P. 1


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# 1787 Prepped by Ollie Stewart



### Document

Number: 

# 147 ) ll-A-1 6 Docket Number: 

# A-90-3 7

Printed 11/5/2008 9:21:16

AM Sheet 147 of 149

## H-A-i U

April 24 , 199 6 Not e t o docket

A-90-3 7
rrom : Denni s Crumple

r Th e underlying documen

t i s aMarc h 2 2 199 5 draf

t B. m w Analysi s o f

draf t propose d rulemakin

g o n whi t •! Re 8 u, *°i y an

d Economi c Impac t th e provision s ^^S^SS^^ T T ^'"

AUgUS t

1995 ' *TM« Thi s draf t analysi s i s inlcude d \^th^T ^? th e NS R Refor mRemakin g Information Collectio n R^^l ^ t f '* ^ f° T

th e NS RP^a m baseline fo r th e NS R Refor

mPropose d Rulemakin

g Ic T ^ 1995 ' WWc h mtU mforme d th e



## g j 8 g E 1 1 E AP R 3 0 199 6 

### EP A AI R DOCKE

TP. 3

Draf t Economi c Assessmen

t o f th e Impact s o

f Par t C an d D Regulator

y Change s

by : Dan' l Mussatt

i Air Qualit y Managemen

t Divisio n Office o f Ai r Qualit y Plannin g an

d Standard s (MD-12 ) U.S
. Environmenta

l Protectio n Agenc

y Research Triangl e Park , NC 2771 1

March 22 , 199 5P. 4

TABL E O F CONTENT S Sectio n Pag e Lis t of Table s i v 1. 0 INTRODUCTIO N 1- 1 2. 0 DISCUSSIO N O F THE PAR T C AN D D REGULATION S 2- 1 2. 1 GENERA

L OVERVIE

W O F FEDERA

L NS R PROGRA

M 2- 1 2. 2 PAR

T C AN D D REGULATOR

Y CHANGES 2- 2 2.2. 1 Par

t D Change s 2- 3 2.2.1. 1 Change s Affectin

g Applicabilit

y 2- 3 2.2.1. 2 Change s Affectin

g Permi t Cost s 2- 6 2.2. 2 Par

t C Change s 2- 8 2.2.2. 1 Change s Affectin

g Applicabilit

y 2- 8 2.2.2. 2 Change s Affectin

g Permi t Cost s 2- 9 3. 0 INFORMATIO

N COLLECTIO

N REQUES T FOR PAR

T C AN D D CHANGE S 3- 1 4. 0 REGULATOR

Y FLEXIBILITY ANALYSI S 4- 1 4. 1 INTRODUCTIO N 4- 1 4. 2 APPROAC H 4- 2 4.2. 1 Genera

l Approach 4- 2 4.2. 2 Influenc e o

f th e Natur e o f DataSource s o

n Methodolog y 4- 3 4. 3 POPULATIO N DEFINITIO N AN D SAMPLING 4- 4 4.3. 1 Populatio n Definition an d Sampling Approach 4- 4 4.3. 2 Identificatio n o

f Small-Entity-Dominate d Industrie s Impacte d b y NS R Change s 4- 5 4.3. 4 Numbe

r o f Source s Nationwide 4- 9 4. 4 COST S O F REGULATION 4-1 0 4.4. 1 Contro l Technology Cost s 4-1 0 4.4. 2 Offse

t Cost s 4-1 1 4.4. 3 Nationwide Tota

l Cost s 4-1 7 4. 5 RESULT S AN

D DISCUSSION 4-1 7 5. 0 ADDITIONA

L FEDERA

L REQUIREMENT

S AN D SUMMAR

Y O F RELATE

D ISSUE S 5- 1 5. 1 NEED FO R REGULATOR Y ACTION 5- 1 5. 2 UNFUNDE

D MANDATE S AN

D THE EFFEC T ON STATE , LOCAL , AN D TRIBA L GOVERNMENT S 5- 1 5. 3 DEFINITIO N O F SIGNIFICAN T REGULATOR

Y ACTION 5- 2 5. 4 SUMMAR

Y O F COST S 5- 3
CH-94-4 1P. 5

5. 5 SUMMAR

Y O F BENEFIT S 5- 3 6. 0 REFERENCE S 6- 1

CH-94-4 1P. 6

LIS T O F TABLES Numbe r Page 3- 1 Responden

t Dat aan d Information Requirement s fo r Preparin g Par

t C (PSD ) Constructio n Permit s 3- 2 3- 2 3- 2 Responden

t Dat aAn d Informatio n Requirement s fo r Preparin g Part

D (Nonattainmen

t NSR) Constructio n Permit s 3- 3 3- 3 Stat

e Dat aan d Informatio n Requirement s 3-4 3- 4 Summar

y of Recordkeepin g an

d Reportin g Burde

n Estimate s to Industr

y Respondent s and Stat e an d Loca l Agencie s 3- 6 4- 1 Small-Business-Dominate d Industrie s Affecte d b y Change s to New Sourc e Review Regulation s 4- 7 4- 2 Small-Business-Dominate d Industries , Typica l Contro l Technology , an

d Cos t pe r Facilit y 4-1 2 4- 3 Dat afo

r Determinatio n of

Offse t Price s 4-1 4 4- 4 Annualize d Tota

l Cost s of Obtaining Offsets fo

r Affecte d Source s 4-1 6 4- 5 Nationa

l Cos t Projection s 4-1 8 4- 6 Regulator

y Cost s a s Percentag e o

f Averag e Entit

y Revenu e 4-2 1

CH-94-4 1P. 7

SECTIO N 1. 0 INTRODUCTIO N Th e federa l Ne w Sourc e Revie

w (NSR ) progra mi s apreconstructio n permittin g progra mwhich regulate s emission s increase s du e t o ne w sourc e growt

h an d modification s a

t existin g source s in a

n effor t to achiev e an

d maintain th e Nationa

l Ambien t Air Qualit y Standard s (NAAQS)
. Th e 199 0 Amendment s to th e Clea n Air Act mandated numerou s change s to th e federa

l NS R program . Th e mandated change s addres s NS R program s fo r area s currentl y violatin g th e NAAQ S (Nonattainmen t NS R program) a s well a s area s wher e th e NAAQ S ar e bein g me

t (Preventio n of

Significan t Deterioratio n [PSD ] program)
. Th e Ac t requirement s fo

r nonattainmen

t NS R are foun

d in par t D o f titl e I , an d th e requirement s fo

r PS D ar e foun

d in par t C of titl e I
. I n order t o addres s som

e of th e statutor

y changes , th e Environmenta l Protectio n Agency (EPA ) i s proposin g change s t o th e existin g regulation s whic h codif y th e nonattainmen

t NS R an d PS D programs . Th e regulation s bein g revise d are containe d i n part s 5 1 an

d 5 2 o f titl e 4 0 o f th e Code of

Federal Regulations (CFR) whic

h specif y requirement s fo

r th e preparation , adoption , an

d submitta l o f implementatio n plans ; an

d approva l an d promulgatio n of implementatio n plans , respectively
. Thi s repor t present s a

n economi c assessmen

t o f th e par t C an d D change s mad

e by th e 199 0 Amendments
. Whe

n EP A propose s regulations , i t

mus t mee t numerou s requirement s t

o describ e an

d quantif y variou s projecte d economi c impact s o f the propose d rule
. Thes e requirement s includ e requirement s pursuan t to th e following : Regulator y Flexibilit

y Ac t Paperwor k Reductio n Ac

t Executiv e Orde

r 1261 2 Executiv e Orde

r 1286 6 Executiv e Orde

r 1287 5 Executiv e Orde

r 1289 8 Thi s repor t assist s EP A i n satisfyin g thes e requirements
. Section 2 provide s abrie f descriptio n o

f th e NS R regulations , an

d discusse s th e change s i

n th e 199 0 Amendment s to part s C an d D
. Section 3 contain s a

n Informatio n Collectio n Reques t (ICR ) an d supportin g documentation , whic

h estimat e th e burde

n o f th e regulator

y change s on industr

y an d o n Stat e an d loca l ai r pollutio n contro l agencies
. Thi s IC R wil l aid EP A i n satisfying it s Paperwor

k Reductio n Act

requirements
. Section 4 contain s a n initia l regulator y flexibility analysi s (IRFA ) which wil l provid e EP A wit h information necessar

y to mee t it s Regulator

y Flexibilit

y Ac t requirements
. Section 5 contain s aqualitativ e discussio n of severa l additiona l economi c issue s which EP

A mus t conside r pursuan t to th e requirement s o

f Executiv e Order s 1286 6 an d 12875
. Finally , reference s ar e provide d in Section 6
.

CH-94-4 1P. 8

SECTION 2. 0 DISCUSSION O F TH

E PAR T C AN D D CHANGE S Som e of th e propose d change s to th e C an d D regulation s addres s statutor y change s to th e NS R preconstructio n permi t progra mmandated by th e 199 0 Amendment s t o th e Clea n Ai r Ac t (CAA)
. Thi s section provide s abrie f genera l background on th e current NS R program , an d summarize s specifi c change s mad e a s aresul t

of th e par t C an d D changes
. Emphasi s i

n thi s section i s place d o

n th e regulator

y change s expecte d to hav e significan t bearin g o n th e analyse s conducte d i

n thi s document
. 2. 1 GENERAL OVERVIE W O F FEDERAL NS RPROGRA M I n general , th e NS R progra

mregulate s increase s in amajo r source' s emission s of

ai r pollutant s subject

t o th e CAA
. Befor

e amajo r sourc e ma

y construc t

o r modif y a n emission s uni t in awa y tha t would increas e it s emission s o f an y pollutan t regulate d by th e Act , th e sourc e mus t

obtain apermi t

fo r tha t construction
. I

n order t o obtain th e permit , th e sourc e i n a n attainmen

t area s ha s to predic t

it s air qualit y impact , includin g it s impac t o n th e NAAQS
. I n addition , th e sourc e ha s to determin e an d appl y th e appropriat

e emission s contro l technolog y t o th e ne

w o r modifie d unit
. I n nonattainmen

t areas , majo

r source s ma

y hav e to obtai n emission s offset s to mak e u p fo r th e propose d emission s increas e a t th e source . No t

al l emission s increase s are subject to thes e requirements
. Smalle r ne w source s o r

modification s ma y b e exempt ; specifi c emission s level s are discusse d below
. Th e NS R progra

mi s divide d into tw o separat e elements
. Th e first

elemen t regulate s emission s increase s i

n area s tha

t are i n attainmen

t o f th e NAAQ S (or

thos e whic

h do no t hav e sufficien t dat at o b e classified a s nonattainment)
. Thi s progra mi s calle d Preventio n o

f Significan t Deterioratio n (PSD)
. Th e PS D requirement s are containe d i n par t C of titl e I of th e CAA
. Th e secon

d elemen t regulate s emission s increase s in area s tha t are i n violatio n o

f th e NAAQS
. Thi s progra

mi s calle d nonattainmen

t NSR
. Th e nonattainmen

t NS R requirement s ar e containe d in par t D o f titl e I o f th e Act
. A sourc e ca

n b e i n a n are atha t i s attainmen t fo r on e pollutant , whil e simultaneousl y nonattainmen

t fo r anothe r pollutant
. I

n thes e cases , emission s increase s a t majo r source s ma

y b e subject

to PS D requirement s if

the y increas e emission s o

f th e attainmen

t pollutants , an

d ma y als o b e subject

t o th e nonattainmen

t NS R requirement s if

the y increas e emission s o

f th e nonattainmen

t pollutants
. There ar e severa

l majo r difference s betwee

n th e nonattainmen

t NS R an d PS D programs . First , th e leve l of contro l i s mor

e stringen t fo r nonattainmen

t areas . I n general , ne w majo r source s an

d majo r modification s of

existin g majo

r source s i n thes e area s mus t

appl y th e Lowes t

Achievabl e Emission s Rat e (LAER ) of an y demonstrate d technology , wherea s i n PS D areas , the

y mus t appl y th e Best Availabl e Contro l Technolog y (BACT) , whic h give s som e consideratio n to cost . Second , ne w o r modifie d majo r source s in nonattainmen

t area s are require d t o offse

t th e propose d emission s increase s by securing emission s reduction s fro m existin g sources . Third , th e nonattainmen t NS R applicabilit

y criteri a(discussed below ) ar e mor e stringen t in nonattainmen

t areas . Othe

r mino r difference s appl

y a s well
. Th e majorit

y o f th e par t C and D change s bein g propose d apply to nonattainmen t NS R program . Regardin g applicability , tw o factor s mus t b e considere d i

n determinin g if

apropose d emission s increas e i s subject to NS R permittin g requirements
. First , th e sourc e mus t b e a
CH-94-4 1P. 9

"majo r source. " Th e leve l abov e whic h asourc e i s considere d majo r fo r NS R purpose s ("majo r sourc e cutoff

) varie s wit

h pollutan t an d attainmen

t statu s of th e area . I

f asourc e i s no t amajo r source , it s emission s increase s are no t subject to federa l majo r sourc e NS R permittin g requirement s unles s th e propose d emission s increas e itsel f i s abov e th e majo

r sourc e cutoff
. Th e ne w minor sourc e o r mino r modification ma

y b e subject

to Stat e requirement s ("mino r sourc e NSR")
. I

n additio n to existin g sources , ne w facilitie s a

t "gree n field" source s ar e considere d majo

r i f their tota l propose d emission s of

a n applicabl e pollutant

exceed th e majo r sourc e cutoff

. Th e secon d par t o f th e applicabilit

y tes t applie s to modification s a

t existin g majo

r sources . Th e potentia

l emission s increas e du e to th e modification mus t exceed certai n de minimis levels
. If

thes e level s are exceeded , th e modification will resul t in a"significan

t ne t emission s increase " an

d i s subject

to th e NS R permittin g requirements
. A s wit h th e majo

r sourc e cutoffs , thes e de minimis level s var y wit h pollutant

an d attainmen

t statu s of th e area . Whe n considerin g th e emission s change s du e to amodification , asourc e ma y als o conside

r other creditabl e increase s an

d decrease s a

t th e sourc e tha

t are contemporaneou s wit

h th e chang e bein g considered
. If th e su mo f creditabl e contemporaneou s increase s an d decrease s result s in anet

emission s increas e belo w th e significanc e level , th e modification i s exemp t fro mmajo r NS R requirements , eve

n if it s emission s considere d alon e would b e abov e thi s level
. Thi s consideratio n o f contemporaneou s increase s an d decrease s i s referre d to a s "netting. " Whe n asourc e anticipate s constructio n o r modification tha

t wil l increas e emission s by a n amoun t which would subject

i t t o NSR , i t mus t appl y fo r apreconstructio n permit
. Th e informatio n which mus t

b e presente d i

n th e applicatio n varie s fro mcas e to case , an

d i s affected b y numerou s factors , including attainmen t status , proximit

y to Clas s I areas , and others
. Th e informatio n requirement s are discussed i n detai l i n th e IC R accompanyin g thi s analysi s (Sectio n 3)
. Th e permi t applicatio n i s the

n submitted t

o th e permittin g authorit

y (PA) , which i s typically th e Stat e or loca l ai r pollutio n contro l agency , bu t may , i n som e cases , b e EPA
. Th e P

A evaluate s th e applicatio n fo r completenes s an

d request s additiona

l informatio n a s needed
. Befor e th e P A ma y grant final approva

l t o construct , th e publi c mus t hav e a n opportunit

y t o commen t o n th e application
. 2. 2 PAR

T C AN D D REGULATOR Y CHANGE S Som e propose d change s to th e par t C an d D regulation s primaril y addres s th e statutor y requirement s o

f th e 199 0 Amendment s t

o th e CAA
. Mos t

of thes e Amendment s addres s nonattainmen

t areas , primaril y fo

r ozone . However , som

e provision s appl

y to attainment areas, " whil e other s addres s overal l administratio n o f th e NS R program . I n addition , EP

