March 2010

Economic Impact Analysis for the

Mandatory Reporting of

Greenhouse Gas Emissions

F-Gases: Subparts I, L, QQ, SS

Draft Report
i

CONTENTS

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

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

1.2 Proposed Rule: F-Gas Subparts........................................................................... 1-2

1.2.1 Subpart I: Electronics Manufacturing..................................................... 1-2

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

1.2.3 Subpart QQ: Imports and Exports of Fluorinated GHGs in PreCharged Equipment and Closed-Cell Foams........................................... 1-3

1.2.4 Subpart SS: Electrical Equipment Manufacture or Refurbishment

and Manufacturing of Electrical Components......................................... 1-3

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

2.2 Existing Reporting Programs............................................................................... 2-4

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

3.1 Subpart I – Electronics Manufacturing................................................................ 3-1

3.1.1 Definition of Affected Entities................................................................. 3-1

3.1.2 Summary of Initial Proposal.................................................................... 3-2

3.1.3 Summary of Major Changes Since Initital Proposal................................ 3-3

3.1.4 Selection of Reporting Threshold ............................................................ 3-4
ii

3.1.5 Selection of Proposed Monitoring Methods............................................ 3-5

3.1.6 Selection of Procedures for Estimating Missing Data ............................. 3-9

3.1.7 Selection of Data Reporting Requirements.............................................. 3-9

3.1.8 Selection of Recordkeeping Requirements............................................ 3-10

3.2 Subpart L – Fluorinated GHG Producers........................................................... 3-11

3.2.1 Definition of Affected Entities............................................................... 3-11

3.2.2 Summary of Initial Proposal.................................................................. 3-11

3.2.3 Summary of Changes Since the Initial Proposal.................................... 3-12

3.2.4 Selection of Reporting Threshold .......................................................... 3-12

3.2.5 Selection of Proposed Monitoring Methods.......................................... 3-12

3.2.6 Selection of Procedures for Estimating Missing Data ........................... 3-15

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

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

3.3 Subpart QQ – Importing/Exporting of Pre-charged Equipment and Foams...... 3-16

3.3.1 Definition of Affected Entities............................................................... 3-16

3.3.2 Summary of Initial Proposal.................................................................. 3-16

3.3.3 Summary of Current Proposal ............................................................... 3-17

3.3.4 Selection of Reporting Threshold .......................................................... 3-17

3.3.5 Selection of Proposed Monitoring Methods and QA/QC

Requirements ......................................................................................... 3-17

3.3.6 Selection of Procedures for Estimating Missing Data ........................... 3-17

3.3.7 Selection of Data Reporting Requirements............................................ 3-17

3.3.8 Selection of Recordkeeping Requirements............................................ 3-18

3.4 Subpart SS – Electrical Equipment and Components Manufacturing............... 3-19

3.4.1 Definition of Affected Entities............................................................... 3-19

3.4.2 Selection of Reporting Threshold .......................................................... 3-20
iii

3.4.3 Selection of Proposed Monitoring Methods and QA/QC

Requirements ......................................................................................... 3-20

3.4.4 Selection of Procedures for Estimating Missing Data ........................... 3-21

3.4.5 Selection of Data Reporting Requirements............................................ 3-21

3.4.6 Selection of Recordkeeping Requirements............................................ 3-21

Section 4 Engineering Cost Analysis................................................................................... 4-22

4.1 Introduction........................................................................................................ 4-22

4.2 Overview of Cost Analysis................................................................................ 4-22

4.2.1 Baseline Reporting................................................................................. 4-22

4.2.2 Reporting Costs...................................................................................... 4-23

4.3 Cost Analysis for Subpart I – Electronic 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 Different 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......................... 4-33

4.4 Cost Analysis for Subpart L—Fluorinated Gas Production .............................. 4-34

4.4.1 Model Facility Development ................................................................. 4-34

4.4.2 Cost Analysis for Mass Balance Approach - Option 1.......................... 4-35

4.4.3 Cost Analysis for Option 2- Process Vent Testing ................................ 4-38

4.5 Cost Analysis for Subpart QQ—Imports and Exports of Fluorinated GHGs.... 4-41

4.5.1 Model Facility Development ................................................................. 4-41

4.5.2 Determine Cost Elements ...................................................................... 4-42

4.5.3 Analyze Proportion of Facilities in the Different Model Facility

Categories .............................................................................................. 4-43
iv

4.5.4 Assigning Costs to Cost Elements......................................................... 4-44

4.5.5 Estimate per Facility Costs for Each Threshold Level .......................... 4-45

4.5.6 Subpart SS—Electrical Equipment Manufacturing............................... 4-46

4.5.7 Other Costs............................................................................................. 4-50

4.6 Public Sector Burden ......................................................................................... 4-50

Section 5 Economic Impact Analysis.................................................................................. 5-51

5.1 Selection of Reporting Thresholds..................................................................... 5-51

5.1.1 Subpart I- Electronics Manufacturing.................................................... 5-51

5.1.2 Subpart L- Fluorinated Gas Production ................................................. 5-53

5.1.3 Subpart QQ- Imports and Exports of Fluorinated GHGs in PreCharged Equipment and Closed-Cell Foams......................................... 5-55

5.1.4 Subpart SS- Electrical Equipment Manufacture or Refurbishment

and Manufacturing of Electrical Components....................................... 5-56

5.1.5 National Emissions Covered Under Selected Thresholds ..................... 5-57

5.2 National Cost Estimates..................................................................................... 5-57

5.2.1 Additional National Cost Analysis ........................................................ 5-58

5.3 Economic Impact Analysis................................................................................ 5-60

5.3.1 Assessing Economic Impacts on Small Entities.................................... 5-60

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

6.1 Executive Order 12866: Regulatory 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
v

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........................................................................................................ 6-6

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 .............................................................................. 7-1

7.1.1 Subpart I – Electronics Manufacturing.................................................... 7-1

7.1.2 Subpart L – Fluorinated GHG Producers................................................. 7-1

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

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

7.1.4 Subpart SS – Electrical Equipment and Components

Manufacturing.......................................................................................... 7-3

7.2 Estimated Costs and Impacts of the Mandatory GHG Reporting Program......... 7-3

Section 8 References.............................................................................................................. 8-1
vi

LIST OF TABLES

Table 4-1. Labor Categories and Hourly Rates ........................................................................ 4-24

Table 4-2. Number of Representative Affected Entities Used in the Cost Analysis................ 4-29

Table 4-3. Labor Categories and Hourly Rates ........................................................................ 4-29

Table 4-4. Responsibilities for Regulation Compliance by Labor Category Per Facility ......... 4-31

Table 4-5. Subpart L – F-Gas Mass Balance Approach: Labor Costs (2006$)........................4-37

Table 4-6. Subpart L – F-Gas Mass Balance Method: Capital and O&M Costs (2006$)........ 4-37

Table 4-7. Subpart L – F-Gas Process Vent (Avg. per plant basis): Labor Costs (2006$)....... 4-40

Table 4-8. Subpart L – F-Gas Process Vent Method: Capital and O&M Costs (2006$) ......... 4-41

Table 4-9. Number of Representative Affected Entities Used in the Cost Analysis................ 4-42

Table 4-10. Allocation of Facilities to Model Types................................................................4-43

Table 4-11. Labor Categories and Hourly Rates ...................................................................... 4-44

Table 4-12. Responsibilities for Regulation Compliance by Labor Category..........................4-45

Table 4-13. Number of Representative Affected Entities Used in the Cost Analysis.............. 4-46

Table 4-14. Labor Categories and Hourly Rates ...................................................................... 4-48

Table 4-15. Responsibilities for Regulation Compliance by Labor Category Per Facility ...... 4-49

Table 4-16. Other Costs Associated with Reporting and Recordkeeping ................................4-50

Table 5-1. Threshold Analysis for Subpart I – Electronics Manufacturing Industry ............... 5-52

Table 5-2. Summary of Rule Applicability under the Proposed Capacity-Based Thresholds for

Subpart I – Electronics Manufacturing Industry........................................................................ 5-52

Table 5-3 Threshold Analysis for Fluorinated GHG Emissions from Production of HFCs, PFCs,

SF6, NF3, CFCs, and HCFCs (Uncontrolled Emissions)..........................................................5-54

Table 5-4. Threshold Analysis for Fluorinated GHG Emissions from Production of HFCs, PFCs,

SF6, NF3, CFCs, and HCFCs (Controlled Emissions)..............................................................5-55

Table 5-5. Threshold Analysis for Subpart QQ–Imports of Fluorinated GHGs in Pre-Charged

Equipment and Closed-Cell Foams ...........................................................................................5-56
vii

Table 5-6. Threshold Analysis for Subpart QQ–Exports of Fluorinated GHGs in Pre-Charged

Equipment and Closed-Cell Foams ...........................................................................................5-56

Table 5-7. Threshold Analysis for Subpart SS– Electrical Equipment Manufacture or

Refurbishment and Manufacturing of Electrical Components .................................................. 5-57

Table 5-8. Estimates of Emissions (MtCO2e) Reported in 2008 Under the Selected Option .. 5-57

Table 5-9. National Cost Estimates by Subpart: Selected Option ............................................ 5-58

Table 5-10. Additional Subpart I Private Cost Estimates: Validating the DRE of Abatement

Devices....................................................................................................................................... 5-60

Table 5-11. Number of Establishments by Affected Industry and Enterprisea Size: 2002....... 5-62

Table 5-12. Receipts by Affected Industry and Enterprisea Size ($2002 Million)................... 5-64

Table 5-13. Establishment Sales Tests by Industry and Enterprisea Size: First Year Costs..... 5-67

Table 5-14. Establishment Sales Tests by Industry and Enterprisea Size: Subsequent Years Costs

.................................................................................................................................................... 5-69
1-1

SECTION 1

INTRODUCTION AND BACKGROUND

1.1 Background

On December 26, 2007, President Bush signed the FY2008 Consolidated Appropriations

Act which authorized funding for EPA to “develop and publish a draft rule not later than 9

months after the date of enactment of this Act, and a final rule not later than 18 months after the

date of enactment of this Act, to require mandatory reporting of GHG emissions above

appropriate thresholds in all sectors of the economy of the United States.” (Consolidated

Appropriations Act, 2008, Pub. L. No.110-161, 121 Stat 1844, 2128 (2008)). An accompanying

joint explanatory 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 was signed on September 22,

2009 by Administrator Lisa Jackson; and published in the Federal Register on October 30, 2009.

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 direction in the 2008

Consolidated Appropriations Act1. These source categories capture approximately 85 percent of

U.S. GHG emissions through reporting by direct emitters as well as suppliers of fossil fuels and

industrial gases.

In the April 2009 proposed mandatory GHG reporting rule, the electronics, fluorinated

GHG production, and use of electrical equipment source categories were included as subparts I,

L, and DD. In addition, EPA requested comment on requiring reporting under subpart OO of the

quantities of fluorinated GHGs imported and exported inside pre-charged equipment and foams.

EPA received numerous comments on these subparts related to reporting costs and technical

feasibility of implementing subparts I and L; requests for clarification of how “facility” should

be interpreted in subpart DD, and comments both in favor and opposed to a requirement to report

imports of F-GHGs contained in imported and exported pre-charged equipment and closed-cell

foams.

1 Consolidated Appropriations Act, 2008, Public Law 110–161, 121 Stat. 1844, 2128.
1-2

EPA recognized the concerns raised by stakeholders, and decided not to finalize subparts

I, L, and DD with the Final MRR, but instead to re-propose significant pieces of these subparts.

This supplemental proposal incorporates a number of changes including, but not limited to,

different methodologies that provide improved emissions coverage at a lower cost burden to

facilities than would have been covered under the initial proposal. In addition, EPA is proposing

requirements to report emissions from manufacture of electrical equipment and to report the

quantities of fluorinated GHGs imported and exported inside pre-charged equipment and foams.

EPA believes the monitoring approaches proposed in this action, which combine direct

measurement and facility-specific calculations, effectively balance accuracy and costs, and that

they are warranted even though the rule does not contain any emissions reduction requirements.

As stated in the Final Rule, 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 Proposed Rule: Fluorinated Greenhouse Gas Subparts

This proposal requires reporting of fluorinated greenhouse gas (F-GHG) emissions from

electronics manufacturing, production of fluorinated gases, and use of electrical equipment.

EPA is also proposing to require 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, QQ, and SS of the rule. This section provides a brief

introduction to the industries covered by each subpart and details which subparts were included

in the initial proposal and which subparts are new additions to the original MRR.

1.2.1 Subpart I: Electronics Manufacturing

 Electronics manufacturing includes but is not limited to the manufacturing of

semiconductors, liquid crystal displays (LCD), microelectromechanical systems (MEMs), and

photovoltaic (PV) cells. The electronics industry uses multiple long-lived F-GHGs such as

perfluorocarbons (PFCs), Hydrofluorocarbons (HFCs), sulfur hexafluoride (SF6), and nitrogen

trifluoride (NF3), as well as nitrous oxide (N2O). The proposed rule applies to electronics

manufacturing facilities that emit GHGs from electronics manufacturing processes such as

plasma etching, chemical vapor deposition, chamber 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
1-3

forth in the initial proposal. EPA took these comments into consideration and is proposing a

revised version of the MRR for entities covered under this subpart.

1.2.2 Subpart L:Fluorinated Gas Production

The fluorinated gas production source category consists of facilities that produce

fluorinated gases. Under the proposed rule, these facilities would be required to report their

fluorinated GHG emissions from fluorinated gas production, transformation, and destruction, as

well as combustion-related CO2, CH4, and nitrous oxide (N2O) emissions from stationary fuel

combustion. Fluorinated gases include fluorinated 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. Similarly, emissions of CFCs and

HCFCs 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 proposed regulation in the initial proposal, EPA has

modified the rule with respect to entities under this subpart and is proposing the revised version.

1.2.3 Subpart QQ: Imports and Exports of Fluorinated GHGs in Pre-Charged Equipment

and Closed-Cell Foams

The source category, importers and exporters of fluorinated GHGs contained in precharged equipment or closed-cell foams, consists of any entity that is importing or exporting precharged equipment that contains a fluorinated GHG such as air-conditioning and refrigeration

equipment. This subpart also covers any entity that imports or exports closed-cell foams that

contain a fluorinated GHG.

Today’s proposal introduces Subpart QQ as a new addition to the MRR. This source

category was not included in the initial rule.

1.2.4 Subpart SS: Electrical Equipment Manufacture or Refurbishment and Manufacturing

of Electrical Components

The electrical equipment manufacturing category includes facilities that manufacture gasinsulated substations, circuit breakers, other switchgear, gas-insulated lines, or power

transformers containing sulfur-hexafluoride (SF6) or perfluorocarbons (PFCs).
1-4

This is the initial proposal for Subpart SS. This source category was not covered under

the initial MRR.

1.3 Economic Impact Analysis for F-Gas Subparts

As part of the regulatory process of proposing these rules, EPA is required to develop an

economic impact analysis (EIA). This report documents the EIA methods and results and

proceeds as follows: Section 2 describes the current regulatory context into which the new

proposals will be integrated. Section 3 explains 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 impact analysis. A review of

executive orders is provided in Section 6, which is followed by a brief EIA summary and

conclusion in Section 7.
2-1

SECTION 2

REGULATORY BACKGROUND

The intent of this rule is to collect accurate and timely GHG emissions data that can be

used to inform future policies. Although the 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 duplicate other U.S. government GHG programs. We

outline EPA’s overall rulemaking approach, sources considered, and summarize our review of

GHG monitoring protocols below. For example, the monitoring and GHG calculation

methodologies for many source categories are the same as, or similar to, the methodologies

contained in state reporting programs. The remainder of the section provides an overview of

related existing programs and discusses their relevance in the development of this rule.

2.1 EPA’s Overall Rulemaking Approach

The mandatory reporting program will provide comprehensive and accurate data which

will inform future climate change policies. Potential future climate policies include research and

development initiatives, economic incentives, new or expanded voluntary programs, adaptation

strategies, emission standards, 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

mandatory reporting system should be of sufficient quality to support a range of approaches.

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

 Obtain data that is of sufficient 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.

 Create reporting requirements that are consistent with existing GHG reporting

programs by using existing GHG emission estimation and reporting methodologies to

reduce reporting burden, where feasible.

2.1.1 Stakeholder Outreach to Identify Reporting Issues

Early in the development process, we conducted a proactive communications outreach

program to inform the public about the rule development effort. We solicited input and
2-2

maintained an open door policy for those interested in discussing the rulemaking. Since January

2008, EPA staff has held more than 100 meetings with stakeholders, including the following:

 trade associations and firms in potentially affected industries/sectors;

 state, local, and tribal environmental control agencies and regional air quality

planning organizations;

 state and regional organizations already involved in GHG emissions reporting,

such as TCR, CARB, and Western Climate Initiative (WCI); and

 environmental groups and other nongovernmental organizations.

 We also met with U.S. Department of Energy (DOE) and U.S. Department of

Agriculture (USDA), which have programs relevant to GHG emissions.

During the meetings, we shared information about the statutory requirements and

timetable for developing a rule. Stakeholders were encouraged to provide input on key issues.

Examples of topics discussed included existing GHG monitoring and reporting programs and

lessons learned, thresholds for reporting, schedules 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 different 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 (March 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 gas production facilities and conducted multiple

meetings and conference calls with fluorinated gas producers in order to better understand the
2-3

current practices and issues associated with measuring emissions of fluorinated GHGs from

fluorinated gas production facilities.

In the April 2009 proposed mandatory GHG reporting rule, the electronics, fluorinated

GHG production, and use of electrical equipment source categories were included as subparts I,

L, and DD. In addition, EPA requested comment on requiring reporting under subpart OO of the

quantities of fluorinated GHGs imported and exported inside pre-charged equipment and foams.

