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### FINA L DRAF T REGULATOR Y AN

D ECONOMI C IMPAC T ANALYSI S FO R4 0 CF RPAR T 5 1 AN D 5 2 PREVENTIO N O F SIGNIFICAN T DETERIORATIO N AN D NONATTAINMEN T NE W SOURC E REVIE W REGULATOR Y REFOR M

b y Danie l Charle s Mussatti , Economis t Innovativ e Strategie s an d Economic s Grou p Ai r Qualit y Managemen t

Divisio n an d Denni s Crumpler , Environmenta l Enginee r Integrate d Implementatio n Grou p Informatio n Transfer

an d Progra mIntegratio n Divisio n Offic e o f Air Qualit y Plannin g an d Standard s Offic e o f Air an d Radiatio n Unite d State s Environmenta l Protectio n Agenc y

MD-1 2 RTP , Nort h Carolin a2771 1
Apri l 1 , 199 6P. 3

E t

ECONOMI C IMPAC T ANALYSI S TABL E O F CONTENT S
1 . INTRODUCTIO N 1 1(a ) TITL E AN D DESCRIPTIO N O F TH E ECONOMI C IMPAC T ANALYSI S 1 1(b ) EXECUTIV E SUMMAR Y 1 2 . SCHEDULE S FO ROM B REVIE W 2 3 . NEED S AN D CONSEQUENCE S 2 3(a ) NATUR E O F TH E PROBLE M 2 3(b ) LEGISLATIV E REQUIREMENT S 3 4 . CONSIDERATIO N O F ALTERNATIV E APPROACHE S 4 4(a ) N O REGULATIO N 4 4(b ) ALTERNATIV E EFFECTIV E DATE S 4 4(c ) ECONOMI C INCENTIV E ALTERNATIVE S 4 5 . ASSESSIN G BENEFIT S 5 5(a ) INTRODUCTIO N 5 5(b ) EXPECTE D BENEFIT S 5 6 . ASSESSIN G COST S 5 6(a ) INTRODUCTIO N 5 6(b ) METHODOLOG Y 5 6(b)(i ) MAJO RSOURCE S 5 TABL E 6- 1 MAJO RMODIFICATION S ABL E T O AVOI D NS RDU E T O TH E NS R

REFOR M PROPOSA L 7P. 4

6(b)(ii ) MINORSOURCES 8 6(b)(iii ) STAT

E AN D LOCA L AI RPOLLUTION CONTRO L AGENCIES 8 6(b)(iv ) DETERMINING BURDE N 8 TABL E 6- 2 RELATIV

E RESPONDEN

T BURDE

N 1 0 6(c ) COSTS : TH

E INFORMATIO

N COLLECTIO

N REQUES T 1 2 6(d ) TH E COS T O

F ALTERNATIVES 1 2 TABL E 6- 3 SUMMAR

Y O F RECORD-KEEPING AN D REPORTING BURDE

N ESTIMATE S T

O INDUSTR

Y RESPONDENT S AN

D STAT E AN D LOCAL AGENCIE S 1 3
7. UNFUNDE

D MANDATES REFOR

M AC T REQUIREMENT S 1 4 7(a ) INTRODUCTION 1 4 7(b ) PRIO RCONSULTATIO N 1 4 8 . REGULATOR

Y FLEXIBILIT

Y AC T REQUIREMENT S 1 4 8(a ) INTRODUCTION 1 4 8(b ) METHODOLOG

Y 1 5 TABL E 8- 1 INDUSTR

Y MULTIPLIER

S 1 5 8(c ) RESULT S 1 6 8(d) MEASURE S T

O AVER T IMPACTS O

N SMAL L ENTITIE S 1 6 8(e ) MEASURE S T

O MITIGAT

E IMPACT S O

N SMAL L FIRM S 1 6 9 . ENVIRONMENTAL JUSTICE CONSIDERATIONS 1 7 9(a) PURPOS E O

F ANALYSIS 1 7 9(b ) MITIGATIO N STRATEGIES 1 7 10 . FINDING S AN

D CONCLUSIONS 1 7P. 5

10(a ) INTRODUCTIO N 17 10(b ) FINDING S AN D CONCLUSION S 1 8 FIGUR E 10- 1 DISTRIBUTIO N O F REGULATOR Y RELIE F EFFECT S

DU E T O PROPOSE D NS RREFOR M CHANGE S 1 8 APPENDI X A 1 9 TABL E A- l COMPARISON O F TH E ANNUA L NUMBE RO F SOURCE S USE D I N

PREVIOU S NS RICR s T O ESTIMAT E TH E RECORD-KEEPIN G AN D REPORTIN G BURDE N T O INDUSTR Y RESPONDENT S AN D STAT E AN D LOCA L AI RPOLLUTIO N CONTRO L AGENCIE S 2 0 TABL E A- 2 COMPARISON O F RECORD-KEEPIN G AN D REPORTIN G BURDE N

ESTIMATE S USE D I N PREVIOU S ICR s 2 1 APPENDI X B STATUTOR Y AUTHORIT Y 2 2 TABL E B- 1 RESPONDEN T DAT A AN D INFORMATIO N REQUIREMENT S FO R

PREPARIN G PAR T C (PSD ) CONSTRUCTIO N PERMIT S 2 3 TABL E B- 2 STAT E DAT A AN D INFORMATIO N REQUIREMENT S 2 4P. 6

1
. INTRODUCTIO N 1(a ) TITL E AN D DESCRIPTIO N O F TH E ECONOMI C IMPAC T ANALYSI S Th e major Ne w Sourc e Revie w (NSR ) progra mregulate s emission s increase s du e t o ne w majo r source s an d modification s at existin g major

source s in a

n effor t t o achiev e an d maintai n th e Nationa l Ambient

Ai r Qualit y Standard s (NAAQS)
. O n Novembe r 15 , 1990 , Congres s enacte d numerou s change s t o titl e I o f th e Ac t (th e 199 0 Amendments ) includin g change s involvin g th e NS Rprovision s unde r

part s C an d D for

major ne w source s an d majo r

modification s locatin g i

n attainmen t

an d unclassifiabl e areas , nonattainmen t areas , an d ozon e transpor t regions
. Mos t

o f thes e change s ar e describe d i n th e "General Preambl e fo r Implementatio n o f

Titl e I o f th e Clean Air Ac t Amendment s o f

1990 " (Genera l Preamble ; se e 5 7 F.R
. 13498 , Apri l 16 , 1992)
. Eve n thoug h th e EP A ha s not

at thi s tim e revise d it s NS Rregulation s t o reflec t th e statutor y change s resultin g fromth e 199 0 Amendments , mos t State s hav e adopte d th e basi c requirement s int o thei r SIP s i n respons e t o statutor y deadline s fo r SI P submittals
. The y ar e issuin g permit s pursuan t t o th e 199 0 Amendment s an d NS RTransitio n Guidanc e tha t was issue d o n Marc h 3 , 199 1 an d Septembe r

9 , 1992
. Durin g 1992 , th e Environmenta l Protectio n Agenc y (EPA ) initiate d tw o regulator y project s with respec t

t o th e NS Rprogram . On e was t o codif y th e revision s t o th e NS Rprogram s mandate d b y th e 199 0 Amendment s (th e so-calle d Par t C & D rule)
. Th e othe r

wa s t o investigat e concern s an d potentia l correctiv e measure s identifie d b y th e regulate d communit y wh o conten d tha t NS Rprogra mofte n subject s environmentall y neutral , an d i n som e case s beneficial , activitie s t o tim e consuming , comple x an d costl y permittin g requirements
. Th e EP A committe d t o refor m th e NS Rprogra mwith several objectives : 1 ) Provid e progra mexclusion s fo r thos e project s tha t ar e environmentall y beneficia l o r neutra l but

tha t ge t caugh t unde r th e ol d regulations ; an d 2 ) Clarif y ambiguou s requirement s an d revie w procedures , thereb y expeditin g th e permittin g process ; an d 3 ) maintai n th e curren t leve l o f environmental protectio n an d othe r benefit s derive d fromth e existin g program . Prio r t o proposa l o f

th e NS Rrefor

mrevisions , th e Agenc y decide d a s part o f it s regulator y streamlinin g initiativ e t o merg e several provision s fromth e Par t C & D rul e int o th e NS RReformrulemaking
. Thos e provision s woul d eithe r further reliev e regulatory burde n o f th e NS Rprogram s o r

hel p State s tha t

hav e outstandin g Stat e implementatio n pla n (SIP ) obligation s an d revision s t o resolv e th e underlyin g issue s an d expedit e th e SI P approva l process . Th e NS Rrefor mrulemakin g therefor e propose s regulator y change s i n fou r majo r areas : (1 ) applicabilit y criteria , includin g ne w majo r sourc e thresholds , fo r

determinin g i f

th e majo r NS Rrequirement s appl y t o asource ; (2 ) contro l technolog y requirements , (3 ) protectio n o f Clas s I areas ; an d (4 ) revise d offse t requirement s fo r

nonattainmen t

areas . Severa l othe r

mino r change s ar e als o proposed
. Al l o f th e propose d change s ar e discusse d i n th e Federal Register notic e o f propose d rulemakin g fo r NS RReform
. Th e purpos e o f thi s documen t

i s t o analyz e th e regulator y impac t

o f th e propose d NS Rchange s accordin g t o th e regulator y requirement s of : th e Regulator y Flexibilit y Ac t (RFA) , th e Paperwor k

Reductio n Ac t

(PRA) , Executiv e Orde r (EO ) 12612-Federalis mPolic y Formulatio n an d Implementation , E O 12898-Federa l Action s t o Addres s

PS D an d Noutta-nmen tNS RRefor m DRAF T RI A Apri l 1,199 6 Page- 1P. 7

> > Environmenta

l Justic e i n Minorit y Population s an

d Lo w Incom e Populations , an

d th e Unfunde d Mandate s Refor

mAct o f 1995 , A ful

l Informatio n Collectio n Reques t (ICR ) analysi s i s include d i

n aseparat

e document
. 1(b) EXECUTIV

E SUMMAR

Y Th e Unfunde d Mandate s Refor

mAc t of 1995 ("Unfunde

d Mandate s Act") , signe

d int o la w on March 22 , 1995 , codifie s existin g regulator y reportin g requirement s for mExecutiv e Order s 1286 6 (Regulator

y Plannin g an d Review , signe

d Septembe

r 1993) , an d 1287 5 (Enhancin

g th e Intergovernmenta

l Partnership , signe

d Octobe r 1993)
. Unde

r Section 20 2 o

f th e Unfunde

d Mandate s Act , EP

A mus t prepar e abudgetar

y impac t statemen t t o accompan

y an y propose d o r final rul e wher

e th e estimated cost s t o State , local , or triba l governments , or

t o th e privat

e sector , wil l b e $100 millio

n or more . Unde

r Section 205 , EP

A must selec t th e mos t cost-effective an

d leas t burdensom

e alternativ e tha

t achieve s th e objective of

th e rule an

d i s consisten

t wit h statutor y requirements
. Th

e budgetar y impac t statemen t unde r Section 20 2 must

include : 1 ) acitatio n of th e statutor

y authorit y unde r whic h th e rul e i s propose d or

promulgated , 2 ) a

n assessmen

t o f th e cost s an d benefits o f

th e rule an

d th e federa

l resource s availabl

e t o defra y th e costs , 3 ) wher

e feasible , estimate s o f

futur e complianc e cost s an

d disproportionat

e impact s upon particula

r geographi c o r

socia l segments of

th e nation or

industry , 4 ) wher

e relevant , a

n estimat e o f th e effec t on th e nationa

l economy , an

d 5 ) adescription of

EPA' s prior

consultatio n wit

h State , local , an d triba l officials
. Th e propose d NS RRefor

mrevision s offe

r significan t regulator y relie f i n term s o f th e reportin g an

d RECORD-KEEPING burden , relativ e t o th e NS Rrequirement s a s the y are currently implemented
. Th e propose d revision s t o majo r NS Rapplicabilit

y criteri awoul

d exclud e a n estimated 50 % of

source s tha

t migh t otherwis e b e subjec

t t o majo r NSR
. Thes e source s would then b e covered b y mino r NS Rprogram s implemente d a t th e Stat e an d loca l levels
. Figure 10- 1 belo w display s th e relativ e impac t o f eac h o f th e propose d revision s t

o majo r NS R applicability
. Cos t

saving s woul

d b e realized due t o les s effor t neede d fo r preparatio n of

permi t application s an

d shorte r processing tim

e of mino r versu s majo

r NS Rpermi

t an d t o th e exten

t tha t th e mino r NS Rtechnology contro l requirement s an d mitigation measure s ar

e les s costl y tha n th e majo r sourc e requirement s an

d measures . Also , th e propose d streamlinin g of som e of th e time

intensive aspect s of

th e majo r sourc e requirement s would have asimila r effec t i n decreasin g th e cost s of developin g permit s an

d reduce s th e cost s o

f dela y an d uncertaint

y i n plannin g fo

r futur e sourc e growth
. Permittin g Authoritie s (PAs ) an d th e Agency wil l als o i

n adecreas e i

n permi t processin g costs . Becaus e th e propose d Refor mrevision s t o th e NS Rprogra mwoul d produc e acos t savings , th e EP

