# FINAL REPORT

Small Business Advocacy Review Panel on EPA’s Planned Proposed Rule:

Combined Rulemaking for Industrial, Commercial, and Institutional Boilers and Process Heaters at Major Sources of HAP

and Industrial Boilers and Commercial and

Institutional Boilers at Area Sources

March 23, 20092 

### Table of Contents

1. Introduction . . . . . . . . . . .

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

2. Background . . . . . . . . . . . . .

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 2.1 Background and Regulatory History . .

. . . . . . . . . . . . . . . . . . . . 5 2.2 Description of Rule and its Scope . . . . . . . . .

. . . . . . . . . . . . . . 6

2.3 Related Federal Rules . . .

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7

3. Overview of Proposal Under Consideration

. . . . . . . . . . . . . . . . . . . . . . . 8 3.1 Potential Requirements of the Proposal . . . . . . . . . . . . . . . . . . . . 8 3.2 Options Likely to be Proposed . . . . .

. . . . . . . . . . . . . . . . . . . . . . 9

4. Applicable Small Entity Defin itions . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10

5. Small Entities That May Be Subject to the Proposed Regulation . . . . . . 11

6. Summary of Small Entity Outreach

. . . . . . . . . . . . . . . . . . . . . . . . . . . . 12

7. List of Small Entity Representatives . . .

. . . . . . . . . . . . . . . . . . . . . . . . . 14

8. Summary of Inputs from Potential Sma ll Entity Representatives . . . . . 16 8.1 Number and Types of Entities Affected . . . . . . . . . . . . . . . . . . . 16 8.2 Potential Reporting, Record Keep ing, and Compliance . . . . . . . 16

8.3 Related Federal Rules . . .

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16 8.4 Regulatory Flexibility Alternatives . .

. . . . . . . . . . . . . . . . . . . . 17

8.4.1 Work Practice Standards . . . . . . . . . . . . . . . . . . . . . . . . 17 8.4.2 Subcategorization . .

. . . . . . . . . . . . . . . . . . . . . . . . . . . .18 8.4.3 Health Based Compliance A lternatives (HBCA). . . . . . 19

8.4.4 Potential Adverse Economic Impact . . . . . . . . . . . . . . 19 8.4.5 Emissions Averaging . . . . . . . . . . . . . . . . . . . . . . . . . . . 19

9. Panel Findings and Discussion . . . . . . . .

. . . . . . . . . . . . . . . . . . . . . . . . 20 9.1 Number and Types of Entities Affected .. . . . . . . . . . . . . . . . . . . 20 9.2 Potential Reporting, Record Keep ing, and Compliance . . . . . . . 20

9.3 Related Federal Rules . . .

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21 9.4 Regulatory Flexibility Alternatives . . . . . . . . . . . . . . . . . . . . . . . 21

9.4.1 Work Practice Standard s . . . . . . . . . . . . . . . . . . . . . . . . 21 9.4.2 Subcategorization

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22 9.4.3 Health Based Comp liance Alternatives (HBCA) . . . . . . 233 

### 9.4.4 Emissions Averaging . . . . . . . . . . . . . . . . . . . . . . . 23 9.4.5 Compliance Costs

. . . . . . . . . . . . . . . . . . . . . . . . . . . . 23

Appendices Appendix A: List of Materi als EPA Shared With SERs Appendix B: Summaries of Outreach Meetings with SERs Appendix B: Written Comments Received from SERs4 Final Report for the Small Business Advocacy Review Panel on EPA’s Planned Proposal of Combined Rulemaking for Industrial, Commercial, and Institutional Boilers and Process Heaters at Major Sources of HAP and

Industrial Boilers and Commercial and Inst itutional Boilers at Area Sources

1. INTRODUCTION

This report is presented to the Small Busi ness Advocacy Review Panel (SBAR Panel or Panel) convened for the planned propos ed rulemakings on the National Emission Standards for Hazardous Air Pollutants (NES HAP) for Industrial, Commercial, and

Institutional Boilers and Process Heater s (Boiler MACT) and on the NESHAP for Industrial, Commercial, and In stitutional Boilers Ar ea Sources, currently being developed by the U.S. Environmental Protection Agency (EPA). Under section 609(b) of the Regulatory Flexibility Act (RFA) as am ended by the Small Business Regulatory Enforcement Fairness Act of 1996 (SBREFA), a Pa nel is required to be convened prior to publication of the initial regulatory flexibility analysis (IRFA) that an agency may be required to prepare under the RFA. In addition to EPA’s Small Business Advocacy Chairperson, the Panel will consist of the Dir ector of EPA’s Sector Policies and Programs Division within the Office of Air Quality Pla nning and Standards, the Administrator of the Office of Information and Regulatory Affa irs within the Office of Management and Budget, and the Chief Counsel for Advocacy of the Small Business Administration.

This report includes the following:

• background information on the planned proposed rule being developed;

• information on the types of small entities that would be subject to the planned proposed rule;

• a description of efforts made to obt ain the advice and recommendations of representatives of thos e small entities; and

• a summary of the comments that have been received to date from those representatives.

Section 609(b) of the RFA directs the Panel to report on the comments of small entity representatives and make findings on issues re lated to identified el ements of an IRFA

under section 603 of the RFA. Thos e elements of an IRFA are:

• a description of and, where feasible, an estimate of the number of small entities to which the proposed rule will apply;

• projected reporting, record keeping, a nd other compliance requirements of the proposed rule, including an estimate of th e classes of small entities which will be5 subject to the requirements and the type of professi onal skills necessary for preparation of the report or record;

• an identification, to the ex tent practicable, of all ot her relevant Federal rules which may duplicate, overlap, or co nflict with the proposed rule; and

• any impacts on small entities and any signi ficant alternatives to the proposed rule which accomplish the stated objectiv es of applicable statutes and which minimize any significant economic impact of the proposed rule on small entities;

Once completed, the Panel report is provided to the agency issuing the planned proposed rule and included in the rulemaking record. In light of the Pa nel report, and where appropriate, the agency is to make changes to the draft planned pr oposed rule, the IRFA for the planned proposed rule, or the d ecision on whether an IRFA is required.

It is important to note that the Panel’s findings and discussion will be based on the information available at the time the final Panel report is drafted. EPA will continue to conduct analyses relevant to the proposed rule, and additional information may be developed or obtained during the remainder of the rule development process. The Panel makes its report at a preliminary stage of rule development and its report should be considered in that light. At the same time, the report provides the Panel and the Agency with an opportunity to identif y and explore potential ways of shaping the proposed rule to

minimize the burden of the rule on small en tities while achieving the rule’s purposes.

Any options identified by the Panel for reduc ing the rule’s regulatory impact on small entities may require further analysis and/or da ta collection to ensure that the options are practicable, enforceable, environmentally sound, and consistent with the Clean Air Act.

2. BACKGROUND

2.1 Background and Regulatory History

Section 112 of the Clean Air Act (CAA) requi res the Environmental Protection Agency (EPA) to list categories and subcategories of major sources and area sources of hazardous air pollutants (HAP) and to establish NESH AP for the listed s ource categories and subcategories. Industrial boilers, commerc ial and institutional boilers, and process heaters were listed as a major source for regul ation. Major sources of HAP are those that have the potential to emit grea ter than 10 tons per year (tpy ) of any one HAP or 25 tpy of any combination of HAP.

Under the CAA section 112(k) (U rban Strategy/Area Source Pr ogram), EPA is to identify and list area source categories accounting for 90 percent of the emissions of each of 30

urban HAP emitted from area sources. EPA published the Integrated Urban Air Toxics Strategy on July 19, 1999 (64 FR 38707). As pa rt of the Strategy, EP A listed Industrial

Boilers and Commercial/Institutional Boilers as two of the area source categories for regulation. Once the area sour ce categories are listed, sectio n 112(d) requires the EPA to6 promulgate technology-based standards for th e sources in the lis ted category. The

standards can be based on either maximum ach ievable control technology (MACT) or, at the discretion of the Administrator, generally available control technology (GACT).

In addition, both area source i ndustrial boilers and commercial/ institutional boilers are on the list of section 112(c)(6) source categories, which requires that the listed categories be subject to MACT regulation. These cate gories are on the 112(c)(6) list because of emissions of mercury and polycyclic organic matter (POM).

A NESHAP (Boiler MACT) was promulga ted on September 13, 2004 for industrial boilers, commercial and institutional boilers, a nd process heaters. Pe titions for judicial review were filed on the promulgated Boile r MACT. The Boiler MACT was vacated by the D.C. Circuit Court of Appeals on June 8, 2007. The court remanded the NESHAP to EPA, requiring the Agency to revise the Boile r MACT and the associated MACT floors. In the same decision, the court also vacated and remanded EPA’s CISWI definitions rule, in which the Agency had defined “commercia l and industrial solid waste” to exclude materials combusted in units for energy recove ry. The court held that the plain meaning of the statute required EPA to regulate unde r section 129 of the CAA “any” unit which combusts “any” solid waste material. Unde r section 129, “solid waste” is to have the meaning established by the Administrator under the Solid Waste Disposal Act. Therefore, combustion units that combust any solid waste will be subject to emissions

standards under section 129. Combustion units that do not combust any solid waste will be subject to emissions st andards under section 112.

2.2 Description of the Rule and its Scope

The industrial boilers source category include s boilers used in manufacturing, processing, mining, and refining or any othe r industry. The commercial/institutional boilers source category includes boilers used in commercial establishments (stores/malls, laundries, apartments, restaurants), medical centers (hos pitals, clinics, nursing homes), educational and religious facilities (school s, universities, churches), hotels/motels, and municipal buildings (courthouses, prisons).

The vacated Boiler MACT affected industria l boilers, institutional and commercial boilers, and process heaters located at majo r source facilities. A process heater was defined as enclosed device using controlled flame, that is not a boiler, and the unit’s primary purpose is to transfer h eat indirectly to a process mate rial. Process heaters do not

include units used for comfort heat or space heat, food preparation for on-site consumption, or autoclaves. A boiler was defi ned as an enclosed device using controlled flame combustion and having the primary pur pose of recovering thermal energy in the

form of steam or hot water. Waste heat boile rs are excluded from the definition of boiler.

Hot water heaters were also not regulated under the vacated rule. A hot water heater was defined as a closed vessel with a capacity of no more than 120 U.S. gallons, in which water is heated by combustion of gaseous or li quid fuel. Temporary boi lers were also not regulated under the vacated rule. A temporar y boiler was any gaseous or liquid fuel-fired7 boiler that remained at any one location for less than 180 consecutive days. Boilers or process heaters that are used specifically for research and development were not regulated under the vacated rule.

The vacated Boiler MACT reflected the appl ication of the maximum achievable control technology (MACT). Pollutants of interest are all hazardous air pollutants (HAP), but mainly metals, acid gases, mercury, and or ganic HAP. Hydrogen chloride (HCl) was the predominant HAP emitted from boilers/process heaters, and HCl was used as a surrogate for all acid gases. Boilers/process heater s also emit metals (mostly arsenic, cadmium, chromium, mercury, manganese, nickel, and l ead). The vacated Boiler MACT used PM as a surrogate for metal emissions. Boilers /process heaters emit organic HAP emissions (mostly formaldehyde, benzene, and acetaldehyde ). Carbon monoxide (CO) was used as a surrogate for organic HAP emissions.

In developing the vacated Boiler MACT, it wa s estimated that the number of affected boilers/process heaters were as follows: 3,808 solid fuel, 7,500 liquid fuel, and 46,892 gaseous fuel. These estimates were based on data that were compiled in 1999. Based on a preliminary review of res ponses to a survey conducted by EPA of all facilities that would have been subject to the vacated Boiler MACT, revised estimates are 2,414 major

source facilities with abou t 11,500 boilers/process heaters. Approximately, 158 (or 7 percent) of these facilities are reported to be small entities.

As for boiler area sources, there are estimated to be over one million boilers located at industrial, commercial, and inst itutional area source f acilities. The vast majority of area

source boilers are estimated to be located at commercial and institutional facilities, and, thus, generally owned or operated by small entit ies. Many of the boilers at area sources are not required to have a permit or submit peri odic emission reports to a state or federal agency. Natural gas is the principal fuel type used by commercial and institutional boilers, but many do combust wood, coal, or ot her non-fossil and biomass fuels (e.g., fish oil, landfill gas, and agricultural residues). Po llutants of interest are all HAP, but mainly, metals, mercury, and organic HAP. Industr ial boilers and commercial/institutional boilers are on the 112(c)(6) list due to their emissions of mercury and POM.

2.3 Related Federal Rules

These rules will regulate source categories co vering industrial boilers, institutional and commercial boilers, and process heaters. Th ese source categories potentially include combustion units that are already regulated by other MACT standard s. Therefore, we intend to exclude from these rules any boiler or process heater that is already or will be subject to regulation under another MACT standard.

Combustion units that are regulated by other standards and are therefore likely to be

excluded from these rules include: solid wa ste incineration units covered by section 129 of the CAA; boilers or process heaters covered by the hazardous waste combustor NESHAP; kraft recovery furnaces; and electric utility steam generating units (i.e., a fossil

fuel-fired combustion unit of more than 25 megawatts that serves a generator that8 produces electricity for sale).

