000 gallons and larger would not be affected by the final change. For this cost estimate, EPA assumed that all existing facilities are currently using the STI SP-001 standard and performing only external inspections for small portable containers and shop-built tanks up to 5,000 gallons in capacity, instead of visual inspection plus a system of non-destructive shell testing such as hydrostatic testing, radiographic testing, ultrasonic testing, etc., as required under the integrity-testing requirement. Therefore, existing facilities would not be affected because they would have already certified the environmental equivalence of their inspection standards. Exhibit 6-23 presents the projected number of new facilities that would be affected by this final amendment from 2010 through 2019. The projected average annual number of new storage facilities is 10,100. EPA projected the number of new storage facilities over the 10-year analysis period using the estimated number of SPCC-regulated facilities and industry-specific growth rates.
Exhibit 6-23
Projected Number of New Storage Facilities Affected by the Integrity Testing Amendment

Number of New Storage Facilities Affected by the Amendment
10-Year Average

2010
Year 1
2011
Year 2
2012
Year 3
2013
Year 4
2014
Year 5
2015
Year 6
2016
Year 7
2017
Year 8
2018
Year 9
2019
Year 10

New Facilities
                                                                         8,960
                                                                         9,170
                                                                         9,390
                                                                         9,630
                                                                         9,880
                                                                        10,200
                                                                        10,400
                                                                        10,800
                                                                        11,100
                                                                        11,500
                                                                        10,100

Baseline Cost of Compliance and Cost Savings
EPA assumed that all facilities would use the STI SP-001 standard and perform external inspections only for portable containers and for small shop-built tanks up to 5,000-gallons, instead of visual inspection, plus a form of non-destructive shell testing as required under the integrity-testing provision. This implies that facilities would save the cost incurred for preparing an environmental equivalence statement and having a PE certify environmental equivalence statements in SPCC Plans, equal to the baseline cost of compliance with integrity testing requirements for small shop-built tanks. Since existing facilities would have already incurred this cost, only new facilities would have cost savings from this amendment. The Agency estimates that the cost savings per facility for all size categories for not having to claim environmental equivalence would be $1,230.
EPA calculated the total compliance cost savings (and the baseline cost of compliance) using the projected number of new facilities and their corresponding per-facility compliance cost savings estimates, which is summarized in the equation below:
                                Total Cost Savings =
 Where i = I, II, III and IV are facility size categories.
 NFaci = the projected number of new non-production facilities affected by the amendment (see Exhibit 6-23).
 NCostSaving = Facility level cost savings (see this section).
 Overlapi = 1 - estimated percentage reduction in total burden due to state overlap for size category i  (see Exhibit 5-22).
Calculation of Total Cost Savings
Using the equation above, EPA estimated that the final amendment to the 2002 SPCC final rule would reduce compliance costs by $11.1 million and $11.1 million per year, discounted at 3 percent and 7 percent, respectively. Exhibit 6-24 presents the total annual cost savings for the integrity testing amendments each year.

Exhibit 6-24
Total Projected Compliance Cost Savings from Integrity Testing Amendment (2007$ Millions)[1,2]

Compliance Cost Savings
10- Year Present Value
Annualized

2010
Year 1
2011
Year 2
2012
Year 3
2013
Year 4
2014
Year 5
2015
Year 6
2016
Year 7
2017
Year 8
2018
Year 9
2019
Year 10

Not Discounted
                                                                          $9.96
                                                                          $10.2
                                                                          $10.4
                                                                          $10.7
                                                                          $11.0
                                                                          $11.3
                                                                          $11.6
                                                                          $12.0
                                                                          $12.3
                                                                          $12.7
                                                                           $112
                                                                          $11.2
3% Discounted
                                                                          $9.67
                                                                          $9.61
                                                                          $9.56
                                                                          $9.51
                                                                          $9.48
                                                                          $9.46
                                                                          $9.44
                                                                          $9.44
                                                                          $9.46
                                                                          $9.48
                                                                          $95.1
                                                                          $11.1
7% Discounted
                                                                          $9.31
                                                                          $8.90
                                                                          $8.52
                                                                          $8.17
                                                                          $7.83
                                                                          $7.52
                                                                          $7.23
                                                                          $6.96
                                                                          $6.71
                                                                          $6.48
                                                                          $77.6
                                                                          $11.1
[1] 	Baseline compliance cost is the same as the cost savings.
[2] 	See Appendix J in Volume II for more details on the calculation of cost savings.

Integrity Testing Requirements for Animal Fats and Vegetable Oils
Background
EPA amended the rule requirements by providing differentiated integrity testing requirements for facilities that handle certain types of animal fats and vegetable oils. EPA provided the PE or an owner/operator self-certifying an SPCC Plan with the flexibility to use a visual inspection program for integrity testing that is appropriate for containers that store AFVOs that meet certain criteria. This flexibility applies to those bulk storage containers that are subject to the applicable sections of the Food and Drug Administration (FDA) regulation 21 CFR part 110, Current Good Manufacturing Practice in Manufacturing, Packing or Holding Human Food, and that meet the following additional criteria: (1) the containers are elevated; (2) the containers are made from austenitic stainless steel; (3) the containers have no external insulation; and (4) the containers are shop-built.
Universe of Affected Facilities
In the regulatory impact analysis (RIA) of the final rule amendments published on December 26, 2006, EPA estimated that 7,640 facilities produce or store AFVOs, comprising approximately one percent of the regulated universe. Of the 7,640 facilities that EPA estimates to be AFVO facilities, the Agency excluded the facilities that process food for pets or use vegetable oil in non-food production related activities. The remaining 7,390 are assumed to store food oils in addition to other non-food oils that are used for heating or manufacturing processes and therefore are affected by the final amendments. Further, all new facilities would be affected by this amendment.
In addition to the requirement that the containers should store food oils, the final amendment also requires that the containers be shop-built, made of austenitic stainless steel, elevated with no external insulation, and be covered by 21 CFR part 110. The amendment relies on the judgment of a PE to determine if the tank should be eligible for differentiated integrity testing requirements. To account for this, the Agency assumed that only a certain percentage of food oil storage tanks would be affected by the final amendments. To simplify the analysis, EPA assumed that all food oil containers at a facility are subject to the same integrity testing requirements. The Agency contacted industry experts, who determined that 40 percent to 90 percent of containers at AFVO facilities are made of stainless steel. Further, they noted that 21 CFR part 110 applies to many AFVO facilities. Therefore, based on professional judgment, the Agency assumed that 40 percent (low), 65 percent (medium), and 90 percent (high) of the 7,390 facilities would have food oil tanks that are eligible (see Exhibit 6-25).
Exhibit 6-25
Projected Total Number of New and Existing AFVO Facilities Affected by the Final Amendment
Percent of Facilities Affected
Number of AFVO Facilities Affected by the Amendment
10-Year Average

