[House Hearing, 106 Congress]
[From the U.S. Government Publishing Office]
EPA'S EXPANSION OF 112(r) OF THE 1990 CLEAN AIR ACT AMENDMENTS TO
INCLUDE PROPANE
=======================================================================
HEARING
before the
COMMITTEE ON SMALL BUSINESS
HOUSE OF REPRESENTATIVES
ONE HUNDRED SIXTH CONGRESS
FIRST SESSION
__________
WASHINGTON, DC, JULY 29, 1999
__________
Serial No. 106-26
__________
Printed for the use of the Committee on Small Business
U.S. GOVERNMENT PRINTING OFFICE
61-131 WASHINGTON : 1999
COMMITTEE ON SMALL BUSINESS
JAMES M. TALENT, Missouri, Chairman
LARRY COMBEST, Texas NYDIA M. VELAZQUEZ, New York
JOEL HEFLEY, Colorado JUANITA MILLENDER-McDONALD,
DONALD A. MANZULLO, Illinois California
ROSCOE G. BARTLETT, Maryland DANNY K. DAVIS, Illinois
FRANK A. LoBIONDO, New Jersey CAROLYN McCARTHY, New York
SUE W. KELLY, New York BILL PASCRELL, New Jersey
STEVEN J. CHABOT, Ohio RUBEN HINOJOSA, Texas
PHIL ENGLISH, Pennsylvania DONNA M. CHRISTIAN-CHRISTENSEN,
DAVID M. McINTOSH, Indiana Virgin Islands
RICK HILL, Montana ROBERT A. BRADY, Pennsylvania
JOSEPH R. PITTS, Pennsylvania TOM UDALL, New Mexico
JOHN E. SWEENEY, New York DENNIS MOORE, Kansas
PATRICK J. TOOMEY, Pennsylvania STEPHANIE TUBBS JONES, Ohio
JIM DeMINT, South Carolina CHARLES A. GONZALEZ, Texas
EDWARD PEASE, Indiana DAVID D. PHELPS, Illnois
JOHN THUNE, South Dakota GRACE F. NAPOLITANO, California
MARY BONO, California BRIAN BAIRD, Washington
MARK UDALL, Colorado
SHELLEY BERKLEY, Nevada
Harry Katrichis, Chief Counsel
Michael Day, Minority Staff Director
C O N T E N T S
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Page
Hearing held on July 29, 1999.................................... 1
WITNESSES
Makris, Jim Director, Chemical Emergency Preparedness &
Prevention Office, U.S. Environmental Protection Agency........ 4
Blunt, Roy, a Representative in Congress from the State of
Missouri....................................................... 22
Densmore, Mary and John, Geldbach Petroleum Co................... 24
Lindsey, Paul, CEO, All Star Gas Company......................... 26
APPENDIX
Opening statements:
Talent, Hon. James M......................................... 33
Velazquez, Hon. Nydia........................................ 37
Sweeney, Hon. John E......................................... 38
Prepared statements:
Makris, Jim.................................................. 39
Blunt, Roy................................................... 50
Densmore, Mary and John...................................... 57
Lindsey, Paul................................................ 60
THE ENVIRONMENTAL PROTECTION AGENCY'S EXPANSION OF 112(r) OF THE 1990
CLEAN AIR ACT AMENDMENTS TO INCLUDE PROPANE
----------
THURSDAY, JULY 29, 1999
House of Representatives,
Committee on Small Business,
Washington, DC.
The Committee met, pursuant to notice, at 10:47 a.m., in
room 2360, Rayburn House Office Building, Hon. James M. Talent
(Chairman of the Committee) presiding.
Chairman Talent. The hearing will come to order. Good
morning. Today, the Committee will examine how the
Environmental Protection Agency's inclusion of propane within
the Clean Air Act Amendment of 1990 impacts small businesses.
The Committee will also focus on Congressman Blunt's bill, H.R.
1301, and S. 880, which the Senate and House passed, which
remove propane from the list of covered chemicals.
In December 1984, a storage tank in Bhopal, India,
accidentally released a toxic chemical into the atmosphere.
This accidental release killed over 3,000 people and injured
more than 200,000 individuals. In response, Congress amended
the Clean Air Act to require the EPA to promulgate a ``list of
100 substances which in the case of accidental release are
known to cause or may reasonably be anticipated to cause death,
injury, or serious adverse effects to human health or the
environment.'' Congress required EPA to include 16 chemicals on
the list.
These chemicals all share a similar characteristic--they
are all toxic. The intent to include flammable, but non-toxic,
materials in the regulated list is conspicuously absent from
the legislative history. Recently, Senator Max Baucus, a
conference committee member to the 1990 Clean Air Act
Amendments, noted that, ``Congress did not intend that propane
or flammables used as fuels would be listed. Congress was
focused on preventing major toxic catastrophes, such as
occurred in Bhopal, not the type of accidents that are covered
by existing Federal or State fire safety or transportation
laws.''
Nevertheless, in 1993, the outgoing Bush administration EPA
proposed expansive regulations that brought flammables,
including propane, within Section 112(r) of the 1990
amendments, and the EPA has continued its attempt to promulgate
those regulations for the last six years, at least up until
very recently.
It is uncontested that propane is not toxic or poisonous,
while all the chemicals Congress listed are toxic. In fact, the
EPA has commented that methyl chloride, one of the
Congressionally mandated listed chemicals, ``is extremely
toxic. Acute exposure to high concentrations of methyl chloride
in humans has caused severe neurological effects, including
convulsions, coma, and death. Methyl chloride has also caused
effects on the heart rate, blood pressure, liver, and kidney.''
Propane, however, presents no such threat. In fact, as Mr.
Blunt's bill recognizes and S. 880 recognized, the Clean Air
Act and the Energy Policy Act of 1992 list propane as a clean
alternative fuel. In other words, it is a fuel that is favored
under our other environmental laws.
All of this would be of little concern if the burden caused
by the proposed regulation was a minor one. However, the EPA
regulation as originally drafted would have covered any
business that stored more than 10,000 pounds or 2,300 gallons
of propane, which would have included the average family
farmer, greenhouse, or restaurant using propane, as well as
small propane dealers. These businesses would have been
required, at a minimum, to develop a worst-case scenario impact
of a propane explosion and a plan for dealing with that
scenario and to bring equipment and personnel up to EPA
standards for executing such a plan. The draft risk management
program guidance for propane storage facilities, I hold in my
hand. The Committee can take a look at the size of it.
The use of propane is already regulated by OSHA, the
Department of Transportation, and every State, as well as local
fire departments. The additional EPA regulation would have
given propane users the perverse incentive to do one of two
things, either switch to an environmentally unfriendly fuel,
but unregulated fuel, like fuel oil, or store less than the
threshold 10,000 pounds on site, which would have required more
frequent deliveries of propane to replenish the smaller amount
that was being stored and, therefore, more transportation of
flammable fuels on the highways.
As a result of these obvious problems with the regulation,
after six years and under extreme Congressional pressure, EPA
raised the threshold for application of its regulation from
10,000 pounds to 67,000 pounds, thus exempting most small
business end users. This welcome change, however, may be too
late to save the regulation, as both the House and the Senate
have unanimously passed bills clearly removing propane from the
list of covered chemicals. That bill is in conference and, of
course, we expect it will come out of conference and be passed.
I appreciate the EPA's responsiveness to Congressional
inquiries and to this Committee. I participated in informal
meetings with the EPA in which they did make an effort to
respond to the concerns of small business people and, I think,
did so in a cordial and responsive fashion and I am grateful
for that. That has not always been the case in dealing with
agencies.
I have to say, however, that this whole regulation is
another example of the kind of wasted time and effort that is
the least damage done by regulations which would hurt small
businesses without accomplishing anything. I want to repeat
what I have often said in this Committee. The whole problem can
be avoided if agencies will take the procedures mandated by
SBREFA to heart, if they will listen to the small business
stakeholders early in the process, credit them with being
genuine and having some understanding of the impact on their
small business, and then try to be responsive to concerns
expressed through that process.
Had the agency done that four or five years ago and simply
raised the threshold, the regulation would probably be law now
whether it is necessary or not. I think it probably would be. I
think it is the unanimous judgment of both bodies that propane
is adequately regulated by other regulatory schemes and
probably does not need to be included here. But it is a shame
that we have spent six years and it looks like we are going to
come up with nothing.
I am happy now to recognize my friend, the gentlelady from
New York.
[Mr. Talent's statement may be found in the appendix.]
Ms. Velazquez. Good morning and thank you, Mr. Chairman,
for holding this hearing today. This hearing is a continuation
of this Committee's ongoing review of government regulations
and its effects on small businesses. Let us keep that in mind
as we examine how EPA's inclusion of propane within the Clean
Air Act Amendments and associated regulations affects small
businesses. It is an issue well worth looking at and reviewing.
Mr. Chairman, what we have before us are small businesses
that may have fallen victim to the law of unintended
consequences, consequences that small businesses have had to
live with for some time now and a solution is long overdue.
This issue came into light over a decade ago when a disastrous
escape of toxic gases killed and injured thousands of Indians.
Unfortunately, it took a tragedy to look for better management
of toxic substances.
However, in response to this disaster and bipartisan
Congressional legislation, President Bush on his last day in
office proposed new regulations. I believe that these
regulations, while written to protect the public, disregarded
how small businesses will be affected, and that is at odds with
our purpose here on the Small Business Committee and in
Congress. We need to look at the challenges that entrepreneurs
face and make it easier, not harder, for them to succeed. I
believe that these regulations, while drafted in good faith,
have hurt small businesses, but they have also shown all of us
how important and necessary the SBREFA process is.
EPA was not always a part of the SBREFA process. As a
matter of fact, I would like to remind my colleagues that it
was not until 1996 that this Committee expanded SBREFA to
require the EPA to sit down with small businesses on this rule.
Had there been a quicker response to small business needs, we
might not be here today. But we are, and we are fortunate to
have Congressman Blunt with us. He has introduced legislation
to protect small businesses from these indiscriminatory rules.
His legislation will exempt propane from EPA regulations,
thereby protecting those small businesses.
I thank the Chair for holding this hearing and I look
forward to hearing from today's witnesses. Thank you, Mr.
Chairman.
[Ms. Velazquez' statement may be found in the appendix.]
