# Economic Impact Screening Analysis for Regulatory Change s to the Listing Status of High

- GWP Alternatives

- Revised

P REPARED FOR 

### :

Stratospheric Protection Division Office of Air and Radiation U.S. Environmental Protection Agency Washington, D.C. 20460

P REPARED BY 

### :

ICF International 1725 Eye Street, NW Washington, DC 20006

JULY 2015Economic Impact Screening Analysis i 

## Executive Summary The Significant New Alternatives Policy (SNAP) Program is the U.S. Environmental Protection Agency 's ( EPA ) program to evaluate and regulate substitutes under the Clean Air Act (CAA). In Section 612(c) of the C AA , the Agency is authorized to identify and publish lists of acceptable and unacceptable substitutes

.

EPA is chang ing the listing status of certain high

- GWP alternatives used in aerosols, foams, commercial refrigeration, and motor vehicle air cond itioning (MVAC). The final regulatory changes are summarized in Exhibit ES

- 1. To assist the Agency in satisfying its obligations under the Regulatory Flexibility Act (RFA) as amended by the Small Business Regulatory
En forcement Fairness Act (SBREFA), this report provides a screening analysis to assess the potential economic impacts on small entities associated with these changes.

Industries potentially affected by these regulatory options were primarily identified by North American Industry Classification System (NAICS) codes

. Small businesses in each affected industry were classified as such based on size definitions established by the Small Business Administration. Economic impacts on affected small businesses were calculated using a direct compliance cos t method. T he “sales test” was applied by estimating annualized compliance costs for affected small businesses as a percentage of those businesses’ annual sales.

This screening analysis finds that the rulemaking can be presumed to have no significant econ omic impact on a substantial number of small entities (SISNOSE)

. This screening analysis finds that this rulemaking can be presumed to have no SISNOSE for the following

reasons:

• About 500,000 small businesses could be subject to the rulemaking, although m ore than 99% of small businesses subject to this rulemaking would be expected to experience zero compliance costs. Exhibit ES

- 1: Summary of Regulatory Changes Analyzed

• List unacceptable HFC

- 134a for new MVACs starting in

model year 2021 ; narrowed use limits apply f or export to countries without servicing infrastructure through model year 2025

.
• List unacceptable HFC

- 125 for aerosols in 2016, restrict

use of HFC

- 134a to certain medical aerosols and technical aerosols in 2018 and one year from date of publication ; rest rict use of HFC

- 227ea and blends of HFC

- 227ea and HFC

- 134a to metered dose inhalers in aerosols one year from date of publication

.
• List unacceptable certain HFCs and HFC blends in 1) rigid

polyurethane appliance foam; 2) flexible polyurethane; 3) rigid pol yurethane: commercial refrigeration and sandwich; 4) rigid polyurethane and polyisocyanurate laminated boardstock; 5) rigid polyurethane slabstock; 6) polyurethane integral skin; 7) polystyrene: extruded sheet; 8) polystyrene: extruded boardstock and bille t; 9) polyolefin; 10) PU marine flotation foam and 11) phenolic foams in various years from 2017 to 2021 for specified end

- uses , except for certain military, space

and aeronautics

- related applications

. Commercial Refrigeration:

• List unacceptable 10 high

- GWP HFCs/HFC blends for:

new supermarket systems in 2017; new remote condensing units in 2018.

• List unacceptable 9 high

- GWP HFC blends for: retrofitted

supermarket systems and retrofitted remote condensing units one year from date of publication

.
• List unacceptable 31 high

- GWP HFCs/HFC blends for:

new stand

- alone medium

- temperature units with a compressor capacity below 2,200 Btu/hr and not containing a flooded evaporator in 2019 and all other

new stand

- alone medium

- temperature units in 2020

.
• List unacceptable 28 high

- GWP HFCs/HFC blends for

new stand

- alone low

- temperature units in 2020

.
• List unacceptable R

- 404A and R

- 507A for retrofitted

stand

- alone retail food refrigeration equipment one year from date of publication

.
• List unacceptable 20 high

- GWP HFCs/HFC blends for

new vending machines in 201 9

.
• List unacceptable R

- 404A and R

- 507A for retrofitted

vending machines one year from date of publication

.Economic Impact Screening Analysis ii • For about 120 small businesses that are expected to incur compliance costs as a result of this rulemaking, their costs are estimated to be le ss than 1% of annual sales.

• This analysis indicates that fewer than 80 of the nearly 500,000 affected small businesses

— or <0.1%

— could incur costs in excess of 1% of annual sales, and that fewer than 60 small businesses could incur costs in excess of 3% of annual sales.

Total annualized compliance costs across affected small businesses are es timated at approximately $ 4.5

- $7.7 million at a 7% discount rate, or $ 2.3

- $4.7 million at a 3% discount rate

. The aggregated economic impacts on small businesses and SISNOSE determination are summarized in Table ES

- 1. Affected small businesses are manufacturers of light

- duty vehicles and trucks, consumer and some technical and medical aerosol products, domestic an d commercial refrigerated appliances, polyurethane foam s , polystyrene foam s , polyolefin foams, polyisocyanurate foams, and self

- contained retail food equipment and vending machines.

Table ES

- 1: Aggregated Economic Impacts on Small Businesses and SISNOSE D etermination

a Represents small entities affected with an economic impact equal to or lesser than 1% but greater than 0%.
b T his category aggregates the number of small entities that would be expected to experience an impact of 1% to 3% with the number of small entities that w ould be expected to experience an impact of 3% or greater.

Economic Impact Number of Small Entities Subject to the Rule and Experiencing Given Economic Impact Percent of All Small Entities Subject to the Rule That are Experiencing Given Economic Impact Less than 1% for all affected small entities a 120 0.02%

1% or more for one or more affected small entities b 74 0.01%

Greater than 3% for one or more affected small entities 57 0.01%Economic Impact Screening Analysis iii 

## Table of Contents
Executive Summary

................................ ................................ ................................ ................................ ..................... i
List of Tables

................................ ................................ ................................ ................................ .............................. iv
1 Introduction

................................ ................................ ................................ ................................ ......................... 1
2 Summary of General Approach and Key Analytical Assumptions

................................ ................................ ....... 3
3 Motor Vehicle Air Conditioning

................................ ................................ ................................ ........................... 7

3.1 Estimated Economic Impact on Affected Small Entities

................................ ................................ ............... 9
4 Aerosols

................................ ................................ ................................ ................................ ............................. 10

4.1 Small Entities Potentially Subject to the Rulemaking

................................ ................................ .................. 10
4.2 Estimated Economic Impact on Affected Small Entities

................................ ................................ ............. 12
5 Foam Sector

................................ ................................ ................................ ................................ ...................... 14

5.1 Small Entities Potentially Subject to the Rulemaking

................................ ................................ .................. 14

5.1.1 Polystyrene Foam Product Manufacturing (NAICS code 326140)

................................ ........................ 14 5.1.2 Household Refrigerator and H ome Freezer Manufacturing (NAICS code 335222)

.............................. 14 5.1.3 Air

- Conditioning and Warm Air Heating Equipment and Commercial and Industr ial Refrigeration Equipment Manufacturing (NAICS code 333415)

................................ ................................ .............................. 15 5.1.4 Urethane and Other Foam Product (Except Polystyrene) Manufacturing (NAICS code 326150)

........ 16
5.1.5 Summary of Small Business Impacted in the Foam Sector

................................ ................................ ... 17
5.2 Estimated Economic Impact on Affected Small Entities

................................ ................................ ............. 18
6 Commercial Refrigeration

................................ ................................ ................................ ................................ . 23

6.1 Small Entities Potentially Subject to the Rulemaking

................................ ................................ .................. 23

6.1.1 Remote Retail Food Equipment (Supermarket Systems and Remote Condensing Units)

.................... 23 6.1.2 Stand

- Alone Retail Food Equipment

................................ ................................ ................................ ..... 25 6.1.3 Vending Machines

................................ ................................ ................................ ................................ . 27
6.2 Estimated Economic Impact on Affected Small Entities

................................ ................................ ............. 28

6.2.1 Remote Retail Food Equipment (Supermarket Systems and Remote Condensing Units)

.................... 28 6.2.2 Stand

- Alone Retail Food Equipment

................................ ................................ ................................ ..... 29 6.2.3 Vending Machines

................................ ................................ ................................ ................................ . 30
7 Conclusion

................................ ................................ ................................ ................................ ......................... 31

7.1 Decision Regarding Significant Economic Impact on a Substantial Number of Small Entities

.................... 31
7.2 Aggregated Small Business Impacts of Regulatory Changes

................................ ................................ ....... 31
References

................................ ................................ ................................ ................................ ............................... 36Economic Impact Screening Analysis iv 

## List of Tables Table 1: Unacceptable Substitutes and Substitutes Subject to Use Restrictions

................................ ....................... 1 Table 2: General Steps and Approach for Small Business Impact Analyses

................................ ............................... 3 Table 3: Assumptions Concerning Types of HFCs in Use, Alternatives Modeled, and Types of Entities Affected

..... 6 Table 4: Estimated Number of Small Light

- Duty Veh icle Manufacturers Affected a

................................ .................. 8 Table 5: Estimated Economic Impact on Small Entities in the Automobile Manufacturing Industry (Sales Test)

..... 9 Table 6: Estimated Number of Aerosol Small Businesses Affected by the Regulation

................................ ........... 11 Table 7 : Estimated Economic Impact on Small Businesses (Sales Test)

................................ ................................ .. 13 Table 8: NAICS Codes for Foams

................................ ................................ ................................ .............................. 14 Table 9: Estimated Number of Appliance Small Businesses Affected

................................ ................................ ..... 15 Table 10. Estimated Number of Commercial Refrigeration Small Businesses Affected

................................ ......... 16 Table 11: Assumptions about the Percentage of Affected Entities in NAICS Code 326150

................................ .... 16 Table 12: Estimated Number of Small Businesses Manufacturing Non

- Appliance PU Foam Types Affected

........ 17 Table 13: Estimated Number of Small Businesses Affected in the Foam Sector

................................ .................... 17 Table 14: Estimated Economic Impact on Small Entities in the Foam Manuf acturing Industry (Sales Test)

.......... 19 Table 15: NAICS Codes for Affected Retail Food Industries

................................ ................................ .................... 23 Table 16: Estimated Number of Retail Food Small Businesses Affected by the Regulation*

................................ . 25 Table 17: Estimated Number of Stand

- Alone Retail Food Equipment Manufacturing Small Businesses Affected by the Regulation

................................ ................................ ................................ ................................ ......................... 27 Table 18: Estimated Number of Vending Machine Manufacturing Small Businesses Affected by the Regulation 28 Table 19: Estimated Economic Impact on Small Entities with Remote Retail Food Equipment (Sales Test)

.......... 29 Table 20: Estimated Economic Impact on Small Entities in the Stand

- Alone Retail Food Ca tegory (Sales Test)

.... 30 Table 21: Estimated Economic Impact on Small Entities in the Vending Machine End

- Use (Sales Test)

............... 30 Table 22: Summary of the Small Business Impact at 7% Discount Rate

................................ ................................ . 31 Table 23: Summary of the Small Busine ss Impact at 3% Discount Rate

................................ ................................ . 33 Table 24: Aggregated Economic Impacts on Small Businesses

................................ ................................ ............... 35Economic Impact Screening Analysis 1 

## 1 **Introduction** The Significant New Alternatives Policy (SNAP) Program is the U.S. Environmental Protection Agency 's ( EPA ) program to evaluate and regulate substitutes under the Clean Air Act (CAA). In CAA Section 612(c) , the Agency is authorized to identify and publish lists of acceptable and unacceptable substitutes.

EPA is changing the listing stat us of certain high

- GWP alternatives used in aerosols, foams, commercial refrigeration, and motor vehicle air conditioning (MVAC). The regulatory changes are shown in Table 1

. To assist the Agency in satisfying its obligations under the Regulatory Flexibility Act (RFA) as amended by the Small Business Regulatory En forcement Fairness Act (SBREFA), 1 this report provides a screening analysis to assess the potential economic impacts on small entities associated with these changes. This analysis finds that the final rulemaking can be presumed to have no significant economic impact on a substantial number of small entities (SISNOSE)

.
Table 1 : Unacceptable Substitutes and Substitutes Subject to Use Restrictions

Sector Description of Regulatory Change MVACs List unacceptable HFC

- 134a for new MVACs starting in model year 2021; narrowed use limits apply for export to countries without servicing in frastructure through model year 2025. Aerosols List unacceptable HFC

- 125 for aerosols in 2016, restrict use of HFC

- 134a to certain medical aerosols and technical aerosols in 2018 and one year from date of publication; restrict use of HFC

- 227ea and blends to metered dose inhalers in aerosols one year from date of publication.
Foams List unacceptable HFC

- 134a, HFC

- 245fa, HFC

- 365mfc, and blends thereof, Formacel TI, and Formacel Z

- 6 in rigid polyurethane (PU) appliance foam, rigid PU commercial refrigeratio n and sandwich panels, polyolefin, and PU marine floatation foam in 2020. List unacceptable HFC

- 134a, HFC

- 245fa, HFC

- 365mfc, and blends thereof; Formacel TI, and Formacel Z

- 6 in rigid PU slabstock and other in 2019. List unacceptable HFC

- 134a, HFC

- 245fa, HFC

- 365mfc, and blends thereof; in rigid PU and polyisocyanurate laminated boardstock and in flexible PU in 2017. List unacceptable HFC

- 134a, HFC

- 245fa, HFC

- 365mfc, and blends thereof; Formacel TI, and Formacel Z

- 6 in integral skin PU and in p olystyrene extruded sheet in 2017. List unacceptable HFC

- 134a, HFC

- 245fa, HFC

- 365mfc, and blends thereof; Formacel B, Formacel TI, and Formacel Z

- 6 in polystyrene extruded boardstock and billet (XPS) in 2021. List unacceptable HFC

- 143a, HFC

- 134a, HFC

- 2 45fa, HFC

- 365mfc, and blends thereof; in phenolic insulation board and bunstock in 2017. Commercial Refrigeration Commercial Refrigeration List unacceptable 10 high

- GWP HFCs/HFC blends (R

- 404A, R

- 407B, R

- 421B, R

- 422A, R

- 422C, R

422D, R

- 428A, R

- 434A, R

- 50 7A, and HFC

- 227ea) for new supermarket systems in 2017. List unacceptable 9 high

- GWP HFC blends (R

- 404A, R

- 407B, R

- 421B, R

- 422A, R

- 422C, R

- 422D, R

- 428A, R

- 434A, and R

- 507A,) for retrofitted supermarket systems one year from date of publication. List unacceptable 10 high

- GWP HFCs/HFC blends (R

- 404A, R

- 407B, R

- 421B, R

- 422A, R

- 422C, R

422D, R

- 428A, R

- 434A, R

- 507A, and HFC

- 227ea) for new remote condensing units in 2018.

