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OAR Box 1834 

Prepped by Keeia Richards 

Document Number: 

49) IV-H-03 

Docket Number: 

A-90-07 

Printed 11/10/2008 2:14:35 PM Sheet 49 of 61 
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#-70-07 

43T-H-03 

<3 «F J * Ot 

Draft 

Regulatory Support Document 

and 

flp isipjjij 

ui " MAY 2 6& M 

EPA AIR DOCK El 

Regulatory Flexibility Analysis 

Fuels and Fuel Additives Registration 

Regulations 

DRAFT 

April 7, 1994 

U.S. Environmental Protection Agency 

Office of Air and Radiation 

Office of Mobile Sources 
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\ 

Table of Contents Page. 

Introduction 1 

Chapter 1: Program Description 

I. Statutory Background 

II. Description of the Program 

A. Scope of Health Effects Evaluation 

B. Scope of Welfare Provisions 

C. Scope of Emission Control System Testing 

III. Provisions to Prevent Undue Burdens 

A. Cost/Burden Sharing Provisions 

B. Small Business Provisions 

C. Provisions to Eliminate Duplication of Effort 

D. Other Special Provisions 

Chapter 2: Industry Overview 

I. Introduction 

II. Analysis of Currently Registered F/FA Producers 

A. Data Collection 

B. Characterization of Registered Producers 

Chapter 3: Program Requirements and Associated Costs 

I. Introduction 

II. Description of Changes in Program Requirements 

III. Tier 1 Requirements and Costs 

A. Literature Search 

B. Characterization of Emissions 

C. Total Tier 1 Costs 

IV. Tier 2 Requirements and Costs 

A. Emission Generation for Biological Testing 

B. Biological Test Costs 

C. Total Biological Test Costs 

D. Total Tier 2 Costs 

V. Tier 3 Requirements, and Potential Costs 

VI. Administrative/Reporting Requirements and Costs 

VII. Summary 

VIII. Cost Estimates for Future Alternative F/FA Registrations 

Chapter 4: Estimated Cost Impacts 

I. Introduction 

II. Analytical Assumptions and Approach 

III. Methodology and Results 

A. Producer Cost Impacts 

B. Industry Cost Impacts : 
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IV. Limitations of the Analysis 

V. Conclusions 

Chapter 5: Regulatory Flexibility Analysis 

I. Introduction 

II. Requirements of the Regulatory Flexibility Act 

III. Methodology 

A. Data Sources 

B. Adjustments to the Data 

C. Definition of Small Manufacturer 

IV. Characterization of Small & Large Manufacturers ... 

A. Characteristics of Additive Manufacturers 

B. Characteristics of Fuel Manufacturers 

C. General Conclusions 

V. Estimation of Impacts on Small Manufacturers 

A. Comparing the Ratio of Compliance Cost to Sales 

B. Analysis of Change in ROA 

C. Examination of Manufacturers Potentially Pushed into Closure. 

VI. Assessing the Effectiveness of Small Business Provisions 

VII. Mitigating Circumstances that Reduce Adverse Impacts 

VIII. Limitations of the Analysis 

IX. Conclusions 

Chapter 6: Perspective: Summary and Societal Benefits 

Appendix A: Summary of Biological Test Costs 
p.a . 

Figure 1-1: 

Figure 1-2: 

Figure 1-3: 

Table 1-1: 

Exhibit 2-1: 

Exhibit 2-2: 

Table 3-1: 

Table 3-2: 

Table 3-3: 

Table 3-4: 

Table 3-5: 

Table 4-1: 

Table 4-2: 

Table 4-3 

Table 4-4: 

Table 4-5: 

Table 4-6: 

Exhibit 5-1: 

Exhibit 5-2: 

List of Exhibits. Figures, and Tables 

Grouping Framework 

Fuel Manufacturer Annual Sales 

Distribution 

Fuel Additive Manufacturer Annual Sales 

Distribution ; 

F/FA Grouping System 

Profiles of Registered Fuel Manufacturers.. 

Profiles of Registered Additive 

Manufacturers 

Emission Characterization/Measurement 

Requirements 

Estimated Emission Characterization/ 

Measurement Costs 

Tier 1 Costs 

Tier 2 Costs 

Estimated Alternative Fuel Registrations & 

Costs 

Estimated Groups Per Fuel/Fuel Additive 

Category 

Assumed Combustion Emission Test 

Requirements Per Category 

Assumed Evaporative Emission Test 

Requirements Per Category 

Estimated Compliance Costs Per Group 

Estimated Compliance Costs for Small 

Atypical Manufacturers 

Summary of Compliance Costs 

SBA Definitions of Small by SIC Code for 

F/FA Manufacturers 

Profiles of Additive Manufacturers 

F/FA Program Definition 

Eagfi 
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Exhibit 5-3: 

Exhibit 5-4: 

Exhibit 5-5: 

Exhibit 5-6: 

Exhibit 5-7: 

Exhibit 5-8: 

Exhibit 5-9: 

Figure 5-1: 

Figure 5-2: 

Figure 5-3: 

Figure 5-4: 

Profiles of Additive Manufacturers 

SBA Definitions 

Profiles of Fuel Manufacturers 

F/FA Program Definition 

Profiles of Fuel Manufacturers 

SBA Definition 

Summary of Compliance Costs per Manufacturer 

Comparison of Small and Large Company 

Compliance Cost to Sales Ratios 

Estimated Impacts on ROA 

Summary of Profile of Manufacturers 

Potentially Pushed into Closure 

Diagram of 8 Profiles 

Number of Additive Companies Classified by 

EPA and SBA Definitions as Small 

Number of Fuel Companies Classified by EPA 

and SBA Definitions as Small 

Measure of Financial Health and Distress... 
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DRAFT 

Introduction 

This Regulatory Support Document (RSD) presents the 

Environmental Protection Agency's (EPA) final estimates of costs 

and impacts of the Fuels and Fuel Additives (F/FA) Registration 

Regulations on the affected industries. The basic approach used in 

the draft support document1 prepared for the Notice of Proposed 

Rulemaking (NPRM) (57 FR 13168, April 15, 1992) is maintained 

throughout this final document. Major changes in program 

requirements and assumptions on which the analysis is based are 

identified throughout the document. Similar to the analysis 

prepared for the NPRM, this final rule analysis focuses mainly on 

producers of gasoline and diesel fuels and their additives since 

producers of alternative F/FAs are not yet required to register 

their products with EPA. However, EPA expects to designate these 

F/FAs for registration and has included provisions for alternative 

fuels in this final rule under the assumption that they will be 

designated. Consequently, this analysis includes a discussion of 

the expected impact of this rule on producers of alternative fuels. 

EPA contracted with Dun & Bradstreet (D&B) Information 

Services, ICF Incorporated, and Southwest Research Institute for 

assistance in obtaining information to update the draft RSD. To 

^.S. Environmental Protection Agency, Office of Mobile 

Sources, "Draft Regulatory Support Document, Fuels and Fuel 

Additives Registration Regulations," September, 1991, Docket A90-07. 
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update manufacturer/product information contained on the Fuels and 

Fuel Additives Registration (FFAR) database, EPA requested that D&B 

collect current financial information on the registered companies 

and identify registered companies no longer in operation. A letter 

explaining financial information sought and collection methodology 

is available in the public docket2. Results of the data collection 

are discussed in Chapter 2. 

Two contracts were established with ICF Incorporated. One 

contract3 was established for the purpose of creating a flexible 

product grouping facility from which cost estimates would be 

determined (explained further in Chapter 4) . The other such 

contract4 involved data analysis to support EPA's assessment of 

impacts of the F/FA registration regulations on small businesses, 

the results of which are presented in Chapter 5. 

Finally, EPA established a contract with Southwest Research 

2Letter to Sheri Dunatchik, EPA, from Kathryn E. Brigham, 

Government Support Manager, Dun & Bradstreet Information 

Services, June 30, 1993. 

3"Grouping and Reporting Database for Fuels and Fuel 

Additives," prepared for EPA by ICF Incorporated under EPA 

contract 68-C1-0059, September, 1993. 

4"Small Business Impact Analysis of the Fuel and Fuel 

Additive Registration Program," prepared for EPA by ICF 

Incorporated under EPA Contract 68-C1-0059, January, 1994, 

available in Docket A-90-07. 
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Institute3 to identify commercial prices associated with certain 

aspects of the Tier 1 testing requirements of this rule, the 

results of which are discussed in Chapter 3. 

Following this introduction, the first chapter provides the 

statutory history of this rulemaking along with a brief description 

of the requirements of the program. The scope of health and 

welfare effects evaluation and emission control system testing are 

discussed, followed by a discussion of special provisions of the 

program. 

Chapter 2 presents a characterization of manufacturers 

currently registering fuel and additive products with EPA. The 

chapter characterizes registered manufacturers in terms of sales 

and net income, as well as number and type of products they 

produce. 

Chapter 3 discusses fuel and fuel additive testing 

requirements and related costs. The chapter provides a brief 

discussion of the major changes in program requirements and 

assumptions from those used in the draft impact analysis. 

Following this discussion, estimated costs are presented for each 

activity required under each tier of evaluation and testing. The 

estimated costs for emission generation, emission speciation, 

5"Motor Vehicle Fuel and Fuel Additive Emissions Generation 

and Speciation Costs," June, 1993, prepared by Southwest Research 

Institute under EPA Contract No. 68-C2-0144. 
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biological testing, and compliance with reporting requirements are 

provided. The chapter also includes a discussion of projected 

costs related to future registrations of alternative F/FA products. 

Chapter 4 presents the projected cost impacts of the program 

on the fuel/fuel additive industry. Cost impacts are discussed for 

fuel manufacturers, fuel additive manufacturers, and the industry 

as a whole. The analytical judgements and assumptions on which the 

analysis is based and the methodology for determining the cost 

impacts of compliance are presented. 

Chapter 5 presents an analysis of the financial impacts of the 

F/FA Registration Regulations on small businesses and compares 

these to the impacts on large manufacturers. It explains the F/FA 

program's small business definition and assesses the effectiveness 

of special provisions included in the final rule for certain small 

companies. 

Finally, Chapter 6 provides a summary and discussion of the 

information presented. The sensitivity of projected costs to 

assumptions used in the analysis is included as well as a brief 

discussion of the expected relationship between the program' s costs 

and benefits. 
DRAFT 

Chapter 1 

Program Description 

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I. statutory Background 

Section 211(a) of 1970 Clean Air Act (CAA) directs the 

Administrator of the EPA to register motor vehicle fuels and fuel 

additives prior to their sale or introduction into commerce. The 

basic registration information required by each fuel and fuel 

additive manufacturer is specified under section 211(b)(1), and 

includes such items as commercial identifying information, range of 

concentration, purpose in-use, and chemical composition. Under 

section 211(b)(2), EPA is also given authority to require 

manufacturers to conduct tests to determine the potential health 

effects of their fuels and fuel additives and to require other 

information to identify the emissions produced by such fuels and 

fuel additives, their effect(s) on the public health and welfare, 

and their impact on vehicular emission control performance. 

Although the general registration regulations of sections 

211(a) and (b)(1) were implemented in 1975, EPA did not exercise 

its authority to require health, welfare, and emission control 

system effects testing under section 211(b)(2). However, in the 

CAA Amendments of 1977 (PL 95-95, August 7, 1977), Congress added 
section 211(e) to the statute which made implementation of section 

211(b)(2) mandatory and established time limits for compliance by 

fuel and fuel additive producers. In addition, Section 211(e)(3) 

allowed the Administrator to exempt or make special allowances for 

small businesses, to provide for cost and/or burden sharing, and to 

make other specific exemptions when additional testing would be 

duplicative of adequate existing testing. 

II. Description of the Program 

The purpose of the new registration requirements is to provide 

EPA with information to evaluate the potential adverse health, 

welfare, and emission effects of F/FA emissions and to help 

determine whether regulatory action is needed under section 211(c) . 

The new requirements supplement existing registration requirements 

and apply to all F/FA designated for registration. At the present 

time, gasoline and diesel F/FAs produced and commercially 

distributed for use in highway motor vehicles are designated for 

registration. Both domestic and foreign products are included in 

the designation. EPA anticipates that methanol (M100 and M85), 

ethanol (E100 and E85), natural gas (both compressed natural gas 

(CNG) and liquified natural gas (LNG)) , and liquified petroleum gas 

(LPG) alternative fuels and additives will soon be designated. 

Fuels intended for use exclusively in off-road vehicles are not 

currently designated. 
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A. Scope of Health Effects Evaluation 

The potential scope of the health effects testing program is 

vast, and EPA has taken steps consistent with the Act to limit the 

focus of the requirements so as not to levy an unnecessary burden 

on the regulated industry, while still requiring the level of 

information needed to achieve the overall goals of the program. 

The 211(b) program does not mandate comprehensive health effects 

assessments as routine requirements for registration. Instead, a 

system of evaluation tiers has been developed, enabling EPA to 

determine whether more definitive testing is needed for specified 

fuels or additives based upon toxicity and exposure data obtained 

from available literature and/or from a battery of screening tests. 

The tiered approach permits F/FA manufacturers to make full 

use of test results and other information which may already be 

available about their products. Under Tier 1, F/FA manufacturers 

are required to perform a literature search on the health and 

welfare effects of F/FAs, characterize the emissions, and provide 

production volume and market distribution data6. Tier 2 consists 

of a 90-day animal exposure study to screen for general systemic 

and organ toxicity, and also encompasses specific tests for 

carcinogenicity, mutagenicity, teratogenicity, neurotoxicity, and 

reproductive effects. Actual Tier 2 testing requirements will 

depend on the extent to which the data search activities in Tier 1 

sThe modeling analyses proposed in the NPRM have been 

eliminated from Tier 1 requirements. When needed, they will be 

prescribed under Tier 3. 
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provide documentation of adequate existing tests comparable to 

those included in Tier 2. Fuels and additives will be subject to 

Tier 3 testing requirements only if determined to be needed on a 

case-by-case basis by EPA. The endpoints to be addressed and the 

studies conducted in Tier 3 will be determined individually for 

each case, generally focusing on areas of concern which are 

identified in the earlier tiers. The evaluation tiers are further 

explained in Chapter 3 of this document. 

Consistent with the overall emphasis of the CAA on adverse air 

pollution effects, the health testing requirements are concerned 

with the effects of inhalation exposure to the evaporative and 

combustion products of fuels and additives. They do not 

specifically address the possible adverse effects of exposure to 

fuels and additives in the liquid state, nor at this time do they 

include the effects of exposure to the atmospheric transformation 

products of fuel and additive emissions. Restricting the focus of 

the rulemaking to exposure of combustion and evaporative emissions 

of fuels and additives represents a major reduction in the 

potential scope of the health effects evaluation program. Further 

significant reductions in program costs and overall impact on the 

fuel and additive industry will also occur as a result of grouping 

mechanisms for testing F/FA products, provisions for exempting 

relabeled products from testing requirements, and special 

provisions for small businesses. 
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B. Scope of Welfare Provisions 

Section 211(b) (2) (B) states that the Administrator may require 

manufacturers to furnish "reasonable and necessary" information for 

determining "the extent to which (fuel and fuel additive) emissions 

affect the public health or welfare". The term "welfare effects" 

refers generally to the impact which air pollution produced by 

motor vehicle fuels and additives may have on the environment, 

including not only effects on aquatic ecosystems and animal health, 

but also effects which may detract from human well-being. 

The welfare effects requirements will be met in association 

with the requirements in the first evaluation tier. In Tier 1, 

responsible producers are required to conduct exhaust and 

evaporative emission chemical speciation procedures to identify the 

specific compounds in the emission products generated by fuels and 

additives. These procedures will yield an inventory of potentially 

hazardous air pollutants which may have significant impacts on the 

general environment and public welfare as well as on the public 

health. These will also be useful in assessing Tier 2 results. 

Tier 1 also includes a literature search for existing healthrelated information which will be expanded to include requirements 

for collection of published or in-house data regarding the welfare 

effects of the emission products. Finally, Tier 1 requires 

manufacturers to provide information on the production and 

distribution patterns of F/FAs which will be used by EPA to 

evaluate the potential exposures resulting from their use. Thus, 
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except perhaps for a minor increase in the scope of the literature 

search activities of Tier 1, no incremental costs are expected with 

respect to welfare effects assessments. 

C. Scope of Emissions Control System Testing 

Existing regulations under section 211(f) call for emission 

control testing of fuels and additives only when their composition 

departs significantly from the general range of fuel formulations 

which would ordinarily be anticipated by manufacturers of motor 

vehicle engines and emission control devices. Under the existing 

fuel/additive registration program, fuel and additive formulations 

which are not "substantially similar" ("sub sim") to designated 

certification fuels (as defined in 56 FR 5352, February 19, 1991) 

cannot be introduced into commerce unless a waiver is issued by 

EPA. To obtain such a waiver, the producer of the fuel or additive 

must show that the "dissimilar" product does not adversely affect 

the ability of a motor vehicle's emission control system to achieve 

compliance with emission standards during the useful life of the 

vehicle. 

The current waiver program has proven to be both practical and 

effective as applied to gasoline fuels and additives, and EPA's 

plans to extend the applicability of this program to other fuel and 

additive categories will serve to fulfill the aims of the emission 

control testing provisions of section 211(b). Therefore, the 

emission control system testing provisions of 211(b) will be 

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integrated with existing and planned programs promulgated under 

section 211(f). In other words, new fuels and additives which do 

not meet the "sub sim" criteria will be subject to the regular 

section 211(f) waiver application process prior to registration, as 

under the existing registration program. 

The only new expression of EPA's authority under section 

211(b) in regard to emission control testing requirements pertains 

to fuels and additives which were registered in the past under the 

statute's "grandfathering" provision. Rather than requiring all 

"grandfathered" products7 to routinely go through the waiver 

process, emission control system testing for "grandfathered" 

products will be required only on a case-by-case basis when 

evidence becomes available that such products may have adverse 

effects on emission control performance. Thus, this rulemaking 

provides a mechanism by which EPA can choose to require specific 

"grandfathered" products to undergo section 211(f) waiver 

application procedures if so petitioned by outside parties, or if 

other information available to the Agency indicates that such 

review is appropriate. Consequently, this analysis includes no 

costs directly related to emission control system testing. 

'Products registered prior to the implementation of the 

waiver application program and/or promulgation of applicable 

"substantially similar" criteria and which exceed those "sub sim" 

criteria. 

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III. Provisions to Prevent Undue Burdens 

The final rule provides a number of special provisions to 

avoid duplication of effort, to alleviate the financial impact on 

small businesses, and to ease the burden on the regulated industry 

in general. The discussion below focuses on cost/burden sharing 

provisions and provisions established for relabeled products and 

small businesses. Other special provisions of the program are 

briefly described below, but are not included in the analysis 

either because they have no direct impact or their impacts would be 

minimal. These additional special provisions would only further 

decrease the financial burden on the regulated industry. 

A. Cost/Burden Sharing Provisions 

Section 211 (e) (3) allows the Agency to provide for cost and/or 

burden sharing among producers of any fuel or fuel additive which 

is manufactured or processed by two or more persons so that 

requirements can be met without duplication of effort. Under one 

scenario, a manufacturer may already have incurred all necessary 

costs of registration, and another manufacturer might wish to rely 

on the results of this existing testing for purposes of registering 

a similar product. Another case involves two or more producers of 

similar products who need to undertake the same testing 

requirements prior to registration. For purposes of enacting these 

provisions, EPA has developed a voluntary grouping scheme which 

permits manufacturers of similar F/FAs to pool their resources and 

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efforts in satisfying the registration requirements. Manufacturers 

taking advantage of the grouping provisions will be able to share 

their planning efforts, research capabilities, and financial 

resources in satisfying the information-gathering and testing 

requirements of the F/FA registration program. Required testing is 

to be done on the selected representative for the respective group 

and results submitted jointly for all members of the group, with 

applicable cost to be shared by the respective manufacturers. 

The basic conceptual framework for the grouping system is 

illustrated in Figure 1-1. Each fuel or additive is first sorted 

into one of six broad "fuel families". Each fuel family consists 

of F/FA products which share basic characteristics in regard to 

their chemical/physical properties and engine/vehicle 

applicability. As previously mentioned, this analysis focuses 

mainly on products belonging to the gasoline and diesel fuel 

families, but includes a brief discussion of future registrations 

of products belonging to the alternative fuel families. 

The fuel families are then subdivided into the following three 

F/FA categories: "baseline," "non-baseline," and "atypical." The 

baseline categories generally consist of fuels and associated fuel 

additives which contain no elements other than carbon, hydrogen, 

oxygen, nitrogen, and sulfur and conform to certain quantitative 

limits for particular elements, compounds, and/or characteristics 

(e.g., oxygen less than 1.5 weight percent in gasoline and less 

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than 1.0 weight percent in diesel). Non-baseline F/FAs contain no 

elements other than those allowed in the baseline category, but 

they exceed the maximum amounts allowed for certain restricted 

characteristics. The atypical categories consist primarily of 

F/FAs that contain elements other than those allowed in the 

baseline category. For fuel additives, the category determination 

is based on the characteristics of the mixture which results when 

the additive is mixed in the appropriate base fuel at the maximum 

concentration recommended by the additive manufacturer. If the 

fuel or fuel/additive mixture contains both non-baseline (e.g., 

exceeds allowable oxygen content) and atypical characteristics 

(e.g., contains a metal), the formulation is characterized as 

atypical. Thus, atypical characteristics take precedence over nonbaseline characteristics. 

Finally, from these categories, products are further 

subdivided into "fuel/additive groups" which represent the final 

level of product classification within the grouping system. The 

groups consist of F/FAs sorted together on the basis of the 

assumption that their emission products will be similar on a 

qualitative basis. A representative from each group will be 

selected for testing with the results and associated costs shared 

by the participating manufacturers. 

