November 2010

Economic Impact Analysis for the

Mandatory Reporting of

Greenhouse Gas Emissions

F-Gases: Subparts I, L, DD, QQ, SS

Final Report
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CONTENTS

Section 1 Introduction and Background ................................................................................ 1-1

1.1 Background.......................................................................................................... 1-1

1.2 Final Rule: Fluorinated Greenhouse Gas Subparts.............................................. 1-2

1.2.1 Subpart I: Electronics Manufacturing..................................................... 1-3

1.2.2 Subpart L:Fluorinated Gas Production .................................................... 1-3

1.2.3 Subpart DD: Electric Transmission and Distribution Equipment

Use ........................................................................................................... 1-3

1.2.4 Subpart QQ: Imports and Exports of Fluorinated GHGs in PreCharged Equipment and Closed-Cell Foams........................................... 1-4

1.2.5 Subpart SS: Electrical Equipment Manufacture or Refurbishment

and Manufacturing of Electrical Components......................................... 1-4

1.3 Economic Impact Analysis for F-Gas Subparts................................................... 1-4

Section 2 Regulatory Background ......................................................................................... 2-1

2.1 EPA’s Overall Rulemaking Approach................................................................. 2-1

2.1.1 Stakeholder Outreach to Identify Reporting Issues................................. 2-1

2.1.2 Consideration of Comments Received..................................................... 2-3

2.1.3 Analysis of Emissions by Sector.............................................................. 2-3

2.2 Statutory Authority .............................................................................................. 2-4

2.3 Existing Reporting Programs............................................................................... 2-4

Section 3 Development of Subparts....................................................................................... 3-1

3.1 Subpart I – Electronics Manufacturing................................................................ 3-1
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3.1.1 Definition of Affected Entities................................................................. 3-1

3.1.2 Summary of Major Changes Since Proposal ........................................... 3-2

3.1.3 Selection of Reporting Threshold ............................................................ 3-3

3.1.4 Selection of Monitoring Methods............................................................ 3-4

3.1.5 Selection of Data Reporting Requirements.............................................. 3-8

3.1.6 Selection of Recordkeeping Requirements.............................................. 3-8

3.2 Subpart L – Fluorinated GHG Producers............................................................. 3-9

3.2.1 Definition of Affected Entities................................................................. 3-9

3.2.2 Summary of Changes Since the Initial Proposal...................................... 3-9

3.2.3 Selection of Reporting Threshold .......................................................... 3-11

3.2.4 Selection of Monitoring Methods.......................................................... 3-11

3.2.5 Selection of Data Reporting Requirements............................................ 3-12

3.2.6 Selection of Recordkeeping Requirements............................................ 3-12

3.3 Subpart DD--Electric Transmission and Distribution Equipment Use.............. 3-12

3.3.1 Definition of Affected Entities............................................................... 3-12

3.3.2 Summary of Changes Since Proposal.................................................... 3-13

3.4 Subpart QQ – Importing/Exporting of Pre-charged Equipment and Foams...... 3-14

3.4.1 Definition of Affected Entities............................................................... 3-14

3.4.2 Summary of Proposal............................................................................. 3-14

3.4.3 Summary of Changes Since the Proposal .............................................. 3-15

3.4.4 Selection of Reporting Threshold .......................................................... 3-15

3.4.5 Selection of Monitoring Methods and QA/QC Requirements............... 3-16

3.4.6 Selection of Data Reporting Requirements............................................ 3-16

3.4.7 Selection of Recordkeeping Requirements............................................ 3-17

3.5 Subpart SS – Electrical Equipment and Components Manufacturing............... 3-17

3.5.1 Definition of Affected Entities............................................................... 3-17
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3.5.2 Summary of Changes Since Proposal.................................................... 3-18

3.5.3 Selection of Reporting Threshold .......................................................... 3-19

3.5.4 Selection of Monitoring Methods and QA/QC Requirements............... 3-19

3.5.5 Selection of Data Reporting Requirements............................................ 3-20

3.5.6 Selection of Recordkeeping Requirements............................................ 3-20

Section 4 Engineering Cost Analysis..................................................................................... 4-1

4.1 Introduction.......................................................................................................... 4-1

4.2 Overview of Cost Analysis.................................................................................. 4-1

4.2.1 Baseline Reporting................................................................................... 4-1

4.2.2 Reporting Costs........................................................................................ 4-2

4.3 Cost Analysis for Subpart I – Electronics Manufacturers ................................... 4-5

4.3.1 Model Facility Development ................................................................... 4-5

4.3.2 Determination of Cost Elements.............................................................. 4-6

4.3.3 Proportion of Facilities in the Different Model Facility Levels .............. 4-8

4.3.4 Assigning Costs to Cost Elements........................................................... 4-9

4.3.5 Estimation of Facility Costs for Each Threshold Level......................... 4-15

4.4 Cost Analysis for Subpart L—Fluorinated Gas Production .............................. 4-15

4.4.1 Model Facility Development ................................................................. 4-15

4.4.2 Cost Analysis for Mass Balance Approach - Option 1.......................... 4-16

4.4.3 Cost Analysis for Option 2- Process Vent Testing ................................ 4-18

4.5 Cost Analysis for Subpart DD—Electric Power Systems ................................. 4-21

4.5.1 Model Facility Development ................................................................. 4-21

4.5.2 Determine Cost Elements ...................................................................... 4-21

4.5.3 Proportion of Facilities in Different Model Facility Levels .................. 4-22

4.5.4 Assigning Costs to Cost Elements......................................................... 4-22
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4.5.5 Estimate per Facility Costs for Each Threshold Level .......................... 4-24

4.6 Cost Analysis for Subpart QQ—Imports and Exports of Fluorinated GHGs.... 4-24

4.6.1 Model Facility Development ................................................................. 4-24

4.6.2 Determine Cost Elements ...................................................................... 4-26

4.6.3 Analyze Proportion of Facilities in the Different Model Facility

Categories .............................................................................................. 4-26

4.6.4 Assigning Costs to Cost Elements......................................................... 4-27

4.6.5 Estimate per Facility Costs for Each Threshold Level .......................... 4-29

4.7 Subpart SS—Electrical Equipment Manufacturing........................................... 4-29

4.7.1 Model Facility Development ................................................................. 4-29

4.7.2 Determine Cost Elements ...................................................................... 4-30

4.7.3 Analyze Proportion of Facilities in the Different Model Facility

Categories .............................................................................................. 4-31

4.7.4 Assigning Costs to Cost Elements......................................................... 4-31

4.7.5 Other Costs............................................................................................. 4-33

4.7.6 Estimate per Facility Costs for Each Threshold Level .......................... 4-33

4.8 Public Sector Burden ......................................................................................... 4-33

Section 5 Economic Impact Analysis.................................................................................... 5-1

5.1 Selection of Reporting Thresholds....................................................................... 5-1

5.1.1 Subpart I- Electronics Manufacturing...................................................... 5-1

5.1.2 Subpart L- Fluorinated Gas Production ................................................... 5-3

5.1.3 Subpart DD- Sulfur Hexafluoride from Electric Power Systems............ 5-5

5.1.4 Subpart QQ- Imports and Exports of Fluorinated GHGs in PreCharged Equipment and Closed-Cell Foams........................................... 5-6
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5.1.5 Subpart SS- Electrical Equipment Manufacture or Refurbishment

and Manufacturing of Electrical Components......................................... 5-7

5.1.6 National Emissions Covered Under Selected Thresholds ....................... 5-7

5.2 National Cost Estimates....................................................................................... 5-8

5.3 Economic Impact Analysis.................................................................................. 5-9

5.3.1 Overall Method of Assessing Economic Impacts.................................... 5-9

5.3.2 Assessing Economic Impacts on Small Entities.................................... 5-10

Section 6 Statutory and Executive Order Reviews................................................................ 6-1

6.1 Executive Order 12866: Regulatory Planning and Review................................. 6-1

6.2 Paperwork Reduction Act.................................................................................... 6-1

6.3 Regulatory Flexibility Act ................................................................................... 6-3

6.3.1 Identify Affected Sectors and Entities..................................................... 6-3

6.3.2 Develop Small Entity Economic Impact Measures................................. 6-4

6.3.3 Results of Screening Analysis ................................................................. 6-4

6.4 Unfunded Mandates Reform Act......................................................................... 6-5

6.5 Executive Order 13132: Federalism .................................................................... 6-6

6.6 Executive Order 13175: Consultation and Coordination with Indian Tribal

Governments........................................................................................................ 6-7

6.7 Executive Order 13045: Protection of Children from Environmental

Health and Safety Risks....................................................................................... 6-7

6.8 Executive Order 13211: Actions that Significantly Affect Energy Supply,

Distribution, or Use ............................................................................................. 6-7

6.9 National Technology Transfer Advancement Act ............................................... 6-8
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6.10 Executive Order 12898: Federal Actions to Address Environmental Justice

in Minority Populations and Low-Income Populations....................................... 6-8

Section 7 Conclusions............................................................................................................ 7-1

7.1 Summary of Sectors Covered .............................................................................. 7-1

7.1.1 Subpart I – Electronics Manufacturing.................................................... 7-1

7.1.2 Subpart L – Fluorinated GHG Producers................................................. 7-1

7.1.3 Subpart DD: Electric Transmission and Distribution Equipment

Use ........................................................................................................... 7-2

7.1.4 Subpart QQ – Importing/Exporting of Pre-charged Equipment and

Foams....................................................................................................... 7-2

7.1.5 Subpart SS – Electrical Equipment and Components

Manufacturing.......................................................................................... 7-3

7.2 Estimated Costs and Impacts of the GHG Reporting Program............................ 7-3

Section 8 References.............................................................................................................. 8-1
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LIST OF TABLES

Table 4-1. Labor Categories and Hourly Rates........................................................................ 4-4

Table 4-2. Number of Representative Affected Entities Used in the Cost Analysis................ 4-9

Table 4-3. Labor Categories and Hourly Rates...................................................................... 4-10

Table 4-4. Responsibilities for Regulation Compliance by Labor Category Per Facility

Category................................................................................................................ 4-11

Table 4-5. Subpart L – F-Gas Mass Balance Approach: Labor Costs (2006$)...................... 4-18

Table 4-6. Subpart L – F-Gas Mass Balance Method: Capital and O&M Costs (2006$)...... 4-18

Table 4-7. Subpart L – F-Gas Process Vent (Avg. per plant basis): Labor Costs (2006$).... 4-20

Table 4-8. Subpart L – F-Gas Process Vent Method: Capital and O&M Costs (2006$)....... 4-20

Table 4-9. Subpart L – F-Gas Typical Facility: Labor Costs (2006$)Error! Bookmark not defined.

Table 4-10. Subpart L – F-Gas Typical Facility: Capital and O&M Costs (2006$)Error! Bookmark not defined.

Table 4-11. Labor Categories and Hourly Rates...................................................................... 4-22

Table 4-12. Responsibilities for Regulation Compliance by Labor Category ......................... 4-23

Table 4-13. Other Costs Associated with Reporting and Recordkeeping................................ 4-24

Table 4-14. Number of Representative Affected Entities Used in the Cost Analysis.............. 4-26

Table 4-15. Allocation of Facilities to Model Types ............................................................... 4-27

Table 4-16. Labor Categories and Hourly Rates...................................................................... 4-27

Table 4-17. Responsibilities for Regulation Compliance by Labor Category ......................... 4-28

Table 4-18. Number of Representative Affected Entities Used in the Cost Analysis.............. 4-30

Table 4-19. Labor Categories and Hourly Rates...................................................................... 4-31

Table 4-20. Responsibilities for Regulation Compliance by Labor Category Per Facility...... 4-32

Table 4-21. Other Costs Associated with Reporting and Recordkeeping................................ 4-33

Table 5-1. Threshold Analysis for Subpart I – Electronics Manufacturing Industry............... 5-2

Table 5-2. Summary of Rule Applicability under the Proposed Emission-Based

Thresholds for Subpart I – Electronics Manufacturing Industry ............................ 5-3
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Table 5-3. Threshold Analysis for Fluorinated GHG Emissions from Production of

HFCs, PFCs, SF6, NF3, CFCs, and HCFCs (Uncontrolled Emissions)................. 5-4

Table 5-4. Threshold Analysis for Fluorinated GHG Emissions from Production of

HFCs, PFCs, SF6, NF3, CFCs, and HCFCs (Controlled Emissions)..................... 5-5

Table 5-5. Threshold Analysis for Subpart DD – Electric Power Systems ............................. 5-6

Table 5-6. Threshold Analysis for Subpart QQ–Imports of Fluorinated GHGs in PreCharged Equipment and Closed-Cell Foams.......................................................... 5-6

Table 5-7. Threshold Analysis for Subpart QQ–Exports of Fluorinated GHGs in PreCharged Equipment and Closed-Cell Foams.......................................................... 5-7

Table 5-8. Threshold Analysis for Subpart SS– Electrical Equipment Manufacture or

Refurbishment and Manufacturing of Electrical Components............................... 5-7

Table 5-9. Estimates of Emissions (MtCO2e) Reported in 2008 Under the Selected

Option ..................................................................................................................... 5-8

Table 5-10. National Cost Estimates by Subpart: Selected Option............................................ 5-9

Table 5-11. Number of Establishments by Affected Industry and Enterprise Size: 2002 ....... 5-12

Table 5-12. Receipts by Affected Industry and EnterpriseaSize ($2002 Million) .................. 5-14

Table 5-13. Establishment Sales Tests by Industry and EnterpriseaSize: First Year Costs.... 5-17

Table 5-14. Establishment Sales Tests by Industry and EnterpriseaSize: Subsequent

Years Costs ........................................................................................................... 5-19
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SECTION 1

INTRODUCTION AND BACKGROUND

1.1 Background

On December 26, 2007, President Bush signed the FY2008 Consolidated Appropriations

Act authorizing funding for EPA to issue a rule requiring the mandatory reporting of greenhouse

gas (GHG) emissions (Consolidated Appropriations Act, 2008, Pub. L. No.110-161, 121 Stat

1844, 2128 (2008)). An accompanying joint explanatory statement directed EPA to "use its

existing authority under the Clean Air Act" to develop a mandatory GHG reporting rule.

The Final Mandatory Reporting of Greenhouse Gases Rule (Final MRR) (40 CFR part

98) was signed on September 22, 2009 by Administrator Lisa Jackson; and published in the

Federal Register on October 30, 2009 (74 FR 56260). The Final MRR, which is effective on

December 29, 2009, included reporting of GHGs from the facilities and suppliers that EPA

determined appropriately responded to the direction in the 2008 Consolidated Appropriations

Act1. These source categories capture approximately 85 percent of U.S. GHG emissions through

reporting by direct emitters as well as suppliers of fossil fuels and industrial gases.

EPA initially proposed reporting requirements for electronics, fluorinated GHG

production, and electrical equipment use on April 12, 2009 (74 FR 16448) as part of the larger

rulemaking effort to establish a GHG reporting program for all sectors of the economy. In

addition, EPA requested comment on requiring reporting of the quantities of fluorinated GHGs

imported and exported inside pre-charged equipment and foams. However, EPA did not include

requirements for these source categories in the Final Mandatory GHG Reporting Rule.

EPA deferred action on these requirements because EPA received a number of lengthy,

detailed comments regarding the proposed requirements for electronics and fluorinated GHG

production (subparts I and L, respectively), several comments regarding the definition of

“facility” for electric power system use (Subpart DD), and several comments regarding a

reporting requirement for imports and exports of fluorinated GHGs contained inside pre-charged

equipment and foams (included in today’s final rule as Subpart QQ). These comments, which

are described in more detail in the discussions of the individual source categories in the April 12,

2010 proposed rule, raised concerns about the costs and technical feasibility of implementing

subparts I and L as initially proposed, requested clarification of how “facility” should be

interpreted under subpart DD, and both favored and opposed a requirement to report imports of

1 Consolidated Appropriations Act, 2008, Public Law 110–161, 121 Stat. 1844, 2128.
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fluorinated GHGs contained in imported and exported pre-charged equipment and closed-cell

foams.

EPA recognized the concerns raised by stakeholders, and decided to re-propose

significant pieces of these subparts. The revised proposed rule was published in the Federal

Register on April 12, 2010. A public hearing on the proposed rule was held on April 20, 2010 in

Washington, DC, and the 60-day public comment period ended on June 11, 2010.

For subparts I and L this rule incorporates a number of changes including, but not limited

to, the addition of different methodologies that provide improved emissions coverage at a lower

cost burden to facilities as compared to the initial April 2009 proposal. Where aspects of the

initial proposals for subparts I and L are retained in this rule, such as in the basic mass-balance

methodology for subpart L (as an option for some facilities) and in many of the equations for

subpart I, today’s rule adds more flexibility in how and how frequently the underlying data are

gathered. In addition, EPA is requiring facilities to report emissions from manufacture or

refurbishment of electrical equipment and to report the quantities of fluorinated GHGs imported

and exported inside pre-charged equipment and foams.

EPA believes the monitoring approaches required in this rule, which combine direct

measurement and facility-specific calculations, effectively balance accuracy and costs, and that

they are warranted even though the rule does not contain any emissions reduction requirements.

As we stated in the October 2009 Final MRR, the data collected by the rule are expected to be

used in analyzing and developing a range of potential CAA GHG policies and programs. A

consistent and accurate data set is crucial to serve this intended purpose.

1.2 Final Rule: Fluorinated Greenhouse Gas Subparts

This rule requires reporting of fluorinated greenhouse gas (F-GHG) emissions from

electronics manufacturing, production of fluorinated gases, and use of electric transmission and

distribution equipment. EPA is also requiring such reporting from manufacturers of electrical

equipment, import and export of pre-charged equipment, and closed cell foams. These F-GHG

source categories are covered under Subparts I, L, DD, QQ, and SS of the rule. This section

provides a brief introduction to the industries covered by each subpart and identifies which

subparts were included in the initial proposal.
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1.2.1 Subpart I: Electronics Manufacturing

The electronics manufacturing source category consists of facilities that manufacture

semiconductors, liquid crystal displays (LCDs), micro-electro-mechanical systems (MEMS),

photovoltaic cells (PV), and light-emitting diodes (LEDs).The rule applies to electronics

manufacturing facilities that emit GHGs from electronics manufacturing processes such as

plasma etching, chemical vapor deposition, chamber cleaning, and heat transfer fluid use.

Subpart I was included in the initial MRR proposal but omitted from the final rule. EPA

received comments from entities within the covered industries regarding the requirements put

forth in the initial proposal. EPA took these comments into consideration in the development of

this final rule.

1.2.2 Subpart L:Fluorinated Gas Production

The fluorinated gas production source category consists of processes that manufacture a

fluorinated gas from any raw material or feedstock chemical, except for processes that generate

HFC-23 during the production of HCFC-222. Under the rule, these facilities would be required

to report their fluorinated GHG emissions from fluorinated gas production, transformation, and

destruction, as well as combustion-related CO2, CH4, and nitrous oxide (N2O) emissions from

stationary fuel combustion. Fluorinated gases include fluorinated GHGs (HFCs, PFCs, SF6,

NF3, HFEs, etc.), CFCs, and HCFCs. Similarly, emissions of CFCs and HCFCs (considered

ozone depleting substances rather than F-GHG) are addressed under the regulations

implementing Title VI of the Clean Air Act and are therefore excluded from this subpart.

Like Subpart I, Subpart L was included in the initial MRR proposal but omitted from the

final rule. After receiving comments on the proposed regulation, EPA has modified the rule with

respect to entities under this subpart.

1.2.3 Subpart DD: Electric Transmission and Distribution Equipment Use

The electric transmission and distribution equipment use source category includes gasinsulated substations, circuit breakers, other switchgear, and gas-insulated lines containing SF6 or

PFCs. Equipment also includes gas containers such as pressurized cylinders, gas carts, new

equipment owned but not yet installed, or other containers. Notwithstanding the definition of

facility in subpart A, for purposes of this subpart, “facility” means an electric transmission and

2

Since HFC-23 emissions for HCFC-22 production are addressed under Subpart O, they are omitted from this

subpart.
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distribution system which is the collection of SF6- and PFC insulated equipment linked through

electric power transmission or distribution lines and operated as an integrated unit by one electric

power entity or several entities that have a single owner.

Regulation of Subpart DD was proposed under the initial MRR, but was excluded after

EPA received several comments regarding the definition of “facility” as it would be covered

under the rule. After taking these comments under consideration, EPA has clarified the

definition for this final rule.

1.2.4 Subpart QQ: Imports and Exports of Fluorinated GHGs in Pre-Charged Equipment

and Closed-Cell Foams

This source category consists of any entity that is importing or exporting pre-charged

equipment that contains a fluorinated GHG and also includes any entity that is importing or

exporting closed-cell foams that contain a fluorinated GHG.

Today’s rule introduces Subpart QQ as a new addition to the MRR. This source category

was not proposed in the initial rule.

1.2.5 Subpart SS: Electrical Equipment Manufacture or Refurbishment and Manufacturing

of Electrical Components

This source category consists of electrical equipment manufacturers and refurbishers of

SF6 or PFC-insulated closed-pressure equipment and sealed-pressure equipment including gasinsulated substations, circuit breakers and other switchgear, gas-insulated lines, or power

transformers containing sulfur-hexafluoride (SF6) or perfluorocarbons (PFCs).Like Subpart QQ,

this source category was not covered under the initial MRR proposal and final rule.

1.3 Economic Impact Analysis for F-Gas Subparts

As part of the regulatory process of developing these rules, EPA is required to conduct an

economic impact analysis (EIA). This report documents the EIA methods and results and

proceeds as follows: Section 2 describes the current regulatory context into which the new rules

will be integrated. Section 3 explains the development process for each of the four subparts, and

Section 4 details the individual cost analyses methodology used to evaluate each regulation.

Section 5 presents the results of the economic impact analysis. A review of executive orders is

provided in Section 6, which is followed by a brief EIA summary and conclusion in Section 7.
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SECTION 2

REGULATORY BACKGROUND

The intent of this rule is to collect accurate and timely GHG emissions data that can be

used to inform future policies. Although the mandatory GHG rule is unique, EPA carefully

considered other federal and state programs during development of the rule. The reporting

program will supplement rather than duplicate other U.S. government GHG programs. We

outline EPA’s overall rulemaking approach, statutory authority, and summarize our review of

GHG monitoring protocols below.

2.1 EPA’s Overall Rulemaking Approach

The greenhouse gas reporting program will provide comprehensive and accurate data

which will inform future climate change policies. Potential future climate policies include

research and development initiatives, economic incentives, new or expanded voluntary

programs, adaptation strategies, emission standards, a carbon tax, or a cap-and-trade program.

Because we do not know at this time the specific policies that will be adopted, the data reported

through the greenhouse gas reporting system should be of sufficient quality to support a range of

approaches.

To these ends, we identified the following goals of the greenhouse gas reporting system:

 Obtain data that is of sufficient quality that it can be used to support a range of

future climate change policies and regulations.

 Balance the rule coverage to maximize the amount of emissions reported while

excluding small emitters.

 Create reporting requirements that are consistent with existing GHG reporting

programs by using existing GHG emission estimation and reporting methodologies to

reduce reporting burden, where feasible.

2.1.1 Stakeholder Outreach to Identify Reporting Issues

Early in the development process, we conducted a proactive communications outreach

program to inform the public about the rule development effort. We solicited input and

maintained an open door policy for those interested in discussing the rulemaking. Since January

2008, EPA staff has held more than 100 meetings with stakeholders, including the following:
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 trade associations and firms in potentially affected industries/sectors;

 state, local, and tribal environmental control agencies and regional air quality

planning organizations;

 state and regional organizations already involved in GHG emissions reporting,

such as TCR, CARB, and Western Climate Initiative (WCI); and

 environmental groups and other nongovernmental organizations.

 We also met with U.S. Department of Energy (DOE) and U.S. Department of

Agriculture (USDA), which have programs relevant to GHG emissions.

During the meetings, we shared information about the statutory requirements and

timetable for developing a rule. Stakeholders were encouraged to provide input on key issues.

Examples of topics discussed included existing GHG monitoring and reporting programs and

lessons learned, thresholds for reporting, schedules for reporting, scope of reporting, handling of

confidential data, data verification, and the role of states in administering the program. As

needed, the EPA technical workgroups followed up with these stakeholder groups on a variety of

methodological, technical, and policy issues. EPA staff also provided information to tribes

through conference calls with different Indian tribal working groups and organizations at EPA

and through individual calls with tribal board members of TCR.

