[Federal Register Volume 59, Number 39 (Monday, February 28, 1994)]
[Unknown Section]
[Page ]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-4375]
[Federal Register: February 28, 1994]
_______________________________________________________________________
Part IV
Environmental Protection Agency
_______________________________________________________________________
40 CFR Part 280
Underground Storage Tanks Containing Petroleum; Financial
Responsibility Requirements; Rule
ENVIRONMENTAL PROTECTION AGENCY
40 CFR Part 280
[FRL-4842-6]
Underground Storage Tanks Containing Petroleum; Financial
Responsibility Requirements
AGENCY: Environmental Protection Agency (EPA).
ACTION: Final rule.
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SUMMARY: The Environmental Protection Agency (EPA) is today
promulgating a rule to amend the financial responsibility requirements
for underground storage tanks (USTs) containing petroleum that appear
in subpart H of 40 CFR part 280. Specifically, this rule modifies the
financial responsibility compliance date under 40 CFR 280.91(e) for one
category of UST owners. Under this modification, Federally-recognized
Indian tribes that own USTs on Indian lands are required to comply with
Federal Financial Responsibility requirements of 40 CFR part 280
subpart H--Financial Responsibility--by December 31, 1998 if those USTs
are in compliance with applicable technical requirements for USTs in 40
CFR part 280. Today's rule extends the deadline for certain USTs owned
by Indian tribes from the previous date of February 18, 1994. This
change will allow EPA, the Bureau of Indian Affairs and Indian tribes
additional time to explore options for solving the root problem of lack
of funding for past contamination on Indian lands and further assist
tribes with future technical requirements, such as tank upgrading. EPA
is not changing the financial responsibility deadline for rural
petroleum marketers or local governments. A discussion of the Agency
rationale behind this decision can be found in section III. C. under
``SUPPLEMENTARY INFORMATION''.
EFFECTIVE DATE: This rulemaking is effective on February 28, 1994.
ADDRESSES: The public docket for this rule is in room M2616, U.S.
Environmental Protection Agency, 401 M Street SW., Washington, DC
20460. Call (202) 260-9720 for an appointment to review docket
materials.
FOR FURTHER INFORMATION CONTACT: The RCRA/Superfund Hotline at (800)
424-9346 (toll free) or (703) 412-9810 in Virginia. For technical
questions, contact Sammy Ng in the Office of Underground Storage Tanks
at (703) 308-8882.
SUPPLEMENTARY INFORMATION: EPA is today finalizing a rule that would
allow certain Federally-recognized Indian tribes that own USTs
containing petroleum on Indian lands additional time to comply with the
financial responsibility requirements. Specifically, this rule modifies
the compliance date under 40 CFR 280.91(e). Under this modification,
Indian tribes that own USTs containing petroleum on Indian lands must
comply with the financial responsibility requirements by December 31,
1998. To qualify for the 1998 financial responsibility deadline,
tribally-owned USTs must be in compliance with the technical
requirements for USTs described in 40 CFR part 280. Technical
compliance for USTs includes, for example, leak detection and
reporting. The technical requirements criterion has been included to
protect human health and the environment on Indian lands. EPA is not
changing the financial responsibility deadline for rural petroleum
marketers or local governments. A discussion of Agency rationale behind
this decision can be found in section III C.
The contents of today's preamble are listed in the following
outline:
I. Authority
II. Effective Date
III. Background
IV. Final Rule
A. Indian Tribes
B. Implementation of Final Rule
C. Discussion of Options Proposed but Not Finalized for
Petroleum Marketers and Local Governments.
V. Economic Impacts
A. Economic Impact Analysis
B. Regulatory Flexibility Analysis
C. Regulatory Impact Analysis
D. Paperwork Reduction Act
I. Authority
These regulations are issued under the authority of sections 2002,
9001, 9002, 9003, 9004, 9005, 9006, 9007, and 9009 of the Solid Waste
Disposal Act, as amended (42 U.S.C. 6912, 6991, 6991a, 6991b, 6991c,
6991d, 6991e, 6991f, and 6991h).
II. Effective Date
This rule will be effective on February 28, 1994, pursuant to 5
U.S.C. 553(d). This rule may be made effective immediately because it
extends an existing compliance date and there is good cause to make
that extension immediately effective within the meaning of 28 U.S.C.
553(d)(1) and (3).
