### July 2010


# Economic Impact Analysis for the
Mandatory Reporting of

Greenhouse Gas Emissions
F-Gases: Subparts I, L, DD, QQ, SS

Final Reporti 

### CONTENTS

Section 1 Introduction and Background ................................................................................ 1-1

1.1 Background .......................................................................................................... 1-1

1.2 Final Rule: Fluorinated Greenhouse Gas Subparts .............................................. 1-2

1.2.1 Subpart I: Electronics Manufacturing ..................................................... 1-3

1.2.2 Subpart L:Fluorinated Gas Production .................................................... 1-3

1.2.3 Subpart DD: Electric Transmission and Distribution Equipment

Use ........................................................................................................... 1-3

1.2.4 Subpart QQ: Imports and Exports of Fluorinated GHGs in PreCharged Equipment and Closed-Cell Foams ........................................... 1-4

1.2.5 Subpart SS: Electrical Equipmen t Manufacture or Refurbishment and Manufacturing of Electrical Components ......................................... 1-4

1.3 Economic Impact Analysis for F-Gas Subparts ................................................... 1-4

Section 2 Regulatory Background ......................................................................................... 2-1

2.1 EPA’s Overall Rulemaking Approach ................................................................. 2-1

2.1.1 Stakeholder Outreach to Identify Reporting Issues ................................. 2-1

2.1.2 Consideration of Comments Received ..................................................... 2-3

2.1.3 Analysis of Emissions by Sector .............................................................. 2-3

2.2 Statutory Authority .............................................................................................. 2-4

2.3 Existing Reporting Programs ............................................................................... 2-4

Section 3 Development of Subparts ....................................................................................... 3-1

3.1 Subpart I – Electronics Manufacturing ................................................................ 3-1ii 3.1.1 Definition of Affected Entities ................................................................. 3-1

3.1.2 Summary of Major Changes Since Proposal ........................................... 3-2

3.1.3 Selection of Reporting Threshold ............................................................ 3-3

3.1.4 Selection of Monitoring Methods ............................................................ 3-4

3.1.5 Selection of Data Reporting Requirements .............................................. 3-8

3.1.6 Selection of Recordkeeping Requirements .............................................. 3-9

3.2 Subpart L – Fluorin ated GHG Producers ............................................................. 3-9

3.2.1 Definition of Affected Entities ................................................................. 3-9

3.2.2 Summary of Changes Si nce the Initial Proposal .................................... 3-10

3.2.3 Selection of Reporting Threshold .......................................................... 3-11

3.2.4 Selection of Monitoring Methods .......................................................... 3-11

3.2.5 Selection of Data Reporting Requirements ............................................ 3-12

3.2.6 Selection of Recordkeeping Requirements ............................................ 3-12

3.3 Subpart DD--Electric Transmission and Distribution Equipment Use .............. 3-12

3.3.1 Definition of Affected Entities ............................................................... 3-12

3.3.2 Summary of Changes Since Proposal .................................................... 3-13

3.4 Subpart QQ – Importing/Exporting of Pre-charged Equipment and Foams ...... 3-14

3.4.1 Definition of Affected Entities ............................................................... 3-14

3.4.2 Summary of Proposal ............................................................................. 3-14

3.4.3 Summary of Changes Since the Proposal .............................................. 3-15

3.4.4 Selection of Reporting Threshold .......................................................... 3-15

3.4.5 Selection of Monitoring Met hods and QA/QC Requirements ............... 3-15

3.4.6 Selection of Data Reporting Requirements ............................................ 3-15

3.4.7 Selection of Recordkeeping Requirements ............................................ 3-16

3.5 Subpart SS – Electrical Equipmen t and Components Manufacturing ............... 3-17iii 3.5.1 Definition of Affected Entities ............................................................... 3-17

3.5.2 Summary of Changes Since Proposal .................................................... 3-18

3.5.3 Selection of Reporting Threshold .......................................................... 3-18

3.5.4 Selection of Monitoring Met hods and QA/QC Requirements ............... 3-18

3.5.5 Selection of Data Reporting Requirements ............................................ 3-19

3.5.6 Selection of Recordkeeping Requirements ............................................ 3-20

Section 4 Engineering Cost Analysis................................................................................... 4-21

4.1 Introduction ........................................................................................................ 4-21

4.2 Overview of Cost Analysis ................................................................................ 4-21

4.2.1 Baseline Reporting ................................................................................. 4-21

4.2.2 Reporting Costs ...................................................................................... 4-22

4.3 Cost Analysis for Subpart I – Electronics Manufacturers ................................. 4-25

4.3.1 Model Facility Development ................................................................. 4-25

4.3.2 Determination of Cost Elements ............................................................ 4-26

4.3.3 Proportion of Facilities in the Di fferent Model Facility Levels ............ 4-28

4.3.4 Assigning Costs to Cost Elements ......................................................... 4-29

4.3.5 Estimation of Facility Costs for Each Threshold Level ......................... 4-36

4.4 Cost Analysis for Subpart L—Fluorinated Gas Production .............................. 4-36

4.4.1 Model Facility Development ................................................................. 4-36

4.4.2 Cost Analysis for Mass Balance Approach - Option 1 .......................... 4-37

4.4.3 Cost Analysis for Option 2- Process Vent Testing ................................ 4-39

4.4.4 Cost Analysis for Option 3- T ypical Facility, Combination of
Process Vent and Mass Balance ............................................................ 4-43

4.5 Cost Analysis for Subpart DD—Electric Power Systems ................................. 4-45

4.5.1 Model Facility Development ................................................................. 4-45iv 4.5.2 Determine Cost Elements ...................................................................... 4-46

4.5.3 Proportion of Facilities in Diffe rent Model Facility Levels .................. 4-46

4.5.4 Assigning Costs to Cost Elements ......................................................... 4-47

4.5.5 Determine Labor Categories .................................................................. 4-47

4.5.6 Estimate per Facility Costs for Each Threshold Level .......................... 4-49

4.6 Cost Analysis for Subpart QQ—Imports and Exports of Fluorinated GHGs .... 4-49

4.6.1 Model Facility Development ................................................................. 4-49

4.6.2 Determine Cost Elements ...................................................................... 4-50

4.6.3 Analyze Proportion of Facilities in the Different Model Facility Categories .............................................................................................. 4-51

4.6.4 Assigning Costs to Cost Elements ......................................................... 4-51

4.6.5 Estimate per Facility Costs for Each Threshold Level .......................... 4-54

4.6.6 Subpart SS—Electrical E quipment Manufacturing ............................... 4-55

4.6.7 Other Costs ............................................................................................. 4-59

4.7 Public Sector Burden ......................................................................................... 4-59

Section 5 Economic Impact Analysis .................................................................................. 5-60

5.1 Selection of Reporting Thresholds ..................................................................... 5-60

5.1.1 Subpart I- Electronics Manufacturing .................................................... 5-60

5.1.2 Subpart L- Fluorinated Gas Production ................................................. 5-62

5.1.3 Subpart DD- Sulfur Hexafluorid e from Electric Power Systems .......... 5-64

5.1.4 Subpart QQ- Imports and Exports of Fluorinated GHGs in PreCharged Equipment and Closed-Cell Foams ......................................... 5-65

5.1.5 Subpart SS- Electrical Equipmen t Manufacture or Refurbishment and Manufacturing of Electrical Components ....................................... 5-66

5.1.6 National Emissions Covered Under Selected Thresholds ..................... 5-67v 5.2 National Cost Estimates ..................................................................................... 5-67

5.3 Economic Impact Analysis ................................................................................ 5-68

5.3.1 Assessing Economic Impacts on Small Entities .................................... 5-68

Section 6 Statutory and Executive Order Reviews ................................................................ 6-1

6.1 Executive Order 12866: Regulat ory Planning and Review ................................. 6-1

6.2 Paperwork Reduction Act .................................................................................... 6-1

6.3 Regulatory Flexibility Act ................................................................................... 6-3

6.3.1 Identify Affected Sectors and Entities ..................................................... 6-3

6.3.2 Develop Small Entity Economic Impact Measures ................................. 6-4

6.3.3 Results of Screening Analysis ................................................................. 6-4

6.4 Unfunded Mandates Reform Act ......................................................................... 6-5

6.5 Executive Order 13132: Federalism .................................................................... 6-6

6.6 Executive Order 13175: Consultation and Coordination with Indian Tribal
Governments ........................................................................................................ 6-7

6.7 Executive Order 13045: Protection of Children from Environmental Health and Safety Risks ....................................................................................... 6-7

6.8 Executive Order 13211: Actions that Significantly Affect Energy Supply, Distribution, or Use ............................................................................................. 6-7

6.9 National Technology Transfer Advancement Act ............................................... 6-8

6.10 Executive Order 12898: Federal Actions to Address Environmental Justice in Minority Populations and Low-Income Populations ....................................... 6-8

Section 7 Conclusions ............................................................................................................ 7-1

7.1 Summary of Sectors Covered .............................................................................. 7-1vi 7.1.1 Subpart I – Electronics Manufacturing .................................................... 7-1

7.1.2 Subpart L – Fluorin ated GHG Producers ................................................. 7-1

7.1.3 Subpart DD: Electric Transmission and Distribution Equipment

Use ........................................................................................................... 7-2

7.1.4 Subpart QQ – Importing/Exporting of Pre-charged Equipment and

Foams ....................................................................................................... 7-2

7.1.5 Subpart SS – Electrical E quipment and Components Manufacturing .......................................................................................... 7-3

7.2 Estimated Costs and Impacts of the GHG Reporting Program ............................ 7-4

Section 8 References .............................................................................................................. 8-5vii 

### LIST OF TABLES

Table 4-1. Labor Categories and Hourly Rates ........................................................................ 4-24
Table 4-2. Number of Representative Affect ed Entities Used in the Cost Analysis ................4-29
Table - 4-3. Labor Categories and Hourly Rates ....................................................................... 4-30
Table 4-4. Responsibilities for Regulation Complia nce by Labor Category Per Facility Category

............................................................................................................................... ........................ 31
Table 4-5 Subpart L – F-Gas Mass Balance Approach: Labor Costs (2006$) ..........................4-39
Table 4-6 Subpart L – F-Gas Mass Balance Me thod: Capital and O&M Costs (2006$) ..........4-39
Table 4-7 Subpart L – F-Gas Process Vent (A vg. per plant basis): Labor Costs (2006$) .........4-42
Table 4-8 Subpart L – F-Gas Process Vent Method: Capital and O&M Costs (2006$) ...........4-42
Table 4-9 Subpart L – F-Gas Typical Facility: Labor Costs (2006$) ........................................ 4-44
Table 4-10. Subpart L – F-Gas Typical F acility: Capital and O&M Costs (2006$) ................4-45
Table 4-11. Labor Categories and Hourly Rates ...................................................................... 4-47
Table 4-12. Responsibilities for Regulation Compliance by Labor Category ......................4-47
Table 4-13. Other Costs Associated with Reporting and Recordkeeping ..............................4-48
Table 4-14. Number of Representative Affect ed Entities Used in the Cost Analysis ..............4-50
Table 4-15. Allocation of Facilities to Model Types ................................................................ 4-51
Table 4-16. Labor Categories and Hourly Rates ...................................................................... 4-52
Table 4-17. Responsibilities for Regulation Compliance by Labor Category ..........................4-54
Table 4-18. Number of Representative Affect ed Entities Used in the Cost Analysis ..............4-55
Table 4-19. Labor Categories and Hourly Rates ...................................................................... 4-57
Table 4-20. Responsibilities for Regulation Co mpliance by Labor Category Per Facility ......4-58
Table 4-21. Other Costs Associated w ith Reporting and Recordkeeping ................................4-59
Table 5-1. Number of Establishments by Affected Industry and Enterprise a Size: 2002 .........5-71
Table 5-2. Receipts by Affected Industry and Enterprise a Size ($2002 Million) .....................5-73
Table 5-3. Establishment Sales Tests by Industry and Enterprise a Size: First Year Costs .......5-76viii Table 5-4. Establishment Sales Tests by Industry and Enterprise a Size: Subsequent Years Costs

............................................................................................................................... .....................5-781-1 SECTION 1 INTRODUCTION AND BACKGROUND

1.1 Background

On December 26, 2007, President Bush signe d the FY2008 Consolidated Appropriations Act authorizing funding for EPA to issue a rule requiring the mandatory reporting of greenhouse gas (GHG) emissions (Consolidated Appr opriations Act, 2008, Pub. L. No.110-161, 121 Stat 1844, 2128 (2008)). An accompanying joint explanat ory statement directed EPA to "use its existing authority under the Clean Air Act" to develop a mandatory GHG reporting rule.

The Final Mandatory Reporting of Greenhouse Gases Rule (Final MRR) (40 CFR part 98) was signed on September 22, 2009 by Administ rator Lisa Jackson; and published in the Federal Register on October 30, 2009 (74 FR 56260) . The Final MRR, which is effective on December 29, 2009, included reporting of GHGs from the facilities and suppliers that EPA determined appropriately responded to the direct ion in the 2008 Consolid ated Appropriations
Act 1 . These source categories capture approxima tely 85 percent of U.S. GHG emissions through reporting by direct emitters as well as supp liers of fossil fuels and industrial gases.

EPA initially proposed reporting requiremen ts for electronics, fluorinated GHG production, and electrical equipment use on Apri l 12, 2009 (74 FR 16448) as part of the larger rulemaking effort to establish a GHG reporting pr ogram for all sectors of the economy. In addition, EPA requested comment on requiring reporting of the qua ntities of fluorinated GHGs imported and exported inside pre- charged equipment and foams. However, EPA did not include requirements for these source categories in the Final Mandatory GHG Reporting Rule.

EPA deferred action on these requirements because EPA received a number of lengthy, detailed comments regarding the proposed requ irements for electronics and fluorinated GHG production (subparts I and L, respectively), se veral comments regard ing the definition of “facility” for electric power system use (S ubpart DD), and several comments regarding a reporting requirement for imports and exports of fluorinated GHGs containe d inside pre-charged equipment and foams (included in today’s final rule as Subpart QQ). These comments, which

1 Consolidated Appropriations Act, 2008, Public Law 110–161, 121 Stat. 1844, 2128.1-2 are described in more detail in the discussions of the individual source categories in the April 12, 2010 proposed rule, raised concerns about the co sts and technical feasibility of implementing subparts I and L as initially proposed, request ed clarification of how “facility” should be interpreted under subpart DD, and both favored and opposed a requirement to report imports of
fluorinated GHGs contained in im ported and exported pre-charged equipment and closed-cell
foams.

EPA recognized the concerns raised by st akeholders, and decided to re-propose significant pieces of these subparts. The revised proposed rule was published in the Federal Register on April 12, 2010. A public hearing on the proposed rule was held on April 20, 2010 in Washington, DC, and the 60-day public comment period ended on June 11, 2010.

For subparts I and L this rule incorporates a number of changes including, but not limited to, the addition of different methodologies that provide improved emissions coverage at a lower
cost burden to facilities as co mpared to the initial April 2009 proposal. Where aspects of the initial proposals for subparts I and L are retained in this rule, such as in the basic mass-balance methodology for subpart L (as an option for some facilities) and in many of the equations for subpart I, today’s rule adds mo re flexibility in how and how fr equently the underlying data are gathered. In addition, EPA is requiring facili ties to report emissions from manufacture or refurbishment of electrical equipment and to re port the quantities of fluorinated GHGs imported and exported inside pre-charged equipment and foams.

EPA believes the monitoring approaches requi red in this rule, which combine direct measurement and facility-specific calculations, ef fectively balance accuracy and costs, and that they are warranted even though th e rule does not contain any emi ssions reduction requirements. As we stated in the October 2009 Final MRR, the data collected by the rule are expected to be used in analyzing and developing a range of potential CAA GHG policies and programs. A
consistent and accurate data set is crucial to serve this intended purpose.

1.2 Final Rule: Fluorinated Greenhouse Gas Subparts

This rule requires reporting of fluorinat ed greenhouse gas (F-GHG) emissions from electronics manufacturing, producti on of fluorinated gases, and use of electric transmission and distribution equipment. EPA is also requiring such reporting from manufacturers of electrical equipment, import and export of pre-charged equipment, and closed cell foams. These F-GHG source categories are covered under Subparts I, L, DD, QQ, and SS of the rule. This section1-3 provides a brief introduction to the industries co vered by each subpart and identifies which subparts were included in the initial proposal.

1.2.1 Subpart I: Electronics Manufacturing

The electronics manufacturing source category consists of faciliti es that manufacture semiconductors, liquid crystal displays (LCDs) , micro-electro-mechanical systems (MEMS), photovoltaic cells (PV), and light -emitting diodes (LEDs).The ru le applies to electronics manufacturing facilities that emit GHGs from electronics manufacturing processes such as plasma etching, chemical vapor deposition, cham ber cleaning, and heat transfer fluid use.

Subpart I was included in the initial MRR proposal but omitted from the final rule. EPA
received comments from entities within the covered industries regarding the requirements put forth in the initial proposal. EPA took these co mments into consideration in the development of
this final rule.

1.2.2 Subpart L:Fluorinated Gas Production

The fluorinated gas production source category consists of processe s that manufacture a fluorinated gas from any raw mate rial or feedstock chemical, except for processes that generate HFC-23 during the production of HCFC-22 2 . Under the rule, these f acilities would be required to report their fluorinated GHG emissions from fluorinated gas production, transformation, and destruction, as well as combustion-related CO 2, CH 4, and nitrous oxide (N 2 O) emissions from stationary fuel combustion. Fluorinated gase s include fluorinated GHGs (HFCs, PFCs, SF6, NF3, HFEs, etc.), CFCs, and HCFCs. Similarl y, emissions of CFCs and HCFCs (considered ozone depleting substances rather than F-GHG) are addressed under the regulations implementing Title VI of the Clean Air Act and are therefore excluded from this subpart.

Like Subpart I, Subpart L was included in the initial MRR proposal but omitted from the final rule. After receiving comments on the propo sed regulation, EPA has modified the rule with respect to entities under this subpart.

1.2.3 Subpart DD: Electric Transmission and Distribution Equipment Use

The electric transmission and distribution equipment use source category includes gasinsulated substations, circuit breakers, other switchgear, and gas-insula ted lines containing SF 6 or

2 Since HFC-23 emissions for HCFC-22 production are addressed under Subpart O, they are omitted from this subpart.1-4 PFCs. Equipment also includes gas containers su ch as pressurized cylinders, gas carts, new equipment owned but not yet installed, or othe r containers. Notwithsta nding the definition of facility in subpart A, for purposes of this s ubpart, “facility” means an electric transmission and distribution system which is the collection of SF6- and PFC insulated equipment linked through electric power transmission or distribution lines a nd operated as an integrat ed unit by one electric power entity or several entitie s that have a single owner.

Regulation of Subpart DD was proposed under the initial MRR, but was excluded after EPA received several comments regarding the defi nition of “facility” as it would be covered under the rule. After taking these comments under consideration, EPA has clarified the
definition for this final rule.

1.2.4 Subpart QQ: Imports and Exports of Fluo rinated GHGs in Pre-Charged Equipment
and Closed-Cell Foams

This source category consists of any entity that is importing or exporting pre-charged equipment that contains a fluorinated GHG and al so includes any entity that is importing or exporting closed-cell foams that contain a fluorinated GHG.

Today’s rule introduces Subpart QQ as a new ad dition to the MRR. This source category was not proposed in the initial rule.

1.2.5 Subpart SS: Electrical Equipm ent Manufacture or Refurbishment and Manufacturing of Electrical Components

This source category consists of electrical equipment manufacturers and refurbishers of
SF 6 or PFC-insulated closed-pressure equipment and sealed-pressure equipment including gasinsulated substations, circuit breakers and ot her switchgear, gas-insu lated lines, or power transformers containing sulfur-hexafluoride (SF 6 ) or perfluorocarbons (PFCs).Like Subpart QQ, this source category was not covered under the initial MRR proposal and final rule.

1.3 Economic Impact Analysis for F-Gas Subparts

As part of the regulatory process of developi ng these rules, EPA is required to conduct an economic impact analysis (EIA). This repo rt documents the EIA methods and results and proceeds as follows: Section 2 describes the curre nt regulatory context into which the new rules1-5 will be integrated. Section 3 e xplains the development process for each of the four subparts, and Section 4 details the individual cost analyses methodology used to evaluate each regulation. Section 5 presents the results of the economic imp act analysis. A review of executive orders is provided in Section 6, which is followed by a brief EIA summary and c onclusion in Section 7.2-1 SEC TION 2 REGULATORY BACKGROUND

The intent of this rule is to collect accura te and timely GHG emissi ons data that can be used to inform future policies. Although th e mandatory GHG rule is unique, EPA carefully considered other federal and state programs during development of the rule. The reporting program will supplement rather than duplicat e other U.S. government GHG programs. We outline EPA’s overall rulemaking approach, statut ory authority, and summarize our review of GHG monitoring protocols below.

2 .1 EPA’s Overall Rulemaking Approach

The greenhouse gas reporting program will provide comprehensive and accurate data which will inform future climate change policie s. Potential future climate policies include research and development initiatives, econom ic incentives, new or expanded voluntary programs, adaptation strategies, emission standard s, a carbon tax, or a cap-and-trade program. Because we do not know at this time the specific policies that will be adopted, the data reported through the greenhouse gas reporting system should be of sufficient quality to support a range of approaches.

To these ends, we identified the following goals of the greenhouse gas reporting system:

 Obtain data that is of su fficient quality that it can be used to support a range of future climate change policies and regulations.

 Balance the rule coverage to maximize the amount of emissions reported while excluding small emitters.

 Crea te reporting requirements that are c onsistent with existing GHG reporting programs by using existing GHG emission es timation and reporting methodologies to reduce reporting burden, where feasible.

2 .1.1 Stakeholder Outreach to Identify Reporting Issues

Early in the development process, we c onducted a proactive co mmunications outreach program to inform the public about the rule development effort. We solicited input and maintained an open door policy for those interest ed in discussing the rulemaking. Since January 2008, EPA staff has held more than 100 meetings with stakeholders, in cluding the following:2-2  trade associations and firms in poten tially affected industries/sectors;

 state, local, and tribal environmental control agencies and regional air quality planning organizations;

 state and regional organizations alre ady involved in GHG emissions reporting, such as TCR, CARB, and Wester n Climate Initiative (WCI); and

 environmental groups and other nongovernmental organizations.

 We al so met with U.S. Department of Energy (DOE) and U.S. Department of Agriculture (USDA), which have pr ograms relevant to GHG emissions.

During the meetings, we shared informati on about the statutory requirements and timetable for developing a rule. Stakeholders we re encouraged to provide input on key issues. Examples of topics discussed included exis ting GHG monitoring and re porting programs and lessons learned, thresholds for reporting, schedul es for reporting, scope of reporting, handling of confidential data, data verification, and the role of states in administering the program. As needed, the EPA technical workgroups followed up with these stakeholder groups on a variety of methodological, technical, and policy issues. EPA staff also provided information to tribes through conference calls with diffe rent Indian tribal working groups and organizations at EPA and through individual calls with tribal board members of TCR.

For a full list of organizations EPA met with when developing this rule please see the memo found at EPA-HQ-OAR-2008-0508-055.

On April 10, 2009 (74 FR 16448), EPA proposed the GHG reporting rule. EPA held two public hearings, and received over 16,000 written public comments. The public comment period ended on June 9, 2009.

In addition to the public hearings, EPA had an open door policy, similar to the outreach conducted during the development of the proposal . As a result, EPA met with over 4,000 people and 135 groups between proposal signature (M arch 10, 2009) and the close of the comment period (June 9, 2009). Details of these meetings are available in the docket (EPA-HQ-OAR2008-0508). EPA also visited two fluorinated ga s production facilities and conducted multiple meetings and conference calls with fluorinated gas producers in order to better understand the current practices and issues a ssociated with measuring emissions of fluorinated GHGs from fluorinated gas production facilities.2-3 2.1.2 Consideration of Comments Received

In the April 2009 proposed mandatory GHG repor ting rule, the electr onics, fluorinated GHG production, and use of electrical equipment s ource categories were included as subparts I, L, and DD. In addition, EPA requested commen t on requiring reporting under subpart OO of the quantities of fluorinated GHGs imported and export ed inside pre-charged equipment and foams. EPA received a number of lengthy, detailed co mments regarding proposed subparts I and L, several comments regarding the definition of “facility” under subpart DD, and several comments regarding a reporting requirement for imports and exports of F-GHGs contained inside precharged equipment and foams. These comments, which are described in more detail in the
discussions of the individual sour ce categories in the proposed ru le, raised concerns about the
costs and technical feas ibility of implementing subparts I a nd L as initially proposed, requested
clarification of how “facility” should be inte rpreted under subpart DD, and both favored and opposed a requirement to report imports of F- GHGs contained in imported and exported precharged equipment and closed-cell foams. EPA recognized the concerns raised by stakeholders, and decided not to finalize subpa rts I, L, and DD with the Final MRR, but chose instead to repropose significant pieces of these subparts in April, 2010..

