P.1 

OAR Box 1787 

Prepped by Ollie Stewart 

Document Number: 

147) ll-A-16 

Docket Number: 

A-90-37 

Printed 11/5/2008 9:21:16 AM Sheet 147 of 149 
H-A-i U 

April 24, 1996 

Note to docket A-90-37 

rrom: Dennis Crumpler 

The underlying document is a March 22 1995 draft B. m w 

Analysis of draft proposed rulemaking on whit •! Re8

u,*°iy and Economic Impact 

the provisions ^^S^SS^^ T T ^ '" AUgUSt 1995 ' *TM« 

This draft analysis is inlcuded \^th^T ^ ?the NS R Refor m Remaking 

Information Collection R^^l ^ t f '* ^ f°

T th e NS R

 P^a m 

baseline for the NSR Reform Proposed Rulemaking Ic T ^ 1995 '

WWc h m tU m forme d th e 

gj 8 g E 11 E 

APR 3 0 1996 

EPA AIR DOCKET 
P.3 

Draft Economic Assessment of the Impacts of Part C and D Regulatory Changes 

by: 

Dan'l Mussatti 

Air Quality Management Division 

Office of Air Quality Planning and Standards 

(MD-12) 

U.S. Environmental Protection Agency 

Research Triangle Park, NC 27711 

March 22, 1995 
P.4 

TABLE OF CONTENTS 

Section Page 

List of Tables iv 

1.0 INTRODUCTION 1-1 

2.0 DISCUSSION OF THE PART C AND D REGULATIONS 2-1 

2.1 GENERAL OVERVIEW OF FEDERAL NSR PROGRAM 2-1 

2.2 PART C AND D REGULATORY CHANGES 2-2 

2.2.1 Part D Changes 2-3 

2.2.1.1 Changes Affecting Applicability 2-3 

2.2.1.2 Changes Affecting Permit Costs 2-6 

2.2.2 Part C Changes 2-8 

2.2.2.1 Changes Affecting Applicability 2-8 

2.2.2.2 Changes Affecting Permit Costs 2-9 

3.0 INFORMATION COLLECTION REQUEST FOR PART C AND D CHANGES 

3-1 

4.0 REGULATORY FLEXIBILITY ANALYSIS 4-1 

4.1 INTRODUCTION 4-1 

4.2 APPROACH 4-2 

4.2.1 General Approach 4-2 

4.2.2 Influence of the Nature of Data Sources on Methodology 4-3 

4.3 POPULATION DEFINITION AND SAMPLING 4-4 

4.3.1 Population Definition and Sampling Approach 4-4 

4.3.2 Identification of Small-Entity-Dominated Industries Impacted by 

NSR Changes 4-5 

4.3.4 Number of Sources Nationwide 4-9 

4.4 COSTS OF REGULATION 4-10 

4.4.1 Control Technology Costs 4-10 

4.4.2 Offset Costs 4-11 

4.4.3 Nationwide Total Costs 4-17 

4.5 RESULTS AND DISCUSSION 4-17 

5.0 ADDITIONAL FEDERAL REQUIREMENTS AND SUMMARY OF RELATED ISSUES 

5-1 

5.1 NEED FOR REGULATORY ACTION 5-1 

5.2 UNFUNDED MANDATES AND THE EFFECT ON STATE, LOCAL, 

AND TRIBAL GOVERNMENTS 5-1 

5.3 DEFINITION OF SIGNIFICANT REGULATORY ACTION 5-2 

5.4 SUMMARY OF COSTS 5-3 

CH-94-41 
P.5 

5.5 SUMMARY OF BENEFITS 5-3 

6.0 REFERENCES 6-1 

CH-94-41 
P.6 

LIST OF TABLES 

Number Page 

3-1 Respondent Data and Information Requirements for Preparing Part C (PSD) 

Construction Permits 3-2 3-2 

3-2 Respondent Data And Information Requirements for Preparing Part D (Nonattainment 

NSR) Construction Permits 3-3 

3-3 State Data and Information Requirements 3-4 

3-4 Summary of Recordkeeping and Reporting Burden Estimates to Industry Respondents 

and State and Local Agencies 3-6 

4-1 Small-Business-Dominated Industries Affected by Changes to New Source 

Review Regulations 4-7 

4-2 Small-Business-Dominated Industries, Typical Control Technology, and 

Cost per Facility 4-12 

4-3 Data for Determination of Offset Prices 4-14 

4-4 Annualized Total Costs of Obtaining Offsets for Affected Sources 4-16 

4-5 National Cost Projections 4-18 

4-6 Regulatory Costs as Percentage of Average Entity Revenue 4-21 

CH-94-41 
P.7 

SECTION 1.0 

INTRODUCTION 

The federal New Source Review (NSR) program is a preconstruction permitting 

program which regulates emissions increases due to new source growth and modifications at 

existing sources in an effort to achieve and maintain the National Ambient Air Quality 

Standards (NAAQS). The 1990 Amendments to the Clean Air Act mandated numerous 

changes to the federal NSR program. The mandated changes address NSR programs for areas 

currently violating the NAAQS (Nonattainment NSR program) as well as areas where the 

NAAQS are being met (Prevention of Significant Deterioration [PSD] program). The Act 

requirements for nonattainment NSR are found in part D of title I, and the requirements for 

PSD are found in part C of title I. 

In order to address some of the statutory changes, the Environmental Protection 

Agency (EPA) is proposing changes to the existing regulations which codify the nonattainment 

NSR and PSD programs. The regulations being revised are contained in parts 51 and 52 of 

title 40 of the Code of Federal Regulations (CFR) which specify requirements for the 

preparation, adoption, and submittal of implementation plans; and approval and promulgation 

of implementation plans, respectively. 

This report presents an economic assessment of the part C and D changes made by the 

1990 Amendments. When EPA proposes regulations, it must meet numerous requirements to 

describe and quantify various projected economic impacts of the proposed rule. These 

requirements include requirements pursuant to the following: 

Regulatory Flexibility Act 

Paperwork Reduction Act 

Executive Order 12612 

Executive Order 12866 

Executive Order 12875 

Executive Order 12898 

This report assists EPA in satisfying these requirements. Section 2 provides a brief 

description of the NSR regulations, and discusses the changes in the 1990 Amendments to 

parts C and D. Section 3 contains an Information Collection Request (ICR) and supporting 

documentation, which estimate the burden of the regulatory changes on industry and on State 

and local air pollution control agencies. This ICR will aid EPA in satisfying its Paperwork 

Reduction Act requirements. Section 4 contains an initial regulatory flexibility analysis 

(IRFA) which will provide EPA with information necessary to meet its Regulatory Flexibility 

Act requirements. Section 5 contains a qualitative discussion of several additional economic 

issues which EPA must consider pursuant to the requirements of Executive Orders 12866 and 

12875. Finally, references are provided in Section 6. 

CH-94-41 
P.8 

SECTION 2.0 

DISCUSSION OF THE PART C AND D CHANGES 

Some of the proposed changes to the C and D regulations address statutory changes to 

the NSR preconstruction permit program mandated by the 1990 Amendments to the Clean Air 

Act (CAA). This section provides a brief general background on the current NSR program, 

and summarizes specific changes made as a result of the part C and D changes. Emphasis in 

this section is placed on the regulatory changes expected to have significant bearing on the 

analyses conducted in this document. 

2.1 GENERAL OVERVIEW OF FEDERAL NSR PROGRAM 

In general, the NSR program regulates increases in a major source's emissions of air 

pollutants subject to the CAA. Before a major source may construct or modify an emissions 

unit in a way that would increase its emissions of any pollutant regulated by the Act, the 

source must obtain a permit for that construction. In order to obtain the permit, the source in 

an attainment areas has to predict its air quality impact, including its impact on the NAAQS. 

In addition, the source has to determine and apply the appropriate emissions control 

technology to the new or modified unit. In nonattainment areas, major sources may have to 

obtain emissions offsets to make up for the proposed emissions increase at the source. Not all 

emissions increases are subject to these requirements. Smaller new sources or modifications 

may be exempt; specific emissions levels are discussed below. 

The NSR program is divided into two separate elements. The first element regulates 

emissions increases in areas that are in attainment of the NAAQS (or those which do not have 

sufficient data to be classified as nonattainment). This program is called Prevention of 

Significant Deterioration (PSD). The PSD requirements are contained in part C of title I of 

the CAA. The second element regulates emissions increases in areas that are in violation of 

the NAAQS. This program is called nonattainment NSR. The nonattainment NSR 

requirements are contained in part D of title I of the Act. A source can be in an area that is 

attainment for one pollutant, while simultaneously nonattainment for another pollutant. In 

these cases, emissions increases at major sources may be subject to PSD requirements if they 

increase emissions of the attainment pollutants, and may also be subject to the nonattainment 

NSR requirements if they increase emissions of the nonattainment pollutants. 

There are several major differences between the nonattainment NSR and PSD 

programs. First, the level of control is more stringent for nonattainment areas. In general, 

new major sources and major modifications of existing major sources in these areas must apply 

the Lowest Achievable Emissions Rate (LAER) of any demonstrated technology, whereas in 

PSD areas, they must apply the Best Available Control Technology (BACT), which gives 

some consideration to cost. Second, new or modified major sources in nonattainment areas are 

required to offset the proposed emissions increases by securing emissions reductions from 

existing sources. Third, the nonattainment NSR applicability criteria (discussed below) are 

more stringent in nonattainment areas. Other minor differences apply as well. The majority 

of the part C and D changes being proposed apply to nonattainment NSR program. 

Regarding applicability, two factors must be considered in determining if a proposed 

emissions increase is subject to NSR permitting requirements. First, the source must be a 

CH-94-41 
P.9 

"major source." The level above which a source is considered major for NSR purposes 

("major source cutoff) varies with pollutant and attainment status of the area. If a source is 

not a major source, its emissions increases are not subject to federal major source NSR 

permitting requirements unless the proposed emissions increase itself is above the major source 

cutoff. The new minor source or minor modification may be subject to State requirements 

("minor source NSR"). In addition to existing sources, new facilities at "green field" sources 

are considered major if their total proposed emissions of an applicable pollutant exceed the 

major source cutoff. 

The second part of the applicability test applies to modifications at existing major 

sources. The potential emissions increase due to the modification must exceed certain de 

minimis levels. If these levels are exceeded, the modification will result in a "significant net 

emissions increase" and is subject to the NSR permitting requirements. As with the major 

source cutoffs, these de minimis levels vary with pollutant and attainment status of the area. 

When considering the emissions changes due to a modification, a source may also consider 

other creditable increases and decreases at the source that are contemporaneous with the 

change being considered. If the sum of creditable contemporaneous increases and decreases 

results in a net emissions increase below the significance level, the modification is exempt 

from major NSR requirements, even if its emissions considered alone would be above this 

level. This consideration of contemporaneous increases and decreases is referred to as 

"netting." 

When a source anticipates construction or modification that will increase emissions by 

an amount which would subject it to NSR, it must apply for a preconstruction permit. The 

information which must be presented in the application varies from case to case, and is 

affected by numerous factors, including attainment status, proximity to Class I areas, and 

others. The information requirements are discussed in detail in the ICR accompanying this 

analysis (Section 3). The permit application is then submitted to the permitting authority 

(PA), which is typically the State or local air pollution control agency, but may, in some 

cases, be EPA. The PA evaluates the application for completeness and requests additional 

information as needed. Before the PA may grant final approval to construct, the public must 

have an opportunity to comment on the application. 

2.2 PART C AND D REGULATORY CHANGES 

Some proposed changes to the part C and D regulations primarily address the 

statutory requirements of the 1990 Amendments to the CAA. Most of these Amendments 

address nonattainment areas, primarily for ozone. However, some provisions apply to 

attainment areas," while others address overall administration of the NSR program. In 

addition, EPA is making changes which are intended to clarify long standing policies and 

improve EPA oversight of NSR programs. This section describes all major part C and D 

changes, with an emphasis on changes which are likely to have a significant effect on the 

analyses in this document. The nonattainment NSR changes are discussed first, followed by 

the PSD changes. Within each discussion, the changes are presented in approximate order 

from the most economically significant to the least significant. 

The EPA issued transitional guidance for implementing the statutory changes prior to 

this proposed rulemaking. This guidance, contained in a September 3, 1992 EPA 

CH-94-41 
P.10 

memorandum, provided that most of the statutory changes became effective November 15, 

1992. Thus, many of the changes to the part C and D rules made in this rulemaking, when 

promulgated, will have already been in effect for two or more years. 

