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### 5**/ 0** **8 /2012** 

**FINAL REGULATORY**  **SUPPORT DOCUMENT**

**W IDESPREAD USE**  **for O NBOARD REFUELING VAPOR RECOVERY**  **and S TAGE II**  **W AIVER** 

**DECOMMISSIONING STAGE II VAPOR RECOVERY FINANCIAL BENEFIT** **S AND COST** **S**

**M AY 8,**  **201 2** 

**US EPA OAQPS/OTAQ** 2

**BACKGROUND** The methodology for capturing gasoline vapors generated during vehicle refueling is in a transition phase. Stage II vapor recovery systems (VRS) are gradually being supplanted by vehicle
- based onboard refueling vapor recovery (ORVR) systems . Stage II VRS capture gasoline vapors at the fuel inlet of a vehicle and transfers them to the underground storage tank. ORVR blocks the gasoline vapors from exiting the fill neck and instead displace s them to a n activated carbon canister on the vehicle where they are purged to the engine during vehicle operation . Manufacturers have equipped various vehicles with ORVR since 1998. Since 2006, all newly manufactured passenger cars and light trucks and even some heavy
- duty gasoline vehicles have incorporated ORVR contro ls. Once vehicles equipped with ORVR are in widespread use, using Stage II VRS on fuel dispensers under the program as now structured in most states offers little or no additional emissions benefit, especially as ORVR phase
- in continues. 1 Under section 202(a)(6) of the Clean Air Act (CAA), EPA has authority to determine a time when ORVR is in widespread use and to then waive or revise the CAA section 182(b)(3) statutory requirement for installing and operating Stage II VRS equipment in serious, severe and extreme ozone non
attainment areas . Subsequent to th is determination, state and local air quality management agencies may seek state implementation plan (SIP) revisions to permit gasoline dispensing facilities (GDF) to discontinue use of Sta g e II VRS and follow recommended procedures for decommissioning the equipment and vapor vent piping. In this final rule rulemaking ( F RM), EPA is establishing a date when ORVR will be considered in widespread use and the statutory requirement for serious, severe and extreme ozone non
- attainment areas to adopt Stage II VRS is waived
. Once this FRM takes effect, this finding gives states the option t o conclude at that date or some other date in the future that the effectiveness of Stage II VRS prog rams have reached a point where the emissions benefit relative to the control from ORVR will no longer justify the cost of installing new Stage II VRS systems or maintaining existing ones. In some cases, there is, or could be, a n et emissions dis
- benefit associated with continuing to employ Stage II VRS
. 2 However, it should be noted that removing Stage II will leave refueling emissions from the declining population of non - ORVR equipped vehicles uncontrolled. 3 This rule gives states the option to revise th eir ozone SIPs to remove some or all of their Stage II requirements but does not mandate any action. The purpose of this document is to present the financial benefits and costs associated with removing Stage II VRS from GDF s . The financial information is useful when evaluating cost impacts or burdens or cost savings when removing Stage II VRS equipment.

1 The California Air Resources Board Enhanced Vapor Recovery (EVR) program includes additional regulatory provision to improve the overall effectiveness of Stage II VRS in California. See http://www.arb.ca.gov/vapor/vapor.htm for more detail. 2 See discuss ion in EPA memorandum entitled, Onboard Refueling Vapor Recovery Widespread Use Assessment in public docket EPA
- HQ
- OAR
- 2010
- 1076. 3 As is discussed in the preamble to the final rule, the population of ORVR equipped vehicles and the fraction of gasoline dispensed to ORVR vehicles increases each year. For example by the end of 2015, over 81 percent of vehicles will be ORVR
- equipped and over 86 percent of gasoline will be dispensed to ORVR vehicles. The control lost from removing Stage II would vary according to the real Stage II in
-use efficiency value and the im pact of the ORVR/Stage II compatibility effect.3