A i s no t require d t o prepar

e abudgetar

y impac t statemen t th e propose d rulemaking
. But

sinc e th e NS Rprogra

mi s of grea t interes t t o industr y an d permitting Agencies , acomparativ e analysi s wa s performe d of th e progra munde r th e curren t an d propose d Reforms
. Th e tota l informatio n collectio n cos t burde n o f th e current

NS Rprogra

mt o industry , th e implementin g Federal , Stat e an d loca l permittin g agencie s i s estimate d t o b e approximately $4 1 million
. Th e cos t

burden t o industr y respondent s o

f th e current

NS Rprogra

mi s about $2 9 million
. Th e estimate d cos t burden t o industr y respondents , if

th e propose d change s i

n the

PS D an d Nonattainmen tNS RReform DRAF T RIA Apri l 1,199 6 Page - 1P. 8

NS RRefor

mrulemakin g are promulgated , would b e abou t $1 8 million , yieldin g a

n estimate d decreas e in expecte d cost s o f approximatel

y $1 1 million per

year . I n addition , th e propose d NS RRefor

mpackag e would reduc e th e cos t t o Stat e an d loca l agencie s by a

n estimate d 2. 5 millio n pe r

year . Fo r

th e Federa

l government , however , th e saving s derive d for mthi s rulemakin g would b e smaller , o n th e order

o f $20 0 thousand per

year . Th e propose d revision s ar

e not expected t o resul

t i n significan

t deleteriou s environmenta

l impact
. 2 . SCHEDULES FOROM B REVIE W Thi s rulemakin

g wa s presente d t o th e Offic e of Managemen

t an d Budge t i n Jul y of 1995 fo r review
. Th

e proposa l dat e wil l b e i n Marc h or Apri l 1996
. Th e Administrato

r anticipate s promulgation of

thi s rulemakin

g i n Apri l 1997
. 3 . NEED S AN

D CONSEQUENCES Thi s chapte

r of th e Economi c Impact

Analysi s summarize s th e statutor y requirement s affectin g th e developmen

t of th e majo r NS Rprogra

man d describe s th e natur

e of th e problem
. Th e nee d fo r regulator y action an

d th e consequence s of

th e regulation i

n term s of improvin g th e functionin g o f th e marke t ar e als o discussed
. 3(a ) NATUR

E O F TH E PROBLE

M In th e absenc e of

governmen

t regulation , market-oriente d economic systems typicall y fai l t o preven t elevated level s o f

pollution i n th e environmen

t becaus e th e environmen

t i s apublic good
. More specifically , individua l source s trea

t th e assimilative capacit

y of th e environmen

t as a "fre e good " resourc e t o dispos e of unused byproduc t

emissions
. Unde

r thes e conditions , emitter s of pollutant s an

d pollutan t precursor s d

o no t internaliz e th e cos t

of damage s create d b

y thei r ow n emissions
. Thes e damage s occu r t o societ y a s awhole , rathe

r tha n t o specifi

c member s of society
. Thi s i s becaus e pollution emission s ar e non-marke

t good s ~ good s not

bough t or sol d i n th e marketplac e ~ an

d th e atmospher

e carrie s wit

h i t n o propert y rights
. Th

e damage s of pollution includ

e increased morbidit

y an d mortality ; propert

y damag e fro

msoiling , staining , an

d corrosion ; an

d productiv e los s due t o decreased worke r efficiency , crop an

d livestoc k damage , an d increased wea

r an d tea r o n capita l stocks
. Al

l of thes e damage s ar

e measurable
. I

n addition , ther e ar e damage s caused b

y pollution tha

t ar e muc h harder , i f not impossible , t o quantify
. Thes e damage s includ

e habita t loss , diminishe

d biodiversity , reduction s i

n aestheti c quality , optio n values , an d existenc e values
. Th e divergenc e betwee

n th e privat

e cos t of productio n an

d th e socia l cos t o f productio n occu r becaus e th e sourc e doe s not bea r th e ful l cos t of it s activitie s (marke

t cost s plu s damages)
. Th e outcom e of th e cos t divergenc e i s marke

t failure , wher

e as described i

n thi s case , th e leve

l o f output i s suc h tha t margina l socia l benefits ar

e not equa l t o margina

l socia l cost . Th

e resul t i s

PS D an d Nonattainmen tNS RRefor m DRAF T RI A Apri l 1,199 6 Page- JP. 9

economic inefficiency , o r

amis-allocation o

f society' s resources ; th e polluting activit y (e.g. , th e releas e o f ozone precursors ) occur s a t to o hig h aleve l i n comparison t o th e optimall y efficien t situation , thu s reducing th e potentia l tota l benefits t o society
. Regulator y strategie s attempt

t o correc t fo r th e divergenc e betwee

n socia l an d privat e costs . Using regulator

y strategie s t o internaliz e th e negativ e externalit y ma y not , however , resul

t i n zer o ai r pollution
. Economi c efficienc y call s fo r abatemen t u p t o th e poin

t wher e additiona l abatemen t woul d cos t mor e tha n th e additiona

l benefits would b e wort

h t o society
. I n addition t o governmen

t regulation , othe

r potentia l mechanisms ma

y b e use d t o correc t fo r th e negativ e externalit

y brough t abou t b y ai r pollution
. Negotiation s or

litigatio n unde

r stat e tor t an d stat e commo n law , i n theory , could resul

t i n compensation t o person s fo r th e damage s tha t the y incur
. However , tw o majo r obstacle s bloc

k th e correctio n b

y th e privat

e marke t fo r pollution-based inefficiencie s an d inequities
. Th

e first obstacl e i s hig

h transactio n cost s whe

n million s of person s ar

e affecte d b y million s of

pollution sources . Transactio n cost s of compensating thos e adversel y affecte d aris e an d accumulat

e becaus e th e curren

t an d futur e injur y t o eac h individua

l must b e appraised , th e injur

y must b e apportione d t o eac

h precursor

source , an d damag e suit s or

negotiation s must

b e conducted
. I

n a n unregulate d market , eac

h sourc e o f precursor emission s an

d eac h affecte d perso n woul

d have t o litigat

e o r negotiate
. Th

e transactio n cost s would b e s o hig

h a s t o probabl

y excee d th e benefits of

reduced ai

r emissions
. Thes e obstacle s strongl

y sugges t tha t anothe r mechanis mi s desirable fo

r solvin g ai r pollution problems
. Th e secon d obstacl e discouraging resolutio n b y th e privat

e sector i s due t o th e public goo d natur

e of ai r resource . Tha

t is , afte r emissio n reduction s have bee

n achieved , th e benefits o

f cleane r ai r ca n b e enjoye

d b y additiona

l person s a t n o additiona

l cost . Thi s result s i

n th e classi c "fre e rider " problem
. Everyone would hav e a n incentive to b e th e las t

t o contribut

e resource s fo

r litigatio n or

negotiation , thinkin

g tha t h e o r sh e woul d freely benefi

t fro mth e efforts of

others
. Whil e regulator y interventio n ca

n mitigat e th e impacts of

th e type s of

marke t failure s discussed above , the y generall y d o no t occu r withou t imposin g thei r ow n costs . Typically , thes e cost s includ e administration , enforcement, an d th e redistributio n of

resource s a

t al l levels
. However , secondar y impact s on socia

l an d economic sub-group s of

th e econom

y ca n als o b e affecte

d i n a disproportionat

e manner . Th

e purpos e of

thi s repor t i s t o analyze , identify , an

d mitigat e thes e regulator y cost s an d impacts
. 3(b ) LEGISLATIV

E REQUIREMENT S Thi s repor t present s a n economic assessmen

t of th e likel y impacts of

th e propose d NS R Refor mrevision s i

n accordanc e wit

h th e requirement s of

: EO 1286 6 fo

r Economi c Analysi s (EA , formerl y aRegulator

y Impact Analysi s - RIA) ; EO 1287 5 fo r th e analysi s of

Unfunde d Mandates ; E O 12898 , whic

h provide s limite

d guidanc e fo

r th e analysi s of

disproportiona

l impact s o

n people s (Environmenta

l Justic e - EJ) ; th e Regulator y Flexibilit y Ac t requirement s fo

r disproportiona

l impact s on smal

l entities ; an

d th e Paperwor

k Reduction Ac

t requirement s fo

r a n Informatio

n Collection Reques t

(ICR) t o analyze th e administrative burde n impose d b y th e propose d rulemaking
.

PS D an d Nonattainmen tNS RReform DRAF T RIA Apri l 1,199 6 Page- 4P.1 0

4 . CONSIDERATIO N O F ALTERNATIV E APPROACHE S Becaus e th e developmen t o f th e propose d NS RRefor mpackag e ha s bee n informe d b y recommendation s an d discours e unde r th e Federa l Advisor

y Committe e Ac t

(FACA ) process , ther e ha s bee n significant

consideratio n o f

alternativ e approache s t o eac h part o f th e NS RRefor

m effort
. Becaus e th e NS RRefor mSubcommittee , forme d unde r th e auspice s o f

th e Clean Ai r

Ac t Advisor y Committe e (CAAAC) , was comprise d o f member s o f

th e regulate d community , Stat e an d loca l ai r

pollutio n contro l agencies , environmental organizations , an d othe r Federa l agencies , th e propose d NS RReformpackag e reflect s areasone d consideratio n o f th e specifi c interest s o f eac h o f thos e groups . 4(a ) N O REGULATIO N Titl e I o f th e Clea n Air Ac t mandate s th e NS Rprogram . Consequently , "N o Regulation " i s no t aviabl e optio n fo r

thi s analysis
. 4(b ) ALTERNATIV E EFFECTIV E DATE S Th e purpos e o f

th e propose d NS RRefor mrulemakin g i s t o provid e regulator y relie f t o source s (th e purpose s ar e describe d in mor e detai l elsewher e in thi s EIA)
. Consequently , th e earlies t possibl e effectiv e dat e was assume d i n thi s analysis
. An

y othe r alternativ e effectiv e dates woul d delay th e regulator y relie f contemplate d b y th e propose d revision s and , i n effect , resul t

i n additiona l cost s an d burde n t o sources . 4(c ) ECONOMI C INCENTIV E ALTERNATIVE S Whil e marketabl e permit s ar e no t typicall y apart

o f th e NS Rprocess , ther e ar e certai n market-lik e decision s availabl e t o a n owne r operato r whe n considerin g t o construc t ane w plan t

o r modif y a n existin g one . I n th e first case , whe n ane w major

sourc e i s contemplated , th e owner/operato r

mus t determin e i f

th e annualize d cos t

o f complyin g wit

h all environmenta l regulation s (o f

whic h NS Ri s only on e factor ) ca n b e absorbe d eithe r

b y th e marke t

o r th e source , suc h tha t acceptabl e profit s woul d b e realized
. Wit h respec t t o NS Rth e factor s woul d includ e preparatio n o f

permi t application , installin g th e require d emission s controls , an d mitigatin g any advers e ai r

qualit y impact s tha t

woul d otherwis e deriv e fromth e constructio n an d operatio n o f th e source . Fo r

example , whe n ane w sourc e seek s t o buil d i n a n are adesignate d a s nonattainment , tha t sourc e i s require d t o offset it s propose d emission s increase s b y purchasin g emission s reduction s fromexistin g sources . Th e offset proces s i s afor

mo f marke t base d strategy . Fo r existin g majo r

sources , th e existin g applicabilit y criteri aset s u p ascenari o in whic h th e owner/operato r

ma y retir e ol d les s efficien

t emission s unit s for

emission s credi t

agains t th e increas e create d b y ne w o r modifie d emission s units
. Historically , th e EP A hel d tha t th e increas e associate d with ne w an d modifie d unit s mus t b e it s ful l potentia l (whic h include s th e effect o f installe d emission s control s an d othe r specific , enforceabl e operatin g limitations)
. Thus , th e market-base d decisio n i s betwee n th e emission s control s an d mitigatio n o f impact s associate d wit

