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Number: 

# 53 ) IV-H-0 7 Docket Number: 

# A-90-0 7

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Draf t Regulator ySuppor t Documen t

an d Regulator yFlexibilit yAnalysi s 

## « ? 8 Sil l MA Y2 6 EP AAI H DOCKET

Apri l 21 , 199 4 U.S . Environmenta l Protectio nAgenc y Offic e o f Ai r an dRadiatio n Offic e o f Mobil e Source s

-"•/ .P. 3

Tabl eo f

Content s Pag e
Introductio n1 Chapte r 1 : Progra mDescriptio n I . Statutor yBackgroun d 4 II . Descriptio no f th e Progra m4 A . Scop e o f Healt hEffect s Evaluatio n5 B . Scop e o f Welfar e Provision s 6 C . Scop e o f Emissio nContro l Syste mTestin g 6 III . Provision s t o Preven t Undu e Burden s 7 A . Cost/Burde nSharin g Provision s 7 B . Smal l Busines s Provision s 9 C . Provision s t o Eliminat e Duplicatio no f Effort. . 1 2 D . Othe r Specia l Provision s 1 2 Chapte r 2 : Industr yOvervie w I . Introductio n1 8 II . Analysi s o f Currentl yRegistere d F/F AProducer s 1 8 A . Dat a Collectio n1 9 B . Characterizatio no f Registere d Producer s 2 0 Chapte r 3 : Progra mRequirement s an d Associate d Cost s I . Introductio n2 5 II . Descriptio no f Change s i nProgra mRequirement s 2 6 III . Tie r 1 Requirement s an d Cost s 2 7 A . Literatur e Searc h2 8 B . Characterizatio no f Emission s 2 8 C . Tota l Tie r 1 Cost s 3 5 IV . Tie r 2 Requirement s an d Cost s 3 5 A . Emissio nGeneratio nfo r Biologica l Testin g 3 6 B . Biologica l Tes t Cost s 3 7 C . Tota l Biologica l Tes t Cost s 3 9 D . Tota l Tie r 2 Cost s 3 9 V . Tie r 3 Requirement s an d Potentia l Cost s 3 9 V I . Administrative/Reportin g Requirement s an d Cost s 4 0 VII . Summar y4 1 VIII.Cos t Estimate s fo r Futur e Alternativ e F/F A Registration s 4 2 Chapte r 4 : Estimate d Cos t Impact s I . Introductio n4 9 II . Analytica l Assumption s an d Approac h5 0 III . Methodolog yan d Result s 5 2 A . Produce r Cos t Impact s 5 2 B . Industr yCos t Impact s 5 4 IV . Limitation s o f th e Analysi s 5 4 V . Conclusion s 5 5P. 4

Chapte r 5 : Regulator yFlexibilit yAnalysi s I . Introductio n6 4 II . Requirement s o f th e Regulator yFlexibilit yAc t 6 4 III . Methodolog y6 5 A . Dat a Source s 6 5 B . Adjustment s t o th e Dat a 6 5 C . Definitio no f Smal l Manufacture r 6 6 IV . Characterizatio no f Smal l & Larg e Manufacturer s 6 6 A . Characteristic s o f Additiv e Manufacturer s 6 7 B . Characteristic s o f Fue l Manufacturer s 6 8 C . Genera l Conclusion s 6 9 V . Estimatio no f Impact s o nSmal l Manufacturer s 6 9 A . Comparin g th e Rati o o f Complianc e Cos t t o Sale s 7 0 B . Analysi s o f Chang e i nRO A7 1 C . Examinatio no f Manufacturer s Potentiall y Pushe d int o Closur e 7 2 VI . Assessin g th e Effectivenes s o f Smal l Busines s Provision s 7 3 VII . Mitigatin g Circumstance s tha t Reduc e Advers e Impact s 7 3 VII I .Limitation s o f th e Analysi s 7 5 IX . Conclusion s 7 5 Chapte r 6 : Perspective : Summar yan dSocieta l Benefit s 8 6 Appendi xA : Detaile d Progra mCost s Appendi xB : Summar yo f Biologica l Tes t Cost sP. 5

Figur e 1-1 : Figur e 1-2 : Figur e 1-3 : Tabl e 1-1 : Exhibi t 2- 1 Exhibi t 2- 2
Tabl e 3-1 :

Tabl e 3-2 : Tabl e 3-3 : Tabl e 3-4 : Tabl e 3-5 : Figur e 4-1 : Tabl e 4-1 : Tabl e 4-2 : Tabl e 4- 3
Tabl e 4-4 : Tabl e 4-5 : Tabl e 4-6 : Lis t o f Exhibits . Figures , an d Table s 

### Pag e

Groupin g Framewor k 1 4

Fue l Manufacture r Annua l Sale s Distributio n1 6 Fue l Additiv e Manufacture r Annua l Sale s Distributio n1 7 F/F AGroupin g Syste m1 5 Profile s o f Registere dFue l Manufacturers . 2 3 Profile s o f Registere dAdditiv e Manufacturer s 2 4 Emissio nCharacterization/Measuremen t Requirement s 4 4 Estimate d Emissio nCharacterization / Measuremen t Cost s 4 5 Tie r 1 Cost s 4 6 Tie r 2 Cost s 4 7 Estimate d Alternativ e Fue l Registration s & Cost s 4 8 Distributio no f Complianc e Cost s 6 3 Estimate d Group s Pe r Fuel/Fue l Additiv e Categor y5 7 Assume d Combustio nEmissio nTes t '- n Requirement s Pe r Categor y5 8 Assume d Evaporativ e Emissio nTes t Requirement s Pe r Categor y5 9 Estimate d Complianc e Cost s Pe r Grou p 6 0 Estimate d Complianc e Cost s fo r Smal l Atypica l Manufacturer s 6 1 Summar yo f Complianc e Cost s 6 2P. 6

Exhibi t 5-1 : Exhibi t 5-2 : Exhibi t 5-3 : Exhibi t 5-4 : Exhibi t 5-5 : Exhibi t 5-6 : Exhibi t 5-7 : Exhibi t 5-8 : Exhibi t 5-9 : Figur e 5-1 : Figur e 5-2 : Figur e 5-3 : Figur e 5-4 : SB ADefinition s o f Smal l b ySI C Cod e fo r

F/F AManufacturer s 7 7 Profile s o f Additiv e Manufacturer s F/F AProgra mDefinitio n7 8 Profile s o f Additiv e Manufacturer s SB ADefinition s 7 9 Profile s o f Fue l Manufacturer s F/F AProgra mDefinitio n8 0 Profile s o f Fue l Manufacturer s SB ADefinitio n8 1 Summar yo f Complianc e Cost s pe r Manufacture r 8 2 Compariso no f Smal l an d Larg e Compan y Complianc e Cos t t o Sale s Ratio s 8 3 Estimate d Impact s o nRO A8 4 Summar yo f Profil e o f Manufacturer s Potentiall yPushe dint o Closur e 8 5 Diagra m

o f 8 Profile s 6 7 Numbe r o f Additiv e Companie s Classifie db y EP Aan d SB ADefinition s a s Smal l 6 7 Numbe r o f Fue l Companie s Classifie dbyEP A an d SB ADefinition s a s Smal l 6 8 Measur e o f Financia l Healt han dDistress. . 7 1P. 7

Introductio n Thi s Regulator ySuppor t Documen t (RSD ) present s th e Environmenta l Protectio nAgency' s (EPA ) fina l estimate s o f cost s an d impact s o f th e Fuel s an d Fue l Additive s (F/FA ) Registratio n Regulation s o nth e affecte dindustries . Th e basi c approac huse di n th e draf t suppor t document 1 prepare dfo r th e Notic e o f Propose d Rulemakin g (NPRM ) (5 7 F R13168 , Apri l 15 , 1992 ) i s maintaine d throughou t thi s fina l document . Majo r change s i nprogra m requirement s an d assumption s o nwhic hth e analysi s i s base d ar e identifie d throughou t th e document . Simila r t o th e analysi s prepare d fo r th e NPRM , thi s fina l rul e analysi s focuse s mainl yo n producer s o f gasolin e an ddiese l fuel s an dthei r additive s sinc e producer s o f alternativ e F/FA s ar e no t ye t require dt o registe r thei r product s wit hEPA . However , EP Aexpect s t o designat e thes e F/FA s fo r registratio nan d ha s include dprovision s fo r alternativ e fuel s i nthi s fina l rul e unde r th e assumptio ntha t the ywil l b e designated . Consequently , thi s analysi s include s a discussio no f th e expecte d impac t o f thi s rul e o nproducer s o f alternativ e fuels . EP Acontracte d wit hDu n& Bradstree t (D&B ) Informatio n Services , IC F Incorporated , an dSouthwes t Researc hInstitut e fo r assistanc e i nobtainin g informatio nt o updat e th e draf t RSD . T o updat e manufacturer/produc t informatio ncontaine do nth e Fuel s an d Fue l Additive s Registratio n(FFAR ) database , EP Arequeste dtha t D& B collec t curren t financia l informatio no nth e registere dcompanie s an d identif yregistere d companie s n o longe r i noperation . Alette r explainin g financia l informatio nsough t an dcollectio nmethodolog y i s availabl e i nth e publi c docket 2

. Result s o f th e dat a collectio n ar e discusse d i nChapte r 2 . Tw o contract s wer e establishe d wit hIC F Incorporated . On e contract 3 wa s establishe d fo r th e purpos e o f creatin g a flexibl e produc t groupin g facilit yfro mwhic hcos t estimate s woul db e determine d (explaine d furthe r i nChapte r 4 ) . Th e othe r suc h

^.S . Environmenta l Protectio nAgency , Offic e o f Mobil e Sources , "Draf t Regulator ySuppor t Document , Fuel s an dFue l Additive s Registratio nRegulations, " September , 1991 , Docke t A
90-07 .

2 Lette r t o Sher i Dunatchik , EPA , fro mKathry nE . Brigham , Governmen t Suppor t Manager , Du n& Bradstree t Informatio n Services , Jun e 30 , 1993 .

3 "Groupin g an d Reportin g Databas e fo r Fuel s an dFue l Additives, " prepare d fo r EP AbyIC F Incorporate dunde r EP A contrac t 68-C1-0059 , September , 1993 .contract 4 involve d dat a analysi s t o suppor t EPA' s assessmen t o f

impact s o f th e F/F Aregistratio nregulation s o nsmal l businesses , th e result s o f whic har e presente di nChapte r 5 . Finally , EP Aestablishe d a contrac t wit hSouthwes t Researc h Institute 3 t o identif ycommercia l price s associate dwit hcertai n aspect s o f th e Tie r 1 testin g requirement s o f thi s rule , th e result s o f whic har e discusse di nChapte r 3 . Followin g thi s introduction , th e firs t chapte r provide s th e statutor yhistor yo f thi s rulemakin g alon g wit ha brie f descriptio n o f th e requirement s o f th e program . Th e scop e o f healt han d welfar e effect s evaluatio nan demissio ncontro l syste mtestin g ar e discussed , followe d b ya discussio no f specia l provision s o f th e program . Chapte r 2 present s a characterizatio no f manufacturer s currentl yregisterin g fue l an d additiv e product s wit hEPA . Th e chapte r characterize s registere d manufacturer s i nterm s o f sale s an d ne t income , a s wel l a s numbe r an dtyp e o f product s the y produce . Chapte r 3 discusse s fue l an dfue l additiv e testin g requirement s an d relate d costs . Th e chapte r provide s a brie f discussio no f th e majo r change s i nprogra mrequirement s an d assumption s fro m thos e use d i nth e draf t impac t analysis . Followin g thi s discussion , estimate dcost s ar e presente dfo r eac h activit yrequire d unde r eac htie r o f evaluatio nan dtesting . Th e estimate d cost s fo r emissio ngeneration , emissio nspeciation , biologica l testing , an d complianc e wit hreportin g requirement s ar e provided . Th e chapte r als o include s a discussio no f projecte d cost s relate d t o futur e registration s o f alternativ e F/F Aproducts . Chapte r 4 present s th e projecte dcos t impact s o f th e progra m o nth e fuel/fue l additiv e industry . Cos t impact s ar e discusse dfo r fue l manufacturers , fue l additiv e manufacturers , an dth e industr y a s a whole . Th e analytica l judgement s an dassumption s o nwhic hth e analysi s i s base d an d th e methodolog yfo r determinin g th e cos t impact s o f complianc e ar e presented . Chapte r 5 present s a nanalysi s o f th e financia l impact s o f th e

4 "Smal l Busines s Impac t Analysi s o f th e Fue l an dFue l Additiv e Registratio nProgram, " prepare dfo r EP Ab yIC F Incorporate d unde r EP AContrac t 68-C1-0059 , January , 1994 , availabl e i nDocke t A-90-07 .

5 "Moto r Vehicl e Fue l an dFue l Additiv e Emission s Generatio n an d Speciatio nCosts, " June , 1993 , prepare db ySouthwes t Researc h Institut e unde r EP AContrac t No . 68-C2-0144 .P. 9

F/F ARegistratio nRegulation s o nsmal l businesse s an dcompare s thes e t o th e impact s o nlarg e manufacturers . I t explain s th e F/F A program' s smal l busines s definitio nan dassesse s th e effectivenes s o f specia l provision s include d i nth e fina l rul e fo r certai nsmal l companies . Finally , Chapte r 6 provide s a summar yan ddiscussio no f th e informatio npresented . Th e sensitivit yo f projecte dcost s t o assumption s use d i nth e analysi s i s include da s wel l a s a brie f discussio no f th e expecte drelationshi p betwee nth e program' s cost s an d benefits .P.1 0

Chapte r 1 

### Progra m Description 

### i . Statutory

Background Sectio n211(a ) o f 197 0 Clea nAi r Ac t (CAA ) direct s th e Administrato r o f th e EP At o registe r moto r vehicl e fuel s an dfue l additive s prio r t o thei r sal e o r introductio nint o commerce . Th e basi c registratio ninformatio nrequire d b yeac hfue l an d fue l additiv e manufacture r i s specifie d unde r sectio n211(b)(1) , an d include s suc hitem s a s commercia l identifyin g information , rang e o f concentration , purpos e in-use , an d chemica l composition . Unde r sectio n21 1 (b ) (2) , EP Ai s als o give nauthorit yt o requir e manufacturer s t o conduc t test s t o determin e th e potentia l healt h effect s o f thei r fuel s an d fue l additive s an d t o requir e othe r informatio nt o identif yth e emission s produce d b ysuc hfuel s an d fue l additives , thei r effect(s ) o nth e publi c healt han d welfare , an d thei r impac t o nvehicula r emissio ncontro l performance . Althoug hth e genera l registratio nregulation s o f section s 21 1 (a ) an d (b ) (1 ) wer e implemente d i n1975 , EP Adi d no t exercis e it s authorit yt o requir e health , welfare , an d emissio ncontro l syste meffect s testin g unde r sectio n211(b)(2) . However , i nth e CA AAmendment s o f 197 7 (P L 95-95 , Augus t 7 , 1977) , Congres s adde d sectio n21 1 (e ) t o th e statut e whic hmad e implementatio no f sectio n 211(b)(2 ) mandator yan d establishe d tim e limit s fo r complianc e b y fue l an d fue l additiv e producers . I naddition , Sectio n211(e ) (3 ) allowe d th e Administrato r t o exemp t o r mak e specia l allowance s fo r smal l businesses , t o provid e fo r cos t and/o r burde nsharing , an dt o mak e othe r specifi c exemption s whe nadditiona l testin g woul db e duplicativ e o f adequat e existin g testing .

II . Descriptio no f th « Progra m Th e purpos e o f th e ne wregistratio nrequirement s i s t o provid e EP Awit hinformatio nt o evaluat e th e potentia l advers e health , welfare , an d emissio neffect s o f F/F Aemission s an d t o hel p determin e whethe r regulator yactio ni s neede d unde r sectio n211(c) . Th e ne wrequirement s supplemen t existin g registratio nrequirement s an d appl yt o al l F/F Adesignate d fo r registration . A t th e presen t time , gasolin e an d diese l F/FA s produce d an d commerciall y distribute d fo r us e i nhighwa ymoto r vehicle s ar e designate dfo r registration . Bot hdomesti c an d foreig nproduct s ar e include di n th e designation . EP Aanticipate s tha t methano l (M10 0 an d M85 ) , ethano l (E10 0 an d E85) , natura l ga s (bot hcompresse d natura l ga s (CNG ) an d liquifie d natura l ga s (LNG)) , an d liquifie d petroleu mga s (LPG ) alternativ e fuel s an d additive s wil l soo nb e designated . Fuel s intende d fo r us e exclusivel yi noff-roa d vehicle s ar e no tP.1 1

currentl ydesignated . 

### A . Scop e o f Healt hEffect s Evaluatio n Th e potentia l scop e o f th e healt heffect s testin g progra mi s vast , an d EP Aha s take nstep s consisten t wit hth e Ac t t o limi t th e focu s o f th e requirement s s o a s no t t o levya nunnecessar yburde n o nth e regulate d industry , whil e stil l requirin g th e leve l o f informatio nneede d t o achiev e th e overal l goal s o f th e program . Th e 211(b ) progra mdoe s no t mandat e comprehensiv e healt heffect s assessment s a s routin e requirement s fo r registration . Instead , a syste mo f evaluatio ntier s ha s bee ndeveloped , enablin g EP At o determin e whethe r mor e definitiv e testin g i s neede dfo r specifie d fuel s o r additive s base d upo ntoxicit yan dexposur e dat a obtaine d fro mavailabl e literatur e and/o r fro ma batter yo f screenin g tests . Th e tiere d approac hpermit s F/F Amanufacturer s t o mak e ful l us e o f tes t result s an d othe r informatio nwhic hma yalreadyb e availabl e abou t thei r products . Unde r Tie r 1 , F/F Amanufacturer s ar e require d t o perfor ma literatur e searc ho nth e healt han d welfar e effect s o f F/FAs , characteriz e th e emissions , an dprovid e productio nvolum e an d marke t distributio ndata 6

. Tie r 2 consist s o f a 90-da yanima l exposur e studyt o scree nfo r genera l systemi c an d orga ntoxicity , an d als o encompasse s specifi c test s fo r carcinogenicity , mutagenicity , teratogenicity , neurotoxicity , an d reproductiv e effects . Actua l Tie r 2 testin g requirement s wil l depen d o nth e exten t t o whic hth e dat a searc hactivitie s i nTie r 1 provid e documentatio no f adequat e existin g test s comparabl e t o thos e include d i nTie r 2 . Fuel s an dadditive s wil l b e subjec t t o Tie r 3 testin g requirement s onl yi f determine dt o b e neede do na case-by-cas e basi s b yEPA . Th e endpoint s t o b e addresse dan dth e studie s conducte d i nTie r 3 wil l b e determine dindividuall yfo r eac hcase , generall yfocusin g o narea s o f concer nwhic har e identifie d i nth e earlie r tiers . Th e evaluatio ntier s ar e furthe r explaine d i nChapte r 3 o f thi s document . Consisten t wit hth e overal l emphasi s o f th e CAAo nadvers e ai r pollutio neffects , th e healt htestin g requirement s ar e concerne d wit hth e effect s o f inhalatio nexposur e t o th e evaporativ e an d combustio nproduct s o f fuel s an d additives . The yd o no t specificall yaddres s th e possibl e advers e effect s o f exposur e t o fuel s an d additive s i nth e liqui dstate , no r a t thi s tim e d o the y includ e th e effect s o f exposur e t o th e atmospheri c transformatio n product s o f fue l an d additiv e emissions . Restrictin g th e focu s o f th e rulemakin g t o exposur e o f combustio nan devaporativ e emission s o f fuel s an d additive s represent s a majo r reductio ni nth e potentia l scop e o f th e healt heffect s evaluatio nprogram . Furthe r

6 Th e modelin g analyse s propose d i nth e NPR Mhav e bee n eliminate d fro mTie r 1 requirements . Whe nneeded , the ywil l b e prescribe d unde r Tie r 3 .P.1 2

significan t reduction s i nprogra mcost s an d overal l impac t o nth e fue l an d additiv e industr ywil l als o occu r a s a resul t o f groupin g mechanism s fo r testin g F/F Aproducts , provision s fo r exemptin g relabele d product s fro mtestin g requirements , an d specia l provision s fo r smal l businesses .

B . Scop e o f Walfar a Provision s Sectio n211(b)(2)(B ) state s tha t th e Administrato r ma yrequir e manufacturer s t o furnis h"reasonabl e an d necessary " informatio nfo r determinin g "th e exten t t o whic h(fue l an d fue l additive ) emission s affec t th e publi c healt ho r welfare" . Th e ter m"welfar e effects " refer s generall yt o th e impac t whic hai r pollutio nproduce db y moto r vehicl e fuel s an d additive s ma yhav e o nth e environment , includin g no t onl yeffect s o naquati c ecosystem s an d anima l health , bu t als o effect s whic hma ydetrac t fro mhuma nwell-being . Th e welfar e effect s requirement s wil l b e me t i nassociatio n wit hth e requirement s i nth e firs t evaluatio ntier . I nTie r 1 , responsibl e producer s ar e require d t o conduc t exhaus t an d evaporativ e emissio nchemica l speciatio nprocedure s t o identif yth e specifi c compound s i nth e emissio nproduct s generate d b yfuel s an d additives . Thes e procedure s wil l yiel d a ninventor yo f potentiall y hazardou s ai r pollutant s whic hma yhav e significan t impact s o nth e genera l environmen t an d publi c welfar e a s wel l a s o nth e publi c health . Thes e wil l als o b e usefu l i nassessin g Tie r 2 results . Tie r 1 als o include s a literatur e searc hfo r existin g health

relate d informatio nwhic hwil l b e expande d t o includ e requirement s fo r collectio no f publishe d o r in-hous e dat a regardin g th e welfar e effect s o f th e emissio nproducts . Finally , Tie r 1 require s manufacturer s t o provid e informatio no nth e productio nan d distributio npattern s o f F/FA s whic hwil l b e use d b yEP At o evaluat e th e potentia l exposure s resultin g fro mthei r use . Thus , excep t perhap s fo r a mino r increas e i nth e scop e o f th e literatur e searc hactivitie s o f Tie r 1 , n o incrementa l cost s ar e expecte dwit h respec t t o welfar e effect s assessments . C . Scop e o f amission s Contro l Syste mTastin g Existin g regulation s unde r sectio n211(f ) cal l fo r emissio n contro l testin g o f fuel s an d additive s onl ywhe nthei r compositio n depart s significantl yfro mth e genera l rang e o f fue l formulation s whic hwoul d ordinaril yb e anticipate d b ymanufacturer s o f moto r vehicl e engine s an d emissio ncontro l devices . Unde r th e existin g fuel/additiv e registratio nprogram , fue l an d additiv e formulation s whic har e no t "substantiall ysimilar " ("su bsim" ) t o designate d certificatio nfuel s (a s define d i n5 6 F R5352 , Februar y19 , 1991 ) canno t b e introduce d int o commerc e unles s a waive r i s issue db y EPA . T o obtai nsuc ha waiver , th e produce r o f th e fue l o r additiv e mus t sho wtha t th e "dissimilar " produc t doe s no t adversel yaffec t th e abilit yo f a moto r vehicle' s emissio ncontro l syste mt o achiev e complianc e wit hemissio nstandard s durin g th e usefu l lif e o f th eP.1 3

vehicle . Th e curren t waive r progra mha s prove nt o b e bot hpractica l an d effectiv e a s applie d t o gasolin e fuel s an d additives , an d EPA' s plan s t o exten d th e applicabilit yo f thi s progra mt o othe r fue l an d additiv e categorie s wil l serv e t o fulfil l th e aim s o f th e emissio n contro l testin g provision s o f sectio n211(b) . Therefore , th e emissio ncontro l syste mtestin g provision s o f 211(b ) wil l b e integrate d wit hexistin g an d planne d program s promulgate d unde r sectio n211(f) . I nothe r words , ne wfuel s an d additive s whic hd o no t mee t th e "su bsim " criteri a wil l b e subjec t t o th e regula r sectio n211(f ) waive r applicatio nproces s prio r t o registration , a s unde r th e existin g registratio nprogram . Th e onl yne wexpressio no f EPA' s authorit yunde r sectio n 211(b ) i nregar d t o emissio ncontro l testin g requirement s pertain s t o fuel s an d additive s whic hwer e registere d i nth e pas t unde r th e statute' s "grandfathering " provision . Rathe r tha nrequirin g al l "grandfathered " products 7 t o routinel yg o throug hth e waive r process , emissio ncontro l syste mtestin g fo r "grandfathered " product s wil l b e require d onl yo na case-by-cas e basi s whe n evidenc e become s availabl e tha t suc hproduct s ma yhav e advers e effect s o nemissio ncontro l performance . Thus , thi s rulemakin g provide s a mechanis mb ywhic hEP Aca nchoos e t o requir e specifi c "grandfathered " product s t o underg o sectio n211(f ) waive r applicatio nprocedure s i f s o petitione d b youtsid e parties , o r i f othe r informatio navailabl e t o th e Agenc yindicate s tha t suc h revie wi s appropriate . Consequently , thi s analysi s include s n o cost s directl yrelate d t o emissio ncontro l syste mtesting .

III . Provision s t o Preven t Undu e Burden s Th e fina l rul e provide s a numbe r o f specia l provision s t o avoi d duplicatio no f effort , t o alleviat e th e financia l impac t o n smal l businesses , an d t o eas e th e burde no nth e regulate d industr y i ngeneral . Th e discussio nbelo wfocuse s o ncost/burde nsharin g provision s an d provision s establishe d fo r relabele d product s an d smal l businesses . Othe r specia l provision s o f th e progra mar e briefl ydescribe d below , bu t ar e no t include d i nth e analysi s eithe r becaus e the yhav e n o direc t impac t o r thei r impact s woul db e minimal . Thes e additiona l specia l provision s woul d onl yfurthe r decreas e th e financia l burde no nth e regulate d industry . A . Coat/Burda nSharin g Provision s

'Product s registere d prio r t o th e implementatio no f th e waive r applicatio nprogra mand/o r promulgatio no f applicabl e "substantiall ysimilar " criteri a an d whic hexcee d thos e "su bsim " criteria .P.1 4

Sectio n21 1 (e ) (3 ) allow s th e Agenc yt o provid e fo r cos t and/o r burde nsharin g amon g producer s o f anyfue l o r fue l additiv e whic h i s manufacture d o r processe dbytw o o r mor e person s s o tha t requirement s ca nb e me t withou t duplicatio no f effort . Unde r on e scenario , a manufacture r ma yalreadyhav e incurre dal l necessar y cost s o f registration , an danothe r manufacture r migh t wis ht o rel y o nth e result s o f thi s existin g testin g fo r purpose s o f registerin g a simila r product . Anothe r cas e involve s tw o o r mor e producer s o f simila r product s wh o nee dt o undertak e th e sam e testin g requirement s prio r t o registration . Fo r purpose s o f enactin g thes e provisions , EP Aha s develope d a voluntar ygroupin g schem e whic h permit s manufacturer s o f simila r F/FA s t o poo l thei r resource s an d effort s i nsatisfyin g th e registratio nrequirements . Manufacturer s takin g advantag e o f th e groupin g provision s wil l b e abl e t o shar e thei r plannin g efforts , researc hcapabilities , an dfinancia l resource s i nsatisfyin g th e information-gatherin g an dtestin g requirement s o f th e F/F Aregistratio nprogram . Require dtestin g i s t o b e don e o nth e selecte drepresentativ e fo r th e respectiv e grou p an d result s submitte d jointl yfo r al l member s o f th e group , wit h applicabl e cos t t o b e share d b yth e respectiv e manufacturers . Th e basi c conceptua l framewor k fo r th e groupin g syste mi s illustrate d i nFigur e 1-1 . Eac hfue l o r additiv e i s firs t sorte d int o on e o f si xbroa d "fue l families" . Eac hfue l famil yconsist s o f F/F Aproduct s whic hshar e basi c characteristic s i nregar d t o thei r chemical/physica l propertie s an dengine/vehicl e applicability . A s previousl ymentioned , thi s analysi s focuse s mainl yo nproduct s belongin g t o th e gasolin e an ddiese l fue l families , bu t include s a brie f discussio no f futur e registration s o f product s belongin g t o th e alternativ e fue l families . Th e fue l familie s ar e the nsubdivide dint o th e followin g thre e F/F Acategories : "baseline, " "non-baseline, " an d"atypical. " Th e baselin e categorie s generall yconsis t o f fuel s an dassociate dfue l additive s whic hcontai nn o element s othe r tha ncarbon , hydrogen , oxygen , nitrogen , an d sulfu r an d confor mt o certai nquantitativ e limit s fo r particula r elements , compounds , and/o r characteristic s (e.g. , oxyge nles s tha n1. 5 weigh t percen t i ngasolin e an dles s tha n1. 0 weigh t percen t i ndiesel) . Non-baselin e F/FA s contai nn o element s othe r tha nthos e allowe di nth e baselin e category , bu t the yexcee d th e maximu mamount s allowe dfo r certai nrestricte d characteristics . Th e atypica l categorie s consis t primaril yo f F/FA s tha t contai nelement s othe r tha nthos e allowe di nth e baselin e category . Fo r fue l additives , th e categor ydeterminatio n i s base d o nth e characteristic s o f th e mixtur e whic hresult s whe n th e additiv e i s mixe d i nth e appropriat e bas e fue l a t th e maximu m concentratio nrecommende d b yth e additiv e manufacturer . I f th e fue l o r fuel/additiv e mixtur e contain s bot hnon-baselin e (e.g. , exceed s allowabl e oxyge ncontent ) an datypica l characteristic s (e.g. , contain s a metal) , th e formulatio ni s characterize da s atypical . Thus , atypica l characteristic s tak e precedenc e ove r non 8P.1 5

baselin e characteristics . Finally , fro mthes e categories , product s ar e furthe r subdivide d int o "fuel/additiv e groups " whic hrepresen t th e fina l leve l o f produc t classificatio nwithi nth e groupin g system . Th e group s consis t o f F/FA s sorte d togethe r o nth e basi s o f th e assumptio ntha t thei r emissio nproduct s wil l b e simila r o na qualitativ e basis . Arepresentativ e fro meac hgrou p wil l b e selecte d fo r testin g wit hth e result s an d associate d cost s share d b yth e participatin g manufacturers . Tabl e 1- 1 show s a summar yo f th e F/F Agroupin g system . Th e colum nheading s represen t th e fue l familie s an d th e categorie s defin e th e rows . Withi neac hfue l family' s categorie s ar e th e fuel/additiv e groups . Th e groupin g syste mi s a ke yfacto r i n determinin g manufacture r cost s fo r thi s program . Assumption s regardin g manufacture r participatio ni ngroup s an d th e amoun t o f testin g expecte d t o b e require d fo r product s i neac ho f th e group s i s discusse d i nChapte r 4 . B . Smal l Busines s Provision s Th e CA Agive s EP Adiscretionar yauthorit yt o provid e progra m exemptions , deferrals , o r modification s fo r smal l businesses , an d t o defin e "smal l business " fo r th e regulations . Usin g curren t annua l sale s data , EP Aexamine d th e distributio no f currentl y registere d companie s acros s variou s sale s range s an d identifie da sale s leve l whic hwil l defin e th e businesse s whic hwil l b e considere d "small " fo r thi s program . Figure s 1- 2 an d 1- 3 sho wth e sale s distribution s o f registere d fue l manufacturer s an d additiv e manufacturers , respectively . Acompariso no f thes e figure s indicate s tha t th e distributio no f sale s i s simila r fo r bot h industries . Eac hindustr yappear s t o b e mad e u p o f man ysmal l companie s an d relativel yfe wlarge r companies . Th e figure s sho w tha t abou t a fift ho f registere d fue l manufacturer s an d a thir do f registere d additiv e manufacturer s hav e sale s abov e $10 0 million . Fo r bot hindustries , mos t companie s wit hsale s unde r $10 0 millio n actuall yhav e sale s unde r $5 0 million . Thus , withi neac ho f th e industries , companie s ten d t o cluste r abov e $10 0 millio nan d belo w $5 0 millio ni nsales . Furthermore , companie s belo w$5 0 millio ni n sale s als o ten d t o b e belo w$1 0 million , especiall ywithi nth e additiv e industry . Base d o nthi s analysi s o f F/F Amanufacture r sale s data , EP A identifie d $5 0 millio na s a reasonabl e sale s leve l fo r differentiatin g betwee nsmal l an d larg e companie s withi neac h industry . A s a result , th e fina l rul e define s a smal l busines s fo r thi s ' progra ma s an ymoto r vehicl e fue l o r fue l additiv eP.1 6

manufacture r wit htota l annua l sale s o f les s tha n$5 0 million. 8 Th e smal l busines s relate d provision s establishe d fo r thi s rul e ar e define d below . Specia l provision s fo r smal l F/F Acompanie s wer e develope d base d o nassumption s regardin g th e degre e t o whic hmanufacturer s wil l hav e th e opportunit yt o grou p wit hothe r manufacturer s t o shar e costs , an d th e degre e t o whic hinformatio no nsimila r product s ca nb e expecte d t o b e submitte d b ylarge r companies . A revie wo f th e registratio ndatabas e show s tha t nearl yever y registere d F/F Amanufacture r produce s a t leas t on e baselin e o r non baselin e product . Hence , eve ni f generou s specia l provision s ar e provide d fo r smal l manufacturer s o f thes e products , EP Ai s assure d tha t tes t dat a o nsuc hproduct s wil l stil l b e submitte d b yother , large r companie s whic hd o no t qualif yfo r th e specia l provisions . Therefore , i nregar d t o registratio no f product s i nth e baselin e an d non-baselin e categories , th e fina l rul e require s smal l businesse s (i.e. , companie s wit hannua l sale s les s tha n$5 0 million ) t o submi t onl yth e basi c registratio ndat a fo r thei r baselin e and/o r non-baselin e products . Suc hcompanie s ar e no t require d t o mee t th e Tie r 1 an d Tie r 2 requirement s i norde r t o registe r thei r baselin e an d non-baselin e F/FAs . Sinc e th e large r companie s wil l stil l b e submittin g th e dat a fo r thes e products , thi s provisio nshoul d no t caus e EP At o b e withou t th e dat a neede d t o evaluat e thes e products . However , th e product s o f suc hsmal l companie s wil l b e treate d th e sam e a s thos e o f th e large r companie s i nth e sam e grou p shoul d Tie r 3 o r 211(c ) action s b e taken . Thi s i s no t a vali d assumptio ni nth e cas e o f atypica l products , however . Analysi s o f curren t registration s show s tha t ther e ar e fewe r atypica l product s tha nbaselin e products , an d fewe r larg e companie s tha t produc e atypica l products . O f th e tota l numbe r o f registere d fue l additiv e manufacturers , les s tha n3 0 percen t produc e a t leas t on e atypica l product , an d th e majorit yo f thes e manufacturer s (abou t 6 0 percent ) hav e unde r $5 0 millio ni n sales . Eve nfewe r fue l manufacturer s produc e atypica l products , wit honl y1 3 percen t producin g a t leas t on e atypica l product . I n contras t t o manufacturer s o f atypica l additives , th e majorit yo f manufacturer s o f atypica l fuel s (abou t 7 0 percent ) hav e sale s abov e $10 0 million . Therefore , i f th e sam e smal l busines s provision s describe d

