EPA 510-2-94-001
Monday
February 28, 1994
Part IV
Environmental
Protection Agency
40 CFR Part 280
Underground Storage Tanks Containing
Petroleum; Financial Responsibility
Requirements; Rule
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9604 Federal Register / Vol. 59, No. 39 / Monday. February 28, 1994 / Rules and Regulations
ENVIRONMENTAL PROTECTION
AGENCY
40 CFR Part 280
[FfU.-4842-«]
Underground Storage Tanks
Containing Petroleum; Financial
Responsibility Requirements
AGENCY: Environmental Protection
Agency (EPA).
ACTION: Final rule.
SUMMARY: The Environmental Protection
Agency (EPA) is today promulgating a
rule to amend the financial
responsibility requirements for
underground storage tanks (USTs)
containing petroleum that appear in
subpart H of 40 CFR part 280.
Specifically, this rule modifies the
financial responsibility compliance date
under 40 CFR 280.91(e) for one category
of UST owners. Under this
modification, Federally-recognized
Indian tribes that own USTs on Indian
lands are required to comply with
Federal Financial Responsibility
requirements of 40 CFR part 280 subpart
H—Financial Responsibility—by
December 31,1998 if those USTs are in
compliance with applicable technical
requirements for USTs in 40 CFR part
280. Today's rule extends the deadline
for certain USTs owned by Indian tribes
from the previous date of February 18,
1994. This change will allow EPA, the
Bureau of Indian Affairs and Indian
tribes additional time to explore options
for solving the root problem of lack of
funding for past contamination on
Indian lands and further assist tribes
with future technical requirements,
such as tank upgrading. EPA is not
changing the financial responsibility
deadline for rural petroleum marketers
or local governments. A discussion of
the Agency rationale behind this
decision can be found in section m. C.
under "SUPPLEMENTARY INFORMATION".
EFFECTIVE DATE: This rulemaking is
effective on February 28,1994.
ADDRESSES: The public docket for this
rule is in room M2616, U.S.
Environmental Protection Agency, 401
M Street SW., Washington, DC 20460.
Call (202) 260-9720 for an appointment
to review docket materials.
FOR FURTHER INFORMATION CONTACT: The
RCRA/Superfund Hotline at (800) 424-
9346 (toll free) or (703) 412-9810 in
Virginia. For technical questions,
contact Sammy Ng in the Office of
Underground Storage Tanks at (703)
308-8882.
SUPPLEMENTARY INFORMATION: EPA is
today finalizing a rule that would allow
certain Federally-recognized Indian
tribes that own USTs containing
petroleum on Indian lands additional
time to comply with the financial
responsibility requirements.
Specifically, this rule modifies the
compliance date under 40 CFR
280.91(e). Under this modification,
Indian tribes that own USTs containing
petroleum on Indian lands must comply
with the financial responsibility
requirements by December 31,1998. To
qualify for the 1998 financial
responsibility deadline, tribally-owned
USTs must be in compliance with the
technical requirements for USTs
described in 40 CFR part 280. Technical
compliance for USTs includes, for
example, leak detection and reporting.
The technical requirements criterion has
been included to protect human health
and the environment on Indian lands.
EPA is not changing the financial
responsibility deadline for rural
petroleum marketers or local
governments. A discussion of Agency
rationale behind this decision can be
found in section m C.
The contents of today's preamble are
listed in the following outline:
I. Authority
II. Efiective Date
m. Background
IV. Final Rule
A. Indian Tribes
B. Implementation of Final Rule
C Discussion of Options Proposed but Not
Finalized for Petroleum Marketers and
Local Governments.
V. Economic Impacts
A. Economic Impact Analysis
B. Regulatory Flexibility Analysis
C Regulatory Impact Analysis
D. Paperwork Reduction Act
I. Authority
These regulations are issued under
the authority of sections 2002,9001,
9002,9003, 9004, 9005, 9006, 9007, and
9009 of the Solid Waste Disposal Act, as
amended (42 U.S.C. 6912,6991,6991a,
6991b, 6991c, 6991d, 6991e, 6991 f. and
6991h).
n. Efiective Date
This rule will be effective on February
28,1994, pursuant to 5 U.S.C. 553(d).