h

PS D an d Nonattainmen tNS RRefor m DRAF T RI A Apri l 1,199 6 Page- 5P.1 1

th e ne w unit s compare d with th e profitabilit y o f continuin g t o operat e th e ol d units
. Th e propose d NS RReform s woul d favorabl y impac t thi s market-lik e decisio n proces s i n several ways : 1 ) th e emission s increase s associate d with ne w emission s unit s o r modifie d existin g unit s woul d b e base d o n projection s o f wha t actua l emission s wil l b e afte r th e installatio n o r modification
. Thu s th e owner/operato r determine s th e valu e o f

th e emission s fromol d unit s tha t might b e retired
. 2 ) Certai n emission s increase s associate d wit h project s tha t

produc e aclea

r overal l benefi t

b y eliminatin g othe r

emission s wil l b e exempte d frommajor NSR , thu s allowin g th e owner/operato r

t o reserv e th e emissio n reductio n credit s fromretirin g ol d emission s unit s for subsequen t

increases
. 3 ) Th e reform s will , t o som e degree , reduc e th e cost s associate d with preparin g th e majo r

sourc e permit , an d provid e fo r mor e source s o f

"marketable " offset s t o mitigat e impacts , thereb y lowerin g thei r cost . Sinc e atru e voluntary marketabl e permi t progra mi s outsid e th e scop e o f th e NS R progra man d th e quantificatio n o f value s fo r

th e market-lik e decision s describe d abov e ar e extremel y complex , th e comparativ e analysi s describe d herei n will only includ e th e mandate d offset s progra mfo r

nonattainmen t

an d certai n PS D areas . 5
. ASSESSIN G BENEFIT S 5(a ) INTRODUCTIO N Thi s chapte r

addresse s th e potentia l benefit s associate d with implementatio n o f th e major NS Rprogra munde r

titl e I o f th e Act , a s modifie d b y thi s rulemaking
. 5(b ) EXPECTE D BENEFIT S Th e primary benefi t

i s regulator y relief

, i.e. , areductio n in th e regulator y burde n for industry an d th e program-implementin g Federal , Stat e an d local agencies
. Thi s rulemakin g woul d exemp t frommajo r

NS Rabou t

hal f th e source s tha t

woul d otherwis e b e subjec t t o major sourc e permittin g requirement s o f Par t C & D o f

th e Ac t an d th e implementin g Federa l an d Stat e regulations
. Further , th e complexit y an d lengt

h o f th e NS Rpermittin g proces s hav e bee n reduced
. Environmentally , th e propose d rule s woul d provid e for bette r protectio n o f

air-quality

relate d ecosyste meffect s t o area s o f publi c interes t

suc h a s Nationa l Park s an d Wildernes s Areas
. Change s i n ai r

qualit y from ahuma

n healt h an d welfare standpoin t

ar e expecte d t o b e insignificant a s aresul t o f th e propose d reforms. 1 Consequently , thi s analysi s assume s tha t th e only benefit s tha t wil l b e achieve d fromthi s rulemakin g ar e quantifiabl e a s cos t savings
.
1 Certai n propose d provision s no t associate d with th e NS RRefor meffor t wil l facilitat e th e Act-mandate d requirement s t o limit an d offse t emission s increase s fromne w an d modifie d major source s locate d i

n area s tha t

d o no t achiev e th e NAAQS
. Mos t o f thes e requirement s ar e already bein g implemente d b y Stat e an d local agencies , an d th e regulatory burde n fo r thes e provision s ha s bee n assesse d previously
. Benefit s t o b e derive d fromchange s i n huma n exposure , improve d qualit y o f life , an d othe r

unquantifiabl e aspect s o f titl e I ar e enumerate d i

n analyse s fo r

othe r rulemakings , suc h a s th e settin g o f NAAQS , an d ar e no t

include d in thi s EA
. PS D an d Nonattainmen tNS RRefor m DRAF T RIA Apri l 1,199 6 Pag e 4P.1 2

6 . ASSESSIN G COST S 6(a) INTRODUCTION Thi s chapte

r addresse s th e explici

t cost s of th e propose d NS RRefor

mpackag e i

n term s of numbe r o f sources , an

d th e methodology fo

r determinin

g th e administrative burde

n t o source s an

d implementin

g Federal , Stat

e an d loca l permitting agencies
. Th

e cos t t o source s include s th e administrative cos t

of preparing , an

d submittin

g apar t C or D permit
. Th

e cos t estimat e exclude s opportunit y cost s an d an y unquantifiabl

e cos t associate d wit

h an y productio n delay s attribute d t o permitting
. Thes e intangible cost s ar e deal t wit h separatel y withi n thi s report . 

### 6(b ) METHODOLOG Y Thi s section discusse s th e methodology used t o estimat e Federal , State , an

d sourc e cost s associate d wit

h th e implementatio

n of th e propose d NS RRefor

mprogram , includin

g th e determination of

anationwid

e estimat e fo r administrative cost s an

d a n analysi s of

economic impact s of th e propose d NS RRefor

mpackag e o

n smal l businesse s i

n accordanc e wit

h th e requirement s of

th e Regulator

y Flexibilit y Act
. 6(b)(i ) MAJO

RSOURCES Th e NS Rprogrammati c ICRwa s update d i n Septembe

r 1995 t o reflec

t th e requirement s impose d on th e NS Rprogra

mi n part s C an

d D Act
. Th

e supporting draf

t EIA fo r tha t IC Ri s attache d a s a

n appendix
. A s noted earlier , th e revision s t o par t C & D requirement s fromth e 1990 Amendments have no t bee n codifie d int o th e NS Rregulations , but

nearl y al l substantiv e requirement s have bee

n implemente

d b y Stat e an d loca l agencies
. Th

e propose d rulemakin

g tha t i s th e subjec t of thi s EI A als o propos e t o adopt certain ke y revision s mandated b

y th e 199 0 Amendments t o furthe

r relieve regulator

y burde n of th e NS Rprogram s or

hel p State s tha

t have outstanding Stat

e implementatio

n pla n (SIP ) obligation s an

d revision s t o resolv e th e underlyin g issue s an d expedit e th e SI P approva l process . Consequentl

y th e baselin

e provided b

y th e Septembe r 199 5 IC Rwould no t

chang e a s aresul

t of thi s propose d rulemakin

g an d thu s woul

d continu e t o b e th e baselin

e (the 199 5 baseline) fo

r thi s EIA (an

d ICRfo r th e NS RRefor

m rulemaking)
. Th e Septembe

r 199 5 NS Rprogra

mIC Rrepresent s asignificantl y highe r numbe r of source s subjec

t t o NS Rtha

n previou s ICR s a s aresul

t of th e 1990 Amendments
. Th e metho d used t o determin

e th e expected numbe

r of permit s effecte

d b y th e NS RRefor

mrul e wa s th e sam

e a s tha t used fo r Septembe r 1995 ICR
. Datafro

mpreviou s ICR s wer

e used
. Th e approach involve d tw o steps : asensitivit

y analysi s of

thos e Standar

d Industria l Cod e (SIC ) group s whic

h tend t o have th e greates t

numbe r of NS Rpermit s eac

h year , an d conducting telephone interview s t o verif y th e accuracy of

thes e estimates
. Interview s wer e conducted wit

h Stat e an d EP A Regiona l Offic e personne

l who wer e identifie d as havin g broa d NS Rpermitting experience , industr y experts , an

d othe r affecte d parties
. Thes e estimate s wer e use d t o develo

p a n overal l

PS D an d Nonattainmen tNS RReform DRAF T RI A Apri l 1,199 6 Page- 7P.1 3

estimat e of th e numbe

r of affecte d sources . Whil e th e telephone survey s showe d tha t eve n amon g expert s wit

h simila r expertis e an

d experience , estimate s of

th e effect s of th e propose d change s varied widely , th e ne t effec t of th e propose d revision s t o th e NS Rregulation s wil l b e t o reduc e th e numbe

r o f source s subjec

t t o NS Rpermitting , a s compared t o th e 1995 baseline
. Thi s reductio n wil l occu r i n bot h nonattainmen

t an d PS D areas . Becaus e dat

aar e not availabl e fo r estimating th e numbe

r o f source s b y pollutant , th e numbe

r of source s subjec

t t o majo r NS Rprovision s wil

l b e estimated collectivel y fo r al l o f th e criteri apollutants
. Thi s i s consisten t wit h th e methodology used fo

r th e Septembe r 199 5 ICR
. Thu s th e estimated tota l annua l numbe r of majo r par t D source s pe

r yea r i s 590 ; th e numbe

r of PS D source s a

t 320 pe r year . The EP A estimate s tha

t a t leas t 80 % of th e source s i

n th e 1995 baselin

e ar e majo r modification s t o existing majo r sources . Th

e propose d NS RReforms would creat e fou r exclusion s tha

t would reduc e th e numbe

r of source s whic

h mus t underg o majo

r NS Ra s aresul

t of modificatio

n unde r th e curren t regulations
. Each of

thes e i s discussed below
. Th e actua l frequency tha

t agive n propose d revisio

n would b e use

d i s extremel

y difficul t t o quantif y give n the limite d dataon th e numbe

r an d type s of source s tha

t hav e bee n issue d majo r NS Rpermit s i

n th e past . Numerou s assumption s wer e therefor e necessar y i n derivin g th e estimated impact s of

th e propose d NS RRefor

mrevisions
. I t

i s believed , however , tha

t th e assumption s er

r conservatively , s o th e analysi s i s stil l quit e usefu l fo r estimatin g aconservativ e burde

n reductio n o f th e propose d NS RRefor

mrule
. New Applicabilit

y Tes t fo r "Clea n Units " Thi s tes t

woul d appl y t o tw o type s of modification s t o existing emission s units
. First , i t i s assume d tha t majo r modification s t o existing unit s constitut

e abou t 20 % of al l modification s tha

t woul d otherwis e b e subjec

t t o NS R(16 % o

f th e 199 5 baseline)
. Abou

t 50 % of thes e modification s ar

e assume d t o hav e installed BAC

T or LAE Rwithi n th e las t 1 0 year s an

d anothe r 10 % would qualif

y a s well-controlle d units
. Therefor e th e tes t would appl

y t o approximatel

y 1 0 percen

t of th e 199 5 baseline
. No w i

t i s assume d tha t 5 0 % o f thes e source s woul d exhibi t no increas e i

n potentia l hourl y emission s an

d thu s avoid majo r NSR
. Multiplyin

g th e 199 5 baselin

e b y th e resulting 5% , 3 0 par

t D an d 1 6 PS D source s pe r yea r would b e able t o avoi

d majo r NS Ra s aresul

t of thi s propose d applicabilit

y test . Chang e i n Nettin g Baselin

e Reporte d estimate s fo

r th e percentag e of

modification s currentl y subjec t t o majo r NS Rtha t would b e abl

e t o ne t out unde r th e propose d syste

mrange d from25 t o 90%
. Using th e 199 5 baselin e an d th e most conservativ e reductio n (25 % of estimated modification s or

2 0 o f th e 199 5 baseline) thi s analysi s project s 11 8 majo r par t D source s o

r modification s an

d 6 4 majo r PS D source s pe

r yea r would ne t out du e t o th e chang e i

n th e netting baseline
. Pollutio n Contro l Projec t

Exemption Th

e Agenc y expect s th e decreas e i

n majo r NS R permit s du e t o th e propose d exemptio n fo r pollution contro l project s an d qualifyin g pollution preventio n project s t o b e abou t 5 percen t o f 199 5 baseline
. Thi s estimat e i s smal l becaus e i t i s believe d mos t project s of

thi s natur e would not

b e amajo r modificatio

n unde r th e curren t regulations
. Consequently , th e estimated reductio n i n th e numbe

r of majo r par t D permit s i s 3 0 pe r year , an d th e numbe

r of majo r PS D permit s would fal

l b y 1 6 pe r year . Actual-to-Futur

e Actua l tes t Th e Agenc y expect s tha

t b y itsel f th e impac t of thi s applicabilit y tes t would b e simila

r t o extendin

g th e perio d fo

r determinin

g th e netting baseline ;

PS D an d Nonattainmen tNS RRefor m DRAF T RI A Apri l 1,199 6 Page- 8P.1 4

however , whe

n combined , th e tw o shoul

d creat e asynergistic effect
. Therefore , th e impact fo r thi s tes t wa s conservativel

y estimated a

t a30 % reductio n o

f al l modification s tha

t would otherwis e b e covere d b

y majo r NS R(or 25 % of th e 199 5 baseline)
. Consequentl y th e commensurat

e reductio n i

n majo r par t D NS Rpermit s would b e 147 , an d th e numbe

r o f PS D permit s would drop b

y 80
. Combine d Effec t of Change s Th

e decrease s i

n th e numbe

r of source s subjec

t t o majo r NS Rar e no t additive
. Fo r

example , amodifie

d uni t migh t no longe r b e subjec t t o NS Rbecaus e of th e clean-uni

t tes t p_ r th e revision i

n th e netting baseline
. However , give n th e numerou s assumption s tha

t wer e necessar y th e effec t of thi s double-counting wa s als o assume d t o b e negligibl e an d wa s therefor

e ignored
. Th

e estimated impac

t o f al l th e propose d reforms o

n NS R applicabilit y woul d b e areductio n of

32 4 par t D source s an

d 17 6 PS D source s whic

h would have otherwis e bee

n subjec t t o majo r NSR
. Th e Septembe

r 199 5 IC Rbaselin

e would b e reduced to 26 6 par t D an d 14 4 PS D majo

r source s pe

r year . Table 6- 1 below display s th e change s i n reportin g requirement s i

n tabula r form
. 

