# Economic Impact Screening Analysis for Regulatory Change s to the Listing Status of High

- GWP Alternatives used in Refrigeration and Air Conditioning, Foams, and Fire Suppression

P R E P A R E D F O R 

### : Stratospheric Protection Division Office of Air and Radiation U.S. Environmental Protection Agency Washington, D.C. 20460

P R E P A R E D B Y 

### : ICF International 1725 Eye Street, NW Washington, DC 20006

M A R C H 

### 2 0 1 6

### Economic Impact Screening Analysis i 

# Executive Summary The Significant New Alternatives Policy (SNAP) Program is the U.S. Environmental Protection Agency 's ( EPA ) program to evaluate and regulate substitutes under the Clean Air Act (CAA). Section 612(c) of the C AA authorizes the Agency to identify and publish lists of acceptable and unacceptable substitutes

. EPA is proposing to chang e the listing status of certain high

- GWP alternatives used in refrigeration and air conditioning, foams, and fire suppression

. The proposed regulatory options are summarized in Exhibit ES

- 1. To assist the Agency in satisfying its obligations under the Regulatory Flexibility Act (RFA) as amended by the Small Business Regulatory En forcement Fairness Act (SBREFA), this report provides a screening analysis to assess the potential economic impacts on small entities associated with these proposed changes

. Industries potentially affected by these regulat ory options were primarily identified by North American Industry Classification System (NAICS) codes

. Small businesses in each affected industry were classified as such based on size definitions established by the Small Business Administration. Economic im pacts on affected small businesses were calculated using a direct compliance cos t method. T he “sales test” was applied by estimating annualized compliance costs for affected small businesses as a percentage of those businesses’ annual sales. This screenin g analysis finds that the rulemaking can be presumed to have no significant economic impact on a substantial number of small entities (SISNOSE)

. This screening analysis finds that this rulemaking can be presumed to have no SISNOSE for the following reasons :

 Roughly 8 9 small businesses could be subject to the rulemaking, although roughly 76 % of small businesses subject to this rulemaking would be expected to incur compliance costs that are estimated to be less than 1% of annual sales.
 This analysis indicates that up to 21 of the 8 9 affected small businesses

— or roughly 24 %
— could incur costs in excess of 1% of annual sales, and that up to 1 2 small businesses could incur costs in excess of 3% of annual sales. Total annualized compliance costs across affected sm all businesses are es timated at approximately $ 11
. 8

- $ 1 4
. 4 million at a 7% discount rate, or $ 11
. 5

- $ 1 4
. 0 million at a 3% discount rate

. The aggregated economic impacts on small businesses and SISNOSE determination are summarized in Table ES

- 1. Affected small Exhibit ES - 1: Summary of Proposed Regulatory

Options Analyzed
 List unacceptable 24 hydrofluorocarbons (HFCs) an d HFC blends for new centrifugal chillers in 2024.
 List unacceptable 24 HFCs and HFC blends for new positive displacement chillers in 2024.
 List unacceptable 24 HFCs and HFC blends for new refrigerated food processing and dispensing equipment in 2021.
 List unacceptable 28 HFCs and HFC blends for new household refrigerators and freezers in 2021.
 List unacceptable 22 HFCs and HFC blends for new cold storage warehouses in 2021.
 List unacceptable HFC

- 134a, HFC

- 245fa, and certain HFC blends in 1) rigid polyurethane high

pressure two component spray foam , 2) rigid polyurethane low

- p ressure two component spray foam , and 3) rigid polyurethane one - component foam sealants in 2020, 2021, and 2020, respectively , except for certain military, space

- and aeronautics

- related applications.
 List unacceptable methylene chloride in 1) flexible polyurethane foam, 2) integral skin polyurethane foam, and 3) polyolefin foam 30 days from date of publication , in 2017, and in 2020, respectively.
 L ist unacceptable perfluorocarbons (C 3 F 8 and C 4 F 10 ) one year after publication of a final rule for total flooding uses

.

### Economic Impact Screening Analysis ii



### businesses are manufacturers of food processing and dispensing equipment, household refrigerators and freezers, cold storage refrigeration systems, and polyurethane foams.
Table ES - 1: Aggregated Economic Impacts on Small Businesses and SI SNOSE Determination

a Represents small entities affected with an economic impact equal to or lesser than 1% but greater than 0%. b T his category aggregates the number of small entities that would be expected to experience an impact of 1% to 3% with the number of small entitie s that w ould be expected to experience an impact of 3% or greater. Economic Impact Number of Small Entities Subject to the Rule and Experiencing Given Economic Impact Percent of All Small Entities Subject to the Rule That are Experiencing Given Economic Impact Less than 1% for all affected small entities a 68 76.4 % 1% or more for one or more affected small entities b 21 2 3.6 % Greater than 3% for one or more affected small entities 12 13
. 5 %

### Economic Impact Screening Analysis iii 

# Table of Contents Executive Summary
................................ ................................ ................................ ................................ ..................... i List of Tables

................................ ................................ ................................ ................................ .............................. iv 1 Introduction

................................ ................................ ................................ ................................ ......................... 5 2 Summary of G eneral Approach and Key Analytical Assumptions

................................ ................................ ....... 8 3 Refrigeration and Air Conditioning

................................ ................................ ................................ ................... 11 3.1 Chillers (centrifugal and positive displacement)

................................ ................................ ......................... 11 3.1.1 Small Entities Potentially Subject to the Rulemaking

................................ ................................ ........... 11 3.1.2 Estimated Economic Impact on Affected Small Entities

................................ ................................ ....... 12 3.2 Retail Food Refrigeration (Food Pr ocessing and Dispensing Equipment)

................................ ................... 14 3.2.1 Small Entities Potentially Subject to the Rulemaking

................................ ................................ ........... 14 3.2.2 Estimated Economic Impact on Affected Small Entities

................................ ................................ ....... 15 3.3 Household Refrigerators and Freezers

................................ ................................ ................................ ........ 16 3.3.1 Small Entities Potentially Subject to the Rulemaki ng ................................ ................................ ........... 16 3.3.2 Estimated Economic Impact on Affected Small Entities

................................ ................................ ....... 17 3.4 Cold Storage Warehouses

................................ ................................ ................................ ........................... 18 3.4.1 Small Entities Potentially Subject to the Rulemaking

................................ ................................ ........... 19 3.4.2 Estimated Economic Impact on Affected Small Entities

................................ ................................ ....... 22 4 Foam Blowing

................................ ................................ ................................ ................................ .................... 24 4.1 Small Entities Potentially Subject to the Rulemaking

................................ ................................ .................. 25 4.2 Estimated Economic Impact on Affected Small Entities

................................ ................................ ............. 26 4.2.1 High

- Pressure Two

- Component Spray Fo am (Options 11a and 11b)

................................ ................... 26 4.2.2 Low

- Pressure Two

- Component Spray Foam (Options 12a and 12b)

................................ .................... 27 4.2.3 One Component Foam Sealants (Options 13a and 13b)

................................ ................................ ...... 27 4.2.4 Flexible Polyurethane Foam (Option 14)

................................ ................................ .............................. 27 4.2.5 Integral Skin Polyurethane Foam (Option 15)

................................ ................................ ...................... 27 4.2.6 Polyolefin Foam (Option 16)

................................ ................................ ................................ ................. 28 5 Fire Suppression and Explosion Prevention

................................ ................................ ................................ ...... 28 5.1 Small Entities Potentially Subject to the Rulemaking

................................ ................................ .................. 28 5.2 Estimated Economic Impact on Affec ted Small Entities

................................ ................................ ............. 29 6 Conclusion

................................ ................................ ................................ ................................ ......................... 30 6.1 Decision Regarding Significant Economic Impact on a Substantial Number of Small Entities

.................... 30 6.2 Aggregated Small Business Impacts of Regulatory Changes

................................ ................................ ....... 30 7 References

................................ ................................ ................................ ................................ ........................ 35 Appendix A: Sensitivity Analysis of Amoritization Period

................................ ................................ ....................... 38 Appendix B: Summary of the Small Business Impact of All Options

................................ ................................ ....... 41

### Economic Impact Screening Analysis iv 

# List of Tables Table 1: Unacceptable Substitutes and Substitutes Subject to Use Restrictions

................................ ....................... 5 Table 2: Assumptions Concerning Affected Chemicals in Use, Alternatives Modeled, and Types of Entities Affected

................................ ................................ ................................ ................................ ................................ ... 10 Table 3: Estimated Number of Chiller Equipment Manufacturing Small Businesses Affected

............................... 12 Table 4: Estimated Economic Impact on Small Entities in the Chiller End

- Use (Sales Test)

................................ ... 13 Table 5: Estimated Number of Refrigerated Food Processing and Dispensing Equipment Manufacturing Small Businesses Affected

................................ ................................ ................................ ................................ ................. 15 Table 6: Estimated Economic Impact on Small Entities in the Retail Food Refrigeration End

- Use (Sales Test)

..... 16 Table 7: Estimated Number of Household Refrigeration Equipment Manufacturing Small Businesses Affected

.. 17 Table 8: Estimated Economic Impact on Small Entities in the Household Refrigeration Sector (Sales Test)

......... 18 Table 9: NAICS Codes for Affected Cold Storage Industries

................................ ................................ .................... 20 Table 10: Cold Storage Small Businesses Affected by the Proposed Regulatory Options

................................ ...... 21 Table 11: Estimated Economic Impact on Cold Storage Small Businesses (Sales Test)

................................ .......... 23 Table 12: Assumptions about the Percentage of Affected Entities i n NAICS Code 326150

................................ .... 25 Table 13: Estimated Number of Small Business Foam Manufacturers Affected by Regulatory Option

................. 26 Table 14: Estimated Economic Impact on Small Businesses in the Foam Blowing Sector (Sales Test)

................... 26 Table 15: Estimated Number of Small Businesses Manufacturing Fire Suppression Equipment Affected

............. 29 Table 16: Estimated Economic Impact on Small Businesses in the Fire Suppr ession Sector (Sales Test)

............... 29 Table 17: Summary of the Small Business Impact at 7% Discount Rate

................................ ................................ . 31 Table 18: Summary of the Small Business Impact at 3% Discount Rate

................................ ................................ . 32 Table 19: Aggregated Econom ic Impacts on Small Businesses

................................ ................................ ............... 33 Table 20: Regulatory Options Impacted by Annualized Cost Assumptions

................................ ............................ 38 Table 21: Annualized Compliance Costs Assuming a 30 Year and 10 Year Lifetime for Annualizing Costs

............ 38 Table 22: Summary of the Total Small Business Impact by Lifetime Assumption at a 7% Discount Rate*

............ 39 Table 23: Summary of the Total Small Business Impact by Lifetime Assumption at a 3% Discount Rate*

............ 39 Table 24: Aggregated Economic Impacts on Small Businesses a



### ................................ ................................ ............. 40 Table 25: Summary of the Small Business Impact of all Regulatory Options at 7% Discount Rate

........................ 41

### Economic Impact Screening Analysis 5 

# 1 Introduction The Significant New Alternatives Policy (SNAP) Program is the U.S. Environmental Protection Agency 's ( EPA ) program to evaluate and regulate substitutes under the Clean Air Act (CAA). In CAA Section 612(c) , the Agency is authorized to identify and publish lists of acceptable and unacceptable substitutes. EPA is proposing to chang e the listing status of certain high

- GWP alternatives used in refrigeration and air conditioning, foams, and fire suppression

. The complete list of regulatory options that were considered are shown in Table 1
. To assist the Agency in satisfying its obligations under the Regulatory Flexibility Act (RFA) as amended by the Small Business Regulatory Enforcement Fairness Act (SBREFA), 1 

### this report provides a screening analysis to assess the potential economic impacts on small entities associated with these changes. This analysis finds that the proposed regulatory options can be presumed to have no significant economic impact on a substantial number of small entities (SISNOSE)

. This determination applies to a rulemaking that includes the proposed regulatory options 1, 3, 5, 7 a , 9 a , 1 1 b, 1 2 b, 1 3b , 1 4 , 1 5 , 1 6 , and 1 7a (highlighted in Table 1 )

. Table 1 : Unacceptable Substitutes and Substitutes Subject to Use Restrictions Opt ion Description of Re gulatory Change Refrigeration and Air
- Conditioning 1 * For new centrifugal chillers , list unacceptable FOR12A, FOR12B, HFC

- 134a, HFC

- 227ea, HFC

- 236fa, HFC

- 245fa, R

- 125/134a/600a (28.1/70/1.9), R

- 125/290/134a/600a (55.0/1.0/42.5/1.5), R

- 404A, R

- 407C, R

- 410A, R

- 410B, R

- 417A, R

- 421A, R

- 422B, R

- 422C, R

- 422D, R

- 423A, R

- 424A, R

- 434A, R

- 438A, R

- 507A, RS

- 44 (2003 composition), and THR

- 03 in 202 4
. 2 For retrofit centrifugal chillers , list unacceptable FOR12A, FOR12B, HFC

- 134a, HFC

- 236fa, HFC

- 245fa, R

125/134a/600a (28.1/70/1.9), R

- 125/290/134a/600a (55.0/1.0/42.5/1.5), R

- 404A, R

- 407C, R

- 417A, R

- 417C, R

421A, R

- 422B, R

- 422C, R

- 422D, R

- 423A, R

- 424A, R

- 434A, R

- 438A, R

- 507A, RS

- 44 (2003 composition), and THR

03 in 202 4
. 3 * For new positive displacement chillers , list unacceptable FOR12A, FOR12B, HFC

- 134a, HFC

- 227ea, KDD6, R

125/134a/600a (28.1/70/1.9), R

- 125/290/134a/600a (55.0/1.0/42.5/1.5), R

- 404A, R

- 407C, R

- 410A, R

- 410B, R

417A, R

- 421A, R

- 422B, R

- 422C, R

- 422D, R

- 424A, R

- 434A, R

- 437A, R

- 438A, R

- 507A, RS

- 44 (2003 composition), SP 34E, and THR

- 03 in 202 4
. 4 For retrofit positive displacement chillers , list unacceptable FOR12A, FOR12B, HFC

- 134a, KDD6, R

125/134a/600a (28.1/70/1.9), R

- 125/290/134a/600a (55.0/1.0/42.5/1.5), R

- 404A, R

- 407C, R

- 417A, R

- 417C, R

421A, R

- 422B, R

- 422C, R

- 422 D, R

- 424A, R

- 427A, R

- 434A, R

- 437A, R

- 438A, R

- 507A, RS

- 44 (2003 composition), SP34E, and THR

- 03 in 2024
. 5 * For new retail food refrigeration (refrigerated food processing and dispensing equipment) , l ist unacceptable HFC

- 227ea, KDD6, R

- 125/290/134a/600a (55.0/1.0/42.5/1.5), R

- 404A, R

- 407A, R

- 407B, R

- 407C, R

- 407F, R

410A, R

- 410B, R

- 417A, R

- 421A, R

- 421B, R

- 422A, R

- 422B, R

- 422C, R

- 422D, R

- 424A, R

- 428A, R

- 434A, R

- 437A, R

438A, R

- 507A, and RS

- 44 (2003 formulation) in 2021
. 6 For retrofit retail food refrigera tion (refrigerated food processing and dispensing equipment) , l ist unacceptable R

- 404A and R

- 507A one year after publication of a final rule

. 7a * For new household refrigerators and freezers , list unacceptable FOR12A, FOR12B, HFC

- 134a, KDD6, R

125/290/134a/600a (55.0/1.0/42.5/1.5), R

- 404A, R

- 407C, R

- 407F, R

- 410A, R

- 410B, R

- 417A, R

- 421A, R

- 421B, R

422A, R

- 422B, R

- 422C, R

- 422D, R

- 424A, R

- 426A, R

- 428A, R

- 434A, R

- 437A, R

- 438A, R

- 507A, RS

- 24 (2002 formulation), RS

- 44 (2003 formulation), SP34E, and THR

- 03 in 2021
.