The re-proposed rule incorporated a number of changes including, but not limited to, different methodologies that provi de improved emissions coverage at a lower cost burden to
facilities than would have been covered under the initial proposed ru le. In addition, EPA proposed requirements to report the quantities of fluorinated GHGs imported and exported inside pre-charged equipment and foams, and to repor t emissions from manufacture of electrical equipment, which are covered under Subparts QQ and SS. This rule was published in the Federal Register on April 12, 2010. During the 60-day comment period following the public hearing for the rule, EPA received further re quests from commenters for clarification and revisions to certain aspects of the each subpa rt. EPA took these comments into account while developing today’s final rule s for the F-gas subparts.

2.1 .3 Analysis of Emissions by Sector

For each of the source categories considered for this rule, EPA compiled information on current conditions in the categor y, including information about ex isting monitoring equipment or reporting frameworks, estimated emissions of GHGs, and estimated productive capacity or throughput. Incremental costs of measuring GHG emissions and conducting reporting activities were estimated under multiples scenarios. The cost estimates and analysis methodologies are detailed in Sections 4 and 5 of this report.2-4 2.2 Statutory Authority

As proposed, EPA is promulgating this rule under its existing CAA authority; specifically, authorities provided in CAA section 114. As discussed in detail in Sections I.C and II.Q of the preamble to the final rule es tablishing the GHG Reporting Program (74 FR 56260, October 30, 2009), CAA section 114 provides EPA with broad authority to require information mandated by this rule, because such data will inform and are relevant to EPA’s carrying out a wide variety of CAA provisions. Under CAA section 114(a)(1), the Administrator may require emissions sources, persons subject to the CAA, or persons whom the Administrator believes may have necessary information to monitor and report emissions and provide such other information as the Administrator requests for the purposes of carrying out the provisions in the CAA (except for a provision of title II with re spect to motor vehicles).
As discussed in greater detail in “Ma ndatory Reporting of Greenhouse Gases, EPA’s Response to Public Comment’s Section 3- Legal Issues” (EPA-HQ-OAR-2008-0508), the CAA provides EPA with broad authority to require the comprehensive and accurate information mandated in this rule because such data will inform, and are relevant to, EPA’s analyses of various CAA provisions. EPA may gather info rmation for a variety of purposes, including for the purpose of assisting in the development of implementation pl ans or of emissions standards under CAA section 111, determining compliance with implementation plans or such standards, or more broadly for “carrying out any provision” of the CAA. In addition, CAA section 103
authorizes EPA to establish a national rese arch and development program, including nonregulatory approaches and technologies for the prevention and control of air pollution as it relates to GHGs and climate change.

2.3 Existi ng Reporting Programs

In addition to the greenhouse gas repor ting program, a number of voluntary and mandatory GHG programs already exist or are be ing developed at the State, regional, and Federal levels. These programs have differe nt scopes and purposes. Many focus on GHG emission reduction, whereas others are purely reporting programs. In addition to the GHG programs, other Federal emission reporting program s and emission inventorie s are relevant to the GHG reporting rule. Several of these program s are summarized in this section.

Since the 1990s, EPA has operated a number of non-CO2 voluntary partnership programs aimed at reducing emissions from GHGs such as methane, SF6, and PFCs. There are two sector-2-5 specific partnerships to reduce SF6 emissions : the SF6 Emission Reduction Partnership for Electric Power Systems, with over 80 particip ating utilities, and the SF6 Emission Reduction Partnership for the Magnesium Industry. Partners in these programs implement practices to reduce SF6 emissions and prepare corporate-wide annual inventories of SF6 emissions using protocols and reporting tools developed by EPA. There are also two partnerships focused on PFCs: The Voluntary Aluminum Industrial Partners hip (VAIP) promotes t echnically feasible and
cost-effective actions to reduce PFC emissions; industry partners track and report PFC emissions reductions. Similarly, the Semiconductor Industry Association and EPA formed a partnership to reduce PFC emissions in which a third party compiles data from participating semiconductor companies and submits an aggregate (not comp any-specific) annual PFC emissions report.

In developing the rule, we carefully re viewed the existing reporting programs, particularly with respect to emissions s ources covered, thresholds, monitoring methods, frequency of reporting and verification. States may have, or intend to develop, reporting programs that are broader in scope or are more aggressive in implementation because those programs are either components of established re duction programs (e.g., cap and trade) or being used to design and inform measures that re duced GHGs indirectly (e .g., energy efficiency). Where possible, we built upon concepts in existing Federal and State prog rams in developing the mandatory GHG reporting rule. For a full summary of the reporting programs reviewed in the development of the mandatory reporting rule plea se see the Regulatory Impact Analysis for the Mandatory Reporting of Greenhouse Ga s Emissions EPA-HQ-OAR-2008-0508.S ECTION 3 DEVELOPMENT OF SUBPARTS

The F-Gas source categories included in this rule are:

 Subpart I -Electronics Manufacturing;

 Subpart L - Fluorinated Gas Production;

 Subpart DD – Electric Transmission and Distribution Equipment Use

 Su bpart QQ - Imports and Exports of Fluor inated GHGs in Pre-Charged Equipment and Closed-Cell Foams; and

 Subp art SS - Electrical Equipment Manuf acture or Refurbishment and Manufacturing of Electrical Components.

This section provides additional details abou t the development of these subparts (e.g., which were included in the initial proposal and which subparts are new additions to the original MRR). For each subpart, this section also prov ides a brief description of required monitoring methods and data reporting and recordkeeping requirements.

3.1 Su bpart I – Electronics Manufacturing

3 .1.1 Definition of Affected Entities

Electronics manufacturing includes, but is not lim ited to, the manufacture of semiconductors, liquid crystal displays (LCDs), microelectromechanical (MEMS), and photovoltaic cells (PV). The el ectronics industry uses multiple long-lived F-GHGs such as perfluorocarbons (PFCs), Hydrofluorocar bons (HFCs), sulfur hexafluoride (SF 6 ), and nitrogen trifluoride (NF 3 ), as well as nitrous oxide (N 2 O). This rule would apply to electronics manufacturing facilities that emit equal to or greater th an 25,000 metric tons of CO 2 e per year 3 from electronics manufacturing processes such as plasma etching, chemical vapor deposition, chamber cleaning, and heat transfer fluid use.

3 As discussed further below, EPA is proposing that uncontrolled emissions be used for purposes of determining whether a facility’s emissions are equal to or greater than 25,000 mtCO2e.

3-1In this action, EPA is designating methods to estimate emissions from cleaning and etching processes for semiconductor, LCD, ME MS, and PV manufacture and also methods for estimating N 2 O emissions from deposition and other ma nufacturing processes such as chamber cleaning. EPA is also clarifying methods for esti mating emissions from heat transfer fluids. EPA is also presenting methods fo r reporting controlled emissions fr om abatement systems.

3 .1.2 Summary of Major Changes Since Proposal

The April 2010 proposal included the follo wing reporting provisions for electronics manufacturers: (1) a single emissions-based reporting threshold for semiconductor, LCD, MEMS, and PV facilities; (2) modified methods for estimating emissions from cleaning and etching activities for semiconductor facilities and other electronics fa cilities including those that manufacture LCDs, MEMS, and PV; (3) methods for estimating facility N 2 O emissions; (4) clarified methods for estimating emissions from h eat transfer fluids; and (5) revised methods for reporting controlled emissions from abatement equipment.

After considering comments in response to the April 2010 proposal, EPA has further revised and clarified the regula tions on the electronics manufactur ing industry for today’s final rule. The changes to the rule include the following:

 EPA has revised the methodology for semiconductor manufacturing facilities to require affected facilities 4 to estimate and report emissions from etching and cleaning using five process categorizations differe ntiated by two wafer technologies (150/200 mm and 300 mm wafer size).

 EPA has added a requirement for the larg est semiconductor fac ilities (defined as facilities with annual capaciti es of greater than 10,500 m 2 of silicon) to estimate and report their emissions from the plasma etch ing process type using directly measured recipe-specific emission factors. (i.e. us ing an approach consistent with the 2006 IPCC Tier 3 method).

 EPA has modified the procedures by which facilities must develop gas consumption apportioning factors. Faci lities are required to apportion gas consumption using facility-specific engine ering models based on quantifiable metrics of fluorinated GHG-using activity and to document and verify these models, as specified by EPA, in site GHG Monitori ng Plan (as required under 40 CFR 98.3). EPA will permit the use of facility-specific models based on quantifiable metrics, such as wafer pass or wafer starts, provided a facility acceptably documents and verifies the model.

4 Covers facilities that have emissions equal to or greater than 25,000 mtCO 2 e

3-2 EPA has added methods by which to calcu late uptime and the DRE for a specific gas/categorization set. EP A has also modified how uptime is calculated by defining an “operational mode” for abatement systems.

 EPA has further defined direct recipe-sp ecific measurements (i.e., an approach based on the 2006 IPCC Tier 3 method) by addi ng definitions for “individual recipe” and “similar recipes.”

 EPA h as added provisions for the largest facilities to submit extension requests for only specific monitoring requirements a nd QA/QC standards demonstrating that it is not reasonable feasible to implement the use of a quantifiable indicator for apportioning gas to all etch processes and obtain directly measured emission factors for all etch processes at the facility. This extension request is in addition to permitting the use of BAMM through March 31, 2011. EPA does not anticipate approving extension requests beyond December 31, 2011 except in extreme circumstances which include safety, a requi rement being technically infeasible or counter to other local, State or Federal regulations.

 EPA h as added provisions for facilities that manufacture LEDs to estimate and report their emissions using an approach ba sed on two process types, plasma etching and chamber cleaning, and default emi ssion factors (utilization and by-product formation rates).

3.1.3 Se lection of Reporting Threshold

Under this rule, facilities that manufactur e semiconductors, LCD, MEMS, and PV would be subject to an emissions -based threshold of 25,000 mtCO 2 e. Consistent with other sections of the Final MRR, for the purposes of determining whether a facility emits equal to or greater than a 25,000 mtCO 2 e, a facility must include emissions fr om all source categorie s for which methods are provided in the rule. For purposes of the threshold determination under subpart I, EPA is offering two different methods, depending on whethe r the facility manufac turers semiconductors, MEMS, LCDs or PVs. It is important to not e that these methods are only for determining whether a facility exceeds th e threshold; methods require d for monitoring and reporting emissions data are presented in sections 3.1.5 and 3.1.6 below.

To determine whether a manufacturer falls above or below the 25,000 metric tons of
CO 2 e threshold, EPA is requiring that semic onductor, MEMS, and LCD facilities use gas specific emission factors assuming 100% manufacturing capacity to calculate annual metric tons
of emissions in CO 2 equivalents. Because we understand that heat transfer fluids are widely used within semiconductor manufacturing, EPA is re quiring that semiconducto r manufacturers add 10% of total clean and etch emissions at a facility to their estimate. PV facilities must multiply annual fluorinated GHG purchases or consumpti on by the gas-appropriate 100-year GWPs, as

3-3defined in Table A-1 of Subpart A of Part 98, to calculate annual metric t ons of emissions in CO 2 equivalents.

EPA is requiring an emissions estimating me thod that does not account for destruction by abatement equipment because actual emissions from facilities employing abatement equipment may exceed estimates when based on the manufact urers’ rated DREs of the equipment and may therefore exceed the 25,000 metric tons CO 2 e threshold without the knowledge of the facility operators. When abatement equipment is used, electronics manufacturer s often estimate their emissions using the manufacturer-supplied DRE for the equipment. However, abatement equipment may fail to achieve its rated DRE eith er because it was not installed properly, is not being properly operated and maintained, or b ecause the DRE value itself was incorrectly measured due to a failure to properly acc ount for the effects of dilution.

EPA is imposing an emissions-based threshol d in response to comments received on the initial proposal that stated the proposed cap acity-based threshold created ambiguity. EPA believes an emissions-based threshold will simplif y the applicability determination and that by applying the method for determini ng whether the threshold is met, a facility will be able to quickly determine whether they must report under this rule.

3 .1.4 Selection of Monitoring Methods

Today’s rule specifies methods to monitor and estimate fluorinated GHG and N 2 O emissions from semiconductor, LCD, MEMS, and PV manufacture. The methods discussed below include the following:

estimating emissions from cleaning and etching processes;

estimating facility N 2 O emissions;

estimating emissions from heat transfer fluids; and

reporting controlled emissions from abatement systems.

The methods described in this section are for estimating emissions that are required to be reported under this subpart.

3-43 .1.4.1 GHG Emissions Calculations and Monitoring Overview

To calculate fluorinated GHG and N 2 O emissions from electronics manufacturing facilities, reporters (i.e. cove red facilities) must use the fo llowing methods, as appropriate. 5

Fluorinated GHG emissions from electro nics manufacturing production processes

To calculate fluorinated GHG emissions, fac ilities must calculate emissions of each fluorinated GHG at the facility following me thods based on (1) gas consumption, and (2) fluorinated GHG utilization and by-product forma tion rates (emission factors) as discussed
below.

Gas Consumption

Electronics manufacturing f acilities must use the following methods to calculate and apportion gas consumption:

 Gas con sumption as calculated using the facility’s purchase records, disbursements, gas cylinder/container inventor ies, and gas- and facility-specific heel factors.

 Gas con sumption apportioning factors developed using facility-specific engineering models based on quantifiable me trics of fluorinated GHG-using activity.

Fluorinated GHG Utilization and By-Produc t Formation Rates (Emission Factors)

Electronics manufacturing facilities must use the following methods for applying
fluorinated GHG emission fact ors, as appropriate.

3 .1.4.2 F-GHG Emissions Estimation Methods – PV, LCD, MEM, and LED Manufacturing
Facilities that manufacture PV, LCDs, MEMS , and LEDS are required to estimate their emissions using default emissions factors for tw o process types, plasma etching and chamber cleaning. A facility may use di rectly measured recipe-specifi c emission factors in lieu of defaults only if the factors are measured in accordance with the 2006 ISMI Guidelines,

5 Covered facilities are electronics manufacturing facilities th at have emissions equal to or greater than 25,000
mtCO 2 e. For electronics manufacturing, EPA is requiring that uncontrolled emissions be used for purposes of determining whether a facility’s emissions are equal to or greater than 25,000 mt CO 2 e.

3-5International SEMATECH #06124825A-ENG, with limited exceptions. 6 A facility must use only default emission factors or only recipe-specific emission f actors; the combined use of emission factor types within the same reporting year is not permitted.

3 .1.4.3 F-GHG Emissions Estimation Method s – Semiconductor Manufacturing Facilities that Fabricate Devices on Wafe rs Measuring 300 mm or less in Diameter
Semiconductor manufacturing facilities that fa bricate devices on wa fers measuring 300
mm or less in diameter and have an annual ma nufacturing capacity of le ss than or equal to 10,500 m 2 silicon must estimate their emissions using default emissions factors for the following five categorizations.

 process type plasma etching;

 process category in-situ pl asma chamber cleaning;

 process category remote plasma chamber cleaning;

 process category in-situ ther mal chamber cleaning; and

 process type wafer cleaning.

This approach is hereinafter referred to as the “Tier 2c Method.” Semiconductor manufacturing facilities that fa bricate devices on wafers meas uring 300 mm or less in diameter and have an annual manufacturing capacity greater than 10,500 m 2 silicon must estimate their emissions using the five categoriz ations as defined for the Tier 2c method. However, instead of using default emission factors for the plasma etch ing process type, faciliti es must use directly measured recipe-specific emission factors. Thes e facilities must use default emission factors for the following:

 process category in-situ pl asma chamber cleaning;

 process category remote plasma chamber cleaning;

 proces s category in-situ ther mal chamber cleaning; and

 proces s type wafer cleaning.

6 EPA is permitting facilities to use emission factors measured in accordance with th e 2001 ISMI Guidelines provided the emissions factors were measured prior to January 1, 2007. Documentation for the measurements is required.

3-6The following hybrid methodology is hereinafter referred to as the “Tier 2d Method.” A facility may use directly measur ed recipe-specific emission factor s in lieu of chamber and wafer cleaning defaults only if the factors are measur ed in accordance with the 2006 ISMI Guidelines, International SEMATECH #06124825A-ENG, with limited exceptions. 7 A facility must use only default emission factors, or only recipe-specific emission factors for chamber and wafer cleaning; the combined use of emission factor types within the same reporting year is not permitted.

3 .1.4.4 F-GHG Estimation Methods—Sem iconductor Facilities that Fabricate Devices of Wafers Measuring 300 mm or more in Diameter Semiconductor manufacturing facilities that fabricate devices on wafers m easuring greater than
300 mm in diameter must estimate all of their emissions from plasma etching, chamber cleaning, and wafer cleaning using directly measured reci pe-specific emission fact ors. Emission factors must be measured in accordance with the 2006 ISMI Guidelines, International SEMATECH #06124825A-ENG, with limited exceptions. 8

3 .1.4.5 Method for Estimating N 2 O Emissions
Electronics manufacturing facilitie s must calculate emissions of N 2 O using:

 Requir ements for calculating and apportioni ng gas consumption as outlined above for “ Fluorinated GHG emissions from electronics manufacturing production processes”

 Manufa cturing production process emission factors for chemical vapor deposition and other electronics manufact uring production processes.

3 .1.4.6 Method for Estimating Emissions of Heat Transfer Methods
Electronics manufacturing facili ties must calculate emissions from heat transfer fluids using a mass balance approach in which disburse ments are properly account ed for according to procedures provided in 40 CFR part 98, subpart I.

3 .1.4.7 Method for Reporting Controlled Emi ssions from Abatement Equipment
Electronics manufacturing f acilities that wish to docum ent and report controlled
fluorinated GHG and N 2 O emissions from abatement systems must certify that that abatement system is installed, operated, and maintain ed in accordance with the manufacturers’

7 See footnote 5.

8 See footnote 5.

3-7specifications, as well as account for uptime of ab atement systems. Facilities must calculate controlled emissions using either:

 Dest ruction or removal efficiencies base d on a default value of 60%. Under this approach, certification that the abatement system is specifically designed for fluorinated GHG and N 2 O abatement is required; or

 EPA’ s Random Sampling Abatement Syst em Testing Program (RSASTP) to measure destruction or removal efficienci es using EPA’s Protocol for Measuring Destruction or Removal Efficiency of Fluorinated Greenhouse Gas Abatement Equipment in Electronics Manufactur ing, Version 1, EPA 430-R-10-003.

3.1 .5 Selection of Data Reporting Requirements

Owners and operators would be requir ed to report fluorinated GHG and N 2 O emissions for the facility for all plasma etching, chemical vapor deposition, chamber cleaning, and wafer cleaning processes as well as all h eat transfer fluid use. In ad dition, facilities would be required to report the following: method used to calculate emissions; factors used for gas utilization and by-product formation rates and the source for each factor for each fluorinated GHG and N 2 O; production in terms of substrate surface area (e.g., silicon, PV-cell, LCD); for each fluorinated
GHG and N 2 O, annual gas consumed during the reporting year and gas-and facility-specific heel factors used; the apportioning fact ors used, a description of th e engineering model used for apportioning gas usage, and facility-wide cons umption estimates based upon development of the apportioning factors, independent of the consumption value calc ulated using purchase records; fraction of each gas fed into each process type th at is fed into tools with abatement systems; descriptions and information about abatemen t systems through which fluorinated GHGs and N 2 O flow; inputs in the mass-balance equation (for heat transfer fluid emissions); and example calculations. Where process ca tegories defined in the Refine d Method and/or default gas utilization and by-product formati on rates are not used, facilities would be required to provide descriptions of individual pro cesses or processes categories us ed to estimate emissions.

For each abatement system for which a facili ty is reporting controlled emissions, the following would be required: certif ication that the abatement de vice is installed, operated, and maintained according to manufacturers’ specifications; the uptime and the calculations to determine uptime for that reporting year; the DRE used (i.e. either the EPA default DRE value or a properly measured DRE); and required documen tation to use the EPA default DRE value or a properly measured DRE.

3-8These data form the basis of the calculati ons and are needed fo r EPA to understand the reported emissions and verify their reasonableness.

3.1.6 Selection of Recordkeeping Requirements

EPA is requiring that facilities keep records of data used to estimate emissions, records supporting values used to estimate emissions, purch ase records, and invoices for gas purchases
and sales.

For those facilities that are reporting controlled emissions, EPA requests that the following records be kept: documentation to certify that each abatement device used at the facility is installed, maintained, and operated in accordance with manufac turers’ specifications; records of the uptime and the calculations to de termine uptime; abatement system calibration and maintenance records; required documentation to use either the EPA default DRE value or a properly measured DRE; and dated certificati on by the technician who makes the measurement that the destruction or removal efficiency is ca lculated in accordance with the methods in EPA
430-R-10-003.

These records consist of values that are direc tly used to calculate the emissions that are reported and are necessary to enable verification that th e GHG emissions monitoring and calculations are done correctly.

3.2 Su bpart L – Fluorinated GHG Producers

3 .2.1 Definition of Affected Entities

An affected entity under subpart L is defined as any facility that produces a fluorinated gas from any raw material or feedstock ch emical. Fluorinated gas production includes the production of fluorinated GHGs (including HFCs, PFCs, SF 6 , NF3, and HFEs) and chlorofluorocarbons (CFCs) or hydrochlorofl uorocarbons (HCFCs). EPA stipulates that production of fluorinated gases does not include the reuse or recycling of fluorinated GHG or the generation of HFC-23 during th e production of HCFC-22.

Facilities that produce fluorin ated gases will be required to report their fluorinated GHG emissions from fluorinated gas production, transformation, and destruction, as well as
combustion-related CO 2, CH 4, and nitrous oxide (N 2 O) emissions from stationary fuel combustion. Fluorinated gases include fluorinat ed GHGs (HFCs, PFCs, SF6, NF3, HFEs, etc.), CFCs, and HCFCs. However, emissions of HFC-23 from HCFC-22 production are addressed

3-9under subpart O and are therefore excluded from this subpart. Si milarly, emissions of CFCs and HCFCs are addressed under the regulations implem enting Title VI of the Clean Air Act and are therefore excluded from this subpart.

3 .2.2 Summary of Changes Since the Initial Proposal

The proposal published in the Federal Registry in April of 2010, included revisions to several of the provisions in the initial proposed subpart L (April 2009). The subsequent comment period provided commenters an opportun ity to respond to the new proposal. Today’s
final rule reflects EPA’s consideration of th e concerns raised during this comment period.

Today’s Subpart L rule incorporates a numbe r of changes since th e previous proposal including, but not limited to, the following:

 EPA has clarified when and how the scoping test must be performed.

 EPA has added more flexibility to the ma ss-balance approach in order to: allow use of the mass-balance approach with pr ocess that do not produce fluorinated GHGs but may emit them (e.g., process wafers that transform fluorinated GHGs); and incorporate process variability into the erro r calculation.

 EPA has added more flexibility to the emission factor approach by:

– Changing the method for determining whether the emissions of a process fall below the 10,000 mtCO2e cutoff that allows the use of engineering calculations rather than stack testing.

– Allowing use of engineering calculati ons or assessments with all batch processes, regardless of emissions, as long as a field verification of major emissions events are conducted.

– Allowing emissions testing after the cont rol device if the vent is controlled and annual emissions bypassing (i.e., not ve nted to) the control device are less than 10,000 mtCO2e.

– Expanding the set of test methods that can be used for emissions testing to include industry standard sampling and analytical methods that have been validated using EPA Method 301 or other validation methods.

– Expanding the set of methods that can be used for quantifying emissions from equipment leaks.

– For p urposes of quantifying emissions from equipment leaks, defining “in fluorinated GHG service” as containing or contacting a feedstock, byproduct, or product that contains 5 percent or more total fluorinated GHG by weight.

3-10– Addi ng a requirement to monitor and report fluorinated GHG emissions from containers when the residual fluorinated GHG (heel) is vented to the atmosphere rather than recaptured and reused or destroyed.

