### 1

MEMORANDUM

DATE : September 2014

TO : Docket EPA

- HQ

- OAR

- 2010

- 0929

FROM : Lisa Grogan

- McCulloch, U.S. EPA

SUBJECT : Assessment of Cost Impacts of 2015 Inputs Final Rule

– Revisions to Reporting,

Recordkeeping, and Verification Requirements under the Greenhouse Gas Reporting Program

1.0 INTRODUCTION

F acilities subject to the GHG reporting rule (40 CFR part 98 , hereafter referred to as “Part 98” )

must report their GHG emissions to the EPA through the electronic Greenhouse Gas Reporting
Tool ( e

- GGRT )

. The EPA is revisi ng the reporting and recordkeeping requirements in Part 98 that apply to reporters subject to any of the 23 subparts listed in Table 1 . The revisions include :

 Adding a require ment for certain reporters under 2 3 subparts to use an EPA

- provided inputs verification tool. For these subparts, the designated inputs to emission equations for which reporting was deferred to 2015 (hereafter referred to as “input to equations’ data eleme nts”) and disclosure concerns have been identified are entered into the tool. a 

### The tool calculate s the emission equation results and perform s electronic verification. The tool does not retain the entered inputs (i.e., the inputs would not be reported to th e EPA); instead, the tool conduct s certain checks (e.g., accuracy of the inputs) at the time of data entry and generate s a verification summary. The verification summary, which is accessible to the EPA once the annual report is submitted, provide s the EPA with information to conduct further verification if necessary.

 For reporters required to use the inputs verification tool, changing the required format for maintaining records of these inputs to emission equations.

 For reporters required to use the inputs verification tool, lengthening the record retention period from 3 to 5 years for all records maintained under Part 98 (including subparts that do not require the use of the tool).

a T he inputs verification tool is not required to be used by reporters for any reported GHG for which the reporter uses a CEMS or an EPA

- approved alternative method (as allowed under sections 98.33(a)(5), 98.53(a)(2), and 98.223(a)(2) of Part 98) to calculate the reported GHG value, rathe r than using "inputs to equations" data elements and the associated EPA

- provided calculation methodologies to calculate the reported GHG value.

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 For certain reporters required to use the inputs verification tool, adding new data elements to be reported for the EPA’s verification purposes . The EPA is also finalizing confidentiality determinations for the new data elements to be reported.

 For reporters required to use the inputs verification tool, removing the requirement to report the inputs to emission equations for which reporting was deferred to 2015 and disclosure concerns have been identified, and requiring the se data to be kept as records.

 For subpart W, delay ing reporting of six inputs to equations related to specific types of exploratory wells for two years to prevent early public disclosure of potentially sensitive information. The EPA determined there was no burden associated with this decision.

Table 1

. Subparts Affected by the Revisions to Reporting, Reco rdkeeping , and Verification Requirements

Subpart Source Category Number of “Inputs to Equations” Data Elements Currently Required to be Reported For which Reporting

is to be Removed

C General Stationary Fuel Combustion Sources except Certain Electric Generators I 2 6 II 2 6 II

E Adipic Acid Production 21 11

F Aluminum Production 29 29

G Ammonia Manufacturing 8 8

H Cement Production 16 14

K Ferroalloy Production 13 13

N Glass Production 3 3

O HCFC

- 22 Production and HFC

- 23 Destruction 15 12

P Hydrogen Production 7 7 Q Iron and Steel Production 86 85

R Lead Production 10 10

S Lime Manufacturing (non

- CEMS) 9 9

U Miscellaneous Uses of Carbonate 6 6

V Nitric Acid Production 21 21

X Petrochemical Production 19 19

Y Petroleum Refineries 75 70

Z Phosphoric Acid Production 4 4

AA Pulp and Paper Manufacturing 31 28

BB Silicon Carbide Production 3 3

CC Soda Ash Manufacturing 10 4

EE Titanium Dioxide Production 2 2

GG Zinc Production 8 8

TT Industrial Waste Landfills 4 3

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Table 1

. Subparts Affected by the Revisions to Reporting, Reco rdkeeping , and Verification Requirements

