# Economic	Impact	Screening	Analysis	for	Regulatory

Changes	to	the	Listing	Status	of	High‐GWP

Alternatives	used	in	Refrigeration	and	Air

Conditioning,	Foams,	and	Fire	Suppression

P REPARED FOR 

### :

Stratospheric	Protection	Division

Office	of	Air	and	Radiation

U.S.	Environmental	Protection	Agency

Washington,	D.C.	20460

P REPARED B Y 

### :

ICF	International

1725	Eye	Street,	NW

Washington,	DC	20006

M ARCH 

### 2016Economic 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). Section 612(c) of the CAA

authorizes the Agency to identify and publish lists of acceptable and unacceptable substitutes.

EPA is proposing to change the listing status of certain high

‐ GWP alternatives used in refrigeration and air

conditioning, foams, and fire suppression. The proposed

regulatory options 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 Enforcement Fairness Act (SBREFA), this report

provides a screening analysis to assess the potential

economic impacts on small entities associated with these

proposed 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 cost method. The “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 economic 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:

 Roughly 89 small businesses could be subject to the rulemaking, although roughly 76% of small

businesses subject to this rulemaking would be expected to incur compliance costs that are estimated to

be less than 1% of annual sales.

 This analysis indicates that up to 21 of the 89 affected small businesses—or roughly 24%—could incur

costs in excess of 1% of annual sales, and that up to 12 small businesses could incur costs in excess of 3%

of annual sales.

Total annualized compliance costs across affected small businesses are estimated at approximately $11.8

‐

$14.4 million at a 7% discount rate, or $11.5

‐ $14.0 million at a 3% discount rate. The aggregated economic

impacts on small businesses and SISNOSE determination are summarized in Table ES

‐ 1. Affected small Exhibit ES

‐ 1: Summary of Proposed Regulatory

Options Analyzed

 List unacceptable 24 hydrofluorocarbons (HFCs)

and HFC blends for new centrifugal chillers in

2024.

 List unacceptable 24 HFCs and HFC blends for new

positive displacement chillers in 2024.

 List unacceptable 24 HFCs and HFC blends for new

refrigerated food processing and dispensing

equipment in 2021.

 List unacceptable 28 HFCs and HFC blends for new

household refrigerators and freezers in 2021.

 List unacceptable 22 HFCs and HFC blends for new

cold storage warehouses in 2021.

 List unacceptable HFC

‐ 134a, HFC

‐ 245fa, and

certain HFC blends in 1) rigid polyurethane high

‐

pressure two component spray foam, 2) rigid

polyurethane low

‐ pressure two component spray

foam, and 3) rigid polyurethane one

‐ component

foam sealants in 2020, 2021, and 2020,

respectively, except for certain military, space ‐ and

aeronautics

‐ related applications.

 List unacceptable methylene chloride in 1) flexible

polyurethane foam, 2) integral skin polyurethane

foam, and 3) polyolefin foam 30 days from date of

publication, in 2017, and in 2020, respectively.

 List unacceptable perfluorocarbons (C 3 F 8 and C 4 F 10 )

one year after publication of a final rule for total

flooding uses.Economic Impact Screening Analysis ii businesses are manufacturers of food processing and dispensing equipment, household refrigerators and

freezers, cold storage refrigeration systems, and polyurethane foams.

Table ES

‐ 1: Aggregated Economic Impacts on Small Businesses and SISNOSE Determination

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

b This 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 would 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 68 76.4%

1% or more for one or more affected small entities b 21 23.6%

Greater than 3% for one or more affected small entities 12 13.5%Economic Impact Screening Analysis iii 

## Table of Contents

Executive Summary

............................................................................................................................... ...................... i

List of Tables

............................................................................................................................... ............................... iv

1 Introduction

............................................................................................................................... ......................... 5

2 Summary of General Approach and Key Analytical Assumptions

...................................................................... 8

3 Refrigeration and Air Conditioning

................................................................................................................... 11

3.1 Chillers (centrifugal and positive displacement)

......................................................................................... 11

3.1.1 Small Entities Potentially Subject to the Rulemaking

........................................................................... 11

3.1.2 Estimated Economic Impact on Affected Small Entities

....................................................................... 12

3.2 Retail Food Refrigeration (Food Processing and Dispensing Equipment)

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

3.2.1 Small Entities Potentially Subject to the Rulemaking

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

3.2.2 Estimated Economic Impact on Affected Small Entities

....................................................................... 15

3.3 Household Refrigerators and Freezers

........................................................................................................ 16

3.3.1 Small Entities Potentially Subject to the Rulemaking

........................................................................... 16

3.3.2 Estimated Economic Impact on Affected Small Entities

....................................................................... 17

3.4 Cold Storage Warehouses

........................................................................................................................... 18

3.4.1 Small Entities Potentially Subject to the Rulemaking

........................................................................... 19

3.4.2 Estimated Economic Impact on Affected Small Entities

....................................................................... 22

4 Foam Blowing

............................................................................................................................... ..................... 24

4.1 Small Entities Potentially Subject to the Rulemaking

.................................................................................. 25

4.2 Estimated Economic Impact on Affected Small Entities

............................................................................. 26

4.2.1 High

‐ Pressure Two

‐ Component Spray Foam (Options 11a and 11b)

................................................... 26

4.2.2 Low

‐ Pressure Two

‐ Component Spray Foam (Options 12a and 12b)

.................................................... 27

4.2.3 One Component Foam Sealants (Options 13a and 13b)

...................................................................... 27

4.2.4 Flexible Polyurethane Foam (Option 14)

.............................................................................................. 27

4.2.5 Integral Skin Polyurethane Foam (Option 15)

...................................................................................... 27

4.2.6 Polyolefin Foam (Option 16)

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

5 Fire Suppression and Explosion Prevention

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

5.1 Small Entities Potentially Subject to the Rulemaking

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

5.2 Estimated Economic Impact on Affected Small Entities

............................................................................. 29

6 Conclusion

............................................................................................................................... .......................... 30

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

.................... 30

6.2 Aggregated Small Business Impacts of Regulatory Changes

....................................................................... 30

7 References

............................................................................................................................... ......................... 35

Appendix A: Sensitivity Analysis of Amoritization Period

....................................................................................... 38

Appendix B: Summary of the Small Business Impact of All Options

....................................................................... 41Economic Impact Screening Analysis iv 

## List of Tables

Table 1: Unacceptable Substitutes and Substitutes Subject to Use Restrictions

...................................................... 5

Table 2: Assumptions Concerning Affected Chemicals in Use, Alternatives Modeled, and Types of Entities

Affected

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

Table 3: Estimated Number of Chiller Equipment Manufacturing Small Businesses Affected

............................... 12

Table 4: Estimated Economic Impact on Small Entities in the Chiller End

‐ Use (Sales Test)

................................... 13

Table 5: Estimated Number of Refrigerated Food Processing and Dispensing Equipment Manufacturing Small

Businesses Affected

............................................................................................................................... .................. 15

Table 6: Estimated Economic Impact on Small Entities in the Retail Food Refrigeration End

‐ Use (Sales Test)

..... 16

Table 7: Estimated Number of Household Refrigeration Equipment Manufacturing Small Businesses Affected

.. 17

Table 8: Estimated Economic Impact on Small Entities in the Household Refrigeration Sector (Sales Test)

......... 18

Table 9: NAICS Codes for Affected Cold Storage Industries

.................................................................................... 20

Table 10: Cold Storage Small Businesses Affected by the Proposed Regulatory Options

...................................... 21

Table 11: Estimated Economic Impact on Cold Storage Small Businesses (Sales Test)

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

Table 12: Assumptions about the Percentage of Affected Entities in NAICS Code 326150

.................................... 25

Table 13: Estimated Number of Small Business Foam Manufacturers Affected by Regulatory Option

................. 26

Table 14: Estimated Economic Impact on Small Businesses in the Foam Blowing Sector (Sales Test)

................... 26

Table 15: Estimated Number of Small Businesses Manufacturing Fire Suppression Equipment Affected

............. 29

Table 16: Estimated Economic Impact on Small Businesses in the Fire Suppression Sector (Sales Test)

............... 29

Table 17: Summary of the Small Business Impact at 7% Discount Rate

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

Table 18: Summary of the Small Business Impact at 3% Discount Rate

................................................................. 32

Table 19: Aggregated Economic Impacts on Small Businesses

............................................................................... 33

Table 20: Regulatory Options Impacted by Annualized Cost Assumptions

............................................................ 38

Table 21: Annualized Compliance Costs Assuming a 30 Year and 10 Year Lifetime for Annualizing Costs

............ 38

Table 22: Summary of the Total Small Business Impact by Lifetime Assumption at a 7% Discount Rate*

............ 39

Table 23: Summary of the Total Small Business Impact by Lifetime Assumption at a 3% Discount Rate*

............ 39

Table 24: Aggregated Economic Impacts on Small Businesses a

............................................................................. 40

Table 25: Summary of the Small Business Impact of all Regulatory Options at 7% Discount Rate

........................ 41Economic Impact Screening Analysis 5 

## 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 proposing to change the listing status of certain high

‐ GWP alternatives used in refrigeration and air

conditioning, foams, and fire suppression. The complete list of regulatory options that were considered 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 Enforcement 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 proposed regulatory options can be presumed to have no significant economic impact on a

substantial number of small entities (SISNOSE)

. This determination applies to a rulemaking that includes the

proposed regulatory options 1, 3, 5, 7a, 9a, 11b, 12b, 13b, 14, 15, 16, and 17a (highlighted in Table 1).

Table 1: Unacceptable Substitutes and Substitutes Subject to Use Restrictions

Option Description of Regulatory Change

Refrigeration and Air

‐ Conditioning

1* For new centrifugal chillers, list unacceptable FOR12A, FOR12B, HFC

‐ 134a, HFC

‐ 227ea, HFC

‐ 236fa, HFC

‐ 245fa,

R

‐ 125/134a/600a (28.1/70/1.9), R

‐ 125/290/134a/600a (55.0/1.0/42.5/1.5), R

‐ 404A, R

‐ 407C, R

‐ 410A, R

‐ 410B,

R

‐ 417A, R

‐ 421A, R

‐ 422B, R

‐ 422C, R

‐ 422D, R

‐ 423A, R

‐ 424A, R

‐ 434A, R

‐ 438A, R

‐ 507A, RS

‐ 44 (2003 composition),

and THR

‐ 03 in 2024.

2 For retrofit centrifugal chillers, list unacceptable FOR12A, FOR12B, HFC

‐ 134a, HFC

‐ 236fa, HFC

‐ 245fa, R

‐ 125/134a/600a (28.1/70/1.9), R

‐ 125/290/134a/600a (55.0/1.0/42.5/1.5), R

‐ 404A, R

‐ 407C, R

‐ 417A, R

‐ 417C, R

‐

421A, R

‐ 422B, R

‐ 422C, R

‐ 422D, R

‐ 423A, R

‐ 424A, R

‐ 434A, R

‐ 438A, R

‐ 507A, RS

‐ 44 (2003 composition), and THR

‐

03 in 2024.

3* For new positive displacement chillers, list unacceptable FOR12A, FOR12B, HFC

‐ 134a, HFC

‐ 227ea, KDD6, R

‐ 125/134a/600a (28.1/70/1.9), R

‐ 125/290/134a/600a (55.0/1.0/42.5/1.5), R

‐ 404A, R

‐ 407C, R

‐ 410A, R

‐ 410B, R

‐

417A, R

‐ 421A, R

‐ 422B, R

‐ 422C, R

‐ 422D, R

‐ 424A, R

‐ 434A, R

‐ 437A, R

‐ 438A, R

‐ 507A, RS

‐ 44 (2003 composition),

SP34E, and THR

‐ 03 in 2024.

4 For retrofit positive displacement chillers, list unacceptable FOR12A, FOR12B, HFC

‐ 134a, KDD6, R

‐ 125/134a/600a (28.1/70/1.9), R

‐ 125/290/134a/600a (55.0/1.0/42.5/1.5), R

‐ 404A, R

‐ 407C, R

‐ 417A, R

‐ 417C, R

‐

421A, R

‐ 422B, R

‐ 422C, R

‐ 422D, R

‐ 424A, R

‐ 427A, R

‐ 434A, R

‐ 437A, R

‐ 438A, R

‐ 507A, RS

‐ 44 (2003 composition),

SP34E, and THR

‐ 03 in 2024.

5* For new retail food refrigeration (refrigerated food processing and dispensing equipment), list unacceptable

HFC

‐ 227ea, KDD6, R

‐ 125/290/134a/600a (55.0/1.0/42.5/1.5), 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

‐ 44 (2003 formulation) in 2021.

6 For retrofit retail food refrigeration (refrigerated food processing and dispensing equipment), list unacceptable

R

‐ 404A and R

‐ 507A one year after publication of a final rule.

7a* For new household refrigerators and freezers, list unacceptable FOR12A, FOR12B, HFC

‐ 134a, KDD6, R

‐ 125/290/134a/600a (55.0/1.0/42.5/1.5), R

‐ 404A, 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 in 2021.

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 and final regulatory flexibility analysis is further required.Economic Impact Screening Analysis 6 Option Description of Regulatory Change

7b For new household refrigerators and freezers, list unacceptable FOR12A, FOR12B, HFC

‐ 134a, KDD6, R

‐ 125/290/134a/600a (55.0/1.0/42.5/1.5), R

‐ 404A, 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

‐ 450A, R

‐ 438A, R

‐ 507A, R

‐ 513A, RS

‐

24 (2002 formulation), RS

‐ 44 (2003 formulation), SP34E, and THR

‐ 03 in 2021.

