[Federal Register Volume 59, Number 39 (Monday, February 28, 1994)]
[Unknown Section]
[Page ]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-4375]


[Federal Register: February 28, 1994]


_______________________________________________________________________

Part IV





Environmental Protection Agency





_______________________________________________________________________



40 CFR Part 280



Underground Storage Tanks Containing Petroleum; Financial 
Responsibility Requirements; Rule
ENVIRONMENTAL PROTECTION AGENCY

40 CFR Part 280

[FRL-4842-6]


Underground Storage Tanks Containing Petroleum; Financial 
Responsibility Requirements

AGENCY: Environmental Protection Agency (EPA).

ACTION: Final rule.

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SUMMARY: The Environmental Protection Agency (EPA) is today 
promulgating a rule to amend the financial responsibility requirements 
for underground storage tanks (USTs) containing petroleum that appear 
in subpart H of 40 CFR part 280. Specifically, this rule modifies the 
financial responsibility compliance date under 40 CFR 280.91(e) for one 
category of UST owners. Under this modification, Federally-recognized 
Indian tribes that own USTs on Indian lands are required to comply with 
Federal Financial Responsibility requirements of 40 CFR part 280 
subpart H--Financial Responsibility--by December 31, 1998 if those USTs 
are in compliance with applicable technical requirements for USTs in 40 
CFR part 280. Today's rule extends the deadline for certain USTs owned 
by Indian tribes from the previous date of February 18, 1994. This 
change will allow EPA, the Bureau of Indian Affairs and Indian tribes 
additional time to explore options for solving the root problem of lack 
of funding for past contamination on Indian lands and further assist 
tribes with future technical requirements, such as tank upgrading. EPA 
is not changing the financial responsibility deadline for rural 
petroleum marketers or local governments. A discussion of the Agency 
rationale behind this decision can be found in section III. C. under 
``SUPPLEMENTARY INFORMATION''.

EFFECTIVE DATE: This rulemaking is effective on February 28, 1994.

ADDRESSES: The public docket for this rule is in room M2616, U.S. 
Environmental Protection Agency, 401 M Street SW., Washington, DC 
20460. Call (202) 260-9720 for an appointment to review docket 
materials.

FOR FURTHER INFORMATION CONTACT: The RCRA/Superfund Hotline at (800) 
424-9346 (toll free) or (703) 412-9810 in Virginia. For technical 
questions, contact Sammy Ng in the Office of Underground Storage Tanks 
at (703) 308-8882.

SUPPLEMENTARY INFORMATION: EPA is today finalizing a rule that would 
allow certain Federally-recognized Indian tribes that own USTs 
containing petroleum on Indian lands additional time to comply with the 
financial responsibility requirements. Specifically, this rule modifies 
the compliance date under 40 CFR 280.91(e). Under this modification, 
Indian tribes that own USTs containing petroleum on Indian lands must 
comply with the financial responsibility requirements by December 31, 
1998. To qualify for the 1998 financial responsibility deadline, 
tribally-owned USTs must be in compliance with the technical 
requirements for USTs described in 40 CFR part 280. Technical 
compliance for USTs includes, for example, leak detection and 
reporting. The technical requirements criterion has been included to 
protect human health and the environment on Indian lands. EPA is not 
changing the financial responsibility deadline for rural petroleum 
marketers or local governments. A discussion of Agency rationale behind 
this decision can be found in section III C.
    The contents of today's preamble are listed in the following 
outline:

I. Authority
II. Effective Date
III. Background
IV. Final Rule
    A. Indian Tribes
    B. Implementation of Final Rule
    C. Discussion of Options Proposed but Not Finalized for 
Petroleum Marketers and Local Governments.
V. Economic Impacts
    A. Economic Impact Analysis
    B. Regulatory Flexibility Analysis
    C. Regulatory Impact Analysis
    D. Paperwork Reduction Act

I. Authority

    These regulations are issued under the authority of sections 2002, 
9001, 9002, 9003, 9004, 9005, 9006, 9007, and 9009 of the Solid Waste 
Disposal Act, as amended (42 U.S.C. 6912, 6991, 6991a, 6991b, 6991c, 
6991d, 6991e, 6991f, and 6991h).

