vvEPA United Scales Environmental Protection Agmrcy REGULATORY IMPACT ANALYSIS FOR THE FINAL PREVENTION OF SIGNIFICANT DETERIORATION AND TITLE V GREENHOUSE GAS TAILORING RULE Final Report May 2010 Linda M. Chappell, PhD U.S. Environmental Protection Agency Office of Air Quality Planning and Standards Air Benefits and Cost Group 109 TW Alexander Drive Research Triangle Park, NC 27711 RTI International 3040 Cornwallis Road Research Triangle Park, NC 27709 ------- EP A 452/R-10-003 May 2010 Regulatory Impact Analysis for the Final Greenhouse Gas Tailoring Rule Final Report Linda M. Chappell, PhD U.S. Environmental Protection Agency Office of Air Quality Planning and Standards Air Benefits and Cost Group 109 TW Alexander Drive Research Triangle Park, NC 27711 U.S. Environmental Protection Agency Office of Air Quality Planning and Standards Health and Environmental Impacts Division Research Triangle Park, NC ------- CONTENTS Page 1 Executive Summary 4 1.0 Summary 5 1.1 Summary of Analytical Approach for the Analysis 9 1.2 Benefits, Cost, and Net Benefits of the Final Tailoring Rule 16 1.3 Organization of this Report 20 2 Baseline Description, Regulatory Alternatives, and Affected Entities 22 3 Benefits (Regulatory Relief or Avoided Permit Burden Costs) 34 3.1 Avoided Burden Costs for Title V 34 3.2 Avoided Information Collection Costs Associated with the PSD Program 38 4 Social Costs 45 5 Net Benefits 49 6 Impacts of Regulatory Relief 53 6.1 Method for Analyzing Avoided Economic and Small Entity Impacts 53 6.1.1 Identifying Affected Sectors and Entities 53 6.1.2 Data Used to Characterize Affected Entities by Size 54 6.2 Developing Economic and Small Entity Regulatory Relief Impact Measures 68 6.3 Implementing the Sales Test to Measure Impacts on Industrial, Commercial, and Multifamily Residential Sources 68 6.4 Economic Relief to Permitting Authorities 70 7 Statutory and Executive Order Reviews 87 7.1 Executive Order 12866 - Regulatory Planning and Review 87 7.2 Paperwork Reduction Act 87 7.3 Regulatory Flexibility Act 88 7.4 Unfunded Mandates Reform Act 89 7.5 Executive Order 13132 -Federalism 89 7.6 Executive Order 13175 - Consultation and Coordination with Indian Tribal Governments 90 7.7 Executive Order 13045 - Protection of Children from Environmental Health and Safety Risks 90 7.8 Executive Order 13211 - Actions That Significantly Affect Energy Supply, Distribution, or Use 91 ------- 7.9 National Technology Transfer and Advancement Act 91 7.10 Executive Order 12898 - Federal Actions to Address Environmental Justice in Minority Populations and Low-Income Populations 91 7.11 Congressional Review Act 92 8 Limitations and Uncertainties 93 9 References 99 Attachment A: Source Categories Affected by the Rule with Industry Detail Attachment B: Technical Support Document for Greenhouse Gas Emissions Thresholds Evaluation Attachment C: Summary of Methodology and Data Used to Estimate Burden Relief and Evaluate Resource Requirements at Alternative Greenhouse Gas (GHG) Permitting Thresholds ------- List of Tables Page 1.0 Time Periods and Regulatory Alternatives Analyzed in the RIA 12 1.1 Annual Net Benefits for GHG Tailoring Rule Regulatory Alternatives 18 1.2 Net Benefits for the Final Rule and Regulatory Alternatives for Steps 1 and 2 of the Phase-In Period 19 1.3 Net Benefits of the Final Rule and Step 3 Regulatory Alternatives 20 2.0 Phase-In Steps for Large Sources for the Final GHG Tailoring Rule 22 2.1 Baseline Sources Subject to Statutory Permit Requirements 29 2.2 Qualitative Description of Benefits and Cost of the Tailoring Rule 31 2.3 Estimated Number of Affected Sources Experiencing Regulatory Relief for Final Rule and Regulatory Alternatives 32 3.0 Annual Title V Regulatory Relief (Avoided Cost) Estimates for Affected Sources of GHG and Permitting Authorities at Alternative Thresholds 36 3-1 Steps 1 and 2 Title V Regulatory Relief (Avoided Cost) Estimates for Affected Sources of GHG and Permitting Authorities at Alternative Thresholds 39 3.2 Annual PSD Regulatory Relief (Avoided Costs) for Sources of GHG and Permitting Authorities at Alternative Thresholds 40 3.3 Step 1 and 2 PSD Regulatory Relief (Avoided Costs) for Sources of GHG and Permitting Authorities at Alternative Thresholds 43 3.4 Benefits of the Final Rule and Step 3 Regulatory Alternatives 44 5.1 Annual Net Benefits for GHG Tailoring Rule Regulatory Alternatives 50 5.2 Net Benefits of the Final GHG Tailoring Rule and Regulatory Alternatives 51 5.3 Net Benefits of the Final Rule and Step 3 Regulatory Alternatives 52 6.0 Number of Firms by Industry and Enterprise Size: 2002 55 6.1 Number of Establishments by Affected Industry and Enterprise Size: 2002 57 6.2 Number of Employees by Affected Industry and Enterprise Size: 2002 59 6.3 Receipts by Industry and Enterprise Size: 2002 (in millions of 2007$) 61 6.4 Number of Firms by Affected Industry and Enterprise Size in Commercial Sectors: 2002 63 6.5 Number of Establishments by Affected Industry and Enterprise Size: 2002 64 6.6 Number of Employees by Affected Industry and Commercial Enterprise Size: 2002 66 6.7 Receipts by Affected Industry and Enterprise Size: 2002 (Millions of 2007 $) 67 6.8 Avoided Title V Costs to Sales for Small Industrial Sources of GHG Emissions 72 6.9 Avoided Costs to Sales for Small Modifying Industrial GHG PSD Emission Sources 74 6.10 Avoided Costs to Sales for Small New PSD Industrial GHG Sources 76 6-11 Avoided Title V Permitting Costs to Sales for Permit Revisions Due to GHG 78 6.12 Title V Avoided Costs for Small New Commercial Sources of GHG Emissions Compared to Annual Sales Revenue 81 6.13 Avoided Costs for Small Modifying Commercial PSD GHG Emission Sources Compared to Annual Sales Revenue 83 6.14 Avoided Costs to Small PSD New Commercial GHG Emission Sources 85 ------- A-l Title V Sources Expected to Experience Regulatory Relief at Alternative Threshold Levels by Industry Category 100 A-2 New PSD Sources Expected to Experience Regulatory Relief at Alternative Threshold Levels by Industry Category 102 List of Figures Page 1.0. Alternative States of Regulation Relating to the GHG Tailoring Rule 11 ------- Section 1 Executive Summary 1.0 Summary This Regulatory Impact Analysis (RIA) examines the benefits, costs, and economic impacts of the Final Prevention of Significant Deterioration and Title V Greenhouse Gas Tailoring Rule for affected entities and society as a whole. The tailoring rule lifts, for a period of beginning January 2, 2011 through April 30, 2016 (referred to as phase-in period), the burden to obtain a title V operating permit required by the Clean Air Act (CAA or Act) for many small existing sources of greenhouse gas (GHG) and the burden of Prevention of Significant Deterioration (PSD) requirements for small new or modifying sources of GHG. Thus, this rule may be viewed as providing regulatory relief rather than regulatory requirements for these smaller GHG sources for a period of at least the phase-in period. For larger sources of GHG, there are no direct economic burdens or costs as a result of this rule, because requirements to obtain a title V operating permit or to adhere to PSD requirements of the CAA are already mandated by the Act and by existing rules and are not imposed as a result of this rulemaking. In this final rule, the Environmental Protection Agency (EPA) is relieving overwhelming permitting burdens that would, in the absence of this rule, fall on permitting authorities and sources. We accomplish this by tailoring the applicability criteria that determine which GHG emission sources become subject to the PSD and title V programs of the CAA. In particular, EPA is establishing with this rulemaking a phase-in approach for PSD and title V applicability, and is establishing the first two steps of the phase-in for the large emitters of GHGs. We also commit to certain follow-up actions regarding future steps beyond the first two, discussed in more detail later. For the first step of this Tailoring Rule, which will begin on January 2, 2011, PSD or title V requirements will apply to sources' GHG emissions only if the sources are subject to PSD or title V anyway due to their non-GHG conventional pollutants. Therefore, EPA will not require sources or modifications to evaluate whether they are subject to PSD or title V requirements solely on account of their GHG emissions. Specifically, for PSD, Step 1 requires that as of January 2, 2011, the applicable requirements of PSD, most notably, the best available control technology (BACT) requirement, will apply to projects that increase net GHG emissions by at least 75,000 tons per year (tpy) carbon dioxide equivalent (CC^e), but only if the project also ------- significantly increases emissions of at least one non-GHG pollutant. For the title V program, only existing sources with, or new sources obtaining, title V permits for non-GHG pollutants will be required to address GHGs during this first step. This first step of the tailoring rule is referred to as Step 1 or 'anyway' threshold throughout this RIA. The second step of the tailoring rule, that begins on July 1, 2011, will phase-in additional large sources of GHG emissions. New sources as well as existing sources not already subject to title V that emit, or have the potential to emit, at least 100,000 tpy CC^e will become subject to the PSD and title V requirements. In addition, sources that emit or have the potential to emit at least 100,000 tpy CC^e and that undertake a modification that increases net emissions of GHGs by at least 75,000 tpy CC^e will also be subject to PSD requirements. For both steps, we also note that if sources or modifications exceed these CO2e-adjusted GHG triggers, they are not covered by permitting requirements unless their GHG emissions also exceed the corresponding mass-based triggers (i.e., unadjusted for CC^e.) This second step of the phase-in period is referred to as Step 2 or 100,000 tpy CC^e threshold throughout this report. Although the thresholds established by the tailoring rule are levels set that apply to sources at or above the threshold, this RIA examine the sources obtaining regulatory relief. By definition the sources obtaining regulatory relief are those sources with GHG potential to emit emissions below a particular threshold EPA believes that the costs to the sources and the administrative burdens to the permitting authorities of PSD and title V permitting will be manageable at the levels in these initial two steps, and that it would be administratively infeasible to subject additional sources to PSD and title V requirements at those times. However, we also intend to issue a supplemental notice of proposed rulemaking (SNPR) in 2011, in which we will propose or solicit comment on a third step of the phase-in that would include more sources, beginning by July 1, 2013. In the same rulemaking, we may propose or solicit comment on a permanent exclusion from permitting for some category of sources. We are establishing an enforceable commitment that we will complete this rulemaking by July 1, 2012, which will allow for 1 year's notice before step 3 would take effect. In addition, we commit to explore streamlining techniques that may well make the permitting programs much more efficient to administer for GHGs, and that therefore may allow their expansion to smaller sources. We expect that the initial streamlining techniques will take several years to develop and implement. ------- We are also including in this action a rule that no source with emissions below 50,000 tpy CO26, and no modification resulting in net GHG increases of less than 50,000 tpy CC^e, will be subject to PSD or title V permitting before at least, April 30, 2016. This is because we are able to conclude at the present time that the administrative burdens that would accompany permitting sources below this level will be so great that even the streamlining actions that EPA may be able to develop and implement in the next several years, and even with the increases in permitting resources that we can reasonably expect the permitting authorities to acquire, it will be impossible to administer the permit programs for these sources until at least 2016. Further, we are establishing an enforceable commitment that we will (i) complete a study by April 30, 2015, to evaluate the status of PSD and title V permitting for GHG-emitting sources, including progress in developing streamlining techniques; and (ii) complete further rulemaking based on that study by April 30, 2016, to address the permitting of smaller sources. That rulemaking may also consider additional permanent exclusions based on the "absurd results" doctrine, where applicable. This tailoring rulemaking is necessary because without it, PSD and title V would apply to all stationary sources that emit or have the potential to emit more than 100 or 250 tpy of GHGs beginning on January 2, 2011. This is the date when EPA's recently promulgated Light Duty Vehicle Rule (LDVR)1 takes effect, imposing control requirements for the first time on carbon dioxide (€62) and other GHGs. If this January 2, 2011 date were to pass without this tailoring rule being in effect, PSD and title V requirements would apply at the 100/250 tpy CO2e potential to emit (PTE) applicability levels provided under a literal reading of the CAA as of that date. From that point forward, a source owner proposing to construct any new major source that emits at or higher than the applicability levels (and which therefore may be referred to as a "major" source) or modify any existing major source in a way that would increase GHG emissions would need to obtain a permit under the PSD program that addresses these emissions before construction or modification could begin. Similarly, title V would apply to a new or existing source exceeding the 100 tpy applicability level in the Act, if the source did not already have a title V permit. 1 EPA-HQ-OAR-2009-0472; NHTSA-2010-0059 RIN 2060-AP58; RIN 2127-AK50. April 1, 2010 Light-Duty Vehicle Greenhouse Gas Emission Standards and Corporate Average Fuel Economy Standards; Final Rule http://www.epa.gov/otaq/climate/regulations/ldv-ghg-final-rule.pdf ------- Under these circumstances, many small sources would be burdened by the costs of the individualized PSD control technology requirements and permit applications that the PSD provisions, absent streamlining, require. Additionally, state and local permitting authorities would be burdened by the extraordinary number of these permit applications, which are orders of magnitude greater than the current inventory of permits and would vastly exceed the current administrative resources of the permitting authorities. Permit gridlock would result with the permitting authorities able to issue only a tiny fraction of the permits requested. This rulemaking provides permitting thresholds for sources of GHG exceeding levels contained in the CAA, and these levels are phased in steps based on legal considerations of absurd results and administrative necessity discussed in the preamble to this rule. In the phase-in period following promulgation of this rule, we estimate that, compared to baseline estimates that do not include the effects of this rule, over six million sources of GHG emissions will be allowed to operate without a title V operating permit and tens of thousands of new sources or modifying sources per year will not be subject to PSD requirements for GHG. The emissions from these sources amount to approximately 11 percent of all GHG emissions from stationary sources (100,000 CO26 tpy threshold) equating to approximately 630 million short tons CC^e, but represent 95 percent of the total number of stationary sources. For this large number of smaller GHG sources, this rule alleviates the regulatory burden associated with obtaining an operating or PSD permit or complying with PSD BACT requirements. Therefore, this final action may be considered beneficial to these small sources as it provides relief from regulation that would otherwise be required. Within this RIA we are providing an illustrative monetary estimate of statutory permitting requirements to show the magnitude of the savings that hypothetically result from this rulemaking. While we believe it is impossible to implement these permit requirements by January 2, 2011 for the reasons laid out in the preamble, it is useful to understand the scale of what the burden may have been. For sake of simplicity, within this document we refer to this illustrative monetary estimate as the monetized benefits of the regulatory relief presented by this rulemaking or regulatory relief benefits for brevity. We estimate that the regulatory relief benefits from this rule amount to $193.6 billion for the final rule Steps 1 and 2 of the phase-in period (January 2, 2011 through July 1, 2013). There will be some costs to society during this time from the potential loss of GHG emission reductions from small sources that could occur ------- during the Steps 1 and 2 phase-in period. We are not able to quantify or monetize these potential foregone emission reductions resulting from this final rule. 1.1 Summary of Analytical Approach for the Analysis Our analysis of the GHG tailoring rule includes several key elements including: • specification of the baseline that requires title V and PSD permitting statutory thresholds of 100/250 tpy CO2e potential to emit (PTE), • development of alternative regulatory relief thresholds including those authorized by this final rule, • estimation of sources affected by alternative regulatory relief thresholds, • estimation of the benefits of this rule in terms of permitting burden costs avoided, • qualitative discussion of social costs or potential GHG emission reductions foregone due to this rule, and • estimation of the economic impacts of this final rule. A brief synopsis of these analytical aspects of the final rule follows. Analytical Baseline The baseline for this rulemaking is a state of regulation in which the statutory thresholds of 100/250 tpy CO26 apply for title V sources and new or modifying PSD sources beginning January 2, 2011 absent actions taken in the final tailoring rule. Figure 1.0 below depicts this analytical baseline in which GHG permitting is statutorily required by the CAA. Within this framework, there are two general possibilities - 'no action' or 'regulatory relief action' taken by EPA. Under the 'no action' case baseline, statutory limits become effective and permitting authorities are overwhelmed with permit applications. Millions of new sources in total many of which have not been regulated under the Act would be required to obtain title V sources and tens of thousands of these sources will face PSD permitting annually. In contrast, the EPA may take action as it has in this final rule to provide 'regulatory relief. As described, the 'no action' case is the analytical baseline for this RIA. All alternatives analyzed in this RIA show the level of regulatory relief in comparison to a baseline in which statutory CAA thresholds of 100/250 tpy CO26 are required. Regulatory Alternatives, Affected Sources, and Avoided Permitting Cost Estimates All regulatory alternatives evaluated in this RIA, except the 'no action' alternative, represent regulatory relief possibilities that establish title V permitting thresholds and PSD ------- permitting thresholds and significance levels above the statutory 100/250 tpy CC^e requirements. Due to the phase-in nature of this rule, EPA analyzes the benefits and costs of the tailoring rule for three different time periods. We analyze the net benefits of the rule annually to allow for a comparison of the final rule Steps 1 and 2 to be made with regulatory alternatives. We also evaluate the net benefits of the rule for the 2V2 years period of Steps 1 and 2 of the phase-in period (January 2, 2011 through July 1, 2013) , and for the approximate five year period of Step 1, 2, and 3 of the phase-in period January 2, 2011 through April 30, 2016. Table 1.0 shows the final rule and regulatory alternatives analyzed in this RIA for these differing time periods of the phase-in. The benefits of this rule are the regulatory relief in the form of avoided permitting burdened cost for smaller sources of GHG and permitting authorities. Avoided permitting costs to these smaller GHG sources and permitting authorities are calculated by estimating the number of sources and related permits avoided as a result of this rule. We then place a dollar value on these avoided permits by estimating the burden cost per permit. The product of the avoided permits and the per permit costs represents the regulatory relief for this rule. Thus the annual regulatory relief for the rule is equal to the number of annual sources (number of permits) above statutory thresholds of 100/250 tpy and below final rule thresholds multiplied by per permit costs for sources and permitting authorities, respectively. We use these annual estimates to calculate multiple year regulatory relief for Steps 1 and 2 of the phase-in and for the five years beginning January 2, 2011. Estimates of sources afforded regulatory relief under the alternative regulatory thresholds are based upon an analysis completed by EPA that is included as Attachment B Technical Support Document for Greenhouse Gas Emissions Threshold Evaluation of this report. This analysis supports EPA's assessment of the administrative burden created by adding GHGs to the PSD and title V programs. It was necessary to develop information on the number of affected facilities at both the current permitting major source thresholds (100 tons per year for title V and 100 or 250 tons per year for PSD depending on the source category classification) and at alternative higher thresholds in existing PSD and title V permitting programs. An affected facility would be one who's annual emissions of GHG equal or exceed the major source threshold being evaluated. The number of sources allowed regulatory relief by this rule represents the difference in the number of sources at the baseline 100/250 tpy CC^e PTE threshold and at the higher regulatory alternative thresholds. 