1 For all rules subject to the RFA, a screening analysis is required to first determine what, if any, impact a rulemaking may have on small entities. For rules that pose “a significant economic impact on a substantial number of small entities , ” an initial an d final regulatory flexibility analysis is further required.

### Economic Impact Screening Analysis 6

Opt ion Description of Re gulatory Change 7 b For new household refrigerators and freezers , list unacceptable FOR12A, FOR12B, HFC

- 134a, KDD6, R

125/290/134a/600a (55.0/1.0/42.5/1.5), R

- 404A, R

- 407C, R

- 407F, R

- 410A, R

- 410B, R

- 417A, R

- 421A, R

- 421B, R

422A, R

- 422B, R

- 422C, R

- 422D, R

- 424A, R

- 426A, R

- 428A, R

- 434A, R

- 437A, R

- 450A, R

- 438A, R

- 507A, R

- 513A, RS

24 (2002 formulation), RS

- 44 (2003 formulation), SP34E, and THR

- 03 in 2021
. 7 c For new household refrigerators and freezers , list unacceptable FOR12A, FOR12B, HFC

- 134a, KDD6, R

125/290/134a/600a (55.0/1.0/42.5/1.5), R

- 404A, R

- 407C, R

- 407F, R

- 410A, R

- 410B, R

- 417A, R

- 421A, R

- 421B, R

422A, R

- 422B, R

- 422C, R

- 422D, R

- 424A, R

- 426A, R

- 428A, R

- 434A, R

- 437A, R

- 438A, R

- 450A, R

- 507A, R

- 5 13A, RS

24 (2002 formulation), RS

- 44 (2003 formulation), SP34E, and THR

- 03 in 2025
. 8 For retrofit household refrigerators and freezers , list unacceptable FOR12A, FOR12B, HFC

- 134a, KDD6, R

125/290/134a/600a (55.0/1.0/42.5/1.5), R

- 404A, R

- 407C, R

- 407F, R

- 417A, R

- 421A, R

- 421B, R

- 422A, R

- 422B, R

422C, R

- 422D, R

- 424A, R

- 426A, R

- 427A, R

- 428A, R

- 434A, R

- 437A, R

- 438A, R

- 507A, RS

- 24 (2002 formulation), RS

- 44 (2003 formulation), and SP34E in 2021
. 9a * For new cold storage warehouses , l ist unacceptable HFC

- 227ea, R

- 125/290/134a/600a (55.0/1.0/42.5/1.5), R

404A, R

- 407A, R

- 407B, R

- 410A, R

- 410B, R

- 417A, R

- 421A, R

- 421B, R

- 422A, R

- 422B, R

- 422C, R

- 422D, R

- 423A, R

424A, R

- 428A, R

- 434A, R

- 438A, R

- 507A, and RS

- 44 (2003 composition) in 2021
. 9b For new cold storage warehouses , list unacceptable HFC

- 227ea, KDD6, R

- 125/290/134a/600a (55.0/1.0/42.5/1.5), R

- 404A, R

- 407A, R

- 407B, R

- 407C, R

- 407F, R

- 410A, R

- 410B, R

- 417A, R

- 421A, R

- 421B, R

422A, R

- 422B, R

- 422C, R

- 422D, R

- 423A, R

- 424A, R

- 428A, R

- 434A, R

- 437A, R

- 438A, R

- 507A, and RS

- 44 (2003 composition) in 2021
. 10 For retrofit cold storage warehouses, list unacceptable R

- 125/290/134a/600a (55.0/1.0/42.5/1.5), R

- 404A, R

407A, R

- 407B, R

- 417A, R

- 421A, R

- 421B, R

- 422A, R

- 422B, R

- 422C, R

- 422D, R

- 423A, R

- 424A, R

- 428A, R

- 434A, R

438 A, R

- 507A, and RS

- 44 (2003 composition) in 2021
. Foam Blowing 11 a For rigid polyurethane high

- pressure two
- component spray foam , list unacceptable HFC

- 134a, HFC

- 245fa, and blends thereof; blends of HFC

- 365mfc with at least 4% HFC

- 245fa, and commercial blends of HFC

- 365mfc with 7 to 13% HFC

- 227ea and the remainder HFC

- 365mfc; and Formacel TI, in 2019 , except as allowed under a narr owed use limit for military or space

- and aeronautics

– related applications. 1 1 b * For rigid polyurethane high

- pressure two
- component spray foam , list unacceptable HFC

- 134a, HFC

- 245fa, and blends thereof; blends of HFC

- 365mfc with at least 4% HFC

- 245fa, and commercial blends of HFC

- 365mfc with 7 to 13% HFC

- 227ea and the remainder HFC

- 365mfc; and Formacel TI in 2020, except as allowed under a narrowed use limit for military or space

- and aeronautics

– related applications. 1 2 a For rigid polyurethane low

- pressure two
- component spray foam , list unacceptable HFC

- 134a, HFC

- 245fa, and blends thereof; blends of HFC

- 365mfc with at least 4% HFC

- 245fa, and commercial blends of HFC

- 365mfc with 7 to 13% HFC

- 227ea and the remainder HFC

- 365mfc; and Formacel TI in 2020 , except as allowed under a narrowed use limit for military or space

- and aeronautics

– related applications. 1 2 b * For rigid polyurethane low

- pressure two
- component spray foam , list unacceptable HFC

- 134a, HFC

- 245fa, and blends thereof; blends of HFC

- 365 mfc with at least 4% HFC

- 245fa, and commercial blends of HFC

- 365mfc with 7 to 13% HFC

- 227ea and the remainder HFC

- 365mfc; and Formacel TI in 2021 , except as allowed under a narrowed use limit for military or space

- and aeronautics

– related applications. 1 3 a For rigid polyurethane one

- component foam sealants , list unacceptable HFC

- 134a, HFC

- 245fa, and blends thereof; blends of HFC

- 365mfc with at least 4% HFC

- 245fa, and commercial blends of HFC

- 365mfc with 7 to 13% HFC

- 227ea and the remainder HFC

- 365mfc; and Formacel TI in 2019 , except as allowed under a narro wed use limit for military or space

- and aeronautics

– related applications. 1 3 b * For rigid polyurethane one

- component foam sealants , list unacceptable HFC

- 134a, HFC

- 245fa, and blends thereof; blends of HFC

- 365mfc with at least 4% HFC

- 245fa, and commercial blends of HFC

- 365mfc with 7 to 13% HFC

- 227ea and the remainder HFC

- 365mfc; and Formacel TI in 2020 , except as allowed under a narrowed use limit for military or space

- and aeronautics

– related applications. 1 4 * In flexible polyurethane foam, list methylene chloride as unacceptable 30 days after publication of a final rule.

### Economic Impact Screening Analysis 7

Opt ion Description of Re gulatory Change 1 5 * In integral skin polyurethane foam , list methylene chloride as unacceptable in 2017
. 1 6 * In polyolefin foam, list methylene chloride as unacceptable in 2020. Fire Suppression and Explosion Prevention 1 7 a * For total flooding uses, list unacceptable perfluorocarbons (C 3 F 8 and C 4 F 10 ) one year after publication of a final rule. 1 7 b For total flooding uses, list unacceptable perfluorocarbons (C 3 F 8 and C 4 F 10 ) and SF 6 one year after publication of a final rule and list HFC

- 23 as acceptable, subject to narrowed use limit s one year after publication of a final rule. 1 8 For streaming uses, list unacceptable perfluorocarbon (C 6 F 14 ) one year after publication of a final rule. * Proposed o ption included in rulemaking. 

### The remainder of this report is organized as follows:

 Chapter 2 presents the general ap proach and assumptions used to ensure consistency across the analysis, and also summarizes key assumptions made for each of the three affected industries

.  Chapters 3 , Error! Reference source not found. , and 4 identify the small entities potentially affected by he regulatory changes and then estimate the economic im pact on those affected entities for the refrigeration and air

- conditioning, foams, and fire suppression industries , respectively.
 Chapter 6 summarizes the aggregate small business impacts of the regulatory changes , along with a recommendation for certification based on a decision matrix for determining SISNOSE.

### Economic Impact Screening Analysis 8 

# 2 Summary of General Approach and Key Analytical Assumptions To ensure consistency across the analysis, standard analytical steps and approaches were followed for each of the affected industries , as detailed below

.

 Step 1: Identify the types of industries expected to be directly impacted b y the regulatory changes

- For all sectors, potentially affected industries were identified by North American Industry Classification System (NAICS) codes. Economic data about each affected industry

— including number of firms and establishments 2 

### by employment or receipts size

— was obtained from the U.S. Census Bureau’s Statistics of U.S. Businesses ( http://www.census.gov/econ/susb/ ) and includes data from the 2012 Economic Census. The economic cens us profiles U.S. national and local economies every five years, and the 20 12 data is the latest available at the time of this writing. By chang ing the listing status of certain high

- GWP alternatives used in refrigeration and air

- conditioning , foams, and fi re suppression, this rulemaking potentially directly impacts small entities associated with these changes. Other entities (e.g., refrigeration and air conditioning technicians) may experience indirect effects as a result of market changes influenced by the rule, but these are not considered in this analysis. See Cement Kiln Recycling Coalition v. EPA, 255 F.3d 855, 869 (D.C. Cir. 2001) , where the D.C. Circuit “has consistently rejected the contention that the RFA applies to small businesses indirectly affec ted by the regulation of other entities.”

 Step 2: Determine what proportion of impacted industries are small businesses

- For all industries, small businesses were identified using the U.S. Small Business Administration’s table of small business size stand ards matched to NAICS codes. The version employed for this analysis became effective February 26 , 201 6
.
 Step 3: Determine what proportion of small businesses could be directly impacted

- This determination was made on a n individual sector and end

- use basis, taking into consideration whether the HFC s affected by this rulemaking are still

— or were ever — known to be in use, and what proportion of the market the affected HFCs are expected to represent at the time that the regulations would come into effect.

 Step 4: For the purposes of quantifying compliance costs, make assumptions about the alternatives that would likely be used in place of the HFCs affected by this rulemaking
- For the purposes of quantifying compliance costs, this analysis has made some as sumptions regarding which alternatives are implemented in the transition away from the HFCs affected by this rulemaking. These assumptions are not intended to represent the range of available alternatives, or to imply that other alternatives are not availa ble. For a more complete accounting of substitutes, refer to the lists of acceptable substitutes as published under EPA’s SNAP Program ( www.epa.gov/ozone/snap/ ). For the purposes of this analysis, the assumpti on about the alternative modeled was made on an individual sector or end

- use basis, relying primarily on assumptions in EPA’s Vintaging Model (EPA 201 4 ) and lists of acceptable substitutes identified through EPA’s SNAP program .

2 The U.S. Census Bureau defines an establishment as a single physical location where business is conducted or where services or industrial operations are performed; a firm is a business organiza tion consisting of one or more domestic establishments in the same state and industry that were specified under common ownership or control. The firm and the establishment are the same for single

- establishment firms. For each multi

- establishment firm, esta blishments in the same industry within a state are counted as one firm , and the firm employment and annual payroll are summed from the associated establishments.

### Economic Impact Screening Analysis 9



###  Step 5: Quantify the economic impact on small businesses

- This analysis uses the direct compliance cost method to quantify impacts. Direct compliance costs include capital, operating, maintenance, and other direct compliance costs associated with switching to alternatives as a result of the regulatory changes. These costs were annualized to calculate a metric that can be compared with annual sales in the next step of the analysis. Consistent with EPA’s Guidelines for Preparing Economic Analysis (2010), capital costs were annu alized over the expected lifetime of the capital equipment using the opportunity cost of capital (discount rate). This screening analysis uses a 3 percent and 7 percent discount rate, in line with OMB Circular A

- 94, which provides guidelines for discount r ates in benefit

- cost analyses of federal programs. Where applicable, annual non

- capital compliance costs

— such as ongoing operating and maintenance costs

— are added to the annualized capital costs to yield a total annualized cost of compliance. All costs and savings values are expressed in constant year 201 5 U.S. dollars, adjusted using the implicit GDP price deflator published by the U.S. Bureau of Economic Analysis. When available and appropriate, cost assumptions identified in EPA’s report on Global Mitiga tion of Non

- CO 2 

### Greenhouse Gases: 2010

- 2030 (EPA 2013) and information from industry were employed. For sub

- sectors for which these cost data were not estimated, other available sources were sought, as described in the individual sector chapters. It should be noted that all cost information reflects the current cost of compliance, and thus likely represents a higher

- end estimate of the cost of compliance in the years in which the regulatory changes would become effective. For example, the price of alternati ve refrigerants and blowing agents would likely be expected to decrease over time.

 Step 6: Perform the sales test

- For this analysis, the “sales test” was applied, which calculates annualized compliance costs as a percentage of annual sales. For industrie s for which annual sales data was not available through the Economic Census, annual receipts or annual value of shipments 3 

### was utilized as a reasonable proxy. For the purposes of the sales test, annualized compliance costs were calculated using a 7% discou nt rate. Applying this sales test resulted in several possible outcomes apart from a positive percentage (such as 1% or 3%). In some cases, no small entities would be expected to be impacted by the rulemaking in a given NAICS code. In other cases, the annu alized cost of compliance was expected to be zero because the cost of using alternative refrigerants or blowing agents was negligible (i.e. zero dollars). In these instances, the result is shown as 0%. Chapters 3, 4, and 5 that follow further describe the specific data and assumptions that enable the estimation of the economic impact on small businesses in the industries potentially affected by this rulemaking. Table 2 summarizes some of these key assumptions by industry and end

- use — including which affected chemicals are currently assumed to be in use in each end

- use , and to which alternatives each end

- use is assumed to transition
— for the pu rposes of estimating costs

. Table 2 also summarizes the types of entities expected to be directly impacted

.

3 Total value of shipments includes the received or receivable net selling values of all produ cts shipped (exclusive of freight and taxes).