II. Effective Date

    This rule will be effective on February 28, 1994, pursuant to 5 
U.S.C. 553(d). This rule may be made effective immediately because it 
extends an existing compliance date and there is good cause to make 
that extension immediately effective within the meaning of 28 U.S.C. 
553(d)(1) and (3).

III. Background

    On October 26, 1988, EPA promulgated financial responsibility 
requirements applicable to owners and operators of underground storage 
tanks (USTs) containing petroleum (53 FR 43322). To meet the 
requirements, owners and operators must demonstrate that they can pay 
for the costs of cleanups and third-party damages resulting from any 
leaks that may occur. In the final rule, EPA established a phased 
compliance schedule for owners and operators of petroleum USTs. The 
principal reason for adopting the phased compliance approach was to 
provide the time necessary for providers of financial assurance 
mechanisms (including private insurance companies and states intending 
to establish state assurance funds) to develop new policies and 
programs or conform their policies and programs with EPA requirements. 
See 53 FR 43324.
    When devising the phased compliance approach, the Agency wanted to 
achieve the best balance between the need to demonstrate financial 
responsibility for UST releases and the time necessary for owners and 
operators to obtain assurance mechanisms. The Agency attempted to 
establish compliance dates that were as early as possible, considering 
the type of assurance different types of facilities were likely to 
obtain. Petroleum marketers owning or operating 1,000 or more USTs and 
non-marketers with more than $20 million in tangible net worth were 
required to comply by January 24, 1989, based primarily on their 
ability to qualify for self-insurance. Petroleum marketers with 100 to 
999 USTs were required to comply by October 26, 1989. These marketers 
were estimated to be relatively more likely to be able to obtain 
insurance; some of them were also expected to qualify as self-insurers. 
Petroleum marketers owning 13 to 99 USTs at more than one facility were 
originally required to comply by April 26, 1990. However, on May 2, 
1990, the Agency published a rule (55 FR 18566) extending this 
compliance date to April 26, 1991. These marketers were thought to be 
less likely to be able to obtain insurance than members of the October 
26, 1989, compliance group.
    Petroleum marketers owning fewer than 13 USTs at more than one 
facility or owning only one facility with fewer than 100 USTs, as well 
as non-marketers with less than $20 million in net worth and local 
governments (including Indian tribes) were originally required to 
comply by October 26, 1990. This group was expected to rely primarily 
on state assurance funds for compliance. (State assurance funds provide 
money for cleanups to owners and operators in their states. Owners and 
operators in states with assurance funds are deemed to be in compliance 
with financial responsibility for the amount covered by the fund once 
the state submits the fund to EPA for approval unless and until EPA 
disapproves the fund.) On October 31, 1990, EPA extended the compliance 
deadline for one year for small marketers (with fewer than 13 USTs or 
fewer than 100 USTs at a single facility) and small non-marketers (with 
less than $20 million in net worth), otherwise known as Category IV. 
This extension was based on the need for additional time for state 
assurance funds to be developed. In addition, EPA extended the 
compliance deadline for local governments and Indian tribes until one 
year after publication of a final rule with additional self-insurance 
mechanisms for local governments to use to demonstrate compliance. This 
rule was published on February 18, 1993 (58 FR 9026).
    On December 23, 1991, EPA once again extended the compliance 
deadline for the Category IV group (small marketers with fewer than 13 
tanks at more than one facility or fewer than 100 tanks at a single 
facility as well as non-marketers with net worth less than $20 million) 
to December 31, 1993 (56 FR 66369). EPA based the extension on its 
understanding that more members of this compliance group than the 
Agency had originally projected must rely on state assurance funds, 
rather than on insurance, to demonstrate compliance with the financial 
responsibility requirements. EPA believed that, in order for owners and 
operators to rely on state assurance funds as compliance mechanisms, 
states must have more time to submit their state assurance funds to EPA 
for approval. Currently, 31 state assurance funds have been approved by 
EPA and an additional eight state assurance funds have been submitted 
to EPA for approval. (It is important to note that upon submission of a 
state assurance fund to the EPA Regional Administrator, the fund is 