8 Fo r thi s purpose , "manufacturer " i s define d a s a paren t compan yownin g mor e tha n5 0 percen t o f a company' s asset s o r shares . "Tota l Annua l Sales " i s define d a s th e averag e o f th e manufacturer' s tota l sale s revenu e i neac ho f th e previou s thre e years . Sinc e manufacture r sale s dat a wa s no t availabl e fo r th e previou s thre e years , 199 3 sale s dat a wa s use d fo r determinin g impact s i nthi s analysis . 1 0P.1 7

abov e i nrelatio nt o baseline/non-baselin e F/FA s wer e als o applie d t o atypica l F/FAs , the nn o dat a woul d b e submitte d fo r man y atypica l F/FAs . I f thi s wer e th e case , EP Awoul d b e unabl e t o discharg e it s responsibilit yt o evaluat e th e healt heffect s o f al l fuel s an d additives . Nevertheless , EP Arealize s tha t th e testin g progra mwil l b e particularl yburdensom e fo r ver ysmal l manufacturer s o f atypica l products . I npart , thi s i s du e t o th e adde d complianc e requirement s fo r atypica l product s (e.g. , mor e rigorou s mileag e accumulatio nrequirement s prio r t o emissio ngeneratio nan d extr a emissio ncharacterizatio nrequirement s fo r determinin g th e emissio n specie s containin g th e a typica l element(s)) . A neve ngreate r impac t result s fro mth e fac t tha t groupin g opportunitie s fo r thes e manufacturer s ar e mor e limited . No t onl yd o atypica l product s ten d t o b e unique , bu t also , th e smalles t manufacturer s rarel yar e member s o f th e dominan t trad e association s whic har e mos t likel yt o tak e th e lea d i norganizin g an d administerin g F/F Agrou p functions . Thus , th e highes t progra mcost s ar e expecte d t o fal l o nth e manufacturer s wit hth e lowes t financia l resource s an d th e fewes t opportunitie s t o shar e th e costs . Fo r thes e reasons , specia l smal l busines s provision s applicabl e t o atypica l product s hav e bee ninclude d i nth e fina l rule . However , thes e provision s appl yt o fewe r manufacturer s an d ar e les s libera l tha nthos e establishe d fo r baselin e an d non baselin e products . Specifically , fo r manufacturer s o f atypica l product s wit hles s tha n$1 0 millio ni nannua l sale s (rathe r tha n th e $5 0 millio nsale s leve l applicabl e t o manufacturer s o f baseline/non-baselin e products) , th e minima l requirement s o f th e progra minclud e onl ybasi c registratio nan d Tie r 1 data . Thes e requirement s fal l betwee nthos e applicabl e t o smal l manufacturer s o f baseline/non-baselin e product s (basi c registratio ndat a only ) an d th e genera l requirement s o f th e progra mfo r large r manufacturer s (basi c registration , Tie r 1 , an d Tie r 2) . Still , a nassessmen t o f th e effectivenes s o f smal l busines s provision s performe d b ya contractor , ICF , sho wtha t th e smal l busines s provisio nfo r manufacturer s o f atypica l product s reduce s th e financia l burde no f th e progra msignificantly . I ntotal , th e smal l busines s provision s fo r manufacturer s o f thes e product s lessene d th e cos t burde nt o industr yb yove r $2 0 millio ndollars . Thus , althoug hth e smal l busines s provision s fo r atypica l manufacturer s ar e no t a s libera l a s thos e provide d fo r manufacturer s o f baselin e an d non-baselin e products , th e provision s reduc e th e financia l burde no f th e progra msignificantl ywhil e stil l assurin g tha t EP Awil l b e supplie d wit hemissio n characterizatio nan d literatur e searc hdat a upo nwhic ht o bas e it s initia l evaluatio no f eac hatypica l F/F A(o r group ) . A t th e Agency' s discretion , healt heffec t concern s arisin g fro m th e 1 1P.1 8

initia l revie wo f thi s dat a ma ystil l b e require d t o b e followe du p b ysuitabl e testin g unde r th e provision s o f Tie r 3 . Sinc e smal l busines s exemption s ar e base d o nbot hth e manufacturer' s annua l sale s an d th e produc t category , i t i s possibl e fo r a manufacture r t o hav e som e product s excuse d fro m progra mrequirement s bu t no t others . Fo r example , a nadditiv e manufacture r havin g bot hbaselin e an d atypica l product s an d annua l sale s o f $3 0 millio nwil l b e excuse d fro mTie r 1 an d Tie r 2 requirement s fo r th e baselin e additives , bu t wil l no t b e excuse d fro mprogra mrequirement s fo r th e atypica l products . Thes e specia l provision s allo wth e Agenc yt o eas e th e testin g burde no na significan t numbe r o f relativel ysmal l manufacturers , whil e stil l obtainin g th e leve l o f informatio nnecessar yt o achiev e th e overal l goal s o f th e program . Approximatel y6 4 percen t o f fue l additiv e manufacturer s an d 7 4 percen t o f fue l manufacturer s wil l qualif yfo r smal l busines s provision s fo r thei r baseline/non

baselin e products . Furthermore , abou t 4 5 percen t o f additiv e manufacturer s an d 1 1 percen t o f fue l manufacturer s wil l qualif yfo r smal l busines s specia l provision s fo r thei r atypica l products . Th e result s o f th e smal l busines s impac t analysi s suppor t th e smal l busines s definition s use d i nthi s registratio nprogram , an dar e discusse d i ngreate r detai l i nChapte r 5 .
C . Provision s t o Eliminat e Duplicatio no f gffor t Unde r CA Asectio n211(e)(3)(c) , th e Administrato r ma yexemp t an yfue l o r additiv e fro mth e regulation s "upo na findin g tha t an y additiona l testin g o f suc hfue l o r fue l additiv e woul db e duplicativ e o f adequat e existin g testing. " EP Awil l exercis e it s authorit yunde r thi s provisio nb yexemptin g fuel s an d additive s registere d a s relabele d product s fro mth e evaluatio nan d testin g requirement s o f thi s program . Arelabele d produc t i s a repackage d versio no f a produc t whic hi s als o registere d b yth e origina l manufacturer . Testin g o f relabele d product s woul d clearl y duplicat e th e effort s o f th e origina l manufacturer . Consequently , onl ybasi c registratio ninformatio nwil l b e require d fo r relabele d products . EP Ai s als o providin g a specia l provisio nfo r manufacturer s o f non-baselin e an d atypica l product s t o avoi d duplicativ e efforts . Sinc e requirin g manufacturer s o f non-baselin e an d atypica l F/FA s t o submi t literatur e dat a o nal l emissio nproduct s wil l duplicat e th e effort s o f informatio nsubmitte d fo r th e bas e fue l t o whic hi t i s compared , EP Ai s allowin g manufacturer s o f non-baselin e an d atypica l F/FA s t o submi t Tie r 1 literatur e dat a onl yfo r th e emissio nspecie s whic har e differen t fro mth e emissio nproduct s o f th e respectiv e bas e fuel . 

### D . othe r specia l Provision s 1 2P.1 9

I nadditio nt o th e provision s discusse dabove , EP Ai s als o providin g i nthi s fina l rul e specia l provision s fo r experimenta l F/FA s an d aerosol s products . Fo r experimenta l F/FAs , EP Ai s relyin g o nexistin g regulation s unde r 4 0 CF R79.4(a)(3 ) an d 79.4(b ) (2 ) whic hexempt s fuel s an dfue l additive s use d fo r research , developmen t o r testing . Base do nthes e provisions , any designate d F/F Asol d t o automobile , engine , o r componen t manufacturer s fo r research , developmen t o r tes t purposes , o r sol d t o automobil e manufacturer s fo r factor yfill , an dno t i nanycas e offere d fo r commercia l sal e t o th e public , i s exempte dfro mth e registratio nrequirements . Thi s provisio ndoe s no t affec t th e result s o f th e analysi s sinc e thes e product s ar e no t currentl y require d t o registe r wit hEPA . I nregar d t o aeroso l products , th e fina l rul e contain s a specia l provisio nunde r whic hmanufacturer s o f aftermarke t additive s tha t ar e sol d t o b e applie di naeroso l for m(e.g. , starte r fluids , carbureto r cleaners ) ar e require dt o provid e onl y existin g informatio no nthei r product s (o r components) , a discussio no f th e potentia l exposures , an dbasi c registratio ndata . Thus , aeroso l product s ar e exemp t fro mTie r 1 emissio n characterizatio nrequirement s an d Tie r 2 . Testin g o f aerosol s ma y b e performe d unde r Tie r 3 a t EPA' s discretion . EPA' s registratio n databas e doe s no t indicat e whic hcurrentl yregistere daftermarke t additive s ar e aerosols . A s a result , cos t reduction s fo r product s qualifyin g fo r thes e provision s ar e no t considere di nthi s analysis .

1 3Figure 1-1 : Groupin g Framewor k

Fue l Families Conventional : Alternative : Gasofln e

Diese l Methano l Ethano l Methan e (CNG . LNG ) Propan e (LPG )

Fuel/Additiv e Categories :

- Baselin e

- Non-baselin e -Atypica l

Fuel/Additiv e Group s 

# I

Grou p Representative(s )

h o

### Tabl e1-1 : F/F AGroupin g Syste m

t * F/F

A Categor

y
Baseline

Non-baaaline

Atypica l Conventiona l Gasoline (A ) One grou

p representedb

y gasoline bas e fua l

On e grou pfor each gasoline-oxygenat e blan dor each gasoline methanol/co aolvent blend ; on e grou pfor each syntheti c crude derivedfue l On e grou pfor each atypica l element / characteristic , o r unique combination of atypica l elements / characteristic s

- Fue l Familie s

Diese l (B ) On e grou

p representedb

y diese l bas e fue l

On e grou

pfor eachoxygen contributing compoun do r clas s o f compounds ; one grou pfor each syntheti c crude derivedfue l On e grou

pfor eachatypica l element / characteristic , o r unique combinationo f atypica l elements / characteristic s Methano l <C ) Tw o groups : 1 ) M10 0 grou

p (include s methanol-gasoline formulation s wit h at leas t 96 % methanol ) representedb

y M10 0 bas e fue l 2 ) N8 5 (include s methanol-gasoline formulation s wit h 50-95 % methanol ) representedb

y M8 5 bas e fue l One grou

pfor eac hindividua l non-methanol , non-gasoline component andon e grou pfor each unique combinatio

no f suc hcomponent s On e grou pfor eac hatypica l element / characteristic . or unique combinatio

no f atypica l elements / characteristic s Alternativ e Fue l Familie s Ethano l (D ) On e grou

p (include s ethanol-gasoline formulation s with at leas t 50 % ethanol ) representedb

y E8 5 bas e fue l

One grou

pfor eachindividua l non-ethanol , non gasoline component andon e grou pfo r each unique combinatio

no f suchcomponent s On e grou

pfor eachatypica l element / characteristic . o r unique combinatio

no f atypica l elements / characteristic s Methan e (CNG , LNG ) (E ) One grou

p (include s bot h CN Gan dLNG ) , representedb

y CN Gbas e fue l

One grou

pt o includ e methan e formulation s exceedin

gth e specifiedlimi t for non—methane hydrocarbon s

One grou

pfo r eachatypica l element / characteristic . or unique combinatio

no f atypica l elements / characteristic s Propane (LPG ) (F ) On e grou

p representedb

y LP Gbas e fue l

On e grou

pt o include propane formulation s exceedingthe specifiedlimi t for butane an

d highe r hydrocarbon s On e grou

pfor eachatypica l element / characteristic . o r unique combinationo f atypica l elements / characteristic s

h oP.2 2


## Fue l Manufacture rAnnua l Sale s Distributio n

Manufacturer

s o fLeaded Product

s Exclude

d Figure1-2. 1


## $1 

# 1 1 < 1

Figur e 1-2. 2 05 101 5 2025303540455055606 5 7 07 5 8085909 5 10 0 Cumulativ

e Percento

f63 8 Companie

s

<10 10-4 9 50-9 9 Annua l Sales ($ Millions ) ->10 0 Figur e 1-2. 3 12 0 10 0 c o 1 8 0 h

w6 0 h <o 3 C 

### • 5 < 0 4 0 3 C 2 0 Fuel Mfrs . Earnin g < $100 M Pe rYea i

$5 0 MILLION /

-»-•-•--«• • - I I l

_ i i l i l L

. 1 0 2 0 3 0 4 0 5 0 6 0 7 0 8 0

Cumulativ

e Percento

f52 5 Comoanie

s < $10 0 M M 9 0 10 0 

## /f r

## Fue l Additiv e Manufacture rAnnua l Sale s Distributio n Manufacturers ofLeade d Product s &Relabelers Exclude d Flaur e 1-3. 1

i n 1 3 0 

# = 1 c. 2 —-$10,060
- -$100 ~ $1. 0

J | | I 1 | | | | L

_ Figur e 1-3. 2 _ l I I l

_ 1 0 2 0 3 0 4 0 S O 6 0 7 0 Cumulativ e Percen tof45 8 Companie s 8 0 9

0 10

0

25 0
20 0 - E 15 0 

## 3

" S 

## 1 1 0 

## ° E 3 Z50 

# I
I 20 7 

### •

mliBBBBBBBBBBBBBBBK^sLa^mlBBBBBBBBBB l •••••••••••••BTT'^^^^^^ ^ 

# ^^^H B

<1 0 10-4 9 50-9 9 Annua l Sale s ( $ Millions ) »10 0 Figur e 1-3. 3
10 0

m c 0 s i T ¥¥ *-*' (fl 9Sal 1 3 3 C C < 8 0

6 0

4 0

2 0 Fue l Additiv e Mfrs

. Earnin g < $100 M Pw Yearj

$50 Minion 

### . W

### ^A.

•-f j mV " m l M ~ 1 i 1 i 1 1 0 2030405060708 0

Cumulativ e Percen tof31 4 Companie s < $10 0 M M 9 0 10 0


# n

### Chapte r 2 

### Industry ovarvigw

I . Introductio n Thi s chapte r provide s a characterizatio no f currentl y registere d fue l an d fue l additiv e manufacturers . Financia l informatio nan d informatio nregardin g th e numbe r an d type s o f product s registere d ar e presented . Fo r purpose s o f registratio n wit hEPA , a fue l manufacture r i s define d a s an yperso nwho , fo r sal e o r introductio nint o commerce , produces , manufactures , o r import s a fue l o r cause s o r direct s th e alteratio no f th e chemica l compositio nof , o r th e mixtur e o f chemica l compound s in , a bul k fue l b yaddin g t o i t a nadditive. 9 B ythi s definition , thos e entitie s require d t o registe r fuel s includ e no t onl yrefiner s o f crud e oil , bu t als o operator s wh o formulat e thei r ow nfuel s b y addin g differen t combination s o f additives , an d thos e wh o mi x fuels . Afue l additiv e manufacture r i s define d a s an yperso nwh o produces , manufactures , o r import s a nadditiv e fo r us e a s a n additiv e and/o r sell s o r import s fo r sal e suc hadditiv e unde r th e person' s ow nname. 1 0 Include d i nthi s definitio nar e companie s whic hmanufactur e additive s fro mnon-additiv e constituent s a s wel l a s thos e whic hproduc e additive s b ymixin g tw o o r mor e othe r registere d additive s an d thos e whic hrepackag e existin g additive s fo r sal e unde r a differen t labe l (i.e. , relabelers) . Fue l additiv e product s ca nb e subdivide d b ypurpose-in-us e a s bul k additive s and/o r aftermarke t additives . Bul k additive s ar e product s whic h ar e adde d t o fue l befor e th e fue l i s commerciall yavailabl e fo r introductio nint o th e fue l tan k o f a moto r vehicle , whethe r adde d a t th e refiner ya s par t o f th e origina l blendin g strea mo r afte r th e fue l i s transporte d fro mth e refinery . Aftermarke t additive s ar e product s whic har e adde d b yth e end-use r directl yt o fue l i na moto r vehicl e o r engin e t o modif yth e performanc e o r othe r characteristic s o f th e fuel , th e engine , o r it s emissions . EP A als o expect s t o includ e importer s o f fue l additive s i nth e fue l additiv e manufacture r definition .

II . Analyal a o f Currentl y Rfl^iatara dFual/Fua l Additiv e Producer s A s discusse d i nth e firs t chapter , EP Ai s require d t o registe r moto r vehicl e fuel s an d fue l additive s prio r t o thei r sal e o r

9 4 0 CF RPar t 79 . 10 Ibid . 1 8P.2 5

introductio nint o commerce . Commercia l identifyin g information , rang e o f concentration , purpose-in-use , an d chemica l compositio n ar e example s o f informatio nrequire d fo r eac hproduc t registration . Th e registratio ninformation , maintaine d b yEP Ao na registratio n database , i s th e primar ysourc e o f dat a use d i nthi s impac t analysis . A s o f Decembe r 1992 , th e registratio ndatabas e containe d informatio no na tota l o f 2,05 3 uniqu e producer s an d 6,46 9 leade d gasoline , unleade d gasolin e an d diese l fue l an d fue l additiv e products . O f thes e manufacturers , approximatel y78 5 (nearl y4 0 percent ) wer e fue l producers , 1,24 0 (ove r 6 0 percent ) wer e additiv e producers , an d 2 8 produce d bot hfuel s an d additives . Approximatel y 3 0 percen t o f th e 2,09 9 fue l product s registere d wer e leade d gasolin e products , 6 0 percen t wer e unleade d gasolin e products , an d 1 0 percen t wer e diese l fue l products . O f th e 4,37 0 registere d fue l additiv e products , 4 2 percen t wer e bul k additive s an d 5 8 percen t wer e aftermarket . Nearl yone-fourt ho f al l registere d additive s wer e relabele d products . Th e databas e contain s informatio no nproduct s registere d sinc e th e registratio nprogra mbega ni n1975 . Sinc e manufacturer s ar e no t currentl yrequire d t o notif yth e Agenc ywhe nproductio no f a registere d produc t ha s ceased , o r whe na compan yha s bee nsol do r gon e ou t o f business , th e databas e ma ycontai nobsolet e information . Thus , t o mor e accuratel ydetermin e cost s an d impact s o f thi s program , EP Aattempte d t o updat e th e databas e b y identifyin g manufacturer s n o longe r i nbusines s an d t o collec t curren t financia l informatio nfo r thos e manufacturer s stil l producin g registere d products , a s describe d below . However , ther e wa s n o wa yfo r EP At o confir mwhethe r al l o f th e F/FA s registere d b ya "functioning " manufacture r ar e stil l (o r hav e eve r been ) i n production . A . Dat a Collectio n Usin g th e Du n& Bradstree t (D&B ) databas e service s availabl e t o EP Athroug hth e Nationa l Compute r Center 11 , informatio no nannua l sales , numbe r o f employees , an d th e primar yStandar d Industria l Classificatio n(SIC ) cod e wa s collecte d o napproximatel y6 3 percen t o f registere d F/F Amanufacturers . Whe nth e registere d F/F Acompan y wa s a subsidiar yo r divisio no f a large r company , th e

X1 Acomputerize d inventor yo f facilitie s regulate d b yth e U.S . EPA , calle d FINDS , i s maintaine d b yEPA' s Offic e o f Informatio nResource s Management . I t operate s o na mainfram e compute r whic hreside s a t EPA' s Nationa l Compute r Cente r i n Researc hTriangl e Park , Nort hCarolina . Throug hFINDS , user s ca n acces s a Du n& Bradstree t databas e whic hcontain s informatio no n U.S . busines s establishments . 1 9P.2 6

sales/employee/SI C cod e dat a wa s collecte d fo r th e parent 1 2 company . Fo r th e remainin g companies , EP Acontracte d wit hDu n& Bradstree t Informatio nService s t o collec t sales/employee/SI C cod e information , throug hus e o f thei r mor e comprehensiv e database , an d t o identif ycompanie s whic hha d relocated , ha d bee nsol do r renamed , o r whic hwer e n o longe r i nbusiness . Companie s no t identifie d o nD&B' s comprehensiv e databas e wer e investigate dvi a phone , an d i nsom e cases , physica l researc h(i.e. , a D& B analys t drov e t o th e busines s site) . Companie s stil l no t foun d afte r thi s effor t wer e considere d t o b e ou t o f busines s fo r purpose s o f thi s analysis . Financia l dat a wa s no t sough t fo r companie s producin g onl y leade d gasolin e product s sinc e leade d gasolin e fo r highwa yvehicle s wil l b e illega l a s o f Januar y1 , 1996 . Consequently , the yar e exclude d fro mth e remainde r o f thi s analysis . I naddition , becaus e onl ybasi c registratio ninformatio nwil l b e require d fo r relabele d products , financia l informatio nwa s no t collecte d fo r relabeler s sinc e thei r impact s woul d b e minimal . However , cost s t o companie s registerin g relabele d product s ar e include d i nth e overal l cos t projection s discusse d i nChapte r 4 . A s a resul t o f th e dat a search , 2 4 9 registere d F/F Acompanie s (1 2 percen t o f tota l registere d companies ) wer e determine d t o b e ou t o f business . Excludin g thes e companies , relabelers , thos e producin g onl yleade d products , an d afte r combinin g companie s liste d mor e tha nonc e o nth e databas e (se e sectio nII I o f Chapte r 5 fo r discussion) , curren t annua l sale s dat a wa s collecte d fo r 9 5 percen t o f th e registere d companies . Fo r th e remainin g fiv e percent , unde r th e assumptio ntha t companie s fo r whic hsale s dat a wa s no t availabl e wer e likel yt o b e small , EP Aassigne d a sale s leve l o f $ 4 9 millio nt o manufacturer s wit hgreate r tha n5 0 employees , an d $ 9 millio nt o manufacturer s wit hles s tha n5 0 employees . I f employe e informatio nwa s no t available , a sale s o f $ 4 9 millio nwa s assigne d t o th e company . B . Characterizatio no f Registere dProducer a I ntotal , th e numbe r o f uniqu e "functioning " registere d manufacturer s o nwhic hthi s analysi s i s base d i s 1,076 . Thi s include s 43 8 additiv e manufacturers , 61 8 fue l manufacturers , an d2 0 manufacturer s tha t produc e bot hfue l an d additiv e products . Th e tota l numbe r o f additiv e product s manufacture d b yth e 45 8 additiv e companie s i s 2,778 . Th e averag e numbe r o f additiv e product s

""Parent " i s define da s a busines s entit ywit hcontrollin g interes t i nanothe r compan ythroug hownershi p o f a majorit y(mor e tha n5 0 percent ) o f it s votin g stock . Whe nth e F/F Acompan ywa s a subsidiar yo r division , informatio nwa s collecte d fo r th e "closest " paren t listed , no t th e uppermos t headquarter s o r ultimat e paren t company . 2 0P.2 7

registere d pe r additiv e manufacture r i s approximatel y6 , wit hth e maximu mnumbe r o f product s manufacture dbya singl e additiv e compan ybein g 179 . Nearl yhal f o f th e additiv e manufacturer s (4 5 percent ) produc e onl yon e product . O f th e 2,77 8 registere d additives , approximatel y1 0 percen t ar e atypical . Th e tota l numbe r o f fue l product s manufacture db yth e 63 8 fue l companie s i s 1,420 , roughl yone-hal f th e numbe r o f product s manufacture d byadditiv e companies . Th e averag e numbe r o f fue l product s pe r manufacture r i s approximatel y2 , wit hth e maximu m numbe r registere d bya singl e fue l companybein g 16 . Abou t 4 0 percen t o f fue l manufacturer s produc e onl yon e product , an d approximatel y1 5 percen t o f tota l registere dfue l product s ar e atypical . Analysi s o f th e update ddatabas e show s tha t abou t 9 0 percen t o f additiv e manufacturer s an d 9 8 percen t o f fue l manufacturer s produc e a t leas t on e baselin e o r non-baselin e product . Registratio no f atypica l product s i s muc hlower , especiall yb yfue l manufacturers , wit honl y2 7 percen t o f tota l additiv e manufacturer s an d 1 3 percen t o f tota l fue l manufacturer s producin g a t leas t on e atypica l product . A s discusse d briefl yi nChapte r 1 an dshow ni nFigur e 1- 2 fo r fue l manufacturer s an d Figur e 1- 3 fo r additiv e manufacturers , th e distributio no f annua l sale s acros s registere dmanufacturer s show s tha t eac hindustr yconsist s o f a smal l numbe r o f larg e manufacturer s an d a larg e numbe r o f smalle r companies . A s show ni n Figur e 1-2 , abou t 8 2 percen t o f tota l fue l manufacturer s hav e sale s unde r $10 0 million , 7 3 percen t hav e sale s unde r $5 0 million , an d nearl y4 0 percen t hav e sale s belo w$1 0 million . Thus , o f th e fue l companie s unde r $10 0 millio ni nsales , nearl yal l hav e sale s unde r $5 0 million , an d hal f fal l belo w$1 0 millio ni nsales . Onl yabou t 1 8 percen t o f fue l manufacturer s hav e sale s $10 0 millio nan dabove . I nregar d t o fue l additiv e manufacturers , approximatel y6 8 percen t hav e sale s belo w$10 0 million , 6 4 percen t belo w$5 0 million , an d 4 5 percen t belo w$1 0 million . Thus , registere d fue l additiv e manufacturer s ten dt o b e small , wit hove r 6 5 percen t o f thos e unde r $10 0 millio ni nsale s als o belo w$1 0 million . Onl y abou t a thir d o f tota l fue l additiv e companie s hav e sale s abov e $10 0 million . Usin g th e sale s dat a collecte dfo r eac hmanufacture r an dth e regressio nequation s develope dfo r th e smal l busines s impac t analysi s fo r th e NPRM 13 , IC F provide destimate s o f ne t income ,
"Se e IC F Analysi s availabl e i nAi r Docke t A-90-07 , ite m numbe r III-A-03 . 2 1asset , an d retur no nasse t (ROA ) informatio nfo r eac ho f th e

registere d companies . Fro mthis , IC F develope dprofile s o f smal l an d larg e companies , a s show ni nExhibi t 2- 1 fo r fue l manufacturer s an d Exhibi t 2- 2 fo r additiv e manufacturers . Approximatel y7 3 percen t o f fue l companie s an d6 4 percen t o f additiv e companie s ar e considere d smal l fo r thi s progra m(i.e. , hav e sale s <$5 0 million) . Acompariso no f th e media nsmal l fue l an dfue l additiv e manufacture r indicate s tha t smal l fue l manufacturer s generall yhav e mor e employee s an d highe r sale s an dne t incom e tha nsmal l additiv e manufacturers , bu t tha t RO Atend s t o b e smalle r fo r smal l fue l companies . However , whe ncomparin g th e media nlarg e fue l an d additiv e manufacturer , th e dat a suggest s tha t larg e additiv e manufacturer s generall yhav e mor e employee s an dhighe r sales , ne t income , an d RO Atha nlarg e fue l companies . Th e likel yexplanatio n fo r thi s findin g i s tha t severa l ver ylarg e companies , includin g majo r automobil e manufacturer s an dchemica l companie s ar e registere d a s fue l additiv e manufacturers . I nsum , a compariso no f currentl yregistere dfue l an dadditiv e companie s suggest s tha t larg e additiv e manufacturer s (thos e wit h sale s $5 0 millio nan d above ) generall yten dt o b e large r i nterm s o f sale s an d numbe r o f employee s tha nlarg e fue l manufacturers . However , smal l additiv e manufacturer s ar e generall ysmalle r tha n smal l fue l companies . On e reaso nfo r thi s ma yb e th e divers e natur e o f th e companie s registerin g products , particularl y additives . Tha t is , the ymak e mor e product s tha nfue l additives . Th e dat a als o suggest s a bimoda l distributio ni nth e siz e o f th e companie s i neac hindustr y(i.e. , a smal l numbe r o f larg e companie s an d a larg e numbe r o f smal l ones) . Complianc e cos t impact s o n smal l an d larg e fue l an dadditiv e manufacturer s i s discusse di n Chapte r 5 .

2 2P.2 9



### Exhibit2- 1 Profiles o f RegisteredFuelManufacturers

Small * Larg e TOTA L Numbe r 46 5 173 63 8 Percent

73 % 27 % 100 %

Mlalmaa i Lawa rQvartll a Madla a Uaat rQnartll a 1 Mailma n Avaraa a Smal l Foa l Mtnafactnrar s Employaa s Salt s Aatat a Na tIBCOO M RO A 0 $49,00 0 $13,16 4 $29 2 121 % 8

$3,000,00 0 $882,30 3 $28,34 4 3.25 % 2 2

$9,000,00 0 $2,711.66 4 $97,05 7 3.57 % 5 1

$22,000,00 0 $6,782,32 1 $263,63 9 3.90 % 29,43 7

$49,665,53 4 $15,537,04 1 $650,73 7 5.19 % 15 4

$14,707,89 4 $4,535,22 4 $178,35 4 3.54 % Lar| tFoa l Manofactiirar a Bmptoyaa a Sal* * A«M U Na tIncom a RO A 0 $30,000,00 0 $15,643,98 3 $633,62 1 4.19f t 21 5

$85,917,70 2 $27,204,04 0 $1,198,32 1 *M% 44 5

$268,822,00 0 $87,279,65 8 $4,269,96 0 4.89 % 3,02 5

$1,775,820,00 0 $628,866,62 2 $36,751,77 2 3.85 % 67,30 0

$62,359,000,00 0 $68,509,097,98 8 $4,969,802,31 1

7.86 % 4,31 5

$2,653,133,84 8 $1,688,061,56 3 $116,891,85 2 5.16 % •Companie s wit

hsale s les s tha

n$5 0million .