### Economic Impact Screening Analysis 10



### Table 2 : Assumptions Concerning Affected Chemicals in Use, Alternatives Modeled, and Types of Entities Affected
Sector Opt. End Use Affected Chemical(s) Assumed to Currently be in Use Alternatives Modeled

for the Cost Analysis a Types of Entities Directly Affected

Refrigeration and Air

Conditioning 1 Centrifugal Chillers New HFC

- 134a , HFC

- 245fa R

- 450A, R

- 513A , R

1233zd(E) System manufacturers 2 Retrofit None None None 3 Positive Displacement Chillers New R

- 410A, R

- 407C, HFC

- 134a R

- 450A , R

- 513A System manufacturers 4 Retrofit None None None 5 Retail Food Refrigeration (refrigerated food processing and dispensing equipment) New R

- 404A R

- 450A System manufacturers 6 Retrofit None None None 7a Household Refrigerators and Freezers New HFC

- 134a R

- 450A, R

- 513A System manufacturers 7b H ydrocarbons (HCs) 7c 8 Retrofit None None None 9a Cold Storage Warehouses New R

- 404A , R

- 507A R

- 407F System manufacturers 9b R

- 404A, R

- 507A Ammonia 10 Retrofit R

- 404A, R

- 507A R

- 407F End

- users

Foam 1 1 a R igid PU: high

- pressure two
- component spray foam HFC

- 245fa Hydrofluoroolefin ( HFO )

- 1233zd(E) Foam manufacturers 1 1 b 1 2 a R igid PU: low

- pressure two
- component spray foam HFC

- 134a, HFC

- 245fa HFO

- 1234ze Foam manufacturers 1 2 b 1 3 a R igid PU : one - component foam sealants HFC

- 134a HFO

- 1234ze Foam manufacturers 1 3 b 1 4 Flexible PU None None None 1 5 Integral Skin PU None None None 1 6 P olyolefin F oam None None None Fire Suppression and Explosion Prevention 1 7 a Total Flooding None None None

1 7 b None None 1 8 Streaming None None None
a As noted previously, for the purposes of quantifying compliance costs, this analysis has made some assumptions regarding which alternatives to model in the transition away from the affected HFCs. These assumptions are not intended to represent the entirety of available alternatives, or to imply that other alternatives are not available. For a fuller accounting of substitutes, please refer to the lists of acceptable substitutes as pub lished under EPA’s SNAP Program ( www.epa.gov/ozone/snap/ ).

### Economic Impact Screening Analysis 11 

# 3 Refrigeration and Air Conditioning 3.1 Chillers (centrifugal and positive displacement) The proposed regulatory changes are expected to affect the chillers end

- use, including centrifugal and positive displacement chillers

. Specifically, the regulatory options applicable to the chillers end

- use that were assessed includ e the following:

 Regulatory Option 1: For new centrifugal chillers , list unacceptable FOR12A, FOR12B, HFC

- 134a, HFC

227ea, HFC

- 236fa, HFC

- 245fa, R

- 125/134a/600a (28.1/70/1.9), R

- 125/290/134a/600a (55.0/1.0/42.5/1.5), R

- 404A, R

- 407C, R

- 410A, R

- 410B, R

- 417A, R

- 421A, R

- 422B, R

- 422C, R

- 422D, R

- 423A, R

- 424A, R

- 434A, R

438A, R

- 507A, RS

- 44 (2003 composition), and THR

- 03 in 202 4
.  Regulatory Option 2: For retrofit centrifugal chillers , list unacceptable FOR12A, FOR12B, HFC

- 134a, HFC

236fa, HFC

- 245fa, R

- 125/134a/600a (28.1/70/1.9), R

- 125/290/134a/600a (55.0/1.0/42.5/1.5), R

- 404A, R

407C, R

- 417A, R

- 417C, R

- 421A, R

- 422B, R

- 422C, R

- 422D, R

- 423A, R

- 424A, R

- 434A, R

- 438A, R

- 507A, RS

- 44 (2003 composition), and THR

- 03 in 202 4
.  Regulatory Option 3: For new positive displacement chillers , list unacceptable FOR12A, FOR12B, HFC

134a, HFC

- 227ea, KDD6, R

- 125/134a/600a (28.1/70/1.9), R

- 125/290/134a/600a (55.0/1.0/42.5/1.5), R

404A, R

- 407C, R

- 410A, R

- 410B, R

- 417A, R

- 421A, R

- 422B, R

- 422C, R

- 422D, R

- 424A, R

- 434A, R

- 437A, R

- 438A, R

- 507A, RS

- 44 (2003 composition), SP34E, and THR

- 03 in 202 4
.  Regulatory O ption 4: For retrofit positive displacement chillers , list unacceptable FOR12A, FOR12B, HFC

134a, KDD6, R

- 125/134a/600a (28.1/70/1.9), R

- 125/290/134a/600a (55.0/1.0/42.5/1.5), R

- 404A, R

- 407C, R

- 417A, R

- 417C, R

- 421A, R

- 422B, R

- 422C, R

- 422D, R

- 424A, R

- 427A, R

- 434A, R

- 437A, R

- 438A, R

- 507A, RS

- 44 (2003 composition), SP34E, and THR

- 03 in 202 4
. 

### 3.1.1 Small Entities Potentially Subject to the Rulemaking Chillers are used to regulate temperature and humidity in office buildings, hotels, hospitals, shopping centers, and other commercial buildings . Vapor

- compression chillers, which have historically used ozone depleting substances (ODS) as their refrigerant , are designed with an electric motor that runs a compressor and are further classified by the type of compression sys tem used : centrifugal or positive displacement

. C entrifugal compressors have a typical cooling capacity between 750 and 10,000 kW , compared to positive displacement compressors which can serve between 50 and 750 kW (UNEP 2015b). Centrifugal chillers, therefore, have larger charge sizes than positive displacement chillers and are typically employed in larger buildings. The economic impact of complying with the proposed regulatory changes that impact new centrifugal and positive displacement chillers is expected to be incurred by manufacturers of new centrifugal and positive displacement chillers, including manufacturers of fully assembled chillers and manufacturers of chiller components (i.e., compressors or chiller shells). With regard to retrofitting, centrifugal and positive displacement chillers containing hydrochlorofluorocarbon ( HCFC )

- 22 and HCFC

- 123 are expected to be in operation in 202 4 ( based on EPA’s Vintaging Model) and would be available for retrofitting; however, refrigerant substitutions in chillers are uncommon (UNEP 2010). As a result, retrofits are not assumed to occur, even in the absence of the proposed regulatory changes, and no end

- users of chillers are identified as being affected.

### Economic Impact Screening Analysis 12



### The Departmen t of Energy (DOE) identified domestic water

- and evaporatively

- cooled air conditioner manufacturers in a technical support document for a final rule on Commercial, Air Conditioning, and Water Heating Equipment ( DOE 2011) , including s ix centrifugal and posi tive displacement chiller manufacturers. 4 

### In addition to the DOE technical support document, three additional U.S. manufacturers of centrifugal and positive displacement chillers were identified through an online search. 5 

### In total, it is estimated that the re are nine manufacturers of centrifugal and positive displacement chillers in the United States. However, none of these manufacturers are small businesses, according to the metric used for this industry. Centrifugal and positive displacement chiller manu facturers are matched to NAICS code 333415, a ir

- c onditioning and w arm a ir h eating e quipment and c ommercial and i ndustrial r efrigeration e quipment m anufacturing

. The small business threshold for this industry is defined as firms with 1,250 employees or fewer. Based on a review of U.S. Securities and Exchange Commission Form 10

- K submissions, 2014 Company Annual Reports, and company websites for the nine identified centrifugal and positive displacement chiller manufacturers, eight of the nine manufacturers were found to exceed the small business threshold of 1,250 employees ( Aaon 2015, Danfoss 2015, Emerson Electric 2015, Engineered Air 2015, Ingersoll Rand 2015, Johnson Controls 2015, Lennox International 2015, and United Technologies 2015) w hile one manufacturer is considered to be a small business (MFRI 2015). Error! Not a valid bookmark self
- reference. below summarizes the estimated number of small businesses expected to be directly affected by the four proposed regula tory options
. Table 3 : Estimated Number of Chiller Equipment Manufacturing Small Businesses Affected NAICS Code Industry Name Estimated Number of Small Businesses Affected a Option 1 Option 2 Option 3 Option 4
333415 Air

- c onditioning and w arm a ir h eating e quipment

and c ommercial and i ndustrial r efrigeration e quipment m anufacturing 1 b 0 1 b 0

a The total number of firms in this industry is 729 , of which 700 are assumed to be small businesses (U.S. Census Bureau 2012)
. b The same small business is affected by both regulatory option 1 and option 3. 

### 3.1.2 Estimated Economic Impact on Affected Small Entities This analysis assumes that positive displacement manufacturers and centrifugal chiller manufacturers will use R

450A or R

- 513A in place of R

- 410A/R

- 407C and HFC

- 134a , respectively

. In addition, it is assumed that centrifugal manufacturers that manufacture low

- pressure centrifugal chillers will transition to SolsticeTM

- 1233zd(E). R

- 450A and R

- 513A are considered a near drop

- in repla cement for HFC

- 134a chillers and thus do not require any significant changes to the chiller equipment (Honeywell 2015; DuPont 2014). Therefore, it is assumed that manufacturers will not incur any one

- time capital costs associated with using R

- 450A or R

- 513 A in place of HFC

134a in new centrifugal chillers or R

- 407C and R

- 410A in new positive displacement chillers. For manufacturers of low

- pressure centrifugal chillers that transition to SolsticeTM

- 1233zd(E), it is assumed that manufacturers would incur a one

- time capital cost of approximately $51,000 to convert the production line, including

4 DOE identified the following eight manufacturers of water
- and evaporatively

- cooled air conditioners: Aaon, Inc., Allied Thermal Systems, Carrier Corp. (United Technologies Corporation), Lennox International, Inc., Engineered Air, Thermoplus Air, Inc., Trane Inc. (Ingersoll Rand), and York International Corp. (Johnson Controls, Inc.). Six of these manufacturers (excluding Allied Thermal Systems and ThermoPlus Air) manufacture centrifugal and positive displacem ent chillers. 5 The online search identified the following three additional manufacturers of centrifugal and positive displacement chillers: Danfoss, Emerson Electric, and Thermal Care (MRFI, Inc.).

### Economic Impact Screening Analysis 13



### purchasing a new refrigerant system and charging equipment (UNEP 2012). Current refrigerants used in low

pressure centrifugal chillers include HCFC

- 123 and HFC

- 245fa ; use of HCFC

- 123 in new chiller equipment will be prohibited beginning in 2020

. Annual costs incurred by manufacturers of chillers are calculated based on the higher cost of R

- 450A, R

- 513A, and SolsticeTM

- 1233zd(E) relative to the cost of HFC

- 134a, R

- 407C, R

- 41 0A, and HFC

- 245fa. Specifically, ICF estimates that R

- 450A and R

- 513A cost roughly $ 5

- $ 6 more per kilogram than HFC

- 134a and $ 4

- $ 5 more per kilogram than R

- 407C and R

- 410A, and SolsticeTM

- 1233zd(E) costs approximately $11

- $ 12 more per kilogram than HFC

- 245f a. In the absence of this proposed rulemaking, by 202 4 it is assumed that 10% of new positive displacement and centrifugal chillers will have already transitioned away from HFCs. This assumption is based on the current commercial availability of R

- 513A a nd SolsticeTM

- 1233zd(E) chillers as well as commitments from chiller manufacturers to introduce low

- GWP refrigerants in their product lines (White House 2015). Based on this and 202 4 sales of centrifugal chillers and positive displacement chillers estimated by EPA’s Vintaging Model (EPA 2014), i t is assumed that the small business manufacturer affected by the proposed r egualtory changes will sell roughly 54 5 centrifugal chillers and 2,681 positive displacement chillers on average in 202 4
. It is additionally assumed that a pproximately 41% of the centrifugal chillers will transition to SolsticeTM

- 1233zd(E) and 59% will transition to R

- 450A or R

- 513A. EPA’s Vintaging Model assumes an average charge size of 708 kg for centrifugal chillers and 28 3 kg for positive displacement chillers, yielding incremental costs of $ 3 , 500 to $ 4,200 for centrifugal chillers and $ 1,100

- $ 1,400 for positive displacement chillers using R

- 450A or R

- 513A, and $7,800 to $ 8,500 for centrifugal chillers using SolsticeTM

- 1233 zd(E), associated with charging the systems. 6 

### As a result, it is estimated that the small businesses manufacturer of centrifugal chillers and positive displacement chillers could incur an annual cost of roughly $ 2
. 9 million to $ 3
. 3 million and roughly $ 3
. 0 million to $ 3 .8 million associated with manufacturing centrifugal chillers and positive displacement chillers , respectively, as a result of the proposed regulatory changes. 7 

### Table 4 below presents the estimated economic impact of th e proposed regulat ory changes on small businesses in the chiller end

- uses. Table 4 : Estimated Economic Impact on Small Entities in the Chiller End - Use (Sales Test)
NAICS Code Industry Name Annual ized Compliance Cost as a Percentage of Average Annual Sales per Manufacturer Option 1 Option 2 Option 3 Option 4
333415 Air

- c onditioning and w arm a ir h eating e quipment

and c ommercial and i ndustrial r efrigeration e quipment m anufacturing 0. 7 %
– 0. 8 % 0 % 0
. 7 %
– 0. 9 % 0%

6 Chiller compressors can be charged at the manufacturing facility, shipped partially charged and filled on

- site, or shipped dry and filled on site depending on the size and installation location of the system. For the purposes of this analysis, it i s assum ed that all charging costs will be incurred by the manufacturer, although it is likely that some of these costs would be passed on to the end

- user. 7 Costs are annualized assuming a 25 year lifetime. See Appendix A for the results of a sensitivity analysi s associated with this assumption.

### Economic Impact Screening Analysis 14 

## 3.2 Retail Food Refrigeration ( F ood P rocessing and D ispensing E quipment) The proposed regulatory changes are expected to affect the retail food refrigeration end

- use , including refrigerated food processing and dispensing equipment. Specifically, the regulatory options applicable to this end

- use that were assessed include the following:

 Regulatory Option 5: For new retail food refrigeration (refrigerated food processing and dispensing equipment) , l ist unacceptable HFC

- 227ea, KDD6, R

- 125/290/134a/600a (55.0/1.0/42.5/1.5), R

- 404A, R

407A, R

- 407B, R

- 407C, R

- 407F, R

- 410A, R

- 410B, R

- 417A, R

- 421A, R

- 421B, R

- 422A, R

- 422B, R

- 422C, R

- 422D, R

- 424A, R

- 428A, R

- 434A, R

- 437A, R

- 438A, R

- 507A, and RS

- 44 (2003 formulati on) in 2021
.  Regulatory Option 6: For retrofit retail food refrigeration (refrigerated food processing and dispensing equipment) , l ist unacceptable R

- 404A and R

- 507A one year after publication of a final rule

. 

