1

MEMORANDUM

DATE: December 1 1 , 2013

SUBJECT: Draft Cost Impacts of the Revised NESHAP for the Amino/Phenolic Resins Production,

Acrylic and Modacrylic Fibers Production, and Polycarbonate Production Source Categories

FROM: Lesley Stobert, EC/R Incorporated

TO: Nick Parsons, EPA

The purpose of this memorandum is to present the estimated cost impacts of the proposed amendments to the Amino and Phenolic Resins Production (APR), Acrylic and Modacrylic Fibers Production (AMF), and Polycarbonate Production (PC) National Emissions Standards for Hazardous Air Pollutants (NESHAP) under the EPA’s Risk and Technology Review (RTR) program. This program addresses the requirements of sections 112(d)(6) and 112(f)(2) of the Clean Air Act (CAA). The standar ds for the APR source category are codified at 40 CFR 63, subpart OOO, and the standards for the AMF and PC source categories are codified at subpart YY.

In this action, several requirements for the APR, AMF, and PC source categories are being proposed.

T hese proposed requirements are shown in Table 1.

Source Category(s) Propose Requirements Apply

to New or Existing Sources Process or Equipment Proposed Requirement

APR, AMF, PC Existing and new Pressure relief devices (PRDs) Add monitoring

requirements

APR, AMF, PC Existing and new All processes and equipment Add affirmative defense

to civil penalties for violations of emission standards that are caused by malfunctions

AMF and PC Existing and new Equipment leaks Eliminate a compliance option

AMF Existing Spinning lines that use a spin dope produced from a solution polymerization

process Add emission control

requirements

APR Existing Storage vessels Add emission control requirements

APR Existing Continuous process vents Add emission control

requirements

APR New Storage vessels Revise emission control requirements2

Section 1 provides background information, followed by the estimated cost impacts of the proposed requirements for each source category in section 2.

1. BACKGROUND

Section 112 of the CAA establishes a comprehensive regulatory process to address emissions of hazardous air pollutants (HAP) from stationary sources. In accordance with CAA section 112(c), the EPA identifies categories and subcategories of major sources th at emit one or more of the HAP listed in CAA section 112(b). CAA section 112(d)(2) 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 t he 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 reductions of HAP achievable (after considering cost, energ y requirements, and non

- air health and environmental impacts) and are commonly referred to as maximum achievable control technology (MACT) standards. Section 112(d)(6) then requires the 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) requires the EPA t o promulgate standards for each category or subcategory of sources “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 environmental effect.

The EPA is not proposing any new requirements or changes to 40 CFR 63, subparts YY or OOO as a result of the residual risk review for the APR, AMF and PC source categories. As a result of the

te chnology review, the EPA is proposing revisions to the requirements for all three source categories. The AMF and PC MACT standards currently require compliance with either 40 CFR 63, subpart TT or 40 CFR 63, subpart UU to control emissions from equipment leaks. However, subpart UU requires the use of a lower leak definition for valves, pumps and connectors as compared to subpart TT. The EPA is proposing to eliminate the option of complying with 40 CFR 63, subpart TT for the control of emissions from equipm ent leaks and require compliance only with 40 CFR 63, subpart UU for these source categories, with the exception of connectors in gas and vapor service and in light liquid service. The EPA is proposing to retain the option to comply with subpart TT or subp art UU for these components. Also as part of the technology review, the EPA is proposing to revise the APR MACT standards to expand the requirements for storage vessels at new sources to include additional storage vessels with smaller capacities and those storing material with lower vapor pressures.

In addition to the residual risk and technology reviews performed regarding the NESHAP, the EPA also reviews the existing provisions of the NESHAP during the RTR process. In 2008, the United States Court of Appe als for the District of Columbia 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 vacated the SSM exemption contained in 40 CFR 63.6(f)(1) and 40 CFR 63.6(h)(1), that are part of a regulation, commonly referred to as the “General Provisions Rule,” that the EPA promulgated under section 112 of
the CAA. When inc orporated into CAA Section 112(d) regulations for specific source categories, these two provisions exempt sources from the requirement to comply with the otherwise applicable CAA3

section 112(d) emission standard during periods of SSM. In light of and consi stent with Sierra Club v.

