Memorandum to Docket EPA-HQ-OAR-2012-0322 Estimate of Potential Costs of this Rulemaking April 28, 2015

1 MEMORANDUM

TO: Docket for rulemaking, "State Implemen tation Plans: Response to Petition for Rulemaking; Restatement and Update of EPA’s SSM Policy Applicable to SIPs; Findings of Substantial Inadequacy; and SIP Calls to Amend Provisions Applying to Excess Emissions During Periods of Startup, Shutdown and Malfunction" (EPA-HQ-OAR-2012-0322)

DATE: April 28, 2015

SUBJECT: Estimate of Potential Direct Co sts of SSM SIP Calls to Air Agencies

This memorandum presents an estimate made by the U.S. Environmental Protection Agency (EPA) of the potential direct cost s to state and local air agencies associated with SIP calls under the subject final action, which concerns state impl ementation plan (SIP) is sues related to excess emissions during periods of star tup, shutdown and malfunction (SSM ). As part of this final action, the EPA is promulgating SIP calls fo r 36 states, affecting 45 SIP jurisdictions. 1

In response to the February 2013 proposal for this rulemaking action, the EPA received public comments concerning the adequacy of the EPA’s accounting for potential costs to air agencies, sources and the public as a result of the SIP call action. The EPA provides its response to these comments in the notice of final action (see, e.g. , section V.D.7 of the final action).

To the extent that the EPA is issuing a SIP call to a state unde r Clean Air Act (CAA) section 110(k)(5), the EPA is requiring that the stat e revise the identified provision(s) in its SIP to comply with existing requirements of the CAA. The EPA’s action leaves to affected states the choice of how to revise those SIP provisions subject to the SIP call action to make them consistent with CAA requirements, and it does no t directly impose costs on any sources or the public.

The EPA anticipates that the SSM SIP call action will result in some direct costs, specifically on the affected state and local agencies to submit corrective SIP revisions. In considering potential costs of this rulemaking action, as described in detail below, the EP A estimated a total direct cost of $158,220, entirely in labor costs to state and local air agencies associated with one-time SIP revision activities.

1 The state has the primary responsibility to implement SIP obligations, pursuant to CAA section 107(a) of the Clean Air Act (CAA). However, as CAA section 110(a)(2)(E) allows , a state may authorize and re ly on a local or regional government, agency or instrumentality to carry out the SIP or a portion of the SIP within its jurisdiction. As a result, some of the SIP provisions at issue in this rulemaking actio n apply to specific portions of a state. Thus, in certain states, submission of a corrective SIP revision may involve rulemaking in more than one jurisdiction.Memorandum to Docket EPA-HQ-OAR-2012-0322 Estimate of Potential Costs of this Rulemaking April 28, 2015

2 Summary of Estimated Costs

The following table presents the EPA’s estimate of direct costs to state and local air agencies associated with the SSM SIP calls.

Table 1. Estimated Direct Costs to State and Local Air Agencies Associated with SSM SIP Call Action

SIP revision activity No. of SIP revisions Labor hours per SIP revision Labor cost per activity hour Total cost State/local air agency submits SIP revision 45 40 $87.90 $158,220

Components of the activity shown in Table 1 fo r the state/local air agency to submit a SIP revision include development of a state rule, conducting notice and pub lic hearing and other costs incurred in connection with a SIP subm ission. As a practice of efficient resource management, it is common for an air agency to combine certain activities when needing to change multiple SIP-approved rules, sometimes even to process those changes together as a single SIP revision and submission. For example, pursuant to the in frastructure SIP requirements under CAA section 110(a)(2), nearly all of the 36 states affected by this SSM SIP call action are currently obligated to submit SIP revisions by December 14, 2015, to reflect the most recent (2012) National Ambient Air Quality Standa rds (NAAQS) for fine particulate matter. 2 Several of these states also remain obligated to submit SIP revisions required as a result of earlier rulemakings ( e.g. , the 2010 SO 2 NAAQS). Many states will c hoose to combine SIP revision activities where doing so is reasona ble. As a result, in light of the ongoing obligations of states and the EPA concerning SIP revisi ons other than those called for in this action, the EPA expects that the actual direct co sts to air agencies associated with the SSM SIP calls may be lower than the estimate presented for purposes of this memorandum.