7c For new household refrigerators and freezers, list unacceptable FOR12A, FOR12B, HFC

‐ 134a, KDD6, R

‐ 125/290/134a/600a (55.0/1.0/42.5/1.5), R

‐ 404A, 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

‐ 450A, R

‐ 507A, R

‐ 513A, RS

‐

24 (2002 formulation), RS

‐ 44 (2003 formulation), SP34E, and THR

‐ 03 in 2025.

8 For retrofit household refrigerators and freezers, list unacceptable FOR12A, FOR12B, HFC

‐ 134a, KDD6, R

‐ 125/290/134a/600a (55.0/1.0/42.5/1.5), R

‐ 404A, R

‐ 407C, R

‐ 407F, R

‐ 417A, R

‐ 421A, R

‐ 421B, R

‐ 422A, R

‐ 422B, R

‐

422C, R

‐ 422D, R

‐ 424A, R

‐ 426A, R

‐ 427A, R

‐ 428A, R

‐ 434A, R

‐ 437A, R

‐ 438A, R

‐ 507A, RS

‐ 24 (2002 formulation),

RS

‐ 44 (2003 formulation), and SP34E in 2021.

9a* For new cold storage warehouses, list unacceptable HFC

‐ 227ea, R

‐ 125/290/134a/600a (55.0/1.0/42.5/1.5), R

‐

404A, R

‐ 407A, R

‐ 407B, R

‐ 410A, R

‐ 410B, R

‐ 417A, R

‐ 421A, R

‐ 421B, R

‐ 422A, R

‐ 422B, R

‐ 422C, R

‐ 422D, R

‐ 423A, R

‐

424A, R

‐ 428A, R

‐ 434A, R

‐ 438A, R

‐ 507A, and RS

‐ 44 (2003 composition) in 2021.

9b For new cold storage warehouses, list unacceptable HFC

‐ 227ea, KDD6, R

‐ 125/290/134a/600a

(55.0/1.0/42.5/1.5), 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

‐ 423A, R

‐ 424A, R

‐ 428A, R

‐ 434A, R

‐ 437A, R

‐ 438A, R

‐ 507A, and RS

‐ 44 (2003

composition) in 2021.

10 For retrofit cold storage warehouses, list unacceptable R

‐ 125/290/134a/600a (55.0/1.0/42.5/1.5), R

‐ 404A, R

‐

407A, R

‐ 407B, R

‐ 417A, R

‐ 421A, R

‐ 421B, R

‐ 422A, R

‐ 422B, R

‐ 422C, R

‐ 422D, R

‐ 423A, R

‐ 424A, R

‐ 428A, R

‐ 434A, R

‐

438A, R

‐ 507A, and RS

‐ 44 (2003 composition) in 2021.

Foam Blowing

11a For rigid polyurethane high

‐ pressure two

‐ component spray foam, list unacceptable HFC

‐ 134a, HFC

‐ 245fa, and

blends thereof; blends of HFC

‐ 365mfc with at least 4% HFC

‐ 245fa, and commercial blends of HFC

‐ 365mfc with

7 to 13% HFC

‐ 227ea and the remainder HFC

‐ 365mfc; and Formacel TI, in 2019, except as allowed under a

narrowed use limit for military or space

‐ and aeronautics–related applications.

11b* For rigid polyurethane high

‐ pressure two

‐ component spray foam, list unacceptable HFC

‐ 134a, HFC

‐ 245fa, and

blends thereof; blends of HFC

‐ 365mfc with at least 4% HFC

‐ 245fa, and commercial blends of HFC

‐ 365mfc with

7 to 13% HFC

‐ 227ea and the remainder HFC

‐ 365mfc; and Formacel TI in 2020, except as allowed under a

narrowed use limit for military or space

‐ and aeronautics–related applications.

12a For rigid polyurethane low

‐ pressure two

‐ component spray foam, list unacceptable HFC

‐ 134a, HFC

‐ 245fa, and

blends thereof; blends of HFC

‐ 365mfc with at least 4% HFC

‐ 245fa, and commercial blends of HFC

‐ 365mfc with

7 to 13% HFC

‐ 227ea and the remainder HFC

‐ 365mfc; and Formacel TI in 2020, except as allowed under a

narrowed use limit for military or space

‐ and aeronautics–related applications.

12b* For rigid polyurethane low

‐ pressure two

‐ component spray foam, list unacceptable HFC

‐ 134a, HFC

‐ 245fa, and

blends thereof; blends of HFC

‐ 365mfc with at least 4% HFC

‐ 245fa, and commercial blends of HFC

‐ 365mfc with

7 to 13% HFC

‐ 227ea and the remainder HFC

‐ 365mfc; and Formacel TI in 2021, except as allowed under a

narrowed use limit for military or space

‐ and aeronautics–related applications.

13a For rigid polyurethane one

‐ component foam sealants, list unacceptable HFC

‐ 134a, HFC

‐ 245fa, and blends

thereof; blends of HFC

‐ 365mfc with at least 4% HFC

‐ 245fa, and commercial blends of HFC

‐ 365mfc with 7 to

13% HFC

‐ 227ea and the remainder HFC

‐ 365mfc; and Formacel TI in 2019, except as allowed under a narrowed

use limit for military or space

‐ and aeronautics–related applications.

13b* For rigid polyurethane one

‐ component foam sealants, list unacceptable HFC

‐ 134a, HFC

‐ 245fa, and blends

thereof; blends of HFC

‐ 365mfc with at least 4% HFC

‐ 245fa, and commercial blends of HFC

‐ 365mfc with 7 to

13% HFC

‐ 227ea and the remainder HFC

‐ 365mfc; and Formacel TI in 2020, except as allowed under a narrowed

use limit for military or space

‐ and aeronautics–related applications.

14* In flexible polyurethane foam, list methylene chloride as unacceptable 30 days after publication of a final rule.Economic Impact Screening Analysis 7 Option Description of Regulatory Change

15* In integral skin polyurethane foam, list methylene chloride as unacceptable in 2017.

16* In polyolefin foam, list methylene chloride as unacceptable in 2020.

Fire Suppression and Explosion Prevention

17a* For total flooding uses, list unacceptable perfluorocarbons (C 3 F 8 and C 4 F 10 ) one year after publication of a final

rule.

17b For total flooding uses, list unacceptable perfluorocarbons (C 3 F 8 and C 4 F 10 ) and SF 6 one year after publication

of a final rule and list HFC

‐ 23 as acceptable, subject to narrowed use limits one year after publication of a final

rule.

18 For streaming uses, list unacceptable perfluorocarbon (C 6 F 14 ) one year after publication of a final rule.

*Proposed option included in rulemaking.

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 three affected industries.

 Chapters 3, Error! Reference source not found.

, and 4 identify the small entities potentially affected by

the regulatory changes and then estimate the economic impact on those affected entities for the

refrigeration and air

‐ conditioning, foams, and fire suppression industries, respectively.

 Chapter 6 summarizes the aggregate small business impacts of the regulatory changes, along with a

recommendation for certification based on a decision matrix for determining SISNOSE.Economic Impact Screening Analysis 8 

## 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 detailed below.

 Step 1: 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 Statistics of U.S. Businesses

( http://www.census.gov/econ/susb/ ) and includes data from the 2012 Economic Census. The economic

census profiles U.S. national and local economies every five years, and the 2012 data is the latest available at

the time of this writing. By changing the listing status of certain high

‐ GWP alternatives used in refrigeration

and air

‐ conditioning, foams, and fire suppression, this rulemaking potentially directly impacts small entities

associated with these changes. Other entities (e.g., refrigeration and air conditioning technicians) may

experience indirect effects as a result of market changes influenced by the rule, but these are not considered

in this analysis. See Cement Kiln Recycling Coalition v. EPA, 255 F.3d 855, 869 (D.C. Cir. 2001), where the D.C.

Circuit “has consistently rejected the contention that the RFA applies to small businesses indirectly affected

by the regulation of other entities.”

 Step 2: 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 February 26,

2016.

 Step 3: Determine what proportion of small businesses could be directly impacted

‐ This determination was

made on an individual sector and end

‐ use basis, taking into consideration whether the HFCs affected by this

rulemaking are still—or were ever—known to be in use, and what proportion of the market the affected HFCs

are expected to represent at the time that the regulations would come into effect.

 Step 4: For the purposes of quantifying compliance costs, make assumptions about the alternatives that

would 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 more

complete accounting of substitutes, refer to the lists of acceptable substitutes 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 2014) and lists of acceptable substitutes identified through EPA’s SNAP program.

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 organization 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, establishments 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 9  Step 5: Quantify the economic impact on small businesses

‐ This 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. 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 analyses 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

expressed in constant year 2015 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

industry were employed. For sub

‐ sectors for which these cost data were 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 regulatory changes would become effective. For example, the

price of alternative refrigerants and blowing agents would likely be expected to decrease over time.

 Step 6: Perform the sales test

‐ For this analysis, the “sales test” was applied, which calculates annualized

compliance costs as a percentage of annual sales. For industries for which annual sales data was not available

through the Economic Census, annual receipts or annual value of shipments 3 was utilized as a reasonable

proxy. For the purposes of the sales test, annualized compliance costs were calculated 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 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 instances, the result

is shown as 0%.

Chapters 3, 4, and 5 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 2

summarizes some of these key assumptions by industry and end

‐ use —including which affected chemicals 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 2 also summarizes the types of entities expected to be

directly impacted.

3 Total value of shipments includes the received or receivable net selling values of all products shipped (exclusive of freight

and taxes).EconomicImpactScreeningAnalysis10Table2:AssumptionsConcerningAffectedChemicalsinUse,AlternativesModeled,andTypesofEntitiesAffectedSectorOpt.EndUseAffectedChemical(s)AssumedtoCurrentlybeinUseAlternativesModeledfortheCostAnalysisaTypesofEntitiesDirectlyAffectedRefrigerationandAir‐Conditioning1CentrifugalChillersNewHFC‐134a,HFC‐245faR‐450A,R‐513A,R‐1233zd(E)Systemmanufacturers2RetrofitNoneNoneNone3PositiveDisplacementChillersNewR‐410A,R‐407C,HFC‐134aR‐450A,R‐513ASystemmanufacturers4RetrofitNoneNoneNone5RetailFoodRefrigeration(refrigeratedfoodprocessinganddispensingequipment)NewR‐404AR‐450ASystemmanufacturers6RetrofitNoneNoneNone7aHouseholdRefrigeratorsandFreezersNewHFC‐134aR‐450A,R‐513ASystemmanufacturers7bHydrocarbons(HCs)7c8RetrofitNoneNoneNone9aColdStorageWarehousesNewR‐404A,R‐507AR‐407FSystemmanufacturers9bR‐404A,R‐507AAmmonia10RetrofitR‐404A,R‐507AR‐407FEnd‐usersFoam11aRigidPU:high‐pressuretwo‐componentsprayfoamHFC‐245faHydrofluoroolefin(HFO)‐1233zd(E)Foammanufacturers11b12aRigidPU:low‐pressuretwo‐componentsprayfoamHFC‐134a,HFC‐245faHFO‐1234zeFoammanufacturers12b13aRigidPU:one‐componentfoamsealantsHFC‐134aHFO‐1234zeFoammanufacturers13b14FlexiblePUNoneNoneNone15IntegralSkinPUNoneNoneNone16PolyolefinFoamNoneNoneNoneFireSuppressionandExplosionPrevention17aTotalFloodingNoneNoneNone17bNoneNone18StreamingNoneNoneNoneaAsnotedpreviously,forthepurposesofquantifyingcompliancecosts,thisanalysishasmadesomeassumptionsregardingwhichalternativestomodelinthetransitionawayfromtheaffectedHFCs.Theseassumptionsarenotintendedtorepresenttheentiretyofavailablealternatives,ortoimplythatotheralternativesarenotavailable.Forafulleraccountingofsubstitutes,pleaserefertothelistsofacceptablesubstitutesaspublishedunderEPA’sSNAPProgram(www.epa.gov/ozone/snap/).Economic Impact Screening Analysis 11 

## 3 Refrigeration and Air Conditioning

3.1 Chillers (centrifugal and positive displacement)

The proposed regulatory changes are expected to affect the chillers end

‐ use, including centrifugal and positive

displacement chillers. Specifically, the regulatory options applicable to the chillers end

‐ use that were assessed

include the following:

 Regulatory Option 1: For new centrifugal chillers, list unacceptable FOR12A, FOR12B, HFC

‐ 134a, HFC

‐

227ea, HFC

‐ 236fa, HFC

‐ 245fa, R

‐ 125/134a/600a (28.1/70/1.9), R

‐ 125/290/134a/600a (55.0/1.0/42.5/1.5),

R

‐ 404A, R

‐ 407C, R

‐ 410A, R

‐ 410B, R

‐ 417A, R

‐ 421A, R

‐ 422B, R

‐ 422C, R

‐ 422D, R

‐ 423A, R

‐ 424A, R

‐ 434A, R

‐

438A, R

‐ 507A, RS

‐ 44 (2003 composition), and THR

‐ 03 in 2024.

 Regulatory Option 2: For retrofit centrifugal chillers, list unacceptable FOR12A, FOR12B, HFC

‐ 134a, HFC

‐

236fa, HFC

‐ 245fa, R

‐ 125/134a/600a (28.1/70/1.9), R

‐ 125/290/134a/600a (55.0/1.0/42.5/1.5), R

‐ 404A, R

‐

407C, R

‐ 417A, R

‐ 417C, R

‐ 421A, R

‐ 422B, R

‐ 422C, R

‐ 422D, R

‐ 423A, R

‐ 424A, R

‐ 434A, R

‐ 438A, R

‐ 507A, RS

‐ 44

(2003 composition), and THR

‐ 03 in 2024.