Chairman Talent. I thank the gentlelady.
Mr. Blunt is going to be testifying. The markup ran longer
than I thought, so I released him to go to another markup or
meeting he had and he will be coming back in a few minutes. We
will just put him on the second panel, which will actually save
the time of the Committee anyway.
The first witness is Mr. Jim Makris, who is the Director of
the Chemical Emergency Preparedness and Prevention Office in
the Office of Solid Waste and Emergency Response of the U.S.
Environmental Protection Agency.
Mr. Makris, I want to welcome you, and I do want to say
again, from my perspective, that when I dealt with your people
in your office, they were always very cordial and very
responsive. I am grateful for that and I want to compliment the
agency on that. Obviously, I disagree with the amount of time
it took to adjust the regulation, but your people were always
very good and I want to compliment you on that. Welcome to the
Committee.
STATEMENT OF JAMES MAKRIS, DIRECTOR, CHEMICAL EMERGENCY
PREPAREDNESS AND PREVENTION OFFICE, OFFICE OF SOLID WASTE AND
EMERGENCY RESPONSE, UNITED STATES ENVIRONMENTAL PROTECTION
AGENCY
Mr. Makris. I hope I can live up to the reputation that my
staff has already established with you. I do remember the
meeting that we had in Congressman Emerson's office where we
set up the meeting that we later held in the Midwest. I think
that it is an important point, and I think that, as you recall,
during that discussion, the law of unintended consequences did
emerge. There were some issues that came to much of our
surprise.
My name is Jim Makris and I direct the Chemical Emergency
Preparedness Intervention Office. My responsibilities include
the implementation of the Accidental Release Provisions of
Section 112, implementation of several sections of the
Community Right to Know Act of 1986, SARA Title 3. I also
serve, incidentally, as EPA's emergency coordinator for issues
such as national security and counterterrorism.
I am accompanied today principally by my Director of
Program Development, David Speights, and also behind me is
Senior Chemical Engineer Craig Matthiessen.
I am really pleased to be able to talk about the importance
of chemical safety, accident prevention, and community right to
know. I ask that my written testimony be included in the record
and I will summarize and try to tell a fairly short story that
takes us to where we are.
The Chairman mentioned the issue of the world's largest
chemical accident in Bhopal, India, which led quite promptly to
the creation of a series of activities both within the agency
and within the chemical industry to finally recognize the right
of people to know that they are exposed to risk. It is pretty
hard to recognize that for generations in this nation, there
was no specific program geared to providing people, the public,
with data on risks that may be confronting them. But SARA Title
3, the Community Right to Know Act of 1986, modified that. It
immediately said that companies that had one of a list of 400-
and-some-odd hazardous substances or had inventories of
hazardous substances or had inventories of a substantial nature
of substances that might be dangerous in the workplace had,
indeed, to provide this information to the general public.
It is really shocking that until 1986, the entire reliance
of information on risk in manufacturing facilities was either
dependent upon disclosure by the company itself or protection
under the labor laws, for worker protection under OSHA. It is
important to remember, Bhopal did not injure or kill workers.
Bhopal went outside the fence line and went into the community.
So it was quite a different situation, and, frankly, it
changed the paradigm of how we all thought about risks.
Originally, we felt if we protected the worker with good
workplace safety laws and good process safety management, we,
indeed, were protecting the community, but Bhopal modified
that.
A few years after the passage of SARA Title 3, the Congress
took another major step with Section 112, the Clean Air Act,
where it recognized the need for facilities to develop or
improve their planning or accident prevention programs to
reduce the risk of accidents. It also again recognized that
citizens should have access to information about hazards that
these facilities presented. It assured that the public would
have much more information on risk with extensive details on
the company's, large and small, obligation to deal with process
safety. It provided accident history and information on
contingency planning.
Chairman Talent. Go ahead. This happens all the time here.
Mr. Makris. I do not want to get in your way of doing other
business.
EPA finally issued final regulations that dealt with the
risk management planning. We followed the processes that were
required on submission to the Congress in advance. Keep in mind
that throughout this effort, we were dealing with the issue of
risk. Whether it was a large company or a small company, if the
issue was a chemical that could cause harm in accordance with
the definition of the law, we felt that we had an obligation to
put it on the table and let the community understand that the
risk was there and cause the company to take such steps as were
necessary to assure that the populations were protected.
It is the very people in these communities that have the
jobs, that work in the facilities, that are also at risk, and
we felt that the intention of 112(r), and the legislative
history supports it, was to provide the broadest amount of
information on the listed chemicals to the community and to
cause companies to introspect on their safety practices.
It was not a casual determination. As you know, one of the
most costly and devastating vapor cloud explosions in the
United States was at the Phillips Petroleum Plant in Pasadena
in 1989, where 23 deaths occurred, the plant was destroyed, and
business interruption costs were in excess of $700 million.
That was an explosion of ethylene and isobutane, both of which
have flammable characteristics similar to propane.
The United States has experienced devastating accidents due
to propane, and, of course, the second largest accident in
industrial chemical industry history was the event in Mexico
City, where 650 people died as a result of an explosion and a
fire at a propane terminal. Six-hundred-and-fifty people died
and 6,400 were injured.
In the United States, on New Year's Eve in 1998, an
accidental propane release and fire near Des Moines, Iowa,
resulted in the evacuation of 10,000 people. Two firefighters
were killed. At an Albert City, Iowa, poultry farm in 1998, a
propane storage tank exploded, and seven other major accidents
occurred during 1998 involving four deaths, 22 injuries, and
thousands of dollars of property damage.
We listened. We had thousands of letters from the propane
industry asking us to reconsider. We listened carefully, and
eventually, after we got some further insight and recognized
that perhaps there was an unintended consequence, we tried to
draw a line between the facilities that warranted Federal
regulation and those that did not. We issued a six-month
administrative stay. The stay applied to any process that did
not contain more than 67,000 pounds of the fuel, which is the
maximum amount you can hold in an 18,000-gallon tank, does not
manufacture flammable hydrocarbons, does not contain more than
a threshold quantity of another non-fuel-related substance, is
not connected or collocated. We also issued a notice proposing
to revise the RMP rule to exempt processes that met that
criteria.
In our effort to lessen the burden for the small and
medium-sized enterprise, we worked with the State of Delaware
to devise guidance, and you showed guidance that was thicker
than the one I am going to show. It is a little narrower. We
also developed some automated methods of completing the RMP for
facilities that were burdened by this issue.
To ease the burden, we prepared model plans for a number of
industrial sectors, including large propane distributors,
users, and small propane users. The models make compliance with
risk management program rules relatively easy. They recognize
the safe practices embodied in existing industry standards,
such as NFPA 58, and encouraged propane facilities to take
credit for those practices.
To the extent that companies were in full compliance with
NFPA 58 in its latest form, with the exception of providing
information to the public and publishing accident history, the
completion of an RMP would not have been a very substantial
burden. The allegations go from $1 billion to the industry. Our
records say it is more like a couple hundred dollars per
company, unless there were deficiencies that in the inspection
of the facility they needed to fix, in which case it would cost
more.
But to fundamentally complete the obligations of the RMP
for a small user would not have been the substantial burden
that some have indicated that it was, and we went the extra
mile to provide consulting services, assistance, meetings in
the field. We have asked lots of people to come in and provide
advice and guidance to them and to try to, in many ways, make
it easier for a small and medium-sized enterprise using propane
or other flammable fuels to comply.
We began the rule like everything at EPA. One size fits
all. We immediately changed to a phased situation, where if
somebody presented a small amount of propane that did not
create a risk, their activity was relatively small. If you had
a huge production facility that was manufacturing substantial
amounts of propane, obviously, that was a large risk. That is
what happened in Mexico City, a large propane producer and
distributor. Six-hundred-and-fifty people died. We tried to
scale it so that we would have a much heavier burden on that
larger organization than the smaller organization.
I think that risk management programs that are implemented
by facilities will improve safety in two ways. They will
encourage facilities to identify and address the hazards posed
by their handling of flammable substances, and it will provide
information to the public about the potential risk of
accidental releases and facilities' efforts to prevent and
mitigate any other releases.
From the beginning of this program following Bhopal, our
emphasis has been almost Jeffersonian. Jefferson said, people
are inherently capable of making proper judgments when they are
properly informed. It was our view, I think it was the view of
the Congress as expressed in the SARA Title 3 EPCRA legislation
and in the 112 legislation, that the agency should not say what
companies specifically should do. The laws said and the agency
implemented a program which provided information to a public
that might be affected by the possibility of an accident, an
accident that could be the release of a toxic or the release of
a blevy or a vapor cloud explosion.
With those ideas in hand, providing this information to a
public allowed a dialogue to take place, keeping pressure on
businesses large and small to comply with what is regarded as
safe practice. We responded to small business concerns. We
issued regulations recognizing existing industry standards. We
produced tailored and detailed guidance, model plans, free RMP
software, and working with the small business community to ease
the compliance concerns.
We believe the efforts have eased the reporting burden. Our
goal remains, has been, hopefully will continue to be to
protect human health and the environment by providing
information to populations that might be affected by an
accident that could be prevented through careful process safety
practices. Thank you, Mr. Chairman.
[Mr. Makris' statement may be found in the appendix.]
Chairman Talent. Thank you for your testimony.
We have got a vote on and I think it is probably better
just to recess, pending the vote. Mr. Makris, by the way, has
put Thomas Jefferson in play, so members who want to think of
counter-Jeffersonian quotes have the recess in which to do it.
We will come right back and then get to the question period.
[Recess.]
Chairman Talent. We will reconvene the hearing. I think I
will hold my questions for a couple of minutes and recognize
the gentlelady from New York for her questions.
Ms. Velazquez. Thank you, Mr. Chairman.
Mr. Makris, welcome to this Committee. I understand that
these regulations were promulgated prior to the effective date
of the small entity review process under SBREFA. My question to
you is if you were proceeding in this area today, do you
believe that the SBREFA process would have been appropriately
invoked?
Mr. Makris. Absolutely. We did follow the fundamental
process of REG FLEX, but we did not have an obligation under
SBREFA. We did send the bills up, though. We did send the
regulations up.
Ms. Velazquez. Do you believe that the SBREFA process might
have helped in the formation of the regulations and the means
through which they would be implemented?