### TABL E 6-

1 TH E CHANG E I

N NS R APPLICABILIT

Y DU E T O TH E NS R REFORM PROPOSAL S 199 5 Baselin e fo r

Reportin g Source s Propose d Chang e t o Applicabilit y Ne w Tes t fo r "Clea n Units " Chang e i n Nettin g Baselin e Us e o f Actual-To-Actua l Tes t Pollutio n Contro l Projec t

Exemptio n Total Reductio n i n 199 5 Baselin e % Reductio n o f Baselin e PS D 0.0 5 0. 2 0.2 5 0.0 5 0.5 5 Part D

0.0 5 0. 2 0.2 5 0.0 5 0.5 5 Numbe r o f Source s Require d t o Report PS D 32 0 Par t

D NS R 59 0 Total

91 0 Unit s Abl e t o Avoi d NS R PS D -1 6 -6 4 -8 0 -1 6 -17 6 14 4 Part D

-3 0 -11 8 -14 8 -3 0 -32 5 26 6 TOTA L

-4 6 -18 2 -22 8 -4 6 -50 1 41 0 6(b)(ii ) MINORSOURCES Th e Septembe

r 199 5 IC Restimated 19,50

0 mino r sourc e permit s pe

r year . For th e purpose s of

thi s analysis , th e ter

m"mino r source " mean s an

y ne w sourc e tha

t i s belo w th e majo

r ne w sourc e emission s thresholds , an d an y modifie d sourc e tha

t i s below th e majo

r modificatio

n threshold s calle

d "significan

t emission s increases, " fo

r eithe r nonattainmen

t or attainment/unclassifiable areas . Althoug h thes e source s would not

have t o underg o majo

r NSR , the y would have t o receiv e anonapplicabilit y determination , an

d would probabl

y b e subjec

t t o th e relevan t Stat e mino r NS Rpermitting provisions
. Th e numbe r of mino r source s nationwid

e wil l increas e a s aresul

t of th e decreas e i

n majo r sources . Th

e estimated total decreas e i

n majo r source s a s aresul

t o f th e propose d NS Rreforms

PS D an d Nonattainmen tNS RReform DRAF T R U Apri l 1,199 6 Page- 9P.1 5

wa s added t o th e 19,50

0 mino r source s respondent s t o yiel d aestimated tota

l of 20,00 0 mino

r sourc e respondents
. 6(b)(iii ) STAT

E AN D LOCA L AI RPOLLUTION CONTRO L AGENCIES Al l o f th e previou s ICR s us e th e sam e numbe r o f Stat e an d loca l ai r pollution contro l agencie s performin

g majo r par t D , majo r PSD , an d mino r sourc e revie

w programs . For consistency , thi s analysi s als o assume s th e numbe r of Stat e an d loca l agencie s would not

chang e fromth e numbe

r o f agencie s used i

n th e previou s ICRs
. 6(b)(iv ) DETERMINING BURDE N Responden

t Burde n Appendi

x A , Tabl e A- l show s th e estimated industr y burde n use d i n th e five previou s NS RICRs
. Eac h presented separat

e estimate s fo

r developin g majo r PSD , majo

r par t D , an d mino r sourc e permits
. Thi s analysi s use s th e estimate s fro mSeptembe

r 199 5 ICR analysi s a s abaselin

e an d adjusts the

mbase d o n th e propose d NS Rrefor

mchanges
. Th

e followin g item s ar e acomprehensive list

of th e task s tha

t amajo r sourc e ma

y b e required t o perfor mwhe n developing an

d submittin

g aPS D permi

t application :

• Rea

d applicable regulation s t o determin e complianc e requirement s • Inquir

e of or mee t wit h th e appropriat

e permi t reviewin g authorit y (an d concurrentl

y wit h th e FL M i f applicable) t o obtai

n guidanc e o

n wha t dataar e neede d t o mee t th e applicable requirements
. • Prepar

e BACT engineerin

g analysi s • Perfor

mai r qualit y modelin g t o demonstrat

e tha t th e sourc e wil

l not caus e o r contribut e to aviolatio n of

aNAAQ S or

incremen t • I f applicable , ascertain an

d presen t informatio n t o determin

e th e effec t of th e propose d sourc e on AQRV s insid

e Clas s I areas . Th

e AQRV s t o b e addressed wil l b e identifie

d b y th e FLM
. • Perfor

mbot h pre - an d post-constructio n ai

r qualit y monitoring a s necessar

y • Prepar

e an d submi t permi t application • Attend public hearin g • Revis e permi

t application pe

r comments receive

d fro mth e P A and/o r fro mpublic comments a s directed b

y th e P A No t al l majo r PS D source s would hav

e t o perfor mal l of th e task s liste

d above
. For example , asourc e wil

l onl y have t o perfor

mpre-constructio n monitoring i f ther e i s insufficien

t monitoring dataavailable , or i f th e permi t reviewin g authorit y request s it
. Also , asourc e wil l no t have t o perfor

maClas s I are aAQR

V analysi s i

f it s propose d emission s ar

e not expected t o adversel y impac t aFedera l Clas s I are a(base

d o n apropose d requiremen

t linkin g th e necessit

y fo r aClas s I analysi s wit

h th e filin g of anotic e allegin

g potentia l advers e impacts)
. Th

e leve l of effor t associate d wit

h performin

g th e task s wil

l als o var y fromsourc e t o sourc e dependin g o n suc h factor s a s th e type s an

d amount s o

f pollutant s emitte

d b y th e source , it s proximit

y t o th e Federa

l

PS D an d Nonattainmen tNS RRefor m DRAF T RIA Apri l 1,199 6 Pag e -1 0P.1 6

Clas s I area , th e numbe

r of AQRV s potentiall

y affected , th e availabilit

y of ai r qualit y an d modelin g data , an d availabilit

y of datarelativ e t o sensitive receptor s an d th e AQRVs
. Becaus e th e effect s o f eac h categor y of chang e liste

d above ar e largel y uncertain , the

y ar e not considered furthe r here
. Fo r methodologica

l consistency wit

h previou s NS RICRs , th e followin g burde n estimat e represent s a

n averag e rathe

r tha n aworst-cas e estimate
. Thi s analysi s estimate s a n increas e i n burde n fo r PS D permi

t developmen

t i n Clas s I area s of

1 8 hours , an

d adecreas e of

7 hour s fo r th e BACT cutof

f date , fo r ane t increas e of

1 1 hour s pe

r permit
. Usin

g th e Septembe

r 199 5 IC Ra s abaseline , th e ne w PS D permi

t developmen

t estimat e i s 71 1 hour s pe

r source . Th e Septembe

r 199 5 IC Rals o provided estimate s o f th e burde n fo r par t D (nonattainmen

t area) permi

t development
. A s wit

h PSD , thi s estimat

e i s used a s abaseline , an

d i s adjuste

d t o accoun t fo r th e propose d NS Rrefor

mchanges
. A majo

r sourc e developing an

d submittin

g apar t D permi t application ma

y b e required t o perfor

mth e followin

g tasks : Rea d applicable regulation s t o determin e complianc e requirement s Inquir e o f or mee t wit h th e appropriat

e permi t reviewin g authorit y t o obtai n guidanc e o

n wha t dataar e needed t o mee

t th e applicabl

e requirement s Prepar e LAE Rengineerin

g analysi s Perfor mai r qualit y analysi s Identif y an d documen

t emission s offset

s Perfor ma n analysi s of

alternative s (described below ) Prepar e an d submi t permi t application Attend public hearin

g Revis e permi

t application pe

r comment s receive d fro mth e permi

t reviewin g authorit y and/o r public comments Th e Septembe

r 199 5 IC Restimated th e averag e par t D permi t developmen

t burde n a t 45 0 hour s pe r source . Change s t o par

t D due t o th e expansio

n of th e Undemonstrate d Technology/Application (UT/A) waive r i s th e onl y significan

t provision tha

t applie s t o nonattainmen

t areas . However , i

n term s of reportin g an

d RECORD-KEEPING burden , thi s provision i s expecte d t o have anegligibl e effec t becaus e th e ful

l nonattainmen

t NS Rprocedure s wil l continu e t o apply
. I

n fact, th e UT/

A procedur

e pose s apossible increas e i n burde n becaus e o f th e added task s of

determinin

g th e UT/ A emission s limit, identifyin g failur e modes , evaluation of th e UT/A' s performance , an d possibl y performin

g aClas s I are aanalysis
. Becaus e th e impac t of th e UT/ A procedur

e coul d b e positiv e or

negative an

d becaus e i

t i s avoluntar

y exercise , th e effec t of th e expansion of

th e UT/ A progra mi s estimated t o b e negligible
. Th e propose d reforms tha t reduce d th e burde

n of th e BAC T analysi s woul

d als o exten

d t o LAER
. Th

e benefi t t o par t D source s wa s estimated approximatel y on e percen t o f th e tota l burde n t o sources , or approximatel

y five hours
. Therefore , th e overal l par t D permi t developmen

t burde n wa s estimated a

t 44 5 hour s pe

r source . Table 6- 2 display s th e relativ e burde n of eac h of th e par t C an d D tasks
. Th e burde n associate d wit

h mino r sourc e permit s derive s fro

mpreparing th e necessar

y analyse s an

d documentation t o demonstrat e tha t the y ar e exemp t fro mth e majo

r sourc e requirements
. Thes e requirement s ma y var y dependin

g o n Stat e requirements , o

n whethe r th e

PS D an d NonattalnmentNS RReform DRAF T RI A Apri l 1,199 6 Page-1 1P.1 7

sourc e wil l b e locate d i

n a n attainmen

t or nonattainmen

t area , an d on whethe

r th e sourc e wil

l b e ne w or modified
. A

t aminimum

, asourc e wil

l hav e t o fill ou t apermi t application an

d submi t documentation t o th e permi t reviewin g authorit y t o demonstrat

e tha t th e source' s emission s wil

l b e belo w th e emissio

n cut-poin t fo r amajo r source . Th

e Septembe

r 199 5 IC Restimated th e permi t developmen

t burde n fo r mino r source s a t 8 hours
. Revision s t o th e NS Rregulation s wil l no t substantiall

y increas e th e permi

t burde n estimat e fo r mino r sources . Source s tha

t would b e excluded unde

r curren t regulation s would continue t o b e required t o submi t th e sam e informatio

n a s before
. Therefore , thi s analysi s use s 8 hour s t o calculat e th e burde

n estimat e fo r mino r sources . Stat e an d Loca l Agenc y Burde n Appendi

x A Table A- l show s th e Stat e an d loca l agenc y burde n estimate s used i

n th e five previou s NS RICR s fo r developin g majo r PSD , majo

r nonattainmen

t NSR , an d mino r sourc e permits
. Th

e Septembe

r 199 5 IC Restimated th e PS D permi t processin g burde

n t o Stat e an d loca l agencie s t o b e 28 0 hour s pe r permit
. Severa

l propose d regulator

y change s affec

t th e burde n t o Stat e an d loca l agencie s i

n processing PS D permits
. Th

e BACT cutof

f dat e coul d lea d t o asignifican

t saving s i n afe w instances
. Thi s analysi s estimate s th e averag e saving s fromth e propose d change s t o th e BAC T cutof f dat e t o b e 3 hour s pe r permit
. Severa l additiona l requirement s pertain t o th e permitting authorities ' (PA) responsibilitie s t o coordinat