2010
Year 1
2011
Year 2
2012
Year 3
2013
Year 4
2014
Year 5
2015
Year 6
2016
Year 7
2017
Year 8
2018
Year 9
2019
Year 10

Existing Facilities
100%
                                                                         7,790
                                                                         7,820
                                                                         7,860
                                                                         7,890
                                                                         7,930
                                                                         7,960
                                                                         8,000
                                                                         8,030
                                                                         8,070
                                                                         8,100
                                                                         7,950
90%
                                                                         7,010
                                                                         7,040
                                                                         7,070
                                                                         7,100
                                                                         7,130
                                                                         7,170
                                                                         7,200
                                                                         7,230
                                                                         7,260
                                                                         7,290
                                                                         7,150
65%
                                                                         5,060
                                                                         5,090
                                                                         5,110
                                                                         5,130
                                                                         5,150
                                                                         5,180
                                                                         5,200
                                                                         5,220
                                                                         5,240
                                                                         5,270
                                                                         5,160
40%
                                                                         3,120
                                                                         3,130
                                                                         3,140
                                                                         3,160
                                                                         3,170
                                                                         3,180
                                                                         3,200
                                                                         3,210
                                                                         3,230
                                                                         3,240
                                                                         3,180
New Facilities
100%
                                                                           181
                                                                           182
                                                                           183
                                                                           184
                                                                           185
                                                                           185
                                                                           186
                                                                           187
                                                                           188
                                                                           189
                                                                           185
90%
                                                                           163
                                                                           164
                                                                           165
                                                                           165
                                                                           166
                                                                           167
                                                                           168
                                                                           168
                                                                           169
                                                                           170
                                                                           166
65%
                                                                           118
                                                                           118
                                                                           119
                                                                           119
                                                                           120
                                                                           120
                                                                           121
                                                                           122
                                                                           122
                                                                           123
                                                                           120
40%
                                                                            72
                                                                            73
                                                                            73
                                                                            74
                                                                            74
                                                                            74
                                                                            75
                                                                            75
                                                                            75
                                                                            75
                                                                            74

Baseline Compliance Cost and Cost Savings
Baseline Compliance Cost
EPA calculated the baseline cost of compliance for integrity testing requirements at AFVO facilities using the projected number of new and existing AFVO facilities and the corresponding per-facility cost of compliance estimates for integrity testing before the final amendments. The estimates for facility-level compliance cost (see Exhibit 6-26) are based on specific assumptions developed from a review of SPCC Plans, such as the number of tanks per facility by size category, the total capacity, and other facility characteristics, such as the type of secondary containment used.
Exhibit 6-26
Estimated Baseline Facility-Level Integrity Testing by Facility Size Category (2007$)
Cost Item
Category I
Category II
Category III
Category IV
Integrity Testing[1]
                                                                         $1,500
                                                                         $6,000
                                                                        $12,000
                                                                        $24,000
Test Frequency[2]
                                Every 12 years
Annual Baseline Cost of Compliance
                                                                           $125
                                                                           $500
                                                                         $1,000
                                                                         $2,000
[1]	The cost estimate reflects hydrostatic testing, non-destructive shell thickness testing.
[2]	Estimated as an average time period over which facility owner/operators conduct integrity testing.
Source: Facility visits; SCS Engineers.

The Agency estimates that the baseline cost of compliance for integrity testing requirements at AFVO facilities is $2.97 million and $2.96 million discounted at 3 percent and 7 percent, respectively (see Exhibit 6-27).

Exhibit 6-27
Total Projected Baseline Compliance Cost for Integrity Testing Requirement at AFVO Facilities (2007$ Millions)

Compliance Costs
10- Year Present Value
Annualized

2010
Year 1
2011
Year 2
2012
Year 3
2013
Year 4
2014
Year 5
2015
Year 6
2016
Year 7
2017
Year 8
2018
Year 9
2019
Year 10

Not Discounted
                                                                          $2.91
                                                                          $2.93
                                                                          $2.94
                                                                          $2.95
                                                                          $2.96
                                                                          $2.98
                                                                          $2.99
                                                                          $3.00
                                                                          $3.02
                                                                          $3.03
                                                                          $29.7
                                                                          $2.97
3% Discounted
                                                                          $2.83
                                                                          $2.76
                                                                          $2.69
                                                                          $2.62
                                                                          $2.56
                                                                          $2.49
                                                                          $2.43
                                                                          $2.37
                                                                          $2.31
                                                                          $2.25
                                                                          $25.3
                                                                          $2.97
7% Discounted
                                                                          $2.72
                                                                          $2.56
                                                                          $2.40
                                                                          $2.25
                                                                          $2.11
                                                                          $1.98
                                                                          $1.86
                                                                          $1.75
                                                                          $1.64
                                                                          $1.54
                                                                          $20.8
                                                                          $2.96

Compliance Cost Savings
EPA differentiated the integrity testing requirements for facilities that handle food oils stored in containers that are corrosion free and are austenitic stainless steel tanks or tanks made with equally corrosion-resistant materials that are in good repair and have smooth, impervious, corrosion-free, easily cleanable food oil contact surfaces. In addition, the containers must be elevated to facilitate complete drainage of the container to prevent corrosion.
Although it is possible that a PE would require that the qualified AFVO firms conduct integrity testing but a less costly type, the Agency assumed that all facilities that meet the above criteria would, in effect, be eligible to conduct visual inspections for these containers. Further, EPA assumed that facilities would not incur any additional cost for visual inspection of these containers.
However, AFVO facilities that produce or store food oils are likely to also store other non-food and petroleum oil. Facilities would have to comply with integrity testing requirements for the non-food oil containers. To assess the ratio of food oil storage to total oil storage capacity, the Agency relied on SPCC Plans obtained from AFVO facilities. Although these facilities are not representative of the entire AFVO universe, in the absence of other data, these Plans provide a range of possible values for the ratio of food oil to non-food oil at these facilities.
The SPCC Plans suggest that on average, 93 percent of an AFVO facility's total storage is for AFVO. Therefore, EPA assumed that facilities eligible for these differentiated requirements for visual inspection would save 93 percent of their total cost of integrity testing. To make this assumption, EPA also assumed that the integrity testing costs are proportional to the storage capacity. Given the data from a PE firm, this seems to be a reasonable assumption on average. It should be noted that EPA also assumed that all the vegetable oil stored at a facility is food grade and is not waste oil; the SPCC Plans considered did not distinguish between the two grades.
Exhibit 6-28 lists the average cost of integrity testing of tanks by facility category.
Exhibit 6-28
Estimated Facility-Level Integrity Testing by Facility Size Category (2007$)
Cost Item
Category I
Category II
Category III
Category IV
Integrity Testing[1]
                                                                         $1,500
                                                                         $6,000
                                                                        $12,000
                                                                        $24,000
Test Frequency[2]
                                Every 12 years
Annual Cost Savings
                                                                           $125
                                                                           $500
                                                                         $1,000
                                                                         $2,000
[1]	The cost estimate reflects hydrostatic testing, non-destructive shell thickness testing. Unit costs range from $500 to $2,500 per tank for hydrostatic testing. EPA assumed that the number of tanks per typical facility would be 1, 4, 8, and 16 for Category I, II, III, and IV facilities, respectively. This assumption was based on estimates obtained from SCS Engineers as well as state oil tank databases.
[2]	Estimated as an average time period over which facility owner/operators conduct integrity testing.
Source: Facility visits; SCS Engineers.