2.2.1 Part D Changes 

The part D changes encompass a wide variety of program revisions. These revisions 

can be divided into two groups: changes in part D applicability criteria, and changes that affect 

the nature of the permitting process for applicable sources. In general, the economic impacts 

of the updated NSR program are determined by both types of changes. The revisions to 

applicability increase the number of sources nationwide which must go through the permit 

process. Broader applicability for the part D sources, especially for part D sources in ozone 

nonattainment areas and the ozone transport region, accounts for a large majority of the 

cumulative economic impact of the part C and D regulations. The revisions in the permit 

process affect the burden of obtaining the actual permit. (Permit burden to industry includes, 

for example, costs of developing the permit application, finding and purchasing offsets, 

applying control technology, and costs imposed as a result of permit processing time. For air 

pollution control agencies, permit burden includes processing the application and issuing the 

permit.) The major part D program revisions identified in each category are presented below. 

2.2.1.1 Changes Affecting AppUcabiUty 

lowering of major source cutoffs and dp minimis levels The most significant change in the 

part D regulations is lowering the major source cutoff for certain nonattainment areas. The 

major source cutoff for emissions of volatile organic compounds (VOC) in ozone 

nonattainment areas was previously 100 tons per year (tpy). This level continues to apply in 

most marginal and moderate ozone nonattainment areas. However, for serious nonattainment 

areas, the new major source cutoff will be 50 tpy [Sec. 182(c)]; for severe areas, 25 tpy [Sec. 

182(d)]; and for extreme areas, 10 tpy [Sec. 182(e)]. For marginal and moderate ozone 

nonattainment areas, the current significance level for net emission increases of 40 tpy 

continues to apply. However, for serious and severe ozone nonattainment areas, the new 

significance level will be 25 tpy. For extreme areas, there will be no significance level; any 

emissions increase at a major source in an extreme area will be subject to part D NSR. 

A lowering of major source cutoffs and de minimis levels will take place in some PMIO nonattainment areas. For PM-10 areas, the 100 tpy major source cutoff will remain in 

place for moderate PM-10 nonattainment areas; but for the new serious PM-10 nonattainment 

areas the major source cutoff will be lowered to 70 tpy [Sec 189(b)(3)]. Proposed new 

significance levels for both types of areas will be 15 tpy. Also, because section 189(e) of the 

Act mandates that PM-10 requirements apply to sources of PM-10 precursors (S02, NOx, and 

VOC), where needed EPA proposes cutoffs for these pollutants in PM-10 nonattainment areas. 

The different types of PM-10 precursors will be treated separately (i.e., not summed) for NSR 

applicability purposes. These NSR provisions will apply unless the Administrator determines 

that precursors do not contribute significantly to PM-10 concentrations. The new PM-10 

precursor major source threshold will be 100 tpy in moderate areas, and 70 tpy in serious 

CH-94-41 
p.11 

areas. Likewise, the significance level for PM-10 precursors will be 40 tpy in both types of 

areas. 

Finally, the major source cutoff and significance level will be lowered for serious CO 

nonattainment areas where major stationary sources contribute significantly to the 

nonattainment problem. For these areas, the major source cutoff and significance level will be 

lowered to 50 tpy from 100 tpy. In other CO nonattainment areas the 100 tpy levels will 

continue to apply [Sec 187(c)(1)]. 

These provisions will significantly increase the number of major sources nationwide for 

VOC, CO, and PM-10. The effect will be greatest for VOC sources, where the cutoffs in 

some areas are much lower than 100 tpy. The mandated lowering of the major source cutoffs 

and de minimis levels for major modifications in these areas will not immediately lead to 

additional required action for sources which become major sources as a result of the title I 

requirements. Rather, the requirements will become applicable when these sources propose to 

expand, or when new sources propose to build, if these sources increase emissions of one or 

more of the pollutants for which the area is nonattainment. 

F.xpansion of VOC requirements to NOA sources in ozone nonattainment areas The major 

source cutoffs and significance levels discussed above for VOC in nonattainment areas will be 

extended to major NOx sources, except where the Administrator determines that the air quality 

will be better off without NOx controls [Sec. 182(f)]. This change will also significantly 

increase the number of part D major sources nationwide. The effect of this provision is that 

many new or modified NOx sources which were previously not subject to part D permitting 

provisions will now be subject to them. For example, NOx sources which emit less than 100 

tpy of NOx in N02 nonattainment areas (and are therefore not major for PSD), but that also 

happen to be serious or severe nonattainment areas for ozone, may now be major for part D 

NSR for their NOx emissions because of the lower major source cutoffs and significance 

levels. In addition, sources which emit both VOC and NOx in ozone nonattainment areas, but 

which were previously only subject to part D NSR for VOC, may now be subject to part D 

NSR for both pollutants. 

Introduction of requirements for ozone transport regions Interstate transport regions are areas 

where interstate transport of pollution from one State may contribute to a NAAQS violation in 

another State. The 1990 Amendments established the first ozone transport region (OTR), and 

gave the Administrator authority to establish others. The first OTR, the Northeast OTR, 

consists of the 11 northeastern States stretching from Maryland to Maine, in addition to the 

District of Columbia Consolidated Metropolitan Statistical Area (CMSA). In moderate and 

above ozone nonattainment areas in OTRs, the otherwise applicable part D requirements for 

those nonattainment areas continue to apply. In addition, for all other areas within the OTR, 

including portions classified as attainment for ozone, major sources are subject to most of the 

requirements of moderate ozone nonattainment areas. The major source cutoffs for these areas 

(i.e., attainment areas and marginal and moderate ozone nonattainment areas) within the OTR 

are 50 tpy for VOC and 100 tpy for NOx. The part D NSR major source cutoff and 

significance level for NOx remain unchanged in OTRs. The VOC significance level for these 

portions of the OTR will be 40 tpy (Sec. 184). 

CH-94-41 
This provision brings additional new sources into the universe of part D major sources. 

Although its effect will probably not be as great as lowering major source VOC cutoffs, it will 

subject to NSR a substantial number of moderately sized VOC sources in the OTR which were 

previously not major. Likewise, it will shift major VOC sources in attainment areas for ozone 

into the part D program, with its associated offset provisions and more stringent control 

requirements. 

Additional Minor Provisions Affecting Applicability The following is a list of Other part D 

statutory changes expected to have a minor effect on the number of sources nationwide 

affected by the nonattainment NSR regulations: 

• Certain modifications in extreme areas for ozone are exempted from offset 

requirements if the modifications are required by the Act, the applicable SIP, or an 

applicable permit condition [Sec. 182(e)(2)]. Also, in these areas, modifications are 

exempt from the 1.5:1 NSR offset requirement if they obtain internal offsets at a ratio 

of at least 1.3:1 [Sec. 182(c)(8)]. 

• Oil and natural gas stripper wells are exempt from the following nonattainment area 

permit requirements: (1) major source thresholds below 100 tpy, (2) increased offset 

ratios, (3) requirements for NOx and PM-10 precursors, and (4) special modification 

provisions for serious ozone nonattainment areas (Sec. 819). This will exempt a small 

number of sources in this category to which these provisions would otherwise have 

applied. 

If States opt for one of the following statutory exemptions from reasonable further 

progress (RFP) requirements for VOC emissions, the number of sources subject to part 

D in those States will increase, as will the requirements upon them: (1) the requirement 

for 3 percent VOC reduction per year can be waived if the State requires sources in 

serious and severe areas to meet requirements of the next higher classification (severe 

and extreme, respectively) [Sec. 182(c)(2)(B)(ii)], and (2) the requirement for 15 

percent VOC reduction over six years can be waived in any moderate or higher 

nonattainment area if the major source threshold for VOC is reduced to 5 tpy and the 

sources in the areas must meet the requirements of extreme areas [Sec 182(b)(1)]. 

The netting calculation for VOC or NOx emissions is more stringent for serious and 

severe ozone areas [Sec. 182(c)(6)]. Some sources which could have netted out of 

NSR using the old calculation will probably not be able to net out under the new 

calculation. 

2.2.1.2 Changes Affecting Permit Costs 

NPW offset ratios for ozone areas Currently, the location of offsets for new sources must 

result in a net air quality benefit in the area of the new source. Prior to the 1990 

Amendments, offset ratios (i.e., the ratio ofthe reduction of emissions obtained from existing 

CH-94-41 
P.13 

sources to the potential emissions increase of the new source) were required only to be greater 

than 1:1. However, the 1990 Amendments required that minimum offset ratios in ozone 

nonattainment areas must be increased as follows: 1.1:1 in marginal areas, 1.15:1 in moderate 

areas, 1.2:1 in serious areas, 1.3:1 in severe areas, and 1.5:1 in extreme areas (Sec. 182). 

For severe and extreme areas, the minimum ratio can be reduced to 1.2:1 if the area's SIP also 

requires all existing major source to apply BACT (instead of RACT) for VOC [Sec. 

182(c)(10)]. 

While this provision will not increase the number of applicable sources, it increases the 

minimum amount of offsets a source in an ozone nonattainment area will have to obtain. This 

could, in turn, increase the total cost to sources to comply with the part D rules. On the other 

hand, if States presume these minimum ratios constitute a net air quality benefit, some 

administrative burden could be saved relative to the case-by-case offset determination. 

Alternatives Analysis The 1990 Amendments added a new requirement to the information that 

the source must present in support of its permit application. By means of an analysis of 

alternatives (sizes, sites, processes, controls, etc.), the source must demonstrate that the 

benefits of the proposed project significantly outweigh its environmental and social costs [Sec. 

173(a)(5)]. This provision will increase the burden to sources preparing permit 

applications, as well as air pollution control agencies reviewing them. No specific procedures, 

formats, or extensive guidelines have been issued for conducting this analysis, but its scope 

may vary widely, depending on the size and nature of the project and the scope of issues raised 

by the public. A partial list of issues that appropriately could be raised includes environmental 

justice, demand-side management, alternative energy sources, global warming, recycling, or 

other source reduction techniques. 

Mandatory submissions of data to RACT/RAfT/TAFK Clearinghouse To assist permit 

applicants and States in determining the technologies to be considered in control technology 

demonstrations for NSR permits, EPA operates an online bulletin board system (BBS) called 

the RACT/BACT/LAER Clearinghouse. Previously, States submitted control technology 

determinations to the Clearinghouse voluntarily. However, submittal of this data for part D 

NSR permitting is now required by the Act [Sec. 173(d)]. This will add a minor additional 

burden to the permitting authority for each permit processed. The short-term burden to the PA 

may eventually be offset by the decrease in the burden to a source undertaking a LAER 

determination due to ready availability of control technology data. 

Additional Minor Provisions Affecting Permit Cost The following is a list of Other part D 

changes which may have a minor effect on the permit cost for some or all of the sources 

and/or agencies affected by the nonattainment NSR regulations: 

Several changes have been made affecting the nature of offsets in certain areas for some 

sources. These include: (1) invalidation of existing growth allowances in areas that 

received notice of an inadequate SIP [Sec. 173(b)]; (2) prohibition of new growth 

allowances, except in HUD enterprise zones [Sec. 173(a)(1)(b)]; (3) allowance for 

alternative means of offsets for facilities permitted to test-fire rocket engines [Sec. 

CH-94-41 
P.14 

173(e)]; and (4) lifting certain restrictions on the use of shutdowns and curtailments as 

offsets in ozone nonattainment areas. 

• The Federal construction ban currently in effect (at 40 CFR 52.24) for nonattainment 

areas without an adequate part D SIP will be lifted for all but a few nonattainment 

areas. The operational effect of this provision will likely be negligible because the 

actual extent of this ban is very limited (Sec. 110). 

2.2.2 Part C Changes 

The proposed part C, or PSD, regulatory changes encompass a much narrower group 

of changes man the part D changes. Like the part D changes, these changes can be divided 

into two groups: (1) changes in PSD applicability criteria, and (2) changes that affect the 

nature of the PSD permitting process for applicable sources. 

2.2.2.1 Changes Affecting AppUcabiUty 

Sources of hazardous air pollutants (HAPs) are exempt from PSD permitting requirements 

Sources of the HAPs listed under section 112 of the Act as amended in 1990 are exempt from 

the PSD permitting requirements [Sec. 112(b)(6)]. Normally, at major sources the PSD 

requirements apply to significant increases in emissions of any pollutant regulated by the Act, 

not just the criteria pollutants. This includes pollutants subject to existing New Source 

Performance Standards (NSPS) and National Emissions Standards for Hazardous Air 

Pollutants (NESHAPS). The Act specifically exempts HAPs from review.' However, any 

HAPs regulated as constituents or precursors of more general criteria pollutants are still be 

subject to PSD for the more general pollutant. For example benzene, toluene, etc. are still 

regulated as VOC, and asbestos is still regulated as PM-10. This provision will reduce the 

number of PSD sources. 