Table 1-1 shows a summary of the F/FA grouping system. The 

column headings represent the fuel families and the categories 

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define the rows. Within each fuel family's categories are the 

fuel/additive groups. The grouping system is a key factor in 

determining manufacturer costs for this program. Assumptions 

regarding manufacturer participation in groups and the amount of 

testing expected to be required for products in each of the groups 

is discussed in Chapter 4. 

B. Small Business Provisions 

The CAA gives EPA discretionary authority to provide program 

exemptions, deferrals, or modifications for small businesses, and 

to define "small business" for the regulations. Using current 

annual sales data, EPA examined the distribution of currently 

registered companies across various sales ranges and identified a 

sales level which will define the businesses which will be 

considered "small" for this program. Figures 1-2 and 1-3 show the 

sales distributions of registered fuel manufacturers and additive 

manufacturers, respectively. A comparison of these figures 

indicates that the distribution of sales is similar for both 

industries. Each industry appears to be made up of many small 

companies and relatively few larger companies. The figures show 

that about a fifth of registered fuel manufacturers and a third of 

registered additive manufacturers have sales above $100 million. 

For both industries, most companies with sales under $100 million 

actually have sales under $50 million. Thus, within each of the 

industries, companies tend to cluster above $100 million and below 

$50 million in sales. Furthermore, companies below $50 million in 

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sales also tend to be below $10 million, especially within the 

additive industry. 

Based on this analysis of F/FA manufacturer sales data, EPA 

identified $50 million as a reasonable sales level for 

differentiating between small and large companies within each 

industry. As a result, the final rule defines a small business for 

this program as any motor vehicle fuel or fuel additive 

manufacturer with total annual sales of less than $50 million.8 

The small business related provisions established for this rule are 

defined below. 

Special provisions for small F/FA companies were developed 

based on assumptions regarding the degree to which manufacturers 

will have the opportunity to group with other manufacturers to 

share costs, and the degree to which information on similar 

products can be expected to be submitted by larger companies. A 

review of the registration database shows that nearly every 

registered F/FA manufacturer produces at least one baseline or nonbaseline product. Hence, even if generous special provisions are 

provided for small manufacturers of these products, EPA is assured 

that test data on such products will still be submitted by other, 

8For this purpose, "manufacturer" is defined as a parent 

company owning more than 50 percent of a company's assets or 

shares. "Total Annual Sales" is defined as the average of the 

manufacturer's total sales revenue in each of the previous three 

years. Since manufacturer sales data was not available for the 

previous three years, 1993 sales data was used for determining 

impacts in this analysis. 

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larger companies which do not qualify for the special provisions. 

Therefore, in regard to registration of products in the baseline 

and non-baseline categories, the final rule requires small 

businesses (i.e., companies with annual sales less than $50 

million) to submit only the basic registration data for their 

baseline and/or non-baseline products. Such companies are not 

required to meet the Tier 1 and Tier 2 requirements in order to 

register their baseline and non-baseline F/FAs. Since the larger 

companies will still be submitting the data for these products, 

this provision should not cause EPA to be without the data needed 

to evaluate these products. However, the products of such small 

companies will be treated the same as those of the larger companies 

in the same group should Tier 3 or 211(c) actions be taken. 

This is not a valid assumption in the case of atypical 

products, however. Analysis of current registrations shows that 

there are fewer atypical products than baseline products, and fewer 

large companies that produce atypical products. Of the total 

number of registered fuel additive manufacturers, less than 30 

percent produce at least one atypical product, and the majority of 

these manufacturers (about 60 percent) have under $50 million in 

sales. Even fewer fuel manufacturers produce atypical products, 

with only 13 percent producing at least one atypical product. In 

contrast to manufacturers of atypical additives, the majority of 

manufacturers of atypical fuels (about 70 percent) have sales above 

$100 million. 

17 
Therefore, if the same small business provisions described 

above in relation to baseline/non-baseline F/FAs were also applied 

to atypical F/FAs, then no data would be submitted for many 

atypical F/FAs. If this were the case, EPA would be unable to 

discharge its responsibility to evaluate the health effects of all 

fuels and additives. 

Nevertheless, EPA realizes that the testing program will be 

particularly burdensome for very small manufacturers of atypical 

products. In part, this is due to the added compliance 

requirements for atypical products (e.g., more rigorous mileage 

accumulation requirements prior to emission generation and extra 

emission characterization requirements for determining the emission 

species containing the a typical element(s)) . An even greater 

impact results from the fact that grouping opportunities for these 

manufacturers are more limited. Not only do atypical products tend 

to be unique, but also, the smallest manufacturers rarely are 

members of the dominant trade associations which are most likely to 

take the lead in organizing and administering F/FA group functions. 

Thus, the highest program costs are expected to fall on the 

manufacturers with the lowest financial resources and the fewest 

opportunities to share the costs. 

For these reasons, special small business provisions 

applicable to atypical products have been included in the final 

rule. However, these provisions apply to fewer manufacturers and 

18 
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are less liberal than those established for baseline and nonbaseline products. Specifically, for manufacturers of atypical 

products with less than $10 million in annual sales (rather than 

the $50 million sales level applicable to manufacturers of 

baseline/non-baseline products), the minimal requirements of the 

program include only basic registration and Tier 1 data. These 

requirements fall between those applicable to small manufacturers 

of baseline/non-baseline products (basic registration data only) 

and the general requirements of the program for larger 

manufacturers (basic registration, Tier 1, and Tier 2). 

Still, an assessment of the effectiveness of small business 

provisions performed by a contractor, ICF, show that the small 

business provision for manufacturers of atypical products reduces 

the financial burden of the program significantly. In total, the 

small business provisions for manufacturers of these products 

lessened the cost burden to industry by over $20 million dollars. 

Thus, although the small business provisions for atypical 

manufacturers are not as liberal as those provided for 

manufacturers of baseline and non-baseline products, the provisions 

reduce the financial burden of the program significantly while 

still assuring that EPA will be supplied with emission 

characterization and literature search data upon which to base its 

initial evaluation of each atypical F/FA (or group) . At the 

Agency's discretion, health effect concerns arising from the 

19 
J 

initial review of this data may still be required to be followed up 

by suitable testing under the provisions of Tier 3. 

Since small business exemptions are based on both the 

manufacturer's annual sales and the product category, it is 

possible for a manufacturer to have some products excused from 

program requirements but not others. For example, an additive 

manufacturer having both baseline and atypical products and annual 

sales of $30 million will be excused from Tier 1 and Tier 2 

requirements for the baseline additives, but will not be excused 

from program requirements for the atypical products. 

These special provisions allow the Agency to ease the testing 

burden on a significant number of relatively small manufacturers, 

while still obtaining the level of information necessary to achieve 

the overall goals of the program. Approximately 64 percent of fuel 

additive manufacturers and 74 percent of fuel manufacturers will 

qualify for small business provisions for their baseline/nonbaseline products. Furthermore, about 45 percent of additive 

manufacturers and 11 percent of fuel manufacturers will qualify for 

small business special provisions for their atypical products. The 

results of the small business impact analysis support the small 

business definitions used in this registration program, and are 

discussed in greater detail in Chapter 5. 

20 
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C. Provisions to Eliminate Duplication of Effort 

Under CAA section 211(e)(3)(c), the Administrator may exempt 

any fuel or additive from the regulations "upon a finding that any 

additional testing of such fuel or fuel additive would be 

duplicative of adequate existing testing." EPA will exercise its 

authority under this provision by exempting fuels and additives 

registered as relabeled products from the evaluation and testing 

requirements of this program. A relabeled product is a repackaged 

version of a product which is also registered by the original 

manufacturer. Testing of relabeled products would clearly 

duplicate the efforts of the original manufacturer. Consequently, 

only basic registration information will be required for relabeled 

products. 

EPA is also providing a special provision for manufacturers of 

non-baseline and atypical products to avoid duplicative efforts. 

Since requiring manufacturers of non-baseline and atypical F/FAs to 

submit literature data on all emission products will duplicate the 

efforts of information submitted for the base fuel to which it is 

compared, EPA is allowing manufacturers of non-baseline and 

atypical F/FAs to submit Tier 1 literature data only for the 

emission species which are different from the emission products of 

the respective base fuel. 

D. Other Special Provisions 

In addition to the provisions discussed above, EPA is also 

21 
providing in this final rule special provisions for experimental 

F/FAs and aerosols products. For experimental F/FAs, EPA is 

relying on existing regulations under 40 CFR 79.4(a)(3) and 

79.4(b)(2) which exempts fuels and fuel additives used for 

research, development or testing. Based on these provisions, any 

designated F/FA sold to automobile, engine, or component 

manufacturers for research, development or test purposes, or sold 

to automobile manufacturers for factory fill, and not in any case 

offered for commercial sale to the public, is exempted from the 

registration requirements. This provision does not affect the 

results of the analysis since these products are not currently 

required to register with EPA. 

In regard to aerosol products, the final rule contains a 

special provision under which manufacturers of aftermarket 

additives that are sold to be applied in aerosol form (e.g., 

starter fluids, carburetor cleaners) are required to provide only 

existing information on their products (or components), a 

discussion of the potential exposures, and basic registration data. 

Thus, aerosol products are exempt from Tier 1 emission 

characterization requirements and Tier 2. Testing of aerosols may 

be performed under Tier 3 at EPA's discretion. EPA's registration 

database does not indicate which currently registered aftermarket 

additives are aerosols. As a result, cost reductions for products 

qualifying for these provisions are not considered in this 

analysis. 

22 
Figure 1-1: Grouping Framework 

FiMlFamttM 

Conventional: 

Artemaftv*: 

Ganln * 

DtoMl 

Methanol 

Ethanol 

Mathana (CNQ. LUG) 

Propane (LPG) 

FueVAddrttve 

Categories: 

- Baseline 

- Non-baseline 

-Atypical 

I 

FueVAddtfve 

Groups 

I 

Group 

Representative(s) 
Tabl e 1-1: F/FA Grouping System 

F/FA Category 

Baseline 

Non-baeeline 

Atypical 

Conventional 

Gasoline 

(A) 

Ona group 

raprasantad by 

gasolina baaa fuel 

Ona group for aach 

gasoline-oxygenate 

bland or aach 

gasolinemet hanol/cosolvent bland; 

ona group fox aach 

synthetic crudederived fual 

Ona group for aach 

atypical element/ 

characteristic, or 

uniqua combination 

of atypical 

elamanta/ 

charactariatic* 

Fual Families 

Diaaal 

(B) 

Ona group 

rapraaantad by 

diaaal baaa fual 

Ona group for 

aach oxygencontributing 

coapound or claaa 

of compounds; ona 

group for aach 

aynthatic crudederived fual 

Ona group for 

aach atypical 

element/ 

charactariatic. 

or uniqua 

combination of 

atypical 

elements/ 

characteristics 

Mathanol 

(C) 

Two groupa: 

1) K100 group 

(indudaa 

methanol-gasoline 

formulations with 

at laaat 9«% 

methanol) 

rapraaantad by 

M100 baaa fual 

2) M S (indudaa 

•athanol-gaaolina 

foramlationa with 

50-95% methanol) 

rapraaantad by 

MS5 baaa fual 

Ona group for 

aach individual 

non-methanol, 

non-gaaolina 

component and ona 

group for aach 

uniqua 

combination of 

aach components 

Ona group for 

aach atypical 

alaaant/ 

charactariatic. 

or uniqua 

combination of 

atypical 

alaaanta/ 

characteristics 

Alternative rual Families 

Ethanol 

(D) 

Ona group 

(includes 

athanol-gaaolina 

foramlationa with 

at laaat 50% 

ethanol) 

represented by 

E85 base fual 

One group for 

each Individual 

non-ethanol, nongasoline 

component and one 

group for each 

unique 

combination of 

such components 

One group for 

each atypical 

alaaant/ 

charactariatic. 

or unique 

combination of 

atypical 

elements/ 

characteristics 

Methane 

(CHS, IMG) 

(E) 

One group 

(includes both 

CHG and LUG), 

represented by 

CHG base fuel 

One group to 

include methane 

formulations 

exceeding the 

specified limit 

for non-methane 

hydrocarbons 

One group for 

each atypical 

element/ 

charactariatic. 

or unique 

combination of 

atypical 

elements/ 

character istica 

Propane 

(LPG) 

(F) 

One group 

represented by 

LPS baaa fuel 

One group to 

include propane 

formulations 

exceeding the 

specified limit 

for butane and 

higher 

hydrocarbons 

One group for 

aach atypical 

alaaant/ 

charactariatic. 

or unique 

combination of 

atypical 

elements/ 

characteriatica 

CO 
Figure 1-2.1 

Fuel Manufacturer Annual Sales Distribution 

Manufacturers of Leaded Products Excluded 

P.31 

Figure 1-2.2 

0 5 10 15 2025303540455055606570758085909 5 100 

Cumulative Percent of 638 Companies 

300 

<10 10-49 50-99 

Annual Sales ($ Millions) 

•>100 

Figure 1 -2.3 

OT 

c 

o 

i 

OT 

<s 

73 

3 

C 

1ZU 

100 

80 

60 

40 

20 

0 

JFuel Mfrs. Earning < $100M Per Yeai 

• 

-

i 

$50 MiaiON /" 

• II I •*«—-P" ' 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 — 

10 2030405060708 0 

Cumulative Percent of 525 Comoanies < $100 MM 

90 100 
Fuel Additive Manufacturer Annual Sales Distribution 

Manufacturers of Leaded Products & Relabelers Excluded 

Flaure 1-3.1 

Figure 1 -3.2 

10 20 30 40 50 60 70 

Cumulative Percent of 456 Companies 

80 90 100 

Figure 1-3.3 

<10 10-49 50-99 

Annual Sales ($Miltions) 

->100 

100 

t 

•8 

3 3 

5 

«> 

1 

OT 

13 

3 

C 

S 

80 

60 

40 

20 

-

-

• 

Fuel Additive Mfrs. Earning < $100M P«r Year| 

/ 

$60 Million j j 

/ / / 

> 

10 2030405060708 0 

Cumulative Percent of 314 Companies < $100 MM 

90 100 
DRAFT 

Chapter 2 

Industry Overview 

I. Introduction 

This chapter provides a characterization of currently 

registered fuel and fuel additive manufacturers. Financial 

information and information regarding the number and types of 

products registered are presented. For purposes of registration 

with EPA, a fuel manufacturer is defined as any person who, for 

sale or introduction into commerce, produces or manufactures a fuel 

or causes or directs the alteration of the chemical composition of, 

or the mixture of chemical compounds in, a bulk fuel by adding to 

it an additive.9 By this definition, those entities required to 

register fuels include not only refiners of crude oil, but also 

operators who formulate their own fuels by adding different 

combinations of additives, and those who mix fuels. EPA is also 

expecting to include importers of fuels in the definition of fuel 

manufacturer. 

A fuel additive manufacturer is defined as any person who 

produces or manufactures an additive for use as an additive and/or 

940 CFR Part 79. 

23 
sells an additive under his own name.10 Included in this definition 

are companies which manufacture additives from non-additive 

constituents as well as those which produce additives by mixing two 

or more other registered additives and those which repackage 

existing additives for sale under a different label (i.e., 

relabelers). Fuel additive products can be subdivided by purposein-use as bulk additives and/or aftermarket additives. Bulk 

additives are products which are added to fuel before the fuel is 

commercially available for introduction into the fuel tank of a 

motor vehicle, whether added at the refinery as part of the 

original blending stream or after the fuel is transported from the 

refinery. Aftermarket additives are products which are added by 

the end-user directly to fuel in a motor vehicle or engine to 

modify the performance or other characteristics of the fuel, the 

engine, or its emissions. EPA also expects to include importers 

of fuel additives in the fuel additive manufacturer definition. 

II. Analysis of Currently Registered Fuel/Fuel Additive Producers 

As discussed in the first chapter, EPA is required to register 

motor vehicle fuels and fuel additives prior to their sale or 

introduction into commerce. Commercial identifying information, 

range of concentration, purpose-in-use, and chemical composition 

are examples of information required for each product registration. 

10Ibid. 

24 
P.35 

The registration information, maintained by EPA on a registration 

database, is the primary source of data used in this impact 

analysis. 

As of December 1992, the registration database contained 

information on a total of 2,053 unique producers and 6,469 leaded 

gasoline, unleaded gasoline and diesel fuel and fuel additive 

products. Of these manufacturers, approximately 785 (nearly 40 

percent) were fuel producers, 1,240 (over 60 percent) were additive 

producers, and 28 produced both fuels and additives. Approximately 

30 percent of the 2,099 fuel products registered were leaded 

gasoline products, 60 percent were unleaded gasoline products, and 

10 percent were diesel fuel products. Of the 4,370 registered fuel 

additive products, 42 percent were bulk additives and 58 percent 

were aftermarket. Nearly one-fourth of all registered additives 

were relabeled products. 

The database contains information on products registered since 

the registration program began in 1975. Since manufacturers are 

not currently required to notify the Agency when production of a 

registered product has ceased, or when a company has been sold or 

gone out of business, the database may contain obsolete 

information. Thus, to more accurately determine costs and impacts 

of this program, EPA attempted to update the database by 

identifying manufacturers no longer in business and to collect 

current financial information for those manufacturers still 

25 
producing registered products, as described below. However, there 

was no way for EPA to confirm whether all of the F/FAs registered 

by a "functioning" manufacturer are still (or have ever been) in 

production. 

A. Data Collection 

Using the Dun & Bradstreet (D&B) database services available 

to EPA through the National Computer Center11, information on annual 

sales, number of employees, and the primary Standard Industrial 

Classification (SIC) code was collected on approximately 63 percent 

of registered F/FA manufacturers. When the registered F/FA company 

was a subsidiary or division of a larger company, the 

sales/employee/SIC code data was collected for the parent12 company. 

For the remaining companies, EPA contracted with Dun & Bradstreet 

Information Services to collect sales/employee/SIC code 

information, through use of their more comprehensive database, and 

to identify companies which had relocated, had been sold or 

renamed, or which were no longer in business. Companies not 

"A computerized inventory of facilities regulated by the 

U.S. EPA, called FINDS, is maintained by EPA's Office of 

Information Resources Management. It operates on a mainframe 

computer which resides at EPA's National Computer Center in 

Research Triangle Park, North Carolina. Through FINDS, users can 

access a Dun & Bradstreet database which contains information on 

U.S. business establishments. 

""Parent" is defined as a business entity with controlling 

interest in another company through ownership of a majority (more 

than 50 percent) of its voting stock. When the F/FA company was 

a subsidiary or division, information was collected for the 

"closest" parent listed, not the uppermost headquarters or 

ultimate parent company. 

26 
P.37 

identified on D&B's comprehensive database were investigated via 

phone, and in some cases, physical research (i.e., a D&B analyst 

drove to the business site). Companies still not found after this 

effort were considered to be out of business for purposes of this 

analysis. 

Financial data was not sought for companies producing only 

leaded gasoline products since leaded gasoline for highway vehicles 

will be illegal as of January 1, 1996. Consequently, they are 

excluded from the remainder of this analysis. In addition, because 

only basic registration information will be required for relabeled 

products, financial information was not collected for relabelers 

since their impacts would be minimal. However, costs to companies 

registering relabeled products are included in the overall cost 

projections discussed in Chapter 4. 

As a result of the data search, 249 registered F/FA companies 

(12 percent of total registered companies) were determined to be 

out of business. Excluding these companies, relabelers, those 

producing only leaded products, and after combining companies 

listed more than once on the database (see section III of Chapter 

5 for discussion), current annual sales data was collected for 95 

percent of the registered companies. For the remaining five 

percent, under the assumption that companies for which sales data 

was not available were likely to be small, EPA assigned a sales 

level of $49 million to manufacturers with greater than 50 

27 
employees, and $9 million to manufacturers with less than 50 

employees. If employee information was not available, a sales of 

$49 million was assigned to the company. 

B. Characterization of Registered Producers 

In total, the number of unique "functioning" registered 

manufacturers on which this analysis is based is 1,076. This 

includes 438 additive manufacturers, 618 fuel manufacturers, and 20 

manufacturers that produce both fuel and additive products. The 

total number of additive products manufactured by the 458 additive 

companies is 2,778. The average number of additive products 

registered per additive manufacturer is approximately 6, with the 

maximum number of products manufactured by a single additive 

company being 179. Nearly half of the additive manufacturers (45 

percent) produce only one product. Of the 2,778 registered 

additives, approximately 10 percent are atypical. 

The total number of fuel products manufactured by the 638 fuel 

companies is 1,420, roughly one-half the number of products 

manufactured by additive companies. The average number of fuel 

products per manufacturer is approximately 2, with the maximum 

number registered by a single fuel company being 16. About 40 

percent of fuel manufacturers produce only one product, and 

approximately 15 percent of total registered fuel products are 

atypical. 

28 
P.39 

Analysis of the updated database shows that about 90 percent 

of additive manufacturers and 98 percent of fuel manufacturers 

produce at least one baseline or non-baseline product. 

Registration of atypical products is much lower, especially by fuel 

manufacturers, with only 27 percent of total additive manufacturers 

and 13 percent of total fuel manufacturers producing at least one 

atypical product. 

As discussed briefly in Chapter 1 and shown in Figure 1-2 for 

fuel manufacturers and Figure 1-3 for additive manufacturers, the 

distribution of annual sales across registered manufacturers shows 

that each industry consists of a small number of large 

manufacturers and a large number of smaller companies. As shown in 

Figure 1-2, about 82 percent of total fuel manufacturers have sales 

under $100 million, 73 percent have sales under $50 million, and 

nearly 40 percent have sales below $10 million. Thus, of the fuel 

companies under $100 million in sales, nearly all have sales under 

$50 million, and half fall below $10 million in sales. Only about 

18 percent of fuel manufacturers have sales $100 million and above. 

In regard to fuel additive manufacturers, approximately 68 

percent have sales below $100 million, 64 percent below $50 

million, and 45 percent below $10 million. Thus, registered fuel 

additive manufacturers tend to be small, with over 65 percent of 

those under $100 million in sales also below $10 million. Only 

about a third of total fuel additive companies have sales above 

29 
P.40 

$100 million. 

