P. 1



# OAR Box 1834 Prepped byKeeiaRichards



### Document

Number: 

# 61 ) V-B-0 1 Docket Number: 

# A-90-07

Printed 11/10/20082:14:36

PM Sheet 61 of 61P. 2

RegulatorySuppor t Documen t

an d RegulatoryFlexibilit yAnalysi s 

# / f-lo -07

I fB El f MA Y1 61994 I

- J I— / EP AAI R DOCKE T

May25 , 199 4 U.S . Environmenta l Protectio nAgenc y Offic e o f Ai r an

d Radiatio n Offic e o f Mobil e Source sP. 3

Prefac e Thi s documen t summarize s th e requirement s o f th e fina l Fue l and Fue l Additiv e (F/FA ) Registratio nRegulation s an d present s cost s associate d wit hperformin g eac ho f th e require d tasks . Th e cost s an

d potentia l impac t estimate s presente d i nthi s documen t ar e applicabl e t o manufacturer s fo r submitting th e require d dat a on currentl yregistere d F/FAs . Thi s analysi s wa s conducte d unde r th e assumptio n tha t th e notificatio n an d Tie r 1 an

d Tie r 2 informatio n requirement s woul d al l b e submitte d withi n thre e year s afte r promulgatio no f th e fina l rule . Thus , complianc e cost s wer e average d ove r a thre e yea r time perio d an d impact s wer e estimate d accordingly . Th e fina l rul e contain s th e same mandatorytesting requirement s a s assume d i n thi s analysis , bu t withi na modifie d timefram e whic hpermit s u p t o si xyear s fo r manufacturer s t o submi t Tie r 2 results . Consequently , th e averag e annua l cost s t o manufacturer s wil l b e les s tha n estimate d i nthi s analysis , an d th e numbe r o f companie s estimate d t o b e heavil yimpacte d o r potentiall y i n dange r o f closur e i s als o likel yt o b e less .P. 4

Tabl e o f Content s Pag e Introductio n1 Chapte r 1 : ProgramDescriptio n I . StatutoryBackground 4 II . Descriptio no f th e Program4 A . Scop e o f Healt hEffect s Evaluatio n 5 B . Scop e o f Welfar e Provision s 6 C . Scop e o f Emissio nContro l SystemTesting 6 III . Provision s t o Preven t Undu e Burden s 7 A . Cost/Burde n Sharing Provision s 7 B . Smal l Busines s Provision s 9 C . Provision s t o Eliminat e Duplicatio n o f Effort. . 1 2 D . Othe r Specia l Provision s 1 2 Chapte r 2 : IndustryOvervie w I . Introductio n 1 8 II . Analysi s o f Currentl yRegistere d F/F AProducer s 1 8 A . Dat a Collectio n 1 9 B . Characterizatio no f Registere d Producer s 2 0 Chapte r 3 : ProgramRequirement s an d Associate d Cost s I . Introductio n 2 5 II . Descriptio n o f Change s i n ProgramRequirement s 2 6 III . Tie r 1 Requirement s an d Cost s 2 7 A . Literatur e Searc h2 8 B . Characterizatio no f Emission s 2 8 C . Tota l Tie r 1 Cost s 3 5 IV . Tie r 2 Requirement s and Cost s 3 5 A . Emissio nGeneratio n fo r Biologica l Testing 3 6 B . Biologica l Tes t Cost s 3 7 C . Tota l Biologica l Tes t Cost s 3 8 D . Tota l Tie r 2 Cost s 3 9 V . Tie r 3 Requirement s an d Potentia l Cost s 3 9 VI . Administrative/Reportin g Requirement s and Cost s 4 0 VII . Summary4 0 VIII.Cos t Estimate s fo r Futur e Alternativ e F/F A Registration s 4 1 Chapte r 4 : Estimate d Cos t Impact s I . Introductio n 4 9 II . Analytica l Assumption s an d Approac h5 0 III . Methodologyan d Result s 5 2 A . Produce r Cos t Impact s 5 2 B . IndustryCos t Impact s 5 4 IV . Limitation s o f th e Analysi s 5 4 V . Conclusion s 5 5 Chapte r 5 : RegulatoryFlexibilit yAnalysi s~7- P. 5

I . Introductio n 6 4 II . Requirement s o f th e RegulatoryFlexibilit yAc t 6 4 III . Methodology6 5 A . Dat a Source s 6 5 B . Adjustment s t o th e Dat a 6 6 C . Definitio n o f Smal l Manufacture r 6 6 IV . Characterizatio n o f Smal l & Larg e Manufacturer s 6 7 A . Characteristic s o f Additiv e Manufacturer s 6 7 B . Characteristic s o f Fue l Manufacturer s 6 8 C . Genera l Conclusion s 6 9 V . Estimatio n o f Impact s o nSmal l Manufacturer s 7 0 A . Comparing th e Rati o o f Complianc e Cos t t o Sale s 7 0 B . Analysi s o f Chang e i nROA7 1 C . Examinatio n o f Manufacturer s Potentiall y Pushe d int o Closur e 7 2 VI . Assessin g th e Effectivenes s o f Smal l Busines s Provision s 7 3 VII . Mitigatin g Circumstance s tha t Reduc e Advers e Impact s 7 3 VIII . Limitation s o f th e Analysi s 7 5 IX . Conclusion s 7 5 Chapte r 6 : Perspective : Summaryand Societa l Benefit s 8 6 Appendi xA : Detaile d ProgramCost s Appendi xB : Summaryo f Biologica l Tes t Cost sP. 6

Figur e 1-1 : Figur e 1-2 : Figur e 1-3 :
Tabl e 1-1 : Exhibi t 2-1 ; Exhibi t 2-2 :
Tabl e 3-1 :

Tabl e 3-2 :
Tabl e 3-3 : Tabl e 3-4 : Tabl e 3-5 : Figur e 4-1 : Tabl e 4-1 :
Tabl e 4-2 :
Tabl e 4- 3
Tabl e 4-4 : Tabl e 4-5 :
Tabl e 4-6 : Exhibi t 5- 1 Lis t o f Exhibits , Figures , an d Table s Pag e

Groupin g Framewor k 1 4

Fue l Manufacture r Annua l Sale s Distributio n1 6 Fue l Additiv e Manufacture r Annua l Sale s Distributio n1 7 F/F AGroupin g Syste m1 5 Profile s o f Registere d Fue l Manufacturers . 2 3 Profile s o f Registere d Additiv e Manufacturer s 2 4 Emissio nCharacterization/Measuremen t Requirement s 4 4
Estimate d Emissio nCharacterization / Measuremen t Cost s 4 5 Tie r 1 Cost s 4 6 Tie r 2 Cost s 4 7 Estimate d Alternativ e Fue l Registration s & Cost s 4 8 Distributio no f Complianc e Cost s 6 3 Estimate d Group s Pe r Fuel/Fue l Additiv e Categor y5 7 Assume d Combustio n Emissio n Tes t Requirement s Pe r Categor y5 8 Assume d Evaporativ e Emissio n Tes t Requirement s Pe r Categor y* 5 9 Estimate d Complianc e Cost s Pe r Grou p 6 0 Estimate d Complianc e Cost s fo r Smal l Atypica l Manufacturer s 6 1 Summar yo f Complianc e Cost s 6 2 SB ADefinition s o f Smal l b ySI C Cod e fo r F/F AManufacturer s 7 7P. 7

Exhibi t 5-2 : Exhibi t 5-3 : Exhibi t 5-4 : Exhibi t 5-5 : Exhibi t 5-6 : Exhibi t 5-7 : Exhibi t 5-8 : Exhibi t 5-9 : Figur e 5-1 : Figur e 5-2 : Figur e 5-3 : Figur e 5-4 : Profile s o f Additiv e Manufacturer s

F/F AProgramDefinitio n7 8 Profile s o f Additiv e Manufacturer s SB ADefinition s 7 9 Profile s o f Fue l Manufacturer s F/F AProgramDefinitio n 8 0 Profile s o f Fue l Manufacturer s SB ADefinitio n 8 1 Summaryo f Complianc e Cost s pe r Manufacture r 82 . Compariso no f Smal l an d Larg e Compan

y Complianc e Cos t t o Sale s Ratio s 8 3 Estimate d Impact s o n ROA8 4 Summaryo f Profil e o f Manufacturer s Potentiall yPushe d int o Closur e 8 5 Diagramo f 8 Profile s 6 7 Numbe r o f Additiv e Companie s Classifie d b y EP Aand SB

ADefinition s a s Smal l 6 7 Numbe r o f Fue l Companie s Classifie d byEP A and SB ADefinition s a s Smal l 6 8 Measur e o f Financia l Healt han d Distress. . 7 1P. 8

Introductio n Thi s RegulatorySuppor t Documen t (RSD ) present s th e Environmenta l Protectio n Agency' s (EPA ) fina l estimate s o f cost s an d impact s o f th e Fuel s an d Fue l Additive s (F/FA ) Registratio n Regulation s o nth e affecte d industries . Th e basi c approac huse d i n th e draf t suppor t document 1 prepare d fo r th e Notic e o f Propose d Rulemaking (NPRM ) (5 7 F R13168 , Apri l 15 , 1992 ) i s maintaine d throughou t thi s fina l document . Majo r change s i n program requirement s an

d assumption s o nwhic hth e analysi s i s base d ar e identifie d throughou t th e document . Simila r t o th e analysi s prepare d fo r th e NPRM , thi s fina l rul e analysi s focuse s mainl yon producer s o f gasolin e an d diese l fuel s an

d thei r additive s sinc e producer s o f alternativ e F/FA s ar e no t ye t require d t o registe r thei r product s wit hEPA . However , EP Aexpect s t o designat e thes e F/FA s fo r registratio n an d ha s include d provision s fo r alternativ e fuel s i n thi s fina l rul e unde r th e assumptio ntha t theywil l b e designated . Consequently , thi s analysi s include s a discussio no f th e expecte d impac t o f thi s rul e o n producer s o f alternativ e fuels . EP Acontracte d wit hDun & Bradstree t (D&B ) Informatio n Services , IC F Incorporated , an d Southwes t Researc hInstitut e fo r assistanc e i n obtaining informatio nt o updat e th e draf t RSD . T o updat e manufacturer/produc t informatio ncontaine d o n th e Fuel s an d Fue l Additive s Registratio n (FFAR ) database , EP Arequeste d tha t D& B collec t curren t financia l informatio n o nth e registere d companie s an d identif yregistere d companie s n o longe r i n operation . Alette r explaining financia l informatio n sough t an d collectio n methodology i s availabl e i nth e publi c docket 2

. Result s o f th e dat a collectio n ar e discusse d i n Chapte r 2 . Tw o contract s wer e establishe d wit hIC F Incorporated . On e contrac t wa s establishe d fo r th e purpos e o f creating a flexibl e produc t grouping facilit yfro mwhic hcos t estimate s woul d b e determine d (explaine d furthe r i nChapte r 4 ) . Th e othe r suc h contract 3 involve d dat a analysi s t o suppor t EPA' s assessmen t o f impact s o f th e F/F

Aregistratio nregulation s o n smal l businesses , HJ.S . Environmenta l Protectio nAgency , Offic e o f Mobil e Sources , "Draf t RegulatorySuppor t Document , Fuel s an d Fue l Additive s Registratio n Regulations, " September , 1991 , Docke t A
90-07 , itemnumbe r II-B-01 .

2 Lette r t o Sher i Dunatchik , EPA , fro m Kathry n E . Brigham , Governmen t Suppor t Manager , Dun& Bradstree t Informatio n Services , Jun e 30 , 1993 , Docke t A-90-07 .

3 "Smal l Busines s Impac t Analysi s o f th e Fue l an d Fue l Additiv e Registratio n Program, " prepare d fo r EP Ab yIC F Incorporate d unde r EP AContrac t 68-C1-0059 , January , 1994 , availabl e i n Docke t A-90-07 .P. 9

th e result s o f whic har e presente d i nChapte r 5 . Finally , EP Aestablishe d a contrac t wit hSouthwes t Researc h Institute 4 t o identif ycommercia l price s associate d wit hcertai n aspect s o f th e Tie r 1 testing requirement s o f thi s rule , th e result s o f whic har e discusse d i nChapte r 3 . Followin g thi s introduction , th e firs t chapte r provide s th e statutoryhistoryo f thi s rulemaking along wit ha brie f descriptio n o f th e requirement s o f th e program . Th e scop e o f healt han d welfar e effect s evaluatio n an d emissio ncontro l systemtesting ar e discussed , followe d b ya discussio no f specia l provision s o f th e program . Chapte r 2 present s a characterizatio n o f manufacturer s currentl yregistering fue l an d additiv e product s wit hEPA . The chapte r characterize s registere d manufacturer s i nterm s o f sale s an d ne t income , a s wel l a s numbe r and typ e o f product s they produce . Chapte r 3 discusse s fue l an d fue l additiv e testin g requirement s and relate d costs . Th e chapte r provide s a brie f discussio no f th e majo r change s i n programrequirement s and assumption s from

thos e use d i n th e draf t impac t analysis . Followin g thi s discussion , estimate d cost s ar e presente d fo r eac h activit yrequire d unde r eac htie r o f evaluatio n and testing . Th e estimate d cost s fo r emissio n generation , emissio nspeciation , biologica l testing , an d complianc e wit hreporting requirement s ar e provided . Th e chapte r als o include s a discussio no f projecte d cost s relate d t o futur e registration s o f alternativ e F/F Aproducts . Chapte r 4 present s th e projecte d cos t impact s o f th e program o n th e fuel/fue l additiv e industry . Cos t impact s ar e discusse d fo r fue l manufacturers , fue l additiv e manufacturers , and th e industry a s a whole . Th e analytica l judgement s and assumption s o n whic hth e analysi s i s base d and th e methodologyfo r determining th e cos t impact s o f complianc e ar e presented . Chapte r 5 present s an analysi s o f th e financia l impact s o f th e F/F ARegistratio n Regulation s o n smal l businesse s and compare s thes e t o th e impact s o n larg e manufacturers . I t explain s th e F/F A program' s smal l busines s definitio n and assesse s th e effectivenes s o f specia l provision s include d i n th e fina l rul e fo r certai nsmal l companies . Finally , Chapte r 6 provide s a summaryan d discussio no f th e *"Moto r Vehicl e Fue l an d Fue l Additiv e Emission s Generatio n an d Speciatio n Costs, " June , 1993 , prepare d b ySouthwes t Researc h Institut e unde r EP AContrac t No . 68-C2-0144 , Docke t A-90-07 , item numbe r IV-A-02 .P.1 0

informatio n presented . Th e sensitivit yo f projecte d cost s t o assumption s use d i nth e analysi s i s include d a s wel l a s a brie f discussio n o f th e expecte d relationshi p betwee n th e program ' s cost s and benefits .P.1 1

Chapte r 1 Progra m Description
I . Statutor

y Backgroun

d Sectio n 211(a ) o f 197 0 Clea nAi r Ac t (CAA ) direct s th e Administrato r o f th e EP At o registe r moto r vehicl e fuel s an d fue l additive s prio r t o thei r sal e o r introductio n int o commerce . Th e basi c registratio n informatio n require d b yeac hfue l an

d fue l additiv e manufacture r i s specifie d unde r sectio n211(b)(1) , an d include s suc hitem s a s commercia l identifying information , rang e o f concentration , purpos e in-use , and chemica l composition . Unde r sectio n 211(b)(2) , EP Ai s als o give nauthorit yt o requir e manufacturer s t o conduc t test s t o determin e th e potentia l healt h effect s o f thei r fuel s an d fue l additive s an d t o requir e othe r informatio n t o identif yth e emission s produce d b ysuc hfuel s an

d fue l additives , thei r effect(s ) o nth e publi c healt han d welfare , an d thei r impac t on vehicula r emissio n contro l performance . Althoug hth e genera l registratio n regulation s o f section s 211(a ) and (b)(1 ) wer e implemente d i n1975 , EP Adi d no t exercis e it s authorit yt o requir e health , welfare , and emissio ncontro l systemeffect s testing unde r sectio n 211(b)(2) . However , i n th e CA AAmendment s o f 197 7 (P L 95-95 , Augus t 7 , 1977) , Congres s adde d sectio n 211(e ) t o th e statut e whic hmad e implementatio n o f sectio n 211(b)(2 ) mandatoryan d establishe d time limit s fo r complianc e b y fue l and fue l additiv e producers . I n addition , Sectio n 211(e ) (3 ) allowe d th e Administrato r t o exemp t o r mak e specia l allowance s fo r smal l businesses , t o provid e fo r cos t and/o r burde nsharing , an d t o mak e othe r specifi c exemption s whe n additiona l testin g woul d b e duplicativ e o f adequat e existing testing .
II . Descriptiono f the Progra m Th e purpos e o f th e ne wregistratio n requirement s i s t o provid e EP Awit hinformatio n t o evaluat e th e potentia l advers e health , welfare , and emissio n effect s o f F/F Aemission s and t o hel p determin e whethe r regulatoryactio ni s neede d unde r sectio n 211(c ) . Th e ne wrequirement s supplemen t existing registratio nrequirement s an d appl yt o al l F/F

Adesignate d fo r registration . A t th e presen t time , gasolin e an d diese l F/FA s produce d and commerciall y distribute d fo r us e i n highwaymoto r vehicle s ar e designate d fo r registration . Both:domesti c an d foreignproduct s ar e include d i n th e designation . EP Aanticipate s tha t methano l (MlO O an d M85 ) , ethano l (E10 0 and E85) , natura l ga s (bothcompresse d natura l ga s (CNG ) and liquifie d natura l ga s (LNG) ) , an d liquifie d petroleu mga s (LPG ) alternativ e fuel s an d additive s wil l soo n b e designated . Fuel s intende d fo r us e exclusivel yi noff-roa d vehicle s ar e no t currentl ydesignated .P.1 2

A . Scope o f Healt hEffect s Evaluation Th e potentia l scop e o f th e healt heffect s testin g programi s vast , and EP Aha s take n step s consisten t wit hth e Ac t t o limi t th e focu s o f th e requirement s s o a s no t t o lev yanunnecessaryburde n on th e regulate d industry , whil e stil l requiring th e leve l o f informatio nneede d t o achiev e th e overal l goal s o f th e program . Th e 21 1 (b ) program doe s no t mandat e comprehensiv e healt heffect s assessment s a s routin e requirement s fo r registration . Instead , a systemo f evaluatio n tier s ha s bee n developed , enabling EP At o determin e whethe r mor e definitiv e testing i s neede d fo r specifie d fuel s o r additive s base d upo ntoxicit yan d exposur e dat a obtaine d fro mavailabl e literatur e and/o r fro ma batteryo f screening tests . Th e tiere d approac hpermit s F/F Amanufacturer s t o mak e ful l us e o f tes t result s and othe r informatio nwhic hmayalread yb e availabl e abou t thei r products . Unde r Tie r 1 , F/F Amanufacturer s ar e require d t o performa literatur e searc ho n th e healt han d welfar e effect s o f F/FAs , characteriz e th e emissions , an d provid e productio n volum e an d marke t distributio n data 5

. Tie r 2 consist s o f a 90-da

yanima l exposur e stud yt o scree nfo r genera l systemi c and orga ntoxicity , an d als o encompasse s specifi c test s fo r carcinogenicity , mutagenicity , teratogenicity , neurotoxicity , and reproductiv e effects . Actua l Tie r 2 testin g requirement s wil l depend o n th e exten t t o whic hth e dat a searc hactivitie s i nTie r 1 provid e documentatio no f adequat e existing test s comparabl e t o thos e include d i n Tie r 2 . Fuel s and additive s wil l b e subjec t t o Tie r 3 testin g requirement s onl yi f determine d t o b e neede d o na case-by-cas e basi s b yEPA . Th e endpoint s t o b e addresse d an d th e studie s conducte d i n Tie r 3 wil l b e determine d individuall yfo r eac hcase , generall yfocusing o narea s o f concer nwhic har e identifie d i nth e earlie r tiers . Th e evaluatio n tier s ar e furthe r explaine d i n Chapte r 3 o f thi s document . Consisten t wit hth e overal l emphasi s o f th e CA Ao n advers e ai r pollutio n effects , th e healt htestin g requirement s ar e concerne d wit hth e effect s o f inhalatio nexposur e t o th e evaporativ e and combustio n product s o f fuel s and additives . Theyd o no t specificall yaddres s th e possibl e advers e effect s o f exposur e t o fuel s and additive s i n th e liqui d state , no r a t thi s tim e d o the y includ e th e effect s o f exposur e t o th e atmospheri c transformatio n product s o f fue l and additiv e emissions . Restricting th e focu s o f th e rulemaking t o exposur e o f combustio nand evaporativ e emission s o f fuel s and additive s represent s a majo r reductio n i nth e potentia l scop e o f th e healt heffect s evaluatio nprogram . Furthe r significan t reduction s i nprogram cost s and overal l impac t o n th e fue l and additiv e industrywil l als o occu r a s a resul t o f grouping mechanism s fo r testin g F/F Aproducts , provision s fo r exempting

5 Th e modelin g analyse s propose d i n th e NPRMhav e bee n eliminate d from

Tie r 1 requirements . Whe nneeded , the ywil l b e prescribe d unde r Tie r 3 .P.1 3

relabele d product s from testin g requirements , and specia l provision s fo r smal l businesses . B . Scope o f Welfar e Provision s Sectio n 21 1 (b ) (2 ) (B ) state s tha t th e Administrato r mayrequir e manufacturer s t o furnis h"reasonabl e an d necessary " informatio nfo r determining "the exten t t o whic h(fue l an d fue l additive ) emission s affec t th e publi c healt ho r welfare" . Th e term"welfar e effects " refer s generall yt o th e impac t whic hai r pollutio nproduce d b y moto r vehicl e fuel s an d additive s mayhav e o nth e environment , including no t onl yeffect s o n aquati c ecosystem s and anima l health , bu t als o effect s whic hmaydetrac t fro mhuma nwell-being . Th e welfar e effect s requirement s wil l b e me t i n associatio n wit hth e requirement s i n th e firs t evaluatio ntier . I nTie r 1 , responsibl e producer s ar e require d t o conduc t exhaus t an d evaporativ e emissio n chemica l speciatio n procedure s t o identif yth e specifi c compound s i n th e emissio n product s generate d b yfuel s an

d additives . Thes e procedure s wil l yiel d aninventoryo f potentiall y hazardou s ai r pollutant s whic hmayhav e significan t impact s o nth e genera l environmen t and publi c welfar e a s wel l a s o nth e publi c health . Thes e wil l als o b e usefu l i n assessing Tie r 2 results . Tie r 1 als o include s a literatur e searc hfo r existing health

relate d informatio n whic hwil l b e expande d t o includ e requirement s fo r collectio n o f publishe d o r in-hous e dat a regarding th e welfar e effect s o f th e emissio n products . Finally , Tie r 1 require s manufacturer s t o provid e informatio no nth e productio nan d distributio n pattern s o f F/FA s whic hwil l b e use d b yEP At o evaluat e th e potentia l exposure s resulting fromthei r use . Thus , excep t perhap s fo r a mino r increas e i n th e scop e o f th e literatur e searc hactivitie s o f Tie r 1 , n o incrementa l cost s ar e expecte d wit h respec t t o welfar e effect s assessments . C . Scope o f Emission s Contro l Syste m Testin g Existin g regulation s unde r sectio n 211(f ) cal l fo r emissio n contro l testin g o f fuel s an d additive s onl ywhe nthei r compositio n depart s significantl yfromth e genera l rang e o f fue l formulation s whic hwoul d ordinaril yb e anticipate d b ymanufacturer s o f moto r vehicl e engine s and emissio n contro l devices . Unde r th e existin g fuel/additiv e registratio n program , fue l and additiv e formulation s whic har e no t "substantiall ysimilar " ("su bsim" ) t o designate d certificatio n fuel s (as define d i n 5 6 F R5352 , February19 , 1991 ) canno t b e introduce d int o commerc e unles s a waive r i s issue d b y EPA . T o obtai n suc ha waiver , th e produce r o f th e fue l o r additiv e mus t sho wtha t th e "dissimilar " produc t doe s no t adversel yaffec t th e abilit yo f a moto r vehicle' s emissio n contro l systemt o achiev e complianc e wit hemissio n standard s during th e usefu l lif e o f th e vehicle . Th e curren t waive r programha s prove n t o b e bot hpractica l an d effectiv e a s applie d t o gasolin e fuel s and additives , an d EPA' sP.1 4

plan s t o extend th e applicabilit yo f thi s program t o othe r fue l an

d additiv e categorie s wil l serv e t o fulfil l th e aim s o f th e emissio n contro l testing provision s o f sectio n211(b) . Therefore , th e emissio n contro l systemtesting provision s o f 211(b ) wil l b e integrate d wit hexisting an d planne d program s promulgate d unde r sectio n211(f) . I nothe r words , ne wfuel s and additive s whic hd o no t mee t th e "su

bsim " criteri a wil l b e subjec t t o th e regula r sectio n 211(f ) waive r applicatio n proces s prio r t o registration , a s unde r th e existing registratio nprogram . Th e onl yne wexpressio n o f EPA' s authorit yunde r sectio n 211(b ) i n regar d t o emissio ncontro l testin g requirement s pertain s t o fuel s and additive s whic hwer e registere d i nth e pas t unde r th e statute' s "grandfathering " provision . Rathe r tha nrequiring al l "grandfathered " products 6 t o routinel yg o throughth e waive r process , emissio n contro l systemtesting fo r "grandfathered " product s wil l b e require d onl yo na case-by-cas e basi s whe n evidenc e become s availabl e tha t suc hproduct s mayhav e advers e effect s o n emissio ncontro l performance . Thus , thi s rulemaking provide s a mechanis mbywhic hEP Aca n choos e t o requir e specifi c "grandfathered " product s t o underg o sectio n211(f ) waive r applicatio n procedure s i f s o petitione d b youtsid e parties , o r i f othe r informatio navailabl e t o th e Agenc yindicate s tha t suc h revie wi s appropriate . Consequently , thi s analysi s include s n o cost s directl yrelate d t o emissio ncontro l systemtesting . III . Provision s t o Prevent Undue Burden s Th e fina l rul e provide s a numbe r o f specia l provision s t o avoi d duplicatio no f effort , t o alleviat e th e financia l impac t o n smal l businesses , an d t o eas e th e burde no n th e regulate d industry i n general . Th e discussio n belo wfocuse s o ncost/burde nsharing provision s and provision s establishe d fo r relabele d product s and smal l businesses . Othe r specia l provision s o f th e programar e briefl ydescribe d below , bu t ar e no t include d i nth e analysi s eithe r becaus e the yhav e n o direc t impac t o r thei r impact s woul d b e minimal . Thes e additiona l specia l provision s woul d onl yfurthe r decreas e th e financia l burde n o n th e regulate d industry . A . Cost/BurdenSharin gProvision s Sectio n 21 1 (e ) (3 ) allow s th e Agenc yt o provid e fo r cos t and/o r burde n sharing among producer s o f an yfue l o r fuel " additiv e whic h i s manufacture d o r processe d b ytw o o r mor e person s s o tha t requirement s ca n b e me t withou t duplicatio n o f effort . Unde r on e scenario , a manufacture r mayalread yhav e incurre d al l necessary

6 Product s registere d prio r t o th e implementatio no f th e waive r applicatio nprogramand/o r promulgatio n o f applicabl e "substantiall ysimilar " criteri a and whic hexcee d thos e "su bsim " criteria .P.1 5

cost s o f registration , an d anothe r manufacture r migh t wis ht o rel y o n th e result s o f thi s existing testing fo r purpose s o f registering a simila r product . Anothe r cas e involve s tw o o r mor e producer s o f simila r product s wh o nee d t o undertak e th e same testing requirement s prio r t o registration . Fo r purpose s o f enacting thes e provisions , EP Aha s develope d a voluntarygrouping scheme whic h permit s manufacturer s o f simila r F/FA s t o poo l thei r resource s an d effort s i n satisfying th e registratio nrequirements . Manufacturer s takin g advantag e o f th e grouping provision s wil l b e abl e t o shar e thei r plannin g efforts , researc hcapabilities , an d financia l resource s i n satisfying th e information-gathering and testing requirement s o f th e F/F Aregistratio nprogram . Require d testing i s t o b e don e o n th e selecte d representativ e fo r th e respectiv e grou p an d result s submitte d jointl yfo r al l member s o f th e group , wit h applicabl e cos t t o b e share d b yth e respectiv e manufacturers . Th e basi c conceptua l framewor k fo r th e grouping systemi s illustrate d i n Figur e 1-1 . Eac hfue l o r additiv e i s firs t sorte d int o on e o f si xbroa d "fue l families" . Eac hfue l famil yconsist s o f F/F Aproduct s whic hshar e basi c characteristic s i n regar d t o thei r chemical/physica l propertie s an d engine/vehicl e applicability . A s previousl ymentioned , thi s analysi s focuse s mainl yo nproduct s belongin g t o th e gasolin e and diese l fue l families , bu t include s a brie f discussio n o f futur e registration s o f product s belongin g t o th e alternativ e fue l families . Th e fue l familie s ar e the nsubdivide d int o th e following thre e F/F Acategories : "baseline, " "non-baseline, " an d "atypical. " Th e baselin e categorie s generall yconsis t o f fuel s and associate d fue l additive s whic hcontai n n o element s othe r tha ncarbon , hydrogen , oxygen , nitrogen , and sulfu r and conformt o certai nquantitativ e limit s fo r particula r elements , compounds , and/o r characteristic s (e.g. , oxyge nles s tha n 1. 5 weigh t percen t i ngasolin e an d les s tha n 1. 0 weigh t percen t i n diesel) . Non-baselin e F/FA s contai nn o element s othe r tha n thos e allowe d i n th e baselin e category , bu t the yexcee d th e maximu m amount s allowe d fo r certai n restricte d characteristics . Th e atypica l categorie s consis t primaril yo f F/FA s tha t contai n element s othe r tha nthos e allowe d i n th e baselin e category . Fo r fue l additives , th e categorydeterminatio n i s base d o n th e characteristic s o f th e mixtur e whic hresult s whe n th e additiv e i s mixe d i nth e appropriat e bas e fue l a t th e maximu m concentratio n recommende d b yth e additiv e manufacturer . I f th e fue l o r fuel/additiv e mixtur e contain s bot hnon-baselin e (e.g. , exceed s allowabl e oxyge ncontent ) an d atypica l characteristic s (e.g. , contain s a metal) , th e formulatio ni s characterize d a s atypical . Thus , atypica l characteristic s tak e precedenc e ove r non baselin e characteristics . Finally , fromthes e categories , product s ar e furthe r subdivide d int o "fuel/additiv e groups " whic hrepresen t th e fina l leve l o f produc t classificatio n withi n th e grouping system . Th e group s consis t o f F/FA s sorte d togethe r o nth e basi s o f th e 8P.1 6

assumptio n tha t thei r emissio nproduct s wil l b e simila r o na qualitativ e basis . Arepresentativ e from eac hgrou

p wil l b e selecte d fo r testin g wit hth e result s and associate d cost s share d b yth e participatin g manufacturers . Tabl e 1- 1 show s a summaryo f th e F/F Agrouping system . Th e colum n heading s represen t th e fue l familie s and th e categorie s defin e th e rows . Withi n eac hfue l family' s categorie s ar e th e fuel/additiv e groups . Th e grouping system i s a keyfacto r i n determining manufacture r cost s fo r thi s program . Assumption s regarding manufacture r participatio n i n group s an d th e amoun t o f testin g expecte d t o b e require d fo r product s i neac ho f th e group s i s discusse d i n Chapte r 4 . B . Smal l Busines s Provision s Th e CA Agive s EP Adiscretionaryauthorit yt o provid e program exemptions , deferrals , o r modification s fo r smal l businesses , an d t o defin e "smal l business " fo r th e regulations . Using curren t annua l sale s data , EP Aexamine d th e distributio no f currentl y registere d companie s acros s variou s sale s range s and identifie d a sale s leve l whic hwil l defin e th e businesse s whic hwil l b e considere d "small " fo r thi s program . Figure s 1- 2 an d 1- 3 sho wth e sale s distribution s o f registere d fue l manufacturer s and additiv e manufacturers , respectively . Acompariso no f thes e figure s indicate s tha t th e distributio no f sale s i s simila r fo r bot h industries . Eac hindustryappear s t o b e mad e up o f man ysmal l companie s an

d relativel yfewlarge r companies . Th e figure s show tha t abou t a fift ho f registere d fue l manufacturer s and a thir d o f registere d additiv e manufacturer s hav e sale s abov e $10 0 million . Fo r bot hindustries , mos t companie s wit hsale s unde r $10 0 millio n actuall yhav e sale s unde r $5 0 million . Thus , withi n eac ho f th e industries , companie s tend t o cluste r abov e $10 0 millio n and belo w $5 0 millio n i n sales . Furthermore , companie s belo w$5 0 millio ni n sale s als o tend t o b e belo w$1 0 million , especiall ywithi n th e additiv e industry . Base d o n thi s analysi s o f F/F Amanufacture r sale s data , EP A identifie d $5 0 millio n a s a reasonabl e sale s leve l fo r differentiatin g betwee n smal l an d larg e companie s withi neac h industry . A s a result , th e fina l rul e define s a smal l busines s fo r thi s programa s an ymoto r vehicl e fue l o r fue l additiv e manufacture r wit htota l annua l sale s o f les s tha n$5 0 million. 7