III. Background
On October 26, 1988, EPA promulgated financial responsibility
requirements applicable to owners and operators of underground storage
tanks (USTs) containing petroleum (53 FR 43322). To meet the
requirements, owners and operators must demonstrate that they can pay
for the costs of cleanups and third-party damages resulting from any
leaks that may occur. In the final rule, EPA established a phased
compliance schedule for owners and operators of petroleum USTs. The
principal reason for adopting the phased compliance approach was to
provide the time necessary for providers of financial assurance
mechanisms (including private insurance companies and states intending
to establish state assurance funds) to develop new policies and
programs or conform their policies and programs with EPA requirements.
See 53 FR 43324.
When devising the phased compliance approach, the Agency wanted to
achieve the best balance between the need to demonstrate financial
responsibility for UST releases and the time necessary for owners and
operators to obtain assurance mechanisms. The Agency attempted to
establish compliance dates that were as early as possible, considering
the type of assurance different types of facilities were likely to
obtain. Petroleum marketers owning or operating 1,000 or more USTs and
non-marketers with more than $20 million in tangible net worth were
required to comply by January 24, 1989, based primarily on their
ability to qualify for self-insurance. Petroleum marketers with 100 to
999 USTs were required to comply by October 26, 1989. These marketers
were estimated to be relatively more likely to be able to obtain
insurance; some of them were also expected to qualify as self-insurers.
Petroleum marketers owning 13 to 99 USTs at more than one facility were
originally required to comply by April 26, 1990. However, on May 2,
1990, the Agency published a rule (55 FR 18566) extending this
compliance date to April 26, 1991. These marketers were thought to be
less likely to be able to obtain insurance than members of the October
26, 1989, compliance group.
Petroleum marketers owning fewer than 13 USTs at more than one
facility or owning only one facility with fewer than 100 USTs, as well
as non-marketers with less than $20 million in net worth and local
governments (including Indian tribes) were originally required to
comply by October 26, 1990. This group was expected to rely primarily
on state assurance funds for compliance. (State assurance funds provide
money for cleanups to owners and operators in their states. Owners and
operators in states with assurance funds are deemed to be in compliance
with financial responsibility for the amount covered by the fund once
the state submits the fund to EPA for approval unless and until EPA
disapproves the fund.) On October 31, 1990, EPA extended the compliance
deadline for one year for small marketers (with fewer than 13 USTs or
fewer than 100 USTs at a single facility) and small non-marketers (with
less than $20 million in net worth), otherwise known as Category IV.
This extension was based on the need for additional time for state
assurance funds to be developed. In addition, EPA extended the
compliance deadline for local governments and Indian tribes until one
year after publication of a final rule with additional self-insurance
mechanisms for local governments to use to demonstrate compliance. This
rule was published on February 18, 1993 (58 FR 9026).
On December 23, 1991, EPA once again extended the compliance
deadline for the Category IV group (small marketers with fewer than 13
tanks at more than one facility or fewer than 100 tanks at a single
facility as well as non-marketers with net worth less than $20 million)
to December 31, 1993 (56 FR 66369). EPA based the extension on its
understanding that more members of this compliance group than the
Agency had originally projected must rely on state assurance funds,
rather than on insurance, to demonstrate compliance with the financial
responsibility requirements. EPA believed that, in order for owners and
operators to rely on state assurance funds as compliance mechanisms,
states must have more time to submit their state assurance funds to EPA
for approval. Currently, 31 state assurance funds have been approved by
EPA and an additional eight state assurance funds have been submitted
to EPA for approval. (It is important to note that upon submission of a
state assurance fund to the EPA Regional Administrator, the fund is
considered to be approved unless and until EPA disapproves it.)
Additionally, the extension provided states with more time to develop
and implement financial assistance programs (e.g., direct loan
programs, loan guarantee programs, grant programs) which help owners
and operators (especially small businesses) pay for technical
requirements such as tank upgrading. These technical improvements, in
turn, help USTs meet insurers' underwriting criteria.
The Agency, however, continued to be concerned about the effects of
its regulations on the regulated community. By analyzing the costs of
the requirements, EPA found that the affordability of financial
responsibility compliance is often tied to early compliance with
technical requirements such as tank upgrading, since, for example,
private insurance companies may refuse to provide coverage unless they
are certain that a site does not pose a high risk of leaking. EPA
believed that the costs associated with the technical requirements are
an important factor underlying the inability of some small owners and
operators to meet the financial responsibility requirements. These
costs coupled with the lack of a state assurance fund, grant, or loan
program could force some gas stations to close their tanks when the
1993 financial responsibility compliance date fell. EPA believed that
tank closure could be particularly problematic when those tanks provide
essential services to rural communities.
