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entitled 'Aboveground Oil Storage Tanks: Observations on EPA's Economic 
Analyses of Amendments to the Spill Prevention, Control, and 
Countermeasure Rule' which was released on August 16, 2007. 

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Report to the Honorable James M. Inhofe, Ranking Member, Committee on 
Environment and Public Works, U.S. Senate: 

United States Government Accountability Office: 

GAO: 

July 2007: 

Aboveground Oil Storage Tanks: 

Observations on EPA's Economic Analyses of Amendments to the Spill 
Prevention, Control, and Countermeasure Rule: 

Aboveground Oil Storage Tanks: 

GAO-07-763: 

GAO Highlights: 

Highlights of GAO-07-763, a report to the Honorable James M. Inhofe, 
Ranking Member, Committee on Environment and Public Works, U.S. Senate 

Why GAO Did This Study: 

Oil in aboveground tanks can leak into soil and nearby water, 
threatening human health and wildlife. To prevent certain oil spills, 
the Environmental Protection Agency (EPA) issued the Spill Prevention, 
Control, and Countermeasure (SPCC) rule in 1973. EPA estimated that, in 
2005, about 571,000 facilities were regulated under this rule. When 
finalizing amendments to the rule in 2002 and 2006 to both strengthen 
the rule and reduce industry burden, EPA analyzed the amendments’ 
potential impacts and concluded that the amendments were economically 
justified. 

As requested, GAO assessed the reasonableness of EPA’s economic 
analyses of the 2002 and 2006 SPCC amendments, using Office of 
Management and Budget (OMB) guidelines for federal agencies in 
determining regulatory impacts, among other criteria, and discussed 
EPA’s analyses with EPA officials. 

What GAO Found: 

EPA’s economic analysis of the 2002 SPCC amendments had several 
limitations that reduced its usefulness for assessing the amendments’ 
benefits and costs. In particular, EPA did not include in its analysis 
a number of the elements recommended by OMB guidelines for assessing 
regulatory impacts. For example, EPA did not assess the uncertainty of 
key assumptions and data. In the analysis, EPA assumed that certain 
facilities were already complying with at least some of the rule’s 
provisions and, as a result, they would not incur any additional 
compliance costs because of the amendments. However, the extent of 
facility compliance with the rule was highly uncertain. EPA did not 
analyze the effects of alternative rates of industry compliance on the 
estimated costs and benefits of the revised rule and, therefore, 
potentially misstated these amounts. Furthermore, EPA’s 2002 analysis 
was limited in that it 

• did not analyze alternatives to the amendments, such as alternative 
lead times for industry to comply or alternative levels of stringency; 
• did not present the compliance costs that EPA expects facilities to 
incur or save in the second and subsequent years under the amendments 
in comparable present value terms (through discounting); and • provided 
only limited general information on the amendments’ potential benefits 
in reducing the risk of an oil spill and its potential effects on human 
health and the environment. 

EPA’s economic analysis of the 2006 amendments addressed several of the 
limitations of its 2002 analysis, but it also had some limitations that 
made it less useful than it could have been for assessing the 
amendments’ costs and benefits. For example, EPA’s 2006 analysis 
assessed the potential effect of industry noncompliance on the 
estimated costs (or cost savings) and estimated the present value of 
costs (or cost savings) associated with different alternatives for 
burden reduction. Nevertheless, as with the 2002 analysis, EPA did not 
estimate the potential benefits of the 2006 amendments, such as the 
extent to which they would affect the risk of an oil spill and public 
health and welfare and the environment. In addition, EPA did not have 
available nationally representative samples for its analysis; 
therefore, its estimates of the number of facilities that would be 
affected by the 2006 amendments may not be accurate. In particular, for 
one category of facilities, EPA based its estimates of the number of 
facilities on data available from eight states. Because facilities in 
these states may not have been representative of facilities nationwide, 
EPA’s use of these data in its analysis could have introduced bias into 
its estimates of the number of facilities and costs for this amendment. 
EPA acknowledged that its analysis of the 2006 amendments was not a 
full accounting of all social benefits and costs but stated that the 
results were based on the best available information given time and 
resource constraints. 

What GAO Recommends: 

GAO recommends that EPA improve its analysis of future changes to the 
SPCC rule by more closely following OMB guidance. In commenting on a 
draft of this report, EPA generally agreed with this recommendation and 
stated that, consistent with it, the agency will continue gathering 
data to improve its understanding of the regulated universe and oil 
spill risks and to address uncertainty and quantify benefits. 

[hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO-07-763]. 

To view the full product, including the scope and methodology, click on 
the link above. For more information, contact John B. Stephenson at 
(202) 512-3841 or stephensonj@gao.gov 

Contents: 

Letter: 

Results in Brief: 

Background: 

Limitations in EPA's Analysis of the 2002 SPCC Amendments Reduced Its 
Usefulness for Informing Decision Makers and the Public About Economic 
Trade-offs: 

EPA's Economic Analysis of the 2006 SPCC Amendments Improved on the 
Earlier Study but Also Had Limitations: 

Conclusions: 

Recommendation for Executive Action: 

Agency Comments and Our Evaluation: 

Appendix I: Objectives, Scope, and Methodology: 

Appendix II: Summary of Survey Results: 

Survey Question 1: 

Survey Question 2: 

Appendix III: Analysis of the Results of GAO's Survey on the Impacts of 
the SPCC Amendments on Industry: 

Stakeholders Had Mixed Views on the Impacts of the SPCC Amendments: 

Analysis Methodology: 

Appendix IV: Comments from the Environmental Protection Agency: 

Appendix V: GAO Contact and Staff Acknowledgments: 

Tables: 

Table 1: Estimated Economic Impacts Associated with EPA's 2002 
Amendments to the SPCC Regulation: 

Table 2: Estimated Economic Impacts Associated with EPA's 2006 
Amendments to the SPCC Regulation: 

Table 3: Examples from Industry Comments Regarding the 2002 and 2006 
Amendments to the SPCC Regulation: 

Figure: 

Figure 1: Summary of Industry Stakeholder Views on Impacts of 11 SPCC 
Amendment Categories: 

Abbreviations: 

EPA: Environmental Protection Agency: 

FRP: Federal Response Plan: 

NRC: National Response Center: 

OMB: Office of Management and Budget: 

PE: Professional Engineer: 

SPCC: Spill Prevention, Control, and Countermeasure: 

United States Government Accountability Office: 

Washington, DC 20548: 

July 27, 2007: 

The Honorable James M. Inhofe: 
Ranking Member: 
Committee on Environment and Public Works: 
United States Senate: 

Dear Senator Inhofe: 

Billions of gallons of oil, from petroleum products to cooking oils, 
are produced, distributed, and used each year in the United States. 
These oils--often stored in aboveground storage tanks at various types 
of facilities--have sometimes leaked into soil and nearby water, posing 
threats to public health and to wildlife and their habitats. To prevent 
certain oil spills, the Environmental Protection Agency (EPA), under 
the authority of the Clean Water Act, issued the Spill Prevention, 
Control, and Countermeasure (SPCC) rule in 1973. EPA estimated that, in 
2005, about 571,000 facilities in industry sectors such as oil 
production, petroleum bulk storage, farming, electric utilities, and 
manufacturing were regulated under this rule. Facilities are subject to 
the rule, as amended, if they are nontransportation related and have a 
total capacity of greater than (1) 1,320 gallons in aboveground oil 
storage tanks or (2) 42,000 gallons in completely buried oil storage 
tanks, and if they could reasonably be expected, due to their location, 
to discharge harmful quantities of oil into or upon the navigable 
waters of the United States or adjoining shorelines.[Footnote 1] 

The SPCC rule requires each owner or operator of a regulated facility 
to prepare or amend and implement a plan that describes how the 
facility is designed, operated, and maintained to prevent the discharge 
of oil into navigable waters or adjoining shorelines. The plan must 
also include measures to control, contain, clean up, and alleviate the 
effects of an oil spill so as to prevent such spills from reaching any 
navigable waters or adjoining shorelines. According to industry sectors 
covered by the rule, facilities may incur significant costs to develop, 
revise, and implement an SPCC plan, for such actions as modifying the 
facility and having an engineer review and certify these modifications. 
The extent of the costs depends on, among other things, the size and 
type of facility and whether the facility is a new or existing one. 

In July 2002, as part of an overall government effort to reduce 
regulatory burden--and to respond to recommendations made by GAO and an 
EPA spills task force--EPA made over 100 amendments to the rule, 
including 30 that it considered major. Although the intent of some of 
the amendments was to strengthen the rule to better prevent oil spills 
as GAO and the task force had recommended, EPA also expected that some 
of these amendments would, among other things, reduce inefficiencies, 
eliminate duplication of effort, reduce the number of facilities 
regulated by the rule, and lower facilities' compliance costs.[Footnote 
2] For example, under the 2002 amendments to the rule, EPA no longer 
regulates certain completely buried tanks that are subject to 
underground storage tank regulations.[Footnote 3] This change 
eliminated from the rule some completely buried containers and 
facilities that were previously covered by both sets of regulations 
and, therefore, duplicated compliance costs. In addition, the agency 
made changes that, in EPA's view, clarified the rule's language to 
better define which facilities are subject to the rule. However, many 
industry sectors consider several of these amendments to be changes to 
the requirements of the rule rather than clarifications and, in some 
cases, maintain that they had not previously considered themselves 
subject to the rule prior to these changes. 

In 2006, partly in response to industry concerns about the cost of 
complying with the 2002 amendments, EPA made several major changes to 
the rule to further reduce burden and provide owners and operators of 
certain facilities a more cost-effective approach to prevent oil 
spills, which, according to EPA, could potentially impact about 62 
percent of the regulated universe. For example, the 2006 amendments 
allowed qualified facilities, such as those with an oil storage 
capacity of 10,000 gallons or less and that meet a reportable discharge 
history criterion, to self-certify their SPCC plans rather than hire a 
professional engineer for certification. EPA has extended until July 1, 
2009, the date by which facility owners and operators must prepare or 
amend and implement SPCC plans in accordance with the 2002 and 2006 
amendments, provided that the owners and operators of facilities in 
existence on or before August 16, 2002, maintain their existing plans. 

When finalizing the 2002 and 2006 amendments to the SPCC rule, EPA 
conducted economic analyses of the potential impacts that these 
amendments were expected to have on the regulated community. Federal 
agencies are generally required by statute and executive order to 
assess the costs and benefits of significant regulatory actions, 
including those that would have an annual effect on the economy of $100 
million or more.[Footnote 4] Furthermore, the Office of Management and 
Budget (OMB) developed guidelines under Executive Order 12866 to 
encourage good regulatory impact analysis and to standardize the way 
that benefits and costs of federal regulations are measured and 
reported.[Footnote 5] The OMB guidelines generally direct agencies, in 
analyzing the impacts of rules, to, among other things, (1) identify 
and quantitatively analyze key uncertainties in their analysis, (2) 
measure the potential social benefits and costs--including the effects 
on public health and welfare and the environment--of regulatory 
alternatives incremental to a "baseline," (or the conditions that would 
exist in the absence of the proposed regulation), (3) identify the 
regulatory alternative that would maximize net social benefits (total 
benefits minus total costs), and (4) present benefits and costs that 
would occur in different time periods in comparable, present value 
terms. OMB guidelines further state that good regulatory analysis 
includes identifying the regulatory alternative with the largest net 
benefits (that is, that maximizes economic efficiency), and such 
information is useful for decision makers and the public, even when 
economic efficiency is not the only or the overriding public policy 
objective. EPA concluded, on the basis of its economic analyses, that 
the 2002 and 2006 amendments were economically justified. 

In this context, you asked us to review the reasonableness of the 
economic analyses EPA performed in support of the 2002 and 2006 SPCC 
amendments. To respond to this objective, we evaluated EPA's economic 
analyses using, among other criteria, OMB guidelines for federal 
agencies in assessing regulatory impacts. In addition, we discussed 
EPA's analyses with senior officials in EPA's Office of Emergency 
Management, which was responsible for conducting the analyses. We 
performed our work from June 2006 to July 2007 in accordance with 
generally accepted government auditing standards. A more detailed 
discussion of our objectives, scope, and methodology is presented in 
appendix I. 

Results in Brief: 

EPA's economic analysis of the 2002 SPCC amendments had limitations 
that reduced its usefulness for assessing the amendments' costs and 
benefits. In particular, EPA's analysis did not assess the uncertainty 
associated with key assumptions and data, as directed by OMB 
guidelines. For example, in conducting its analysis, EPA assumed that 
certain facilities were already complying with at least some of the 
2002 amendments and, as a result, these facilities would not incur any 
additional compliance costs. In addition, EPA assumed that any 
compliance costs incurred by facilities that were not complying with at 
least some of the amendments should be attributed in its analysis to 
the baseline and not to the 2002 amendments. However, the extent to 
which facilities were in compliance--or would be in compliance in the 
future in the absence of the amendments--was highly uncertain. EPA 
stated that it was possible that some facilities misinterpreted the 
existing regulation and were not in full compliance with it but that 
there was no practical way to measure industry compliance. 
Nevertheless, OMB guidelines indicate that, when compliance with 
existing regulations is uncertain and different assumptions about 
compliance could significantly affect the estimated benefits and costs, 
agencies can assess, through uncertainty analysis, the effect of 
multiple baselines using different assumptions about the extent of 
compliance. Without such an analysis, EPA excluded from its assessment 
of the total costs and benefits associated with the 2002 amendments the 
potential impacts of the extent of facilities' compliance, thus 
potentially misstating these amounts. Furthermore, EPA's 2002 analysis 
was limited because it did not: 

* analyze alternatives to the amendments, such as alternative lead 
times for industry to comply or alternative levels of stringency; 

* present in comparable present value terms (through discounting) the 
compliance costs that EPA expected facilities to incur or save over 
time as a result of the amendments; and: 

* estimate the benefits associated with the amendments but rather 
provided only limited general qualitative information on the risk of an 
oil spill and the damages to public health and welfare and the 
environment that it might cause. 

EPA's economic analysis of the 2006 amendments addressed several of the 
limitations of its 2002 analysis, but it also had some limitations that 
made it less useful than it could have been for assessing the economic 
trade-offs associated with the amendments. For example, in contrast 
with its analysis of the 2002 amendments, EPA's 2006 analysis used an 
alternative baseline to assess the potential effects of industry 
noncompliance on the estimated costs (or cost savings), considered some 
regulatory alternatives, and estimated the present value of costs (or 
cost savings) associated with different regulatory alternatives for 
burden reduction that the agency considered in its analysis. 
Nevertheless, as with the 2002 analysis, EPA did not estimate the 
potential benefits of the 2006 amendments, such as the extent to which 
they would affect the risk of an oil spill and public health and 
welfare and the environment. In addition, EPA did not have available 
nationally representative samples for its analysis; therefore, its 
estimates of the number of facilities that would be affected by the 
2006 amendments may not be accurate. In particular, EPA based its 
estimates of the number of facilities that would be affected by one 
amendment that would reduce the burden for certain "qualified 
facilities" on data available from eight states. Because facilities in 
these states may not have been representative of facilities nationwide, 
EPA's use of these data in its analysis could have introduced bias into 
its estimates of the number of facilities and costs for this amendment. 
EPA acknowledged that its 2006 analysis was not a full accounting of 
all social benefits and costs, but stated that the results were useful 
and informative and were based on the best available information given 
time and resource constraints. However, without more substantive 
information on the extent to which the 2006 amendments might affect the 
risk of an oil spill and public health and welfare and the environment, 
it is difficult to confirm that the amendments were economically 
justified, as EPA concluded. EPA officials stated that the agency will 
continue to work to refine and improve its analytical methods to 
address uncertainties in the number of facilities affected, compliance 
rates, and benefits analysis, and to improve its economic analyses for 
future rule changes. In light of the limitations of EPA's analysis of 
the 2002 and 2006 SPCC amendments, we are recommending that EPA improve 
its economic analyses of future changes to the SPCC rule by ensuring 
that they include all of the key elements contained in OMB's 
guidelines. 