EPA received a number of lengthy, detailed comments 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 source categories in the proposed rule, raised concerns about the

costs and technical feasibility of implementing subparts I and L as initially proposed, requested

clarification of how “facility” should be interpreted 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 subparts I, L, and DD with the Final MRR, but instead to re-propose

significant pieces of these subparts. The proposed rule incorporates a number of changes

including, but not limited to, different methodologies that provide improved emissions coverage

at a lower cost burden to facilities than would have been covered under the initial proposed rule.

In addition, EPA is proposing requirements to report emissions from manufacture of electrical

equipment and to report the quantities of fluorinated GHGs imported and exported inside precharged equipment and foams.

2.1.2 Analysis of Emissions by Sector

For each of the source categories considered in this proposal, EPA compiled information

on current conditions in the category, including information about existing 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 Existing Reporting Programs

In addition to the mandatory reporting program, a number of voluntary and mandatory

GHG programs already exist or are being developed at the State, regional, and Federal levels.

These programs have different 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 programs and emission inventories are relevant to the GHG reporting rule.

Several of these programs 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 sectorspecific partnerships to reduce SF6 emissions: the SF6 Emission Reduction Partnership for

Electric Power Systems, with over 80 participating 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 Partnership (VAIP) promotes technically 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 company-specific) annual PFC emissions report.

In developing the rule, we carefully reviewed the existing reporting programs,

particularly with respect to emissions sources 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 reduction programs (e.g., cap and trade) or being

used to design and inform measures that reduced GHGs indirectly (e.g., energy efficiency).

Where possible, we built upon concepts in existing Federal and State programs in developing the

mandatory GHG reporting rule. For a full summary of the reporting programs reviewed in the

development of the mandatory reporting rule please see the Regulatory Impact Analysis for the

Mandatory Reporting of Greenhouse Gas Emissions EPA-HQ-OAR-2008-0508.
3-1

SECTION 3

DEVELOPMENT OF SUBPARTS

The four F-Gas source categories included in this supplemental proposal are

 Subpart I -Electronics Manufacturing;

 Subpart L - Fluorinated Gas Production;

 Subpart QQ - Imports and Exports of Fluorinated GHGs in Pre-Charged

Equipment and Closed-Cell Foams; and

 Subpart SS - Electrical Equipment Manufacture or Refurbishment and

Manufacturing of Electrical Components.

This section provides additional details about 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 provides a brief description of proposed monitoring

methods; procedures for estimating missing data; as well as data reporting and recordkeeping

requirements.

3.1 Subpart I – Electronics Manufacturing

3.1.1 Definition of Affected Entities

Electronics manufacturing includes, but is not limited to, the manufacture of

semiconductors, liquid crystal displays (LCDs), microelectromechanical (MEMS), and

photovoltaic cells (PV). The electronics industry uses multiple long-lived F-GHGs such as

perfluorocarbons (PFCs), Hydrofluorocarbons (HFCs), sulfur hexafluoride (SF6), and nitrogen

trifluoride (NF3), as well as nitrous oxide (N2O). This proposed rule would apply to electronics

manufacturing facilities that emit equal to or greater than 25,000 metric tons of CO2e per year2

from electronics manufacturing processes such as plasma etching, chemical vapor deposition,

chamber cleaning, and heat transfer fluid use.

In this action, EPA is proposing methods to estimate emissions from cleaning and etch

processes for semiconductor, LCD, MEMS, and PV manufacture and also methods for

estimating N2O emissions from deposition and other manufacturing processes such as chamber

cleaning. EPA is also clarifying methods for estimating emissions from heat transfer fluids.

Finally, EPA is proposing methods for reporting controlled emissions from abatement systems.

2

 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.
3-2

3.1.2 Summary of Initial Proposal

The initial proposal for electronics manufacturing, EPA included the following

provisions for reporting emissions from electronics manufacture: (1) a reporting threshold for

semiconductors, LCDs, MEMS, and PV; (2) methods for estimating emissions from etching and

cleaning; (3) methods for estimating N2O emissions during etching and cleaning; (4) methods for

verifying destruction or removal efficiency (DRE) of abatement equipment; and (5) methods for

estimating emissions from heat transfer fluids. The main provisions proposed initially for

reporting emissions from electronics manufacturing are briefly summarized in paragraphs below.

For more detailed information on the initial proposal, see the electronics manufacturing section

of EPA’s proposed rule on the Mandatory Reporting of Greenhouse Gases (74 FR 16448).

In the initial proposal, a capacity-based threshold was proposed, requiring those facilities

with a capacity of 1,080 m2 silicon or greater to report their GHG emissions. The capacity based

threshold of 1,080 m2 silicon, which is equivalent to 25,000 mtCO2e using the 2006 IPCC Tier 1

default factors and assuming no abatement, was applicable to semiconductor, MEMS, and LCD

manufacturers. Due to a lack of information on use and emissions of F-GHGs for PV

manufacture, EPA proposed an emissions-based threshold of 25,000 mtCO2e for these facilities,

in lieu of an emissions-based threshold, where possible, because EPA believes that this approach

will simplify the applicability determination.

With respect to estimating emissions from chamber cleaning and etching during

semiconductor manufacturing, in our initial proposal, EPA outlined two different methods; one

method for the largest semiconductor facilities, and another method for other semiconductor

facilities and LCD, MEMS, and PV facilities. EPA defined large semiconductor facilities as

those facilities with annual capacities of greater than 10,500 m2 silicon (equivalent to 29 out of

175 total facilities). For large semiconductor facilities EPA proposed an approach based on the

IPCC Tier 3 method that required the use of company-specific data for (1) gas consumption, (2)

gas utilization, (3) by-product formation, and (4) DREs for all emissions abatement processes at

the facility. As EPA stated in the initial proposal, it had concluded that large semiconductor

facilities were already using Tier 3 methods and/or had the necessary data readily available either

in-house or from suppliers to apply the highest Tier method. For other semiconductor facilities

and LCD, MEMS, and PV facilities, EPA proposed the IPCC Tier 2b approach, which provides

IPCC 2b default emissions factors for process utilization, by-product formation, and site-specific

DRE measurements.
3-3

In the initial proposal, EPA proposed to require facilities to estimate annual N2O

emissions using a simple mass-balance. This method assumed that all N2O consumed is emitted

(i.e. not converted or destroyed). Based on comments received on EPA’s initial proposal, EPA is

now proposing two methods for estimating N2O emissions from electronics manufacturing: one

for estimating N2O emissions from chemical vapor deposition and another for estimating N2O

emissions from all other manufacturing processes such as chamber cleaning.

With respect to the use of devices to abate F-GHG emissions, the emissions estimation

method EPA proposed accounted for destruction by abatement systems only if facilities verified

the performance of their systems using one of two methods. In particular, EPA proposed to

require that either (1) the DRE be verified by measurement using the methods described in

EPA’s Protocol for Measuring Destruction or Removal Efficiency of Fluorinated Greenhouse

Gas Abatement Equipment in Electronics Manufacturing (EPA’s DRE Protocol), or (2) purchase

by the facility of abatement systems that were tested by a third party according to EPA’s DRE

Protocol. The proposed rule also required that facilities use the equipment within the

manufacturer’s specified equipment lifetime, operate the equipment within the manufacturer

specific limits for the gas mix and exhaust flow rate intended for the F-GHG destruction, and

maintain the equipment according to the manufacturer’s guidelines. In addition, if facilities

chose not to verify the performance of their abatement systems using the methods, only

uncontrolled emissions could be reported.

To estimate the emissions from heat transfer fluids, in the initial proposal, EPA required

that electronics manufacturers use the 2006 IPCC Tier 2 approach, which is based on a massbalance method. As stated in the initial proposal, the 2006 IPCC Tier 2 approach uses companyspecific data and accounts for differences among facilities’ heat transfer fluids, leak rates, and

service practices. Comments received on EPA’s initial proposal, noted that the proposed method

for estimating emissions from heat transfer fluids would require companies to compile a detailed

inventory of all fluorinated heat transfer equipment and its nameplate capacity. Comments stated

that such a mass balance approach would be overly burdensome. In evaluating these comments,

EPA believes that there was some confusion regarding the intended method. As a result, EPA is

not changing the broad outlines of the initial proposal, but does provide additional clarifying

description of the required data elements.

3.1.3 Summary of Major Changes Since Initital Proposal

EPA received comments from approximately 10 entities on the proposed rule.

Commenters generally opposed the proposed reporting requirements and stated that excessive
3-4

monitoring and reporting were required. For example, commenters asserted that they do not

currently collect the data required to report using an IPCC Tier 3 approach, and that to collect

such data would entail significant burden and capital costs. In most cases, commenters provided

alternative approaches to each of the reporting requirements.

In response to those comments, EPA is revising its initial proposal and are proposing the

following 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 facilities including those that manufacture LCDs, MEMS, and PV; (3) methods for

estimating facility N2O emissions; (4) clarified methods for estimating emissions from heat

transfer fluids; and (5) revised methods for reporting controlled emissions from abatement

equipment.

3.1.4 Selection of Reporting Threshold

Under the re-proposed rule, facilities that manufacture semiconductors, LCD, MEMS,

and PV would be subject to an emissions-based threshold of 25,000 mtCO2e. 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 mtCO2e, a facility must include emissions from all source categories

for which methods are provided in the rule. For purposes of the threshold determination under

subpart I, EPA is proposing two different methods, depending on whether the facility

manufacturers semiconductors, MEMS, LCDs or PVs. It is important to note that these methods

are only for determining whether a facility exceeds the threshold; methods required 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 proposed 25,000 metric

tons of CO2e, EPA is proposing that semiconductor, MEMS, and LCD facilities use gas specific

emission factors assuming 100% manufacturing capacity to calculate annual metric tons of

emissions in CO2 equivalents. Because we understand that heat transfer fluids are widely used

within semiconductor manufacturing, EPA is proposing that semiconductor manufacturers add

10% of total clean and etch emissions at a facility to their estimate. EPA is proposing that PV

facilities multiply annual fluorinated GHG purchases or consumption by the gas-appropriate

100-year GWPs, as defined in Table A-1 of Subpart A of Part 98, to calculate annual metric tons

of emissions in CO2 equivalents.
3-5

EPA is proposing to require an emissions estimating method that does not account for

destruction by abatement equipment because actual emissions from facilities employing

abatement equipment may exceed estimates when based on the manufacturers’ rated DREs of the

equipment and may therefore exceed the 25,000 metric tons CO2e threshold without the

knowledge of the facility operators. When abatement equipment is used, electronics

manufacturers often estimate their emissions using the manufacturer-supplied DRE for the

equipment. However, abatement equipment may fail to achieve its rated DRE either because it

was not installed properly, is not being properly operated and maintained, or because the DRE

value itself was incorrectly measured due to a failure to properly account for the effects of

dilution.

EPA is proposing an emissions-based threshold in response to comments received on the

initial proposal that stated the proposed capacity-based threshold created ambiguity. EPA

believes an emissions-based threshold will simplify the applicability determination and that by

applying the method for determining whether the threshold is met, a facility will be able to

quickly determine whether they must report under this rule.

3.1.5 Selection of Proposed Monitoring Methods

EPA is proposing methods to monitor and estimate fluorinated GHG and N2O emissions

from semiconductor, LCD, MEMS, and PV manufacture. The proposed methods discussed

below include the following:

(i) estimating emissions from cleaning and etching processes;

(ii) estimating facility N2O emissions;

(iii) estimating emissions from heat transfer fluids; and

(iv) reporting controlled emissions from abatement systems.

The methods described and proposed in this section are for estimating emissions that

would be required to be reported under this subpart. EPA proposes different methods for

estimating fluorinated GHG emissions from etching and cleaning. One method applies to all

semiconductor manufacturers and the other applies to LCD, MEMS, and PV manufacturers.

3.1.5.2 F-GHG Emissions Estimation Methods – Semiconductor Manufacturing

Under this proposal, all semiconductor manufacturers that have emissions equal to or

greater than 25,000 mtCO2e would be required to estimate and report emissions from etching and

cleaning using one of two approaches.
3-6

The first approach is based on: (1) gas consumption as calculated using the facility’s

purchase records, inventory, and gas-and facility-specific heel factors, (2) facility-specific

methods for apportioning gas usage by process category using indicators of GHG-using activity

(e.g. wafer passes), (3) emissions factors (including factors for by-products) based on refined

process categories (e.g., categories with more specificity than the simpler cleaning and etching

categories listed in the 2006 IPCC Guidelines), and (4) methods for reporting controlled

emissions. This approach, hereinafter referred to as the “Refined Method”, was developed in

response to comments received in response to the initial proposal which called for using the 2006

Tier 3 method for estimating emissions from large semiconductor facilities. The Refined

Method would apply to all semiconductor facilities, thereby removing the distinction between

large and relatively smaller facilities.

3.1.5.3 F-GHG Emissions Estimation Methods – LCD, MEMS, and PV Manufacturing

In this action EPA is proposing to require an approach based on a slightly modified 2006

IPCC Tier 2b method which would include (1) gas consumption calculated using the facility’s

purchase records, inventory, and gas-and facility-specific heel factors , (2) gas consumption

apportioned to 2006 IPCC Tier 2b process categories, clean and etch, (3) emissions factors

consistent with 2006 IPCC Tier 2b factors, and (4) methods for reporting controlled emissions.

The main difference between the method proposed in this proposal and that in the initial

proposal is the addition of a gas-and facility-specific heel factor to determine overall gas

consumption. The method proposed to develop the gas-and facility-specific heel for LCD,

MEMS, and PV facilities is the same as proposed for semiconductor facilities including the

provisions for exceptional circumstances. EPA is proposing this method based on information

received in response to our initial proposal from semiconductor manufacturers regarding the

development of gas-and facility-specific heel factors. Although EPA does not have complete

information on how LCD, MEMS, and PV facilities are currently estimating their emissions

from manufacture and how they are currently accounting for heels, their gas use and

manufacturing processes are similar to that of semiconductor manufacturing. As a result, EPA

concludes that these facilities have the data required to develop a gas-and facility-specific heel

factors and that it can be implemented with minimal burden.

3.1.5.4 Method for Estimating N2O Emissions

EPA is proposing that electronics manufacturers estimate N2O emissions from chemical

vapor deposition processes and all other electronics manufacturing processes such as chamber

cleaning, and that they estimate those emissions using the following proposed methods.
3-7

To estimate N2O emissions from chemical vapor deposition, EPA is proposing the use of

a facility-specific emission factor based on facility measurements of N2O utilization for chemical

vapor deposition at a facility, using 2006 ISMI Guidelines. Under this approach, EPA is

proposing to permit the facility to apply the average N2O utilization emission factor to all N2O

using chemical vapor deposition recipes. In cases where a facility has not developed a facilityspecific N2O utilization factor for chemical vapor deposition processes, EPA is proposing a

default value in the range of ~0% to 40%. EPA is proposing a range due to a lack of information

for N2O utilization rate for chemical vapor deposition processes. In comments received in

response to our initial proposal, industry provided information to support a N2O utilization factor

of 40%, primarily in 300 mm CVD processes. Taking the industry-provided 40% utilization

value into account, EPA is proposing a default value within a range of values with 40% as the

upper bound and ~0%.

To estimate N2O emissions from all other manufacturing processes (e.g., chamber

cleaning), EPA is proposing either a facility-specific utilization factor based on facility

measurements using 2006 ISMI Guidelines, or applying a default utilization factor of 0% which

assumes N2O is not converted or destroyed during the manufacturing process. EPA is proposing

this method due to a lack of information regarding other processes for which N2O is used and

N2O utilization data in those processes. EPA has requested information on electronics

manufacturing processes that use N2O and N2O utilization during those processes.

Additionally EPA is proposing that as part of determining annual facility N2O emissions

that if a facility employs abatement devices and it wishes to report N2O emission reductions due

to these devices it must adhere to the methods for reporting controlled emissions included in this

proposal.

3.1.5.5 Method for Estimating Emissions of Heat Transfer Methods

To estimate the emissions of heat transfer fluids, EPA proposes that electronics

manufacturers use the 2006 IPCC Tier 2b approach, which is a mass-balance approach.

3.1.5.6 Method for Reporting Controlled Emissions from Abatement Equipment

For this proposed rule, EPA is defining DRE as the efficiency of a control system

designed to destroy or remove fluorinated GHGs, N2O, or both. The DRE is equal to one minus

the ratio of the mass of all relevant GHGs exiting the emission abatement system to the mass of
3-8

GHGs entering the emission abatement system. When fluorinated GHGs are formed in an

abatement system, DRE is expressed as one minus the ratio of amounts of exiting GHGs to the

amounts entering the system in units of CO2-equivalents. In addition, EPA is clarifying that

facilities may account for all abatement systems (e.g., multi-chamber POU, central devices)

provided that they abide by the requirements proposed.

EPA is proposing to use the term destruction or removal efficiency (DRE) as opposed to

“destruction efficiency” or “destruction,” terms that are already defined in Subpart A of the Final

MRR. EPA is proposing to use DRE because it is the term generally used by the electronics

manufacturing industry. Furthermore, in addition to capturing the destruction of materials in the

exhaust, the term also captures materials in the exhaust that are recycled or captured for reuse.

For purposes of this reporting rule, EPA is proposing that facilities that wish to document

and report fluorinated GHG and N2O emissions reflecting the use of abatement systems adhere to

a method that would require: (1) documentation to certify that the abatement system is installed,

operated, and maintained in accordance with manufacturers’ specifications, (2) accounting for

the system’s uptime

3

, and (3) either certification that the abatement system is specifically

designed for fluorinated GHG and N2O abatement and the use of an EPA default DRE value, or

direct, proper DRE measurement to confirm the performance of the abatement system. Proper

DRE measurement means measured in accordance with EPA’s Protocol for Measuring

Destruction or Removal Efficiency of Fluorinated Greenhouse Gas Abatement Equipment in

Electronics Manufacturing (EPA’s DRE Protocol).