In 1986, EPA developed new source performa nce standards (NSPS) for industrial, commercial, and institutional boilers having a heat input capacity greater than 100 million Btu per hour (40 CFR part 60, subpa rts Db and Dc). The NSPS regulates emissions of particulate matter (PM), sulfur dioxide, and nitroge n oxides from boilers

constructed after June 1984. S ources subject to the NSPS woul d also be subject to these rules because these rules regulate sources of HAP while the NSPS does not. However, in developing these rules for industrial, commerc ial, and institutional boilers and process heaters, EPA will minimize the monitoring requirements, testing requirements, and recordkeeping requirements to avoid duplicating requirements.

3. OVERVIEW OF PROPOSAL UNDER CONSIDERATION

3.1 Potential Requirements of the Proposals

Development of standards for major sources and area sources are a statutorily required action. Voluntary and incentive-based a pproaches are not av ailable for these rulemakings. These proposals must set t echnology-based limits as appropriate, but will explore options to nontraditional rulemaking, such as pollution prevention approaches (e.g., energy audits and tune-ups) and innovati ve compliance measures (e.g., health based compliance alternatives).

Section 112(d)(2) of the CAA states that st andards are based on the maximum achievable control technology (MACT). Section 112(d )(3) sets minimum stringency criteria (MACT Floor) for these standards. For existi ng sources, the standard s shall not be less stringent than “the average emission lim itation achieved by th e best performing 12 percent of existing sources...” For new sources, the MACT fl oor is “the emission control achieved in practice by the best controlled similar source...”

The court has rule that the “no emission reduction” MACT floors (resulting in no emission limits being set for some of the ex isting subcategories) in the vacated Boiler MACT are unlawful. Thus, the proposal for major sources will contain limits for HAP for all subcategories. Therefore, emission limits will need to be developed for PM (as a surrogate for metals), mercury, HCl (as a surrogate for acid gases), and CO (as a surrogate for organic HAP). Based on th e rulemaking done for the vacated Boiler MACT, the likely control techno logy basis representing the MACT Floor for the various emission limits for major sources will be:



### • PM/metals = Fabric Filters



### • Mercury = Fabric Filters



### • HCl = Wet Scrubber



### • CO = Good Combustion Practice (CO limit/monitoring)

One of the first issues that must be addre ssed in these rulemakings is defining “solid waste.” The definition of “solid waste,” that is nonhazardous solid waste, is being developed by EPA’s Office of Solid Waste. Once that is determined, waste-burning9 boilers will be removed from MACT da tabases, and the emission limits will be

reassessed in accordance with recent c ourt decisions regarding MACT floor determinations. This will require that MA CT floor “emission limits” be developed for subcategories and HAP groups that had no emission standards in the vacated Boiler

MACT.

To assist in this effort, EPA is currently conducting a survey to collect information on

materials combusted and emissions in order to address the court de cisions. That is, revising the population of boilers that should be covered under the Boiler MACT. This survey was sent mainly to major sources. Responses to the survey were received by the

end of November 2008.

For the Boiler Area Source rule, emission limits for mercury and POM must be based on

MACT because MACT emission limits are required under 112(c)(6) and mercury and POM are 112(c)(6) pollutants. Again, CO will be used as surrogate for POM. The likely control technology basis for mercur y is either a fabric filter or fuel switching to a lower mercury content fuel and for POM is good co mbustion practices (GCP), such as annual tune-up or burner replacement . A work practice standard, instead of emission limits, may be proposed if it can be justified under sec tion 112(h), that is, it is impracticable to

enforce the emission standards due to tec hnical or economic limitations. These work practice standards could include annual tune-up and/or en ergy audits. These work practice standards could reduce fuel use wh ich would result in reduced emissions of mercury and POM. For the other HAP (metals, organic HAP), GACT emission limits will be proposed, using PM as surrogate for metals and CO as surrogate for organic HAP, or a GACT management practices will be proposed (annual tune-up, energy audits, installation of energy efficient boiler).

3.2 Options Likely to be Proposed

EPA is in the early stages of developing the proposals. EPA has not yet decided on a detailed approach for subcategorizing the source categories, determining the MACT floor, or the compliance requirements. As EPA is beginning to develop these rulemakings, EPA is also starting to discuss appropriate options th at would, consistent with the Clean Air Act, ease the compliance burden for small businesses that may be affected by the rules while maintaining the overall goals of the programs. EPA will continue to seek input from small entities th roughout the regulatory de velopment process.

We note that the vacated Boiler MACT wa s certified as not having a significant economic impact on a substantial number of sm all entities due to the decisions made at that time regarding the development of that rule. However, the decision to have a separate subcategory for small boilers whic h resulted in a no emission reduction MACT floor (and thus no emission limit) has since been ruled unlawful by the court. Therefore, we must assess the potential options in light of current case law.

In addition, expansion of the program to both major and area sources means that certain sectors and businesses that were not previ ously covered under the vacated Boiler MACT will now become obligated parties. EPA does intend to explore potential flexibility10 options for small entities. Some potential optio ns to assist small entities in compliance with the new rule requirem ents are discussed below.

A likely option for both rulemakings is to lim it the number of subcateg ories to four: coal, biomass, liquid, and gas. While emission char acteristics differ between fuel types. Size and duty cycle have little effect on emissions or controls. Subcategories by fuel type would simplify the regulations and enfor cement. Basing subcategories on industry sectors, such as, pulp & paper, chemical, furn iture, refineries, etc., or source categories, such as, commercial units, institutional units wi ll continue to be explored. However, it currently appears that the sector has little e ffect on emissions or control feasibility and

there is limited emissions information on ma ny sectors. So, there appears to be no technical justification for creating additional special subcategories but EPA will continue to consider any option suggested for subcateg orization to reduce the impact of the rules

on small entities.

Likely options to be proposed are in terms of compliance re quirements, such as, emission averaging within facility, reduced monitori ng/testing requirements, or allowing more time for compliance. For area sources, exempting them from Title V permitting may be an option but only if we can determine complia nce would be impracticable, infeasible, or unnecessarily burdensome.

4. APPLICABLE SMALL ENTITY DEFINITIONS

For purposes of assessing the impacts of the pr oposed rule on small entities, small entity is defined as: (1) a small business as de fined by the Small Business Administration's (SBA) regulations at 13 CFR 121.201; (2) a small governmental jurisdiction that is a government of a city, county, town, school distri ct or special district with a population of less than 50,000; and (3) a small organization that is any not-fo r-profit enterprise which is independently owned and operated and is not do minant in its field. Small businesses (as well as large businesses) would be regulat ed by these rulemakings, as well as small governmental jurisdictions or small organizatio ns as described above. As set by SBA, the categories of small entities that will potential ly be affected by this rulemaking are defined in the following table:

Defined as small entity by SBA if less than or equal to: Sector NAICS

Code

Number of Employees Millions of

Dollars Revenue or Budget Major

Sources Area

Sources

Wood Product Manufacturing 321 500 Yes Yes

Furniture 337 500 Yes Yes

Utilities (Municipal) 221 4 million megawatt hours Yes No

Food 311 500 Yes Yes11 Manufacturing Elementary and Secondary

Schools 611110 $7.0 No Yes

Hospitals 622 $34.5 No Yes Religious Organizations 813110 $7.0 No Yes

Full-Service

Restaurants 722110 $7.0 No Yes

Commercial Printing 323 500 Yes Yes

Hotels and

Motels 721110 $7.0 No Yes

EPA used a variety of sources to identify which entities are appropriately considered “small.” EPA used the criteria for small entities developed by the Small Business

Administration under the North American Indus try Classification System (NAICS) as a guide. Information about the characteristics of the sectors comes fr om sources including the Energy Information Administration (EIA) wi thin the U.S. Department of Energy and the U.S. Census Bureau. EPA then found employment, revenue, and population information for parent entities using the Dun and Bradstreet, Standard & Poor’s, American Business Information, and U.S. Census Bureau.

5. SMALL ENTITIES THAT MAY BE SUBJECT TO THE PROPOSED

REGULATION

The estimated number of small entities that will be subject to these rulemakings, as required by CAA, for the various industrial, commercial, and institutional sectors are presented in the following tables:

Boiler MACT

Sector Estimated Number of Small Entities Food and Kindred Products (NAICS 311) 7 Plastics and Rubber Products Manufacturing (NAICS 326) 12

Lumber and Wood Products (NAICS 321) 20 Furniture and Fixtures (NAICS 337) 9 Paper and Allied Products (NAICS 322) 16 Chemical and Allied Products (NAICS 325) 18 Electric, Gas, And Sanitary Services (i.e., Municipal Boilers) (NAICS 221) 26

Fabricated Metals Prod ucts (NAICS 332) 9 Petroleum Refining and Related Industries (NAICS 324) 8

Primary Metal Manufacturing (NAICS 331) 612 Transportation Equipment Manufacturing (NAICS

336 6

Printing and Related Sup port Activities (NAICS 323) 5

Oil and Gas Extraction (NAICS 211) 3 Nonmetallic Mineral Products Manufacturing (NAICS 327) 3

Waste Management (NAICS 562) 2 Educational Services (NAICS 611) 2 Others (NAICS 212, 313, 316, 339, 493, 423) 6

TOTAL 158

Boiler Area Sources

Sector Estimated Number of Small

Entities Food Manufacturing (NAICS 311) 18,200 Wood Product Manufacturing (NAICS 321) 1,300 Religious Organizations (NAICS 8131) 37,500 Wholesale Trade (NAICS 422) 1,900 Real Estate (NAICS 531) 329,000 Educational Services (NAICS 611) 210,000 Traveler Accommodations (NAICS 7211) 42,700 Hospitals (NAICS 622) 23,800 Food Services and Drinking Places (NAICS 722) 21,200
TOTAL 685,600

Based on the 2002 Economic Census, EPA belie ves that the percentage of firms qualifying as small entities under the NAICS defi nitions in each of these sectors range from 96 percent to 99.5 percent. It should be noted that the estimate of facilities

nationwide in each of the sect ors is projected from inventor ies of boilers, inspected for safety and insurance purposes, from 13 stat es, the actual number of small entities that ultimately subject to these rules could be different than this initial estimate.

6. SUMMARY OF SMALL ENTITY OUTREACH

6.1 Small Entity Outreach

Before beginning the formal SBAR Panel pr ocess, EPA actively engaged in outreach with entities that would pot entially be affected by the upcoming rulemaking. EPA held phone conferences with some of these companie s, and also had conference calls with an

ad-hoc coalition of small entities to discu ss the proposed rulemaking and to provide these contacts with an early opportunity to ask que stions and discuss their concerns with the upcoming rulemaking. EPA provided each poten tial small entity representative (SER) with general information on the SBAR Panel process and background information on the

Boiler MACT and the Boiler Area Source rule making process. Once the SBAR Panel13 process began and potential SERs were iden tified, EPA held an outreach meeting with the potential SERs on November 13, 2008.

6.2 Summary of EPA’s Outreach Meetin g with Potential Small Entity Representatives

On November 13, 2008 EPA held a two-hour meeti ng with potential SERs for this SBAR Panel and invited representatives from the Office of Advocacy of the Small Business

Administration and the Office of Information and Regulatory Affairs within the Office of Management and Budget to the meeting. To help them prepare for the meeting/teleconference, on October 30, 2008, EPA sent materials to each of the potentialSERs via email. A list of the materials shared with the potential SERs during the prepanel outreach meeting is contained in Appendix A. The Outreach Meeting was held to solicit feedback from the potential SERs on the upcoming rulemaking. Representatives from nine of the twelve companies and organi zations that we selected as potential SERs for this SBREFA process participated in the meeting (in person and by phone).

The meeting was opened by Lanelle Wiggins, ac ting in place of Alex Cristofaro, EPA’s Small Business Advocacy Chair, with a shor t introduction to the Re gulatory Flexibility Act (RFA) and SBREFA; this also included an explanation of the SBREFA process, the purpose of the Outreach Meeting, and the impor tance of the SERs’ comments. Following this was a presentation by EPA staff on the Boiler MACT and Boiler Area Source rules, requirements of CAA, and our current thinking on the scope of the proposed requirements for the Boiler MACT and Boile r Area Source rules. EPA then began a discussion on how the rulemakings are working so far, previous alternatives used in past rulemakings, and potential small business flexibil ities for these rules. (See Section 8.5 for discussions/comments raised during th e EPA Outreach Meeting, and Appendix B for

the written comments received fr om potential SERs.) EPA as ked that the potential SERs provide feedback on the outreach packet they received as well as the outreach meeting itself by November 26, 2008.

A discussion of issues related to the NESHAP program (both the Boiler MACT and Boiler Area Source rules) followed EPA’s presentation. The area source program was

discussed for those who are not as familiar with the program since many small entities have not previously been subject to emission standards. Further, there were discussions regarding the changes mandated by Court that will be proposed in the Boiler MACT and Boiler Area Source rules that are of importa nce to the small entities. These changes include: standards for all HAP and subcateg ories instead of a MACT floor of “no emission reduction” (thus re quiring emissions limits for a ll units) and work practice standards only if they can be justified due to technical or economic reasons. In general, potential SERs noted that a regulatory appr oach to improve combustion efficiency, such as work practice standards in stead of emission standards, would have positive impacts with respect to the environment and energy use and it would save revenue.