### 3.2.1 Small Entities Potentially Subject to the Rule making Refrigerated food processing and dispensing equipment

— including ice cream machines, “slushy” iced beverage dispensers, and refrigerated beverage dispensers

— are self

- contained units that cool and dispense food and beverages via a nozzle. They are typ ically found in small retail food facilities, including convenience stores, restaurants, cafeterias, hotels, schools, hospitals, and snack and beverage bars. Currently, e quipment used for medium temperature applications (i.e., refrigerated beverage dispens ers) use HFC

- 134a while equipment used for low temperature applications (i.e., frozen beverage dispensers and ice cream machines) use R

- 404A. Since HFC

- 134a may continue to be used in new equipment under the proposed regulatory changes , only m anufacturers of new low temperature refrigerated food processing and dispensing equipment are expected to be affected by the proposed regulatory changes. It is also assumed that end

- users of this equipment do not and would not retrofit their equipment, even in the abs ence of the rulemaking , due to the high costs of retrofitting equipment relative to the cost of purchasing a new unit . As a result, only manufacturers (and no end

- users) of this equipment are identified as being affected by the proposed regulatory changes. Manufacturers of refrigerated food processing and dispensing equipment were identified through a n internet search. In total, 1 6 U.S. manufacturers of refrigerated food processing and dispensing equipment were identified. 8 

### Since this list may not be exhaustive, it is conservatively assumed that there are 2 0 manufacturers of refrigerated food processing and dispensing equipment in the United States. Manufacturers of refrigerated food processing and dispensing equipment are matched to NAICS code 3334 15, air

‐ conditioning and warm air heating equipment and commercial and industrial refrigeration equipment manufacturing . The small business threshold for this industry is defined as an enterprise with 1,2 50 employees or fewer. Based on this, roughly 96 % o f firms in this industry are categorized as a small business. 9 

### By applying this percentage to the estimated

8 Manufacturers include Alpine Freezer , Avantco Equipment , Bunn , Central Exclusive , Cornelius , Electro Freeze , Elmeco , Emery Thompson Machine & Supply Co. , Eurodib , Grindmaster Cecilware , MegaLane , Omega , SaniServ , Spacem an , Stoelting , and Taylor Company

. 9 The Census Statistics of U.S. Businesses data does not disaggregate the number of firms with an employment size above 500 employees . Since it is not possible to know how many firms with >500 employees fall within t he small business threshold (i.e., have <1,250 employees), for the purposes of this analysis, 50% of firms with >500 employees are assumed to be small businesses.

### Economic Impact Screening Analysis 15



### number of refrigerated food processing and dispensing equipment manufacturers, it is estimated that there are 19 small business manufacturers of refrigerated food processing and dispensing equipment in the United States

. While it is possible that some manufacturers only produce medium temperature equipment, it is conservatively assumed that all 19 small business manufacturers of refrigerated food processing and dispensing equipment produce low temperature equipment, and therefore could be affected by the proposed regulatory changes , as summarized below in Table 5
. Table 5 : Estimated Number of R efrigerated F ood P rocessing and D ispensing E quipment Manufacturing Small Businesses Affected
NAICS Code Industry Name Estimated Number of Small Businesses Affected a Option 5 Option 6 333415 Air

- c onditioning and w arm a ir h eating e quipment and c ommercial and

i ndustrial r efrigeration e quipment m anufacturing 19 0

a The total number of firms in this industry is 729 , of which 700 are assumed to be small businesses (U.S. Census Bureau 2012)
. 

### 3.2.2 Estimated Economic Impact on Affected Small Entities For the proposed regulatory changes that affect refrigerated food processing and dispensing equipment, the potential economic impact on small businesses was calculated based on the assumption that all ma nufacturers of refrigerated food processing and dispensing equipment would continue to use HFC

- 134a in medium temperature applications , and would use R

- 450A in low temperature applications in place of R

- 404A
. R

- 450A was approved for use in new refrigerated food processing and dispensing equipment under EPA’s SNAP Program in 2014. M inimal changes to manufacturing processes and infrastructure are assumed to be required to use R

4 50 A in place of R

- 404A in new low

- temperature equipment, resulting in negligible associated upfront costs

. 10 

### Annual costs incurred by manufacturers of refrigerated food processing and dispensing equipment are calculated based on the higher cost of R

- 450A relative to the cost of R

- 404A. Assuming that refrigerated food processing and dis pensing equipment contains 1 kg of R

- 404A, it is conservatively estimated that manufacturers will incur an incremental cost of $ 4

- 5 for each piece of equipment they produce ( UNEP 2012; Alpine Freezer 2015)

. With units estimated to sell for $ 10 ,000 a piece on average — based on the fact that th is equipment range s in price from roughly $1,000 to $20,000 (W ebstaurant S tore 2015a; W ebstaurant S tore 2015b; Central Restaurant Products 2015)

— small business manufacturers are estimated to incur on average an a nnual incremental cost of roughly $ 200

- $ 200 ,000, depending on the size of the firm

. 11 , 12

10 R

- 450A is used as a proxy R

- 404A drop

- in replacement refrigerant in this analysis. It is as sumed that by 2021, a similar HFC/HFO refrigerant blend that is a drop

- in replacement for R

- 404A will be available for use in low

- temperature refrigerated food processing and dispensing equipment (Honeywell 2015) . It is further assumed that refrigerant co sts will be similar to that identified for R

- 450A. 11 To estimate the total incremental cost per company, NAICS data was used to calculate the average value of shipments per firm for each small business establishment size (e.g., 0

- 4 employees, 5

- 9 employees , 10

- 19 employees, etc.). This information was then used to estimate the number of units sold by each firm on average by firm size. 12 For the purposes of this analysis, it is assumed that all refrigerant costs will be incurred by the manufacturer, althoug h it is possible that some of these costs would be passed on to the end

- user.

### Economic Impact Screening Analysis 16



### For manufacturers of refrigerated food processing and dispensing equipment affected by the proposed regulatory changes, average annual sales per firm were calculated by dividing total value of receipts (as a proxy for sales) by the number of firms for each small business establishment size (e.g., 0

- 4 employees, 5

- 9 employees, 10

- 19 employees, etc.). Because average annual sales were calculated by establishment size, a ra nge is provided for annual compliance costs as a percentage of annual sales. Table 6 below presents the es timated economic impact of the proposed regulatory changes on small businesses in the retail food refrigeration end

- use. Table 6 : Estimated Econom ic Impact on Small Entities in the Retail Food Refrigeration End - Use (Sales Test)
NAICS Code Industry Name Annual ized Compliance Cost as a Percentage of Average Annual Sales per Firm Option 5 Option 6
333415 Air

- c onditioning and w arm a ir h eating e quipment and

c ommercial and i ndustrial r efrigeration e quipment m anufacturing < 0. 1 % 0% 

## 3.3 Household Refrigerators and Freezers The regulatory changes are expected to affect the household refrigeration end

- use. Specifically, the regulatory option applicable to the household refrigeration end

- use that were assessed include the following:

 Regulatory option 7a: For new household refrigerators and freezers , list unacceptable FOR12A, FOR12B, HFC

- 134a, KDD6, R

- 125/290/134a/600a (55.0/1.0/42.5/1.5), R

- 404 A, R

- 407C, R

- 407F, R

- 410A, R

- 410B, R

417A, R

- 421A, R

- 421B, R

- 422A, R

- 422B, R

- 422C, R

- 422D, R

- 424A, R

- 426A, R

- 428A, R

- 434A, R

- 437A, R

- 438A, R

- 507A, RS

- 24 (2002 formulation), RS

- 44 (2003 formulation), SP34E, and THR

- 03 in 2021
.  Regulatory option 7 b : For new household refrigerators and freezers , list unacceptable FOR12A, FOR12B, HFC

- 134a, KDD6, R

- 125/290/134a/600a (55.0/1.0/42.5/1.5), R

- 404A, R

- 407C, R

- 407F, R

- 410A, R

- 410B, R

417A, R

- 421A, R

- 421B, R

- 422A, R

- 422B, R

- 422C, R

- 422D, R

- 424A, R

- 426A, R

- 428A, R

- 434A, R

- 437A, R

- 450A, R

- 438A, R

- 507A, R

- 513A, RS

- 24 (2002 formulation), RS

- 44 (2003 formulation), SP34E, and THR

- 03 in 2021
.  Regulatory option 7 c : For new household refrigerators and freezers , list unacceptable FOR12A, FOR12B, HFC

- 134a, KDD6, R

- 125/290/134a/600 a (55.0/1.0/42.5/1.5), R

- 404A, R

- 407C, R

- 407F, R

- 410A, R

- 410B, R

417A, R

- 421A, R

- 421B, R

- 422A, R

- 422B, R

- 422C, R

- 422D, R

- 424A, R

- 426A, R

- 428A, R

- 434A, R

- 437A, R

- 438A, R

- 450A, R

- 507A, R

- 513A, RS

- 24 (2002 formulation), RS

- 44 (2003 formulation), SP34E, and TH R

- 03 in 2025
.  Regulatory option 8: For retrofit household refrigerators and freezers , list unacceptable FOR12A, FOR12B, HFC

- 134a, KDD6, R

- 125/290/134a/600a (55.0/1.0/42.5/1.5), R

- 404A, R

- 407C, R

- 407F, R

- 417A, R

- 421A, R

421B, R

- 422A, R

- 422B, R

- 422C, R

- 422D, R

- 424A, R

- 426A, R

- 427A, R

- 428A, R

- 434A, R

- 437A, R

- 438A, R

- 507A, RS

- 24 (2002 formulation), RS

- 44 (2003 formulation), and SP34E in 2021
. 

### 3.3.1 Small Entities Potentially Subject to the Rulemaking Household refrigeration, including household refrigerators and free zers, is primarily intended for residential use, but can also be found outside a home, for example, in an office building break room. There are three main product categories of household refrigeration: refrigerators, freezers, and refrigerator

- freezers. As the equipment design in all of these applications is very similar, this analysis does not distinguish between the main product categories of household refrigeration.

### Economic Impact Screening Analysis 17



### The economic impact of complying with the proposed regulatory changes that impact new ho usehold refrigeration equipment is expected to be incurred by manufacturers of new household refrigerators, freezers, and refrigerator

- freezers

. However , it is assume d that end

- users do not and would not retrofit this equipment, even in the absence of the rulemaking, due to the high costs of retrofitting equipment relative to the cost of purchasing a new unit. As a result, only manufacturers (and no end

- users) of household refrigeration equipment are identified as being affected by this regulation. Manufacturers of household refrigeration equipment are matched to NAICS code 33 5222 , household refrigerator and home freezer manufacturing

. Within this NAICS code, there are 23 manufacturers of househol d refrigeration equipment (U.S. Census Bureau 20 12 ). Of those, 20 are classified as small businesses based on the size threshold for this industry ( i.e., firms with 1, 250 employees or fewer )

. 13 

### Table 7 below summarizes the estimated nu mber of small businesses expected to be directly affected by the proposed regulatory changes applicable to household refrigeration equipment . As previously noted, no end

- users of household refrigeration units are expected to be affected by this regulation. Table 7 : Estimated Number of Household Refrigeration Equipment Manufacturing Small Businesses Affected NAICS Code Industry Name Estimated Number of Small Businesses Affected a Option 7a Option 7 b Option 7 c Option 8 335222 Household refrigerator and home

freezer manufacturing 20 20 20 0

a The total number of firms in this industry is 23 , of which 20 are assumed to be small businesses (U.S. Census Bureau 2012 )
. 

### 3.3.2 Estimated Economic Impact on Affected Small Entities The potential economic impact on small businesses to comply with regulatory option 7a was calculated based on the assumption that household refrigeration manufacturers would use R

- 450A or R

- 513A in place of HFC

- 134a in new equipment . For regulatory options 7b and 7c, t he potential economic impact was calculated based on the assumption that manufacturers would use R

- 600a (isobutane) in place of HFC

- 134a in new equipment . The e conomic impact of each regulatory option is discussed further below. 3.3.2.1 Regulatory Options 7a R

- 450A and R

- 513A , which are considered near drop

- in replacement s for HFC

- 134a (Honeywell 2015; DuPont 2014), were SNAP

- approved in 2014 and 2015, respectively, for use in new and retrofitted household refrigerators. Given that no significant changes to the equipment are required, it is assumed that manufacturers will not incur any one

- time capital costs associated with using R

- 450A or R

- 513A in place of HFC

- 134a
. Annual costs incurred by manufacturers of household refrigerators and freezers are calculated based on the higher cost of R

- 450A and R

- 513A relative to the cost of HFC

- 134a. Specifically, ICF estimates that R

- 450A and R

513A cost roughly $ 5

- $ 6 more per kilogram than HFC

- 134a. Assuming an average charge size of 0.16 kg (EPA

13 The Census Statistics of U.S. Businesses data does not disaggregate the number of firms with an employment size above 500 employees . Since it is not possible to know how many firms with >500 employees fall within the small business threshold (i.e., have <1,250 employees), for the purposes of this analysis, 50% of firms with >500 employees are assumed to be small businesses.

### Economic Impact Screening Analysis 18



### 2014), it is estimated that each manufacturer of household refrigerators and freezers could incur an annual cost of roughly $ 1,400 to $ 1
. 7 million , depending on the size of the firm

. 14 , 15 

### 3.3.2.2 Regulatory Options 7b and 7c R

- 600a was SNAP

- approved in 2011 for use in household refriger ation subject to use conditions. Due to the ir flammability , hydrocarbons (Safety Group A3, higher flammability) may only be used in new household refrigerators and freezers that are specifically designed for and clearly identified to contain these refrigerants (UNEP 2015a ; EPA 2015 ). For manufacturers of househol d refrigeration equipment it is assumed that there is a one - time investment of $150,000 to $500,000 associated with using R

- 600a in place of HFC

- 134a refrigerant. This estimate is based on industry input, which assumes the need for manufacturers to (a) pur chase new charging equipment, (b) test and certify their equipment to UL standards, and (c) convert their facility to accommodate a flammable refrigerant, if applicable (e.g., installing sensors and storage capacity). The incremental capital cost is annual ized over a 20 year lifetime of the facility. 16 

### N o annual incremental costs are assumed given that hydrocarbon refrigerants cost significantly less than HFC

- 134a ( EPA 2013). The economic impact per firm was calculated by dividing estimated receipts (as a proxy for sales) by the number of firms for each small business establishment size (e.g., 0

- 4 employees, 5

- 9 employees, 10

- 19 employees, etc.). Because a range of costs was used in the calculations, a range is provided for annual compliance cost as a perce ntage of average annual sales per manufacturer. In general, annual compliance costs represent a higher percentage of annual sales for smaller establishments. Table 8 below presents the estimated economic impact of the proposed regulat ory changes on small businesses in the household refrigeration sector
. Table 8 : Estimated Economic Impact on Small Entities in the Household Refrigeration Sector (Sales Test) NAICS Code Industry Name Annual ized Compliance Cost as a Percentage of Average Annual Sales per Firm Option 7a Option 7 b Option 7 c Option 8 335222 Household refrigerator and home

freezer manufacturing 0. 3 %
– 0. 3 % <0. 1 %
– 8.6 % <0. 1 %
– 8.6% 0% 

## 3.4 Cold Storage Warehouses The regulatory options considered are expected to affect the cold storage warehouse end

- use, including manufacturers of cold storage refrigeration systems and warehouse operators. Specifically, the regulatory options applicable to this end

- use that were as sessed including the following:

 Regulatory Option 9a: For new cold storage warehouses, list unacceptable HFC

- 227ea, R

125/290/134a/600a (55.0/1.0/42.5/1.5), R

- 404A, R

- 407A, R

- 407B, R

- 410A, R

- 410B, R

- 417A, R

- 421A, R

421B, R

- 422A, R

- 422B, R

- 422C, R

- 422D, R

- 4 23A, R

- 424A, R

- 428A, R

- 434A, R

- 438A, R

- 507A, and RS

- 44 (2003 composition) in 2021.