For a full list of organizations EPA met with when developing this rule please see the

memo found at EPA-HQ-OAR-2008-0508-055.

On April 10, 2009 (74 FR 16448), EPA proposed the GHG reporting rule. EPA held two

public hearings, and received over 16,000 written public comments. The public comment period

ended on June 9, 2009.

In addition to the public hearings, EPA had an open door policy, similar to the outreach

conducted during the development of the proposal. As a result, EPA met with over 4,000 people

and 135 groups between proposal signature (March 10, 2009) and the close of the comment

period (June 9, 2009). Details of these meetings are available in the docket (EPA-HQ-OAR2008-0508). EPA also visited two fluorinated gas production facilities and conducted multiple

meetings and conference calls with fluorinated gas producers in order to better understand the

current practices and issues associated with measuring emissions of fluorinated GHGs from

fluorinated gas production facilities.
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2.1.2 Consideration of Comments Received

In the April 2009 proposed mandatory GHG reporting rule, the electronics, fluorinated

GHG production, and use of electrical equipment source categories were included as subparts I,

L, and DD. In addition, EPA requested comment on requiring reporting under subpart OO of the

quantities of fluorinated GHGs imported and exported inside pre-charged equipment and foams.

EPA received a number of lengthy, detailed comments regarding proposed subparts I and L,

several comments regarding the definition of “facility” under subpart DD, and several comments

regarding a reporting requirement for imports and exports of F-GHGs contained inside precharged equipment and foams. These comments, which are described in more detail in the

discussions of the individual source categories in the proposed rule, raised concerns about the

costs and technical feasibility of implementing subparts I and L as initially proposed, requested

clarification of how “facility” should be interpreted under subpart DD, and both favored and

opposed a requirement to report imports of F-GHGs contained in imported and exported precharged equipment and closed-cell foams. EPA recognized the concerns raised by stakeholders,

and decided not to finalize subparts I, L, and DD with the Final MRR, but chose instead to repropose significant pieces of these subparts in April, 2010.

The re-proposed rule incorporated a number of changes including, but not limited to,

different methodologies that provide improved emissions coverage at a lower cost burden to

facilities than would have been covered under the initial proposed rule. In addition, EPA

proposed requirements to report the quantities of fluorinated GHGs imported and exported inside

pre-charged equipment and foams, and to report emissions from manufacture of electrical

equipment, which are covered under Subparts QQ and SS. This rule was published in the

Federal Register on April 12, 2010. During the 60-day comment period following the public

hearing for the rule, EPA received further requests from commenters for clarification and

revisions to certain aspects of the each subpart. EPA took these comments into account while

developing today’s final rules for the F-gas subparts.

2.1.3 Analysis of Emissions by Sector

For each of the source categories considered for this rule, EPA compiled information on

current conditions in the category, including information about existing monitoring equipment or

reporting frameworks, estimated emissions of GHGs, and estimated productive capacity or

throughput. Incremental costs of measuring GHG emissions and conducting reporting activities

were estimated under multiples scenarios. The cost estimates and analysis methodologies are

detailed in Sections 4 and 5 of this report.
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2.2 Statutory Authority

As proposed, EPA is promulgating this rule under its existing CAA authority;

specifically, authorities provided in CAA section 114. As discussed in detail in Sections I.C and

II.Q of the preamble to the final rule establishing the GHG Reporting Program (74 FR 56260,

October 30, 2009), CAA section 114 provides EPA with broad authority to require information

mandated by this rule, because such data will inform and are relevant to EPA’s carrying out a

wide variety of CAA provisions. Under CAA section 114(a)(1), the Administrator may require

emissions sources, persons subject to the CAA, or persons whom the Administrator believes may

have necessary information to monitor and report emissions and provide such other information

as the Administrator requests for the purposes of carrying out the provisions in the CAA (except

for a provision of title II with respect to motor vehicles).

As discussed in greater detail in “Mandatory Reporting of Greenhouse Gases, EPA’s

Response to Public Comment’s Section 3- Legal Issues” (EPA-HQ-OAR-2008-0508), the CAA

provides EPA with broad authority to require the comprehensive and accurate information

mandated in this rule because such data will inform, and are relevant to, EPA’s analyses of

various CAA provisions. EPA may gather information for a variety of purposes, including for

the purpose of assisting in the development of implementation plans or of emissions standards

under CAA section 111, determining compliance with implementation plans or such standards,

or more broadly for “carrying out any provision” of the CAA. In addition, CAA section 103

authorizes EPA to establish a national research and development program, including nonregulatory approaches and technologies for the prevention and control of air pollution as it

relates to GHGs and climate change.

2.3 Existing Reporting Programs

In addition to the greenhouse gas reporting program, a number of voluntary and

mandatory GHG programs already exist or are being developed at the State, regional, and

Federal levels. These programs have different scopes and purposes. Many focus on GHG

emission reduction, whereas others are purely reporting programs. In addition to the GHG

programs, other Federal emission reporting programs and emission inventories are relevant to the

GHG reporting rule. Several of these programs are summarized in this section.

Since the 1990s, EPA has operated a number of non-CO2 voluntary partnership programs

aimed at reducing emissions from GHGs such as methane, SF6, and PFCs. There are two sectorspecific partnerships to reduce SF6 emissions: the SF6 Emission Reduction Partnership for

Electric Power Systems, with over 80 participating utilities, and the SF6 Emission Reduction
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Partnership for the Magnesium Industry. Partners in these programs implement practices to

reduce SF6 emissions and prepare corporate-wide annual inventories of SF6 emissions using

protocols and reporting tools developed by EPA. There are also two partnerships focused on

PFCs: The Voluntary Aluminum Industrial Partnership (VAIP) promotes technically feasible and

cost-effective actions to reduce PFC emissions; industry partners track and report PFC emissions

reductions. Similarly, the Semiconductor Industry Association and EPA formed a partnership to

reduce PFC emissions in which a third party compiles data from participating semiconductor

companies and submits an aggregate (not company-specific) annual PFC emissions report.

In developing the rule, we carefully reviewed the existing reporting programs,

particularly with respect to emissions sources covered, thresholds, monitoring methods,

frequency of reporting and verification. States may have, or intend to develop, reporting

programs that are broader in scope or are more aggressive in implementation because those

programs are either components of established reduction programs (e.g., cap and trade) or being

used to design and inform measures that reduced GHGs indirectly (e.g., energy efficiency).

Where possible, we built upon concepts in existing Federal and State programs in developing the

mandatory GHG reporting rule. For a full summary of the reporting programs reviewed in the

development of the mandatory reporting rule please see the Regulatory Impact Analysis for the

Mandatory Reporting of Greenhouse Gas Emissions EPA-HQ-OAR-2008-0508.
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SECTION 3

DEVELOPMENT OF SUBPARTS

The F-Gas source categories included in this rule are:

 Subpart I -Electronics Manufacturing;

 Subpart L - Fluorinated Gas Production;

 Subpart DD – Electric Transmission and Distribution Equipment Use

 Subpart QQ - Imports and Exports of Fluorinated GHGs in Pre-Charged

Equipment and Closed-Cell Foams; and

 Subpart SS - Electrical Equipment Manufacture or Refurbishment and

Manufacturing of Electrical Components.

This section provides additional details about the development of these subparts (e.g.,

which were included in the initial proposal and which subparts are new additions to the original

MRR). For each subpart, this section also provides a brief description of required monitoring

methods and data reporting and recordkeeping requirements.

3.1 Subpart I – Electronics Manufacturing

3.1.1 Definition of Affected Entities

Electronics manufacturing includes, but is not limited to, the manufacture of

semiconductors, liquid crystal displays (LCDs), microelectromechanical (MEMS), and

photovoltaic cells (PV). The electronics industry uses multiple long-lived F-GHGs such as

perfluorocarbons (PFCs), Hydrofluorocarbons (HFCs), sulfur hexafluoride (SF6), and nitrogen

trifluoride (NF3), as well as nitrous oxide (N2O). This rule would apply to electronics

manufacturing facilities that emit equal to or greater than 25,000 metric tons of CO2e per year3

from electronics manufacturing processes such as plasma etching, chemical vapor deposition,

chamber cleaning, and heat transfer fluid use.

3 As discussed further below, EPA is proposing that uncontrolled emissions be used for purposes of determining

whether a facility’s emissions are equal to or greater than 25,000 mtCO2e.
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In this action, EPA is designating methods to estimate emissions from cleaning and

etching processes for semiconductor, LCD, MEMS, and PV manufacture and also methods for

estimating N2O emissions from deposition and other manufacturing processes such as chamber

cleaning. EPA is also clarifying methods for estimating emissions from heat transfer fluids.

EPA is also presenting methods for reporting controlled emissions from abatement systems.

3.1.2 Summary of Major Changes Since Proposal

The April 2010 proposal included the following reporting provisions for electronics

manufacturers: (1) a single emissions-based reporting threshold for semiconductor, LCD,

MEMS, and PV facilities; (2) modified methods for estimating emissions from cleaning and

etching activities for semiconductor facilities and other electronics facilities including those that

manufacture LCDs, MEMS, and PV; (3) methods for estimating facility N2O emissions; (4)

clarified methods for estimating emissions from heat transfer fluids; and (5) revised methods for

reporting controlled emissions from abatement equipment.

After considering comments in response to the April 2010 proposal, EPA has further

revised and clarified the regulations on the electronics manufacturing industry for today’s final

rule. The changes to the rule include the following:

 EPA has revised the methodology for semiconductor manufacturing facilities to

require affected facilities4to estimate and report emissions from etching and cleaning

using five process categorizations differentiated by two wafer technologies (150/200

mm and 300 mm wafer size).

 EPA has added a requirement for the largest semiconductor facilities (defined as

facilities with annual capacities of greater than 10,500 m2of silicon) to estimate and

report their emissions from the plasma etching process type using directly measured

recipe-specific emission factors. (i.e. using an approach consistent with the 2006

IPCC Tier 3 method).

 EPA has modified the procedures by which facilities must develop gas

consumption apportioning factors. Facilities are required to apportion gas

consumption using facility-specific engineering models based on quantifiable metrics

of fluorinated GHG-using activity and to document and verify these models, as

specified by EPA, in site GHG Monitoring Plan (as required under 40 CFR 98.3).

EPA will permit the use of facility-specific models based on quantifiable metrics,

such as wafer pass or wafer starts, provided a facility acceptably documents and

verifies the model.

4 Covers facilities that have emissions equal to or greater than 25,000 mtCO2e
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 EPA has revised the requirement to recalculate gas- and facility-specific heel

factors by requiring facilities to recalculate these factors if the trigger point for

change out used to establish a gas- and facility-specific heel factors differs by more

than 5 percent from the previous trigger point.

 EPA has added methods by which to calculate uptime and the DRE for a specific

gas/categorization set. EPA has also modified how uptime is calculated by defining

an “operational mode” for abatement systems.

 EPA has further defined direct recipe-specific measurements (i.e., an approach

based on the 2006 IPCC Tier 3 method) by adding definitions for “individual recipe”

and “similar recipes.”

 EPA has added provisions for the largest facilities to submit extension requests

for only specific monitoring requirements and QA/QC standards demonstrating that it

is not reasonable feasible to implement the use of a quantifiable indicator for

apportioning gas to all etch processes and obtain directly measured emission factors

for all etch processes at the facility. This extension request is in addition to

permitting the use of BAMM through March 31, 2011. EPA does not anticipate

approving extension requests beyond December 31, 2011 except in extreme

circumstances which include safety, a requirement being technically infeasible or

counter to other local, State or Federal regulations.

 EPA has added provisions for facilities that manufacture LEDs to estimate and

report their emissions using an approach based on two process types, plasma etching

and chamber cleaning, and default emission factors (utilization and by-product

formation rates).

3.1.3 Selection of Reporting Threshold

Under this rule, facilities that manufacture semiconductors, LCD, MEMS, and PV would

be subject to an emissions-based threshold of 25,000 mtCO2e. Consistent with other sections of

the Final MRR, for the purposes of determining whether a facility emits equal to or greater than a

25,000 mtCO2e, a facility must include emissions from all source categories for which methods

are provided in the rule. For purposes of the threshold determination under subpart I, EPA is

offering two different methods, depending on whether the facility manufacturers semiconductors,

MEMS, LCDs or PVs. It is important to note that these methods are only for determining

whether a facility exceeds the threshold; methods required for monitoring and reporting

emissions data are presented in sections 3.1.5 and 3.1.6 below.

To determine whether a manufacturer falls above or below the 25,000 metric tons of

CO2e threshold, EPA is requiring that semiconductor, MEMS, and LCD facilities use gas

specific emission factors assuming 100% manufacturing capacity to calculate annual metric tons
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of emissions in CO2 equivalents. Because we understand that heat transfer fluids are widely used

within semiconductor manufacturing, EPA is requiring that semiconductor manufacturers add

10% of total clean and etch emissions at a facility to their estimate. PV facilities must multiply

annual fluorinated GHG purchases or consumption by the gas-appropriate 100-year GWPs, as

defined in Table A-1 of Subpart A of Part 98, to calculate annual metric tons of emissions in CO2

equivalents.

EPA is requiring an emissions estimating method that does not account for destruction by

abatement equipment because actual emissions from facilities employing abatement equipment

may exceed estimates when based on the manufacturers’ rated DREs of the equipment and may

therefore exceed the 25,000 metric tons CO2e threshold without the knowledge of the facility

operators. When abatement equipment is used, electronics manufacturers often estimate their

emissions using the manufacturer-supplied DRE for the equipment. However, abatement

equipment may fail to achieve its rated DRE either because it was not installed properly, is not

being properly operated and maintained, or because the DRE value itself was incorrectly

measured due to a failure to properly account for the effects of dilution.

EPA is imposing an emissions-based threshold in response to comments received on the

initial proposal that stated the proposed capacity-based threshold created ambiguity. EPA

believes an emissions-based threshold will simplify the applicability determination and that by

applying the method for determining whether the threshold is met, a facility will be able to

quickly determine whether they must report under this rule.

3.1.4 Selection of Monitoring Methods

Today’s rule specifies methods to monitor and estimate fluorinated GHG and N2O

emissions from semiconductor, LCD, MEMS, and PV manufacture. The methods discussed

below include the following:

 estimating emissions from cleaning and etching processes;

 estimating facility N2O emissions;

 estimating emissions from heat transfer fluids; and

 reporting controlled emissions from abatement systems.
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The methods described in this section are for estimating emissions that are required to be

reported under this subpart.

3.1.4.1 GHG Emissions Calculations and Monitoring Overview

To calculate fluorinated GHG and N2O emissions from electronics manufacturing

facilities, reporters (i.e. covered facilities) must use the following methods, as appropriate.5

Fluorinated GHG emissions from electronics manufacturing production processes

All electronics manufacturing facilities are required to calculate fluorinated GHG

emissions from etch and clean processes by estimating emissions of input fluorinated GHGs and

of by-product fluorinated GHGs. This is done by applying utilization factors and by-product

formation factors (collectively referred to as “emission factors” below) to the consumption of

each fluorinated GHG by each process type, process sub-type or recipe, as appropriate. The

methods prescribed for use by different types of electronics manufacturing facilities differ in the

values of these emission factors, the level of aggregation to which the factors are applied

(process type, process sub-type, or recipe), and whether defaults or facility-specific factors are

applied.

Gas Consumption

Electronics manufacturing facilities must use the following methods to calculate and

apportion gas consumption:

 Gas consumption as calculated using the facility’s purchase records,

disbursements, gas container inventories, and gas- and facility-specific heel factors.

 Gas consumption apportioning factors developed using facility-specific

engineering models based on quantifiable metrics of fluorinated GHG-using activity.

Fluorinated GHG Utilization and By-Product Formation Rates (Emission Factors)

Electronics manufacturing facilities must use the following methods for applying

fluorinated GHG emission factors, as appropriate.

5 Covered facilities are electronics manufacturing facilities that have emissions equal to or greater than 25,000

mtCO2e. For electronics manufacturing, EPA is requiring that uncontrolled emissions be used for purposes of

determining whether a facility’s emissions are equal to or greater than 25,000 mt CO2e.
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3.1.4.2 F-GHG Emissions Estimation Methods – PV, LCD, MEM, and LED

Manufacturing

Facilities that manufacture PV, LCDs, MEMS, and LEDS are required to estimate their

emissions using default emissions factors for two process types: plasma etching and chamber

cleaning. A facility may use directly measured recipe-specific emission factors in lieu of

defaults only if the factors are measured in accordance with the 2006 ISMI Guidelines,

International SEMATECH #06124825A-ENG, with limited exceptions.6 A facility must use

only default emission factors or only recipe-specific emission factors; the combined use of

emission factor types within the same reporting year is not permitted.

3.1.4.3 F-GHG Emissions Estimation Methods – Semiconductor Manufacturing

Facilities that Fabricate Devices on Wafers Measuring 300 mm or less in Diameter

Semiconductor manufacturing facilities that fabricate devices on wafers measuring 300

mm or less in diameter and have an annual manufacturing capacity of less than or equal to

10,500 m2silicon must estimate their emissions using default emissions factors for the following

five categorizations.

 process type plasma etching;

 process category in-situ plasma chamber cleaning;

 process category remote plasma chamber cleaning;

 process category in-situ thermal chamber cleaning; and

 process type wafer cleaning.

This approach is hereinafter referred to as the “Tier 2c Method.” Semiconductor

manufacturing facilities that fabricate devices on wafers measuring 300 mm or less in diameter

and have an annual manufacturing capacity greater than 10,500 m2silicon must estimate their

emissions using the five categorizations as defined for the Tier 2c method. However, instead of

using default emission factors for the plasma etching process type, facilities must use directly

measured recipe-specific emission factors. These facilities must use default emission factors for

the following:

 process category in-situ plasma chamber cleaning;

6

EPA is permitting facilities to use emission factors measured in accordance with the 2001 ISMI Guidelines

provided the emissions factors were measured prior to January 1, 2007. Documentation for the measurements is

required.
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 process category remote plasma chamber cleaning;

 process category in-situ thermal chamber cleaning; and

 process type wafer cleaning.

The following hybrid methodology is hereinafter referred to as the “Tier 2d Method.” A

facility may use directly measured recipe-specific emission factors in lieu of chamber and wafer

cleaning defaults only if the factors are measured in accordance with the 2006 ISMI Guidelines,

International SEMATECH #06124825A-ENG, with limited exceptions.7 A facility must use

only default emission factors, or only recipe-specific emission factors for chamber and wafer

cleaning; the combined use of emission factor types within the same reporting year is not

permitted.

3.1.4.4 F-GHG Estimation Methods—Semiconductor Facilities that Fabricate Devices

on Wafers Measuring 300 mm or more in Diameter

Semiconductor manufacturing facilities that fabricate devices on wafers measuring

greater than 300 mm in diameter must estimate all of their emissions from plasma etching,

chamber cleaning, and wafer cleaning using directly measured recipe-specific emission factors.

Emission factors must be measured in accordance with the 2006 ISMI Guidelines, International

SEMATECH #06124825A-ENG, with limited exceptions.8

3.1.4.5 Method for Estimating N2O Emissions

Electronics manufacturing facilities must calculate emissions of N2O using:

 Requirements for calculating and apportioning gas consumption as outlined above

for “Fluorinated GHG emissions from electronics manufacturing production

processes”

 Manufacturing production process emission factors for chemical vapor deposition

and other electronics manufacturing production processes.

3.1.4.6 Method for Estimating Emissions of Heat Transfer Methods

Electronics manufacturing facilities must calculate emissions from heat transfer fluids

using a mass balance approach in which disbursements are properly accounted for according to

procedures provided in 40 CFR part 98, subpart I.

7

See footnote 5.

8

See footnote 5.
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3.1.4.7 Method for Reporting Controlled Emissions from Abatement Equipment

Electronics manufacturing facilities that wish to document and report controlled

fluorinated GHG and N2O emissions from abatement systems must certify that that abatement

system is installed, operated, and maintained in accordance with the manufacturers’

specifications, as well as account for uptime of abatement systems. Facilities must calculate

controlled emissions using either:

 Destruction or removal efficiencies based on a default value of 60%. Under this

approach, certification that the abatement system is specifically designed for

fluorinated GHG and N2O abatement is required; or

 EPA’s Random Sampling Abatement System Testing Program (RSASTP) to

measure destruction or removal efficiencies using EPA’s Protocol for Measuring

Destruction or Removal Efficiency of Fluorinated Greenhouse Gas Abatement

Equipment in Electronics Manufacturing, Version 1, EPA 430-R-10-003.

3.1.5 Selection of Data Reporting Requirements

Owners and operators would be required to report fluorinated GHG and N2O emissions

for the facility for all plasma etching, chemical vapor deposition, chamber cleaning, and wafer

cleaning processes as well as all heat transfer fluid use. The text of today’s rule details the

specific data reporting requirements for this sector.

For each abatement system for which a facility is reporting controlled emissions, the

following would be required: certification that the abatement device is installed, operated, and

maintained according to manufacturers’ specifications; the uptime and the calculations to

determine uptime for that reporting year; the DRE used (i.e. either the EPA default DRE value or

a properly measured DRE); and required documentation to use the EPA default DRE value or a

properly measured DRE.

These data form the basis of the calculations and are needed for EPA to understand the

reported emissions and verify their reasonableness.

3.1.6 Selection of Recordkeeping Requirements

EPA is requiring that facilities keep records of data used to estimate emissions, records

supporting values used to estimate emissions, purchase records, and invoices for gas purchases

and sales.
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For those facilities that are reporting controlled emissions, EPA requests that the

following records be kept: documentation to certify that each abatement device used at the

facility is installed, maintained, and operated in accordance with manufacturers’ specifications;

records of the uptime and the calculations to determine uptime; abatement system calibration and

maintenance records; required documentation to use either the EPA default DRE value or a

properly measured DRE; and dated certification by the technician who makes the measurement

that the destruction or removal efficiency is calculated in accordance with the methods in EPA

430-R-10-003.

These records consist of values that are directly used to calculate the emissions that are

reported and are necessary to enable verification that the GHG emissions monitoring and

calculations are done correctly.

3.2 Subpart L – Fluorinated GHG Producers

3.2.1 Definition of Affected Entities

An affected entity under subpart L is defined as any facility that produces a fluorinated

gas from any raw material or feedstock chemical. Fluorinated gas production includes the

production of fluorinated GHGs (including HFCs, PFCs, SF6, NF3, and HFEs) and

chlorofluorocarbons (CFCs) or hydrochlorofluorocarbons (HCFCs). EPA stipulates that

production of fluorinated gases does not include the reuse or recycling of fluorinated GHG or the

generation of HFC-23 during the production of HCFC-22.

Facilities that produce fluorinated gases will be required to report their fluorinated GHG

emissions from fluorinated gas production, transformation, venting, and destruction, as well as

combustion-related CO2, CH4, and nitrous oxide (N2O) emissions from stationary fuel

combustion. Fluorinated gases include fluorinated GHGs (HFCs, PFCs, SF6, NF3, HFEs, etc.),

CFCs, and HCFCs. However, emissions of HFC-23 from HCFC-22 production are addressed

under subpart O and are therefore excluded from this subpart. Similarly, emissions of CFCs and

HCFCs are addressed under the regulations implementing Title VI of the Clean Air Act and are

therefore excluded from this subpart.

3.2.2 Summary of Changes Since the Initial Proposal

The proposal published in the Federal Registry in April of 2010, included revisions to

several of the provisions in the initial proposed subpart L (April 2009). The subsequent
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comment period provided commenters an opportunity to respond to the new proposal. Today’s

final rule reflects EPA’s consideration of the concerns raised during this comment period.

Today’s Subpart L rule incorporates a number of changes since proposal including, but

not limited to, the following:

 EPA has clarified when and how the scoping speciation (“scoping test” in the

proposed rule) must be performed.

 EPA has added more flexibility to the mass-balance approach in order to: allow

use of the mass-balance approach with process that do not produce fluorinated GHGs

but may emit them (e.g., process wafers that transform fluorinated GHGs);

incorporate process variability into the error calculation; and provide an alternative to

the error limits for facilities that do not wish to calculate them

 EPA has added more flexibility to the emission factor approach by:

– Changing the method for determining whether the emissions of a process fall

below the 10,000 mtCO2e cutoff that allows the use of engineering calculations

rather than stack testing.

