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Economic Impact and Small Business
Analysis for the Standards of Performance
for Stationary Spark Ignition Internal
Combustion Engines and NESHAP for
Reciprocating Internal Combustion Engines

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                                                                   EPA-452/P-06-001

                                                                           May 2006
Economic Impact and Small Business Analysis for the Standards of Performance for Stationary
     Spark Ignition Internal Combustion Engines and NESHAP for Reciprocating Internal
                                 Combustion Engines
                                        By:
                                   Brooks Depro
                                  RTI International
                     Research Triangle Park, North Carolina 27709
                                    Prepared for:
                            John L. Sorrels, Project Officer
                   Innovative Strategies and Economics Group (ISEG)
                              Contract No. EP-D-06-003
                                 Task Order No. 0-2
                         U.S. Environmental Protection Agency
                      Office of Air Quality Planning and Standards
                   Innovative Strategies and Economics Group (ISEG)
                                   (MD-C339-01)
                          Research Triangle Park, NC 27711

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                                     CONTENTS

Section                                                                          Page
   1    Introduction	1-1
        1.1  Executive Summary	1-1
        1.2  Organization of this Report	1-2
   2    Industry Profile	2-1
        2.1  The Supply Side	2-1
             2.1.1  Equipment Production Costs	2-1
        2.2  The Demand Side	2-5
             2.2.1  Generators and Welding Equipment	2-5
             2.2.2  Stationary Pumps and Compressor Equipment	2-6
             2.2.3  Irrigation	2-8
        2.3  Industry Organization	2-8
             2.3.1  Engines: The Equipment Firm's "Make" or "Buy" Decision	2-9
             2.3.2  Distribution of Small and Large Firms	2-9
        2.4  Historical Market Data	2-12
             2.4.1  Price Trends	2-12
        2.5  Projections	2-14
   3    Economic Impact  Analysis	3-1
        3.1  Regulatory Program Cost Estimates	3-1
        3.2  Economic Framework	3-2
        3.3  Conclusion	3-3
   4    Energy Impacts	4-1
   5    Small Business Impact Analysis	5-1
        5.1  Description of Small Entities Affected	5-1
        5.2  Small Business Screening Analysis	5-1
        5.3  Assessment	5-3
   References	R-1
                                          in

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                               LIST OF FIGURES






Number                                                                     Page




   2-1  Engine Companies Employment Distribution, 2005 (N = 21)	2-11




   2-2  Engine Companies Sales Distribution (N = 24)	2-11




   2-3  Equipment Companies Employment Distribution, 2005 (N = 60)	2-12




   2-4  Equipment Companies Employment Distribution (N = 60)	2-13




   2-5  Price Trends for Equipment and Engines	2-15








   3-1  Long Run: Full-Cost Pass-Through	3-2
                                       IV

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                                 LIST OF TABLES

Number                                                                        Page

   2-1  Motor and Generator Manufacturing: 2002 and Earlier Years (Sbillion)	2-2
   2-2  Welding and Soldering Equipment Manufacturing: 2002 and Earlier Years
        (Sbillion)	2-3
   2-3  Pumps and Pumping Equipment Manufacturing: 2002 and Earlier Years
        (Sbillion)	2-4
   2-4  Air and Gas Compressor Manufacturing: 2002 and Earlier Years (Sbillion)	2-4
   2-5  Farm Machinery and Equipment Manufacturing: 2002 and Earlier Years
        (Sbillion)	2-5
   2-6  Generator Set and Welding Equipment Use by Industry:  1997	2-6
   2-7  Pumps and Compressor Equipment Use by Industry: 1997	2-7
   2-8  Number of On-Farm Pumps of Irrigation Water by Type of Energy:  1998 and
        2003	2-8
   2-9  Distribution of Engine and Equipment Production by Business Size: 2002 and
        Earlier Years	2-10
   2-10 Estimated Historical Unit Sales Data by Market: 1998-2002	2-14
   2-11 Projected Unit Sales Data by Horsepower Range: Selected Years	2-15

   3-1  Average Total Cost Per Engine: 2015 (2005$)	3-1

   5-1  Summary Statistics for SBREFA Screening Analysis	5-3

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                                      SECTION 1
                                  INTRODUCTION

       The U.S. Environmental Protection Agency (EPA) is proposing a new source
performance standards (NSPS) that would apply to new stationary spark ignition (SI) internal
combustion engines (ICE). New source performance standards implement section 11 l(b) of the
Clean Air Act (CAA) and are issued for categories of sources that cause, or contribute
significantly to, air pollution that may reasonably be anticipated to endanger public health or
welfare. The standards apply to new stationary sources of emissions (i.e., sources whose
construction, reconstruction, or modification begins after a standard for those sources is
proposed). The NSPS for stationary SI ICE would be promulgated under 40 CFR part 60, subpart
JJJJ.

       The regulatory action also proposes national emission standards for hazardous air
pollutants (NESHAP) from existing, new, and reconstructed stationary reciprocating internal
combustion engines (RICE) with a site rating of less than or equal to 500 horsepower (hp)
located at major sources and existing, new, and reconstructed stationary RICE located at area
sources. This action, when promulgated in a final rule, would meet EPA's statutory obligation to
address hazardous air pollutant (HAP) emissions from these sources under sections 112(d) and
112(k) of the CAA. The final NESHAP for stationary RICE would be promulgated under 40
CFR part 63, subpart ZZZZ, which already contains standards applicable to stationary RICE with
a site rating above 500 hp located at major sources.

       As part of the regulatory process of preparing this area source standard, EPA is required
to develop an economic impact analysis (EIA) and small entity impacts analysis for the gas
distribution industry. To support EPA's development of these  standards, EPA's Innovative
Strategies and Economics Group (ISEG) has conducted an EIA to assess the potential costs of
the rule. This report documents the methods and results of this EIA.
1.1     Executive Summary
       The key results of the EIA are as follows:
       •   Engineering Cost Analysis: EPA estimates total annualized costs of the NSPS will
          be $17 million for the year 2015. The total annualized costs associated with the
          NESHAP for 250 to 500 hp 4-stroke lean burn (4SLB) SI engines located at major
          sources will be $3 million for the year 2015. Both programs represent an annualized
          cost of approximately $20 million.
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       •   Market Analysis: The average total cost data per engine suggest percentage changes
          in engine prices may exceed 10% on average and range from 2% to 20%. Although
          these changes are large, economic theory and other EPA economic models of engine
          markets suggest demand for engines is inelastic and changes in consumption are
          likely to be small.
       •   Economic Welfare Analysis: EPA believes the national annualized compliance cost
          estimates provide a reasonable approximation of the social cost of this regulatory
          program.  The engineering analysis estimated annualized costs of $20 million in 2015.
       •   Energy Impacts:  EPA concludes that the proposed rule when implemented will not
          have a significant adverse effect on the supply, distribution, or use of energy.
       •   Small Business Analysis: EPA performed a screening analysis for impacts on small
          businesses by comparing compliance costs to average company revenues. EPA's
          analysis found that the ratio of compliance cost to company revenue falls below 1%
          for four of the five small companies included in the screening analysis. One small
          firm would have an annualized cost of more than 1% of sales associated with meeting
          the requirements; the estimated cost is between 3% and 4% for this small firm. No
          other adverse impacts are expected to these affected small businesses.

