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CRNWVR CP. 3 

### Unite dState s Environmenta l Protectio n Agenc y 

# EP A Office o f Air andRadiatio n Office o f Air Qualit y Plannin g andStandard s Innovativ e Strategie s andEconomic s Grou p November , 2002 

## REGULATOR Y IMPAC T ANALYSI S FO R

TH E SPECIFICATIO N O F CATEGORIE S O F ACTIVITIE S A S ROUTIN E MAINTENANCE , REPAI RAN D REPLACEMEN T FO RTH E NE W SOURC E

REVIE W PROGRA M

prepare db y
Danie l Mussatti , Senio r Economis t Innovativ e Strategie s an dEconomic s Grou p Ai r Qualit y Strategie s an dStandard s Divisio n



# ^Ztt& >P. 4

Executiv e Summar y Unde r th e change s promulgate dt o 4 0 CF Rpart s 5 1 an d52 , "majo r modification " i s define da s an y physica l chang e i n o r chang e i n th e metho d o f operatio n of amajo r

stationary sourc e that

woul dresul t

in : (1 ) a significan t

emission s increas e of aregulate dne w sourc e revie w (NSR ) pollutant ; an d(2 ) asignifican t ne t emission s increas e o f

tha t pollutan t fromth e majo r

stationary source . Owner s o r operator s o f

majo r stationary source s (sources ) ar e require dt o obtai n amajo r NS Rpermi t

prio r t o beginnin g actual constructio n o f amodificatio n tha t

meet s thi s definition

. Th e regulation s exclud e certai n activitie s fromth e definitio n o f "majo r modification. " On e suc hexclusio n i s for routin e maintenance , repai r an d replacemen t

(RMRR ) activities

. Th e regulation s d o not defin e thi s term
. Unde r ou r curren t approach , th e RMR Rexclusio n i s applie do n a case-by-cas e basi s usin g amulti-facto r test
. I n interpretin g thi s exclusion , w e hav e followe dcertai n criteria

. Th e preambl e t o th e 199 2 "WEPC O Rule " (5 7 F R32314 ) an dapplicabilit y determination s mad e t o dat e describ e ou r

curren t approac ht o assessin g wha t activitie s constitut e RMRR
. Thi s approac hi s know n a s th e multi-facto r test
. Thi s propose d rulemakin g change s th e majo r NS Rprogra mb y providin g specifi c categorie s o f

activitie s tha t

EP A wil l conside r

RMR Ri n th e future

. Th e proposa l provide s tw o approache s that reviewin g authoritie s wil l conside r for identifyin g RMR Ractivitie s i n th e future : an annua l maintenance , repai r

an dreplacemen t

allowance , an dan allowanc e for certai n equipmen t

replacement

. Whe n a

n activity fall s withi n eithe r o f thes e categories , the n EP A woul dconside r i t t o b e RMR Ran dasourc e woul dkno w that

i t wa s exclude dfrommajo r NS Rwithou t

regar dt o othe r considerations

. Whe n a

n activity doe s no t

fal l withi n on e o f

thes e categories , the n i t

stil l coul dqualif

y a s routin e maintenance , repair , an d replacemen t

unde r th e multi-facto r

test
. Th e approache s woul dexclud e frommajo r NS Rapplicability : 1 ) activitie s a t astationary sourc e whos e tota l cost s fall belo w specifie dthreshold s se t s o a s t o cove r

RMR Rcapita l an dnon-capita l cost s incurre dt o maintain , facilitate , restore , o r

improv e th e safety , efficiency , availabilit y o r reliabilit y o f

th e operatio n o f

th e stationary source ; and , 2 ) th e replacemen t

o f existin g equipmen t

withequipmen t

tha t serve s th e sam e functio n an dthat

doe s no t alte r th e basi c desig n parameter s of aunit , provide dth e cos t

o f th e replacemen t

equipmen t

doe s not excee dacertai n percentag e o f

th e cos t o f th e proces s uni t

t o whic hth e equipmen t

belongs

. Suc hcategorie s woul dremov e disincentive s t o undertakin g RMR R activitie s an dprovid e mor e certaint y botht o th e industry , wh o coul dbette r pla n activitie s a

t thei r facilities , an dt o reviewin g authorities , wh o coul d bette r focu s resource s o n activitie s outside thes e RMR Rcategories

. Th e Agenc y ma y decid e t o promulgat e bothapproache s o r jus t on e o f th e tw o approaches

. W e hav e attempte dt o quantitativel y analyz e th e possibl e emission s consequence s o f

th e approache s t o th e RMR Rexclusio n describe dabove

.P. 5

Th e analysi s was conducte dusin g th e Integrate dPlannin g Mode l (IPM ) whic hi s apowerfu l mode l that cover s th e entir e powe r

industry

. W e d o not hav e suc hamodel for

othe r industrie s but

believ e that

th e result s for th e electri c utilitie s accuratel y reflec t th e trend s w e woul dse e i n othe r industries

. Th e analysi s look s a

t th e potentia l impact s o f

a"narrow " RMR Rexclusio n (e.g. , les s activitie s identifie da s RMRR ) an d"broader " RMR Rexclusion s (e.g , mor e activitie s identifie da s RMRR)

. Th e analysi s i s mean t t o boun d th e potentia l effect s o f

th e rang e o f

approache s proposed

. It i s difficul t

t o b e certai n that

suc ha n analysi s ca n trul y boun dth e potentia l improvement s i n energ y efficienc y an demission s reduction s whic hma y b e realize db y a"broader " RMR Rexclusion

. W e als o considere dsimilar analyse s for

th e powe r

secto r conducte db y th e Departmen t

o f Energ y (DOE)

. Th e DO E use dacomple x model calle dth e Nationa l Energ y Modelin g Syste m(NEMS)

. Althoug hNEM S an dIP M d o no t emplo y exactl y th e sam e analytica l methods , w e conside r th e result s frombot hmodel s t o b e comparabl e an dusefu l i n examinin g ou r propose d rule

. Th e analyse s generall y conclude dtha t th e breadtho f

th e RMR Rexclusio n woul dhav e littl e impac t

o n th e emission s reduction s tha t wil l b e achieve d i n th e future unde r

th e majo r

NS Rprogram . Th e analyse s showe dthat emission s o f

sulfur dioxid e (S02 ) are essentiall y th e sam e unde r al l scenarios

. Thi s stand s t o reaso n becaus e nationwid e emission s o f S0 2 fromth e powe r

secto r ar e cappe db y th e titl e WAci dRai n Program
. Fo r nitroge n oxid e (NOx) , th e analyse s showe dmodes t relativ e decrease s i n som e case s an dmodes t

relativ e increase s i n othe r cases . Thes e predicte d change s represen t

onl y amodes t

fraction o f

nationwid e NO x emission s fromth e powe r

sector , whic hhove r

aroun d4. 3 millio n ton s pe r year . Th e analyse s d o no t

conside r change s i n maintenanc e costs , the y onl y assume s change s i n fue

l cost s an dchange s i n capita l cost s associate dwit h ne w generatin g unit s an dne w emissio n contro l equipment

. Therefore , th e analyse s probabl y understate s th e cos t o f th e increase dmaintenanc e scenario s an dunderstate s th e cos t o f th e majo r NS Rbas e case . I n addition , ther e woul db e significan t reductio n i n th e cost s t o industry an d reviewin g agencies , du e t o decrease s i n makin g applicabilit y determinations , associate dwit hidentifyin g categorie s o f activitie s tha t

are RMRR
.P. 6

1 Introductio n 1. 1 Purpos e Th e purpos e o f thi s documen t

i s t o provid e informatio n o n th e potential cost s an dbenefit s o f

th e propose dmodification s t o th e majo r NS Rroutin e maintenance , repai r

an dreplacemen t

program . New Sourc e Revie w i s on e o f man y program s create db y th e Clea n Ai r Ac t t o contro l o r

reduc e emission s o f

criteri aai r

pollutant s emitte dfrom a wid e variety o f

source s an dhav e a

n advers e impac t

o n huma n healthan d th e environment

. Othe r

ke y program s include : th e titl e IV Aci dRai n Program , Maximu mAchievabl e Contro l Technolog y (MACT ) an dothe r ai r toxic s standard s for

contro l o f

Hazardou s Ai r

Pollutant s (HAPs) , New Sourc e Performanc e Standards , th e 22-stat e NO x "SI P call", , th e Regiona l Haz e program , numerou s mobil e sourc e programs , an dth e basi c stat e an d loca l ai r contro l program s t o attai n an dmaintai n th e Nationa l Ambien t Ai r Qualit y Standard s (NAAQS)

. Together , thes e program s hav e achieved , an dwil l continu e t o achieve , ten s o f million s o f

ton s pe r year o f reduction s tha t are independen t

o f th e majo r

NS RImprovement s rule

. Whil e th e program s discusse dabove pla y th e dominant rol e i n reducin g emission s o f

ai r pollution , th e majo r

NS Rprogra massure s tha t whe n th e constructio n o f

ne w source s o f

pollutio n o r

modification s at

existin g source s occur , th e emission s tha t resul t fromtha t constructio n o r modificatio n are well-controlle dan dare permitte dconsisten t wit hthes e programs . Thi s documen t

support s th e Agency' s requirement s unde r th e variou s Act s an dExecutiv e Order s governin g th e analysi s o f regulations , includin g (bu t not limite dto ) th e requirement s discusse dbelo w i n sectio n 2 o f thi s analysi s withregard s t o determinin g th e regulatory burde n associate dwith th e propose dchang e t o th e preconstructio n permittin g progra mt o provid e aclear category o f

activitie s tha t

wil l b e considere droutin e maintenance , repair , an dreplacemen t

unde r th e majo r

NS Rprogram . 1. 2 Introductio n Currently , th e Agenc y interpret s an dapplie s it s majo r Ne w Sourc e Revie w (majo r NSR ) exclusio n for

source s performin g routin e maintenance , repai r an dreplacemen t

(RMRR ) o n acase-by-cas e basis

. Th e rulemakin g provide s tw o approache s tha t reviewin g authoritie s wil l conside r for identifyin g RMR Ractivitie s i n th e future : a n annua l maintenance , repai r an dreplacemen t

allowance , an da

n allowanc e fo

r certai n equipmen t replacement

. Whe n a

n activit y fall s withi n eithe r o f thes e categories , the n EP A woul dconside r

i t t o b e RMR Ran dasourc e woul dkno w tha t i t wa s exclude dfrommajo r

NS Rwithou t

regar dt o othe r

considerations

. Whe n an activit y di dnot

fal l withi n on e o f

thes e categories , the n i t

stil l coul d

REGULATOR Y IMPAC T ANALYSI S FO RTH E SPECIFICATIO N O F CATEGORIE S O F ACTIVITIE S A S ROUTIN E MAINTENANCE , REPAIR , AN D REPLACEMEN T FO RTH E NE W SOURC E REVIE W PROGRA M Pag e 1P. 7

qualif y a s routin e maintenance , repair , an dreplacemen t unde r th e multi

facto r test
. Thi s pape r

present s a

n overvie w o f

th e impact s o f

th e propose d identificatio n o f

categorie s o f

activitie s a s routin e maintenance , repair , an d replacemen t

(RMRR ) withi n th e framewor k o f th e majo r

NS R preconstructio n permi t

program . T o performthi s analysis , th e Agenc y relie dheavil y upo n existin g report s o n file for variou s aspect s o f

th e majo r NS Rprogram , includin g th e Jun e 200 2 Repor t t o th e President, ' th e majo r NS RRevie w Backgroun dPaper, 2 th e curren t majo r NS RInformatio n Collectio n Reques t

(ICR), 3 th e ICR s submitte di n Ma y an dJun e for revision s t o th e majo r

NS Rapplicability requirement s an dth e propose d RMR Rprogram, 4 ' 5 an dthei r associate dFedera l Registe r notice s an dothe r publi c announcements
.
1. 3 Th e Curren tTh e majo r NS Rprogra mi s acombinatio n o f ai r qualit y plannin g an dai r NS RProara m pollutio n contro l technolog y programrequirement s for ne w an dmodifie d majo r stationary source s o f

ai r pollution

. Sectio n 10 9 o f th e Clean Ai r

Ac t Amendment s o f

199 0 (CAAA ) require s EP A t o promulgat e primar y Nationa l Ambien t

Ai r Quality Standard s (NAAQS ) t o protec t publi c healthan dsecondary NAAQ S t o protec t publi c welfare

. Onc e EP A ha s se t thes e standards , state s mus t develo p Stat e Implementatio n Plan s (SIPs ) that contai n emissio n limitation s an dothe r contro l measure s t o attai n an d maintai n th e NAAQ S an dt o mee t th e othe r requirement s o f

sectio n 110(a ) o f th e Act

. Th e majo r

NS Rprogrami s apart

o f tha t SI P requirement

. Th e progra mcommonl y calle d"majo r NSR " derive s it s authority from part s C an dD o f

Titl e I o f th e Ac t an di s apreconstructio n revie w an d

U.S

. EPA , 2002 , "Ne w Sourc e Review : Repor t T o th e President, " http://www.epa.gov/air/nsr-review/background.htm l U.S

. EPA , 2001 , "NS R90-Da y Revie w Backgroun dPaper, " Docke t A-2001-19 , Documen t

Numbe r II-A-01 , http://www.epa.gov/air/nsr-review/background.htm l U.S

. EPA , 2001 , "Informatio n Collectio n Reques t fo r 4 0 CF RPart

5 1 an d5 2 Preventio n o f

Significan t

Deterioratio n an dNonattainmen t Ne w Sourc e Re

view, " OM B Contro l Numbe r 2060-0003 ; EP A For mNumbe r 1230.09

. U.S

. EPA , 2002 , "Informatio n Collectio n Reques t for Change s t o th e 4 0 CFR Part s 5 1 an d5 2 PS D an dNS RApplicability Requirements for Modification s t o Existin g Sources, " EP A For mNumbe r 2074.01

. U.S

. EPA , 2002 , "Informatio n Collectio n Reques t for th e Establishmen t

of a Definitio n o f

Routin e Maintenance , Repai r an dReplacemen t

for th e Ne w Sourc e Revie w Program, " EP A For mNumbe r 1713.04

.