3.2.3 Selection of Reporting Threshold

Under the rule, owners and ope rators of fluorinated gas production facilities would be required to estimate and report GHG emissions if they are equal to or greater than 25,000 mtCO2e in the absence of control technology (e.g., thermal oxidation).

As is true for the other source catego ries covered by the Mandatory GHG Reporting Rule, EPA is allowing that fluorinated gas produ ction facilities could cease reporting if their emissions were less than 25,000 mtCO2e per year for five consecutive years or less than 15,000 mtCO2e per year for three consecutive years.

A full discussion of the threshold selection anal ysis is available in the revised Fluorinated Gas Production TSD (EPA-HQ-OAR-2009-0927). For sp ecific information on costs, including unamortized first year capital expend itures, please refer to section 4.

3.2.4 Selection of Monitoring Methods

EPA is allowing facilities to use either a mass-balance approach or a site-specific, process-vent-specific emission factor (PSEF) approach to estimate their fluorinated GHG emissions. The mass-balance approach is similar to that of the April, 2009 proposal, as well as that included in the April, 2010 proposal, but has been modified in some details in response to comments. Facilities using either approach w ould be required to perfor m a one-time survey to identify the F-GHGs in certain emitted streams and to verify the destruction efficiency (DE) of any destruction devices every five years.

Facilities that produce fluorin ated gases must perform an initial survey of the F-GHGs present in emissions from processes that would emit more than two metric tons per year of FGHGs before the imposition of control technologies . Under this requirement, which would be one-time for any given process, facilities would be required to sample the vent(s) or stream(s) that, alone or together, would be expected to contain all the F-GHG by-products of the process.

3-113.2 .5 Selection of Data Reporting Requirements

Under the rule, owners and operators of facilities producing fluorinat ed GHGs would be required to report both their fluor inated GHG emissions and the quant ities used to estimate them on a process-specific basis. For the mass-bala nce approach, this incl udes the masses of the reactants, products, by-products, and wastes, and, if applicable, the quantities of any product in the by-products and/or wastes (if that product is emitted at the facility). For the emission factor
and emission calculation factor a pproach, data to be reported in cludes the process activity used to calculate emissions (e.g., the tons of product produced or tons of reactant consumed) and the
emission factors used to estimate them. Owners and operators must also re port the mass of each fluorinated GHG gas emitted, including the mass of each fluorinated GHG emitted from equipment leaks.

Where fluorinated gas production facilities ha ve estimated missing data, the facility would be required to report the reason the data were missing, the length of time the data were missing, the method used to estimate the missing data, and the estimates of those data.

3.2.6 Selection of Recordkeeping Requirements

Maintaining records of the information used to determine the reported GHG emissions is necessary to enable us to verify that the GHG emissions monitoring and calculations were done correctly. Under the rule, owne rs and operators of facilities producing fluorinated GHGs would be required to retain records documenting the data reported, including records of monthly emission estimation calculations, including all data that went in to the calculations, calibration records for flowmeters, scales, and gas chroma tographs, and documentation of emission factor development activities. These records are necessary to verify that the GHG emissions monitoring and calculations were performed correctly.

3.3 Su bpart DD--Electric Transmission and Distribution Equipment Use

3.3 .1 Definition of Affected Entities

The electric transmission and distribution equipment use source category includes gasinsulated substations, circuit breakers, other sw itchgear, and gas-insulate d lines containing SF6 or PFCs. Equipment also includes gas containers such as pressurized cylinders, gas carts, new equipment owned but not yet installed, or othe r containers. Notwithsta nding the definition of facility in subpart A, for purposes of this s ubpart, “facility” means an electric transmission and distribution system which is the collection of SF6- and PFC insulated equipment linked through

3-12electric power transmission or distribution lines a nd operated as an integrat ed unit by one electric power entity or several entitie s that have a single owner.

Reporting by the electric transmission and di stribution system is comprised of the system-wide collection of gas-insulated equipment located between the poin t of generation or the point at which electricity is obtained from a di fferent power entity and the point at which the customer or another electric power entity receiv es the electricity, and must be based on the aggregation of emissions of all servicing inventory and equipmen t. All individual pieces of equipment that are located within the syst em are included regardless of ownership.

EPA defines an electric power entity as a company; an electric cooperative; a public electric supply corporation as the Tennessee Valle y Authority; a similar Federal department or agency such as the Bonneville Power Administrati on; the Bureau of Reclamation or the Corps of Engineers; a municipally owned electric department offering serv ice to the public; or an electric public utility district (a ‘‘PUD ’’); also a jointly owned electri c supply project such as the Keystone.

3.3.2 Summary of Changes Since Proposal

While Subpart DD remains largely unchanged from the initial proposal, EPA has made a few modifications after receiving several comments regarding the source category definition and the rule requirements. In the final rule, EPA is cl arifying that “operators” refers to operators of the collection of system assets including SF6 equipment and not ope rators of Electric Systems, whose responsibility is to monitor and control electricity in that system in real time. EPA is also clarifying that system boundaries are specific to delivery to the customer or another electric power system. EPA is also requiring scale recalibration is accordance with manufacturer specifications or every three years, whichever is sooner, and that the scales are required to be accurate with +/- 2 pounds of the scale’s capacity . Finally, EPA is including costs of reporting requirements ( $1700 in reporting costs for each f acility) which had inadvertently been omitted from the proposal RIA.

With the exception of the updates discussed in the previous paragr aph, the requirements for entities covered under Subpart DD are identical to those described in the proposed MRR ((see docket # EPA-HQ-OAR-2008-0508).

3-133.4 Su bpart QQ – Importing/Exporting of Pre-charged Equipment and Foams

3.4.1 Definition of Affected Entities

This source category consists of any entity that is importing or exporting pre-charged equipment that contains a fluorin ated GHG and also consists of a ny entity that that is importing or exporting closed-cell foams th at contain a fluorinated GHG. A variety of products containing fluorinated greenhouse gases (F-GHGs), nitrous oxide (N 2 O), and carbon dioxide (CO 2 ) are imported into and exported from the United St ates. Pre-charged equipment includes airconditioning, refrigeration, and elec trical equipment. Closed-ce ll foams that are imported and exported include polyurethane (PU) rigid foam us ed in insulation in domestic refrigerators and freezers; commercial refrigeration foam,; PU ri gid sandwich panel continuous and discontinuous foam; extruded polystryrene (XPS) sheet foam; and XPS boardstock foam.

3.4.2 Summary of Proposal

In the April 2009 proposed rule EPA did not re quire reporting of the quantities of GHGs imported and exported inside products. EPA was concerned that it would be difficult for importers and exporters to identify and quantif y the quantities of GHGs inside some products and that the number of impor ters and exporters would be high. However, EPA requested comment on the option of requiring reporting of imports and exports of HFCs and SF 6 contained in pre-charged air-conditioning, refr igeration, and electri cal equipment and in closed cell foams. EPA noted that for these products, information on th e size and chemical identity of the charge or blowing agent is likely to be readily available to importers and exporters (e.g., from nameplates affixed to equipment, servicing manuals, and product information for foams). Moreover, as noted above, the total quantities of imported and exported F-GHGs in pre-charged equipment and foams are significant.

After carefully considering the comments and available information on imports and exports of F-GHGs inside pre-charged equipmen t and foams, EPA proposed to require reporting of these imports and exports in the revised Ap ril 2010 proposal. Importers and exporters of precharged equipment and closed-cell foams would be subject to requirements similar to those for importers and exporters of bulk GHGs. In addi tion, equipment importers would be required to report the types and charge sizes of equipmen t and the number of pieces of each type of equipment that they imported or exported, whil e foam importers would be required to report the volume of foam and F-GHG density of the foam that they imported. As is true for importers and

3-14exporters of bulk F-GHGs, importers and expor ters of equipment and foam would only be required to report if their total imports or exports exceeded the 25,000 mtCO2e threshold.

3.4.3 Summary of Changes Since the Proposal

Following the comment period on the Apr il 2010 proposal, EPA has modified the regulations on Subpart QQ for today’ s final rule. The definition of closed-cell foams was revised to only include closed-cell foams that are used to insulate equipment or other articles. EPA’s original analysis of this source category identified imports and e xports of closed-cell foams used to insulate, such as foams used in refrigeration equipment, as a significant source of fluorinated
GHGs. In conversation with indus try representatives, EPA learne d that closed-cell foams are sometimes used in general packaging. EPA neve r intended to include these sources. Packaging foams are widely used when shipping mate rials, and EPA anticip ates it would be too burdensome for entities to ascertain the type of packaging foam and the blowing agent used in that foam when shipping materials.

3.4.4 Selection of Reporting Threshold

Under the final rule, EPA is requiring that importers and exporters of F-GHGs contained in pre-charged equipment and closed cell foams report their fluorinated GHG emissions if either their total imports or their to tal exports, in equipment, foams, and in bulk, exceed 25,000 mtCO 2 e per year. This threshold is the same as that for bulk imports and exports.

3.4.5 Selection of Monitoring Meth ods and QA/QC Requirements

EPA is requiring importers and exporters of equipment and foams to estimate their imports and exports of each F-GHG by multiplyi ng the mass of the F-GHG contained in each type of equipment or foam by the number of pi eces of equipment or by the volume of foam, as appropriate. EPA believes that information on F- GHG identity and charge size (or density, for foams) should be readily availabl e to importers and exporters.

3.4 .6 Selection of Data Reporting Requirements

Under the rule, EPA will require importers and exporters of pre-charged equipment and closed cell foams to report the following:

(1) The total mass in metric tons of each fluorinated GHG imported or exported in precharged equipment or closed-cell foams.

3-15(2) For each type of pre-charged equipment, the identity of the fluorinated GHG used as a refrigerant or electrical insu lator, charge size (holding charge 9 , if applicable), and number imported or exported.

(3) For closed-cell foams that are imported or exported inside of appliances, the identity of the fluorinated GHG contained in the foam, th e quantity of fluorinated GHG contained in the foam in each appliance, and the number of app liances imported for each type of appliance.

(4) For closed cell-foams that are not inside of appliances, the ident ity of the fluorinated GHG, the density of the fluorinated GHG in the fo am (kg F-GHG/cubic foot ), and the quantity of foam imported or exported (cubic feet) for each type of closed-cell foam.

(5) Dates on which the pre-charged equipm ent or closed-cell foams were imported or exported.

(6) Ports of entry through wh ich the pre-charged equipment or closed-cell foams passed.

(7) Countries from or to which the pre-ch arged equipment or closed-cell foams were imported or exported.

EPA is collecting this information because it is necessary either to understand the total volume of F-GHGs imported or exported insi de of pre-charged equipment and foams (and thereby contributing to the U.S. supply of F-GHGs) or to verify submitted information.

3.4.7 Selection of Recordkeeping Requirements

EPA is requiring importers and exporters of e quipment and closed cell foams to retain the following records:

(1) a copy of the bill of lading for the import or export;

(2) the invoice for th e import or export; and

(3) for imports, the U.S. Customs entry form.

Persons who transship pre-charged equipm ent and closed cell foams containing
fluorinated GHGs must maintain records that in dicate that the pre-charged equipment or foam

9 This refers to any holding charge consisting of a fluorinated GHG. Holding charges consisting of other gases, such as nitrogen, are not included.

3-16originated in a foreign country and did not enter into commer ce in the United States. This information is necessary to verify submitted information.

3.5 Su bpart SS – Electrical Equipment and Components Manufacturing

3 .5.1 Definition of Affected Entities

Affected entities under subpart SS are defined as electrical equipment manufacturers of
SF 6 -insulated closed-pressure system equipment and sealed-pressure system equipment including gas-insulated substations, circ uit breakers, other switchgear, gas-insulated lines, or power transformers containing sulfur-hexafluoride (SF 6 ) or perfluorocarbons (PFCs).

Electrical equipment ma nufacturers purchase bulk SF 6 gas to (1) install a nominal charge in high-voltage closed-pressure equipmen t, (2) ship alongside closed-pressure equipment for topping off at installation site, (3) fill seal ed-pressure equipment with its intended lifetime supply of SF6, and (4) develop and test equipment. Fugitive emissions of SF 6 from equipment manufacturers typically occur during the manufac turing of equipment but can also occur during
the other uses of SF 6 at manufacturing facilities.

While EPA believes that SF 6 represents the majority of emissions from this source category, manufacturers may also us e PFCs as dielectrics and heat transfer fluids in power transformers. For example the PFC perfluorohexane (C 6 F 14 ) is used for retrofitting CFC-113
cooled transformers.

According to the U.S. Inventory of Greenhouse Gas Emissions and Sinks: 1990-2007 (U.S. Environmental Protection Agency, 2009), total U.S. estimated emissions of SF 6 from electrical equipment manufacturers was estim ated to be 0.81 million metric tons CO 2 e in 2006. EPA is requiring reporting from electrical equipment manufacture and refurbishment facilities because these operations represent a signi ficant source, approximately 5% of SF 6 emissions. It is estimated that ten equipment manufacturer s were responsible for these emissions.

EPA is also including emissions of PFCs emitted during the manufacture or refurbishment of PFC-containing power transfor mers because the National Inventory has no
information on this source and because use of tran sformers is expected to grow in the future.

This source category comprises electrical eq uipment manufacturers and refurbishers of SF6 or PFC-insulated closed-pressure system e quipment and sealed-pressure system equipment

3-17including gas-insulated substations , circuit breakers, other switchgear, gas-insulated lines, or power transformers containi ng sulfur-hexaf luoride (SF 6 ) or perfluorocarbons (PFCs).

3 .5.2 Summary of Changes Since Proposal

The major changes in this rule since the pr oposal are identified in the following list.

 Scale recalibration is require d in accordance with manufact urer specifications or once every three years, whichever is sooner.

 Scales are required to be accurate within +/- 2 pounds of the scale’s capacity.

 EPA is allowing use of a statistically representative value for emissions downstream of the flowmeter measuring the mass of SF 6 being transferred from the storage container to the equipment being fill ed. The statistically representative value must be based on a statistically represen tative sample size for each combination of hose and valve of a given sized diameter.

 The q uantity of gas charged in to delivered equipment and added during installation by the manufacturer must be ce rtified by the manufacturer and expressed in pounds of SF 6 or PFC.

 The e lectrical equipment manufacturer must estimate the annual SF 6 and PFC emissions from the equipment being inst alled on the electric power system’s premises, only when the title of the equipmen t has not yet been transferred, using an equipment installation mass balance equation.

3.5.3 Selection of Reporting Threshold

EPA is requiring electrical equipmen t manufacturers to report their SF 6 and PFC
emissions if their tota l annual purchases of SF 6 and PFCs exceed 23,000 lbs. This consumptionbased threshold is equivalent to an emissions-based threshold of 25,000 mtCO 2 e, assuming an average manufacturer emission rate of 10%.

3.5.4 Selection of Monitoring Meth ods and QA/QC Requirements

In developing the approach, EPA reviewed the 2006 IPCC Guidelines, the U.S. GHG Inventory, DOE 1605(b), EPA’s Climate Leaders Program, and The Climate Registry. In the IPCC Guidelines, Tiers 1 and 2 are based on defa ult and country-specifi c SF6 and PFC emission factors, but Tier 3 is based on a mass-balance ap proach for estimating SF6 and PFC emissions at each life-cycle stage of the equipment.

3-18The monitoring methods for calculating SF 6 and PFC emissions from electrical equipment manufacturing and refurbishment are similar to the methodologies described in the
2006 IPCC Guidelines Tier 3 methods for emissi ons from electrical equipment manufacturing.

EPA is requiring that all SF 6 and PFC emissions be repor ted, including those from equipment testing, manufacturing, decommissioning and disposal, refurbishing, and from storage cylinders, as well as combustion-related CO 2 , CH 4 , and nitrous oxide (N 2 O) emissions from stationary fuel combustion. The Tier 3 approach is being used because it is the most accurate
and it is feasible for all equipment manufacturers to conduc t the mass balance analysis for SF 6 and PFCs using readily available information.

A comparable mass-balance approach is used for subpart DD Sulfur Hexafluoride (SF 6 ) and Perfluorocarbons (PFCs) from Electrica l Equipment at an Electric Power System . The mass-balance approach works by tracking and system atically accounting for al l facility uses of
SF 6 and PFCs during the reporting year. The quantities of SF 6 and PFCs that cannot be
accounted for are assumed to have been emitte d to the atmosphere. The emissions of SF 6 and PFCs must be estimated and reported separately. All quantities required to calculate the massbalance equations for this subpart must be measured using scales or flow me ters that are certified with an accuracy and precision within two pounds of the scale’s capacity.

In addition, EPA will require th at electrical equipment manufacturers keep records for the QA/QC requirements including chec k-out sheets and weigh-in pro cedures for cylinders, residual gas amounts in cylinders sent back to suppliers , invoices for gas and equipment purchases or sales, and documentation of recycling and destru ction. The records that are being requested are the minimum needed to reproduce and confirm emission calculations.

3.5.5 Sele ction of Data Reporting Requirements

EPA is requiring annual reporting for the electrical equipment manufacturing and refurbishing industry. Equipment manufacturers would report all SF 6 and PFC emissions, including those from equipment testi ng, equipment manufacturing, and bulk SF 6 and PFC handling. However, the emissions would not need to be broken down and reported separately for testing, manufacturing, or bulk SF 6 and PFC handling. Along with their emissions, electrical equipment manufacturers will be required to submit the following supplemental data: SF 6 and PFCs with or inside equipment delivered to customers, SF 6 and PFCs returned by customers with or inside equipment, bulk SF 6 and PFC purchases, SF 6 and PFCs sent off-site for destruction or to be recycled, SF 6 and PFC returned from offsite after recycling, SF 6 and PFCs stored in

3-193-20 containers at the beginning and end of the year, and SF 6 and PFCs returned to suppliers. Facilities must also report a description of the engineering me thods and calculations used to
determine emissions from hoses or other flow lin es that connect the cont ainer to the equipment that is being filled.

These data must be submitted because they are the minimum data that are needed to understand and reproduce the emission calculations that are the basi s of the reported emissions.

3.5 .6 Selection of Recordkeeping Requirements

In this action, EPA is requiring that electr ical equipment manufact urers be required to keep records documenting (1) their adherence to the QA/QC requirements specified in the rule, and (2) the data that would be included in thei r emission reports, as spec ified above. Facilities must also keep check-out and weigh-in sheets and procedures for cylinders, documentation of residual gas amounts in cylinders sent back to suppliers, and invoices for gas purchases and
sales.SECTION 4 ENGINEERING COST ANALYSIS

4.1 Introduction
EPA estimated costs of complying with the rule for process emissions of GHGs in each affected industrial facility. EPA used availabl e industry and EPA data to characterize conditions
at affected sources. Incrementa l monitoring, recordkeeping, and reporting activitie s were then identified for each type of facility, and the associated costs were estimated.

4.2 Ov erview of Cost Analysis
The costs of complying with the rule will vary from one facility to another, depending on the types of emissions, the number of affected sources at the facility, existing monitoring, recordkeeping, and reporting activities at the f acility, etc. The costs include labor costs for performing the monitoring, recordkeeping, and repor ting activities necessary to comply with the rule. For affected facilities, costs include monitoring, recordin g, and reporting of GHG emissions from production processes and from stationary combustion units. A ll costs referred to in this section are reported in 2006 dollars.

For each source category, we first provide a general overview of baseline reporting (if data are available); two costs components associat ed with this information collection; labor costs (i.e., the cost of labor by facility staff to m eet the information collec tion requirements of the rule); and capital and operating and maintenance costs (e.g., the cost of purchasing and installing monitoring equipment or contractor costs associ ated with providing the required information). Additional details of the data, methods, and assu mptions underlying the co sts are documented in a separate cost appendix and in accompanying Technical Support Documents (TSDs). The TSDs also include information on the assumptions and methods used to identif y representative entities or groups of entities used to develop the cost analysis for each subpart.

4.2.1 Baseline Reporting

When data are available to determine how many companies are currently implementing approaches consistent with the methods at the facility level to meet internal GHG management programs or state or voluntary reporting programs at the domestic or international level, we
include a discussion of the base line reporting practices. When da ta are not available, EPA is assuming that none of the facilities in these source categories are curre ntly reporting emissions and that many of the requirements will result in “new” or “full” costs to meet reporting requirements. Specifically, EPA is assuming that there will be additional costs for any sampling

4-21and testing in the requirements in methods (i.e ., carbon contents of process inputs, such coke, coal, carbonate composition, or ac tual emissions). EPA is also a ssuming that additional costs will be incurred for preparing monitoring and QA/QC plans, performing the calculations, reporting the results, and maintaining records.

4

.2.2 Reporting Costs

To ensure consistency in the development of cost estimates across all sources, EPA developed a cost spreadsheet template that each subpart used to compile, document, and calculate per unit reporting costs. Detailed inst ructions were provided along with the cost spreadsheet template that clearly explained the data to be compiled and calculated. The template included three tables; analysis of reporting thresholds, analys is of monitoring and reporting options, and unit costs for monitoring and reporti ng. Key variables and data fields were clearly defined to ensure that costs developed for each subpart used a standard set of methods and assumptions (e.g., method for annualization of capital co sts, interest rate to be applied to capital).

Labor Costs . The costs of complying with and admini stering this rule include the time of managers, technical, and administrative staff in both the private sector and the public sector. Staff hours are estimated for activities including:

 monitoring (private): staff hours to opera te and maintain emissions monitoring systems;

 reporting (private): staff hours to gather a nd process available da ta and reporting it to EPA through electronic systems; and

 as suring and releasing data ( public): staff hours to quality assure, analyze, and release reports.

Staff activities and associated labor costs may vary over ti me. Thus, cost estimates are developed for start-up, first-time reporting, and subsequent reporting.

Loaded hourly labor rates (also referred to as “wage rates”) were developed for several labor categories to represent the employer costs to use an hour of employees’ time in each of the manufacturing sector labor cate gories used in this analysis. The labor categories correspond to the job responsibilities of the personnel that are likely to be involved in GHG emissions monitoring activities at the ma nufacturing facility level to comply with the rulemaking.

For purposes of this study, EPA adopted the methodology used by Cody Rice (2002) to calculate the wage rates for the EPA’s Toxics Release Inventory (TRI) Program. Thus, the wage
rates calculated for different labor categories included the employer costs for employee

4-22compensation (comprising the basic wages a nd the corresponding benefits) and the overhead

costs to the employer

. 10

For each labor category, the following formula was used to calculate the wage rates:
Loaded Hourly Labor Rate ($/h r.) = Basic Wages ($/hr.) * (1 + Benefits Loading Factor + Overhead Loading Factor).

The benefits loading factor corresponds to the relative shar e of benefits compensation in the total employee compensation (comprising basi c wages and benefits). Although the benefits factor tends to vary by labor category and by industry (0.37 to 0.50), for purposes of this analysis, we have assumed the benefits loading f actor (1.7) to remain the same for each labor category across all industrie s within the manufacturing sector due to a lack of availability of necessary industry-specific data on benefits paid to employees.

The overhead loading factor corresponds to the share of overhead costs to the employer
relative to the tota l employee compensation. For purposes of th is analysis, we have also adopted the same overhead loading factor that Cody Rice ( 2002) used in her wage rate calculations. Thus the overhead loading factor that we used in the wage rate calcul ations remains the same for all labor categories and across a ll industry types with in the manufacturing sector. The overhead loading factor was assumed to be 0.17.

The loaded labor rates for the four labor categories that are used in the cost analysis for each subpart covered under this rule and are also reported in the appropria te sectors labor cost tables in the following sections.

10 For each employee, the employer also incurs overhead costs (comprising the rental costs of the office space, computer hardware and software, telecommunication and other equipments, organizational support, etc.) required for and used by the employee to effectively fu lfill his/her job responsibilities. These costs are over and above the employee compensation costs.

4-23Table 4-1. Labor Categories and Hourly Rates

Labor Category Description Load ed Hourly Rate ($/hour) Legal Oversees legal aspects of company reports and data-reporting forms. $101.00/hour

Managerial Oversees work at a high level and is the final authority on all reporting requirements. $71.03/hour

Technical Conducts monitoring of emissions sources, checks for accuracy, performs measurements. $55.20/hour

Clerical Assists with documentation and recording information $29.65/hour

Capital and O&M Costs . This includes the cost of pur chasing and installing monitoring equipment or contractor costs associated with providing the required information. Selected subparts do not require capital expenditures beca use the selected monitoring option does not require capital equipment or th e reporter already owns the ne cessary monitoring equipment. Equipment costs include both the initial purch ase price of monitoring equipment and any facility/process modification that may be required. For example, the cost estimation method for mobile sources involves upstream measurement by the vehicle manufacturers. This may require an upgrade to their test equipmen t and facility. Based on expert judgment, the engineering costs analyses annualized capital equipment costs with the appropriate lifetime and interest rate assumptions. Cost recovery periods vary by indust ry (5 to 15 years) wi th one-time capital costs are amortized at a rate of 7%.

