Hearings - Testimony
 
FULL COMMITTEE HEARING
EPA’s Spill Prevention Control and Countermeasure Program
Wednesday, December 14, 2005
 
James J. Corbett, PhD
Assistant Professor, Marine Policy Program, Graduate College of Marine Studies, University of Delaware

Good morning, Mr. Chairman and members of the Committee. I am James J. Corbett, Jr., Assistant Professor in the College of Marine Studies at the University of Delaware. The College of Marine Studies is an interdisciplinary unit that conducts research and education regarding fundamental and applied problems in environmental science and policy. The college mission is to provide better understanding of oceanic, geologic and atmospheric systems and to inform society about human impacts on the environment. My research develops and applies tools and analyses to help reveal and evaluate technology-policy alternatives related to energy, environment, and transportation. Additionally, I have experience as a practicing professional engineer (PE) who certified Spill Prevention, Control, and Countermeasures (SPCC) plans, and experience as an operating engineer of facilities and ships that store, transport, and handle oil. The opinions I offer to you today are based on my review of the proposed regulations, on research studies showing that policies aimed primarily at one aspect of a situation often produce unintended consequences, and on how multiple stakeholders focus technology-policy debate on issues of central importance.

 

Summary of Concerns with Proposed Changes
Spill Prevention Control and Countermeasures (SPCC) Plans serve to protect the public and our environment from oil discharges and spills. Landside runoff and discharges currently release significant amounts of oil into our waterways and their tributary streams, watersheds and groundwater connections.(1)

SPCC Plans also protect businesses, both small and large, from the direct cleanup costs and liability for damages. Oil spills and discharges from routine operations impair our nation’s fertile land, the water network that gives it life, the living ecosystems impacted by oil toxicity, and the public health. The costs of preparing SPCC plans, including the costs of maintaining their certification through training and periodic review, afford businesses the benefits of fewer spills, better control of routine discharges, and countermeasures that may contain spills within the facility, instead of polluting a facility’s neighboring communities and environment. In other words, SPCC plans are recognized successes at minimizing the burden of oil spills to business and society, because they reduce the risk – both the likelihood and the consequences – of oil spills.

From a policy perspective, good environmental regulation reduces impacts and costs of pollution that are external to a facility’s normal operation – this remains an explicit purpose of the original SPCC plan requirements. The EPA’s SPCC regulations (and OPA 90) successfully required that facilities internally cover the costs of protecting the environment and public from oil spills, because businesses must bear the costs of a certified SPCC plan and bear the costs of spill cleanup if the plan fails. In this regard, a good SPCC plan is more cost effective through prevention, control, and countermeasures within a facility than the direct and indirect costs of responding after a spill.

EPA’s proposed revisions raise the question whether it is more beneficial to act to prevent an event or to respond afterwards [US Environmental Protection Agency, 2005]. In fact, some of the proposed changes appear to reduce or defer indefinitely the burden of spill prevention for some facilities. EPA’s proposed SPCC revisions use a rationale that argues it is better for small facilities to bear the greater burden of liability without adequate spill prevention measures. Specifically, I have three major policy concerns:

1. Preventing spills appears in the revised rule to be less important for smaller facilities. Without a risk-based justification, this provision implies that only facilities large enough to afford spill prevention plans should be asked to do them, while leaving smaller facilities exposed to the risk of higher cleanup and liability costs. The proposed rule does not consider properly that higher overall risk to public health and the environment may be associated with facilities exempted in the revision. More frequent (if smaller volume) spills and discharges can occur from smaller facilities, contrary to EPA’s summary statements.

 

2. The rule indefinitely allows agricultural facilities to avoid SPCC plan compliance, even though spill prevention may better protect rural, farming areas of our nation that are more connected to our environment and our food supply than many commercial facilities that must complete SPCC plans. If agricultural oil storage and handling facilities are among the smallest, most distributed facilities addressed by the SPCC rule, they are also among those that may impact most our groundwater, irrigation networks, wetlands, and navigable waterways.

3. The proposed revisions weaken certification requirements by relying less on independent, professional expertise. The justification appears to be that SPCC plans can be obtained by industry at lower cost, without a convincing argument that the public receives equivalent protection from the risk of spills, or any other public benefit in tradeoff. Justifying self-certification of SPCC plans on the basis that no spills occurred in the past decade is like allowing me to write prescriptions for my child, instead of requiring a physician’s examination and judgment, because she hasn’t had a serious illness in the past ten years. It provides no public guarantee, or sufficient requirement, that the person certifying the plan posesses education, professional qualifications, and the commitment to public safety that professional engineering licensure requires.