– Providing an additional two months to develop emission factors and emission

calculation factors.

– Allowing use of engineering calculations or assessments with all batch

processes, regardless of emissions.

– Allowing emissions testing after the control device if the vent is controlled

and annual emissions bypassing (i.e., not vented to) the control device are less

than 10,000 mtCO2e.

– Requiring testing of only the largest-emitting operating scenario and any other

operating scenario that (1) emits more than 10,000 mtCO2e through the vent, and

(2) has an emission calculation factor that differs by 15 percent or more from the

emission calculation factor of the tested operating scenario. (In the proposed rule,

stack testing would have been required for each operating scenario.)

– Expanding the set of test methods that can be used for emissions testing to

include industry standard sampling and analytical methods that have been

validated using EPA Method 301 or other validation methods.

– Expanding the set of methods that can be used for quantifying emissions from

equipment leaks.

– For purposes of quantifying emissions from equipment leaks, defining “in

fluorinated GHG service” as containing or contacting a feedstock, byproduct, or

product that contains 5 percent or more total fluorinated GHG by weight.
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 EPA is adding a requirement to monitor and report fluorinated GHG emissions

from containers when the residual fluorinated GHG (heel) is vented to the atmosphere

rather than recaptured and reused or destroyed.

 EPA has also added a one-time requirement to report existing data and analysis

regarding the formation of products of incomplete combustion (PICs) that are

fluorinated GHGs during the destruction of fluorinated gases.

 EPA has clarified that PICs are excluded from reporting under the rule after the

one-time initial reporting requirement.

 EPA is limiting the proposed BAMM provision to allow fluorinated gas

production facilities to use BAMM through June 20, 2011 without submitting a

request to EPA. In the proposal, facilities would have been allowed to use BAMM

only through March 31, 2011 without submitting a request.

3.2.3 Selection of Reporting Threshold

Under the rule, owners and operators of fluorinated gas production facilities would be

required to estimate and report GHG emissions if they are equal to or greater than 25,000

mtCO2e in the absence of control technology (e.g., thermal oxidation).

As is true for the other source categories covered by the Mandatory GHG Reporting

Rule, EPA is allowing that fluorinated gas production facilities could cease reporting if their

emissions were less than 25,000 mtCO2e per year for five consecutive years or less than 15,000

mtCO2e per year for three consecutive years.

A full discussion of the threshold selection analysis is available in the revised Fluorinated

Gas Production TSD (EPA-HQ-OAR-2009-0927). For specific information on costs, including

unamortized first year capital expenditures, please refer to section 4.

3.2.4 Selection of Monitoring Methods

EPA is allowing facilities to use either a mass-balance approach or a site-specific,

process-vent-specific emission factor (PSEF) approach to estimate their fluorinated GHG

emissions. The mass-balance approach is similar to that of the April, 2009 proposal, as well as

that included in the April, 2010 proposal, but has been modified in some details in response to

comments. Facilities using either approach would be required to perform a one-time scoping

speciation to identify the F-GHGs in certain emitted streams and to verify the destruction

efficiency (DE) of any destruction devices every ten years.
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3.2.5 Selection of Data Reporting Requirements

Under the rule, owners and operators of facilities producing fluorinated GHGs would be

required to report both their fluorinated GHG emissions and the quantities used to estimate them

on a process-specific basis. For the mass-balance approach, this includes the masses of the

reactants and products and the masses of the reactants, by-products, and products destroyed or

recaptured. For the emission factor and emission calculation factor approach, data to be reported

includes the process activity used to calculate emissions (e.g., the tons of product produced or

tons of reactant consumed) and the emission factors used to estimate them. Owners and operators

must also report the mass of each fluorinated GHG gas emitted, including the mass of each

fluorinated GHG emitted from equipment leaks.

Where fluorinated gas production facilities have estimated missing data, the facility

would be required to report the reason the data were missing, the length of time the data were

missing, the method used to estimate the missing data, and the estimates of those data.

3.2.6 Selection of Recordkeeping Requirements

Maintaining records of the information used to determine the reported GHG emissions is

necessary to enable us to verify that the GHG emissions monitoring and calculations were done

correctly. Under the rule, owners and operators of facilities producing fluorinated GHGs would

be required to retain records documenting the data reported, including records of monthly

emission estimation calculations, including all data that went in to the calculations, calibration

records for flowmeters, scales, and gas chromatographs, and documentation of emission factor

development activities. These records are necessary to verify that the GHG emissions

monitoring and calculations were performed correctly.

3.3 Subpart DD--Electric Transmission and Distribution Equipment Use

3.3.1 Definition of Affected Entities

The electric transmission and distribution equipment use source category includes gasinsulated substations, circuit breakers, other switchgear, and gas-insulated lines containing SF6

or PFCs. Equipment also includes gas containers such as pressurized cylinders, gas carts, new

equipment owned but not yet installed, or other containers. Notwithstanding the definition of

facility in subpart A, for purposes of this subpart, “facility” means an electric transmission and

distribution system which is the collection of SF6- and PFC insulated equipment linked through
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electric power transmission or distribution lines and operated as an integrated unit by one electric

power entity or several entities that have a single owner.

Reporting by the electric transmission and distribution system is comprised of the

system-wide collection of gas-insulated equipment located between the point of generation or the

point at which electricity is obtained from a different power entity and the point at which the

customer or another electric power entity receives the electricity, and must be based on the

aggregation of emissions of all servicing inventory and equipment. All individual pieces of

equipment that are located within the system are included regardless of ownership.

EPA defines an electric power entity as a company; an electric cooperative; a public

electric supply corporation as the Tennessee Valley Authority; a similar Federal department or

agency such as the Bonneville Power Administration; the Bureau of Reclamation or the Corps of

Engineers; a municipally owned electric department offering service to the public; or an electric

public utility district (a ‘‘PUD’’); also a jointly owned electric supply project such as the

Keystone.

3.3.2 Summary of Changes Since Proposal

While Subpart DD remains largely unchanged from the initial proposal, EPA has made a

few modifications after receiving several comments regarding the source category definition and

the rule requirements. In the final rule, EPA is clarifying that “operators” refers to operators of

the collection of system assets including SF6 equipment and not operators of Electric Systems,

whose responsibility is to monitor and control electricity in that system in real time. EPA is also

clarifying that system boundaries are specific to delivery to the customer or another electric

power system. EPA is also requiring scale recalibration is accordance with manufacturer

specifications or every three years, whichever is sooner, and that the scales are required to be

accurate with +/- 2 pounds of the scale’s capacity. Finally, EPA is including costs of reporting

requirements ($1,700 in reporting costs for each facility) which had inadvertently been omitted

from the proposal RIA.

With the exception of the updates discussed in the previous paragraph, the requirements

for entities covered under Subpart DD are identical to those described in the proposed MRR (see

docket # EPA-HQ-OAR-2008-0508).
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3.4 Subpart QQ – Importing/Exporting of Pre-charged Equipment and Foams

3.4.1 Definition of Affected Entities

This source category consists of any entity that is importing or exporting pre-charged

equipment that contains a fluorinated GHG and also consists of any entity that that is importing

or exporting closed-cell foams that contain a fluorinated GHG. A variety of products containing

fluorinated greenhouse gases (F-GHGs), nitrous oxide (N2O), and carbon dioxide (CO2) are

imported into and exported from the United States. Pre-charged equipment includes airconditioning, refrigeration, and electrical equipment. Closed-cell foams that are imported and

exported include polyurethane (PU) rigid foam used in insulation in domestic refrigerators and

freezers; commercial refrigeration foam,; PU rigid sandwich panel continuous and discontinuous

foam; extruded polystryrene (XPS) sheet foam; and XPS boardstock foam.

3.4.2 Summary of Proposal

In the April 2009 proposed rule EPA did not require reporting of the quantities of GHGs

imported and exported inside products. EPA was concerned that it would be difficult for

importers and exporters to identify and quantify the quantities of GHGs inside some products

and that the number of importers and exporters would be high. However, EPA requested

comment on the option of requiring reporting of imports and exports of HFCs and SF6 contained

in pre-charged air-conditioning, refrigeration, and electrical equipment and in closed cell foams.

EPA noted that for these products, information on the size and chemical identity of the charge or

blowing agent is likely to be readily available to importers and exporters (e.g., from nameplates

affixed to equipment, servicing manuals, and product information for foams). Moreover, as

noted above, the total quantities of imported and exported F-GHGs in pre-charged equipment

and foams are significant.

After carefully considering the comments and available information on imports and

exports of F-GHGs inside pre-charged equipment and foams, EPA proposed to require reporting

of these imports and exports in the revised April 2010 proposal. Importers and exporters of precharged equipment and closed-cell foams would be subject to requirements similar to those for

importers and exporters of bulk GHGs. In addition, equipment importers would be required to

report the types and charge sizes of equipment and the number of pieces of each type of

equipment that they imported or exported, while foam importers would be required to report the

volume of foam and F-GHG density of the foam that they imported. As is true for importers and
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exporters of bulk F-GHGs, importers and exporters of equipment and foam would only be

required to report if their total imports or exports exceeded the 25,000 mtCO2e threshold.

3.4.3 Summary of Changes Since the Proposal

Following the comment period on the April 2010 proposal, EPA has modified the

regulations on Subpart QQ for today’s final rule. The changes to Subpart QQ are as follows:

 EPA has revised the reporting requirements for closed-cell foams such that, in

cases where the importer or exporter does not know the identity and amount of

fluorinated GHGs inside the closed-cell foam, they can report the amount of

fluorinated GHGS imported or exported on a Co2e basis, based on information from

the manufacturer.

 EPA has revised the definition of closed-cell foams to exclude packaging foam.

 EPA has revised the requirements for importers such that the port of entry and

country of origin are no longer listed under data reporting requirements. These two

data elements are now listed under recordkeeping requirements.

 EPA has revised the requirement for exporters such that the port of exit and

countries to which items were exported are no longer listed under data reporting

requirements. These are two data elements are now listed under recordkeeping

requirements.

 EPA has clarified that importers and exporters must report the number of pieces

of pre-charge equipment and closed-cell foam imported with each unique

combination of charge size and charge type. Importers and exporters cannot report

the average charge size or most common fluorinated GHG used for a particular type

of equipment.

3.4.4 Selection of Reporting Threshold

Under the final rule, EPA is requiring that importers and exporters of F-GHGs contained

in pre-charged equipment and closed cell foams report their fluorinated GHG emissions if either
3-16

their total imports or their total exports, in equipment, foams, and in bulk, exceed 25,000 mtCO2e

per year. This threshold is the same as that for bulk imports and exports.

3.4.5 Selection of Monitoring Methods and QA/QC Requirements

EPA is requiring importers and exporters of equipment and foams to estimate their

imports and exports of each F-GHG by multiplying the mass of the F-GHG contained in each

type of equipment or foam by the number of pieces of equipment or by the volume of foam, as

appropriate. EPA believes that information on F-GHG identity and charge size (or density, for

foams) should be readily available to importers and exporters.

3.4.6 Selection of Data Reporting Requirements

Under the rule, EPA will require importers and exporters of pre-charged equipment and

closed cell foams to report the following:

(1) The total mass in metric tons of each fluorinated GHG imported or exported in precharged equipment or closed-cell foams.

(2) For each type of pre-charged equipment, the identity of the fluorinated GHG used as

a refrigerant or electrical insulator, charge size (holding charge9, if applicable), and number

imported or exported.

(3) For closed-cell foams that are imported or exported inside of appliances, the identity

of the fluorinated GHG contained in the foam, the quantity of fluorinated GHG contained in the

foam in each appliance, and the number of appliances imported for each type of appliance.

(4) For closed cell-foams that are not inside of appliances, the identity of the fluorinated

GHG, the density of the fluorinated GHG in the foam (kg F-GHG/cubic foot), and the quantity of

foam imported or exported (cubic feet) for each type of closed-cell foam.

(5) Dates on which the pre-charged equipment or closed-cell foams were imported or

exported.

(6) Ports of entry through which the pre-charged equipment or closed-cell foams passed.

9

This refers to any holding charge consisting of a fluorinated GHG. Holding charges consisting of other gases, such

as nitrogen, are not included.
3-17

(7) Countries from or to which the pre-charged equipment or closed-cell foams were

imported or exported.

EPA is collecting this information because it is necessary either to understand the total

volume of F-GHGs imported or exported inside of pre-charged equipment and foams (and

thereby contributing to the U.S. supply of F-GHGs) or to verify submitted information.

3.4.7 Selection of Recordkeeping Requirements

EPA is requiring importers and exporters of equipment and closed cell foams to retain the

following records:

(1) a copy of the bill of lading for the import or export;

(2) the invoice for the import or export; and

(3) for imports, the U.S. Customs entry form.

Persons who transship pre-charged equipment and closed cell foams containing

fluorinated GHGs must maintain records that indicate that the pre-charged equipment or foam

originated in a foreign country and did not enter into commerce in the United States. This

information is necessary to verify submitted information.

3.5 Subpart SS – Electrical Equipment and Components Manufacturing

3.5.1 Definition of Affected Entities

Affected entities under subpart SS are defined as electrical equipment manufacturers of

SF6-insulated closed-pressure system equipment and sealed-pressure system equipment including

gas-insulated substations, circuit breakers, other switchgear, gas-insulated lines, or power

transformers containing sulfur-hexafluoride (SF6) or perfluorocarbons (PFCs).

Electrical equipment manufacturers purchase bulk SF6 gas to (1) install a nominal charge

in high-voltage closed-pressure equipment, (2) ship alongside closed-pressure equipment for

topping off at installation site, (3) fill sealed-pressure equipment with its intended lifetime supply

of SF6, and (4) develop and test equipment. Fugitive emissions of SF6 from equipment

manufacturers typically occur during the manufacturing of equipment but can also occur during

the other uses of SF6 at manufacturing facilities.
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While EPA believes that SF6 represents the majority of emissions from this source

category, manufacturers may also use PFCs as dielectrics and heat transfer fluids in power

transformers. For example the PFC perfluorohexane (C6F14) is used for retrofitting CFC-113

cooled transformers.

According to the U.S. Inventory of Greenhouse Gas Emissions and Sinks: 1990-2007

(U.S. Environmental Protection Agency, 2009), total U.S. estimated emissions of SF6 from

electrical equipment manufacturers was estimated to be 0.81 million metric tons CO2e in 2006.

EPA is requiring reporting from electrical equipment manufacture and refurbishment facilities

because these operations represent a significant source, approximately 5% of SF6 emissions. It is

estimated that ten equipment manufacturers were responsible for these emissions.

EPA is also including emissions of PFCs emitted during the manufacture or

refurbishment of PFC-containing power transformers because the National Inventory has no

information on this source and because use of transformers is expected to grow in the future.

This source category comprises electrical equipment manufacturers and refurbishers of

SF6 or PFC-insulated closed-pressure system equipment and sealed-pressure system equipment

including gas-insulated substations, circuit breakers, other switchgear, gas-insulated lines, or

power transformers containing sulfur-hexafluoride (SF6) or perfluorocarbons (PFCs).

3.5.2 Summary of Changes Since Proposal

The major changes in this rule since the proposal are identified in the following list.

 Scale recalibration is required in accordance with manufacturer specifications or

once every three years, whichever is sooner.

 Scales are required to be accurate within +/- 2 pounds of the scale’s capacity.

 EPA is allowing use of a statistically representative value for emissions

downstream of the flowmeter measuring the mass of SF6 being transferred from the

storage container to the equipment being filled. The statistically representative value

must be based on a statistically representative sample size for each combination of

hose and valve of a given sized diameter.

 To increase flexibility, EPA is providing an additional option for determining the

mass of SF6 or the PFCs disbursed to customers in new equipment. EPA is allowing

the equipment’s nameplate capacity or, in cases where equipment is shipped with a

partial charge, the equipment’s partial shipping charge to be assumed as equal to the

disbursement.
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 The quantity of gas charged in to delivered equipment and added during

installation by the manufacturer must be certified by the manufacturer and expressed

in pounds of SF6 or PFC.

 The electrical equipment manufacturer must estimate the annual SF6 and PFC

emissions from the equipment being installed on the electric power system’s

premises, only when the title of the equipment has not yet been transferred, using an

equipment installation mass balance equation.

3.5.3 Selection of Reporting Threshold

EPA is requiring electrical equipment manufacturers to report their SF6 and PFC

emissions if their total annual purchases of SF6 and PFCs exceed 23,000 lbs. This consumptionbased threshold is equivalent to an emissions-based threshold of 25,000 mtCO2e, assuming an

average manufacturer emission rate of 10%.

3.5.4 Selection of Monitoring Methods and QA/QC Requirements

In developing the approach, EPA reviewed the 2006 IPCC Guidelines, the U.S. GHG

Inventory, DOE 1605(b), EPA’s Climate Leaders Program, and The Climate Registry. In the

IPCC Guidelines, Tiers 1 and 2 are based on default and country-specific SF6 and PFC emission

factors, but Tier 3 is based on a mass-balance approach for estimating SF6 and PFC emissions at

each life-cycle stage of the equipment.

The monitoring methods for calculating SF6 and PFC emissions from electrical

equipment manufacturing and refurbishment are similar to the methodologies described in the

2006 IPCC Guidelines Tier 3 methods for emissions from electrical equipment manufacturing.

EPA is requiring that all SF6 and PFC emissions be reported, including those from

equipment testing, manufacturing, decommissioning and disposal, refurbishing, and from storage

cylinders, as well as combustion-related CO2, CH4, and nitrous oxide (N2O) emissions from

stationary fuel combustion. The Tier 3 approach is being used because it is the most accurate

and it is feasible for all equipment manufacturers to conduct the mass balance analysis for SF6

and PFCs using readily available information.

A comparable mass-balance approach is used for subpart DD Sulfur Hexafluoride (SF6)

and Perfluorocarbons (PFCs) from Electrical Equipment at an Electric Power System. The

mass-balance approach works by tracking and systematically accounting for all facility uses of

SF6 and PFCs during the reporting year. The quantities of SF6 and PFCs that cannot be

accounted for are assumed to have been emitted to the atmosphere. The emissions of SF6 and
3-20

PFCs must be estimated and reported separately. All quantities required to calculate the massbalance equations for this subpart must be measured using scales or flow meters that are certified

with an accuracy and precision within two pounds of the scale’s capacity.

In addition, EPA will require that electrical equipment manufacturers keep records for the

QA/QC requirements including check-out sheets and weigh-in procedures for cylinders, residual

gas amounts in cylinders sent back to suppliers, invoices for gas and equipment purchases or

sales, and documentation of recycling and destruction. The records that are being requested are

the minimum needed to reproduce and confirm emission calculations.

3.5.5 Selection of Data Reporting Requirements

EPA is requiring annual reporting for the electrical equipment manufacturing and

refurbishing industry. Equipment manufacturers would report all SF6 and PFC emissions,

including those from equipment testing, equipment manufacturing, and bulk SF6 and PFC

handling. However, the emissions would not need to be broken down and reported separately for

testing, manufacturing, or bulk SF6 and PFC handling. Along with their emissions, electrical

equipment manufacturers will be required to submit the following supplemental data: SF6 and

PFCs with or inside equipment delivered to customers, SF6 and PFCs returned by customers with

or inside equipment, bulk SF6 and PFC purchases, SF6 and PFCs sent off-site for destruction or

to be recycled, SF6 and PFC returned from offsite after recycling, SF6 and PFCs stored in

containers at the beginning and end of the year, and SF6 and PFCs returned to suppliers.

Facilities must also report a description of the engineering methods and calculations used to

determine emissions from hoses or other flow lines that connect the container to the equipment

that is being filled.

These data must be submitted because they are the minimum data that are needed to

understand and reproduce the emission calculations that are the basis of the reported emissions.

3.5.6 Selection of Recordkeeping Requirements

In this action, EPA is requiring that electrical equipment manufacturers be required to

keep records documenting (1) their adherence to the QA/QC requirements specified in the rule,

and (2) the data that would be included in their emission reports, as specified above. Facilities

must also keep check-out and weigh-in sheets and procedures for cylinders, documentation of

residual gas amounts in cylinders sent back to suppliers, and invoices for gas purchases and

sales.
4-1

SECTION 4

ENGINEERING COST ANALYSIS

4.1 Introduction

EPA estimated costs of complying with the rule for process emissions of GHGs in each

affected industrial facility. EPA used available industry and EPA data to characterize conditions

at affected sources. Incremental monitoring, recordkeeping, and reporting activities were then

identified for each type of facility, and the associated costs were estimated.

4.2 Overview of Cost Analysis

The costs of complying with the rule will vary from one facility to another, depending on

the types of emissions, the number of affected sources at the facility, existing monitoring,

recordkeeping, and reporting activities at the facility, etc. The costs include labor costs for

performing the monitoring, recordkeeping, and reporting activities necessary to comply with the

rule. For affected facilities, costs include monitoring, recording, and reporting of GHG emissions

from production processes and from stationary combustion units. All costs referred to in this

section are reported in 2006 dollars.

For each source category, we first provide a general overview of baseline reporting (if

data are available); two costs components associated with this information collection; labor costs

(i.e., the cost of labor by facility staff to meet the information collection requirements of the

rule); and capital and operating and maintenance costs (e.g., the cost of purchasing and installing

monitoring equipment or contractor costs associated with providing the required information).

Additional details of the data, methods, and assumptions underlying the costs are documented in

a separate cost appendix and in accompanying Technical Support Documents (TSDs). The TSDs

also include information on the assumptions and methods used to identify representative entities

or groups of entities used to develop the cost analysis for each subpart.

4.2.1 Baseline Reporting

When data are available to determine how many companies are currently implementing

approaches consistent with the methods at the facility level to meet internal GHG management

programs or state or voluntary reporting programs at the domestic or international level, we

include a discussion of the baseline reporting practices. When data are not available, EPA is

assuming that none of the facilities in these source categories are currently reporting emissions

and that many of the requirements will result in “new” or “full” costs to meet reporting

requirements. Specifically, EPA is assuming that there will be additional costs for any sampling
4-2

and testing in the requirements in methods (i.e., carbon contents of process inputs, such coke,

coal, carbonate composition, or actual emissions). EPA is also assuming that additional costs will

be incurred for preparing monitoring and QA/QC plans, performing the calculations, reporting

the results, and maintaining records.

4.2.2 Reporting Costs

To ensure consistency in the development of cost estimates across all sources, EPA

developed a cost spreadsheet template used for each subpart to compile, document, and calculate

per unit reporting costs. Detailed instructions were provided along with the cost spreadsheet

template that clearly explained the data to be compiled and calculated. The template included

three tables; analysis of reporting thresholds, analysis of monitoring and reporting options, and

unit costs for monitoring and reporting. Key variables and data fields were clearly defined to

ensure that costs developed for each subpart used a standard set of methods and assumptions

(e.g., method for annualization of capital costs, interest rate to be applied to capital).

Labor Costs. The costs of complying with and administering this rule include the time of

managers, technical, and administrative staff in both the private sector and the public sector.

Staff hours are estimated for activities including:

 monitoring (private): staff hours to operate and maintain emissions monitoring

systems;

 reporting (private): staff hours to gather and process available data and reporting it to

EPA through electronic systems; and

 assuring and releasing data (public): staff hours to quality assure, analyze, and release

reports.

Staff activities and associated labor costs may vary over time. Thus, cost estimates are

developed for start-up, first-time reporting, and subsequent reporting.

Loaded hourly labor rates (also referred to as “wage rates”) were developed for several

labor categories to represent the employer costs to use an hour of employees’ time in each of the

manufacturing sector labor categories used in this analysis. The labor categories correspond to

the job responsibilities of the personnel that are likely to be involved in GHG emissions

monitoring activities at the manufacturing facility level to comply with the rulemaking.

For purposes of this study, EPA adopted the methodology used by Cody Rice (2002) to

calculate the wage rates for the EPA’s Toxics Release Inventory (TRI) Program. Thus, the wage

rates calculated for different labor categories included the employer costs for employee
4-3

compensation (comprising the basic wages and the corresponding benefits) and the overhead

costs to the employer.

10

For each labor category, the following formula was used to calculate the wage rates:

Loaded Hourly Labor Rate ($/hr.) = Basic Wages ($/hr.) *

(1 + Benefits Loading Factor + Overhead Loading Factor).