New significance level for ozone depleting substances (ODS) Title VI of the Act as amended 

in 1990 lists substances which are expected to deplete stratospheric ozone (Sec. 602). Because 

these substances are regulated by the Act, they are subject to PSD (many of these substances 

were previously subject to PSD because of the Montreal Protocol). As before, the major 

source cutoff for ODS will be 250 tpy, except for sources from categories listed in section 169 

of the Act, for which the cutoff will be 100 tpy. The new ODS significance level for all 

sources will be 100 tpy. As proposed, ODS will be grouped and treated as a single pollutant 

for PSD applicability purposes. In addition, modifications substituting less-potent ODS for 

more-potent ODS will generally be exempt from PSD review. The effect of the changes in the 

ODS provisions will be to decrease the number of sources subject to PSD requirements. 

Previously, there was no significance level for ODS; all modifications involving increases in 

ODS regulated under the Montreal Protocol occurring at major sources were subject to PSD, 

The following pollutants which were regulated by PSD are no longer regulated individually because they are section 112 

HAPs: arsenic, asbestos, benzene, beryllium, mercury, radionuclides, and vinyl chloride. They may be regulated as a 

precursor or constituent of a criteria pollutant, however, such as VOC or particulate matter. 

CH-94-41 
P.15 

no matter how small the emissions increase. With the new significance level, some sources 

with small increases, which previously would have been subject to PSD, will now be exempt. 

New major source criteria for municipal waste incinerators The criteria by which municipal 

waste incinerators are 100 tpy sources for PSD applicability purposes have been changed from 

incinerators "capable of charging 250 tons of refuse per day" to those "capable of charging 50 

tons of refuse per day." This will lead to a minor increase in the applicability of these types of 

sources to PSD [Sec 169(1)]. 

2.2.2.2 Changes Affecting Permit Costs 

Mandatory submissions of data to RACT/B ACT/I .AF.R Clearinghouse To be consistent with 

part D LAER determinations, EPA proposes that States must submit BACT data to the 

Clearinghouse. This will add a minor burden to the permitting authority for each PSD permit 

processed. The short-term burden to the PA may eventually be offset by the decrease in the 

burden to a source undertaking a BACT determination due to the ready availability of more 

comprehensive control technology data. 

Update of Class I, TI, and III area boundaries The 1990 Amendments clarified that the Class 

I, II, and III areas for PSD purposes will always correspond with any boundary changes of the 

Federal lands [Sees. 162(a) and 164(a)]. If Class I area boundaries expand, then new or 

modified sources in such areas will have to meet more stringent PSD provisions for increments 

and air quality related values (AQRVs). However, the number of projects affected by 

boundary changes is likely insignificant compared to other PSD changes described herein. 

CH-94-41 
P.16 

SECTION 3.0 

INFORMATION COLLECTION REQUEST FOR PART C AND D CHANGES 

For federal rulemakings, the Paperwork Reduction Act of 1980 requires an assessment 

of the anticipated burden of information collection activities undertaken to comply with the 

rulemaking. This assessment is referred to as an information collection request (ICR). In an 

ICR the burden must be estimated for business enterprises and for government entities. 

Burden estimates must be updated periodically, and revised to reflect any relevant regulatory 

changes. The ICR should, to the extent possible, quantify the total burden imposed by the 

regulation, in addition to the change in burden. 

Since the NSR program is a long-standing federal program, several of these ICRs have 

already been prepared. However, because of the significant changes to the NSR program as a 

result of the part C and D requirements of title I of the Clean Air Act as amended in 1990, the 

ICR must be revised and updated to reflect the regulatory changes. Below are the highlights of 

that ICR. The complete ICR which reflects the part C and D regulatory changes, is included 

as Appendix B of this report.[editor's note: since the rule was suspended the ICR referred to 

here would be the September 1995 NSR Program ICR Renewal] 

3.1 RESPONDENTS AND THE INFORMATION REQUESTED 

The SIC groups that are anticipated to cover the majority of the respondents who will 

be affected by the part C and D regulations are steam and electric plants, petroleum refining, 

chemical processing, natural gas transport, pulp and paper manufacturing, automobile 

manufacturing, and pharmaceutical manufacturing. Tables 3-1 and 3-2 summarize the data 

and information requirements which owners or operators of major sources must include in 

PSD and nonattainment NSR construction permit applications, respectively. Tables 3-1 and 3-

2 also show the references for the data and information requirements specified in the current 

CFR and in the 1990 CAA. Table 3-3 summarizes the data and information requirements 

which State and local agencies must follow. Table 3 also shows the references for the data and 

information requirements specified in the current CFR and 1990 CAA. 

CH-94-41 
P.17 

TABLE 3-1. RESPONDENT DATA AND INFORMATION REQUIREMENTS FOR 

PREPARING PART C (PSD) CONSTRUCTION PERMITS 

Requirements 

Current 

Regulation Reference 

1990 CAA 

Reference 

Description ofthe nature, location, 

design capacity, and typical operating 

schedule 

Detailed schedule for construction 

Description of continuous emission 

reduction system, emission estimates, 

and other information needed to 

determine that BACT is used 

Air quality impact, meteorological, 

and topographical data 

Nature and extent of, and air quality 

impacts of general commercial, 

residential, industrial, and other 

growth in area of source 

Use of air quality models to 

demonstrate compliance with NAAQS 

and increment 

Information necessary to perform 

Class I area analysis 

Air quality monitoring data 

Impairment of visibility, soils, and 

vegetation 

Air quality impact resulting from 

general commercial, residential, 

industrial, and other growth associated 

with source 

Written notice of proposed relocation 

from portable source 

Description ofthe location, design 

construction, and operation of 

building, structure, facility, or 

installation 

Description of the nature and amounts 

of emissions to be emitted 

Description ofthe air quality data and 

dispersion or other air quality 

modeling used 

Sufficient information to ensure 

attainment and maintenance of 

NAAQS 

40CFR51.166(n)(2)(i) 

[40 CFR 52.21(n)(l)(i)] 

40CFR51.166(n)(2)(ii) 

[40 CFR 52.21(n)(l)(ii)] 

40CFR51.166(n)(2)(iii) 

[40 CFR 52.21(n)(l)(iii)] 

40CFR51.166(n)(3)(i) 

[40 CFR 52.21(n)(2)(i)] 

40CFR51.166(n)(3)(ii) 

[40 CFR 52.21(n)(2)(ii)] 

40CFR51.166(k)&(l) 

[40 CFR 52.21(k)&(l)] 

40CFR51.166(k),(n)&(o) 

[40 CFR 52.21(k)(n)&(o)] 

40CFR51.166(m)(l)(b) 

[40 CFR 52.21(m)(l)(b)] 

40CFR51.166(o)(l) 

[40 CFR 52.21(o)(l)] 

40CFR51.166(o)(2) 

[40 CFR 52.21(o)(2)] 

40CFR51.166(i)(4)(iii)(d) 

[40 CFR 52.21(i)(4)(viii)] 

40CFR51.166(n) 

[40 CFR 52.21(n)] 

40CFR51.166(n) 

[40 CFR 52.21(n)] 

40CFR51.166(n) 

[40 CFR 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) 

301 &161 

110(a)(2)(A)&(C) 

110(a)(2)(A)&(C) 

110(a)(2)(B)&(K) 

110(a)(2)(A)&(C) 

CH-94-41 
P.18 

CH-94-41 
P.19 

TABLE 3-2. RESPONDENT DATA AND INFORMATION REQUIREMENTS FOR 

PREPARING PART D (NONATTAINMENT NSR) CONSTRUCTION 

PERMITS 

Requirements Regulation Reference 

1990 CAA 

Reference 

Documentation that LAER is being applied 

Documentation that all sources owned or 

operated by same person are in compliance 

Documentation that sufficient emissions 

reductions are occurring to ensure RFP 

Documentation that benefits of proposed source 

significantly outweigh the environmental and 

social costs imposed as a result of its location, 

construction, or modification 

Description ofthe location, design construction, 

and operation of building, structure, facility, or 

installation 

Description ofthe nature and amounts of 

emissions to be emitted 

Description ofthe air quality data and dispersion 

or other air quality modeling used 

Sufficient information to ensure attainment and 

maintenance of NAAQS 

Proposed 

40 CFR 51.165(a)(6) 

Proposed 

40 CFR 51.165(a)(6) 

40 CFR 51.165(a)(3) 

40 CFR 51.165(a)(2) 

173(a)(2) 

173(a)(3) 

173(a)(1) 

173(a)(5) 

Proposed 

40 CFR 51.165(a)(6) 

Proposed 

40 CFR 51.165(a)(6) 

40 CFR 51.160(f) 

40CFR51.160(c)-(e) 

40 CFR 51.161 

110(a)(2)(A)&(C) 

110(a)(2)(A)&(C) 

110(a)(2)(B)&(K) 

110(a)(2)(A)&(C) 

172(c)(6) 

CH-94-41 
P.20 

TABLE 3-3. STATE DATA AND INFORMATION REQUIREMENTS 

Regulation

 b 

Requirement Reference 

Make completeness determinations C-40 CFR 51.166(n) 

Submission of all permit applications to EPA C-40 CFR 51.166(q) 

D-40 CFR 51.161(d) 

review application, make technology requirement C- 40 CFR 51.166 

determination, review degree of increment consumption, D-40 CFR 51.160-165 

assure maintenance of NAAQS, ensure source complies 

with all requirements consistent with the CAA. 

Submission of notice of application, preliminary C- 40 CFR 51.166(q) 

determination, summary of impacts and degree of D-40 CFR 51.160-164 

increment consumption, basis of offsets if applicable, and 

documentation that proposed project will comply with all 

permit requirements and opportunity for public comment 

Submission of written request to exempt sources from C-40 CFR 52.21(i)(4) 

review 

Written request for use of innovative control technology C-40 CFR 51.166(s) 

Establishing and operating a permitting program for all 40 CFR 51.160 

new sources 

Provide for public comment for all NSR permits 40 CFR 51.161 

b

 The Letter "C" denotes Part C PSD Requirements; "D" denotes Part D Nonattainment 

requirements. 

CH-94-41 
P.21 

3.2. THE INFORMATION COLLECTED - AGENCY ACTIVITIES, COT LECTION 

MFTHODOTnaV, AND INFORMATION MANAftFMFNT 

Agencies responsible for processing NSR construction permits will typically perform the 

following activities: 

Answer respondent questions 

Log in and review data submissions 

Make a completeness determination to indicate if sufficient information has been 

submitted to process the application 

Request additional information for incomplete applications 

Analyze requests for confidentiality and provide appropriate protection 

Evaluate elements of application for source compliance with permitting 

requirements and the Clean Air Act 

Prepare permits, review reports and permits for processing and approval 

Prepare notices of public hearings on permit applications for publication in 

newspapers, arrange and attend public hearings, and summarize and respond to 

public comments. Request additional information from sources as necessary to 

address comments. 

Submit information on BACT/LAER determinations to EPA's 

RACT/BACT/LAER Clearinghouse for entry into database 

The owners and operators of new or modified stationary sources affected by the NSR 

regulations will be responsible for submitting construction permit applications to the permit 

reviewing authority. The permit reviewing authority will log in permit applications and store 

them in a central filing location at the location of the permit reviewing authority. Once 

construction permits have been approved, the reviewing authority will submit control 

technology information to EPA's RACT/BACT/LAER Clearinghouse database. Because the 

construction permits and associated control technology determinations are performed on a caseby-case basis, the regulations will not contain additional forms which owners or operators will 

have to fill out and submit to the permit reviewing authority. States will likely use their 

current permit application forms for NSR purposes. 

Qualified personnel who work for the permit reviewing authority will perform permit 

reviews and check the quality of data submitted by the applicant on a case-by-case basis. The 

applicant will be required to submit information on how the data were obtained (e.g., indicate 

whether emissions data were obtained through the use of emissions factors or test data) and 

how calculations were performed. The permit reviewing authority personnel will check data 

CH-94-41 
P.22 

quality by reviewing test data and checking engineering calculations, and by reviewing control 

technology determinations for similar sources. The RACT/BACT/LAER Clearinghouse 

database will be reviewed for information on control technology determinations made for 

sources similar to the sources included in a permit application. Confidential information 

submitted by the applicant will be handled in accordance with the permit reviewing authority's 

confidential information handling procedures. The public will be provided the opportunity to 

review a permit application by obtaining a copy from the permit reviewing authority and by 

attending the public hearing. The NSR regulations will not require the request of information 

through any type of survey. 