1 For all rules subject to the RFA, a screening analysis is required to first determine what, if any, impact a rulemaking may have on small entities. For rules that pose “a significant economic impact on a substantial number of small entities
, ” an initial an d final regulatory flexibility analysis is further required.Economic Impact Screening Analysis 2 Sector Description of Regulatory Change List unacceptable 9 high

- GWP HFC blends (R

- 404A, R

- 407B, R

- 421B, R

- 422A, R

- 422C, R

- 422D, R

- 428A, R

- 434A, and R

- 507A, and R

- 227ea) for retrofitted remote condensing units one year from date of publication. List unacceptable 20 high

- GWP HFCs/HFC blends (FOR12A, FOR12B, HFC

- 134a, KDD6, R

125/290/134a/600a (55/1/42.5/1.5), R

- 404A , R

- 407C, R

- 410A, R

- 410B, R

- 417A, R

- 421A, R

422B, R

- 422C, R

- 422D, R

- 426A, R

- 437A, R

- 438A, R

- 507A, RS

- 24 (2002 formulation), and SP34E) for new vending machines in 2019. List unacceptable R

- 404A and R

- 507A for retrofitted vending machines one year from date of publication

. List unacceptable 31 high

- GWP HFCs/HFC blends (FOR12A, FOR12B, HFC

- 134a, HFC

- 227ea, KDD6, R

- 125/290/134a/600a (55/1/42.5/1.5), R

- 404A, R

- 407A, R

- 407B, R

- 407C, R

- 407F, R

410A, R

- 410B, R

- 417A, R

- 421A, R

- 421B, R

- 422A, R

- 422B, R

- 422C, R

- 422D, R

- 424A, R

- 426A, R

428A, R

- 434A, R

- 437A, R

- 438A, R

- 507A, RS

- 24 (2002 formulation), RS

- 44 (2003 formulation), SP34E, and THR

- 03) for new stand

- alone medium

- temperature units with a compressor capacity below 2,200 Btu/hr and not containing a flooded eva porator in 2019. List unacceptable 31 high

- GWP HFCs/HFC blends (FOR12A, FOR12B, HFC

- 134a, HFC

- 227ea, KDD6, R

- 125/290/134a/600a (55/1/42.5/1.5), R

- 404A, R

- 407A, R

- 407B, R

- 407C, R

- 407F, R

410A, R

- 410B, R

- 417A, R

- 421A, R

- 421B, R

- 422A, R

- 422B, R

- 422C, R

- 422D , R

- 424A, R

- 426A, R

428A, R

- 434A, R

- 437A, R

- 438A, R

- 507A, RS

- 24 (2002 formulation), RS

- 44 (2003 formulation), SP34E, and THR

- 03) for new stand

- alone medium

- temperature units with a compressor capacity equal to or greater than 2,200 Btu/hr and all new stand

- alone medium

- temperature units not containing a flooded evaporator in 20 20

. List unacceptable 2 4 high

- GWP HFCs/HFC blends ( HFC

- 227ea, KDD6, R

- 125/290/134a/600a (55/1/42.5/1.5), R

- 404A, R

- 407A, R

- 407B, R

- 407C, R

- 407F, R

- 410A, R

- 410B, R

- 417A, R

- 421A, R

421B, R

- 422A, R

- 422B, R

- 422C, R

- 422D, R

- 424A, R

- 428A, R

- 434A, R

- 437A, R

- 438A, R

- 507A, and RS

- 4 4 (2003 formulation) ) for new stand

- alone low

- temperature units in 2020

. List unacceptable R

- 404A and R

- 507A for retrofitted stand

- alone retail food refrigeration equipment one year from date of publication

. The remainder of this report is organized as follows:

• Chapter 2 presents the general approach and assumptions used to ensure consistency across the analysis, and also summarizes key assumptions made for each of the four affected industries

.

• Chapters 3 , 4 , 5 , and 6 identify the small entities potentially affected by the regulatory chang es and then estimate the economic impact on those affected entities, for the MVAC, aerosols, foams , and commercial refrigeration industries , respectively.

• Chapter 7 summarizes the aggregate small business impacts of the regulatory changes , along with a

rec ommendation for certification based on a decision matrix for determining SISNOSE.Economic Impact Screening Analysis 3 

## 2 **Summary of General Approach and**  **Key Analytical Assumptions**  To ensure consistency across the analysis, standard analytical steps and approaches were followed for each of the affected industries , as shown in Table 2

.
Table 2 : General Steps and Approach for Small Bus iness Impact Analyses Step Approach Identify the types of industries expected to be directly impacted by the regulatory changes For all sectors, potentially affected industries were identified by North American Industry Classification System (NAICS) codes. Economic data about each affected industry

— including number of firms and establishments 2 by employment or receipts size

— was obtained from the U.S. Census Bureau’s Industry Statistics Portal ( http://www .census.gov/econ/isp/ ) and includes data from the 2007 Economic Census. The economic census profiles U.S. national and local economies every five years, and the 2007 data is the latest available at the time of this writing.

By change the listing status o f certain high

- GWP alternatives used in aerosols, foams, commercial refrigeration, and MVAC, this rulemaking potentially directly impacts small entities associated with these changes. Other entities may experience indirect effects as a result of market cha nges influenced by the rule, but these are not to be considered in this analysis. See Cement Kiln Recycling Coalition v. EPA, 255 F.3d 855, 869 (D.C. Cir. 2001) (the D.C. Circuit “has consistently rejected the contention that the RFA applies to small busin esses indirectly affected by the regulation of other entities.”).

This rule’s provisions do not create enforceable requirements for refrigeration and air conditioning technicians, but they would indirectly affect technicians servicing MVAC systems, retail food refrigeration equipment, and vending machines where the technician, rather than the refrigeration or AC equipment owner, purchases servicing equipment for different refrigerants. EPA expects these indirect impacts on technicians are minimal, because the transitions to different refrigerant s required by this rule are already occurring due to other regulations (e.g., light duty vehicle GHG rule) and corporate social responsibility initiatives (e.g., Consumer Goods Forum pledge concernin g HFC refrigerants), and because many of the still

accept able alternatives are already used for these refrigeration or air conditioning equipment types. Further, most acceptable HFC refrigerant blends can be recovered and serviced using equipment that serv ice technicians already own. Determine what proportion of impacted industries are small businesses For all industries , small businesses were identified using the U.S. Small Business Administration’s table of small business size standards matched to NAICS codes. The version employed for this analysis became effective July 22, 2013. In several industries, the small business threshold was defined as a firm with fewer than a certain number of employees, but Census data was only available by

2 The U.S. Census Bureau defines an establishment as a single physical location where business is conducted or where services or industrial operations are performed; a firm is a business organiza tion consisting of one or more domestic establishments in the same state and industry that were specified under common ownership or control. The firm and the establishment are the same for single

- establishment firms. For each multi

- establishment firm, esta blishments in the same industry within a state are counted as one firm , and the firm employment and annual payroll are summed from the associated establishments.Economic Impact Screening Analysis 4 Step Approach establishment size. In these cases, the threshold was applied to establishment sizes. This is considered a conservative proxy, as the number of establishments is typically greater than , and can be no lower than, the number of firms by definition. Determine what proport ion of small businesses c ould be directly impacted This determination was made on a n individual sector and end

- use basis, taking into consideration whether the HFC s affected by this rulemaking are still

— or were
ever
— known to be in use, and what proportion of the market the affected HFC s
are expected to represent at the time that the regulations would come into effect. For the purposes of quantifying compliance costs, make assumptions about the alternative refrigerants, foam blowing agents, and aerosols that w ould likely be used in place of the HFCs affected by this rulemaking For the purposes of quantifying compliance costs, this analysis has made some assumptions regarding which alternatives are implemented in the transition away from the HFCs affected by this rulemaking . These assumptions are not intended to represent the range of available alternatives, or to imply that other alternatives are not available. For a fuller accounting of substitutes, please refer to the lists of acceptable substi tutes as published under EPA’s SNAP Program ( www.epa.gov/ozone/snap/ ). For the purposes of this analysis, the assumption about the alternative modeled was made on an individual sector or end

- use basis, relying primarily on assumptions in EPA’s Vintaging Model (EPA 2012)
, EPA’s report on Global Mitigation of Non

- CO 2 Greenhouse Gases: 2010

- 2030 (EPA 2013), and lists of acceptable substitutes under SNAP

. Quantify the economic impact on small busine sses T his analysis uses the direct compliance cost method to quantify impacts

. Direct compliance costs include capital, operating, maintenance, and other direct compliance costs associated with switching to alternatives as a result of the regulatory changes

. These costs were annualized to calculate a metric that can be compared with annual sales in the next step of the analysis. 3

Consistent with EPA’s Guidelines for Preparing Economic Analysis (2010), capital
costs were annualized over the expected lifetime of the capital equipment using the opportunity cost of capital (discount rate). This screening analysis uses a 3 percent and 7 percent discount rate, in line with OMB Circular A

- 94 , which provides guidelines for discount rates in benefit

- cost anal yses of federal programs. Where applicable, annual non

- capital compliance costs

— such as ongoing operating and maintenance costs

— are added to the annualized capital costs to yield a total annualized cost of compliance. All costs and savings values are expre ssed in constant year 2013 U.S. dollars, adjusted using the implicit GDP price deflator published by the U.S. Bureau of Economic Analysis.
When available and appropriate
, cost assumptions identified in EPA’s report on Global Mitigation of Non

- CO 2 Greenhouse Gases: 2010

- 2030 (EPA 2013) and information from comments or other industry input were employed. For sub

sectors for which th ese cost data w ere not estimated, other available sources were sought, as described in the individual sector chapters. It should be noted that all cost information reflects the current cost of compliance, and thus likely represents a higher

- end estimate of the cost of compliance in the years in which the

3 In some industries, an upfront capital expenditure is involved with complying with the regul atory actions. As an example,

some manufacturers of refrigerated vending machines may purchase new equipment costing $100,000 to switch from HFCs to carbon dioxide. Annualizing this upfront cost provides a metric that can be compared with annual revenues, and reflects an expectation that such upfront capital expenditures might be financed.Economic Impact Screening Analysis 5 Step Approach regulatory changes would become effective (i.e.
, 2016 and beyond). Fo r example, the price of alternative refrigerants and blowing agents would likely be expected to decrease over time.

Perform the sales test For this analysis, the “sales test” was applied, which calculates annualized compliance costs as a percentage of ann ual sales. For industries for which annua l sales data was not available through the Economic Census, annual receipts or annual value of shipments 4 was utilized as a reasonable proxy. For the purposes of the sales test, annualized compliance costs were calc ulated using a 7% discount rate. Applying this sales test resulted in several possible outcomes apart from a positive percentage (such as 1% or 3%) . In some cases, no small entities would be expected to be impacted by the rulemaking in a given NAICS code

. In these instances, the result is shown as Not Applicable (NA). In other cases, the annualized cost of compliance was expected to be zero because the cost of using alternative refrigerants or blowing agents was negligible (i.e. zero dollars) . In these inst ances, the result is shown as 0%. In some other cases, the annualized cost was found to be negative (i.e. cost

- saving) because the annual cost savings associated with a lower

- cost alternative outweighed the annualized value of the upfront capital expenditu re. In these instances, the result is shown as <0%.

Chapters 3, 4, 5, and 6 that follow further describe the specific data and assumptions that enable the estimation of the economic impact on small businesses in the industries potentially affected by this rulemaking. Table 3 summarizes some of these key assumptions by industry and end

- use
— including which HFCs are currently assumed to be in use in each end

- use , and to which alternatives each end

- use is assumed to transition

— for the purposes of estimating costs

. Table 3 also summarizes the types of entities expected to be di rectly impacted

.

4 Total value of shipments includes the received or receivable net selling values of all products shipped (exclusive of freight and taxes).Economic Impact Screening Analysis 6 Table 3 : Assumptions Concerning Types of HFCs in Use, Alternatives Modeled, and Types of Entities Affected

Sector End Use Primary HFC(s) Assumed to be Currently in Use Alternatives Modeled for the Cost A nalysis* Types of Entities Directly Affected

MVAC Motor Vehicle Air Conditioning HFC

- 134a HFO

- 1234yf Automobile manufacturers Aerosols Propellants HFC

- 134a in tire inflators and products for functional testing of smoke detectors;

m ajority of remaining HFC use is in excepted uses; H ydrocarbons (HC) and HFO

- 1234ze Manufacturers of aerosol products, including consumer, technical, and medical aerosols

Foam R igid PU : (household) a ppliance HFC

- 245fa; HFC

- 134a HC and Solstice LBA Manufacturers of foam products, household refrigerated appliances, commercial refrigerated appliances, furniture, and cars Flexible PU : slabstock and moulded None No transition R igid PU : c ommercial r efrigeration HFC

- 245fa; HFC

- 134a HC and Solstice LBA R igid PU : s andwich HFC

- 245fa; HFC

- 134a HC Rigid PU and polyisocyanurate laminated boardstock HFC

- 245fa HC Rigid PU : slabstock None No transition Rigid PU : marine flotation foam HFC

- 245fa; HFC

- 134a HC & HFO/ H 2 O Blends PU integral skin HFC

- 134a CO 2 Polystyrene: extruded sheet HFC

- 152a No transition P olystyrene: e xtruded b oardstock and b illet foams HFC

- 134a HC & HFO Polyolefin None No transition Phenolic None No transition Commercial Refrigeration Retail Food Refrigeration (Supermarket Systems and Remote Condensing Units) (New) R

- 404A; R

- 507A R

- 407A Supermarkets, warehouse clubs/ superstores, convenience stores, drug stores, hotels, cafeterias, specialty food stores, restaurants, and bars (Retrofit) R

- 404A; R

- 507A; R

- 422D R

- 407A

Retail Food Refrigeration (Stand

- Alone Units) (New) R

- 404A; HFC

- 134a HC , R

- 450A Manufacturers of stand

- alone commercial refrigerators/freezers (Retrofit) None None None Vending Machines (New) R

- 404A; HFC

- 134a CO 2 Manufacturers of vending machines (Retrofit) None None None * As noted previously, for the purposes of quantifying compliance costs, this analysis has made some assumptions regarding which alternatives to model in the transition away from the affected HFCs. These assumptions are not intended to represent the entire ty of available alternatives, or to imply that other alternatives are not available. For a fuller accounting of substitutes, please refer to the lists of acceptable substitutes as published under EPA’s SNAP Program ( www.epa.gov/ozone/snap/ ).Economic Impact Screening Analysis 7 

## 3 **Motor Vehicle Air Conditioning** The EPA has previously examined when automobile manufacturers may be able to transition their fleets to lower GWP refrigerants in support of its rules to extend the greenhouse gas and fuel eco nomy standards for model year (MY) 2017

- 2025 light

- duty vehicles , herein referred to as the Light

- Duty Greenhouse Gas ( LD GHG) Rule . 77 FR 62624, 62807

- 810 (October 15, 2012); see also 75 FR 25325, 25431

- 32 (May 7, 2010) (discussing the same issue for MY 2012

- 2016 light

- duty vehicles).