e wit h Federa l Lan d Manager s (FLM ) whe

n processing an

d reviewin g application s equiring aClas s I analysis
. Thes e requirement s include : I f th e PA receive s earl

y notification of

aproject withi n 10 0 k mof aClas s I area , i

t must notif y th e FLM(s ) an

d provid e th e FLM(s ) wit

h a n opportunit

y t o participat

e i n an y preapplicatio n meetings
. Whe n apermi t application i s received fo

r asourc e withi

n 10 0 k mof aClas s I area , th e P

A must submi t acop y t o th e relevan

t FLM
. Th e PA must lo g al l application s i

n th e NS RBB S an

d submi t acop y of th e application t o EPA
. Th e preliminar

y determination prepare d b

y th e P A fo r th e public commen

t perio d must no w addres s efforts t o consul t wit h th e FL M abou t th e application , as wel

l a s a n evaluatio n o f

th e FLM' s Clas s I are aanalysis , i f applicable
. I t shoul d b e noted , however , tha

t th e ne w provision s d

o not represen t totally ne w burden s i n al l cases . Fo r

example , th e Federa

l PS D progra

mcurrentl y require s a

n opportunit

y fo r th e FL M t o participat

e i n pre-applicatio n meeting s wit h th e applican

t an d permitting authority
. State s whic h implemen

t th e PS D progra

munde r delegated authorit

y alread y undertak e th e responsibilit

y of notifyin g an d schedulin

g suc h pre-application activities
. Th e ne w requiremen

t i s bein g added t o th e par t 5 1 PS D regulation s wher

e i t i s als o likel

y tha t som e State s ar e alread y assumin g thi s responsibilit

y a s wel l followin g th e procedure s contained i n th e Federa

l PS D regulations
. Also , som e State s notif

y (includin g th e mailin

g o f th e permi t application to ) th e FL

M whe n asourc e i s expected t o adversel

y affec t aFedera l Clas s I area . Thi s requiremen t wil l affec t onl y thos e circumstance s wher

e suc h notification wa s not

automaticall

y don e fo r source s withi

n 10 0 kilometer s o f

th e Clas s I area . Finally , th e inclusio n of Clas s I are ainformatio

n i n th e

PS D an d Nonattainmen tNS RRefor m DRAF T RI A Apri l 1,199 6 Page-1 2P.1 8

t TABL E 6- 2 RELATIV E RESPONDENT BURDE N Activit y I
. Par t C (PSD ) A
. Preparatio n an d Plannin g Determinatio n o f

Complianc e Requirement s Obtai n guidanc e o n Dat aNeed s Preparatio n o f

BAC T Engineerin g Analysi s B
. Dat aCollectio n an d Analysi s Ai r Qualit y Modelin g Determinatio n o f

Impac t o n Ai r Qualit y Relate d Value s Pre-constructio n Ai r

Qualit y Monitorin g Post-constructio n Ai r

Qualit y Monitorin g C
. Permi t

Applicatio n Preparatio n an d Submittal o f Permi t Applicatio n Publi c Hearing s Revision s t o Permi t D
. TOTA L E
. 199 5 Baselin e Burde n F
. Estimate d Increas e (Reduction ) i n Burde n 11
. PAR T D (Nonattainment ) A
. Preparatio n an d Plannin g Determinatio n o f

Complianc e Requirement s Obtai n guidanc e o n Dat aNeed s B
. Dat aCollectio n an d Analysi s Preparatio n o f

LAE REngineerin g Analysi s Demonstrat e Offset s Prepar e Analysi s o f

Alternativ e Sites , Processes , etc . Ai r Qualit y Modelin g C
. Permi t

Applicatio n Preparatio n an d Submittal o f Permi t Applicatio n Publi c Hearing s Revision s t o Permi t D
. TOTA L E
. 199 5 Baselin e Burde n F
. Estimate d Increas e (Reduction ) i n Burde n HI
. Mino r

NS RPermittin g A
. Prepar e an d Submi t Permi t Applicatio n B
. 199 5 Baselin e Bunle n C
. Estimate d Chang e i n Burde n IV
. TOTAL S A
. Tota l Burde n Base d o n Propose d Reform s B
. 199 5 Total Baselin e Burde n C
. Estimate d Increas e (Reduction ) i n Burde n

PS D an d Nonattainmen tNS RReform DRAF T RI A Apri l 1,199 6 Page-I J No
. Unit s

14 4 14 4 14 4 14 4 14 4 14 4 14 4 14 4 14 4 14 4 14 4

26 6 26 6 26 6 26 6 26 6 26 6 26 6 26 6 26 6 26 6

2000 0 Hour s Pe r Uni t

8 6 8 6 8 6 20 2 5 0 5 0 5 0 5 2 3 3 1 6 71 1

7 5 7 5 2 0 4 0 6 0 100 3 8 2 5 1 2 44 5

8 Total Hour s

12,38 4 12,38 4 12,38 4 29,08 8 7,20 0 7,20 0 7,20 0 7,48 8 4,75 2 2,30 4 102,38 4 224,00 0 (121,616 )
19,91 3 19,91 3 5,31 0 10,62 0 15,93 0 26,55 0 10,08 9 6,63 8 3,18 6 118,14 8 26550 0 (147,353 ) 160,00 0 156,00 0 400 0 380,53 2 645,50 0 (264.969 )P.1 9

preliminar y determination i s not

acompletel

y ne w requiremen

t either , althoug

h th e ne w provision s clarif

y th e typ e of

informatio n tha t must b e include d i n th e public recor

d an d th e exten

t t o whic h th e PA i s expected addres s it s ow n evaluation o f

th e Clas s I advers e impact s i f i t reject s th e FLM' s demonstration.
. Therefore , al l o f th e above requirement s would appl y fo r ever y PS D permit
. Each of

th e requirement s wil

l yiel d amino r increas e i n burden
. Thi s analysi s estimate s th e ne t increas e i n burde n due t o th e increased Clas s I are arequirement s i n th e propose d NS R reforms woul d b e abou

t 9 hour s pe

r source . I t i s believe d tha t considerable benefi

t ma y b e derived b y th e propose d revision s i

n reducing th e nee

d fo r furthe r analyses , meeting s an

d negotiation s lat

e i n th e permitting process . It wa s estimated tha

t th e saving s would a

n averag e of 1 4 hour s pe

r permit
. Th

e resulting ne

t chang e i n Stat e an d loca l agenc y burde n fro mth e propose d NS RRefor

mrevision s would b e 8 hour s resulting i n aburde n estimat e o f 27 2 hour s pe

r majo r sourc e permit
. Th e Septembe

r 1995 IC Restimated th e par t D NS Rpermi

t processing burde

n t o State/loca l agencie s t o b e 11 0 hours
. Th e actua l burde n reductio n pe

r permi t o f thi s propose d rulemakin g i s expected t o b e statisticall y negligibl e since th e propose d NS Rreforms d o not impac t th e par t D majo r sourc e requirements
. Th e Septembe

r 199 5 IC Restimated th e mino r sourc e permi

t processing burde

n a t 1 0 hours
. A numbe

r of mino r sourc e permit s coul

d resul t fro mth e "clea

n uni t test " o r pollutio n o

r preventio n project s tha

t involve analyse s t o determin e i f incidenta l o r collatera l emissio n increase s caus e unacceptabl e environmenta l impacts
. However , eve

n i f th e estimated tota

l reductio n i

n majo r sourc e permit s estimated t o resul t fromthes e reforms -9 0 an

d th e revie w burde n increased by 24 hours , th e increas e whe n normalize

d ove r al l 20,00 0 mino

r permi t action s doe s no t appreciabl y affec t th e pe r permi t value
. Th e 10-hou r estimat e derive d i n previou s ICR s i s therefor e believed t o represen

t asuitable estimat

e fo r al l mino r sources . EP A Burden Th

e EP A burde n ca n b e grouped int

o th e followin

g tasks , wit

h associate d burde

n hours :

• Revie

w an d verif y applicabilit

y determination : 2 hour s • Revie

w contro l technology determination : 3 hour s • Evaluat

e offset s (nonattainmen

t NS Rpermit s only) : 1 hou r • Evaluat

e ai r qualit y modelin g (typicall y applie s fo

r PS D sources , bu

t ma y als o b e submitted fo

r som e nonattainmen

t NS Rpermits) : 4 hour s • Evaluat

e alternative s analysi s an

d secondar y impact s analysis : 2 hour s • Evaluat

e Clas s I are aanalysi s (nea

r Clas s I area s only) : 2 hour s • Administrative task s (correspondence , management) : 1 hou r Thi s result s i

n a n uppe r boun d o n th e EP A burde n of 1 5 hour s pe

r permi t fo r PS D source s an

d fo r nonattainmen

t NSR
. Fo r mino r ne w sourc e revie

w applications , th e Agenc

y expect s tha

t it s entir e burde n fo r eac h permi t wil l b e limite d t o th e revie

w an d verificatio

n of th e applicabilit

y determination of

tha t source . Th

e estimated burde

n fo r eac h mino r NS Rpermi

t tha t fo r aMajo r NS Rapplicabilit

y determination , tw o hour s pe r application ; howeve

r th e EP A anticipate s tha

t i t wil l onl y audi t abou t 1 0 percen t of th e mino r sourc e permit s due t o th e trend t o dives t progra m responsibilitie s t o th e States
.

PS D an d Nonattainmen t NS R Refor m DRAF T RI A Apri l 1,199 6 Page-1 4P.2 0

6(c ) COSTS : TH E INFORMATIO

N COLLECTIO

N REQUES T Table s 6- 2 an

d 6- 3 lis t th e effor t an d cost s fo r respondents , State s an

d loca l authorities , an d th e Federa

l governmen

t t o successfull

y complet e aNS Rapplication unde

r th e propose d NS R Refor mchanges
. Th

e cost s i n Tabl e 6- 3 ar e i n 199 4 dollars
. Th

e tota l annualize d cos t of th e propose d NS RRefor

mprogra mi s show n t o b e $35. 5 million
. I

n accordanc e wit

h th e estimation of cost s performe

d i n prior NS Rimpac

t analyses , th e 1992 par

t 7 0 permitting progra

mICR , an d th e 199 4 par t 7 1 Federa l permitting progra

mICR , Federa

l an d Stat e burde n wa s value

d a t $3 4 pe r hour , whic

h i s comparable t o afull

y loaded full-tim

e employe e (FTE) a t aG.S
. leve

l 11 , ste p 3
. Responden

t burde n wa s estimated th e averag e o f a$4 5 pe r hour , whic

h represent s a$4 1 pe

r hou r in-hous e labo

r rate an d a$5 5 pe r hou r consultan t rate , utilized a

t aratio n o f

70 % t o 30% , respectively
. A complet

e discussion of

thes e cost s ca

n b e foun d i n th e companio

n report : Information Collection Reques t fo r 4 0 CF Rpar t 5 1 an d 5 2 Preventio n of

Significan t Deterioratio n an

d Nonattainmen

t Ne w Sourc e Revie

w Regulator

y Reform
. Thi s analysi s determine s th e curren t propose d Refor

mchange s simplif

y th e permitting proces s fo r ne w an d existin g unit s whic

h mus t mee t majo r NS Rrequirements
. I t

show s a n expected burde

n o f 52 0 thousand hour s fo

r NS Rpermitting pe

r yea r fo r respondents , areductio n o f almos t 126 thousand burde

n hours , or

approximatel

y twent y percen t fromth e baselin

e burden
. 6(d ) TH E COS T O

F ALTERNATIVES Th e datai n Table 6- 2 ar

e primary , direct

burde n hour s fo r managemen

t an d implementation of

a n NS Rpermi

t progra munde r th e propose d change s of

thi s rulemaking
. Th

e associate d cost s fo

r thes e burde

n estimate s ar

e foun d i n Table 6-3
. Section 4 o f

thi s repor t discusse s thre e alternativ e regulator y approaches
. I t

conclude s "N

o Regulation " i s no

t aviable optio n withi

n th e framework

o f th e Act
. Changin

g th e effectiv

e dat e of th e regulation coul

d chang e th e value o f

cost s an d benefits , a s wel

l a s th e distribution of

thos e cost s an

d benefits amon g differen t interes t group s withi

n th e economy . For

instance , postponing regulatio n allow s fo r furthe r technologica

l innovation t o reduc e th e cos t o f compliance
. Postponin g complianc e deadline s als o increase s th e bas e fo r valuin g benefits
. A s population s increase , th e benefits o f regulator y contro l ar

e enjoye d b y mor e people , whil

e th e cost s of

contro l remai

n constan t (or fall , i f technologica

l innovation has occurred)
. Therefore , program s tha t ma y b e infeasibl

e toda y (becaus e th e su

mo f benefits doe s not

outweig h th e cost s of

regulation) ma

y ver y wel l b e a n economicall

y viable alternativ e som

e year s fro mnow . However , th e additiona l los s o f healt h an d environmenta

l benefits durin

g th e postponemen

t perio d must

als o b e include

d i n th e decisio

n t o pus h back complianc e deadlines
. A

n effectiv e dat e o f thi s rulemakin

g wa s not considered b

y th e NS RRefor

mSubcommittee , althoug

h ther e wa s agenera

l agreemen

t tha t th e rulemakin

g shoul d procee d expeditiousl

y an d th e EP A agreed t o mak

e allo w a s muc h refor ma s possible vi aissuanc e of polic y statements . Th

e EP A has therefor

e assume d tha t th e effectiv

e dat e of th e change s wil

l b e th e dat e of promulgation
. Becaus e th e effec t o f thi s rulemakin

g wil l b e t o provid

e regulator y relief , th e cost s of

alternativ e effectiv

e date s ca n b e assume

d t o b e greate

r tha n thos e of th e propose d NS RRefor

mrulemaking
. Finally , a s state d i n Section 4 of

thi s analysis , th e impac

t of economi c incentive alternative s ha s bee n ignored i n orde r tha t th e conclusion s reached herei n ar e of amor e conservativ e nature .