Mr. Makris. We consulted with an awful lot of small
business entities as we went through this process. We had an
advisory committee that included small business. We had a lot
of national meetings and small businesses were invited to
attend. There are several actions that we took over the period
of time involved in the development of this rule, including
completely changing it from, as I said earlier, a one-size-
fits-all to trying to tailor it. I think we got a lot of input.
No doubt, the SBREFA process would have focused specifically on
a few of the unintended consequences.
Ms. Velazquez. Mr. Makris, I understand that a propane
terminal explosion in Mexico City in 1994 was one of the events
which was cited as a reason for the United States to pay more
attention to hazardous substances and to preventing or
alleviating the harm they might cause. To your knowledge, did
Congress take that event into account in fashioning its
approach to this manner?
Mr. Makris. It was a very, very well publicized propane
event and I think the language of the law and then some of the
legislative history, including the idea that ethylene oxide and
vinyl chloride were included, suggests that people were
concerned with flammables. Clearly, even S. 880 does not take
all flammables out. It just takes the fuel flammables out. So
the debate about why do we have flammables is not even totally
being addressed because there are explosives and flammables
which are not even being touched by the S. 880 legislation.
Ms. Velazquez. Did EPA take that into account when
including propane among the substances to be covered by its
regulations?
Mr. Makris. I am sorry, would you repeat that?
Ms. Velazquez. Did EPA take that into account, that event
in Mexico City?
Mr. Makris. It was pretty hard to ignore the second largest
chemical industrial accident in history. One of the concerns we
have, and, frankly, if there was anything that I could redo, it
would have been to avoid the possibility that large facilities
having substantial amounts of propane might now become exempt
as a result of S. 880.
Ms. Velazquez. Does the NFPA have the same requirements as
EPA's regulation? If not, what are the major differences?
Mr. Makris. First, NFPA is largely not a maintenance
standard. It is a standard by which the propane systems are
installed. It does not deal with maintenance. It does not deal
with regular reporting. It does not have formal information to
publics. And, I guess most of all, there are several NFPA 58s.
It sounds as if NFPA 58 is some magical thing that is in place
in States throughout the country. It turns out that NFPA 58 is
in various forms based on how various State legislatures have
inserted it. So there are several NFPA 58s. And, in addition,
as you may have noted from the Chemical Safety Board's review
of a propane accident, there is pretty casual enforcement of
NFPA 58 in a lot of jurisdictions.
Ms. Velazquez. In your testimony, you mentioned a propane
accident in Iowa where two firefighters were killed. I
understand that the Chemical Safety Board has done a report on
that accident in which they cite low enforcement at the State
level as a problem. Would you care to comment?
Mr. Makris. No, I think that is right. I think the CSB
report noted that the fire marshal did not detect the
deficiencies in the design and the installation, nor did they
have a program to monitor and to come back on a regular basis
to see if the systems are being maintained.
A lot of users, it is kind of like the way we use propane
barbecues at home. You assume that the tank is intact, that the
systems are right, that the fittings are working, and,
therefore, there is not going to be an explosion. But if you
allow them to get rusty or if you do not attach them correctly,
then there is one, or if there is a deficiency in the tank
itself, you are going to possibly have an accident.
For example, a few weeks ago, I had a propane tank for my
barbecue and it was cross-threaded. So when I turned it on, not
only did the gas go into the barbecue but it also was coming
out the side. All of those things are very unlikely, but any of
them could occur, and, obviously, the larger amount of chemical
or propane you have, the more likely they are to have
devastating consequences.
Ms. Velazquez. Why do you list propane on this regulation
but not other flammables, such as gasoline?
Mr. Makris. Gasoline is one step lower in the NFPA
standards. We just took gasoline off the EPCRA list because we
used to have gasoline stations covered, and one of our efforts
to help small business, for example, was to take gasoline
stations off the obligation to report under the Community Right
to Know Act of 1986. Believe it or not, we believe that most
people knew that gas stations had gas and it probably was not
necessary for them to report in that that was their situation.
However, when we were trying to deregulate gasoline from
the EPCRA rule, when you are trying to say gasoline stations
have gas and we do not need to have a report on it, some people
came back and said that there were disadvantages to
deregulating it. One was that it was not obvious that there
were 24-hour contacts, who they would call in case there was an
accident at night. It was not clear how much gasoline were at
each of these stations. Some States argued that they were
collecting revenues from the reports of gasoline stations. So
there was a tremendous amount of resistance when we decided
that gasoline reporting under EPCRA was a burden to small
business and worked with the Small Business Administration to
take it off the EPCRA list.
Ms. Velazquez. Thank you, Mr. Chairman.
Chairman Talent. Thank you. I will follow up a little bit
on that line. When I looked at the NFPA evaluation of propane,
they give it as a health hazard, which I think is their word
for toxicity. They give it a one on a scale of one to four. On
flammability, they give it a four, and reactivity, which in my
lay person's understanding means can it join with some other
substance and become something poisonous, they gave it a zero.
That is about your evaluation of propane, too, is it not?
Mr. Makris. Yes, and if Mr. Matthiessen is nodding his head
yes, it is an even better one.
Chairman Talent. Then when you look at natural gas, its
health hazard or is toxicity is one, like propane. Its
flammability is four, like propane, and its reactivity is zero,
like propane. So you would agree with that, too, right?
Mr. Makris. Yes.
Chairman Talent. And yet your regulation covers propane and
does not cover natural gas. You may want to look behind you.
Mr. Makris. Yes. Methane is covered.
Chairman Talent. Now, wait a minute. Methane and natural
gas are different, are they not?
Mr. Makris. Craig?
Chairman Talent. Why do you not just come on up and
testify, sir, if you want to, and just state your name for the
record.
Mr. Matthiessen. My name is Craig Matthiessen, EPA. Methane
is natural gas, or natural gas is methane, predominately.
Chairman Talent. This is a real fundamental
misunderstanding, because my understanding is that natural gas
includes methane but it also includes other substances, so that
a natural gas storage tank would not be covered under the
regulation, is that correct?
Mr. Matthiessen. No, that is not correct. A natural gas
storage tank would be covered because it is an NFPA four
flammable on that list. It includes predominately methane. It
may also have propane and butane, ethane, all of which are
listed substances under the RMP rule.
Chairman Talent. I have a Federal Register here which says,
explain, then, what this exemption is. EPA considers the
transportation exemption to include storage fields for natural
gas, where gas taken from pipelines is stored during non-peak
periods to be returned to the pipelines when needed.
Mr. Matthiessen. Right, because----
Chairman Talent. For purposes of this regulation, this type
of storage is incident to transportation and, therefore, is not
subject to the RMP rule.
Mr. Matthiessen. That is correct. In other words, naturally
occurring hydrocarbon mixtures, the material that comes out of
the ground from exploration wells, for example, that is held
and then distributed interstate, is covered by the Department
of Transportation and so we sought not to double-up on that.
The transportation requirements, we are not subjecting
facilities that are already covered by those transportation
regulations to the RMP requirement.
Chairman Talent. So the exemption covers the transportation
of natural gas but not the storage of it?
Mr. Matthiessen. Well, if you are storing it for use other
than transportation, then you are covered.
Chairman Talent. Okay.
Mr. Matthiessen. So, for example, if you are a chemical
facility or a fuel distributorship and you have large amounts
of natural gas, propane, butane, common fuels, you are covered
by the RMP.
Chairman Talent. So a farmer who used natural gas instead
of propane would be covered by this regulation to the same
extent as if he was using propane?
Mr. Matthiessen. That is correct, if he had more than the
threshold quantity.
Chairman Talent. I will recognize Ms. Kelly.
Mrs. Kelly. Thank you, Mr. Chairman. I have a couple of
questions here. On page three in your testimony, you estimate
that about 33,000 propane facilities nationwide would be
affected by the regulation, is that correct?
Mr. Matthiessen. Yes, ma'am.
Mrs. Kelly. Just out of curiosity, I looked in the 19th
Congressional District in New York. We have estimates there
that there are about 25,000 to 30,000 commercial and
residential propane users in my district. Now, if we have about
30,000 commercial people in my district and they are using it
for agriculture and so on, we also have a number of gas
marketers that will have fairly large tanks.
My concern is we also have some fairly large greenhouses.
We also have a situation where we are constantly losing energy
and people are beginning in residences, because I live in an
area where there are very large homes and there are a lot of
outbuildings and there are other golf courses and things like
that and they are putting in very large propane tanks because
then they run generators off these tanks and they run their
kitchens off these tanks and they do not have to worry about
power outages, which we do have.
I am thinking that this 33,000 figure may be very low and I
just would like to test that figure with you a little bit. Are
you talking about only those people that have tanks of, what--
--
Mr. Makris. Ten thousand pounds or more.
Mrs. Kelly. Ten thousand or more?
Mr. Makris. Ten thousand pounds or more.
Mrs. Kelly. What about joined tanks? What if somebody has a
tank, like a series of three tanks?
Mr. Makris. Part of our effort to try to ease the burden on
primarily users who might have had two or three under-10,000-
pound tanks connected, we put out a revision or a discussion
and guidance on the separation distance. So if they were
separated by an amount that would not cause them to interact,
they would be counted as individual under-10,000-pound tanks.
Mrs. Kelly. So if there is some sort of, for want of a
better use, I am going to say a firewall, some kind of a way
that they are walled off from each other, they are
individualized tanks and the succession of tanks does not count
as a unit, one unit, is that correct?
Mr. Makris. Yes, when we began, but we moved, certainly
after Mr. Talent and others raised issues with us. It was one
of the early steps that we could take within our own authority
to simply say that separation distance assisted in easing the
regulatory burden for those who had multiple tanks of small
size.
Mrs. Kelly. When you looked at this regulation, obviously,
the security risks were a problem. Are they still a problem? I
am going to ask this in a generalized way because I think we
can get into the specifics without having it public forum.
Mr. Makris. Propane tanks usually contain propane.
Certainly, the small propane tanks, disclosure of that was not
going to create a major security risk different than what
mischief makers might have gone to anyway. In our judgment, we
are very concerned with the issue of terrorism and
environmental crime and mischief makers and hoodlums, as the
FBI calls them, who are anxious to do harm to us all. I also
have the counterterrorism responsibility in EPA and so I live
that side of the world most of the time, as well.