1.2    Organization of this Report

       The remainder of this report supports and details the methodology and the results of the
EIA:
          Section 2 presents a profile of the affected industries.
          Section 3 describes the estimated costs of the regulation and describes the EIA
          methodology and reports market and welfare impacts.
          Section 4 describes energy impacts.
          Section 5 presents estimated impacts on small entities.
                                          1-2

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                                      SECTION 2
                                 INDUSTRY PROFILE
2.1    The Supply Side
       In this industry profile, we discuss an important supply-side issue associated with
industries that manufacture equipment powered by SI stationary internal combustion engines:
production costs (e.g., labor and materials such as engines). Because the proposed rule will
change the costs of engines, we compare the costs of engine inputs with equipment product
value, other variable production costs such as labor and materials, and capital expenditures. This
cost information along with other information in this industry profile serve to inform the
economic impact and small business impact analyses included in this report.
2.1.1   Equipment Production Costs
       The equipment industries provide three broad services: power (generator sets and
welding equipment), pumping and compression, and irrigation. Similar to the industry
characterization approach EPA followed for the proposed Stationary Compression Ignition
Internal Combustion Engines New Source Performance Standard (NSPS)  (EPA, 2005), we rely
on industry data reported by the U.S. Census to provide an overview of equipment production
costs. Although industry definitions are broad and limit their ability to provide insight into
absolute expenditure levels, the statistics do provide  a reasonable proxy of the relative
importance of inputs in the manufacturing process.

       The U.S. Economic Census data provide production cost data by industry North
American  Industrial Classification System (NAICS)  codes. As discussed below, all of the
industries have similar distributions of production costs across materials, labor, and capital. As
shown in the discussion below, engine costs generally represent 1% to 2% of product value in
these industries.
2.1.1.1 Generator Sets and Welding Equipment
       The U.S. Economic Census classifies generator sets under Motor and Generator
Manufacturing (NAICS 335312). This industry comprises establishments  primarily engaged in
manufacturing electric motors (except internal combustion engine starting motors), power
generators (except battery charging alternators for internal combustion engines), and motor
generator sets (except turbine generator set units). It also  includes establishments rewinding
armatures  on a factory basis.
                                          2-1

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       As shown in Table 2-1, the variable production costs include materials (including energy)
and labor. Of these categories, materials (including fuel and energy) represent about half of the
total product value. Within the materials category, gasoline and other carburetor engines
Table 2-1.  Motor and Generator Manufacturing: 2002 and Earlier Years (Sbillion)
Year
2002
2001
2000
1999
1998
1997
Value of
Shipments
$9.1
$9.4
$10.0
$10.8
$11.6
$12.2
Cost of
Materials
$4.3
$4.5
$4.9
$5.4
$5.7
$6.0
Cost as a Share
of Product
Value (%)
47%
48%
49%
50%
49%
49%
Labor
$1.2
$1.2
$1.3
$1.4
$1.5
$1.5
Cost as a Share
of Product
Value (%)
13%
13%
13%
13%
13%
12%
Capital
$0.2
$0.2
$0.2
$0.3
$0.4
$0.3
Cost as a Share
of Product
Value (%)
2%
2%
2%
3%
3%
2%
Source: U.S. Bureau of the Census. 2004b. "Motor and Generator Manufacturing: 2002." 2002 Economic Census
       Manufacturing Industry Series. EC02-311-335312(RV). Washington, DC: U.S. Bureau of the Census.
       Table 1.

accounted for approximately 1.6% of product value in 2002. Labor expenditures accounted for
approximately 13%, and other costs, such as capital, transportation, marketing, and markup,
represented the remaining 40%.

       The U.S. Economic Census classifies welding equipment under Welding and Soldering
Equipment Manufacturing (NAICS 333992). This U.S. industry comprises establishments
primarily engaged in manufacturing welding and  soldering equipment and accessories (except
transformers), such as arc, resistance, gas, plasma, laser, electron beam, and ultrasonic welding
equipment; welding electrodes; coated or cored welding wire; and soldering equipment (except
handheld).

       As shown in Table 2-2, the variable production costs include materials (including energy)
and labor. Of these categories, materials (including fuel and energy) represented about 50% to
57% of the total product value in 1997 to 2002. Within the materials category, the Census did not
report gasoline and other carburetor engine costs.  Labor expenditures accounted for
approximately 11%, and other costs, such as capital, transportation, marketing, and markup,
represented the remaining 40%.
                                           2-2

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2.1.1.2 Pumps and Compressors
       The U.S. Economic Census classifies pumps and pumping equipment under Pump and
Pumping Equipment Manufacturing (NAICS 333911). This U.S. industry comprises
establishments primarily engaged in manufacturing general purpose pumps and pumping
equipment (except fluid power pumps and motors), such as reciprocating pumps, turbine pumps,
Table 2-2.   Welding and Soldering Equipment Manufacturing: 2002 and Earlier Years
            (Sbillion)
Year
2002
2001
2000
1999
1998
1997
Value of
Shipments
$3.8
$3.9
$4.2
$4.2
$4.3
$4.4
Cost of
Materials
$1.9
$2.1
$2.3
$2.3
$2.3
$2.5
Cost as a Share
of Product
Value (%)
50%
54%
55%
55%
53%
57%
Labor
$0.4
$0.4
$0.4
$0.4
$0.4
$0.5
Cost as a Share
of Product
Value (%) Capital
11% $0.1
10% $0.1
10% $0.1
9% $0.1
9% $0.1
11% $0.1
Cost as a Share
of Product
Value (%)
3%
3%
2%
2%
2%
2%
Source:  U.S. Bureau of the Census. 2004d. "Welding and Soldering Equipment Manufacturing: 2002." 2002
       Economic Census Manufacturing Industry Series. EC02-311-333992(RV). Washington, DC: U.S. Bureau
       of the Census. Table 1.

centrifugal pumps, rotary pumps, diaphragm pumps, domestic water system pumps, oil well and
oil field pumps, and sump pumps.