EPA calculated the total compliance cost savings for AFVO facilities using the projected number of facilities affected by the final amendments and their corresponding per-facility compliance cost savings estimates, as summarized in the equation below:
                             Total Cost Savings =
 Where i = I,II,III, and IV are the facility size categories, and j = low, medium, and high estimates of facilities affected by the proposed amendments.
 NFaci = the projected number of affected AFVO qualified facilities by size category (see Exhibit 6-25).
 NCostSavingi = the per facility cost savings based on compliance options available to AFVO facilities storing food oils by size category (see Exhibit 6-28).
 Overlapi = 1 - estimated percentage reduction in total burden due to state overlap for size category i  (see Exhibit 5-22).
Calculation of Total Cost Savings
The Agency estimates that the AFVO facilities would save $1.19 million and $1.19 million discounted at 3 percent and 7 percent discount rate, respectively (low estimate) to $2.67 million and $2.67 million, discounted at 3 percent and 7 percent discount rate, respectively (high estimate) from the final amendments (see Exhibit 6-29).

Exhibit 6-29
Total Projected Compliance Cost Savings for AFVO Facilities from Final Amendments (2007$ Millions)[1]
Percent of Facilities Affected
Compliance Cost Savings
10- Year Present Value
Annualized

2010
Year 1
2011
Year 2
2012
Year 3
2013
Year 4
2014
Year 5
2015
Year 6
2016
Year 7
2017
Year 8
2018
Year 9
2019
Year 10

Low Scenario (40%)
Not Discounted
                                                                          $1.17
                                                                          $1.17
                                                                          $1.18
                                                                          $1.18
                                                                          $1.19
                                                                          $1.19
                                                                          $1.20
                                                                          $1.20
                                                                          $1.21
                                                                          $1.21
                                                                          $11.9
                                                                          $1.19
3% Discounted
                                                                          $1.13
                                                                          $1.10
                                                                          $1.08
                                                                          $1.05
                                                                          $1.02
                                                                         $0.998
                                                                         $0.973
                                                                         $0.948
                                                                         $0.925
                                                                         $0.902
                                                                          $10.1
                                                                          $1.19
7% Discounted
                                                                          $1.09
                                                                          $1.02
                                                                         $0.960
                                                                         $0.901
                                                                         $0.846
                                                                         $0.794
                                                                         $0.745
                                                                         $0.699
                                                                         $0.656
                                                                         $0.616
                                                                          $8.33
                                                                          $1.19
Midpoint Scenario (65%)
Not Discounted
                                                                          $1.89
                                                                          $1.90
                                                                          $1.91
                                                                          $1.92
                                                                          $1.93
                                                                          $1.94
                                                                          $1.94
                                                                          $1.95
                                                                          $1.96
                                                                          $1.97
                                                                          $19.3
                                                                          $1.93
3% Discounted
                                                                          $1.84
                                                                          $1.79
                                                                          $1.75
                                                                          $1.70
                                                                          $1.66
                                                                          $1.62
                                                                          $1.58
                                                                          $1.54
                                                                          $1.50
                                                                          $1.47
                                                                          $16.5
                                                                          $1.93
7% Discounted
                                                                          $1.77
                                                                          $1.66
                                                                          $1.56
                                                                          $1.46
                                                                          $1.37
                                                                          $1.29
                                                                          $1.21
                                                                          $1.14
                                                                          $1.07
                                                                          $1.00
                                                                          $13.5
                                                                          $1.93
High Scenario (90%)
Not Discounted
                                                                          $2.62
                                                                          $2.63
                                                                          $2.65
                                                                          $2.66
                                                                          $2.67
                                                                          $2.68
                                                                          $2.69
                                                                          $2.70
                                                                          $2.72
                                                                          $2.73
                                                                          $26.7
                                                                          $2.67
3% Discounted
                                                                          $2.55
                                                                          $2.48
                                                                          $2.42
                                                                          $2.36
                                                                          $2.30
                                                                          $2.24
                                                                          $2.19
                                                                          $2.13
                                                                          $2.08
                                                                          $2.03
                                                                          $22.8
                                                                          $2.67
7% Discounted
                                                                          $2.45
                                                                          $2.30
                                                                          $2.16
                                                                          $2.03
                                                                          $1.90
                                                                          $1.79
                                                                          $1.68
                                                                          $1.57
                                                                          $1.48
                                                                          $1.39
                                                                          $18.7
                                                                          $2.67
[1]	See Appendix J in Volume II for more details on the calculation of cost savings.