Other Recordkeeping and Reporting. Additional reporting ($500) costs was added to all subparts.

Cost Analysis by Subpart. The balance of section 4 provi des the cost data by subpart. The data are the basis for the economic impact anal ysis described in detail in Section 5 of this document. This chapter provides these data, as well as background information needed to understand the engineering costs analysis condu cted for each source and the reporting option selection.

4-244.3 Co st Analysis for Subpart I – Electronics Manufacturers

4.3.1 Model Facility Development

This analysis is based on the costs of monitoring fluorinated greenhouse gas (F-GHG) and nitrous oxide (N2O) emissions from electro nics manufacturing facilities. Electronics manufacturing facilities were br oken into three categories; n on-semiconductor electronics (3 facilities), large semiconductor (29 facilities ), and non-large semic onductor (62 facilities). 11
, 12
Non-semiconductor electronics includes facilities that manufacture micro-electromechanical systems (MEMS), liquid crystal displa ys (LCDs), and photovoltaics (PV).

Through industry comments and the PFC Reduction/Climate Partnership for Semiconductors, the EPA has improved its underst anding of semiconductor facilities and their emissions and has assigned a method of complian ce to each electronics manufacturing facility category. For cost estimates, non-semiconductor facilities were assigned to use the “Tier 2b
Method” based on IPCC’s Tier 2b tw o process categories (chamber cleaning and plasma etching) in order to comply with Subpart I. Non-large semiconductor facilities we re assigned to use the “Tier 2c Method” defining the following five proce ss categories and defau lt emission factors: (1) chamber cleaning – in situ plasma; (2) chamber cleaning – remote plasma; (3) chamber cleaning – in-situ thermal; (4) plasma etching; and (5) wa fer cleans. The larges t semiconductor facilities were assigned to use the “Tier 2d Method” which is identical to the “T ier 2c Method” for all facility process categories excep t plasma etching, which requires directly measured recipespecific emission factors similar to the 2006 IPCC Tier 3 methodology. 13 Annual costs differ for each of the three electronics manufacturing cate gories because they are subject to different requirements, as detailed below under “Monitori ng Costs”. In addition, MEMS, LCD, and PV manufacturing use fewer types of F-GHGs than semiconductor manufacturing facilities. Therefore, cost estimates for these other types of electronics facilities we re developed using cost

11 Number of facilities based on Semiconductor Equi pment and Materials Indus try (SEMI). July 2007. World Fab

Forecast

. http://www.semi.org/en/index.htm and does not include LED facilities.

12 The distinction between large and small semiconductor fa cilities is based on the facility’s manufacturing capacity and the wafer size the facility manufactures.

13 Plasma etching emission factors must be measured in accordance with the 2006 ISMI Guidelines, International SEMATECH #06124825A-ENG, with limited exemptions.

4-25estimates from EPA’s initial proposal for a “sma ll” semiconductor facili ty and scaling these costs to account for the use of a smaller set of gases. 14

4.3.2 Determination of Cost Elements

The total costs associated with complying w ith the proposed rulemaking were broken into four elements, which are described below.
Monitoring costs. The following types of mon itoring costs were identified:

Collection of activity data for estimating F-GHG and N2O emissions.

As previously mentioned costs for collecting activity data differ depending on the facility category (large semiconductor, non-large semiconductor, or other electronics manufacturing).

Using the “Tier 2b Method” non-semiconducto r facilities are re quired to estimate emissions using (1) gas consumption as calcula ted using the facility’s purchase records, inventory, and gas-and facility-specific heel factors, (2) facility specific methods for apportioning gas usage by IPCC’s Tier 2b two pro cess categories (clean and etch), (3) updated
Tier 2b default emissions factor s, and (4) either EPA published default DRE value or properly measured DRE where appropriate.

Non-large semiconductor facilities assigned to the “Tier 2c Method” would be required to use an approach for estimating emissions wh ich includes the followi ng components: (1) gas consumption as calculated using th e facility’s purchase records, inventory, and gas-and facilityspecific heel factors, (2) facility spec ific methods for apportioning gas usage by five process categories, (3) default emission factors (including factors for by-products) based on five process categories, and (4) either EPA published default destruction or removal efficiency (DRE) value or properly measured DRE where appropriate. Facilities could either use emission factors provided by EPA or develop/acquire facility-specific emissions f actors from process equipment manufacturers. In addition, facili ties that have monitoring infrastruc ture or the necessary data to estimate emissions obtained through recipe-specific measurements would be permitted to do so.

14 In its initial 2009 proposal for electronics manufactur e, EPA defined “small” semiconductor facilities as those facilities with annual capacities less than 10,500 m 2 silicon (147 facilities out of 175 total facilities). In the initial proposal, those facilities were required to estimate their emissions using an approach based on the IPCC Tier 2b
method.

4-26The costs presented in this analysis reflect th e use of default emission factors and EPA published
DRE values.

Under the “Tier 2d Method” the largest semic onductor facilities were assigned to use an approach for estimating emissions which includes (1) gas consumption as calculated using the facility’s purchase records, i nventory, and gas-and facility-speci fic heel factors, (2) facility specific methods for apportioning gas usage by fi ve process categories (3) default emission factors (including factors for by-products) ba sed on four process categories and directly measured emission factors for the etching pr ocess, and (4) either EPA published default destruction or removal efficiency (DRE) value or properly measured DRE. Similar to the “Tier 2c Method”, facilities can use ei ther default emission factors or developed emission factors for the four non-etch processes, however the facili ty must measure and de velop recipe-specific emission factors for all etch processes. The cost analysis reflects using default factors for the non-etch processes and the cost to measure and develop emission factors for etch processes. Due to the complex nature of apportioning gas in a large semiconductor facility, EPA has added software costs to account for the challenge of apportioning gases to etch processes.

Annual costs to report controlled em issions from abatement systems.

Under the final rule, any facility that wish es to reflect abatement of F-GHGs in its emissions estimates would be required to certify that the abatement system is installed, operated,
and maintained in accordance with manufacturers’ specifications and either use EPA published DRE default value or properly measured DRE. Facility costs incurred for assuring abatement systems are properly installed, operated, main tained, and reported, and accounting for uptime have been included for large facility categories in this cost analysis. 15 However, because DRE measurements are optional, the EPA’s estimat ed costs for performing DRE testing was not included for any facility category in this cost analysis.

Collection of data for estimating heat transfer fluid (HTF) emissions.

In the proposed rule, electronic s manufacturing facilities that us e heat transfer fluids were required to account for emissions from use of heat transfer fluids using a mass-balance approach.
EPA understands heat transfer fl uids are widely used within semiconductor manufacturing; however, EPA is uncertain about heat transfer fluid use in other el ectronics manufacturing

15 Facility costs incurred for assuring abatement systems are properly installed, operated, maintained, and reported, and accounting for uptime are based on 32 technical labor hours. This cost is only included for large
semiconductor facilities based on SIA’s comments that 29 facilities would incur abatement compliance costs.

4-27facilities. For this reason, costs associated w ith emissions from heat transfer fluids were conservatively included in all electronics manuf acturing categories. The mass-balance approach uses company-specific data and accounts for diffe rences among facilities’ HTFs (which vary in their global warming potentia ls), leak rates, and service practices.
Record keeping costs. Additional recordkeep ing costs ($1,700 per en tity) were added to each facility. These costs are in line with other source catego ries and include labor hours for technical, managerial, and administrative staff.

Reporting costs. The following types of reporting costs were identified: Reporting F-GHG emission estimate.

Electronics manufacturing facilities will be required to complete and submit companyspecific annual reports. Costs associated with reporting activity data were included for all categories. Facilities that employ abatement syst ems and wish to reflect the emission reductions due to these systems in their emissions estimates will need to provide certification that the system is installed, operated, and maintained in accordance with manufacturer s’ specifications in their annual reports. 5 This certification process also includes an annual assessment of the equipment uptime. It is assumed there are no other costs associated with using default DRE
values.

Facilities that choose to reflect emissions reductions through direct measurement of DRE at the facility, performance confirmed through di rect DRE measurement (i .e., consistent with EPA’s DRE Protocol) would be required. As pr eviously stated, direct DRE measurements are optional, therefore reporting cost s for DRE testing were not included in the cost analysis for any of the electronics manufacturing categories.

Reporting heat transfer fluid emissions estimate.

Electronics manufacturing fac ilities are required to complete and submit data-reporting forms. EPA has included costs for reporting heat transfer fluid emissions from all facilities because EPA is uncertain about whether LCD, PV , and MEMS manufacturing facilities use heat
transfer fluids.

4.3.3 Proportion of Facilities in the Di fferent Model Facility Levels

Semiconductor, MEMS, PV, and LCD facilitie s would determine whether they exceed
the emissions-based threshold using IPCC Tier 1 emission fact ors and assuming no abatement.

4-28For PV facilities, annual em issions would be estimate d by multiplying annual F-GHG consumption by the appropriate GWP factor. Fo r semiconductor facilities, 91 out of 175 entities exceed the 25,000 mtCO 2 e threshold which includes 96 percent of total semiconductor emissions. For MEMS facilities, the 25,000 mtCO 2 e threshold includes tw o out of 12 entities and includes 66 percent of total MEMS emissions . For LCD facilities, no entities exceed the 25,000 mtCO 2 e threshold. Only one PV facility is included in the 25,000 mtCO 2 e threshold which includes 47 percent of total PV emissions. The number of each type of facility that EPA estimates will meet the 25,000 mtCO 2 e threshold and required to repor t is identified in Table 4-2.
Table 4-2. Number of Representative Affect ed Entities Used in the Cost Analysis

Threshold Number of Representative Entities

Semiconductors (All) MEMS Liquid Crystal Display Photovoltaics

1,000 134 10 5 16
10,000 108 4 1 1
25,000 91 2 0 1
100,000 55 0 0 0

4.3.4 Assigning Costs to Cost Elements

Assigning costs to each of the cost elem ents was completed using the four labor categories (legal, managerial, tec hnical and clerical) and associated labor rates presented in Table 4-3. EPA assigns responsibilities to each labor cate gory to estimate labor hours. Finally, EPA estimates the annualized capital costs and opera tion & maintenance (O&M) costs for each of the
cost elements.

Determining Labor Categories.

To evaluate labor costs, it was not only necessary to determine the amount of time required for all of the tasks associated with m onitoring, but also to dete rmine who will perform
each task.

4-294-30 Table -4-3. Labor Categories and Hourly Rates

Labor Category Description Load ed Hourly Rate ($/hour)

Legal Oversees legal aspects of company reports and data-reporting forms. $101.00/hour

Managerial Oversees work at a high level and is the final authority on all reporting requirements. $71.03/hour

Technical Conducts monitoring of emissions sources, checks for accuracy, performs measurements. $55.20/hour

Clerical Assists with documentation and recording information $29.65/hour

Allocate Responsibilities and Estimate Labor Hours.

Labor hours for all categories (large and non-large semic onductor and other electronics facilities) were estimated using IPCC’s Tier 2b method from the initial proposed method for small semiconductor facilities and industry comment s. EPA, drawing on its experience with semiconductor facilities voluntarily reporting emission via its sect or Partnership, estimated the labor hours borne by non-large semiconductor fa cilities using IPCC’s Tier 2b method and scaling the hours to represent 5 process categories. Large semiconductor facility burden hours were also based on scaling IPCC’s Tier 2b method to four process categor ies (which account for 70 percent of all facility proce sses) and adding IPCC’s Tier 3 me thod for the etching process (30 percent of all facility pro cesses). The burden hours and costs borne by other electronics manufacturers were estimated using cost estim ates from EPA’s initial proposal for a small semiconductor facility and scaling these costs dow n to account for the use of a smaller set of gases, as these facilities use fewer types of PFCs than the semiconductor manufacturing facilities. In addition, inform ation received from industry on bur den hour estimates for technical staff to measure gas- and facili ty-specific heel factors were included. Table 4-4 presents the burden hours allocated to each labor category acro ss all affected facil ity types covered under subpart I. The hours and costs for estimating emissi ons of heat transfer fluids were based on the
ICR for EPA’s SF6 Emission Reduc tion Partnership for Electric Po wer Systems. Under the SF6 Partnership, electric power systems report em issions using a mass-balance method that is essentially identical to that proposed for heat transfer fluids in semi conductor facilities.Table 4-4. Responsibilities for Regulation Compliance by Labor Category Per Facility CategoryResponsibilities and Hours by Labor CategoryLegalManagerialTechnicalClericalCost ElementResponsibilitiesHoursResponsibilitiesHoursResponsibilitiesHoursResponsibilitiesHoursLarge Semiconductors—Tier 2d MethodMonitoringCollection of activity datafor F-GHG emissionestimateProvidequalityassuranceof analyses and authorizecompleteness of thechecks.15.7Collect data on gas consumption,gas utilization, and by-productformation. Perform calculationfor four process categories usingdefault factors provided by EPA(Costs for EF Tier 3 EFDevelopment for etch is undercapital costs).228Assist in recording andmaintaining data collectedon gas consumption, gasutilization and by-productformation3.6Collect data for massbalance calculation ofHeat Transfer FluidsProvidequalityassuranceof analyses and authorizecompleteness of thechecks.2.4Collect activity data related toHTF emissions10Assist in recording andmaintaining data oncollected activity datarelated to HTF emissions6.7ReportingComplete and submitcompany-specific annualreportOversee legal aspectsof annual reportsubmission0.26Provide quality assuranceof annual report.10.8Complete and submit companyspecific annual report25.3Assist with completing andsubmitting the companyspecific annual report8.4Complete and submit datareporting forms for massbalance calculation ofHeat Transfer FluidsReview and submit datareporting form.3.5Review instructions andcomplete the form for datareporting3.5Maintain data reportingrecords.1.9Abatement/DRE datagatheringAbatement system qualityassurance audit and reporting32RecordkeepingCollect and storenecessary records forcomplianceReviewandsubmitappropriate records2.4Assure that appropriate recordsare kept24.7Assist with recordkeepingand filing5.731Responsibilities and Hours by Labor CategoryLegalManagerialTechnicalClericalCost ElementResponsibilitiesHoursResponsibilitiesHoursResponsibilitiesHoursResponsibilitiesHoursNon-Large Semiconductor Facilities—Tier 2c MethodMonitoringCollection of activity datafor F-GHG emissionestimateProvidequalityassuranceof analyses and authorizecompleteness of thechecks.3.6Collect data on gas consumption.Perform calculations using IPCCTier 2b default emission factors.257.3Assist in recording andmaintaining data collectedon gas consumption, gasutilization and by-productformationCollect data for massbalance calculation of HeatTransfer FluidsProvidequalityassuranceof analyses and authorizecompleteness of thechecks.2.2Collect activity data related toHTF emissions9.4Assist in recording andmaintaining data oncollected activity datarelated to HTF emissions6.11ReportingCompletion of companyspecific annual reportOversee legal aspectsof annual reportsubmission0.26Provide quality assuranceof annual report.10.8Complete and submit companyspecific annual report25.3Assist with completing andsubmitting the companyspecific annual report8.4Complete and submit datareporting forms for massbalance calculation ofHeat Transfer FluidsReview and submit datareporting form.3.5Review instructions andcomplete the form for datareporting3.5Maintain data reportingrecords.1.7RecordkeepingCollect and storenecessary records forcomplianceReviewandsubmitappropriate records2.39Assure that appropriate recordsare kept24.7Assist with recordkeepingand filing5.732Responsibilities and Hours by Labor CategoryLegalManagerialTechnicalClericalCost ElementResponsibilitiesHoursResponsibilitiesHoursResponsibilitiesHoursResponsibilitiesHoursNon-Semiconductors—Tier 2b MethodMonitoringCollection of activity datafor F-GHG emissionestimateProvidequalityassuranceof analyses and authorizecompleteness of thechecks.7.2Collect data on gas consumption,gas utilization, and by-productformation. Perform calculationfor five process categories usingdefault factors provided by EPA.169.5Assist in recording andmaintaining data collectedon gas consumption, gasutilization and by-productformationCollect data for massbalance calculation ofHeat Transfer FluidsProvidequalityassuranceof analyses and authorizecompleteness of thechecks.4Collect activity data related toHTF emissions17Assist in recording andmaintaining data oncollected activity datarelated to HTF emissions11ReportingCompletion of companyspecific annual reportOversee legal aspectsof annual reportsubmission0.26Provide quality assuranceof annual report.10.8Complete and submit companyspecific annual report25.3Assist with completing andsubmitting the companyspecific annual report8.4Complete and submit datareporting forms for massbalance calculation ofHeat Transfer FluidsReview and submit datareporting form.3.5Review instructions andcomplete the form for datareporting3.5Maintain data reportingrecords.1.7RecordkeepingCollect and storenecessary records forcomplianceReviewandsubmitappropriate records2.4Assure that appropriate recordsare kept24.7Assist with recordkeepingand filing5.73334Capital and O&M Costs

Non-Large Semiconductor, LCD, PV and MEMS Facilities : The EPA estimated that non-large semiconductor facilities and non-semiconductor facilities us ing the “Tier 2b” or “Tier 2c” method would incur no capital or O&M costs.

Large Semiconductor Facilities: For the largest semiconducto r facilities using the “Tier 2d Method”, the EPA has estimated capital and O&M costs associated with developing both apportioning software and emission factors for the etch processes. Facilities were assumed to share software development reso urces if they are owned by the same company; EPA estimated 11 companies own the 29 large semiconductor facilities. Industry appor tioning software capital costs were based on the assumption that each of the 11 companies would pay the full software development cost (based on 2,000 labor hours require d to develop the soft ware at a technical engineer labor rate) for one of their facilities and each subsequent facility the company owned would pay 50 percent of the software developmen t cost (i.e., 11 facilities pay full cost and 18 facilities pay 50 percent). Facility software capit al cost was then calculated by dividing total industry software capital cost by 29 facilities. Apportioning soft ware O&M costs were based on a 10 year software lifetime. 16 Industry capital costs for em ission factor development (etch processes only) was assumed to be incurred pe r company and based on labor costs associated with three technical engineers (2,000 hours each) needed to develop emission factors. The EPA assumed that facilities will already have the ne cessary equipment to develop emission factors and therefore did not include capita l cost estimates for equipment. In order to obtain facility capital cost for emission factor development, the total industry cost was di vided by 29 facilities.
O&M costs for emission factor development represents the co st for updating/revising emission factors as needed based on changes to a facility’s processes, recipes, or equipment (estimated to be every 7 years) 17 . All capital costs (for both software and emission factor development) were
annualized with an interest ra te of 7.0 percent.

Other Costs

The EPA estimated that the per-facility optional cost of directly measuring DREs in accordance with EPA’s DRE Protocol is $71,766. This cost was not included in this economic analysis since direct measurements of DREs ar e optional. The cost estimate was based on the assumption that a large semiconductor facility w ould have approximately 50 etch tools, all of

16 O&M cost for software is based on 500 labor hours at an industrial engineer labor rate.

17 O&M costs were not factored into first year costs to a facility.

4-35which have PFC abatement systems. The EPA es timates that 20 percent of these fifty systems would be required to be tested annually and that it would take two weeks to test these ten systems per year. The cost for two weeks wort h of testing was based on industry estimates and EPA’s experience conducting DRE testing. While 90 pe rcent of this cost is related to labor and 10 percent is related to freight shipments and measurement study supplies, it was assumed that
the facilities outsource the DRE measurement and t hus this cost was not considered a labor cost for the facility.

4.3 .5 Estimation of Facility Costs for Each Threshold Level

Once the labor hours were calculated, by category, for each of the cost elements, they were multiplied by the associated labor rates to es timate labor costs per facility for each facility category (large semiconductor facilities, non-large semiconductor facilities, and nonsemiconductor facilities). Finally, the unit co st per facility was mu ltiplied by the number of facilities that exceed the reporting threshold for e ach type of facility, resulting in the total national costs per year for this sector.

4.4 Co st Analysis for Subpart L—Fluorinated Gas Production

4.4.1 Model Facility Development

For the Fluorinated Gas Production subpart, mode l facilities were developed based on the number of products at a single fac ility using known data for Fluorinat ed Gas facilities. Facilities were then categorized as producing one, three or six products using eith er continuous or batch processes. Facilities that we re assumed to use continuous pr ocesses to produce their products were assumed to employ two processes per product and two vents per process. Facilities that were assumed to use batch processes to produ ce their products were assumed to employ five processes per product and five vents per process.

Option 1, the Mass Balance Approach, would re quire that a monthly fluorine or carbon balance of all inputs and outputs be performed us ing measurements of the masses of the inputs and outputs and of the fluorine or carbon conten t of the inputs and outputs. Fluorinated greenhouse gas (GHG) emissions would be calculated from the difference between fluorine- or
carbon-in and fluorine- or carbon-out.

Option 2, the Process Vent Method, would requi re the development of emission factors for each process vent. For vents whos e pre-control GHG emissions exceeded 10,000
mtCO 2 e/year and were not vented to a destruction device with a destruction efficiency of at least

4-3699.9 percent, facilities would be required to use emissions tes ting to establish the emission factor. For other vents, facili ties could use engineering calcula tions to establish the emission factor. For the purpose of this evaluation it was assumed that half of the process vents had precontrol GHG emissions over 10,000 mtCO 2e per year, and that half of these were not vented to
destruction devices with de struction efficiencies of at least 99.9 percent. Thus, for the “average” facility, it was assumed that 25 percent of vent s would be measured by emission testing and the other 75 percent would be evaluated using engin eering calculations. Under the proposed rule, facilities would be requir ed to develop emission factors in the first year and to update them every five years thereafter. In addi tion, facilities would be required to estimate their emissions from equipment leaks every year.

When calculating the cost impact for the Pr ocess Vent Method, it was apparent that a single “outlier” facility was distorting the average co st per facility. This outlier is comprised of many more processes than the average facility, a nd also consists of pr ocesses that are very complicated and require many steps. Thus, the co st for this particular outlier is not at all representative of the cost that the “average” facility will see. Thus, the outlier was excluded for purposes of summarizing the typical cost to a f acility. However, the outlier cost was still included for the nationwide impact analysis.

Under both Option 1 and Option 2, facilities would be required to perform a scoping study to identify potentially emitted F-GHGs in their process streams. It was estimated that twothirds of the processes at f acilities would have F-GHG emissions that exceeded the one-ton threshold for performing the study. Facilities woul d also be required to measure the destruction efficiency of their destruction device (e.g., th ermal oxidizer) initially and every five years
thereafter.

Option 3 identifies the cost that the typical or average facility will incur. The costs for Option 3 are a combination of measurements, some using the Mass Balance Approach and others using the Process Vent approach.

4.4.2 Cost Analysis for Mass Balance Approach - Option 1

This section identifies the costs associated with complying with the rulemaking using Option 1, the Mass Balance approach. Compliance costs for this option include both labor and non-labor (capital and O&M) costs and both startup and recurring costs. The “average” plant that utilized the mass balance approach was estimated to have a total of 4.67 processes. The total

4-37first year cost for the mass balance method is $127,440 in labor costs and $14,933 in capital
costs. Tables 4-5 and 4-6 summarize th e labor and non-labor costs respectively.

Initial planning costs were estimated for the time needed to review the rule and prepare required initial notifications a nd records. These planning hours include resolving questions, reviewing drawings, conducting so urce inspections, defining constr aints, writing the engineering report and onetime costs for equipment leak measurement, such as walk-down and field verification, populating software and in itial monitoring setup costs.

For the mass balance approach, the planning hours total to 6.4 ma nagement hours, 12.5 administrative hours and 124.9 hours for the industrial engineer/technician. Quality assurance/quality control costs for planning, mee tings, sample analysis certification and annual review total 4.6 hours for the industrial manager, 92.9 industrial engineer/technician hours and
37.1 administrative hours.

Sampling, analysis, monitoring and calculati on costs were estimated on a per-continuousprocess basis. Existing facilities have indicate d that the mass balance method is not practical for batch processes, due to higher cost and the natu re of the batch processes, so costs for batch processes have not been calculated.