Subpart Source Category Number of “Inputs to Equations” Data Elements Currently Required to be Reported For which Reporting

is to be Removed

I For subpart C, stationary fuel combustion sources (e.g., individual units, aggregations of units, common pipes, or common stacks) are not affected by the final amendments if they contain at least one combustion unit connected to a fuel

- fired electric generator owned or operated by an entity that is subject to regulation of customer billing rates by the public utility commission (PUC) (excluding generators connected to combustion units subject to 40 CFR part 98, subpar t D) and that are located at a facility for which the sum of the nameplate capacities for all such electric generators is greater than or equal to 1 megawatt electric output. All other subpart C so urces may elect to report inputs to emission equations rather than use the inputs verification tool. If these sources elect to report inputs to equations, they are not affected by the final amendments

. II Includes one deferred “inputs to equations” data element, 40 CFR 98.3(d)(3)(v), which is specified in subp art A of P art 98 and applies to only certain reporters under subpart C of part 98. 

### This memorandum documents the EPA’s assessment of the cost impacts associated with the
revisions to the GHGRP. Section 2.0 of this memorandum contains a description of the analys e s conducted to estimate cost impacts . Section 3.0 presents the results of the analys e s.

2.0 DESCRIPTION OF ANALY SIS CONDUCTED

Under this analysis

, the EPA estimated t he cost of the changes to the GHGRP as the incremental

costs above the previously estimated costs of the program as promulgated in 2009 (refer to the
2009 Impacts Analysis) 1



### . The EPA calculated th is incremental cost based on the number of
reporters that submitted a GHG report in 2012 under each subpart specified in Table 1

. To
calculate the incremental cost, the EPA estimate d the following for each subpart: (1) the cost for
each facility to become familiar with the inputs verification tool within e

- GGRT , and ( 2 ) the
costs associated with reporting the new data elements

. To es timate the number of reporters
affected by the new data elements, the EPA used t he number of reporters that submitted a GHG
report in 2012 under each of the 9 subparts for which the new data elements would be reported

. To estimate hourly wages, the EPA use d t he labor costs per hour for technical, managerial

, and
legal hours specified in the Bureau of Labor Statistics Index for 2011 , consistent with the most

current information collection request for the GHGRP

. These c osts are presented in Table 2

.

Table 2

. Labor Costs

- Year 2011 Labor Category Description Hourly Rate ($/hour)

Legal Oversees legal aspects of company reports and data

- reporting

forms. 109.94

Managerial Oversees work at a high level and is the final authority on all

reporting requirements. 77.23

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Technical Conducts monitoring of emissions sources, checks for accuracy,

performs measurements. 59.12
Clerical Assists with documentation and recording information 31.35



### 2.1 Use of the Electronic Inputs V erification T ool

The EPA is eliminat ing the reporting of many “ inputs to equations ” data elements , d ue to
disclosure concerns

. The EPA is replac ing th ese reporting requirements with a requirement to
enter the data into a new inputs verification tool within e

- GGRT. For more information on the inputs verification tool, refer to the memorandum documenting the EPA’s a nalysis of a lternative
verification approaches in docket EPA

- HQ

- OAR

- 2010

- 0929

. 2



### The EPA has determined that there will be no cost increase to enter “inputs to equations” data
elements into the inputs verification tool , as compared to the cost associated with reporting the se data via e

- GGRT (i.e., the EPA’s previous cost estimate under the original 2009 rule for reporting t hese data ) 1



### . The EPA expects that reporters would spend the same time to complete
entry of “ inputs to equations ” data element s into the inputs verification tool as they would spend reporting these data via e

- GGRT. The EPA recognize s , however

, that there m ay be some time associated with learning the new procedures for the verification tool. The EPA has estimated that each reporter will spend one technical hour to become familiar with the inputs verification tool.
Based on this technical labor estimate , the associated clerical and managerial labor hours b



### , and
an estimated 5, 7 95 affected reporters (the number of reporters in 2012 under one or more of the affected subparts in Table 1), the EPA estimates that using the new inputs verification tool would
cost app roximately $ 383, 000 for the first year.