A i s making change s whic

h are intende d to clarif

y lon g standin g policie s an d improv e EP

A oversigh

t of NS R programs . Thi s section describe s al l majo r par t C an d D changes , wit

h a n emphasi s on change s whic h are likely t

o hav e asignifican

t effec t o n th e analyse s i n thi s document
. Th e nonattainmen t NS R change s ar e discusse d first, followed by th e PS D changes
. Within eac h discussion , th e change s are presente d in approximat e order fromth e mos t

economically significan

t to th e leas t

significant
. Th e EP A issue d transitiona

l guidanc e fo

r implementin g th e statutor

y change s prio r

to thi s propose d rulemaking
. Thi s guidance , containe d i n aSeptembe

r 3 , 199 2 EP

A
CH-94-4 1P.1 0

memorandum , provide d tha t mos t o f th e statutor

y change s becam

e effectiv e Novembe

r 15 , 1992
. Thus , man

y o f th e change s t

o th e par t C an d D rule s mad

e i n thi s rulemaking , whe

n promulgated , wil l hav e alread y bee n i n effec t fo r tw o o r mor e years . 2.2. 1 Par

tD Change s Th e par t D change s encompas s awide variet y o f progra mrevisions
. Thes e revision s ca n b e divide d int o tw o groups : change s i n par t D applicabilit

y criteria , an

d change s tha

t affec t th e natur e of th e permittin g proces s fo

r applicabl e sources . I

n general , th e economi c impact s of th e update d NS R progra

mare determine d by bot

h type s of changes
. Th e revision s to applicabilit

y increas e th e numbe

r o f source s nationwide whic

h mus t g o through th e permi t process . Broade

r applicabilit

y fo r th e par t D sources , especially fo

r par t D source s i

n ozon e nonattainmen

t area s an d th e ozon e transpor

t region , account s fo

r alarg e majorit

y of th e cumulativ e economi c impac t o f th e par t C an d D regulations
. Th e revision s i n th e permi t proces s affec

t th e burden o

f obtainin g th e actua

l permit
. (Permi t

burden to industr

y includes , fo r example , cost s o

f developing th e permi t

application , findin

g an d purchasin g offsets , applyin g contro l technology , an d cost s imposed a s aresul t of permi t processin g time
. Fo r

ai r pollutio n contro l agencies , permi t burde n include s processin g th e applicatio n an d issuin g th e permit. ) Th e majo

r par t D progra mrevision s identified i

n eac h categor y are presente d below
. 2.2.1.1 Changes Affecting AppUcabiUty lowerin g of

majo r sourc e cutoff

s an d dp minimis level s Th e mos t significan t chang e i n th e par t D regulation s i s lowerin g th e majo r sourc e cutof

f fo r certai n nonattainmen

t areas . Th e majo r sourc e cutof

f fo r emission s o f

volatil e organi c compound s (VOC ) in ozon e nonattainmen

t area s wa s previously 10

0 ton s per yea r (tpy)
. Thi s level continue s to appl y i n mos t margina l an d moderat e ozon e nonattainmen

t areas . However , fo

r seriou s nonattainmen

t areas , th e ne

w majo r sourc e cutof

f will b e 5 0 tp

y [Sec
. 182(c)] ; fo

r sever e areas , 2 5 tp

y [Sec
. 182(d)] ; and fo

r extreme areas , 1 0 tp

y [Sec
. 182(e)]
. Fo r

margina l an d moderat e ozon e nonattainmen

t areas , th e current

significanc e leve l fo

r ne t emission increase s o

f 4 0 tp y continue s t o apply
. However , fo r seriou s an

d sever e ozon e nonattainmen

t areas , th e ne

w significanc e leve l will b e 2 5 tpy . Fo r extrem e areas , there wil l b e n o significanc e level ; any emission s increas e a

t amajo r sourc e i n a n extrem e are awill b e subject

to part D NSR
. A lowerin g of

majo r sourc e cutoff

s an d de minimis level s will tak e plac e i n som e PM

I O nonattainmen

t areas . Fo r

PM-1 0 areas , th e 10

0 tp y majo r sourc e cutof

f wil l remain i

n plac e fo r moderat e PM-1 0 nonattainmen

t areas ; but fo r th e ne w seriou s PM-1 0 nonattainmen t area s th e majo

r sourc e cutof

f wil l b e lowere d to 7 0 tp

y [Sec 189(b)(3)]
. Propose d ne w significanc e level s fo

r bot h type s o f area s will b e 1 5 tpy . Also , becaus e section 189(e) of th e Ac t mandate s tha

t PM-1 0 requirement s appl

y to source s o

f PM-1 0 precursor s (S0 2 , NO x , an d VOC) , wher

e needed EP

A propose s cutoff

s fo r thes e pollutant s i

n PM-1 0 nonattainmen

t areas . Th e differen

t type s o f PM-1 0 precursor s will b e treate d separatel y (i.e. , no t

summed ) fo r NS R applicabilit

y purposes . Thes e NS R provision s will appl y unles s th e Administrator

determine s tha t precursor s do no t

contribut e significantl

y to PM-1 0 concentrations
. Th e ne w PM-1 0 precurso r majo r sourc e threshol d will b e 10 0 tp y i n moderat e areas , an

d 7 0 tp y i n seriou s

CH-94-4 1p.1 1

areas . Likewise , th e significanc e leve l fo r PM-1 0 precursor s will b e 4 0 tp y i n bot h type s o f areas . Finally , th e majo

r sourc e cutof

f an d significanc e leve l will b e lowere d fo r seriou s C O nonattainmen

t area s wher

e majo r stationar y source s contribut

e significantl

y t o th e nonattainmen

t problem
. Fo r

thes e areas , th e majo

r sourc e cutof

f an d significanc e leve l will b e lowere d t o 5 0 tp y fro

m10 0 tpy . I n other

C O nonattainmen

t area s th e 10

0 tpy level s wil l continu e t o apply [Sec 187(c)(1)]
. Thes e provision s wil l significantl y increas e th e numbe

r o f majo r source s nationwide fo

r VOC , CO , and PM-10
. Th e effec t will b e greates t

fo r VO C sources , wher

e th e cutoff

s in som e area s are muc

h lowe r tha n 10 0 tpy . Th e mandated lowerin g o f th e majo r sourc e cutoff

s an d de minimis level s fo

r majo r modification s i

n thes e area s wil l no t

immediately lea

d to additiona l require d actio n fo

r source s whic

h becom e majo r source s a s aresul t

of th e titl e I requirements
. Rather , th e requirement s wil l becom e applicabl e whe

n thes e source s propos e t

o expand , o r

whe n ne w source s propos e to build , if thes e source s increas e emission s o f on e o r mor e of th e pollutant s fo

r whic h th e are ai s nonattainment
. F.xpansio n o f

VO C requirement s t o NO A source s i n ozon e nonattainmen t area s Th e majo r sourc e cutoff

s an d significanc e level s discussed abov e fo r VOC i n nonattainmen

t area s will b e extende d to majo

r NO x sources , excep t

wher e th e Administrator

determine s tha

t th e ai r qualit y wil l b e bette r

of f without NO x control s [Sec
. 182(f)]
. Thi s chang e wil l als o significantly increas e th e numbe

r o f par t D majo r source s nationwide
. Th e effec t o f thi s provisio n i s tha

t man y ne w o r modifie d NO x source s whic

h wer e previously not

subject t o par t D permittin g provision s wil l now b e subject t o them
. Fo r

example , NO x source s which emi t les s tha n 10 0 tpy of NO x in N0 2 nonattainmen t area s (an d ar e therefor

e not majo r fo r PSD) , bu t

tha t als o happe n t o b e seriou s o r

sever e nonattainmen

t area s fo r ozone , ma

y now b e majo

r fo r part D NS R fo r their NO x emission s becaus e o

f th e lowe r majo r sourc e cutoff

s an d significanc e levels
. I n addition , source s whic

h emi t bot h VO C an d NO x i n ozon e nonattainmen

t areas , but which were previously onl y subject to par t D NS R fo

r VOC , ma y no w b e subject

to par t D NS R fo r bot h pollutants
. Introductio n o f

requirement s fo r

ozon e transpor t

regions Interstat e transpor t region s ar e area s wher e interstate transpor

t of pollutio n fro

mon e Stat

e ma y contribute to aNAAQ S violatio n i n anothe r State
. Th e 199 0 Amendment s establishe d th e first ozon e transpor

t regio n (OTR) , an

d gav e th e Administrato r

authorit y t o establis h others
. Th e first OTR , th e Northeas t

OTR , consist s o f th e 1 1 northeaster

n State s stretchin g fro

mMaryland to Maine , in additio n to th e Distric t of Columbi aConsolidate d Metropolita n Statistica

l Are a(CMSA)
. I

n moderat e an d abov e ozon e nonattainmen

t area s i n OTRs , th e otherwis e applicabl e par t D requirement s fo

r thos e nonattainmen

t area s continu e to apply
. I n addition , fo

r al l othe r area s within th e OTR , includin g portion s classifie d a s attainmen t fo r ozone , majo

r source s ar e subject

t o mos t o f th e requirement s of

moderat e ozon e nonattainmen

t areas . Th e majo

r sourc e cutoff

s fo r thes e area s (i.e. , attainmen

t area s an d margina l an d moderat e ozon e nonattainmen

t areas ) within th e OT

R ar e 5 0 tpy fo

r VO C an d 10 0 tpy fo r NO x . Th e par

t D NS R majo

r sourc e cutof

f an d significanc e leve l fo

r NO x remain unchanged i

n OTRs
. Th e VOC significanc e level fo r thes e portion s of

th e OT R wil l b e 4 0 tp

y (Sec
. 184)
.

CH-94-4 1Thi s provisio n bring s additiona l ne w source s int

o th e univers e of

par t D majo r sources . Although it s effec

t wil l probably no t

b e a s grea

t a s lowerin g majo

r sourc e VO C cutoffs , i t

wil l subject to NS R asubstantia

l numbe r o f moderatel y sized VO C source s i

n th e OT R whic h wer e previousl y no t

major
. Likewise , i t

will shif t majo r VO C source s i

n attainmen

t area s fo r ozon e int o th e part

D program , wit

h it s associate d offse

t provision s an

d mor e stringent contro l requirements
. Additiona l Mino r Provision s Affectin g Applicabilit y Th e following i s a lis to f Other par tD statutor y change s expecte d to hav e amino r effec t o n th e numbe

r of source s nationwide affecte d b y th e nonattainmen

t NS R regulations :

• Certai n modification s i n extrem e area s fo r ozon e are exempted fro

moffse t requirement s i f

th e modification s are require d by th e Act , th e applicabl e SIP , o r a n applicabl e permi t

conditio n [Sec
. 182(e)(2)]
. Also , i n thes e areas , modification s are exemp t fro mth e 1.5: 1 NS R offse

t requiremen

t i f the y obtain interna

l offset s a t arati o of a t leas t 1.3: 1 [Sec
. 182(c)(8)]
.

• Oil an

d natura l ga s strippe

r well s are exempt

fro mth e following nonattainmen t are a permi t requirements : (1 ) majo

r sourc e threshold s belo w 10 0 tpy , (2 ) increase d offse

t ratios , (3 ) requirement s fo

r NO x an d PM-1 0 precursors , an

d (4 ) specia

l modification provision s fo

r seriou s ozon e nonattainmen t area s (Sec
. 819)
. Thi s will exempt asmal l numbe r of source s i n thi s categor

y to whic h thes e provision s would otherwis e hav e applied
. If State s op t fo r on e o f th e followin

g statutor y exemption s fro

mreasonabl e furthe

r progres s (RFP ) requirement s fo r VO C emissions , th e numbe r of source s subject

t o par t D in thos e State s wil l increase , a s will th e requirement s upo n them : (1 ) th e requiremen t fo r 3 percent VO C reductio n per

yea r ca n b e waived if

th e Stat e require s source s i

n seriou s an d sever e area s to mee

t requirement s o

f th e nex t highe r classificatio n (sever

e an d extreme , respectively ) [Sec
. 182(c)(2)(B)(ii)] , an d (2 ) th e requiremen

t fo r 1 5 percent VO C reductio n ove

r si x year s ca n b e waive

d i n an y moderat e o r highe r nonattainmen

t are aif th e majo r sourc e threshol d fo

r VO C i s reduce d t

o 5 tp y an d th e source s i n th e area s mus t

mee t th e requirement s of

extreme area s [Sec 182(b)(1)]
. Th e nettin g calculatio n fo

r VOC o r NO x emission s i s mor

e stringen t fo r seriou s an

d sever e ozon e area s [Sec
. 182(c)(6)]
. Som e source s whic

h coul d hav e netted ou

t of NS R using th e ol d calculatio n will probably no t b e abl e t o ne t out unde r th e ne w calculation
. 2.2.1.2 Changes Affecting Permit Costs NP W offse t ratio s fo r ozon e area s Currently , th e locatio n of offset s fo r ne w source s mus t resul t in anet ai r qualit y benefi t in th e are aof

th e ne w source . Prio r

t o th e 199 0 Amendments , offse

t ratio s (i.e. , th e rati o ofth e reductio n o f emission s obtaine d fro

mexistin g
CH-94-4 1P.1 3

source s to th e potentia

l emission s increas e o

f th e ne w source ) wer

e require d onl

y t o b e greater tha n 1:1
. However , th e 199 0 Amendment s require d tha t minimu moffse t ratio s i n ozon e nonattainmen

t area s mus t

b e increase d a s follows : 1.1: 1 i n margina l areas , 1.15: 1 i

n moderat e areas , 1.2: 1 i

n seriou s areas , 1.3: 1 in sever e areas , an

d 1.5: 1 i n extreme area s (Sec
. 182)
. Fo r sever e and extreme areas , th e minimu mrati o ca n b e reduce d to 1.2: 1 i f

th e area' s SI P als o require s al l existin g majo

r sourc e to appl

y BAC T (instea d o f RACT) fo

r VO C [Sec
. 182(c)(10)]
. Whil e thi s provisio n wil l no t increas e th e numbe

r o f applicabl e sources , i t

increase s th e minimu mamoun t of offset s asourc e i

n a n ozon e nonattainmen

t are awill hav e to obtain
. Thi s could , in turn , increas e th e tota l cos t to source s to compl

y wit h th e par t D rules
. O

n th e othe r hand , i f State s presume thes e minimu mratio s constitut

e anet ai r qualit y benefit , som

e administrativ e burden coul d b e save d relativ e to th e case-by-cas e offse t determination
. Alternative s Analysi s Th e 199 0 Amendment s added ane w requiremen

t t o th e information tha

t th e sourc e mus t

present i n suppor t o f it s permi t application
. B y mean s of

a n analysi s o

f alternative s (sizes , sites , processes , controls , etc.) , th e sourc e mus t demonstrat

e tha t th e benefit s of

th e propose d projec t

significantl

y outweig h it s environmenta

l an d socia l cost s [Sec
. 173(a)(5)]
. Thi s provisio n wil l increas e th e burden t o source s preparin g permi t applications , a s well a s ai r pollutio n contro l agencie s reviewin g them
. N o specifi c procedures , formats , o r

extensiv e guideline s hav e bee n issued fo

r conducting thi s analysis , bu t it s scop e ma y var y widely , dependin g on th e siz e an d natur e of th e projec t

an d th e scop e of

issue s raise d b y th e public
. A partia

l lis t o f issue s tha t appropriately could b e raise d include s environmenta l justice , demand-side management , alternativ e energy sources , globa l warming , recycling , or other sourc e reductio n techniques
. Mandator y submission s o f dat at o RACT/RAfT/TAF K Clearinghous e T o assis t permi t applicant s an

d State s i n determinin g th e technologie s t o b e considere d in contro l technolog y demonstration s fo

r NS R permits , EP

A operate s a

n onlin e bulleti n boar

d syste m(BBS ) calle d th e RACT/BACT/LAE

R Clearinghouse
. Previously , State s submitted contro l technolog y determination s to th e Clearinghous e voluntarily
. However , submitta l o f thi s datafo

r par t D NS R permittin g i s no

w require d by th e Ac

t [Sec
. 173(d)]
. Thi s will ad d amino r additiona l burden to th e permittin g authorit y fo r eac h permi t processed
. Th e short-ter

mburde n t o th e P A ma y eventually b e offse

t by th e decreas e i

n th e burde

n t o asourc e undertakin g aLAE R determinatio n du e to read

y availabilit

y o f contro l technology data
. Additiona l Mino r

Provision s Affectin g Permi t Cos t Th e following i s alis t o f Othe r par t D change s which ma

y hav e amino

r effec t o n th e permi t

cos t fo r som e o r al l of th e source s and/o r agencie s affecte

d b y th e nonattainmen

t NS R regulations : Severa l change s hav e bee

n mad e affectin g th e nature of

offset s in certai n area s fo

r som e sources . Thes e include : (1 ) invalidatio n o f existin g growt

h allowance s i

n area s tha

t receive d notic e of

a n inadequat

e SIP [Sec
. 173(b)] ; (2 ) prohibitio n of ne w growt h allowances , excep t

in HUD enterpris e zone s [Sec
. 173(a)(1)(b)] ; (3 ) allowanc e fo r alternativ e mean s o

f offsets fo r facilitie s permitte d t

o test-fir e rocket engine s [Sec
.

CH-94-4 1P.1 4

173(e)] ; an d (4 ) lifting certain restriction s o n th e us e o

f shutdown s an

d curtailment s a s offset s i n ozon e nonattainmen

t areas .