14 Annual costs are based on estimated 2021 sales of household refrigerators and freezers (approximately 11 million units) using EPA’s Vintaging Model (EPA 2014). This analysis assumes that refrigerator sales are proportionally distributed among manufacturer s based on average sales across each establishment size category. 15 For the purposes of this analysis, it is assumed that all refrigerant costs will be incurred by the manufacturer, although it is possible that some of these costs would be passed on to th e end

- user. 16 See Appendix A for the results of a sensitivity analysis associated with this assumption.

### Economic Impact Screening Analysis 19



###  Regulatory Option 9b: For new cold storage warehouses, list unacceptable HFC

- 227ea, R

125/290/134a/600a (55.0/1.0/42.5/1.5), R

- 404A, R

- 407B, R

- 410B, R

- 417A, R

- 421A, R

- 421B, R

- 422A, R

422B, R

- 422C, R

- 422D, R

- 423A, R

- 424A, R

- 428A, R

- 434A, R

- 438A, R

- 507A, and RS

- 44 (2003 composition) for new cold storage warehouses in 2021.

 Regulatory Option 10: For retrofit cold storage warehouses, list unacceptable R

- 125/290/134a/600a (55.0/1. 0/42.5/1.5), R

- 404A, R

- 407A, R

- 407B, R

- 417A, R

- 421A, R

- 421B, R

- 422A, R

- 422B, R

- 422C, R

- 422D, R

423A, R

- 424A, R

- 428A, R

- 434A, R

- 438A, R

- 507A, and RS

- 44 (2003 composition) in 2021
. 

### 3.4.1 Small Entities Potentially Subject to the Rulemaking The cold storage warehouse industry is comprised of refrigeration system manufacturers and c old storage warehouse operators . Cold storage refrigeration system manufacturers are expected to be impacted by the proposed regulatory changes affecting new systems. Cold storage w arehouse operators are expected to be impacted by the proposed regulatory changes affecting system retrofits. Thirty

- five cold storage refrigeration system manufacturers were identified through an internet search, including review of the Global Cold Chain Alliance directory (GCCA 2013). Since this list is not assumed to be exhaustive, it is conservatively assumed that there are 40 manufacturers of cold storage refrigeration systems in the United States. Manufacturers of cold storage refrigeration systems ar e matched to NAICS code 333415, Air

- Conditioning and Warm Air Heating Equipment and Commercial and Industrial Refrigeration Equipment Manufacturing

. The small business threshold for this industry is defined as a firm with less than 1,250 employees and , rou ghly 96 % of establishments in this industry are categorized as a small business. 17 

### By applying this percentage to the estimated number of cold storage refrigeration system manufacturers, it is estimated that there are 38 small business manufacturers of co ld storage refrigeration system in the United States. It is estimated that 90 percent of the cold storage industry currently uses ammonia in their refrigeration systems (Accelerate America 2015) . Ammonia is most commonly used in large central systems that are typically found in warehouses greater than 200,000 square feet (EPA 2013). The remaining 10 percent of the market is assumed to use fluorinated refrigerants

— historically chlorofluorocarbon ( CFC )

- 12, R

- 502, and HCFC

- 22, with R

- 404A and R

507A being use d in new equipment entering the market today (EPA 2014). T he portion of the cold storage market that uses fluorinated refrigerants is assumed to use mostly packaged systems (i.e., self

- contained systems that combine an evaporator, compressor, and condenser in one frame ). Packaged systems are factory

built and commonly installed on the roof of small refrigerated warehouses with capacities ranging from 20 kW to 750 kW (Cole 2004; Emerson Climate 2014). Based on the current refrigerant use of the industry, it is assumed that 10 percent of the small business cold storage refrigeration system manufacturers, or four small businesses, produce packaged systems with fluorinated refrigerants and therefore would be affected by the proposed regulatory changes.

17 The Census Statistics of U.S. Businesses data does not disaggregate the number of firms with an employment size above 500 employees . Since it is not possible to know how many firms with >500 employees fall within the small business threshold (i.e., have <1,250 employees), for the purposes of this analysis, 50% of firms with >500 employees are assumed to be small businesses.

### Economic Impact Screening Analysis 20



### Operators of cold storage warehouses are matched to NAICS code 493120, Refrigerated warehousing and storage as well as select NAICS codes under sector 424, Merchant Wholesalers, Nondurable Goods and sector 311, Food Manufacturing. Table 9 below presents the industries that are expected to be affected (by NAICS code), the total number of firms represented by each industry, the small business threshold for each industry, and the resulting number of small businesses. Table 9 : NAICS Codes for Affected Cold Storage Industries
NAICS Code Industry Name Total Number of Firms Small Business

Threshold Total Number

of Small Businesses in Each Industry 311411 Frozen Fruit, Juice and Vegetable Manufacturing 148 1,0 00 employees 1 37* 311412 Frozen Specialty Food Manufacturing 389 1,25 0 employees 3 68* 311511 Fluid Milk Manufacturing 246 1,0 00 employees 2 23* 311512 Creamery Butter Manufacturing 30 7 50 employees 2 7* 311513 Cheese Manufacturing 390 1,2 50 employees 3 76* 311514 Dry, Condensed, and Evaporated Dairy Product Manufacturing 133 7 50 employees 1 19* 311520 Ice Cream and Frozen Dessert Manufacturing 347 1,0 00 employees 3 36* 311611 Animal (except Poultry) Slaughtering 1,427 1,0 00 employees 1, 404* 311612 Meat Processed from Carcasses 1,202 1,0 00 employees 1,1 75* 311613 Rendering and Meat Byproduct Processing 114 7 50 employees 10 8* 311615 Poultry Processing 307 1,2 50 employees 2 7 7 * 311710 Seafood Product Preparation and Packaging 497 7 50 employees 4 87* 311811 Retail Bakeries 6,423 500 employees 6,406 311812 Commercial Bakeries 2,321 1,0 00 employees 2,2 83* 311813 Frozen Cakes, Pies, and Other Pastries Manufacturing 205 7 50 employees 1 94* 311991 Perishable Prepared Food Manufacturing 640 500 employees 600 312113 Ice Manufacturing 310 7 50 employees 308* 312120 Breweries 843 1,2 50 employees 838* 312130 Wineries 2,519 1,0 00 employees 2,510* 424420 Packaged frozen food merchant wholesalers 2,839 200 employees 2,674 424430 Dairy product (except dried or canned) merchant wholesalers 1,655 2 00 employees 1,558 424440 Poultry and poultry product merchant wholesalers 453 1 5 0 employees 421 424460 Fish and seafood merchant wholesalers 1,854 100 employees 1,811 424470 Meat and meat product merchant wholesalers 2,162 1 5 0 employees 2,052 424480 Fresh fruit and vegetable merchant wholesalers 4,405 100 employees 4,159 424590 Other farm product raw material merchant wholesalers 601 100 employees 569 424810 Beer and ale merchant wholesalers 1,524 2 00 employees 1,285 424930 Flower, nursery stock, and florists' supplies merchant

wholesalers 3,111 100 employees 3,011 493120 Refrigerated Warehousing and Storage 628 $27.5 million* 525 * The Census Statistics of U.S. Businesses data does not disaggregate the number of firms with an employment size above 500 employees. Since it is not possible to know how many firms with >500 employees fall within the small business threshold (i.e ., have <1,250 emplo yees), for the purposes of this analysis, 50% of firms with >500 employees are assumed to be small businesses. * Based on annual sales per firm. 

### Industry input on current practices suggests that a limited number of cold storage refrigeration systems are retrofitted each year. The retrofits that are taking place are primarily from ODS refrigerants (e.g., HCFC

- 22) to R

404A or R

- 507A , which will no longer be permitted for use as retrofit refrigeran t s under the proposed regulatory

### Economic Impact Screening Analysis 21



### changes. Based on EPA’s Vintaging Model, approximately 40 percent of systems that contain fluorinated refrigerants are expected to still contain CFC

- 12, R

- 502, or HCFC

- 22 in 2021 (EPA 2014). Even though it is unlikely tha t all of these systems will actually be retrofitted, for the purposes of this analysis, it is conservatively assumed that 4 percent of all cold storage refrigeration systems (i.e., 40 percent of the 10 percent of the market that uses fluorinated refrigeran ts) could be affected by the proposed regulatory changes. These roughly 3,000 systems are estimated to be owned by 1, 4 46 small firms , based on the assumption of two cold storage systems per establishment (ICF 2015) and the ratio of establishments to firms in each NAICS code and small business size category (U.S. Census Bureau 2012 )

. Table 10 below summarizes the number of cold storage small businesses that are expected to be affected by the proposed regulatory changes by industry and regulatory option. Table 10 : Cold Storage Small Businesses Affected by the Proposed Regulatory Options
NAICS Industry Name Estimated Number of Small Businesses Affected Option 9a Option 9b Option 10 333415 Air

- Conditioning and Warm Air Heating Equipment and Commercial

and Industrial Refrigeration Equipment Manufacturing 4 4 0 311411 Frozen Fruit, Juice and Vegetable Manufacturing 0 0 5 311412 Frozen Specialty Food Manufacturing 0 0 1 5 311511 Fluid Milk Manufacturing 0 0 9 311512 Creamery Butter Manufacturing 0 0 1 311513 Cheese Manufacturing 0 0 1 5 311514 Dry, Condensed, and Evaporated Dairy Product Manufacturing 0 0 5 311520 Ice Cream and Frozen Dessert Manufacturing 0 0 13 311611 Animal (except Poultry) Slaughtering 0 0 5 6 311612 Meat Processed from Carcasses 0 0 4 7 311613 Rendering and Meat Byproduct Processing 0 0 4 311615 Poultry Processing 0 0 1 1 311710 Seafood Product Preparation and Packaging 0 0 19 311811 Retail Bakeries 0 0 256 311812 Commercial Bakeries 0 0 9 1 311813 Frozen Cakes, Pies, and Other Pastries Manufacturing 0 0 8 311991 Perishable Prepared Food Manufacturing 0 0 24 312113 Ice Manufacturing 0 0 12 312120 Breweries 0 0 3 4 312130 Wineries 0 0 100 424420 Packaged frozen food merchant wholesalers 0 0 10 7 424430 Dairy product (except dried or canned) merchant wholesalers 0 0 6 2 424440 Poultry and poultry product merchant wholesalers 0 0 17 424460 Fish and seafood merchant wholesalers 0 0 72 424470 Meat and meat product merchant wholesalers 0 0 8 2 424480 Fresh fruit and vegetable merchant wholesalers 0 0 166 424590 Other farm product raw material merchant wholesalers 0 0 23 424810 Beer and ale merchant wholesalers 0 0 51 424930 Flower, nursery stock, and florists’ supplies merchant wholesalers 0 0 120 493120 Refrigerated Warehousing and Storage 0 0 21 Total 4 4 1, 446

### Economic Impact Screening Analysis 22



### 3.4.2 Estimated Economic Impact on Affected Small Entities The potential economic impact on small businesses for complying with regulatory options 9a and 10 was calculated based on the assumption that cold storage system manufacturers and warehouse operators would use R

- 407F in place of R

- 404A and R

- 507A in new and retrofitted systems. The potential economic impact on small businesses for complying with regulatory option 9b was calculated based on the assumption that manufacturers would use ammonia in place of R

- 404A and R

- 507A in new systems. The economic impact of each regulatory opti on is discussed further below. 3.4.2.1 Regulatory Option 9a R

- 407F is considered a viable alternative to R

- 404A and R

- 507A in both medium and low temperature applications in new systems (Honeywell 2014). Given that R

- 407A can be used interchangeably with both R

- 40 4A with only minor system adaptations , no upfront costs are assumed to be incurred by manufacturers when transitioning from R

- 404A or R

- 507A to R

- 407A in new cold storage refrigeration systems . In regards to annual costs, R

- 407F
— a blend of HFC

- 134a, HFC

- 32 , and HFC

- 125
— is estimated to cost between $7.60 and $9.60 per kilogram, while R

- 404A and R

- 507A are estimated to cost between $8 and $10 per kilogram (UNEP 2012). 18 

### At the same time, the charge size of R

- 407F systems is assumed to be 1.07 times greater th an the charge sizes of R

404A and R

- 507A systems (Honeywell 2012). As a result, it is estimated that using R

- 407F in new systems in place of R

- 404A and R

- 507A will cost each manufacturer roughly $20,000 to $40,000 per year. 19 , 20 

### 3.4.2.2 Regulatory Option 9b Relativ e to using R

- 404A or R

- 507A, the incremental one

- time capital cost of transitioning to new equipment using ammonia is estimated at $300,000

- $500,000 , associated with the purchase of safety equipment, and the cost of conducting trials, training, testing and obtaining certification

. The incremental capital cost i s annualized over a 25 year lifetime of the facility. No incremental annual costs are assumed

. W hile it is likely that operational savings could result due to the lower price of ammonia relative to R

- 404A and R

- 507A , these savings were not incorporated, given the compliance cost approach for this analysis

. 21 

### 3.4.2.3 Regulatory Option 10 E nd

- users that retrofit their equipment are assumed to use R

- 407F in place of R

- 404A or R

- 507A as a retrofit refrigerant. The incremental cost of using R

- 407F instead of R

- 404A or R

- 507A as a retrofit refrigerant is associated with the cost of purchasing the refrigerant. Specifically, for servicing facilities, th e cost of R

- 407A is estimated to range between $6.40 to $36.60 per kilogram, while R

- 404A and R

- 507A are estimated to cost between $6 and $35 per kilogram (UNEP 2012). While the cost of R

- 407F is estimated to cost slightly less per kilogram relative to R

- 4 04A or R

- 507A, the charge size required of R

- 407F is 1.07 times greater than the charge

18 Cost data was not availabl e for R

- 507A, but the analysis assumes the costs of R

- 404A and R

- 507A are comparable due to their components and market penetration. R

- 404A is a refrigerant blend comprised of 44% HFC

- 125, 52% HFC

- 143a, and 4% HFC

- 134a. R

- 507A is a refrigerant blend compri sed of 50% HFC

- 125 and 50% HFC

- 143a. 19 Based on EPA’s Vintaging Model, it is assumed that in the absence of these proposed regulatory changes, roughly 520 MT of R

- 404A or R

- 507A would be used in new cold storage refrigeration systems in 2021. 20 For the pur poses of this analysis, it is assumed that all refrigerant costs will be incurred by the manufacturer, although it is possible that some of these costs would be passed on to the end

- user. 21 Ammonia is estimated to cost between $0.50 and $2 per kilogram (UN EP 2012).