6.3 Summary of SBAR Panel’s Outreach Meet ing with Small Entity Representatives14 The SBAR Panel convened on January 22, 2009 . The Panel held a formal outreach meeting/teleconference with SERs on February 10, 2009. To help the SERs prepare for the meeting/teleconference, on January 29, 2009, the Panel sent materials to each of the

SERs via email. A list of the materials sh ared with the SERs during the SBAR Panel Outreach Meeting is contained in Appendix A. Information presented at the meeting included:

• Background and regulatory history • Overview of proposal ideas • Applicable small entity definitions • Small entities potentia lly subject to regulation • Regulatory flexibility options for small entities • Preliminary cost and economic impact on small entities

The Outreach Meeting was held to solicit feedback from the SERs on their suggestions for the upcoming rulemakings. The main areas for comment received in the previous outreach meeting covered the following topics:

o Subcategorization of units

o Health-Based Compliance Alternatives

o Emission Averaging EPA asked the Panel Members to elaborate on specific information needed from the SERs that will help inform their report to the Administrator. The Panel summarized the following needs:

1. Specific Ideas for making compliance with both the major source boilers and process heaters rule and the area source rule more flexible to small entities. Ideas emphasized to date have included:

a. Health-based Compliance Alternatives

b. Increased subcategorization (consider ing unit design, fuels, operations)

c. Energy Audits, and how they can be made most effective

2. Emission variability issues to the extent th ere is data to suppor t the variability of emissions across a certain subcateg ory, and/or intra-unit variability.

The Agency received written comments from five SERs (See Appendix B). Section 8.6 of this document contains a summary of the minutes for the February 10 Panel Outreach Meeting.

7. LIST OF SMALL ENTITY REPRESENTATIVES

Of the original 15 potential SERs who partic ipated in the pre-panel outreach 14 were selected as official SERs for the Panel pro cess. In addition to the original 14, the

National School Board Associati on was added following the pre-panel outreach meeting.15 The Council of Industrial Boiler Owners particip ated at the pre-panel level and provided comment, but did not participate in the panel stage. The offi cial SER list is as follows:

Waccamaw Community Hospital David W. Crego Murrells Inlet, SC

Bulter Printing & Laminating Inc.

Walter L. Nordblom Bulter, NJ

Port Townsend Paper Corporation

Eveleen Muehlethaler Port Townsend, WA

Bamberg County Hospital

R. Dean Felkel Bamberg, SC

Monadnock Paper Mills, Inc. Richard Verney Bennington, NH

Sugar Cane Growers Cooperative of Florida

Kathleen Lockhart Belle Glade, FL

Darby Schools

Mr. Rick Scheele Darby, MT

Hartzell Hardwoods, Inc.

Terri Gerlach Piqua, OH

Orrville Utilities Jeff Brediger Orrville, OH

Cedar Lane Farms

Tom Machamer Wooster, OH

American Forest & Paper Association Timothy G. Hunt Washington, DC16 National School Boards Association Marc Egan Alexandria, VA

American Home Furnishings Alliance

Bill Perdue High Point, NC

American Hotel and Lodging Association

Kevin Maher Washington, DC

Interfaith Coalition on Energy

Andrew Rubin Melrose Park, PA

8. SUMMARY OF INPUT FROM SMA LL ENTITY REPRESENTATIVES

8.1 Number and Types of Entities Affected

Though the SBAR Panel did not receive spec ific comments on the number and types of entities that may be affected by the two rulema kings, the Panel believes that the SERs are in agreement with EPA on this matter. The tables in Chapter 5 of this report, which present the industry, commercial, and institutional sectors, number of small entities potentially affected by the two rules, were provided to the SERs before both outreach meetings, and were discussed at the meetings.

8.2 Potential Reporting, Record Keeping, and Compliance

During the outreach meeting, EPA directed the focus to a list of di rected questions EPA had prepared for SER (See Appendix B for th e actual questions). The purpose of the questions was for EPA to collect information on how small entities will have to absorb the costs of compliance with the proposed rulemakings. The SERs were encouraged to provide comments on the specific questions in addition to other metrics of absorbing costs of the regulations. Several SERs not ed that recordkeeping activities, as was required by the vacated Boiler MACT, would be especially challenging for small entities

that do not have a dedicated environmental a ffairs department. They estimated that one hour per day would be devoted to recordkeep ing activities mentioned in the regulatory options. Two SERs commented that requiri ng recordkeeping and reporting for operator training or certification would be an increased burden with little environmental benefits.

8.3 Related Federal Rules

The only comment the SBAR Panel received from SERs on related Federal rules was about the rulemaking on the definition of non-hazardous solid waste. The SERs17 commented that the solid waste definition could have significant economic impact on

small entities. The SERs commented that ad ditional regulatory requirements that would be imposed on a small entity if it was regulated as an incinerator under section 129 of the CAA would present an extreme burden on a sma ll entity, possibly forcing the facility to

shut down.

8.4 Regulatory Flexibility Alternatives

As described in section 6.2 and 6.3 above, EPA conducted outreach to SERs by sending outreach packages and conducting outreach meetings/teleconferences with them on November 13, 2008 and February 10, 2009. In ad dition to the oral comments that the SERs made during the outreach meetings, th e Panel received written comments from 5 potential SERs during the pre- Panel outreach and from 5 SE Rs during the formal Panel outreach process (including two who submitted a set of joint comments). The written

comments were distributed to all Panel member s as they were received. A summary of the comments is provided below.

8.4.1 Work Practice Standards

During the SER Outreach meeting, several ques tions were directed towards the SERs regarding the management practic es (e.g., tune-ups, operator trai ning or certification) that are typically required by their State. It wa s commented that they are not aware of any state requirements for boiler “tune-ups” but they believe annual tune-ups are the most cost effective way to impr ove boiler performance and reduce emissions under a MACT rule. One SER, representing sugar cane grow ers, suggested that a fuel specification standard specifically for bagasse-fired boilers could also be a cost effective option, as it

would eliminate or reduce the needing for testing and monito ring, but only if it was an option and not a requirement.

The SERs commented that it is less clear how requiring energy audits would work for

small sources since the annua l tune-up may achieve most of the emission reduction

benefits. The SERs have concerns with im plementation of energy audit findings, but if required to implant energy audit findings, one SER suggested that th e threshold should be no more than a 1-year payback period.

As for operator licensing, only 11 states and 18 major cities have some program with respect to boiler operator licen sing. In many instances, when a licensed boiler operator is required is dependent on the size and operating pr essure of the boiler. Boilers located at large industrial facilitie s generally have dedica ted operators who have been trained in the proper operation and maintenan ce of boilers. Boilers lo cated at commercial and institutional facilities generally are smaller th an those at industrial facilities and do not have dedicated operators but are operated by staff personnel (e.g., cu stodian) who do not have the same degree of traini ng in good combustion practices.

The SERs presented their estimates on the cost and burden for permitting, recordkeeping, annual tune-up, and operator training and lic ensing, but commented EPA should consider18 other ways to mitigate the cost of compliance for small entities, including relaxed monitoring, recordkeeping/repor ting and testing obligations.

8.4.2 Subcategorization

SERs commented that subcategorization is a ke y concept that could make sure that like boilers are compared with similar boilers so that MACT floors are more reasonable and could be achieved by all units within a subcategory using appropriate emission reduction strategies. One SER commented that bagass e-fired boilers should be regulated as a separate subcategory. Bagasse -fired boilers have several unique characteristics. The boilers usually are operated onl y during the sugarcane harvest. The design of the furnace, combined with the high moisture content and other characteristics of the bagasse, produces a relatively unique combustion proces s and a characteristic mix of emissions. Emissions data obtained by EPA for other solid fuel-fired boilers are not likely to be representative of the emissions from bagasse-fired boilers.

One SER commented that EPA should subcateg orize based on coal type. Coal rank matters because different categories of coal have very different ch aracteristics. Coalfired boilers are not “one-size fits-all,” but rather much more specialized units that are designed to operate effectively burning a particular type of co al. Boilers designed to burn a certain coal type cannot burn other coal ra nks to meet emission limits. In addition to properly recognizing technological differences, subcategorization will also help alleviate the achievability concerns likely to stem from combining boilers that burn different coal ranks when determining the MACT floor.

Several SERs commented that EPA should exam ine a full list of possible subcategories based on fuel type, boiler type, and duty cycl e. The structural differences among boiler types (e.g., fluidized bed, stokers, pulverized coal, suspension burners) translate into distinct combustion efficiency and emissions profiles that are unrelated to control technology. The vacated Boiler MACT subcategor ized fuels into solid, liquid and gas. The SERs requested that further subcategoriz ation be made for fuel such as coal, wet biomass, dry biomass, distillate fuel oil, resi dual fuel oil, and gas. SERs also commented that limited use boilers (such as those used in churches, municipalities) be a subcategory,

A comment raised during the SER Outr each Meeting was whether EPA could subcategorize on facility-level differences as opposed to technical di fferences in the unit size and design. For example, some SERs aske d whether a separate subcategory for units at small entities could be developed. Since the SER Outreach Meeting, EPA has investigated the issue and base d on a review of the legislativ e history has determined that economic grounds are not to be the basis for creation of section 112 categories. Therefore, it is clear that EPA has concl uded that subcategori zation cannot be based solely on costs or entity si ze. The types of factors that are rational bases for subcategorizing are emissions differences, ba sed on the fuel burned, combustor size and use characteristics, and the technical feasib ility of applying emissions controls.19 8.4.3 Health Based Compliance Alternatives (HBCA)

Several SERs commented that the HBCA for both hydrogen chloride (HCl) and manganese is perhaps the most important step EPA can take to mitigate the serious financial harm Boiler MACT will otherwise inflict on small entities using solid fuels nationwide and, therefore, HBCA should be a cr itical component of any future rule to lessen impact on small entities. The HBCA th at were in the vacated Boiler MACT were one of the several decisions EPA made that resulted in limiting the impact of the rule on small entities and the rule not having a si gnificant economic impact on a substantial

number of small entities.

The panel and SERs acknowledge that the H BCA provision was the main issue in the litigation of the Boiler MACT but the Court did not rule on this issue in vacating the

Boiler MACT.

8.4.4 Potential Adverse Economic Impact

Several SERs commented that their interpreta tion of these rulings would find them in a

awkward financial situation. One SER commen ted that with profits of less then one percent over the last five year s, how would they get and re pay the capital to buy, install, and maintain the new equipment required by th ese rules. The SER commented that “we have been down this road before” when they invested over $350,000 during the late

1990s to minimize emissions from one of their existing boilers; the SER believe that they

still have not recovered from that investment.

One SER expressed concerns that, dependi ng on the range of requirements, the regulations could be exceptionally costly or even outright unaffordable for local school districts to implement, and urged EPA to fully and seriously weigh the ultimate consequences the regulations might ha ve on the nation’s school districts.

Several SERs commented that they know of se veral other small entities that will also be negatively affected by these rules. They feel that the impact of these rules, as they understand them, will put them out of business. This is due to the fact that the estimate for the equipment and installation to bring their seasonal boilers up to the new rule standards would be over $500,000 which is n early half of their yearly sales.

8.4.5 Emissions Averaging

SERs commented that a measur e EPA should consider to less en the regulatory burden of complying with Boiler MACT is to allow em issions averaging at sources with multiple regulated units. By allowing averaging, source s with multiple units at a common site will

be able to achieve EPA’s re gulatory requirements at lower overall compliance costs while achieving the same emission control benefit. This enables innovation and offers the flexibility to match control technologies to the units with the highe st utilization at a facility.20 SERs commented that another approach that can aide small entity compliance is to set longer averaging times (i.e., 30-days or more) rather than looking at a mere 3-run (hour) average for performance. Given the inherent va riability in boiler pe rformance, an annual or quarterly averaging period for all HAP, but especially fo r CO, would prevent a single spike in emissions from throwing a t op performing unit into non-compliance.

Several SERs commented that properly capturi ng variability is centr al to establishing MACT standards that are achievable by a ll similarly situated units in a given subcategory. There are at least four aspects of variability that must be considered in setting MACT floors: (1) boiler operating variabili ty (such as load swings), (2) variability in control device performance, (3) variability in the test me thods, and (4) variability in the composition of fuels combusted.

9. PANEL FINDINGS AND DISCUSSION

9.1 Number and Types of Entities Affected

The Boiler Area Source rule consists primarily of institutional and commercial facilities, such as, schools, churches, and hotels/motels . For the Boiler MACT, the small entities are primarily industrial facilities, such as, lumber mills and municipal boilers. For a complete description and estimate of the type and number of small entities to which the proposed rules will apply, see section 5.

9.2 Potential Reporting, Record Keeping, and Compliance

In general, state agencies will enforce both the Boiler MACT and the Boiler Area Source rules, owing to CAA section 112(l), which dire cts the EPA Administrator to delegate to each State, when appropriate, the authority to implement and enforce standards and other requirements pursuant to section 112 for stationary sources located in that State. Title V of the CAA requires that a State’s permit programs ensure compliance with all requirements established under section 112 applic able to major sources and area sources. Section 502(a) of the CAA, however, provide s that the Administrator may exempt an area source category (in whole or in part) from title V if the Administrator determines that compliance with title V requirements is impracticable, infeasible, or unnecessarily burdensome on an area source category. Ther efore, if the Boiler Area Source rule exempts sources from the need to obtain a title V permit, it is unclear whether state agencies will implement and enforce the rule. Regardless of whether a rule is delegated, EPA retains enforcement authority for section 112 rules.

The General Provisions, subpart A of 40 CRF part 63, list the requirements for recordkeeping and reporting to ensure comp liance with, and effective enforcement of

rules established under section 112 of the C AA. As part of any rulemaking, these requirements are evaluated to determine the minimum recordkeeping and reporting necessary to ensure complianc e with and enforcement of th e proposed rules. The Panel

recommends that EPA minimize the potential burden of co mpliance on small entities.21 Specifically, with respect to sources at area sources, the Panel recommends EPA consider an exemption from title V permitting require ments, reduced monitoring requirements, and less frequent reporting.