**STAGE II VAPOR RECOVERY SYSTEMS**  **CURRENTLY IN USE** Stage II VRS are required to be used at certain GDF s located in serious, severe, and extreme non
attainment areas for ozone under CAA section 18 2 (b)( 3 )
. I t has also been used in certain areas of the O zone T ransport R egion (OTR) to meet separate comparable emissions reduction requirements under CAA section 184 (b)( 2 ) of the CAA, but that section does not absolutely require the use of Stage II in these areas and is not directly affected by the CAA section 202(a)(6) widespread use finding and waiver of the CAA section 182(b)(3) Stage II requirement
. 4 To meet the CAA section 182 and section 184 provisions noted above, Stage II VRS are in place in a total of 2 0 states and the District of Columbia. 5 Six addition al states have adopted Stage II VRS regulations to address issues such as ozone attainment and maintenance and air toxics. 6 Th ese states use technically the same hardware and related requirements as are used in the serious, severe, and extreme areas, but removal action s by these states does not depend on EPA’s widespread use finding, since they are not subject to the CAA section 182(b)(3) requirement
. In total, 2 6 states and the District of Columbia have included these control measure s in their federally
- approved SIPs in the form of generally applicable regulatory requirements governing all GDF th at exceed the relevant gasoline throughput criteria. Based on conversations with state agency and industry association representatives and our own assessments, EPA estimates that Stage II VRS are in use at GDFs providing about 40 percent of the gasoline consumed nationally. This estimate is based on the sum of gasoline consumption in states which require Stage II VRS in all counties , plus the gasoline consumption in other states in which Stage II VRS are required only in specific count ies
. We estimate that Stage II VRS are installed at about 4 7, 500 GDF’s in part or all of the 2 6 states and the District of Columbia noted above. This includes retail, private, and government GDFs. In most cases this involves GDFs using underground storage tan ks, but in a few locations it includes aboveground storage tanks with volumes above a set threshold such as 250
- 500 gallons. Of these, based on gasoline consumption in these 2 7 jurisdictions, EPA estimates that about 4, 9 00 are in areas not subject to CAA section 182(b)(3)
. Addition ally, about 330 GDF s in Vermont currently covered under its CAA section 184(b)(2) SIP are expected to remove these controls by 2013 as a result of a separate state regulatory action. Finally, of th e remaining 42,270 GDFs in thes e states, about 11, 7 00 GDFs in California are expected to retain this equipment until later in this decade. This leaves about 30,6 00 GDFs which may potentially remove Stage II VRS in respon s e to an EPA determination of ORVR widespread use and waiver of th e CAA section 182(b)(3) requirement
. EPA received a number of comments on the NPRM stating that the potential cost savings would not be realized in the OTR states if EPA did not provide updated guidance to enable states in the OTR to meet the emissions reduction requirements of CAA section 184(b)(2) but still be able to remove Stage II VRS they previously chose to adopt to achieve those reductions . In the NPRM , EPA proposed the idea that the comparable emissions reduction measures of section CAA section 1 84(b)(2) could be based on an assessment of the refueling emission reduction benefits of Stage II incremental to ORVR, rather than

4 See EPA report “Stage II Comparability Study for the Northeast Ozone Transport Region,” EPA
-453/R

- 94
- 011, January 1995 for more information. 5 T he States of Arizona, California, Connecticut, Delaware, Georgia, Illinois, Indiana, Louisiana, Maryland, Massachusetts, Missouri, New Hampshire, New Jersey, New York, Pennsylvania, Rhode Island, Texas, Virginia, Wisconsin, and the District of Columbia have GDF with Stage II VRS under these provisions. The requirement in Maine which was implemented under CAA §184(b)(2) (OTR) was removed at the end of 2011; the requirement in Vermont which is also under §184(b)(2) will be removed at the end of 2012. Nei ther is included in this analysis. 6 These include Kentucky, Nevada, Ohio, Oregon, Tennessee and Washington.4

