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: Sue Lieu, 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 - Continuous Emission Monitoring 

And 

Proposed Rule 218.1 - Continuous Emission Monitoring Performance Standards 

Proposed Amended Rule 2 18 (PAR 2 18) and Proposed Rule 2 1 8.1 (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 Incentives Market (RECLAIM), Regulation IX -New Source 

Performance Standards," or Regulation XXXI -the federal Acid Rain Program. CEMS 

operating under approved alternative performance specifications are also not subject to 

PAR 218 and PR 281.1. 

Affected Industries 

Existing CEMS subject to PAR 21 8 and PR 21 8.1 are required by various AQMD rules 

and permit conditions on large emission sources of NOx, SOX, CO, and other pollutants. 

- These sources are not large enough to be in the RECLAIM program. Also, essential 

public services, such as landfills and sewage treatment plants, are exempt from 

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

Rule2 T87MwftheCEEMSmeasure emissions from 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 59 
New CEMS are defined as those that apply for certification on or after the date of 

adoption of PAR 2 1 8 and PR 2 1 8.1 (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. Throughout this assessment, it is the 

additional cost of PAR 2 18 and PR 2 18.1 over the cost of existing Rule 2 18 that is 

estimated. Some CEMS may already be voluntarily performing some of the 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 of the 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 experience no 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 characteristics of 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 amendments to Rule 218 and PR 21 8.1 for a typical 

CEMS consists of each of the separate cost categories listed in Table 2. With the 

exception of the annual RATA test and the cylinder gas audit (CGA), all of the cost items 

are one-time costs resulting 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 21 8.1'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 of the 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. 

Recertification Application 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 staff review time. Thus, for all 59 CEMS the total 

application cost is $1 53,400. 

Quality Assurance/Quality Control (QAIQC) Programs 

PR 2 18.1 requires submission of a QNQC plan by new and existing CEMS operators by 

May 14,2006. QNQC programs 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 development cost (upper bound estimate) is, therefore, 

estimated at $885,000. Typically, QNQC plans are developed for the CEMS operator by 

a service testing 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 

QNQC program,. The compliance date for this requirement for existing CEMS is May 

14, 2006. Some CEMS owners have historically conducted the RATA test as an ordinary 

part of their 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 annual 
RATA testing cost for all 59 CEMS would be (upper bound estimate) $283,200. ,me 

costs of physical maintenance and operation of the CEMS are expected to remain the 

same as under existing Rule 21 8. 

Cylinder Gas Audit 

The proposed performance specifications require 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 three times each year. The cost of the CGA is 

estimated at $500 per audit. Therefore, the annual cost of the CGA is $1,500 per CEMS. 

Those CEMS which are currently operating under the performance specifications of 40 

CFR must already perform the CGA. Therefore, these CEMS would not experience the 

additional CGA cost. Since it is 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 21 8 and PR 

218.1 for the 59 existing CEMS is estimated to total $1.8 million (Table 2). 

Table 2 

Annual Cost of PAR 218 and PR 218.1 

Cost Category Cost (1 997$) 

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-Effectiveness Schedule 

On October 14, 1994, the Governing Board adopted a resolution that requires staff to 

address whether proposed rules being considered for adoption are being presented in rank 

order by cost-effectiveness. The 1997 Air Quality Management Plan (AQMP) ranks, in 

order of cost-effectiveness, all of the proposed control measures for which costs were 

'-- 
quantified. The proposed. amendments to Rule 2 18 are not part of the 1997 AQMP, but, 

rather, are being proposed to provide clarity for the review, certification, approval, and 

operation of CEMS. Although a certified and well-maintained CEMS ensures 

compliance with other AQMD rules (i.e., real and quantifiable emission reductions), no 

direct impact on emissions is expected to result fiom the proposed amendments to Rule 

2 18 or fkom PR 2 18.1. Consideration in the order of cost-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 achieve the emission 

reduction objective of the proposed amendments, relative to ozone, CO, SOX, NOx, and 

their precursors. Since the proposed amendments to Rule 21 8 and PR 2 18.1 do not 

involve emission reductions, the incremental cost-effectiveness analysis requirement does 

not apply here. 
APPENDIX 

Cost Impact 

The greatest cost impact of the proposed amendments to Rule 21 8 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 (between May 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, accuracy testing would be required to be performed annuallv 

for all.CEMS recertified 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 analyzers within 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 installation cost for 

the analyzers ranges fiom 50 percent to 80 percent of the capital cost. Assuming the 

worst-case scenario, the installation cost would be $64,000 per CEMS. Engineering 

analysis can cost an additional $20,000. The total capital and installation cost of the 

analyzer replacement would be $1 64,000 per CEMS. Other modifications, such as 

replacement of the 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, 

"Calibration and Certification Testing." 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 14,2006 compliance 

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 21 8.1's performance standards on May 

14,2006, and would not have to be recertified. Therefore, the cost of recertification for 

those CEMS in the interim before the May 14,2006 compliance deadline is included in 

the above recertification cost 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 additional initial cost for each new CEMS would be $34,030. When amortized 

over a 10-year equipment life at a 4 percent real rate of interest, the annual expense would 

be $4,186. The ongoing annual cost of operation for new CEMS would be increased by 

the annual RATA and CGA costs of $6,300 per year.