In commenting on a draft of this report, EPA generally agreed with our 
recommendation. According to EPA, consistent with our recommendation, 
the agency is taking steps to improve its SPCC analyses and plans to 
continue gathering additional data to improve its understanding of the 
regulated universe and oil spill risks and to address uncertainty and 
quantify benefits. 

Background: 

The Clean Water Act prohibits the discharge of oil into or upon 
navigable waters or adjoining shorelines and requires the President to 
establish regulations to prevent oil spills. The President subsequently 
delegated this responsibility to EPA. To fulfill this requirement, in 
1973, EPA issued its Oil Pollution Prevention Regulation,[Footnote 6] 
which outlined actions regulated facilities must take to prevent, 
prepare for, and respond to oil spills before they reach navigable 
waters or adjoining shorelines. Under this rule, as amended through 
2006, EPA seeks to prevent oil spills from storage tanks at facilities 
that (1) have an aggregate aboveground storage tank capacity of more 
than 1,320 gallons or a total completely buried storage capacity 
greater than 42,000 gallons and (2) could reasonably be expected, due 
to their location, to discharge oil in quantities that may be harmful 
into or upon the navigable waters of the United States or onto 
adjoining shorelines.[Footnote 7] EPA estimated that about 571,000 
facilities were regulated under the SPCC rule as of 2005. Oil 
production facilities (an estimated 166,000 facilities or 29 percent of 
the total) and farms (an estimated 152,000 facilities or 27 percent of 
the total) account for the largest portion of these estimated 
facilities. The SPCC rule does not require facilities that are covered 
under the rule to report to EPA that they are covered. Therefore, the 
agency does not have an inventory of facilities that it regulates under 
the program. However, facilities are required to report discharges of 
oil in quantities that may be harmful to navigable waters or adjoining 
shorelines to the National Response Center (NRC), but EPA does not 
consider these and other data reliable enough for EPA to determine the 
number of facilities subject to the SPCC rule that have had oil 
spills.[Footnote 8] 

The SPCC rule is a cornerstone of EPA's strategy to prevent oil spills 
from reaching the nation's waters. The regulation requires each owner 
or operator of a regulated onshore or offshore facility to prepare or 
amend and implement an SPCC plan that describes the facility's design, 
operation, and maintenance procedures established to prevent spills 
from occurring, as well as countermeasures to control, contain, clean 
up, and mitigate the effects of an oil spill that could reach navigable 
waters or adjoining shorelines. Unlike oil spill contingency plans that 
typically address spill cleanup measures after a spill to navigable 
waters or adjoining shorelines has occurred, SPCC plans ensure that 
facilities put in place containment and other measures--such as regular 
visual inspection and integrity testing of bulk storage containers--to 
prevent oil spills that could reach navigable waters or adjoining 
shorelines. EPA's 10 regional offices administer an inspection program 
to ensure compliance with the regulations. 

EPA proposed revisions to the SPCC rule in October 1991 and February 
1993. In addition to clarifying previous regulatory language, these 
proposed revisions outlined additional requirements for regulated 
facilities. In December 1997, EPA proposed additional amendments to the 
SPCC requirements, focusing on measures to reduce the information 
collection burden on affected facilities. Many, but not all, of the 
amendments to the rule proposed by EPA in 1991, 1993, and 1997, were 
made final in July 2002. 

EPA made over 100 amendments to the rule in 2002, including more than 
30 that EPA considers to be major. Several of these amendments changed 
the scope of the rule's applicability. For example, the 2002 
amendments: 

* exempted from the rule containers with a capacity of less than 55 
gallons, completely buried storage tanks subject to all of the 
technical requirements of underground storage tank regulations, 
permanently closed oil tanks as defined in the regulation, and any 
facility or part thereof used exclusively for wastewater treatment; 
and: 

* eliminated the provision triggering the requirement for an SPCC plan 
when any single container has a capacity of greater than 660 gallons 
but maintained the 1,320-gallon total capacity threshold. 

The 2002 amendments also added to or changed the language of some 
definitions in the 1973 rule in order, according to EPA, to clarify 
which facilities are subject to the rule and facilities' 
responsibilities under the rule. For example, according to EPA, the 
2002 amendments clarified the following: 

* A "facility" may be as small as a piece of equipment--for example, a 
tank--or as large as a military base; "oil" includes not only petroleum 
oil, but such other products as animal fats, vegetable oils, and oil 
mixed with wastes, other than "dredged spoil"; and what "navigable 
waters" means for purposes of the rule.[Footnote 9] 

* The SPCC rule applies to facilities that "use" oil, such as in the 
operational use of oil-filled equipment.[Footnote 10] 

* EPA had always considered statements in the existing (1973) SPCC 
regulations that a facility "should" implement a specific rule 
provision as meaning that a facility was required to comply with that 
provision or, if circumstances warranted, undertake alternative methods 
to achieve environmental protection. As a result, EPA changed "should" 
to "must" to reflect this understanding and address any confusion that 
compliance with such provisions was optional. 

According to EPA, the agency made several of these definitional changes 
to clarify the types of facilities that are included under the rule and 
facilities' requirements. However, many industry sectors consider 
several of these amendments to be changes to the requirements of the 
rule rather than clarifications and, in some cases, maintain that they 
had not previously considered themselves subject to the rule prior to 
these changes. (A summary of industries' views on the impacts that 
these and other amendments to the SPCC rule have had or are likely to 
have on the regulated community, and our analysis of these views, are 
included in apps. II and III, respectively.) 

Several of the rule's amendments also changed requirements for 
preparing, implementing, reviewing, and amending SPCC plans. For 
example, the 2002 amendments to the rule: 

* decreased from once every 3 years to once every 5 years, the 
frequency with which a facility's SPCC plan must be reviewed; required 
that the plan include a diagram of the facility, and that completely 
buried storage tanks located on the facility--otherwise exempt from 
SPCC rules--be included on the facility diagram; and: 

* gave EPA regional administrators the authority to require that any 
facility within their jurisdiction amend the SPCC plan after on-site 
review of the plan and extend the period of time for facilities already 
in operation to amend or complete their plans. 

Other amendments to the rule in 2002 changed facility requirements 
regarding the use and testing of containers, piping, and other 
equipment to prevent or mitigate the effects of oil spills from 
containers. For example, the 2002 amendments: 

* amended the integrity testing requirements for aboveground containers 
and required brittle fracture evaluation of field-constructed 
aboveground containers that may have a risk of discharge; 

* added specificity to the description of secondary containment 
requirements, such as detailing that the containment system, including 
walls and floors, must be capable of containing oil and constructed so 
that any discharge from the primary containment system is prevented 
from escaping before cleanup occurs;[Footnote 11] and: 

* required a facility to conduct periodic integrity testing of 
containers and piping, in addition to the other requirements--i.e., 
contingency planning and a written commitment of resources--when the 
owner/operator determines and clearly explains that the installation of 
specific secondary containment structures or equipment is not 
practicable. 

In December 2006, EPA again made several changes to the SPCC rule, 
including several major amendments to provide additional burden relief 
to the regulated industries on specific rule provisions. For example, 
the scope of the rule's applicability was changed, potentially reducing 
the number of facilities under the rule, by excluding motive power 
containers from the rule's requirements.[Footnote 12] In addition, the 
2006 amendments also changed requirements for preparing SPCC plans by 
providing an option for "qualified facilities" to prepare a self- 
certified SPCC plan instead of one that is reviewed and certified by a 
professional engineer.[Footnote 13] The 2006 amendments also decreased 
some secondary containment requirements to reduce the burden for 
facilities. For example, the 2006 amendments: 

* exempted facilities from having to construct and meet requirements 
for specific sized secondary containment for mobile refuelers;[Footnote 
14] and: 

* allowed facilities to use alternatives to general secondary 
containment requirements for qualified oil-filled operational 
equipment, such as preparing an oil spill contingency plan and a 
written commitment of resources to control and remove discharged oil, 
and requiring an inspection or monitoring program. 

Although changes to the rule were finalized in 2002 and 2006, EPA 
extended the date of compliance in 2003, 2004, 2006, and 2007. 
Currently, owners and operators of facilities in existence on or before 
August 16, 2002, must continue to maintain their SPCC plans, and then 
must amend them to ensure compliance with current requirements, and 
implement the amended plan no later than July 1, 2009. Facilities 
beginning operations after August 16, 2002, must prepare and implement 
a plan by July 1, 2009. EPA made this latest extension to, among other 
things, allow owners and operators of facilities the time to fully 
understand the 2002 and 2006 amendments and the further revisions to 
the rule EPA plans to make in 2008 and to make changes to their 
facilities and SPCC plans. 

EPA determined that the 2002 and 2006 amendments constituted 
significant regulatory actions under Executive Order 12866. For 
significant regulatory actions, Executive Order 12866 requires agencies 
to assess the benefits and costs of, and reasonably feasible 
alternatives to, the planned regulatory action.[Footnote 15] In 
response, EPA conducted an economic analysis to provide estimates of 
the potential costs and benefits of the amendments.[Footnote 16] In 
addition, the agency conducted economic analyses of the 2006 
amendments, both as proposed in 2005 and as made final in December 
2006.[Footnote 17] EPA's Office of Solid Waste and Emergency Response 
conducted these analyses. 

Limitations in EPA's Analysis of the 2002 SPCC Amendments Reduced Its 
Usefulness for Informing Decision Makers and the Public About Economic 
Trade-offs: 

EPA's economic analysis of the 2002 SPCC amendments had a number of 
limitations that reduced its usefulness for assessing the economic 
trade-offs associated with the amendments. Specifically, EPA's 2002 
analysis was limited because it did not (1) assess the uncertainty 
associated with key data and assumptions, such as the degree to which 
facilities were already in compliance with the amendments, (2) analyze 
the effect of regulatory alternatives to the amendments, (3) provide 
the compliance costs that EPA expected facilities to incur or save as a 
result of the amendments in comparable present value terms, and (4) 
estimate the effect of the amendments on the risk of an oil spill and 
on public health and welfare and the environment. These limitations 
raise questions about the reasonableness of the estimates and limit 
their usefulness for informing decision makers, stakeholders, and the 
public about the potential effects of the 2002 amendments. 

EPA's Methodology for Analyzing the 2002 SPCC Amendments: 

EPA estimated the compliance costs or cost savings to the regulated 
community of complying with the 2002 SPCC amendments using the 
following methodology: 

* First, EPA established a baseline for the analysis, which it defines 
as a projection of regulated facility behavior in the absence of new 
regulatory provisions.[Footnote 18] For the purposes of its analysis, 
EPA assumed that the baseline represented full compliance by regulated 
facilities with the existing (1973) regulation, as well as industry 
behavior, practices, or standards that exceed the existing regulation. 
After establishing the baseline, EPA classified each regulatory 
revision or amendment into one of five categories: baseline, cost 
increase, negligible increase, cost savings, or negligible 
savings.[Footnote 19] 

* Second, EPA estimated the total number of potentially affected 
facilities covered by the regulation to account for differences in the 
total potential costs for different sizes of facilities. Because 
estimating the economic effects of the amendments first required 
information on the size of the regulated community, EPA used a 1995 
survey that it had conducted to determine the estimated number and size 
of production and storage facilities in most regulated industry 
sectors.[Footnote 20] 

* Third, EPA estimated the costs of compliance for each regulated 
facility (that is, hours multiplied by the wage rate) for certain 
amendments, varying costs for each facility by its size. EPA developed 
costs for each facility for amendments considered to have cost 
increases or cost savings that were not negligible.[Footnote 21] 

* Finally, EPA estimated the annual total compliance costs (or cost 
savings) associated with the amendments by multiplying the estimated 
costs per facility by the estimated number of affected facilities, 
taking into account whether the facility was small, medium, or large. 
EPA then aggregated the first-year and subsequent-year costs or savings 
incurred by all facilities. 

On the basis of this methodology, EPA estimated the costs that 
facilities will incur by implementing the 2002 amendments. As shown in 
table 1, EPA estimated that facilities will incur costs the first year 
and then save costs in the following years. 

Table 1: Estimated Economic Impacts Associated with EPA's 2002 
Amendments to the SPCC Regulation: 

Dollars in millions. 

Year amendments are in effect: First year; 
Costs (cost savings)[A]: $21.9; 
Benefits: Not estimated. 

Year amendments are in effect: 
Second year; Costs (cost savings)[A]: (60.2); 
Benefits: Not estimated. 

Year amendments are in effect: Each subsequent year; 
Costs (cost savings)[A]: (45.0); 
Benefits: Not estimated. 

Source: EPA. 

Note: EPA's analysis does not indicate which year the dollars 
represent. 

[A] The estimates represent costs for all facilities (small, medium, 
and large) and all amendments for which EPA estimated costs. 

[End of table]

EPA Did Not Assess the Uncertainty Associated with Key Assumptions and 
Data: 

EPA's estimates of the economic impacts of the 2002 SPCC amendments are 
based on assumptions and data that are subject to uncertainty. In 
conducting its analysis of the amendments, however, EPA did not 
evaluate these uncertainties, as OMB guidelines advise. For example, 
EPA did not consider the uncertainties relating to its assumptions 
about facilities' compliance with the existing 1973 SPCC rule and the 
potential impacts of revisions that were intended to clarify what types 
of facilities are subject to the rule. According to EPA, many of the 
2002 SPCC amendments are either clarifications or editorial in nature, 
or they do not represent a substantive change in the existing 
regulatory requirements. In assessing the economic impacts associated 
with these amendments, EPA maintained that the clarifications were 
making explicit provisions or requirements that were already implicit 
in the existing SPCC rule, rather than introducing new ones. Therefore, 
in its analysis, EPA assumed that all regulated facilities were in full 
compliance with these existing provisions and would not incur any 
additional compliance costs as a result of the amendments. In addition, 
to the extent that regulated facilities were not in compliance with the 
provisions being clarified, EPA assumed that any cost they would incur 
to comply should be attributed in its analysis to the baseline and not 
to the 2002 amendments. However, the extent to which facilities were in 
compliance--or would be in compliance in the future in the absence of 
the amendments--is highly uncertain. As a result, EPA's cost estimates 
do not fully reflect the potential impacts of the amendments. 

