### ATTACHMENT
' 

### C

FINAL SOCIOECONOMIC IMPACT ASSESSMENT

### SOUTH COAST AIR QUALITY MANAGEMENT DISTRICT



### FINAL SOCIOECONOMIC IMPACT ASSESSMENT

PROPOSED AMENDED RULE 218 

### AND PROPOSED RULE 218.1



### APRIL, 1999
Prepared by: Robert Kneisel, Ph.D. Staff Specialist Reviewed by: SueLieu, Ph.D. Program Supervisor Henry Hogo Planning Manager Elaine Chang, DrPH Asst. Deputy Executive Officer Office of Planning, Rule Development and Area Sources

### SOCIOECONOMIC ASSESSMENT Proposed Amended Rule 218

## -ContinuousEmission Monitoring And Proposed Rule 218.1 

## - Continuous Emission Monitoring Performance Standards
Proposed Amended Rule 2 18 (PAR 2 18) and Proposed Rule 2 18.1 (PR 2 18.1)apply only to sources which are required by AQMD rules or permit conditions to use Continuous Emissions Monitoring Systems (CEMS)to determine compliance with an applicable limit or standard. PAR 2 18 and PR 2 18.1 do not apply to CEMS subject to Regulation 

### XX - 

### Regional Clean 

### Air IncentivesMarket (RECLAIM), Regulation 

### IX -New Source Performance Standards," or RegulationXXXI -the federal Acid Rain Program. CEMS operating under approved alternativeperformance specifications are also not subject to PAR 218 and PR 281.1.
Affected Industries Existing CEMS subject to PAR 218 and PR 21 8.1 are required by various AQMD rules and permit conditions on large emission sourcesofNOx, SOX,CO, and other pollutants. 

# - These sources are not large enough to be in the RECLAIMprogram. Also, essential public services, such as landfills and sewagetreatment plants, are exempt from

.... 

### RECLAIM. As a result, the CEMS that are required for their operations are subject to 

### Rule2T87MwftheCEEMSmeasure emissionsfrom cogeneration systems and large boilers, which can be found not only in the manufacturing industry, but also at facilities such as colleges. As Table 1 indicates, the sectors with the greatest concentration of these CEMS are electric, gas and sanitary services (SIC 49), petroleum refining (SIC 29), chemicals (SIC 28), and educational services (SIC 82).

Table 

### 1 PAR 218 and PR 218.1 CEMS by Industry SIC Sector Number Oil and Gas Extraction Food Paper Chemicals Petroleum Refining Stone, Clay, Glass, and Concrete Electric, Gas, and Sanitary Services Health Services Educational Services of CEMS 2 5 1 8 12 2 18 

### 3 7 92 Justice, Public Order, and Safety - 

### 1 TOTAL 59New CEMS are defined as those that apply for certification on or after the date of adoption ofPAR 2 1 8 and PR 2 18.1 (May 14,1999). New CEMS can be replacements of existing CEMS or can be CEMS for an entirely new facility or operation, i.e., "additional CEMS." It is unknown how many additional CEMS might be constructed and apply for certification 

### in future years. 

### Cost Impact The cost estimates 

### in this assessment are based upon data and experience fiom the AQMD's implementation of existing Rule 2 18. Throughoutthis assessment, it is the additional cost of PAR 2 18 and PR 2 18.1 over the cost of existing Rule 2 18that is estimated. Some CEMS may already be voluntarily performing some ofthe activities which are required for the first time under PAR 21 8 and PR 2 18.1. Consequently, the additional cost to these sources would be less than the full cost estimated here. The greatest cost impact ofthe amendments to Rule 2 18 and PR 2 18.1 is the modification or replacement of CEMS to meet the new performance requirements that will become effective on May 14,2006. Those CEMS operators who choose to comply with the performance standards in 40 CFR, rather than those in PR 2 18.1,may experienceno additional cost compared to their current practice. It cannot be determined at this time how many CEMS operators will choose the performance standards in 40 CFR, versus those in PR 2 18.1. The choice would be largely influenced by the individual characteristicsof the operation and its emissions concentrations. The cost impact analysis presented here will assume a worstcase scenario, i.e., that all CEMS operators will choose the performance standards in PR 218.1. The cost impact of the proposed amendmentsto Rule 218 and PR 218.1 for a typical CEMS consists of each of the separate cost categories listed in Table 2. With the exception ofthe annual RATA test and the cylinder gas audit (CGA), all ofthe cost items are one-time costsresulting fiom CEMS modification. When the one-time costs are amortized over a 10-year period at a 4 percent real interest rate, the total annual cost to a typical CEMS becomes $30,977.