2.2 New Data Elements

In order to facilitate the verification of data and ensure that the EPA has the information needed to better understand emissions associated with reporters, the EPA is requiring that reporters
under 9 subparts report a total of 21 new data elements ( that were not previously required to be reported ) with their annual report

. Table 3 summarizes the new data elements for each subpart and presents an analysis of the data availability for each data element. For the 21 data elements
added to the 9 subparts listed in Table 3

, the EPA has estimated that 14 of these are values that could be calculated using data currently requi red to be reported. For example, under subpart H, the EPA is proposing to replace the current reporting requirement to report the monthly kiln

specific clinker CO 2 

### emission factor for each kiln with a requirement to report the annual average clinker CO 2 

### em ission factor for the facility, averaged across all kilns. For the purposes

b Clerical and managerial and hours are assumed to be 10 percent and 5 percent, respectively, of technical labo r hours.

### 5

of reporting the new data element, a reporter under subpart H would calculate an annual average facility

- wide value based on the current monthly values for all kilns. As a result, there will be no additional monitoring cost associated with these data elements. For these 14 data elements for which the underlying data (used to calculate the data element) are currently being reported, and only a simple change to a calculation spreadshe et would be required to fulfill the reporting requirement, the EPA has estimated a nominal additional cost to report the data element of 0.5 technical hours per data element for reporting requirements.

The remaining 7 new data elements that will be reporte d are available from current facility procedures used for accounting purposes or design and purchase documents

. These data elements

are related to annual production or raw material use

, and are collected by reporters as a routine part of conducting busines s. The EPA is not requiring additional monitoring requirements for these data elements, but would allow the use of data collected for normal business purposes. Therefore, there will be no additional monitoring cost associated with these data elements.

Tab le 3

. New Data Elements for Part 98
Subpart New Data Element Analysis of Data Availability

E

- Adipic Acid If only cyclohexane is oxidized to produce

adipic acid: the a nnual quantity of cyclohexane (tons) used to produce adipic acid . If materials other than cyclohexane are oxidized to produce adipic acid: the annual quantity of cyclohexanone and cyclohexanol mixture (metric tons) used to produce adipic acid. Available from plant procedures used for accounting purposes. Raw material consumption is necessary for financial accounting
purposes.

Annual percent nitrous oxide (N 2 O) emission reduction for all production units combined. Calculated value using available data for percent emission reduction data from each unit. No additional measurement required

. G

- Ammonia Annual ammonia production (metric tons,

sum of all process units reported within subpart G). Available from plant procedures used for accounting purposes. Quantity of product produced is necessary for financial accounting
purposes. Annual methanol production (metric tons) for each process unit. Available from plant procedures used for accounting purposes. Quantity of product produced is necessary for financial accounting
purposes.
H

- Cement Annual clinker production (metric tons). Calculated value using available data for monthly clinker production currently required for emissions equations. No additional measurement required.

### 6 Tab le 3

. New Data Elements for Part 98
Subpart New Data Element Analysis of Data Availability

Annual average clinker CO 2 emission factor for the facility, averaged across all kilns (metric tons CO 2 /metric ton clinker produced). Calculated value using available data for clinker emission factor for each kiln and total clinker production. No additional measurement required

. Annual average cement kiln dust (CKD) CO 2 emission factor for the facility, averaged across all kilns (metric tons CO 2 /metric ton CKD produced). Calculated value using available data for CKD from each kiln. No additional measurement required

.

P

- Hydrogen Name and annual quantity (metric tons) of

each carbon

- containing fuel and feedstock. Available from plant procedures used for accounting purposes. Raw material consumption and fuel consumption are necessary for financial accounting purposes. 