       As shown in Table 2-3, the variable production costs include materials (including energy)
and labor.  Of these categories, materials (including fuel and energy) represented about half of the
total product value in 1997 to 2002. Within the materials category, the U.S. Census did not report
gasoline and other carburetor costs. Labor expenditures accounted for approximately 9%, and
other costs, such as capital, transportation, marketing, and markup, represented the remaining
43%.

       The U.S. Economic Census classifies compressors under Air and Gas Compressor
Manufacturing (NAICS 333912). This U.S. industry comprises establishments primarily engaged
in manufacturing general purpose air and gas compressors, such as reciprocating compressors,
centrifugal compressors, vacuum pumps (except laboratory), and nonagricultural spraying and
dusting compressors and spray gun units.
                                          2-3

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       As shown in Table 2-4, the variable production costs include materials (including energy)
and labor. Of these categories, materials (including fuel and energy) represented 55% to 60% of
the total product value in 1997 to 2002. As with the pumps and pumping equipment category, the
U.S. Census did not report gasoline and other carburetor engine costs separately. Labor
expenditures accounted for approximately 8%,  and other costs, such as capital, transportation,
marketing, and markup, represented the remaining 35%.
Table 2-3.  Pumps and Pumping Equipment Manufacturing: 2002 and Earlier Years
            (Shillion)
Year
2002
2001
2000
1999
1998
1997
Value of
Shipments
$7.0
$7.4
$7.6
$7.2
$7.6
$6.7
Cost of
Materials
$3.4
$3.6
$3.7
$3.5
$4.0
$3.3
Cost as a Share
of Product
Value (%)
49%
49%
49%
49%
53%
49%
Labor
$0.6
$0.6
$0.6
$0.6
$0.7
$0.7
Cost as a Share
of Product
Value (%)
9%
8%
8%
8%
9%
10%
Capital
$0.2
$0.2
$0.2
$0.2
$0.2
$0.2
Cost as a Share
of Product
Value (%)
3%
3%
3%
3%
3%
3%
Source: U.S. Bureau of the Census. 2004c. "Pump and Pumping Equipment Manufacturing: 2002." 2002 Economic
       Census Manufacturing Industry Series. EC02-311-333911(RV). Washington, DC: U.S. Bureau of the
       Census. Table 1.

Table 2-4.  Air and Gas Compressor Manufacturing: 2002 and Earlier Years (Sbillion)
Year
2002
2001
2000
1999
1998
1997
Value of
Shipments
$4.8
$5.6
$6.2
$5.7
$5.7
$5.6
Cost of
Materials
$2.7
$3.0
$3.3
$3.0
$3.1
$3.1
Cost as a Share
of Product
Value (%)
56%
54%
53%
53%
54%
55%
Labor
$0.4
$0.4
$0.4
$0.4
$0.5
$0.5
Cost as a Share
of Product
Value (%)
8%
7%
6%
7%
9%
9%
Capital
$0.2
$0.2
$0.2
$0.2
$0.2
$0.2
Cost as a Share
of Product
Value (%)
4%
4%
3%
4%
4%
4%
Source: U.S. Bureau of the Census. 2004c. "Pump and Pumping Equipment Manufacturing: 2002." 2002 Economic
       Census Manufacturing Industry Series. EC02-311-333911(RV). Washington, DC: U.S. Bureau of the
       Census. Table 1.

2.1.1.3 Irrigation Systems
       The U.S. Economic Census classifies irrigation equipment under Farm Machinery and
Equipment Manufacturing (NAICS 333111). This U.S. industry comprises establishments
                                           2-4

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primarily engaged in manufacturing agricultural and farm machinery and equipment and other
turf and grounds care equipment, including planting, harvesting, and grass-mowing equipment
(except lawn and garden type).

       As shown in Table 2-5, the variable production costs include materials (including energy)
and labor. Of these categories, materials (including fuel and energy) represented 52% to 57% of
the total product value in 1997 to 2002. Within the materials category, gasoline and other
Table 2-5.  Farm Machinery and Equipment Manufacturing: 2002 and Earlier Years
            (Shillion)

                               Cost as a Share           Cost as a Share          Cost as a Share
          Value of     Cost of     of Product              of Product             of Product
   Year    Shipments   Materials    Value (%)     Labor    Value (%)    Capital   Value (%)
2002
2001
2000
1999
1998
1997
$14.7
$14.1
$13.5
$11.8
$16.5
$16.0
$7.7
$7.6
$7.7
$6.4
$8.5
$8.4
52%
54%
57%
54%
52%
53%
$1.3
$1.3
$1.4
$1.3
$1.5
$1.6
9%
9%
10%
11%
9%
10%
$0.3
$0.3
$0.3
$0.3
$0.4
$0.5
2%
2%
2%
3%
2%
3%
Source: U.S. Bureau of the Census. 2004a. "Farm Machinery and Equipment Manufacturing: 2002." 2002
       Economic Census Manufacturing Industry Series. EC02-311-333111(RV). Washington, DC: U.S. Bureau
       of the Census. Table 1.

carburetor engines accounted for approximately 0.9% of product value in 2002. Labor
expenditures accounted for approximately 9%, and other costs, such as capital, transportation,
marketing,  and markup, represented the remaining 39%.
2.2    The Demand Side
       The demand for equipment is derived from consumer demand for the services and
products the equipment provides. We describe uses and industrial consumers of these equipment.
2.2.1   Generators and Welding Equipment
       Generator sets provide power for prime, standby, and peaking power industrial,
commercial, and communications facilities. According to the latest detailed benchmark input-
output data reported by the Bureau of Economic Analysis (U.S. BEA, 2002),l NAICS 33415
(AC, Refrigeration, and Forced Air Heating) is the largest industrial user of generators (see
1 These data include all types of generators and welding equipment and are not restricted to equipment affected by
   the NSPS.
                                           2-5

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Table 2-6). Other industries include pumping equipment manufacturing, generators and welders
manufacturing, and machinery repair.