Oil Production Facilities
Background
Since its original promulgation in 1973, the SPCC rule has included differentiated requirements for oil production facilities, which are provided in §112.9. Under this final rulemaking, EPA is finalizing specific modifications for oil production facilities. In particular, EPA is finalizing the following modifications: revising the definition of "production facility"; extending the timeframe by which the owner or operator of a new oil production facility must prepare and implement an SPCC Plan; providing an alternative option for flow-through process vessels at oil production facilities to comply with the general secondary containment requirement and additional oil spill prevention measures in lieu of sized secondary containment requirements; providing an exemption for certain intra-facility gathering lines from the SPCC requirements; establishing specific requirements for a flowline/intra-facility gathering line maintenance program and providing an alternative compliance option for flowlines and intra-facility gathering lines at oil production facilities for contingency planning in lieu of the general secondary containment requirements; defining produced water container and providing an alternative compliance option for produced water containers at oil production facilities requiring general secondary containment, a process or procedure certified by a PE designed to remove free-phase oil on the surface of the produced water container and additional oil spill prevention measures in lieu of sized secondary containment requirements; and clarifying the definition of "permanently closed" as it applies to an oil production facility.
 In the December 5, 2008 amendments EPA exempted certain produced water containers and any associated piping and appurtenances downstream of the container from the SPCC requirements, and provided alternative qualified facilities criteria for oil production facilities. Under this final rulemaking, EPA is removing both provisions.  EPA is also removing the exclusion for oil production facility from the loading/unloading rack requirements..
Universe of Affected Facilities
EPA estimated that 215,000 oil and gas production facilities would be subject to the SPCC rule in 2010. The number of production facilities affected varies for each individual final rule amendment. Therefore, the universe of affected facilities is discussed separately for each of the amendments in the sections below.
Definition of "Production Facility"
EPA modified the definition of "production facility" to clarify which specific provisions of the rule may apply, consistent with the definition of "facility." Because the Agency is only providing clarity on the applicability of the rule, no cost impact is monetized as a result of the amended definition of "production facility."
Modifications to §112.9 for Drilling and Workover Facilities
To clarify that drilling and workover activities are not subject to the provisions at §112.9, EPA amended the title of §112.9 to read "Spill Prevention, Control, and Countermeasure Plan requirements for onshore oil production facilities (excluding drilling and workover facilities)." EPA also amended the introductory sentence of the section accordingly. Because the Agency is only providing clarity on the applicability of the rule, no cost impact is monetized as a result of the specified exclusion of drilling and workover facilities.
SPCC Plan Preparation and Implementation for New Oil Production Facilities
Background
EPA amended §112.3(b) to extend the timeframe by which a production facility that becomes operational after November 10, 2010, must prepare and implement an SPCC Plan. Under the existing rule, any facility that becomes operational after November 10, 2010 (a "new facility"), must prepare an SPCC Plan before beginning operations. However, oil production facilities have unique characteristics during the start-up period of their operations, which lead to variability in the amount and type of oil handled. This would imply that oil production facilities must continually amend Plans until operations stabilize, and have a licensed Professional Engineer (PE) certify each amendment. To alleviate this burden, EPA gave a new production facility six months to prepare and implement an SPCC Plan.
Universe of Affected Facilities
EPA assumed that only 75 percent of oil production facilities would be affected by the rule change and would save the cost to amend the Plan and the PE certification cost. The remaining 25 percent of the facilities were assumed to be correct in their original predictions of the oil well's flow, and would therefore not need to amend the Plan.
Exhibit 6-30 presents the projected number of new oil production facilities that would be affected by this final amendment from 2010 through 2019. The projected average annual number of new oil production facilities is 6,910. EPA projected the number of new production facilities over the 10-year analysis period using the estimated number of SPCC-regulated production facilities and industry-specific growth rates.
Exhibit 6-30
Projected Total Number of New Oil Production Facilities Affected by the
Final Amendment to SPCC Plan Preparation and Implementation[1]
Oil Production Industry
Number of New Oil Production Facilities Affected by the Amendment
10-Year Average

2010
Year 1
2011
Year 2
2012
Year 3
2013
Year 4
2014
Year 5
2015
Year 6
2016
Year 7
2017
Year 8
2018
Year 9
2019
Year 10

Category I
                                                                            807
                                                                            603
                                                                            868
                                                                            901
                                                                            937
                                                                            858
                                                                          1,170
                                                                            763
                                                                            875
                                                                          1,050
                                                                            883
Category II
                                                                          4,350
                                                                          3,250
                                                                          4,680
                                                                          4,860
                                                                          5,050
                                                                          4,630
                                                                          6,310
                                                                          4,110
                                                                          4,720
                                                                          5,640
                                                                          4,760
Category III
                                                                          1,140
                                                                            854
                                                                          1,230
                                                                          1,280
                                                                          1,330
                                                                          1,220
                                                                          1,660
                                                                          1,080
                                                                          1,240
                                                                          1,480
                                                                          1,250
Category IV
                                                                             11
                                                                              8
                                                                             12
                                                                             13
                                                                             13
                                                                             12
                                                                             16
                                                                             11
                                                                             12
                                                                             15
                                                                             12
Total
                                                                          6,310
                                                                          4,720
                                                                          6,790
                                                                          7,050
                                                                          7,330
                                                                          6,710
                                                                          9,160
                                                                          5,960
                                                                          6,840
                                                                          8,180
                                                                          6,910
[1] 	The number of affected new production facilities represents 75 percent of the total new production facilities.

Baseline Compliance Cost and Cost Savings
Baseline Cost of Compliance
The baseline compliance cost incurred by oil production facilities for preparing and implementing the SPCC Plan is the same as the total cost of compliance with the SPCC rule. For 75 percent of the facilities, the baseline cost also includes the cost the oil production facilities might incur in having to amend the Plan and have it certified by a PE after operations have stabilized in the first year.
EPA calculated the baseline cost of compliance for oil production facilities using the projected number of new production facilities and the corresponding per-facility cost of compliance estimates before the final amendments. EPA estimated that the total cost of complying with the 2002 SPCC rule for a new production facility is $37,600 for facilities in size Category I, $58,400 for Category II, $148,000 for Category III, and $411,000 for Category IV (Exhibit 6-31). Exhibit 6-32 presents the assumptions for oil production facilities in Categories I, II, III, and IV.
Exhibit 6-31
Annual Cost of Compliance
with 2002 SPCC Rule Requirements (2007$)
Facility Size
Facility-Level Compliance Cost[1]

Average Cost
Category I
                                                                        $37,600
Category II
                                                                        $58,400
Category III
                                                                       $148,000
Category IV
                                                                       $411,000
[1] 	See Appendix K in Volume II for details on the assumptions for arriving at these costs.
Source: SCS Engineers.