As a result of this concern about the availability of fuel in rural
areas, EPA proposed a December 31, 1998 compliance date for certain
petroleum marketers, local governments, and Indian tribes, that meet
Federally-determined criteria (58 FR 43770). The objective of the
August 17, 1993 proposed rule was to obtain data on whether an
additional extension of the financial responsibility requirements was
needed, and for whom. The Agency intended to limit any additional
extension to, at most, a small sub-group of marketers currently in
Category IV, as well as certain local governments and Indian tribes;
EPA did not want to change compliance dates for all Category IV
marketers or local governments on the belief that most of these tank
owners were already in compliance with the financial responsibility
requirements due to the existence of state assurance funds and reliance
on self-insurance mechanisms. The August 17, 1993 proposed rule
included eligibility criteria limiting the proposed 1998 compliance
group to rural petroleum marketers that met a hardship criterion of
annual profit on gasoline sales of $15,000 or less, rural local
governments that use tanks for essential services such as police and
fire departments, and Indian tribes. (The definition of rural was
obtained from the Farmers Home Administration within the U.S.
Department of Agriculture.) In addition, all owners in the new 1998
compliance group would have to ensure that their tanks were in
compliance with applicable technical requirements, such as leak
detection. The technical compliance criterion was included to protect
human health and the environment regardless of a change in the
financial responsibility deadline. EPA also stressed the fact that any
change in the financial responsibility compliance date would not remove
the liability on the part of the owner or operator to clean-up a leak.
Current Financial Responsibility Deadlines
January 24, 1989:
Marketers With 1000 or More Tanks; Non-Marketers With Net Worth
Greater Than $20 Million.
October 26, 1989:
Marketers With 100-999 Tanks.
April 26, 1991:
Marketers With 13-99 Tanks at More Than One Facility
December 31, 1993:
Marketers With 1-12 Tanks at More Than One Facility or Fewer Than
100 Tanks at One Site; Non-Marketers With Net Worth Less Than $20
Million.
February 18, 1994:
Local Governments and Indian Tribes
IV. Final Rule
EPA received 58 comments on the August 18, 1993 proposed extension.
34 commenters supported an extension for one or more groups. 21
commenters opposed any extension of the financial responsibility
requirements. No commenters objected to an extended compliance deadline
for Indian tribes while one commenter supported it. One commenter
remained neutral on the subject and two additional comments were
received regarding the proposed definition of rural, as defined by the
Farmers Home Administration.
Based on EPA analysis of the comments received as well as the rest
of the administrative record from the proposal, the Agency is
finalizing an extension to 1998 for Federally-recognized Indian tribes
that own USTs on Indian lands. No other entity (petroleum marketer or
local government) has been included in this 1998 compliance group. A
discussion of comments relating to a 1998 compliance deadline for
petroleum marketers and local governments can be found in section III
C.
A. Indian Tribes
Based on an analysis of the administrative record for this
rulemaking and lack of opposition to an extension for tribes, EPA is
extending the compliance deadline for Tribally-owned USTs on Indian
lands to December 31, 1998 if the USTs meet the technical compliance
criterion. The Agency is sensitive to the lack of funding available to
help Indian tribes pay for environmental problems and acknowledges that
mechanisms used by other owners, such as state assurance funds or
private insurance, may be inaccessible to tribes. The Agency has
retained the technical compliance criterion in order to protect human
health and the environment on Indian lands and expects that inclusion
of this criterion may prompt some owners to come into compliance with
the technical requirements in order to qualify for the extension.
(Tanks owned by Indian tribes which are out of compliance with
applicable technical requirements would not be eligible for the 1998
deadline.)
The additional time will also allow the Agency to work with the
Bureau of Indian Affairs (BIA) at the U.S. Department of the Interior
to explore options for solving the root problem of lack of funding for
past contamination on Indian lands and further assist tribes with
future technical requirements, such as tank upgrading.
A compliance date of December 31, 1998 was selected for Indian
tribes because this date corresponds with the final technical
compliance date for tank upgrading. Tribes unable to comply with the
financial responsibility requirements at that time face the more costly
technical requirement of upgrading their USTs. At that point, tanks not
in technical compliance would be forced to close with or without the
financial assurance coverage. Conversely, owners able to meet the
technical requirements at that time would be more likely to obtain an
affordable assurance mechanism, such as private insurance, since the
tanks would be considered an insurable, reasonable risk.
B. Implementation of Final Rule
EPA intends to promulgate regulations that pose the least burden to
the affected regulated community while protecting human health and the
environment. Therefore, no change in reporting requirements or
recordkeeping procedures from the October 26, 1988 rule is incorporated
into this rule.