In support of the LD GHG rule, EPA projected that the industry will make the full transition to lower

- GWP refrigerants over the period of time spanning between MY 2017 and MY 2021, and the level of the standard in each of these model years reflects a projected 20 percent increase in sub stitution in each model year and complete transition by MY 2021 ( 77 FR 62720/2

- 3 ) . In support of the assumption of this multi

- year transition, the LD GHG rule for MYs 2017

- 2025 includes an extensive discussion of the refrigerant substitute availability and technical feasibil ity of transitioning the fleet ( 77 FR 62720; 62807

- 810 )

. Factors contributing the transition to low

- GWP refrigerants in MVAC are discussed in the preamble to the final rule as well as in the LD GHG rule and its supporting documents. Beca use the analysis supporting the LD GHG rulemaking accounted for impacts of a full transition by MY 2021 for domestic sales, this analysis considers only export vehicles to estimate costs that would be incurred as a result of this rulemaking.

L ight

- duty ve hicle and truck manufacturers purchase MVAC system components from a third party and then assemble and install the MVAC systems in

- house. As such, t his analysis assumes that some l ight

- duty vehicle and truck manufacturers directly incur incremental complia nce costs associated with modifying MVAC systems to accommodate an alternative refrigerant to HFC

- 134a (i.e., slightly different components and more costly refrigerant for first

- fill) for a portion of their export market

. Other potentially affected industr ies were considered in the preparation of this analysis, including MVAC and other motor vehicle parts manufacturing industries, as well as the general automotive repair industry. These industries were either determined to not experience direct impacts or a ssumed to pass on direct costs to automobile manufacturers, as described in Exhibit 1 below.

Th e l ight

- duty vehicle and truck m anufacturing i ndustr ies are matched to NAICS code 336111 , a utomobile manufacturing , and NAICS code 336112, light truck and utility vehicle manufacturing

. 5 The small business threshold for these industr ies is defined as a firm with less than 1,00 0 employees. Applying this definition yields an estimate of 198 small businesses in th e s e industr ies

. 6 The total number of companies in these industries

— including those not characterized as small businesses

— is 241. O ut of a total of twenty

- three automobile manufacturers selling light

- duty vehicles in the United States, ten of those twenty

- three represent 85% of the light

- duty vehicles s old in the United States in MY 2013. 7

5 This industry comprises esta blishments primarily engaged in manufacturing light trucks and utility vehicles, including light

duty vans, pick

- up trucks, minivans, and sport utility vehicles.
6 Because Census data disaggregated by employment size are only available by establishment siz e, the definition was conservatively applied as establishments with less than 1,000 employees. The total number of small businesses (firms) potentially impacted by the rulemaking was then estimated by applying a scaling ratio between total firms and establ ishments for this industry (i.e., 174 firms to 188 establishments).
7 EPA

- HQ

- OAR

- 2014

- 0198

- 0113 and EPA

- HQ

- OAR

- 2014

- 0198

- 0207Economic Impact Screening Analysis 8 Although HFC

- 134a has been the predominant refrigerant used in MVAC systems in the United States since the 1990s, some manufacturers have recently begun selling cars with HFO

- 1234yf MVAC systems in the United States, i ncluding for instance General Motors’ sales of the Cadillac XTS . While these sales currently represent a very small percentage of the overall market, further transition of MVACs to alternative refrigerants is expected in response to the joint rulemakings b y EPA and the National Highway Traffic Safety Administration (NHTSA) to reduce GHG emissions and improve fuel economy of light

- duty vehicles. 8 Adopting MVAC systems with low

GWP refrigerants is one of many strateg ies to reduce GHG emissions in this sector. The technical support document for EPA’s LD GHG final rule estimates that for MY 2017, 20% of the U.S. market will have adopt ed alternative MVAC systems, and that in each subsequent year the penetration will increase an additional 20%, reaching 100% by MY 2021 (EPA/NHTSA 2012) . This analysis adopts these assumptions, with the caveat that these penetrations are applied only to a given manufacturer’s vehicle production for domestic sales. This analysis conservatively assumes that all manufacturers would co ntinue to produce light

- duty vehicles and trucks containing HFC

- 134a for export , but that none of the exporting manufacturers are small businesses

.
Table 4 below presents the number of small businesses under the applicable NAICS codes estimated to be potentially directly affected by the regulatory changes

. EPA assumes that none of the companies that are manufacturing new light

- duty vehicles and trucks for export are small businesses.

Table 4 : Estimated Number of Small Light

- Duty Vehicle Manufacturers Affected a

Estimated Number of Small Businesses Affected NAICS 336111 Automobile Manufacturing NAICS 336112 Light Truck and Utility Vehicle

Manufacturing Total

All Production 0 b 0 b 0 Production for Export Only 155 b 43 b 198
Total 155 b 43 b 198
Total Number of Small Businesses 155 b 43 b 198

a Based on analysis using Census Bureau (2007). The total number of companies in th e s e industr ies

— including those not characterized as small businesses

— is 241

. b 0% of small businesses assumed to be affected.

8 The EPA/NHTSA Final Rulemaking to Establish 2017 and Later Model Year Light

- Duty Vehicle Greenhouse Gas Emissions and Corporate Average Fuel Economy Standards was issued August 28, 2012.Economic Impact Screening Analysis 9 

## 3.1 **Estimated Economic Impact on Affected Small Entities**
This section summarizes the annual c ompliance costs for light

- duty vehicle and truck manufacturers, and provides a comparison of those costs to average annual sales per firm. For the purposes of this analysis, compliance costs were estimated based on the assumption that HFC

- 134a MVACs w ould be replaced by HFO

1234yf, although other SNAP

- approved alternatives also exist.

Light

- duty vehicle and truck manufacturers purchase either MVAC system components or fully

- assembled MVACs systems which they install in

- house. Costs to manufacturers were es timated based on per

- system costs of alternative systems, as identified in EPA’s report on Global Mitigation of Non

- CO 2 Greenhouse Gases: 2010

- 2030 (EPA 2013) , and converted to 2013 dollars . The incremental per

- system costs of assembling an alternative
MVA C system compared to a n HFC

- 134a system is assumed to be about $6 2 /unit. These incremental costs are less than 1% relative to the total direct manufacturing cost for a light

- duty vehicle or truck.

B ecause no small businesses are expected to be manufacturi ng vehicles for export, the a nnual compliance c ost

a s a p ercentage of a verage s ales per s mall b usiness (i.e., the sales test) is zero, as shown in Table 6 below.

Table 5 : Estimated Economic Impact on Small Entities in the Automobile Manufacturing Industr y (Sales Test)

NAICS Industry Name Annual Compliance Cost a s a Percentage of Average Sales per Small Business Establishment 336111 Automobile manufacturing 0% 336112 Light truck and utility vehicle manufacturing 0% Exhibit 1 : Related Industries Not Directly Affected by the Rulemaking Other Motor Vehicle Parts Manufacturing (NAICS 336390)

— this industry will need to manufacture certain modified MVAC system components to develop alternative designs that can deliver comparable perf ormance to HFC

- 134a systems and meet EPA requirements (e.g., modified suction lines, cooling modules, etc.). While there may be a minimal cost associated with these modifications, for the purpose of this analysis, any such costs are assumed to be passed on to automobile manufacturers. Further, many of these businesses are expected to transition to the manufacture of such modified components under the baseline, given current industry trends and other regulatory incentives and requirements.

Automotive Repair Industry (NAICS 811111)

— this industry is required to use recovery equipment under Section 609 of the Clean Air Act, regardless of the refrigerant. Although the transition to new refrigerant(s) may facilitate the purchase of new refrigerant recovery devices to accommodate those new refrigerants

— the associated costs are considered to be required pursuant to Section 609 rather than resulting from this final rule

.Economic Impact Screening Analysis 10 

## 4 **Aerosol s**  The regulatory changes are expected to affect all aerosol products, with some exceptions for certain medical and technical aerosols. Manufacturers of aerosol products containing propellants listed as unacceptable or those that do not meet the crit eria for the exceptions are required to reformulate or redesign products to use alternative propellants or alternative delivery systems by the dates specified in the final rule

. 

## 4.1 **Small Entities Potentially Subject to the Rulemaking** The U.S. aerosol industry is comprised of the following three product categories:



### • Consumer Aerosols

– A wide variety of personal care products using aerosols, including cosmetics, hairspray, body sprays, and deodorants are covered by this category along with a wide variety of other products such as : tire inflators and other automotive products (e.g., au to lubricants, brake cleaners); noise horns and safety horns; animal repellants; spray paint; spray adhesive with various applications; cleaning products; eyeglass and keyboard dusters; room fresheners; food dispensing products; freeze sprays for removal o f chewing gum, pet excrement, and other wastes; and novelty aerosols (e.g., artificial snow, plastic string, noise makers, and cork poppers).

• Technical Aerosols

– This grouping represents highly specialized products for certain commercial and industrial applications that are not for personal use, which generally include (but are not limited to) those products ex c epted from the Clean Air Act Section 610 nonessenti al products bans (subpart C of 40 CFR part 82) . Products include : cleaners (e.g., electronic contact cleaners, flux removers, degreasers); pesticides (e.g., certain wasp and hornet sprays, aircraft insecticides) ; mold release agents ; certain dusters (e.g. , for photographic negatives, semiconductor chip manufacture, specimens for observation under electron microscope); and spinnerette lubricant/cleaning sprays. Other miscellaneous products such as document preservation sprays and products for the functiona l and sensitivity testing of smoke detectors are also considered in this category.

• Medical Aerosols

– This grouping includes topical anesthetic sprays , products for removing bandage adhesives from skin, and wound care sprays (among excepted products) and l iquid bandages, wart removal sprays, antifungals, and calamine sprays, among the products that would be restricted from using HFC

- 134a and HFC

- 227ea

. A erosol propellants are also used in metered dose inhalers (MDIs) ; however
, use of HFC

134a and HFC

- 227ea and blends of these two HFCs in MDIs is ex c epted from the regulatory restriction

.

The industries directly affected by th e regulatory changes were identified using NAICS codes, as shown in Table
6 below. H owever, the broader industries represented by these NAICS codes may also manufacture a majority of products which are not aerosols , such as creams, polishes, lotions, and other chemic als and equipment

. In addition to manufacturing many non

- aerosol products, these manufacturers are also likely to produce aerosol products that are already using non

- HFC technologies.

In fact, while this rulemaking list s HFC

- 125 as unacceptable and restr ict s HFC

- 227ea to metered dose inhalers and HFC

- 134a to certain technical and medical aerosols
, HFC

- 125 and HFC

- 227ea 9 are not currently used as aerosol propellants

. IPCC (2011) estimates that in developed countries, more than 98 % of non

- medical aerosols

9 HFC

- 227ea is used as a propellant in MDIs, which is excepted.Economic Impact Screening Analysis 11 n ow use non

- ozone

- depleting, low

- GWP propellants (e.g., hydrocarbons, dimethyl ether, CO 2 , or nitrogen). As such, this rulemaking would serve to avoid future use of these HFC propellants.

With regard to HFC

- 134a, primarily technical aerosol products continu e to use this chemical as propellants for specific purposes (e.g., specialized product cleaners, aircraft pesticides) due to performance or safety limitations (e.g., flammability). The following technical aerosol application s are ex cepted from restrictions on HFC

- 134a

. This list also incorporates those applications that were previously ex c epted from the nonessential products regulations (EPA 2010):

• Certain m edical devices including metered dose inhalers ;

• Lubricants, coatings, or cleaning fluids for aircraf t maintenance ;

• Lubricants, coatings, or cleaning fluids for electrical, electronic or photographic equipment ;

• Mold release agents ;

• Spinnerette lubricant/cleaning sprays

• Document preservation sprays ;

• P esticides for use near electrical wires or in aircraft ; and

• Products for the sensitivity testing of smoke detectors.
Among consumer products, tire inflators are one significant remaining use of HFC

- 134a propellant. Some brands of tire inflators in the United States , and all those in Europe, use hydrocarbons as the propellant. Products for the functional and sensitivity testing of smoke detectors are another remaining use of HFC

- 134a propellant; however, these products are considered to be part of a niche market. Bo th aerosol tire inflators and products for the functional testing of smoke detectors are subject to the regulatory prohibition on use of HFC

- 134a as a propellant

.
Table 6 below presents the estimated number of entities expected to be directly affected. A significant portion of the aerosol product manufacturing industry has already transitioned out of the HFCs for regulation or is

e xc epted . However, two tire inflator manufacturers 10 and three smoke detector tester manufacturers 11 using
HF C

- 134a propellant are considered to be small businesses and are expected to be affected by this rulemaking.