• Th e Federa

l constructio n ba

n currently i

n effec t (a t 4 0 CF R 52.24 ) fo

r nonattainmen

t area s without

a n adequat e par t D SI P will b e lifted fo

r al l bu t afe w nonattainmen

t areas . Th e operationa

l effec t o f thi s provisio n wil l likely b e negligibl e becaus e th e actua l extent of thi s ba n i s ver y limite d (Sec
. 110)
. 2.2. 2 PartC Change s Th e propose d par

t C , o r PSD , regulator

y change s encompas s amuc h narrower

group o f change s ma

n th e par t D changes
. Lik

e th e par t D changes , thes e change s ca n b e divide d into tw o groups : (1 ) change s i n PS D applicabilit

y criteria , an

d (2 ) change s tha

t affec t th e natur e of th e PS D permittin g proces s fo r applicabl e sources . 2.2.2.1 Changes Affecting AppUcabiUty Source s o f

hazardou s ai r pollutant s (HAPs ) ar e exemp tfro m PS D permittin g requirement s Source s o f th e HAP s liste d unde

r section 11 2 of

th e Act a s amended i

n 199 0 are exemp t

fro m th e PS D permittin g requirement s [Sec
. 112(b)(6)]
. Normally , a t majo r source s th e PS D requirement s appl

y to significan

t increase s i

n emission s o

f an y pollutan t regulate d by th e Act , no t jus t th e criteri apollutants
. Thi s include s pollutant s subject t o existin g Ne

w Sourc e Performanc e Standard s (NSPS ) an d Nationa l Emission s Standard s fo

r Hazardou s Air Pollutant s (NESHAPS)
. Th e Ac t specificall y exempt s HAP s fro

mreview. ' However , an

y HAP s regulate d a s constituent s o r precursor s o f

mor e genera l criteri apollutant s ar e stil l b e subject to PS D fo

r th e mor e genera l pollutant
. Fo r

exampl e benzene , toluene , etc . are stil l regulate d a s VOC , and asbesto s i s stil l regulate d a s PM-10
. Thi s provisio n wil l reduc e th e numbe r o f PS D sources . Ne w significanc e leve

l fo r ozon e depletin g substance s (ODS ) Titl e V I o f th e Ac t a s amended in 199 0 list s substance s whic h are expected t

o deplet e stratospheri c ozon e (Sec
. 602)
. Becaus e thes e substance s ar e regulate d by th e Act , the y are subject

to PS D (man

y o f thes e substance s were previously subject

to PS D becaus e o

f th e Montrea

l Protocol)
. A s before , th e majo r sourc e cutof

f fo r OD S wil l b e 25 0 tpy , excep t fo r source s fro

mcategorie s liste d i

n section 169 o f th e Act , fo

r which th e cutof

f wil l b e 10

0 tpy . Th e ne

w OD S significanc e leve l fo r al l source s wil l b e 10

0 tpy . A s proposed , OD S will b e groupe d and treate d a s asingl e pollutant fo r PS D applicabilit

y purposes . I

n addition , modification s substitutin g less-poten t OD S fo r more-poten

t OD S wil l generally b e exempt fro mPS D review
. Th e effec

t o f th e change s i

n th e OD S provision s wil l b e to decreas e th e numbe r o f source s subject

to PS D requirements
. Previously , there wa s n o significanc e level fo r ODS ; al l modification s involvin g increase s i n OD S regulate d unde

r th e Montrea

l Protoco l occurrin g a

t majo r source s were subject

t o PSD ,
Th e followin g pollutant

s whic h wer e regulate d b y PS D ar e no longe r regulate

d individuall

y becaus e the

y ar e sectio n 11 2 HAPs : arsenic , asbestos , benzene , beryllium , mercury , radionuclides , an d viny l chloride . The

y ma y b e regulate

d a s a precurso r o r constituen

to f a criteria pollutant

, however , such a

s VO C o r particulat

e matter. CH-94-4 1P.1 5

n o matte r how smal l th e emission s increase
. Wit h th e ne w significanc e level , som

e source s wit h smal l increases , whic

h previously woul

d hav e bee

n subjec t t o PSD , will no

w b e exempt . Ne w majo r sourc e criteri afo

r municipa l wast e incinerator s Th e criteri aby whic h municipa

l wast e incinerator s are 10

0 tp y source s fo

r PS D applicabilit

y purpose s hav e bee

n changed fro

m incinerator s "capable of

chargin g 25 0 ton s o

f refus e per

day " t o thos e "capable of

chargin g 5 0 ton s of refus e pe r

day. " Thi s will lea

d t o amino r increas e i n th e applicabilit

y o f thes e type s o

f source s to PS D [Sec 169(1)]
. 2.2.2.2 Changes Affecting Permit Costs Mandator y submission s o f dat at o RACT/ B ACT/ I .AF.R Clearinghous e T o b e consisten t wit h par t D LAE R determinations , EP

A propose s tha

t State s mus t

submi t BAC T dat ato th e Clearinghouse
. Thi s wil l ad d amino r burde n to th e permittin g authorit y fo r eac h PS D permi t processed
. Th e short-ter

mburde n t o th e P A ma y eventuall

y b e offse t by th e decreas e i

n th e burden t o asourc e undertakin g aBAC T determinatio n du e t

o th e read y availabilit

y o f mor e comprehensiv e contro l technology data
. Updat e of Clas s I , TI

, an d II I are aboundarie s Th e 199 0 Amendment s clarifie d tha t th e Clas s I , II , an d II I area s fo

r PS D purpose s will alway s correspond wit h an y boundar y change s of

th e Federa l land s [Sees
. 162(a

) an d 164(a)]
. If

Clas s I are aboundarie s expand , the n ne w o r modifie d source s in suc

h area s will hav e to mee

t mor e stringen t PS D provision s fo

r increment s an d ai r qualit y relate d value s (AQRVs)
. However , th e numbe r of project s affecte

d by boundar y change s i s likely insignifican t compared to othe

r PS D change s describe d herein
.

CH-94-4 1P.1 6

SECTIO N 3. 0 INFORMATION COLLECTIO N REQUES T FO

RPAR T C AN D D CHANGES Fo r federa l rulemakings , th e Paperwor k Reduction Ac

t of 198 0 require s a

n assessmen

t of th e anticipate d burden of

information collectio n activitie s undertaken t o compl y wit h th e rulemaking
. Thi s assessmen t i s referre d to a s a

n information collectio n reques t (ICR)
. I n a n IC Rth e burden mus t

b e estimate d fo

r busines s enterprise s an

d fo r governmen

t entities
. Burde n estimate s mus t

b e updated periodically , an d revise d t o reflec t an y relevant regulator y changes
. Th e IC

Rshould , to th e exten

t possible , quantif

y th e tota l burden imposed b y th e regulation , in additio n to th e chang e i n burden
. Sinc e th e NS R progra

mi s along-standin g federa l program , severa

l of thes e ICR s hav e alread y bee n prepared
. However , becaus e o f th e significan

t change s t o th e NS R progra

ma s a resul t of th e par t C an d D requirement s o

f titl e I of th e Clea n Air Act a s amended i

n 1990 , th e IC Rmus t b e revise d an

d updated to reflec t

th e regulator

y changes
. Belo

w are th e highlight s o

f tha t ICR
. Th e complet

e ICR whic

h reflect s th e par

t C an d D regulator

y changes , i s include d a s Appendix B of

thi s report.[editor' s note : sinc e th e rul e wa s suspended th e IC R referre d to here would b e th e Septembe r 199 5 NS R Progra

mICR Renewal ] 

### 3. 1 RESPONDENT S AN D TH E INFORMATIO NREQUESTE D Th e SIC group s tha

t are anticipate d t

o cove r th e majorit

y of the respondent s who wil l b e affecte d b y th e par

t C an d D regulation s are stea

man d electri c plants , petroleumrefining , chemica l processing , natura

l ga s transport , pulp an

d paper manufacturing , automobil e manufacturing , an

d pharmaceutica

l manufacturing
. Table s 3- 1 an d 3- 2 summariz e th e data and informatio n requirement s whic h owner s o r

operator s o

f majo r source s must

include i n PS D an d nonattainmen

t NS R constructio n permi t

applications , respectively
. Table s 3- 1 an d 3

- 2 als o sho w th e reference s fo

r th e dataan

d information requirement s specified i n th e current CFR an d in th e 199 0 CAA
. Tabl e 3- 3 summarize s th e dataan d informatio n requirement s which Stat e an d loca l agencie s mus t

follow
. Tabl e 3 als o show s th e reference s fo r th e dataan

d informatio n requirement s specified i n th e current

CFR an d 199 0 CAA
.

CH-94-4 1P.1 7

TABL E 3-1 . RESPONDENT DAT A AN D INFORMATIO

N REQUIREMENT S FO R PREPARING PAR

T C (PSD) CONSTRUCTIO N PERMIT S Requirement s Curren t Regulatio n Referenc e 199 0 CA A Referenc e Descriptio n ofth e nature , location , desig n capacity , an d typica l operatin g schedul e Detaile d schedul e fo r

constructio n Descriptio n o f

continuou s emissio n reductio n system , emissio n estimates , an d othe r informatio n neede d t o determin e tha t

BAC T i s use d Ai r qualit y impact , meteorological , an d topographica l dat a Natur e an d exten t

of , an d ai r quality impact s o f

genera l commercial , residential , industrial , an d othe r growt h i n are ao f

sourc e Us e o f ai r qualit y model s t o demonstrat e complianc e with NAAQ S an d incremen t Informatio n necessar y t o perfor m Clas s I are aanalysi s Ai r qualit y monitorin g dat a Impairmen t

o f visibility , soils , an d vegetatio n Ai r qualit y impac t

resultin g fro m genera l commercial , residential , industrial , an d othe r

growt h associate d wit h sourc e Writte n notic e o f

propose d relocatio n fromportabl e sourc e Descriptio n ofth e location , desig n construction , an d operatio n o f building , structure , facility , o r installatio n Descriptio n o f

th e natur e an d amount s o f emission s t o b e emitte d Descriptio n ofth e ai r

qualit y dat aan d dispersio n o r

othe r ai r qualit y modelin g use d Sufficien t informatio n t o ensur e attainmen t

an d maintenanc e o f NAAQ S 40CFR51.166(n)(2)(i ) [4 0 CF R 52.21(n)(l)(i) ] 40CFR51.166(n)(2)(ii ) [4 0 CF R 52.21(n)(l)(ii) ] 40CFR51.166(n)(2)(iii ) [4 0 CF R 52.21(n)(l)(iii) ] 40CFR51.166(n)(3)(i ) [4 0 CF R 52.21(n)(2)(i) ] 40CFR51.166(n)(3)(ii ) [4 0 CF R 52.21(n)(2)(ii) ] 40CFR51.166(k)&(l ) [4 0 CF R 52.21(k)&(l) ] 40CFR51.166(k),(n)&(o ) [4 0 CF R 52.21(k)(n)&(o) ] 40CFR51.166(m)(l)(b ) [4 0 CF R 52.21(m)(l)(b) ] 40CFR51.166(o)(l ) [4 0 CF R 52.21(o)(l) ] 40CFR51.166(o)(2 ) [4 0 CF R 52.21(o)(2) ] 40CFR51.166(i)(4)(iii)(d ) [4 0 CF R 52.21(i)(4)(viii) ] 40CFR51.166(n ) [4 0 CF R 52.21(n) ] 40CFR51.166(n ) [4 0 CF R 52.21(n) ] 40CFR51.166(n ) [4 0 CF R 52/21(n) ] 40CFR51.160(c)-(e ) 110(a)(2)(A)&(C ) 110(a)(2)(A)&(C ) 165(a)(4 )
165(a)(3 ) 165(a)(6 )
165(a)(3)&(e)(3)(D ) 165(a)(5 ) 165(d)(2)(C ) 165(a)(7 ) 110(a)(2)(B)&(F ) 165(e)(3 ) 165(a)(6 )

30 1 &16 1 110(a)(2)(A)&(C )
110(a)(2)(A)&(C ) 110(a)(2)(B)&(K ) 110(a)(2)(A)&(C )

CH-94-4 1P.1 8

CH-94-4 1P.1 9

TABL E 3-2 . RESPONDEN T DAT A AN D INFORMATIO N REQUIREMENT S FO R

PREPARIN G PAR T D (NONATTAINMEN T NSR ) CONSTRUCTIO N PERMIT S Requirement s Regulatio n Referenc e 199 0 CA A Referenc e Documentatio n tha t

LAE Ri s bein g applie d

Documentatio n tha t

al l source s owne d o r operate d b y sam e perso n ar e i n complianc e Documentatio n tha t

sufficien t emission s reduction s ar e occurrin g t o ensur e RF P Documentatio n tha t

benefit s o f

propose d sourc e significantl y outweig h th e environmenta l an d socia l cost s impose d a s aresul t o f it s location , construction , o r

modificatio n Descriptio n ofth e location , desig n construction , an d operatio n o f

building , structure , facility , o r installatio n Descriptio n ofth e natur e an d amount s o f emission s t o b e emitte d Descriptio n ofth e ai r

qualit y dat aan d dispersio n o r othe r ai r qualit y modelin g use d Sufficien t informatio n t o ensur e attainmen t an d maintenanc e o f

NAAQ S Propose d 4 0 CF R51.165(a)(6 ) Propose d 4 0 CF R51.165(a)(6 ) 4 0 CF R51.165(a)(3 ) 4 0 CF R51.165(a)(2 ) 173(a)(2 )

173(a)(3 )
173(a)(1 ) 173(a)(5 )

Propose d 4 0 CF R 51.165(a)(6 ) Propose d 4 0 CF R 51.165(a)(6 ) 4 0 CF R 51.160(f

) 40CFR51.160(c)-(e ) 4 0 CF R 51.16 1 110(a)(2)(A)&(C )
110(a)(2)(A)&(C ) 110(a)(2)(B)&(K ) 110(a)(2)(A)&(C ) 172(c)(6 )

CH-94-4 1P.2 0

TABLE 3-3 . STATE DAT A AN D INFORMATIO

N REQUIREMENT S Regulatio n b RequirementReference Mak e completenes s determination s C-4 0 CF R 51.166(n ) Submission o

f al l permi t application s t

o EP A C-4 0 CF R 51.166(q ) D-4 0 CF R 51.161(d ) revie w application , mak

e technolog y requiremen

t C

- 4 0 CF

R 51.16 6 determination , revie w degre e o f incremen t consumption , D-4 0 CF R 51.160-16 5 assure maintenanc e of

NAAQS , ensur

e sourc e complie s wit h al l requirement s consisten t wit h th e CAA
. Submission o

f notic e o f application , preliminar

y C

- 4 0 CF

R 51.166(q ) determination , summar

y o f impact s an

d degre e o f D-4 0 CF

R 51.160-16 4 incremen t consumption , basi s o

f offsets if applicable , an

d documentatio n tha

t propose d projec t

will compl

y wit h al l permi t requirement s an

d opportunit

y fo r publi c commen

t Submissio n o f

written reques t

t o exempt source s fro

mC-4 0 CF

R 52.21(i)(4 ) revie w Written reques t

fo r us e o f innovativ e contro l technology C-4 0 CF R 51.166(s ) Establishin g an

d operatin g apermittin g progra mfo r al l 4 0 CF

R 51.16 0 ne w source s Provid e fo r publi c commen

t fo r al l NS R permit s 4 0 CF R 51.16 1

b Th e Letter

"C " denote s Par

t C PS D Requirements ; "D " denote s Par t D Nonattainmen

t requirements
. CH-94-4 1P.2 1

3.2
. TH E INFORMATIO N COLLECTE D - AGENC Y ACTIVITIES , CO T LECTIO N MFTHODOTnaV , AN

D INFORMATIO N MANAftFMFN T Agencie s responsibl e fo

r processin g NS R constructio n permit s will typically perfor mth e following activities :

