As you know, Mr. Chairman, propane is an important commodity in rural America. It can be found on 660,000 farms and is widely used in various agricultural applications. These include crop drying, heating of livestock facilities, operation of crop protection devices (wind machines) and a host of residential uses. Each year, approximately 1.5 billion gallons of propane are used for agricultural purposes.
Demand for propane by farmers is driven by a number of factors. Most farms are located in areas beyond the reach of the gas lines that serve the typical urban consumer. Propane, while indeed a gas, is safely transported and stored as a liquid when subject to a modest amount of pressure. This characteristic is what allows farmers to enjoy the economic and environmental benefits of gaseous fuels.
We strongly oppose the inclusion of propane as a covered substance subject to the Environmental Protection Agency's Risk Management Program (RMP). In deciding to regulate propane under this program, we believe EPA failed to consider the significant adverse effects which these regulations will have on hundreds of thousands of farmers nationwide.
Adverse Safety Consequences
By adopting Section 112(r) of the Clean Air Act Amendments of 1990, Congress specifically sought to reduce the risks associated with the accidental and catastrophic release of toxic chemicals. It is our strong belief that the original intent of Congress was to address substances used in manufacturing processes or other chemical applications, rather than those used as a fuel source. Unfortunately, EPA's decision to include propane, coupled with its decision not to grant a fuel-use exemption, has the effect of extending these regulations to consumers who use comparatively small volumes of this covered substance.
The RMP rules require farmers and other propane users with more than 2,358 gallons of propane storage to complete and file risk management plans by June 21, 1999. While larger agribusinesses might have greater storage, a typical installation on a small farm would likely consist of anywhere from two to five 1000-gallon propane tanks or containers piped together. Having only three such cylinders would bring the farmer under the requirements of the RMP program.
It is wrong to confront agriculture with new regulatory burdens and resulting compliance costs that are vague, misleading and fail to achieve the stated purpose of protecting the public safety. It is understandable that a significant percentage of users will try to lawfully avoid the burden of compliance by limiting their volume of on-site storage. This could be accomplished by simply instructing their propane supplier to reduce delivery volumes to an amount below the program's threshold level (2,385gallons). However, this will result in a significant increase in the number of propane deliveries.
Although propane has a proven safety record, there is, in fact, some degree of risk associated with the storage and handling of any flammable fuel. Government agencies that are knowledgeable about flammable fuels understand that the risks associated with the transportation of flammable fuels are considerably higher than those associated with stationary storage. The RMP compromises safety because it shifts the emphasis from low risk stationary storage to the higher risk category of transportation.
EPA's own incident database of 157 incidents dating back to 1951 confirms this point. Of the 31 incidents listed involving sites over the threshold level, 15 of them were related to transportation. None of the events listed could be confirmed to have involved the release of product from a stationary source located on a farm. It is at best ironic that a rule intended to reduce the risks of accidental releases will, in practice, result in an increase in the number of such incidents.
Distribution Disruptions
A significant increase in the number of deliveries also will lead to serious fuel distribution difficulties, thus placing an additional burden on America's farmers. The propane distribution infrastructure is unique because of its cyclical nature. Demand for propane increases dramatically with the onset of the fall crop-drying season and continues throughout the winter season. At the end of the peak-heating season, demand for the product falls as precipitously as it rose several months prior. Seasonal fluctuations in demand mean that propane's distribution infrastructure is vastly underutilized for several months of the year. In the remaining months, however, the distribution infrastructure strains to meet the needs of seasonal customers.
Subjecting propane to the requirements of RMP will increase the number of winter deliveries, thereby placing added pressure on an already overburdened infrastructure. The availability of this important commodity will be untimely and unnecessarily limited. This situation will be exacerbated by the winter driving conditions that are beyond the control of either the farmer or his propane supplier. This season alone, 15 states have issued emergency waivers relaxing federal hours-of-service regulations as a way to prevent interruptions in fuel deliveries brought on by winter driving conditions.
Regulatory Duplication
Too often new federal regulations are promulgated in a vacuum. They are considered as stand-alone requirements, rather than part of a comprehensive quilt of overlapping safety measures. Unfortunately, this is the case with EPA's Risk Management Program as it applies to propane. EPA appears to take the position that an industry is unregulated unless it is doing the regulating. The agency has failed to consider the vast extent to which propane is already regulated at the federal, state and local levels. It failed to take into account the fact that propane installations are designed, constructed and maintained in accordance with the standards for the safe storage and handling of propane established by the National Fire Protection Association (NFPA). These standards have, in fact, served consumers well as a safe and effective accident prevention program.
EPA's failure to give credence to existing safety standards violates the federal standards adoption policy. The National Technology Transfer and Advancement Act of 1995 stipulates that "all federal agencies and departments shall use technical standards that are developed or adopted by voluntary consensus standards bodies, using such technical standards as a means to carry out policy objectives or activities determined by the agencies and departments."