The benefits loading factor corresponds to the relative share of benefits compensation in

the total employee compensation (comprising basic wages and benefits). Although the benefits

factor tends to vary by labor category and by industry (0.37 to 0.50), for purposes of this

analysis, we have assumed the benefits loading factor (1.7) to remain the same for each labor

category across all industries within the manufacturing sector due to a lack of availability of

necessary industry-specific data on benefits paid to employees.

The overhead loading factor corresponds to the share of overhead costs to the employer

relative to the total employee compensation. For purposes of this analysis, we have also adopted

the same overhead loading factor that Cody Rice (2002) used in her wage rate calculations. Thus

the overhead loading factor that we used in the wage rate calculations remains the same for all

labor categories and across all industry types within the manufacturing sector. The overhead

loading factor was assumed to be 0.17.

The loaded labor rates for the four labor categories that are used in the cost analysis for

each subpart covered under this rule and are also reported in the appropriate sectors labor cost

tables in the following sections.

10For each employee, the employer also incurs overhead costs (comprising the rental costs of the office space, computer

hardware and software, telecommunication and other equipments, organizational support, etc.) required for and used by the

employee to effectively fulfill his/her job responsibilities. These costs are over and above the employee compensation costs.
4-4

Table 4-1. Labor Categories and Hourly Rates

Labor Category Description Loaded Hourly Rate ($/hour)

Legal Oversees legal aspects of company

reports and data-reporting forms.

$101.00/hour

Managerial Oversees work at a high level and

is the final authority on all

reporting requirements.

$71.03/hour

Technical Conducts monitoring of emissions

sources, checks for accuracy,

performs measurements.

$55.20/hour

Clerical Assists with documentation and

recording information

$29.65/hour

Capital and O&M Costs. This includes the cost of purchasing and installing monitoring

equipment or contractor costs associated with providing the required information. Selected

subparts do not require capital expenditures because the selected monitoring option does not

require capital equipment or the reporter already owns the necessary monitoring equipment.

Equipment costs include both the initial purchase price of monitoring equipment and any

facility/process modification that may be required. For example, the cost estimation method for

mobile sources involves upstream measurement by the vehicle manufacturers. This may require

an upgrade to their test equipment and facility. Based on expert judgment, the engineering costs

analyses annualized capital equipment costs with the appropriate lifetime and interest rate

assumptions. Cost recovery periods vary by industry (5 to 15 years) with one-time capital costs

are amortized at a rate of 7%.

Other Recordkeeping and Reporting. Additional reporting ($500) costs was added to all

subparts.

Cost Analysis by Subpart. The balance of section 4 provides the cost data by subpart.

The data are the basis for the economic impact analysis described in detail in Section 5 of this

document. This chapter provides these data, as well as background information needed to

understand the engineering costs analysis conducted for each source and the reporting option

selection.
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4.3 Cost Analysis for Subpart I – Electronics Manufacturers

4.3.1 Model Facility Development

This analysis is based on the costs of monitoring fluorinated greenhouse gas (F-GHG)

and nitrous oxide (N2O) emissions from electronics manufacturing facilities. Electronics

manufacturing facilities were broken into three categories; non-semiconductor electronics (3

facilities), large semiconductor (29 facilities), and non-large semiconductor (62 facilities).11,12

Non-semiconductor electronics includes facilities that manufacture micro-electromechanical

systems (MEMS), liquid crystal displays (LCDs), and photovoltaics (PV).

Through industry comments and the PFC Reduction/Climate Partnership for

Semiconductors, the EPA has improved its understanding of semiconductor facilities and their

emissions and has assigned a method of compliance to each electronics manufacturing facility

category. For cost estimates, non-semiconductor facilities were assigned to use the “Tier 2b

Method” based on IPCC’s Tier 2b two process categories (chamber cleaning and plasma etching)

in order to comply with Subpart I. Non-large semiconductor facilities were assigned to use the

“Tier 2c Method” defining the following five process categories and default emission factors: (1)

chamber cleaning – in situ plasma; (2) chamber cleaning – remote plasma; (3) chamber cleaning

– in-situ thermal; (4) plasma etching; and (5) wafer cleans. The largest semiconductor facilities

were assigned to use the “Tier 2d Method” which is identical to the “Tier 2c Method” for all

facility process categories except plasma etching, which requires directly measured recipespecific emission factors similar to the 2006 IPCC Tier 3 methodology.13 Annual costs differ for

each of the three electronics manufacturing categories because they are subject to different

requirements, as detailed below under “Monitoring Costs”. In addition, MEMS, LCD, and PV

manufacturing use fewer types of F-GHGs than semiconductor manufacturing facilities.

Therefore, cost estimates for these other types of electronics facilities were developed using cost

estimates from EPA’s initial proposal for a “small” semiconductor facility and scaling these

costs to account for the use of a smaller set of gases.14

11 Number of facilities based on Semiconductor Equipment and Materials Industry (SEMI). July 2007. World Fab Forecast.

http://www.semi.org/en/index.htm and does not include LED facilities.

12 The distinction between large and small semiconductor facilities is based on the facility’s manufacturing capacity and the

wafer size the facility manufactures.

13 Plasma etching emission factors must be measured in accordance with the 2006 ISMI Guidelines, International SEMATECH

#06124825A-ENG, with limited exemptions.

14 In its initial 2009 proposal for electronics manufacture, EPA defined “small” semiconductor facilities as those facilities with

annual capacities less than 10,500 m2 silicon (147 facilities out of 175 total facilities). In the initial proposal, those facilities

were required to estimate their emissions using an approach based on the IPCC Tier 2b method.
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4.3.2 Determination of Cost Elements

The total costs associated with complying with the proposed rulemaking were broken into

four elements, which are described below.

Monitoring costs. The following types of monitoring costs were identified:

Collection of activity data for estimating F-GHG and N2O emissions.

As previously mentioned costs for collecting activity data differ depending on the facility

category (large semiconductor, non-large semiconductor, or other electronics manufacturing).

Using the “Tier 2b Method” non-semiconductor facilities are required to estimate

emissions using (1) gas consumption as calculated using the facility’s purchase records,

inventory, and gas-and facility-specific heel factors, (2) facility specific methods for

apportioning gas usage by IPCC’s Tier 2b two process categories (clean and etch), (3) updated

Tier 2b default emissions factors, and (4) either EPA published default DRE value or properly

measured DRE where appropriate.

Non-large semiconductor facilities assigned to the “Tier 2c Method” would be required to

use an approach for estimating emissions which includes the following components: (1) gas

consumption as calculated using the facility’s purchase records, inventory, and gas-and facilityspecific heel factors, (2) facility specific methods for apportioning gas usage by five process

categories, (3) default emission factors (including factors for by-products) based on five process

categories, and (4) either EPA published default destruction or removal efficiency (DRE) value

or properly measured DRE where appropriate. Facilities could either use emission factors

provided by EPA or develop/acquire facility-specific emissions factors from process equipment

manufacturers. In addition, facilities that have monitoring infrastructure or the necessary data to

estimate emissions obtained through recipe-specific measurements would be permitted to do so.

The costs presented in this analysis reflect the use of default emission factors and EPA published

DRE values.

Under the “Tier 2d Method” the largest semiconductor facilities were assigned to use an

approach for estimating emissions which includes (1) gas consumption as calculated using the

facility’s purchase records, inventory, and gas-and facility-specific heel factors, (2) facility

specific methods for apportioning gas usage by five process categories (3) default emission

factors (including factors for by-products) based on four process categories and directly

measured emission factors for the etching process, and (4) either EPA published default

destruction or removal efficiency (DRE) value or properly measured DRE. Similar to the “Tier
4-7

2c Method”, facilities can use either default emission factors or developed emission factors for

the four non-etch processes, however the facility must measure and develop recipe-specific

emission factors for all etch processes. The cost analysis reflects using default factors for the

non-etch processes and the cost to measure and develop emission factors for etch processes. Due

to the complex nature of apportioning gas in a large semiconductor facility, EPA has added

software costs to account for the challenge of apportioning gases to etch processes.

Annual costs to report controlled emissions from abatement systems.

Under the final rule, any facility that wishes to reflect abatement of F-GHGs in its

emissions estimates would be required to certify that the abatement system is installed, operated,

and maintained in accordance with manufacturers’ specifications and either use EPA published

DRE default value or properly measured DRE. Facility costs incurred for assuring abatement

systems are properly installed, operated, maintained, and reported, and accounting for uptime

have been included for large facility categories in this cost analysis.15 However, because DRE

measurements are optional, the EPA’s estimated costs for performing DRE testing was not

included for any facility category in this cost analysis.

Collection of data for estimating heat transfer fluid (HTF) emissions.

In the proposed rule, electronics manufacturing facilities that use heat transfer fluids were

required to account for emissions from use of heat transfer fluids using a mass-balance approach.

EPA understands heat transfer fluids are widely used within semiconductor manufacturing;

however, EPA is uncertain about heat transfer fluid use in other electronics manufacturing

facilities. For this reason, costs associated with emissions from heat transfer fluids were

conservatively included in all electronics manufacturing categories. The mass-balance approach

uses company-specific data and accounts for differences among facilities’ HTFs (which vary in

their global warming potentials), leak rates, and service practices.

Reporting costs. The following types of reporting costs were identified:

Reporting F-GHG emission estimate.

Electronics manufacturing facilities will be required to complete and submit companyspecific annual reports. Costs associated with reporting activity data were included for all

categories. Facilities that employ abatement systems and wish to reflect the emission reductions

15 Facility costs incurred for assuring abatement systems are properly installed, operated, maintained, and reported,

and accounting for uptime are based on 32 technical labor hours. This cost is only included for large

semiconductor facilities based on SIA’s comments that 29 facilities would incur abatement compliance costs.
4-8

due to these systems in their emissions estimates will need to provide certification that the

system is installed, operated, and maintained in accordance with manufacturers’ specifications in

their annual reports.

5

This certification process also includes an annual assessment of the

equipment uptime. It is assumed there are no other costs associated with using default DRE

values.

Facilities that choose to reflect emissions reductions through direct measurement of DRE

at the facility, performance confirmed through direct DRE measurement (i.e., consistent with

EPA’s DRE Protocol) would be required. As previously stated, direct DRE measurements are

optional, therefore reporting costs for DRE testing were not included in the cost analysis for any

of the electronics manufacturing categories.

Reporting heat transfer fluid emissions estimate.

Electronics manufacturing facilities are required to complete and submit data-reporting

forms. EPA has included costs for reporting heat transfer fluid emissions from all facilities

because EPA is uncertain about whether LCD, PV, and MEMS manufacturing facilities use heat

transfer fluids.

4.3.3 Proportion of Facilities in the Different Model Facility Levels

Semiconductor, MEMS, PV, and LCD facilities would determine whether they exceed

the emissions-based threshold using IPCC Tier 1 emission factors and assuming no abatement.

For PV facilities, annual emissions would be estimated by multiplying annual F-GHG

consumption by the appropriate GWP factor. For semiconductor facilities, 91 out of 175 entities

exceed the 25,000 mtCO2e threshold which includes 96 percent of total semiconductor

emissions. For MEMS facilities, the 25,000 mtCO2e threshold includes two out of 12 entities

and includes 66 percent of total MEMS emissions. For LCD facilities, no entities exceed the

25,000 mtCO2e threshold. Only one PV facility is included in the 25,000 mtCO2e threshold

which includes 47 percent of total PV emissions. The number of each type of facility that EPA

estimates will meet the 25,000 mtCO2e threshold and required to report is identified in Table 4-2.
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Table 4-2. Number of Representative Affected Entities Used in the Cost Analysis

Threshold Number of Representative Entities

Semiconductors

(All) MEMS Liquid Crystal

Display Photovoltaics

1,000 134 10 5 16

10,000 108 4 1 1

25,000 91 2 0 1

100,000 55 0 0 0

4.3.4 Assigning Costs to Cost Elements

Assigning costs to each of the cost elements was completed using the four labor

categories (legal, managerial, technical and clerical) and associated labor rates presented in Table

4-3. EPA assigns responsibilities to each labor category to estimate labor hours. Finally, EPA

estimates the annualized capital costs and operation & maintenance (O&M) costs for each of the

cost elements.

Determining Labor Categories.

To evaluate labor costs, it was not only necessary to determine the amount of time

required for all of the tasks associated with monitoring, but also to determine who will perform

each task.
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Table 4-3. Labor Categories and Hourly Rates

Labor Category Description Loaded Hourly Rate ($/hour)

Legal Oversees legal aspects of company

reports and data-reporting forms.

$101.00/hour

Managerial Oversees work at a high level and

is the final authority on all

reporting requirements.

$71.03/hour

Technical Conducts monitoring of emissions

sources, checks for accuracy,

performs measurements.

$55.20/hour

Clerical Assists with documentation and

recording information

$29.65/hour

Allocate Responsibilities and Estimate Labor Hours.

Labor hours for all categories (large and non-large semiconductor and other electronics

facilities) were estimated using IPCC’s Tier 2b method from the initial proposed method for

small semiconductor facilities and industry comments. EPA, drawing on its experience with

semiconductor facilities voluntarily reporting emission via its sector Partnership, estimated the

labor hours borne by non-large semiconductor facilities using IPCC’s Tier 2b method and

scaling the hours to represent 5 process categories. Large semiconductor facility burden hours

were also based on scaling IPCC’s Tier 2b method to four process categories (which account for

70 percent of all facility processes) and adding IPCC’s Tier 3 method for the etching process (30

percent of all facility processes). The burden hours and costs borne by other electronics

manufacturers were estimated using cost estimates from EPA’s initial proposal for a small

semiconductor facility and scaling these costs down to account for the use of a smaller set of

gases, as these facilities use fewer types of PFCs than the semiconductor manufacturing

facilities. In addition, information received from industry on burden hour estimates for technical

staff to measure gas- and facility-specific heel factors were included. Table 4-4 presents the

burden hours allocated to each labor category across all affected facility types covered under

subpart I. The hours and costs for estimating emissions of heat transfer fluids were based on the

ICR for EPA’s SF6 Emission Reduction Partnership for Electric Power Systems. Under the SF6

Partnership, electric power systems report emissions using a mass-balance method that is

essentially identical to that proposed for heat transfer fluids in semiconductor facilities.
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Table 4-4. Responsibilities for Regulation Compliance by Labor Category Per Facility Category

Cost Element

Responsibilities and Hours by Labor Category

Legal Managerial Technical Clerical

Responsibilities Hours Responsibilities Hours Responsibilities Hours Responsibilities Hours

Large Semiconductors—Tier 2d Method

Monitoring

Collection of activity data

for F-GHG emission

estimate

Provide quality assurance

of analyses and authorize

completeness of the

checks.

15.7 Collect data on gas consumption,

gas utilization, and by-product

formation. Perform calculation

for four process categories using

default factors provided by EPA

(Costs for EF Tier 3 EF

Development for etch is under

capital costs).

228 Assist in recording and

maintaining data collected

on gas consumption, gas

utilization and by-product

formation

3.6

Collect data for massbalance calculation of

Heat Transfer Fluids

Provide quality assurance

of analyses and authorize

completeness of the

checks.

2.4 Collect activity data related to

HTF emissions

10 Assist in recording and

maintaining data on

collected activity data

related to HTF emissions

6.7

Reporting

Complete and submit

company-specific annual

report

Oversee legal aspects

of annual report

submission

0.26 Provide quality assurance

of annual report.

10.8 Complete and submit companyspecific annual report25.3 Assist with completing and

submitting the companyspecific annual report

8.4

Complete and submit data

reporting forms for massbalance calculation of

Heat Transfer Fluids

Review and submit data

reporting form.

3.5 Review instructions and

complete the form for data

reporting

3.5 Maintain data reporting

records.

1.9

Abatement/DRE data

gathering

Abatement system quality

assurance audit and reporting

32

Recordkeeping

Collect and store

necessary records for

compliance

Review and submit

appropriate records

2.4 Assure that appropriate records

are kept

24.7 Assist with recordkeeping

and filing

5.7
4-12

Cost Element

Responsibilities and Hours by Labor Category

Legal Managerial Technical Clerical

Responsibilities Hours Responsibilities Hours Responsibilities Hours Responsibilities Hours

Non-Large Semiconductor Facilities—Tier 2c Method

Monitoring

Collection of activity data

for F-GHG emission

estimate

Provide quality assurance

of analyses and authorize

completeness of the

checks.

3.6 Collect data on gas consumption.

Perform calculations using IPCC

Tier 2b default emission factors.

257.3 Assist in recording and

maintaining data collected

on gas consumption, gas

utilization and by-product

formation

Collect data for massbalance calculation of Heat

Transfer Fluids

Provide quality assurance

of analyses and authorize

completeness of the

checks.

2.2 Collect activity data related to

HTF emissions

9.4 Assist in recording and

maintaining data on

collected activity data

related to HTF emissions

6.11

Reporting

Completion of companyspecific annual report

Oversee legal aspects

of annual report

submission

0.26 Provide quality assurance

of annual report.

10.8 Complete and submit companyspecific annual report25.3 Assist with completing and

submitting the companyspecific annual report

8.4

Complete and submit data

reporting forms for massbalance calculation of

Heat Transfer Fluids

Review and submit data

reporting form.

3.5 Review instructions and

complete the form for data

reporting

3.5 Maintain data reporting

records.

1.7

Recordkeeping

Collect and store

necessary records for

compliance

Review and submit

appropriate records

2.39 Assure that appropriate records

are kept

24.7 Assist with recordkeeping

and filing

5.7
4-13

Cost Element

Responsibilities and Hours by Labor Category

Legal Managerial Technical Clerical

Responsibilities Hours Responsibilities Hours Responsibilities Hours Responsibilities Hours

Non-Semiconductors—Tier 2b Method

Monitoring

Collection of activity data

for F-GHG emission

estimate

Provide quality assurance

of analyses and authorize

completeness of the

checks.

7.2 Collect data on gas consumption,

gas utilization, and by-product

formation. Perform calculation

for five process categories using

default factors provided by EPA.

169.5 Assist in recording and

maintaining data collected

on gas consumption, gas

utilization and by-product

formation

Collect data for massbalance calculation of

Heat Transfer Fluids

Provide quality assurance

of analyses and authorize

completeness of the

checks.

4 Collect activity data related to

HTF emissions

17 Assist in recording and

maintaining data on

collected activity data

related to HTF emissions

11

Reporting

Completion of companyspecific annual report

Oversee legal aspects

of annual report

submission

0.26 Provide quality assurance

of annual report.

10.8 Complete and submit companyspecific annual report25.3 Assist with completing and

submitting the companyspecific annual report

8.4

Complete and submit data

reporting forms for massbalance calculation of

Heat Transfer Fluids

Review and submit data

reporting form.

3.5 Review instructions and

complete the form for data

reporting

3.5 Maintain data reporting

records.

1.7

Recordkeeping

Collect and store

necessary records for

compliance

Review and submit

appropriate records

2.4 Assure that appropriate records

are kept

24.7 Assist with recordkeeping

and filing

5.7
4-14

Capital and O&M Costs

Non-Large Semiconductor, LCD, PV and MEMS Facilities: The EPA estimated that

non-large semiconductor facilities and non-semiconductor facilities using the “Tier 2b” or “Tier

2c” method would incur no capital or O&M costs.

Large Semiconductor Facilities: For the largest semiconductor facilities using the “Tier

2d Method”, the EPA has estimated capital and O&M costs associated with developing both

apportioning software and emission factors for the etch processes. Facilities were assumed to

share software development resources if they are owned by the same company; EPA estimated

11 companies own the 29 large semiconductor facilities. Industry apportioning software capital

costs were based on the assumption that each of the 11 companies would pay the full software

development cost (based on 2,000 labor hours required to develop the software at a technical

engineer labor rate) for one of their facilities and each subsequent facility the company owned

would pay 50 percent of the software development cost (i.e., 11 facilities pay full cost and 18

facilities pay 50 percent). Facility software capital cost was then calculated by dividing total

industry software capital cost by 29 facilities. Apportioning software O&M costs were based on

a 10 year software lifetime.16 Industry capital costs for emission factor development (etch

processes only) was assumed to be incurred per company and based on labor costs associated

with three technical engineers (2,000 hours each) needed to develop emission factors. The EPA

assumed that facilities will already have the necessary equipment to develop emission factors

and therefore did not include capital cost estimates for equipment. In order to obtain facility

capital cost for emission factor development, the total industry cost was divided by 29 facilities.

O&M costs for emission factor development represents the cost for updating/revising emission

factors as needed based on changes to a facility’s processes, recipes, or equipment (estimated to

be every 7 years)17. All capital costs (for both software and emission factor development) were

annualized with an interest rate of 7.0 percent.

Other Costs

The EPA estimated that the per-facility optional cost of directly measuring DREs in

accordance with EPA’s DRE Protocol is $71,766. This cost was not included in this economic

analysis since direct measurements of DREs are optional. The cost estimate was based on the

assumption that a large semiconductor facility would have approximately 50 etch tools, all of

16 O&M cost for software is based on 500 labor hours at an industrial engineer labor rate.

17 O&M costs were not factored into first year costs to a facility.
4-15

which have PFC abatement systems. The EPA estimates that 20 percent of these fifty systems

would be required to be tested annually and that it would take two weeks to test these ten

systems per year. The cost for two weeks worth of testing was based on industry estimates and

EPA’s experience conducting DRE testing. While 90 percent of this cost is related to labor and

10 percent is related to freight shipments and measurement study supplies, it was assumed that

the facilities outsource the DRE measurement and thus this cost was not considered a labor cost

for the facility.

4.3.5 Estimation of Facility Costs for Each Threshold Level

Once the labor hours were calculated, by category, for each of the cost elements, they

were multiplied by the associated labor rates to estimate labor costs per facility for each facility

category (large semiconductor facilities, non-large semiconductor facilities, and nonsemiconductor facilities). Finally, the unit cost per facility was multiplied by the number of

facilities that exceed the reporting threshold for each type of facility, resulting in the total

national costs per year for this sector.

4.4 Cost Analysis for Subpart L—Fluorinated Gas Production

4.4.1 Model Facility Development

For the Fluorinated Gas Production subpart, model facilities were developed based on the

number of products at a single facility using known data for Fluorinated Gas Production

facilities. Facilities were then categorized as producing one, three or six products using either

continuous or batch processes. Facilities that were assumed to use continuous processes to

produce their products were assumed to employ two processes per product and two vents per

process. Facilities that were assumed to use batch processes to produce their products were

assumed to employ five processes per product and five vents per process.

Option 1, the Mass Balance Approach, requires that a monthly fluorine or carbon balance

of all inputs and outputs be performed using measurements of the masses of the inputs and

outputs and of the fluorine or carbon content of the inputs and outputs. Greenhouse gas (GHG)

emissions are calculated from the difference of fluorine- or carbon-in minus fluorine- or carbonout. For this evaluation, the average facility using either Mass Balance Approach was assumed

to have four processes on site.

Option 2, the Process Vent Method, requires the development of emission factors for

each process vent. For vents whose GHG emissions exceed 10,000 mt CO2e/year, facilities
4-16

must use emissions testing to establish the emission factor. For other vents, facilities may use

engineering calculations to establish the emission calculation factor. For the purpose of this

evaluation it was assumed that one quarter of the process vents had GHG emissions over 10,000

mtCO2e per year. Thus, for the “average” facility, it was assumed that 25 percent of vents would

be measured by emission testing and the other three quarters would be evaluated using

engineering calculations. Under the proposed rule, facilities are required to develop emission

factors and emission calculation factors in the first year and to update them every ten years

thereafter.

When calculating the cost impact for the Process Vent Method, it was apparent that a

single “outlier” facility was distorting the average cost per facility. This “outlier” is comprised of

many more processes than the average facility, and also consists of processes that are very

complicated and require many steps. Thus, the cost for this particular outlier is not at all

representative of the cost that the “average” facility will see. Thus, the cost for this particular

outlier is not at all representative of the cost that the “average” facility will see. Thus, the outlier

was excluded for purposes of summarizing the typical cost to a facility. However, the outlier

cost was still included for the nationwide impact analysis.

Under the Process Vent Method, Option 2, facilities would be required to estimate their

emissions from equipment leaks every year. Under both Option 1 and Option 2, facilities would

also be required to measure the destruction efficiency of their destruction device (e.g., thermal

oxidizer) initially and every ten years thereafter.