The proposed approach requires annual certification to ensure that abatement systems for

which controlled emissions are reported are installed, operating, and maintained according to

manufacturers’ specifications. This approach would also require that any DRE used in reporting

emissions be based on an EPA default DRE value or on recent on-site measurements and actual

uptime of the system, accounting for system redundancy. When process tools are equipped with

multiple abatement systems designed for fluorinated GHGs and N2O, the facility may account

for the combined uptime for the specific calculation of controlled emissions. EPA anticipates

this method for reporting controlled emissions will ensure that abatement systems have been

properly installed, operated and maintained during each reporting period and that best available

measured DRE values are used to estimate and report emissions.

3

 Uptime means the total time during the reporting year when the abatement system for which controlled emissions

will be reported was properly installed, operated, and maintained.
3-9

3.1.6 Selection of Procedures for Estimating Missing Data

In general, it is not expected that data to estimate emissions from cleaning and etching

would be missing; gas consumption data and indicators of activity data (e.g. wafer passes,

finished wafers) is collected as business as usual. For this reason, EPA is not proposing

procedures for estimating missing data from emissions from cleaning, etching or disposition

processes. Because this proposal includes an EPA default DRE value for estimating and

reporting controlled emissions, EPA proposes that no missing data procedures would apply.

When estimating heat transfer fluid emissions during semiconductor manufacture, the use

of the mass-balance approach requires facilities to correct records for all inputs. Should the

facility be missing records for a given input, heat transfer fluid emissions may be estimated using

the arithmetic average of the emission rates for the year immediately preceding the period of

missing data and the months immediately following the period of missing data. Alternatively it

may be possible that the heat transfer fluid supplier has information in their records for the

facility.

3.1.7 Selection of Data Reporting Requirements

Owners and operators would be required to report fluorinated GHG and N2O emissions

for the facility for all plasma etching, chemical vapor deposition, chamber cleaning, and wafer

cleaning processes as well as all heat transfer fluid use. In addition, 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 N2O;

production in terms of substrate surface area (e.g., silicon, PV-cell, LCD); for each fluorinated

GHG and N2O, annual gas consumed during the reporting year and gas-and facility-specific heel

factors used; the apportioning factors used, a description of the engineering model used for

apportioning gas usage, and facility-wide consumption estimates based upon development of the

apportioning factors, independent of the consumption value calculated using purchase records;

fraction of each gas fed into each process type that is fed into tools with abatement systems;

descriptions and information about abatement systems through which fluorinated GHGs and N2O

flow; inputs in the mass-balance equation (for heat transfer fluid emissions); and example

calculations. Where process categories defined in the Refined Method and/or default gas

utilization and by-product formation rates are not used, facilities would be required to provide

descriptions of individual processes or processes categories used to estimate emissions.
3-10

For each abatement system for which a facility is reporting controlled emissions, the

following would be required: certification that the abatement device 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 documentation to use the EPA default DRE value or a

properly measured DRE.

These data form the basis of the calculations and are needed for EPA to understand the

reported emissions and verify their reasonableness.

3.1.8 Selection of Recordkeeping Requirements

EPA proposes that facilities keep records of data used to estimate emissions, records

supporting values used to estimate emissions, purchase records, and invoices for gas purchases

and sales. For those facilities that use facility-specific, recipe- specific gas utilization and byproduction formation rates, EPA proposes that the following records be maintained:

documentation that the rates were measured using the 2006 ISMI Guidelines, documentation that

the measurements made are representative of fluorinated GHG and N2O emitting processes at the

facility, and the date and results of the initial and any subsequent tests to determine process tool

gas utilization and by-product formation rates.

For those facilities that are reporting controlled emissions, EPA proposes 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 manufacturers’ specifications;

records of the uptime and the calculations to determine uptime; abatement system calibration and

maintenance records; required documentation to use either the EPA default DRE value or a

properly measured DRE.

These records consist of values that are directly used to calculate the emissions that are

reported and are necessary to enable verification that the GHG emissions monitoring and

calculations are done correctly.
3-11

3.2 Subpart L – Fluorinated GHG Producers

3.2.1 Definition of Affected Entities

Affected entities under subpart L are defined as any facility that produces a fluorinated

gas from any raw material or feedstock chemical. Fluorinated gas production includes the

production of fluorinated GHGs (including HFCs, PFCs, SF6, NF3, and HFEs) and

chlorofluorocarbons (CFCs) or hydrochlorofluorocarbons (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 the production of HCFC-22.

Facilities that produce fluorinated gases will be required to report their fluorinated GHG

emissions from fluorinated gas production, transformation, and destruction, as well as

combustion-related CO2, CH4, and nitrous oxide (N2O) emissions from stationary fuel

combustion. Fluorinated gases include fluorinated 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. Similarly, emissions of CFCs and

HCFCs are addressed under the regulations implementing Title VI of the Clean Air Act and are

therefore excluded from this subpart.

3.2.2 Summary of Initial Proposal

In the April 2009 proposed mandatory GHG reporting rule (74 FR 16448; April 10,

2009), the fluorinated GHG production subcategory was included as proposed subpart L. In the

initial proposal for fluorinated GHG production, EPA proposed to require reporting from

facilities emitting more than 25,000 mtCO2e from fluorinated GHG production and other source

categories. EPA proposed monitoring based on a daily mass balance or yield approach that

included measurements of the reactants and the fluorinated GHG product and byproducts. Under

this approach, facilities would have had to calculate the difference between the expected

production of each fluorinated GHG based on the consumption of reactants and the measured

production of that fluorinated GHG, accounting for yield losses related to byproducts and wastes

and accounting for streams that were recaptured and destroyed. Measurements of the various

inputs and outputs were to be conducted with scales and flow meters meeting an accuracy and

precision of 0.2 percent of full scale, and measured concentrations in streams were to meet an

accuracy and precision of 5 percent.

EPA received a number of detailed comments regarding the subpart L proposal.

Commenters focused on the applicability of the rule; the potential difficulty, expense, and
3-12

inaccuracy that would be associated with applying the proposed mass-balance approach to many

facilities; and the need for inclusion of other monitoring approaches in the rule.

EPA recognizes the concerns that stakeholders have raised and decided not to finalize the

April 2009 proposed subpart L but instead to issue a new proposal for emissions from fluorinated

gas production. This proposal includes revisions to several of the provisions in the initial

proposed subpart L.

3.2.3 Summary of Changes Since the Initial Proposal

Today’s proposed subpart L rule incorporates a number of changes since the original

proposal including, but not limited to, inclusion of fluorinated GHGs emitted from fluorinated

gas production processes that are not producing fluorinated GHGs (i.e., production of CFCs and

HCFCs), inclusion of transformation processes that produce products that are not F-GHGs (when

those transformation processes are co-located with fluorinated gas production processes),

inclusion of additional emission estimation methodologies that provide flexibility to facilities to

estimate emissions using methods that may already be in place, and revision of the mass-balance

approach.

3.2.4 Selection of Reporting Threshold

Under the re-proposed rule, owners and operators 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 categories covered by the Mandatory GHG Reporting

Rule, EPA is proposing that fluorinated gas production 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 analysis is available in the revised Fluorinated

Gas Production TSD (EPA-HQ-OAR-2009-0927). For specific information on costs, including

unamortized first year capital expenditures, please refer to section 4.

3.2.5 Selection of Proposed Monitoring Methods

EPA is proposing to allow facilities to use either a mass-balance approach or a sitespecific, process-vent-specific emission factor (PSEF) approach to estimate their fluorinated

GHG emissions. The mass-balance approach is similar to that proposed in April, 2009, but has
3-13

been modified in some details in response to comments. Facilities using either approach would

be required to perform 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.

EPA is proposing that facilities that produce fluorinated gases perform an initial survey

of the F-GHGs present in emissions from processes that would emit more than two metric tons

per year of F-GHGs 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 byproducts of the process. Facilities would be required to use EPA Method 18 (GC/ECD, GC/MS)

or EPA Method 320 (FTIR) to identify F-GHGs.

3.2.5.1 Mass Balance Approach

In this action, EPA is proposing that facilities producing F-GHGs have the option of

monitoring emissions using the mass balance approach. In this approach, facilities would

calculate the difference between the expected production of each fluorinated GHG based on the

consumption of reactants and the measured production of that fluorinated GHG, accounting for

yield losses related to byproducts (including intermediates permanently removed from the

process) and wastes. Yield losses that could not be accounted for would be attributed to

emissions of the fluorinated GHG product. This calculation could be performed for either/any

reactant (e.g., hydrocarbon or HF) to estimate emissions of the fluorinated GHG product for that

reactant (i.e., the mass balance may be based on a carbon balance or a fluorine balance). If

fluorinated GHG byproducts were produced and were not completely recaptured or completely

destroyed, facilities would also estimate emissions of each fluorinated GHG byproduct.

Because the mass-balance approach assumes that losses from the process are emissions of

the product, EPA believes that the mass-balance approach would only be appropriate for

estimating emissions from F-GHG production, not production of CFCs, HCFCs, or polymers.

To be eligible to use the mass balance approach, facilities would have to demonstrate that

their planned measurements could meet a statistical error limit required in the rule. If the facility

could not demonstrate that it could meet the error limit, it would have to improve the accuracy

and/or precision of its monitoring and measurement devices or opt to use another monitoring

approach offered in the rule.

To carry out the mass balance approach, the facility would choose a reactant for yield

calculation purposes. The facility would then weigh or meter the mass of that reactant fed into
3-14

the process, any primary fluorinated GHG produced by the process, the mass of the reactant

permanently removed from the process (i.e., sent to the thermal oxidizer or other equipment, not

immediately recycled back into the process), any fluorinated GHG byproducts generated, and

any streams that contain the product or fluorinated GHG byproducts and that are recaptured or

destroyed. These measurements would be tracked on a monthly or more frequent basis and

consolidated and recorded on a monthly basis. If monitored process streams included more than

one component (product, byproducts, or other materials) in more than trace concentrations,4 the

facility would be required to monitor concentrations of products and byproducts in these streams.

Finally, the facility would be required to perform monthly mass balance calculations for each

product produced.

3.2.5.2 Process Specific Emissions Factor Approach

In this action, EPA is proposing an additional monitoring approach based on site-specific,

process-specific emissions factors. This approach includes either calculation or measurement of

process vent emissions depending on the size and fate of the emissions from the vent. Facilities

would develop preliminary emissions estimates to determine the level of uncontrolled emissions

from each process vent in processes subject to this subpart. For process vents with uncontrolled

emissions of less than 10,000 mt CO2e (or less than 1 ton for emissions that include an F-GHG

whose GWP does not appear in Table A-1 of Subpart A), facilities could conduct either

engineering calculations or emissions testing to estimate emissions. Facilities could also conduct

either engineering calculations or emissions testing to estimate emissions that were vented to a

destruction device demonstrated to achieve a destruction efficiency of 99.9 percent (for

fluorinated GHGs), as long as equipment or procedures5 were in place to ensure that uncontrolled

emissions did not occur. For other emissions, facilities would be required to conduct emissions

testing to determine the process vent emission factor.

3.2.5.3 Equipment Leak Emissions Estimation Approach

For completeness, EPA proposes that facilities monitoring of process vents be

supplemented by monitoring of equipment leaks, whose emissions would not occur through

process vents. To estimate emissions from equipment leaks, facilities will be required to use

EPA Method 21 and the Protocol for Equipment Leak Estimates (EPA-453/R-95-017).

4

 EPA is proposing to define “trace concentration” as any concentration less than 0.1 percent by mass of the process

stream.

5

 Such equipment or procedures could include, for example, holding tank capacity, monitoring of by-pass streams,

or compulsory process shutdowns in the event the destruction device remains off line.
3-15

3.2.6 Selection of Procedures for Estimating Missing Data

In the event that a scale or flowmeter normally used to measure reactants, products, byproducts, or wastes fails to meet an accuracy or precision test, malfunctions, or is rendered

inoperable, EPA is proposing that facilities be required to estimate these quantities using other

measurements where these data are available. For example, facilities that ordinarily measure

production by metering the flow into the day tank could use the weight of product charged into

shipping containers for sale and distribution as a substitute. It is EPA’s understanding that the

types of flowmeters and scales used to measure fluorocarbon production (e.g., Coriolis meters)

are generally quite reliable, and therefore that it should rarely be necessary to rely solely on

secondary production measurements. In general, production facilities rely on accurate

monitoring and reporting of the inputs and outputs of the production process. Nevertheless, EPA

is also proposing that if a secondary mass measurement for the stream is not available, producers

can use a related parameter and the historical relationship between the related parameter and the

missing parameter to estimate the flow.

If concentration measurements are unavailable for some period, EPA is proposing that

the facility use the average of the concentration measurements from just before and just after the

period of missing data.

3.2.7 Selection of Data Reporting Requirements

Under the proposed rule, owners and operators of facilities producing fluorinated GHGs

would be required to report both their fluorinated GHG emissions and the quantities used to

estimate them on a process-specific basis. For the mass-balance approach, this includes 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). The

chemical identities of reactants, products, and by-products would also be reported, along with the

chemical equations used to estimate emissions. For the process vent approach, data to be

reported includes the activity data used to calculate emissions (e.g., the quantity produced,

transformed, or destroyed) and the emission factors used to estimate them. EPA is proposing that

owners and operators report annual totals of these quantities.

Where fluorinated gas production facilities have 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.
3-16

3.2.8 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 proposed rule, owners 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 chromatographs, 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 Subpart QQ – Importing/Exporting of Pre-charged Equipment and Foams

3.3.1 Definition of Affected Entities

Affected entities under subpart QQ are defined as any entity that is an importers and/or

exporter of pre-charged equipment or closed-cell foams that contain fluorinated GHGs. A

variety of products containing fluorinated greenhouse gases (F-GHGs), nitrous oxide (N2O), and

carbon dioxide (CO2) are imported into and exported from the United States. Pre-charged

equipment includes air-conditioning, refrigeration, and electrical equipment. Closed-cell foams

that are imported and exported include polyurethane (PU) rigid foam used in insulation in

domestic refrigerators and freezers,; commercial refrigeration foam,; PU rigid sandwich panel

continuous and discontinuous foam; extruded polystryrene (XPS) sheet foam; and XPS

boardstock foam.

3.3.2 Summary of Initial Proposal

In the initial proposed rule EPA did not require 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 quantify the quantities of GHGs inside some products

and that the number of importers and exporters would be high. However, EPA requested

comment on the option of requiring reporting of imports and exports of HFCs and SF6 contained

in pre-charged air-conditioning, refrigeration, and electrical equipment and in closed cell foams.

EPA noted that for these products, information on the 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.
3-17

3.3.3 Summary of Current Proposal

After carefully considering the comments and available information on imports and

exports of F-GHGs inside pre-charged equipment and foams, EPA is proposing to require

reporting of these 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 equipment and foam would only be required to report if their total

imports or exports exceeded the 25,000 mtCO2e threshold.

3.3.4 Selection of Reporting Threshold

Under the current proposal, EPA is proposing to require that importers and exporters of

F-GHGs contained in pre-charged equipment and closed cell foams report their imports and

exports if either their total imports or their total exports, in equipment, foams, and in bulk,

exceed 25,000 mtCO2e per year. This threshold is the same as that for bulk imports and exports.

3.3.5 Selection of Proposed Monitoring Methods and QA/QC Requirements

EPA proposes to require importers and exporters of equipment and foams to estimate

their imports and exports of each F-GHG by multiplying the mass of the F-GHG contained in

each type of equipment or foam by the number of pieces 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 available to importers and exporters.

3.3.6 Selection of Procedures for Estimating Missing Data

Procedures for estimating missing data are not provided for importers and exporters of

fluorinated GHGs contained in pre-charged equipment or closed-cell foams. A complete record

of all measured parameters used in tracking fluorinated GHGs contained in pre-charged

equipment or closed-cell foams is required.

3.3.7 Selection of Data Reporting Requirements

Under the current proposal, EPA is proposing to require importers and exporters of precharged equipment and closed cell foams to report the following:
3-18

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

(2) For each type of pre-charged equipment, the identity of the fluorinated GHG used as

a refrigerant or electrical insulator, charge size (holding charge6, 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, the quantity of fluorinated GHG contained in the

foam in each appliance, and the number of appliances imported for each type of appliance.

(4) For closed cell-foams that are not inside of appliances, the identity of the fluorinated

GHG, the density of the fluorinated GHG in the foam (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 equipment or closed-cell foams were imported or

exported.

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

(7) Countries from or to which the pre-charged equipment or closed-cell foams were

imported or exported.

EPA is proposing to collect this information because it is necessary either to understand

the total volume of F-GHGs imported or exported inside of pre-charged equipment and foams

(and thereby contributing to the U.S. supply of F-GHGs) or to verify submitted information.

3.3.8 Selection of Recordkeeping Requirements

EPA is proposing to require importers and exporters of equipment and closed cell foams

to retain the following records:

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

(2) the invoice for the import; and

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

This information is necessary to verify submitted information.

6

 This refers to any holding charge consisting of a fluorinated GHG. Holding charges consisting of other gases, such

as nitrogen, are not included.
3-19

3.4 Subpart SS – Electrical Equipment and Components Manufacturing

3.4.1 Definition of Affected Entities

Affected entities under subpart SS are defined as electrical equipment manufacturers of

SF6-insulated closed-pressure system equipment and sealed-pressure system equipment including

gas-insulated substations, circuit breakers, other switchgear, gas-insulated lines, or power

transformers containing sulfur-hexafluoride (SF6) or perfluorocarbons (PFCs).

