### 1



### December 1 8 , 2012

MEMORANDUM

SUBJECT: Regulatory Impact Results for the Reconsideration Final Rule for Standards of

Performance for New Stationary Sources and Emission Guidelines for Existing
Sources: Commercial and Industrial Solid Waste Incineration Units

FROM: Tom Walton

Economist AEG (C439

- 02)

TO: Toni Jones

Environmental Engineer
FIG ( E143

- 03)

The EPA analyzed the economic impacts and benefits of this reconsideration final rule using the methodology that was discussed in the original final rule RIA and in the preamble to the original final rule. See FR 76 15704

.

Changes Since 2010 Final Rule to Emission Reductions and Engineering Costs



### The changes in emission reductions and annual engineering costs in the final CISWI reconsideration are the result of revisions made to the CISWI unit inventory since promulgation

of the March 2 011 final rule. Since the March 2011 final rule, some units were identified that were not previously in the CISWI inventory database, some units were removed from the inventory, and one unit was moved from one subcategory to another . Making these changes resulted in 1 additional incinerator, 14 additional small remote incinerators, 8 fewer energy recovery units burning solid waste, no change in the number of energy recovery units burning liquid waste, and 11 additional waste

- burning kilns. Altogether, the current CISWI inventory comprises 18 more units than the inventory at the time the March 2011 final rule was promulgated. If all units choose to comply with the rule, the resulting incremental cost impact for the revised inventory of CISWI units to comply with the final amended rule is approximately 184 million dollars in capital expenditures and 42 million dollars per year in total annual costs.

The changes in emission reductions and annual engineering costs in the final CISWI reconsideration are mainly the result of revisions made to the emission limits due to receiving new data, subcategory inventory changes, and changes to the emissions monitoring provisions. Incremental annual engineering costs for liquid/gas burning energy recover units decreased by approximately $219,000 because a lower baseline CO emission concentration was determined

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### for one of the units, thus eliminating the need for an oxidation catalyst to meet the new CO limit. Incremental annual engineering costs for energy recover units burni ng solids decreased by about $70 million because eight units were cut from the inventory and a revised activated carbon injection cost algorithm was used in estimating costs. Incremental annual engineering costs for incinerators increased by about $340,000 because of a more stringent CO limit, which prompted

the need for afterburner retrofits on units that can’t meet the revised limit. Incremental annual engineering costs for small remote units increased by approximately $3.2 million; although

limits became less stringent and fewer controls were required per unit, the additional annual costs required for an additional 14 units to comply ($3.7 million) outweighed the cost reduction from decreased control requirements ($498,000). Incremental annual engineering costs for

waste

- burning kilns increased by about $109 million because additional wet scrubbers, activated carbon injection, regenerative thermal oxidizers, and fabric filter improvements were required for the original 12 units to meet revised limits, and an additional 11 units were added to the inventory, many of which require similar controls to meet the revised limits.

Table 1 shows the changes in emission reductions of directly emitted PM 2.5 

### , SO 2 

### , and

NOx. Table 2 shows an estimate of the changes in monetized benefits associated with the emission reductions and engineering costs in the final CISWI reconsideration.

Table 1. Changes in Emission Reductions for the F inal CISWI Reconsideration a

Direct PM 2.5 (tons per year) SO 2

(tons per year) NOx

(tons per year)

Final CISWI Rule (March 2011) 759 5,259 5,734

Changes due to increase in scope
(addition of 18 units) + 98 + 970

- 8

Changes due to provision changes in this final reconsideration + 60 + 33

- 327

Net changes since final rule + 158 +1,003

- 335

Final CISWI Reconsideration 917 6,262 5,399

a We provide only the emission changes associated with these 2 pollutants in this table because the other pollutants (e.g., Cd, CO, HCl, Pb, Hg, D/F ) were not monetized in the RIA.

### 3 Table 2. Changes in Benefits and Costs for the Final CISWI Reconsideration

Monetized Benefits in 2015 a Annual Engineering

Costs b

(considering fuel savings) 3% discount rate 7% discount rate

Final CISWI Rule (March 2011) $3 6 0 to $8 7 0 million $3 2 0 to $7 9 0 million $2 18 million

Changes due to increase in scope
(addition of 18 units) +$ 51 to $ 12 0 million +$ 46 to $ 110 million +$30 million

Changes due to provision changes in this

final reconsideration +$ 13 to $ 32 million + 12 to $ 29 million +$10 million

Net changes since final rule +$ 64 to $ 160 million + 58 to $ 140 million $40 million

Final CISWI Reconsideration $420 to $1,000

million $380 to $ 930 million $258 million

a These benefits do not include benefits associated with reduced exposure to HAP, direct exposure to SO 2 , visibility impairment, or ecosystem effects. These benefits reflect the final rule, which were 4% higher than shown in the

RIA.

b Minimum and maximum fuel savings reflect a range of fuel prices for the final reconsideration. These costs reflect
the final rule, which were 22% lower than shown in the RIA.