This rule may be made effective
immediately because it extends an
existing compliance date and there is
good cause to make that extension
immediately effective within the
meaning of 28 U.S.C. 553(d)(l) and (3).
m. Background
On October 26,1988, EPA
promulgated financial responsibility
requirements applicable to owners and
operators of underground storage tanks
(USTs) containing petroleum (53 FR
43322). To meet the requirements, •
owners and operators must demonstrate
that they can pay for the costs of
cleanups and third-party damages
resulting from any leaks that may occur.
In the final rule, EPA established a
phased compliance schedule for owners
and operators of petroleum USTs. The
principal reason for adopting the phased
compliance approach was to provide the
time necessary for providers of financial
assurance mechanisms (including
private insurance companies and states
intending to establish state assurance
funds) to develop new policies and
programs or conform their policies and
programs with EPA requirements. See
53 FR 43324.
When devising the phased
compliance approach, the Agency
wanted to achieve the best balance
between the need to demonstrate
financial responsibility for UST releases
and the time necessary for owners and
operators to obtain assurance
mechanisms. The Agency attempted to
establish compliance dates that were as
early as possible, considering the type of
assurance different types of facilities
were likely to obtain. Petroleum
marketers owning or operating 1,000 or
more USTs and non-marketers with
more than $20 million in tangible net
worth were required to comply by
January 24,1989, based primarily on
their ability to qualify for self-insurance.
Petroleum marketers with 100 to 999
USTs were required to comply by
October 26,1989. These marketers were
estimated to be relatively more likely to
be able to obtain insurance; some of
them were also expected to qualify as
self-insurers. Petroleum marketers
owning 13 to 99 USTs at more than one
facility were originally required to
comply by April 26,1990. However, on
May 2,1990, the Agency published a
rule (55 FR 18566) extending this
compliance date to April 26,1991.
These marketers were thought to be less
likely to be able to obtain insurance
than members of the October 26,1989,
compliance group.
Petroleum marketers owning fewer
than 13 USTs at more than one facility
or owning only one facility with fewer
than 100 USTs, as well as non-marketers
with less than $20 million in net worth
and local governments (including
Indian tribes) were originally required
to comply by October 26,1990. This
group was expected to rely primarily on
state assurance funds for compliance.
(State assurance funds provide money
for cleanups to owners and operators hi
their states. Owners and operators in
states with assurance funds are deemed
to be in compliance with financial
responsibility for the amount covered by
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Federal Register / Vol. 59, No. 39 / Monday, February 28, 1994 / Rules and Regulations
9605
the fund once the state submits the fund
to EPA for approval unless and until
EPA disapproves the fund.) On October
31,1990, EPA extended the compliance
deadline for one year for small
marketers (with fewer than 13 USTs or
fewer than 100 USTs at a single facility)
and small non-marketers (with less than
$20 million in net worth), otherwise
known as Category IV. This extension
was based on the need for additional
time for state assurance funds to be
developed. In addition, EPA extended
the compliance deadline for local
governments and Indian tribes until one
year after publication of a final rule with
additional self-insurance mechanisms
for local governments to use to
demonstrate compliance. This rule was
published on February 18,1993 (58 FR
9026).
On December 23,1991, EPA once
again extended the compliance deadline
for the Category IV group (small
marketers with fewer than 13 tanks at
more than one facility or fewer than 100
tanks at a single facility as well as non-
marketers with net worth less than $20
million) to December 31,1993 (56 FR
66369). EPA based the extension on its
understanding that more members of
this compliance group than the Agency
had originally projected must rely on
state assurance funds, rather than on
insurance, to demonstrate compliance
with the financial responsibility
requirements. EPA believed that, in
order for owners and operators to rely
on state assurance funds as compliance
mechanisms, states must have more
time to submit their state assurance
funds to EPA for approval. Currently, 31
state assurance funds have been
approved by EPA and an additional
eight state assurance funds have been
submitted to EPA for approval. (It is
important to note that upon submission
of a state assurance fund to the EPA
Regional Administrator, the fund is
considered to be approved unless and
until EPA disapproves it.) Additionally,
the extension provided states with more
time to develop and implement
financial assistance programs (e.g.,
direct loan programs, loan guarantee
programs, grant programs) which help
owners and operators (especially small
businesses) pay for technical
requirements such as tank upgrading.