Answe r responden

t question s Lo g in an d revie w datasubmission s Mak e acompletenes s determinatio n to indicat e if sufficien t informatio n ha s bee

n submitte d to proces s th e applicatio n Reques t additiona l information fo

r incomplet

e application s Analyz e request s fo

r confidentialit

y an d provid e appropriate protectio n Evaluat e element s o

f applicatio n fo

r sourc e complianc e wit

h permittin g requirement s an

d th e Clea n Ai r Ac t Prepar e permits , revie w report s an d permit s fo

r processin g an

d approva l Prepar e notice s o

f publi c hearing s o

n permi t application s fo

r publicatio n i

n newspapers , arrang e an

d attend publi c hearings , an d summariz e an

d respond to publi c comments . Reques t additiona l information fro

msource s a s necessar

y to addres s comments . Submi t information o

n BACT/LAE

R determination s t

o EPA' s RACT/BACT/LAE

R Clearinghous e fo

r entr y int o databas e Th e owner s an

d operator s of

ne w o r modifie d stationar y source s affecte

d b y th e NS R regulation s wil l b e responsibl e fo r submitting constructio n permi t application s to th e permi t reviewin g authority
. Th e permi t reviewin g authorit

y will lo g i

n permi t application s an

d stor e the min acentra

l filing locatio n a

t th e locatio n of

th e permi t

reviewin g authority
. Onc e constructio n permit s hav e bee n approved , th e reviewin g authorit y will submi

t contro l technolog y informatio n to EPA' s RACT/BACT/LAE R Clearinghous e database
. Becaus e th e constructio n permit s an

d associate d contro l technology determination s ar e performe d o n acase by-cas e basis , th e regulation s will no t contain additiona

l form s whic

h owner s o r

operator s wil l hav e to fill ou t

an d submi t to th e permi t

reviewin g authority
. State s wil l likely us e their current permi t applicatio n form s fo

r NS R purposes . Qualified personne l who wor k fo r th e permi t

reviewin g authorit

y will perfor

mpermi t review s and check

th e qualit y of dat asubmitted b y th e applican t on acase-by-cas e basis
. Th e applican t wil l b e require d to submi

t information on ho

w th e datawer

e obtaine d (e.g. , indicat

e whethe r emission s dat awer

e obtaine d through th e us e o f emission s factor s o r

tes t data) an d ho w calculation s were performed
. Th e permi t reviewin g authorit

y personne l wil l chec

k data
CH-94-4 1P.2 2

qualit y b y reviewin g tes t

dataan d checking engineerin g calculations , an d by reviewin g contro l technology determination s fo r simila r sources . Th e RACT/BACT/LAE R Clearinghous e databas e wil l b e reviewe d fo r information o

n contro l technology determination s mad e fo r source s simila

r to th e source s include d i

n apermi t application
. Confidentia

l information submitted b y th e applican

t wil l b e handled i

n accordanc e wit

h th e permi t

reviewin g authority' s confidentia

l informatio n handling procedures
. Th e publi c will b e provide d th e opportunit y t o revie w apermi t

applicatio n b y obtainin g acopy fro mth e permi t

reviewin g authorit

y an d b y attendin g th e publi c hearing
. Th e NS R regulation s wil l no t require th e reques t

of informatio n through an

y typ e of survey . Thi s section o

f th e IC R requires , i

n th e absenc e o

f astatutor y requirement , a demonstratio n tha

t th e Agenc

y ha s take n al l practicabl e step s to develop simplified requirement s fo

r smal l businesse s an

d othe r entities
. Thi s section i s no t applicabl e t

o th e propose d change s to th e par t C an d D rule s becaus e th e propose d rul e implement s statutor y requirements
. Thi s IC R doe s no t

requir e surveys . Eac

h sourc e affecte

d by th e revise d NS R regulation s wil l b e require d t o submi t a n applicatio n a s aprerequisite t o receivin g a constructio n permit
. Preparatio n o f aconstructio n permi t

applicatio n i s aone-time-only activit y fo r each ne w sourc e o r

modification
. Th e NS R permi t regulation s wil l no t

require periodi c reportin g o r

surveys . 3.3
. ESTIMATIN G TH E BURDE N AN D COS T O F TH E COLLECTIO N Respondent s include owner s o r operator s o

f majo r stationar y source s whic

h will b e subject to th e constructio n permi t requirement s unde

r EPA' s NS R regulations
. Respondent s als o includ e owner s o r

operator s o

f mino r source s whic

h will b e subject

to preconstructio n revie w to demonstrat

e tha t the y are exempt

fro mEPA' s NS R regulations
. Th e annua l responden t burden (i.e. , labor

hour s an d costs ) associated wit

h majo r sourc e PS D an

d par t D constructio n permi t

activities , an

d mino r sourc e preconstructio n review activitie s i s show n i n Tabl e 3-4
. Th e attachmen t to thi s IC R explain s how th e numbe r of source s an

d th e burden estimate s presente d i

n Tabl e 3-4 wer

e derive d fo

r majo r PS D an d par t D source s an

d mino r sources .

CH-94J» 1P.2 3

TABL E 3-4 . SUMMAR Y O F RECORDKEEPIN G AN D REPORTIN G BURDE N ESTIMATE S T O INDUSTRY RESPONDENT S AN D STAT E AN D LOCA L AGENCIE S Par tD Par

tC Mino

r Source (Nonattainmen

t(PSD) Determinatio n of NSR ) Majo r Sourc e Majo r Source Exemptio

n Fro m Permit s Permit

s Majo

r NS R Total s Industr y Responden tBurde n

• No
. o f

Source s

• Hours/Sourc e

• Tota l Hour s

• Wag e Rate , $/hour b

• Tota l Cost s
Stat e an d Loca l Agenc y Burde n

• No
. o f

Agencie s

• No
. o f

Sources / Agency '

• Hours/Sourc e Tota l Hour s Wag e Rate , $/hour * Tota l Cost s 590 * 45 0 265,50 0 3 8 10,089,00 0

5 0 11. 8 U O 64,90 0 3 8 2,466,20 0 320 * 70 0 224,00 0 3 8 8,512,00 0

6 0 5. 3 28 0 89,60 0 3 8 3,404,80 0 19,50 0 8 156,00 0 3 8 5,928,00 0

8 5 229. 4 1 0 195,00 0 3 8 7,410,00 0 -

- 645,50 0 3 8 24,529,00 0

-

-

- 349,50 0 3 8 13,281,00 0 'Include s bot

h majo r ne w an d modifie d stationar y sources . ''Wag e rate i s base d o

n th e Federa

l wag e rat e a t th e Grad e 11 , Ste p 3 leve l fo r the 199 4 pa y schedule
. Th e wag e rat

e include s direc t personne l an

d overhea d costs . Thi s i s th e sam

e wag e rat e use d i n th e Draf t Titl e V Operating Permit s ICR
. "Numbe r o f sourc e permit

s processe d b y eac h agency equal s th e tota

l numbe r o f source s divided b

y th e tota l numbe r of agencie s unde r eac h column
.
EP A Regiona

l Office s typically revie w an d commen t o n majo r NS R permit s issued b

y Stat e and loca l agencies
. EP

A revie w o

f NS R permit s i s expected t o consis t o f th e following tasks , wit h associate d burden hours : Review an d verif y applicabilit

y determination : 2 hour s Review contro l technology determination : 3 hour s Evaluat e offset s (par

t D permit s only) : 1 hou

r Evaluat e ai r qualit y modeling (typically applie s fo r PS D sources , but

ma y als o b e submitte d fo

r som e par t D permits) : 4 hour s Evaluat e alternative s analysi s an

d secondar y impact s analysis : 2 hour s Evaluat e Clas s I are aanalysi s (nea r Clas s I area s only) : 2 hour s Administrativ e task s (correspondence , management) : 1 hou r
CH-94-4 1P.2 4

Usin g th e hourly number s abov e ( 2 hour s fo r eac h mino r sourc e permit , an

d aworst-cas e of 1 5 hour s fo

r eac h majo r sourc e permit) togethe

r wit h th e estimate s o

f numbe r o f source s fro mthi s ICR , th e tota

l annua l hour s fo r permi t revie w i s 52,65 0 hours , o r 25. 3 ful l time equivalent s (FTE) , assuming 2,08 0 hour s equal s 1 FTE
. Th e cos t i s approximately $2,000,000 , usin g awag e an d overhea d rat e o f $38/hour (whic h i s fo r aFedera l wag e rat e a

t th e Grade 11 , sty , 3 leve l fo r th e 199 4 pa y schedul e an

d correspond s t

o th e sam e wag e rat e used in th e Draf

t Titl e V Operatin g Permit s ICR
.

3.4
. CONCLUSION S Fo r industr y respondents , th e burde

n estimated i

n thi s IC R i s 6 9 percent

highe r tha n i n th e CM A Exhibi t A IC R whic

h wa s use d a s th e baseline
. Virtually al l o f thi s increas e fo

r industr y respondent s i s du e t o a60 0 percent increas e i n th e numbe

r o f majo r source s per

yea r subject t o part D requirements
. B y far , th e majorit y of thi s 60 0 percent

increas e i s du e to th e lowerin g of majo r sourc e cutoff

s fo r VOC source s i

n serious , severe , an

d extreme ozon e nonattainmen t areas , an d th e additio n o

f majo r sourc e cutoff

s fo r NO x source s i

n thes e areas . A lesse

r numbe r of additiona l source s nationwide will als o b e newl y subject to par t D requirements
. A small fraction of

th e increas e i

n industr y burden hour s i s attributabl e to th e sligh t increas e i n burden pe r

source , brough

t abou t chiefl y by th e ne

w requiremen

t fo r a n alternative s analysis
. Fo r State/loca l agency respondents , th e burden estimate d i n thi s IC R i s 2 1 percent

highe r tha n in th e CM

A Exhibi t A ICR
. Virtually al l o

f thi s increas e i s du e to a60 0 percent increas e in th e numbe

r o f par t D sources . A smal

l portio n o f th e burden hou

r increas e wa s attributabl e to a n increas e i

n th e burden per

source , chiefl

y du e t o th e ne w requirement s fo

r a n alternative s analysi s an

d fo r submission o

f contro l technology determination s t o th e RACT/BACT/LAE

R Clearinghouse
.

CH-94-4 1P.2 5

SECTIO N 4. 0 REGULATOR Y FLEXIBILIT Y ANALYSI S Thi s sectio n addresse s th e anticipate d economi c effec t of th e par t C an d D statutor

y and propose d rul e change s on smal l entities
. Thi s analysi s i s developed pursuant to th e requirement s of

th e Regulator

y Flexibilit

y Act
. 4. 1 INTRODUCTIO N Th e Regulator

y Flexibilit

y Ac t require s regulator

y agencies , upo

n regulator

y action , to prepare severa

l document s determine d by , amon g other things , th e attribute s o

f th e regulator

y actio n bein g taken
. Thes e include : (1 ) aCertification , (2 ) a n Initia l Regulator

y Flexibilit

y Analysi s (IRFA) , an

d (3 ) aFinal Regulator

y Flexibilit

y Analysi s (FRFA)
. I

n addition , th e agencie s mus t

assur e through variou s mechanism s tha t smal l entitie s are give

n a n opportunit

y to participate in th e rulemakin g process . Th e Environmenta l Protectio n Agenc

y ha s revise d thes e guideline s suc

h that , fo r an y ne w rul e subject

to th e Regulator

y Flexibilit

y Act , a regulator y flexibilit y analysi s i s require d i

f th e rul e wil l hav e an

y economi c impact , howeve r small , on an

y smal l enitie s tha

t are subjec t to th e rule
. Thi s section of

th e repor t provide s a

n analysi s to assis t

EP A i n completin g a

n IRF A fo r th e par t C an d D statutor

y an d propose d rul e changes
. A summar y o f th e change s i s include d i

n Section 2 of

thi s document
. Th e remainde r of Section 4 discusse s ho

w th e impac t

o n smal l entitie s du e to thes e change s wa s estimated
. Th e approach use d i s discusse d i

n Section 4.2 ; th e stud y populatio n i s define

d i n Section 4.3 ; th e cost s o

f the regulatio n are estimate d i n Section 4.4 ; an

d th e result s ar e discussed i n Section 4.5
. 4. 2 APPROAC H 4.2. 1 Genera l Approac h A Regulator

y Flexibilit

y Analysi s (RFA ) ha s tw o principa l analytica l components : a descriptio n an

d estimat e o f th e numbe

r o f smal l entitie s to whic

h th e statutor

y an d propose d rul e change s wil l apply. , an d adescriptio n o

f th e projecte d complianc e requirement s o f th e propose d rule , includin g a

n estimat e of th e classe s of

small entitie s whic

h wil l b e subject

to th e requirement
. Th e objectiv e o f thi s section i s to analyz e th e impact s of th e change s i

n 4 0 CF R part s 5 1 an

d 5 2 on smal

l entities
. I

n keeping wit

h th e genera

l methodology jus t

described , there wil l b e tw o distinc t

part s t o thi s analysis
. Th e first par t i s a n estimat e of th e numbe

r o f small entitie s affected b y th e par t C and D changes
. T o develop thi s estimate , a n estimat e of th e numbe r of affecte d smal l entitie s wa s mad

e by identifying three-digi t Standar d Industria

l Classificatio n (SIC ) categorie s whic h hav e asignifican

t numbe r o f potentia l majo r ne w sources , an

d by comparin g thi s lis t

wit h alis t of SIC categorie s whic

h are likely t

o hav e a

CH-94-4 1P.2 6

significan t numbe r of smal l entities
. Th e secon

d par t i s a n estimat e o f th e cost s t

o th e affecte

d sources . Cost s are initiall y estimate d fo r eac h categor y o f sources . A s describe d below , estimate s ar e mad

e bot h fo r contro l cost s an

d fo r offse t costs . Thes e cost s are estimate d o n bot h a n establishmen

t and a n annualize d industr

y basis
. Industr

y cost s ar e compare d to a standar d figur e of financia l merit , corporat

e revenues , an

d are summarized nationwide
. Th e mos t conservativ e approach to cos t estimatio n i s use

d throughout

th e analysis
. 4.2. 2 Influenc e o

f th e Natur e o

f Dat aSource s o n Methodolog y Th e for min which dat aar e availabl e ha s astron g influenc e o n th e methodology chose

n fo r thi s analysis
. Th e siz e cutof f fo r defining a

n entity , suc

h a s asmal

l business , i s based o

n th e numbe r of employee s o r

th e revenue s of

a n enterprise
. Enterprise s togethe r wit h establishments , compris e th e tw o differen t level s a t whic h entitie s are studied
. Datasource s frequentl y provid e informatio n abou t jus t on e level
. Establishment s an d enterprise s are describe d a s follows : Establishment s A

n establishmen

t i s th e smalles t

uni t in whic h activit y i s conducte d an

d on whic h statistica

l information i s collected
. Th e establishmen t classificatio n make s n o referenc e t o either ownershi p o r taxpaying status . Furthermore , establishment s ma y b e branche s o

f larger firm s an d diffe r fro mseparatel

y owne d an d operate d entitie s o

f simila r siz e i n purchasin g power , advertisin g coverage , managemen t an d contro l systems , technica l resources , an d accesse s to capita

l an d credit
. Mos t

ver y smal l entitie s are singl e establishments
. Enterprise s A

n enterpris e i s a

n establishmen

t owned by aparen t

company . Fo r

instance , a

n enterpris e ca

n ow n subsidiaries , branches , an d unrelate d establishments
. I n most instances , i t i s necessar y to us e th e enterpris e concept t o stud y th e characteristic s o

f small firms sinc e th e ownershi p issu e i s critica

l fo r assessing the impac t

o f agive n policy
. Thi s repor t use s a n approach comparing emission s datawit h SBA siz e definition s a

t th e sourc e categor

y level
. Emission s dataare currently being maintained by EP A i n th e Aerometri c Informatio n Retrieva l Syste m(AIRS ) database
. Thi s databas e show s informatio n a t th e plant leve l an d the subplan

t level , suc h a s segment s an

d stacks
. Determination s o f th e productio n equipmen

t an d emission s contro l equipmen t use d i n eac h plant mus t b e mad e a t th e segmen t level
. Th e plant s referre d t o i n th e AIRS databas e are equivalen t to establishments
. Th e plant s liste d i

n AIRS ca n b e linke d to establishment s i n Dun n an d Bradstreet

data , but thi s i s alabo r intensiv e operatio n requirin g clos e attentio n t o th e wa y plant s (establishments ) are named
. Thi s operatio n i s als o beyond th e scop e of thi s study
. Thus , a

n alternativ e methodology , describe d below , wa s developed
. Th e dat afo

r thi s analysi s wer

e collecte d a

t th e thre e digi t

SIC cod e level , which group s industrie s together

based on th e produc t

o r servic e the

y provide
. Thus , fo

r example , al l entitie s producin g fores t

product s are groupe d togethe r whil e al l entitie s producin g softwood plywoo d are groupe d a s asubgrou p o f fores t products
. Entitie s providin g governmen t service s ar e include d in th e SIC cod e groupings
. Man y othe r dat asource s provid e financia l informatio n a

t th e industr

y level
. Th e Smal

l Busines s Administratio n ha s identified ase t of industrie s a s bein g smal

l busines s dominated
. Thi s se t consist s o f industrie s i

n whic h ove r 6 0

CH-94-4 1P.2 7

percent o f entitie s are classified a s small
. Whe n averag e employmen

t o r revenue s are compute d fo

r small busines s dominated industries , th e average s reflec t th e smal l busines s influence
. 4. 3 POPULATION DEFINITION AN D SAMPLING 4.3. 1 Populatio n Definitio n and Sampling Approac h Thi s sectio n describe s th e selectio n of industrie s tha

t ar e likely t o b e affecte

d b y th e statutor y an d propose d rul e change s i

n th e ne w sourc e revie w (NSR

) progra mwithout regar d t o th e leve l o

f participatio n by smal

l entities
. Th e basi c strateg y o f thi s section i s t o identif

y and count th e emissio n source s identified in AIRS in eac h SIC categor

y an d each nonattainmen

t categor y tha t would b e affecte

d by th e changes
. Th e selectio n proces s identifie s existin g source s wit

h emission s below th e current majo r sourc e cutpoint , bu t

abov e th e propose d ne

w cutpoints
. Th e AIRS databas e wa s use d to determin e th e industrie s likely to b e affecte d b y NSR
. Th e AIRS databas e provide s information describin g eac h sourc e i n th e nation tha

t emit s ove r 10 0 tpy of acriteri aai r

pollutan t and , i n som e States , smalle

r source s a s well
. Th e informatio n include s firmidentifier s suc h a s th e name , address , county , an d State ; SIC codes ; productio n parameters ; proces s (o r segment ) identifiers ; pollutan

t identifiers ; an

d description s of emissio n contro l equipment , contro l efficiencies , emission rates , an d annua l emissions
. Th e dat ain AIRS ar e require d t o b e submitte d b y Stat e an d loca l agencies
. Thes e dat aar e dynami c an d ma y b e periodicall y updated b y th e submitting agencies
. Fo r thi s reason , th e mos t

recen t datayea r availabl e ma

y diffe r fro mStat e to State
. Typically thes e dataare availabl e fo r bas e yea r 1990 , bu t mor e recen t dataare availabl e fro

msom e States
. Fo r

thi s analysi s th e mos t recent dat afo r eac h Stat e wer e used
. Th e AIRS databas e doe s no t contain complet

e information fo

r al l o f th e parameter s necessar y to complet

e thi s analysi s o

n anationa

l level
. Th e degre e o

f detai l i n th e information submitte d by State s ca

n var y widely
. I

n particular , State s hav e onl y bee n requeste d to provid e informatio n fo

r majo r source s which , befor

e 1992 , wer

e define d a s thos e emittin g ove

r 10 0 tp y (or , in som

e cases , 25 0 tpy)
. Thi s analysi s require d informatio n o n source s wit

h potentia l emission s belo w 10

0 tpy . T o identif

y thos e State s whic

h ha d voluntaril y submitte d informatio n o

n source s emittin g les s tha

n 10 0 tpy , th e lis t

o f source s identified i

n th e SIP fo

r th e nonattainmen

t area s in agive

n Stat e wa s compared wit

h th e lis t o f source s i n th e AIRS databas e fo

r tha t State. 3 Te

n State s wer

e selecte d fro

mthi s list
. Fo r

eac h Stat e selected , dat a were collecte d o

n emission s o

f VOC , NO x , CO , an

d PM-10 , (th e fou

r pollutant s fo

r whic h additiona l source s ma

y b e redefined a s majo

r i n th e par t C an d D changes)
. Th e te

n State s selecte d include : Arizona , Connecticut , Indiana , Massachusetts , Missouri , Ne w York , Ne

w Jersey , Ohio , Tennessee , Wes t Virginia
. Th e Agency the

n identified 12 3 industr

y categorie s i

n thes e State s a s havin g source s i n th e siz e rang e affecte

d by th e par

t C an d D changes
. Industr

y categorie s wit

h onl y on e sourc e wer e eliminate d t

o simplif y th e analysis
. Eliminatio n of suc h one-sourc e categorie s i s no t believe d to hav e asignifican t impac t o n th e final estimat

e o f numbe r o f smal l entitie s nationwide
.