The remainder of my testimony discusses these points in greater detail.

 

Exempting small facilities reduces protection without reducing costs
It is not clear that EPA is correct in its claim that it significantly reduces “the burden imposed on the regulated community in complying with the SPCC requirements, while maintaining protection of human health and the environment.” EPA claims that a key limitation in their recent analysis is lack of data on regulated facilities. However, EPA uses its own 1995 survey data [US Environmental Protection Agency, 1996a; US Environmental Protection Agency, 1996b], collected for the specific purpose of reviewing the efficacy of the SPCC regulation. These data provide significant evidence that SPCC plans effectively reduce the burden of spill liability for facilities – and that SPCC plans may protect small facilities more than larger ones.

EPA's survey analysis “revealed that compliance with the SPCC provisions reduces the number of spills, spill volume and the amount of oil that migrates outside of the facility's boundaries. It also indicated that compliance with one SPCC provision serves as a general indicator of a facility's awareness of the importance of other spill prevention and control measures” [US Environmental Protection Agency, 1996a; US Environmental Protection Agency, 1996b]. This reduces the liability small businesses face if a spill occurs.

EPA’s proposed rule quotes their SPCC survey report claiming that facilities with larger storage capacity are likely to have a greater number of oil spills, larger volumes of oil spilled, and greater cleanup costs.(2) Indeed, actual data from the SPCC survey shows significantly different costs on a per gallon spilled basis. EPA data show that with an SPCC plan, small facility spills cost less per gallon to clean up than large facility spills.

EPA survey data shows that an SPCC plan reduces cleanup costs and that smaller facilities face lower cleanup costs than larger facilities, even on a per gallon spilled basis. This is because with an effective SPCC plan, spills are smaller, less frequent, and better contained within the facility. In exempting small facilities from plan requirements, the proposed rule states that “small facilities no longer required to have SPCC plans are still liable for cleanup costs and damages.” Strangely, this justification suggests that exposing small facilities to the direct and liability costs of larger spills is better than requiring SPCC plans to protect the public and the environment through prevention of spills, or through controls and countermeasures to minimize them and confine them to the facility. EPA’s rationale argues that society and businesses are better off paying for the consequences of spills from small facilities rather than preventing them.

Delaying agricultural facility compliance is inadequately justified
Quoting from a current report by USDA (3) [U.S. Department of Agriculture, 2004]:

“Energy is used directly in agriculture for a range of purposes, including operating vehicles and irrigation pumps, and controlling indoor temperatures of greenhouses, barns, and other farm buildings. Crop production requires a large amount of liquid fuel for field operations. Most large farms use diesel-fueled vehicles for tilling, planting, cultivating, disking, harvesting, and applying chemicals. Gasoline is used for small trucks and older harvesting equipment primarily. Smaller farms are more likely to use gasoline-powered equipment, but as farms get larger they tend to use more diesel fuel. In addition, energy is used in some operations to dry crops such as grain, tobacco, and peanuts; and livestock operations use energy to operate various types of equipment.”

EPA’s own “survey data indicate that two industries (Farms and Oil Production) constitute about 80% of the SPCC-regulated universe. Manufacturing, Transportation, and Gasoline Stations/Vehicle Fueling constitute the next 12% of facilities. All other industries combined make up the remaining 8%.” EPA also notes that “while farms may comprise a sizable portion of the SPCC-regulated universe, [farms that would require SPCC plans] represent only a small percentage (8%) of the farms in the United States. … Farms in general have smaller storage capacity, fewer tanks, and lower throughput levels than other types of facilities” [US Environmental Protection Agency, 1996a; US Environmental Protection Agency, 1996b].(4) One may presume that these represent the 8% of farms at highest spill risk, or at least that these store, transfer, or use the most oil. This information is summarized in Figure 1.

For link see .pdf at end of testimony for Figure 1.

Figure 1. Percent of Industry Meeting SPCC Storage Criteria by Industry Sector

Figure 1 suggests that farms may not be disproportionately burdened compared to other industries. However, such a conclusion should consider the oil spill risk from agricultural SPCC facilities compared to SPCC facilities in other sectors. My estimate in Table 1 of the total petroleum usage by the agriculture sector indicates that farms store, transfer, and use about the same quantity oil products as the nation’s commercial sector, or about half as much oil as the electric power industry.