10 ------- Figure 1.0. Alternative States of Regulation Relating to the GHG Tailoring Rule GHG Permitting Triggered No Action Case Baseline * Statutory limits become effective ^Permitting authorities overwhelmed with permit applications, millions of new sources required to obtain permits Action Taken With Permit Trigger *RIA analyzed regulatory alternatives * Significant reduction in facilities required to obtain permit and permitting authority burdens *Limited foregone GHG emission reductions 11 ------- Table 1.0 Time Periods and Regulatory Alternatives Analyzed in the RIA Time Period of Analysis Regulatory Alternatives Thresholds Analyzed for Each Time Period1 Annual 1. Anyway 2. 100,000 tpy CO2e 3. 50,000 tpy CO2e 4. 25,000 tpy CO2e 2.5-Year (Jan. 2, 2011-July 1,2013) Corresponds to Steps 1 and 2 of the Phase-In Alternatives assuming threshold remain in effect for the entire years of the Step 1 and 2 phase-in period): 1. 25,000 tpy CO2e (25,000 tpy CO2e significance level) 2. 50,000 tpy CO2e (50,000 tpy CO2e significance level) 3. 100,000 tpy CO2e 4. Anyway Other alternatives involving thresholds that change during the phase-in period are: 5. Step 1 Anyway for 6 months/ Step 2 100,000 tpy CO2e for 2 years 6. Step 1 Anyway threshold for 6 months / Step 2 50,000 tpy CO2e for 2 years 7. Stepl Anyway threshold for 6 months/ Step 2 25,000 tpy CO2e for 2 years 5-year (Five years beginning January 2, 2011) Corresponds to Steps 1-3 of the Phase-In 1. Step 1 Anyway for 6 months/ Step2 100,000 tpy CO2e for 2 years/ Step 3 100,000 tpy CO2e for 21/2 years 2. Step 1 Anyway for 6 months/ Step 2 100,000 tpy CO2e for 2 years/ Step 3 50,000 tpy CO2e for 21/2 years 1 Regulatory relief relates to those sources with the potential to emit annual emissions below the threshold levels. Threshold 100,000 tpy CO2e has significance level of 75,000 tpy CO2e. Threshold 50,000 tpy CO2e has significance level of 50,000 tpy CO2e, and threshold 25,000 tpy CO2e has significance level of 25,000 tpy CO2e Regulatory relief or avoided permit burden estimates are based upon permitting cost estimates developed by EPA and discussed extensively in Attachment C Summary of Methodology and Data Used to Estimate Burden Relief and Evaluate Resource Requirements at Alternative Greenhouse Gas Permitting Thresholds.. EPA conducted an assessment of the estimated resource requirements for sources to obtain title V operating permits, for new and modifying sources to obtain PSD permits, and for permitting authorities to include GHG in permit actions at several possible major source permitting thresholds. EPA developed the burden reduction and costs savings for permitting authorities and sources as a result of requiring the inclusion of GHG in the title V and PSD permitting programs at thresholds greater than the current statutory requirements. Time and costs associated with permit activities are derived from existing Information Collection Requests (ICRs) for the title V and PSD programs. Regulatory 12 ------- relief avoided cost estimates do not include the costs for new and modifying PSD sources to comply with BACT requirements due to lack of sufficient data to estimate the BACT requirements and associated costs. We discuss the costs of this rule in terms of foregone environmental benefits qualitatively in this report. There will be some costs to society during this phase-in period from the potential loss of GHG emission reductions from small sources that could occur during the Steps 1, 2, and 3. We are not able to quantify or monetize these potential foregone emission reductions resulting from this final rule. We also provide in this RIA an estimate of the economic impact of the regulatory relief to affected sources by developing avoided-cost-to-sales ratios for the affected sources by comparing avoided permitting costs to average industry sales revenue or average revenue by firm size. Limitations and Uncertainties of the Analysis The benefits, costs and economic impacts estimated in this RIA are subject to limitations and uncertainties. The benefits of this rule are the regulatory relief provided to small sources of GHG and permitting authorities. Regulatory relief estimates are provided for the final rule Steps 1, 2 and 3 on an annual basis as well as for the full phase-in period. The benefits or avoided permitting costs are based upon the best data available currently regarding sources affected and burden cost estimates but are subject to uncertainties. Benefit Estimate Limitations and Uncertainties Uncertainties exist in the affected source counts at different thresholds used to estimate regulatory relief due to the absence of a comprehensive data set of facility-level GHG emissions across all sectors on which to base the number of facilities subject to title V and PSD permitting at alternative regulatory thresholds. These affected source counts are multiplied by the permit burden cost estimates to derive the benefit (regulatory relief) estimates for the rule. Although there are different levels of uncertainty in our facility level estimates across sectors, we do believe that the data are sufficiently robust to use in the aggregate to assess national permitting level impacts. The threshold analysis also conservatively assumes that no GHG PTE limits are in place for any of the affected sources. Some sources may use PTE limits to avoid being classified as major, which would reduce burden. The number of PTE limits is uncertain. We assume there will be a limited number in the immediate stages of GHG permitting for affected sources, but this assumption is subject to some uncertainty. 13 ------- There is also significant uncertainty in both our modification rate for newly major GHG sources and in our estimate of modification activity at existing major sources that will become subject to PSD review for GHG emission increases. The general uncertainty results from inherent uncertainty in predicting not only how many major sources will elect to undergo physical or operational changes in any given year, but also which of those changes would result in GHG emissions increases that would exceed a proposed GHG significance level. First, information is not available across sectors and source categories on the types and numbers of specific physical and operational changes that would result in GHG emissions increases in amounts that can be estimated and that therefore can be compared to various GHG emissions significance levels. Second, there is uncertainty in how many project modifications will occur within any given year because decisions on these projects are driven by facility- and sector-based growth patterns and business planning decisions. Lastly, some source categories and units that emit GHGs have not previously been subject to any type of permitting or reporting requirements; as a result, for these sources, there is very little historical record for use in estimating the number and types of projects that would occur at these sources and, in turn, establish an appropriate significance level for GHGs. The permit burden estimates that are multiplied by the source counts to derive the benefits of the rule are also subject to uncertainty. The primary reference sources for our estimate of burden hours and costs for permitting GHGs are the most recent ICRs for the PSD and title V programs. There a number of uncertainties introduced in using these references for costing GHG permitting activities. First, we are assuming that the average, conventional pollutant per-permit costs will be similar for GHGs. We do recognize the likelihood that residential and commercial permits would be simpler and have a lower per-permit burden than traditional industrial sources, and have made adjustments for this: however, for industrial sources we assume per-permit costs on par with what are estimated in the latest ICRs for PSD and title V programs. There is uncertainty in applying these average ICR-based costs to GHG permitting, even for industrial sources, because the best source of this cost information is permitting experience and there is no historical track record for permitting these GHG sources and thus any cost efficiencies that have been realized over the years for conventional pollutant permitting, and thus reflected in the current ICRs, may not be initially realized for GHG permitting. 14 ------- As mentioned above, in our burden scenario analyses we do discount the ICR-based per- permit costs for residential and commercial sources to reflect what we believe will generally be simpler permits, involving primarily uniform combustion type equipment. For PSD we discount the per-permit cost by 30%, and for title V we discount the per-permit cost by 50%. There is significant uncertainty in these estimated discounts since we have no track record for permitting these smaller commercial and residential sources. However, we do believe that, based solely on the type and uniformity of the GHG emission units that would be subject to permitting at these facilities under lower GHG threshold scenarios, that average per-permit costs would be less than those currently experienced by more complex industrial facilities, with numerous emission units, for currently regulated pollutants. Current avoided permitting cost or regulatory relief estimates also do not include the avoided costs to comply with PSD BACT requirements due to lack of available data. This omission will tend to reduce the amount of regulatory relief that smaller sources of GHG will experience during the phase-in period. In addition to the avoided BACT costs that we are unable to quantify, there are likely general economic costs associated with requiring permitting for these smaller sources of GHG. Numerous public comments on the proposed rule spoke to the economic burden permitting would place on sources above the actual costs to obtain a permit. These costs might include delays or impediments to entering a new market or to expand existing facilities to accommodate increased demand for products or services. These avoided costs might be viewed as additional costs of doing business or barriers to entry for these smaller sources of GHG. The avoided economic costs of these possible additional costs or barriers to doing business have not been considered in the regulatory relief estimates provided for this final rule due to lack of sufficient information about these potential impacts. If such avoided cost estimates were available, these estimates would tend to increase the regulatory relief burden reported for the final rule. For the phase-in period regulatory relief multiyear estimates, we assume that the annual estimates are representative for each year of the phase-in period. This presumes that permitting activity would be constant over time. It is quite possible that permit activity for these smaller sources may grow over time with economic growth in the general economy and will likely vary from year to year due to differences in business activity. However, we do not have sufficient information about these year to year variations nor expected growth in permitting to develop 15 ------- more precise estimates. Given the uncertainty in the annual relief estimates and the short time frame analyzed (five years), we feel it reasonable to not consider these potential yearly fluctuations for the phase-in period. Consideration of growth in permits over time would tend to increase the regulatory relief estimates reported for the final rule. In a similar manner, we do not discount the phase-in regulatory relief to the present in this final report. Since the analytical time period evaluated varies from annual to five years, we feel this is a reasonable approach. Discounting the regulatory relief estimates to present values would tend to lower the total present value amount of regulatory relief reported. Social Cost Limitations and Uncertainties The social costs of this rule are the foregone environmental benefits that might occur during the phase-in period absent this rulemaking. This subject is discussed in Section 4 of the RIA. We are unable to estimate the PSD BACT requirements that would likely occur for the smaller sources of GHG at this time. Because BACT is a case-by-case decision and evolves over time, because we do not at this time have historical experience with the available controls for small-source GHG emissions, and because of the inherent uncertainty in describing the types of sources that would have triggered BACT absent this rule, we cannot quantify the emission reductions that might be feasible or the associated pollution control costs. For this reason, the social costs of this rule are discussed qualitatively in this RIA. Economic Impact Limitations and Uncertainties As previously discussed there is uncertainty in the estimates of sources affected by this final rule and the permitting burden costs used to estimate the benefits (regulatory relief) of this rule. These uncertainties also affect the economic impact analysis conducted. In the economic impact analysis, we compare the avoided permit burden cost estimates to average industry revenues in order to gauge the magnitude of regulatory relief for affected sources. We used average industry revenue, and average revenue estimates by firm size to estimate avoided-cost- to-sales ratios due to lack of data specific to the sources actually obtaining regulatory relief. The actual benefits to individual firms affected by this rule may differ from industry averages. 1.2 Benefits, Cost, and Net Benefits of the Final Tailoring Rule In the RIA, we estimated the benefits, costs and net benefits of the final rule. This rulemaking provides regulatory relief for a phase-in period of approximately 5 years to smaller sources of GHG by phasing in the statutory permitting threshold at levels above statutory 16 ------- requirements. This final rule establishes thresholds and PSD significance levels for Steps 1 and 2 of the phase-in period (the 21/2 year period between January 2, 2011 and July 1, 2013), commits to considering a further Step 3, and indicates floor title V and PSD threshold levels from July 1, 2013 through April 30, 2016. While the EPA commits to undertake a rulemaking for a further Step 3, the ultimate outcome for sources of GHG from this additional rulemaking is unknown at this time. Annual estimates for the final rule Steps 1 and 2 and regulatory alternatives are presented in Table 1.1. As Table 1.1 indicates, the annual net benefits associated with the final rule Step 1 are $77,530.2 million +B-C and for Step 2 are $77,416.2 +B-C million, where B denotes the unquantified benefits and C the quantified costs of this final rule. These unquantified benefits and costs are discussed in more detail in the preceding limitations and uncertainties section of this executive summary. Table 1.2 shows the final rule Steps 1 and 2 with regulatory alternatives for the two and one-half year phase-in period January 2, 2011 through July 1, 2013. The net benefits of the final rule for Steps 1 and 2 are $193,597.5 + B - C million for the two and one-half year period. Finally, Table 1.3 presents the final rule net benefits with two alternatives for Step 3, one in which Step 3 remains at the Step 2 100,000 tpy CO2e level and one in which Step 3 becomes the minimum threshold of at least 50,000 tpy CO2e previously discussed. These alternatives for Step 3 bound the net benefit estimates for the entire phase in period. If Step 3 remains at the Step 2 level, net benefits for the five year period are $387,153.4+5-0 million. This net benefit estimate becomes $386,724.1 +B-C million if Step 3 becomes the minimum level of 50,000 tpy threshold for the five year phase-in period. Given the short time frame of the impact of this final rule, we did not consider the time value of money or discount the benefit and cost estimates provided in this report to present values, rather we assume these benefit and cost estimates are occurring currently. All dollar estimates shown are based upon 2007$. 17 ------- Table 1.1 Annual Net Benefits for GHG Tailoring Rule Regulatory Alternatives Benefits - Regulatory Relief Sources Title V1 PSD2 Total Source Regulatory Relief Permitting Authority Title V1 PSD2 Total Permitting Authority Total Regulatory Relief Costs - Foregone GHG Emission Reductions Title V& PSD Net Benefits3 Annual Benefits and Costs for Regulatory Alternatives (millions of 2007$) Final Rule Step 1 Anyway $49,457.3 $5,488.8 $54,946.1 $21,077.6 $1,506.5 $22,584.1 $77,530.2+B C $77,530.2+B-C Final Rule Step 2 100,000 tpy CO2e $49,447.4 $5,411.2 $54,858.6 $21,072.4 $1,485.2 $22,557.6 $77,416.2+B C $77,416.2+B-C 50,000 tpy CO2e $49,403.8 $5,326.0 $54,729.8 $21,052.8 $1,461.8 $22,514.6 $77,244.4+B C $77,244.4+B-C 25,000 tpy CO2e $49,334.2 $4,707.6 $54,041.8 $21,014.9 $1,291.7 $22,306.6 $76,348.4+B C $76,348.4+B-C Benefits relate to regulatory relief for sources with annual potential to emit levels below the thresholds shown. B - unqualified benefits of the rule include regulatory relief from B ACT requirements for PSD sources C - unqualified social costs of tailoring rule represents economic value of foregone environmental benefits (possible GHG emission reductions) during Step 1 and 2 of the phase in period. Potential foregone GHG emission reductions during the phase-in period are not known at this time. See Section 4 of the RIA for a qualitative discussion of the social costs of the rule. IReflects estimates of regulatory relief or avoided permit burden costs for title V GHG sources and permitting authorities. 2 Shows estimates of regulatory relief or avoided permit burden costs for GHG PSD sources and permitting authorities. 3 Totals may not sum due to rounding. 