1

September 25, 2014

MEMORANDUM

SUBJECT: Economic Impact Analysis for Electronic Reporting and Recordkeeping

Requirements for NSPS Rule

FROM: Robin Langdon

Economist

A E G (C439

- 02)

TO: Colin Boswell

Environmental Enginee r
M P G ( D243

- 0 5 )

Introduct ion

This document addresses the economic im pacts of the Electronic Reporting and Recordkeeping Requirements for NSPS (ERRR) Rule

. A vailable in the docket is ER RR Rule EIA

ICR Data Part 60 .xls

, which is a worksheet that includes information used in this analysis regarding the number of source performance tests required by P art 60 regulations and the
number of summary and excess emissions reports

. 1 In addition, available in the docket is Electronic Reporting and Recordkeeping Requirements for NSPS Rule Estimate 0 9

_ 1 7 _201 3

in cludes Part 6 0 .xls , which includes additional assumptions and underlying calculations
discussed in this memo randum

.

C ost and Savings E stimation Approach

The Environmental Council of the States (ECOS) conducted a state survey through their Integrated Project Team; ECOS asked states if they intend ed on integrating EPA’s e

Reporting program through the Compliance and Emissions Data Reporting Interface (CEDRI) into state and local agency programs . Approximately 4 3 percent of states responded yes , they intended to use CEDRI as a means of fulfilling state reporting requirements ; 4 3 percent of states respon ded they were not sure if they intended to use CEDRI; and 14 percent of states responded no , they did not intend to use CEDRI. To estimate total annualized cost s,

we assigned the n ot sure responses to the yes and no response categories in the same ratio

as the yes to no responses. Also, we assumed the source performance tests and summary and excess emissions reports being submitted only through CEDRI ( i.e., there would be no additional reporting to the states) were evenly distributed among respond ing states

.

1 For additional discussion on summary and excess emissions reports, see the section below entitled Data Used in Cost and Savings Estimation

.2

We estimate total annualized savings for the proposed requirements to be approximately $ 3 0 0,000 per year. 2 In addition to reflecting states’ inte ntions of allowing sources to submit reports through CEDRI to satisfy state reporting requirements

, t he total annualized savings
estimate reflects different assumptions for year one, year two, and years three through twenty. To allow time to transition from written reports to electronic reporting, we assume that (a) written reports will be submitted in years one and two

, (b) for sources in states opting into EPA’s electronic reporting program

, beginning in year three, written reports will no longer be submitted , and (c) for sources in states that are not opting into EPA’s electronic reporting program , electronic reports will be submitted to CEDRI , as well as printed out and
submitted to the state to meet the state’s requirement for a written report

. For each of the three time periods (e.g., year one, year two, and years three through twenty), Table 1 below provides a summary of the number of each type of report submitted and the total labor time
and costs or savings that would accrue

.

Table 1 . By Report Type, the Number of Reports Submitted Each Year and Labor Hours per
Submittal

Report Number of

Submittals Labor

Rate Hours /Test

Submit tal

– Year 1 Total Labor Costs for

Year 1
Source Performance

Test 1, 393 $85. 22 6 $ 71 0,000 Periodic Reports 1 7,612 $85. 22 3.5 $ 5

, 3 00,000

Report Number of

Submittals Labor

Rate Hours /Test

S ubmit tal

– Year 2 Total Labor Costs for

Year 2
Source Performance

Test 1,393 $85. 22 4 $ 48 0,000 Periodic Reports 17,612 $85. 22 3 $ 4

, 5 00,000

Report Number of

Submittals 3 Labor

Rate Hours /Test

S ubmit tal

– Years 3 through 2 0 Total Labor Costs Each

Year for Years 3 through 20
Source Performance

Test 1,051 $ 85. 22 (4) ($360,000) Periodic Reports 13,286 $ 85. 22 (1) ($1,100,000)

2 The estimate reflects a 7 percent discount rate, a 7 percent cost of capital, and a 20

- year annualization period.

3 For year three, the table reflect s cost savings associated with those states opting into EPA’s electronic reporting program where written reports will n o longer be submitted ; we are not including any cost savings
associated with those states that do not opt into EPA’s electronic reporting program.3

Data Used in Cost and Savings Estimation

T he following section briefly discuss es the data used in calculating the cost and savings

estimates

. B ecause the ERRR Rule does not require testing, we do not include testing costs

in the estimates

. For additional details on the calculations, please refer to the Electronic Reporting and Recordkeeping Requirements for NSPS Rule Estimate 0 9

_ 1 7 _201 3 includes

Part 60 .xls worksheet located in the docket.

The periodic reports category includes reports required by 40 CFR Part 60 (Standards of Performance for New Stationary Sources)

. Currently, the General Provisions of Part 60 include requirements for summary r eports, excess emission reports, or a combination of the

two. Generally , the reporting required by the General Provisions of the major air pollution regulation Parts appl ies to all of the related subparts (e.g., the General Provisions for Part 6 0 apply to all of Part 60 ’s corresponding subparts). However, in some cases

, subparts override the General Provisions or otherwise indicate that the General Provisions do not apply to th at subpart. In other cases, the individual subparts create their own versions of these report
types

. To simplify th ese differences for our analysis

, we use the term periodic report to describe the various reports that are similar to the summary reports and excess emissions reports required in the General Provisions of P art 60. 4

To estimate costs and savings associated with annual electronic submittal of source performance tests , t he Agency compiled data on the total number of source performance tests required annually by 40 CFR Part 60 a nd its respective subparts. The total number of source performance tests submitted annually is 1, 39 3