 Regulatory Option 3: For new positive displacement chillers, list unacceptable FOR12A, FOR12B, HFC

‐

134a, HFC

‐ 227ea, KDD6, R

‐ 125/134a/600a (28.1/70/1.9), R

‐ 125/290/134a/600a (55.0/1.0/42.5/1.5), R

‐

404A, R

‐ 407C, R

‐ 410A, R

‐ 410B, R

‐ 417A, R

‐ 421A, R

‐ 422B, R

‐ 422C, R

‐ 422D, R

‐ 424A, R

‐ 434A, R

‐ 437A, R

‐ 438A,

R

‐ 507A, RS

‐ 44 (2003 composition), SP34E, and THR

‐ 03 in 2024.

 Regulatory Option 4: For retrofit positive displacement chillers, list unacceptable FOR12A, FOR12B, HFC

‐

134a, KDD6, R

‐ 125/134a/600a (28.1/70/1.9), R

‐ 125/290/134a/600a (55.0/1.0/42.5/1.5), R

‐ 404A, R

‐ 407C,

R

‐ 417A, R

‐ 417C, R

‐ 421A, R

‐ 422B, R

‐ 422C, R

‐ 422D, R

‐ 424A, R

‐ 427A, R

‐ 434A, R

‐ 437A, R

‐ 438A, R

‐ 507A, RS

‐ 44

(2003 composition), SP34E, and THR

‐ 03 in 2024.



### 3.1.1 Small Entities Potentially Subject to the Rulemaking

Chillers are used to regulate temperature and humidity in office buildings, hotels, hospitals, shopping centers,

and other commercial buildings. Vapor

‐ compression chillers, which have historically used ozone depleting

substances (ODS) as their refrigerant, are designed with an electric motor that runs a compressor and are

further classified by the type of compression system used: centrifugal or positive displacement. Centrifugal

compressors have a typical cooling capacity between 750 and 10,000 kW, compared to positive displacement

compressors which can serve between 50 and 750 kW (UNEP 2015b). Centrifugal chillers, therefore, have larger

charge sizes than positive displacement chillers and are typically employed in larger buildings.

The economic impact of complying with the proposed regulatory changes that impact new centrifugal and

positive displacement chillers is expected to be incurred by manufacturers of new centrifugal and positive

displacement chillers, including manufacturers of fully assembled chillers and manufacturers of chiller

components (i.e., compressors or chiller shells). With regard to retrofitting, centrifugal and positive

displacement chillers containing hydrochlorofluorocarbon (HCFC)

‐ 22 and HCFC

‐ 123 are expected to be in

operation in 2024 (based on EPA’s Vintaging Model) and would be available for retrofitting; however, refrigerant

substitutions in chillers are uncommon (UNEP 2010). As a result, retrofits are not assumed to occur, even in the

absence of the proposed regulatory changes, and no end

‐ users of chillers are identified as being affected.Economic Impact Screening Analysis 12 The Department of Energy (DOE) identified domestic water

‐ and evaporatively

‐ cooled air conditioner

manufacturers in a technical support document for a final rule on Commercial, Air Conditioning, and Water

Heating Equipment (DOE 2011), including six centrifugal and positive displacement chiller manufacturers. 4 In

addition to the DOE technical support document, three additional U.S. manufacturers of centrifugal and positive

displacement chillers were identified through an online search. 5 In total, it is estimated that there are nine

manufacturers of centrifugal and positive displacement chillers in the United States. However, none of these

manufacturers are small businesses, according to the metric used for this industry.

Centrifugal and positive displacement chiller manufacturers are matched to NAICS code 333415, air

‐ conditioning

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

. The

small business threshold for this industry is defined as firms with 1,250 employees or fewer. Based on a review

of U.S. Securities and Exchange Commission Form 10

‐ K submissions, 2014 Company Annual Reports, and

company websites for the nine identified centrifugal and positive displacement chiller manufacturers, eight of

the nine manufacturers were found to exceed the small business threshold of 1,250 employees (Aaon 2015,

Danfoss 2015, Emerson Electric 2015, Engineered Air 2015, Ingersoll Rand 2015, Johnson Controls 2015, Lennox

International 2015, and United Technologies 2015) while one manufacturer is considered to be a small business

(MFRI 2015). Error! Not a valid bookmark self

‐ reference. below summarizes the estimated number of small

businesses expected to be directly affected by the four proposed regulatory options.

Table 3: Estimated Number of Chiller Equipment Manufacturing Small Businesses Affected

NAICS Code Industry Name Estimated Number of Small Businesses Affected a

Option 1 Option 2 Option 3 Option 4

333415 Air

‐ conditioning and warm air heating equipment

and commercial and industrial refrigeration

equipment manufacturing 1 b 0 1 b 0

a The total number of firms in this industry is 729, of which 700 are assumed to be small businesses (U.S. Census Bureau 2012)

.

b The same small business is affected by both regulatory option 1 and option 3.



### 3.1.2 Estimated Economic Impact on Affected Small Entities

This analysis assumes that positive displacement manufacturers and centrifugal chiller manufacturers will use R

‐

450A or R

‐ 513A in place of R

‐ 410A/R

‐ 407C and HFC

‐ 134a, respectively. In addition, it is assumed that centrifugal

manufacturers that manufacture low

‐ pressure centrifugal chillers will transition to SolsticeTM

‐ 1233zd(E). R

‐ 450A

and R

‐ 513A are considered a near drop

‐ in replacement for HFC

‐ 134a chillers and thus do not require any

significant changes to the chiller equipment (Honeywell 2015; DuPont 2014). Therefore, it is assumed that

manufacturers will not incur any one

‐ time capital costs associated with using R

‐ 450A or R

‐ 513A in place of HFC

‐

134a in new centrifugal chillers or R

‐ 407C and R

‐ 410A in new positive displacement chillers. For manufacturers

of low

‐ pressure centrifugal chillers that transition to SolsticeTM

‐ 1233zd(E), it is assumed that manufacturers

would incur a one

‐ time capital cost of approximately $51,000 to convert the production line, including

4 DOE identified the following eight manufacturers of water

‐ and evaporatively

‐ cooled air conditioners: Aaon, Inc., Allied

Thermal Systems, Carrier Corp. (United Technologies Corporation), Lennox International, Inc., Engineered Air, Thermoplus

Air, Inc., Trane Inc. (Ingersoll Rand), and York International Corp. (Johnson Controls, Inc.). Six of these manufacturers

(excluding Allied Thermal Systems and ThermoPlus Air) manufacture centrifugal and positive displacement chillers.

5 The online search identified the following three additional manufacturers of centrifugal and positive displacement chillers:

Danfoss, Emerson Electric, and Thermal Care (MRFI, Inc.).Economic Impact Screening Analysis 13 purchasing a new refrigerant system and charging equipment (UNEP 2012). Current refrigerants used in low

‐

pressure centrifugal chillers include HCFC

‐ 123 and HFC

‐ 245fa; use of HCFC

‐ 123 in new chiller equipment will be

prohibited beginning in 2020.

Annual costs incurred by manufacturers of chillers are calculated based on the higher cost of R

‐ 450A, R

‐ 513A,

and SolsticeTM

‐ 1233zd(E) relative to the cost of HFC

‐ 134a, R

‐ 407C, R

‐ 410A, and HFC

‐ 245fa. Specifically, ICF

estimates that R

‐ 450A and R

‐ 513A cost roughly $5

‐ $6 more per kilogram than HFC

‐ 134a and $4

‐ $5 more per

kilogram than R

‐ 407C and R

‐ 410A, and SolsticeTM

‐ 1233zd(E) costs approximately $11

‐ $12 more per kilogram

than HFC

‐ 245fa.

In the absence of this proposed rulemaking, by 2024 it is assumed that 10% of new positive displacement and

centrifugal chillers will have already transitioned away from HFCs. This assumption is based on the current

commercial availability of R

‐ 513A and SolsticeTM

‐ 1233zd(E) chillers as well as commitments from chiller

manufacturers to introduce low

‐ GWP refrigerants in their product lines (White House 2015). Based on this and

2024 sales of centrifugal chillers and positive displacement chillers estimated by EPA’s Vintaging Model (EPA

2014), it is assumed that the small business manufacturer affected by the proposed regualtory changes will sell

roughly 545 centrifugal chillers and 2,681 positive displacement chillers on average in 2024. It is additionally

assumed that approximately 41% of the centrifugal chillers will transition to SolsticeTM

‐ 1233zd(E) and 59% will

transition to R

‐ 450A or R

‐ 513A. EPA’s Vintaging Model assumes an average charge size of 708 kg for centrifugal

chillers and 283 kg for positive displacement chillers, yielding incremental costs of $3,500 to $4,200 for

centrifugal chillers and $1,100

‐ $1,400 for positive displacement chillers using R

‐ 450A or R

‐ 513A, and $7,800 to

$8,500 for centrifugal chillers using SolsticeTM

‐ 1233zd(E), associated with charging the systems. 6

As a result, it is estimated that the small businesses manufacturer of centrifugal chillers and positive

displacement chillers could incur an annual cost of roughly $2.9 million to $3.3 million and roughly $3.0 million

to $3.8 million associated with manufacturing centrifugal chillers and positive displacement chillers,

respectively, as a result of the proposed regulatory changes. 7 Table 4 below presents the estimated economic

impact of the proposed regulatory changes on small businesses in the chiller end

‐ uses.

Table 4: Estimated Economic Impact on Small Entities in the Chiller End

‐ Use (Sales Test)

NAICS Code Industry Name Annualized Compliance Cost as a Percentage of

Average Annual Sales per Manufacturer

Option 1 Option 2 Option 3 Option 4

333415 Air

‐ conditioning and warm air heating equipment

and commercial and industrial refrigeration

equipment manufacturing 0.7%–0.8% 0% 0.7%–0.9% 0%

6 Chiller compressors can be charged at the manufacturing facility, shipped partially charged and filled on

‐ site, or shipped

dry and filled on site depending on the size and installation location of the system. For the purposes of this analysis, it is

assumed that all charging costs will be incurred by the manufacturer, although it is likely that some of these costs would be

passed on to the end

‐ user.

7 Costs are annualized assuming a 25 year lifetime. See Appendix A for the results of a sensitivity analysis associated with

this assumption.Economic Impact Screening Analysis 14 

## 3.2 Retail Food Refrigeration (Food Processing and Dispensing Equipment)

The proposed regulatory changes are expected to affect the retail food refrigeration end

‐ use, including

refrigerated food processing and dispensing equipment. Specifically, the regulatory options applicable to this

end

‐ use that were assessed include the following:

 Regulatory Option 5: For new retail food refrigeration (refrigerated food processing and dispensing

equipment), list unacceptable HFC

‐ 227ea, KDD6, R

‐ 125/290/134a/600a (55.0/1.0/42.5/1.5), 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

‐ 44 (2003 formulation) in 2021.

 Regulatory Option 6: For retrofit retail food refrigeration (refrigerated food processing and dispensing

equipment), list unacceptable R

‐ 404A and R

‐ 507A one year after publication of a final rule.



### 3.2.1 Small Entities Potentially Subject to the Rulemaking

Refrigerated food processing and dispensing equipment—including ice cream machines, “slushy” iced beverage

dispensers, and refrigerated beverage dispensers—are self

‐ contained units that cool and dispense food and

beverages via a nozzle. They are typically found in small retail food facilities, including convenience stores,

restaurants, cafeterias, hotels, schools, hospitals, and snack and beverage bars. Currently, equipment used for

medium temperature applications (i.e., refrigerated beverage dispensers) use HFC

‐ 134a while equipment used

for low temperature applications (i.e., frozen beverage dispensers and ice cream machines) use R

‐ 404A. Since

HFC

‐ 134a may continue to be used in new equipment under the proposed regulatory changes, only

manufacturers of new low temperature refrigerated food processing and dispensing equipment are expected to

be affected by the proposed regulatory changes. It is also assumed that end

‐ users of this equipment do not and

would not retrofit their 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

this equipment are identified as being affected by the proposed regulatory changes.

Manufacturers of refrigerated food processing and dispensing equipment were identified through an internet

search. In total, 16 U.S. manufacturers of refrigerated food processing and dispensing equipment were

identified. 8 Since this list may not be exhaustive, it is conservatively assumed that there are 20 manufacturers of

refrigerated food processing and dispensing equipment in the United States. Manufacturers of refrigerated food

processing and dispensing equipment are matched to NAICS code 333415, air

‐ conditioning and warm air

heating equipment and commercial and industrial refrigeration equipment manufacturing

. The small business

threshold for this industry is defined as an enterprise with 1,250 employees or fewer. Based on this, roughly

96% of firms in this industry are categorized as a small business. 9 By applying this percentage to the estimated

8 Manufacturers include Alpine Freezer, Avantco Equipment, Bunn, Central Exclusive, Cornelius, Electro Freeze, Elmeco,

Emery Thompson Machine & Supply Co., Eurodib, Grindmaster Cecilware, MegaLane, Omega, SaniServ, Spaceman,

Stoelting, and Taylor Company.

9 The Census Statistics of U.S. Businesses data does not disaggregate the number of firms with an employment size above

500 employees. Since it is not possible to know how many firms with >500 employees fall within the small business

threshold (i.e., have <1,250 employees), for the purposes of this analysis, 50% of firms with >500 employees are assumed to

be small businesses.Economic Impact Screening Analysis 15 number of refrigerated food processing and dispensing equipment manufacturers, it is estimated that there are

19 small business manufacturers of refrigerated food processing and dispensing equipment in the United States.

While it is possible that some manufacturers only produce medium temperature equipment, it is conservatively

assumed that all 19 small business manufacturers of refrigerated food processing and dispensing equipment

produce low temperature equipment, and therefore could be affected by the proposed regulatory changes, as

summarized below in Table 5.

Table 5: Estimated Number of Refrigerated Food Processing and Dispensing Equipment Manufacturing Small

Businesses Affected

NAICS Code Industry Name Estimated Number of Small

Businesses Affected a

Option 5 Option 6

333415 Air

‐ conditioning and warm air heating equipment and commercial and

industrial refrigeration equipment manufacturing 19 0

a The total number of firms in this industry is 729, of which 700 are assumed to be small businesses (U.S. Census Bureau 2012)

.