18 ------- Table 1.2. Net Benefits for the Final Rule and Regulatory Alternatives for Steps 1 and 2 of the Phase-In Period Benefits - Regulatory Relief Sources Title V1 PSD2 Total Source Regulatory Relief Permitting Authority Title V1 PSD2 Total Permitting Authority Total Regulatory Relief Costs - Foregone GHG Emission Reductions Title V& PSD Net Benefits Benefits and Cost s for Step 1 and 2 Phase-In Period (January 2, 2011- July 1, 2013) For Regulatory Alternatives (millions of 2007$) Anyway3 $123,643.3 $13,722.0 $137,365.3 $52,694.1 $3,766.3 $56,460.4 $193,825.6+5 C $193,825.6+B-C 100,000 tpy CO2e3 $123,618.5 $13,528.0 $137,146.5 $52,681 $3,713.0 $56,393.9 $193,540.4+5 C $193,540.4+B-C 50,000 tpy CO2e3 $123,509.5 $13,315.0 $136,824.5 $52,631.9 $3,654.5 $56,286.3 $193,110.9+5 C $193,110.9+B-C 25,000 tpy CO2e3 $123,335.5 $11,769.0 $135,104.5 $52,537.3 $3,229.3 $55,766.7 $190,871.1+5 C $190,871.1+B-C Anyway/ 50,000 tpy CO2e4 $123,536.3 $13,396.4 $136,932.8 $52,644.3 $3,676.8 $56,321.1 $193,253.9+5 C $193,253.9+B-C Anyway/25,000 tpy CO2e5 $123,397.1 $12,159.6 $135,556.6 $52,568.7 $3,336.7 $55,905.4 $191,462.0+5 C $191,462.0+B-C Final Rule6 $123,623.5 $13,566.8 $137,190.3 $52,683.6 $3,723.6 $56,407.2 $193,597.5+5 C $193,597.5+B-C Benefits represent regulatory relief for those sources with the annual potential to emit less than the threshold shown. B - unqualified benefits of the rule include regulatory relief from B ACT requirements for PSD sources C - unqualified social costs of tailoring rule represents economic value of foregone environmental benefits (potential GHG emission reductions) during Step 1 and 2 of the phase in period. Foregone GHG emission reductions are not known at this time. See Section 4 of the PJA for a qualitative discussion of the social costs of the rule. IReflects estimates of regulatory relief or avoided permit burden costs for title V GHG sources and permitting authorities. 2 Shows estimates of regulatory relief or avoided permit burden costs for GHG PSD sources and permitting authorities. 3 Shows alternative as single step for the 2'Ayear phase-in period for 'anyway', 100,000 tpy CO2e, 50,000 tpy CO2e, and 25,000 tpy CO2 e thresholds respectively. 4 Includes Step 1 for one-half year and 50,000 tpy CO2e threshold for two years. 5 Includes Step 1 for one-half year and 25,000 tpy CO2e threshold for two years. 6 Phase-in period for final rule includes 1/2 year of Step 1 thresholds and 2 years of Step 2 threshold. 19 ------- Table 1.3 Net Benefits of the Final Rule and Step 3 Regulatory Alternatives Benefits - Regulatory Relief Sources Title V1 PSD2 Total Source Regulatory Relief Permitting Authority Title V1 PSD2 Total Permitting Authority Total Regulatory Relief Costs - Foregone GHG Emission Reductions Title V & PSD Net Benefits Regulatory Alternative (millions 2007$) Final Rule + Possible Step 3 of 100, 000 tpy CO2e3 $247,253.6 $27,094.7 $274,348.3 $105,368.5 $7,436.61 $112,805.1 $387,153.4+5 C $387,153.4+B-C 50, 000 tpy CO2e4 $247,145.3 $26,881.8 $274,027.1 $105,318.8 $7,378.1 $112,696.8 $386,719.4+5 C $386,724.1+B-C Benefits represent regulatory relief for sources with the annual potential to emit below the thresholds shown. B - unqualified benefits of the rule include regulatory relief from B ACT requirements for PSD sources C - unqualified social costs of tailoring rule represents economic value of foregone environmental benefits (potential GHG emission reductions) during Step 1, 2,and 3 of the phase in period. Foregone GHG emission reductions are not known at this time. See Section 4 of the RIA for a qualitative discussion of the social costs of the rule. IReflects estimates of regulatory relief or avoided permit burden costs for title V GHG sources and permitting authorities. 2 Shows estimates of regulatory relief or avoided permit burden costs for GHG PSD sources and permitting authorities. 3 Includes 1/2 year of Step 1 (anyway threshold), 41/2 years of Step 2 (100,000 threshold), 4 Includes 1/2 year of Step 1 (anyway threshold), 2 years of Step 2 (100,000 threshold), and 21/2 years Step 3 alternative of 50,000. 1.3 Organization of this Report The remainder of this report supports and details the methodology and the results of this illustrative RIA. • Section 2 presents a discussion of the regulatory baseline, regulatory alternatives and affected entities. • Section 3 describes the benefits of the rule. 20 ------- Section 4 provides a qualitative description of social costs of the rule. Section 5 presents the benefits, costs, and net benefits of the rule. Section 6 describes the methodology and the estimated economic impacts of the regulatory relief. Section 7 discusses small business impacts, unfunded mandates, and effects of the rule on energy supply Section 8 describes limitations and uncertainties of the analysis Section 9 lists the references for the analyses included in this RIA. 21 ------- Section 2 Baseline Description, Regulatory Alternatives, and Affected Entities As previously stated, this final rule is essentially providing regulatory relief and does not include direct regulatory provisions for any industrial, commercial, or residential entities. An analysis is presented for smaller sources that experience regulatory relief. This rule increases the GHG applicability threshold for title V from 100 tpy CC^e and for new and modifying sources of GHG emissions from the CAA mandated 100 or 250 tpy CC^e major source applicability threshold in a phased-in step process described in Table 2.0. Table 2.0. Phase-In Steps for Large Sources for the Final GHG Tailoring Rule1 PSD Title V Step 1: Phase-in of Large Sources (January 2,2011- June 30, 2011) (referred to as 'anyway' threshold or Step 1) Permitting based on emissions of non-GHG pollutants and, for BACT applicability with GHG emissions or GHG emission increases above 75,000 tpy CO2e Sources with title V permits for non- GHG pollutants will address GHG as part of title V permitting Step 2: Phase in for Large Sources (July 1,2011-June 30, 2013) (referred to as 100,000 tpy CO2e threshold or Step 2) Sources above 100,000 tpy (new) and 75,000 tpy (major modifications) of CO2e (and not already subject to PSD based on non-GHG) Sources that exceed 100,000 tpy GHG threshold will be required to obtain a title V permit if they do not already have one Step 3: Phase in for Large Sources (July 1, 2013 - April 30, 2016) Effective only after additional regulatory process An enforceable commitment to assess experience from Steps 1 and 2; commit to propose, consider comments, and promulgate potential Step 3 (level will not go below 50,000 tpy CO2e [new] and 50,000 tpy CO2e [major modifications]) An enforceable commitment to assess experience from Steps 1 and 2; commit to propose, consider comments, and promulgate potential Step 3 (level will not go below 50,000 tpy CO2e) Final Phase Effective only after additional regulatory process EPA will take rulemaking action in 2016 or before to address small sources in light of the 5-year study EPA will take rulemaking action in 2016 or before to address small sources in light of the 5-year study Thresholds/significance levels are based on PTE. The rules also sets GHG significance levels for each step under PSD to determine applicability as it relates to GHG emissions or emission increases for projects at major sources. The baseline for this rulemaking is a state of regulation in which the statutory thresholds of 100/250 tpy CO26 apply for title V sources and new or modifying PSD sources beginning January 2, 2011 absent actions taken in the final tailoring rule. Within this framework, there are 22 ------- two general possibilities - 'no action' or 'regulatory relief action' taken by EPA. Under the 'no action' case baseline, statutory limits become effective and permitting authorities are overwhelmed with permit applications. Millions of new sources in total many of which have not been regulated under the Act are required to obtain title V sources and tens of thousands of these sources will face PSD permitting annually. In contrast, the EPA may take action as it has in this final rule to provide 'regulatory relief. As described, the 'no action' case is the analytical baseline for this RIA. All alternatives analyzed in this RIA show the level of regulatory relief in comparison to a baseline in which statutory CAA thresholds of 100/250 tpy CC^e are required. For larger sources of GHG, there are no direct economic burdens or costs as a result of this rule, because requirements to obtain a title V operating permit or to adhere to PSD requirements of the CAA are already mandated by the Act and by existing rules and are not imposed as a result of this rulemaking. In order to analyze the baseline administrative burden created by adding GHGs to existing PSD and title V permitting programs, it was necessary to develop information on the number of affected facilities at the current permitting major source thresholds (generally, 100 tons per year for Title V and 100 or 250 tons per year for PSD depending on the source category classification). An affected facility would be one who's annual emissions of the GHG equal or exceed the major source threshold, based on a PTE basis. Detailed descriptions of the methodologies used are provided in Attachments B and C of the RIA. An explanation of the uncertainties associated with this methodology is discussed in Section 8 of this report. The following are the basic steps used in the methodology to estimate affected sources and permitting actions under the baseline scenario. 1) Identify GHG source categories. EPA evaluated the same range of stationary source types with direct GHG emissions as identified in EPA's proposed and final GHG mandatory reporting rule (MRR)2. The GHG MRR source categories were based on a comprehensive review of all U.S. source categories with GHG emissions from EPA's national inventory of GHG 74 FR 68, pp. 16447 - 16731 and 74 FR 209, pp. 56260-56519, respectively. 23 ------- emissions3. The stationary sources evaluated in this analysis can be grouped in the sectors shown below: • Electricity Generation (facilities with fossil fuel-fired electric generating units); • Industry (range of industries with process and combustion GHG emissions); • Energy (oil and gas extraction, transport, and processing; underground coal mining); • Waste Treatment (landfills and municipal solid waste incinerators); • Agriculture (stationary fuel combustion units); • Commercial (variety of establishments including office, retail, hospitals, lodging, etc.); • Residential (single-family and multi-family housing). A small number of direct emission source types included in the GHG MRR analysis were not included in the tailoring rule analysis because the GHG emissions from these sources were primarily fugitive emissions. Fugitive emissions are generally defined as emissions which are not released, or could not be reasonably collected and released, through a stack or vent. Under the PSD rules, fugitive emissions are only included in potential to emit estimates if the source is one of 28 listed PSD source categories. The excluded categories included electrical equipment fugitive SFe emissions; wastewater treatment plant fugitive emissions not associated with one of 28 listed PSD source categories; and, agricultural manure management fugitive emissions. 2) Estimate Actual Facility Level GHG Emissions. We started with estimates of facility emissions based on actual operating conditions, not PTE, since this is the standard format of the EPA's national inventory of GHG emissions. Actual emissions for each source category were obtained from earlier analyses performed to develop emission thresholds for the proposed and final GHG MRR, or we used the same data sources when additional analyses were required. EPA generally relied on published research and publicly available government data, such as EPA's eGRID database of electric generating source emissions, Economic and Housing Census data, and Energy Information Agency (EIA) data on energy consumption. See Attachment B for full descriptions of the methodologies used to estimate emissions for each source category. 3 U.S. Environmental Protection Agency (EPA), Inventory of U.S. Greenhouse Gas Emissions and Sinks: 1990 - 2007, April 2009, US EPA 430-R-09-004. http://www.epa.gov/climatechange/emissions/usinventoryreport.html 24 ------- 3) Estimate PTE-basedFacility Level GHG Emissions. It was necessary to convert actual emissions to a PTE basis, because as noted earlier, that is the basis for determining applicability under PSD and title V. PTE is generally defined as the amount of emissions that can be emitted from a source operating at full equipment capacity, 24 hours per day, 365 days per year. Capacity information and annual GHG emissions were available for some of the source categories from analyses performed to support the GHG MRR. In some cases the supporting analyses had already calculated GHG emissions on a full capacity basis, in which case EPA directly used those estimates as PTE estimates. Alternatively, some data from the supporting analysis estimated actual annual emissions using a baseline year. If capacity and baseline year production information was provided in the supporting data, EPA adjusted the source actual emissions estimate by the ratio of annual capacity to baseline production to estimate PTE. If capacity information was not available, EPA used capacity factors from other data sources to adjust actual emission estimates to PTE estimates. These capacity factors add varying uncertainty to the PTE estimate. Detailed descriptions of the different PTE calculation methodologies are included in the source descriptions in Attachment B. 4) Count Facilities that Exceed the Baseline GHG Thresholds. After compiling facility level PTE-based emission under Step 3, these estimates were evaluated against the threshold levels in order to determine whether or not a facility would be included in the baseline threshold count. The number of facilities exceeding the baseline threshold based on a PTE basis were then identified as 'major sources' for the purposes of GHG permitting under PSD and title V. Our facility counts include both existing sources that would exceed the baseline GHG thresholds and newly constructed sources. Newly constructed sources only represent a small fraction (less than 2 percent for the baseline scenario) of the total population of GHG major sources in a given year. Growth rates used to estimate new construction were based on a variety of sources including Economic Census data, EIA energy survey data, and various EPA regulatory impact analyses and information collection requests which require source population estimates. In some cases there was sufficient information to distribute new sources to different thresholds based on emission information specific to the new sources (electric generating, municipal solid waste combustors, and commercial stationary fuel combustion). 5) Estimate total permitting actions for PSD and title V based on facility counts. The next basic step was to estimate permitting actions that result from the baseline facility counts. 25 ------- For PSD, this required an estimate of modifications at existing facilities in addition to the estimate of newly constructed facilities from step 4. Our estimate for modifications at existing facilities is based on calculating how many of the facilities identified as major sources would undergo a modification project that would exceed our baseline GHG thresholds. The methodology for estimating modifications is described in detail in Attachment C. The basic methodology for estimating modifications at existing, but newly classified GHG major sources, under PSD was to apply a 4 percent modification rate to the population of facilities that exceed the threshold. For title V, any facility, existing or newly constructed, that exceeded the baseline thresholds for GHG permitting (i.e., 100 tpy CO2e) was considered to be required to get a title V permit under the baseline scenario. 6) Calculate costs for permitting actions. The total permitting actions calculated under step 5 above, were then combined with average permitting costs for each type of permitting activity for PSD and title V to calculate overall permitting burden. See Attachment C for full description on assumptions regarding permitting costs and how these were applied to different permitting actions under PSD and title V. 7) Adjustments based on public comment on proposal. We made three main adjustments to our basic methodology based on public comments received on our proposal. Two of these affected the estimate of modifications under PSD. Many commenters indicated that they felt EPA had underestimated the number of modification permitting actions associated with PSD. Our proposed general modification rate (2 percent of the newly major facility population) used to estimate modifications at existing, but newly newly major GHG sources did not appear to have caught the extent to which facility level changes could result in projects that exceed the GHG permitting threshold. In reassessing this modification rate, we determined that we had not fully accounted for all possible PSD modifications relative to the major source population in calculating this modification rate. Based on this reassessment we revised our general modification rate to 4 percent (as noted above in step 5) that is used to estimate the annual modification activity at existing, but newly major GHG sources. Another adjustment to the PSD modifications methodology was based on public comments on the proposal that we did not fully account for the number of major modification projects at existing major sources because we did not capture the number of existing projects that avoid major PSD review (by either taking limits—synthetic based modifications—or by netting 26 ------- out) for existing pollutants but that would not be able to avoid PSD for GHGs. Our modifications methodology, as described in Attachment C, now specifically includes additional modifications for these projects that would not be able to avoid PSD review because of their GHG emissions. Lastly, based on public on public comments we revised our estimate of capacity utilization used for estimating PTE-based emissions for the general manufacturing source category (referred to as 'unspecified stationary combustion' in the GHG threshold analysis in Attachment B) and the oil and gas industry. In our proposal, the range for capacity utilization for 'unspecified stationary combustion' varied from 70 to 90 percent depending on manufacturing category, and for the oil and gas industry we used 90 percent. Based on comments received indicating that these utilization rates are higher than what is normally achieved in real-world conditions, particularly for smaller manufacturing type facilities, we used a 50 percent capacity utilization rate for both of these source categories. We believe that these assumptions better reflect what can be deemed reasonable operation under normal conditions for facilities in these source categories. The baseline affected sources estimated using the preceding methodology are shown on Table 2.1. As Table 2.1 shows, EPA estimates the total number of title V sources and the annual estimate of new PSD sources that would be required to obtain permits absent this tailoring rule in a world where EPA takes 'no action'. These affected source estimates provide a baseline on which to estimate the regulatory relief allowed by EPA in this final rule and possible at alternative regulatory thresholds. We compare these baseline affected source counts to the sources counts at alternative regulatory relief thresholds to determine the number of sources likely to obtain regulatory relief due to the tailoring rule. All regulatory alternatives evaluated in this RIA, except the 'no action' alternative, represent regulatory relief possibilities that establish title V permitting thresholds and PSD permitting thresholds and significance levels above the statutory 100/250 tpy CC^e requirements. In this RIA, EPA