Had NFPA and EPA sought to work with stakeholders to improve that standard to achieve its goals, we would not need to be here today.
Non-conformity with Other Clean Air Act Provisions
Congress understood the importance of avoiding duplication and ensuring cross-agency conformity when it passed the Clean Air Act Amendments in 1990. Section 112(r) of the act authorizes the establishment of two companion programs dealing with onsite and offsite consequences. Authority for the workplace program (i.e., onsite consequences) was granted to the Occupational Safety and Health Administration of the U.S. Department of Labor; authority for programs relating to offsite and environmental consequences was granted to EPA.
Mindful of the need for uniformity, Congress specifically instructed EPA "to consult with the Secretary of Labor and the Secretary of Transportation and shall coordinate any requirements under this paragraph with any requirements established for comparable purposes by OSHA or DOT."
In 1992, OSHA established its onsite program known as the Process Safety Management Program (PSM). In doing so, it granted a fuel use exemption. Consumers who use covered substances as fuel sources are not required to comply with PSM requirements. EPA, when faced with the same option on its RPM, decided to oppose such an exemption. We believe it took this action in direct violation of the clear language of the statute.
Furthermore, Section 112(r) specifically authorizes an exemption for anhydrous ammonia, a toxic chemical, when used for agricultural purposes. Considering that propane, unlike anhydrous ammonia, is non-toxic, it is baffling that EPA chose to list propane under RMP.
Burden of Compliance
The Risk Management Program is complicated and highly technical. Risk management plans, which must be filed by June 21, 1999, are based on complex chemical release models. The Final Rule published by the EPA in June 1996, is 62 pages in length. EPA's guidance document for propane users is 24 pages. The general guidance document for risk management plans is 2 inches thick. With your permission, Mr. Chairman, I would like to introduce a copy of these documents into the record.
We are aware of EPA's contention that in the final analysis, risk management plans will be only a few pages in length. We believe this is akin to arguing that a federal income tax filing is only a few pages in length. Their analogy fails to acknowledge that it will take dozens of hours to collect and organize the appropriate data before a relatively brief plan can be completed.
Because of the highly technical nature of the program, we believe that most covered farmers will find it necessary to contract with RMP service providers in order to meet their obligations under the rules. It is our understanding that the propane industry has compiled a list of vendors and the average cost of completing a risk management plan will be several thousand dollars per site. Even if only 10 percent of the 660,000 farm users of propane are required to file a plan, the total cost to the farm economy could exceed $100 million.
While it is likely that many rural propane users will fall into the least rigorous compliance category (Program 1), the economic impact will remain high since a significant up-front cost will be incurred to determine the appropriate program level. Farmers who ultimately qualify for Program 1 coverage will still be required to complete a detailed off-site consequence analysis to determine their eligibility for this program level.
It is quite clear that EPA failed to understand the full implications of its decision to include propane customers. EPA estimates that 66,000 sites are covered under RMP nationwide and that 28,000 (42 percent) of those sites involve propane. In stark contrast to EPA's calculations, the North Carolina Department of Environment and Resources estimates there are 11,000 covered farm sites in that state alone!
State of Farm Economy
Much has been said in recent months about economic conditions affecting the average farmer. Those of us who are involved in agriculture know that times are tough. We farmers and ranchers are willing to tackle those tough times, but now is not the time to place a $100 million compliance burden on farmers.
EPA's Modest Proposals
We understand that in recent weeks EPA has recognized that its estimate of the number of affected farms was severely low. We appreciate and welcome EPA's overtures and believe they suggest a willingness to reduce the burden which the RMP rules place on farmers. We are concerned, however, that the proposals floated to date do not sufficiently address the issues presented in our testimony.
EPA is apparently willing to consider altering the program guidance documents to address distances of non-interconnected tanks for the purpose of making threshold determinations. The relief provided by this action would be negligible since a substantial percentage of farm installations include multiple interconnected cylinders. Furthermore, regulatory guidance is not a substitute for regulatory text. EPA's current guidance document states, "This document does not substitute for EPA's regulations, nor is it a regulation itself. Thus, it cannot impose legally binding requirements on EPA, states, or the regulated community, and may not apply to a particular situation based upon circumstances. This guidance does not represent final agency action, and EPA may change it in the future, as appropriate."
We are troubled by the fact that EPA could indeed change its guidance without the benefit of notice and comment.
Conclusion
I appear before this committee on behalf of the hundreds of thousands of farmers now caught in this regulatory dragnet. In keeping with that responsibility, I would ask your indulgence to include in the record letters from 17 agriculture organizations whose views support the testimony I have given here today.
In summary, Mr. Chairman, EPA's Risk Management Program as it pertains to propane is unsafe, contrary to the environmental goals established by the Clean Air Act, and will adversely affect hundreds of thousands of farmers nationwide. We urge this committee to act quickly to avoid these consequences before the June 21 deadline.