The oil industry is looking for more storage and some are modifying above-ground storage tanks historically used for water storage- SPCC/FRP/Etc.?

I’ve devoted the last several Monday articles to discuss how the oil industry is looking for new ways to store oil. This need derives from the ever-shrinking tank capacity around the U.S. due to the Coronavirus and compliance implications these new alternatives may cause that some hadn’t thought about. Read last week’s article which contains links to my previous conversations (Barges, Pipelines, Railcars).

Today’s post was inspired by an article posted by Hart Energy titled, Mobile Storage Option Provides Temporary Relief for Oil Producers. In the article it talked about an oil company that was converting water tanks at one of their facilities to store oil. Given I’m a compliance expert, a light went off in my head regarding the cascade of activities this would require. For example, air permitting, security plan updates, integrity testing to ensure tanks meet applicable standards, possible implications of a stormwater permit, and spill plans and response plans amendments. I am sure the company thought through these ramifications before embarking on this solution; however, for those of you who are just now beginning to think through their options may have not yet landed on the correct answers.

Both last year and in 2016, I wrote articles about the requirements for companies who were buying marine oil terminals. The articles laid out a series of planning considerations you should ensure are done timely in order to maintain compliance. These articles offer a lot of insight into what you should be thinking about if you’re considering turning water tanks into oil tanks. For example, if you don’t have any oil-related spill plans or response plans in place, you must act fast to get one in place per regulatory deadlines. If you have spill plans and response plans in place, you must get them updated per the regulatory timing requirements and get updates submitted based on facility changes.

The list below is not an exhaustive one, but tackles many of the compliance-related activities that may be impacted.

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Witt O'Brien's will be hosting Troy Swackhammer, Mark Howard and Chris Perry, EPA Region 6 Spill Prevention Control and Countermeasure (SPCC) Plan and Facility Response Plan (FRP) Coordinator in Houston for an all-day Free SPCC Plan and FRP workshop on June 11th, 2020. Click here to RSVP.

Coronavirus - We are monitoring this closely and have been in discussions with our presenters. If events require event hall to close, we are working on a WEBEX solution. As of today, plans are to continue to move forward, so do not let that stop you from RSVPing.

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Flashback Article

“I just bought an oil marine terminal – now what?” - ICP Timelines - EPA, USCG, PHMSA Requirements

Today’s blog is not new, as I wrote a similar one back in 2016. With many of Witt O’Brien’s clients buying new assets again, along with those that have been inquiring on what they need to do for potential purchases, I thought it was a good time to blow off the dust, update, and post again.

Let’s begin. In order to fully take ownership and begin operations, companies acquiring new assets have a plethora of pre-and-post due diligence requirements. However, at the end of the day, getting product to market is paramount, and all the paperwork requirements don’t necessarily get the attention they warrant. Today we will focus primarily on several of the large plans that are tied to new purchases. State and local permitting, federal permits, along with other regulatory plans are part of this too and need to be reviewed as well. Do not take this as a catch all blue print for new ownership. Beyond plans and permits, one will have training, inspections and a host of other “fun” activities to navigate.

Witt O’Brien’s Compliance Consultants get this call regularly: “We just bought ‘ABC Terminal’ from ‘ABC Terminal Company;’ can we just use their old plans?”

In the midstream world, Witt O’Brien’s’ compliance group is known for its Pipeline and Hazardous Materials Safety Administration (PHMSA), Environmental Protection Agency (EPA), and United States Coast Guard (USCG) regulatory planning work (amongst other things); so, these calls typically deal with ABC Terminal Company’s newly acquired Integrated Contingency Plan (ICP). Generally, midstream operators use ICPs to house their PHMSA Oil Spill Response Plan (OSRP), EPA Spill Prevention, Control, and Countermeasure (SPCC) Plan, EPA Facility Response Plan (FRP), USCG FRP and USCG Dock Operational Manual (DOM). Separate from the ICP, one will also have a USCG Facility Security Plan (FSP), which is relevant to today’s conversation. I know it’s hard to believe, but all of these have different submission requirements, which makes this process that much more fun.

What are the new owner submission requirements?

The following are summaries of the agency requirements. In some cases, there may be alternatives or other exceptions to these; however, in most cases these timelines and actions will apply to all.