9.3 Related Federal Rules

The Panel is aware of the re quirements of section 112 of the CAA that direct EPA to establish national emission standards for hazardous air pollutants for both major and area sources. Section 112 require s the regulations to refl ect the maximum degree of

reductions in emissions that is achievable taki ng into consideration the cost of achieving emission reductions, any non-air quality hea lth and environmental impacts, and energy requirements. Section 112 further states that these standards shall not be less stringent than the average emission limitation achieve d by the best performing 12 percent of the existing sources, commonly referred to as the “MACT floor.”

The Panel is also aware of the rulemaking currently underway by EPA’s Office of Resource Conservation and Recovery to issu e a final rule on the definition of nonhazardous solid waste. Boilers that combust any solid waste material would be regulated

under section 129 of the CAA instead of eith er the Boiler MACT or the Boiler Area

Source Rule.

9.4 Regulatory Flexibility Alternatives

EPA is seeking to minimize the burden of the proposed rules on small entities in both complying with the standards and in the permitting, recordkeeping, and reporting requirements. Because of the potential burden s and costs of meeting these standards, the

Panel recommends that EPA consider and seek comments on the flexibility options

described below. Several SERs commented that flexibility is important to small entities.

The Panel believes that EPA should consider adopting the following flexibility options if it could assure that they significantly reduce compliance burden without significantly compromising intended protections for human health and the environment.

9.4.1 Work Practice Standards

A work practice standard, instead of MACT em ission limits, may be proposed if it can be justified under section 112(h) of the CAA, that is, it is impracticable to enforce the

emission standards due to technical or ec onomic limitations. Potential work practice

standards could include annual boiler tune-up and/or energy a udits. These work practice standards could reduce fuel use and improve combustion efficiency which would result in

reduced emissions.

In general, SERs commented that a re gulatory approach to improve combustion efficiency, such as work practice standards, would have positive impacts with respect to the environment and energy use and save on compliance costs. The SERs strongly suggested that a work practice standard woul d be necessary for area sources to comply

with the rule. The SERs were concerned with work practice standard s that would require22 energy audits and implementation of audit findi ngs. The basis of these concerns rested upon the uncertainty of the potential costs a nd the lack of standa rdized energy audit

criteria. A SER noted that even if an ener gy audit finding has a short payback, there is no guarantee that there are available funds to implement a particul ar audit’s findings.

The Panel believes that EPA should consider a regulatory appro ach based on improving combustion efficiency. EPA should investigat e the extent to which such an approach could have multiple positive impacts for the facility with respect to the environment, energy use, and saved compliance costs for the affected facility. The panel recommends that EPA consider requiring annual tune-ups , including standardized criteria outlining proper tune-up methods targeted at smalle r boiler operators. In addition, the panel recommends that EPA analyze and consider the efficacy of energy audits at improving combustion efficiency and the cost of perfor ming the audits, especially to smaller boiler operators. Furthermore, the panel recomme nds the EPA take comment on the cost and efficacy of energy audits.

9.4.2 Subcategorization

SERs commented that subcategorization is a key concept that could ensure that like boilers are compared with similar boilers so that MACT floors are more reasonable and could be achieved by all units within a subcategory using appropriate emission reduction strategies. SERs commented that EPA shoul d subcategorize based on fuel type, boiler type, duty cycle, and location.

The Panel recognizes the need to subcategori ze in order to develop MACT standards that

are reasonable and achievable for the various boil er types and fuels used in the industrial, commercial, and institutional s ource categories. SERs reco mmended that EPA adopt the following subcategories for boilers:

 Fuel type (including coal rank, ba gasse, biomass by type, and oil by type);

 Boiler design type (e.g. fluidized be d, stoker, fuel cell, suspension burner);

 Duty cycle;

 Geographic location;

 Boiler size;

 Burner type (with and without low-NOx burners);

 Process heaters;

 Limited use boilers.

The Panel acknowledges that it may not be pr acticable to adopt all of the proposed subcategories, as there is substantial overlap between the groups. However, the Panel recommends that EPA consider the subcategor ies discussed by SERs and adopt a set of

standards that is consistent with the Clean Air Act and which effectively reduces burden

on small entities.23 9.4.3 Health Based Compliance Alternatives (HBCA)

In the vacated Boiler MACT, there were two HBCA (HCl and mangane se) that could be used if the facility could demonstrate it was a low health risk to the surrounding community. Several SERs commented th at adopting an HBCA for both HCl and manganese would perhaps be the most importa nt step EPA could take to mitigate the

serious financial harm the Boiler MACT woul d otherwise inflict on small entities using solid fuels nationwide and, therefore, HBCA s hould be a critical component of any future rule to lessen impact on small entities.

In light of SER comments, the Panel recomm ends that EPA adopt HBCA as a regulatory flexibility option for the Boiler MACT rulemaking. The panel recognizes, however, that EPA has concerns about its legal authority to provide an HBCA under the Clean Air Act, and EPA may ultimately determine that this flex ibility is inconsistent with the Clean Air

Act.

9.4.4 Emissions Averaging

SERs commented that a measur e EPA should consider to less en the regulatory burden of complying with Boiler MACT is to allow em issions averaging at sources with multiple regulated units. SERs commented that anot her approach that can aide small entity compliance is to set longer averaging times (i .e., 30-days or more) ra ther than looking at a mere 3-run (hour) average for performance. Given the inherent variability in boiler performance, an annual or quarterly averaging period for all HAP, but especially for CO, would prevent a single spike in emissions from throwing a unit into non-compliance.

The Panel appreciates the SERs commen ts regarding emission averaging and recommends that EPA consider a provisi on for emission averaging and long averaging times for the proposed emission limits.

9.4.5 Compliance Costs

Several SERs noted that recordkeeping activit ies, as written in the vacated boiler MACT, would be especially challenging for sma ll entities that do not have a dedicated environmental affairs department. The SERs advocate for the most efficient way to get reductions in HAP and requested that the Pane l consider all available alternatives to reduce to a bare minimum any extraneous requirements that require considerable paperwork that in the opinion of the SE Rs do not contribute to emission reductions.

The Panel recommends that EPA carefully weigh the potential burden of compliance requirements and consider for small entities options such as, emi ssion averaging within facility, reduced monitoring/te sting requirements, or allowi ng more time for compliance. For area source boilers, the Panel recommends that EPA consider exempting them from Title V permitting.24 

### Appendix A

List of Materials EPA Shar ed With Potential SERs (October 2008)

• PowerPoint Presentation entitled “Combined Rulemaking for

Industrial, Commercial, and In stitutional Boilers and Proce ss Heaters at Major Sources

of HAP and Industrial Boilers and Commerci al and Institutional Boilers at Area Sources” including: • Regulatory History • Overview of Proposal Ideas • Applicable Small Entity Definitions • Small Entities Potentially Subject to Regulation • Regulatory Flexibility Options for Small Entities

• Schedule

• List of Potential SERs • Questions for Potential SERs • EPA Report: Revised Economic Impact Anal ysis of the Industria l Boilers and Process

Heaters NESHAP (Condensed Version), June 2007 • Draft Report: Economic Impact Analysis of NESHAP for Instit utional, Commercial,

and Industrial Boilers at Area Sources, RTI International, February 2007 • Memorandum: Cost-to-Sales Analysis of Testing and Monitoring Costs, RTI

International, June 7, 2007 • Cost-to-Sales Appendix A (Excel file)



### Additional Materials the SBAR Panel Shared With SERs (February 2009)

• PowerPoint repr esentation (revised) • Memorandum: Preliminary Small Entity Cost and Emission Impacts for Boiler and Process Heater Rulemakings, January 2, 2009 • Spreadsheets: Control Costs for Preliminary Economic Analysis • Memorandum: Draft Small Entity Screening Analysis: Industrial Boilers and Process Heaters, January 26, 2009 • Spreadsheets: Small Business Screening Analysis Results • Information on the Linkageless Combustion Controls • Spreadsheet: Health Based Compliance Alternative Tracking Table • Spreadsheets: Capital Costs for Scrubbers, ESP, and Fabric Filters25 

### Appendix B

Summaries of Outreach Meetings with SERs26 November 13, 2008 Outreach Meeting Summary

The meeting focused on three main topics: 1. Regulatory Background 2. Discussion and Questions on Presentation 3. Introduction and Discussion of Directed Questions for SERs

EPA-OAQPS presented the hist ory and background of the NESHAP standards for boilers and process heaters, estimated costs and im pacts of pending regulations, and a summary of possible regulatory options for consideration by the SERs.

Discussion began with questi ons from the potential SERs on the regulatory background. One potential SER asked how EPA estimated the area source boiler population to be 1 million units. EPA stated that it extrapolated this inventory nationally using boiler safety inspector inventories from 13 st ates. Another SER asked if EP A is obligated to evaluate all 30 HAP or just mercury (Hg) and polycyc lic organic matter (POM). EPA indicated that EPA is obligated under section 112 (c)(6) of the Clean Air Act to consider MACT for Hg and POM and added that EPA is also required to focus on the 30 urban HAP that is specifically listed for the area sources.

The question was asked if EPA has the author ity to exclude certain sectors from its rulemaking. EPA indicated that it was not aware of any authority or precedence for excluding certain sectors that have combustion units. The question was also asked if EPA has any discretion on establishing a mini mum threshold for the size of boilers subject to the standard. EPA replied that the rules will regulate all boilers, regardless of size, included in the source categories. One potential SER asked why gas units needed to be regulated if they are not on the 112 (c)(6 ) list. EPA responded th at gas units are not regulated for Hg or POM, but they ar e regulated under 112(k) for the other HAP associated with the boiler category. The as ked how many of the affected area source facilities are expected to be small entities. EPA estimated that 80 percent of area source facilities were expected to be small entities.

Several potential SERs had questions on subcategories fo r the proposed rulemakings. One potential SER suggested that these new rulemakings present si gnificant opportunity to re-define the subcategories in order to provide for regulatory flexibility. EPA responded that in order to subcategorize, you have to have enough data to assess variability and performance for units assigned to that subcat egory. Another SER asked if EPA could subcategorize on facility-level diffe rences as opposed to technical differences in the unit size and design. For example, c ould a separate subcateg ory be developed for units at small entities. Alternately, would it be possible for EPA to subcategorize based on whether the facility was in the public or pr ivate sector? EPA noted that the statute says EPA can subcategorize based on the proc ess, class, type, and size. EPA has not historically looked at subcateg orizing based on facility-level factors other than unit-level technical differences. EPA will investigate what types of sub categorization are statutorily appropriate for this rulemaking.27 SERs asked the group to summarize the major benefits of the He ath Based Compliance Alternatives (HBCA). EPA re sponded that the biggest benefit, from a compliance cost perspective, was that the HBCA substantially reduced the number of boilers subject to a

numerical emission limit. There were two HBCA s in the vacated standard that could be used if the facility could demonstrate it was a low health risk to the surrounding community. In the first alternative, a f acility could demonstrate compliance with a health-based facility-wide HCl equivalent a llowable emission limit instead of a unit-level

emission limit. In the second al ternative, in lieu of comply ing with the emission standard for total selected metals (TSM), (arsen ic, cadmium, chromium, mercury, manganese, nickel, and lead) you may demonstrate eligibil ity for complying with the TSM standard based on excluding manganese emissions from the summation of TSM emissions for the

affected source unit. The SERs were as ked if they have any data on the cost

effectiveness of the HBCAs. If this data is available, it was requested they submit it in their written comments by November 26, 2008.

EPA directed the focus of the meeting to th e list of directed ques tions EPA has prepared for SERs (actual questions shown below). Th e purpose of these questions is for EPA to

collect information on how small entities will have to absorb the costs of compliance with the proposed rulemakings. The SERs were encouraged to provide comment on the specific questions in addition to other metrics of absorbing costs of the regulation. SBA added that a regulatory approach to improve combustion effici ency is favorable from the SBA perspective since efficiency based sta ndards can have multiple positive impacts for the facility with respect to the environment, energy use, and saved revenues for the affected facility. SBA would be specifically interested in data on the costs and efficiency improvements of various combustion improvements.

Directed Questions for SERs

Questions on Management Practices

Tune-ups and boiler operator requirements:

1. Does your state or local aut hority require an annual or periodic tune-up of the

boiler?

2. If not, do you perform an annual or peri odic tune-up as part of routine maintenance, and what is your estimate of the cost to perform it? What percentage of the cost of performing rou tine maintenance is the annual tune-up?

3. Does your state or local au thority require any training or certification (licensing) of the boiler operator?

4. If so (a certified (license d) boiler operator is required) , what is your estimate of the cost of either certifying the curr ent boiler operator or adding a certified (licensed) boiler operator? What percenta ge of your facility’s or organization’s budget will this cost be?

Energy audit (assessment):

1. Does your state or local elec tric power company offer any assistance, incentive, or discount in conducting an energy aud it (assessment) for your facility?28 2. If a requirement for implementation of the energy conservation measures identified by the energy audit is impose d, what rate-of-return (in percent terms, not payback period) would be the mini mum required for you to implement any identified energy conservation meas ures for your type of operation?

