Beveridge & Diamond
 

EPA Issues Amendments to SPCC Rule

Beveridge & Diamond, P.C., December 3, 2008

In November, 2008, the U.S. Environmental Protection Agency (EPA) issued two significant amendments to the Spill Prevention, Control and Countermeasure (SPCC) rule, 40 CFR Part 112. These amendments implement important changes to the scope and applicability of the SPCC rule.  Pre-publication copies of the rules can be accessed at http://www.epa.gov/emergencies/docs/oil/spcc/SPCC_waters_signed.pdf. and http://www.epa.gov/emergencies/docs/oil/spcc/SPCC_Final%20Rule_signed.pdf. The first amendment, relating to the definition of navigable waters, will become effective upon publication in the Federal Register. The second amendment, containing a number of changes to the rule, will become effective sixty days after publication in the Federal Register (neither amendment had been published as of the date of this summary).

Also on November 20, 2008, the EPA Administrator signed a proposed rule to extend the compliance date for the 2002 SPCC rule and subsequent revisions from July 1, 2009 to November 20, 2009.  The pre-publication copy of the proposed extension can be accessed at http://www.epa.gov/emergencies/docs/oil/spcc/SPCC_ext_signed.pdf.  Note, however, that obligations imposed by the 2002 regulation that EPA deems not to constitute changes from its pre-2002 regulatory scheme are already in force, including some obligations that are described more fulsomely and, in the eyes of many, more restrictively by the 2002 rule.  This extension applies only to provisions of the 2002 rule and its subsequent amendments that EPA deems to impose wholly new obligations on the regulated community.  Each affected facility should assess its circumstances carefully to ensure compliance with both the “existing” and the new SPCC requirements imposed under the 2002 rule and its subsequent revisions.

The SPCC rule establishes procedures, methods, equipment, and other requirements to prevent the discharge of oil from non-transportation-related onshore and offshore facilities into or upon the navigable waters of the United States or adjoining shorelines. 40 CFR 112.1(a). The rule is very broadly applicable; EPA has estimated that between 350,000 and 425,000 facilities are subject to its requirements. See Analysis of the Number of Facilities Regulated by the SPCC Program, July 1996. 

The SPCC rule arises from Section 311(j)(i)(c) of the Clean Water Act, which requires the President of the United States to issue regulations establishing procedures, methods, equipment and other requirements necessary to prevent discharges of oil to navigable waters and adjoining shorelines. 33 U.S.C. 1331.  The authority to regulate non-transportation-related on shore facilities was delegated to EPA by executive order, and the authority to regulate certain off shore facilities was provided by memorandum of understanding among EPA, the Department of the Interior and the Department of Transportation.

Navigable Waters Amendment

EPA’s first action amends the SPCC rule by redefining and narrowing the definition of “navigable waters” to reflect a decision of the U.S. District Court for the District of Columbia which held that the broad existing definition violated the Administrative Procedure Act. See American Petroleum Institute (API) v. Johnson, 541 F. Supp. 2d 165, 173 (D.D.C. 2008).

In the API decision, the District Court overturned the “navigable waters” definition that had been adopted by EPA in 2002 (67 Fed. Reg. 47042 (July 17, 2002). That definition had included as navigable waters all waters currently used, used in the past, or susceptible to use in the future, in interstate or foreign commerce, all interstate waters including interstate wetlands, and all other waters the use, degradation or destruction of which could affect interstate or foreign commerce.

The District Court found that the 2002 definition was too expansive and that EPA’s analysis of the legal basis for the amendment was too sparse; in effect, that EPA had failed to provide a rational explanation for the change. Further, the court found that “it is extremely difficult to square EPA’s conclusion ... that the case law supports a definition of “navigable waters” as broad as the one included in the 2002 SPCC Rule - with the decision and reasoning of the Supreme Court in [Solid Waste Agency of N. Cook County v. Army Corps of Engineers, 531 U.S. 159 (2001)].” Id. at 183.  In that case, the U.S. Supreme Court recognized that there were some limitations to the definition of “navigable waters” under the Clean Water Act.  The District Court therefore (i) vacated the amended definition of “navigable waters” in the SPCC rule, (ii) restored the initial more limited definition that had been adopted with the enactment of the SPCC rule in 1973, see 38 Fed. Reg. 34164 (Dec. 11, 1973), and (iii) remanded the case to EPA for further action.  API at 185.  The recently announced amendment, formally restoring the 1973 definition, reflects EPA’s action on remand.