# 23P.3 0

Exhibi t2- 2 Profile s of

Registere dAdditiv eManufacturer s

Small * Larg e TOTA L Numbe r 29 5 16 3 458 Percen t 64% 36% 100%

Minimu m Lowa rQnartll a Maa-la o Uapa rQnartll a Maxlam a Avarag a Smal l AddlUv a Manufacturer s E m pioraa s Sales Assats NatIncom a RO A 0 $50,00 0 $12,06 3 $49 2 4.08 % 3

$900,00 0 $296,68 8 $13,62 8 4.59 % 1 6

$4,282,99 3 $1,671,04 2 $81,82 6 4.90 % 5 2

$12,116,18 3 $5,288,94 9 $270,26 4 5.11 % 1,11 0

$49,000,00 0 $24,87342 0 $13*5.97 0 5.41 % 3 1

$9,688,73 8 $4,47646 7 $234,29 0 4.86 % Leri a A4dltlr a Maaatactnra n Emalorac a Salaa Aaaa U Na tIncom a RO A 1 0

$50,000,00 0 $23.436J8 3 $1,377,37 9 3.42 % 72 2

$176,414,56 0 $102,845,13 3 $3,863,45 < 3.70 % 3,54 8

$972,795,13 3 $681,922,81 4 $41,710,68 6 6.12 % 14,33 3

$3.403400.00 0 $2,733,105,65 1 $175,985,07 3 6.44 % 332,70 0

$115,068,000,00 0 $133,063493.62 0 $10,047,009,08 1

7.44 % 14,76 4

$4,974,456,42 0 $4,905.81446 1 $344452.61 1 6.12 % •Companie s wit

hsale s les s tha

n$5 0million
.



# 11P.3 1

Chapte r 3 Program

Rttouiramant s an dAssociate dCost a

I . Introductio n Th e regulation s implementin g Clea nAi r Ac t (CAA ) sectio n 211(b)(2 ) requir e producer s o f moto r vehicl e fuel s an dfue l additive s t o submi t informatio nregardin g th e compositio no f th e emission s produce d bysuc hF/FA s an dth e effect s o f th e emission s o nth e publi c healt han dwelfare . A s previousl ymentioned , EP A believe s th e genera l regulator ymechanism s alreadyimplemente d unde r sectio n21 1 (f ) ar e adequat e t o satisf yth e emissio ncontro l syste mprovision s o f sectio n211(b) . Furthermore , a s indicate di n Chapte r 1 o f thi s document , welfar e effect s ar e t o b e addresse di n conjunctio nwit hTie r 1 healt heffect s requirements , an dpossibl y Tie r 3 . Therefore , th e cost s presente di nthi s analysi s ar e associate d primaril ywit hhealt heffect s evaluation , includin g informatio ncollection , emissio ncharacterization , biologica l testing , an d reportin g requirements . Th e purpos e o f thi s chapte r i s t o projec t cost s associate d wit hmeetin g progra mrequirement s an dsubmittin g th e informatio n necessar yfo r registration . Becaus e gasolin e an ddiese l fuel s an d thei r additive s ar e th e onl yproduct s require dt o b e registere d wit hEP Aa t th e tim e thi s analysi s wa s conducted , specifi c componen t cos t estimate s ar e provide donl yfo r testin g o f thes e fuel/additiv e families . However , futur e designatio no f methanol , ethanol , natura l gas , an d liquifie d petroleu mga s fuel s an dthei r additive s i s expected . Thus , producer s o f thes e F/FAs , i nadditio n t o gasolin e an d diesel , ar e expecte dt o b e subjec t t o th e registratio nrequirement s o f today' s rule . Potentia l cost s associate d wit hfutur e registration s o f alternativ e F/F Aproduct s ar e discusse d a t th e en d o f thi s chapter . A s previousl ymentioned , EP Acontracte dwit hSwR I t o hel p identif ycommercia l price s associate dwit hspecifie daspect s o f th e generatio nan d collectio no f combustio nan devaporativ e emissions , th e chemica l characterizatio n(speciation ) o f suc h emissions , an d th e controlle ddilutio nan ddirec t deliver yo f suc h emission s t o anima l exposur e chamber s fo r healt heffect s testing . T o obtai nthi s data , SwR I contacte d an dprovide da surve yt o eigh t laboratorie s capabl e o f performin g a t leas t som e o f thes e tasks . Eac ho f th e laboratorie s responde dt o a t leas t som e o f th e surve y categories . Base d o nit s ownexperienc e a s a commercia l testin g laboratory , SwR I the nevaluate d th e response s an ddevelope da "typical " commercia l pric e whic hmigh t b e charge dfo r eac ho f th e tasks . Thes e pric e estimate s ar e th e basi s fo r muc ho f th e cos t dat a presente d i nthi s chapter . Othe r cos t estimate s wer e obtaine d fro mvariou s sources , includin g resource s withi nEPA . Fo r example , 2 5P.3 2

biologica l testin g cost s wer e base do ndat a receive dfro mth e Offic e o f Pesticide s an dToxi c Substances 14

. Componen t cos t dat a fo r eac hrequiremen t o f eac hevaluatio ntie r i s provide di n Appendi xA . Th e dat a presente d i nthi s chapte r reflec t th e cost s fo r a n individua l produce r t o mee t th e requirements , an dd o no t reflec t potentia l saving s resultin g fro mcost-sharin g arrangement s o r fro m volum e discount s provide d bylaboratories . Whe ncos t projection s ar e presente d i nthi s chapter , a rang e o f estimate dcost s i s provide d i nsom e instances . Thi s reflect s th e fac t tha t certai n progra mrequirement s ar e mor e stringen t an dcostl yfo r product s i n th e "atypical " categorie s tha nfo r th e "non-atypical " (baselin e an d non-baseline ) products . I nsuc hinstances , differen t cost s ar e presente d fo r "atypical " an d "non-atypical " products . Majo r change s i nth e fina l progra mrequirement s compare dt o thos e originall ypropose d ar e outline dbelow , followe dbya discussio no f requirement s an dcost s associate dwit heac h evaluatio ntier , and , finally , cost s associate dwit hadministrativ e an d reportin g requirements . Aggregat e cost s t o industr yar e discusse d i nChapte r 4 . II . Descriptio no f Chanoa a I nProgram Ragulramantf l Th e fina l rul e maintain s th e three-tie r testin g structur e fo r evaluatin g th e healt heffect s o f fuel s an dadditives , wit hsom e variation s i nspecifi c progra mrequirements . Tie r 1 o f th e proposa l include d a modelin g analysi s fo r atmospheri c reactivity , environmenta l fate/partitioning , an dexposur e a s par t o f th e welfar e effect s evaluation . Du e t o th e limite dapplicabilit yo f availabl e modelin g method s fo r thi s program , EP Ai s no t requirin g routin e modelin g analysi s i nth e fina l rule . Instead , modelin g effort s wil l b e require d onl yo na case-by-cas e basis , a s neede d unde r Tie r 3 . Tie r 1 requirements , however , d o includ e submitta l o f productio nvolum e an d distributio ndata . F/F Amanufacturer s ar e als o require dunde r Tie r 1 t o determin e th e emission s resultin g fro mth e us e o f th e fue l o r additiv e containe d i nth e fuel . I ndoin g so , th e emission s ar e t o b e generated , collected , sampled , an dsubjecte dt o test s fo r determinin g th e identit yan dconcentratio no f individua l emissio n products . Befor e emission s ca nb e generate dfo r characterization , manufacturer s wil l b e require d t o accumulat e a certai nnumbe r o f mile s o nth e vehicle . Th e minimu mmileag e accumulatio nrequire d

14 U.S . Environmenta l Protectio nAgency , Offic e o f Pesticide s an d Toxi c Substances , "Cos t Estimate s fo r TSC ATes t Guidelines, " Memorandu mfro mDa nAxelra dt o Sher i Dunatchik , June , 1991 . 2 6P.3 3

prio r t o emission s testin g ha s bee nreduce d fro mth e propose d 25,00 0 mile s (o r comparabl e hours ) t o 4,00 0 mile s fo r light-dut y vehicle/truc k testin g o r 12 5 hour s fo r heavy-dut yengin e testing . I nth e cas e o f F/FA s wit hatypica l elements , onc e eac hatypica l element(s ) o f interes t i s detecte d i na t leas t on e emissio n fraction , a nadditiona l 10,00 0 mile s i s require d prio r t o generatio no f emission s fo r purpose s o f emissio ncharacterizatio n an d biologica l testing . I nadditio nt o characterizin g catalyze d exhaus t emission s generate d vi a th e Federa l Tes t Procedur e (FTP ) a s proposed , th e fina l rul e als o include s characterizatio no f non-catalyze d exhaus t emissions . Furthermore , fo r th e fina l rule , evaporativ e emissio n characterizatio ni s t o b e conducte d o nemission s generate d fro ma n evaporativ e emissio ngenerato r (EEG) , rathe r tha nth e propose d metho d o f usin g a seale d housin g fo r evaporativ e determinatio n (SHED ) t o generat e emissions . I ngeneral , thes e change s describe d above , alon g wit hothe r change s i nprogra massumption s an d cost s (explaine d i nth e nex t section ) , resul t i ntota l Tie r 1 cost s bein g highe r tha nestimate d i nth e proposal . I nth e NPRM , EP Apropose d short-ter mtest s unde r Tie r 2 fo r th e evaluatio no f si xhealt heffect s endpoints : carcinogenicity , mutagenicity , teratogenicity , reproductiv e toxicity , neurotoxicity , an d pulmonar ytoxicity . Th e Tie r 2 testin g requirement s hav e bee n modifie d i nth e fina l rul e t o enhanc e th e efficienc yan d feasibilit yo f th e program . Aserie s o f individua l test s ar e replace d wit ha comprehensiv e 90-da ysubchroni c inhalatio nprotoco l tha t examine s genera l systemi c an d orga ntoxicit y(includin g pulmonar ytoxicity) , a s wel l a s specifi c assessment s relate dt o carcinogenic , mutagenic , teratogenic , reproductive , an d neurotoxi c effects . Thes e modification s wil l increas e th e qualit yan d breadt h o f th e tes t data , whil e slightl ydecreasin g th e actua l testin g cost . However , result s o f th e surve yconducte d b ySwR I sugges t tha t bot hlight

- an d heavy-dut yemissio ngeneratio ncost s fo r biologica l testin g purpose s wer e underestimate d i nth e proposal . This , i ncombinatio nwit hchange s i nothe r assumption s regardin g Tie r 2 testing , explaine d i ndetai l below , resul t i na sligh t increas e i ntota l Tie r 2 cost s estimate d fo r bot hlight-dut y gasolin e an d heavy-dut ydiese l testing . Cost s associate d wit h individua l testin g requirement s o f eac htie r ar e discusse d below .

III . Tie r 1 RaqulrtMnant s an d Cost s Th e scop e o f Tie r 1 encompasses : 1 ) a literatur e searc ho f availabl e informatio no nth e compositio nan d effect s o f F/F A emission s o npubli c healt han d welfare , 2 ) a chemica l analysi s t o characteriz e th e emission s o f fuel s o r fuel/additiv e mixtures , an d 3 ) a discussio no npotentia l exposure s usin g informatio no n productio nvolum e an d distributio npattern s o f th e particula r 2 7P.3 4

fuel(s ) o r fuel/additiv e mixture(s) . Eac ho f thes e requirement s ar e explaine d below . 

### A . LaUaratur e starc h Acomprehensiv e literatur e surve ywil l b e required , usin g bot h publi c an d in-hous e (industr yan d manufacturer ) source s t o gathe r al l availabl e informatio nabou t th e chemica l compositio nan d potentia l advers e effect s o f whol e combustio nemission s an d relevan t emissio nfractions , a s wel l a s th e individua l emissio n product s identifie d b yemissio nspeciatio nprocedures . Th e informatio ni s t o b e compile d fro mpeer-reviewe d scientifi c journal s an d othe r literatur e a s wel l a s interna l industr ystudies , government-sponsore d reports , proceeding s o f scientifi c meetings , an d othe r documente d sources . Asearc ho f appropriat e commerciall y availabl e toxicologi c an d environmenta l database s mus t b e conducte d t o locat e informatio nfro mpublishe d sources . Th e searc hmus t cove r a t leas t fiftee nyear s prio r t o th e dat e o f submission , an d mus t b e curren t a s o f si xmonth s prio r t o beginnin g o f testing . Th e informatio nt o b e submitte d t o EP Aa s a resul t o f th e dat a searc hinclude s a summar yo f th e genera l findings , a printe dcop y o f th e output s fro mth e databas e searches , complet e documentatio n o f unpublishe d in-hous e o r othe r privatel yconducte d studies , an d table s summarizin g al l cite d studies . I nEPA' s judgement , companie s wil l likel ymee t thes e dat a researc hrequirement s throug hth e service s o f a contractor . EP A estimate s tha t a typica l contracto r wil l charg e a nhourl yrat e o f $6 5 fo r thi s service , an d databas e service s ar e estimate d t o cos t approximatel y$2 0 pe r hour . Fo r baselin e products , EP Aestimate s contracto r an d databas e servic e hour s t o b e approximatel y30 0 an d 7 5 hours , respectively . Fo r non-baselin e an d atypica l products , EP Ai s allowin g manufacturer s t o submi t Tie r 1 literatur e dat a onl y fo r th e emissio nspecie s whic har e differen t fro mth e emissio n product s o f th e respectiv e bas e fuel . Consequently , EP Aestimate s th e dat a researc hrequirement s fo r thes e product s t o abou t one thir d o f th e researc htim e require d fo r baselin e product s (i.e. , 10 0 contracto r hour s an d 2 5 hour s o f databas e use) . I nsum , EP A estimate s th e cos t fo r conductin g th e literatur e searc hportio no f Tie r 1 t o b e $21,00 0 fo r baselin e product s an d $7,00 0 fo r non baselin e an d atypica l products . B . Characterizatio no f Emission s CA Asectio n211(b ) require s F/F Aproducer s "t o determin e th e emission s resultin g fro mth e us e o f th e fue l o r additiv e containe d i nsuc hfuel. " T o satisf yth e requirement s o f thi s provision , exhaus t emission s wil l nee d t o b e generated , collected , sampled , an d subjecte d t o test s fo r determinin g th e identit yan d concentratio no f individua l emissio nproducts . Whe napplicable , evaporativ e emission s wil l als o b e generated , collected , an d subjecte d t o mos t o f th e sam e method s o f chemica l analysis . Th e emissio ncharacterizatio nrequirement s ca nb e mitigate db y 2 8P.3 5

comparabl e dat a obtaine d throug hth e literatur e searc hdescribe d above . 1 . Emissio nGeneratio n Thi s sectio npresent s th e method s an dcost s fo r generatin g an d samplin g th e emission s t o b e use di nchemica l speciatio n procedures . Becaus e man yo f th e sam e method s wil l b e neede dfo r generatin g emission s t o b e use d fo r biologica l testin g i nTier s 2 an d 3 , a discussio no f thes e overlappin g requirement s i s als o include d i nthi s section . a . Vehicl e Requirement s Th e vehicle s use d t o generat e emission s fo r purpose s o f emissio ncharacterizatio nan dbiologica l testin g mus t b e ne w vehicle s o f th e mode l yea r i nwhic htestin g begins . Vehicl e class , emissio ncontro l equipment , an dvehicl e sale s volum e ar e th e parameter s t o b e considere d i ndeterminin g th e vehicl e o r engin e t o b e use d fo r emissio ngeneration . Fo r eac hfue l famil y(i.e. , gasoline , diesel) , th e vehicl e clas s t o b e use dfo r emissio n generatio nwil l b e tha t whic hconsume s th e highes t yearl yamoun t o f fue l i ntha t fue l family . Sinc e diese l F/FA s ar e currentl yuse d predominantl yi nHDEs , an d gasolin e F/FA s ar e predominantl yuse di n light-dut yvehicle s (LDVs) , EP Aassume s i nthi s analysi s tha t HDE s wil l b e use d fo r testin g diese l product s an dLDV s wil l b e use dfo r testin g gasolin e products . Further , EP Aassume s us e o f a heavy heavy-dut ydiese l engin e (HDDE ) (a nengin e use di na vehicl e greate r tha n33,00 0 lbs . gros s vehicl e weigh t ratin g (GVWR) ) becaus e thi s subclas s reflect s th e mos t gallon s o f diese l fue l consume d amon g vehicle s operatin g o ndiese l fuel . Th e specifi c vehicle/engin e mode l t o b e selecte dfo r testin g i s t o b e anyon e o f th e fiv e mos t commo nfue l syste man demissio ncontro l syste m configurations . Ne wvehicle s (o r engines ) use di nemissio ngeneratio nfo r th e testin g o f baselin e an d non-baselin e F/FA s ar e require dt o underg o a break-i nperio d wher e th e vehicl e (o r engine ) i s ru nexclusivel y o nth e fue l o r fuel/additiv e mixtur e t o b e tested . Fo r vehicle s o n a chassi s dynamometer , th e mileag e accumulatio nneede dprio r t o emission s testin g i s a minimu mo f 4,00 0 miles . Fo r engine s o na n engin e dynamomete r th e minimu mbreak-i nrequiremen t i s 12 5 hour s o f operatio nfo r heavy-dut yengine s an d8 0 hour s fo r light-dut y vehicl e engines . Th e manufacturer s wil l b e responsibl e fo r appropriatel ymaintainin g th e vehicle/engin e whil e subjec t t o thes e requirements . Mileag e ca nb e accumulate dbyanyappropriat e means . I nth e cas e o f F/FA s wit hatypica l elements , afte r completio n o f th e 4,00 0 miles , th e F/F Amanufacture r i s require dt o identif y an d measur e th e atypica l element(s ) i nth e exhaust , i f possible . Th e atypica l element(s ) o f interes t ar e t o b e measure di neac ho f th e emissio nfraction s (i.e. , vapor , semi-volatile , an d particulate ) a t interval s t o b e decide db yth e manufacturer . Th e 2 9P.3 6

manufacture r i s require d t o continu e mileag e accumulatio nunti l eithe r 1 ) 5 0 percen t o r mor e o f th e inpu t mas s o f eac hatypica l ca n b e measure d i nth e emissions , o r 2 ) mileag e equivalen t t o 4 0 percen t o f th e vehicle' s usefu l lif e i s reached . Testin g ma y commenc e afte r eithe r o f thes e condition s ha s bee nmet . Cos t estimate s provide d fo r producer s o f non-atypica l produc t formulation s (i.e. , baselin e an dnon-baseline ) reflec t th e assumptio ntha t emissio ngeneratio nfo r purpose s o f emissio n characterizatio nan d biologica l testin g wil l begi nwhe nth e vehicl e ha s accumulate d th e minimu mmiles/hour s require d(4,00 0 mile s fo r a nLD V o r 12 5 hour s fo r a nHDE ) . Fo r producer s o f atypica l formulations , range s an d poin t estimate s ar e provided . Th e lo wen d cos t estimat e assume s testin g begin s whe nth e minimu mmileag e accumulatio nrequiremen t o f 4,00 0 mile s (o r equivalen t hours ) i s reached . Th e hig hen d reflect s th e cos t a manufacture r woul dincu r i f mileag e equivalen t t o 4 0 percen t o f th e vehicle' s usefu l lif e woul d nee d t o b e accumulated . Whe ndeterminin g poin t estimate s t o b e use d i nth e cos t analysi s fo r atypicals , EP Aassume dtha t a t leas t 5 0 percen t o f th e inpu t mas s o f eac hatypica l elemen t woul d b e abl e t o b e measure d i nth e emission s afte r th e accumulatio no f mileag e equivalen t t o 7 5 percen t o f th e maximu mrequirement . I n othe r words , poin t estimate s use d i nthi s cos t analysi s fo r testin g o f atypica l product s reflec t th e assumptio ntha t testin g wil l begi n whe nmileag e ha s reache d 3 0 percen t o f th e vehicle' s usefu l lif e (i.e. , 30,00 0 mile s fo r LDV s an d87,00 0 mile s fo r heavyHDVs) . Vehicl e Acquisitio nCost s EP Aestimate s producer s o f gasolin e fuel s an dadditive s wil l spen d approximatel y$15,00 0 t o purchas e th e appropriat e light-dut y vehicl e fo r testin g purposes . I nth e cas e o f diese l fuel/additiv e products , EP Aassume s tha t producer s wil l purchas e a heavy-dut y diese l engin e (HDDE ) fo r testin g purposes , rathe r tha npurchasin g a HDV , accumulatin g miles , an d the nremovin g th e engin e fro mth e vehicl e fo r testing . Dealer s i nth e South-Centra l Texa s are a wer e contacte d t o obtai npric e estimate s fo r new , highway-certifie d heavyHDDEs . Base d o nfiv e pric e estimates , th e averag e pric e o f a new , heavyHDD E i s $18,600 . Althoug hEP Ai s routinel yrequirin g onl yon e vehicl e o r engin e fo r th e testin g o f F/FAs , EP Aforesee s tha t a t leas t on e backu p vehicle/engine , identica l i nmode l an demissio ncontro l equipment , ma yb e neede d i norde r t o replac e vehicles/engine s tha t wea r ou t o r malfunctio ndurin g th e cours e o f testing . EP Arecommend s tha t backu p vehicles/engine s accumulat e mileag e alon g wit hth e primar y tes t vehicle/engine , s o a s t o minimiz e testin g interruption s i nth e even t tha t th e backu p vehicle/engin e i s needed . Fo r thi s analysis , EP Aassume s manufacturer s wil l retai non e backu p vehicl e fo r testing . Consequently , gasolin e F/F Aproducer s wil l spen d$30,00 0 o nvehicl e purchase s fo r testing , whil e engin e acquisitio ncost s fo r diese l F/F Aproducer s ar e estimate dt o tota l $37,000 . 3 0P.3 7

Mileag e Accumulatio nCost s A s indicate d above , EP Aenvision s emissio ncharacterizatio nt o b e conducte d a t 4,00 0 mile s fo r non-atypica l (baselin e an dnon baseline ) formulations , an dwhe n3 0 percen t o f th e vehicle' s usefu l lif e i s reache d fo r atypica l formulations . I nadditio nt o maintenanc e an d fue l expenses , th e require dmileag e accumulatio n wil l hav e a nadde d expens e fo r th e tim e and/o r personne l involve d i nth e mileag e accumulatio nactivity . Severa l o f th e laboratorie s contacte d bySwR I indicate dthe ywer e familia r wit hoperatin g vehicle s o na se t drivin g rout e wit ha hire ddrive r t o accumulat e miles . O nth e basi s o f th e responses , $0.80/mil e i s determine dt o b e a cos t likel yt o b e charge dfo r thi s task . Maintenanc e an dfue l cost s ar e included . Usin g thi s rate , EP Aestimate s mileag e accumulatio ncost s fo r gasolin e an d othe r F/FA s teste do nlight

dut yvehicle s t o b e $3,20 0 fo r non-atypica l an d$24,00 0 fo r atypica l formulations . Doublin g thi s cos t t o accoun t fo r backu p vehicl e mileag e accumulation , tota l LD V mileag e accumulatio ncost s ar e estimate d t o b e $6,40 0 fo r testin g non-atypica l gasolin e F/FAs , an d $48,00 0 fo r testin g atypica l gasolin e F/FAs . Thi s cos t coul d reac ha s muc ha s $64,00 0 fo r atypica l product s i f testin g i s conducte d whe nbot hvehicle s hav e reache d4 0 percen t o f th e vehicle s usefu l life , o r coul d b e a s lo wa s abou t $6,40 0 i f th e minimu mmileag e o f 4,00 0 mile s prove dt o b e adequate 15

. Fo r diese l an d othe r F/FA s whic har e use di nHDVs , EP A envision s "miles " wil l b e accumulate do na heavy-dut yengin e vi a a dynamomete r a t a testin g facility , wit hn o particula r loa do r cycle s bein g applie d t o th e engine . Informatio nreceive dfro m testin g facilitie s familia r wit hthi s procedur e indicate s tha t approximatel y$2.2 0 pe r mile , includin g fue l an dmaintenanc e costs , migh t b e charge d fo r thi s task . Usin g a rat e o f 5 0 miles/hou r t o conver t hour s t o miles , EP Aestimate s th e cos t t o accumulat e th e equivalen t o f 12 5 hour s o na HD E woul db e approximatel y$13,750 . Thus , tota l HD E mileag e accumulatio ncosts , includin g on e backu p vehicle , i s estimate d a t $27,50 0 fo r non-atypica l produc t testing . Th e cos t fo r atypica l produc t mileag e accumulatio ni s estimate da t $191,400 , rangin g fro m nearl y$8,80 0 fo r 4,00 0 mile s o f mileag e accumulatio nt o a maximu mcos t o f ove r $255,00 0 fo r accumulatin g mile s equivalen t t o 4 0 percen t o f th e engine' s usefu l life . HD E acquisitio nan d mileag e accumulatio ncost s ar e estimate dt o tota l ove r $200,00 0 fo r testin g o f atypica l diese l products , assumin g

ls I t shoul d b e note d tha t manufacturer s ar e permitte dt o accumulat e mile s b yanyappropriat e means , includin g us e o f a chassi s o r engin e dynamomete r a s oppose dt o us e o f a tes t trac k assume d fo r thi s analysis . I f mile s ar e accumulate dvi a a chassi s dynamometer , tota l mileag e accumulatio ncost s woul db e approximatel y3 3 percen t highe r tha nestimate dfo r thi s analysis , whil e engin e dynamomete r cost s woul db e abou t 4 6 percen t highe r (assumin g 2 vehicles/engines) . 3 1P.38
_

tha t characterizatio nwil l no t b e conducte dunti l mileag e ha s reache d 3 0 percen t o f th e vehicle s usefu l life . Shoul dthi s leve l o f mileag e accumulatio nb e necessary , manufacturer s o f thes e product s ar e likel yt o fin d i t mor e economicall yfeasibl e t o repea t a portio no f th e testing , shoul d i t b e necessary , rathe r tha n retai na backu p tes t engine . Thus , thi s analysi s assume s tha t manufacturer s o f atypica l diese l product s wil l choos e no t t o purchas e a backu p engine . Tota l Vehicl e Requiremen t Cost s I nsum , fo r testin g gasolin e fuel s an dadditive s usin g a nLDV , EP Aestimate s cost s associate d wit hvehicl e acquisitio nan dmileag e accumulatio n(fo r a primar ytes t vehicl e an don e backu p vehicle ) t o b e $36,40 0 fo r non-atypica l produc t formulations , assumin g emissio n speciation/biologica l testin g begin s a t 4,00 0 miles . Fo r atypica l produc t formulations , assumin g emissio nspeciatio nan dbiologica l testin g occu r a t 30,00 0 miles , th e vehicle-relate dcost s ar e estimate d t o b e $78,000 . Reflecte di nthes e cost s i s th e conservativ e assumptio ntha t th e vehicle s ar e retained , shoul d furthe r testin g b e necessar y(e.g. , prescribe dunde r Tie r 3 ) . Fue l cost s an d maintenanc e cost s ar e include di nth e cost s presente d above . Th e chang e i nmileag e accumulatio nrequirement s an d assumption s regardin g vehicl e purchases , i ncombinatio nwit h update d cos t data , resul t i ntota l estimate dlight-dut ygasolin e vehicl e acquisition/mileag e accumulatio ncost s bein g highe r tha n wer e estimate d a t th e tim e o f th e NPRM . Wit hregar d t o diese l an dothe r F/FA s requirin g th e us e o f HDEs , cost s associate d wit hacquirin g an doperatin g a heavyheavy

dut yengin e ar e estimate d t o tota l abou t $64,70 0 fo r non-atypica l formulation s an d $210,00 0 fo r testin g atypica l formulation s (non

atypica l pric e include s acquisitio nan dmileag e accumulatio nfo r on e backu p engine) . Thes e cost s reflec t th e assumptio ntha t emissio ncharacterizatio nan d biologica l testin g begi na t th e equivalen t o f 4,00 0 mile s fo r non-atypica l products , an da t 87,00 0 mile s fo r atypica l products . Fue l an dmaintenanc e cost s ar e reflecte d i nth e cost s a s well . Thes e HD E acquisition/mileag e accumulatio ncost s ar e highe r tha nestimate dfo r th e proposal . b . Combustio nEmissio nGeneratio n Procedure s fo r generatin g emission s fo r emissio n characterizatio nar e dependen t upo nth e emissio nproduc t categorie s o f interest . Bot hcatalyze dan dnon-catalyze dexhaus t emission s generate d usin g th e FT P ar e t o b e speciate dfo r light-dut ygasolin e vehicl e testing , an d onl ynon-catalyze dexhaus t emission s ar e t o b e speciate d fo r heavy-dut ydiese l engin e testing . Vapor-phase , semi

volatile , an d particulat e emission s ar e require dt o b e characterized . Cost s ar e base do nth e assumptio ntha t th e F/F A manufacturer s wil l see k laborator yservice s fo r thes e purposes , rathe r tha nconductin g test s in-hous e o r erectin g facilitie s capabl e o f conductin g suc htests . 3 2P.3 9

Estimate s receive d fro mtestin g laboratorie s indicat e tha t generatin g emission s vi a a nFT P whic hha s bee nmodifie dt o allo w collectio no f al l thre e phase s o f emission s fo r subsequen t measuremen t o f th e emissio nproduct s o f interes t woul dcos t approximatel y$1,10 0 fo r a light-dut yvehicl e an d$2,40 0 fo r a heavy-dut yengine . Base d o ncomment s receive dfro mtestin g facilities , a nadditiona l $5,00 0 engin e set-u p fe e i s expecte dt o b e charge d fo r heavy-dut yengin e testing . 