PS D an d Nonattainmen tNS RReform DRAF T RI A Apri l 1 , 199 6 Page-I SP.2 1



# FIGURE10- 1 EXPECTE D REDUCTIO N I N MAJO R SOURC E PERMIT S DU E T O NS R REFOR M

APPLICABILITY BASE D O N PROJECTIO N O F ACTUA L EMISSION S

Clea n Uni t Tes t Pollutio n Contro l Project s Exclusio n Chang e t o 10-yea r nettin g Baselin e Reductio n i n

permi t Action s



# Sainin g Majo r Source s Subject t o Revie ; 

# 45 %P.2 2

PS D andNonattalnmentNS RRefor m DRAF T RI A Apri l 1,199 6 Page-1 6P.2 3

TABLE 6- 3 SUMMAR

Y OF RECORD-KEEPIN G AN D REPORTIN G BURDE

N ESTIMATE S T O INDUSTR Y RESPONDENTS , AN

D FEDERAL , STATE AN D LOCA L AGENCIE S

No
. o f Source s (a ) Part D (Nonattainmen t NSR ) Majo r Sourc e Permit s

26 6 Industr y Responden t

Burde n Hours/Sourc e Total Hour s Wag e Rate , $/hour(b ) Total Cost s 199 5 Baselin e Cos t 44 5 118,37 0 $4 5 $5,326,650 Cos t o r (Savings ) fromBaselin e I
. Stat e an d Local Agenc y Burde n No
. o f Agencie s No
. o f Sources / Agenc y (c ) Hours/Sourc e Total Hour s Wag e Rate , $/hour

(b ) Total Cost s 199 5 Baselin e Cos t 5 0 5. 3 11 0 29,26 0 $3 4 $994,84 0 Cos t o r (Savings ) fromBaselin e II
. Federa l Burde n No
. o f Source s (d ) Hours/Sourc e Total Hour s Wag e Rate , $/hour

(b ) Total Cost s 199 5 Baselin e Cos t 26 6 1 5 3,99 0 3 4 $135,66 0 Cos t o r (Savings ) fromBaselin e V
. Total Progra mCos t 6,457,15 0 Part C (PSD ) Majo r sourc e Permit s 14 4 71 1 102,38 4 $4 5 $4,607,280

6 0 2. 4 27 2 39,16 8 $3 4 $1,331,71 2

14 4 1 5 2,16 0 3 4 $73,44 0

6,012,43 2 Total Progra mCos t

o r (Savings ) fromBaselin e Mino r Sourc e Actio n 20,00 0 8 160,00 0 $4 5 $7,200,000

8 5 235. 3 1 0 200,00 0 $3 4 $6,800,000

2,00 0 2 4,00 0 3 4 $136,00 0

14,136,00 0

a ) Include s both majo r

ne w and modifie d stationar y sources . TOTAL !

380,75 ' $4
. S17.133.93 C $29,073,00
. ($11,939,07 0

268,42 ! $3 ' $9,126,55 : $11,776,00
. ($2,649,448

10,15 ( 3 ' $345,10
. $597,00
. ($251,90 0 $26,605,58 : ($14,840,41 8 b ) Wag e rat e i s base d o n th e Federal wag e rat e a t th e Grad e 11 , Ste p 3 leve l fo r th e 199 4 pa

y schedule
. Th e wag e rat e nclude s direc t

personne l an d overhea d costs . c ) Numbe r

o f sourc e permit s processe d b y eac h agenc y equal s th e total numbe r of source s divide d by th e tota l number o i

PS D andNonattalnmentNS RRefor m DRAF T RI A Apri l 1,199 6 Page-1 7P.2 4

7 . UNFUNDE D MANDATE S REFOR M AC T REQUIREMENT S 7(a ) INTRODUCTIO N

Titl e I I o f th e Unfunde d Mandate s Refor mAc t o f 199 5 (UMRA) , P.L
. 104-4 , establishe s requirement s for Federa l agencie s t o asses s th e effect s o f thei r regulatory action s o n State , local , an d triba l government s an d th e privat e sector . Unde r sectio n 20 2 o f

th e UMRA , EP A generall y mus t

prepar e awritte n statement , includin g acost-benefi t analysis , fo r

propose d an d final rule s with "Federal mandates " tha t ma y resul t in expenditure s t o State , local , an d tribal governments , i n th e aggregate , o r t o th e privat e sector , o f

$10 0 millio n o r

mor e in any on e year . Befor e promulgatin g a

n EP A rul e fo r

whic h awritte n statemen t i s needed , sectio n 20 5 o f th e UMR A generall y require s EP A t o identif y an d conside r

areasonabl e numbe r

o f regulatory alternative s an d adop t

th e leas t costly , mos t

cost-effectiv e o r

leas t burdensom e alternativ e tha t achieve s th e objective s o f th e rule
. Th e provision s o f sectio n 20 5 d o no t

appl y whe n the y ar e inconsisten t

with applicabl e law
. Moreover , sectio n 20 5 allow s EP A t o adop t a n alternativ e othe r tha n th e leas t

costly , mos t

cost-effectiv e o r

leas t burdensom e alternativ e i f th e Administrato r publishe s with th e final rul e a n explanatio n wh y tha t

alternativ e wa s no t

adopted
. Befor e EP A establishe s any regulator y requirement s tha t ma y significantly o r

uniquel y affect

small governments , includin g triba l governments , i t mus t hav e develope d unde r

sectio n 20 3 o f

th e UMR A asmall governmen t agenc y plan
. Th e pla

n mus t provid e fo r

notifyin g potentiall y affecte d smal l governments , enablin g official s o f affecte d small government s t o hav e meaningfu l an d timel y inpu t in th e developmen t

o f EP A regulatory proposal s with significan t Federa l intergovernmenta l mandates , an d informing , educating , an d advisin g small government s o n complianc e wit h th e regulator y requirements
. A s show n in thi s RI A EP A ha s estimate d th e tota l annualize d cos t o f th e NS Rpermittin g progra mincludin g th e propose d reform s doe s no t includ e aFedera l mandat e tha t ma y resul t i n expenditure s o f

$10 0 millio n o r

mor e t o eithe r

State , local , o r

triba l government s i

n th e aggregate , o r t o th e privat e sector . Therefore , today' s propose d rul e i s no t subjec t t o th e requirement s o f section s 20 2 an d 20 5 o f

th e UMRA
. I n addition , EP A ha s determine d tha t thi s propose d rul e contain s n o regulator y requirement s tha t might significantly o r

uniquel y affect

small governments , whic h generall y d o not

hav e ne w sourc e permittin g authority
. Executiv e Orde r

1287 5 ("Enhancin g th e Intergovernmenta l Partnership" ) i s designe d t o reduc e th e burde n t o State , local , an d tribal government s o f th e cumulativ e effect

o f unfunde d Federa l mandates , an d recognize s th e nee d for thes e entitie s t o b e fre e fromunnecessary Federa l regulatio n t o enhanc e thei r abilit y t o addres s problem s the y fac e an d provide s for Federa l agencie s t o gran t waiver s t o thes e entitie s fromdiscretionary Federa l requirements
. 7(b ) PRIO RCONSULTATIO N Initially , th e EP A convene d thre e NS Rsimplificatio n workshops , invitin g representative s fromamon g thos e involve d with an d affecte d b y th e major sourc e NS Rpermittin g program . Workshop s wer e hel d o n Augus t 12-13 , 1992 ; Marc h 17-18 , 1993 ; an d Jun e 4 , 1993
. I n Jul y 1993 , th e EP A forme d th e NS RRefor mSubcommitte e unde r

th e auspice s o f

th e CAAAC , a

PS D andNonattalnmentNS RRefor m DRAF T RIA Apri l 1,199 6 Page-1 8P.2 5

committe e forme d i n accordanc e with th e Federa l Advisor y Committe e Ac t

(FACA ) ( 5 U.S.C
. App
. I)
. Th e purpos e o f th e Subcommitte e was t o provide , unde r th e directio n o f

th e CAAAC , independen t

advic e an d counse l t o th e EP A o n polic y an d technica l issue s associate d with reformin g th e major

NS Rprogram . Th e responsibilitie s o f th e NS RRefor

mSubcommitte e include d developin g draf

t recommendation s o n approache s fo r reformin g th e major

NS Rrule s i

n orde r t o reduc e complexit

y an d perceive d impediment s t o speedy revie w o f th e curren t

systems , whil e at th e sam e tim e maintainin g th e environmental goal s an d benefit s embodie d i n th e curren t approach. Th e Subcommitte e wa s compose d o f representative s fromindustry , environmenta l organizations , an d Stat e an d local agencies , an d variou s Federa l Department s an d Agencies
. Member s wer e selecte d o n th e basi s o f thei r professional qualification s an d diversit y o f perspectives
. NS RReformSubcommitte e meeting s wer e hel d o n Jul y 21-22 , 1993 ; Novembe r 8

- 9 , 1993 ; January 20-21 , 1994 ; Marc h 16-17 , 1994 ; an d Jul y 19-20 , 1994
. Th e Subcommitte e forme d subgroup s t o analyz e issue s an d develo p draf t recommendation s i

n specifi c progra mareas , includin g NS Rpermittin g issue s associate d wit h nea r Federa l Clas s I areas , BAC T an d LAE Rdeterminations , an d t o addres s th e impac t o f Existin g Source s i n Federa l Clas s I Areas , an d NS RApplicability
. Fina l recommendation s wer e transmitte d b y th e CAAA C t o th e EP A t o assis t th e developmen t

o f thi s propose d rulemaking
. All o f th e CAAA C an d Subcommitte e meeting s wer e ope n t o th e publi c an d announce d i n th e Federa l Registe r

an d relevan t

material s wer e place d in th e publi c docke t associate d wit

h thi s rulemaking
. 8 . REGULATOR Y FLEXIBILIT Y AC T REQUIREMENT S 8(a ) INTRODUCTIO N Thi s sectio n addresse s th e anticipate d economi c effect o f th e propose d NS RRefor m change s o n small entities , pursuan t t o th e requirement s o f

th e Regulator y Flexibilit

y Ac t (P L 96

- 354)
. Th e propose d NS RRefor mrul e change s wil l caus e varie d effect s i n th e regulate d community
. Th e Regulator y Flexibilit y Ac t require s EP A an d othe r

regulatory agencie s t o prepar e a n analysi s o f

th e disproportiona l effect s o f it s rulemaking s o n small entitie s (smal l businesses , small governments , an d small organizations)
. I n thos e case s wher e th e Agenc y doe s not know , eithe r

in quantitativ e o r

qualitativ e terms , th e approximat e severit y o f th e impact s a propose d rul e wil l hav e o n small entitie s subjec t t o th e rule , i t

mus t undertak e a

n initia l screenin g analysi s t o evaluat e th e likely economi c an d administrativ e burdens
. Th e result s o f th e screenin g analysi s help s th e Agenc y determin e th e potentia l economi c impact s o f th e propose d regulatory option
. 8(b ) METHODOLOG Y Thi s repor t

describe s a

n initia l screenin g analysi s t o determin e whethe r th e propose d NS R change s wil l hav e asignifican t impac t o n small entities
. Th e screenin g approac h i s t o (1 ) identif y thos e provision s o f

th e rul e change s tha t

hav e th e potentia l t o generat e economi c impact s o n an y entities , eithe r

positiv e o r

negative , (2 ) estimat e th e frequenc y with whic h impact s coul d b e generate d an d thei r

typica l magnitude , an d (3 ) estimat e th e exten t t o whic h small entitie s ar e

