### 1 MEMORANDUM

DATE : August 2013

TO : Docket EPA-HQ-OAR-2010-0929

FROM : Lisa Grogan-McCulloch, U.S. EPA

SUBJECT : Assessment of Cost Impacts of 2015 I nputs Proposal – Revisions to Reporting, Recordkeeping, and Verification Requirements under the Greenhouse Gas Reporting Program

1.0 INTRODUCTION Facilities subject to the GHG re porting rule (40 CFR part 98, her eafter referred to as “Part 98”) must report their GHG emissions to the EPA through the electronic Greenhouse Gas Reporting Tool (e-GGRT). The EPA is proposing revi sions to the reporting and recordkeeping requirements in Part 98 that would apply to repo rters subject to any of the 24 subparts listed in Table 1. The proposed revisions include:

 Adding a requirement for certain reporters under 24 subparts to use an EPA-provided inputs verification tool. For th ese subparts, the designated inputs to emission equations for which reporting was deferred to 2015 (hereaft er referred to as “’input to equations’ data elements”) and disclosure concerns have been identified would be entered into the tool. 1 

### The tool would calculate the emissions and perform electronic verification. The tool would not retain the ente red inputs (i.e., the inputs w ould not be reported to the EPA); instead, the tool would conduct certain checks (e.g., accuracy of the inputs) at the time of data entry and generate a verifica tion summary. The verification summary, which would be accessible to the EPA once the a nnual report is submitted, would provide the EPA with information to conduct further verification if necessary.

 For reporters required to use th e inputs verification tool, chan ging the required format for maintaining records of these inputs to emission equations.

 For reporters required to use th e inputs verification tool, le ngthening the record retention period from 3 to 5 years for all records main tained under Part 98 (including subparts that do not require the use of the tool).

1 Under this proposal, the inputs verificati on tool would not be required to be used by reporters for any reported GHG for which the reporter uses a CEMS or an EPA- approved alternative method (as allowed unde r sections 98.33(a)(5), 98.53(a)(2), and 98.223(a)(2) of Part 98) to calculate the reported GHG value, rath er than using "inputs to equations" data elements and the associated EPA-provided calculation methodolo gies to calculate the reported GHG value.

### 2  For certain reporters required to use the inputs verification tool, adding new data elements to be reported for the EP A’s verification purposes, and proposing confidentiality determinations for the new data elements proposed to be reported.

 For reporters required to use the inputs verification tool, removing the requirement to report the inputs to emissi on equations for which reporting was deferred to 2015 and disclosure concerns have been identified, and requiring these data to be kept as records.

Table 1. Subparts Affected by the Proposed Reporting, Recordkeeping, and Verification Requirements 1

Subpart Source Category Number of “Inputs to Equations” Data Elements Currently Required to be Reported For which Reporting is Proposed to be Removed C General Stationary Fuel Combustion Sources except Certain Electric Generators 2 26 3 26 3

E Adipic Acid Production 21 11
F Aluminum Production 29 29 G Ammonia Manufacturing 8 8
H Cement Production 16 14 K Ferroalloy Production 13 13
L Fluorinated Gas Production 55 46
N Glass Production 3 2
O HCFC-22 Production and HFC-23 Destruction 15 12
P Hydrogen Production 7 7 Q Iron and Steel Production 93 92
R Lead Production 10 10 S Lime Manufacturing (non-CEMS) 9 9
U Miscellaneous Uses of Carbonate 6 6
V Nitric Acid Production 21 6
X Petrochemical Production 21 21
Y Petroleum Refineries 80 75 Z Phosphoric Acid Production 4 4 AA Pulp and Paper Manufacturing 31 28
BB Silicon Carbide Production 3 3 CC Soda Ash Manufacturing 10 4
EE Titanium Dioxide Production 2 2
GG Zinc Production 8 8
TT Industrial Waste Landfills 3 3

### 3 Table 1. Subparts Affected by the Proposed Reporting, Recordkeeping, and Verification Requirements 1

Subpart Source Category Number of “Inputs to Equations” Data Elements Currently Required to be Reported For which Reporting is Proposed to be Removed