Good Combustion Practices: 1. Do you use any monitors, emissions para meters, or process parameters to monitor the operation of the boiler? 2. If you use monitors, what kind and how many? If monitors are used, are these monitors in place for environmental regulat ory reasons? Insurance reasons? Are there other reasons, and if so, what are they?

Questions on Compliance Demonstration

1. Does your state require any continuous monitoring of emissions or process parameter(s)? If so, what are the costs to the facility? What percentage of overall facility costs do these represent?

2. Does your state require any periodic testi ng or monitoring of emissions or process parameter(s)? If so, what are the costs to the facility? What percentage of overall facility costs do these represent?

3. Do your boilers have testi ng ports available for conducti ng compliance tests? If not, what do you estimate the costs to be of modifying the stack for testing?

4. If your boilers were subject to emission lim its, are there alternatives to monitoring emissions or to stack testing that would be less costly to demonstrate compliance? How much less costly are these alternatives?

Permitting: 1. Are your boilers required to be permitted by the state or a loca l authority? If so, what is the cost for permitting? If not, what would you estimate the burden to be in terms of costs and hours if the boilers are required to be permitted? What is the size of these costs compared to the costs of boiler operation and the facility as a whole? If your boilers require permitting, are your permitting activities done by in-house staff or by outside contractors? 2. Are your boilers required to be inspected for safety, insurance or other reasons? If so, how often is this performed? What is the cost of these inspections? What is the size of these costs compared to the cost of boiler operation a nd the facility as a

whole?

Compliance:

1. How do you know if your boile rs are properly operated and maintained, and how do you ensure good combustion?

2. How much burden (in terms of cost and hours) would it be for you to maintain a file with daily operation and each in spection and maintenance conducted?

3. If your boiler was subject to an emissi on limitation would you consider switching to a less polluting fuel and how much a dditional burden (in terms of cost and hours) would it add? What fuel would your f acility switch to (or blends of fuels),

and what benefits outside of reduced em issions could your facility experience?29 Capital Availability and Regulatory Impact: 1. Are your firm’s or organization’s expens es for the activities listed above largely paid for out of equity, earnings, or debt? 2. Considered together, how much of your firm’s or organization’s revenues or budget are the costs of the activities lis ted above in percentage terms?30 February 10, 2009 Panel SER Outreach Meeting Summary

Alex Christopher, EPA Small Business Chair, opened the outreach meeting and provided a brief background on the Regulatory Flexibility Act. He added that previous discussions and discussions held today will help inform the SBREFA panel on recommendations for these two rulemakings. He reminded all particip ants that written comments are due to the panel by February 24, 2009. The panel will then prepare a report by March 19, 2009 to document suggestions for the Administrator with respect to regulator y flexibility options for small businesses. It is EPA policy that th e report will be made available to the public at the same time the rules are proposed.

EPA-OAQPS presented briefly on regulatory history and the t ypes of comments received by the SERs to date on the area and major s ource boiler rulemakings. The main areas for comment received in previous panel m eetings covered the following topics: - Subcategorization of units - Previous comments had asked whether or not it was feasible to subcategorize based on whet her or not the unit wa s located at a small entity. EPA Office of General Counsel reiterate d that while EPA has some flexibility in developing subcategories, the subcategorie s must be based on technical differences between the units in the categories (e .g., unit design, operations, fuel types). Subcategories cannot be based on small entity status or sectors at which the unit is

located. - Health-Based Compliance Alternatives : Previous comments have emphasized the need for using the health-based complian ce alternatives, as were included in the vacated boiler MACT rulemaking as a way to reduce the burden on small entities. - Emission Averaging : Previous comments have emphasized that the emissionaveraging clause included in the vacated rulemaking would provide another mechanism to provide regulatory flexibility to small entities.

A SER commented on the costs of the area source rulemaking under regulatory option 1, and emphasized his concern over the magnit ude of a rulemaking with a cost of $27

billion. He added that most of those costs are monitoring a nd testing costs, which do not achieve environmental benefits. He strongl y suggested that a work practice standard would be justified and necessary for ar ea sources to comply with the rule.

Several SERs asked about the significance of the 3% cost:to:sales ratio threshold. The Agency explained that the 3% threshold is us ed as an indicator to determine whether or not a rulemaking has a substantial impact on a significant number of small entities (SISNOSE). If a rulemaking is considered to trigger a SISNOSE, a SBREFA panel must be convened in order for the Agency to pr ovide ample opportunity for small entities to learn and provide input about the rulemaki ngs impact. Several EPA representatives emphasized that the 3 percent threshold is not used from this point going forward as a

determination of whether or not a standard is economically feasible. The Administrator

must consider certain statut ory required technology minimu ms, if complying with the MACT standard. However, the Administra tor has more flexibility to consider economically feasible regulatory options, in combination with corresponding emission reduction potentials, if a GACT standard is adopted.31 A SER mentioned that muni cipalities must borrow mone y through bond funds, and he

added that the interest rates for these funds are very high in today’s economic climate. The SER suggested that by provi ding small entities with a longer compliance timeframe,

the small entities could stre tch the compliance costs out ove r a longer period of time. A longer compliance window would significantly help cities needing to borrow capital. Several SERs emphasized that large capital expenses for environmental controls would present a very difficult challenge in this ec onomic environment. Many of the affected companies would have to borrow money in order to finance this equipment during a period of evermore stringent credit. One SE R added that they done a lot of work in anticipation of the Boiler MACT and that that costs should also be included in determining the cost of compliance.

Several SER noted that recordkeeping activitie s, as written in the vacated boiler MACT would be especially challenging for sma ll entities that do not have a dedicated environmental affairs department. They estima te that 1 hour per day would be devoted to recordkeeping activities mentione d in the regulatory options.

One SER emphasized the limited use of church boilers, which operate only a few hours per week. These operating schedules minimize the pollutants emitted thereby increasing the cost per ton of pollutant removed, assumi ng these units would be subject to the same controls as other more frequently operat ed units. The SER requested a charitable exemption from the rules for all non-profit orga nizations. The Agency reiterated here that the Act does not allow for an exemption ba sed on the sector the combustion unit is

located.

Several SERs expressed concerns of not in corporating unit design into the regulatory subcategories. One SER suggested that location be considered when creating subcategories for coal-fired units. The SER pr ovided a map of coal regions with recent emission test data summaries for mercury em issions. He noted that mercury emission factors range from 2 to 20 lb/trillion Btu.

The SERs were concerned with work practi ce standards that would require repetitive energy audits, implementation of audit suggestio ns, or boiler operator certifications. A SER noted that even if an energy audit fi nding has a short payback, there is no guarantee that there are available funds to implement a particular audit’s findings. In conclusion, perhaps payback period should not be the only criteria for determining whether or not a facility would be required to implement the audit’s suggestions. In summary, the SER advocates for the most efficient way to get reductions in HAP and requested that the

Panel consider all available alternatives to reduce to a bare mi nimum any extraneous requirements that require a lot of paperwork, certification of operato rs, etc... that do not

contribute to emission reductions.

A SER suggested that longer av eraging periods, especially fo r a pollutant like CO where

there is a lot of variab ility, would help SERs co mply with the standard.32 In closing, the Panel Members elaborated on sp ecific information needed from the SERs that will help in their report to the Admini strator. The Panel summarized the following

needs: - Specific Ideas for making compliance with both the major source boilers and process

heaters rule and the area source rule more flex ible to small entities. Ideas emphasized to

date have included:

a. Health-based Compliance Alternatives

b. Increased subcategorization (consider ing unit design, fuels, operations)

c. Energy Audits, and how they can be made most effective - Emission variability issues to the extent th ere is data to support the variability of emissions across a certain subcategor y, and/or intra-unit variability.33 

### Appendix C

Written Comments Received from SERs34 

### Comment Received from Cedar Lane Farms

To: Jim Eddinger

U.S. EPA

From: Thomas Machamer Cedar Lane Farms Corp. Wooster, Ohio

December 2, 2008

Ref: Rulemakings, HAPs and Public Comments

Cedar Lane Farms is a 220,000 sq.ft. wholesale greenhouse in rural Wayne County, Ohio. We have two 5.6mmBtu coal fired stokers and a 8.5mmBtu Atmospheric Fluidized Bed Combustor System (AFBC). At the peak of our production season we employ over 50 people and annual sales of under $1.4 million. Historically there has been a greenhouse on this farm for over 100 years.

The wholesale value of just the gree nhouse industry (floriculture) is ov er $4 billion. This is according to the U.S. Dept. of Agriculture Statistics Services. Th is $4 billion does not include sales from the tree nurseries, landscape companies, reta il garden centers and retail box stor es like Lowe’s or Wal-Mart. These other green industries will be negatively impacted as well. The cost (if still in business) will be passed on to

the retail consumer.

Our interpretation of these rulings find Cedar Lane Farms in a financial awkward situation. With profits of less then 1% over the last five years, we ask ourselves, how will we get and repay the capital to buy, install, and maintain the new equipment required by these rules.

We have been down this road before of Maximum Achievable Control Technology (MACT) with the installation of our 8.5mmBtu AFBC heating system, in the late 1990s, to reduce our stoker use and minimize our environmental emissions. We invested over $350,000 to accomplish this. It took us over ten years to get the system up and running. We believe we still have not recovered from that investment.

We have however reduced our sulfur emissions “V OLUNTARILY” with the AFBC. Actually, due to the way we calculate our emissions with the Maximum Pote ntial Emissions calculations, the installation of the AFBC has put us potentially under these rulings .

We know of several other local green industry comp anies that will also be negatively effected by these

rules.

To summarize the impact of these rules, as we unders tand them, they will put us out of business. This is

due to the fact that the estimates fo r the equipment and installation to bring our seasonal stokers up to the new rule standers would be over $500,000. This is nearly half of our yearly sales.

We ask for your assistance and recommendations you may have to keep Cedar Lane Farms in business

under these rules.

Respectfully Submitted

Thomas Machamer President CLF Corp.35 Comment Received from Sugar Cane Growers Cooperative of Florida

Golder Associates Inc.

6241 NW 23rd Street, Suite 500 Gainesville, FL 32653-1500 Telephone (352) 336-5600 Fax (352) 336-6603

November 26, 2008 Via Electronic Delivery

Energy Strategies Group Sector Policies and Program Division (D243-01) U.S. Environmental Protection Agency Research Triangle Park, NC 27711

Attention: Jim Eddinger

SUBJECT: BOILER MACT SUBCATEG ORIZATION AND BAGASSE BOILERS Dear

Mr. Eddinger:

This letter is on behalf of the Sugar Cane Gr owers Cooperative of Florida (SCGCF), a Small Entity that will be impacted by the Boiler MACT rule, and the Florida Sugar Industry (FSI), which is comprised of sugarcane processors lo cated in south Florida. These processors harvest sugarcane to produce raw and/or refined sugar. The SCGCF and FSI operate industrial boilers that use bagasse (a co-product of suga rcane processing) as their primary fuel.

The FSI understands that the U.S. Environmental Protection Agency (EPA) is currently determining subcategories of boilers that should be regulated under Section 112 of the Clean Air Act (CAA). To assist EPA with its determina tion, the FSI has prepared a report (attached) concerning the U.S. sugarcane industry. The FSI’s report explains why bagasse is a fuel and not a solid waste, and why bagasse-fired boilers should be regulated under Section 112 of the CAA in a separate subcategory of solid fuel-fired boilers.

Bagasse is mostly carbon, hydrogen, and oxygen. It contains a small amount of nitrogen, traces of other elements, and very low ash and sulfur cont ent. Since the bagasse is washed and re-washed during the milling operation, it is very clean and typically has about 50-percent moisture content,

as it is fed into the boilers.

For more than 200 years, the sugarcane industr y has used bagasse as its primary fuel. Sugarcane mills use bagasse-burning boilers to produce steam, which is needed to evaporate the sugarcane juice, run rotating equipment, and produce elec tricity. The electricity is used for internal operations in the mill and any excess is provided to the power grid.

Bagasse has been used in suga r mills worldwide to displace th e use of fossil fuels. Burning bagasse, instead of fossil fuels, reduces carbon dioxide (CO 2 ) emissions into the atmosphere and, thus, helps mitigate global warming. In the United States, bagasse helps reduce the nation’s dependence on imported fuels.

Bagasse-fired boilers have several unique charact eristics. The boilers usually are operated only during the sugarcane harvest, which typically lasts less than 6 months in Florida. The design of36 the furnace, combined with the high-moisture c ontent and other characteristics of the bagasse, produces a relatively unique combustion process and a characteristic mix of emissions. Among other things, the combustion temperatures in the FSI’s furnaces are relatively low, which produces relatively low nitrogen oxide (NO x ) emissions, and relatively high carbon monoxide (CO) emissions. Of course, emissions of sulfur dioxide (SO 2 ) and metals remain very low.

EPA’s emissions data for other solid fuel-fired bo ilers are not likely to be representative of the emissions from bagasse-fired boile rs. Consequently, EPA is not likely to establish an appropriate MACT floor for bagasse-fired boilers if bagasse-fire d boilers are regulated under Section 112 in a category that includes other types of solid fuel-fired boilers. Therefore, EPA should establish a separate subcategory for bagasse-fired boilers wh en EPA establishes the MACT floor for solid

fuel-fired boilers.

In conclusion, bagasse is a valuable fuel that is unique to the sugar industry. Bagasse-fired boilers are designed to burn bagasse instead of fossil fuels, resulting in:

Reduced CO 2 emissions, thus helping to mitigate climate change; Reduced emissions of metals, SO 2 , and NO x , when compared to the use of fossil fuels; Reduced dependence on foreign oil; and Energy and economic savings for the nation.