EPA , the EPA is proposing to eliminate the SSM exemptions in the APR, AMF, and PC production NESHAP and require that the standards in these rules would apply at all times. In recognition that even equipment that is properly design ed and maintained can sometimes fail and that such failure can sometimes cause a violation of an emission standard, the EPA is also proposing to add an affirmative defense to civil penalties for violations of emission standards in these rules that are caus ed by malfunctions. If these provisions are used, the owner or operator is required to meet certain criteria during the malfunction, notify the Administrator of the malfunction that may cause an exceedance of the emissions standards, and submit a report of the malfunction to the Administrator (including a root cause analysis of the malfunction), within certain timeframes.

Also as part of the revisions to address periods of SSM in response to the 2008 Sierra Club ruling, the EPA is proposing to specify tha t PRDs in organic HAP service may not release to the atmosphere. To ensure compliance with this requirement, facility owners or operators would be required to monitor each PRD such that they would be able to identify and record the time and duration of eac h pressure release and immediately notify operators that a pressure release has occurred. The proposed provisions clarify
that such release events would be violations of the emissions standards of these rules.

Where the EPA identifies emission points that were erroneously not regulated under a MACT rule, the EPA may identify MACT floor and beyond

- the

- floor control options for existing and new sources and set standards for these sources under CAA section 112(d)(2) and (3). During review of the existing

prov isions of the NESHAP, the EPA identified unregulated emissions sources in the AMF and APR source categories. For the AMF source category, the unregulated emission sources identified are fiber spinning lines that use a spin dope produced from a solution pol ymerization process. For these sources, the EPA is proposing an emission standard that reflects the MACT floor level of control, which is the existing level of emissions from the one facility in the source category. The proposed emissions limit is 20 kg or ganic HAP/Mg (40 lb organic HAP/ton) of acrylic and modacrylic fiber produced, which takes into account expected variability in the production

- based emission rates. For the APR source category, storage vessels and continuous process vents at existing facil ities were both identified as unregulated emissions sources. For storage vessels at APR facilities, the EPA is proposing requirements that reflect a beyond

- the

- floor control option. The proposed requirements are to maintain and operate the storage vessel

w ith an internal or an external floating roof, or use a fixed roof tank with emissions vented through a closed vent system to any combination of control devices that achieve a 95

- percent emissions reduction or reduce emissions to specified control device ou tlet concentrations. These proposed requirements would apply to storage vessels of capacities greater than or equal to 20,000 gallons (gal), but less than 40,000 gal if the maximum true vapor pressure (MTVP) is 1.9 pouds per square inch absolute (psia) or greater, and for storage vessels of capacities greater than or equal to 40,000 gal, but less than 90,000 gal if the MTVP is 0.75 psia or greater. Control would also be required for storage vessels of 90,000 gal or greater, if the MTVP is 0.15 psia or great er. For continuous process vents at existing APR facilities, the EPA is proposing requirements that reflect the MACT floor level of control. These requirements are to reduce organic HAP either by 85 percent or to a concentration of 20 parts per million by volume (ppmv) when using a combustion control device, or to a concentration of 50 ppmv when using a non

- combustion
control device.4

2. IMPACTS OF RISK REDUCTION OPTIONS

Table 1 presents the estimated costs of the proposed requirements for the APR, AMF, a nd PC source categories.

For purposes of estimating the costs for facilities in the PC source category to comply with the requirements of subpart UU, it was conservatively assumed that each facility is complying with subpart TT (and would incur costs to tr ansition to subpart UU), even though some facilities may currently be complying with subpart UU. The only facility in the AMF source category is currently complying with subpart TT. Capital, annualized capital and O&M, and annual recordkeeping and reportin g costs are expected as a result of the proposed requirement for facilities to comply with the lower leak definitions set forth in subpart UU. More information about how these costs were estimated can be found in the two memoranda, Technology Review and Estimated Cost Impacts for the Acrylic and Modacrylic Fibers Production Source Category and Technology Review and Estimated Cost Impacts for the Polycarbonate
Production Source Category

, which are available in the docket for the propo sed rule ( EPA

- HQ

- OAR

2012

- 0133 ).

For purposes of estimating the costs of the PRD monitoring requirement, it was assumed that all facilities would install electronic indicators on each PRD that would be able to identify and record the time and
duration of each pressure release. However, the EPA is proposing to allow a range of methods to satisfy these requirements, including the use of a parameter monitoring system that may already have been in place. The PRD monitoring costs were estimated based on the num ber of PRDs at model APR and PC facilities, and the actual number of PRDs at the one AMF facility. More information about how these costs were estimated can be found in the memorandum, Cost Impacts of Pressure Relief Device Monitoring for Acrylic and Modacrylic Fibers Production, Polycarbonate Production, and Amino/Phenolic Resins Production Source Categories , available in the docket for the proposed rule ( EPA

- HQ

- OAR

- 2012

- 0133 ).