### c. Evaporative EmissionGeneration Dependin g o nspecifi c RV P criteria , som e fuel s an dadditive s wil l b e require d t o underg o emissio ncharacterizatio nan d biologica l testin g fo r evaporativ e emissions . Th e evaporativ e emissio ncharacterizatio nrequirement s involv e speciatio no f emission s generate d fro ma nevaporativ e emissio ngenerato r (EEG ) rathe r tha na vehicle . Th e EE Gi s a fue l tan k o r vesse l t o whic hhea t and/o r vacuu m i s applie d t o caus e a portio no f th e fue l t o evaporat e a t a desire d rate . EP Aestimate s th e cos t o f generating/collectin g evaporativ e emission s vi a thi s procedur e t o b e approximatel y$20 0 pe r hour . Althoug hmanufacturer s wil l hav e flexibilit yi nth e desig no f th e EEG , EP Aestimate s a cos t o f $4,00 0 fo r th e hardwar e an dlabo r expecte d t o b e associate dwit hit s development . Evaporativ e emissio ngeneratio ni s no t applicabl e t o diese l fuel s an dthei r additives . 2 . Emissio nCharacterizatio n I ngeneral , th e emissio ncharacterizatio nrequirement s o f Tie r 1 focu s o nth e detectio nan d measuremen t o f selecte dchemica l classe s an d compounds . Th e require danalyse s include : 1 ) th e measuremen t o f basi c emissions 1 6 (i.e. , tota l hydrocarbons , carbo n monoxide , nitroge noxides , an dparticulate s fro mcombustio n emissions ; tota l hydrocarbon s fro mevaporativ e emissions) , 2 ) th e speciatio no f volatil e hydrocarbo ncompounds , aldehydes , ketones , alcohols , ethers , polycycli c aromati c hydrocarbon s (PAHs ) an d nitrate d polycycli c aromati c hydrocarbon s (NPAHs) , an d4 ) th e speciatio no f atypica l emissio nproducts , whe natypica l element s ar e know nt o b e presen t i nth e ra wfue l o r additiv e formulation . Speciatio nrequirement s ar e summarize di nTabl e 3-1 , an dassociate d cost s ar e provide d i nTabl e 3-2 . Th e cost s identifie dar e cost s

16 EP Apropose d t o requir e th e characterizatio no f "regulate d emissions " fo r fuel/vehicl e type s fo r whic hcertificatio n procedure s existe d a t th e tim e o f th e publicatio no f th e NPR M (i.e. , gasoline , diesel , an dmethanol) . Th e ter m"basi c emissions " i s bein g use d instea do f "regulate demissions " becaus e certificatio nrequirement s hav e no t ye t bee ndevelope dfo r al l F/FA s include d i nthi s rule . 3 3P.4 0

pe r sampl e o f emission s collected 17 , an dar e th e sam e fo r bot h gasolin e an d diese l F/F Aproducts . I nsum , basi c emission s ar e t o b e measure dfo r bot hvapo r an d particulat e phas e combustio nemission s a t a cos t o f $30 0 pe r sample . Measuremen t o f tota l hydrocarbon s i s require dfo r evaporativ e emission s (whe napplicabl e t o th e F/FA ) a t a per-sampl e cos t o f $225 . Th e cos t o f hydrocarbo nspeciatio nfo r vapo r phas e combustio nemission s an d evaporativ e emission s i s estimate da t $33 3 pe r sample . Speciatio no f aldehyde s an dketone s i s require donl y fo r th e vapo r phas e o f combustio nemissions , an di s estimate dt o cos t abou t $20 0 pe r sample . Alcoho l an dethe r speciation , require d fo r bot hvapo r phas e combustio nemission s an devaporativ e emission s wheneve r th e fue l o r fuel/additiv e formulatio nunde r evaluatio n contain s alcohol s o r ethers , i s estimate da t $16 7 pe r sample . PA H an d NPA H speciation , require dfo r bot hth e semi-volatil e an d particulat e phas e o f combustio nemissions , i s estimate da t $80 0 pe r sampl e fo r LD V

gasolin e testin g an d$120 0 pe r sampl e fo r HD E diese l testing. 1 8 Thes e cost s ar e base do nth e result s o f th e surve y conducte d bySwR I wher e laboratorie s wer e aske dt o identif y commercia l price s charge dfo r performin g th e characterizatio n requirement s describe d abov e usin g curren t characterizatio n procedures . I ngeneral , thes e cost s ar e considerabl yles s tha n estimate d i nth e NPRM . T o determin e speciatio ncost s fo r atypica l elements , EP A reviewe d th e atypica l product s containe di nth e registratio n databas e accordin g t o th e variabilit yi nth e numbe r o f atypica l element s the ycontain , wha t phas e o r phase s th e element s woul d appea r in , th e numbe r o f en demissio nspecie s whic hcontai nsuc h elements , an d othe r factors . Base d o nthi s analysis , EP Abelieve s tha t tw o i s a representativ e numbe r o f atypica l element s containe d i natypica l products . EP Aestimate s a cos t o f $30 0 fo r activitie s relate d t o detectio no f th e atypica l element , an d$40 0 fo r measurin g th e emissio nproduct s containin g th e atypica l element s (pe r element , pe r phase) . A s state dpreviously , EP Aenvision s emissio ncharacterizatio nt o b e conducte dwhe n3 0 percen t o f th e vehicle' s usefu l lif e i s reache d fo r atypica l formulations . Befor e thi s poin t i s reached , EP Aenvision s tha t detectio nprocedure s wil l b e conducte d fiv e time s fo r light-dut yvehicl e testin g an dseve n time s fo r heavy-dut yengin e testing . Base do nal l o f thes e factors , EP Aestimate s cost s relate dt o identificatio nan d measuremen t o f atypica l element s t o b e $3,90 0 fo r light-dut y

17 Thre e bag s o f vapo r phas e emission s ar e t o b e collected . Characterizatio ni s t o b e performe do na sampl e o f eac hba g o f emission s collected . "Fo r heavy-duty , particulat e phas e combustio nemission s ar e collecte d fo r bot hth e hot

- an dcold-star t segment s o f th e FTP . 3 4P.4 1

vehicl e testin g an d $5,30 0 fo r heavy-dut yengin e testing . C . Tota l Tie r 1 Cost s Tabl e 3- 3 provide s tota l estimate d cost s o f Tie r 1 requirements . A s show ni nth e table , cost s ar e provide dfo r producer s o f bot hgasolin e an d diese l products , an d fo r baseline , non-baselin e an d atypica l produc t formulations . Fo r presentatio n purposes , emissio ngeneration/speciatio ncost s hav e bee ncombined . Thi s analysi s assume s th e following : 1 ) onl yon e combustio nan d on e evaporativ e emissio ngeneratio nwil l b e neede d fo r emissio n characterization , wit hth e exceptio no f emissio nproduct s containin g atypica l element s 2 ) speciatio no f alcohols/ether s wil l onl yb e necessar yfo r non-baselin e products , 3 ) onl yon e sampl e o f emission s wil l b e collecte d an d characterize d fo r evaporativ e emission s generate d vi a th e EE Gmethod , 4 ) acquisitio nan d mileag e accumulatio nfo r on e backu p vehicle , wit hth e exceptio no f heavy

dut ydiese l atypica l testin g (se e III. B o f thi s chapter) . A$5 0 fe e fo r measurin g a fuel' s RV P leve l i s reflecte d i nth e cost s fo r testin g gasolin e products . Th e cost s als o reflec t th e requiremen t tha t emissio ngeneration/speciatio nprocedure s b e conducte d thre e times . Fo r atypica l F/FAs , testin g i s assume d t o begi nwhe n3 0 percen t o f th e vehicle' s usefu l lif e ha s bee nreached . Underlyin g thes e cost s ar e th e assumption s tha t littl e o r n o previou s dat a exist s t o offse t speciatio nrequirement s an d tha t ther e ar e n o saving s fro mcost-sharin g provisions . Unde r thes e assumptions , producer s o f gasolin e fuel s o r fue l additive s woul d likel yincu r Tie r 1 cost s o f $106,30 0 fo r baselin e products , $95,80 0 fo r non-baselin e products 19 , an d $150,60 0 fo r atypica l products . Cost s t o a produce r o f baseline , non-baseline , an d atypica l diese l produc t formulation s ar e estimate d a t $119,400 , $106,400 , an d $262,400 , respectively . Thi s include s cost s for : 1 ) conductin g a literatur e searc hfo r informatio no nth e compositio n an d effect s o f F/F Aemission s o npubli c healt h& welfare , 2 ) purchasin g on e primar ytes t vehicle/engin e an d on e backu p vehicle/engin e (excep t fo r testin g diese l atypica l produc t formulations ) an d accumulatin g th e appropriat e mile s fo r testing , an d 3 ) performin g th e appropriat e emissio ncharacterizatio n requirements . Al l Tie r 1 cos t total s estimate d i nthi s analysi s ar e highe r tha nthos e estimate d i nth e proposal , wit hth e exceptio n o f diese l atypica l produc t testing . IV . Tie r 2 Requirement s an dCost s Th e secon d tie r o f healt heffect s evaluatio nconsist s o f a subchroni c inhalatio ntoxicit ytest , wit hth e additio no f ancillar y studie s t o scree nfo r severa l specifi c healt heffec t endpoint s

"Tota l non-baselin e produc t cost s ar e les s tha nbaseline

produc t cost s du e t o lowe r literatur e searc hcosts . 3 5P.4 2

(carcinogenicity , mutagenicity , teratogenicity , reproductiv e toxicit yan d neurotoxicity ) withi na singl e 90-da yexposur e schedule . Thes e test s wil l b e require dfo r al l fuel s an dadditive s t o th e exten t tha t th e result s o f th e dat a searc hactivitie s i n Tie r 1 d o no t includ e comparabl e existin g informatio nfro m adequatel yperforme d an d properl ydocumente dpreviou s studies . I ngeneral , laborator yanimal s ar e t o b e expose db yinhalatio n t o dilute d whol e exhaus t an d(whe napplicable ) evaporativ e emissions . Th e tes t guideline s generall ycal l fo r a minimu mo f thirtee nweek s exposure , si xhour s pe r day , fiv e day s pe r week . Th e tes t guideline s an d relate d emissio ngeneratio nprocedure s ar e discusse d below , alon g wit hestimate dcost s o f performin g eac htes t o na nindividua l basis . A . Emissio nGeneratio nfo r Biologica l Testin g 1 . Combustio nEmissio nGeneratio n Emission s ar e t o b e generate do na continua l basi s throughou t th e require d hour s o f anima l exposur e fo r eac hexposur e day , wit h emission s dilute d an d route d directl yfro mth e vehicl e o r engin e t o th e biologica l testin g chamber . Fo r testin g o f gasolin e fuels/additives , EP Aconservativel yassume s a chassi s dynamomete r wil l b e use d t o generat e emission s ove r consecutiv e transien t drivin g cycle s fo r healt heffect s testing , a t a cos t o f approximatel y$71,500. 2 0 Testin g o f diese l fuel s an dadditive s usin g a nengin e dynamomete r fo r emissio ngeneratio ni s estimate dt o cos t $58,500 . Thes e cost s ar e base do nestimate s receive dfro m testin g laboratorie s whic hsugges t $1,10 0 pe r da yfo r chassi s dynamomete r testin g an d $90 0 pe r da yfo r engin e dynamomete r testin g migh t b e charge d fo r generation , dilution , an ddeliver yo f th e emission s t o th e anima l cages . Fue l an dmaintenanc e cost s ar e included . On e require d test , th e Salmonell a Mutagenicit yAssa y(Ame s Assay ) i s a nin-vitr o tes t requirin g exposur e o f bacteria l culture s t o th e extracte d particulat e matte r an dth e semi-volatil e fractio n o f combustio nemissions . EP Aassume s tha t a strea mo f emission s delivere d t o th e anima l exposur e chamber s wil l b e diverte dan d collecte d fo r thi s assay . Acos t o f $50 0 fo r gasolin e product s an d $80 0 fo r diese l product s i s estimate dfo r th e processin g o f th e P M an d semi-volatil e fraction s o f th e samples . 2 . Evaporativ e Emissio nGeneratio n Fo r healt heffect s testing , manufacturer s ar e require dt o generat e emission s usin g th e sam e evaporativ e emissio ngenerato r (EEG ) an d operatin g condition s specifie dabov e unde r Evaporativ e Emissio nGeneration , sectio nIII . Evaporativ e emission s wil l b e

20 Us e o f a nengin e dynamomete r fo r testin g gasolin e F/FA s i s permitte d bu t no t required . 3 6P.4 3

dilute d an d route d t o th e anima l chamber s i na manne r simila r t o th e metho d use d fo r combustio nemission s healt heffect s testing . Estimate s receive d fro m laboratorie s fo r generation , dilution , an d deliver yo f evaporativ e emission s generate dfro ma nEE Gchambe r range d fro m$15 0 t o $1,05 0 pe r day . Although , i nEPA' s judgement , th e cos t seem s t o b e high , evaluatio no f th e estimate s indicate s tha t $90 0 pe r da yma ylikel yb e charged . Usin g thi s price , th e tota l cos t o f generatin g evaporativ e emission s fo r si xhour s pe r da yfo r 6 5 day s usin g th e procedur e describe dabov e i s estimate da t $58,500 . Brie f description s o f biologica l tes t guideline s fo r th e evaluatio no f eac hhealt heffec t endpoin t ar e provide dbelow , alon g wit hthei r associate d cost . Th e cos t estimate s ar e base do n standar d testin g cost s receive dfro mth e Offic e o f Pesticide s an d Toxi c Substance s (se e footnot e numbe r 14 ) , adjuste dt o accoun t fo r modification s t o th e standar dprotocol s t o b e consisten t wit hth e scop e o f th e healt heffect s testin g program , an dupdate dt o accoun t fo r inflatio ni nth e labo r rate s sinc e th e tim e o f th e proposal . Appendi xB provide s componen t cos t dat a fo r eac ho f th e biologica l test s describe d below . Thes e cost s ar e incrementa l t o th e associate d emissio ngeneratio ncost s describe dabove . B . Biologica l Tes t Cost s 1 . Subchroni c Inhalatio nStudy Th e 90-da ysubchroni c inhalatio nstudywil l serv e a s a basi c framewor k fo r th e Tie r 2 testin g program . Th e tes t wil l provid e valuabl e screenin g informatio no ngenera l systemi c an dorga n toxicity . Basi c requirement s o f th e studyinclud e ophthalmologica l examination , bloo d chemistr yanalysis , broa dorga nexamination , an d histopathology . Hematolog yan d clinica l biochemistr yanalysi s i s als o included . Specifi c tes t requirement s o f th e studyar e describe d i nth e regulator ytex t o f thi s fina l rule . Thi s 90-da y subchroni c inhalatio ntoxicit ytes t i s estimate dt o cos t approximatel y$177,000 . 2 . Carcinogenicit yan d Mutagenicit yScreen s Thre e assay s ar e include di nTie r 2 fo r carcinogenicit yan d mutagenicit yscreening . Th e salmonell a mutagenicit y(SM ) assa yi s conducte d separatel yfro mth e othe r tw o screenin g test s becaus e exposur e o f liv e animal s t o exhaus t emission s i s no t required . T o accommodat e th e tw o invivo assay s (micronucleu s (MN ) an dsiste r chromati c exchang e (SCE)) , withi nth e overal l Tie r 2 testin g framework , a satellit e grou p o f animal s woul db e expose d concurrentl ywit hth e mai nanima l populatio no f th e 90-da y subchroni c inhalatio nstudy . Thus , th e incrementa l cost s fo r thes e studie s ar e limite d t o th e additiona l anima l acquisitio nan d maintenanc e cost s an d th e cost s specifi c t o eac hassay . N o incrementa l cost s fo r th e anima l exposure s woul db e incurred . Salmonell a Mutagenicit yAssay . Th e S Massa yi s a ninVitr o tes t 3 7P.4 4

whic hmake s us e o f fiv e mutan t strain s o f th e bacteriu mSalmonell a typhimuri urn. Th e bacteri a wil l b e expose dt o extracte d fuel/additiv e combustio nemissio nfractions , an dth e numbe r o f revers e mutation s wil l b e analyzed . Th e cos t o f conductin g a S M assa yfo r thi s progra mi s estimate d a t $4,700 . Thi s assa ywil l b e conducte d o nbot hparticulat e an dsemi-volatile-phas e sample s o f combustio nemissions , therefor e doublin g thi s cos t t o $9,400 . Micronucleu s Assay . Micronucle i ar e sub-cellula r structure s containin g chromosome s an dchromosom e fragment s no t incorporate d int o th e mai nnucleu s durin g cel l division . Whil e micronucle i d o for munde r natura l conditions , exposur e t o potentiall ymutageni c o r carcinogeni c agent s ca ncaus e a nincreas e i nmicronucleate dcells . I nthi s assay , liv e rodent s wil l b e expose db yinhalatio nt o th e fuel/additiv e emissions , an d thei r periphera l bloo dcell s wil l subsequentl yb e examine d an dcompare dt o thos e o f untreate d animals . A s a supplementar ytes t t o th e subchroni c inhalatio n study , th e incrementa l cos t fo r thi s assa yi s estimate da t $2,900 . Th e cos t fo r a 3 0 da ystand-alon e tes t i s estimate da t $38,000 . Siste r Chromati c Exchang e (SCE) . I nthi s assay , bloo dlymphocyte s an d lun g cell s fro manimal s whic hhav e undergon e inhalatio n exposur e t o vehicl e emission s wil l b e examine dmicroscopicall y afte r bein g labele d an d staine d t o permi t visualizatio no f DNA replicatio nerrors . Thi s assa yi s estimate dt o cos t $43,00 0 a s a stand-alon e test , o r abou t $7,20 0 whe ncoordinate dwit hth e 90-da y subchroni c inhalatio nstudy . 3 . Fertilit yScree nfo r Reproductiv e an dTeratologi c Effect s Th e purpos e o f thi s screenin g tes t i s t o obtai ninformatio n abou t th e potentia l reproductiv e an dteratogeni c (developmental ) effect s cause d byinhalatio no f F/F Aemissions . Th e fertilit y scree ninvolve s th e matin g o f expose dmal e an dfemal e animal s t o F/F Aemission s t o examin e th e effect s o nconception , followe d b ya teratolog ystudy , involvin g inhalatio nexposur e o f th e female s t o F/F Aemission s durin g pregnancy . Thi s assessmen t coul dcos t ove r $90,00 0 i f conducte d individually , o r abou t $38,00 0 whe nth e exposure s ar e conducte d i nconjunctio nwit hth e subchroni c inhalatio nstudy . 4 . Neurotoxicit yScree n Th e fina l rul e doe s no t includ e th e Functiona l Observationa l Neurotoxicit yBatter y(FONB ) propose di nth e NPRM . Instead,a n expande d neurohistopatholog yexaminatio ni s include dwithi nth e 90

- da ysubchroni c inhalatio nstudy . I naddition , a biochemica l assa y whic hmeasure s th e leve l o f glia l fibrillar yacidi c protei n(GFAP ) i s required . Performanc e o f th e GFA P assa yan dneurohistopatholog y examinatio ncoul d cos t nearl y$200,00 0 whe nconducte dseparately , o r $3,60 0 an d $42,000 , respectively , whe ncoordinate dwit hth e subchroni c inhalatio nstudy .
3 8P.4 5

C . Tota l Biologica l Tes t Cost s Th e cos t o f conductin g eac ho f th e screenin g test s individuall ywa s provide dabove , alon g wit hth e incrementa l cos t o f conductin g th e screenin g test s i nconjunctio nwit hth e subchroni c inhalatio nstudy . Th e cos t o f conductin g eac htes t individuall y doe s no t conside r anysaving s whic hcoul db e achieve dfro m conductin g anyo f th e test s i nconjunctio nwit hon e another . Th e Tie r 2 testin g progra mi s designe ds o tha t variou s tes t requirements , suc ha s anima l subjects , exposur e scenarios , an d genera l technica l principles , ar e simila r amon g th e tests . Thi s permit s th e healt heffect s examinatio nt o b e conducte dunde r a singl e comprehensiv e tes t protocol . Th e desig no f th e Tie r 2 testin g progra mmake s bes t us e o f animals , laborator ycapacity , an d financia l resources . I f testin g i s planne dan dconducte di nthi s fashion , EP Aestimate s tha t th e tota l cos t fo r conductin g al l o f th e require d biologica l test s o ncombustio nemission s woul db e slightl yabov e $280,00 0 (excludin g emissio ngeneratio ncosts) . Likewise , conductin g al l biologica l test s o nevaporativ e emission s i s estimate d t o cos t abou t $270,700 . Th e differenc e i s th e salmonell a mutagenicit yassay , whic hi s require donl yfo r combustio nemissions . Thes e cost s represen t tota l cost s o f conductin g al l biologica l test s wit hn o cost-sharin g arrangements . D . Tota l Tie r 2 Cost s Tabl e 3- 4 show s th e cost s associate dwit hmeetin g th e requirement s o f Tie r 2 . Th e emissio ngeneratio ncost s assum e emission s wil l b e generate d 6 hours/day , 5 days/wee k fo r 1 3 weeks , an d tha t on e emissio ngeneratio n(combustio no r evaporative ) wil l produc e sufficien t emission s t o conduc t al l biologica l tests . Th e cost s assum e tha t al l biologica l test s excep t th e S Massa ywil l b e performe d o nbot hcombustio nan d evaporativ e emission s fo r th e evaluatio no f gasolin e fuel s an d additives , an do ncombustio nonl y whe ntestin g diese l fuel s an dadditives . Thi s analysi s indicate s th e highes t cos t a nindividua l produce r woul dlikel yincu r fo r fulfillin g al l Tie r 2 requirement s woul db e approximatel y$681,300 . Thi s cos t represent s th e potentia l cos t t o producer s o f a gasolin e fue l product . Th e highes t potentia l Tie r 2 cos t t o a diese l fue l produce r woul d b e abou t $339,400 . Tota l tie r 2 cost s ar e slightl y highe r tha ninitiall yestimate dfo r th e proposal . Eve nthoug hth e require d exposur e duratio ni s longe r tha nproposed , th e biologica l testin g i s progra m i s designe dfo r mor e efficien t us e o f animal s an d laborator ycapacity , resultin g i ntie r 2 tes t cost s bein g simila r t o thos e proposed .
V . Tie r 3 Requirement s andPotentia l Cost s Al l cost s associate d wit hTie r 1 an dTie r 2 requirement s ar e assume d t o b e incurre d i nth e firs t 3 year s afte r th e rul e i s promulgated , an d Tie r 3 cost s ar e assume dt o b e incurre dove r th e followin g 3 years . Generally , manufacturer s ar e allowe dthre e 3 9P.4 6

year s afte r promulgatio no f th e fina l rul e t o submi t th e require d data . However , upo nrequest , EP Ama ygran t a nextensio nt o th e Tie r 2 deadlin e fo r a registere d F/F Ao r F/F Agroup . Thus , yearl y cost s ma yactuall yb e les s i f producer s financ e th e cost s ove r a longe r perio d o f time . Fuel s an d fue l additive s wil l b e subjec t t o additiona l testin g unde r th e Tie r 3 provision s o f th e registratio nprogra monl yi f determine d t o b e neede d o na case-by-cas e basi s b yEPA . Th e endpoint s t o b e addresse dan dth e natur e o f th e studie s t o b e performe d wil l depen d o nth e cas e a t hand . Chronic/lifetim e studies , exposur e studies , an dadditiona l emissio ncharacterizatio n o r modelin g analysi s ar e example s o f furthe r testing/analysi s tha t coul d b e required . An ytestin g t o b e performe do naeroso l additive s woul d als o occu r a t th e Tie r 3 level . Becaus e suc ha wid e rang e o f testing/analysi s ma yb e require dunde r Tie r 3 dependin g o nth e area s o f concern , i t i s difficul t t o predic t th e associate d costs . However , usin g anima l inhalatio nexposure s o f chroni c tw o yea r duratio na s a nexampl e o f testin g whic hmigh t b e required , Tie r 3 cost s coul d reac habou t 3 millio ndollars , o r on e millio ndollar s pe r year , assumin g th e cos t o f 2 year s o f biologica l testin g woul d b e incurre dove r 3 years . Thes e Tie r 3 cost s ar e no t include d i nth e overal l cos t projection s presente di n Chapte r 4 .
VI . Administrative/Reportin gRequirement s andCost s Th e material s t o b e submitte dt o EP Aar e divide dint o thre e majo r categories : basi c registratio ndata , a summar yreport , an d appendices . Productio nvolum e dat a an dinformatio ncurrentl y require d fo r F/F Aregistratio nar e require dt o b e submitte dfo r basi c registration , an d shoul db e submitte do nEP Aform s whic har e i neffec t a t th e tim e o f th e submittal . Th e summar yrepor t require s a tex t summar yo f th e evaluatio nprocedures , results , an d conclusion s pertainin g t o requirement s o f Tier s 1 an d2 . Detaile d informatio ni nsuppor t o f th e genera l discussion s containe di nth e summar yrepor t ar e t o b e submitte da s appendice s t o th e report . Producer s wh o mus t conduc t additiona l testin g unde r Tie r 3 wil l b e require d t o submi t a fina l repor t whe nth e designate dTie r 3 testin g i s complete . EP Aestimate s approximatel y$10 0 wil l b e spen t b yeac h produce r fo r submitta l o f basi c registratio ndat a o neac hproduct . I naddition , eac hmanufacture r i s expecte dt o incu r approximatel y $30 0 fo r activitie s associate dwit hreviewin g th e regulation s an d plannin g fo r grou p participation , i f applicable . EP Aestimate s approximatel y$9,40 0 fo r administratio ncost s relate dt o submissio n o f Tie r 1 data , $4,60 0 fo r submissio no f Tie r 2 data , an dnearl y $12,30 0 fo r cost s associate d wit hgrou p administration . Thus , a tota l o f ove r $26,00 0 i s expecte d t o b e incurre dbyeac hgrou p o f 4 0P.4 7

manufacturer s wit hsimila r product s fo r activitie s relate d t o grou p administration , collectio no f existin g data , oversigh t o f testin g (i f required) , an d submissio no f Tie r 1 an d Tie r 2 data . Averagin g thi s cos t ove r thre e year s yield s a cos t o f abou t $8,50 0 pe r year , pe r grou p fo r thes e activitie s . Thi s cos t woul d likel yb e les s fo r a manufacture r wh o i s alon e i na grou p o r wh o wishe s t o conduc t testin g individuall ysinc e grou p administratio ncost s woul dno t apply .

VII . fil ?mmffry Fo r a nindividua l produce r o f a gasolin e F/FA , th e cos t fo r fulfillin g al l requirement s o f Tier s 1 an d 2 an d reportin g th e result s t o EP Ai s estimate d t o b e abou t $800,00 0 fo r baselin e products , abou t $792,00 0 fo r non-baselin e produc t formulations , an d abou t $846,00 0 i f th e produc t formulatio ni s atypical . Comparabl e cost s fo r diese l fuel/additiv e producer s ar e estimate da t approximatel y$473,00 0 an d $460,00 0 fo r producer s o f baselin e an d non-baselin e produc t formulation s respectively , an d abou t $616,00 0 fo r producer s o f atypica l produc t formulations . T o er r o nth e conservativ e side , thes e cost s ar e inclusive . Tha t is , the yassum e tha t ther e i s no t adequat e existin g data , an d tha t th e produce r mus t therefor e conduc t al l o f th e Tie r 1 an d Tie r 2 test s d e novo. The yals o assum e tha t th e produce r doe s no t qualif yfo r an yspecia l provision s (e.g. , fo r smal l businesses) . I naddition , th e estimate s assum e tha t th e produce r take s o nindividua l financia l responsibilit yfo r al l tes t costs , eithe r becaus e h e elect s no t t o engag e i ngroupin g an d cos t sharin g provision s o r becaus e h e i s no t abl e t o d o s o (i.e. , sol e produce r i nth e group) . Th e lowes t cos t likel yt o b e incurre d b ya produce r no t qualifyin g fo r specia l provision s an d no t participatin g i na grou p woul d b e th e cos t o f conductin g a literatur e searc h(th e result s o f whic hprovid e documentatio no f adequat e existin g test s comparabl e t o thos e include d i nTie r 2 ) an d registerin g th e produc t wit hEPA . Thi s cos t i s estimate d t o b e abou t $21,00 0 fo r a produce r o f a baselin e product , an d $7,00 0 fo r a produce r o f a non-baselin e product . Producer s o f atypica l product s woul d nee d t o characteriz e th e emission s befor e a literatur e searc hcoul d b e conducted . A s previousl ydiscussed , "small " F/F Amanufacturer s o f baselin e an d non-baselin e produc t formulations , an d manufacturer s o f relabele d products , ar e onl yrequire d t o submi t basi c registratio ndata . Th e per-produc t cos t t o suc hproducer s i s estimate d t o tota l onl yabou t $400 . "Small " manufacturer s o f atypica l product s hav e th e adde d cos t o f Tie r 1 testing . Cost s t o thi s typ e o f produce r coul d rang e fro mabou t $13,50 0 t o abou t $114,00 0 fo r a gasolin e produc t an d u p t o abou t $272,00 0 fo r a diese l product , dependin g o nth e degre e t o whic hadequat e Tie r 1 dat a alread yexists . Al l o f thes e cost s ar e one-tim e obligation s associate d wit hmeetin g th e basi c registratio nand/o r generi c 4 1P.4 8

testin g requirement s o f th e progra mfo r on e product . Tie r 3 cost s ar e no t included . Cost s incurre d o na per-manufacture r basi s (takin g int o accoun t suc hfactor s a s specia l provisions , multipl e product s pe r manufacturer , an dcost-sharin g opportunities ) an d aggregat e cost s t o th e industr yar e discusse di nth e nex t chapter . VIII.Cos t Estimate s fo r Futur e Alternativ e F/FA Registration s Th e discussio nthu s fa r ha s focuse do ncost s associate dwit h registratio nan d testin g requirement s fo r gasolin e an ddiese l fue l an d fue l additiv e products . A s mentione dpreviously , a proposa l t o designat e methanol , ethanol , liquifie dpetroleu mgas , an dnatura l ga s F/F Aproduct s fo r registratio ni s expecte di nth e nea r future . EP Aha s thu s define d familie s an d include dprovision s fo r thes e alternativ e fue l product s i nthi s fina l rul e unde r th e assumptio n tha t the ywil l b e designated . Th e projecte dcos t impac t o f thi s rul e o nproducer s o f thes e alternativ e fue l product s i s discusse d below . A s show ni nTabl e 1- 1 fo r th e F/F Agroupin g system , withi nth e baselin e category , tw o group s ar e establishe dfo r th e methano l fue l famil y(M10 0 grou p an d M8 5 group , represente db ythei r respectiv e bas e fuel) , on e grou p fo r th e ethano l fue l famil y(represente dby E8 5 bas e fuel) , on e grou p fo r th e methan e fue l famil y(represente d byCN Gbas e fuel ) , an d on e grou p fo r th e propan e fue l famil y (represente d b yLP Gbas e fuel ) . Cos t estimate s fo r th e registratio nan d testin g o f thes e products , show ni nTabl e 3-5 , ar e base d o nuni t pric e estimate s associate dwit hregistration/testin g o f gasolin e an d diese l baselin e products . Althoug hsom e require d dat a ma yb e availabl e fo r som e o f th e alternativ e fue l families , thi s analysi s conservativel yassume s tha t al l Tie r 1 an dTie r 2 testin g wil l b e require d fo r eac htestin g representativ e o f eac h alternativ e F/F Aproduc t group . Othe r assumption s underlyin g th e analysi s are : 1 ) al l registere dproduct s ar e baselin e products , 2 ) testin g fo r th e M10 0 an d LP Ggroup s wil l b e conducte dusin g a heavy-dut yengine , an d al l remainin g group s wil l mak e us e o f light

dut yvehicle s fo r testing ; 3 ) evaporativ e testin g wil l b e require d fo r th e methano l an d ethano l fue l familie s only ; an d4 ) a salmonell a mutagenicit yassa ywil l no t b e require dt o b e conducte d o nth e testin g representativ e o f th e methan e (CN Gan dLNG ) an d propan e (LPG ) groups . Base d o nthes e assumptions , cost s associate dwit htestin g a singl e representativ e fro meac halternativ e fue l famil ybaselin e grou p ar e estimate d t o b e a s follows : $735,00 0 fo r testin g eac ho f th e E8 5 an d M8 5 representatives , $721,00 0 fo r th e M10 0 group , $389,00 0 fo r th e methan e (CNG ) group , an d$408,00 0 fo r th e propan e (LPG ) group . Thi s sum s t o a tota l cos t o f abou t 3 millio ndollar s fo r testin g o f a singl e representativ e fro meac hgrou p i nth e 4 2P.4 9

baselin e categor yo f eac ho f th e alternativ e fue l families . Afte r discussion s wit hrepresentative s fro msevera l majo r alternativ e fue l trad e associations , EP Aestimate s approximatel y40 0 baselin e alternativ e F/F Aproduct s wil l b e registere dwithi nth e firs t yea r afte r the yar e designate dfo r registration . O f thes e 40 0 produc t registrations , EP Aestimate s tha t th e ethano l fue l famil ywil l accoun t fo r abou t 5 percent , th e M10 0 an dM8 5 produc t registration s wil l b e abou t 1 5 percen t an d2 0 percent , respectively , abou t hal f o f th e alternativ e F/F Aproduc t registration s wil l b e i nth e methan e fue l family , an d th e remainin g 1 0 percen t wil l b e i nth e propan e fue l family . Usin g thes e produc t percentages , EP A estimate s pe r produc t cost s t o rang e fro mjus t belo w$2,00 0 (fo r product s i nth e methan e fue l family ) t o abou t $37,00 0 (fo r product s i nth e ethano l fue l family) . O naverage , alternativ e F/F A producer s ma yincu r cost s o f $7,50 0 pe r produc t ($3,000,000/40 0 products ) i nth e firs t yea r t o registe r thei r alternativ e F/F A product s wit hEPA , assumin g al l Tie r 1 an dTie r 2 testin g i s required . Thes e judgement s regardin g futur e registration s o f alternativ e F/F Aproduct s ar e no t intende dt o b e prediction s o f introductio no f thes e product s int o th e market . Rather , the yar e estimate s use d fo r th e sol e purpos e o f estimatin g possibl e cos t impact s o f thi s rul e o nalternativ e F/F Aproducers . Futur e registration s o f thes e product s ma yb e highe r o r lowe r tha nassume d i nthi s analysis , an d th e estimate dper-produc t cost s woul db e lowe r o r highe r a s a result . Th e overal l cos t projection s presente d elsewher e i nthi s documen t ar e base do ncurren t produc t registration s an d d o no t includ e cos t projection s relate dt o thes e potentia l futur e alternativ e F/F Aproduc t registrations .