REGULATOR Y IMPAC T ANALYSI S FO RTH E SPECIFICATIO N O F CATEGORIE S O F ACTIVITIE S A S ROUTIN E MAINTENANCE , REPAIR , AN D REPLACEMEN T FO RTH E NE W SOURC E REVIE W PROGRA M Pag e 2P. 8

permittin g progra mapplicabl e t o ne w o r modifie dmajo r

stationary source s o f ai r pollutants

. In area s not

meetin g th e NAAQ S an di n th e ozon e transport region s (OTR) , th e progra mi s th e "nonattainment " majo r NS R program , implemente dunde r th e requirement s o f

part D o f titl e I o f th e Act

. In attainmen t

area s (area s meetin g NAAQS ) o r i n area s wher e ther e i s insufficien t

informatio n t o determin e whethe r the y mee t

th e NAAQ S ("unclassifiable " areas) , th e Agenc y implement s majo r NS Ra s th e Preventio n o f

Significan t

Deterioratio n (PSD ) progra munde r th e requirement s o f

part C o f Titl e I o f th e Act

. Applicabilit y o f th e majo r NS Rprogra mmus t

b e determine di n advanc e o f constructio n an di s pollutant-specific

. Whe n asourc e triggers majo r NS Ri n attainmen t

areas , i t mus t instal l bes t

availabl e contro l technolog y (BACT ) an dconduc t modelin g an dmonitorin g a s necessary . I f th e sourc e i s locate di n a nonattainmen t

area , it mus t instal l technolog y tha t

meet s th e lowes t achievabl e emissio n rat e (LAER) , secur e emissio n reduction s t o offse t an y increase s abov e baselin e emissio n levels , an dperformothe r analysis

.
1. 4 RMR R - Backgroun d Th e modificatio n provision s o f th e majo r NS Rprogra mi n part s C an dD are basedo n th e definitio n i n sectio n 111(a)(4 ) o f th e Act :

"

. . . ['modification ' means ]
.. . an y physica l chang e in , o r chang e i n th e metho do f

operatio n of

, astationary sourc e whic hincrease s th e amoun t

o f an y ai r pollutan t emitte db y suc hsourc e o r whic h result s i n th e emissio n o f an y ai r pollutan t no t previousl y emitted. " That definitio n involve s atwo-ste p tes t fo r determinin g whethe r

sourc e activitie s constitut e amodificatio n subjec t t o majo r NS Rrequirements : th e sourc e determine s whethe r aphysica l o r

operationa l chang e wil l occu r an d the n determine s whethe r

th e chang e wil l resul t

i n (1 ) asignifican t emission s increas e o f

aregulate dpollutan t

from acombinatio n o f

on e o r mor e emission s unit s followin g th e physica l o r operationa l change ; an d(2 ) asignifican t

ne t emission s increas e o f

that pollutan t fromth e majo r stationary sourc e ove r

th e contemporaneou s period

. Unde r th e change s promulgate dt o 4 0 CF Rpart s 5 1 an d52 , "majo r modification " i s define da s an y physica l chang e i n o r chang e i n th e metho d o f operatio n of amajo r

stationary sourc e that

woul dresul t

in : (1 ) a significan t

emission s increas e o f

aregulate dne w sourc e revie w (NSR ) pollutant ; an d(2 ) asignifican t ne t emission s increas e o f

tha t pollutan t fromth e majo r

stationary source . Owner s o r operator s o f

majo r stationary source s ar e require dt o obtai n amajo r NS Rpermi t

prio r t o beginnin g actual constructio n o f

amodificatio n that

meet s thi s definition

. Th e regulation s exclud e certai n activitie s fromth e definitio n o f "majo r modification, " includin g activitie s that constitut e RMRR
.

REGULATOR Y IMPAC T ANALYSI S FO RTH E SPECIFICATIO N O F CATEGORIE S O F ACTIVITIE S A S ROUTIN E MAINTENANCE , REPAIR , AN D REPLACEMEN T FO RTH E NE W SOURC E REVIE W PROGRA M Pag e 3P. 9

Currently , th e RMR Rexclusio n i s interprete dan dapplie do n acase-by

cas e basis

. Th e curren t

proces s stil l "impose s significan t burden s o n th e utilit y practice s necessary t o maintai n th e safety , availability , efficienc y an dreliabilit y o f

th e electricity suppl y a

t existin g sources. . .[and ] th e curren t NS Rprogra mha s activel y discourage defficienc y improvemen t project s . . ," 6 7 Fo r

example , th e 200 1 NS R90-Da y Report cite s th e followin g anecdota l evidence : ".

. .pas t blad e maintenanc e an dreplacemen t o f onl y th e deteriorate dblade s a

t Detroi t Ediso n ha s neve r

increase defficienc y ove r th e origina l design

. Ye t

becaus e [blad e upgrade ] woul dresul t i n substantiall y improve defficienc y compare dt o th e origina l design , EP A considere di t aphysica l chang e unde r

it s NS R regulations , an d[therefore ] subjec t t o NSR.

. ." 8 Anothe r majo r proble minheren t

i n th e curren t

majo r NS Rsyste mi s regulator y delay

. Sinc e 1997 , th e average tim e neede dt o obtai n amajo r NS Ro r PS D permit , acros s al l industries , i s abou t seve n months. 9 Th e averag e tim e neede dt o mak e amaintenance-relate dNS Rdeterminatio n i s betwee n thirt y an dsixty days

. Th e Nationa l Petroleu mCounci l (NPC ) reporte di n Jun e 200 0 that th e length y proces s for

obtainin g permit s can limi t arefinery' s ability t o respon dquickl y t o changin g marke t conditions

. The y offere dth e followin g lis t o f averag e regulator y delays , basedupo n survey s o f

it s members :

• 3- 6 month s t o prepar e apermi t applicatio n
• 1-3 month s fo

r th e permittin g authorit y t o dee mth e applicatio n complet e
• 3- 6 month s fo

r th e developmen t

an dnegotiatio n o f

adraf t permi t
• A n unstate dperio dfo r publi c notic e an dth e opportunit y t o receiv e publi c comment s o n th e draf t permi t
• A n unstate dperio do f tim e for th e permittin g authority t o respon dt o publi c comment s andtak e final actio n o n th e permit 1 0

6 U.S

. EP A 2002 , "Ne w Sourc e Review : Repor t T o th e President, " p : 7 Th e discussio n applie s equall y t o industria l sources . 8 U.S

. EPA , 2001 , "NS R90-Da y Revie w Backgroun dPaper, " p 28

. 9 Ibid , p 7
. 1 0 Ibid , p 44

.

REGULATOR Y IMPAC T ANALYSI S FO RTH E SPECIFICATIO N O F CATEGORIE S O F ACTIVITIE S A S ROUTIN E MAINTENANCE , REPAIR , AN D REPLACEMEN T FO RTH E NE W SOURC E REVIE W PROGRA M Pag e 4Not e that thes e example s d o no t

addres s onl y routin e maintenance

. Relyin g o n th e result s o f

th e NP C survey , th e entir e proces s o f merel y gettin g approva l t o mak e aroutin e modificatio n woul drequir e aminimu m o f year . Then , i f

th e determinatio n indicate dth e activit y require dmajo r NS Rpermitting , th e sourc e woul dhav e t o wai t onc e mor e for

it s permi t

t o b e approve dbefor e beginnin g th e repair

. I n othe r words , asourc e ma y hav e t o wai t

for u p t o eightee n month s t o b e abl e t o mak e arepai r becaus e i t triggers majo r

NS Rpermitting

. Obviously , i f suc haroutin e chang e i s warrante di n respons e t o changin g marke t conditions , the n suc hdelay woul dthreate n acompany' s ability t o operat e effectivel y i n th e market

. On e o f th e goal s o f

th e rulemakin g o n th e routin e maintenance , repai r an d replacemen t

exclusio n i s t o allo w for th e exclusio n t o b e implemente d withou t suc hdelays

. EP A propose s modifyin g th e RMR Rexclusio n t o explicitl y includ e activitie s withtota l cost s belo w an annua l maintenance , repair , an d replacemen t

allowanc e for

aunit

. Th e annua l maintenance , repair , an d replacemen t

allowanc e an dth e rule s fo r calculatin g an dsummin g project s unde r th e allowanc e woul db e define di n ne w provision s a t 4 0 CF R51.16 5 (a ) (1 ) (xxvi) , 4 0 CF R51.16 6 (b ) (38), 4 0 CF R52.2 1 (b ) (39) , an d4 0 CF R 52.2 4 (f ) (25)

. Unde r

EPA' s first

approac hamaintenance , repair , an d replacemen t

allowanc e woul db e establishe dfor eac hfacility for

eac hpre define dyea

r (typicall y acalendar

yea r o r fiscal year)

. Th e cost s o f project s incurre ddurin g th e calendar year woul db e summe dacros s al l unit s regardles s o f

th e pollutan t

i t emit s fromleas t

expensiv e t o mos t

expensiv e t o ge t atota l yearl y cos t

for aunit

. Facilitie s withtota l RMRR-relate d cost s belo w th e annua l maintenance , repair , an dreplacemen t allowanc e woul db e considere dt o hav e undertak e onl y routin e maintenance , repai r an dreplacemen t

activitie s for

thos e project s i n it s annua l report
. Whe n a facility' s tota l yearl y reporte dcos t exceed s th e annua l maintenance , repair , an dreplacemen t

allowance , th e activitie s woul db e reviewe da s follows :

• Th e owner/operato r

woul dsubtrac t

project s fromth e tota l yearl y cost , startin g withth e mos t

expensiv e project , unti l th e remainde r i s les s tha n o r equal t o th e annua l maintenance , repair , an dreplacemen t allowance

. • Project s that

wer e remove dfromth e tota l yearl y cos t woul db e evaluate daccordin g t o th e multi-facto r tes t i n accordanc e withcurren t EP A policy

. • An y remove dprojec t

foun dt o requir e majo r

NS Rpermittin g throug h th e ex post case-by-cas e revie w woul db e subjec t t o majo r NSR

. Th e Agenc y woul destablis hth e annua l maintenance , repair , an d replacemen t

allowanc e equal t o th e produc t o f th e replacemen t

cos t o f th e uni t an daspecifie dmaintenanc e percentag e establishe di n th e propose d

REGULATOR Y IMPAC T ANALYSI S FO RTH E SPECIFICATIO N O F CATEGORIE S O F ACTIVITIE S A S ROUTIN E MAINTENANCE , REPAIR , AN D REPLACEMEN T FO RTH E NE W SOURC E REVIE W PROGRA M Pag e 5P.1 1

rule , wher e replacemen t

cos t i s define da s th e tota l capita l investmen t necessar y for

th e complet e replacemen t o f th e unit , calculate daccordin g t o th e EPA' s cos t

methodology , se t

ou t i n th e EP A Ai r

Pollutio n Contro l Cos t Manual , (excludin g th e cost s for installin g an dmaintainin g pollutio n contro l equipment). " Whe n astationary sourc e use s th e annua l maintenance , repair , an dreplacemen t allowanc e t o determin e RMR R activities , al l project s mus t b e include di n th e annua l cos t calculations

. Unde r th e first approach , facilitie s mus t submi t a n annua l report , aggregate dacros s al l unit s at th e facility , t o th e appropriat e reviewin g authority (RA ) withi n 6 0 day s o f th e en do f

th e yea r ove r whic hprojec t cost s hav e bee n summed

. Eac hreport mus t provid e asummary o f

th e estimate dreplacemen t

valu e o f eac hunit , th e aggregate dannua l maintenance , repair , an dreplacemen t allowanc e for

th e facility , a descriptio n o f

al l change s mad e t o eac hunit , an dth e cost s associate dwith thos e projects

. I f

th e su mo f

th e cos t o f th e project s a

t afacility excee dth e annua l maintenance , repair , an dreplacemen t allowanc e for

th e unit , th e outcom e o f

th e multi-facto r

tes t for al l project s selecte di n accordanc e with th e step s outline dabove mus t als o b e include di n th e unit' s report
. EPA' s recommende dapproac hwil l als o contai n safeguard s t o hel p ensur e tha t project s that

shoul db e considere damajo r modificatio n unde r

th e regulation s ar e ineligibl e for exclusio n frommajo r

NS Runde r

th e annua l maintenance , repair , an dreplacemen t allowance

. EP A propose s excludin g fromus e o f

th e annua l maintenance , repair , andreplacemen t allowance : 1

. Th e installatio n of ane w proces s unit . Th e type s o f activitie s eligibl e for

a n automati c RMR Rexclusio n shoul db e limite dt o maintenanc e o f

existin g proces s unit s a

t astationar y sourc e i n orde r t o ensur e continue dsaf

e an dreliabl e operation

. Th e additio n o f ne w proces s unit s tha t

di dnot previousl y exis t

shoul dreceiv e greate r scrutin y befor e adeterminatio n o f routinenes s i s made

. 2

. Th e replacemen to f an entir e proces s unit . Th e replacemen t o f an entir e proces s uni t

shoul dnot

b e automaticall y considere d routin e sinc e avariet y o f

operatin g parameter s coul dchange

. Therefore , awholesal e exchang e o f aproces s uni t

shoul db e subjec t t o greate r

scrutin y unde r

th e majo r

NS Rprogram . 3

. An y chang e tha twoul d resul tin a n increas e i n shor tter m emissio n rate s o f

an y regulate d pollutant , o rin th e emissio n o f an y regulate d pollutan tno tpreviousl y emitted . An y activity tha t wil l resul t

i n ahighe r

emissio n rat e o r

th e emissio n o f

ane w

1 1 Th e EP A Ai r

Pollutio n Contro l Cos t

Manual , 6 , hEdition , Danie l Mussatti , ed. , January 2002 , EP A #452-B-02-001 , Sectio n 1 , Chapte r 2

.