### Annual methanol production (metric tons) for each process unit. Available from plant procedures used for accounting purposes. Quantity of product produced is necessary for financial accounting
purposes. Q

- Iron & Steel If you use the carbon mass balance method

in 40 CFR §98.173(b)(1) to determine CO2 emissions: The annual mass (metric tons) of all gaseous, liquid, and solid fuels (combined) used in process units specified in Equations Q

- 1 through Q

- 7, calculated as specified in Equation Q

- 9 in the final rule amendments. Do not include fuel used in a stationary combustion unit where emissions

are reported under subpart C. Calculated value using available data for mass of each fuel. No additional measurement required

.

If you use the carbon mass balance method in 40 CFR §98.173(b)(1) to determine CO2 emissions: The annual mass (metric tons) of all non

- fuel material inputs (combined) specified in Equations Q

- 1 through Q

- 7 of subpart Q, calculated as specified in Equation Q

- 10 of subpart Q

. Calculated value using available data for each non

- fuel input. No additional measurement required

.

If you use the carbon mass balance method in 40 CFR 98.173(b)(1) to determine CO2 emissions: The annual mass (metric tons) of all solid and liquid products and byproducts (combined) specified in Equations Q

- 1 through Q

- 7 of subpart Q, calculated as specified in Equation Q

- 11 of subpart Q

. Calculated value using available data for each product and byproduct. No additional
measurement required.

If you use the carbon mass balance method in 40 CFR 98.173(b)(1) to determine CO2 Calculated value using available data of carbon content for each

### 7 Tab le 3

. New Data Elements for Part 98
Subpart New Data Element Analysis of Data Availability

emissions: The weighted average carbon content of all gaseous, liquid, and solid fuels (combined) included in Equation Q

- 9 of subpart Q being finalized in today’s action, calculated as specified in Equation Q

- 12 of subpart Q

. fuel. No additional measurement required.

If you use the carbon mass balance method in 40 CFR 98.173(b)(1) to determine CO2 emissions: The weighted average carbon content of all non

- fuel inputs to all furnaces (combined) included in Equation Q

- 10 of subpart Q being finalized in today’s action, calculated as specified in Equation Q

- 13 of subpart Q. Calculated value using availab le data of carbon content for each

non

- fuel input to each furnace. No additional measurement required.

If you use the carbon mass balance method in 40 CFR 98.173(b)(1) to determine CO2 emissions: The weighted average carbon content of all solid and liqui d products and byproducts from all furnaces (combined) included in Equation Q

- 11 of subpart Q being finalized in today’s action, calculated as specified in Equation Q

- 14 of subpart Q. Calculated value using available data of carbon content for each product and byproduct. No additional measurement required.

S

- Lime Annual quantity (tons) of lime product sold,

by type. Available from plant procedures used for accounting purposes. Quantity of product produced is necessary for financial accounting
purposes.
V

- Nitric Acid Annual percent N2O emission reduction for

all nitric acid trains combined. Calculated value using available data of emission reduction for each production unit. No additional measurement required.

X

- Petrochemicals If using the CEMS metho d to calculate GHG

emissions: Name and annual quantity (in metric tons) of each product. If using the mass balance method to calculate GHG emissions: Name and annual quantity (in metric tons) of each product used in Equations X

- 1, X

- 2, and X

- 3 of subpart X

. Calculated value using available data of monthly quantities of feedstocks. No additional measurement required.

If using the CEMS method to calculate GHG emissions: Name and annual quantity (in metric tons) of each carbon

- containing feedstock. If using the mass balance method to calculate GHG emissions: Name and annual quantity (in metric tons) of each carbon

- containing feedstock used in Equations X

- 1, X

- 2, and X

- 3 of subpart X. Calculated value using available data of monthly quantities of products. No additional measurement required.