### Economic Impact Screening Analysis 23



### of R

- 404A or R

- 507A (Honeywell 2012). Therefore, each system retrofit is estimated to incrementally cost end

users approximately $400 to $ 3,300
. 22 

### Total costs per firm range from roughly $ 850 to $ 47 , 000 based on the average number of establishments per firm (determined using U.S. Census data for each establishment size category) and on the assumption that cold storage facilities contain on average 2 systems each ( ICF 201 5). The incremental cost is annualized over a n assumed remaining equipment lifetime of 10 years. The economic impact per firm was calculated by dividing estimated receipts (as a proxy for sales) by the number of firms for each small business establishment size (e.g., 0

- 4 employees, 5

- 9 employees, 10

- 19 employees, etc.). Because a range of costs was used in the calculations, a range is provided for annual compliance cost as a percentage of average annual sales per business. In general, annual compliance cost s represent a higher percentage of annual sales for smaller establishments. Table 11 below presents the estimated economic impact of the proposed regulatory changes o n small businesses in the cold storage industry. Table 11 : Estimated Economic Impact on Cold Storage Small Businesses (Sales Test) NAICS Code Industry Name Annual ized Compliance Cost as a Percentage of Annual Sales per Small Business Option 9a Option 9b Option 10
333415 Air

- Conditioning and Warm Air Heating Equipment and

Commercial and Industrial Refrigeration Equipment Manufacturing <0.1%
– 6. 2 % <0.1%
– 7.5 % 0%
311411 Frozen Fruit, Juice and Vegetable Manufacturing 0% 0% < 0.1%
– 0.2% 311412 Frozen Specialty Food Manufacturing 0% 0% <0.1%
– 0.1% 311511 Fluid Milk Manufacturing 0% 0% <0.1%
– 0.1% 311512 Creamery Butter Manufacturing 0% 0% <0.1% 311513 Cheese Manufacturing 0% 0% <0.1%
– 0.1% 311514 Dry, Condensed, and Evaporated Dairy Product Manufacturing 0% 0% <0.1%
– 0.1% 311520 Ice Cream and Frozen Dessert Manufacturing 0% 0% <0.1%
– 0.1% 311611 Animal (except Poultry) Slaughtering 0% 0% <0.1%
– 0.1% 311612 Meat Processed from Carcasses 0% 0% <0.1%
– 0.1% 311613 Rendering and Meat Byproduct Processing 0% 0% <0.1%
– 0.1% 311615 Poultry Processing 0% 0% <0.1%
– 0.1% 311710 Seafood Product Preparation and Packaging 0% 0% <0.1%
– 0.1% 311811 Retail Bakeries 0% 0% <0.1%
– 0.9% 311812 Commercial Bakeries 0% 0% <0.1%
– 0.5% 311813 Frozen Cakes, Pies, and Other Pastries Manufacturing 0% 0% <0. 1%
– 0.4% 311991 Perishable Prepared Food Manufacturing 0% 0% <0.1%
– 0.1% 312113 Ice Manufacturing 0% 0% <0.1%
– 0.4% 312120 Breweries 0% 0% <0.1%
– 0.3% 312130 Wineries 0% 0% <0.1%
– 0.3% 424420 Packaged frozen food merchant wholesalers 0% 0% <0.1% 424430 Dairy product (except dried or canned) merchant wholesalers 0% 0% <0.1%
– 0.1% 424440 Poultry and poultry product merchant wholesalers 0% 0% <0.1% 424460 Fish and seafood merchant wholesalers 0% 0% <0.1%
– 0.1% 424470 Meat and meat product merchant wholesalers 0% 0% <0.1% 424480 Fresh fruit and vegetable merchant wholesalers 0% 0% <0.1%

22 This estimate is based on the conservative assumption that packaged HFC

- based cold storage systems have a charge size that ranges from 500 to 800 kilograms.

### Economic Impact Screening Analysis 24

NAICS Code Industry Name Annual ized Compliance Cost as a Percentage of Annual Sales per Small Business Option 9a Option 9b Option 10 424590 Other farm product raw material merchant wholesalers 0% 0% <0.1% 424810 Beer and ale merchant wholesalers 0% 0% <0.1%
– 0.1% 424930 Flower, nursery stock, and florists' supplies merchant

wholesalers 0% 0% <0.1%
– 0.2% 493120 Refrigerated Warehousing and Storage 0% 0% <0.1%
– 2.1% 

# 4 F oam Blowing The proposed regulatory changes are expected to affect the foam manufacturing industry , including manufacturers of polyurethane (PU) foam products and polyolefin foams. Specifically, the regulatory options applicable to the foam blowing sector that were assessed includ e the following:

 Regulatory Option 1 1 a: For rigid PU high

- pressure (HP) two
- component spray foam , list unacceptable HFC

134a, HFC

- 245fa, and blends thereof; blends of HFC

- 365mfc with at least 4% HFC

- 245fa, and commercial blends of HFC

- 365mfc with 7 to 13% HFC

- 227ea and the remainder HFC

- 365mfc; and Formacel TI, in 2019 , except as allowed under a narrowed use limit for military or space

- and aeronautics

– related applications.

 Regulatory Option 1 1 b: For rigid PU HP two
- component spray foam , list unacceptable HFC

- 134a, HFC

245fa, and blends thereof; blends of HFC

- 365mfc with at least 4% HFC

- 245fa, and commercial blends of HFC

- 365mfc with 7 to 13% HFC

- 227ea and the remainder HFC

- 365mfc; and Formacel TI in 2020 , except as allowed under a narrowed use limit for military or space

- and aeronautics

– related a pplications.

 Regulatory Option 1 2 a: For rigid PU low

- pressure (LP) two
- component spray foam , list unacceptable HFC

134a, HFC

- 245fa, and blends thereof; blends of HFC

- 365mfc with at least 4% HFC

- 245fa, and commercial blends of HFC

- 365mfc with 7 to 13% HFC

- 2 27ea and the remainder HFC

- 365mfc; and Formacel TI in 2020 , except as allowed under a narrowed use limit for military or space

- and aeronautics

– related applications.

 Regulatory Option 1 2 b: For rigid PU LP two
- component spray foam , list

. unacceptable HFC

- 134a, HFC

245fa, and blends thereof; blends of HFC

- 365mfc with at least 4% HFC

- 245fa, and commercial blends of HFC

- 365mfc with 7 to 13% HFC

- 227ea and the remainder HFC

- 365mfc; and Formacel TI in 2021 , except as allowed under a narrowed use limit for military or space

- and aeronautics

– related applications.

 Regulatory Option 1 3 a: For rigid PU one - component foam (OCF) sealants , list unacceptable HFC

- 134a, HFC

245fa, and blends thereof; blends of HFC

- 365mfc with at least 4% HFC

- 245fa, and comme rcial blends of HFC

- 365mfc with 7 to 13% HFC

- 227ea and the remainder HFC

- 365mfc; and Formacel TI in 2019 , except as allowed under a narrowed use limit for military or space

- and aeronautics

– related applications.

 Regulatory Option 1 3 b: For rigid PU OCF seal ants , list unacceptable HFC

- 134a, HFC

- 245fa, and blends thereof; blends of HFC

- 365mfc with at least 4% HFC

- 245fa, and commercial blends of HFC

- 365mfc with 7 to 13% HFC

- 227ea and the remainder HFC

- 365mfc; and Formacel TI in 2020 , except as allowed under a n arrowed use limit for military or space

- and aeronautics

– related applications.

 Regulatory Option 1 4 : In flexible PU foam, list methylene chloride as unacceptable 30 days after publication of a final rule.

 Regulatory Option 1 5 : In integral skin PU foam , lis t methylene chloride as unacceptable in 2017
.

### Economic Impact Screening Analysis 25



###  Regulatory Option 1 6 : In polyolefin foam, list methylene chloride as unacceptable in 2020. 

## 4.1 Small Entities Potentially Subject to the Rulemaking The foam types affected by the proposed regulatory changes are matched to NAICS code 326150, u rethane and o ther f oam p roduct (except polystyrene) m anufacturing

. However, NAICS code 326150 covers a broader industry than the specific foam end

- uses addressed in the proposed regulatory changes . Thus, the number of manufacturers potentially affected by the proposed regulatory changes by relevant foam type was determined based on market penetration data from EPA’s Vintaging Model (EPA 2014). The Vintaging Model d efines the market for PU spray foam, PU one - component foam (OCF) , flexible PU (slabstock and mo lded), PU integral skin, and polyolefin foam, among other foam end

- uses. Since HP two

- component and LP two

- component spray foams are not defined by the Vintaging Model, expert judgement was used to further break out the PU spray foam market by sub

- type (Jeffs 2015). Based on the Vintaging Model, it is estimated that 92% and 17% of the spray foam (i.e., HP two

- component and LP two

- component) and OCF markets, respec tively, currently use HFC

- 134a, HFC

- 245fa, or other HFCs/HFC blended blowing agents, namely HFC

- 365mfc with HFC

- 245fa or HFC

- 227ea. Flexible PU (slabstock and molded) and polyolefin manufacturing are assumed to use only hydrocarbon blowing agents, while PU integral skin is assumed to only use HFC

- 134a and CO 2 

### (i.e., methylene chloride is not currently in use in any of these foam types). S ome movement away from high‐GWP blowing agents (e.g., HFC

- 134a, HFC

- 245fa) has already been observed in the spray foam insulation industry, and industry pledges to transition away from HFC blowing agents in new foam products may serve to accelerate the transition out of HFC blo wing agents ( White House 2015)

. Assuming that the industry is operating under business as usual conditions, this analysis estimates that in the absence of this proposed rulemaking , approximately 10% of the HP two

- component and LP two

- component industry wil l transition away from HFC blowing agents by 2020 and 2021, respectively. By combining these assumptions, the percent of entities identified by NAICS code 326150 that are assumed to be affected by each proposed regulatory option can be calculated, as sum marized below in Table 12

. Table 12 : Assumptions about the Percentage of Affected Entities in NAICS Code 326150 Regulatory Option(s) Relevant Foam Types % of the Foam Blowing Industry a % of Foam Type

Using Blowing Agents Listed as Unacceptable % of Entities

Assumed to be Affected 11a/11b Rigid PU : HP two
- component spray foam 10% 83% 8.6 % 12a/12b Rigid PU: LP two

- component spray foam 2.2% 83% 1.8 % 13a/13b Rigid PU: OCF sealants 0.2% 17% <0.1 % 14 Flexible PU: slabstock and molded 14% 0 % 0 % 15 PU i ntegral s kin 0.2% 0 % 0 % 16 Polyolefin 4% 0 % 0 % Total 30% NA 11.7%
a The foam blowing industry includes all foam types covered under NAICS code 326150

.

### Economic Impact Screening Analysis 26



### The small business threshold for the u rethane and other foam product (except polystyrene) manufacturing industry is defined as a firm with fewer than 750 employees

. Table below presents the number of small businesses estimated to be directly affected by each proposed regulatory option

. 23 

### Table 13 : Estimated Number of Small Business Foam Manufactur ers Affected by Regulatory Option NAICS Code Industry Name Estimated Number of Small Businesses Affected a 11a / 11b 12a / 12b 13a / 13b 14 1 5 1 6 326150 Urethane and other foam product

(except polystyrene) manufacturing 36 8 1 0 0 0

a The total number of firms in this industry is 44 6 , of which 422 are characterized as small businesses (U.S. Census Bureau 2012)

. 

## 4.2 Estimated Economic Impact on Affected Small Entities This section summarizes the estimated economic impact of the proposed regulatory changes on PU and polyolefin manufacturers

. Where available and appropriate, compliance costs were estimated based on industry input received in comments on EPA’s rulemaking, Protection of Stratospheric Ozone: Change of Listing Status for Certain Substitutes under the Significant New Alternatives Policy Program (79 FR 46126), EPA’s report on Global Mitigation of Non

- CO 2 

### Greenhouse Gases: 2010

- 2030 (EPA 2013), and recently released public information (e.g., private sector commitments and executive actions to reduce consumption of HFCs). Table 14 presents a summary of the annualized compliance costs as a percentage of the average annual sales for each foam type. Average annual sales per firm were calculated by dividing total value of receipts (as a proxy for sales) by the number of fir ms , for each small business establishment size (e.g., 0

- 4 employees, 5

- 9 employees, 10

- 19 employees, etc.). Because average annual sales were calculated by establishment size, a range is provided for annual compliance costs as a percentage of annual sales. The specific assumptions used for each foam type to estimate annualized compliance costs are presented after the table. Table 14 : Estimated Economic Impact on Small Businesses in the Foam Blowing Sector (Sales Test) NAICS Code Indu stry Name Annual ized Compliance Cost as a Percentage of Annual Sales per Small Business 11a / 11b 12a / 12b 13a / 13b 14 1 5 1 6 326150 Urethane and other foam product

(except polystyrene) manufacturing < 0 .1 %
– 3.9 % 0 .2 %
– 7.8 % < 0 .1 %
– 3.9 % 0% a 0% a 0% a

a Because methylene chloride is not currently in use, annual compliance costs are assumed to be zero. 

### 4.2.1 High - Pressure Two - Component Spray Foam (Options 1 1 a and 1 1 b) I t is assumed that companies still using HFC

- 134a, HFC

- 245fa, and blends thereof in HP two

- co mponent spray foam would transition to Solstice TM Liquid Blowing Agent (LBA) (1233zd(E) , trans
- 1

- chloro

- 3,3,3

- trifluoroprop

- 1

- ene ), which is commercially available in the United States (and has been since 2013). Capital costs for transitioning to Solstice TM LBA are assumed to be $2 00,000
– $300,000 per facility , associated with the cost of

23 The Census Statistics of U.S. Businesses data does not disaggregate the number of fir ms with an employment size above 500 employees . Since it is not possible to know how many firms with >500 employees fall within the small business threshold (i.e., have <750 employees), for the purposes of this analysis, 50% of firms with >500 employees a re assumed to be small businesses.