7 I n case s wher e subsidiary , divisional , o r othe r comple x busines s arrangement s exist , th e busines s entit yt o whic hthi s sale s leve l pertain s i s th e paren t compan ywit hultimat e ownership . Th e "ultimate " paren t i s define d a s th e uppermos t headquarter s o r topmos t compan yencompassing al l relate d parents , subsidiaries , divisions , branches , o r othe r operating units . Thi s definitio n follow s tha t use d b yth e Smal l Busines s Administration . I t als o help s t o ensur e tha t companie s wil l no tP.1 7

Th e smal l busines s relate d provision s establishe d fo r thi s rul e ar e define d below . Specia l provision s fo r smal l F/F Acompanie s wer e develope d base d o n assumption s regarding th e degre e t o whic hmanufacturer s wil l hav e th e opportunit yt o grou p wit hothe r manufacturer s t o shar e costs , and th e degre e t o whic hinformatio no nsimila r product s canb e expecte d t o b e submitte d b ylarge r companies . A revie wo f th e registratio ndatabas e show s tha t nearl yevery registere d F/F

Amanufacture r produce s a t leas t on e baselin e o r non baselin e product . Hence , eve ni f generou s specia l provision s ar e provide d fo r smal l manufacturer s o f thes e products , EP Ai s assure d tha t tes t dat a o n suc hproduct s wil l stil l b e submitte d b yother , large r companie s whic hd o no t qualif yfo r th e specia l provisions . Therefore , i n regar d t o registratio n o f product s i n th e baselin e and non-baselin e categories , th e fina l rul e require s smal l businesse s (i.e. , companie s wit hannua l sale s les s tha n$5 0 million ) t o submi t onl yth e basi c registratio ndat a fo r thei r baselin e and/o r non-baselin e products . Suc hcompanie s ar e no t require d t o mee t th e Tie r 1 and Tie r 2 requirement s i norde r t o registe r thei r baselin e and non-baselin e F/FAs . Sinc e th e large r companie s wil l stil l b e submitting th e dat a fo r thes e products , thi s provisio n shoul d no t caus e EP At o b e withou t th e dat a neede d t o evaluat e thes e products . However , th e product s o f suc hsmal l companie s wil l b e treate d th e same a s thos e o f th e large r companie s i n th e same grou

p shoul d Tie r 3 o r 211(c ) action s b e taken . Thi s i s no t a vali d assumptio n i n th e cas e o f atypica l products , however . Analysi s o f curren t registration s show s tha t ther e ar e fewe r atypica l product s tha n baselin e products , an d fewe r larg e companie s tha t produc e atypica l products . O f th e tota l numbe r o f registere d fue l additiv e manufacturers , les s tha n3 0 percen t produc e a t leas t on e atypica l product , and th e majorit yo f thes e manufacturer s (about 6 0 percent ) hav e unde r $5 0 millio n i n sales . Eve n fewe r fue l manufacturer s produc e atypica l products , wit honl y1 3 percen t producin g a t leas t on e atypica l product . I n contras t t o manufacturer s o f atypica l additives , th e majorit yo f manufacturer s o f atypica l fuel s (about 7 0 percent ) hav e sale s abov e $10 0 million . Therefore , i f th e same smal l busines s provision s describe d abov e i n relatio nt o baseline/non-baselin e F/FA s wer e als o applie d t o atypica l F/FAs , the n n o dat a woul d b e submitte d fo r man y atypica l F/FAs . I f thi s wer e th e case , EP Awoul d b e unabl e t o discharg e it s responsibilit yt o evaluat e th e healt heffect s o f al l subdivid e merel yt o becom e eligibl e fo r th e smal l busines s provision s o f thi s program . "Tota l annua l sales " mean s th e averag e o f th e manufacturer' s sale s revenu e i neac ho f th e previou s thre e year s (i.e. , th e thre e year s prio r t o submitta l o f th e supplementa l notificatio n form) . 1 0P.1 8

fuel s and additives . Nevertheless , EP Arealize s tha t th e testing programwil l b e particularl yburdensom e fo r verysmal l manufacturer s o f atypica l products . I npart , thi s i s du e t o th e adde d complianc e requirement s fo r atypica l product s (e.g. , mor e rigorou s mileag e accumulatio n requirement s prio r t o emissio ngeneratio nand extr a emissio n characterizatio n requirement s fo r determining th e emissio n specie s containing th e a typica l element(s)) . Aneve ngreate r impac t result s fro

mth e fac t tha t grouping opportunitie s fo r thes e manufacturer s ar e mor e limited . No t onl yd o atypica l product s tend t o b e unique , bu t also , th e smalles t manufacturer s rarel yar e member s o f th e dominan t trad e association s whic har e mos t likel yt o tak e th e lead i n organizing an d administering F/F Agrou p functions . Thus , th e highes t programcost s ar e expecte d t o fal l o n th e manufacturer s wit hth e lowes t financia l resource s an d th e fewes t opportunitie s t o shar e th e costs . Fo r thes e reasons , specia l smal l busines s provision s applicabl e t o atypica l product s hav e bee ninclude d i nth e fina l rule . However , thes e provision s appl yt o fewe r manufacturer s an d ar e les s libera l tha n thos e establishe d fo r baselin e and non baselin e products . Specifically , fo r manufacturer s o f atypica l product s wit hles s tha n $1 0 millio ni nannua l sale s (rathe r tha n th e $5 0 millio n sale s leve l applicabl e t o manufacturer s o f baseline/non-baselin e products) , th e minima l requirement s o f th e programinclud e onl ybasi c registratio nan d Tie r 1 data 8

. Thes e requirement s fal l betwee n thos e applicabl e t o smal l manufacturer s o f baseline/non-baselin e product s (basi c registratio n dat a only ) and th e genera l requirement s o f th e programfo r large r manufacturer s (basi c registration , Tie r 1 , an d Tie r 2) . Still , an assessmen t o f th e effectivenes s o f smal l busines s provision s performe d b ya contractor , ICF , sho wtha t th e smal l busines s provisio n fo r manufacturer s o f atypica l product s reduce s th e financia l burde n o f th e programsignificantly . I n total , th e smal l busines s provision s fo r manufacturer s o f thes e product s lessene d th e cos t burde n t o industryb yove r $2 0 millio ndollars . Thus , althoughth e smal l busines s provision s fo r atypica l manufacturer s ar e no t a s libera l a s thos e provide d fo r manufacturer s o f baselin e and non-baselin e products , th e provision s reduc e th e financia l burde n o f th e programsignificantl ywhil e stil l assuring tha t EP Awil l b e supplie d wit hemissio n characterizatio nan d literatur e searc hdat a upo nwhic ht o bas e it s initia l evaluatio no f eac hatypica l F/F A(o r group) . A t th e

8 A s wit hbaselin e an d non-baselin e products , th e busines s entit yt o whic hthi s sale s leve l pertain s i s th e sale s o f th e ultimat e paren t compan ywhe nth e registering compan yi s a subsidiary , division , o r othe r busines s unit . 1 1P.1 9

Agency' s discretion , healt heffec t concern s arising fromth e initia l revie wo f thi s dat a maystil l b e require d t o b e followe d u p b ysuitabl e testin g unde r th e provision s o f Tie r 3 . Sinc e smal l busines s exemption s ar e base d o nbot hth e manufacturer' s annua l sale s an d th e produc t category , i t i s possibl e fo r a manufacture r t o hav e some product s excuse d fro m programrequirement s bu t no t others . Fo r example , anadditiv e manufacture r having bot hbaselin e an d atypica l product s an d annua l sale s o f $3 0 millio nwil l b e excuse d fro mTie r 1 an

d Tie r 2 requirement s fo r th e baselin e additives , bu t wil l no t b e excuse d fromprogramrequirement s fo r th e atypica l products . Thes e specia l provision s allo wth e Agenc yt o eas e th e testing burde n o n a significan t numbe r o f relativel ysmall , manufacturers , whil e stil l obtaining th e leve l o f informatio n necessaryt o achiev e th e overal l goal s o f th e program . Approximatel y6 4 percen t o f fue l additiv e manufacturer s an d 7 4 percen t o f fue l manufacturer s wil l qualif yfo r smal l busines s provision s fo r thei r baseline/non

baselin e products . Furthermore , abou t 4 5 percen t o f additiv e manufacturer s and 1 1 percen t o f fue l manufacturer s wil l qualif yfo r smal l busines s specia l provision s fo r thei r atypica l products . Th e result s o f th e smal l busines s impac t analysi s suppor t th e smal l busines s definition s use d i nthi s registratio n program , and ar e discusse d i n greate r detai l i nChapte r 5 . C . Provision s t o Eliminat e Duplicationo f Effor t Unde r CA

Asectio n 211(e)(3)(c) , th e Administrato r mayexemp t an yfue l o r additiv e fromth e regulation s "upo n a finding tha t an y additiona l testin g o f suc hfue l o r fue l additiv e woul d b e duplicativ e o f adequat e existing testing. " EP Awil l exercis e it s authorit yunde r thi s provisio n b yexempting fuel s and additive s registere d a s relabele d product s fromth e evaluatio n and testin g requirement s o f thi s program . Arelabele d produc t i s a repackage d versio n o f a produc t whic hi s als o registere d b yth e origina l manufacturer . Testing o f relabele d product s woul d clearl y duplicat e th e effort s o f th e origina l manufacturer . Consequently , onl ybasi c registratio n informatio nwil l b e require d fo r relabele d products . EP Ai s als o providin g a specia l provisio n fo r manufacturer s o f non-baselin e an

d atypica l product s t o avoi d duplicativ e efforts . Sinc e requiring manufacturer s o f non-baselin e and atypica l F/FA s t o submi t literatur e dat a o n al l emissio nproduct s wil l duplicat e th e effort s o f informatio n submitte d fo r th e bas e fue l t o whic hi t i s compared , EP Ai s allowing manufacturer s o f non-baselin e an d atypica l F/FA s t o submi t Tie r 1 literatur e dat a onl yfo r th e emissio nspecie s whic har e differen t fro mth e emissio nproduct s o f th e respectiv e bas e fuel . D . Othe r Specia l Provision s 1 2P.2 0

I nadditio n t o th e provision s discusse d above , EP Ai s als o providin g i n thi s fina l rul e specia l provision s fo r experimenta l F/FA s an

d aerosol s products . Fo r experimenta l F/FAs , EP Ai s relying o nexisting regulation s unde r 4 0 CF R79.4(a)(3 ) and 79.4(b)(2 ) whic hexempt s fuel s an d fue l additive s use d fo r research , developmen t o r testing . Base d o n thes e provisions , an y designate d F/F

Asol d t o automobile , engine , o r componen t manufacturer s fo r research , developmen t o r tes t purposes , o r sol d t o automobil e manufacturer s fo r factoryfill , an d no t i nan

ycas e offere d fo r commercia l sal e t o th e public , i s exempte d fro mth e registratio nrequirements . Thi s provisio n doe s no t affec t th e result s o f th e analysi s sinc e thes e product s ar e no t currentl y require d t o registe r wit hEPA . I n regar d t o aeroso l products , th e fina l rul e contain s a specia l provisio nunde r whic hmanufacturer s o f aftermarke t additive s tha t ar e sol d t o b e applie d i naeroso l for m (e.g. , starte r fluids , carbureto r cleaners ) ar e require d t o provid e onl y existing informatio n o n thei r product s (o r components) , a discussio n o f th e potentia l exposures , an d basi c registratio ndata . Thus , aeroso l product s ar e exemp t from Tie r 1 emissio n characterizatio nrequirement s an d Tie r 2 . Testing o f aerosol s may b e performe d unde r Tie r 3 a t EPA' s discretion . EPA' s registratio n databas e doe s no t indicat e whic hcurrentl yregistere d aftermarke t additive s ar e aerosols . A s a result , cos t reduction s fo r product s qualifyin g fo r thes e provision s ar e no t considere d i nthi s analysis .

1 3P.2 1

Figur e 1-1 : Groupin g Framewor k

Fue l FamlIle s Conventional : Gasolin e

Diese l Alternative : Methano l

Ethano l Methan e CCNG , LNG . Propan e CLPG .

FueI/Ad d111v e Categorles :

- Bas e I Ine

- Non-bas e I Ine

- Atypica l

Fuel/Addltlv e Group s

Grou p Representa t I veCs ]

1 4Tabl e1-1 : F/F A Groupin gSyste m

F/r & Catagor

y

Bn«U,n «

Bon-h a aa l 1 n»

Atypiaa l Comr—itlona l Qaaollna (A ) On * group rapraaantadb

y gaaolina baa a fua l

On * grou

pfor aac h gaaolina—oxyganat a blon do r aach gaaolina

— Bathanol/ao

— aolvant bland ; on * grou

pCor aaah aynthati a axud * • daxivadfua l On * grou

pfor aaa h atypica l __•__ / charactarlatla , o r unicru * coabinatlan o f atypica l alamanta / charactarlatla * •Ma i raaillaa Dl*a* l (B ) On * group rapraaantadb

y dl*a* l baa * fua l

On * groupfor aac hoxygan aontxlbutln

g coapoun do r alaaa o f —_pounda ; on * groupfo r aaa

h aynthati a axud* - daxi-ra dfua l
On * grou

pfor aac batypiaa l al —ant / charac t *xia-tic . o r unlqu * iwa M nationo f atypiaa l al——nta / aharact*ri*tiaa Mathano l (C ) Tw o groupa : 1 ) MlO Ogroup (includaa —thanol-gaaolln a xoxaulatioa a wit h at laaa t 96 % •athanol ) rapxaaantadb

y MlOObaa * fua l 2 ) M8S (includaa —thanol-gaaolln a f oxaulation * wit h SO-95 % aathanol ) rapraaantadb

y MS 5 baa * fu* l On * groupfor •aahIndividua l non-aathanol , non-gaaolln * ooaponan t an

don * groupfo r aac h unlqu * aoabinationo f aue haaaponant a On * groupfor aachatypiaa l alaaant / charac t ariatia , o r unlqu * aaabinationo f atypiaa l a la—nt-a / aharaat*rlatle a JLLtarnativ* Fua l raailla a Bthano l (D > On * grou

p (Includaa athanol-gaaollna formulation * wit h at laaa t 50 % athanol ) rapraaantadb

y •8 5 baa * fu* l

On * grou

pfo r •aahindividua l nonathanol , non gaaolln * coaponan t an

don * grou pfor aach unlqu * aaabinationo f auchaoaponant a On * grou

pfor •aahatypiaa l al*——t / chaxactaxiatic , o r unlqu * aoablnatlono f atypiaa l a l —ant* / ahaxaataxlatic * Mathan a (CHG , LHG ) (" ) On * group (Includaa bot h —( GandLHG ) , rapraaantadb

y —H 3 baa a fua l

On * groupt o Innlnrt * —than * foxaulation * *Tnaar11n« j th

a apaeifladlimi t for non—than * hydroaarbona

On * groupfor aachatypiaa l a——ant / charactariatic , o r unlqu * aoablnatlono f atypica l a l —ant - .* / charactariatlc a Propana (LPO ) <» ) On * grou

p rapraaantadb

y _> Gbaa a fua l

On * grou

pt o 1 n<- l ml * propana f oxaulatlon

a axoaadlngth * apaoifiadHal t for butan * an

d hlgha r hydrocarbon * Ona grou

pfor aachatypica l • la — nt / oharaataxlatia . o r unlqu * aoablnatlono f atypica l alaaanta / charac t ariatlc a

15P.23


## Fue l Manufacture rAnnua l Sale s Distributio n

Manufacturer s o

fleade d Products Exclude d Figure 1-2. 1



## 3 7 3 o 3 C $10,006 -

$100
- $1.0
-

I I l

_ I I

_ l I L . Rgur e 1-2. 2 0 5 1 0 1 5 2025303840485058606870788086909 6 10 0 Cumulative Percen to

f83 8 Companie s

30 0

20 0 -

10 0- 3 

### z

<1 0 10-4 0 50-9 6 Annua l Sale s (IMMons ) Fig Lir e

*Sales 

## 1 1-2. 3
12 0
100
8 0
6 0
4 0
2 0 kie l Mfrs . Earnin g < S100 M Pe rYea i

$80 MILLIO N

•*• 1 0 2030405060708 0

Cunnjlattv e Percen to f52 5 Comoarde e < S10 0 M M 9 0 10 0
\(.P.2 4



## Fue l Additiv eManufacture rAnnua l Sale s Distributio n

Manufacturer

s o fLeaded Product

s &Relabeiers Excluded Fiaure 1-3. 1

3 9 —-$10.06©—

- $10© -
$1. 0

' ' • Rgur e 1 -3

_ 1 0 20 30 40 S O 6 0 7 0 Cumulativ ePercen to f45 8Companle e 8 09 0 10 0

<1 0 10-4 6 50-9 6 Annue l SaJe

e ( $ MWone

) Rgure 1-3. 3

too

a " 80 h 

# 1 » 

# J .
< 20 Fue l AddWv e Mfrs . Earnin g < $100 M Pe rYear .

i i i 1O203O4OW6O7O8O9O10 0

Curm-rfv e Percen to

f31 4 Companlee < $10 0 M M 

## 1 7P.2 5

Chapte r 2 Industr y Overvie

w
I . Introductio

n Thi s chapte r provide s a characterizatio no f currentl y registere d fue l an d fue l additiv e manufacturers . Financia l informatio n an

d informatio n regarding th e numbe r and type s o f product s registere d ar e presented . Fo r purpose s o f registratio n wit hEPA , a fue l manufacture r i s define d a s an yperso nwho , fo r sal e o r introductio n int o commerce , produces , manufactures , o r import s a fue l o r cause s o r direct s th e alteratio no f th e chemica l compositio n of , o r th e mixtur e o f chemica l compound s in , a bul k fue l b yadding t o i t an additive. 9 B ythi s definition , thos e entitie s require d t o registe r fuel s includ e no t onl yrefiner s o f crud e oil , bu t als o operator s wh o formulat e thei r ow nfuel s b

y adding differen t combination s o f additives , and thos e wh o mi x fuels . Afue l additiv e manufacture r i s define d a s an yperso n wh o produces , manufactures , o r import s anadditiv e fo r us e a s an additiv e and/o r sell s o r import s fo r sal e suc hadditiv e unde r th e person' s ow

n name. 1 0 Include d i nthi s definitio nar e companie s whic hmanufactur e additive s fromnon-additiv e constituent s a s wel l a s thos e whic hproduc e additive s b ymixin g tw o o r mor e othe r registere d additive s an d thos e whic hrepackag e existing additive s fo r sal e unde r a differen t labe l (i.e. , relabeiers) . Fue l additiv e product s can b e subdivide d b ypurpose-in-us e a s bul k additive s and/o r aftermarke t additives . Bul k additive s ar e product s whic h ar e adde d t o fue l befor e th e fue l i s commerciall yavailabl e fo r introductio n int o th e fue l tank o f a moto r vehicle , whethe r adde d a t th e refinerya s par t o f th e origina l blending strea mo r afte r th e fue l i s transporte d fro mth e refinery . Aftermarke t additive s ar e product s whic har e adde d b yth e end-use r directl yt o fue l i n a moto r vehicl e o r engin e t o modif yth e performanc e o r othe r characteristic s o f th e fuel , th e engine , o r it s emissions . EP A als o expect s t o includ e importer s o f fue l additive s i n th e fue l additiv e manufacture r definition . II . Analysi s o f Currentl y RegisteredFuel/Fue l Additive Producer s A s discusse d i n th e firs t chapter , EP Ai s require d t o registe r moto r vehicl e fuel s an d fue l additive s prio r t o thei r sal e o r introductio n int o commerce . Commercia l identifying information ,

9 4 0 CF RPar t 79 . 10 Ibid . 1 8rang e o f concentration , purpose-in-use , an d chemica l compositio n ar e example s o f informatio n require d fo r eac hproduc t registration . Th e registratio n information , maintaine d b yEP Ao na registratio n database , i s th e primarysourc e o f dat a use d i n thi s impac t analysis . A s o f Decembe r 1992 , th e registratio ndatabas e containe d informatio no n a tota l o f 2,05 3 uniqu e producer s an d 6,46 9 leade d gasoline , unleade d gasolin e an d diese l fue l and fue l additiv e products . O f thes e manufacturers , approximatel y78 5 (nearly4 0 percent ) wer e fue l producers , 1,24 0 (ove r 6 0 percent ) wer e additiv e producers , and 2 8 produce d bot hfuel s and additives . Approximatel y 3 0 percen t o f th e 2,09 9 fue l product s registere d wer e leade d gasolin e products , 6 0 percen t wer e unleade d gasolin e products , an d 1 0 percen t wer e diese l fue l products . O f th e 4,37 0 registere d fue l additiv e products , 4 2 percen t wer e bul k additive s an d 5 8 percen t wer e aftermarket . Nearl yone-fourt ho f al l registere d additive s wer e relabele d products . Th e databas e contain s informatio n o nproduct s registere d sinc e th e registratio n programbega n i n 1975 . Sinc e manufacturer s ar e no t currentl yrequire d t o notif yth e Agenc ywhe nproductio no f a registere d produc t ha s ceased , o r whe na compan yha s bee nsol d o r gon e ou t o f business , th e databas e maycontai n obsolet e information . Thus , t o mor e accuratel ydetermin e cost s and impact s o f thi s program , EP Aattempte d t o updat e th e databas e b y identifying manufacturer s n o longe r i n busines s and t o collec t curren t financia l informatio n fo r thos e manufacturer s stil l producin g registere d products , a s describe d below . However , ther e wa s n o wayfo r EP At o confirmwhethe r al l o f th e F/FA s registere d b ya "functioning " manufacture r ar e stil l (o r hav e eve r been ) i n production . A . Dat a Collection Usin g th e Dun& Bradstree t (D&B ) databas e service s availabl e t o EP Athroughth e Nationa l Compute r Center 11 , informatio n o nannua l sales , numbe r o f employees , and th e primaryStandar d Industria l Classificatio n (SIC ) cod e wa s collecte d o n approximatel y6 3 percen t o f registere d F/F

Amanufacturers . Whe nth e registere d F/F Acompan

y wa s a subsidiaryo r divisio no f a large r company , th e

U Acomputerize d inventoryo f facilitie s regulate d b yth e U.S . EPA , calle d FINDS , i s maintaine d b yEPA' s Offic e o f Informatio nResource s Management . I t operate s o n a mainframe compute r whic hreside s a t EPA' s Nationa l Compute r Cente r i n Researc hTriangl e Park , Nort hCarolina . ThroughFINDS , user s can acces s a Dun & Bradstree t databas e whic hcontain s informatio no n U.S . busines s establishments . 1 9P.2 7

sales/employee/SI C cod e dat a wa s collecte d fo r th e parent 1 2 company . Fo r th e remaining companies , EPAcontracte d wit hDun & Bradstree t Informatio n Service s t o collec t sales/employee/SI C cod e information , throughus e o f thei r mor e comprehensiv e database , an d t o identif ycompanie s whic hha d relocated , ha d bee n sol d o r renamed , o r whic hwer e n o longe r i n business . Companie s no t identifie d o n D&B' s comprehensiv e databas e wer e investigate d vi a phone , an

d i n some cases , physica l researc h(i.e. , a D& B analys t drov e t o th e busines s site) . Companie s stil l no t foun d afte r thi s effor t wer e considere d t o b e ou t o f busines s fo r purpose s o f thi s analysis . Financia l dat a wa s no t sough t fo r companie s producing onl y leade d gasolin e product s sinc e leade d gasolin e fo r highwayvehicle s wil l b e illega l a s o f January1 , 1996 . Consequently , the yar e exclude d from

th e remainde r o f thi s analysis . I n addition , becaus e onl ybasi c registratio ninformatio n wil l b e require d fo r relabele d products , financia l informatio n wa s no t collecte d fo r relabeier s sinc e thei r impact s woul d b e minimal . However , cost s t o companie s registering relabele d product s ar e include d i n th e overal l cos t projection s discusse d i n Chapte r 4 . A s a resul t o f th e dat a search , 24 9 registere d F/F Acompanie s (1 2 percen t o f tota l registere d companies ) wer e determine d t o b e ou t o f business . Excluding thes e companies , relabeiers , thos e producin g onl yleade d products , and afte r combining companie s liste d mor e tha n onc e o nth e databas e (se e sectio n II I o f Chapte r 5 fo r discussion) , curren t annua l sale s dat a wa s collecte d fo r 9 5 percen t o f th e registere d companies . Fo r th e remaining five percent , unde r th e assumptio n tha t companie s fo r whic hsale s dat a wa s no t availabl e wer e likel yt o b e small , EP Aassigne d a sale s leve l o f $4 9 millio n t o manufacturer s wit hgreate r tha n 5 0 employees , an

d $ 9 millio n t o manufacturer s wit hles s tha n5 0 employees . I f employe e informatio n wa s no t available , a sale s o f $4 9 millio n wa s assigne d t o th e company . B . Characterizationo f RegisteredProducer s I n total , th e numbe r o f uniqu e "functioning " registere d manufacturer s o nwhic hthi s analysi s i s base d i s 1,076 . Thi s

12A t th e tim e thi s analysi s wa s conducted , EP Aintende d t o bas e smal l busines s provision s o n th e sale s o f th e closes t paren t compan y(i.e. , direc t parent ) whe n th e registering entit ywa s a subsidiary , division , o r othe r operating unit . Fo r thi s reason , informatio n wa s collecte d fo r th e "closest " paren t listed , no t th e uppermos t headquarter s o r ultimat e paren t company . However , t o b e consisten t wit hth e Smal l Busines s Administration' s definitio n o f small , an d t o ensur e tha t companie s wil l no t subdivid e t o becom e eligibl e fo r th e smal l busines s provision s o f thi s program , EP Ai s basin g smal l busines s provision s o n sale s o f th e "ultimate " paren t rathe r tha nth e direc t paren t company . 2 0P.2 8

include s 43 8 additiv e manufacturers , 61 8 fue l manufacturers , an d 2 0 manufacturer s tha t produc e bot hfue l an d additiv e products . Th e tota l numbe r o f additiv e product s manufacture d b yth e 45 8 additiv e companie s i s 2,778 . Th e averag e numbe r o f additiv e product s registere d pe r additiv e manufacture r i s approximatel y6 , wit hth e maximu mnumbe r o f product s manufacture d b ya singl e additiv e compan ybein g 179 . Nearl yhal f o f th e additiv e manufacturer s (4 5 percent ) produc e onl yon e product . O f th e 2,77 8 registere d additives , approximatel y1 0 percen t ar e atypical . Th e tota l numbe r o f fue l product s manufacture d b yth e 63 8 fue l companie s i s 1,420 , roughl yone-hal f th e numbe r o f product s manufacture d b

yadditiv e companies . Th e averag e numbe r o f fue l product s pe r manufacture r i s approximatel y2 , wit hth e maximu m numbe r registere d b ya singl e fue l compan ybein g 16 . Abou t 4 0 percen t o f fue l manufacturer s produc e onl yon e product , and approximatel y1 5 percen t o f tota l registere d fue l product s ar e atypical . Analysi s o f th e update d databas e show s tha t abou t 9 0 percen t o f additiv e manufacturer s an d 9 8 percen t o f fue l manufacturer s produc e a t leas t on e baselin e o r non-baselin e product . Registratio n o f atypica l product s i s muc hlower , especiall yb yfue l manufacturers , wit honl y2 7 percen t o f tota l additiv e manufacturer s an d 1 3 percen t o f tota l fue l manufacturer s producin g a t leas t on e atypica l product . A s discusse d briefl yi nChapte r 1 and show ni nFigur e 1- 2 fo r fue l manufacturer s an d Figur e 1- 3 fo r additiv e manufacturers , th e distributio n o f annua l sale s acros s registere d manufacturer s show s tha t eac hindustryconsist s o f a smal l numbe r o f larg e manufacturer s and a larg e numbe r o f smalle r companies . A s show ni n Figur e 1-2 , abou t 8 2 percen t o f tota l fue l manufacturer s hav e sale s unde r $10 0 million , 7 3 percen t hav e sale s unde r $5 0 million , an d nearl y4 0 percen t hav e sale s belo w$1 0 million . Thus , o f th e fue l companie s unde r $10 0 millio ni nsales , nearl yal l hav e sale s unde r $5 0 million , and hal f fal l belo w$1 0 millio n i n sales . Onl yabou t 1 8 percen t o f fue l manufacturer s hav e sale s $10 0 millio nand above . I n regar d t o fue l additiv e manufacturers , approximatel y6 8 percen t hav e sale s belo w$10 0 million , 6 4 percen t belo w$5 0 million , and 4 5 percen t belo w$1 0 million . Thus , registere d fue l additiv e manufacturer s tend t o b e small , wit hove r 6 5 percen t o f thos e unde r $10 0 millio ni nsale s als o belo w$1 0 million . Onl y abou t a thir d o f tota l fue l additiv e companie s hav e sale s abov e $10 0 million . Usin g th e sale s dat a collecte d fo r eac hmanufacture r an d th e regressio n equation s develope d fo r th e smal l busines s impac t

2 1P.2 9

analysi s fo r th e NPRM 13 , IC F provide d estimate s o f ne t income , asset , and retur n on asse t (ROA ) informatio n fo r eac ho f th e registere d companies . Fromthis , IC F develope d profile s o f smal l an d larg e companies , a s show n i nExhibi t 2- 1 fo r fue l manufacturer s an d Exhibi t 2- 2 fo r additiv e manufacturers . Approximatel y7 3 percen t o f fue l companie s an d 6 4 percen t o f additiv e companie s ar e considere d smal l fo r thi s program(i.e. , hav e sale s <$5 0 million) . Acompariso n o f th e media nsmal l fue l an d fue l additiv e manufacture r indicate s tha t smal l fue l manufacturer s generall yhav e mor e employee s an

d highe r sale s and ne t income tha n smal l additiv e manufacturers , bu t tha t ROAtend s t o b e smalle r fo r smal l fue l companies . However , whe n comparing th e media nlarg e fue l an d additiv e manufacturer , th e dat a suggest s tha t larg e additiv e manufacturer s generall yhav e mor e employee s and highe r sales , ne t income , and ROAtha n larg e fue l companies . Th e likel yexplanatio n fo r thi s finding i s tha t severa l verylarg e companies , including majo r automobil e manufacturer s an d chemica l companie s ar e registere d a s fue l additiv e manufacturers . I n sum , a compariso n o f currentl yregistere d fue l and additiv e companie s suggest s tha t larg e additiv e manufacturer s (thos e wit h sale s $5 0 millio n an d above ) generall ytend t o b e large r i nterm s o f sale s and numbe r o f employee s tha n larg e fue l manufacturers . However , smal l additiv e manufacturer s ar e generall ysmalle r tha n smal l fue l companies . On e reaso n fo r thi s mayb e th e divers e natur e o f th e companie s registering products , particularl y additives . Tha t is , theymak e mor e product s tha nfue l additives . Th e dat a als o suggest s a bimoda l distributio ni nth e siz e o f th e companie s i n eac hindustry(i.e. , a smal l numbe r o f larg e companie s an d a larg e numbe r o f smal l ones) . Complianc e cos t impact s o n smal l and larg e fue l an d additiv e manufacturer s i s discusse d i n Chapte r 5 .