. 5 B ecause not all states intend to integrat e CEDRI into state and local agency programs, to calculate the savings beginning in year three, we estimate the numbe r of source performance tests annually submitted only to

CEDRI to be 1,051 ( approximately 75 percent of the total number of tests )

. 6 The re mainder
of the source performance tests will be submitted both to CEDRI and to the state. EPA’s
Electronic Reporting Tool (ERT) allows the source performance test report to be printed by
the source once data is entered. The source can mail the printed report to the state or local air agency. While there is some additional burden associated with printing and m ailing the report, we assume that the burden will be equal to or less than the savings associated with entering the data electronically. Because 40 CFR Part 60 do es not require more than one source performance test per year , we conservatively assumed that the number of source performance test submittals is equal to the number of facilities.

To estimate costs and savings associated with periodic reports

, we compiled data on the
total number of summary report and excess emissions report submittals through a review of

4 In developing the electronic reporting data flow for these reports, the Agency determined that the majority of the reports will be subpart

- specific forms on the CEDRI system and that the remaining minority will be source

specific reports converted and uploaded on to the CEDRI system.

5 The data is found in the following worksheet in the docket

-- E RRR Rule EIA ICR Data Part 60.xls.

6 The 75 percent is calculated as follows: 43% of states that responded yes /(43 percent that responded yes + 14 percent that responded no )

.4

40 CFR Part 60 and its corresponding ICR

. The estimated number of periodic reports submitted each year is 1 7

, 612

. 7 B ecause not all states intend to integrat e CEDRI into state and local agency programs, to calculate the savi ngs beginning in year three, we estimate the number of periodic reports annually submitted only to CEDRI to be 13,286 ( approximately 75 percent of the total number of reports )

. The re mainder of the periodic reports will be
submitted both to CEDRI and to the state. EPA’s ERT allows the periodic report to be printed by the source once data is entered, and the source can mail the printed report to the state or local air agency. While there is some additional burden associated with printing and mailing the report, we assume that the burden will be equal to or less than the savings associated with entering the data electronically.

Cost Calculations

– Years 1 and 2

In year one, we assume that written reports will still be submitted . We calculate the labor

costs associated with any additional time it may take to (a) become familiar with the electronic report templates and submittal process (i.e., the learning curve)

, and (b) submit the electronic reports . I n year two, we also assume written reports will still be submitted

, and w e calculate the labor costs associated with any additional time it may take to submit the electronic reports.

Savings and Cost Calculations

– Years 3 through 20

In years three through twenty, we assume that written reports are no longer submitted for sources in those states that opt into EPA’s electronic reporting program and that there is labor savings associated with only submi tting electronic report s

. We assume the labor savings are associated with report submittals from the sources in the portion of states that (a ) intend to use CEDRI (43 percent) and ( b ) were not sure if the y would use CEDRI but that we assigned to the yes response category ( an additional 32 percent)

. We also assume that there is a 50 percent labor savings associated with electronically submitting source performance test reports , and we assume a 25 percent labor savings associated with electronically submi tting periodic reports. 8 For sources in states that are not opting into EPA’s electronic reporting program, we assume that these sources will have to submit an electronic report through CEDRI to meet federal reporting requirements and a written
report to meet state reporting requirements. Because the electronic report s can be printed out and submitted to the state or local agency to meet th at agency’s requirement for a written report, we assume that the burden will be equal to or less than the savings associated with entering the data electronically. We used labor rates from the Bureau of Labor Statistics and selected a rate for the Management, Professional, and Related

7 The data is found in the following worksheet in the docket

-- E RRR Rule EIA ICR Data Part 60.xls.

8 The 50 percent labor savings assumes an existing source performance test file can be reused and already contains about 50 percent of required data. The 25 percent labor savings assumes about 25 percent of the required data is in existing databa ses and will not need to be submitted a second time.5

Occupations category; we adjusted the rate upward by 67 percent to reflect overhead. 9 See Table 1 above for a summary, by report type, of the number of submittals and labor costs and savings. We aggregated the labor costs and savings and annualized the total s over a 20

- year peri od using a 7 percent discount rate ; we estimated total annualized savings for the proposed requirements to be approximately $300,000 per year

.

To gauge the sensitivity of the assumption of assigning the not sure responses to the yes and

no response categories, we assigned all of the not sure responses to the no response category. This resulted in a total annualized cost estimate for the proposed requirements of approximately $ 53 0,000. In this case, t he total annualized cost estimate is hi gher because (a) years one and two reflect only costs for all facilities submitting both written and electronic reports, while years three through twenty reflect savings only for facilities in the states intending to use CEDRI, and (b) the costs in years o ne and two are not discounted as
much as the costs and savings that accrue in years three through twenty

. Approximately 12,000 facilities are subject to Part 60 regulations, and some facilities submit one periodic report per year while others submit more than one

. While i t is difficult to calculate a potential precise per

- facility cost, the cost is expected to be low.

Conclusions

Because we assume that beginning in year three written reports are no longer submitted for

most states and for a portion of the states, there is labor savings associated with only submitting electronic report s , we conclude the ERRR Rule results in labor , or cost

, s avings

. W e conclude that the proposed ERRR Rule will not have a s ignificant economic impact on
small

, or large

, entities

.

9 The Labor Rates used in the analysis can be found at http://www.bls.gov/news.release/pdf/ecec.pdf, Table 9, Management, Professional, and Related Occupations.