### Economic Impact Screening Analysis 27



### formulation development and compliance testing. These costs are annualized assuming a facility lifetime of 25 years. 24 

### No incremental operating costs are assumed. 25 

### 4.2.2 Low - Pressu re Two - Component Spray Foam (Options 12a and 12b ) C ompanies still using HFC

- 134a, HFC

- 245fa, and blends thereof in LP two

- component spray foam are assumed to transition to Solstice TM Gaseous Blowing Agent (GBA) (HFO

- 1234ze). R eformulation of this foam type requires many iterative steps and manufacturers are experiencing technical issues with shelf

- life stability caused by chemical interaction issues within the formulation. To successfully adopt an alternative blowing agent in L P two

component spray foams and develop a quality product, manufacturers will need to reformulate their systems to meet specific performance requirements and physical properties, and also conduct required field testing and certification. Capital costs for transitioning to HFO

- 1234ze are assumed to be $500,000

– $600,000 per facility to cover the cost of extensive formulation development and compliance testing. These costs are annualized assuming a facility lifetime of 25 years. 26 

### No incremental operating costs are assumed. 27 

### 4.2.3 One Component Foam Sealants (Options 13a and 13b ) C ompanies still using HFC

- 134a and blends thereof in OCF sealants are expected to transition to Solstice TM GBA (HFO

- 1234ze), which is currently commercially available for use as a blowing agent in OCF in the United States. Capital costs for transitioning to HFO

- 1234ze are assumed to be $2 00,000
– $300,000 per facility to cover the cost of formulation development and compliance testing. These costs are annualized assuming a facility lifetime of 25 years. 28 

### No incremental operating costs were assumed. 29 

### 4.2.4 Flexible Polyurethane Foam (Option 14 ) Methylene chloride is not known to be used in any flexible PU foam applicati ons. This foam type is currently only manufactured in the United States using hydrocarbons. Therefore, prohibiting the use of methylene chloride in this end

- use is not expected to impact small businesses. The proposed regulatory changes would serve to prev ent uptake of methylene chloride into this foam end

- use subsector

. 

### 4.2.5 Integral Skin Polyurethane Foam (Option 1 5 ) Methylene chloride is not known to be used in any integral skin PU foam applications. This foam type is currently only manufactured in the United States using HFC

- 134a , hydrocarbons, and CO 2 

### . 30 

### Therefore, prohibiting the use of methylene chloride in this end

- use is not expected to impact small businesses. The proposed regulatory changes would serve to prevent uptake of methylene chloride into this f oam end

- use subsector.

24 See Appendix A for the results of a sensitivity analysis associated with this assumption. 25 Cost savings may be associated with the increase in yield (product coverage) and R

- value (insulation value) of the blowing agent (estimated to equal approximately $1.60 per kilogram of blowing agent). These savings are not accounted for in this direct compliance cost approach. 26 See Appendix A for the results of a sensitivity analysis associated with this assumption. 27 Cost sa vings may be associated with the increase in yield (product coverage) and R

- value (insulation value) of the blowing agent (estimated to equal approximately $3.10 per kilogram of blowing agent). These savings are not accounted for in this direct compliance cost approach. 28 See Appendix A for the results of a sensitivity analysis associated with this assumption. 29 Cost savings may be associated with the increase in yield (product coverage) of the blowing agent (estimated to equal roughly $3.10 per kilogram of blowing agent). These savings are not accounted for in this direct compliance cost approach. 30 HFC

- 134a will be unacceptable for use in integral skin polyurethane foam as of January 1, 2017 (80 FR 42870).

### Economic Impact Screening Analysis 28



### 4.2.6 Polyolefin Foam (Option 1 6 ) Methylene chloride is not known to be used in any polyolefin foam applications. This foam type is currently manufactured in the United States primarily using hydrocarbons. Therefore, prohibiting the use of methylene chloride in this end

- use is not expected to impact small businesses. The proposed regulatory changes would serve to p revent uptake of methylene chloride into this foam end

- use subsector. 

# 5 Fire Suppression and Explosion Prevention The proposed reg ulatory changes are expected to affect the fire suppression and explosion protection industry, including manufacturers of total flooding systems and streaming applications (i.e., portable fire extinguishers). Specifically, the proposed regulatory options a pplicable to the fire suppression sector that were assessed include the following:

 Regulatory Option 1 7 a: For total flooding uses, list unacceptable perfluorocarbons (C 3 

### F 8 

### and C 4 

### F 10 

### ) one year after publication of a final rule

.  Regulatory Option 1 7 b: For total flooding uses, list unacceptable perfluorocarbons (C 3 

### F 8 

### and C 4 

### F 10 

### ) and SF 6 

### one year after publication of a final rule and list HFC

- 23 as acceptable, subject to narrowed use limit s one year after publication of a final rule

.  Regulatory Option 1 8 : For streaming uses, list unacceptable perfluorocarbon (C 6 

### F 14 

### ) one year after publication of a final rule

. 

## 5.1 Small Entities Potentially Subject to the Rulemaking The industry affected by the proposed regulatory changes to the fire suppression sector is matched to NAICS code 3399991 , fire extinguishing equipment, hand

- portable and fixed

- system (excluding water sprinkler systems), including parts and attachments, man ufacturing . The small business threshold for this industry is defined as a firm with fewer than 750 employees. Based on EPA’s Vintaging Model, it is estimated that 0.2% of the market uses HFC

- 23 in total flooding systems in 2015, with the remaining using halon 1301, other HFCs, and agents with zero ODP and low GWP, including fluoroketone, inert gas, CO 2 

### , powdered aerosols, foam, and water mist (EPA 2014). It is additionally estimated that fire suppression agents with zero ODP and low GWP

— including water, C O 2 

### , and dry chemical

— currently occupy over 80% of the available streaming applications, with the remaining 20% of the market using halon 1211, Halotron, and HFCs (e.g., HFC

- 236fa). Since PFCs (i.e., C 3 

### F 8 

### and C 4 

### F 10 

### ) and SF 6 

### are not assumed to currently be u sed in new fire extinguishing equipment and the portion of the market using HFC

- 23 is assumed to be using it for explosion inerting for oil and gas processing facilities , no small businesses are estimated to be affected by the proposed regulatory changes, as shown in Table

.

### Economic Impact Screening Analysis 29



### Table 15 : Estimated Number of Small Businesses Manufacturing Fire Suppression Equipment Affected NAICS Code Industry Name Estimated Number of Small Businesses Affected by Regulatory Option a 1 7 a 1 7 b 1 8
3399991 F ire extinguishing equipment, hand

- portable and fixed

system (excluding water sprinkler systems), including parts and attachments, manufacturing 0 0 0

a The total number of firms in this industry is 29 , of which 25 are characterized as small businesses (U.S. Census Bureau 2012)

. 

## 5.2 Estimated Economic Impact on Affected Small Entities Because no small businesses are expected to be affected by the proposed regulatory changes , the annual compliance cost as a percentage of average sales per firm is zero, as shown in Table below. Table 16 : Estimated Economic Impact on Small Businesses in the Fire Suppression Sector (Sales Test)
NAICS Industry Name Annual ized Compliance Cost as a Percentage of Annual Sales per Small Business 1 7 a 1 7 b 1 8
3399991 F ire extinguishing equipment, hand

- portable and fixed

system (excluding water sprinkler systems), including parts and attachments, manufacturing 0% a 0% a,b 0% a

a Because PFCs are not currently in use, annual compliance costs are assumed to be zero. b Because the proportion of the market using HFC

- 23 is negligible, annual compliance costs are assumed to be zero.

### Economic Impact Screening Analysis 30 

# 6 Conclusion This screening analysis finds that the proposed regulatory changes can be presumed to have no significant economic impact on a substantial number of small entities (SISNOSE) , as described below. The discussion below describes the decision matrix used to make this determination, as well as the a ggregated small business impacts. 

## 6.1 Decis ion Regarding Significant Economic Impact on a Substantial N um ber of Small E ntities Using economic threshold levels set conservatively at 1% and 3% of sales , consistent with similar analyses on other Title VI rules , this screening analysis finds that the proposed regulatory changes can be presumed to have no SISNOSE . These thresholds are set conservatively because the proposed changes would affect small businesses in a range of different industries, which may have significantly different profit margins and abilities to pass compliance costs along to customers. 

## 6.2 Aggregated Small Business Impacts of Regulatory Changes Table summarizes the total number of small businesses that are expected to be subject to the regulatory changes , as well as the total economic impact and the a nnualized c ompliance c ost s as a p ercentage of t otal a nnual s ales on those small bu sinesses using a 7% discount rate

. Table summarizes the total number of small businesses that are expected to be subject to the regulation, as well as the total economic impact and the a nnualized c ompliance c ost s as a p ercentage of t otal a nnual s ales on those small businesses using a 3% discount rate. These tables assume a rulemaking that includes regulatory options 1, 3, 5, 7a, 9a, 11b , 12b , 13 b , 14 , 15 , 16 , and 1 7 a (Appendix B shows the economic impacts associated with all of the regulatory options under consideration)

.

### Economic Impact Screening Analysis 31



### Table 17 : Summary of the Small Business Impact at 7% Discount Rate

Sector Opt. NAICS

Code Industry Estimated Number of Small Businesses Affected by the Rule Total Annualized Economic

Impact on Small Businesses Annualized Compliance Cost as a Percentage of Total Annual Sales
Lower Higher Lower Higher

Chillers 1 333415 Air

- conditioning and warm air heating equipment and commercial and industrial refrigeration equipment manufacturing

1 $2,88 0,000 $3,26 0,000 0 .7% 0 .8%
3 333415 Air

- conditioning and warm air heating

equipment and commercial and industrial refrigeration equipment manufacturing $3,03 0,000 $3,7 9 0,000 0 .7% 0 .9% Retail Food 5 333415 Air

- conditioning and warm air heating equipment and commercial and industrial refrigeration equipment manufacturing 1 9 $70,000 $90,000 <0.1% <0.1% Household Refrigeration 7a 335222 Household refrigerator and home freezer manufacturing 20 $4,590,000 $5,500,000 0.3% 0.3% Cold Storage 9a 333415 Air

- conditioning and warm air heating equipment and commercial and industrial refrigeration equipment manufacturing 4 $70,000 $1 4 0,000 <0.1%

- 3.0% <0.1%

- 6.2%

Foam 11b

326150 Urethane and other foam product (except polystyrene) manufacturing 3 6 $800,000 $1, 20 0,000 <0.1%

- 2.6% 0.1%

- 3.9% 12b 8 $4 0 0,000 $500,000 0.2%

- 6.5% 0.3%

- 7.8% 13b 1 $3,000 $5,000 <0.1%

- 2.3% 0.1%

- 3.9% 14 0 $0 $0 NA NA 15 0 $0 $0 NA NA 1 6 0 $0 $0 NA NA Fire Suppression 1 7 b 3399991 Fire extinguishing equipment, hand

portable and fixed

- system (excluding water sprinkler systems), including parts and attachments, manufacturing 0 $0 $0 NA NA TOTAL* 89 $11,843 ,000 $14,485 ,000 NA NA *Total may not sum due to rounding.

### Economic Impact Screening Analysis 32



### Table 18 : Summary of the Small Business Impact at 3% Discount Rate

Sector Opt. NAICS

Code Industry Estimated Number of Small Businesses Affected by the Rule Total Annualized Economic

Impact on Small Businesses Annualized Compliance Cost as a Percentage of Total Annual Sales
Lower Higher Lower Higher

Chillers 1 333415 Air

- c onditioning and w arm a ir h eating e quipment and c ommercial and i ndustrial r efrigeration e quipment m anufacturing

1 $2,88 0,000 $3,26 0,000 0.7% 0.8%
3 333415 Air

- c onditioning and w arm a ir h eating

e quipment and c ommercial and i ndustrial r efrigeration e quipment m anufacturing $3,03 0,000 $3,79 0,000 0.7% 0.9% Retail Food 5 333415 Air

- c onditioning and w arm a ir h eating e quipment and c ommercial and i ndustrial r efrigeration e quipment m anufacturing 1 9 $70,000 $90,000 <0.1% <0.1% Household Refrigeration 7a 335222 Household refrigerator and home freezer manufacturing 20 $4,590,000 $5,500,000 0.3% 0.3% Cold Storage 9a 333415 Air

- c onditioning and w arm a ir h eating e quipment and c ommercial and i ndustrial r efrigeration e quipment m anufacturing 4 $70,000 $140,000 <0.1%

- 3.0% <0.1%

- 6.2%

Foam 11b

326150 Urethane and other foam product (except polystyrene) manufacturing 3 6 $ 60 0,000 $ 9 00,000 <0.1%

- 1.7 % <0 .1%

- 2.6 % 12b 8 $3 0 0,000 $ 40 0,000 0.2%

- 4.3 % 0. 2 %

- 5.2 % 13b 1 $2,000 $ 4 ,000 <0.1%

- 1.7 % <0 .1%

- 2.6 % 14 0 $0 $0 NA NA 15 0 $0 $0 NA NA 16 0 $0 $0 NA NA Fire Suppression 17b 3399991 F ire extinguishing equipment, hand

portable and fixed

- system (excluding water sprinkler systems), including parts and attachments, manufacturing 0 $0 $0 NA NA TOTAL * 89 $11, 5 42,000 $14,08 4,000 NA NA *Total may not sum due to rounding.

### Economic Impact Screening Analysis 33



###  Roughly 8 9 small businesses could be subject to the rulemaking, although roughly 76 % of small businesses subject to this rulemaking would be expected to incur compliance costs that are estimated to be less than 1% of annual sale s.
 This analysis indicates that up to 21 of the 8 9 affected small businesses

— or roughly 24 %
— could incur costs in excess of 1% of annual sales, and that up to 1 2 small businesses could incur costs in excess of 3% of annual sales. While Table assumes a proposed rulemaking that includes regulatory options 1, 3, 5, 7a, 9a, 11b , 12b , 13b , 14 , 1 5 , 1 6 , and 1 7 a , analysis of the other regulatory options under consideration similarly shows that all regulatory options present no SISNOSE.