These technical improvements, in turn,
help USTs meet insurers' underwriting
criteria.
The Agency, however, continued to
be concerned about the effects of its
regulations on the regulated community.
By analyzing the costs of the
requirements, EPA found that the
affordability of financial responsibility
compliance is often tied to early
compliance with technical requirements
such as tank upgrading, since, for
example, private insurance companies
may refuse to provide'coverage unless
they are certain that a site does not pose
a high risk of leaking. EPA believed that
the costs associated with the technical
requirements are an important factor
underlying the inability of some small
owners and operators to meet the
financial responsibility requirements.
These costs coupled with the lack of a
state assurance fund, grant, or loan
program could force some gas stations to
close their tanks when the 1993
financial responsibility compliance date
fell. EPA believed that tank closure
could be particularly problematic when
those tanks provide essential services to
rural communities.
As a result of this concern about the
availability of fuel in rural areas, EPA
proposed a December 31,1998
compliance date for certain petroleum
marketers, local governments, and
Indian tribes, that meet Federally-
determined criteria (58 FR 43770). The
objective of the August 17,1993
proposed rule was to obtain data on
whether an additional extension of the
financial responsibility requirements
was needed, and for whom. The Agency
intended to limit any additional
extension to, at most, a small sub-group
of marketers currently in Category IV, as
well as certain local governments and
Indian tribes; EPA did not want to
change compliance dates for all
Category IV marketers or local
governments on the belief that most of
these tank owners were already in
compliance with the financial
responsibility requirements due to the
existence of state assurance funds and
reliance on self-insurance mechanisms.
The August 17,1993 proposed rule
included eligibility criteria limiting the
proposed 1998 compliance group to
rural petroleum marketers that met a
hardship criterion of annual profit on
gasoline sales of $15,000 or less, rural
local governments that use tanks for
essential services such as police and fire
departments, and Indian tribes. (The
definition of rural was obtained from
the Fanners Home Administration
within the U.S. Department of
Agriculture.) In addition, all owners in
the new 1998 compliance group would
have to ensure that their tanks were in
compliance with applicable technical
requirements, such as leak detection.
The technical compliance criterion was
included to protect human health and
the environment regardless of a change
in the financial responsibility deadline.
EPA also stressed the fact that any
change in the financial responsibility
compliance date would not remove the
liability on the part of the owner or
operator to clean-up a leak.
Current Financial Responsibility
Deadlines
January 24,1989:
Marketers With 1000 or More Tanks;
Non-Marketers With Net Worth
Greater Than $20 Million.
October 26, 1989:
Marketers With 100-999 Tanks.
April 26,1991:
Marketers With 13-99 Tanks at More
Than One Facility
December 31,1993:
Marketers With 1-12 Tanks at More
Than One Facility or Fewer Than
100 Tanks at One Site; Non-
Marketers With Net Worth Less
Than $20 Million.
February 18,1994:
Local Governments and Indian Tribes
IV. Final Rule
EPA received 58 comments on the
August 18,1993 proposed extension. 34
commenters supported an extension for
onei or more groups. 21 commenters
opposed any extension of the financial
responsibility requirements. No
commenters objected to an extended
compliance deadline for Indian tribes
while one commenter supported it. One
commenter remained neutral on the
subject and two additional comments
were received regarding the proposed
definition of rural, as defined by the
Farmers Home Administration.