REGULATOR Y IMPAC T ANALYSI S FO RTH E SPECIFICATIO N O F CATEGORIE S O F ACTIVITIE S A S ROUTIN E MAINTENANCE , REPAIR , AN D REPLACEMEN T FO RTH E NE W SOURC E REVIE W PROGRA M Pag e 6P.1 2

pollutan t shoul dno t

b e automaticall y exclude dfromth e majo r NS Rprogra ma s thes e increase s ma y resul t i n asignifican t

ne t emission s increas e o r

ma y hav e asignifican t

impac t o n th e environment

. Concomitan t

withth e propose dannua l maintenance , repair , an d replacemen t

allowanc e approach , th e Agenc y develope dasecon d approac ht o th e managemen t o f RMR Ractivitie s that

focuse s o n clarifyin g whe n th e replacemen t

o f existin g equipmen t

withequipmen t

that serve s th e sam e functio n an dthat doe s not alte r th e basi c desig n parameter s o f a uni t woul db e considere dRMRR
. Unde r thi s approach , EP A woul d establis hapercentag e (ye t t o b e determined ) o f

th e replacemen t

valu e o f an uni t a s aper-projec t

threshol dfor

applyin g th e RMR Rexclusio n i n a fashio n similar

t o that employe dfor

Ne w Sourc e Performanc e Standard s (NSPS ) purposes . Thi s approac hwoul dle t source s determin e mor e readil y wha t large-scal e replacemen t

activitie s woul do r

woul dno t

trigge r majo r NS Rpermitting

. Th e equipmen t replacemen t

approac hwoul dappl y t o th e replacemen t

o f existin g equipmen t

wit heithe r

identica l ne w equipmen t o r withfunctionall y equivalen t equipment

. Whil e th e annua l maintenanc e provision s describe dabove wil l improv e implementatio n o f

th e RMR Rexclusion , th e allowanc e applie s primaril y t o lowe r cost , short

turn-aroun dactivities

. Fo r larg e scal e project s that shoul dqualif

y for a n RMR Rexclusion , th e curren t multi-facto r

tes t an d th e propose dannua l maintenance , repair , an dreplacemen t allowanc e approac hma y not

provid e sufficient

relief

. Th e curren t

approac hrequire s comple x analysi s t o decid e whethe r o r not propose dproject s (th e sam e project s tha t

woul dno t

mee t th e annua l maintenance , repair , an d replacemen t

allowanc e criteria ) constitut e RMRR
. Source s mus t choos e betwee n proceedin g withou t apermi t (withal l o f

th e potentia l liabilitie s o f noncompliance ) o r

seekin g a

n applicabilit y determination , whic hdelay s majo r sourc e NS Rprojec t

implementatio n b y aminimu mo f si x months

. Give n suc hachoice , i t

i s no t surprisin g tha t

th e Agenc y ha s amasse d anecdota l evidenc e ther e hav e bee n case s i n whic hth e uncertaint y abou t th e exemptio n for

routin e activitie s ha s resulte di n expensiv e delay s o r eve n th e cancellatio n o f

beneficia l projects

. Suc hregulatory discouragemen t

result s i n los t

productiv e capacity , a s wel l a s los t opportunitie s t o improv e energ y efficienc y an dreduc e ai r pollution

. Source s ar e no t

th e onl y entitie s that

incu r cost s fromsuc hdeterminations

. Stat e an dloca l permittin g authoritie s mus t devot e scarc e resource s t o mak e comple x determinations , consul t withothe r

agencie s t o ensur e thei r determination s are consisten t withdecision s mad e for

similar circumstance s i n othe r

jurisdiction s (an dth e EPA) , an dconfe r withothe r regulator s t o ensur e consistency amon g th e RA' s conclusions

.

REGULATOR Y IMPAC T ANALYSI S FO RTH E SPECIFICATIO N O F CATEGORIE S O F ACTIVITIE S A S ROUTIN E MAINTENANCE , REPAIR , AN D REPLACEMEN T FO RTH E NE W SOURC E REVIE W PROGRA M Pag e 7P.1 3



### 1. 6 Analytica l Consideration s Whil e th e Agenc y propose s asingl e RMR Rapproac htha t combine s elements o f

bothalternatives , th e exac t natur e o f that combine dapproac h canno t b e determine da

t thi s time

. Consequently , th e Agenc y ha dt o mak e a n importan t

limitin g assumptio n withregar dt o thi s analysi s b y assumin g th e tw o approache s ar e mutuall y exclusiv e an dthat on e o r th e othe r o f th e approache s - but

no t bot h- wil l b e presen t

i n th e final rule

. Furthermore , i n considerin g eac halternativ e separately , th e conclusion s o f th e analysi s canno t b e considere dt o b e uppe r o r lowe r bound s o n th e benefit s o r cost s that ma y accru e t o affecte dentitie s becaus e th e Agenc y wil l selec t th e bes t o f bothalternative s whe n designin g it s hybri dprogra mand , therefore , believe s th e su mwil l b e greate r tha n it s parts , expandin g benefit s beyon d eithe r progra mindividuall y an dreducin g cost s belo w thos e reporte dfor eithe r alternative

. Th e result s o f

th e EPA' s analysi s ar e foun dbelow

.

REGULATOR Y IMPAC T ANALYSI S FO RTH E SPECIFICATIO N O F CATEGORIE S O F ACTIVITIE S A S ROUTIN E MAINTENANCE , REPAIR , AN D REPLACEMEN T FO RTH E NE W SOURC E REVIE W PROGRA M Pag e 8P.1 4

Need s an d Consequence s

Thi s part o f th e qualitativ e analysi s summarize s th e statutory requirement s affectin g th e developmen t o f aFedera l majo r

NS Rprogra man ddescribe s th e natur e o f

th e problem

. Th e nee dfor regulatory actio n an dth e consequence s o f

th e regulatio n i n term s o f improvin g th e functionin g o f th e marke t

are als o discussed

.
2. 1 Natur e o f th e Proble m In th e absenc e o f governmen t

regulation , market-oriente deconomi c system s typicall y fai l t o preven t elevate dlevel s o f

pollutio n i n th e environmen t

becaus e th e environmen t i s apubli c good

. Mor e specifically , individua l source s treat

th e assimilativ e capacity o f th e environmen t

a s a "fre e good " resourc e t o dispos e o f unuse dbyproduc t

emissions

. Unde r thes e conditions , emitter s o f pollutant s an dpollutan t

precursor s d o no t internaliz e th e cos t

o f damage s create db y thei r ow n emissions

. Thes e damage s occu r

t o society a s awhole , rathe r tha n t o specifi c member s o f society

. Thi s i s becaus e pollutio n emission s are non-marke t good s — good s no t bough t o r sol di n th e marketplac e —an dth e atmospher e carrie s withit n o property rights. Th e damage s o f pollutio n includ e increase d morbidit y an dmortality ; propert y damag e fromsoiling , staining , an d corrosion ; an dproductiv e los s du e t o decrease dworke r efficiency , cro p an dlivestoc k

damage , an dincrease dwear an dtear o n capita l stocks

. Al l o f thes e damage s are measurable

. I n addition , ther e are damage s cause d b y pollutio n that

are muc hharder , i f

not impossible , t o quantify

. Thes e damage s includ e habita t

loss , diminishe dbiodiversity , reduction s i n aestheti c quality , optio n values , an dexistenc e values

. Th e divergenc e betwee n th e privat e cos t o f productio n an dth e social cos t o f productio n occu r

becaus e th e sourc e doe s not bear th e full cos t

o f it s activitie s (marke t

cost s plu s damages)

. Th e outcom e o f th e cos t divergenc e i s marke t

failure , wher e a s describe di n thi s case , th e leve l o f outpu t i s suc hthat

margina l socia l benefit s are not equa l t o margina l social cost
. Th e resul t

i s economi c inefficiency , o r amis-allocatio n o f

society' s resources ; th e pollutin g activit y (e.g. , th e releas e o f ozon e precursors ) occur s a t to o hig haleve l i n compariso n t o th e optimall y efficient situation , thu s reducin g th e potentia l tota l benefit s t o society

. Regulatory strategie s attemp t

t o correc t

for th e divergenc e betwee n socia l an dprivat e costs
. Usin g regulatory strategie s t o internaliz e th e negativ e externalit y may not , however , resul t

i n zer o ai r

pollution

. Economi c efficienc y call s for abatemen t

up t o th e poin t

wher e additiona l abatemen t woul dcos t

mor e tha n th e additiona l benefit s woul db e wortht o society

. In additio n t o governmen t regulation , othe r

potentia l mechanism s may b e use dt o correc t

for th e negativ e externalit y brough t abou t b y ai r

REGULATOR Y IMPAC T ANALYSI S FO RTH E SPECIFICATIO N O F CATEGORIE S O F ACTIVITIE S A S ROUTIN E MAINTENANCE , REPAIR , AN D REPLACEMEN T FO RTH E NE W SOURC E REVIE W PROGRA M Pag e 9P.1 5

pollution

. Negotiation s o r litigatio n unde r

tort an dcommo n law , in theory , coul dresul t

i n compensatio n t o person s for th e damage s that

the y incur

. However , tw o majo r obstacle s bloc k

th e correctio n b y th e privat e marke t for pollution-base dinefficiencie s an dinequities

. Th e first obstacl e i s hig htransactio n cost s whe n million s o f person s ar e affecte db y million s o f pollutio n sources . Transactio n cost s o f compensatin g thos e adversel y affecte daris e an daccumulat e becaus e th e curren t an dfuture injur

y t o eac h individua l mus t

b e appraised , th e injur

y mus t b e apportione dt o eac h precurso r source , an ddamag e suit s o r negotiation s mus t

b e conducted

. In a n unregulate dmarket , eac hsourc e o f precurso r emission s an deac h affecte dperso n woul dhav e t o litigat e o r negotiate

. Th e transactio n cost s woul db e s o hig ha s t o probabl y excee dth e benefit s o f reduce dai r emissions

. Thes e obstacle s strongl y sugges t that anothe r mechanis mi s desirabl e for

solvin g ai r

pollutio n problems

. Th e secon dobstacl e discouragin g resolutio n b y th e privat e secto r i s du e t o th e publi c goo dnatur e o f ai r resource . Tha t

is , afte r emissio n reduction s hav e bee n achieved , th e benefit s o f cleane r ai r can b e enjoye d b y additiona l person s at

n o additional cost
. Thi s result s i n th e classi c "fre e rider" problem

. Everyon e woul dhav e a n incentiv e t o b e th e las t

t o contribut e resource s for

litigatio n o r

negotiation , thinkin g that h e o r sh e woul dfreely benefi t

fromth e effort s o f

others

. Whil e regulator y interventio n ca n mitigat e th e impact s o f th e type s o f

marke t failure s discusse dabove , the y generall y d o not occu r withou t imposin g thei r

ow n costs
. Typically , thes e cost s includ e administration , enforcement , an dth e redistributio n o f

resource s a

t al l levels

. However , secondary impact s o n social an deconomi c sub-group s o f th e economy can als o b e affecte di n a disproportionat e manner . Th e purpos e o f thi s report

i s t o analyze , identify , an dmitigat e thes e regulator y costs
.
2. 2 Legislativ e Requirement s Thi s sectio n describe s variou s legislativ e an dexecutiv e requirement s that

govern th e analytica l requirement s for Federa l rulemakings , an ddescribe s ho w eac hanalytica l requiremen t i s addresse di n thi s RIA

.
2.2. 1 Executiv e Orde r 1286 6 Executiv e Orde r 12866 , "Regulator y Plannin g an dReview " (FR , 1993) , supercede s Executiv e Orde r 1229 1 "Federa l Regulation " o f 1981

. I t require s EP A t o provid e th e Offic e o f Informatio n an dRegulatory Affair s o f th e Offic e o f

Managemen t

an dBudge t

(OLRA , OMB ) witha

n assessmen t

o f th e cost s an dbenefit s o f significan t

regulator y actions

. A "significan t

regulator y action " i s define da s "an y regulator y actio n that i s likel y t o resul t

i n arul e tha t

may : Hav e a n annua l effec t

o n th e economy o f

$10 0 millio n o r

mor e o r adversel y affec t

i n amateria l wa y th e economy, asecto r o f th e

REGULATOR Y IMPAC T ANALYSI S FO RTH E SPECIFICATIO N O F CATEGORIE S O F ACTIVITIE S A S ROUTIN E MAINTENANCE , REPAIR , AN D REPLACEMEN T FO RTH E NE W SOURC E REVIE W PROGRA M Pag e 1 0P.1 6

economy , productivity , competition , jobs , th e environment , publi c healtho r safety , o r State , local , o r

triba l government s o r

communities ;
• Creat e aseriou s inconsistenc y o r otherwis e interfer e witha n actio n take n o r planne db y anothe r

agency ;
• Materiall y alte r

th e budgetar y impac t

o f entitlements , grants , use r fees , o r loan program s o r

th e rights an dobligation s o f recipient s thereof ; o r
• Rais e nove l lega l o r

polic y issue s arisin g ou t

o f lega l mandates , th e President' s priorities , o r

th e principle s se t

fort hi n th e Executiv e Order " (FR , 1993)

. Fo r an y suc hregulator y action , th e Agenc y mus t provid e astatemen t

o f th e nee dfor th e propose daction , mus t examin e alternativ e approaches , an d estimat e socia l benefit s an dcosts
. EP A ha s determine dtha t

th e propose dchang e t o th e RMR Rexclusio n doe s not constitut e asignifican t

regulatory actio n becaus e onl y mino r ne w regulatory requirement s wil l b e imposed

. However , th e Agenc y recognize s th e importanc e o f th e majo r NS Rprogra man dit s effor t t o streamlin e an dsimplif

y it s processes . Consequently , thi s RI A ha s bee n prepare dt o provid e update deconomi c cos t an dbenefit s informatio n require db y E.O

. 1286 6 for asignifican t

regulator y action

.
2.2. 2 Executiv e Orde r 1289 8 Executiv e Orde r 12898 , "Federa l Action s t o Addres s Environmenta l Justic e i n Minorit y Population s an dLow-Incom e Populations, " require s federal agencie s t o conside r th e impac t

o f programs , policies , an d activitie s o n minorit y population s an dlow-incom e populations

. Disproportionat e advers e impact s o n thes e population s shoul db e avoided

. Accordin g t o EP A guidance , agencie s are t o asses s whethe r minorit y o r low-incom e population s fac e risk o r arat e o f exposur e t o hazard s that

i s significan t

(a s define db y th e Nationa l Environmenta l Polic y Act ) an dtha t "appreciabl y exceed s o r

i s likel y t o appreciabl y excee dth e ris k o r rat e t o th e general populatio n o r othe r appropriat e compariso n group. " (EPA , 1996b ) Thi s guidanc e outline s EPA' s Environmenta l Justic e Strateg y an d discusse s environmenta l justic e issues , concerns , an dgoal s identifie db y EP A an denvironmenta l justic e advocate s i n relatio n t o regulatory actions

. In general , th e potentia l for disproportionat e effect s o n minorit y an dlow

incom e population s i n th e majo r NS Rprogra mcom e fromsitin g issues

. However , b y definition , th e RMR Rcomponen t o f th e majo r

NS Rprogra m deal s exclusivel y wit hexistin g facilities

. Therefore , whil e th e Agenc y ha s conducte donl y agenera l analysi s o f th e potentia l change s i n exposur e t o harmfu l ai r

pollutant s becaus e o f

th e RMR Rprogram . Thes e finding s ar e presente di n thi s RIA

.

REGULATOR Y IMPAC T ANALYSI S FO RTH E SPECIFICATIO N O F CATEGORIE S O F ACTIVITIE S A S ROUTIN E MAINTENANCE , REPAIR , AN D REPLACEMEN T FO RTH E NE W SOURC E REVIE W PROGRA M Pag e 1 1P.1 7



### 2.2. 3 Executiv

e Orde r 13045 Executiv e Orde r 13045 , "Protectio n o f

Childre n fromEnvironmenta l HealthRisk s an dSafet

y Risks, " direct s Federa l agencie s developin g health an dsafety standard s t o includ e a n evaluatio n o f

th e healthan dsafety effect s o f th e regulation s o n children

. Regulatory action s covere dunde r th e Executiv e Orde r

includ e rulemaking s that are economicall y significan t unde r Executiv e Orde r

12866 , an dtha t

concern a

n environmenta l health risk o r safety risk

that th e Agenc y ha s reaso n t o believ e ma y disproportionatel y affec t

children

. EP A ha s develope dinterna l guideline s for implementin g th e E.O

. 13045

. (EPA , 1998b ) Thi s rul e i s not subjec t t o Executiv e Orde r

13045 , becaus e i t

i s not economicall y significan t unde r E.O

. 1286 6 an dth e Agenc y doe s not hav e reaso n t o believ e th e environmenta l healthrisks o r safet y risks addresse db y thi s actio n presen t adisproportionat e risk

t o children

. 