 Electrical equipment manufacturers purchase bulk SF6 gas to (1) install a nominal

charge in high-voltage closed-pressure equipment, (2) ship alongside closed-pressure equipment

for topping off at installation site, (3) fill sealed-pressure equipment with its intended lifetime

supply of SF6, and (4) develop and test equipment. Fugitive emissions of SF6 from equipment

manufacturers typically occur during the manufacturing of equipment but can also occur during

the other uses of SF6 at manufacturing facilities.

While EPA believes that SF6 represents the majority of emissions from this source

category, manufacturers may also use PFCs as dielectrics and heat transfer fluids in power

transformers. For example the PFC perfluorohexane (C6F14) 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 SF6 from

electrical equipment manufacturers was estimated to be 0.81 million metric tons CO2e in 2006.

EPA is proposing to require reporting from electrical equipment manufacture and refurbishment

facilities because these operations represent a significant source, approximately 5% of SF6

emissions. It is estimated that ten equipment manufacturers were responsible for these emissions.

EPA is proposing to include emissions of PFCs emitted during the manufacture or

refurbishment of PFC-containing power transformers because the National Inventory has no

information on this source and because use of transformers is expected to grow in the future.

This source category comprises electrical equipment manufacturers and refurbishers of

SF6 or PFC-insulated closed-pressure system equipment and sealed-pressure system equipment

including gas-insulated substations, circuit breakers, other switchgear, gas-insulated lines, or

power transformers containing sulfur-hexafluoride (SF6) or perfluorocarbons (PFCs).
3-20

3.4.2 Selection of Reporting Threshold

EPA is proposing requiring electrical equipment manufacturers to report their SF6 and

PFC emissions if their total annual purchases of SF6 and PFCs exceed 23,000 lbs. This

consumption-based threshold is equivalent to an emissions-based threshold of 25,000 mtCO2e,

assuming an average manufacturer emission rate of 10%.

3.4.3 Selection of Proposed Monitoring Methods and QA/QC Requirements

In developing the proposed 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 default and country-specific SF6 and PFC

emission factors, but Tier 3 is based on a mass-balance approach for estimating SF6 and PFC

emissions at each life-cycle stage of the equipment.

The proposed monitoring methods for calculating SF6 and PFC emissions from electrical

equipment manufacturing and refurbishment are similar to the methodologies described in the

2006 IPCC Guidelines Tier 3 methods for emissions from electrical equipment manufacturing.

EPA proposes that all SF6 and PFC emissions be reported, including those from

equipment testing, manufacturing, decommissioning and disposal, refurbishing, and from storage

cylinders, as well as combustion-related CO2, CH4, and nitrous oxide (N2O) emissions from

stationary fuel combustion. This requirement would apply only to electrical equipment

manufacturers where SF6 and PFC purchases exceed 23,061 lbs per year. The Tier 3 approach is

being proposed because it is the most accurate and it is feasible for all equipment manufacturers

to conduct the mass balance analysis for SF6 and PFCs using readily available information.

A comparable mass-balance approach has also been proposed for subpart DD Sulfur

Hexafluoride (SF6) and Perfluorocarbons (PFCs) from Electrical Equipment at an Electric

Power System. The mass-balance approach works by tracking and systematically accounting for

all facility uses of SF6 and PFCs during the reporting year. The quantities of SF6 and PFCs that

cannot be accounted for are assumed to have been emitted to the atmosphere. The emissions of

SF6 and PFCs would be estimated and reported separately.

In addition, EPA proposes that electrical equipment manufacturers be required to keep

records for the QA/QC requirements including check-out sheets and weigh-in procedures for

cylinders, residual gas amounts in cylinders sent back to suppliers, invoices for gas and
3-21

equipment purchases or sales, and documentation of recycling and destruction. The records that

are being proposed are the minimum needed to reproduce and confirm emission calculations.

3.4.4 Selection of Procedures for Estimating Missing Data

It is expected that equipment manufacturers should be able to obtain 100 percent of the

data needed to perform the mass balance calculations for both SF6 and PFCs. The use of the

mass-balance approach requires correct records for all inputs. However, if needed, missing data

can be replaced using data from similar manufacturing operations, and from similar equipment

testing and decomissioning activities for which data is available.

3.4.5 Selection of Data Reporting Requirements

EPA proposes annual reporting for the electrical equipment manufacturing and

refurbishing industry. Equipment manufacturers would report all SF6 and PFC emissions,

including those from equipment testing, equipment manufacturing, and bulk SF6 and PFC

handling. However, the emissions would not need to be broken down and reported separately for

testing, manufacturing, or bulk SF6 and PFC handling. Along with their emissions, electrical

equipment manufacturers would be required to submit the following supplemental data: SF6 and

PFCs with or inside equipment delivered to customers, SF6 and PFCs returned by customers with

or inside equipment, bulk SF6 and PFC purchases, SF6 and PFCs sent off-site for destruction or

to be recycled, SF6 and PFC returned from offsite after recycling, SF6 and PFCs stored in

containers at the beginning and end of the year, SF6 and PFCs returned to suppliers. If

applicable, combustion-related CO2, CH4, and nitrous oxide (N2O) emissions from stationary fuel

combustion.

These data would be submitted because they are the minimum data that are needed to

understand and reproduce the emission calculations that are the basis of the reported emissions.

3.4.6 Selection of Recordkeeping Requirements

In this action, EPA is proposing that electrical equipment manufacturers be required to

keep records documenting (1) their adherence to the QA/QC requirements specified in the

proposed rule, and (2) the data that would be included in their emission reports, as specified

above.
4-22

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 available industry and EPA data to characterize conditions

at affected sources. Incremental monitoring, recordkeeping, and reporting activities were then

identified for each type of facility, and the associated costs were estimated.

4.2 Overview 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 facility, etc. The costs include labor costs for

performing the monitoring, recordkeeping, and reporting activities necessary to comply with the

rule. For affected facilities, costs include monitoring, recording, and reporting of GHG emissions

from production processes and from stationary combustion units. All 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 associated with this information collection; labor costs

(i.e., the cost of labor by facility staff to meet the information collection requirements of the

rule); and capital and operating and maintenance costs (e.g., the cost of purchasing and installing

monitoring equipment or contractor costs associated with providing the required information).

Additional details of the data, methods, and assumptions underlying the costs 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 identify 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 baseline reporting practices. When data are not available, EPA is

assuming that none of the facilities in these source categories are currently 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
4-23

and testing in the requirements in methods (i.e., carbon contents of process inputs, such coke,

coal, carbonate composition, or actual emissions). EPA is also assuming 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. Please refer back to Section 3 for information on the subpart

process for source categories. Detailed instructions 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, analysis of monitoring and reporting

options, and unit costs for monitoring and reporting. Key variables and data fields were clearly

defined to ensure that each sub group developed costs around a standard set of methods and

assumptions (e.g., method for annualization of capital costs, interest rate to be applied to capital).

Labor Costs. The costs of complying with and administering 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 operate and maintain emissions monitoring

systems;

 reporting (private): staff hours to gather and process available data and reporting it to

EPA through electronic systems; and

 assuring and releasing data (public): staff hours to quality assure, analyze, and release

reports.

Staff activities and associated labor costs may vary over time. 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 categories 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 manufacturing 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
4-24

rates calculated for different labor categories included the employer costs for employee

compensation (comprising the basic wages and the corresponding benefits) and the overhead

costs to the employer.

7

For each labor category, the following formula was used to calculate the wage rates:

Loaded Hourly Labor Rate ($/hr.) = Basic Wages ($/hr.) *

(1 + Benefits Loading Factor + Overhead Loading Factor).

The benefits loading factor corresponds to the relative share of benefits compensation in

the total employee compensation (comprising basic 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 factor (1.7) to remain the same for each labor

category across all industries 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 total employee compensation. For purposes of this 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 calculations remains the same for all

labor categories and across all industry types within 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 appropriate sectors labor cost

tables in the following sections.

Table 4-1. Labor Categories and Hourly Rates

Labor Category Description Loaded Hourly Rate ($/hour)

Legal Oversees legal aspects of company $101.00/hour

7

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 fulfill his/her job responsibilities. These costs are over and

above the employee compensation costs.
4-25

reports and data-reporting forms.

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 purchasing and installing monitoring

equipment or contractor costs associated with providing the required information. Selected

subparts do not require capital expenditures because the selected monitoring option does not

require capital equipment or the reporter already owns the necessary monitoring equipment.

Equipment costs include both the initial purchase 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 equipment 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 industry (5 to 15 years) with 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 provides the cost data by subpart.

The data are the basis for the economic impact analysis 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 conducted for each source and the reporting option

selection.

4.3 Cost Analysis for Subpart I – Electronic Manufacturers

4.3.1 Model Facility Development

This analysis is based on the costs of monitoring fluorinated greenhouse gas emissions

from semiconductor manufacturing facilities. Semiconductor facilities constitute the majority of

the electronics facilities likely to report under the rule, and EPA has improved its understanding
4-26

of semiconductor facilities and their emissions through the PFC Reduction/Climate Partnership

for Semiconductors, which has been in place since 1995.

In the proposed rule, semiconductor facilities annual costs differ from those for other

electronics manufacturing facilities (i.e., facilities that manufacture microelectromechanical

systems, liquid crystal displays, and photovoltaics) because they are subject to different reporting

requirements, as detailed below under “Monitoring Costs”. In addition, microelectromechanical

systems (MEMS), liquid crystal display (LCD), and photovoltaics (PV) manufacturing use fewer

types of F-GHGs than semiconductor manufacturing facilities. Therefore, cost estimates for

these other types of electronics facilities were developed using cost estimates from EPA’s initial

proposal for other semiconductor facilities and scaling these costs to account for the use of a

smaller set of gases.8

4.3.2 Determination of Cost Elements

The total costs associated with complying with the proposed rulemaking were broken into

four elements, which are described below.

Monitoring costs. The following types of monitoring costs were identified:

Collection of activity data for estimating F-GHG emissions. In the proposed rule, costs

for collecting activity data differ depending on type of facility (semiconductor or MEMS,

LCD, and PV). In the proposed rule, semiconductor facilities would be required to use an

approach for estimating emissions which includes (1) gas consumption as calculated

using the facility’s purchase records, inventory, and gas-and facility-specific heel factors,

(2) facility specific methods for apportioning gas usage by process category, (3)

emissions factors (including factors for by-products) based on refined process categories,

and (4) either EPA published default destruction or removal efficiency (DRE) value or

properly measured DRE. This approach is referred to as the “Refined Method.”

Facilities could either use emissions factors provided by EPA or facilities would develop

or acquire the emissions factors from process equipment manufacturers. The costs

presented in this analysis reflect the first approach. In addition, facilities that have

monitoring infrastructure or the necessary data to estimate emissions obtained through

8

 In its initial proposal for electronics manufacture, EPA proposed different requirements for the largest

semiconductor facilities (those with annual capacities greater than 10,500 m2 silicon) and all other semiconductor

facilities. In the initial proposal all other semiconductor facilities were required to estimate their emissions using

an approach based on the IPCC Tier 2b method.
4-27

recipe-specific measurements would be permitted to do so. Those costs are not included

in this analysis because it is optional. EPA also considered another approach for

estimating emissions from semiconductor facilities which includes (1) gas consumption

as calculated 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 process categories (clean and etch), (3) IPCC Tier 2b default emissions factors, and

(4) either EPA published default DRE value or properly measured DRE. This approach

is referred to as the “Modified Tier 2b Method.” Other electronics manufacture facilities

(i.e. MEMS, LCD, PV facilities) also would also be required to estimate emissions using

the Modified Tier 2b Method.

Annual costs to report controlled emissions from abatement systems. Under the proposed

rule, any facility that wishes to reflect abatement of fluorinated 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. Properly measured DRE costs

were estimated assuming that only the 23 “large” semiconductor facilities that participate

in EPA’s PFC Reduction/Climate Partnership for the Semiconductor Industry use

abatement devices and would incur costs for verifying the DREs of these systems. This

assumption likely provides a conservative overestimate of cost as not all EPA Partners

use F-GHG emissions abatement systems. Also, those facilities that have abatement

systems and choose to use EPA published default DRE value are assumed to incur only

the cost of assuring their abatement system is properly installed, operated, and

maintained, and accounting for uptime and no cost for measurement of DREs. Facilities

that manufacture electronic devices other than semiconductors (PVs, MEMS, etc.) and

semiconductor facilities that do not participate in EPA’s PFC Reduction Partnership (119

semiconductor facilities) and smaller semiconductor facilities that participate in EPA’s

PFC Reduction/Climate Partnership (33 semiconductor facilities) are assumed to incur no

costs to validate DREs. The 23 “large” semiconductor facilities that participate in EPA’s

PFC Reduction/Climate Partnership for the Semiconductor Industry using abatement

systems and opt to reflect abatement of F-GHG emissions through DRE measurements

are assumed, on average, to make ten DRE measurements per year.

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

rule, electronics manufacturing facilities that use heat transfer fluids would be required to

account for emissions from use of heat transfer fluids using a mass-balance approach.
4-28

Our understanding is that heat transfer fluids are widely used within semiconductor

manufacturing; EPA is uncertain about heat transfer fluid use in other electronics

manufacturing facilities. For this reason, we did not account for heat transfer fluid use in

other electronics manufacturing facilities. The mass-balance approach uses companyspecific data and accounts for differences among facilities’ HTFs (which vary in their

global warming potentials), leak rates, and service practices.

Record keeping costs. Additional recordkeeping ($1,700 per entity) were added to each

facility.

Reporting costs. The following types of reporting costs were identified:

Reporting F-GHG emission estimate. In the proposed rule, electronics manufacturing

facilities would be required to complete and submit company-specific annual reports.

For purposes of the proposal, facilities that employ abatement systems and wish to reflect

the emission reductions due to these systems in their emissions estimates, certification

that the system is installed, operated, and maintained in accordance with manufacturers’

specifications would be required to be included in the company-specific annual reports,

and for facilities that choose to reflect emissions reductions through direct measurement

of DRE at the facility, performance confirmed through direct DRE measurement (i.e.,

consistent with EPA’s DRE Protocol ) would be required.

Reporting heat transfer fluid emissions estimate. In the proposed rule, electronics

manufacturing facilities would be required to complete and submit data-reporting forms.

Because EPA is uncertain about whether other electronics manufacturing facilities (i.e.

electronics manufacturing facilities other than semiconductor manufacturing facilities),

we only included costs for reporting emissions from heat transfer fluids for

semiconductor manufacturing facilities.

4.3.3 Proportion of Facilities in the Different Model Facility Levels

Semiconductor, MEMS, and LCD facilities would determine whether they exceed the

emissions-based threshold using IPCC Tier 1 emission factors and assuming no abatement.

Because we understand that heat transfer fluids are widely used within semiconductor

manufacturing, semiconductor manufacturers would also add 10% of total clean and etch

emissions at a facility to their estimate. For PV facilities, annual emissions would be estimated

by multiplying annual F-GHG consumption by the appropriate GWP factor. For semiconductor

facilities, 91 entities out of 175 entities exceed the 25,000 mtCO2e threshold which includes 96%
4-29

of total semiconductor emissions. For MEMS facilities, the 25,000 mtCO2e threshold includes

two entities out of 12 entities and includes 66% of total MEMS emissions. For LCD facilities,

no entities exceed the 25,000 mtCO2e threshold. Only one PV facility is included in the 25,000

mtCO2e threshold which includes 47% of total PV emissions. The number of each type of

facility that EPA estimates will meet the threshold 25,000 mtCO2e threshold and required to

report is identified in Table 4-2.

Table 4-2. Number of Representative Affected 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 elements was completed using the four labor

categories and associated labor rates presented in Table 4-1. EPA assigns responsibilities to each

labor category to estimate labor hours. Finally, EPA estimates the annualized capital costs and

operation & 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 monitoring, but also to determine who will perform

each task. The four labor categories used in this analysis for this subpart are presented in Table

4-3 and include legal, managerial, technical and clerical.

Table 4-3. Labor Categories and Hourly Rates

Labor Category Description Loaded 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
4-30

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.

The burden hours and costs borne by semiconductor facilities using the Refined Method

were estimated using IPCC’s Tier 2b method from our initial proposed method for other

semiconductor facilities and also using information received from industry. EPA also estimated

the burden hours and costs for using the Modified Tier 2b Method using IPCC’s Tier 2b method

from our initial proposed method for other semiconductor facilities and also using information

received from industry for estimating gas-and facility-specific heel factors. The burden hours

and costs borne by other electronics manufacturers, MEMS, LCD, and PV, were estimated using

cost estimates from EPA’s initial proposal for other semiconductor facilities and scaling these

costs down to account for the use of a smaller set of gases, as these facilities use fewer types of

F-GHGs than the semiconductor manufacturing facilities. In addition, information received from

industry on burden hour estimates for technical staff to measure gas- and facility-specific heel

factors were included for MEMS, LCD, and PV manufacturers. Table 4-4 presents the burden

hours allocated to each labor category across all affected facility types covered under subpart I.

The hours and costs for estimating emissions of heat transfer fluids were based on the

ICR for EPA’s SF6 Emission Reduction Partnership for Electric Power Systems. Under the SF6

Partnership, electric power systems report emissions using a mass-balance method that is

essentially identical to that proposed for heat transfer fluids in semiconductor facilities. Finally,

the costs of proper DRE measurements were estimated based on EPA’s experience in conducting

multiple DRE measurements in semiconductor facilities.
4-31

Table 4-4. Responsibilities for Regulation Compliance by Labor Category Per Facility

Responsibilities and Hours by Labor Category

Cost Element Legal Managerial Technical Clerical

Responsibilities Hours Responsibilities Hours Responsibilities Hours Responsibilities Hours

Semiconductors—Refined Method

Monitoring

Collection of activity data

for F-GHG emission

estimate

Provide quality assurance

of analyses and authorize

completeness of the

checks.

