MEMORANDUM

Date: November 7 , 2011

Subject: Draft Cost Impacts of the Revised NESHAP for 7 Source Categories

From: Lesley Stobert, EC/R Incorporated

To: Paula Hirtz, EPA/OAQPS/SPPD Nick Parsons, EPA/OAQPS/SPPD

______________________________________________________________________________

The purpose of this memorandum is to present the estimated cost impacts of proposed require ments for pressure relief device (PRD) monitors for the seven source categories that are subject to the Pesticide Active Ingredient (PAI) , Polyether Polyols (PEPO) , and Group IV Polymers and Resins Production National Emissions Standards for Hazardous Air Pollutants ( NESHAP )

– 40 CRF 63, subparts MMM, PPP, and JJJ, respectively. These source categories

are Pesticide Active Ingredient Production, Polyether Polyols Production, Acrylic

- Butadiene

Styrene (ABS) Production, Methyl Methacrylate

- Butadiene

- Styrene (MBS) Production

, Po lyethylene Terephthalate (PET) Production

, Polystyrene Production , and Styrene

- Acrylonitrile (SAN) Production . The addition of PRD monitors to the NESHAP for these source categories is being proposed along with proposed changes evaluated under EPA’s Risk and Technology

Review (RTR) program, which is addressing statutory requirements under section 112(d)(6) and 112(f)(2 ) of the Clean Air Act. Section 1 provides background information, followed by the estimated costs of the impacts of the PRD monitors for e ach source category in section 2

.

1. BACKGROUND

Section 112 of the Clean Air Act (CAA) establishes a comprehensive regulatory process to address emissions of hazardous air pollutants (HAP) from stationary sources. In accordance

with CAA section 112(c), EPA identifies categories and subcategories of major sources that emit one or more of the HAP listed in CAA section 112(b). CAA section 112(d) (2) then calls for EPA to promulgate national technology

- based emission standards for each listed cate gor y or subcategory of sources. For “major sources” that emit or have the potential to emit any single HAP at a rate of 10 tons or more per year or any combination of HAP at a rate of 25 tons or more per year, these technology

- based standards must reflect th e maximum reductions of HAP achievable (after considering cost, energy requirements, and non

- air health and environmental impacts) and are commonly referred to as maximum achievable contro l technology (MACT)

standards. S ection 112(d)(6) then requires EPA to review the CAA section 112(d) technology

based standards and to revise them “as necessary, taking into account developments in practices, processes, and control technologies,” no less frequently t han every 8 years. The residual risk

review is described in section 112(f) of the CAA. CAA section 112(f)(2) requires EPA to promulgate standards for each category or subcategory of CAA section 112(d) sources “if promulgation of such standards is required in order to provide an ample margin of safety to2

protec t public health . . . or to prevent, taking into consideration costs, energy, safety, and other relevant factors, an adverse environmental effect

.

In addition to the residual risk and technology reviews performed regarding the NESHAP, EPA also reviews th e existing provisions of the NESHAP during the RTR process

. In 2008, t he United States Court of Appeals for the District of Columbia Circuit vacated portions of two provisions in the EPA’s CAA Section 112 regulations governing the emissions of HAP during periods of SSM. Sierra Club v. EPA , 551 F.3d 1019 (D.C. Cir. 2008), cert. denied , 130 S. Ct. 1735 (U.S. 2010). Specifically, the Court vacated the SSM exemption contained in 40 CFR 63.6(f)(1) and 40 CFR 63.6(h)(1), that are part of a regulation, commonly r eferred to as the “General Provisions Rule,” that the EPA promulgated under section 112 of the CAA. When incorporated into CAA Section 112(d) regulations for specific source categories, these two provisions exempt sources from the requirement to comply wit h the otherwise applicable CAA section 112(d) emission standard during periods of SSM. In light of and c onsistent with Sierra

Club v. EPA , the EPA is proposing to eliminate the SSM exemption in the PAI, PEPO and Group IV Polymers and Resins NESHAP and require that the standards in th e s e rule would apply at all times.

As part of the proposed elimination of the SSM exemption in these NESHAP, EPA is

p roposing that there be no discharge to the atmosphere from any PRD on any equipment in HAP

se rvice within the process units for these seven source categories. To ensure compliance with this requirement, facility owners or operators would be required to install and operate electronic indicators on each PRD that would be able to identify and record the time and duration of each pressure release and notify operators that a pressure release has occurred. These provisions are proposed due to concerns that a large number of PRD releases may emit large quantities of HAP, may not be identified and control led in a timely manner and may be due to repeat problems that have not been corrected. The proposed provisions clarify that such release events would be

violations of the emissions standards of these rules ; however, for pressure release events that

occur r elated to a process or control device malfunction, the owner or operator could claim an affirmative defense through other proposed NESHAP provision s

.