Using the sales data collected for each manufacturer and the 

regression equations developed for the small business impact 

analysis for the NPRM13, ICF provided estimates of net income, 

asset, and return on asset (ROA) information for each of the 

registered companies. From this, ICF developed profiles of small 

and large companies, as shown in Exhibit 2-1 for fuel manufacturers 

and Exhibit 2-2 for additive manufacturers. Approximately 73 

percent of fuel companies and 64 percent of additive companies are 

considered small for this program (i.e., have sales <$50 million). 

A comparison of the median small fuel and fuel additive 

manufacturer indicates that small fuel manufacturers generally have 

more employees and higher sales and net income than small additive 

manufacturers, but that ROA tends to be smaller for small fuel 

companies. However, when comparing the median large fuel and 

additive manufacturer, the data suggests that large additive 

manufacturers generally have more employees and higher sales, net 

income, and ROA than large fuel companies. The likely explanation 

for this finding is that several very large companies, including 

major automobile manufacturers and chemical companies are 

registered as fuel additive manufacturers. 

In sum, a comparison of currently registered fuel and additive 

13See ICF Analysis available in Air Docket A-90-07, item 

number III-A-03. 

30 
P.41 

companies suggests that large additive manufacturers (those with 

sales $50 million and above) generally tend to be larger in terms 

of sales and number of employees than large fuel manufacturers. 

However, small additive manufacturers are generally smaller than 

small fuel companies. One reason for this may be the diverse 

nature of the companies registering products, particularly 

additives. That is, they make more products than fuel additives. 

The data also suggests a bimodal distribution in the size of the 

companies in each industry (i.e., a small number of large companies 

and a large number of small ones). Compliance cost impacts on 

small and large fuel and additive manufacturers is discussed in 

Chapter 5. 

31 
P.42 

Exhibit 2-1 

Profiles of Registered Fuel Manufacturers 

Small* 

Large 

TOTAL 

Number 

465 

173 

638 

Percent 

73% 

27% 

100% 

ImaJarata 

Salaa 

Aaiat* 

Nat !•««*• 

• O A 

Bmalaraa* 

S*M« 

AaaaU 

N*t Ia**OM 

ROA 

Mlslmam 

0 

S49.000 

Jl 3.1«4 

$292 

2Jt% 

0 

J50.000.000 

$15,643,913 

$633,621 

4.19* 

Lairar Qaartil* 

1 

$3,000,000 

$882,303 

$28,544 

3J3 * 

215 

$15,917,702 

$27,204,040 

$1,191,321 

4-40* 

Maflaa 

Small >••! Ma n 

22 

$9,000,000 

$2,711,664 

$97,037 

3.57* 

Lara* r*al Mail 

443 

$261,121000 

$87,279,658 

$4069560 

4.19% 

Upaar OsarWa 

factaran 

51 

$22,000,000 

$6,712,321 

$263,639 

3.90* 

•factaran 

3,025 

$1,775,820,000 

$621,866,622 

$36,751,772 

SJU% 

Manam a 

29,437 

$49,665,534 

$13,537,041 

$630,737 

3.19* 

67.300 

S62J59.000.000 

S6t.309.097.9M 

$4^69.80X311 

7.86* 

Ararat* 

154 

$14,707,894 

$4,335,224 

$178,334 

3.54% 

4.315 

$2,653,133,848 

$1,688,061,363 

$116,891,832 

5.16* 

•Companies with sales less than $50 million. 
P.43 

Exhibit 2-2 

Profiles of Registered Additive Manufacturers 

Small* 

Large 

TOTAL 

Number 

295 

163 

458 

Percent 

64% 

36% 

100% 

Bmaioyaaa 

Salaa 

AaaaU 

Nat IncaaM 

ROA 

Bmalaraaa 

Salaa 

Aaaata 

Nat lacama 

ROA 

0 

$30,000 

$12,063 

$492 

4.08% 

10 

$30,000,000 

$13.436 J 83 

$1,377,379 

5.42* 

3 

$900,000 

$296,688 

$13,628 

4.39* 

722 

$176,414,366 

$102,843.1 J3 

$3,863,456 

3.70* 

M*4laa 

Small A4altrra M 

16 

$4,282,995 

$1,671,042 

$81,826 

4.90* 

Larta A44ttlr< M 

3 j a 

$97X793,133 

S681,»2X8t4 

$41,710,686 

6.12* 

Uaaar QaarUla 

aaafaataiaia 

52 

$1X116.183 

$5,288,949 

$270,264 

5.11 * 

aaafaatarar* 

14.333 

$3,405,500,000 

SX733.103.451 

$173,985*75 

6.44* 

Maxtaaam 

1.110 

$49,000,000 

$24,873,320 

$1345,970 

5.41 * 

33X700 

$115,068,000,000 

S135.063J93.620 

$10,047,009,081 

7.44* 

A'rrat* 

31 

$9,688,738 

$4,476,367 

$234090 

4.86* 

14,764 

$4,974,456,420 

$4,903,814,561 

$344,33X611 

6.12* 

•Companies with sales less than $50 million. 
DRAFT 

Chapter 3 

Program Requirements and Associated Coata 

I. Introduction 

The regulations implementing Clean Air Act (CAA) section 

211(b)(2) require producers of motor vehicle fuels and fuel 

additives to submit information regarding the composition of the 

emissions produced by such F/FAs and the effects of the emissions 

on the public health and welfare. As previously mentioned, EPA 

believes the general regulatory mechanisms already implemented 

under section 211 (f) are adequate to satisfy the emission control 

system provisions of section 211(b). Furthermore, as indicated in 

Chapter 1 of this document, welfare effects are to be addressed in 

conjunction with Tier 1 health effects requirements, and possibly 

Tier 3. Therefore, the costs presented in this analysis are 

associated primarily with health effects evaluation, including 

information collection, emission characterization, biological 

testing, and reporting requirements. 

The purpose of this chapter is to project costs associated 

with meeting program requirements and submitting the information 

necessary for registration. Because gasoline and diesel fuels and 

their additives are the only products required to be registered 

32 
with EPA at the time this analysis was conducted, specific 

component cost estimates are provided only for testing of these 

fuel/additive families. However, future designation of methanol, 

ethanol, natural gas, and liquified petroleum gas fuels and their 

additives is expected. Thus, producers of these F/FAs, in addition 

to gasoline and diesel, are expected to be subject to the 

registration requirements of today's rule. Potential costs 

associated.with future registrations of alternative F/FA products 

are discussed at the end of this chapter. 

As previously mentioned, EPA contracted with SwRI to 

help identify commercial prices associated with specified aspects 

of the generation and collection of combustion and evaporative 

emissions, the chemical characterization (speciation) of such 

emissions, and the controlled dilution and direct delivery of such 

emissions to animal exposure chambers for health effects testing. 

To obtain this data, SwRI contacted and provided a survey to eight 

laboratories capable of performing at least some of these tasks. 

Each of the laboratories responded to at least some of the survey 

categories. Based on its own experience as a commercial testing 

laboratory, SwRI then evaluated the responses and developed a 

"typical" commercial price which might be charged for each of the 

tasks. These price estimates are the basis for much of the cost 

data presented in this chapter. Other cost estimates were obtained 

from various sources, including resources within EPA. For example, 

biological testing costs were based on data received from the 

33 
Office of Pesticides and Toxic Substances14. 

The data presented in this chapter reflect the costs for an 

individual producer to meet the requirements, and do not reflect 

potential savings resulting from cost-sharing arrangements or from 

volume discounts provided by laboratories. When cost projections 

are presented in this chapter, a range of estimated costs is 

provided in some instances. This reflects the fact that certain 

program requirements are more stringent and costly for products in 

the "atypical" categories than for the "non-atypical" (baseline and 

non-baseline) products. In such instances, different costs are 

presented for "atypical" and "non-atypical" products. 

Major changes in the final program requirements compared to 

those originally proposed are outlined below, followed by a 

discussion of requirements and costs associated with each 

evaluation tier, and, finally, costs associated with administrative 

and reporting requirements. Aggregate costs to industry are 

discussed in Chapter 4. 

II. Description of Changes in Program Requirements 

The final rule maintains the three-tier testing structure for 

14U.S. Environmental Protection Agency, Office of Pesticides 

and Toxic Substances, "Cost Estimates for TSCA Test Guidelines," 

Memorandum from Dan Axelrad to Sheri Dunatchik, June, 1991. 

34 
evaluating the health effects of fuels and additives, with some 

variations in specific program requirements. Tier 1 of the 

proposal included a modeling analysis for atmospheric reactivity, 

environmental fate/partitioning, and exposure as part of the 

welfare effects evaluation. Due to the limited applicability of 

available modeling methods for this program, EPA is not requiring 

routine modeling analysis in the final rule. Instead, modeling 

efforts will be required only on a case-by-case basis, as needed 

under Tier 3. Tier 1 requirements, however, do include submittal 

of production volume and distribution data. 

F/FA manufacturers are also required under Tier 1 to determine 

the emissions resulting from the use of the fuel or additive 

contained in the fuel. In doing so, the emissions are to be 

generated, collected, sampled, and subjected to tests for 

determining the identity and concentration of individual emission 

products. Before emissions can be generated for characterization, 

manufacturers will be required to accumulate a certain number of 

miles on the vehicle. The minimum mileage accumulation required 

prior to emissions testing has been reduced from the proposed 

25,000 miles (or comparable hours) to 4,000 miles for light-duty 

vehicle/truck testing or 125 hours for heavy-duty engine testing. 

In the case of F/FAs with atypical elements, once each atypical 

element(s) of interest is detected in at least one emission 

fraction, an additional 10,000 miles is required prior to 

generation of emissions for purposes of emission characterization 

35 
1 

and biological testing. 

In addition to characterizing catalyzed exhaust emissions 

generated via the Federal Test Procedure (FTP) as proposed, the 

final rule also includes characterization of non-catalyzed exhaust 

emissions. Furthermore, for the final rule, evaporative emission 

characterization is to be conducted on emissions generated from an 

evaporative emission generator (EEG), rather than the proposed 

method of using a sealed housing for evaporative determination 

(SHED) to generate emissions. In general, these changes described 

above, along with other changes in program assumptions and costs 

(explained in the next section), result in total Tier 1 costs being 

higher than estimated in the proposal. 

In the NPRM, EPA proposed short-term tests under Tier 2 for 

the evaluation of six health effects endpoints: carcinogenicity, 

mutagenicity, teratogenicity, reproductive toxicity, neurotoxicity, 

and pulmonary toxicity. The Tier 2 testing requirements have been 

modified in the final rule to enhance the efficiency and 

feasibility of the program. A series of individual tests are 

replaced with a comprehensive 90-day subchronic inhalation protocol 

that examines general systemic and organ toxicity (including 

pulmonary toxicity), as well as specific assessments related to 

carcinogenic, mutagenic, teratogenic, reproductive, and neurotoxic 

effects. These modifications will increase the quality and breadth 

of the test data, while slightly decreasing the actual testing 

36 
cost. However, results of the survey conducted by SwRI suggest 

that both light- and heavy-duty emission generation costs for 

biological testing purposes were underestimated in the proposal. 

This, in combination with changes in other assumptions regarding 

Tier 2 testing, explained in detail below, result in a slight 

increase in total Tier 2 costs estimated for both light-duty 

gasoline and heavy-duty diesel testing. Costs associated with 

individual testing requirements of each tier are discussed below. 

III. Tier 1 Requirements and Coata 

The scope of Tier 1 encompasses: 1) a literature search of 

available information on the composition and effects of F/FA 

emissions on public health and welfare, 2) a chemical analysis to 

characterize the emissions of fuels or fuel/additive mixtures, and 

3) a discussion on potential exposures using information on 

production volume and distribution patterns of the particular 

fuel(s) or fuel/additive mixture(s). Each of these requirements 

are explained below. 

*• Literature Search 

A comprehensive literature survey will be required, using both 

public and in-house (industry and manufacturer) sources to gather 

all available information about the chemical composition and 

potential adverse effects of whole combustion emissions and 

37 
P.50 

relevant emission fractions, as well as the individual emission 

products identified by emission speciation procedures. The 

information is to be compiled from peer-reviewed scientific 

journals and other literature as well as internal industry studies, 

government-sponsored reports, proceedings of scientific meetings, 

and other documented sources. A search of appropriate commercially 

available toxicologic and environmental databases must be conducted 

to locate information from published sources. The search must 

cover at least fifteen years prior to the date of submission, and 

must be current as of six months prior to beginning of testing. 

The information to be submitted to EPA as a result of the data 

search includes a summary of the general findings, a printed copy 

of the outputs from the database searches, complete documentation 

of unpublished in-house or other privately conducted studies, and 

tables summarizing all cited studies. 

In EPA's judgement, companies will likely meet these data 

research requirements through the services of a contractor. EPA 

estimates that a typical contractor will charge an hourly rate of 

$65 for this service, and database services are estimated to cost 

approximately $20 per hour. For baseline products, EPA estimates 

contractor and database service hours to be approximately 300 and 

75 hours, respectively. . For non-baseline and atypical products, 

EPA is allowing manufacturers to submit Tier 1 literature data only 

for the emission species which are different from the emission 

products of the respective base fuel. Consequently, EPA estimates 

38 
P.51 

the data research requirements for these products to about onethird of the research time required for baseline products (i.e., 

100 contractor hours and 25 hours of database use). In sum, EPA 

estimates the cost for conducting the literature search portion of 

Tier 1 to be $21,000 for baseline products and $7,000 for nonbaseline and atypical products. 

B. Characterization of Kmiaaiona 

CAA section 211(b) requires F/FA producers "to determine the 

emissions resulting from the use of the fuel or additive contained 

in such fuel." To satisfy the requirements of this provision, 

exhaust emissions will need to be generated, collected, sampled, 

and subjected to tests for determining the identity and 

concentration of individual emission products. When applicable, 

evaporative emissions will also be generated, collected, and 

subjected to most of the same methods of chemical analysis. The 

emission characterization requirements can be mitigated by 

comparable data obtained through the literature search described 

above. 

1. Emission Generation 

This section presents the methods and costs for generating and 

sampling the emissions to be used in chemical speciation 

procedures. Because many of the same methods will be needed for 

generating emissions to be used for biological testing in Tiers 2 

and 3, a discussion of these overlapping requirements is also 

39 
included in this section. 

a. Vehicle Requirements 

The vehicles used to generate emissions for purposes of 

emission characterization and biological testing must be new 

vehicles of the model year in which testing begins. Vehicle class, 

emission control equipment, and vehicle sales volume are the 

parameters to be considered in determining the vehicle or engine to 

be used for emission generation. For each fuel family (i.e., 

gasoline, diesel), the vehicle class to be used for emission 

generation will be that which consumes the highest yearly amount of 

fuel in that fuel family. Since diesel F/FAs are currently used 

predominantly in HDEs, and gasoline F/FAs are predominantly used in 

light-duty vehicles (LDVs), EPA assumes in this analysis that HDEs 

will be used for testing diesel products and LDVs will be used for 

testing gasoline products. Further, EPA assumes use of a heavy 

heavy-duty diesel engine (HDDE) (an engine used in a vehicle 

greater than 33,000 lbs. gross vehicle weight rating (GVWR)) 

because this subclass reflects the most gallons of diesel fuel 

consumed among vehicles operating on diesel fuel. The specific 

vehicle/engine model to be selected for testing is to be any one of 

the five most common fuel system and emission control system 

configurations. 

New vehicles (or engines) used in emission generation for the 

testing of baseline and non-baseline F/FAs are required to undergo 

40 
P.53 

a break-in period where the vehicle (or engine) is run exclusively 

on the fuel or fuel/additive mixture to be tested. For vehicles on 

a chassis dynamometer, the mileage accumulation needed prior to 

emissions testing is a minimum of 4,000 miles. For engines on an 

engine dynamometer the minimum break-in requirement is 125 hours of 

operation for heavy-duty engines and 80 hours for light-duty 

vehicle engines. The manufacturers will be responsible for 

appropriately maintaining the vehicle/engine while subject to these 

requirements. Mileage can be accumulated by any appropriate means. 

In the case of F/FAs with atypical elements, after completion 

of the 4,000 miles, the F/FA manufacturer is required to identify 

and measure the atypical element(s) in the exhaust, if possible. 

The atypical element(s) of interest are to be measured in each of 

the emission fractions (i.e., vapor, semi-volatile, and 

particulate) at intervals to be decided by the manufacturer. The 

manufacturer is required to continue mileage accumulation until 

either 1) 50 percent or more of the input mass of each atypical can 

be measured in the emissions, or 2) mileage equivalent to 40 

percent of the vehicle's useful life is reached. Testing may 

commence after either of these conditions has been met. 

Cost estimates provided for producers of non-atypical product 

formulations (i.e., baseline and non-baseline) reflect the 

assumption that emission generation for purposes of emission 

characterization and biological testing will begin when the vehicle 

41 
P.54 

has accumulated the minimum miles/hours required (4,000 miles for 

an LDV or 125 hours for an HDE) . For producers of atypical 

formulations, ranges and point estimates are provided. The low end 

cost estimate assumes testing begins when the minimum mileage 

accumulation requirement of 4,000 miles (or equivalent hours) is 

reached. The high end reflects the cost a manufacturer would incur 

if mileage equivalent to 40 percent of the vehicle's useful life 

would need to be accumulated. When determining point estimates to 

be used in the cost analysis for atypicals, EPA assumed that at 

least 50 percent of the input mass of each atypical element would 

be able to be measured in the emissions after the accumulation of 

mileage equivalent to 75 percent of the maximum requirement. In 

other words, point estimates used in this cost analysis for testing 

of atypical products reflect the assumption that testing will begin 

when mileage has reached 30 percent of the vehicle's useful life 

(i.e., 30,000 miles for LDVs and 87,000 miles for heavy HDVs). 

Vehicle Acguisition Costs 

EPA estimates producers of gasoline fuels and additives will 

spend approximately $15,000 to purchase the appropriate light-duty 

vehicle for testing purposes. In the case of diesel fuel/additive 

products, EPA assumes that producers will purchase a heavy-duty 

diesel engine (HDDE) for testing purposes, rather than purchasing 

a HDV, accumulating miles, and then removing the engine from the 

vehicle for testing. Dealers in the South-Central Texas area were 

contacted to obtain price estimates for new, highway-certified 

42 
P.55 

heavy HDDEs. Based on five price estimates, the average price of 

a new, heavy HDDE is $18,600. 

Although EPA is routinely requiring only one vehicle or engine 

for the testing of F/FAs, EPA foresees that at least one backup 

vehicle/engine, identical in model and emission control equipment, 

may be needed in order to replace vehicles /engines that wear out or 

malfunction during the course of testing. EPA recommends that 

backup vehicles/engines accumulate mileage along with the primary 

test vehicle/engine, so as to minimize testing interruptions in the 

event that the backup vehicle/engine is needed. For this analysis, 

EPA assumes manufacturers will retain one backup vehicle for 

testing. Consequently, gasoline F/FA producers will spend $30,000 

on vehicle purchases for testing, while engine acquisition costs 

for diesel F/FA producers are estimated to total $37,000. 

Mileage Accumulation Costs 

As indicated above, EPA envisions emission characterization to 

be conducted at 4,000 miles for non-atypical (baseline and nonbaseline) formulations, and when 30 percent of the vehicle's useful 

life is reached for atypical formulations. In addition to 

maintenance and fuel expenses, the required mileage accumulation 

will have an added expense for the time and/or personnel involved 

in the mileage accumulation activity. Several of the laboratories 

contacted by SwRI indicated they were familiar with operating 

vehicles on a set driving route with a hired driver to accumulate 

43 
miles. On the basis of the responses, $0.80/mile is determined to 

be a cost likely to be charged for this task. Maintenance and fuel 

costs are included. Using this rate, EPA estimates mileage 

accumulation costs for gasoline and other F/FAs tested on lightduty vehicles to be $3,200 for non-atypical and $24,000 for 

atypical formulations. Doubling this cost to account for backup 

vehicle mileage accumulation, total LDV mileage accumulation costs 

are estimated to be $6,400 for testing non-atypical gasoline F/FAs, 

and $48,000 for testing atypical gasoline F/FAs. This cost could 

reach as much as $64,000 for atypical products if testing is 

conducted when both vehicles have reached 40 percent of the 

vehicles useful life, or could be as low as about $6,400 if the 

minimum mileage of 4,000 miles proved to be adequate15. 

For diesel and other F/FAs which are used in HDVs, EPA 

envisions "miles" will be accumulated on a heavy-duty engine via a 

dynamometer at a testing facility, with no particular load or 

cycles being applied to the engine. Information received from 

testing facilities familiar with this procedure indicates that 

approximately $2.20 per mile, including fuel and maintenance costs, 

might be charged for this task. Using a rate of 50 miles/hour to 

15It should be noted that manufacturers are permitted to 

accumulate miles by any appropriate means, including use of a 

chassis or engine dynamometer as opposed to use of a test track 

assumed for this analysis. If miles are accumulated via a 

chassis dynamometer, total mileage accumulation costs would be 

approximately 33 percent higher than estimated for this analysis, 

while engine dynamometer costs would be about 46 percent higher 

(assuming 2 vehicles/engines). 

44 
convert hours to miles, EPA estimates the cost to accumulate the 

equivalent of 125 hours on a HDE would be approximately $13,750. 

Thus, total HDE mileage accumulation costs, including one backup 

vehicle, is estimated at $27,500 for non-atypical product testing. 