"Se e IC F Analysi s availabl e i n Ai r Docke t A-90-07 , item numbe r III-A-03 . 2 2P.3 0

Exhibi t2- 1 Profile s o f

Fue lManufacturer s

Small * Larg e TOTA L Numbe r

46 5 17 3 63 8 Percen t

73 % 27% 100 %

__l__3iN—

n Lowe r

gnartll e BtegiM i Uppe rQoartife |flL0L____Q__

_ Averag e Bmal lFue lMan—aul—ci * Employee s Sala a Aaaet a Ne tutcoflt c RO A 0 $49,00 0 $13,16 4 $29 2 2.21 % 8

$3,000,00 0 $882,30 3 $28,34 4 3.25 % 2 2

$9,000,00 0 $2,711,66 4 $97,05 7 3.57 % 5 1

$22,000,00 0 $6,782,32 1 $263,63 9 3.9vM> 29.43 7

$49,665,53 4 $13,537,04 1 $650,73 7 5.19 % 15 4

$14,707,89 4 $4,335,22 4 $178,33 4 3.54 % Larg eFoa lManafactnrer a Employee * Sale s Aaaet a Ne tIncom e RO A 0

$50,000,00 0 $15,643,98 3 $656,62 1 4.19 % 21 5

$85,917,70 2 $27,204,04 0 $1,198,32 1 4.40 % 44 5

$268,822,00 0 $87,279,65 8 $4,269,96 0 4.89 % 3.02 5

$1,775,820,00 0 $628,866,62 2 $36,751,77 2 5.85 % 67.30 0

$62,359,000,00 0 $68,509,097,98 8 $4,969,802,31 8

7.86 % 431 3

$2,653,133,84 8 $1,688,061,56 3 $116,891,85 2 3.16 % "Companie s wit hsale s les s tha n$5 0millio n

2 3P.3 1



### Exhibi t2- 2 Profile s o f

Additiv eManufacturers

Small * Large TOTAL Numbe r 29 5 16 3 45 8 Percen t

64 % 36 % 100 %

MltllHMBH I Lowe r

guartU e Media n Uppe rgoartil e am i*_D_MUa l Arerag e Smal lAddltrr eManafactmer a Employee * Sale * Aaaet a Ne t Incom e RO A 0

$50,00 0 $12,06 3 $49 2
4.08 % 5

$900,00 0 $296,68 8 $13,62 8
4.59 % 1 6

$4,282,99 5 $1,671,04 2 $81,82 6
4.90 % 5 2

$12,116,18 5 $5,288,94 9 $270,26 4
5.11 % 1.11 0

$49,000,00 0 $24,873,52 0 $1,345,97 0
5.41 % 5 1

$9,688,73 8 $4,476,56 7 $234,29 0
4.86 % Larg oAddltrr eManufacturer s Employee s Sale * Aaaet a Ne t Incom e RO A 1 0

$50,000,00 0 $25,436,58 3 $1,377,57 9
5.42 % 72 2

$176,414,56 6 $102,845,13 3 $5,865,45 6

5.70 % 3,54 8 $972,795,13 3 $681,922,81 4 $41,710,68 6

6.12 % 14.33 5

$3,405,500,00 0 $2,733,105,65 1 $175,985,07 5

6.44 % 332,70 0

$115,068,000,00 0 $135,063,393,62 0 $10,047,009,08 1

7.44 % 14.76 4 $4,974,456,42 0 $4,905,814,56 1 $344.352.61 1
6.12 % "Companie s wit hsale s les s tha n$5 0millio n

2 4Chapte r 3 Progra m Requirement s an

dAssociatedCost s
I . Introductio

n Th e regulation s implementing Clea nAi r Ac t (CAA ) sectio n 211(b)(2 ) requir e producer s o f moto r vehicl e fuel s an d fue l additive s t o submi t informatio nregarding th e compositio no f th e emission s produce d b ysuc hF/FA s an

d th e effect s o f th e emission s o n th e publi c healt han d welfare . A s previousl ymentioned , EPA believe s th e genera l regulatorymechanism s alread yimplemente d unde r sectio n 21 1 (f ) ar e adequat e t o satisf yth e emissio ncontro l systemprovision s o f sectio n211(b) . Furthermore , a s indicate d i n Chapte r 1 o f thi s document , welfar e effect s ar e t o b e addresse d i n conjunctio nwit hTie r 1 healt heffect s requirements , and possibl y Tie r 3 . Therefore , th e cost s presente d i n thi s analysi s ar e associate d primaril ywit hhealt heffect s evaluation , including informatio n collection , emissio n characterization , biologica l testing , and reporting requirements . Th e purpos e o f thi s chapte r i s t o projec t cost s associate d wit hmeetin g programrequirement s and submitting th e informatio n necessaryfo r registration . Becaus e gasolin e an d diese l fuel s an

d thei r additive s ar e th e onl yproduct s require d t o b e registere d wit hEP Aa t th e tim e thi s analysi s wa s conducted , specifi c componen t cos t estimate s ar e provide d onl yfo r testin g o f thes e fuel/additiv e families . However , futur e designatio no f methanol , ethanol , natura l gas , an d liquifie d petroleu m ga s fuel s an

d thei r additive s i s expected . Thus , producer s o f thes e F/FAs , i n additio n t o gasolin e and diesel , ar e expecte d t o b e subjec t t o th e registratio n requirement s o f today' s rule . Potentia l cost s associate d wit hfutur e registration s o f alternativ e F/F Aproduct s ar e discusse d a t th e end o f thi s chapter . A s previousl ymentioned , EP Acontracte d wit hSwR I t o hel p identif ycommercia l price s associate d wit hspecifie d aspect s o f th e generatio n and collectio no f combustio n an d evaporativ e emissions , th e chemica l characterizatio n(speciation ) o f suc h emissions , and th e controlle d dilutio nand direc t deliveryo f suc h emission s t o anima l exposur e chamber s fo r healt heffect s testing . T o obtai nthi s data , SwR I contacte d an d provide d a surveyt o eigh t laboratorie s capabl e o f performing a t leas t some o f thes e tasks . Eac ho f th e laboratorie s responde d t o a t leas t some o f th e survey categories . Base d o nit s ow nexperienc e a s a commercia l testing laboratory , SwR I the n evaluate d th e response s an d develope d a "typical " commercia l pric e whic hmigh t b e charge d fo r eac ho f th e tasks . Thes e pric e estimate s ar e th e basi s fo r muc ho f th e cos t dat a presente d i nthi s chapter . Othe r cos t estimate s wer e obtaine d fromvariou s sources , including resource s withi n EPA . Fo r example , biologica l testin g cost s wer e base d o n dat a receive d fromth e 2 5P.3 3

Offic e o f Pesticide s and Toxi c Substances 14

. Componen t cos t dat a fo r eac hrequiremen t o f eac hevaluatio n tie r i s provide d i n Appendi xA . Th e dat a presente d i n thi s chapte r reflec t th e cost s fo r an individua l produce r t o mee t th e requirements , an d d o no t reflec t potentia l saving s resulting from cost-sharing arrangement s o r fro m volum e discount s provide d b ylaboratories . Whe ncos t projection s ar e presente d i n thi s chapter , a rang e o f estimate d cost s i s provide d i n some instances . Thi s reflect s th e fac t tha t certai n programrequirement s ar e mor e stringen t and costl yfo r product s i n th e "atypical " categorie s tha n fo r th e "non-atypical " (baseline an d non-baseline ) products . I n suc hinstances , differen t cost s ar e presente d fo r "atypical " an d "non-atypical " products . Majo r change s i n th e fina l programrequirement s compare d t o thos e originall ypropose d ar e outline d below , followe d b ya discussio no f requirement s an d cost s associate d wit heac h evaluatio ntier , and , finally , cost s associate d wit hadministrativ e and reporting requirements . Aggregat e cost s t o industryar e discusse d i n Chapte r 4 . II . Descriptiono f Change s inProgra m Requirement s Th e fina l rul e maintain s th e three-tie r testin g structur e fo r evaluating th e healt heffect s o f fuel s and additives , wit hsome variation s i nspecifi c programrequirements . Tie r 1 o f th e proposa l include d a modelin g analysi s fo r atmospheri c reactivity , environmenta l fate/partitioning , and exposur e a s par t o f th e welfar e effect s evaluation . Du e t o th e limite d applicabilit yo f availabl e modelin g method s fo r thi s program , EP Ai s no t requiring routin e modelin g analysi s i n th e fina l rule . Instead , modelin g effort s wil l b e require d onl yo na case-by-cas e basis , a s neede d unde r Tie r 3 . Tie r 1 requirements , however , d o includ e submitta l o f productio n volum e and distributio ndata . F/F Amanufacturer s ar e als o require d unde r Tie r 1 t o determin e th e emission s resulting fro mth e us e o f th e fue l o r additiv e containe d i n th e fuel . I n doin g so , th e emission s ar e t o b e generated , collected , sampled , and subjecte d t o test s fo r determinin g th e identit yand concentratio no f individua l emissio n products . Befor e emission s ca nb e generate d fo r characterization , manufacturer s wil l b e require d t o accumulat e a certai n numbe r o f mile s o n th e vehicle . Th e minimu mmileag e accumulatio nrequire d prio r t o emission s testin g ha s bee n reduce d fromth e propose d

14 U.S . Environmenta l Protectio nAgency , Offic e o f Pesticide s and Toxi c Substances , "Cos t Estimate s fo r TSCATes t Guidelines, " Memorandu

m fromDa n Axelra d t o Sher i Dunatchik , June , 1991 , Docke t A-90-07 , itemnumbe r II-B-05 . 2 6P.3 4

25,00 0 mile s (or comparabl e hours ) t o 4,00 0 mile s fo r light-dut y vehicle/truc k testing o r 12 5 hour s fo r heavy-dut yengin e testing . I n th e cas e o f F/FA s wit hatypica l elements , onc e eac hatypica l element(s ) o f interes t i s detecte d i na t leas t on e emissio n fraction , an additiona l 10,00 0 mile s i s require d prio r t o generatio no f emission s fo r purpose s o f emissio n characterizatio n an d biologica l testing . I n additio nt o characterizing catalyze d exhaus t emission s generate d vi a th e Federa l Tes t Procedur e (FTP ) a s proposed , th e fina l rul e als o include s characterizatio no f non-catalyze d exhaus t emissions . Furthermore , fo r th e fina l rule , evaporativ e emissio n characterizatio n i s t o b e conducte d o nemission s generate d fro man evaporativ e emissio ngenerato r (EEG) , rathe r tha nth e propose d metho d o f usin g a seale d housing fo r evaporativ e determinatio n (SHED ) t o generat e emissions . I ngeneral , thes e change s describe d above , along wit hothe r change s i nprogramassumption s an d cost s (explaine d i nth e nex t section ) , resul t i n tota l Tie r 1 cost s bein g highe r tha n estimate d i n th e proposal . I n th e NPRM , EP Apropose d short-term test s unde r Tie r 2 fo r th e evaluatio no f si xhealt heffect s endpoints : carcinogenicity , mutagenicity , teratogenicity , reproductiv e toxicity , neurotoxicity , an d pulmonarytoxicity . Th e Tie r 2 testin g requirement s hav e bee n modifie d i nth e fina l rul e t o enhanc e th e efficienc yan d feasibilit yo f th e program . Aserie s o f individua l test s ar e replace d wit ha comprehensiv e 90-da ysubchroni c inhalatio nprotoco l tha t examine s genera l systemi c and orga n toxicit y(including pulmonarytoxicity) , a s wel l a s specifi c assessment s relate d t o carcinogenic , mutagenic , teratogenic , reproductive , and neurotoxi c effects . Thes e modification s wil l increas e th e qualit yand breadt h o f th e tes t data , whil e slightl ydecreasing th e actua l testing cost . However , result s o f th e surveyconducte d b ySwR I sugges t tha t bot hlight

- and heavy-dut yemissio n generatio n cost s fo r biologica l testin g purpose s wer e underestimate d i nth e proposal . This , i n combinatio n wit hchange s i nothe r assumption s regarding Tie r 2 testing , explaine d i n detai l below , resul t i na sligh t increas e i n tota l Tie r 2 cost s estimate d fo r bot hlight-dut y gasolin e an

d heavy-dut ydiese l testing . Cost s associate d wit h individua l testing requirement s o f eac htie r ar e discusse d below .
III . Tie r 1 Requirement s an dCost s Th e scop e o f Tie r 1 encompasses : 1 ) a literatur e searc ho f availabl e informatio n o n th e compositio nan d effect s o f F/F

A emission s o n publi c healt han d welfare , 2 ) a chemica l analysi s t o characteriz e th e emission s o f fuel s o r fuel/additiv e mixtures , an d 3 ) a discussio no npotentia l exposure s using informatio non productio n volum e and distributio npattern s o f th e particula r fuel(s ) o r fuel/additiv e mixture(s) . Eac ho f thes e requirement s ar e explaine d below . 2 7P.3 5

A . Literatur e Search Acomprehensiv e literatur e surveywil l b e required , usin g bot h publi c an

d in-hous e (industr yan d manufacturer ) source s t o gathe r al l availabl e informatio n abou t th e chemica l compositio n an d potentia l advers e effect s o f whol e combustio n emission s an d relevan t emissio nfractions , a s wel l a s th e individua l emissio n product s identifie d b yemissio n speciatio nprocedures . The informatio n i s t o b e compile d fro mpeer-reviewe d scientifi c journal s and othe r literatur e a s wel l a s interna l industrystudies , government-sponsore d reports , proceeding s o f scientifi c meetings , an d othe r documente d sources . Asearc ho f appropriat e commerciall y availabl e toxicologi c an d environmenta l database s mus t b e conducte d t o locat e informatio nfrompublishe d sources . Th e searc hmus t cove r a t leas t fiftee n year s prio r t o th e dat e o f submission , an d mus t b e curren t a s o f si xmonth s prio r t o beginnin g o f testing . Th e informatio nt o b e submitte d t o EP Aa s a resul t o f th e dat a searc hinclude s a summaryo f th e genera l findings , a printe d cop y o f th e output s fro

mth e databas e searches , complet e documentatio n o f unpublishe d in-hous e o r othe r privatel yconducte d studies , an d table s summarizing al l cite d studies . I n EPA' s judgement , companie s wil l likel ymee t thes e dat a researc hrequirement s throughth e service s o f a contractor . EP A estimate s tha t a typica l contracto r wil l charg e a nhourl yrat e o f $6 5 fo r thi s service , an d databas e service s ar e estimate d t o cos t approximatel y$2 0 pe r hour . Fo r baselin e products , EP Aestimate s contracto r an

d databas e servic e hour s t o b e approximatel y30 0 an d 7 5 hours , respectively . Fo r non-baselin e an d atypica l products , EP Ai s allowing manufacturer s t o submi t Tie r 1 literatur e dat a onl y fo r th e emissio nspecie s whic har e differen t fromth e emissio n product s o f th e respectiv e bas e fuel . Consequently , EP Aestimate s th e dat a researc hrequirement s fo r thes e product s t o abou t one thir d o f th e researc htim e require d fo r baselin e product s (i.e. , 10 0 contracto r hour s an d 2 5 hour s o f databas e use) . I nsum , EP A estimate s th e cos t fo r conducting th e literatur e searc hportio no f Tie r 1 t o b e $21,00 0 fo r baselin e product s and $7,00 0 fo r non baselin e and atypica l products . B . Characterizationo f Emission s CA Asectio n 211(b ) require s F/FAproducer s "t o determin e th e emission s resulting fromth e us e o f th e fue l o r additiv e containe d i n suc hfuel. " T o satisf yth e requirement s o f thi s provision , exhaus t emission s wil l nee d t o b e generated , collected , sampled , and subjecte d t o test s fo r determining th e identit yan d concentratio n o f individua l emissio nproducts . Whe napplicable , evaporativ e emission s wil l als o b e generated , collected , an d subjecte d t o mos t o f th e same method s o f chemica l analysis . Th e emissio n characterizatio nrequirement s canb e mitigate d b y comparabl e dat a obtaine d throughth e literatur e searc hdescribe d above . 1 . Emissio n Generatio n 2 8Thi s sectio n present s th e method s and cost s fo r generating and

sampling th e emission s t o b e use d i nchemica l speciatio n procedures . Becaus e man yo f th e same method s wil l b e neede d fo r generating emission s t o b e use d fo r biologica l testing i n Tier s 2 an d 3 , a discussio n o f thes e overlapping requirement s i s als o include d i n thi s section . a . Vehicl e Requirement s Th e vehicle s use d t o generat e emission s fo r purpose s o f emissio ncharacterizatio nan d biologica l testin g mus t b e ne w vehicle s o f th e mode l yea r i n whic htesting begins . Vehicl e class , emissio ncontro l equipment , an d vehicl e sale s volum e ar e th e parameter s t o b e considere d i ndetermining th e vehicl e o r engin e t o b e use d fo r emissio ngeneration . Fo r eac hfue l famil y(i.e. , gasoline , diesel) , th e vehicl e clas s t o b e use d fo r emissio n generatio n wil l b e tha t whic hconsume s th e highes t yearl yamoun t o f fue l i n tha t fue l family . Sinc e diese l F/FA s ar e currentl yuse d predominantl yi n HDEs , an d gasolin e F/FA s ar e predominantl yuse d i n light-dut yvehicle s (LDVs) , EP Aassume s i nthi s analysi s tha t HDE s wil l b e use d fo r testin g diese l product s and LDV s wil l b e use d fo r testin g gasolin e products . Further , EP Aassume s us e o f a heav y heavy-dut ydiese l engin e (HDDE ) (a n engin e use d i n a vehicl e greate r tha n 33,00 0 lbs . gros s vehicl e weigh t rating (GVWR) ) becaus e thi s subclas s reflect s th e mos t gallon s o f diese l fue l consume d among vehicle s operating o n diese l fuel . Th e specifi c vehicle/engin e mode l t o b e selecte d fo r testing i s t o b e an yon e o f th e five mos t commo n fue l systeman d emissio ncontro l system configurations . Ne wvehicle s (o

r engines ) use d i n emissio ngeneratio nfo r th e testin g o f baselin e an d non-baselin e F/FA s ar e require d t o underg o a break-i n perio d wher e th e vehicl e (o r engine ) i s runexclusivel y o n th e fue l o r fuel/additiv e mixtur e t o b e tested . Fo r vehicle s o n a chassi s dynamometer , th e mileag e accumulatio n neede d prio r t o emission s testin g i s a minimu mo f 4,00 0 miles . Fo r engine s o n an engin e dynamomete r th e minimu mbreak-i nrequiremen t i s 12 5 hour s o f operatio nfo r heavy-dut yengine s and 8 0 hour s fo r light-dut y vehicl e engines . Th e manufacturer s wil l b e responsibl e fo r appropriatel ymaintainin g th e vehicle/engin e whil e subjec t t o thes e requirements . Mileag e ca n b e accumulate d b yan yappropriat e means . I n th e cas e o f F/FA s wit hatypica l elements , afte r completio n o f th e 4,00 0 miles , th e F/F Amanufacture r i s require d t o identif y and measur e th e atypica l element(s ) i nth e exhaust , i f possible . Th e atypica l element(s ) o f interes t ar e t o b e measure d i neac ho f th e emissio n fraction s (i.e. , vapor , semi-volatile , an d particulate ) a t interval s t o b e decide d b yth e manufacturer . Th e manufacture r i s require d t o continu e mileag e accumulatio nunti l eithe r 1 ) 5 0 percen t o r mor e o f th e inpu t mas s o f eac hatypica l ca n b e measure d i n th e emissions , o r 2 ) mileag e equivalen t t o 4 0 percen t o f th e vehicle' s usefu l lif e i s reached . Testing may commenc e afte r eithe r o f thes e condition s ha s bee n met . 2 9P.3 7

Cos t estimate s provide d fo r producer s o f non-atypica l produc t formulation s (i.e. , baselin e and non-baseline ) reflec t th e assumptio n tha t emissio ngeneratio nfo r purpose s o f emissio n characterizatio n and biologica l testin g wil l begi nwhe n th e vehicl e ha s accumulate d th e minimu mmiles/hour s require d (4,00 0 mile s fo r an LD V o r 12 5 hour s fo r a n HDE ) . Fo r producer s o f atypica l formulations , range s an d poin t estimate s ar e provided . Th e lowend cos t estimat e assume s testin g begin s whe n th e minimu mmileag e accumulatio n requiremen t o f 4,00 0 mile s (o r equivalen t hours ) i s reached . Th e hig hend reflect s th e cos t a manufacture r woul d incu r i f mileag e equivalen t t o 4 0 percen t o f th e vehicle' s usefu l lif e woul d nee d t o b e accumulated . Whe n determining poin t estimate s t o b e use d i n th e cos t analysi s fo r atypicals , EP Aassume d tha t a t leas t 5 0 percen t o f th e inpu t mas s o f eac hatypica l elemen t woul d b e abl e t o b e measure d i n th e emission s afte r th e accumulatio no f mileag e equivalen t t o 7 5 percen t o f th e maximu m requirement . I n othe r words , poin t estimate s use d i n thi s cos t analysi s fo r testing o f atypica l product s reflec t th e assumptio n tha t testin g wil l begi n whe n mileag e ha s reache d 3 0 percen t o f th e vehicle' s usefu l lif e (i.e. , 30,00 0 mile s fo r LDV s and 87,00 0 mile s fo r heav yHDVs) . Vehicl e Acquisitio n Cost s EP Aestimate s producer s o f gasolin e fuel s and additive s will , spend approximatel y$15,00 0 t o purchas e th e appropriat e light-dut y vehicl e fo r testing.purposes . I n th e cas e o f diese l fuel/additiv e products , EP Aassume s tha t producer s wil l purchas e a heavy-dut y diese l engin e (HDDE ) fo r testing purposes , rathe r tha npurchasin g a HDV , accumulatin g miles , and the nremoving th e engin e fromth e vehicl e fo r testing . Dealer s i n th e South-Centra l Texa s are a wer e contacte d t o obtai n pric e estimate s fo r new , highway-certifie d heav yHDDEs . Base d o n five pric e estimates , th e averag e pric e o f a new , heav

yHDD E i s $18,600 . Althoug hEP Ai s routinel yrequiring onl yon e vehicl e o r engin e fo r th e testin g o f F/FAs , EP Aforesee s tha t a t leas t on e backup vehicle/engine , identica l i n mode l and emissio ncontro l equipment , mayb e neede d i n orde r t o replac e vehicles/engine s tha t wea r ou t o r malfunctio n during th e cours e o f testing . EP Arecommend s tha t backup vehicles/engine s accumulat e mileag e along wit hth e primary tes t vehicle/engine , s o a s t o minimiz e testin g interruption s i n th e even t tha t th e backup vehicle/engin e i s needed . Fo r thi s analysis , EP Aassume s manufacturer s wil l retai non e backup vehicl e fo r testing . Consequently , gasolin e F/F Aproducer s wil l spend $30,00 0 o n vehicl e purchase s fo r testing , whil e engin e acquisitio ncost s fo r diese l F/F

Aproducer s ar e estimate d t o tota l $37,000 . Mileag e Accumulatio nCost s A s indicate d above , EP Aenvision s emissio ncharacterizatio nt o b e conducte d a t 4,00 0 mile s fo r non-atypica l (baseline an d non baseline ) formulations , and whe n3 0 percen t o f th e vehicle' s usefu l lif e i s reache d fo r atypica l formulations . I n additio nt o maintenanc e and fue l expenses , th e require d mileag e accumulatio n 3 0wil l hav e an adde d expens e fo r th e time and/o r personne l involve d

i n th e mileag e accumulatio n activity . Severa l o f th e laboratorie s contacte d b

ySwR I indicate d theywer e familia r wit hoperating vehicle s o na se t driving rout e wit ha hire d drive r t o accumulat e miles . On th e basi s o f th e responses , $0.80/mil e i s determine d t o b e a cos t likel yt o b e charge d fo r thi s task . Maintenanc e and fue l cost s ar e included . Usin g thi s rate , EP Aestimate s mileag e accumulatio n cost s fo r gasolin e and othe r F/FA s teste d o nlight

dut yvehicle s t o b e $3,20 0 fo r non-atypica l and $24,00 0 fo r atypica l formulations . Doubling thi s cos t t o accoun t fo r backu p vehicl e mileag e accumulation , tota l LD V mileag e accumulatio ncost s ar e estimate d t o b e $6,40 0 fo r testing non-atypica l gasolin e F/FAs , and $48,00 0 fo r testing atypica l gasolin e F/FAs . Thi s cos t coul d reac ha s muc ha s $64,00 0 fo r atypica l product s i f testing i s conducte d whe n bot hvehicle s hav e reache d 4 0 percen t o f th e vehicle s usefu l life , o r coul d b e a s lowa s abou t $6,40 0 i f th e minimu mmileag e o f 4,00 0 mile s prove d t o b e adequate 15

. Fo r diese l an

d othe r F/FA s whic har e use d i n HDVs , EP A envision s "miles " wil l b e accumulate d o na heavy-dut yengin e vi a a dynamomete r a t a testing facility , wit hn o particula r loa d o r cycle s bein g applie d t o th e engine . Informatio nreceive d from testin g facilitie s familia r wit hthi s procedur e indicate s tha t approximatel y$2.2 0 pe r mile , including fue l and maintenanc e costs , migh t b e charge d fo r thi s task . Usin g a rat e o f 5 0 miles/hou r t o conver t hour s t o miles , EP Aestimate s th e cos t t o accumulat e th e equivalen t o f 12 5 hour s o na HD E woul d b e approximatel y$13,750 . Thus , tota l HD E mileag e accumulatio n costs , including on e backup vehicle , i s estimate d a t $27,50 0 fo r non-atypica l produc t testing . Th e cos t fo r atypica l produc t mileag e accumulatio ni s estimate d a t $191,400 , ranging fromnearl y$8,80 0 fo r 4,00 0 mile s o f mileag e accumulatio n t o a maximu mcos t o f ove r $255,00 0 fo r accumulating mile s equivalen t t o 4 0 percen t o f th e engine' s usefu l life . HD E acquisitio n an

d mileag e accumulatio ncost s ar e estimate d t o tota l ove r $200,00 0 fo r testing o f atypica l diese l products , assuming tha t characterizatio n wil l no t b e conducte d unti l mileag e ha s reache d 3 0 percen t o f th e vehicle s usefu l life . Shoul d thi s leve l o f mileag e accumulatio nb e necessary , manufacturer s o f thes e product s ar e likel yt o fin d i t mor e economicall yfeasibl e t o repea t a portio n o f th e testing , shoul d i t b e necessary , rathe r tha n retai n a backup tes t engine . Thus , thi s analysi s assume s tha t manufacturer s o f atypica l diese l product s wil l choos e no t t o

15 I t shoul d b e note d tha t manufacturer s ar e permitte d t o accumulat e mile s b yan yappropriat e means , including us e o f a chassi s o r engin e dynamomete r a s oppose d t o us e o f a tes t trac k assume d fo r thi s analysis . I f mile s ar e accumulate d vi a a chassi s dynamometer , tota l mileag e accumulatio ncost s woul d b e approximatel y3 3 percen t highe r tha nestimate d fo r thi s analysis , whil e engin e dynamomete r cost s woul d b e abou t 4 6 percen t highe r (assuming 2 vehicles/engines) . 3 1P.3 9

purchas e a backup engine . Tota l Vehicl e Requiremen t Cost s I n sum , fo r testing gasolin e fuel s an d additive s usin g anLDV , EP Aestimate s cost s associate d wit hvehicl e acquisitio nand mileag e accumulatio n (for a primarytes t vehicl e and on e backup vehicle ) t o b e $36,40 0 fo r non-atypica l produc t formulations , assuming emissio n speciation/biologica l testing begin s a t 4,00 0 miles . Fo r atypica l produc t formulations , assuming emissio n speciatio n an d biologica l testin g occu r a t 30,00 0 miles , th e vehicle-relate d cost s ar e estimate d t o b e $78,000 . Reflecte d i n thes e cost s i s th e conservativ e assumptio n tha t th e vehicle s ar e retained , shoul d furthe r testing b e necessary(e.g. , prescribe d unde r Tie r 3 ) . Fue l cost s an

d maintenanc e cost s ar e include d i n th e cost s presente d above . Th e chang e i n mileag e accumulatio nrequirement s an d assumption s regarding vehicl e purchases , i ncombinatio nwit h update d cos t data , resul t i n tota l estimate d light-dut ygasolin e vehicl e acquisition/mileag e accumulatio ncost s bein g highe r tha n wer e estimate d a t th e tim e o f th e NPRM . Wit hregar d t o diese l an d othe r F/FA s requiring th e us e o f HDEs , cost s associate d wit hacquiring and operating a heav yheavy

dut yengin e ar e estimate d t o tota l abou t $64,70 0 fo r non-atypica l formulation s an

d $210,00 0 fo r testing atypica l formulation s (non

atypica l pric e include s acquisitio nand mileag e accumulatio nfo r on e backup engine) . Thes e cost s reflec t th e assumptio ntha t emissio ncharacterizatio n an d biologica l testing begi na t th e equivalen t o f 4,00 0 mile s fo r non-atypica l products , and a t 87,00 0 mile s fo r atypica l products . Fue l an d maintenanc e cost s ar e reflecte d i n th e cost s a s well . Thes e HD E acquisition/mileag e accumulatio n cost s ar e highe r tha n estimate d fo r th e proposal . b . Combustio n Emissio n Generatio n Procedure s fo r generating emission s fo r emissio n characterizatio nar e dependen t upo n th e emissio nproduc t categorie s o f interest . Bot hcatalyze d and non-catalyze d exhaus t emission s generate d usin g th e FT P ar e t o b e speciate d fo r light-dut ygasolin e vehicl e testing , an d onl ynon-catalyze d exhaus t emission s ar e t o b e speciate d fo r heavy-dut ydiese l engin e testing . Vapor-phase , semi

volatile , and particulat e emission s ar e require d t o b e characterized . Cost s ar e base d o nth e assumptio ntha t th e F/FA manufacturer s wil l see k laboratoryservice s fo r thes e purposes , rathe r tha nconducting test s in-hous e o r erecting facilitie s capabl e o f conducting suc htests . Estimate s receive d fro mtesting laboratorie s indicat e tha t generating emission s vi a an FT P whic hha s bee nmodifie d t o allo w collectio n o f al l thre e phase s o f emission s fo r subsequen t measuremen t o f th e emissio n product s o f interes t woul d cos t approximatel y$1,10 0 fo r a light-dut yvehicl e an d $2,40 0 fo r a heavy-dut yengine . Base d o n comment s receive d fromtestin g facilities , a n additiona l $5,00 0 engin e set-u p fe e i s expecte d t o 3 2P.4 0

b e charge d fo r heavy-dut yengin e testing . c . Evaporativ e Emission Generation Dependin g o n specifi c RV P criteria , some fuel s and additive s wil l b e require d t o underg o emissio ncharacterizatio nan d biologica l testing fo r evaporativ e emissions . Th e evaporativ e emissio n characterizatio nrequirement s involv e speciatio no f emission s generate d from an evaporativ e emissio ngenerato r (EEG ) rathe r tha na vehicle . Th e EE Gi s a fue l tank o r vesse l t o whic hhea t and/o r vacuu m i s applie d t o caus e a portio no f th e fue l t o evaporat e a t a desire d rate . EP Aestimate s th e cos t o f generating/collecting evaporativ e emission s vi a thi s procedur e t o b e approximatel y$20 0 pe r hour . Althoughmanufacturer s wil l hav e flexibilit yi n th e design o f th e EEG , EP Aestimate s a cos t o f $4,00 0 fo r th e hardwar e an d labo r expecte d t o b e associate d wit hit s development . Evaporativ e emissio n generatio ni s no t applicabl e t o diese l fuel s an d thei r additives . 2 . Emissio nCharacterizatio n I n general , th e emissio ncharacterizatio nrequirement s o f Tie r 1 focu s o n th e detectio n an d measuremen t o f selecte d chemica l classe s and compounds . Th e require d analyse s include : 1 ) th e measuremen t o f basi c emissions 1 6 (i.e. , tota l hydrocarbons , carbo n monoxide , nitroge noxides , an d particulate s fromcombustio n emissions ; tota l hydrocarbon s fro mevaporativ e emissions) , 2 ) th e speciatio n o f volatil e hydrocarbo n compounds , aldehydes , ketones , alcohols , ethers , 3 ) th e speciatio n o f polycycli c aromati c hydrocarbon s (PAHs ) and nitrate d polycycli c aromati c hydrocarbon s (NPAHs) 17 , and 4 ) th e speciatio n o f atypica l emissio n products , whe n atypica l element s ar e know n t o b e presen t i nth e rawfue l o r additiv e formulation . Speciatio n requirement s ar e summarize d i n Tabl e 3-1 , an

d associate d cost s ar e provide d i n Tabl e 3-2 . Th e

"EP Apropose d t o requir e th e characterizatio no f "regulate d emissions " fo r fuel/vehicl e type s fo r whic hcertificatio n procedure s existe d a t th e tim e o f th e publicatio n o f th e NPRM (i.e. , gasoline , diesel , and methanol) . Th e term"basi c emissions " i s bein g use d instead o f "regulate d emissions " becaus e certificatio n requirement s hav e no t ye t bee n develope d fo r al l F/FA s include d i n thi s rule .

