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CBO Releases Cost Estimate of Storage Tank Legislation

Contact: Javaneh Nekoomaram Tuesday, June 24, 2014

On June 5, the Congressional Budget Office (CBO) released its cost estimate for Sen. Joe Manchin’s (D-W.V.) storage tank legislation, the Chemical Safety and Drinking Water Protection Act, S.1961. This legislation was introduced in January 2014 in response to the devastating chemical spill from Freedom Industries, Inc. in Charleston, W. Va. In that incident, about 7,500 gallons of a chemical called 4-methylcyclohexanemethanol (MCHM) leaked into the Elk River in Charleston, causing over 300,000 West Virginia residents to go without access to clean water for weeks. The spill not only negatively impacted residents, but businesses and tourism in West Virginia also suffered from the spill.

The bill would amend the Safe Drinking Water Act to require states to establish chemical storage facility source water protection programs to provide for the protection of public water systems from a release of a chemical from chemical facilities. The bill establishes minimum requirements for these state programs as well as information sharing, notification, inspection, and cost recovery provisions. 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.

Shortly after the bill was introduced, ACA met with Congressional staff 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. The legislation was amended during markup in the Senate Environment and Public Works Committee in early April 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 the U.S. Environmental Protection Agency (EPA) to issue guidance to states on implementation of state programs, and to issue public notice and opportunity for comment on this guidance.

CBO is providing this cost estimate because the legislation would impose intergovernmental and private-sector mandates as defined in the Unfunded Mandates Reform Act (UMRA) on owners and operators of chemical storage tanks. CBO requested and gathered information from ACA, along with a number of other stakeholders, to come up with a broad estimate of the bill’s financial impact on the private sector.

In its report, CBO states that if the legislation is enacted in 2015, “a large number of private entities would be affected by the program” and estimated the cost of the private-sector mandates would “probably exceed the annual threshold established in UMRA ($152 million in 2014, adjusted annually for inflation).” CBO explains that the legislation could potentially cost the private sector tens of thousands of dollars to comply with the new requirements. CBO also indicates that it anticipates about 10 states would elect to not run their own programs and instead have EPA run their programs. In this case, EPA would incur costs of about $3 million annually per state to run a program.  

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