CH-94-4 1P.2 8

4.3. 2 Identificatio n o

f Small-Entity-Dominate d Industrie s Impacte d b y NS R Change s Th e nex t ste p o f thi s approach wa s to divide th e potentially affecte d industrie s identifie d abov e betwee

n smal l an d larg e entitie s an

d to determin e th e numbe

r of smal l source s nationwide
. EP

A guideline s fo

r implementing th e Regulator y Flexibilit

y Act require tha

t th e small entit y definition s formulated b y th e SB A ar e to b e applie d unles s there ha s bee n prio r consultatio n on alternativ e definition s wit h SBA' s Offic e of

Advocacy
. Th e SBA , i

n 1 3 CF R par t 121.601 , quote s siz e standard s fo r al l industrie s eithe

r o n th e basi s of

revenue

4 o r numbe r of employees
. SB A als o define s anumbe r o f industrie s a s "small-entit

y dominated" , whic

h mean s tha t 6 0 percent

o r mor e o f th e wor k forc e i n suc h a n industr y i s employed i

n entitie s wit h fewe r tha n 50 0 employees
. Give n th e economy-wid

e natur e o f th e change s i

n NSR , using small-entity-dominate d industries , a s defined by SBA , i s ausefu l mean s o f identifying concentration s o f small entitie s likely to b e impacte d b y th e NS R Changes
. A chec k o f th e 8 7 non-small-entity-dominate d industrie s fo

r which on e o r

mor e sourc e wa s foun

d i n th e potentially affecte

d rang e show s a larg e portio n of

industrie s characterize d by ver y larg e entitie s ~ pulp an

d pape r mills , pharmaceuticals , chemicals , petroleumrefining , rubber , iro n an d steel , aircraft , etc . Althoug h th e par t C an d D change s will affec

t suc h industries , fe

w smal l entitie s ar e expected i

n thes e categories , s o th e effec

t o f th e rul e change s o

n smal l entitie s ca

n b e approximate d by considerin g th e small-entity-dominate d industries
. A mor e detaile d accountin g of

source s i n th e large-entity-dominate d industrie s woul d require obtainin g information a t th e level of individua l entities , whic

h i s beyond the scop e o

f thi s report . I t

should b e noted tha

t asmal l entit y definitio n o f

on e hundre d employee s ha s bee n used previously b y EP

A i n th e assessmen

t of ai r qualit y regulations
. Applicatio n o f suc h adefinition woul

d lea d t o muc h smalle r impact s tha n would b e foun

d using th e 50 0 employe e standar d use d here
. Therefore , thi s metho d i s conservativ e wit

h respec t t o th e definition o

f smal l entity
. Tabl e 4- 1 list s th e 3 6 industrie s include d within th e industr y se t derive d fro

mth e ten-stat

e AIRS sampl e an

d th e SB A se

t o f small-entity-dominate d industries
. Mos t (24 ) o f th e high-ris k industrie s are i

n th e manufacturing sector . O f these , 1 3 are industrie s manufacturing durabl e product s (SIC 308-399) , an d 1 1 produc e non-durabl e product s (SIC 209-275)
. Th e wholesal e trade , mining , service , financial, an d utilit y sector s ar e als o represented
. Brie f profile s fo

r a numbe r of thes e high-ris k

industrie s are give

n below. 5 industria l Mineral s Productio n of

crushe d stone an

d san d an d grave l primaril y depend s o n commercia

l buildin g an

d publi c infrastructur

e investment
. Ove

r th e coming 5-yea

r perio d commercia

l buildin g deman

d i s expecte d to retur

n to highe r levels
. I n combinatio n wit

h greater Federa l emphasi s o

n infrastructur

e spending , thi s should mea n areviva l i n th e crushe d ston e an d san d an d grave l industries
. Millwood , Plywoo d an

d .Structura

l Memher s Millwoo d include s awide rang e o f fabricate d millwor k products , principall y commoditie s wit h metal , vinyl , an

d plasti c overlays
. Plywoo d i s divide d betwee

n hardwoo d an

d softwoo d products
. There wer

e a n estimate d 12 1 softwood veneer an d plywoo d plant s operatin g i n 1992 , man

y o f whic h wer e owned by larg e integrate d fores t product s companie s wit

h a t leas t som e private timbe

r holdings
. Thi s industr

y i s expecte d to show littl e o r

n o growt h ove r th e nex t five years . CH-94-4 1 'P.2 9

Miscellaneou s Wood Product s Thes e product s are primaril y reconstitute d panel products , which in tur

n are principall y composed o f particl e board
. Particl e boar d i s mad e fro mwood residue s bonded togethe

r unde r hea t an d pressure wit

h aure aformaldehyd

e adhesive
. Approximatel

y 8 1 percent

o f particl e boar

d produce d i

n th e Unite d State s i s use

d i n furnitur e manufacture
. Steady , bu t

slow growt

h i s forecas t

fo r th e next five years . Dyein g and Finishin g Textile s Thi s categor y include s establishment s engage d i n processin g al l type s o f textile s - cotton , silk , an

d synthetic s ~ excep t

wool an d kni t goods
. Processin g operation s includ e bleaching , printing , preshrinking , an d calendaring
. The

y als o includ e chemica l finishing fo

r wate r repellency , fire resistance , an d milde w proofing
.

CH-94-4 1P.3 0

SIC TABL E 4-1 . SMALL-BUSINESS-DOMINATE D INDUSTRIE S AFFECTE D B Y CHANGE S T O

NE W SOURC E REVIE W REGULATION S

Descriptio n Source s Potentiall y Affecte d Nationwid e b y Regulation * 14 2 Crushe

d an d Broke n Stone , including Ripra

p 14 4 San

d an d Grave l 20 9 Miscellaneou s Foo d Preparation s an d Kindre d Product s 22 4 Narrow Fabric an d Othe r Smallwares Mills : Cotton , Wool , Silk , etc . 22 6 Dyein g an

d Finishin g Textiles , excep tWool Fabric s an d Kni tGoods 22 9 Miscellaneou s Textil e Good s 23 9 Mis c Fabricate

d Textil e Product

s 24 3 Millwood , Veneer , Plywood , an d Structura

l Woo d Member

s 24 9 Miscellaneou s Wood Product s 25 3 Publi c Building an d Relate d Furnitur

e 25 4 Partitions , Shelving , Lockers , an d Office an

d Stor e Fixtures 25 9 Miscellaneou s Furnitur e an d Fixtures 27 5 Commercia

l Printin g 30 8 Miscellaneou s Plastic s Product s 31 1 Leathe

r Tannin g an d Finishin g 33 6 Nonferrous Foundries 34 5 Machined Products , Bolts , Nuts , Screws , Rivet s an d Washer s 34 6 Meta

l Forging s an

d Stamping

s 34 7 Coating , Engraving , an d Allie d Service s 34 9 Miscellaneou s Fabricate d Meta l Product s 35 4 Metalworking Machiner y an d Equipmen

t 35 5 Specia

l Industr y Machinery , excep tMetalworkin g Machiner

y 35 9 Miscellaneou s Industria l an d Commercia

l Machiner

y an d Equipmen

t 37 4 Railroa

d Equipmen

t 39 5 Pens , Pencils , an

d Othe r Artists ' Materials 39 9 Miscellaneou s Manufacturin g Industrie

s 42 2 Public Warehousin g an d Storag e 50 9 Miscellaneou s Durabl e Good s (Wholesale ) 51 1 Pape

r an d Pape r Product s 51 7 Petroleu

m an d Petroleu m Product

s (Wholesale ) 55 4 Gasolin e Servic e Station s (Retail ) 65 1 Rea

l Estat e Operator

s (excep tDevelopers ) an

d Lessor s 72 1 Laundry , Cleaning , an d Garmen tService s 73 9 Miscellaneou s Busines s Service s 75 3 Automotive Repair Shop s 82 1 Elementar

y an d Secondar

y School s TOTA L (3 6 SI C categories ) 3 2 9 1 0 8 5 2 5 9 8 7 7 5 6 2 0 5 2 3 2 38 3 20 7 6 3 2 4 3 6 4 13 1 13 7 2 2 1 3 1 3 1 2 1 2 3 2 1 1 1 0 8 31 4 1 1 17 1 4 0 3 6 3 6 1 2 218 0 'Based o n extrapolation often-stat e sample t o a nationa

l scale , usin g Reference 6 . CH-94-4 1P.3 1

CH-94^» 1P.3 2

Commercia

l Printin g Fou r

ou t of five commercia

l printin g firms hav e fewe

r tha n 2 0 employees
. Mos t

o f th e industry' s approximately 37,00 0 establishment s provid e arang e of printe d material s t o a

n essentially loca

l clientele
. Increase d deman d fo r colo r printin g ha s increase d th e us e of

specialize d chemicals
. Thi s industr y i s expected t

o gro w a t a3. 5 percent annua l rat e through th e en

d o f th e century . Miscellaneou s Plasti c Product s Thi s secto r link s togethe

r th e output

of th e plasti c processin g sector . More tha

n half of industr y output i s consumed b y tw o end-markets : (1 ) packagin g and , (2 ) buildin g an

d construction
. Ther

e are mor e tha n 12,00 0 establishment s i

n thi s industr

y an d concentratio n i s low
. Th e fou r larges t companie s wer

e responsibl e fo

r onl y 6 percent

o f tota l shipment s in 1987
. Growt h i n thi s secto

r wil l b e moderat

e ove r th e nex t five years . Screw Machin e Product s Thi s categor y include s custom-designe d product s mad e o n screw machines , a s well a s standar d industria

l fastener s suc

h a s nuts , screws , bolts , rivets , an d washers
. Industr

y deman d i s closel y associated wit

h th e automotive , aerospace , heav y equipment , an

d applianc e markets
. Growt h i n thi s secto

r will b e around 3 percent

annuall y durin g th e nex

t five years . Miscellaneou s Fabricate d Meta l Product s Thi s categor

y i s primaril y composed of valv e an d pip e fittin g manufacture
. Stainles s steel an d thermoplastic s are gainin g i n popularit

y a s valv e an d fittin g material s fo

r corrosio n an

d hea t resistance
. Overall , annua l growt h i n th e rang e o

f 2- 3 percent

i s expecte d ove

r th e nex t five years . Meta l Service s Thi s industr

y cover s alarg e numbe

r o f processin g activities , suc

h a s electroplating , plating , anodizing , coloring , and finishing metals
. I t als o include s enameling , lacquering , an

d varnishing , a s well a s hot dip galvanizin g an

d jewelr y engravin g an

d etching
. Metalworkin g Equipmen

t Thi s sector

cover s machine tools ; meta l cuttin g tools ; dies , jigs , fixtures, and industria

l molds ; power-driven han d tools ; an d weldin g apparatus . Th e too l an d di e segmen

t account s fo

r mor e tha n athir d o f th e tota l industr y group . Enterprise s i

n thi s industr y ar e generally small
. Around 65 0 machine too l plant s ar e operate d b y 57 0 firms wit

h averag e annua

l tota l revenue s o

f approximatel

y $ 8 million
. Abou

t two-third s of

th e companie s tha t mak e specia l tools , dies , an

d mold s hav e 2 0 o r

fewe r employees
. Growt

h i n thes e differen t area s wil l var

y markedl y ove r th e nex t five years , fro

madeclin e fo

r die s an d mold s t o a3 percent

annua l increas e fo

r meta l cuttin g an

d forming machine tools
. Specia l Industr y Machiner

y Th e primar

y industrie s served by machiner y manufactur

e ar e semiconductors , textiles , paper , printing , an d foo d products
. Semiconductor manufacturing equipmen t ca n b e furthe

r divide d into thre e categories : wafe r processing , tes t

an d inspection , an d assembl y equipment
. Lithograph

y i s th e dominan

t printin g proces s fo

r whic h machiner

y i s produced
. Machiner

y fo r th e traditiona

l industrie s will produc e growt h o f 2. 5 to 3. 5 percent annually , whil e semiconductor machiner y i s forecas t

t o show a n 1 1 percent

annua l rate .

CH-94-4 1P.3 3

Miscellaneou s Fabricate d Textil e Product s Thi s sector cover s curtain s an

d draperies ; hous e furnishings ; textil e bags ; canva s an d relate d products ; pleatin g an d stitching ; automotiv e an

d appare l trimmings ; machine embroideries ; an d fabricate d textil e products
. Textil e hous e furnishing s an

d automotiv e an

d apparel trimming s constitut e th e larges t

share s o f thi s sector' s industr y shipments~2 8 an

d 3 0 percent

respectively
. Moderat

e growt h i s projecte d fo

r thi s sector over th e nex t fe w years . leathe r Tannin g an

d Finishin g Thi s sector

consist s o f

establishment s engage d in tanning , currying , an

d finishing ra

w o r cure d hide s an

d skin s into leather , an

d associate d processors . Wit h th e U.S
. hid e suppl

y projecte d t

o continu e to increas e i

n th e nex t fe w years , th e long

ter moutlook fo r thi s industr

y appear s t

o b e good
. Good growt

h i s projecte d fo

r th e nex t fe w years . 4.3. 4 Numbe r

o f Source s Nationwid e Th e ten-stat

e sampling procedur

e describe d earlier

provide s informatio n tha

t must b e extrapolate d to anationa

l scale
. Thi s extrapolatio n assume s astron g correlatio n exist s betwee n th e numbe r o f industry-specifi c source s present i n an y Stat e an d th e economi c activit

y attributabl e t

o tha t industr y within th e State
. Base

d o n thi s assumption , amultiplie r wa s develope d a s aweighted averag e using Gros s Stat e Produc t (GSP) figure s compile d by th e U.S
. Department

of Commerc e fo

r majo r industr y groupings. 6 Seve

n weighted multiplier s specifi c to th e ten-stat

e sampl e wer

e derived ; on e fo

r eac h o f th e 2-digit

SIC code s liste d below : SI C 10-1 4 20-2 9 30-3 9 40-4 9 50-5 9 60-6 7 70-8 9 Industr

y Grou p Mining Manufacturing-No n Durabl e Good s Manufacturing-Durabl e Good s Transportatio n an

d Publi c Facilitie s Wholesal e Trad e Finance , Insurance , an

d Rea l Estat e Service s Weig h fp d Multiplie r 6. 4 3. 5 3. 2 3. 6 3. 3 3. 8 3. 3 Thes e weighte d multiplier s are th e rati o o f nationwide GS P fo

r eac h majo r industr y sector divide d b y th e ten-stat

e tota l GS P fro mth e sam

e sector . Th e multiplier s typically rang e fro m3. 2 to 3.8 , indicatin g tha t th e ten-stat

e sample represent s roughly one-thir d of al l economi c activit

y i n tha t sector i n th e Unite d States
. Th e exceptio n i s mining , wher e th e multiplie r o f 6. 4 indicate s tha