Mrs. Kelly. And have you built things into this that are
comfortable? I mean, who in Congress knows what you have built
in? Is there any Congressional oversight that you have built in
into the security aspects of this?
Mr. Makris. No. As a matter of fact, that was one of the
issues that we have been working under Presidential Directive
Decision No. 63, which is dealing both with cyber and physical
security. As you know, S. 880 does require that actions be
taken--that a study be done on the security of the facilities
that are covered by this rule. In addition, we have made it
very clear to the chemical industry that security of their
facility is consistent with their obligation under general duty
requirements of this law. It is also pretty clearly under their
obligations under common law that they need to attend to the
issue of security.
We have not laid down standards and there is no direct
oversight. There have not been any efforts of direct oversight
on our security action at chemical facilities to this time. Our
concern is that the companies have got to recognize that they
are creating a risk, and that is not only propane companies but
that is big guys and small guys, in the same way as if I have
a--it is not a great story, but if I have a swimming pool, I am
obligated to build a fence to keep people out of it. If I have
a risky, hazardous substance, I need to protect people from
being able to get to it to do harm. Similarly, I guess, if I
have a dangerous dog, I have to build a fence to keep him in,
and I think, similarly, the chemical companies have an
obligation, large and small, to protect their facilities.
Mrs. Kelly. Since you brought up the issue of small, the
small dealers, how many small businesses would fall into the
regulated category? What are we talking about here?
Mr. Makris. I cannot give you the final answers, but I can
tell you, based on what we have got so far, as of this week, we
have 14,250 facilities that have submitted RMPs, keeping in
mind now that we have told propane they do not have to submit.
Sixteen-hundred-and-thirty-three facilities did report fuels.
Of all of the facilities that came in, 10,637 out of the 13,445
would be regarded as a small business. So it is a substantial
number of small businesses that are affected here, 79 percent
of the database.
Mrs. Kelly. What did you calculate their cost is to comply
with the rule? What is your calculation on cost?
Mr. Makris. A few hundred to a few thousand dollars.
Mrs. Kelly. A few hundred to a few thousand dollars?
Mr. Makris. Yes.
Mrs. Kelly. Okay. Did you----
Mr. Makris. That is assuming, if I may, and I made this
comment earlier in my testimony and I will just restate it, if
you do not mind, a few hundred to a few thousand dollars,
particularly if you want to say the propane industry, with the
facilities that are already in compliance with NFPA and their
only obligation would have been to review their system, to
check out the offsite consequences, be sure that there is no
probability of a vapor cloud explosion or a release that would
affect them, and there were no deficiencies in their systems
that they would have to fix before they could certify that they
were safe. I mean, that is the big package.
Now, obviously, if any of these facilities have major
failures in safe practice, if they do not have adequate
prevention measures as has been established by the normal codes
of practice of NFPA and the chemical industry and the Center
for Chemical Process Safety and others, then they have got work
to do and that is going to cost a lot more money before the CEO
or the owner puts his signature on the piece of paper saying,
``We are in compliance.'' We are not sure how much that might
cost. We do know that, hearing from large companies and small,
they have said as a result of their activity under this
program, they have improved their safety.
Mrs. Kelly. But you really have not kind of given me an
idea about what the cost of their documentation might be. In a
small business, the business owners themselves or somebody who
works as a secretary, somebody who works in the office is going
to have to document all this stuff. Did you figure that in as a
part of the cost?
Mr. Makris. It is part of our economic analysis, but let me
comment on what three propane industry consultants have told
us, that they charge propane facilities from $200 to $700 to
complete a program one RMP and up to a couple thousand for a
program two RMP. That is experts speaking to us. Our own input
suggests that that is about the range of time and our economic
analysis talked about how many hours we felt it would require.
We gave them free software. We gave them free guidance.
Mrs. Kelly. Wait a minute. Small business owners do not all
have computers.
Mr. Makris. And if they did not have----
Mrs. Kelly. Free software does not help somebody who does
not. What have you done for them?
Mr. Makris. First, we were surprised to find out how many
small and medium-sized enterprises do have computers, because a
relatively small amount, I think about five percent of the
14,000 that were submitted, were not submitted electronically.
But we also provided in our regulation that if a company or
firm, large or small, was unable to do it electronically, they
could do it in paper and we would put it into the computers at
the Federal level. But we did provide software tools, guidance
tools, guidance manuals, and, frankly, reduced it to a largely
question and answer format.
Mrs. Kelly. One other--I am sorry. Go ahead.
Mr. Matthiessen. Thank you. I just was going to add that
for a company that does not have a computer, if they were to
take this guidance and walk through it, and, in fact, our
regional offices have done this with a number of States and a
number of small business owners in those States who have come
in to what we call a session that is plan in hand, and at the
end of that session, in roughly a half an hour, companies have
been able to fill out their RMP and either leave with a
completed RMP or a nearly complete RMP using this guide right
here without a computer.
We think, on the basis of that information, with people
that are actually operating facilities coming to the session
and leaving with a completed RMP, that the process is not all
that difficult. Again, I think the key point, as Jim mentioned,
is it is building on what they are already doing. It is not
creating anything new. It is capturing what they are already
doing and making sure that it is being done right.
Mrs. Kelly. I want the United States population to be safe
and I understand what you are trying to do here, but I also
know, as a former small business owner, that if you are calling
me out of my business and you are making me sit down for a half
an hour of my time to learn how to fill out one more form, I
had better be sure that that form is something that is really
essential to the United States of America because you are
taking my time and that is cost.
I want to say that we are going to have some people come to
speak to us, John and Mary Densmore, and I, in reading their
testimony, realized something when they said that they are
going to testify that their drivers have had to make more
deliveries and they drive more miles if they have to use this
new EPA rule. Now, my question to you, when I ask you about the
figures of this, did you figure the cost of the air quality to
have those people making those extra trips?
Mr. Makris. I suspect that we did not figure the cost of
emissions from automobiles or trucks making extra deliveries.
Yes, I think we did not do that.
Mrs. Kelly. But you are the EPA. You are supposed to be in
charge of our air quality.
Mr. Makris. That is right. I would guess we blew that one.
I doubt very much if our economic analysis would have
included--and I am saying that intuitively. Did it?
Mr. Matthiessen. No, and you are exactly right. The issue
was not considered because it was our belief that a company
that is already complying with all these requirements under
NFPA 58----
Mr. Makris. There is no change, really.
Mr. Matthiessen. Yes. There is very little additional
information other than providing facts to the community that
they are operating safely. The concern that there would be a
risk around this facility is minimized and, in fact, a number
of small companies have said, as Jim mentioned, that the idea
of preventing an accident saves a considerable amount of money.
Mrs. Kelly. Are you saying--I do not mean to interrupt you,
but I have been talking for a little time here and I do not
want to dominate when other people need to talk, but what you
are looking at is from one direction and what I am looking at
is from the small business owner's direction, which is you are
going to put more people on the roads driving probably diesel
fueled trucks putting particulate matter in the air and you
have not calculated that factor in because you are having those
drivers make more trips and they are going to have to drive
more miles in order to comply with what your new regulation has
done. That is an overlaying within your own organization and I
just simply would ask you, please, to take a look at the net
effect. Too often in an agency as large as the EPA, one hand
does not know what the other hand is doing, and I think this is
an example of it right here.
Mr. Matthiessen. If I might add, we think that our new
proposal to raise the threshold minimizes the number of extra
deliveries because there will not be deliveries to small
facilities that often. There would only be deliveries to large
facilities. And again, we just believe that it is possible to
achieve safety and environmental protection at the same time.
Mrs. Kelly. I would ask you to read the Densmores'
testimony yourself and then come back and make that statement,
because I think they are very clear on the face of their
testimony, and unless they have something more, and they
probably will have a lot more to say about this, I think they
are exactly the kind of people that we need to try to help
maintain their family businesses, and one way we have to do
that is to take a look at this cost versus benefit analysis.
The other thing I wanted to ask you, and this is my last
question to you, is are you holding back and waiting until the
court decides on the case or are you just going to go ahead and
promulgate this rule and put it into law before the courts make
their decision?
Mr. Makris. At the moment, of course, S. 880 takes it
pretty much out of the jurisdiction. If S. 880 stays in either
of the forms that it has passed the House and Senate, it would
render a good much of what the court did as moot.
We are very happy to proceed with a detailed study, and I
think S. 880 is going to require us to take a close examination
of some of these issues that have been put forward, but we are
not hanging around just waiting for the court to make its final
ruling and then we are going to follow through. We have
legitimately raised, not because we do not think anything under
67,000 pounds is safe, it is not inherently safe, but we have
listened, we have heard, and we have found a practical place to
which we can go.
Now, let me just say that I would suggest that the small
and medium-sized enterprise, whether or not they are covered by
this regulation, would still benefit from reviewing the
material that is in this and just not reporting it to me but
introspecting on the safety that they have at their location. I
think that would be a terrific voluntary activity for us all to
work on, because I think there is some useful information in
the material that we put out as part of our regulatory package
for propane users that would still benefit them.
Mrs. Kelly. I thank you, and I understand what you are
saying. I would also suggest that people who deal with
flammable and the types of materials you are talking about here
are people who do not want to have accidents and they are going
to do this anyway. My only question here is whether or not it
is an efficient use of their time and of government's time and
whether or not we put in all of the cost-benefit factors here
before this rule becomes actual law. I thank you for your
testimony.
Mr. Makris. Thank you for your questions.
Chairman Talent. I will go to Mr. Sweeney.
Mr. Sweeney. Thank you, Mr. Chairman. I would like to ask
unanimous consent to submit into the record a formal statement
in an effort to expedite my questions.
[Mr. Sweeney's statement may be found in the appendix.]
Mr. Sweeney. I want to thank Mr. Makris and Mr. Matthiessen
for their testimony. I wanted you to know first that I am a
former regulator of probably the largest regulatory agency in
the State of New York, the Department of Labor. Different
health and safety issues were attendant to the work that I did
and the work I oversaw. Oftentimes, there was interaction with
EPA, there was interaction with my State Department of
Environmental Conservation. As I understand, your charge and
your mission is to place the highest priority on safety and I
respect and thank you for that.