If, contrary to EPA's assumption, facilities were not previously in 
compliance with the clarified provisions, but are brought into 
compliance by the 2002 amendments, the estimated costs (or cost 
savings) that should be attributed to the 2002 amendments would be 
higher (or lower), all else remaining the same. For example, in 
commenting to EPA and OMB on the proposed 2002 amendments, a 
representative of the electric utility industry stated that, until EPA 
clarified in the 2002 amendments that "users" of oil are subject to the 
rule, the electric utility industry did not believe that the SPCC rules 
applied to electrical equipment. Because of EPA's clarification, 
however, facilities in this industry found that they were subject to 
the rule and EPA would consider them to have been out of compliance. As 
a result, the representative stated, the clarification would cause that 
industry to incur substantial costs to modify its facilities to meet 
the requirements of the amendments, such as installing secondary 
containment. 

EPA's economic analysis stated that it was possible that some 
facilities misinterpreted the existing regulation and were not in full 
compliance with it, but there was no practical way to measure industry 
compliance. OMB guidelines indicate, however, that agencies can use 
uncertainty analysis to assess the effect of multiple baselines with 
different assumptions about the degree of compliance, particularly when 
industry compliance with existing regulations is uncertain and when 
different assumptions about compliance could substantially affect the 
estimated benefits and costs. Without such an analysis, EPA excluded 
the potential impact of current industry practice from its assessment 
of the total costs and benefits associated with the 2002 amendments, 
thus potentially misstating these amounts. 

In addition, EPA did not account for the uncertainty associated with 
its estimates of the number of facilities affected by the amendments. 
Because these estimates were subject to sampling error, EPA may not 
have accurately presented the number of facilities subject to the 
amendments. For example, for its estimates, EPA used a 1995 survey, 
which was based on a statistical sample of facilities in the 48 
contiguous states. On the basis of this survey and subsequent 
adjustments agency officials made using their professional judgment, 
EPA estimated that 51,398 facilities would no longer be subject to the 
requirements of the SPCC rule as a result of the 2002 amendments. 
However, like estimates from all statistical samples, EPA's estimates 
are subject to sampling error, which is the imprecision that results 
from surveying a sample of facilities rather than surveying every 
facility in the country. In its 2002 analysis, EPA acknowledged the 
sampling error, stating that its estimates of the number of facilities 
were accurate within plus or minus 10 percent. However, EPA did not 
account for this sampling error when estimating the costs associated 
with the amendments.[Footnote 22] OMB guidelines direct that the 
agencies ensure that their estimates reflect the full probability 
distribution of potential results. Consequently, to account for the 
imprecision in the estimated facilities and costs, it would have been 
appropriate for EPA to analyze the uncertainty associated with these 
estimates. 

EPA's 2002 Analysis Had Other Limitations: 

OMB guidelines direct agencies to consider the most important 
alternative approaches to some or all of a rule's provisions and 
provide their reasons for selecting the preferred regulatory action 
over such alternatives. However, EPA's 2002 analysis did not assess 
alternatives to the amendments, such as alternative levels of 
stringency or alternative lead times to comply. To provide decision 
makers and the public with information on how the costs and benefits 
might vary depending on the regulatory approach, it would have been 
appropriate for EPA to assess the effect of alternatives in its 
analysis of the 2002 amendments. Without information on the benefits 
and costs of alternative regulatory actions, it is difficult to confirm 
that EPA's preferred regulatory approach maximizes net benefits. 

Moreover, OMB guidelines state that agencies should discount costs and 
benefits that accrue in different time periods to present values. As 
depicted in table 1, EPA did not present the total cost estimate (costs 
incurred minus cost savings) of the amendments in comparable, net 
present value terms. Instead, EPA estimated the costs that would be 
incurred in the first year that the rule is in effect and the cost 
savings that facilities would achieve in the second and subsequent 
years. EPA officials stated that the present value of estimated costs 
is not significantly different from the cost estimates in the simple 
analysis it conducted absent the discounting. Nonetheless, since EPA 
estimated costs incurred and cost savings in the first year and each 
subsequent year over the life of the amendments, it would have been 
appropriate for EPA to present the total net costs in comparable 
present value terms. To compute present value, the agencies are 
directed to discount the estimated benefits and costs using interest 
rates recommended by OMB. 

Finally, OMB guidelines direct agencies to quantify and monetize the 
benefits (including the benefits of risk reductions) associated with 
the regulatory action, whenever possible. Moreover, when benefits are 
difficult to monetize, the OMB guidelines state that acceptable 
quantitative estimates of benefits and costs are preferable to 
qualitative descriptions. In cases where quantification is difficult, 
the guidelines direct the agencies to present any relevant quantitative 
information and describe the unquantifiable effects. In its analysis of 
the 2002 amendments, however, EPA did not monetize or quantify the 
potential benefits expected to result from any of the amendments. In 
addition, EPA's qualitative discussion of the potential beneficial 
aspects of the 2002 amendments was very limited. For example, the 
agency discussed the general risk of an oil spill and the general 
damage that might be caused to public health and welfare and the 
environment. EPA stated that it assumed that the amendments would have 
minimal effects on the risks of a spill, lessen the burden to the 
regulated community, and maintain the existing level of protection to 
public health and welfare and the environment. Nonetheless, some of the 
2002 amendments are more stringent than the existing SPCC rule, 
possibly reducing the risk of an oil spill, while other amendments are 
less stringent (that is, burden reducing), possibly increasing the risk 
of an oil spill. Without more substantive information on the potential 
effect of the amendments on the risk of an oil spill and the resulting 
effect on public health and welfare and the environment, it is 
difficult to confirm that the benefits of the amendments exceed their 
costs, as EPA concluded. 

EPA's Economic Analysis of the 2006 SPCC Amendments Improved on the 
Earlier Study but Also Had Limitations: 

EPA's economic analysis of the 2006 amendments to the SPCC rule 
addressed several of the limitations in the agency's 2002 analysis. 
However, the 2006 analysis also had some limitations that made it less 
useful than it could have been for assessing the economic trade-offs 
associated with the amendments. 

EPA's 2006 Analysis Included Elements Absent from Its Earlier Study: 

As shown in table 2, EPA estimated the compliance cost savings that 
would be generated by the 2006 amendments under (1) a baseline assuming 
full compliance with the existing SPCC rule including the 2002 
amendments, (2) an alternative baseline assuming only 50 percent 
compliance with the existing SPCC rule including the 2002 amendments, 
and (3) different assumptions about the number of facilities that would 
be affected by the 2006 amendments. 

Table 2: Estimated Economic Impacts Associated with EPA's 2006 
Amendments to the SPCC Regulation: 

2005 dollars in millions. 

Major components of the 2006 final rule: Qualified facilities eligible 
for streamlined regulatory requirements; 
Percentage of facilities assumed to be affected by rule: 100%; 
Cost savings expected under baseline of full compliance[A]: $38; 
Cost savings expected under alternative baseline of 50 percent 
compliance[A]: $19; 
Benefits expected under full compliance or 50 percent compliance 
baselines: Not estimated. 

Major components of the 2006 final rule: Qualified oil-filled 
operational equipment[B]; 
Percentage of facilities assumed to be affected by rule: 25; 
Cost savings expected under baseline of full compliance[A]: 39; 
Cost savings expected under alternative baseline of 50 percent 
compliance[A]: 19; 
Benefits expected under full compliance or 50 percent compliance 
baselines: Not estimated. 

Major components of the 2006 final rule: Qualified oil-filled 
operational equipment[B];
Percentage of facilities assumed to be affected by rule: 50; 
Cost savings expected under baseline of full compliance[A]: 53; 
Cost savings expected under alternative baseline of 50 percent 
compliance[A]: 26; 
Benefits expected under full compliance or 50 percent compliance 
baselines: Not estimated. 

Major components of the 2006 final rule: Qualified oil-filled 
operational equipment[B]; 
Percentage of facilities assumed to be affected by rule: 75; 
Cost savings expected under baseline of full compliance[A]: 67; 
Cost savings expected under alternative baseline of 50 percent 
compliance[A]: 33; 
Benefits expected under full compliance or 50 percent compliance 
baselines: Not estimated. 

Major components of the 2006 final rule: Motive power; 
Percentage of facilities assumed to be affected by rule: 10; 
Cost savings expected under baseline of full compliance[A]: 1; 
Cost savings expected under alternative baseline of 50 percent 
compliance[A]: < 1; 
Benefits expected under full compliance or 50 percent compliance 
baselines: Not estimated. 

Major components of the 2006 final rule: Motive power; 
Percentage of facilities assumed to be affected by rule: 25; 
Cost savings expected under baseline of full compliance[A]: 3; 
Cost savings expected under alternative baseline of 50 percent 
compliance[A]: 1; 
Benefits expected under full compliance or 50 percent compliance 
baselines: Not estimated. 

Major components of the 2006 final rule: Motive power; 
Percentage of facilities assumed to be affected by rule: 50; 
Cost savings expected under baseline of full compliance[A]: 5; 
Cost savings expected under alternative baseline of 50 percent 
compliance[A]: 3; 
Benefits expected under full compliance or 50 percent compliance 
baselines: : Not estimated. 

Major components of the 2006 final rule: Mobile refuelers; 
Percentage of facilities assumed to be affected by rule: 25; 
Cost savings expected under baseline of full compliance[A]: 17; 
Cost savings expected under alternative baseline of 50 percent 
compliance[A]: 9; 
Benefits expected under full compliance or 50 percent compliance 
baselines: Not estimated. 

Major components of the 2006 final rule: Mobile refuelers;
Percentage of facilities assumed to be affected by rule: 50; 
Cost savings expected under baseline of full compliance[A]: 34; 
Cost savings expected under alternative baseline of 50 percent 
compliance[A]: : 17; Benefits expected under full compliance or 50 
percent compliance baselines: : Not estimated. 

Major components of the 2006 final rule: Mobile refuelers;
Percentage of facilities assumed to be affected by rule: 75%; 
Cost savings expected under baseline of full compliance[A]: $51; 
Cost savings expected under alternative baseline of 50 percent 
compliance[A]: 26; 
Benefits expected under full compliance or 50 percent compliance 
baselines: Not estimated. 

Source: EPA. 

[A] Estimates are annualized cost savings using 7 percent discount 
rate; EPA also estimated savings using a 3 percent discount rate, per 
OMB's Circular A-4 guidelines. 

[B] Estimates apply to new facilities only. EPA assumed that existing 
facilities would already have secondary containment in place or an 
impracticality determination and, therefore, would not benefit from 
this burden reduction. 

[End of table] 

Under the alternative baseline, compliance cost savings would be 
roughly half as much as under the full compliance baseline because 
owners and operators of facilities that are not currently in compliance 
will not save costs as a result of the changes for burden reduction. In 
addition, because EPA did not have data on the precise number of 
facilities that would be affected by the amendments, EPA assessed the 
uncertainty associated with its estimates using arbitrarily developed 
scenarios for three of the major components of the rule. Based on this 
approach, EPA assumed that various percentages of the facilities would 
be affected by the regulatory changes in the rule. For example, for 
facilities with qualified oil-filled operational equipment, EPA 
analyzed the cost savings under different assumptions about the number 
of facilities that would be affected by the rule, ranging from 25 
percent to 75 percent of the total number. 

Moreover, unlike its 2002 analysis, EPA's 2006 analysis also analyzed 
and discussed some regulatory alternatives. For example, for the 
version of these amendments that were proposed in 2005, EPA proposed an 
exemption on the oil-filled operational equipment requirement for 
facilities that had no reportable discharges from their equipment 
within the prior 10 years of the date of their SPCC plan certification. 
Partly in response to comments on the proposed rule, EPA narrowed the 
restriction in the 2006 final rule to owners and operators that have 
not had a discharge exceeding 1,000 gallons or two discharges exceeding 
42 gallons within a 12-month period in the 3 years prior to SPCC plan 
certification. Oil spills that are the result of natural disasters are 
not subject to these limitations. In its economic analysis of the 2006 
final rule, EPA discussed the differences between the cost estimates 
for the restriction proposed in 2005 and the estimates for the 
restriction adopted in 2006. EPA estimated that the final rule cost 
savings would be greater under certain conditions (that is, if 75 
percent of facilities are affected by the amendment), than estimated in 
the proposed version. 

EPA's 2006 Analysis Also Had Limitations: 

Despite the improvements over its 2002 analysis, EPA's analysis of the 
2006 amendments also had some limitations that made it less useful than 
it could have been for assessing the economic trade-offs associated 
with the amendments. For example, EPA did not quantify or monetize the 
potential impacts of the 2006 amendments on the risk of an oil spill 
and on public health and welfare and the environment. Instead, EPA 
provided only a very limited qualitative discussion of the general risk 
of an oil spill and the general potential damages that it might cause. 
EPA reported that the reduced compliance costs will translate to net 
social benefits, but that these benefits might be partially offset by 
the potential increase in the risk of an oil spill (because of the less 
stringent requirements of the 2006 amendments compared with the 
existing requirements).[Footnote 23] EPA also stated that quantifying 
net benefits (benefits minus costs) associated with the 2006 amendments 
was not possible due to unknown future impacts of the rule, but it 
concluded that cost savings resulting from the amendments will not be 
offset by any significant losses in environmental protection. 
Nonetheless, it is difficult to affirm EPA's conclusion without more 
substantive information on the potential effect of the amendments on 
the risk of an oil spill and the resulting effect on public health and 
welfare and the environment. 

In addition, because EPA's estimates of the number of facilities that 
would be affected by the 2006 amendments were not based on nationally 
representative samples, the results may not be accurate. In particular, 
for the one amendment that would reduce the burden for certain SPCC- 
regulated facilities, EPA based its estimates of the number of 
facilities that would be affected by this amendment on data drawn from 
eight states: Florida, Kansas, Maryland, Minnesota, New York, Oklahoma, 
Virginia, and Wisconsin. Because facilities in these states may not 
have been representative of facilities nationwide, EPA's use of these 
data in its analysis could have introduced bias into its estimates of 
the number of facilities and costs for this amendment. Furthermore, EPA 
excluded from its analysis more than half of the facilities in these 
eight states because the industrial category for these facilities could 
not be determined and could not be matched to an additional database. 
By not including such a high proportion of facilities on a nonrandom 
basis, additional error was likely introduced into EPA's estimates of 
the number of SPCC-regulated facilities. It is, therefore, unclear 
whether the facilities that EPA included in the analysis are even 
representative of the universe of facilities within these eight states. 
EPA acknowledged these limitations in its analysis and stated that the 
analysis provided the best possible results given time and resource 
constraints. However, the actual number of U.S. facilities, and hence 
the resulting cost impacts, could be greater or less than EPA 
estimated. 

Overall, EPA reported that its analysis did not fully comply with OMB 
guidelines for conducting economic analyses of significant regulatory 
actions. It is difficult to confirm, however, that the regulatory 
changes are economically justified, as EPA concluded, without an 
estimate of both the costs and benefits associated with the amendments. 