For all of these reasons, EPA should establish a separate subcategory for bagasse-fired boilers, and not place bagasse-fired boilers in a general category with other types of solid fuel-fired boilers, when EPA establishes the MACT floors.

Please do not hesitate to contact me at (352) 33 6-5600 if you have any questions about these

issues.

Sincerely yours,

GOLDER ASSOCIATES INC. David A. Buff David A. Buff, P.E., Q.E.P. Principal Engineer

Enclosures Cc: Kathy Lockhart, SCGCF37 Comment from American Forest and Paper Association

Email from Tim Hunt, American Home Furn ishings Alliance, to Jim Eddinger, EPA,

dated 12/01/08

Jim,

The minutes capture my memory of the meeting pretty faithfully.

I would make a discrete action item out of your response to question 24 so that it is highlighted like you have done with other action items since this issue is so critical to a MACT/GACT rule that minimizes impacts to small entities. It would read (additions in CAPS): EPA will contact the facilities identified in the best-controlled 12 percent OF VARIOUS POSSIBLE SUBCATEGORY GROUPINGS to request long-term data THAT

WOULD SHOW PERFORMANCE VARIABILITY OVER TIME.

In addition, I would also create an action item around responses to questions 27 and 28 that would say: "EPA will investigate ANY REASONABLE SUGGESTIONS FOR NEW/ADDITIONAL sub categorizations THAT are statutorily appropriate AND MIGHT REDUCE IMPACTS ON SMALL ENTITIES." Once we have had a chance to look at the survey results, we should have some suggestions for possible subcategories.

Once we have the information on HBCA from you, I can try and answer Keith's question about its exact value to small entities in my sector. I can say with confidence now, however, that HBCA for both HCL and Manganese will be a critical component of any future rule to lessen impact on small entities. I was glad to see the concept reaffirmed in the recent Hazardous Waste Combustor MACT (FR 10/28 - excerpt attached)

I have asked my members to consider the questions posed to SERS and get feedback to me later this month which I will be glad to share in January.

I would note that the schedule you sent out says promulgation by March 2010 when the consent decree you mentioned is July 15th 2010. It's probably worth updating especially since letters to facilities that will have to do HAP testing won't go out until early next year.

I've built an e-mail distribution list of the SERS in case any of us want to set up a call in advance of any future call or meeting. I'd be glad to host if there is an interest.

Hope everyone had a good Thanksgiving.

Tim38 Comment from Council of Industrial Boiler Owners

Email from Robert Bessette, Council of Industrial Boiler Own ers, to Jim Eddinger, EPA,

dated 11/25/08

Jim,

I asked the following question of some of our people and Randy Rawson of the American Boiler Manufacturers Association (ABMA):

Is there something at the National Board that describes boiler inspection or insurance inspection requirements? What are the Ohio Special Boilers? Are these the ones that do not need an operator? Is there a break point between boilers that need and do not need operators?

I have also contacted the National Institute for Uniform Licensing of Power Engineers < http://www.niulpe.com/ > for a list of state jurisdictions that have adopted an operator licensing program. As youwill read below, this program is designed for safety which is the topmost concern within any boiler house.

Attached is also a copy of New Jersey's annual tune-up rule. I understand they are in the process of trying to update the program. Any tune-up program must take into consideration the linkages between Excess Air, CO, NOx and Efficiency (CO2)as expressed in the attached Graph generated by Hamworthy-Peabody Burner Company linking combustion and boiler design.

Considering the amount of time, these initial comments are not complete. Should a SEBRFA Panel be needed, we will be prepared to discuss the complete list of questions. It might be worth while for the DOE to make a presentation on the results of the Eave Energy Now Program and the 2000+ energy audits they have run. I believer part of that process was information gathered on boiler tune-ups.

RDB

The responses to date are as follows. We will have more after the holidays.

_______________________________________________________________

Several comments in no particular order:

As I recall an "Ohio Special" is a boiler so constructed that it has more output for the amount of surface area than a standard firetube boiler. Alternatively, since I think that Ohio's rules for operators revolve around surface area an "Ohio Special" allowed you more steaming without an operator. The break point between attended and non attended boilers is generally two fold: state and/or local regulations requiring an operator based on boiler heating surface pressure, heat input or steaming rate and good practice at larger facilities where an on duty utility operator handles multiple systems. There is a National Board inspection code - Part RB would seem to apply for a general inspection. However most industrial boilers are generally covered by some sort of boiler and machinery insurance and typically the inspector from the insurance company will periodically inspect the boilers. It should be noted that this inspection is for mechanical /structural integrity and not for emissions limits compliance or combustion performance.

________________________________________________________________________39 Perhaps the attached will help in the interim. My quick take on Ohio is: Ohio law requires that steam boilers larger than 30 hp cannot be operated unless they are directly in the charge of a licensed engineer. The law goes on to define one hp as 12 sq ft of boiler heating surface. Additionally, this engineer may not leave the boiler plant unattended any longer than the length of the evaporation test of the boiler. Rules such as this have been the source of ambiguity and debate, however. The other important part of the unique Ohio Special regulations is the number of boilers at the (+/-) 358 sq. ft. heating surface restriction does not factor in to the requirement for operators. For example, as I understand it, a single 800 HP installation would require operators, but four 200 HP Ohio Specials do not, even though both scenarios generate a

total of 800 HP of steam.

The National Board Inspection Code (NBIC) was first published in 1946 as a guide for state and local jurisdiction chief inspectors. It has become an internationally recognized standard, adopted by most (BUT NOT ALL) US and Canadian jurisdictions. The NBIC provides standards for the installation, inspection, and repair and/or alteration of boilers, pressure vessels, and pressure relief devices. The Synopsis I have attached is self-explanatory.

I have a couple of inquiries out that may yield more info. I'll be back with you tomorrow or so.

In addition to the material above, RE: The National Board's Synopsis and the boiler rule overview, I would offer the following observations:

The National Board does not address operational considerations - their members (the jurisdictional boiler inspectors in the several states) are primarily concerned with installation and commissioning of boilers. The NBIC offers those inspectors guidance, but in the final analysis, local and state boiler inspectors will make decisions based on their jurisdictional requirements - and, in many instances, they maydiffer significantly from those of the ASME and/or the NBIC. Stateauthorized boiler inspectors make the final decisions. . In-service inspections are sometimes done by National Board-certified inspectors - so-called Authorized Inspectors - and many times they represent insurance companies. They, too, may use ASME and National Board codes for guidance, but they inspect primarily to satisfy insurance requirements. . Unfortunately - and I would not say this publically, necessarily - most boiler inspectors - National Board members or AI's from insurance companies -- are NOT sufficiently - if at all -- informed on combustion practices and most certainly not on combustion practices as they may pertain to emissions control. They are oriented almost entirely to the pressure vessel. . We know of no state requirements for boiler "tune-ups." If they exist, they most probably exist through the environmental departments and agencies of the states rather than the departments and agencies that inspect or license or certify boilers. . According to the information I have been able to find over the last few hours, the following states and major cities have some program with respect to boiler operator licensing: Alaska, Arkansas, Maine, Maryland, Massachusetts, Minnesota, Montana, New Jersey, New Mexico, Ohio, Oklahoma, Washington, D.C., Los Angeles, Denver, Tampa, Chicago, New Orleans, Detroit, Kansas City, St. Louis, New York City, Buffalo, Philadelphia, Pittsburgh, Memphis, Houston, Salt Lake City, Seattle, Milwaukee, plus over 200 more licenses in other cities. [This is probably not as exhaustive as it should be.] . Although I am not sure how many of the above it actually affects, in many instances when a licensed boiler operator is required is dependent on the size and operating pressure of the boiler or in40 conformance with other criteria such as the Ohio Specials. The trend, now, is to take action to avoid situations where licensed operators are needed. For instance, in a hospital, efforts may be taken to localize sterilization techniques within the hospital, retrofit the boiler, and lower the pressure of an otherwise high pressure boiler to avoid having to employ a licensed operator. . Very large boilers are operated and maintained to the highest criteria, normally. The smaller boilers - so-called commercial and institutional (schools, hospitals, prisons, shopping malls, office buildings, dry-cleaners, etc.) are not operated or maintained as vigorously, particularly in the nation's school systems. The smaller the boiler, seemingly, the less rigorous the operational criteria or routine maintenance. ABMA has fought the battle for years to train the operators of these types of systems to extend their lives and to obtain highest efficiency. When you are talking about condensing boilers - as opposed to conventional boilers - the rigors of operation and maintenance grow exponentially. If you do not practice good operations techniques and if you are not religious about maintenance, you will not get the advertising efficiency out of your boiler. Few owners understand this additional requirement when they purchase the systems. They are used to conventional systems which are far more forgiving of abandonment than are condensing systems (technologies). To reach the type of "green" efficiencies for which many are calling, condensing technology is the way to go, but too often the "green" turns to "brown" or "black" because the owner/operator doesn't operate and maintain the systems or the equipment in strict accordance with manufacturers'
recommendations.

In all candor, small boiler operators typically do not take the same degree of care of their systems as to larger boiler owners/operators. The level of operator sophistication is just not there. Many small boiler operators KNOW that better operation and maintenance of their systems would save them money on many different levels, but such is just a very low if not nonexistent priority. When it comes to operational or maintenance for emissions controls . well, if they don't spend money to save money (fuel and life-of-boiler perspective), they certainly don't spend money to control emissions. Smaller boiler operators are not sophisticated on good combustion practices. Every manufacturer that sells at least a >400,000 Btu heat input boiler will thoroughly advise their customer on the proper long-term operational criteria and maintenance routine to keep that boiler alive for a very long time. Because of the way they are made, those conventional boilers (again, condensing boilers not so much) will last a very long time even if neglected.

Hope this helps. We are available for any additional consultation that is appropriate.

_______________________________________________________________________

I agree. My experience with inspection, particularly insurance inspections, is that they are solely pressure part oriented leaving out the non pressure parts such as the burners etc entirely. In a previous reincarnation I was able to work out an arrangement with the insurance company that they would note any apparent problem areas - ie. something looks weird or damaged – on their reports but that was the extent of it. These people are pressure vessel oriented and not combustion or emissions oriented. A boiler could pass an insurance inspection flying colors and fail an emission test completely.

Several states have annual tune up requirements in their operating permits. New Jersey and Georgia come to mind but the boilers involved were larger units, say 90,000 lb/hr and above in terms of size.41 We need to keep in mind that licensing per se is not necessarily the answer since in my experience there was, in general, no requirement for relicensing when say a low NOx burner was installed in place of an existing one.42 Comments from Orrville Utilities434445464748 

### Appendix C

Preliminary Small Entity Cost and Emission Impacts49 To: Jim Eddinger, EPA SPPD

From: Amanda Singleton, ERG Subject: Preliminary Small Entity Cost and Emission Impacts for Boiler and Process Heater Rulemakings

Date: January 2, 2008

This memo summarizes the preliminary cost estimates for add-on control devices, work practice standards; and testing and monitoring requirements anti cipated for boilers and process heaters subject to the hazardous air pollutants (HAP) emission standards. All costs are presented in year 2007$. This memo also discusses the emission reductions corresponding to the regulatory options for various hazardous air pollutants (HAP) and HAP surrogates that are targ eted under the emission standards. The memo is separated into two sections to separately summarize the cost and emission impacts for units at area and major sources of HAP.

1.0 Summary of Cost and Emission Impacts for Boilers at Area Sources of HAP

Model units were created to represent approximately 1.37 million boiler area source population database so that an impacts analysis could be performed on a reasonable number of units and could be conducted in a practical and timely manner. The development of model units involved reviewing parameters that distinguish and characterize unit characteristics, such as the materials combusted, exis ting (baseline) air pollution control devices and heat input capacity (in million British thermal units per hour (MMBtu /hr)). Model units were defined based on various combinations of the parameters so that the boiler population would be accu rately represented by the models.

1.1. Model Units for Area Source Boilers

Table A-1 presents the estimated population of 1. 37 million boilers at area sources of HAP. These estimates were derived from boiler inspector invent ories from 13 states. These inventories were then extrapolated nationally using a ratio of boiler heat inpu t to state population. The distribution of boiler fuels was assigned based on a state-specific distribu tion of fuels used in industrial and commercial applications. 1 The distribution of unit size and baseline cont rol was assigned based on the distribution of

boiler sizes in the 13-state bo iler inspector inventory.

As shown in table A-1, 90 percent of the area source boiler population is gas-fired without any type of air pollution control device or monitoring equipment. Thes e units have only trace emissions of PM, mercury, and metallic HAP. However, gas-fired units do prod uce organic HAP during the combustion process.
Since emission factors at units of a similar fuel and control device are expected to be similar for units regardless of whether or not they are located at area or major sources of HAP, the baseline emission rates shown in the summary table are based on data collected during the vacated industrial, commercial and institutional boiler NESHAP (40 CFR Part 63 Subpart DDDDD).

1.2 Preliminary Emission Limits for Boilers at Area Sources

Section 112(d)(5) of the Clean Air Act (CAA) allows for area source standards to be based on GACT (Generally Available Control Technology). GACT may consider costs and economic impacts. However, since solid and liquid fuel industrial boilers and instit utional/commercial boilers at area sources are on list of CAA 112(c)(6) sour ce categories for Mercury (Hg) and polyc yclic organic matter (POM), EPA is required to make these source categories subject to a MACT (Maximum Achievable Control Technology) for Hg and POM. EPA can use GACT for other HAP.