This section of the ICR requires, in the absence of a statutory requirement, a 

demonstration that the Agency has taken all practicable steps to develop simplified 

requirements for small businesses and other entities. This section is not applicable to the 

proposed changes to the part C and D rules because the proposed rule implements statutory 

requirements. 

This ICR does not require surveys. Each source affected by the revised NSR 

regulations will be required to submit an application as a prerequisite to receiving a 

construction permit. Preparation of a construction permit application is a one-time-only 

activity for each new source or modification. The NSR permit regulations will not require 

periodic reporting or surveys. 

3.3. ESTIMATING THE BURDEN AND COST OF THE COLLECTION 

Respondents include owners or operators of major stationary sources which will be 

subject to the construction permit requirements under EPA's NSR regulations. Respondents 

also include owners or operators of minor sources which will be subject to preconstruction 

review to demonstrate that they are exempt from EPA's NSR regulations. The annual 

respondent burden (i.e., labor hours and costs) associated with major source PSD and part D 

construction permit activities, and minor source preconstruction review activities is shown in 

Table 3-4. The attachment to this ICR explains how the number of sources and the burden 

estimates presented in Table 3-4 were derived for major PSD and part D sources and minor 

sources. 

CH-94J»1 
P.23 

TABLE 3-4. SUMMARY OF RECORDKEEPING AND REPORTING BURDEN 

ESTIMATES TO INDUSTRY RESPONDENTS AND STATE AND LOCAL 

AGENCIES 

Part D Part C Minor Source 

(Nonattainment (PSD) Determination of 

NSR) Major Source Major Source Exemption From 

Permits Permits Major NSR Totals 

Industry Respondent Burden 

• No. of Sources 

• Hours/Source 

• Total Hours 

• Wage Rate, $/hourb 

• Total Costs 

State and Local Agency Burden 

• No. of Agencies 

• No. of Sources/ Agency' 

• Hours/Source 

Total Hours 

Wage Rate, $/hour* 

Total Costs 

590* 

450 

265,500 

38 

10,089,000 

50 

11.8 

UO 

64,900 

38 

2,466,200 

320* 

700 

224,000 

38 

8,512,000 

60 

5.3 

280 

89,600 

38 

3,404,800 

19,500 

8 

156,000 

38 

5,928,000 

85 

229.4 

10 

195,000 

38 

7,410,000 

-

-

645,500 

38 

24,529,000 

-

-

-

349,500 

38 

13,281,000 

'Includes both major new and modified stationary sources. 

''Wage rate is based on the Federal wage rate at the Grade 11, Step 3 level for the 1994 pay schedule. The wage rate includes 

direct personnel and overhead costs. This is the same wage rate used in the Draft Title V Operating Permits ICR. 

"Number of source permits processed by each agency equals the total number of sources divided by the total number of agencies 

under each column. 

EPA Regional Offices typically review and comment on major NSR permits issued by 

State and local agencies. EPA review of NSR permits is expected to consist of the following 

tasks, with associated burden hours: 

Review and verify applicability determination: 2 hours 

Review control technology determination: 3 hours 

Evaluate offsets (part D permits only): 1 hour 

Evaluate air quality modeling (typically applies for PSD sources, but may also be 

submitted for some part D permits): 4 hours 

Evaluate alternatives analysis and secondary impacts analysis: 2 hours 

Evaluate Class I area analysis (near Class I areas only): 2 hours 

Administrative tasks (correspondence, management): 1 hour 

CH-94-41 
P.24 

Using the hourly numbers above (2 hours for each minor source permit, and a worst-case 

of 15 hours for each major source permit) together with the estimates of number of sources 

from this ICR, the total annual hours for permit review is 52,650 hours, or 25.3 full time 

equivalents (FTE), assuming 2,080 hours equals 1 FTE. The cost is approximately 

$2,000,000, using a wage and overhead rate of $38/hour (which is for a Federal wage rate at 

the Grade 11, sty, 3 level for the 1994 pay schedule and corresponds to the same wage rate 

used in the Draft Title V Operating Permits ICR. 

3.4. CONCLUSIONS 

For industry respondents, the burden estimated in this ICR is 69 percent higher than in the 

CMA Exhibit A ICR which was used as the baseline. Virtually all of this increase for industry 

respondents is due to a 600 percent increase in the number of major sources per year subject to 

part D requirements. By far, the majority of this 600 percent increase is due to the lowering 

of major source cutoffs for VOC sources in serious, severe, and extreme ozone nonattainment 

areas, and the addition of major source cutoffs for NOx sources in these areas. A lesser 

number of additional sources nationwide will also be newly subject to part D requirements. A 

small fraction of the increase in industry burden hours is attributable to the slight increase in 

burden per source, brought about chiefly by the new requirement for an alternatives analysis. 

For State/local agency respondents, the burden estimated in this ICR is 21 percent higher 

than in the CMA Exhibit A ICR. Virtually all of this increase is due to a 600 percent increase 

in the number of part D sources. A small portion of the burden hour increase was attributable 

to an increase in the burden per source, chiefly due to the new requirements for an alternatives 

analysis and for submission of control technology determinations to the RACT/BACT/LAER 

Clearinghouse. 

CH-94-41 
P.25 

SECTION 4.0 

REGULATORY FLEXIBILITY ANALYSIS 

This section addresses the anticipated economic effect of the part C and D statutory and 

proposed rule changes on small entities. This analysis is developed pursuant to the 

requirements of the Regulatory Flexibility Act. 

4.1 INTRODUCTION 

The Regulatory Flexibility Act requires regulatory agencies, upon regulatory action, to 

prepare several documents determined by, among other things, the attributes of the regulatory 

action being taken. These include: (1) a Certification, (2) an Initial Regulatory Flexibility 

Analysis (IRFA), and (3) a Final Regulatory Flexibility Analysis (FRFA). In addition, the 

agencies must assure through various mechanisms that small entities are given an opportunity 

to participate in the rulemaking process. The Environmental Protection Agency has revised 

these guidelines such that, for any new rule subject to the Regulatory Flexibility Act, a 

regulatory flexibility analysis is required if the rule will have any economic impact, however 

small, on any small enities that are subject to the rule. 

This section of the report provides an analysis to assist EPA in completing an IRFA for the 

part C and D statutory and proposed rule changes. A summary of the changes is included in 

Section 2 of this document. The remainder of Section 4 discusses how the impact on small 

entities due to these changes was estimated. The approach used is discussed in Section 4.2; 

the study population is defined in Section 4.3; the costs of the regulation are estimated in 

Section 4.4; and the results are discussed in Section 4.5. 

4.2 APPROACH 

4.2.1 General Approach 

A Regulatory Flexibility Analysis (RFA) has two principal analytical components: a 

description and estimate of the number of small entities to which the statutory and proposed 

rule changes will apply., and a description of the projected compliance requirements of the 

proposed rule, including an estimate of the classes of small entities which will be subject to the 

requirement. The objective of this section is to analyze the impacts of the changes in 40 CFR 

parts 51 and 52 on small entities. In keeping with the general methodology just described, 

there will be two distinct parts to this analysis. The first part is an estimate of the number of 

small entities affected by the part C and D changes. To develop this estimate, an estimate of 

the number of affected small entities was made by identifying three-digit Standard Industrial 

Classification (SIC) categories which have a significant number of potential major new 

sources, and by comparing this list with a list of SIC categories which are likely to have a 

CH-94-41 
P.26 

significant number of small entities. The second part is an estimate of the costs to the affected 

sources. Costs are initially estimated for each category of sources. As described below, 

estimates are made both for control costs and for offset costs. These costs are estimated on 

both an establishment and an annualized industry basis. Industry costs are compared to a 

standard figure of financial merit, corporate revenues, and are summarized nationwide. The 

most conservative approach to cost estimation is used throughout the analysis. 

4.2.2 Influence of the Nature of Data Sources on Methodology 

The form in which data are available has a strong influence on the methodology chosen for 

this analysis. The size cutoff for defining an entity, such as a small business, is based on the 

number of employees or the revenues of an enterprise. Enterprises together with 

establishments, comprise the two different levels at which entities are studied. Data sources 

frequently provide information about just one level. Establishments and enterprises are 

described as follows: 

Establishments An establishment is the smallest unit in which activity is conducted and on 

which statistical information is collected. The establishment classification makes no reference 

to either ownership or taxpaying status. Furthermore, establishments may be branches of 

larger firms and differ from separately owned and operated entities of similar size in 

purchasing power, advertising coverage, management and control systems, technical resources, 

and accesses to capital and credit. Most very small entities are single establishments. 

Enterprises An enterprise is an establishment owned by a parent company. For instance, an 

enterprise can own subsidiaries, branches, and unrelated establishments. In most instances, it 

is necessary to use the enterprise concept to study the characteristics of small firms since the 

ownership issue is critical for assessing the impact of a given policy. 

This report uses an approach comparing emissions data with SBA size definitions at the 

source category level. Emissions data are currently being maintained by EPA in the 

Aerometric Information Retrieval System (AIRS) database. This database shows information 

at the plant level and the subplant level, such as segments and stacks. Determinations of the 

production equipment and emissions control equipment used in each plant must be made at the 

segment level. The plants referred to in the AIRS database are equivalent to establishments. 

The plants listed in AIRS can be linked to establishments in Dunn and Bradstreet data, but this 

is a labor intensive operation requiring close attention to the way plants (establishments) are 

named. This operation is also beyond the scope of this study. Thus, an alternative 

methodology, described below, was developed. 

The data for this analysis were collected at the three digit SIC code level, which groups 

industries together based on the product or service they provide. Thus, for example, all 

entities producing forest products are grouped together while all entities producing softwood 

plywood are grouped as a subgroup of forest products. Entities providing government services 

are included in the SIC code groupings. Many other data sources provide financial 

information at the industry level. The Small Business Administration has identified a set of 

industries as being small business dominated. This set consists of industries in which over 60 

CH-94-41 
P.27 

percent of entities are classified as small. When average employment or revenues are 

computed for small business dominated industries, the averages reflect the small business 

influence. 

4.3 POPULATION DEFINITION AND SAMPLING 

4.3.1 Population Definition and Sampling Approach 

This section describes the selection of industries that are likely to be affected by the 

statutory and proposed rule changes in the new source review (NSR) program without regard 

to the level of participation by small entities. The basic strategy of this section is to identify 

and count the emission sources identified in AIRS in each SIC category and each 

nonattainment category that would be affected by the changes. The selection process identifies 

existing sources with emissions below the current major source cutpoint, but above the 

proposed new cutpoints. 

The AIRS database was used to determine the industries likely to be affected by NSR. 

The AIRS database provides information describing each source in the nation that emits over 

100 tpy of a criteria air pollutant and, in some States, smaller sources as well. The 

information includes firm identifiers such as the name, address, county, and State; SIC codes; 

production parameters; process (or segment) identifiers; pollutant identifiers; and descriptions 

of emission control equipment, control efficiencies, emission rates, and annual emissions. The 

data in AIRS are required to be submitted by State and local agencies. These data are dynamic 

and may be periodically updated by the submitting agencies. For this reason, the most recent 

data year available may differ from State to State. Typically these data are available for base 

year 1990, but more recent data are available from some States. For this analysis the most 

recent data for each State were used. 

The AIRS database does not contain complete information for all of the parameters 

necessary to complete this analysis on a national level. The degree of detail in the information 

submitted by States can vary widely. In particular, States have only been requested to provide 

information for major sources which, before 1992, were defined as those emitting over 100 

tpy (or, in some cases, 250 tpy). This analysis required information on sources with potential 

emissions below 100 tpy. To identify those States which had voluntarily submitted 

information on sources emitting less than 100 tpy, the list of sources identified in the SIP for 

the nonattainment areas in a given State was compared with the list of sources in the AIRS 

database for that State.3 Ten States were selected from this list. For each State selected, data 

were collected on emissions of VOC, NOx, CO, and PM-10, (the four pollutants for which 

additional sources may be redefined as major in the part C and D changes). The ten States 

selected include: Arizona, Connecticut, Indiana, Massachusetts, Missouri, New York, New 

Jersey, Ohio, Tennessee, West Virginia. 

The Agency then identified 123 industry categories in these States as having sources in the 

size range affected by the part C and D changes. Industry categories with only one source 

were eliminated to simplify the analysis. Elimination of such one-source categories is not 

believed to have a significant impact on the final estimate of number of small entities 

nationwide. 