Based on EPA analysis of the
comments received as well as the rest of
the administrative record from the
proposal, the Agency is finalizing an
extension to 1998 for Federelly-
recognteed Indian tribes that own USTs
on Indian lands. No other entity
(petroleum marketer or local
government) has been included in this
1998 compliance group. A discussion of
comments relating to a 1998 compliance
deadline for petroleum marketers and
local governments can be found in
section in C.
A. Indian Tribes
Based on an analysis of the
administrative record for this
rulemaking and lack of opposition to an
extension for tribes, EPA is extending
the compliance deadline for Tribally-
own.ed USTs on Indian lands to
December 31,1998 if the USTs meet the
technical compliance criterion. The
Agency is sensitive to the lack of
funding available to help Indian tribes
pay for environmental problems and
acknowledges that mechanisms used by
other owners, such as state assurance
funds or private insurance, may be
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9606 Federal Register / Vol. 59, No. 39 / Monday, February 28, 1994 / Rules and Regulations
inaccessible to tribes. The Agency has
retained the technical compliance
criterion in order to protect human
health and the environment on Indian
lands and expects that inclusion of this
criterion may prompt some owners to
come into compliance with the
technical requirements in order to
qualify for the extension. (Tanks owned
by Indian tribes which are out of
compliance with applicable technical
requirements would not be eligible for
the 1998 deadline.)
The additional time will also allow
the Agency to work with the Bureau of
Indian Affairs (BIA) at the U.S.
Department of the Interior to explore
options for solving the root problem of
lack of funding for past contamination
on Indian lands and further assist tribes
with future technical requirements,
such as tank upgrading.
A compliance date of December 31,
1998 was selected for Indian tribes
because this date corresponds with the
final technical compliance date for tank
upgrading. Tribes unable to comply
with the financial responsibility
requirements at that time face the more
costly technical requirement of
upgrading their USTs. At that point,
tanks not in technical compliance
would be forced to close with or
without the financial assurance
coverage. Conversely, owners able to
meet the technical requirements at that
time would be more likely to obtain an
affordable assurance mechanism, such
as private insurance, since the tanks
would be considered an insurable,
reasonable risk.
B. Implementation of Final Rule
EPA intends to promulgate
regulations that pose the least burden to
the affected regulated community while
protecting human health and the
environment. Therefore, no change in
reporting requirements or recordkeeping
procedures from the October 26,1988
rule is incorporated into this rule.
The August 17,1993 proposed rule
included a requirement that UST
owners self-certify for an extension and
keep a record of the proposed
compliance checklist on file for
enforcement purposes. Based on a
review of the comments and the rest of
the administrative record for the
proposal, the Agency has decided that
this self-certification is unnecessary for
implementing this rule and has
therefore decided to delete the self-
certification and recordkeeping
requirement.
C. Discussion of Options Proposed But
Not Finalized for Petroleum Marketers
and Local Governments
As noted above, EPA received 58
comments on the August, 1993
proposed rule. Of the 34 comments
received in support of a 1998
compliance deadline, 17 specifically
supported an extension only for
petroleum marketers. An additional
seven comments were received in
support of local governments, four for
non-marketers (such as rental car
companies, etc.), and one for Indian
tribes. Five commenters supported an
extension for all Category IV firms and
local governments regardless of criteria,
or not at all, concluding that a limited
extension would be unfair to the entities
not included in the 1998 compliance
group.
Twenty-one commenters were against
any additional extension to 1998. Of the
21 comments which disagreed with the
proposed extension, eight were
provided by state agencies that
administer UST regulatory or state fund
programs. One commenter was neutral,
neither agreeing or disagreeing with the
proposed compliance date, and two
additional comments addressed only the
definition of rural.
Commenters arguing for a 1998
compliance date for certain petroleum
marketers and local governments stated
that the additional time was needed to
keep small businesses open. Several
commenters said that compliance with
financial responsibility was difficult in
states without state assurance funds. In
fact, of the commenters supporting a
1998 compliance date for one or more
groups, 12 out of 35 were received from
a state without a state assurance fund.