### 8 Tab le 3

. New Data Elements for Part 98
Subpart New Data Element Analysis of Data Availability

AA

- Pulp & Paper For each pulp mill lime kiln: Quantity of

calcium oxide (CaO) produced (metric tons). Available from plant procedures used for accounting purposes. Quantity of product produced is necessary for financial accounting
purposes. For each pulp mill lime kiln: Percent age of annual heat input, individually for each fossil fuel type. Calculated using known quantities of fuel and heat value of fuel. No additional measurement required.



### For these data elements

, the EPA has estimated that there is little cost to the reporter to acquire the data and report the values during the reporting process. However, we have also assigned a cost of 0.5 technical hours per data element to provide a conservative estimate of cost s.

For all 21 new data elements, the EPA estimated that l egal and managerial hours would be 5 percent and 10 percent

, respectively

, of the technical hours. The EPA estimated t he number of
reporters based on the annual reports received in 2012 for the 9 su bparts

. 3 

### Table 4 shows the number of affected reporters by subpart and the number of data elements to be reported for each subpart. Based on these data, t he total estimated costs associated with reporting for the 21 data
elements in the 9 subparts listed i n Table 4 is $ 55 ,000.

Table 4

. Subparts with New Data Elements Reported

Subpart Source Category Number of New Data Elements Number of Reporters

E Adipic Acid Production 2 3

G Ammonia Manufacturing 2 22

H Cement Production 3 82

P Hydrogen Production 2 74 Q Iron and Steel Production 6 126

S Lime Manufacturing (non

- CEMS) 1 75

V Nitric Acid Production 1 35

X Petrochemical Production 2 64

AA Pulp and Paper Manufacturing 2 111



### 2.3 Recordkeeping changes The changes to the GHGRP include a provision to retain records of all “ inputs to equations ” data
elements for five years instead of the three years currently required

. Additionally, the EPA is requiring reporters who use the inputs verification tool to mai ntain a record of a file generated by the tool, which lists the entered “inputs to equations” data elements . This list of data elements could be maintained in a format (e.g., electronic, hard copy) currently allowed under Part 98. The

### 9

EPA does not anticipa te that t his change to the recordkeeping requirements would create any additional burden for a reporting facility in addition to the recordkeeping burden estimated in the 2009 Impact Analysis

. 1



### 3.0 RESULTS OF ANALYSIS The total cost of the proposed changes is presented in Table 5

. The EPA estimates that t he first
year net cost would be $ 438 ,000

, which includes the one

- time cost of learning the verification
system

. The EPA estimates recurring costs to be $ 55 ,000 for re p or t ing of new data elements.
Details of the recordkeeping and reporting burden estimate analysis can be found in the ICR supporting statement for the 2015 inputs final rule in the docket (Docket ID No. EPA

- HQ

- OAR

2010

- 0929).

Table 5 . Summary of Changes to Costs of GHGRP for 2015 Inputs Rule

Cost Element First Year Costs Subsequent Year Costs 

### Verification tool (training) $ 383 ,000 N/A

Reporting for New Data Elements $ 55 ,000 $ 55 ,000

Net Cost $ 438 ,000 $ 55 ,000

4.0 REFERENCES

1. 

### Regulatory Impact Analysis for the Mandatory Reporting of Greenhouse Gas Emissions Final Rule (GHG Reporting). U.S. Environmental Protection Agency. September 2009. http://www.epa.gov/ghgreporting/documents/pdf/arch ived/EPA

- HQ

- OAR

- 2008

- 0508

- 2229.pdf 

### 2. Evaluation of Alternative Verification Approaches for Greenhouse Gas Reporting Rule Subparts for which Reporting of Inputs to Emission Equations was Deferred to March 31, 2015. Memorandum from Lisa Grogan

- McCulloch, U.S. EPA to Docket EPA

- HQ

- OAR

2010

- 0929

. August 2013. 3. 2012 Greenhouse Gas Emissions from Large Facilities. http://ghgdata.epa.gov/ghgp/main.do