### We estimated the total monetized benefits for the final CISWI RIA (March 2011) to be
$340 million to $830 million at 3 percent discount rate and $310 million to $750 million at 7 percent discount rate. However, EPA noted that the RIA did not incorporate the final engineering costs and emission reductions, which would decrease the engineering costs by app roximately 22% and increase the monetized benefits by approximately 4%. For this final reconsideration, we estimate the total monetized benefits to be $420 million to $1 billion at 3 percent discount rate and $380 million to $930 million at 7 percent disco unt rate. All estimates are in 2008$.

Revised Economic Impacts

The market impact results are very similar to the results in the final rule RIA. The Agency’s economic model suggests average national price increases for industrial sectors are

less than 0.001 percent, while average annual domestic production may fall by less than 0.001 percent. Because of higher domestic prices, imports slightly rise by 0.001 percent and exports fall by 0.001 percent. The change in US surplus is now

- 258 million dollars (2006$). For the final rule RIA, the change in surplus was

- 283 million dollars (2006$). Table 3 provides the price, production, import, and export changes for this final reconsideration rule, which are very close to the estimated changes for the final rul e RIA.

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### Table 3 . Price, Production, Import, and Export Changes Resulting from the Final CISWI

Reconsideration

Industry Sector U.S. Prices U.S. Production Imports U.S. Consumption Exports Energy 0.001%

- 0.001% 0.002% 0.000% 0.000% Nonmanufacturing 0.004%

- 0.001% 0.003% 0.000%

- 0.003% Manufacturing Food, beverages, and textiles 0.001%

- 0.001% 0.001% 0.000% 0.000% Lumber, paper, and printing 0. 020 %

- 0.009% 0.021%

- 0.005%

- 0.014%

Chemicals 0.000%

- 0.001% 0.000%

- 0.001% 0.000%

Plastics and Rubber 0.000%

- 0.001% 0.000%

- 0.001% 0.000%

Nonmetallic Minerals 0.087%

- 0.020% 0.032%

- 0.012%

- 0.072% Primary Metals 0.001%

- 0.001% 0.001%

- 0.001%

- 0.001%

Fabricated Metals 0.000% 0.000% 0.000% 0.000% 0.000% Machinery and Equipment 0.000% 0.000% 0.000% 0.000% 0.000% Electronic Equipment 0.000% 0.000% 0.000% 0.000% 0.000% Transportation Equipment 0.000% 0.000% 0.000% 0.000% 0.000%

Other 0.000%

- 0.001% 0.001% 0.000% 0.000%

Wholesale and Retail Trade 0.000% 0.000% 0.000% 0.000% 0.000% Transportation Services 0. 000 %

- 0.001% 0.000% 0.000% 0.000%

Other Services 0.000% 0.000% 0.000% 0.000% 0.000%



### The results for sales tests for small businesses are lower for the reconsideration final than

those calculated for the final rule. The number of small entities affected by the rule dropped from
nine to five. For the final rule, four of the nine had cost

- t o

- sales percentages of more than 3 percent. For the reconsideration final only one of the five had a cost

- to

- sales percentage of more than 3 percent and the other four had small savings. This is not a significant impact on a

substantial number of small e ntities.

The change in employment estimates between the final rule RIA and the reconsideration final is small. The estimated employment changes range between −500 to +1000 employees, with a central estimate of +300 employees for the final rule RIA. For the reconsideration final, the estimated employment changes range between −400 to +800 employees, with a central

estimate of +200.

Revised Benefits



### The health benefits were calculated using the methodology described in the final CISWI
RIA (U.S. EPA, 2011) 1 

### using the revised emission reductions estimated for the final reconsideration. We were unable to estimate the benefits from reducing exposure to HAPs and ozone, ecosystem impairment, and visibility impairment, including reducing 20,000 tons of

carbon monox ide, 780 tons of HCl, 2. 5 tons of lead, 1.8 tons of cadmium, 680 pounds of

1 U.S. Environmental Protection Agency (U.S. EPA). 2011. Regulatory Impact Analysis: Standards of Performance for New Stationary Sources and Emission Guidelines for Existing Sources: Commercial and Industrial Solid

Waste Incinerati on Units

. February. Available at http://www.epa.gov/ttnecas1/regdata/RIAs/CISWIRIAfinal110221_psg2.pdf

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### mercury, and 58 grams of dioxins/ furans. Please refer to the full description in the final CISWI RIA of the unqua ntified benefits as well as analysis limitations and uncertainties. These monetized benefits are approximately 18 % higher than the final CISWI NSPS due to the

increased emission reductions of PM 2.5 

### and SO 2



### . Since the reconsideration proposal, we have made several updates to the approach we use to estimate mortality and morbidity benefits in the
PM NAAQS RIAs (U.S. EPA, 2012a,b) 2

, 3 

### , including updated epidemiology studies, health endpoints, and population data. Although we have not re

- estimated the benefits for this rule to apply this new approach, these updates generally offset each other, and we anticipate that the rounded benefits estimated for this rule are unlikely to be different than those provided below. More information on these updates can be found in the PM NAAQS proposal RIA. We provide

the benefits results in T ables 4 and 5 and Figure 2. We also provide the breakdown of monetized benefits by subcategory in Figure 1

.