For the mass balance approach, stream sa mpling and analysis costs include 1798 hours for the industrial engineer/technician, 179.8 admi nistrative hours and 89.9 management hours. This includes 165 engineer/technician hours, 8.25 management hours and 16.5 administrative hours to perform the mass balanc e measurements and calculations for each of the 4.67 processes. It also includes 330 engineer/technician hours, 16.5 management hours and 33 administrative hours to complete the scoping study on each of the 3.1 processes above the one-ton threshold.

Recordkeeping and reporting costs were estimated to include 24.7 industrial engineer/technician hours, 5.7 management hour s and 2.4 administrative hours to compile and store data annually. Labor requirements for prep aring the annual report include 7.3 industrial engineer/technician hours, 0.7 management hours, and 1.7 administrative hours to prepare the annual report.

Capital costs included incl ude $14,933 to hire a consulta nt to perform Destruction Efficiency Testing.

4-38Table 4-5 Subpart L – F-Gas Mass Balance Approach: Labor Costs (2006$)

Labor Rates (per hour)

Legal Managerial Technical Clerical $101.00 $71.03 $55.20 $29.65 Labor Cost per Year per Reporting Unit/Facility Activity

First

Year Subseq.

Year First

Year Subseq.

Year First

Year Subseq.

Year First

Year Subseq.

Year First

Year Subseq.

Year

Planning 6.4 0.0 124.9 0.0 12.5 0.0 $7,719 $0
QA/QC 4.6 1.2 92.9 23.2 37.1 9.3 $6,555 $1,638
Recordkeeping 2.4 2.4 24.7 24.7 5.7 5.7 $1,702 $1,702
Sampling and analysis

(calculations) 89.9 1798.0 179.8 $110,960 $0
Reporting 0.7 0.7 7.3 7.3 1.7 1.7 $503 $503

Total 0 0 103.99 4.24 2,047.80 55. 20 236.80 16.70 $127,440 $3,844

Note: All costs are in constant 2006$s.

Table 4-6 Subpart L – F-Gas Mass Balance Method: Capital and O&M Costs (2006$)

Cost Categories Total Reporting Cost per Unit/Facility

Activity Capital Cost Equipment Lifetime (years) Annualized Capital Cost

(per year) O&M Costs (per year) First Year Subseq. Year Equipment (selection, purchase,

installation) Performance testing $14,993 10 $1,046 $1,046 $0 Recordkeeping and Reporting

Travel Sampling costs

Total $14,993 $1,046 $0 $1,046 $0

Note: All costs are in constant 2006$s. Annualization uses 7% interest rate.

4.4.3 Cost Analysis for Option 2- Process Vent Testing

This section presents costs associated with complying with the rulemaking using Option 2, Process Vent Testing. These include both la bor and non-labor (capita l and O&M) costs and both startup and recurring costs. The “average” plan t that utilized the process vent approach was

4-39assumed to have a total of 5 processes. An average of 2.5 process vents were assumed to be evaluated by testing. The remain ing vents, accounting for 75% of the total vents at a facility, were assumed to be evaluated using the engineering calculation approach. In effect, this was assumed to require engineering cal culations for each of the 5 pro cesses at the average facility complying with the Process Vent approach.

In each of the following paragraphs, the cost s are broken out between the process vent emissions estimates and the equipment leak assess ment. For the average facility, the total first year labor cost (Table 4-7) for the process ve nt method is $99,350, and the total first year labor cost for the equipment leak measurements is $50,650. A capital cost of $22,120 per average facility is also estimated, as shown in Table 4-8.

Initial planning costs were estimated for the time needed to review the rule and prepare required initial notifications a nd records. These planning hours include resolving questions, reviewing drawings, conducting so urce inspections, defining constr aints, writing the engineering report and onetime costs for equipment leak measurement, such as walk-down and field verification, populating software and in itial monitoring setup costs.

For the process vent measurements and calculations, the plan ning hours total to 1.8 management hours, 19 administrative hours and 37.6 hours for the industrial engineer/technician. Quality assurance/quality control costs for plan ning, meetings, sample analysis certification and
annual review total 3.4 hours for the industr ial manager, 67.8 technician hours and 34
administrative hours.

For the equipment leak assessment, the pl anning hours total to 50 administrative hours and 35 hours for the industrial engineer/technician.

Sampling, analysis, monitoring and calculati on costs were on a per-vent basis for the process vent testing and a per-p rocess basis for process vent calculations and for equipment
leaks.

For the process vent measurements and calculations, the emissions sampling and analysis costs (including the scoping study) include 1,448.3 hours for the industrial engineer/technician, 144.8 administrative hours and 72.4 management hours. This includes 236 engineer/technician hours per process vent to perform testing on 2.5 process vents. In addition, it includes 5 engineer/technician hours for each of the 5 processe s at the average facility to model the process and perform the calculations. Finally, it includes 250 engineer /technician hours, 12.5

4-40management hours and 25 administrative hours to complete the scoping study on each of the 3.34 processes above the one-ton threshold.

For the equipment leak assessment, these costs incl ude 800.5 industrial engineer/technician hours for the combined firs t year cost of the emissions test and the engineering calculations. It was a ssumed that facilities were alrea dy assessing leaks on half of the processes; thus, costs are incurred under th e rule for the other ha lf. A total of 307.88 engineer/technician hours per proc ess would be required for each of the 2.6 processes required to commence leak testing under the rule. (The total number of processes assessed for equipment leaks at the average facility, 5.2, is higher than the number of proce sses evaluated under the process vent approach due to the slightly higher number of processes at th e facilities required to assess leaks.).

Recordkeeping and reporting costs were estimated were estimated on an annual basis, requiring 24.7 industrial engineer /technician hours, 5.7 management hours and 2.4 administrative hours to compile and store data. Labor requireme nts for preparing the annual report included 7.3 industrial engineer/tech nician hours, 0.7 management hours, and 1.7 administrative hours to prepare the annual report.

For the equipment leak assessment, first ye ar recordkeeping cost s totaled 32.5 technical
hours and 42.5 administrative hours to document th e monitoring process, maintain records and perform administrative tasks. First year reporting costs to taled 32.5 technical hours and 42.5 administrative hours for all annual reporting a ssociated with equipment leaks. For both recordkeeping and reporting, these costs remained c onstant for the second and subsequent years. These costs are halved in the table because, as noted above, half of the processes were assumed to already be monitored.

Capital costs included equipment for leak detection such as the monitoring device and data collection system. It was assumed that half of the facilities already possess monitoring and data collections systems, and that half of the f acilities would be required to complete Destruction Efficiency Testing.

Capital costs for the mass balance approach included $11,200 for Destruction Efficiency Testing equipment.

Capital costs for the aver age facility totaled $11,340 in equipment and O&M costs associated with the equipment leaks.

4-41Table 4-7 Subpart L – F-Gas Process Vent (Avg. per plant basis): Labor Costs (2006$)

Labor Rates (per hour)

Legal Managerial Technical Clerical $101.00 $71.03 $55.20 $29.65 Labor Cost per Year per Reporting Unit/Facility Activity

First Year Subseq. Year First Year Subseq. Year First Year Subseq. Year First Year Subseq. Year First Year Subseq. Year Planning 1.8 72.6 69.0 $6,181 $0
QA/QC 3.4 0.9 67.8 17.0 34.0 8.5 $4,992 $1,251
Recordkeeping 2.4 2.4 41.0 41.0 27.0 27.0 $3,230 $3,230
Sampling and analysis

(calculations) 72.4 2248.8 138.6 144.8 $133,565 $7,649
Reporting 0.7 0.7 23.6 23.6 23.0 23.0 $2,031 $2,031

Total
0 0 80.73 3.96 2,453.7
3 220.08 297.73 58.40 $149,999 $14,161

Note: All costs are in constant 2006$s.

Table 4-8 Subpart L – F-Gas Process Vent Method: Capital and O&M Costs (2006$)

Cost Categories Total Reporting Cost per Unit/Facility

Activity Capital Cost Equipment
Lifetime (years) Annualized Capital Cost

(per year) O&M Costs (per year) First

Year Subseq.

Year

Equipment (selection, purchase,

installation) $10,920 10 $765 $765 $0
Performance testing $11,200 10 $784 $784 $0
Recordkeeping and Reporting

Travel
Sampling costs $0 $2,560

Total $22,120 $1,549 $0 $1,549 $2,560

Note: All costs are in constant 2006$s. Annualization uses 7% interest rate.

4-424.4 .4 Cost Analysis for Option 3- Typical Facili ty, Combination of Process Vent and Mass
Balance

This section describes costs associated with complying with the rulemaking using Option 3, Typical Facility, Combination of Process Vent and Mass Balance. These include both labor and non-labor (capital and O&M) costs and both star tup and recurring costs. The “average” plant that utilized the combination of the process ve nt approach and the mass balance approach was assumed to have an average of 4.92 processes. In this plant, approximate ly 21.4% of the plant is evaluated using the Mass Balance techniques, an d the remainder is evaluated using the Process Vent techniques. For the portion of the plant that is evaluated using the Process Vent Option, an average of 2.5 process vents were assumed to be evaluated by testi ng, and the remaining 7.5 process vents, accounting for 75% of the total vents at a facility, were assumed to be evaluated using the engineering calc ulation approach. In effect, this was assumed to require engineering calculations for each of the 5 processes at the av erage facility complying with the Process Vent approach. The costs for each of these options were discussed in Option 1 and Option 2.

Labor costs for Option 3 are summarized in Table 4-9. In each of the following paragraphs, the costs are broken out by labor category. For the av erage facility, the total first year labor cost for the combination of the process vent and mass balance method is $145,165. A capital cost of $20,580 per averag e facility is also estimate d, as shown in Table 4-10.

Initial planning costs were estimated for the time needed to review the rule and prepare required initial notifications a nd records. These planning hours include resolving questions, reviewing drawings, conducting so urce inspections, defining constr aints, writing the engineering report and onetime costs for equipment leak measurement, such as walk-down and field verification, populating software and in itial monitoring setup costs.

For the average facility completing a mix of mass balance and process vent measurements, the first year planning hours total 2.8 management hours, 56.9 administrative hours and 83.8 hours for the industrial engineer/t echnician. Quality assurance/quality control costs for planning, meetings, sample analysis ce rtification and annual review total 3.7 hours for the industrial manager, 73.2 technici an hours and 34.7 administrative hours.

Sampling, analysis, monitoring and calcula tion costs during the first year for the measurements and calculations, the emissions sa mpling and analysis cost s (including the scoping study and equipment leak evaluation for those vents that will be measured using the process vent method) include 2,152.2 hours for the industrial e ngineer/technician, 152.3 administrative hours

4-43and 76.2 management hours. For a specific lis ting of the labor task s involved in the measurements and calculations, please refer to the mass balance and process vent options
sections above.

Recordkeeping and reporting costs during the first year were estimated to include 37.5 industrial engineer/tech nician hours, 2.4 management hour s and 22.4 administrative hours to compile and store data annually. Labor requireme nts for preparing the an nual report include 20.1 industrial engineer/tech nician hours, 0.7 management hours, and 18.4 administrative hours to prepare the annual report.

Capital costs during the first year include equipment for leak detection such as the monitoring device and data collectio n system and the cost of the Destruction Efficiency Testing, if the facility was required to complete it. Please refer to Option 1 and Option 2 for a more detailed breakdown of the specific costs associat ed with the Mass Balance and Process Vent.

Capital costs for the average facility totaled $20,580 in equi pment and O&M costs for the first year.

Table 4-9 Subpart L – F-Gas Typical Facility: Labor Costs (2006$)

Labor Rates (per hour)

Legal Managerial Technical Clerical $101.00 $71.03 $55.20 $29.65 Labor Cost per Year per Reporting Unit/Facility Activity

First Year Subseq. Year First Year Subseq. Year First Year Subseq. Year First Year Subseq. Year First Year Subseq. Year Planning 2.8 0.0 83.8 0.0 56.9 0.0 $6,511 $0

QA/QC 3.7 0.9 73.2 18.3 34. 7 8.7 $5,327 $1,334

Recordkeeping 2.4 2.4 37.5 37.5 22. 4 22.4 $2,903 $2,903

Sampling and analysis

(calculations) 76.2 0.0 2152.2 108.9 152. 3 0.0 $128,721 $6,010

Reporting 0.7 0.7 20.1 20.1 18. 4 18.4 $1,704 $1,704

Total 0 0 85.71 4.02 2,366.74 184.75 284.68 49.46 $145,165 $11,950

Note: All costs are in constant 2006$s. Note: One outlier facility, whose costs were an order of magnitude higher than the “average” facility, was represented in this

evaluation as having “average” costs in order to be representative of most facilities.

4-44Table 4-10. Subpart L – F-Gas Typical Fa cility: Capital and O&M Costs (2006$)

Cost Categories Total Reporting Cost per Unit/Facility

Activity Capital Cost Equipment
Lifetime (years) Annualized Capital Cost

(per year) O&M Costs (per year) First

Year Subseq.

Year

Equipment (selection, purchase,

installation) $8,580 $0 $0 $0 $8,580

Performance testing $12,000 $0 $0 $0 $12,000 $0

Recordkeeping and Reporting $0 $0 $0 $0 $0 $0

Travel $0 $0 $0 $0 $0 $0

Sampling costs $0 $0 $0 $0 $0 $2,560

Total $20,580 $0 $0 $0 $20,580 $2,560

Note: All costs are in constant 2006$s. Annualization uses 7% interest rate.

4.5 Co st Analysis for Subpart DD—Electric Power Systems

4.5.1 Model Facility Development
The model facility for electric power systems is an electric utility that operates an average amount (nameplate capacity) of SF 6 -containing transmission equipmen t. Costs are not expected to vary widely among utilities because all utili ties would track the same set of quantities (SF 6 stored, acquired, and disbursed; equipment instal led and retired), and the costs of tracking and reporting these quantities are relatively modest. The model facility is assumed to already ha ve the capital and technical capability to monitor and report emissions of SF 6 using a mass-balance formula. To use the formula, facilities
must track their SF 6 inventory in cylinders, SF 6 acquisitions, and SF 6 disbursements, as well as their equipment commissioning and decommi ssioning. These data are already tracked by utilities, but not necessarily as closely and comprehensively as required to develop all utility

4-45level mass-balance inputs. Thus, as discussed below, the model facility is assumed to incur some costs for tracking and reporting SF 6 emissions.

4.5.2 Determine Cost Elements

The total costs associated with the proposed rulemaking for electric power systems were estimated using labor hours from an Information Collection Reque st (ICR) performed for EPA’s SF6 Emission Reduction Partnership. 18 The labor hours were multiplied by current labor costs to calculate the reporting costs under the proposed reporting rule.

All labor costs are considered on an annual basis and are di vided into the following four categories:

Regulation Compliance Determination Costs . Recurring costs cons ist of reviewing the
instructions of the mass-balance reporting form and associated materials to ensure the proper procedures are in place to obtai n technically accurate inputs.

Monitoring Costs

. Recurring costs consist of gatheri ng information for the mass-balance reporting form and associated materials. The info rmation gathered represents the movement of
SF 6 throughout the system. Since SF 6 is often handled and stored at the substation level, collecting information is usually a bottom-up process that is the mo st labor-intensive activity in the reporting process.

Reporting Costs

. Recurring costs consist of comple ting and reviewing the information requested by the mass-balance reporting form and associated materials as well as submitting all
materials.

Recordkeeping Costs

. Recurring costs consist of main taining a record of the emissions inventory and documentation.

4.5.3 Proportion of Facilities in Di fferent Model Facility Levels
There is only one model facility for electric power systems.

18 EPA. (2000). Supporting statement for EPA Information Collection Request number 1933.01 “Information
collection activities associated with EPA’s SF 6 Emission Reduction Partnership for Electric Power Systems”

4-464.5.4 Assigning Costs to Cost Elements

4.5.5 Determine Labor Categories

To evaluate labor costs, it was not only necessary to determine the amount of time required for all of the tasks associated w ith the compliance, monitoring, reporting, and recordkeeping activities, but also to determin e who will perform each task. For this analysis, three labor categories were us ed as shown in Table 4-9.
Table 4-11. Labor Categories and Hourly Rates

Labor Category Description Load ed Hourly Rate ($/hour) Managerial Oversees work at a high level and is the final authority on all reporting requirements. Reviews reporting forms to ensure accuracy and consistency $71.03/hour

Technical Compiles data to develop massbalance inputs. Performs emission calculations on reporting form $55.20/hour

Clerical Assists with documentation and recording information $29.65/hour

Allocate Responsibilities and Estimate Labor Hours

Labor hours for all cost elements were esti mated based on consultation between EPA and
SF 6 Emission Reduction Partners conducted for the 2000 Partnership ICR. Table 4-10
summarizes the allocation of hours a nd responsibilities by labor category.
Table 4-12. Responsibilities for Regulation Compliance by Labor Category

Responsibilities and Hours by Labor Category Managerial Technical Clerical

Cost Element Responsibilities Hours Responsibilit ies Hours Responsibilities Hours Per Facility/ Per Company Regulation Compliance Determination Costs

Review the instructions, SF 6 mass-balance reporting form, and associated materials Review the instructions to the level required to perform oversight responsibilities 1 Review the instructions to the level required to compile data and perform necessary calculations 1.5 Per Facility

4-47Monitoring Costs
Gather information for the SF 6massbalance reporting form and associated materials Institute and oversee proper data collection procedures that account for all SF 6 within the system 4 Compile SF 6 data and sort data into appropriate input categoriesfor the massbalance formula 17 Perform measurements and collect documentation that track SF 6 gas movements 11 Per Facility

Reporting Costs

Complete and review the information requested by the SF 6 mass-balance reporting form and associated materials Review reporting forms to ensure accuracy and consistency 3.5 Calculate inputsfor the massbalance reporting form.Perform facilitywide SF 6 emission calculations 3.5 Provide data and supporting documentation to technical and managerial staff 1.5 Per Facility

Submit the SF 6 mass-balance reporting form and associated materials 0 0 Combine the mass-balance reporting form with all necessary materials and submit 0.2 Per Facility

Recordkeeping Costs

Maintain a record of the emissions inventory and documentation 0 0 File the massbalance reporting form and associated materials into the recordkeeping system 0.2 Per Facility

Other Costs

Other costs consist of postage costs—for su bmitting materials in a one ounce package, and photocopying costs—for maintaining records of the reporting form and associated materials. These costs were gathered by EPA in the SF 6 Emission Reduction Partnership ICR.

Table 4-13. Other Costs Associated with Reporting and Recordkeeping

Element Description Costs ($)
Postage Costs Postage costs for submitting the reporting form and associated materials $0.38 Photocopying Costs Photocopying costs for maintaining a record of the emissions inventory and associated materials $11.66

4-484.5 .6 Estimate per Facility Costs for Each Threshold Level

Once the labor hours were calculated, by category, for each of the cost elements, they were multiplied by the associated labor rates to estimate labor costs per facility. Other costs, consisting of postage and photocopying, were then a dded to the labor costs to calculate the total cost per facility. For calculating national costs, the total cost per facility was multiplied by 141,
which is the number of facilities that exceed the reporting threshold.

4.6 Co st Analysis for Subpart QQ—Imports and Exports of Fluorinated GHGs

4

.6.1 Model Facility Development

Importers and exporters of products contai ning fluorinated GHGs include manufacturers, distributors, and retailer s of these products. Such products include several types of refrigeration and air-conditioning equipment and foams containing HFCs and electrical equipment containing
SF 6. This analysis does not consider the costs of CO 2 and N 2 O contained in imported and exported products. Although EPA does not have data on the amount of CO 2 or N 2 O imported and exported in products (e.g., carb onated sodas and cans of whipped cream), the relatively small quantities of CO2 or N2O contained in each unit and the relatively low GWPs of these gases (compared to those of the fluorinated GHGs) imply that the CO 2 -equivalent quantities imported are likely to be small both na tionally and per importer.

There is one model entity that represents importers/exporters of products containing fluorinated GHGs and the specific repor ting activities and costs.

• Impo rters/Exporters of fluori nated GHG--containing products: An entity that imports or exports products or foam containing fluor inated GHGs or equipment containing SF 6 . This entity is assumed to import or export 15 equipment types (with distinct charge sizes and possibly chemicals) in 20 shipments each year.

The proposed monitoring method for fl uorinated GHGs-containing products and equipment requires the identification of the total amount of each fluorinated GHG imported/exported inside the pr oducts and/or the quantity of products imported/exported (e.g., number of pieces of equipment) along with in formation on the identity and quantity of the fluorinated GHG in each unit or piece. Pers ons importing equipment that contain both a fluorinated GHG refrigerant and a foam bl own with a fluorinated GHG (e.g., household refrigerators) would separately report these GHGs (which are generally different). Similarly, total exports of chemical actua lly contained in exported equipm ent, foams, or other products

4-49would be reported by exporters, by chemical in metr ic tons or metric tCO2e. Trans-shipments (i.e., products containing GHGs that originate in a foreign country and enter the United States en
route to an ultimate destination in another fore ign country) would be exempt from reporting. Importers/exports of products containing fluorinated GHGs would report their imports/exports on the corporate level.

Table 4-12 presents the number of affected enti ties that would be subject to the rule based
on alternative emission thresholds.
Table 4-14. Number of Representative Affect ed Entities Used in the Cost Analysis

Number of Representative Entities a

All HFC Equipment All Foam Products All SF 6 Equipment Threshold

Importers Exporters Importers Exporters Importers Exporters

1,000 50 25 50 25 8 10
10,000 50 25 50 25 8 5
25,000 50 25 50 25 8 0
100,000 50 25 50 25 8 0

a While listed separately in the table above to illustrate the num ber of importers and number of exporters, importers and exporte rs are the same entities for SF 6 equipment, and in some cases, the same entities for HFC equipmen t and foam products. As such, the per-facilities costs w ill increase—to reflect ac tivities associated with both importi ng and exporting, and the overall numb er of respondents will decrease given the overlap.

4.6.2 Determine Cost Elements

The total costs associated with complying with the proposed rulemaking can be broken into 4 elements, each of which is described below.

Monitoring Costs. Costs for tracking quant ities of products importe d and the quantity of fluorinated GHGs in these products include first- year costs to establish a system such as a spreadsheet or database to track charge si zes for different types of equipment and the numbers of pieces of that type of equipment that are imported. Subsequent year costs include maintaining this system.

Reporting Costs. The reporting costs associated w ith complying include annual labor hours for reporting the quantities of products or foam imported and/or exported; and the name and quantity of fluorinated GHG within each product or foam imported and/or exported.

4-50Record Keeping Costs . Additional and reporting ($500) co sts were also added to each facility.

4.6.3 Analyze Proportion of Facilities in the Different Model Facility Categories

To classify facilities into different groups, th e activities undertaken at each model facility type were evaluated. The activities conducted by each model facility ar e listed in the model facility development section for this subpart. Ta ble 4-13 indicates the numbe r of facilities that fall into each model facility category.
Table 4-15. Allocation of Facilities to Model Types

Segment Number of Facilities
Importer of HFC-containing equipment 50 Exporters of HFC-containing equipment 25 Importer of HFC-containing foams 50 Exporter of HFC-containing foams 25 Importers of SF 6 -containing equipment 8 Exporters of SF 6 -containing equipment 10

4.6.4 Assigning Costs to Cost Elements

Determining Labor Categories

To evaluate labor costs, it was not only necessary to determine the amount of time required for all of the tasks associated with m onitoring, but also to dete rmine who will perform each task. For this analysis, two labor cate gories were used as shown in Table 4-14.

4-51Table 4-16. Labor Categories and Hourly Rates

Labor Category Description Loaded Hourly Rate (2006$/hour)

Managerial Oversees work at a high level and is the final authority on all reporting requirements. $71.03/hour

Technical Conducts monitoring of emissions sources, checks for accuracy, performs measurements. $55.20/hour

Allocating Responsibilities and Estimate Labor Hours

Assigning labor hours for all cost elements was based on the following approach.

To determine hours for the first year, the time to assemble relevant paperwork for the first year was taken into account, as well as the time to develop a listing of equipment types and foam products, and the time to enter in the data fo r all equipment types across all shipments.

To determine hours for subsequent years, th e time to maintain the ongoing, relevant paperwork was taken into account as well as the time to enter in the data for all equipment types across all shipments. Management time in both the first and subsequent years was assumed to represent 10 percent of tota l time for both the first and subsequent years. .

4-52Table 4-17 summarizes the allocation of hours a nd responsibilities by la bor category. The reporting labor hours shown in this table repres ent the time estimated to complete the cost
element for all activities a pplicable to the entity (i.e., import, export).