I also, as a former regulator and someone who oversaw, a
vast agency with huge responsibilities, recognized that we
never have enough regulators. We never have enough personnel to
absolutely ensure health and safety. I do not know if it is
humanly possible to guarantee the kinds of safety that we all
would like to see, which is a totally risk-free environment. I
also know that one of the management tools that we often used
to ensure we were focused where we needed to most be focused,
so we could fully meet our charge and our obligations, was to
look where duplication occurred and existed with other State
agencies, with the Federal Government, within our own agency,
and within departments and bureaus. I know that is a never-
ending job that you absolutely have to be diligent about.
In your testimony, as I came into this process, I was going
to focus on the duplication issues. I understand DOT regulates
the transportation end of this. I understand OSHA has
responsibilities. I understand the States, through the NFPA,
have their obligations, as well. So I would like to focus, very
specifically, on those areas and look where I think my
disagreement with your position exists.
You mentioned in your testimony, and in your questions and
answers, the RMP requirements. I am interested to know, as it
relates to toxicity, has the EPA conducted further studies on
toxic levels of any substances and is that an ongoing process?
How do you manage that?
Mr. Makris. Well, we have not. The agency is continuously
in the process of reviewing toxic substances, toxics endpoints.
We have a major project within the Environmental Protection
Agency going right now with the National Academy of Sciences
that is international to try to come to grips with toxicity at
certain endpoints of ubiquitous chemicals.
Mr. Sweeney. That answers the question, because----
Mr. Makris. Do we do it fast enough? Heck, no.
Mr. Sweeney. My follow-up question was going to be, out of
those studies, are there specific studies as it relates to
propane? Has there been a new bit of research or empirical data
established that says propane, while it is listed on the RMP
requirements as a one grade for toxicity, we believe it could,
indeed, possess certain elements that present--but you do not
have that kind of data?
Mr. Makris. We do not.
Mr. Sweeney. That leads me to the next question, at what
point does the EPA make its determination as to what level of
toxicity must exist before you would regulate in this regard? I
am confused, because I, frankly, think you have overstepped
here and that it is OSHA who has the kinds of responsibilities.
I listened to you very carefully explain the safety issues you
were concerned about and those are OSHA issues, not EPA issues
necessarily. They may be connected in a cause and effect way,
and OSHA and EPA probably ought to be together on those issues.
What toxic threat does propane provide that raises it to the
level that it is, other than its flammability?
Chairman Talent. John, will you yield for just a second?
Mr. Sweeney. I certainly will.
Chairman Talent. That was a question that I was going to
ask, so let me piggyback just a second.
Mr. Sweeney. Okay.
Chairman Talent. The distinction here between toxicity and
flammability, it seems to me--I was not in the Congress in
1990, but what Senator Baucus said recently makes perfect sense
to me, because what Congress is saying in that law, it seems to
me, is we are concerned not so much about the effects of the
explosion itself, which we understand is already regulated by
other agencies, but the effect of the explosion in putting into
the air and in the surrounding environment toxic or poisonous
agents which may hurt people in a way that the explosion would
not have. I think that is what John is getting at, and he said
it better than I said it, but just answer both of our questions
in that.
Mr. Sweeney. No, Mr. Chairman. I do not----
Chairman Talent. I can also see, if this came up now, why I
would, as a Congressman, want the effects of the explosion
maybe to be regulated by DOT or by OSHA or by some kind of
fire-oriented agency, which might be local, whereas the
toxicity and the poison, I would say, yes, that is an EPA job.
So you see what we are getting at here, and answer us both, if
you would.
Mr. Makris. And that might be a reason why you would have
wanted to have another agency than EPA do this. On the other
hand, nobody is doing it.
I guess, first, the bill and the history talked about the
obligation for acute effects. There clearly is an acute effect
from an explosion like Phillips Petroleum, which basically had
the equivalent of ten tons of TNT and is probably eight times
the 10,000-pound threshold we are talking about and it
destroyed the whole building. It did have offsite effects from
glass, but not toxics.
None of this was toward long-term health effects. This was
all toward immediate effect on surrounding populations, not
only for workers but for offsite consequences, and we felt that
the history and discussions with those who drafted the bill--
not Senator Baucus, obviously, and I am not sure that we are
all coming up with some unintended consequences, perhaps, to
some of the things we said--would not recognize that there is
an important issue around explosivity and flammability.
I must say, and I want to say it again, even S. 880 does
not take all that away. S. 880 does not now limit the coverage
of 112(r) only to toxics. It leaves explosives and flammables
still covered. So even a new thought about the issue is putting
us in the same place.
Mr. Matthiessen. Thank you for allowing me to add that in
the discussion of general duty in the legislative history under
the Clean Air Act, under Section 112(r)(1), there is a clear
statement that says that there is a presumption that a chemical
that by virtue of explosion or fire causes adverse health
effects in the community, and it is not the combustion products
of that explosion or fire, it is the explosion or fire itself.
That is a presumption confirming that that chemical is
extremely hazardous.
That, in combination with a couple of chemicals that, by
virtue of their accident history were added to the list of
substances that Congress said must be on the list, told us that
flammability was a concern in addition to toxicity that we
ought to consider for protection of the public.
Mr. Sweeney. Is your interpretation, Mr. Matthiessen, that
any one of those elements can elusively exist and that triggers
the EPA purview and authority over regulating in that area? Is
that what you are saying?
Mr. Matthiessen. Yes. We are saying if there is----
Mr. Sweeney. What products, that we could distinguish from
propane, would then not be covered by the EPA, that the EPA has
determined are not flammable and/or toxic enough for your
review?
Mr. Matthiessen. Well, for example, gasoline was not put on
the list because it is not flammable enough, and the concern
here is not fire. The concern----
Mr. Sweeney. So flammability is the primary element that
triggers----
Mr. Matthiessen. Yes, that triggered propane, and fire is
not the concern. I mean, if you burn your plant down and do not
have any offsite consequences, that is your problem, and OSHA,
DOT, and the fire services all cover that problem. What we are
worried about is the large-scale vapor release in the middle of
the night----
Mr. Sweeney. Under what authority, though? I am so
confused. Under what authority do those elements, that level of
flammability, trigger the EPA response? My fundamental
disagreement with you is that while an imminent health and
safety risk might exist, it is entirely a different debate, a
different discussion, and a different issue if OSHA is involved
in that oversight, which I believe is accurate and proper.
Mr. Matthiessen. They are.
Mr. Sweeney. If OSHA is not carrying out those duties for
whatever reason, whether it is funding or it is other
priorities, that ought to be more accurately focused upon
rather than the notion that a different Federal agency comes in
and requires additional paperwork and additional regulatory
responses.
Mr. Matthiessen. I would just say that our reading of the
statute and the legislative history tells us that flammability
is a concern that can have an acute health effect offsite,
while OSHA is predominately concerned with within the fence,
and we have been working very closely with OSHA. In fact, our
regulation builds on OSHA. It only builds on to the extent that
we are trying to protect the public and the environment from
the risks of a vapor cloud explosion or fire.
Mr. Sweeney. Let me conclude, and I will yield back to the
Chairman. Mr. Makris, you made a great example in which you
said, if I had a pool, I would have to have a fence around it
for safety concerns. I agree with you. It is not the EPA that
is responsible for enforcing that regulation, however, it is
another entity. I think that is the core of our dispute here in
terms of on what we agree. I yield to the Chairman the balance
of my time.
Chairman Talent. I thank the gentleman. I am going to try
and be brief, in part because I think you both have been very
responsive and I very much appreciate it. You clearly know what
you are doing and you have thought about all this stuff. We
have been arguing, in essence, a point of law that nine years
ago was a point of policy, and I respect your interpretation of
it, although I tend to disagree, as well.
But let me go back to the question of the burden and try
and get at what Ms. Kelly was getting at. We constantly repeat
this in this Committee because we understand that you all are
doing your jobs. Your job is not to run small businesses. We do
not blame you for not instinctively understanding where the
average small business person is coming from unless you happen
to have run one.
Here is a letter which the Committee has and it was sent on
January 14 to a propane dealer in California by an Orange
County agency which is responsible for enforcing this kind of a
requirement. I do not want to read it all, but I want to read
enough of it so you can get the flavor, and put yourself in the
shoes of the small business person getting this.
``Your business has been identified as subject to the
requirements of the California Accidental Release Prevention
Program found in Chapter 6.9,'' and so on. ``In addition, your
business is also subject to the Federal program found in
Section 112(r) of the Clean Air Act. Your business is required
to develop and implement a risk management program to prevent
accidental releases of regulated substances that can cause
serious harm to the public and the environment. You are also
required to develop and submit a risk management program which
includes a summary of your risk management program. The RMP
must be submitted to this agency and an electronic version
submitted to U.S. EPA by June 21, 1999.''
``We are requesting that your business contact this agency
to schedule an RMP compliance meeting during the month of
January 1999. These meetings are required pursuant to
California regulatory requirements and to ensure that your
business meets the Federally mandated time line.''
``Should your business so choose, you may implement one of
the following options in lieu of developing an RMP: Eliminate
or replace the regulated substance with a non-regulated
substance; reduce the amount onsite to below the Federal
threshold quantity. If one of the above options is chosen, you
will be required to verify compliance prior to the June 21
deadline.''
``This agency is dedicated to assisting your business in
meeting these new regulatory requirements. In the near future,
we will be providing technical regulatory assistance, as well
as RMP guidance documents. However, failure to develop and
submit an RMP as required will subject your business of
penalties of up to $10,000 per day. In addition, failure to
contact and work with this agency during the development of
your RMP could cause costly revisions to be made during the
agency review and evaluation period.''
Now, I am not criticizing this letter----
Mr. Makris. I am just glad my signature is not at the end
of that letter.
Chairman Talent. I am really not criticizing it. In fact,
they are outreaching here. We know you have a problem. We want
to give you plenty of time to deal with this. This is not a bad
letter. But you are a small business person and you are trying
to stay in business, and propane is a highly competitive
business. Ten thousand dollars a day, I mean, you do not make
that much money in a month in profits.
So you get this letter, and you are not thinking that this
is only going to cost you four to five hours and $200 to
prepare this plan, because what you are thinking is, I have got
to make certain I am in compliance. So even if somebody who is
already totally familiar and comfortable with the plan could do
it in four to five hours--this person, if they are serious, if
they are the kind of honest person that we want, they are going
to react and say, I have got to be in compliance. The first
thing you do is call your lawyer, probably, and say, what about
this? What is going on here? Or maybe the trade association.