analyzes the benefits and costs of the tailoring rule for thresholds finalized in this rule for Steps 1 and 2 of the phase-in period, as well as, the proposal thresholds of 25,000 tpy CO26 and a possible Step 3 minimum threshold level of 50,000 tpy CC^e. The annual levels of regulatory relief associated with these regulatory alternatives are evaluated, as well as, two 27 ------- and one-half year estimates that cover the Steps 1 and 2 phase-in period and for the full phase-in period of approximately 5 years. For the initial phase-in Step 1, only title V and new PSD sources already applying for permits due to air pollutants other than GHG emissions are required to obtain a permit. New PSD sources required to obtain permits for GHG must also comply with BACT requirements for GHG. However, under Step 1, only modification projects or sources with GHG emissions or emission increases that equal or exceed 75,000 tpy CC^e PTE are required to comply with BACT requirements for GHG emissions. During Step 2 of the phase-in, sources at or above 100,000 tpy CO26 PTE are required to a obtain title V permit. Likewise, new sources at or above the 100,000 tpy CO26 PTE and modifying sources with PTE at or above 75,000 tpy CC^e are required to comply with the requirements of PSD. After the initial two steps of the phase-in, EPA will determine whether a Step 3 that lowers thresholds below 100,000 tpy CO2e PTE beginning July 2013 is feasible. However, in this final rule, the Agency is making an enforceable commitment to conduct a regulatory-setting process to consider the experience during the initial steps prior to lowering the threshold in a further Step 3. EPA also commits to not lowering the threshold below 50,000 tpy CC^e PTE until 2016. EPA will also conduct a study of permitting processes at existing levels in the next 5 years and determine whether thresholds can be lowered below 50,000 tpy CC^e PTE after another regulatory process. At proposal, EPA identified as the pollutants subject to PSD and title V the group of up to six GHG emissions, each one weighted for its global warming potential (GWP), that are included in regulations for their control under the CAA. EPA also proposed to conform its action on PSD state implementation plans (SIPs) and title V programs to match the proposed Federal applicability requirements. In its proposed rule, EPA provided temporary regulatory relief for sources of GHG emissions below a level of 25,000 tpy CC^e PTE. The rationale for finalizing the previously described thresholds in the tailoring rule is based in part on our review of the costs and benefits associated with the different thresholds evaluated and described in this RIA. However, the primary basis for choosing the threshold enumerated in Table 2.0 is to ensure consistency with the legal doctrines set forth in the preamble of the tailoring rule. To apply the statutory PSD and title V applicability thresholds to sources of GHG emissions would create immediate and insuperable administrative burdens for permitting authorities and perhaps absurd results. By establishing the applicability thresholds at 28 ------- the levels for the first and second steps of the phase-in period, we would avoid an administratively impossible scenario where each year tens of thousands of new sources and modifications would become subject to PSD review, and, in total, millions of sources would require title V operating permits. We used the results of this RIA to support the threshold decisions, which we believe would result in a variance from existing statutory permitting thresholds that would—consistent with the supporting legal rationale—be as limited as possible and with consideration given to costs and benefits as described in this RIA. Table 2.2 describes qualitatively the benefits, costs, and economic impacts analyzed for regulatory alternatives in this RIA. As shown in Table 2.1, leaving the CAA thresholds unchanged for sources of GHG emissions is the baseline or 'no action' alternative that will render this tailoring rule as having no impact on sources or permitting authorities beyond the current CAA requirements. In this 'no action' case, we are simply comparing the baseline to itself. Thus, this is a regulatory alternative with zero benefits and zero costs. Under this alternative, small and large sources of GHG emissions will be required to obtain title V operating and PSD permits as mandated by the Act. Although this alternative is considered for analytical completeness, its impact is essentially the same as no GHG tailoring rule and no further discussion of this alternative is considered in this document. In addition to the 'no action' alternative, this RIA examines Step 1 and 2 thresholds of the phase-in final rule, as well as a less Table 2.1. Baseline Sources Subject to Statutory Permit Requirements Sector Electricity Industrial Energy Waste Treatment Agriculture Commercial Residential Totals Baseline Number of Sources Requiring Permits 100/250 tov CO2e Thresholds Title V New PSD 2,237 178,037 5,000 4,206 37,351 1,355,921 4,535,500 6,118,252 93 604 48 2 299 12,041 6,915 20,002 Notes: Title V sources are the total number of sources estimated to require an operating permit under statutory CAA thresholds. PSD sources are new source estimates anticipated to require compliance with permitting annually. Estimates for PSD sources are for newly constructed facilities and do not include modifications at existing facilities that may also be subject to PSD requirements. 29 ------- than 50,000 tpy CC^e threshold (meaning sources below 50,000 tpy obtain regulatory relief and this is the minimum level for potential Step 3) and a less than 25,000 tpy CC^e threshold (meaning sources below 25,000 tpy obtain regulatory relief and this is the proposed rule threshold level) regulatory alternatives. The benefits of this rule (and the alternatives considered) are the permit burden costs avoided due to increasing the threshold levels above current CAA requirements as reflected in Table 2.1. Under this final rule, millions of title V sources in total and thousands of PSD sources annually are afforded regulatory relief. For each of the regulatory alternatives increasing the threshold above statutory levels, the benefits of this tailoring rule are primarily the avoided permitting costs for affected small sources of GHG emissions. The permitting costs avoided by small sources are quantified for the final rule Step 1 and 2 thresholds and each of the regulatory alternatives in Section 3 of this document. The avoided costs associated with compliance with BACT requirements for PSD new and modifying sources are addressed qualitatively in this RIA because of lack of sufficient data to estimate quantitative BACT requirements for affected GHG sources. The industry categories for sources anticipated to experience regulatory relief at the threshold levels finalized in this regulation are shown in Table 2.3. As Table 2.3 shows, this action lifts permitting requirements for over 6 million potential title V sources in total and tens of thousands of potential PSD new and modifying sources annually otherwise required by the CAA to obtain permits. The estimates for title V sources represent the total number of sources afforded regulatory relief by this rule and for regulatory alternatives. In contrast, the estimates shown for PSD represent the annual estimate of new PSD sources expected to experience regulatory relief from this rule. For additional industry details including applicable affected industry North American Classification System (NAICS) codes see Attachment A "Source Categories Affected by the Rule with Industry Detail." EPA considered a number of factors involving administrative burden and necessity in finalizing the thresholds for this rule, including comments received in response to the proposed rule. After considering the comments regarding the number of affected sources at various thresholds, EPA revised its estimates of sources potentially required to obtain permits significantly increasing the number of affected sources at the alternative threshold/significance levels as discussed in detail previously. 30 ------- Table 2.2. Qualitative Description of Benefits and Cost of the Tailoring Rule Description Benefits (Regulatory relief — avoided permitting requirements and associated costs) Social Costs (Foregone emission reductions due to regulating GHG sources) Economic Impacts (Avoided costs compared to annual sales or revenue data for affected sources) No Action Alternative (Thresholds Remain at 100/250 tpy)1 No avoided permitting costs (i.e., over 6 million title V sources in total and over 80 thousand PSD small new and modifying GHG sources annually (over 240 thousand PSD sources during Steps 1 and 2) remain subject to programs) No foregone emission reductions No avoided costs Alternative (Proposal) 25,000 tpy GHG Emission Threshold2 Avoid permitting costs for 6.098 million title V sources in total and for 72.3 thousand new and modifying PSD sources annually (or 216.9 thousand PSD sources during the Steps 1 and 2 time period) Foregone GHG emission reductions for affected sources (addressed qualitatively) Impact of avoided costs (benefits) compared to annual sales revenues of affected sources Alternative 50,000 tpy GHG Emission Threshold2 Avoid permitting costs for 6. 102 million sources in total and for 79.7 thousand new and modifying PSD sources annually (or 239.1 thousand PSD sources during the Steps 1 and 2 time period) Foregone GHG emission reductions for affected sources (addressed qualitatively) Impact of avoided costs (benefits) compared to annual sales revenues of affected sources Step 2 100,000 tpy GHG Emission Threshold2 Avoid permitting costs for 6. 105 million sources in total and for 80.7 thousand new and modifying PSD sources annually (or 242.1 thousand PSD sources during the Steps 1 and 2 time period) Foregone GHG emission reductions for affected sources (addressed qualitatively) Impact of avoided costs (benefits) compared to annual sales revenues of affected sources Stepl Anyway Threshold2 Avoid permitting costs for 6. 106 million sources in total and for 81.6 thousand new and modifying PSD sources annually (or 244.8 thousand PSD sources during the Steps 1 and 2 time period) Foregone GHG emission reductions for affected sources (addressed qualitatively) Impact of avoided costs (benefits) compared to annual sales revenues of affected sources 1 This table recognizes that triggering for GHG permitting has occurred with promulgation of the LDVR. Because of this event, sources with the potential to emit 100 tpy CO2e are required to obtain a title V permit and new or modifying sources with the potential to emit 250 tpy are required to obtain a PSD permit as mandated by the CAA. If current threshold levels in the CAA remain unchanged for GHG emissions, the tailoring rule has no effect on sources or permitting authorities and provides no regulatory relief to sources or permitting authorities. 2 Promulgated Steps 1 and 2 thresholds and alternative regulatory thresholds are shown. Threshold levels represent PTE levels for affected sources. Sources affected, enumerated above, represent sources, permits, or actions. Alternative 50,000 tpy CO2e is the minimum threshold level to be considered for a possible Step 3. ------- Table 2.3. Estimated Number of Affected Sources Experiencing Regulatory Relief for Final Rule and Regulatory Alternatives1'2'3 Sector Electricity Industrial Energy Waste Treatment Agriculture Commercial Residential Totals % Emissions Covered4 Number of Sources Experiencing Regulatory Relief Final Rule: Step 2 Final Rule: Step 1 25,000 COie tnv 50,000 COie tov 100,000 COie tnv Anvwav Threshold Title V New PSD Title V New PSD Title V New PSD Title V New PSD 161 166,908 2,401 1,431 37,351 1,354,760 4,535,340 6,098,352 20 574 23 0 299 12,034 6,912 19,862 3% 285 168,976 2,513 2,448 37,351 1,355,321 4,535,480 6,102,374 29 586 38 1 299 12,038 6,915 19,906 8% 285 170,654 2,536 3,165 37,351 1,355,870 4,535,500 6,105,361 33 599 44 1 299 12,039 6,915 19,930 11% 285 170,910 2,588 3,358 37,351 1,355,921 4,535,500 6,105,913 93 604 48 2 299 12,041 6,915 20,002 13% 1 Number of sources is determined on a PTE basis. Estimates for PSD sources are for newly constructed facilities and do not include modifications at existing facilities that may also be subject to PSD requirements. Source estimates shown above represent the total number of title V sources potentially afforded regulatory relief during Step 1 and 2 of the phase-in period. In contrast, for new PSD sources, the estimates shown are the annual estimates of permits avoided for new small PSD GHG sources. 2 See Attachment B for more details of how thresholds and sources affected were developed. 3 The "no action" alternative is not included since the number of sources experiencing regulatory relief for this regulatory alternative is by definition zero. 4 Percentage of emissions covered represents estimated actual emissions from sources expected to experience regulatory relief as a percentage of total stationary source GHG emissions. When comparing the regulatory alternatives for revised affected sources at alternative thresholds as discussed above, there are differences between them. The reason the thresholds and significance levels are chosen as shown in Table 2.0 for Steps 1 and 2 of the phase-in period with an additional Step 3 to be considered only after a subsequent regulatory process is because permitting authorities cannot immediately accommodate a huge increase in permitting. The thresholds chosen for Steps 1 and 2 are chosen over the proposal level of 25,000 tpy CC^e, because evidence suggests that permitting authorities can run programs for the levels of permitting that would be required Steps 1 and 2, and EPA believes legal doctrine requires the threshold to be as low as administratively feasible. The choice of a threshold is a balancing act of administrative considerations between threshold levels that EPA feels are not administratively feasible at this time (i.e., 25,000 tpy CC^e potential to emit threshold) compared to threshold levels that are not impossible such as the Step 1 'anyway' threshold and the Step 2 100,000 tpy CO26 threshold achieving a reasonable balance. For more information on the process used to determine the appropriate thresholds/significance levels for Steps 1 and 2 of the phase-in period, 32 ------- see Attachment B. There are a number of uncertainties involved in the determination of the baseline and regulatory alternative affected sources. These threshold analysis uncertainties are discussed in Section 8 of the RIA. 33 ------- Section 3 Benefits (Regulatory Relief or Avoided Permit Burden Costs) EPA estimated the regulatory relief or avoided title V and PSD permitting costs for small sources of GHG that will be postponed as a result of this rulemaking. This analysis focuses on the burdens that are being lifted for smaller sources as a result of this rule. In addition, an accounting of the avoided costs to State, local, and tribal permitting authorities is provided. These avoided costs relate specifically to information collection costs or burden costs for sources of GHG emissions that would have been required to obtain an operating permit under title V or required to modify an existing permit to address GHG if not for this rule. Avoided costs shown also include information collection requirements for additional PSD permits required for new or modifying sources of GHG, as well as the costs to State, local, and tribal permitting authorities for extending their existing permitting programs to include sources of GHG. These avoided costs do not include the cost of modifying and new source compliance with BACT because of the lack of available data. Within this benefits section of the RIA we are providing an illustrative monetary estimate of statutory permitting requirements to show the magnitude of the savings that hypothetically result from this rulemaking. While we believe it is impossible to implement these permit requirements by January 2, 2011 for the reasons laid out in the preamble, it is useful to understand the scale of what the burden may have been. For sake of simplicity, we refer to this illustrative monetary estimate as the monetized benefits of the regulatory relief presented by this rulemaking or regulatory relief benefits for brevity. Time and costs associated with permit activities are derived from existing Information Collection Request (ICR) EPA documents for title V and PSD as described below. Significant uncertainties exist in the following estimates because of the lack of historical record and permitting experience on which to base resource needs to consider sources of GHG emissions in permitting and are discussed more fully in Section 8 of this RIA. 3.1 Avoided Burden Costs for Title V Under Step 1 of the phase-in, major sources of GHG that would otherwise be required to obtain an operating permit due to emissions of non-GHG pollutants are required to include GHG in permit requests. During this period, sources other than those obtaining permits for non-GHG pollutants will experience regulatory relief. Under Step 2, sources below 100,000 tpy CC>2 e PTE will experience regulatory relief, while sources above this threshold will be required to obtain 34 ------- operating permits. Table 3.0 shows the estimated annual permitting cost or burden cost avoided for sources subject to title V experiencing regulatory relief during the period January 2, 2011, through June 30, 2013, as well as for two other regulatory alternatives. The alternatives shown are a threshold of 50,000 tpy CC>2 e PTE (the minimum threshold for a possible Step 3) and 25,000 tpy CC>2 e PTE (the proposal threshold level). Estimates shown are the annual portion of regulatory relief expected to occur for small GHG sources and permitting authorities due to this final rule and equate to regulatory relief for approximately 2 million title V sources. As shown on Table 3.0, the cost for a new industrial source to obtain an operating permit for GHG is $46,350 per permit. Over 71,000 industrial sources are likely to benefit from this rule because of the postponement of permitting requirements under Steps 1 and 2 of the phase-in period annually. Approximately 61,836 industrial sources annually will be allowed to postpone permit revisions for GHG at an avoided cost of $1,677 per permit revision under the 'anyway' threshold Step 1. The estimate of industrial sources avoiding permit revisions becomes 60,921 annually under Step 2, the less than 100,000 tpy CC^e threshold. The burden cost to obtain a new commercial or multifamily residential operating permit is approximately $23,175 per permit with about 2.0 million of these sources annually benefiting from this rule by avoiding these costs for the phase-in period. The total regulatory relief or benefits for smaller sources of GHG amount to approximately $49.5 billion per year under Steps 1 and 2 of the phase-in period. Avoided costs for sources at regulatory alternative threshold levels of 50,000 tpy and 25,000 tpy CO2e are also presented in Table 3.0. All benefits estimates shown in this report are in 2007$. State, local, and tribal permitting authorities will also benefit from this rule by avoiding the administrative burden of processing over 2 million title V operating permits for small industrial, commercial, and residential sources of GHG annually. Avoided permitting cost estimates for permitting authorities and sources are calculated based on information obtained from the April 2007 Information Collection Request for State Operating Permit Regulations4 Annual values are derived from Tables 7 and 8 of this document. For consistency, the permitting authority labor costs are updated to 2007 dollars using the 2007 General Schedule Salary Table from the Office of Personnel Management. For the purposes of this analysis, we assume that 4 Information Collection Request for State Operating Permit Regulations (Renewal), EPA ICR Number 1587.07, OMB Control Number 2060-0243, 2007. 