1 The EPA is also proposing to revise the general recordkeeping requirements in subpart A of Part 98, which would affect the recordkeeping duration for all records maintained under Part 98 by reporters subj ect to these subparts.
2 The reporting requirements applicable to certain stationary fuel combustion sources (e.g., indi vidual units, aggregations of units, common pipes, or common stacks) subject to 40 CFR part 98 , subpart C remain the same under the proposed amendment. Subpart C would co ntinue to require reporting of all applicable “inputs to equations ” data elements for stationary fuel combustion sources that meet both of the followi ng criteria: (1) the stationary fuel combustion source contains at least one combustion unit connected to a fuel-fired electric generator that has been granted access by the Public Utilities Commission to deliver power to the local or regional electric power grid (excluding generators connected to combustion units that are subject to 40 CFR part 98, subpart D); and (2) the stationary fuel co mbustion source is lo cated at a facility fo r which the sum of the combined nameplate capacities for all such electric generators is greater than or equal to 1 megawatt electric output. Subpart C reporters would not report “inputs to equations” data elemen ts for all other types of stationary fue l combustion sources subject to subpart C.
3 Includes one “inputs to equations” data element, 40 CFR 98.3(d)(3)(v), which is specified in subpart A of Part 98 and applies to only certain reporte rs under subpart C of part 98.U nder this evaluation of the subpart C “inputs to equations” data elements, this one subpart A “input to equation” data elemen t is grouped together with the 25 “inputs to equations” data elements in subpart C, rather than being listed separately under subpart A.



### This memorandum documents the EPA’s assessment of the cost impacts associated with the proposed revisions to the GHGRP. Section 2.0 of this memorandum co ntains a description of the analyses conducted to estimate cost impacts. Sect ion 3.0 presents the results of the analyses.

2.0 DESCRIPTION OF ANA LYSIS CONDUCTED

Under this analysis, the EPA estimated the cost of the proposed changes to the GHGRP as the incremental costs above the previously estimate d costs of the program as promulgated in 2009 (refer to the 2009 Impacts Analysis) 3 

### . The EPA calculated this incremental cost based on the number of reporters that submitted a GHG repor t in 2011 under each subpart specified in Table
1. To calculate the incremental cost, the EPA estimated the following fo r each subpart: (1) the cost for each facility to become familiar with the inputs verification tool within e-GGRT, and (2) the costs associated with reporting the new data elements. To estimate the number of reporters affected by the proposed new data elements, th e EPA used the number of reporters that submitted a GHG report in 2011 under each of the 10 subparts for which the new data elements would be reported. To estimate hourly wages, the EPA used the labor costs per hour for technical, managerial, and legal hours specified in the Bureau of Labor Statistics Index for 2011. These costs are presented in Table 2.

### 4 Table 2. Labor Costs - Year 2011
Labor Category Description Hourly Rate ($/hour)

Legal Oversees legal aspects of company reports and data-reporting forms. 109.94

Managerial Oversees work at a high level and is the final authority on all reporting requirements. 77.23

Technical Conducts monitoring of emissions sources, checks for accuracy, performs measurements. 59.12 Clerical Assists with documentation and recording information 31.35



### 2.1 Use of the Electronic Inputs Verification Tool

The EPA is proposing to eliminate the reporting of many “inputs to equations” data elements, due to disclosure concerns. The EPA is proposi ng to replace these reporting requirements with a requirement to enter the data into a new input s verification tool with in e-GGRT. For more information on the inputs verification tool, refer to the memorandum documenting the EPA’s analysis of alternative verification approaches in docket EPA-HQ-OAR-2010-0929. 1



### The EPA has determined that there would be no co st increase to enter “inputs to equations” data elements into the inputs verifica tion tool, as compared to the cost associated with reporting these data via e-GGRT (i.e., the EPA’s previous cost estimate under the original 2009 rule for reporting these data ) 3 

### . The EPA expects that reporters woul d spend the same time to complete entry of “inputs to equations” da ta element into the inputs verifi cation tool as they would spend reporting these data via e-GGRT. The EPA does recognize, however, that there may be some time associated with learning the new proce dures for the verification tool. The EPA has estimated that each reporter will spend one tech nical hour to become familiar with the inputs
verification tool. Based on this t echnical labor estimate, the associ ated clerical and managerial
labor hours 2 

### , and an estimated 5,742 affected reporters (the number of reporters in 2011 under one or more of the affected subparts in Table 1) 3 

### , the EPA estimates that using the new inputs verification tool would cost approx imately $379,244 for the first year.