The cost for atypical product mileage accumulation is estimated at 

$191,400, ranging from nearly $8,800 for 4,000 miles of mileage 

accumulation to a maximum cost of over $255,000 for accumulating 

miles equivalent to 40 percent of the engine's useful life. HDE 

acquisition and mileage accumulation costs are estimated to total 

over $200,000 for testing of atypical diesel products, assuming 

that characterization will not be conducted until mileage has 

reached 30 percent of the vehicles useful life. Should this level 

of mileage accumulation be necessary, manufacturers of these 

products are likely to find it more economically feasible to repeat 

a portion of the testing, should it be necessary, rather than 

retain a backup test engine. Thus, this analysis assumes that 

manufacturers of atypical diesel products will choose not to 

purchase a backup engine. 

Total Vehicle Reguirement Costs 

In sum, for testing gasoline fuels and additives using an LDV, 

EPA estimates costs associated with vehicle acquisition and mileage 

accumulation (for a primary test vehicle and one backup vehicle) to 

be $36,400 for non-atypical product formulations, assuming emission 

speciation/biological testing begins at 4,000 miles. For atypical 

product formulations, assuming emission speciation and biological 

45 
testing occur at 30,000 miles, the vehicle-related costs are 

estimated to be $78,000. Reflected in these costs is the 

conservative assumption that the vehicles are retained, should 

further testing be necessary (e.g., prescribed under Tier 3) . Fuel 

costs and maintenance costs are included in the costs presented 

above. The change in mileage accumulation requirements and 

assumptions regarding vehicle purchases, in combination with 

updated cost data, result in total estimated light-duty gasoline 

vehicle acquisition/mileage accumulation costs being higher than 

were estimated at the time of the NPRM. 

With regard to diesel and other F/FAs requiring the use of 

HDEs, costs associated with acquiring and operating a heavy heavyduty engine are estimated to total about $64,700 for. non-atypical 

formulations and $210,000 for testing atypical formulations (nonatypical price includes acquisition and mileage accumulation for 

one backup engine). These costs reflect the assumption that 

emission characterization and biological testing begin at the 

equivalent of 4,000 miles for non-atypical products, and at 87,000 

miles for atypical products. Fuel and maintenance costs are 

reflected in the costs as well. These HDE acquisition/mileage 

accumulation costs are higher than estimated for the proposal. 

b. Combustion Emission Generation 

Procedures for generating emissions for emission 

characterization are dependent upon the emission product categories 

46 
of interest. Both catalyzed and non-catalyzed exhaust emissions 

generated using the FTP are to be speciated for light-duty gasoline 

vehicle testing, and only non-catalyzed exhaust emissions are to be 

speciated for heavy-duty diesel engine testing. Vapor-phase, semivolatile, and particulate emissions are required to be 

characterized. Costs are based on the assumption that the F/FA 

manufacturers will seek laboratory services for these purposes, 

rather than conducting tests in-house or erecting facilities 

capable of conducting such tests. 

Estimates received from testing laboratories indicate that 

generating emissions via an FTP which has been modified to allow 

collection of all three phases of emissions for subsequent 

measurement of the emission products of interest would cost 

approximately $1,100 for a light-duty vehicle and $2,400 for a 

heavy-duty engine. Based on comments received from testing 

facilities, an additional $5,000 engine set-up fee is expected to 

be charged for heavy-duty engine testing. 

c. Evaporative Emission Generation 

Depending on specific RVP criteria, some fuels and additives 

will be required to undergo emission characterization and 

biological testing for evaporative emissions. The evaporative 

emission characterization requirements involve speciation of 

emissions generated from an evaporative emission generator (EEG) 

rather than a vehicle. 

47 
1 

The EEG is a fuel tank or vessel to which heat and/or vacuum 

is applied to cause a portion of the fuel to evaporate at a desired 

rate. EPA estimates the cost of generating/collecting evaporative 

emissions via this procedure to be approximately $200 per hour. 

Although manufacturers will have flexibility in the design of the 

EEG, EPA estimates a cost of $4,000 for the hardware and labor 

expected to be associated with its development. Evaporative 

emission generation is not applicable to diesel fuels and their 

additives. 

2. Emission Characterization 

In general, the emission characterization requirements of Tier 

1 focus on the detection and measurement of selected chemical 

classes and compounds. The required analyses include: 1) the 

measurement of basic emissions16 (i.e., total hydrocarbons, carbon 

monoxide, nitrogen oxides, and particulates from combustion 

emissions; total hydrocarbons from evaporative emissions), 2) the 

speciation of volatile hydrocarbon compounds, aldehydes, ketones, 

alcohols, ethers, polycyclic aromatic hydrocarbons (PAHs) and 

nitrated polycyclic aromatic hydrocarbons (NPAHs), and 4) the 

speciation of atypical emission products, when atypical elements 

are known to be present in the raw fuel or additive formulation. 

16EPA proposed to require the characterization of "regulated 

emissions" for fuel/vehicle types for which certification 

procedures existed at the time of the publication of the NPRM 

(i.e., gasoline, diesel, and methanol). The term "basic 

emissions" is being used instead of "regulated emissions" because 

certification requirements have not yet been developed for all 

F/FAs included in this rule. 

48 
P.61 

Speciation requirements are summarized in Table 3-1, and associated 

costs are provided in Table 3-2. The costs identified are costs 

per sample of emissions collected17, and are the same for both 

gasoline and diesel F/FA products. 

In sum, basic emissions are to be measured for both vapor and 

particulate phase combustion emissions at a cost of $300 per 

sample. Measurement of total hydrocarbons is required for 

evaporative emissions (when applicable to the F/FA) at a per-sample 

cost of $225. The cost of hydrocarbon speciation for vapor phase 

combustion emissions and evaporative emissions is estimated at $333 

per sample. Speciation of aldehydes and ketones is required only 

for the vapor phase of combustion emissions, and is estimated to 

cost about $200 per sample. Alcohol and ether speciation, required 

for both vapor phase combustion emissions and evaporative emissions 

whenever the fuel or fuel/additive formulation under evaluation 

contains alcohols or ethers, is estimated at $167 per sample. PAH 

and NPAH speciation, required for both the semi-volatile and 

particulate phase of combustion emissions, is estimated at $800 per 

sample for LDV gasoline testing and $1200 per sample for HDE diesel 

testing.18 These costs are based on the results of the survey 

conducted by SwRI where laboratories were asked to identify 

17Three bags of vapor phase emissions are to be collected. 

Characterization is to be performed on a sample of each bag of 

emissions collected. 

"For heavy-duty, particulate phase combustion emissions are 

collected for both the hot- and cold-start segments of the FTP. 

49 
commercial prices charged for performing the characterization 

requirements described above using current characterization 

procedures. In general, these costs are considerably less than 

estimated in the NPRM. 

To determine speciation costs for atypical elements, EPA 

reviewed the atypical products contained in the registration 

database according to the variability in the number of atypical 

elements they contain, what phase or phases the elements would 

appear in, the number of end emission species which contain such 

elements, and other factors. Based on this analysis, EPA believes 

that two is a representative number of atypical elements contained 

in atypical products. EPA estimates a cost of $300 for activities 

related to detection of the atypical element, and $400 for 

measuring the emission products containing the atypical elements 

(per element, per phase). As stated previously, EPA envisions 

emission characterization to be conducted when 30 percent of the 

vehicle's useful life is reached for atypical formulations. Before 

this point is reached, EPA envisions that detection procedures will 

be conducted five times for light-duty vehicle testing and seven 

times for heavy-duty engine testing. Based on all of these 

factors, EPA estimates costs related to identification and 

measurement of atypical elements to be $3,900 for light-duty 

vehicle testing and $5,300 for heavy-duty engine testing. 

C. Total Tier 1 Costa 

50 
Table 3-3 provides total estimated costs of Tier 1 

requirements. As shown in the table, costs are provided for 

producers of both gasoline and diesel products, and for baseline, 

non-baseline and atypical product formulations. For presentation 

purposes, emission generation/speciation costs have been combined. 

This analysis assumes the following: 1) only one combustion and 

one evaporative emission generation will be needed for emission 

characterization, with the exception of emission products 

containing atypical elements 2) speciation of alcohols/ethers will 

only be necessary for non-baseline products, 3) only one sample of 

emissions will be collected and characterized for evaporative 

emissions generated via the EEG method, 4) acquisition and mileage 

accumulation for one backup vehicle, with the exception of heavyduty diesel atypical testing (see III.B of this chapter). A $50 

fee for measuring a fuel's RVP level is reflected in the costs for 

testing gasoline products. The costs also reflect the requirement 

that emission generation/speciation procedures be conducted three 

times. For atypical F/FAs, testing is assumed to begin when 30 

percent of the vehicle's useful life has been reached. Underlying 

these costs are the assumptions that little or no previous data 

exists to offset speciation requirements and that there are no 

savings from cost-sharing provisions. 

Under these assumptions, producers of gasoline fuels or fuel 

additives would likely incur Tier 1 costs of $106,300 for baseline 

51 
products, $95,800 for non-baseline products19, and $150,600 for 

atypical products. Costs to a producer of baseline, non-baseline, 

and atypical diesel product formulations are estimated at $119,400, 

$106,400, and $262,400, respectively. This includes costs for: 1) 

conducting a literature search for information on the composition 

and effects of F/FA emissions on public health & welfare, 2) 

purchasing one primary test vehicle/engine and one backup 

vehicle/engine (except for testing diesel atypical product 

formulations) and accumulating the appropriate miles for testing, 

and 3) performing the appropriate emission characterization 

requirements. All Tier 1 cost totals estimated in this analysis 

are higher than those estimated in the proposal, with the exception 

of diesel atypical product testing. 

IV. Tier 2 Requirement* and Costa 

The second tier of health effects evaluation consists of a 

subchronic inhalation toxicity test, with the addition of ancillary 

studies to screen for several specific health effect endpoints 

(carcinogenicity, mutagenicity, teratogenicity, reproductive 

toxicity and neurotoxicity) within a single 90-day exposure 

schedule. These tests will be required for all fuels and additives 

to the extent that the results of the data search activities in 

Tier 1 do not include comparable existing information from 

"Total non-baseline product costs are less than baselineproduct costs due to lower literature search costs. 

52 
P.65 

adequately performed and properly documented previous studies. 

In general, laboratory animals are to be exposed by inhalation 

to diluted whole exhaust and (when applicable) evaporative 

emissions. The test guidelines generally call for a minimum of 

thirteen weeks exposure, six hours per day, five days per week. 

The test guidelines and related emission generation procedures are 

discussed below, along with estimated costs of performing each test 

on an individual basis. 

A. Kmiaaion Generation for Biological Teating 

1. Combustion Emission Generation 

Emissions are to be generated on a continual basis throughout 

the required hours of animal exposure for each exposure day, with 

emissions diluted and routed directly from the vehicle or engine to 

the biological testing chamber. For testing of gasoline 

fuels/additives, EPA conservatively assumes a chassis dynamometer 

will be used to generate emissions over consecutive transient 

driving cycles for health effects testing, at a cost of 

approximately $71,500.2° Testing of diesel fuels and additives 

using an engine dynamometer for emission generation is estimated to 

cost $58,500. These costs are based on estimates received from 

testing laboratories which suggest $1,100 per day for chassis 

dynamometer testing and $900 per day for engine dynamometer testing 

"Use of an engine dynamometer for testing gasoline F/FAs is 

permitted but not required. 

53 
might be charged for generation, dilution, and delivery of the 

emissions to the animal cages. Fuel and maintenance costs are 

included. 

One required test, the Ames Reverse Mutation Assay, is an invitro test requiring exposure of bacterial cultures to the 

extracted particulate matter and the semi-volatile fraction of 

combustion emissions. EPA assumes that a stream of emissions 

delivered to the animal exposure chambers will be diverted and 

collected for the Ames assay. A cost of $500 for gasoline products 

and $800 for diesel products is estimated for the processing of the 

PM and semi-volatile fractions of the samples. 

2. Evaporative Emission Generation 

For health effects testing, manufacturers are required to 

generate emissions using the same evaporative emission generator 

(EEG) and operating conditions specified above under Evaporative 

Emission Generation, section III. Evaporative emissions will be 

diluted and routed to the animal chambers in a manner similar to 

the method used for combustion emissions health effects testing. 

Estimates received from laboratories for generation, dilution, and 

delivery of evaporative emissions generated from an EEG chamber 

ranged from $150 to $1,050 per day. Although, in EPA's judgement, 

the cost seems to be high, evaluation of the estimates indicates 

that $900 per day may likely be charged. Using this price, the 

total cost of generating evaporative emissions for six hours per 

54 
day for 65 days using the procedure described above is estimated at 

$58,500. 

Brief descriptions of biological test guidelines for the 

evaluation of each health effect endpoint are provided below, along 

with their associated cost. The cost estimates are based on 

standard testing costs received from the Office of Pesticides and 

Toxic Substances (see footnote number 14), adjusted to account for 

modifications to the standard protocols to be consistent with the 

scope of the health effects testing program, and updated to account 

for inflation in the labor rates since the time of the proposal. 

Appendix A provides component cost data for each of the biological 

tests described below. These costs are incremental to the 

associated emission generation costs described above. 

B. Biological Teat Coata 

1. Subchronic Inhalation Study 

The 90-day subchronic inhalation study will serve as a basic 

framework for the Tier 2 testing program. The test will provide 

valuable screening information on general systemic and organ 

toxicity. Basic requirements of the study include ophthalmological 

examination, blood chemistry analysis, broad organ examination, and 

histopathology. Hematology and clinical biochemistry analysis is 

also included. Specific test requirements of the study are 

described in the regulatory text of this final rule. This 90-day 

subchronic inhalation toxicity test is estimated to cost 

55 
approximately $177,000. 

2. Carcinogenicity and Mutagenicity Screens 

Three assays are included in Tier 2 for carcinogenicity and 

mutagenicity screening. The Ames assay is conducted separately 

from the other two screening tests because exposure of live animals 

to exhaust emissions is not required. To accommodate the two in 

vivo assays (micronucleus (MN) and sister chromatic exchange 

(SCE)), within the overall Tier 2 testing framework, a satellite 

group of animals would be exposed concurrently with the main animal 

population of the 90-day subchronic inhalation study. Thus, the 

incremental costs for these studies are limited to the additional 

animal acquisition and maintenance costs and the costs specific to 

each assay. No incremental costs for the animal exposures would be 

incurred. 

Ames Reverse Mutation Assay. The Ames assay is an in vitro test 

which makes use of five mutant strains of the bacterium Salmonella 

typhimurium. The bacteria will be exposed to extracted 

fuel/additive combustion emission fractions, and the number of 

reverse mutations will be analyzed. The cost of conducting an Ames 

assay for this program is estimated at $4,700. An Ames battery 

will be conducted on both particulate and semi-volatile-phase 

samples of combustion emissions, therefore doubling this cost to 

$9,400. 

56 
P.69 

Micronucleus Assay. Micronuclei are sub-cellular structures 

containing chromosomes and chromosome fragments not incorporated 

into the main nucleus during cell division. While micronuclei do 

form under natural conditions, exposure to potentially mutagenic or 

carcinogenic agents can cause an increase in micronucleated cells. 

In this assay, live rodents will be exposed by inhalation to the 

fuel/additive emissions, and their peripheral blood cells will 

subsequently be examined and compared to those of untreated 

animals. As a supplementary test to the subchronic inhalation 

study, the incremental cost for this assay is estimated at $2,900. 

The cost for a 30 day stand-alone test is estimated at $38,000. 

Sister Chromatic Exchange (SCE). In this assay, blood lymphocytes 

and lung cells from animals which have undergone inhalation 

exposure to vehicle emissions will be examined microscopically 

after being labeled and stained to permit visualization of DNA 

replication errors. This assay is estimated to cost $43,000 as a 

stand-alone test, or about $7,200 when coordinated with the 90-day 

subchronic inhalation study. 

3. Fertility Screen for Reproductive and Teratologic Effects 

The purpose of this screening test is to obtain information 

about the potential reproductive and teratogenic (developmental) 

effects caused by inhalation of F/FA emissions. The fertility 

screen involves the mating of exposed male and female animals to 

F/FA emissions to examine the effects on conception, followed by a 

57 
teratology study, involving inhalation exposure of the females to 

F/FA emissions during pregnancy. This assessment could cost over 

$90,000 if conducted individually, or about $38,000 when the 

exposures are conducted in conjunction with the subchronic 

inhalation study. 

4. Neurotoxicity Screen 

The final rule does not include the Functional Observational 

Neurotoxicity Battery (FONB) proposed in the NPRM. Instead,an 

expanded neurohistopathology examination is included within the 90-

day subchronic inhalation study. In addition, a biochemical assay 

which measures the level of glial fibrillary acidic protein (GFAP) 

is required. Performance of the GFAP assay and neurohistopathology 

examination could cost nearly $200,000 when conducted separately, 

or $3,600 and $42,000, respectively, when coordinated with the 

subchronic inhalation study. 

C. Total Biological Teat Coats 

The cost of conducting each of the screening tests 

individually was provided above, along with the incremental cost of 

conducting the screening tests in conjunction with the subchronic 

inhalation study. The cost of conducting each test individually 

does not consider any savings which could be achieved from 

conducting any of the tests in conjunction with one another. The 

Tier 2 testing program is designed so that various test 

requirements, such as animal subjects, exposure scenarios, and 

58 
P.71 

general technical principles, are similar among the tests. This 

permits the health effects examination to be conducted under a 

L 

single comprehensive test protocol. The design of the Tier 2 

testing program makes best use of animals, laboratory capacity, and 

financial resources. If testing is planned and conducted in this 

fashion, EPA estimates that the total cost for conducting all of 

the required biological tests on combustion emissions would be 

slightly above $280,000 (excluding emission generation costs). 

Likewise, conducting all biological tests on evaporative emissions 

is estimated to cost about $270,700. The difference is the Ames 

assay, which is required only for combustion emissions. These 

costs represent total costs of conducting all biological tests with 

no cost-sharing arrangements. 

3 

D. Total Tier 2 Coata 

Table 3-4 shows the costs associated with meeting the 

requirements of Tier 2. The emission generation costs assume 

emissions will be generated 6 hours/day, 5 days/week for 13 weeks, 

and that one emission generation (combustion or evaporative) will 

produce sufficient emissions to conduct all biological tests. The 

costs assume that all biological tests except the Ames assay will 

be performed on both combustion and evaporative emissions for the 

evaluation of gasoline fuels and additives, and on combustion only 

when testing diesel fuels and additives. This analysis indicates 

the highest cost an individual producer would likely incur for 

fulfilling all Tier 2 requirements would be approximately $681,300. 

59 
This cost represents the potential cost to producers of a gasoline 

fuel product. The highest potential Tier 2 cost to a diesel fuel 

producer would be about $339,400. Total tier 2 costs are slightly 

higher than initially estimated for the proposal. Even though the 

required exposure duration is longer than proposed, the biological 

testing is program is designed for more efficient use of animals 

and laboratory capacity, resulting in tier 2 test costs being 

similar to those proposed. 

V. Tier 3 Requirementa and Potential Coeta 

All costs associated with Tier 1 and Tier 2 requirements are 

assumed to be incurred in the first 3 years after the rule is 

promulgated, and Tier 3 costs are assumed to be incurred over the 

following 3 years. However, yearly costs may actually be less if 

producers finance the costs over a longer period of time. 

Fuels and fuel additives will be subject to additional testing 

under the Tier 3 provisions of the registration program only if 

determined to be needed on a case-by-case basis by EPA. The 

endpoints to be addressed and the nature of the studies to be 

performed will depend on the case at hand. Chronic/lifetime 

studies, exposure studies, and additional emission characterization 

or modeling analysis are examples of further testing/analysis that 

could be required. Any testing to be performed on aerosol 

60 
P.73 

additives would also occur at the Tier 3 level. Because such a 

wide range of testing/analysis may be required under Tier 3 

depending on the areas of concern, it is difficult to predict the 

associated costs. However, using animal inhalation exposures of 

chronic two year duration as an example of testing which might be 

required, Tier 3 costs could reach about 3 million dollars, or one 

million dollars per year, assuming the cost of 2 years of 

biological testing would be incurred over 3 years. These Tier 3 

costs are not included in the overall cost projections presented in 

Chapter 4. 

VT. Adminiatrative/Reporting Reguiremenf and Coata 

The materials to be submitted to EPA are divided into three 

major categories: basic registration data, a summary report, and 

appendices. Production volume data and information currently 

required for F/FA registration are required to be submitted for 

basic registration, and should be submitted on EPA forms which are 

in effect at the time of the submittal. The summary report 

requires a text summary of the evaluation procedures, results, and 

conclusions pertaining to requirements of Tiers 1 and 2. Detailed 

information in support of the general discussions contained in the 

summary report are to be submitted as appendices to the report. 

Producers who must conduct additional testing under Tier 3 will be 

required to submit a final report when the designated Tier 3 

61 
1 

testing is complete. 

EPA estimates approximately $100 will be spent by each 

producer for submittal of basic registration data on each product. 

In addition, each manufacturer is expected to incur approximately 

$300 for activities associated with reviewing the regulations and 

planning for group participation, if applicable. EPA estimates 

approximately $9,400 for administration costs related to submission 

of Tier 1 data, $4,600 for submission of Tier 2 data, and nearly 

$12,300 for costs associated with group administration. Thus, a 

total of over $26,000 is expected to be incurred by each group of 

manufacturers with similar products for activities related to group 

administration, collection of existing data, oversight of testing 

(if required), and submission of Tier 1 and Tier 2 data. Averaging 

this cost over the three year period manufacturers are allowed for 

submission of data after promulgation of the final rule yields a 

cost of about $8,500 per year, per group for these activities. 

This cost would likely be less for a manufacturer who is alone in 

a group or who wishes to conduct testing individually since group 

administration costs would not apply. 

VII. Summary 

For an individual producer of a gasoline F/FA, the cost for 

fulfilling all requirements of Tiers 1 and 2 and reporting the 

62 
results to EPA is estimated to be about $800,000 for baseline 

products, about $792,000 for non-baseline product formulations, and 

about $846,000 if the product formulation is atypical. Comparable 

costs for diesel fuel/additive producers are estimated at 

approximately $473,000 and $460,000 for producers of baseline and 

non-baseline product formulations respectively, and about $616,000 

for producers of atypical product formulations. To err on the 

conservative side, these costs are inclusive. That is, they assume 

that there is not adequate existing data, and that the producer 

must therefore conduct all of the Tier 1 and Tier 2 tests de novo. 