the reductions that Stage II would have achieved assuming the absence of ORVR. As discussed in the FRM, we are issu ing updated guidance to the states on how they might conduct this comparability analysis, and we believe its application could create a framework and pathway for a state in the OTR to satisfy the comparable emissions reduction measures requirements if it elect s to seek removal of Stage II controls. 7, 8 **MODEL GDF** Today the average GDF with Stage II VRS pumps about 1.2 million gallons per year, or about 1 0 0,000 gallons of fuel per month. 9 While it varies somewhat by design and location, this a verage GDF would hav e 5 dispenser cabinets with 10 fueling points or nozzles connected by associated piping with fuel product being stored in an average of four underground storage tanks. There are two types of Stage II VRS: balance and vacuum assist. It is estimated that nationally about 70 percent of GDFs empl o y vacuum - assist type systems and 30 percent area balance
-type systems, although this ratio can vary greatly from state to state. **REMOVAL OF THE STAGE II**  **VRS REQUIREMENT** E PA has determined that ORVR is in widespread use nationwide on the effective date of this FRM and t hereby waive s the CAA section 182(b)(3) requirement after that date
. After the effective date of the final rule, any state currently requir ing Stage II VRS under CAA section 182(b)(3) may s eek EPA approval to revise i t s state regulations to no longer require GDFs to install and implement Stage I I . Nonetheless, it should be noted that this action would require EPA to approve a revised ozone SIP before a state could permit decommissioning of Stage II systems. This action would not require any state to remove Stage II VRS if it elected to retain or upgrade contro l s . **DECOMMISSIONING OF STAGE II SYSTEMS** The Petroleum Equipment Institute (PEI) 10 and at least four states have recommended practices or specific requirements for decommissioning Stage II systems. The PEI guidance is especially instructive as it was developed by industry experts with a focus on regulatory compliance and safety
. It includes the following steps which involve either hardware costs, labor costs, or both. Most steps apply to both balance and vacuum assist type systems, while some only apply to vacuum assist systems . The steps listed below assume that underground va por vent piping is left in place and no construction costs would be incurred to break up and repair the GDF driving surface
.
 Relieve pressure in the tank ullage.  Remove and collect all liquids from equipment.

7 The OTR is comprised of the states of Maine, New Hampshire, Vermont, Massachusetts, Connecticut, Rhode Island, New York, New Jersey, Pennsylvania , Maryland Delaware, Virginia, and the District of Columbia. Only Maine and Vermont do not have at least one area covered by section 182(b)(3). 8 EPA intends to develop guidance titled (tentative) "Guidance on Removing Stage II Gasoline apor Control Programs from State Implementation Plans and Assessing Comparable Measures
. " 9 Estimate based on dividing EPA’s estimate of fraction of nationwide annual consumption covered by Stage II VRS by the total estimated GDFs with Stage II VRS and dividing by 12 months
. 10 Recommended Practices for Installation and Testing of Vapor
- Recovery Systems at Vehicle Fueling Sites.PEI/RP300

- 09.5

 Remove or disable vacuum
- assist vapor pump(s), if installed.  Reprogram dispenser electronics as required related to vacuum assist pump at each dispenser or centrally if one pump
.  Disconnect and cap off the vapor line at the dispenser end and the tank end for each dispenser.  Replace Stage II no zzles and all related aboveground dispensing hardware with conventional hardware for each dispenser
.  Remove Stage II operating instructions
.  Conduct tank system integrity test .  Assure overfill device is present and fully functional
.  Restore the facility to operating status
.  Maintain documentation of the procedures used in decommissioning
.  Report results to owner and/or regulatory authority, as required.  Update any registration or certificates to reflect that Stage II equipment is no longer in service. **COSTS OF DECOMMISIONING STAGE II**  **VRS** After a state acts to remove i t s Stage II VRS requirement, each GDF owner in that jurisdiction should ascertain the optimum point at which to initiate the decommissioning process , within the time boundaries of the state requirements. Not all states will act simultaneously, and within a given state not all GDFs will initiate this effort at the same time
. W e expect the GDF owner will pick the optimum date for decommissioning which minimize s total cost and minimizes disru ption to business operations. To accomplish this, we expect the GDF owner to pick a decommissioning date on or near a future date for standard maintenance for their GDF pump hanging hardware. Once decommissioning starts, this sets in motion a series of actions and ongoing changes in future operations in several categories . These changes lead to both costs and reductions in costs (savings). This part of the analysis discusses the costs and sav ings related to these actions and ongoing changes . These will be identified as one time or recurring costs or savings for the model GDF. **A NNUAL BASIS PER GDF**  The costs presented in this analysis are divided between aboveground hardware and dispenser relat ed activities
. Most aboveground hardware component costs involve the nozzles, hoses, swivels, check valves, and other related components needed at the dispensers to dispense fuel and capture the vapors displaced during refueling
. The dispenser related activities involve isolating and capping the vapor piping, dealing with vacuum assist pumps, and other related actions
. The aboveground costs at a GDF are driven by the number of nozzles present at the GDF, while the dispenser costs depend mostly on the num ber of dispensers . This analysis will break down costs into aboveground and dispenser portions
. Table 1 shows the aboveground hardware c osts for the model GDF mentioned here to represent the typical service station with Stage II VRS
. The se costs are ass ociated with replacing aboveground hardware of the Stage II VRS with conventional nozzle hardware
. After moving to conventional dispensing hardware , t he GDF will not be required to maintain nozzles with bellows, coaxial hoses and high hang hose retractors, special breakaway fittings, swivels, flow limiters, vapor check valves and hose splitters. As can be seen in Table 1, for the model GDF used here, a verage replacement costs drop by $3580. This savings would be realized at decommissioning since maintenance was presumed to be due anyway and at each subsequent maintenance interval for the GDF.6