4.4.2 Cost Analysis for Mass Balance Approach - Option 1

This section identifies the costs associated with complying with the rulemaking using

Option 1, the Mass Balance approach. Compliance costs for this option include both labor and

non-labor (capital and O&M) costs and both startup and recurring costs. The “average” plant that

utilized the mass balance approach was estimated to have a total of 4.67 processes. The total

first year cost for the mass balance method is $127,440 in labor costs and $12,061 in capital

costs. Tables 4-5 and 4-6 summarize the labor and non-labor costs respectively.

Initial planning costs were estimated for the time needed to review the rule and prepare

required initial notifications and records. These planning hours include resolving questions,

reviewing drawings, conducting source inspections, defining constraints, writing the engineering

report and onetime costs for equipment leak measurement, such as walk-down and field

verification, populating software and initial monitoring setup costs.
4-17

For the mass balance approach, the first year planning hours include 6.4 management

hours, 12.5 administrative hours and 124.9 hours for the industrial engineer/technician. Quality

assurance/quality control costs for planning, meetings, sample analysis certification and annual

review total 4.6 hours for the industrial manager, 92.9 industrial engineer/technician hours and

37.1 administrative hours. No planning costs are incurred in subsequent years, and QA/QC hours

drop from 135 in the first year to a total of 34 in subsequent years.

Sampling, analysis, monitoring and calculation costs were estimated on a per-continuousprocess basis. Existing facilities have indicated that the mass balance method is not practical for

batch processes, due to higher cost and the nature of the batch processes, so costs for batch

processes have not been calculated.

For the mass balance approach, first year stream sampling and analysis costs include

1798 hours for the industrial engineer/technician, 179.8 administrative hours and 89.9

management hours. This includes 165 engineer/technician hours, 8.25 management hours and

16.5 administrative hours to perform the mass balance measurements and calculations for each of

the 4.67 processes. It also includes 330 engineer/technician hours, 16.5 management hours and

33 administrative hours to complete the scoping study on each of the 3.1 processes above the

one-ton threshold. These costs apply only to the first year.

First year recordkeeping and reporting costs were estimated to include 24.7 industrial

engineer/technician hours, 5.7 management hours and 2.4 administrative hours to compile and

store data annually. Labor requirements for preparing the annual report include 7.3 industrial

engineer/technician hours, 0.7 management hours, and 1.7 administrative hours to prepare the

annual report. These costs remain unchanged in subsequent years.

Capital costs included include $12,061 to hire a consultant to perform Destruction

Efficiency Testing.
4-18

Table 4-5. Subpart L – F-Gas Mass Balance Approach: Labor Costs (2006$)

Activity

Labor Rates (per hour) Labor Cost per Year

per Reporting

Unit/Facility

Legal Managerial Technical Clerical

$101.00 $71.03 $55.20 $29.65

First

Year

Subseq.

Year

First

Year

Subseq.

Year

First

Year

Subseq.

Year

First

Year

Subseq.

Year

First

Year

Subseq.

Year

Planning 6.4 0.0 124.9 0.0 12.5 0.0 $7,719 $0

QA/QC 4.6 1.2 92.9 23.2 37.1 9.3 $6,555 $1,638

Recordkeeping 2.4 2.4 24.7 24.7 5.7 5.7 $1,702 $1,702

Sampling and analysis

(calculations) 89.9 0 1,798.0 0 179.8 0 $110,960 $0

Reporting 0.7 0.7 7.3 7.3 1.7 1.7 $503 $503

Total 0 0 103.99 4.24 2,047.80 55.20 236.80 16.70 $127,440 $3,844

Note: All costs are in constant 2006$s.

Table 4-6. Subpart L – F-Gas Mass Balance Method: Capital and O&M Costs (2006$)

Activity

Cost Categories

Total Reporting

Cost per

Unit/Facility

Capital Cost

Equipment

Lifetime

(years)

Annualized

Capital Cost

(per year)

O&M Costs

(per year)

First

Year

Subseq.

Year

Equipment (selection, purchase,

installation)

Performance testing $12,061 10 $845 $845 $845

Recordkeeping and Reporting

Travel

Sampling costs

Total $12,061 $845 $0 $845 $845

Note: All costs are in constant 2006$s. Annualization uses 7% interest rate.

4.4.3 Cost Analysis for Option 2- Process Vent Testing

This section presents costs associated with complying with the rulemaking using Option

2, Process Vent Testing. These include both labor and non-labor (capital and O&M) costs and

both startup and recurring costs. The “average” plant that utilized the process vent approach was
4-19

assumed to have a total of 5 processes. An average of 2.5 process vents were assumed to be

evaluated by testing. The remaining vents, accounting for 75% of the total vents at a facility,

were assumed to be evaluated using the engineering calculation approach. In effect, this was

assumed to require engineering calculations for each of the 5 processes at the average facility

complying with the Process Vent approach.

In each of the following paragraphs, the costs are broken out between the process vent

emissions estimates and the equipment leak assessment. For the average facility, the total first

year labor cost (Table 4-7) for the process vent method is $124,768. A capital cost of $17,521

per average facility is also estimated, as shown in Table 4-8.

Initial planning costs were estimated for the time needed to review the rule and prepare

required initial notifications and records. These planning hours include resolving questions,

reviewing drawings, conducting source inspections, defining constraints, writing the engineering

report and onetime costs for equipment leak measurement, such as walk-down and field

verification, populating software and initial monitoring setup costs.

For Option 2, the planning labor includes 1.8 hours for the industrial manager, 55.1 hours

for the industrial engineer/technician, and 44 administrative hours, totaling $4,474. There are no

planning costs estimated in subsequent years. Quality assurance/quality control requires an

estimated 105.2 hours during the first year ($4,992), and 26.35 hours in subsequent years

($1,251).

Sampling, analysis, monitoring and calculation costs were on a per-vent basis for the

process vent testing and a per-process basis for process vent calculations and for equipment

leaks.

Sampling and analysis is estimated to require 2,067.33 hours, costing $111,568, during

the first year; and 70.75 hours, costing $3,917, in subsequent years.

Recordkeeping costs were estimated on an annual basis, requiring 32.8 industrial

engineer/technician hours, 2.4 management hours and 16.3 administrative hours to compile and

store data, and costing $2,466. Labor requirements for preparing the annual report included 15.4

industrial engineer/technician hours, 0.7 management hours, and 12.3 administrative hours to

prepare the annual report, at a cost of $1,267.

Capital costs included equipment for leak detection such as the monitoring device and

data collection system. It was assumed that half of the facilities already possess monitoring and
4-20

data collections systems, and that half of the facilities would be required to complete Destruction

Efficiency Testing.

Capital costs for the average facility totaled $17,521 (annualized to $1,227) in equipment

purchases, and an annual rental cost, in subsequent years, of $1,280 for sampling equipment.

Table 4-7. Subpart L – F-Gas Process Vent (Avg. per plant basis): Labor Costs (2006$)

Activity

Labor Rates (per hour) Labor Cost per Year

per Reporting

Unit/Facility

Legal Managerial Technical Clerical

$101.00 $71.03 $55.20 $29.65

First

Year

Subseq.

Year

First

Year

Subseq.

Year

First

Year

Subseq.

Year

First

Year

Subseq.

Year

First

Year

Subseq.

Year

Planning 1.8 0 55.1 0 44.0 0 $4,474 $0

QA/QC 3.4 0.9 67.8 17.0 34.0 8.5 $4,992 $1,251

Recordkeeping 2.4 2.4 32.8 32.8 16.3 16.3 $2,466 $2,466

Sampling and analysis

(calculations) 73.2 0.75 1,849.3 70.0 144.8 0 $111,568 $3,919

Reporting 0.7 0.7 15.4 15.4 12.3 12.3 $1,267 $1,267

Total 0 0 81.48 4.71 2,020.48 135.29 251.48 37.15 $124,768 $8,904

Note: All costs are in constant 2006$s.

Table 4-8. Subpart L – F-Gas Process Vent Method: Capital and O&M Costs (2006$)

Activity

Cost Categories

Total Reporting

Cost per

Unit/Facility

Capital Cost

Equipment

Lifetime

(years)

Annualized

Capital Cost

(per year)

O&M Costs

(per year)

First

Year

Subseq.

Year

Equipment (selection, purchase,

installation) $5,460 10 $382 $382 $382

Performance testing $11,200 10 $845 $845 $845

Recordkeeping and Reporting

Travel

Sampling costs $0 $1,280

Total $17,521 $1,227 $1,227 $2,507
4-21

4.5 Cost Analysis for Subpart DD—Electric Power Systems

4.5.1 Model Facility Development

The model facility for electric power systems is an electric utility that operates an average

amount (nameplate capacity) of SF6-containing transmission equipment. Costs are not expected

to vary widely among utilities because all utilities would track the same set of quantities (SF6

stored, acquired, and disbursed; equipment installed and retired), and the costs of tracking and

reporting these quantities are relatively modest.

The model facility is assumed to already have the capital and technical capability to

monitor and report emissions of SF6 using a mass-balance formula. To use the formula, facilities

must track their SF6 inventory in cylinders, SF6 acquisitions, and SF6 disbursements, as well as

their equipment commissioning and decommissioning. These data are already tracked by

utilities, but not necessarily as closely and comprehensively as required to develop all utility

level mass-balance inputs. Thus, as discussed below, the model facility is assumed to incur some

costs for tracking and reporting SF6 emissions.

4.5.2 Determine Cost Elements

The total costs associated with the proposed rulemaking for electric power systems were

estimated using labor hours from an Information Collection Request (ICR) performed for EPA’s

SF6 Emission Reduction Partnership.18 The labor hours were multiplied by current labor costs to

calculate the reporting costs under the proposed reporting rule.

All labor costs are considered on an annual basis and are divided into the following four

categories:

Regulation Compliance Determination Costs. Recurring costs consist of reviewing the

instructions of the mass-balance reporting form and associated materials to ensure the proper

procedures are in place to obtain technically accurate inputs.

Monitoring Costs. Recurring costs consist of gathering information for the mass-balance

reporting form and associated materials. The information gathered represents the movement of

SF6 throughout the system. Since SF6 is often handled and stored at the substation level,

18 EPA. (2000). Supporting statement for EPA Information Collection Request number 1933.01 “Information

collection activities associated with EPA’s SF6 Emission Reduction Partnership for Electric Power Systems.”
4-22

collecting information is usually a bottom-up process that is the most labor-intensive activity in

the reporting process.

Reporting Costs. Recurring costs consist of completing and reviewing the information

requested by the mass-balance reporting form and associated materials as well as submitting all

materials.

Recordkeeping Costs. Recurring costs consist of maintaining a record of the emissions

inventory and documentation.

4.5.3 Proportion of Facilities in Different Model Facility Levels

There is only one model facility for electric power systems.

4.5.4 Assigning Costs to Cost Elements

Determine Labor Categories

To evaluate labor costs, it was not only necessary to determine the amount of time

required for all of the tasks associated with the compliance, monitoring, reporting, and

recordkeeping activities, but also to determine who will perform each task. For this analysis,

three labor categories were used as shown in Table 4-9.

Table 4-9. Labor Categories and Hourly Rates

Labor Category Description Loaded Hourly Rate ($/hour)

Managerial Oversees work at a high level and

is the final authority on all

reporting requirements. Reviews

reporting forms to ensure accuracy

and consistency

$71.03/hour

Technical Compiles data to develop massbalance inputs. Performs emission

calculations on reporting form

$55.20/hour

Clerical Assists with documentation and

recording information

$29.65/hour
4-23

Allocate Responsibilities and Estimate Labor Hours

Labor hours for all cost elements were estimated based on consultation between EPA and

SF6 Emission Reduction Partners conducted for the 2000 Partnership ICR. Table 4-10

summarizes the allocation of hours and responsibilities by labor category.

Table 4-10. Responsibilities for Regulation Compliance by Labor Category

Cost Element

Responsibilities and Hours by Labor Category

Managerial Technical Clerical Per Facility/

Per

Responsibilities Hours Responsibilities Hours Responsibilities Hours Company

Regulation Compliance Determination Costs

Review the

instructions, SF6

mass-balance

reporting form, and

associated materials

Review the

instructions to

the level

required to

perform

oversight

responsibilities

1 Review the

instructions to

the level

required to

compile data

and perform

necessary

calculations

1.5 Per Facility

Monitoring Costs

Gather information

for the SF6 massbalance reporting

form and associated

materials

Institute and

oversee proper

data collection

procedures that

account for all

SF6 within the

system

4 Compile SF6

data and sort

data into

appropriate

input categories

for the massbalance formula

17 Perform

measurements

and collect

documentation

that track SF6 gas

movements

11 Per Facility

Reporting Costs

Complete and review

the information

requested by the SF6

mass-balance

reporting form and

associated materials

Review

reporting forms

to ensure

accuracy and

consistency

3.5 Calculate inputs

for the massbalance

reporting form.

Perform facilitywide SF6

emission

calculations

3.5 Provide data and

supporting

documentation to

technical and

managerial staff

1.5 Per Facility

Submit the SF6

mass-balance

reporting form and

associated materials

0 0 Combine the

mass-balance

reporting form

with all

necessary

materials and

submit

0.2 Per Facility

Recordkeeping Costs

Maintain a record of

the emissions

inventory and

documentation

0 0 File the massbalance reporting

form and

associated

materials into the

recordkeeping

0.2 Per Facility
4-24

Cost Element

Responsibilities and Hours by Labor Category

Managerial Technical Clerical Per Facility/

Per

Responsibilities Hours Responsibilities Hours Responsibilities Hours Company

system

Other Costs

Other costs consist of postage costs—for submitting materials in a one ounce package,

and photocopying costs—for maintaining records of the reporting form and associated materials.

These costs were gathered by EPA in the SF6 Emission Reduction Partnership ICR.

Table 4-11. Other Costs Associated with Reporting and Recordkeeping

Element Description Costs ($)

Postage Costs Postage costs for submitting the reporting form and associated materials $0.38

Photocopying

Costs

Photocopying costs for maintaining a record of the emissions inventory

and associated materials $11.66

4.5.5 Estimate per Facility Costs for Each Threshold Level

Once the labor hours were calculated, by category, for each of the cost elements, they

were multiplied by the associated labor rates to estimate labor costs per facility. Other costs,

consisting of postage and photocopying, were then added to the labor costs to calculate the total

cost per facility. For calculating national costs, the total cost per facility was multiplied by 141,

which is the number of facilities that exceed the reporting threshold.

4.6 Cost Analysis for Subpart QQ—Imports and Exports of Fluorinated GHGs

4.6.1 Model Facility Development

Importers and exporters of products containing fluorinated GHGs include manufacturers,

distributors, and retailers of these products. Such products include several types of refrigeration

and air-conditioning equipment and foams containing HFCs and electrical equipment containing

SF6. This analysis does not consider the costs of CO2 and N2O contained in imported and

exported products. Although EPA does not have data on the amount of CO2 or N2O imported

and exported in products (e.g., carbonated sodas and cans of whipped cream), the relatively small

quantities of CO2 or N2O contained in each unit and the relatively low GWPs of these gases
4-25

(compared to those of the fluorinated GHGs) imply that the CO2-equivalent quantities imported

are likely to be small both nationally and per importer.

There is one model entity that represents importers/exporters of products containing

fluorinated GHGs and the specific reporting activities and costs.

 Importers/Exporters of fluorinated GHG--containing products: An entity that imports or

exports products or foam containing fluorinated GHGs or equipment containing SF6.

This entity is assumed to import or export 15 equipment types (with distinct charge sizes

and possibly chemicals) in 20 shipments each year.

The proposed monitoring method for fluorinated GHGs-containing products and

equipment requires the identification of the total amount of each fluorinated GHG

imported/exported inside the products and/or the quantity of products imported/exported (e.g.,

number of pieces of equipment) along with information on the identity and quantity of the

fluorinated GHG in each unit or piece. Persons importing equipment that contain both a

fluorinated GHG refrigerant and a foam blown with a fluorinated GHG (e.g., household

refrigerators) would separately report these GHGs (which are generally different). Similarly,

total exports of chemical actually contained in exported equipment, foams, or other products

would be reported by exporters, by chemical in metric tons or metric tCO2e. Trans-shipments

(i.e., products containing GHGs that originate in a foreign country and enter the United States en

route to an ultimate destination in another foreign country) would be exempt from reporting.

Importers/exports of products containing fluorinated GHGs would report their imports/exports

on the corporate level.

Table 4-12 presents the number of affected entities that would be subject to the rule based

on alternative emission thresholds.
4-26

Table 4-12. Number of Representative Affected Entities Used in the Cost Analysis

Threshold

Number of Representative Entitiesa

All HFC Equipment All Foam Products All SF6 Equipment

Importers Exporters Importers Exporters Importers Exporters

1,000 50 25 50 25 8 10

10,000 50 25 50 25 8 5

25,000 50 25 50 25 8 0

100,000 50 25 50 25 8 0

aWhile listed separately in the table above to illustrate the number of importers and number of exporters, importers and exporters

are the same entities for SF6 equipment, and in some cases, the same entities for HFC equipment and foam products. As such,

the per-facilities costs will increase—to reflect activities associated with both importing and exporting, and the overall number of

respondents will decrease given the overlap.

4.6.2 Determine Cost Elements

The total costs associated with complying with the proposed rulemaking can be broken

into 4 elements, each of which is described below.

Monitoring Costs. Costs for tracking quantities of products imported and the quantity of

fluorinated GHGs in these products include first-year costs to establish a system such as a

spreadsheet or database to track charge sizes for different types of equipment and the

numbers of pieces of that type of equipment that are imported. Subsequent year costs

include maintaining this system.

Reporting Costs. The reporting costs associated with complying include annual labor

hours for reporting the quantities of products or foam imported and/or exported; and the

name and quantity of fluorinated GHG within each product or foam imported and/or

exported.

Record Keeping Costs. Additional and reporting ($500) costs were also added to each

facility.

4.6.3 Analyze Proportion of Facilities in the Different Model Facility Categories

To classify facilities into different groups, the activities undertaken at each model facility

type were evaluated. The activities conducted by each model facility are listed in the model

facility development section for this subpart. Table 4-13 indicates the number of facilities that

fall into each model facility category.
4-27

Table 4-13. Allocation of Facilities to Model Types

Segment Number of Facilities

Importer of HFC-containing equipment

50

Exporters of HFC-containing equipment

25

Importer of HFC-containing foams

50

Exporter of HFC-containing foams

25

Importers of SF6-containing equipment

8

Exporters of SF6-containing equipment

10

4.6.4 Assigning Costs to Cost Elements

Determining Labor Categories

To evaluate labor costs, it was not only necessary to determine the amount of time

required for all of the tasks associated with monitoring, but also to determine who will perform

each task. For this analysis, two labor categories were used as shown in Table 4-14.

Table 4-14. Labor Categories and Hourly Rates

Labor Category Description

Loaded Hourly Rate

(2006$/hour)

Managerial Oversees work at a high level and

is the final authority on all

reporting requirements.

$71.03/hour

Technical Conducts monitoring of emissions

sources, checks for accuracy,

performs measurements.

$55.20/hour

Allocating Responsibilities and Estimate Labor Hours

Assigning labor hours for all cost elements was based on the following approach.

To determine hours for the first year, the time to assemble relevant paperwork for the first

year was taken into account, as well as the time to develop a listing of equipment types and foam

products, and the time to enter in the data for all equipment types across all shipments.
4-28

To determine hours for subsequent years, the time to maintain the ongoing, relevant

paperwork was taken into account as well as the time to enter in the data for all equipment types

across all shipments. Management time in both the first and subsequent years was assumed to

represent 10 percent of total time for both the first and subsequent years.Table 4-15 summarizes

the allocation of hours and responsibilities by labor category. The reporting labor hours shown

in this table represent the time estimated to complete the cost element for all activities applicable

to the entity (i.e., import, export).

Table 4-15. Responsibilities for Regulation Compliance by Labor Category

Cost Element

Responsibilities and Hours by Labor Category

Managerial Technical

Per Facility/

Per

Company*

Responsibilities Hours Responsibilities Hours

Importer/Exporter of Fluorinated GHG-containing Product (including foams and SF6-containing equipment)

Registration Compliance Data

None Estimated

Monitoring

First Year:

Tracking System

To oversee the design of a

database or spreadsheet to

track imports/exports

4 To establish a database or

spreadsheet to track

imports/exports

40 Per Company

Subsequent Years:

Tracking System

To review maintained

tracking system

3 To update and maintain

tracking system

31 Per Company

Reporting

Report Data To review the data 1 To collect data records

already measured by an

instrument

3 Per Company

Record Keeping

None Estimated

Once the labor hours were calculated, by category, for each of the cost elements, they

were multiplied by the associated labor rates to estimate labor costs per facility. No additional

costs are assumed.
4-29

Capital Cost Annualization and O&M Costs

There are no assumed capital costs related to monitoring emissions and archiving of

information, and therefore there are no associated O&M costs.

4.6.5 Estimate per Facility Costs for Each Threshold Level

Once the labor hours were calculated, by category, for each of the cost elements (as

shown in Table 4-15, they were multiplied by the associated labor rates (as shown in Table 4-14)

to estimate labor costs per facility. The unit cost per entity was multiplied by the number of

facilities that exceed the reporting threshold (as shown in Table 4-13), to determine the total

national costs per year for this sector.

4.7 Subpart SS—Electrical Equipment Manufacturing

4.7.1 Model Facility Development

The model facility for electrical equipment manufacture or refurbishment and

manufacturing of electrical components is a manufacturer that produces an average amount

(nameplate capacity) of SF6-containing transmission and distribution equipment. Costs are not

expected to vary widely among electrical equipment manufacturers because all manufacturers

would track the same set of quantities (SF6 stored, acquired, and disbursed), and the costs of

tracking and reporting these quantities are relatively modest.

The model facility is assumed to already have the capital and technical capability to

monitor and report emissions of SF6 using a mass-balance formula. To use the formula, facilities

must track their SF6 inventory in cylinders, SF6 acquisitions, and SF6 disbursements. These data

are already tracked by electrical equipment manufacturers, but not necessarily as closely and

comprehensively as required to develop all manufacturer-level mass-balance inputs. Thus, as

discussed below, the model facility is assumed to incur some costs for tracking and reporting SF6

emissions.

Table 4-16 presents the number of affected entities that would be subject to the rule based

on alternative emission thresholds under subpart SS.
4-30

Table 4-16. Number of Representative Affected Entities Used in the Cost Analysis

Threshold

Number of

Representative Entities

1,000 10

10,000 10

25,000 10

100,000 5

4.7.2 Determine Cost Elements

The total costs associated with the proposed rulemaking for electrical equipment

manufacturers were estimated using labor hours from an Information Collection Request (ICR)

performed for EPA’s SF6 Emission Reduction Partnership.19,20 The labor hours were multiplied

by current labor costs to calculate the reporting costs under the proposed reporting rule. All labor

costs are considered on an annual basis and are divided into the following four categories:

Regulation Compliance Determination Costs. Recurring costs consist of reviewing the

instructions of the mass-balance reporting form and associated materials to ensure the proper

procedures are in place to obtain technically accurate inputs.

Monitoring Costs. Recurring costs consist of gathering information for the mass-balance

reporting form and associated materials. The information gathered represents the movement of

SF6 throughout the system.

Reporting Costs. Recurring costs consist of completing and reviewing the information

requested by the mass-balance reporting form and associated materials as well as submitting all

materials.

Recordkeeping Costs. Recurring costs consist of maintaining a record of the emissions

inventory and documentation.

19 EPA. (2000). Supporting statement for EPA Information Collection Request number 1933.01 “Information

collection activities associated with EPA’s SF6 Emission Reduction Partnership for Electric Power Systems”

20 Although the ICR was focused on the costs of reporting SF6 emissions from electric utilities rather than electrical

equipment manufacturers, the inputs required to calculate emissions and the activities involved with reporting are

similar for both sectors. Therefore, the costs incurred for electrical equipment manufacturers are assumed to be the

same as the costs incurred for electric power systems.
4-31

4.7.3 Analyze Proportion of Facilities in the Different Model Facility Categories

There is only one model facility for electrical equipment manufacture or refurbishment

and manufacturing of electrical components.