4 3

### Tabl e 3-1 : Emissio nCharacterization/Measuremen t Requirement s

Emissio n Typ e

Combustio n Emissions : Vapo r Phas e Semi volatil e Phas e Particulat e Phas e Evaporativ e Emissions: * Evaporativ e Emissio n Generator ' Basi c Emissions * Speciate dEmission s

Hydroc a rbon s Ketone s an d Aldehyde s Alcohol s an d Ethers " Polycycli c

Aromati c Hydrocarbon s (PAHs) ° Nitrate d

Polycycli c Aromati c Hydrocarbon s (NPAHs) c Atypicals d

X

X X X X X

X X

X X

X

X

X * X X X

Basi c emission s = tota l hydrocarbons , carbo nmonoxide , oxide s o f nitrogen , an dparticulate s (se e Sectio n VII.B.2. a below ) bRequire di f alcohol s o r ether s exis t i nth e uncombuste dfue l o r fue l additiv e formulation . c No t require dfo r methan e (CNG , LNG ) o r propan e (LPG ) . d Manufacturer s o f atypica l product s mus t examin e al l emissio nfraction s fo r th e measuremen t an d identificatio no f potentia l atypica l species . * Onl y applicabl e t o F/FA s require dt o measur e evaporativ e emissions . * Evaporativ e emission s ar e t o b e generate dusin ga nevaporativ e emissio ngenerato r a s describe di nSectio n VI . C . 9 Th e onl y

basi c emissio nrequire dt o b e measure dfo r evaporativ e emission s i s tota l hydrocarbons .Tabl e 3—2 : Estimate dEmissio nCharacterization/Measuremen t Costs *



## S i Emissio n Typ e

Combustio n Emissions : Vapo r Phas e Semi

volatil e Phas e Particulat e Phas e Evapora t iv e Emission s : * Evaporativ e Emissio n Generator ' Basi c

Emissions " Speciate d Emission s

Hydrocarbon s Ketone s an d Aldehyde s Alcohol s

an d Ethers b Polycycli c

Aromati c Hydrocarbon s (PAHs) ° Nitrate d

Polycycli c Aromati c Hydrocarbon s (NPAHs) c Atypicals d

$30 0

$30 0 $333 $20 0 $16 7 $80 0 $80 0 $80 0

$80 0 $40 0

$40 0 $40 0

$225 h $333 $16 7 $40 0

* Basi c emission s = tota l hydrocarbons , carbo nmonoxide , oxide s o f nitrogen , an dparticulate s (se e Sectio n VII.B.2. a below ) bRequire d i f alcohol s o r ether s exis t i nth e uncombuste d fue l o r fue l additiv e formulation . c No t require d fo r methan e (CNG , LNG ) o r propan e (LPG ) . dManufacturer s o f atypica l product s mus t examin e al l emissio nfraction s fo r th e measuremen t an d identificatio no f potentia l atypica l species . * Onl yapplicabl e t o F/FA s require d t o measur e evaporativ e emissions . f Evaporativ e emission s ar e t o b e generate d usin g a nevaporativ e emissio ngenerato r a s describe di nSectio n VT.C . 'Th e onl ybasi c emissio nrequire d t o b e measure d fo r evaporativ e emission s i s tota l hydrocarbons . *Pe r Sampl e

X )Tabl e 3-3 : Tie r 1 Cost s

Literatur e Searc h Acquisition * Mileag e Accumulation * Combust.Gen./Charact:* * RV P Measuremen t Engin e set-u pfe e Evaporativ e Gen./Charac t TOTAL : Gasolin e Fue l Famil y Baselin e $21,00 0 30,00 0 6,40 0 42,60 0 5 0 N/ A 6,27 5 $106,32 5 Non-Baselin e $7,00 0 30,00 0 6,40 0 45,60 0 5 0 N/ A 6,77 5 $95,82 5 Atypica l

$7,00 0 30,00 0 48,00 0 58,50 0 5 0 N/ A 7,07 5 $150,62 5 Diese l Fue l Famil y

Baselin e $21,00 0 37,20 0 27,50 0 28,70 0

5,00 0 N/ A $119,40 0 Non-Baselin e $7,00 0 37,20 0 27,50 0 29,70 0

5 , 00 0 N/ A $106,40 0 Atypica l $7,00 0 18,60 0 191,40 0 40,40 0

5,00 0 N/ A $262,40 0

•Pric e include s on e primar yan d on e backu p vehicle/engin e (excep t fo r diese l atypical ) **Pric e include s characterizatio n o f bot hcatalyze d & non-catalyze d exhaus t emission s fo r light-duty , an d characterizatio n o f non-catalyze d exhaus t emission s fo r heavy-duty .Tabl e 3- 4 Tie r 2 Cost s

Combustio nEmissio nGeneratio n S MSamplin g Evaporativ e Emissio nGeneratio n Biologica l Tests : 90-da ySubchroni c Inhalatio nStud y Salmonell a Mutagenicit yAssa y Micronucleu s Assa y Siste r Chromati d Exchang e Fertilit yScree n Neurotoxicit yScree n TOTAL : Gasolin e Fue l Famil y Baseline/Non-Baseline/Atypica l

$71,50 0 50 0 58,50 0

177,00 0 9,400 * 2,90 0 7,20 0 38,00 0 45,60 0 $681,300* * Diese l Fue l Famil y Baseline/Non-Baseline/Atypica l

$58,50 0 80 0 N/ A

177,00 0 9,40 0 2,90 0 7,20 0 38,00 0 45,60 0 $339,40 0 *Pric e include s th e cos t o f conductin g th e assa yo n bot hparticulat e an d semi-volatile-phas e combustio n emissions . **Pric e include s al l biologica l test s conducte d twic e (onc e o n combustio n emission s an d onc e o n evaporativ e emissions) , excep t fo r th e S Massa y(no t require d fo r evap . testing) .Tabl e 3-5 : Estimate d Alternativ e Fue l Registration s & Cost s

Baselin e Group s Tes t Representativ e Grou p Cos t

Est . Produc t Registration s Cost/Produc t (Rounded ) Methano l
2
M8 5 $735,00 0
8 0 $9,00 0 M10 0

$721,00 0
6 0 $12,00 0 Fue l Familie s

Ethano l
1
E8 5 $735,00 0
2 0 $37,00 0 Methan e

1

CN G $389,00 0
20 0 $2,00 0 Propan e

1

LP G $408,00 0
4 0 $10,00 0 Tota l

5

$ 3 Millio n 40 0 $7,50 0P.5 5

Chapte r 4 Eafcimata dCoa t Impact s

I . Introductio n Unde r Executiv e Orde r 1286 6 [5 8 Federa l Registe r 51,73 5 (Octobe r 4 , 1993)] , EP Amus t determin e whethe r a regulatio ni s "significant " an d therefor e subjec t t o revie wb yth e Offic e o f Managemen t an d Budge t (OMB ) an d th e requirement s o f th e Executiv e Order . Th e orde r define s "significan t regulator yaction " a s on e tha t i s likel yt o resul t i na rul e tha t may : (1 ) hav e a nannua l effec t o nth e econom yo f $10 0 millio no r mor e o r adversel yaffec t i na materia l wa yth e economy , secto r o f th e economy , productivity , competition , jobs , th e environment , publi c healt ho r safety , o r State , local , o r triba l government s o r communities , (2 ) creat e a seriou s inconsistenc yo r otherwis e interfer e wit h a nactio ntake no r planne d b yanothe r agency , (3 ) materiall yalte r th e budgetar yimpac t o f entitlements , grants , use r fees , o r loa nprograms , o r th e right s an d obligation s o f recipient s thereof ; o r (4 ) rais e nove l lega l o r polic yissue s arisin g ou t o f lega l mandates , th e President' s priorities , o r th e principle s se t fort hi nth e Executiv e Order. " Thi s analysi s indicate s tha t th e rul e i s no t expecte d t o hav e a nannua l effec t o nth e econom yo f $10 0 millio no r more , no r woul d i t hav e an ysignifican t advers e effect s o nth e economy , productivity , competition , jobs , th e environment , publi c healt ho r safety , o r government s o r communities . Consequently , thi s rul e i s no t considere d significan t unde r th e term s o f th e firs t criterion , and , sinc e th e othe r thre e criteri a ar e no t applicable , thi s rul e i s no t considere d t o b e a "significan t regulator yaction " unde r th e term s o f th e Executiv e Order . Nevertheless , becaus e thi s rul e ha s bee no nEPA' s regulator yagend a fo r ove r 2 0 years , th e Agenc yha s decide d t o trea t thi s actio na s significan t an d prepar e a Regulator ySuppor t Documen t (RSD ) t o asses s it s economi c impact s o n th e affecte d industries . Base d o nth e uni t cos t estimate s presente d i nth e previou s chapter , thi s chapte r project s th e overal l cos t impact s o f th e F/F A registratio nprogra mo nth e F/F Aindustry . Cos t impact s ar e discusse d fo r fue l manufacturers , additiv e manufacturers , an d th e industr ya s a whole . Th e followin g section s discus s th e analytica l assumption s an d approache s o nwhic hthi s cos t analysi s i s based , 4 9P.5 6

th e methodolog yfo r determinin g produce r an dindustr yimpacts , th e limitation s o f th e analysis , an d conclusions . 

### n . Analytica l Assumption s an dApproac h Althoug hth e cost-sharin g (grouping ) provisio no f thi s rul e i s voluntary , EP Aassume s fo r thi s analysi s tha t manufacturer s wil l choos e t o participat e i ngroupin g wit hmanufacturer s o f simila r product s t o th e exten t possible . So , fo r th e purpos e o f determinin g progra mcosts , eac hcurrently-registere dproduc t wa s assigne d t o a nappropriat e categor yan dgroup , base do nth e compositiona l informatio ncontaine d i nth e registratio ndatabas e fo r eac hF/FA . Th e result s o f thes e assignment s ar e show ni nTabl e 4-1 . Exclude d fro mth e tabl e ar e manufacturer s who , throug hsmal l busines s provisions , ar e exempte d fro mtestin g requirement s fo r thei r baselin e an d non-baselin e products . Fo r eac hcategory , th e tabl e identifie s th e numbe r o f registere dfuel s an dfue l additive s i nth e category , th e numbe r o f group s the ysor t into , an dth e numbe r o f producer s wit ha t leas t on e registere dproduc t i nth e category . T o determin e th e cost s applicabl e t o th e group s i neac h category , assumption s ha d t o b e mad e wit hregar dt o th e applicabilit yo f variou s progra mrequirement s t o eac hcategor yan d th e likelihoo d tha t som e o f thes e requirement s coul db e satisfie d byrelyin g o nadequat e existin g tes t data . Thes e assumption s ar e outline d belo wfo r eac hproduc t categor yan dar e summarize di n Tabl e 4- 2 fo r testin g o f combustio nemission s an dTabl e 4- 3 fo r testin g o f evaporativ e emissions . Whil e som e oxygenat e gasolin e mixture s ma yhav e adequat e informatio navailabl e fo r bot hcatalyze d an d non-catalyze d exhaus t emissions , EP Aconservativel yassume s fo r thi s analysi s tha t dat a fo r non-catalyze dexhaus t emission s i s no t available . I nregar d t o Tie r 2 , EP Aassume s test s wil l b e necessar yfo r bot hcombustio nan d evaporativ e emissions . 

### Gasolin e Baselin e Category EP Aha s designate d on e grou p fo r thi s category , whic hi s estimate d t o contai napproximatel y1,58 6 fuel/additiv e product s registere d by30 7 larg e producer s (sale s £ $5 0 million) . Base do n result s o f th e Auto/Oi l Ai r Qualit yImprovemen t Researc hProgra m (Auto/Oi l Program) , fo r thi s category , EP Aanticipate s sufficien t dat a t o b e availabl e fo r characterizatio no f bot hcatalyze dan d non-catalyze d exhaus t emission s generate dusin g th e FTP , excep t fo r PA H an d NPA H analysis . EP Aestimate s al l require dtest s wil l b e neede d fo r characterizatio no f evaporativ e emissions . Furthermore , EP Aassume s al l Tie r 2 test s wil l b e neede dfo r combustio nan d evaporativ e emission s fo r thi s category . Gasolin e Non-Baselin e Categor y Thi s categor yo f fuel/additiv e product s i s estimate dt o contai n47 6 product s produce d b y12 0 larg e manufacturer s (sale s £ 5 0P.5 7

$5 0 million) , whic har e subdivide d int o nin e groups . EP Aassume s al l Tie r 1 characterizatio ntest s wil l b e neede d fo r non-catalyze d combustio nemission s an d evaporativ e emissions . However , du e t o studie s don e b yth e Auto/Oi l Progra ma s wel l a s othe r on-goin g industr yefforts , EP Abelieve s i t i s reasonabl e t o assum e tha t onl y PA H speciatio nan d measuremen t o f tota l NPA H wil l b e neede d fo r catalyze d combustio nemissions . Whil e som e oxygenat e gasolin e mixture s ma yhav e adequat e informatio navailabl e fo r bot hcatalyze d an d non-catalyze d exhaus t emissions , EP Aconservativel yassume s fo r thi s analysi s tha t dat a fo r non-catalyze d exhaus t emission s i s no t available . I nregar d t o Tie r 2 , EP Aassume s al l biologica l test s wil l b e necessar yfo r bot hcombustio nan d evaporativ e emissions . Gasolin e Atypica l Categor y EP Aestimate s thi s categor ywil l b e mad e u p o f 5 6 fuel/additiv e group s consistin g o f 29 3 product s manufacture d b y14 6 producers . I nth e fina l rule , EP Ai s requirin g onl yvolatil e fuel/additiv e mixture s t o underg o testin g o f evaporativ e emissions. 2 1 Base d o nth e chemical/physica l characteristic s o f product s i nthi s category , an d th e likelihoo d tha t a nadditiv e wil l b e th e testin g representativ e fo r mos t o f th e group s i nthi s category , EP Aanticipate s tha t non e o f th e group s wil l b e require d t o tes t evaporativ e emissions . Fo r combustio nemissions , however , EP Aassume s al l Tie r 1 an d Tie r 2 testin g wil l b e needed . Diese l Baselin e Categor y Thi s categor ycontain s onl yon e group , whic hinclude s a n estimate d 8 7 larg e manufacturer s (sale s i. $5 0 million ) representin g 49 6 products . Aconsiderabl e amoun t o f informatio nexist s o n baselin e diese l products . Fo r thes e products , EP Ai s considerin g existin g applicabl e speciatio nstudie s conducte d unde r th e Ai r Pollutio nResearc hAdvisor yCounci l (APRAC ) progra mt o b e adequat e data , i nlie u o f ne wtesting . However , th e APRA C progra mdoe s no t includ e dat a concernin g speciatio no f hydrocarbons , whic hi s require d fo r manufacturer s o f diese l F/FA s unde r thi s program . Consequently , EP Aassume s tha t th e onl yemissio ncharacterizatio n test s require d fo r thi s grou p ar e hydrocarbo nspeciatio no f non catalyze d combustio nemissions . Becaus e th e literatur e contain s existin g tes t dat a o nman yo f th e require d healt heffect s endpoints , EP Afurthe r project s tha t withi nTie r 2 , onl yth e screen s fo r neurotoxi c an d teratologi c endpoint s o ncombustio n emission s wil l nee d t o b e conducted . Evaporativ e emissio n assessment s ar e no t applicabl e t o product s i nth e diese l

"Fuel s wit ha Rei d Vapo r Pressur e (RVP ) o f 2. 0 pound s pe r squar e inc h(psi ) ar e subjec t t o th e Tie r 1 an d Tie r 2 testin g requirements , whil e thos e wit hRV P les s tha n2. 0 ar e excused . Wit hrespec t t o additives , Tie r 1 an d Tie r 2 evaporativ e emissio n testin g i s require d whe nth e RV P o f th e fuel/fue l additiv e mixtur e i s increase d b y0. 4 ps i o r more . 5 1P.5 8

categories . Diese l Non-Baselin e Categor y Amon g currentl yregistere d diese l products , th e non-baselin e categor yha s tw o groups , containin g on e larg e manufacture r (sale s £ $5 0 million ) wit hon e produc t i neac hgroup . Unlik e product s i n th e diese l baselin e category , littl e informatio ni s expecte dt o exis t fo r thes e uniqu e produc t formulations . Consequently , al l testin g o f combustio nemissions , bot hchemica l an dbiological , i s assume d t o b e neede d fo r product s identifie dwit hthi s group . Diese l Atypica l Categor y EP Aestimate s 4 1 group s withi nthi s category , representin g a tota l o f 11 2 manufacturer s an d21 3 products . Becaus e o f th e uniqu e natur e o f thes e products , EP Aassume s adequat e dat a i s unavailabl e fo r fulfillin g chemica l an d biologica l testin g requirement s o f thi s category . Thus , fo r purpose s o f thi s analysis , EP Aassume s al l Tie r 1 an d 2 test s o ncombustio nemission s wil l b e conducted . Th e assumption s outline dabov e ar e th e basi s fo r determinin g impact s t o manufacturer s no t qualifyin g fo r anyspecia l provision s o f th e rul e fo r a give nproduct . Fo r manufacturer s qualifyin g fo r smal l busines s specia l provision s fo r som e product s bu t no t others , th e assumption s abov e appl yonl yt o th e product s fo r whic hd o no t qualif ythe mfo r specia l smal l busines s provisions . Assumption s regardin g tes t requirement s fo r manufacturer s qualifyin g fo r specia l smal l busines s provision s fo r suc hproduct s ar e discusse d i nth e nex t section . Th e methodolog yuse dt o projec t th e complianc e cost s fo r individua l companie s alon g wit hth e overal l cos t impact s o nfue l manufacturers , additiv e manufacturers , an dth e combine d industr yi s als o discussed .
III . Mathodolo<r

v andRaaulfca A . Produea r Coa t Impact s Befor e initiatin g activitie s directe dspecificall yt o completin g th e Tie r requirement s discusse dabove , eac hmanufacture r wil l nee d t o becom e familia r wit hth e regulation s an dwil l als o nee d t o submi t basi c registratio ndat a (o r reaffir mexistin g registratio ndata ) fo r eac hproduct . Fo r thes e start-u p activities , EP Aassigne d t o eac hmanufacture r a one-tim e fixe dcos t o f $30 0 plu s $10 0 pe r product . Next , t o determin e th e testin g cost s applicabl e t o manufacturer s no t qualifyin g fo r anyspecia l smal l busines s provisions , cost s wer e calculate d base do nth e genera l testin g assumption s describe d abov e fo r eac hcategory , usin g th e uni t cos t estimate s provide d i nChapte r 3 . Thes e total s wer e assigne dt o eac hgrou p i nth e categor yan dwer e the ndivide dequall yamon g th e product s assigne d t o eac hsuc hgroup . Finally , th e per-produc t 5 2P.5 9

cost s wer e assigne d bac k t o th e responsibl e manufacturers . Th e estimate d complianc e cost s applicabl e t o eac hgrou p i neac hproduc t categor yar e summarize d i nTabl e 4- 4 an ddetaile di nAppendi xA . Base d o nth e uni t cos t dat a presente di nChapte r 3 an dth e testin g assumption s outline d above , th e tabl e show s tha t group s i nth e gasolin e baselin e produc t categor yar e likel yt o hav e th e highes t grou p cos t (estimate d a t nearl y$800,000) , an ddiese l baselin e group s ar e expecte d t o incu r th e lowes t grou p cos t (estimate da t nearl y$445,000) . Consisten t wit hth e smal l busines s provision s describe di n Chapte r 1 , manufacturer s wit hannua l sale s les s tha n$5 0 millio n wer e omitte d fro mthi s cos t allocatio nproces s fo r thei r baselin e an d non-baselin e products . Suc hmanufacturer s wer e assigne dn o Tie r 1 o r Tie r 2 cost s fo r thei r products . Th e atypica l product s o f manufacturer s wit hannua l sale s les s tha n$1 0 millio nwer e als o omitte d fro mth e genera l cos t allocatio nproces s describe dabove ; however , thes e manufacturer s wer e assigne dcost s applicabl e t o thei r atypica l products . A s previousl ydescribed , thes e manufacturer s qualif yfo r th e specia l smal l busines s provisio n whic hexcuse s the mfro m Tie r 2 testin g requirement s fo r thei r atypica l products , bu t ar e stil l responsibl e fo r Tie r 1 . Becaus e thes e ver ysmal l manufacturer s ar e expecte dt o fin di t difficul t t o participat e i nth e groupin g an dcos t sharin g provision s o f th e rule , thi s analysi s assigne d eac hsuc hmanufacture r th e ful l cos t fo r completin g Tie r 1 fo r eac ho f hi s atypica l products . However , i f a nindividua l manufacture r ha dmor e tha non e atypica l produc t applicabl e t o a particula r group , th e Tie r 1 cos t fo r thos e product s wa s assigne d t o th e manufacture r onl yonce . Thi s analysi s als o assume s tha t thes e manufacturer s wil l no t purchas e backu p vehicles/engine s sinc e the yar e excuse dfro mTie r 2 . Tabl e 4- 5 present s estimate d complianc e cost s t o manufacturer s qualifyin g fo r specia l provision s fo r thei r atypica l products . I n sum , approximatel y$114,00 0 wil l b e spen t b ya manufacture r (wit h sale s les s tha n$1 0 million ) o f a natypica l produc t i nth e gasolin e fue l family , whil e manufacturer s (wit hsale s les s tha n$1 0 million ) o f atypica l diese l product s ar e projecte dt o incu r cost s o f approximatel y$272,00 0 fo r testin g thei r products . Manufacturer s qualifyin g fo r specia l provision s fo r thei r baseline/non-baselin e product s (no t show ni nth e table ) wil l incu r cost s o f $10 0 fo r registratio no f thei r product , an da one-tim e pe r manufacture r cos t o f $30 0 fo r becomin g familia r wit hth e regulations . Thi s analysi s ha s focuse d o ncos t impact s t o producer s o f non leaded , non-relabele d products . A s discusse di nth e dat a collectio nsectio no f Chapte r 2 , financia l dat a wa s no t sough t fo r companie s producin g onl yleade d gasolin e product s sinc e thes e product s wil l b e illega l a s o f Januar y1 , 1996 , an dfo r companie s registerin g onl yrelabele dproduct s sinc e onl ybasi c registratio n dat a wil l b e require d fo r thes e products . However , sinc e th e basi c 5 3P.6 0

registratio nrequirement s appl yt o relabelers , the ywil l hav e applicabl e t o the m cost s o f $30 0 ( a one-tim e pe r manufacture r cost ) fo r activitie s associate dwit hreviewin g th e regulations , an d$10 0 fo r submitta l o f basi c registratio ndat a fo r eac hproduct . Thes e cost s appl yt o 32 7 relabeler s an d63 8 products . Accordingly , a tota l cos t o f $161,900 , applicabl e t o relabelers , i s include d i n th e tota l cost s t o th e industry , discusse di nth e nex t section . Tabl e 4- 6 provide s a compariso no f complianc e cost s betwee n fue l an d additiv e manufacturers . Th e tabl e include s dat a fo r 61 8 fue l manufacturers , 43 8 additiv e manufacturers , 2 0 tha t produc e bot hfue l an d additiv e products , an d32 7 relabelers . Fo r th e 63 8 fue l manufacturer s examine di nthi s analysis , complianc e cost s rang e fro mabou t $40 0 t o $1. 7 million , wit ha media ncomplianc e cos t o f $500 . O f th e 45 8 fue l additiv e manufacturers , cost s rang e fro man d $40 0 t o $3. 7 million , wit ha media ncomplianc e cos t o f abou t $900 . Approximatel y8 2 percen t o f al l F/F Amanufacturer s ar e estimate d t o incu r cost s belo w$10,000 , an dabou t 7 2 percen t belo w $1,000 . Furthermore , les s tha non e percen t o f th e fue l an d additiv e manufacturer s examine di nthi s analysi s wil l potentiall y incu r cost s i nexces s o f on e millio ndollars . Complianc e cost s fo r fue l an d fue l additiv e producer s combine drang e fro m$40 0 t o abou t $ 4 million , wit ha media ncos t o f abou t $500 . Th e distributio no f cost s fo r thes e 1,40 3 manufacturer s ar e show ni nFigur e 4-1 . A mor e detaile d analysi s o f th e financia l impact s t o smal l fue l an d fue l additiv e manufacturer s i s provide di nth e nex t chapter . 

### B . industry

coa t impact a Summin g th e cost s acros s al l manufacturer s yield s a tota l cos t impac t t o th e fuel/fue l additiv e industr yo f approximatel y6 6 millio ndollars . Averagin g th e industr ycost s ove r thre e year s bring s th e annua l cost s t o approximatel y$2 2 million , wel l unde r th e $10 0 millio nlimi t tha t contribute s t o definin g a "significan t regulator yaction" . Th e thre e yea r averag e i s relevan t becaus e manufacturer s wil l generall yb e allowe dthre e year s fo r complianc e fo r thei r fuels/additive s registere dbefor e promulgatio no f th e fina l rule . However , manufacturer s coul dpotentiall yreques t an d b e grante d a tim e extensio nfo r complianc e o r coul dfinanc e complianc e cost s ove r a nextende dperiod . Consequently , annua l cas houtflow s coul d b e substantiall yreduced . IV . Limitatlon a o f fcha Analyal a I ndeterminin g cost s t o eac hgroup , judgement s wer e mad e concernin g th e availabilit yo f existin g dat a whic hcoul dmitigat e th e program' s testin g requirements . I t i s possibl e tha t mor e o r les s adequat e existin g tes t dat a ma yb e availabl e tha nwa s assume d i nthi s analysi s fo r al l categories , an dth e estimate dcost s woul d b e lowe r o r highe r a s a result .
5 4P.6 1

Whe nper-produc t cost s wer e calculate dfo r manufacturer s no t qualifyin g fo r specia l provisions , EP Aassume dtha t complianc e cost s woul d b e divide d equall yamon g th e numbe r o f products . However , manufacturer s hav e th e opportunit yt o apportio ncost s i n anymanner . Fo r example , cost s coul db e divide damon g th e member s o f th e grou p rathe r tha namon g th e numbe r o f products . I f cost s ar e divide d differentl ytha nwa s assume dfo r thi s analysis , change s woul d b e reflecte d i ncost s t o eac hmanufacturer , bu t industr y cost s woul d remai nunchanged . Additionally , fo r purpose s o f thi s analysis , EP Aassume d tha t manufacturer s qualifyin g fo r specia l smal l busines s provision s fo r thei r atypica l product s (i.e. , thos e wit hsale s les s tha n$1 0 million ) woul dno t hav e th e resource s t o grou p wit hothe r manufacturer s t o shar e costs . I f thes e manufacturer s ar e capabl e o f groupin g an dca nshar e cost s wit h othe r manufacturers , th e cost s i nthi s analysi s ar e overestimate d bot hfo r th e individua l manufacturer s involve dan dfo r th e industr y a s a whole . Th e per-produc t cost s als o depen d o nth e numbe r o f product s expecte d t o b e containe d i neac hgroup . However , th e numbe r o f product s assigne d t o th e group s fo r thi s analysi s ma yb e subjec t t o erro r fo r a variet yo f reasons . First , producer s ar e no t require d t o notif yEP Ai f manufacturin g o f a produc t ha s cease dpermanently , an d thu s EPA' s registratio ndatabas e ma ycontai nF/FA s whic hn o longe r exist . Fo r thi s reason , i t i s possibl e tha t th e numbe r o f product s i nanygrou p i s overestimated , thu s underestimatin g th e per-produc t costs . Second , th e analysi s i s base do nproduct s registere d wit hEP Aprio r t o Decembe r 1992 . Sinc e tha t time , additiona l fuel/fue l additiv e product s hav e bee nregistere dwit h EPA . I nthi s instance , th e numbe r o f product s actuall ybelongin g t o a grou p ma yb e underestimated , thu s overestimatin g th e per produc t cost s fo r tha t group . Third , groupin g assignment s fo r thi s analysi s wer e base d o nexistin g registratio ndat a submitte dby manufacturer s concernin g th e chemica l compositio no f thei r fuel s an d additives . T o th e exten t tha t thi s informatio nma yb e inaccurat e o r out-of-date , EPA' s assumption s a s t o appropriat e grou p assignment s ma yb e erroneous . Thus , th e actua l numbe r o f product s pe r grou p an d eve nth e numbe r o f group s pe r categor yma y b e somewha t differen t fro mthos e assume dhere . Finally , participatio ni nth e groupin g syste mi s voluntary , an d manufacturer s ma ychoos e t o defin e thei r ow nsubgroup s o r eve nwor k independentl yrathe r tha nshar e cost s amon g al l potentia l manufacturer s i nth e group . A s a result , th e numbe r o f participatin g manufacturers , an dthei r respectiv e products , ma yb e les s fo r anygroup . I f so , th e numbe r o f product s bywhic hth e cost s wer e divide d ma yb e overestimated , thu s underestimatin g manufacture r an d industr ycosts . Concluaion s

5 5P.6 2

Th e effect s o f th e regulatio no nfue l an dfue l additiv e producer s appea r t o b e relativel ysmall . A s identifie di nFigur e 4-1 , i nmos t cases , th e complianc e cost s wil l b e les s tha n$1,00 0 pe r manufacturer , an d les s tha non e percen t o f producer s ar e expecte d t o incu r cost s i nexces s o f on e millio ndollars . Th e result s o f thi s analysi s indicat e th e fuel/fue l additiv e registratio nregulatio nwil l lea dt o tota l cost s o f abou t $66 million . Wit hindustr ycomplianc e cost s conservativel yaverage d ove r thre e years , th e annua l cos t impac t t o th e industr yi s estimate d a t $2 2 million . EP Aha s n o reaso nt o believ e th e economy , productivity , competition , employment , environment , publi c healt ho r safety , o r government s o r communitie s wil l b e adversel y affecte d a s a resul t o f thi s regulation . Th e Regulator y Flexibilit yAnalysi s (RFA ) i nChapte r 5 , lend s suppor t t o expectatio no f onl yminima l economi c impact s fro mth e cost s impose d b ythi s regulation . Th e RFA , whil e primaril yconcerne dwit hcost s impose d o nsmalle r entities , als o provide s insigh t a s t o overal l economi c impact s o nth e industr ya s a whole . Th e impac t t o mos t companie s i s expecte d t o b e relativel ysmal l s o a s no t t o caus e significan t advers e effects . I nconclusion , th e fue l an dfue l additiv e registratio nregulatio nwil l no t hav e significan t advers e effect s o nth e industry , no r wil l i t resul t i na neconomi c impac t o f $10 0 millio no r mor e annually .

5 6P.6 3

Tabl e 4-1 : Estimate d Group s Pe r Fuel/Fue l Additiv e Categor y

F/F ACategor y

Baseline 1

Non-Baseline 1 ' 2

Atypical 3 Fue l Famil y Gasolin e
1 Grou p 30 7 Manufacturer s 1,5 8 6 Product s

, 9 Group s 12 0 Manufacturer s 47 6 Product s

5 6 Group s 1 4 6 Manufacturer s 29 3 Product s Diese l

1 Grou p 8 7 Manufacturer s 49 6 Product s

2 Group s 1 Manufacture r 2 Product s

4 1 Group s 11 2 Manufacturer s 21 3 Product s 'Excludesdat a fo r manufacturer s who , unde r smal l busines s provision s o f thi s rule , ar e exempte d fro mtes t requirement s fo r thei r baselin e an d non-baselin e product s (i.e. , exclude s manufacturer s < $5 0 millio ni n sales) . 'Non-baselin e product s ca n fal l int o mor e tha non e group dependin g upo nth e numbe r o f oxyge ncompound s the ycontain . Thus , the yar e counte d multipl e time s i n th e tabl e dependin g upo nth e numbe r o f group s the yfal l into . 'Includesdat a fo r manufacturer s wh o ar e exempte d fro ma portio no f th e t e requirement s fo r thes e product s unde r th e smal l busines s provision s o f thi 3 r u (i.e. , include s manufacturer s < $1 0 millio ni n sales) . s t i e



## 57Tabl e 4-2 : Assume d Combustio nEmissio nTes t

Family / Categor y Tie r 1 Requirement s

Lit . Searc h Charact .

o f Catalyze d Emission s Charact .

o f Non
Catalyze d Emission s 90-da y

Inhalatio n Stud y S M

Assa y

Gasolin e Categor y Baselin e

No n Baselin e
Atypica l X



### x

X X 1

X 1

X X 1

X

X X

X

X X

X

X

Diese l Categor y Baselin e

No n Baselin e
Atypica l X

X

X N/ A

N/ A

N/ A X 2

X

X X

X

X X

X

L Onl yPA H an d NPA H speciatio nassume d t o b e necessary . 2 Onl yHydrocarbo nspeciatio nassume d t o b e necessary . Requirement s Pe r Categor y Tie r 2 Requirement s Micronucl . Assa y SC E

X

X

X X

X

X

X

X X

X Fertilit y

Scree n

X

X

X

X

X

X Neurotox .