CH-94-41 
P.28 

4.3.2 Identification of Small-Entity-Dominated Industries Impacted by NSR Changes 

The next step of this approach was to divide the potentially affected industries identified 

above between small and large entities and to determine the number of small sources 

nationwide. EPA guidelines for implementing the Regulatory Flexibility Act require that the 

small entity definitions formulated by the SBA are to be applied unless there has been prior 

consultation on alternative definitions with SBA's Office of Advocacy. The SBA, in 13 CFR 

part 121.601, quotes size standards for all industries either on the basis of revenue4 or number 

of employees. SBA also defines a number of industries as "small-entity dominated", which 

means that 60 percent or more of the work force in such an industry is employed in entities 

with fewer than 500 employees. 

Given the economy-wide nature of the changes in NSR, using small-entity-dominated 

industries, as defined by SBA, is a useful means of identifying concentrations of small entities 

likely to be impacted by the NSR Changes. A check of the 87 non-small-entity-dominated 

industries for which one or more source was found in the potentially affected range shows a 

large portion of industries characterized by very large entities ~ pulp and paper mills, 

pharmaceuticals, chemicals, petroleum refining, rubber, iron and steel, aircraft, etc. Although 

the part C and D changes will affect such industries, few small entities are expected in these 

categories, so the effect of the rule changes on small entities can be approximated by 

considering the small-entity-dominated industries. A more detailed accounting of sources in 

the large-entity-dominated industries would require obtaining information at the level of 

individual entities, which is beyond the scope of this report. It should be noted that a small 

entity definition of one hundred employees has been used previously by EPA in the assessment 

of air quality regulations. Application of such a definition would lead to much smaller impacts 

than would be found using the 500 employee standard used here. Therefore, this method is 

conservative with respect to the definition of small entity. 

Table 4-1 lists the 36 industries included within the industry set derived from the ten-state 

AIRS sample and the SBA set of small-entity-dominated industries. Most (24) of the high-risk 

industries are in the manufacturing sector. Of these, 13 are industries manufacturing durable 

products (SIC 308-399), and 11 produce non-durable products (SIC 209-275). The wholesale 

trade, mining, service, financial, and utility sectors are also represented. Brief profiles for a 

number of these high-risk industries are given below.5 

industrial Minerals Production of crushed stone and sand and gravel primarily depends on 

commercial building and public infrastructure investment. Over the coming 5-year period 

commercial building demand is expected to return to higher levels. In combination with 

greater Federal emphasis on infrastructure spending, this should mean a revival in the crushed 

stone and sand and gravel industries. 

Millwood, Plywood and .Structural Memhers Millwood includes a wide range of fabricated 

millwork products, principally commodities with metal, vinyl, and plastic overlays. Plywood 

is divided between hardwood and softwood products. There were an estimated 121 softwood 

veneer and plywood plants operating in 1992, many of which were owned by large integrated 

forest products companies with at least some private timber holdings. This industry is 

expected to show little or no growth over the next five years. 

CH-94-41 ' 
P.29 

Miscellaneous Wood Products These products are primarily reconstituted panel products, 

which in turn are principally composed of particle board. Particle board is made from wood 

residues bonded together under heat and pressure with a urea formaldehyde adhesive. 

Approximately 81 percent of particle board produced in the United States is used in furniture 

manufacture. Steady, but slow growth is forecast for the next five years. 

Dyeing and Finishing Textiles This category includes establishments engaged in processing all 

types of textiles - cotton, silk, and synthetics ~ except wool and knit goods. Processing 

operations include bleaching, printing, preshrinking, and calendaring. They also include 

chemical finishing for water repellency, fire resistance, and mildew proofing. 

CH-94-41 
P.30 

SIC 

TABLE 4-1. SMALL-BUSINESS-DOMINATED INDUSTRIES AFFECTED BY CHANGES TO 

NEW SOURCE REVIEW REGULATIONS 

Description 

Sources Potentially 

Affected Nationwide by 

Regulation* 

142 Crushed and Broken Stone, including Riprap 

144 Sand and Gravel 

209 Miscellaneous Food Preparations and Kindred Products 

224 Narrow Fabric and Other Smallwares Mills: Cotton, Wool, Silk, etc. 

226 Dyeing and Finishing Textiles, except Wool Fabrics and Knit Goods 

229 Miscellaneous Textile Goods 

239 Misc Fabricated Textile Products 

243 Millwood, Veneer, Plywood, and Structural Wood Members 

249 Miscellaneous Wood Products 

253 Public Building and Related Furniture 

254 Partitions, Shelving, Lockers, and Office and Store Fixtures 

259 Miscellaneous Furniture and Fixtures 

275 Commercial Printing 

308 Miscellaneous Plastics Products 

311 Leather Tanning and Finishing 

336 Nonferrous Foundries 

345 Machined Products, Bolts, Nuts, Screws, Rivets and Washers 

346 Metal Forgings and Stampings 

347 Coating, Engraving, and Allied Services 

349 Miscellaneous Fabricated Metal Products 

354 Metalworking Machinery and Equipment 

355 Special Industry Machinery, except Metalworking Machinery 

359 Miscellaneous Industrial and Commercial Machinery and Equipment 

374 Railroad Equipment 

395 Pens, Pencils, and Other Artists' Materials 

399 Miscellaneous Manufacturing Industries 

422 Public Warehousing and Storage 

509 Miscellaneous Durable Goods (Wholesale) 

511 Paper and Paper Products 

517 Petroleum and Petroleum Products (Wholesale) 

554 Gasoline Service Stations (Retail) 

651 Real Estate Operators (except Developers) and Lessors 

721 Laundry, Cleaning, and Garment Services 

739 Miscellaneous Business Services 

753 Automotive Repair Shops 

821 Elementary and Secondary Schools 

TOTAL (36 SIC categories) 

32 

9 

10 

8 

52 

59 

8 

77 

56 

20 

52 

32 

383 

207 

63 

24 

3 

64 

131 

137 

22 

13 

13 

12 

12 

32 

11 

10 

8 

314 

11 

171 

40 

36 

36 

12 

2180 

'Based on extrapolation often-state sample to a national scale, using Reference 6. 

CH-94-41 
P.31 

CH-94^»1 
P.32 

Commercial Printing Four out of five commercial printing firms have fewer than 20 

employees. Most of the industry's approximately 37,000 establishments provide a range of 

printed materials to an essentially local clientele. Increased demand for color printing has 

increased the use of specialized chemicals. This industry is expected to grow at a 3.5 percent 

annual rate through the end of the century. 

Miscellaneous Plastic Products This sector links together the output of the plastic processing 

sector. More than half of industry output is consumed by two end-markets: (1) packaging 

and, (2) building and construction. There are more than 12,000 establishments in this industry 

and concentration is low. The four largest companies were responsible for only 6 percent of 

total shipments in 1987. Growth in this sector will be moderate over the next five years. 

Screw Machine Products This category includes custom-designed products made on screw 

machines, as well as standard industrial fasteners such as nuts, screws, bolts, rivets, and 

washers. Industry demand is closely associated with the automotive, aerospace, heavy 

equipment, and appliance markets. Growth in this sector will be around 3 percent annually 

during the next five years. 

Miscellaneous Fabricated Metal Products This category is primarily composed of valve and 

pipe fitting manufacture. Stainless steel and thermoplastics are gaining in popularity as valve 

and fitting materials for corrosion and heat resistance. Overall, annual growth in the range of 

2-3 percent is expected over the next five years. 

Metal Services This industry covers a large number of processing activities, such as 

electroplating, plating, anodizing, coloring, and finishing metals. It also includes enameling, 

lacquering, and varnishing, as well as hot dip galvanizing and jewelry engraving and etching. 

Metalworking Equipment This sector covers machine tools; metal cutting tools; dies, jigs, 

fixtures, and industrial molds; power-driven hand tools; and welding apparatus. The tool and 

die segment accounts for more than a third of the total industry group. Enterprises in this 

industry are generally small. Around 650 machine tool plants are operated by 570 firms with 

average annual total revenues of approximately $8 million. About two-thirds of the companies 

that make special tools, dies, and molds have 20 or fewer employees. Growth in these 

different areas will vary markedly over the next five years, from a decline for dies and molds 

to a 3 percent annual increase for metal cutting and forming machine tools. 

Special Industry Machinery The primary industries served by machinery manufacture are 

semiconductors, textiles, paper, printing, and food products. Semiconductor manufacturing 

equipment can be further divided into three categories: wafer processing, test and inspection, 

and assembly equipment. Lithography is the dominant printing process for which machinery is 

produced. Machinery for the traditional industries will produce growth of 2.5 to 3.5 percent 

annually, while semiconductor machinery is forecast to show an 11 percent annual rate. 

CH-94-41 
P.33 

Miscellaneous Fabricated Textile Products This sector covers curtains and draperies; house 

furnishings; textile bags; canvas and related products; pleating and stitching; automotive and 

apparel trimmings; machine embroideries; and fabricated textile products. Textile house 

furnishings and automotive and apparel trimmings constitute the largest shares of this sector's 

industry shipments~28 and 30 percent respectively. Moderate growth is projected for this 

sector over the next few years. 

leather Tanning and Finishing This sector consists of establishments engaged in tanning, 

currying, and finishing raw or cured hides and skins into leather, and associated processors. 

With the U.S. hide supply projected to continue to increase in the next few years, the longterm outlook for this industry appears to be good. Good growth is projected for the next few 

years. 

4.3.4 Number of Sources Nationwide 

The ten-state sampling procedure described earlier provides information that must be 

extrapolated to a national scale. This extrapolation assumes a strong correlation exists between 

the number of industry-specific sources present in any State and the economic activity 

attributable to that industry within the State. Based on this assumption, a multiplier was 

developed as a weighted average using Gross State Product (GSP) figures compiled by the 

U.S. Department of Commerce for major industry groupings.6 Seven weighted multipliers 

specific to the ten-state sample were derived; one for each of the 2-digit SIC codes listed 

below: 

SIC 

10-14 

20-29 

30-39 

40-49 

50-59 

60-67 

70-89 

Industry Group 

Mining 

Manufacturing-Non Durable Goods 

Manufacturing-Durable Goods 

Transportation and Public Facilities 

Wholesale Trade 

Finance, Insurance, and Real Estate 

Services 

Weigh fpd 

Multiplier 

6.4 

3.5 

3.2 

3.6 

3.3 

3.8 

3.3 

These weighted multipliers are the ratio of nationwide GSP for each major industry 

sector divided by the ten-state total GSP from the same sector. The multipliers typically range 

from 3.2 to 3.8, indicating that the ten-state sample represents roughly one-third of all 

economic activity in that sector in the United States. The exception is mining, where the 

multiplier of 6.4 indicates that the sample from this sector is not as representative nationally as 

the others. This is not surprising since mining is concentrated in a few States and is not 

uniformly distributed throughout the nation. 

The weighted multipliers were applied to estimates of the numbers of affected sources 

for the ten States. For CO and PM-10, the cutpoint for major sources in serious nonattainment 

areas was lowered to 50 (in some cases) and 70 tpy, respectively. Hence, for each of these 

pollutants all affected sources are in the same category. For VOC and NOx, two additional 

CH-94-41 
P.34 

cutpoints were identified, making three categories of affected sources. Nationwide, all new 

VOC or NOx sources located in serious, severe, or extreme nonattainment areas, or an ozone 

transport region, and which would emit over 50 tpy are affected. Sources emitting over 25 tpy 

are affected if they are in severe or extreme nonattainment areas. Sources emitting over 10 tpy 

are affected if they are in an extreme nonattainment area. In this assessment of the number of 

affected sources, all sources of CO or PM-10 in the ten States are included if they are in the 

affected range, as are all VOC and NOx sources if they emit 25 tpy to 100 tpy. This method 

does not subtract out the sources in attainment areas, which are relatively few, and it 

overestimates the number of 25 to 50 tpy sources that would be affected. Since the South 

Coast Air Basin is the only extreme nonattainment area where 10 to 25 tpy sources are affected 

and since data for California are not available in AIRS, a national extrapolation was not 

feasible. Other than this exclusion, the method overstates the number of affected sources in 

the ten States and continues the conservative nature of this analysis. 

In total, the results of the extrapolation indicate that around 2200 sources in the highrisk industries are affected by the changes in major source definition. (See Table 4-1). It is 

assumed that all of these 2200 sources are associated with small entities although some sources 

in these small-business-dominated industries are not likely to be "small" entities. This 

assumption continues the conservative nature of this analysis. 