The costs of complying with the APR source category requirement to control continuous process vent emissions by 85 percent are based on the average cost of a scrubber at the two facilities in the source category known to operate continuous process vents. Additional recordkeeping and reporting costs are expected for compliance wi th the proposed continuous process vent requirements. More information
about how the continuous process vent costs were estimated can be found in the memorandum, MACT Floor and Beyond

- the

- Floor Analyses for Unregulated Emission Sources in the Acrylic and M odacrylic
Fibers Production and Amino/Phenolic Resins Production Source Categories , available in the docket for the proposed rule ( EPA

- HQ

- OAR

- 2012

- 0133 ).

For fiber spinning lines that use a spin dope produced from a solution polymerization process in the AMF source category, no capital or annualized capital and O&M costs expected because the proposed control requirements reflect current operations at the one facility in the source category. However, some additional recordkeeping and reporting costs are exp ected for compliance with the proposed requirements for these spinning lines. More information about the analysis conducted for the fiber spinning lines that use a spin dope produced from a solution polymerization process can be found in the memorandum,

MA CT Floor and Beyond

- the

- Floor Analyses for Unregulated Emission Sources in the Acrylic and Modacrylic Fibers Production and Amino/Phenolic Resins Production Source Categories , available in the docket for the proposed rule ( EPA

- HQ

- OAR

- 2012

- 0133 ).5

For the p roposed affirmative defense provisions, the EPA’s cost estimate for the required notification, reports and records, including the root cause analysis, associated with a single incident is based on the time and effort required of a source to review relevant data, interview plant employees, and document the events surrounding a malfunction that has caused an exceedance of an emission limit. The estimate also includes time to produce and retain the records and reports for submission to EPA. It is estimated tha t there will be only 3 occurrences of a source choosing to assert an affirmative defense for all sources within a given category over a 3

- year period. This is because only a small number of excess emission events reported by source operators would be expec ted to result from a malfunction, and only a subset of excess emissions caused by malfunctions would result in the source choosing to assert the affirmative defense. In Table 1 below, these costs are included in the annual recordkeeping and reporting costs

.
For reporting and recordkeeping costs associated with the amendments to the requirements for t he APR, AMF, and PC source categor ies, labor costs were based on the following labor rates:

Technical $54.66 ($26.03 + 110%) Managerial $115.96 ($55.22 + 110%) Clerical $38.14 ($18.16 + 110%)

These labor rates are based on the May 2012 National Occupational Employment and Wage Estimates for the United States, occupational codes 51

- 8091 for chemical plant and system operato rs (technical), 11

- 1021 for general and operations managers (managerial) and 43

- 6010 for secretaries and administrative assistants (clerical). The Appendix to this doc ument includes more details regarding the estimated reporting and recordkeeping activiti es and costs associated with the proposed amendments to subparts
OOO and YY for the APR, AMF and PC source categories.6

Table 1. Estimated Costs of Proposed Requirements for the APR, AMF, and PC Source Categories

Source Category Number

of Facilities Proposed

Requirement Capital

Cost per Facility Annualized

Capital Cost per Facility Total

Capital Cost per Source Category Total

Annual Cost per Source Category Amino and Phenolic Resins Production (APR) 18 PRD monitoring $21,919 $3,121 $394,542 $56,178

2* Continuous process vents $1,109,750* $341,344* $1,109,750 $341,344

18 Annual Operation, Maintenance, Recordkeeping and Reporting - - - $ 93,612

APR Source Category Total (all proposed requirements): $1,504,292 $ 491,134

Acrylic and Modacrylic Fibers Production (AMF) 1 PRD monitoring $37,063 $5,277 $37,063 $5,277

1 LDAR program $1,428 $223 $1,428 $223

1 Annual Operation, Maintenance, Recordkeeping and Reporting - - - $ 7

, 6 7 3

AMF Source Category Total (all proposed requirements): $38,491 $ 1 3
, 1 7 3

Polycarbonate Production (PC) 4 PRD monitoring $12,649 $1,804 $50,596 $7,216

4 LDAR program $3,899 $541 $15,596 $2,164

4 Annual Operation, Maintenance, Recordkeeping and Reporting - - - $ 20,477

PC Source Category Total (all proposed requirements): $66,192 $ 29,857

* There are 18 facilities in the APR source category; however, only 2 facilities operate continuous process vents.

