p.1 

OAR Box 1875 

Prepped by Ollie Stewart 

Document Number: 

67) ll-F-14 

Docket Number: 

A-90-19 

Printed 12/1/200811:12:48 AM Sheet 67 of 86 
P.2 

A-90-19 

ll-F-14 

Note to: Troy Hillier, OMB 

From: Jan Meyer, EPA 

Date: October 8, 1992 

/X~~ m n° 

Subject: Transmittal of Requested Materials for 12291 Review of 

the HON 

Attached please find: 1) a draft analysis of the costs 

associated with the monitoring, recordkeeping and reporting 

requirements in the HON; and 2) a summary of the banking provisions 

that EPA is planning on adding to the HON as a result of our 

previous discussions. These materials are being submitted to you 

for your review as part of OMB's on-going review of the HON under 

Executive order 12291. If you have questions about either 

attachment, please contact me at (919) 541-5254. 

cc: Daphne McMurrer 

Alan Rush 

EJLSSJJLX 

EPAAJRDOC^iL 
P.3 

,\tO Sr,,_ 

f^ x UNITED STATES ENVIRONMENTAL PROTECTION AGENCY 

Office of Air Quality Planning and Standards USB Research Triangle Park. North Carolina 27711 ; 

MEMORANDUM 

SUBJECT: Presentation of HON Monitoring/Recordkeeping/Reporting 

Costs 

—y 

FROM: Larry Sorrels ,^^-t.^^ <r4-

SDB, CEIS (MD-13) •'•/ ' 

TO: Troy Hillier, OMB 

This memorandum explains the calculation of national costs 

of monitoring, recordkeeping, and reporting from compliance with 

the HON. Estimates of hours per item (required action), 

frequency per year, and number of respondents used in the cost 

calculations were prepared in consultation with people who 

routinely work with or consult major chemical firms or have 

considerable experience with such firms. 

To compute the costs associated with the burden estimates, a 

wage rate of $32 per hour ($1990) was assumed. This assumption 

was based on 85 percent of the labor accomplished by technical 

personnel (typically an engineer at $33 per hour), 10 percent 

accomplished by a manager (at $49 per hour), and 5 percent 

clerical (at $15 per hour). All of the wage rates include an 

additional 110 percent for overhead. Costs were annualized 

assuming an expected remaining life for affected facilities of 15 

years from HON promulgation (officially November 1992), and using 

an interest rate of 10 percent in accordance with OMB guidelines. 

The annualization of costs took into account the different 

starting points for compliance requirements. For example, 

facilities must develop implementation plans for monitoring, 

recordkeeping, and reporting by 12 or 18 months before the 

compliance date. The starting point for annualizing these costs 

is taken as November 1993; this is the conservative assumption 

that facilities will develop implementation plans by the earliest 

possible time. 

Compliance requirements vary in terms of frequency, and are 

taken into account in the annualization of costs. Performance 

tests to demonstrate compliance with the control device 

requirements are required once. Compliance requirements also 

include monitoring of operating parameters of control devices and 

records of work practice and other inspections. These activities 

must be reported semiannually. The compliance requirements that 

are to be done but once are annualized over the time from the 
P.4 

year in which they are to take place to the expected end of 

facility life (November 2007). 

Spreadsheets showing the breakdown of the burden on affected 

facilities and the cost of the burden requirements, as well as 

the assumptions behind the cost calculations, the breakdown of 

costs on an annual basis, and a list of compliance dates are in 

Attachment A. The assumptions behind the burden estimates are 

listed in Attachment B. 

2 Attachments 

cc: Doug Bell, SDB 

Les Evans, CPB 

Linda Herring, SDB 

Daphne McMurrer, SDB 

Jan Meyer, SDB 

Bill Vatavuk, SDB 

Tom Walton, SDB 

Al Wehe, SDB 
P.5 

Attachment A 

Annual Cost for Years 1-15 after HON Promulgation 

Year After 

Promulgation 

1 

2 

3 

4-5 

6-15 

Annual Cost 

$3,366 

7,180,838 

12,586,847 

48,139,462 

48,136,065 

The fifth year cost will be $48,139.462. 

Assumptions for the M/R/R Cost Calculations 

1. The interest rate used is 10 percent. 

2. The expected remaining life after promulgation 

(November 1992) for facilities affected by the HON is 

15 years. 