4.4 COSTS OF REGULATION 

The expanded definition of major sources for the various pollutants generates costs in 

two principal ways: (1) through more stringent control costs on sources previously not subject 

to NSR, and (2) through the need for pollutant offsets for these same sources. These costs will 

be incurred in the future as industries expand and modify their existing facilities. These future 

costs will affect both small and large entities. The following discussion attempts to examine 

the cost impact upon small entities only. 

4.4.1 Control Technology Costs 

Major new and modified sources of air pollution are required to control their emissions 

more stringently than sources that were built before the effective date of modern air pollution 

regulations. For facilities built in nonattainment areas, the control standard applicable upon 

building a new source or modifying an existing source is Lowest Achievable Emissions Rate 

(LAER), while for those built in attainment areas the standard is Best Available Control 

Technology (BACT). The standard for existing sources is Reasonably Available Control 

Technology (RACT). 

Control costs for LAER and BACT are not well defined and recorded. RACT costs are 

more readily available, but the data are reported on a technology-specific basis and are 

formulated on an industry basis only for a few of the more prominent industries. Thus, a 

costing methodology was chosen to make maximum use of available information while 

providing results on the basis of the 3-digit SIC codes identified above. Using the AIRS 

database and the ten-state sample described previously, sources within the emissions ranges 

newly subject to NSR requirements were examined in all industries to determine the specific 

type of control technology used to satisfy RACT requirements. The cost of these control 

CH-9441 
P.35 

devices were then estimated using standard references,7'

8,9

 and an average facility cost, in 1994 

dollars, was calculated for each industry. This procedure produced estimates of annualized 

costs for RACT controls for sources in the affected size range in 18 of the 36 small-entitydominated industries. Where it is known, the control technology associated with a specific 

industry is shown in Table 4-2. Due to a lack of data, the RACT costs for the remaining 18 

industries for which no specific control technology information was available were estimated 

using the average cost for the other 18. 

The increment above RACT necessary to meet LAER was estimated using an earlier 

study prepared for EPA.10 For the four examples in this study from which direct comparisons 

could be derived, LAER control costs exceeded RACT control costs by 16 to 66 percent, with 

a mean value of 47 percent. Based on this information, LAER control costs were estimated to 

exceed the RACT baseline costs by roughly 50 percent. As an approximation, no 

differentiation was made between BACT and LAER control costs and, thus, between sources 

in nonattainment and attainment areas. Since BACT represents the lower end of the LAER 

cost range, using LAER is likely to be a more conservative estimate. 

Table 4-2 lists the small-entity-dominated industries identified above, the principal 

control technologies derived from AIRS, RACT costs per facility, and the estimated LAER 

increment over RACT at 50 percent of RACT. The cost in Table 4-2 represent an estimate of 

the incremental costs for each new facility that would previously have been controlled by 

RACT, but which will now have to apply LAER due to the part C and D regulatory changes. 

4.4.2 Offset Costs 

In this section, the costs of obtaining offsets are estimated for the average affected 

source in each industry. All major new sources and modifications located in nonattainment 

areas are required to obtain offsets, while those in attainment areas are not. However, some 

sources in attainment areas might need to obtain offsets in order to avoid violating a PSD 

increment or a NAAQS. The method used in this analysis first calculates the cost of an offset 

on a per ton basis and then multiplies this value by the average amount of controlled emissions 

for a typical source in each industry. This provides the average cost to an affected source in 

each industry. This analysis likely overestimates the costs of obtaining offsets. The cost of 

offsets was estimated in a recent study for EPA.11 Since most of the offset activity in the 

United States has been concentrated in California, Table 4.3 extrapolates the prices of 

California offsets through the year 2001 as a proxy for a national offsets value. The 

extrapolation process is based on an ordinary least squares regression of price over time, 

estimating future effects based on the coefficient of that regression. 

CH-94-41 
TABLE 4-2. SMALL-BUSINESS-DOMINATED INDUSTRIES, TYPICAL CONTROL TECHNOLOGY, AND COST 

PER FACILITY 

SIC Description Typical RACT Technology" 

Total Annualized 

RACT Cost per 

Facility (x$1000)b 

Total Annualized 

Incremental 

LAER Cost per 

Facility (x$1000)c 

142 Crushed and Broken Stone, including 

Riprap 

144 Sand and Gravel 

209 Miscellaneous Food Preparations and 

Kindred Products 

224 Narrow Fabric and Other Smallwares Mills: 

Cotton, Wool, Silk, etc. 

226 Dyeing and finishing Textiles, except Wool 

Fabrics and Knit Goods 

229 Miscellaneous Textile Goods 

239 Miscellaneous Fabricated Textile Products 

243 Millwood, Veneer, Plywood, and Structural 

Wood Members 

249 Miscellaneous Wood Products 

253 Public Building and Related Furniture 

254 Partitions, Shelving, Lockers, and Office 

and Store Fixtures 

259 Miscellaneous Furniture and Fixtures 

275 Commercial Printing 

Electrostatic Precipitator 

Electrostatic Precipitator 

604 

604 

391 

391 

Catalytic and Thermal 

Afterburner, Vapor Recovery 

Thermal Afterburner 

Mat or Panel Filter 

Catalytic and Thermal 

Afterburners 

430 

472 

391 

391 

391 

23 

391 

391 

421 

302 

302 

196 

196 

215 

236 

196 

196 

196 

12 

196 

196 

210 

(continued) 
TABLE 4-2. SMALL-BUSINESS-DOMINATED INDUSTRIES, TYPICAL CONTROL TECHNOLOGY, AND COST 

PER FACILITY (continued) 

SIC 

308 

311 

336 

345 

346 

347 

349 

354 

355 

359 

374 

395 

399 

422 

Description 

Miscellaneous Plastics Products 

Leather Tanning and Finishing 

Nonferrous Foundries 

Screw Machine Products, and Bolts, Nuts, 

Screws, Rivets and Washers 

Metal Forgings and Stampings 

Coating, Engraving, and Allied Services 

Miscellaneous Fabricated Metal Products 

Metalworking Machinery and Equipment 

Special Industry Machinery, except 

Metalworking Machinery 

Miscellaneous Industrial and Commercial 

Machinery and Equipment 

Railroad Equipment 

Pens, Pencils, and Other Artists' Materials 

Miscellaneous Manufacturing Industries 

Public Warehousing and Storage 

Typical RACT Technology" 

Catalytic and Thermal 

Afterburners 

Catalytic Afterburner 

Thermal Afterburner 

Thermal Afterburner w/ Heat 

Exchanger 

Catalytic and Thermal 

Afterburner, Vapor Recovery 

Thermal Afterburner 

Conservation Vent 

(continued) 

Total Annualized 

RACT Cost per 

Facility (x$1000)b 

438 

391 

385 

391 

472 

956 

712 

391 

391 

391 

391 

472 

391 

4 

Total Annualized 

Incremental 

LAER Cost per 

Facility (x$1000)£ 

219 

196 

192 

196 

236 

478 

356 

196 

196 

196 

196 

236 

196 

2 
TABLE 4-2. SMALL-BUSINESS-DOMINATED INDUSTRIES, TYPICAL CONTROL TECHNOLOGY, AND COST 

PER FACILITY (continued) 

SIC Description Typical RACT Technology' 

Thermal Afterburner 

Thermal Afterburner 

Activated Carbon Adsorption, 

Vapor Recovery 

Vapor Recovery, Submerged 

Filling 

Vapor Recovery 

Total Annualized 

RACT Cost per 

Facility (x$1000)b 

472 

472 

90 

3 

391 

7 

391 

391 

391 

Total Annualized 

Incremental 

LAER Cost per 

Facility (x$1000)c 

236 

236 

45 

1.5 

196 

3.5 

196 

196 

196 

509 Miscellaneous Durable Goods (Wholesale) 

511 Paper and Paper Products 

517 Petroleum and Petroleum Products 

(Wholesale) 

554 Gasoline Service Stations (Retail) 

651 Real Estate Operators (except Developers) 

and Lessors 

721 Laundry, Cleaning, and Garment Services 

739 Miscellaneous Business Services 

753 Automotive Repair Shops 

821 Elementary and Secondary Schools 

"From AIRS database. 

bReferences 7, 8, and 9. 

'Reference 10. 

(continued) 
P.39 

TABLE 4-3. DATA FOR DETERMINATION OF OFFSET PRICES 

Extrapolation of Offset Prices for Southern California 

Year 

1985 

1986 

1987 

1988 

1989 

1990 

1991 

1992 

1993 

1994 

1995 

1996 

1997 

1998 

1999 

2000 

2001 

Quantity* 

367 

940 

210 

248 

228 

107 

539 

Price Observed" 

4,600 

4,500 

3,600 

4,300 

7,100 

9,900 

15,400 

Price Calculatedb 

2,054 

3,721 

5,389 

7,057 

8,725 

10,393 

12,061 

13,729 

15,396 

17,064 

18,732 

20,400 

22,068 

23,736 

25,404 

27,071 

28,739 

Difference 

2,546 

779 

(1,789) 

(2,757) 

(1,625) 

(493) 

3,339 

CH-94-31 

"Reference 11. 

bBased on regression of price on year. 

The EPA study concludes that the future prices of offsets are very likely to increase, 

due to the impacts of the 1990 Amendments to the CAA and especially to the increased scope 

of offset requirements due to changes in the NSR program and the increased number of subject 

sources. These changes in the program are expected to lead to an increase in demand for 

offsets, while decreasing supply. In this light, the value pf $20,000 per ton per year of offsets 

can be considered to be a lower limit on the possible range of offset prices. 

4-15 
P.40 

In addition to the offset price, the cost of offsets includes transaction costs includes: 

brokers' retainers, documentation and filing costs, search costs, and negotiation costs. 

As an example of the magnitude of brokers retainers and administrative costs that occur 

in some trading systems, AER*X, an emissions brokerage firm, reported that in Los Angeles, 

when emission offsets were purchased for new sources, the fixed fee broker's retainer was 

$3,000 per trade with $10,000 to $25,000 for costs such as documentation and filing.12 

Search costs, the costs of finding a firm that will reduce its emissions to provide the 

offset, are a second major component of transaction costs. A search frequently consists of a 

broker developing a list of firms with potential to provide the offset and then contacting each 

firm to explore offers. The firm seeking the offset will pay the broker's expenses, which may 

run from approximately $20,000 to $85,000 per trade.11 Negotiating costs are closely related 

to search costs and represent the cost of finalizing the purchase. There are no data on 

negotiating costs. 

Because efficient emissions trading systems such as offset banks are expected to emerge 

as the amount of trading increases, the lower end of these transaction cost ranges was selected 

for use here with the expectation that, in time, actual transaction costs will continue to decline 

to a lower level. The total transaction costs consist of $3,000 per transaction for the fixed fee, 

$10,000 per transaction for documentation and filing costs, and $20,000 per transaction for 

search and negotiating costs, or a sum of $33,000 per transaction. The total quantity of traded 

offsets analyzed in the report was 10,062 tpy, while the number of transactions was 88. Thus, 

the average number of offsets per trade was 114 tpy and the average transaction cost per offset 

was $289 per tpy per trade. 

The total cost of an offset (measured as 1 tpy emission reduction purchased from 

another source) is estimated to be $20,289 and the annualized cost is $1,915 per ton. This 

annualized cost is based on a 20 year time horizon, assumed to be a typical firm's planning 

horizon, and a 7 percent discount rate. 