Then you are going to worry. If all you look at is that
workbook, what if there is something that is not in the
workbook that I have got to do, because it is not like you guys
would say, ``Well, it was not in the workbook and, therefore,
we are not going to enforce it.''
This is what we are getting at here. I cannot believe the
$200 estimate. I think it is going to cost a lot of money just
to determine whether they are in a program one or program two
phase.
I try and be measured in chairing this Committee and
recognize when agencies have made an effort, but I also try and
get their culture to change to understand that the average
small business person, just to be safe, is going to spend a lot
more than this. These people have spent an enormous amount of
time and money lobbying against your rule, and they are not
doing that because they think that your rule is only going to
cost them $200.
I also do think the transportation questions that Ms. Kelly
was getting at, what I think, too, is they are going to have
less than the threshold amount, which means there are going to
have to be more deliveries, which means there are going to be
increased costs. Do you see what I mean? Tell me what you think
in response to that.
Mr. Makris. I think I agree with virtually everything you
said. First, it was not a very user-friendly letter and it was
not an inducement to cause folks to really want to not be
afraid of the jackbooted thugs coming in and stomping on their
company.
Small and medium-sized enterprises are becoming even more
of a concern to us because a lot of the big companies are
easing off some of their more toxic activities to small and
medium-sized enterprises and, I think in some ways, shifting
the risk from those who are better able scientifically and
technically to deal with it to a smaller guy, where the
liability will then be carried. We are pretty nervous about
small and medium-sized enterprises perhaps having a more
dangerous condition in the future as big guys try to avoid some
of these risks.
In terms of the $200, $400, $600, $800, I guess it depends
upon how one proceeds to evaluate the obligation that is put in
here. I am far more interested in the company reviewing its
operation under acceptable standards and concluding that they
are operating safely and then reporting on that than I am in
the reporting on it. The report is the way the Congress and the
Federal Government and State Governments assure compliance.
If we knew that everyone in small and medium-sized and
large enterprise was constantly and vigilantly pursuing safe
practice, using industry standards like NFPA 58, and were
maintaining those standards always, then we would not need any
of this. We would not probably be having some of the accidents
that we have been having.
But we do not know that, and so the Congress said, not
specifically to propane but said generally, let us cause the
American industrial sector dealing with chemicals that provide
risks to communities to fess up. Do not tell EPA that they are
or are not meeting an EPA standard because there is no EPA
standard. What they are only doing is they are saying, we have
reviewed what is a safe practice and we have shared this with
our community. We have told the people that are possibly within
the area of risk that we have checked it over, we are in
compliance with the regulation that requires safe practice, and
we are telling you what the risk is.
That does not sound like an unreasonable burden. It becomes
unreasonable when it becomes a regulatory program. It is not an
unreasonable burden to just do it. Maybe we can figure out a
way to just do it.
Chairman Talent. So what we are saying is what we want is
common sense on the part of people. What we encounter in this
Committee is that trying to legislate or regulate common sense,
one of the problems with it is you see that the kind of people
who would not do on their own what common sense would tell them
to do are precisely the kind of people who would ignore this
letter.
This is the other problem. We tend to overregulate the
people who do not need the regulation, as a practical impact,
and under-regulate that small layer of people who probably do
need it.
I am not saying I have the answers to this. We are not
going to end big government tomorrow. It is going to be here,
and should be, for some purposes. But what I am saying is there
have got to be ways, and we are groping for them and finding
them in some contexts, to achieve what we want without
presenting this jackboot approach to people that demoralizes
them, that causes a lot of extra costs none of us want. I am
not exactly sure how to get there.
I think what you are were trying to do was sincere. I think
Congress is right in pulling you off propane for now and then
we will see where we go with some other things. I mean, that is
my view and I guess it is probably the view of most of my
colleagues, because the bill has been passed.
Why don't you get the last word in, and then we will bring
the next panel up, because we have other witnesses who have
been waiting.
Mr. Makris. Mr. Matthiessen has something he must say on
this.
Chairman Talent. Sure.
Mr. Matthiessen. At the risk of making a commitment without
checking with the boss first, you mentioned about our proposal
and going forward blissfully without consideration of input. I
would submit that we are going to get comment on that proposal
to raise the threshold and reconsider what we are doing.
I would offer once again, as we did with you in the past,
we would welcome the opportunity to get outside the beltway and
go to some facilities and find out what it is that strikes fear
and chill in the hearts of small business operators when
letters like that come, that take away their self-confidence to
be able to comply with something they are already doing. That
way, then, we can find out if we really are wrong and try to
improve our guidance so that it is not so intimidating and that
what we do really has meaning for safety, as opposed to just a
blatant, blind regulatory approach. If that has any value at
all, we will certainly commit to going and doing that.
Chairman Talent. The other thing that we have to get into
the process is a consideration of at least some indirect costs
or effects. I understand there is a certain point where you
have to cut it off, because you have more people out driving to
deliver more things and then they are going to stop and have to
eat lunch more and they are going to build that. I mean, there
is a certain point where you have to cut off the chain of
estimation. But, obviously, if indirect effects are to be
considered under SBREFA, and when you have a bill or regulation
which is so directly or so emphatically encouraging people to
drop the amount that they have got stored, they are going to
have more deliveries and they are going to have to pay for more
deliveries and it is going to be a cost.
I did not see Mr. Bartlett come in. He has some more
questions and this is certainly a field where his scientific
background would be of great use and I am happy to recognize
the gentleman.
Mr. Bartlett. Thank you, Mr. Chairman. I do not have a
scientific question, I have a Jefferson quote that I thought
was particularly appropriate for our discussion here, and this
was not an offhand quote because it is in the Declaration of
Independence. When I read it, I thought, I could not have
better described our regulatory agencies. It says, ``He has
erected a multitude of new offices and sent hither swarms of
officers to harass our people and eke out their substance.''
Mr. Makris. I like mine better. [Laughter.]
Chairman Talent. I thank the gentleman and I thank you all
and appreciate your patience. We will have the next panel of
witnesses, then. If Mr. Blunt would not mind, perhaps he could
just testify first on the next panel, because I know he needs
to go. So everybody else who is left, come on up and sit
together and we will have Mr. Blunt go first.
STATEMENT OF HON. ROY BLUNT, A REPRESENTATIVE IN CONGRESS FROM
THE STATE OF MISSOURI
Mr. Blunt. Mr. Chairman, if you do not mind, I will go
ahead and go first while everybody else is coming to the table.
Chairman Talent. Go ahead. I appreciate the gentleman's
being willing to wait on the Committee.
Mr. Blunt. I am pleased to wait. I appreciate you having
this hearing. I will proceed for any number of reasons. One is
I have a vote downstairs in a couple of minutes, and two is I
think it is very important, as Ms. Kelly mentioned earlier,
that we hear from the folks here at the table with me who
really are affected by these regulations in ways that you just
described.
I just want to thank the Chairman for not only being an
original cosponsor of my legislation, of H.R. 1301, but also
for holding this hearing, for looking at the process of how we
approach these topics of regulation, and, I think importantly,
looking at the process of the regulating agency deciding that
there is a meritorious reason to regulate, and no matter what
the law said or what the Congressional intent was, that we are
going to stretch that intent to cover some other area that that
agency thinks needs to be covered.
That is not the job of these regulatory agencies. Their job
is to come to the Congress and say, we know the law says toxic
substances. We think it should also say, toxic substances and
something else, and if the Congress agrees with that, then they
should regulate. If the Congress does not agree with that, that
is our job. The EPA is right now fighting a significant case
about whether they had the authority to do what they did with
clean air standards because they wanted to both set the goal
and figure out how to achieve the goal. That is not their job.
I also want to say, at the same time, I want to acknowledge
that they have worked closely with us to try to solve this
problem. I think Mr. Makris and his staff have really done a
good job of trying to come forward, be willing to rethink and
discuss what they did, why they did it, what their thought
process was, and, obviously, we would not be at the point we
are today with S. 880 and the House bill that I sponsored, H.R.
1301, that had 145 cosponsors in the House, if it had not been
for the willingness of this agency, of this part of the agency,
to look at this again. So I have some appreciation for where
the agency has been. I also think that this problem is largely
created by a misinterpretation of not only the law, but their
authority to decide what the law should say, and that is our
job, not their job.
You had some discussion while I have been sitting here
about whether or not there was already regulation, and I would
like to submit for the record a regulatory duplication chart of
all the various regulations that already cover these areas. In
fact, I think I heard in some immediately previous testimony
that if some of these regulations were enforced, that this
action might not have been necessary. Well, enforce the
regulations. Do not decide to legislate and regulate at the
same time.
I am glad that, even though we seem a long way toward the
final determination on the propane issue, that you decided, Mr.
Chairman, your Committee has decided to take how we got to this
point so seriously. I think it is an important area of
Congressional oversight. I think it is a constitutional area,
Mr. Bartlett, of Congressional responsibility, as opposed to
the responsibility of regulators, and I am certainly grateful
you are having the hearing and grateful that you have asked
this panel to come in, who really know what happens when they
get that letter in the mail and see the $10,000-a-day fine as
one of the consequences, and one of the other alternatives is
no longer distribute or use this substance, which if you are in
the propane business is not a very satisfactory alternative, I
would think. So thank you, Mr. Chairman.
Chairman Talent. Yes. When one of the alternatives is to
end your business, it is not much of an alternative.
I appreciate your testimony. I know you need to leave, Mr.
Blunt, and we will just let you go. I do not think there are
probably any questions for you.
[Mr. Blunt's statement may be found in the appendix.]
Chairman Talent. Our next witnesses, we will start on my
left and the panel's right, are John and Mary Densmore, who
represent Geldbach Petroleum from the wonderful town of Valley
Park, Missouri, and it is only a coincidence that they are from
the Second Congressional District. Mr. and Mrs. Densmore,
whichever of you wants to go ahead with the testimony.
STATEMENT OF JOHN AND MARY DENSMORE, GELDBACH PETROLEUM, VALLEY
PARK, MI
Mrs. Densmore. We would like to thank the Chairman and the
Committee for listening to our views on this issue. Geldbach
Petroleum is a family-owned business located in St. Louis
County in Valley Park, Missouri. We have several other plants
located in eastern Missouri. We market mostly in eastern
Missouri. We are not in Illinois or any other State. Geldbach
is one of the few remaining independent propane marketers.