17 Th e fina l rul e doe s no t requir e PA H o r NPAH speciatio n fo r atypica l fuel s o r fue l additives . Consequently , cost s ar e overstate d b

y$19,20 0 fo r testing atypica l gasolin e product s an d $14,40 0 fo r testin g atypica l diese l products . 3 3P.4 1

cost s identifie d ar e cost s pe r sampl e o f emission s collected 18 , an d ar e th e same fo r bot hgasolin e an d diese l F/F

Aproducts . I n sum , basi c emission s ar e t o b e measure d fo r bot hvapo r an d particulat e phas e combustio nemission s a t a cos t o f $30 0 pe r sample . Measuremen t o f tota l hydrocarbon s i s require d fo r evaporativ e emission s (whe n applicabl e t o th e F/FA ) a t a per-sampl e cos t o f $225 . Th e cos t o f hydrocarbo n speciatio n fo r vapo r phas e combustio n emission s and evaporativ e emission s i s estimate d a t $33 3 pe r sample . Speciatio n o f aldehyde s an d ketone s i s require d onl y fo r th e vapo r phas e o f combustio nemissions , and i s estimate d t o cos t abou t $20 0 pe r sample . Alcoho l an d ethe r speciation , require d fo r bot hvapo r phas e combustio nemission s an d evaporativ e emission s wheneve r th e fue l o r fuel/additiv e formulatio nunde r evaluatio n contain s alcohol s o r ethers , i s estimate d a t $16 7 pe r sample . PA H and NPAH speciation , require d fo r bot hth e semi-volatil e an d particulat e phas e o f combustio n emissions , i s estimate d a t $80 0 pe r sampl e fo r LD

V gasolin e testing an d $120 0 pe r sampl e fo r HD E diese l testing. 1 9 Thes e cost s ar e base d o n th e result s o f th e survey conducte d b

ySwR I wher e laboratorie s wer e aske d t o identif y commercia l price s charge d fo r performin g th e characterizatio n requirement s describe d abov e usin g curren t characterizatio n procedures . I n general , thes e cost s ar e considerabl yles s tha n estimate d i n th e NPRM . T o determin e speciatio ncost s fo r atypica l elements , EP A reviewe d th e atypica l product s containe d i n th e registratio n databas e according t o th e variabilit yi n th e numbe r o f atypica l element s the ycontain , wha t phas e o r phase s th e element s woul d appea r in , th e numbe r o f end emissio n specie s whic hcontai nsuc h elements , and othe r factors . Base d o n thi s analysis , EP Abelieve s tha t tw o i s a representativ e numbe r o f atypica l element s containe d i n atypica l products . EP Aestimate s a cos t o f $30 0 fo r activitie s relate d t o detectio n o f th e atypica l element , an d $40 0 fo r measurin g th e emissio n product s containing th e atypica l element s (per element , pe r phase) . A s state d previously , EP Aenvision s emissio n characterizatio n t o b e conducte d whe n 3 0 percen t o f th e vehicle' s usefu l lif e i s reache d fo r atypica l formulations . Befor e thi s poin t i s reached , EP Aenvision s tha t detectio nprocedure s wil l b e conducte d five time s fo r light-dut yvehicl e testin g and seve n time s fo r heavy-dut yengin e testing . Base d o nal l o f thes e factors , EP Aestimate s cost s relate d t o identificatio n and measuremen t o f atypica l element s t o b e $3,90 0 fo r light-dut y vehicl e testin g and $5,30 0 fo r heavy-dut yengin e testing . "Thre e bag s o f vapo r phas e emission s ar e t o b e collected . Characterizatio n i s t o b e performe d o n a sampl e o f eac hba g o f emission s collected .

19 Fo r heavy-duty , particulat e phas e combustio nemission s ar e collecte d fo r bot hth e hot

- an d cold-star t segment s o f th e FTP . 3 4P.4 2

C . Tota l Tie r 1 Cost s Tabl e 3- 3 provide s tota l estimate d cost s o f Tie r 1 requirements . A s show n i n th e table , cost s ar e provide d fo r producer s o f bot hgasolin e an d diese l products , and fo r baseline , non-baselin e and atypica l produc t formulations . Fo r presentatio n purposes , emissio ngeneration/speciatio ncost s hav e bee ncombined . Thi s analysi s assume s th e following : 1 ) onl yon e combustio nand on e evaporativ e emissio ngeneratio n wil l b e neede d fo r emissio n characterization , wit hth e exceptio n o f emissio nproduct s containing atypica l element s 2 ) speciatio no f alcohols/ether s wil l onl yb e necessaryfo r non-baselin e products , 3 ) onl yon e sampl e o f emission s wil l b e collecte d an d characterize d fo r evaporativ e emission s generate d vi a th e EE Gmethod , 4 ) acquisitio n and mileag e accumulatio n fo r on e backup vehicle , wit hth e exceptio n o f heavy

dut ydiese l atypica l testin g (se e III. B o f thi s chapter) . A$5 0 fe e fo r measurin g a fuel' s RVP leve l i s reflecte d i nth e cost s fo r testin g gasolin e products . Th e cost s als o reflec t th e requiremen t tha t emissio n generation/speciatio nprocedure s b e conducte d thre e times . Fo r atypica l F/FAs , testin g i s assume d t o begi nwhe n3 0 percen t o f th e vehicle' s usefu l lif e ha s bee nreached . Underlyin g thes e cost s ar e th e assumption s tha t littl e o r n o previou s dat a exist s t o offse t speciatio nrequirement s an d tha t ther e ar e n o saving s from

cost-sharing provisions . Unde r thes e assumptions , producer s o f gasolin e fuel s o r fue l additive s woul d likel yincu r Tie r 1 cost s o f $106,30 0 fo r baselin e products , $95,80 0 fo r non-baselin e products 20 , and $150,60 0 fo r atypica l products . Cost s t o a produce r o f baseline , non-baseline , and atypica l diese l produc t formulation s ar e estimate d a t $119,400 , $106,400 , and $262,400 , respectively . Thi s include s cost s for : 1 ) conducting a literatur e searc hfo r informatio no nth e compositio n an d effect s o f F/F

Aemission s o n publi c healt h& welfare , 2 ) purchasin g on e primarytes t vehicle/engin e and on e backup vehicle/engin e (excep t fo r testin g diese l atypica l produc t formulations ) and accumulating th e appropriat e mile s fo r testing , and 3 ) performin g th e appropriat e emissio ncharacterizatio n requirements . Al l Tie r 1 cos t total s estimate d i n thi s analysi s ar e highe r tha n thos e estimate d i n th e proposal , wit hth e exceptio n o f diese l atypica l produc t testing . IV . Tie r 2 Requirement s an dCost s Th e second tie r o f healt heffect s evaluatio nconsist s o f a subchroni c inhalatio n toxicit ytest , wit hth e additio no f ancillary studie s t o scree n fo r severa l specifi c healt heffec t endpoint s (carcinogenicity , mutagenicity , teratogenicity , reproductiv e toxicit yand neurotoxicity ) withi n a singl e 90-da yexposur e

20 Tota l non-baselin e produc t cost s ar e les s tha nbaseline

produc t cost s du e t o lowe r literatur e searc hcosts . 3 5schedule . Thes e test s wil l b e require d fo r al l fuel s an d additive s t o th e exten t tha t th e result s o f th e dat a searc hactivitie s i n Tie r 1 d o no t includ e comparabl e existing informatio n from adequatel yperforme d an d properl ydocumente d previou s studies . I n general , laboratoryanimal s ar e t o b e expose d b yinhalatio n t o dilute d whol e exhaus t an d (when applicable ) evaporativ e emissions . Th e tes t guideline s generall ycal l fo r a minimu mo f thirtee nweek s exposure , si xhour s pe r day , five day s pe r week . Th e tes t guideline s an d relate d emissio n generatio n procedure s ar e discusse d below , along wit hestimate d cost s o f performin g eac htes t o n an individua l basis . A . EmissionGenerationfor Biologica l Testin g 1 . Combustio n Emissio n Generatio n Emission s ar e t o b e generate d o n a continua l basi s throughou t th e require d hour s o f anima l exposur e fo r eac hexposur e day , wit h emission s dilute d an d route d directl yfrom th e vehicl e o r engin e t o th e biologica l testing chamber . Fo r testing o f gasolin e fuels/additives , EP Aconservativel yassume s a chassi s dynamomete r wil l b e use d t o generat e emission s ove r consecutiv e transien t drivin g cycle s fo r healt heffect s testing , a t a cos t o f approximatel y$71,500. 2 1 Testing o f diese l fuel s and additive s usin g an engin e dynamomete r fo r emissio n generatio n i s estimate d t o cos t $58,500 . Thes e cost s ar e base d o nestimate s receive d fro m testin g laboratorie s whic hsugges t $1,10 0 pe r da yfo r chassi s dynamomete r testin g an d $90 0 pe r da

yfo r engin e dynamomete r testing migh t b e charge d fo r generation , dilution , and deliveryo f th e emission s t o th e anima l cages . Fue l and maintenanc e cost s ar e included . On e require d test , th e Salmonell a Mutagenicit yAssay(Ame s Assay ) i s an in-vitr o tes t requiring exposur e o f bacteria l culture s t o th e extracte d particulat e matte r and th e semi-volatil e fractio n o f combustio nemissions . EP Aassume s tha t a stream o f emission s delivere d t o th e anima l exposur e chamber s wil l b e diverte d and collecte d fo r thi s assay . Acos t o f $50 0 fo r gasolin e product s an d $80 0 fo r diese l product s i s estimate d fo r th e processin g o f th e P M an d semi-volatil e fraction s o f th e samples . 2 . Evaporativ e Emissio n Generatio n Fo r healt heffect s testing , manufacturer s ar e require d t o generat e emission s usin g th e same evaporativ e emissio n generato r (EEG ) and operating condition s specifie d abov e unde r Evaporativ e Emissio n Generation: , sectio n III . Evaporativ e emission s wil l b e dilute d and route d t o th e anima l chamber s i n a manne r simila r t o th e metho d use d fo r combustio nemission s healt heffect s testing . Estimate s receive d fromlaboratorie s fo r generation , dilution , and

21 Us e o f a n engin e dynamomete r fo r testin g gasolin e F/FA s i s permitte d bu t no t required . 3 6P.4 4

deliveryo f evaporativ e emission s generate d fro m an EE Gchambe r range d from

$15 0 t o $1,05 0 pe r day . Although , i n EPA' s judgement , th e cos t seem s t o b e high , evaluatio no f th e estimate s indicate s tha t $90 0 pe r da

ymaylikel yb e charged . Using thi s price , th e tota l cos t o f generating evaporativ e emission s fo r si xhour s pe r dayfo r 6 5 day s usin g th e procedur e describe d abov e i s estimate d a t $58,500 . Brie f description s o f biologica l tes t guideline s fo r th e evaluatio n o f eac hhealt heffec t endpoin t ar e provide d below , along wit hthei r associate d cost . Th e cos t estimate s ar e base d o n standar d testin g cost s receive d fromth e Offic e o f Pesticide s an d Toxi c Substance s (se e footnot e numbe r 14) , adjuste d t o accoun t fo r modification s t o th e standar d protocol s t o b e consisten t wit hth e scop e o f th e healt heffect s testin g program , and update d t o accoun t fo r inflatio ni n th e labo r rate s sinc e th e tim e o f th e proposal . Appendi xB provide s componen t cos t dat a fo r eac ho f th e biologica l test s describe d below . Thes e cost s ar e incrementa l t o th e associate d emissio ngeneratio ncost s describe d above . B . Biologica l Tes t Cost s 1 . Subchroni c Inhalatio nStud y Th e 90-da

ysubchroni c inhalatio nstud ywil l serv e a s a basi c framewor k fo r th e Tie r 2 testin g program . Th e tes t wil l provid e valuabl e screening informatio n o n genera l systemi c and orga n toxicity . Basi c requirement s o f th e stud yinclud e ophthalmologica l examination , bloo d chemistryanalysis , broa d orga n examination , and histopathology . Hematologyan d clinica l biochemistryanalysi s i s als o included . Specifi c tes t requirement s o f th e stud yar e describe d i n th e regulatorytex t o f thi s fina l rule . Thi s 90-da y subchroni c inhalatio ntoxicit ytes t i s estimate d t o cos t approximatel y$177,000 . 2 . Carcinogenicit yan d Mutagenicit yScreen s Thre e assay s ar e include d i n Tie r 2 fo r carcinogenicit yand mutagenicit yscreening . Th e salmonell a mutagenicit y(SM ) assayi s conducte d separatel yfromth e othe r tw o screening test s becaus e exposur e o f liv e animal s t o exhaus t emission s i s no t required . T o accommodat e th e tw o i n vivo assay s (micronucleu s (MN ) an d siste r chromati c exchang e (SCE)) , withi n th e overal l Tie r 2 testing framework , a satellit e grou p o f animal s woul d b e expose d concurrentl ywit hth e mai nanima l populatio n o f th e 90-da y subchroni c inhalatio n study . Thus , th e incrementa l cost s fo r thes e studie s ar e limite d t o th e additiona l anima l acquisitio nand maintenanc e cost s an d th e cost s specifi c t o eac hassay . N o incrementa l cost s fo r th e anima l exposure s woul d b e incurred . Salmonell a Mutagenicit yAssav . Th e S Massa yi s an in vitro tes t whic hmake s us e o f five mutan t strain s o f th e bacteriu mSalmonella typhimurium. Th e bacteri a wil l b e expose d t o extracte d fuel/additiv e combustio nemissio nfractions , an d th e numbe r o f revers e mutation s wil l b e analyzed . Th e cos t o f conducting a S M 3 7P.4 5

assayfo r thi s programi s estimate d a t $4,700 . Thi s assaywil l b e conducte d o n bot hparticulat e an d semi-volatile-phas e sample s o f combustio n emissions , therefor e doubling thi s cos t t o $9,400 . Micronucleu s Assav . Micronucle i ar e sub-cellula r structure s containing chromosome s an d chromosome fragment s no t incorporate d int o th e mai nnucleu s during cel l division . Whil e micronucle i d o for munde r natura l conditions , exposur e t o potentiall ymutageni c o r carcinogeni c agent s can caus e an increas e i nmicronucleate d cells . I n thi s assay , live rodent s wil l b e expose d b yinhalatio nt o th e fuel/additiv e emissions , an d thei r periphera l bloo d cell s wil l subsequentl yb e examine d an d compare d t o thos e o f untreate d animals . A s a supplementarytes t t o th e subchroni c inhalatio n study , th e incrementa l cos t fo r thi s assayi s estimate d a t $2,900 . Th e cos t fo r a 3 0 da ystand-alon e tes t i s estimate d a t $38,000 . Siste r Chromati c Exchang e (SCE) . I n thi s assay , bloo d lymphocyte s an d lung cell s fro manimal s whic hhav e undergon e inhalatio n exposur e t o vehicl e emission s wil l b e examine d microscopicall y afte r bein g labele d an d staine d t o permi t visualizatio no f DN A replicatio n errors . Thi s assayi s estimate d t o cos t $43,00 0 a s a stand-alon e test , o r abou t $7,20 0 whe ncoordinate d wit hth e 90-da y subchroni c inhalatio n study . 3 . Fertilit yScree n fo r Reproductiv e an d Teratologi c Effect s Th e purpos e o f thi s screening tes t i s t o obtai ninformatio n abou t th e potentia l reproductiv e and teratogeni c (developmental ) effect s cause d b

yinhalatio n o f F/F Aemissions . Th e fertilit y scree n involve s th e matin g o f expose d mal e and femal e animal s t o F/F Aemission s t o examin e th e effect s o n conception , followe d b ya teratologystudy , involving inhalatio nexposur e o f th e female s t o F/F Aemission s during pregnancy . Thi s assessmen t coul d cos t ove r $90,00 0 i f conducte d individually , o r abou t $38,00 0 whe nth e exposure s ar e conducte d i nconjunctio nwit hth e subchroni c inhalatio n study . 4 . Neurotoxicit yScree n Th e fina l rul e doe s no t includ e th e Functiona l Observationa l Neurotoxicit yBattery(FONB ) propose d i nth e NPRM . Instead,a n expande d neurohistopathologyexaminatio ni s include d withi n th e 90

- daysubchroni c inhalatio nstudy . I naddition , a biochemica l assay whic hmeasure s th e leve l o f glia l fibrillaryacidi c protei n(GFAP ) i s required . Performanc e o f th e GFAP assayan d neurohistopathology examinatio ncoul d cos t nearl y$200,00 0 whe n conducte d separately , o r $3,60 0 and $42,000 , respectively , whe ncoordinate d wit hth e subchroni c inhalatio n study . C . Tota l Biologica l Tes t Cost s Th e cos t o f conducting eac ho f th e screening test s individuall ywa s provide d above , along wit hth e incrementa l cos t o f conducting th e screening test s i nconjunctio nwit hth e subchroni c inhalatio n study . Th e cos t o f conducting eac htes t individuall y 3 8doe s no t conside r an ysaving s whic hcoul d b e achieve d fro m conducting an

yo f th e test s i nconjunctio nwit hon e another . Th e Tie r 2 testin g programi s designe d s o tha t variou s tes t requirements , suc ha s anima l subjects , exposur e scenarios , an d genera l technica l principles , ar e simila r among th e tests . Thi s permit s th e healt heffect s examinatio nt o b e conducte d unde r a singl e comprehensiv e tes t protocol . Th e designo f th e Tie r 2 testin g programmake s bes t us e o f animals , laboratorycapacity , an d financia l resources . I f testing i s planne d and conducte d i nthi s fashion , EP Aestimate s tha t th e tota l cos t fo r conducting al l o f th e require d biologica l test s oncombustio nemission s woul d b e slightl yabov e $280,00 0 (excluding emissio n generatio n costs) . Likewise , conducting al l biologica l test s o nevaporativ e emission s i s estimate d t o cos t abou t $270,700 . Th e differenc e i s th e salmonell a mutagenicit yassay , whic hi s require d onl yfo r combustio n emissions . Thes e cost s represen t tota l cost s o f conducting al l biologica l test s wit hn o cost-sharing arrangements . D . Tota l Tie r 2 Cost s Tabl e 3- 4 show s th e cost s associate d wit hmeetin g th e requirement s o f Tie r 2 . Th e emissio ngeneratio ncost s assume emission s wil l b e generate d 6 hours/day , 5 days/wee k fo r 1 3 weeks , and tha t on e emissio n generatio n(combustiono r evaporative ) wil l produc e sufficien t emission s t o conduc t al l biologica l tests . Th e cost s assume tha t al l biologica l test s excep t th e S Massaywil l b e performe d o n bot hcombustio nand evaporativ e emission s fo r th e evaluatio n o f gasolin e fuel s an d additives , an

d o ncombustio nonl y whe n testin g diese l fuel s and additives . Thi s analysi s indicate s th e highes t cos t a n individua l produce r woul d likel yincu r fo r fulfilling al l Tie r 2 requirement s woul d b e approximatel y$681,300 . Thi s cos t represent s th e potentia l cos t t o producer s o f a gasolin e fue l product . Th e highes t potentia l Tie r 2 cos t t o a diese l fue l produce r woul d b e abou t $339,400 . Tota l tie r 2 cost s ar e slightl y highe r tha n initiall yestimate d fo r th e proposal . Eve n thoughth e require d exposur e duratio n i s longe r tha nproposed , th e biologica l testin g i s programi s designe d fo r mor e efficien t us e o f animal s an d laboratorycapacity , resulting i ntie r 2 tes t cost s bein g simila r t o thos e proposed .
V . Tie r 3 Requirement s an dPotentia l Cost s Al l cost s associate d wit hTie r 1 an d Tie r 2 requirement s ar e assume d t o b e incurre d i n th e firs t 3 year s afte r th e rul e i s promulgated , and Tie r 3 cost s ar e assume d t o b e incurre d ove r th e following 3 years . However , yearl ycost s mayactuall yb e les s i f producer s financ e th e cost s ove r a longe r perio d o f time . Fuel s an

d fue l additive s wil l b e subjec t t o additiona l testing unde r th e Tie r 3 provision s o f th e registratio nprogramonl yi f determine d t o b e neede d o n a case-by-cas e basi s b yEPA . Th e endpoint s t o b e addresse d an d th e natur e o f th e studie s t o b e 3 9performe d wil l depend o n th e cas e a t hand . Chronic/lifetime

studies , exposur e studies , an d additiona l emissio ncharacterizatio n o r modelin g analysi s ar e example s o f furthe r testing/analysi s tha t coul d b e required . An ytesting t o b e performe d o naeroso l additive s woul d als o occu r a t th e Tie r 3 level . Becaus e suc ha wid e rang e o f testing/analysi s mayb e require d unde r Tie r 3 depending o n th e area s o f concern , i t i s difficul t t o predic t th e associate d costs . However , using anima l inhalatio n exposure s o f chroni c tw o yea r duratio na s an exampl e o f testin g whic hmigh t b e required , Tie r 3 cost s coul d reac habou t 3 millio n dollars , o r on e millio n dollar s pe r year , assuming th e cos t o f 2 year s o f biologica l testin g woul d b e incurre d ove r 3 years . Thes e Tie r 3 cost s ar e no t include d i n th e overal l cos t projection s presente d i n Chapte r 4 . VI . Administrative/Reportin gRequirement s an

dCost s Th e material s t o b e submitte d t o EP Aar e divide d int o thre e majo r categories : basi c registratio n data , a summaryreport , and appendices . Productio n volum e dat a and informatio n currentl y require d fo r F/FAregistratio n ar e require d t o b e submitte d fo r basi c registration , and shoul d b e submitte d o n EP Aform s whic har e i n effec t a t th e tim e o f th e submittal . Th e summaryrepor t require s a tex t summaryo f th e evaluatio nprocedures , results , an d conclusion s pertainin g t o requirement s o f Tier s 1 and 2 . Detaile d informatio n i nsuppor t o f th e genera l discussion s containe d i nth e summaryrepor t ar e t o b e submitte d a s appendice s t o th e report . Producer s wh o mus t conduc t additiona l testin g unde r Tie r 3 wil l b e require d t o submi t a fina l repor t whe nth e designate d Tie r 3 testin g i s complete . EP Aestimate s approximatel y$10 0 wil l b e spen t b yeac h produce r fo r submitta l o f basi c registratio ndat a o neac hproduct . I n addition , eac hmanufacture r i s expecte d t o incu r approximatel y $30 0 fo r activitie s associate d wit hreviewing th e regulation s and plannin g fo r grou

p participation , i f applicable . EP Aestimate s approximatel y$9,40 0 fo r administratio ncost s relate d t o submissio n o f Tie r 1 data , $4,60 0 fo r submissio no f Tie r 2 data , an d nearl y $12,30 0 fo r cost s associate d wit hgrou p administration . Thus , a tota l o f ove r $26,00 0 i s expecte d t o b e incurre d b yeac hgrou

p o f manufacturer s wit hsimila r product s fo r activitie s relate d t o group administration , collectio no f existing data , oversigh t o f testing (i f required ) , and submissio no f Tie r 1 and Tie r 2 data . Averagin g thi s cos t ove r thre e year s yield s a cos t o f abou t $8,50 0 pe r year , pe r group fo r thes e activities . Thi s cos t woul d likel yb e les s fo r a manufacture r wh o i s alon e i n a grou p o r wh o wishe s t o conduc t testin g individuall ysinc e grou p administratio ncost s woul d no t apply .
VII . Summar

y 4 0P.4 8

Fo r an individua l produce r o f a gasolin e F/FA , th e cos t fo r fulfilling al l requirement s o f Tier s 1 an d 2 an d reporting th e result s t o EP Ai s estimate d t o b e abou t $800,00 0 fo r baselin e products , abou t $792,00 0 fo r non-baselin e produc t formulations , an d abou t $846,00 0 i f th e produc t formulatio ni s atypical . Comparabl e cost s fo r diese l fuel/additiv e producer s ar e estimate d a t approximatel y$473,00 0 an d $460,00 0 fo r producer s o f baselin e an d non-baselin e produc t formulation s respectively , an d abou t $616,00 0 fo r producer s o f atypica l produc t formulations . T o er r onth e conservativ e side , thes e cost s ar e inclusive . Tha t is , theyassume tha t ther e i s no t adequat e existing data , and tha t th e produce r mus t therefor e conduc t al l o f th e Tie r 1 and Tie r 2 test s d e novo. Theyals o assume tha t th e produce r doe s no t qualif yfo r an yspecia l provision s (e.g. , fo r smal l businesses) . I naddition , th e estimate s assume tha t th e produce r take s o n individua l financia l responsibilit yfo r al l tes t costs , eithe r becaus e h e elect s no t t o engag e i n grouping and cos t sharing provision s o r becaus e h e i s no t abl e t o d o s o (i.e. , sol e produce r i nth e group) . Th e lowes t cos t likel yt o b e incurre d b ya produce r no t qualifying fo r specia l provision s and no t participating i na grou p woul d b e th e cos t o f conducting a literatur e searc h(th e result s o f whic hprovid e documentatio n o f adequat e existing test s comparabl e t o thos e include d i nTie r 2 ) and registering th e produc t wit hEPA . Thi s cos t i s estimate d t o b e abou t $21,00 0 fo r a produce r o f a baselin e product , and $7,00 0 fo r a produce r o f a non-baselin e product . Producer s o f atypica l product s woul d nee d t o characteriz e th e emission s befor e a literatur e searc hcoul d b e conducted . A s previousl ydiscussed , "small " F/F Amanufacturer s o f baselin e and non-baselin e produc t formulations , and manufacturer s o f relabele d products , ar e onl yrequire d t o submi t basi c registratio n data . Th e per-produc t cos t t o suc hproducer s i s estimate d t o tota l onl yabou t $400 . "Small " manufacturer s o f atypica l product s hav e th e adde d cos t o f Tie r 1 testing . Cost s t o thi s typ e o f produce r coul d rang e fromabou t $13,50 0 t o abou t $114,00 0 fo r a gasolin e produc t and up t o abou t $272,00 0 fo r a diese l product , depending o nth e degre e t o whic hadequat e Tie r 1 dat a alread

yexists . Al l o f thes e cost s ar e one-time obligation s associate d wit hmeetin g th e basi c registratio nand/o r generi c testin g requirement s o f th e programfo r on e product . Tie r 3 cost s ar e no t included . Cost s incurre d o n a per-manufacture r basi s (takin g int o accoun t suc hfactor s a s specia l provisions , multipl e product s pe r manufacturer , an d cost-sharing opportunities ) an d aggregat e cost s t o th e industryar e discusse d i nth e nex t chapter . VIII.Cos t Estimate s for Futur e Alternative F/F A Registration s Th e discussio n thu s fa r ha s focuse d o ncost s associate d wit h registratio n an

d testin g requirement s fo r gasolin e and diese l fue l an d fue l additiv e products . A s mentione d previously , a proposa l t o 4 1P.4 9

designat e methanol , ethanol , liquifie d petroleu mgas , an

d natura l ga s F/F Aproduct s fo r registratio n i s expecte d i nth e nea r future . EP Aha s thu s define d familie s an d include d provision s fo r thes e alternativ e fue l product s i n thi s fina l rul e unde r th e assumptio n tha t the ywil l b e designated . Th e projecte d cos t impac t o f thi s rul e o n producer s o f thes e alternativ e fue l product s i s discusse d below . A s show n i n Tabl e 1- 1 fo r th e F/F Agrouping system , withi nth e baselin e category , tw o group s ar e establishe d fo r th e methano l fue l famil y(MlO

O grou p an d M8 5 group , represente d b ythei r respectiv e bas e fuel) , on e grou p fo r th e ethano l fue l famil y(represente d b y E8 5 bas e fuel) , on e grou p fo r th e methan e fue l famil y(represente d b yCN Gbas e fuel) , an

d on e grou

p fo r th e propan e fue l famil y (represente d b

yLP Gbas e fuel) . Cos t estimate s fo r th e registratio nan

d testing o f thes e products , show n i n Tabl e 3-5 , ar e base d o n uni t pric e estimate s associate d wit hregistration/testing o f gasolin e and diese l baselin e products . Althoughsome require d dat a mayb e availabl e fo r some o f th e alternativ e fue l families , thi s analysi s conservativel yassume s tha t al l Tie r 1 an d Tie r 2 testin g wil l b e require d fo r eac htestin g representativ e o f eac h alternativ e F/F

Aproduc t group . Othe r assumption s underlyin g th e analysi s are : 1 ) al l registere d product s ar e baselin e products , 2 ) testin g fo r th e MlO O an d LP Ggroup s wil l b e conducte d usin g a heavy-dut yengine , and al l remaining group s wil l mak e us e o f light

dut yvehicle s fo r testing ; 3 ) evaporativ e testin g wil l b e require d fo r th e methano l an d ethano l fue l familie s only ; and 4 ) a salmonell a mutagenicit yassa ywil l no t b e require d t o b e conducte d o n th e testin g representativ e o f th e methan e (CN Gan d LNG ) an

d propan e (LPG ) groups . Base d o n thes e assumptions , cost s associate d wit htesting a singl e representativ e fromeac halternativ e fue l famil ybaselin e grou p ar e estimate d t o b e a s follows : $735,00 0 fo r testin g eac ho f th e E8 5 an

d M8 5 representatives , $721,00 0 fo r th e MlO O group , $389,00 0 fo r th e methan e (CNG ) group , an d $408,00 0 fo r th e propan e (LPG ) group . Thi s sum s t o a tota l cos t o f abou t 3 millio ndollar s fo r testin g o f a singl e representativ e fromeac hgrou p i nth e baselin e categoryo f eac ho f th e alternativ e fue l families . Afte r discussion s wit hrepresentative s fromsevera l majo r alternativ e fue l trad e associations , EP Aestimate s approximatel y40 0 baselin e alternativ e F/FAproduct s wil l b e registere d withi n th e firs t yea r afte r the yar e designate d fo r registration . O f thes e 40 0 produc t registrations , EP Aestimate s tha t th e ethano l fue l famil ywil l accoun t fo r abou t 5 percent , th e MlO O an d M8 5 produc t registration s wil l b e abou t 1 5 percen t an d 2 0 percent , respectively , abou t hal f o f th e alternativ e F/F Aproduc t registration s wil l b e i n th e methan e fue l family , an d th e remaining 1 0 percen t wil l b e i nth e propan e fue l family . Usin g thes e produc t percentages , EP A estimate s pe r produc t cost s t o rang e fromjus t belo w$2,00 0 (for product s i n th e methan e fue l family ) t o abou t $37,00 0 (for product s i n th e ethano l fue l family) . O naverage , alternativ e F/F A 4 2P.5 0

producer s mayincu r cost s o f $7,50 0 pe r produc t ($3,000,000/40 0 products ) i n th e firs t yea r t o registe r thei r alternativ e F/F A product s wit hEPA , assuming al l Tie r 1 an d Tie r 2 testin g i s required . Thes e judgement s regarding futur e registration s o f alternativ e F/F

Aproduct s ar e no t intende d t o b e prediction s o f introductio n o f thes e product s int o th e market . Rather , the yar e estimate s use d fo r th e sol e purpos e o f estimating possibl e cos t impact s o f thi s rul e o n alternativ e F/F Aproducers . Futur e registration s o f thes e product s mayb e highe r o r lowe r tha n assume d i n thi s analysis , an d th e estimate d per-produc t cost s woul d b e lowe r o r highe r a s a result . Th e overal l cos t projection s presente d elsewher e i n thi s documen t ar e base d o ncurren t produc t registration s an

d d o no t includ e cos t projection s relate d t o thes e potentia l futur e alternativ e F/F Aproduc t registrations .

4 3Tabl e 3—1 : Emissio nCharacterization/Measuremen t Requirement s

Emissio n Typ e

Combustio n Emissions : Vapo r Phas e Semi volatil e Phas e Particulat e Phas e Evapora t iv e Emissions: * Evapora t iv e Emissio n Generator ' Basi c

Emissions * Speciate dEmission s

Hydrocarbon s Ketone s an d Aldehyde s Alcohol s

an d Ethers " Polycycli c

Aromati c Hydrocarbon s (PAHs) " Nitrate d

Polycycli c Aromati c Hydrocarbon s (NPAHs) ° Atypicals "

X

X X X X X
X X

X X

X
X

X * X X X

* Basi c emission s — tota l hydrocarbons , carbo nmonoxide , oxide s o f nitrogen , andparticulate s (se e Sectio n VII.B.2. a below ) bRequire di f alcohol s o r ether s exis t i nthe uncombuste dfue l o r fue l additive formulation . ° No t require dfor methan e (CNG , LNG ) o r propan e (LPG ) . Als o no t require dfo r testin gatypica l F/FA s (se e footnot e #17) . * Manufacturer s o f atypica l product s mus t examin e al l emissio nfraction s fo r the measuremen t and identificatio no f potentia l atypica l species . * Onl y applicabl e t o F/FA s require dt o measur e evaporative emissions . * Evaporativ e emission s ar e t o b e generate dusin ga nevaporativ e emissio ngenerato r a s describe di nSectio n VI.c . * Th e onl y

basi c emissio nrequire dt o b e measure dfo r evaporativ e emission s i s tota l hydrocarbons .