considered to be approved unless and until EPA disapproves it.) 
Additionally, the extension provided states with more time to develop 
and implement financial assistance programs (e.g., direct loan 
programs, loan guarantee programs, grant programs) which help owners 
and operators (especially small businesses) pay for technical 
requirements such as tank upgrading. These technical improvements, in 
turn, help USTs meet insurers' underwriting criteria.
    The Agency, however, continued to be concerned about the effects of 
its regulations on the regulated community. By analyzing the costs of 
the requirements, EPA found that the affordability of financial 
responsibility compliance is often tied to early compliance with 
technical requirements such as tank upgrading, since, for example, 
private insurance companies may refuse to provide coverage unless they 
are certain that a site does not pose a high risk of leaking. EPA 
believed that the costs associated with the technical requirements are 
an important factor underlying the inability of some small owners and 
operators to meet the financial responsibility requirements. These 
costs coupled with the lack of a state assurance fund, grant, or loan 
program could force some gas stations to close their tanks when the 
1993 financial responsibility compliance date fell. EPA believed that 
tank closure could be particularly problematic when those tanks provide 
essential services to rural communities.
    As a result of this concern about the availability of fuel in rural 
areas, EPA proposed a December 31, 1998 compliance date for certain 
petroleum marketers, local governments, and Indian tribes, that meet 
Federally-determined criteria (58 FR 43770). The objective of the 
August 17, 1993 proposed rule was to obtain data on whether an 
additional extension of the financial responsibility requirements was 
needed, and for whom. The Agency intended to limit any additional 
extension to, at most, a small sub-group of marketers currently in 
Category IV, as well as certain local governments and Indian tribes; 
EPA did not want to change compliance dates for all Category IV 
marketers or local governments on the belief that most of these tank 
owners were already in compliance with the financial responsibility 
requirements due to the existence of state assurance funds and reliance 
on self-insurance mechanisms. The August 17, 1993 proposed rule 
included eligibility criteria limiting the proposed 1998 compliance 
group to rural petroleum marketers that met a hardship criterion of 
annual profit on gasoline sales of $15,000 or less, rural local 
governments that use tanks for essential services such as police and 
fire departments, and Indian tribes. (The definition of rural was 
obtained from the Farmers Home Administration within the U.S. 
Department of Agriculture.) In addition, all owners in the new 1998 
compliance group would have to ensure that their tanks were in 
compliance with applicable technical requirements, such as leak 
detection. The technical compliance criterion was included to protect 
human health and the environment regardless of a change in the 
financial responsibility deadline. EPA also stressed the fact that any 
change in the financial responsibility compliance date would not remove 
the liability on the part of the owner or operator to clean-up a leak.
Current Financial Responsibility Deadlines
January 24, 1989:
    Marketers With 1000 or More Tanks; Non-Marketers With Net Worth 
Greater Than $20 Million.
October 26, 1989:
    Marketers With 100-999 Tanks.
April 26, 1991:
    Marketers With 13-99 Tanks at More Than One Facility
December 31, 1993:
    Marketers With 1-12 Tanks at More Than One Facility or Fewer Than 
100 Tanks at One Site; Non-Marketers With Net Worth Less Than $20 
Million.
February 18, 1994:
    Local Governments and Indian Tribes

IV. Final Rule

    EPA received 58 comments on the August 18, 1993 proposed extension. 
34 commenters supported an extension for one or more groups. 21 
commenters opposed any extension of the financial responsibility 
requirements. No commenters objected to an extended compliance deadline 
for Indian tribes while one commenter supported it. One commenter 
remained neutral on the subject and two additional comments were 
received regarding the proposed definition of rural, as defined by the 
Farmers Home Administration.
    Based on EPA analysis of the comments received as well as the rest 
of the administrative record from the proposal, the Agency is 
finalizing an extension to 1998 for Federally-recognized Indian tribes 
that own USTs on Indian lands. No other entity (petroleum marketer or 
local government) has been included in this 1998 compliance group. A 
discussion of comments relating to a 1998 compliance deadline for 
petroleum marketers and local governments can be found in section III 
C.