Exemptions and Streamlining Amendment

EPA’s second action amends the SPCC rule by adopting numerous changes, including the creation of exemptions for certain containers, provision for streamlined self-certification and additional means to provide flexibility in compliance, and also includes several sector-specific changes impacting agriculture and oil production facilities.

The amendment provides new exemptions from the rule for the following oil containers:

  • Hot-mix asphalt and hot-mix asphalt containers;
  • Residential heating oil containers used solely at single-family residences;
  • Pesticide application equipment and related mix containers;
  • Underground oil storage tanks at nuclear power generation facilities;
  • Intra-facility gathering lines subject to the pipeline regulations of the Department of Transportation; and
  • Produced water containers that do not contain oil in harmful quantities.

The amendment also adopts several provisions intended to streamline compliance procedures and incorporate additional flexibility for regulated facilities, including the provision of a new SPCC Plan “template” which certain qualifying facilities may complete and self-certify rather than creating a full SPCC Plan. 

The existing SPCC rule requires facilities to develop and implement SPCC plans detailing procedures and equipment requirements to help prevent oil discharges from reaching navigable waters.  Under a previous amendment to the SPCC rule finalized in December 2006, owners and operators of “qualified facilities” were given the option of self-certifying their SPCC plans rather than requiring that they incur the cost of certification by a professional engineer.  Qualified facility status was granted to facilities with (1) 10,000 gallons or less aggregate aboveground oil storage capacity, and, (2) no single discharge event of more than 1,000 gallons of oil to navigable waters or a shoreline, and no two such discharges totaling more than 42 gallons within any twelve-month period, in the three years prior to the SPCC plan certification date.  The 2008 amendment extends this “qualified facility” status to certain smaller oil production facilities.

In addition, the amendment creates two tiers within the previously established group of qualifying facilities.  Tier I qualified facilities meet the criteria above and have no oil storage containers with an individual aboveground storage capacity of more than 5,000 gallons.  All other qualifying facilities are Tier II qualified facilities.  Tier I qualified facilities are eligible under the amended rule to utilize and self-certify the SPCC plan template (Appendix G to 40 CFR part 112) rather than prepare an SPCC plan in accordance with the requirements of Section 112.7 and subparts B and C of the rule.  Tier II qualified facilities remain authorized to self-certify their SPCC plans, but they may not utilize the simplified SPCC plan template.

The revised rule contains amendments to numerous definitions and provisions.  The fundamental definition of a “facility” -- the entity to which the rule applies -- has been amended in an effort to eliminate what the Agency considers to be unnatural characterizations of facility boundaries.  “Loading/unloading rack” has been defined for the first time to confirm that requirements for such systems apply to  racks that service tank car and tank trucks, and do not apply to “areas” in which loading or unloading of oil occurs without the use of a rack.  The revised rule also clarifies or provides greater flexibility in provisions affecting the facility diagram requirement, the general secondary containment requirement, acceptable integrity testing requirements, and facility security requirements, allowing tailored security measures specific to a particular facility.

The revised rule also includes certain sector-specific changes that address oil storage activities in the agricultural sector and the oil production facility sector.  Changes impacting the agricultural sector include the exemption of pesticide application equipment and related mix containers, the exemption of farms from the loading rack requirements, and clarification that a nurse tank is exempt from the sized secondary containment requirements.

There are numerous amendments and particularly exemptions that will impact oil production facilities.  In addition to the exemptions listed above, several of which are relevant to oil production facilities, the amendment modifies the definition of “production facility”, exempts production facilities from requirements applicable to loading racks, and - in one of the more controversial changes - provides a qualified exemption for certain produced water containers and associated downstream piping and appurtenances.  The rule also exempts some intra-facility gathering lines that are subject to U.S. Department of Transportation regulations, extends the timeframe by which new oil production facilities must prepare and implement SPCC Plans, and establishes alternative criteria through which certain oil production facilities may qualify to self-certify an SPCC Plan. 

For more information on these amendments, please contact Stephen Richmond at srichmond@bdlaw.com, Krista Hawley at khawley@bdlaw.com or Richard Davis at rdavis@bdlaw.com.

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