Exhibit 6-32
Assumptions on Production Facility Characteristics
Cost Item
Category I
Category II
Category III
Category IV
Labor Burden of Certifying an Existing SPCC Plan[1]
PE
                                                                        6 hours
                                                                       12 hours
                                                                       24 hours
                                                                       36 hours

Clerical Worker
                                                                       0.5 hour
                                                                         1 hour
                                                                        2 hours
                                                                        3 hours
Number of Tank Batteries[2]
                                       1
                                       1
                                       1
                                       4
                                       8
Number of Tanks per Tank Battery[3]
Minimum Capacity
                             (1) 1,000-gallon tank
               (1) 1,000-gallon tank and (1) 10,000-gallon tank
                            (3) 20,000-gallon tanks
                           (3) 100,000-gallon tanks
                            (3) 50,000-gallon tanks

Maximum Capacity
                            (1) 10,000-gallon tank
               (1) 1,000-gallon tank and (3) 10,000-gallon tanks
                           (3) 100,000-gallon tanks

Total Tank Capacity[4]
                           1,000  -  10,000 gallons
                           11,000  -  31,000 gallons
                          60,000  -  300,000 gallons
                               1,200,000 gallons
[1]	Assumes that facility uses in-house labor when a PE is not required. A production facility will incur labor costs roughly proportional to the size of the facility. The labor hours needed to complete a task at a Category II, III, and IV size facility are assumed to be 2, 4, and 6 times the labor hours needed at a Category I size facility, respectively. Assumptions provided by SCS Engineers.
[2]	Estimates provided by SCS Engineers; assumption used to develop universe estimates.
3 	Estimates provided by SCS Engineers.
[4]	Estimates provided by SCS Engineers.

It is important to note that since certain SPCC requirements may be similar in nature to those imposed by state regulations and facility owner/operators of many industries may follow specific industry standards, compliance activities and their associated costs cannot be fully attributed to the SPCC rule. Since regulations vary widely across states and industries, there is no single adjustment factor that could be developed to address this issue for the universe of regulated facilities. However, due to the lack of data on the extent to which facilities adopt industry standards, in this analysis the Agency estimated the baseline compliance costs and cost savings associated with the SPCC requirements without accounting for possible overlap with industry standards. EPA did take into account requirements imposed by state regulations that are similar to the SPCC requirements. As a result, the estimated compliance costs are likely to present a significant overestimate of the costs attributed to the SPCC rule. For details of the state overlap analysis, refer to Section 5.4 of this report.
About 75 percent of facilities face an additional cost of amending and certifying the Plans after the operations are stabilized (see Exhibit 6-33). While a facility owner/operator must have the Plan certified by a PE, the cost of amending the Plan depends on whether a facility uses in-house labor or hires outside PEs, where the latter is more expensive. On the one hand, a small facility is more likely to hire outside engineers because it may not have the in-house expertise to comply with the SPCC requirements. On the other hand, a small facility may not have the resources to hire outside engineers and may be in a better position to use in-house labor because the owner may be closely involved with all the operations. A similar two-sided argument can also be made for larger facilities. Therefore, EPA assumed that 50 percent of the facilities of all size categories use in-house labor and the remaining 50 percent use outside professional labor. The unit costs of amending and certifying the SPCC Plan also depend on whether the technical amendment is minor or major. EPA calculated the cost savings for each facility using the average PE certification cost of a minor and major technical amendment.
Exhibit 6-33
Annual Cost of Plan Amendment
for Production Facilities (2007$)
Facility Size
Facility-Level Cost of Plan Amendment[1]

Average Cost[3]
Category I
                                                                         $1,830
Category II
                                                                         $3,660
Category III
                                                                         $7,320
Category IV
                                                                        $11,000
[1]	Includes the cost of amending the Plan and the cost of having a PE certify the Plan. Numbers are rounded to the nearest ten.
[2]	Average of the cost for major and minor changes.
Source: SCS Engineers.

Based on the facility-level costs, EPA estimated that the baseline cost of compliance for oil production facilities is $563 million and $558 million per year, discounted at 3 percent and 7 percent, respectively (see Exhibit 6-34).

Exhibit 6-34
Projected Annual Baseline Compliance Costs of 2002 SPCC Requirements for Oil Production Facilities (2007$ Millions)

Compliance Costs

2010
Year 1
2011
Year 2
2012
Year 3
2013
Year 4
2014
Year 5
2015
Year 6
2016
Year 7
2017
Year 8
2018
Year 9
2019
Year 10
10- Year Present Value
Annualized
Not Discounted
                                                                           $518
                                                                           $387
                                                                           $558
                                                                           $579
                                                                           $602
                                                                           $551
                                                                           $752
                                                                           $490
                                                                           $562
                                                                           $672
                                                                         $5,670
                                                                           $567
3% Discounted
                                                                           $503
                                                                           $365
                                                                           $510
                                                                           $514
                                                                           $519
                                                                           $462
                                                                           $612
                                                                           $386
                                                                           $431
                                                                           $500
                                                                         $4,800
                                                                           $563
7% Discounted
                                                                           $484
                                                                           $338
                                                                           $455
                                                                           $441
                                                                           $429
                                                                           $367
                                                                           $469
                                                                           $285
                                                                           $306
                                                                           $342
                                                                         $3,920
                                                                           $558

Compliance Cost Savings
As a result of the final rule change, the main cost savings for a facility will result from not having to amend the Plan and have it certified by a PE after operations have stabilized. EPA assumed that there will be no cost savings related to Plan preparation and implementation because there will be no change in the cost in the first year. Facilities may find it economical to construct the containment structures at the time of construction, regardless of the implementation date.
The cost savings from this final amendment include the cost of amending the Plan and having the Plan certified by a PE. The Agency assumed that a production facility owner or operator would have a PE certify technical amendments to the facility's Plan once in the first six months of operation, for the changes made at the facility that materially affect its potential for a discharge. As discussed above, the unit costs of amending and certifying the SPCC Plan also depend on whether the technical amendment is minor or major. EPA calculated the cost savings for each facility using the average PE certification cost of a minor and major technical amendment. The unit costs for amending and certifying the SPCC Plan are provided in Exhibit 6-35.
Exhibit 6-35
Annual Cost of Plan Amendment for Oil Production Facilities (2007$)
Facility Size
Facility-Level Cost of Plan Amendment[1]

Average Cost[2]
Category I
                                                                         $1,830
Category II
                                                                         $3,660
Category III
                                                                         $7,320
Category IV
                                                                        $11,000
[1]	Includes the cost of amending the Plan and the cost of having a PE certify the Plan. Numbers are rounded to the nearest ten.
[2]	Average of the cost for major and minor changes.
Source: SCS Engineers.