Table 6 : Estimated Number of Aerosol Small Businesses Affected by the Regulation

NAICS Code Industry Name Relevant Aerosol Products Included Small Business Threshold (Number of Employees) Percent of Industry Assumed to

Use HFCs Affected by Regulatory

Changes Estimated Number of Small Business es Affected

325620 Perfumes, m akeups and

o ther t oiletries Aerosol h airsprays, Cologne and perfume manufacturing
, Deodorants 500 0% 0

10 The two manufacturers, Radiator Specialty Company and Warren Distribution, Inc. were determined to be small businesses based on employee data available from Dun and Bradstreet (2014) and the small business threshold for NAICS code 325998 of 500 employees. Other producers of tire sealants containing HFC

- 134a (e.g., ITW Global Brands, Valvoline Co.) exceed the small business size threshold.
11 The three manufacturers, SDi/detectortesters, CRC Industries, and HIS Fire & Safety Group LLC were determined to be small businesses based on discussion with EPA, available employee data, and the small business threshold for NAICS code 325998 of 500 employees. Another producer of products for functional testing of smoke detectors containing HFC

- 134a (i.e., Interlogix) e xceeds the small business size threshold.Economic Impact Screening Analysis 12 NAICS Code Industry Name Relevant Aerosol Products Included Small Business Threshold (Number of Employees) Percent of Industry Assumed to

Use HFCs Affected by Regulatory

Changes Estimated Number of Small Business es Affected

325612 Polishes and o ther

s anitation g oods Air fresheners
, Household c leaning
p roducts
, Specialized dusters
, Degreasers (household)
, Deodorants (non

- personal)
, Aircraft cleaner 500 E/0% a 0

325520 Adhesive manufacturing Household maintenance adhesives
, Caulking, Sealants 500 0% 0

324191 Petroleum lubricating oil and grease manufacturing Auto products
, Lubricants 500 E/0% a 0

325510 Paint and c oating

m anufacturing Dispersions , Paint , Enamel p aint , Latex p aint , Coatings 500 0% 0

325998 All o ther m iscellaneous

c hemical p roduct and
p reparation m anufacturing Degreasers , Defluxers , Freeze s prays , Mold release agents , Wasp and hornet spray b
, Spinnerette lubricant sprays , Document preservation sprays , Tire inflators
, Products for functional testing of smoke detectors 500 E / 0% c 5

325412 Pharmaceutical
p reparation m anufacturing Freeze s prays (wart treatment)
, Calamine spray 750 0% 0

325199 All o ther b asic o rganic

c hemical m anufacturing Anti

- fungal sprays 1,000 0% 0

339113 Surgical a ppliance and

s upplies m anufacturing Liquid bandages 500 0% 0 Note: Bolded items have been identified as products that are likely to use HFC

- 134a, but are ex ce pt ed from the regulatory restrictions ; “ E ” represents entities that are found to be ex c ept ed from the regulatory restriction

. a Some products in this category are excepted from the regulatory restriction. F or restricted products, it is expected that all manufacturers would already have transition ed out of the HFCs in the regulation, thus 0% are expected to be affected. b Only wasp and hornet spray for use near power lines would qualify for an exception, not household sprays.

c The majority of the products in this category are ex ce pt ed from the reg ulatory restriction. F or the restricted products, it is expected that all manufacturers would already have transitioned out of the HFCs in the regulation . However, aerosol tire inflators containing HFC

- 134a would be subject to the regulatory changes . T wo m anufacturers that produce tire inflators and three manufacturers of products for functional testing of smoke detectors with HFC

- 134a propellant were identified as small businesses.



## 4.2 **Estimated Economic Impact on Affected Small Entities**
Table 7 presents a summary of the annualized compliance costs as a percentage of average annual sales for the small businesses affected. As shown, there is no economic impact for small businesses in most covered industries, due to the already widespread use of non

- HFC

- 134a aerosol propellants, and ex c eptions for HFC

134a and HFC

- 227ea in MDIs, and HFC

- 134a in technical aerosols for specialized uses. In addition, small businesses manufacturing tire inflators using HFC

- 134a propellant are expected to exper ience cost savings on an annualized basis, 12 due to the lower cost of hydrocarbon

- based propellant. The specific assumptions used to calculate annualized compliance costs for tire inflator manufacturers are presented after the table.

12 This screening assessment assumes facilities produce approximately 1 million aerosol cans annually; however, facilities that manufacture as few as 200,000 aerosol cans per year (assuming lower end of up

- front cos ts) can expect to see cost savings as a result of compliance with the regulatory changes. If a facility incurs conversion costs on the higher end of the range, the facility would have to manufacture 670,000 aerosol cans per year to see cost savings as a re sult of regulatory compliance.Economic Impact Screening Analysis 13 Table 7 : Estimated Economic Impact on Small Businesses (Sales Test)

NAICS Industry Name Annual Compliance Cost as a Percentage of Annual Sales per Small Business 325620 Perfumes, m akeups and o ther t oiletries NA 325612 Polishes and o ther s anitation g oods NA 325520 Adhesive manufacturing NA 324191 Petroleum lubricating oil and grease manufacturing NA 325510 Paint and c oating m anufacturing NA 325998 All o ther m iscellaneous c hemical p roduct and p reparation m anufacturing < 0% *

- 2.6 % 325412 Pharmaceutical p reparation m anufacturing NA 325199 All o ther b asic o rganic c hemical m anufacturing NA 339113 Surgical a ppliance and s upplies m anufacturing NA NA indicates that no small entities are expected to be subject to this rulemaking, and thus compliance costs are zero. * On an annualized basis, tire inflator manufacturer small businesses are expected to experience some cost sa vings as a result of compliance

.
Aerosol Tire Inflators

-- For the purposes of quantifying compliance costs for this analysis, it was assumed that tire inflator manufacturers still using HFC

- 134a w ould transition to a hydrocarbon

- based propellant (usually a mixture of propane, butane, and isobutane). One

- time capital costs for conversion were assumed to range between $ 34 2 ,000 and $1.3 million in 2013 dollars , which covers costs to convert a facility to accommodate a flammable aerosol propellant (e.g., installing sensors and storage capacity)
, t est and certify equipment to U nderwriter’s L aboratory (UL) standards , and the p otential need to relocate facilities to regions where hydrocarbon use is considered safe (EPA 2013). These upfront costs are offset by annual savings of about $ 260 ,000 per facility associated with a lower

- cost hydrocarbon

- based propellant. Incremental annu al operating costs were assumed to be zero, based on the expectation that companies already have fire insurance and other fire safety precautions intact (EPA 2013). All costs and savings were developed based on a model facility assumed to manufacture 1 mil lion consumer aerosol cans 13 per year and were annualized assuming a lifetime of 10 years.

Aerosol Products for Functional and Sensitivity Testing of Smoke Detectors

-- For the purposes of quantifying compliance costs for this analysis, it was assumed that manufacturers of products for functional and sensitivity testing of smoke detectors still using HFC

- 134a would transition to HFO

- 1234ze, as the product requires a non

f lammable propellant. One

- time capital costs for conversion were assumed to be between $105,000 and $ 5 3 0,000 in 2013 dollars, depending on the need for bulk storage (EPA 2013). Incremental annual operating costs were assumed to be $1, 250 per facility associ ated with the higher cost of HFO

- 1234ze than other HFC propellants (i.e., HFC

- 134a) (EPA 2013). All costs were developed based on a model facility assumed to manufacture 10,000 smoke detector tester aerosol cans 14 per year and were annualized assuming a n eq uipment lifetime of 10 years.

13 Each aerosol can is assumed to contain an HFC

- 134a aerosol propellant charge of two ounces (EPA 2013).
14 Ibid.Economic Impact Screening Analysis 1 4 

## 5 **Foam Sector** The regulatory changes are expected to affect manufacturers of domestic and commercial refrigerated appliances, polyurethane foam products, polystyrene foam products, polyolefin foams, polyisocyanurate foams, and phenolic foams.



## 5.1 **Small Entities Potentially Subject to the Rulemaking** The industries directly affected by the regulatory changes in the foam sector were identified using NAICS codes, as shown in Table 8

. Foam end

- uses in cluded under each of the broader industries are also shown. The remaining sections analyze the number of small businesses under each NAICS code affected by the regulatory changes.

Table 8 : NAICS Codes for Foams

NAICS Code Industry Name Relevant Foam End

- Uses

326140 Polystyrene foam product manufacturing Polystyrene: e xtruded b oardstock and b illet Polystyrene: e xtruded s heet 335222 Household refrigerator and home freezer manufacturing Rigid p olyurethane : (household) a ppliance 333415 Air

- conditioning and warm air heating equipment and commercial and industrial refrigeration equipment manufacturing Rigid p olyurethane: c ommercial r efrigeration

326150 Urethane and other foam product (except polystyrene) manufacturing Flexible p olyurethane : slabstock and moulded

Rigid p olyurethane: s andwich panels Rigid p olyurethane : s labstock Rigid polyurethane: marine flotation foam Rigid p olyurethane and p olyisocyanurate l aminated b oardstock Polyurethane i ntegral s kin Polyolefin Phenolic



### 5.1.1 Polystyrene Foam Product Manufacturing ( NAICS code 326140 ) The extruded polystyrene (XPS) boardstock and billet manufacturing and XPS sheet manufacturing industr ies fall within the broader NAICS code 326140, p olystyrene f oam p roduct m anufacturing

. A ll known companies that manufacture extruded polystyrene (XPS) foam in the United States exceed the small business size threshold for this NAICS code (defined as a firm with less than 500 employees). Thus, no small businesses are est imated to be directly affected by the regulatory changes.



### 5.1.2 Household R efrigerator and H ome F reezer M anufacturing (NAICS code 335222 ) The household appliance foam industry is associated with NAICS code 335222
, h ousehold r efrigerator and h ome f

reezer m anufa cturing

. 15 By 2020, when the final unacceptability decision for this end

- use becomes effective, some manufacturers are expected to have transitioned out of HFCs. Specifically, among domestically

15 In contrast to many other polyurethane foam types, household appliance foam is blown directly into the appli ance at time of appliance manufacture.Economic Impact Screening Analysis 15 manufactured appliances on the market in 2020, approximately 5% are assumed to still use HFC

- 134a

- blown foam, while 33% use HFC

- 245fa and the remaining 62% use hydrocarbons (EPA 2012) . The regulatory changes

are therefore assumed t o affect 38 % of the small businesses in manufacturing appli ance foam, since an estimated 38 % of companies would need to transition away from HFC

- 134a and HFC

- 245fa.

The small business threshold for this industry is defined as a firm with fewer than 1,000 employees; however, Census data was only available by estab lishment size. Conservatively applying this threshold to establishments yielded the total number of small establishments. To estimate the total number of small businesses (firms) affected, a scaling ratio was used between total firms and establishments for this industry (i.e., 19 firms to 2 5 establishments). Table 9 below presents the number of small businesses estimated to be directly affected.

Table 9 : Estimated Number of Appliance Small Businesses Affected

NAICS Code Industry Name Total Number of Small Businesses Estimated Number of Small Businesses Affected

335222 Household refrigerator and home freezer manufacturing 14 a 5

a Based on U.S. Census Bureau (2007). The total number of companies in this industry

— including those not characterized as small businesses

— is 19.


### 5.1.3 Air

- C onditioning and W arm A ir H eating E quipment and C ommercial and I ndustrial R efrigeration E quipment M anufacturing (NAICS code 333415) The commercial refrigeration foam industry is associated with NAICS code 333415, air

- conditioning and warm air heating equipment and commercial and industrial refrigeration equipment manufacturing

. 16 By 2020, when the final unacceptability decision for this end

- use becomes effective, some manufacturers are expected to have transitioned out of HFCs. Specifically, among domestically manufactured commercial refrigeration equipment on the market in 2020 , approximately 5% are assu med to still use HFC

- 134a

- blown foam, while 44% use HFC

- 245fa and the remaining 51% use hydrocarbons (EPA 2012) . As such, the r egulatory changes are assumed to affect
49 % of the small businesses manufacturing commercial refrigeration foam, since an estimat ed 49 % of companies could need to transition away from HFC

- 134a and HFC

- 245fa.

The small business threshold for this industry is defined as a firm with less than 750 employees; however, Census data were only available by establishment size. Conservatively applying this threshold to establishments yielded the total number of small establishments. To estimate the total number of small businesses (firms) affected , a scaling ratio was used between total firms and establishments for this industry (i.e., 730 firm s to 902 establishments ).

Further, because NAICS code 333415 reflects the manufacturing of a wide range of equipment types, including those that would not be affected, the relevant subset of the economic sector

— NAICS code 3334153 commercial refrigerators and related equipment

— was used to identify the number of businesses that could be affected.
D ata on the number of establishments at the disaggregated NAICS code 3334153 l evel , however, are not available ; as a proxy, C ensus data on the value of product ship ments of NAICS code 3334153 relative to the broader NAICS code 333415 were used (U.S. Census 2007, 2014). Based on these data, it was estimated that

16 In contrast to many other polyurethane foam types, commercial refrigeration foam is blown directly into commercial appliances at time of manufacture.Economic Impact Screening Analysis 16 13.5% of the small businesses in NAICS code 333415 manufacture commercial refrigeration equipment and could be affected

. Table 10 below presents the number of small businesses estimated to be directly affected.

Table 10

. Estimated Number of Commercial Refrigeration Small Businesses Affected

NAICS Code Industry Name Total Number of Small Businesses Estimated Number of Small Businesses Affected

33 3415 Air

- conditioning and warm air heating equipment and commercial and industrial refrigeration equipment manufacturing 95 a 47

a Based on U.S. Census Bureau (2007). The total number of firms manufacturing commercial refrigeration equipment

— including those not characterized as small businesses

— is estimated to be 99.


### 5.1.4 Urethane and Other Foam Product (Except Polystyrene) Manufacturing ( NAICS code 326150 ) The remaining foam types affected by the regulatory changes

— f lexible PU slabstock/moulded, marine flotation foam , sandwich panels , integral skin foam s, rigid PU slabstock, rigid PU/PIR laminated boardstock, polyolefin, and phenolic foams

— all fall under NAICS code 326150, u rethane and o ther f oam p roduct (except polystyrene)

m anufacturing

. Within this broader NAICS code industry, only a portion of compan ies would be expected to manufacture PU foam products with HFC

- 134a, or other HFCs/HFC blended blowing agents

— namely HFC

- 365mfc and HFC

- 245fa

. The proportion for each of the foam types was estimated using a two

- step process and data from EPA’s Vintaging Mo del (EPA 2012): 1. First, the amount of blowing agent (all types) used specifically for each of the foam types was compared to the total in the NAICS code. This yielded a proxy for the percentage of companies assumed to be manufacturing each foam type within this NAICS code. 2. Second, the amounts of (a) HFC

- 134a blowing agent and (b) HFC blowing agents other than HFC

- 152a were calculated for each foam type and compared to the total amount of blowing agent used for each foam type (EPA 2012) . This yielded a proxy for the percentage of companies in each foam type that are using HFC blowing agents listed as unacceptable. The combined result of these two steps yields for each PU foam type the percent of companies assumed to be manufacturing covered foam products wit h certain HFCs that could be subject to the regulatory changes. These percentages are summarized in Table 11

.
Table 11 : Assumptions about the Percentage of Affected Entities in NAICS Code 326150

Relevant Foam Types % of Entities Assumed to be Affected Flexible p olyurethane : slabstock and moulded 0% a Rigid p olyurethane: s andwich 1.0% Rigid p olyurethane : slabstock 0% Rigid polyurethane: marine flotation foam 2.2% b Rigid p olyurethane and polyisocyanurate laminated boardstock 9.5% Polyurethane i ntegral s kin 0.2% Polyolefin 0% Phenolic 0% a

a Because the HFCs list ed as unacceptable are not currently in use, 0% of small businesses are assumed to be affected.
b Assumed to be 15% of the entire rigid polyurethane: spray foam market.Economic Impact Screening Analysis 17 The small business threshold for this industry is defined as a firm with less than 500 employees; however, while the Census Bureau provides the total number of firms and establishments in the industry, it only provides disaggregated data by employee size for establishment s . To estimate the total number of small businesse s (i.e., firms with less than 500 employees ) affected by the regulatory changes, a scaling ratio between total number of firms and establishments for this industry (i.e., 482 firms to 685 establishments) was applied to the number of establishments with les s than 500 employees

. Table 12 below presents the number of small businesses estimated to be directly affected

.
Table 12 : Estimated Number o f Small Businesses Manufacturing Non

- Appliance PU Foam Types Affected

NAICS Code Industry Name Total Number of Small Businesses Foam Type Estimated Number of Small Businesses Affected

326150 Urethane and other foam product (except polystyrene) manufacturing 481 a Flexible p olyurethane : slabstock and moulded 0 Rigid p olyurethane: s andwich 5 Rigid p olyurethane : slabstock 0 Rigid polyurethane: marine flotation foam 11 Rigid p olyurethane and polyisocyanurate laminated boardstock 46 Polyurethane integral skin 1 Polyolefin 0 Phenolic 0 Total 61

a Based on U.S. Census Bureau (2007). Includes total number of small business establishments for all urethane foam types, including those not listed in table. The total number of companies in this industry

— including those not characterized as small businesses

— is 482.