4 4Tabl e 3-2 : EstimatedEmissio nCharacterization/Measuremen t Costs *

Emissio n Typ e

Combustio n Emissions : Vapo r Phas e Semi volatil e Phas e Particulat e Phas e Evapora t iv e Emissions: * Evapora t ive Emissio n Generator ' Basi c

Emissions * Speciate dEmission s

Hydrocarbon s Ketone s an d Aldehyde s Alcohol s

and Ethers " Polycycli c

Aromati c Hydrocarbon s (PAHs) c Nitrate d

Polycycli c Aromati c Hydrocarbon s (NPAHs) ° Atypicals "

$30 0

$30 0 $33 3 $20 0 $16 7 $800(LDV ) $1200(HDE ) $800(LDV ) $1200(HDE ) $800(LDV )

$1200(HDE ) $800(LDV ) $1200(HDE ) $40 0

$40 0 $40 0

$225 h $33 3 $16 7 $40 0

* Basi c emission s — tota l hydrocarbons , carbo nmonoxide , oxide s o f nitrogen , an dparticulate s (se e Sectio n VII.B.2. a below ) " Require di f alcohol s o r ether s exis t i nth e uncombuste dfue l o r fue l additiv e formulation . ° No t require dfo r methan e (CNG , LNG ) o r propan e (LPG ) . dManufacturer s o f atypica l product s mus t examin e al l emissio nfraction s fo r th e measuremen t an d identificatio no f potentia l atypica l species . * Onl y applicabl e t o F/FA s require dt o measur e evaporativ e emissions . ' Evaporativ e emission s ar e t o b e generate dusin ga nevaporativ e emissio ngenerato r a s describe di nSectio n VI.C . 9 The onl y

basi c emissio nrequire dt o b e measure dfo r evaporativ e emission s i s tota l hydrocarbons . *Pe r Sampl e

4 5Tabl e 3-3 : Tie r 1 Cost s

Literatur e Searc h Acquisition * Mileag e Accumulation * Combust.Gen./Charact:* * RV P Measuremen t Engin e set-u p fe e Evaporativ e Gen./Charac t TOTAL : Gasolin e Fue l Famil y Baselin e $21,00 0 30,00 0 6,40 0 42,60 0 5 0 N/ A 6,27 5 $106,32 5 Non-Baselin e

$7,00 0 30,00 0 6,40 0 45,60 0 5 0 N/ A 6,77 5 $95,82 5 Atypica l

$7,00 0 30,00 0 48,00 0 58,50 0 5 0 N/ A 7,07 5 $150,62 5 Diese l Fue l Famil y

Baselin e $21,00 0 37,20 0 27,50 0 28,70 0

5,00 0 N/ A $119,40 0 Non—Baselin e

$7,00 0 37,20 0 27,50 0 29,70 0

5,00 0 N/ A $106,40 0 Atypica l

$7,00 0 18,60 0 191,40 0 40,40 0

5,00 0 N/ A $262,40 0

*Pric e include s on e primar yan d on e backu p vehicle/engin e (excep t fo r diese l atypical) . **Pric e include s characterizatio n o f bot hcatalyze d & non-catalyze d exhaus t emission s fo r light-duty , an d characterizatio n o f non—catalyze d exhaus t emission s fo r heavy—duty .

4 6Tabl e 3-4 : Tie r 2 Cost s

Combustio n Emissio n Generatio n S MSamplin g Evaporativ e Emissio n Generatio n Biologica l Tests : 90—da ySubchroni c Inhalatio n Stud y Salmonell a Mutagenicit yAssa y Micronucleu s Assa y Siste r Chromati d Exchang e Fertilit yScree n Neurotoxicit yScree n TOTAL : Gasolin e Fue l Famil y Baseline/Non-Baseline/Atypica l

$71,50 0 50 0 58,50 0
177,00 0 9,400 * 2,90 0 7,20 0 38,00 0 45,60 0 $681,300* * Diese l Fue l Famil y Baseline/Non-Baseline/Atypica l

$58,50 0 80 0 N/ A
177,00 0 9,40 0 2,90 0 7,20 0 38,00 0 45,60 0 $339,40 0 *Pric e include s th e cos t o f conductin g th e assayo n bot hparticulat e and semi-volatile—phas e combustio n emissions . **Pric e include s al l biologica l test s conducte d twic e (onc e o n combustio n emission s and onc e o n evaporativ e emissions) , excep t fo r th e S Massay(no t require d fo r evap . testing).

4 7

### Tabl e3-5 : Estimate dAlternativ eFue lRegistration s & Cost s

Baselin e Group s Tes t Representativ e Grou p Cos t
Est . Produc t Registration s Cost/Produc t (Rounded ) Methano l
2
M8 5 $735,00 0
8 0 $9,00 0 MlO O

$721,00 0
6 0 $12,00 0 Fue l Familie s

Ethano l
1
E8 5 $735,00 0
2 0 $37,00 0 Methan e

1
CN G $389,00 0
20 0 $2,00 0 Propan e

1

LP G $408,00 0
4 0 $10,00 0 Tota l

5

$ 3 Millio n 40 0 $7,50 0

4 8P.5 6

Chapte r 4 Estimate dCos t Impact s
I . Introductio n Unde r Executiv e Orde r 1286 6 [5 8 Federa l Registe r 51,735 (Octobe r 4 , 1993)] , EP Amus t determin e whethe r a regulatio n i s "significant " an d therefor e subjec t t o revie wb yth e Offic e o f Managemen t an d Budge t (OMB ) an d th e requirement s o f th e Executiv e Order . Th e orde r define s "significan t regulator yaction " a s on e tha t i s likel yt o resul t i na rul e tha t may : (1 ) hav e a nannua l effec t o n th e economyo f $10 0 millio n o r mor e o r adversel yaffec t i na materia l wa yth e economy , secto r o f th e economy , productivity , competition , jobs , th e environment , publi c healt ho r safety , o r State , local , o r triba l government s o r communities , (2 ) creat e a seriou s inconsistenc yo r otherwis e interfer e wit h a n actio ntake no r planne d b yanothe r agency , (3 ) materiall yalte r th e budgetar yimpac t o f entitlements , grants , use r fees , o r loa n programs , o r th e right s an d obligation s o f recipient s thereof ; o r (4 ) rais e nove l lega l o r polic yissue s arisin g ou t o f lega l mandates , th e President' s priorities , o r th e principle s se t fort hi nth e Executiv e Order. " Thi s analysi s indicate s tha t th e rul e i s no t expecte d t o hav e a n annua l effec t o nth e economyo f $10 0 millio no r more , no r woul d i t hav e anysignifican t advers e effect s o nth e economy , productivity , competition , jobs , th e environment , publi c healt ho r safety , o r government s o r communities . Consequently , thi s rul e i s no t considere d significan t unde r th e term s o f th e firs t criterion , and , sinc e th e othe r thre e criteri a ar e no t applicable , thi s rul e i s no t considere d t o b e a "significan t regulator yaction " unde r th e term s o f th e Executiv e Order . Nevertheless , becaus e thi s rul e ha s bee n o nEPA' s regulator yagend a fo r ove r 2 0 years , th e Agenc yha s decide d t o trea t thi s actio na s significan t an d prepar e a Regulator ySuppor t Documen t (RSD ) t o asses s it s economi c impact s o n th e affecte d industries . Base d o n th e uni t cos t estimate s presente d i nth e previou s chapter , thi s chapte r project s th e overal l cos t impact s o f th e F/F A registratio nprogra m o n th e F/F Aindustry . Cos t impact s ar e discusse d fo r fue l manufacturers , additiv e manufacturers , an d th e industr ya s a whole . Th e followin g section s discus s th e analytica l assumption s an d approache s o n whic hthi s cos t analysi s i s based , th e methodolog yfo r determinin g produce r an d industr yimpacts , th e 4 9P.5 7

limitation s o f th e analysis , an d conclusions . II . Analytica l Assumption s and Approac h Althoug hth e cost-sharing (grouping ) provisio no f thi s rul e i s voluntary , EP Aassume s fo r thi s analysi s tha t manufacturer s wil l choos e t o participat e i n grouping wit hmanufacturer s o f simila r product s t o th e exten t possible . So , fo r th e purpos e o f determining program costs , eac hcurrently-registere d produc t wa s assigne d t o an appropriat e categoryand group , base d on th e compositiona l informatio n containe d i nth e registratio ndatabas e fo r eac hF/FA . Th e result s o f thes e assignment s ar e show n i n Tabl e 4-1 . Exclude d from th e tabl e ar e manufacturer s who , throughsmal l busines s provisions , ar e exempte d fromtestin g requirement s fo r thei r baselin e and non-baselin e products . Fo r eac hcategory , th e tabl e identifie s th e numbe r o f registere d fuel s an d fue l additive s i n th e category , th e numbe r o f group s the ysor t into , an d th e numbe r o f producer s wit ha t leas t on e registere d produc t i nth e category . T o determin e th e cost s applicabl e t o th e group s i n eac h category , assumption s ha d t o b e mad e wit hregar d t o th e applicabilit yo f variou s programrequirement s t o eac hcategoryand th e likelihoo d tha t some o f thes e requirement s coul d b e satisfie d b yrelying o nadequat e existing tes t data . Thes e assumption s ar e outline d belo wfo r eac hproduc t categoryan d ar e summarize d i n Tabl e 4- 2 fo r testing o f combustio n emission s and Tabl e 4- 3 fo r testin g o f evaporativ e emissions . Whil e some oxygenat e gasolin e mixture s mayhav e adequat e informatio navailabl e fo r bot hcatalyze d and non-catalyze d exhaus t emissions , EP Aconservativel yassume s fo r thi s analysi s tha t dat a fo r non-catalyze d exhaus t emission s i s no t available . I n regar d t o Tie r 2 , EP Aassume s test s wil l b e necessaryfo r bot hcombustio nand evaporativ e emissions . Gasolin e Baselin e Category EP Aha s designate d on e grou p fo r thi s category , whic hi s estimate d t o contai napproximatel y1,58 6 fuel/additiv e product s registere d by30 7 larg e producer s (sale s _$5 0 million) . Base d o n result s o f th e Auto/Oi l Ai r Qualit yImprovemen t Researc hProgram (Auto/Oi l Program) , fo r thi s category , EP Aanticipate s sufficien t dat a t o b e availabl e fo r characterizatio no f bot hcatalyze d an d non-catalyze d exhaus t emission s generate d usin g th e FTP , excep t fo r PAH and NPAH analysis . EP Aestimate s al l require d test s wil l b e neede d fo r characterizatio n o f evaporativ e emissions . Furthermore , EP Aassume s al l Tie r 2 test s wil l b e neede d fo r combustio nan d evaporativ e emission s fo r thi s category . Gasolin e Non-Baselin e Category Thi s categoryo f fuel/additiv e product s i s estimate d t o contai n 4 7 6 product s produce d b y12 0 larg e manufacturer s (sale s _ $5 0 million) , whic har e subdivide d int o nin e groups . EP Aassume s al l Tie r 1 characterizatio ntest s wil l b e neede d fo r non-catalyze d 5 0P.5 8

combustio n emission s an d evaporativ e emissions . However , du e t o studie s don e b

yth e Auto/Oi l Program a s wel l a s othe r on-going industryefforts , EP Abelieve s i t i s reasonabl e t o assume tha t onl y PA H speciatio nan

d measuremen t o f tota l NPAH wil l b e neede d fo r catalyze d combustio n emissions . Whil e some oxygenat e gasolin e mixture s mayhav e adequat e informatio navailabl e fo r bot hcatalyze d an d non-catalyze d exhaus t emissions , EP Aconservativel yassume s fo r thi s analysi s tha t dat a fo r non-catalyze d exhaus t emission s i s no t available . I n regar d t o Tie r 2 , EP Aassume s al l biological.test s wil l b e necessaryfo r bot hcombustio n an d evaporativ e emissions . Gasolin e Atypica l Category EP Aestimate s thi s categorywil l b e mad e up o f 5 6 fuel/additiv e group s consisting o f 29 3 product s manufacture d b y14 6 producers . I n th e fina l rule , EP Ai s requiring onl yvolatil e fuel/additiv e mixture s t o underg o testing o f evaporativ e emissions. 2 2 Base d o n th e chemical/physica l characteristic s o f product s i nthi s category , and th e likelihoo d tha t anadditiv e wil l b e th e testin g representativ e fo r mos t o f th e group s i n thi s category , EP Aanticipate s tha t non e o f th e group s wil l b e require d t o tes t evaporativ e emissions . Fo r combustio n emissions , however , EP Aassume s al l Tie r 1 an d Tie r 2 testing wil l b e needed . Diese l Baselin e Category Thi s categorycontain s onl yon e group , whic hinclude s an estimate d 8 7 larg e manufacturer s (sale s _$5 0 million ) representing 49 6 products . Aconsiderabl e amoun t o f informatio nexist s on baselin e diese l products . Fo r thes e products , EP Ai s considering existing applicabl e speciatio nstudie s conducte d unde r th e Ai r Pollutio n Researc hAdvisoryCounci l (APRAC ) programt o b e adequat e data , i n lie u o f ne wtesting . However , th e APRAC programdoe s no t includ e dat a concerning speciatio no f hydrocarbons , whic hi s require d fo r manufacturer s o f diese l F/FA s unde r thi s program . Consequently , EP Aassume s tha t th e onl yemissio n characterizatio n test s require d fo r thi s grou p ar e hydrocarbo nspeciatio n o f non catalyze d combustio n emissions . Becaus e th e literatur e contain s existing tes t dat a o n man yo f th e require d healt heffect s endpoints , EP Afurthe r project s tha t withi nTie r 2 , onl yth e screen s fo r neurotoxi c and teratologi c endpoint s o n combustio n emission s wil l nee d t o b e conducted . Evaporativ e emissio n assessment s ar e no t applicabl e t o product s i nth e diese l categories . Diese l Non-Baselin e Category "Fuel s wit ha Rei d Vapo r Pressur e (RVP ) o f 2. 0 pound s pe r squar e inc h(psi ) ar e subjec t t o th e Tie r 1 an d Tie r 2 testing requirements , whil e thos e wit hRV P les s tha n2. 0 ar e excused . Wit hrespec t t o additives , Tie r 1 an d Tie r 2 evaporativ e emissio n testin g i s require d whe n th e RVP o f th e fuel/fue l additiv e mixtur e i s increase d b y0. 4 ps i o r more .

5 1P.5 9

Amon g currentl yregistere d diese l products , th e non-baselin e categoryha s tw o groups , containing on e larg e manufacture r (sale s > $5 0 million ) wit hon e produc t i n eac hgroup . Unlik e product s i n th e diese l baselin e category , littl e informatio ni s expecte d t o exis t fo r thes e uniqu e produc t formulations . Consequently , al l testing o f combustio nemissions , bot hchemica l and biological , i s assume d t o b e neede d fo r product s identifie d wit hthi s group . Diese l Atypica l Category EP Aestimate s 4 1 group s withi nthi s category , representing a tota l o f 11 2 manufacturer s an d 21 3 products . Becaus e o f th e uniqu e natur e o f thes e products , EP Aassume s adequat e dat a i s unavailabl e fo r fulfilling chemica l an d biologica l testing requirement s o f thi s category . Thus , fo r purpose s o f thi s analysis , EP Aassume s al l Tie r 1 and 2 test s o ncombustio nemission s wil l b e conducted . Th e assumption s outline d abov e ar e th e basi s fo r determining impact s t o manufacturer s no t qualifying fo r an yspecia l provision s o f th e rul e fo r a give nproduct . Fo r manufacturer s qualifyin g fo r smal l busines s specia l provision s fo r some product s bu t no t others , th e assumption s abov e appl yonl yt o th e product s fo r whic hd o no t qualif ythemfo r specia l smal l busines s provisions . Assumption s regarding tes t requirement s fo r manufacturer s qualifyin g fo r specia l smal l busines s provision s fo r suc hproduct s ar e discusse d i n th e nex t section . Th e methodologyuse d t o projec t th e complianc e cost s fo r individua l companie s along wit hth e overal l cos t impact s o n fue l manufacturers , additiv e manufacturers , an d th e combine d industryi s als o discussed .
III . Methodolog

y an dResult s A . Produce r Cos t Impact s Befor e initiating activitie s directe d specificall yt o completing th e Tie r requirement s discusse d above , eac hmanufacture r wil l nee d t o becom e familia r wit hth e regulation s and wil l als o nee d t o submi t basi c registratio ndat a (o r reaffirm

existing registratio n data ) fo r eac hproduct . Fo r thes e start-u p activities , EP Aassigne d t o eac hmanufacture r a one-time fixe d cos t o f $30 0 plu s $10 0 pe r product . Next , t o determin e th e testin g cost s applicabl e t o manufacturer s no t qualifying fo r an yspecia l smal l busines s provisions , cost s wer e calculate d base d o n th e genera l testin g assumption s describe d abov e fo r eac hcategory , using th e uni t cos t estimate s provide d i n Chapte r 3 . Thes e total s wer e assigne d t o eac hgrou

p i n th e categoryan d wer e the ndivide d equall yamong th e product s assigne d t o eac hsuc hgroup . Finally , th e per-produc t cost s wer e assigne d bac k t o th e responsibl e manufacturers . Th e estimate d complianc e cost s applicabl e t o eac hgrou p i neac hproduc t categoryar e summarize d i n Tabl e 4- 4 and detaile d i nAppendi xA . Base d o n th e uni t cos t dat a presente d i nChapte r 3 and th e testin g 5 2P.6 0

assumption s outline d above , th e tabl e show s tha t group s i n th e gasolin e baselin e produc t categor yar e likel yt o hav e th e highes t grou p cos t (estimate d a t nearl y$800,000) , an d diese l baselin e group s ar e expecte d t o incu r th e lowes t grou p cos t (estimate d a t nearl y$445,000) . Consisten t wit hth e smal l busines s provision s describe d i n Chapte r 1 , manufacturer s wit hannua l sale s les s tha n$5 0 millio n wer e omitte d fro mthi s cos t allocatio nproces s fo r thei r baselin e an d non-baselin e products . Suc hmanufacturer s wer e assigne d n o Tie r 1 o r Tie r 2 cost s fo r thei r products . Th e atypica l product s o f manufacturer s wit hannua l sale s les s tha n$1 0 millio nwer e als o omitte d fro m

th e genera l cos t allocatio nproces s describe d above ; however , thes e manufacturer s wer e assigne d cost s applicabl e t o thei r atypica l products . A s previousl ydescribed , thes e manufacturer s qualif yfo r th e specia l smal l busines s provisio n whic hexcuse s the m fro m Tie r 2 testin g requirement s fo r thei r atypica l products , bu t ar e stil l responsibl e fo r Tie r 1 . Becaus e thes e ver ysmal l manufacturer s ar e expecte d t o fin d i t difficul t t o participat e i n th e groupin g an d cos t sharin g provision s o f th e rule , thi s analysi s assigne d eac hsuc hmanufacture r th e ful l cos t fo r completin g Tie r 1 fo r eac ho f hi s atypica l products . However , i f a nindividua l manufacture r ha d mor e tha non e atypica l produc t applicabl e t o a particula r group , th e Tie r 1 cos t fo r thos e product s wa s assigne d t o th e manufacture r onl yonce . Thi s analysi s als o assume s tha t thes e manufacturer s wil l no t purchas e backu p vehicles/engine s sinc e the yar e excuse d fro mTie r 2 . Tabl e 4- 5 present s estimate d complianc e cost s t o manufacturer s qualifyin g fo r specia l provision s fo r thei r atypica l products . I n sum , approximatel y$114,00 0 wil l b e spen t b ya manufacture r (wit h sale s les s tha n $1 0 million ) o f a natypica l produc t i nth e gasolin e fue l family , whil e manufacturer s (wit hsale s les s tha n$1 0 million ) o f atypica l diese l product s ar e projecte d t o incu r cost s o f approximatel y$272,00 0 fo r testin g thei r products . Manufacturer s qualifyin g fo r specia l provision s fo r thei r baseline/non-baselin e product s (no t show ni n th e table ) wil l incu r cost s o f $10 0 fo r registratio n o f thei r product , an d a one-tim e pe r manufacture r cos t o f $30 0 fo r becomin g familia r wit hth e regulations . Thi s analysi s ha s focuse d o ncos t impact s t o producer s o f non leaded , non-relabele d products . A s discusse d i nth e dat a collectio nsectio n o f Chapte r 2 , financia l dat a wa s no t sough t fo r companie s producin g onl yleade d gasolin e product s sinc e thes e product s wil l b e illega l a s o f Januar y1 , 1996 , an d fo r companie s registerin g onl yrelabele d product s sinc e onl ybasi c registratio n dat a wil l b e require d fo r thes e products . However , sinc e th e basi c registratio n requirement s appl yt o relabeiers , the ywil l hav e applicabl e t o the mcost s o f $30 0 ( a one-tim e pe r manufacture r cost ) fo r activitie s associate d wit hreviewin g th e regulations , an d $10 0 fo r submitta l o f basi c registratio ndat a fo r eac hproduct . Thes e cost s appl yt o 32 7 relabeier s an d 63 8 products . Accordingly , a 5 3P.6 1

tota l cos t o f $161,900 , applicabl e t o relabeiers , i s include d i n th e tota l cost s t o th e industry , discusse d i n th e nex t section . Tabl e 4- 6 provide s a compariso no f complianc e cost s betwee n fue l an d additiv e manufacturers . Th e tabl e include s dat a fo r 61 8 fue l manufacturers , 43 8 additiv e manufacturers , 2 0 tha t produc e bot hfue l an

d additiv e products , an d 32 7 relabeiers . Fo r th e 63 8 fue l manufacturer s examine d i nthi s analysis , complianc e cost s rang e fro

mabou t $40 0 t o $1. 7 million , wit ha media ncomplianc e cos t o f $500 . O f th e 45 8 fue l additiv e manufacturers , cost s rang e froman d $40 0 t o $3. 7 million , wit ha media ncomplianc e cos t o f abou t $900 . Approximatel y8 2 percen t o f al l F/F Amanufacturer s ar e estimate d t o incu r cost s belo w$10,000 , an d abou t 7 2 percen t belo w $1,000 . Furthermore , les s tha non e percen t o f th e fue l an d additiv e manufacturer s examine d i n thi s analysi s wil l potentiall y incu r cost s i n exces s o f on e millio ndollars . Complianc e cost s fo r fue l an d fue l additiv e producer s combine d rang e from $40 0 t o abou t $ 4 million , wit ha media n cos t o f abou t $500 . Th e distributio no f cost s fo r thes e 1,40 3 manufacturer s ar e show ni nFigur e 4-1 . A mor e detaile d analysi s o f th e financia l impact s t o smal l fue l an d fue l additiv e manufacturer s i s provide d i nth e nex t chapter . B . Industr

y Cos t Impact s Summing th e cost s acros s al l manufacturer s yield s a tota l cos t impac t t o th e fuel/fue l additiv e industryo f approximatel y6 6 millio n dollars . Averagin g th e industrycost s ove r thre e year s bring s th e annua l cost s t o approximatel y$2 2 million , wel l unde r th e $10 0 millio n limi t tha t contribute s t o defining a "significan t regulatoryaction" . Th e thre e yea r averag e i s relevan t becaus e manufacturer s wil l generall yb e allowe d thre e year s fo r complianc e fo r thei r fuels/additive s registere d befor e promulgatio no f th e fina l rule . Annua l cost s mayi n fac t b e les s i f th e complianc e cost s ar e finance d ove r mor e tha n thre e years . IV . Limitation s o f the Analysi s I n determining cost s t o eac hgroup , judgement s wer e mad e concernin g th e availabilit yo f existing dat a whic hcoul d mitigat e th e program' s testin g requirements . I t i s possibl e tha t mor e o r les s adequat e existing tes t dat a mayb e availabl e tha nwa s assume d i n thi s analysi s fo r al l categories , and th e estimate d cost s woul d b e lowe r o r highe r a s a result . Whe n per-produc t cost s wer e calculate d fo r manufacturer s no t qualifying fo r specia l provisions , EP Aassume d tha t complianc e cost s woul d b e divide d equall yamong th e numbe r o f products . However , manufacturer s hav e th e opportunit yt o apportio ncost s i n an ymanner . Fo r example , cost s coul d b e divide d among th e member s o f th e grou

p rathe r tha namong th e numbe r o f products . I f cost s ar e divide d differentl ytha n wa s assume d fo r thi s analysis , change s woul d b e reflecte d i n cost s t o eac hmanufacturer , bu t industry 5 4cost s woul d remai n unchanged . Additionally , fo r purpose s o f thi s

analysis , EP Aassume d tha t manufacturer s qualifying fo r specia l smal l busines s provision s fo r thei r atypica l product s (i.e. , thos e wit hsale s les s tha n $1 0 million ) woul d no t hav e th e resource s t o grou p wit hothe r manufacturer s t o shar e costs . I f thes e manufacturer s ar e capabl e o f grouping and canshar e cost s wit h othe r manufacturers , th e cost s i n thi s analysi s ar e overestimate d bot hfo r th e individua l manufacturer s involve d an d fo r th e industry a s a whole . Th e per-produc t cost s als o depend o nth e numbe r o f product s expecte d t o b e containe d i n eac hgroup . However , th e numbe r o f product s assigne d t o th e group s fo r thi s analysi s mayb e subjec t t o erro r fo r a variet yo f reasons . First , producer s ar e no t require d t o notif yEP Ai f manufacturing o f a produc t ha s cease d permanently , an d thu s EPA' s registratio n databas e maycontai nF/FA s whic hn o longe r exist . Fo r thi s reason , i t i s possibl e tha t th e numbe r o f product s i n an

ygrou p i s overestimated , thu s underestimating th e per-produc t costs . Second , th e analysi s i s base d o nproduct s registere d wit hEP Aprio r t o Decembe r 1992 . Sinc e tha t time , additiona l fuel/fue l additiv e product s hav e bee n registere d wit h EPA . I n thi s instance , th e numbe r o f product s actuall ybelongin g t o a grou

p mayb e underestimated , thu s overestimating th e per produc t cost s fo r tha t group . Third , grouping assignment s fo r thi s analysi s wer e base d o n existing registratio ndat a submitte d b y manufacturer s concerning th e chemica l compositio no f thei r fuel s an d additives . T o th e exten t tha t thi s informatio n mayb e inaccurat e o r out-of-date , EPA' s assumption s a s t o appropriat e grou p assignment s mayb e erroneous . Thus , th e actua l numbe r o f product s pe r grou

p and eve nth e numbe r o f group s pe r categorymay b e somewha t differen t fromthos e assume d here . Finally , participatio n i n th e grouping system i s voluntary , and manufacturer s maychoos e t o defin e thei r ow nsubgroup s o r eve n wor k independentl yrathe r tha nshar e cost s among al l potentia l manufacturer s i n th e group . A s a result , th e numbe r o f participatin g manufacturers , an d thei r respectiv e products , mayb e les s fo r an

ygroup . I f so , th e numbe r o f product s b ywhic hth e cost s wer e divide d mayb e overestimated , thu s underestimatin g manufacture r and industrycosts .

V . Conclusion s Th e effect s o f the . regulatio n o nfue l and fue l additiv e producer s appea r t o b e relativel ysmall . A s identifie d i n Figur e 4-1 , i nmos t cases , th e complianc e cost s wil l b e les s tha n$1,00 0 pe r manufacturer , an d les s tha n on e percen t o f producer s ar e expecte d t o incu r cost s i nexces s o f on e millio ndollars . Th e result s o f thi s analysi s indicat e th e fuel/fue l additiv e registratio n regulatio n wil l lead t o tota l cost s o f abou t $6 6 million . Wit hindustrycomplianc e cost s average d ove r thre e years , 5 5P.6 3

th e annua l cos t impac t t o th e industryi s estimate d a t $2 2 million . EP Aha s n o reaso nt o believ e th e economy , productivity , competition , employment , environment , publi c healt ho r safety , o r government s o r communitie s wil l b e adversel yaffecte d a s a resul t o f thi s regulation . Th e RegulatoryFlexibilit yAnalysi s (RFA ) i n Chapte r 5 , lend s suppor t t o expectatio n o f onl yminima l economi c impact s fro

mth e cost s impose d b ythi s regulation . Th e RFA , whil e primaril yconcerne d wit hcost s impose d o nsmalle r entities , als o provide s insigh t a s t o overal l economi c impact s o nth e industrya s a whole . Th e impac t t o mos t companie s i s expecte d t o b e relativel y smal l s o a s no t t o caus e significan t advers e effects . I n conclusion , th e fue l an d fue l additiv e registratio n regulatio nwil l no t hav e significan t advers e effect s o nth e industry , no r wil l i t resul t i n a neconomi c impac t o f $10 0 millio no r mor e annually .

5 6P.6 4

Tabl e 4-1 : EstimatedGroup s Pe r Fuel/Fue l Additiv e Categor

y

Fue l Famil y F/F A Categor

y Gasoline Diese l
Baseline 1 1 Grou p 30 7 Manufacturer s 1,58 6 Product s 1 Grou p 8 7 Manufacturer s 49 6 Product s

Non-Baselin e

i - „ 1, 2 9 Group s

12 0 Manufacturer s 47 6 Product s 2 Group s 1 Manufacture r 2 Product s
Atypical 3 5 6 Group s

14 6 Manufacturer s 29 3 Product s 4 1 Group s 11 2 Manufacturer s 21 3 Product s Exclude s dat a fo r manufacturer s who , unde r smal l busines s provision s o f thi s rule , ar e exempte d fro mtes t requirement s fo r thei r baselin e an d non-baselin e product s (i.e. , exclude s manufacturer s < $5 0 millio n i n sales) . 2Non-baselin e product s can fal l int o mor e than on e grou p depending upon the numbe r o f oxyge n compound s theycontain . Thus , theyar e counte d multipl e time s i n the tabl e depending upo n the numbe r o f group s theyfal l into . 3Includesdat a fo r manufacturer s wh o ar e exempte d fro ma portio n o f the tes t requirement s fo r thes e product s unde r th e smal l busines s provision s o f thi s rul e (i.e. , include s manufacturer s < $1 0 millio n i n sales) .

5 7Family /

Categor y

Gasolin e Categor y Baselin e

No n Baselin e
Atypica l

Diese l Categor y Baselin e

No n Baselin e
Atypica l Tabl e 4-2 : Assume d Combustio n Emissio n Tes t Tie r 1 Requirement s Lit . Searc h Charact .

o f Catalyze d Emission s Charact .

o f Non
Catalyze d Emission s

X

X

X X 1

X 1

X X 1

X

X

•' ?
X

X

. X N/ A

N/ A

N/ A X 2

X

X 90-da y

Inhalatio n Stud y S M

Assa y

X

X

X X

X

X

X

X

X X

X Requirement s Pe r Tie r 2 Requirement s Micronucl . A 3 sa y SC E

X

X

X X

X

X

X

X X

X Categor y

Fertilit y Scree n

X

X

X

X

X

X Neurotox .

Scree n

X

X

X

X

X

X Onl yPA

H and NPA

H speciatio n assume d t o b e necessary 2 Onl yHydrocarbo n speciatio n assume d t o b e necessary 5 8Tabl e 4—3 : Assume d Evaporativ e Emissio n Tes t Requirement s Pe r Categor y

Family / Categor y
Gasolin e Categor y Baselin e
No n Baselin e
Atypica l

Diese l Categor y Baselin e
No n Baselin e
Atypica l Tie r 1

Req u i rerne n t s Lit . Searc h Charact .

o f Evap . Emission s

X

X

X X

X

N/ A

N/ A

N/ A N/ A

N/ A
N/ A 90-da y

Inhalatio n Stud y

X

X

N/ A

N/ A
N/ A S M

Assa y

X

X

N/ A

N/ A

N/ A Tie r 2

Requiremen t s Micronucl . Assa y SC E

X

X X

X

N/ A

N/ A

N/ A N/ A

N/ A
N/ A Fertilit y

Scree n

X

X

N/ A

N/ A
N/ A Neurotox .