The total cost savings from the final amendments were calculated by multiplying the facility-level cost by facility size category with the total number of new production facilities affected by this amendment in each facility category, as summarized in the equation below.
EPA estimated that the final amendment to the SPCC rule would reduce compliance costs by $24.1 million and $23.8 million per year, discounted at 3 percent and 7 percent, respectively (see Exhibit 6-36).
                              Total Cost Savings =
 Where,
 i = I, II, III, and IV are the facility size categories.
 NFaci = the projected number of new production facilities affected by size category (see Exhibit 6-30).
NCostSi = the annualized cost of amending and certifying SPCC plan (see Exhibit 6-35).
Overlapi = 1 - estimated percentage reduction in total burden due to state overlap for size category i (see Exhibit 5-22).
Calculation of Total Cost Savings

Exhibit 6-36
Projected Annual Compliance Cost Savings from Final Amendment to SPCC Plan Preparation and Implementation (2007$ Millions)[1]

Total Cost Savings

2010
Year 1
2011
Year 2
2012
Year 3
2013
Year 4
2014
Year 5
2015
Year 6
2016
Year 7
2017
Year 8
2018
Year 9
2019
Year 10
10- Year Present Value
Annualized
Not Discounted
                                                                          $22.2
                                                                          $16.6
                                                                          $23.8
                                                                          $24.7
                                                                          $25.7
                                                                          $23.6
                                                                          $32.2
                                                                          $20.9
                                                                          $24.0
                                                                          $28.7
                                                                           $242
                                                                          $24.2
3% Discounted
                                                                          $21.5
                                                                          $15.6
                                                                          $21.8
                                                                          $22.0
                                                                          $22.2
                                                                          $19.7
                                                                          $26.2
                                                                          $16.5
                                                                          $18.4
                                                                          $21.4
                                                                           $205
                                                                          $24.1
7% Discounted
                                                                          $20.7
                                                                          $14.5
                                                                          $19.5
                                                                          $18.9
                                                                          $18.3
                                                                          $15.7
                                                                          $20.0
                                                                          $12.2
                                                                          $13.1
                                                                          $14.6
                                                                           $167
                                                                          $23.8
[1]	See Appendix J in Volume II for more details on the calculation of cost savings.