1 2001 EIA State Fuel Consumption Data by Sector. Accessed online at: http://www.eia.doe.gov/emeu/states/sep_sum/html/sum_btu_res.html http://www.eia.doe.gov/emeu/states/sep_sum/html/sum_btu_com.html50 Table A-2 summarizes preliminary numerical MACT floor emission limits for the best controlled 12 percent of units for CO (as a surrogate to organic HAP) and mercury (Hg) at solid and liquid fuel boilers. Table A2 also summarizes preliminary numerical GACT emi ssion limits for PM and metallic HAP at all boilers as well as GACT limits for CO and Hg at gas-fired boilers.

MACT Floor for Mercury (Hg)

No air pollution control devices were installed to reduce Hg at area sources. The Hg limits in Table A-2 were based on the average coal mercury contents in the 13 states with boiler inspector inventories. The lowest 12 percent of boiler coal mercury contents were comprised of Nebraska boilers (assumed to be firing Wyoming coal), Colorado boilers, and Utah boilers . Mercury limits at biomass units were based on Hg contents of wood fuels from five of the 13 states with boiler inspector inventories. The lowest 12 percent of boiler wood mercury contents were bas ed on Hg contents for New York and North Carolina boilers. Variability factors were applied to these floors to account for the standard deviations of each fuel’s mercury content. 2 Hg limits at liquid fuel units were base d on AP-42 emission factors for distillate oil

boilers.

MACT Floor for Carbon Monoxide (CO)

No control devices were installed to reduce organi c HAP and CO emissions. The MACT floors for CO at coal and liquid fuel boilers were based on availabl e state permit limits for CO. Coal boiler permit limits
consisted of 11 coal boilers in Illinois and Ohio while liquid boiler permit limits were comprised of limits from 46 boilers in Vermont, New Hampshire, Maine, and Rhode Island. The MACT floor for CO at biomass boilers was based on 27 state permit limit s in Vermont, New Hampshire, Maine, and Rhode Island as well as actual CO emission data (with va riability factors) from 14 boilers under the Department of Forestry Fuels for Schools program. 2

GACT for Particulate Matter (PM) and non-Mercury Metallic HAP

Based on a review of available information and stat e regulations, GACT for the boiler source category was set to be an annual tune-up work practice st andard. PM and non-mercury metallic HAP emissions are expected to decrease 5 to 10 percent below baseli ne levels as a result of implementing an annual tune-up.

1.3 National Impacts for Area Source Boilers

Table A-3 presents per boiler costs for fabric filter s (if necessary), work prac tice standards (tune-ups, linkageless boiler management systems (LBMS), and energy audits) and testing and monitoring costs to demonstrate compliance with the numerical limits. Fa bric filter costs are specific to each model boiler,
because the control costs are based on exhaust flow s, and required pollutant removal efficiencies. The costs for work practice standards, testing, and m onitoring are constant across all model boilers.

The national costs and emission impacts are summarized in Tables A-4a, b, and c. To estimate the national costs of each regulatory opti on, the per boiler costs in Table A-3 were multiplied by the number of boilers represented by the model unit. In order to avoid double counting the control costs in the cost effectiveness summaries, the cost of the control is only assigned to the targeted pollutant of each regulatory option. The cost of a fabric filter was assigned to mercury reductions while the cost of an annual tune-up was assigned to polycyclic arom atic hydrocarbon (PAH) reduct ions.

Regulatory Option 1 – MACT for Hg and CO and Work Practice Standard for PM and Metallic HAP (Table A-4a)

2 Draft Memo. Eddinger, Jim. Approach for determin ing MACT floors for existing area source boilers. August 22, 2008.51 Based on the distribution of coal and wood Hg cont ents, this preliminary analysis assumes that 12 percent of coal fired units and 14 percent of biomass fi red units will fire fuels with mercury contents above
the MACT floor emission limits. Since AP-42 emissi on factors represent an average of all available information, this analysis assumes 50 percent of liquid units are expected to have mercury contents higher than the MACT floor. A fabric filter will be requ ired on units with fuels with Hg contents higher than the MACT floor. A fabric filter is expected to ac hieve 75 percent reduction in Hg and 99 percent reduction in PM and non-Hg metallic HAP. Based on the distri bution of state permit limits and CO stack test data 27 percent of coal units, 68 percent of biomass units, and 4 percent of liquid fuel units will need to install enhanced combustion control equipment, such as a LBMS , to meet the CO MACT floor. The remaining coal, biomass, and liquid fuel units were assumed to conduct and annual tune-up and achieve 5 to 10 percent reduction in CO, Hg, non-Hg metallic HAP, and PAH. Gas units do have testing and monitoring costs to meet GACT CO limit, all other boilers hav e PM and Hg testing costs, and monitoring costs for opacity, mercury content and CO, O2 levels. Table 1 summarizes the national costs of option 1.

Table 1 National Annualized Control Cost s for Regulatory Option 1 (2007 million$)

Add-On Control
Costs Combustion
Control Costs Testing Costs Monitoring
Costs Total Costs

222 4,099 2,962 16,386 $ 23,669

Regulatory Option 2 – Work Practice Standard for All Pollutants (Table A-4b)

Section 112(h) of the CAA allows EPA to promulgate a work practice sta ndard, if it is not feasible to
enforce an emission standard. Not feasible means the application of measurement methodology is not practicable due to technological and economic limitat ions. Given the high costs associated with testing and monitoring associated with the MACT floor under regulatory option 1, regulatory option 2 summarizes the costs associated with conducting an annual tune-up work practice standard on all units that are not already assumed to be conducting tune-ups in order to comply with existing state emission standards. This option considers the cost of a tune-up only ( annualized costs of $2,219 per boiler) and it does not incorporate any costs for add-on controls, testing, or monitoring. A tune-up is expected to achieve 5 to 10 percent reductions in all pollutants. Table 2 su mmarizes the national costs of regulatory option 2.

Table 2 National Annualized Contro l Costs for Option 2 (2007 million$)

Add-On Control
Costs Combustion Control Costs Testing Costs Monitoring
Costs Total Costs

0 2,906 0 0 $ 2,906

Regulatory Option 3 – Energy Audit on All Solid Fuel Boilers with Tune-up on all Other Units (Table A-4b)

Regulatory Option 3 analyzes work practice standar ds more stringent than the tune-ups analyzed under option 2. The cost to conduct an energy audit and implem ent any audit findings with less than a 3-year payback was analyzed for all solid units. The one-time cost of an energy audit was estimated as $245. Costs associated with implementing the findings of the energy audit were not included in this analysis, because it was assumed that the cost for implement ation would be offset by fuel savings. Table 3 summarizes the national costs of regulatory option 3.

Table 3 National Annualized Contro l Costs for Option 3 (2007 million$)

Add-On Control
Costs Combustion Control Costs Testing Costs Monitoring
Costs Total Costs

0 2,909 0 0 $ 2,90952 1.4 Example Small Entity Costs for Ar ea Source Facilities with Boilers

Tables A-5a, b, c present example facility costs for ty pical area source facilities to comply with regulatory options 1, 2, and 3 outlined above. The example costs are based on actual area source facilities that responded to the 2008 combustion survey. According to table A-6 there is an average of two boilers per area source facility. The types of controls necess ary and corresponding emission reduction potentials will depend on the blend of fuels and boiler sizes at each facility.

Regulatory Option 1

Under option 1, the annualized costs fo r the example facilities are $2,200 for a church with one small gas boiler, and $399,100 for a public sector training facility with two coal and two liquid fuel boilers.

Regulatory Option 2

Under option 2, the annualized costs fo r the example facilities are $2,200 for a church with one small gas boiler, and $11,100 for a not-for profit hospital with five gas boilers.

Regulatory Option 3

Under option 3, the annualized costs fo r the example facilities are $2,200 for a church with one small gas boiler, and $101,000 for a public sector training facility with two coal and two liquid fuel boilers.

2.0 Summary of Cost and Emission Impacts for Boilers and Process Heaters at Major Sources
of HAP

Similar to the discussion in Section 1.0 model units we re created to represent the boiler major source population database so that an impacts analysis could be performed on a reasonable number of units and could be conducted in a practical and timely manner. Table M-1 summarizes the distribution of small entity facilities to various types of facilities. On average ther e are 3.2 boilers per major source fa cility, compared with 2 boilers per area source facility. The majority of small entity ma jor sources are located in private indust ries; however there are some small entities in the public and non-profit sectors.

2.1 Model Units for Major Sour ce Boilers and Process Heaters

Table M-2 presents the estimated population of boilers at major sources of HAP. These estimates are
based on the estimates in the vacated boiler MACT ru lemaking. The actual pop ulation of units will be modified to reflect the results of the 2008 combustion survey. At this time, model units were not yet developed based on the recent survey. Based on pre liminary screening of the survey results, the total population of units is much less. There are approx imately 12,000 boilers and process heaters at major sources, compared to the 58,200 boilers summarized in Table M-2. However, the distribution of units in the survey contains proportionately much less coal-f ired units than what is shown in Table M-2. The baseline emission rates shown in the summary tabl e are based on data collected during the vacated boiler maximum achievable control technology (MACT) standard. Only baseline PAH emission rates are summarized for gas units.

2.2. MACT Floor Emission Limits for Boil ers and Process Heaters at Major Sources

Based on the current status of data from the 2008 co mbustion survey, it is premature to estimate numerical emission limits (and corresponding emis sion reductions) based on the best performing 12 percent of units. Despite the lack of a numerical lim it, it is expected the level of control technology required to meet the emission limits of the new MACT standard will be comparable to the controls analyzed in the vacated boiler MACT standard.

2.3 National Impacts for Major Source Boilers and Process Heaters53 The control, testing, and monitoring costs shown in table M-3 represent the controls analyzed under the vacated standard. Tables M-4a and b present the nati onal costs for regulatory options 1 and 2. To
estimate the national costs of each regulatory option, the per unit cost s in Table M-3 were multiplied by the number of boilers and process heaters represented by the model unit.

Regulatory Option 1 – National Cost to Achieve MA CT Floor for Hg, HCl, Metallic HAP and POM (CO) Emissions (Table M-4a)

The costs in regulatory option 1 in clude control costs for fabric filt er, venturi scru bber, and ESP, as needed. These costs also include monitoring costs such as process monitors for control devices if a
control device is installed otherwise fuel content monitoring. Costs also include monitoring opacity and CO, O2 levels as well as testing for HCl, PM, and Hg. Table 4 summarizes the national costs of regulatory option 1.

Table 4 National Annualized Contro l Costs for Option 1 (2007 million$)

Add-On Control Costs (TAC) Testing Costs (TAC) Monitoring Costs (TAC) Total

1,878 208 1,558 3,644

Regulatory Option 2 – National Cost to Achieve MACT Floor Assuming Certain Coal and Wood-Fired Units Comply with the HCl and Manganese Exclusi on Health-Based Compliance Alternatives (HBCA) (Table M-4b)

If a facility can demonstrate that facility-wide emission s of HCl and Cl2 do not pose significant risks, the facility does not have to comply with the HCl MACT floor limit on individual boiler basis. To analyze the reduce costs of compliance for facilities estimat ed to comply the the HCl HBCA, the HCl (scrubber) control costs on approximately 220 boilers and pr ocess heaters were removed. These units were assumed to comply with the HCl emission standard using the facilit y-wide HCl health-based compliance

alternative.

Similarly, if a facility can demonstrate that facilit y-wide emissions of manganese do not pose significant risks, the facility can exclude manganese emissions when determining compliance with the total selected metals (TSM) limit on an individual boiler basis. To an alyze the reduce costs of compliance for facilities estimated to comply the TSM HBCA, the PM (fabric filter or ESP) control costs on an additional 202 boilers and process heaters were removed. These uni ts were assumed to qualify for exempting their Manganese emissions from the TSM emission limit and th us avoid the need to install controls to comply
with the TSM standard.

Although these 400 units were exempt from control co sts under the HCl and TSM HBCA, costs for testing and monitoring are still applicable in order to demonstrate compliance with the standard. The portion of units eligible for the HCl and TSM HBCA standa rds was based on a memorandum prepared for the
vacated Boiler MACT standard. 3 Table 5 summarizes the national costs of regulatory option 2.

Table 5 National Annualized Contro l Costs for Option 2 (2007 million$)

Add-On Control Costs (TAC) Testing Costs (TAC) Monitoring Costs (TAC) Total

1,687 208 1,520 3,415

2.4 Example Small Entity Costs for Major Sour ce Facilities with Boilers and Process Heaters

3 Eddinger, J. Estimating Impact on Control Costs and Emissions Reductions of the Health-Based Compliance Alternatives. February 2004.54 Tables M-5a and b present example facility costs fo r typical major source type facilities that were identified as small entities to comply with regulat ory options 1 and 2 outlined above. The example costs are based on actual major source facilities that re sponded to the 2008 combustion survey. The types of controls necessary at each unique facility will depend on the blend of fuels and boiler and process heater subcategories at each facility.

Regulatory Option 1

Under option 1, the annualized costs for the example facilities are $148,000 for a small wood products facility with one biomass boiler and one gas-fired boiler, and $1 million for a facility with three boilers firing a blend of coal, biomass and non-fossil solid fuels.