### 5.1.5 Summary of Small Business Impacted in the Foam Sector
Table 13 below summarizes the number of small businesses estimated to be impacted in each NAICS code and foam type.

Table 13 : Estimated Number of Small Businesses Affected in the Foam Sector

NAICS Code Industry Name Relevant Foam End

- Uses Estimated Number of Small Businesses Affected

326140 Polystyrene foam product manufacturing Polystyrene: e xtruded b oardstock and b illet 0 Polystyrene : extruded sheet 0

335222 Household refrigerator and home freezer manufacturing Rigid p olyurethane (household) a ppliance 5

333415 Air

- conditioning and warm air heating equipment and commercial and industrial refrigeration equipment manufacturing Rigid p olyurethane: c ommercial r efrigeration 47

326150 Urethane and other foam product (except polystyrene) manufacturing Flexible polyurethane: slabstock and moulded 0 Rigid p olyurethane: s andwich 5 Rigid p olyurethane : slabstock 0 Rigid p olyurethane : m arine flotation foam 11 Rigid p olyurethane and polyisocyanurate laminated boardstock 46 Polyurethane integral skin 1 Polyolefin 0Economic Impact Screening Analysis 18 NAICS Code Industry Name Relevant Foam End

- Uses Estimated Number of Small Businesses Affected Phenolic 0 Total 114 Note: T otals may not sum due to independent rounding.


## 5.2 **Estimated Economic Impact on Affected Small Entities** This section summarizes the annual compliance costs for polyurethane, polystyrene, and appliance foam manufacturers, and provides a comparison of those costs to average annual sales per establishment. All costs and savings are expressed in 2013 U.S. dollars. Where available and appropriate, compliance costs were estimated based on EPA’s report on Global Mitigation of Non

- CO 2 Greenhouse Gases: 2010

- 2030 (EPA 2013). Because EPA (2013) costs are based on typical U.S. facility sizes, in some cases, they were considered to overestimate incremental compliance cost s for a small business, which is likely to have fewer production lines (and/or lower run

- times) and lower annual blowing agent consumption. For those foam types for which EPA (2013) cost estimates were not appropriate or available, incremental capital and operating costs were estimated based on industry input, as available, and costs reported in project proposals submitted to the Multilateral Fund (MLF) of the Montreal Protocol, and scaled according to actual project funds approved by the Executive
Committe e of the MLF. Among foam sector projects submitted to the MLF, selections were based on analysis of which project provided the most reasonable proxy for U.S. small businesses; considerations included facility size (i.e., annual blowing agent use) and alter native used. In consideration of the uncertainty inherent in these cost estimates, capital costs for each of the end

- uses were increased by 20% to explore the sensitivity of the results to these costs and develop a higher and lower range of the potential c ompliance costs.

Used as a proxy for U.S. small business compliance costs, these MLF project costs are subject to several limitations, including: funding requested and approved by the Executive Committee of the MLF is based on myriad complex considerations such as cost

- effectiveness thresholds for specific foam project types, foreign ownership stakes in domestic companies, assumptions about company counterpart contributions to conversion costs, and so on, which may affect the accuracy of the cost estimates when transferred to the U.S. context; MLF costs are based on those estimated or reported for developing countries, which may not be the same as those experienced in the United States; and MLF costs are based on facility conversions from HCFC

- 141b blowing

a gent, rather than HFCs.

Table 14 presents a summary of the annualized compliance costs as a percentage of the average annual sales for each foam type. Average annual sales per establishment were calculated by dividing total value of shipments (as a proxy for sales) by the number of estab lishments, for each small business establishment size (e.g., 0

- 4 employees, 5

- 9 employees, 10

- 19 employees, etc.). Because average annual sales were calculated by establishment size, a range is provided for annual compliance costs as a percentage of annual sales. In general, annual compliance costs represent a higher percentage of annual sales for smaller establishments. The specific assumptions used for each foam type to estimate annualized compliance costs are presented after the table.Economic Impact Screening Analysis 19 Table 14 : Estimated Economic Impact on Small Entities in the Foam Manufacturing Industry (Sales Test)

NAICS Code Industry Name Foam Type Annual Compliance Cost as a Percentage of Average Sales per

Establishment

326140 Polystyrene foam product manuf acturing Polystyrene: e xtruded b oardstock and b illet 0% a Polystyrene: extruded sheet 0% b

335222 Household refrigerator and home freezer manufacturing Rigid polyurethane: (household) appliance <0% c

– 2. 4 %

333415 Air

- conditioning and warm air heating equipment and commercial and industrial refrigeration equipment manufacturing Rigid p olyurethane : c ommercial r efrigeration <0% c

– 3.9 %

326150 Urethane and other foam product (except polystyrene) manufacturing Flexible polyurethane: slabstock and moulded 0% b Rigid polyurethane: sandwich <0.1%

– 6.5 % Polyurethane integral skin <0.1%

– 6.6 % Rigid polyurethane: slabstock 0% Rigid polyurethane: marine flotation foam <0.1%

– 4 8.0 % Rigid polyurethane and polyisocyanurate laminated boardstock <0.1%

– 15.5% Polyolefin 0% Phenolic 0% b

a All of the manufacturers in this end

- use are large businesses (i.e., those with more than 499 employees).

b Because the HFCs list ed as unacceptable are not currently in use, annual compliance costs are assumed to be zero.

c On an annualized basis, the largest

- sized small businesses (i.e., those with 500 to 999 employees) are expected to experience some cost

sa vings as a result of com pliance with this regulatory change.

**5.2.1.1 Polystyrene Foam Product Manufacturing** 

• XPS Sheet and Boardstock and Billet

– All known XPS manufacturers of boardstock and billet are larger businesses (i.e., having more than 499 employees) and therefore do not qualify as small businesses for the purposes of this analysis. XPS sheet is manufactured using alternatives other than the HFCs listed as unacceptable, and this analysis ass umes the rule will not result in costs for this end

- use.

**5.2.1.2 Household R**  **efr igerator and Home Freezer M**  **anufacturing**

• Rigid Polyurethane : (Household) Appliance

— Manufacturers using HFC

- 245fa and HFC

- 134a would be impacted by the regulatory changes. For the purpo ses of quantifying compliance costs for this analysis, it was assumed that companies still using HFC

- 245fa and HFC

- 134a would transition to either hydrocarbons or Solstice LBA. Hydrocarbons may be a more cost

- effective option, but Solstice LBA is
conservat ively assumed to be adopted to help achieve energy efficiency standards and/or to avoid incurring upfront capital costs. Specifically, establishments with zero to nine employees are assumed to transition fully to Solstice LBA, while establishments with 10 to 999 employees are assumed to transition 50% to Solstice LBA and 50% to hydrocarbons.
The range of facility transition costs were based on the costs to transition from HFC

- 245fa, as reported in EPA (2013). Capital facility costs to convert to hydrocarb ons were assumed to be between $ 5.1 million and $6. 1 million per facility, but these costs are offset by annual savings of up to $1.4 million per facility due to lower blowing agent costs; these savings are varied depending on facility size (i.e., number o fEconomic Impact Screening Analysis 20 units produced). The short

- term impact of the initial capital expenditures would be expected to depend in part on how small businesses are able to finance their upfront costs.

Conversely, no capital costs were assumed to convert to Solstice LBA (since this option is considered to be a near drop

- in replacement for HFC

- 245fa), but annual costs per facility were estimated to be between $2,000 and $ 900 ,000 per facility, 17 due to high er blowing agent costs

. Annual costs/savings associated with blowing agent costs were scaled by the number of appliances manufactured per facility, which was estimated based on reported value of shipments and an assumed value of $1,500 per appliance. All c osts were annualized assuming a facility lifetime of 25 years.

**5.2.1.3 Commercial and Industrial Refrigeration Equipment Manufacturing** 

• Rigid Polyurethane: Commercial Refrigeration

— Manufacturers using HFC

- 245fa and HFC

- 134a would be impacted. For the purposes of q uantifying compliance costs for this analysis, it was assumed that companies still using HFC

- 245fa and HFC

- 134a would transition to hydrocarbons or Solstice LBA.
Facility transition costs were based on the costs to transition from HFC

- 245fa, as reported i n EPA (2013). Capital costs to transition to hydrocarbons were assumed to be approximately between $ 1.3 million and $ 1.6 million per facility, while net annual savings are estimated to be up to $992,000 per facility, due to lower blowing agent costs

. The short

- term impact of the initial capital expenditures would be expected to depend in part on how small businesses are able to finance their upfront costs.

No capital costs were assumed to convert to Solstice LBA (since this option is considered to be a near drop

- in replacement for HFC

- 245fa), but annual costs per facility were estimated to be between $500 and $2 68 ,000 per facility, 18 due to higher blowing agent costs. Annual costs/savings associated with blowing agent costs were scaled by the number of appliances manufactured per facility, which was estimated based on reported value of shipments and an assumed value of $2,000 per equipment. All costs were annualized assuming a facility lifetime of 25 years.

**5.2.1.4 Urethane and**  **O ther**  **F oam**  **P roduct (**  **Except P**  **olys tyrene)**  **M anufacturing** 

• Flexible Polyurethane

— As previously mentioned, this foam type is currently manufactured in the United States using only hydrocarbons. Therefore, prohibiting the use of HFCs in this end

- use would no t be expected to impact small busines ses. The regulatory changes would serve to avoid use of HFCs

.

• Rigid Polyurethane: Sandwich Panels

— Th e regulatory changes would be expected to impact manufacturers producing sandwich panel foam using HFC

- 134a and HFC

- 245fa blowing agent. For the
purposes o f quantifying compliance costs for this analysis, it was assumed that companies still using
HFC

- 134a or HFC

- 245fa would transition to hydrocarbons. One time

- capital costs for conversion were assumed to be between $ 183 ,000 and $2 20 ,000 for a typical firm; this is assumed to cover retrofitting or replacement of foam dispensers, purchase of a pre

- mixing system, retrofitting of jigs, purchase of safety related equipment, and conducting trials, training, testing and certification (UNEP 2012, UNEP 2013a).

17 Depending on the number of appliances assumed to be manufacture d per facility and the cost of Solstice LBA (which was assumed to range from $14 to $17 per kilogram).

18 Depending on the number of equipment assumed to be manufactured per facility and the cost of Solstice LBA (which was assumed to range from $14 to $17 p er kilogram).Economic Impact Screening Analysis 21 Incremental annual operating costs were assumed to be zero; while an increase in operating costs may be experienced associated with the use of hydrocarbons

— due to the need for raw materials for fire retardants

— these costs are not expected to outweigh the annual savings associated with the lower incremental blowing agent cost. Indeed, this assumption is conservative given the significant annual cost savings assumed in EPA (2013) for other foam types transitioning to hydrocarbons. Costs were annualized over an assumed facility lifetime of 25 years.

• Rigid Polyurethane: Marine Flotation Foam

— Foam is used in boat manufacturing for both structural and flotation purposes. Polyurethane foams for flotation purposes are available in blocks, or sheets, but the most significant application is closed

- cell polyurethane injection foams, or pour

- in

- place application.
R eformulation costs would be borne by polyol and isocyanate manufacturers and systems houses. System houses typically develop appropriate formulations thro ugh an experimental process making improvements incrementally until the ideal en d

- use properties are developed. Thus, the regulatory changes would be expected to impact marine flotation foam manufacturers (i.e., Urethane and Other Foam Product (Except Poly styrene) Manufacturing ) using HFC

- 134a and HFC

- 245fa, not boat manufacturers

. 19 Depending on the complexity of and time required for this development process, incremental costs may or may not be passed on to end

- users. It was assumed that companies still us ing HFC

- 134a and HFC

- 245fa would transition to hydrocarbons (e. g. , pentane) and HFO/water blends. Transitioning to these blowing agent substitutes are expected to result in a 10% increase in raw material costs for boat manufacturers associated with slightl y more foam needed on a volume basis (ICF estimate). This cost would likely be passed on to the consumer (i.e., boat manufacturers would add the incremental cost of the foam, a very small cost compared to other boat costs, to the final price of the fabrica ted boat). For the purposes of quantifying compliance costs for this analysis, the smaller marine flotation foam manufacturers (i.e., those with less than 10 employees) are expected to transition to HFO/water systems. Of the remaining entities, 50% would b e expected to transition to pentane blowing agents and the remaining 50% to HFO/water systems. Capital costs for transitioning to HFO/water systems were assumed to be between $ 210 ,000 and $ 253 ,000 per facility, covering the cost of formulation development and compliance testing. Incremental annual operating costs were conservatively estimated to be between $97,000 and $116,000 per facility, due to higher blowing agent costs (EPA 2013) 20 ; actual costs may be lower given potential efficiency savings. Actual co mpliance costs may vary based on the size of each manufacturing facility. Costs were annualized over the facility lifetime, assumed to be 25 years. Capital costs for transitioning to pentane blowing agents were assumed to be between $210,000 and $632,000 p er facility, associated with hydrocarbon storage systems, replacement or retrofit of existing foaming dispenser including jigs and fixtures, installation of safety related equipment, trials, and certification (UNEP 2010c). Incremental annual operating cost s were assumed to be zero; while an increase in operating costs may be experienced associated with the use of hydrocarbons

— due to the

19 The boat manufacturing industry, which can be characterized by the North American Industry Classification System (NAICS) code 336612: Boat Building, is primarily comprised of small businesses (i.e., having less than 500 employees).

20 Assumi ng Solstice LBA costs between $14 and $17 per kilogram.Economic Impact Screening Analysis 22 need for raw materials for fire retardants

— these costs are not expected to outweigh the annual savings associated with the lower blowing agent cost.