Conclusions: 

Because both the 2002 and 2006 amendments to the SPCC rule are 
significant regulatory actions, it is important for EPA to have a 
credible economic basis for selecting these as the agency's preferred 
regulatory actions. However, although EPA's 2006 analysis improved upon 
its 2002 analysis, both analyses had limitations that may make it 
difficult for decision makers, stakeholders, and the public to verify 
that the agency has fully analyzed the economic impacts of its 
regulatory actions. Specifically, because EPA did not analyze key 
uncertainties in its analysis of the 2002 amendments, including the 
degree to which facilities were in compliance with some of the 
revisions, the reliability of the estimated costs and cost savings is 
questionable. In addition, EPA did not assess regulatory alternatives 
in its analysis for the 2002 amendments, making it difficult to confirm 
that EPA's preferred regulatory approach is economically superior to 
other possible approaches. Moreover, because EPA did not estimate the 
impact of the amendments on the potential risk of an oil spill and on 
public health and welfare and the environment for either the 2002 or 
the 2006 amendments, EPA's economic analyses may not provide decision 
makers, stakeholders, and the public with a sufficient basis for 
concluding that the benefits of the amendments outweigh their costs, as 
EPA did. Although we recognize that evaluating regulatory impacts is a 
complex task, unless EPA conducts more thorough economic analyses 
consistent with OMB guidelines, decision makers, stakeholders, and the 
public may lack assurance that the agency has fully evaluated the 
economic trade-offs of its regulatory actions. 

Recommendation for Executive Action: 

To improve the usefulness of the agency's economic analysis for 
informing decision makers and the public, we recommend that the 
Administrator, EPA, take action to ensure that the agency's economic 
analysis of future changes to the SPCC rule includes all of the key 
elements for such analyses contained in OMB's guidelines for complying 
with Executive Order 12866. 

Agency Comments and Our Evaluation: 

GAO provided EPA with a draft of this report for its review and 
comment. The agency stated that it generally agreed with the 
recommendation in the report to improve the agency's economic analyses 
for future changes to the SPCC rule, consistent with OMB guidelines, 
and has undertaken several initiatives to improve its analyses. EPA 
noted that, consistent with our recommendation, the agency has (1) 
activated a core SPCC Economic Subgroup of economic and technical 
experts; (2) acquired additional expert contractor support; and (3) 
hired an experienced senior economist to guide these efforts, and plans 
to continue gathering additional data to improve its understanding of 
the regulated universe and oil spill risks, and to address uncertainty 
and quantify benefits. 

In addition, EPA commented that the agency believes that the economic 
analyses that it conducted for the 2002 and 2006 amendments to the SPCC 
rule are already consistent with, and meet the spirit and intent of, 
OMB guidelines, given the limited data, time, and resources available. 
However, because both the 2002 and 2006 amendments to the SPCC rule 
were significant regulatory actions potentially affecting thousands of 
facilities across a wide range of industries, it is important for EPA 
to have a credible economic basis for selecting its preferred 
regulatory actions. In particular, we found that EPA's analyses were 
generally not consistent with OMB guidelines in some key areas, 
including accounting for the extent to which facilities were in 
compliance with the existing 1973 rule and in assessing the impact of 
the amendments on the risk of an oil spill and public health and the 
environment. Decision makers, stakeholders, and the public may lack 
assurance that the agency has fully evaluated the economic trade-offs 
of its regulatory actions without more thorough economic analyses 
consistent with OMB guidelines. 

Finally, EPA commented that it does not agree with GAO's 
characterization that the agency's sensitivity analysis of the 2006 
amendments used "arbitrarily developed scenarios" for three of the 
major components affected by the rule. However, in its economic 
analysis of the 2006 amendments, EPA stated that it "arbitrarily 
developed three scenarios" to estimate the number of facilities that 
might be affected by these components. Furthermore, we did not comment 
on EPA's use of these scenarios because, according to the agency, data 
on the number of facilities that might be affected by the rule were not 
available. 

EPA also provided technical comments on the draft report, which we have 
incorporated as appropriate. The full text of EPA's comments is 
included as appendix IV. 

As agreed with your office, unless you publicly announce the contents 
of this report earlier, we plan no further distribution until 20 days 
from the report date. At that time, we will send copies to the 
Administrator of EPA and other interested parties. We will also make 
copies available to others upon request. In addition, the report will 
be available at no charge on the GAO Web site at [hyperlink, 
http://www.gao.gov]. 

If you or your staff has any questions about this report, please 
contact me at (202) 512-3841 or stephensonj@gao.gov. Contact points for 
our Offices of Congressional Relations and Public Affairs may be found 
on the last page of this report. Key contributors to this report are 
listed in appendix V. 

Sincerely yours, 

Signed by:

John B. Stephenson: 
Director, Natural Resources
 and Environment: 

[End of section] 

Appendix I: Objectives, Scope, and Methodology: 

We reviewed the reasonableness of the economic analyses that the 
Environmental Protection Agency (EPA) used in support of the 2002 and 
2006 Spill Prevention, Control, and Countermeasure (SPCC) amendments. 
To determine the reasonableness of EPA's economic analyses, we assessed 
EPA's May 2002 Economic Analysis for the Final Revisions to the Oil 
Pollution Prevention Regulation (40 CFR Part 112), November 2005 
Regulatory Analysis for the Proposed Revisions to the Oil Pollution 
Prevention Regulation (40 CFR Part 112), and November 2006 Regulatory 
Impact Analysis for the Final Revisions to the Oil Pollution Prevention 
Regulations (40 CFR Part 112). As criteria for evaluating the 
reasonableness of the economic analyses, we used guidelines for federal 
agencies in assessing regulatory impacts that the Office of Management 
and Budget (OMB) developed under Executive Order 12866, including its 
Economic Analysis of Federal Regulations Under Executive Order 12966; 
Guidelines to Standardize Measures of Costs and Benefits and the Format 
of Accounting Statements; and Circular A-4. We also reviewed the 
Unfunded Mandates Reform Act of 1995. In addition, we discussed EPA's 
analyses with senior officials in EPA's Office of Emergency Management, 
Regulation, and Policy Development Division, which was responsible for 
conducting the analyses. We also spoke with officials representing 
major industry associations about their views on EPA's economic 
analyses and discussed any analysis they may have prepared regarding 
the SPCC amendments. Furthermore, we reviewed other documents related 
to the rule changes. 

We also obtained stakeholders' views on any impacts that they believe 
the SPCC amendments will have on either the regulated community or on 
the risk of oil spills by administering a survey to key industry 
associations and environmental groups, respectively, regarding 43 key 
SPCC amendments. A summary of responses to survey questions appears in 
appendix II, and our analysis of the results of the survey appears in 
appendix III. 

Selection of Survey Respondents: 

To administer our survey, we selected a nonprobablity sample of 30 SPCC 
stakeholders, including 28 industry associations and two environmental 
groups. These organizations were either (1) members of EPA's SPCC 
stakeholder group, which was involved with the agency in discussions 
and periodic meetings before the rule amendments were made final, or 
(2) national organizations that submitted comments to EPA regarding 
proposed SPCC rule changes more than once in 1991, 1993, 1997, or 2002. 
The vast majority of comments were received from associations and 
businesses representing the major industry sectors--such as oil and 
natural gas products, petroleum refining, transportation, 
manufacturing, electric utilities, and food and agriculture--most 
likely to be regulated under SPCC. Only a few environmental 
associations submitted comments. Results from this nonprobability 
sample cannot be used to make inferences about all industry or 
environmental associations because not all associations representing 
those affected by the SPCC rule had a chance of being selected as part 
of the sample. 

Questionnaire Design and Pretesting: 

Our questionnaire asked stakeholders what impact they believe will 
result from each of 43 major amendments to the SPCC rule. We selected 
these amendments by reviewing the major changes EPA made to the SPCC 
rule in 2002 and 2006. Our questionnaire provided summaries of each of 
these amendments, which, in most instances, were derived from EPA's 
descriptions in the Federal Register. In some cases, we developed our 
summaries by reviewing the descriptions of the amendments in the rules, 
and reviewing comments on the amendments submitted to EPA by both 
industry and environmental groups. Of the 43 amendments selected, we 
included 29 amendments finalized in 2002 that EPA listed as major 
amendments in the Federal Register. In addition, we included six 
amendments from 2006 that EPA described in the Federal Register and 
several agency fact sheets as major amendments to the rule. The 
remaining eight amendments we included in our survey--six from 2002 and 
two from 2006--were frequently mentioned in industry comments that we 
reviewed. We asked respondents to assess the impact of each of these 
amendments on a five-point scale which ranged from "very negative 
impact" to "very positive impact." We asked industry associations to 
assess the impact on their industry and environmental groups to assess 
the impact on the risk of oil spills. We also asked respondents to list 
the five amendments that would have the greatest positive impact and 
the five amendments that would have the greatest negative impact. 
However, we did not receive a sufficient number of responses to these 
questions and so did not include them in our analysis. 

The practical difficulties of conducting any survey may introduce 
errors, commonly referred to as nonsampling errors. For example, 
respondents may have difficulty in interpreting a particular question 
or may lack information necessary to provide valid and reliable 
responses. In order to minimize these errors, we conducted pretests of 
the draft questionnaire with two industry associations by telephone. 
During these pretests, we checked whether (1) questions were clear and 
unambiguous, (2) terminology was used correctly, (3) the questionnaire 
did not place undue burden on respondents, (4) the information could 
feasibly be obtained, and (5) the survey was comprehensive and 
unbiased. In addition, the survey was peer reviewed by a GAO senior 
survey methodologist. We made changes to the content and the format of 
the questionnaire after each of the pretests based on the feedback we 
received. 

Survey Administration: 

We administered our survey in January 2007. We first phoned each 
stakeholder group to identify the most appropriate individual to 
receive the questionnaire. We then e-mailed the questionnaire to each 
stakeholder as a Microsoft Word form that respondents could complete by 
marking checkboxes. In addition, we attached copies of the SPCC rule, 
as amended in 2002 and 2006, and EPA's 2002 economic analysis to 
provide stakeholders a more thorough description of the amendments than 
we provided in the survey. On January 17, 2007, we sent a reminder 
letter to all stakeholders who had not responded by that date, along 
with additional copies of the questionnaire, the SPCC rule, and EPA's 
economic analysis. Two days later, we telephoned all stakeholders who 
had not returned the questionnaire and asked them to participate in our 
survey. We received usable responses from 23 of the 28 industry 
associations and one of the two environmental groups by January 29, 
2007. Following is a list of the associations from which we received 
completed questionnaires: 

Agricultural Retailers Association: 
Air Transport Association of America, Inc.: 
Aircraft Owners & Pilots Association: 
Airports Council International-North America: 
Alliance of Automobile Manufacturers: 
American Association of Airport Executives: 
American Bakers Association: 
American Feed Industry Association: 
American Gas Association: 
American Petroleum Institute: 
American Trucking Associations, Inc.: 
Domestic Petroleum Council Independent: 
Petroleum Association of America: 
Independent Liquid Terminals Association: 
Independent Lubricant Manufacturers Association: 
National Air Transportation Association: 
National Automobile Dealers Association: 
Natural Resources Defense Council: 
National Stone, Sand, and Gravel Association: 
Petroleum Marketers Association of America: 
Synthetic Organic Chemical Manufacturers Association: 
The Associated General Contractors of America: 
USA Rice Federation: 
Utility Solid Waste Activities Group: 

Content Analysis: 

In order to succinctly summarize responses to our survey, we performed 
a content analysis in which we grouped each of the 43 SPCC amendments 
into major categories. We first reviewed the summary of each of the 
amendments that we included in our questionnaire and inductively 
identified common groups. We then developed criteria to define which 
amendments would be included in each group. To ensure that this process 
was reliable, each amendment was independently categorized by three GAO 
analysts, and categorization decisions among the three analysts were 
compared. All initial disagreements regarding categorization decisions 
were discussed and reconciled by refining the criteria used to 
categorize the amendments. In a few cases, we were unable to determine 
the category into which to place an amendment based solely on the 
description of that amendment used in our survey. In these cases, we 
reviewed the complete description of the amendment in the Federal 
Register to determine the appropriate category. To see the exact 
wording of the final rule, please refer to the Federal Register. 

We categorized each of the 43 amendments along two dimensions. The 
first dimension relates to the actions that regulated facilities are 
required to take. The categories within this dimension that we 
identified during our content analysis include the following: (1) 
requirements to develop an SPCC plan or to notify officials of oil 
spills; (2) changes to the scope of those facilities to which the rule 
applies; (3) requirements for containers and piping used by SPCC 
facilities; (4) requirements to test or inspect containers, piping, and 
other equipment; (5) requirements regarding training of SPCC facility 
employees; and (6) amendments that fit into more than one of the above 
categories or did not fit into one of the above categories. 

The second dimension relates to whether the amendment increases or 
decreases requirements on facilities. We made this determination based 
on whether the amendment uses terms such as "adds new requirements" and 
"mandates," which would be considered an increase in requirements, or 
terms such as "allows" or "exempts," which would be considered a 
decrease in requirements. In some instances, we determined that an 
amendment does not imply either an increase or a decrease in 
requirements, or that an amendment included provisions that would both 
increase and decrease requirements. In these instances we categorized 
the amendment as having a "mixed" direction. In some instances we could 
not determine if the amendments increased or decreased requirements 
and, therefore, did not categorize the amendment along the second 
dimension. 

By categorizing each amendment in terms of both of these dimensions-- 
the facility actions to which the amendment applies and whether the 
amendment increases or decreases requirements on facilities--we 
identified 11 total categories of amendments. For example, we developed 
a category for amendments that increased requirements on planning and 
notification and another category for amendments that decreased 
requirements on the scope. Some combinations of categories in these two 
dimensions contained no amendments. For example, we did not identify 
any amendments that decreased requirements on inspections and testing. 
For a detailed description of our coding rules and specific amendments 
that we placed in each of these categories, please see appendix III. 

Data Analysis: 

We calculated a score to summarize the industry stakeholders' views of 
the impact they believe each type of SPCC amendment will have on their 
industries. We collapsed the five-point response options in our survey 
into "very positive impact" and "somewhat positive impact" categories 
from the survey into one and removed the "no answer/no basis to judge" 
responses. We then calculated the average of the responses from all of 
the industry associations to questions regarding all of the amendments 
within a particular category and developed a score, ranging from -1.0 
(entirely negative impact), to 0.0 (no impact), to 1.0 (entirely 
positive impact), for each of the categories of amendments. An entirely 
positive impact would indicate that every industry stakeholder reported 
that every amendment of a given type would have a positive impact on 
their industry. Similarly, an entirely negative impact would indicate 
that every industry stakeholder reported that every amendment of a 
given type would have a negative impact on their industry. No impact 
would indicate that either (1) every industry stakeholder reported that 
every amendment of a given type would have no impact on their industry, 
or (2) an equal number of responses reported a positive impact as 
reported a negative impact for all amendments of a given type. Using 
these three anchor points, we considered scores between -1.0 and -0.5 
to be mostly negative, scores between -0.5 and 0.0 to be somewhat 
negative, scores between 0.0 and 0.5 to be somewhat positive, and 
scores between 0.5 and 1.0 to be mostly positive. Computer analysis 
programs were independently verified by a senior statistician. We also 
verified the accuracy of the underlying survey data keypunched by 
comparing them with their corresponding questionnaires and found that 
there were no errors. Our analysis is limited to the perceived impact 
of the amendments on industry. We did not receive sufficient responses 
from environmental groups to do a thorough analysis of the perceived 
impact of the amendments to the SPCC rule on protecting human health 
and the environment. 

We performed our work from June 2006 to July 2007 in accordance with 
generally accepted government auditing standards. 