A. Indian Tribes

    Based on an analysis of the administrative record for this 
rulemaking and lack of opposition to an extension for tribes, EPA is 
extending the compliance deadline for Tribally-owned USTs on Indian 
lands to December 31, 1998 if the USTs meet the technical compliance 
criterion. The Agency is sensitive to the lack of funding available to 
help Indian tribes pay for environmental problems and acknowledges that 
mechanisms used by other owners, such as state assurance funds or 
private insurance, may be inaccessible to tribes. The Agency has 
retained the technical compliance criterion in order to protect human 
health and the environment on Indian lands and expects that inclusion 
of this criterion may prompt some owners to come into compliance with 
the technical requirements in order to qualify for the extension. 
(Tanks owned by Indian tribes which are out of compliance with 
applicable technical requirements would not be eligible for the 1998 
deadline.)
    The additional time will also allow the Agency to work with the 
Bureau of Indian Affairs (BIA) at the U.S. Department of the Interior 
to explore options for solving the root problem of lack of funding for 
past contamination on Indian lands and further assist tribes with 
future technical requirements, such as tank upgrading.
    A compliance date of December 31, 1998 was selected for Indian 
tribes because this date corresponds with the final technical 
compliance date for tank upgrading. Tribes unable to comply with the 
financial responsibility requirements at that time face the more costly 
technical requirement of upgrading their USTs. At that point, tanks not 
in technical compliance would be forced to close with or without the 
financial assurance coverage. Conversely, owners able to meet the 
technical requirements at that time would be more likely to obtain an 
affordable assurance mechanism, such as private insurance, since the 
tanks would be considered an insurable, reasonable risk.

B. Implementation of Final Rule

    EPA intends to promulgate regulations that pose the least burden to 
the affected regulated community while protecting human health and the 
environment. Therefore, no change in reporting requirements or 
recordkeeping procedures from the October 26, 1988 rule is incorporated 
into this rule.
    The August 17, 1993 proposed rule included a requirement that UST 
owners self-certify for an extension and keep a record of the proposed 
compliance checklist on file for enforcement purposes. Based on a 
review of the comments and the rest of the administrative record for 
the proposal, the Agency has decided that this self-certification is 
unnecessary for implementing this rule and has therefore decided to 
delete the self-certification and recordkeeping requirement.