Table 1. Summary of Petroleum Usagea by Sector (106 metric tons)

For .pdf link see end of testimony for Table 1.

a. Derived from CO2 totals for petroleum from Table 1-11 and Table 2-3 [Environmental Protection Agency, 2003], using an average petroleum carbon content of 86%.
b. Industrial petroleum use includes agricultural use; agricultural petroleum consumption was deducted from the total.

More directly, the 1996 Survey data can be used to compare SPCC facilities by sector as part of the set of all facilities covered by SPCC requirements. This is shown in Figure 2, which plots the percent of regulated facilities and the percent of reported spills by sector. In this figure, farms appear to be ranked third among SPCC-facility spills by sector, behind only manufacturing and oil production. Based on the survey data, EPA may be deferring indefinitely the compliance requirements for those farms where an SPCC plan made the most positive difference. Survey data indicate that less than 2% of all agricultural spills in facilities with SPCC plans escape secondary containment; this demonstrates that control and countermeasures in SPCC plans for farms are nearly as effective as SPCC plans are for the electric power sector.

Figure 2. Comparison of SPCC facilities (1991, 1996) and the percent of all spills from in EPA’s 1996 survey [US Environmental Protection Agency, 1996a; US Environmental Protection Agency, 1996b].

For .pdf link see end of testimony for Figure 2.

Is the indefinite deferment of compliance requirements justified for facilities in one sector, but not for other sectors with similar oil consumption and/or spill rates? Potential spill consequences from agriculture may directly damage our crop lands, water irrigation networks, groundwater aquifers, and associated wetlands and waterways. EPA’s proposed rulemaking doesn’t consider that consequences from agricultural spills to rural ecosystems may be greater than consequences of commercial sector spill in more urban regions.

Professional Engineer Certification versus Self-certification
Exempting some facilities from PE certification of an SPCC appears counter to the justifications for other exemptions from PE certifications, such as industry exemptions for mechanical and electrical engineers. Moreover, exempting PE certification from SPCC plans on the basis of cost (or regulatory burden) may increase the risk of spills from self-certifying facilities where managers without engineering training and/or technicians do not possess a standard professional knowledge base, ascribe to a professional code that places public protection highest, or share individual legal liability for their judgments.

Self-certification of SPCC plans for smaller facilities appears similar to an industry exemption for other engineering documents and plans, but it is not. Industry exemptions have been generally provided to unlicensed, practicing engineers who are directly employed by the company for which they provide engineering services.(5) Such exemptions have been justified for the following reasons:

1. Engineering services provided within a company for the company’s benefit (e.g., revenue and profit) do not present a conflict of interest between an engineer’s independent judgment and his/her loyalty to the company.
2. The business assumes direct responsibility as employer for the quality of the unlicensed engineer’s work; this provides the company with motivation to hire and train well-qualified engineering employees.
3. Therefore, when the best engineering judgment of the employee engineer is exercised, there is reasonable assurance that both the company’s and individual’s interests are served.

Unlike engineering services provided by an unlicensed employee under the industry exemption, required SPCC plans serve the public goal of protecting the environment. EPA appears to misapply the logic behind industry exemptions or they ignore the real and potential conflicts of interest inherent in their self-certification proposal. Unlicensed employees are not protected if they attempt to “protect the public” in opposition to their employer’s economic motivations. (Licensed professional engineers within the same company may face similar potential conflicts, but may be less influenced by virtue of their license and code of conduct requirements “to protect and safeguard the health, safety, welfare, and property of the public.”)

The possibility that an owner/operator without proper engineering skills will self-certify a facility presents even greater concern. In this case, the possibility of a conflict of interest that puts the public at risk is compounded because the public has no assurance that judgments made to self-certify the SPCC plan are founded in the qualifications and training of the individual owner/operator. Many owner/operators may make adequate judgments based upon experience or because their facility has avoided spills in the recent past. However, the proposed rule provides no way of assessing an manager’s contribution to a spill free past at a facility; in short, the proposed revision cannot assure the public that the environment is protected from oil spills.