### CEMS Modification Cost The proposed amendments to Rule 2 18 and PR 2 18.1 require modification or replacement of existing CEMS starting on May 14,2006,unless the CEMS is granted a waiver, which must be renewed every three years. However, if a CEMS or a major component of a CEMS breaks down and needs to be replaced before May 14,2006, it would have to be replaced with equipment that meets 

### PR 2 18.1 's performance specifications. Based on past experience, it is estimated that by May 14,2006, the age of all 59 presently existing CEMS would make them candidates for modification or replacement. However,this is a worst-case estimate. It is likely that a portion of the 59 existing CEMS would meet PR 218.1's standards on May 14,2006,through appropriate maintenance 

### and selective component change-out in the interim. The district-wide installed capital cost of modification for the 59 CEMS is estimated at $9.7 million (for detailed cost calculations, please see the Appendix).



### Recertification Testing for Modified CEMS CEMS which are modified in anticipation ofthe May 14,2006 compliance deadline, would have to be recertified, using the new standards contained in PR 2 18.1. Recertification under PR 2 18.1 would require the successful completion of several tests, including the relative accuracy test audit (RATA), linearity test, response time check, and stratification test. The total cost for all tests is estimated to be from $17,430 to $1 9,030. Thus, for the 59 CEMS expected to need modification, the total certification testing cost (upper bound estimate) is $1.1 million.



### RecertificationApplication Cost The application fee for re-certifying a CEMS varies with the degree of modification the CEMS has undergone. This is because the District's application fees are based on the number of staff hours of review that an application requires. The recertification

w~h application fee is estimated to be, on average, $2,600 for each CEMS, assuming 

### an average amount of 60 hours of staffreview time. Thus, for all 59 CEMS the total application cost is $153,400.


### Quality Assurance/Quality Control (QAIQC) Programs PR 2 18.1 requires submission of a QNQCplan by new and existing CEMS operatorsby May 14,2006. QNQCprograms have been a part of CEMS certification under existing D..l, 11 0 TT . 

### . . . 

# - .+ 

### ;p"iZ;lrv~eZ~f2e~5:"ooo. -I For all 59 CEMS,the QNQC developmentcost (upper bound estimate) is, therefore, estimated at $885,000. Typically, QNQCplans are developed for the CEMS operatorby a servicetesting company, SIC 8734.



### Annual Testing Cost PR 2 18.1 specifies that the RATA test must be performed annually as a part of a CEMS QNQCprogram,. The compliance date for this requirement for existing CEMS is May 14, 2006. Some CEMS owners have historically conductedthe RATA test as an ordinary part oftheir maintenance procedures. However, these owners cannot be specifically identified. Therefore, in keeping with the "worst-case" assumption procedure of the analysis, it is assumed that the RATA would be a new cost to the owners of all existing 

# - CEMS. The cost of the RATA test is estimated at $4,300 to $4,800. Thus, the annualRATA testing cost for all 59CEMS would be (upperbound estimate) $283,200. ,me costs ofphysical maintenance and operation of the CEMS are expected to remain the same as under existingRule 218.


### Cylinder Gas 

### Audit
The proposed performance specificationsrequire that a cylinder gas audit (CGA)be performed every calendar quarter, but in no more than three quarters 

### in succession. Accordingly, the CGA would be required threetimes each year. The cost of the CGA is estimated at $500per audit. Therefore, the annual cost ofthe CGA is $1,500per CEMS. Those CEMS which are currently operatingunder the performance specifications of40 CFR must alreadyperform the CGA. Therefore,these CEMS would not experiencethe additional CGA cost. Since itis not known how many CEMS currently operate under 40 CFR, it is assumed that all 59 CEMS would experience the added CGA cost. The annual CGA cost for all 59 CEMS would be $88,500.



### Total Cost for Existing CEMS By amortizing the initial costs at a 4 percent real interest rate and a ten-year equipment

+- ( life, the total annual district-wide cost of the proposed amendments to Rule 218 and PR 218.1 for the 59 existing CEMS is estimatedto total $1.8 million (Table 2). 