• Polyurethane Integral Skin

— Th e regulatory changes would be expected to impact integral skin manufacturers using HFC

- 134a, as no other HFCs are assumed to be in use in this application (EPA 2012). It was assumed that companies still using HFC

- 134a would transition to CO 2 . Capital costs were assumed to be between $ 184 ,000 and $2 20 ,000 for a typical firm; this is assumed to cover the purchase or retrofit of foam dispensers, purchase of cooling equipment, purchase of a pre

- mixing t ank, and trials (UNEP 2012, UNEP 2013a). Incremental annual operating costs were assumed to be zero; while an increase in operating costs may be experienced associated with the use of CO 2 , these costs are not expected to outweigh the annual savings associat ed with the lower incremental blowing agent cost. Indeed, this assumption is conservative given the significant annual cost savings assumed in EPA (2013) for other foam types transitioning to CO 2 . Costs were annualized over an assumed 25 year facility life time

.

• PU/PIR Laminated Boardstock

— Manufacturers of this foam type rely on HFC

- 134a, as well as HFC

245fa and hydrocarbons. For the purposes of quantifying compliance costs for this analysis, it was assumed that companies using HFC

- 134a or HFC

- 245fa would transition to hydrocarbons. Capital costs for a facility to transition to hydrocarbons were estimated to be approximately between $ 4 32 ,000 and $959,000 for one production line that produces 25 MT of blowing agent per year (UNEP 2009 , 2011a, 2010c). The cap ital costs associated with the conversion to hydrocarbons include hydrocarbon storage systems, replacement or retrofit of existing foaming dispenser including jigs and fixtures, installation of safety related equipment, trials, and certification (UNEP 2010 c). Incremental annual operating costs were assumed to be zero; while an increase in operating costs may be experienced associated with the use of hydrocarbons

— due to the need for raw materials for fire retardants

— these costs are not expected to outweigh t he annual savings associated with the lower blowing agent cost. This assumption is conservative given the significant annual cost savings assumed in EPA (2013) for other foam types transitioning to hydrocarbons. Costs were annualized over an assumed facili ty lifetime of 25 years. Although the smallest facilities (i.e., those with less than 20 employees) may face significant annualized compliance costs representing up to about 15% of annual sales for the high capital cost estimate, for the majority of small businesses (38 of 46), compliance costs are estimated at 2% or less of annual sales.

• Polyolefin

— Previous analysis assumed t his foam type to be manufactured in the United States using only hydrocarbons. All known companies that manufacture polyolefin foam u sing HFC

- 134a in the United States exceed the small business size threshold for this NAICS code (defined as a firm with less than 500 employees). Thus, no small businesses are estimated to be directly affected by the regulatory changes.

• Phenolic

— This foam type is assumed to be manufactured in the United States using only hydrocarbons. Therefore, prohibiting the use of HFCs in this end

- use would not be expected to impact small businesses.Economic Impact Screening Analysis 23 

## 6 **Commercial Refrigeration**  The regulatory changes are expected to affect the retail food refrigeration end

- use , including new and retrofitted supermarket systems, remote condensing unit systems, and stand

- alone units

. The regulatory changes are also expected to affect new and retrofitted vending m achines.



## 6.1 **Small Entities Potentially Subject to the Rulemaking**

6.1.1 Remote Retail Food Equipment (Supermarket Systems and Remote Condensing Units) Supermarkets and other retail food establishments that use remote refrigeration systems (i.e., rack systems and

r emote condensing units) to cool food, beverages, and other refrigerated or frozen products prior to sale are required to use alternative refrigerants to the ones listed as unacceptable by the regulation in new and retrofitted equipment beginning in 2016, 2 017, or 2018 (depending on the end

- use and application)

. Remote refrigeration systems are generally defined as systems that consist of various components linked through a refrigerant piping network. Rack systems, which are most commonly used in supermark ets as well as warehouse clubs and superstores, consist of racks of multiple compressors and other components that are connected to a remote condenser and linked to display cases, reach

- ins, and walk

- ins through a piping network. Remote condensing units, which are more commonly used in convenience stores and other medium

- sized retail food establishments, consist of one or two compressors, one condenser, and one receiver assembled into a condensing unit system, which is then linked to display cases, reach

- i ns, or walk

- ins through a piping network. Since new remote refrigeration systems are typically installed and charged onsite, and existing systems are also retrofitted onsite, the economic impact of complying with this regulation is expected to be most dir ectly incurred by the end

- users of the equipment.

**6.1.1.1 Affected Industries**  End

- users of remote retail food equipment include supermarkets, w arehouse c lubs /s uperstores , convenience stores, drug stores, hotels, cafeterias, specialty food stores, restaurants, an d bars. Table 15 below presents the industries that are expected to be affected (by NAICS code), the total number of firms represented by each industry, the small business threshold for each industry, and the resulting number of small businesses.

Table 15 : NAICS Codes for Affected Retail Food Industries

NAICS Code Industry Name Total Number of Firms in Each

Industry* Small Business Threshold: Annual Sales

per Firm Total Number of Small Businesses in Each Industry
44511 Supermarkets and o ther g rocery ( e xcept c onvenience) s tores 34,009 $30 million 33,332
44512 Convenience s tores 16,944 $27 million 16,918
44521 Specialty f ood s tores

– m eat m arkets 4,628 $7 million 4,532
44522 Specialty f ood s tores

– f ish and s eafood m arkets 1,591 $7 million 1,547
44523 Specialty f ood s tores

– f ruit and v egetable m arkets 2,082 $7 million 1,983
445291 Specialty f ood s tores

– b aked g oods s tores 2,229 $7 million 2,220
445292 Specialty f ood s tores

– c onfectionary and n ut s tores 1,619 $7 million 1,600
445299 All o ther s pecialty f ood s tores 3,182 $7 million 3,162
4453 Beer, w ine, and l iquor s tores 23,206 $7 million 22,697Economic Impact Screening Analysis 24 NAICS Code Industry Name Total Number of Firms in Each

Industry* Small Business Threshold: Annual Sales

per Firm Total Number of Small Businesses in Each Industry
453110 Florist 16,031 $7 million 16,001
44711 Gasoline s tations with c onvenience s tores 44,565 $27 million 43,724
44719 Other g asoline s tations 13,195 $14 million 12,161
446110 Pharmacies and d rug s tores 17,217 $25.5 million 17,069
452910 Warehouse c lubs and s uperstores 11 $27 million 0
452990 All o ther g eneral m erchandise s tores 6,946 $30 million 6,880

72111 Hotels ( e xcept c asino h otels) and m otels 31,649 $30 million 30,706
72112 Casino h otels 177 $30 million 20
72211 Full

- s ervice Restaurants 148,269 $7 million 142,096
722211 Limited

- s ervice restaurants 107,017 $10 million 103,478
722212 Cafeterias, b uffets, and g rill b uffets 4,146 $25.5 million 4,105
722213 Snack and n onalcoholic b everage b ars 24,850 $7 million 24,449
72241 Drinking p laces 37,531 $7 million 37,037 * Includes all firms in this industry, including firms that are and are not categorized as small businesses. Only firms that have been in operation for the entire year are considered as part of this analysis. Source: U.S. Census Bureau (2007).

**6.1.1.2 Affected Small**  **Businesses** Some movement out of high

- GWP refrigerants (e.g., R

- 404A and R

- 507A) has already been observed in the retail food industry, and industry pledges, such as those made by the Consumer Goods Forum and its members to phase out HFC refrigerants in ne wly purchased equipment by the end of 2015, may serve to accelerate the transition out of HFC refrigerants. 21 Assuming that the industry is operating under business as usual conditions, this analysis estimates that in the absence of this rulemaking 70% of f irms would continue to use R

- 404A or R

507A in new supermarket systems in 2017 and 70% of firms would continue to use R

- 404A or R

- 507A in new remote condensing units in 2018; therefore, these firms will be affected by this regulation. In addition, this

an alysis estimates that 25% of firms will have CFC

- 12, R

- 502, or HCFC

- 22 supermarket systems in operation in 2016 and 25% of firms will have CFC

- 12, R

- 502, or HCFC

- 22 remote condensing units in operation in 2016 that will be available for retrofitting . With R

- 404A, R

- 507A, or R

- 422D being the preferred retrofit refrigerant, firms that have CFC

- 12, R

- 502, or HCFC

- 22 systems in operation would thus also be affected by the regulation.

Applying these assumptions, Table 16 below presents the estimated number of small businesses expected to be directly affected by the regulatory decisions applicable to remote retail food refrigeration systems. Not all of these small businesses will be affected in the first year in which the regulation goes into effect; instead, a proportion of these businesses are expected to be affected in each of the approximately 15

- 20 years after 2017 or 2018, as existing supermarket systems and remote condensing units, respectively, reach end

- of

- life and are

21 The Consumer Goods Forum is a global industry network consisting of retailers, manufacturers, service providers, and other stakeholders . In 2010, the Forum agreed to “begin phasing

- out hydrofluorocarbon (HFC) refrigerants as of 2015 and replace them with non

- HFC refrigerants (natural refrigerant alternatives) where these are legally allowed and available for new purchases of point

- of

- sale units and large refrigeration install ations” (CGF 2010).Economic Impact Screening Analysis 25 replaced with new systems. Likewise a proportion of these business are expected to be affected in the years after 2016, as existing supermarket systems and remote condensing units are retrofitted

.
Table 16 : Estimated Number of Retail Food Small Businesses Affected by the Regulat ion*
NAICS Code Industry Name Estimated Number of Small Businesses Affected New Systems Retrofit Total**

44511 Supermarkets and o ther g rocery ( e xcept

c onvenience) s tores 23,332 8,333 31,665

44512 Convenience s tores 11,842 4,229 16,072

44521 Specialty f ood s tores

– m eat m arkets 3,172 1,133 4,305

44522 Specialty f ood s tores

– f ish and s eafood m arkets 1,083 387 1,470

44523 Specialty f ood s tores

– f ruit and v egetable m arkets 1,388 496 1,884

445291 Specialty f ood s tores

– b aked g oods s tores 1,554 555 2,109

445292 Specialty f ood s tores

– c onfectionary and n ut s tores 1,120 400 1,520

445299 All o ther s pecialty f ood s tores 2,214 791 3,004

4453 Beer, w ine, and l iquor s tores 15,888 5,674 21,562

453110 Florist 11,201 4,000 15,201

44711 Gasoline s tations with c onvenience s tores 30,607 10,931 41,538

44719 Other g asoline s tations 8,513 3,040 11,553

446110 Pharmacies and d rug s tores 11,948 4,267 16,216

452910 Warehouse c lubs and s uperstores 0 0 0

452990 All o ther g eneral m erchandise s tores 4,816 1,720 6,536

72111 Hotels ( e xcept c asino h otels) and m otels 21,494 7,676 29,170

72112 Casino h otels 14 5 19

72211 Full

- s ervice Restaurants 99,467 35,524 134,992

722211 Limited

- s ervice restaurants 72,435 25,870 98,304

722212 Cafeterias, b uffets, and g rill b uffets 2,874 1,026 3,900

722213 Snack and n onalcoholic b everage b ars 17,114 6,112 23,226

72241 Drinking p laces 25,926 9,259 35,185
TOTAL 368,001 131,429 499,430

* Based on U.S. Census Bureau (2007); o nly firms that have been in operation for the entire year are considered as part of this analysis.

** The total number of firms affected is a conservative estimate given that there is likely overlap in the firms who are assumed to be affected by the regulator y decisions concerning new systems and the regulatory decisions concerning refrigerant retrofits.



### 6.1.2 Stand

- Alone Retail Food Equipment Stand

- alone retail food refrigerators and freezers are commonly located in supermarkets, w arehouse

c lubs /s uperstores , conve nience stores, restaurants, bars, cafeterias, hotels, schools, hospitals. These systems integrate all components within their structure, and can be further characterized by their operating temperature (e.g., medium vs. low), door type (e.g., transparent, s olid, without), and orientation (e.g., horizontal, semivertical, vertical). These units are distinct from other commercial refrigeration equipment designed to make or process cold food and beverages that are dispensed via a nozzle, including soft

- serve ic e cream machines, “slushy” iced beverage dispensers, and soft

- drink dispensers.Economic Impact Screening Analysis 26 **6.1.2.1 Affected Industries**  Manufacturers of new stand

- alon e equipment using an alternative refrigerant to the ones listed by this regulation as unacceptable are assumed to incur costs associated with that alternative

. With regard to retrofitting, 3% of stand

- alone equipment is assumed to have CFC

- 12, R

- 502, or HCFC

- 22 in operation by 2016 that would be available for retrofitting ( based on EPA’s Vintaging Model )

. However, it is assumed that end

- users do not and would not retrofit this equipment, even in the absence of the rulemaking, due to the high costs of retrofitting equipment relative to the cost of purchasing a new unit. As a result, only manufacturers (and no end

- users ) of stand

- alone equipment are identified as being affected by this regulation.

Manufacturers of stand

- alone units have been identified by the Department of Energy (DOE) in support of rulemakings for the Appliance and Equipment Standards Progra m. Based on the DOE’s assessment, there are a total of 33 commercial refrigeration equipment manufacturers (DOE 2013). Industry data for commercial refrigeration equipment is matched to NAICS code 333415, a ir

- c onditioning and w arm a ir h eating e quipment

an d c ommercial and i ndustrial r efrigeration e quipment m anufacturing

. The small business threshold for this industry is defined as enterprises with 750 employees or fewer. Based on this, DOE identified a total of 30 commercial refrigeration equipment manufac turers that are small businesses.

**6.1.2.2 Affected Small Businesses**  Like the remote retail food equipment subsector, developments in the stand

- alone retail food equipment industry suggest that some companies are already planning to transition out of HFCs. Recent SNAP approvals for alternative refrigerants used in stand

- alone retail food systems ( e.g ., propane, carbon dioxide, and R

- 450A, found acceptable or acceptable subject to use conditions in 2011, 2009, and 2014 respectively) give companies additional options for transition. In addition, industry pledges to phase out HFCs (e.g., the Consumer Goods Forum’s pledge to phase out HFC refrigerants in newly purchased equipment by the end of 2015) may create momentum in the transition away from HFCs.

However, due to the high er cost estimate of transitioning to an alternative (as discussed further below), for the purposes of this analysis, it is conservatively assumed that no small businesses will make this transition in the absence of the regulation. As a result, in the absence of the regulation it is assumed that all small businesses would continue to use R

- 404A or HFC

- 134a in new stand

- alone equipment, and thus will be affected by the regulation.

Table 17 below summarizes the estimated number of small businesses expected to be directly affected by the regulatory decision applicable to new stand

- alone equipment . As previously noted, no end

- use rs of stand

- alone units are expected to be affected by this regulation.Economic Impact Screening Analysis 27 Table 17 : Estimated Number of Stand

- Alone Retail Food Equipment Manufacturing Small Businesses Affected by the Regulation

NAICS Code Industry Name Estimated Number of Small Businesses Affected

333415 Air

- c onditioning and w arm a ir h eating e quipment and c ommercial and
i ndustrial r efrigeration e quipment m anufacturing 30



### 6.1.3 Vending Machines
V ending machines are commonly located in offices, public locations, and factories . Similar to stand

- alone systems, v ending machines can be further characterized by their operating temperature (e.g., medium vs. low), machine use designation (e.g., indoor vs. indoor/outdoor), and front type (e.g., glassfront vs. s olid

- door).