[End of section] 

Appendix II: Summary of Survey Results: 

The following tables present a summary of our survey of 23 stakeholders 
to obtain their views on the impacts that the amendments to the SPCC 
rule have had or are likely to have on the regulated community. These 
stakeholders included the major associations representing industry that 
had submitted comments to EPA on the proposed rule changes and that EPA 
had also identified as key stakeholders. We also followed up with 
officials from several industry associations to clarify some of their 
survey responses. 

Survey Question 1: 

What impact does your association believe each of the following 2006 
amendments to the SPCC rule will have on your industry? (We asked 
survey recipients to check one box per amendment.) 

Reference letter: a; 
2006 Rule amendments: § 112.1 General Applicability: § 112.1(d)(2)(ii), 
§ 112.1(d)(7): excludes 'motive power containers' (defined in § 112.2) 
from the rule, but includes the transfer of fuel or other oil into a 
motive power container at an otherwise regulated facility; 
Very Positive Impact: 10; 
Somewhat Positive Impact: 7; 
No Impact: 4; 
Somewhat Negative Impact: 2; 
Very Negative Impact: 0; 
No Answer or No Basis to Judge: 0. 

Reference letter: b;
2006 Rule amendments: § 112.2 Definitions: § 112.2: adds several 
definitions, including airport mobile refueler, farm, motive power 
container, and an oil-filled operational equipment;
Very Positive Impact: 5;
Somewhat Positive Impact: 9;
No Impact: 2; 
Somewhat Negative Impact: 6; 
Very Negative Impact: 0; 
No Answer or No Basis to Judge: 1. 

Reference letter: c; 2006 Rule amendments: § 112.3(a)(2), § 
112.3(b)(2): delays the compliance dates for farms until the effective 
date of a rule establishing SPCC requirements specifically for farms or 
dates that farms must comply with the provisions of this part; 
Very Positive Impact: 1; 
Somewhat Positive Impact: 3; 
No Impact: 10; 
Somewhat Negative Impact: 2; 
Very Negative Impact: 0; 
No Answer or No Basis to Judge: 7. 

Reference letter: d; 
2006 Rule amendments: § 112.3(g): defines a qualified facility eligible 
to self-certify under the provisions set forth in § 112.6; 
Very Positive Impact: 7; 
Somewhat Positive Impact: 12; 
No Impact: 4; 
Somewhat Negative Impact: 0; 
Very Negative Impact: 0; 
No Answer or No Basis to Judge: 0. 

Reference letter: e; 
2006 Rule amendments: § 112.6 Qualified Facility Plan Requirements: § 
112.6: allows qualified facilities (defined in § 112.3(g)) to self-
certify and provides applicable requirements for self-certification; 
Very Positive Impact: 10; 
Somewhat Positive Impact: 7; 
No Impact: 5; 
Somewhat Negative Impact: 1; 
Very Negative Impact: 0; 
No Answer or No Basis to Judge: 0. 

Reference letter: f; 
2006 Rule amendments: § 112.7 General requirements for Spill 
Prevention, Control, and Countermeasure Plans: § 112.7(k): allows 
owners/ operators of qualified oil-filled operational equipment 
(defined in (k)(1)) to meet alternate requirements (defined in (k)(2)) 
in lieu of the general secondary containment requirements; 
Very Positive Impact: 5; 
Somewhat Positive Impact: 16; 
No Impact: 2; 
Somewhat Negative Impact: 0; 
Very Negative Impact: 0; 
No Answer or No Basis to Judge: 0. 

Reference letter: g; 
2006 Rule amendments: § 112.8 Spill Prevention, Control, and 
Countermeasure Plan requirements for onshore facilities (excluding 
production facilities) § 112.12 Spill Prevention, Control, and 
Countermeasure Plan Requirements: § 112.8 (c)(2), § 112.8 (c)(11), § 
112.12 (c)(2), § 112.12 (c)(11): provides an exception for mobile 
refuelers from constructing and meeting requirements for secondary 
containment; 
Very Positive Impact: 10; 
Somewhat Positive Impact: 10; 
No Impact: 3; 
Somewhat Negative Impact: 0; 
Very Negative Impact: 0; 
No Answer or No Basis to Judge: 0. 

Reference letter: h; 
2006 Rule amendments: Subpart C - Requirements for Animal Fats and Oils 
and Greases, and Fish and Marine Mammal Oils; and for Vegetable Oils, 
including Oils from Seeds, Nuts Fruits, and Kernels: § 112.13 - § 
112.15: removal of these sections because they do not apply to 
facilities that process, store, use, or transport animal fats and/or 
vegetable oils; 
Very Positive Impact: 0; 
Somewhat Positive Impact: 1; 
No Impact: 13; 
Somewhat Negative Impact: 0; 
Very Negative Impact: 0; 
No Answer or No Basis to Judge: 9. 

[End of table] 

Survey Question 2: 

What impact does your association believe each of the following 2002 
amendments to the SPCC rule will have on your industry? (We asked 
survey recipients to check one box per amendment.) 

Reference letter: i; 
2002 Rule amendments: § 112.1 General Applicability: § 112.1(b): adds 
"users" of oil as a group subject to the rule and expands the 
jurisdiction of the rule as amended in the Clean Water Act; 
Very Positive Impact: 0; 
Somewhat Positive Impact: 0; 
No Impact: 3; 
Somewhat Negative Impact: 3; 
Very Negative Impact: 14; 
No Answer or No Basis to Judge: 3. 

Reference letter: j; 
2002 Rule amendments: § 112.1 General Applicability: § 112.1(d)(2)(i): 
does not count the capacity of completely buried tanks (defined in 
parts 280 or 281) or permanently closed tanks towards the threshold; 
Very Positive Impact: 3; 
Somewhat Positive Impact: 10; 
No Impact: 8; 
Somewhat Negative Impact: 1; 
Very Negative Impact: 0; 
No Answer or No Basis to Judge: 1. 

Reference letter: k; 
2002 Rule amendments: § 112.1 General Applicability: § 112.1(d)(2)(ii): 
eliminates the aboveground storage capacity threshold of greater than 
660 gallons for a single container but maintains the greater than 1320 
threshold and establishes a "de minimis" container capacity size of 55 
gallons or greater to calculate capacity; 
Very Positive Impact: 2; 
Somewhat Positive Impact: 12; 
No Impact: 4; 
Somewhat Negative Impact: 3; 
Very Negative Impact: 2; 
No Answer or No Basis to Judge: 0. 

Reference letter: l; 
2002 Rule amendments: § 112.1 General Applicability: § 112.1(d)(4): 
requires completely buried storage tanks, otherwise exempt, to be 
included on the facility diagram; 
Very Positive Impact: 0; 
Somewhat Positive Impact: 0; 
No Impact: 8; 
Somewhat Negative Impact: 11; 
Very Negative Impact: 1; 
No Answer or No Basis to Judge: 3. 

Reference letter: m; 
2002 Rule amendments: § 112.1 General Applicability: § 112.1(d)(5), 
(6): exempts containers that are 55 gallons or less; exempts facilities 
(or parts thereof) used exclusively for wastewater treatment unless it 
is used to meet part 112 requirements; 
Very Positive Impact: 5; 
Somewhat Positive Impact: 12; 
No Impact: 2; 
Somewhat Negative Impact: 0; 
Very Negative Impact: 2; 
No Answer or No Basis to Judge: 2. 

Reference letter: n; 
2002 Rule amendments: § 112.1 General Applicability: § 112.1(f): gives 
the EPA Regional Administrators authority to require an SPCC plan for 
any facility within the jurisdiction in order to meet goals of the CWA; 
Very Positive Impact: 0; 
Somewhat Positive Impact: 0; 
No Impact: 11; 
Somewhat Negative Impact: 6; 
Very Negative Impact: 3; 
No Answer or No Basis to Judge: 3. 

Reference letter: o; 
2002 Rule amendments: § 112.2 Definitions: § 112.2: adds new 
definitions, such as for 'facility', and expands the definition of 
'oil', 'discharge', 'navigable waters', 'offshore facility', and 
'United States'; 
Very Positive Impact: 1; 
Somewhat Positive Impact: 3; 
No Impact: 3; 
Somewhat Negative Impact: 4; 
Very Negative Impact: 11; 
No Answer or No Basis to Judge: 1. 

Reference letter: p; 
2002 Rule amendments: Reference letter p.: § 112.3 Requirement to 
prepare and implement Spill Prevention, Control, and Countermeasure 
Plan: § 112.3(a),(b): requires facilities in operation to prepare or 
revise an SPCC Plan within six months and implement the plan within 
another six months; new facilities must prepare and implement an SPCC 
Plan before beginning operations; 
Very Positive Impact: 1; 
Somewhat Positive Impact: 1; 
No Impact: 5; 
Somewhat Negative Impact: 8; 
Very Negative Impact: 5; 
No Answer or No Basis to Judge: 3. 

Reference letter: q; 
2002 Rule amendments: § 112.3 Requirement to prepare and implement 
Spill Prevention, Control, and Countermeasure Plan: § 112.3(d): 
requires the professional engineer (PE) attestation to include that the 
PE considered applicable industry standards and certified that the Plan 
is in accordance with SPCC requirements; also allows an agent to 
examine a facility in place of the PE, but the PE must review the 
agent's work, and certify the SPCC Plan; 
Very Positive Impact: 0; 
Somewhat Positive Impact: 7; 
No Impact: 6; 
Somewhat Negative Impact: 6; 
Very Negative Impact: 4; 
No Answer or No Basis to Judge: 0. 

Reference letter: r; 
2002 Rule amendments: § 112.3 Requirement to prepare and implement 
Spill Prevention, Control, and Countermeasure Plan: § 112.3(e): 
requires a copy of the SPCC Plan to be maintained at a facility 
attended for at least 4 hours a day instead of the current requirement 
of 8 hours; 
Very Positive Impact: 0; 
Somewhat Positive Impact: 1; 
No Impact: 17; 
Somewhat Negative Impact: 4; 
Very Negative Impact: 0; 
No Answer or No Basis to Judge: 1. 

Reference letter: s; 
2002 Rule amendments: § 112.3 Requirement to prepare and implement 
Spill Prevention, Control, and Countermeasure Plan: § 112.3(f): 
provides for an extension of time to be granted by the Regional 
Administrators (RA) for amendments of the SPCC Plan, as well as the 
entire SPCC Plan; 
Very Positive Impact: 1; 
Somewhat Positive Impact: 13; 
No Impact: 7; 
Somewhat Negative Impact: 1; 
Very Negative Impact: 0; 
No Answer or No Basis to Judge: 1. 

Reference letter: t; 
2002 Rule amendments:  § 112.4 Amendment of Spill Prevention, Control, 
and Countermeasure Plan by Regional Administrator: § 112.4(a): raises 
the threshold for reporting two discharges to greater than 42 U.S. 
gallons (1 barrel) per discharge, but reduces the amount of information 
to be submitted to the RA; 
Very Positive Impact: 6; 
Somewhat Positive Impact: 11; 
No Impact: 2; Somewhat Negative Impact: 2; 
Very Negative Impact: 0; 
No Answer or No Basis to Judge: 2. 

Reference letter: u; 
2002 Rule amendments: § 112.4 Amendment of Spill Prevention, Control, 
and Countermeasure Plan by Regional Administrator: § 112.4(b): does not 
require facilities to meet any requirements of this section (§ 112.4) 
until the new compliance deadlines to prepare an SPCC Plan (specified 
in section § 112.3); 
Very Positive Impact: 5; 
Somewhat Positive Impact: 11; 
No Impact: 5; 
Somewhat Negative Impact: 1; 
Very Negative Impact: 0; 
No Answer or No Basis to Judge: 1. 

Reference letter: v; 
2002 Rule amendments: § 112.4 Amendment of Spill Prevention, Control, 
and Countermeasure Plan by Regional Administrator: § 112.4(c): changes 
the requirement from notification to the State agency in charge of 
water pollution control activities to notification to the State agency 
in charge of oil pollution control activities; 
Very Positive Impact: 0; 
Somewhat Positive Impact: 0; 
No Impact: 22; 
Somewhat Negative Impact: 1; 
Very Negative Impact: 0; 
No Answer or No Basis to Judge: 0. 

Reference letter: w; 
2002 Rule amendments: § 112.4 Amendment of Spill Prevention, Control, 
and Countermeasure Plan by Regional Administrator: § 112.4(d): provides 
that the RA may require a Plan amendment after an on-site review of the 
Plan; 
Very Positive Impact: 0; 
Somewhat Positive Impact: 0; 
No Impact: 13; 
Somewhat Negative Impact: 8; 
Very Negative Impact: 0; 
No Answer or No Basis to Judge: 2. 

Reference letter: x; 
2002 Rule amendments: § 112.5 Amendment of Spill Prevention, Control, 
and Countermeasure Plan by owners or operators: § 112.5(a), (b): 
requires any amendment made under this section be prepared within six 
months and implemented in no more than six months from when the 
amendment was made; 
Very Positive Impact: 0; 
Somewhat Positive Impact: 2; 
No Impact: 11; 
Somewhat Negative Impact: 8; 
Very Negative Impact: 1; 
No Answer or No Basis to Judge: 1. 

Reference letter: y; 
2002 Rule amendments: § 112.5 Amendment of Spill Prevention, Control, 
and Countermeasure Plan by owners or operators: § 112.5(b): changes the 
period of review for SPCC Plans from 3 to 5 years, and requires 
documentation of completion of the review and evaluation; 
Very Positive Impact: 10; 
Somewhat Positive Impact: 10; 
No Impact: 2; 
Somewhat Negative Impact: 0; 
Very Negative Impact: 0; 
No Answer or No Basis to Judge: 1. 

Reference letter: z; 
2002 Rule amendments: § 112.5 Amendment of Spill Prevention, Control, 
and Countermeasure Plan by owners or operators: § 112.5(c): clarifies 
that a PE must certify only technical amendments, and not non-technical 
amendments (ex. names, phone numbers); 
Very Positive Impact: 8; 
Somewhat Positive Impact: 12; 
No Impact: 1; 
Somewhat Negative Impact: 1; 
Very Negative Impact: 1; 
No Answer or No Basis to Judge: 0. 

Reference letter: aa; 
2002 Rule amendments: § 112.7 General requirements for Spill 
Prevention, Control, and Countermeasure Plans: § 112.7: allows 
differing formats for the Plan; other formats must be cross-referenced 
to the listed SPCC requirements and include all applicable SPCC 
requirements; 
Very Positive Impact: 3; 
Somewhat Positive Impact: 13; 
No Impact: 3; 
Somewhat Negative Impact: 1; 
Very Negative Impact: 0; 
No Answer or No Basis to Judge: 2. 

Reference letter: bb; 
2002 Rule amendments: § 112.7 General requirements for Spill 
Prevention, Control, and Countermeasure Plans: § 112.7(a)(2): allows 
deviations from most of the rule's major requirements (except secondary 
containment), provided that the reasons for nonconformance are 
explained, and equivalent environmental protection is provided; 
Very Positive Impact: 10; 
Somewhat Positive Impact: 9; 
No Impact: 1; 
Somewhat Negative Impact: 0; 
Very Negative Impact: 2; 
No Answer or No Basis to Judge: 1. 