2.2 New Data Elements
In order to facilitate the verifi cation of data, and ensure that th e EPA has the information needed
to better understand emissions associated with reporters, the EPA is proposing that reporters

2 Clerical and managerial and hours ar e assumed to be 10 percent and 5 perc ent, respectively, of technical labor hours.

3 In 2011, 5,667 reporters reported data elements under subpart C (some of which also reported data elements under other subparts listed in Table 1), and 75 additional reporters reported data elements under one or more subparts, excluding subpart C, listed in Table 1.

### 5 under 10 subparts report 26 new data elements (that were not previ ously required to be reported) with their annual report. Table 3 summarizes the new data elements for each subpart and presents an analysis of the data availability for each data element. For the 26 data elements added to the 10 GHG subparts listed in Table 3, the EPA has es timated that 8 of the data elements are available from current facility procedures us ed for accounting purposes or design and purchase
documents. These data elements are related to annual production or raw material use, and are collected by reporters as a rout ine part of conducting business. The EPA is not proposing to add additional monitoring requirements for these data elements, but would allow the use of data collected for normal business purposes. Therefore, there will be no additional monitoring cost
associated with these data elements. The other 18 data elements proposed to be reported are
values that could be calculated using data currently required to be reported. For example, under subpart H, the EPA is proposing to replace the current reporting requirement to report the monthly kiln-specific clinker CO 2 

### emission factor for each kiln w ith a requirement to report the annual average clinker CO 2 

### emission factor for the facility, averaged across all kilns. For the purposes of reporting the new data element, a repor ter under subpart H woul d calculate an annual average facility-wide value based on the cu rrent monthly values for all kilns.

Table 3. New Proposed Data Elements for Part 98
Subpart New Data Element Analysis of Data Availability E - Adipic Acid Annual quantity of cyclohexane fed to all production lines (metric tons). Available from plant procedures used for accounting purposes. Raw material consumption is necessary for financial accounting
purposes. Annual percent N 2 O emission reduction for all production units combined. Calculated value using available data for percent emission reduction data from each unit. No additional measurement required
G - Ammonia Annual ammonia production (metric tons). Available from plant procedures used for accounting purposes. Quantity of product produced is necessary for financial accounting
purposes. Annual methanol production (metric tons), if this quantity is not reported under subpart X. Available from plant procedures used for accounting purposes. Quantity of product produced is necessary for financial accounting
purposes. H - Cement Annual clinker production (metric tons). Calculated value using available data for monthly clinker production currently required for emissions equations. No additional measurement required.

### 6 Table 3. New Proposed Data Elements for Part 98
Subpart New Data Element Analysis of Data Availability Annual average clinker CO 2 emission factor for the facility, averaged across all kilns (metric tons CO 2 /metric ton clinker produced). Calculated value using available data for clinker emission factor for each kiln and total clinker production. No additional measurement required Annual average cement kiln dust (CKD) CO 2 emission factor for the facility, averaged across all kilns (metric tons CO 2 /metric ton CKD produced). Calculated value using available data for CKD from each kiln. No additional measurement required