### 3.2.2 Estimated Economic Impact on Affected Small Entities

For the proposed regulatory changes that affect refrigerated food processing and dispensing equipment, the

potential economic impact on small businesses was calculated based on the assumption that all manufacturers

of refrigerated food processing and dispensing equipment would continue to use HFC

‐ 134a in medium

temperature applications, and would use R

‐ 450A in low temperature applications in place of R

‐ 404A. R

‐ 450A

was approved for use in new refrigerated food processing and dispensing equipment under EPA’s SNAP Program

in 2014. Minimal changes to manufacturing processes and infrastructure are assumed to be required to use R

‐

450A in place of R

‐ 404A in new low

‐ temperature equipment, resulting in negligible associated upfront costs. 10

Annual costs incurred by manufacturers of refrigerated food processing and dispensing equipment are

calculated based on the higher cost of R

‐ 450A relative to the cost of R

‐ 404A. Assuming that refrigerated food

processing and dispensing equipment contains 1 kg of R

‐ 404A, it is conservatively estimated that manufacturers

will incur an incremental cost of $4

‐ 5 for each piece of equipment they produce (UNEP 2012; Alpine Freezer

2015). With units estimated to sell for $10,000 a piece on average—based on the fact that this equipment

ranges in price from roughly $1,000 to $20,000 (Webstaurant Store 2015a; Webstaurant Store 2015b; Central

Restaurant Products 2015)—small business manufacturers are estimated to incur on average an annual

incremental cost of roughly $200

‐ $200,000, depending on the size of the firm. 11,12

10 R

‐ 450A is used as a proxy R

‐ 404A drop

‐ in replacement refrigerant in this analysis. It is assumed that by 2021, a similar

HFC/HFO refrigerant blend that is a drop

‐ in replacement for R

‐ 404A will be available for use in low

‐ temperature

refrigerated food processing and dispensing equipment (Honeywell 2015). It is further assumed that refrigerant costs will

be similar to that identified for R

‐ 450A.

11 To estimate the total incremental cost per company, NAICS data was used to calculate the average value of shipments

per firm for each small business establishment size (e.g., 0

‐ 4 employees, 5

‐ 9 employees, 10

‐ 19 employees, etc.). This

information was then used to estimate the number of units sold by each firm on average by firm size.

12 For the purposes of this analysis, it is assumed that all refrigerant costs will be incurred by the manufacturer, although it

is possible that some of these costs would be passed on to the end

‐ user.Economic Impact Screening Analysis 16 For manufacturers of refrigerated food processing and dispensing equipment affected by the proposed

regulatory changes, average annual sales per firm were calculated by dividing total value of receipts (as a proxy

for sales) by the number of firms 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. Table 6 below presents the estimated economic

impact of the proposed regulatory changes on small businesses in the retail food refrigeration end

‐ use.

Table 6: Estimated Economic Impact on Small Entities in the Retail Food Refrigeration End

‐ Use (Sales Test)

NAICS Code Industry Name Annualized Compliance Cost as a Percentage

of Average Annual Sales per Firm

Option 5 Option 6

333415 Air

‐ conditioning and warm air heating equipment and

commercial and industrial refrigeration equipment

manufacturing <0.1% 0%



## 3.3 Household Refrigerators and Freezers

The regulatory changes are expected to affect the household refrigeration end

‐ use. Specifically, the regulatory

option applicable to the household refrigeration end

‐ use that were assessed include the following:

 Regulatory option 7a: For new household refrigerators and freezers, list unacceptable FOR12A, FOR12B,

HFC

‐ 134a, KDD6, R

‐ 125/290/134a/600a (55.0/1.0/42.5/1.5), R

‐ 404A, 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 in 2021.

 Regulatory option 7b: For new household refrigerators and freezers, list unacceptable FOR12A, FOR12B,

HFC

‐ 134a, KDD6, R

‐ 125/290/134a/600a (55.0/1.0/42.5/1.5), R

‐ 404A, 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

‐ 450A,

R

‐ 438A, R

‐ 507A, R

‐ 513A, RS

‐ 24 (2002 formulation), RS

‐ 44 (2003 formulation), SP34E, and THR

‐ 03 in 2021.

 Regulatory option 7c: For new household refrigerators and freezers, list unacceptable FOR12A, FOR12B,

HFC

‐ 134a, KDD6, R

‐ 125/290/134a/600a (55.0/1.0/42.5/1.5), R

‐ 404A, 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

‐ 450A, R

‐ 507A, R

‐ 513A, RS

‐ 24 (2002 formulation), RS

‐ 44 (2003 formulation), SP34E, and THR

‐ 03 in 2025.

 Regulatory option 8: For retrofit household refrigerators and freezers, list unacceptable FOR12A, FOR12B,

HFC

‐ 134a, KDD6, R

‐ 125/290/134a/600a (55.0/1.0/42.5/1.5), R

‐ 404A, R

‐ 407C, R

‐ 407F, R

‐ 417A, R

‐ 421A, R

‐

421B, R

‐ 422A, R

‐ 422B, R

‐ 422C, R

‐ 422D, R

‐ 424A, R

‐ 426A, R

‐ 427A, R

‐ 428A, R

‐ 434A, R

‐ 437A, R

‐ 438A, R

‐ 507A,

RS

‐ 24 (2002 formulation), RS

‐ 44 (2003 formulation), and SP34E in 2021.



### 3.3.1 Small Entities Potentially Subject to the Rulemaking

Household refrigeration, including household refrigerators and freezers, is primarily intended for residential use,

but can also be found outside a home, for example, in an office building break room. There are three main

product categories of household refrigeration: refrigerators, freezers, and refrigerator

‐ freezers. As the

equipment design in all of these applications is very similar, this analysis does not distinguish between the main

product categories of household refrigeration.Economic Impact Screening Analysis 17 The economic impact of complying with the proposed regulatory changes that impact new household

refrigeration equipment is expected to be incurred by manufacturers of new household refrigerators, freezers,

and refrigerator

‐ freezers. 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 household refrigeration equipment

are identified as being affected by this regulation.

Manufacturers of household refrigeration equipment are matched to NAICS code 335222, household

refrigerator and home freezer manufacturing

. Within this NAICS code, there are 23 manufacturers of household

refrigeration equipment (U.S. Census Bureau 2012). Of those, 20 are classified as small businesses based on the

size threshold for this industry (i.e., firms with 1,250 employees or fewer). 13 Table 7 below summarizes the

estimated number of small businesses expected to be directly affected by the proposed regulatory changes

applicable to household refrigeration equipment. As previously noted, no end

‐ users of household refrigeration

units are expected to be affected by this regulation.

Table 7: Estimated Number of Household Refrigeration Equipment Manufacturing Small Businesses Affected

NAICS

Code Industry Name Estimated Number of Small Businesses Affected a

Option 7a Option 7b Option 7c Option 8

335222 Household refrigerator and home

freezer manufacturing 20 20 20 0

a The total number of firms in this industry is 23, of which 20 are assumed to be small businesses (U.S. Census Bureau 2012)

.



### 3.3.2 Estimated Economic Impact on Affected Small Entities

The potential economic impact on small businesses to comply with regulatory option 7a was calculated based on

the assumption that household refrigeration manufacturers would use R

‐ 450A or R

‐ 513A in place of HFC

‐ 134a in

new equipment. For regulatory options 7b and 7c, the potential economic impact was calculated based on the

assumption that manufacturers would use R

‐ 600a (isobutane) in place of HFC

‐ 134a in new equipment. The

economic impact of each regulatory option is discussed further below.

3.3.2.1 Regulatory Options 7a

R

‐ 450A and R

‐ 513A, which are considered near drop

‐ in replacements for HFC

‐ 134a (Honeywell 2015; DuPont

2014), were SNAP

‐ approved in 2014 and 2015, respectively, for use in new and retrofitted household

refrigerators. Given that no significant changes to the equipment are required, it is assumed that manufacturers

will not incur any one

‐ time capital costs associated with using R

‐ 450A or R

‐ 513A in place of HFC

‐ 134a.

Annual costs incurred by manufacturers of household refrigerators and freezers are calculated based on the

higher cost of R

‐ 450A and R

‐ 513A relative to the cost of HFC

‐ 134a. Specifically, ICF estimates that R

‐ 450A and R

‐

513A cost roughly $5

‐ $6 more per kilogram than HFC

‐ 134a. Assuming an average charge size of 0.16 kg (EPA

13 The Census Statistics of U.S. Businesses data does not disaggregate the number of firms with an employment size above

500 employees. Since it is not possible to know how many firms with >500 employees fall within the small business

threshold (i.e., have <1,250 employees), for the purposes of this analysis, 50% of firms with >500 employees are assumed to

be small businesses.Economic Impact Screening Analysis 18 2014), it is estimated that each manufacturer of household refrigerators and freezers could incur an annual cost

of roughly $1,400 to $1.7 million, depending on the size of the firm. 14,15

3.3.2.2 Regulatory Options 7b and 7c

R

‐ 600a was SNAP

‐ approved in 2011 for use in household refrigeration subject to use conditions. Due to their

flammability, hydrocarbons (Safety Group A3, higher flammability) may only be used in new household

refrigerators and freezers that are specifically designed for and clearly identified to contain these refrigerants

(UNEP 2015a; EPA 2015). For manufacturers of household refrigeration equipment it is assumed that there is a

one

‐ time investment of $150,000 to $500,000 associated with using R

‐ 600a in place of HFC

‐ 134a refrigerant.

This estimate is based on industry input, which assumes the need for manufacturers to (a) purchase new

charging equipment, (b) test and certify their equipment to UL standards, and (c) convert their facility to

accommodate a flammable refrigerant, if applicable (e.g., installing sensors and storage capacity). The

incremental capital cost is annualized over a 20 year lifetime of the facility. 16 No annual incremental costs are

assumed given that hydrocarbon refrigerants cost significantly less than HFC

‐ 134a (EPA 2013).

The economic impact per firm was calculated by dividing estimated receipts (as a proxy for sales) by the number

of firms for each small business establishment size (e.g., 0

‐ 4 employees, 5

‐ 9 employees, 10

‐ 19 employees, etc.).

Because a range of costs was used in the calculations, a range is provided for annual compliance cost as a

percentage of average annual sales per manufacturer. In general, annual compliance costs represent a higher

percentage of annual sales for smaller establishments. Table 8 below presents the estimated economic impact

of the proposed regulatory changes on small businesses in the household refrigeration sector.

Table 8: Estimated Economic Impact on Small Entities in the Household Refrigeration Sector (Sales Test)

NAICS

Code Industry Name Annualized Compliance Cost as a Percentage of Average Annual Sales

per Firm

Option 7a Option 7b Option 7c Option 8

335222 Household refrigerator and home

freezer manufacturing 0.3%–0.3% <0.1%–8.6% <0.1%–8.6% 0%



## 3.4 Cold Storage Warehouses

The regulatory options considered are expected to affect the cold storage warehouse end

‐ use, including

manufacturers of cold storage refrigeration systems and warehouse operators. Specifically, the regulatory

options applicable to this end

‐ use that were assessed including the following:

 Regulatory Option 9a: For new cold storage warehouses, list unacceptable HFC

‐ 227ea, R

‐

125/290/134a/600a (55.0/1.0/42.5/1.5), R

‐ 404A, R

‐ 407A, R

‐ 407B, R

‐ 410A, R

‐ 410B, R

‐ 417A, R

‐ 421A, R

‐

421B, R

‐ 422A, R

‐ 422B, R

‐ 422C, R

‐ 422D, R

‐ 423A, R

‐ 424A, R

‐ 428A, R

‐ 434A, R

‐ 438A, R

‐ 507A, and RS

‐ 44

(2003 composition) in 2021.

14 Annual costs are based on estimated 2021 sales of household refrigerators and freezers (approximately 11 million units)

using EPA’s Vintaging Model (EPA 2014). This analysis assumes that refrigerator sales are proportionally distributed among

manufacturers based on average sales across each establishment size category.

15 For the purposes of this analysis, it is assumed that all refrigerant costs will be incurred by the manufacturer, although it

is possible that some of these costs would be passed on to the end

‐ user.

16 See Appendix A for the results of a sensitivity analysis associated with this assumption.Economic Impact Screening Analysis 19  Regulatory Option 9b: For new cold storage warehouses, list unacceptable HFC

‐ 227ea, R

‐

125/290/134a/600a (55.0/1.0/42.5/1.5), R

‐ 404A, R

‐ 407B, R

‐ 410B, R

‐ 417A, R

‐ 421A, R

‐ 421B, R

‐ 422A, R

‐

422B, R

‐ 422C, R

‐ 422D, R

‐ 423A, R

‐ 424A, R

‐ 428A, R

‐ 434A, R

‐ 438A, R

‐ 507A, and RS

‐ 44 (2003 composition)

for new cold storage warehouses in 2021.

 Regulatory Option 10: For retrofit cold storage warehouses, list unacceptable R

‐ 125/290/134a/600a

(55.0/1.0/42.5/1.5), R

‐ 404A, R

‐ 407A, R

‐ 407B, R

‐ 417A, R

‐ 421A, R

‐ 421B, R

‐ 422A, R

‐ 422B, R

‐ 422C, R

‐ 422D, R

‐

423A, R

‐ 424A, R

‐ 428A, R

‐ 434A, R

‐ 438A, R

‐ 507A, and RS

‐ 44 (2003 composition) in 2021.



### 3.4.1 Small Entities Potentially Subject to the Rulemaking

The cold storage warehouse industry is comprised of refrigeration system manufacturers and cold storage

warehouse operators. Cold storage refrigeration system manufacturers are expected to be impacted by the

proposed regulatory changes affecting new systems. Cold storage warehouse operators are expected to be

impacted by the proposed regulatory changes affecting system retrofits.