35 ------- Table 3.0. Annual Title V Regulatory Relief (Avoided Cost) Estimates for Affected Sources of GHG and Permitting Authorities at Alternative Thresholds1'2'3 Activity Sources New Industrial New Commercial/Residential Permit Revisions due to GHG Source Total Permitting Authority New Industrial New Commercial/Residential Permit Revisions due to GHG Permitting Authority Total Total Title V Regulatory Relief Percentage of Emissions Covered3 Cost per Permit (2007$) $46,350 $23,175 $1,677 $19,688 $9,844 $1,840 Regulatory Alternative 25,000 CO2e tpy Number of Permits 69,726 1,985,504 52,639 2,107,869 69,726 1,985,504 52,639 2,107,869 Avoided Costs (millions 2007$) $3,231.8 $46,014.1 $88.3 $49,334.1 $1,372.8 $19,545.3 $96.9 $21,014.9 $70,349 3% Regulatory Alternative 50,000 CO2e tpy Number of Permits 70,848 1,985,740 59,930 2,116,518 70,848 1,985,740 59,930 2,116,518 Avoided Costs (millions 2007$) $3,283.8 $46,019.5 $100.5 $49,403.8 $1,394.9 $19,547.6 $110.3 $21,052.8 $70,456.6 8% Final Rule: Step 2 100,000 CO2e tpy Number of Permits 71,657 1,985,930 60,921 2,118,508 71,657 1,985,930 60,921 2,118,508 Avoided Costs (millions 2007$) $3,321.3 $46,023.9 $102.2 $49,447.4 $1,410.8 $19,549.5 $112.1 $21,072.4 $70,519.8 11% Final Rule: Step 1 Anyway Threshold Number of Permits 71,829 1,985,948 61,836 2,119,613 71,829 1,985,948 61,836 2,119,613 Avoided Costs (millions 2007$) $3,329.3 $46,024.3 $103.7 $49,457.3 $1,414.2 $19,549.7 $113.8 $21,077.6 $70,534.9 13% Sums may not add due to rounding. 1 Avoided costs shown represent the annual estimates of the regulatory burden relief from this rule and for regulatory alternatives for over 2 million sources of GHGs (about 1/3 of the total number of title V sources expected to obtain regulatory relief). See Appendix B and C for more details. Sources experiencing regulatory relief are those with the potential to emit less than the threshold levels annually. 2 These estimates are explained in more detail in Attachment C " Summary of Methodology and Data Used to Estimate Burden Relief and Evaluate Resource Requirements at Alternative Greenhouse Gas Permitting Thresholds." 3 Percentage of emissions covered represents estimated actual emissions from sources expected to experience regulatory relief as a percentage of total stationary source GHG emissions. ------- commercial/residential sources that exceed the major source threshold due to GHG emissions will not likely have as substantial applicable permitting cost requirements as industrial sources. We assumed that permits for such sources will require only one half the time to prepare and issue as those for industrial sources, which have applicable requirements in addition to GHG. Therefore, it is estimated that new commercial/residential permits require 50 percent of the time needed for new industrial permits, or 214 hours compared to 428 hours for permitting authorities. For significant revisions and permit renewals, it is assumed that incorporating GHG information adds 40 hours, or an additional 10 percent to the current updating and processing time. For more information on the methods used to calculate permit processing costs for permitting authorities for title V permitting, see Attachment C, "Summary of Methodology and Data Used to Estimate Burden Relief and Evaluate Resource Requirements at Alternative Greenhouse Gas Permitting Thresholds." The cost savings for permitting authorities relating to title V are summarized in Table 3.0 and are estimated to exceed $21 billion annually. Costs avoided annually for permitting authorities at alternative threshold levels other than Steps 1 and 2 are also shown on Table 3.0. This rule specifies a phased-in step approach to establish title V and PSD thresholds. For this reason, it is appropriate to assess the regulatory relief during the various steps of the phase-in period in addition to looking at regulatory relief on an annual basis as previously discussed. Since thresholds for only Steps 1 and 2 are promulgated in this rulemaking with a potential Step 3 to be considered only after subsequent rulemaking, we calculate the regulatory relief possible for a two and one-half year period, the approximate time period covered by Steps 1 and 2 of this tailoring rule. Considering the regulatory relief for the 2.5 year period allows us to evaluate alternative regulatory relief based not only on threshold levels, but also based upon the timing of the steps of the phase-in period. Table 3-1 presents the Steps 1 and 2 regulatory relief for title V based upon alternative regulatory thresholds and the timing of the phase-in steps. Alternatives of 25,000 tpy CO2e, 50,000 tpy CO2e, 100,000 tpy CO2e, and the 'anyway' thresholds are evaluated as if they were implemented for the entire Step 1 and 2 period. The 25,000 tpy CO2e and the 'anyway' threshold regulatory relief shown represent the bounding estimates for regulatory relief for these threshold alternatives as well as alternative timings of the steps. If the 25,000 tpy CO2e threshold were imposed for Steps 1 and 2 of the phase-in, regulatory reliefer avoided title V permitting costs for sources and permitting authorities would amount to approximately $175.9 37 ------- billion for a Steps 1 and 2 phase-in period. Alternatively if the 'anyway' based threshold were imposed for a 2.5 year period, the regulatory relief would be $176.3 billion for sources and permitting authorities during the first two steps of the phase-in period. The final tailoring rule promulgated, establishes the 'anyway' threshold for Step 1 and 100,000 tpy CC^e threshold for Step 2. The total regulatory relief for the final rule for the 2.5 year period for title V is estimated to be $176.3 billion. Altering Step 2 to be 25,000 tpy CO2e and 50,000 tpy CO2e with Step 1 as the 'anyway' threshold would result regulatory relief estimates for the three year period of $176 billion and $176.2 billion, respectively. 3.2 Avoided Information Collection Costs Associated with the PSD Program This rulemaking limits the new sources requiring PSD permits for Step 1 to those that would be required to comply with PSD for non-GHG emissions. For modifying sources, the significance level requiring permits is 75,000 or greater tpy CC^e PTE. In Step 2 of the phase-in period, the threshold becomes 100,000 tpy CC^e PTE or greater for new sources and the significance level for modifying sources remains at 75,000 or greater tpy CC^e. Table 3.2 summarizes the estimated benefits to small GHG sources resulting from this final rule. Annual regulatory relief for Steps 1 and 2 of the phase-in period, as well as additional alternative regulatory thresholds, are depicted on Table 3.2. The estimated annual burden or permit-related costs avoided by small GHG sources amount to around $5.5 billion annually during Step 1 and $5.4 billion during Step 2 with the burden costs per permit expected to be $131 thousand for new sources, $84.5 thousand for modified industrial sources, $82.3 thousand for new commercial or residential sources, and $59.2 thousand for modifying commercial and residential sources. State, local, and tribal permitting authorities are expected to avoid administrative costs of $1.5 billion under Step 1 and $1,485 million under Step 2 annually. Burden estimates for the PSD program permitting authorities are calculated based on listed values obtained from Tables 6-1 and 6-2 on pages 18-19 in the Information Collection Request for Prevention of Significant Deterioration and Nonattainment New Source Review 38 ------- Table 3-1. Steps 1 and 2 Title V Regulatory Relief (Avoided Cost) Estimates for Affected Sources of GHG and Permitting Authorities at Alternative Thresholds1'2 Activity Sources New Industrial New Commercial/Residential Permit revisions due to GHG Source Total Permitting Authority New Industrial New Commercial/Residential Permit revisions due to GHG Permitting Authority Total Total Title V Regulatory Relief Regulatory Relief Estimates for Step 1 and 2 of the Phase-In Period (January 2, 2011 through July 1, 2013) Regulatory Alternatives (Avoided Permittin 25,000 CO2e tpy $8,079.5 $115,035.3 $220.8 $123,335.5 $3,431.9 $48,863.3 $242.1 $52,537.3 $175,872.8 50,000 CO2e tpy $8,209.5 $115,048.8 $251.3 $123,509.5 $3,487.2 $48,869.1 $275.7 $52,632 $176,141.5 100,000 CO2e tpy $8,303.3 $115,059.8 $255.5 $123,618.5 $3,527 $48,873.7.0 $280.2 $52,680.9 $176,299.4 Anyway Threshold $8,323.3 $115,060.8 $259.3 $123,643.3 $3,535.4 $48,874.2 $284.5 $52,694.1 $176,337.5 g Costs in million 2007$) Anyway/ 50,000 $8,232.3 $115,051.2 $252.9 $123,536.3 $3,496.8 $48,870.1 $277.4 $52,644.3 $176,180.6 Anyway/25,000 $8,128.3 $115,040.4 $228.5 $123,397.1 $3,452.6 $48,865.4 $250.6 $52,568.6 $175,965.7 Final Rule Anyway/100,000 $8,307.3 $115,060.0 $256.3 $123,623.5 $3,528.7 $48,873.8 $281.1 $52,683.6 $176,307.1 VO Benefits represent regulatory relief or avoided costs for sources with the potential to emit below the thresholds shown. 1 Avoided costs shown represent the 21A year estimates of the regulatory burden relief from this rule and for regulatory alternatives for Steps 1 and 2 for the period Jan. 2, 2011 through July 1, 2013. Alternatives 25,000 CO2e tpy, 50,000 CO2e tpy, 100,000 CO2e tpy, and non-GHG based assume these thresholds remain in effect for entire 21A years. Alternatives Anyway/50,000 and Anyway/25,000 assume the Anyway threshold for Step 1 and 50,000 CO2e tpy and 25,000 CO2e tpy thresholds for Step 2, respectively. Finally the final rule estimates shown in the last column of the table assume the Anyway threshold for Step 1 (one half year) and the 100,000 CO2e tpy threshold for Step 2 (two years). Sums may not add due to rounding. 2 These estimates are explained in more detail in Attachment C "Summary of Methodology and Data Used to Estimate Burden Relief and Evaluate Rprmirpmpnts at Alternative Greenhouse Gas Permitting Thresholds " ------- Table 3.2. Annual PSD Regulatory Relief (Avoided Costs) for Sources of GHG and Permitting Authorities at Alternative Thresholds 1,2 Activity Sources New Industrial New Commercial/Residential Source Total Permitting Authority New Industrial New Commercial/Residential Permitting Authority Total Total PSD Regulatory Relief Cost per Permit (2007$) $84,530 $59,152 $23,243 $16,216 Regulatory Alternative 25,000 CO2e tpy Number of Permits 16,892 55,446 72,338 16,892 55,446 72,338 Avoided Costs (millions 2007$) $1,427.9 $3,279.7 $4,707.6 $392.6 $899.1 $1,291.7 $5,999.4 Regulatory Alternative 50,000 CO2e tpy Number of Permits 24,183 55,481 79,664 24,183 55,481 79,664 Avoided Costs (millions 2007$) $2,044.2 $3,281.8 $5,326.0 $562.1 $899.7 $1,461.8 $6,787.8 Step 2 100,000 CO2e tpy Threshold, 75,000 CO2e tpy Significance Level Number of Permits 25,174 55,505 80,679 25,174 55,505 80,679 Avoided Costs (millions 2007$) $2,128.0 $3,283.2 $5,411.2 $585.1 $900.1 $1,485.2 $6,896.4 Stepl Anyway 75,000 CO2e tpy Significance Level Number of Permits 26,089 55,509 81,598 26,089 55,509 81,598 Avoided Costs (millions 2007$) $2,205.3 $3,283.5 $5,488.8 $606.4 $900.1 $1,506.5 $6,995.3 1 Avoided costs shown represent annual estimates of the regulatory burden relief for this rule and for regulatory alternatives for sources with the potential to emit below the threshold. Sums may not add due to rounding. 2 Attachment C: "Summary of Methodology and Data Used to Estimate Burden Relief and Evaluate Resource Requirements at Alternative Greenhouse Gas Permitting Thresholds ------- August 2008.5 As shown in Table 3.2, State, local, and tribal permitting authorities are estimated to expend $23,243 per permit to process a new GHG industrial PSD permit and $16,216 per permit for a new commercial or residential PSD permit. It is assumed that permit preparation and issuance for commercial/residential permits require less time to prepare and issue than industrial source permits since commercial/residential sources would likely be somewhat less complex in terms of numbers and types of emission sources and control requirements. Estimates obtained are additional burden and costs to those currently experienced by permitting authorities and sources. For more information on the estimates of burden costs for PSD permits, see Attachment C. Avoided costs estimates for regulatory alternatives of 25,000 tpy (proposal level) and 50,000tpy CC^e PTE are also shown in Table 3.2. The PSD estimated costs on Table 3.2 represent annual estimates of costs avoided for sources and permitting authorities. Regulatory relief alternatives for Steps 1 and 2 for PSD are shown on Table 3.3. Evaluating regulatory alternatives for the approximate 2.5 year time period covered by Steps 1 and 2 provides comparisons of the threshold levels and the impacts of timing choices for the steps. As shown on Table 3.3, regulatory alternatives of 25,000 tpy CC^e, 50,000 tpy CC^e, 100,000 tpy CO26, and the 'anyway' thresholds are evaluated as if they were implemented for the entire two step phase-in period. The 25,000 tpy CC^e and the 'anyway' thresholds represent the bounding alternatives over the period with the 25,000 tpy CC^e alternative providing the least regulatory relief and the 'anyway' threshold the greatest. If the 25,000 tpy CO2e were implemented for Steps 1 and 2, the regulatory relief for PSD sources would amount to approximately $14,998.3 million during the Steps 1 and 2 phase-in period. This regulatory relief would be $17,488.3 million over the same period with the 'anyway' threshold. All other alternatives shown and combinations of regulatory alternatives within the 2.5 year time frame lie within the 25,000 tpy CC^e threshold and the 'anyway' threshold. The final rule 'anyway' threshold for Step 1 and 100,000 tpy CO2e threshold for Step 2 results in PSD regulatory relief of $17,290.5 million for the 2.5 year phase-in period. This rule also alleviates the regulatory burden associated with complying with PSD BACT requirements for small new and modifying sources. The BACT costs foregone are not ' Prevention of Significant Deterioration and Non-Attainment Area New Source Review (Renewal), EPA ICR Number 123.23, OMB Control Number 2060-0003, 2008. 41 ------- estimated or shown in Tables 3.2 or 3.3 because of the significant uncertainties involved in these requirements for affected sources and lack of sufficient information to estimate these costs currently. Likewise, the foregone emission reductions associated with these BACT requirements for small sources are not estimated. This issue is discussed further in Section 4 of this RIA. The benefits estimates for this rule are subject to limitations and uncertainties that are discussed in Sections of this RIA. Table 3.4 presents the title V and PSD regulatory relief for the full phase-in period of approximately five years. The final rule benefits are shown for two alternatives for Step 3, one in which Step 3 remains at the Step 2 level and one in which Step 3 becomes the minimum threshold of at least 50,000 tpy CC^e previously discussed. These alternatives for Step 3 bound the net benefit estimates for the entire phase in period. If Step 3 remains at the Step 2 level, net benefits for the five year period are $387,153.4 +B million. This benefit estimate becomes $386,724.1 +B million if Step 3 becomes the minimum level of 50,000 tpy for the five year phase-in period. The letter B represents the benefits we are not able to quantify in this analysis and are discussed in section 8 of this report. Given the short time frame of the impact of this final rule, we did not consider the time value of money or discount the benefit and cost estimates provided in this report, rather we assume these benefit and cost estimates are occurring currently. All benefit dollar estimates shown are based upon 2007$. 42 ------- Table 3.3 Step 1 and 2 PSD Regulatory Relief (Avoided Costs) for Sources of GHG and Permitting Authorities at Alternative Thresholds 1,2 Activity Sources New Industrial New Commercial/Residential Source Total Permitting Authority New Industrial New Commercial/Residential Permitting Authority Total Total PSD Regulatory Relief Regulatory Relief for Step 1 and 2 Phase-in Period ( January 2, 2011 through July 1, 2013) Regulatory Alternatives (Avoided Permitting Costs in millions 2007$) 25,000 CO2e tpy $3,569.8 $8,199.3 $11,769.0 $981.5 $2,247.8 $3,229.3 $14,998.3 50,000 CO2e tpy $5,110.5 $8,204.5 $13,315.0 $1,405.3 $2,249.3 $3,654.5 $16,969.5 100,000 CO2e tpy $5,320.0 $8,208.0 $13,528.0 $1,462.8 $2,250.3 $3,713.0 $17,241.0 Anyway Threshold $5,513.3 $8,208.8 $13,722.0 $1,516.0 $2,250.3 $3,766.3 $17,488.3 Anyway/50,000 $5,191.1 $8,205.4 $13,396.4 $1,427.4 $2,249.5 $3,676.9 $17,073.3 Anyway/25,000 $3,958.5 $8,201.2 $12,159.6 $1,088.4 $2,248.3 $3,336.7 $15,496.3 Final Rule Anyway/100,000 $5,358.7 $8,208.2 $13,566.8 $1,473.4 $2,250.3 $3,723.7 $17,290.5 Benefits are regulatory relief or avoided costs for sources with the potential to emit below the thresholds shown. 1 Avoided costs shown represent the 1l/i year estimates of the regulatory burden relief from this rule and for regulatory alternatives for Steps 1 and 2 of the phase- in period January 2, 2011 through July 1, 2013. Alternatives 25,000 CO2e tpy, 50,000 CO2e tpy, 100,000 CO2e tpy, and 'anyway' assume these thresholds remain in effect for 1l/i years. Alternatives Anyway/50,000 and Anyway/25,000 assume the Anyway threshold for Step 1 and 50,000 CO2e tpy and 25,000 CO2e tpy thresholds for Step 2, respectively. Finally the final rule estimates shown in the last column of the table show the Anyway threshold for Step 1 (one half year), and the 100,000 CO2e tpy threshold for Step 2 (two years). Sums may not add due to rounding. 2 Attachment C: "Summary of Methodology and Data Used to Estimate Burden Relief and Evaluate Resource Requirements at Alternative Greenhouse Gas Permitting Thresholds." 43 ------- Table 3.4 Benefits of the Final Rule and Step 3 Regulatory Alternatives Benefits for the Five Year Period Beginning January 2, 2011 Benefits - Regulatory Relief Sources Title V1 PSD2 Total Source Regulatory Relief Permitting Authority Title V1 PSD2 Total Permitting Authority Total Regulatory Relief Regulatory Alternative (millions 2007$) Final Rule + Possible Step 3 of 100, 000 tpy CO2e3 $247,253.6 $27,094.7 $274,348.3 $105,368.5 $7,436.61 $112,805.1 $387,153.4+5 50, 000 tpy CO2e4 $247,145.3 $26,881.8 $274,027.1 $105,318.8 $7,378.1 $112,696.8 $386,724.1+5 Benefits are regulatory relief for sources with the potential to emit below the thresholds shown. B - unqualified benefits of the rule include regulatory relief from B ACT requirements for PSD sources IReflects estimates of regulatory relief or avoided permit burden costs for title V GHG sources and permitting authorities. 2 Shows estimates of regulatory relief or avoided permit burden costs for GHG PSD sources and permitting authorities. 3 Includes 1/2 year of Step 1 (anyway threshold), 41/2 years of Step 2 (100,000 threshold), 4 Includes 1/2 year of Step 1 (anyway threshold), 2 years of Step 2 (100,000 threshold), and 21/2 years of Step 3 alternative of 50,000. 