7.2 Collect data on gas consumption,

gas utilization, and by-product

formation. Perform calculation

for nine process categories using

default factors provided by EPA.

454 Assist in recording and

maintaining data collected

on gas consumption, gas

utilization and by-product

formation

Collect data for massbalance calculation of

Heat Transfer Fluids

Provide quality assurance

of analyses and authorize

completeness of the

checks.

4 Collect activity data related to

HTF emissions

17 Assist in recording and

maintaining data on

collected activity data

related to HTF emissions

11

Reporting

Complete and submit

company-specific annual

report

Oversee legal aspects

of annual report

submission

0.3 Provide quality assurance

of annual report.

10.8 Complete and submit companyspecific annual report25.3 Assist with completing and

submitting the companyspecific annual report

8.4

Complete and submit data

reporting forms for massbalance calculation of

Heat Transfer Fluids

Review and submit data

reporting form.

3.5 Review instructions and

complete the form for data

reporting

3.5 Maintain data reporting

records.

1.7

MEMS

Monitoring

Collection of activity data

for F-GHG emission

estimate

Provide quality assurance

of analyses and authorize

completeness of the

checks.

2.2 Collect data on gas consumption.

Perform calculations using IPCC

Tier 2b default emission factors.

30.4 Assist in recording and

maintaining data collected

on gas consumption, gas

utilization and by-product

formation

Reporting

Completion of companyspecific annual report

Oversee legal aspects

of annual report

submission

0.1 Provide quality assurance

of annual report.

3.2 Complete and submit companyspecific annual report7.6 Assist with completing and

submitting the companyspecific annual report

2.5
4-32

Responsibilities and Hours by Labor Category

Cost Element Legal Managerial Technical Clerical

Responsibilities Hours Responsibilities Hours Responsibilities Hours Responsibilities Hours

Liquid Crystal Display

Monitoring

Collection of activity data

for F-GHG emission

estimate

Provide quality assurance

of analyses and authorize

completeness of the

checks.

3.6 Collect data on gas consumption.

Perform calculations using IPCC

Tier 2b default emission factors.

50.6 Assist in recording and

maintaining data collected

on gas consumption, gas

utilization and by-product

formation

Reporting

Completion of companyspecific annual report

Oversee legal aspects

of annual report

submission

0.1 Provide quality assurance

of annual report.

5.4 Complete and submit companyspecific annual report12.7 Assist with completing and

submitting the companyspecific annual report

4.2

Photovoltaics

Monitoring

Collection of activity data

for F-GHG emission

estimate

Provide quality assurance

of analyses and authorize

completeness of the

checks.

4.3 Collect data on gas consumption.

Perform calculations using IPCC

Tier 2b default emission factors.

60.8 Assist in recording and

maintaining data collected

on gas consumption, gas

utilization and by-product

formation

Reporting

Completion of companyspecific annual report

Oversee legal aspects

of annual report

submission

0.2 Provide quality assurance

of annual report.

6.5 Complete and submit companyspecific annual report15.2 Assist with completing and

submitting the companyspecific annual report

5.1
4-33

Capital Cost Annualization and O&M Costs

There are no associated capital or O&M costs.

Other Costs

EPA estimates that the per-facility optional cost of validating, documenting, and

reporting DREs of abatement devices is $1,766 if a facility uses EPA published DRE value, and

$71,766 if a facility properly measures the DREs in accordance with EPA’s DRE Protocol.

Since all facilities must certify their abatement systems are properly installed, maintained, and

operated, the associated cost of $1,766 applies to all options for reporting DREs. The cost of

certifying that the abatement systems are properly installed, maintained, and operated was based

an assumption that such a process would require 32 hours of a technician’s time. 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 value. The cost for two weeks of

testing for facilities that measure DREs as opposed to using EPA published default value is

estimated to be $70,000. The cost estimate is based on an assumption that only the 23 large

facilities that participate in EPA’s PFC Reduction/Climate Partnership for the Semiconductor

Industry use abatement devices and would incur costs for properly measuring the DREs of these

systems and that the average large facility has fifty etch tools, all of which have F-GHG

abatement systems. Because 20% of these fifty systems are required to be tested annually, we

assume testing of ten devices per year and two weeks to test these ten systems. The cost for two

weeks’ worth of testing was based on industry estimate and EPA’s experience conducting DRE

testing. While ninety percent of this cost is related to labor and ten percent is related to freight

shipments and measurement study supplies, it is assumed that the facilities outsource the DRE

measurement and thus this cost is 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 estimate labor costs per facility for each type of

facility (semiconductor facilities, MEMS facilities, liquid crystal display facilities, and

photovoltaic facilities). Additional costs as stated under “Other Costs” are added for those

facilities that employ abatement devices and wish to reflect the emission reductions due to these

devices in their emissions estimates. Finally, the unit cost per facility was multiplied by the

number of facilities that exceed the reporting threshold for each type of facility, resulting in the

total national costs per year for this sector.
4-34

4.4 Cost Analysis for Subpart L—Fluorinated Gas Production

4.4.1 Model Facility Development

For the Fluorinated Gas Production subpart, model facilities were developed based on the

number of products at a single facility using known data for Fluorinated Gas facilities. Facilities

were then categorized as producing one, three or six products using either continuous or batch

processes. Facilities that were assumed to use continuous processes 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 produce their products were assumed to employ five

processes per product and five vents per process.

Option 1, the Mass Balance Approach, would require that a monthly fluorine or carbon

balance of all inputs and outputs be performed using measurements of the masses of the inputs

and outputs and of the fluorine or carbon content 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 require the development of emission factors

for each process vent. For vents whose pre-control GHG emissions exceeded 10,000

mtCO2e/year and were not vented to a destruction device with a destruction efficiency of at least

99.9 percent, facilities would be required to use emissions testing to establish the emission

factor. For other vents, facilities could use engineering calculations 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 mtCO2e per year, and that half of these were not vented to

destruction devices with destruction efficiencies of at least 99.9 percent. Thus, for the “average”

facility, it was assumed that 25 percent of vents would be measured by emission testing and the

other 75 percent would be evaluated using engineering calculations. Under the proposed rule,

facilities would be required to develop emission factors in the first year and to update them every

five years thereafter. In addition, facilities would be required to estimate their emissions from

equipment leaks every year.

When calculating the cost impact for the Process Vent Method, it was apparent that a

single “outlier” facility was distorting the average cost per facility. This outlier is comprised of

many more processes than the average facility, and also consists of processes that are very

complicated and require many steps. Thus, the cost for this particular outlier is not at all

representative of the cost that the “average” facility will see. Thus, the outlier was excluded for
4-35

purposes of summarizing the typical cost to a facility. 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 facilities would have F-GHG emissions that exceeded the one-ton

threshold for performing the study. Facilities would also be required to measure the destruction

efficiency of their destruction device (e.g., thermal oxidizer) initially and every five years

thereafter.

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

first 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 the labor and non-labor costs respectively.

Initial planning costs were estimated for the time needed to review the rule and prepare

required initial notifications and records. These planning hours include resolving questions,

reviewing drawings, conducting source inspections, defining constraints, writing the engineering

report and onetime costs for equipment leak measurement, such as walk-down and field

verification, populating software and initial monitoring setup costs.

For the mass balance approach, the planning hours total to 6.4 management hours, 12.5

administrative hours and 124.9 hours for the industrial engineer/technician. Quality

assurance/quality control costs for planning, meetings, 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 calculation costs were estimated on a percontinuous-process basis. Existing facilities have indicated that the mass balance method is not

practical for batch processes, due to higher cost and the nature of the batch processes, so costs

for batch processes have not been calculated.

For the mass balance approach, stream sampling and analysis costs include 1798 hours

for the industrial engineer/technician, 179.8 administrative hours and 89.9 management hours.
4-36

This includes 165 engineer/technician hours, 8.25 management hours and 16.5 administrative

hours to perform the mass balance 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 hours and 2.4 administrative hours to compile and

store data annually. Labor requirements for preparing 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 include $14,933 to hire a consultant to perform Destruction

Efficiency Testing.
4-37

Table 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

Activity Unit/Facility

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.
4-38

4.4.3 Cost Analysis for Option 2- Process Vent Testing

Following are all costs associated with complying with the rulemaking using Option 2,

Process Vent Testing. These include both labor and non-labor (capital and O&M) costs and both

startup and recurring costs. The “average” plant that utilized the process vent approach was

assumed to have a total of 5 processes. An average of 2.5 process vents were assumed to be

evaluated by testing. The remaining 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 calculations for each of the 5 processes at the average facility

complying with the Process Vent approach.

In each of the following paragraphs, the costs are broken out between the process vent

emissions estimates and the equipment leak assessment. For the average facility, the total first

year labor cost for the process vent 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.

Initial planning costs were estimated for the time needed to review the rule and prepare

required initial notifications and records. These planning hours include resolving questions,

reviewing drawings, conducting source inspections, defining constraints, writing the engineering

report and onetime costs for equipment leak measurement, such as walk-down and field

verification, populating software and initial monitoring setup costs.

For the process vent measurements and calculations, the planning 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 planning, meetings, sample analysis certification and

annual review total 3.4 hours for the industrial manager, 67.8 technician hours and 34

administrative hours.

For the equipment leak assessment, the planning hours total to 50 administrative hours

and 35 hours for the industrial engineer/technician.

Sampling, analysis, monitoring and calculation costs were on a per-vent basis for the

process vent testing and a per-process 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,
4-39

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 processes at the average facility to model the process

and perform the calculations. Finally, it includes 250 engineer/technician hours, 12.5

management 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 include 800.5 industrial

engineer/technician hours for the combined first year cost of the emissions test and the

engineering calculations. It was assumed that facilities were already assessing leaks on half of

the processes; thus, costs are incurred under the rule for the other half. A total of 307.88

engineer/technician hours per process 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 processes evaluated under the

process vent approach due to the slightly higher number of processes at the 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 requirements for preparing the annual report included 7.3

industrial engineer/technician hours, 0.7 management hours, and 1.7 administrative hours to

prepare the annual report.

For the equipment leak assessment, first year recordkeeping costs totaled 32.5 technical

hours and 42.5 administrative hours to document the monitoring process, maintain records and

perform administrative tasks. First year reporting costs totaled 32.5 technical hours and 42.5

administrative hours for all annual reporting associated with equipment leaks. For both

recordkeeping and reporting, these costs remained constant 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 facilities would be required to complete Destruction

Efficiency Testing.
4-40

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

Testing equipment.

Capital costs for the average facility totaled $11,340 in equipment and O&M costs

associated with the equipment leaks.

Table 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

Subse

q.

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 2,453.73 220.08 297.73 58.40 $149,999 $14,161

Note: All costs are in constant 2006$s.
4-41

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.

4.5 Cost Analysis for Subpart QQ—Imports and Exports of Fluorinated GHGs

4.5.1 Model Facility Development

Importers and exporters of products containing fluorinated GHGs include manufacturers,

distributors, and retailers of these products. Such products include several types of refrigeration

and air-conditioning equipment and foams containing HFCs and electrical equipment containing

SF6. This analysis does not consider the costs of CO2 and N2O contained in imported and

exported products. Although EPA does not have data on the amount of CO2 or N2O imported

and exported in products (e.g., carbonated 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 CO2-equivalent quantities imported

are likely to be small both nationally and per importer.

There is one model entity that represents importers/exporters of products containing

fluorinated GHGs and the specific reporting activities and costs.

 Importers/Exporters of fluorinated GHG--containing products: An entity that imports or

exports products or foam containing fluorinated GHGs or equipment containing SF6.
4-42

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 fluorinated GHGs-containing products and

equipment requires the identification of the total amount of each fluorinated GHG

imported/exported inside the products and/or the quantity of products imported/exported (e.g.,

number of pieces of equipment) along with information on the identity and quantity of the

fluorinated GHG in each unit or piece. Persons importing equipment that contain both a

fluorinated GHG refrigerant and a foam blown with a fluorinated GHG (e.g., household

refrigerators) would separately report these GHGs (which are generally different). Similarly,

total exports of chemical actually contained in exported equipment, foams, or other products

would be reported by exporters, by chemical in metric 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 foreign country) would be exempt from reporting.

Importers/exports of products containing fluorinated GHGs would report their imports/exports

on the corporate level.

Table 4-9 presents the number of affected entities that would be subject to the rule based

on alternative emission thresholds.

Table 4-9. Number of Representative Affected Entities Used in the Cost Analysis

Number of Representative Entitiesa

Threshold All HFC Equipment All Foam Products All SF6 Equipment

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

aWhile listed separately in the table above to illustrate the number of importers and number of exporters, importers and exporters

are the same entities for SF6 equipment, and in some cases, the same entities for HFC equipment and foam products. As such,

the per-facilities costs will increase—to reflect activities associated with both importing and exporting, and the overall number of

respondents will decrease given the overlap.

4.5.2 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.
4-43

Monitoring Costs. Costs for tracking quantities of products imported 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 sizes 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 with 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.

Record Keeping Costs. Additional and reporting ($500) costs were also added to each

facility.

4.5.3 Analyze Proportion of Facilities in the Different Model Facility Categories

To classify facilities into different groups, the activities undertaken at each model facility

type were evaluated. The activities conducted by each model facility are listed in the model

facility development section for this subpart. Table 4-10 indicates the number of facilities that

fall into each model facility category.

Table 4-10. 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 SF6-containing equipment

8

Exporters of SF6-containing equipment

10
4-44

4.5.4 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 monitoring, but also to determine who will perform

each task. For this analysis, two labor categories were used as shown in Table 4-11.

Table 4-11. 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 for all equipment types across all shipments.

To determine hours for subsequent years, the 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 total time for both the first and subsequent years. .

Table 4-12 summarizes the allocation of hours and responsibilities by labor category.

The reporting labor hours shown in this table represent the time estimated to complete the cost

element for all activities applicable to the entity (i.e., import, export).
4-45

Table 4-12. Responsibilities for Regulation Compliance by Labor Category

Responsibilities and Hours by Labor Category

Managerial Technical

Per Facility/

Per

Company*

Cost Element Responsibilities Hours Responsibilities Hours

Importer/Exporter of Fluorinated GHG-containing Product (including foams and SF6-containing equipment)

Registration Compliance 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 are no associated O&M costs.

4.5.5 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 4-12, they were multiplied by the associated labor rates (as shown in Table 4-11)

to estimate labor costs per facility. The unit cost per entity was multiplied by the number of
4-46

facilities that exceed the reporting threshold (as shown in Table 4-10), to determine the total

national costs per year for this sector.

4.5.6 Subpart SS—Electrical Equipment Manufacturing

4.5.6.1 Model Facility Development

The model facility for electrical equipment manufacture or refurbishment and

manufacturing of electrical components is a manufacturer that produces an average amount

(nameplate capacity) of SF6-containing transmission and distribution equipment. Costs are not

expected to vary widely among electrical equipment manufacturers because all manufacturers

would track the same set of quantities (SF6 stored, acquired, and disbursed), and the costs of

tracking and reporting these quantities are relatively modest.

The model facility is assumed to already have the capital and technical capability to

monitor and report emissions of SF6 using a mass-balance formula. To use the formula, facilities

must track their SF6 inventory in cylinders, SF6 acquisitions, and SF6 disbursements. These data

are already tracked by electrical equipment manufacturers, but not necessarily as closely and

comprehensively as required to develop all manufacturer-level mass-balance inputs. Thus, as

discussed below, the model facility is assumed to incur some costs for tracking and reporting SF6

emissions.

Table 4-13 presents the number of affected entities that would be subject to the rule based

on alternative emission thresholds under subpart SS.

Table 4-13. Number of Representative Affected Entities Used in the Cost Analysis

Threshold

Number of

Representative Entities

1,000 10

10,000 10

25,000 10

100,000 5

4.5.6.2 Determine Cost Elements

The total costs associated with the proposed rulemaking for electrical equipment

manufacturers were estimated using labor hours from an Information Collection Request (ICR)
4-47

performed for EPA’s SF6 Emission Reduction Partnership.9,10 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 divided into the following four categories:

Regulation Compliance Determination Costs. Recurring costs consist of reviewing the

instructions of the mass-balance reporting form and associated materials to ensure the proper

procedures are in place to obtain technically accurate inputs.

Monitoring Costs. Recurring costs consist of gathering information for the massbalance reporting form and associated materials. The information gathered represents the

movement of SF6 throughout the system.

Reporting Costs. Recurring costs consist of completing 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 maintaining a record of the emissions

inventory and documentation.

4.5.6.3 Analyze Proportion of Facilities in the Different Model Facility Categories

There is only one model facility for electrical equipment manufacture or refurbishment

and manufacturing of electrical components.

4.5.6.4 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 monitoring, but also to determine who will perform

each task. For this analysis, two labor categories were used as shown in Table 4-14.