**TABLE 1: COST COMPARISON OF**  **HARDWARE COMPONENTS**  **ITEM COST**  **OF STAGE II VAPOR**  **RECOVERY EQUIPMENT COST OF NON**  **- STAGE II**  **EQUIPMENT** Multi
-product Single Nozzle Dispenser Multi
-product Single Nozzle Dispenser HANGING HARDWARE COMPONENTS FOR 5 DISPENSERS (10 NOZZLES) Vacuum p ump, vapor recovery Nozzle and coaxial h ose , breakaway, flow restrictor, swivel adaptors, vapor caps, vent caps, other required equipment Nozzle and traditional fuel h ose, breakaway, check valves, clamps and seal kits and other required equipment
OVERALL COST ESTIMATE #1 $4,900 $1,540 Franklin Fueling Systems OVERALL COST ESTIMATE #2 $3,500 $1,200 Graffco Equipment OVERALL COST ESTIMATE #3 $6,900 $2,060 Nozzlemax * OVERALL COST ESTIMATE #4 $3,600 $1,920 JME El l sworth Co. OVERALL COST ESTIMATE #5 State of Maine DEP * $7,100 $1,360 TOTAL AVERAGE COSTS $ 5 , 20 0 $1,6 20 **SAVINGS PER GDF $3,580**  ***** vacuum assist system **LABOR AND LOST REVENUE**  **COSTS OF DECOMMISSIONING** Labor costs for maintaining dispensers and hanging hardware occur each time maintenance occurs. Since this analysis assumes that Stage II decommissioning occurs at a point when GDF maintenance would have occurred anyway, many of the labor and other business costs normall y associated with this activity are not en counte re d here . This leaves only one time labor and other costs related to the decommissioning of the Stage II VRS dispensers. These include direct labor costs for activities such as disconnecting the vapor line between the dispenser and the underground storage tank and capping at each point of disconnection, disabling and/or removing vacuum pumps if used, and other activities related to modifying the hardware and electronics within the dispenser to disable or re move Stage II VRS
. In addition, there would be administrative labor costs related to removing any Stage II related labels or directions on the dispenser, maintaining documentation of the procedures used in the decommissioning, reporting the results to ow ner and/or regulatory authority, as required, and updating any registration or certificates to reflect that Stage II equipment is no longer in service. Underground vapor piping would not be uncovered in most cases, but w ould be capped at the dispenser and remain connected to the tank. As summarized in Table 2 i n this analysis, we therefore include time to modify hardware within each dispenser as discussed above and time to complete documentation and put the station back in full operation. The personnel c ertified to conduct these activities would spend between 1 and 3 hours at7