44 ------- Section 4 Social Costs EPA examined the social costs of this final rule. For this rule, the social costs represent the foregone environmental benefits that would occur if regulatory relief was not offered to small sources of GHG emissions. This action is one of regulatory relief since it increases the emissions thresholds for the title V and PSD programs, as they apply to sources of GHG, to levels above those in the CAA. Previous sections have discussed the avoided cost of such relief, but there is also a social cost imposed by such relief because this rule may forego some of the possible benefits associated with title V and PSD programs for sources of GHG emissions below Step 1 and 2 phase-in thresholds but above the statutory 100/250 tpy levels. These benefits are those attributed to title V and PSD permitting programs in general. These benefits are based on the relevance of these programs to policymaking, transparency issues, and market efficiency and, therefore, are very difficult to quantify and monetize. For title V, they include the benefits of improved compliance with CAA requirements that stem from (1) improved clarity regarding applicability of requirements; (2) discovery and required correction of noncompliance prior to receiving a permit; (3) improving monitoring, recordkeeping, and reporting concerning compliance status; (4) self-certification of compliance with applicable requirements initially and annually, and prompt reporting of deviations from permit requirements; (5) enhanced opportunity for the public to understand and monitor sources' compliance obligations; and (6) improved ability of EPA, permitting authorities, and the public to enforce CAA requirements. However, it is important to remember that a title V permit does not add new requirements for pollution control itself but rather collects all of a facility's applicable requirements under the CAA in one permit. Therefore, the compliance benefits above are less when title V permits contain few or no CAA applicable requirements. During the first two steps of this phase-in period, we expect that the vast majority of sources excluded from title V would be sources that have no CAA applicable requirements for GHG emissions and few or no requirements for other pollutants because their emissions of those pollutants are so small. For this reason, although it is extremely difficult to measure the degree of improved compliance, if any, that would be foregone or to quantify the social costs that would be imposed, we expect that they would be negligible. 45 ------- For PSD, the primary social cost imposed by the tailoring rule stems from the foregone benefit of applying BACT to the tens of thousands of small new sources and modifications that will be below our thresholds during the first phase. This social cost potentially weighs against the cost savings described above that stem (in part) from avoiding the administrative and control costs of applying BACT to these sources. The BACT requirement ensures that when new and modified sources increase their emissions they are using state-of-the-art emission controls and afford the public an opportunity to comment on the control decision. It does not prohibit increases, but it ensures that such controls are applied. Delaying the BACT requirement for numerous small sources during the first phase of this rule could allow increases from these smaller sources that are greater than they would be if BACT were applied. A detailed analysis of this difference is beyond the scope of this rule because we do not have detailed information on the universe of these tens of thousands of small PSD actions, the candidate BACT technologies for each of them, how permitting authorities would make the BACT decisions, and how the BACT limit would compare to what would otherwise be installed absent BACT. Below we present an illustrative example of how BACT impacts might be determined for sources that would be excluded from review under the tailoring rule. This example illustrates the difficulty in quantifying the social costs of avoided BACT but helps explain the nature of such costs. To assess the effect of avoided BACT, we would identify the universe of source types that are affected by the tailoring rule. More specifically, we would have to project the number of various source types (within those affected by the tailoring rule) that would actually be constructing or modifying. We have generally characterized these sources as part of the tailoring rule threshold evaluation and have determined a large proportion of these to consist of small commercial and residential sources. This determination was based on rough energy usage data, but to assess BACT, we would require more specific information about the proposed equipment that will actually be emitting GHG (e.g., water heaters, furnaces, cooking equipment, dryers), and more specific characterization would be subject to a very high degree of uncertainty. Following characterization of new and modified sources, we would need to determine, for each category of source, what GHG control technologies are available for such equipment. For commercial sources, we may have to determine commercial availability of a range of lower emitting processes, more efficient technologies, and other techniques for improving energy efficiency. Next, we would assess affected sources' capital and operating costs of control 46 ------- options and determine energy and environmental impacts. Finally, we would need to apply judgment (as the permitting authority would do in each case) to select the technology that represented the maximum degree of control taking the costs, energy, and environmental impacts into account. The social cost component of the impact of foregoing BACT for sources that construct or modify during the first phase would be represented by the difference between the increased emissions that would result from such sources absent BACT and the increase that would be allowed under the BACT requirement. However, although we can point to the existence of such differences, we cannot quantify them (though as explained below we expect that overall they will be very limited in scope and magnitude). Since there has been no regulatory experience with controlling GHG emissions from these sources, and limited permitting experience of any kind with mandatory control requirements on smaller commercial and residential sources, we are not in a position at this point to identify the specific control technologies and quantify this difference to estimate the greater increases that might occur in the absence of applying the BACT process to these sources across the country. In addition, since the PSD BACT review and selection process is implemented on a case-by-case basis, there is additional uncertainty in predicting program- wide reductions because even for similar sources, permitting authorities may ultimately weigh the BACT factors differently and adopt different control measures. For all these reasons, it is not possible at this time to quantify the social costs of avoided BACT. However, we note that the universe of possible emissions that would be regulated by sources excluded under the tailoring rule is small compared to those that would remain subject to PSD. The sources excluded in the first steps of this phased-in rule comprise only 11 percent of total stationary source GHG emissions, while 68 percent remain subject to regulation. The remaining fraction of stationary GHG source emissions come from sources below statutory CAA thresholds of 100/250 tons per year. Furthermore, we expect the emissions differences due to BACT controls for sources excluded by the tailoring rule to be relatively small because of the lack of available cost-effective capture and control technologies for GHG at such sources that are akin to those that exist for conventional pollutants and large sources, as well as the likelihood that even in the absence of BACT such sources would already be installing relatively efficient GHG technologies to save on fuel costs. Thus, although potential benefits would be foregone by excluding smaller sources from the permitting programs, these benefits are likely to be small. 47 ------- Under the tailoring rule, we will work during the 6-year period to greatly improve our understanding of both the administrative costs of regulating and the social costs of not regulating smaller sources under PSD and title V, and we will rely on that information to support our future threshold analyses called for under the rule. Since EPA is unable to quantify these GHG emission reductions foregone at this time because of these uncertainties involved in this estimation, it is also not possible to provide a monetized estimate of the foregone benefits or social costs of this rule. If such emission reductions foregone were quantified, EPA could use the social cost of carbon benefit estimates such as those used in the "Rulemaking to Establish Light Duty Vehicle Greenhouse Gas Emission Standards and Corporate Average Fuel Economy Standards"6 recently published to compute the dollar value associated with the social costs of this rule. Nonetheless, we expect that the value would be small because, as discussed above, the emissions differences from which this value would be computed are small. In reaching the decisions for this GHG tailoring rule, EPA recognizes the GHG emissions can remain in the atmosphere for decades to centuries, meaning that their concentrations become well mixed throughout the global atmosphere regardless of emission origin, and their effects on climate are long lasting and significant. A detailed explanation of climate change and its impact on health, society, and the environment is included in EPA's technical support document for the endangerment finding (Docket ID No. EPA-HQ-OAR-2009-0171). EPA recognizes the importance of reducing climate change emissions for all sources of GHG emissions, including those sources afforded regulatory relief in this rule, and plans to address potential emission reductions from these small sources using voluntary and energy efficiency approaches. Elsewhere, we have discussed EPA's interest in continuing to use regulatory and/or nonregulatory tools for reducing emissions from smaller GHG sources because we believe that these tools will likely result in more efficient and cost-effective regulation than would case-by- case permitting. 6 U.S. EPA 2010. Rulemaking to Establish Light Duty Vehicle Greenhouse Gas Emission Standards and Corporate Average Fuel Economy Standards. EPA-HQ-OAR-2009-0472. http://www.epa.gov/otaq/climate/regulations/ghg-preamble-regs.pdf. 48 ------- Section 5 Net Benefits The net benefits of this GHG tailoring rule represent the difference between the benefits and costs of this rule to society. This section presents the net benefits of the final rule and other regulatory alternatives. As discussed in Section 3, this rule is one of regulatory relief and the benefits to society are estimates the regulatory relief (avoided permit burden costs) to sources and permitting authorities for Steps 1 and 2 of the phase-in period. Within this RIA we are providing an illustrative monetary estimate of statutory permitting requirements to show the magnitude of the savings that hypothetically result from this rulemaking. While we believe it is impossible to implement these permit requirements by January 2, 2011 for the reasons laid out in the preamble, it is useful to understand the scale of what the burden may have been. For sake of simplicity, we refer to this illustrative monetary estimate as the monetized benefits of the regulatory relief presented by this rulemaking or regulatory relief benefits for brevity. The social costs of the rule are the foregone environmental benefits in the form of potential GHG emission reductions that could occur during the phase-in period and are discussed in Section 4. This rulemaking provides regulatory relief for a phase-in period of approximately 5 years to smaller sources of GHG by phasing in the statutory permitting threshold at levels above statutory requirements. This final rule establishes thresholds and PSD significance levels for Steps 1 and 2 of the phase-in period (the 2.5 year period between January 2, 2011 and July 1, 2013), commits to considering a further Step 3, and indicates floor title V and PSD threshold levels from July 1, 2013 through April 30, 2016. While the EPA commits to undertake a rulemaking for a further Step 3, the ultimate outcome for sources of GHG from this additional rulemaking is unknown at this time. Annual estimates for the final rule Steps 1 and 2 and regulatory alternatives are presented in Table 5.1. As Table 5.1 indicates, the annual net benefits associated with the final rule Step 1 are $77,530.2 million +B-C and for Step 2 are $77,416.2 +B-C million annually, where B denotes the unquantified benefits and C the quantified costs of this final rule. These unquantified benefits and costs are discussed in more detail in the limitations and uncertainties Section 8 of this report. Table 5.2 shows the final rule Steps 1 and 2 with regulatory alternatives for the two and one-half year phase-in period January 2, 2011 through July 1, 2013. The net benefits of the final rule for Steps 1 and 2 are $193,597.5+5-C million for the two and one-half year period. 49 ------- Finally, Table 5.3 presents the final rule net benefits with two alternatives for Step 3, one in which Step 3 remains at the Step 2 level of 100, 000 tpy CC^e and one in which Step 3 becomes the minimum threshold of at least 50,000 tpy CO2e previously discussed. These alternatives for Step 3 bound the net benefit estimates for the entire phase in period. If Step 3 remains at the Step 2 level, net benefits for the five year period are $387,153.4 +B-C million. This net benefit estimate becomes $386,724.1 +B-C million if Step 3 becomes the minimum level of 50,000 tpy CO26 threshold for the five year phase-in period. Given the short time frame of the impact of this final rule, we did not consider the time value of money or discount the benefit and cost estimates provided in this report, rather we assume these benefit and cost estimates are occurring currently. All dollar estimates shown are based upon 2007$. Table 5.1 Annual Net Benefits for GHG Tailoring Rule Regulatory Alternatives Benefits - Regulatory Relief Sources Title V1 PSD2 Total Source Regulatory Relief Permitting Authority Title V1 PSD2 Total Permitting Authority Total Regulatory Relief Costs - Foregone GHG Emission Reductions Title V & PSD Net Benefits3 Annual Benefits and Costs for Regulatory Alternatives (millions of 2007S)3 Final Rule Step 1 Anyway $49,457.3 $5,488.8 $54,946.1 $21,077.6 $1,506.5 $22,584.1 $77,530.2+B C $77,530.2+B-C Final Rule Step 2 100,000 tpy CO2e $49,447.4 $5,411.2 $54,858.6 $21,072.4 $1,485.2 $22,557.6 $77,416.2+B C $77,416.2+B-C 50,000 tpy CO2e $49,403.8 $5,326.0 $54,729.8 $21,052.8 $1,461.8 $22,514.6 $77,244.4+B C $77,244.4+B-C 25,000 tpy CO2e $49,334.2 $4,707.6 $54,041.8 $21,014.9 $1,291.7 $22,306.6 $76,348.4+B C $76,348.4+B-C Benefits are regulatory relief or avoided permit costs for sources with the annual potential to emit less than the threshold shown. B - unqualified benefits of the rule include regulatory relief from B ACT requirements for PSD sources C - unqualified social costs of tailoring rule represents economic value of foregone environmental benefits (possible GHG emission reductions) during Step 1 and 2 of the phase in period. Potential foregone GHG emission reductions during the phase-in period are not known at this time. See Section 4 of the RIA for a qualitative discussion of the social costs of the rule. IReflects estimates of regulatory relief or avoided permit burden costs for title V GHG sources and permitting authorities. 2 Shows estimates of regulatory relief or avoided permit burden costs for GHG PSD sources and permitting authorities. 3 Totals may not sum due to rounding. 50 ------- Table 5.2. Net Benefits of the Final GHG Tailoring Rule and Regulatory Alternatives Benefits - Regulatory Relief Sources Title V1 PSD2 Total Source Regulatory Relief Permitting Authority Title V1 PSD2 Total Permitting Authority Total Regulatory Relief Costs - Foregone GHG Emission Reductions Title V & PSD Net Benefits Step 1 and 2 Phase-In Period (January 2, 2011- July 1, 2013) Regulatory Alternatives (millions of 2007$) Anyway3 $123,643.3 $13,722.0 $137,365.3 $52,694.1 $3,766.3 $56,460.4 $193,825.6+5 C $193,825.6+B-C 100,000 tpy C02e3 $123,618.5 $13,528.0 $137,146.5 $52,681 $3,713.0 $56,393.9 $193,540.4+5 C $193,540.4+B-C 50,000 tpy C02e3 $123,509.5 $13,315.0 $136,824.5 $52,631.9 $3,654.5 $56,286.3 $193,110.9+5 C $193,110.9+B-C 25,000 tpy C02e3 $123,335.5 $11,769.0 $135,104.5 $52,537.3 $3,229.3 $55,766.7 $190,871.1+5 C $190,871.1+B-C Anyway/50,0004 $123,536.3 $13,396.4 $136,932.8 $52,644.3 $3,676.8 $56,321.1 $193,253.9+5 C $193,253.9+B-C Anyway/25,0005 $123,397.1 $12,159.6 $135,556.6 $52,568.7 $3,336.7 $55,905.4 $191,462.0+5 C $191,462.0+B-C Final Rule6 $123,623.5 $13,566.8 $137,190.3 $52,683.6 $3,723.6 $56,407.2 $193,597.5+5 C $193,597.5+B-C Benefits represent regulatory relief for those sources with the annual potential to emit less than the threshold shown. B - unqualified benefits of the rule include regulatory relief from BACT requirements for PSD sources C - unqualified social costs of tailoring rule represents economic value of foregone environmental benefits (potential GHG emission reductions) during Step 1 and 2 of the phase in period. Foregone GHG emission reductions are not known at this time. See Section 4 of the RIA for a qualitative discussion of the social costs of the rule. IReflects estimates of regulatory relief or avoided permit burden costs for title V GHG sources and permitting authorities. 2 Shows estimates of regulatory relief or avoided permit burden costs for GHG PSD sources and permitting authorities. 3 Shows alternative as single step for the 21/2.year phase-in period for 'anyway', 100,000 tpy CO2e, 50,000 tpy CO2e, and 25,000 tpy CO2 e thresholds respectively. 4 Includes Step 1 for one-half year and 50,000 tpy CO2e threshold for two years. 5 Includes Step 1 for one-half year and 25,000 tpy CO2e threshold for two years. 6 Phase-in period for final rule includes 1/2 year of Step 1 'anyway' threshold and 2 years of Step 2 100,000 tpy CO2e threshold. 51 ------- Table 5.3 Net Benefits of the Final Rule and Step 3 Regulatory Alternatives Benefits - Regulatory Relief Sources Title V1 PSD2 Total Source Regulatory Relief Permitting Authority Title V1 PSD2 Total Permitting Authority Total Regulatory Relief Costs - Foregone GHG Emission Reductions Title V & PSD Net Benefits Regulatory Alternatives (millions 2007$) Final Rule + Possible Step 3 (five year period) 100, 000 tpy CO2e3 $247,253.6 $27,094.7 $274,348.3 $105,368.5 $7,436.61 $112,805.1 $387,153.4+5 C $387,153.4+B-C 50, 000 tpy CO2e4 $247,144.1 $26,881.8 $274,025.9 $105,320.2 $7,378.1 $112,698.2 $386,724.1+5 C $386,724. 1+B-C Benefits are regulatory relief for sources with the annual potential to emit less than the thresholds shown. B - unqualified benefits of the rule include regulatory relief from B ACT requirements for PSD sources C - unqualified social costs of tailoring rule represents economic value of foregone environmental benefits (potential GHG emission reductions) during Step 1, 2,and 3 of the phase in period. Foregone GHG emission reductions are not known at this time. See Section 4 of the RIA for a qualitative discussion of the social costs of the rule. IReflects estimates of regulatory relief or avoided permit burden costs for title V GHG sources and permitting authorities. 2 Shows estimates of regulatory relief or avoided permit burden costs for GHG PSD sources and permitting authorities. 3 Includes 1A year of Step 1 (anyway threshold), 2 years of Step 2 (100,000 threshold), and 2!/2 years of Step 3 (alternative of 100,000 threshold). Covers five year period beginning January 2, 2011. 4 Includes 1A year of Step 1 (anyway threshold), 2 years of Step 2 (100,000 threshold), and 21/2 years of Step 3 (alternative of 50,000 threshold). Covers five year period beginning January 2, 2011. 52 ------- Section 6 Impacts of Regulatory Relief This final rulemaking does not impose economic impacts on any sources or permitting authorities but should instead be viewed as regulatory relief for smaller GHG emission sources. This RIA illustrates the burden impacts avoided as a result of this rule. The avoided impacts of extending these programs for State, local, and tribal permitting authorities are also reported. To estimate the avoided economic impacts, which include small business impacts, EPA estimated cost-to-sales ratios by comparing the estimated total annualized compliance cost per permit per source avoided to industry average revenues per establishment. EPA also evaluated cost-to-sales ratios by comparing avoided burden costs to revenues of firms at different firm size categories, recognizing that the sources required to comply with these CAA permit provisions during the phase-in period are larger emissions sources and more likely to be large business entities. 