Costs shown are the combined costs for both facilities.A

- 1 

## Appendix

Reporting and Recordkeeping Costs by Source Category

Table 1 . A PR Source Category Reporting and Recordkeeping Costs Associated with Amendments to Subpart OOO

Reporting or Recordkeeping Activity Hours per year for the source category

Cost Technical Management Clerical Reports Notification of compliance status (PRDs) 72 3.6 7.2 $4,628 Notification of compliance status (Storage vessels) 72 3.6 7.2 $4,628 Notification of compliance status (Continuous process vents) 8 0.4 0.8 $514 Semiannual summary report (PRDs) 198 9.9 19.8 $12,726 Semiannual summary report (Storage vessels) 198 9.9 19.8 $12,726 Semiannual summary report (Continuous process vents) 22 1.1 2.2 $1,414

Affirmative defense 18 12 0 $ 2

, 3 7 5
REPORTING SUBTOTAL (Rounded) 686 $ 3 9 , 0 1 1 Recordkeeping Implement recordkeeping requirements (Storage vessels) 144 7.2 14.4 $9,256 Implement recordkeeping requirements (Continuous process vents) 16 0.8 1.6 $1,028

Implement recordkeeping requirements (PRDs) 36 1.8 3.6 $2,314 Develop record system (PRDs) 36 1.8 3.6 $2,314 Record information (Storage vessels) 144 7.2 14.4 $9,256 Record information (Continuous process vents) 16 0.8 1.6 $1,028
Record information (PRDs) 36 1.8 3.6 $2,314

RECORDKEEPING SUBTOTAL (Rounded) 492 $27,510
OPERATIONS AND MAINTENANCE (Rounded) $27,090
TOTAL LABOR BURDEN AND COST (Rounded) 1,178 $ 9 3 , 6 1 2A

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### Table 2 . AMF Source Category Reporting and Recordkeeping Costs Associated with Amendments to Subpart YY

Reporting or Recordkeeping Activity Hours per year for the source category

Cost Technical Management Clerical Reports

Initial notification 4 0.2 0.4 $257 Periodic reports 15 0.75 1.5 $964 Leak detection and repair reporting 8 0.4 0.8 $514

Affirmative defense 18 12 0 $ 2

, 3 7 5
REPORTING SUBTOTAL (Rounded) 61 $ 4 , 1 1 0 Recordkeeping Implement recordkeeping devices: PRDs 2 0.1 0.2 $129 Leak detection and repair program: identify all affected streams 2 0.1 0.2 $129 Develop record system for PRDs 2 0.1 0.2 $129 Develop record system for spinning lines 8 0.4 0.8 $514 Revise record system for new LDAR requirements 16 0.8 1.6 $257 Record information required for PRDs 2 0.1 0.2 $129 Record information required for new LDAR requirements 4 0.2 0.4 $257 Train personnel on new requirements 8 0.4 0.8 $514
RECORDKEEPING SUBTOTAL (Rounded) 51 $2,058
OPERATIONS AND MAINTENANCE (Rounded) $1,505

TOTAL LABOR BURDEN AND COST (Rounded) 112 $ 7 , 6 7 3A

- 3



### Table 3

. PC Source Category Reporting and Recordkeeping Costs Associated with Amendments to Subpart YY

Reporting or Recordkeeping Activity Hours per year for the source category

Cost Technical Management Clerical Reports

Initial notification 16 0.8 1.6 $1,028 Periodic reports 44 2.2 4.4 $2,828 Leak detection and repair reporting 32 1.6 3.2 $2,057

Affirmative defense 18 12 0 $ 2

, 375
REPORTING SUBTOTAL (Rounded) 136 $ 8 , 2 8 8 Recordkeeping Implement recordkeeping devices: PRDs 8 0.4 0.8 $514 Leak detection and repair program: identify all affected streams 8 0.4 0.8 $514 Develop record system for PRDs 8 0.4 0.8 $514 Revise record system for new LDAR requirements 16 0.8 1.6 $1,028 Record information required for PRDs 8 0.4 0.8 $514 Record information required for new LDAR requirements 16 0.8 1.6 $1,028 Train personnel on new requirements 32 1.6 3.2 $2,057
RECORDKEEPING SUBTOTAL (Rounded) 110 $6,169
OPERATIONS AND MAINTENANCE (Rounded) $6,020
TOTAL LABOR BURDEN AND COST (Rounded) 246 $ 2 0 ,4 7 7