Reference letter: cc; 
2002 Rule amendments: § 112.7 General requirements for Spill 
Prevention, Control, and Countermeasure Plans: § 112.7(a)(3): requires 
a description and a diagram of the facility layout in the SPCC Plan; 
Very Positive Impact: 0; 
Somewhat Positive Impact: 1; 
No Impact: 11; 
Somewhat Negative Impact: 10; 
Very Negative Impact: 1; 
No Answer or No Basis to Judge: 0. 

Reference letter: dd; 
2002 Rule amendments: § 112.7 General requirements for Spill 
Prevention, Control, and Countermeasure Plans: § 112.7(a)(4): requires 
facilities to provide additional information and procedures for 
reporting a discharge; facility response plan (FRP) facilities (defined 
in § 112.20) are exempt; 
Very Positive Impact: 0; 
Somewhat Positive Impact: 1; 
No Impact: 9; 
Somewhat Negative Impact: 10; 
Very Negative Impact: 0; 
No Answer or No Basis to Judge: 3. 

Reference letter: ee; 
2002 Rule amendments: § 112.7 General requirements for Spill 
Prevention, Control, and Countermeasure Plans: § 112.7(a)(5): requires 
facilities to organize the Plan in a readily usable format for an 
emergency; facility response plan (FRP) facilities (defined in § 
112.20) are exempt; 
Very Positive Impact: 0; 
Somewhat Positive Impact: 2; 
No Impact: 18; 
Somewhat Negative Impact: 1; 
Very Negative Impact: 0; 
No Answer or No Basis to Judge: 2. 

Reference letter: ff; 
2002 Rule amendments: § 112.7 General requirements for Spill 
Prevention, Control, and Countermeasure Plans: § 112.7(c): requires a 
containment system to be capable of containing oil and constructed to 
prevent any discharge from escaping from the facility and reaching 
navigable waters and adjoining shorelines; 
Very Positive Impact: 0; 
Somewhat Positive Impact: 0; 
No Impact: 12; 
Somewhat Negative Impact: 5; 
Very Negative Impact: 6; 
No Answer or No Basis to Judge: 0. 

Reference letter: gg; 
2002 Rule amendments: § 112.7 General requirements for Spill 
Prevention, Control, and Countermeasure Plans: § 112.7(d): adds new 
requirements for periodic integrity testing of containers, and periodic 
integrity and leak testing of valves and piping; exempts FRP facilities 
(as defined by section §112.20) from having a contingency plan; 
Very Positive Impact: 0; 
Somewhat Positive Impact: 1; 
No Impact: 2; 
Somewhat Negative Impact: 9; 
Very Negative Impact: 10; 
No Answer or No Basis to Judge: 1. 

Reference letter: hh; 
2002 Rule amendments: § 112.7 General requirements for Spill 
Prevention, Control, and Countermeasure Plans: § 112.7(e): allows use 
of usual and customary business records to serve as a record of tests 
or inspections and records to be kept separate from the Plan; 
acknowledges the certifying engineer as having a role developing 
inspection procedures; 
Very Positive Impact: 0; 
Somewhat Positive Impact: 13; 
No Impact: 8; 
Somewhat Negative Impact: 1; 
Very Negative Impact: 0; 
No Answer or No Basis to Judge: 1. 

Reference letter: ii; 
2002 Rule amendments: § 112.7 General requirements for Spill 
Prevention, Control, and Countermeasure Plans: § 112.7(f): mandates 
training for oil-handling employees only, and specifies training 
topics; also requires discharge prevention briefings at least once a 
year; 
Very Positive Impact: 0; 
Somewhat Positive Impact: 11; 
No Impact: 7; 
Somewhat Negative Impact: 3; 
Very Negative Impact: 2; 
No Answer or No Basis to Judge: 0. 

Reference letter: jj; 
2002 Rule amendments: § 112.7 General requirements for Spill 
Prevention, Control, and Countermeasure Plans: § 112.7(i): specifies a 
brittle fracture requirement for field-constructed containers 
undergoing repairs, alteration, reconstruction or change in service 
that may affect the risk of discharge; 
Very Positive Impact: 1; 
Somewhat Positive Impact: 0; 
No Impact: 6; 
Somewhat Negative Impact: 5; 
Very Negative Impact: 4; 
No Answer or No Basis to Judge: 7. 

Reference letter: kk; 
2002 Rule amendments: § 112.8 Spill Prevention, Control, and 
Countermeasure Plan requirements for onshore facilities (excluding 
production facilities): § 112.8(c)(3), § 112.9(b)(1): allows National 
Pollutant Discharge Elimination Systems (NPDES) records to be used for 
SPCC purposes in lieu of events records specifically prepared for this 
purpose; 
Very Positive Impact: 0; 
Somewhat Positive Impact: 12; 
No Impact: 6; 
Somewhat Negative Impact: 2; 
Very Negative Impact: 0; 
No Answer or No Basis to Judge: 3. 

Reference letter: ll; 
2002 Rule amendments: § 112.8 Spill Prevention, Control, and 
Countermeasure Plan requirements for onshore facilities (excluding 
production facilities) § 112.8(c)(6): requires integrity testing on 
aboveground containers on a regular schedule, and when material repairs 
are done; testing can be recorded using usual and customary business 
records; 
Very Positive Impact: 0; 
Somewhat Positive Impact: 3; 
No Impact: 2; 
Somewhat Negative Impact: 8; 
Very Negative Impact: 9; 
No Answer or No Basis to Judge: 1. 

Reference letter: mm; 
2002 Rule amendments: § 112.8 Spill Prevention, Control, and 
Countermeasure Plan requirements for onshore facilities (excluding 
production facilities) § 112.8(d)(1): requires buried piping installed 
or replaced to have protective wrapping and coating and cathodic 
protection or otherwise satisfy the corrosion protection provisions for 
underground piping (40 CFR part 280 or 281); 
Very Positive Impact: 0; 
Somewhat Positive Impact: 1; 
No Impact: 5; 
Somewhat Negative Impact: 6; 
Very Negative Impact: 8; 
No Answer or No Basis to Judge: 3. 

Reference letter: nn; 
2002 Rule amendments: § 112.8 Spill Prevention, Control, and 
Countermeasure Plan requirements for onshore facilities (excluding 
production facilities) § 112.8(d)(4): requires integrity and leak 
testing of buried piping at the time of installation, construction, 
relocation or replacement; 
Very Positive Impact: 0; 
Somewhat Positive Impact: 2; 
No Impact: 4; 
Somewhat Negative Impact: 11; 
Very Negative Impact: 4; 
No Answer or No Basis to Judge: 2. 

Reference letter: oo; 
2002 Rule amendments: § 112.9 Spill Prevention, Control, and 
Countermeasure Plan requirements for onshore oil production facilities§ 
112.9(c)(2): clarifies that secondary containment include sufficient 
freeboard to contain precipitation; 
Very Positive Impact: 0; 
Somewhat Positive Impact: 0; 
No Impact: 10; 
Somewhat Negative Impact: 10; 
Very Negative Impact: 2; 
No Answer or No Basis to Judge: 1. 

Reference letter: pp; 
2002 Rule amendments: § 112.11 Spill Prevention, Control, and 
Countermeasure Plan requirements for offshore oil drilling, production, 
or workover facilities § 112.11(i): requires offshore oil drilling, 
production or workover facilities to simulate discharges for testing 
and inspecting pollution control and countermeasure systems; 
Very Positive Impact: 0; 
Somewhat Positive Impact: 0; 
No Impact: 10; 
Somewhat Negative Impact: 0; 
Very Negative Impact: 2; 
No Answer or No Basis to Judge: 11. 

Reference letter: qq; 
2002 Rule amendments: Subpart C--Requirements for Animal Fats and Oils 
and Greases, and Fish and Marine Mammal Oils; and for Vegetable Oils, 
including Oils from Seeds, Nuts, Fruits, and Kernels: § 112.12 - § 
112.15: adds sections to apply to Animal Fats and Vegetable Oils based 
on the Edible Oil Regulatory Reform Act (EORRA) requirements. 
Requirements are identical to Subpart B for petroleum and non-petroleum 
oils; 
Very Positive Impact: 0; 
Somewhat Positive Impact: 2; 
No Impact: 8; 
Somewhat Negative Impact: 1; 
Very Negative Impact: 1; 
No Answer or No Basis to Judge: 11. 

Source: Responses to GAO 's survey on EPA's SPCC rule. 

[End of table] 

Our stakeholder survey also allowed respondents the opportunity to 
elaborate on their opinions of the SPCC amendments. Table 3 below 
presents some illustrative examples of the open-ended comments that we 
received from 22 of the 23 industry survey respondents. The examples 
include respondents' opinions on the SPCC amendments that they consider 
to have the most positive or negative impact on their industry sectors. 
These comments provide the current opinions of the industry 
associations we surveyed, but they do not necessarily represent the 
views of the regulated community as a whole. In addition, these 
comments do not represent the views of EPA or GAO. 

Table 3: Examples from Industry Comments Regarding the 2002 and 2006 
Amendments to the SPCC Regulation: 

Reference letter and amendment addressed in survey: N/A: Preamble; 
Comment: "The preamble 'clarifications' significantly broadened the 
scope and reduced the flexibility of the 1973 rule. Industry and 
certifying PEs [Professional Engineers] always interpreted, and EPA 
enforced, the rule containment requirements applying only to bulk 
storage tanks. The 2002 clarifications expanded these requirements to 
include 'containers,' piping, transfer operations, and equipment 
containing oil. As a result, integrity testing requirements were also 
applied to this equipment. Additionally, the 'should to shall to must' 
clarification in the 2002 amendments resulted in the requirements being 
more prescriptive.". 

Reference letter and amendment addressed in survey: i: § 112.1(b); 
Comment: "This provision expands the scope of the 1973 rule to include 
more than the storage of oil increasing the number of facilities and 
equipment regulated with no real benefit cited for the change."; "By 
adding fuel-containing equipment, the universe of sites that require 
secondary containment and SPCC plans increased significantly although 
engine crankcases rarely have significant oil leaks.". 

Reference letter and amendment addressed in survey: j: § 
112.1(d)(2)(i); 
Comment: "The existing Underground Storage Tank (UST) regulations 
already control leaks and spills. Exempting USTs from the SPCC 
requirements is a significant burden reduction, particularly at 
gasoline service stations.". 

Reference letter and amendment addressed in survey: o: § 112.2; 
Comment: "EPA significantly increased the number of facilities covered 
by the rule in changes of the definition text and preamble discussion. 
The 'navigable waters' definition was expanded to EPA's broad 
interpretation without considering the recent court decisions. By 
defining 'storage capacity' as the 'shell capacity' of the container, 
the non-oil portions of a container are included in the applicability 
and containment capacity requirements. The definition of oil now 
includes virtually any substance that leaves a sheen."; "The 
definitions have made the rule more confusing. For example, the 
addition of a definition of oil and gas production facility complicates 
the applicability determination for multiple facilities in a single 
field."; "The definition of oil is also an issue [for us]. The 
definition in the rule is vague and causes uncertainty as to whether or 
not a material is considered oil under SPCC. As a result, materials 
(e.g. solvents, coolants) that would not be considered intuitively to 
be oil are pulled into the regulation. In addition, as mentioned above, 
there is no de minimis amount of oil under which a mixture stops being 
considered oil. One drop of oil in a thousand gallons of water would 
cause the entire mixture to be considered oil.". 

Reference letter and amendment addressed in survey: d: § 112.3(g); 
Comment: "The ability to self certify in certain instances will allow 
facilities to move forward without requiring the signature of a PE, 
which can be costly, and time consuming.". 

Reference letter and amendment addressed in survey: y: § 112.5(b); 
Comment: "Changing the required review period from 3 to 5 years is an 
improvement since most E&P [Exploration and Production] facilities are 
modified infrequently.". 

Reference letter and amendment addressed in survey: bb: § 112.7(a)(2); 
Comment: "Deviations for secondary containment should be allowed where 
secondary containment is not feasible, and 'feasible' should contain 
some element of expense, especially for flowlines.". 

Reference letter and amendment addressed in survey: gg.,ll: § 112.7(d): 
§ 112.8(c)(6); 
Comment: "Integrity testing for small storage tanks is expensive - 
because it must be performed by a PE. EPA should reevaluate any mandate 
beyond visual inspection."; "Integrity testing should be left to the 
assessment of the operator and PE certifying the plan. Under the 1973 
rule operators have used the flexibility of the rule to implement 
appropriate inspections and leak detections methods. The current system 
adequately protects waters of the U.S. from spills associated with E&P 
facilities.". 

Reference letter and amendment addressed in survey: ll: § 112.8(c)(6); 
Comment: "Integrity testing is unnecessary for small elevated tanks or 
those with release prevention barriers, as visual inspection will 
readily detect leaks. Visual inspection in lieu of integrity testing 
was agreed upon by EPA in litigation settlement and should be 
incorporated into the rule. Integrity testing is also not necessary for 
small containers and drums, or for mobile containers which are already 
regulated by DOT regulations."; "…the requirement to integrity test all 
containers/tanks is overly burdensome. Even applying the STI [Steel 
Tank Institute] industry standard (which was rewritten last year after 
the final rules were published) requires a great deal of recordkeeping 
and inspections for smaller tanks and containers. EPA has indicated in 
the past that tanks greater than 40,000 gallons present the greatest 
risk. [We believe] that the rules should require integrity testing only 
for tanks greater than 40,000 gallons.". 

Reference letter and amendment addressed in survey: jj: § 112.7(i); 
Comment: "Consistent with API [American Petroleum Institute] Standard 
653, brittle fracture evaluations are a good industry practice to 
reduce the risk of releases from tanks.". 

Reference letter and amendment addressed in survey: p., q., ff., gg., 
mm: § 112.3(a),(b): § 112.3(d): § 112.7(c): § 112.7(d): § 112.8(d)(1); 
Comment: "[The amendments] will be extremely costly and time consuming. 
Farm tanks, especially those for irrigation, are not situated in 
centralized locations that are ideal for one SPCC plan, containment 
wall, etc. Instead they are spread out in different fields, parcels, 
farms (rented and owned) which, by interpretation, may require separate 
SPCC plans, containment, security, etc. Seasonal (planting, harvest) 
requirements mean that farmers cannot dedicate extensive time to 
upgrading multiple locations for rule compliance. There is also an 
expected shortage of Professional Engineers for the amount of tanks 
that may be regulated. Many tanks must also be mobile to some extent as 
wells dry up and new ones are dug. Short answer - the SPCC rule was 
made for heavy industry, not farming, and does not translate, as 
written, in a common sense manner to agriculture.". 

Reference letter and amendment addressed in survey: i., o., ff., mm., 
gg: § 112.1(b): § 112.2: § 112.7(c): § 112.8(d)(1): § 112.7(d); 
Comment: "We are concerned about the 2002 expansion of the rules to 
motive power and other oil-filled equipment that merely uses oil. These 
issues were also favorably addressed in the 2006 rule revision. 
Finally, we remain concerned about the EPA's definition of "navigable 
waters," which broadly extends the Agency's jurisdiction.". 