6.1 Method for Analyzing Avoided Economic and Small Entity Impacts EPA used cost-to-sales comparisons to evaluate the potential impacts to sources affected by this rule. Since this regulatory action provides regulatory relief, these cost-to-sales ratios represent the economic impacts that are avoided or postponed for small GHG sources as a result of this rule. For all regulatory actions, EPA must determine whether a rule will have a significant impact on a substantial number of small entities (SISNOSE). This rule provides regulatory relief to small sources and thus does not have a significant impact on a substantial number of small entities. The approach for estimating the postponed or avoided economic impacts and the small entity analysis are the same for this analysis. The steps followed include gathering data to characterize the affected entities by size, selecting and describing the measures and economic impact thresholds used in the analysis, and determining cost-to-sales ratios for the affected industrial, commercial, and residential categories. 6.1.1 Identifying Affected Sectors and Entities The industrial, commercial, and residential sectors covered by the rule were identified during the development of the cost analysis for the rule. For the industrial sector, these sources are summarized with applicable NAICS codes in Tables 6.0 through 6.3. For commercial and residential sources, the sources are listed in Tables 6.4 through 6.7. 53 ------- 6.1.2 Data Used to Characterize Affected Entities by Size The Census Bureau's Statistics of U.S. Businesses (SUSB) data provide national information on the distribution of economic variables by industry and size.7 Specifically, the tables report data for each industry on the number of firms (Table 6.0), number of establishments (Table 6.1), employment (Table 6.2), and receipts (Table 6.3) by enterprise size category in affected sectors. Similar results are shown for commercial and residential sources in Tables 6.4 through 6.7. The census definitions in these data elements are as follows: • establishment: An establishment is a single physical location where business is conducted or where services or industrial operations are performed. • employment: Paid employment consists of full- and part-time employees, including salaried officers and executives of corporations, who were on the payroll in the pay period including March 12. Included are employees on sick leave, holidays, and vacations; not included are proprietors and partners of unincorporated businesses. • receipts: Receipts (net of taxes) are defined as the revenue for goods produced, distributed, or services provided, including revenue earned from premiums, commissions and fees, rents, interest, dividends, and royalties. Receipts exclude all revenue collected for local, state, and federal taxes. • enterprise: An enterprise is a business organization consisting of one or more domestic establishments that were specified under common ownership or control. The enterprise and the establishment are the same for single-establishment firms. Each multiestablishment company forms one enterprise—the enterprise employment and annual payroll are summed from the associated establishments. Enterprise size designations are determined by the summed employment of all associated establishments.8 The SBA small business size standard(s) is provided for each industry group in order to facilitate comparisons and different thresholds. The receipt data are reported in 2002 dollars. Therefore, to adjust to 2007 dollars for comparison to costs, EPA used the U.S. Bureau of Labor Statistics' consumer price index (CPI). Using the annual U.S. city average price index for all consumer goods, EPA adjusted revenues to 2007 dollars. 7 These data were developed in cooperation with, and partially funded by, the Office of Advocacy of the Small Business Administration (SBA). 8 Because the SBA's business size definitions (SBA, 2008c) apply to an establishment's "ultimate parent company," we assume in this analysis that the "enterprise" definition above is consistent with the concept of ultimate parent company that is typically used for Small Business Regulatory Enforcement Fairness Act (SBREFA) screening analyses and the terms are used interchangeably. 54 ------- Table 6.0. Number of Firms by Industry and Enterprise Size: 2002 Sector Electricity Generating Units Industrial Industrial Industrial Industrial Industrial Industrial Industrial Industrial Industrial Industrial Industrial Industrial Industrial Industrial Industrial Industrial Industrial Industrial Industrial Industrial Industrial Industrial Industrial Industrial Energy Energy Source Category Electricity Generating Units Adipic Acid Production Aluminum Production Ammonia Manufacturing Cement Production Electronics Manufacturing Ferroalloy Production Glass Production HCFC-22 Production Hydrogen Production Iron and Steel Production Lead Production Lime Manufacturing Magnesium Production Nitric Acid Production Petrochemical Production Petroleum Refineries Phosphoric Acid Production Pulp and Paper Manufacturing Silicon Carbide Production Soda Ash Manufacturing Titanium Dioxide Production Zinc Production Ethanol Production Food Processing Underground Coal Mines Oil and Natural Gas Systems NAICS 22 325199 331312 325311 327310 334 331112 327 325120 325120 331111 3314 327410 3314 325311 3251 324110 325312 3221 327910 325181 325188 3314 325193 311 21211 211 SBA Size Standard i 1,000 1,000 1,000 750 2 750 500-1,000 1,000 1,000 1,000 750-1,000 500 750-1,000 1,000 500-1,000 3 500 750 500 1,000 1,000 750-1,000 1,000 500-1,000 500 500 Total Firms 7,603 443 43 130 136 13,833 14 11,395 87 87 1,135 760 41 760 130 1,145 202 35 338 299 25 367 760 60 21,384 802 6,317 <20 Employees 5,636 157 28 78 67 7,698 3 7,108 45 45 687 384 16 384 78 475 84 12 96 161 10 139 384 19 13,645 387 5,184 20 to 99 Employees 901 95 2 18 21 3,291 NA 2,553 12 12 166 161 10 161 18 111 24 5 55 94 5 92 161 16 3,935 246 354 100 to 499 Employees 288 59 3 6 12 1,149 5 590 8 8 53 74 4 74 6 131 23 6 72 25 2 43 74 3 1,247 67 89 500 to 749 Employees 26 16 1 2 6 150 NA 57 NA NA 9 14 1 14 2 29 6 1 7 2 NA 11 14 1 147 6 13 750 to 999 Employees 18 3 1 1 3 80 1 51 3 3 12 8 2 8 1 14 3 NA 12 NA 1 6 8 NA 63 6 11 1,000 to 1,499 Employees 19 10 NA 7 4 86 1 32 2 2 11 5 1 5 7 20 3 2 12 NA 1 3 5 3 96 3 5 (continued) ------- Table 6.0. Number of Firms by Industry and Enterprise Size: 2002 (continued) Sector Energy Waste Treatment Waste Treatment Source Category Oil and Natural Gas Systems Landfills MWCs NAICS 486 562 562 SBA Size Standard 4 $12.5 million $12.5 million Total Firms 244 14,184 14,184 <20 Employees 110 10,726 10,726 20 to 99 Employees 22 1,616 1,616 100 to 499 Employees 16 258 258 500 to 749 Employees 8 22 22 750 to 999 Employees 3 11 11 1,000 to 1,499 Employees 2 15 15 The Census Bureau defines an enterprise as a business organization consisting of one or more domestic establishments that were specified under common ownership or control. The enterprise and the establishment are the same for single-establishment firms. Each multiestablishment company forms one enterprise— the enterprise employment and annual payroll are summed from the associated establishments. Enterprise size designations are determined by the summed employment of all associated establishments. Since the SBA's business size definitions (http://www.sba.gov/size) apply to an establishment's ultimate parent company, we assume in this analysis that the enterprise definition above is consistent with the concept of ultimate parent company that is typically used for SBREFA screening analyses. SBA size standards as of 8/11/08. 1 NAICS codes 221111, 221112, 221113, 221119, 221121, 221122: A firm is small if, including its affiliates, it is primarily engaged in the generation, transmission, and/or distribution of electric energy for sale and its total electric output for the preceding fiscal year did not exceed 4 million megawatt hours. 2NAICS Subsectors 333, 334, 335 and 336: For rebuilding machinery or equipment on a factory basis, or equivalent, use the NAICS code for a newly manufactured product. Concerns performing major rebuilding or overhaul activities do not necessarily have to meet the criteria for being a "manufacturer" although the activities may be classified under a manufacturing NAICS code. Ordinary repair services or preservation are not considered rebuilding. 3 500 to 1,500. For NAICS code 324110: For purposes of Government procurement, the petroleum refiner must be a concern that has 1,500 employees or fewer or has 125,000 barrels per calendar day or less total Operable Atmospheric Crude Oil Distillation capacity. Capacity includes owned or leased facilities as well as facilities under a processing agreement or an arrangement such as an exchange agreement or a throughput. The total product to be delivered under the contract must be at least 90 percent refined by the successful bidder from either crude oil or bona fide feedstocks. 4 Subsector 486: Pipeline Transportation (486110 Pipeline Transportation of Crude Oil 1,500, 486210 Pipeline Transportation of Natural Gas $7.0 million, 486910 Pipeline Transportation of Refined Petroleum Products 1,500, 486990 All Other Pipeline Transportation $34.5 million). ------- Table 6.1. Number of Establishments by Affected Industry and Enterprise Size: 2002 Sector Electricity Generating Units Industrial Industrial Industrial Industrial Industrial Industrial Industrial Industrial Industrial Industrial Industrial Industrial Industrial Industrial Industrial Industrial Industrial Industrial Industrial Industrial Industrial Industrial Industrial Industrial Energy Source Category Electricity Generating Units Adipic Acid Production Aluminum Production Ammonia Manufacturing Cement Production Electronics Manufacturing Ferroalloy Production Glass Production HCFC-22 Production Hydrogen Production Iron and Steel Production Lead Production Lime Manufacturing Magnesium Production Nitric Acid Production Petrochemical Production Petroleum Refineries Phosphoric Acid Production Pulp and Paper Manufacturing Silicon Carbide Production Soda Ash Manufacturing Titanium Dioxide Production Zinc Production Ethanol Production Food Processing Underground Coal Mines NAICS 22 325199 331312 325311 327310 334 331112 327 325120 325120 331111 3314 327410 3314 325311 3251 324110 325312 3221 327910 325181 325188 3314 325193 311 21211 SBA Size Standard i 1,000 1,000 1,000 750 2 750 500-1,000 1,000 1,000 1,000 750-1,000 500 750-1,000 1,000 500-1,000 3 500 750 500 1,000 1,000 750-1,000 1,000 500-1,000 500 Total Establish- ments 18,432 640 50 157 253 15,883 17 16,674 551 551 1,242 958 77 958 157 2,287 349 50 628 347 38 611 958 66 25,698 1,194 <20 Employees 5,715 157 28 78 67 7,709 3 7,161 45 45 690 386 18 386 78 478 85 12 97 161 10 141 386 20 13,719 390 20 to 99 Employees 1,423 99 2 18 29 3,435 NA 3,302 20 20 169 174 13 174 18 316 29 5 55 100 5 111 174 16 4,254 279 100 to 499 Employees 1,126 78 4 15 22 1,497 7 1,788 20 20 62 108 6 108 15 231 28 6 88 42 4 69 108 5 1,951 138 500 to 749 Employees 282 24 1 5 11 282 NA 306 NA NA 9 24 7 24 5 68 10 2 13 2 NA 38 24 1 370 23 750 to 999 Employees 144 4 1 1 9 130 1 438 30 30 19 14 19 14 1 63 7 NA 34 NA 1 25 14 NA 211 20 1,000 to 1,499 Employees 209 17 NA 12 20 174 1 337 55 55 18 11 4 11 12 97 3 2 21 NA 1 6 11 4 319 24 (continued) ------- Table 6.1. Number of Establishments by Affected Industry and Enterprise Size: 2002 (continued) Sector Energy Energy Waste Treatment Waste Treatment Source Category Oil and Natural Gas Systems Oil and Natural Gas Systems Landfills MWCs NAICS 211 486 562 562 SBA Size Standard 500 4 $12.5 million $12.5 million Total Establish- ments 7,629 2,701 17,698 17,698 <20 Employees 5,239 110 10,775 10,775 20 to 99 Employees 456 59 1,839 1,839 100 to 499 Employees 292 79 612 612 500 to 749 Employees 60 115 86 86 750 to 999 Employees 64 5 63 63 1,000 to 1,499 Employees 31 42 58 58 The Census Bureau defines an enterprise as a business organization consisting of one or more domestic establishments that were specified under common ownership or control. The enterprise and the establishment are the same for single-establishment firms. Each multiestablishment company forms one enterprise—the enterprise employment and annual payroll are summed from the associated establishments. Enterprise size designations are determined by the summed employment of all associated establishments. Since the SBA's business size definitions (http://www.sba.gov/size) apply to an establishment's ultimate parent company, we assume in this analysis that the enterprise definition above is consistent with the concept of ultimate parent company that is typically used for SBREFA screening analyses. SBA Small Entity standards as of 8/11/08. ^ l NAICS codes 221111, 221112, 221113, 221119, 221121, 221122: A firm is small if, including its affiliates, it is primarily engaged in the generation, oo transmission, and/or distribution of electric energy for sale and its total electric output for the preceding fiscal year did not exceed 4 million megawatt hours. 2 NAICS Subsectors 333, 334, 335 and 336: For rebuilding machinery or equipment on a factory basis, or equivalent, use the NAICS code for a newly manufactured product. Concerns performing major rebuilding or overhaul activities do not necessarily have to meet the criteria for being a "manufacturer" although the activities may be classified under a manufacturing NAICS code. Ordinary repair services or preservation are not considered rebuilding. 3 500 to 1,500. For NAICS code 324110: For purposes of Government procurement, the petroleum refiner must be a concern that has 1,500 employees or fewer and has 125,000 barrels or less per calendar day total Operable Atmospheric Crude Oil Distillation capacity. Capacity includes owned or leased facilities as well as facilities under a processing agreement or an arrangement such as an exchange agreement or a throughput. The total product to be delivered under the contract must be at least 90 percent refined by the successful bidder from either crude oil or bona fide feedstocks. 4 Subsector486: Pipeline Transportation (486110 Pipeline Transportation of Crude Oil 1,500, 486210 Pipeline Transportation of Natural Gas $7.0 million, 486910 Pipeline Transportation of Refined Petroleum Products 1,500, 486990 All Other Pipeline Transportation $34.5 million). ------- Table 6.2. Number of Employees by Affected Industry and Enterprise Size: 2002 Sector Electricity Generating Units Industrial Industrial Industrial Industrial Industrial Industrial Industrial Industrial Industrial Industrial Industrial Industrial Industrial Industrial Industrial Industrial Industrial Industrial Industrial Industrial Industrial Industrial Industrial Industrial Energy Source Category Electricity Generating Units Adipic Acid Production Aluminum Production Ammonia Manufacturing Cement Production Electronics Manufacturing Ferroalloy Production Glass Production HCFC-22 Production Hydrogen Production Iron and Steel Production Lead Production Lime Manufacturing Magnesium Production Nitric Acid Production Petrochemical Production Petroleum Refineries Phosphoric Acid Pulp and Paper Silicon Carbide Production Soda Ash Manufacturing Titanium Dioxide Production Zinc Production Ethanol Production Food Processing Underground Coal Mines NAICS 22 325199 331312 325311 327310 334 331112 327 325120 325120 331111 3314 327410 3314 325311 3251 324110 325312 3221 327910 325181 325188 3314 325193 311 21211 SBA Size Standard i 1,000 1,000 1,000 750 2 750 500-1,000 1,000 1,000 1,000 750-1,000 500 750-1,000 1,000 500-1,000 3 500 750 500 1,000 1,000 750-1,000 1,000 500-1,000 500 Total Establish- ments 648,254 73,342 10,158 4,949 16,905 1,300,411 2,266 475,476 9,557 9,557 124,703 64,203 4,393 64,203 4,949 172,964 62,132 6,288 162,988 16,079 4,483 49,845 64,203 64,203 1,735 1,443,766 <20 Employees 24,257 1,023 38 363 493 50,279 NA 47,315 88 88 1,434 2,421 33 2,421 363 3,171 454 27 537 1,237 56 566 2,421 2,421 NA 85,850 20 to 99 Employees 39,391 2,412 NA 210 418 139,966 NA 98,637 294 294 6,235 6,680 227 6,680 210 10,392 942 NA 2,279 3,637 NA 881 6,680 6,680 NA 156,158 100 to 499 Employees 46,942 3,232 NA NA 1,157 186,772 NA 85,569 510 510 3,227 10,407 NA 10,407 NA 16,525 2,870 NA 12,554 3,536 NA 1,839 10,407 10,407 NA 218,041 500 to 749 Employees 12,042 NA NA NA NA 53,138 NA 17,516 NA NA 1,456 NA NA NA NA 5,548 2,903 NA 2,782 NA NA NA NA NA NA 67,104 750 to 999 Employees 6,519 754 NA NA NA 33,589 NA 17,946 NA NA NA NA NA NA NA 3,354 NA NA 7,707 NA NA NA NA NA NA 30,099 1,000 to 1,499 Employees 14,653 NA NA NA 2,051 43,361 NA 17,512 NA NA NA 1,337 NA 1,337 NA 5,001 NA NA 7,121 NA NA NA 1,337 1,337 NA 72,262 (continued) ------- Table 6.2. Number of Employees by Affected Industry and Enterprise Size: 2002 (continued) Sector Energy Energy Waste Treatment Waste Treatment Source Category Oil and Natural Gas Systems Oil and Natural Gas Systems Landfills MWCs NAICS 211 486 562 562 SBA Size Standard 500 4 $12.5 million $12.5 million Total Establish- ments 74,915 88,280 300,580 300,580 <20 Employees 2,801 19,336 56,529 56,529 20 to 99 Employees 10,205 12,113 59,245 59,245 100 to 499 Employees 11,576 11,656 37,530 37,530 500 to 749 Employees NA 2,421 5,122 5,122 750 to 999 Employees 1,773 3,551 3,401 3,401 1,000 to 1,499 Employees NA 1,061 3,645 3,645 The Census Bureau defines an enterprise as a business organization consisting of one or more domestic establishments that were specified under common ownership or control. The enterprise and the establishment are the same for single-establishment firms. Each multi-establishment company forms one enterprise—the enterprise employment and annual payroll are summed from the associated establishments. Enterprise size designations are determined by the summed employment of all associated establishments. Since the SBA's business size definitions (http://www.sba.gov/size) apply to an establishment's ultimate parent company, we assume in this analysis that the enterprise definition above is consistent with the concept of ultimate parent company that is typically used for SBREFA screening analyses. SBA small entity definitions as of 8/11/08. 1 NAICS codes 221111, 221112, 221113, 221119, 221121, 221122: A firm is small if, including its affiliates, it is primarily engaged in the generation, transmission, and/or distribution of electric energy for sale and its total electric output for the preceding fiscal year did not exceed 4 million megawatt hours. 2 NAICS Subsectors 333, 334, 335 and 336: For rebuilding machinery or equipment on a factory basis, or equivalent, use the NAICS code for a newly manufactured product. Concerns performing major rebuilding or overhaul activities do not necessarily have to meet the criteria for being a "manufacturer" although the activities may be classified under a manufacturing NAICS code. Ordinary repair services or preservation are not considered rebuilding. 3 500 to 1,500. For NAICS code 324110: For purposes of Government procurement, the petroleum refiner must be a concern that has 1,500 employees or fewer or 125,000 barrels or less per calendar day total Operable Atmospheric Crude Oil Distillation capacity. Capacity includes owned or leased facilities as well as facilities under a processing agreement or an arrangement such as an exchange agreement or a throughput. The total product to be delivered under the contract must be at least 90 percent refined by the successful bidder from either crude oil or bona fide feedstocks. 