RTI International is a trade name of Research Triangle Institute TO: Shaun Ragnauth, U.S. EPA

FROM: Brooks Depro

DATE: June 22, 2010

SUBJECT: Mandatory Greenhouse Gas Reporting: Ch anges in National Cost Estimates Associated with the Pro posed Notice of Revisions

On October 30, 2009, EPA promulgated the fina l rule titled: Mandatory Reporting of Greenhouse Gases (74 FR 56259), under the authority of Sections 114 and 208 of the Clean Air Act. The final rule (Part 98) requires repor ting of greenhouse gas (GHG) emissions and other relevant information from certain sources in the economy. Data collection begins in the 2010 calendar year with the first reports submitted by March 31, 2011, and annually thereafter by that deadline.
Following publication of the rule, EPA has been working closely with owners and operators of facilities subject to the rule to communicate reporting requirements. Through these discussions, EPA has identified specific sections of the final ru le that were either not clear, or did not have the intended effect. EPA is proposing to am end specific provisions in the greenhouse gas reporting rule to resolve issues and questions raised during implemen tation, and to correct technical and editorial errors th at have been identified sin ce publication. This memorandum documents changes in the national cost esti mates associated with the proposed notice.

Additional First-Year Cost Associat ed with the Review of Revisions
Provisions
During the first year of the Greenhouse Gas Re porting Program (GHGRP), EPA anticipates all reporting facilities would need to review the amended provisions associated with the notice of revisions. To estimate these costs, EPA assume s an additional 3 hour burden for an industrial manager using the loaded labor rate for an industrial manager ($71.03) 1 . Multiplying the cost per facility (3 × $71.03 = $213.09) by the estimated affected population, the total additional first year costs are estimated to be $2.5 million (2006$).

1 A complete description of the labor cate gories and labor cost methodology is describe d in Regulatory Impact Analysis for the Mandatory Reporting of Greenhouse Gas Emissions Final Rule (GHG Reporting) (EPA, 2009, p. 4-2 and 4-3). Available at: http://www.epa.gov/climatechange/emissions/downloads09/GHG_RIA.pdfTable 1. Additional 1 st Year Changes Associated with Review of Revisions Provisions (million, 2006$)

Number of Facilities
Final MRR 10,152 F-Gas: Subparts I, L, OO, SS 398 Subpart RR: 89 Subparts: T, FF, TT, and II: 1,082 Total Population Affected: 11,721 Cost per facility (3 hours × $71.03) $213.09

Total 1 st Year Costs: $2.5 million

Subpart NN: Local natural gas distribution compani es (LDCs)
EPA proposes to amend Part 98 to require all LDCs that deliver 460,000 thousand standard cubic feet (mscf) or more of natural gas per year to be required to report. EPA proposes this capacitybased threshold because a capacity-based thresh old would be more familiar to LDCs. Owners and operators of LDCs know how much natural ga s they deliver to their customers and it would, therefore, be easier for facilities to determine if they are subject to the rule, than if the threshold were emissions-based. The proposed threshol d is approximately equivalent to 25,000 mtCO 2 e.
Under the new reporting threshold, the number of covered LDCs falls by 848 facilities (1,207 to 359.) EPA anticipates many of thes e facilities are potenti ally small entities; as a result, the new threshold will likely reduce the number of sm all entities covered under Part 98. In the Regulatory Impact Analysis for the Mandatory Reporting of Greenhouse Gas Emissions Final
Rule 2 , the estimated reporting cost per facility was approximately:

2 Available at: http://www.epa.gov/climatechange /emissions/ghgrulemaking.h tml

.First Year: ($2,600 +1,700) = $4,300 Subsequent Years: ($1,300 + 1,700) = $3,000

This im plies the following reductions in the national cost estimates:
First Year: 848 × 4,300 = $3.6 million and Subsequent Years: 848 × 3,000 = $2.5 million.

Subpart C: Tier 4 Requirements fo r Units that Combust Greater than
250 Tons of Municipal Solid Waste (MSW) per Day
In Part 98, EPA finalized a threshold of 250 t ons per day of MSW, along with the requisite monitors to determine who had to follow Tier 4, versus who could use Tier 2. Units greater than 250 tons of MSW per day, that have a gas monito r of any kind, or a flow monitor, or both, and meet the other requirements in 98.33(b)(4)(ii) were required to use Tier 4. Units equal to or less than 250 tons of MSW per day, that have a flow monitor and a CO 2 concentration monitor, and meet the other conditions in 98.33(b)(4)(iii) also had to use Tier 4. The 250 tons per day threshold was based on New Source Perfor mance Standards (NSPS). Upon further consideration, EPA determined that although the threshold may be appropriate for NSPS that does not necessarily mean it is appropriat e for a GHG reporting program. Based on these concerns, EPA proposes to amend Part 98 to cha nge the 250 tons per day threshold to 600 tons per day, based on EPA analysis that this value is approximately equivalent to the 250 mmBtu/hr heat input requirements for othe r large stationary combustion units (please see the Background Technical Support Document for Revisions EP A-HQ-OAR-2008-0508). Units that do not meet the 600 tons per day trigger, and do not have th e requisite monitors, could use Tier 2. EPA believes that this proposal still meets the desired goal to obtain high quality data from larger units, while not applying unnecessary burden. With this proposed amendment, general stationary combustion units wi ll be subject to similar thresholds and conditions.
Under the new threshold, EPA believes 87 general unspecified industrial combustion units will move from Tier 4 (CEMS-Add flow monitor only; $25,411 per unit firs t year and $18,090 per unit in subsequent years) to Tier 2 costs ($5,500 per unit)—a net reduction of $19,111 per unit and $12,590. This implies the following reduc tions in the national cost estimates:

First Year: 87 × $19,111 = $1.7 million.
Subsequent Years: 87 × $12,590 = $1.1 million.
Summary National Cost Change s Associated with the Proposed Notice of Revisions As shown in Table 2, the National Cost esti mates decline from $132.0 million to $129.2 million (two percent) in the first year and from $89.1 m illion to $85.5 million (4 percent) in subsequent
years.Table 2. Summary of Cost Changes Associat ed w ith the Proposed Notice of Revision (million, 2006$)
Variable First Year Subsequent Years Mandatory Reporting Rule National Cost Estimate (Private and Public) $132.0 $89.1 Review of Revision Provisions $2.5 $0 Subpart NN Change

— $3.6

— $2.5 Subpart C Change

— $1.7

— $1.1 Revised National Cost Estimate $129.2 $85.5

Other Amendments in Proposed Notice of Revisions

EPA is proposing several other am e ndments to various provisions in Part 98. EPA has estimated that on the whole, these proposed revisions do no t significantly change the overall costs of Part 98. The other proposed amendments could be categorized as follows:

 Proposed rule provides additional flexibility for reporters based on questions raised during implementation.

 Proposal clarifies existing data reporting requirements.

 Proposal would require facilities to report basic facility ID information that they already know.

 Proposal requires reporters to report a data element for which there was a general recordkeeping requirement, but was not pr eviously required to be reported.

 Previously Part 98 required you to calculate something, but it was not required to be reported. Proposal requires the da ta element to now be reported.

 Propose to delete reporting requirements in most subparts

 Renumbering of data reporting elements in most subparts.

See Appendix 1 for an elaboration on each of these changes and examples from the proposed rule.

### Appendix 1: Categories of Proposed Changes

1. Clarification of existing data reporting requirements: There is currently a data reporting requirement in Part 98. However, based on perceived confusion among reporters, EPA is providing additional clarity on what was intended. There is no change in burden from these proposed changes.

Requirement Change in Data Reporting Elements Subpart G: 98.76(b)(6) requires reporters to report the sampling result s of carbon content of petroleum coke as determined for QA/QC of supplier data. The data reporting element is amended to clarify that the reporti ng element applies to feedstock, this may be petroleum coke, but there are also other po tential feedstocks.

Subpart C: 98.36(d)(1) requires that f or stationary combustion un its that either are subject to the Acid Rain Program or not in the Acid Rain Program but monitor and report CO 2 mass emissions year-round according to 40 CFR part 75, reporters re port certain unit level information. The data reporting element is amended to clarify that the reporti ng element applies to units subject to subpart D, which is a more simplified way of stating who the provision

covers.

2. Proposed rule provides additi onal flexibility for reporters based on questions raised during implementation. With the additional flexibility comes additional data reporting requirements, including identify ing which approach the reporter is taking and any new data reporting elements associated with the new a pproach. Because the new approach is an option there is no increase in burden associated with implementing the option because reporters are not required to do so.

Requirement Change in Data Reporting Elements

Subpart C- 98.36(e)(2)- previous rule required facilities subject to use default HHVs found in Table C-1. We propose to provide additional flexibility to use site-specific HHVs. - new data reporting requirements to clarify that when you use a site-specific HHV, you must also report that HHV value.

Subpart X- 98.243(c) (5)(i) – add the option to use standard conditions for the molar volume conversion of either: 849.5 scf per kg-mole at 68 °F and 14.7 PSIA or 836.6 scf/kg-mole at - New data reporting element: report standard temperature at which gaseous feedstock and products volumes used were determined.60 °F and 14.7 PSIA). Subpart X- 98.246(a)- allow use of alternative methods than those listed under limited circumstances. The burden analysis estimated that they had to follow a method and indicate which method they used. - new data reporting elem ent to report/provide the: name or title of analystical method, copy of the method and explanation of why alternative is needed.