They also assume that the producer does not qualify for any special 

provisions (e.g., for small businesses). In addition, the 

estimates assume that the producer takes on individual financial 

responsibility for all test costs, either because he elects not to 

engage in grouping and cost sharing provisions or because he is not 

able to do so (i.e., sole producer in the group). The lowest cost 

likely to be incurred by a producer not qualifying for special 

provisions and not participating in a group would be the cost of 

conducting a literature search (the results of which provide 

documentation of adequate existing tests comparable to those 

included in Tier 2) and registering the product with EPA. This 

cost is estimated to be about $21,000 for a producer of a baseline 

product, and $7,000 for a producer of a non-baseline product. 

Producers of atypical products would need to characterize the 

emissions before a literature search could be conducted. 

63 
P.76 

As previously discussed, "small" F/FA manufacturers of 

baseline and non-baseline product formulations, and manufacturers 

of relabeled products, are only required to submit basic 

registration data. The per-product cost to such producers is 

estimated to total only about $400. "Small" manufacturers of 

atypical products have the added cost of Tier 1 testing. Costs to 

this type of producer could range from about $13,500 to about 

$114,000 for a gasoline product and up to about $272,000 for a 

diesel product, depending on the degree to which adequate Tier 1 

data already exists. All of these costs are one-time obligations 

associated with meeting the basic registration and/or generic 

testing requirements of the program for one product. Tier 3 costs 

are not included. Costs incurred on a per-manufacturer basis 

(taking into account such factors as special provisions, multiple 

products per manufacturer, and cost-sharing opportunities) and 

aggregate costs to the industry are discussed in the next 

chapter. 

VIII.Coat Estimates for Future Alternative F/FA Regiatrationa 

The discussion thus far has focused on costs associated with 

registration and testing requirements for gasoline and diesel fuel 

and fuel additive products. As mentioned previously, a proposal to 

designate methanol, ethanol, liquified petroleum gas, and natural 

gas F/FA products for registration is expected in the near future. 

64 
1 

EPA has thus defined families and included provisions for these 

alternative fuel products in this final rule under the assumption 

that they will be designated. The projected cost impact of this 

rule on producers of these alternative fuel products is discussed 

below. 

As shown in Table 1-1 for the F/FA grouping system, within the 

baseline category, two groups are established for the methanol fuel 

family (M100 group and M85 group, represented by their respective 

base fuel), one group for the ethanol fuel family (represented by 

E85 base fuel), one group for the methane fuel family (represented 

by CNG base fuel), and one group for the propane fuel family 

(represented by LPG base fuel). Cost estimates for the 

registration and testing of these products, shown in Table 3-5, are 

based on unit price estimates associated with registration/testing 

of gasoline and diesel baseline products. Although some required 

data may be available for some of the alternative fuel families, 

this analysis conservatively assumes that all Tier 1 and Tier 2 

testing will be required for each testing representative of each 

alternative F/FA product group. Other assumptions underlying the 

analysis are: 1) all registered products are baseline products, 

2) testing for the M100 and LPG groups will be conducted using a 

heavy-duty engine, and all remaining groups will make use of lightduty vehicles for testing; 3) evaporative testing will be required 

for the methanol and ethanol fuel families only; and 4) an Ames 

test will not be required to be conducted on the testing 

65 
P.78 

representative of the methane (CNG and LNG) and propane (LPG) 

groups. 

Based on these assumptions, costs associated with testing a 

single representative from each alternative fuel family baseline 

group are estimated to be as follows: $735,000 for testing each of 

the E85 and M85 representatives, $721,000 for the M100 group, 

$389,000 for the methane (CNG) group, and $408,000 for the propane 

(LPG) group. This sums to a total cost of about 3 million dollars 

for testing of a single representative from each group in the 

baseline category of each of the alternative fuel families. After 

discussions with representatives from several major alternative 

fuel trade associations, EPA estimates approximately 400 baseline 

alternative F/FA products will be registered within the first year 

after they are designated for registration. Of these 400 product 

registrations, EPA estimates that the ethanol fuel family will 

account for about 5 percent, the M100 and M85 product registrations 

will be about 15 percent and 20 percent, respectively, about half 

of the alternative F/FA product registrations will be in the 

methane fuel family, and the remaining 10 percent will be in the 

propane fuel family. Using these product percentages, EPA 

estimates per product costs to range from just below $2,000 (for 

products in the methane fuel family) to about $37,000 (for products 

in the ethanol fuel family). On average, alternative F/FA 

producers may incur costs of $7,500 per product ($3,000,000/400 

products) in the first year to register their alternative F/FA 

66 
P.79 

products with EPA, assuming all Tier 1 and Tier 2 testing is 

required. These judgements regarding future registrations of 

alternative F/FA products are not intended to be predictions of 

introduction of these products into the market. Rather, they are 

estimates used for the sole purpose of estimating possible cost 

impacts of this rule on alternative F/FA producers. Future 

registrations of these products may be higher or lower than assumed 

in this analysis, and the estimated per-product costs would be 

lower or higher as a result. The overall cost projections 

presented elsewhere in this document are based on current product 

registrations and do not include cost projections related to these 

potential future alternative F/FA product registrations. 

67 
Table 3-1: Emission Characterization/Measurement Requirements 

Emission 

Type 

Combustion 

Emissions: 

Vapor Phase 

Semivolatile 

Phase 

Particulate 

Phase 

Evaporat ive 

Emissions:* 

Evaporative 

Emission 

Generator' 

Basic 

Emissions* 

Speciated Emissions 

Hydrocarbons Ketones 

and 

Aldehydes 

Alcohols 

and 

Ethers" 

Polycyclic 

Aromatic 

Hydrocarbons 

(PAHs)° 

Nitrated 

Polycyclic 

Aromatic 

Hydrocarbons 

(NPAHs)c 

Atypicalsd 

X 

X 

X X X 

X 

X 

X 

X 

X 

X 

x 

X* X X x 

Basic emissions = total hydrocarbons, carbon monoxide, oxides of nitrogen, and particulates (see Section 

VII.B.2.a below) 

b Required if alcohols or ethers exist in the uncombusted fuel or fuel additive formulation. 

° Not required for methane (CNG, LNG) or propane (LPG). 

dManufacturers of atypical products must examine all emission fractions for the measurement and 

identification of potential atypical species. 

"Only applicable to F/FAs required to measure evaporative emissions. 

Evaporative emissions are to be generated using an evaporative emission generator as described in Section 

VI. C. 

'The only basic emission required to be measured for evaporative emissions is total hydrocarbons. 

00 
' 

Table 3-2: Estimated Emission Characterization/Measurement Costs* 

Emission 

Type 

Combust ion 

Emissions: 

Vapor Phase 

Semivolatile 

Phase 

Particulate 

Phase 

Evaporative 

Emissions:* 

Evaporative 

Emission 

Generator' 

Basic 

Emissions* 

Speciated Emissions 

Hydrocarbons Ketones 

and 

Aldehydes 

Alcohols 

and 

Ethers0 

Polycyclic 

Aromatic 

Hydrocarbons 

(PAHs)c 

Nitrated 

Polycyclic 

Aromat ic 

Hydrocarbons 

(NPAHs)° 

$300 

$300 

$333 $200 $167 

$800 

$800 

$800 

$800 

$225h $333 $167 

Atypicalsd 

$400 

$400 

$400 

$400 

Basic emissions = total hydrocarbons, carbon monoxide, oxides of nitrogen, and particulates (see Section 

VII.B.2.a below) 

b Required if alcohols or ethers exist in the uncombusted fuel or fuel additive formulation. 

c Not required for methane (CNG, LNG) or propane (LPG). 

d Manufacturers of atypical products must examine all emission fractions for the measurement and 

identification of potential atypical species. 

* Only applicable to F/FAs required to measure evaporative emissions. 

' Evaporative emissions are to be generated using an evaporative emission generator as described in Section 

VI.C. 

'The only basic emission required to be measured for evaporative emissions is total hydrocarbons. 

*Per Sample 
Table 3-3: Tier 1 Costs 

Literature Search 

Acquisition* 

Mileage Accumulation* 

Combust.Gen./Charact: ** 

RVP Measurement 

Engine set-up fee 

Evaporative Gen./Charact 

TOTAL: 

Gasoline Fuel Family 

Baseline 

$21,000 

30,000 

6,400 

42,600 

50 

N/A 

6,275 

$106,325 

Non-Baseline 

$7,000 

30,000 

6,400 

45,600 

50 

N/A 

6,775 

$95,825 

Atypical 

$7,000 

30,000 

48,000 

58,500 

50 

N/A 

7,075 

$150,625 

Diesel Fuel Family 

Baseline 

$21,000 

37,200 

27,500 

28,700 

5,000 

N/A 

$119,400 

Non-Baseline 

$7,000 

37,200 

27,500 

29,700 

5,000 

N/A 

$106,400 

Atypical 

$7,000 

18,600 

191,400 

40,400 

5,000 

N/A 

$262,400 

1 ' 

•Price includes one primary and one backup vehicle/engine (except for diesel atypical). 

**Prlce includes characterization of both catalyzed 6 non-catalyzed exhaust emissions for light-duty, and 

characterization of non-catalyzed exhaust emissions for heavy-duty. 
Table 3-4 Tier 2 Costs 

Combustion Emission Generation 

Ames Sampling 

Evaporative Emission Generation 

Biological Tests: 

90-day Subchronic Inhalation Study 

Ames Reverse Mutation Assay 

Micronucleus Assay 

Sister Chromatid Exchange 

Fertility Screen 

Neurotoxicity Screen 

TOTAL: 

Gasoline Fuel Family 

Baseline/Non-Baseline/Atypical 

$71,500 

500 

58,500 

177,000 

9,400* 

2,900 

7,200 

38,000 

45,600 

$681,300** 

Diesel Fuel Family 

'Baseline/Non-Baseline/Atypical 

$58,500 

800 

N/A 

177,000 

9,400 

2,900 

7,200 

38,000 

45,600 

$339,400 

*Price includes the cost of conducting the assay on both particulate and semi-volatile-phase combustion 

emissions. 

**Price includes all biological tests conducted twice (once on combustion emissions and once on evaporative 

emissions), except for the Ames assay (not required for evap. testing). 
Tabl e 3-5 : Estimate d Alternativ e Fue l Registration s & Cost s 

Baseline 

Groups 

Test 

Representative 

Group Cost 

Est. Product 

Registrations 

Cost/Product 

(Rounded) 

Methanol 

2 

M85 

$735,000 

80 

$9,000 

M100 

$721,000 

60 

$12,000 

Fuel Families 

Ethanol 

1 

E85 

$735,000 

20 

$37,000 

Methane 

1 

CNG 

$389,000 

200 

$2,000 

Propane 

1 

LPG 

$408,000 

40 

$10,000 

Total 

5 

$3 

Million 

400 

$7,500 
DRAFT 

Chapter 4 

Estimated Cost Impacts 

I. Introduction 

Under Executive Order 12866 [58 Federal Register 51,735 

(October 4, 1993)], EPA must determine whether a regulation is 

"significant" and therefore subject to review by the Office of 

Management and Budget (OMB) and the requirements of the Executive 

Order. The order defines "significant regulatory action" as one 

that is likely to result in a rule that may: 

(1) have an annual effect on the economy of $100 million or 

more or adversely affect in a material way the economy, sector 

of the economy, productivity, competition, jobs, the 

environment, public health or safety, or State, local, or 

tribal governments or communities, 

(2) create a serious inconsistency or otherwise interfere with 

an action taken or planned by another agency, 

(3) materially alter the budgetary impact of entitlements, 

grants, user fees, or loan programs, or the rights and 

obligations of recipients thereof; or 

68 
(4) raise novel legal or policy issues arising out of legal 

mandates, the President's priorities, or the principles set 

forth in the Executive Order." 

This analysis indicates that the rule is not expected to have 

an annual effect on the economy of $100 million or more, nor would 

it have any significant adverse effects on the economy, 

productivity, competition, jobs, the environment, public health or 

safety, or governments or communities. Consequently, this rule is 

not considered significant under the terms of the first criterion, 

and, since the other three criteria are not applicable, this rule 

is not considered to be a "significant regulatory action" under the 

terms of the Executive Order. Nevertheless, because this rule has 

been on EPA's regulatory agenda for over 20 years, the Agency has 

decided to treat this action as significant and prepare a 

Regulatory Support Document (RSD) to assess its economic impacts on 

the affected industries. 

Based on the unit cost estimates presented in the previous 

chapter, this chapter projects the overall cost impacts of the F/FA 

registration program on the F/FA industry. Cost impacts are 

discussed for fuel manufacturers, additive manufacturers, and the 

industry as a whole. The following sections discuss the analytical 

assumptions and approaches on which this cost analysis is based, 

the methodology for determining producer and industry impacts, the 

limitations of the analysis, and conclusions. 

69 
II. Analytical Aaaumptions and Approach 

Although the cost-sharing (grouping) provision of this rule is 

voluntary, EPA assumes for this analysis that manufacturers will 

choose to participate in grouping with manufacturers of similar 

products to the extent possible. So, for the purpose of 

determining program costs, each currently-registered product was 

assigned to an appropriate category and group, based on the 

compositional information contained in the registration database 

for each F/FA. The results of these assignments are shown in Table 

4-1. Excluded from the table are manufacturers who, through small 

business provisions, are exempted from testing requirements for 

their baseline and non-baseline products. For each category, the 

table identifies the number of registered fuels and fuel additives 

in the category, the number of groups they sort into, and the 

number of producers with at least one registered product in the 

category. 

To determine the costs applicable to the groups in each 

category, assumptions had to be made with regard to the 

applicability of various program requirements to each category and 

the likelihood that some of these requirements could be satisfied 

by relying on adequate existing test data. These assumptions are 

outlined below for each product category and are summarized in 

Table 4-2 for testing of combustion emissions and Table 4-3 for 

testing of evaporative emissions. While some oxygenate gasoline 

70 
P.88 

mixtures may have adequate information available for both catalyzed 

and non-catalyzed exhaust emissions, EPA conservatively assumes for 

this analysis that data for non-catalyzed exhaust emissions is not 

available. In regard to Tier 2, EPA assumes tests will be 

necessary for both combustion and evaporative emissions. 

Gasoline Baseline Category 

EPA has designated one group for this category, which is 

estimated to contain approximately 1,586 fuel/additive products 

registered by 307 large producers (sales i $50 million). Based on 

results of the Auto/Oil Air Quality Improvement Research Program 

(Auto/Oil Program), for this category, EPA anticipates sufficient 

data to be available for characterization of both catalyzed and 

non-catalyzed exhaust emissions generated using the FTP, except for 

PAH and NPAH analysis. EPA estimates all required tests will be 

needed for characterization of evaporative emissions. Furthermore, 

EPA assumes all Tier 2 tests will be needed for combustion and 

evaporative emissions for this category. 

Gasoline Non-Baseline Category 

This category of fuel/additive products is estimated to 

contain 476 products produced by 120 large manufacturers (sales z. 

$50 million), which are subdivided into nine groups. EPA assumes 

all Tier 1 characterization tests will be needed for non-catalyzed 

combustion emissions and evaporative emissions. However, due to 

studies done by the Auto/Oil Program as well as other on-going 

71 
P.89 

industry efforts, EPA believes it is reasonable to assume that only 

PAH speciation and measurement of total NPAH will be needed for 

catalyzed combustion emissions. While some oxygenate gasoline 

mixtures may have adequate information available for both catalyzed 

and non-catalyzed exhaust emissions, EPA conservatively assumes for 

this analysis that data for non-catalyzed exhaust emissions is not 

available. In regard to Tier 2, EPA assumes all biological tests 

will be necessary for both combustion and evaporative emissions. 

Gasoline Atypical Category 

EPA estimates this category will be made up of 56 

fuel/additive groups consisting of 293 products manufactured by 146 

producers. In the final rule, EPA is requiring only volatile 

fuel/additive mixtures to undergo testing of evaporative 

emissions.21 Based on the chemical/physical characteristics of 

products in this category, and the likelihood that an additive will 

be the testing representative for most of the groups in this 

category, EPA anticipates that none of the groups will be required 

to test evaporative emissions. For combustion emissions, however, 

EPA assumes all Tier 1 and Tier 2 testing will be needed. 

Diesel Baseline Category 

"Fuels with a Reid Vapor Pressure (RVP) of 2.0 pounds per 

square inch (psi) are subject to the Tier 1 and Tier 2 testing 

requirements, while those with RVP less than 2.0 are excused. 

With respect to additives, Tier 1 and Tier 2 evaporative emission 

testing is required when the RVP of the fuel/fuel additive 

mixture is increased by 0.4 psi or more. 

72 
P.90 

This category contains only one group, which includes an 

estimated 87 large manufacturers (sales 2 $50 million) representing 

496 products. A considerable amount of information exists on 

baseline diesel products. For these products, EPA is considering 

existing applicable speciation studies conducted under the Air 

Pollution Research Advisory Council (APRAC) program to be adequate 

data, in lieu of new testing. However, the APRAC program does not 

include data concerning speciation of hydrocarbons, which is 

required for manufacturers of diesel F/FAs under this program. 

Consequently, EPA assumes that the only emission characterization 

tests required for this group are hydrocarbon speciation of noncatalyzed combustion emissions. Because the literature contains 

existing test data on many of the required health effects 

endpoints, EPA further projects that within Tier 2, only the 

screens for neurotoxic and teratologic endpoints on combustion 

emissions will need to be conducted. Evaporative emission 

assessments are not applicable to products in the diesel 

categories. 

Diesel Non-Baseline Category 

Among currently registered diesel products, the non-baseline 

category has two groups, containing one large manufacturer (sales 

* $50 million) with one product in each group. Unlike products in 

the diesel baseline category, little information is expected to 

exist for these unique product formulations. Consequently, all 

testing of combustion emissions, both chemical and biological, is 

73 
P.91 

assumed to be needed for products identified with this group. 

Diesel Atypical Category 

EPA estimates 41 groups within this category, representing a 

total of 112 manufacturers and 213 products. Because of the unique 

nature of these products, EPA assumes adequate data is unavailable 

for fulfilling chemical and biological testing requirements of this 

category. Thus, for purposes of this analysis, EPA assumes all 

Tier 1 and 2 tests on combustion emissions will be conducted. 

The assumptions outlined above are the basis for determining 

impacts to manufacturers not qualifying for any special provisions 

of the rule for a given product. For manufacturers qualifying for 

small business special provisions for some products but not others, 

the assumptions above apply only to the products for which do not 

qualify them for special small business provisions. Assumptions 

regarding test requirements for manufacturers qualifying for 

special small business provisions for such products are discussed 

in the next section. The methodology used to project the 

compliance costs for individual companies along with the overall 

cost impacts on fuel manufacturers, additive manufacturers, and the 

combined industry is also discussed. 

III. Methodology and Results 

74 
A. Producer Coat Impacts 

Before initiating activities directed specifically to 

completing the Tier requirements discussed above, each manufacturer 

will need to become familiar with the regulations and will also 

need to submit basic registration data (or reaffirm existing 

registration data) for each product. For these start-up 

activities, EPA assigned to each manufacturer a one-time fixed cost 

of $300 plus $100 per product. 

Next, to determine the testing costs applicable to 

manufacturers not qualifying for any special small business 

provisions, costs were calculated based on the general testing 

assumptions described above for each category, using the unit cost 

estimates provided in Chapter 3. These totals were assigned to 

each group in the category and were then divided equally among the 

products assigned to each such group. Finally, the per-product 

costs were assigned back to the responsible manufacturers. The 

estimated compliance costs applicable to each group in each product 

category are summarized in Table 4-4. Based on the unit cost data 

presented in Chapter 3 and the testing assumptions outlined above, 

the table shows that groups in the gasoline baseline product 

category are likely to have the highest group cost (estimated at 

nearly $800,000), and diesel baseline groups are expected to incur 

the lowest group cost (estimated at nearly $445,000). 

Consistent with the small business provisions described in 

75 
Chapter 1, manufacturers with annual sales less than $50 million 

were omitted from this cost allocation process for their baseline 

and non-baseline products. Such manufacturers were assigned no 

Tier 1 or Tier 2 costs for their products. The atypical products 

of manufacturers with annual sales less than $10 million were also 

omitted from the general cost allocation process described above; 

however, these manufacturers were assigned costs applicable to 

their atypical products. As previously described, these 

manufacturers qualify for the special small business provision 

which excuses them from Tier 2 testing requirements for their 

atypical products, but are still responsible for Tier 1. Because 

these very small manufacturers are expected to find it difficult to 

participate in the grouping and cost sharing provisions of the 

rule, this analysis assigned each such manufacturer the full cost 

for completing Tier 1 for each of his atypical products. However, 

if an individual manufacturer had more than one atypical product 

applicable to a particular group, the Tier 1 cost for those 

products was assigned to the manufacturer only once. This analysis 

also assumes that these manufacturers will not purchase backup 

vehicles/engines since they are excused from Tier 2. 

Table 4-5 presents estimated compliance costs to manufacturers 

qualifying for special provisions for their atypical products. In 

sum, approximately $114,000 will be spent by a manufacturer (with 

sales less than $10 million) of an atypical product in the gasoline 

fuel family, while manufacturers (with sales less than $10 million) 

76 
P.94 

of atypical diesel products are projected to incur costs of 

approximately $272,000 for testing their products. Manufacturers 

qualifying for special provisions for their baseline/non-baseline 

products (not shown in the table) will incur costs of $100 for 

registration of their product, and a one-time per manufacturer cost 

of $300 for becoming familiar with the regulations. 