### Table 2 

### Annual Cost of

### PAR 218 and 

### PR 218.1
Cost Category Cost (1997$) CEMS Modification $1,190,148 Recertification Testing 138,000 Recertification Application Fees 18,868 QNQC Plan Preparation 108,855 Annual RATA Test 283,200 Cylinder Gas Audit 88,500 TOTAL $1,827,571



### Rule Adoption Relative to the Cost-EffectivenessSchedule
On October 14, 1994,the Governing Board adopted a resolution that requires staffto address whether proposed rules being considered for adoption are being presented in rank order by cost-effectiveness. The 1997Air Quality Management Plan (AQMP) ranks, in order of cost-effectiveness, all ofthe proposed control measures for which costs were

'--

### quantified. The proposed.amendments to Rule 

### 2 18are not part ofthe 1997AQMP, but, rather, arebeing proposed to provide clarity for the review, certification,approval, and operation of CEMS. Although a certified and well-maintainedCEMS ensures compliancewith 

### other AQMD rules (i.e.,real and quantifiableemission reductions), no direct impact on emissions is expected to result fiom the proposed amendmentstoRule 2 18or fkom PR 2 18.1. Consideration inthe order ofcost-effectiveness is, therefore, not applicable.

Incremental Cost-Effectiveness 

### Health and Safety Code Section 40920.6 requires an incremental cost-effectiveness analysis when there is more than one control option which would achievethe emission reduction objective ofthe proposed amendments, relative to ozone, CO, SOX, NOx, and their precursors. Sincetheproposed amendments to Rule 218 and 

### PR 2 18.1 do not involve emission reductions, the incrementalcost-effectivenessanalysis requirement does not apply here.

### APPENDIX Cost Impact The greatest cost impact of the proposed amendmentsto Rule 218 and PR 2 18.1 is expected to be the replacement or modification of CEMS to meet the new performance requirements, effective on May 14,2006. In the interim (betweenMay 14,1999 and May 14,2006),CEMS or their major components that fail and need to be replaced must be done with CEMS or components capable of meeting the new performance standards. In addition, for the first time, accuracytesting would be required to be performed annuallv for all.CEMSrecertified on or after May 14,1999.


### CEMS Modification Cost In practice, CEMS are usually not replaced wholesale. Rather, they are modified by changing out major components, usually the analyzerswithin the CEMS. A typical CEMS contains four analyzers. Analyzers cost approximately $20,000 each. The capital 

### - cost of modification, then, is estimated at $80,000 per CEMS. The installationcost for the analyzers ranges fiom 50 percent to 80 percent of the capital cost. Assumingthe worst-case scenario, the installation cost would be $64,000per CEMS. Engineering analysis can cost an additional $20,000. The total capital and installation cost ofthe analyzer replacementwould be $164,000 per CEMS. Other modifications, such as replacement ofthe data acquisition system (DAS) would cost less. 

# - Recertification Testing for Modified CEMS RATA tests are typically performed by service companies, which are in SIC 8734, "Calibrationand CertificationTesting." The RATA test is estimated to cost approximately $4,300 to $4,800,the stratification test $4,000, and the other tests combined fiom $9,130 to $10,230. Should an existing CEMS require modification before the May 14,2006compliance deadline, it would have to be recertified, using the new standards contained in PR 21 8.1, including the RATA test. Modification could be needed if an essential component of the CEMS, such 

### as an analyzer, failed, or required replacement. Once recertified, it is assumed that a CEMS would be able to meet PR 218.1's performance standards on May 14,2006,and would not have to be recertified. Therefore, the cost ofrecertification for those CEMS in the interimbefore the May 14,2006 compliance deadline is included in the above recertificationcost estimate for all 59 CEMS.



### Cost 1mpact on Individual CEMS The one-time costs total $200,630. When amortized over a ten-year equipment life at a 4 percent real interest rate, the annual cost is $24,677. The total annual cost to a typical

### CEMS is the $24,677 annual equipment cost, plus the $4,800 annual 

### RATA testing cost plus the $1,500 annual 

### CGA cost. In total, these costs are $30,977.

Additional 

### CEMS The total additionalinitial cost for eachnew 

### CEMS would be $34,030. When amortized over a 10-year equipmentlife at a 4 percentreal rate of interest,the annual expense would be $4,186. The ongoing annual cost ofoperation for new 

### CEMS would be increased by the annual RATA 

### and 

### CGA costs of $6,300per year.