4.7.4 Assigning Costs to Cost Elements

Determining Labor Categories

To evaluate labor costs, it was not only necessary to determine the amount of time

required for all of the tasks associated with monitoring, but also to determine who will perform

each task. For this analysis, two labor categories were used as shown in Table 4-17.

Table 4-17. Labor Categories and Hourly Rates

Labor Category Description Loaded Hourly Rate ($/hour)

Managerial Oversees work at a high level and

is the final authority on all

reporting requirements. Reviews

reporting forms to ensure accuracy

and consistency

$71.03/hour

Technical Compiles data to develop massbalance inputs. Performs emission

calculations on reporting form

$55.20/hour

Clerical Assists with documentation and

recording information

$29.65/hour

Allocating Responsibilities

Labor hours for all cost elements were estimated based on consultation between EPA and

SF6 Emission Reduction Partners conducted for the 2000 Partnership ICR. Table 4-18

summarizes the allocation of hours and responsibilities by labor category.
4-32

Table 4-18. Responsibilities for Regulation Compliance by Labor Category Per Facility

Cost Element

Responsibilities and Hours by Labor Category

Managerial Technical Clerical

Responsibilities Hours Responsibilities Hours Responsibilities Hours

Regulation Compliance Determination Costs

Review the instructions, SF6 massbalance reporting form, and

associated materials

Review the instructions to the

level required to perform

oversight responsibilities

1 Review the instructions to the

level required to compile data

and perform necessary

calculations

1.5 0

Monitoring Costs

Gather information for the SF6 massbalance reporting form and

associated materials

Institute and oversee proper data

collection procedures that account

for all SF6 within the system

4 Compile SF6 data and sort data

into appropriate input categories

for the mass-balance formula

17 Perform measurements and collect

documentation that track SF6 gas

movements

11

Reporting Costs

Complete and review the information

requested by the SF6 mass-balance

reporting form and associated

materials

Review reporting forms to ensure

accuracy and consistency

3.5 Calculate inputs for the massbalance reporting form. Perform

facility-wide SF6 emission

calculations

3.5 Provide data and supporting

documentation to technical and

managerial staff

1.5

Submit the SF6 mass-balance

reporting form and associated

materials

0 0 Combine the mass-balance

reporting form with all necessary

materials and submit

0.2

Recordkeeping Costs

Maintain a record of the emissions

inventory and documentation

0 0 File the mass-balance reporting

form and associated materials into

the recordkeeping system

0.2
4-33

4.7.5 Other Costs

Other costs consist of postage costs—for submitting materials in a one ounce package,

and photocopying costs—for maintaining records of the reporting form and associated materials.

These costs were gathered by EPA in the SF6 Emission Reduction Partnership ICR and are

presented in Table 4-19.

Table 4-19. Other Costs Associated with Reporting and Recordkeeping

Element Description Costs ($)

Postage Costs Postage costs for submitting the reporting form and associated materials $0.38

Photocopying Costs Photocopying costs for maintaining a record of the emissions inventory and

associated materials

$11.66

4.7.6 Estimate per Facility Costs for Each Threshold Level

Once the labor hours were calculated, by category, for each of the cost elements, they

were multiplied by the associated labor rates to estimate labor costs per facility. Other costs,

consisting of postage and photocopying, were then added to the labor costs to calculate the total

cost per facility. For calculating national costs, the total cost per facility was multiplied by 10,

which is the number of facilities that exceed the reporting threshold.

4.8 Public Sector Burden

EPA estimates the public sector burden to be $383,582 per year; $72,000 per year is for

verification activities, and remaining costs are for program implementation and developing and

maintaining the data collection system. Program implementation activities include, but are not

limited to, developing guidance and training materials to assist the regulated community,

responding to inquires from affected facilities on monitoring and applicability requirements, and

developing tools to assist in determining applicability.
5-1

SECTION 5

ECONOMIC IMPACT ANALYSIS

EPA has prepared an EIA to provide decision makers with a measure of the social costs

of using resources to comply with the proposed GHG reporting requirements. As noted in EPA’s

(2000) Guidelines for Preparing Economic Analyses, several tools are available to estimate

social costs and range from simple direct compliance cost methods to the development of a more

complex market analysis that estimates market changes (e.g., price and consumption) and

economic welfare changes (e.g., changes in consumer and producer surplus). Given data

limitations and the size scope of the proposed rule, EPA has used the direct compliance cost

method as a measure of social costs.

5.1 Selection of Reporting Thresholds

5.1.1 Subpart I- Electronics Manufacturing

This analysis is based on the costs of monitoring fluorinated greenhouse gas and N2O

emissions from electronics manufacturing facilities. Electronics manufacturing facilities were

broken into three categories; non-semiconductor electronics (3 facilities), largest semiconductor

(29 facilities), and non-largest semiconductor (62 facilities). Non- semiconductor electronics

facilities include facilities that manufacture micro-electro-mechanical systems (MEMS), liquid

crystal displays (LCDs), and photovoltaics (PV).

In the initial proposal, EPA proposed capacity-based thresholds equivalent to 25,000

metric tons of CO2e for manufacture of semiconductors, LCDs, and MEMS, and an emissionsbased threshold of 25,000 metric tons of CO2e for manufacture of PV. As stated in the initial

proposal, EPA proposed to use a capacity-based threshold based on the published capacities of

facilities, as opposed to an emissions-based threshold, where possible, because EPA believed

that it simplified the applicability determination. In comments received in response to the initial

proposed rule, several comments indicated that the proposed capacity-based threshold created

ambiguity. In response to the comments received on the initial proposed capacity-based

threshold, EPA is now proposing an emissions-based threshold of 25,000 mtCO2e for

manufacture of semiconductors, LCD, MEMS, and PV.

In the analysis, EPA considered emission thresholds of 1,000 metric tons CO2e, 10,000

metric tons CO2e, 25,000 metric tons CO2e, and 100,000 metric tons CO2e per year. This

analysis used IPCC Tier 1 emission factors and assumed no abatement. Table 5-1 presents the

emissions and facilities that would be captured by the respective emissions thresholds.
5-2

Table 5-1. Threshold Analysis for Subpart I – Electronics Manufacturing Industry

Emission

Threshold

Level (metric

tons CO2e/yr)

Total

National

Emissions

(metric tons

CO2e/yr)

Total

Number of

Facilities

Emissions Covered Facilities Covered

metric tons

CO2e/yr Percent Facilities Percent

1,000 5,984,463 216 5,962,091 99.6% 165 76%

10,000 5,984,463 216 5,813,200 97% 114 53%

25,000 5,984,463 216 5,622,570 94% 94 44%

100,000 5,984,463 216 4,737,622 79% 55 26%

EPA selected the 25,000 metric tons CO2e per year threshold because this threshold

maximizes emissions reporting, while excluding small facilities that do not contribute

significantly to the overall GHG emissions.

The proposed emissions-based thresholds are estimated to include approximately 76

percent of semiconductor facilities and 7 percent of the non-semiconductor facilities (see Table

5-2). At the same time, the thresholds are expected to cover nearly 96 percent of fluorinated

GHG emissions from semiconductor facilities, and 54 percent of fluorinated GHG emissions

from non-semiconductor facilities.
5-3

Table 5-2. Summary of Rule Applicability under the Proposed Emission-Based Thresholds

for Subpart I – Electronics Manufacturing Industry

Emission Threshold

Level (metric tons

CO2e/yr)

Total

National

Emissions

(metric tons

CO2e/yr)

Total

Number of

Facilities

Emissions Covered Facilities Covered

Total Emissions

of Source

(metric tons

CO2e)

metric

tons

CO2e/yr Percent Facilities Percent

Semiconductors 25,000 175 5,741,676 5,492,066 96% 91 52%

Non-Semiconductors 25,000 41 242,786 130,504 54% 3 7%

Combined these emissions are estimated to account for close to 94 percent of fluorinated

GHG emissions from the electronics industry as a whole. To determine whether a manufacturer

falls above or below the proposed 25,000 metric tons of CO2e, EPA is proposing that

semiconductor, and non-semiconductor MEMS facilities use gas specific 2006 IPCC Tier 1

emission factors assuming 100% manufacturing capacity to calculate annual metric tons of

emissions in CO2 equivalents. For non-semiconductor PV facilities, EPA is proposing that they

facilities multiply annual fluorinated GHG purchases or consumption by the gas-appropriate

100-year GWPs, as defined in Table A-1 to Subpart A of Part 98, to calculate annual metric tons

of emissions in CO2 equivalents. None of these calculations shall account for emission

abatement technologies.

For additional background information on the threshold analysis, refer to the Electronics

Manufacturing TSD (EPA-HQ-OAR-2009-0927). For specific information on costs, including

unamortized first year capital expenditures, please refer to section 4.3.

5.1.2 Subpart L- Fluorinated Gas Production

Under the proposed rule, owners and operators of fluorinated gas production facilities

would be required to estimate and report GHG emissions if those emissions, including both

combustion and fluorinated GHG emissions, would exceed 25,000 mtCO2e in the absence of

control technology (e.g., thermal oxidation).

21

21 Following the precedents set by other Clean Air Act regulations, EPA is using the term “uncontrolled” to describe

such emissions. Specifically, EPA is proposing to define “uncontrolled fluorinated GHG emissions” as a gas

stream containing fluorinated GHG which has exited the process (or process condenser, where applicable), but
5-4

In developing the threshold, we considered multiple controlled and uncontrolled

emissions thresholds, including 1,000, 10,000, 25,000, and 100,000 metric tons CO2e. For

fluorinated GHG production processes (including fluorinated anesthetics production processes),

uncontrolled (pre-control) emissions were estimated by multiplying a factor of 3 percent by the

estimated production at each facility. For CFC and HCFC production processes (except for

HCFC-22 production processes), uncontrolled emissions were estimated by multiplying a factor

of 2 percent by the estimated production at each facility. Uncontrolled emissions are strongly

influenced by by-product generation rates, which are known to vary between zero and several

percent for fluorinated gas production processes; thus, these estimates are uncertain. Controlled

emissions were assumed to be half of uncontrolled emissions at each facility. Because EPA has

little information on combustion-related emissions at fluorinated gas production facilities, these

emissions were not included in the analysis. The results of the analysis for production of HFCs,

PFCs, SF6, NF3, CFCs, and HCFCs are shown in Tables 5-3 and 5-4.

Table 5-3. Threshold Analysis for Fluorinated GHG Emissions from Production of HFCs,

PFCs, SF6, NF3, CFCs, and HCFCs (Uncontrolled Emissions)

Threshold

Level (metric

tons CO2e/r)

Total National

Emissions

(metric tons

CO2e)

Number of

Facilities

Emissions Covered Facilities Covered

Metric tons

CO2e Percent Number Percent

1,000 10,600,000 14 10,600,000 100% 14 100%

10,000 10,600,000 14 10,600,000 100% 14 100%

25,000 10,600,000 14 10,600,000 100% 14 100%

100,000 10,600,000 14 10,600,000 100% 13 93%

which has not yet been introduced into an air pollution control device to reduce the mass of fluorinated GHGs in

the stream. The term does not imply that the emissions are never controlled, but is synonymous with “precontrol emissions.”
5-5

Table 5-4. Threshold Analysis for Fluorinated GHG Emissions from Production of HFCs,

PFCs, SF6, NF3, CFCs, and HCFCs (Controlled Emissions)

Threshold

Level (metric

tons CO2e/r)

Total National

Emissions

(metric tons

CO2e)

Number of

Facilities

Emissions Covered Facilities Covered

Metric tons

CO2e Percent Number Percent

1,000 10,600,000 14 10,600,000 100% 14 100%

10,000 10,600,000 14 10,600,000 100% 14 100%

25,000 10,600,000 14 10,600,000 100% 14 100%

100,000 10,600,000 14 10,300,000 97% 10 71%

As can be seen from the tables, most HFC, PFC, SF6, NF3, CFC, and HCFC production

facilities would be covered by all the thresholds considered. Although we do not have facilityspecific production information for producers of fluorinated anesthetics, we believe that few or

none of these facilities are likely to have uncontrolled emissions above the proposed threshold.

However, it is possible that EPA has underestimated total pre-control emissions from anesthetics.

In its threshold analysis for fluorinated GHG production, EPA has assumed that emissions have

GWPs similar to those of the product produced. However, fluorinated anesthetics are

hydrofluoroethers, and other HFE production processes of which EPA is aware generate byproducts with higher GWPs than the product. A full discussion of the threshold selection analysis

is available in the revised Fluorinated GHG Production TSD (EPA-HQ-OAR-2009-0927-012).

5.1.3 Subpart DD- Sulfur Hexafluoride from Electric Power Systems

The model facility for electric power systems is an electric utility that operates an average

amount (nameplate capacity) of Sulfur Hexafloride (SF6)-containing transmission equipment.

Costs are not expected to vary widely among utilities because all utilities would track the same

set of quantities (SF6 stored, acquired, and disbursed; equipment installed and retired), and the

costs of tracking and reporting these quantities are relatively modest.

In the analysis, EPA considered emission thresholds of 1,000 metric tons CO2e, 10,000

metric tons CO2e, 25,000 metric tons CO2e, and 100,000 metric tons CO2e per year. This

analysis used IPCC Tier 1 emission factors and assumed no abatement. Table 5-5 presents the

emissions and facilities that would be captured by the respective emissions thresholds.
5-6

Table 5-5. Threshold Analysis for Subpart DD – Electric Power Systems

Emission

Threshold

Level (metric

tons CO2e/yr)

Total

National

Emissions

(metric tons

CO2e/yr)

Total

Number of

Facilities

Emissions Covered Facilities Covered

metric tons

CO2e/yr Percent Facilities Percent

1,000 12,400,000 1,364 12,190,000 98.31% 578 42.38%

10,000 12,400,000 1,364 10,960,000 88.39% 183 13.42%

25,000 12,400,000 1,364 10,320,000 83.23% 141 10.34%

100,000 12,400,000 1,364 5,950,000 47.98% 35 2.57%

EPA selected the 25,000 metric tons CO2e per year threshold because this threshold

maximizes emissions reporting, while excluding small facilities that do not contribute

significantly to the overall GHG emissions.

The proposed emissions-based thresholds are estimated to include approximately 10

percent of electrical power systems transmission equipment (see Table 5-5). At the same time,

the thresholds are expected to cover nearly 83 percent of SF6 emissions.

5.1.4 Subpart QQ- Imports and Exports of Fluorinated GHGs in Pre-Charged Equipment

and Closed-Cell Foams

Under the current proposal, EPA is proposing to require that importers and exporters of

F-GHGs contained in pre-charged equipment and closed cell foams report their imports and

exports if either their total imports or their total exports, in equipment, foams, and in bulk,

exceed 25,000 mtCO2e per year. This threshold is the same as that for bulk imports and exports.

Table 5-6. Threshold Analysis for Subpart QQ–Imports of Fluorinated GHGs in PreCharged Equipment and Closed-Cell Foams

HFC Refrigeration/AC

Equipment SF6 Electrical Equipment Closed-cell Foams

Threshold

Level

Imports

Covered

Importers

Covered

Imports

Covered

Importers

Covered

Imports

Covered

Importers

Covered

1,000 16,992,965 50 1,888,932 8 3,025,285 50

10,000 16,992,965 50 1,888,932 8 3,025,285 50

25,000 16,992,965 50 1,888,932 8 3,025,285 50

100,000 16,992,965 50 1,888,932 8 0 0
5-7

Table 5-7. Threshold Analysis for Subpart QQ–Exports of Fluorinated GHGs in PreCharged Equipment and Closed-Cell Foams

HFC Refrigeration/AC

Equipment SF6 Electrical Equipment Closed-cell Foams

Threshold

Level

Exports

Covered

Exporters

Covered

Exports

Covered

Exporters

Covered

Exports

Covered

Exporters

Covered

1,000 3,061,830 25 153,323 10 1,089,177 25

10,000 3,061,830 25 107,326 5 1,089,177 25

25,000 3,061,830 25 0 0 1,089,177 25

100,000 3,061,830 25 0 0 0 0

5.1.5 Subpart SS- Electrical Equipment Manufacture or Refurbishment and Manufacturing

of Electrical Components

EPA is proposing to require electrical equipment manufacturers to report their SF6 and

PFC emissions if their total annual purchases of SF6 or PFCs exceed 23,061 lbs. This

consumption-based threshold is equivalent to an emissions-based threshold of 25,000 mtCO2e,

assuming an average manufacturer emission rate of 10%. EPA chose the consumption-based

threshold, as it is believed to allow equipment manufacturers to quickly determine if they are

subject to reporting requirements by referencing their SF6 purchase records.

Table 5-8. Threshold Analysis for Subpart SS– Electrical Equipment Manufacture or

Refurbishment and Manufacturing of Electrical Components

Emission Threshold (Mt CO2 Eq) 1,000 10,000 25,000 100,000

Consumption Threshold (lbs. of SF6) 922 9,220 23,061 92,244

Number of Facilities Above 10 10 10 5

Percent of Facilities Above 100% 100% 100% 50%

Total Emissions of Facilities Above (Mt CO2 Eq) 814,128 814,128 814,128 569,890

Percent of Emissions Above 100% 100% 100% 70%

5.1.6 National Emissions Covered Under Selected Thresholds

The total national emissions covered under the selected options are 53.4 MtCO2e (Table

5-9). The majority of these covered emissions are from the importers and exporters of fluorinated

GHGs covered by Subpart QQ (26.1MtCO2e). Although the majority of cost and emissions

information reported in this economic and small entity analysis is organized by subpart, EPA
5-8

also mapped each subpart to an industry included in the North American Industry Classification

System (NAICS); the mapping allows the cost data to be used in conjunction with other

economic census data.

Table 5-9. Estimates of Emissions (MtCO2e) Reported in 2008 Under the Selected Option

Subpart Emissions Coverage (MtCO2e)

Subpart I - Electronics Industry 5.6

Subpart L - Fluorinated Gas Production 10.6

Subpart DD – Sulfur Hexalfuoride (SF6) from Electric Power Systems 10.3

Subpart QQ - Imports and Exports of Fluorinated GHGs 26.1

Subpart SS - Electrical Equipment Manufacture or Refurbishment and

Manufacturing of Electrical Components 0.8

Total 53.4

5.2 National Cost Estimates

As shown in Table 5-10, the total national costs for the selected option are estimated to

be $7.6 million in the first year and $7.24million in subsequent years ($2006). This includes a

public sector burden estimate of $384,000 for program implementation and verification

activities. Subparts bearing the greatest share of the ongoing private costs of the rule in the first

year are the electronics industry (38%) and fluorinated gas producers (40%).

In addition to total national costs by subpart under the selected option, we also report

average cost per ton to support additional analysis of the greenhouse reporting programs. The

average ongoing (subsequent year) private cost per metric ton varies by subpart; measures range

from less than $0.01 per ton (Subpart SS) to $0.36 per ton (Subpart I).
5-9

Table 5-10. National Cost Estimates by Subpart: Selected Option

First Year Subsequent Years

Subpart

2007

NAICS

Millions

2006$ $/ton Share

Millions

2006$ $/ton Share

Subpart I - Electronics

Industry 334413, 334119 $2.9 $0.52 38% $5.4 $0.96 76%

Subpart L - Fluorinated Gas

Productiona325120 $3.0 $0.28 40% $0.2 $0.02 2%

Subpart DD – Electric

Transmission and

Distribution Equipment Use 221121 $0.6 $0.05 7% $0.6 $0.05 8%

Subpart QQ - Imports and

Exports of Fluorinated

GHGs

326140, 326150,

333415, 335313,

336391, 423610,

423620, 423720,

421730, 421740,

443111, 443112,

422610 $0.7 $0.03 9% $0.6 $0.02 9%

Subpart SS - Electrical

Equipment Manufacture

and Refurbishment and

Manufacturing of Electrical

Components 33361, 33531 $0.02 $0.03 0.3% $0.02 $0.03 0%

Private Sector, Total $7.2 95% $6.8 95%

Public Sector, Total $0.4 5% $0.4 5%

Total $7.6 100% $7.2 100%

a

Subpart L costs include costs for outlier facility. Columns may not sum to totals due to rounding. .

5.3 Economic Impact Analysis

EPA assessed how the regulatory program may influence the profitability of companies

by comparing the monitoring program costs to total sales (i.e., a “sales” test). The techniques

and data we use are identical to the MRR rule and focus on small entities. We provide additional

details of the analysis below.

5.3.1 Overall Method of Assessing Economic Impacts

To assess the possible economic impacts associated with the rule, EPA compared perfacility program costs to facility sales for facilities of various sizes. Data on sales revenues for

facilities of various sizes was obtained from the Census Bureau’s Statistics of U.S. Businesses

(SUSB) database for 2002. SUSB provides establishment-level information on revenues

enterprise size; EPA is assuming that “enterprise” corresponds to firm or company, and

“establishment” corresponds to facility. Facility-level costs of complying with the rule are

compared to sales revenues for typical facilities, and for facilities owned by companies of
5-10

various sizes in the tables below. As noted above, the focus of our analysis is impacts to small

entities.

5.3.2 Assessing Economic Impacts on Small Entities

The first step in this assessment was to determine whether the rule will have a significant

impact on a substantial number of small entities (SISNOSE). To make this determination, EPA

used a screening analysis that allows us to indicate whether EPA can certify the rule as not

having a SISNOSE. The elements of this analysis included

 identifying affected subparts and entities,

 selecting and describing the measures and economic impact thresholds used in the

analysis, and

 determining SISNOSE certification category.

5.3.2.1 Identify Affected Subparts and Entities

The industry subparts covered by the rule were identified during the development of the

cost analysis for the reporting rule. The SUSB data provide national information on the

distribution of economic variables by industry and size. These data were developed in

cooperation with, and partially funded by, the Office of Advocacy of the Small Business

Administration (SBA) (SBA, 2008a). The data include the number of establishments

(Table 5-11), and receipts (Table 5-12) and present information on all entities in an industry

covered by the rule; however, many of these entities would not be expected to report under the

preferred option because they would fall below the 25,000 hybrid threshold. SUSB also provides

this data by enterprise employment size. The census definitions in this data set are as follows:

 establishment: An establishment is a single physical location where business is

conducted or where services or industrial operations are performed.

 employment: Paid employment consists of full- and part-time employees, including

salaried officers and executives of corporations, who were on the payroll in the pay

period including March 12, 2002. Included are employees on sick leave, holidays, and

vacations; not included are proprietors and partners of unincorporated businesses.

 receipts: Receipts (net of taxes) are defined as the revenue for goods produced,

distributed, or services provided, including revenue earned from premiums,

commissions and fees, rents, interest, dividends, and royalties. Receipts exclude all

revenue collected for local, state, and federal taxes.
5-11

 enterprise: An enterprise is a business organization consisting of one or more

domestic establishments that were specified under common ownership or control. The

enterprise and the establishment are the same for single-establishment firms. Each

multi-establishment company forms one enterprise—the enterprise employment and

annual payroll are summed from the associated establishments. Enterprise size

designations are determined by the summed employment of all associated

establishments.

Because the SBA’s business size definitions (SBA, 2009c) apply to an establishment’s “ultimate

parent company,” we assume in this analysis that the “enterprise” definition above is consistent

with the concept of ultimate parent company that is typically used for Small Business Regulatory

Enforcement Fairness Act (SBREFA) screening analyses and the terms are used interchangeably.