4-53Table 4-17. Responsibilities for Regula tion Compliance by Labor Category

Responsibilities and Hours by Labor Category

Managerial Technical Per Facility/
Per Company*
Cost Element Responsibilities Hours Re sponsibilities Hours Importer/Exporter of Fluorinated GHG-containing Pro duct (including foams and SF 6-containing equipment)

Registration Co mpliance Data

None Estimated Monitoring

First Year: Tracking System To oversee the design of a database or spreadsheet to track imports/exports 4 To establish a database or spreadsheet to track imports/exports 40 Per Company

Subsequent Years: Tracking System To review maintained tracking system 3 To update and maintain tracking system 31 Per Company

Reporting

Report Data To review the data 1 To collect data records already measured by an instrument 3 Per Company

Record Keeping

None Estimated

Once the labor hours were calculated, by category, for each of the cost elements, they were multiplied by the associated labor rates to estimate labor costs per facility. No additional
costs are assumed.

Capital Cost Annualization and O&M Costs

There are no assumed capital costs related to monitoring emissions and archiving of information, and therefore there ar e no associated O&M costs.

4.6.5 Estimate per Facility Costs for Each Threshold Level

Once the labor hours were calculated, by category, for each of the cost elements (as shown in Table 4-15, they were multiplied by the a ssociated labor rates (as shown in Table 4-14) to estimate labor costs per facility. The unit cost per entity was multiplied by the number of

4-54facilities that exceed the reporti ng threshold (as shown in Table 4-13), to determine the total national costs per year for this sector.

4.6.6 Su bpart SS—Electrical Equipment Manufacturing

4.6.6.1 Model Facility Development
The model facility for electrical equipm ent manufacture or refurbishment and manufacturing of electrical components is a manufacturer that produ ces an average amount (nameplate capacity) of SF 6 -containing transmission and distri bution equipment. Costs are not expected to vary widely among electrical equi pment manufacturers because all manufacturers would track the same set of quantities (SF 6 stored, acquired, and dis bursed), and the costs of tracking and reporting these quantit ies are relatively modest.

The model facility is assumed to already ha ve the capital and technical capability to monitor and report emissions of SF 6 using a mass-balance formula. To use the formula, facilities
must track their SF 6 inventory in cylinders, SF 6 acquisitions, and SF 6 disbursements. These data are already tracked by electrical equipment manuf acturers, but not necessarily as closely and comprehensively as required to develop all ma nufacturer-level mass-bala nce inputs. Thus, as discussed below, the model facility is assumed to incur some costs for tracking and reporting SF 6 emissions.

Table 4-16 presents the number of affected enti ties that would be subject to the rule based
on alternative emission thres holds under subpart SS.
Table 4-18. Number of Representative Affect ed Entities Used in the Cost Analysis

Threshold Number of Representative Entities 1,000 10 10,000 10 25,000 10 100,000 5

4.6.6.2 Determine Cost Elements
The total costs associated with the pr oposed rulemaking for electrical equipment manufacturers were estimated using labor hours from an Information Collection Request (ICR)

4-554-56 performed for EPA’s SF 6 Emission Reduction Partnership. 19 , 20 The labor hours were multiplied by current labor costs to calcula te the reporting costs under the pr oposed reporting rule. All labor
costs are considered on an annual basis and are divided into the following four categories:

Regulation Compliance Determination Costs . Recurring costs consis t of reviewing the
instructions of the mass-balance reporting form and associated materials to ensure the proper procedures are in place to obtai n technically accurate inputs.

Monitoring Costs

. Recurring costs consist of gatheri ng information for the mass-balance reporting form and associated materials. The info rmation gathered represents the movement of
SF 6 throughout the system.

Reporting Costs

. Recurring costs consist of comple ting and reviewing the information requested by the mass-balance reporting form and associated materials as well as submitting all
materials.

Recordkeeping Costs

. Recurring costs consist of maintain ing a record of the emissions inventory and documentation.

4.6.6.3 Analyze Proportion of Facilities in th e Different Model Facility Categories There is only one model facility for electr ical equipment manufacture or refurbishment and manufacturing of electrical components.

4.6.6 .4 Assigning Costs to Cost Elements Determining Labor Categories

To evaluate labor costs, it was not only necessary to determine the amount of time required for all of the tasks associated with m onitoring, but also to dete rmine who will perform each task. For this analysis, two labor cate gories were used as shown in Table 4-17.

19 EPA. (2000). Supporting statement for EPA Information Collection Request number 1933.01 “Information collection activities associated with EPA’s SF 6 Emission Reduction Partnership for Electric Power Systems”

20 Although the ICR was focused on the costs of reporting SF 6 emissions from electric utilities rather than electrical equipment manufacturers, the inputs required to calcula te emissions and the activities involved with reporting are similar for both sectors. Therefore, the costs incurred fo r electrical equipment manufacturers are assumed to be the same as the costs incurred for electric power systems.4-57 Table 4-19. Labor Categories and Hourly Rates

Labor Category Description Load ed Hourly Rate ($/hour)

Managerial Oversees work at a high level and is the final authority on all reporting requirements. Reviews reporting forms to ensure accuracy and consistency $71.03/hour

Technical Compiles data to develop massbalance inputs. Performs emission calculations on reporting form $55.20/hour

Clerical Assists with documentation and recording information $29.65/hour

Allocating Responsibilities

Labor hours for all cost elements were esti mated based on consultation between EPA and
SF 6 Emission Reduction Partners conducted for the 2000 Partnership ICR. Table 4-18
summarizes the allocation of hours a nd responsibilities by labor category.Responsibilities and Hours by Labor CategoryManagerialTechnicalClericalCost ElementResponsibilitiesHoursResponsibilitiesHoursResponsibilitiesHoursRegulation Compliance Determination CostsReview the instructions, SF6massbalance reporting form, andassociated materialsReview the instructions to thelevel required to performoversight responsibilities1Review the instructions to thelevel required to compile dataand perform necessarycalculations1.50Monitoring CostsGather information for the SF6massbalance reporting form andassociated materialsInstitute and oversee proper datacollection procedures that accountfor all SF6within the system4Compile SF6data and sort datainto appropriate input categoriesfor the mass-balance formula17Perform measurements and collectdocumentation that track SF6gasmovements11Reporting CostsComplete and review the informationrequested by the SF6mass-balancereporting form and associatedmaterialsReview reporting forms to ensureaccuracy and consistency3.5Calculate inputs for the massbalance reporting form. Performfacility-wide SF6emissioncalculations3.5Provide data and supportingdocumentation to technical andmanagerial staff1.5Submit the SF6mass-balancereporting form and associatedmaterials00Combine the mass-balancereporting form with all necessarymaterials and submit0.2Recordkeeping CostsMaintain a record of the emissionsinventory and documentation00File the mass-balance reportingform and associated materials intothe recordkeeping system0.2Table 4-20. Responsibilities for RegulationCompliance by Labor Category Per Facility4-584.6.7 Ot her Costs

Other costs consist of postage costs—for su bmitting materials in a one ounce package, and photocopying costs—for maintaining records of the reporting form and associated materials. These costs were gathered by EPA in the SF 6 Emission Reduction Part nership ICR and are presented in Table 4-19.
Table 4-21. Other Costs Associated with Reporting and Recordkeeping

Element Description Costs ($)
Postage Costs Postage costs for submitting the reporting form and associated materials $0.38
Photocopying Costs Photocopying costs for maintaining a record of the emissions inventory and associated materials $11.66

4.6 .7.1 Estimate per Facility Costs for Each Threshold Level
Once the labor hours were calculated, by category, for each of the cost elements, they were multiplied by the associated labor rates to estimate labor costs per facility. Other costs, consisting of postage and photocopying, were then a dded to the labor costs to calculate the total cost per facility. For calculating national costs, the total cost per facility was multiplied by 10,
which is the number of facilities that exceed the reporting threshold.

4.7 Public Sector Burden

EPA estimates the public sect or burden to be $383,582 per year; $72,000 per year is for verification activities, and remaining costs ar e for program implementation and developing and maintaining the data collection system. Program implementation activities include, but are not limited to, developing guidance and training mate rials to assist the regulated community, responding to inquires from affected facilities on monitoring and applicabili ty requirements, and developing tools to assist in determining applicability.

4-59SECTI ON 5 ECONOMIC IMPACT ANALYSIS

EPA has prepared an EIA to provide decision makers with a measure of the social costs of using resources to comply with the proposed GHG reporting requi rements. As noted in EPA’s (2000) Guidelines for Preparing Economic Analyses , several tools are av ailable to estimate social costs and range from simple direct complia nce cost methods to the development of a more complex market analysis that estimates market changes (e.g., price and consumption) and economic welfare changes (e.g., changes in cons umer and producer surplus). Given data limitations and the size scope of the proposed rule, EPA has used the direct compliance cost
method as a measure of social costs.

5.1 Se lection of Reporting Thresholds

5.1.1 Subpart I- Electronics Manufacturing

This analysis is based on the costs of monitoring fluorinated greenhouse gas and N 2 O emissions from electronics manufacturing facili ties. Electronics manuf acturing facilities were broken into three categories; non -semiconductor electronics (3 f acilities), largest semiconductor (29 facilities), and non-largest semiconductor ( 62 facilities). Non- se miconductor electronics
facilities include facilities that manufacture mi cro-electro-mechanical systems (MEMS), liquid crystal displays (LCDs), and photovoltaics (PV).

In the initial proposal, EPA proposed capaci ty-based thresholds equivalent to 25,000
metric tons of CO 2 e for manufacture of semiconductors, LCDs, and MEMS, and an emissionsbased threshold of 25,000 metric tons of CO 2 e for manufacture of PV. As stated in the initial proposal, EPA proposed to use a capacity-based threshold based on the published capacities of facilities, as opposed to an emissions-based threshold, where possible, because EPA believed that it simplified the applicability determination. In comments received in response to the initial proposed rule, several comments i ndicated that the proposed cap acity-based threshold created ambiguity. In response to the comments re ceived on the initial pr oposed capacity-based threshold, EPA is now proposing an em issions-based threshold of 25,000 mtCO 2 e for manufacture of semiconductors, LCD, MEMS, and PV.

In the analysis, EPA considered emi ssion thresholds of 1,000 metric tons CO 2 e, 10,000
metric tons CO 2 e, 25,000 metric tons CO 2 e, and 100,000 metric tons CO 2 e per year. This

5-60analysis used IPCC Tier 1 emission factors and assumed no abatement. Table 5-1 presents the
emissions and facilities that would be captured by the respective emissions thresholds.

Table 5-1. Threshold Analysis for Subpart I – Electronics Manufacturing Industry

Emissions Covered Facilities Covered Emission Threshold Level (metric tons CO 2 e/yr) Total National Emissions (metric tons

CO 2 e/yr) Total Number of Facilities metric tons CO 2 e/yr Percent Facilities Percent 1,00
0 5,9 84,463 216 5,9 62,091 9
9.6% 165 7
6%

10,0
00 5,9 84,463 216 5,8 13,200 9
7% 114 5 3%

25,0
00 5,9 84,463 216 5,6 22,570 9 4% 94 4 4%

100,
000 5,9 84,463 216 4,7 37,622 7
9% 55 2
6%

EPA selected the 25,000 metric tons CO 2 e per year threshold because this threshold maximizes emissions reporting, while excludi ng small facilities that do not contribute significantly to the overall GHG emissions.

The proposed emissions-based thresholds ar e estimated to include approximately 76 percent of semiconductor facilitie s and 7 percent of the non-semiconductor facilities (see Table 5-2). At the same time, the thresholds are exp ected to cover nearly 96 percent of fluorinated GHG emissions from semiconductor facilities, and 54 percent of fluorinated GHG emissions
from non-semiconductor facilities.

5-61Table 5-2. Summary of Rule Applicability un der the Proposed Emission-Based Thresholds for Subpart I – Electronics Manufacturing Industry

Emissions Covered Facilities Covered Emission Threshold

Level (metric tons

CO 2 e/yr) Total National Emissions

(metric

tons CO 2 e/yr) Total Number of Facilities Total Emissions of Source (metric tons CO 2 e) metric tons CO 2 e/yr Percent Facilities Percent
Se
miconduct

ors 2 5,000 1
75 5,741,676 5, 492,066 00% 9
1 7
6%

No

nSemicond

uctors 2 5,000 4
1 242,786 1 30,504 5 4% 3 7
%

Combined these emissions are estimated to acco unt for close to 94 percent of fluorinated GHG emissions from the electronics industry as a whole. To determine whether a manufacturer falls above or below the propos ed 25,000 metric tons of CO 2 e, EPA is proposing that semiconductor, and non-semiconductor MEMS faci lities use gas specific 2006 IPCC Tier 1 emission factors assuming 100% manufacturing cap acity to calculate annual metric tons of
emissions in CO 2 equivalents. For non-semiconductor PV facilities, EPA is proposing that they facilities multiply annual fluorin ated GHG purchases or consum ption by the gas-appropriate 100-year GWPs, as defined in Table A-1 to Subpart A of Part 98, to calcula te annual metric tons
of emissions in CO 2 equivalents. None of these calc ulations shall account for emission abatement technologies.

For additional background information on the th reshold analysis, refer to the Electronics Manufacturing TSD (EPA-HQ-OAR-2009-0927). For specific information on costs, including unamortized first year capital expend itures, please refer to section 4.3.

5.1.2 Subpart L- Fluorinated Gas Production

Under the proposed rule, owners and operato rs of fluorinated gas production facilities would be required to estimate and report GHG emissions if those emissions, including both

5-62combustion and fluorinated GHG emissions, woul d exceed 25,000 mtCO2e in the absence of control technology (e.g., thermal oxidation) 21

. In developing the threshold, we consider ed multiple controlled and uncontrolled emissions thresholds, including 1,000, 10,000, 25,000, and 100,000 metric tons CO 2 e. For fluorinated GHG production processe s (including fluorinated anes thetics production processes), uncontrolled (pre-control) emissions were estimated by multiplying a factor of 3 percent by the estimated production at each facility. For CF C and HCFC production processes (except for HCFC-22 production processes), uncontrolled emissi ons were estimated by multiplying a factor of 2 percent by the estimated pr oduction at each facility. Unc ontrolled emissions are strongly influenced by by-product generation rates, whic h are known to vary between zero and several percent for fluorinated gas producti on processes; thus, these estimat es are uncertain. Controlled
emissions were assumed to be half of uncontro lled emissions at each facility. Because EPA has
little information on combustion-related emissions at fluorinated gas pro duction facilities, these emissions were not included in the analysis. Th e results of the analysis for production of HFCs, PFCs, SF 6 , NF 3 , CFCs, and HCFCs are shown in Tables 5-3 and 5-4.

Table 5-3 Threshold Analysis for Fluorinated GHG Emissions from Production of HFCs, PFCs, SF6, NF3, CFCs, and HCFC s (Uncontrolled Emissions)

Emissions Covered Facilities Covered
Threshold Level (metric
tons CO 2 e/r) Total National
Emissions (metric tons
CO 2 e) Number of
Facilities Metric tons
CO2e Percent Number Percent
1,000 10,600,000 14 10,600,000 100% 14 100%
10,000 10,600,000 14 10,600,000 100% 14 100%
25,000 10,600,000 14 10,600,000 100% 14 100%
100,000 10,600,000 14 10,600,000 100% 13 93%

21 Following the precedents set by other Clean Air Act regulations, EPA is using the term “uncontrolled” to describe such emissions. Specifically, EPA is proposing to define “uncontrolled fluorinated GHG emissions” as a gas stream containing fluorinated GHG which has exited the process (or process condense r, where applicable), but which has not yet been introduced into an air pollution control device to reduce the mass of fluorinated GHGs inthe stream. The term does not imply that the emissions are never controlled, but is synonymous with “precontrol emissions.”

5-63Table 5-4

. Threshold Analysis for Fluorinated GHG Emissions from Production of HFCs, PFCs, SF6, NF3, CFCs, and HCFC s (Controlled Emissions)

Emissions Covered Facilities Covered
Threshold Level (metric
tons CO 2 e/r) Total National
Emissions (metric tons
CO 2 e) Number of
Facilities Metric tons
CO2e Percent Number Percent

1,000 10,600,000 14 10,600,000 100% 14 100%
10,000 10,600,000 14 10,600,000 100% 14 100%
25,000 10,600,000 14 10,600,000 100% 14 100%
100,000 10,600,000 14 10,300,000 97% 10 71%

As can be seen from the tables, most HFC, PFC, SF 6 , NF 3 , CFC, and HCFC production facilities would be covered by all the thresholds considered. Although we do not have facilityspecific production information for producers of fluor inated anesthetics, we believe that few or none of these facilities are likely to have unc ontrolled emissions above the proposed threshold. However, it is possible that EPA has underestimated total pre-control emissions from anesthetics. In its threshold analysis for fluorinated GHG production, EPA has assumed that emissions have GWPs similar to those of the product produce d. However, fluorinat ed anesthetics are hydrofluoroethers, and other HF E production processes of which EPA is aware generate byproducts with higher GWPs than the product. A full discussion of the threshold selection analysis
is available in the revised Fluorinated GHG Production TSD (EPA -HQ-OAR-2009-0927-012). For specific information on costs, including unamort ized first year capital expenditures, please refer to Economic Analysis (EA) for this rulemaking.

5.1.3 Subpart DD- Sulfur Hexafluoride fr om Electric Power Systems

The model facility for electric power systems is an electric utility that operates an average amount (nameplate capacity) of Sulfur Hexafloride (SF 6) -containing transmission equipment. Costs are not expected to vary widely among utilities b ecause all utilities would track the same set of quantities (SF 6 stored, acquired, and disbursed; equipment installed and retired), and the costs of tracking and reporting these quantities are relatively modest.

In the analysis, EPA considered emi ssion thresholds of 1,000 metric tons CO 2 e, 10,000
metric tons CO 2 e, 25,000 metric tons CO 2 e, and 100,000 metric tons CO 2 e per year. This analysis used IPCC Tier 1 emission factors and assumed no abatement. Table 5-5 presents the
emissions and facilities that would be captured by the respective emissions thresholds.

5-64Table 5-5. Threshold Analysis for Subpart DD – Electric Power Systems

Emissions Covered Facilities Covered Emission Threshold Level (metric tons CO 2 e/yr) Total National Emissions (metric tons

CO 2 e/yr) Total Number of Facilities metric tons CO 2 e/yr Percent Facilities Percent

1,000 12,400,000 1,364 12,190,000 98.31% 578 42.38%

10,000 12,400,000 1,364 10,960,000 88.39% 183 13.42%

25,000 12,400,000 1,364 10,320,000 83.23% 141 10.34%

100,000 12,400,000 1,364 5,950,000 47.98% 35 2.57%

EPA selected the 25,000 metric tons CO 2 e per year threshold because this threshold maximizes emissions reporting, while excludi ng small facilities that do not contribute significantly to the overall GHG emissions.

The proposed emissions-based thresholds ar e estimated to include approximately 10 percent of electrical power systems transmission equipment (see Table 5-5). At the same time, the thresholds are expected to cover nearly 83 percent of SF 6 emissions.

5.1.4 Subpart QQ- Imports and Exports of Fluori nated GHGs in Pre-Charged Equipment
and Closed-Cell Foams

Under the current proposal, EPA is proposing to require that importe rs and exporters of F-GHGs contained in pre-charged equipment and closed cell foams report their imports and exports if either their total im ports or their total exports, in equipment, foams, and in bulk, exceed 25,000 mtCO 2 e per year. This threshold is the same as that for bulk imports and exports.
Table 5-6. Threshold Analysis for Subpart QQ–Imports of Fluorinated GHGs in PreCharged Equipment and Closed-Cell Foams

HFC Refrigeration/AC Equipment SF 6 Electrical Equipment Closed-cell Foams
Threshold

Level Imports Covered Importers Covered Imports Covered Importers Covered Imports Covered Importers Covered
1,000 16,992,965 50 1,888,932 8 3,025,285 50
10,000 16,992,965 50 1,888,932 8 3,025,285 50
25,000 16,992,965 50 1,888,932 8 3,025,285 50
100,000 16,992,965 50 1,888,932 8 0 50

5-65Table 5-7. Threshold Analysis for Subpart QQ–Exports of Fluorinated GHGs in PreCharged Equipment and Closed-Cell Foams

HFC Refrigeration/AC Equipment SF 6 Electrical Equipment Closed-cell Foams Threshold Level Exports Covered Exporters Covered Exports Covered Exporters Covered Exports Covered Exporters Covered
1,000 3,061,830 25 153,323 10 1,089,177 25
10,000 3,061,830 25 107,326 5 1,089,177 25
25,000 3,061,830 25 0 0 1,089,177 25
100,000 3,061,830 25 0 0 0 25

5.1 .5 Subpart SS- Electrical Equipm ent Manufacture or Refurbishment and Manufacturing of Electrical Components

EPA is proposing to require electrical equipment manufacturers to report their SF 6 and
PFC emissions if their tota l annual purchases of SF 6 or PFCs exceed 23,061 lbs. This consumption-based threshold is equivalent to an emissions-based threshold of 25,000 mtCO 2 e, assuming an average manufacturer emission rate of 10%. EPA chose the consumption-based threshold, as it is believed to allow equipment manufacturers to quickly determine if they are subject to reporting requirem ents by referencing their SF 6 purchase records.
Table 5-8. Threshold Analysis for Subpart SS– Electrical Equipment Manufacture or Refurbishment and Manufacturing of Electrical Components

Emission Threshold (Mt CO 2 Eq) 1,000 10,000 25,000 100,000

Consumption Threshold (lbs. of SF 6 ) 922 9,220 23,061 92,244

Number of Facilities Above 10 10 10 5

Percent of Facilities Above 100% 100% 100% 50%
Total Emissions of Facilities Above (Mt CO 2 Eq) 814,128 814,128 814,128 569,890

Percent of Emissions Above 100% 100% 100% 70%

5-665.1 .6 National Emissions Covered Under Selected Thresholds

The total national emissions covered under the selected options are 46 MtCO 2 e (Table 5- 9). The majority of these covered emissions are from the importers and e xporters of fluorinated GHGs covered by Subpart QQ (26.1MtCO 2 e). Although the majority of cost and emissions information reported in this economic and small entity analysis is organized by subpart, EPA also mapped each subpart to an industry included in the North American Industry Classification System (NAICS); the mapping allows the cost data to be used in conjunction with other
economic census data.
Table 5-9. Estimates of Emissions (MtCO 2 e) Reported in 2008 Unde r the Selected Option

Subpart Emissions Coverage (MtCO 2 e) Subpart I - Electronics Industry 5.6 Subpart L - Fluorinated Gas Production 10.6 Subpart DD – Sulfur Hexalfuoride (SF 6 ) from Electric Power Systems 10.3 Subpart QQ - Imports and Exports of Fluorinated GHGs 26.1 Subpart SS - Electrical Equipment Manufacture or Refurbishment and Manufacturing of Electrical Components 0.8
Total 53.4

5.2 Na tional Cost Estimates

As shown in Table 5-10, the total national cost s for the selected option are estimated to be $6.8 million in the first year and $7.4 million in subsequent years ($2006). This includes a public sector burden estimate of $384,000 fo r program implementation and verification activities. Subparts bearing the gr eatest share of the ongoing private co sts of the rule in the first year are the electronics industry (45%) and fluorinat ed gas producers (31%).

In addition to total national costs by subpart under the selected option, we also report average cost per ton to support additional analysis of the gr eenhouse reporting programs. The average ongoing (subsequent year) private cost per metric ton va ries by subpart; measures range from less than $0.01 per ton (Subpart SS) to $0.36 per ton (Subpart I).

5-67Table 5-10. National Cost Estimates by Subpart: Selected Option

First Year Subsequent Years

Subpart 2007 NAICS Millions 2006$ $/ton Share Millions 2006$ $/ton Share Subpart I - Electronics Industry 334413, 334119 $3.1 $0.36 45% $5.6 $0.36 75% Subpart L - Fluorinated Gas Production 325120 $2.1 $0.20 31% $0.3 $0.03 4% Subpart DD – Electric Transmission and Distribution Equipment Use 221121 $0.6 $0.19 8% $0.6 $0.05 7%

Subpart QQ - Imports and Exports of Fluorinated GHGs 326140, 326150, 333415, 335313, 336391, 423610, 423620, 423720, 421730, 421740, 443111, 443112, 422610 $0.7 $0.03 10% $0.6 $0.02 8% Subpart SS - Electrical Equipment Manufacture and Refurbis hment and Manufacturing of Electrical Components 33361, 33531 $0.02 $0.01 0.3% $0.02 $0.01 0% Private Sector, Total $6.5 94% $7.0 95% Public Sector, Total $0.4 6% $0.4 5%
Total $6.8 100% $7.4 100%

5 .3 Economic Impact Analysis
EPA assessed how the regulatory program may influence the profitability of companies by comparing the monitoring program costs to total sales (i.e., a “sales” test). The techniques
and data we use are identical to the MRR rule a nd focus on small entities. We provide additional details of the analysis below.