       The welding industry is considered a mature industry, and demand for this equipment
fluctuates with industrial activity (Lincoln Electric Holdings, 2006). BEA data suggest NAICS
811300 (Commercial Machinery Repair and Maintenance) is the largest user of welding and
soldering equipment (see Table 2-6). Other major users include fabricated metal manufacturing,
household goods repair, and other industrial machinery manufacturing.
Table 2-6.   Generator Set and Welding Equipment Use by Industry: 1997

Commodity lO-CodeDetail I-O Industry
Code Description Code
335312 Motor and generator 333415
manufacturing
811300
333911
335312
334119
333992 Welding and soldering 81 1300
equipment
manufacturing 332312

811400
333298
230220


lO-CodeDetail I-O
Description
AC, refrigeration, and forced air
heating
Commercial machinery repair
and maintenance
Pump and pumping equipment
manufacturing
Motor and generator
manufacturing
Other computer peripheral
equipment manufacturing
Commercial machinery repair
and maintenance
Fabricated structural metal
manufacturing
Household goods repair and
maintenance
All other industrial machinery
manufacturing
Commercial and institutional
buildings

Use Value
1,364.2
453.4
451.4
408.7
398.7
408.3
170.5

140.9
107.3
61

Direct
Requirements
Coefficients"
6.23%
1.38%
6.97%
3.46%
1.67%
1.24%
1.13%

0.57%
1.34%
0.03%

Note: The data include generators and welding equipment that is not affected by the proposed NSPS.
aThese values show the amount of the commodity required to produce $1.00 of the industry's output.
Source: U.S. Bureau of Economic Analysis. 2002.  1997 Benchmark Input-Output Accounts: Detailed Make Table,
       Use Table and Direct Requirements Table. Tables 4 and 5.

2.2.2  Stationary Pumps and Compressor Equipment
       The construction industry is an important user of pump and compressor equipment; as a
result, demand for this equipment fluctuates with construction activity. Oil field drilling and well
servicing applications are primary consumers of high horsepower equipment such as drills and
                                           2-6

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compressors. Demand in these areas is influenced by changes in fuel prices and changes in
overall economic activity.

       In Table 2-7, we use the latest detailed benchmark input-output data report by the Bureau
of Economic Analysis (U.S. BEA, 2002) to identify industries that use pumps and compressor
equipment. Again, these data include all types of pumps and compressor equipment and are not
restricted to equipment affected by the NSPS. Nonagricultural demanders of pumps and pumping
equipment include railway transportation, nonfarm single-family homes, and semiconductor
machinery manufacturing.  Major demanders of compressor equipment include construction of
Table 2-7.   Pumps and Compressor Equipment Use by Industry: 1997

Commodity IO-CodeDetail_I-O Industry
Code Description Code
333911 Pump and pumping 482000
equipment manufacturing
230110

333295

230210
213111
333912 Air and gas compressor 230110
manufacturing
333912
230130

336300
3261 9A

lO-CodeDetail I-O Description
Rail transportation
New residential 1 -unit structures,
nonfarm
Semiconductor machinery
manufacturing
Manufacturing and industrial
buildings
Drilling oil and gas wells
New residential 1 -unit structures,
nonfarm
Air and gas compressor
manufacturing
New residential additions and
alterations, nonfarm
Motor vehicle parts manufacturing
Plastics plumbing fixtures and all
other plastics products

Use
Value
508.4
208.1

173.7

92.6
77.7
211.9
115.0
56.1

50.0
50.0
Direct
Requirements
Coefficients
1.34%
0.12%

1.64%

0.34%
0.82%
0.12%
2.22%
0.10%

0.03%
0.08%
Note: The data include pumps and compressor equipment that is not affected by the proposed NSPS.
aThese values show the amount of the commodity required to produce $1.00 of the industry's output.
Source:  U.S. Bureau of Economic Analysis. 2002. 1997 Benchmark Input-Output Accounts: Detailed Make Table,
       Use Table and Direct Requirements Table. Tables 4 and 5.

single-family homes and additions and manufacturing of compressor equipment, motor vehicle
parts, and plastic products.
                                          2-7

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2.2.3   Irrigation
       Demand for irrigation equipment is driven by farm operation decisions, optimal
replacement considerations, and climate and weather conditions. The National Agriculture
Statistics Service (NASS) 2003 Farm and Ranch Irrigation Survey (USDA-NASS, 2004) shows
that the top five states ranked by total acres irrigated are California, Nebraska, Texas, Arkansas,
and Idaho.

       The survey reported that approximately 500,000 pumps were used on U.S. farms in 2003
with energy expenses totaling $1.6 billion. Electricity is the dominant form of energy expense for
irrigation pumps, accounting for 60% of energy expenses. Diesel fuel is second (18%), followed
by natural gas (18%) and other forms of energy such as gasoline (4%).

       As shown in Table 2-8, the number of on-farm pumps fell from 508,727 to 497,443 (2%)
between 1998 and 2003. However, electric- and diesel-powered pumps use increased during this
period (3% and 4%, respectively), while other fuel sources such as gasoline declined
significantly. Pumps powered by gasoline  and gasohol, for example, declined from 8,965 to
6,178, a 31% change during this period.
Table 2-8.  Number of On-Farm Pumps of Irrigation Water by Type of Energy: 1998 and
            2003
Fuel Type
Electricity
Natural gas
LP gas, propane, butane
Diesel fuel
Gasoline and gasohol
Total
1998
308,579
58,880
23,964
108,339
8,965
508,727
2003
319,102
41,771
17,792
112,600
6,178
497,443
Percentage Change
3%
-29%
-26%
4%
-31%
-2%
Source: U.S. Department of Agriculture, National Agricultural Statistics Service. 2004. "2003 Farm and Ranch
       Irrigation Survey" Washington, DC: USDA-NASS. Table 20.

2.3    Industry Organization
       We discuss key issues related to vertical integration within the industry and distinguish
firms in this industry by size using the Small Business Administration's (SBA's) firm size
standards.1 As discussed below, large equipment and engine operations are generally vertically
    latest table of size standards is available at http://www.sba.gov/size/indextableofsize.html.