9

 EPA. (2000). Supporting statement for EPA Information Collection Request number 1933.01 “Information

collection activities associated with EPA’s SF6 Emission Reduction Partnership for Electric Power Systems”

10 Although the ICR was focused on the costs of reporting SF6 emissions from electric utilities rather than electrical

equipment manufacturers, the inputs required to calculate emissions and the activities involved with reporting are

similar for both sectors. Therefore, the costs incurred for electrical equipment manufacturers are assumed to be the

same as the costs incurred for electric power systems.
4-48

Table 4-14. Labor Categories and Hourly Rates

Labor Category Description Loaded 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 estimated based on consultation between EPA and

SF6 Emission Reduction Partners conducted for the 2000 Partnership ICR. Table 4-15

summarizes the allocation of hours and responsibilities by labor category.
4-49

Table 4-15. Responsibilities for Regulation Compliance by Labor Category Per Facility

Responsibilities and Hours by Labor Category

Managerial Technical Clerical

Cost Element Responsibilities Hours Responsibilities Hours Responsibilities Hours

Regulation Compliance Determination Costs

Review the instructions, SF6 massbalance 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 0

Monitoring Costs

Gather information for the SF6 massbalance reporting form and

associated materials

Institute and oversee proper data

collection procedures that account

for all SF6 within the system

4 Compile SF6 data and sort data

into appropriate input categories

for the mass-balance formula

17 Perform measurements and collect

documentation that track SF6 gas

movements

11

Reporting Costs

Complete and review the information

requested by the SF6 mass-balance

reporting form and associated

materials

Review reporting forms to ensure

accuracy and consistency

3.5 Calculate inputs for the massbalance reporting form. Perform

facility-wide SF6 emission

calculations

3.5 Provide data and supporting

documentation to technical and

managerial staff

1.5

Submit the SF6 mass-balance

reporting form and associated

materials

0 0 Combine the mass-balance

reporting form with all necessary

materials and submit

0.2

Recordkeeping Costs

Maintain a record of the emissions

inventory and documentation

0 0 File the mass-balance reporting

form and associated materials into

the recordkeeping system

0.2
4-50

4.5.7 Other Costs

Other costs consist of postage costs—for submitting 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 SF6 Emission Reduction Partnership ICR and are

presented in Table 4-16.

Table 4-16. 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

4.5.7.1 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 added 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.

4.6 Public Sector Burden

EPA estimates the public sector burden to be $383,582 per year; $72,000 per year is for

verification activities, and remaining costs are for program implementation and developing and

maintaining the data collection system. Program implementation activities include, but are not

limited to, developing guidance and training materials to assist the regulated community,

responding to inquires from affected facilities on monitoring and applicability requirements, and

developing tools to assist in determining applicability.
5-51

SECTION 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 requirements. As noted in EPA’s

(2000) Guidelines for Preparing Economic Analyses, several tools are available to estimate

social costs and range from simple direct compliance 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 consumer 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 Selection of Reporting Thresholds

5.1.1 Subpart I- Electronics Manufacturing

In the initial proposal, EPA proposed capacity-based thresholds equivalent to 25,000

metric tons of CO2e for manufacture of semiconductors, LCDs, and MEMS, and an emissionsbased threshold of 25,000 metric tons of CO2e 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 indicated that the proposed capacity-based threshold created

ambiguity. In response to the comments received on the initial proposed capacity-based

threshold, EPA is now proposing an emissions-based threshold of 25,000 mtCO2e for

manufacture of semiconductors, LCD, MEMS, and PV.

In the analysis, EPA considered emission thresholds of 1,000 metric tons CO2e, 10,000

metric tons CO2e, 25,000 metric tons CO2e, and 100,000 metric tons CO2e per year. This

analysis 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.
5-52

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

Emissions Covered Facilities Covered

Emission

Threshold

Level (metric

tons CO2e/yr)

Total

National

Emissions

(metric tons

CO2e/yr)

Total

Number of

Facilities

metric tons

CO2e/yr Percent Facilities Percent

1,000 5,984,463 216 5,962,091 99.6% 165 76%

10,000 5,984,463 216 5,813,200 97% 114 53%

25,000 5,984,463 216 5,622,570 94% 94 44%

100,000 5,984,463 216 4,737,622 79% 55 26%

EPA selected the 25,000 metric tons CO2e per year threshold because this threshold

maximizes emissions reporting, while excluding small facilities that do not contribute

significantly to the overall GHG emissions.

The proposed emissions-based thresholds are estimated to include approximately 50

percent of semiconductor facilities and between approximately 0 percent and 17 percent of the

facilities manufacturing MEMS and PV respectively (see Table 5-2). At the same time, the

thresholds are expected to cover nearly 96 percent of fluorinated GHG emissions from

semiconductor facilities, 66 percent of fluorinated GHG emissions from facilities manufacturing

MEMS, and 47 percent of fluorinated GHG emissions from facilities manufacturing PV.

Table 5-2. Summary of Rule Applicability under the Proposed Emission-Based Thresholds

for Subpart I – Electronics Manufacturing Industry

Emissions Covered Facilities Covered

Emission

Threshold

Level

(metric tons

CO2e/yr)

Total

National

Emissions

(metric

tons

CO2e/yr)

Total

Number of

Facilities

Total Emissions of

Source (metric tons

CO2e)

metric tons

CO2e/yr Percent Facilities Percent

Semiconductors 25,000 175 5,741,676 5,492,066 96% 91 52%

MEMS 25,000 12 146,115 96,164 66% 2 17%

LCD 25,000 9 23,632 0 0% 0 0%

PV 25,000 20 73,039 34,340 47% 1 5%

Combined these emissions are estimated to account for close to 94 percent of fluorinated

GHG emissions from the electronics industry as a whole. Facilities manufacturing LCDs are not
5-53

expected to be covered by the proposed threshold. To determine whether a manufacturer falls

above or below the proposed 25,000 metric tons of CO2e, EPA is proposing that semiconductor,

MEMS, and LCD facilities use gas specific 2006 IPCC Tier 1 emission factors assuming 100%

manufacturing capacity to calculate annual metric tons of emissions in CO2 equivalents. For PV

facilities, EPA is proposing that they facilities multiply annual fluorinated GHG purchases or

consumption by the gas-appropriate 100-year GWPs, as defined in Table A-1 to Subpart A of

Part 98, to calculate annual metric tons of emissions in CO2 equivalents. None of these

calculations shall account for emission abatement technologies.

When abatement equipment is used, electronics manufacturers often estimate their

emissions using the manufacturer-supplied DRE for the equipment. However, abatement

equipment may fail to achieve its rated DRE either because it was not installed properly, is not

being properly operated and maintained, or because the DRE value itself was incorrectly

measured due to a failure to properly account for the effects of dilution. For example, reported

DREs for CF4 can be overstated by as much as a factor of 20 to 50, and the corresponding figure

for C2F6 can be overstated by a factor of up to 10 because of failure to properly account for

dilution (Burton, 2007). Regardless of the reason, actual emissions from facilities employing

abatement equipment may exceed estimates when based on the manufacturers’ rated DREs of

this equipment and may therefore exceed the 25,000 metric tons CO2e threshold without the

knowledge of the facility operators.

For additional background information on the threshold analysis, refer to the Electronics

Manufacturing TSD (EPA-HQ-OAR-2009-0927). For specific information on costs, including

unamortized first year capital expenditures, please refer to section 4.3.

5.1.2 Subpart L- Fluorinated Gas Production

Under the proposed rule, owners and operators of fluorinated gas production facilities

would be required to estimate and report GHG emissions if those emissions, including both

combustion and fluorinated GHG emissions, would exceed 25,000 mtCO2e in the absence of

control technology (e.g., thermal oxidation)11.

11 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 condenser, where applicable), but

which has not yet been introduced into an air pollution control device to reduce the mass of fluorinated GHGs in
5-54

In developing the threshold, we considered multiple controlled and uncontrolled

emissions thresholds, including 1,000, 10,000, 25,000, and 100,000 metric tons CO2e. For

fluorinated GHG production processes (including fluorinated anesthetics production processes),

uncontrolled (pre-control) emissions were estimated by multiplying a factor of 3 percent by the

estimated production at each facility. For CFC and HCFC production processes (except for

HCFC-22 production processes), uncontrolled emissions were estimated by multiplying a factor

of 2 percent by the estimated production at each facility. Uncontrolled emissions are strongly

influenced by by-product generation rates, which are known to vary between zero and several

percent for fluorinated gas production processes; thus, these estimates are uncertain. Controlled

emissions were assumed to be half of uncontrolled emissions at each facility. Because EPA has

little information on combustion-related emissions at fluorinated gas production facilities, these

emissions were not included in the analysis. The results of the analysis for production of HFCs,

PFCs, SF6, NF3, CFCs, and HCFCs are shown in Tables L-1 and L-2.

Table 5-3 Threshold Analysis for Fluorinated GHG Emissions from Production of HFCs, PFCs,

SF6, NF3, CFCs, and HCFCs (Uncontrolled Emissions)

Emissions Covered Facilities Covered

Threshold

Level (metric

tons CO2e/r)

Total National

Emissions

(metric tons

CO2e)

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%

the stream. The term does not imply that the emissions are never controlled, but is synonymous with “precontrol emissions.”
5-55

Table 5-4. Threshold Analysis for Fluorinated GHG Emissions from Production of HFCs,

PFCs, SF6, NF3, CFCs, and HCFCs (Controlled Emissions)

Emissions Covered Facilities Covered

Threshold

Level (metric

tons CO2e/r)

Total National

Emissions

(metric tons

CO2e)

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, SF6, NF3, CFC, and HCFC production

facilities would be covered by all the thresholds considered. Although we do not have facilityspecific production information for producers of fluorinated anesthetics, we believe that few or

none of these facilities are likely to have uncontrolled 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 produced. However, fluorinated anesthetics are

hydrofluoroethers, and other HFE production processes of which EPA is aware generate byproducts with higher GWPs than the product.

5.1.3 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 unamortized first year capital expenditures, please

refer to Economic Analysis (EA) for this rulemaking. Subpart QQ- Imports and

Exports of Fluorinated GHGs in Pre-Charged Equipment and Closed-Cell Foams

Under the current proposal, EPA is proposing to require that importers and exporters of

F-GHGs contained in pre-charged equipment and closed cell foams report their imports and

exports if either their total imports or their total exports, in equipment, foams, and in bulk,

exceed 25,000 mtCO2e per year. This threshold is the same as that for bulk imports and exports.
5-56

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

HFC Refrigeration/AC

Equipment SF6

 Electrical Equipment Closed-cell Foams

Threshold

Level

Imports

Covered

Importers

Covered

Imports

Covered

Importers

Covered

Imports

Covered

Importers

Covered

1,000 15,733,523 50 1,888,932 8 3,025,285 50

10,000 15,733,523 50 1,888,932 8 3,025,285 50

25,000 15,733,523 50 1,888,932 8 3,025,285 50

100,000 15,733,523 50 1,888,932 8 0 50

Table 5-6. Threshold Analysis for Subpart QQ–Exports of Fluorinated GHGs in PreCharged Equipment and Closed-Cell Foams

HFC Refrigeration/AC

Equipment SF6 Electrical Equipment Closed-cell Foams

Threshold

Level

Exports

Covered

Exporters

Covered

Exports

Covered

Exporters

Covered

Exports

Covered

Exporters

Covered

1,000 5,247,905 25 153,323 10 3,025,285 25

10,000 5,247,905 25 107,326 5 3,025,285 25

25,000 5,247,905 25 0 0 3,025,285 25

100,000 5,247,905 25 0 0 3,025,285 25

5.1.4 Subpart SS- Electrical Equipment Manufacture or Refurbishment and Manufacturing

of Electrical Components

EPA is proposing to require electrical equipment manufacturers to report their SF6 and

PFC emissions if their total annual purchases of SF6 or PFCs exceed 23,061 lbs. This

consumption-based threshold is equivalent to an emissions-based threshold of 25,000 mtCO2e,

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 requirements by referencing their SF6 purchase records.
5-57

Table 5-7. Threshold Analysis for Subpart SS– Electrical Equipment Manufacture or

Refurbishment and Manufacturing of Electrical Components

Emission Threshold (Mt CO2 Eq) 1,000 10,000 25,000 100,000

Consumption Threshold (lbs. of SF6) 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 CO2 Eq) 814,128 814,128 814,128 569,890

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

5.1.5 National Emissions Covered Under Selected Thresholds

The total national emissions covered under the selected options are 46 MtCO2e (Table 5-

8). The majority of these covered emissions are from the importers and exporters of fluorinated

GHGs covered by Subpart QQ (28.9 MtCO2e). 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 5-8. Estimates of Emissions (MtCO2e) Reported in 2008 Under the Selected Option

Subpart Emissions Coverage (MtCO2e)

Subpart I - Electronics Industry 5.6

Subpart L - Fluorinated Gas Production 10.6

Subpart QQ - Imports and Exports of Fluorinated GHGs 28.9

Subpart SS - Electrical Equipment Manufacture or Refurbishment and

Manufacturing of Electrical Components 0.8

Total 46.0

5.2 National Cost Estimates

As shown in Table 5-10, the total national costs for the selected option are estimated to

be $6.1 million in the first year and $3.9 million in subsequent years ($2006). This includes a

public sector burden estimate of $384,000 for program implementation and verification
5-58

activities. Subparts bearing the greatest share of the ongoing private costs of the rule are the

electronics industry (67%) fluorinated gas producers (23%).

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 mandatory reporting programs. The

average ongoing (subsequent year) private cost per metric ton varies by subpart; measures range

from less than $0.01 per ton (Subpart SS) to $0.45 per ton (Subpart I).

Table 5-9. 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

334111, 334413,

334119 $2.9 $0.51 47% $2.6 $0.45 67%

Subpart L - Fluorinated Gas

Production 325120 $2.1 $0.20 35% $0.3 $0.03 7%

Subpart QQ - Imports and

Exports of Fluorinated

GHGs

326140, 326150,

333415, 335313,

336391, 423610,

423620, 423720,

421730, 421740,

443111, 443112,

424610 $0.7 $0.02 12% $0.6 $0.02 16%

Subpart SS - Electrical

Equipment Manufacture

and Refurbishment and

Manufacturing of Electrical

Components 33361, 33531 $0.02 $0.01 0.4% $0.02 $0.01 1%

Private Sector, Total $5.7 94% $3.5 90%

Public Sector, Total $0.4 6% $0.4 10%

Total $6.1 100% $3.9 100%

5.2.1 Additional National Cost Analysis

5.2.1.1 Subpart I: Validating the DRE of Abatement Devices

Under the proposed rule, any facility that wishes to reflect abatement of fluorinated

GHGs in its emissions estimates would be required to assure proper equipment installation,
5-59

operation, and maintenance and either use EPA published DRE default values or obtain verified

class-specific DRE measurements to quantify the emission reductions. EPA developed a cost

estimate based on an assumption that only the 23 large facilities that participate in EPA’s PFC

Reduction/Climate Partnership for the Semiconductor Industry use abatement devices and would

incur costs for verifying the DREs of these devices. Table 5-10 illustrates the range of

incremental total private costs assuming the facilities report abatement activities.
5-60

Table 5-10. Additional Subpart I Private Cost Estimates: Validating the DRE of

Abatement Devices

DRE Option

DRE Option

Costs

($/entity):

First and

Subsequent

Year

Number of

Affected

Entities

Reporting

Abatement

Activities

Additional

Private Cost

($/entity): First

and Subsequent

Year

National Cost

Estimate with

DRE Option

First Year

(Millions $2006)

National Cost

Estimate with

DRE Option

Subsequent Years

(Millions $2006)

Semiconductors

(DRE Default

Value Option) $1,766 23 $40,618 $7.2 $4.0

Semiconductors

(DRE

Measurement

Option) $71,766 23 $1,650,618 $8.9 $5.7

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 and focus on small entities. We provide additional

details of the analysis below.

5.3.1 Assessing Economic Impacts on Small Entities

The first step in this assessment was to determine whether the rule will have a significant

impact on a substantial number of small entities (SISNOSE). 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,

 selecting 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 during the development of the

cost analysis for the reporting rule. The SUSB data provide national information on the
5-61

distribution of economic variables by industry and size. These data were developed in

cooperation with, and partially funded by, the Office of Advocacy 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 entities would not be expected to report under the

preferred option because they would fall below the 25,000 hybrid threshold. SUSB also provides

this data by enterprise employment size. The census definitions in this data set are as follows:

 establishment: An establishment is a single physical location where business is

conducted or where services or industrial operations are performed.

 employment: Paid employment consists of full- and part-time employees, including

salaried officers and executives of corporations, who were on the payroll in the pay

period including March 12, 2002. Included are employees on sick leave, holidays, and

vacations; not included are proprietors and partners of unincorporated businesses.

 receipts: Receipts (net of taxes) are defined as the revenue for goods produced,

distributed, or services provided, including revenue earned from premiums,

commissions and fees, rents, interest, dividends, and royalties. Receipts exclude all

revenue collected for local, state, and federal taxes.

 enterprise: An enterprise is a business organization consisting of one or more

domestic establishments that were specified 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 associated establishments. Enterprise size

designations are determined by the summed employment of all associated

establishments.