This cost information was applied to the average affected source in each industry, 

which was assumed to be a new source. The results are shown in Table 4-4. The average 

source size, shown in the second column, was computed from AIRS data for sources in the 

affected emissions range. It was assumed that these sources had installed RACT-level 

pollution control equipment with an emission reduction efficiency of 80 percent. It was also 

assumed that BACT/LAER would achieve emission reductions of 95 percent. The emissions 

calculated assuming these same sources had applied BACT/LAER are shown in the third 

column. These emissions (in tpy) were 

CH-94-31 4-16 
P.41 

TABLE 4-4. ANNUALIZED TOTAL COSTS OF OBTAINING OFFSETS FOR 

AFFECTED SOURCES 

Emissions per Source 

SIC Assuming RACT 

Emissions per Source 

Assuming BACT/LAERb 

Annualized Offset Cost per 

Source' 

142 

144 

209 

224 

226 

229 

239 

243 

249 

253 

254 

259 

275 

308 

311 

336 

345 

346 

347 

349 

354 

355 

359 

374 

395 

399 

422 

509 

511 

517 

554 

651 

721 

739 

753 

821 

47.93 

53.04 

36.62 

23.06 

35.96 

39.22 

52.52 

30.12 

60.00 

38.64 

28.76 

32.55 

31.74 

29.81 

35.18 

40.13 

22.17 

32.89 

31.51 

33.31 

15.31 

18.90 

38.27 

32.02 

18.66 

14.20 

29.88 

20.07 

41.00 

36.38 

26.08 

37.28 

13.03 

35.60 

28.67 

42.58 

11.98 

13.26 

9.16 

5.76 

8.99 

9.81 

13.13 

7.53 

15.00 

9.66 

7.19 

8.14 

7.94 

7.45 

8.79 

10.03 

5.54 

8.22 

7.88 

8.33 

3.83 

4.73 

9.57 

8.00 

4.67 

3.55 

7.47 

5.02 

10.25 

9.10 

6.52 

9.32 

3.26 

8.90 

7.17 

10.65 

$22,948 

$25,394 

$17,533 

$11,039 

$17,217 

$18,778 

$25,145 

$14,421 

$28,727 

$18,500 

$13,770 

$15,584 

$15,196 

$14,272 

$16,841 

$19,213 

$10,614 

$15,747 

$15,086 

$15,948 

$7,330 

$9,049 

$18,323 

$15,328 

$8,934 

$6,799 

$14,306 

$9,609 

$19,631 

$17,418 

$12,486 

$17,851 

$6,238 

$17,045 

$13,726 

$20,388 

a Average emissions calculated using source emissions for affected sources in AIRS, 

b Assumes RACT emission reductions at 80% and LAER emission reductions at 959 

c Based on 20 year time horizon and 1% discount rale. 

CH-94-31 4-17 
P.42 

multiplied by the annualized cost of offsets, $1,915 per tpy, to obtain the annualized offset 

costs per source. These total costs ranged from $6,238 for SIC 721 (Laundry, Cleaning, and 

Garment Services) to $28,727 for SIC 249 (Miscellaneous Wood Products). 

4.4.3 Nationwide Total Costs 

The next step in the analysis is to estimate the total nationwide annual cost attributable 

to the regulation, and then to examine the magnitude of costs relative to other small entity 

financial parameters. In extrapolating costs to a national basis, it is important to note that only 

new facilities or major modifications of existing facilities will be subject to NSR and to the 

changes in definition of major sources. In this analysis, it was assumed that the number of 

new sources in the size range affected by the part C and D rule changes is proportional to the 

number of sources which now exist in that range. Second, it was assumed that the annual 

number of NSR permits is directly proportional to the growth rate of the industry. These 

assumptions imply several things: (1) that major modifications and new sources always result 

in a net increase in production capacity; (2) future technology and market shifts do not change 

the facility size distribution within the industry; and (3) where industry specifics are not 

known, industries will grow at the long term rate for the entire economy (roughly 2 percent). 

Table 4-5 combines facility control and offset costs and extrapolates them to a national 

basis as outlined above. Overall, the NSR regulations will cost small-entity-dominated 

industries approximately $12 million per year. One quarter of this amount results from the 

commercial printing industry, where a significant number of operations typically fall into the 

major source size increment and where projected growth rates are moderately high. Another 

36 percent results from three additional industries: leather tanning and finishing; coating, 

engraving, and allied services; and miscellaneous fabricated metal products. 

The national cost total, while useful for describing the overall burden on small-entitydominated industries, does not provide information on how difficult it may be for any industry 

to finance such costs. Relative size of financial burden is difficult to portray accurately on an 

industry basis. However, the ratio of regulatory costs to annual revenues of the average firm 

in the industry provides a gross measure of the relative level of regulatory burden.13,14 Such 

ratios are presented in Table 4-6. In only three cases does the total regulatory cost exceed 6 

percent of average annual revenues; the median value is 1.6 percent. 

4.5 RESULTS AND DISCUSSION 

The overall cost to small entities of the part C and D package is estimated to be 

$12 million per year. Although this result is based upon estimates, it indicates that smallentity-dominated industries on average are not likely to be greatly affected by revisions to the 

New Source Review regulations. Small-business-dominated industries were not found to 

comprise a large number of the sources in the size range affected by the part C and D changes. 

CH-94-31 4-18 
TABLE 4-5. NATIONAL COST PROJECTIONS 

SIC 

142 

144 

209 

224 

226 

229 

239 

Description 

Crushed and Broken 

Stone, including 

Riprap 

Sand and Gravel 

Miscellaneous Food 

Preparations and 

Kindred Products 

Narrow Fabric and 

Other Smallwares 

Mills: Cotton, Wool, 

Silk, etc. 

Dyeing and finishing 

Textiles, except Wool 

Fabrics and Knit 

Goods 

Miscellaneous Textile 

Goods 

Miscellaneous 

Fabricated Textile 

Products 

Control 

Costs 

Per 

Facility 

($1000)" 

302 

302 

196 

196 

215 

236 

196 

Offset 

Costs Per 

Facility 

($1000)b 

22.9 

25.3 

17.5 

11.0 

17.2 

18.7 

25.1 

Total 

Regulatory 

Costs per 

Facility 

($1000) 

324.9 

327.3 

213.5 

207.0 

232.2 

254.7 

221.1 

Facility 

Population 

In New 

Major 

Source 

Increments' 

32 

9 

10 

8 

52 

59 

8 

Expected 

Growth 

(Percent)d 

2 

2 

2 

2 

2 

2 

2 

Expected 

New 

Facilities 

Per Yeard 

0.64 

0.18 

0.2 

0.16 

1.04 

1.18 

0.16 

Regulatory 

Cost Per 

Year 

($1000)e 

207.9 

58.9 

42.7 

33.1 

241.5 

300.6 

35.3 

(continued) 
SIC 

243 

249 

253 

254 

259 

275 

308 

311 

336 

Description 

Millwood, Veneer, 

Plywood, and 

Structural Wood 

Members 

Miscellaneous Wood 

Products 

Public Building and 

Related Furniture 

Partitions, Shelving, 

Lockers, and Office 

and Store Fixtures 

Miscellaneous 

Furniture nd Fixtures 

Commercial Printing 

Miscellaneous Plastics 

Products 

Leather Tanning and 

Finishing 

Nonferrous Foundries 

TABLE 4-5. 

Control 

Costs 

Per 

Facility 

($1000)" 

196 

196 

12 

196 

196 

210 

219 

196 

192 

NATIONAL COST PROJECTIONS (continued) 

Offset 

Costs Per 

Facility 

($1000)" 

14.4 

28.7 

18.4 

13.7 

15.5 

15.1 

14.2 

16.8 

19.2 

Total 

Regulatory 

Costs per 

Facility 

($1000) 

210.4 

224.7 

30.4 

209.7 

211.5 

225.1 

233.2 

212.8 

211.2 

(continued) 

Facility 

Population 

In New 

Major 

Source 

Increments' 

77 

56 

20 

52 

32 

383 

207 

63 

24 

Expected 

Growth 

(Percent)d 

2 

2 

2 

2 

2 

3.5 

3 

2 

2 

Expected 

New 

Facilities 

Per Yeard 

1.54 

1.12 

0.4 

1.04 

0.64 

13.405 

6.21 

1.26 

0.48 

Regulatory 

Cost Per 

Year 

($1000)e 

324.0 

251.6 

12.1 

218.1 

135.4 

3018.7 

1448.6 

268.1 

101.3 
TABLE 4-5. NATIONAL COST PROJECTIONS (continued) 

SIC 

345 

346 

347 

349 

354 

355 

Description 

Screw Machine 

Products, and Bolts, 

Nuts, Screws, Rivets 

and Washers 

Metal Forgings and 

Stampings 

Coating, Engraving, 

and Allied Services 

Miscellaneous 

Fabricated Metal 

Products 

Metalworking 

Machinery and 

Equipment 

Special Industry 

Machinery, except 

Metalworking 

Machinery 

Control 

Costs 

Per 

Facility 

($1000)" 

196 

236 

478 

356 

196 

196 

Offset 

Costs Per 

Facility 

($1000)b 

10.6 

15.7 

15.0 

15.9 

7.3 

9.0 

Total 

Regulatory 

Costs per 

Facility 

($1000) 

206.6 

251.7 

493.0 

371.9 

203.3 

205.0 

Facility 

Population 

In New 

Major 

Source 

Increments' 

3 

64 

131 

137 

22 

13 

Expected 

Growth 

(Percent)d 

2 

2 

2 

3 

2 

2 

Expected 

New 

Facilities 

Per Yeard 

0.06 

1.28 

2.62 

4.11 

0.44 

0.26 

Regulatory 

Cost Per 

Year 

($1000)' 

12.3 

322.2 

1291.8 

1528.7 

89.4 

53.3 

(continued) 
TABLE 4-5. NATIONAL COST PROJECTIONS (continued) 

SIC 

359 

374 

395 

399 

422 

509 

511 

Description 

Miscellaneous 

Industrial and 

Commercial 

Machinery and 

Equipment 

Railroad Equipment 

Pens, Pencils, and 

Other Artists' 

Materials 

Miscellaneous 

Manufacturing 

Industries 

Public Warehousing 

and Storage 

Miscellaneous 

Durable Goods 

(Wholesale) 

Paper and Paper 

Products 

Control 

Costs 

Per 

Facility 

($1000)" 

196 

196 

236 

196 

2 

236 

236 

Offset 

Costs Per 

Facility 

($1000)" 

18.3 

15.3 

8.9 

6.7 

14.3 

9.6 

19.6 

Total 

Regulatory 

Costs per 

Facility 

($1000) 

214.3 

211.3 

244.9 

202.7 

16.3 

245.6 

255.6 

(continued) 

Facility 

Population 

In New 

Major 

Source 

Increments' 

13 

12 

12 

32 

11 

10 

8 

Expected 

Growth 

(Percent)d 

2 

2 

2 

2 

2 

2 

2 

Expected 

New 

Facilities 

Per Yeard 

0.26 

0.24 

0.24 

0.64 

0.22 

0.2 

0.16 

Regulatory 

Cost Per 

Year 

($1000)' 

55.7 

50.7 

58.7 

129.7 

3.5 

49.1 

40.9 

• 
TABLE 4-5. NATIONAL COST PROJECTIONS (continued) 

SIC 

517 

554 

651 

721 

739 

753 

821 

Tota 

1 

Description 

Petroleum and 

Petroleum Products 

(Wholesale) 

Gasoline Service 

Stations (Retail) 

Real Estate Operators 

(except Developers) 

and Lessors 

Laundry, Cleaning, 

and Garment Services 

Miscellaneous 

Business Services 

Automotive Repair 

Shops 

Elementary and 

Secondary Schools 

Control 

Costs 

Per 

Facility 

($1000)" 

45 

1.5 

196 

3.5 

196 

196 

196 

Offset 

Costs Per 

Facility 

($1000)" 

17.4 

12.4 

17.8 

6.2 

17.0 

13.7 

20.3 

Total 

Regulatory 

Costs per 

Facility 

($1000) 

62.4 

13.9 

213.8 

9.7 

213.0 

209.7 

216.3 

Facility 

Population 

In New 

Major 

Source 

Increments' 

314 

11 

171 

40 

36 

36 

12 

Expected 

Growth 

(Percent)d 

2 

2 

2 

2 

2 

2 

2 

Expected 

New 

Facilities 

Per Yeard 

6.28 

0.22 

3.42 

0.8 

0.72 

0.72 

0.24 

Regulatory 

Cost Per 

Year 

($1000)' 

391.9 

3.0 

731.3 

7.7 

153.3 

151.0 

51.9 

11875.8 

"From Table 4-2 

"From Table 4-4 

Trom Table 4-1 

•"Reference 5 
TABLE 4-5. NATIONAL COST PROJECTIONS (continued) 

'(Total Regulatory Cost per Facility) x (Expected New Facilities) 
TABLE 4-6. REGULATORY COSTS AS PERCENTAGE OF AVERAGE REVENUE 

SIC Description 

Average 

Revenue 

(x$1000)" 

7348 

7348 

13458 

13000 

Regulatory Costs 

Per Facility 

(x$1000)b 

324.9 

327.3 

213.5 

207.0 

Costs/Revenue 

(%) 

4.42 

4.45 

1.58 

1.59 

142 Crushed and Broken Stone, including Riprap 

144 Sand and Gravel 

209 Miscellaneous Food Preparations and Kindred Products 

224 Narrow Fabric and Other Smallwares Mills: Cotton, Wool, 

Silk, etc. 