C. Discussion of Options Proposed But Not Finalized for Petroleum 
Marketers and Local Governments

    As noted above, EPA received 58 comments on the August, 1993 
proposed rule. Of the 34 comments received in support of a 1998 
compliance deadline, 17 specifically supported an extension only for 
petroleum marketers. An additional seven comments were received in 
support of local governments, four for non-marketers (such as rental 
car companies, etc.), and one for Indian tribes. Five commenters 
supported an extension for all Category IV firms and local governments 
regardless of criteria, or not at all, concluding that a limited 
extension would be unfair to the entities not included in the 1998 
compliance group.
    Twenty-one commenters were against any additional extension to 
1998. Of the 21 comments which disagreed with the proposed extension, 
eight were provided by state agencies that administer UST regulatory or 
state fund programs. One commenter was neutral, neither agreeing or 
disagreeing with the proposed compliance date, and two additional 
comments addressed only the definition of rural.
    Commenters arguing for a 1998 compliance date for certain petroleum 
marketers and local governments stated that the additional time was 
needed to keep small businesses open. Several commenters said that 
compliance with financial responsibility was difficult in states 
without state assurance funds. In fact, of the commenters supporting a 
1998 compliance date for one or more groups, 12 out of 35 were received 
from a state without a state assurance fund. In addition, some 
commenters said that insurance was not affordable, particularly when 
tanks have not been upgraded. Two commenters urged an extended 
compliance date in two states that plan to adopt a state assurance fund 
or loan program. One of those commenters felt that a 1996 compliance 
date would be acceptable since it would correspond to the date the 
state loan program plans to be operational. Another commenter noted 
that not all local governments can pass one of the four additional 
self-insurance mechanisms promulgated in February, 1993, and one 
additional commenter urged EPA to extend the financial responsibility 
compliance date for hospitals that use their tanks to fuel emergency 
generators.
    Several commenters arguing against an additional extension to 1998 
for local governments and petroleum marketers stated that most of these 
owners were already in compliance due to state assurance funds. Several 
commenters also stated that an extension would not be fair to those 
owners already in compliance with the financial responsibility 
requirements. Others felt an extended compliance group to 1998 would 
incorrectly imply that the remaining technical compliance dates would 
be extended by EPA as well. Other commenters noted that the criteria 
included in the proposed rule were difficult to implement and would 
prove burdensome to states with regard to enforcement since different 
petroleum marketers and local governments would have different 
compliance dates. Other commenters feared that adoption of a 1998 
deadline for certain gas stations and local governments would hurt the 
environment, since the requirement was necessary to ensure that money 
would be available to pay for cleanups. One commenter stated that 
previous compliance date extensions reduced the volume of business 
available to private insurers trying to create a market for UST 
insurance, thereby increasing the price. Another commenter echoed that 
sentiment, saying that previous extensions had stopped private 
mechanisms, such as insurance, from developing fully. Finally, several 
commenters state that it was appropriate to exclude non-marketers from 
any additional extension since sales of petroleum were not crucial to 
their operations.
    Based on a review of the comments and the administrative record, 
EPA has decided not to extend the financial responsibility compliance 
deadline for petroleum marketers, non-marketers, or local governments. 
While the Agency acknowledges that some of these owners, especially in 
those few states without a state assurance fund, may have difficulty 
complying with the financial responsibility requirements, EPA agrees 
with commenters that say that most owners and operators are already 
covered by either state assurance funds, self-insurance mechanisms or 
private insurance. Agency analysis indicates that compliance may be as 
high as 98% for local governments with the addition of the four self-
assurance mechanisms promulgated in February, 1993. In addition, just 
14% of all tanks are in states without legislation creating state 
assurance funds. The Agency also agrees that another extension hurts 
EPA credibility with regard to upcoming technical compliance dates and 
agrees that a later compliance date is unfair to owners and operators 
already in compliance. In addition, a 1998 compliance deadline for some 
local governments and petroleum marketers would create an 
administrative burden for states to implement, since some states would 
need to change their legislation or regulations in order to adopt the 
new deadline. EPA also acknowledges the difficulty in trying to define 
an appropriate subgroup and believes that inclusion of certain 
marketers and local governments in a new compliance group would create 
additional confusion in the regulated community.
    EPA agrees with commenters who feared that adoption of a 1998 
deadline for certain gas stations and local governments might hurt the 
environment in the event that funds are not available to undertake 
corrective action. In adopting the phased compliance approach, the 
Agency wanted to achieve the best balance between the need to 
demonstrate financial responsibility for UST releases and the ability 
of different types of tank owners to obtain the assurance mechanisms. 
In deciding not to extend the compliance deadline for petroleum 
marketers and local governments, the Agency has decided that, since 
most marketers and local governments can comply, the balance has to be 
weighed in favor of demonstrating compliance. On the other hand, the 
current inability of Indian tribes to demonstrate compliance as 
explained in section IV.A above led the Agency to reach the opposite 
decision in that situation.
    EPA also received comments with regard to the criteria discussed in 
the proposed rule applicable to petroleum marketers and local 
governments. Most commenters supported the use of the Farmers Home 
Administration definition of rural, but felt that a hardship 
determination based on profit should be replaced with a measure of 
yearly throughput of gasoline through an UST system.