In addition, some commenters said that
insurance was not affordable,
particularly when tanks have not been
upgraded. Two commenters urged an
extended compliance date in two states
that plan to adopt a state assurance fund
or loan program. One of those
commenters felt that a 1996 compliance
date would be acceptable since it would
correspond to the date the state loan
program plans to be operational.
Another commenter noted that not all
local governments can pass one of the
four additional self-insurance
mechanisms promulgated in February,
1993, and one additional commenter
urged EPA to extend the financial
responsibility compliance date for
hospitals that use their tanks to fuel
emergency generators.
Several commenters arguing against
an additional extension to 1998 for local
governments and petroleum marketers
stated that most of these owners were
already in compliance due to state
assurance funds. Several commenters
also stated that an extension would not
be fair to those owners already in
compliance with the financial
responsibility requirements. Others felt
an extended compliance group to 1998
would incorrectly imply that the
remaining technical compliance dates
would be extended by EPA as well.
Other commenters noted that the
criteria included in the proposed rule
were difficult to implement and would
prove burdensome to states with regard
to enforcement since different
petroleum marketers and local
governments would have different
compliance dates. Other commenters
feared that adoption of a 1998 deadline
for certain gas stations and local
governments would hurt the
environment, since the requirement was
necessary to ensure that money would
be available to pay for cleanups. One
commenter stated that previous
compliance date extensions reduced the
volume of business available to private
insurers trying to create a market for
UST insurance, thereby increasing the
price. Another commenter echoed that
sentiment, saying that previous
extensions had stopped private
mechanisms, such as insurance, from
developing fully. Finally, several
commenters state that it was appropriate
to exclude non-marketers from any
additional extension since sales of
petroleum were not crucial to their
operations.
Based on a review of the comments
and the administrative record, EPA has
decided not to extend the financial
responsibility compliance deadline for
petroleum marketers, non-marketers, or
local governments. While the Agency
acknowledges that some of these
owners, especially in those few states
without a state assurance fund, may
have difficulty complying with the
financial responsibility requirements,
EPA agrees with commenters that say
that most owners and operators are
already covered by either state
assurance funds, self-insurance
mechanisms or private insurance.
Agency analysis indicates that
compliance may be as high as 98% for
local governments with the addition of
the four self-assurance mechanisms
promulgated in February, 1993. In
addition, just 14% of all tanks are in
states without legislation creating state
assurance funds. The Agency also agrees
that another extension hurts EPA
credibility with regard to upcoming
technical compliance dates and agrees
that a later compliance date is unfair to
owners and operators already in
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compliance. In addition, a 1998
compliance deadline for some local
governments and petroleum marketers
would create an administrative burden
for states to implement, since some
states would-need to change their
legislation or regulations in order to
adopt the new deadline. EPA also
acknowledges the difficulty in trying to
define an appropriate subgroup and
believes that inclusion of certain
marketers and local governments in a
new compliance group would create
additional confusion in the regulated
community.
EPA agrees with commenters who
feared that adoption of a 1998 deadline
for certain gas stations and local
governments might hurt the
environment in the event that funds are
not available to undertake corrective
action. In adopting the phased
compliance approach, the Agency
wanted to achieve the best balance
between the need to demonstrate
financial responsibility for UST releases
and the ability of different types of tank
owners to obtain the assurance
mechanisms. In deciding not to extend
the compliance deadline for petroleum
marketers and local governments, the
Agency has decided that, since most
marketers and local governments can
comply, the balance has to be weighed
in favor of demonstrating compliance.
On the other hand, the current inability
of Indian tribes to demonstrate
compliance as explained in section IV.A
above led the Agency to reach the
opposite decision in that situation.
EPA also received comments with
regard to the criteria discussed in the
proposed rule applicable to petroleum
marketers and local governments. Most
commenters supported the use of the
Farmers Home Administration
definition of rural, but felt that a
hardship determination based on profit
should be replaced with a measure of
yearly throughput of gasoline through
an UST system.