Table 4-6 provides a comparison of compliance costs between 

fuel and additive manufacturers. For the 638 fuel manufacturers 

examined in this analysis, compliance costs range from about $400 

to $1.7 million, with a median compliance cost of $500. Of the 458 

fuel additive manufacturers, costs range from and $400 to $3.7 

million, with a median compliance cost of about $900. 

Approximately 78 percent of all F/FA manufacturers are estimated to 

incur costs below $10,000, and nearly 65 percent below $1,000. 

Furthermore, one percent of the fuel and additive manufacturers 

examined in this analysis will assume costs in excess of one 

million dollars. Compliance costs for fuel and fuel additive 

producers combined range from $400 to about $4 million, with a 

median cost of about $500. A more detailed analysis of the 

financial impacts to small fuel and fuel additive manufacturers is 

provided in the next chapter. 

This analysis has focused on cost impacts to producers of nonleaded, non-relabeled products. As discussed in the data 

collection section of Chapter 2, financial data was not sought for 

77 
companies producing only leaded gasoline products since these 

products will be illegal as of January 1, 1996, and for companies 

registering only relabeled products since only basic registration 

data will be required for these products. However, since the basic 

registration requirements apply to relabelers, they will have 

applicable to them costs of $300 (a one-time per manufacturer cost) 

for activities associated with reviewing the regulations, and $100 

for submittal of basic registration data for each product. These 

costs apply to 327 relabelers and 638 products. Accordingly, a 

total cost of $161,900, applicable to relabelers, is included in 

the total costs to the industry, discussed below. 

B. Industry Coat Impacts 

Summing the costs across all manufacturers yields a total cost 

impact to the fuel/fuel additive industry of approximately 66 

million dollars. Averaging the industry costs over three years 

brings the annual costs to approximately $22 million, well under 

the $100 million limit that contributes to defining a "significant 

regulatory action". The three year average is relevant because 

manufacturers will be allowed three years for compliance for their 

fuels/additives registered before promulgation of the final rule. 

Annual costs may in fact be less if the compliance costs are 

financed over more than three years. 

IV. Limitations of the Analysis 

78 
In determining costs to each group, judgements were made 

concerning the availability of existing data which could mitigate 

the program's testing requirements. It is possible that more or 

less adequate existing test data may be available than was assumed 

in this analysis for all categories, and the estimated costs would 

be lower or higher as a result. 

When per-product costs were calculated for manufacturers not 

qualifying for special provisions, EPA assumed that compliance 

costs would be divided equally among the number of products. 

However, manufacturers have the opportunity to apportion costs in 

any manner. For example, costs could be divided among the members 

of the group rather than among the number of products. If costs 

are divided differently than was assumed for this analysis, changes 

would be reflected in costs to each manufacturer, but industry 

costs would remain unchanged. Additionally, for purposes of this 

analysis, EPA assumed that manufacturers qualifying for special 

small business provisions for their atypical products (i.e., those 

with sales less than $10 million) would not have the resources to 

group with other manufacturers to share costs. If these 

manufacturers are capable of grouping and can share costs with 

other manufacturers, the costs in this analysis are overestimated 

both for the individual manufacturers involved and for the industry 

as a whole. 

79 
The per-product costs also depend on the number of products 

expected to be contained in each group. However, the number of 

products assigned to the groups for this analysis may be subject to 

error for a variety of reasons. First, producers are not required 

to notify EPA if manufacturing of a product has ceased permanently, 

and thus EPA's registration database may contain F/FAs which no 

longer exist. For this reason, it is possible that the number of 

products in any group is overestimated, thus underestimating the 

per-product costs. Second, the analysis is based on products 

registered with EPA prior to December 1992. Since that time, 

additional fuel/fuel additive products have been registered with 

EPA. In this instance, the number of products actually belonging 

to a group may be underestimated, thus overestimating the perproduct costs for that group. Third, grouping assignments for this 

analysis were based on existing registration data submitted by 

manufacturers concerning the chemical composition of their fuels 

and additives. To the extent that this information may be 

inaccurate or out-of-date, EPA's assumptions as to appropriate 

group assignments may be erroneous. Thus, the actual number of 

products per group and even the number of groups per category may 

be somewhat different from those assumed here. Finally, 

participation in the grouping system is voluntary, and 

manufacturers may choose to define their own subgroups or even work 

independently rather than share costs among all potential 

manufacturers in the group. As a result, the number of 

participating manufacturers, and their respective products, may be 

80 
less for any group. If so, the number of products by which the 

costs were divided may be overestimated, thus underestimating 

manufacturer and industry costs. 

V. Conclusions 

The effects of the regulation on fuel and fuel additive 

producers appear to be relatively small. In most cases, the 

compliance costs will be less than $10,000 per manufacturer, and 

only one percent of producers are expected to incur costs in excess 

of one million dollars. 

The results of this analysis indicate the fuel/fuel additive 

registration regulation will lead to total costs of about $66 

million. With industry compliance costs averaged over three years, 

the annual cost impact to the industry is estimated at $22 million. 

EPA has no reason to believe the economy, productivity, 

competition, employment, environment, public health or safety, or 

governments or communities will be adversely affected as a result 

of this regulation. The Regulatory Flexibility Analysis (RFA) in 

Chapter 5, lends support to expectation of only minimal economic 

impacts from the costs imposed by this regulation. The RFA, while 

primarily concerned with costs imposed on smaller entities, also 

provides insight as to overall economic impacts on the industry as 

a whole. The impact to most companies is expected to be relatively 

81 
P.99 

small so as not to cause significant adverse effects. In 

conclusion, the fuel and fuel additive registration regulation will 

not have significant adverse effects on the industry, nor will it 

result in an economic impact of $100 million or more annually. 

3,4 

82 
P.1 

Table 4-1: Estimated Groups Per Fuel/Fuel Additive Category 

F/FA Category 

Baseline1 

Non-Baseline1'

2 

Atypical3 

Fuel Family 

Gasoline 

1 Group 

307 Manufacturers 

1,58 6 Products 

9 Groups 

120 Manufacturers 

47 6 Products 

5 6 Groups 

14 6 Manufacturers 

293 Products 

Diesel 

1 Group 

87 Manufacturers 

496 Products 

2 Groups 

1 Manufacturer 

2 Products 

41 Groups 

112 Manufacturers 

213 Products 

'Excludes daca for manufacturers who, under small business provisions of this 

ruie, are exempted from test requirements for their baseline and non-baseline 

products (i.e., excludes manufacturers < $50 million in sales). 

^Non-baseline products can fall into more than one group depending upon the number 

of oxygen compounds they contain. Thus, they are counted multiple times in the 

table depending upon the number of groups they fall into. 

'Includes data for manufacturers who are exempted from a portion of the test: 

requirements for these products under the small business provisions of this ruie 

(i.e., includes manufacturers < $10 million in sales). 
( 

Table 4-2: Assumed Combustion Emission Test Requirements Per Category 

Family/ 

Category 

Tier 1 Requirements 

Lit. 

Search 

Charact. 

of 

Catalyzed 

Emissions 

Charact. 

of NonCatalyzed 

Emissions 

Tier 2 Requirements 

90-day 

Inhalation 

Study 

Ames 

Assay 

Micronucl. 

Assay 

SCE 

Gasoline 

Category 

Baseline 

Non 

Baseline 

Atypical 

X 

X 

X 

X

1 

X

1 

X 

X

x 

X 

X 

X 

X 

X 

X 

X 

X 

X 

X 

X 

X 

X 

X 

Diesel 

Category 

Baseline 

Non 

Baseline 

Atypical 

X 

X 

X 

N/A 

N/A 

N/A 

X* 

X 

X 

X 

X 

X 

X 

X 

X 

X 

X 

X 

Only PAH speciation ana measurement of total NPAH assumed to be necessary. 

Only Hydrocarbon speciation assumed to be necessary. 

Fertility 

Screen 

X 

X 

X 

X 

X 

X 

Neurotox. 

Screen 

X 

X 

X 

X 

X 

X 
Table 4-3: Assumed Evaporative Emission Test Requirements Per Category 

Family/ 

Category 

Tier 1 

Requirements 

Lit. 

Search 

Charact. 

of Evap. 

Emissions 

Tier 2 

Requirements 

90-day 

Inhalation 

Study 

Ames 

Assay 

Micronucl. 

Assay 

SCE Fertility 

Screen 

Neurotox. 

Screen 

Gasoline 

Category 

Baseline 

Non 

Baseline 

Atypical 

X 

X 

X 

X 

X 

X 

X 

X 

X 

X 

X 

X 

X 

X 

X 

X 

X 

Diesel 

Category 

Baseline 

Non 

Baseline 

Atypical 

N/A 

N/A 

N/A 

N/A 

N/A 

N/A 

N/A 

N/A 

N/A 

N/A 

N/A 

N/A 

N/A 

N/A 

N/A 

N/A 

N/A 

N/A 

N/A 

N/A 

N/A 

N/A 

N/A 

N/A 

CO 
Table 4—4: Estimated Compliance Costs Per Group* 

Tier 1: 

Literature Search 

Acquisition 

Mileage Accumulation 

Combustion Gen./Charact 

Evaporative Gen./Charact 

Tier 2: 

Combustion Generation 

Ames Sampling 

Evaporative Generation 

Biological Testing 

Administrative Costs 

TOTAL (Rounded): 

Gasoline Fuel Family 

Baseline 

$21,000 

30,000 

6,400 

25,850 

6,275 

71,500 

500 

58,500 

550,800** 

26,335 

$797,000 

Non-Baseline 

$7,000 

30,000 

6,400 

35,750 

6,775 

71,500 

500 

58,500 

550,800** 

26,335 

$794,000 

Atypical 

$7,000 

30,000 

48,000 

58,550 

0 

71,500 

500 

0 

280,100 

26,335 

$522,000 

Diesel Fuel Family 

Baseline 

$21,000 

37,200 

27,500 

13,000 

N/A 

58,500 

0 

N/A 

260,600 

26,335 

$444,000 

Non-Baseline 

$7,000 

37,200 

27,500 

34,700 

N/A 

58,500 

800 

N/A 

280,100 

26,335 

$472,000 

Atypical 

$7,000 

18,600 

191,400 

45,400 

N/A 

58,500 

800 

N/A 

280,100 

26,335 

$628,000 

*Costs in this tabl e are applicabl e t o manufacturers not qualifying for specia l provisions. 

**Conducted on both combustion and evaporative emissions. 
P.5 

Table 4-5: Estimated Compliance Costs for 

Small* Atypical Manufacturers 

Tier 1: 

Literature Search 

Acquisition 

Mileage Accumulation 

Combustion Gen./Char. 

Evaporative Gen./Char. 

Tier 2 

Administrative Costs 

TOTAL (Rounded): 

Gasoline 

Fuel Family 

$7,000 

15,000 

24,000 

58,550 

0 

Exempt 

9,450 

$114,000 

Diesel 

Fuel Family 

$7,000 

18,600 

191,400 

45,400 

N/A 

Exempt 

9,450 

$272,000 

*Those manufacturers with sales under $10 million. 
Table 4-6: Summary of Compliance Costs* 

Number of Companies 

Range of Compliance Costs: 

Minimum 

Median 

Maximum 

Percentage Less than $1,000 

Percentage Greater than $10,000 

Percentage Greater than $1 Million 

Fuel 

Manufacturers 

458 

$400 

$500 

$1,673,000 

73% 

16% 

< 1% 

Additive 

Manu facturers 

638 

$400 

$915 

$3,717,000 

53% 

31% 

2% 

Total 

Manufacturers 

1,076** 

$400 

$500 

$3,717,000 

65% 

2 2% 

1% 

*Relabelers, and companies registering only leaded products, are excluded. 

**The total number of unique companies included in this analysis is 1,076. This includes 438 

additive manufacturers, 618 fuel manufacturers, and 20 manufacturers that produce both fuels 

and additives. 
P.7 

DRAFT 

Chapter 5 

Regulatory Flexibility Analysis 

I. Introduction 

This chapter presents the results of a regulatory flexibility 

analysis of the testing requirements of the F/FA registration 

regulations. The results are based on a small business impact 

analysis conducted by ICF Incorporated under contract with EPA22. 

The analysis had four main objectives: 1) to compare the F/FA 

program's small business definition to the Small Business 

Administration's (SBA) definitions of small for the affected 

industries, 2) to determine if the registration program would 

impact small businesses significantly more than large businesses, 

3) to estimate the magnitude of small business impacts by 

assessing if compliance costs would be likely to push small 

businesses into financial distress or even closure, and 4) to 

quantify the extent to which the small business provisions reduce 

the program's burden for manufacturers of atypical products. An 

important point to bear in mind is that the analysis assumes no 

passthrough of costs in price increases and thus can be 

characterized as depicting "worst case" impacts. Since the time of 

the ICF analysis, some underlying assumptions used to project 

"See footnote 4. 

83 
P.8 

manufacturer cost data were revised. The discussion and impact 

estimates presented in this chapter reflect the revised cost 

estimates (which are presented in this document). For this reason, 

the actual data presented in this chapter does not correspond 

directly with the results of the ICF analysis. EPA used ICF's 

methodology discussed below, along with revised cost estimates to 

determine small business impacts for this regulation. 

II. Requirements of the Regulatory Flexibility Act 

EPA is required under the Regulatory Flexibility Act (RFA) to 

determine whether the requirements of the regulation will cause a 

significant impact on a substantial number of small entities. EPA 

has established guidelines setting standards to be used in 

evaluating impacts on small businesses. The guidelines specify 

that size definitions set by the SBA should be used as the initial 

determination of a "small entity," but that EPA may use an 

alternative definition if it better captures the point at which 

entities are adversely affected because of their size. The EPA 

guidelines also provide guidance on setting the standards to be 

used for evaluating impacts on small businesses. Four criteria are 

established for determining whether impacts will be significant: 

1) Annual compliance costs increase total costs of production 

for small businesses by more than five percent. 

84 
P.9 

2) Compliance costs as a percentage of sales for small 

businesses are at least ten percent higher than compliance 

costs as a percentage of sales for large businesses. 

3) Capital costs of compliance represent a significant 

portion of capital available to small businesses. 

4) The requirements of the regulation are likely to result in 

closures of small businesses. 

According to the guidelines, there is a significant impact on 

small entities whenever any of the above criteria are met. The 

first criterion was not applied in this analysis because production 

costs of the F/FA products are unknown. Impacts of the regulation 

on small businesses were determined based on the remaining 

criteria. The methodology used to conduct the small business 

impact analysis is presented below, followed by a discussion of the 

results of the analysis. Assumptions and limitations of the 

analysis are discussed. 

III. Methodology 

A. Data Sources 

EPA provided ICF with the majority of the data needed to 

conduct the impact analysis. Provided for each manufacturer was 

85 
P.10 

manufacturer ID and product information contained on the F/FA 

registration database, SIC code, number of employees, 1993 annual 

sales data, and manufacturer compliance cost data estimated by EPA. 

Using regression equations developed for the small business impact 

analysis conducted at the time of the proposal23, ICF then projected 

net income and asset information for each registered company based 

on the 1993 sales data. This additional information was necessary 

for determining compliance cost impacts using return on assets 

(ROA) (net income/assets) as an indicator of the financial health 

of a company. The regression equations, which related net income 

to sales and assets to sales (see the ICF report), were determined 

to still be valid for this analysis since the industry has not 

changed dramatically from the time of the first analysis.34 

B. Adjustments to the Data 

A review of the F/FA registration database revealed that a 

number of companies are listed more than once for varying reasons: 

they manufacture both fuels and additives, they have multiple fuel 

or additive identification numbers, or they have 

affiliates/subsidiaries for which similar financial data was 

provided. To enable the program's impacts to be appropriately 

estimated, such related companies were considered to be single 

entities, and the program's impacts were estimated based on the sum 

"See footnote 13. 

24ICF verified this by comparing financial statistics for 

relevant SIC codes in the 1990 and 1992 Annual Statement Studies 

by Robert Morris Associates. 

86 
P.11 

\ 

of their respective compliance costs. 

As a result of merging certain manufacturers' data in this 

manner, the total number of unique companies on which this small 

business impact analysis is based is 1,076. This includes 438 

additive manufacturers, 618 fuel manufacturers, and 20 

manufacturers that produce both additives and fuels. Producers of 

both fuel and additive products are included in both the fuel 

manufacturer analysis and the additive manufacturer analysis. 

C. Definition of Small Manufacturer 

The final rule defines a small business for this program as 

any motor vehicle fuel or fuel additive manufacturer with total 

annual sales of less than $50 million (see Chapter 1 for further 

discussion on the small business definition for this program). The 

ICF analysis compared companies classified as small under the F/FA 

program definition to those classified as small by the SBA. The 

next section provides a characterization of small and large fuel 

and additive manufacturers, according to each of the following 

definitions: 

1) F/FA program small business definition, in which a small 

business is defined as any fuel or additive manufacturer with 

total annual sales less than $50 million. 

2) SBA's definitions, which are based on sales or number of 

87 
employees, by SIC code. The SBA definitions are presented in 

Exhibit 5-1. SBA regulations specify that for all industries 

for which no SIC code information is specifically listed, the 

size standard to be used is $3.5 million in sales. This 

standard was used for approximately 24 companies. 

P.12 

I 

IV. Characterisation of Small and Large Manufacturers 

EPA 

Deflnlttoii 

SBA 

Definition 

AtfwtlW 

•MMlfMlUfWS 

S 

s 

L 

L 

S 

s 

PwM 

L 

L 

EPA 

Definition 

SBA 

Definition 

Figure 5-1: Diagram of 8 profiles 

Eight financial 

profiles of affected 

companies were developed 

to facilitate comparison 

of small and large 

companies within each of 

the industries (see Figure 

5-1) . These profiles provide summary data for characteristics such 

as number of employees, sales, assets, net income and return on 

assets for fuel and additive manufacturers using both the F/FA 

program small business definition and the SBA definitions. To 

clearly illustrate the differences between small and large 

manufacturers, statistics on the minimum, maximum, average, and 

quartile values are presented for each data characteristic. The 

minimum and maximum values provide a range of the dispersion of 

values in each set. The average provides a simple (non-weighted) 

average value. Quartiles are a useful measure of distribution of 

88 
data sets that are highly skewed, or those in which other measures 

(e.g., average) would be warped by extreme values. The profiles, 

provided in Exhibits 5-2 through 5-5, were discussed in Chapter 2 

in regard to the F/FA small business definition, and are shown 

again here for comparison purposes. A summary of the profiles is 

provided below for each industry. 

P.13 

1 

A. Characteristics of Additive Manufacturers 

Both the F/FA program and SBA definitions 

classify approximately 65 percent of the 458 

additive manufacturers as small. The F/FA 

program definition classifies 295 companies as 

small while the SBA definition classifies 300 

companies as small. While the two definitions 

result in nearly the same number of companies 

being classified as small, the definitions do Figure 5-2: Number of 

additive companies 

not encompass the same companies (i.e., F/FA classified by EPA and 

SBA definitions as 

small. 

small additive manufacturers are not just a 

subset of SBA small additive manufacturers — see Figure 5-2). This 

results in slight differences in the impact on small companies 

depending upon the definition used. 

A comparison of the F/FA and SBA profiles of small additive 

manufacturers reveals that the F/FA program definition does a 

better job of grouping companies with similar sales and employment 

characteristics. This is because the F/FA program small business 

89 
P.14 

definition is based on sales whereas SBA definitions are primarily 

based on number of employees, regardless of sales. As a result, 

SBA definitions are apt to classify relatively large companies as 

small. For example, a company with $20 billion in sales and 1,500 

employees is considered *small" by the SBA definition. This level 

of sales, however, is much higher than the sales of some of the 

companies classified as large under either definition. 

For both the F/FA Program and SBA small business definitions, 

the profiles show that large additive companies are considerably 

larger than small additive companies. Under both definitions, the 

median small additive company has fewer than 20 employees, under $5 

million in sales, and an ROA of nearly 5 percent. In comparison, 

the median large additive manufacturer has about 3,600 employees, 

nearly $100 million in sales, and an ROA greater than 6 percent. 

Median sales, assets, and net income are approximately 200, 400, 

and 500 times higher for large than for small companies, 

respectively. Thus, to have the registration regulation impact 

small and large additive companies similarly, small company 

compliance costs must be on the order of 200 to 400 times less than 

large company costs. In addition, large additive manufacturers 

tend to have higher ROAs than small additive manufacturers. By 

either definition of small, the median small company ROA is 4.9 

percent while the median large company ROA is 6 percent. Thus, 

small additive companies tend to be financially less robust than 

large additive companies and, therefore, will have relatively less 

90 
capital available to them to sustain financial shocks 

B. Characteristics of Fuel Manufacturers 

There are 638 fuel manufacturers included 

in this analysis. As shown in Exhibits 5-4 and 

5-5, the F/FA program and SBA definitions 

result in very different numbers of fuel 

manufacturers being classified as small. The 

F/FA program definition classifies 465 fuel 

manufacturers (or 73 percent) as small, while 

SBA definitions classify only 381 (or 60 

percent) as small (see Figure 5-3). 

Figure 5-3: Number of 

fuel companies 

classified by EPA and 

SBA definitions as 

small.. 

Similar to the results found for additive 

manufacturers, the F/FA program definition more tightly groups fuel 

manufacturers with similar financial characteristics than do SBA 

definitions. For example, fuel manufacturers classified by the SBA 

as small had sales ranging from $49,000 to $5.5 billion, while F/FA 

small company sales range from $49,000 to approximately $50 

million. Median sales for companies classified by the SBA as large 

are $49 million, $1 million less than the minimum F/FA large 

company sales. 