### 2.2. 4 Executiv

e Orde r 1313 2 Executiv e Orde r 13132 , entitle dFederalis m(6 4 F R43255 , Augus t 10 , 1999) , require s EP A t o develo p an accountabl e proces s t o ensur e meaningfu l an dtimel y inpu t b y Stat e an dlocal official s i n th e developmen t

o f regulator y policie s tha t

hav e federalis mimplications

. "Policie s tha t

hav e federalis mimplications " i s define di n th e Executiv e Orde r t o includ e regulation s tha t hav e "substantia l direc t

effect s o n th e States , o n th e relationshi p betwee n th e nationa l governmen t an dth e States , o r o n th e distributio n o f

powe r an dresponsibilitie s amon g th e variou s level s o f government. " Unde r

Executiv e Orde r

13132 , EP A ma y not

issu e aregulatio n that

ha s federalis mimplications , impose s substantial direc t complianc e costs , o r

tha t i s not require db y statute , unles s th e Federa l governmen t

provide s th e fund s necessar y t o pay th e direc t complianc e cost s incurre db y Stat e an dloca l governments , o r EP A consult s wit hStat e an dloca l official s earl y i n th e proces s o f developin g th e propose d regulation

. EP A als o ma y not issu e aregulatio n preempt s Stat e la w unles s th e Agenc y consult s withStat e an dloca l official s earl y i n th e proces s o f developin g th e propose dregulation

. I f EP A complie s b y consultin g State s an dlocal governments , Executiv e Orde r 1313 2 require s EP A t o provid e t o OMB , i n aseparatel y identifie d sectio n o f th e preambl e t o th e rule , afederalis msummary impac t statemen t (FSIS)

. Th e FSI S mus t

includ e adescriptio n o f

th e exten t

o f EPA' s prio r

consultatio n wit hStat e an dlocal officials , asummar y o f th e natur e o f thei r concern s an dth e agency' s positio n supportin g th e nee dt o issu e th e regulation , an dastatemen t o f th e exten t

t o whic hth e concern s o f Stat e an dlocal official s hav e bee n met
. Also , whe n EP A transmit s adraf t final rul e withfederalis mimplication s t o OM B for revie w pursuan t

t o Executiv e Orde r

12866 , EP A mus t

includ e acertificatio n fromth e Agency' s Federalis mOfficial statin g that EP A ha s me t

th e requirement s o f Executiv e Orde r

1313 2 i n ameaningfu l an dtimel y manner .

REGULATOR Y IMPAC T ANALYSI S FO RTH E SPECIFICATIO N O F CATEGORIE S O F ACTIVITIE S A S ROUTIN E MAINTENANCE , REPAIR , AN D REPLACEMEN T FO RTH E NE W SOURC E REVIE W PROGRA M Pag e 1 2P.1 8

Th e propose dchang e t o th e RMR Rexclusio n unde r th e majo r

NS R progra mwil l no t

hav e substantia l direc t

effect s o n th e States , o n th e relationshi p betwee n th e nationa l governmen t an dth e States , o r

o n th e distributio n o f

powe r an dresponsibilitie s amon g th e variou s level s o f government , a s specifie di n Executiv e Orde r 13132

. A s discusse dabove , thi s rul e impose s onl y minima l complianc e burden s beyon dthos e alread y include di n th e majo r

NS Rprogram . Thus , th e requirement s o f sectio n 6 o f th e Executiv e Orde r

d o no t appl y t o thi s rule

.
2.2. 5 Executiv e Orde r 1308 4 Unde r Executiv e Orde r

13084 , "Consultatio n wit hTriba l Governments, " EP A ma y not

issu e aregulatio n no t

require db y statut e that

significantl y o r uniquel y affect s th e communitie s o f Indian triba l governments , o r that impose s substantial direc t complianc e cost s o n thos e communities , unles s th e Federa l governmen t

provide s th e fund s necessar y t o pa y th e direc t complianc e cost s incurre db y th e triba l governments , o r EP A consult s wit h thos e governments
. I f

EP A complie s b y consultin g thes e governments , Executiv e Orde r

1308 4 require s EP A t o provid e t o OM B i n aseparatel y identifie dsectio n o f

th e preambl e t o th e rule , adescriptio n o f th e exten t

o f EPA' s prio r

consultatio n withrepresentative s o f affecte dtriba l governments , asummary o f th e natur e o f

thei r concerns , an dastatemen t supportin g th e nee dt o issu e th e regulation

. I n addition , Executiv e Orde r 1308 4 require s EP A t o develo p a n effectiv e proces s permittin g electe dan d othe r representative s o f

Indian triba l government s "t o provid e meaningfu l an dtimel y inpu t

i n th e developmen t

o f regulator y policie s o n matter s that significantl y o r

uniquel y affec t

thei r communities. " Thi s propose dchang e i n th e majo r NS Rprogra mdoe s not

significantl y o r uniquel y affec t

th e communitie s o f

India n triba l governments
. A s discusse dabove , thi s rul e impose s onl y minima l ne w complianc e burden s beyon dthos e alread y require db y th e majo r NS Rprogram . Moreover , th e final Sectio n 12 6 rul e wil l no t impos e substantia l direc t complianc e cost s o n suc hcommunities

. Consequently , th e requirement s o f sectio n 3(b ) o f Executiv e Orde r

1308 4 d o no t

apply

.
2.2. 6 Regulator y Flexibilit y Ac t an d th e Smal l Busines s Regulator y Fairnes s Ac t o f 199 6 Th e Regulatory Flexibilit y Ac t (RFA ) o f 198 0 (P L96-354 ) require s agencie s t o conduc t

ascreenin g analysi s t o determin e whethe r aregulatio n wil l hav e asignifican t

impac t o n asubstantia l numbe r

o f smal l entities , includin g smal l businesses , government s an dorganizations

. I f aregulatio n wil l hav e suc ha

n impact , agencie s mus t

prepar e aRegulator y Flexibilit y Analysis , an dcompl y withanumbe r o f procedura l requirement s t o solici t an dconside r

flexible regulatory option s tha t minimiz e advers e economi c impact s o n smal l entities

. Th e RFA' s analytica l an dprocedura l requirement s wer e strengthene db y th e Smal l Busines s Regulator y

REGULATOR Y IMPAC T ANALYSI S FO RTH E SPECIFICATIO N O F CATEGORIE S O F ACTIVITIE S A S ROUTIN E MAINTENANCE , REPAIR , AN D REPLACEMEN T FO RTH E NE W SOURC E REVIE W PROGRA M Pag e 1 3P.1 9

Enforcemen t

Fairnes s Ac t

(SBREFA ) o f

1996

. Th e RF A an dSBREF A requir e us e o f

definition s o f

"smal l entities" , includin g smal l businesses , government s an dnon-profits , publishe db y th e Smal l Busines s Administratio n (SBA). 1 2 I t i s EPA' s positio n that

becaus e th e propose d chang e for

th e RMR Rexclusio n i s asubse t o f th e majo r NS Rprogram , an dsinc e th e majo r

NS Rprogra mha s alread y asserte di t ha s n o significan t impac t o n asubstantial numbe r

o f smal l entities , th e RF A a s amende db y SBREF A doe s appl y t o thi s proposal

.
2.2. 7 Unfunde d Mandate s Refor m Ac t Th e Unfunde dMandate s ReformAc t (UMRA ) o f

199 5 (P L104-4 ) was enacte dt o focu s attentio n o n federal mandate s that requir e othe r government s an dprivat e partie s t o expen dresource s withou t federal funding , t o ensur e that

Congres s consider s thos e cost s befor e imposin g mandates , an dt o encourag e federal financial assistanc e for intergovernmenta l mandates

. Th e Ac t establishe s anumbe r

o f procedura l requirements

. Th e Congressiona l Budge t Offic e i s require dt o infor m Congressiona l committee s abou t th e presenc e o f

federal mandate s i n legislation , an dmus t

estimat e th e tota l direc t

cost s o f mandate s i n abil l i n an y o f th e first five year s o f

amandate , i f

th e tota l exceed s $5 0 millio n fo r intergovernmenta l mandate s an d$10 0 millio n for private-secto r

mandates

. Sectio n 20 2 o f

UMR A direct s agencie s t o provid e aqualitativ e an d quantitativ e assessmen t

o f th e anticipate dcost s an dbenefit s o f aFedera l mandat e that

result s i n annua l expenditure s o f $10 0 millio n o r

more . Th e assessmen t

shoul dinclud e cost s an dbenefit s t o State , local , an dtriba l government s an dth e privat e sector , an didentif y an y disproportionat e budgetar y impacts

. Sectio n 20 5 o f th e Ac t require s agencie s t o identif y an dconside r

alternatives , includin g th e leas t costly , mos t

cost-effective , o r leas t burdensom e alternativ e tha t achieve s th e objective s o f th e rule

. Sinc e th e total expecte dne w cos t o f thi s propose dchang e t o th e RMR R exclusio n i s les s tha n $ 2 millio n pe r year , EP A ha s determine dtha t UMR A doe s no t

affirmativel y appl y t o thi s regulatory action

. However , thi s RI A include s acos t

analysi s o f

administrativ e requirement s for Stat e an dlocal government s associate dwit hrevisin g SIP s an dcollectin g an d reportin g dat at o EPA

. I t als o include s th e complianc e an dadministrativ e cost s t o emission s source s owne db y governmen t entities

.

1 2 Wher e appropriate , agencie s ca n propos e an djustif y alternativ e definition s o f "smal l entity. " Thi s RI A relie s o n th e SB A definitions

.

REGULATOR Y IMPAC T ANALYSI S FO RTH E SPECIFICATIO N O F CATEGORIE S O F ACTIVITIE S A S ROUTIN E MAINTENANCE , REPAIR , AN D REPLACEMEN T FO RTH E NE W SOURC E REVIE W PROGRA M Pag e 1 4P.2 0



### 2.2. 8 Paperwor k Reductio n Ac

t Th e Paperwork

Reductio n Ac t

o f 199 5 (PRA ) require s Federa l agencie s t o b e responsibl e an dpublicl y accountabl e for reducin g th e burde n o f

Federa l paperwork

o n th e public

. EP A ha s submitte da n Informatio n Collectio n Reques t (ICR ) t o th e Offic e o f

Managemen t

an dBudge t

(OMB ) for

thes e propose dchang e t o th e RMR Rexclusio n i n complianc e withth e PRA

. Th e IC Rexplain s th e nee dfo r additiona l informatio n collectio n requirement s an dprovide s responden t burde n estimate s for

additional paperwork

requirement s t o Stat e an dloca l governments
. Fo r th e propose drulemaking , EP A estimate dth e burde n an dcos t o f al l ne w recordkeeping , monitoring , an dreportin g activitie s an dreporte dthe m i n th e Ma y 200 2 ICR

. Thes e estimate s o f administrativ e burde n cost s ar e containe di n th e docke t

for thi s action

. Burde n mean s th e tota l time , effort , an dfinancial resource s expende db y person s t o generate , maintain , retain , an ddisclos e o r provid e informatio n t o o r for afederal agency . Thi s include s th e tim e neede dt o revie w instructions ; develop , acquire , install , an dutiliz e technolog y an dsystem s fo r th e purpose s o f

collecting , validating , processing , maintainin g an d disclosin g information ; adjus t th e existin g ways t o compl y withan y previousl y applicabl e instruction s an drequirements ; trai n personne l t o b e abl e t o respon dt o acollectio n o f information ; searc hdat asources ; complet e an drevie w th e collectio n o f information ; an dtransmi t o r otherwis e disclos e th e information

. A n agenc y ma y no t

conduc t o r sponsor , an dno r

i s aperso n required , t o respon dt o acollectio n o f informatio n unles s i t

display s acurrentl y vali d OM B contro l number

. Th e OM B contro l number s for EPA' s regulation s are liste di n 4 0 CF Rpart

9 an d4 8 CF RChapte r

15

.

REGULATOR Y IMPAC T ANALYSI S FO RTH E SPECIFICATIO N O F CATEGORIE S O F ACTIVITIE S A S ROUTIN E MAINTENANCE , REPAIR , AN D REPLACEMEN T FO RTH E NE W SOURC E REVIE W PROGRA M Pag e 1 5P.2 1

Consideratio n o f Alternativ e Approache s

Becaus e th e propose dchang e t o th e RMR Rexclusio n unde r th e majo r NS Rprogra mha s bee n subjec t t o a n extensiv e stakeholde r

outreac h program , it

ha s bee n subjecte dt o discussion s o f numerou s alternativ e approaches

. Thes e discussion s include dparticipant s fromth e regulate d community , Stat e an dloca l ai r pollutio n contro l agencies , environmenta l organizations , an dothe r

Federa l agencies

. Consequently , th e propose d chang e t o th e RMR Rexclusio n constitute s awel l reasone dcompromis e t o th e specifi c interest s o f

eac ho f thos e groups . 3. 1 N o Regulatio n Th e consideratio n o f alternativ e approache s mus t includ e adeterminatio n o f th e feasibility o f

th e Federa l governmen t

takin g n o action

. Titl e I o f th e Ac t mandate s th e NS Rprocess . Consequently , "N o Regulation " i s not a viabl e optio n for

thi s analysis

. 3. 2 Alternativ e Effectiv e Date s Th e purpos e o f th e propose drulemakin g i s t o increas e th e clarit y regardin g th e RMR Rexclusion

. Consequently , th e Agenc y gav e thi s packag e th e earlies t

possibl e effectiv e date

. Consideratio n o f alternativ e effectiv e dates would , i n effect , resul t i n additiona l cost s an dburde n t o sources . 3. 3 Economi c Incentiv e Alternative s Whil e economi c incentive s can b e considere dapart o f th e majo r

NS R process , th e natur e o f

th e activitie s include dwithi n th e definitio n o f RMR Rdoe s not

contai n elements that

are apart o f th e economi c incentiv e process .

