MEMORANDUM

DATE: May 21 , 201 4

SUBJECT: Cost Impacts of Pressure Relief Device Monitoring for the Off

- site Waste and Recovery

Operations Source Category

FROM: Tanya Parise and Lesley Stobert, EC/R Inc.

TO: Paula Hirtz , EPA/OAQPS/SPPD/RCG

Th e purpose of this memorandum is to present the estimated cost impacts of the proposed requirements for pressure relief device (PRD) monitoring for the Off

- site Waste and Recovery Operations (OSWRO) source category . The requirements for OSWRO facilities are being proposed in 40 CFR part 63, subpart DD and apply to major sources of hazardous air pollutants ( HAP ) emissions at existing and new facilities under t he national emissions standards for hazardous air pollutants (NESHAP). The addition of PRD monitoring to the NESHAP for this source category is being proposed along with proposed changes evaluated under the EPA’s Risk and Technology Review (RTR) program,

w hich is addressing statutory requirements under section 112(d)(6) and 112(f)(2) of the Clean Air Act (CAA). Section 1 provides background information, followed by the estimated costs of the proposed PRD monitoring requirements for the source category in se ction 2.

1.0 BACKGROUND

Section 112 of the CAA establishes a comprehensive regulatory process to address emissions of HAP from stationary sources. In accordance with CAA section 112(c), the EPA identifies categories and subcategories of major sources that emit one or more of the HAP listed under CAA section 112(b). Section 112(d)(2) of the CAA then calls for the EPA to promulgate national technology

- based emission standards for each listed category or subcategory of sources. For “major sources” that emit or have the potential to emit any single HAP at a rate of 10 tons or more per year or any combination of HAP at a rate of 25 tons or more per year, these technology

- based standards must reflect the maximum reduction of HAP achievable (after considering cost, energy requirements, a nd non

- air quality health and environmental impacts) and are commonly referred to as maximum achievable control technology (MACT) standards. Section 112(d)(6) then requires EPA to review the CAA section 112(d) technology

based standards and to revise them “as necessary, taking into account developments in practices, processes, and control technologies,” no less frequently than every 8 years. The residual risk review is described in section 112(f) of the CAA. Section 112(f)(2) of the CAA requires the EPA to promulgate standards “if promulgation of such standards is required in order to provide an ample margin of safety to protect public health . . . or to prevent, taking into consideration costs, energy, safety, and other relevant factors, an adverse environ mental effect. ”

In addition to the residual risk and technology reviews performed regarding the NESHAP, the EPA also reviews existing provisions of the NESHAP during the RTR process. In 2008, the United States Court of Appeals for the District of Columbi a Circuit vacated portions of two provisions in the EPA’s CAA section 112 regulations governing the emissions of HAP during periods of startup, shutdown and malfunction (SSM). Sierra Club v. EPA , 551 F.3d 1019 (D.C. Cir. 2008). Specifically, the

Court vaca ted the SSM exemption contained in 40 CFR 63.6(f)(1) and 40 CFR 63.6(h)(1), that are part2

of a regulation commonly referred to as the “General Provisions Rule,” that the EPA promulgated under section 112 of the CAA. When incorporated into CAA section 112(d ) regulations for specific source categories, these two provisions exempt sources from the requirement to comply with the otherwise applicable CAA section 112(d) emission standard during periods of SSM. In light of and consistent with

Sierra Club v. EPA , t he EPA is proposing to eliminate the SSM exemption for the OSWRO source category and require that the CAA section 112(d) emissions standards apply at all times, including periods of SSM.

In addition, in order for our treatment of malfunction

- caused relea ses to the atmosphere to conform with the reasoning of the Court’s ruling, the EPA is proposing that releases to the atmosphere

from PRDs in off

- site material service must be monitored

. 1 The PRD monitoring device or system must be able to identify the pressure release, record the time and duration of each pressure release

, and immediately notify operators that a pressure release is occurring . Owners or operators would be required

to keep records and report any pressure release with an estimate of th e amount of HAP released to the atmosphere with the next periodic report. These proposed provisions address concerns that PRD releases may emit large quantities of HAP, may not be identified and controlled in a timely manner and may be due to repeat proble ms that have not been corrected.