                                           2-8

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integrated, and approximately half of the ultimate parent companies identified are small
businesses.
2.3.1   Engines: The Equipment Firm's "Make " or "Buy " Decision
       Vertically integrated firms own a combination of "upstream" and "downstream"
production operations; for example, vertically integrated equipment manufacturers make the
engines used in equipment rather than buy engines from independent engine manufacturers.
Although firms may choose this structure for several reasons, two frequently cited benefits are
reducing transaction costs associated with input purchases and taking advantage of technological
economies that arise through integrated production structures (Viscusi, Vernon, and Harrington,
1992). A review of the Power Systems Research (PSR) data for 2002 shows that vertical
operations are more likely to occur within large public and private firms. In addition, a
significant share of small specialty engine manufacturers produce and sell engines to other
independent equipment companies.
2.3.2   Distribution of Small and Large Firms
       EPA identified key firms using PSR data from 2002 (PSR, 2004). Although the
information in PSR's database was separated by fuel, size range, and application type, it includes
both mobile and stationary engines (Parise, 2006). Using these data to identify company names
has some limitations because the data set contains companies that produce mobile only,
stationary only, or mobile and stationary engines. We acknowledge this limitations and are
reviewing alternative ways of identifying stationary SI companies.

       Small  entities include small businesses, small organizations, and small governmental
jurisdictions. A small entity is defined as follows:
       •   a small business whose parent company has fewer than 1,000 employees (for NAICS
          335312 [Motor and Generator Manufacturing]) and NAICS 333618  [Other Engine
          Equipment Manufacturing]
       •   a small business whose parent company has fewer than 500 employees (for NAICS
          333911 [Pump and Pumping Equipment Manufacturing], NAICS 333912 [Air and
          Gas Compressor Manufacturing], NAICS 333 111 [Farm Machinery and Equipment
          Manufacturing], and NAICS 333992 [Welding and Soldering Equipment
          Manufacturing]
       •   a small governmental jurisdiction that is a government of a city, county, town, school
          district, or special district with a population of fewer than 50,000
       •   a small organization that is any not-for-profit enterprise, which is independently
          owned and operated and is not dominant in its field
                                          2-9

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       We identified 21 engine companies and 72 equipment companies and obtained sales and
employment data for 81 of these companies (87%). Using SB A size standards and ultimate
parent employment data, our analysis indicates that 34 ultimate parent companies are small
businesses (37%). PSR data suggest that small businesses manufacture a small share of total
engines (6% in 2002) (see Table 2-9). However, approximately one-quarter of equipment is
manufactured by small businesses.

       As shown in Figures 2-1  and 2-2, 16 engine companies are large (76%) with annual sales
typically exceeding $1 billion. The remaining five engine companies are small (24%) with
annual sales typically falling below $500 million.
Table 2-9.   Distribution of Engine and Equipment Production by Business Size: 2002 and
            Earlier Years

Engines
Small
Large
Total
Equipment
Small
Large
Total
2002

875
13,327
14,201

3,583
10,618
14,201
2001

988
14,669
15,657

2,947
12,711
15,657
2000

1,630
13,292
14,455

1,290
13,165
14,455
Source:  Power Systems Registry (PSR). 2004. OELink™. (http://www.powersys.com/OELink.htm>.
Note:   PSR production levels have been scaled using stationary fractions of total engine sales reported by Parise
       (2006).
                                          2-10

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    re
   .c
   V)
80%

70%

60%

50%

40%

30%

20%

10%

 0%
                <100
                     100-250
250-500
500-750
750-1000
>1000
                                 Parent Company Employment Range
Figure 2-1.   Engine Companies Employment Distribution, 2005 (N = 21)

Sources: Hoover's Online, .
       W&D Partners Worldscape through LexisNexis.
       Dun & Bradstreet Small Business Solutions .
       Graham & Whiteside Major Companies Database through LexisNexis.
      90%
   T 70%

   1
    o
    $1000
                              Parent Company Revenue Range ($millions)
Figure 2-2.   Engine Companies Sales Distribution (N = 24)

Sources: Hoover's Online, .
       W&D Partners Worldscape through LexisNexis.
       Dun & Bradstreet Small Business Solutions .
       Graham & Whiteside Major Companies Database through LexisNexis.
                                            2-11

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       As shown in Figures 2-3 and 2-4, approximately half of the equipment companies (31
total) are large companies, while the remaining 29 equipment companies are small. Annual sales
for equipment companies are concentrated above $1 billion (40%) and below $100 million
(25%).
2.4    Historical Market Data
       Generator sets and welding applications are the only sectors showing growth from 1998
to 2002 (see Table 2-10). The strongest growth occurred in the 175 to 300 hp category. In
contrast, pumps, compressors, and irrigation systems all experienced declines in sales during this
5-year period.
2.4.1  Price Trends
       Prices for equipment and engines have increased moderately over the last decade with the
rate of increases comparable to other manufacturing industries (see Figure 2-5). Since 2003,
prices have risen relatively faster than in previous years as costs of key material inputs have
increased. For example, Lincoln Electric cited the rising cost of steel as a key factor influencing
production costs (Lincoln Electric, 2006).
         45%
       S?
          30%
       "o" 20%
       £
       as 15%
           0%
                  <100      100-250     250-500     500-750    750-1,000
                                  Parent Company Employment Range
>1,000
Figure 2-3.   Equipment Companies Employment Distribution, 2005 (N = 60)
Sources: Hoover's Online, .
       W&D Partners Worldscape through LexisNexis.
       Dun & Bradstreet Small Business Solutions .
       Graham & Whiteside Major Companies Database through LexisNexis.
                                           2-12

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         30%
       03
      .C
      w
         15%
                  <$5      $5-$10    $10-$50   $50-$100  $100-$500 $500-$1,000  >$1,000
                                Parent Company Revenue Range ($millions)


Figure 2-4.    Equipment Companies Employment Distribution (N = 60)

Sources: Hoover's Online, .
        W&D Partners Worldscape through LexisNexis.
        Dun & Bradstreet Small Business Solutions .
        Graham & Whiteside Major Companies Database through LexisNexis.
                                              2-13

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Table 2-10. Estimated Historical Unit Sales Data by Market: 1998-2002

Stationary Generator Sets and Welders
25-50
50-100
100-175
175-300
300-600
600-750
>750
Total
Stationary Pumps and Compressors
25-50
50-100
100-175
175-300
300-600
600-750
>750
Total
Stationary Irrigation Systems
50-100
100-175
175-300
Total
2002