Other independents, many others, have been taken over by large
companies and they are now nationally owned.
Geldbach has been in continual operation since 1920.
Herbert Geldbach, my father, began the business by building his
first truck in his daddy's wagon shop. His father was a
wagonwright and a blacksmith. Herb first started as a one-man
operation until he became large enough to buy more trucks and
hire drivers. He continued in the business by being competitive
and resourceful. He drove a truck every day while expanding the
business into serving gasoline stations and residences with
fuel oil. He owned a few gas stations and he delivered to
approximately 40 independent gas stations over the years.
Herb Geldbach expanded into propane gas in 1957. He saw the
advantages of propane for the consumer. Propane is a very
versatile, clean-burning fuel that has many applications in
business and in the home. It is used in manufacturing plastics,
providing temporary heat on construction sites, as well as
powering forklift trucks in manufacturing and warehouse
industries. It has also been designated a clean air alternative
fuel by the Department of Energy. Propane gas is the rural
residents' choice of fuel when you compare it to a more
expensive or an alternative fuel, such as electric or fuel oil.
Our farmers use propane to dry their crops and operate their
field equipment, such as generators.
After Herb Geldbach died in 1982, the family has continued
the operation and expanded into new locations in order to
remain competitive.
In 1985, the EPA's stage two vapor recovery regulation had
a devastating effect on our gasoline operation. Our independent
service stations were forced out of business by the regulation
and, due to the aforementioned legislation, in 1991, we sold
our service stations to another oil company.
In 1997, we were forced to sell the entire fuel oil and
gasoline division due to the Underground Storage Tank Insurance
Fund, which all tanks are required to be relined and/or
removed. So after 71 years, we are now out of the oil business.
The propane industry is currently regulated by the National
Fire Protection Association Pamphlets 54 and 58. Our local
reporting authority is the Division of Weights and Measures
under the Department of Agriculture. We also submit Tier Two
reports to the Missouri Emergency Response Commission under the
Department of Natural Resources. Our trucking operation falls
under the Department of Transportation. Our plant operations
and facilities are covered by OSHA.
Now we are faced with the EPA under 42 U.S.C. 7412(r),
which has plans to duplicate much of the aforementioned
regulatory reporting information, plus add to it. The EPA's
risk management plan is grossly over-burdening to the propane
industry. The RMP will put us into a non-competitive position.
The hours of preparation and the staff involved would detract
from our other safety considerations, which are consumer
education and plant safety. Realistically, we would have to
hire another non-revenue employee to comply with the proposed
regulations that we are discussing here today.
We have heard from many of our customers regarding the RMP.
One greenhouse customer told me that he would refuse any more
propane than is required to stay below the threshold quantity.
This would mean more deliveries and more road miles for our
trucks and drivers.
Some customers have told us that we will have to keep and
maintain their RMPs or they will switch to an alternative fuel.
The larger customers that I am aware of are taking out
their stand-by systems. Natural gas, during peak usage, at
times will cut off to manufacturing facilities to provide home
heat. To quote a letter directed to Ms. Carol Browner,
Administrator of the EPA from the Director of the Missouri
Department of Agriculture, John Saunders, he says, ``Currently,
because of the forthcoming risk management plan requirement,
many large bulk storage facilities are being removed and
smaller ones put into place. The redesign of these systems will
create performance and safety problems because the systems'
capacity is too small for the load placed upon it. Extremely
cold winters are of a major concern if this trend continues.''
Propane plants are designed to prevent accidents and to
remain in safe operation. The annual inspections from the
Division of Weights and Measures are all inclusive. We work
very closely with the Department of Weights and Measures to
keep all of our equipment running safely and properly. The
percentage of fires and/or explosions occurring at a propane
plant or a storage facility are a fraction of what this
legislation will cost companies like Geldbach Petroleum and the
industry in general, but the taxpayer, as well.
We do not believe it was the intent of Congress through the
Clean Air Act to include a clean-burning home heating fuel
while putting additional burdens on small business.
This regulation will stop our expansion into new areas. We
will not add another propane plant to our business if the RMP
is implemented. If we cannot expand, we cannot acquire new
customers. Our existing customer base will eventually diminish
through competition with natural gas and electric.
In addition to not expanding, adding another compliance
cost to our margin of profit will put us into a non-competitive
position. We have absorbed many of the regulatory costs over
the years in the interest of supplying safe and prompt service
to our customers. However, adding another non-revenue employee
will prohibit any hopes of remaining competitive with the
larger, nationally-owned conglomerates. We will become another
statistic of how the government has squeezed out the small
businessman. It is imperative to our company's viability that
H.R. 1301 is enacted to exempt propane from EPA's risk
management plan. Thank you, ladies and gentlemen.
Chairman Talent. Thank you, ma'am. That about says it all.
[Mr. and Mrs. Densmore's statement may be found in the
appendix.]
Chairman Talent. Our next witness is Paul Lindsey, who is
the Chief Executive Officer of the All Star Gas Company,
headquartered in Lebanon, Missouri. We are glad to have you and
appreciate your patience, Paul. Please go ahead.
STATEMENT OF PAUL LINDSEY, ALL STAR GAS, LEBANON, MO
Mr. Lindsey. Thank you, and good afternoon. My name is Paul
Lindsey and I am the CEO of All Star Gas Company based in
Lebanon, Missouri. My company is primarily in the business of
retail marketing of propane gas to thousands of residential,
agricultural, and commercial customers.
Today, I appear before you as the immediate past
Governmental Affairs Committee Chairman of the National Propane
Gas Association, NPGA. The NPGA membership includes
approximately 3,700 companies that market propane gas and
equipment in all 50 States and in nearly every Congressional
district. The majority of our members are small, independent
business men and women. Propane gas is widely used for home and
commercial heating, cooling, and agricultural and industrial
processing, and as a clean air alternative engine fuel for
vehicles and forklifts. It is often the fuel of choice for
rural consumers.
My statement today reflects the impact EPA's recent risk
management program, RMP, would have had on thousands of propane
businesses, the majority of whom are mom and pop businesses
with well under 100, even under 20, employees. The EPA's recent
RMP would have had serious consequences for consumers and
farmers, as well. I ask that my written statement and other
materials be entered into the record.
To summarize, the RMP rules duplicated an extensive,
incredible safety infrastructure that already exists in all 50
States. The RMP rules would have decreased safety in the
propane industry because customers would have demanded more
smaller deliveries to stay under EPA's threshold. The RMP rules
would have stifled clean air technology because of these new
burdens upon propane. The RMP rules would have harmed the
environment because customers would have switched to less
environmentally sound alternatives. And, the RMP rules would
have harmed the economy, especially in rural communities. Small
businesses would have been hesitant to come into these areas,
since they normally do not have access to natural gas.
Mr. Chairman, we are grateful for Congress' recent activity
on this issue. I know you helped organize and participate in an
industry forum in Missouri with the EPA on this issue. We are
also grateful for Representative Blunt's introduction of and
your support of H.R. 1301, which addressed our concerns.
Last week, the House passed legislation by unanimous
consent that closely tracked the intent of H.R. 1301. In June,
the Senate passed similar legislation with the full consent of
the Senate, the support of NPGA, the International Association
of Fire Chiefs, the International Association of Fire Fighters,
and the National Fire Protection Association. A recent letter
of fire organization support is attached, as well as a letter
of support from a host of farm and business organizations
throughout the nation.
First, I would like to speak to our industry's safety
infrastructure. It might be important to understand a
distinction about our product. Propane is derived from natural
gas processing and crude oil refining, and in a natural state
is odorless, does not contain any odor. When it is used as a
fuel for retail purposes, an odor is added for the purpose of
safety. I think it is important to understand that even though
S. 880 that has been passed will eliminate propane from RMP,
that is propane in the odorized state. Propane that is still in
the unodorized state, such as the Phillips plant incident that
was referred to earlier, is still very much under the RMP
requirements.
All propane facilities are subject to regulation in all 50
States through building and fire codes. These codes, without
exception, adopt or incorporate the substance of National Fire
Protection Association Safety Standard 58. NFPA 58 contains
strict requirements on the design, installation, inspection,
approval, and operation of propane facilities. State agencies,
code inspectors, and fire marshals require propane storage
facilities to be designed, constructed, and operated safely.
I might add, and it is my understanding that the NFPA
rulemaking committee consists of 30 members and that that will
soon perhaps be expanded to 31 because I understand that EPA
has asked for a seat on that committee. I appreciate their
efforts in doing that. That is, in my opinion, absolutely a
great role for EPA to be involved with and to take part in the
rulemaking process that deals with NFPA 58.
The propane industry also complies with the following
Federal requirements: DOT hazardous material requirements and
regulations, OSHA's workplace safety rules, and EPA's community
right to know rules.
Unfortunately, accidents do occasionally happen, and in our
industry, more often than not, these are caused by or occur
during transportation activities--loading, actual
transportation, unloading activities--which would not have been
covered by the RMP rules. EPA's own data demonstrate this.
This industry is concerned about safety, the environment,
and the impact on consumers and the economy, particularly small
business owners. This industry voluntarily spends time and
money training local fire departments all over the nation.
Emergency responders need to be as highly trained as possible,
and we are putting our money where our mouth is. We are proud
to report today that the industry is spending just over $1
million this year alone to develop a comprehensive training
program for emergency response personnel.
The main or primary text of this training program, entitled
``Propane Emergencies,'' is being distributed to every fire
department and fire academy this summer, and I believe that
members of Congress have also received a copy of this program.
Perhaps if this program had been in place, part of the problem
that was encountered in Iowa in the incident that was referred
to a few moments ago would not have occurred.
Our industry is also proud to report completion this year
of a negotiated rulemaking with the Department of
Transportation to address the safety of our industry's delivery
trucks and operating procedures for the safe unloading of
propane at the consumers' tanks. The improvements include new
equipment, technologies on our vehicles, and enhanced safety
operations and procedures. Over the next five years, we
estimate this will cost the industry over $50 million.