Scree n

X

X

N/ A

N/ A

N/ A

5 9

### Tabl e4-4 : Estimate dComplianc eCost s Pe r Group *

Tie r 1 : Literatur e Searc h Acquisitio n Mileag e Accumulatio n Combustio n Gen./Charac t Evaporativ e Gen./Charac t
Tie r 2 : Combustio n Generatio n S MSamplin g Evaporativ e Generatio n Biologica l Testin g
Administrativ e Cost s

TOTA L (Rounded ) : Gasolin e Fue l Famil y Baselin e

$21,00 0 30,00 0 6,40 0 25,85 0 6,27 5

71,50 0 50 0 58,50 0 550,800* *
26,33 5
$797,00 0 Non-Baselin e

$7,00 0 30,00 0 6,40 0 35,75 0 6,77 5

71,50 0 50 0 58,50 0 550,800* *
26,33 5
$794,00 0 Atypica l

$7,00 0 30,00 0 48,00 0 58,55 0 0

71,50 0 50 0 0 280,10 0
26,33 5
$522,00 0 Diese l Fue l Fam i

Baselin e

$21,00 0 37,20 0 27,50 0 13,000 , N/ A

58,50 0 0 N/ A 260,60 0
26,33 5
$444,00 0 Non-Baselin e

$7,00 0 37,20 0 27,50 0 34,70 0 N/ A

58,50 0 80 0 N/ A 280,10 0
26,33 5
$472,00 0 iy Atypica l

$7,00 0 18,60 0 191,40 0 45,40 0 N/ A

58,50 0 80 0 N/ A 280,10 0
26,33 5
$628,00 0 *Cost 3 i nthi s tabl ear eapplicabl et o manufacturer s no t qualifyin g fo r

specia lprovisions , **Conducte do nbot hcombustio nan devaporativ eemissions
. 6 0P.6 8

Tabl e 4-5 : Estimate d Complianc e Cost s fo r

Small * Atypica l Manufacturer s

Tie r 1 : Literatur e Searc h Acquisitio n Mileag e Accumulatio n Combustio n Gen./Char . Evaporativ e Gen./Char .
Tie r 2

Administrativ e Cost s

TOTA L (Rounded) : Gasolin e Fue l Famil y
$7,00 0 15,00 0 24,00 0 58,55 0 0

Exemp t
9,45 0
$114,00 0 Diese l Fue l Famil y
$7,00 0 18,60 0 191,40 0 45,40 0 N/ A
Exemp t
9,45 0
$272,00 0 *Thos e manufacturer s wit hsale s unde r $1 0 million .

6 1Tabl e 4—6 : Summar yo f Complianc e Co3ts *

Numbe r o f Companie s Rang e o f Complianc e Costs :

Minimu m Media n Maximu m Percentag e Les s tha n $1,00 0 Percentag e Greate r tha n $10,00 0 Percentag e Greate r tha n $ 1 millio n Fue l Manufacturer s 45 8
$40 0 $50 0 $1,673,00 0 73 % 16 % <1 % Additiv e

Manufacturer s 63 8
$40 0 $91 5 $3,717,00 0 53 % 31 % 2 % Relabeier s 32 7

N/ A $40 0 N/ A 100 % N/ A N/ A Tota l

Manufacturer s 1,403* *
$40 0 $50 0 $3,717,00 0 72 % 18 % <1 % *Companie 3 registerin g onl yleade d product s ar e excluded . **Th e tota l numbe r o f uniqu e companie s include d i n thi s analysi s i 3 1,403 . Thi s include s 43 8 additiv e manufacturers , 61 8 fue l manufacturers , 2 0 manufacturer s tha t produc e bot hfuel s an d additives , an d 32 7 relabeiers .

6 2

# Figur e 4-1 : Distributio n ofComplianc e Cost s fo r140 3 Fue l an d Additive Manufacturer s Combine d (Includin g Relabeiers )
80 0

60 0

U i _

9 i 3 3 C

_j 40 0 

### J 8 E

_
20 0 -

$0-49 9 $500-1 K$1-5 K$5-10 K$10-50 K$50-100 K Costto Manufacturer s $100-500 K$500K-1 M $1-4 MP.7 1

Chapte r 5 RegulatoryFlexibilit yAnalysi s
I . Introductio

n Thi s chapte r present s th e result s o f a regulatoryflexibilit y analysi s o f th e testing requirement s o f th e F/F Aregistratio n regulations . Th e result s ar e base d o n a smal l busines s impac t analysi s conducte d b yIC F Incorporate d unde r contrac t wit hEPA 23

. Th e analysi s ha d four mai n objectives : 1 ) t o compar e th e F/F A program' s smal l busines s definitio n t o th e Smal l Busines s Administration' s (SBA ) definition s o f smal l fo r th e affecte d industries , 2 ) t o determin e i f th e registratio nprogramwoul d impac t smal l businesse s significantl ymor e tha nlarg e businesses , 3 ) t o estimat e th e magnitud e o f smal l busines s impact s b y assessing i f complianc e cost s woul d b e likel yt o pus hsmal l businesse s int o financia l distres s o r eve nclosure , an d 4 ) t o quantif yth e exten t t o whic hth e smal l busines s provision s reduc e th e program' s burde n fo r manufacturer s o f atypica l products . An importan t poin t t o bea r i nmind i s tha t th e analysi s assume s n o passthroug ho f cost s i n pric e increase s and thu s ca n b e characterize d a s depicting "wors t case " impacts . Sinc e th e tim e o f th e IC F analysis , some underlying assumption s use d t o projec t manufacture r cos t dat a wer e revised . Th e discussio n an d impac t estimate s presente d i n thi s chapte r reflec t th e revise d cos t estimate s (whichar e presente d i n thi s document) . Fo r thi s reason , th e actua l dat a presente d i n thi s chapte r doe s no t correspond directl ywit hth e result s o f th e IC F analysis . EP Ause d ICF' s methodologydiscusse d below , along wit hrevise d cos t estimate s t o determin e smal l busines s impact s fo r thi s regulation .
II . Requirement s o f the Regulator y Flexibility

Ac t EP Ai s require d unde r th e RegulatoryFlexibilit yAc t (RFA ) t o determin e whethe r th e requirement s o f th e regulatio nwil l caus e a significan t impac t o n a substantia l numbe r o f smal l entities . EP A ha s establishe d guideline s setting standard s t o b e use d i n evaluatin g impact s o n smal l businesses . Th e guideline s specif y tha t siz e definition s se t b yth e SB

Ashoul d b e use d a s th e initia l determinatio n o f a "smal l entity, " bu t tha t EP Amayus e an alternativ e definitio n i f i t bette r capture s th e poin t a t whic h entitie s ar e adversel yaffecte d becaus e o f thei r size . Th e EP A guideline s als o provid e guidanc e o n setting th e standard s t o b e use d fo r evaluatin g impact s o nsmal l businesses . Fou r criteri a ar e establishe d fo r determining whethe r impact s wil l b e significant :

23 Se e footnot e 3 . 6 41 ) Annua l complianc e cost s increas e tota l cost s o f productio n

fo r smal l businesse s bymor e tha n fiv e percent . 2 ) Complianc e cost s a s a percentag e o f sale s fo r smal l businesse s ar e a t leas t te npercen t highe r tha ncomplianc e cost s a s a percentag e o f sales.fo r larg e businesses . 3 ) Capita l cost s o f complianc e represen t a significan t portio no f capita l availabl e t o smal l businesses . 4 ) Th e requirement s o f th e regulatio nar e likel yt o resul t i n closure s o f smal l businesses . Accordin g t o th e guidelines , ther e i s a significan t impac t o n smal l entitie s wheneve r anyo f th e abov e criteri a ar e met . Th e firs t criterio n wa s no t applie d i nthi s analysi s becaus e productio n cost s o f th e F/F Aproduct s ar e unknown . Impact s o f th e regulatio n o n smal l businesse s wer e determine d base d o nth e remainin g criteria . Th e methodolog yuse d t o conduc t th e smal l busines s impac t analysi s i s presente d below , followe d b ya discussio no f th e result s o f th e analysis . Assumption s an d limitation s o f th e analysi s ar e discussed .
III . Methodolog y A . Dat a Source s EP Aprovide d IC F wit hth e majorit yo f th e dat a neede d t o conduc t th e impac t analysis . Provide d fo r eac hmanufacture r wa s manufacture r I D an d produc t informatio ncontaine d o nth e F/F A registratio n database , SI C code , numbe r o f employees , 199 3 annua l sale s data 24 , an d manufacture r complianc e cos t dat a estimate d b y EPA . Usin g regressio n equation s develope d fo r th e smal l busines s impac t analysi s conducte d a t th e tim e o f th e proposal 25 , IC F the n projecte d ne t incom e an d asse t informatio nfo r eac hregistere d compan ybase d o n th e 199 3 sale s data . Thi s additiona l informatio n wa s necessar yfo r determinin g complianc e cos t impact s usin g retur n o n asset s (ROA ) (ne t income/assets ) a s a nindicato r o f th e

2 *Whe n th e registerin g compan ywa s a subsidiary , division , o r othe r operatin g unit , sale s dat a wa s collecte d fo r th e closes t paren t company . I n th e fina l rule , however , smal l busines s provision s ar e base d o n th e sale s o f th e ultimat e paren t compan y i n suc hinstances . A s a result , som e companie s wil l hav e highe r sale s level s tha n reporte d her e b ywhic ht o absor bcomplianc e costs . I nfewe r instances , companie s ma yhav e bee nconsidere d smal l base d o nthei r sale s level , thu s qualifyin g the mfo r smal l busines s exemption s whic hthe ywoul d otherwis e no t hav e qualifie d for . 2S Se e footnot e 13 . 6 5P.7 3

financia l healt ho f a company . Th e regressio nequations , whic h relate d ne t income t o sale s an d asset s t o sale s (se e th e IC F report) , wer e determine d t o stil l b e vali d fo r thi s analysi s sinc e th e industryha s no t change d dramaticall yfrom th e tim e o f th e firs t analysis. 2 6 B . Adjustment s t o the Dat a Arevie wo f th e F/F Aregistratio n databas e reveale d tha t a numbe r o f companie s ar e liste d mor e tha nonc e fo r varyin g reasons : the ymanufactur e bot hfuel s and additives , the yhav e multipl e fue l o r additiv e identificatio nnumbers , o r theyhav e affiliates/subsidiarie s fo r whic hsimila r financia l dat a wa s provided . T o enabl e th e program' s impact s t o b e appropriatel y estimated , suc hrelate d companie s wer e considere d t o b e singl e entities , and th e program' s impact s wer e estimate d base d o n th e su m o f thei r respectiv e complianc e costs . A s a resul t o f mergin g certai n manufacturers ' dat a i n thi s manner , th e tota l numbe r o f uniqu e companie s o nwhic hthi s smal l busines s impac t analysi s i s base d i s 1,076 . Thi s include s 43 8 additiv e manufacturers , 61 8 fue l manufacturers , and 2 0 manufacturer s tha t produc e bot hadditive s an d fuels . Producer s o f bot hfue l an

d additiv e product s ar e include d i nbot hth e fue l manufacture r analysi s and th e additiv e manufacture r analysis . C . Definitiono f Smal l Manufacture r Th e fina l rul e define s a smal l busines s fo r thi s programa s an ymoto r vehicl e fue l o r fue l additiv e manufacture r wit htota l annua l sale s o f les s tha n$5 0 millio n(se e Chapte r 1 fo r furthe r discussio n o n th e smal l busines s definitio n fo r thi s program) . Th e IC F analysi s compare d companie s classifie d a s smal l unde r th e F/F A programdefinitio n t o thos e classifie d a s smal l b yth e SBA . Th e nex t sectio n provide s a characterizatio n o f smal l and larg e fue l an d additiv e manufacturers , according t o eac ho f th e following definitions : 1 ) F/FAprogramsmal l busines s definition , i nwhic ha smal l busines s i s define d a s an yfue l o r additiv e manufacture r wit h tota l annua l sale s les s tha n$5 0 million . 2 ) SBA' s definitions , whic har e base d o nsale s o r numbe r o f employees , b

ySI C code . Th e SB Adefinition s ar e presente d i n Exhibi t 5-1 . SB

Aregulation s specif ytha t fo r al l industrie s fo r whic hn o SI C cod e informatio n i s specificall ylisted , th e siz e standar d t o b e use d i s $3. 5 millio ni n sales . Thi s standar d wa s use d fo r approximatel y2 4 companies .

26 IC F verifie d thi s b ycomparing financia l statistic s fo r relevan t SI C code s i n th e 199 0 and 199 2 Annua l Statemen t Studie s b yRober t Morri s Associates . 6 6P.7 4

EP A Definitio n SB A Definitio n Addltlv t

Manufacturers 

# s s L L Fue l

Manufacturers 

# s s L L EP

A Definitio n SB A Definitio n IV . Characterizationo f Smal l an dLarge Manufacturer s Eigh t financia l profile s o f affecte d companie s wer e develope d t o facilitat e compariso n o f smal l an

d larg e companie s withi n eac ho f th e industrie s (se e Figur e 5-1 ) . Thes e profile s provid e summarydat a fo r characteristic s suc ha s numbe r o f employees , sales , assets , ne t income an d retur n o n asset s fo r fue l an d additiv e manufacturer s using bot h th e F/F

Aprogramsmal l busines s definitio nand th e SB Adefinitions . T o clearl yillustrat e th e difference s betwee nsmal l and larg e manufacturers , statistic s o n th e minimum , maximum , average , an d quartil e value s ar e presente d fo r eac hdat a characteristic . Th e minimu mand maximu

mvalue s provid e a rang e o f th e dispersio no f value s i neac hset . Th e averag e provide s a simpl e (non-weighted ) averag e value . Quartile s ar e a usefu l measur e o f distributio n o f dat a set s tha t ar e highl y skewed , o r thos e i n whic hothe r measure s (e.g. , average ) woul d b e warpe d byextreme values . Th e profiles , provide d i n Exhibit s 5- 2 through5-5 , wer e discusse d i nChapte r 2 i nregar d t o th e F/F A smal l busines s definition , an d ar e show

nagai nher e fo r compariso n purposes . Asummaryo f th e profile s i s provide d belo wfo r eac h industry . Figure 5-1: Diagramof 8profiles

A . Characteristic s o f Additive Manufacturer s Bot hth e F/F

Aprograman

d SB Adefinition s approximatel y6 5 percen t o f th e 45 8 additiv e manufacturer s a s small . Th e F/F Aprogram definitio n classifie s 29 5 companie s a s smal l whil e th e SB

Adefinitio nclassifie s 30 0 companie s a s small . Whil e th e tw o definition s resul t i n nearl yth e same numbe r o f companie s bein g classifie d a s small , th e definition s d o no t encompas s th e same companie s (i.e. , F/F A smal l additiv e manufacturer s ar e no t jus t a subse t o f SB

Asmal l additiv e manufacturer s — se e Figur e 5-2) . Thi s result s i n sligh t difference s i n th e impac t o n smal l companie s depending upo nth e definitio n used . 

### classif y

Acompariso no f

th eF/FAan dSB

Aprofile s o f smal ladditiv emanufacturer s reveal s tha t th eF/FAprogra mdefinitio ndoe s abette r jo b o f groupin g companie s wit hsimila r sale s an d employmen t

characteristics
. Thi s i s becaus e th eF/FAprogra msmal lbusines s definitio ni s base do nsale s Figure 5-2: Number of additive companies classified byEPA and SBA definitionsas small.

6 7wherea s SB Adefinition s ar e primaril ybase d o nnumbe r o f employees , regardles s o f sales . A s a result , SB Adefinition s ar e ap t t o classif yrelativel ylarg e companie s a s small . Fo r example , a compan ywit h$2 0 billio n i n sale s an d 1,50 0 employee s i s considere d "small " b

yth e SB

Adefinition . Thi s leve l o f sales , however , i s muc hhighe r tha nth e sale s o f some o f th e companie s classifie d a s larg e unde r eithe r definition . Fo r bot hth e F/F

APrograman

d SB Asmal l busines s definitions , th e profile s showtha t larg e additiv e companie s ar e considerabl y large r tha n smal l additiv e companies . Unde r bot hdefinitions , th e media n smal l additiv e compan yha s fewe r tha n2 0 employees , unde r $ 5 millio n i n sales , an d an ROAo f nearl y5 percent . I ncomparison , th e media nlarg e additiv e manufacture r ha s abou t 3,60 0 employees , nearl y$10 0 millio ni nsales , an d anROAgreate r tha n 6 percent . Media n sales , assets , an d ne t income ar e approximatel y200 , 400 , an d 50 0 time s highe r fo r larg e tha nfo r smal l companies , respectively . Thus , t o hav e th e registratio n regulatio nimpac t smal l and larg e additiv e companie s similarly , smal l compan y complianc e cost s mus t b e o nth e orde r o f 20 0 t o 40 0 time s les s tha n larg e compan

ycosts . I n addition , larg e additiv e manufacturer s tend t o hav e highe r ROA s tha n smal l additiv e manufacturers . B y eithe r definitio no f small , th e media n smal l compan yROAi s 4. 9 percen t whil e th e media n larg e compan yROAi s 6 percent . Thus , smal l additiv e companie s tend t o b e financiall yles s robus t tha n larg e additiv e companie s and , therefore , wil l hav e relativel yles s capita l availabl e t o themt o sustai nfinancia l shocks . B . Characteristic s o f Fue l Manufacturer s Ther e ar e 63 8 fue l manufacturer s include d i nthi s analysis , A s show

ni n Exhibit s 5- 4 an d 5-5 , th e F/F

A programan

d SB Adefinition s resul t i nvery differen t number s o f fue l manufacturer s bein g classifie d a s small . Th e F/F Aprogram definitio nclassifie s 46 5 fue l manufacturer s (o r 7 3 percent ) a s small , whil e SB Adefinition s classif yonl y38 1 (o r 6 0 percent ) a s smal l (se e Figur e 5-3 ) . Simila r t o th e result s foun d fo r additiv e manufacturers , th e F/F Aprogramdefinitio n mor e tightl ygroup s fue l manufacturer s wit hsimila r financia l characteristic s tha nd o SB A definitions . Fo r example , fue l manufacturer s classifie d b

yth e SB

Aa s smal l ha d sale s Figure 5-3: Number of ranging from$49,00 0 t o $5. 5 billion , whil e fuel companies F/F Asmal l compan

ysale s rang e from$49,00 0 t o approximatel y$5 0 million . Media n sale s fo r companie s classifie d b yth e SB

Aa s larg e ar e $4 9 million , $ 1 millio n lesstha n th e minimu m F/F Alarg e compan

ysales . classified byEPA and SBA definitionsas small.

6 8Th e profile s sho wtha t larg e fue l companie s ar e considerabl y

large r tha n smal l fue l companies . Th e profil e o f th e media nsmal l fue l manufacture r i s simila r unde r bot hdefinitions : nearl y2 0 employees , $ 9 millio n i n sales , an d ROAo f nearl y3. 6 percent . I n comparison , statistic s o nlarg e fue l manufacturer s diffe r considerabl yunde r th e tw o definitions . Usin g th e F/FAprogram smal l busines s definition , th e media nfue l manufacture r classifie d a s larg e ha s nearl y45 0 employees , $26 9 millio n i n sales , an d ROA o f 4. 9 percent . Th e media n larg e fue l manufacture r unde r th e SB A definitio n ha s abou t 20 0 employees , $4 9 millio ni n sales , an d 4. 2 percen t ROA . Th e magnitud e o f differenc e i nsiz e betwee nsmal l an d larg e fue l companie s i s muc hsmalle r i ncompariso n t o th e differenc e i n siz e betwee nsmal l and larg e additiv e companies . Specifically , media n sales , assets , an d ne t income o f larg e fue l manufacturer s ar e onl y30-4 0 time s highe r tha nfo r smal l fue l manufacturer s unde r th e F/F Aprogram

definition , an

d onl y5- 6 time s highe r unde r th e SB Adefinition . Thus , impact s woul d b e simila r t o smal l and larg e fue l companie s unde r th e SBAdefinition , bu t t o hav e th e registratio nregulation s impact s smal l and larg e fue l companie s similarl yunde r th e F/F Adefinition , smal l compan y complianc e cost s mus t b e 30-4 0 time s les s tha nlarg e compan ycosts . Acompariso n o f ROA' s show s tha t smal l fue l companie s hav e simila r ROAprofile s unde r bot hdefinitions . Accordin g t o eithe r definition , th e media n ROAfo r smal l fue l manufacturer s i s 3. 6 percent , and th e 75t hpercentil e ROAi s 4 percent . F/FAlarg e companies , however , hav e somewha t highe r ROA s tha n SB Alarg e companies . Thi s migh t reflec t that , fo r companie s i nthi s analysis , ROAtend s t o increas e wit hsize , and F/FAlarg e companie s tend t o hav e highe r sale s tha nSB Alarg e companies . Finally , unde r th e F/FAprogramdefinition , th e fue l manufacture r profile s sugges t that , base d o nROA , smal l fue l companie s tend t o b e les s health y financiall ytha n larg e fue l companies . C . Genera l Conclusion s I n sum , a revie wo f th e profile s show s tha t larg e additiv e manufacturer s tend t o b e bigge r i n term s o f sale s and numbe r o f employee s tha n larg e fue l manufacturers , wherea s smal l additiv e manufacturer s tend t o b e smalle r tha nsmal l fue l manufacturers . I n general , additiv e manufacturer s tend t o hav e highe r ROA s tha nfue l manufacturers , suggesting tha t the ymayb e mor e capabl e o f withstandin g th e impact s o f complianc e costs . Th e IC F stud

ysupport s th e adoptio n o f th e F/FAprogram' s definition s o f smal l fo r thi s program . I ncompariso n t o th e SBA , th e F/FAprogramdefinitio nclassifie s a large r numbe r o f manufacturer s a s small , an d mor e closel ygroup s companie s wit h simila r financia l characteristics . Adoptio no f SBA' s smal l busines s definition s woul d resul t i nfewe r numbe r o f companie s qualifyin g fo r specia l smal l busines s provision s and , consequently , large r cost s pe r firm . Consequently , th e remainde r o f thi s analysi s focuse s o n impact s t o smal l companie s usin g th e F/FAsmal l 6 9P.7 7

busines s definition .
V . Estimatio no f Impact s o n Smal l Manufacturer s I n accordanc e wit hEP Aguidance , th e followin g thre e method s wer e use d t o determin e i f smal l businesse s ar e disproportionatel y impacte d b yth e F/F ARegistratio n Program : 1 ) Th e rati o o f complianc e cos t t o sale s wa s compare d fo r smal l an d larg e companie s t o determin e i f th e rati o wa s a t leas t te n percen t highe r fo r smal l companies . 2 ) Th e impac t o f complianc e cost s o na company' s RO Awa s calculate d t o se e i f complianc e cost s represen t a significan t portio no f capita l availabl e t o smal l businesses . 3 ) Th e chang e i na company' s RO Adirectl yattributabl e t o th e F/F Aregistratio nprogra mwa s examine d t o determin e th e leve l o f financia l distres s cause d b ythi s change . Th e result s o f th e analysi s ar e discusse d below . Sinc e testin g requirement s wil l impos e one-tim e cost s that , fo r purpose s o f thi s analysis , ar e assume d t o b e incurre d ove r a thre e yea r period , th e complianc e cos t use d i s th e tota l complianc e cos t divide d b ythree . A . Comparin gth e Rati o o f Complianc e Cos t t o Sale s Exhibi t 5- 6 provide s a summar yo f complianc e cost s fo r smal l an d larg e companie s withi n eac ho f th e industries . Amon g al l additiv e manufacturers , complianc e cost s ar e estimate d t o rang e fro m$40 0 t o nearl y$ 4 million , wit hth e media nadditiv e manufacture r expecte d t o incu r cost s o f abou t $900 . Thirty-on e percen t o f registere d additiv e manufacturer s ar e estimate d t o incu r cost s abov e $10,000 . I n comparison , fue l manufacture r cost s rang e fro m$40 0 t o abou t $1. 7 million , wit hth e media nfue l manufacture r havin g complianc e cost s o f $500 , an d 1 6 percen t incurrin g cost s abov e $10,000 . Exhibi t 5- 7 show s complianc e cost s a s a percen t o f sale s fo r smal l an d larg e companie s an d als o show s th e rati o o f thes e result s betwee n smal l an d larg e companies . Ahig h"small/large " rati o indicate s tha t th e smal l compan yi s affecte d significantl ymor e tha n th e comparabl e larg e company . Arati o o f "1 " indicate s tha t complianc e cost s a s a percen t o f sale s i s th e sam e fo r smal l an d larg e companies . A s larg e companie s experienc e a relativel y greate r complianc e cos t burden , th e ratio s i nth e tabl e woul d b e les s tha n"1" , an d woul d i nfac t approac h"0" . Th e minimum/maximu m value s i n th e tabl e illustrat e th e exten t t o whic hth e cost-to
sale s rati o o f th e mos t lightly/heavil yimpacte d smal l compan y compare s t o th e cost-to-sale s rati o o f th e mos t lightly/heavil y impacte d larg e company . 7 0Fo r additiv e manufacturers , th e analysi s reveal s tha t

complianc e cost s tend t o b e substantiall yhighe r i n compariso n t o sale s fo r smal l companie s tha n fo r larg e companies . Th e typica l smal l additiv e company' s cost-to-sale s rati o i s abou t 3 1 time s greate r tha nfo r a typica l larg e manufacturer . I n comparison , typica l smal l an

d larg e fue l manufacturer s hav e a 1: 1 rati o meanin g that , relativ e t o sales , smal l companie s fac e complianc e cost s tha t ar e th e same a s larg e companies . I n sum , fo r bot hfue l an d additiv e manufacturers , some smal l companie s hav e complianc e cos t t o sale s ratio s a t leas t te npercen t highe r tha nth e corresponding rati o fo r th e respectiv e media nlarg e companies . Nevertheless , i t i s importan t t o not e tha t complianc e cos t t o sale s ratio s tend t o b e verysmal l fo r thi s regulation . A s a result , a te n percen t differenc e betwee nsmal l and larg e compan y ratio s ha s littl e statistica l significance . Acompan ymaypaya relativel yhighcomplianc e cos t compare d wit hanothe r fir mi nth e industry(e.g. , $5,00 0 versu s $400 ) withou t having muc himpac t o n it s financia l health . I n thi s case , althoughcomplianc e cos t t o sale s ratio s mayb e a usefu l too l i ncomparing impact s o f smal l and larg e manufacturers , a compariso no f th e magnitud e o f change s i n ROAi s a mor e direc t indicato r o f th e impact s o f complianc e cost s o n a company' s financia l health . Th e discussio ni n th e nex t sectio n focuse s o n using chang e i n ROAa s a measur e o f complianc e cos t impacts . B . Analysi s o f Change i nRO A ROAi s a genera l indicato r o f financia l healt han d i s frequentl yuse d fo r determining th e borrowin g potentia l o f a compan yand fo r comparing th e financia l healt ho f companie s withi n an industry . Analysi s o f th e chang e i n a company' s ROAca n indicat e whethe r complianc e cost s represen t a significan t portio n o f th e capita l availabl e t o a smal l busines s and , whethe r complianc e cost s ar e likel yt o resul t i nfinancia l hardshi p including , ultimately , closur e o f tha t company . financia l general ,

R M -JO % 18 % Closur e Standar d ROAthresholds , wer e use d t o measur e th e healt ho f eac hregistere d compan y(se e Figur e 5-4) . I n a compan

ywit ha n ROAles s tha n 2. 5 percen t i s alread y considere d t o b e i n financia l distress . Pollutio n contro l cost s coul d hasten , bu t ar e no t th e caus e of , closure . A t thi s level , a compan ymay experienc e difficultie s obtaining additiona l loan s o r othe r capital . An ROA les s tha n- 4 percen t indicate s tha t a compan yi s i n sever e financia l distress . Finally , an ROAles s tha n -3 0 percen t generall yindicate s closure . Sever e Distres s Financia l Financia l

Distres s Healt h Figure 5-4: distress. Measure of financial

healthand

7 1P.7 9

I n thi s analysis , eac hcompany' s ROAafte r complianc e cost s (calculate d b

ysubtracting one-thir d o f complianc e cost s from annua l ne t income ) wa s compare d t o th e company' s initia l ROAt o identif ycompanie s tha t wer e likel yt o b e pushe d ove r on e o r mor e o f th e thre e ROAthresholds . Companie s having an ROAo f les s tha n 2. 5 percen t befor e complianc e cost s wer e no t identifie d a s a compan ypushed int o financia l distres s a s resul t o f th e regulation . A s show

n i n Exhibi t 5-8 , complianc e cost s o f th e F/F A Registratio n Programcoul d potentiall ycaus e 4 5 additiv e manufacturer s (1 5 percen t o f small ) and 2 5 fue l manufacturer s ( 5 percen t o f small ) t o g o int o some leve l o f financial distress. 21 Tw o companie s produc e bot hfuel s an d additive s an

d bot har e include d i n bot hth e additiv e an d fue l manufacture r analysi s i nth e table . Therefore , ther e ar e sixty-eigh t uniqu e F/FAcompanie s potentiall ypushe d int o some leve l o f financia l distress , al l o f whic har e classifie d a s smal l (i.e. , hav e sale s < $5 0 million) . O f companie s potentiall ypushe d int o financia l distress , ove r hal f (about 5 9 percent ) woul d b e pushe d int o th e firs t leve l o f distres s (i.e. , -4%_ROA<2.5% ) an d les s tha none-fift h(1 2 companies ) woul d potentiall yb e pushe d int o closure . Characteristic s particula r t o companie s pushe d int o closur e ar e examine d i nth e nex t section . I t i s importan t t o note , however , tha t thes e companie s hav e severa l course s o f actio navailabl e t o them , othe r tha n closure , i n respons e t o th e impact s o f th e regulation . Thes e option s ar e discusse d i n sectio nVI I o f thi s chapter . C . Examinationo f Manufacturer s Potentiall y Pushedint o Closur e Twelv e manufacturer s (nine additive , on e fuel , an d tw o tha t produc e both ) appea r t o b e i ndange r o f closur e a s a resul t o f complianc e cost s o f th e F/F ARegistratio nProgram . Al l o f th e companie s ar e classifie d a s smal l unde r thi s program . Exhibi t 5- 9 profile s thes e manufacturer s according t o numbe r o f employees , annua l sales , complianc e costs , an d retur no nasset s (befor e an d afte r complianc e costs) . Analysi s o f thes e manufacturer s reveal s tha t al l ar e financiall yhealth y(i.e. , hav e ROA s greate r tha n 2.5% ) befor e complianc e costs . Th e averag e ROAo f th e fourtee n companie s i s 4.2 1 percen t befor e complianc e costs , and -134.2 5 percen t after . Thes e companie s generall yhav e fewe r tha nfive employee s and les s tha n$500,00 0 i nsales . Annua l complianc e cost s ar e greate r tha nannua l sale s fo r abou t hal f o f th e companies . Th e averag e complianc e cos t o f th e fourtee ncompanie s i s $273,400 , slightl ymor e tha n th e averag e annua l sale s o f $272,593 . An examinatio n o f th e numbe r an d type s o f product s produce d b y thes e fourtee ncompanie s reveal s tha t mor e tha n hal f produc e thre e o r fewe r product s an d al l produc e a t leas t on e atypica l product . "Companie s tha t produc e bot hfuel s an d additive s ar e liste d unde r bot ho f th e heading s i n th e table . 7 2P.8 0

Nin e companie s produc e mor e atypica l tha nbaselin e product s (sixo f whic hproduc e onl yatypica l products) , an d thre e produc e fewe r atypica l tha nbaselin e products . Companie s wit honl yatypica l product s tend t o hav e th e lowes t adjuste d ROA 2 8 (i.e. , mos t likel y t o close ) and companie s wit hth e fewes t atypica l product s tend t o hav e th e highes t adjuste d ROA , suggesting tha t i t i s thei r produc t mi xrathe r tha nthei r siz e tha t cause s themt o b e mor e heavil y impacted . I t shoul d b e note d tha t thes e atypica l product s ar e onl y registere d du e t o a "grandfathering " provisio n unde r whic htheyar e no t require d t o obtai na waive r fo r thei r "dissimilar " product . Ordinarily , product s whic har e no t "substantiall ysimilar " t o designate d certificatio n fuel s mus t showtha t th e produc t doe s no t adversel yaffec t th e abilit yo f a moto r vehicle' s emissio n contro l systemt o achiev e complianc e wit hemissio nstandard s during th e usefu l lif e o f th e vehicle . Sinc e thes e product s wer e no t require d t o obtai nsuc ha waiver , littl e i s know n abou t thei r health , welfare , o r emissio n contro l system effects . I f thei r manufacturer' s attempte d t o registe r suc hproduct s today , th e registration s woul d b e denied .
VI . Assessingthe Effectivenes s o f Smal l Busines s Provision s Nearl yhal f o f al l atypica l produc t manufacturers ' ar e considere d smal l fo r thi s program(i.e. , hav e sale s unde r $5 0 million ) and nearl yone-thir d qualif yfo r specia l provision s fo r thei r atypica l product s (i.e. , hav e sale s unde r $1 0 million) . Th e estimate d impact s discusse d abov e wer e base d o ncomplianc e cost s whic htoo k int o accoun t th e specia l provision s provide d fo r qualifyin g manufacturer s o f atypica l products . T o asses s th e effectivenes s o f thes e provisions , thi s analysi s compare s th e financia l impact s whic hth e regulation s woul d hav e o nsmal l atypica l producer s i n th e absenc e o f thes e specia l provision s t o th e impact s identifie d above . Th e result s showtha t th e specia l provision s fo r manufacturer s o f atypica l product s lowe r complianc e cost s fo r 6 0 smal l atypica l companie s b ya tota l o f $20,458,00 0 (as compare d wit hcost s tha t woul d otherwis e occur) . Withou t thes e provisions , an additiona l 1 5 otherwis e health ycompanie s woul d potentiall yb e pushe d int o closure . VII . Mitigatingcircumstance s tha t Reduc e Advers e Impact s Th e foregoing analysi s o f financia l effect s o ncompanie s projecte d t o experienc e significan t reduction s i nthei r rate s o f retur n a s a resul t o f thei r complianc e cost s represent s a "wors t case " picture . Mitigatin g circumstance s exis t t o reduc e th e impact s o f th e regulations .