Thirty

‐ five cold storage refrigeration system manufacturers were identified through an internet search, including

review of the Global Cold Chain Alliance directory (GCCA 2013). Since this list is not assumed to be exhaustive, it

is conservatively assumed that there are 40 manufacturers of cold storage refrigeration systems in the United

States. Manufacturers of cold storage refrigeration systems are matched to NAICS code 333415, Air

‐ Conditioning

and Warm Air Heating Equipment and Commercial and Industrial Refrigeration Equipment Manufacturing. The

small business threshold for this industry is defined as a firm with less than 1,250 employees and, roughly 96%

of establishments in this industry are categorized as a small business. 17 By applying this percentage to the

estimated number of cold storage refrigeration system manufacturers, it is estimated that there are 38 small

business manufacturers of cold storage refrigeration system in the United States.

It is estimated that 90 percent of the cold storage industry currently uses ammonia in their refrigeration systems

(Accelerate America 2015). Ammonia is most commonly used in large central systems that are typically found in

warehouses greater than 200,000 square feet (EPA 2013). The remaining 10 percent of the market is assumed to

use fluorinated refrigerants—historically chlorofluorocarbon (CFC)

‐ 12, R

‐ 502, and HCFC

‐ 22, with R

‐ 404A and R

‐

507A being used in new equipment entering the market today (EPA 2014). The portion of the cold storage

market that uses fluorinated refrigerants is assumed to use mostly packaged systems (i.e., self

‐ contained

systems that combine an evaporator, compressor, and condenser in one frame). Packaged systems are factory

‐

built and commonly installed on the roof of small refrigerated warehouses with capacities ranging from 20 kW

to 750 kW (Cole 2004; Emerson Climate 2014). Based on the current refrigerant use of the industry, it is

assumed that 10 percent of the small business cold storage refrigeration system manufacturers, or four small

businesses, produce packaged systems with fluorinated refrigerants and therefore would be affected by the

proposed regulatory changes.

17 The Census Statistics of U.S. Businesses data does not disaggregate the number of firms with an employment size above

500 employees. Since it is not possible to know how many firms with >500 employees fall within the small business

threshold (i.e., have <1,250 employees), for the purposes of this analysis, 50% of firms with >500 employees are assumed to

be small businesses.Economic Impact Screening Analysis 20 Operators of cold storage warehouses are matched to NAICS code 493120, Refrigerated warehousing and

storage as well as select NAICS codes under sector 424, Merchant Wholesalers, Nondurable Goods and sector

311, Food Manufacturing. Table 9 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 9: NAICS Codes for Affected Cold Storage Industries

NAICS

Code Industry Name Total

Number

of Firms Small Business

Threshold Total Number

of Small

Businesses in

Each Industry

311411 Frozen Fruit, Juice and Vegetable Manufacturing 148 1,000 employees 137*

311412 Frozen Specialty Food Manufacturing 389 1,250 employees 368*

311511 Fluid Milk Manufacturing 246 1,000 employees 223*

311512 Creamery Butter Manufacturing 30 750 employees 27*

311513 Cheese Manufacturing 390 1,250 employees 376*

311514 Dry, Condensed, and Evaporated Dairy Product Manufacturing 133 750 employees 119*

311520 Ice Cream and Frozen Dessert Manufacturing 347 1,000 employees 336*

311611 Animal (except Poultry) Slaughtering 1,427 1,000 employees 1,404*

311612 Meat Processed from Carcasses 1,202 1,000 employees 1,175*

311613 Rendering and Meat Byproduct Processing 114 750 employees 108*

311615 Poultry Processing 307 1,250 employees 277*

311710 Seafood Product Preparation and Packaging 497 750 employees 487*

311811 Retail Bakeries 6,423 500 employees 6,406

311812 Commercial Bakeries 2,321 1,000 employees 2,283*

311813 Frozen Cakes, Pies, and Other Pastries Manufacturing 205 750 employees 194*

311991 Perishable Prepared Food Manufacturing 640 500 employees 600

312113 Ice Manufacturing 310 750 employees 308*

312120 Breweries 843 1,250 employees 838*

312130 Wineries 2,519 1,000 employees 2,510*

424420 Packaged frozen food merchant wholesalers 2,839 200 employees 2,674

424430 Dairy product (except dried or canned) merchant wholesalers 1,655 200 employees 1,558

424440 Poultry and poultry product merchant wholesalers 453 150 employees 421

424460 Fish and seafood merchant wholesalers 1,854 100 employees 1,811

424470 Meat and meat product merchant wholesalers 2,162 150 employees 2,052

424480 Fresh fruit and vegetable merchant wholesalers 4,405 100 employees 4,159

424590 Other farm product raw material merchant wholesalers 601 100 employees 569

424810 Beer and ale merchant wholesalers 1,524 200 employees 1,285

424930 Flower, nursery stock, and florists' supplies merchant

wholesalers 3,111 100 employees 3,011

493120 Refrigerated Warehousing and Storage 628 $27.5 million* 525

* The Census Statistics of U.S. Businesses data does not disaggregate the number of firms with an employment size above 500

employees. Since it is not possible to know how many firms with >500 employees fall within the small business threshold (i.e., have

<1,250 employees), for the purposes of this analysis, 50% of firms with >500 employees are assumed to be small businesses.

* Based on annual sales per firm.

Industry input on current practices suggests that a limited number of cold storage refrigeration systems are

retrofitted each year. The retrofits that are taking place are primarily from ODS refrigerants (e.g., HCFC

‐ 22) to R

‐

404A or R

‐ 507A, which will no longer be permitted for use as retrofit refrigerants under the proposed regulatoryEconomic Impact Screening Analysis 21 changes. Based on EPA’s Vintaging Model, approximately 40 percent of systems that contain fluorinated

refrigerants are expected to still contain CFC

‐ 12, R

‐ 502, or HCFC

‐ 22 in 2021 (EPA 2014). Even though it is

unlikely that all of these systems will actually be retrofitted, for the purposes of this analysis, it is conservatively

assumed that 4 percent of all cold storage refrigeration systems (i.e., 40 percent of the 10 percent of the market

that uses fluorinated refrigerants) could be affected by the proposed regulatory changes. These roughly 3,000

systems are estimated to be owned by 1,446 small firms, based on the assumption of two cold storage systems

per establishment (ICF 2015) and the ratio of establishments to firms in each NAICS code and small business size

category (U.S. Census Bureau 2012).

Table 10 below summarizes the number of cold storage small businesses that are expected to be affected by the

proposed regulatory changes by industry and regulatory option.

Table 10: Cold Storage Small Businesses Affected by the Proposed Regulatory Options

NAICS Industry Name Estimated Number of Small

Businesses Affected

Option 9a Option 9b Option 10

333415 Air

‐ Conditioning and Warm Air Heating Equipment and Commercial

and Industrial Refrigeration Equipment Manufacturing 4 4 0

311411 Frozen Fruit, Juice and Vegetable Manufacturing 0 0 5

311412 Frozen Specialty Food Manufacturing 0 0 15

311511 Fluid Milk Manufacturing 0 0 9

311512 Creamery Butter Manufacturing 0 0 1

311513 Cheese Manufacturing 0 0 15

311514 Dry, Condensed, and Evaporated Dairy Product Manufacturing 0 0 5

311520 Ice Cream and Frozen Dessert Manufacturing 0 0 13

311611 Animal (except Poultry) Slaughtering 0 0 56

311612 Meat Processed from Carcasses 0 0 47

311613 Rendering and Meat Byproduct Processing 0 0 4

311615 Poultry Processing 0 0 11

311710 Seafood Product Preparation and Packaging 0 0 19

311811 Retail Bakeries 0 0 256

311812 Commercial Bakeries 0 0 91

311813 Frozen Cakes, Pies, and Other Pastries Manufacturing 0 0 8

311991 Perishable Prepared Food Manufacturing 0 0 24

312113 Ice Manufacturing 0 0 12

312120 Breweries 0 0 34

312130 Wineries 0 0 100

424420 Packaged frozen food merchant wholesalers 0 0 107

424430 Dairy product (except dried or canned) merchant wholesalers 0 0 62

424440 Poultry and poultry product merchant wholesalers 0 0 17

424460 Fish and seafood merchant wholesalers 0 0 72

424470 Meat and meat product merchant wholesalers 0 0 82

424480 Fresh fruit and vegetable merchant wholesalers 0 0 166

424590 Other farm product raw material merchant wholesalers 0 0 23

424810 Beer and ale merchant wholesalers 0 0 51

424930 Flower, nursery stock, and florists’ supplies merchant wholesalers 0 0 120

493120 Refrigerated Warehousing and Storage 0 0 21

Total 4 4 1,446Economic Impact Screening Analysis 22 

### 3.4.2 Estimated Economic Impact on Affected Small Entities

The potential economic impact on small businesses for complying with regulatory options 9a and 10 was

calculated based on the assumption that cold storage system manufacturers and warehouse operators would

use R

‐ 407F in place of R

‐ 404A and R

‐ 507A in new and retrofitted systems. The potential economic impact on

small businesses for complying with regulatory option 9b was calculated based on the assumption that

manufacturers would use ammonia in place of R

‐ 404A and R

‐ 507A in new systems. The economic impact of each

regulatory option is discussed further below.

3.4.2.1 Regulatory Option 9a

R

‐ 407F is considered a viable alternative to R

‐ 404A and R

‐ 507A in both medium and low temperature

applications in new systems (Honeywell 2014). Given that R

‐ 407A can be used interchangeably with both R

‐ 404A

with only minor system adaptations, no upfront costs are assumed to be incurred by manufacturers when

transitioning from R

‐ 404A or R

‐ 507A to R

‐ 407A in new cold storage refrigeration systems. In regards to annual

costs, R

‐ 407F—a blend of HFC

‐ 134a, HFC

‐ 32, and HFC

‐ 125—is estimated to cost between $7.60 and $9.60 per

kilogram, while R

‐ 404A and R

‐ 507A are estimated to cost between $8 and $10 per kilogram (UNEP 2012). 18 At

the same time, the charge size of R

‐ 407F systems is assumed to be 1.07 times greater than the charge sizes of R

‐

404A and R

‐ 507A systems (Honeywell 2012). As a result, it is estimated that using R

‐ 407F in new systems in

place of R

‐ 404A and R

‐ 507A will cost each manufacturer roughly $20,000 to $40,000 per year. 19,20

3.4.2.2 Regulatory Option 9b

Relative to using R

‐ 404A or R

‐ 507A, the incremental one

‐ time capital cost of transitioning to new equipment

using ammonia is estimated at $300,000

‐ $500,000, associated with the purchase of safety equipment, and the

cost of conducting trials, training, testing and obtaining certification. The incremental capital cost is annualized

over a 25 year lifetime of the facility. No incremental annual costs are assumed. While it is likely that operational

savings could result due to the lower price of ammonia relative to R

‐ 404A and R

‐ 507A, these savings were not

incorporated, given the compliance cost approach for this analysis. 21

3.4.2.3 Regulatory Option 10

End

‐ users that retrofit their equipment are assumed to use R

‐ 407F in place of R

‐ 404A or R

‐ 507A as a retrofit

refrigerant. The incremental cost of using R

‐ 407F instead of R

‐ 404A or R

‐ 507A as a retrofit refrigerant is

associated with the cost of purchasing the refrigerant. Specifically, for servicing facilities, the cost of R

‐ 407A is

estimated to range between $6.40 to $36.60 per kilogram, while R

‐ 404A and R

‐ 507A are estimated to cost

between $6 and $35 per kilogram (UNEP 2012). While the cost of R

‐ 407F is estimated to cost slightly less per

kilogram relative to R

‐ 404A or R

‐ 507A, the charge size required of R

‐ 407F is 1.07 times greater than the charge

18 Cost data was not available for R

‐ 507A, but the analysis assumes the costs of R

‐ 404A and R

‐ 507A are comparable due to

their components and market penetration. R

‐ 404A is a refrigerant blend comprised of 44% HFC

‐ 125, 52% HFC

‐ 143a, and 4%

HFC

‐ 134a. R

‐ 507A is a refrigerant blend comprised of 50% HFC

‐ 125 and 50% HFC

‐ 143a.

19 Based on EPA’s Vintaging Model, it is assumed that in the absence of these proposed regulatory changes, roughly 520 MT

of R

‐ 404A or R

‐ 507A would be used in new cold storage refrigeration systems in 2021.

20 For the purposes of this analysis, it is assumed that all refrigerant costs will be incurred by the manufacturer, although it

is possible that some of these costs would be passed on to the end

‐ user.

21 Ammonia is estimated to cost between $0.50 and $2 per kilogram (UNEP 2012).Economic Impact Screening Analysis 23 of R

‐ 404A or R

‐ 507A (Honeywell 2012). Therefore, each system retrofit is estimated to incrementally cost end

‐

users approximately $400 to $3,300. 22 Total costs per firm range from roughly $850 to $47,000 based on the

average number of establishments per firm (determined using U.S. Census data for each establishment size

category) and on the assumption that cold storage facilities contain on average 2 systems each (ICF 2015). The

incremental cost is annualized over an assumed remaining equipment lifetime of 10 years.

The economic impact per firm was calculated by dividing estimated receipts (as a proxy for sales) by the number

of firms for each small business establishment size (e.g., 0

‐ 4 employees, 5

‐ 9 employees, 10

‐ 19 employees, etc.).

Because a range of costs was used in the calculations, a range is provided for annual compliance cost as a

percentage of average annual sales per business. In general, annual compliance costs represent a higher

percentage of annual sales for smaller establishments. Table 11 below presents the estimated economic impact

of the proposed regulatory changes on small businesses in the cold storage industry.