REGULATOR Y IMPAC T ANALYSI S FO RTH E SPECIFICATIO N O F CATEGORIE S O F ACTIVITIE S A S ROUTIN E MAINTENANCE , REPAIR , AN D REPLACEMEN T FO RTH E NE W SOURC E REVIE W PROGRA M Pag e 1 6P.2 2



### Descriptio n o f Affecte d Entitie s

Ther e are tw o type s o f

source s potentiall y affecte db y th e propose d approache s t o routin e maintenance , repair , an dreplacemen t withi n th e framework

o f th e Agency' s majo r

NS Rpreconstructio n permi t program : electricity utilit y steamgeneratin g unit s an dnon-utilit y sources . Th e followin g discussio n include s brie f description s o f

eac htyp e o f

affecte d entity

. Th e Agenc y mad e thi s differentiatio n base dupo n existin g ai r quality report s an dregulator y analyses : th e Ozon e Transpor t Assessmen t Group' s (OTAG's ) 199 0 dat abase ; th e Operating Permit s dat abas e o f respondents ; an dth e dat abas e develope db y th e RACT/BACT/LAE R Clearinghous e (RBLC)

. 

### 4. 1 Electricit yGen
eratin g Unit s In 1990 , approximatel y 2. 8 trillio n kilowatt hour s (kWh ) o f

electricity wer e generate di n th e Unite dStates

. B y 2005 , EP A project s thi s tota l t o increas e t o abou t

3. 6 trillio n kWh. 1 3 Mor e tha n 9 5 percen t o f th e nation' s generatin g capacity i s owne db y electri c utilitie s an dasignifican t portio n o f th e nation' s electricit y generatin g industry i s i n th e regio n affecte db y th e final Sectio n 12 6 rule. 1 4 EP A estimate s 84 2 electrica l generatin g unit s o f les s tha n 2 5 M Wwil l b e operatin g i n thi s regio n i n th e year 2000

. In additio n t o electri c utilit y powe r unit s that produc e onl y electricity , thi s numbe r include s unit s owne db y independen t powe r producer s (LPPs ) an d unit s that co-generat e electricit y an dsteam(co-generators) , whethe r owne d b y utilitie s o r

IPPs
. 

### 4. 2 Non-Utilit y Potentiall y Affecte d Source s Ther e are abou t 14,50 0 source s subjec t

t o Titl e I operatin g permit s requirement s i n th e EPA' s Operatin g Permit s Database , encompassin g al l industry classification s i n 3 4 state s an dth e Distric t o f Columbia

. EP A believe s thi s databas e represent s th e majority o f th e univers e o f

potentiall y affecte dsource s for

th e majo r

NS Rprogram . Tabl e 1 belo w i s i n th e

1 3 EPA' s generatio n requiremen t projection s ar e base do n an extensio n o f th e electri c deman dforecas t

o f th e North America n Electri c Reliabilit y Council , adjuste dfor

th e impac t

o f th e Climat e Chang e Actio n Plan

. 1 4 Th e fina

l Sectio n 12 6 regio n consist s o f whol e o r part s o f Delaware , Distric t

o f Columbia , Indiana , Kentucky , Maryland , Michigan , Nort hCarolina , Ne w Jersey , Ne w York , Ohio , Pennsylvania , Virginia , an dWes t Virginia

. Th e petition s file d wit h EP A onl y nam e part s o f Indiana , Michigan , Kentucky , an dNe w York whil e namin g th e whol e o f

th e othe r jurisdictions

.

REGULATOR Y IMPAC T ANALYSI S FO RTH E SPECIFICATIO N O F CATEGORIE S O F ACTIVITIE S A S ROUTIN E MAINTENANCE , REPAIR , AN D REPLACEMEN T FO RTH E NEW SOURC E REVIE W PROGRA M Pag e 1 7P.2 3

curren t NS RICR

. Tabl e 1 display s th e industr y classification s mos t commonl y affecte db y majo r NS Rpermittin g requirements. I 5 Tabl e 1 Mos tCommonl y Affecte d Entitie s
Industr y Grou p Pulp an dPape r

Mill s Pape r Mill s Chemica l Processe s Pharmaceutical s Petroleu mRefinin g Automobil e Manufacturin g
Electri c Service s Natura l Ga s Transport SI C 26 1 26 2 28 1 28 3 29 1 37 1
49 1 49 2 NAIC S

32211,322121,322122,3221 3 322121,32212 2 325181,32512,325131,325182,211112,325998,331311,32518 8 325411,325412 , 325413 , 32541 4 3241 1 336111,336112,336712 , 336211,336992 , 336322,336312,33633 , 33634,33635,336399 , 336212 , 33621 3 221111,221112,221113,221119,221121,22112 2 48621,2212 1

1 5 Informatio n Collectio n Reques t fo r 4 0 CF RPar t

5 1 an d5 2 Preventio n o f Significan t

Deterioratio n an dNonattainmen t Ne w Sourc e Review , Offic e o f Managemen t

an dBudge t

(OMB ) Contro l Numbe r 2060-0003 ; EP A For m Numbe r 1230.09

.

REGULATOR Y IMPAC T ANALYSI S FO RTH E SPECIFICATIO N O F CATEGORIE S O F ACTIVITIE S A S ROUTIN E MAINTENANCE , REPAIR , AN D REPLACEMEN T FO RTH E NE W SOURC E REVIE W PROGRA M Pag e 1 8P.2 4



### 5 Assessin g Benefit s an d Cost s Th e Agenc y believe s al l source s potentiall y subjec t t o majo r NS R permittin g wil l us e th e RMR Rapproac hpromulgate db y EPA

. T o analyz e th e benefit s an dcost s associate dwit hth e change , EP A looke da t bothth e beneficia l effect s o n industry maintenanc e practice s b y havin g identifie d categorie s o f

activitie s a s RMR Ran do n th e potentia l reductio n i n wor k for industry an dreviewing authoritie s throug hhavin g t o performles s applicabilit y determinations

. W e hav e attempte dt o analyz e quantitativel y th e possibl e emission s an d cos t consequence s o f

th e rang e o f

differen t approache s t o th e RMR R exclusio n describe dabove

. Th e analysi s wa s conducte dusin g th e Integrate dPlannin g Mode l (IPM)

. Thi s analysi s wa s don e for electri c utilitie s becaus e w e hav e apowerfu l model t o performsuc ha n analysi s that w e d o no t

hav e for othe r industries

. W e thin k

th e result s for

th e electri c utilitie s accuratel y reflec t th e trend s w e woul dse e i n othe r industries

. W e hav e als o attempte dt o estimat e th e significan t reductio n i n th e cost s t o industry an dreviewing agencies , du e t o decrease s i n makin g applicability determinations , associate dwithidentifyin g categorie s o f activitie s that

are RMRR
. 5. 1 Analysi s I n orde r t o evaluat e th e impac t

o f th e routin e maintenanc e provisions , EP A considere dascenari o unde r whic hmajo r

NS Rregulation s remaine din plac e an darang e o f

scenario s that

coul doccu r

i f majo r NS Rdi dno t

exist

. Th e first scenari o i s intende dt o represen t th e existin g program , whic hth e EP A ha s foun dimpede s o r result s i n cancellatio n o f project s tha t

maintai n an dimprov e reliability , availability , an defficienc y a t existin g powe r plants. I 6 Th e secon drang e o f scenario s i s base do n companie s receivin g flexibility unde r

th e majo r NS Rprogra mthat

remove s man y o f

thes e impediment s . A s part

o f thi s analysis , EP A reviewe dthre e ke y variables : chang e i n S0 2 emissions , chang e i n NO x emission s an dchang e in cost
. Whe n w e issu e afinal rul e t o establis hcategorie s o f activitie s that

qualif y a s RMR Runde r

majo r NSR , w e expec t

that final rule s governin g th e us e o f plantwid e applicability limit s (PALs) , an dClea n Unit s wil l alread y b e i n place

. Som e source s withi n th e electri c utilit y generatio n industry ma y tak e advantag e o f

thes e changes

. However , an y suc hdecisio n wil l b e

1 6 Thi s finding i s describe di n detai l i n EPA' s Jun e 13 , 200 2 Ne w Sourc e Revie w Report t o th e President

.

REGULATOR Y IMPAC T ANALYSI S FO RTH E SPECIFICATIO N O F CATEGORIE S O F ACTIVITIE S A S ROUTIN E MAINTENANCE , REPAIR , AN D REPLACEMEN T FO RTH E NE W SOURC E REVIE W PROGRA M Pag e 1 9P.2 5

base do n cas e specifi c informatio n relate dt o thei r pas t operatin g levels , curren t level s o f contro l an dcompany' s specifi c strategie s for complyin g withmajor

. Therefore , w e ca n not mak e estimate s o n ho w man y source s ma y tak e advantag e o f

PAL s an dClean Units

. T o th e exten t the y ar e use d withi n th e industry , the y wil l dampe n th e effect s show n i n thi s analysi s (i.e. , estimate ddecrease s an dincrease s wil l no t b e a s large)

. On e part o f ou r analysi s wa s performe dusin g IPM
. IP M i s alinear programmin g model tha t

EP A use s t o analyz e th e effec t o f variou s environmenta l policie s o n th e powe r sector
. It

provide s forecast s o f

least

cos t capacity expansion , electricit y dispatc han demissio n contro l strategie s for

meetin g energ y deman dan denvironmental , transmission , dispatc han dreliabilit y constraints

. EP A ha s use dit t o analyz e man y environmenta l policie s includin g th e Phas e II Aci dRai n Nitroge n Oxid e regulation s an dth e Nitroge n Oxid e SI P Call

. Analysi s can b e performe d varyin g multipl e constraint s suc ha s availabilit y o f variou s type s o f

powe r plant s (e.g

. coal-fired , nuclear , gas-fire dcombine dcycl e units) , hea t rate s o f variou s type s o f

powe r plants , environmenta l constraint s (e.g

. cap s o n emissions , emissio n rat e limitations)

. Mor e detai l regardin g IP M ca n b e foun di n th e documen t

title d"Documentatio n o f EP A Modelin g Applicatio n (V.2.1 ) Usin g th e Integrate dPlannin g Model , whic hcan b e foun dat : http://www.epa.gov/airmarkets/epa-ipm/index.html

. Th e firs t scenario , referre dt o a s th e majo r NS Rbas e case s approximate s utilit y behavio r

unde r th e curren t

program , wher e th e EP A ha s foun dthat companie s performlimite dmaintenanc e o n coal plant s becaus e o f concern s abou t

majo r NSR

. I n thi s scenario , i t was assume dtha t

th e performanc e o f

coa l unit s woul ddeteriorate , resultin g i n highe r hea t rate s an dlowe r capacities

. EP A di dnot

assum e that

reduce dmaintenanc e resulte di n achang e i n maximu mpotentia l uni t availability

. Thi s i s becaus e ove r

th e las t 2 0 years , availabilit y o f

coal-fire dplant s ha s increase deve n a s th e plant s hav e aged

. Thi s i s du e i n larg e part t o improve dmaintenanc e practices

. Fo r instanc e test s t o inspec t

boile r tube s hav e bee n continuall y improvin g (se e "Preventin g Boile r Tub e Failure s withEMAT's" , S.P

. Clark e t al , "EPR I Internationa l Conferenc e o n Boile r Tub e Failure s an dHRS GTub e Failure s an dInspects" , Novembe r 6-8 , 2001)

. Thes e improve dpreventiv e maintenanc e practice s allo w companie s t o replac e component s durin g regularl y schedule doutages befor e the y fai l rathe r

tha n causin g unschedule doutages after the y fail

. Th e secon drang e o f

scenarios , referre dt o a s increase dmaintenanc e case s # 1 - # 5 , look s a

t arang e o f

scenari o for

what migh t happe n i n th e utilit y secto r i f companie s wer e provide dwithincrease dflexibility unde r majo r NS Rt o performmaintenance

. Thi s woul dresul t in lowe r heat rates , highe r capacitie s and/o r

highe r uni t availabilitie s fo

r thes e units

. Finall y

REGULATOR Y IMPAC T ANALYSI S FO RTH E SPECIFICATIO N O F CATEGORIE S O F ACTIVITIE S A S ROUTIN E MAINTENANCE , REPAIR , AN D REPLACEMEN T FO RTH E NE W SOURC E REVIE W PROGRA M Pag e 2 0P.2 6

EP A looke da

t on e cas e (standar dbas e case ) i n whic hheat rate , capacity an duni t availabilit y di dno t

change

. I t i s importan t

t o not e severa l limitation s t o thi s analysis

. Firs t thi s analysi s onl y considere demissio n regulation s that are currentl y i n effec t (e.g

. th e NO x SI P Cal l an dth e Title IV Aci dRai n Provisions)

. Futur e environmenta l regulation s suc ha s emissio n reductio n requirement s necessar y t o mee t

th e fine particulat e matte r standard s o r

emissio n reduction s unde r

multi-pollutan t

regulation s coul dsignificantl y chang e thi s analysis

. Second , th e analysi s assume dth e operatin g an dmaintenanc e cost s o f coal-fire dunit s was th e sam e for unit s performin g limite d maintenanc e an dfor

unit s performin g increase dmaintenance

. Sinc e th e mos t significan t

cos t associate dwit hrunnin g a n existin g powe r

plan t i s th e cos t o f fuel , thi s impac t

i s probabl y fairl y small

.

REGULATOR Y IMPAC T ANALYSI S FO RTH E SPECIFICATIO N O F CATEGORIE S O F ACTIVITIE S A S ROUTIN E MAINTENANCE , REPAIR , AN D REPLACEMEN T FO RTH E NE W SOURC E REVIE W PROGRA M Pag e 2 1P.2 7

Tabl e 1 : Ke y modelin g assumption s in routin e maintenanc e analysi s

Majo r NS RBase-cas e Increase dMaintenanc e Cas e # 1 Increase dMaintenanc e Cas e # 2
Increase dMaintenanc e Cas e # 3
Increase dMaintenanc e Cas e #4
Increase dMaintenanc e # 5 Standar dBas e Cas e Winte r Availabilit y 81.6 % 85.0 % 81.6 %
85.0 %
85.0 %
81.6 % 81.6 % Summe r

Availabili t y 89.8 % 92.0 % 89.8 %
92.0 %
92.0 %
89.8 % 89.8 % Heat

Rat e Chang e +0.1% ) pe r

year -0.1 % pe r year -0.1 % pe r year -1.6 % i n year 200 5 an dbeyon d -3.2 % i n yea

r 200 5 an dbeyon d -1.6 % i n year 200 5 an dbeyon d N o chang e Capacity Chang e

-0.1 % pe r yea r +0. 1 % pe r

yea r +0.1 % pe r

yea r +1.6 % i n year 200 5 an dbeyon d +3.2 % i n yea

r 200 5 an dbeyon d +1.6 % i n year 200 5 an dbeyon d N o chang e Results : Change s i n S0 2 Emissions , NO x emission s an dcos t ar e summarize din table s 2 , 3 an d4 below

. Tabl e 2 : Change s i n S0 2 emission s in scenario s considere d i n routin e maintenanc e

analysis .