Further analysis is merited for proposed SPCC requirements
There is a need for better risk-based analysis before EPA relieves the burden of regulation (i.e., costs) to oil storage and transfer facilities without considering properly how this burden shifts to the public. Environmental consequences may not be primarily influenced by spill size, but by spill impacts. The SPCC Facility Survey Analysis presents graphs of simplified statistical relationships that may be misleading, given that the statistical regressions for small facilities appear systematically biased. More importantly, these data appear to only represent costs of spills from facilities with certified SPCC plans; spill costs from SPCC-exempt facilities could be much greater than facilities where certified SPCC plans helped minimize the frequency and size of spills – and therefore the liability and clean-up costs to those facilities.

This is partly acknowledged within the EPA analysis of their survey data; the report states “if small facilities, for example, are assumed to be less aware of the NRC and the Clean Water Act reporting requirements (due to limited resources for example), then these facilities would be less likely to have spill records in ERNS and the results of the comparison described above would be biased downward.” However, underreporting is not the only threat to validity of EPA’s conclusions. The survey data summarized in the analysis reveals bias in the derived statistics for smaller facilities. In fact, it appears from the data that some smaller facilities have more and larger spills than the simplified statistics predict. Using actual versus predicted data reinforces that exempting smaller facilities may be inconsistent with the goal to reduce the risk of spills.

An analysis of the data summarized in EPA’s survey confirms a more important fact about oil spills. Plotting EPA’s survey data for costs of clean up per gallon and per spill reveals that the cost of cleaning up most oil spills is not proportional to the gallons of oil spilled or number of spills; rather, costs are more related to cleanup efforts and restoring the impacted environment. In other words, where a small amount of spilled oil fouls a local environment and impacts water, soil, and living ecosystems, a larger spill may cause proportionally less damage and can cost less per gallon to clean up. This general fact is not new, and is not limited to land-based oil facilities covered under OPA 90 and the Clean Water Act; a similar conclusion was reached by a study for the National Academy of Sciences in Special Report 259 [Tikka et al., 2001], which simulated physical impacts from various volumes of spilled oil under a variety of oil tanker spill scenarios.

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(1) See http://oils.gpa.unep.org/facts/sources.htm, and http://www.offshore-environment.com/oilpollution.html for links to many sources.
(2) This conclusion appears not to be based on predicted total costs from a statistical regression, which presented very similar cleanup costs per gallon, usually ranging between $0.16 and $0.21 per gallon.
(3) Chapter 5: Energy Use in Agriculture, http://www.usda.gov/oce/gcpo/ghginventory.html,.
(4) See http://www.epa.gov/oilspill/spccref.htm, specifically http://www.epa.gov/oilspill/pdfs/pap_risk.pdf.
(5) Mechanical Engineer magazine http://www.memagazine.org/backissues/may99/features/tolicense/tolicense.html
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References

Environmental Protection Agency, Inventory of U.S. Greenhouse Gas Emissions and Sinks: 1990 – 2001, pp. 254, Environmental Protection Agency, Washington, DC, 2003.
Tikka, K.K., P.F. Bontadelli, J.M. Burke, P.S. Fischbeck, A.G. Gavin, S.A. Lentz, J.R. Paulling, D. Rauta, P.G. Rynn, R. Unsworth, L.W. White, and Committee for Evaluating Double-Hull Tanker Design Alternatives, Environmental Performance of Tanker Designs in Collision and Grounding: Method for Comparison, 154 pp., National Academy of Sciences, Wasington, DCE, 2001.
U.S. Department of Agriculture, U.S. Agriculture and Forestry Greenhouse Gas Inventory: 1990-2001, in Technical Bulletin No. 1907, pp. 164, Global Change Program Office, Office of the Chief Economist, U.S. Department of Agriculture, Washington, DC, 2004.
US Environmental Protection Agency, Results of 1995 Survey of Oil Storage Facilities (July 1996), United States Environmental Protection Agency, Washington, DC, 1996a.
US Environmental Protection Agency, SPCC Facility Survey Results and Analysis, United States Environmental Protection Agency, Washington, DC, 1996b.
US Environmental Protection Agency, 40 CFR Part 112 FRL- RIN 2050-AG23 Oil Pollution Prevention; Spill Prevention, Control, and Countermeasure Plan Requirements - Amendments, Proposed rule, 2005.

FOR COMPLETE TESTIMONY, INCLUDING FIGURES AND TABLES, CLICK HERE (.pdf)

 

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