Scree n

X

X

X

X

X

XTabl e 4-3 : Assume d Evaporativ e Emissio n Tes t Requirement s Pe r Categor y

i n Family / Categor y Gasolin e Categor y Baselin e No n Baselin e Atypica l

Diese l Categor y Baselin e No n Baselin e Atypica l Tie r 1

Requirement s Lit . Search ' Charact .

o f Evap . Emission s

X

X

X X

X

N/ A

N/ A

N/ A N/ A

N/ A

N/ A 90-da y

Inhalatio n Stud y

X

X

N/ A

N/ A

N/ A S M

Assa y

X

X

N/ A

N/ A

N/ A Tie r 2

Requirement s Micronucl . Assa y SC E

X

X X

X

N/ A

N/ A

N/ A N/ A

N/ A

N/ A Fertilit y

Scree n

X

X

N/ A

N/ A

N/ A Neurotox .

Scree n

X

X

N/ A

N/ A

N/ ATabl e 4-4 : Estimate d Complianc e Cost s Pe r Group *

O Tie r 1 :

Literatur e Searc h Acquisitio n Mileag e Accumulatio n Combustio nGen./Charac t Evaporativ e Gen./Charac t

Tie r 2 : Combustio nGeneratio n S M Samplin g Evaporativ e Generatio n Biologica l Testin g

Administrativ e Cost s

TOTA L (Rounded) : Gasolin e Fue l Famil y Baselin e

$21,00 0 30,00 0 6,40 0 25,85 0 6,27 5

71,50 0 50 0 58,50 0 550,800* *

26,33 5

$797,00 0 Non-Baselin e

$7,00 0 30,00 0 6,40 0 35,75 0 6,77 5

71,50 0 50 0 58,50 0 550,800* *

26,33 5

$794,00 0 Atypica l

$7,00 0 30,00 0 48,00 0 58,55 0 0

71,50 0 50 0 0 280,10 0

26,33 5

$522,00 0 Diese l Fue l Famil y

Baselin e

$21,00 0 37,20 0 27,50 0 13,00 0 N/ A

58,50 0 0 N/ A 260,60 0

26,33 5

$444,00 0 Non-Baselin e

$7,00 0 37,20 0 27,50 0 34,70 0 N/ A

58,50 0 80 0 N/ A 280,10 0

26,33 5

$472,00 0 Atypica l

$7,00 0 18,60 0 191,40 0 45,40 0 N/ A

58,50 0 80 0 N/ A 280,10 0

26,33 5

$628,00 0 *Cost s i n thi s tabl e ar e applicabl e t o manufacturer s no t qualifyin g fo r specia l provisions . **Conducte d o n bot hcombustio nan d evaporativ e emissions .P.6 7



### Tabl e 4-5 : Estimate d Complianc e Cost s fo r

Small * Atypica l Manufacturer s

Tie r 1 : Literatur e Searc h Acquisitio n Mileag e Accumulatio n Combustio nGen./Char . Evaporativ e Gen./Char . Tie r 2 Administrativ e Cost s

TOTAL (Rounded) : Gasolin e Fue l Famil y $7,00 0 15,00 0 24,00 0 58,55 0 0 Exemp t 9,45 0 $114,00 0 Diese l

Fue l Famil y $7,00 0 18,60 0 191,40 0 45,40 0 N/ A Exemp t 9,45 0 $272,00 0 *Thos e manufacturer s wit hsale s unde r $1 0 million .



### (siTabl e 4-6 : Summar yo f Complianc e Costs *

Numbe r o f Companie s Rang e o f Complianc e Costs :

Minimu m Media n Maximu m Percentag e Les s tha n$1,00 0 Percentag e Greate r tha n$10,00 0 Percentag e Greate r tha n $ 1 millio n Fue l Manufacturer s 45 8
$40 0 $50 0 $1,673,00 0 73 % 16 % < 1 % Additiv e

Manufacturer s 63 8
$40 0 $91 5 $3,717,00 0 53 % 31 % 2 % Relabeler s

32 7

N/ A $40 0 N/ A 100 % N/ A N/ A Tota l

Manufacturer s 1,403* *
$40 0 $50 0 $3,717,00 0 7 2 % 18 % < 1 % •Companie s registerin g onl yleade d product s ar e excluded . **Th e tota l numbe r o f uniqu e companie s include d i nthi s analysi s i s 1,403 . Thi s include s 43 8 additiv e manufacturers , 61 8 fue l manufacturers , 2 0 manufacturer s tha t produc e bot hfuel s an d additives , an d 32 7 relabelers .P.6 9


### Figure 4-1 : Distributio n o fComplianc e Costs ) fo r140 3 Fue l an d Additiv e Manufacturers Combine d (Indudin g Relabelers) BgBBsmmtmiwiiwmuwmwmm 800

60 0



### 4 S 3 * E 3 Z 400 -

$0-49 9 $500 -1 K$1-5 K $5-10 KS10-50 K$50-100 K$100-500 K$500K-1 M $ 1 - 4 M Costto Manufacturers 

### (• 3P.7 0



### Chapte r5 Rfloulator vFlexibilit yAnalysi s i . introductio n Thi s chapte r present s th e result s o f a regulator yflexibilit y analysi s o f th e testin g requirement s o f th e F/F Aregistratio n regulations . Th e result s ar e base do na smal l busines s impac t analysi s conducte d b yIC F Incorporate dunde r contrac t wit hEPA 22

. Th e analysi s ha d fou r mai nobjectives : 1 ) t o compar e th e F/F A program' s smal l busines s definitio nt o th e Smal l Busines s Administration' s (SBA ) definition s o f smal l fo r th e affecte d industries , 2 ) t o determin e i f th e registratio nprogra mwoul d impac t smal l businesse s significantl ymor e tha nlarg e businesses , 3 ) t o estimat e th e magnitud e o f smal l busines s impact s b y assessin g i f complianc e cost s woul db e likel yt o pus hsmal l businesse s int o financia l distres s o r eve nclosure , an d4 ) t o quantif yth e exten t t o whic hth e smal l busines s provision s reduc e th e program' s burde nfo r manufacturer s o f atypica l products . A n importan t poin t t o bea r i nmin d i s tha t th e analysi s assume s n o passthroug ho f cost s i npric e increase s an dthu s ca nb e characterize d a s depictin g "wors t case " impacts . Sinc e th e tim e o f th e IC F analysis , som e underlyin g assumption s use dt o projec t manufacture r cos t dat a wer e revised . Th e discussio nan dimpac t estimate s presente d i nthi s chapte r reflec t th e revise dcos t estimate s (whic har e presente di nthi s document) . Fo r thi s reason , th e actua l dat a presente d i nthi s chapte r doe s no t correspon d directl ywit hth e result s o f th e IC F analysis . EP Ause dICF' s methodolog ydiscusse d below , alon g wit hrevise dcos t estimate s t o determin e smal l busines s impact s fo r thi s regulation .
II . Requirement s o f th « Regulator y Flexibilit y

Ac t EP Ai s require d unde r th e Regulator yFlexibilit yAc t (RFA ) t o determin e whethe r th e requirement s o f th e regulatio nwil l caus e a significan t impac t o na substantia l numbe r o f smal l entities . EP A ha s establishe d guideline s settin g standard s t o b e use di n evaluatin g impact s o nsmal l businesses . Th e guideline s specif y tha t siz e definition s se t byth e SB Ashoul db e use da s th e initia l determinatio no f a "smal l entity , " bu t tha t EP Ama yus e a n alternativ e definitio ni f i t bette r capture s th e poin t a t whic h entitie s ar e adversel yaffecte d becaus e o f thei r size . Th e EP A guideline s als o provid e guidanc e o nsettin g th e standard s t o b e use d fo r evaluatin g impact s o nsmal l businesses . Fou r criteri a ar e establishe d fo r determinin g whethe r impact s wil l b e significant :

"Se e footnot e 4 . 6 4P.7 1

1 ) Annua l complianc e cost s increas e tota l cost s o f productio n fo r smal l businesse s b ymor e tha nfiv e percent . 2 ) Complianc e cost s a s a percentag e o f sale s fo r smal l businesse s ar e a t leas t te npercen t highe r tha ncomplianc e cost s a s a percentag e o f sale s fo r larg e businesses . 3 ) Capita l cost s o f complianc e represen t a significan t portio no f capita l availabl e t o smal l businesses . 4 ) Th e requirement s o f th e regulatio nar e likel yt o resul t i n closure s o f smal l businesses . Accordin g t o th e guidelines , ther e i s a significan t impac t o n smal l entitie s wheneve r anyo f th e abov e criteri a ar e met . Th e firs t criterio nwa s no t applie d i nthi s analysi s becaus e productio n cost s o f th e F/F Aproduct s ar e unknown . Impact s o f th e regulatio n o nsmal l businesse s wer e determine dbase do nth e remainin g criteria . Th e methodolog yuse d t o conduc t th e smal l busines s impac t analysi s i s presente dbelow , followe dbya discussio no f th e result s o f th e analysis . Assumption s an dlimitation s o f th e analysi s ar e discussed .
III . Methodolog y 

### A . pat a gQVxctg EP Aprovide d IC F wit hth e majorit yo f th e dat a neede dt o conduc t th e impac t analysis . Provide dfo r eac hmanufacture r wa s manufacture r I D an d produc t informatio ncontaine do nth e F/F A registratio ndatabase , SI C code , numbe r o f employees , 199 3 annua l sale s data , an d manufacture r complianc e cos t dat a estimate dbyEPA . Usin g regressio nequation s develope dfo r th e smal l busines s impac t analysi s conducte d a t th e tim e o f th e proposal 23 , IC F the nprojecte d ne t incom e an d asse t informatio nfo r eac hregistere dcompan ybase d o nth e 199 3 sale s data . Thi s additiona l informatio nwa s necessar y fo r determinin g complianc e cos t impact s usin g retur no nasset s (ROA ) (ne t income/assets ) a s a nindicato r o f th e financia l healt h o f a company . Th e regressio nequations , whic hrelate dne t incom e t o sale s an d asset s t o sale s (se e th e IC F report) , wer e determine d t o stil l b e vali d fo r thi s analysi s sinc e th e industr yha s no t change d dramaticall yfro mth e tim e o f th e firs t analysis. 2 4 B . Adjustment s t o th e Dat a

23 Se e footnot e 13 . 24 IC F verifie d thi s b ycomparin g financia l statistic s fo r relevan t SI C code s i nth e 199 0 an d 199 2 Annua l Statement Studies byRober t Morri s Associates . 6 5P.7 2

Arevie wo f th e F/F Aregistratio ndatabas e reveale dtha t a numbe r o f companie s ar e liste d mor e tha nonc e fo r varyin g reasons : the ymanufactur e bot hfuel s an d additives , the yhav e multipl e fue l o r additiv e identificatio nnumbers , o r the yhav e affiliates/subsidiarie s fo r whic hsimila r financia l dat a wa s provided . T o enabl e th e program' s impact s t o b e appropriatel y estimated , suc hrelate d companie s wer e considere dt o b e singl e entities , an d th e program' s impact s wer e estimate dbase do nth e sum o f thei r respectiv e complianc e costs . A s a resul t o f mergin g certai nmanufacturers ' dat a i nthi s manner , th e tota l numbe r o f uniqu e companie s o nwhic hthi s smal l busines s impac t analysi s i s base d i s 1,076 . Thi s include s 43 8 additiv e manufacturers , 61 8 fue l manufacturers , an d2 0 manufacturer s tha t produc e bot hadditive s an dfuels . Producer s o f bot hfue l an d additiv e product s ar e include di nbot hth e fue l manufacture r analysi s an dth e additiv e manufacture r analysis . C . Definitio no f Smal l Manufacture r Th e fina l rul e define s a smal l busines s fo r thi s progra ma s anymoto r vehicl e fue l o r fue l additiv e manufacture r wit htota l annua l sale s o f les s tha n$5 0 millio n(se e Chapte r 1 fo r furthe r discussio no nth e smal l busines s definitio nfo r thi s program) . Th e IC F analysi s compare d companie s classifie da s smal l unde r th e F/F A progra m

definitio nt o thos e classifie da s smal l b yth e SBA . Th e nex t sectio nprovide s a characterizatio no f smal l an dlarg e fue l an d additiv e manufacturers , accordin g t o eac ho f th e followin g definitions : 1 ) F/F Aprogra m

smal l busines s definition , i nwhic ha smal l busines s i s define d a s anyfue l o r additiv e manufacture r wit h tota l annua l sale s les s tha n$5 0 million . 2 ) SBA' s definitions , whic har e base do nsale s o r numbe r o f employees , bySI C code . Th e SB Adefinition s ar e presente di n Exhibi t 5-1 . SB Aregulation s specif ytha t fo r al l industrie s fo r whic hn o SI C cod e informatio ni s specificall ylisted , th e siz e standar d t o b e use di s $3. 5 millio ni nsales . Thi s standar d wa s use d fo r approximatel y2 4 companies .
IV . Characterizatio no f Smal l andLarg e Manufacturer s Eigh t financia l profile s o f affecte d companie s wer e develope d t o facilitat e compariso no f smal l an dlarg e companie s withi neac h o f th e industrie s (se e Figur e 5-1) . Thes e profile s provid e summar y dat a fo r characteristic s suc ha s numbe r o f employees , sales , assets , ne t incom e an d retur no nasset s fo r fue l an dadditiv e manufacturer s usin g bot hth e F/F Aprogra msmal l busines s definitio n an d th e SB Adefinitions . T o clearl yillustrat e th e difference s betwee nsmal l an d larg e manufacturers , statistic s o nth e minimum , 6 6P.7 3

EP A Definitio n SB A Definitio n Additive

Manufacturer* 

# s s L L Fue l

Manufacturer* 

# s s L L EP

A Definitio n SB A Definitio n maximum , average , an d quartil e value s ar e presente d fo r eac hdat a characteristic . Th e minimu m

an d maximu mvalue s provid e a rang e o f th e dispersio no f value s i n eac hset . Th e averag e provide s a simpl e (non

weighted ) averag e value . Quartile s ar e a usefu l measur e o f distributio no f dat a set s tha t ar e highl yskewed , o r thos e i nwhic hothe r measure s (e.g. , average ) woul db e warpe db y extrem e values . Th e profiles , provide di nExhibit s 5- 2 throug h5

- 5 , wer e discusse d i nChapte r 2 i nregar dt o th e F/F Asmal l busines s definition , an d ar e show nagai nher e fo r compariso npurposes . A summar yo f th e profile s i s provide dbelo wfo r eac hindustry . Figur e 5-1: Diagram of 8profiles

A . Character!atle a o f Additiv e Manufacturer s Bot hth e F/F Aprogra man d SB Adefinition s approximatel y6 5 percen t o f th e 45 8 additiv e manufacturer s a s small . Th e F/F Aprogra m definitio nclassifie s 29 5 companie s a s smal l whil e th e SB Adefinitio nclassifie s 30 0 companie s a s small . Whil e th e tw o definition s resul t i nnearl yth e sam e numbe r o f companie s bein g classifie d a s small , th e definition s d o no t encompas s th e sam e companie s (i.e. , F/F A smal l additiv e manufacturer s ar e no t jus t a subse t o f SB Asmal l additiv e manufacturer s — se e Figur e 5-2 ) . Thi s result s i nsligh t difference s i nth e impac t o nsmal l companie s dependin g upo nth e definitio nused . classif y

Figur e 5-2: Numberof additive companies classified by EPA and SBA definitions'as small. i s base do nsale s Acompariso no f th e F/F Aan d SB Aprofile s o f smal l additiv e manufacturer s reveal s tha t th e F/F Aprogra m

definitio ndoe s a bette r jo b o f groupin g companie s wit hsimila r sale s an d employmen t characteristics . Thi s i s becaus e th e F/F Aprogra msmal l busines s definitio n wherea s SB Adefinition s ar e primaril ybase do nnumbe r o f employees , regardles s o f sales . A s a result , SB Adefinition s ar e ap t t o classif yrelativel ylarg e companie s a s small . Fo r example , a compan ywit h$2 0 billio ni nsale s an d1,50 0 employee s i s considere d "small " b yth e SB Adefinition . Thi s leve l o f sales , however , i s muc hhighe r tha nth e sale s o f som e o f th e companie s classifie da s larg e unde r eithe r definition . Fo r bot hth e F/F AProgra man dSB Asmal l busines s definitions , th e profile s sho wtha t larg e additiv e companie s ar e considerabl y large r tha nsmal l additiv e companies . Unde r bot hdefinitions , th e 6 7P.7 4

media nsmal l additiv e compan yha s fewe r tha n2 0 employees , unde r $ 5 millio ni nsales , an d a nRO Ao f nearl y5 percent . I ncomparison , th e media nlarg e additiv e manufacture r ha s abou t 3,60 0 employees , nearl y$10 0 millio ni nsales , an d a nRO Agreate r tha n6 percent . Media nsales , assets , an d ne t incom e ar e approximatel y200 , 400 , an d 50 0 time s highe r fo r larg e tha nfo r smal l companies , respectively . Thus , t o hav e th e registratio nregulatio nimpac t smal l an d larg e additiv e companie s similarly , smal l company complianc e cost s mus t b e o nth e orde r o f 20 0 t o 40 0 time s les s tha n larg e companycosts . I naddition , larg e additiv e manufacturer s ten d t o hav e highe r ROA s tha nsmal l additiv e manufacturers . B y eithe r definitio no f small , th e media nsmal l compan yRO Ai s 4. 9 percen t whil e th e media nlarg e companyRO Ai s 6 percent . Thus , smal l additiv e companie s ten dt o b e financiall yles s robus t tha n larg e additiv e companie s and , therefore , wil l hav e relativel yles s capita l availabl e t o the mt o sustai nfinancia l shocks .
B . Characteristic s o f Fue l Manufacturer s Ther e ar e 63 8 fue l manufacturer s include di nthi s analysi s A s show ni nExhibit s 5- 4 an d5-5 , th e F/FA progra man d SB Adefinition s resul t i nver y differen t number s o f fue l manufacturer s bein g classifie d a s small . Th e F/F Aprogra m definitio nclassifie s 4 6 5 fue l manufacturer s (o r 7 3 percent ) a s small , whil e SB Adefinition s classif yonl y38 1 (o r 6 0 percent ) a s smal l (se e Figur e 5-3 ) . Simila r t o th e result s foun d fo r additiv e manufacturers , th e F/F Aprogra mdefinitio nmor e tightl ygroup s fue l manufacturer s wit hsimila r financia l characteristic s tha nd o SB A definitions . Fo r example , fue l manufacturer s classifie d b yth e SB Aa s smal l ha dsale s rangin g fro m$49,00 0 t o $5. 5 billion , whil e F/F Asmal l compan ysale s rang e fro m$49,00 0 t o approximatel y$5 0 million . Media nsale s fo r companie s classifie d b yth e SB Aa s larg e ar e $4 9 million , $ 1 millio nlesstha nth e minimu m F/F Alarg e compan ysales . Figure 5-3: Numberof fuel companies classified by EPA and SBA definitions as small.

Th e profile s sho wtha t larg e fue l companie s ar e considerabl y large r tha nsmal l fue l companies . Th e profil e o f th e media nsmal l fue l manufacture r i s simila r unde r bot hdefinitions : nearl y2 0 employees , $ 9 millio ni nsales , an d RO Ao f nearl y3. 6 percent . I n comparison , statistic s o nlarg e fue l manufacturer s diffe r considerabl yunde r th e tw o definitions . Usin g th e F/F Aprogra m smal l busines s definition , th e media nfue l manufacture r classifie d a s larg e ha s nearl y45 0 employees , $26 9 millio ni nsales , an dRO A o f 4. 9 percent . Th e media nlarg e fue l manufacture r unde r th e SB A 6 8P.7 5

definitio nha s abou t 20 0 employees , $4 9 millio ni nsales , an d4. 2 percen t ROA . Th e magnitud e o f differenc e i nsiz e betwee nsmal l an d larg e fue l companie s i s muc hsmalle r i ncompariso nt o th e differenc e i nsiz e betwee nsmal l an d larg e additiv e companies . Specifically , media nsales , assets , an d ne t incom e o f larg e fue l manufacturer s ar e onl y30-4 0 time s highe r tha nfo r smal l fue l manufacturer s unde r th e F/F Aprogra mdefinition , an d onl y5- 6 time s highe r unde r th e SB Adefinition . Thus , impact s woul d b e simila r t o smal l an d larg e fue l companie s unde r th e SB Adefinition , bu t t o hav e th e registratio nregulation s impact s smal l an d larg e fue l companie s similarl yunde r th e F/F Adefinition , smal l compan y complianc e cost s mus t b e 30-4 0 time s les s tha nlarg e compan ycosts . Acompariso no f ROA' s show s tha t smal l fue l companie s hav e simila r RO Aprofile s unde r bot hdefinitions . Accordin g t o eithe r definition , th e media nRO Afo r smal l fue l manufacturer s i s 3. 6 percent , an d th e 75t hpercentil e RO Ai s 4 percent . F/F Alarg e companies , however , hav e somewha t highe r ROA s tha nSB Alarg e companies . Thi s migh t reflec t that , fo r companie s i nthi s analysis , RO Atend s t o increas e wit hsize , an d F/F Alarg e companie s ten d t o hav e highe r sale s tha nSB Alarg e companies . Finally , unde r th e F/F Aprogra mdefinition , th e fue l manufacture r profile s sugges t that , base d o nROA , smal l fue l companie s ten d t o b e les s health y financiall ytha nlarg e fue l companies . C . Genera l Conclusion s I nsum , a revie wo f th e profile s show s tha t larg e additiv e manufacturer s ten d t o b e bigge r i nterm s o f sale s an d numbe r o f employee s tha nlarg e fue l manufacturers , wherea s smal l additiv e manufacturer s ten d t o b e smalle r tha nsmal l fue l manufacturers . I n general , additiv e manufacturer s ten d t o hav e highe r ROA s tha nfue l manufacturers , suggestin g tha t the yma yb e mor e capabl e o f withstandin g th e impact s o f complianc e costs . Th e IC F stud ysupport s th e adoptio no f th e F/F Aprogram' s definition s o f smal l fo r thi s program . I ncompariso nt o th e SBA , th e F/F Aprogra mdefinitio nclassifie s a large r numbe r o f manufacturer s a s small , an d mor e closel ygroup s companie s wit h simila r financia l characteristics . Adoptio no f SBA' s smal l busines s definition s woul d resul t i nfewe r numbe r o f companie s qualifyin g fo r specia l smal l busines s provision s and , consequently , large r cost s pe r firm . Consequently , th e remainde r o f thi s analysi s focuse s o nimpact s t o smal l companie s usin g th e F/F Asmal l busines s definition .

V . Estimatio no f Impact s o nSmal l Manufacturer s I naccordanc e wit hEP Aguidance , th e followin g thre e method s wer e use d t o determin e i f smal l businesse s ar e disproportionatel y impacte d b yth e F/F ARegistratio nProgram : 6 9P.7 6

1 ) Th e rati o o f complianc e cos t t o sale s wa s compare dfo r smal l an d larg e companie s t o determin e i f th e rati o wa s a t leas t te npercen t highe r fo r smal l companies . 2 ) Th e impac t o f complianc e cost s o na company' s RO Awa s calculate d t o se e i f complianc e cost s represen t a significan t portio no f capita l availabl e t o smal l businesses . 3 ) Th e chang e i na company' s RO Adirectl yattributabl e t o th e F/F Aregistratio nprogra mwa s examine dt o determin e th e leve l o f financia l distres s cause d bythi s change . Th e result s o f th e analysi s ar e discusse dbelow . Sinc e testin g requirement s wil l impos e one-tim e cost s that , fo r purpose s o f thi s analysis , ar e assume d t o b e incurre dove r a thre e yea r period , th e complianc e cos t use d i s th e tota l complianc e cos t divide d b ythree . However , i f extension s ar e grante do r complianc e cost s ar e finance d ove r a nextende dperiod , annua l complianc e cost s wil l actuall yb e les s tha nassume dhere . 

### A . Comparin g th « Rati o o f Compliance . Coa t t o gala s Exhibi t 5- 6 provide s a summar yo f complianc e cost s fo r smal l an d larg e companie s withi neac ho f th e industries . Amon g al l additiv e manufacturers , complianc e cost s ar e estimate dt o rang e fro m$40 0 t o nearl y$ 4 million , wit hth e media nadditiv e manufacture r expecte d t o incu r cost s o f abou t $900 . Thirty-on e percen t o f registere d additiv e manufacturer s ar e estimate dt o incu r cost s abov e $10,000 . I ncomparison , fue l manufacture r cost s rang e fro m$40 0 t o abou t $1. 7 million , wit hth e media nfue l manufacture r havin g complianc e cost s o f $500 , an d1 6 percen t incurrin g cost s abov e $10,000 . Exhibi t 5- 7 show s complianc e cost s a s a percen t o f sale s fo r smal l an d larg e companie s an dals o show s th e rati o o f thes e result s betwee nsmal l an d larg e companies . Ahig h"small/large " rati o indicate s tha t th e smal l compan yi s affecte dsignificantl ymor e tha nth e comparabl e larg e company . Arati o o f "1 " indicate s tha t complianc e cost s a s a percen t o f sale s i s th e sam e fo r smal l an d larg e companies . A s larg e companie s experienc e a relativel y greate r complianc e cos t burden , th e ratio s i nth e tabl e woul d b e les s tha n"1" , an d woul d i nfac t approac h"0" . Th e minimum/maximu m value s i nth e tabl e illustrat e th e exten t t o whic hth e cost-to
sale s rati o o f th e mos t lightly/heavil yimpacte dsmal l company compare s t o th e cost-to-sale s rati o o f th e mos t lightly/heavil y impacte d larg e company . Fo r additiv e manufacturers , th e analysi s reveal s tha t complianc e cost s ten d t o b e substantiall yhighe r i ncompariso nt o sale s fo r smal l companie s tha nfo r larg e companies . Th e typica l smal l additiv e company' s cost-to-sale s rati o i s abou t 3 1 time s 7 0P.7 7

greate r tha nfo r a typica l larg e manufacturer . I n comparison , typica l smal l an d larg e fue l manufacturer s hav e a 1: 1 rati o meanin g that , relativ e t o sales , smal l companie s fac e complianc e cost s tha t ar e th e same a s larg e companies . I nsum , fo r bot hfue l an d additiv e manufacturers , som e smal l companie s hav e complianc e cos t t o sale s ratio s a t leas t te n percen t highe r tha nth e correspondin g rati o fo r th e respectiv e media nlarg e companies . Nevertheless , i t i s importan t t o not e tha t complianc e cos t t o sale s ratio s ten d t o b e ver ysmal l fo r thi s regulation . A s a result , a te n percen t differenc e betwee nsmal l an d larg e company ratio s ha s littl e statistica l significance . Acompan yma ypa ya relativel yhig hcomplianc e cos t compare dwit hanothe r fir mi n th e industr y(e.g. , $5,00 0 versu s $400 ) withou t havin g muc himpac t o n it s financia l health . I n thi s case , althoug hcomplianc e cos t t o sale s ratio s ma yb e a usefu l too l i n comparin g impact s o f smal l an d larg e manufacturers , a compariso no f th e magnitud e o f change s i n RO Ai s a mor e direc t indicato r o f th e impact s o f complianc e cost s o na company' s financia l health . Th e discussio ni n th e nex t sectio nfocuse s o n usin g chang e i n RO Aa s a measur e o f complianc e cos t impacts . B . Analysi s o f Chang e i n RO A RO Ai s a genera l indicato r o f financia l healt han d i s frequentl yuse d fo r determinin g th e borrowin g potentia l o f a compan yan d fo r comparin g th e financia l healt ho f companie s withi n a nindustry . Analysi s o f th e chang e i n a company' s RO Aca n indicat e whethe r complianc e cost s represen t a significan t portio n o f th e capita l availabl e t o a smal l busines s and , whethe r complianc e cost s ar e likel yt o resul t i n financia l hardshi p including , ultimately , closur e o f tha t company . Standar d RO Athresholds , wer e use d t o measur e th e financia l healt ho f eac hregistere dcompany(se e Figur e 5-4) . I n general , a compan ywit ha n RO Ales s tha n2. 5 percen t i s already considere d t o b e i n financia l distress . Pollutio ncontro l cost s coul d hasten , bu t ar e no t th e caus e of , closure . A t thi s level , a companyma y experienc e difficultie s obtainin g additiona l loan s o r othe r capital . A n RO A les s tha n- 4 percen t indicate s tha t a companyi s i n sever e financia l distress . Finally , a n RO Ales s tha n-3 0 percen t generall yindicate s closure . I nthi s analysis , eac hcompany' s RO Aafte r complianc e cost s (calculate d b ysubtractin g one-thir do f complianc e cost s fro m M M Closur e Figure 5-4: distress. -M % Sever e

Distres s Measur e •mk

of Z£% Financia l Financia l Distres s Heart h financial health and

7 1P.7 8

annua l ne t income ) wa s compare dt o th e company' s initia l RO At o identif ycompanie s tha t wer e likel yt o b e pushed-ove r on e o r mor e o f th e thre e RO Athresholds . Companie s havin g a nRO Ao f les s tha n 2. 5 percen t befor e complianc e cost s wer e no t identifie da s a compan ypushed

int o financia l distres s a s resul t o f th e regulation . A s show ni nExhibi t 5-8 , complianc e cost s o f th e F/F A Registratio nProgra mcoul d potentiall ycaus e 4 5 additiv e manufacturer s (1 5 percen t o f small ) an d2 5 fue l manufacturer s ( 5 percen t o f small ) t o g o int o som e leve l o f financial distress." Tw o companie s produc e bot hfuel s an dadditive s an dbot har e include d i nbot hth e additiv e an d fue l manufacture r analysi s i nth e table . Therefore , ther e ar e sixty-eigh t uniqu e F/F Acompanie s potentiall ypushe d int o som e leve l o f financia l distress , al l o f whic har e classifie d a s smal l (i.e. , hav e sale s < $5 0 million ) . O f companie s potentiall ypushe dint o financia l distress , ove r hal f (abou t 5 9 percent ) woul d b e pushe d int o th e firs t leve l o f distres s (i.e. , -4%£ROA<2.5% ) an d les s tha none-fift h(1 2 companies ) woul d potentiall yb e pushe d int o closure . Characteristic s particula r t o companie s pushe d int o closur e ar e examine di nth e nex t section . I t i s importan t t o note , however , tha t thes e companie s hav e severa l course s o f actio navailabl e t o them , othe r tha nclosure , i n respons e t o th e impact s o f th e regulation . Thes e option s ar e discusse d i nsectio nVI I o f thi s chapter . C . Examinatio no f Manufacturer s Potentiall y Pushe dInt o Closur e Twelv e manufacturer s (nin e additive , on e fuel , an dtw o tha t produc e both ) appea r t o b e i ndange r o f closur e a s a resul t o f complianc e cost s o f th e F/F ARegistratio nProgram . Al l o f th e companie s ar e classifie d a s smal l unde r thi s program . Exhibi t 5- 9 profile s thes e manufacturer s accordin g t o numbe r o f employees , annua l sales , complianc e costs , an dretur no nasset s (befor e an d afte r complianc e costs) . Analysi s o f thes e manufacturer s reveal s tha t al l ar e financiall yhealthy(i.e. , hav e ROA s greate r tha n 2.5% ) befor e complianc e costs . Th e averag e RO Ao f th e fourtee n companie s i s 4.2 1 percen t befor e complianc e costs , an d-134.2 5 percen t after . Thes e companie s generall yhav e fewe r tha nfiv e employee s an d les s tha n$500,00 0 i nsales . Annua l complianc e cost s ar e greate r tha nannua l sale s fo r abou t hal f o f th e companies . Th e averag e complianc e cos t o f th e fourtee ncompanie s i s $273,400 , slightl ymor e tha nth e averag e annua l sale s o f $272,593 . A nexaminatio no f th e numbe r an d type s o f product s produce dby thes e fourtee ncompanie s reveal s tha t mor e tha nhal f produc e thre e o r fewe r product s an d al l produc e a t leas t on e atypica l product . Nin e companie s produc e mor e atypica l tha nbaselin e product s (si xo f "Companie s tha t produc e bot hfuel s an dadditive s ar e liste d unde r bot ho f th e heading s i nth e table . 7 2P.7 9

whic hproduc e onl yatypica l products) , an dthre e produc e fewe r atypica l tha nbaselin e products . Companie s wit honl yatypica l product s ten d t o hav e th e lowes t adjuste dROA 2 6 (i.e. , mos t likel y t o close ) an d companie s wit hth e fewes t atypica l product s ten dt o hav e th e highes t adjuste dROA , suggestin g tha t i t i s thei r produc t mi xrathe r tha nthei r siz e tha t cause s the mt o b e mor e heavil y impacted . I t shoul d b e note dtha t thes e atypica l product s ar e onl y registere d du e t o a "grandfathering " provisio nunde r whic hthe yar e no t require d t o obtai na waive r fo r thei r "dissimilar " product . Ordinarily , product s whic har e no t "substantiall ysimilar " t o designate d certificatio nfuel s mus t sho wtha t th e produc t doe s no t adversel yaffec t th e abilit yo f a moto r vehicle' s emissio ncontro l syste mt o achiev e complianc e wit hemissio nstandard s durin g th e usefu l lif e o f th e vehicle . Sinc e thes e product s wer e no t require d t o obtai nsuc ha waiver , littl e i s know nabou t thei r health , welfare , o r emissio ncontro l syste meffects . I f thei r manufacturer' s attempte d t o registe r suc hproduct s today , th e registration s woul d b e denied .
VI . Assessin gth e Effectivenes s o f Smal l Busines s Provision s Nearl yhal f o f al l atypica l produc t manufacturers ' ar e considere d smal l fo r thi s progra m(i.e. , hav e sale s unde r $5 0 million ) an d nearl yone-thir dqualif yfo r specia l provision s fo r thei r atypica l product s (i.e. , hav e sale s unde r $1 0 million) . Th e estimate d impact s discusse dabov e wer e base do ncomplianc e cost s whic htoo k int o accoun t th e specia l provision s provide dfo r qualifyin g manufacturer s o f atypica l products . T o asses s th e effectivenes s o f thes e provisions , thi s analysi s compare s th e financia l impact s whic hth e regulation s woul dhav e o nsmal l atypica l producer s i nth e absenc e o f thes e specia l provision s t o th e impact s identifie d above . Th e result s sho wtha t th e specia l provision s fo r manufacturer s o f atypica l product s lowe r complianc e cost s fo r 6 0 smal l atypica l companie s b ya tota l o f $20,458,00 0 (a s compare d wit hcost s tha t woul dotherwis e occur) . Withou t thes e provisions , a nadditiona l 1 5 otherwis e healthycompanie s woul d potentiall yb e pushe d int o closure . 