PS D an d Nonattainmen tNS RReform DRAF T RIA Apri l 1,199 6 Page-1 9P.2 6

affected
. Becaus e of

th e natur e of ascreenin g analysi s a s described above , item s (2 ) an d (3 ) wer e approache d throug h asurve y of ne w sourc e permitting authoritie s utilized i n th e Septembe

r 199 5 economic analyses
. Thes e authoritie s includ e 1 0 state s (Arizona , Connecticut , Indiana , Massachusetts , Missouri , New York , New Jersey , Ohio , Tennessee , an d West Virginia)
. Fo r

eac h Stat e selected , datawer

e collecte d o

n emission s o

f VOC , NO x , CO , an

d PM-10
. Th e ten-stat

e sampling provide d informatio n tha t wa s the n extrapolate d t

o anationa

l scale
. Thi s extrapolatio n proces s wa s consisten t wit h th e methodologie s utilize d in prio r NS RRegulator

y Flexibilit y Analysi s work , accordin g t o whic h amultiplie

r was develope d a s aweighted averag e using Gros s Stat

e Produc t (GSP ) figure s compiled b

y th e U.S
. Departmen

t o f Commerc e fo

r majo r industr y groupings
. Thre e weighted multiplier s specifi c t o th e ten-stat

e sampl e were derived ; on e fo r each of th e 3-digit

SIC code s liste d below : TABL E 8- 1 INDUSTR

Y MULTIPLIER S SI C Industr y Grou p Multiplie r 200-29 9 Manufacturing-No n Durabl e Good s 3. 5 300-39 9 Manufacturing-Durabl e Good s 3. 2 400-49 9 Transportatio n an d Publi c Facilitie s 3. 6

Thes e weighted multipliers wer e used t o estimat

e th e numbe

r o f affecte d source s fo

r th e te n States
. Thi s metho d doe s not differentiat

e betwee n source s insid

e nonattainmen

t area s an d thos e whic h ar e locate d i n attainmen

t o r unclassifiabl

e areas . Consequently , thi s methodology overstate s th e numbe

r of affecte d source s i

n th e ten State s an

d constitute s a

n uppe r boun d t o th e impac t of th e propose d NS RRefor

mrulemakin

g o n smal l entities
. The datafo

r thi s analysi s wer

e collected a

t th e thre e digi

t SI C code leve

l fo r sourc e categorie s whic

h ar e als o considered "Smal

l Busines s Dominated " b

y th e Smal l Busines s Administration
. Thi s se

t consist s of

industrie s i

n whic h ove r 60 percen t of entitie s ar e classifie d as small
. Whe

n averag e employmen

t or revenue s ar

e computed fo

r smal l busines s dominated industries , th e average s reflec t th e smal l busines s influence
. 8(c ) RESULT S Smal l Governmen

t Entitie s Th

e screenin g analysi s considered governmenta l entities , bu

t determined no smal

l governmen

t entitie s (define

d a s thos e servin

g population s of

les s tha n 50,000 ) would b e affected
. Onl y entitie s wit

h ne w sourc e permitting authorit y would b e affected , an d agencie s wit

h thi s authorit

y ar e typicall y Stat e governments , municipalities , an d group s o f municipalitie s t o whic

h authorit y has bee n specificall

y delegated
. Therefore , sinc e n o smal l governmen

t entitie s ar e affecte d b y thi s rule , ther

e wil l b e n o significan

t economic effect

s to smal l

PS D an d Nonattainmen tNS RReform DRAF T RI A Apri l 1,199 6 Page-2 0P.2 7

government s a s aresul

t of th e NS Rrefor

mchanges
. Smal l Businesse s Si

x provision s of

th e draf t propose d reforms wer

e identifie d a s havin g th e potentia

l fo r significan t impac t due t o th e propose d NS RRefor mrul e changes
. Th

e Agenc y learned that , i

n virtuall y ever y case , th e burde

n o n permi t applicant s wil

l b e reduced
. Further , th e propose d rulemakin

g doe s not provid e an y particula r size or capacit y bia s whic

h would negativel

y impac t aparticula

r busines s type . Additionally , cumulative benefits ar e expected t o b e relativel

y smal l becaus e th e propose d rul e change s woul d provid e smal l businesse s wit

h relie f onl y i n thos e infrequen t case s wher

e the y migh t otherwis e b e covered unde r majo r NSR
. Therefore , th e Agenc y conclude s th e rul e change s would have littl e impac t o n smal l businesses
. Therefore , th e Agenc y believe s tha

t thi s rul e wil

l not have asignifican

t economic impac

t on asubstantia

l numbe r of smal l entities , an d tha t furthe r analysi s i s not

required unde

r th e Act
. 8(d) MEASURE S T

O AVER T IMPACT S O

N SMAL L ENTITIE S Th e NS RRefor

mpackag e applie s generall

y t o major , ne w an d modifie d source s o

f ai r pollutan t emission s without

respec t t o th e economic classificatio n of th e source . Since th e rule als o impose s no ne

w regulator

y burden s o

n smal l businesse s thi s analysi s wil l not cove r measure s t o mitigat e impact s on smal

l entities
. 9
. ENVIRONMENTA L JUSTIC E CONSIDERATION S 9(a) PURPOS E O

F ANALYSIS Executiv e Orde

r 12898 , dated Februar

y 11 , 1994 , require s tha

t eac h Federa l agenc y mak e achievin g environmenta

l justic e (EJ ) par

t of it s mission
. T o d

o this , agencie s ar

e required t o identif y an d addres s disproportionatel

y hig h advers e healt

h o r environmenta

l effect s of agenc y program s on minorit

y an d low-incom

e populations
. A s par

t o f thi s pla n agencie s must

conside r E J issue s whe

n ne w rule s ar e proposed
. Thi s section of

th e repor t provide s suppor

t t o EP A i n it s effort s t o addres s EJ issue s relate d t o th e NS RRefor mpackage
. EP

A solicited guidanc e fro

mth e Agency' s Offic

e o f Environmenta

l Justic e (OEJ) ; th e Offic

e of Policy , Plannin

g an d Evaluation (OPPE) ; an

d th e Offic e of Soli d Wast e an d Emergency Respons e (OSWER ) o n agenera l se t o f issue s whic

h shoul d b e considered i

n preparatio n of

thi s report . Thes e issue s include d descriptiv e statistics , industria

l concerns , geographi c concerns , an d mitigation strategies
. The datai n thi s section show tha

t i n man y o f th e nonattainmen

t area s affecte

d b y th e NS R Refor mchanges , housin

g densit y i s considerabl

y highe r tha n th e Stat e an d nationa l averages . Whe n subset s of

thes e area s correspond t o area s wit h disproportionatel

y hig h minorit y or low

incom e population s th e agenc

y shoul d b e especiall

y sensitive t o th e potentia

l fo r advers e impacts on minoritie s an

d lowe r incom e groups . 9(b ) MITIGATION STRATEGIES A s described above , th e primar y effect s of th e propose d NS RRefor

mchange s relevan

t t o consideratio n o f

EJ wil l not b e apparen

t whe n considered a

t th e nationa

l level
. Th e mos t

PS D an d Nonattainmen tNS RReform DRAF T R U Apri l 1,199 6 Page-2 1P.2 8

significan t E J concern s coul d aris e whe n th e sitin g o f asourc e in a

n are awoul d hav e disproportionat e effect s o n minorit y o r low-incom e populations
. Whil e thi s rulemakin g doe s no t includ e strategie s t o mitigat e th e disproportionatel y hig h an d advers e impac t o f NS Rpermitting , i

t doe s provid e fo r

bette r availabilit

y o f informatio n abou t

propose d constructio n o f ne w source s an d modificatio n t o existin g major sources . I t

thereb y enhance s th e opportunitie s fo r publi c participatio n throug h th e publi c commen t process . Furthe r

th e abilit y o f th e publi c t o appeal permittin g decision s i n Stat e court s woul d b e improve d b y thi s rule
. 10 . FINDING S AN D CONCLUSION S 10(a ) INTRODUCTIO N Th e previou s section s o f

thi s documen t

hav e addresse d th e majorit y o f th e requirement s relate d t o th e Economi c Assessmen t require d o f

EP A fo r propose d NS RRefor

mregulatory changes
. Thi s sectio n summarize s th e informatio n containe d i n th e previou s sections , an d provide s aqualitativ e discussio n o f som e o f th e economi c effect s no t

addresse d in th e previou s sections
. I n addition , thi s sectio n addresse s th e requirement s o f Executiv e Order s 1286 6 an d 12875
. A s part o f th e qualitativ e discussio n o f effect s o f th e NS RRefor

mrule , thi s sectio n make s conclusion s regardin g EPA' s nee d t o addres s thes e requirements
. 10(b ) FINDING S AN D CONCLUSION S Thi s sectio n provide s aqualitativ e discussio n o f th e cost s an d benefit s associate d wit h th e NS RReformrule , includin g thos e already addresse d in previou s sections
. Th e cost s an d benefit s o f eac h o f th e majo r group s o f

regulatory change s ar e discusse d below
. Fo r th e purpose s o f

thi s discussion , abenefi t

o f th e refor mrul e i s adecreas e in cos t relativ e t o th e baselin e NS R regulations
. Th e propose d NS RRefor mchange s offe

r significan

t regulator y relie f

i n term s o f

th e reportin g an d record-keepin g burden , relativ e t o previou s version s o f th e NS RRules
. Thi s regulator y relie f

arise s primaril y throug h source' s abilit y t o avoi d NS Rrevie w unde r th e propose d change s t o th e NS RRefor mpackage' s permittin g requirements
. Th e reductio n i n th e numbe r

o f applicabl e source s wa s largel y aresul t o f change s i n nettin g procedures
. Figur e 10- 1 belo w display s th e relativ e impac t o f eac h o f th e major NS RRefor

mchanges
. Fo r

sources , regulatory relie f decrease s th e cost s o f

developin g permit s an d reduce s th e cost s o f dela y an d uncertaint y i

n plannin g fo r

futur e sourc e growth
. Likewise , fo r PA s an d th e Agency , thi s result s i n adecreas e i

n permi t processin g costs . Further , th e propose d change s i n th e NS RRefor

mpackag e woul d allo w onl y "insignificant " emission s increase s th e impact s o f whic h mus t

stil l b e manage d b y mino r sourc e program s at

th e Stat e an d local level
. Th e estimate d administrativ e an d recor d keepin g cos t t o industry unde r

th e NS Rprogra m a s revise d b y th e propose d NS RRefor mrulemakin g woul d b e abou t $1 7 million , whic h represent s adecreas e in estimate d cost s t o respondent s o f approximatel y $1 2 millio n pe r year . I n addition , th e propose d NS RRefor mpackag e woul d reduc e th e correspondin g cos t t o Stat e an d local agencie s b y approximatel y $2. 5 millio n pe r year . Fo r th e Federa l government , however , th e saving s derive d for

mthi s rulemakin g ar e muc h smaller , o n th e orde r o f $25 0 thousan d pe r

year .