Basis for Assumptions Used in this Cost Estimate

For the basic assumptions about labor hours asso ciated with SIP revisions, this memorandum uses SIP revision burden estimates appearing in an Information Collection Request (ICR) document associated with the federal New Source Review (NSR) program under the CAA. 3 This

2 The CAA requires states to have SIPs that implemen t, maintain, and enforce a ne w or revised NAAQS within 3 years after the EPA issues the standards. The final rule that most recently revised the NAAQS for fine particulate matter (PM 2.5 ) was signed December 14, 2012; see 78 FR 3086 (January 15, 2013). Additional information on infrastructure SIP requirements, including SIP status reports by pollutant and state, may be found through the EPA’s publicly accessible website at http://www.epa.gov/ai rquality/urbanair/sipstatu s/infrastructure.html.

3 See “Information Collection Request for Prevention of Significant Deterioration and Nonattainment New Source Review (40 CFR Parts 49, 51 and 52).” This 38-page ICR renewal document approved for the NSR program is available through the publicly accessible Regulations.gov website, www.regulations.gov, as Document ID EPA-HQOAR-2011-0901-0008.Memorandum to Docket EPA-HQ-OAR-2012-0322 Estimate of Potential Costs of this Rulemaking April 28, 2015

3 particular document was selected because it is one of the most recent SIP-related ICRs to have been reviewed and approved by the Office of Management and Budget (OMB) for compliance with the Paperwork Reduction Act. The approve d ICR represents a renewal of an earlier approved collection asso ciated with the federal NSR program.

The types of information collection activities ad dressed in the cited ICR document for NSR are mostly those necessary for the preparation and submittal of construction permit applications and the issuance of final permits, and the changes reflected in the re newal result from a number of changes in the EPA’s regulations for NSR. However, because state and local reviewing authorities are required to submit SIP revision s on occasion when the NSR regulations change, that ICR included as a line item a burden estimate for SIP revisions.

Cost Assumptions Specific to State and Local Activity

For purposes of estimating state/local agency hou rs associated with th e SSM SIP call action, the EPA is using the same estimate reflected in the cited ICR, which is 40 hours for each SIP revision. 4

The EPA notes that the labor rate for state and lo cal activity that was used in the cited ICR was drawn from employer costs reported by the Bure au of Labor Statistics (BLS) for December 2011. For purposes of this memorandum, the EPA is using the correspo nding updated labor rate, as reported by the BLS for December 2014. The loaded labor rate used to calculate the state and local agency labor cost is $87.90 per hour, which is the base rate of $43.95 5 multiplied by an overhead factor of 2. 6

Conclusion

As shown in Table 1 above, the EPA estimates a total direct cost of $158,220 to state and local air agencies associated with the SSM SIP call action. The EPA believes ac tual direct costs may be lower than this estimate, however, because in some cases administrative steps associated with these called-for SSM SIP revision activities wi ll likely be shared with other SIP revision activities already required of the affect ed states under other CAA obligations.

4 See “Table 6-2. State and Local RA Respondent Burden and Cost (Annual),” from the ICR renewal document approved for the NSR program. 5 Total compensation, as a cost per hour worked, is reported by the U.S. Department of Labor, Bureau of Labor Statistics. According to the “Employer Costs for Employ ee Compensation–December 2014” news release, the rate for state and local government workers is $43.95, as accessed on April 3, 2015, through the BLS website at www.bls.gov/news.release/ecec. t04.htm. Refer to “Table 4. Employer costs per hour worked for employee compensation and costs as a percent of total compensation: State and local government workers, by occupational and industry group, December 2014.”

6 The cited ICR document similarly assumes 100 per cent overhead for state and local agency labor. See section 6(b)(i) at p. 13.