## v n . Mitigatin gclrmimntancaf rtha tRaflus

aAdverseimpact

s Th e foregoin g analysi s o f financia l effect s o ncompanie s projecte d t o experienc e significan t reduction s i nthei r rate s o f retur na s a resul t o f thei r complianc e cost s represent s a "wors t case " picture . Mitigatin g circumstance s exis t t o reduc e th e impact s o f th e regulations .

26 RO Aafte r complianc e costs . 7 3P.8 0

First , thi s analysi s ha s assume d n o change s i nprice s o r sales . I nman ycases , however , regulator ycost s ca nb e partiall y o r full ypasse d o nt o customers . Fo r example , du e t o th e hig h dependenc e o nmoto r fue l i nth e U.S . an dth e limite dnumbe r o f substitutes , th e moto r fue l industr yha s a relativel ylo wpric e elasticit yo f deman d (roughl y-0. 2 6 i nth e shor t ru nrisin g t o - 0.8 6 i nth e lon g run). 2 7 Thi s suggest s tha t companie s ca nincreas e price s t o recove r a larg e portio no f th e cost s relate dt o th e registratio nprogra mwithou t appreciabl ylosin g sales . Fo r fue l additives , ther e als o appear s t o b e a goo ddea l o f flexibilit y regardin g th e passthroug ho f cost s t o prices . Th e segment s o f th e fue l additiv e industr yappea r t o b e oligopolisti c i nnature , s o smalle r manufacturer s ca ngenerall yincreas e price s onl yt o th e leve l se t byth e larg e manufacturers . However , a t leas t a percentag e o f registratio ncost s ar e recoverabl e b ysmalle r firms , thu s reducin g th e impact s note di nth e precedin g sections . Moreover , th e complianc e cost s represen t a nincreas e i nth e fixe d cost s o f production , rathe r tha ni nvariabl e costs . Thus , th e complianc e cost s pe r produc t uni t dro p wit hever yadditiona l uni t sold , a s th e fixe d complianc e cost s ar e sprea dove r mor e an dmor e units . Thi s mean s tha t competin g manufacturer s tha t ar e abl e t o maintai nsale s level s o f thei r product s wil l greatl yreduc e thei r uni t testin g costs . Second , th e requiremen t tha t anyne wmanufacturer s enterin g th e marke t compensat e th e existin g manufacturer s fo r thei r rightfu l shar e o f th e grou p testin g cost s confer s a certai ndegre e o f protectio no nth e existin g manufacturer s i ntha t anypotentia l ne w competitor s woul d fac e simila r costs . I naddition , t o th e exten t tha t a produc t (particularl yfue l additives ) ha s unusua l characteristics , it s manufacture r ofte nha s a marke t "niche" , resultin g i na rang e ove r whic hi t ca nrais e price s an d no t los e sales . Thi s i s a nimportan t consideration , give ntha t man yo f th e larges t complianc e cost s ar e face dbyfirm s tha t ar e payin g a substantia l percentag e o f th e tota l testin g cost s o f tha t testin g grou p becaus e o f thei r uniqu e produc t mix . Thus , thei r unusua l qualitie s ca nallo wa pric e increas e tha t offset s (o r help s t o offset ) th e impac t o f th e testin g costs . Anothe r respons e ope nt o producer s facin g substantia l testin g cost s i s t o dro p th e produc t o r product s wit hth e greates t cost s and/o r smalles t profi t potential . Thi s respons e i s likel yt o hav e som e residua l impact s o nprofitability . Thi s residua l impact , however , i s likel yt o b e relativel ysmall , a s th e fir mi s firs t droppin g thos e product s wit hrelativel yhig hcost s an dsmal l sales/profi t potential . Ultimatel ythi s respons e woul dreduc e th e ""Analyzin g Gasolin e Demand s Elasticitie s ( ASurvey)" , Caro l Dah l & Thoma s Sterner , Energ yEconomics . Jul y1991 . 7 4P.8 1

numbe r o f competin g product s an d mak e i t easie r fo r remainin g firm s t o increas e marke t share . Finally , a manufacture r face d wit ha hig hcomplianc e cos t becaus e th e produc t ha s unusua l characteristic s (i.e. , th e produc t i s atypical ) ha s th e optio no f reformulatin g th e produc t t o a "baseline " standard , whic hwoul d enabl e th e produc t t o b e groupe d wit hothe r simila r products , reducin g complianc e cost s t o mor e nomina l amounts . VIII.Limitation s o f th e Analysi s Severa l limitation s t o thi s smal l busines s impac t analysi s ar e identified . First , o f necessity , i t assesse s th e impac t o f th e start-u p progra monly . I t account s neithe r fo r th e impact s o f testin g futur e uniqu e product s no r ho wtestin g cost s fro mth e start-u p progra mwil l b e allocate d amon g additiona l manufacturer s tha t introduc e product s belongin g t o existin g produc t groups . Second , i t assume s tha t a compan yi s willin g t o us e profit s an d resource s fro mth e entir e compan yt o cove r complianc e cost s o f thi s regulation . Ho wrealisti c thi s assumptio ni s depends , i npart , o n ho wintegra l fue l an d additiv e product s ar e t o th e cor e busines s o f th e company . IX . Conclusion s Thi s smal l busines s impac t analysi s show s tha t th e F/F A Registratio nProgra mwil l no t hav e significan t financia l impact s o n th e majorit yo f smal l an d larg e companie s i nth e regulate d community . However , th e analysi s show s that , unles s cost s ca nb e passe d throug hi npric e increases , 1 0 percen t o f al l registere d additiv e manufacturer s (1 5 percen t o f small additiv e manufacturers ) an d 3 percen t o f al l registere d fue l manufacturer s ( 4 percen t o f small fue l manufacturers ) ma yg o int o som e leve l o f financia l distres s a s a resul t o f th e regulations . I ntotal , abou t 6 percen t o f al l fue l an d additiv e manufacturer s combine d ma yb e pushe dint o som e leve l o f financia l distres s an d 1. 2 percen t ar e potentiall yi n dange r o f closure . Arevie wo f th e mos t heavil yimpacte d companie s suggest s tha t th e reaso nfo r thei r difficult yi nwithstandin g th e financia l impact s o f thi s regulatio ni s du e i npar t t o thei r smal l siz e (e.g. , nearl yal l hav e fewe r tha n5 employee s an d sale s belo w $500,000 , upo nwhic hnearl yan ycomplianc e cos t impac t coul db e significant ) an d th e natur e o f th e product s the yproduce . Som e o f thes e companies , however , ma yhav e marke t niche s tha t readil y permi t produc t price s t o increas e t o cove r complianc e costs , o r the yma yb e abl e t o ceas e productio no f a relativel yhigh-cos t produc t an d thu s avoi d cost s tha t woul d caus e undu e financia l hardship . However , usin g EPA' s criteri a cite d a t th e beginnin g o f thi s 7 5P.8 2

chapter , th e analysi s indicate s tha t smal l businesses , particularl y smal l additiv e manufacturers , ar e disproportionatel yimpacte d by th e program . Th e rati o o f complianc e cos t t o sale s i s a t leas t te n percen t greate r fo r th e majorit yo f smal l additiv e companie s whe n compare d t o larg e additiv e companies . Conversely , smal l fue l manufacturer s experienc e impact s simila r t o thos e o f larg e manufacturers . Finally , th e analysi s support s EPA' s definitio no f smal l busines s fo r thi s regulation . I t als o show s tha t EPA' s specia l provisio nfo r smal l atypica l manufacturer s prevent s a nadditiona l 1 5 companie s fro mpotentiall ybein g pushe dint o closure , an dsave s th e affecte d companie s roughl y2 0 millio ndollars .

7 6P.8 3

#o f SI C 109 4 122 1 131 1 138 1 138 2 138 9 154 2 171 1 201 1 202 2 202 3 204 6 204 8 206 1 208 5 208 6 209 6 232 9 233 9 243 5 243 6 261 1 265 7 267 1 267 3 267 8 281 3 281 9 282 1 282 2 282 4 283 3 283 4 284 1 284 2 284 3 284 4 285 1 286 5 286 9 287 3 287 4 287 5 287 9 289 1 289 2 289 9 291 1 295 2 299 2 Exhibi t 5- 1

S B A Definitions o f Smal l b y Si c Cod e fo

rF/F A Manufacturer s Employee s o

r Millio nof $ 50 0 50 0 50 0 50 0 $3 3 $3. 5 $17. 0 $7. 0 50 0 50 0 50 0 75 0 50 0 50 0 75 0 50 0 50 0 50 0 50 0 50 0 50 0 75 0 75 0 50 0 50 0 50 0 100 0 100 0 75 0 100 0 100 0 75 0 75 0 75 0 50 0 50 0 50 0 50 0 75 0 100 0 100 0 50 0 50 0 50 0 50 0 75 0 50 0 150 0 75 0 50 0 # of Employee s o r SI C 308 1 308 9 317 2 341 1 342 9 343 2 343 3 346 9 347 9 349 9 351 9 352 3 352 4 353 1 355 6 356 1 356 9 359 2 359 9 369 4 371 1 371 4 371 5 372 4 379 5 379 9 386 1 422 1 422 6 461 2 461 3 495 3 495 9 501 2 501 3 501 4 501 5 507 2 508 2 508 3 508 5 512 2 515 3 515 9 516 9 517 1 517 2 519 1 519 8 521 1 Millio

nof $ 50 0 50 0 50 0 100 0 50 0 50 0 50 0 50 0 50 0 50 0 100 0 50 0 50 0 75 0 50 0 50 0 50 0 50 0 50 0 75 0 100 0 50 0 50 0 100 0 100 0 50 0 50 0 $12 3 $12 3 150 0 150 0 $6. 0 $3 3 10 0 100 10 0 10 0 10 0 10 0 10 0 10 0 10 0 10 0 10 0 10 0 100 10 0 100 10 0 $3 3



### 7 7 # o f Employee s o r SI CMillion

s of $ 525 1 526 1 539 9 541 1 553 1 554 1 557 1 569 9 591 2 594 1 598 3 598 4 622 1 653 1 738 9 753 8 754 9 769 9 873 4 Unknow n $3 3

$3 3 $3 3 $13 3 $3 3 $3 3 $3. 5 $3. 5 $3 3 $3 3 $6. 0 $3 3 $3 3 $10. 0 $3 3 $3 3 $3 3 $3 3 $3 3 $3 3

•P.8 4



### Exhibi t5- 2 Profile s of

Additiv eManufacturer s F/FA Progra mDefinitio n
Summar yStatistic s

Smal l Large TOTA L

Employee * Sale s Assets Ne tIncome RO A

Employees Sale s Assets Ne tIncome RO A Minimum

0 $50,00 0 $12,063 $492 4.08 %

1 0 $50,000,00 0 $23,436,583 $137737 9 5.42 * Numbe r

29 5 16 3 458 Percent

64% 36% 100 %

LowerQuartll e Media n UpperQuartll e Maximum SmallAdditiveManufacturer * 5 $900,00 0 $296,68 8 $13,628 4.59 % 16

$4,282,99 5 $1,671,04 2 $81,82 6 4.90 % 5 2

$12,116,18 5 $5,288,94 9 $270,264 5.11 % 1,11 0

$49,000,00 0 $24,873,52 0 $1,345,97 0 5.41 % LargeAdditiveManufacturers 722 $176,414,56 6 $102,845,13 3 $5,865,45 6 5.70 % 3,548

$972,795,13 3 $681,922,81 4 $41,710,68 6 6.12 % 1433 5

$3,405,500,00 0 $2,733,105,65 1 $175,985,07 5 6.44 % 332,70 0

$115,068,000,00 0 $135.043393,62 0 $10,047,009,08 1 7.44 % Average

5 1 $9,688,73 8 $4,47636 7 $234,29 0 4.86 %

14,764 $4,974,456,42 0 $4,905,81436 1 $344352,61 1 6.12 %



### 7 *P.8 5



### Exhibi t5- 3 Profile s of

Additiv eManufacturer s SB A Definitio n
Summar yStatistic s

Smal l Larg e TOTA L Numbe r 30 0 15 8 45 8 Percent

65 % 35 % 100 %

Minimu m Lowe rQuartll e Media n Uppo rQuartll e Maximu m Averag e Smal l Additiv e Manufacturer s Employee s Sales Assets Ne tIncom e RO A 0 $50,00 0 $12,06 3 $49 2 4.08 % 5

$950,00 0 $315,00 5 $1430 1 4.60 % 1 9

$4,923,21 7 $1,949,92 6 $96,02 9 4.92 % 6 0

$19,400,00 0 $8,910,13 6 $464,17 8 5.21 % 130 0

$20,090,000,00 0 $19329,978,71 3 $1352,458,49 9

6.93 % 6 6

$91,674,72 9 $79,016,06 7 $5,298,10 8 4.92 % Larg e Additiv e Manufacturer s Employee s Sales Assets Ne tIncom e RO A 1

$4,000,00 0 $1349,11 1 $75,64 3 4.88 % 75 3

$139,76330 0 $79,450,76 7 $4,488,07 4 5.65 % 3,60 0

$999,672,63 3 $702,821,79 2 $43,036,86 1 6.12 % 1430 0

$3,405300.00 0 $2,733,103,65 1 $175,985,07 5 6.44 % 332,70 0

$115,068,000,00 0 $135,063393,62 0 $10,047,009,08 1

7.44 % 15,10 4

$4,975,876,70 2 $4,889318,19 3 $343324,20 8 6.03 %



## VP.8 6



### Exhibi t5- 4 Profile s of

Fue lManufacturer s F/FA Progra mDefinitio n
Summar yStatistic s

Smal l Larg e TOTA L Numbe r 465 17 3 638 Percen t 73 % 27% 100%

Minimum LowerQuartll e Median UpperQuartll e Maximum Average SmallPu dManufacturers Employees Sale s Assets Ne tIncome RO A 0

$49,00 0 $13,16 4 $29 2 2.21 % 8

$3,000,00 0 $882,30 3 $28,54 4 3.25 % 22

$9,000,00 0 $2,711,66 4 $97,057 337 % 5 1

$22,000,00 0 $6,782,32 1 $263,63 9 3.90 % 29,43 7

$49,66533 4 $15337,04 1 $650,73 7 5.19 % 154

$14,707,89 4 $4335,22 4 $178,35 4 334 % LargeFue

lManufacturers Employees Sale s Assets NetIncome RO A 0

$50,000,00 0 $15,643,98 3 $655,62 1 4.19 % 21 5

$85,917,702 $27,204,04 0 $1,198,32 1 4.40 % 44 5

$268,822,00 0 $87,279,65 8 $4,269,96 0 4.89 % 3,025

$1,775,820,00 0 $628,866,622 $36,751,77 2 5.85 % 67,30 0

$62,359,000,00 0 $68309,097,98 8 $4,969,802,31 8 7.86 % 4,31 5

$2,653,133,84 8 $1,688,06136 3 $116,891,85 2 5.16 %



### 17 0P.8 7



### Exhibit5- 5 Profiles o f FuelManufacturers SB A Definition Summar yStatistics

Smal l Larg e TOTA L Numbe r 38 1 257 638 Percen t 60% 40% 100%

Minimum Lower

Quartlle Median UpperQuartll e Maxlnmm Average

SmallFue

lManufacturers Employees Sale s Assets Ne tIncome RO A 0

$49,00 0 $13,164 $29 2 2.22 % 7

$2,300,00 0 $672,49 0 $21,23 1 3.17% 1

8 $8,995,33 2 $2,710,22 6 $97,00 1 338 % 45

$27,25639 7 $8,478,54 4 $349,40 0 4.00 % 1,300

$5300,000,00 0 $1,908,317,65 7 $123,24330 4 &46% 5 0

$64,794,32 8 $21,395,29 5 $1,141,177 3.62 % LargeFue

lManufacturers Employees Sale s Assets Ne tIncome RO A 0

$200,00 0 $55,41 8 $1,397 232 % 8 0

$18,618,75 0 $5,700,19 1 $218,13 5 3.83 % 20 3

$49,000,00 0 $15,324,29 1 $641,03 0 4.18 % 1,000

$451,834,00 0 $148,384,46 8 $7,61439 0 5.13 % 67,30 0

$62,359,000,00 0 $68309,097,98 8 $4,969,802,31 8 735 % 3,09 8

$1,710,114,27 0 $1,108378,74 9 $77,021,61 9 432 %



### 81P.8 8



### Exhibit5- 6 Summar yo f ComplianceCost

s perManufacturer Typ eof Manufacture r Minimum Additive Manufacturers Small$40 0 Large$40 0 Tota l Fuel Manufacturers Small Larg e Total $40 0 $40 0 $40 0 $40 0 Median

$50 0 $5,02 9 $91 5 $50 0 $10,98 8 $50 0 Maximu m

$1,207,89 1 $3,717,29 6 $3,7173 6 $500,90 0 $1,672,70 0 $1,672,70 0 % withcosts

> $10,00 0

25 % 43 % 31 %

3 % 53 % 16 %



# tzP.8 9



### Exhibi t5- 7 Compariso nof

Smal lan dLarg eCompan y Complianc eCos ttoSale s Ratios *

Minimu m Additiv eManufacturer s Small Large Small/Larg e 0.00027 %

0.000001 % 26 1 Fue lManufacturer s Small Larg e Small/Larg e 0.000268 %

0.000001 % 24 6 Lowe r

Quartll e

0.00152 % 0.00008 % 1 9

0.000740 % 0.000562 %

1 Media n

0.01213 % 0.00039 % 3 1

0.001709 % 0.003216 %

1 Uppe r Quartll e

0.11905 % 0.00363 % 3 3

0.006177 % 0.006169 %

1 Maximu m

82.5454 % 0.28265 % 29 2

64.217948 % 0.320947 % 20 0 'Three-yearaverag

ecompliancecos ttosales ; allfigures intabl ear erounded. ''"Th emaximu m3-yea raverag ecompliancecos ttosales fo rlarg ecompanies was 1 4times largertha nth e maximu m3-yea raverag ecompliancecosttosales fo rsmallcompanies .

»P.9 0



### Exhibi t5- 8 Estimate dImpact s onRO A

Tjp eo f Manufacture r "Financia lDistress " (-4%=<ROA<2.5% ) Additive Manufacturers Small2 2 Larg e0 Fuel Manufacturers Small2 6 Larg e0 "Sever eFinancia l Dbireu " (30%=<ROA< -

4%)

1 1 0

4 0 "Closure " (ROA<-30% )

12* * 0

3* * 0 Nasabe ro rcompanie s pashe dIntoioa edegre e

o f distres s
45 0

25 * 0 '"Eigh tfue lmanufacturer

s ha da nRO A of les s tha n2.5 % befor

ecompliancecosts wer

e incorporated, an

dar ethu s notincludedinth

enumbe rof companies pushed

int ofinancia ldistress . **Includes twocompanies producin gbot hfuels an dadditive s



## MP.9 1



### Exhibit5- 9 Summar yProfileo

f Manufacturers PotentiallyPushedintoClosure

Manufacturer' s Produc t

Mix * Total 1 1 6 1 4 4 1 3 3 7 1 8 3 Atypica lBaselin e

1 0 1 0 42 1 0 40 40 1 0 21 21 25 3 1 5 1 2 AVERAGE 4. 3 22. 2 # o f Employee s

6

1 4 4 4 3 2 4 4 0 4 2

3 Annua l

Sale s $110,00 0 $166,09 6 $260,00 0 $240,00 0 $310,00 0 $340,00 0 $85,00 0 $430,00 0 $300,00 0 $340,00 0 $410,00 0 $280,00 0

$272,59 3 Complianc e

Cos t $272,40 0 $272,40 0 $500,90 0 $272,40 0 $386,70 1 $386,70 1 $114,40 0 $272,60 0 $228,60 0 $229,00 0 $230,10 0 $114,60 0

$273,40 0 RO A

4.21 % 4.29 % 2.58 % 4.35 % 4.40 % 4.41 % 4.17 % 4.46 % 4.39 % 4.41 % 4.45 % 4.38 %

4.21 % Adjuste d

RO A

-310.00 % -194.75 % -227.84 % -128.03 % -137.13 % -123.34 % -171.42 % -64.97 % -82.37 % -71.24 % -57.33 % -42.57 %

-134.25 % •Th efirstcolum nindicate s totalnumbe ro f products ,thesecon dcolum ni s numbe ro f atypical products , an dthethirdcolum ni s numbe ro f baselin eproducts .



# tsP.9 2

Chapte r 6 Perspective : fflHTfiT.T.rYf Soeiata l B«anaxTlta Thi s analysi s ha s bee nbase do n1,07 6 differen t companie s registerin g a tota l o f 4,19 8 product s i nth e gasolin e an ddiese l fue l families . O f thes e producers , nearl y6 0 percen t ar e fue l manufacturer s an d abou t 4 0 percen t ar e additiv e manufacturers . Th e majorit yo f thei r product s ar e i nth e gasolin e fue l famil y(7 8 percent) , whil e abou t 2 2 percen t ar e diese l products . Manufacturer s o f leade d gasolin e product s wer e exclude dfro mthi s analysis . Th e estimate dcost s o f complianc e wit hstandar d requirement s fo r thes e producer s rang e fro m$40 0 t o $3. 7 million , wit habou t 7 8 percen t havin g cost s $10,00 0 o r less . Totalin g th e cost s t o eac hmanufacture r yield s a nestimate dannua l cos t t o industr yo f $2 2 millio nfo r thre e years . Thus , th e regulation s ar e no t expecte d t o resul t i na "significan t regulator yaction" , a s define d unde r Executiv e Orde r 12 8 66 . Th e componen t cost s presente d i nthi s analysi s wer e generall y base d o nth e result s o f a surve yo f th e applicabl e testin g industry . Thes e cost s wer e the naccumulate dfo r variou s group s an d reallocate d t o individua l product s an dmanufacturer s base do n reasonabl e assumption s an d judgement s regardin g th e expecte dus e o f cost-sharin g provision s an d th e expecte davailabilit yo f existin g chemica l an d biologica l tes t data . Th e majo r assumption s o nwhic h thi s analysi s wa s base d whic hcoul d hav e a nimpac t o nth e projecte d complianc e cost s include : 1 ) expecte dparticipatio ni nth e groupin g system , 2 ) th e numbe r o f groups , 3 ) th e numbe r o f product s expecte d t o b e enrolle d i neac hgroup , 4 ) th e manne r i nwhic hcost s ar e assigned , an d 5 ) th e expecte d availabilit yo f existin g tes t data . Th e sensitivit yo f th e cost s t o thes e assumption s i s examine d below . First , i t i s possibl e tha t som e manufacturer s ma ychoos e no t t o tak e advantag e o f groupin g opportunities . I f on e ou t o f ever y 1 0 producer s (i.e. , 10 7 producers ) chos e t o conduc t test s independentl yrathe r tha nparticipatin g i ngrou p cost-sharin g provisions , an d i f eac hwa s registerin g a gasolin e baselin e produc t (whic hi s estimate d t o hav e th e highes t grou p complianc e cost , $797,000) , the nth e tota l progra mcos t woul dincreas e fro m$2 2 millio nt o $5 1 millio nannually . I t woul dtak e a t leas t on e ou t o f ever ythre e suc hproducer s t o conduc t test s independentl ybefor e th e annua l cost s woul d excee d $10 0 million . I f on e produce r o f eac hgrou p chos e t o conduc t test s independently , th e industr ycos t woul d b e abou t $4 4 millio nannually . I t woul dtak e 3 t o 4 producer s o f eac hgrou p conductin g test s independentl yt o rais e industr ycost s beyon d $10 0 millio nannually . Hence , eve ni f som e producer s choos e no t t o participat e i nth e groupin g system , cost s ar e expecte d t o remai nbelo w$10 0 millio nannually . 8 6P.9 3

Second , th e tota l cost s ar e sensitiv e t o th e numbe r o f group s establishe d fo r th e program . Fo r example , complianc e cost s woul d b e highe r i f ne wtype s o f atypica l o r non-baselin e product s entere d th e marke t o r i f product s i nfamilie s no t currentl ydesignate dfo r registratio nwer e introduced . Fo r example , a s discusse di nChapte r 3 , EP Aestimate s tha t standar d testin g o f th e representativ e fro m al l o f th e baselin e group(s ) o f th e alternativ e fue l familie s woul d ad d a tota l o f abou t thre e millio ndollar s t o th e cost s o f th e program . Furthermore , th e curren t numbe r o f group s ma yb e eithe r highe r o r lowe r tha nestimate d i nthi s analysis . Th e overal l effec t o f a nincreas e i nth e numbe r o f group s woul db e quantitativel ysimila r t o th e effec t o f producer s choosin g t o conduc t test s independently . Conversely , industr ycost s woul db e lowe r i f th e numbe r o f group s i s les s tha nassume di nthi s analysis . Unlik e th e effec t o f th e numbe r o f groups , however , th e numbe r o f product s pe r s e doe s no t necessaril yimpac t tota l progra m costs . Manufacturer s o f ne wproduct s whic har e i nth e gasolin e o r diese l fue l familie s wil l ofte nb e abl e t o rel yo npreviousl y submitte d dat a fo r registratio no f thei r ne wproducts . I nsuc h cases , industr ycost s woul dno t ris e becaus e thes e manufacturer s woul d reimburs e manufacturer s whic hhav e alread yregistere d product s simila r i nnatur e t o th e ne wproduct . Next , th e numbe r o f product s pe r grou p an dth e metho db ywhic h cost s ar e divide d coul d mos t certainl yaffec t cost s t o a give n manufacturer , bu t woul d no t increas e tota l cost s t o th e industry . I nfact , industr ycost s coul dactuall yb e les s becaus e ther e ma yb e fewe r products , henc e fewe r groups , onc e inactiv e product s ar e no t re-registered . Finally , sinc e th e assumption s use dregardin g availabilit yo f existin g tes t dat a wer e conservativ e assumptions , th e estimate d cost s o f th e progra mcoul dactuall yb e less . Thi s analysi s include s onl ycost s associate dwit hTie r 1 an d Tie r 2 testing , conservativel yaverage dove r 3 years . Annua l cost s wil l b e lowe r fo r producer s choosin g t o financ e cost s ove r mor e tha nthre e years , an d fo r producer s bein g grante dtim e extension s fo r compliance . I nth e ensuin g year s o f th e program , som e o f th e registere d product s ar e likel yt o b e subjec t t o Tie r 3 testing . Assumin g te nproduct s o r group s ar e require dt o conduc t Tie r 3 testin g (a t a nestimate d cos t o f $ 3 millio neach ) i nth e thre e yea r perio d followin g th e initia l complianc e period , th e tota l cos t woul d b e $3 0 million , o r $1 0 millio npe r year . Th e requirement s o f thi s progra mar e designe ds o a s no t t o presen t a nunnecessar yburde no nth e regulate dindustry . Th e three-tiere d structur e o f th e testin g progra mprovide s a mean s by whic hadditiona l testin g i s require donl yi f warrante db yth e result s o f th e previou s tier , thu s keepin g testin g burde nt o a minimu m

whil e satisfyin g th e requirement s o f th e statute . I n addition , allowance s fo r adequat e existin g healt heffect s dat a mitigat e testin g requirements , an dth e groupin g syste mpermit s 8 7P.9 4

cost s t o b e share d amon g producer s an dhelp s t o avoi dduplicatio n o f effort . Specia l provision s ar e als o provide dfo r smal l businesses , marketer s o f relabele d additives , an dmanufacturer s o f aeroso l additives . Whil e th e progra m i s designe d t o minimiz e th e burde no nthos e require d t o comply , i t als o ha s a numbe r o f societa l benefits . First , i t wil l provid e a nexcellen t ai r toxic s inventor yo n pollutant s relate d t o th e us e o f moto r fuel s an dfue l additives , an d wil l als o provid e a ninvaluabl e sourc e o f toxicologi c dat a o n th e emission s o f thes e products . I t wil l als o assis t EP Ai n evaluatin g th e relativ e advers e ai r pollutio neffect s o f variou s kind s o f fuel s an d additive s an di ndeterminin g need s fo r relate d regulator yaction s i nth e future . Fo r instance , informatio ni s t o b e submitte d t o EP Aregardin g th e carcinogenicit yo f a fue l o r additiv e product . O nth e basi s o f thi s o r othe r availabl e information , th e Administrato r may , byregulation , contro l o r prohibi t th e manufactur e o r sal e o f toxi c fuel s o r fue l additive s fo r us e i nmoto r vehicles . Alternatively , manufacturer s ma y voluntaril yreformulat e o r withdra wproduct s whic har e show nt o hav e unacceptabl e healt hrisks . Incidence s o f cance r o r othe r advers e healt heffect s ma yb e mitigate dbythes e events . I n1995 , th e numbe r o f cance r incidence s cause db ymoto r vehicl e pollutant s i s projecte d t o b e abou t 350. 2 8 Currently , eac hcance r incidenc e i s estimate d t o hav e a nadvers e impac t t o societ yrangin g fro m$1. 6 millio nt o $8. 0 millio nwit ha mea nvalu e o f $4. 8 million. 2 9 Thus , th e societa l benefit s woul d outweig hth e cost s associate dwit hth e progra mi f jus t 9 t o 4 2 cance r incidence s wer e avoide d(o r abou t 1 4 cance r incidence s whe nusin g th e mea nvalu e o f a statistica l lif e equa l t o $4. 8 million) , o r approximatel y2 t o 1 2 percen t o f vehicle-relate d cance r incidence s projecte dt o occu r i n1995 . Th e avoidanc e o f othe r healt heffect s evaluate dunde r thi s progra m wil l provid e additiona l socia l an dfinancia l benefits . Thes e benefit s ar e difficul t t o quantif ywit hanyaccuracy . Nevertheless , i t i s reasonabl e t o believ e that , a s a resul t o f action s take nb yEP Aan d industr ybase d o ninformatio ngenerate db ythi s program , th e saving s associate d wit hth e avoidanc e o f cance r an dothe r advers e healt heffect s wil l mor e tha noffse t th e associate dprogra mcosts .