The profiles show that large fuel companies are considerably 

larger than small fuel companies. The profile of the median small 

91 
P.16 

fuel manufacturer is similar under both definitions: nearly 20 

employees, $9 million in sales, and ROA of nearly 3.6 percent. In 

comparison, statistics on large fuel manufacturers differ 

considerably under the two definitions. Using the F/FA program 

small business definition, the median fuel manufacturer classified 

as large has nearly 450 employees, $269 million in sales, and ROA 

of 4.9 percent. The median large fuel manufacturer under the SBA 

definition has about 200 employees, $49 million in sales, and 4.2 

percent ROA. The magnitude of difference in size between small and 

large fuel companies is much smaller in comparison to the 

difference in size between small and large additive companies. 

Specifically, median sales, assets, and net income of large fuel 

manufacturers are only 30-40 times higher than for small fuel 

manufacturers under the F/FA program definition, and only 5-6 times 

higher under the SBA definition. Thus, impacts would be similar to 

small and large fuel companies under the SBA definition, but to 

have the registration regulations impacts small and large fuel 

companies similarly under the F/FA definition, small company 

compliance costs must be 30-40 times less than large company costs. 

A comparison of ROA's shows that small fuel companies have 

similar ROA profiles under both definitions. According to either 

definition, the median ROA for small fuel manufacturers is 3.6 

percent, and the 75th percentile ROA is 4 percent. F/FA large 

companies, however, have somewhat higher ROAs than SBA large 

companies. This might reflect that, for companies in this 

92 
analysis, ROA tends to increase with size, and F/FA large companies 

tend to have higher sales than SBA large companies. Finally, under 

the F/FA program definition, the fuel manufacturer profiles suggest 

that, based on ROA, small fuel companies tend to be less healthy 

financially than large fuel companies. 

C. General Conclusions 

In sum, a review of the profiles shows that large additive 

manufacturers tend to be bigger in terms of sales and number of 

employees than large fuel manufacturers, whereas small additive 

manufacturers tend to be smaller than small fuel manufacturers. In 

general, additive manufacturers tend to have higher ROAs than fuel 

manufacturers, suggesting that they may be more capable of 

withstanding the impacts of compliance costs. 

The ICF study supports the adoption of the F/FA program's 

definitions of small for this program. In comparison to the SBA, 

the F/FA program definition classifies a larger number of 

manufacturers as small, and more closely groups companies with 

similar financial characteristics. Adoption of SBA's small 

business definitions would result in fewer number of companies 

qualifying for special small business provisions and, consequently, 

larger costs per firm. Consequently, the remainder of this 

analysis focuses on impacts to small companies using the F/FA small 

business definition. 

93 
P.18 

V. Estimation of Tmp-rrh- on Small Manufacturers 

In accordance with EPA guidance, the following three methods 

were used to determine if small businesses are disproportionately 

impacted by the F/FA Registration Program: 

1) The ratio of compliance cost to sales was compared for 

small and large companies to determine if the ratio was at 

least ten percent higher for small companies. 

2) The impact of compliance costs on a company's ROA was 

calculated to see if compliance costs represent a significant 

portion of capital available to small businesses. 

3) The change in a company's ROA directly attributable to the 

F/FA registration program was examined to determine the level 

of financial distress caused by this change. 

The results of the analysis are discussed below. Since 

testing requirements will impose one-time costs that, for purposes 

of this analysis, are assumed to be incurred over a three year 

period, the compliance cost used is the total compliance cost 

divided by three. 

A. Comparing the Ratio of Compliance Cost to Sales 

Exhibit 5-6 provides a summary of compliance costs for small 

94 
P.19 

and large companies within each of the industries. Among all 

additive manufacturers, compliance costs are estimated to range 

from $400 to nearly $4 million, with the median additive 

manufacturer expected to incur costs of about $900. Thirty-one 

percent of registered additive manufacturers are estimated to incur 

costs above $10,000. In comparison, fuel manufacturer costs range 

from $400 to about $1.7 million, with the median fuel manufacturer 

having compliance costs of $500, and 16 percent incurring costs 

above $10,000. 

Exhibit 5-7 shows compliance costs as a percent of sales for 

small and large companies and also shows the ratio of these results 

between small and large companies. A high "small/large" ratio 

indicates that the small company is affected significantly more 

than the comparable large company. A ratio of "1" indicates that 

compliance costs as a percent of sales is the same for small and 

large companies. As large companies experience a relatively 

greater compliance cost burden, the ratios in the table would be 

less than "1", and would in fact approach "0". The minimum/maximum 

values in the table illustrate the extent to which the cost-tosales ratio of the most lightly/heavily impacted small company 

compares to the cost-to-sales ratio of the most lightly/heavily 

impacted large company. 

For additive manufacturers, the analysis reveals that 

compliance costs tend to be substantially higher in comparison to 

95 
P.20 

sales for small companies than for large companies. The typical 

small additive company's cost-to-sales ratio is about 31 times 

greater than for a typical large manufacturer. In comparison, 

typical small and large fuel manufacturers have a 1:1 ratio meaning 

that, relative to sales, small companies face compliance costs that 

are the same as large companies. 

In sum, for both fuel and additive manufacturers, some small 

companies have compliance cost to sales ratios at least ten percent 

higher than the corresponding ratio for the respective median large 

companies. Nevertheless, it is important to note that compliance 

cost to sales ratios tend to be very small for this regulation. As 

a result, a ten percent difference between small and large company 

ratios has little statistical significance. A company may pay a 

relatively high compliance cost compared with another firm in the 

industry (e.g., $5,000 versus $400) without having much impact on 

its financial health. In this case, although compliance cost to 

sales ratios may be a useful tool in comparing impacts of small and 

large manufacturers, a comparison of the magnitude of changes in 

ROA is a more direct indicator of the impacts of compliance costs 

on a company's financial health. The discussion in the next 

section focuses on using change in ROA as a measure of compliance 

cost impacts. 

B. Analysis of Change in ROA 

ROA is a general indicator of financial health and is 

96 
P.21 

frequently used for determining the borrowing potential of a 

company and for comparing the financial health of companies within 

an industry. Analysis of the change in a company's ROA can 

indicate whether compliance costs represent a significant portion 

of the capital available to a small business and, whether 

compliance costs are likely to result in financial hardship 

including, ultimately, closure of that company. 

Standard ROA thresholds, were used to measure the financial 

health of each registered 

company (see Figure 5-4). 

In general, a company with 

an ROA less than 2.5 percent 

, . . , . . . Figure 5-4: Measure of financial health and 

is already considered to be distress. 

in financial distress. 

Pollution control costs could hasten, but are not the cause of, 

closure. At this level, a company may experience difficulties 

obtaining additional loans or other capital. An ROA less than -4 

percent indicates that a company is in severe financial distress. 

Finally, an ROA less than -30 percent generally indicates closure. 

In this analysis, each company's ROA after compliance costs 

.(calculated by subtracting one-third of compliance costs from 

annual net income) was compared to the company's initial ROA to 

identify companies that were likely to be pushed over one or more 

of the three ROA thresholds. Companies having an ROA of less than 

97 
P.22 

2.5 percent before compliance costs were not identified as a 

company pushed into financial distress as result of the regulation. 

As shown in Exhibit 5-8, compliance costs of the F/FA 

Registration Program could potentially cause 45 additive 

manufacturers (15 percent of small) and 25 fuel manufacturers (5 

percent of small) to go into some level of financial distress.25 

Two companies produce both fuels and additives and both are 

included in both the additive and fuel manufacturer analysis in the 

table. Therefore, there are sixty-eight unique F/FA companies 

potentially pushed into some level of financial distress, all of 

which are classified as small (i.e., have sales < $50 million). Of 

companies potentially pushed into financial distress, over half 

(about 59 percent) would be pushed into the first level of distress 

(i.e., -4%_ROA<2.5%) and less than one-fourth (19 percent) would 

potentially be pushed into closure. Characteristics particular to 

companies pushed into closure are examined in the next section. It 

is important to note, however, that these companies have several 

courses of action available to them, other than closure, in 

response to the impacts of the regulation. These options are 

discussed in section VII of this chapter. 

C. Examination of Manufacturers Potentially Pushed into 

Closure 

"Companies that produce both fuels and additives are listed 

under both of the headings in the table. 

98 
Twelve manufacturers (nine additive, one fuel, and two that 

produce both) appear to be in danger of closure as a result of 

compliance costs of the F/FA Registration Program. All of the 

companies are classified as small under this program. Exhibit 5-9 

profiles these manufacturers according to number of employees, 

annual sales, compliance costs, and return on assets (before and 

after compliance costs). Analysis of these manufacturers reveals 

that all are financially healthy (i.e., have ROAs greater than 

2.5%) before compliance costs. The average ROA of the fourteen 

companies is 4.21 percent before compliance costs, and -134.25 

percent after. These companies generally have fewer than five 

employees and less than $500,000 in sales. Annual compliance costs 

are greater than annual sales for about half of the companies. The 

average compliance cost of the fourteen companies is $273,400, 

slightly more than the average annual sales of $272,593. 

An examination of the number and types of products produced by 

these fourteen companies reveals that more than half produce three 

or fewer products and all produce at least one atypical product. 

Nine companies produce more atypical than baseline products (six of 

which produce only atypical products), and three produce fewer 

atypical than baseline products. Companies with only atypical 

products tend to have the lowest adjusted ROA26 (i.e., most likely 

to close) and companies with the fewest atypical products tend to 

have the highest adjusted ROA, suggesting that it is their product 

26ROA after compliance costs. 

99 
mix rather than their size that causes them to be more heavily 

impacted. It should be noted that these atypical products are only 

registered due to a "grandfathering" provision under which they are 

not required to obtain a waiver for their "dissimilar" product. 

Ordinarily, products which are not "substantially similar" to 

designated certification fuels must show that the product does not 

adversely affect the ability of a motor vehicle's emission control 

system to achieve compliance with emission standards during the 

useful life of the vehicle. Since these products were not required 

to obtain such a waiver, little is known about their health, 

welfare, or emission control system effects. If their 

manufacturer's attempted to register such products today, the 

registrations would be denied. 

VI. Assessing the Effectiveness of Small Business Provisions 

Nearly half of all atypical product manufacturers' are 

considered small for this program (i.e., have sales under $50 

million) and nearly one-third qualify for special provisions for 

their atypical products (i.e., have sales under $10 million). The 

estimated impacts discussed above were based on compliance costs 

which took into account the special provisions provided for 

qualifying manufacturers of atypical products. To assess the 

effectiveness of these provisions, this analysis compares the 

financial impacts which the regulations would have on small 

100 
P.25 

atypical producers in the absence of these special provisions to 

the impacts identified above. The results show that the special 

provisions for manufacturers of atypical products lower compliance 

costs for 60 small atypical companies by a total of $20,458,000 (as 

compared with costs that would otherwise occur). Without these 

provisions, an additional 15 otherwise healthy companies would 

potentially be pushed into closure. 

VTI. Mitigating cirTMTM»-»»nces that Reduce Adverse Impacts 

The foregoing analysis of financial effects on companies 

projected to experience significant reductions in their rates of 

return as a result of their compliance costs represents a "worst 

case" picture. Mitigating circumstances exist to reduce the 

impacts of the regulations. 

First, this analysis has assumed no changes in prices or 

sales. In many cases, however, regulatory costs can be partially 

or fully passed on to customers. For example, due to the high 

dependence on motor fuel in the U.S. and the limited number of 

substitutes, the motor fuel industry has a relatively low price 

elasticity of demand (roughly -0.26 in the short run rising to -

0.86 in the long run).27 This suggests that companies can increase 

""Analyzing Gasoline Demands Elasticities (A Survey)", 

Carol Dahl & Thomas Sterner, Energy Economics, July 1991. 

101 
prices to recover a large portion of the costs related to the 

registration program without appreciably losing sales. For fuel 

additives, there also appears to be a good deal of flexibility 

regarding the passthrough of costs to prices. The segments of the 

fuel additive industry appear to be oligopolistic in nature, so 

smaller manufacturers can generally increase prices only to the 

level set by the large manufacturers. However, at least a 

percentage of registration costs are recoverable by smaller firms, 

thus reducing the impacts noted in the preceding sections. 

Moreover, the compliance costs represent an increase in the fixed 

costs of production, rather than in variable costs. Thus, the 

compliance costs per product unit drop with every additional unit 

sold, as the fixed compliance costs are spread over more and more 

units. This means that competing manufacturers that are able to 

maintain sales levels of their products will greatly reduce their 

unit testing costs. 

Second, the requirement that any new manufacturers entering 

the market compensate the existing manufacturers for their rightful 

share of the group testing costs confers a certain degree of 

protection on the existing manufacturers in that any potential new 

competitors would face similar costs. 

In addition, to the extent that a product (particularly fuel 

additives) has unusual characteristics, its manufacturer often has 

a market "niche", resulting in a range over which it can raise 

102 
prices and not lose sales. This is an important consideration, 

given that many of the largest compliance costs are faced by firms 

that are paying a substantial percentage of the total testing costs 

of that testing group because of their unique product mix. Thus, 

their unusual qualities can allow a price increase that offsets (or 

helps to offset) the impact of the testing costs. 

Another response open to producers facing substantial testing 

costs is to drop the product or products with the greatest costs 

and/or smallest profit potential. This response is likely to have 

some residual impacts on profitability. This residual impact, 

however, is likely to be relatively small, as the firm is first 

dropping those products with relatively high costs and small 

sales/profit potential. Ultimately this response would reduce the 

number of competing products and make it easier for remaining firms 

to increase market share. 

Finally, a manufacturer faced with a high compliance cost 

because the product has unusual characteristics (i.e., the product 

is atypical) has the option of reformulating the product to a 

"baseline" standard, which would enable the product to be grouped 

with other similar products, reducing compliance costs to more 

nominal amounts. 

VIII.Limitations of the Analysis 

103 
Several limitations to this small business impact analysis are 

identified. First, of necessity, it assesses the impact of the 

start-up program only. It accounts neither for the impacts of 

testing future unique products nor how testing costs from the 

start-up program will be allocated among additional manufacturers 

that introduce products belonging to existing product groups. 

Second, it assumes that a company is willing to use profits and 

resources from the entire company to cover compliance costs of this 

regulation. How realistic this assumption is depends, in part, on 

how integral fuel and additive products are to the core business of 

the company. 

IX. Conclusions 

This small business impact analysis shows that the F/FA 

Registration Program will not have significant financial impacts on 

the majority of small and large companies in the regulated 

community. However, the analysis shows that, unless costs can be 

passed through in price increases, 10 percent of all registered 

additive manufacturers (15 percent of small additive manufacturers) 

and 3 percent of all registered fuel manufacturers (4 percent of 

small fuel manufacturers) may go into some level of financial 

distress as a result of the regulations. In total, about 6 percent 

of all fuel and additive manufacturers combined may be pushed into 

some level of financial distress and 1.2 percent are potentially in 

danger of closure. A review of the most heavily impacted companies 

104 
P.29 

suggests that the reason for their difficulty in withstanding the 

financial impacts of this regulation is due in part to their small 

size (e.g., nearly all have fewer than 5 employees and sales below 

$500,000, upon which nearly any compliance cost impact could be 

significant) and the nature of the products they produce. Some of 

these companies, however, may have market niches that readily 

permit product prices to increase to cover compliance costs, or 

they may be able to cease production of a relatively high-cost 

product and thus avoid costs that would cause undue financial 

hardship. 

However, using EPA's criteria cited at the beginning of this 

chapter, the analysis indicates that small businesses, particularly 

small additive manufacturers, are disproportionately impacted by 

the program. The ratio of compliance cost to sales is at least ten 

percent greater for the majority of small additive companies when 

compared to large additive companies. Conversely, small fuel 

manufacturers experience impacts similar to those of large 

manufacturers. 

Finally, the analysis supports EPA's definition of small 

business for this regulation. It also shows that EPA's special 

provision for small atypical manufacturers prevents an additional 

15 companies from potentially being pushed into closure, and saves 

the affected companies roughly 20 million dollars. 

105 
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P.31 

Exhibit 5-2 

Profiles of Additive Manufacturers 

F/FA Program Definition 

Summary Statistics 

Small 

Large 

TOTAL 

Number 

295 

163 

458 

Percent 

64% 

36% 

100% 

Employeeo 

Selee 

Ain u 

Net Income 

ROA 

Employees 

Said 

A M U 

Net Income 

ROA 

Minimi __ 

0 

$30,000 

$12,063 

$492 

4.08* 

10 

$30,000,000 

$23,436,383 

$1377.379 

3.42* 

Lower Qnartlle 

3 

$900,000 

$296,688 

$13,621 

4.3 9 * 

722 

$176,414,566 

$102,843,133 

$3,863,436 

3.70* 

Mediae Upper Qurtlle 

Small Addttrre Meaefectarera 

16 

$4,282,993 

$1,671,042 

$81,826 

4.90* 

Large Addltlre M 

3,348 

$972,793,133 

$681,922,814 

$41,710,686 

6.12* 

32 

$1X116.183 

$3,288,949 

$270,264 

3.11 * 

•nnfaetarera 

14^33 

$3,403,300,000 

$2,733,103,631 

$173,983,073 

6.44* 

Maxima l 

1.110 

$49,000,000 

$24,873,320 

$1343,970 

3.41 * 

332.700 

$113,068,000,000 

$133,063393,620 

$10,047,009,081 

7.44* 

Arenae 

31 

$9,688,738 

$4,476,367 

$234,290 

4.86* 

14,764 

$4,974,436,420 

$4,903,814,561 

$344352,611 

6.12* 
Exhibit 5-3 

Profiles of Additive Manufacturers 

SBA Definition 

Summary Statistics 

Small 

Large 

TOTAL 

Number 

300 

158 

458 

Percent | 

65% 1 

35% | 

100% | 

Employees 

Salsa 

Assets 

Net Income 

ROA 

Employees 

Sales 

Assets 

Net Income 

ROA 

Mlnlmnm 

0 

$50,000 

$12,063 

$492 

4.08* 

1 

$4,000,000 

$1349.111 

$75,643 

4.88* 

Lower Qaartlle 

5 

$950,000 

$313,005 

$14301 

4.60* 

753 

$139,763300 

$79,430,767 

$4,488,074 

5.65* 

Median Upper QaarUle 

Small AddlUre Maaafactarers 

19 

$4,923,217 

$1,949,926 

$96,029 

4.92* 

Larae AddltlTe M 

3,600 

$999,672,633 

$702,821,792 

$43,036,861 

6.12* 

60 

$19,400,000 

$8,910,136 

$464,178 

5.21 * 

anafactorers 

14300 

$3.403300.000 

$2,733,105,651 

$173,983,075 

644 * 

Mail an a 

1300 

$20,090,000,000 

$19329^78,713 

$1352,458,499 

6.93* 

332.700 

$115,068,000,000 

$133,063393,620 

$10,047,009,081 

7.44* 

Arerefe 

66 

$91,674,729 

$79,016,067 

$3398,108 

4.92* 

15,104 

$4,975,876,702 

$4,889318,193 

$343324,208 

6.03* 
Exhibit 5-4 

Profiles of Fuel Manufacturers 

F/FA Program Definition 

Summary Statistics 

P.33 

Small 

Large 

TOTAL 

Number 

465 

173 

638 

Percent 

73% 

27% 

100% 

Minimum Lower QaartlU Medlaa Upper QaartUe Maxima* Average 

Small Fuel Maaafactarers 

Employees 

Sales 

Assets 

Net Income 

ROA 

0 

$49,000 

$13,164 

$292 

2.21 * 

8 

$3,000,000 

$882,303 

$28344 

3.25* 

22 

$9,000,000 

$2,711,664 

$97,037 

337 * 

51 

$22,000,000 

$6,782,321 

$263,639 

3.90* 

29,437 

$49,665334 

$13337,041 

$630,737 

3.19* 

154 

$14,707,894 

$4335^24 

$178,334 

334 * 

Large fuel Maaafactarers 

Employees 

Sales 

Assets 

Net Income 

ROA 

0 

$50,000,000 

$15,643,983 

$653,621 

4,19* 

213 

$85,917,702 

$27,204,040 

$1,198,321 

4.40% 

443 

$268,822,000 

$87,279,658 

$4,269,960 

4,89* 

3,025 

$1,775,820,000 

$628,866,622 

$36,751,772 

3.85* 

67,300 

$62,359,000,000 

$68309,097.988 

$4,969,802,318 

7.86* 

4,315 

$2,633,133,848 

$1,688.061363 

$116,891,832 

3.16% 
Exhibit S-S 

Profiles of Fuel Manufacturers 

SBA Definition 

Summary Statistics 

Small 

Large 

TOTAL 

Mlnlmam 

Lower 

QnarUla 

Number 

381 

257 

638 

Percent 

60% 

40% 

100% 

Median Upper Qaartlle | Mail am at Average 

Small Fuel Maaafactarere 

Bmployees 

Sales 

Assets 

Net Income 

ROA 

0 

$49,000 

$13,164 

$292 

Z22* 

7 

$2,300,000 

$672,490 

$21,231 

3.17* 

18 

$8,993,332 

$2,710,226 

$97,001 

338* 

45 

$27,236397 

$8,478,544 

$349,400 

4.00* 

1.300 

$3300,000,000 

$13«317,6_7 

$123,243304 

&46ft 

30 

$64,794,328 

$21,395,295 

$1,141,177 

3.62* 

Large Fool Maaafactarers 

Employees 

Sales 

Assets 

Net Income 

ROA 

0 

$200,000 

$55,418 

$1,397 

232 * 

80 

$18,618,750 

$5,700,191 

$218,135 

3.83* 

203 

$49,000,000 

$15,324,291 

$641,030 

4.18* 

1,000 

$451,834,000 

$148,384,468 

$7,614390 

5.13* 

67300 

$62,339,000,000 

$68309,097,988 

$4,969,802,318 

733 * 

3.098 

$1,710,114,270 

$1,108378,749 

$77,021,619 

432 * 
Exhibit 5-6 

Summary of Compliance Costs per Manufacturer 

P.35 

Type of 

Manufacturer 

Minimum 

Additive Manufacturers 

Small 

Large 

Total 

Fuel Manufacturers 

Small 

Large 

Total 

$400 

$400 

$400 

$400 

$400 

$400 

Median 

$500 

$5,029 

$915 

$500 

$10,988 

$500 

Maximum 

$1,207,891 

$3,717^96 

$3,717296 

$500,900 

$1,672,700 

$1,672,700 

% with costs 

> $10,000 

25% 

43% 

31% 

3% 

53% 

16% 
P.36 

Exhibit 5-7 

Comparison of Small and Large Company 

Compliance Cost to Sales Ratios* 

Additive Manofa 

Small 

Large 

Snail/Large 

Fuel Manufactur 

Small 

Large 

Small/Large 

Minimum 

cturers 

0.00027% 

0.000001% 

261 

ers 

0.000268% 

0.000001% 

246 

Lower 

Quartile 

0.00152% 

0.00008% 

19 

0.000740% 

0.000562% 

1 

Medlaa 

0.01213% 

0.00039% 

31 

0.001709% 

0.003216% 

1 

Upper 

Quartile 

0.11905% 

0.00363% 

33 

0.006177% 

0.006169% 

1 

Maximum 

82.5454% 

0.28265% 

292 

64.217948% 

0.320947% 

200 

1 

Three-year average compliance cost to sales; all figures in table are rounded. 