Table 11: Estimated Economic Impact on Cold Storage Small Businesses (Sales Test)

NAICS

Code Industry Name Annualized Compliance Cost as a Percentage

of Annual Sales per Small Business

Option 9a Option 9b Option 10

333415 Air

‐ Conditioning and Warm Air Heating Equipment and

Commercial and Industrial Refrigeration Equipment

Manufacturing <0.1%–6.2% <0.1%–7.5% 0%

311411 Frozen Fruit, Juice and Vegetable Manufacturing 0% 0% <0.1%

– 0.2%

311412 Frozen Specialty Food Manufacturing 0% 0% <0.1%

– 0.1%

311511 Fluid Milk Manufacturing 0% 0% <0.1%

– 0.1%

311512 Creamery Butter Manufacturing 0% 0% <0.1%

311513 Cheese Manufacturing 0% 0% <0.1%

– 0.1%

311514 Dry, Condensed, and Evaporated Dairy Product Manufacturing 0% 0% <0.1%

– 0.1%

311520 Ice Cream and Frozen Dessert Manufacturing 0% 0% <0.1%

– 0.1%

311611 Animal (except Poultry) Slaughtering 0% 0% <0.1%

– 0.1%

311612 Meat Processed from Carcasses 0% 0% <0.1%

– 0.1%

311613 Rendering and Meat Byproduct Processing 0% 0% <0.1%

– 0.1%

311615 Poultry Processing 0% 0% <0.1%

– 0.1%

311710 Seafood Product Preparation and Packaging 0% 0% <0.1%

– 0.1%

311811 Retail Bakeries 0% 0% <0.1%

– 0.9%

311812 Commercial Bakeries 0% 0% <0.1%

– 0.5%

311813 Frozen Cakes, Pies, and Other Pastries Manufacturing 0% 0% <0.1%

– 0.4%

311991 Perishable Prepared Food Manufacturing 0% 0% <0.1%

– 0.1%

312113 Ice Manufacturing 0% 0% <0.1%

– 0.4%

312120 Breweries 0% 0% <0.1%

– 0.3%

312130 Wineries 0% 0% <0.1%

– 0.3%

424420 Packaged frozen food merchant wholesalers 0% 0% <0.1%

424430 Dairy product (except dried or canned) merchant wholesalers 0% 0% <0.1%

– 0.1%

424440 Poultry and poultry product merchant wholesalers 0% 0% <0.1%

424460 Fish and seafood merchant wholesalers 0% 0% <0.1%

– 0.1%

424470 Meat and meat product merchant wholesalers 0% 0% <0.1%

424480 Fresh fruit and vegetable merchant wholesalers 0% 0% <0.1%

22 This estimate is based on the conservative assumption that packaged HFC

‐ based cold storage systems have a charge size

that ranges from 500 to 800 kilograms.Economic Impact Screening Analysis 24 NAICS

Code Industry Name Annualized Compliance Cost as a Percentage

of Annual Sales per Small Business

Option 9a Option 9b Option 10

424590 Other farm product raw material merchant wholesalers 0% 0% <0.1%

424810 Beer and ale merchant wholesalers 0% 0% <0.1%

– 0.1%

424930 Flower, nursery stock, and florists' supplies merchant

wholesalers 0% 0% <0.1%–0.2%

493120 Refrigerated Warehousing and Storage 0% 0% <0.1%

– 2.1%



## 4 Foam Blowing

The proposed regulatory changes are expected to affect the foam manufacturing industry, including

manufacturers of polyurethane (PU) foam products and polyolefin foams. Specifically, the regulatory options

applicable to the foam blowing sector that were assessed include the following:

 Regulatory Option 11a: For rigid PU high

‐ pressure (HP) two

‐ component spray foam, list unacceptable HFC

‐

134a, HFC

‐ 245fa, and blends thereof; blends of HFC

‐ 365mfc with at least 4% HFC

‐ 245fa, and commercial

blends of HFC

‐ 365mfc with 7 to 13% HFC

‐ 227ea and the remainder HFC

‐ 365mfc; and Formacel TI, in 2019,

except as allowed under a narrowed use limit for military or space

‐ and aeronautics–related applications.

 Regulatory Option 11b: For rigid PU HP two

‐ component spray foam, list unacceptable HFC

‐ 134a, HFC

‐

245fa, and blends thereof; blends of HFC

‐ 365mfc with at least 4% HFC

‐ 245fa, and commercial blends of

HFC

‐ 365mfc with 7 to 13% HFC

‐ 227ea and the remainder HFC

‐ 365mfc; and Formacel TI in 2020, except as

allowed under a narrowed use limit for military or space

‐ and aeronautics–related applications.

 Regulatory Option 12a: For rigid PU low

‐ pressure (LP) two

‐ component spray foam, list unacceptable HFC

‐

134a, HFC

‐ 245fa, and blends thereof; blends of HFC

‐ 365mfc with at least 4% HFC

‐ 245fa, and commercial

blends of HFC

‐ 365mfc with 7 to 13% HFC

‐ 227ea and the remainder HFC

‐ 365mfc; and Formacel TI in 2020,

except as allowed under a narrowed use limit for military or space

‐ and aeronautics–related applications.

 Regulatory Option 12b: For rigid PU LP two

‐ component spray foam, list .unacceptable HFC

‐ 134a, HFC

‐

245fa, and blends thereof; blends of HFC

‐ 365mfc with at least 4% HFC

‐ 245fa, and commercial blends of

HFC

‐ 365mfc with 7 to 13% HFC

‐ 227ea and the remainder HFC

‐ 365mfc; and Formacel TI in 2021, except as

allowed under a narrowed use limit for military or space

‐ and aeronautics–related applications.

 Regulatory Option 13a: For rigid PU one

‐ component foam (OCF) sealants, list unacceptable HFC

‐ 134a, HFC

‐

245fa, and blends thereof; blends of HFC

‐ 365mfc with at least 4% HFC

‐ 245fa, and commercial blends of

HFC

‐ 365mfc with 7 to 13% HFC

‐ 227ea and the remainder HFC

‐ 365mfc; and Formacel TI in 2019, except as

allowed under a narrowed use limit for military or space

‐ and aeronautics–related applications.

 Regulatory Option 13b: For rigid PU OCF sealants, list unacceptable HFC

‐ 134a, HFC

‐ 245fa, and blends

thereof; blends of HFC

‐ 365mfc with at least 4% HFC

‐ 245fa, and commercial blends of HFC

‐ 365mfc with 7 to

13% HFC

‐ 227ea and the remainder HFC

‐ 365mfc; and Formacel TI in 2020, except as allowed under a

narrowed use limit for military or space

‐ and aeronautics–related applications.

 Regulatory Option 14: In flexible PU foam, list methylene chloride as unacceptable 30 days after

publication of a final rule.

 Regulatory Option 15: In integral skin PU foam, list methylene chloride as unacceptable in 2017.Economic Impact Screening Analysis 25  Regulatory Option 16: In polyolefin foam, list methylene chloride as unacceptable in 2020.



## 4.1 Small Entities Potentially Subject to the Rulemaking

The foam types affected by the proposed regulatory changes are matched to NAICS code 326150, urethane and

other foam product (except polystyrene) manufacturing. However, NAICS code 326150 covers a broader industry

than the specific foam end

‐ uses addressed in the proposed regulatory changes. Thus, the number of

manufacturers potentially affected by the proposed regulatory changes by relevant foam type was determined

based on market penetration data from EPA’s Vintaging Model (EPA 2014). The Vintaging Model defines the

market for PU spray foam, PU one

‐ component foam (OCF), flexible PU (slabstock and molded), PU integral skin,

and polyolefin foam, among other foam end

‐ uses. Since HP two

‐ component and LP two

‐ component spray foams

are not defined by the Vintaging Model, expert judgement was used to further break out the PU spray foam

market by sub

‐ type (Jeffs 2015).

Based on the Vintaging Model, it is estimated that 92% and 17% of the spray foam (i.e., HP two

‐ component and

LP two

‐ component) and OCF markets, respectively, currently use HFC

‐ 134a, HFC

‐ 245fa, or other HFCs/HFC

blended blowing agents, namely HFC

‐ 365mfc with HFC

‐ 245fa or HFC

‐ 227ea. Flexible PU (slabstock and molded)

and polyolefin manufacturing are assumed to use only hydrocarbon blowing agents, while PU integral skin is

assumed to only use HFC

‐ 134a and CO 2 (i.e., methylene chloride is not currently in use in any of these foam

types).

Some movement away from high

‐ GWP blowing agents (e.g., HFC

‐ 134a, HFC

‐ 245fa) has already been observed in

the spray foam insulation industry, and industry pledges to transition away from HFC blowing agents in new

foam products may serve to accelerate the transition out of HFC blowing agents (White House 2015). Assuming

that the industry is operating under business as usual conditions, this analysis estimates that in the absence of

this proposed rulemaking, approximately 10% of the HP two

‐ component and LP two

‐ component industry will

transition away from HFC blowing agents by 2020 and 2021, respectively.

By combining these assumptions, the percent of entities identified by NAICS code 326150 that are assumed to

be affected by each proposed regulatory option can be calculated, as summarized below in Table 12.

Table 12: Assumptions about the Percentage of Affected Entities in NAICS Code 326150

Regulatory

Option(s) Relevant Foam Types % of the Foam

Blowing

Industry a % of Foam Type

Using Blowing

Agents Listed as

Unacceptable % of Entities

Assumed to

be Affected

11a/11b Rigid PU: HP two

‐ component spray foam 10% 83% 8.6%

12a/12b Rigid PU: LP two

‐ component spray foam 2.2% 83% 1.8%

13a/13b Rigid PU: OCF sealants 0.2% 17% <0.1%

14 Flexible PU: slabstock and molded 14% 0% 0%

15 PU integral skin 0.2% 0% 0%

16 Polyolefin 4% 0% 0%

Total 30% NA 11.7%

a The foam blowing industry includes all foam types covered under NAICS code 326150.Economic Impact Screening Analysis 26 The small business threshold for the urethane and other foam product (except polystyrene) manufacturing

industry is defined as a firm with fewer than 750 employees. Table below presents the number of small

businesses estimated to be directly affected by each proposed regulatory option. 23

Table 13: Estimated Number of Small Business Foam Manufacturers Affected by Regulatory Option

NAICS

Code Industry Name Estimated Number of Small Businesses Affected a

11a/11b 12a/12b 13a/13b 14 15 16

326150 Urethane and other foam product

(except polystyrene) manufacturing 36 8 1 0 0 0

a The total number of firms in this industry is 446, of which 422 are characterized as small businesses (U.S. Census Bureau 2012).



## 4.2 Estimated Economic Impact on Affected Small Entities

This section summarizes the estimated economic impact of the proposed regulatory changes on PU and

polyolefin manufacturers. Where available and appropriate, compliance costs were estimated based on industry

input received in comments on EPA’s rulemaking, Protection of Stratospheric Ozone: Change of Listing Status for

Certain Substitutes under the Significant New Alternatives Policy Program (79 FR 46126), EPA’s report on Global

Mitigation of Non

‐ CO 2 Greenhouse Gases: 2010

‐ 2030 (EPA 2013), and recently released public information (e.g.,

private sector commitments and executive actions to reduce consumption of 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 firm were calculated by dividing total value of receipts (as a proxy for

sales) by the number of firms, 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. The specific assumptions used for each foam type

to estimate annualized compliance costs are presented after the table.

Table 14: Estimated Economic Impact on Small Businesses in the Foam Blowing Sector (Sales Test)

NAICS

Code Industry Name Annualized Compliance Cost as a Percentage of Annual Sales per

Small Business

11a/11b 12a/12b 13a/13b 14 15 16

326150 Urethane and other foam product

(except polystyrene) manufacturing <0.1%–3.9% 0.2%–7.8% <0.1%–3.9% 0% a 0% a 0% a

a Because methylene chloride is not currently in use, annual compliance costs are assumed to be zero.



### 4.2.1 High

‐ Pressure Two

‐ Component Spray Foam (Options 11a and 11b)

It is assumed that companies still using HFC

‐ 134a, HFC

‐ 245fa, and blends thereof in HP two

‐ component spray

foam would transition to SolsticeTM Liquid Blowing Agent (LBA) (1233zd(E), trans

‐ 1

‐ chloro

‐ 3,3,3

‐ trifluoroprop

‐ 1

‐

ene), which is commercially available in the United States (and has been since 2013). Capital costs for

transitioning to SolsticeTM LBA are assumed to be $200,000–$300,000 per facility, associated with the cost of

23 The Census Statistics of U.S. Businesses data does not disaggregate the number of firms with an employment size above

500 employees. Since it is not possible to know how many firms with >500 employees fall within the small business

threshold (i.e., have <750 employees), for the purposes of this analysis, 50% of firms with >500 employees are assumed to

be small businesses.Economic Impact Screening Analysis 27 formulation development and compliance testing. These costs are annualized assuming a facility lifetime of 25

years. 24 No incremental operating costs are assumed. 25



### 4.2.2 Low

‐ Pressure Two

‐ Component Spray Foam (Options 12a and 12b)

Companies still using HFC

‐ 134a, HFC

‐ 245fa, and blends thereof in LP two

‐ component spray foam are assumed to

transition to SolsticeTM Gaseous Blowing Agent (GBA) (HFO

‐ 1234ze). Reformulation of this foam type requires

many iterative steps and manufacturers are experiencing technical issues with shelf

‐ life stability caused by

chemical interaction issues within the formulation. To successfully adopt an alternative blowing agent in LP two

‐

component spray foams and develop a quality product, manufacturers will need to reformulate their systems to

meet specific performance requirements and physical properties, and also conduct required field testing and

certification. Capital costs for transitioning to HFO

‐ 1234ze are assumed to be $500,000–$600,000 per facility to

cover the cost of extensive formulation development and compliance testing. These costs are annualized

assuming a facility lifetime of 25 years. 26 No incremental operating costs are assumed. 27



### 4.2.3 One Component Foam Sealants (Options 13a and 13b)

Companies still using HFC

‐ 134a and blends thereof in OCF sealants are expected to transition to SolsticeTM GBA

(HFO

‐ 1234ze), which is currently commercially available for use as a blowing agent in OCF in the United States.

