[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

                              ----------                              
                                                                   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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