5 .3.1 Assessing Economic Impac ts on Small Entities

The first step in this assessment was to dete rmine whether the rule will have a significant impact on a substantial number of small entities (SIS NOSE). To make this determination, EPA used a screening analysis that allows us to indicate whether EPA can certify the rule as not having a SISNOSE. The elements of this analysis included

 identifying affected subparts and entities,

5-685-69  select ing and describing the measures and economic impact thresholds used in the analysis, and

 determining SISNOSE certification category.

5 .3.1.1 Identify Affected Subparts and Entities

The industry subparts covered by the rule were identified du ring the development of the cost analysis for the reporting rule. The SU SB data provide national information on the
distribution of economic variab les by industry and size. Thes e data were developed in cooperation with, and partially funded by, the Office of Advo cacy of the Small Business Administration (SBA) (SBA, 2008a). The data include the number of establishments (Table 5-11), and receipts (Table 5-12) and present information on all entities in an industry covered by the rule; however, many of these entitie s would not be expected to report under the preferred option because they would fall belo w the 25,000 hybrid threshold. SUSB also provides this data by enterprise employme nt size. The census definitions in this data set are as follows:

 establishment : An establishment is a single phys ical location wh ere business is
conducted or where services or i ndustrial operations are performed.

 employment : Paid employment consists of full- and part-time employees, including salaried officers and executives of corpor ations, who were on the payroll in the pay period including March 12, 2002. Included are em ployees on sick leave, holidays, and vacations; not included are proprietors and partners of unincorporated businesses.

 receip ts : Receipts (net of taxes) are define d as the revenue for goods produced, distributed, or services provided, in cluding revenue earned from premiums, commissions and fees, rents, interest, divi dends, and royalties. Receipts exclude all revenue collected for local, state, and federal taxes.

 enterp rise : An enterprise is a business organi zation consisting of one or more domestic establishments that were specifi ed under common ownership or control. The enterprise and the establishment are the same for single-establishment firms. Each multi-establishment company forms one enterprise—the enterprise employment and annual payroll are summed from the asso ciated establishmen ts. Enterprise size designations are determined by the su mmed employment of all associated
establishments.5-70 Because the SBA’s business size definitions (SBA , 2009c) apply to an establishment’s “ultimate parent company,” we assume in th is analysis that the “enterprise” definition above is consistent with the concept of ultimate pa rent company that is typically used for Small Business Regulatory Enforcement Fairness Act (SBREFA) screening anal yses and the terms are used interchangeably. We also report the SBA size standard(s) for each industry group in order to facilitate comparisons and different thresholds.5-71Table 5-1. Number of Establishments by Affected Industry and EnterpriseaSize: 2002Owned by Enterprises with:2007NAICSNAICS DescriptionSubpartSBA Size Standard(effective August 22,2008)TotalEstablishments1 to 20Employees20 to 99Employees100 to 499Employees500 to 749Employees750 to 999Employees1,000 to1,499Employees334413Semiconductor andRelated DeviceManufacturingI5001,098458220138191916334119Other ComputerPeripheral EquipmentManufacturingI1,0008154111698517711325120Industrial GasManufacturingL1,000551452020NA3055221121Electrical Power SystemsDD< 4 Million MWh2173920291NANA326140Polystyrene FoamProduct ManufacturingQQ5005511761238516120326150Urethane and Other FoamProduct (exceptPolystyrene)ManufacturingQQ500610192133731983333415Air-Conditioning andWarm Air HeatingEquipmentand Commercial andIndustrial RefrigerationEquipmentManufacturingQQ75084030318787102520335313Switchgear andSwitchboard ApparatusManufacturingQQ750563273105466NA10336391Motor Vehicle AirConditioningManufacturingQQ7507234178NA11423610Electrical Apparatus andEquipment, WiringSupplies,and Related EquipmentMerchant WholesalersQQ10014,3377,4581,6791,01624811387423620Electrical and ElectronicAppliance, Television,andRadio Set MerchantWholesalersQQ1003,5102,1565541891939725-72423720Plumbing and HeatingEquipment and Supplies(Hydronics) MerchantWholesalersQQ1005,1442,8717204551342116423730Warm Air Heating andAir-ConditioningEquipmentand Supplies MerchantWholesalersQQ1005,5982,39492965421352355423740Refrigeration Equipmentand Supplies MerchantWholesalersQQ1001,48272427119342829443111Household ApplianceStoresQQ$9 M10,0027,628806312NA731443112Radio, Television andOther Electronics StoresQQ$9 M24,22611,1811,7601,2303875328422610Plastics Materials andBasic Forms and ShapesMerchant WholesalersQQ1003,7172,23851828126205833361Engine, Turbine, andPower TransmissionEquipmentManufacturingSS500 - 1,0009223752089414111233531Electrical EquipmentManufacturingSS750 - 1,0002,6511,311522246412319aThe Census Bureau defines an enterprise as a business organization consisting of one or more domestic establishments that werespecified under common ownership or control.The enterprise and the establishment are the same for single-establishment firms. Each multi-establishment company forms one enterprise—the enterprise employment andannual payroll are summed from the associatedestablishments. Enterprisesize designations are determined by the summed employment of all associated establishments.Since the SBA’s business size definitions(http://www.sba.gov/size) apply to an establishment’s ultimate parent company, we assume in this analysis that the enterprise definitionabove is consistent with the concept of ultimate parent company thatis typically used for SmallBusiness Regulatory Enforcement Fairness Act (SBREFA) screening analyses.bThe 2002 SUSB data uses 1997 NAICS codes. For this industry, the relevantcode is NAICS 422610.5-73Table 5-2. Receipts by Affected Industry and EnterpriseaSize ($2002 Million)Owned by Enterprises with:NAICSNAICS DescriptionSubpartSBA Size Standard(effective August 22,2009)Total Establishments1 to 20Employees20 to 99Employees100 to 499Employees500 to 749Employees750 to 999Employees1,000 to1,499Employees334413Semiconductor andRelated DeviceManufacturingI50063,7797011,7553,7117752,5931,434334119Other ComputerPeripheral EquipmentManufacturingI50018,1356421,6802,7121,4052471,372325120Industrial GasManufacturingL1,0005,7802229271NANANA221121Electrical Power SystemsDD< 4 Million MWh13,83174353406NANANA326140Polystyrene FoamProduct ManufacturingQQ5006,330209623689NANA539326150Urethane and OtherFoam Product (exceptPolystyrene)ManufacturingQQ5007,1703077721,063288NANA333415Air-Conditioning andWarm Air HeatingEquipmentand Commercial andIndustrial RefrigerationEquipmentManufacturingQQ75024,6994091,4601,813348980803335313Switchgear andSwitchboard ApparatusManufacturingQQ7508,593347641826NANANA336391Motor Vehicle AirConditioningManufacturingQQ7503,3963172NANANANA423610Electrical Apparatus andEquipment, WiringSupplies,and Related EquipmentMerchant WholesalersQQ10093,52421,85016,2299,6901,6481,339766423620Electrical and ElectronicAppliance, Television,andRadio Set MerchantWholesalersQQ10068,2559,64010,38810,5772,4181,8054,291423720Plumbing and HeatingEquipment and Supplies(Hydronics) MerchantWholesalersQQ10031,6688,30412,3224,15668624751423730Warm Air Heating andAir-ConditioningEquipmentand Supplies MerchantWholesalersQQ10025,5995,4265,0753,551613526NA423740Refrigeration Equipmentand Supplies MerchantWholesalersQQ1005,0141,3331,79158114187NA443111Household ApplianceStoresQQ$9M12,6195,4322,8011,354NANANA443112Radio, Television andOther Electronics StoresQQ$9M53,5576,3253,5101,612NANANA422610Plastics Materials andBasic Forms and ShapesMerchant WholesalersQQ10032,6487,3455,7854,09161468733833361Engine, Turbine, andPower TransmissionEquipmentManufacturingSS500 - 1,00037,7014291,3262,06730933330433531Electrical EquipmentManufacturingSS750 - 1,00033,2111,3302,9124,0969791,089406Since the SBA’s business size definitions(http://www.sba.gov/size) apply to an establishment’s ultimate parent company, we assume in this analysis that the enterprise definitionabove is consistent with the concept of ultimate parent company thatis typically used for SmallBusiness Regulatory Enforcement Fairness Act (SBREFA) screening analyses.aThe Census Bureau defines an enterprise as a business organization consisting of one or more domestic establishments that werespecified under common ownership or control.The enterprise and the establishment are the same for single-establishment firms. Each multi-establishment company forms one enterprise—the enterprise employment andannual payroll are summed from the associatedestablishments. Enterprisesize designations are determined by the summed employment of all associated establishments.bThe 2002 SUSB data uses 1997 NAICS codes. For this industry, the relevantcode is NAICS 422610.

5-745-75 5.3 .1.2 Develop Small Entity Economic Impact Measures

Because the rule covers a large number of s ubparts and primarily covers businesses, the analysis generated a set of sales test s (represented as cost-to-receipt ratios) 22 for NAICS codes associated with the affected subparts. Alt hough the appropriate SBA size definition should be applied at the parent company (ent erprise) level, data limitations allowed us only to compute and compare ratios for a model establishment for six enterprise size ranges (i.e., all categories, enterprises with 1 to 20 employees, 20 to 99 employees, 100 to 499 employees, 500 to 999 employees, and 1,000 to 1,499 employees. This approach allows us to account for differences in establishment receipts between large and small enterprises and differences in small business definitions across affected industries. It is also a conservative approach, because an establishment’s parent company (t he “enterprise”) may have othe r economic resources that could be used to cover the cost s of the reporting program.

These sales tests examine the average es tablishment’s total annualized mandatory reporting costs to the average establishment recei pts for enterprises within several employment categories 23 (first year costs: Table 5- 13; subsequent year costs: Ta ble 5-14). The average entity costs used to compute the sales test are the same across all of these enterpri se size categories. As a result, the sales-test will overstate the cost-to- receipt ratio for establishments owned by small businesses, because the reporting costs are likely lower than average entity estimates provided by the engineering cost analysis.

22 The following metrics for other small entity economic impact measures (if applicable) would potentially include

 Small governments (if applicable): “Revenue” test; annualized compliance cost as a percentage of annual

government revenues

 Small non-profits (if applicable): “Expenditure” test; annualized compliance cost as a percentage of annual

operating expenses 23 For the one to 20 employee category, we exclude SU SB data for enterprises with zero employees. These enterprises did not operate the entire year.5-76Table 5-3. Establishment Sales Tests by Industry and EnterpriseaSize: First Year CostsOwned by Enterprises with:2007NAICSNAICS DescriptionSub-partSBA SizeStandard(effectiveAugust 22,2008)AverageCost PerEntity($/entity)AllEnterprises1 to 20Employees20 to 99Employees100 to 499Employees500 to 749Employees750 to 999Employees1,000 to1,499Employees334413Semiconductor and Related DeviceManufacturingI (Semis)500$19,9800.03%1.16%0.22%0.07%0.04%0.01%0.02%334413Semiconductor and Related DeviceManufacturingI (Non-Semis)500$16,0460.02%0.94%0.18%0.05%0.04%0.01%0.02%334119Other Computer Peripheral EquipmentManufacturingI (Non-Semis)500$16,0460.06%0.92%0.14%0.04%0.02%0.04%0.01%325120Industrial Gas ManufacturingL1,000$151,0451.28%27.68%0.92%3.80%NANANA221121Electrical Power SystemsDD< 4 MillionMWh$2,2130.00%0.10%0.01%0.01%NANANA326140Polystyrene Foam ProductManufacturingQQ500$3,3640.03%0.25%0.06%0.04%NANA0.01%326150Urethane and Other Foam Product(except Polystyrene)ManufacturingQQ500$3,3640.03%0.19%0.05%0.02%0.02%NANA333415Air-Conditioning and Warm AirHeating Equipmentand Commercial and IndustrialRefrigerationEquipment ManufacturingQQ750$3,3640.01%0.22%0.04%0.01%0.01%0.01%0.01%335313Switchgear and Switchboard ApparatusManufacturingQQ750$3,3640.02%0.24%0.05%0.02%NANANA336391Motor Vehicle Air-ConditioningManufacturingQQ750$3,3640.01%0.33%0.07%NANANANA423610Electrical Apparatus and Equipment,Wiring Supplies,and Related Equipment MerchantWholesalersQQ100$3,3640.05%0.10%0.03%0.03%0.05%0.03%0.03%423620Electrical and Electronic Appliance,Television, andRadio Set Merchant WholesalersQQ100$3,3640.02%0.07%0.02%0.01%0.00%0.01%0.01%423720Plumbing and Heating Equipment andSupplies(Hydronics) Merchant WholesalersQQ100$3,3640.05%0.10%0.02%0.03%0.06%0.03%0.09%423730Warm Air Heating and AirConditioning Equipmentand Supplies Merchant WholesalersQQ100$3,3640.07%0.13%0.05%0.06%0.10%0.03%NA423740Refrigeration Equipment and SuppliesMerchantWholesalersQQ100$3,3640.09%0.16%0.05%0.10%0.08%0.04%NA443111Household Appliance StoresQQ$9 M$3,3640.24%0.42%0.09%0.07%NANANA5-77443112Radio, Television and OtherElectronics StoresQQ$9M$3,3640.14%0.53%0.15%0.23%NANANA422610Plastics Materials and Basic Forms andShapesMerchant WholesalersQQ100$3,3640.03%0.09%0.03%0.02%0.01%0.01%0.05%33361Engine, Turbine, and PowerTransmission EquipmentManufacturingSS500 - 1,000$2,2130.00%0.17%0.03%0.01%0.01%0.01%0.01%33531Electrical Equipment ManufacturingSS750 - 1,000$2,2130.02%0.19%0.04%0.01%0.01%0.00%0.01%aThe Census Bureau defines an enterprise as a business organization consisting of one or more domestic establishments that werespecified under common ownership or control.The enterprise and the establishment are the same for single-establishment firms. Each multi-establishment company forms one enterprise—the enterprise employment andannual payroll are summed from the associatedestablishments. Enterprisesize designations are determined by the summed employment of all associated establishments.Since the SBA’s business size definitions(http://www.sba.gov/size) apply to an establishment’s ultimate parent company, we assume in this analysis that the enterprise definitionabove is consistent with the concept of ultimate parent company thatis typically used for SmallBusiness Regulatory Enforcement Fairness Act (SBREFA) screening analyses.Note: Receipt data in Table 5-7 has been adjusted to 2006$ using the latest GDP implicit price deflator reported by the U.S. Bureau of Economic Analysis (103.257/92.118=1.121)http://www.bea.gov/national/nipaweb/Index.asp(accessed December 21, 2009).bThe 2002 SUSB data uses 1997 NAICS codes. For this industry, the relevantcode is NAICS 422610.5-78Table 5-4. Establishment Sales Tests by Industry and EnterpriseaSize: Subsequent Years CostsOwned by Enterprises with:2007NAICSNAICS DescriptionSub-partSBA SizeStandard(effectiveAugust 22,2008)AverageCost PerEntity($/entity)AllEnterprises1 to 20Employeesb20 to 99Employees100 to 499Employees500 to 749Employees750 to 999Employees1,000 to1,499Employees334413Semiconductor and Related DeviceManufacturingI(Semis)500$19,9800.03%1.16%0.22%0.07%0.04%0.01%0.02%334413Semiconductor and Related DeviceManufacturingI(Non-Semis)500$16,0460.02%0.94%0.18%0.05%0.04%0.01%0.02%334119Other Computer Peripheral EquipmentManufacturingI(Non-Semis)500$16,0460.06%0.92%0.14%0.04%0.02%0.04%0.01%325120Industrial Gas ManufacturingL1,000$19,1090.16%3.50%0.12%0.48%NANANA221121Electrical Power SystemsDD< 4 MillionMWh$2,2130.00%0.10%0.01%0.01%NANANA326140Polystyrene Foam Product ManufacturingQQ500$2,9330.02%0.22%0.05%0.03%NANA0.01%326150Urethane and Other Foam Product (exceptPolystyrene)ManufacturingQQ500$2,9330.02%0.16%0.05%0.02%0.02%NANA333415Air-Conditioning and Warm Air HeatingEquipmentand Commercial and IndustrialRefrigerationEquipment ManufacturingQQ750$2,9330.01%0.19%0.03%0.01%0.01%0.01%0.01%335313Switchgear and Switchboard ApparatusManufacturingQQ750$2,9330.02%0.21%0.04%0.01%NANANA336391Motor Vehicle Air-ConditioningManufacturingQQ750$2,9330.01%0.29%0.06%NANANANA423610Electrical Apparatus and Equipment,Wiring Supplies,and Related Equipment MerchantWholesalersQQ100$2,9330.04%0.09%0.03%0.03%0.04%0.02%0.03%423620Electrical and Electronic Appliance,Television, andRadio Set Merchant WholesalersQQ100$2,9330.01%0.06%0.01%0.00%0.00%0.01%0.00%423720Plumbing and Heating Equipment andSupplies(Hydronics) Merchant WholesalersQQ100$2,9330.04%0.09%0.02%0.03%0.05%0.02%0.08%423730Warm Air Heating and Air-ConditioningEquipmentand Supplies Merchant WholesalersQQ100$2,9330.06%0.12%0.05%0.05%0.09%0.03%NA423740Refrigeration Equipment and SuppliesMerchantWholesalersQQ100$2,9330.08%0.14%0.04%0.09%0.07%0.04%NA5-79443111Household Appliance StoresQQ$9 M$2,9330.21%0.37%0.08%0.06%NANANA443112Radio, Television and Other ElectronicsStoresQQ$9M$2,9330.12%0.46%0.13%0.20%NANANA422610Plastics Materials and Basic Forms andShapesMerchant WholesalersQQ100$2,9330.03%0.08%0.02%0.02%0.01%0.01%0.04%33361Engine, Turbine, and Power TransmissionEquipment ManufacturingSS500 - 1,000$2,2130.00%0.17%0.03%0.01%0.01%0.01%0.01%33531Electrical Equipment ManufacturingSS750 - 1,000$2,2130.02%0.19%0.04%0.01%0.01%0.00%0.01%aThe Census Bureau defines an enterprise as a business organization consisting of one or more domestic establishments that werespecified under common ownership or control.The enterprise and the establishment are the same for single-establishment firms. Each multi-establishment company forms one enterprise—the enterprise employment andannual payroll are summed from the associatedestablishments. Enterprisesize designations are determined by the summed employment of all associated establishments.Since the SBA’s business size definitions(http://www.sba.gov/size) apply to an establishment’s ultimate parent company, we assume in this analysis that the enterprise definitionabove is consistent with the concept of ultimate parent company thatis typically used for SmallBusiness Regulatory Enforcement Fairness Act (SBREFA) screening analyses.Note: Receipt data in Table 5-7 has been adjusted to 2006$ using the latest GDP implicit price deflator reported by the U.S. Bureau of Economic Analysis (103.257/92.118=1.121)http://www.bea.gov/national/nipaweb/Index.asp(accessed December 21, 2009).bThe 2002 SUSB data uses 1997 NAICS codes. For this industry, the relevantcode is NAICS 422610.5-80 5 .3.1.3 Results of Screening Analysis

The Regulatory Flexibility Act generally re quires an agency to prepare a regulatory flexibility analysis of any rule subject to notice and comment rulemaking requirements under the
Administrative Procedure Act or any other statute, unless the agen cy certifies that the rule will not have a significant economic impact on a substa ntial number of small entities. Small entities include small businesses, small governmental jurisdictions, and sm all not-for-profit enterprises.

For the purposes of assessing the impacts of th e rule on small entities, we defined a small entity as (1) a small business, as defined by SBA’s regulations at 13 CFR Part 121.201; (2) a small governmental jurisdiction that is a governme nt of a city, county, town, school district, or special district with a population of less than 50, 000; or (3) a small organization that is any notfor-profit enterprise that is independently owne d and operated and is not dominant in its field.

After considering the economic impact of the rule on small entities, EPA has concluded
that this action will not have a significant economic impact on a substantial number of small entities. As shown in Tables 5-13 and 5-14, th e average ratio of annua lized reporting program costs to receipts of establishments owned by model small enterprises was less than 1% for industries presumed likely to have small bus inesses covered by th e reporting program.

We acknowledge that several enterprise categor ies have ratios that exceed this threshold (e.g., enterprise with one to 20 employees). Th e Industrial Gas Manufact uring industry (NAICS 325120) has sales test results over 1% for all en terprises. The following enterprise categories have sales test results over 1% and for ent ities with less than 20 employees: Industrial Gas Manufacturing (325120) and Semiconductor a nd Related Device Manufacturing (334413).

Below we take a more detailed look at the categories noted above as having sales test ratios above 1%. EPA collected information on th e entities likely to be covered by the rule as part of the expert sub-group process.
Threshold-based Analysis of Categorie s Having Sales Test Ratios Above 1% Industrial Gas Manufacturing (325120)

Subpart L covers facilities included in NAI CS codes for Industrial Gas Manufacturing (NAICS 325120). Within this subpart, EPA id entified 13 ultimate parent company names covered by the proposed rule. Using publicly ava ilable sources (e.g., Hoovers.com), we collected parent company sales and employme nt data and found that only one company could be classifiedas a small entity. Using the cost data for a repres entative entity (see Section 4), EPA determined the small entity's cost-to-sales ratio is below one percent.

Electronic Computer Manufacturing (334111) and Semiconductor and Related Device Manufacturing (334413)

Data on the number of electronics facilitie s comes from the World Fab Watch and the Flat Panel Display Fabs on Disk datasets. The census data categories cover more establishments than just those facilities covered in the rule. Subpart I covers facilitie s included in NAICS codes for Semiconductor and Related Device Manufacturing (334413) and Other Computer Peripheral Equipment Manufacturing (334119). The World Fab Watch dataset in cludes 216 facilities (94 of which exceed the 25,000 ton threshold), while the sum of the two NAICS codes include 1,903
establishments. Covered fac ilities with emissions greater than 25,000 MtCO2e per year are unlikely to be included in the 1 to 20 em ployees size category. Emissions are roughly proportional to production, and establishments with 1 to 20 employees total only 1.6% of total receipts, while the proposed threshold excludes 6% of industry emissions from the least-emitting
facilities.

Although this rule would not have a signifi cant economic impact on a substantial number of small entities, the Agency nonetheless tried to reduce the impact of this rule on small entities, including seeking input from a wide range of private- and pub lic-sector stakeholders. When developing the rule, the Agency took special steps to ensure th at the burdens imposed on small entities were minimal. The Agency conducted several meetings with industry trade associations to discuss regulatory options a nd the corresponding burden on i ndustry, such as recordkeeping and reporting. The Agency investig ated alternative thresholds and analyzed the marginal costs associated with requiring smaller entities with lower emissions to report. The Agency also selected a hybrid method for reporting, which provi des flexibility to enti ties and helps minimize reporting costs.

5-81S ECTION 6 STATUTORY AND EXECUT IVE ORDER REVIEWS

This section describes EPA’s compliance with several applicable executive orders and statutes during the development of the F-GHG re porting rule, under subparts I, L, DD, QQ, and SS of the Mandatory Reporting Rule.

6 .1 Executive Order 12866: Regulatory Planning and Review
Under Executive Order (EO) 12866 (58 FR 51735, October 4, 1993), this action is a "significant regulat ory action” because it may raise novel le gal or policy issues arising out of legal mandates, the President’s priorities, or th e principles set forth in the EO. Accordingly,
EPA submitted this action to the Office of Mana gement and Budget (OMB) for review under EO 12866 and any changes made in response to OMB recommendations have been documented in
the docket for this action.

In addition, EPA prepared this EIA, including an analysis of the poten tial costs associated with this action. In this report, EPA has identified the regulatory options considered, their costs, the emissions that would likely be reported under each option, and explained the selection of the option chosen for the rule. The costs of the ru le are reported in Section 4, and the economic impacts and qualitative benefits assessment ar e reported in Section 5. EPA’s cost analysis estimates that for the minimum reporting under the recommended regulatory option, the total annualized cost of the rule will be approximately $6.8 million (in $2006) during the first year of the program and $7.4 million in subsequent year s (including $0.4 million of programmatic costs to the Agency). Overall, EPA has concluded that the costs of the F-GHG Reporting Rule are outweighed by the potential benef its of more comprehensive in formation about GHG emissions.