28 ROAafte r complianc e costs . 7 3P.8 1

First , thi s analysi s ha s assume d n o change s i n price s o r sales . I n man

ycases , however , regulatorycost s can b e partiall y o r full ypasse d o nt o customers . Fo r example , du e t o th e high dependenc e o nmoto r fue l i n th e U.S . an d th e limite d numbe r o f substitutes , th e moto r fue l industryha s a relativel ylowpric e elasticit yo f demand (roughl y-0.2 6 i n th e shor t runrising t o - 0.8 6 i n th e long run). 2 9 Thi s suggest s tha t companie s ca n increas e price s t o recove r a larg e portio no f th e cost s relate d t o th e registratio nprogram withou t appreciabl ylosing sales . Fo r fue l additives , ther e als o appear s t o b e a goo d dea l o f flexibilit y regarding th e passthrougho f cost s t o prices . Th e segment s o f th e fue l additiv e industryappea r t o b e oligopolisti c i nnature , s o smalle r manufacturer s can generall yincreas e price s onl yt o th e leve l se t b

yth e larg e manufacturers . However , a t leas t a percentag e o f registratio ncost s ar e recoverabl e b ysmalle r firms , thu s reducing th e impact s note d i nth e precedin g sections . Moreover , th e complianc e cost s represen t an increas e i nth e fixe d cost s o f production , rathe r tha ni nvariabl e costs . Thus , th e complianc e cost s pe r produc t uni t dro p wit heveryadditiona l uni t sold , a s th e fixe d complianc e cost s ar e spread ove r mor e and mor e units . Thi s mean s tha t competing manufacturer s tha t ar e abl e t o maintai n sale s level s o f thei r product s wil l greatl yreduc e thei r uni t testin g costs . Second , th e requiremen t tha t an yne wmanufacturer s entering th e marke t compensat e th e existing manufacturer s fo r thei r rightfu l shar e o f th e grou p testing cost s confer s a certai n degre e o f protectio n o n th e existing manufacturer s i n tha t an ypotentia l ne w competitor s woul d fac e simila r costs . I n addition , t o th e exten t tha t a produc t (particularl yfue l additives ) ha s unusua l characteristics , it s manufacture r ofte nha s a marke t "niche" , resulting i n a rang e ove r whic hi t ca n rais e price s an

d no t los e sales . Thi s i s animportan t consideration , give n tha t man

yo f th e larges t complianc e cost s ar e face d b yfirm s tha t ar e payin g a substantia l percentag e o f th e tota l testing cost s o f tha t testin g grou p becaus e o f thei r uniqu e produc t mix . Thus , thei r unusua l qualitie s ca nallo wa pric e increas e tha t offset s (o r help s t o offset ) th e impac t o f th e testing costs . Anothe r respons e ope nt o producer s facing substantia l testin g cost s i s t o dro p th e produc t o r product s wit hth e greates t cost s and/o r smalles t profi t potential . Thi s respons e i s likel yt o hav e some residua l impact s o n profitability . Thi s residua l impact , however , i s likel yt o b e relativel ysmall , a s th e fir mi s firs t dropping thos e product s wit hrelativel yhighcost s an d smal l sales/profi t potential . Ultimatel ythi s respons e woul d reduc e th e numbe r o f competing product s an d mak e i t easie r fo r remaining firm s ""Analyzin g Gasolin e Demand s Elasticitie s ( ASurvey)" , Caro l Dah l & Thoma s Sterner , EnergyEconomics , Jul y1991 . 7 4P.8 2

t o increas e marke t share . Finally , a manufacture r face d wit ha highcomplianc e cos t becaus e th e produc t ha s unusua l characteristic s (i.e. , th e produc t i s atypical ) ha s th e optio no f reformulating th e produc t t o a "baseline " standard , whic hwoul d enabl e th e produc t t o b e groupe d wit hothe r simila r products , reducing complianc e cost s t o mor e nomina l amounts . VIII.Limitation s o f the Analysi s Severa l limitation s t o thi s smal l busines s impac t analysi s ar e identified . First , o f necessity , i t assesse s th e impac t o f th e start-u p programonly . I t account s neithe r fo r th e impact s o f testin g futur e uniqu e product s no r ho wtesting cost s fro m th e start-u p programwil l b e allocate d among additiona l manufacturer s tha t introduc e product s belonging t o existing produc t groups . Second , i t assume s tha t a compan yi s willin g t o us e profit s and resource s fromth e entir e compan yt o cove r complianc e cost s o f thi s regulation . Ho wrealisti c thi s assumptio n i s depends , i npart , o n ho wintegra l fue l an d additiv e product s ar e t o th e cor e busines s o f th e company . IX . Conclusion s Thi s smal l busines s impac t analysi s show s tha t th e F/F A Registratio n Program wil l no t hav e significan t financia l impact s o n th e majorit yo f smal l an d larg e companie s i nth e regulate d community . However , th e analysi s show s that , unles s cost s canb e passe d throughi n pric e increases , 1 0 percen t o f al l registere d additiv e manufacturer s (1 5 percen t o f smal l additiv e manufacturers ) an d 3 percen t o f al l registere d fue l manufacturer s ( 4 percen t o f small fue l manufacturers ) mayg o int o some leve l o f financia l distres s a s a resul t o f th e regulations . I ntotal , abou t 6 percen t o f al l fue l and additiv e manufacturer s combine d mayb e pushe d int o some leve l o f financia l distres s an d 1. 2 percen t ar e potentiall yi n dange r o f closure . Arevie wo f th e mos t heavil yimpacte d companie s suggest s tha t th e reaso n fo r thei r difficult yi n withstandin g th e financia l impact s o f thi s regulatio ni s du e i npar t t o thei r smal l siz e (e.g. , nearl yal l hav e fewe r tha n 5 employee s an d sale s belo w $500,000 , upo n whic hnearl yan ycomplianc e cos t impac t coul d b e significant ) and th e natur e o f th e product s theyproduce . Some o f thes e companies , however , mayhav e marke t niche s tha t readil y permi t produc t price s t o increas e t o cove r complianc e costs , o r the ymayb e abl e t o ceas e productio no f a relativel yhigh-cos t produc t an

d thu s avoi d cost s tha t woul d caus e undu e financia l hardship . However , usin g EPA' s criteri a cite d a t th e beginnin g o f thi s chapter , th e analysi s indicate s tha t smal l businesses , particularl y smal l additiv e manufacturers , ar e disproportionatel yimpacte d b y 75 .P.8 3

th e program . Th e rati o o f complianc e cos t t o sale s i s a t leas t te n percen t greate r fo r th e majorit yo f smal l additiv e companie s whe n compare d t o larg e additiv e companies . Conversely , smal l fue l manufacturer s experienc e impact s simila r t o thos e o f larg e manufacturers . Finally , th e analysi s support s EPA' s definitio no f smal l busines s fo r thi s regulation . I t als o show s tha t EPA' s specia l provisio n fo r smal l atypica l manufacturer s prevent s anadditiona l 1 5 companie s fro

mpotentiall ybein g pushe d int o closure , an d save s th e affecte d companie s roughl y2 0 millio ndollars .

7 6P.8 4

S B A Definition s # o f Employee s o

r SI C 109 4 122 1 131 1 138 1 138 2 138 9 154 2 171 1 201 1 202 2 202 3 204 6 204 8 206 1 208 5 208 6 209 6 232 9 233 9 243 5 243 6 261 1 265 7 267 1 267 3 267 8 281 3 281 9 282 1 282 2 282 4 283 3 283 4 284 1 284 2 284 3 284 4 285 1 286 5 286 9 287 3 287 4 287 5 287 9 289 1 289 2 289 9 291 1 295 2 299 2 Millio

no f $ 50 0 50 0 50 0 50 0 $3. 5 $3. 5 $17. 0 $7. 0 50 0 50 0 50 0 75 0 50 0 50 0 75 0 50 0 50 0 50 0 50 0 50 0 50 0 75 0 75 0 50 0 50 0 50 0 100 0 100 0 75 0 100 0 100 0 75 0 75 0 75 0 50 0 50 0 50 0 50 0 75 0 100 0 100 0 50 0 50 0 50 0 50 0 75 0 50 0 150 0 75 0 50 0 Exhibi t

o f Smal l b y

Si c # o f Employee s o

r SI C 308 1 308 9 317 2 341 1 342 9 343 2 343 3 346 9 347 9 349 9 351 9 352 3 352 4 353 1 355 6 356 1 356 9 359 2 359 9 369 4 371 1 371 4 371 5 372 4 379 5 379 9 386 1 422 1 422 6 461 2 461 3 495 3 495 9 501 2 501 3 501 4 501 5 507 2 508 2 508 3 508 5 512 2 515 3 515 9 516 9 517 1 517 2 519 1 519 8 521 1 Millio

no f $ 50 0 50 0 50 0 100 0 50 0 50 0 50 0 50 0 50 0 50 0 100 0 50 0 50 0 75 0 50 0 50 0 50 0 50 0 50 0 75 0 100 0 50 0 50 0 100 0 100 0 50 0 50 0 $12. 5 $12. 5 150 0 150 0 $6. 0 $3. 5 10 0 10 0 10 0 10 0 10 0 10 0 10 0 10 0 10 0 10 0 10 0 10 0 10 0 10 0 10 0 10 0 $3. 5

7 7 5- 1

Cod e fo r F/F A

Manufacturer s # o f Employee s o

r SI C Million

s o f $ 525 1 $3. 5 526 1 $3. 5 539 9 $3. 5 541 1 $13. 5 553 1 $3. 5 554 1 $3. 5 557 1 $3. 5 569 9 $3. 5 591 2 $3. 5 594 1 $3. 5 598 3 $6. 0 598 4 $3. 5 622 1 $3. 5 653 1 $10. 0 738 9 $3. 5 753 8 $3. 5 754 9 $3. 5 769 9 $3. 5 873 4 $3. 5 Unknown$3. 5P.8 5



### Exhibi t5- 2 

### Profile s of

Additiv eManufacturers F/F A Progra

mDefinitio n SummaryStatistic s

Smal l 

### Larg e TOTA L Numbe r 29 5 16 3 45 8 

### Percent

64 % 36 % 100 %

4__n_mu m Lowe r

Qaartil e Media n Uppe rQaartil e Mizfann n Areraf e Smal lAdditiv eMurafacttsre n Employe ea 8 _ M Awe - Ne t Incom e RO A 0

$50,00 0 $12,06 3 $49 2

4.08 % 5

$900,00 0 $206,68 8 $13,62 8

4.59 % 1 6

$4,282,99 5 $1,671,04 2 $81,82 6

4.90 % 5 2

$12,116,18 5 $5,288,94 9 $270,26 4

5.11 % 1,11 0

$49,000,00 0 $24,873,52 0 $1,345,97 0

5.41 % 5 1

$9,688,73 8 $4,476,56 7 $234,29 0

4.86 % L_rg eA_Utrr eManafacturer e Bniployee e Sale s Aaaet a Ne t
KO A 1 0

$50,000,00 0 $25,436,58 3 $1,377,57 9
5.42 % 72 2

$176,414,56 6 $102,845,13 3 $5,865,45 6
5.70 % 3.54 8 $972,795,13 3 $681,922,81 4 $41,710,68 6
6.12 % 14,33 5

$3,405,500,00 0 $2,733,105,65 1 $175,985,07 5
6.44 % 332.70 0

$115,068,000,00 0 $135,063,393,62 0 $10,047,009,08 1

7.44 % 14.76 4 $4,974,456,42 0 $4,905,814,56 1 $344,352,61 1
6.12 %

7 8P.8 6



### Exhibi t5- 3 Profile s of

Additiv eManufacturers SBA Definitio n SummaryStatistic s

Smal l 

### Larg e TOTAL 

### Numbe r 30 0 15 8 45 8 

### Percent

65 % 35 % 100 %

Lowe r Qaartil e Media n Uppe rQaartll a __a__xn*—B E Averag e Smal lAdditiv eMaaafeetarer * Employee * Sale * Aaaet a Ne tIncom e RO A 0

$50,00 0 $12,06 3 $49 2 4.08 % 5

$950,00 0 $315,00 5 $14,50 1 4.60 % 1 9

$4,923,21 7 $1,949,92 6 $96,02 9 4.92 % 6 0

$19,400,00 0 $8,910,13 6 $464,17 8 5.21 % 1.50 0

$20,090,000,00 0 $19,529,978,71 3 $1,352,458,49 9

6.93 % 6 6

$91,674,72 9 $79,016,06 7 $5,298,10 8 4.92 % Larg eAdditiv e_a____rer e Bmployoc e Sale * Aaaet a Ro tIncom e RO A 1

$4,000,00 0 $1,549,11 1 $75,64 3 4.88 % 75 3

$139,763,50 0 $79,450,76 7 $4,488,07 4 5.65 % 3.60 0

$999,672,63 3 $702,821,79 2 $43,036,86 1 6.12 % 14.50 0

$3,405,500,00 0 $2,733,105,65 1 $175,985,07 5 6.44 % 332.70 0

$115,068,000,00 0 $135,063,393,62 0 $10,047,009,08 1

7.44 % 15.10 4

$4,975,876,70 2 $4,889,518,19 3 $343,624,20 8 6.03 %

7 9P.8 7



### Exhibi t5- 4 Profile s of

Fue lManufacturers F/F A Progra

mDefinitio n SummaryStatistic s

Smal l Large TOTAL Numbe r 46 5 17 3 63 8 Percen t

73 % 27 % 100 %

Qaartil e Media n Uppe rQaartil e ____yEHM_9

_ Averag e

Smal lFoa lManufacturer s Employee s Sale a Aaaet a Ne tIncome RO A 0 $49,00 0 $13,16 4 $29 2 2.21 % 8

$3,000,00 0 $882,30 3 $28,54 4 3.25 % 2 2

$9,000,00 0 $2,711,66 4 $97,05 7 3.57 % 5 1

$22,000,00 0 $6,782,32 1 $263,63 9 3-90 % 29.43 7

$49,665,53 4 $15,537,04 1 $650,73 7 5.19 % 15 4

$14,707,89 4 $4,535,22 4 $178,35 4 3.54 % Larg eFoa lManufacturer s Employee s Safe a Aaaet a I f a tIncome ) RO A 0

$50,000,00 0 $15,643,98 3 $655,62 1 4.19 % 21 5

$85,917,70 2 $27,204,04 0 $1,198,32 1 4.40 % 44 5

$268,822,00 0 $87,279,65 8 $4,269,96 0 4.89 % 3.02 5

$1,775,820,00 0 $628,866,62 2 $36,751,77 2 5.85 % 67,30 0

$62,359,000,00 0 $68,509,097,98 8 $4,969,802,31 8

7.86 % 431 5

$2,653,133,84 8 $1,688,061,56 3 $116,891,85 2 5.16 %

8 0P.8 8



### Exhibi t5- 5 Profile s o f

Fue lManufacturers SBA Definitio n SummaryStatistic s

Smal l 

### Larg e TOTAL Numbe r 38 1 25 7 63 8 

### Percent

60 % 40 % 100 %

BlinifffKff

n UIIS 1 Qaartil e Media n Uppe r Qaartil e 1_»4—Ml— l Averag e Smal lFue lManufacture — Employee s Sale s Asset s
no tKnoomf

t RO A 0

$49,00 0 $13,16 4 $29 2 2.22 % 7

$2,300,00 0 $672,49 0 $21,23 1 3.17 % 1 8

$8,995,33 2 $2,710,22 6 $97,00 1 3.58 % 4 5

$27,256,59 7 $8,478,54 4 $349,40 0 4.00 % 130 0

$5,500,000,00 0 $1,908,317,65 7 $123,243,50 4 6.46 % 5 0

$64,794,32 8 $21,395,29 5 $1,141,17 7 3.62 % targ eFoe lManufacturer s Etttployco s Sale a Asset s
n e tDtoofli a RO A 0

$200,00 0 $55,41 8 $1,39 7 2.52 % 8 0 $18,618,75 0 $5,700,19 1 $218,13 5 3.83 % 20 3

$49,000,00 0 $15,324,29 1 $641,03 0 4.18 % 1.00 0

$451,834,00 0 $148,384,46 8 $7,614,59 0 5.13 % 6730 0

$62,359,000,00 0 $68,509,097,98 8 $4,969,802,31 8

7.55 % 3.09 8

$1,710,114,27 0 $1,108,578,74 9 $77,021,61 9 4.52 %

8 1P.8 9 

## 1

Exhibi t5- 6 Summaryo f

Complianc eCost s pe rManufacture r Typ eo f Manufacture r Minimu m Media n Maximu m %wit h cost s > $10,00 0 Additive Manufacturers Smal l$40 0$50 0$1,207,89 1 25 % Larg e$40 0$5,02 9 $3,717,29 6 43 % Tota l$40 0$91 5 $3,717,29 6 31 % Fue lManufacturers Smal l$40 0$50 0$500,90 03 % Larg e$40 0$10,98 8 $1,672,70 053 % Tota l$40 0$50 0$1,672,70 016 %



# nP.9 0



### Exhibi t5- 7 Compariso no f

Smal lan dLargeCompany Complianc eCos tt oSale s Ratios *

AUfil_—_ta__

_ Additiv eManufacturer s Smal l0.00027 % Larg e0.000001 % Small/Larg e26 1 Fue lManufacturer s Smal l0.000268 % Larg e0.000001 % Small/Larg e24 6 Lowe r Q—util e
0.00152 % 0.00008 % 1 9

0.000740 % 0.000562 %

1 Media n
0.01213 % 0.00039 % 3 1

0.001709 % 0.003216 %

1 Uppe r Qui util e
0.11905 % 0.00363 % 3 3

0.006177 % 0.006169 %

1 lu&X_flC_XU_

_
82.5454 % 0.28265 % 29 2

64.217948 % 0.320947 % 20 0 •Three-yea r

averag ecomplianc ecos t t o sales ; al lfigures I ntabl ear erounded
. **Themaximu m3-yea r averag ecomplianc ecos t t o sale s for

larg ecompanie s wa s 1 4 time s larger tha nth emaximu m3-yea r averag ecomplianc ecos t t o sale s for

smal lcompanies
.

8 3P.9 1



## Exhibit5- 8 EstimatedImpacts o nRO A
Typ eo f Manufacture r "FinancialDistress " (-4%xROA<2.5% ) Additive Manufacturers Smal l Larg e Fue lManufacturers Smal l Larg e 2 2 0

2 6 0 "SevereFinancia l

Distress " (-30%-<R0A<-4% )

1 1 0

4 0 "Closure " (ROA<-90% )

12» * 0

3 " 0 I f ambe ro f compenie e pushe dint osom e degre eo f distres s
4 5 0

25 * 0 •Eigh t fue lmanufacturer s ha da nRO Aof les s tha n2.5 % befor ecomplianc ecost s wer eIncorporated , an d ar ethu s no t

include dI nth enumbe r o f companie s pushed

int o financialdistress
. "Include s tw o companie s producin g bot hfuel s an dadditive s

8 4

### Exhibi t5- 9 SummaryProfil eo f

Manufacturers Potentiall yPushe dint oClosure
Manufacturer' s Produc t

Mix * Tota l 1 1 6 1 4 4 1 3 3 7 1 8 3 Atypica lBaselin e

1 0 1 0 4 2 1 0 4 0 4 0 1 0 21 21 25 3 1 5 1 2 AVERAG E 4. 3 22. 2 #o f Employee s

6 1 4 4 4 3 2 4 4 0 4 2

3 Annual Sale s $110,00 0 $166,09 6 $260,00 0 $240,00 0 $310,00 0 $340,00 0 $85,00 0 $430,00 0 $300,00 0 $340,00 0 $410,00 0 $280,00 0
$272,59 3 Complianc e

Cos t $272,40 0 $272,40 0 $500,90 0 $272,40 0 $386,70 1 $386,70 1 $114,40 0 $272,60 0 $228,60 0 $229,00 0 $230,10 0 $114,60 0
$273,40 0 RO

A

4.21 % 4.29 % 2.58 % 4.35 % 4.40 % 4.41 % 4.17 % 4.46 % 4.39 % 4.41 % 4.45 % 4.38 %

4.21 % Adjuste d

ROA

-310.00 % -194.75 % -227.84 % -128.03 % -137.13 % -123.34 % -171.42 % -64.97 % -82.37 % -71.24 % -57.33 % -42.57 %

-134.25 % •Th efirst colum nIndicate s tota lnumbe r of products , th esecon dcolum ni s numbe r o f atypica lproducts , an dth ethir dcolum ni s numbe r o f baselin eproducts
.

8 5P.9 3

Chapte r 6 Perspective : Summar y & Societa l Benefit s Thi s analysi s ha s bee nbase d o n 1,0 7 6 differen t companie s registering a tota l o f 4,19 8 product s i nth e gasolin e an d diese l fue l families . O f thes e producers , nearl y6 0 percen t ar e fue l manufacturer s an

d abou t 4 0 percen t ar e additiv e manufacturers . Th e majorit yo f thei r product s ar e i nth e gasolin e fue l famil y(7 8 percent) , whil e abou t 2 2 percen t ar e diese l products . Manufacturer s o f leade d gasolin e product s wer e exclude d fro mthi s analysis . Th e estimate d cost s o f complianc e wit hstandar d requirement s fo r thes e producer s rang e fro m$40 0 t o $3. 7 million , wit habou t 7 8 percen t having cost s $10,00 0 o r less . Totaling th e cost s t o eac hmanufacture r yield s anestimate d annua l cos t t o industryo f $2 2 millio nfo r thre e years . Thus , th e regulation s ar e no t expecte d t o resul t i na "significan t regulatoryaction" , a s define d unde r Executiv e Orde r 12866 . Th e componen t cost s presente d i nthi s analysi s wer e generall y base d o n th e result s o f a surveyo f th e applicabl e testin g industry . Thes e cost s wer e the n accumulate d fo r variou s group s an d reallocate d t o individua l product s an d manufacturer s base d o n reasonabl e assumption s an d judgement s regarding th e expecte d us e o f cost-sharing provision s an d th e expecte d availabilit yo f existing chemica l and biologica l tes t data . Th e majo r assumption s o nwhic h thi s analysi s wa s base d whic hcoul d hav e animpac t o nth e projecte d complianc e cost s include : 1 ) expecte d participatio n i nth e grouping system , 2 ) th e numbe r o f groups , 3 ) th e numbe r o f product s expecte d t o b e enrolle d i n eac hgroup , 4 ) th e manne r i n whic hcost s ar e assigned , an

d 5 ) th e expecte d availabilit yo f existing tes t data . Th e sensitivit yo f th e cost s t o thes e assumption s i s examine d below . First , i t i s possibl e tha t some manufacturer s maychoos e no t t o tak e advantag e o f grouping opportunities . I f on e ou t o f every 1 0 producer s (i.e. , 10 7 producers ) chos e t o conduc t test s independentl yrathe r tha nparticipatin g i ngrou p cost-sharing provisions , and i f eac hwa s registering a gasolin e baselin e produc t (whichi s estimate d t o hav e th e highes t grou p complianc e cost , $797,000) , the nth e tota l programcos t woul d increas e from$2 2 millio n t o $5 1 millio n annually . I t woul d tak e a t leas t on e ou t o f everythre e suc hproducer s t o conduc t test s independentl ybefor e th e annua l cost s woul d excee d $10 0 million . I f on e produce r o f eac hgrou

p chos e t o conduc t test s independently , th e industrycos t woul d b e abou t $4 4 millio nannually . I t woul d tak e 3 t o 4 producer s o f eac hgrou p conducting test s independentl yt o rais e industrycost s beyond $10 0 millio nannually . Hence , eve ni f some producer s choos e no t t o participat e i n th e grouping system , cost s ar e expecte d t o remai n belo w$10 0 millio nannually . 8 6P.9 4

Second , th e tota l cost s ar e sensitiv e t o th e numbe r o f group s establishe d fo r th e program . Fo r example , complianc e cost s woul d b e highe r i f ne wtype s o f atypica l o r non-baselin e product s entere d th e marke t o r i f product s i n familie s no t currentl ydesignate d fo r registratio n wer e introduced . Fo r example , a s discusse d i n Chapte r 3 , EP Aestimate s tha t standar d testing o f th e representativ e fro m al l o f th e baselin e group(s ) o f th e alternativ e fue l familie s woul d add a tota l o f abou t thre e millio ndollar s t o th e cost s o f th e program . Furthermore , th e curren t numbe r o f group s mayb e eithe r highe r o r lowe r tha nestimate d i n thi s analysis . Th e overal l effec t o f anincreas e i n th e numbe r o f group s woul d b e quantitativel ysimila r t o th e effec t o f producer s choosing t o conduc t test s independently . Conversely , industrycost s woul d b e lowe r i f th e numbe r o f group s i s les s tha n assume d i nthi s analysis . Unlik e th e effec t o f th e numbe r o f groups , however , th e numbe r o f product s pe r s e doe s no t necessaril yimpac t tota l program costs . Manufacturer s o f ne wproduct s whic har e i nth e gasolin e o r diese l fue l familie s wil l ofte nb e abl e t o rel yo n previousl y submitte d dat a fo r registratio n o f thei r ne wproducts . I n suc h cases , industrycost s woul d no t ris e becaus e thes e manufacturer s woul d reimburs e manufacturer s whic hhav e alread yregistere d product s simila r i n natur e t o th e ne wproduct . Next , th e numbe r o f product s pe r grou p an d th e metho d b

ywhic h cost s ar e divide d coul d mos t certainl yaffec t cost s t o a give n manufacturer , bu t woul d no t increas e tota l cost s t o th e industry . I n fact , industrycost s coul d actuall yb e les s becaus e ther e mayb e fewe r products , henc e fewe r groups , onc e inactiv e product s ar e no t re-registered . Finally , sinc e th e assumption s use d regarding availabilit yo f existing tes t dat a wer e conservativ e assumptions , th e estimate d cost s o f th e programcoul d actuall yb e less . Thi s analysi s include s onl ycost s associate d wit hTie r 1 an d Tie r 2 testing , average d ove r 3 years . However , i nth e ensuing year s o f th e program , some o f th e registere d product s ar e likel yt o b e subjec t t o Tie r 3 testing . Assumin g te nproduct s o r group s ar e require d t o conduc t Tie r 3 testing (a t an estimate d cos t o f $ 3 millio n each ) i n th e thre e yea r perio d following th e initia l complianc e period , th e tota l cos t woul d b e $3 0 million , o r $1 0 millio n pe r year . Th e requirement s o f thi s programar e designe d s o a s no t t o presen t a n unnecessaryburde n o nth e regulate d industry . Th e three-tiere d structur e o f th e testing program provide s a mean s b y whic hadditiona l testing i s require d onl yi f warrante d b yth e result s o f th e previou s tier , thu s keeping testing burde n t o a minimu mwhil e satisfying th e requirement s o f th e statute . I n addition , allowance s fo r adequat e existing healt heffect s dat a mitigat e testin g requirements , an d th e grouping systempermit s cost s t o b e share d among producer s an d help s t o avoi d duplicatio n o f effort . Specia l provision s ar e als o provide d fo r smal l businesses , marketer s o f relabele d additives , an d manufacturer s o f 8 7P.9 5

aeroso l additives . Whil e th e program

i s designe d t o minimiz e th e burde no nthos e require d t o comply , i t als o ha s a numbe r o f societa l benefits . First , i t wil l provid e an excellen t ai r toxic s inventoryo n pollutant s relate d t o th e us e o f moto r fuel s and fue l additives , an d wil l als o provid e an invaluabl e sourc e o f toxicologi c dat a o n th e emission s o f thes e products . I t wil l als o assis t EP Ai n evaluating th e relativ e advers e ai r pollutio neffect s o f variou s kind s o f fuel s an

d additive s an

d i n determining need s fo r relate d regulatoryaction s i n th e future . Fo r instance , informatio n i s t o b e submitte d t o EP Aregarding th e carcinogenicit yo f a fue l o r additiv e product . On th e basi s o f thi s o r othe r availabl e information , th e Administrato r may , b yregulation , contro l o r prohibi t th e manufactur e o r sal e o f toxi c fuel s o r fue l additive s fo r us e i n moto r vehicles . Alternatively , manufacturer s may voluntaril yreformulat e o r withdrawproduct s whic har e show nt o hav e unacceptabl e healt hrisks . Incidence s o f cance r o r othe r advers e healt heffect s mayb e mitigate d b ythes e events . I n1995 , th e numbe r o f cance r incidence s cause d b ymoto r vehicl e pollutant s i s projecte d t o b e abou t 350. 3 0 Currently , eac hcance r incidenc e i s estimate d t o hav e an advers e impac t t o societ yranging from$1. 6 millio n t o $8. 0 millio n wit ha mea nvalu e o f $4. 8 million. 3 1 Thus , th e societa l benefit s woul d outweighth e cost s associate d wit hth e programi f jus t 9 t o 4 2 cance r incidence s wer e avoide d (o r abou t 1 4 cance r incidence s whe n usin g th e mea n valu e o f a statistica l lif e equa l t o $4. 8 million) , o r approximatel y2 t o 1 2 percen t o f vehicle-relate d cance r incidence s projecte d t o occu r i n1995 . Th e avoidanc e o f othe r healt heffect s evaluate d unde r thi s programwil l provid e additiona l socia l an d financia l benefits . Thes e benefit s ar e difficul t t o quantif ywit han yaccuracy . Nevertheless , i t i s reasonabl e t o believ e that , a s a resul t o f action s take n b yEP Aan

d industrybase d o n informatio ngenerate d b ythi s program , th e saving s associate d wit hth e avoidanc e o f cance r an d othe r advers e healt heffect s wil l mor e tha noffse t th e associate d program costs .

30 "Moto r Vehicle-Relate d Ai r Toxic s Study, " U.S . Environmenta l Protectio n Agency , Offic e o f Mobil e Sources , EP A 420-R-93-005 , April , 1993 , availabl e i n Ai r docke t A-91-19 .