Reference letter and amendment addressed in survey: i., o., ff., mm., 
gg: § 112.1(b): § 112.2: § 112.7(c): § 112.8(d)(1): § 112.7(d); 
Comment: "[Our] chief concern with the 2002 amendments was the 
regulation of airport mobile refuelers, requiring them to have sized 
containment plans for the trucks when not in service. The 2006 
amendments have essentially eliminated this requirement. [We also were] 
very concerned about the 2002 expansion of the rules to motive power 
and other oil-filled equipment that merely uses oil. These issues were 
also favorably addressed in the 2006 rule revision. Finally, [we 
remain] concerned about the EPA's expansive and vague definition of 
'navigable waters,' which broadly extends the agency's jurisdiction. We 
look forward to additional rulemaking to address this concern.". 

Reference letter and amendment addressed in survey: ll., mm., nn., oo: 
§ 112.8(c)(6): § 112.8(d)(1): § 112.8(d)(4): § 112.9(c)(2); 
Comment: "Produced water storage tanks typically contain small volumes 
of oil that do not represent a significant source of oil storage. Water 
produced should be exempt from the SPCC regulations because there is a 
very low risk of a significant discharge of oil to Waters of the U.S. 
Additionally, by expanding the scope of the SPCC program to cover 
produced water, it has the effect of capturing hundreds of thousands of 
natural gas operations producing natural gas liquids that have 
previously fallen below the threshold for planning."; "The containment 
of produced fluids around oil and gas fired process vessels, such as 
heater treaters, can present a serious safety hazard and it is 
impractical for pressurized vessels. In addition, the rule treats 
process/operating equipment inconsistently for the different industrial 
sectors. At non-exploration and production sites, it is excluded from 
the definition of bulk storage containers, whereas at E&P facilities, 
this type of equipment is considered bulk storage containers and 
subject to secondary containment requirements. The purpose of oil and 
gas process equipment such as heater treaters is to process oil/water 
mixtures. These vessels are flow-through process vessels rather than 
containment vessels."; "Requirements for containment around flow lines 
and gathering lines are excessive and impractical and will cause 
significant and unnecessary disturbance of the surrounding lands. 
Installing secondary containment (including double-walled piping) or 
retrofitting all existing flow lines and gathering lines is cost 
prohibitive. A more reasonable approach would be to allow operators to 
implement flexible and responsible, risk-based flow line inspection and 
maintenance programs to prevent spills. Flow lines are not and should 
not be considered oil storage containers.". 

Reference letter and amendment addressed in survey: N/A; 
Comment: "A recurring problem with the SPCC program has been 
inconsistent interpretation between EPA's headquarters and its regions. 
Consequently, EPA needs to establish its requirements as regulations 
that can be consistently interpreted and applied equally throughout the 
country. Guidance documents fail to provide certainty; rather, they 
create the opportunity for different interpretations of the same 
requirements in different EPA offices. But, Guidance documents preclude 
formal challenges and therefore create the opportunity for arbitrary 
and unsubstantiated decisions by EPA inspectors. The SPCC programs 
needs reliability that can only be achieved in regulations.". 

Source: Responses to GAO 's survey on EPA's SPCC rule. 

[End of table] 

[End of section] 

Appendix III: Analysis of the Results of GAO's Survey on the Impacts of 
the SPCC Amendments on Industry: 

Stakeholders Had Mixed Views on the Impacts of the SPCC Amendments: 

Our analysis of the results of our survey of 23 key industry 
stakeholders regarding 43 major SPCC amendments indicates that they 
generally view increases in SPCC requirements as having a negative 
impact on their industries and decreases as having a positive 
impact.[Footnote 24] However, their views on the extent of the 
anticipated impacts varied widely depending on the type of requirement. 
Overall, industry stakeholders responded that the 2006 amendments would 
have a positive impact on their industries and that the 2002 amendments 
would have a combination of both positive and negative impacts. We 
identified five categories of amendments that increase SPCC 
requirements. Of these five categories, we found that industry 
stakeholders view two as having a mostly negative impact on their 
industry, two as having a somewhat negative impact, and one as having a 
somewhat positive impact. In addition, we identified four categories of 
amendments that decrease SPCC requirements. Of these four types, we 
found that industry stakeholders view three as having a mostly positive 
impact on their industry and one as having a somewhat positive impact. 
Finally, we identified one category of amendments that both increase 
and decrease requirements and another category of amendments for which 
we could not determine whether the amendments either increase or 
decrease the requirements. We found that industry stakeholders view 
both of these categories as having a somewhat negative impact.[Footnote 
25] 

We found that industry stakeholders anticipate a mostly negative impact 
from amendments that (1) increased requirements on testing, such as 
integrity testing of storage tanks; and (2) increased requirements on 
containment, such as secondary containment requirements. 

By contrast, these stakeholders anticipate a mostly positive impact 
from amendments that decrease requirements on containment, facility oil 
spill prevention plans or notification procedures, and what we 
categorize as multiple SPCC requirements. Finally, industry 
stakeholders indicated that six amendment categories will have a 
somewhat negative or somewhat positive impact on their industries 
compared with the other amendments. Figure 1 summarizes these views. 

Figure 1: Summary of Industry Stakeholder Views on Impacts of 11 SPCC 
Amendment Categories: 

[See PDF for image] 

Source: GAO survey of industry stakeholders and analysis of SPCC 
amendments.

[End of figure] 

We received responses to our survey from only one environmental 
stakeholder and, therefore, we were unable to comprehensively analyze 
the views of environmental groups. 

Analysis Methodology: 

The following is a detailed description of the coding rules used and 
the 11 categories into which we placed the 2002 and 2006 SPCC 
amendments. We summarize the major rule amendments finalized in 2002 
and 2006; to see the exact wording of the finalized rule, please refer 
to the regulation as published in the Federal Register. We determined 
whether the amendment increases or decreases requirements on facilities 
based on whether the amendment uses terms such as "adds new 
requirements" and "mandates," which would be considered an increase in 
requirements, or terms such as "allows" or "exempts," which would be 
considered a decrease in requirements. In some instances, we determined 
that an amendment does not imply either an increase or a decrease in 
requirements, or that an amendment included provisions that would both 
increase and decrease requirements. In addition, there were several 
instances where we could not determine if the amendment increased or 
decreased requirements. For example, several of these types of 
amendments made definitional changes to words used in the rule, but it 
was unclear from reviewing the text of the amendment whether these 
changes were a clarification to the rule or increased or decreased 
requirements. [Footnote 26] 

Changes to Scope of the SPCC rule: 

In general, amendments in this category are changes to the criteria for 
eligibility or changes to thresholds for oil storage. These amendments 
affect either the number of facilities subject to the SPCC rule or the 
number of oil tanks at a given facility subject to the SPCC rule. In 
particular, the written description of the amendment in our survey 
should include words such as increases, adds, eliminate, or exempts. We 
identified one of the 43 amendments as expanding the scope of the SPCC 
rule, and six as decreasing the scope of the SPCC rule. 

2002 amendment that we categorized as expanding the scope of the rule: 

* 112.1(f): gives the EPA Regional Administrators authority to require 
an SPCC plan for any facility within the region, otherwise exempt from 
the rule, in order to carry out the purposes of the Clean Water 
Act.[Footnote 27] 

2002 amendments that we categorized as decreasing the scope of the 
rule: 

* 112.1(d)(2)(i): excludes the capacity of completely buried tanks 
subject to all of the technical requirements of the underground storage 
tank regulations from calculation of the threshold, and states that 
permanently closed tanks also do not count in the calculation. 

* 112.1(d)(2)(ii): eliminates the aboveground storage capacity 
threshold of greater than 660 gallons for a single container, but 
maintains the greater than 1,320 threshold and establishes a "de 
minimis" container capacity size of 55 gallons or greater to calculate 
capacity. 

* 112.1(d)(4): exempts completely buried storage tanks that are subject 
to all of the technical requirements of the underground storage tank 
regulations from the rule requirements, but requires those tanks to be 
included on the facility diagram. 

* 112.1(d)(5), (6): exempts containers that are less than 55 gallons; 
and facilities (or parts thereof) used exclusively for wastewater 
treatment unless it is used to meet part 112 requirements. 

2006 amendments that we categorized as decreasing the scope of the 
rule: 

* 112.1(d)(2)(ii), § 112.1(d)(7): excludes "motive power containers" 
(defined in § 112.2) from the rule, but does not exclude the transfer 
of fuel or other oil into a motive power container at an otherwise 
regulated facility. 

* 112.3(a)(2), § 112.3(b)(2): delays the compliance dates for farms 
until the effective date of a rule establishing SPCC requirements 
specifically for farms or dates that farms must comply with the 
provisions of this part. 

Planning or Notification: 

In general, this category refers to requirements to prepare, implement, 
amend, or certify SPCC plans or other records or documents required of 
regulated facilities. The description of the amendment includes 
references to plans, records, diagrams, or any other documents that 
facilities are required to have under the SPCC rule. We identified 17 
amendments from 2002 and 1 amendment from 2006 that fit this category. 
Of the 17 amendments from 2002, we categorized 5 amendments as 
increasing requirements on facility oil spill prevention plans or oil 
spill notification procedures, 9 as decreasing requirements, and 3 as 
either both increasing and decreasing requirements or neither 
increasing or decreasing requirements. The one amendment from 2006 
decreased requirements. 

2002 amendments that we categorize as increasing planning or 
notification requirements: 

* 112.3(e): requires a copy of the SPCC plan to be maintained at a 
facility attended for at least 4 hours a day instead of the current 
requirement of 8 hours. 

* 112.4(d): provides that the EPA Regional Administrator may require an 
amendment to the SPCC plan after an on-site review of the plan. 

* 112.7(a)(3): requires a description and a diagram of the facility 
layout in the SPCC plan. 

* 112.7(a)(4): requires facilities to provide additional information 
and procedures in the SPCC plan for reporting a discharge; facility 
response plan (FRP) facilities (defined in § 112.20) are exempt. 

* 112.7(a)(5): requires facilities to organize the SPCC plan in a 
readily usable format for an emergency; FRP facilities (defined in § 
112.20) are exempt. 

2002 amendments that we categorize as decreasing planning or 
notification requirements: 

* 112.3(f): allows the EPA Regional Administrator to grant an extension 
of time for amendments of the SPCC plan, as well as the entire SPCC 
plan. 

* 112.4(a): raises the threshold for reporting under the program to two 
discharges of greater than 42 U.S. gallons (1 barrel) per discharge in 
any 12-month period, and reduces the amount of information to be 
submitted to the EPA Regional Administrator. 

* 112.4(b): does not require new facilities to meet any requirements of 
this section (§ 112.4) until the compliance dates for the initial 
preparation and implementation of an SPCC plan. 

* 112.5(a): requires any amendment made under this section be prepared 
within six months and implemented in no more than six months from when 
the amendment was prepared. 

* 112.5(b): changes the period of review for SPCC plans from 3 to 5 
years, and requires documentation of completion of the review and 
evaluation. 

* 112.5(c): states that a professional engineer (PE) must certify only 
technical amendments, and not non-technical amendments (e.g. names, 
phone numbers). 

* 112.7: allows differing formats for the SPCC plan; other formats must 
be cross-referenced to the listed SPCC requirements and include all 
applicable SPCC requirements. 

* 112.7(e): allows use of usual and customary business records to serve 
as a record of tests or inspections and records to be kept separate 
from the SPCC plan; acknowledges the certifying engineer as having a 
role developing inspection procedures. 

* 112.8(c)(3), § 112.9(b)(1): allows National Pollutant Discharge 
Elimination Systems (NPDES) records to be used for SPCC purposes in 
lieu of events records specifically prepared for this purpose. 

2006 amendments that we categorize as decreasing planning or 
notification requirements: 

* 112.6: allows "qualified facilities" (defined in § 112.3(g) to self- 
certify SPCC plans and provides applicable requirements for self- 
certification. 

2002 amendments that we categorize as both increasing and decreasing 
the planning or notification requirements, or that neither increasing 
nor decreasing the requirements: 

* 112.3(a),(b): requires facilities in operation to prepare or revise 
an SPCC plan within 6 months and implement the plan within one year; 
new facilities must prepare and implement an SPCC plan before beginning 
operations. 

* 112.3(d): requires the PEs to attest that they considered applicable 
industry standards and that the SPCC plan is in accordance with SPCC 
requirements; also allows an agent to examine a facility in place of 
the PE, but the PE must review the agent's work, and certify the SPCC 
plan. 

* 112.4(c): changes the requirement from notification to the state 
agency in charge of water pollution control activities to notification 
to the state agency in charge of oil pollution control activities. 

Containment: 

In general, this category refers to requirements for containers or 
piping used by SPCC facilities. In particular, the amendment in our 
survey should use one or more of the following terms: container, 
containment, secondary containment, piping, or tanks to be included in 
this category. We identified one amendment from 2002 that increased 
requirements for containers or piping used by SPCC facilities and two 
amendments from 2006 that decreased the requirements. 

2002 amendment that we categorized as increasing containment 
requirements: 

* 112.8(d)(1): requires all buried piping installed or replaced on or 
after August 16, 2002, to have protective wrapping and coating and 
cathodic protection or otherwise satisfy the corrosion protection 
provisions for underground piping (40 C.F.R. pts. 280 or 281). 

2006 amendments that we categorized as decreasing containment 
requirements: 

* 112.7(k): allows owners/operators of qualified oil-filled operational 
equipment (defined in 112.7 (k)(1)) to meet alternate requirements 
(defined in 112.7(k)(2)) in lieu of the general secondary containment 
requirements. 

* 112.8 (c)(2), § 112.8 (c)(11), § 112.12 (c)(2), § 112.12 (c)(11): 
provides an exception for mobile refuelers from constructing and 
meeting certain secondary containment requirements. 

Testing: 

In general, this category refers to requirements to evaluate, inspect, 
and test containers, piping, or equipment to prevent oil spills. In 
particular, the written description of the amendment in our survey 
should include one or more of the following terms: test, integrity 
test, or inspect. We identified five amendments from 2002 that fit this 
category. All five of these amendments were categorized as increasing 
SPCC requirements. 

2002 amendments that we categorized as increasing testing requirements: 

* 112.7(d): adds new requirements for periodic integrity testing of 
containers, and periodic integrity and leak testing of valves and 
piping when secondary containment is impracticable; exempts FRP 
facilities (as defined by section §112.20) from having a contingency 
plan when secondary containment is impracticable. 

* 112.7(i): specifies a brittle fracture evaluation requirement for 
field-constructed containers undergoing repairs, alteration, 
reconstruction, or change in service that may affect the risk of 
discharge. 

* 112.8(c)(6): requires integrity testing on aboveground containers on 
a regular schedule (as opposed to periodically), and when material 
repairs are done; testing can be recorded using usual and customary 
business records. 

* 112.8(d)(4): requires integrity and leak testing of buried piping at 
the time of installation, construction, relocation, or replacement. 

* 112.11(i): requires offshore oil drilling, production, or workover 
facilities to simulate discharges for testing and inspecting pollution 
control and countermeasure systems. 

Training: 

This category refers to training of employees that facilities are 
required to undertake. Amendments placed into this category must 
include the key word "training." We identified one amendment--from 
2002--that fits this category. We categorized it as increasing 
requirements. 