Capital costs for transitioning to HFO

‐ 1234ze are assumed to be $200,000–$300,000 per facility to cover the cost

of formulation development and compliance testing. These costs are annualized assuming a facility lifetime of

25 years. 28 No incremental operating costs were assumed. 29



### 4.2.4 Flexible Polyurethane Foam (Option 14)

Methylene chloride is not known to be used in any flexible PU foam applications. This foam type is currently only

manufactured in the United States using hydrocarbons. Therefore, prohibiting the use of methylene chloride in

this end

‐ use is not expected to impact small businesses. The proposed regulatory changes would serve to

prevent uptake of methylene chloride into this foam end

‐ use subsector.



### 4.2.5 Integral Skin Polyurethane Foam (Option 15)

Methylene chloride is not known to be used in any integral skin PU foam applications. This foam type is currently

only manufactured in the United States using HFC

‐ 134a, hydrocarbons, and CO 2

. 30 Therefore, prohibiting the use

of methylene chloride in this end

‐ use is not expected to impact small businesses. The proposed regulatory

changes would serve to prevent uptake of methylene chloride into this foam end

‐ use subsector.

24 See Appendix A for the results of a sensitivity analysis associated with this assumption.

25 Cost savings may be associated with the increase in yield (product coverage) and R

‐ value (insulation value) of the blowing

agent (estimated to equal approximately $1.60 per kilogram of blowing agent). These savings are not accounted for in this

direct compliance cost approach.

26 See Appendix A for the results of a sensitivity analysis associated with this assumption.

27 Cost savings may be associated with the increase in yield (product coverage) and R

‐ value (insulation value) of the blowing

agent (estimated to equal approximately $3.10 per kilogram of blowing agent). These savings are not accounted for in this

direct compliance cost approach.

28 See Appendix A for the results of a sensitivity analysis associated with this assumption.

29 Cost savings may be associated with the increase in yield (product coverage) of the blowing agent (estimated to equal

roughly $3.10 per kilogram of blowing agent). These savings are not accounted for in this direct compliance cost approach.

30 HFC

‐ 134a will be unacceptable for use in integral skin polyurethane foam as of January 1, 2017 (80 FR 42870).Economic Impact Screening Analysis 28 

### 4.2.6 Polyolefin Foam (Option 16)

Methylene chloride is not known to be used in any polyolefin foam applications. This foam type is currently

manufactured in the United States primarily using hydrocarbons. Therefore, prohibiting the use of methylene

chloride in this end

‐ use is not expected to impact small businesses. The proposed regulatory changes would

serve to prevent uptake of methylene chloride into this foam end

‐ use subsector.



## 5 Fire Suppression and Explosion Prevention

The proposed regulatory changes are expected to affect the fire suppression and explosion protection industry,

including manufacturers of total flooding systems and streaming applications (i.e., portable fire extinguishers).

Specifically, the proposed regulatory options applicable to the fire suppression sector that were assessed include

the following:

 Regulatory Option 17a: For total flooding uses, list unacceptable perfluorocarbons (C 3 F 8 and C 4 F 10 ) one year

after publication of a final rule.

 Regulatory Option 17b: For total flooding uses, list unacceptable perfluorocarbons (C 3 F 8 and C 4 F 10 ) and SF 6

one year after publication of a final rule and list HFC

‐ 23 as acceptable, subject to narrowed use limits one

year after publication of a final rule.

 Regulatory Option 18: For streaming uses, list unacceptable perfluorocarbon (C 6 F 14 ) one year after

publication of a final rule.



## 5.1 Small Entities Potentially Subject to the Rulemaking

The industry affected by the proposed regulatory changes to the fire suppression sector is matched to NAICS

code 3399991, fire extinguishing equipment, hand

‐ portable and fixed

‐ system (excluding water sprinkler

systems), including parts and attachments, manufacturing

. The small business threshold for this industry is

defined as a firm with fewer than 750 employees.

Based on EPA’s Vintaging Model, it is estimated that 0.2% of the market uses HFC

‐ 23 in total flooding systems in

2015, with the remaining using halon 1301, other HFCs, and agents with zero ODP and low GWP, including

fluoroketone, inert gas, CO 2 , powdered aerosols, foam, and water mist (EPA 2014). It is additionally estimated

that fire suppression agents with zero ODP and low GWP—including water, CO 2 , and dry chemical—currently

occupy over 80% of the available streaming applications, with the remaining 20% of the market using halon

1211, Halotron, and HFCs (e.g., HFC

‐ 236fa). Since PFCs (i.e., C 3 F 8 and C 4 F 10 ) and SF 6 are not assumed to currently

be used in new fire extinguishing equipment and the portion of the market using HFC

‐ 23 is assumed to be using

it for explosion inerting for oil and gas processing facilities, no small businesses are estimated to be affected by

the proposed regulatory changes, as shown in Table

.Economic Impact Screening Analysis 29 Table 15: Estimated Number of Small Businesses Manufacturing Fire Suppression Equipment Affected

NAICS

Code Industry Name Estimated Number of Small Businesses

Affected by Regulatory Option a

17a 17b 18

3399991 Fire extinguishing equipment, hand

‐ portable and fixed

‐

system (excluding water sprinkler systems), including parts

and attachments, manufacturing 0 0 0

a The total number of firms in this industry is 29, of which 25 are characterized as small businesses (U.S. Census Bureau 2012).



## 5.2 Estimated Economic Impact on Affected Small Entities

Because no small businesses are expected to be affected by the proposed regulatory changes, the annual

compliance cost as a percentage of average sales per firm is zero, as shown in Table below.

Table 16: Estimated Economic Impact on Small Businesses in the Fire Suppression Sector (Sales Test)

NAICS Industry Name Annualized Compliance Cost as a Percentage

of Annual Sales per Small Business

17a 17b 18

3399991 Fire extinguishing equipment, hand

‐ portable and fixed

‐

system (excluding water sprinkler systems), including parts

and attachments, manufacturing 0% a 0% a,b 0% a

a Because PFCs are not currently in use, annual compliance costs are assumed to be zero.

b Because the proportion of the market using HFC

‐ 23 is negligible, annual compliance costs are assumed to be zero.Economic Impact Screening Analysis 30 

## 6 Conclusion

This screening analysis finds that the proposed regulatory changes 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 business

impacts.



## 6.1 Decision Regarding Significant Economic Impact on a Substantial Number

of Small Entities

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 proposed regulatory changes can be presumed to have

no SISNOSE

. These thresholds are set conservatively because the proposed changes would affect small

businesses in a range of different industries, which may have significantly different profit margins and abilities to

pass compliance costs along to customers.



## 6.2 Aggregated Small Business Impacts of Regulatory Changes

Table summarizes the total number of small businesses that are expected to be subject to the regulatory

changes, as well as the total economic impact and the annualized compliance costs as a percentage of total

annual sales on those small businesses using a 7% discount rate. Table summarizes the total number of small

businesses that are expected to be subject to the regulation, as well as the total economic impact and the

annualized compliance costs as a percentage of total annual sales on those small businesses using a 3% discount

rate. These tables assume a rulemaking that includes regulatory options 1, 3, 5, 7a, 9a, 11b, 12b, 13b, 14, 15,

16, and 17a (Appendix B shows the economic impacts associated with all of the regulatory options under

consideration).EconomicImpactScreeningAnalysis31Table17:SummaryoftheSmallBusinessImpactat7%DiscountRateSectorOpt.NAICSCodeIndustryEstimatedNumberofSmallBusinessesAffectedbytheRuleTotalAnnualizedEconomicImpactonSmallBusinessesAnnualizedComplianceCostasaPercentageofTotalAnnualSalesLowerHigherLowerHigherChillers1333415Air‐conditioningandwarmairheatingequipmentandcommercialandindustrialrefrigerationequipmentmanufacturing1$2,880,000$3,260,0000.7%0.8%3333415Air‐conditioningandwarmairheatingequipmentandcommercialandindustrialrefrigerationequipmentmanufacturing$3,030,000$3,790,0000.7%0.9%RetailFood5333415Air‐conditioningandwarmairheatingequipmentandcommercialandindustrialrefrigerationequipmentmanufacturing19$70,000$90,000<0.1%<0.1%HouseholdRefrigeration7a335222Householdrefrigeratorandhomefreezermanufacturing20$4,590,000$5,500,0000.3%0.3%ColdStorage9a333415Air‐conditioningandwarmairheatingequipmentandcommercialandindustrialrefrigerationequipmentmanufacturing4$70,000$140,000<0.1%‐3.0%<0.1%‐6.2%Foam11b326150Urethaneandotherfoamproduct(exceptpolystyrene)manufacturing36$800,000$1,200,000<0.1%‐2.6%0.1%‐3.9%12b8$400,000$500,0000.2%‐6.5%0.3%‐7.8%13b1$3,000$5,000<0.1%‐2.3%0.1%‐3.9%140$0$0NANA150$0$0NANA160$0$0NANAFireSuppression17b3399991Fireextinguishingequipment,hand‐portableandfixed‐system(excludingwatersprinklersystems),includingpartsandattachments,manufacturing0$0$0NANATOTAL*89$11,843,000$14,485,000NANA*Totalmaynotsumduetorounding.EconomicImpactScreeningAnalysis32Table18:SummaryoftheSmallBusinessImpactat3%DiscountRateSectorOpt.NAICSCodeIndustryEstimatedNumberofSmallBusinessesAffectedbytheRuleTotalAnnualizedEconomicImpactonSmallBusinessesAnnualizedComplianceCostasaPercentageofTotalAnnualSalesLowerHigherLowerHigherChillers1333415Air‐conditioningandwarmairheatingequipmentandcommercialandindustrialrefrigerationequipmentmanufacturing1$2,880,000$3,260,0000.7%0.8%3333415Air‐conditioningandwarmairheatingequipmentandcommercialandindustrialrefrigerationequipmentmanufacturing$3,030,000$3,790,0000.7%0.9%RetailFood5333415Air‐conditioningandwarmairheatingequipmentandcommercialandindustrialrefrigerationequipmentmanufacturing19$70,000$90,000<0.1%<0.1%HouseholdRefrigeration7a335222Householdrefrigeratorandhomefreezermanufacturing20$4,590,000$5,500,0000.3%0.3%ColdStorage9a333415Air‐conditioningandwarmairheatingequipmentandcommercialandindustrialrefrigerationequipmentmanufacturing4$70,000$140,000<0.1%‐3.0%<0.1%‐6.2%Foam11b326150Urethaneandotherfoamproduct(exceptpolystyrene)manufacturing36$600,000$900,000<0.1%‐1.7%<0.1%‐2.6%12b8$300,000$400,0000.2%‐4.3%0.2%‐5.2%13b1$2,000$4,000<0.1%‐1.7%<0.1%‐2.6%140$0$0NANA150$0$0NANA160$0$0NANAFireSuppression17b3399991Fireextinguishingequipment,hand‐portableandfixed‐system(excludingwatersprinklersystems),includingpartsandattachments,manufacturing0$0$0NANATOTAL*89$11,542,000$14,084,000NANA*Totalmaynotsumduetorounding.Economic Impact Screening Analysis 33  Roughly 89 small businesses could be subject to the rulemaking, although roughly 76% of small

businesses subject to this rulemaking would be expected to incur compliance costs that are estimated to

be less than 1% of annual sales.

 This analysis indicates that up to 21 of the 89 affected small businesses—or roughly 24%—could incur

costs in excess of 1% of annual sales, and that up to 12 small businesses could incur costs in excess of 3%

of annual sales.

While Table assumes a proposed rulemaking that includes regulatory options 1, 3, 5, 7a, 9a, 11b, 12b, 13b, 14,

15, 16, and 17a, analysis of the other regulatory options under consideration similarly shows that all regulatory

options present no SISNOSE.

 Table aggregates the estimated economic impacts on small businesses, according to the categories set

out in the SISNOSE decision matrix. For the most conservative assessment, Roughly 89 small businesses

could be subject to the rulemaking, although roughly 76% of small businesses subject to this rulemaking

would be expected to incur compliance costs that are estimated to be less than 1% of annual sales.

 This analysis indicates that up to 21 of the 89 affected small businesses—or roughly 24%—could incur

costs in excess of 1% of annual sales, and that up to 12 small businesses could incur costs in excess of 3%

of annual sales.

While Table assumes a proposed rulemaking that includes regulatory options 1, 3, 5, 7a, 9a, 11b, 12b, 13b, 14,

15, 16, and 17a, analysis of the other regulatory options under consideration similarly shows that all regulatory

options present no SISNOSE.

Table 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 the proposed regulatory changes can be presumed to have

no SISNOSE for the following reasons:

 Roughly 89 small businesses could be subject to the rulemaking, although roughly 76% of small

businesses subject to this rulemaking would be expected to incur compliance costs that are estimated to

be less than 1% of annual sales.

 This analysis indicates that up to 21 of the 89 affected small businesses—or roughly 24%—could incur

costs in excess of 1% of annual sales, and that up to 12 small businesses could incur costs in excess of 3%

of annual sales. 31

While Table assumes a proposed rulemaking that includes regulatory options 1, 3, 5, 7a, 9a, 11b, 12b, 13b, 14,

15, 16, and 17a, analysis of the other regulatory options under consideration similarly shows that all regulatory

options present no SISNOSE.