2.0 COST IMPACTS

Owners or operators could use a range of methods to identify pressure releases, record the time and duration of each pressure release and immediately notify operators that a pressure release is

occurri ng, including parameter monitoring systems that facilities may already have in place. However,

i n order to estimate the costs associated with requiring monitoring of PRDs for OSWRO facilities, it was conservatively assumed that operators would install wire less electronic indicators on each PRD in off

site material service that vents to the atmosphere to meet the pressure release requirements . To estimate the cost of electronic indicators, we used information from analyses performed by the South Coast Air Quality Management District (SCAQMD) of California, which were conducted in support of a rule that requires continuous monitoring of a percentage of PRDs at refineries by installing a monitoring device capable of recording the duration of each release and quantifying emissions. Wireless technology allows continuous monitoring of PRDs and makes it easier for operators to identify releases and leaks. 2 There

are several types of monitoring devices available , including acoustic sensors and pressure/differential pressure sensors. These sensor units communicate with a base radio that interfaces with the existing control system. The costs for PRD wireless monitoring, based on information from the SCAQMD analyses, are summarized in Table 1.

The monitoring device c ost provided by the SCAQMD was based on vendor costs and ranged from $5,000 to $10,000, with an average of $7,500, and includes device parts, installation, and maintenance, as well as a data retrieval system. According to the SCAQMD analyses, annual operat ing costs are minimal because they typically only include periodic replacement of inexpensive batteries. It was assumed that, for this analysis, these costs were presented in 2007 dollars and were therefore

escalated to 2012 dollars. As a result, the total capital investment was determined to be $8,3 45 per PRD.

1 The proposed provisions also clarify that releases from PRDs directly to the atmosphere would be prohibited by the

OSWRO NESHAP.

2 Ellis, Kennard, SCAQMD. Final Staff Report for Proposed Amended Rule 1173

- Control of Volatile Organic Compound Leaks and Releases from Components at Petroleum Facilities and Chemical Plants. May 15, 2007. Docket No. EPA

- HQ

OAR

- 2010

- 0869

- 0024.3

According to the SCAQMD analyses , the cost of electronic monitoring systems is not linear, and facilities requiring a larger number of monitors are expected to benefit from economies of scale.

Ther efore, the sixth

- tenths rule was applied to calculate initial costs. 3 As shown in Table 1 , the total capital investment for the model OSWRO facility , which has 13 PRDs, was determined to be $38,900. A capital recovery factor of 0.142 4 was applied to the to tal capital investment to get an annualized cost for the model plant of $5,500/yr (no operating costs were estimated as they are assumed to be minimal).

Table 1 . Total Capital Investment and Annualized Cost of PRDs

Cost Parameter Value

Number of PRDs at Model OSWRO Facility a 13

Unit Device Installation Cost b $7,500 (2007 Dollars) $8,345 (201 2 Dollars) c Facility Total Capital Investment d $38,886 Total Capital Investment for the OSWRO Source Category e $1,7 49

, 870

Capital Recovery Factor 0.142 4 f

Total Annualized Cost Per Facility $5,537

Total Annualized Cost for the OSWRO Source Category e $2 49,165

Minor discrepancies are due to rounding.

a Median of number of PRDs reported in responses to a questionnaire sent to OSWRO facilities in 2013 under the authority of CAA section 114.

b Device cost is average of range provided.

c C hemical E ngineering Index for 2007 is 525.4 and 584.6 for 2012.

d Cal culated using sixth

- tenths rule. Facility Cost ($) = PRD Unit Cost ($) * (No. of PRDs)^0.6

e Total costs for the source category based on 4 5 facilities that will be subject to these requirements.

f Capital recovery factor calculated based on 7 percent inte rest and 10 year equipment life.

3 Sixth

- te nths rule is used to adjust for economies of scale. Cost to Facility = cost of one PRD * (number of PRDs at facility)^0.6.