Accidental Release Prevention Requirements, B-272247
| Decision Date | 05 July 1996 |
| Docket Number | B-272247 |
| Court | Comptroller General of the United States |
| Parties | Accidental Release Prevention Requirements: Risk Management Programs Under Clean Air Act Section 112(r)(7), |
Pursuant to section 801(a)(2)(A) of title 5, United States Code, this is our report on a major rule promulgated by the Environmental Protection Agency (EPA), entitled "Accidental Release Prevention Requirements: Risk Management Programs Under Clean Air Act Section 112(r)(7)" (FRL #5516-5, RIN: 2050-AD26). We received the rule on June 7, 1996. It was published in the Federal Register as a final rule on June 20, 1996. 61 Fed. Reg 31668.
This rule implements section 112(r) of the Clean Air Act Amendments of 1990, which mandates that EPA promulgate regulations and develop guidance to prevent accidental releases to the air from stationary sources and mitigate the consequences of such releases by focusing prevention measures on chemicals that pose the greatest risk to the public and the environment.
Enclosed is our assessment of EPA-s compliance with the procedural steps required by sections 801(a)(1)(B)(i) through (iv) of title 5 with respect to the rule. Our review indicates that EPA complied with the applicable requirements.
If you have any questions about this report, please contact Kathleen E. Wannisky, Associate General Counsel for Operations, at (202) 512-5207. The official responsible for GAO evaluation work relating to EPA is Peter F. Guerrero, Director for Environmental Protection Issues. Mr. Guerrero can be reached at (202) 512-6111.
cc Craig Matthiessen Senior Chemical Engineer Environmental Protection Agency
ANALYSIS UNDER 5 U.S.C. Sec. 801(a)(1)(B)(i)-(iv) OF A MAJOR RULE ISSUED BY THE ENVIRONMENTAL PROTECTION AGENCY (EPA) ENTITLED "ACCIDENTAL RELEASE PREVENTION REQUIREMENTS: RISK MANAGEMENT PROGRAMS UNDER CLEAN AIR ACT SECTION 112(r)(7)" (RIN: 2050-AD26)
Because EPA determined that the rule was an "economically significant regulatory action" under terms of Executive Order 12866, it prepared an economic impact analysis in support of the rule on risk management program regulations. It submitted that analysis to the General Accounting Office on June 7, 1996, along with a copy of its final rule. The economic impact analysis describes the regulatory options EPA considered for revising its earlier proposed risk management requirements and estimates the costs and benefits attributable to these options.
The chart below, extracted from the analysis, shows that, with the exception of the first year, EPA believes that the cost of the benefits associated with the implementation of the rule's requirements greatly exceed the costs of implementation of the rule.
NET COSTS $144 million $92 million $73 million $75 million
BENEFITS $62 million $124 million $187 million $174 million
In addition to the estimated benefits of reduced damages from releases of toxic substances, EPA-s analysis also highlights what the agency believes to be additional qualitative benefits including those resulting from efficiency gains increased technology transfer, indirect cost savings increased goodwill, and increased public awareness.
Section 603: Initial regulatory flexibility analyses
The Regulatory Flexibility Act requires federal agencies to evaluate the effects of a proposed rule on small entities. EPA prepared an initial regulatory flexibility analysis in compliance with section 603 of the Act; it published a summary of that analysis in the preamble to the proposed rule in the Federal Register on October 20, 1993. 58 Fed. Reg 54212. The analysis concluded that the economic burden for initial compliance would be minimal for about 90 percent of the small businesses affected. For the remaining 10 percent, however, the analysis stated that the program would impose a significant adverse effect in the first year.
Based on the information presented during public hearings and in comments received on the proposed rule, EPA published a supplemental notice of proposed rulemaking in the Federal Register on March 13, 1995. 60 Fed. Reg. 13526. The agency included in the preamble to the revised proposed rule a summary of its updated regulatory flexibility analysis. The analysis concluded that the rule as proposed in 1993 would have had severe adverse effects on small businesses. The revised analysis evaluates three alternatives to the initially proposed rule and assesses the burdens and impacts of each. According to the EPA-s discussion, the streamlined requirements of the revised proposed rule drastically reduce the burden on both small businesses and small communities.
Section 604: Final regulatory flexibility analysis
EPA published a summary of its final regulatory flexibility analyses as required by section 604 of the Act in the Federal Register on June 20, 1996. 61 Fed. Reg. 31715. EPA estimated that the total number of small entities affected by the rule was 12, 500 or 19 percent of the affected universe. No detailed analysis of the impact on small entities was performed because of the relatively low cost of implementation estimated by EPA (for most manufacturers substantially less than 1 percent of sales the first year and considerably less in subsequent years; for non-manufacturers less than $1, 000 for initial compliance).
According to EPA-s analysis, a number of decisions adopted in the final rule (, the adoption of tiers ("programs"), the reduced requirements for the risk management plan and the development of guidance for offsite consequence analysis) have significantly reduced the burden on small entities. EPA considered comments on both the initial and the proposed rule in making these decisions.
All analyses prepared in accordance with this Act were submitted to the Chief Counsel, Small Business Administration.
Section 607: Preparation of analysis
EPA-s analyses use both quantifiable and general descriptions of the effects of the rule and alternatives on small entities.
Section 609: Participation by small entities
EPA included small entities (from both government and business) in focus groups, public hearings, seminars, and meetings to develop this rule.
EPA has determined that this rule contains a federal mandate that may result in expenditures of $100 million or more for state, local, and tribal governments, or the private sector in only its first year. In compliance with section 202 of the Unfunded Mandates Reform Act, EPA prepared a written statement, including a cost benefit analysis, assessing the impact of the rule, which it published with both the proposed and the final rule. As discussed previously, EPA considered the future compliance costs in assessing the impact of the rule.
Consistent with the intergovernmental provisions of sections 203 and 204 of the Act, and Executive Order 12875 "Enhancing the Intergovernmental Partnership, " EPA involved state, local, and business representatives in focus groups, public hearings, seminars, and meetings to develop the rule.
Section 205 of the Act requires agencies to identify and consider a reasonable number of regulatory alternatives and to adopt the least costly, most cost-effective or least burdensome alternative that achieves the objectives of the rule. The preamble to the final rule indicates that EPA evaluated three different methodologies for implementation. It ultimately chose what it believed to be the least costly and least burdensome alternative.
Administrative Procedure Act, 5 U.S.C. Secs. 551 et seq.
This rule was promulgated through the general notice of proposed rulemaking procedures of the Act, 5 U.S.C. Sec. 553. EPA afforded interested persons several opportunities to comment. Following publication of the proposed rule (58 Fed. Reg 54190), EPA held four public hearings and received approximately 770 written comments. Because of these comments, EPA issued a supplemental notice of proposed rulemaking on March 13, 1995 (60 FR 13526) for comment on:
approaches for setting different requirements for sources that pose different levels of hazard (tiering); worst-case releases and other hazard assessment issues; accident information reporting; public participation; inherently safer approaches and implementation and integration of section 112(r) with state programs, particularly state air permitting...
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