We also report the SBA size standard(s) for each industry group in order to facilitate

comparisons and different thresholds.
5-12

Table 5-11. Number of Establishments by Affected Industry and EnterpriseaSize: 2002

SBA Size Standard

(effective August 22,

2008)

Total

Establishments

Owned by Enterprises with:

2007

NAICS NAICS Description Subpart

1 to 20

Employees

20 to 99

Employees

100 to 499

Employees

500 to 749

Employees

750 to 999

Employees

1,000 to

1,499

Employees

334413

Semiconductor and

Related Device

Manufacturing I 500 1,098 458 220 138 19 19 16

334119

Other Computer

Peripheral Equipment

Manufacturing I 1,000 815 411 169 85 17 7 11

325120

Industrial Gas

Manufacturing L 1,000 551 45 20 20 NA 30 55

221121 Electrical Power Systems DD < 4 Million MWh 217 39 20 29 1 NA NA

326140

Polystyrene Foam

Product Manufacturing QQ 500 551 176 123 85 16 1 20

326150

Urethane and Other Foam

Product (except

Polystyrene)

Manufacturing QQ 500 610 192 133 73 19 8 3

333415

Air-Conditioning and

Warm Air Heating

Equipment

and Commercial and

Industrial Refrigeration

Equipment

Manufacturing QQ 750 840 303 187 87 10 25 20

335313

Switchgear and

Switchboard Apparatus

Manufacturing QQ 750 563 273 105 46 6 NA 10

336391

Motor Vehicle AirConditioning

Manufacturing QQ 750 72 34 17 8 NA 1 1

423610

Electrical Apparatus and

Equipment, Wiring

Supplies,

and Related Equipment

Merchant Wholesalers QQ 100 14,337 7,458 1,679 1,016 248 113 87

423620

Electrical and Electronic

Appliance, Television,

and

Radio Set Merchant

Wholesalers QQ 100 3,510 2,156 554 189 19 39 72
5-13

SBA Size Standard

(effective August 22,

2008)

Total

Establishments

Owned by Enterprises with:

2007

NAICS NAICS Description Subpart

1 to 20

Employees

20 to 99

Employees

100 to 499

Employees

500 to 749

Employees

750 to 999

Employees

1,000 to

1,499

Employees

423720

Plumbing and Heating

Equipment and Supplies

(Hydronics) Merchant

Wholesalers QQ 100 5,144 2,871 720 455 134 21 16

423730

Warm Air Heating and

Air-Conditioning

Equipment

and Supplies Merchant

Wholesalers QQ 100 5,598 2,394 929 654 213 52 355

423740

Refrigeration Equipment

and Supplies Merchant

Wholesalers QQ 100 1,482 724 271 193 4 28 29

443111

Household Appliance

Stores QQ $9 M 10,002 7,628 806 312 NA 73 1

443112

Radio, Television and

Other Electronics Stores QQ $9 M 24,226 11,181 1,760 1,230 38 75 328

422610

Plastics Materials and

Basic Forms and Shapes

Merchant Wholesalers QQ 100 3,717 2,238 518 281 26 20 58

33361

Engine, Turbine, and

Power Transmission

Equipment

Manufacturing SS 500 - 1,000 922 375 208 94 14 11 12

33531

Electrical Equipment

Manufacturing SS 750 - 1,000 2,651 1,311 522 246 41 23 19

a The Census Bureau defines an enterprise as a business organization consisting of one or more domestic establishments that were specified under common ownership or control.

The enterprise and the establishment are the same for single-establishment firms. Each multi-establishment company forms one enterprise—the enterprise employment and

annual payroll are summed from the associated establishments. Enterprise size designations are determined by the summed employment of all associated establishments.

Since the SBA’s business size definitions (http://www.sba.gov/size) apply to an establishment’s ultimate parent company, we assume in this analysis that the enterprise definition

above is consistent with the concept of ultimate parent company that is typically used for Small Business Regulatory Enforcement Fairness Act (SBREFA) screening analyses.

b The 2002 SUSB data uses 1997 NAICS codes. For this industry, the relevant code is NAICS 422610.
5-14

Table 5-12. Receipts by Affected Industry and EnterpriseaSize ($2002 Million)

SBA Size Standard

(effective August 22,

2009)

Total

Establishments

Owned by Enterprises with:

NAICS NAICS Description Subpart

1 to 20

Employees

20 to 99

Employees

100 to 499

Employees

500 to 749

Employees

750 to 999

Employees

1,000 to

1,499

Employees

334413

Semiconductor and

Related Device

Manufacturing I 500 63,779 701 1,755 3,711 775 2,593 1,434

334119

Other Computer

Peripheral Equipment

Manufacturing I 500 18,135 642 1,680 2,712 1,405 247 1,372

325120

Industrial Gas

Manufacturing L 1,000 5,780 22 292 71 NA NA NA

221121 Electrical Power Systems DD < 4 Million MWh 13,831 74 353 406 NA NA NA

326140

Polystyrene Foam

Product Manufacturing QQ 500 6,330 209 623 689 NA NA 539

326150

Urethane and Other

Foam Product (except

Polystyrene)

Manufacturing QQ 500 7,170 307 772 1,063 288 NA NA

333415

Air-Conditioning and

Warm Air Heating

Equipment

and Commercial and

Industrial Refrigeration

Equipment

Manufacturing QQ 750 24,699 409 1,460 1,813 348 980 803

335313

Switchgear and

Switchboard Apparatus

Manufacturing QQ 750 8,593 347 641 826 NA NA NA

336391

Motor Vehicle AirConditioning

Manufacturing QQ 750 3,396 31 72 NA NA NA NA

423610

Electrical Apparatus and

Equipment, Wiring

Supplies,

and Related Equipment

Merchant Wholesalers QQ 100 93,524 21,850 16,229 9,690 1,648 1,339 766
5-15

SBA Size Standard

(effective August 22,

2009)

Total

Establishments

Owned by Enterprises with:

NAICS NAICS Description Subpart

1 to 20

Employees

20 to 99

Employees

100 to 499

Employees

500 to 749

Employees

750 to 999

Employees

1,000 to

1,499

Employees

423620

Electrical and Electronic

Appliance, Television,

and

Radio Set Merchant

Wholesalers QQ 100 68,255 9,640 10,388 10,577 2,418 1,805 4,291

423720

Plumbing and Heating

Equipment and Supplies

(Hydronics) Merchant

Wholesalers QQ 100 31,668 8,304 12,322 4,156 686 247 51

423730

Warm Air Heating and

Air-Conditioning

Equipment

and Supplies Merchant

Wholesalers QQ 100 25,599 5,426 5,075 3,551 613 526 NA

423740

Refrigeration Equipment

and Supplies Merchant

Wholesalers QQ 100 5,014 1,333 1,791 581 14 187 NA

443111

Household Appliance

Stores QQ $9 M 12,619 5,432 2,801 1,354 NA NA NA

443112

Radio, Television and

Other Electronics Stores QQ $9 M 53,557 6,325 3,510 1,612 NA NA NA

422610

Plastics Materials and

Basic Forms and Shapes

Merchant Wholesalers QQ 100 32,648 7,345 5,785 4,091 614 687 338

33361

Engine, Turbine, and

Power Transmission

Equipment

Manufacturing SS 500 - 1,000 37,701 429 1,326 2,067 309 333 304

33531

Electrical Equipment

Manufacturing SS 750 - 1,000 33,211 1,330 2,912 4,096 979 1,089 406

a The Census Bureau defines an enterprise as a business organization consisting of one or more domestic establishments that were specified under common ownership or control.

The enterprise and the establishment are the same for single-establishment firms. Each multi-establishment company forms one enterprise—the enterprise employment and

annual payroll are summed from the associated establishments. Enterprise size designations are determined by the summed employment of all associated establishments.

Since the SBA’s business size definitions (http://www.sba.gov/size) apply to an establishment’s ultimate parent company, we assume in this analysis that the enterprise definition

above is consistent with the concept of ultimate parent company that is typically used for Small Business Regulatory Enforcement Fairness Act (SBREFA) screening analyses.

b The 2002 SUSB data uses 1997 NAICS codes. For this industry, the relevant code is NAICS 422610.
5-16

5.3.2.2 Develop Small Entity Economic Impact Measures

Because the rule covers a large number of subparts and primarily covers businesses, the

analysis generated a set of sales tests (represented as cost-to-receipt ratios)22 for NAICS codes

associated with the affected subparts. Although the appropriate SBA size definition should be

applied at the parent company (enterprise) level, data limitations allowed us only to compute and

compare ratios for a model establishment for six enterprise size ranges (i.e., all categories,

enterprises with 1 to 20 employees, 20 to 99 employees, 100 to 499 employees, 500 to 999

employees, and 1,000 to 1,499 employees. This approach allows us to account for differences in

establishment receipts between large and small enterprises and differences in small business

definitions across affected industries. It is also a conservative approach, because an

establishment’s parent company (the “enterprise”) may have other economic resources that could

be used to cover the costs of the reporting program.

These sales tests examine the average establishment’s total annualized mandatory

reporting costs to the average establishment receipts for enterprises within several employment

categories23 (first year costs: Table 5-13; subsequent year costs: Table 5-14). The average entity

costs used to compute the sales test are the same across all of these enterprise size categories. As

a result, the sales-test will overstate the cost-to-receipt ratio for establishments owned by small

businesses, because the reporting costs are likely lower than average entity estimates provided by

the engineering cost analysis.

22The following metrics for other small entity economic impact measures (if applicable) would potentially include

 Small governments (if applicable): “Revenue” test; annualized compliance cost as a percentage of annual

government revenues

 Small non-profits (if applicable): “Expenditure” test; annualized compliance cost as a percentage of annual

operating expenses

23For the one to 20 employee category, we exclude SUSB data for enterprises with zero employees. These

enterprises did not operate the entire year.
5-17

Table 5-13. Establishment Sales Tests by Industry and EnterpriseaSize: First Year Costs

SBA Size

Standard

(effective

August 22,

2008)

Average

Cost Per

Entity

($/entity)

All

Enterprises

Owned by Enterprises with:

2007

NAICS NAICS Description Sub-part

1 to 20

Employees

20 to 99

Employees

100 to 499

Employees

500 to 749

Employees

750 to 999

Employees

1,000 to

1,499

Employees

334413

Semiconductor and Related Device

Manufacturing I (Semis) 500 $19,980 0.03% 1.16% 0.22% 0.07% 0.04% 0.01% 0.02%

334413

Semiconductor and Related Device

Manufacturing I (Non-Semis) 500 $16,046 0.02% 0.94% 0.18% 0.05% 0.04% 0.01% 0.02%

334119

Other Computer Peripheral Equipment

Manufacturing I (Non-Semis) 500 $16,046 0.06% 0.92% 0.14% 0.04% 0.02% 0.04% 0.01%

325120 Industrial Gas Manufacturing L 1,000 $126,523c1.08% 23.19% 0.77% 3.19% NA NA NA

221121 Electrical Power Systems DD

< 4 Million

MWh $2,213 0.00% 0.10% 0.01% 0.01% NA NA NA

326140

Polystyrene Foam Product

Manufacturing QQ 500 $3,364 0.03% 0.25% 0.06% 0.04% NA NA 0.01%

326150

Urethane and Other Foam Product

(except Polystyrene)

Manufacturing QQ 500 $3,364 0.03% 0.19% 0.05% 0.02% 0.02% NA NA

333415

Air-Conditioning and Warm Air

Heating Equipment

and Commercial and Industrial

Refrigeration

Equipment Manufacturing QQ 750 $3,364 0.01% 0.22% 0.04% 0.01% 0.01% 0.01% 0.01%

335313

Switchgear and Switchboard Apparatus

Manufacturing QQ 750 $3,364 0.02% 0.24% 0.05% 0.02% NA NA NA

336391

Motor Vehicle Air-Conditioning

Manufacturing QQ 750 $3,364 0.01% 0.33% 0.07% NA NA NA NA

423610

Electrical Apparatus and Equipment,

Wiring Supplies,

and Related Equipment Merchant

Wholesalers QQ 100 $3,364 0.05% 0.10% 0.03% 0.03% 0.05% 0.03% 0.03%

423620

Electrical and Electronic Appliance,

Television, and

Radio Set Merchant Wholesalers QQ 100 $3,364 0.02% 0.07% 0.02% 0.01% 0.00% 0.01% 0.01%

423720

Plumbing and Heating Equipment and

Supplies

(Hydronics) Merchant Wholesalers QQ 100 $3,364 0.05% 0.10% 0.02% 0.03% 0.06% 0.03% 0.09%

423730

Warm Air Heating and AirConditioning Equipment

and Supplies Merchant Wholesalers QQ 100 $3,364 0.07% 0.13% 0.05% 0.06% 0.10% 0.03% NA

423740

Refrigeration Equipment and Supplies

Merchant

Wholesalers QQ 100 $3,364 0.09% 0.16% 0.05% 0.10% 0.08% 0.04% NA

443111 Household Appliance Stores QQ $9 M $3,364 0.24% 0.42% 0.09% 0.07% NA NA NA

443112

Radio, Television and Other

Electronics Stores QQ $9 M $3,364 0.14% 0.53% 0.15% 0.23% NA NA NA
5-18

SBA Size

Standard

(effective

August 22,

2008)

Average

Cost Per

Entity

($/entity)

All

Enterprises

Owned by Enterprises with:

2007

NAICS NAICS Description Sub-part

1 to 20

Employees

20 to 99

Employees

100 to 499

Employees

500 to 749

Employees

750 to 999

Employees

1,000 to

1,499

Employees

422610

Plastics Materials and Basic Forms and

Shapes

Merchant Wholesalers QQ 100 $3,364 0.03% 0.09% 0.03% 0.02% 0.01% 0.01% 0.05%

33361

Engine, Turbine, and Power

Transmission Equipment

Manufacturing SS 500 - 1,000 $2,213 0.00% 0.17% 0.03% 0.01% 0.01% 0.01% 0.01%

33531 Electrical Equipment Manufacturing SS 750 - 1,000 $2,213 0.02% 0.19% 0.04% 0.01% 0.01% 0.00% 0.01%

a The Census Bureau defines an enterprise as a business organization consisting of one or more domestic establishments that were specified under common ownership or control.

The enterprise and the establishment are the same for single-establishment firms. Each multi-establishment company forms one enterprise—the enterprise employment and

annual payroll are summed from the associated establishments. Enterprise size designations are determined by the summed employment of all associated establishments.

Since the SBA’s business size definitions (http://www.sba.gov/size) apply to an establishment’s ultimate parent company, we assume in this analysis that the enterprise definition

above is consistent with the concept of ultimate parent company that is typically used for Small Business Regulatory Enforcement Fairness Act (SBREFA) screening analyses.

Note: Receipt data in Table 5-7 has been adjusted to 2006$ using the latest GDP implicit price deflator reported by the U.S. Bureau of Economic Analysis (103.257/92.118=1.121)

http://www.bea.gov/national/nipaweb/Index.asp (accessed December 21, 2009).

b The 2002 SUSB data uses 1997 NAICS codes. For this industry, the relevant code is NAICS 422610.

cTotal Annualized Costs for Subpart L are computed as a weighted average of costs for Mass Balance and costs for Process Vent, excluding the outlier facility.
5-19

Table 5-14. Establishment Sales Tests by Industry and EnterpriseaSize: Subsequent Years Costs

SBA Size

Standard

(effective

August 22,

2008)

Average

Cost Per

Entity

($/entity)

All

Enterprises

Owned by Enterprises with:

2007

NAICS NAICS Description Sub-part

1 to 20

Employeesb

20 to 99

Employees

100 to 499

Employees

500 to 749

Employees

750 to 999

Employees

1,000 to

1,499

Employees

334413

Semiconductor and Related Device

Manufacturing I (Semis) 500 $19,980 0.03% 1.16% 0.22% 0.07% 0.04% 0.01% 0.02%

334413

Semiconductor and Related Device

Manufacturing I (Non-Semis) 500 $16,046 0.02% 0.94% 0.18% 0.05% 0.04% 0.01% 0.02%

334119

Other Computer Peripheral Equipment

Manufacturing I (Non-Semis) 500 $16,046 0.06% 0.92% 0.14% 0.04% 0.02% 0.04% 0.01%

325120 Industrial Gas Manufacturing L 1,000 $9,859c0.08% 1.81% 0.06% 0.25% NA NA NA

221121 Electrical Power Systems DD

< 4 Million

MWh $2,213 0.00% 0.10% 0.01% 0.01% NA NA NA

326140 Polystyrene Foam Product Manufacturing QQ 500 $2,933 0.02% 0.22% 0.05% 0.03% NA NA 0.01%

326150

Urethane and Other Foam Product (except

Polystyrene)

Manufacturing QQ 500 $2,933 0.02% 0.16% 0.05% 0.02% 0.02% NA NA

333415

Air-Conditioning and Warm Air Heating

Equipment

and Commercial and Industrial

Refrigeration

Equipment Manufacturing QQ 750 $2,933 0.01% 0.19% 0.03% 0.01% 0.01% 0.01% 0.01%

335313

Switchgear and Switchboard Apparatus

Manufacturing QQ 750 $2,933 0.02% 0.21% 0.04% 0.01% NA NA NA

336391

Motor Vehicle Air-Conditioning

Manufacturing QQ 750 $2,933 0.01% 0.29% 0.06% NA NA NA NA

423610

Electrical Apparatus and Equipment,

Wiring Supplies,

and Related Equipment Merchant

Wholesalers QQ 100 $2,933 0.04% 0.09% 0.03% 0.03% 0.04% 0.02% 0.03%

423620

Electrical and Electronic Appliance,

Television, and

Radio Set Merchant Wholesalers QQ 100 $2,933 0.01% 0.06% 0.01% 0.00% 0.00% 0.01% 0.00%

423720

Plumbing and Heating Equipment and

Supplies

(Hydronics) Merchant Wholesalers QQ 100 $2,933 0.04% 0.09% 0.02% 0.03% 0.05% 0.02% 0.08%

423730

Warm Air Heating and Air-Conditioning

Equipment

and Supplies Merchant Wholesalers QQ 100 $2,933 0.06% 0.12% 0.05% 0.05% 0.09% 0.03% NA

423740

Refrigeration Equipment and Supplies

Merchant

Wholesalers QQ 100 $2,933 0.08% 0.14% 0.04% 0.09% 0.07% 0.04% NA
5-20

SBA Size

Standard

(effective

August 22,

2008)

Average

Cost Per

Entity

($/entity)

All

Enterprises

Owned by Enterprises with:

2007

NAICS NAICS Description Sub-part

1 to 20

Employeesb

20 to 99

Employees

100 to 499

Employees

500 to 749

Employees

750 to 999

Employees

1,000 to

1,499

Employees

443111 Household Appliance Stores QQ $9 M $2,933 0.21% 0.37% 0.08% 0.06% NA NA NA

443112

Radio, Television and Other Electronics

Stores QQ $9 M $2,933 0.12% 0.46% 0.13% 0.20% NA NA NA

422610

Plastics Materials and Basic Forms and

Shapes

Merchant Wholesalers QQ 100 $2,933 0.03% 0.08% 0.02% 0.02% 0.01% 0.01% 0.04%

33361

Engine, Turbine, and Power Transmission

Equipment Manufacturing SS 500 - 1,000 $2,213 0.00% 0.17% 0.03% 0.01% 0.01% 0.01% 0.01%

33531 Electrical Equipment Manufacturing SS 750 - 1,000 $2,213 0.02% 0.19% 0.04% 0.01% 0.01% 0.00% 0.01%

a The Census Bureau defines an enterprise as a business organization consisting of one or more domestic establishments that were specified under common ownership or control.

The enterprise and the establishment are the same for single-establishment firms. Each multi-establishment company forms one enterprise—the enterprise employment and

annual payroll are summed from the associated establishments. Enterprise size designations are determined by the summed employment of all associated establishments.

Since the SBA’s business size definitions (http://www.sba.gov/size) apply to an establishment’s ultimate parent company, we assume in this analysis that the enterprise definition

above is consistent with the concept of ultimate parent company that is typically used for Small Business Regulatory Enforcement Fairness Act (SBREFA) screening analyses.

Note: Receipt data in Table 5-7 has been adjusted to 2006$ using the latest GDP implicit price deflator reported by the U.S. Bureau of Economic Analysis (103.257/92.118=1.121)

http://www.bea.gov/national/nipaweb/Index.asp (accessed December 21, 2009).

b The 2002 SUSB data uses 1997 NAICS codes. For this industry, the relevant code is NAICS 422610.

cTotal Annualized Costs for Subpart L are computed as a weighted average of costs for Mass Balance and costs for Process Vent, excluding the outlier facility.
5-21

5.3.2.3 Results of Screening Analysis

The Regulatory Flexibility Act generally requires an agency to prepare a regulatory

flexibility analysis of any rule subject to notice and comment rulemaking requirements under the

Administrative Procedure Act or any other statute, unless the agency certifies that the rule will

not have a significant economic impact on a substantial number of small entities. Small entities

include small businesses, small governmental jurisdictions, and small not-for-profit enterprises.

For the purposes of assessing the impacts of the rule on small entities, we defined a small

entity as (1) a small business, as defined by SBA’s regulations at 13 CFR Part 121.201; (2) a

small governmental jurisdiction that is a government of a city, county, town, school district, or

special district with a population of less than 50,000; or (3) a small organization that is any notfor-profit enterprise that is independently owned and operated and is not dominant in its field.

After considering the economic impact of the rule on small entities, EPA has concluded

that this action will not have a significant economic impact on a substantial number of small

entities. As shown in Tables 5-13 and 5-14, the average ratio of annualized reporting program

costs to receipts of establishments owned by model small enterprises was less than 1% for

industries presumed likely to have small businesses covered by the reporting program.

We acknowledge that several enterprise categories have ratios that exceed this threshold

(e.g., enterprise with one to 20 employees). The Industrial Gas Manufacturing industry (NAICS

325120) has sales test results over 1% for all enterprises. The following enterprise categories

have sales test results over 1% and for entities with less than 20 employees: Industrial Gas

Manufacturing (325120) and Semiconductor and Related Device Manufacturing (334413).

Below we take a more detailed look at the categories noted above as having sales test

ratios above 1%. EPA collected information on the entities likely to be covered by the rule as

part of the expert sub-group process.

5.3.2.4 Threshold-based Analysis of Categories Having Sales Test Ratios Above 1%

Industrial Gas Manufacturing (325120)

Subpart L covers facilities included in NAICS codes for Industrial Gas Manufacturing

(NAICS 325120). Within this subpart, EPA identified 13 ultimate parent company names

covered by the proposed rule. Using publicly available sources (e.g., Hoovers.com), we collected

parent company sales and employment data and found that only one company could be classified
5-22

as a small entity. Using the cost data for a representative entity (see Section 4), EPA determined

the small entity's cost-to-sales ratio is below one percent.

Electronic Computer Manufacturing (334111) and Semiconductor and Related Device

Manufacturing (334413)

Data on the number of electronics facilities comes from the World Fab Watch and the

Flat Panel Display Fabs on Disk datasets. The census data categories cover more establishments

than just those facilities covered in the rule. Subpart I covers facilities included in NAICS codes

for Semiconductor and Related Device Manufacturing (334413) and Other Computer Peripheral

Equipment Manufacturing (334119). The World Fab Watch dataset includes 216 facilities (94 of

which exceed the 25,000 ton threshold), while the sum of the two NAICS codes include 1,903

establishments. Covered facilities with emissions greater than 25,000 MtCO2e per year are

unlikely to be included in the 1 to 20 employees size category. Emissions are roughly

proportional to production, and establishments with 1 to 20 employees total only 1.6% of total

receipts, while the proposed threshold excludes 6% of industry emissions from the least-emitting

facilities.

Although this rule would not have a significant economic impact on a substantial number

of small entities, the Agency nonetheless tried to reduce the impact of this rule on small entities,

including seeking input from a wide range of private- and public-sector stakeholders. When

developing the rule, the Agency took special steps to ensure that the burdens imposed on small

entities were minimal. The Agency conducted several meetings with industry trade associations

to discuss regulatory options and the corresponding burden on industry, such as recordkeeping

and reporting. The Agency investigated alternative thresholds and analyzed the marginal costs

associated with requiring smaller entities with lower emissions to report. The Agency also

selected a hybrid method for reporting, which provides flexibility to entities and helps minimize

reporting costs.
6-1

SECTION 6

STATUTORY AND EXECUTIVE ORDER REVIEWS

This section describes EPA’s compliance with several applicable executive orders and

statutes during the development of the F-GHG reporting rule, under subparts I, L, DD, QQ, and

SS of the Mandatory Reporting Rule.

6.1 Executive Order 12866: Regulatory Planning and Review

Under Executive Order (EO) 12866 (58 FR 51735, October 4, 1993), this action is a

"significant regulatory action” because it may raise novel legal or policy issues arising out of

legal mandates, the President’s priorities, or the principles set forth in the EO. Accordingly,

EPA submitted this action to the Office of Management and Budget (OMB) for review under EO

12866 and any changes made in response to OMB recommendations have been documented in

the docket for this action.