V. Economic Impacts

    This section provides an estimate of the economic impacts of the 
proposed rule. Because the proposed rule will not cause an annual 
impact on the economy of $100 million or more and will not cause an 
increase in the costs of production or the prices charged by the 
affected community, a Regulatory Impact Analysis is not required. 
Instead, EPA has prepared an economic impact analysis to estimate the 
number of affected facilities that would benefit from this additional 
flexibility.

A. Economic Impact Analysis

    The economic analysis examines the potential economic effects of 
adopting a new compliance category to 1998 and estimates the number of 
potentially affected entities.
    Overall, approximately 1.3 million USTs are subject to the 
technical and financial responsibility standards. The number of 
tribally-owned USTs that could be eligible for the 1998 compliance date 
numbers approximately 500. These 500 tribally-owned USTs represent 
approximately 10% of all active tanks on Indian lands. (The remainder 
of the tanks on Indian lands are owned by private individuals and 
firms, as opposed to Federally-recognized tribes.) The total number of 
tanks eligible for the 1998 compliance date would be reduced, however, 
with the inclusion of the technical compliance criterion.

B. Regulatory Flexibility Analysis

    Pursuant to the Regulatory Flexibility Act of 1980, 5 U.S.C. 601 et 
seq., when an Agency publishes a notice of rulemaking, for a rule that 
will have a significant effect on a substantial number of small 
entities, the agency must prepare and make available for public comment 
a regulatory flexibility analysis that considers the effect of the rule 
on small entities (i.e.: Small businesses, small organizations, and 
small governmental jurisdictions). EPA believes that this rule will 
not, if promulgated, have a significant economic impact on a 
substantial number of small entities. The new compliance deadline to 
1998 will provide relief to members of this compliance group by 
allowing them additional time to comply with the financial 
responsibility requirements. Accordingly, the Agency has concluded that 
the law does not require a Regulatory Flexibility Analysis, and 
certifies that this rule, if promulgated, will not have a significant 
economic impact on a substantial number of small entities.

C. Regulatory Impact Analysis

1. Executive Order 12866
    Pursuant to the terms of Executive Order 12866, OMB has notified 
EPA that it considers this a ``significant regulatory action'' within 
the meaning of the Executive Order. EPA has submitted this action to 
OMB for review. Changes made in response to OMB suggestions or 
recommendations will be documented in the public record.

D. Paperwork Reduction Act

    This rule does not contain any new information collection 
requirements subject to review by the Office of Management and Budget 
(OMB) under the provisions of the Paperwork Reduction Act, 44 U.S.C. 
3501 et seq.

List of Subjects in 40 CFR Part 280

    Environmental protection, Administrative practice and procedure, 
Hazardous materials insurance, Oil pollution, Penalties, Petroleum, 
Reporting and recordkeeping requirements, State program approval, 
Surety bonds, Underground storage tanks, Water pollution control.

    Dated: February 18, 1994.
Carol M. Browner,
Administrator.
    For the reasons set out in the preamble, part 280 of title 40 of 
the Code of Federal Regulations is amended as follows:

PART 280--TECHNICAL STANDARDS AND CORRECTIVE ACTION REQUIREMENTS 
FOR OWNERS AND OPERATORS OF UNDERGROUND STORAGE TANKS (UST)

    1. The authority citation for part 280 continues to read as 
follows:

    Authority: 42 U.S.C. 6912, 6991, 6991a, 6991b, 6991c, 6991d, 
6991e, 6991f, and 6991h.

    2. Section 280.91 is amended by revising paragraph (e) and adding 
paragraph (f), to read as follows:


Sec. 280.91  Compliance dates.

* * * * *
    (e) All local government entities (including Indian tribes) not 
included in paragraph (f) of this section; February 18, 1994.
    (f) Indian tribes that own USTs on Indian lands which meet the 
applicable technical requirements of this part; December 31, 1998.
[FR Doc. 94-4375 Filed 2-25-94; 8:45 am]
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