6.2 Paperwork Reduction Act
The information collection requirements in this final rule have been submitted for approval to the Office of Management and Budget (OMB) under the Paperwork Reduction Act
, 44 U.S.C. 3501 et seq . The Information Collection Request (ICR) document prepared by EPA has been assigned EPA I CR number [XXXX.XX].

EPA has identified the following goals of the mandatory GHG reporting system:

6-1 Obtain data that is of sufficient quality that it can be used to analyze and inform the development of a range of future climate change policies and potential regulations.

 Balance the rule’s coverage to maximize the amount of emissions reported while excluding small emitters.

 Create reporting requirements that are, to the extent possible and appropriate, consistent with existing GHG reporting progr ams in order to reduce reporting burden for all parties involved.

The information from F-GHG facilities will a llow EPA to make well-informed decisions about whether and how to use the CAA to regul ate these facilities a nd encourage voluntary reductions. Because EPA does not yet know the speci fic policies that will be adopted, the data reported through the mandatory reporting system shoul d be of sufficient quality to inform policy and program development. Also, consistent w ith the Appropriations Act, the reporting rule covers a broad range of sectors of the economy.

This information collection is mandatory a nd will be carried out under CAA Sections
114. Information identified and marked as Conf idential Business Informa tion (CBI) will not be disclosed except in accordance with procedures se t forth in 40 CFR Part 2. However, emissions information collected under CAA Sections 114 generally cannot be claimed as CBI and will be made public. 24

The projected cost and hour respondent burden in the ICR, averaged over the first three years after promulgation, is $6.70 million and 73,246 hours per year. The estimated average burden per response is 175.7 hours; the frequency of response is annual for all respondents that must comply with the rule’s reporting requirements; and the es timated average number of likely respondents per year is 417. The cost burden to respondents resulting from the collection of information includes the total cap ital and start-up cost annualize d over the equipment’s expected useful life (averaging $2.72 million per year) a total operation and maintenance component (averaging $24,000 per year), and a labor cost component (averaging $3.96 million per year). Burden is defined at 5 CFR Part 1320.3(b).

These cost numbers differ from those show n elsewhere in the EIA because ICR costs represent the average cost over the first three ye ars of the rule, but cost s are reported elsewhere

24 Although CBI determinations are usually made on a case-by-case basis, EPA has issued guidance in an earlier Federal Register notice on what constitutes emission data that cannot be considered CBI (956 FR 7042 – 7043, February 21, 1991). As discussed in Section II.B of th e preamble to the rule, EPA will be initiating a separate notice and comment process to make CBI determinations for the data collected under this rule.

6-2in the EIA for the first year of the rule. Als o, the total cost estimate of the rule in the EIA includes the cost to the Agency to administ er the program. The ICR differentiates between respondent burden and cost to the Agency, es timated to be $384,000.An agency may not conduct or sponsor, and a person is not required to re spond to, a collection of information unless it displays a currently valid OMB control num ber. The OMB control numbers for EPA’s regulations in 40 CFR are listed in 40 CFR Pa rt 9. When this ICR is approved by OMB, the Agency will publish a technical amendment to 40 CFR part 9 in the Federal Register to display the OMB control number for the approved informa tion collection requireme nts contained in the
final rule.

6.3 Re gulatory Flexibility Act
The Regulatory Flexibility Act generally re quires an agency to prepare a regulatory flexibility analysis of any rule subject to notice and comment rulemaking requirements under the
Administrative Procedure Act or any other statute, unless the agen cy certifies that the rule will not have a significant economic impact on a substa ntial number of small entities. Small entities include small businesses, small governmental jurisdictions, and sm all not-for-profit enterprises.

The first step in this assessment was to dete rmine whether the rule will have a significant impact on a substantial number of small entities (SIS NOSE). To make this determination, EPA used a screening analysis that allows us to indicate whether EPA can certify the rule as not having a SISNOSE. The elements of this analysis included

 iden tifying affected sectors and entities,

 sele cting and describing the measures and economic impact thresholds used in the analysis, and

 de termining SISNOSE certification category.

6.3 .1 Identify Affected Sectors and Entities

For the purposes of assessing the impacts of th e rule on small entities, we defined a small entity as (1) a small business, as defined by SBA’s regulations at 13 CFR Part 121.201; (2) a small governmental jurisdiction that is a governme nt of a city, county, town, school district, or special district with a population of less than 50, 000; or (3) a small organization that is any notfor-profit enterprise that is independently owne d and operated and is not dominant in its field.

For the F-GHG Reporting Rule, small entity is defined as a small business as defined by the Small Business Administration’s regulati ons at 13 CFR 121.201; according to these size standards, criteria for determining if ultimate parent companies owning affected facilities are

6-3categorized as small vary by NAICS. Small entity criteria range from total number of employees
at the firm fewer than 100 to number of em ployees fewer than 1000; one affected NAICS, 44311, defines small entities as those with sa les below $9 million. Tables 5-11 through 5-14 present small business criteria and enterprise size distribution data for affected NAICS.

6.3 .2 Develop Small Entity Economic Impact Measures

The ratio of total annualized compliance costs to firm sales (or sales test) is the selected impact measure. Details are provided in secti on 5.3, and results are presented in Table 5-3 for first-year costs and in Table 5-4 for subsequent year costs. These sales tests examine the average establishment’s total annualized mandatory reporting costs to the average establishment receipts for enterprises within several employment categories 25 . The average entity costs used to compute the sales test are the same across al l of these enterprise size categories. As a result, the sales-test will overstate the cost-to-receipt ratio for estab lishments owned by small businesses, because the reporting costs are likely lower than average en tity estimates provided by the engineering cost analysis

6.3 .3 Results of Screening Analysis

After considering the economic impact of the rule on small entities, EPA has concluded
that this action will not have a significant economic impact on a substantial number of small entities. The average ratio of annualized repor ting program costs to revenues for F-GHG firms owned by model small enterprises and likely to be affected by the final rule was generally less than 1%. For two NAICS, however, some size cate gories (especially those with 1-20 employees) show costs exceeding 1% of sales. These sect ors are Industrial Gas Manufacturing (NAICS 325120) and Semiconductor and Related Devi ce Manufacturing (NAICS 334413). A more careful examination of impacts on small fi rms in these NAICS codes was conducted.

Analysis of firms in NAICS 334413 shows th at firms with fewer than 20 employees produce less than 2% of output; firms below the 25,000 Mt CO 2 e threshold release approximately 6% of emissions. Because emission s and production levels are highly correlated, firms fewer than 20 employees are generally not exp ected to be affected by the final rule; if they are, their costs are likely to be lower than the overall average costs used in the screening analysis. Thus, EPA does not expe ct the final rule to impose significant costs to a substantial
number of small entities in NAICS 334413.

25 For the one to 20 employee category, we exclude SU SB data for enterprises with zero employees. These enterprises did not operate the entire year.

6-4Subpart L covers facilities included in NAI CS codes for Industrial Gas Manufacturing (NAICS 325120). Within this subpart, EPA id entified 13 ultimate parent company names covered by the final rule. Using publicly availa ble sources (e.g., Hoovers.com), we collected parent company sales and employme nt data and found that only one company could be classified as a small entity. Using the cost data for a repres entative entity (see Sec tion 4 of the EA), EPA determined the small entity's cost-to-sales ratio is below one percent.

Although this rule would not have a signifi cant economic impact on a substantial number of small entities, the Agency nonetheless tried to reduce the impact of this rule on small entities, including seeking input from a wide range of private- and pub lic-sector stakeholders. When developing the rule, the Agency took special steps to ensure th at the burdens imposed on small entities were minimal. The Agency conducted several meetings with industry trade associations to discuss regulatory options a nd the corresponding burden on i ndustry, such as recordkeeping and reporting. The Agency investig ated alternative thresholds and analyzed the marginal costs associated with requiring smaller entities with lower emissions to report.

Through comprehensive outreach activities after proposal of the rule, EPA held meetings and/or conference calls with representatives of the primary audience groups. After proposal, EPA posted a general fact sheet for the rule, info rmation sheets for every source category, and an FAQ document. We continued to meet with st akeholders and entere d documentation of all meetings into the docket. One public hearing was held on April 12, 2010, which included three speakers from industry and one non-governmental environmental group. In addition, 20 outreach meetings were held. We considered public comments in developing the final rule.

During rule implementation, EPA will maintain an “open door” policy for stakeholders to ask questions about rule or provi de suggestions to EPA about th e types of compliance assistance
that would be useful to small businesses. EPA intends to develop a range of compliance
assistance tools and materials and conduc t extensive outreach for the final rule.

6.4 Unfunded Mandates Reform Act
Title II of the Unfunded Mandates Reform Act of 1995 (UMRA), P.L. 104-4, establishes requirements for federal agencies to assess the eff ects of their regulatory actions on state, local, and tribal governments and the private sector . Under Section 202 of th e UMRA, EPA generally must prepare a written statement, including a cost-b enefit analysis, for final rules with “federal mandates” that may result in expenditures to state, local, and tribal governments, in the aggregate, or to the private sector, of $100 million or more in any one year.

6-5This final rule does not contain a Federal ma ndate that may result in expenditures of $100 million or more for State, local, and tribal government s, in the aggregate, or the private sector in any one year. Overall, EPA estimates that the total annualized costs of this final rule are approximately $6.8 million for the first year, and $7.4 million for subsequent years ($2006). Thus, this final rule is not subject to the requirements of sections 202 or 205 of UMRA.

This final rule is also not subject to the requirements of section 203 of UMRA because it contains no regulatory require ments that might significantly or uniquely affect small governments. Facilities subject to the final rule include manufacturer s, wholesalers, and retailers. None of the facilities currently known to undertake these activities are owned by small governments.

6.5 Executive Order 13132: Federalism
Executive Order 13132, entitled “Federalism” (64 FR 43255, August 10, 1999), requires EPA to develop an accountable process to ensure “meaningful and timely input by state and local officials in the development of re gulatory policies that have fede ralism implications.” “Policies that have federalism implications” is defined in the executive order to in clude regulations that
have “substantial direct effects on the states, on the relationship between the national government and the states, or on the distri bution of power and re sponsibilities among the various levels of government.”

This final rule does not have federalism impli cations. It will not have substantial direct effects on the states, on the relationship between the national government and the states, or on the distribution of power and responsibilities among the various levels of government, as specified in Executive Order 13132.

This regulation applies to manufacturers, wholesalers, and retailers. Few government
facilities would be affected. This regulation also does not limit the pow er of states or localities to collect GHG data and/or regul ate GHG emissions. Thus, Executive Order 13132 does not apply
to this final rule.

In the spirit of Executive Or der 13132, and consistent with EPA policy to promote
communications between EPA and State and lo cal governments, EPA specifically solicits comment on this proposed action fr om State and local officials.

6-66.6 E xecutive Order 13175: Consultation and Coordination with Indian Tribal Governments
Executive Order 13175, entitled “Consultation a nd Coordination with Indian Tribal Governments” (59 FR 22951, November 6, 2000), requires EPA to develop an accountable process to ensure “meaningful and timely input by tribal officials in the development of regulatory policies that have tribal implications.”

This final rule is not expected to have trib al implications, as specified in Executive Order 13175. This regulation applies to fa cilities that directly emit GHGs. We do not expect facilities owned by tribal governments to be affecyed by this rule. Thus, Execu tive Order 13175 does not apply to this final rule.

Although Executive Order 13175 does not apply to this final rule, EPA sought opportunities to provide information to trib al governments and re presentatives during development of the MRR rule. In consultation w ith EPA’s American Indian Environment Office, EPA’s outreach plan for the MRR included tribes. Fo r a complete list of tribal contacts, see the “Summary of EPA Outreach Activities for Deve loping the Greenhouse Gas Reporting Rule,” in the Docket for this final rulemaking (E PA-HQ-OAR-2008-0508-055). In addition to the consultation activities supporting the MRR, EPA continues to pr ovide information to tribal governments and representatives during development of the Track II rules such as this final rulemaking. EPA specifically solicits additional comment on this proposed action from tribal
officials.

6.7 Execut ive Order 13045: Protection of Ch ildren from Environmental Health and Safety Risks
EPA interprets Executive Order 13045 (62 F.R. 19885, April 23, 1997) as applying only to those regulatory actions that concern health or safe ty risks, such that the analysis required
under Section 5-501 of the executive order has the potential to influence the regulation. This action is not subject to Executive Order 13045 becau se it does not establish an environmental standard intended to mitigate health or safety risks.

6.8 Executive Order 13211: Actions that Significantly Affect Energy Supply, Distribution, or Use

This final rule is not a “s ignificant energy action” as de fined in Executive Order 13211 (66 FR 28355, May 22, 2001) because it is not likely to have a significant adverse effect on the supply, distribution, or use of energy. Further, we ha ve concluded that this final rule is not likely to have any adverse energy effects.

6-76-8 This proposal relates to monitoring, reporti ng, and recordkeeping at facilities that manufacture, sell, import, or export F-GHG relate d products; it does not ad versely affect energy supply, distribution or use. Therefor e, we conclude that this final rule is not likely to have any adverse effects on energy s upply, distribution, or use.

6.9 Na tional Technology Transfer Advancement Act
Section 12(d) of the Nati onal Technology Transfer and Advancement Act of 1995 (NTTAA), Public Law No. 104-113 (15 U.S.C. 272 note) directs EPA to use voluntary consensus standards in its regul atory activities unless to do so would be inconsistent with applicable law or otherwise impractical. Volunt ary consensus standards are technical standards (e.g., materials specifications, test methods, samp ling procedures, and busi ness practices) that are developed or adopted by voluntary consensus st andards bodies. NTTAA directs EPA to provide Congress, through OMB, explanations when th e Agency decides not to use available and applicable voluntary consensus standards.

This rule involves technical standards. EPA will use voluntary consensus standards from
at least four three different voluntary consensus standards bodie s, including the following: ASTM, ASME, and International SEMATECH Ma nufacturing Initiative, and EPA . These voluntary consensus standards will help faciliti es monitor, report, a nd keep records of GHG
emissions. No new test methods were developed for this rule. Instead, from existing rules for source categories and voluntary greenhouse gas programs, EPA identified existing means of monitoring, reporting, and keeping records of gr eenhouse gas emissions. The existing methods (voluntary consensus standards) include a broad range of meas urement techniques, such as methods to measure gas or liquid flow and met hods to identify the contents of vented or exhausted streams. The existing methods (voluntar y consensus standards) include a broad range of measurement techniques, such as methods to measure gas or liquid flow; and methods to gauge and measure petroleum and petroleum produc ts . The test methods are incorporated by
reference into the rule and are av ailable as specified in 40 CFR 98.7.

6.10 E xecutive Order 12898: Federal Actions to Address Environm ental Justice in Minority Populations and Low-Income Populations
Executive Order 12898 (59 FR 7629, February 16, 1994) establishes federal executive policy on environmental justice. It s main provision directs federal ag encies, to the greatest extent practicable and permitted by law, to make environmental justice part of their mission by identifying and addressing, as appropriate, disp roportionately high and adverse human health or environmental effects of their programs, policie s, and activities on minority populations and lowincome populations in the United States.EPA has determined that this final rule will not have disproportionately high and adverse
human health or environmental effects on minor ity or low-income populations because it does not affect the level of protection provided to human health or the environment. This final rule does not affect the level of prot ection provided to human health or the environment because it is a rule addressing information co llection and reporting procedures.

6-9SECTI ON 7 CONCLUSIONS

The supplemental proposal requires reporti ng of fluorinated greenhouse gas (F-GHG) emissions from electronics manufacturing, producti on of fluorinated gases, and use of electrical equipment. EPA is also proposing to require such reporting from manu facturers of electrical equipment, import and export of pre-charged equipment, and closed cell foams. These F-GHG source categories are covered under Subparts I, L, DD, QQ, and SS of the rule.

7.1 Su mmary of Sectors Covered

7.1 .1 Subpart I – Electronics Manufacturing
Electronics manufacturing in cludes, but is not limite d to, the manufacture of semiconductors, liquid crystal displays (LCD s), microelectricomechanical (MEMS), and photovoltaic cells (PV). The el ectronics industry uses multiple long-lived F-GHGs such as perfluorocarbons (PFCs), Hydrofluorocar bons (HFCs), sulfur hexafluoride (SF 6 ), and nitrogen trifluoride (NF 3 ), as well as nitrous oxide (N 2 O). This proposed rule wo uld apply to electronics manufacturing facilities that emit equal to or greater th an 25,000 metric tons of CO 2 e per year 26 from electronics manufacturing processes such as plasma etching, thin film deposition, chamber cleaning, and heat transfer fluid use. EPA is also proposing methods to estimate emissions from cleaning and etch processes for semiconductor, LCD, MEMS, and PV manufacture and also methods for estimating N 2 O emissions from deposition and ot her manufacturing processes such as chamber cleaning. EPA is also clarifying met hods for estimating emissions from heat transfer fluids. Finally, EPA is proposing methods for verifying destruction or removal efficiency (DRE) from abatement equipment.

7.1.2 Subp art L – Fluorinated GHG Producers

Affected entities under subpart L are defined as any facility that produces a fluorinated gas from any raw material or feedstock ch emical. Fluorinated gas production includes the production of fluorinated GHG, CFC, or HCFC. EPA stipulates th at production of fluorinated

26 As discussed further below, EPA is proposing that uncontrolled emissions be used for purposes of determining whether a facility’s emissions are equal to or greater than 25,000 mtCO2e.

7-1gases does not include the reuse or recycling of fluorinated GHG or the generation of HFC-23 during the production of HCFC-22.

Facilities that produce fluorin ated gases will be required to report their fluorinated GHG emissions from fluorinated gas production, transformation, and destruction, as well as
combustion-related CO 2, CH 4, and nitrous oxide (N 2 O) emissions from stationary fuel combustion. Fluorinated gases include fluorinat ed GHGs (HFCs, PFCs, SF6, NF3, HFEs, etc.), CFCs, and HCFCs. However, emissions of HFC-23 from HCFC-22 production are addressed under subpart O and are therefore excluded from this subpart. Si milarly, emissions of CFCs and HCFCs are addressed under the regulations implem enting Title VI of the Clean Air Act and are therefore excluded from this subpart.

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.1.3 Subpart DD: Electric Transmission and Distribution Equipment Use

The electric transmission and distribution equipment use source category includes gasinsulated substations, circuit breakers, other switchgear, and gas-insula ted lines containing SF 6 or PFCs. Equipment also includes gas containers su ch as pressurized cylinders, gas carts, new equipment owned but not yet installed, or othe r containers. Notwithsta nding the definition of facility in subpart A, for purposes of this s ubpart, “facility” means an electric transmission and distribution system which is the collection of SF6- and PFC insulated equipment linked through electric power transmission or distribution lines a nd operated as an integrat ed unit by one electric power entity or several entitie s that have a single owner.

Regulation of Subpart DD was proposed under the initial MRR, but was excluded after EPA received several comments regarding the defi nition of “facility” as it would be covered under the rule. After taking these comments under consideration, EPA has clarified the
definition for this final rule.

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.1.4 Subpart QQ – Importing/Exporting of Pre-charged Equipment and Foams

Affected entities under subpart QQ are defined as any entity that is an importer and/or exporter of pre-charged equipm ent or closed-cell foams that contain fluorinated GHGs. A variety of products containing fluorinated greenhouse gases (F-GHGs), nitrous oxide (N 2 O), and carbon dioxide (CO 2 ) are imported into and exported from the United States. Pre-charged equipment includes air-conditioning, refrigeration, a nd electrical equipment. Closed-cell foams that are imported and exported in clude polyurethane (PU) rigid foam used in insulation in domestic refrigerators and freezers,; commercial refrigeration foam,; PU rigid sandwich panel

7-2continuous and discontinuous foam; extruded polystryrene (XPS) sheet foam; and XPS
boardstock foam.

EPA is proposing to require reporting of th ese imports and exports. Importers and exporters of pre-charged equipment and closed -cell foams would be subject to requirements similar to those for importers and exporters of bulk GHGs. In addition, equipment importers would be required to report the types and charge sizes of equipment and the number of pieces of each type of equipment that they imported or exported, while foam importers would be required to report the volume of foam and F-GHG density of the foam that they imported. As is true for importers and exporters of bulk F-GHGs, importers and exporters of equi pment and foam would only be required to report if their total imports or expor ts exceeded the 25,000 mtCO2e
threshold.

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.1.5 Subpart SS – Electrical Equipment and Components Manufacturing

Affected entities under subpart SS are defined as electrical equipment manufacturers and
refurbishers of SF 6 -insulated closed-pressure system e quipment and sealed-pressure system equipment including gas-insulated substations, ci rcuit breakers, other switchgear, gas-insulated lines, or power transformers c ontaining sulfur-hexafluoride (SF 6 ) or perfluorocarbons (PFCs). EPA is proposing to require reporting of SF6 and PFC emission from electrical equipment manufacturing and refurbishing using a mass-ba lance monitoring method comparable to the approach specified for subpart DD, Sulfur Hexafluoride (SF6) and Perfluorocarbons (PFCs) from Electrical Equipment at an Electric Power System.

Facilities covered under subpa rt SS would be required repor t annual emission report all
SF 6 and PFC emissions, including those from eq uipment testing, equipment manufacturing, and
bulk SF 6 and PFC handling. In addition, electrical e quipment manufacturers would be required to submit supplemental data that includes: SF 6 and PFCs with or inside equipment delivered to customers, SF 6 and PFCs returned by customers w ith or inside equipment, bulk SF 6 and PFC purchases, SF 6 and PFCs sent off-site for destruction or to be recycled, SF 6 and PFC returned from offsite after recycling, SF 6 and PFCs stored in containers at the beginning and end of the year, SF 6 and PFCs returned to suppliers. If applicable, facilities woul d also be required to report
combustion-related CO 2, CH 4, and nitrous oxide (N 2 O) emissions from stationary fuel combustion. EPA would only require emission repor ting a facility’s tota l annual purchases of
SF 6 and PFCs are greater than 23,000 lbs. This re porting threshold is equi valent an emissionsbased threshold of 25,000 MtCO 2 e, assuming an average manufact urer emission rate of 10%.

7-37-4 7 .2 Estimated Costs and Impacts of the GHG Reporting Program

The total national costs for the selected opti on are estimated to be $6.8 million in the first year and $7.4 million in subsequent years ($2006) . This includes a public sector burden estimate of $384,000 for program implementation and verificat ion activities. Subparts bearing the greatest share of the ongoing private costs of the rule ar e the electronics industr y (74%) and importers and exporters of fluorinated GHGs (8%). The average ongoing (subsequent year) private cost per metric ton varies by subpart; measures range from approximately than $0.01 per ton (Subpart SS) to $0.35 per ton (Subpart I). The national cost s are distributed to several economic sectors and represent less than 0.01% of 2008 gross domestic product; overall, EPA does not believe the rule will have a significant macroeconomic impa ct on the national economy or on small entities
within those sectors.8-5 S ECTION 8 REFERENCES

Burton (2007). Assessing the need for FC abatem ent standards, Solid State Technology, January
2007. Available at: http://sst.pennnet.com/disp lay_article/281422/5/ARTCL/none/none/1/Assessing-theneed-for-FC-abatement-standards/

U.S. Environmental Protection Agency (EPA). 2000. Guidelines for Preparing Economic Analyses . EPA 240-R-00-003. Washington, DC: EPA. Available at <http://yosemite.epa.gov/ee/epa/eed.nsf/webpages/Guidelines.html>.

U.S. Environmental Protection Agency. 2009. U.S. Inventory of Greenhouse Gas Emissions
and Sinks: 1990-2007.

U.S. Small Business Administration (SBA). 2008a. Fi rm Size Data from the Statistics of U.S.
Businesses: U.S. Detail Employment Sizes: 2002. http://www.census.gov/csd/susb/download_susb02.htm.

U.S. Small Business Administration (SBA). 2008b. Fi rm Size Data from the Statistics of U.S. Businesses: Dynamic Data by Bi rths, Deaths, Growth, and Decline, U.S. Industry Data: 2003-2005. http://www.sba.gov/advo/research/data.html.

U.S. Small Business Administration (SBA). 2009c. Table of Small Business Size Standards Matched to North American Industry Classi fication System Codes. Effective August 22, 2008. http://www.sba.gov/services/contrac tingopportunities/size standardstopics/
size/index.html.