Subpart Y – 98.253(b)(1)(ii)(A) – add the option to calculate CO2 emissions from flares using a different equation. - New data reporting elements: the inputs to the new equation (e.g.,the number of carbon containing compounds other than CO 2 in the flare gas stream) Subpart Y : 98.253(c)(2)(ii) – add an alternative option to calculate the exhaust flow rate of the fluid cat alytic cracking unit regenerator. The new option allows the calculation to be performed using a nitrogen balance rather than an inert balance. New data reporting elements: the inputs to the new equation (e.g., Annual average flow rate of inlet air, Annual average flow rate of oxygen-enriched air)

Subpart PP- 40 C.F.R. § 98.423(b)- add an option where CO2 is s upplied in containers, that the reporter can use weigh bills, scales or load cells as an alternative to the flow meters. - Clarify existing reporting requirement- clarify that data could be reported from the flow meter or the mass of CO2 from CO 2 streams that deliver CO 2 to containers.3. Asking the m to report basic facility ID information that they already know. These are new reporting requirements, but not new data collection efforts. This is common information, no assumed burden for data collect ion. The revisions would now just require them to report.

Requirement Change in Data Reporting Elements Subpart A- Ask for basic information on facility, organization or entity reporting. - add general reporting requirements on 1. Facility or supplier ID 2. Organizational name (company affiliation/employer) for the designated representative 3. Organizational name (company affiliation/employer) for the alternative designated representative Subpart C- Ask for unit ID information based on information already available in other
programs. 1. Add Acid Rain Program Indicator

Subpart X- Ask for basic facility information Type of Petrochemical Produced Subpart Y- Asking for information on the type of sulfur recovery pl ant (e.g., non-Claus sulfur recovery) Description of the type of sulfur recovery plant.

Subpart Y: Asking which of two options were chosen 1. Asking whether daily or weekly measurement periods were used 2. Asking which method was used to calculate emissions4. Require reporters to report a new data element for w hich there was a general recordkeeping requirement, but not lis ted in the respective subparts. These are new reporting requirements, but not ne w data collection efforts. The burden associated with collecting the data was accounted for in the ICR. The facilities would also have been required to retain the data as a record unde r the requirements of the specific subpart, or under the general recordkeepi ng requirements under 98.3(g). The revisions would now just require them to report.

Requirement Change in Data Reporting Elements Subpart C- Requirement to add “methodology start date and end date”. Rule is clear under 98.3(e) you needed to provide a written explanation of why a change in methodology was required. We felt it necessary, for the purposes of verification, to make clear that this description of why , should include when the change actually takes place. - Add “methodology start date” and “methodology end date”

Subpart X. Identify petrochemical unit ID98.3(g) (1) would have re quired the facility to report “a list of all units , operations, processes, and activities for which GHG emissions were calculated” - Add “Unit ID”5. Part 98 req uires them to calculate somethin g, but it was not required to be reported. These are new reporting requirements, but not new data collection efforts. The burden associated with collecting the data was accounted for in the ICR. The facilities would also have been required to retain the data as a re cord under the requirem ents of the specific subpart, or under the general recordkeep ing requirements under 98.3(g). The revisions would now just require them to report.

Requirement Change in Data Reporting Elements Subpart C- had to calculate the tota l heat input, by fuel, when implementing equation C-10 in the final rule. The heat input was not required to be reported. Although note that data would have been required to be retained under 98.3(g)(2). This proposal now requires them to report heat input. - 98.36(d)(1)- add data reporting requirement for “The total heat input from each fuel listed in Table C-2 that was combusted during the year, expressed in MMBtu.”

Subpart C- New proposal to report the number of units served by the common pipe. Before reporters had to report data on the common pipe, including the ID numbers of the units and the maximum rated heat capacity of each unit, but they didn’t actually have to report the number of units. Not a new data collection effort. - Number of units served by the common pipe.

Subpart Y- Had to report whether you use a measured value, a unit-specific emissi on factor or a default, and you had to report several pieces of information about the unit-specific emission factor , if applicable. We inadvertently left out the re quirement to report the unitspecific emission factor its elf. We are now not proposing to change the cal culation methods, but now have to report the data elem ent. Note that they would have had to retain this emission factor as a recordkeeping requirement per 98.3(2). - 98.256- add data reporting elements for unit specific emission factors for CH4 and N2O.6. Other

Requirement Change in Data Reporting Elements

Subpart G: Industry felt it was important to add a reporting element on the quantity of CO 2 supplied for onsite urea production, and the method use to quantify that CO2. This information is readily available from onsite process information needed for urea production, no data collection methods are required. CO2 from the steam reforming of a hydrocarbon or the gasification of solid and liquid raw material at the ammonia manufacturing process unit used to produce urea and the method used to determine the CO2 consumed in urea production.

Subpart OO- Have to submit a one time report that describes the concentration of each fluorinated GHG constituent in each fluorinated GHG product.

6. Propose to delete reporting re quirements in most subparts- (Stationary Combustion, Electricity Generation, Amm onia Production, Nitric Acid Production, Petrochemical Production, Petroleum Refining, S uppliers of Industrial Gases)

7. Renumbering in most subparts of data reporting elements- resulting from the additions/deletions described above.