1,484
2,575
4,252
1,908
1,011
67
1,107
12,404

32
151
199
92
192
52
505
1,222

0
415.2
143.65
559
2001

1,909
2,054
6,659
995
952
88
1,043
13,700

35
151
223
107
238
60
567
1,381

0
469.6
88.4
558
2000

1,691
2,045
4,901
840
963
83
1,041
11,564

61
126
710
234
375
85
844
2,436

72.9
360.8
0
434
1999

1,765
2,365
6,510
983
1,200
70
976
13,868

74
129
754
306
515
111
1,026
2,915

97.8
371.2
0
469
1998

891
1,807
3,911
886
1,034
64
791
9,384

75
269
773
349
559
106
1,102
3,234

120.3
495.2
0
616
Note:   Total PSR population sales were multiplied by the stationary fraction of total engine sales reported by
       Panse (2006).
2.5    Projections
       Using 10-year growth data for engines (Parise, 2006), the Agency estimated that
stationary SI engine markets will continue to grow at historical rates (see Table 2-11). The total
affected population is estimated to grow from  15,938 to 18,235 engines between 2006 and 2015.
                                           2-14

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                1995  1996   1997   1998   1999   2000  2001   2002   2003   2004   2005
                       Motor and Generator
                       Pump and Pumping Equipment
                       Farm Machinery and Equipment
                            U.S. Manufacturing
 Welding and Soldering Equipment
-Air and Gas Compressor
-Gasoline Nonautomotive Engines
Figure 2-5.   Price Trends for Equipment and Engines
Note:   Price data for 2005 are preliminary estimates made by BLS that are subject to future revisions.
Source: U.S. Bureau of Labor Statistics. 2006. Series PCU335312335312, PCU333992333992,
       PCU333911333911, PCU333912333912, PCU333111333111, PCU3336183336181, PCUOMFG-
       OMFG.

Table 2-11. Projected Unit Sales Data by Horsepower Range: Selected Years
HP Range
25-50
50-100
100-175
175-300
300-600
600-750
>750
Total
2006
2,697
2,628
4,914
2,259
1,430
88
1,922
15,938
2010
3,091
2,584
4,946
2,389
1,658
56
2,236
16,959
2015
3,584
2,529
4,986
2,552
1,942
15
2,627
18,235
aThe projected number of new SI engines does not include new 2-stroke lean burn (2SLB) engines.
Source: Parise, T., Alpha-Gamma Technologies, Inc. 2006. Memorandum: "Population and Projection of Stationary
       Spark Ignition Engines."
                                            2-15

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                                      SECTION 3
                           ECONOMIC IMPACT ANALYSIS

       EPA prepares an EIA in order to provide decision makers with a measure of the social
costs of using resources to comply with a proposed program (EPA, 2000). The analysis generally
includes the development of one or more partial equilibrium market models that estimate price
and consumption changes and the associated measures of social costs (as measured by changes in
consumer and producer surplus). However, data quality and uncertainties prevented a full
specification and numerical partial equilibrium model for this analysis. As a result, EPA used a
qualitative approach to assess economic impacts.
3.1    Regulatory Program Cost Estimates
       The real-resource costs associated with the proposed NSPS and NESHAP programs
include the cost of installing and maintaining air pollution control equipment; the activities
related to engine certification for manufacturers; and the cost of initial notification, record
keeping, and testing for certain engine owners and operators (see Table 3-1). EPA estimates total
annualized  costs of the NSPS will be $17 million for the year 2015. The total annualized costs
associated with the NESHAP for 250 to 500 hp 4SLB SI engines located at major sources will be
$3 million for the year 2015. Both programs represent an annualized cost of approximately $20
million.
Table 3-1.   Average Total Cost Per Engine: 2015 (2005$)
NSPS
25-50
50-100
100-175
175-300
300-600
600-750
750>
Total
NESHAP
Total Annual Costs
$1,747,358
$2,020,548
$4,271,151
$2,342,233
$2,348,153
$45,425
$4,508,746
$17,283,614
$3,170,231
Number of Affected Engines
3,584
2,529
4,986
2,552
1,942
15
2,627
18,235
416
Average Total Cost
($/Engine)
$488
$799
$857
$918
$1,209
$3,028
$1,716
$948
$7,621
Sources: Parise, T., Alpha-Gamma Technologies, Inc. 2006. Memorandum: "Cost Impacts and Emission Reductions
       Associated with Proposed NSPS for Stationary SI ICE and NESHAP for Stationary RICE." Appendix A.
       Parise, T., Alpha-Gamma Technologies, Inc. 2006. Memorandum: "Population and Projection of Stationary
       Spark Ignition Engines." Table 3.
                                           3-1

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3.2    Economic Framework
       Given data limitations and uncertainties regarding supply and demand equations in
affected markets, EPA used a stylized model to support conclusions regarding the economic
impacts of the proposed program. This model examines changes in long-run equilibrium in
response to increases in per-unit production costs. The market supply function is assumed to be
horizontal in this model because marginal costs are constant as output changes (EPA, 1999).
Market demand is represented by the standard downward-sloping curve. The market is assumed
here to be perfectly competitive; equilibrium is determined by the intersection of the supply and
demand curves.

       A change in unit-production costs shifts the market supply curve for engines (see Figure
3-1). As shown in the figure, the cost increase causes the market price to increase by the full
amount of the per-unit control cost (i.e., from P to P'). This scenario is typically referred to as
"full-cost pass-through" because the costs are passed on to downstream buyers in the form of
higher prices. A rise in the equilibrium market price will also lead to a reduction in consumption.
                                                                    \  With Regulation
Price / 1
Increased
p
K0




^\


^Unit Cost Increase
a
\SQ Without Regulation
D
                                        Q.
Figure 3-1.   Long Run: Full-Cost Pass-Through
Output
                                          3-2

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3.3    Conclusion
       Using average total cost data from the engineering cost memos, the NSPS standard could
result in average price increase for engines of $950 (see Table 3-1). The price increases will
likely vary by engine horsepower and range from $490 per engine to $3,030 per engine. The
NESHAP requires additional controls for a very small subset of the engine population (250 to
500 hp 4SLB SI engines located at major sources). Price increases for these engines could be as
high as $7,620 per engine. Although baseline price data for these engines are not available, EPA
analysis for the nonroad rule (EPA, 2004; Table 10.3-6) provides a proxy for engine prices.
Using these baseline price data and average total cost data suggests percentage changes in engine
prices may exceed 10% on average and range from 2% to 20%.

       EPA considered potential consumption changes using the price elasticity of demand,
which refers to the percentage change in quantity demanded resulting from a percentage change
in price of the good. Economic theory and other EPA economic models of engine markets
suggest these elasticities are likely to be inelastic and very small (EPA, 2004). As a result, EPA
believes changes in engine consumption will be much smaller than the percentage increases in
price discussed above. For example, if we consider the range of percentage change in prices
above and assume a constant price elasticity of demand of-0.10, engine consumption could
potentially fall between 0.2% to 2%.