""Moto r Vehicle-Relate d Ai r Toxic s Study, " U.S . Environmenta l Protectio nAgency , Offic e o f Mobil e Sources , EP A 420-R-93-005 , April , 199 3 availabl e i nAi r docke t A-91-19 . ""Revie wo f Existin g Valu e o f Lif e Estimates : Valuatio n Document, " Memorandu mfro mBo bUnsworth , Ji mNeumann , an dW . Eri c Browne , Industria l Economic s Incorporated , th e Ji mDeMocker , Offic e o f Polic yAnalysi s an dReview , U.S . Environmenta l Protectio nAgency , Novembe r 6 , 1992 . 8 8P.9 5



## Appendi xA Detaile d Progra mCost sTIE R 1 TES TCOST S

A

. Literatur e Searc h Cost s Baseline : Contracto rcos t($/hr ) 6 5 Estimate d hour s 30 0 Tota l Contracto rCos t($ ) 1950 0 Cos to fdatabas e sv . ($/hr ) 2 0 Estimate d hour s 7 5 Tota l databas e sv . cos t($ ) 150 0 Tota l Lit

. Searc h Cos t($ ) 2100 0 Non-Baseline/Atypical : Contracto rcos t($/hr ) 6 5 Estimate d hour s 10 0 Tota l Contracto rCos t($ ) 650 0 Cos to fdatabas e sv . ($/hr ) 2 0 Estimate d hour s 2 5 Tota l databas e sv . cos t($ ) 50 0 Tota l Lit

. Searc h Cos t($ ) 700 0

B

. Vehicle/Engin e Acquisitio n Cos t 1

. Mid-Siz e LD V($ ) Nonatypical

Product: Acquisitio n 1500 0 Salvag e Valu e fo rNonatypica l F/FA($ ) 0 Incrementa l veh

. acq . cos tfo rnonatypica l 1500 0 Atypical Product: Acquisitio n 1500 0 Salvag e Valu e fo ratypica l F/F A($ ) 0 Incrementa l veh

. acq . cos tfo ratypica l 1500 0
2

. Heav yHD E ($ ) Nonatypical

Product: Acquisitio n 1860 0 Salvag e Valu e fo rNonatypica l F/FA($ ) 0 Incrementa l veh

. acq . cos tfo rnonatypica l 1860 0 Atypical Product: Acquisitio n 1860 0 Salvag e Valu e fo ratypica l F/FA($ ) 0 Incrementa l veh

. acq . cos tfo ratypica l 1860 0C

. Mileag e Accumulatio n Cost s

1

. Light-Dut y(Maint./fue l cost s included ) Nonatypical

Product: Cost/mil e Numbe ro fmile s LD Vmileag e accum . cos tfo rnonatypica l Atypical Product: Cost/mil e Numbe ro fmile s LD Vmileag e accum . cos tfo ratypica l
2

. Heavy-Dut y(Maint./fue l cost s included ) Nonatypical

Product: Cost/mil e Numbe ro fmile s HD E mileag e accum . cos tfo rnonatypica l Atypical Product: Cost/mil e Numbe ro fmile s HD E mileag e accum . cos tfo ratypica l 0. 8 400 0 320 0
0. 8 3000 0 2400 0

2. 2 625 0 1375 0
2. 2 8700 0 19140 0D

. Emissio n Generation/Characterizatio n Cost s Combustio n 1a

. Light-Dut yVehicl e (Chassi s Dyno ) - FTP , catalyze d Assum e on e modifie d FT P necessaryfo rgen./coll

. o fal l 3 phase s Assum e sufficien temission s ar e generate d fro m on e FT P t o characteriz e al l o fth e following : Modifie d FT P Em

. rat e o fRegulate d Emissions-Vapo rPhas e H C speciation-Vapo rPhas e Aldehyde/keton e speciation-Vapo rPhas e Analysi s o fReg

. Em

. fo rP M phas e PA H speciatio n fo rP M phas e NPA H (total ) fo rP M phas e PA H speciatio n fo rS Vphas e NPA H (total ) fo rS Vphas e Subtota l GenVChar

. Emission s 3 xfo rvariabilit y Tota l Cos tfo rRV P Measuremen t Tota l LD V(FTP ) emissio n gen. / char , cost s (nonatypical) : Incrementa l Cos tfo rAtypica l Product s Detectio n &Samplin g Cos t$300/time , 5 time s Identify/Measur e Atypica l El

. an d Em

. Product s (X3 ) Tota l Incrementa l Cos tfo rLD V(FTP ) Atypica l GenVCha r Incrementa l cos tfo rNonBaselin e Product s Alcohol/Ethe rspeciation-Vapo rPhas e X 3 fo rvariabilit y Tota l Incrementa l cos tfo rLD V(FTP ) NonBaselin e 110 0 90 0 100 0 60 0 30 0 80 0 80 0 80 0 80 0 710 0 3 2130 0 5 0 2135 0
150 0 720 0 870 0

50 0 3 150 01b

. Light-Dut yVehicl e (Chassi s Dyno ) - FTP , Non-Catalyze d

FT P 110 0 Em

. rat e o fRegulate d Emissions-Vapo rPhas e 90 0 H C speciation-Vapo rPhas e 100 0 Aldehyde/keton e speciation-Vapo rPhas e 60 0 Analysi s o fReg

. Em

. fo rP M phas e 30 0 PA H speciatio n fo rP M phas e 80 0 NPA H (total ) fo rP M phas e 80 0 PA H speciatio n fo rS Vphas e 80 0 NPA H (total ) fo rS Vphas e 80 0 Subtota l 710 0 Gen./Char

. Emission s 3 xfo rvariabilit y3 Tota l LD V(SS ) emissio n gen. / char , cost s (nonatypical) : 2130 0

Incrementa l Cos tfo rAtypica l Product s Identify/Measur e Atypica l El

. an d Em

. Product s (X3 ) 720 0 Tota l Incrementa l Cos tfo rLD V(SS ) Atypica l GenVChar

. 720 0 Incrementa l cos tfo rNonBaselin e Product s Alcohol/Ethe rspeciation-Vapo rPhas e 50 0 X 3 fo rvariabilit y3 Tota l Incrementa l cos tfo rLD V(SS ) NonBaselin e 150 02

. HeavyHD E (Engin e Dyno ) - FTP/Non-catalyze d

Assum e on e modifie d FT P necessaryfo rge n ./coll

. o fal l 3 phase s Assum e sufficien temission s ar e generate d fro m on e FT P t o characteriz e al l o fth e following : Modifie d FT P 240 0 Em

. rat e o fRegulate d Emissions-Vapo rPhas e 100 0 H C speciation-Vapo rPhas e 66 7 Aldehyde/keton e speciation-Vapo rPhas e 40 0 Analysi s o fReg

. Em

. fo rP M phas e 30 0 PA H speciatio n fo rP M phas e 120 0 NPA H (total ) fo rP M phas e 120 0 PA H speciatio n fo rS Vphas e 120 0 NPA H (total) fo rS Vphas e 120 0 Subtota l 956 7 GenVChar

. Emission s 3 xfo rvariabilit y3 Tota l 2870 0 Engin e Set-u p fe e 500 0 Cos tfo rRV P Measuremen t0 Tota l HD E (FTP ) emissio n gen. / char , cost s (nonatypical ) 3370 0 Incrementa l Cos tfo rAtypica l Product s Detection/Sampling , $300/time , 7 time s 210 0 Identify/Measur e Atypica l El

. an d Em

. Product s (x3 ) 960 0 Tota l Incrementa l Cos tfo rHD E (FTP ) Atypica l Gen./Cha i 1170 0 Incrementa l cos tfo rNonBaselin e Product s Alcohol/Ethe rspeciation-Vapo rPhas e 33 3 X 3 fo rvariabilit y3 Tota l Incrementa l cos tfo rLD V(SS ) NonBaselin e 100 0Evaporativ e Light-Dut yGeneratio n Chambe rMetho d Assum e on e generation/characterizatio n necessary Generation/Collectio n Cos t($200/hr , 1 hour ) 20 0 H C speciatio n 33 3 Measuremen to fTota l Hydrocarbon s 22 5 Subtota l 75 8 GenVChar

. Emission s 3 xfo rvariabilit y3 Tota l 227 5 Set-u p cost/Hardwar e 400 0 Tota l LD VEvap

. Chambe rgen. / char , cost s (nonatypical ) 627 5 Incrementa l Cos tfo rLD VEvap

. Atypica l Gen/Char

. 80 0 Incrementa l Cos tfo rLD VEvap

. Non-B LGen/Char

. Alcohol/Ethe rspeciatio n 16 7 X 3 fo rvariabilit y3 Tota l Incrementa l Cos tfo rLD VEvap

. NB LGen/Cha r50 0

h oTIE R 2 TES TCOST S

A

. Emissio n Generatio n Cost s Assum e generatio n require d fo r6hr/day , 5day/wk , 13week s Cost s ar e tota l combine d cos to fgeneratio n (includin g maint

. Combustio n 1

. Light-Dut y 1 a . Assum e us e o fchassi s dyno , FT P Cos tpe rda y Numbe ro fday s Tota l LD VComb

. Emissio n Gen

. Cost s fo rBio

. Testin g Incrementa l cos to fsamplin g em . fo rS M (Ames )
2

. Heavy-Dut y Assum e us e o fengin e dyno , FT P Cos tpe rda y Numbe ro fday s Tota l HD E Emissio n Gen

. Cost s fo rBio

. Testin g Incrementa l cos to fsamplin g em . fo rS M (Ames ) Evaporativ e - Light-Dut yOnl y Assum e us e o fa n evaporativ e emissio n generatio n chambe r Set-up/Hardwar e Cos tpe rda y Numbe ro fday s Tota l Tota l L D Evap

. Emissio n Gen

. Cost s fo rBio

. Testin g B

. Combine d Healt h Tes tCost s 1

. Salmonell aMutagenicit y( 2 required ) 2

. 9 0 da ySubchroni cToxicit yTes t(5dy/wk , 34 0 rats ) Incrementa l test s t o b e adde d t o 9 0 subchroni ctes t 3

. Neurotoxicity-GFA P 4

. Neurotoxicity-Neurohistolog y 5

. Repro/Teratolog y 6

. Micronucleu s 7

. Siste rChromati d Exchang e Tota l Healt h Effect s Tes tCost s an d fuel) , dilutio n an d deliver y

110 0 6 5 7150 0 50 0

90 0 6 5 5850 0 80 0

0 90 0 6 5 5850 0 5850 0
940 0 17700 0 360 0 4200 0 3800 0 290 0 720 0 28010 0ADMINISTRATIVE/REPORTIN G COST S Cost s pe rmanufacturer/pe rproduc t A

. Notificatio n 42 6 Cost s Pe rGrou p A

. Tie r1 944 9 B

. Tie r2 462 6 C

. Grou p Administratio n 1226 0 Tota l Pe rGrou p Cos t2633 5

-oCOST S PE R TIE R

TIE R 1 COST S Light-Dut y Literatur e Searc h Acquistio n cos t(x 2 t o includ e back-up ) Mileag e Accumulatio n (x 2 fo rback-up ) Combustio n Em

. GenVChar

. - Ca t Combustio n Em

. Gen7Char

. - Non-Ca t Evaporativ e Em

. GeniChar. - SHE D Evaporativ e Em

. Gen./Char. - Chambe r Tota l Heavy-Dut y Literatur e Searc h Acquistio n cos t(x 2 t o includ e back-up ) Mileag e Acc(x 2 fo rback-u p excp tatyp ) Combustio n Em

. GenVChar

. -Non-Cataly z Combustio n Em

. GenVChar

. - Ca t Tota l

TIE R 2 COST S Light-Dut y On e Combustio n Emissio n Gen

. Neede d Incrementa l Samplin g fo rS M Biologica l Tes tCos - Subtota l On e Evap

. Generation s Neede d Biologica l Tes tCost s Subtota l TOTA L Heavy-Dut y On e Combustio n Emissio n Gen

. Neede d Incrementa l Samplin g fo rS M Biologica l Tes tCost s TOTA L Baselin e Non-Baselin e Produc t
2100 0 3000 0 640 0 2135 0 2130 0 0 627 5 10632 5

2100 0 3720 0 2750 0 3370 0 0 11940 0

BL/NB L Produc t 7150 0 50 0 28010 0 35210 0 5850 0 27070 0 32920 0 68130 0

5850 0 80 0 28010 0 33940 0 Produc t

700 0 3000 0 640 0 2285 0 2280 0 0 677 5 9582 5

700 0 3720 0 2750 0 3470 0 0 10640 0

Atypica l Produc t 7150 0 50 0 28010 0 35210 0 5850 0 27070 0 32920 0 68130 0

5850 0 80 0 28010 0 33940 0 Atypica l

Produc t
700 0 3000 0 4800 0 3005 0 2850 0 0 707 5 15062 5

700 0 1860 0 19140 0 4540 0 0 26240 0

—CATEGOR YCOST S FO R BUSINESSE S NO TSUBJEC TT O SMAL L BUSINES S PROVISION S

Category : Gasolin e - Baselin e Assumption s fo rtesting : Combustion : Em

. Char , require d fo rPAH , NPA H

Al l Tie r2 Biologica l Testin g Necessar y Evaporative : Al l Tie r1 an d Tie r2 Testin g Necessar y Tie r1 Cost s Literatur e Searc h Acquisitio n Mileag e Accumulatio n PAH , NPA H Combustio n Em

. Analysi s (Cat. ) Comb

. Em

. Gen/Characterizatio n (Non-cat. ) Evap

. Em

. GenVChar.-Chambe r Tota l Tie r1 Cost s Tie r2 Cost s (Combine d Test s - Combustio n an d Evap. ) Adminstrative/Reportin g Cost s (Tier s 1 an d 2 ) Tota l Gasolin e - Baselin e Categor yCos t

Category : Gasolin e - Non-Baselin e Assumption s fo rtesting : Combustion : Em

. Char , require d fo rPAH , NPA H fo rcat
.

Al l Tie r2 Biologica l Testin g Necessar y Evaporative : Al l Tie r1 an d Tie r2 Testin g Necessar y Tie r1 Cost s Literatur e Searc h Acquisitio n Cos t Mileag e Accumulatio n PAH , NPA H Combustio n Em

. Analysi s (Cat. ) Comb

. Em

. Gen/Characterizatio n (Non-cat. ) Evaporativ e Em

. GenVChar.-Chambe r Tota l Tie r1 Cost s Tie r2 Cost s (Combine d Test s - Combustio n an d Evap. ) Adminstrative/Reportin g Cost s (Tier s 1 an d 2 ) Tota l Gasolin e - Non-Baselin e Categor yCos t 2100 0 3000 0 640 0 1295 0 1290 0 627 5 8952 5 68130 0 2633 5 79716 0

' emiss. , an d fo ral l requirement s fo rNon-ca temiss

.

700 0 3000 0 640 0 1295 0 2280 0 677 5 8592 5 68130 0 2633 5 79356 0Category : Gasolin e - Atypica l

Assumption s fo rtesting : Combustion : Al l Tie r1 an d Tie r2 Testin g Necessar y Evaporative : Non e Tie r1 Cost s Literatur e Searc h Acquisitio n Cos t Mileag e Accumulatio n Combustio n Em

. GenVChar

. (Cat. ) Combustio n Em

. Gen./Char

. (Non-cat. ) Tota l Tie r1 Cost s Tie r2 Cost s (Combine d Test s - Combustio n Only ) Adminstrative/Reportin g Cost s (Tier s 1 an d 2 ) Tota l Gasolin e Atypica l Categor yCos t 700 0 3000 0 4800 0 3005 0 2850 0 14355 0 35210 0 2633 5 52198 5

Category : Diese l - Baselin e Assumption s fo rtesting : Combustion : Em

. Char , require d fo rH C

Assum e Neurotoxicity/Teratolog ytestin g necessar y Evaporative : Non e Tie r1 Cost s Literatur e Searc h Acquisitio n Mileag e Accumulatio n H C Combustio n Em

. Analysi s Tota l Tie r1 Cost s Tie r2 Cost s Adminstrative/Reportin g Cost s (Tier s 1 an d 2 ) Tota l Diese l - Baselin e Categor yCos t 2100 0 3720 0 2750 0 1300 0 9870 0
31910 0 2633 5 44413 5Category : Diese l - Non-Baselin e Assumption s fo rtesting : Combustion : Al l Tie r1 an d Tie r2 Testin g Necessary Evaporative : Non e Tie r1 Cost s Literatur e Searc h Acquisitio n Cos t Mileag e Accumulatio n Combustio n Em

. GenVChar

. Tota l Tie r1 Cost s Tie r2 Cost s (Combine d Test s - Combustio n Only ) Adminstrative/Reportin g Cost s (Tiers 1 an d 2 ) Total Diese l - Non-Baselin e CategoryCos t 700 0 3720 0 2750 0 3470 0 10640 0 33940 0 2633 5 47213 5

Category : Diese l - Atypica l Assumption s fo rtesting : Combustion : Al l Tie r1 an d Tie r2 Testin g Necessary Evaporative : Non e Tie r1 Cost s Literatur e Searc h Acquisitio n Cos t Mileag e Accumulatio n Combustio n Em

. GenVChar

. - FT P Tota l Tie r1 Cost s Tie r2 Cost s (Combine d Test s - Combustio n Only ) Adminstrative/Reportin g Cost s (Tiers 1 an d 2 ) Total Diese l - Atypica l Categor yCos t 700 0 1860 0 19140 0 4540 0 26240 0 33940 0 2633 5 62813 5

0 0CATEGOR YCOST S FO R BUSINESSE S SUBJEC TT O SMAL L BUSINES S PROVISION S Baseline/Non-Baselin e Categorie s (No tfue l specific ) Assumptions : Require d t o submi tnotificatio n informatio n Administrative/Managemen tCost s Cost/Hou r4 9 No

. o fHour s 3 Tota l 14 7 Professional/Technica l Cost s Cost/Hou r3 3 No

. o fHour s 8 Tota l 26 4 Clerica l Cost s Cost/Hou r1 5 No

. o fHour s I Tota l 1 5 Tota l Estimate d Registratio n Cos tfo rBL/NB L S B 42 6

C OGasolin e Atypica l Categor y Assumptions : Require d t o complet e Tie r1 requirement s Tie r1 Cost s Literatur e Searc h Acquisitio n Cos t Mileag e Accumulatio n Combustio n Em

. GenVChar

. (Cat. ) Combustio n Em

. GenVChar

. (Non-cat. ) Tota l Tie r1 Cost s 

### 700 0 1500 0 2400 0 3005 0 2850 0 10455 0
Tota l Administrative/Reportin g Cost s Tota l U L Ga s - Atypica l Cat . Cos t(n o Evap ) fo rS B 

### 944 9 11399 9 Diese l Atypica l Categor y Assumptions : Require d t o complet e Tie r1 requirement s Tie r1 Cost s Literatur e Searc h Acquisitio n Cos t Mileag e Accumulatio n * Combustio n Em

. GenVChar

. Tota l Tie r1 Cost s Tota l Administrative/Reportin g Cost s Tota l Diese l Atypica l Ca tCos tfo rS B 

### 700 0 1860 0 19140 0 4540 0 26240 0 944 9 27184 9

oP.1 1



## Appendi xB

Summar yo f Biologica l Tes t Cost sP.1 2

Tie r 2 Biologica l Tes t Cos t Dat a Th e Tie r 2 biologica l tes t cos t estimate s ar e base d o na modifie d 90-da ysubchroni c toxicit ystud ywhic hrequire s a 5-da y pe r wee k repea t inhalatio nexposur e usin g approximatel y34 0 rats . Figur e A- l i nthi s appendi xprovide s a novervie wo f thi s tes t an d a genera l outlin e o f th e exposur e timin g an d th e sequenc e o f events . Specifi c test s fo r carcinogenicity , mutagenicity , neurotoxicity , an d teratogenicity/reproductiv e effect s mak e us e o f th e sam e ra t population . Therefore , cos t estimate s fo r mos t o f th e healt heffect s test s liste d i nthi s appendi xar e incrementa l t o th e cos t o f th e subchroni c inhalatio ntoxicit yassa ydescribe d above . Tabl e A- l provide s estimate s o f th e cost s associate d wit hth e modifie d subchroni c inhalatio ntoxicit yassay . Tabl e A- 2 estimate s th e cost s associate d wit ha Fertility/Teratolog ystud ywhic hrun s concurrentl ywit hth e abov e inhalatio nassay . Tabl e A- 3 estimate s th e cost s associate d wit ha modifie d Salmonell a mutagenicit yassa y whic hi s independen t o f th e othe r assay s i nthi s scenario . Th e informatio npresente d i nthes e table s wa s derive d fro mcos t estimate s develope d fo r th e Toxi c Substance s Contro l Ac t (TSCA ) healt heffec t guideline s foun d i n4 0 CFR , par t 798 , an d wer e provide d b yth e EP AOffic e o f Pollutio nPreventio nan d Toxi c Substance s (OPPTS) 1

. Th e table s sho wth e numbe r o f hour s an d cos t o f direc t labo r wit h facilit yoverhea d added , direc t cos t o f supplies , genera l an d administrativ e fe e calculatio nfo r th e tester , an d a fee-for-profi t calculation . Thes e ar e al l component s o f th e estimate d fina l cos t calculatio nfo r th e particula r healt heffec t test . Th e cos t estimate s includ e tota l estimate d hour s pe r worker , hour s pe r task , rat e o f pa ype r worke r (adjuste d u p 10 % fro m199 0 estimate s fo r inflation) , an d compute d cos t pe r worker . Direc t cost s o f testing , overtime , supplies , contracte d labor , etc. , ar e describe d i nterm s o f unit s neede d t o complet e th e testing , cos t pe r unit , an d compute d cos t pe r item . Analytica l chemistr yi s a bes t estimat e o f "typical " sampl e verificatio nan d analysi s costs . Neurotoxicit ytestin g i s comprise d o f th e Glia l Fibrillar y Acidi c Protei n(GFAP ) assa yan d a histopathologi c examinatio no f nerv e fiber s i nth e tes t animal . Th e cos t estimat e fo r th e neurohistopatholog yportio no f Neurotoxicit ytestin g i s $42,00 0 an d i s derive d fro m"Neurotoxicity : Identifyin g an d Controllin g Poison s o f th e Nervou s System . Ne wDevelopment s i nNeuroscience. " Congres s o f th e Unite d States , Offic e o f Technolog yAssessment , 1990 , pag e 22 5 (attached) . Teratologi c effect s ar e teste d unde r th e Fertilit y Assay/Teratolog yguideline . Carcinogenicit yan d mutagenicit yar e covere d b yth e Salmonell a mutagenicit yassa y(Tabl e A-3) , th e

X 

### U.S . EPA , OPPTS , "Cos t estimate s fo r TSCATes t Guidelines" , Memorandu

mfrom Da nAxelra d t o Sher i Dunatchik , June , 1991 .P.1 3

Siste r Chromati d Exchang e (SCE ) assay , an dth e Micronucleu s (MN ) assay . Cos t estimate s fo r th e GFAP , MN , an dSC E assay s ar e summarize d below :

no . o f tes t sample s person-hours/sampl e hourl yrat e ($US ) estimate d fina l cos t ($US ) GFA P 4 0 2. 5 3 6 360 0 M N 4 0

2. 0 3 6 290 0 SC E 4 0

5. 0 3 6 720 0

### Acclimatizatio n

An d Cullin g

25 ¥+ 25o " S- 2 - 1 0 1 

## i 2 5 * 

### Figur e A-1

. Suggeste d Timin g an d Organizatio n o fTie r2 Studie s Exposur e Analysi s

Exposur e fo rSubchroni cStud y (Genera l Toxicityan d Othe rEndpoints )

. . 2 3 4 5 6 7 8 9 1 0 1 1 1 2 1 3 1 4 

### A (Exposure ' Exposur e fo rFertility/Teratolog yStudie s end s a t Gestatio n Day15 ) I Estrou s Cycl e | 1 Analyse s '

. Matin g . Termination , (w/ abov e d" ) (Gestatio n Day20 ) 5d*+ 5 9 Perfuse d fo r neuro , testis , lun g histolog y 20d"+2 0 ? Fixe d fo r genera l histolog y 

# v

5 o" + 5 9 Tissue s fo r GFAP , MN , SC E

Fetal/Uterin e Analysi s 20-2 5 pregnancie s NOTE : Thi s diagra m illustrate s testin g a ton e dosag e level , usin g 7 5 animals

. Complet e Tie r2 require s testin g a tfou r dosag e level s (high , medium , low , an d control) , requirin g aminimu m of300 animal s ( 4 x75) , plu s a n additiona l grou p o f2 0 animal s expose d atth e hig h dos e an d hel d 2 8 day s fo rstud yofrecoverypotential

. Timin g ofSalmonell a mutagenicityassa yi s independen tofthi s testin g scenario

.P.1 5

Tabl e A- 1 : ComponentCost s of90-da ySubchroni cInhalatio n Assa y Protoco l estimte : Rat , subchroni cinhalatio n assay : 1 3 weeks-5days/w k Directlabo rTotal

. Hrs

. Hrs./Tas k Wage/Hr

. Cos t($ ) Stud yDir./Ph D Tox

. Q.A

. Inspecto r Boar d Cert

. Pathologis t Slide Evaluation Supervise

Necropsy La b anima l Vet

. Clinica l Chemis t Clinica l La b Tech

. Histologis t Histolog yTech

. Snr

. Anima l Tech

. Set-up Compd. prep. Data Record Keep. Necropsy Exposure Anima l Tech

. Setup Body WtsJObserv. Necropsy Exposure Bleeding Anima l Caretake r(2 ) Room setup Bedding Change Room Maintenance Cage cleaning Feeding Washing Feeders, Clean chamber Hematologis t Biostatisticia n ReportWriter/Dat a Wor d Proces s ./Typis t Compute rCode r Subtota l 240 2 240 2 27252. 4 Overhea d 61317. 9 Hrs

. X225 % Tota l DirectLabo r88570. 3 

### 6 0 

### 15 0 6 1
2 5 5 0 3 0 

### 15 4 8 0 

### 24 1

63 5

38 9

6 0 

### 8 4 1 1 3 1 6 6 0



### 15 0 5 4 7 

### 2 5 5 0 3 0 

### 15 4 8 0 2 0 1 5 2 3 7 17 6 2 0 4 0 1 5 55 0 1 0 1 5 24 2 0 3 0 2 5 2 5 25 0 

### 6 0 

### 8 41 1 3 1 6 37.9 8

15.3 3 43.6 3

25.9 2 11.7 9 10.9 3 11.4 4 9.71 10.8 6

8.8 1

7.5 5

12.4 2 25.3 9 13. 6 10.0 8 11.6 4 2278. 8

2299. 5 2661.4 3


### 64 8 589. 5 327. 9 1761.7 6 776. 8 2617.2 6

5594.3 5

5873. 9

745. 2 203.1 2 557. 6 131.0 4 186.2 4Tabl e A-1 : Componen tCosts o f90da ySubchroni cInhalatio n Assay , cont
. Protoco l Estimate : Rat , Subchroni cinhalatio n assay:1 3 weeks-5days/wee k P.1 6

Othe rDirectCost s Overtime : Animal Technicians Rat s Fee d Beddin g Disposable s Histolog ysupplie s Clinica l path , supplie s Vet

. ophthalmologis t La b Supplie s (10 % o fSubtot

. TOTA LOthe rD.C. s TOTA LCOS T Gen' l + Admin.(22% ) SUBTOTA L FE E (20% ) Estimate d tes tcos t Analytica l chemistry EST' D FINA LCOS T #o f

Di rLabor) Unit s

15 0 34 0 10 6 205 0 30 5 1 1 2 Uni tCos t

4.4 1 9.3 5 22. 5 0.2 5 5. 5 144 0 108 0 100 0

2481 6 Cos t($ )

661. 5 317 9 238 5 512. 5 1677. 5 144 0 108 0 200 0 2725.2 4 15660.7 4 10423 1 22930.8 3 127161. 9 25432.3 7 152594. 2

177410. 2P.1 7



### Tabl e A-2 : Componen tCosts o fFertilit yAssessment/Teratolog ywithi n Subchroni c Inhalatio n Assa

y Protoco l Estimate : Direc tlabo r StudyDir./Ph D Tox

. Q.A

. Inspecto r Cert' d Pathologist Supervise

Necropsy La b anima l Vet

. Snr

. Anima l Tech

. Set-up Matings/Observation Data Record Keep. Necropsy Estrus/Cell

Eval. C-Sections Fetal Evaluation Anima l Tech

. Setup Matings/Observation Necropsy Breeding Estrus/Cell

Eval. C-Sections Fetal Evaluation Biostatisticia n Repor tWriter/Data Wor d Process ./Typist Compute rCode r Subtota l Overhead Hrs

. X225 % Tota l Direc

tLabo r Rat , Fertilit

yAssessment/Teratology : 1 3 weeks , Tota l Hrs

. 8

3 1 4 4 22 6

34 0

3 1 8 7 8 1038 Hrs/Tas k 8

3 1 4 4 1 0 62 8 7 5 2 2 0 6 7 1 5 9 0 2 0 2 8 8 0 4 0 6 7 3 1 8 7 8 1038 Wage/Hr

.

37.9 8 15.33 43.6 3 25.9 2 10.8 6

8.8 1

25.3 9 13. 6 10.0 8 11.64 5 days/wee k

Cost($) 303.8 4 475.2 3 174.52 103.6 8 2454.3 6

2995. 4

76.1 7 244. 8 70.5 6 93.1 2 6991.6 8 15731.2 8 22722.9 6P.1 8


### Tabl e A-2 : Componen tCosts o fFertilit yAssessment/Teratolog ywithi n Subchroni c Inhalatio n Assay , cont
. Protoco l Estimate : Rat , Fertilit yAssessment/Teratology : 1 3 week-5days/wee k Othe rDirec

tCosts # o fUnits Fixitive s 1 Stain s 1.5 Disposable s 6 3 La b Supplie s (10 % o

fSubtot

. Dir

. Labor

) TOTA LOthe rD.C. s TOTA LCOST Gen l + Admin.(22% ) SUBTOTA L FE E (20%) Estimate d testcost Analytica l chemistr

y Estimate d Fina l Cost Uni tCost 66 0 11 0 5. 5

1700 Cos

t($) 66 0 165 346. 5 699.1 7 1870.6 7 24593.6 3 5410. 6 30004.2 3 6000.8 5 36005.0 8

37705.0 8P.1 9

Tabl e A-3 : Componen tCost s ofSalmonell aMutagenicityAssay("Ame s Assay" ) Protoco l Estimate : Salmonell atyphimuriu m Revers e Mutatio n Assay (DirectPlat e Incorporatio n Method ) DirectLabo r Stud yDirector/PhD

. Q.A

. Inspecto r Geneticis t Plate Counting La b Technicia n Setup Agar Ovrly/Plating Repor tProc/Typin g Compute rCodin g SUBTOTA L Overhea d (225 % dir

. labor) Tota l DirectLabo r Othe rDirectCost s (ODC ) Bacteri a Plates/Medi a Disposable s La b Supplie s (0. 1 ofSUBTOTAL ) TOTA LODC' S TOTA L Gen'l/Admin

. (0.2 2 o fTOTAL) Subtota l Fe e (0. 2 o fSubtotal ) TestEstimat e Analytica l Chem

. Estimate d Fina l Cost Tota l Hrs

. # ofUnit s Hrs./Tas k Cos tpe rUni tWage/Hr

. Cost($ ) 5 3 9 2 0

3 1



### 41

1. 2

1. 2 2. 4 5

3

7 1 3 3 1



### 41

2 5

30 0 5 29.0 8 15.3 3 19.0 3 10.9 3 145. 4

45.9 9 171.2 7 218. 6
10.0 8 11.6 4 30.2 4

11.6 4 623.1 4 1402.0 7

2025.2 1

3 0 36 0 1 2 62.3 1

464.3 1 2489.5 2 547.6 9

3037.2 1 607.4 4

3644.6 5 102 0 4664.6 5Chapter 8—EconemicCansidvadovin Regulating NeurotoxicSubsume**• 22 5

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