226 Dyeing and finishing Textiles, except Wool Fabrics and 

Knit Goods 

229 Miscellaneous Textile Goods 

239 Miscellaneous Fabricated Textile Products 

243 Millwood, Veneer, Plywood, and Structural Wood 

Members 

249 Miscellaneous Wood Products 

253 Public Building and Related Furniture 

254 Partitions, Shelving, Lockers, and Office and Store Fixtures 

259 Misc Furniture and Fixtures 

275 Commercial Printing 

308 Miscellaneous Plastics Products 

311 Leather Tanning and Finishing 

336 Nonferrous Foundries 

345 Screw Machine Products, and Bolts, Nuts, Screws, Rivets 

and Washers 

346 Metal Forgings and Stampings 

347 Coating, Engraving, and Allied Services 

349 Miscellaneous Fabricated Metal Products 

354 Metalworking Machinery and Equipment 

355 Special Industry Machinery, except Metalworking 

Machinery 

13763 232.2 1.68 

12062 

13963 

13896 

16703 

3743 

10740 

3743 

9336 

4812 

31288 

13769 

11572 

14775 

9040 

2732 

7234 

16388 

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 

2.11 

1.58 

1.51 

1.34 

0.81 

1.95 

5.65 

2.41 

4.84 

0.68 

1.53 

1.78 

1.70 

5.45 

13.61 

2.81 

1.25 
359 Miscellaneous Industrial and Commercial Machinery and 

Equipment 

374 Railroad Equipment 

395 Pens, Pencils, and Other Artists' Materials 

399 Miscellaneous Manufacturing Industries 

422 Public Warehousing and Storage 

509 Miscellaneous Durable Goods (Wholesale) 

511 Paper and Paper Products 

517 Petroleum and Petroleum Products (Wholesale) 

554 Gasoline Service Stations (Retail) 

651 Real Estate Operators (except Developers) and Lessors 

721 Laundry, Cleaning, and Garment Services 

739 Miscellaneous Business Services 

753 Automotive Repair Shops 

821 Elementary and Secondary Schools 

6679 214.3 3.20 

31336 

3319 

6907 

7658 

15569 

13741 

14479 

6282 

NA 

25977 

NA 

2155 

NA 

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 

0.67 

7.37 

2.93 

0.21 

1.57 

1.86 

0.43 

0.22 

NA 

0.03 

NA 

9.73 

NA 

"Source: Robert Morris Associates, "RMA Annual Statement Studies", Philadelphia, PA, 1989. Internal Revenue Service, 

"Statistics of Income Source Book 1990", U.S. Department of the Treasury, Washington, D.C, 1991 b

See Exhibit 10 
P.51 

In addition, the results indicate that the costs to small entities in the source categories 

studies are not likely to be significant when compared to those entities' total revenues. 

However, the average firm is by no means the same as the marginal firm in an industry. A 

marginal firm might have a significantly less robust financial situation than the average firm 

and might at the same time face higher regulatory costs than the average firm. Thus, average 

figures as derived in this analysis can disguise the difficulties that can face a few firms in each 

industry. 

The assumptions made in performing this analysis are provided again here. Taken 

together, they can provide some measure of the degree of confidence that can be placed in the 

results. Key assumptions are as follows. 

• The only regulatory revisions which generate significant costs are those which affect 

the number of part D sources, and hence the number of entities facing LAER and offset 

requirements. 

• Small-entity-dominated industries (as defined by SBA) are a reasonable proxy for the 

total population of small entities, given that the major portion of other industries with 

potential sources falling under the NSR changes tends to be identified with very large 

entities. If alternative small entity definitions (e.g., 100 employees) were to be used, 

the number of small entities affected and the total cost of regulation would decrease 

substantially. 

• A ten-state sample provides a reasonable basis for representing the entire economy. 

The sample chosen in this study covers approximately one-third of national gross 

domestic product and is well distributed geographically. 

• RACT control costs can be calculated using the primary control technologies associated 

with specific sources in the potentially affected range and using unit costs for typical 

facilities. LAER control costs can be estimated to be 50 percent more than the RACT 

amount, and LAER can be considered to be the upper limit of BACT. 

• Future offset costs can be projected based upon experience with offset costs to date. 

• Future NSR activity for newly subject sources is proportional to the distribution of 

existing firms and projected industrial growth rates. 

CH-94-41 4-27 
P.52 

CH-94-41 

SECTION 5.0 

ADDITIONAL FEDERAL REQUIREMENTS AND SUMMARY OF RELATED ISSUES 

The previous sections of this document have addressed the majority of the requirements 

related to the Economic Assessment required of EPA for the part C and D statutory and 

proposed rule changes. Several additional requirements remain to be addressed. This section 

presents a qualitative analysis of the effect of the part C and D changes on the remaining 

issues. The issues covered include the specific requirements of Executive Orders 12866, and 

12875. In addition to the specific requirements of these executive orders, a general summary 

of the costs and benefits of the proposed rule is provided, which reviews issues already 

discussed, and explores a few issues not covered by other parts of this analysis. This is a 

qualitative analysis, and is based primarily on interviews with EPA personnel and internal 

discussions with the TRC project team. The issues to be considered are discussed below. 

5.1 NEED FOR REGULATORY ACTION 

Most of the regulatory changes addressed in this analysis are specifically mandated by 

the 1990 Amendments to the Clean Air Act. A few additional changes are clarifications of 

existing policies and new administrative requirements which are viewed by EPA as essential to 

implementing the mandated requirements for the NSR program. In meeting the various 

economic assessment requirements of the various statutes and Executive Orders, EPA must 

consider regulatory alternatives to the proposed rule. However, to a great extent in this case, 

EPA has no alternatives, and must implement the statutory requirements of the Clean Air Act. 

This fact will shed perspective on the scope of EPA's analysis of the proposed regulation as 

the Agency prepares its Economic Assessment. 

5.2 UNFUNDED MANDATES AND THE EFFECT ON STATE, LOCAL, AND 

TRIBAL GOVERNMENTS 

Executive Order 12875, dated October 26, 1993, specifies that, to the extent feasible, 

no agency shall promulgate any regulation that is not required by statute if it places mandates 

on State, local, or tribal governments, unless funds are provided to comply with the mandate. 

If such a regulation is promulgated and funds are not provided, the agency must submit to the 

Office of Management and Budget (OMB) a description of the agency's efforts to describe and 

address concerns from affected agencies, and of the agency's own position supporting the need 

to issue the regulation. 

Regarding other effects on governments, Section 301(d)(2) of the Act provides that 

Indian tribes may now develop implementation plans (Tribal Implementation Plans, or TIPs). 

TTPs, like SIPs must include all requirements set forth in the Act. Further guidance on where 

it is appropriate to treat tribes as States will be provided in a separate rulemaking pursuant to 

Section 301(d)(2) of the Act. This provision allows Indian tribes to voluntarily implement 

their own TIPs as long as they meet the requirements of the Act which would otherwise be 

applicable on the corresponding Indian lands. No net costs or benefits result from any 

mandatory action resulting from this change. However, tribal governments may choose to 

6-1 
P.53 

CH-94-41 

operate their own NSR programs, incurring permit program costs in exchange for the ability to 

implement their own TIPs. As described above, part 70 provides for the collection of fees to 

offset such costs if a tribe operates its own NSR program. 

5.3 DEFINITION OF "SIGNIFICANT" REGULATORY ACTION 

Executive order 12866, dated September 30, 1993, requires an economic assessment 

(EA, formerly a Regulatory Impact Analysis [RIA]) of all regulatory actions deemed 

"significant." Significant means any regulatory action which will: (1) have an annual effect on 

the economy of $100 million or more, or adversely affect in a material way the economy, a 

sector of the economy, productivity, competition, jobs, the environment, public health or 

safety, or State, local, or tribal governments or communities; (2) create inconsistency with or 

interfere with actions of other agencies; (3) materially alter the budgetary impact of 

entitlements, grants, user fees, or loan programs and obligations of recipients thereof; or (4) 

raise novel legal or policy issues arising out of legal mandates, or the President's priorities. 

Furthermore, EPA has further defined "significant" for the purposes of Executive Order 12866 

to apply to any regulatory action having a negative effect of $25 million or more on any 

sector, region, or other subcomponent of the national economy. 

The part C and D changes are expected to be significant by definition (1) because of the 

expected total economic burden. Definitions (2), (3), and (4) are not expected to apply to the 

proposed changes. The ICR and RFA have provided some measure of the economic effect of 

the changes. The RFA-estimated effect on small businesses due to LAER and offsets was an 

increase of about $12 million per year. The ICR-estimated reporting and recordkeeping 

burden to industry increased by $10 million per year, and the burden to States increased by 

about $2 million per year. While these numbers yield an increase of only $24 million per 

year, they do not include the effect of the changes on LAER and offset costs for businesses 

other than the RFA small businesses. While this effect is not quantified here, it will likely be 

larger than the small business costs, because many large-facility dominated source categories 

(e.g., chemical processing, petroleum refining) will be significantly affected. In addition, 

there are other unquantified costs of this rule, which are briefly described below. Thus, it is 

reasonable to expect the total economic burden to exceed $100 million per year. In addition, 

for similar reasons, the $25 million significance threshold defined by EPA for sectors of the 

economy may also be exceeded for some sectors. 

Even if the changes to the part C and D requirements were not significant by definition 

(1) due to the $100 million cost cutoff, other clauses in definition (1) will probably apply to 

the rule because of its adverse effects on sectors of the economy, competition, and jobs (the 

effect on other governments has already been discussed). The adverse environmental, health, 

and safety impact clause clearly will not apply, because the part C and D changes will lead to a 

net environmental benefit. However, the rule will adversely affect certain sectors of the 

economy, because the costs of growth will increase for many new sources to which 

nonattainment NSR is newly applicable due to increased permitting requirements, and control 

and offset costs. These increased costs will not drive marginal existing firms within the 

affected source categories out of business, but they will likely slow the rate of growth in these 

categories as some new sources or expansions which would have taken place become 

6-2 
P.54 

CH-94-41 

prohibitively expensive. The adverse effect on the economy will be a slower growth rate than 

in the absence of the regulations. Job growth for such industries in affected areas would also 

slow. 

The part C and D changes will also lead to adverse effects on the domestic and 

international competitiveness of sources, because sources inside of nonattainment areas or 

OTR's which are newly defined as major will have higher costs to grow and expand than 

similar sources outside of these areas (including those outside of the U.S.), or sources within 

these areas which fall below the major source cutoffs. 

Because the regulatory change will likely be considered significant pursuant to 

Executive Order 12866, EPA must provide OMB with an assessment of (1) costs of the 

regulatory action, including, to the extent feasible, a quantification of these costs; (2) benefits 

of the regulatory action, including, to the extent feasible, a quantification of these benefits; 

and (3) an assessment of alternatives to the regulatory action. The following sections 

summarize and qualitatively discuss costs and benefits. Alternatives are not discussed, 

because, as described above, this regulation is largely a statutory mandate. 

5.4 SUMMARY OF COSTS 

Costs pertaining to the definition of significant have already been discussed in this 

section. These include: (1) an increase in costs to small businesses totaling $12 million per 

year, as estimated by the RFA in Section 4; (2) an increase in reporting and recordkeeping 

costs to industry and governmental entities totaling $12 million per year as estimated by the 

ICR in section 3; and (3) adverse effects on the economy, including employment and 

competitiveness discussed qualitatively above. Costs to larger businesses not included in the 

RFA, including costs of LAER and offsets, were also mentioned but not quantified. This 

report does not attempt to quantify the costs described in this section which are not elsewhere 

quantified, but provides sufficient information for a qualitative assessment. 

5.5 SUMMARY OF BENEFITS 

The primary benefit of the part C and D changes has already been discussed, but not 

quantified. Environmental benefits, such as those due to increased public health, lower 

morbidity and mortality rates, and lower maintenance costs for structures adversely affected by 

air pollution, are difficult to quantify, and are beyond the scope of this report. However, 

sufficient information is provided for a qualitative assessment. An additional minor benefit of 

the part C and D changes is that, because of the larger number of sources subject to NSR (and 

thus to BACT and LAER requirements), and the mandated submittal of control technology 

information to a national clearinghouse, incentives will be provided for suppliers of control 

technology to provide lower- cost, more efficient control technology. The additional incentive 

for technological innovation will lead to more cost-effective pollution controls, resulting in a 

net benefit nationwide. It may also enhance the competitiveness of these technologies in the 

international market. Quantification of these benefits is beyond the scope of this report. 

6-3