t th e sampl e fro

mthi s sector

i s no t a s representativ e nationally a s th e others
. Thi s i s no t

surprisin g sinc e mining i s concentrate d i n afe w State s an

d i s no t uniforml y distribute d throughout

th e nation
. Th e weighte d multiplier s wer e applie d to estimate s o

f th e number s of

affecte d source s fo r th e te n States
. Fo r

C O an d PM-10 , th e cutpoin

t fo r majo r source s i n seriou s nonattainmen

t area s wa s lowere d t o 5 0 (i

n som e cases ) an

d 7 0 tpy , respectively
. Hence , fo r eac h of thes e pollutant s al l affecte

d source s are i

n th e sam e category . Fo r

VOC an d NO x , tw o additiona

l
CH-94-4 1P.3 4

cutpoint s wer

e identified , makin

g thre e categorie s o

f affecte d sources . Nationwide , al l ne w VO C o r NO x source s located i

n serious , severe , o r

extrem e nonattainmen

t areas , o r a n ozon e transpor t region , an

d whic h woul d emit ove r 5 0 tp y are affected
. Source s emittin g ove r 2 5 tp y ar e affecte d if the y are i n sever e o r extrem e nonattainmen

t areas . Source s emittin g ove r 1 0 tp y ar e affecte d if the y are i n a n extrem e nonattainmen

t area . I n thi s assessmen

t o f th e numbe

r o f affecte d sources , al l source s o

f C O o r PM-1 0 i n th e te n State s ar e include d if

the y ar e i n th e affecte d range , a s ar e al l VOC an d NO x source s if

the y emi t 2 5 tp y to 10 0 tpy . Thi s metho d doe s no t subtrac t out th e source s i

n attainmen

t areas , whic

h ar e relatively few , an

d i t overestimate s th e numbe

r o f 2 5 to 5 0 tp

y source s tha

t would b e affected
. Sinc e th e Sout h Coas t Air Basi n i s th e onl

y extreme nonattainmen

t are awher

e 1 0 to 2 5 tpy source s ar e affecte d an d sinc e dat afo

r Californi aare no t

availabl e in AIRS , anationa l extrapolatio n wa s no t feasible
. Othe

r tha n thi s exclusion , th e metho d overstate s th e numbe r o f affecte d source s i

n th e te n State s an

d continue s th e conservativ e natur e of thi s analysis
. I n total , th e result s o

f th e extrapolatio n indicat

e tha t around 220 0 source s i

n th e high

ris k industrie s are affecte

d b y th e change s i

n majo r sourc e definition
. (Se e Tabl e 4-1)
. I t i s assumed tha

t al l of thes e 220 0 source s are associate d wit h smal l entitie s although som

e source s i n thes e small-business-dominate d industrie s are not likely t o b e "small " entities
. Thi s assumptio n continue s th e conservativ e natur e o f thi s analysis
. 4. 4 COST S O F REGULATIO N Th e expanded definition of majo r source s fo

r th e variou s pollutant s generate s cost s i n tw o principa

l ways : (1 ) through mor

e stringen t contro l cost s o

n source s previously not

subject t o NSR , an

d (2 ) through th e nee

d fo r pollutan t offsets fo r thes e sam

e sources . Thes e cost s will b e incurre d i

n th e futur e a s industrie s expan

d an d modif y their existin g facilities
. Thes e futur e cost s will affec

t bot h smal l an d larg e entities
. Th e following discussio n attempt s t o examin e th e cos t impac t upon smal

l entitie s only
. 4.4. 1 Contro l Technolog y Cost s Majo r ne w an d modifie d source s o

f ai r pollutio n are require d t

o contro l their

emission s mor e stringently tha

n source s tha

t wer e built befor e th e effective dat

e o f moder n ai r pollutio n regulations
. Fo r

facilitie s built

i n nonattainmen

t areas , th e contro l standar

d applicabl e upo

n buildin g ane

w sourc e o r

modifyin g a n existin g sourc e i s Lowes t Achievabl e Emission s Rat e (LAER) , whil e fo

r thos e buil t

i n attainmen

t area s th e standar

d i s Bes t Availabl e Contro l Technolog y (BACT)
. Th e standar d fo r existin g source s i s Reasonabl y Availabl e Contro l Technolog y (RACT)
. Contro l cost s fo

r LAE R an d BAC T are not well define

d an d recorded
. RAC T cost s ar e mor e readily available , but

th e dataare reporte d o

n atechnology-specifi c basi s an d ar e formulate d o

n a n industr y basi s onl

y fo r afe w of th e mor e prominen

t industries
. Thus , a costin g methodology wa s chose n to mak e maximu mus e o f availabl e informatio n whil e providin g result s o

n th e basi s o

f th e 3-digi t SIC code s identified above
. Usin g th e AIR S databas e an

d th e ten-stat

e sampl e describe d previously , source s within th e emission s range s newl y subject to NS R requirement s wer

e examined i

n al l industrie s to determin e th e specifi c typ e of contro l technolog y used t

o satisf y RAC T requirements
. Th e cos t o f thes e contro l
CH-944 1P.3 5

device s wer

e the n estimate d using standar

d references, 7 ' 8, 9 an

d a n averag e facilit

y cost , i n 199 4 dollars , wa s calculate d fo

r eac h industry
. Thi s procedur

e produce d estimate s o

f annualize d cost s fo r RAC T control s fo

r source s i n th e affecte

d siz e rang e i

n 1 8 o f th e 3 6 small-entity

dominate d industries
. Wher e i t i s known , th e contro l technology associate d wit h aspecifi c industr y i s show n in Tabl e 4-2
. Du e to alac k o f data , th e RAC T cost s fo

r th e remainin g 1 8 industrie s fo

r which n o specific contro l technology information wa s availabl e were estimate d usin g th e averag e cos t

fo r th e othe r 18
. Th e incremen

t abov e RAC T necessar

y to mee t LAE R wa s estimate d using a

n earlier stud y prepare d fo

r EPA. 1 0 Fo r

th e fou r example s i

n thi s stud y fro mwhic h direc t comparison s coul d b e derived , LAE

R contro l cost s exceeded RAC T contro l cost s by 1 6 to 6 6 percent , wit h amea n valu e o f 4 7 percent . Base

d o n thi s information , LAE

R contro l cost s wer

e estimate d t

o excee d th e RAC T baselin e cost s by roughly 5 0 percent . A s a n approximation , n o differentiatio n wa s mad

e betwee n BAC T an d LAE R contro l cost s and , thus , betwee n source s i n nonattainmen

t an d attainmen

t areas . Sinc e BAC

T represent s th e lowe

r en d o f th e LAE R cos t range , using LAE

R i s likely to b e amor

e conservativ e estimate
. Tabl e 4- 2 list s th e small-entity-dominate d industrie s identified above , th e principa l contro l technologie s derive d fro mAIRS , RAC T cost s per

facility , an

d th e estimate d LAE

R incremen t ove r RAC T a t 5 0 percent

o f RACT
. Th e cos t

i n Tabl e 4- 2 represent

a n estimat e o f th e incrementa

l cost s fo r eac h ne w facilit y tha t would previously hav e bee n controlle d by RACT , bu t

whic h wil l now hav e t

o appl y LAE R du e to th e par

t C an d D regulator

y changes
. 4.4. 2 Offset

Cost s I n thi s section , th e cost s o

f obtainin g offsets are estimate d fo r th e averag e affecte

d sourc e in each industry
. All majo r ne w source s an

d modification s locate d i

n nonattainmen

t area s are require d to obtain offsets , whil e thos e i n attainmen

t area s ar e not . However , som e source s in attainmen

t area s migh

t nee d to obtain offsets i

n order to avoi d violatin g aPS D incremen t o r aNAAQS
. Th e metho d use d i n thi s analysi s first

calculate s th e cos t

o f a n offse t on ape r ton basi s an

d the n multiplie s thi s valu e b y th e averag e amoun t of controlle d emission s fo r atypica l sourc e i n eac h industry
. Thi s provide s th e averag e cos t t o a n affecte d sourc e i n eac h industry
. Thi s analysi s likely overestimate s th e cost s o f obtainin g offsets
. Th e cos t of offset s wa s estimate d i

n arecen t stud y fo r EPA. 1 1 Sinc e mos t

o f th e offse t activit y i n th e Unite d State s ha s bee

n concentrate d in California , Tabl e 4. 3 extrapolate s th e price s of Californi aoffset s through th e yea r 200 1 a s aproxy fo

r anationa l offsets value
. Th e extrapolatio n proces s i s based o n a n ordinar y leas t square s regressio n of

pric e ove r time , estimatin g futur

e effects based o

n th e coefficien

t o f tha t regression
.

CH-94-4 1TABL E 4-2 . SMALL-BUSINESS-DOMINATE D INDUSTRIES , TYPICA L CONTRO L TECHNOLOGY , AN D COS T PE RFACILIT

Y

SI C Descriptio n Typica l RAC T Technology " Tota l Annualize d RAC T Cos tpe r Facilit y (x$1000) b Tota

l Annualize d Incremental LAE RCos tpe r Facilit y (x$1000) c 142 Crushe d and Broke

n Stone , includin g Ripra p 14 4 San d and Grave l 20 9 Miscellaneou s Foo d Preparation s an d Kindre d Product s 22 4 Narro w Fabri c and Othe r Smallware s Mills : Cotton , Wool , Silk , etc . 22 6 Dyein g and finishing Textiles , excep t Woo l Fabric s and Kni

t Good s 22 9 Miscellaneou s Textil e Good s 23 9 Miscellaneou s Fabricate d Textil e Product s 24 3 Millwood , Veneer , Plywood , an d Structura

l Woo d Member s 24 9 Miscellaneou s Woo d Product s 25 3 Publi c Buildin g an d Relate d Furnitur e 25 4 Partitions , Shelving , Lockers , and Offic e and Store Fixture s 25 9 Miscellaneou s Furnitur e and Fixture s 27 5 Commercia

l Printin g Electrostati c Precipitato r Electrostati c Precipitato r 60 4 60 4 39 1 39 1 Catalyti c an

d Therma l Afterburner , Vapo

r Recover y Therma l Afterburne

r

Ma t o r Panel Filte r
Catalyti c an

d Therma l Afterburner s 43 0 47 2 39 1 39 1 39 1 2 3 39 1 39 1 42 1 30 2 30 2 19 6 19 6 21 5 23 6 19 6 19 6 19 6 1 2 19 6 19 6 21 0

(continued )TABL E 4-2 . SMALL-BUSINESS-DOMINATE D INDUSTRIES , TYPICA L CONTRO L TECHNOLOGY , AN D COS T PERFACILIT

Y (continued )

SI C 30 8 31 1 33 6 34 5 34 6 34 7 34 9 35 4 35 5 35 9 374 39 5 39 9 42 2 Descriptio n Miscellaneou s Plastic s Product s Leathe r Tannin g an d Finishin g Nonferrou s Foundrie s Screw Machine Products , and Bolts , Nuts , Screws , Rivet s and Washer s Meta l Forging s an

d Stamping s Coating , Engraving , an d Allie d Service s Miscellaneou s Fabricate d Meta l Product s Metalworkin g Machiner

y an d Equipmen

t Specia l Industr y Machinery , excep t Metalworkin g Machiner

y Miscellaneou s Industria

l an d Commercia

l Machiner y and Equipment Railroa d Equipmen

t Pens , Pencils , an

d Other Artists ' Material s Miscellaneou s Manufacturin g Industrie s Publi c Warehousin g an d Storag e Typica l RAC T Technology " Catalyti c and Therma

l Afterburner s Catalyti c Afterburne

r
Therma l Afterburne

r Therma l Afterburne

r w / Hea t Exchange r Catalyti c and Therma

l Afterburner , Vapo

r Recover y

Therma l Afterburne

r Conservatio n Ven

t (continued ) Tota l Annualize d RAC T Cos tpe r Facilit y (x$1000) b 43 8 39 1 38 5 39 1 47 2 95 6 71 2 39 1 39 1 39 1 39 1 47 2 39 1 4 Tota

l Annualize d Incrementa

l LAERCos tpe r Facilit y (x$1000) £ 21 9 19 6 19 2 19 6 23 6 47 8 35 6 19 6 19 6 19 6 19 6 23 6 19 6 2TABL

E 4-2 . SMALL-BUSINESS-DOMINATED INDUSTRIES , TYPICAL CONTRO L TECHNOLOGY , AND COS T PE RFACILIT

Y (continued )

SI C Descriptio n Typical RAC T Technology ' Therma l Afterburne

r Therma l Afterburne

r Activate d Carbon Adsorption , Vapor Recover y Vapor Recovery , Submerge d Fillin g Vapo r Recover y Total Annualize d

RAC T Cos tpe r Facilit y (x$1000) b 47 2 47 2 9 0 3 39 1 7 39 1 39 1 39 1 Total Annualize d

Incremental LAERCos tpe r Facilit y (x$1000) c 23 6 23 6 4 51. 5 19 6 3. 5 19 6 19 6 19 6 50 9 Miscellaneou s Durabl e Good s (Wholesale ) 51 1 Pape

r and Paper

Product s 51 7 Petroleu man d Petroleu mProduct s (Wholesale ) 55 4 Gasolin e Servic e Station s (Retail ) 65 1 Rea l Estate Operator s (excep t

Developers ) and Lessor s 72 1 Laundry , Cleaning , an d Garmen t Service s 73 9 Miscellaneou s Busines s Service s 75 3 Automotiv e Repair

Shop s 82 1 Elementar

y an d Secondar

y School s "Fro mAIRS database
. bReference s 7 , 8 , an d 9
. 'Referenc e 10
.

(continued)P.3 9

TABL E 4-3 . DAT

A FO RDETERMINATIO

N O F OFFSE T PRICE S Extrapolatio n o

f Offset Price s fo r

Souther n Californi a Yea r 198 5 198 6 198 7 198 8 198 9 199 0 199 1 199 2 199 3 199 4 199 5 199 6 1997 199 8 199 9 200 0 200 1 Quantity *

36 7 94 0 21 0 24 8 22 8 10 7 53 9 Pric e Observed "

4,60 0 4,50 0 3,60 0 4,30 0 7,10 0 9,90 0 15,40 0 Pric e Calculated b

2,05 4 3,72 1 5,38 9 7,05 7 8,72 5 10,39 3 12,06 1 13,72 9 15,39 6 17,064 18,73 2 20,40 0 22,06 8 23,73 6 25,40 4 27,07 1 28,73 9 Differenc e

2,54 6 77 9 (1,789 ) (2,757 ) (1,625 ) (493 ) 3,33 9

CH-94-3 1 "Referenc e 11
.

b Base d on regressio n of

pric e o n year . Th e EP A stud y conclude s tha

t th e futur e price s o f

offsets ar e ver

y likely t o increase , du e t o th e impact s of

th e 199 0 Amendment s t o th e CA A an d especially to th e increase d scop e of offse t requirement s du e to change s in th e NS R progra man d th e increase d numbe

r of subject sources . Thes e change s i

n th e progra

mare expected t

o lea d t o a n increas e i

n deman d fo r offsets , whil e decreasin g supply
. I n thi s light , th e valu e p

f $20,00 0 per

to n per yea r o f offset s ca n b e considere d t

o b e alowe

r limi t o n th e possibl e rang e of

offse t prices
. 4-1 5P.4 0

I n additio n to th e offse

t price , th e cos t

o f offsets include s transactio n cost s includes : brokers ' retainers , documentatio n an d filing costs , search costs , an d negotiatio n costs . A s a n exampl e o

f th e magnitud

e o f broker s retainer s an

d administrativ e cost s tha

t occu r i n som e tradin g systems , AER*X , a n emission s brokerag e firm, reporte d tha t i n Lo s Angeles , whe n emissio n offset s wer

e purchase d fo

r ne w sources , th e fixed fe

e broker' s retainer

wa s $3,00 0 pe r

trad e wit h $10,00 0 to $25,00 0 fo

r cost s suc h a s documentatio n and filing. 12 Search costs , th e cost s of

findin g afirmtha

t will reduc e it s emission s to provid e th e offset , ar e asecon

d majo r componen

t of transactio n costs . A search frequentl y consist s of

a broker developin g alis t

o f firms wit h potentia l to provid e th e offse

t and the n contactin g each firmt o explore offers
. Th e firmseekin g th e offse t will pa y th e broker' s expenses , which ma y run fro mapproximately $20,00 0 to $85,00 0 per trade. 1 1 Negotiatin g cost s are closely relate d t o search cost s and represent th e cos t of finalizing th e purchase
. Ther e ar e n o dat ao n negotiatin g costs . Becaus e efficien

t emission s tradin g system s suc h a s offse t bank s are expecte d t

o emerg e a s th e amoun

t o f tradin g increases , th e lowe r en d o f thes e transactio n cos t

range s wa s selected fo r us e here wit

h th e expectatio n that , i

n time , actua

l transactio n cost s wil l continu e to declin e t o alowe r level
. Th e tota

l transactio n cost s consis t

o f $3,00 0 per

transactio n fo

r th e fixed fee , $10,00 0 pe r

transactio n fo

r documentation an

d filin g costs , an

d $20,00 0 per

transactio n fo

r search and negotiatin g costs , o r asu mof $33,00 0 per

transaction
. Th e tota

l quantit y of trade d offset s analyze d i

n th e repor

t wa s 10,06 2 tpy , whil e th e numbe r o f transaction s wa s 88
. Thus , th e averag e numbe

r of offset s pe r

trad e wa s 11 4 tp

y an d th e averag e transactio n cos t per offse t wa s $28 9 pe r

tp y pe r trade
. Th e tota l cos t o f a n offse t (measured a s 1 tp

y emission reductio n purchase d fro m anothe r source ) i s estimate d t

o b e $20,28 9 an

d th e annualize d cos t

i s $1,91 5 per

ton . Thi s annualize d cos t

i s based o n a2 0 yea r tim e horizon , assumed t

o b e atypica

l firm' s plannin g horizon , an

d a7 percent

discoun t rate . Thi s cos t informatio n wa s applie d to th e averag e affecte d sourc e i n eac h industry , which wa s assumed to b e ane w source . Th e result s are show n i n Tabl e 4-4
. Th e averag e sourc e size , show

n i n th e secon

d column , wa s compute d fro mAIRS datafo

r source s i n th e affecte d emission s range . I t

wa s assumed tha

t thes e source s ha

d installe d RACT-level pollutio n contro l equipmen t wit h a n emission reductio n efficiency of 8 0 percent . I t

wa s als o assume d tha

t BACT/LAE

R would achiev e emissio n reduction s of 9 5 percent . Th e emission s calculate d assuming thes e sam e source s ha

d applie d BACT/LAE

R are show

n i n th e thir d column
. Thes e emission s (i n tpy ) wer e

CH-94-3 1 4-1 6P.4 1

TABL E 4-4 . ANNUALIZE D TOTA L COST S O F OBTAININ G OFFSET S FO R

AFFECTE D SOURCE S Emission s pe r Sourc e SI C Assumin g RAC T Emission s pe r Sourc e Assumin g BACT/LAER b Annualize d Offse tCos tpe r Source ' 14 2 14 4 20 9 22 4 22 6 22 9 23 9 24 3 24 9 25 3 25 4 25 9 27 5 30 8 31 1 33 6 34 5 34 6 34 7 34 9 35 4 35 5 35 9 37 4 39 5 39 9 42 2 50 9 51 1 51 7 55 4 65 1 72 1 73 9 75 3 82 1 47.9 3