**6.1.3.1 Affected Industries**  Manufacturers of new vending machines using an alternative refrigerant to the ones listed by this regulation as unacceptable are expected to incur costs associated with that alternative

. With regard to retrofitting, b ased on the lifetime of the equipment and the direct transition from CFCs to HFCs in this end

- use before 1996, the analysis assumes that no vending machines w ill have CFC

- 12, R

- 502, or HCFC

- 22 systems in operation in 2016 that would be available for retrofitting

. As a result, only manufacturers (and no end

- users ) of vending machines are identified as being affected by this regulation.

Manufacturers of vending machines have been identified by the Department of Energy (DOE) in support of rulemakings for the Appliance and Equipment Standards Program. Based on the DOE’s assessment, there are a total of 10 manufacturers of beverage vending machines (DOE 2008). No data are available on the number of manufacturers of other (non

- beverage) refrigerated vending machines, although reports suggest that beverage vending machines represent the majority of the refrigerated vending machine market ( DOE 2009 ). Industry data for vending machine is matched to NAICS code 333311, a utomatic v ending m achine m anufacturing . The small business threshold defines small business manufacturing enterprises for automatic vending machine manufacturing as those having 50 0 employees or fewer. Based on this, DOE (2008) identified a total of six beverage vending machine manufacturers that are small business es. Applying the conservative assumption that beverage vending machines represent half of the total refrigerated vendi ng machine market, it is assumed that 12 small

- business refrigerated vending machine manufacturers could be affected by the rulemaking. 22

**6.1.3.2 Affected Small Businesses**  S imilar industry trends to those already noted for retail food

— i.e., the approval of carbon dioxide by SNAP for use in vending machines in 2012 and voluntary industry efforts by companies such as Coca

- Cola and Pepsi Co to transition away from HFCs in vending machines (CGF 2010 )

— may serve to accelerate the transition out of HFC refrigerants. Assum ing that the industry is operating under business as usual conditions, in the absence of the regulation it is assumed that 40% of the market w ould already have transitioned to an alternative refrigerant in

22 DOE (2009) indicates that beverage vending machines represent 50

- 90% of the refrigerated vending machine market . For the purposes of this analysis, it is assumed that the number of small business beverage vending machine manufacture rs is proportional to the market share of beverage vending machines. Therefore, it is estimated that the total number of small business refrigerated vending machine manufacturers could range from seven to 12 small businesses

.Economic Impact Screening Analysis 28 new equipment by 201 8

. As a result, it is estimate d that 60% of the small businesses identified by DOE (2009) (equivalent to seven small businesses) will be affected by this regulation

.
Table 18 below summarizes the estimated number of small businesses expected to be directly affected by the regulatory decision applicable to new vending machines . As already stated, no end

- users of vending machines are expected to be affected by this regulation.

T able 18 : Estimated Number of Vending Machine Manufacturing Small Businesses Affected by the Regulation

NAICS Code Industry Name Estimated Number of Small Businesses Affected

333311 Automatic v ending m achine m anufacturing 7



## 6.2 **Estimated Economic Impact on Affected Small Entities** For each end use, the potential economic impact on small businesses was calculated by comparing the estimated annualized compliance cost to average annual sales per firm (i.e., sales test).



### 6.2.1 Remote Retail Food Equipment (Supermarket Systems and Remote Condensing Units) For modeling purposes, compliance costs were based on the assumption that end

- users would use R

- 407A in new and retrofitted systems in place of R

- 404A and R

- 507A

. The incremental cost of using this alternative is assumed to be negligible (i.e.
, zero dollars) based on cost assumptions identified in EPA’s report on Global Mitigation of Non

- CO 2 Greenhouse Gases: 2010

- 2030 (EPA 2013). As presented in Table 19 , since annualized compliance costs of using alternative refrigerants are assumed to be negligible, a nnual c ompliance c ost s as a p ercentage of a verage a nnual s ales per f irm are assumed to be zero. 23

23 EPA (2013) assumes that the re is a one

- time conversion cost associated with performing a refrigerant retrofit on a remote retail food system. However, since the rulemaking does not require end

- users to retrofit their equipment, but rather only prohibits the use of certain refrigera nts to be used as a retrofit, the labor costs associated with performing the retrofit itself are not associated with the rulemaking and therefore not included in this analysis.Economic Impact Screening Analysis 29 Table 19 : Estimated Economic Impact on Small Entities with Remote Retail Food Equipment (Sales Test)

NAICS Code Industry Name Annual Compliance Cost as a Percentage of Average Annual Sales per Firm
44511 Supermarkets and o ther g rocery ( e xcept c onvenience) s tores 0 %
44512 Convenience s tores 0%
44521 Specialty f ood s tores

– m eat m arkets 0%
44522 Specialty f ood s tores

– f ish and s eafood m arkets 0%
44523 Specialty f ood s tores

– f ruit and v egetable m arkets 0%
445291 Specialty f ood s tores

– b aked g oods s tores 0%
445292 Specialty f ood s tores

– c onfectionary and n ut s tores 0%
445299 All o ther s pecialty f ood s tores 0%
4453 Beer, w ine, and l iquor s tores 0%
453110 Florist 0%
44711 Gasoline s tations with c onvenience s tores 0%
44719 Other g asoline s tations 0%
446110 Pharmacies and d rug s tores 0%
452910 Warehouse c lubs and s uperstores 0%
452990 All o ther g eneral m erchandise s tores 0%
72111 Hotels ( e xcept c asino h otels) and m otels 0%
72112 Casino h otels 0%
72211 Full

- s ervice Restaurants 0%
722211 Limited

- s ervice restaurants 0%
722212 Cafeterias, b uffets, and g rill b uffets 0%
722213 Snack and n onalcoholic b everage b ars 0%
72241 Drinking p laces 0%



### 6.2.2 Stand

- Alone Retail Food Equipment For the regulatory decisions that affect stand

- alone retail food equipment, the potential economic impact on small businesses was calculated based on the assumption that all manufacturers of stand

- alone equipment

w ould use hydrocarbons (R

- 290) or a non

- fla mmable low

- GWP refrigerant blend (e.g., R

- 450A) in place of HFC refrigerants in new equipment.

Specifically, for manufacturers of self

- contained refrigerators/freezers, it is assumed that there is a one

- time investment of $ 150 ,000 to $500,000 associated wi th using R

- 290 or a non

- flammable alternative in place of an HFC refrigerant. This estimate is based on industry input, which assumes the need for manufacturers to (a) purchase new charging equipment, (b) t est and certify their equipment to UL standards , a nd (c) convert their facility to accommodate a flammable refrigerant, if applicable (e.g., installing sensors and storage capacity). No incremental manufacturing costs are assumed given that the cost to consumers of R

- 290 self

- contained systems is on par w ith the cost of systems that contain an HFC (EPA 2013). Systems that use R

- 450A

— a refrigerant blend of HFC

- 134a and HFO

- 1234ze(E)

— are also expected to have similar costs to HFC

- 134a and R

- 404A systems.

For manufacturers of stand

- alone units affected by t his regulation, average annual sales per establishment were calculated by dividing total value of shipments (as a proxy for sales) by the number of establishments, for eachEconomic Impact Screening Analysis 30 small business establishment size (e.g., 0

- 4 employees, 5

- 9 employees, 10

- 19 employ ees, etc.). Because average annual sales were calculated by establishment size, a range is provided for annual compliance costs as a percentage of annual sales. In general, annual compliance costs represent a higher percentage of annual sales for smaller establishments. Table 20 below presents the estimated economic impact of this regulation on small businesses in the stand

- alone retail food refrigeration category

.
Table 20 : Estimated Economic Impact on Small Entities in the Stand

- Alone Retail Food Category (Sales Test)

NAICS Code Industry Name Annual Compliance Cost as a Percentage of Average Annual Sales per Firm

333415 Air

- c onditioning and w arm a ir h eating e quipment and c ommercial and i ndustrial r efrigeration e quipment m anufacturing <0.1 %

– 11.5%



### 6.2.3 Vending Machines For the regulatory decisions that affect vending machines, the potential economic impact on small businesses was calculated based on the assumption that all manufacturers of vending machines would use carbon dioxide in place of HFC refrigerants in new equi pment. Specifically, for vending machine manufacture r s, it is assumed that there is a one

- time investment cost of $100,000 to $250,000 associated with using carbon dioxide in place of HFC refrigerants. This cost is assumed to be required for the purchase o f new equipment to support the testing, certification, and manufacture of vending machines that contain carbon dioxide. 24

For manufacturers of vending machines affected by this regulation, average annual sales per establishment were calculated by dividing total value of shipments (as a proxy for sales) by the number of establishments, for each small business establishment size (e.g., 0

- 4 employees, 5

- 9 employees, 10

- 19 employees, etc.). Because average annual sales were calculated by establishment size, a range is provided for annual compliance costs as a percentage of annual sales. In general, annual compliance costs represent a higher percentage of annual sales for smaller establishments. Table 21 below presents the estimated economic impact of this regulation on small businesses in the vending machine end

- use

.
Table 21 : Estimated Economic Impact on Small Entities in the Vending Machine End

- Us e (Sales Test)

NAICS Code Industry Name Annual Compliance Cost as a Percentage of Average Annual Sales per Firm
333311 Automatic v ending m achine m anufacturing <0.1 %

– 9.1%

24 These costs may be partially offset by cost pass

- through to the consumer. One report indicated that vending machines that are charged with carbon dioxide cost 2

- 3%, or roughly $100, more than vending machines that are charged with HFCs (DOE 2009).Economic Impact Screening Analysis 31 

## 7 **Conclusion** This screening analysis finds that the final rulemaking can be presumed to have no significant economic impact on a substantial number of small entities (SISNOSE) , as described below. The discussion below describes the decision matrix used to make this determination, as well as the aggregated small b usiness impacts.



## 7.1 **Decis ion**  **Regarding Significant Economic Impact on a Substantial N**  **um ber**  **of Small E ntities**  Using economic threshold levels set conservatively at 1% and 3% of sales , consistent with similar analyses on other Title VI rules
, this screening analysis finds that the rulemaking can be presumed to have no SISNOSE

. These thresholds are set conservatively because the rulemaking affects small businesses in a range of different industries, which may have significantly different profit margi ns and abilities to pass compliance costs along to
customers.



## 7.2 **Aggregated Small Business Impacts of Regulatory Changes** 
Table 22 summarizes the total number of small bu sinesses that are expected to be subject to the regulation , as well as the total economic impact on those small businesses using a 7% discount rate

.

Table 23 summarizes the total number of small businesses that are expected to be subject to the regulation, as well as the total economic impact on those small businesses using a 3% discount rate.

As shown, an estimated 500 ,000 small businesses may be subject to t he regulatory actions, the vast majority of which are not expected to experience adverse economic impacts. N early all of the small businesses are in the commercial refrigeration sector

. The foam sector is expected to account for nearly all of total annuali zed compliance costs experienced by small businesses ; although these costs w ould be borne by about 120 small businesses, the average sales per small business are relatively high in this industry, keeping costs for the majority of those foam manufacturers b elow 1% of annual sales.

Table 22 : Summary of the Small Business Impact at 7% Discount Rate

Sector NAICS Industry Estimated Number of Small Businesses Affected by

the Rule Total Annualized Economic Impact on Small Businesses

Lower Higher

MVACs 336111 Automobile Manufacturing 0 $0 $0
336112 Light truck and utility vehicle manufacturing 0 $0 $0 Aerosols 325620 Perfumes, Makeups and Other Toiletries

- $0 $0
325612 Polishes and Other Sanitation Goods

- $0 $0
325520 Adhesive manufacturing

- $0 $0

324191 Petroleum lubricating oil and grease manufacturing

- $0 $0
325510 Paint and Coating Manufacturing

- $0 $0

325998 All Other Miscellaneous Chemical Product and Preparation Manufacturing 5

- $360,000 $90,000Economic Impact Screening Analysis 32 325412 Pharmaceutical Preparation Manufacturing

- $0 $0
325199 All Other Basic Organic Chemical Manufacturing

- $0 $0
339113 Surgical Appliance & Supplies Manufacturing

- $0 $0 Foams 326140 Polystyrene foam product manufacturing

- $0 $0

335222 Household refrigerator and home freezer manufacturing 5 $590,000 $910,000

333415 Air

- conditioning and warm air heating equipment and commercial and industrial refrigeration equipment manufacturing 47

- $70,000 $510,000

326150 Urethane and other foam product (except polystyrene) manufacturing 61 $3,840,000 $4,620,000 Retail Food 44511 Supermarkets and Other Grocery (Except Convenience) Stores 31,665 $0 $0
44512 Convenience Stores 16,072 $0 $0
44521 Specialty Food Stores

– Meat Markets 4,305 $0 $0
44522 Specialty Food Stores

– Fish & Seafood Markets 1,470 $0 $0
44523 Specialty Food Stores

– Fruit & Vegetable Markets 1,884 $0 $0
445291 Specialty Food Stores

– Baked Goods Stores 2,109 $0 $0
445292 Specialty Food Stores

– Confectionary & Nut Stores 1,520 $0 $0
445299 All Other Specialty Food Stores 3,004 $0 $0
4453 Beer, Wine, & Liquor Stores 21,562 $0 $0
453110 Florist 15,201 $0 $0

44711 Gasoline Stations with Convenience Stores 41,538 $0 $0
44719 Other Gasoline Stations 11,553 $0 $0
446110 Pharmacies and Drug Stores 16,216 $0 $0
452910 Warehouse Clubs and Superstores

- $0 $0
452990 All Other General Merchandise Stores 6,536 $0 $0

72111 Hotels (Except Casino Hotels) & Motels 29,170 $0 $0
72112 Casino Hotels 19 $0 $0
72211 Full

- Service Restaurants 134,992 $0 $0
722211 Limited

- Service restaurants 98,304 $0 $0
722212 Cafeterias, Buffets, & Grill Buffets 3,900 $0 $0
722213 Snack & Nonalcoholic Beverage Bars 23,226 $0 $0

72241 Drinking Places 35,185 $0 $0

333415 Air

- Conditioning and Warm Air Heating Equipment and Commercial and Industrial Refrigeration Equipment Manufacturing 30 $420,000 $1,420,000
333311 Automatic Vending Machine Manufacturing 7 $70,000 $170,000
TOTAL * 499,784 $4,490,000 $7,720,000 *Total may not sum due to rounding.Economic Impact Screening Analysis 33 Table 23 : Summary of the Small Business Impact at 3% Discount Rate