PHMSA’s OSRP

PHMSA, unlike the USCG, does not require approval to one’s plan prior to operating; however, one must submit one’s plan on or before taking ownership, via two (2) electronic copies.

A common mistake amongst new operators is that new ownership can be managed similarly to PHMSA’s significant plan revision requirement: “If a new or different operating condition or information would substantially affect the implementation of a response plan, the operator must immediately modify its response plan to address such a change and, within 30 days of making such a change, submit the change to PHMSA.”

In September 2016, I discussed PHMSA’s new management, how that has impacted how OSRP reviews are administered, and the implications on plan content. It is important to be mindful of the conversation in that article as simply making plan edits for new ownership and personnel, depending on the age of the OSRP, may not be enough. Additionally, as discussed below with the EPA’s FRP, these plans have a handful of additional items that must be readdressed with new ownership.

EPA’s SPCC Plan

EPA’s SPCC change in ownership guidance: “If no change in procedures has been made, it may still be feasible to operate under the existing SPCC Plan. The information in the existing plan must be changed to reflect the new owner/company names. Changes which are non-technical changes do not require a Professional Engineer (P.E.) certification. Non-technical changes are changes which do not require the exercise of good engineering practice. If the change in ownership results in any change in the facility's operation or maintenance that materially affects the facility's potential for a discharge as described in §112.1(b), the SPCC Plan must be amended within six months and any technical amendments must be certified by a PE (40 CFR §112.5).”

As stated above, one can use the existing SPCC Plan; however, with regards to updating personnel, company name, and other disposable pieces of information, one must treat it as if it’s a “new facility” and have all these items completed on or before the new ownership takes over the facility. I’ve heard several interpretations over the years in regards to timing on these; however, as noted by Mark Howard, EPA - Office of Emergency Management (OEM) and Regulatory and Policy Development Division (RPDD), “This is a new facility, and at a minimum, all administrative edits shall be completed by day one of ownership.”

As a cautionary note, one which many companies over look while trying to conserve costs, if one only does an administrative edit to avoid the cost of having the SPCC re-certified by a P.E., one must then fully accept all the inspection, training, and operating procedures in the existing SPCC Plan, as the P.E. seal binds these actions to a company.

Additional information can be found on the EPA’s SPCC Guidance for Regional Inspectors web page.

EPA’s FRP Plan

As with the SPCC Plan, there are several trains of thought on how to manage the EPA’s FRP submittal. Incorrectly, many confuse the guidance on changes to the FRP as noted below, as it is perceived that new ownership is addressed by bullets 3 and 4. However, like the SPCC Plan, this should be viewed as a new facility, and thus, must have an FRP submitted on or before the new ownership takes over to the EPA.

“For a newly constructed facility that commences operation after August 30, 1994, and is required to prepare and submit a response plan based on the criteria in paragraph (f)(1) of this section, the owner or operator shall submit the response plan, along with a completed version of the response plan cover sheet contained in appendix F to this part, to the Regional Administrator prior to the start of operations … “

EPA’s FRP guidance on change: “… You must review and update the FRP periodically to reflect changes at the facility. (see 40 CFR 112.20(g)(1), (2), and (3) for more information.) You must submit the revised portions of the response plan within 60 days of each change that may materially affect the response to a worst-case discharge. These changes include:

• A change in the facility’s configuration that materially alters information in the response plan
• A change in the type of oil handled, stored, or transferred
• A material change in capabilities of any oil spill removal organization that provides equipment and personnel to respond to oil discharges from the facility
• A material change in the facility’s discharge prevention and response equipment or emergency response procedures.”

A cautionary note: as with the SPCC Plan, one must go beyond just changing the company name. Forgetting to secure a new Oil Spill Removal Organization (OSRO) contract, updating Qualified Individuals (QI), confirming available response equipment, and confirming other contractors are commonly overlooked as well; so, make sure to read the ICP carefully.

Read more at eCFR.

USCG’s DOM, FSP and FRP

USCG makes things pretty cut and dry; however, more forethought is required to ensure one can operate a dock and transfer oil in a timely manner in addition to the above.