The August 17, 1993 proposed rule included a requirement that UST
owners self-certify for an extension and keep a record of the proposed
compliance checklist on file for enforcement purposes. Based on a
review of the comments and the rest of the administrative record for
the proposal, the Agency has decided that this self-certification is
unnecessary for implementing this rule and has therefore decided to
delete the self-certification and recordkeeping requirement.
C. Discussion of Options Proposed But Not Finalized for Petroleum
Marketers and Local Governments
As noted above, EPA received 58 comments on the August, 1993
proposed rule. Of the 34 comments received in support of a 1998
compliance deadline, 17 specifically supported an extension only for
petroleum marketers. An additional seven comments were received in
support of local governments, four for non-marketers (such as rental
car companies, etc.), and one for Indian tribes. Five commenters
supported an extension for all Category IV firms and local governments
regardless of criteria, or not at all, concluding that a limited
extension would be unfair to the entities not included in the 1998
compliance group.
Twenty-one commenters were against any additional extension to
1998. Of the 21 comments which disagreed with the proposed extension,
eight were provided by state agencies that administer UST regulatory or
state fund programs. One commenter was neutral, neither agreeing or
disagreeing with the proposed compliance date, and two additional
comments addressed only the definition of rural.
Commenters arguing for a 1998 compliance date for certain petroleum
marketers and local governments stated that the additional time was
needed to keep small businesses open. Several commenters said that
compliance with financial responsibility was difficult in states
without state assurance funds. In fact, of the commenters supporting a
1998 compliance date for one or more groups, 12 out of 35 were received
from a state without a state assurance fund. In addition, some
commenters said that insurance was not affordable, particularly when
tanks have not been upgraded. Two commenters urged an extended
compliance date in two states that plan to adopt a state assurance fund
or loan program. One of those commenters felt that a 1996 compliance
date would be acceptable since it would correspond to the date the
state loan program plans to be operational. Another commenter noted
that not all local governments can pass one of the four additional
self-insurance mechanisms promulgated in February, 1993, and one
additional commenter urged EPA to extend the financial responsibility
compliance date for hospitals that use their tanks to fuel emergency
generators.
Several commenters arguing against an additional extension to 1998
for local governments and petroleum marketers stated that most of these
owners were already in compliance due to state assurance funds. Several
commenters also stated that an extension would not be fair to those
owners already in compliance with the financial responsibility
requirements. Others felt an extended compliance group to 1998 would
incorrectly imply that the remaining technical compliance dates would
be extended by EPA as well. Other commenters noted that the criteria
included in the proposed rule were difficult to implement and would
prove burdensome to states with regard to enforcement since different
petroleum marketers and local governments would have different
compliance dates. Other commenters feared that adoption of a 1998
deadline for certain gas stations and local governments would hurt the
environment, since the requirement was necessary to ensure that money
would be available to pay for cleanups. One commenter stated that
previous compliance date extensions reduced the volume of business
available to private insurers trying to create a market for UST
insurance, thereby increasing the price. Another commenter echoed that
sentiment, saying that previous extensions had stopped private
mechanisms, such as insurance, from developing fully. Finally, several
commenters state that it was appropriate to exclude non-marketers from
any additional extension since sales of petroleum were not crucial to
their operations.
Based on a review of the comments and the administrative record,
EPA has decided not to extend the financial responsibility compliance
deadline for petroleum marketers, non-marketers, or local governments.
While the Agency acknowledges that some of these owners, especially in
those few states without a state assurance fund, may have difficulty
complying with the financial responsibility requirements, EPA agrees
with commenters that say that most owners and operators are already
covered by either state assurance funds, self-insurance mechanisms or
private insurance. Agency analysis indicates that compliance may be as
high as 98% for local governments with the addition of the four self-
assurance mechanisms promulgated in February, 1993. In addition, just
14% of all tanks are in states without legislation creating state
assurance funds. The Agency also agrees that another extension hurts
EPA credibility with regard to upcoming technical compliance dates and
agrees that a later compliance date is unfair to owners and operators
already in compliance. In addition, a 1998 compliance deadline for some
local governments and petroleum marketers would create an
administrative burden for states to implement, since some states would
need to change their legislation or regulations in order to adopt the
new deadline. EPA also acknowledges the difficulty in trying to define
an appropriate subgroup and believes that inclusion of certain
marketers and local governments in a new compliance group would create
additional confusion in the regulated community.
EPA agrees with commenters who feared that adoption of a 1998
deadline for certain gas stations and local governments might hurt the
environment in the event that funds are not available to undertake
corrective action. In adopting the phased compliance approach, the
Agency wanted to achieve the best balance between the need to
demonstrate financial responsibility for UST releases and the ability
of different types of tank owners to obtain the assurance mechanisms.