2

. IMPACTS OF RISK REDUCTION OPTIONS

In the evaluation of NESHAP options for Polyvinyl Chloride and Copolymers

Production , the EPA estimated the costs of requiring PRD monitoring systems

. 1 As polyvinyl chloride and copolymers (PVC) are produced at chemical production facilities of similar size and with similar equipment type characteristics as facilitie s that produce PAI, PEPO and Group IV Polymers and Resins , the capital and annual cost s of PRD monitors at PVC facilities were applied to these source categories to obtain estimated cost impacts.

In the development of the PVC NESHAP, the estimated cost of a PRD monitoring system was $188,913 and annual costs of operating and maintaining the monitoring system w ere

1 National Emission Standards for Hazardous Air Pollutants for Polyvinyl Chloride and Copolymers Production : Proposed Rule. 7 6 FR 29528

. May 20, 2011

.3

estimated to be $26,897 per facility

. 2 These costs were based an estimated average facility,

which was assumed to have 134 PRD

. In addition , it was estimated that approximately 12.5 hours of labor would be expended by facility personnel to meet the NESHAP reporting and recordkeeping requirements related to PRDs.

To estimate the PRD monitoring system costs for the PAI, PEPO, and Group IV Polymers and Resins source categories, we applied the same estimates used in the PVC NESHAP analysis. These assumptions include the same PRD count, monitoring system initial and operation and maintenance costs, and the same labor hours needed to meet the NESHAP reporting and recordkeeping requirements. However, slightly different industry labor rates were applied compared with those used in the PVC analysis. The PAI, PEPO and Group IV Polymers

and Resins source category labor costs associated with PRD m onitoring NESHAP reporting and recordkeeping cost were based on the following labor rates 3 :

Technical $51.62 ($24.58 + 110%) Managerial $104.92 ($49.96 + 110%)

Clerical $41.66 ($19.84 + 110%)

Tab le 1 shows the estimated costs of the PRD monitoring system requirements proposed for the PAI, PEPO, and Group IV Polymers and Resins source categories

.

2 “Costs and Emission Reductions of the Proposed Standards for the Polyvinyl Chloride and Copolymers (PVC) Production Source Category.” Memorandum from Eastern Research Group, Inc. to Jodi Howard, U.S. Environmental Protection Agency. April 13, 2011. (Docket ite m no. EPA

- HQ

- OAR

- 2002

- 0037

- 1002).

3 Labor rates and associated costs are based on data from the United States Department of Labor, Bureau of Labor Statistics (BLS) from July 2010. Wages for technical labor are from the category "chemical plant and system operators"; wages for management labor are from the category "general and operations managers”; and wages for clerical labor are from the category “secretaries and administrative assistants”. These rates represent salaries plus fringe benefits. The wages provided above were increased by a rate of 110 percent to account for overhead.4

Table 1 . Estimated Costs of PRD Monitoring Systems for the PAI, PEPO, and Group IV Polymers and Resins Source Categories

Source Category Number of

Facilities in

Source Category PRD

Monitoring System Cost per Facility Annual PRD

Operation and

Maintenance Costs per Facility Annual Recordkeeping and

Reporti ng Labor Hours/Costs per

Facility Total Capital PRD Costs per

Source Category Total

Annual

PRD

Costs

per Source Category Total PRD

Source Category

Costs Technical Managerial Clerical

Pesticide Active Ingredient (PAI)

Production 17 $188,913 $26,897 11/$568 0 .55 /$ 58 1. 1/$4 6 $3,211,521 $468, 673 $3,680, 194

Polyether Polyols (PEPO) Production * 23 $188,913 $26,897 11/$568 0.55/$58 1.1/$46 $4,344,999 $634, 087 $4,979, 086

Acrylic

Butadiene

Styrene (ABS)

Production 5 $188,913 $26,897 11/$568 0.55/$58 1.1/$46 $944,565 $137,845 $1,082,410

S t yrene

Acrylonitrile (SAN)

Production 2 $188,913 $26,897 11/$568 0.55/$58 1.1/$46 $377,826 $55,138 $432,964

Methyl Methacrylate

Butadiene

Styrene (MBS)

Production 2 $188,913 $26,897 11/$568 0.55/$58 1.1/$46 $377,826 $55,138 $432,964

Polyethylene Terephthalate (PET) Production 15 $188,913 $26,897 11/$568 0.55/$58 1.1/$46 $2,833,695 $413,535 $3,247,230

Polystyrene

Production 11 $188,913 $26,897 11/$568 0.55/$58 1.1/$46 $2,078,043 $303,259 $2,381,302

* The estimates for this source category are based on 23 operating facilities in the source category. Earlier estimates of the number of operating facilities and costs associated with any additional requirements ha d been 25 or more before EPA learned of so me facility closures.