Sector NAICS Industry Estimated Number of Small Businesses Affected by

the Rule Total Annualized Economic Impact on Small Businesses

Lower Higher

MVACs 336111 Automobile Manufacturing 0 $0 $0
336112 Light truck and utility vehicle manufacturing 0 $0 $0 Aerosols 325620 Perfumes, Makeups and Other Toiletries

- $0 $0
325612 Polishes and Other Sanitation Goods

- $0 $0
325520 Adhesive manufacturing

- $0 $0

324191 Petroleum lubricating oil and grease manufacturing

- $0 $0
325510 Paint and Coating Manufacturing

- $0 $0

325998 All Other Miscellaneous Chemical Product and Preparation Manufacturing 5

- $390,000

- $20,000
325412 Pharmaceutical Preparation Manufacturing

- $0 $0
325199 All Other Basic Organic Chemical Manufacturing

- $0 $0
339113 Surgical Appliance & Supplies Manufacturing

- $0 $0 Foams 326140 Polystyrene foam product manufacturing

- $0 $0

335222 Household refrigerator and home freezer manufacturing 5 $240,000 $490,000

333415 Air

- conditioning and warm air heating equipment and commercial and industrial refrigeration equipment manufacturing 47

- $800,000

- $370,000

326150 Urethane and other foam product (except polystyrene) manufacturing 61 $2,870,000 $3,460,000 Retail Food 44511 Supermarkets and Other Grocery (Except Convenience) Stores 31,665 $0 $0
44512 Convenience Stores 16,072 $0 $0
44521 Specialty Food Stores

– Meat Markets 4,305 $0 $0
44522 Specialty Food Stores

– Fish & Seafood Markets 1,470 $0 $0
44523 Specialty Food Stores

– Fruit & Vegetable Markets 1,884 $0 $0
445291 Specialty Food Stores

– Baked Goods Stores 2,109 $0 $0
445292 Specialty Food Stores

– Confectionary & Nut Stores 1,520 $0 $0
445299 All Other Specialty Food Stores 3,004 $0 $0
4453 Beer, Wine, & Liquor Stores 21,562 $0 $0
453110 Florist 15,201 $0 $0

44711 Gasoline Stations with Convenience Stores 41,538 $0 $0
44719 Other Gasoline Stations 11,553 $0 $0
446110 Pharmacies and Drug Stores 16,216 $0 $0
452910 Warehouse Clubs and Superstores

- $0 $0Economic Impact Screening Analysis 34 452990 All Other General Merchandise Stores 6,536 $0 $0

72111 Hotels (Except Casino Hotels) & Motels 29,170 $0 $0
72112 Casino Hotels 19 $0 $0
72211 Full

- Service Restaurants 134,992 $0 $0
722211 Limited

- Service restaurants 98,304 $0 $0
722212 Cafeterias, Buffets, & Grill Buffets 3,900 $0 $0
722213 Snack & Nonalcoholic Beverage Bars 23,226 $0 $0

72241 Drinking Places 35,185 $0 $0

333415 Air

- Conditioning and Warm Air Heating Equipment and Commercial and Industrial Refrigeration Equipment Manufacturing 30 $300,000 $1,010,000
333311 Automatic Vending Machine Manufacturing 7 $50,000 $120,000
TOTAL * 499,784 $2,280,000 $4,700,000 *Total may not sum due to rounding.

Table 24 aggregates the estimated economic impacts on small businesses, according to the categories set out in the SISNOSE decision matrix. For the most conservative assessment, Table 24 reflects the higher cost ranges for each end

- use and a 7% discount rate. Using the decision criteria established in this screening analysis suggests that this rulemaking can be pr esumed to have no SISNOSE for the following reasons:

• More than 99 % of small businesses subject to this rulemaking would be expected to experience zero compliance costs.

• For about 1 2 0 small businesses that are expected to incur compliance costs as a result of this rulemaking, their costs are estimated to be less than 1% of annual sales.

• This analysis indicates that fewer than 80 of the nearly 500,000 affected small businesses

— or <0.1 %

— could incur costs in excess of 1% of annual sales , and that fewer than 6 0 small businesses could incur costs in excess of 3% of annual sales . These estimates are below the thresholds for a substantial number determination (i.e., fewer than 100 businesses, and less than 20% of affected entities).Economic Impact Screening Analysis 35 Table 24 : A ggregated Economic Impacts on Small Businesses

Economic Impact Industry Impacted Number of Small Entities Subject to the Rule and Experiencing Given Economic

Impact Percent of All Small Entities Subject to the Rule That are Experiencing Given Economic

Impact Less than 1% for all affected small entities a 335222 Household refrigerator and home freezer manufacturing 5

0.02% 326150 Urethane and other foam product (except polystyrene) manufacturing 36

333415 Air

- conditioning and warm air heating equipment and commercial and industrial refrigeration equipment manufacturing 71
333311 Automatic Vending Machine Manufacturing 7
Total 120 1% or more for

one or more affected small entities b 325998 All Other Miscellaneous Chemical Product and Preparation Manufacturing 3

0.01% 326150 Urethane and other foam product (except polystyrene) manufacturing 26

333415 Air

- Conditioning and Warm Air Heating Equipment and Commercial and Industrial Refrigeration Equipment Manufacturing 38
333311 Automatic Vending Machine Manufacturing 7
Total 74 Greater than 3% for one or more affected small entities 326150 Urethane and other foam product (except polystyrene) manufacturing 17

0.01% 333415 Air

- Conditioning and Warm Air Heating Equipment and Commercial and Industrial Refrigeration Equipment Manufacturing 33 333311 Automatic Vending Machine Manufacturing 7
Total 57 Totals may not sum due to independent rounding.

a Represents small entities affected with an economic impact equal to or lesser than 1% but greater than 0%.

b T his category aggregates the number of small entities that w ould be expected to experience an impact of 1% to 3% with the number of small entitie s that w ould be expected to experience an impact of 3% or greater.Economic Impact Screening Analysis 36 

## References

Atkinson, Ward . 2 012. Personal communications between ICF International and Ward Atkinson. January

- March 2012.
Automotive News. 2008. 2008 Market Data: North American Production. April 7, 2008. Available online at: http://www.autonews.com/assets/PDF/CA4289044.PDF

.

Automotive News. 2009. 2009 Market D ata: North American Production. July 27, 2009. Available online at: http://europe.autonews.com/assets/PDF/CA66214723.PDF

.

Automotive News. 2011. 2011 Market Data: North American Producti on. July 25, 2011. Available online at: http://www.autonews.com/assets/PDF/CA74794722.PDF

.

Automotive News. 2012a. 2012 Market Data: North American Production. November 2012. Available onl ine at: http://www.autonews.com/assets/PDF/CA846391218.PDF

Automotive News. 20 12 b . “ JV pushes Valeo to No. 2 HVAC supplier in N.A. November 13, 2012. Available online
at: http://www.autonews.com/article/20121113/OEM10/121119984/jv

- pushes

- valeo

- to

- no.

- 2

- hvac

supplier

- in

- n.a.ixzz2juLDW8Su

.
BEA (Bureau of Econ omic Analysis). 2014. Auto and Truck Seasonal Adjustment

.

Bureau of Labor Statistics (BLS) (2013 ). “ Occupational Employment and Wages .” May 201 2 : 49

- 3023 Automotive Service Technicians and M echanics. Available online at http://www.bls.gov/oes/current/oes493023.htm

. Accessed November 3, 2013.
Consumer Goods Forum (CGF). 2010. “Consumer Goods Industry Announces Initiatives on Climate Protection.” November 29, 2010 . Available online at: www.theconsumergoodsforum.com/pfiles/press_release/2010

- 11

- 28_TCGF_final_press_release.pdf

. Department of Energy (DOE). 2013. Technical Support Document for the Notice of Proposed Rulemaking for Commercial Refrigeration Equipment. September 2013. Available at: http://www.regulations.gov/!documentDetail;D=EERE

- 2010

- BT

- STD

- 0003

- 0051

. Department of Energy (DOE), Office of Energy Efficiency and Renewable Energy. 2009. “Energy Savings Potential and R and D Opportunities for Commercial Refrigeration.” September 2009 . Prepared by Navigant Consulting. Available online at: http://apps1.eere.energy.gov/buildings/publications/pdfs/corporate/commercial_ refrig_report_10

- 09.pdf.

Department of Energy (DOE). 2008. Technical Support Document for the Notice of Proposed Rulemaking for Beverage Vending Machines. Available at: http://www1.eere.energy.gov/buildings/appliance_standards/commercial/pdfs/bvm_anopr_tsd_chpt_3.pdf

DOT (Department of Transportation). 2014. “ Table 1

- 15: Annual U.S. Motor Vehicle Production and Factory (Wholesale) Sales (Thousands of units) .” May 2014. Available online at:Economic Impact Screening Analysis 37 http://www.rita.dot.gov/bts/sites/rit a.dot.gov.bts/files/publications/national_transportation_statistics/htm l/table_01_15.html_mfd

Environmental Protection Agency (EPA). 2013. Global Mitigation of Non

- CO2 Greenhouse Gases: 2010

- 2030 Available online at: http://www.epa.gov/climatechange/Downloads/EPAactivities/MAC_Report_2013.pdf

. Environmental Protection Agency (EPA). 20 12

. Vintaging Model, Version VM IO File v4.4_11.6.12.xls

Environmental Protectio n Agency (EPA). 2010. Guidelines for Preparing Economic Analyses. December 17, 2010. Available online at: http://yosemite.epa.gov/ee/epa/eerm.nsf/vwAN/EE

- 0568

- 50.pdf/$file/EE

- 0568

- 50.pdf

. Environmental Protection Agency (EPA). 2006. Final Guidance for EPA Rulewriters: Regulatory Flexibility Act as amended by the Small Business Regulatory Enforcement Fairness Act

.

E nvironmental Protection Agency (EPA) and National Highway Traffic Safety Administration (NHTSA). 2012. Joint Technical Support Document: Final Rul e making for 2017

- 2025 Light

- Duty Vehicle Greenhouse Gas Emission Standards and Corporate Average Fuel Economy Standards. August 2012. Available online at: http://www.epa.gov/otaq/climate/documents/420r12901.pdf

. Food Marketing Industry (FMI). 2013. Industry Overview 2011

– 2012. Available online at: http://www.fmi.org/facts_figs/?fuseaction=superfac t

. International Panel on Climate Change (IPCC)/ Technical and Economical Assessment Panel (TEAP). 2005. “Safeguarding the Ozone Layer and the Global Climate System: Is sues Related to Hydrofluorocarbons and Perfluorocarbons”, Chapter 10: Non

- Medical Aerosols, Solvents, and HFC

- 23. Campbell, N., J. Hu, P. Lapin, A. McCulloch, A. Merchant, K. Mizuno, J. Owens, P. Rollet. Available online at: http://www.ipcc.ch/pdf/special

reports/sroc/sroc10.pdf . Accessed April 14, 2011.

OICA. 2014. World Motor Vehicle Production by Country a nd Type 2005

– 2013. International Organization of Motor Vehicle Manufacturers . Available online at: http://www.oica.net/category/production

- statistics/

.

U.S. Census Bureau. 2007. Economic Census. Data accessed via the Industry Statistics Portal, available at: http://www.census.gov/ec on/isp/

.

U.S. Census Bureau. 20 14 . Economic Census. Personal Communication with Census NAICS Subject Matter Expert on April 16 th , 2014. Contact information available online at: http://www.census.gov/aboutus/subjects.html

. United Nations Environment Programme (UNEP). 2009. Multilateral Fund for the Implementation of the Montreal Protocol (2009), Project Proposal: China, UNEP/OzL.Pro/ExCom/59/23, http://www.multilateralfund.org/sites/59/Document%20Library2/1/5923.pdf

. United Nations Environment Programme (UNEP). 2010a. Multilateral Fund for the Implementation of the Montreal Protocol (2010), Report of the Sixtieth Meeting of the Executive Committee, UNEP/OzL.Pro/ExCom/60/54
, http://www.multilateralfund.org/sites/60/Document%20Library2/1/6054.pdf

United Nations Environment Programme (UNEP). 2010b. Multilateral Fund for the Implementation of the Montreal Protocol (2010), Project Proposal: Colombia, UNEP/OzL.Pro/ExCom/60/25 http://www.multilateralfund.org/sites/60/Document%20Library2/1/6025.pdf

.Economic Impact Screening Analysis 38 United Nations Environment Programme (UNEP). 2010c. Multilateral Fund for the Implementation of the Montreal Protocol (2011), Project Proposal: China, UNEP/OzL.Pro/ExCom/6 2/26, http://www.multilateralfund.org/62/English%20Document/1/6226.pdf

. United Nations Environment Programme (UNEP). 2011a. Multilateral Fund for the Implementation of the Montreal Protocol (2011), Project Proposal: Egypt, UNEP/OzL.Pro/ExCom/65/32, http://www.multilateralfund.org/65/English/1/6532.pdf

. United Nations Environment Programme (UNEP). 2011 b

. Multilateral Fund for the Implementation of the Montreal Protocol (2011), Project Proposal: China, UNEP/OzL.Pro/ExCom/64/29
, http://www.multilateral fund.org/MeetingsandDocuments/currentmeeting/64/English/1/6429.pdf

. United Nations Environment Programme (UNEP). 2012. Multilateral Fund for the Implementation of the Montreal Protocol (2012), Project Proposal: Thailand, UNEP/OzL.Pro/ExCom/68/41 http://www.multilateralfund.org/68/English/1/6841.pdf

. United Nations Environment Programme (UNEP). 2013a. Multilateral Fund for the Implementation of the Montreal Protocol (2013), Repor t of the Sixty

- eighth Meeting of the Executive Committee, U NEP/OzL.Pro/ExCom/68/53/Corr.1, http://www.multilateralfund.org/68/English/1/6853_and_Corr.1.pdf

.

United Nations En vironment Programme (UNEP). 2013b. Multilateral Fund for the Implementation of the Montreal Protocol (2013), Project Proposal: China, UNEP/OzL.Pro/ExCom/69/23 http://www.multilateralfund.org/69/English/1/6923.pdf

. United States Environmental Protection Ag ency (EPA). 2010. The Nonessential Products Ban. Available online at: http://epa.gov/ozone/title6/noness/index.html

. United States Environmental Protection Agency (EPA). 2013. Global Mitigation of Non

- CO2 Greenhouse Gases: 2010

- 2030 Available online at: http://www.epa.gov/climate change/Downloads/EPAactivities/MAC_Report_2013.pdf

. Ward’s Automotive Group. 20 11

. 2007 World Vehicle Sales by Company and Country

.