Because the SBA’s business size definitions (SBA, 2009c) apply to an establishment’s “ultimate

parent company,” we assume in this analysis that the “enterprise” definition above is consistent

with the concept of ultimate parent company that is typically used for Small Business Regulatory

Enforcement Fairness Act (SBREFA) screening analyses 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.
5-62

Table 5-11. Number of Establishments by Affected Industry and Enterprisea Size: 2002

Owned by Enterprises with:

2007

 NAICS NAICS Description Subpart

SBA Size Standard

(effective August 22,

2008)

Total

Establishments

1 to 20

Employees

20 to 99

Employees

100 to 499

Employees

500 to 749

Employees

750 to 999

Employees

1,000 to

1,499

Employees

334111

Electronic Computer

Manufacturing I 1,000 486 257 84 36 3 2 3

334413

Semiconductor and

Related Device

Manufacturing I 1,000 1,098 458 220 138 19 19 16

334119

Other Computer

Peripheral Equipment

Manufacturing I 1,000 815 411 169 85 17 7 11

325120

Industrial Gas

Manufacturing L 1,000 551 45 20 20 NA 30 55

326140

Polystyrene Foam

Product Manufacturing QQ 500 551 176 123 85 16 1 20

326150

Urethane and Other Foam

Product (except

Polystyrene)

Manufacturing QQ 500 610 192 133 73 19 8 3

333415

Air-Conditioning and

Warm Air Heating

Equipment

and Commercial and

Industrial Refrigeration

Equipment

Manufacturing QQ 750 840 303 187 87 10 25 20

335313

Switchgear and

Switchboard Apparatus

Manufacturing QQ 750 563 273 105 46 6 NA 10

336391

Motor Vehicle AirConditioning

Manufacturing QQ 750 72 34 17 8 NA 1 1

423610

Electrical Apparatus and

Equipment, Wiring

Supplies,

and Related Equipment

Merchant Wholesalers QQ 100 14,337 7,458 1,679 1,016 248 113 87

423620

Electrical and Electronic

Appliance, Television,

and

Radio Set Merchant

Wholesalers QQ 100 3,510 2,156 554 189 19 39 72
5-63

423720

Plumbing and Heating

Equipment and Supplies

(Hydronics) Merchant

Wholesalers QQ 100 5,144 2,871 720 455 134 21 16

423730

Warm Air Heating and

Air-Conditioning

Equipment

and Supplies Merchant

Wholesalers QQ 100 5,598 2,394 929 654 213 52 355

423740

Refrigeration Equipment

and Supplies Merchant

Wholesalers QQ 100 1,482 724 271 193 4 28 29

443111

Household Appliance

Stores QQ $9 M 10,002 7,628 806 312 NA 73 1

443112

Radio, Television and

Other Electronics Stores QQ $9 M 24,226 11,181 1,760 1,230 38 75 328

424610b

Plastics Materials and

Basic Forms and Shapes

Merchant Wholesalers QQ 100 3,717 2,238 518 281 26 20 58

33361

Engine, Turbine, and

Power Transmission

Equipment

Manufacturing SS 500 - 1,000 922 375 208 94 14 11 12

a The Census Bureau defines an enterprise as a business organization consisting of one or more domestic establishments that were specified 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 associated establishments. Enterprise size 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 definition

above is consistent with the concept of ultimate parent company that is typically used for Small Business Regulatory Enforcement Fairness Act (SBREFA) screening analyses.

b The 2002 SUSB data uses 1997 NAICS codes. For this industry, the relevant code is NAICS 422610.
5-64

Table 5-12. Receipts by Affected Industry and Enterprisea Size ($2002 Million)

Owned by Enterprises with:

NAICS NAICS Description Subpart

SBA Size Standard

(effective August 22,

2009)

Total Establishments

1 to 20

Employees

20 to 99

Employees

100 to 499

Employees

500 to 749

Employees

750 to 999

Employees

1,000 to

1,499

Employees

334111

Electronic Computer

Manufacturing I 1,000 47,806 272 766 1,271 NA NA NA

334413

Semiconductor and

Related Device

Manufacturing I 1,000 63,779 701 1,755 3,711 775 2,593 1,434

334119

Other Computer

Peripheral Equipment

Manufacturing I 1,000 18,135 642 1,680 2,712 1,405 247 1,372

325120

Industrial Gas

Manufacturing L 1,000 5,780 22 292 71 NA NA NA

326140

Polystyrene Foam

Product Manufacturing QQ 500 6,330 209 623 689 NA NA 539

326150

Urethane and Other

Foam Product (except

Polystyrene)

Manufacturing QQ 500 7,170 307 772 1,063 288 NA NA

333415

Air-Conditioning and

Warm Air Heating

Equipment

and Commercial and

Industrial Refrigeration

Equipment

Manufacturing QQ 750 24,699 409 1,460 1,813 348 980 803

335313

Switchgear and

Switchboard Apparatus

Manufacturing QQ 750 8,593 347 641 826 NA NA NA

336391

Motor Vehicle AirConditioning

Manufacturing QQ 750 3,396 31 72 NA NA NA NA

423610

Electrical Apparatus and

Equipment, Wiring

Supplies,

and Related Equipment

Merchant Wholesalers QQ 100 93,524 21,850 16,229 9,690 1,648 1,339 766
5-65

423620

Electrical and Electronic

Appliance, Television,

and

Radio Set Merchant

Wholesalers QQ 100 68,255 9,640 10,388 10,577 2,418 1,805 4,291

423720

Plumbing and Heating

Equipment and Supplies

(Hydronics) Merchant

Wholesalers QQ 100 31,668 8,304 12,322 4,156 686 247 51

423730

Warm Air Heating and

Air-Conditioning

Equipment

and Supplies Merchant

Wholesalers QQ 100 25,599 5,426 5,075 3,551 613 526 NA

423740

Refrigeration Equipment

and Supplies Merchant

Wholesalers QQ 100 5,014 1,333 1,791 581 14 187 NA

443111

Household Appliance

Stores QQ $9 M 12,619 5,432 2,801 1,354 NA NA NA

443112

Radio, Television and

Other Electronics Stores QQ $9 M 53,557 6,325 3,510 1,612 NA NA NA

424610b

Plastics Materials and

Basic Forms and Shapes

Merchant Wholesalers QQ 100 32,648 7,345 5,785 4,091 614 687 338

33361

Engine, Turbine, and

Power Transmission

Equipment

Manufacturing SS 500 - 1,000 37,701 429 1,326 2,067 309 333 304

a The Census Bureau defines an enterprise as a business organization consisting of one or more domestic establishments that were specified 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 associated establishments. Enterprise size 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 definition

above is consistent with the concept of ultimate parent company that is typically used for Small Business Regulatory Enforcement Fairness Act (SBREFA) screening analyses.

b The 2002 SUSB data uses 1997 NAICS codes. For this industry, the relevant code is NAICS 422610.
5-66

5.3.1.2 Develop Small Entity Economic Impact Measures

Because the rule covers a large number of subparts and primarily covers businesses, the

analysis generated a set of sales tests (represented as cost-to-receipt ratios)12 for NAICS codes

associated with the affected subparts. Although the appropriate SBA size definition should be

applied at the parent company (enterprise) 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 (the “enterprise”) may have other economic resources that could

be used to cover the costs of the reporting program.

These sales tests examine the average establishment’s total annualized mandatory

reporting costs to the average establishment receipts for enterprises within several employment

categories13 (first year costs: Table 5-13; subsequent year costs: Table 5-14). The average entity

costs used to compute the sales test are the same across all of these enterprise 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.

12The 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

13For the one to 20 employee category, we exclude SUSB data for enterprises with zero employees. These

enterprises did not operate the entire year.
5-67

Table 5-13. Establishment Sales Tests by Industry and Enterprisea Size: First Year Costs

Owned by Enterprises with:

2007

NAICS NAICS Description Sub-part

SBA Size

Standard

(effective

August 22,

2008)

Average

Cost Per

Entity

($/entity)

All

Enterprises

1 to 20

Employees

20 to 99

Employees

100 to 499

Employees

500 to 749

Employees

750 to 999

Employees

1,000 to

1,499

Employees

334111 Electronic Computer Manufacturing I 500 $31,748 0.03% 2.67% 0.31% 0.08% NA NA NA

334413

Semiconductor and Related Device

Manufacturing I (Semis) 500 $31,748 0.05% 1.85% 0.36% 0.11% 0.07% 0.02% 0.03%

334413

Semiconductor and Related Device

Manufacturing I (Photovoltaics) 1,000 $8,777 0.01% 0.51% 0.10% 0.03% 0.02% 0.01% 0.01%

334119

Other Computer Peripheral Equipment

Manufacturing I (LCD) 500 $7,598 0.03% 0.43% 0.07% 0.02% 0.01% 0.02% 0.01%

334119

Other Computer Peripheral Equipment

Manufacturing I (MEMS) 500 $5,239 0.02% 0.30% 0.05% 0.01% 0.01% 0.01% 0.00%

325120 Industrial Gas Manufacturing L 1,000 $151,045 1.28% 27.68% 0.92% 3.80% NA NA NA

326140

Polystyrene Foam Product

Manufacturing QQ 500 $3,364 0.03% 0.25% 0.06% 0.04% NA NA 0.01%

326150

Urethane and Other Foam Product

(except Polystyrene)

Manufacturing QQ 500 $3,364 0.03% 0.19% 0.05% 0.02% 0.02% NA NA

333415

Air-Conditioning and Warm Air

Heating Equipment

and Commercial and Industrial

Refrigeration

Equipment Manufacturing QQ 750 $3,364 0.01% 0.22% 0.04% 0.01% 0.01% 0.01% 0.01%

335313

Switchgear and Switchboard Apparatus

Manufacturing QQ 750 $3,364 0.02% 0.24% 0.05% 0.02% NA NA NA

336391

Motor Vehicle Air-Conditioning

Manufacturing QQ 750 $3,364 0.01% 0.33% 0.07% NA NA NA NA

423610

Electrical Apparatus and Equipment,

Wiring Supplies,

and Related Equipment Merchant

Wholesalers QQ 100 $3,364 0.05% 0.10% 0.03% 0.03% 0.05% 0.03% 0.03%

423620

Electrical and Electronic Appliance,

Television, and

Radio Set Merchant Wholesalers QQ 100 $3,364 0.02% 0.07% 0.02% 0.01% 0.00% 0.01% 0.01%

423720

Plumbing and Heating Equipment and

Supplies

(Hydronics) Merchant Wholesalers QQ 100 $3,364 0.05% 0.10% 0.02% 0.03% 0.06% 0.03% 0.09%

423730

Warm Air Heating and AirConditioning Equipment

and Supplies Merchant Wholesalers QQ 100 $3,364 0.07% 0.13% 0.05% 0.06% 0.10% 0.03% NA
5-68

423740

Refrigeration Equipment and Supplies

Merchant

Wholesalers QQ 100 $3,364 0.09% 0.16% 0.05% 0.10% 0.08% 0.04% NA

443111 Household Appliance Stores QQ $9 M $3,364 0.24% 0.42% 0.09% 0.07% NA NA NA

443112

Radio, Television and Other

Electronics Stores QQ $9 M $3,364 0.14% 0.53% 0.15% 0.23% NA NA NA

424610b

Plastics Materials and Basic Forms and

Shapes

Merchant Wholesalers QQ 100 $3,364 0.03% 0.09% 0.03% 0.02% 0.01% 0.01% 0.05%

33361

Engine, Turbine, and Power

Transmission Equipment

Manufacturing SS 500 - 1,000 $2,213 0.00% 0.17% 0.03% 0.01% 0.01% 0.01% 0.01%

33531 Electrical Equipment Manufacturing SS 750 - 1,000 $2,213 0.02% 0.19% 0.04% 0.01% 0.01% 0.00% 0.01%

a

 The Census Bureau defines an enterprise as a business organization consisting of one or more domestic establishments that were specified 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 associated establishments. Enterprise size 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 definition

above is consistent with the concept of ultimate parent company that is typically used for Small Business 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).

b The 2002 SUSB data uses 1997 NAICS codes. For this industry, the relevant code is NAICS 422610.
5-69

Table 5-14. Establishment Sales Tests by Industry and Enterprisea Size: Subsequent Years Costs

Owned by Enterprises with:

2007

NAICS NAICS Description Sub-part

SBA Size

Standard

(effective

August 22,

2008)

Average

Cost Per

Entity

($/entity)

All

Enterprises

1 to 20

Employeesb

20 to 99

Employees

100 to 499

Employees

500 to 749

Employees

750 to 999

Employees

1,000 to

1,499

Employees

334111 Electronic Computer Manufacturing I 500 $31,748 0.03% 2.67% 0.31% 0.08% NA NA NA

334413

Semiconductor and Related Device

Manufacturing I (Semis) 500 $31,748 0.05% 1.85% 0.36% 0.11% 0.07% 0.02% 0.03%

334413

Semiconductor and Related Device

Manufacturing

I

(Photovoltaics) 1,000 $8,777 0.01% 0.51% 0.10% 0.03% 0.02% 0.01% 0.01%

334119

Other Computer Peripheral Equipment

Manufacturing I (LCD) 500 $7,598 0.03% 0.43% 0.07% 0.02% 0.01% 0.02% 0.01%

334119

Other Computer Peripheral Equipment

Manufacturing I (MEMS) 500 $5,239 0.02% 0.30% 0.05% 0.01% 0.01% 0.01% 0.00%

325120 Industrial Gas Manufacturing L 1,000 $19,109 0.16% 3.50% 0.12% 0.48% NA NA NA

326140 Polystyrene Foam Product Manufacturing QQ 500 $2,933 0.02% 0.22% 0.05% 0.03% NA NA 0.01%

326150

Urethane and Other Foam Product (except

Polystyrene)

Manufacturing QQ 500 $2,933 0.02% 0.16% 0.05% 0.02% 0.02% NA NA

333415

Air-Conditioning and Warm Air Heating

Equipment

and Commercial and Industrial

Refrigeration

Equipment Manufacturing QQ 750 $2,933 0.01% 0.19% 0.03% 0.01% 0.01% 0.01% 0.01%

335313

Switchgear and Switchboard Apparatus

Manufacturing QQ 750 $2,933 0.02% 0.21% 0.04% 0.01% NA NA NA

336391

Motor Vehicle Air-Conditioning

Manufacturing QQ 750 $2,933 0.01% 0.29% 0.06% NA NA NA NA

423610

Electrical Apparatus and Equipment,

Wiring Supplies,

and Related Equipment Merchant

Wholesalers QQ 100 $2,933 0.04% 0.09% 0.03% 0.03% 0.04% 0.02% 0.03%

423620

Electrical and Electronic Appliance,

Television, and

Radio Set Merchant Wholesalers QQ 100 $2,933 0.01% 0.06% 0.01% 0.00% 0.00% 0.01% 0.00%

423720

Plumbing and Heating Equipment and

Supplies

(Hydronics) Merchant Wholesalers QQ 100 $2,933 0.04% 0.09% 0.02% 0.03% 0.05% 0.02% 0.08%

423730

Warm Air Heating and Air-Conditioning

Equipment

and Supplies Merchant Wholesalers QQ 100 $2,933 0.06% 0.12% 0.05% 0.05% 0.09% 0.03% NA
5-70

423740

Refrigeration Equipment and Supplies

Merchant

Wholesalers QQ 100 $2,933 0.08% 0.14% 0.04% 0.09% 0.07% 0.04% NA

443111 Household Appliance Stores QQ $9 M $2,933 0.21% 0.37% 0.08% 0.06% NA NA NA

443112

Radio, Television and Other Electronics

Stores QQ $9 M $2,933 0.12% 0.46% 0.13% 0.20% NA NA NA

424610

Plastics Materials and Basic Forms and

Shapes

Merchant Wholesalers QQ 100 $2,933 0.03% 0.08% 0.02% 0.02% 0.01% 0.01% 0.04%

33361

Engine, Turbine, and Power Transmission

Equipment Manufacturing SS 500 - 1,000 $2,213 0.00% 0.17% 0.03% 0.01% 0.01% 0.01% 0.01%

33531 Electrical Equipment Manufacturing SS 750 - 1,000 $2,213 0.02% 0.19% 0.04% 0.01% 0.01% 0.00% 0.01%

a

 The Census Bureau defines an enterprise as a business organization consisting of one or more domestic establishments that were specified 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 associated establishments. Enterprise size 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 definition

above is consistent with the concept of ultimate parent company that is typically used for Small Business 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).

b The 2002 SUSB data uses 1997 NAICS codes. For this industry, the relevant code is NAICS 422610.
5-71

5.3.1.3 Results of Screening Analysis

The Regulatory Flexibility Act generally requires 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 agency certifies that the rule will

not have a significant economic impact on a substantial number of small entities. Small entities

include small businesses, small governmental jurisdictions, and small not-for-profit enterprises.

For the purposes of assessing the impacts of the 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 government 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 owned 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, the average ratio of annualized reporting program

costs to receipts of establishments owned by model small enterprises was less than 1% for

industries presumed likely to have small businesses covered by the reporting program.

We acknowledge that several enterprise categories have ratios that exceed this threshold

(e.g., enterprise with one to 20 employees). The Industrial Gas Manufacturing industry (NAICS

325120) has sales test results over 1% for all enterprises. The following enterprise categories

have sales test results over 1% and for entities with less than 20 employees: Industrial Gas

Manufacturing (325120) and Semiconductor and 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 the entities likely to be covered by the rule as

part of the expert sub-group process.

Threshold-based Analysis of Categories Having Sales Test Ratios Above 1%

Industrial Gas Manufacturing (325120)

Subpart L covers facilities included in NAICS codes for Industrial Gas Manufacturing

(NAICS 325120). Within this subpart, EPA identified 13 ultimate parent company names

covered by the proposed rule. Using publicly available sources (e.g., Hoovers.com), we collected

parent company sales and employment data and found that only one company could be classified
5-72

as a small entity. Using the cost data for a representative 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 facilities 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 facilities included in NAICS codes

for Semiconductor and Related Device Manufacturing (334413) and Other Computer Peripheral

Equipment Manufacturing (334119). The World Fab Watch dataset includes 216 facilities (94 of

which exceed the 25,000 ton threshold), while the sum of the two NAICS codes include 1,903

establishments. Covered facilities with emissions greater than 25,000 MtCO2e per year are

unlikely to be included in the 1 to 20 employees 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 significant 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 public-sector stakeholders. When

developing the rule, the Agency took special steps to ensure that the burdens imposed on small

entities were minimal. The Agency conducted several meetings with industry trade associations

to discuss regulatory options and the corresponding burden on industry, such as recordkeeping

and reporting. The Agency investigated 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 provides flexibility to entities and helps minimize

reporting costs.
6-1

SECTION 6

STATUTORY AND EXECUTIVE ORDER REVIEWS

This section describes EPA’s compliance with several applicable executive orders and

statutes during the development of the proposed F-GHG reporting rule, under subparts I, L, QQ,

and SS of the Mandatory Reporting Rule.

