1 UNFUNDED MANDATES REFORM ACT ANALYSIS FOR THE SPARK

- IGNITION ( S I) STATIONARY RECIPROCATING INTERNAL COMBUSTION ENGINE (RICE) NESHAP UNDER THE CLEAN AIR ACT (August , 2010 )

This document provides an anal ys is of the effects of the U.S. Environm ental Protection Agency ’s (“EPA”) stationary spark

- ignition ( S I) reciprocating internal combustion engine (RI CE) national emissions standard for hazardous air pollutants (NESHAP) rulemaking under Title III of the Clean Air Act (“CAA”) on State, local, and tribal governments, and the private sector as required b y the Unfunded Mandates Reform Act of 1995 (“UMRA”). EPA has determined that an UMRA anal ys is i s required because the S I RI CE rulemaking will affect units operated b y State and local governments, and will impose a cost on the private sector greater than $100 million in any

one year. This UMRA analy sis exami nes the impacts of the rule on units that are owned by State, local, tribal governments and the private sector. This analy sis is based on the re gulatory impact anal ys is (“RIA ”) prepared for this r ule. The RIA for this rule includes EPA’s assessment of costs, benefits, and economic impacts and can be found in the docket for this rulemaking at www.regulati ons.gov
. This final rule includes a maximum achievable control technology (MACT) standard for S I RI CE that are major sources of HAP and a generall y available control technology (GACT) standard for RICE that are area sources of HAP. Existing spark

- ignition engines will incur compliance costs (th e costs of control measures and testing, monitoring, recordkeeping, and reporting) under this rule

. New spark

- ignition engines will not be affected by this rule. This rule will be promulgated on August 10, 20 10 as directed under a court

- order.
This rule affects existing S I RI CE (defined as RICE constructed before June 12, 2006) but not new ones. Estimates of existing S I RI CE by engine ty pe and compliance cost estimates by engine ty pe were used as inputs to calculate the economic impact of the rule. SIRICE are defined as emergency

and non

- emergency

engines based on their extent of use in a ty pical year. Most engines affected b y this rule are in the non

- emergency category . Emergency

engines will not be required to add controls to meet the final rule’s requirements, but will have to submit to monitoring, recordkeeping, reporting, and testing requirements. The economic impact analy sis (“EIA”) that is included in the RIA indicates that prices of affected o utput from the affected industries will incre ase as a result of the rule, but the changes will be small. The largest impacts are on the electric power generating industry because it bears more costs from the rule than any other affected industry ( slightly more than 50 percent of the total annualized costs)

. For all affected industries, annualized compliance costs are 0. 5 percent or less on average of sales for firms.2

Based on the estimated compliance cost s associated with this rule and the predicted ch anges in prices and output in affected markets, the estimated social costs are $ 2 53 million (200 9 dollars), which is the same as the estimated compliance costs.
Itis estimated that HAP emissions from exi sting RI CE will be reduced b y 6 ,000 tons per ye ar b y 2013. Reductions in formaldehyde, acetaldehyde, acrolein, methanol, benzene and other HAPs are included in this estimate. The rule will also achieve in 2013 reductions in criteria pollutants. Reductions in carbon mo noxide (CO) will total about 1 09 ,000 tons per year, about 31 ,000 tons of volatile organic compounds (VOC), and nearl y 96 , 0 00 tons per year of nitrogen oxides (NOx). Exposure to CO can affect the cardiovascular s ys tem and the central nervous sy stem. E missions of NOx and VOC can also transform into PM (including PM 2.5 ) in the atmosphere

. Exposure to PM emissions can result in premature fatalities and many respiratory problems (such as asthma and bronchitis) . NOx and VOC can also transform into ozone, and this can also lead to premature mortalities and many respiratory

problems.
The total monetized benefits of the rule range from $ 5 1 0 million to $ 1

. 2 billion (200 9 dollars ) in 2013 with a 3 percent discount rate and $ 4 6 0 million to $ 1

. 1 billion (200 9 dollars) in 2013 with a 7 percent discount rate . The monetized benefits are comprised primarily of the benefits from reductions in directly emitted PM 2.5 and PM 2.5 created from transformation of NOx and VOC . We cannot provide a monetary estimate for the benefits associated with reductio ns of HAP and CO due to a lack of scientific knowledge of the links between the reductions in incidence of the health and environmental effects listed and a value that can be placed on them. EPA currentl y has research going on to provide such monetized es timates. The methodology for estimating monetized benefits is discussed in more detail in the RIA. Overall, the monetized net benefits of the final rule are $25 0 m illion to $ 980 m illion and $ 21 0 m illion to $ 86 0 m illion, at 3% and 7% discount rates, resp ectivel y
. Our anal ys is also includes the economic impacts on small entities. The analy sis of impacts on small entities is done as part of compliance with the Small Business Regulatory Enforcement Fairness Act (SBREFA), and is referred to by reference i n this report. We estimate that all small private sector entities will have annualized costs of less than 1 percent of their sales in all industries except NAI CS 2211 (electric power generation, transmission, and distrib ution) and NAICS 111 and 112 (Crop and Animal Production). For NAI CS 2211 , the number of private sector small entities having annualized costs of greater than 1 percent of their sales is less than 5 percent. For NAICS 111 and 112, the number of small entities having annualized costs of gr eater than 1 percent of their sales is about 30 percent , but no small entity has an impact of 2 percent or greater

. We conclude that there is no significant impact on a substantial number of small entities (SI SNOSE) that results from this rule. Small g o vernment entities may also be affected by this rule as well as small private sector entities. As presented in the RIA, we find that no small government entity will have compliance costs of more than 0. 2 percent of their revenues. Hence, no small governm ent entity will be impacted significantly

by this rule.3

Although this rule will not have a SISNOSE, EPA nonetheless has tried to reduce the impact of this rule on s mall entities. EPA carefully examined the regulatory alternatives, and selected the lowest cost/least burdensome alternative that EPA deems adequate to achieve the statutory requirements of Clean Air Act section 112 and effectivel y reduce emissions of HAP from major and area sources

. Some alternatives considered that provided more than the min imum level of control were deemed as not technically feasible or cost

- effective for EPA to implement for small engines and emergency engines

. All of these actions should reduce the level of small entity

impacts including impacts to small governments.