Majo r NS RBase-cas e Increase dMaintenanc e Cas e # 1 Increase dMaintenanc e Cas e # 2 Increase dMaintenanc e Cas e # 3 Increase dMaintenanc e Cas e #4 Increase dMaintenanc e # 5 Standar dBas e Cas e 200 5 S0 2 Emission s (tons ) 10,168,23 0 10,135,12 0 10,186,66 0 10,075,06 0 10,009,25 0 10,079,51 0 10,168,52 0 201 0 S0 2

Emission s (tons ) 9,713,68 4 9,739,02 9 9,701,11 2 9,773,24 2 9,813,66 4 9,764,97 1 9,712,49 9 201 5 S0 2

Emission s (tons ) 9,101,62 2 9,104,12 1 9,099,36 3 9,104,83 6 9,105,42 9 9,099,92 3 9,100,26 4 202 0 S0 2

Emission s (tons ) 9,103,27 5 9,102,68 8 9,099,27 1 9,103,77 9 9,104,39 6 9,100,36 1 9,100,68 0

REGULATOR Y IMPAC T ANALYSI S FO RTH E SPECIFICATIO N O F CATEGORIE S O F ACTIVITIE S A S ROUTIN E MAINTENANCE , REPAIR , AN D REPLACEMEN T FO RTH E NE W SOURC E REVIE W PROGRA M Pag e 2 2P.2 8

A s show n i n tabl e 2 , ther e i s very littl e chang e i n S0 2 emission s ove r th e entir e tim e perio dstudie dunde r th e tw o scenarios

. Thi s i s becaus e S0 2 emission s are alread y cappe dnationall y unde r th e Titl e IV Aci dRai n Provisions

. Therefor e i f

auni t decrease s it s emission s t o mak e roo m unde r it s PAL , i t

coul dinstea dsel l exces s allowance s t o anothe r unit

. Howeve r becaus e emission s can als o b e shifte dtemporall y b y bankin g emissio n allowance s t o b e use di n afuture year ther e can b e significan t change s i n emission s fo

r aspecifi c year . Whil e tempora l distributio n o f emission s di dnot

chang e muc hove r

tim e i n th e majo r

NS Rcase s considered , ther e was mor e tempora l distributio n o f emission s i n th e increase dmaintenanc e scenario s considered

. Increasin g capacity (unde r th e increase dmaintenanc e cases ) lead s t o increase s i n NO x emissions

. Whe n comparin g increase dmaintenanc e case s # 1 an d# 2 (whic hha dth e sam e increase s i n efficiency , but differen t change s i n maximu mavailability , NO x emission s increas e b y a n average o f almos t 92,00 0 ton s pe r

yea r ove r th e tim e perio danalyzed

. Tabl e 3 : Change s i n NO x emissions in scenario s considere d underroutin e maintenanc e

scenarios .

Majo r NS RBase-cas e Increase dMaintenanc e Cas e # 1 Increase dMaintenanc e Cas e # 2 Increase dMaintenanc e Cas e # 3 Increase dMaintenanc e Cas e # 4 Increase dMaintenanc e # 5 Standar dBas e Cas e 200 5 NO x Emission s (tons ) 4,279,36 2 4,340,16 6 4,276,55 0 4,307,79 6 4,276,17 2 4,259,17 0 4,277,40 7 201 0 NO x

Emission s (tons ) 4,285,40 0 4,362,94 8 4,283,08 1 4,350,73 7 4,334,67 1 4,271,29 4 4,285,42 3 201 5 NO x

Emission s (tons ) 4,338,46 1 4,442,88 1 4,327,97 9 4,423,14 1 4,412,34 0 4,324,99 2 4,332,20 9 202 0 NO x

Emission s (tons ) 4,375,48 6 4,471,49 9 4,362,85 9 4,472,70 6 4,460,04 1 4,363,93 0 4,360,04 4 It appear s tha t

changin g heat

rate s an dcapacitie s ha s th e opposit e affec t o n emissions

. NO x emission s actuall y decreas e whe n flexibility unde r majo r NS Rprogra mallow s powe r generatio n companie s t o improv e efficienc y b y performin g increase dmaintenanc e i f maximu mavailabilit y o f thes e unit s doe s no t

chang e a t th e sam e time

. Fo r

instanc e i f

on e compare s tw o scenario s withth e sam e maximu mcapacities : Majo r NS RBase-cas e , increase dmaintenanc e cas e # 2 an dth e standar dbas e case , averag e emission s ar e abou t

700 0 ton s pe r

year highe r ove r th e tim e perio d

REGULATOR Y IMPAC T ANALYSI S FO RTH E SPECIFICATIO N O F CATEGORIE S O F ACTIVITIE S A S ROUTIN E MAINTENANCE , REPAIR , AN D REPLACEMEN T FO RTH E NE W SOURC E REVIE W PROGRA M Pag e 2 3P.2 9

analyze di n th e Majo r

NS RBase-cas e wher e heat rate s are highe r

an d capacitie s are lower

. Lookin g a t increase dmaintenanc e case s # 3 an d#4 show s th e sam e trend

. In thes e tw o case s maximu mavailabilit y remain s constant , but

heat rate s ar e lowe r

an dcapacitie s ar e highe r i n increase d maintenanc e cas e #4

. Thes e lowe r heat rate s an dhighe r

capacitie s leadt o emission s tha t

are o n average nearl y 1800 0 ton s pe r yea r les s in increase d maintenanc e cas e # 4 tha n i n increase dmaintenanc e cas e #5

. Anothe r poin t t o not e i s tha t

EP A als o looke da

t th e spee di n whic hth e improvement s t o th e unit s wer e made

. Fo r exampl e b y 2020 , th e heat rat e decreas e an dth e capacit y increas e wa s th e sam e i n bothincrease d maintenanc e cas e # 2 an dincrease dmaintenanc e cas e # 5 wer e th e same . Howeve r i n cas e #5 , thos e change s happene di n on e ste p i n 2005 , i n cas e #2 , th e change s happene dgradually

. Whe n th e change s occurre dal l a t emission s wer e lowe r

i n th e earl y years . I n th e late r years , whe n th e tota l magnitud e o f

th e change s wa s mor e similar i n bothcases , th e NO x emission s wer e als o mor e similar

. Thi s analysi s suggest s tha t th e affec t that changin g th e requirement s o f majo r NS Rwithregard s t o routin e maintenanc e wil l hav e o n emission s i s dependen t

upo n th e affec t

that i t wil l hav e o n maximu muni t availabilities

. I f th e routin e maintenanc e change s increas e efficienc y an dplan t capacity withou t increasin g maximu muni t availability , thi s analysi s suggest s that th e change s coul ddecreas e emissions

. Th e amoun t o f that emissio n decreas e woul ddepen dbotho n ho w muc hheat rat e decrease dan d capacit y increase dan dho w quickl y thes e change s occurred

. Th e greate r th e heat rat e decreas e an dcapacity increas e an dth e mor e quickl y th e change s occurred , th e greate r th e emissio n reductions

. I f o n th e othe r hand , th e ne w provision s increas e maximu muni t availabilitie s thi s analysi s suggest s tha t

th e change s coul dincreas e emissions

. Change s i n cos t

ar e summarize di n tabl e 4 below

. Not e that thi s analysi s doe s not conside r change s i n maintenanc e costs , i t onl y assume s change s i n fuel cost s an dchange s i n capita l cost s associate dwit hne w generatin g unit s an dne w emissio n contro l equipment

. Therefor e it probabl y understate s th e cos t

o f th e increase dmaintenanc e scenario s an d understate s th e cos t

o f th e Majo r

NS RBase-case
.

REGULATOR Y IMPAC T ANALYSI S FO RTH E SPECIFICATIO N O F CATEGORIE S O F ACTIVITIE S A S ROUTIN E MAINTENANCE , REPAIR , AN D REPLACEMEN T FO RTH E NE W SOURC E REVIE W PROGRA M Pag e 2 4P.3 0

Tabl e 4 : Tota l cos to f

scenario s considere d (i n 199 9 dollars )

Majo r NS RBase-cas e Increase dMaintenanc e Cas e # 1 Increase dMaintenanc e Cas e # 2 Increase dMaintenanc e Cas e # 3 Increase dMaintenanc e Cas e #4 Increase dMaintenanc e # 5 Standar dBas e Cas e 200 5 Tota l Cos t (millio n 199 9 dollars ) 76,18 7 75,43 2 76,08 8 74,42 2 73,74 0 75,16 4 76,14 9 201 0 Tota l

Cos t (millio n 199 9 dollars ) 80,93 4 79,81 9 80,29 0 79,30 9 78,25 0 79,78 2 80,57 2 201 5 Tota l

Cos t (millio n 199 9 dollars ) 88,92 1 87,30 6 87,86 1 86,71 5 85,89 8 87,60 0 88,40 4 202 0 Cos t

(millio n 199 9 dollars ) 95,81 9 92,81 7 93,78 1 92,78 8 91,93 2 93,78 4 94,58 8 Th e Departmen t

o f Energ y als o attempte dt o analyz e quantitativel y th e possibl e emission s consequence s o f th e rang e o f

differen t approache s t o th e RMR Rexclusio n describe dabove

. Usin g th e Nationa l Energ y Modelin g Syste m(NEMS) , DO E evaluate davariet y o f change s i n energ y efficienc y an davailability , a s wel l a s th e effec t o n emission s resultin g fromthes e changes

. Thi s analysi s conclude dthat efficienc y improvement s resultin g fromincrease dmaintenanc e are expecte dt o decreas e emissions , wherea s availabilit y improvement s are expecte dt o increas e emissions

. I n th e case s represente di n thi s analysis , th e impact s o f th e assume d reduction s i n hea t

rate s ten dt o dominat e th e correspondin g effect s o f th e assume davailabilit y increases

. A cop y o f tha t analysi s i s include di n Appendi x A o f

thi s report
. A mor e complet e descriptio n o f th e analysi s an dit s result s ca n b e foun di n EP A Ai r docke t A-2002-04

. 

### 5. 2 Benefit s "Benefits " refer s t o an y an dal l outcome s o f aregulatio n that

contribut e t o a n enhance dleve l o f

socia l welfare

. Th e tw o primar y type s o f benefit s tha t can b e attribute dt o th e propose dchang e t o th e RMR Rexclusio n are temporal health-relate dbenefit s an dbenefit s fromavoided costs. Th e Agenc y believe s mos t o f th e benefit s fromth e propose dchang e t o th e RMR Rexclusio n wil l b e derive dfromcos t savings , o f

whic hthi s report identifie s four

types : 1 ) increase defficienc y for industria l production , 2 ) improve dflexibility an dreactio n time , 3 ) reduction s i n th e numbe r o f applicability determination s performe db y industr y an dreviewin g authoritie s an dthei r

associate ddelay s an d4 ) reduction s i n th e nee dfor

REGULATOR Y IMPAC T ANALYSI S FO RTH E SPECIFICATIO N O F CATEGORIE S O F ACTIVITIE S A S ROUTIN E MAINTENANCE , REPAIR , AN D REPLACEMEN T FO RTH E NE W SOURC E REVIE W PROGRA M Pag e 2 5P.3 1

ne w sources . Th e delay s associate dwithapplicabilit y determination s can limi t industry' s abilit y t o reac t quickl y i n achangin g economi c environmen t

Fo r man y sourc e categories , thi s i s no t abi g proble mbecaus e the y undertak e majo r

NSR-relate dactivitie s o n a n infrequen t

basis

. However , for

anumbe r

o f industries , th e Agenc y ha s identifie da s man y a s thre e o r four change s tak e plac e eac hyear tha t coul dpromp t

a n Operating Permi t revisio n and , potentially , amajo r NS Rpermit , a s well. I 7 Whe n suc hchange s occur , permittin g lag s can significantl y impac t th e profitability o f

th e sourc e b y preventin g timel y change s i n processe s that improv e competitivenes s an dprotec t marke t share

. Fo r

EGU s an dothe r boile r applications , th e failure t o performtimel y repair s an dmaintenanc e can reduc e boile r

efficienc y an dthereb y reduc e electricity generatin g capacity

. Eve n aon e percen t chang e i n th e hea t

rat e o f aboile r {ceteris paribus) ca n impos e ahal f amillio n dollar

chang e i n ne t

revenue s fo

r a 50 0 MW e coal-fire dboiler. 1 8 Allowin g source s t o respon dt o maintenance-relate dproblem s i n arevenu e maximizin g fashio n wil l unambiguousl y increas e revenue s (an dprofits ) an dreduc e operatin g cost s for industry

. Th e ne t effec t o f thes e cos t

saving s coul db e substantial

. I n tangibl e cos t savings , th e abilit y t o addres s large r routin e maintenanc e an drepai r problem s quickl y ca n conceivabl y resul t i n ten s o f

million s o f

dollar s i n saving s throug hmor e efficient electricity generatio n alone

. Th e LP M analysi s showe dtha t

increase dlevel s o f

maintenanc e can lea dt o increase d availabilit y o f

unit s whic hwil l decreas e th e nee dfor ne w generatin g unit s savin g million s o f

dollars

. That , combine dwit hth e potential for improve d nationa l an dinternationa l competitivenes s an dmarke t shar e du e t o RMR R flexibility improvement s coul dpotentiall y resul t i n jo b savings , jo b creation , an dothe r

macro-economi c improvements

. Unfortunately , ther e i s n o wa y t o determin e arealisti c valu e for thes e improvements

. Th e LP M analysi s als o show s tha t

ther e may b e reduce dNO x emission s unde r som e o f th e increase dmaintenanc e scenario s du e t o improve defficienc y o f th e units

. Thi s report

invite s th e publi c an dothe r stakeholder s t o offe

r thei r inpu t int o thi s assessmen t

towardfuture refinemen t o f thi s analysis

.