**The maximum 3-year average compliance cost to sales for large companies was 14 times larger than the 

maximum 3-year average compliance cost to sales for small companies. 
P.37 

Exhibit 5-8 

Estimated Impacts on ROA 

Type of 

Manafactarer 

"Plaaadal Dbtreu" 

(•4«.<ROA<2.5%) 

Additive Manufacturers 

Small 22 

Large 0 

Fuel Manufacturers 

Small 26 

Large 0 

"Severe Financial 

Dbtreaa" 

(•3.%*<ROA<-

4 « ) 

11 

0 

4 

0 

"Cloiare" 

(ROA<-39«) 

12** 

0 

3** 

0 

N I B 

pathad 

ear 

Inte 

of coaeanlaa 

•ra i dafree 

«r Jarireu 

45 

0 

25* 

0 

•Eight fuel manufacturers had an ROA of less than 2.5% before compliance costs were 

incorporated, and are thus not included in the number of companies pushed into financial distress. 

**Includes two companies producing both fuels and additives 
P.38 

Exhibit 5-9 

Summary Profile of Manufacturers 

Potentially Pushed into Closure 

Manufacturer's Product 

Mix* 

Total 

1 

1 

6 

1 

4 

4 

1 

3 

3 

7 

18 

3 

Atypical Baseline 

1 0 

1 0 

4 2 

1 0 

4 0 

4 0 

1 0 

2 1 

2 1 

2 5 

3 15 

1 2 

AVERAGE 

4.3 2 2.2 

#of 

Employees 

6 

1 

4 

4 

4 

3 

2 

4 

4 

0 

4 

2 

3 

Annual 

Sales 

$110,000 

$166,096 

$260,000 

$240,000 

$310,000 

$340,000 

$85,000 

$430,000 

$300,000 

$340,000 

$410,000 

$280,000 

$272,593 

Compliance 

Cost 

$272,400 

$272,400 

$500,900 

$272,400 

$386,701 

$386,701 

$114,400 

$272,600 

$228,600 

$229,000 

$230,100 

$114,600 

$273,400 

ROA 

4.21% 

4.29% 

2.58% 

4.35% 

4.40% 

4.41% 

4.17% 

4.46% 

4.39% 

4.41% 

4.45% 

4.38% 

4.21% 

Adjusted 

ROA 

-310.00% 

-194.75% 

-227.84% 

-128.03% 

-137.13% 

-123.34% 

-171.42% 

-64.97% 

-82.37% 

-71.24% 

-57.33% 

^2.57% 

-134.25% 

The first column indicates total number of products, the second cohimn is number of atypical 

noducts, and the third column is number of baseline products. 
DRAFT 

Chapter 6 

Perspective: Summary & Societal Benefits 

This analysis has been based on 1,076 different companies 

registering a total of 4,198 products in the gasoline and diesel 

fuel families. Of these producers, nearly 60 percent are fuel 

manufacturers and about 40 percent are additive manufacturers. The 

majority of their products are in the gasoline fuel family (78 

percent), while about 22 percent are diesel products. 

Manufacturers of leaded gasoline products were excluded from this 

analysis. The estimated costs of compliance with standard 

requirements for these producers range from $400 to $3.7 million, 

with about 78 percent having costs $10,000 or less. Totaling the 

costs to each manufacturer yields an estimated annual cost to 

industry of $22 million for three years. Thus, the regulations are 

not expected to result in a "significant regulatory action", as 

defined under Executive Order 12866. 

The component costs presented in this analysis were generally 

based on the results of a survey of the applicable testing 

industry. These costs were then accumulated for various groups and 

reallocated to individual products and manufacturers based on 

reasonable assumptions and judgements regarding the expected use of 

cost-sharing provisions and the expected availability of existing 

106 
P.40 

chemical and biological test data. The major assumptions on which 

this analysis was based which could have an impact on the projected 

compliance costs include: 1) expected participation in the 

grouping system, 2) the number of groups, 3) the number of products 

expected to be enrolled in each group, 4) the manner in which costs 

are assigned, and 5) the expected availability of existing test 

data. The sensitivity of the costs to these assumptions is 

examined below. 

First, it is possible that some manufacturers may choose not 

to take advantage of grouping opportunities. If one out of every 

10 producers (i.e., 107 producers) chose to conduct tests 

independently rather than participating in group cost-sharing 

provisions, and if each was registering a gasoline baseline product 

(which is estimated to have the highest group compliance cost, 

$797,000), then the total program cost would increase from $22 

million to $51 million annually. It would take at least one out of 

every three such producers to conduct tests independently before 

the annual costs would exceed $100 million. If one producer of 

each group chose to conduct tests independently, the industry cost 

would be about $44 million annually. It would take 3 to 4 

producers of each group conducting tests independently to raise 

industry costs beyond $100 million annually. Hence, even if some 

producers choose not to participate in the grouping system, costs 

are expected to remain below $100 million annually. 

107 
P.41 

Second, the total costs are sensitive to the number of groups 

established for the program. For example, compliance costs would 

be higher if new types of atypical or non-baseline products entered 

the market or if products in families not currently designated for 

registration were introduced. For example, as discussed in Chapter 

3, EPA estimates that standard testing of the representative from 

all of the baseline group (s) of the alternative fuel families would 

add a total of about three million dollars to the costs of the 

program. Furthermore, the current number of groups may be either 

higher or lower than estimated in this analysis. The overall 

effect of an increase in the number of groups would be 

quantitatively similar to the effect of producers choosing to 

conduct tests independently. Conversely, industry costs would be 

lower if the number of groups is less than assumed in this 

analysis. Unlike the effect of the number of groups, however, the 

number of products per se does not necessarily impact total program 

costs. Manufacturers of new products which are in the gasoline or 

diesel fuel families will often be able to rely on previously 

submitted data for registration of their new products. In such 

cases, industry costs would not rise because these manufacturers 

would reimburse manufacturers which have already registered 

products similar in nature to the new product. 

Next, the number of products per group and the method by which 

costs are divided could most certainly affect costs to a given 

manufacturer, but would not increase total costs to the industry. 

108 
P.42 

In fact, industry costs could actually be less because there may be 

fewer products, hence fewer groups, once inactive products are not 

re-registered. Finally, since the assumptions used regarding 

availability of existing test data were conservative assumptions, 

the estimated costs of the program could actually be less. 

This analysis includes only costs associated with Tier 1 and 

Tier 2 testing, averaged over 3 years. However, in the ensuing 

years of the program, some of the registered products are likely to 

be subject to Tier 3 testing. Assuming ten products or groups are 

required to conduct Tier 3 testing (at an estimated cost of $3 

million each) in the three year period following the initial 

compliance period, the total cost would be $30 million, or $10 

million per year. 

The requirements of this program are designed so as not to 

present an unnecessary burden on the regulated industry. The 

three-tiered structure of the testing program provides a means by 

which additional testing is required only if warranted by the 

results of the previous tier, thus keeping testing burden to a 

minimum while satisfying the requirements of the statute. In 

addition, allowances for adequate existing health effects data 

mitigate testing requirements, and the grouping system permits 

costs to be shared among producers and helps to avoid duplication 

of effort. Special provisions are also provided for small 

businesses, marketers of relabeled additives, and manufacturers of 

109 
P.43 

aerosol additives. 

While the program is designed to minimize the burden on those 

required to comply, it also has a number of societal benefits. 

First, it will provide an excellent air toxics inventory on 

pollutants related to the use of motor fuels and fuel additives, 

and will also provide an invaluable source of toxicologic data on 

the emissions of these products. It will also assist EPA in 

evaluating the relative adverse air pollution effects of various 

kinds of fuels and additives and in determining needs for related 

regulatory actions in the future. For instance, information is to 

be submitted to EPA regarding the carcinogenicity of a fuel or 

additive product. On the basis of this or other available 

information, the Administrator may, by regulation, control or 

prohibit the manufacture or sale of toxic fuels or fuel additives 

for use in motor vehicles. Alternatively, manufacturers may 

voluntarily reformulate or withdraw products which are shown to 

have unacceptable health risks. Incidences of cancer or other 

adverse health effects may be mitigated by these events. In 1995, 

the number of cancer incidences caused by motor vehicle pollutants 

is projected to be about 350.28 Currently, each cancer incidence 

is estimated to have an adverse impact to society ranging from $1.6 

""Motor Vehicle-Related Air Toxics Study," U.S. 

Environmental Protection Agency, Office of Mobile1Sources, EPA 

420-R-93-005, April, 1993 available in Air docket A-91-19. 

110 
million to $8.0 million with a mean value of $4.8 million.29 Thus, 

the societal benefits would outweigh the costs associated with the 

program if just 9 to 42 cancer incidences were avoided (or about 14 

cancer incidences when using the mean value of a statistical life 

equal to $4.8 million), or approximately 2 to 12 percent of 

vehicle-related cancer incidences projected to occur in 1995. The 

avoidance of other health effects evaluated under this program will 

provide additional social and financial benefits. These benefits 

are difficult to quantify with any accuracy. Nevertheless, it is 

reasonable to believe that, as a result of actions taken by EPA and 

industry based on information generated by this program, the 

savings associated with the avoidance of cancer and other adverse 

health effects will more than offset the associated program costs. 

""Review of Existing Value of Life Estimates: Valuation 

Document," Memorandum from Bob Unsworth, Jim Neumann, and W. Eric 

Browne, Industrial Economics Incorporated, the Jim DeMocker, 

Office of Policy Analysis and Review, U.S. Environmental 

Protection Agency, November 6, 1992. 

Ill 
P.45 

DRAFT 

Appendix A 
P.46 

i 

Tier 2 Biological Test Cost Data 

The Tier 2 biological test cost estimates are based on a 

modified 90-day subchronic toxicity study which requires a 5-day 

per week repeat inhalation exposure using approximately 340 rats. 

Figure A-l in this appendix provides an overview of this test and 

a general outline of the exposure timing and the sequence of 

events. Specific tests for carcinogenicity, mutagenicity, 

neurotoxicity, and teratogenicity/reproductive effects make use of 

the same rat population. Therefore, cost estimates for most of the 

health effects tests listed in this appendix are incremental to the 

cost of the subchronic inhalation toxicity assay described above. 

Table A-l provides estimates of the costs associated with the 

modified subchronic inhalation toxicity assay. Table A-2 estimates 

the costs associated with a Fertility/Teratology study which runs 

concurrently with the above inhalation assay. Table A-3 estimates 

the costs associated with a modified Salmonella mutagenicity assay 

which is independent of the other assays in this scenario. The 

information presented in these tables was derived from cost 

estimates developed for the Toxic Substances Control Act (TSCA) 

health effect guidelines found in 40 CFR, part 798, and were 

provided by the EPA Office of Pollution Prevention and Toxic 

Substances (OPPTS)1. 

The tables show the number of hours and cost of direct labor with 

facility overhead added, direct cost of supplies, general and 

administrative fee calculation for the tester, and a fee-for-profit 

calculation. These are all components of the estimated final cost 

calculation for the particular health effect test. The cost 

estimates include total estimated hours per worker, hours per task, 

rate of pay per worker (adjusted up 10% from 1990 estimates for 

inflation), and computed coat per worker. Direct costs of testing, 

overtime, supplies, contracted labor, etc., are described in terms 

of units needed to complete the testing, cost per unit, and 

computed cost per item. Analytical chemistry is a best estimate of 

"typical" sample verification and analysis costs. 

Neurotoxicity testing is comprised of the Glial Fibrillary 

Acidic Protein (GFAP) assay and a histopathologic examination of 

nerve fibers in the test animal. The cost estimate for the 

neurohistopathology portion of Neurotoxicity testing is $42,000 and 

is derived from."Neurotoxicity: Identifying and Controlling Poisons 

of the Nervous System. New Developments in Neuroscience." Congress 

of the United States, Office of Technology Assessment, 1990, page 

225 (attached). Teratologic effects are tested under the Fertility 

Assay/Teratology guideline. Carcinogenicity and mutagenicity are 

covered by the Salmonella mutagenicity assay (Table A-3), the 

HJ.S. EPA, OPPTS, "Cost estimates for TSCA Test Guidelines", 

Memorandum from Dan Axelrad to Sheri Dunatchik, June, 1991. 
P.47 . 

1 

Sister Chromatid Exchange (SCE) assay, and the Micronucleus (MN) 

assay. Cost estimates for the GFAP, MN, and SCE assays are 

summarized below: 

no. of test samples 

person-hours/sample 

hourly rate ($US) 

estimated final 

coat ($US) 

GFAP 

40 

2.5 

36 

3600 

MN 

40 

2.0 

36 

2900 

SCE 

40 

5.0 

36 

7200 

J 
Figure A-1. Suggested Timing and Organization of Tier 2 Studies 

Acclimatization 

And Culling 

Exposure 

25 ? + 25 d" 

_: 

$-2 _L 

f 

JL 

Exposure for Subchronic Study 

(General Toxicity and Other Endpoints) 

JL 10 11 1__ 

r 

13 14 

25 9 Exposure for Fertility/Teratology Studies 

(Exposure 

ends at 

Gestation 

Day 15) 

Estrous Cycle 

Analyses 

Mating Termination, 

(w/ above d") (Gestation Day 20) 

Analysis 

5d%5 ¥ 

Perfused for 

neuro, testis, 

lung histology 

20d"+20 ¥ 

Fixed for 

general 

histology 5d"+5 ? 

Tissues for 

GFAP, MN, 

SCE 

Fetal/Uterine 

Analysis 

20-25 pregnancies 

NOTE: This diagram illustrates testing at one dosage level, using 75 animals. Complete Tier 2 requires testing at four 

dosage levels (high, medium, low, and control), requiring a minimum of 300 animals (4 x 75), pius an additional 

group of 20 animals exposed at the high dose and held 28 days for study of recovery potential. Timing of Salmonella 

mutagenicity assay is independent of this testing scenario. 
P.49 

1 

Table A-1 : Component Costs of 90-day Subchronic Inhalation Assay 

Protocol estimte: Rat, subchronic inhalation assay: 13 weeks-5days/wk 

Direct labor 

Study Dir./PhD Tox. 

Q.A. Inspector 

Board Cert. Pathologist 

Slide Evaluation 

Supervise Necropsy 

Lab animal Vet. 

Clinical Chemist 

Clinical Lab Tech. 

Histologist 

Histology Tech. 

Snr. Animal Tech. 

Set-up 

Compd. prep. 

Data Record Keep. 

Necropsy 

Exposure 

Animal Tech. 

Setup 

Body WtsJObserv. 

Necropsy 

Exposure 

Bleeding 

Animal Caretaker (2) 

Room setup 

Bedding Change 

Room Maintenance 

Cage cleaning 

Feeding 

Washing Feeders, 

Clean chamber 

Hematologist 

Biostatistician 

Report Writer/Data 

Word Process ./Typist 

Computer Coder 

Subtotal 

Overhead 

Hrs. X 225% 

Total Direct Labor 

Total. Hrs. 

60 

150 

61 

25 

50 

30 

154 

80 

241 

635 

389 

60 

8 

41 

13 

16 

2402 

Hrs./Task i 

60 

150 

54 

7 

25 

50 

30 

154 

80 

20 

15 

23 

7 

176 

20 

40 

15 

550 

10 

15 

24 

20 

30 

25 

25 

250 

60 

8 

41 

13 

16 

2402 

Wage/Hr. 

37.98 

15.33 

43.63 

25.92 

11.79 

10.93 

11.44 

9.71 

10.86 

8.81 

7.55 

12.42 

25.39 

13.6 

10.08 

11.64 

Cost ($) 

2278.8 

2299.5 

2661.43 

648 

589.5 

327.9 

1761.76 

776.8 

2617.26 

5594.35 

5873.9 

745.2 

203.12 

557.6 

131.04 

186.24 

27252.4 

61317.9 

88570.3 
Table A-1: Component Costs of 90day Subchronic Inhalation Assay, cont. 

Protocol Estimate: Rat, Subchronic inhalation assay: 13 weeks-5days/week 

P.50 

1 

Other Direct Costs 

Overtime: 

Animal Technicians 

Rats 

Feed 

Bedding 

Disposables 

Histology supplies 

Clinical path, supplies 

Vet. ophthalmologist 

#of 

Lab Supplies (10% of Subtot. Dir Labor) 

TOTAL Other D.C.s 

TOTAL COST 

Gen'l + Admin.(22%) 

SUBTOTAL 

FEE (20%) 

Estimated test cost 

Analytical chemistry 

ESTD FINAL COST 

Units 

150 

340 

106 

2050 

305 

1 

1 

2 

Unit Cost 

4.41 

9.35 

22.5 

0.25 

5.5 

1440 

1080 

1000 

24816 

Cost ($) 

661.5 

3179 

2385 

512.5 

1677.5 

1440 

1080 

2000 

2725.24 

15660.74 

104231 

22930.83 

127161.9 

25432.37 

152594.2 

177410.2 
P.51 

Table A-2: Component Costs of Fertility Assessment/Teratology within Subchronic 

Inhalation Assay 

Protocol Estimate: Rat, Fertility Assessment/Teratology: 13 weeks, 5 days/week 

Direct labor 

Study Dir./PhD Tox. 

Q.A. Inspector 

Cert'd Pathologist 

Supervise Necropsy 

Lab animal Vet. 

Snr. Animal Tech. 

Set-up 

Matings/Observation 

Data Record Keep. 

Necropsy 

Estrus/Cell Eval. 

C-Sections 

Fetal Evaluation 

Animal Tech. 

Setup 

Matings/Observation 

Necropsy 

Breeding 

Estrus/Cell Eval. 

C-Sections 

Fetal Evaluation 

Biostatistician 

Report Writer/Data 

Word Process/Typist 

Computer Coder 

Total Hrs 5. 

8 

31 

4 

4 

226 

340 

3 

18 

7 

8 

Hrs/Task 

8 

31 

4 

4 

10 

62 

8 

7 

52 

20 

67 

15 

90 

20 

28 

80 

40 

67 

3 

18 

7 

8 

Wage/Hr. 

37.98 

15.33 

43.63 

25.92 

10.86 

8.81 

25.39 

13.6 

10.08 

11.64 

Cost ($) 

303.84 

475.23 

174.52 

103.68 

2454.36 

2995.4 

76.17 

244.8 

70.56 

93.12 

Subtotal 

Overhead 

Hrs. X 225% 

1038 1038 6991.68 

15731.28 

Total Direct Labor 22722.96 
Table A-2: Component Costs of Fertility Assessment/Teratology within Subchronic 

Inhalation Assay, cont. 

Protocol Estimate: Rat, Fertility Assessment 

Other Direct Costs # of Units 

Fixitives 1 

Stains 1.5 

Disposables 63 

Lab Supplies (10% of Subtot. Dir. Labor) 

TOTAL Other D.C.s 

TOTAL COST 

Gen'l + Admin.(22%) 

SUBTOTAL 

FEE (20%) 

Estimated test cost 

Analytical chemistry 

Estimated Final Cost 

Teratology: 13 week-5days/week 

Unit Cost 

660 

110 

5.5 

1700 

Cost ($) 

660 

165 

346.5 

699.17 

1870.67 

24593.63 

5410.6 

30004.23 

6000.85 

36005.08 

37705.08 

1 
Table A-3: Component Costs of Salmonella Mutagenicity Assay ("Ames Assay") 

Protocol Estimate: Salmonella typhimurium Reverse Mutation Assay 

(Direct Plate Incorporation Method) 

1 

Direct Labor 

Study Director/PhD. 

Q.A. Inspector 

Geneticist 

Plate Counting 

Lab Technician 

Setup 

Agar Ovrly/Plating 

Report Proc/Typing 

Computer Coding 

SUBTOTAL 

Overhead 

(225% dir. labor) 

Total Direct Labor 

Other Direct Costs (ODC) 

Bacteria 

Plates/Media 

Disposables 

Lab Supplies 

(0.1 of SUBTOTAL) 

TOTAL ODC'S 

TOTAL 

Gen'l/Admin. 

(0.22 of TOTAL) 

Subtotal 

Fee 

(0.2 of Subtotal) 

Test Estimate 

Analytical Chem. 

Estimated Final Cost 

Total Hrs. # of Units Hrs./Task Cost per Unit Wage/Hr. Cost($) 

5 

3 

9 

20 

3 

1 

41 

1.2 

1.2 

2.4 

5 

3 

7 

13 

3 

1 

41 

25 

300 

5 

29.08 

15.33 

19.03 

145.4 

45.99 

171.27 

10.93 

10.08 

11.64 

218.6 

30.24 

11.64 

623.14 

1402.07 

2025.21 

30 

360 

12 

62.31 

464.31 

2489.52 

547.69 

3037.21 

607.44 

3644.65 

1020 

4664.65 
P.54 

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