Table 19: Aggregated Economic Impacts on Small Businesses

Economic

Impact Industry Impacted Number of Small

Entities Subject to

the Rule and Percent of All Small

Entities Subject to

the Rule That are

31 When the the firm size of the small businesses affected is not known, this analysis conservatively assumes that these businesses fall

into the smallest facility size category (i.e., 0 to 4 employees) and, therefore, experience the high end of the range of economic impacts.Economic Impact Screening Analysis 34 Experiencing Given

Economic Impact Experiencing Given

Economic Impact

Less than 1%

for all affected

small entities a 326150 Urethane and other foam product (except

polystyrene) manufacturing 28

76.4% 333415 Air

‐ conditioning and warm air heating

equipment and commercial and industrial

refrigeration equipment manufacturing 20

335222 Household refrigerator and home freezer

manufacturing 20

Total 68

1% or more

for one or

more affected

small entities b 326150 Urethane and other foam product (except

polystyrene) manufacturing 17

23.6% 333415 Air

‐ Conditioning and Warm Air Heating

Equipment and Commercial and Industrial

Refrigeration Equipment Manufacturing 4

Total 21

Greater than

3% for one or

more affected

small entities 326150 Urethane and other foam product (except

polystyrene) manufacturing 8

13.5% 333415 Air

‐ Conditioning and Warm Air Heating

Equipment and Commercial and Industrial

Refrigeration Equipment Manufacturing 4

Total 12

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

b This 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 would be expected to experience an impact of 3% or greater.Economic Impact Screening Analysis 35 

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United Technologies. 2015. 2014 Annual Report: Financial and Corporate Responsibility Performance. Available

online at: http://2014ar.utc.com/assets/pdfs/UTCAR2014_FullReport.pdf

U.S. Census Bureau. 2007. Economic Census. Data accessed via the Industry Statistics Portal, available at:

https://www.census.gov/econ/isp/

.

U.S. Census Bureau. 2012. 2012 County Business Patterns. Number of Firms, Number of Establishments,

Employment, and Annual Payroll by Enterprise Employment Size for the United States, All Industries: 2012.

Retrieved November 3, 2015 from: http://www.census.gov/econ/susb/

Webstaurant Store. 2015a. Soft Serve Machines. Available online at:

http://www.webstaurantstore.com/47343/soft

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http://www.webstaurantstore.com/14061/granita

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. Accessed November 2, 2015.

White House. 2015. FACT SHEET: Obama Administration and Private

‐ Sector Leaders Announce Ambitious

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October 15, 2015. Available online at: https://www.whitehouse.gov/the

‐ press

‐ office/2015/10/15/fact

‐

sheet

‐ obama

‐ administration

‐ and

‐ private

‐ sector

‐ leaders

‐ announce

.Economic Impact Screening Analysis 38 

## Appendix A: Sensitivity Analysis of Amoritization Period

In cases where capital costs are incurred to invest in new equipment as a result of the proposed regulatory

changes, the analysis assumes that these costs are annualized over the physical lifetime of the equipment. Since

it is feasible that the financing period of these costs may vary, a sensitivity analysis was conducted to further

assess the implications of this assumption. A summary of the regulatory options that are impacted by this

assumption are presented in Table 20 along with the assumed lifetime for annualizing costs and the resulting

annualized compliance cost as a percentage of average annual sales per firm.

Table 20: Regulatory Options Impacted by Annualized Cost Assumptions

Option End

‐ Use Lifetime for

Annualizing Costs Annualized Compliance Cost

as a Percentage of Average

Annual Sales per Firm*

1 Centrifugal Chillers 25 years 0.7%–0.8%

7b/7c Household Refrigerators and Freezers 20 years <0.1%–8.6%

11a/11b Rigid PU: high

‐ pressure two

‐ component spray foam 25 years <0.1%–3.9%

12a/12b Rigid PU: low

‐ pressure two

‐ component spray foam 25 years 0.2%–7.8%

13a/13b Rigid PU: one

‐ component foam sealants 25 years <0.1%–3.9%

* Assumes a 7% discount rate.

Table 21 summarizes the change in annualized compliance costs as a precent of average annual sales per firm

assuming a 10 year and 5 year lifetime for annualizing costs.

Table 21: Annualized Compliance Costs Assuming a 30 Year and 10 Year Lifetime for Annualizing Costs

Option NAICS

Code Industry Name Annualized Compliance Cost as a Percentage

of Average Annual Sales per Firm*

10 Year Lifetime 5 Year Lifetime

1 333415 Air

‐ conditioning and warm air heating

equipment and commercial and industrial

refrigeration equipment manufacturing 0.7%–0.8% 0.7%–0.8%

7b/7c 335222 Household refrigerator and home freezer

manufacturing <0.1%–13.0% <0.1%–22.2%

11a/11b

326150 Urethane and other foam product (except

polystyrene) manufacturing 0.1%–6.4% 0.3%–11.0%

12a/12b 0.4%–12.9% 0.6%–22.1%

13a/13b 0.1%–6.4% 0.3%–11.0%

* Assumes a 7% discount rate.

A comparison of the total annualized economic impact on small businesses under each lifetime assumption at a

7% and 3% discount rate is presented in Table 22 and Table 23, respectively. These tables assume a rulemaking

that includes regulatory options 1, 3, 5, 7a, 9a, 11b, 12b, 13b, 14, 15, 16, and 17a. The aggregated economic

impact on small businesses based on the higher cost range for each end

‐ use and a 7% discount rate under each

lifetime assumption is presented in Table 24.Economic Impact Screening Analysis 39 Table 22: Summary of the Total Small Business Impact by Lifetime Assumption at a 7% Discount Rate*

Option NAICS

Code Total Annualized Economic Impact on Small Businesses

Current Lifetime

Assumption 10 Year Lifetime 5 Year Lifetime

Lower Higher Lower Higher Lower Higher

1 333415 $2,880,000 $3,260,000 $2,880,000 $3,270,000 $2,880,000 $3,270,000

3 333415 $3,000,000 $3,760,000 $3,000,000 $3,760,000 $3,000,000 $3,760,000

5 333415 $70,000 $90,000 $70,000 $90,000 $70,000 $90,000

7a 335222 $4,590,000 $5,500,000 $4,590,000 $5,500,000 $4,590,000 $5,500,000

9a 333415 $70,000 $140,000 $70,000 $140,000 $70,000 $140,000

11b

326150 $800,000 $1,200,000 $1,330,000 $1,990,000 $2,270,000 $3,410,000

12b $400,000 $500,000 $700,000 $900,000 $1,220,000 $1,460,000

13b $3,000 $5,000 $6,000 $8,000 $10,000 $14,000

14 $0 $0 $0 $0 $0 $0

15 $0 $0 $0 $0 $0 $0

16 $0 $0 $0 $0 $0 $0

17b 3399991 $0 $0 $0 $0 $0 $0

TOTAL $11,843,000 $14,485,000 $12,646,000 $15,658,000 $14,110,000 $17,644,000

* Assumes a proposed rulemaking that includes regulatory options 1, 3, 5, 7a, 9a, 11b, 12b, 13b, 14, 15, 16, and 17a.

Table 23: Summary of the Total Small Business Impact by Lifetime Assumption at a 3% Discount Rate*

Option NAICS

Code Total Annualized Economic Impact on Small Businesses

Current Lifetime

Assumption 10 Year Lifetime 5 Year Lifetime

Lower Higher Lower Higher Lower Higher

1 333415 $2,880,000 $3,260,000 $2,880,000 $3,270,000 $2,880,000 $3,270,000

3 333415 $3,000,000 $3,760,000 $3,000,000 $3,760,000 $3,000,000 $3,760,000

5 333415 $70,000 $90,000 $70,000 $90,000 $70,000 $90,000

7a 335222 $4,590,000 $5,500,000 $4,590,000 $5,500,000 $4,590,000 $5,500,000

9a 333415 $70,000 $140,000 $70,000 $140,000 $70,000 $140,000

11b

326150 $600,000 $900,000 $1,100,000 $1,700,000 $2,080,000 $3,110,000

12b $300,000 $400,000 $600,000 $700,000 $1,110,000 $1,330,000

13b $2,000 $4,000 $5,000 $7,000 $9,000 $13,000

14 $0 $0 $0 $0 $0 $0

15 $0 $0 $0 $0 $0 $0

16 $0 $0 $0 $0 $0 $0

17b 3399991 $0 $0 $0 $0 $0 $0

TOTAL $11,542,000 $14,084,000 $12,315,000 $15,167,000 $13,809,000 $17,213,000

* Assumes a proposed rulemaking that includes regulatory options 1, 3, 5, 7a, 9a, 11b, 12b, 13b, 14, 15, 16, and 17a.Economic Impact Screening Analysis 40 Table 24: Aggregated Economic Impacts on Small Businesses a

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

Current

Lifetime

Assumption 10 Year

Lifetime 5 Year

Lifetime Current

Lifetime

Assumption 10 Year

Lifetime 5 Year

Lifetime

Less than 1%

for all affected

small entities b 326150 28 20 20

76.4% 67.4% 67.4% 333415 20 20 20

335222 20 20 20

Total 68 60 60

1% or more for

one or more

affected small

entities c 326150 17 25 25

23.6% 32.6% 32.6% 333415 4 4 4

Total 21 29 29

Greater than

3% for one or

more affected

small entities 326150 8 11 17

13.5% 16.9% 23.6% 333415 4 4 4

Total 12 15 21

a Assumes a proposed rulemaking that includes regulatory options 1, 3, 5, 7a, 9a, 11b, 12b, 13b, 14, 15, 16, and 17a.

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

c This 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 would be expected to experience an impact of 3% or greater.Economic Impact Screening Analysis 41 

## Appendix B: Summary of the Small Business Impact of All Options

Table 25: Summary of the Small Business Impact of all Regulatory Options at 7% Discount Rate

Sector Opt. NAICS

Code Industry Estimated

Number of

Small

Businesses

Affected by

the Rule Total Annualized

Economic Impact on Small

Businesses

Lower Higher

Chillers 1 333415 Air

‐ conditioning and warm air heating

equipment and commercial and industrial

refrigeration equipment manufacturing 1 $2,880,000 $3,270,000

2 NA None

‐ $0 $0

3 333415 Air

‐ conditioning and warm air heating

equipment and commercial and industrial

refrigeration equipment manufacturing 1 $3,030,000 $3,790,000

4 NA None

‐ $0 $0

Retail Food 5 333415 Air

‐ conditioning and warm air heating

equipment and commercial and industrial

refrigeration equipment manufacturing 19 $70,000 $90,000

6 NA None

‐ $0 $0

Household

Refrigeration 7a

335222 Household refrigerator and home freezer

manufacturing

20 $4,590,000 $5,500,000

7b

7c $330,000 $1,110,000

8 NA None

‐ $0 $0

Cold Storage 9a 333415 Air

‐ conditioning and warm air heating

equipment and commercial and industrial

refrigeration equipment manufacturing 4 $70,000 $140,000

9b 333415 Air

‐ conditioning and warm air heating

equipment and commercial and industrial

refrigeration equipment manufacturing 4 $100,000 $220,000

10 311411 Frozen Fruit, Juice and Vegetable

Manufacturing 5 $1,000 $7,000

311412 Frozen Specialty Food Manufacturing 15 $2,000 $16,000

311511 Fluid Milk Manufacturing 9 $2,000 $12,000

311512 Creamery Butter Manufacturing 1 $100 $1,000

311513 Cheese Manufacturing 15 $2,000 $18,000

311514 Dry, Condensed, and Evaporated Dairy

Product Manufacturing 5 $700 $6,000

311520 Ice Cream and Frozen Dessert

Manufacturing 13 $2,000 $14,000

311611 Animal (except Poultry) Slaughtering 56 $10,000 $60,000

311612 Meat Processed from Carcasses 47 $10,000 $50,000

311613 Rendering and Meat Byproduct Processing 4 $800 $6,000

311615 Poultry Processing 11 $2,000 $15,000

311710 Seafood Product Preparation and

Packaging 19 $3,000 $21,000Economic Impact Screening Analysis 42 311811 Retail Bakeries 256 $30,000 $250,000

311812 Commercial Bakeries 91 $10,000 $90,000

311813 Frozen Cakes, Pies, and Other Pastries

Manufacturing 8 $1,000 $8,000

311991 Perishable Prepared Food Manufacturing 24 $3,000 $24,000

312113 Ice Manufacturing 12 $2,000 $14,000

312120 Breweries 34 $4,000 $33,000

312130 Wineries 100 $10,000 $100,000

424420 Packaged frozen food merchant

wholesalers 107 $10,000 $100,000

424430 Dairy product (except dried or canned)

merchant wholesalers 62 $10,000 $60,000

424440 Poultry and poultry product merchant

wholesalers 17 $2,000 $17,000

424460 Fish and seafood merchant wholesalers 72 $10,000 $70,000

424470 Meat and meat product merchant

wholesalers 82 $10,000 $80,000

424480 Fresh fruit and vegetable merchant

wholesalers 166 $20,000 $160,000

424590 Other farm product raw material merchant

wholesalers 23 $3,000 $22,000

424810 Beer and ale merchant wholesalers 51 $10,000 $50,000

424930 Flower, nursery stock, and florists' supplies

merchant wholesalers 120 $15,000 $120,000

493120 Refrigerated Warehousing and Storage 21 $3,000 $23,000

Foam 11a

11b

326150 Urethane and other foam product (except

polystyrene) manufacturing 36 $800,000 $1,200,000

12a

12b 8 $400,000 $500,000

13a

13b 1 $3,000 $5,000

14 0 $0 $0

15 0 $0 $0

16 0 $0 $0

Fire

Suppression 17a

17b

3399991 Fire extinguishing equipment, hand

‐ portable and fixed

‐ system (excluding water

sprinkler systems), including parts and

attachments, manufacturing 0 $0 $0

18 0 $0 $0