31 "Revie wo f Existing Valu e o f Lif e Estimates : Valuatio n Document, " Memorandu mfro m Bo bUnsworth , Ji m Neumann , and W . Eri c Browne , Industria l Economic s Incorporated , t o Ji m DeMocker , Offic e o f Polic yAnalysi s an d Review , U.S . Environmenta l Protectio n Agency , Novembe r 6 , 1992 . 8 8P.9 6



## Appendi xA DetailedProgra

m Cost sTIE R 1 TES TCOST S A . Literature Saarc h Coat s Baseline : Contracto rcost($/hr) Estimate d hour

s Tota l Contracto rCost($ ) Cos to fdatabas e sv . ($/hr ) Estimate d hour

s Total riataha s a sv . cost($ ) Tota l U i Saarc h Cos t($ ) 6 5 30 0 1950 0 2 0 150 0 2100 0 Non-Baselina/Atypical : Contracto roos

t(C/hr ) Estimate d hours Tota l Contracto rCoat($ ) Coa tofdatabas e sv . ($/hr ) Estimate d hour

s Tota l databas e sv . oos t($ ) Tota l U L Saarc h Coat($ ) 6 6 10 0 650 0 2 0 2 5 50 0 700 0

B . Vehicle/Engin e Acquisitio n Coat 1 . Mid-Siz e LDV(* ) Nanatypicml

Product Acquisitio n SaJvag a Valu a forNonatypica l F/FA($ ) Incramanta l van . acq . ooatfornonatypica l Atypical Product Acquisitio n Salvag e Valu a fo ratypica l F/F A($ ) Incramanta l vah . acq . ooa ttoratypica l 1500 0 0 1500 0
1500 0 0 1500 0
2 . Haav yHD E ($ ) Nonatypical

Product: Acquisitio n 1860 0 Salvag e Valu e fo rNonatypica l F/FA($ ) 0 Incramanta l veh . acq . costfo rnonatypica l 1860 0 Atypical Product: Acquisitio n 1860 0 Salvag e Valu e foratypica l F/FA($ ) 0 Incrementa l veh . acq . cos tfo ratypica l 1860 0C . Mileag e Accumulatio n Costs 1 . Light-Duty(Maint./fue l costs included ) Nonatypical

Product: Cost/mil e Numbe ro

fmile s LD Vmileag e accum . costfo rnonatypica l Atypical Product: Cost/mil e Numbe rofmile s 0. 8 400 0 320 0
0.8 3000 0 LD Vmileag e accum . costfo ratypica l 2400 0
2 . Heavy-Duty(MaintTfue l costs included ) Nonatypical

Product: Cost/mil e 2. 2 Numbe rofmile s 625 0 HD E mileag e accum . costfo rnonatypica l 1375 0 Atypical Product: Cost/mil e 2. 2 Numbe ro

fmile s 8700 0 HD E mileag e accum . costfo ratypica l 19140 0

C OD

. Emissio n Generation/Characterizatio n Cost s Combustio n 1a

. Light-Dut yVehicl e (Chassi s Dyno ) - FTP , catalyze d Assum e on e modifie d FT P necessaryfo rgen./coll

. o fal l 3 phase s Assum e sufficien temission s ar e generate d fro m on e FT P Modifie d FT P Em

. rat e ofRegulate d Emissions-Vapo rPhas e H C speciation-Vapo rPhas e Aldehyde/keton e speciation-Vapo rPhas e Analysi s o fReg

. Em

. fo rP M phas e PA H speciatio n fo rP M phas e NPA H fo rP M phas e PA H speciatio n fo rS Vphas e NPA H fo rS Vphas e Subtota l GenVChar

. Emission s 3xfo rvariabilit y Tota l Cos tfo rRV P Measuremen t Tota l LD V(FTP ) emissio n gen. / char , cost s (nonatypical) : Incrementa l Cos tfo rAtypica l Product s Detectio n &Samplin g Cos t$300/time , 5 time s Identify/Measur e Atypica l El

. an d Em

. Product s (X3 ) Tota l Incrementa l Cos tfo rLD V(FTP ) Atypica l GenVCha r Incrementa l cos tfo rNonBaselin e Product s Alcohol/Ethe rspeciation-Vapo rPhas e X 3 fo rvariabilit y Tota l Incrementa l cos tfo rLD V(FTP ) NonBaselin e t o characteriz e al l o fth e following : 110 0 90 0 100 0 60 0 300 80 0 800 80 0 800 710 0 3 2130 0 5 0 2135 0
150 0 720 0 870 0

50 0 3 150 01b

. Light-Dut yVehicl e (Chassi s Dyno ) - FTP , Non-Catalyze d

FT P Em

. rat e o fRegulate d Emissions-Vapo rPhas e H C speciation-Vapo rPhas e Aldehyde/keton e speciation-Vapo rPhas e Analysi s o fReg

. Em

. fo rP M phas e PA H speciatio n fo rP M phas e NPA H fo rP M phas e PA H speciatio n fo rS Vphas e NPA H fo rS Vphas e Subtota l Gen./Char

. Emission s 3 xfo rvariabilit y Tota l LD V(SS ) emissio n gen. / char , cost s (nonatypical) :

Incrementa l Cos tfo rAtypica l Product s Identify/Measur e Atypica l El

. an d Em

. Product s (X3 ) Tota l Incrementa l Cos tfo rLD V(SS ) Atypica l Gen./Char

. Incrementa l cos tfo rNonBaselin e Product s Alcohol/Ethe rspeciation-Vapo rPhas e X 3 fo rvariabilit y Tota l Incrementa l cos tfo rLD V(SS ) NonBaselin e 110 0 90 0 100 0 60 0 30 0 80 0 80 0 80 0 80 0 710 0 3 2130 0

720 0 720 0
50 0 3 150 02

. HeavyHD E (Engin e Dyno ) - FTP/Non-catalyze d Assum e on e modifie d FT P necessaryfo rgen./coll

. o fal l 3 phase s Assum e sufficien temission s ar e generate d fro m on e FT P t o characteriz e al l o fth e following : Modifie d FT P 240 0 Em

. rat e ofRegulate d Emissions-Vapo rPhas e 100 0 H C speciation-Vapo rPhas e 66 7 Aldehyde/keton e speciation-Vapo rPhas e 40 0 Analysi s o fReg

. Em

. fo rP M phas e 300 PA H speciatio n fo rP M phas e 120 0 NPA H fo rP M phas e 120 0 PA H speciatio n fo rS Vphas e 120 0 NPA H fo rS Vphas e 120 0 Subtota l 956 7 GenVChar

. Emission s 3 xfo rvariabilit y3 Tota l 2870 0 Engin e Set-u p fe e 500 0 Cos tfo rRV P Measuremen t0 Tota l HD E (FTP ) emissio n gen. / char , cost s (nonatypical ) 3370 0 Incrementa l Cos tfo rAtypica l Product s Detection/Sampling , $300/time , 7 time s 210 0 identify/Measur e Atypica l El

. an d Em

. Product s (x3 ) 960 0 Tota l Incrementa l Cos tfo rHD E (FTP ) Atypica l GenVCha i 1170 0 Incrementa l cos tfo rNonBaselin e Product s Alcohol/Ethe rspeciation-Vapo rPhas e 33 3 X 3 fo rvariabilit y3 Tota l Incrementa l cos tfo rLD V(SS ) NonBaselin e 100 0

h oEvaporative Light-DutyGeneratio n Chambe rMetho d Assum e on e generation/characterizatio n necessar y Generation/Collectio n Cost($200/hr , 1 hour) 20 0 H C speciatio n 33 3 Measuremen tofTota l Hydrocarbon s 22 5 Subtota l 75 8 GenVChar

. Emission s 3xfo rvariability3 Tota l 227 5 Set-u p cost/Hardware 400 0 Tota l LD VEvap

. Chambe rgen Vchar , cost s (nonatypical ) 627 5 Incrementa l Costfo rLD VEvap

. Atypica l Gen/Char

. 80 0 Incrementa l Costfo rLD VEvap

. Non-B LGen/Char

. Alcohol/Ethe rspeciatio n 16 7 X 3 fo rvariability3 Tota l Incrementa l Costfo rLDVEvap

. NB LGen/Cha r50 0

T l C OTJEn„T5§TCQ§T9 A

. Emissio n Generatio n Cost s Assum e generatio n require d fo r6hr/day , 5day/wk , 13weeks Cost s are tota l combine d cos tofgeneratio n (includin g main tan d fuel) , dilutio n an d delivery Combustio n 1

. Light-Duty 1 a . Assum e us e o fchassi s dyno , FT P Costpe rday110 0 Numbe rofday s 6 5 Tota l LD VComb

. Emissio n Gen

. Cost s fo rBio

. Testin g 7150 0 Incrementa l cos tofsamplin g em . fo rS M (Ames ) 50 0
2

. Heavy-Duty Assum e us e ofengin e dyno , FT P Cos tpe rda y90 0 Numbe ro fday s 6 5 Tota l HD E Emissio n Gen

. Cost s fo rBio

. Testin g 5850 0 Incrementa l cos tofsamplin g em . fo rS M (Ames ) 80 0 Evaporative - Light-DutyOnl y Assum e us e ofa n evaporativ e emissio n generatio n chambe r Set-up/Hardware 0

_ • Cos tpe rday90 0 Numbe ro fday s 6 5 Tota l 5850 0 Tota l L D Evap

. Emissio n Gen

. Cost s fo rBio

. Testin g 5850 0 B

. Combine d Healt h Tes tCosts 1

. Salmonell a Mutagenicity( 2 required) 940 0 2.9 0 daySubchroni cToxicityTest(SdyAvk, 34 0 rats ) 17700 0 Incrementa l test s t o b e adde d t o 9 0 subchroni ctes t 3

. Neurotoxicity-GFA P 360 0 4

. Neurotoxicity-Neurohistolog y4200 0 5

. Repro/Teratolog y3800 0 6

. K-cronudeu s 290 0 7

. Siste rChromati d Exchang e 720 0 Tota l Healt h Effect s TestCosts 28010 0

T l

_ADMINISTRATIVE/REPORTIN G COST S Cost s pe rmanufacturer/pe rproduc t A

. Notificatio n 42 6 Cost s Pe rGrou p A

. Tie r1 944 9 B

. Tie r2 462 6 C

. Grou p Administratio n 1226 0 Tota l Pe rGrou p Cos t2633 5

T l c nCOST ? PE R ran TIE R 1 COST S light-Dut y Literature Searc h Aoquistio n cost(x 2 t o includ e back-up ) Mileag e Accumulatio n (x 2 fo rback-up ) Combustio n Em . GenTChar . - Ca t Combustio n Em . GenTChar . - Non-Ca t Evaporative Em . GanTChar. - SHE O Evaporative Em . Gen-/Char. - Chambe r Baselin e Produc t
2100 0 3000 0 640 0 2135 0 2130 0 0 627 5 'ton-Baselin e

Produc t
700 0 3000 0 640 0 2285 0 2280 0 0 677 5 Atypica l

Produc t
700 0 3000 0 4800 0 3005 0 2850 0 0 707 5 Tota l 10632 S 9582 5 15062 5 Heavy-Dut y Literature Searc h Aoquistio n cost(x 2 t o includ e back-up ) Mileag e Aoc(x2 fo rback-u p excptatyp ) Combustio n Em . GenTChar . -Non-Catatyz Combustio n Em . GanJChar . - Ca t Tota l 2100 0 3720 0 2750 0 3370 0 0 700 0

3720 0 2750 0 3470 0 0 700 0

1860 0 10140 0 4540 0 0 11940 0 10640 0 26240 0

TIE R 2 COST S Lkjht-Dutv On *Combustio n Emissio n Gen

. Neede d Incrementa l Sampin g fo rS M Btotogka l Tes tCost s Subtota l On e Evap . Generation s Neede d Biologica l Tss tCost s Subtota l TOTA L Heavy-Dut y On e Combustio n Emissio n Gen

. Neede d Incrementa l Samplin g lo rS M Biologica l Tes tCost a TOTA L BL/NB L Product 7150 0 50 0 28010 0 35210 0 5850 0 27070 0 32920 0 66130 0

5850 0 80 0 28010 0 33940 0 Atypica l

Product 7150 0 50 0 28010 0 35210 0 5850 0 27070 0 32920 0 68130 0

5850 0 80 0 28010 0 33940 0

T l b >CATEGOR YCOST S FO R BUSINESSE S NO TSUBJEC TT O SMAL LBUSINES S PROVISION S Catagory ; Gasolin e - Be—lin e Assumption s fo rtesting : Combustion : Em

. Char , require d fo rPAH , NPA H

A l Tie r2 Biologica l Testin g Necessar y Evaporative : Al l Tie r1 an d Tie r2 Testin g Necessary Tie r1 Cost s Literatur e Searc h Acquisitio n Mileag e Accumulatio n PAH

. NPA H Combustio n Em

. Analysi s (Cat. ) Comb

. Em

. Gen/Characterizatio n (Non-cat ) Evap

. Em

. GenVCrwr.-Charnbe r Tota l Tie r1 Cost s 2100 0 3000 0 640 0 1295 0 1290 0 627 5 8952 5 Tie r2 Cost s (Combine d Test s - Combustio n an d Evap. ) 68130 0 Adminstra-ve/Reportin g Cost s (Tiers 1 an d 2 ) 2633 5 Tota l Gasolin e - Baselin e CategoryCos t79716 0

Category : Gasolin e - Non-Baselin e Assumption s fo rtesting : (Combustion : Em

. Char , require d fo rPAH , NPA H fo rcat
. emiss. , an d fo ral l requirement s fo rNon-ca temiss

.

A l Tie r2 Biologica l Testin g Necessary Evaporative : A l Tie r1 an d Tie r2 Testin g Necessary Tie r1 Cost s Literatur e Searc h 700 0 Acquisitio n Cos t3000 0 Mileag e Accumulatio n 640 0 PAH

. NPA H Combustio n Em

. Analysi s (Cat. ) 1295 0 Comb

. Em

. GerVCharacterizatio n (Non-cat. ) 2280 0 Evaporative Em

. GenVChar.-Chambe r6775 Tota l Tie r1 Cost s 8592 5 Tie r2 Cost s (Combine d Test s - Combustio n an d Evap. ) 681300 Adminstrativa/Repor-n g Cost s (Tiers 1 an d 2 ) 2633 5 Tota l Gasolin e - Non-Baselin e CategoryCos t79356 0

T l HCategory : Gasolin e - Atypica l Assumption s fo rtesting : Combustion : Al l Tie r1 an d Tie r2 Testin g Necessar y Evaporative : Non e Tie r1 Cost s Literature Searc h Acquisitio n Cost Mileag e Accumulatio n Combustio n Em. GenVChar

. (Cat ) Combustio n Em

. Gen./Char

. (Non-cat ) Tota l Tie r1 Cost s Tie r2 Cost s (Combine d Test s - Combustio n Only) Adminstrative/Reportin g Cost s (Tiers 1 an d 2 ) Tota l Gasolin e Atypica l CategoryCos t 700 0 3000 0 4800 0 3005 0 2850 0 14355 0 35210 0 2633 5 52198 5

Category : Diese l - Baselin e Assumption s fo rtesting : Combustion : Em

. Char , require d fo rH C

Assum e Neurotoxicty/Teratolog ytestin g necessar y Evaporative : Non e Tie r1 Cost s Literatur e Searc h Acquisitio n Mileag e Accumulatio n H C Combustio n Em

. Analysi s Tota l Tie r1 Costs 2100 0 3720 0 2750 0 1300 0 9870 0
Tie r 2 Cost s Adminstrative/Reportin g Costs (Tiers 1 an d 2) Tota l Diese l - Baselin e CategoryCos t 31910 0 2633 5 44413 5
T l 0 0Category : Diese l - Non-Baselin e Assumption s fo rtesting : Combustion : Al l Tie r1 an d Tie r2 Testin g Necessar y Evaporative : Non e Tie r1 Costs Literature Searc h Acquisitio n Cost Mileag e Accumulatio n Combustio n Em

. GenVChar

. Tota l Tie r1 Cost s Tie r2 Costs (Combine d Tests -Combustio n Only ) Adminstrative/Reportin g Costs (Tiers 1 an d 2 ) Tota l Diese l •Non-Baselin e Categor yCost 700 0 3720 0 2750 0 3470 0 10640 0 33940 0 2633 5 47213 5

Category : Diese l - Atypica l Assumption s fo rtesting : Combustion : Al l Tie r1 an d Tie r2 Testin g Necessar y

- Evaporative : Non e Tie r1 Costs Literature Searc h Acquisitio n Cos t Mileag e Accumulatio n Combustio n Em

. GenVChar

. - FT P Tota l Tie r1 Cost s Tie r2 Costs (Combine d Tests - Combustio n Only) Adminstrative/Reportin g Costs (Tier s 1 an d 2 ) Tota l Diese l - Atypica l Categor yCos t 700 0 1660 0 19140 0 4540 0 26240 0 33940 0 2633 5 62813 5

T l C OCATEGORYCOST S FO R BUSINESSE S SUBJEC TT O SMAL LBUSINES S PROVISION S Basellne/Non-Baselln e Categorie s (No tfue l specific ) Assumptions : Require d t o submi tnotificatio n informatio n Administrative/Managemen tCost s Cost/Hou r4 9 No

. ofHour

s 3 Tota l 147 Professional/Technica l Cost s Cost/Hou r3 3 No

. ofHour

s 8 Tota l 26 4 Clerica l Costs Cost/Hou r1 5 No

. ofHour

s 1 Tota l 1 5 Tota l Estimate d Registratio n Cos tfo rBL/NB L S B 42 6

T l oGasolin e Atypica l Category Assumptions : Require d t o complet e Tie r1 requirements Tie r1 Costs Literature Searc h Acquisitio n Cost Mileag e Accumulatio n Combustio n Em

. GenVChar

. (Cat. ) Combustio n Em

. GenVChar

. (Non-cat. ) Tota l Tie r1 Costs 700 0 1500 0 2400 0 3005 0 2850 0 10455 0 Tota l Administrative/Reportin g Cost s Tota l U L Gas - Atypica l Ca tCos t(n o Evap) fo rS B 944 9 11399 9 Diese l Atypica l Category Assumptions : Require d t o complet e Tie r1 requirements Tie r1 Costs Literature Searc h Acquisitio n Cost Mileag e Accumulatio n Combustio n Em

. GenVChar

. Tota l Tie r1 Costs Tota l Administrative/Reportin g Cost s Tota l Diese l Atypica l Ca tCostfo rS B 700 0 1860 0 19140 0 4540 0 26240 0 944 9 27184 9P.1 2



## Appendi xB

Summar y o f Biologica l Tes t Cost sP.1 3

Tie r 2 Biologica l Tes t Cos t Dat a Th e Tie r 2 biologica l tes t cos t estimate s ar e base do na modifie d90-day

subchroni c toxicit y stud y whic hrequire s a 5-da y pe r wee krepea t inhalatio nexposur e usin gapproximatel y 34 0 rats . Figur e A- l i nthi s appendi xprovide s anoverview o f thi s tes t and a genera l outlin e o f th e exposur e timin gandth e sequenc e o f eventa . Specifi c test s fo r carcinogenicity , mutagenicity , neurotoxicity , andteratogenicity/reproductiv e effect s mak e us e o f th e same ra t population . Therefore , coa t estimate s for mos t o f th e healt heffect s test s liste di nthi s appendi xar e incrementa l t o th e cos t o f th e subchroni c inhalatio ntoxicit y assay describe dabove . Tabl e A- l provide s estimate s o f th e cost s associate dwit hth e modifie dsubchroni c inhalatio ntoxicit y assay . Tabl e A- 2 estimate s th e cost s associate dwit ha Fertility/Teratology stud y whic hrun s concurrentl y

wit hth e abov e inhalatio nassay . Tabl e A- 3 estimate s th e cost s associate dwit ha modifie dSalmonell a mutagenicit y assay whic hi s independen t o f th e othe r assay s i nthi s scenario . Th e informatio npresente di nthes e table s wa s derive dfro m cos t estimate s develope dfo r th e Toxi c Substance s Contro l Ac t (TSCA ) healt heffec t guideline s foundi n4 0 CFR , par t 798 , andwer e provide db

y th e EF A

Offic e o f PollutionPreventionandToxi c Substance s (OPPTS) 1 . Th e table s show

th e numbe r o f hour s andcos t o f direc t labo r wit h facilit y

overhea dadded , direc t cos t o f supplies , genera l an d administrativ e fe e calculatio nfo r th e tester, anda fee-for-profi t calculation . Thes e ar e al l component s o f th e estimate dfina l cos t calculatio nfo r th e particula r healt heffec t test . Th e cos t estimate s includ e tota l estimate dhour s pe r worker , hour s pe r task , rat e o f pa y

pe r worke r (adjuste dup10 % fro m 199 0 estimate s for inflation) , andcompute dcos t pe r worker . Direc t cost s o f testing , overtime , supplies , contracte dlabor , etc. , ar e describe di nterm s o f unit s neede dto complet e th e testing , cos t pe r unit , and compute dcos t pe r item . Analytica l chemistr y i s a bes t estimat e o f "typical " sampl e verificatio nandanalysi s costs . Neurotoxicit y

testin gi s comprise do f th e Glia l Fibrillar y Acidi c Protei n(GFAP ) assay anda histopathologi c examinationo f nerv e fiber s i nth e tes t animal . Th e cos t estimat e fo r th e neurohiatopatholog y portio no f Neurotoxicit y testin gi s $42,00 0 an d i s derive dfro

m "Neurotoxicity : Identifyin gandControllin gPoison s o f th e Nervou s System . Ne w Development s i nNeuroscience. " Congres s o f th e Unite dStates , Offic e o f Technology Assessment , 1990 , pag e 22 5 (attached) . Teratologi c effect s ar e teste dunde r th e Fertilit y Assay/Teratolog y

guideline . Carcinogenicit y andmutagenicit y ar e covere dby

th e Salmonell a mutagenicit y assay (Tabl e A-3) , th e

X U.S . EPA , OPPTS , "Cos t estimate s fo r TSC A Tes t Guidelines" , Memorandu

m fro m Da nAxelra dto Sher i Dunatchik , June , 1991 .P.1 4

Sister Chromati dExchange (SCE ) assay , an dth e Micronucleu s (MN ) assay . Cos t estimate s fo r th e GFAP , MN , an

dSCE assays are summarize

dJbelow :

no . o f tes t sample s person-hours/sampl e hourl y rat e ($US ) estimate dfina l cos t ($US ) GFAP 4 0 2. 5 3 6 360 0 M

N 4 0 2. 0 3 6 290 0 SC E 4 0

5. 0 3 6 720 0

### Figur e 6-1

. Suggeste d Timin g an d Organizatio n o fTie r2 Studie s

Acclimatizatio n Exposur e Analysi s An d Cullin g

25 ? + 25d * -Exposur e fo rSubchroni c Study (Genera l Toxicit

van d Othe rEndooints

t



# _T•
•- 2 - 1 0 1 2 3 4 5 6 7 8 9 1 0 1 1 1 2 1 3 1 4
* > *



### i 2 5 ? 1(Exposure ' Exposur e fo rFertility/TeratologyStudies end s at Gestatio n Da y15 ) i Estrou s Cycl e \ 1 Analyses '

I Matin g (Terminationj (w / above d" ) (Gestatio n Da y20 ) 5d"+ 5 9 Perfuse d lo r neuro , testis , lun g histology 20d % 2 0 ? Fixe d fo r genera l histology

— l



# 1 ' 5 d V5 * Tissue s fo r GFAP , MN , SC E

Fetal/Uterin e Analysi s 20-2 5 pregnancies NOTE : Thi s diagra m illustrates testin g aton e dosag e level , usin g 7 5 animals . Complete Tie r2 requires testin g atfou r dosag e level s (high , medium , low , an d control) , requirin g a minimu m o f30 0 animal s (4 x75) , plu s a n additiona l grou p o f2 0 animal s exposed a tth e hig h dose an d hel d 2 8 days fo rstudyo frecover ypotential . Timin g o

fSalmonell a mutagenicit

yassa yi s independen to

fthi s testin g scenario .P.1 6

Tabl e g- 1 : Componen tCosts o f90-da ySubchroni cInhalatio n Assa y Protoco l estimte : Rat , subchroni cinhalatio n assay : 1 3 weeks-5days/w k Direc tlabo rTotal

. Hrs

. Hrs./Tas k Wage/Hr

. Cos

t($) StudyDir./Ph D Tox

. Q.A

. Inspecto r Boar d Cert

. Pathologist Slide Evaluation Supervise

Necropsy La b anima l Vet

. Clinica l Chemist Clinica l La b Tech

. Histologist Histolog yTech

. Snr

. Anima l Tech

. Set-up Compd. prep. Data Record Keep. Necropsy Exposure Anima l Tech

. Setup Body WtsJObserv. Necropsy Exposure Bleeding Anima l Caretake r(2 ) Room setup Bedding Change Room Maintenance Cage cleaning Feeding Washing Feeders, Clean chamber Hematologist Biostatisticia n Repor tWriter/Data Word Process/Typis t Compute rCode r Subtota l Overhea d Hrs

. X225 % 6 0 15 0 6 1
2 5 5 0 3 0 15 4 8 0 24 1

63 5

38 9

6 0 8 4 1 1 3 1 6 6 0

15 0 5 4 7 2 5 5 0 3 0 15 4 8 0 2 0 1 5 2 3 7 17 6 2 0 4 0 1 5 55 0 1 0 1 5 2 4 2 0 3 0 2 5 2 5 25 0 6 0 8 4 1 1 3 1 6 37.9 8

15.3 3 43.6 3
25.9 2 11.7 9 10.9 3 11.4 4 9.7 1 10.8 6

8.81

7.5 5

12.4 2 25.3 9 13. 6 10.0 8 11.6 4 2278. 8

2299. 5 2661.4 3
64 8 589. 5 327. 9 1761.7 6 776. 8 2617.2 6

5594.3 5

5873. 9

745. 2 203.1 2 557. 6 131.0 4 186.2 4 240 2 240 2 27252. 4 61317. 9
Tota l Direc

tLabor 88570. 3P.1 7

Tabl e B-1 : Componen tCosts o f90daySubchroni c Inhalatio n Assay , cont . Protoco l Estimate : Rat , Subchroni c inhalatio n assay : 1 3 weeks-5days/wee k
Othe rDirectCosts Overtime : Animal Technicians Rats Fee d Beddin g Disposables Histologysupplies Clinica l path , supplies Vet . ophthalmologist #o f

La b Supplies (10 % o

fSubtot . Di rLabor

) TOTA L ahe rD.C. s TOTA L COS T Gen' l + Admin.(22% ) SUBTOTA L FE E (20% ) Estimated testcos

t Units U n 150 34 0 10 6 205 0 305 1 1 2 tCos t

4.4 1 9.3 5 22. 5 0.2 5 5. 5 144 0 108 0 100 0 Cos

t($ )
661. 5 317 9 238 5 512. 5 1677. 5 144 0 108 0 200 0 2725.2 4 15660.7 4 10423 1 22930.8 3 127161. 9 25432.3 7 152594. 2 Analytica l chemistr

y EST D FINA L COS T 2481 6 177410. 2P.1 8

Tabl e 8-2 : Componen tCosts o fFertilityAssessment/Teratolog ywithi n Subchroni c Inhalatio n Assa

y Protoco l Estimate : ~ Rat , FertilityAssessment/Teratology : 1 3 weeks , 5 days/wee k
Direc tlabo r StudyDir./Ph D Tox

. Q.A

. Inspecto r Cert' d Pathologist Supervise

Necropsy La b anima l Vet

. Snr

. Anima l Tech

. Set-up Matings/Observation Data Record Keep. Necropsy Estrus/Cell

Eval. C-Sections Fetal Evaluation Anima l Tech

. Setup Matings/Observation Necropsy Breeding Estrus/Cell

Eval. C-Sections Fetal Evaluation Biostatisticia n Repor tWriter/Dat a Word ProcessTTypist Compute rCode r Subtota l Overhea d Hrs

. X225 % Tota l Direc

tLabor Tota l Hrs

. 8

3 1 4 4 22 6

34 0

3 1 8 7 8 1038 Hrs/Tas k

! 8 3 1 4 4 1 0 62 8 7 5 2 2 0 6 7 1 5 9 0 2 0 2 8 8 0 4 0 6 7 3 1 8 7 8 1038 Wage/Hr

.

37.9 8 15.33 43.6 3 25.9 2 10.8 6

8.8 1

25.3 9 13. 6 10.08 11.64 Cos

t($) 303.8 4 475.2 3 174.52 103.6 8 2454.3 6

2995. 4

76.1 7 244. 8 70.5 6 • 93.1 2 6991.6 8 15731.2 8
22722.9 6P.1 9
Tabl e fi-2: Componen tCosts o fFertilityAssessment/Teratolog ywithi n Subchroni c Inhalatio n Assay , cont
. Protoco l Estimate : Rat , FertilityAssessment/Teratology : 1 3 week-5days/wee k
Othe rDirec

tCosts # c fUnits Un i Fixitive s Stain s Disposable s La b Supplie s (10 % o

fSubtot

. Dir

. Labor

) TOTA LOthe rD.C. s TOTA LCOST Gen' l + Admin.(22% ) SUBTOTA L FE E (20%) Estimate d tes tcost Analytica l chemistr

y Estimate d Fina l Cost 1 1.5 63 tCos t

66 0 11 0 5. 5

1700 Cos

t($) 66 0 165 346. 5 699.1 7 1870.6 7 24593.6 3 5410. 6 30004.2 3 6000.8 5 36005.0 8

37705.0 8P.2 0

Tabl e 8-3 : Componen tCost s o fSalmonell a MutagenicityAssay("Ame s Assay" ) Protoco l Estimate : Salmonell a typhimuriu m Revers e Mutatio n Assay

- (DirectPlat e Incorporatio n Method )
Direc tLabo r Stud yDirector/PhD

. Q.A

. Inspecto r Geneticis t Plate Counting La b Technicia n Setup Agar Ovrly/Plating Repor tProcTTypin g Compute rCodin g SUBTOTA L Overhea d (225 % dir

. labor) Tota l DirectLabo r Othe rDirectCost s (ODC ) Bacteri a Plates/Medi a Disposable s La b Supplie s (0. 1 ofSUBTOTAL) TOTA L ODC' S TOTA L Gen'l/Admin

. (0.2 2 ofTOTAL ) Subtota l Fee (0. 2 o fSubtotal ) TestEstimat

e Analytica l Chem . Estimated Fina l Cos

t Tota l Hrs

. # ofUnit s Hrs./Tas k Costpe rUni tWage/Hr

. Cost($ ) 5 3 9 2 0
3 1

4 1

1.2

1.2 2. 4 5

3

7 1 3 3 1

4 1

2 5

30 0 5 29.0 8 15.3 3 19.0 3 145. 4

45.9 9 171.2 7 10.9 3 218. 6
10.0 8 11.6 4 30.2 4

11.64 623.1 4 1402.0 7
2025.2 1

3 0 36 0 1 2 62.3 1
464.3 1 2489.5 2 547.6 9 3037.2 1 607.4 4
3644.6 5 1020 4664.6 5Chapttr»-£n*omi rConsUkndmsm RegaJatrts Nontoxic Suiamnca • 22 5 '.2 1

ttatftggPrc<oc^fCTWMc^Ct_I-t»n___IVNM5oMoH>d

_K-uoMKioryT W

• « ^^"i^---^^^^-"----_---____-W---»«^__________t_______^--»-«-^^^-^-«^j_^«_^-__^_i_

. SshaduM . ftyistanriCcflmt u Otwwjunt

iUofi rN«M - Opm n ; . Sentr yAaMt

ypeWofl

yB*sflo

r XXX X X X aitfwert o Mrtitni i xx x ******* XX SfrtMriOO M X XX (tntitont XxX flOUROK* Oflfl p fj

fIxAMAfl fAetSMflmflt* 1MB L iMHt n nenpe

e m rn wruiniiie e m r*idm l Toiirn y

tm___k*^^tti

^£ r *m_________m

Mfj t taoMRfc ; o m (H P tGOOt T•• . Ifcdetyl M

BtfttCet t t»*4?. 2 U « 7 •HVM1 J 

### •wa s •j-im o 23AA-7MJ lHWtpBWNQ ypg^ B •flRtMtv4Brst v Jt^te ^mBfw V(VM^I^ W Tltttl 8 J^itinOo^EiMBW^ierAnttMlTWdty l

M m Ba tC M lota ) Con&M M Wi n NturarandtyEvttuttion a to r1 W t

nvuramx

yW KWIIIH U ooso

t Ajnotont J Bsav yAdfct

y I1.1-8 U S1.M U 1.141 4 1*11 J L M U H-11 J 2.742 4 2.1-

1 I J N AN

A 9 M I 4A4 U NaaoP*Wog y I4.7-It7.f t 4.M71 J ootft

w Btfwito r N A N A N A N A 11.0-80. 3 N A !MComMnMWtt)M«»otoxicftyEV«lu«1lora1or10t t atftttft ) NWCRns yHH\II U MINU S QMB I Furttn M P Mtt y Cortrats tUedk n wcrenwn

t U M *Nu » OMMJ M Tat

J MBPK M MPM J ptpnoo

yMnmo rINJMIM B 4IMB * taste* au m itar - ntor o14 , •ubrfw* : «•(»• » » acor r1

~ — ~ im »
•dUi i in n nip i iii>mw§w>«MlfcWM , 

### NEUROTOXICITYTES T COST S AND INNOVATION I tant et ottttft ttb ennpect A o f ttstia gte neurotoxicit

ya nhunvenotit s tb tdrag , pwtiddt , uxlcncnnc«llfldo«ri«ittUi*««l»ltodacribeib e poem s o f

iflvvfttio tfardrag , periods , to d chtmict lproducts. WUt tdiet s t ncarttf ntimilsri * ties unoa gtb tthroe, tha ttr einporttn teconomic 

# S T 7«.1( 9 79.1(8 ) 

### « W 11194 ) 1 H

23 5 4 2 4 1 7% 3 7

betwee nth edevelopmen tproces sfo r ne wchemictl s tfidtha

ifo rne wdtags orpesticides . i Dntt %wi?%tikfdiDfftbpwuni Th ma tmto ysiffltltrhktintheprocess o f developingnewdmgf

ttn dpesticide* , Theke y tetongoverningthtpatter nof innovtrionh

idies e industrie s tradiehighcosts sndlon gdevelopmen t timetexperiencedbo mdiscover yo f ftnewcom potm dtocoenmerdtiitttio oo f

i tHuiidiedsofoc w

/•.^>.^- |tte^twawTe|> ^y*.^!w.) • "•w.i.,;-. . w«>.

202260693 2 ":7.".«.-'. , - , ! I .

I i

i \ ! i i

I :

01-22-9 3
. . :9PM't