Regulatory Option 2

Assuming the two facilities mentioned above could co mply with the HBCA, the annualized costs for the small wood products facility decreased from $148,000 to $64,200. The cost for the facility with three solid fuel boilers decreased from $1 million to $451,400.55 

### Appendix D

Draft Small Entity Screening Analysis56 TO: Tom Walton

FROM: Brooks Depro

Dallas Wood

DATE: January 26, 2009

SUBJECT: Draft Small Entity Screening Analysis: Industrial Boilers and Process

Heaters

The Regulatory Flexibility Act as am ended by the Small Business Regulatory
Enforcement Fairness Act (SBREFA) genera lly requires an agency to prepare a
regulatory flexibility analysis of any rule subject to notice and comment rulemaking
requirements under the Administrative Proce dure Act or any other statute, unless the
agency certifies that the rule will not have a significant ec onomic impact on a substantial

number of small entities. Small entities include small businesses, small governmental
jurisdictions, and small not-for-profit enterprises.

We performed a preliminary screening analysis to assess small entity impacts. The initial
screening analysis suggests a large number of small entitie s (business and governments)

have sales and revenue tests that exceed 3 percent.

1. Small Business Screening Analysis

The industry sectors covered by the rule were identified through lists of small entities at
major and area sources included in the surv ey database provided to RTI (ERG, 2008). A
listing of the sectors affected (3-Digit NAICS) and the range of SBA size definitions are
provided for major and area sources in Tables 1 and 2.

1.1 Representative Small Bu siness Analysis Using Census

Statistics of U.S. Businesses

For each 3-Digit NAICS code, the Statistics of U.S. Businesses (SUSB) provides national

information on the distribution of economic variables by industry and enterprise size
(U.S. Census, 2008a and b). 4 The Census Bureau and the Office of Advocacy of the
Small Business Administration (SBA) supported and developed these files for use in a
broad range of economic analyses. 5 Statistics include the tota l number of establishments
and receipts for all entities in an indust ry; however, many of these entities may not

4 The SUSB data do not provide establishment information for the national security North American Industry Classification Syst em (NAICS) code (92811) or irrigated farms. Since most national security installations are owned by the federal government (e.g., military bases), the U.S. Environmental Protection Agency (EPA) assumes these entities would not be considered small. For irrigated farms, we relied on receipt data provided in the 2003 Farm and Irrigation Survey (USDA, 2004).

5 See http://www.census.gov/csd/susb/ and http://www.sba.gov/advo/research/data.html for additional

details.57 necessarily be covered by the proposed rule. SUSB also provides st atistics by enterprise
employment and receipt size.

Table 1. Major Sources: Affect ed Sectors and Size Standards

Industry Description Corresponding

NAICS SBA Size Standard for Businesses (effective

March 11, 2008)

Oil & gas extraction 211 500 employees

Mining (except oil & gas) 212 500 employees

Utilities 221 a

Food mfg 311 500 to 1,000 employees

Textile mills 313 500 to 1,000 employees

Leather & allied product mfg 316 500 to 1,000 employees

Wood product mfg 321 500 employees

Paper mfg 322 500 to 750 employees

Printing & related support

activities 323 500 employees

Petroleum & coal products mfg 324 Typically 500 to 1,500 employees

Chemical mfg 325 500 to 1,000 employees

Plastics & rubber products mfg 326 Typically 500 to 1,000 employees

Nonmetallic mineral product mfg 327 500 to 1,000 employees

Primary metal mfg 331 500 to 1,000 employees

Fabricated metal product mfg 332 500 to 1,500 employees

Transportation equipment mfg 336 500 to 1,000 employees

Furniture & related product mfg 337 500 employees

Warehousing & storage 493 $25.5 Million in Annual Receipts

Waste management &

remediation services 562 Typically $7 to $14 Million in Annual Receipts

Educational services 611 Typically $7 to $35.5 Million in Annual Receipts

a NAICS codes 221111, 221112, 221113, 221119, 221121, 221122—A firm is small if, including its affiliates, it is primarily engage d

in the generation, transmission, and/or distribution of electri c energy for sale and its total electric output for the precedin g fiscal year did not exceed 4 million megawatt hours.58 Table 2. Area Sources: Affected Sectors and Size Standards

Industry Description Corresponding

NAICS SBA Size Standard for Businesses (effective March 11, 2008)

Utilities 221 a

Food mfg 311 500 to 1,000 employees

Beverage & tobacco product mfg 312 500 to 1,000 employees

Textile mills 313 500 to 1,000 employees

Textile product mills 314 500 to 1,000 employees

Wood product mfg 321 500 employees

Paper mfg 322 500 to 750 employees

Printing & related support activities 323 500 employees

Petroleum & coal products mfg 324 500 to 1,500 employees

Chemical mfg 325 500 to 1,000 employees

Plastics & rubber products mfg 326 500 to 1,000 employees

Nonmetallic mineral product mfg 327 500 to 1,000 employees

Fabricated metal product mf g 332 500 to 1,500 employees

Computer & electronic product mfg 334 500 to 1,000 employees

Electrical equipment, appliance, & component mfg 335 500 to 1,000 employees

Transportation equipment mfg 336 500 to 1,000 employees

Furniture & related product mfg 337 500 employees

Miscellaneous mfg 339 500 employees

Hospitals 622 $34.5 Million in Annual Receipts

a NAICS codes 221111, 221112, 221113, 221119, 221121, 221122—A firm is small if, including its affiliates, it is primarily engage d

in the generation, transmission, and/or distribution of electri c energy for sale and its total electric output for the precedin g fiscal year did not exceed 4 million megawatt hours.

The Census Bureau’s definitions used in the SUSB are as follows:

 establishmen t: An establishment is a single physical location where business

is conducted or where services or in dustrial operations are performed.

 receipts : Receipts (net of taxes) are defined as the revenue for goods produced, distributed, or services prov ided, including revenue earned from premiums, commissions and fees, rents, interest, dividends, and royalties. Receipts exclude all revenue collected fo r local, state, and federal taxes.

 enterprise : An enterprise is a business organi zation consisting of one or more

domestic establishments that were specified under common ownership or control. The enterprise and the es tablishment are the same for singleestablishment firms. Each multi-establishment company forms one enterprise—the enterprise employment and annual payroll are summed from59 the associated establishments. Enterpri se size designations are determined by the summed employment of all associated establishments.

Because the SBA’s business size definitions (SBA, 2008) apply to an establishment’s
“ultimate parent company,” we assumed in th is analysis that the “enterprise” definition
above is consistent with the concept of ultimat e parent company that is typically used for
SBREFA screening analyses and the terms are used interchangeably.

The analysis generated a se t of establishment sales tests (represented as cost-toreceipt ratios) for NAICS codes associated with sect ors listed in Tables 1 and 2. Although
the appropriate SBA size defini tion should be applied at the parent company (enterprise)
level, we can only compute and compare ratios for a model establishment owned by an
enterprise within an SUSB size range (emp loyment or receipts). Using the SUSB size
range helps us account for receipt differences between establishments owned by large and
small enterprises and also allows us to consid er the variation in small business definitions
across affected industries. Using establishmen t receipts is also a conservative approach,
because an establishment’s parent company (the “enterprise”) may have other economic

resources that could be used to cove r the costs of the regulatory program.

The engineering costs analysis developed compliance costs estimates for facilities
reported to be owned by small businesses. There were four estimates for private
enterprise major sources and two estimates for private enterprise area sources. Within
each group, the initial screening uses the highest va lue as the numerator for the cost-toreceipt ratio. This assumption does not significantly influence the conclusions in this
memo unless EPA determines the lowest facility cost data is more lik ely representative of
small facility costs.

Major Sources:

 Option 1 : $1 million (highest cost small facility)

o 4 facility range : $148K to $1 million

 Option 2 : $1 million (highest cost small facility)

o 4 facility range : $64K to $1 million

Area Sources:

 Option 1 : $195K (highest co st small facility)

o 2 facility range : $163K to $195K

 Option 2 : $4K (RTI estimate using 2 boilers × average cost per boiler in cost spreadsheet ($2K)60 o 2 facility range : Not available/reported

 Option 3 : $7K(highest cost small facility)

o 2 facility range : $2K to $7K

A large number of sources within SUSB NAICS/enterprise categories had ratios
exceeding 3 percent. We have provided deta ils on the cost-to-receipt ratios generated
using the SUSB in the attached MS Excel workbook (3-67 SUSB Small Entity Screen
Tables 1-26-2009.xls) 6 . A summary of results by source type shows:

Major Sources:

 Option 1 : 75 percent the NAICS/enterpris e categories had ratios exceeding 3

percent.

 Option 2 : 73 percent the NAICS/enterpris e categories had ratios exceeding 3

percent.

Area Sources:

 Option 1 : 25 percent the NAICS/enterpris e categories had ratios exceeding 3

percent.

 Option 2 : No NAICS/enterprise categorie s had ratios exceeding 3 percent.

 Option 3 : No NAICS/enterprise categorie s had ratios exceeding 3 percent.

1.2 Additional Small Business A nalysis Using Sample of Small
Businesses Identified in Combustion Facility Survey

Next, we performed a more detailed anal ysis that compares the Census SUSB
representative small entity results with a firm-specific sample of major and area small
private enterprises. In this approach, we identified the survey facility names listed as
small, traced the ultimate parent company name in order to verify the facility was owned
by a small business, and collected the most recent parent company sales and employment
figures. As Tables 5 shows, the average cost-to-sales ratios for small major source
companies are above 5 percent. The median ratios are similarly high (approximately 3
percent). Average cost-to-sales ratios for small area sources are smaller; the average and

median values are less than one and a half percent.

6 Prior to computing the cost-to-receipt ratios report ed in the tables presented in the spreadsheet, we adjusted the engineering compliance costs to reflect 2002 dollars using the implicit price deflators for gross domestic product (GDP)The values used are: 2002 = 104.187 and 2007 = 119.816 (U.S. BEA, 2008).61 Table 5. Major Sources: Sales Tests Using Small Companies Identified in the
Combustion Survey

Sample Statistic Option 1 Option 2

Minimum <0.1% <0.1%

Maximum 32.4% 32.2%

Median 2.9% 2.7%
Average 5.1% 5.0% Ultimate Parent Company Observations: 62 62

Table 6. Area Sources: Sales Tests Us ing Small Companies Identified in the
Combustion Survey

Sample Statistic Option 1 Option 2 Option 3

Minimum <0.1% <0.1% <0.1%

Maximum 6.1% 0.1% 2.3%

Median 0.8% <0.1% 0.3% Average 1.5% <0.1% 0.6% Ultimate Parent Company Observations: 45 45 45

2. Small Government and Non-Pr ofit Screening Analysis

In addition to the private sector, this rule also covers sectors that include entities
owned by small and large governments. Give n the uncertainty and data limitations
associated with identifying a nd appropriately classifying th ese entities, we computed a
“revenue” test for a model small government, where the annualized compliance cost is a
percentage of annual government revenues (U.S. Census, 2005a and b).

As before, compliance costs were estimated for model facilities for major and
area sources for multiple options. When there were multiple model facilities, the model
facility with the highest cost was chosen as representative. A summary of the compliance

costs used follows:

Major Sources:

 Option 1&2 : $1.3 million (highest cost public facility)

Area Sources:

 Option 1 : $399K (highest co st public facility)

o Schools $67K

o Churches $2K

 Option 2 : $9K (highest cost public facility)

o Schools $2K62 o Churches $2K

 Option 3 : $9K (highest cost public facility)

o Schools $5K

o Churches $2K

From the 2002 Census (in 2007 dollars ), the average revenue for small
governments (counties and munici palities with populations fewer than 10,000) are $3
million per entity, and the average revenue fo r local governments with populations fewer than 50,000 is $7 million per entity.

Highest Cost Public Facility : for major sources, the co st-to-revenue ratio would
be 43% for the smallest group of local governments (<10,000 people) and 19% for the
larger group of governments (<50,000). For area sources, the cost-to- revenue ratio would
range from 0.3% to 13.3% for the smallest group of local governments (<10,000 people)
and would range from 0.1% to 5.7% for the larger group of governments (<50,000
people).

Schools : For area sources, the cost-to-reve nue ratio would range from 0.1% to
2.2% for the smallest group of local g overnments (<10,000 people) and would range
from <0.1% to 1.0% for the larger group of governments (<50,000 people).

Churches : Assuming an annual operating budget of $150,000, the ratio of costto-expenditures is approx imately 1.3 percent.

3. References

Singelton, Amanda, Eastern Research Group, December 2008. Email Communication with Jim Eddinger, Larry Sorrels, and Tom Walton, U.S. Environmental Protection Agency. Major and Area S ource Preliminary Economic Impacts.

U.S. Bureau of Economic Analysis (BEA). 2008. Table 1.1.9. Implicit Price Deflators for Gross Domestic Product. Last Revised November 25, 2008.

U.S. Census Bureau. 2005a. 2002 Census of Governments, Volume 4, Number 3, Finances of County Gover nments: 2002 GC02(4)-3 . U.S. Government Printing Office, Washington, DC. Table 12.

U.S. Census Bureau. 2005b. 2002 Census of Governments, Volume 4, Number 4, Finances of Municipal and Township Governments: 2002 GC02(4)-4 . U.S. Government Printing Office, Washington, DC. Table 13.63 U.S. Small Business Administration (SBA). 2008. Table of Small Business Size

Standards Matched to North American Industry Classification System Codes. Effective March 11, 2008. <http://www.sba.gov/services/contractingopportunities/sizestandardstopics/

size/index.html>.