3. Annualization of costs was computed for different time 

periods due to different starting points for required 

HON measures. See "Compliance Dates for the Various 

Requirements" below. The compliance date for each 

requirement was taken as the starting point for 

annualizing the costs in meeting each 

requirement. 

Costs are incurred at the beginning of a year, 

a convention from engineering economy. 

This is 

No growth projections are included, for it is not 

advisable to project growth so far (beyond 5 years) 

into the future. 
P.6 

Annualized Cost Breakdown 

For Year 1 (after promulgation)- The annualized cost of 

initial notification. 

For Year 2- The sum of Year 1 costs, the annualized cost of 

implementation plans, and the annual cost of data gathering for 

equipment leaks. 

For Year 3- The sum of Year 2 costs, the annualized cost of 

compliance notification for all emission points, and the 

annualized cost for notices of new source construction. 

For Years 4 and 5- Same as Year 3. 

For Years 6 through 15- Same as Years 4 and 5, except there 

is no annualized cost for notices of new source construction. 

Compliance Dates for the Various Requirements 

Initial notification must occur by 90 days after issuance of 

the final rule (or February 1993). 

An implementation plan (or permit application) must be 

submitted by 12 or 18 months before the compliance date. The 

compliance date for all emission points except equipment leaks is 

three years after promulgation (for this analysis assumed to be 

November 1995). The compliance date for equipment leaks is two 

years after promulgation (November 1994). 

Compliance notification must occur by November 1995. 

Data gathering for all emission points except equipment 

leaks must begin by four years after promulgation (November 

1996). Data gathering for equipment leaks must begin by November 

1994. 
Item 

HON Monitoring/Recordkeeping/Reporting Cost Analysis 

(Frequency of occurrence per item is 1 time only.) 

Hours 

per item 

# of 

respondents Total Hrs. 

800 

120000 

120800 

Total Cost ($) 

25,600 

3,840,000 

3,865,600 

Initial 

Notification 

Implement. Plan 

-or Permit Appli. 

300 

400 

400 

Subtotal: 

For Compliance 

Notification 

Process Vents 

Tests 

No Tests 

Report 

Transfer 

Tests 

No Tests 

Storage 

Subject to Control 

Not Subject to 

Control 

Equipment Leaks 

No. of Emission 

Points 

360 

80 

80 

12 

360 

20 

(TRE<4) 

(TRE>4) 

1067 

200 

1067 

200 

280 

210 

24 

4 

208 

3193 

920 

1000 

384120 

16000 

85360 

2400 

100800 

4200 

76632 

3680 

208000 

$12,291,840 

512,000 

2,731,520 

76,800 

3,225,600 

134,400 

2,452,224 

117,760 

6,656,000 

Wastewater 

Group 1 streams 360 400 144000 4,608,000 
Group 2 streams 100 1208 120800 3,865,600 

Est. total hours required: 1,266,792 

Total annualized cost: $5,927,450 

00 
Periodic Reports 

Item 

Gather Data 

# of hours 

Frequency 

per year 

# of 

respondents Total Hrs, Total Cost (SJ 

Process Vents 

Transfer 

Storage 

Wastewater 

Equip. Leaks 

Report Data 

All points 

Notices of New Source 

Construction 

300 

282 

2.2 

244 

104 

120 

1067 

280 

3193 

400 

1000 

400 

640,200 

157,920 

14,049 

195,200 

208,000 

96,000 

20,486,400 

5,053,440 

449,574 

6,246,400 

6,656,000 

3,072,000 

Notice Const. / 

Reconst. 

Notice expected 

Startup 

Notice of Startup 

Notice of: 

-Tank Inspect. 

-Group 2-1 

33 

33 

33 

850 

850 

66 

132 

66 

850 

6,800 

849 

1,698 

849 

27,200 

217,600 

Annual Cost for Year 1 

Annual Cost for Year 2 

Annual Cost for Year 3 

Annual Cost for Years 4 and 5: 

$3,366 

$7,180,838 

$12,586,847 

$48,139,462 

Annual Cost for Years 6 through 15: $48,136,065 
P.10 

Attachment B 

Assumptions Behind the Burden Estimates 

For Initial Requirements 

The number of respondents for initial notification and 

implementation plans are based on a reasonable upperbound 

estimate of the number of facilities with unit(s) subject to the 

rule. 