each dispensing unit to exchange equipment and complete the administrative tasks at a billed labor rate between $70 to $120/hour . The model GDF we are using has five dispensers. To be reasonably conservative for estimating costs, w e have chosen the higher labor rate and 1 0 labor hours to decommission the m odel GDF. Since there will be some miscellaneous parts and materials related to the within dispenser work these have been include d at 20 percent of direct labor. Two hours ha ve been included for completion of administrative tasks. There are two other categories of costs associated with this decommissioning. It should be noted that the re
- commissioning process for a non
- stage I I GDF would include tank integrity tests such as a pressure decay test . Costs for these tests are not included here as they are already required annual ly under applicable state and federal regulations for Stage I control requirements and NESHAP for GDFs
. 11 In addition, the work on the dispensers and nozzles will put at least part of the GDF out of operation over the course of the day as changes are made to the various dispensers
. To some degree, this business disruption would occur anyway during the norma l maintenance cycle. However, to be conservative here, w e estimate foregone sales of about 165 0 gallons (1/2 of a day’s throughput at the model GDF) and a lost gross profit of about $ 3 00 at each GDF to account for within dispenser work that occurs only a t decommissioning
. 12 **TABLE 2**  **: ONE TIME**  **COST S**  **ESTIMATES OF DECOMMISSIONING DISPENS**  **ERS ITEM**  **COST OF DECOMMISSIONING**  **STAGE II VRS**  LABOR COSTS 5 Multi
-product Dispenser s Direct Labor for reconfiguration of 5 dispensers : 2 hours per dispenser @ $120 labor rate (1, 2) $ 1 , 2 00 Miscellaneous dispenser hardware/parts @20% of direct labor $240 Administrative tasks $ 240 **TOTAL LABOR COSTS $**  **1,6 8** **0** Lost gross profit for one - half day out of s ervice 165 0 gallons @ $ 0
. 1 8 5/gal gross marketing margin 13 $ 3 00 **TOTAL LABOR AND LOST REVENUE COSTS $**  **1 ,**  **9 80**  Source: 1
- Core Engineering, Inc.; 2
- OPW, A Dover Company

**F INANCIAL BENEFIT** **S OF REMOVING STAGE II VRS** 

11 See recommendations in Enforcement Guidance for Stage II Vehicle Refueling Control Programs, U.S. EPA, Office of Air and Radiation, Office of Mobile Sources, December 1991, and requirements in 40 CFR part 63 subpart CCCCCC. 12 EPA recognizes that to some degree the revenues and profits arising from these lost sales would be picked up by other nearby GDFs and that on average (over time in a given area) these gains/losses could even out. 13 The gross margin on gasoline in 2011 was 18.5 cents per gallon or about 5.3% of the cost of the fuel. See http://www.nacsonline.com/NACS/Resources/campaigns/GasPrices_2012/Documents/NACSFuelsReport2012__ USPetroleumIndustryStatisticsDefinitions%20_black.pdf
-- downloaded on February 26, 2012.8

The financial benefits of removing Stage II VRS arise as a result of reduced life cycle costs. For purposes of this analysis , the costs and savings for the first 12 months will be presented as beginning when decommissioning first occurs and for the subsequent 12
- month periods (without initial one -time costs). The direct costs (and cost savings) for hardware and labor we re presented above. In addition there are other recurring costs and cost savings which will occur in the first year and subsequent periods
. The recurring costs and costs savings fall into the follo wing categories: foregone vapor recovery savings ; reduced dispenser operating costs ; and elimination of any annual costs related to system testing, inspections, fees, training and record keeping. This third category of costs is identified in EPA enforceme nt guidance related to Stage II VRS and in state Stage II SIPs. 14 15 Table 3 present s the annual reduced dispenser operating and maintenance cost for the model GDF on an annual (or 12 month) basis
. Beyond this, GDFs will lose the vapor recovery savings orig inally expected with Stage II VRS. Even though ORVR is in widespread use, some benefit would have continued to accrue into the future. The methodology for calculating this benefit is presented in EPA’s Stage II technical guidance document. 16 Using 86 percent Stage II efficiency, 85 percent ORVR penetration and $ 3.04 per gallon (201 1 average retail gasoline price without tax included according to the Department of Energy ) , the foregone annual recovery savings is about $ 12 30 for the model GDF in the year St age II is removed. 17 This value would change every year due to the volatility of gasoline prices and the continued phase
- in of ORVR vehicles. While the effect of the ORVR phase in can be predicted from Table 2 of the final rule preamble , predicting future gasoline prices is difficult. For purposes of this analysis , the $ 12 30 will be kept constant
. **TABLE 3**  **: OPERATING AND**  **MAINTENANCE COSTS COMPARISON**  **STAGE II VRS COSTS (SAVINGS)**  **CONVENTIONAL**