6.1 Executive Order 12866: Regulatory Planning and Review

Under Section 3(f)(1) of Executive Order 12866 (58 FR 51735, October 4, 1993), this

action is not by itself an “economically significant regulatory action” because it is unlikely to

have an annual economic effect of less than $100 million. EPA’s cost analysis, presented in

Section 4, estimates that for the minimum reporting under the recommended regulatory option,

the total annualized cost of the rule will be approximately $6.1 million (in $2006) during the first

year of the program and $3.9 million in subsequent years (including $0.4 million of

programmatic costs to the Agency). However, this action adds Subparts I, L, QQ, and SS to the

mandatory GHG reporting rule, which was a significant regulatory action. Thus, EPA has chosen

to analyze the impacts of Subparts I, L, QQ, and SS as if their impacts were significant. EPA

submitted this action to the Office of Management and Budget (OMB) for review under

Executive Order 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 potential 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 rule are reported in Section 4, and the economic

impacts and qualitative benefits assessment are reported in Section 5. Overall, EPA has

concluded that the costs of the F-GHG Reporting Rule are outweighed by the potential benefits

of more comprehensive information about CO2 emissions.

6.2 Paperwork Reduction Act

The information collection requirements in this proposed 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 ICR number [XXXX.XX].
6-2

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

 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 programs in order to reduce reporting burden

for all parties involved.

The information from F-GHG facilities will allow EPA to make well-informed decisions

about whether and how to use the CAA to regulate these facilities and encourage voluntary

reductions. Because EPA does not yet know the specific policies that will be adopted, the data

reported through the mandatory reporting system should be of sufficient quality to inform policy

and program development. Also, consistent with the Appropriations Act, the reporting rule

covers a broad range of sectors of the economy.

This information collection is mandatory and will be carried out under CAA Sections

114. Information identified and marked as Confidential Business Information (CBI) will not be

disclosed except in accordance with procedures set 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.14

The projected cost and hour respondent burden in the ICR, averaged over the first three

years after promulgation, is $4.51 million and 81,500 hours per year. The estimated average

burden per response is 272 hours; the frequency of response is annual for all respondents that

must comply with the rule’s reporting requirements; and the estimated average number of likely

respondents per year is 276. The cost burden to respondents resulting from the collection of

information includes the total capital and start-up cost annualized over the equipment’s expected

useful life (averaging $44,000 per year) a total operation and maintenance component (averaging

$24,000 per year), and a labor cost component (averaging $4.44 million per year). Burden is

defined at 5 CFR Part 1320.3(b).

14 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 emissions data that cannot be considered CBI (956 FR 7042 – 7043,

February 21, 1991). As discussed in Section II.R of the preamble to the rule, EPA will be initiating a separate

notice and comment process to make CBI determinations for the data collected under this proposed rulemaking.
6-3

These cost numbers differ from those shown elsewhere in the EIA because ICR costs

represent the average cost over the first three years of the rule, but costs are reported elsewhere

in the EIA for the first year of the rule. Also, the total cost estimate of the rule in the EIA

includes the cost to the Agency to administer the program. The ICR differentiates between

respondent burden and cost to the Agency, estimated to be $384,000.

An agency may not conduct or sponsor, and a person is not required to respond to, a

collection of information unless it displays a currently valid OMB control number. The OMB

control numbers for EPA’s regulations in 40 CFR are listed in 40 CFR Part 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 information collection

requirements contained in the final rule.

6.3 Regulatory Flexibility Act

The Regulatory Flexibility Act generally requires 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 agency certifies that the rule will

not have a significant economic impact on a substantial number of small entities. Small entities

include small businesses, small governmental jurisdictions, and small not-for-profit enterprises.

The first step in this assessment was to determine whether the rule will have a significant

impact on a substantial number of small entities (SISNOSE). 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 sectors and entities,

 selecting and describing the measures and economic impact thresholds used in the

analysis, and

 determining SISNOSE certification category.

6.3.1 Identify Affected Sectors and Entities

For the purposes of assessing the impacts of the 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 government 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 owned and operated and is not dominant in its field.
6-4

For the F-GHG Reporting Rule, small entity is defined as a small business as defined by

the Small Business Administration’s regulations at 13 CFR 121.201; according to these size

standards, criteria for determining if ultimate parent companies owning affected facilities are

categorized as small vary by NAICS. Small entity criteria range from total number of employees

at the firm fewer than 100 to number of employees fewer than 1000; one affected NAICS,

44311, defines small entities as those with sales below $9 million. Tables 5-6 and 5-7 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 section 5.3, and results are presented in Table 5-8 for

first-year costs and in Table 5-9 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 categories15. The average entity costs used to compute

the sales test are the same across all of these enterprise 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

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. As shown in Table 5-8, the average ratio of annualized reporting program costs to

revenues for F-GHG firms owned by model small enterprises and likely to be affected by the

proposed rule was generally less than 1%. For two NAICS, however, some size categories

(especially those with 1-20 employees) show costs exceeding 1% of sales. These sectors are

Industrial Gas Manufacturing (NAICS 325120) and Semiconductor and Related Device

Manufacturing (NAICS 334413). A more careful examination of impacts on small firms in these

NAICS codes was conducted.

Analysis of firms in NAICS 334413 shows that firms with fewer than 20 employees

produce less than 2% of output; firms below the 25,000 Mt CO2e threshold release

approximately 6% of emissions. Because emissions and production levels are highly correlated,

firms fewer than 20 employees are generally not expected to be affected by the proposed rule; if

15For the one to 20 employee category, we exclude SUSB data for enterprises with zero employees. These

enterprises did not operate the entire year.
6-5

they are, their costs are likely to be lower than the overall average costs used in the screening

analysis. Thus, EPA does not expect the proposed rule to impose significant costs to a substantial

number of small entities in NAICS 334413.

Subpart L covers facilities included in NAICS codes for Industrial Gas Manufacturing

(NAICS 325120). Within this subpart, EPA identified 13 ultimate parent company names

covered by the proposed rule. Using publicly available sources (e.g., Hoovers.com), we collected

parent company sales and employment data and found that only one company could be classified

as a small entity. Using the cost data for a representative entity (see Section 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 significant 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 public-sector stakeholders. When

developing the rule, the Agency took special steps to ensure that the burdens imposed on small

entities were minimal. The Agency conducted several meetings with industry trade associations

to discuss regulatory options and the corresponding burden on industry, such as recordkeeping

and reporting. The Agency investigated 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 provides flexibility to entities and helps minimize

reporting costs.

In addition to the public hearing that EPA plans to hold, EPA has an open door policy,

similar to the outreach conducted during the development of the proposed and final Mandatory

GHG Reporting Rule. Details of these meetings are available in the docket (EPA-HQ-OAR2008-0508).

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 effects of their regulatory actions on state, local,

and tribal governments and the private sector. Under Section 202 of the UMRA, EPA generally

must prepare a written statement, including a cost-benefit 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.

This proposed rule does not contain a Federal mandate that may result in expenditures of

$100 million or more for State, local, and tribal governments, in the aggregate, or the private
6-6

sector in any one year. Overall, EPA estimates that the total annualized costs of this proposed

rule are approximately $6.1 million for the first year, and $3.9 million for subsequent years

($2006). Thus, this proposed rule is not subject to the requirements of sections 202 or 205 of

UMRA.

This proposed rule is also not subject to the requirements of section 203 of UMRA

because it contains no regulatory requirements that might significantly or uniquely affect small

governments. Facilities subject to the proposed rule include manufacturers, 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 regulatory policies that have federalism implications.” “Policies

that have federalism implications” is defined in the executive order to include regulations that

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.”

This proposed rule does not have federalism implications. 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 power of states or localities to

collect GHG data and/or regulate GHG emissions. Thus, Executive Order 13132 does not apply

to this proposed rule.

In the spirit of Executive Order 13132, and consistent with EPA policy to promote

communications between EPA and State and local governments, EPA specifically solicits

comment on this proposed action from State and local officials.

6.6 Executive Order 13175: Consultation and Coordination with Indian Tribal

Governments

Executive Order 13175, entitled “Consultation and Coordination with Indian Tribal

Governments” (59 FR 22951, November 6, 2000), requires EPA to develop an accountable
6-7

process to ensure “meaningful and timely input by tribal officials in the development of

regulatory policies that have tribal implications.”

This proposed rule is not expected to have tribal implications, as specified in Executive

Order 13175. This regulation applies to facilities that directly emit GHGs. Few facilities

expected to be affected by the rule are likely to be owned by tribal governments. Thus, Executive

Order 13175 does not apply to this proposed rule.

Although Executive Order 13175 does not apply to this proposed rule, EPA sought

opportunities to provide information to tribal governments and representatives during

development of the MRR rule. In consultation with EPA’s American Indian Environment Office,

EPA’s outreach plan for the MRR included tribes. For a complete list of tribal contacts, see the

“Summary of EPA Outreach Activities for Developing the Greenhouse Gas Reporting Rule,” in

the Docket for this proposed rulemaking (EPA-HQ-OAR-2008-0508-055). In addition to the

consultation activities supporting the MRR, EPA continues to provide information to tribal

governments and representatives during development of the Track II rules such as this proposed

rulemaking. EPA specifically solicits additional comment on this proposed action from tribal

officials.

6.7 Executive Order 13045: Protection of Children 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 safety 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 because 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 proposed rule is not a “significant energy action” as defined 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 have concluded that this proposed rule

is not likely to have any adverse energy effects.

This proposal relates to monitoring, reporting, and recordkeeping at facilities that

manufacture, sell, import, or export F-GHG related products; it does not adversely affect energy
6-8

supply, distribution or use. Therefore, we conclude that this proposed rule is not likely to have

any adverse effects on energy supply, distribution, or use.

6.9 National Technology Transfer Advancement Act

Section 12(d) of the National 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 regulatory activities unless to do so would be inconsistent with

applicable law or otherwise impractical. Voluntary consensus standards are technical standards

(e.g., materials specifications, test methods, sampling procedures, and business practices) that are

developed or adopted by voluntary consensus standards bodies. NTTAA directs EPA to provide

Congress, through OMB, with explanations when the Agency decides not to use available and

applicable voluntary consensus standards.

This proposed rulemaking involves technical standards. EPA proposes to use voluntary

consensus standards from three different voluntary consensus standards bodies: American

Society for Testing and Material (ASTM), American Society of Mechanical Engineers (ASME),

and International SEMATECH Manufacturing Initiative. These voluntary consensus standards

will help facilities monitor, report, and keep records of F-GHG emissions associated with their

manufacturing or sales activities. No new test methods were developed for this proposed rule.

Instead, from existing rules for source categories and voluntary GHG programs, EPA identified

existing means of monitoring, reporting, and keeping records. The existing methods (voluntary

consensus standards) include a broad range of measurement techniques, methods to measure gas

or liquid flow, and methods to gauge and measure petroleum and petroleum products. The test

methods are incorporated by reference into the rule and are available as specified in Section 98.6

of subpart A.

By incorporating voluntary consensus standards into this proposed rule, EPA is both

meeting the requirements of the NTTAA and presenting multiple options and flexibility for

complying with the proposed rule. EPA welcomes comments on this aspect of the proposed

rulemaking and, specifically, invites the public to identify potentially-applicable voluntary

consensus standards and to explain why such standards should be used in this proposed

regulation.

6.10 Executive Order 12898: Federal Actions to Address Environmental Justice in

Minority Populations and Low-Income Populations

Executive Order 12898 (59 FR 7629, February 16, 1994) establishes federal executive

policy on environmental justice. Its main provision directs federal agencies, to the greatest extent
6-9

practicable and permitted by law, to make environmental justice part of their mission by

identifying and addressing, as appropriate, disproportionately high and adverse human health or

environmental effects of their programs, policies, and activities on minority populations and lowincome populations in the United States.

EPA has determined that this proposed rule will not have disproportionately high and

adverse human health or environmental effects on minority or low-income populations because it

does not affect the level of protection provided to human health or the environment. This

proposed rule does not affect the level of protection provided to human health or the

environment because it is a rule addressing information collection and reporting procedures.
7-1

SECTION 7

CONCLUSIONS

The supplemental proposal requires reporting of fluorinated greenhouse gas (F-GHG)

emissions from electronics manufacturing, production of fluorinated gases, and use of electrical

equipment. EPA is also proposing to require 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, QQ, and SS of the rule.

7.1 Summary of Sectors Covered

7.1.1 Subpart I – Electronics Manufacturing

Electronics manufacturing includes, but is not limited to, the manufacture of

semiconductors, liquid crystal displays (LCDs), microelectricomechanical (MEMS), and

photovoltaic cells (PV). The electronics industry uses multiple long-lived F-GHGs such as

perfluorocarbons (PFCs), Hydrofluorocarbons (HFCs), sulfur hexafluoride (SF6), and nitrogen

trifluoride (NF3), as well as nitrous oxide (N2O). This proposed rule would apply to electronics

manufacturing facilities that emit equal to or greater than 25,000 metric tons of CO2e per year16

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 N2O emissions from deposition and other manufacturing processes such

as chamber cleaning. EPA is also clarifying methods 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 Subpart 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 chemical. Fluorinated gas production includes the

production of fluorinated GHG, CFC, or HCFC. EPA stipulates that production of fluorinated

16 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.
7-2

gases 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 fluorinated gases will be required to report their fluorinated GHG

emissions from fluorinated gas production, transformation, and destruction, as well as

combustion-related CO2, CH4, and nitrous oxide (N2O) emissions from stationary fuel

combustion. Fluorinated gases include fluorinated 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. Similarly, emissions of CFCs and

HCFCs are addressed under the regulations implementing Title VI of the Clean Air Act and are

therefore excluded from this subpart.

7.1.3 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 equipment or closed-cell foams that contain fluorinated GHGs. A

variety of products containing fluorinated greenhouse gases (F-GHGs), nitrous oxide (N2O), and

carbon dioxide (CO2) are imported into and exported from the United States. Pre-charged

equipment includes air-conditioning, refrigeration, and electrical equipment. Closed-cell foams

that are imported and exported include polyurethane (PU) rigid foam used in insulation in

domestic refrigerators and freezers,; commercial refrigeration foam,; PU rigid sandwich panel

continuous and discontinuous foam; extruded polystryrene (XPS) sheet foam; and XPS

boardstock foam.

EPA is proposing to require reporting of these 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 equipment and foam would

only be required to report if their total imports or exports exceeded the 25,000 mtCO2e

threshold.
7-3

7.1.4 Subpart SS – Electrical Equipment and Components Manufacturing

Affected entities under subpart SS are defined as electrical equipment manufacturers and

refurbishers of SF6-insulated closed-pressure system equipment and sealed-pressure system

equipment including gas-insulated substations, circuit breakers, other switchgear, gas-insulated

lines, or power transformers containing sulfur-hexafluoride (SF6) or perfluorocarbons (PFCs).

EPA is proposing to require reporting of SF6 and PFC emission from electrical equipment

manufacturing and refurbishing using a mass-balance 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 subpart SS would be required report annual emission report all

SF6 and PFC emissions, including those from equipment testing, equipment manufacturing, and

bulk SF6 and PFC handling. In addition, electrical equipment manufacturers would be required to

submit supplemental data that includes: SF6 and PFCs with or inside equipment delivered to

customers, SF6 and PFCs returned by customers with or inside equipment, bulk SF6 and PFC

purchases, SF6 and PFCs sent off-site for destruction or to be recycled, SF6 and PFC returned

from offsite after recycling, SF6 and PFCs stored in containers at the beginning and end of the

year, SF6 and PFCs returned to suppliers. If applicable, facilities would also be required to report

combustion-related CO2, CH4, and nitrous oxide (N2O) emissions from stationary fuel

combustion. EPA would only require emission reporting a facility’s total annual purchases of

SF6 and PFCs are greater than 23,000 lbs. This reporting threshold is equivalent an emissionsbased threshold of 25,000 MtCO2e, assuming an average manufacturer emission rate of 10%.

7.2 Estimated Costs and Impacts of the Mandatory GHG Reporting Program

The total national costs for the selected option are estimated to be $6.1 million in the first

year and $3.9 million in subsequent years ($2006). This includes a public sector burden estimate

of $384,000 for program implementation and verification activities. Subparts bearing the greatest

share of the ongoing private costs of the rule are fluorinated gas producers (60%), and electronics

industry (36%). The average ongoing (subsequent year) private cost per metric ton varies by

subpart; measures range from less than $0.01 per ton (Subpart SS) to $0.45 per ton (Subpart I).

The ongoing national cost estimates increase by approximately $1.5 million per year if the 23

large electronics facilities that participate in EPA’s PFC Reduction/Climate Partnership for the

Semiconductor Industry use abatement devices and incur costs for verifying the DREs of these

devices. The national costs are distributed to several economic sectors and represent

approximately less than 0.01% of 2008 gross domestic product; overall, EPA does not believe
7-4

the rule will have a significant macroeconomic impact on the national economy or on small

entities within those sectors.
8-1

SECTION 8

REFERENCES

Burton (2007). Assessing the need for FC abatement standards, Solid State Technology, January

2007. Available at:

http://sst.pennnet.com/display_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. Firm 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. Firm Size Data from the Statistics of U.S.

Businesses: Dynamic Data by Births, 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 Classification System Codes. Effective August 22,

2008. http://www.sba.gov/services/contractingopportunities/sizestandardstopics/

size/index.html.