P - Hydrogen Name and annual quantity (metric tons) of each carbon-containing fuel and feedstock. Available from plant procedures used for accounting purposes. Raw material consumption and fuel consumption are necessary for financial accounting purposes. Annual methanol production (metric tons), if this quantity is not reported under subpart X. Available from plant procedures used for accounting purposes. Quantity of product produced is necessary for financial accounting
purposes. Q - Iron & Steel If you use the carbon mass balance method in §98.173(b)(1) to determine CO 2 emissions: The annual mass (metric tons) of all gaseous, liquid, and solid fuels (combined) used in process units specified in Equations Q-1 through Q-7, calculated as specified in a proposed new Equation Q-9 in the proposed rule amendments. Do not include fuel used in a stationary combustion unit where emissions are reported under subpart C. Calculated value using available data for mass of each fuel. No additional measurement required

If you use the carbon mass balance method in §98.173(b)(1) to determine CO 2 emissions: The annual mass (metric tons) of all non-fuel material inputs (combined) specified in Equations Q-1 through Q-7, calculated as specified in a proposed new Equation Q-10 in the proposed rule amendments. Calculated value using available data for each non-fuel input. No additional measurement required

If you use the carbon mass balance method in §98.173(b)(1) to determine CO 2 emissions: The annual mass (metric tons) of all solid and liquid products and byproducts (combined) specified in Equations Q-1 through Q-7, calculated as specified in a proposed new Equation Q-11 in the proposed rule amendments. Calculated value using available data for each product and byproduct. No additional measurement required.

### 7 Table 3. New Proposed Data Elements for Part 98
Subpart New Data Element Analysis of Data Availability If you use the carbon mass balance method in §98.173(b)(1) to determine CO 2 emissions: The weighted average carbon content of all gaseous, liquid, and solid fuels (combined) included in proposed new Equation Q-9, calculated as specified in a proposed new Equation Q-12 in the proposed rule amendments. Calculated value using available data of carbon content for each fuel. No additional measurement required.

If you use the carbon mass balance method in §98.173(b)(1) to determine CO 2 emissions: The weighted average carbon content of all non-fuel inputs to all furnaces (combined) included in proposed new Equation Q-10, calculated as specified in a proposed new Equation Q-13 in the proposed rule amendments. Calculated value using available data of carbon content for each non-fuel input to each furnace. No additional measurement required.

If you use the carbon mass balance method in §98.173(b)(1) to determine CO 2 emissions: The weighted average carbon content of all solid and liquid products and byproducts from all furnaces (combined) included in a proposed new Equation Q-11 in the proposed rule amendments, calculated as specified in new Equation Q-14. Calculated value using available data of carbon content for each product and byproduct. No additional measurement required.

S - Lime Annual quantity (metric tons) of lime product sold, by type. Available from plant procedures used for accounting purposes. Quantity of product produced is necessary for financial accounting
purposes. V - Nitric Acid Annual percent N 2 O emission reduction for all production units combined. Calculated value using available data of emission reduction for each production unit. No additional measurement required.
X - Petrochemicals If using the mass balance method or CEMS method to calculate GHG emissions: Name and annual quantity (in metric tons) of each carbon-containing. Calculated value using available data of monthly quantities of feedstocks. No additional measurement required. If using the mass balance method or CEMS method to calculate GHG emissions: Name and annual quantity (in metric tons) of each carbon-containing co-product. Calculated value using availabledata of monthly quantities of coproducts. No additional measurement required.
Y - Refineries Annual quantity of flare gas combusted (in MMscf per year) (only when using Equation Y-3). Calculated value using available data of annual volumes of flare gas during normal operations and during SSM events. No additional

### 8 Table 3. New Proposed Data Elements for Part 98
Subpart New Data Element Analysis of Data Availability measurement required. Annual average molecular weight of flare gas combusted (in mmBtu per MMscf) (only when using Equation Y-3). Calculated using known composition of flare gas during normal operations and during SSM events. No additional measurement required. Annual average carbon content of flare gas combusted (expressed as a decimal fraction)(only when using Equation Y-3). Calculated using known composition of flare gas during normal operations and during SSM events. No additional measurement required. AA - Pulp & Paper For each pulp mill lime kiln: Quantity of calcium oxide (CaO) produced (metric tons). Available from plant procedures used for accounting purposes. Quantity of product produced is necessary for financial accounting
purposes. For each pulp mill lime kiln: Percent of annual heat input, individually for each fossil fuel type. Calculated using known quantities of fuel and heat value of fuel. No additional measurement required. For each chemical recovery furnace and chemical recovery combustion unit for which you are not using Equation C-2c to calculate CO 2 emissions: Annual mass of steam generated (lb steam), individually for each fossil fuel type and for spent liquor solids. Calculate using known quantities of fuel and heat value of fuel. No additional measurement required.