       EPA's Guidelines for Preparing Economic Analyses (EPA, 2000; p. 125) notes there is
little practical difference between social cost estimates derived from a perfect competition partial
equilibrium model and engineering compliance cost estimates when consumption changes are
small. Given the consumption change analysis above, EPA believes the national annualized
compliance cost estimates provide a reasonable approximation of the social cost of this
regulatory program. The engineering analysis estimated annualized costs of $20 million in 2015.
                                          3-3

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                                      SECTION 4
                                  ENERGY IMPACTS

       Executive Order 13211 (66 FR 28355, May 22, 2001) provides that agencies will prepare
and submit to the Administrator of the Office of Information and Regulatory Affairs, Office of
Management and Budget, a Statement of Energy Effects for certain actions identified as
"significant energy actions." Section 4(b) of Executive Order 13211 defines "significant energy
actions" as

       any action by an agency (normally published in the Federal Register} that promulgates or
       is expected to lead to the promulgation of a final rule or regulation, including notices of
       inquiry, advance notices  of proposed rulemaking, and notices of proposed rulemaking:
       (1) (i) that is a significant regulatory action under Executive Order 12866 or any
       successor order, and (ii) is likely to have a significant adverse effect on the supply,
       distribution, or use of energy; or (2) that is designated by the Administrator of the Office
       of Information and Regulatory Affairs as  a significant energy action.

This proposed rule is a significant energy action as designated by the Administrator of the Office
of Information and Regulatory Affairs. We have, therefore, prepared a Statement of Energy
Effects for this action as follows.

       The increase in petroleum product output, which includes increases in fuel production, is
estimated at less  than 0.00001%, or about  10 barrels per day based on 2006 U.S. fuel production
nationwide. The  reduction in coal production is zero because no coal-fired units will be affected
by the requirements of this proposed rule. The reduction in electricity  output is estimated at
0.00002%, or about 88,000 kilowatt-hours per year based on 2006 U.S. electricity production
nationwide. Production of natural gas is expected to decrease by 286,000 cubic feet (ft3) per day,
a decrease of 0.00002% from 2006 U.S. production levels. The maximum of all energy price
increases, which  include increases in natural gas prices as well as those for petroleum products,
and electricity, is estimated to be 0.0001% nationwide. Energy distribution costs may increase by
roughly no more than the same amount as electricity rates. We expect that there will be no
discernable impact on the import of foreign energy supplies, and no other adverse outcomes are
expected to occur with regard to energy supplies. The increase in the cost of energy production
should be minimal given the very small increases in energy prices and outputs shown above. All
of the estimates presented above account for some pass-through of costs to consumers, as well as
the direct cost impact to producers. For more information on these estimated energy effects,
                                           4-1

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please refer to the economic impact analysis for the proposed rule. This analysis is available in
the public docket.

       Therefore, we conclude that the proposed rule when implemented will not have a
significant adverse effect on the supply, distribution, or use of energy.
                                           4-2

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                                     SECTION 5
                       SMALL BUSINESS IMPACT ANALYSIS

       The Regulatory Flexibility Act (RFA) generally requires an agency to prepare a
regulatory flexibility analysis of any rule subject to notice and comment rulemaking
requirements under the Administrative Procedure Act or any other statute unless the agency
certifies that the rule will not have a significant economic impact on a substantial number of
small entities (SISNOSE). Small entities include small businesses, small organizations, and small
governmental jurisdictions.
5.1    Description of Small Entities Affected
       For the purposes of assessing the impacts of this proposed rule on small entities, small
entity is defined as (1) a small business based on the following Small Business Administration
(SBA)  size standards, which are based on employee size: NAICS 333911 B Pump and Pumping
Equipment Manufacturing—500 employees or less; NAICS 333912 B Pump and Compressor
Manufacturing—500 employees or less; NAICS 33399P—All other Miscellaneous General
Purpose, Machinery—500 employees or less; NAICS 335312 B Motor and Generator
Manufacturing—1,000 employees or less; and NAICS 333618—Other Engine Equipment
Manufacturing—1,000 employees or less; (2) a small governmental jurisdiction that is a
government of a city, county, town, school district, or special district with a population of less
than 50,000; and (3) a small  organization that is any not-for-profit enterprise that is
independently owned and operated and is not dominant in its field. For more information, refer
to http://www.sba.gov/size/sizetable2002.html. The small entity impacts of this proposed rule are
estimated in terms of comparing the compliance costs to revenues at affected firms.
5.2    Small Business Screening Analysis
       In the next step of the analysis, we assessed how the regulatory program may influence
the profitability of ultimate parent companies by comparing pollution control costs to total sales.
To do this, we divided an ultimate parent company's total annual compliance cost by its reported
revenue:
                                                                                  (5.1)
                                          5-1

-------
where

       CSR  =   cost-to-sales ratio,
       TACC =   total annualized compliance costs,
       i      =   index of the number of affected plants owned by company j,
       n     =   number of affected plants, and
       TRj   =   total revenue from all operations of ultimate parent company].

This method assumes the affected company cannot shift pollution control costs to consumers (in
the form of higher market prices). Instead, the company experiences a one-for-one reduction in
profits.

       To identify sales and employment characteristics of affected parent companies, we used a
company database developed for small business analysis of the Bond Rule (RTI,  2006). Since the
rule does not affect all companies included in the database, the analysis only includes companies
that produced the following types of equipment segments:

       •  pumps and compressors (Pump and Pumping Equipment Manufacturing [NAICS
          333911] or Air and Gas Compressor Manufacturing [NAICS 333912]) and
       •  welders and generators (Motor and Generator Manufacturing [NAICS 335312] or
          Welding and Soldering Equipment Manufacturing [NAICS 333992]).

