Leak Repair Rule and 

Emissions ‘Discounting’

Briefing for Rob Brenner

Friday, September 17, 2010

Stratospheric Protection Division
Scope of Briefing

• Background on Leak Repair Rule

• History of OMB Review of Rule

• Current Status

• Relationship to Agency Guidelines and 

to other OAR Rulemakings

• Decision Point

• Next Steps
Background

• Since 1995, 608 CAA rules cover servicing of air 

conditioning and refrigeration equipment using 

>=50 lbs of refrigerants that are ozone depleting 

substances (ODS)

– Comfort cooling building chillers

– Commercial warehouses & supermarket refrigeration 

equipment 

– Many industrial uses (food processing, pharmaceutical, 

ice rinks, etc.)

• Leak repair requirements establish mandatory 

timeframes for repair or replacement of ODS 

leaking equipment

• Tier 3 NPRM will further reduce ODS emissions 

(SAN 4856, Tier 3 RIN 2060-AM09)
Background

• 1995 requirements no longer reflect industry best 

practices, so Leak Repair Proposed Rule reduces 

ODS refrigerant emissions by lowering threshold 

for repair or replacement of leaking equipment

– From 15% down to 10% for comfort cooling appliances

– From 35% down to 20% for commercial refrigeration

– Option to require replacement of consistently leaky 

components

• Annual Benefits:

– Ozone: 316 ODP MT

– Climate: 6.6 MMTCO2eq.

• Issue: 

– OMB pushing footnote stating that avoided emissions, 

attributed to the leak repair NPRM , are not discounted
OMB Review History

• August 18, 2008: Rule first submitted to OMB; 

withdrawn in October after OMB request

• May 28, 2010: resubmitted to OMB 

– August 12, OMB forwarded final comments on NPRM 

with new footnote (rationale that past OAR rulemakings 

discounted non-monetized effects)

– Conference Call August 16, 2010

• EPA agreed to make edits to NPRM & check with other EPA 

offices

• OPEI agreed to check for examples

• August 25, 2010: OMB Cleared NPRM with 

discount language
Documentation Findings

• EPA’s Guidelines for Preparing Economic 

Analyses, September 2000

– Perspectives on discounting non-monetized 

effects:

• “...discounting is essentially a financial process 

designed to evaluate investment decisions, it is only 

relevant to dollar-denominated streams, and so 

benefits that are in physical rather than dollar terms 

cannot be discounted.”

• “... it is ethically unacceptable to discount physical 

units.” (e.g. cancer cases)
When Is Discounting Non-monetized 

Effects Appropriate?

WHEN “Quantitative information on the time streams of physical 

effects is available and these effects are measured in terms of 

human health consequences and ecosystem damages that are 

normally monetized.”

– “Physical effects have been estimated and could be monetized, but 

this last step – converting measured physical effects into dollar 

values of benefits – has not been taken.”

BUT NOT WHEN

– Conceals information of value to policymakers

– Masks information through implicit assumptions (identical effects 

over time)

– Detailed linkages of current and future damages do not exist

– Examples of when discounting benefits is not appropriate: 

• greenhouse effect, pollution damages, effluent discharges to rivers, 

etc... 

– Comparisons of costs and benefits can still be made without 

directly discounting the benefits
Discounting Emissions in Past EPA 

Rules – 2007 Mobile Source Air Toxics Rule RIA

• Emissions not directly discounted; $/ton

– 2002 Non-road Spark Ignition Rule RIA

– 2004 Non-road Diesel Rule RIA

– 2008 Locomotive/Marine Diesel Rule RIA

• Emission tons directly discounted; may not be consistent with 

Economic Guidelines

– Is Discounting Appropriate in OAP Leak Repair Rule?

– No because:

• Dynamic nature of ozone depletion and climate change

• Cumulative effects of reducing emissions including additional 

health benefits (e.g. cataracts, skin cancer cases avoided)

• Reduces future benefits 
Summary and Options

–Send Rule Forward as Is (cleared ROCIS) 

and publish proposal with footnote

– Restart process with OMB, with support 

from OAR front office