For each chemical recovery furnace and chemical recovery combustion unit for which you are not using Equation C-2c to calculate CO 2 emissions: Ratio of the unit’s maximum rated heat input capacity to its design rated steam output capacity (mmBtu/lb steam), individually for each fossil fuel type and for spent liquor solids. Data readily available from design or purchase documents. No additional measurement required.



### For data elements that would be readily available to the facilities, the EPA has estimated that there is little cost to the reporter to acqui re the data and report the values during the reporting process. For data elements for which the underlying data (used to calculate the data element) are currently being reported, and onl y a simple change to a calc ulation spreadsheet would be required to fulfill the reporting requirement, the EPA has estimated a nominal additional cost to report the data element. For each of the proposed new data elements, the EPA estimated that reporters would annually spend 0.5 technical hour s per data element for proposed reporting

### 9 requirements. The EPA estimated that legal a nd managerial hours woul d be 5 percent and 10 percent, respectively, of the t echnical hours. The EPA estimated the number of reporters based on the annual reports received in 2011 for the 10 subparts. 2 

### Table 4 shows the number of affected reporters by subpart and the number of da ta elements to be reported for each subpart. Based on these data, the total estimated costs asso ciated with reporting fo r the 26 data elements in the 10 subparts listed in Table 4 is $80,000.

Table 4. Subparts with New Data Elements Reported

Subpart Source Category Number of New Data Elements Number of Reporters E Adipic Acid Production 2 3 G Ammonia Manufacturing 2 22
H Cement Production 3 98 P Hydrogen Production 2 103 Q Iron and Steel Production 6 128 S Lime Manufacturing (non-CEMS) 1 73
V Nitric Acid Production 1 35
X Petrochemical Production 2 64
Y Petroleum Refineries 3 145 AA Pulp and Paper Manufacturing 4 110



### 2.3 Recordkeeping changes The proposed changes to the GHGRP include a provi sion to retain record s of all “inputs to equations” data elements for five years instead of the three years currently required. Additionally, the EPA is requiring reporters who us e the inputs verification tool to maintain a record of a file generated by th e tool, which lists the entered “i nputs to equations” data elements.
This list of data elements could be maintained in a format (e.g., electroni c, hard copy) currently allowed under Part 98. The EPA does not anticipa te that this change to the recordkeeping requirements would create any additional burden for a reporting facility in addition to the recordkeeping burden estimated in the 2009 Impact Analysis. 3



### 3.0 RESULTS OF ANALYSIS The total cost of the proposed changes is presen ted in Table 5. The EPA estimates that the first year net cost would be $460,000, which includes th e one-time cost of learning the verification system. The EPA estimates recurring costs to be $80,000 for reporting of new data elements.

### 10 Table 5. Summary of Changes to Cost s of GHGRP for 2015 Inputs Proposal
Cost Element First Year Costs Subsequent Year Costs 

### Verification tool (training) $380,000

Reporting for New Data Elements $ 80,000 $80,000

Net Cost $420,000 $80,000

4.0 REFERENCES

1. Evaluation of Alternative Verification A pproaches for Greenhouse Gas Reporting Rule Subparts for which Reporting of Inputs to Emission Equations was Deferred to March 31, 2015. Memorandum from Lisa Grogan-McCull och, U.S. EPA to Docket EPA-HQ-OAR2010-0929. August 2013. 2. 2011 Greenhouse Gas Emissions from Large Facilities. http://ghgdata.epa.gov/ghgp/main.do

. 3. Regulatory Impact Analysis for the Manda tory Reporting of Greenhouse Gas Emissions Final Rule (GHG Reporting). U.S. Envir onmental Protection Agency. September 2009.