2002 amendment that we categorized as increasing requirements: 

* 112.7(f): mandates training for oil-handling employees only, and 
specifies additional training topics; also requires discharge 
prevention briefings at least once a year. 

Multiple Aspects: 

Amendments in this category either (1) do not fit into one of the above 
categories or (2) fit into more than one of the above categories. Two 
amendments--one each from 2002 and one from 2006--were categorized as 
decreasing requirements. In addition, seven amendments in this category 
did not fit into the above categories because we could not determine if 
the amendments increased or decreased requirements. 

2002 amendment that we categorized as decreasing requirements: 

* 112.7(a)(2): allows deviations from most of the rule's substantive 
requirements (except secondary containment), provided that the reasons 
for nonconformance are explained, and equivalent environmental 
protection is provided. 

2006 amendment that we categorized as decreasing requirements: 

* 112.3(g): defines a qualified facility eligible to self-certify under 
the provisions set forth in § 112.6. 

2002 amendments that we could not determine if they should be 
categorized as increasing or decreasing or neither increased or 
decreased requirements: 

* 112.1(b): adds "using" to the lists of activities at facilities 
subject to the rule and expands the scope of the rule to conform to the 
expanded jurisdiction in the Clean Water Act. 

* 112.2: adds new definitions, such as for "facility," and discharge; 
revises the text of the definitions of "oil" and "navigable waters"; 
and includes statutory definitions for "offshore facility," and "United 
States" in the rule. 

* 112.7(c): states that a containment system must be capable of 
containing oil and constructed to prevent any discharge from escaping 
from the facility before cleanup occurs. 

* 112.9(c)(2): states that secondary containment must include 
sufficient freeboard to contain precipitation. 

* 112.12 - § 112.15: adds sections to differentiate requirements for 
Animal Fats and Vegetables Oils based on the Edible Oil Regulatory 
Reform Act (EORRA) requirements. Requirements are identical to Subpart 
B for petroleum and non-petroleum oils.[Footnote 28] 

2006 amendments that we could not determine if they should be 
categorized as increasing or decreasing or neither increased or 
decreased requirements: 

* 112.2: adds several definitions, including airport mobile refueler, 
farm, motive power container, and oil-filled operational equipment. 

* 112.13 - § 112.15: removal of these sections because they are not 
appropriate for facilities that process, store, use, or transport 
animal fats and/or vegetable oils. 

[End of section] 

Appendix IV: Comments from the Environmental Protection Agency: 

United States Environmental Protection Agency:
Washington D.C. 20460:

July 13, 2007:

Mr. John B. Stephenson, Director:
 Natural Resources & Environment: 
Government Accountability Office: 
441 G Street, NW, Room 2135:
Washington D.C. 20548: 

Dear Mr. Stephenson: 

Thank you for the opportunity to comment on the draft report 
"Aboveground Oil Storage Tanks: Observations on EPA's Economic Analysis 
of the Amendments to the Spill Prevention, Control and Countermeasure 
Rule (GAO-07-763)." We appreciate the collegial working relationship 
and open dialog, while working with GAO on this report.

Overall, we generally agree with the Recommendation in the report to 
improve our economic analyses for future changes to the Spill 
Prevention, Control, and Countermeasures (SPCC) rule, consistent with 
Office of Management and Budget (OMB) guidelines and in consideration 
of available data. EPA recognized this need last year and implemented 
three major initiatives: (1) activated a core SPCC Economic Subgroup of 
economic and technical experts; (2) acquired additional expert 
contractor support; and (3) hired an experienced senior economist to 
guide these efforts. 

However, we also believe that the economic analyses that were conducted 
for the 2002 and 2006 amendments to the SPCC rule are already 
consistent with, and meet the spirit and intent of, OMB guidelines, 
given the limited data, time, and resources available. We are 
continuously working to gather additional data to improve our 
understanding of the regulated universe, oil spill risks, and to 
address uncertainty and quantify benefits. Although the Regulatory 
Impact Analysis (RIA) that supports the 2006 final rule amendments 
promulgated in December 2006 is constrained by limited data and 
uncertainty, we believe that the assumptions used in the analyses have 
a reasonable basis and that there was sufficient information to allow 
us to make policy and regulatory decisions underpinning these 
amendments that generate significant cost savings and burden reduction. 
We also maintain that these modifications serve to tailor and ease 
compliance for several industry sectors leading to protection of the 
environment from oil spills. As you noted in your report, the 2006 R1A 
addresses many of the issues identified in the RIA for the final 2002 
amendments. Therefore, we request that you consider revising this 
portion of the report to note RIA consistency with 0MB guidelines in 
light of limited data.

EPA also requests that the report be modified to address several 
technical corrections (see enclosure). In one section, in particular 
(page 20), the report characterizes the 2002 economic analysis, and to 
some extent, the 2006 economic analysis, with terminology that we 
believe does not accurately reflect the analysis. With respect to the 
choice of assumed rates of compliance for sensitivity analysis, the 
term "arbitrary" is used. Rather than arbitrary, EPA assumed 100% 
compliance under the baseline and the rule amendments for a proper 
"with and without" comparison of the economic impact. We then chose 
25%, 50% and 75% rates of compliance for the sensitivity analysis to 
show the full range of impacts, depending upon any future, new 
information that would suggest otherwise. Therefore, we do not agree 
with GAO's characterization that the analysis used "arbitrarily 
developed scenarios." 

Again, we appreciate the opportunity to work with your team on this 
review and your consideration of technical corrections. If you have 
other comments or questions about these corrections, please contact 
Deborah Dietrich, Director of the Office of Emergency Management at 202-
564-8600. 

Sincerely:

Signed by:

Susan Parker Bodine:
Assistant Administrator:

Enclosure:

[End of section] 

Appendix V: GAO Contact and Staff Acknowledgments: 

GAO Contact: 

John B. Stephenson, (202) 512-3841, stephensonj@gao.gov: 

Staff Acknowledgments: 

In addition to the individual named above, Vincent P. Price, Assistant 
Director; Kevin Bray; Mark Braza; Greg Carroll; Jennifer DuBord; 
Timothy J. Guinane; Jennifer Huynh; Lisa Mirel; and Carol Herrnstadt 
Shulman made key contributions to this report. 

AO, Inland Oil Spills: Stronger Regulation and Enforcement Needed to 
Avoid Future Incidents, GAO/RCED-89-65 (Washington, D.C.: Feb. 22, 
1989); The Oil Spill Prevention, Control, and Countermeasures Program 
Task Force, Interim Final Report, May 13, 1988. 

FOOTNOTES 

[1] EPA defines harmful quantity as any quantity of discharged oil that 
violates applicable water quality standards, causes a film or sheen 
upon, or discoloration of, the surface of the water or adjoining 
shorelines, or causes a sludge or emulsion to be deposited beneath the 
surface of the water or upon adjoining shorelines. 40 C.F.R. §110.3. 
Section 311 of the Clean Water Act prohibits the discharge of harmful 
quantities of oil or hazardous substances (1) into or upon the 
navigable waters of the United States, adjoining shorelines, or into or 
upon the waters of the contiguous zone, or (2) in connection with 
activities under the Outer Continental Shelf Lands Act or the Deepwater 
Port Act of 1974, or which may affect natural resources belonging to, 
appertaining to, or under the exclusive management authority of the 
United States, including resources under the Magnuson-Stevens Fishery 
Conservation and Management Act 33 U.S.C.§ 1321(b)(3). 

[2] GA0 C.F.R. pts. 280, 281. 

[3] 40 C.F.R. pts. 280, 281.

[4] Executive Order 12866 directs agencies to conduct economic analyses 
of significant regulatory actions and to select the policy that 
maximizes net benefits to society unless a statute requires otherwise. 
Further, the Unfunded Mandates Reform Act of 1995, Pub. L. No. 104-4, 
109 Stat. 48 (1995) (codified at 2 U.S.C. § 1531 et seq.), requires 
agencies to choose the least costly, most cost-effective, or least 
burdensome option, unless inconsistent with law or the agency head 
explains why this option was not adopted. 

[5] Office of Management and Budget (OMB): Economic Analysis of Federal 
Regulations Under Executive Order 12866 (Jan. 11, 1996) (generally 
referred to as "best practices"); OMB, Guidelines to Standardize 
Measures of Costs and Benefits and the Format of Accounting Statements 
(May 22, 2000); and Circular A-4 (Sept. 17, 2003) (replacing earlier 
guidelines, effective for significant final rules on January 1, 2005). 

[6] Oil Pollution Prevention: Non-Transportation-Related Onshore and 
Offshore Facilities, 38 Fed. Reg. 34164 (December 11, 1973) (codified 
as amended at 40 C.F.R. pt. 112). 

[7] As amended in 2002, total storage capacity excludes containers with 
capacity of less than 55 gallons, capacity of containers that are 
permanently closed, and facilities or parts of facilities used 
exclusively for wastewater treatment. In addition, it excludes 
completely buried tanks, associated underground piping, underground 
ancillary equipment, and containment systems that are subject to all of 
the technical requirements of the underground storage tank regulations. 

[8] NRC is the federal government's national communications center and 
the national point of contact for spill reporting. NRC also distributes 
reported spill information to agencies--including EPA and the U.S. 
Coast Guard--tasked with responding to spills. It is staffed 24 hours a 
day by Coast Guard officers and marine science technicians. 

[9] In 1975, EPA first published a clarification of the rule's 
definition of oil, "affirm[ing] that non-petroleum oils, such as fats 
and oils from animals and vegetable sources," were subject to the rule. 
40 Fed. Reg. 28,849 (July 9, 1975). Wastes can include oil mixed with 
water--known as produced water in the oil and gas production sector. 

[10] Facilities that use oil operationally include electrical 
substations that contain electrical transformers and certain hydraulic 
systems. Oil-filled operational equipment includes an oil storage 
container in which the oil is present solely to support the function of 
the apparatus or device. 

[11] At an SPCC-regulated facility, areas with the potential for a 
discharge are subject to either general or specific secondary 
containment requirements. Under SPCC, several methods can be used to 
contain oil from spilling into or upon navigable waters or adjoining 
shorelines, such as dikes and berms. As described in agency guidance, 
general secondary containment requirements are intended to address the 
most likely oil discharge in loading or unloading areas or areas (not 
associated with a rack) with containers and equipment, such as oil- 
filled operational and manufacturing equipment, or piping. Specific 
secondary containment requirements are intended to address a worst case 
container failure, such as for bulk storage containers, certain mobile 
portable containers, or loading/unloading racks. These specific 
provisions prescribe the size of secondary containment methods used. 

[12] A "motive power" container is any onboard bulk storage container 
used primarily to power the movement of a motor vehicle or ancillary 
onboard oil-filled operational equipment. Examples of motive power 
containers include trucks, automobiles, aircraft, self-propelled 
cranes, and locomotives. 

[13] A "qualified facility" is a facility with a limited oil storage 
capacity that is eligible for streamlined regulatory requirements. To 
be eligible, the facility must have 10,000 gallons or less in aggregate 
aboveground oil storage capacity and must not have (1) a single 
discharge of oil into or upon navigable waters or adjoining shorelines 
each exceeding 1,000 U.S. gallons or (2) two discharges of oil to 
navigable waters or adjoining shorelines exceeding 42 U.S. gallons 
within any 12-month period for the 3 years prior to the SPCC plan 
certification or since becoming subject to the rule if the facility has 
been in operation for less than 3 years. Oil spills that occur as a 
result of a natural disaster are not subject to these criteria. 

[13] Mobile refuelers are bulk storage containers onboard a vehicle or 
towed that are designed or used solely to store and transport fuel for 
transfer into or from an aircraft, motor vehicle, locomotive, vessel, 
ground service equipment, or other oil storage container. 

[15] Social costs and benefits represent the opportunity costs of the 
resources used or the benefits forgone as a result of the regulatory 
action. Opportunity costs include private-sector compliance costs, 
government administrative costs, and losses in consumer or producer 
surpluses. EPA estimated only the compliance costs (or cost savings) 
associated with the rule changes. 

[16] EPA, Economic Analysis for the Final Revisions to the Oil 
Pollution Prevention Regulation (40 CFR Part 112) (May 2002). 

[17] PA, Regulatory Analysis for the Proposed Revisions to the Oil 
Pollution Prevention Regulations (40 CFR Part 112), (November 2005); 
Regulatory Impact Analysis for the Final Revisions to the Oil Pollution 
Prevention Regulations (40 CFR Part 112), (November 2006). 

[18] OMB guidelines recommend that the benefits and costs of regulatory 
alternatives be measured incrementally to a baseline, or the way the 
world would look in the absence of the proposed regulatory 
alternatives. Thus, the baseline provides a point of comparison for 
estimating the effects of different regulatory alternatives. 

[19] EPA assumed that revisions classified as baseline would produce no 
substantive change in the existing regulation or were already adhered 
to by facilities as good engineering practices or prevailing industry 
standards or practices. 

[20] According to EPA's 1995 EPA survey, the survey was designed so 
that data on sampled facilities could be extrapolated to the nation as 
a whole for all facilities regulated by EPA's SPCC rule. 

[21] To collect data for the estimation of costs, selected EPA and 
state officials and contractor staff with experience in the existing 
SPCC program and other spill prevention programs were contacted. EPA 
considered the cost estimates to be representative of the possible 
costs to be incurred by facilities, rather than precise estimates of 
the actual costs that will occur. 

[22] For certain industrial categories, EPA did not obtain complete 
data. In these cases, it supplemented the 1995 survey data with data 
from a 1991 study of four states. However, we could not determine 
whether this caused additional error or bias. 

[23] In its analysis of the 2006 amendments, EPA used compliance cost 
savings to approximate social benefits and considered the impact on 
public health and welfare and the environment as representing the 
potential social costs of the amendments. To be consistent with the 
agency's analysis of the 2002 amendments, we present EPA's 2006 
estimates of the potential effect on private-sector compliance as costs 
(or negative costs) and on public health and the environment as 
benefits (or negative benefits). As with its 2002 analysis, EPA did not 
fully assess the social costs or social benefits associated with the 
amendments. 

[24] There was one exception to this general pattern: industry 
associations generally reported that increasing requirements on 
employee training will have a somewhat positive impact on their 
industry. 

[25] According to EPA, Office of Emergency Management officials, the 
agency considers five of the amendments to be clarifications to the 
scope or definitions of the SPCC rule. The survey referred to these 
five amendments as additions or expansions. To assess the potential for 
bias among these questions we removed the questions related to these 
five amendments from our analysis and recomputed scores for each of the 
categories. After removing these five questions from the multiple 
aspects category, the score results were similar to those presented 
above and in figure 1. 

[26] As previously stated in the report, according to EPA, the agency 
made several definitional changes to clarify the types of facilities 
that are included under the rule and facilities' requirements. However, 
many industry sectors consider these amendments to be increases to the 
requirements of the rule rather than clarifications. 

[27] The summaries of amendments presented in this appendix were 
modified from the text of amendment summaries in the questionnaire. For 
the full text of amendments, see the Federal Register. 

[28] Sections 112.13-112.15 have been deleted per the December 2006 
amendments. Section 112.12 was established to provide a platform for 
any further differentiation, if necessary. 71 FR 77285, 77293. 

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