53.0 4 36.6 2 23.0 6 35.9 6 39.2 2 52.5 2 30.1 2 60.0 0 38.6 4 28.7 6 32.5 5 31.7 4 29.8 1 35.1 8 40.1 3 22.1 7 32.8 9 31.5 1 33.3 1 15.3 1 18.9 0 38.2 7 32.0 2 18.6 6 14.2 0 29.8 8 20.0 7 41.0 0 36.3 8 26.0 8 37.2 8 13.0 3 35.6 0 28.6 7 42.5 8 11.9 8 13.2 6 9.1 6 5.7 6 8.9 9 9.8 1 13.1 3 7.5 3 15.0 0 9.6 6 7.1 9 8.1 4 7.9 4 7.4 5 8.7 9 10.0 3 5.5 4 8.2 2 7.8 8 8.3 3 3.8 3 4.7 3 9.5 7 8.0 0 4.6 7 3.5 5 7.4 7 5.0 2 10.2 5 9.1 0 6.5 2 9.3 2 3.2 6 8.9 0 7.1 7 10.6 5 $22,94 8 $25,39 4 $17,53 3 $11,03 9 $17,21 7 $18,77 8 $25,14 5 $14,42 1 $28,72 7 $18,50 0 $13,77 0 $15,58 4 $15,19 6 $14,27 2 $16,84 1 $19,21 3 $10,61 4 $15,74 7 $15,08 6 $15,94 8 $7,33 0 $9,04 9 $18,32 3 $15,32 8 $8,93 4 $6,79 9 $14,30 6 $9,60 9 $19,63 1 $17,41 8 $12,48 6 $17,85 1 $6,23 8 $17,04 5 $13,72 6 $20,38 8

aAverag e emission s calculate d usin g sourc e emission s fo r affecte d source s i n AIRS , b Assume s RAC T emissio n reduction s a t 80 % an d LAE R emissio n reduction s a t 95 9 c Base d o n 2 0 yea r time horizo n an d 1% discoun t rale
.

CH-94-3 1 4-1 7P.4 2

multiplie d by th e annualize d cos t of offsets , $1,91 5 pe r

tpy , t o obtain th e annualize d offse t cost s pe r source . Thes e tota

l cost s range d fro

m$6,23 8 fo

r SIC 72 1 (Laundry , Cleaning , an d Garmen t Services ) to $28,72 7 fo

r SIC 24 9 (Miscellaneou s Wood Products)
. 4.4. 3 Nationwid e Tota l Cost s Th e next ste p in th e analysi s i s to estimat e th e tota l nationwide annua

l cos t attributabl e t o th e regulation , an

d the n to examine th e magnitud e of cost s relativ e t

o other smal l entit y financial parameters . I

n extrapolatin g cost s to anationa l basis , i t i s importan

t t o not e tha t onl y ne w facilitie s o r

majo r modification s o

f existin g facilitie s will b e subject to NS R an

d t o th e change s i n definitio n of

majo r sources . I

n thi s analysis , i t

wa s assumed tha

t th e numbe

r o f ne w source s in th e siz e rang e affecte d by th e par

t C an d D rul e change s i s proportiona l to th e numbe r of source s whic

h no w exis t i n tha t range . Second , i t

wa s assumed tha

t th e annua l numbe r of NS R permit s i s directly proportiona l to th e growt

h rat e of th e industry
. Thes e assumption s imply severa

l things : (1 ) tha

t majo r modification s an

d ne w source s alway s resul t in anet increas e i n productio n capacity ; (2 ) futur e technology an

d marke t shifts do not

chang e th e facilit y siz e distributio n withi

n th e industry ; an

d (3 ) wher

e industr y specific s are not known , industrie s wil l gro w a t th e long ter

mrat e fo r th e entire econom

y (roughly 2 percent)
. Tabl e 4- 5 combine s facilit

y contro l an

d offse t cost s an d extrapolate s the

mto anationa

l basi s a s outline d above
. Overall , th e NS R regulation s will cos t small-entity-dominate d industrie s approximately $1 2 million per year . On e quarter o f thi s amoun

t result s fro mth e commercia

l printin g industry , wher

e asignifican

t numbe r of operation s typically fal

l into th e majo r sourc e siz e incremen

t an d wher e projecte d growt

h rate s are moderately high
. Anothe r 3 6 percent result s fro

mthre e additiona

l industries : leathe

r tannin g an

d finishing ; coating , engraving , an

d allie d services ; an

d miscellaneou s fabricate d meta l products
. Th e nationa

l cos t total , whil e usefu

l fo r describin g th e overal l burde n o n small-entity

dominate d industries , doe s not provid e information o

n ho w difficul t i t ma y b e fo r an y industr y t o financ e suc

h costs . Relativ e siz e o

f financia l burde n i s difficul

t t o portra y accurately o

n a n industr y basis
. However , th e rati o o f regulator y cost s to annua

l revenue s o

f th e averag e firm in th e industr

y provide s agros s measur

e o f th e relativ e leve l o

f regulator y burden. 13,1 4 Suc

h ratio s are presente d i

n Tabl e 4-6
. I

n onl y thre e case s doe s th e tota

l regulator y cos t exceed 6 percent of averag e annua

l revenues ; th e media

n valu e i s 1. 6 percent . 4. 5 RESULT S AN

D DISCUSSIO N Th e overal l cos t

t o smal l entitie s o f th e par t C an d D packag e i s estimate d t o b e $1 2 millio n pe r

year . Although thi s resul t i s based upo

n estimates , i t

indicate s tha

t small

entity-dominate d industrie s on averag e are no t likely to b e greatly affecte d by revision s t

o th e Ne w Sourc e Review regulations
. Small-business-dominate d industrie s wer e no t foun d t o compris e alarg e numbe

r o f th e source s i

n th e siz e rang e affecte

d by th e par

t C an d D changes
.

CH-94-3 1 4-1 8TABLE 4-5 . NATIONA L COS T PROJECTION S

SI C 14 2
14 4 20 9
22 4

22 6

22 9 23 9 Descriptio n Crushe d an

d Broke n Stone , includin g Ripra p San d an d Grave l Miscellaneou s Foo d Preparation s an d Kindre d Product s Narro w Fabri c and Othe r Smallware s Mills : Cotton , Wool , Silk , etc . Dyein g and finishing Textiles , excep t

Woo l Fabric s and Knit Good s Miscellaneou s Textil e Good s Miscellaneou s Fabricate d Textil e Product s Control Cost s Pe r Facilit y ($1000) " 30 2
30 2 19 6
19 6

21 5

23 6 19 6 Offse t

Costs Pe r Facilit y ($1000) b 22. 9
25. 3 17. 5
11. 0

17. 2

18. 7 25. 1 Tota

l Regulator y Costs pe r Facilit y ($1000 ) 324. 9
327. 3 213. 5
207. 0

232. 2

254. 7 221. 1 Facilit

y Populatio n In Ne w Majo r Source Increments ' 3 2
9 1 0
8

5 2

5 9 8 Expecte d

Growt h (Percent) d 2
2 2
2

2

2 2 Expecte d

Ne w Facilitie s Pe r Year

d 0.6 4
0.1 8 0. 2
0.1 6

1.0 4

1.1 8 0.1 6 Regulatory

Cos tPe r Yea r ($1000) e 207. 9
58. 9 42. 7
33. 1

241. 5

300. 6 35. 3

(continued )SI C

24 3

24 9 25 3 25 4
25 9 27 5 30 8 31 1 33 6 Descriptio n Millwood , Veneer , Plywood , an

d Structura l Woo d Member s Miscellaneou s Woo d Product s Publi c Building and Relate d Furniture Partitions , Shelving , Lockers , and Offic e an d Store Fixture s Miscellaneou s Furnitur e n

d Fixture s Commercia

l Printin g Miscellaneou s Plastic s Product s Leathe r Tannin g an

d Finishin g Nonferrou s Foundrie s TABL E 4-5 .

Contro l Cost s Pe r Facilit y ($1000) " 19 6

19 6 1 2 19 6
19 6 21 0 21 9 19 6 192 NATIONA L COS T PROJECTION S (continued )

Offse t Cost s Pe r Facilit y ($1000) " 14. 4

28. 7 18. 4 13. 7
15. 5 15. 1 14. 2 16. 8 19. 2 Tota

l Regulator y Cost s pe r Facilit y ($1000 ) 210. 4

224. 7 30. 4 209. 7
211. 5 225. 1 233. 2 212. 8 211. 2
(continued) Facilit

y Populatio n In Ne w Majo r Sourc e Increments ' 7 7

5 6 2 0 5 2
3 2 38 3 20 7 6 3 24 Expecte d

Growt h (Percent) d 2

2 2 2
2 3. 5 3 2 2 Expecte d

New Facilitie s Pe r Year

d 1.5 4

1.1 2 0. 4 1.0 4
0.6 4 13.40 5 6.2 1 1.2 6 0.4 8 Regulatory

Cos tPe r Yea r ($1000) e 324. 0

251. 6 12. 1 218. 1
135. 4 3018. 7 1448. 6 268. 1 101. 3TABL E 4-5 . NATIONA L COS T PROJECTION S (continued )

SI C 34 5

34 6 34 7 34 9
35 4
35 5 Descriptio n Scre w Machin e Products , and Bolts , Nuts , Screws , Rivet s an d Washer s Meta l Forging s and Stamping s Coating , Engraving , and Allie d Service s Miscellaneou s Fabricate d Meta

l Product s Metalworkin g Machiner y an d Equipmen t Specia l Industr y Machinery , excep t Metalworkin g Machiner y Contro l

Costs Pe r Facilit y ($1000) " 19 6

23 6 47 8 35 6
19 6
19 6 Offse t

Cost s Pe r Facilit y ($1000) b 10. 6

15. 7 15. 0 15. 9
7. 3
9. 0 Tota

l Regulator y Cost s pe r Facilit y ($1000 ) 206. 6

251. 7 493. 0 371. 9
203. 3
205. 0 Facilit

y Populatio n I n New Majo r Sourc e Increments ' 3

6 4 13 1 13 7
2 2
1 3 Expected

Growt h (Percent) d 2

2 2 3
2
2 Expecte d

Ne w Facilitie s Pe r Yeard 0.0 6

1.2 8 2.6 2 4.1 1
0.4 4
0.2 6 Regulatory

Cos tPe r Yea r ($1000) ' 12. 3

322. 2 1291. 8 1528. 7
89. 4
53. 3

(continued)TABL E 4-5 . NATIONA L COS T PROJECTIONS (continued )

SI C 35 9

37 4 39 5
39 9
42 2 50 9
51 1 Descriptio n Miscellaneou s Industria l an d Commercia

l Machiner y an d Equipmen t Railroa d Equipmen

t Pens , Pencils , an d Other Artists ' Material s Miscellaneou s Manufacturin g Industrie s Publi c Warehousin g and Storag e Miscellaneou s Durabl e Good s (Wholesale ) Paper an d Paper Product s Contro l Cost s Pe r Facilit y ($1000) " 19 6

19 6 23 6
19 6
2 23 6
23 6 Offset

Cost s Pe r Facilit y ($1000) " 18. 3

15. 3 8. 9
6. 7
14. 3 9. 6
19. 6 Total

Regulator

y Costs pe r Facilit y ($1000 ) 214. 3

211. 3 244. 9
202. 7
16. 3 245. 6
255. 6

(continued ) Facilit

y Populatio n In Ne w Majo r Sourc e Increments ' 1 3

1 2 1 2
3 2
1 1 1 0
8 Expecte d

Growt h (Percent) d 2

2 2
2
2 2
2 Expecte d

New Facilitie s Pe r Year

d 0.2 6

0.2 4 0.2 4
0.6 4
0.2 2 0. 2
0.1 6 Regulator

y Cos tPe r Yea r ($1000) ' 55. 7

50. 7 58. 7
129. 7
3. 5 49. 1
40. 9

•TABL E 4-5 . NATIONA L COS T PROJECTIONS (continued )

SI C 51 7
55 4 65 1
72 1 73 9 75 3 82 1 Tot a 1 Descriptio n Petroleuman

d PetroleumProduct s (Wholesale ) Gasolin e Servic e Station s (Retail ) Rea l Estate Operator s (excep t Developers ) an d Lessor s Laundry , Cleaning , an d Garmen t Service s Miscellaneou s Busines s Service s Automotiv e Repair Shop s Elementar y and Secondar y School s Contro l

Cost s Pe r Facilit y ($1000) " 4 5
1. 5 19 6
3. 5 19 6 19 6 19 6 Offse t

Cost s Pe r Facilit y ($1000) " 17. 4
12. 4 17. 8
6. 2 17. 0 13. 7 20. 3 Tota

l Regulator y Cost s pe r Facilit y ($1000 ) 62. 4
13. 9 213. 8
9. 7 213. 0 209. 7 216. 3 Facilit

y Populatio n I n Ne w Majo r Source Increments ' 31 4
1 1 17 1
4 0 3 6 3 6 1 2 Expecte d

Growt h (Percent) d 2
2 2
2 2 2 2 Expecte d

Ne w Facilitie s Pe r Year

d 6.2 8
0.2 2 3.4 2
0. 8 0.7 2 0.7 2 0.2 4 Regulatory

Cos tPe r Yea r ($1000) ' 391. 9
3. 0 731. 3
7. 7 153. 3 151. 0 51. 9 11875. 8
"Fro mTabl e 4- 2 "FromTabl e 4- 4 Tro mTabl e 4- 1 •"Referenc e 5TABL E 4-5 . NATIONA L COS T PROJECTION S (continued )

'(Tota l Regulator

y Cos t pe r Facility ) x (Expecte d New Facilities )TABL E 4-6 . REGULATOR Y COST S A S PERCENTAG E O F AVERAG

E REVENUE SI C Descriptio n Average Revenue (x$1000) " 734 8 734 8 1345 8 1300 0 Regulator

y Cost s Pe r Facilit

y (x$1000) b 324. 9 327. 3 213. 5 207. 0 Costs/Revenu e (% ) 4.4 2 4.4 5 1.5 8 1.5 9 14 2 Crushe d an

d Broke n Stone , includin g Ripra

p 14 4 San d and Grave l 20 9 Miscellaneou s Foo d Preparation s an d Kindre d Product s 22 4 Narro w Fabri c an

d Othe r Smallware s Mills : Cotton , Wool , Silk , etc . 22 6 Dyein g and finishin g Textiles , excep t Wool Fabric s an

d Knit Good s 22 9 Miscellaneou s Textil e Good s 23 9 Miscellaneou s Fabricate d Textil e Product s 24 3 Millwood , Veneer , Plywood , an d Structura

l Woo d Member s 24 9 Miscellaneou s Woo d Product s 25 3 Publi c Buildin g an d Relate d Furniture 25 4 Partitions , Shelving , Lockers , an d Office and Store Fixture s 25 9 Mis c Furnitur e and Fixture s 27 5 Commercia

l Printin g 30 8 Miscellaneou s Plastic s Product s 31 1 Leathe

r Tannin g and Finishin g 33 6 Nonferrou s Foundrie s 34 5 Screw Machin e Products , an d Bolts , Nuts , Screws , Rivet s and Washer s 34 6 Meta l Forging s and Stamping s 34 7 Coating , Engraving , an d Allie d Service s 34 9 Miscellaneou s Fabricate d Meta l Product s 35 4 Metalworkin g Machiner y an d Equipmen

t 35 5 Specia

l Industr y Machinery , excep t

Metalworkin g Machiner y 1376 3 232. 2 1.6 8 1206 2 1396 3 1389 6 1670 3 374 3 1074 0 374 3 933 6 481 2 3128 8 1376 9 1157 2 1477 5 904 0 273 2 723 4 1638 8 254. 7