Flowlines and Intra-facility Gathering Lines
Background
In 2008, EPA finalized a conditional exemption from secondary containment requirements under the SPCC rule for flowlines and intra-facility gathering lines. That is, in lieu of general secondary containment, an owner or operator may opt to prepare a contingency plan and written commitment of manpower, equipment, and materials. Additionally, EPA finalized specific requirements for a flowlines and intra-facility gathering lines maintenance program. EPA also exempted intra-facility gathering lines that are subject to the regulatory requirements at 49 CFR parts 192 or 195 from the SPCC requirements.
The 2002 SPCC rule required secondary containment for all areas of a facility where there is a potential for a discharge, as described in §112.1(b). This requirement applied to flowlines and intra-facility gathering lines. However, if secondary containment is determined impracticable, facility owners/operators had the option to explain why it was not practicable and provide a written commitment of manpower, equipment, and materials required to expeditiously control and remove any quantity of discharged oil that may be harmful. Owners/operators were also required to provide an oil spill contingency plan prepared in accordance with 40 CFR part 109.
EPA recognizes that gathering lines are often outside of the Agency's jurisdiction because they "transport" oil outside of an oil production facility. Based on a 1971 Memorandum of Understanding (MOU) with the Department of Transportation (DOT), EPA has jurisdiction only over non-transportation-related facilities, which includes pipelines that transport oil within a facility. Any pipeline, including a gathering line, that transports oil between facilities or from a facility to a vessel, is considered transportation-related and is therefore outside the jurisdiction of EPA and not subject to the SPCC rule. However, the definition of "facility" as it applies to the SPCC rule is flexible, and some gathering lines may be within the boundaries of a non-transportation-related facility.
Although it is likely that some oil production facilities could have secondary containment around flowlines and intra-facility gathering lines (double walled pipes qualify as secondary containment), EPA assumed that all existing and new facilities would determine impracticability because of the difficulty in building secondary containment around flowlines and intra-facility gathering lines. As a result of the 2008 amendment, facility owners/operators would no longer need to explain why secondary containment is not practicable, but they would still need to prepare an oil spill contingency plan. Intra-facility gathering lines are those lines that connect tank batteries located inside the facility. Based on information from EPA regions, it is likely that each production facility has one tank battery. However, the definition of "facility" is flexible, and a facility owner/operator is able to include any number of tank batteries -- and the intra-facility gathering lines that connect them -- within the boundaries of the facility. Given the uncertainty of how frequently facility owners/operators would aggregate tank batteries, for the purposes of this analysis, EPA assumed one tank battery per production facility. This implies that the final rule clarifications would not result in any impact on intra-facility gathering lines and would only affect facility's flowlines.
EPA recognizes that a contingency plan provides environmental protection in response to a discharge, but in order to implement such a plan, a discharge detection mechanism is necessary. Furthermore, EPA believes that with the elimination of the requirement for secondary containment, a strong program of flowline or intra-facility gathering line maintenance would provide additional preventative measures for these pipelines and increase discharge detection ability. Therefore, in 2008 EPA added specificity to the existing flowline maintenance program requirements and clarifying that the requirement applies to intra-facility gathering lines as well as flowlines at a production facility. The flowline maintenance program must address procedures to:
   * Ensure that flowlines and intra-facility gathering lines and associated valves and equipment are compatible with the type of production fluids, their potential corrosivity, volume, and pressure, and other conditions expected in the operational environment.
   * Visually inspect and/or test flowlines and intra-facility gathering lines and associated appurtenances on a periodic and regular schedule for leaks, oil discharges, corrosion, or other conditions that could lead to a discharge as described in Sec. 112.1(b). For flowlines and intra-facility gathering lines that are not provided with secondary containment in accordance with Sec. 112.7(c), the frequency and type of testing must allow for the implementation of a contingency plan as described under part 109 of this chapter.
   * Take corrective action or make repairs to any flowlines and intra-facility gathering lines and associated appurtenances as indicated by regularly scheduled visual inspections, tests, or evidence of a discharge.
   * Promptly remove or initiate actions to stabilize and remediate any accumulations of oil discharges associated with flowlines, intra-facility gathering lines, and associated appurtenances.
This provision would continue to be subject to the "environmental equivalence" provision at §112.7(a)(2), meaning that a facility owner/operator can substitute alternative measures if he or she demonstrates that the alternate measures would achieve equivalent environmental protection.
Universe of Affected Facilities
Since EPA assumed that all facilities would determine impracticability of secondary containment around flowlines and develop an oil spill contingency plan instead and existing facilities would already have a contingency plan in place. Therefore, only new oil production facilities would be affected by the 2008 final amendment that gave conditional exemption to the secondary containment requirement around flowlines. However, both new and existing facilities may be affected by the more prescriptive flowlines and gathering lines maintenance plan.
Compliance Cost Savings
EPA expects that majority of the facilities with flowlines would choose impracticability determination because of the difficulty involved in installing secondary containment around flowlines. It is likely that some facilities have such secondary containment in the form of double walled pipelines. However, EPA does not have information on the number of such facilities and therefore EPA assumed that, in the baseline, all the facilities with flowlines would choose impracticability determination. Therefore, as a result of the final amendment, the conservative estimate is that the facility owners/operators would not benefit from cost savings on secondary containment. Instead, owners/operators would save from not having to determine impracticability. In order to determine impracticability, the current SPCC rule requires the facility owner or operator to (1) explain why it is impracticable, (2) develop a contingency plan, and (3) have a written commitment of resources in case of a discharge. Since the final amendment requires that a facility have a contingency plan and written commitment of resources, the facility would only save the cost of not needing to explain why secondary containment is impracticable.
In addition to exempting secondary containment for flowlines, the 2008 final amendments provided prescriptive requirements for a flowline and gathering line maintenance program. The 1973 SPCC rule had prescriptive requirements for the flowline maintenance program, and the 2002 rule only required that the facility owners and operators have a maintenance program without a prescriptive requirement. However, a PE had to certify the maintenance program.
EPA expects that for the majority of owners and operators of facilities the current maintenance program that they have in place incorporates most of the prescriptive requirements finalized in the 2008 amendment. For these owners and operators there will be no cost of the prescriptive requirement. Only owners and operators of facilities whose current plan does not have the four elements will incur additional cost. These facilities would have the choice to either incorporate the additional elements of the prescriptive requirement or demonstrate that their program is environmentally equivalent. Since the 2002 SPCC rule required a maintenance program, EPA assumed that production facilities would choose the lower-cost option and would demonstrate that their program is environmentally equivalent to the prescriptive requirements of the final amendment, rather than adopt the new requirements. Thus, the upper bound of the cost that facility owners and operators would incur is the cost increase for having to demonstrate environmental equivalence, as a result of the 2008 amendments.
EPA recognizes that some facilities may have maintenance programs that are more stringent than the prescriptive requirements and will not incur any additional cost. However, the Agency did not have information to estimate the distribution of existing facilities that will incur a cost a result of this prescriptive plan and those that will not. Further, some facilities may already have secondary containment around flowlines and gathering lines and these facilities will not have any cost savings from the changed requirement. However, EPA expects that the cost of demonstrating environmental equivalence to the prescriptive requirements is likely to be similar to the cost of explaining why secondary containment is impracticable for flowlines and gathering lines. Therefore, even if facilities incur an additional cost, on balance, a large majority of the facilities would not face any significant cost change because of this amendment.
DOT-Regulated Gathering Lines
To clarify the scope of the SPCC rule's applicability to gathering lines, in 2008 the Agency also finalized an amendment that would exempt the few "intra-facility" gathering lines that are subject to both EPA and DOT regulatory requirements. Some intra-facility gathering lines may be regulated by DOT because DOT may limit the boundary of a facility to the central tank battery, thereby including under regulation intra-facility gathering lines that are also regulated by EPA. EPA's exemption of DOT-regulated gathering lines from SPCC regulation is likely to only have a small impact on compliance costs, because the gathering lines subject to DOT's authority under the "technical requirements" of 49 CFR parts 192 and 195 would be subject to similar requirements as under the SPCC rule. The only cost increase would be related to the cost of adding the DOT regulated gathering lines in the SPCC Plan. The Agency did not have data to estimate the additional cost resulting from this but expects that the cost would be minimal.
Flow-through Process Vessels
Flow-through process vessels at an oil production facility typically include equipment such as horizontal or vertical separation vessels (e.g., free-water knockout, gun-barrel, heater-treater) that are used to separate the well fluid into its marketable or waste fractions (oil, gas, wastewater, and solids), and to treat the crude oil as needed for further storage and shipping. Under the existing SPCC requirements, flow-through process vessels are required to have secondary containment for the entire capacity of the largest single container and sufficient freeboard to contain precipitation (§112.9(c)(2)). EPA modified the requirements at §112.9(c) to provide an alternative to the sized secondary containment requirements for flow-through process vessels at oil production facilities. This amendment removes the requirement to provide sized secondary containment for flow-through process vessels at oil production facilities without making an impracticability determination, and allows the facility owner or operator the option to comply with the alternate requirements in §112.9(c)(5) instead. However, because this equipment at a production facility typically operates unattended, EPA also amended the rule to require the inspection of process vessel components including ancillary equipment, prompt removal of any oil accumulations, and corrective action should a discharge occur.
Universe of Affected Facilities
Because the Agency assumed full compliance with the current SPCC rule requirements, existing facilities will not be affected by this amendment; only new production facilities will be affected. The amendment has an eligibility clause, requiring facilities that have a single oil discharge to navigable waters or adjoining shorelines exceeding 1,000 gallons or two discharges to navigable waters or adjoining shorelines exceeding 42 gallons within a 12-month period to revert back to the sized secondary containment requirement within six months of the discharge date. However, the discharge history from the process vessels suggests that the percentage of such facilities would be few. The Agency analyzed the National Response Center (NRC) data for the period of 2000 through 2005 and found only 120 discharge cases originating from process vessels, which is equivalent to approximately 20 discharges a year. Even assuming that these discharges originated from 20 individual facilities and exceeded 1,000 gallons each, it would result in an insignificant percentage of the total number of oil production facilities (215,000). The final amendment also includes measures that are likely to further reduce the threat of an oil discharge from these vessels. Therefore, the Agency assumed that all new facilities will be exempt from the sized secondary containment requirements.
Exhibit 6-37 presents the projected number of new production facilities from 2010 through 2019. The projected average annual number of new production facilities is estimated to be 9,210. EPA projected the number of new oil production facilities over the 10-year analysis period using the estimated number of SPCC-regulated oil production facilities and industry-specific growth rates.
Exhibit 6-37
Projected Number of New Oil Production Facilities[1]
Oil Production Industry
Number of New Facilities Affected by the Amendment
10-Year Average