1 7 U.S

. EPA , 1994 , "Economi c Analysis , Regulator y Flexibility Ac t Screenin g Analysis , an dPaperwork Reductio n Ac t

Informatio n Collectio n Reques t Analy

si s for Propose dRevision s t o Part 7 0 Operatin g Permit s Regulations, " b y Danie l Charle s Mussatti , p p 33-48

. 1 8 http://ildpower.com/fossil02.htm l

REGULATOR Y IMPAC T ANALYSI S FO RTH E SPECIFICATIO N O F CATEGORIE S O F ACTIVITIE S A S ROUTIN E MAINTENANCE , REPAIR , AN D REPLACEMEN T FO RTH E NE W SOURC E REVIE W PROGRA M Pag e 2 6P.3 2

5. 3 Cost s Th e IP M analysi s showe dsignifican t decrease dcost s associate dwithth e increase dmaintenanc e scenarios

. Thes e decrease s resul t fromth e increase davailabilit y o f

existin g unit s and , therefore , th e decreas e i n constructio n o f

ne w generatin g units

. Th e analysi s di dno t conside r change s i n maintenanc e costs
. 5.3. 1 Sourc e Cost s EP A believe s cost s wil l b e insignifican t for mos t o f th e source s participatin g i n th e RMR Rprogra munde r eithe r approach. Fo r

instance , th e first annua l tas k

at eac hparticipatin g facility wil l b e t o estimat e th e replacemen t

cost s o f al l o f it s proces s units

. Sinc e thes e dat aar e readil y availabl e t o th e applican t

throug hfinancial record s (sucha s insuranc e forms ) i t shoul dtak e n o mor e than 4 hour s pe r proces s uni t

(source ) for eac hfacility t o inventor y al l o f it s units

. Followin g th e estimatio n o f replacemen t

cos t for eac hproces s unit , th e facility mus t creat e a n annua l report for eac hsource , detailin g al l o f th e RMRR-relate dcost s an d activitie s a

t that unit

. Fo r mos t units , thi s wil l b e arelativel y short report , agai n probabl y n o mor e tha n 4 hour s pe r report t o gathe r an drecor deac h unit' s RMRR-relate dactivitie s int o th e facility' s annua l report
. A s state di n th e preambl e t o th e propose dchang e t o th e RMR Rexclusion , source s mus t

report activitie s aggregate db y cost s acros s al l appropriat e proces s units , rathe r

tha n aggregatin g th e cos t o f activitie s acros s pollutants

. Whil e thi s limitatio n necessaril y increase s th e burde n an dcos t t o industry , EP A believe s th e cos t o f that additional burde n i s minimal

. Tabl e 2 display s th e expecte dlong-termannua l burde n an dcos t o f thi s rulemakin g t o source s for th e maximu mscop e o f

thi s propose d rulemaking

. Tabl e 2 Expecte d Annua l Margina l Burde n an d Cos tt o Proces s Unit s (Sources ) fo rth e Annua l

Maintenance , Repair , an d Replacemen tAllowanc e Approac h

Entity / Activity Source s Rul e Assimilation , Developmen t o f Strategy 2 Assessmen t

o f Replacemen t

Valu e Preparatio n o f

Annua l RMR RReport Tota l Sourc e Burde n an dCos t Respondent s

1,45 0
1,45 0 1,45 0 1,45 0 Hour s Per

Responden t

pe r Yea r

4

4 4 1 2 Total Annua l

Hour s (Al l Respondents )

5,80 0
5,80 0 5,80 0 17,40 0 Annua l Cos t

pe r Respondent '

$30 0
$30 0 $30 0 $90 0 Total Annua l

Cos t (Al l Respondent) '

$435,00 0 $435,00 0 $435,00 0 $1,305,00 0 1 All cost s ar e i n 200 2 dollar s 2 One-tim e item s hav e bee n average dove r th e thre e year

lif e o f this ICR

.

REGULATOR Y IMPAC T ANALYSI S FO RTH E SPECIFICATIO N O F CATEGORIE S O F ACTIVITIE S A S ROUTIN E MAINTENANCE , REPAIR , AN D REPLACEMEN T FO RTH E NE W SOURC E REVIE W PROGRA M Pag e 2 7P.3 3

Ther e are approximatel y 14,50 0 source s o f ai r pollutio n potentiall y subjec t t o majo r NS Rpermitting. 1 9 Eac ho f thes e source s wil l hav e t o undertak e th e task s liste di n Tabl e 2 , resultin g i n a n increase dburde n t o al l potentiall y affecte dsource s o f abou t $90 0 pe r yea r ($1.3 millio n annuall y for al l sources ) unde r

th e annua l maintenance , repair , an dreplacemen t allowanc e approach

. Becaus e ther e ar e s o man y source s tha t ar e potentiall y affecte dan dwil l nee dt o performth e minima l annua l task s o f inventory an dreporting , th e increas e i n burde n dominate s th e expecte deffect s o f th e RMR Rprogram . However , throug hth e potentia l for reduce duncertaint y an dimprove dflexibility an dcompetitivenes s foun di n th e RMR R program , th e Agenc y believe s tha t althoug hno t

measurable , for

thos e source s subjec t

t o majo r NSR , th e overal l benefi t t o source s abl e t o avoi d majo r NS Rpermittin g throug hth e RMR Rprogra moutweigh s th e de minimis increas e i n burde n an dcost s impose dupo n th e entir e univers e o f potentiall y affecte dsources . Consequently , th e Administrato r assert s that whil e no t estimabl e i n th e traditiona l sense , th e propose dRMR R approache s provid e regulator y relie f t o thos e source s currentl y subjec t t o majo r NS Runde r

th e curren t

routin e maintenanc e provisions

. Tabl e 3 Expecte d Annua l Margina l Burde n an d Cos tt o Proces s Unit s (Sources ) fo rth e

Equipmen tReplacemen tApproac h

Entity / Activit y Source s Rul e Assimilation , Developmen t o f Strategy 2 Assessmen t

o f Replacemen t

Valu e Tota l Sourc e Burde n an dCos t Respondent s

1,45 0
1,45 0 1,45 0 Hour s Per

Responden t pe r Yea r

4

4 8 Total Annua l Hour s (Al l Respondents )

5,80 0
5,80 0 11,60 0 Annua l Cos t

pe r Respondent '

$30 0
$30 0 $60 0 Total Annua l

Cos t (Al l Respondent) 1

$435,00 0 $435,00 0 $870,00 0 1 Al l cost s ar e i n 200 2 dollar s 2 One-tim e item s hav e bee n average dove r th e thre e year

lif e o f thi s ICR

. Th e 14,50 0 source s o f

ai r pollutio n potentiall y subjec t t o majo r NS R permittin g unde r

th e propose dequipmen t

replacemen t

approac hwil l hav e t o undertak e th e task s liste di n Tabl e 3 , above

. Ther e i s n o reaso n t o believ e th e numbe r

o f affecte dsource s o r

th e burde n differ s betwee n th e tw o propose dapproaches

. Th e primary differenc e betwee n th e tw o propose dapproache s i s tha t th e equipmen t

replacemen t

approac hdoe s no t hav e a n associate dannua l reportin g requirement

. Consequently , th e numbe r o f affecte dsource s an dth e burde n associate dwit heac ho f th e task s in Tabl e 3 ha s th e sam e valu e a s it s analo g i n Tabl e 2 for th e annual

1 9 Mos t

source s contai n mor e tha n on e pollutio n creatin g unit , bu t thi s report

doe s no t nee dt o differentiat e b y pollutan t for th e purpose s o f

thi s analysis

.

REGULATOR Y IMPAC T ANALYSI S FO RTH E SPECIFICATIO N O F CATEGORIE S O F ACTIVITIE S A S ROUTIN E MAINTENANCE , REPAIR , AN D REPLACEMEN T FO RTH E NE W SOURC E REVIE W PROGRA M Pag e 2 8P.3 4



### maintenance , repair , an

dreplacemen

t allowanc e approach

. Eac

haffecte d sourc e will expendabou

t 8 additiona

l hour s i n regulatory-relate dactivities , relativ e t o the status quo, fo

r atota l additiona l cos t o f abou t $87 0 thousand pe r year . A s wit

hthe annua

l maintenance , repair , an

dreplacemen

t allowanc e approach , the Administrator assert s tha

t the reductio n in uncertaint y an dimprovedflexibilit

y an dcompetitivenes s availabl e through th e equipmen

t replacemen

t RMR Rapproachals o provide s regulator y relief t o industry

. 5.3. 2 Reviewin g Authorit y Cost s 

### Permittin g authoritie s seeking t o implemen

t th e ne w RMR Rprovision s will incu r the cost s outline in thi s section

. RAs , however , d o not hav e t o adopt an y particula r provisio n a s long a s they ca n show tha

t their versio n of the progra mi s a t leas t as stringen

t a s ours . RA s wh

o d o not wan t t o implemen t the ne w provision s will incu

r cost s associatedwit

h demonstrating the adequacy of their existin g programs . Eac

hparticipatin g R A will have t

o lear n the rul e an

dincorporat

e i t int o it s SIP

. The Agency identifiedfive task s tha

t eac hR A mus t perfor mfo r the incorporatio n of the RMR Rprogra mint o it s SI P an dtw o annua

l task s i t will hav e t

o perfor mt o maintain the RMR

Rprogram . Tabl e 4 display s the expecte d annua l burden an

dcos t o f thi s rulemakin g t

o RA s fo r the maximu

mscop e of thi s analysis

. Eac

hR A ca n expect t o incu r a n additiona

l 1,40 0 hour s of activit y pe r yea r Tabl e 4 Expected Margina l

Entity / Activity Rul e Familiarization 2 Applicabilit y Determinations 2 SI P Revision 2 Publi c Hearin g an dSI P Modification 2 Legislativ e Coordination 2 Annua l Report

Review 3 Majo r NS RDeterminatio n 3 ' 4 Total One-Tim e R

A Burde n an dCost ' Total Annua l Burde n an dCost ' 

### Burde n an d Costt o

Respondent s 11 2 11 2 11 2 11 2 11 2 11 2 11 2 11 2 11 2 Hour s Pe r

Activity 2 0 1 0 4 0 3 0 4 0 8 1 0 

### Permitting Authorities

Tota l Annua l Hour s (Al l Respondents ) 2,24 0 1,120 4,48 0 3,36 0 4,48 0 116,48 0 7,28 0 15,68 0 123,76 0 Annua l Cos t pe r Respondent ' $74 0 $37 0 $1,48 0 $1,11 0 $1,48 0 $38,48 0 $2,40 5 $5,18 0 Tota l Annua l

Cos t (Al l Respondent) ' $82,88 0 $41,44 0 $165,76 0 $124,32 0 $165,76 0 $4,309,76 0 $269,36 0 $580,16 0 $4,579,12 0 1 Al l cost s ar e i n 200 2 dollar s 2 One-tim e item s hav e bee n average dove r th e thre e yea

r lif e o f this ICR

. 3 Annua l item s hav e bee n estimate da t 13 0 source s pe r

R A pe r year . 4 Assume s 1 determinatio n fo r every 2 0 sources . 5.3. 3 Federa l Cost s

REGULATOR Y IMPAC T ANALYSI S FO RTH E SPECIFICATIO N O F CATEGORIE S O F ACTIVITIE S A S ROUTIN E MAINTENANCE , REPAIR , AN D REPLACEMEN T FO RTH E NE W SOURC E REVIE W PROGRA M Pag e 2 9P.3 5

Th e Federa l governmen t

incur s amoderat e long-ru n burde n fromth e promulgatio n o f

thi s rule , bu t

th e Agenc y believe s th e burde n an dcos t o f th e RMR Rprogra mt o b e justified

. Furthermore , th e Agenc y believe s th e sligh t increas e i n burde n wil l b e somewhat offset b y th e reductio n i n oversigh t an denforcemen t

activitie s that

wil l resul t

fromfewer

majo r sourc e modification s occurrin g eac hyear . Fo r th e RMR Rprogram , EP A wil l b e responsibl e for

tw o one-tim e activities , SI P revisio n support (a t leas t 1 0 hour s o f

guidanc e pe r

year , o r 3,36 0 hour s ove r

th e thre e year s o f expecte dSI P revision) , an dSI P revie w an dapprova l (abou t on e da y pe r SIP , o r atota l o f 29 9 hour s pe r

year)

. Annually , th e EP A wil l hav e tw o task s t o perform : managemen t o f th e RMR Rprogra mt o thos e source s wher e i t ha s authority (abou t

1 0 hour s pe r

year , o r 1,45 0 hour s pe r

year pe r Federall y manage dsource) , an doversigh t o f R A report

revie w an dmajo r NS Rdeterminations , whic hwil l tak e abou t hal f a s lon g for

th e Federa l governmen t

t o revie w eac hform , relativ e t o th e RA' s burde n for eac htask

. Th e Agenc y typicall y provide s Permittin g Authority oversigh t t o on e sourc e determinatio n i n ten
. Tabl e 5 , below , display s th e averag e annua l expecte dburde n an dcos t t o th e Federa l governmen t for th e RMR R program . 5.3. 4 Botto m Lin e Im pact s Th e propose dannua l maintenance , repair , an dreplacemen t allowanc e approac ht o RMR Ractivitie s wil l ad dabou t $1 3 millio n annuall y t o th e cos t o f th e majo r

NS Rprogram . However , th e effec t o f smal l cost s accrue db y larg e number s o f source s make s thi s tota l misleading

. Abou t 6 1 percen t o f that cos t applies t o th e annua l cos t o f th e RMR Rprogra mt o source s - mos t

o f whic hi s attributabl e t o th e de minimis cos t o f additional reportin g tha t

i s sprea dacros s 14,50 0 source s (at an annua l cos t

o f les s tha n athousan ddollar s pe r source)

. I f

that de minimis cos t

i s remove d fromtotal , th e annua l cos t o f th e annua l maintenance , repair , an d replacemen t

allowanc e RMR Rprogra mi s les s than $200,000

. Th e equipmen t

replacemen t

approac hcost s somewhat les s tha n th e annua l maintenance , repair , an dreplacemen t allowanc e approach , sinc e i t doe s no t hav e a n annua l reportin g requirement

. Consequently , th e equipmen t replacemen t

approac hwil l cos t

source s $87 0 thousan dpe r year , o r abou t $60 0 pe r sourc e pe r

year . Tabl e 5 Expecte d Yearl y Margina l Burde n an d Cos tt o Th e Federa l Governmen t

Entity / Activity
Coordinatio n wit

hRA s 2 Revie w o f

SIPS 2 Managemen t

o f Federal Program3 Annua l Report

Review 3 Numbe r o f Respondent s Serve d 11 2 11 2 14 5 13,05 0 Hour s pe r

Yea r Per Responden t 1 0 8 1 0 4 Total Annua l

Hour s 1,120 89 6 1,45 0 5,22 0 Averag e

Annua l Cos t pe r Respondent ' $41,44 0 $11,06 3 $37 0 $ 4 Total Annua l

Cos t (Al l Respondent) ' $41,44 0 $11,06 3 $53,65 0 $193,14 0
REGULATOR Y IMPAC T ANALYSI S FO RTH E SPECIFICATIO N O F CATEGORIE S O F ACTIVITIE S A S ROUTIN E MAINTENANCE , REPAIR , AN D REPLACEMEN T FO RTH E NE W SOURC E REVIE W PROGRA M Pag e 3 0P.3 6

Majo r NS RDeterminatio n 3 ' 4 TOTA LOne-Tim e Federal Burde n an dCost s ' TOTA LAnnual Federal Burde n an dCost s ' 13,05 0 1 0 1 3 13,05 0

1,45 6 $ 6

$52,50 3 $482,85 0

$52,50 3 $502,19 0 1 All cost s ar e i

n 200 2 dollar s 2 One-tim e item s hav e bee n average dove r th e thre e yea

r lif e o f thi s ICR

. 3 Annua l item s hav e bee n estimate dat 13 0 source s pe r

R A pe r year . 4 Assume s 1 determination for every 2 0 sources . Unde r bothapproaches , th e Agenc y ha s provide dopportunitie s for industr y t o improv e it s responsivenes s t o changin g economi c condition s whil e performin g critica l repair , replacemen t an dmaintenanc e activities

. Thes e improvement s deriv e fromth e RMR Rprogram' s primar y goal s - th e reductio n o f

uncertainty an dregulator y delay relate dt o th e performanc e o f

suc hactivities

. Whil e valuable , th e decreas e i n uncertaint y an dregulator y delay are no t quantifiabl e i n th e traditiona l sense . Instead , th e Agency' s assertio n that th e tw o alternativ e approache s t o RMR R provid e regulatory relie f

depend s o n asimpl e concept , th e L e Chetalie r Principl e i n it s economi c application : reducin g th e restriction s o n industr y reduce s costs
. Consequently , whil e th e measurabl e portio n o f th e propose d approache s indicat e increase s i n burde n an dcost , th e progra min toto shoul db e beneficial

.