The statistics included in the database come from PSR and other publicly available resources
such as the following:

       •  LexisNexis Academic Universe: A single database for company profiles, executives,
          revenue, and competitors; detailed financial information; full-text articles; investment
          reports; and industry overviews. Company information can be searched by name,
          address, Standard Industrial Classification (SIC), or ticker symbol.
          www.lexisnexis.com/academic/universe/academic/.
       •  Hoover's Online: This electronic database is an excellent source of information on
          U.S. public and private companies. Users can search for companies by name, ticker
          symbol, or keyword. It provides corporate ownership, sales, net income, and
          employment. Links are also provided to the company's Web site and those of top
          competitors (if available), Securities and Exchange Commission (SEC) filings in
          EDGAR Online, investor research reports, and news and commentary.
          http://www.hoovers.com/.
       •  Dun & Bradstreet's Million Dollar Directory: The D&B Million Dollar Directory
          provides information on over 1,260,000 leading U.S. public and private businesses.
          Company information includes industry information with up to 24 individual eight-
          digit SIC codes, size criteria (employees and annual sales), type of ownership, and
                                          5-2

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          principal executives and biographies, http://www.dnb.com/dbproducts/description/
          0,2867,2-223-1012-0-223-142-177-l,OO.html.
       Among the companies that manufacture engines, we identified 5 small companies and 16
large companies with sales data. All of them are included in the Other Engine Equipment
Manufacturing (NAICS 333618) industry.

       The results of the screening analysis, presented in Table 5-1, show that one firm has a
CSR greater than 3%. The remaining 20 small firms have estimated CSRs below 1%. The
average (median) CSR for small firms is 0.73% (0.02%), and the average and median CSR for
all large firms with data is less than 0.01% (0.001%).
Table 5-1.  Summary Statistics for SBREFA Screening Analysis


Companies with Parent Sales Data
Compliance costs are <1% of sales
Compliance costs are > 1 to 3% of sales
Compliance costs are >3% of sales
Cost-to-Sales Ratios (%)
Average
Median
Maximum
Minimum
Small
Number Share (%)
5 100%
4 80%
0 0%
1 20%

0.73%
0.02%
3.55%
0.00%
Large
Number
16
16
0
0

0.01%
0.001%
0.08%
0.00%
Share (%)
100%
100%
0%
0%





5.3    Assessment
       After considering the economic impacts of this proposed rule on small entities, the
Agency certifies that this proposed rule will not have a significant economic impact on a
substantial number of small entities. This proposed rule is expected to affect 21 ultimate parent
businesses. Five of the parent businesses are small according to the SB A small business size
standard. One of these five firms would have an annualized cost of more than 1% of sales
associated with meeting the requirements; the estimated cost is between 3% and 4% for this
small firm. Also, no other adverse impacts are expected to these affected small businesses.

       Although this proposed rule would not have a significant economic impact on a
substantial number of small entities, the Agency nonetheless tried to reduce the impact of this
                                         5-3

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proposed rule on small entities. When developing the revised standards, the Agency took special
steps to ensure that the burdens imposed on small entities were minimal. The Agency conducted
several meetings with industry trade associations to discuss regulatory options and the
corresponding burden on industry, such as record keeping and reporting.

       Following publication of this proposed rule, copies of the Federal Register action and, in
some cases, background documents, will be publicly available to all industries, organizations,
and trade associations that have had input during the regulation development, as well as state and
local agencies. The Agency continues to be interested in the potential impacts of this proposed
rule on small entities and welcomes comments on issues related to such impacts.
                                           5-4

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                                   REFERENCES

Dun & Bradstreet Small Business Solutions http://smallbusiness.dnb.com/default.asp?
      bhcd2=l107465546.

Graham & Whiteside Major Companies Database through LexisNexis. Available from
      .

Hoover's Online. 2005. Available from .

Lincoln Electric Holdings. 2006. Form 10-K. Filed February 24, 2006.

Parise, T., Alpha-Gamma Technologies, Inc. 2006. Memorandum: "Population and Projection of
      Stationary Spark Ignition Engines."

Power Systems Registry (PSR). 2004. OELink™. .

U.S. Bureau of Economic Analysis (BEA). 2002. 1997 Benchmark Input-Output Accounts:
      Detailed Make Table, Use Table and Direct Requirements Table. Tables 4 and 5.

U.S. Bureau of Economic Analysis (BEA).2006. Series PCU335312335312,
      PCU333992333992, PCU333911333911, PCU333912333912, PCU333111333111,
      PCU3336183336181, PCUOMFG—OMFG

U.S. Bureau of the Census. 2004a. "Farm Machinery and Equipment Manufacturing: 2002."
      2002 Economic Census Manufacturing Industry Series. EC02-311-333111(RV).
      Washington, DC: U.S. Bureau of the Census. Table 1.

U.S. Bureau of the Census. 2004b. "Motor and Generator Manufacturing: 2002." 2002 Economic
      Census Manufacturing Industry Series. EC02-311-335312(RV). Washington, DC: U.S.
      Bureau of the Census. Table 1.

U.S. Bureau of the Census. 2004c. "Pump and Pumping Equipment Manufacturing:  2002." 2002
      Economic Census Manufacturing Industry Series. EC02-311-333911(RV). Washington,
      DC: U.S. Bureau of the Census. Table 1.

U.S. Bureau of the Census. 2004d. "Welding and Soldering Equipment Manufacturing: 2002."
      2002 Economic Census Manufacturing Industry Series. EC02-311-333992(RV).
      Washington, DC: U.S. Bureau of the Census. Table 1.

U.S. Department of Agriculture (USD A), National Agricultural Statistics Service (NASS). 2004.
      "2003 Farm and Ranch Irrigation Survey." Washington, DC: USDA-NASS.

U.S. Environmental Protection Agency (EPA). 1999. OAQPS Economic Analysis Resource
      Document. Research Triangle Park, NC: EPA. A copy of this document can be found at
      http://www.epa.gov/ttn/ecas/econdata/6807-305.pdf
                                        R-l

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U.S. Environmental Protection Agency (EPA). 2000. EPA Guidelines for Preparing Economic
       Analyses, EPA 240-R-00-003, September 2000. A copy of this document can be found at
       .

U.S. Environmental Protection Agency (EPA). 2004. Final Regulatory Impact Analysis: Control
       of Emissions from Nonroad Diesel Engines EPA420-R-04-007, May 2004. A copy of this
       document can be found at .

U.S. Environmental Protection Agency. 2005. Economic Impact Analysis of the Standards of
       Performance for Stationary Compression Ignition Internal Combustion Engines. EPA-
       452/R-05-006. Research Triangle Park, NC: EPA.

Viscusi, W.K., J.M. Vernon, and I.E. Harrington. 1992. Economics of Regulation and Antitrust.
       Lexington, MA: D.C. Heath and Co.

W&D Partners Worldscape through LexisNexis. Available from .
                                         R-2

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United States                              Office of Air Quality Planning and Standards              Publication No. EPA-452/P-06-001
Environmental Protection                   Air Quality Strategies and Standards Division
Agency                                           Research Triangle Park, NC                                             May 2006

-------