 Table aggregates the estimated economic impacts on small businesses, according to the categories set out in the SISNOSE decision matrix. For the most conservative assessment, Roughly 8 9 small businesses could be subject to the rulemaking, although roughly 76 % of small businesses subject to this rulemaking would be expected to incur compliance costs that are estimated to be less than 1% of annual sale s.
 This analysis indicates that up to 21 of the 8 9 affected small businesses

— or roughly 24 %
— could incur costs in excess of 1% of annual sales, and that up to 1 2 small businesses could incur costs in excess of 3% of annual sales. While Table assumes a proposed rulemaking that includes regulatory options 1, 3, 5, 7a, 9a, 11b , 12b , 13b , 14 , 1 5 , 1 6 , and 1 7 a , analysis of the other regulatory options under consideration similarly shows that all regulatory options present no SISNOSE. Table reflects the higher cost ranges for each end

- use and a 7% discount rate. Using the decision criteria established in this screening analysis suggests that the proposed regulatory changes can be presumed to have no SISNOSE for the following reasons:

 Roughly 8 9 small businesses could be subject to the rulemaking, although roughly 76 % of small businesses subject to this rulemaking would be expected to incur compliance costs that are estimated to be less than 1% of annual sale s.
 This analysis indicates that up to 21 of the 8 9 affected small businesses

— or roughly 24 %
— could incur costs in excess of 1% of annual sales, and that up to 1 2 small businesses could incur costs in excess of 3% of annual sales. 31 

### While Table assumes a proposed rulemaking that includes regulatory options 1, 3, 5, 7a, 9a, 11b , 12b , 13b , 14 , 1 5 , 1 6 , and 1 7 a , analysis of the other regulatory options under consideration similarly shows that all regulatory options present no SISNOSE. Table 19 : A ggregated Economic Impacts on Small Businesses Economic Impact Industry Impacted Number of Small Entities Subject to the Rule and Percent of All Small

Entities Subject to the Rule That are

31 When the the firm size of the small businesses a ffected is not known , this analysis conservatively assumes that these businesses fall into the smallest facility size category (i.e., 0 to 4 employees) and, therefore, experience the high end of the range of eco nomic impacts.

### Economic Impact Screening Analysis 34 Experiencing Given Econom ic Impact Experiencing Given

Economic Impact Less than 1% for all affected small entities a 326150 Urethane and other foam product (except polystyrene) manufacturing 2 8

7 6 . 4 % 333415 Air

- conditioning and warm air heating

equipment and commercial and industrial refrigeration equipment manufacturing 20 335222 Household refrigerator and home freezer

manufacturing 20 Total 6 8 1% or more for one or more affected small entities b 326150 Urethane and other foam product (except polystyrene) manufacturing 1 7

23 . 6 % 333415 Air

- Conditioning and Warm Air Heating

Equipment and Commercial and Industrial Refrigeration Equipment Manufacturing 4 Total 2 1 Greater than 3% for one or more affected small entities 326150 Urethane and other foam product (except polystyrene) manufacturing 8

13 . 5 % 333415 Air

- Conditioning and Warm Air Heating

Equipment and Commercial and Industrial Refrigeration Equipment Manufacturing 4 Total 1 2
a Represents small entities affected with an economic impact equal to or lesser than 1% but greater than 0%. b T his category aggregates the number of small entities that w ould be expected to experience an impact of 1% to 3% with the number of small entities that w ould be expected to experience an impact of 3% or greater

.

### Economic Impact Screening Analysis 35 

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### Economic Impact Screening Analysis 36



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### Economic Impact Screening Analysis 37



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### Economic Impact Screening Analysis 38 

# Appendix A: Sensitivity Analysis of Amoritization Period In cases where capital costs are incurred to invest in new equipment as a result of the proposed regulatory changes , the analysis assumes that these costs are annualized over the physical lifetime of the equipment. Since it is feasible that the financing period of these costs may vary , a sensitivity analysis was conducted to further assess the implications of this ass umption. A summary of the regulatory options that are impacted by this assumption are presented in Table 20 along with the assumed lifetime for annualizing costs and the resulting annualized compliance cost as a percentage of average annual sales per firm

.

Table 20 : Regulatory Options Impacted by Annualized Cost Assumptions Option End - Use Lifetime for Annualizing Costs Annual ized Compliance Co st

as a Percentage of Average Annual Sales per Firm * 1 Centrifugal Chillers 25 years 0.7%
– 0.8% 7b/7c Household Refrigerators and Freezers 20 years <0.1%
– 8.6% 11a/11b R igid PU: high

- pressure two
- component spray foam 25 years < 0 .1 %
– 3.9 % 12a/12b R igid PU: low

- pressure two
- component spray foam 25 years 0 .2 %
– 7.8 % 13a/13b R igid PU : one - component foam sealants 25 years < 0 .1 %
– 3.9 % * Assumes a 7% discount rate. 

### Table 21 summarize s the change in annualized compliance costs as a precent of average annual sales per firm assuming a 1 0 year and 5 year lifetime for annualizing costs. Table 21 : Annualized Compliance Costs Assuming a 30 Year and 10 Year Lifetime for Annualizing Costs Option NAICS

Code Industry Name Annual ized Compliance Cost as a Percentage of Average Annual Sales per Firm * 10 Year Lifetime 5 Year Lifetime
1 333415 Air

- conditioning and warm air heating

equipment and commercial and industrial refrigeration equipment manufacturing 0.7%
– 0.8% 0.7%
– 0.8% 7b/7c 335222 Household refrigerator and home freezer

manufacturing <0.1%
– 13.0% <0.1%
– 22.2% 11a/11b 326150 Urethane and other foam product (except

polystyrene) manufacturing 0.1%
– 6.4% 0.3%
– 11.0% 12a/12b 0.4%
– 12.9% 0. 6 %
– 2 2. 1 % 13a/13b 0.1%
– 6.4% 0. 3 %
– 11
. 0 % * Assumes a 7% discount rate. 

### A comparison of the total annualized economic impact on small businesses under each lifetime assumption at a 7% and 3% discount rate is presented in Table 22 and Table 23 , respectively

. These tables assume a rulemaking that includes regulatory options 1, 3, 5, 7a, 9a, 11b , 12b , 13b , 14 , 15 , 16 , and 1 7a. The aggregated economic impact on small businesses based on the higher cost range for each end

- use a nd a 7% discount rate under each lifetime assumption is presented in Table 24
.

### Economic Impact Screening Analysis 39



### Table 22 : Summary of the Total Small Business Impact by Lifetime Assumption at a 7% Discount Rate *
Option NAICS

Code Total Annualized Economic Impact on Small Businesses

Current Lifetime Assumption 1 0 Year Lifetime 5 Year Lifetime
Lower Higher Lower Higher Lower Higher 1 333415 $2,88 0,000 $3,26 0,000 $2,88 0,000 $3,27 0,000 $2,88 0,000 $3,27 0,000 3 333415 $3,000,000 $3,760,000 $3,000,000 $3,760,000 $3,000,000 $3,760,000 5 333415 $70,000 $90,000 $70,000 $90,000 $70,000 $90,000 7a 335222 $4,590,000 $5,500,000 $4,590,000 $5,500,000 $4,590,000 $5,500,000 9a 333415 $70,000 $1 4 0,000 $70,000 $1 4 0,000 $70,000 $1 4 0,000 11b

326150 $800,000 $1,200,000 $1,330,000 $1,990,000 $ 2 , 27 0,000 $ 3 , 41 0,000 12b $400,000 $500,000 $700,000 $900,000 $ 1,22 0,000 $ 1,46 0,000 13b $3,000 $5,000 $6,000 $8,000 $ 10 ,000 $ 14 ,000 14 $0 $0 $0 $0 $0 $0 15 $0 $0 $0 $0 $0 $0 16 $0 $0 $0 $0 $0 $0 17b 3399991 $0 $0 $0 $0 $0 $0 TOTAL $11,84 3,000 $14,48 5,000 $12, 64 6,000 $15,65 8,000 $14,11 0,000 $17,64 4,000 * A ssumes a proposed rulemaking that includes regulatory options 1, 3, 5, 7a, 9a, 11b, 12b, 13b, 14, 15, 16, and 17a

. 

### Table 23 : Summary of the Total Small Business Impact by Lifetime Assumption at a 3% Discount Rate *
Option NAICS

Code Total Annualized Economic Impact on Small Businesses

Current Lifetime Assumption 1 0 Year Lifetime 5 Year Lifetime
Lower Higher Lower Higher Lower Higher 1 333415 $2,8 8 0,000 $3,2 6 0,000 $ 2,88 0,000 $3,27 0,000 $2,8 8 0,000 $ 3,27 0,000 3 333415 $3,000,000 $3,760,000 $3,000,000 $3,760,000 $3,000,000 $3,760,000 5 333415 $70,000 $90,000 $70,000 $90,000 $70,000 $90,000 7a 335222 $4,590,000 $5,500,000 $4,590,000 $5,500,000 $4,590,000 $5,500,000 9a 333415 $70,000 $140,000 $70,000 $140,000 $70,000 $140,000 11b

326150 $600,000 $900,000 $1,100,000 $1,700,000 $ 2 , 08 0,000 $ 3 , 11 0,000 12b $300,000 $400,000 $600,000 $700,000 $ 1,110 ,000 $ 1,33 0,000 13b $2,000 $4,000 $5,000 $7,000 $ 9 ,000 $ 13 ,000 14 $0 $0 $0 $0 $0 $0 15 $0 $0 $0 $0 $0 $0 16 $0 $0 $0 $0 $0 $0 17b 3399991 $0 $0 $0 $0 $0 $0 TOTAL $11, 5 42,000 $ 14,08 4,000 $12,31 5,000 $15,16 7,000 $13, 8 0 9,000 $17,21 3,000 * A ssumes a proposed rulemaking that includes regulatory options 1, 3, 5, 7a, 9a, 11b, 12b, 13b, 14, 15, 16, and 17a

.

### Economic Impact Screening Analysis 40 

### Table 24 : Aggregated Economic Impacts on Small Businesses a

Economic Impact Industry

Impacted Number of Small Entities Subject to

the Rule and Experiencing Given Economic Impact Percent of All Small Entities Subject to the Rule That are Experiencing Given

Economic Impact Current Lifetime Assumption 1 0 Year

Lifetime 5 Year

Lifetime Current

Lifetime Assumption 1 0 Year

Lifetime 5 Year

Lifetime Less than 1% for all affected small entities b 326150 2 8 20 20

76.4% 67.4% 67.4%

333415 20 20 20 335222 20 20 20 Total 68 60 60 1% or more for one or more affected small entities c 326150 1 7 25 25

23.6 % 32.6% 32.6%

333415 4 4 4 Total 21 29 29 Greater than 3% for one or more affected small entities 326150 8 11 1 7

13.5 % 16.9% 23.6 %

333415 4 4 4 Total 12 15 21
a A ssumes a proposed rulemaking that includes regulatory options 1, 3, 5, 7a, 9a, 11b, 12b, 13b, 14, 15, 16, and 17a

. b Represents small entities affected with an economic impact equal to or lesser than 1% but greater than 0%. c T his category aggregates the number of small entities that w ould be expected to experience an impact of 1% to 3% with the number of small entities that w ould be expected to experience an impact of 3% or greater

.

### Economic Impact Screening Analysis 41 

# Appendix B : Summary of the Small Business Impact of All Options
Table 25 : Summary of the Small Business Impact of all Regulatory Options at 7% Discount Rate

Sector Opt. NAICS

Code Industry Estimated Number of Small Businesses Affected by the Rule Total Annualized

Economic Impact on Small Businesses
Lower Higher

Chillers 1 333415 Air

- conditioning and warm air heating equipment and commercial and industrial refrigeration equipment manufacturing 1 $2,88 0,000 $3,2 7 0,000 2 NA None

- $0 $0
3 333415 Air

- conditioning and warm air heating

equipment and commercial and industrial refrigeration equipment manufacturing 1 $3,0 3 0,000 $ 3,79 0,000 4 NA None

- $0 $0

Retail Food 5 333415 Air

- conditioning and warm air heating equipment and commercial and industrial refrigeration equipment manufacturing 19 $70,000 $90,000 6 NA None

- $0 $0
Household Refrigeration 7a 335222 Household refrigerator and home freezer manufacturing 20 $4,590,000 $5,500,000 7b 7c $330,000 $1,110,000 8 NA None

- $0 $0

Cold Storage 9a 333415 Air

- conditioning and warm air heating equipment and commercial and industrial refrigeration equipment manufacturing 4 $70,000 $ 1 4 0 ,000 9 b 333415 Air

- conditioning and warm air heating

equipment and commercial and industrial refrigeration equipment manufacturing 4 $ 100 ,000 $ 220 ,000

10 311411 Frozen Fruit, Juice and Vegetable

Manufacturing 5 $1,000 $ 7 ,000 311412 Frozen Specialty Food Manufacturing 1 5 $2,000 $1 6 ,000 311511 Fluid Milk Manufacturing 9 $ 2 ,000 $ 12 ,000 311512 Creamery Butter Manufacturing 1 $100 $ 1,0 00 311513 Cheese Manufacturing 1 5 $2,000 $1 8 ,000 311514 Dry, Condensed, and Evaporated Dairy

Product Manufacturing 5 $ 7 00 $ 6 ,000 311520 Ice Cream and Frozen Dessert

Manufacturing 13 $2,000 $ 14 ,000 311611 Animal (except Poultry) Slaughtering 5 6 $10,000 $ 60 ,000 311612 Meat Processed from Carcasses 4 7 $10,000 $ 50 ,000 311613 Rendering and Meat Byproduct Processing 4 $ 800 $ 6 ,000 311615 Poultry Processing 1 1 $ 2 ,000 $ 15 ,000 311710 Seafood Product Preparation and

Packaging 19 $ 3 ,000 $ 21 ,000

### Economic Impact Screening Analysis 42 311811 Retail Bakeries 256 $30,000 $250,000 311812 Commercial Bakeries 9 1 $10,000 $90,000 311813 Frozen Cakes, Pies, and Other Pastries

Manufacturing 8 $1,000 $ 8 ,000 311991 Perishable Prepared Food Manufacturing 24 $3,000 $24,000 312113 Ice Manufacturing 12 $2,000 $14,000 312120 Breweries 3 4 $4,000 $33,000 312130 Wineries 100 $10,000 $100,000 424420 Packaged frozen food merchant

wholesalers 10 7 $10,000 $100,000 424430 Dairy product (except dried or canned)

merchant wholesalers 6 2 $10,000 $60,000 424440 Poultry and poultry product merchant

wholesalers 17 $2,000 $17,000 424460 Fish and seafood merchant wholesalers 72 $10,000 $70,000 424470 Meat and meat product merchant

wholesalers 8 2 $10,000 $80,000 424480 Fresh fruit and vegetable merchant

wholesalers 166 $20,000 $160,000 424590 Other farm product raw material merchant

wholesalers 23 $3,000 $22,000 424810 Beer and ale merchant wholesalers 51 $10,000 $50,000 424930 Flower, nursery stock, and florists' supplies

merchant wholesalers 120 $15,000 $120,000 493120 Refrigerated Warehousing and Storage 21 $3,000 $ 23 ,000

Foam 11a

11b

326150 Urethane and other foam product (except

polystyrene) manufacturing 3 6 $800,000 $1, 20 0,000 12a 12b 8 $4 0 0,000 $500,000 13a 13b 1 $3,000 $5,000 14 0 $0 $0 1 5 0 $0 $0 1 6 0 $0 $0
Fire Suppression 17a

1 7 b 3399991 Fire extinguishing equipment, hand

portable and fixed

- system (excluding water sprinkler systems), including parts and attachments, manufacturing 0 $0 $0 1 8 0 $0 $0