Second, many propane customers would have sought to reduce
the quantity of propane they stored to levels below the EPA's
threshold for coverage. This would not, however, have reduced
their demand for timely deliveries. Our industry delivery
trucks would have faced making many more small deliveries
rather than the safer alternative of making fewer larger
deliveries. Complicating this situation would have been the bad
weather that often accompanies the industry's busiest time, the
winter heating season.
Customers also face the choice to switch to all the other
consumer fuels which were not on EPA's RMP list. Unfortunately,
this choice often led to less environmentally desirable fuels.
Companies who used propane began switching fuels because the
RMP rules were very complex and because they come with a high
public relations price tag. These are the real-world impacts of
the RMP rules.
Third, the reduction in air quality may be the most ironic
aspect of the RMP rules. Legislative and regulatory consistency
are very important to small business. Unfortunately, EPA's RMP
rules were anything but consistent for propane. EPA's RMP rules
would have stigmatized the use of clean burning, non-toxic
propane as an alternative engine fuel in the very same law
approved by Congress that held it up as a clean burning fuel.
Finally, I want to address the costs we believe the RMP
rules would have had on our industry. Huge numbers of
agricultural and commercial facilities use propane in
sufficient quantities to be covered by the RMP rules. The EPA
compliance threshold for propane was 10,000 pounds of fuel
stored. At this level, we estimate the total number of RMP-
covered facilities was over one million for propane alone.
Using a conservative $1,000-per-site estimate, the RMP rules
would have cost $330 million to the farm sector, $675 million
to all other covered propane customers, and $12 million to
propane marketers.
The National Propane Gas Association sought to prepare a
risk management program services directory for the benefit of
its membership and the customers of its membership. Twenty-
three of the consultants involved would not specify a
particular charge. Two of the consultants indicated that the
fee would be less than $2,000. Eleven indicated more than
$2,000, with one of them indicating $20,000. The billing ranges
were from $25 to $140 per hour, or $500 to $2,000 per day.
Recently, EPA proposed to raise the RMP threshold level for
propane up to 67,000 pounds. This change still would not have
helped many agricultural consumers or those larger commercial
accounts most able to switch to other fuels.
The bottom line is that the RMP rules were an expensive,
duplicative paperwork exercise that would have had little or no
discernible impact on safety but which would have drained a
total of $1 billion out of the pockets of our customers and our
industry.
In closing, EPA's RMP rules never should have covered
propane. These rules would have been bad for consumers,
particularly small business owners, bad for the environment,
and did nothing to improve safety.
Mr. Chairman, members of this Committee and other members
of Congress, I want to thank you again for unanimously passing
S. 880 and thank you for your efforts to pull back the
regulatory yoke from this industry and its customers. We are
grateful to Congress for the swift action to bring consistency
and common sense to regulations affecting small business
throughout the nation, and we ask the Committee's support to
see that the legislation before the Congress moves swiftly to
the President. Thank you.
Mrs. Kelly [presiding]. Thank you very much, Mr. Lindsey.
[Mr. Lindsey's statement may be found in the appendix.]
Mrs. Kelly. I want to thank both of you, Mr. and Mrs.
Densmore and Mr. Lindsey, for staying with us for as long as
you have. I have a couple of questions that I would like to ask
you.
Mr. and Mrs. Densmore, you heard me, I am sure, questioning
the EPA about your statement about having more drivers making
more deliveries. That is caused by--I just want you to say
again what I think I read in your testimony--by what?
Mrs. Densmore. By the fact that they would not receive
any--we would have to deliver propane only so they could remain
below the threshold. We have one customer who has, like, 5,000
gallons in storage tank capacity and he would only take a
2,000-gallon delivery from us. We would have to go twice and
make sure he was not over the threshold.
Mrs. Kelly. So you are saying that this would result in
customer avoidance so they will not have to file this. It is
possible for schools, universities, shopping centers,
commercial buildings, it would be possible for them, also, to
reconstruct their tanks, if I understood the answer from the
EPA to my earlier question to be correct, if they firewall off,
they can just string out a whole lot of these tanks in a
sequence and, thus, avoid the EPA rule.
Mrs. Densmore. I think that is correct, yes.
Mr. Densmore. What you would have to do, you would have to
make some type of fire barrier or explosive barrier, which
would be ridiculous, also. Basically, what you are looking at a
high peak time in the industry--December, January, February,
where demand for the product is high--our larger facilities
that have stand-by heat, our nursing homes or hospitals, they
have up to 30,000-gallon storage tanks in their facilities. We
count on that storage, so at peak times, we can deliver them
transport loads and we do not run our smaller trucks.
Now, if we have to drop their storage quantity to a smaller
tank which would go into--well, to explain a little bit about
propane, most heating facilities all work on vapor, so a
smaller tank cannot handle the BTU load of that facility, so
you would have to go into a liquid transferal if you went to a
smaller tank, which common sense will tell you, if you are
dealing with vapor and you are going to liquid, there is a
little more danger there. I feel that is more dangerous. Then
you need a vaporizer to heat that propane up to where it could
vaporize enough to take care of that facility.
So, usually, 30,000 is enough to get them through the month
of January and we do not have to worry about them, because we
get allocated during those peak seasons. We are only allowed so
much from our suppliers at that time. So the nursing homes, the
factories, the hospitals, the greenhouses, everybody that
counts on these larger storage tanks, they are taken care of
through this peak time. We can demand all our concerns to
residential heat and the average customer.
If we have to deplete these storage facilities in our area,
then that means we are going to have to make more trips, we are
going to have to hire more drivers, we are going to have to
build a larger storage facility ourselves to compensate. It
would be more trucks on the road. Forty percent of our vehicles
are diesel vehicles, like you said, but most of our vehicles
are propane, clean air, or are powered by propane. But we would
have more trucks on the road.
Like you said about the point of which you transfer liquid,
dispersing it from your plant to your truck, that is your
biggest hazard, whenever you go from your storage tank to your
truck or your truck to your storage tank. That is when you have
the most probability of an accident. So any time you increase
that, then you are really increasing problems.
As far as the EPA was explaining about Pamphlets 54 and 58,
different States have different concerns on that. You cannot go
below the restrictions put in 58 or 54, but you can increase
upon them. Most cities or municipalities have higher
regulations than 58. It is up to the fire department in that
area. They can increase the regulations to see fit, and most of
them do. So we are getting more restrictions at that point.
As far as toxin, it is not a toxin. Their definition of a
toxin, I guess if you poured enough water on your head,
eventually, you drown. I guess that would be a toxin. That is
the only thing I want to say about the toxin end of it. I
cannot see where we fall into any of this compliance.
Mrs. Kelly. So you agree with Mr. Lindsey that, in a sense,
what they are doing is they are degrading the safety, in a
sense.
Mr. Densmore. Actually, they are degrading the safety at a
higher level. When you have to put these bigger operations on
vaporizers, whenever you add more toys, you are going to have
to have more responsibility, which alleviates more problems.
You are not dispersing vapor anymore, you are dispensing
liquid, and if you had liquid dispersion, you are putting out
more product than you are with a vapor product because it
expands it 240 times. If you are dumping out liquid, well, a
gallon of liquid will expand 240 times versus vapor, it would
take an amount of time for that vapor to expand 240 times. You
might have an opportunity to stop a situation with the vapor
problem.
Mrs. Kelly. Thank you. Mr. Lindsey, how accurate do you
think the EPA's cost estimates for completing an RMP were?
Mr. Lindsey. Based on our study, as I indicated a moment
ago, I think they were certainly low, because our indications
are that we are going to be looking at--11 of the consultants
said it to be in the range of $2,000 or more.
Mrs. Kelly. And they were factoring in the amount of money
that it is going to cost for the person to go and learn and
then continually have to fill these things out, is that
correct?
Mr. Lindsey. That is correct.
Mrs. Densmore. I believe, is that not per location?
Mr. Lindsey. That is per location.
Mr. Densmore. Per location.
Mrs. Kelly. Per location.
Mr. Lindsey. And the real problem you will find here is you
will find that a lot of the customers will probably say, you
are going to add $2,000 of cost to my using this fuel? Then
they have to begin looking at the cost comparisons of does it
make more sense for them to switch to another fuel, or say to
us as a propane supplier, I am either going to be switching to
another fuel unless you bear the cost and burden of completing
this. Then that adds one more challenge, particularly to the
small propane company.
Mrs. Kelly. Do we know the average profitability of the
average person dealing in propane? Are you working at a 10
percent, 20 percent, 50 percent markup, just margin? Usually,
in small businesses, the margin of profitability is so small
that if you talk about $2,000 per location, you are eating into
a big chunk of the profitability of that corporation. I look at
you, Mr. and Mrs. Densmore, knowing that regulatory problems
have actually moved you out of two ancillary businesses. I am
very, very concerned that the cost of this might move you out
entirely.
Mrs. Densmore. One reason we are concerned about it is
because it is an ongoing cost. Every time something changes in
the zone of receptors, you have to submit a new plan. This is
an ongoing cost. We cannot just put it in place, spend the
money, and be done with it. It is ongoing for the rest of your
life.
Mrs. Kelly. Thank you. Mr. Bartlett, I am sure you have a
couple of questions.
Mr. Bartlett. Thank you. Mrs. Densmore, you skipped one
brief paragraph in your written testimony. I was wondering if
you skipped that because you no longer believe it or because
you were trying to shorten your testimony to stay within our
time limits.
Mrs. Densmore. Regarding the vapor cloud explosion?
Mr. Bartlett. Yes.
Mrs. Densmore. No. I thought we had already covered that,
so I just thought I would hop over it.
Mr. Bartlett. Okay. But for the record, you still believe
that the premise the EPA is using, a vapor cloud explosion, is
so far fetched that, to coin a phrase, we could all be struck
by lightning simultaneously?
Mrs. Densmore. Yes, I do believe that.
Mr. Bartlett. They have about the same odds of occurring,
you believe?
Mrs. Densmore. Yes.
Mr. Bartlett. Thank you very much.
Mrs. Kelly. I guess there are no more questions. We really
appreciate your being here. I think you have added a lot of
information for all of us, and thank you very much.
Mrs. Densmore. Thank you.
Mrs. Kelly. I would like to leave the record open for ten
days for additional questions and comment, and I thank you very
much. The hearing is adjourned.
[Whereupon, at 12:57 p.m., the Committee was adjourned.]
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