Table 4 : Summary of Monetized Benefits Estimates for the Final CISWI Reconsideration

in 2015 (2008$)

Pollutant Emissions

Reductions (tons) Benefit

per ton (Pope, 3%) Benefit

per ton (Laden, 3%) Benefit

per ton (Pope, 7%) Benefit

per ton (Laden, 7%) Total Monetized

Benefits (millions 2008$ at 3%) Total Monetized

Benefits (millions 2008$ at 7%)

Direct

PM 2.5 917 $230,000 $560,

000 $210,

000 $500,

000 $

210 t

o $5

10 $

190 t

o $

460

PM 2.5 Precursors

SO 2 6,262 $29,000 $72,000 $27,000 $65,000 $180 to $450 $170 to $410

NO 2 5,399 $4,900 $12,000 $4,400 $11,000 $26 to $64 $24 to $58

Total $420 to $1,000 $380 to $930

*All estimates are for the implementation year (2015), and are rounded to two significant figures so numbers may not sum across columns. These models assume that all fine particles, regardless of their chemical composition, are equally potent in causing premature mortality becau se the scientific evidence is not yet sufficient to allow differentiation of effect estimates by particle type. The benefit per ton estimates vary because each ton of precursor reduced has a different propensity to become PM 2.5 . The monetized benefits inco rporate the conversion from precursor emissions to ambient fine particles. These estimates do not include benefits from reducing HAP emissions

or ozone benefits.

2 U.S. Environmental Protection Agency (U.S. EPA). 2012a. Regulatory Impact Analysis for the Proposed Revisions to the National Ambient Air Quality Stand ards for Particulate Matter . EPA

- 452/R

- 12

- 003. Office of Air Quality Planning and Standards, Health and Environmental Impacts Division. June. Available at http://www.epa.gov/ttnecas1/regdata/RIAs/PMRIACombinedFile_Bookmarked.pdf.

3 U.S. Environmental Prote ction Agency (U.S. EPA). 2012b. Regulatory Impact Analysis for the Final Revisions to the National Ambient Air Quality Standards for Particulate Matter . EPA

- 452/R

- 12

- 003. Office of Air Quality Planning and Standards, Health and Environmental Impacts Divisi on. December. Available at http://www.epa.gov/pm/2012/finalria.pdf.

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### Table 5 : Summary of Estimated Reductions in Health Incidences from PM 2.5 

### for the Final

CISWI Reconsideration in 2015 *

Avoided Premature Mortality

Pope et al. 47

Laden et al. 120

Avoided Morbidity

Chronic Bronchitis 32

Acute Myocardial Infarction 75

Hospital Admissions, Respiratory 11

Hospital Admissions, Cardiovascular 24

Emergency Room Visits, Respiratory 45

Acute Bronchitis 7 6

Work Loss Days 6, 200

Asthma Exacerbation 830

MRAD 37,000

Lower Respiratory Symptoms 910

Upper Respiratory Symptoms 680

*All estimates are for the analysis year (2015) and are rounded to whole numbers with two significant figures. These models assume that all fine particles, regardless of their chemical composition, are equally potent in causing premature mortality because the scientific evidence is not yet sufficient to allow differentiation of effect estimates by particle type. These estimates do not include benefits from reducing HAP emissions and ozone exposure, nor energy disbenefits associated with the increased emissi ons from additional energy usage.

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### Figure 1: Breakdown of Monetized Benefits by Subcategory

Energy recover

unit

- solids

55% Energy recovery



### unit

- liquid/gas

11% 

### Incinerator

1%

Waste

- burning

kiln

33%

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### Figure 2: Total Monetized PM 2.5 

### Benefits Estimates for the Final CISWI Reconsideration

in 2015

Revised Net Benefits



### Table 6 shows the estimated costs and benefits for the reconsideration final. The estimated net benefits are higher than the final rule RIA, which was $30 million to $470 million at 7 percent and was $60 million to $550 million at 3 percent.

Table 6 . Summary of Estimated Social Costs and Benefits

Category Primary
Estimate Low

Estimate High

Estimate Year

Dollar Discount

Rate Period

Covered

Benefits

Annualized Monetized ($millions/year) $380 $930 2008 7% 2015
$420 $1,000 2008 3% 2015

Costs

Annualized Monetized ($millions/year) $ 258 2008 7% 2015
$258 2008 3% 2015

Net Benefits

Annualized Monetized ($millions/year) $120 $670 2008 7% 2015
$160 $770 2008 3% 2015 

### $0 $200 $400 $600 $800 $1,000 

### $1,200 $1,400

Pope et al. Laden et al. Millions (2008$)



### Benefits estimates derived from 2 epidemiology functions and 12 expert

functions 3% DR

7% DR