USCG DOM Requirements  

a)     The operator of a facility shall submit two copies of the Operations Manual to the Captain of the Port of the zone in which the facility is located.

b)    Not less than 60 days prior to any transfer operation, the operator of a new facility shall submit, with the letter of intent, two copies of the Operations Manual to the Captain of the Port of the zone in which the facility is located.

c)     After a facility is removed from caretaker status, not less than 30 days prior to any transfer operation the operator of that facility shall submit two copies of the Operations Manual to the COTP of the zone in which the facility is located unless the manual has been previously examined and no changes have been made since the examination.

d)     If the COTP finds that the Operations Manual meets the requirements of this part and part 156 of this chapter, the COTP will return one copy of the manual to the operator marked “Examined by the Coast Guard”.

e)     If the COTP finds that the Operations Manual does not meet the requirements of this part and/or part 156 of this chapter, the COTP will return the manuals with an explanation of why it does not meet the requirements of this chapter.

f)      No person may use any Operations Manual for transfer operations as required by this chapter unless the Operations Manual has been examined by the COTP.

g)     The Operations Manual is voided if the facility operator:

i)       Amends the Operations Manual without following the procedures in §154.320 of this part;

ii)     Fails to amend the Operations Manual when required by the COTP; or

iii)  Notifies the COTP in writing that the facility will be placed in caretaker status

USCG FSP Requirements

§105.410 Submission and approval.

(a) The owner or operator of each facility currently in operation must either:

(1) Submit one copy of their Facility Security Plan (FSP) for review and approval to the cognizant COTP and a letter certifying that the FSP meets applicable requirements of this part; or

(2) If intending to operate under an Approved Alternative Security Program, a letter signed by the facility owner or operator stating which approved Alternative Security Program the owner or operator intends to use.

(b) Owners or operators of facilities not in service on or before December 31, 2003, must comply with the requirements in paragraph (a) of this section 60 days prior to beginning operations.

(c) The cognizant COTP will examine each submission for compliance with this part and either:

(1) Approve it and specify any conditions of approval, returning to the submitter a letter stating its acceptance and any conditions;

(2) Return it for revision, returning a copy to the submitter with brief descriptions of the required revisions; or

(3) Disapprove it, returning a copy to the submitter with a brief statement of the reasons for disapproval.

(d) An FSP may be submitted and approved to cover more than one facility where they share similarities in design and operations, if authorized and approved by each cognizant COTP.

(e) Each facility owner or operator that submits one FSP to cover two or more facilities of similar design and operation must address facility-specific information that includes the design and operational characteristics of each facility and must complete a separate Facility Vulnerability and Security Measures Summary (Form CG-6025), in Appendix A to Part 105—Facility Vulnerability and Security Measures Summary (CG-6025), for each facility covered by the plan.

(f) A FSP that is approved by the cognizant COTP is valid for five years from the date of its approval.

AND

§105.310 Submission requirements.

(a) A completed FSA report must be submitted with the Facility Security Plan required in §105.410 of this part.

(b) A facility owner or operator may generate and submit a report that contains the Facility Security Assessment for more than one facility subject to this part, to the extent that they share similarities in design and operations, if authorized and approved by the cognizant COTP.

(c) The FSA must be reviewed and validated, and the FSA report must be updated each time the FSP is submitted for reapproval or revisions.

USCG FRP Requirements

Subpart F—Response Plans for Oil Facilities - §154.1025 - Operating restrictions and interim operating authorization - (b) No facility subject to this subpart may handle, store, or transport oil unless it is operating in full compliance with a submitted response plan. No facility categorized under §154.1015(c) as a significant and substantial harm facility may handle, store, or transport oil unless the submitted response plan has been approved by the COTP. The owner or operator of each new facility to which this subpart applies must submit a response plan meeting the requirements listed in §154.1017 not less than 60 days prior to handling, storing, or transporting oil. Where applicable, the response plan shall be submitted along with the letter of intent required under §154.110.

For a complete listing of archived blogs and compliance insights, click here. Past blogs cover training requirements, clarification on additional confusing elements within the above rules, and much more.

We are here to help solve your compliance questions and challenges. Need some compliance assistance, or just have a question? Please email John K. Carroll III ([email protected]) Associate Managing Director - Compliance Services or call at +1 281-320-9796.

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