**COSTS (SAVINGS)**  PER MODEL GDF Stage II vacuum pump maintenance (1,2, 4, 5 ) $ 50 0 $0 Eliminate electricity costs of operating vacuum pump (5) $144 $ 0 Training and Certification of operators 18 (1, 2) $ 6 00 $0 GDF Compliance costs (monitoring & recordkeeping) 19 (1, 2) $ 6 00 $0 Vapor Recovery Savings ( $ 12 30 ) $0 **OPERATING AND MAINTENANCE SAVINGS WHEN**  **SWITCHING TO CONVENTIONAL EQU**  **I PMENT**  **( $**  **6 14)**  Source: 1
- NESCAUM; 2
- State of Vermont; 3
- Franklin Fueling Systems; 4
- Core Engineering, Inc.; 5
- OPW, A Dover Company.

14 Enforcement Guidance for Stage II Vehicle Refueling Control Programs, U.S. EPA, Office of Air and Radiation, Office of Mobile Sources, December 1991. 15 See https://www.jmmmgt.com/kc/ for an unofficial but useful summary of state Stage II requirements for the GDF operators. 16 “Technical Guidance
– Stage II Vapor Recovery Systems for Control of Gasoline Refueling Emissions at Gasoline Dispensing Facilities Vol. 1,” EPA
-450/3

- 91
- 022a, November 1991, p. 5
- 16. 17 See http://www.eia.gov/todayinenergy/detail.cfm?id=4570 downloaded on February 14, 2012 18 Assumes one operator trained each year for 4 0 hours ($10 per hour) at a scheduled one week for fee class. 19 This a ssumes ten minutes per day at $10 per hour.9

**COMBINED HARDWARE AND OPERATING SAVINGS**  The results of Tables 1, 2, and 3 can be used to estimate costs for Stage II decommissioning and at the first maintenance point thereafter. These are shown in Table 4. The recurring costs (savings) are dependent on the time length of the GDF mai ntenance cycle. Industry sources indicate a life cycle of about 18 months for above ground hardware. Thus costs (savings) in the time period following completion of initial decommissioning would start again 18 months later. For purposes of this paper, th is analysis is on a 12 month basis and assumes the hanging hardware cost savings, which would occur at the 18 month point, are apportioned at 2/3 of total per 12 months
. **TABLE 4**  **: 12 MONTH**  **COST S**  **(SAVINGS) FOR**  **DECOMMISSIONING STAGE II VRS FOR MODEL GDF**  **I TEM**  **INITIAL YEAR**  **RECURRING** HANGING HARDWARE ($2 , 363) ($2 , 363) LABOR COSTS $1 , 680 $0 LOST GROSS PROFIT $ 3 00 $0 OPERATING AND MAINTENANCE ($ 1 , 844 ) ( $ 1 , 844) VAPOR RECOVERY $ 12 30 $ 12 30 **TOTAL ($**  **9 97**  **) ($**  **2 ,**  **9 77)**  An illustration may be helpful here. If a GDF was decommissioned in January 2015 there would be a savings of $ 9 97 at that time. The next maintenance event would be assumed to be July 2016. In this illustration, for 2016 the costs (savings) would be based on the 12 month operating/maintenanc e savings, the 12 month foregone vapor recovery savings, and the hanging hardware savings. The total savings would be $ 2 , 9 77. This savings value would continue for subsequent twelve month periods, since hanging hardware is apportioned at 2/3 and other it ems from Table 4 are already on a 12
- month basis. **COST DIFFERENCE**  **OF MAINTAINING**  **STAGE II VRS VS CONVENTIONAL DISPENSING SYSTEM**  Stage II has been a part of VOC emission control in many areas for some time. Areas throughout the country in states listed i n footnote 4 would be potentially affected by this action , if st ates cho o se to seek SIP revisions to remove Stage II requirements from the ir SIP s . EPA believes that no t all of these jurisdictions will remove their requirements for the GDF in th eir states at the same time
. As mentioned earlier, California has 11, 7 00 GDF s and may keep the Stage II requirements in place for the rest of this decade
. EPA estimates that there will be approximately 30,600 GDF s in serious , s evere, and extreme ozone nonattainment areas that will be given the option to take steps to decommission their Stage II VRS after a n ORVR widespread use determination by EPA
. For purposes of this analysis, it is our expectation that, just as was the case for installations, decommissioning wil l occur over about a three year period, with approximately 1/3 of the GDF population affected annually. EPA makes this estimate based on the following: 1) in many cases there are not an adequate number of trained installers and jobbers to meet a surge in demand, especially with seasonal limitations in areas such as New England ; 2) states are likely to act to revise their SIPs and state regulations to remove their Stage II requirements on different schedules and give varying time periods for action by the G DF owners ; and 3)10