PS D an d Nonattainmen tNS RRefor m DRAF T RI A Apri l 1,199 6 Page-2 2P.2 9



## APPENDI

X A COMPARISO N OF PREVIOU S ANALYSE SP.3 0



### TABLE A- l COMPARISO N O F TH E ANNUA L NUMBEROF SOURCE S USE D IN PREVIOU S NS RICR s T O ESTIMAT E TH E RECORD-KEEPIN G AN D REPORTIN G BURDE

N T O INDUSTR

Y RESPONDENT S AN D STATE AN

D LOCA L AT

RPOLLUTIO N CONTRO L AGENCIE S

Industr y Respondent s

• Majo r PS D source s

• Majo r Par t D source s

• Mino r Source 0 Stat e an d Loca l Agencie s

• Majo r PS D source s

• Majo r Par t D source s

• Mino r Sources 0 NS R

IC R (7/85) "

30 0
10 0 20,00 0

6 0
5 0
8 5 PM-1 0

Increment s IC R (4/88) "

30 0
7 0 20,00 0

6 0
5 0
8 5 N0 2

Increment s IC R (10/88) "

30 0
7 0 20,00 0

6 0
5 0
8 5 CM A

Exhibi tA IC R (7/89) "

30 0
7 0 20,00 0

6 0
5 0
8 5 Par tC& D Draf tIC R (6/94) "

32 0 590 " 19,50 0

6 0
5 0
8 5 •Dat e o f th e ICR
. reflect s statutor

y lowerin g o f

majo r sourc e cutof

f du e t o 199 0 CA

A Amendments
. °Minor source s ar e source s in nonattainmen t an d attainment/unclassifiabl e area s whos e actua l emission s an d potentia

l t o emi t are belo w th e major

sourc e threshold s fo

r nonattainmen t

o r PSD , an d modified source s that will ne t ou t o f th e majo r sourc e constructio n permi t requirement s by "nettin g out, " i.e. , generatin g interna l emission s reduction s an d or limitin g thei r

potentia l t o emi t belo w th e applicabl e threshol d significanc e levels
.

PS D an d Nonattainmen l NS RRefor m DRAF T RIA Apri l 1,199 6 Page-2 5P.3 1



### TABLE A- 2 COMPARISO N O F RECORD-KEEPIN G AN D REPORTIN G BURDE N ESTIMATE S USE

D I N PREVIOU S NS RICR s

Respondent s Majo r Sources b, c Mino r Sources " State s Majo r Sources' * Mino r Sources " Person-Hour s Per Occurrenc

e (Source )
NS R IC R (7/85 V PS D Part D 650 8 25 0 1 0 450 d 8 15 0 1 0 PM-1 0

Increment s IC R (4/88 V PS D Part D 690 250 8 8 27 0 13 5 1 0 1 0 NO ,

Increment s IC R (10/88. * PS D Part D 75 3 250 8 8 27 9 13 5 NA h NA

h CM A

Exhibi tA IC R (7/89 V PS D Part D 68 5 24 2 8 8 26 8 13 2 1 0 1 0 Draf t Par tC& D IC R .6/94 V PS D Par tD 70 0 8 28 0 1 0 450 8 11 0 1 0
"Date o f th e ICR
. b Fo r PS D permi t

applicants , hou r

estimate s includ e th e tim e neede d b y a n applican t

t o prepar e an d submi t

acomplet e permi t applicatio n (e.g., BAC T analysis , ai r qualit y modelin g an d monitoring , etc. ) "Fo r nonattainmen t

permi t applicants , hou r

estimate s includ e th e tim e neede d by a n applican t

t o prepar e an

d submi t a complet e permi t

applicatio n (e.g., documentatio n tha t LAERwil l b e applied , tha t othe r facilitie s in Stat e ar e i

n compliance , an d documentatio n o f emission s offsets , etc.)
. d ETh e IC Rdi d no t

provid e atabl e whic h showe d th e hour s fo r preparatio n an d planning , dat acollectio n and analysis , an d writin g th e permi t

application
. "Th e burde n estimate s assum e tha t muc h o f th e actua l penni t developmen t

fo r mino r source s (whic h ar e ofte

n unfamilia

r wit h th e permittin g process ) i s don e b y th e permittin g authority
. Therefore , muc h o f th e permi t

developmen t

burde n i s include d i n th e estimat e for mino r NS Rpermi t

processing
. 'Fo r PS D permi t

applications , th e burde n estimate s includ e reviewin g permit s t o ensur e tha t Par t C requirement s ar e me t (e.g., BAC T determination s an d ai r qualit y analyses ) and fulfilling agenc y responsibilitie s (e.g., Federa l Clas s I are a protectio n an d notifications)
. To r nonattainmen t

penni t applications , th e burde n estimate s includ e reviewin g permit s t o ensur e tha t Part D requirement s ar e me t

(e.g. , LAERdeterminations , othe r facilitie s in th e State ar e i n compliance , documentatio n of emission s offsets , etc.)
. hNo t availabl e i n th e ICR
.

PS D andNonattalnmentNS RRefor m DRAF T RIA Apri l 1,199 6 Page-2 6P.3 2



## APPENDI

X B BURDEN-ASSOCIATED REGULATION S

PS D andNonattalnmentNS RReform DRAF T RIA April] , 199 6 Page-2 7P.3 3



### TABLE B- 1 RESPONDEN T DAT

A AN D INFORMATIO N REQUIREMENT S FO R PREPARIN G PAR T C (PSD ) CONSTRUCTIO N PERMIT S * Requirement s Registratio n o f

permi t applicatio n o n EP A Notificatio n Boar d Descriptio n o f

th e nature , location , desig n capacity , and typical operatin g schedul e Detaile d schedul e for

constructio n Descriptio n o f

continuou s emissio n reductio n system , emissio n estimates , an d othe r

informatio n neede d t o determin e tha t BAC T i s use d Ai r Qualit y impact , meteorological , an d topographica l dat a Natur e an d exten t

of , an d ai r qualit y impact s o f

general commercial , residential , industrial , and othe r growt h i n are ao f sourc e Us e o f ai r qualit y model s t o demonstrat e complianc e wit h NAAQ S an d incremen t Informatio n necessar

y t o determin e impac t

o n AQRV s in Federal Clas s I area s Ai r qualit y monitorin g dat a Analysi s o f

Impairmen t

t o visibility , soils , and vegetatio n I n cas e o f modification , documentatio n of derivatio n of

ne t emission s increas e Documentatio n for

basi s o f qualifyin g fo

r apollutio n contro l o r pollutio n preventio n projec t exclusio n Writte n notic e o f

propose d relocatio n o f

portabl e sourc e Regulatio n Referenc e a s Propose d 40CFR51.166(n)(4 ) 40CFR51.166(n)(2)(i ) 40CFR51.166(n)(2)(ii ) 40CFR51.166(n)(2)(iii )
40CFR51.166(n)(3)(i ) 40CFR51.166(n)(3)(i ) 40CFR51.166(o)(2 ) 40CFR51.166(k)&(l ) 40CFR51.166(p)(2)(i ) 40CFR51.166(m ) 4 0 CF R51.166(o)(l ) 40CFR51.166(b)(3)(i ) 40CFR51.166(b)(2)(iii)(H ) 4 0 CF R51.166(i)(4)(iii)(d )P.3 4



## TABL E B- 2 STAT E DATA

AND INFORMATIO

N REQUIREMENT S

Requirement Regulatio n Referenc e a s Propose d Earl y FL M notificatio n an d opportunit y t o participat e in meeting s (fo r source s withi n 10 0 k

mo f Clas s I area ) Submissio n o f

all permi t application s t o EP A Registratio n o f

summar y informatio n o n NS RBB S Submissio n t o FL M o f

permi t application s for

source s withi n 10 0 k mo f Clas s I are ao r

i f otherwis e requeste d b y FL M Mak e preliminar

y determinatio n whethe r

constructio n permi t shoul d b e issue d fo r

major sourc e o r

mino r sourc e o r

modificatio n du e t o "clea n unit " tes t

o r pollutio n contro l projec t

exclusion
. Submissio n o f

notic e o f application , preliminar

y determination , degre e o f incremen t

consumption , an d opportunit y fo r publi c commen t Conduc t publi c hearing s o n Majo r NS Rpermit s Submissio n o f

writte n reques t

t o exemp t

source s fromrevie w unde r Federa l regulation s whe n Mak e finding s regardin g innovativ e contro l technolog y application s an d issu e appropriat e permit
. Provid e fo r

appropriat e publi c commen t fo r mino r NS Rpermit s tha t hav e bee n issue d i

n lie u o f amajor NS Rpermi t

du e t o "clean unit " tes t o r pollutio n contro l projec t

exclusio n 40CFR51.166(p)(2 ) 40CFR51.166(q)(4)(iv ) 4 0 CF R51.161(d ) 40CFR51.166(n)(4 ) 40CFR51.166(p)(4 ) 40CFR51.166(i)-(p ) 40CFR51.166(q)(4)(_ ) 40CFR51.166(q)(4)(ii ) & (iii ) 40CFR51.166(q)(4)(v ) 40CFR52.21(i)(4)(vi ) 40CFR51.166(s ) 4 0 CF R51.16 1

PS D andNonattalnmentNS RReform DRAF T RIA Apri l 1,199 6 Page-2 9P.3 5 r \ ' • . - ' TABL E B-3 . RESPONDEN T DAT A AN D INFORMATIO N REQUIREMENT S FO RPREPARIN G PAR T D (NONATTAINMEN T NSR ) CONSTRUCTIO N PERMIT S Requirement s Documentatio n tha t

LAERi s bein g applie d Documentatio n tha t

all source s owne d o r

operate d b y sam e perso n i n th e particular

Stat e ar e in complianc e with all Stat e an d Federa l Regulation s applicabl e in tha t Stat e Documentatio n demonstratin g th e legitmac y o f propose d offset s an d tha t

sufficien t emission s reduction s ar e occurrin g t o ensur e RF P Documentatio n tha t

benefit s o f

propose d sourc e significantly outweig h th e environmenta l an d socia l cost s impose d a s a resul t o f it s location , construction , o r modificatio n Descriptio n o f

th e location , desig n construction , an d operatio n o f

building , structure , facility , o r installatio n Descriptio n o f

th e natur e an d amount s o f emission s t o b e emitte d an d in cas e o f

amodificatio n th e derivatio n o f th e ne t emission s increas e Descriptio n o f

th e ai r qualit y dat aan d dispersio n o r

othe r air quality modelin g use d Documentatio n fo r

basi s o f qualifyin g for

apollutio n contro l o r pollutio n preventio n projec t exclusio n Sufficien t informatio n t o ensur e attainmen t an d maintenanc e ofNAAQ S Propose d Regulatio n Referenc e 40CFR51.165(a)(2)(ii ) 4 0 CFR51.165(a)(6)(ii)(D )
40CFR51.165(a)(2)(i ) 40CFR51.165(a)(3)(i ) 40CFR51.165(a)(2)(i )
40CFR51.165(a)(6)(ii ) 4 0 CFR.165(a)(6)(ii ) & (iii ) 40CFR.165(a)(l)(v)&(vi ) 4 0 CF R51.160(f

) 40CFR51.165(a)(l)(v)(C ) 40CFR51.160(c)-(e ) 4 0 CFR51.16 1 4 0 CFR51.16 2 4 0 CFR51.16 3

PS D andNonattalnmentNS RRefor m DRAF T RI A Apri l 1,199 6 Page-3 0P.3 6



## TABL E B- 4 STAT E DATA

AND INFORMATIO

N REQUIREMENT S

Regulatio n Referenc e Requiremen ta s Propose d Submissio n o f

all permi t application s t o EP A 4 0 CF R51.16 1 (d ) Registratio n o f

summar y informatio n o n NS RBB S 4 0 CFR51.165(a)(6 ) Mak e preliminar

y determinatio n whethe r

constructio n permi t

4 0 CFR51.165(a) ( 1 )

- shoul d b e issue d fo r

majo r sourc e o r

mino r sourc e o r

modificatio n (15 ) du e t o "clea n unit " tes t

o r pollutio n contro l projec t

exclusion
. Submissio n o f

notic e o f application , preliminar

y determination , 4 0 CFR51.166(a)(7)(iii ) supportin g analyse s an d documentation , an d opportunit y fo r publi c commen t Conduc t publi c hearing s o n Majo r NS Rpermit s 4 0 CF R51.166(a)(7 ) 4 0 CFR51.16 1 Mak e findings regardin g innovativ e contro l technolog y application s 4 0 CFR51.166(a)(8 ) an d issu e appropriat e permit
. Repor t Technolog y Determination s t o th e RACT/BACT/LAE R4 0 CF R51.165(a)(16 ) Clearinghous e Provid e fo r

appropriat e publi c commen t fo r mino r NS Rpermit s 4 0 CFR51.16 1 tha t hav e bee n issue d in lie

u o f amajor NS Rpermi t

du e t o "clea n unit " tes t o r pollutio n contro l projec t

exclusio n

PS D andNonattalnmentNS RReform DRAF T RI A Apri l 1,199 6 Page-3 1