2010
Year 1
2011
Year 2
2012
Year 3
2013
Year 4
2014
Year 5
2015
Year 6
2016
Year 7
2017
Year 8
2018
Year 9
2019
Year 10

Category I
                                                                         1,080
                                                                           804
                                                                         1,160
                                                                         1,200
                                                                         1,250
                                                                         1,140
                                                                         1,560
                                                                         1,020
                                                                         1,170
                                                                         1,400
                                                                         1,180
Category II
                                                                         5,800
                                                                         4,330
                                                                         6,240
                                                                         6,480
                                                                         6,730
                                                                         6,170
                                                                         8,420
                                                                         5,480
                                                                         6,290
                                                                         7,520
                                                                         6,350
Category III
                                                                         1,520
                                                                         1,140
                                                                         1,640
                                                                         1,700
                                                                         1,770
                                                                         1,620
                                                                         2,210
                                                                         1,440
                                                                         1,650
                                                                         1,980
                                                                         1,670
Category IV
                                                                            15
                                                                            11
                                                                            16
                                                                            17
                                                                            17
                                                                            16
                                                                            22
                                                                            14
                                                                            16
                                                                            19
                                                                            16
Total
                                                                         8,420
                                                                         6,290
                                                                         9,050
                                                                         9,400
                                                                         9,770
                                                                         8,950
                                                                        12,200
                                                                         7,950
                                                                         9,120
                                                                        10,900
                                                                         9,210

Baseline Compliance Cost and Cost Savings
Baseline Compliance Cost
EPA calculated the baseline compliance cost incurred by new production facilities for complying with the secondary containment requirements for flow-through process vessels. EPA assumed that all facilities would locate their separation and treatment containers within the tank battery with the possible exception of the heater-treater; EPA's site visits and the review of several SPCC Plans suggest that some facilities have at least one heater-treater outside the tank battery. Therefore, EPA assumed that the baseline cost of compliance would be the cost of providing sized secondary containment around one heater-treater outside the tank battery. The Agency estimated that the cost of sized containment (earthen berm) around a heater-treater is $4,000 for all size categories.
The total baseline cost of compliance was calculated by multiplying this facility-level cost with the total number of production facilities affected by this amendment.
EPA estimated that the baseline cost of compliance with the flow-through process vessels requirements is $36.6 million and $36.2 million per year, discounted at 3 percent and 7 percent, respectively (see Exhibit 6-38).

Exhibit 6-38
Annual Baseline Compliance Cost of Secondary Containment at Flow-through Process Vessels Requirements
(2007$ Millions)

Compliance Costs

2010
Year 1
2011
Year 2
2012
Year 3
2013
Year 4
2014
Year 5
2015
Year 6
2016
Year 7
2017
Year 8
2018
Year 9
2019
Year 10
10- Year Present Value
Annualized
Not Discounted
                                                                          $33.7
                                                                          $25.2
                                                                          $36.2
                                                                          $37.6
                                                                          $39.1
                                                                          $35.8
                                                                          $48.9
                                                                          $31.8
                                                                          $36.5
                                                                          $43.6
                                                                           $368
                                                                          $36.8
3% Discounted
                                                                          $32.7
                                                                          $23.7
                                                                          $33.1
                                                                          $33.4
                                                                          $33.7
                                                                          $30.0
                                                                          $39.7
                                                                          $25.1
                                                                          $28.0
                                                                          $32.5
                                                                           $312
                                                                          $36.6
7% Discounted
                                                                          $31.5
                                                                          $22.0
                                                                          $29.6
                                                                          $28.7
                                                                          $27.9
                                                                          $23.9
                                                                          $30.4
                                                                          $18.5
                                                                          $19.9
                                                                          $22.2
                                                                           $254
                                                                          $36.2

Compliance Cost Saving
EPA assumed that all new production facilities will save on the cost of sized secondary containment, but still incur the cost of general secondary containment. While providing relief from sized secondary containment, EPA is requiring that facilities inspect components, remove oil accumulations, and take corrective action. Under the current SPCC rule, facilities are already required to periodically inspect containers under §112.9(c)(3). The Agency believes that facilities will remove oil accumulations and take corrective action as part of their normal maintenance operations, and expects no effect on cost because of these additional requirements. Therefore, the cost savings to the facility would be the difference in the cost of sized secondary containment and general secondary containment.
Given the current SPCC requirements, facilities would save the cost of sized secondary containment only if the separation process vessels are located outside of the tank battery, which generally has one secondary containment dike or berm around all of the containers. If the vessels are inside the tank battery, the sized secondary containment that is required for oil stock tanks would likely provide sufficient containment for the process vessels. EPA assumed that all facilities would locate their separation and treatment containers within the tank battery with the possible exception of the heater-treater; EPA's site visits and the review of several SPCC Plans suggest that some facilities have at least one heater-treater outside of the tank battery. Therefore, the amendments present no compliance cost savings for secondary containment of separation process vessels.
The Agency assumed that the cost of general secondary containment is approximately 80 percent of the cost of sized secondary containment. This is based on the fact that, unlike sized secondary containment, which must be designed to hold the capacity of the largest container, general secondary containment should be sized only to contain the most likely discharge (which may be caused by overfill, etc.). The Agency estimated that the cost of sized secondary containment (earthen berm) around a heater-treater is $4,000 for all size categories. The affected facilities would save the difference in cost between sized and general secondary containment (i.e., 20 percent of the total cost for sized secondary containment). Thus, the per-facility cost savings were estimated at $800.
The total cost savings from the final amendments were calculated by multiplying the facility-level cost with the total number of oil production facilities affected by this amendment, as summarized in the equation below.
Using the equation below, EPA estimated that the final amendment to exempt the facilities from sized secondary containment for flow-through process vessels would reduce compliance costs by $7.31 million and $7.24 million per year, discounted at 3 percent and 7 percent, respectively (see Exhibit 6-39).
                             Total Cost Savings =
 where, i = I, II, III, and IV are the size categories.
 NFaci = the projected number of production facilities in size category i  (see Exhibit 6-37).
NCostSavingi = the per-facility cost savings for size category i  (see Section <IP_ADDRESS>).
Overlapi = 1 - estimated percentage reduction in total burden due to state overlap for size category i  (see Exhibit 5-22).
Calculation of Total Cost Savings

Exhibit 6-39
Projected Annual Compliance Cost Savings from Final Amendment to Flow-through Process Vessels Requirements
(2007$ Millions)[1]

Compliance Cost Savings

2010
Year 1
2011
Year 2
2012
Year 3
2013
Year 4
2014
Year 5
2015
Year 6
2016
Year 7
2017
Year 8
2018
Year 9
2019
Year 10
10- Year Present Value
Annualized
Not Discounted
                                                                          $6.73
                                                                          $5.03
                                                                          $7.24
                                                                          $7.52
                                                                          $7.81
                                                                          $7.16
                                                                          $9.77
                                                                          $6.36
                                                                          $7.30
                                                                          $8.73
                                                                          $73.7
                                                                          $7.37
3% Discounted
                                                                          $6.54
                                                                          $4.74