The estimate of hours required to complete an implementation 

plan is an estimate based on reported experience enumerating 

equipment in facilities similar to those subject to HON and 

determining if a point is likely to be Group 1 or 2 and the 

planned control approach. 

Process vents subject to testing by Method 18 and other 

methods are those with total resource effectiveness (TRE) less 

than 4. (Vents with TRE greater than 4 are not required to 

perform a test of the stream characteristics. It can be an 

engineering calculation). Tests would have to be conducted on 

all 1067 process vents to determine stream characteristics to 

calculate TRE. Of the 1067 about 430 would be required to 

demonstrate achieving 98% emission reduction and establish a 

monitoring parameter for the control device. 

Estimate of time required for process vents that do not need 

testing was taken from estimated time required to document an 

engineering analysis for a vent with TRE > 4. This estimate was 

based on experience with documenting these analyses and is 

consistent with estimates from NSPS burden estimates. 

Transfer testing estimates were based on documentation of 

rack weighted average vapor pressure < 1.5 psia. 

Estimate for burden associated with storage tanks subject to 

control was based on time required for initial demonstration of 

IFR or EFR for a control device for a storage tank. For storage 

tanks not subject to control, burden estimates were based on an 

estimate of the time to document liquids stored in the tank and 

to document calculation of the partial pressure of liquid HAP's 

in the tank. 

Virtually all process units in the SOCMI will be subject to 

the equipment leaks control program (or LDAR program). This 

estimate is the time to set up the monitoring system and run the 

program. This requirement applies to all units by 18 months 

after issuance of the final rule. 
P.11 

For Group 1 wastewater streams, the estimate of time to show 

compliance reflects requirements for demonstration of performance 

of treatment processes as well as requirements for each tank, 

surface impoundment, etc., and assumes combining of streams 

likely to occur. For Group 2 wastewater streams, the estimate of 

time to show compliance reflects burden of calculating and 

documenting flow weighted average annual concentration. 

For Periodic Reports 

Estimates for data gathering are derived from detailed 

estimates based on experience with similar requirements in the 

NSPS program. 

Time estimates for initial notification are taken from 

instructions to complete previous SF-83 burden estimates. These 

are commonly used estimates. Also, these estimates assume 100 

process units affected, one time only, and spread equally over 

three years, beginning in the third year after promulgation. 

Thus one-third of the process units are assumed to file a spot 

reports the first year, one-third the next year, and the 

remaining third in year three. These reports are to be filed 

only for new equipment startups. 
P.12 

BANKING 

Preamble will explain that Banking Provisions have been added 

to the HON in order to: 

• Provide compliance flexibility when: 

Credit and debit generators have a mismatch in 

production rates or utilization rates; 

Routine maintenance shutdowns for averaged points 

are in different compliance periods; and 

Credit generators must be shutdown without notice. 

• Encourage more emissions reductions earlier than 

required. 

• Reduce compliance costs. 

Banking policy: 

1) Banked credits can be generated by any emissions average 

that balances on an annual basis, and has extra credits. 

Additional points may be added to an average to 

increase the likelihood of creating bankable 

credits, but these additional points are not 

required to create bankable credits. 

The source will report the data used to calculate 

their annaul balance and any bankable credits in 

the periodic report used to certify compliance with 

the emissions averaging provisions. 

2) Banked credits can be used for the annual balance of 

credits and debits. 

Da.iked credits cannot be used for the quarterly 

checks because the variability factor (25%) already 

allowed for the quarterly comparison should provide 

sufficient operational flexibility on a quarterly 

basis. In addition, the quarterly checks must be 

based on actual credits and debits from the 

preceding quarter because their purpose is to 

ensure that levels of over-control and undercontrol are roughly equivalent over each quarter of 

the year. 

3) Banked credits alone cannot be used to balance an 

uncontrolled Group 1 point. The averaging plan must 

include some credit from on-going over-control to balance 

under-controlled points. 

4) Banked credits have a 2 to 5-year life. EPA will propose 

the 2 to 5-year range for comment. 
BANKING 

Example of Banked Credit Use: 

P.13 

Credits 

Debits 

Newly 

Banked 

Banked 

Withdrawn 

Year 1 

70 

70 

0 

0 

0 

Year 2 

73 

70 

+3 

+3 

0 

^•'; Year..-3.:.. 

80 

70 

+10 

+13 

0 

Year 4 

67 

70 

0 

+10 

-3 

Year 5 

60 

70 

0 

0 

-10