221. 1 210. 4 224. 7 30. 4 209. 7 211. 5 225. 1 233. 2 212. 8 211. 2 206. 6 251. 7 493. 0 371. 9 203. 3 205. 0 2.1 1

1.5 8 1.5 1 1.3 4 0.8 1 1.9 5 5.6 5 2.4 1 4.8 4 0.6 8 1.5 3 1.7 8 1.7 0 5.4 5 13.6 1 2.8 1 1.2535 9 Miscellaneou s Industria l an d Commercia

l Machiner

y and Equipmen t 37 4 Railroa

d Equipmen

t 39 5 Pens , Pencils , an d Othe r Artists ' Material s 39 9 Miscellaneou s Manufacturin g Industrie s 42 2 Publi c Warehousin g an d Storag e 50 9 Miscellaneou s Durabl e Good s (Wholesale ) 51 1 Pape r an d Paper

Product s 51 7 Petroleumand Petroleu mProduct s (Wholesale ) 55 4 Gasolin e Servic e Station s (Retail ) 65 1 Rea l Estate Operator s (excep t

Developers ) an d Lessor s 72 1 Laundry , Cleaning , an d Garmen t Service s 73 9 Miscellaneou s Busines s Service s 75 3 Automotiv e Repair

Shop s 82 1 Elementar

y and Secondar

y School s 667 9 214. 3 3.2 0 3133 6 331 9 690 7 765 8 15569 1374 1 1447 9 628 2 N A 2597 7 N A 215 5 N A 211. 3

244. 9 202. 7 16. 3 245. 6 255. 6 62. 4 13. 9 213. 8 9. 7 213. 0 209. 7 216. 3 0.6 7

7.3 7 2.9 3 0.2 1 1.5 7 1.8 6 0.4 3 0.2 2 N A 0.0 3 N A 9.7 3 N A "Source : Rober

t Morri s Associates , "RM

A Annua l Statement

Studies" , Philadelphia , PA , 1989
. Interna l Revenu e Service , "Statistic s of

Income Sourc e Boo

k 1990" , U.S
. Department

of th e Treasury , Washington , D.C , 199 1 b Se e Exhibi t

1 0P.5 1

I n addition , th e result s indicat e tha t th e cost s to smal

l entitie s i n th e sourc e categorie s studie s ar e no t

likely to b e significan

t whe n compared t

o thos e entities ' tota

l revenues . However , th e averag e firmi s by n o mean s th e sam e a s th e margina

l firmi n a n industry
. A margina l firmmigh

t hav e asignificantl

y les s robus t

financia l situatio n tha

n th e averag e firm an d migh t a t th e sam e time fac e highe

r regulator y cost s tha n th e averag e firm. Thus , averag e figure s a s derive d i

n thi s analysi s ca

n disguis e th e difficultie s tha t ca n fac e afe w firms i n eac h industry
. Th e assumption s mad

e i n performin g thi s analysi s are provide d again here
. Take n together , the

y ca n provid e som

e measur e o f th e degre e o

f confidenc e tha

t ca n b e place d i

n th e results
. Ke

y assumption s ar e a s follows
.

• Th e onl

y regulator

y revision s whic

h generat e significan

t cost s are thos e whic

h affec t th e numbe r o f par t D sources , an

d henc e th e numbe

r o f entitie s facin

g LAE R an d offse t requirements
.

• Small-entity-dominate d industrie s (a s define d by SBA ) ar e areasonabl e proxy fo r th e tota l populatio n o

f smal l entities , give

n tha t th e majo r portio n of

othe r industrie s wit

h potentia l source s falling unde

r the NS R change s tend s to b e identifie d wit h ver y larg e entities
. I f alternativ e smal

l entit y definition s (e.g. , 10

0 employees ) wer

e to b e used , th e numbe r of smal l entitie s affecte

d an d th e tota l cos t o f regulatio n would decreas e substantially
.

• A ten-stat

e sampl e provide s areasonabl e basi s fo r representin g th e entire economy . Th e sample chose

n i n thi s stud y cover s approximately one-thir d o f nationa l gros s domesti c produc t

an d i s well distribute d geographically
.

• RAC T contro l cost s ca n b e calculate d using th e primar y contro l technologie s associate d wit h specifi c source s i

n th e potentiall y affecte

d rang e an

d using unit

cost s fo r typica l facilities
. LAE

R contro l cost s ca

n b e estimate d to b e 5 0 percent mor e tha n th e RAC T amount , an

d LAE R ca n b e considere d t

o b e th e uppe

r limit o f BACT
.

• Futur e offse

t cost s ca n b e projecte d based upo

n experienc e wit

h offse t cost s t o date
.

• Futur e NS R activit

y fo r newl y subject source s i s proportiona

l to th e distributio n of existin g firms an

d projecte d industria

l growt h rates .

CH-94-4 1 4-2 7P.5 2

CH-94-4 1 SECTIO N 5. 0 ADDITIONAL FEDERAL REQUIREMENT S AN D SUMMAR

Y O F RELATE

D ISSUE S Th e previou s section s o

f thi s documen

t hav e addresse d th e majorit y o f th e requirement s relate d t o th e Economi c Assessmen t require d o

f EP A fo r th e par t C an d D statutor

y an d propose d rul e changes
. Severa l additiona l requirement s remain to b e addressed
. Thi s section present s aqualitativ e analysi s o f th e effec t o f th e par t C an d D change s o

n th e remainin g issues
. Th e issue s covere d include th e specific requirement s o f Executiv e Order s 12866 , an d 12875
. I n additio n to th e specifi c requirement s o f thes e executiv e orders , agenera l summar y of th e cost s an

d benefit s o

f th e propose d rul e i s provided , whic h review s issue s alread

y discussed , and explore s afe w issue s no t

covere d by other

part s o f thi s analysis
. Thi s i s a qualitativ e analysis , an

d i s based primaril y o

n interview s wit

h EP A personne l an

d interna l discussion s wit

h th e TR C projec t team . Th e issue s t

o b e considere d are discussed below
. 5. 1 NEE

D FORREGULATOR

Y ACTIO N Mos t of th e regulator

y change s addresse d i

n thi s analysi s are specificall y mandate d b y th e 199 0 Amendment s to th e Clea n Ai r Act
. A fe

w additiona

l change s are clarification s o f existin g policie s an

d ne w administrativ e requirement s whic h are viewed b

y EP A a s essentia

l t o implementin g th e mandated requirement s fo r th e NS R program . I

n meeting th e variou s economi c assessmen

t requirement s o

f th e variou s statute s an

d Executiv e Orders , EP

A must conside r regulator y alternative s t

o th e propose d rule
. However , to agrea t exten t i n thi s case , EP A ha s n o alternatives , an

d must implemen t th e statutor

y requirement s o

f th e Clea n Ai r Act
. Thi s fac t wil l she d perspectiv e o

n th e scop e o

f EPA' s analysi s o

f th e propose d regulatio n a s th e Agency prepare s it s Economi c Assessment
. 5. 2 UNFUNDE

D MANDATES AN

D TH E EFFEC T O

N STATE , LOCAL , AN

D TRIBAL GOVERNMENT S Executiv e Orde

r 12875 , dated Octobe

r 26 , 1993 , specifie s that , t o the exten

t feasible , n o agenc y shall promulgat

e an y regulatio n tha

t i s not require d by statut

e if i t place s mandate s on State , local , o r

triba l governments , unles s funds are provide d to compl y wit h th e mandate
. I f suc h aregulatio n i s promulgate d an d funds are not

provided , th e agenc y mus t submi t to th e Offic e of Managemen

t an d Budge t (OMB ) adescriptio n o

f th e agency' s effort s to describ e an d addres s concern s fro

maffecte d agencies , an

d o f th e agency' s ow

n positio n supportin g th e nee d t o issu e th e regulation
. Regardin g other

effects on governments , Section 301(d)(2 ) of th e Ac t provide s tha

t India n tribe s ma

y no w develop implementatio n plan s (Triba l Implementatio n Plans , o r TIPs)
. TTPs , like SIP s mus t

include al l requirement s se t fort h i n th e Act
. Further

guidanc e o

n wher e i t i s appropriate to trea

t tribe s a s State s will b e provide d i n aseparat

e rulemakin g pursuan

t t o Section 301(d)(2 ) o

f th e Act
. Thi s provisio n allow s India n tribe s to voluntaril y implemen t thei r ow n TIP s a s lon g a s the

y mee t th e requirement s o

f th e Act whic h would otherwis e b e applicabl e o

n th e correspondin g India

n lands
. No ne

t cost s or benefit s resul t

fro man y mandator y actio n resultin g fro

mthi s change
. However , triba l government s ma

y choos e t o 6- 1P.5 3

CH-94-4 1 operate thei r

ow n NS R programs , incurrin g permi t progra mcost s i n exchang e fo

r th e abilit y t o implemen t their ow n TIPs
. A s describe d above , par t 7 0 provide s fo

r th e collectio n o

f fee s t o offse t suc h cost s if atrib e operate s it s ow

n NS R program . 5. 3 DEFINITION O F "SIGNIFICANT " REGULATOR Y ACTION Executiv e order

12866 , dated Septembe

r 30 , 1993 , require s a

n economi c assessmen

t (EA , formerly aRegulator

y Impac t Analysi s [RIA] ) o

f al l regulator

y action s deemed "significant. " Significan

t mean s an y regulator

y actio n whic

h will : (1 ) hav e a

n annua l effec t o n th e econom

y o f $10 0 millio n o r

more , o r adversel y affec t i n amateria

l wa y th e economy , a sector of th e economy , productivity , competition , jobs , th e environment , publi c healt h o r safety , o r State , local , o r

triba l government s o r

communities ; (2 ) create inconsistenc y wit h o r interfer e wit h action s o

f othe r agencies ; (3 ) materially alter th e budgetar

y impac t o f entitlements , grants , use

r fees , o r loa n program s an

d obligation s o

f recipient s thereof

; o r (4 ) rais e novel lega

l o r polic y issue s arisin g out

o f lega l mandates , o r

th e President' s priorities
. Furthermore , EP

A ha s furthe

r define d "significant " fo

r th e purpose s of

Executiv e Orde

r 1286 6 to apply to an

y regulator

y action having anegativ e effec t o f $2 5 million o r

mor e o n an y sector , region , o r

other subcomponen

t o f th e nationa

l economy . Th e part C and D change s ar e expecte d t o b e significan t by definitio n (1 ) becaus e of th e expecte d tota

l economi c burden
. Definition s (2) , (3) , an d (4 ) are not

expecte d t

o appl y t o th e propose d changes
. Th e ICR an d RF A hav e provide d som

e measur e of th e economi c effec

t o f th e changes
. Th e RFA-estimate d effec t o n smal l businesse s du e to LAE

R an d offset s wa s a

n increas e of

about $1 2 millio n per

year . Th e ICR-estimate d reportin g an d recordkeepin g burden to industr

y increase d by $1 0 million per year , an d th e burde

n to State s increase d by abou t $ 2 millio n per

year . Whil e thes e number s yiel d a n increas e o

f onl y $2 4 millio n per year , the y d o not include th e effec

t o f the change s o

n LAE R an d offse t cost s fo r businesse s other tha n th e RF A smal l businesses
. Whil e thi s effec t i s no t quantified here , i t

will likely b e large r tha n th e small busines s costs , becaus e man y large-facilit

y dominate d sourc e categorie s (e.g. , chemica

l processing , petroleumrefining ) wil l b e significantl y affected
. I

n addition , there ar e othe

r unquantified cost s o

f thi s rule , whic

h are briefl

y describe d below
. Thus , i t i s reasonabl e to expec t

th e tota l economi c burden to exceed $10 0 millio n per year . I n addition , fo r simila r reasons , th e $2 5 million significanc e threshol d define d by EP A fo r sector s of th e econom y ma y als o b e exceeded fo

r som e sectors . Eve n if th e change s t

o th e par t C an d D requirement s were no t significan t by definitio n (1 ) du e to th e $10 0 millio n cos t cutoff , othe r clause s i n definition (1 ) will probabl y apply to th e rul e becaus e of

it s advers e effects o

n sector s of

th e economy , competition , an d job s (th e effec t o n other government s ha s alread

y bee n discussed)
. Th e advers e environmental , health , an d safet y impac t claus e clearly will not

apply , becaus e th e par

t C an d D change s wil l lea

d t o a net environmenta

l benefit
. However , th e rul e wil l adversely affec t certai n sector s o

f th e economy , becaus e th e cost s of growt h will increas e fo

r man y ne w source s to whic

h nonattainmen

t NS R i s newl

y applicabl e du e to increase d permittin g requirements , an d contro l an d offse t costs . Thes e increase d cost s will not driv e margina

l existin g firms within th e affecte d sourc e categorie s out

o f business , bu t

the y will likely slow th e rat e o f growt h i n thes e categorie s a s som

e ne w source s o r

expansion s which would hav e take n plac e becom

e 6- 2P.5 4

CH-94-4 1 prohibitively expensive
. Th e advers e effec t o n th e econom

y will b e aslowe

r growt h rate tha n in th e absenc e of

th e regulations
. Job growt h fo r suc h industrie s i

n affecte d area s would als o slow
. Th e par

t C an d D change s wil l als o lea

d to advers e effects o

n th e domesti c an

d internationa

l competitivenes s of

sources , becaus e source s inside o f nonattainmen

t area s o r OTR' s which are newl

y defined a s majo

r wil l hav e highe

r cost s to gro w an

d expand tha

n simila r source s outsid e o

f thes e area s (includin g thos e outside o f th e U.S.) , o r

source s within thes e area s which fal

l belo w th e majo

r sourc e cutoffs
. Becaus e th e regulator

y chang e wil l likely b e considere d significan t pursuant t o Executiv e Orde

r 12866 , EP

A mus t provid e OM

B wit h a n assessmen

t of (1 ) cost s o

f th e regulator y action , including , t o th e exten t feasible , aquantificatio n o f thes e costs ; (2 ) benefit s of th e regulator

y action , including , to th e exten t feasible , aquantificatio n o f thes e benefits ; an d (3 ) a n assessmen

t of alternative s to th e regulator y action
. Th e following section s summariz e an

d qualitatively discus s cost s an d benefits
. Alternative s ar e not discussed , because , a s describe d above , thi s regulatio n i s largely astatutor y mandate
. 5. 4 SUMMAR

Y O F COST S Cost s pertainin g to th e definition o f significan t hav e alread

y bee n discusse d i

n thi s section
. Thes e include : (1 ) a n increas e i

n cost s t o smal l businesse s totalin g $1 2 million per year , a s estimate d b y th e RF A i n Section 4 ; (2 ) a

n increas e i

n reportin g an

d recordkeepin g cost s to industr

y and governmenta

l entitie s totalin g $1 2 millio n per yea r a s estimate d by th e IC R i n sectio n 3 ; an

d (3 ) advers e effects o

n th e economy , includin g employmen t an d competitivenes s discusse d qualitatively above
. Cost s to larger businesse s no t

include d i n th e RFA , includin g cost s of

LAE R an d offsets , wer

e als o mentioned bu t

no t quantified
. Thi s repor t doe s no t attemp t t o quantif y th e cost s describe d i

n thi s section which are no t elsewher e quantified , bu t

provide s sufficien

t information fo

r aqualitativ e assessment . 5. 5 SUMMAR

Y O F BENEFIT S Th e primar

y benefit of th e par t C an d D change s ha s alread

y bee n discussed , bu t

not quantified
. Environmenta

l benefits , suc

h a s thos e du e t

o increase d publi c health , lowe r morbidit y and mortalit

y rates , an d lowe r maintenanc e cost s fo

r structure s adversely affecte d by ai r pollution , ar e difficul

t to quantify , an

d are beyond th e scop e o

f thi s report . However , sufficien t informatio n i s provide d fo r aqualitativ e assessment . A n additiona

l minor benefi t o f th e par t C and D change s i s that , becaus e o f th e larger numbe r o f source s subject

t o NS R (an d thu s to BACT an

d LAE R requirements) , an

d th e mandated submitta

l of contro l technolog y informatio n to anationa

l clearinghouse , incentive s will b e provide d fo r supplier s o

f contro l technolog y t o provid e lower

- cost , mor e efficien t contro l technology
. Th e additiona l incentiv e fo r technologica

l innovatio n will lea

d to mor e cost-effectiv e pollutio n controls , resultin g i n a net benefit nationwide
. I t

ma y als o enhanc e th e competitivenes s of thes e technologie s i

n th e internationa

l market
. Quantification of thes e benefit s i s beyond th e scop e o f thi s report .
6- 3