facilities are expected to wait to dismantle their Stage II systems during their scheduled maintenance periods that extend beyond one year. Costs and savings were estimated on a per facility basis based on the model GDF described above , and the initial and recurring cost savings are calculated on that basis. In terms of understanding the overall financial impact, it is useful to assess cost savings during transition years and over the long term. To assess impacts during the transition years, initial and recurring m odel GDF costs may be multiplied by the number of G DF s assigned for decommissioning each year, equal to 1/3 of the total ( or approximately 10, 2 00 GDFs ) , and those decommissioned in previous years , to estimate the nationwide impacts or benefits of this action
. The long term 12
- month savings in 2011 dollars would simply be the product of all decommissioned GDFs ( 30,600 ) and $ 2 , 9 77 per 12
- months or about $ 91 million. **TABLE 5**  **: NATIONWIDE SAVINGS**  **OF REMOVING STAGE II VRS ( INITIAL PLUS RECURRING**  **) COST SAVINGS FOR MODEL PLANT of 120,000 GPM**  **SAVINGS FROM SWITCHING TO CONVENTIONAL DISPENSERS OVER**  **MAINTAINING STAGE II VRS** 12
- MONTH MODEL PLANT GDF SAVINGS AFTER STAGE II VRS IS REMOVED INITIAL $ 9 97 ; RECURRING $ 2 , 9 77 ESTIMATED NATIONWIDE SAVINGS FOR FIRST 12 MONTH PERIOD IF STAGE II VRS IS REMOVED FROM 10, 2 00 GDFs $1 0, 200,000
ESTIMATED NATIONWIDE SAVINGS FOR SECOND 12 MONTH PERIOD IF STAGE II VRS IS REMOVED FROM A TOTAL OF 20,4 00 GDFs $40, 500,000
ESTIMATED NATIONWIDE SAVINGS FOR THIRD 12 MONTH PER I OD IF STAGE II VRS IS REMOVED FROM A TOTAL OF 30,600 GDFs $70, 900,000
**ESTIMATED ANNUAL**  **LONG TERM NATIONWIDE SAVINGS**  **(w/o California) $**  **91 ,**  **100 ,000** 
Of course, these cost savings will not occur in one year, and as presented above are likely to increase over several years as suming Stage II is phased out. Thus , it is useful to present these cost savings as a net pres e nt value in one year. For purposes of this analysis we have selected a base year of 2013 and for sensitivity have used net present value discount factors of three and seven percent. The results of this analysis are shown in Table 6. Note that for “2016 and later” column the savings are annual and the net present value savings would be less for each following calendar year.11