In deciding not to extend the compliance deadline for petroleum
marketers and local governments, the Agency has decided that, since
most marketers and local governments can comply, the balance has to be
weighed in favor of demonstrating compliance. On the other hand, the
current inability of Indian tribes to demonstrate compliance as
explained in section IV.A above led the Agency to reach the opposite
decision in that situation.
EPA also received comments with regard to the criteria discussed in
the proposed rule applicable to petroleum marketers and local
governments. Most commenters supported the use of the Farmers Home
Administration definition of rural, but felt that a hardship
determination based on profit should be replaced with a measure of
yearly throughput of gasoline through an UST system.
V. Economic Impacts
This section provides an estimate of the economic impacts of the
proposed rule. Because the proposed rule will not cause an annual
impact on the economy of $100 million or more and will not cause an
increase in the costs of production or the prices charged by the
affected community, a Regulatory Impact Analysis is not required.
Instead, EPA has prepared an economic impact analysis to estimate the
number of affected facilities that would benefit from this additional
flexibility.
A. Economic Impact Analysis
The economic analysis examines the potential economic effects of
adopting a new compliance category to 1998 and estimates the number of
potentially affected entities.
Overall, approximately 1.3 million USTs are subject to the
technical and financial responsibility standards. The number of
tribally-owned USTs that could be eligible for the 1998 compliance date
numbers approximately 500. These 500 tribally-owned USTs represent
approximately 10% of all active tanks on Indian lands. (The remainder
of the tanks on Indian lands are owned by private individuals and
firms, as opposed to Federally-recognized tribes.) The total number of
tanks eligible for the 1998 compliance date would be reduced, however,
with the inclusion of the technical compliance criterion.
B. Regulatory Flexibility Analysis
Pursuant to the Regulatory Flexibility Act of 1980, 5 U.S.C. 601 et
seq., when an Agency publishes a notice of rulemaking, for a rule that
will have a significant effect on a substantial number of small
entities, the agency must prepare and make available for public comment
a regulatory flexibility analysis that considers the effect of the rule
on small entities (i.e.: Small businesses, small organizations, and
small governmental jurisdictions). EPA believes that this rule will
not, if promulgated, have a significant economic impact on a
substantial number of small entities. The new compliance deadline to
1998 will provide relief to members of this compliance group by
allowing them additional time to comply with the financial
responsibility requirements. Accordingly, the Agency has concluded that
the law does not require a Regulatory Flexibility Analysis, and
certifies that this rule, if promulgated, will not have a significant
economic impact on a substantial number of small entities.
C. Regulatory Impact Analysis
1. Executive Order 12866
Pursuant to the terms of Executive Order 12866, OMB has notified
EPA that it considers this a ``significant regulatory action'' within
the meaning of the Executive Order. EPA has submitted this action to
OMB for review. Changes made in response to OMB suggestions or
recommendations will be documented in the public record.
D. Paperwork Reduction Act
This rule does not contain any new information collection
requirements subject to review by the Office of Management and Budget
(OMB) under the provisions of the Paperwork Reduction Act, 44 U.S.C.
3501 et seq.
List of Subjects in 40 CFR Part 280
Environmental protection, Administrative practice and procedure,
Hazardous materials insurance, Oil pollution, Penalties, Petroleum,
Reporting and recordkeeping requirements, State program approval,
Surety bonds, Underground storage tanks, Water pollution control.
Dated: February 18, 1994.
Carol M. Browner,
Administrator.
For the reasons set out in the preamble, part 280 of title 40 of
the Code of Federal Regulations is amended as follows:
PART 280--TECHNICAL STANDARDS AND CORRECTIVE ACTION REQUIREMENTS
FOR OWNERS AND OPERATORS OF UNDERGROUND STORAGE TANKS (UST)
1. The authority citation for part 280 continues to read as
follows:
Authority: 42 U.S.C. 6912, 6991, 6991a, 6991b, 6991c, 6991d,
6991e, 6991f, and 6991h.
2. Section 280.91 is amended by revising paragraph (e) and adding
paragraph (f), to read as follows:
Sec. 280.91 Compliance dates.
* * * * *
(e) All local government entities (including Indian tribes) not
included in paragraph (f) of this section; February 18, 1994.
(f) Indian tribes that own USTs on Indian lands which meet the
applicable technical requirements of this part; December 31, 1998.
[FR Doc. 94-4375 Filed 2-25-94; 8:45 am]
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