REGULATOR Y IMPAC T ANALYSI S FO RTH E SPECIFICATIO N O F CATEGORIE S O F ACTIVITIES A S ROUTIN E MAINTENANCE , REPAIR , AN D REPLACEMEN T FO RTH E NE W SOURC E REVIE W PROGRA M Pag e 3 1P.3 7

Tabl e 6 Botto m Lin e One-Tim e an d Annua l Burde n an d Costs 1

Entity / Activity Proces s Unit s (Sources ) Annua l Maintenance , Repair , an d Replacemen t

Allowanc e Approac h Proces s Unit s (Sources ) Equipmen t Replacemen t

Approac h Permittin g Authoritie s (BothApproaches ) U S Environmenta l Protectio n Agenc y (Bot hApproaches ) Numbe r o f Responden t

s 1,45 0 1,45 0 11 2 1 Hour s pe r

Yea r pe r Responden t
1 2 8 14 0 2 3 Total Expecte dCos t

(Annua l Maintenance , Repair , an dReplacemen t Allowanc e Approach ) Total Expecte dCos t

( Equipmen t

Replacemen t

Approach ) Tota l Annua l Hour s (Al l Respondents )
17,40 0 11,60 0 15,68 0 2,90 6 Annua l Cos t pe r Respondent '
$90 0 $60 0 $5,18 0 $85 1 Total Annua l

Cos t (Al l Respondent) ' $1,305,00 0 $870,00 0 $580,16 0 $107,52 2 $1,992,68 2 $1,557,68 2 1 Al l cost s ar e i n 200 2 dollar s 

### 5.3. 5 Caveats Th e analysi s i s base dupo n th e bes t dat aavailabl e t o th e Agenc y a t thi s time

. However , inconsistencie s i n R A reportin g techniques , incomplet e dat asets , an dsamplin g limitation s impose dupo n th e Agenc y b y th e Paperwork

Reductio n Ac t

necessitate dacertai n amoun t o f extrapolatio n an d"best-guess " estimation s b y RA s an dAgenc y experts
. Consequently , th e reade r shoul dno t

conside r th e conclusion s t o b e a

n exac t representatio n o f

th e leve l o f

burde n o r

cos t tha t wil l occur . Instead , thi s report shoul db e considere dadirectionall y correc t assessmen t

o f th e impac t th e programmati c change s include di n thi s rulemaking

. Furthermore , becaus e th e final versio n o f thi s rulemakin g ha s no t

bee n determined , th e EP A canno t mak e afair

estimat e ex

ante o f th e impac t

o n numbe r o f permit s that

wil l b e affecte db y thi s rulemaking

. However , i n th e contex t

o f wha t ha s bee n don e for

ove r te n year s for

majo r NSR , th e Agenc y can b e relativel y confiden t that th e DIRECTIO N an dth e MAGNITUD E o f

th e expecte dchange s du e t o th e ne w RMR Rprogra m reporte di n thi s analysi s are representativ e o f wha t wil l b e observ e ex

post. Fo r mos t analyses , th e Agenc y relie s upo n aBayesia n approac ht o predictin g th e future impact s o f it s regulations : i t

relie s upo n pas t informatio n of asimilar

natur e a s th e bes t

predicto r o f th e future

. However , for

th e determinatio n o f

th e numbe r

o f potentiall y affecte d source s i n thi s analysi s involve s th e assessmen t o f counterfactua l data

. In
. othe r words , th e Agenc y ha dt o predic t ho w man y source s woul dnot performspecifi c action s or , for whateve r reason , wer e not

reportin g o n specifi c action s undertaken

. Clearly , n o dat asourc e ca n suppl y suc h information

. Therefore , th e estimate s i n thi s analysi s are basedt o amuc h greate r exten t upo n th e experience s an dexpertis e o f th e Agency' s staf

f an d consultants , a s wel l a s industry representatives

.

REGULATOR Y IMPAC T ANALYSI S FO RTH E SPECIFICATIO N O F CATEGORIE S O F ACTIVITIE S A S ROUTIN E MAINTENANCE , REPAIR , AN D REPLACEMEN T FO RTH E NE W SOURC E REVIE W PROGRA M Pag e 3 2P.3 8

APPENDI X A

EMISSION S IMPACT S O FHIGHE REFFICIENCIE S AN D AVAILABILITIE S FO RCOAL-FIRE D GENERATIN GUNIT S

(DEPARTMEN T O FENERGY )

REGULATOR Y IMPAC T ANALYSI S FO RTH E SPECIFICATIO N O F CATEGORIE S O F ACTIVITIE S A S ROUTIN E MAINTENANCE , REPAIR , AN D REPLACEMEN T FO RTH E NE W SOURC E REVIE W PROGRA M Pag e 3 3P.3 9

EMISSION S IMPACT S O F HIGHE REFFICIENCIE S AN D AVAILABILITIE S FO RCOAL-FIRE D GENERATIN G UNIT S Description : Utilizin g assumption s provide db y th e Offic e o f Fossi l Energ y o f th e Departmen t

o f Energy , thi s analysi s consider s th e effect s o f potential improvement s i n coal powe r plan t heat rate s an davailabilities

. Th e Offic e o f

Fossi l Energ y believe s tha t thes e improvement s migh t occu r i f the y coul db e accomplishe dwithou t triggerin g th e majo r

Ne w Sourc e Revie w (majo r

NSR ) requirements

. Specifically , heat rate s fo r coal-fire d plant s are assume dt o decreas e b y 5 , 10 , an d1 5 percen t b y 2010

. Eac ho f thes e case s ar e als o combine dwithassume dincrease s i n availability for coal capacity o f

2 an d5 percentag e point s b y 2010

. Th e resultin g impact s o n fue l us e an demission s (sulfur dioxide , nitroge n oxide , mercury , an d carbo n dioxide ) are examined

. Methodology : Usin g th e Nationa l Energ y Modelin g Syste m(NEMS) , th e assume dchange s i n heat

rate s an davailabilitie s ar e analyze db y modifyin g th e AEO200 2 Referenc e Case

. Th e improvement s are phase din throug h 2010

. Althoug hth e potentia l t o improv e hea t rate s an davailabilitie s coul d vary amon g coa l units , thi s analysi s assume s tha t th e sam e rat e o f

chang e occur s t o al l o f

thi s capacity

. Althoug hthes e improvement s coul drequir e increase s i n maintenanc e costs , n o chang e i n thes e cost s i s incorporated

. Potentia l improvement s t o oil

- an dgas-fire dcapacit y are als o no t included

. Analvsis : Improvement s i n heat rate s (i.e. , increase doperatin g efficiency ) resul t i n lowe r coa l consumptio n an demissions , althoug hsulfur dioxid e emission s nationall y ar e unaffecte dsinc e ther e i s acap o n total emissions

. Compare dt o th e AEO200 2 Referenc e Case , a5-percen t decreas e i n heat rate s reduce s carbo n an dnitroge n oxid e emission s b y abou t 4 percen t eac h andmercur y emission s b y 2 percen t i n 201 0 (Tabl e 1)

. In 2020 , th e respectiv e emission s reduction s are 3 percent , 4 percent , an d2 percent
. No t surprisingly , highe r

assume defficienc y improvement s resul t i n greate r emission s reductions

. A 10-percen t decreas e i n hea t

rate s reduce s carbo n an dnitroge n oxid e emission s b y abou t 8 percen t eac han dmercury emission s b y 5 percen t

i n 201 0 (Tabl e 2)

. I n 2020 , th e respectiv e emission s reduction s are 7 percent , 8 percent , an d4 percent
. A 15-percen t decreas e i n hea t

rate s reduce s carbon , nitroge n oxide , an dmercury emission s i n 201 0 b y abou t 1 2 percent , 1 3 percent , an d9 percent , respectivel y (Tabl e 3)

. I n 2020 , th e correspondin g reduction s are 1 0 percent , 1 2 percent , an d8 percent
. Increasin g th e availabilit y o f coal-fire dcapacit y leads t o increase s in coa l generation , consumptio n an demissions

. However , thes e increase s i n emission s are not

enoug ht o offset

th e reduction s tha t

resul t fro mth e efficienc y improvements , excep t whe n th e lowes t

assume defficienc y improvemen t

( 5 percent ) i s combine dwit hth e highes t assume d
REGULATOR Y IMPAC T ANALYSI S FO RTH E SPECIFICATIO N O F CATEGORIE S O F ACTIVITIE S A S ROUTIN E MAINTENANCE , REPAIR , AN D REPLACEMEN T FO RTH E NE W SOURC E REVIE W PROGRA M Pag e 3 4P.4 0

availability increas e ( 5 percentag e points)

. Compare dt o th e Referenc e Case , mercury emission s i n thi s cas e are abou t 1 percen t

highe r i n 201 0 an d202 0 (Tabl e 1)

. Carbo n emission s are 2 percen t lowe r i n 201 0 an d1 percen t lowe r i n 2020

. Nitroge n oxid e emission s are slightl y lowe r i n 201 0 bu t slightl y highe r

i n 2020

. I f

a5-percen t

decreas e i n heat

rate s i s combine dwithth e lesse r

availabilit y increas e o f

2-percentag e points , carbo n an dnitroge n oxid e emission s i n 201 0 ar e eac h3 percen t lowe r tha n i n th e Referenc e cas e an dmercur y emission s are 1 percen t lower

. I n 2020 , th e reduction s are abou t

2 percen t eac hfor carbo n an dnitroge n oxid e an d 1 percen t for mercury . Compare dt o th e AEO200 2 Referenc e Case , bot hth e 10-percen t an d15

- percen t efficienc y improvemen t

case s are projecte dt o lowe r emission s whe n combine dwithbot ho f th e assume davailabilit y increases

. Assumin g a10-percen t

decreas e i n heat

rate s an da2-percentag e poin t increas e i n availabilit y lower s carbo n an dnitroge n oxid e emission s i n 201 0 b y 7 percen t

eac han dmercur y emission s b y 5 percen t (Tabl e 2)

. A 5-percentag e poin t

increas e i n availability result s i n further increase s i n coal use , s o th e emission s reduction s resultin g fromth e 10-percen t heat rat e improvement s ar e further offset b y th e availabilit y increases

. In thi s case , carbon , nitroge n oxide , an dmercury emission s i n 201 0 ar e 6 percent , 5 percent , an d2 percen t

lowe r tha n i n th e AEO200 2 Referenc e Case , respectively

. A 15-percen t decreas e i n heat

rate s combine dwitha2

- percentag e poin t

increas e i n availability lower s carbo n an dnitroge n oxid e emission s i n 201 0 b y 1 1 percen t eac han dmercur y emission s b y 8 percen t (Tabl e 3)

. A 15-percen t

decreas e i n heat

rate s combine dwitha5

- percentag e poin t

increas e i n availabilit y lower s carbo n emission s b y 1 0 percent , nitroge n oxid e emission s b y 9 percent , an dmercur y emission s b y 6 percen t i n 2010

. I n 2020 , th e emission s reduction s i n th e combine dheat rate/availabilit y improvemen t case s are typicall y abou t 1 t o 2 percentag e point s lowe r

tha n th e correspondin g result s i n 2010

. I n conclusion , efficienc y improvement s resultin g fromincrease d maintenanc e ar e expecte dt o decreas e emissions , wherea s availabilit y improvement s are expecte dt o increas e emissions

. I n th e case s represente d i n thi s study , th e impact s o f th e assume dreduction s i n heat rate s ten dt o dominat e th e correspondin g effect s o f th e assume davailabilit y increases

. However , th e som e o f

th e assume dheat

rat e improvement s coul db e difficul t t o achieve

. I n 2000 , th e averag e heat rat e for coa l capacity wa s abou t 10,25 0 btu pe r

kilowatt-hour , s o a10-percen t reductio n b y 201 0 woul dlowe r

th e averag e heat

rat e t o abou t

9,20 0 btu pe r

kilowatt-hour

. Thi s heat rat e woul db e almos t

a s goo da s th e heat

rat e assume dfor

ne w coa l units

. A 15-percen t

decreas e woul dreduc e th e heat rat e t o aleve l belo w th e heat

rat e for ne w units

. Eve n i f

th e assume dheat

rat e improvement s are feasible , the y ma y not b e economic

. Th e require d

REGULATOR Y IMPAC T ANALYSI S FO RTH E SPECIFICATIO N O F CATEGORIE S O F ACTIVITIE S A S ROUTIN E MAINTENANCE , REPAIR , AN D REPLACEMEN T FO RTH E NE W SOURC E REVIE W PROGRA M Pag e 3 5P.4 1



### increas e i n maintenanc e costs , whichi s not represente di

n thes e cases , ma

y b e highe r tha n the resultin g saving s i

n fue l costs
. Sinc e the assumedefficienc y improvement s result

in lowe r fue l consumption , it

ma y als o b e possibl e t

o increas e outpu

t a t coal-firedunit s without resultin g in ane

t increas e in coa

l consumption an

dtriggerin g majo r NSR

. The assumedincrease s in availabilit y represen t one optio n fo

r increasin g generation

. Anothe r wa y t o increas e generation wouldb e t o increas e capacity , but

thi s optio n i s no t

considere di

n thi s analysis

.

REGULATOR Y IMPAC T ANALYSI S FO RTH E SPECIFICATIO N O F CATEGORIE S O F ACTIVITIE S A S ROUTIN E MAINTENANCE , REPAIR , AN D REPLACEMEN T FO RTH E NE W SOURC E REVIE W PROGRA M Pag e 3 6