V. Economic Impacts
This section provides an estimate of
the economic impacts of the proposed
rule. Because the proposed rule will not
cause an annual impact on the economy
of $100 million or more and will not
cause an increase in the costs of
production or the prices charged by the
affected community, a Regulatory
Impact Analysis is not required. Instead,
EPA has prepared an economic impact
analysis to estimate the number of
affected facilities that would benefit
from this additional'fle'xibility.
A. EconomiciImpact>Analysis
The economic analysis examines the
potential economic effects of adopting a
new compliance category to 1998 and
estimates the number of potentially
affected entities.
Overall.-approximately 1.3 million
USTs are subject to the technical and
financial responsibility standards. The
number of tribally-owned USTs that
could be eligible for the 1998
compliance date numbers
approximately 500. These 500 tribally-
owned USTs represent approximately
10% of all active tanks on Indian lands.
(The remainder of the tanks on Indian
lands are owned by private individuals
and firms, as opposed to Federally-
recognized tribes.) The total number of
tanks eligible for the 1998 compliance
date would be reduced, however, with
the inclusion of the technical
compliance criterion.
B. Regulatory Flexibility Analysis
Pursuant to the Regulatory Flexibility
Act of 1980,5 U.S.C. 601 et seq., when
an Agency publishes a notice of
rulemaking, for a rule that will have a
significant effect on a substantial
number of small entities, the agency
must prepare and make available for
public comment a regulatory flexibility
analysis that considers the effect of the
rule on small entities (i.e.: Small
businesses, small organizations, and
.small governmental jurisdictions). EPA
believes that this rule will not, if
promulgated, have a significant
economic impact on a substantial
number of small entities. The new
compliance deadline to 1998 will
provide relief to members of this
compliance group by allowing them
additional time to comply with the
financial responsibility requirements.
Accordingly, the Agency has concluded
that the law does not require a
Regulatory Flexibility Analysis, and
certifies that this rule, if promulgated,
will not have a significant economic
impact on a substantial number of small
entities.
C. Regulatory Impact Analysis
I. Executive Order 12866
Pursuant to the terms of Executive
Order 12866, OMB has notified EPA
that it considers this a "significant
regulatory action" within the meaning
of the Executive Order. EPA has
submitted this action to OMB for
review. Changes made in response to
QMB suggestions or recommendations
will be documented in the public
record.
D. Paperwork Reduction Act
This rule does not contain any new
information collection requirements
subject to review by the Office of
MiHiagement and Budget (OMB) under
the provisions of the Paperwork
Reduction Act, 44 U.S.C. 3501 et seq.
List of Subjects in 40 CFR Part 280
Environmental protection.
Administrative practice and procedure,
Haizardous materials insurance, Oil
pollution, Penalties, Petroleum,
Reporting and recordkeeping
requirements. State program approval,
Surety bonds. Underground storage
tanks, Water pollution control.
Dated: February 18,1994.
Carol M. Browner,
Administrator.
Tor the reasons set out in the
preamble, part 280 of title 40 of the
Code of Federal Regulations is amended
as ifollows:'
PART 280—TECHNICAL STANDARDS
AND CORRECTIVE ACTION
REQUIREMENTS FOR OWNERS AND
OPERATORS OF UNDERGROUND
STORAGE TANKS (UST)
1. Tha authority citation for part 280
continues to read as follows:
Authority: 42 U.S.C. 6912,6991,6991a,
6991b, 6991c, 6991d, 6991e, 6991f, and
2, Section 280.91 is amended by
revi sing paragraph (e) and adding
paragraph (f), to read as follows:
§ 280.91 Compliance dates.
* * * * «
fa) All local government entities
(including Indian tribes) not included in
paragraph (f) of this section; February
18, 1994. *
(fj Indian tribes that own USTs on
Indian hinds which meet the applicable
technical requirements of this part;
December 31,1998.
[FR J3oc. 94-4375 Filed 2-25-94; 8:45 am]
BHJJIW COM 6MO-40-P
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