In addition, EPA prepared this EIA, including an analysis of the potential costs associated

with this action. In this report, EPA has identified the regulatory options considered, their costs,

the emissions that would likely be reported under each option, and explained the selection of the

option chosen for the rule. The costs of the rule are reported in Section 4, and the economic

impacts and qualitative benefits assessment are reported in Section 5. EPA’s cost analysis

estimates that for the minimum reporting under the recommended regulatory option, the total

annualized cost of the rule will be approximately $7.6 million (in $2006) during the first year of

the program and $7.32 million in subsequent years (including $0.4 million of programmatic costs

to the Agency). Overall, EPA has concluded that the costs of the F-GHG Reporting Rule are

outweighed by the potential benefits of more comprehensive information about GHG emissions.

6.2 Paperwork Reduction Act

The information collection requirements in this final rule have been submitted for

approval to the Office of Management and Budget (OMB) under the Paperwork Reduction Act,

44 U.S.C. 3501 et seq. The Information Collection Request (ICR) document prepared by EPA

has been assigned EPA ICR number [XXXX.XX].

EPA has identified the following goals of the mandatory GHG reporting system:

 Obtain data that is of sufficient quality that it can be used to analyze and inform

the development of a range of future climate change policies and potential

regulations.
6-2

 Balance the rule’s coverage to maximize the amount of emissions reported while

excluding small emitters.

 Create reporting requirements that are, to the extent possible and appropriate,

consistent with existing GHG reporting programs in order to reduce reporting burden

for all parties involved.

The information from F-GHG facilities will allow EPA to make well-informed decisions

about whether and how to use the CAA to regulate these facilities and encourage voluntary

reductions. Because EPA does not yet know the specific policies that will be adopted, the data

reported through the mandatory reporting system should be of sufficient quality to inform policy

and program development. Also, consistent with the Appropriations Act, the reporting rule

covers a broad range of sectors of the economy.

This information collection is mandatory and will be carried out under CAA Sections

114. Information identified and marked as Confidential Business Information (CBI) will not be

disclosed except in accordance with procedures set forth in 40 CFR Part 2. However, emissions

information collected under CAA Sections 114 generally cannot be claimed as CBI and will be

made public.24

The projected cost and hour respondent burden in the ICR, averaged over the first three

years after promulgation, is $6.9 million and 76,701 hours per year. The estimated average

burden per response is 183.9 hours; the frequency of response is annual for all respondents that

must comply with the rule’s reporting requirements; and the estimated average number of likely

respondents per year is 417. The cost burden to respondents resulting from the collection of

information includes the total capital and start-up cost annualized over the equipment’s expected

useful life (averaging $2.70 million per year) a total operation and maintenance component

(averaging $9.5 thousand per year), and a labor cost component (averaging $4.15 million per

year). Burden is defined at 5 CFR Part 1320.3(b).

These cost numbers differ from those shown elsewhere in the EIA because ICR costs

represent the average cost over the first three years of the rule, but costs are reported elsewhere

in the EIA for the first year of the rule. Also, the total cost estimate of the rule in the EIA

includes the cost to the Agency to administer the program. The ICR differentiates between

respondent burden and cost to the Agency, estimated to be $384,000.An agency may not conduct

24 Although CBI determinations are usually made on a case-by-case basis, EPA has issued guidance in an earlier

Federal Register notice on what constitutes emission data that cannot be considered CBI (956 FR 7042 – 7043,

February 21, 1991). As discussed in Section II.B of the preamble to the rule, EPA will be initiating a separate

notice and comment process to make CBI determinations for the data collected under this rule.
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or sponsor, and a person is not required to respond to, a collection of information unless it

displays a currently valid OMB control number. The OMB control numbers for EPA’s

regulations in 40 CFR are listed in 40 CFR Part 9. When this ICR is approved by OMB, the

Agency will publish a technical amendment to 40 CFR Part 9 in the Federal Register to display

the OMB control number for the approved information collection requirements contained in the

final rule.

6.3 Regulatory Flexibility Act

The Regulatory Flexibility Act generally requires an agency to prepare a regulatory

flexibility analysis of any rule subject to notice and comment rulemaking requirements under the

Administrative Procedure Act or any other statute, unless the agency certifies that the rule will

not have a significant economic impact on a substantial number of small entities. Small entities

include small businesses, small governmental jurisdictions, and small not-for-profit enterprises.

The first step in this assessment was to determine whether the rule will have a significant

impact on a substantial number of small entities (SISNOSE). To make this determination, EPA

used a screening analysis that allows us to indicate whether EPA can certify the rule as not

having a SISNOSE. The elements of this analysis included

 identifying affected sectors and entities,

 selecting and describing the measures and economic impact thresholds used in the

analysis, and

 determining SISNOSE certification category.

6.3.1 Identify Affected Sectors and Entities

For the purposes of assessing the impacts of the rule on small entities, we defined a small

entity as (1) a small business, as defined by SBA’s regulations at 13 CFR Part 121.201; (2) a

small governmental jurisdiction that is a government of a city, county, town, school district, or

special district with a population of less than 50,000; or (3) a small organization that is any notfor-profit enterprise that is independently owned and operated and is not dominant in its field.

For the F-GHG Reporting Rule, small entity is defined as a small business as defined by

the Small Business Administration’s regulations at 13 CFR 121.201; according to these size

standards, criteria for determining if ultimate parent companies owning affected facilities are

categorized as small vary by NAICS. Small entity criteria range from total number of employees

at the firm fewer than 100 to number of employees fewer than 1000; one affected NAICS,
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44311, defines small entities as those with sales below $9 million. Tables 5-11 through 5-14

present small business criteria and enterprise size distribution data for affected NAICS.

6.3.2 Develop Small Entity Economic Impact Measures

The ratio of total annualized compliance costs to firm sales (or sales test) is the selected

impact measure. Details are provided in section 5.3, and results are presented in Table 5-3 for

first-year costs and in Table 5-4 for subsequent year costs. These sales tests examine the average

establishment’s total annualized mandatory reporting costs to the average establishment receipts

for enterprises within several employment categories25. The average entity costs used to compute

the sales test are the same across all of these enterprise size categories. As a result, the sales-test

will overstate the cost-to-receipt ratio for establishments owned by small businesses, because the

reporting costs are likely lower than average entity estimates provided by the engineering cost

analysis

6.3.3 Results of Screening Analysis

After considering the economic impact of the rule on small entities, EPA has concluded

that this action will not have a significant economic impact on a substantial number of small

entities. The average ratio of annualized reporting program costs to revenues for F-GHG firms

owned by model small enterprises and likely to be affected by the final rule was generally less

than 1%. For two NAICS, however, some size categories (especially those with 1-20 employees)

show costs exceeding 1% of sales. These sectors are Industrial Gas Manufacturing (NAICS

325120) and Semiconductor and Related Device Manufacturing (NAICS 334413). A more

careful examination of impacts on small firms in these NAICS codes was conducted.

Analysis of firms in NAICS 334413 shows that firms with fewer than 20 employees

produce less than 2% of output; firms below the 25,000 Mt CO2e threshold release

approximately 6% of emissions. Because emissions and production levels are highly correlated,

firms fewer than 20 employees are generally not expected to be affected by the final rule; if they

are, their costs are likely to be lower than the overall average costs used in the screening

analysis. Thus, EPA does not expect the final rule to impose significant costs to a substantial

number of small entities in NAICS 334413.

25For the one to 20 employee category, we exclude SUSB data for enterprises with zero employees. These

enterprises did not operate the entire year.
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Subpart L covers facilities included in NAICS codes for Industrial Gas Manufacturing

(NAICS 325120). Within this subpart, EPA identified 13 ultimate parent company names

covered by the final rule. Using publicly available sources (e.g., Hoovers.com), we collected

parent company sales and employment data and found that only one company could be classified

as a small entity. Using the cost data for a representative entity (see Section 4 of the EA), EPA

determined the small entity's cost-to-sales ratio is below one percent.

Although this rule would not have a significant economic impact on a substantial number

of small entities, the Agency nonetheless tried to reduce the impact of this rule on small entities,

including seeking input from a wide range of private- and public-sector stakeholders. When

developing the rule, the Agency took special steps to ensure that the burdens imposed on small

entities were minimal. The Agency conducted several meetings with industry trade associations

to discuss regulatory options and the corresponding burden on industry, such as recordkeeping

and reporting. The Agency investigated alternative thresholds and analyzed the marginal costs

associated with requiring smaller entities with lower emissions to report.

Through comprehensive outreach activities after proposal of the rule, EPA held meetings

and/or conference calls with representatives of the primary audience groups. After proposal,

EPA posted a general fact sheet for the rule, information sheets for every source category, and an

FAQ document. We continued to meet with stakeholders and entered documentation of all

meetings into the docket. One public hearing was held on April 12, 2010, which included three

speakers from industry and one non-governmental environmental group. In addition, 20 outreach

meetings were held. We considered public comments in developing the final rule.

During rule implementation, EPA will maintain an “open door” policy for stakeholders to

ask questions about rule or provide suggestions to EPA about the types of compliance assistance

that would be useful to small businesses. EPA intends to develop a range of compliance

assistance tools and materials and conduct extensive outreach for the final rule.

6.4 Unfunded Mandates Reform Act

Title II of the Unfunded Mandates Reform Act of 1995 (UMRA), P.L. 104-4, establishes

requirements for federal agencies to assess the effects of their regulatory actions on state, local,

and tribal governments and the private sector. Under Section 202 of the UMRA, EPA generally

must prepare a written statement, including a cost-benefit analysis, for final rules with “federal

mandates” that may result in expenditures to state, local, and tribal governments, in the

aggregate, or to the private sector, of $100 million or more in any one year.
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This final rule does not contain a Federal mandate that may result in expenditures of $100

million or more for State, local, and tribal governments, in the aggregate, or the private sector in

any one year. Overall, EPA estimates that the total annualized costs of this final rule are

approximately $7.6 million for the first year, and $7.2 million for subsequent years ($2006).

Thus, this final rule is not subject to the requirements of sections 202 or 205 of UMRA.

This final rule is also not subject to the requirements of section 203 of UMRA because it

contains no regulatory requirements that might significantly or uniquely affect small

governments. Facilities subject to the final rule include manufacturers, wholesalers, and retailers.

None of the facilities currently known to undertake these activities are owned by small

governments.

6.5 Executive Order 13132: Federalism

Executive Order 13132, entitled “Federalism” (64 FR 43255, August 10, 1999), requires

EPA to develop an accountable process to ensure “meaningful and timely input by state and local

officials in the development of regulatory policies that have federalism implications.” “Policies

that have federalism implications” is defined in the executive order to include regulations that

have “substantial direct effects on the states, on the relationship between the national government

and the states, or on the distribution of power and responsibilities among the various levels of

government.”

This final rule does not have federalism implications. It will not have substantial direct

effects on the states, on the relationship between the national government and the states, or on

the distribution of power and responsibilities among the various levels of government, as

specified in Executive Order 13132.

This regulation applies to manufacturers, wholesalers, and retailers. Few government

facilities would be affected. This regulation also does not limit the power of states or localities to

collect GHG data and/or regulate GHG emissions. Thus, Executive Order 13132 does not apply

to this final rule.

In the spirit of Executive Order 13132, and consistent with EPA policy to promote

communications between EPA and State and local governments, EPA specifically solicits

comment on this proposed action from State and local officials.
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6.6 Executive Order 13175: Consultation and Coordination with Indian Tribal

Governments

Executive Order 13175, entitled “Consultation and Coordination with Indian Tribal

Governments” (59 FR 22951, November 6, 2000), requires EPA to develop an accountable

process to ensure “meaningful and timely input by tribal officials in the development of

regulatory policies that have tribal implications.”

This final rule is not expected to have tribal implications, as specified in Executive Order

13175. This regulation applies to facilities that directly emit GHGs. We do not expect facilities

owned by tribal governments to be affected by this rule. Thus, Executive Order 13175 does not

apply to this final rule.

Although Executive Order 13175 does not apply to this final rule, EPA sought

opportunities to provide information to tribal governments and representatives during

development of the MRR rule. In consultation with EPA’s American Indian Environment Office,

EPA’s outreach plan for the MRR included tribes. For a complete list of tribal contacts, see the

“Summary of EPA Outreach Activities for Developing the Greenhouse Gas Reporting Rule,” in

the Docket for this final rulemaking (EPA-HQ-OAR-2008-0508-055). In addition to the

consultation activities supporting the MRR, EPA continues to provide information to tribal

governments and representatives during development of the Track II rules such as this final

rulemaking. EPA specifically solicits additional comment on this proposed action from tribal

officials.

6.7 Executive Order 13045: Protection of Children from Environmental Health and

Safety Risks

EPA interprets Executive Order 13045 (62 F.R. 19885, April 23, 1997) as applying only

to those regulatory actions that concern health or safety risks, such that the analysis required

under Section 5-501 of the executive order has the potential to influence the regulation. This

action is not subject to Executive Order 13045 because it does not establish an environmental

standard intended to mitigate health or safety risks.

6.8 Executive Order 13211: Actions that Significantly Affect Energy Supply,

Distribution, or Use

This final rule is not a “significant energy action” as defined in Executive Order 13211

(66 FR 28355, May 22, 2001) because it is not likely to have a significant adverse effect on the

supply, distribution, or use of energy. Further, we have concluded that this final rule is not likely

to have any adverse energy effects.
6-8

This proposal relates to monitoring, reporting, and recordkeeping at facilities that

manufacture, sell, import, or export F-GHG related products; it does not adversely affect energy

supply, distribution or use. Therefore, we conclude that this final rule is not likely to have any

adverse effects on energy supply, distribution, or use.

6.9 National Technology Transfer Advancement Act

Section 12(d) of the National Technology Transfer and Advancement Act of 1995

(NTTAA), Public Law No. 104-113 (15 U.S.C. 272 note) directs EPA to use voluntary

consensus standards in its regulatory activities unless to do so would be inconsistent with

applicable law or otherwise impractical. Voluntary consensus standards are technical standards

(e.g., materials specifications, test methods, sampling procedures, and business practices) that are

developed or adopted by voluntary consensus standards bodies. NTTAA directs EPA to provide

Congress, through OMB, explanations when the Agency decides not to use available and

applicable voluntary consensus standards.

This rule involves technical standards. EPA will use voluntary consensus standards from

at least four three different voluntary consensus standards bodies, including the following:

ASTM, ASME, and International SEMATECH Manufacturing Initiative, and EPA . These

voluntary consensus standards will help facilities monitor, report, and keep records of GHG

emissions. No new test methods were developed for this rule. Instead, from existing rules for

source categories and voluntary greenhouse gas programs, EPA identified existing means of

monitoring, reporting, and keeping records of greenhouse gas emissions. The existing methods

(voluntary consensus standards) include a broad range of measurement techniques, such as

methods to measure gas or liquid flow and methods to identify the contents of vented or

exhausted streams. The existing methods (voluntary consensus standards) include a broad range

of measurement techniques, such as methods to measure gas or liquid flow; and methods to

gauge and measure petroleum and petroleum products . The test methods are incorporated by

reference into the rule and are available as specified in 40 CFR 98.7.

6.10 Executive Order 12898: Federal Actions to Address Environmental Justice in

Minority Populations and Low-Income Populations

Executive Order 12898 (59 FR 7629, February 16, 1994) establishes federal executive

policy on environmental justice. Its main provision directs federal agencies, to the greatest extent

practicable and permitted by law, to make environmental justice part of their mission by

identifying and addressing, as appropriate, disproportionately high and adverse human health or

environmental effects of their programs, policies, and activities on minority populations and lowincome populations in the United States.
6-9

EPA has determined that this final rule will not have disproportionately high and adverse

human health or environmental effects on minority or low-income populations because it does

not affect the level of protection provided to human health or the environment. This final rule

does not affect the level of protection provided to human health or the environment because it is

a rule addressing information collection and reporting procedures.
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SECTION 7

CONCLUSIONS

The supplemental proposal requires reporting of fluorinated greenhouse gas (F-GHG)

emissions from electronics manufacturing, production of fluorinated gases, and use of electrical

equipment. EPA is also proposing to require such reporting from manufacturers of electrical

equipment, import and export of pre-charged equipment, and closed cell foams. These F-GHG

source categories are covered under Subparts I, L, DD, QQ, and SS of the rule.

7.1 Summary of Sectors Covered

7.1.1 Subpart I – Electronics Manufacturing

Electronics manufacturing includes, but is not limited to, the manufacture of

semiconductors, liquid crystal displays (LCDs), microelectricomechanical (MEMS), and

photovoltaic cells (PV). The electronics industry uses multiple long-lived F-GHGs such as

perfluorocarbons (PFCs), Hydrofluorocarbons (HFCs), sulfur hexafluoride (SF6), and nitrogen

trifluoride (NF3), as well as nitrous oxide (N2O). This proposed rule would apply to electronics

manufacturing facilities that emit equal to or greater than 25,000 metric tons of CO2e per year26

from electronics manufacturing processes such as plasma etching, thin film deposition, chamber

cleaning, and heat transfer fluid use. EPA is also proposing methods to estimate emissions from

cleaning and etch processes for semiconductor, LCD, MEMS, and PV manufacture and also

methods for estimating N2O emissions from deposition and other manufacturing processes such

as chamber cleaning. EPA is also clarifying methods for estimating emissions from heat transfer

fluids. Finally, EPA is proposing methods for verifying destruction or removal efficiency (DRE)

from abatement equipment.

7.1.2 Subpart L – Fluorinated GHG Producers

Affected entities under subpart L are defined as any facility that produces a fluorinated

gas from any raw material or feedstock chemical. Fluorinated gas production includes the

production of fluorinated GHG, CFC, or HCFC. EPA stipulates that production of fluorinated

gases does not include the reuse or recycling of fluorinated GHG or the generation of HFC-23

during the production of HCFC-22.

26 As discussed further below, EPA is proposing that uncontrolled emissions be used for purposes of determining

whether a facility’s emissions are equal to or greater than 25,000 mtCO2e.
7-2

Facilities that produce fluorinated gases will be required to report their fluorinated GHG

emissions from fluorinated gas production, transformation, and destruction, as well as

combustion-related CO2, CH4, and nitrous oxide (N2O) emissions from stationary fuel

combustion. Fluorinated gases include fluorinated GHGs (HFCs, PFCs, SF6, NF3, HFEs, etc.),

CFCs, and HCFCs. However, emissions of HFC-23 from HCFC-22 production are addressed

under subpart O and are therefore excluded from this subpart. Similarly, emissions of CFCs and

HCFCs are addressed under the regulations implementing Title VI of the Clean Air Act and are

therefore excluded from this subpart.

7.1.3 Subpart DD: Electric Transmission and Distribution Equipment Use

The electric transmission and distribution equipment use source category includes gasinsulated substations, circuit breakers, other switchgear, and gas-insulated lines containing SF6 or

PFCs. Equipment also includes gas containers such as pressurized cylinders, gas carts, new

equipment owned but not yet installed, or other containers. Notwithstanding the definition of

facility in subpart A, for purposes of this subpart, “facility” means an electric transmission and

distribution system which is the collection of SF6- and PFC insulated equipment linked through

electric power transmission or distribution lines and operated as an integrated unit by one electric

power entity or several entities that have a single owner.

Regulation of Subpart DD was proposed under the initial MRR, but was excluded after

EPA received several comments regarding the definition of “facility” as it would be covered

under the rule. After taking these comments under consideration, EPA has clarified the

definition for this final rule.

7.1.4 Subpart QQ – Importing/Exporting of Pre-charged Equipment and Foams

Affected entities under subpart QQ are defined as any entity that is an importer and/or

exporter of pre-charged equipment or closed-cell foams that contain fluorinated GHGs. A

variety of products containing fluorinated greenhouse gases (F-GHGs), nitrous oxide (N2O), and

carbon dioxide (CO2) are imported into and exported from the United States. Pre-charged

equipment includes air-conditioning, refrigeration, and electrical equipment. Closed-cell foams

that are imported and exported include polyurethane (PU) rigid foam used in insulation in

domestic refrigerators and freezers,; commercial refrigeration foam,; PU rigid sandwich panel

continuous and discontinuous foam; extruded polystryrene (XPS) sheet foam; and XPS

boardstock foam.
7-3

EPA is proposing to require reporting of these imports and exports. Importers and

exporters of pre-charged equipment and closed-cell foams would be subject to requirements

similar to those for importers and exporters of bulk GHGs. In addition, equipment importers

would be required to report the types and charge sizes of equipment and the number of pieces of

each type of equipment that they imported or exported, while foam importers would be required

to report the volume of foam and F-GHG density of the foam that they imported. As is true for

importers and exporters of bulk F-GHGs, importers and exporters of equipment and foam would

only be required to report if their total imports or exports exceeded the 25,000 mtCO2e

threshold.

7.1.5 Subpart SS – Electrical Equipment and Components Manufacturing

Affected entities under subpart SS are defined as electrical equipment manufacturers and

refurbishers of SF6-insulated closed-pressure system equipment and sealed-pressure system

equipment including gas-insulated substations, circuit breakers, other switchgear, gas-insulated

lines, or power transformers containing sulfur-hexafluoride (SF6) or perfluorocarbons (PFCs).

EPA is proposing to require reporting of SF6 and PFC emission from electrical equipment

manufacturing and refurbishing using a mass-balance monitoring method comparable to the

approach specified for subpart DD, Sulfur Hexafluoride (SF6) and Perfluorocarbons (PFCs)

from Electrical Equipment at an Electric Power System.

Facilities covered under subpart SS would be required report annual emission report all

SF6 and PFC emissions, including those from equipment testing, equipment manufacturing, and

bulk SF6 and PFC handling. In addition, electrical equipment manufacturers would be required to

submit supplemental data that includes: SF6 and PFCs with or inside equipment delivered to

customers, SF6 and PFCs returned by customers with or inside equipment, bulk SF6 and PFC

purchases, SF6 and PFCs sent off-site for destruction or to be recycled, SF6 and PFC returned

from offsite after recycling, SF6 and PFCs stored in containers at the beginning and end of the

year, SF6 and PFCs returned to suppliers. If applicable, facilities would also be required to report

combustion-related CO2, CH4, and nitrous oxide (N2O) emissions from stationary fuel

combustion. EPA would only require emission reporting a facility’s total annual purchases of

SF6 and PFCs are greater than 23,000 lbs. This reporting threshold is equivalent an emissionsbased threshold of 25,000 MtCO2e, assuming an average manufacturer emission rate of 10%.

7.2 Estimated Costs and Impacts of the GHG Reporting Program

The total national costs for the selected option are estimated to be $7.6 million in the first

year and $7.2 million in subsequent years ($2006). This includes a public sector burden estimate
7-4

of $384,000 for program implementation and verification activities. Subparts bearing the greatest

share of the ongoing private costs of the rule are the electronics industry (76%) and imports and

exports of fluorinated GHGs (9%). The average ongoing (subsequent year) private cost per

metric ton varies by subpart; measures range from approximately than $0.02 per ton (Subpart

SS) to $0.96 per ton (Subpart I). The national costs are distributed to several economic sectors

and represent less than 0.01% of 2008 gross domestic product; overall, EPA does not believe the

rule will have a significant macroeconomic impact on the national economy or on small entities

within those sectors.
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SECTION 8

REFERENCES

Burton (2007). Assessing the need for FC abatement standards, Solid State Technology, January

2007. Available at:

http://sst.pennnet.com/display_article/281422/5/ARTCL/none/none/1/Assessing-theneed-for-FC-abatement-standards/

U.S. Environmental Protection Agency (EPA). 2000. Guidelines for Preparing Economic

Analyses. EPA 240-R-00-003. Washington, DC: EPA. Available at

<http://yosemite.epa.gov/ee/epa/eed.nsf/webpages/Guidelines.html>.

U.S. Environmental Protection Agency. 2009. U.S. Inventory of Greenhouse Gas Emissions

and Sinks: 1990-2007.

U.S. Small Business Administration (SBA). 2008a. Firm Size Data from the Statistics of U.S.

Businesses: U.S. Detail Employment Sizes: 2002.

http://www.census.gov/csd/susb/download_susb02.htm.

U.S. Small Business Administration (SBA). 2008b. Firm Size Data from the Statistics of U.S.

Businesses: Dynamic Data by Births, Deaths, Growth, and Decline, U.S. Industry Data:

2003-2005. http://www.sba.gov/advo/research/data.html.

U.S. Small Business Administration (SBA). 2009c. Table of Small Business Size Standards

Matched to North American Industry Classification System Codes. Effective August 22,

2008. http://www.sba.gov/services/contractingopportunities/sizestandardstopics/

size/index.html.