**TABLE 6**  **: DISCOUNTED SAVINGS OF REMOVING STAGE II VRS (INITIAL PLUS RECURRING)**  **COST SAVINGS (From Table 5)**  **2013 2014**  **2015 2016**  Undiscounted (millions) $10. 2 $40.5 $70.9 $91.1 NPV 3% (millions) $ 10.2 $39.3 $68.8 $8 3
. 4 NPV 7% (millions) $ 10
. 2 $37. 9 $6 1 . 9 $ 74 .4 In conclusion, the agency has regarded Stage II VRS decommissioning to involve equipment replacement, labor, elimination of certain expenses associated with Stage II VRS operation . We have estimated costs on a model GDF basis and then multiplied by the number of facilities estimated to decommission Stage II VRS and the results indicate a long term substantial annual savings of over $ 91 million per 12 months, n ationwide. **GENERAL DI**  **SCUSSION ON COST SAVINGS FOR**  **NEW INSTALLATIONS** The analysis above represents savings that could result upon EPA’s ORVR widespread use finding and waiver of the CAA section 182(b)(3) requirement only for GDFs which have currently installed and are operatin g Stage II VRS systems
. There are also two other categories of GDFs where savings could accrue as a result of the final rule, and for which costs would be incurred in the absence of EPA’s finding and waiver . The first i s Stage II retrofit s for GDFs in current Stage II areas which are now exempt but whose throughput in the future exceeds the state levels for exemptions and Stage II retrofits in areas which might come under CAA section 182(b)(3) in the future . The second is Stage II installations at new ly constructed GDFs located in areas currently under CAA section 182(b)(3) and Stage II installations at new GDFs in areas whose ozone NAAQS status becomes s erious or worse in the future. The savings profile resulting from EPA’s finding and waiver for GDFs in these tw o categories has similar elements to those identified above but includes some additional elements as well. **RETROFIT INSTALLATION**  **S F**  **O R**  **GDFs IN AREAS CURRENTLY REQUIRING STAGE II VRS**  **OR IN AREAS DOING SO**  **IN THE FUTURE UNDER SECTION 182(b)**  **(3)** This is the situation faced by many GDFs upon implementation of CAA section 182(b)(3) and thus the costs of these installations were studied thoroughly in the early 1990s. Th e retrofitting of GDFs to add Stage II VRS is the most expensive control situation because it includes extensive above ground costs per dispenser as well as construction and below ground costs for piping needed to route the vapors back from the dispenser to the underground storage tank (UST), trenchi ng, backfilling and installation. Above
-ground costs are driven by the number of nozzles present at the GDF, while below
ground costs are driven by the physical layout of the GDF such as the GDF configuration (i.e., number of dispensing islands, distance between islands and distance from islands to UST), the type of system (balanced system or vacuum assist system) and other station physical characteristics (amount of concrete over UST and amount of backfill material required )
. In EPA’s Stage II technical guidance12

document 20, a summary of capital cost estimates were provided for installing Stage II VRS. Taking the average of the costs suggested by commenters ($18,715) for Model Plant 4 and applying the Department of Labor’s Consumer Price Index Inflation C alculator, the capital outlay in 2011 would average about $30,000. 21 This would be the potential cost - avoidance savings per GDF, plus the avoided annual Stage II VRS operating costs of about $ 3 ,0 0 0 per year as discussed above. It is not possible to fold t hese potential savings into the total above, because the number of potentially retrofit GDFs in the absence of EPA’s ORVR widespread use finding and CAA section 182(b)(3) waiver is not known. **STAGE II VRS INSTALLATIONS**  **AT NEW GDFs**  **IN CURRENT OR FUTURE AREAS SUBJECT TO SECTION**  **182(b)(3)** Stage II VRS installation costs at new GDFs in the absence of EPA’s finding and waiver would involve mostly above ground hardware. There would be below ground costs for vapor vent piping and installation to the dispensers manifold, and underground storage tank, but there would be no extra costs for driveway break up and resurfacing. EPA estimates these costs to be about $11,000 for a vacuum assist system when applying the Department of Labor’s Consumer Price Index Inflati on Calculator, leaving a remaining additional cost of about $20,000 per GDF
. 22 This $20,000 would be the potential cost - avoidance savings per GDF, plus the avoided operating costs of about $ 3 , 0 00 per year as discussed above resulting from the final rule
. There would be no further business disruption costs since these GDFs would be new construction. It is not possible to fold these potential savings into the total above, because the number of potentially new GDF installations that could incur costs in the absence of EPA’s ORVR widespread use finding and CAA section 182(b)(3) waiver is not known.

20 “Technical Guidance
– Stage II Vapor Recovery Systems for Control of Gasoline Refueling Emissions at Gasoline Dispensing Facilities Vol. 1,” EPA
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- 19. 21 Work conducted in Colorado in 2008, estimated retrofit costs of twic e this value. See http://raqc.org/postfiles/board_meetings/2008/june18/StageIIVaporRecoveryDMA

- NFR0608RevFinal.pdf. 22 “Technical Guidance
– Stage II Vapor Recovery Systems for Control of Gasoline Refueling Emissions at Gasoline Dispensing Facilities Vol. 1 ,” EPA
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- 022a, November 1991, pp. 5
- 13.