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Storage Tank Bill Tabbed at $114M

Wednesday, July 2, 2014

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A U.S. proposal to protect surface water from chemical storage facilities would cost about $114 million over four years, likely busting the federal threshold for unfunded mandates in the private sector, a new analysis shows.

The American Coatings Association, which represents suppliers, is closely watching the progress of the storage tank legislation, the Chemical Safety and Drinking Water Protection Act (S. 1961), introduced in January by Sen. Joe Manchin (D-WV).

The bill was introduced after a 7,500-gallon chemical spill from a leaky 40,000-gallon storage tank at Freedom Industries Inc. left 300,000 West Virginians in nine counties without clean water for weeks.

ElkRiverSpill
Foo Conner / @iwasaround via thinkprogress.org

An environmental enforcement boat patrols in front of the January chemical spill at Freedom Industries in West Virginia. The spill came from a leaky storage tank.

Freedom Industries filed for bankruptcy shortly after the spill.

Cost Estimate

According to a Congressional Budget Office cost estimate released June 5, the Manchin measure would affect public and private owners and operators of tens of thousands of storage tanks nationwide.

(The measure broadly defines covered chemical storage tanks as onshore, fixed, above-ground storage containers from which a release of a chemical could pose a risk of harm to a public water system.)

Only a small number of chemical storage tanks owned by public entities would be affected, putting their cost of compliance below the annual established by the 1995 Unfunded Mandates Reform Act (UMRA).

But compliance in the private sector would "probably" top that threshold, CBO said.

ASTs Growing

The Steel Tank Institute notes that above-ground storage tanks (ASTs) are becoming more acceptable to local communities and that "bulk storage of fuels and chemicals generally favor AST installations over [underground storage tanks]."

SteelTank
Steel Tank Institute

The Steel Tank Institute says above-ground storage tanks are less expensive to  install, easier to inspect, and gaining acceptance in communities. Dakota Gasification's 30,000-ton ammonia tank in Buelah, ND, was completed in 2013.

The institute says ASTs are cheaper to install, easier to inspect, and easier to relocate when necessary.

Bill Highlights

The Manchin bill would amend the 1974 Safe Water Drinking Act to require either the U.S. Environmental Protection Agency or states with primary enforcement authority for public water systems to implement a program to protect surface water from contamination by chemical storage tanks.

The bill would require owners and operators of covered chemical storage tanks to meet minimum requirements (to be established) under a program to protect public water systems from chemical releases. Those requirements would include standards for tank construction, leak detection, spill prevention, lifecycle maintenance, and proof of financial responsibility.

ElkRiverSpillWaterShortage
Foo Conner / @iwasaround via thinkprogress.org

The bill followed the Elk River spill, which left nine counties without drinking water.

Owners and operators would be required to develop emergency response plans and comply with requirements for periodic inspections. Tanks that are already regulated by state and federal standards and tanks that do not pose a risk to public water systems could be excluded from the program.

The bill also requires covered chemical storage facilities under these plans to be inspected every three years and any other covered storage facilities every five years.

ACA: Narrow the Scope

ACA told its members that it had met with Congressional staff shortly after the bill was introduced "to share its recommendations to narrow the scope of the bill and make it less burdensome on chemical facilities, and to utilize existing regulatory programs to the furthest extent possible."

AST
Steel Tank Institute

About 20 states have tank and water system inspection programs in place and could continue their programs under the bill, the Congressional Budget Office said.

ACA also provided data to the CBO for its cost analysis, the association said.

The legislation was amended in April during markup in the Senate Environment and Public Works Committee to:

  • Have annual inspections for “high hazard” tanks, include definitions of “chemical” and “aboveground storage tank”;
  • Allow pre-transfer inspections to be performed by third parties; and
  • Require EPA to issue guidance to states on implementing state programs, and to issue public notice and opportunity for comment on this guidance.

Cost Estimate

CBO said that if the legislation is enacted in 2015, “a large number of private entities would be affected by the program” and the cost of the private-sector mandates would “probably exceed the annual threshold established in UMRA ($152 million in 2014, adjusted annually for inflation).”

Public entities would be less affected, putting their cost of compliance below the UMRA threshold ($76 million 2014, adjusted annually for inflation), the budget office said.

CBO estimates that 10 states would elect to have EPA run their programs, a cost the agency estimated at $3 million annually per program.

ACA’s Javaneh Nekoomaram and David Darling  are following the bill for the coatings group.

   

Tagged categories: Accidents; Facility Managers; Government; Health and safety; Inspection; Tanks and vessels

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