4 Subsector486: Pipeline Transportation (486110 Pipeline Transportation of Crude Oil 1,500, 486210 Pipeline Transportation of Natural Gas $7.0 million, 486910 Pipeline Transportation of Refined Petroleum Products 1,500, 486990 All Other Pipeline Transportation $34.5 million). ------- Table 6.3. Receipts by Industry and Enterprise Size: 2002 (in millions of 2007$) Sector Electricity Generating Units Industrial Industrial Industrial Industrial Industrial Industrial Industrial Industrial Industrial Industrial Industrial Industrial Industrial Industrial Industrial Industrial Industrial Industrial Industrial Industrial Industrial Industrial Industrial Industrial Source Category Electricity Generating Units Adipic Acid Production Aluminum Production Ammonia Manufacturing Cement Production Electronics Manufacturing Ferroalloy Production Glass Production HCFC-22 Production Hydrogen Production Iron and Steel Production Lead Production Lime Manufacturing Magnesium Production Nitric Acid Production Petrochemical Production Petroleum Refineries Phosphoric Acid Production Pulp and Paper Manufacturing Silicon Carbide Production Soda Ash Manufacturing Titanium Dioxide Production Zinc Production Ethanol Production Food Processing NAICS 22 325199 331312 325311 327310 334 331112 327 325120 325120 331111 3314 327410 3314 325311 3251 324110 325312 3221 327910 325181 325188 3314 325193 311 SBA Size Standard i 1,000 1,000 1,000 750 2 750 500-1,000 1,000 1,000 1,000 750-1,000 500 750-1,000 1,000 500-1,000 3 500 750 500 1,000 1,000 750-1000 1,000 500-1000 Total Receipts ($) 456,494 54,024 4,165 3,844 8,358 437,886 1,008 110,002 6,662 6,662 54,363 24,584 1,173 24,584 3,844 123,343 225,612 4,607 81,766 3,861 2,386 18,803 24,584 2,416 527,312 <20 Employees 10,324 437 7 152 207 9,887 NA 7,430 25 25 275 582 7 582 152 1,603 538 7 146 206 12 199 582 NA 14,597 20 to 99 Employees 28,259 880 NA 60 120 26,268 NA 17,700 337 337 1,237 2,391 64 2,391 60 4,722 2,903 NA 719 561 NA 267 2,391 NA 37,198 100 to 499 Employees 29,111 2,117 NA NA 526 41,653 NA 16,967 82 82 1,192 3,007 NA 3,007 NA 7,974 5,186 NA 5,269 715 NA 685 3,007 NA 65,304 500 to 749 Employees 8,522 NA NA NA NA 14,340 NA 4,154 NA NA 639 NA NA NA NA 3,990 10,094 NA 805 NA NA NA NA NA 26,627 750 to 999 Employees 5,211 984 NA NA NA 8,589 NA 4,000 NA NA NA NA NA NA NA 2,048 NA NA 3,294 NA NA NA NA NA 11,533 1,000 to 1,499 Employees 11,027 NA NA NA 992 12,994 NA 4,366 NA NA NA 364 NA 364 NA 3,819 NA NA 2,833 NA NA NA 364 NA 25,216 (continued) ------- Table 6.3. Receipts by Industry and Enterprise Size: 2002 (in Millions of 2007$) (continued) Sector Energy Energy Energy Waste Treatment Waste Treatment Source Category Underground Coal Mines Oil and Natural Gas Systems Oil and Natural Gas Systems Landfills MWCs NAICS 21211 211 486 562 562 SBA Size Standard 500 500 4 $12.5 million $12.5 million Total Receipts ($) 22,873 185,420 51,926 55,557 55,557 <20 Employees 501 8,465 1,163 7,451 7,451 20 to 99 Employees 2,415 7,826 158 8,366 8,366 100 to 499 Employees 3,328 11,075 258 5,940 5,940 500 to 749 Employees NA 5,312 NA 965 965 750 to 999 Employees 506 4,600 NA 858 858 1,000 to 1,499 Employees NA 3,233 NA 586 586 to The Census Bureau defines an enterprise as a business organization consisting of one or more domestic establishments that were specified under common ownership or control. The enterprise and the establishment are the same for single-establishment firms. Each multi-establishment company forms one enterprise—the enterprise employment and annual payroll are summed from the associated establishments. Enterprise size designations are determined by the summed employment of all associated establishments. Since the SBA's business size definitions (http://www.sba.gov/size) apply to an establishment's ultimate parent company, we assume in this analysis that the enterprise definition above is consistent with the concept of ultimate parent company that is typically used for SBREFA screening analyses. SBA Small Business categorization as of 8/11/08. 1 NAICS codes 221111, 221112, 221113, 221119, 221121, 221122: A firm is small if, including its affiliates, it is primarily engaged in the generation, transmission, and/or distribution of electric energy for sale and its total electric output for the preceding fiscal year did not exceed 4 million megawatt hours. 2 NAICS Subsectors 333, 334, 335 and 336: For rebuilding machinery or equipment on a factory basis, or equivalent, use the NAICS code for a newly manufactured product. Concerns performing major rebuilding or overhaul activities do not necessarily have to meet the criteria for being a "manufacturer" although the activities may be classified under a manufacturing NAICS code. Ordinary repair services or preservation are not considered rebuilding. 3 500 to 1,500. For NAICS code 324110: For purposes of Government procurement, the petroleum refiner must be a concern that has 1,500 employees or fewer and 125,000 barrels or less per calendar day total Operable Atmospheric Crude Oil Distillation capacity. Capacity includes owned or leased facilities as well as facilities under a processing agreement or an arrangement such as an exchange agreement or a throughput. The total product to be delivered under the contract must be at least 90 percent refined by the successful bidder from either crude oil or bona fide feedstocks. 4 Subsector486: Pipeline Transportation (486110 Pipeline Transportation of Crude Oil 1,500, 486210 Pipeline Transportation of Natural Gas $7.0 million, 486910 Pipeline Transportation of Refined Petroleum Products 1,500, 486990 All Other Pipeline Transportation $34.5 million) ------- Table 6.4. Number of Firms by Affected Industry and Enterprise Size in Commercial Sectors: 2002 SBA Size Standard 1,000 to in Millions Total <20 20 to 99 100 to 499 500 to 749 750 to 999 1,499 Sector Source Category NAICS of Dollars Firms Employees Employees Employees Employees Employees Employees Commercial Commercial Commercial Commercial Commercial Commercial Commercial Commercial Commercial Commercial Commercial Commercial Commercial Commercial Commercial Commercial Commercial Commercial Commercial Commercial Residential Education Enclosed Mall Food Sales Food Service Inpatient Health C are Laboratory Laboratory Lodging Nonrefrigerated Warehouse Nursing Office Other Outpatient Health Care Public Assembly Public Order and Safety Refrigerated Warehouse Religious Worship Retail Other than Mall Service Strip Shopping Mall Residential 61 531120 722 622 541380 5417 721 49311 623 531120 81 621 71 49312 813110 44-45 81 531120 531110 $7.035.0 7.0 7.020.5 34.5 12.0 7.0 7.0 25.5 7.013.5 7.0 7.025.0 7.034.5 7.0 25.5 7.0 7.029.0 7.025.0 7.0 7.0 65,933 28,241 NA 376,637 4,548 4,708 11,418 51,168 3,152 32,720 28,241 675,218 424,694 103,043 NA 608 172,311 736,130 675,218 28,241 52,190 40,824 22,509 NA 248,494 427 3,335 7,365 33,326 2,005 14,632 22,509 568,285 351,540 64,915 NA 358 147,505 579,905 568,285 22,509 44,477 12,379 1,077 NA 67,549 487 680 1,478 7,968 514 8,486 1,077 41,363 27,991 12,227 NA 138 15,942 59,639 41,363 1,077 1,799 3,071 329 NA 6,629 1,590 148 532 1,428 199 5,836 329 4,449 4,699 2,292 NA 34 1,213 8,723 4,449 329 441 289 43 NA 447 384 22 72 135 15 418 43 290 428 153 NA 3 39 577 290 43 55 174 32 NA 191 237 6 29 70 10 179 32 164 216 82 NA 2 21 289 164 32 29 187 30 NA 223 333 12 39 77 19 174 30 165 238 95 NA 4 19 338 165 30 30 The Census Bureau defines an enterprise as a business organization consisting of one or more domestic establishments that were specified under common ownership or control. The enterprise and the establishment are the same for single-establishment firms. Each multi-establishment company forms one enterprise—the enterprise employment and annual payroll are summed from the associated establishments. Enterprise size designations are determined by the summed employment of all associated establishments. Since the SBA's business size definitions (http://www.sba.gov/size) apply to an establishment's ultimate parent company, we assume in this analysis that the enterprise definition above is consistent with the concept of ultimate parent company that is typically used for SBREFA screening analyses. SBA size categories as of 8/11/08. ------- Table 6.5. Number of Establishments by Affected Industry and Enterprise Size: 2002 Sector Commercial Commercial Commercial Commercial Commercial Commercial Commercial Commercial Commercial Commercial Commercial Commercial Commercial Commercial Commercial Commercial Commercial Commercial Commercial Commercial Source Category Education Enclosed Mall Food Sales Food Service Inpatient Health Care Laboratory Laboratory Lodging Nonrefrigerated Warehouse Nursing Office Other Outpatient Health Care Public Assembly Public Order and Safety Refrigerated Warehouse Religious Worship Retail Other than Mall Service Strip Shopping Mall NAICS 61 531120 722 622 541380 5417 721 49311 623 531120 81 621 71 49312 813110 44-45 81 531120 SBA Size Standard 7.0-35.0 7.0 7.0-20.5 34.5 12.0 7.0 7.0 25.5 7.0-13.5 7.0 7.0-25.0 7.0-34.5 7.0 25.5 7.0 7.0-29.0 7.0-25.0 7.0 Total Firms 73,701 30,777 NA 503,354 7,569 5,962 13,944 61,795 4,893 67,900 30,777 740,118 487,747 110,375 NA 970 172,562 1,125,693 740,118 30,777 <20 Employees 41,136 22,706 NA 249,889 441 3,371 7,462 33,613 2,057 14,824 22,706 573,318 357,221 65,195 NA 367 147,510 594,655 573,318 22,706 20 to 99 Employees 13,925 1,313 NA 79,906 513 972 1,836 9,057 805 11,701 1,313 54,021 41,650 13,408 NA 204 16,009 98,116 54,021 1,313 100 to 499 Employees 5,604 597 NA 31,769 1,725 488 996 2,962 529 18,516 597 16,431 19,182 3,715 NA 96 1,272 51,814 16,431 597 500 to 749 Employees 864 123 NA 7,297 442 67 228 761 311 3,717 123 2,960 3,021 566 NA 20 115 12,028 2,960 123 750 to 999 Employees 398 180 NA 4,524 294 41 112 249 97 1,898 180 1,850 2,087 591 NA 13 25 8,897 1,850 180 1,000 to 1,499 Employees 501 141 NA 6,819 420 195 150 663 87 2,043 141 2,317 1,933 394 NA 36 27 13,004 2,317 141 (continued) ------- Table 6.5. Number of Establishments by Affected Industry and Enterprise Size: 2002 (continued) Sector Residential Source Category Residential NAICS 531110 SBA Size Standard 7.0 Total Firms 57,748 <20 Employees 45,104 20 to 99 Employees 2,992 100 to 499 Employees 2,491 500 to 749 Employees 479 750 to 999 Employees 132 1,000 to 1,499 Employees 205 The Census Bureau defines an enterprise as a business organization consisting of one or more domestic establishments that were specified under common ownership or control. The enterprise and the establishment are the same for single-establishment firms. Each multi-establishment company forms one enterprise—the enterprise employment and annual payroll are summed from the associated establishments. Enterprise size designations are determined by the summed employment of all associated establishments. Since the SBA's business size definitions (http://www.sba.gov/size) apply to an establishment's ultimate parent company, we assume in this analysis that the enterprise definition above is consistent with the concept of ultimate parent company that is typically used for SBREFA screening analyses. SBA small business categories as of 8/11//08. ------- Table 6.6. Number of Employees by Affected Industry and Commercial Enterprise Size: 2002 Sector Commercial Commercial Commercial Commercial Commercial Commercial Commercial Commercial Commercial Commercial Commercial Commercial Commercial Commercial Commercial Commercial Commercial Commercial Commercial Commercial Residential Source Category Education Enclosed Mall Food Sales Food Service Inpatient Health Care Laboratory Laboratory Lodging Nonrefrigerated Warehouse Nursing Office Other Outpatient Health Care Public Assembly Public Order and Safety Refrigerated Warehouse Religious Worship Retail Other than Mall Service Strip Shopping Mall Residential NAICS 61 531120 722 622 541380 5417 721 49311 623 531120 81 621 71 49312 813110 44^5 81 531120 531110 SBA Size Standard 7.0-35.0 7.0 7.0-20.5 34.5 12.0 7.0 7.0 25.5 7.0-13.5 7.0 7.0-25.0 7.0-34.5 7.0 25.5 7.0 7.0-29.0 7.0-25.0 7.0 7.0 Total Establish- ments 2,701,675 163,501 NA 8,352,174 5,121,584 100,797 399,213 1,696,701 94,316 2,770,665 163,501 5,420,087 4,917,156 1,800,991 NA 28,100 1,638,915 14,819,904 5,420,087 163,501 281,250 <20 Employees 223,695 73,311 NA 1,622,740 2,374 18,415 35,669 202,509 11,294 92,274 73,311 2,547,460 1,829,546 315,475 NA 2,238 722,630 2,889,481 2,547,460 73,311 152,350 20 to 99 Employees 516,135 32,364 NA 2,551,714 30,243 25,714 60,951 292,528 18,392 409,004 32,364 1,482,350 1,029,355 496,962 NA 5,427 607,209 2,204,104 1,482,350 32,364 59,796 100 to 499 Employees 535,272 22,319 NA 1,184,119 389,501 19,918 84,936 232,976 21,859 965,200 22,319 640,068 751,711 380,688 NA 5,010 197,037 1,267,733 640,068 22,319 42,104 500 to 749 Employees 148,370 5,066 NA 232,483 220,984 3,920 22,983 56,837 3,802 172,278 5,066 84,297 134,712 65,678 NA NA 20,211 213,518 84,297 5,066 7,627 750 to 999 Employees 121,656 3,583 NA 134,402 192,908 2,677 9,641 37,156 2,144 91,599 3,583 61,553 89,264 NA NA NA 13,453 138,205 61,553 3,583 NA 1,000 to 1,499 Employees 190,930 4,095 NA 216,606 385,312 4,786 15,808 53,296 2,654 132,119 4,095 74,082 107,577 72,282 NA 1,545 14,081 200,867 74,082 4,095 NA Oi Oi The Census Bureau defines an enterprise as a business organization consisting of one or more domestic establishments that were specified under common ownership or control. The enterprise and the establishment are the same for single-establishment firms. Each multi-establishment company forms one enterprise—the enterprise employment and annual payroll are summed from the associated establishments. Enterprise size designations are determined by the summed employment of all associated establishments. Since the SBA's business size definitions (http://www.sba.gov/size) apply to an establishment's ultimate parent company, we assume in this analysis that the enterprise definition above is consistent with the concept of ultimate parent company that is typically used for SBREFA screening analyses. SBA small business sizes as of 8/11/08. ------- Table 6.7. Receipts by Affected Industry and Enterprise Size: 2002 (Millions of 2007 $) Sector Commercial Commercial Commercial Commercial Commercial Commercial Commercial Commercial Commercial Commercial Commercial Commercial Commercial Commercial Commercial Commercial Commercial Commercial Commercial Commercial Residential Source Category Education Enclosed Mall Food Sales Food Service Inpatient Health Care Laboratory Laboratory Lodging Nonrefrigerated Warehouse Nursing Office Other Outpatient Health Care Public Assembly Public Order and Safety Refrigerated Warehouse Religious Worship Retail Other than Mall Service Strip Shopping Mall Residential NAICS 61 531120 722 622 541380 5417 721 49311 623 531120 81 621 71 NA 49312 813110 44^5 81 531120 531110 SBA Size Standard in Millions of Dollars 7.0-35.0 7.0 7.0-20.5 34.5 12.0 7.0 7.0 25.5 7.0-13.5 7.0 7.0-25.0 7.0-34.5 7.0 NA 25.5 7.0 7.0-29.0 7.0-25.0 7.0 7.0 Total Receipts 207,779 52,796 NA 373,666 575,286 11,854 72,013 141,193 10,705 145,529 52,796 491,097 582,829 170,062 NA 4,889 95,558 3,612,583 491,097 52,796 57,365 <20 Employees 15,586 21,467 NA 79,827 845 2,018 6,419 15,159 1,546 4,624 21,467 215,897 229,611 35,446 NA 325 37,076 577,700 215,897 21,467 32,327 20 to 99 Employees 30,849 8,090 NA 98,916 2,892 2,763 10,785 18,413 2,199 18,714 8,090 120,283 118,216 31,146 NA 765 34,178 662,037 120,283 8,090 9,943 100 to 499 Employees 38,207 6,609 NA 49,500 33,554 2,091 15,439 15,047 2,281 49,332 6,609 67,821 73,667 35,130 NA 586 13,933 441,243 67,821 6,609 6,854 500 to 749 Employees 10,456 2,148 NA 9,774 20,075 478 4,422 4,287 508 9,058 2,148 10,225 12,923 6,972 NA NA 1,681 65,923 10,225 2,148 1,366 750 to 999 Employees 7,620 2,145 NA 5,742 18,448 319 1,942 2,869 286 4,989 2,145 5,946 8,277 NA NA NA 1,165 34,570 5,946 2,145 NA 1,000 to 1,499 Employees 11,997 3,281 NA 9,036 41,167 574 2,802 4,431 301 7,319 3,281 5,999 10,556 7,610 NA 233 1,025 49,386 5,999 3,281 NA The Census Bureau defines an enterprise as a business organization consisting of one or more domestic establishments that were specified under common ownership or control. The enterprise and the establishment are the same for single-establishment firms. Each multi-establishment company forms one enterprise—the enterprise employment and annual payroll are summed from the associated establishments. Enterprise size designations are determined by the summed employment of all associated establishments. Since the SBA's business size definitions (http://www.sba.gov/size) apply to an establishment's ultimate parent company, we assume in this analysis that the enterprise definition above is consistent with the concept of ultimate parent company that is typically used for SBREFA screening analyses. SBA small business sizes as of 8/11.08. ------- Because the SBA's business size definitions (SBA, 2008c) apply to an establishment's "ultimate parent company," we assume in this analysis that the "enterprise" definition above is consistent with the concept of ultimate parent company that is typically used for SBREFA screening analyses, and the terms are used interchangeably. We also report the SBA size standard(s) for each industry group to facilitate comparisons and different thresholds. 6.2 Developing Economic and Small Entity Regulatory Relief Impact Measures We measured the postponed impacts of the rule on small entities in each sector using methods presented in EPA's Final SBREFA Guidance (EPA, 2006). Because the rule covers a large number of sectors and primarily covers businesses, the analysis generated a set of sales tests (represented as cost-to-receipt ratios)9 for NAICS codes associated with the affected sectors. Although the appropriate SBA size definition should be applied at the parent company (enterprise) level, data limitations allowed us only to compute and compare ratios for a model establishment for six enterprise size ranges (i.e., all categories, enterprises with 1 to 20 employees, 20 to 99 employees, 100 to 499 employees, 500 to 999 employees, and 1,000 to 1,499 employees). This approach allowed us to account for differences in establishment receipts between large and small enterprises and differences in small business definitions across affected industries. It is also a conservative approach, because an establishment's parent company (the "enterprise") may have other economic resources that could be used to cover the costs of the reporting program. 6.3 Implementing the Sales Test to Measure Impacts on Industrial, Commercial, and Multifamily Residential Sources To implement the recommended sales test, EPA computed cost-to-sales ratios for affected sectors at the establishment (or facility) level.10 The ratios examine the ratio of the average 9 The following metrics for other small entity economic impact measures (if applicable) would potentially include • Small governments (if applicable): "Revenue" test—annualized compliance cost as a percentage of annual government revenues • Small nonprofits (if applicable): "Expenditure" test—annualized compliance cost as a percentage of annual operating expenses 10 Typically, SBREFA impact assessments are conducted at the ultimate parent company level. As noted above, we assume that Census definition of enterprise is equivalent to ultimate parent company. Theoretically, the comparison of compliance costs to sales should be conducted at the enterprise level. Because Census only provides data for typical establishments within various enterprise size categories, EPA chose to compute the cost-to-sales ratio at the establishment (or facility level). The same ratio could be computed at the enterprise level by multiplying both the numerator and the denominator by the typical number of establishments per enterprise in 68 ------- establishment's total annualized mandatory reporting costs to the average establishment receipts for enterprises within several employment categories.11 The average entity costs used to compute the sales test are the same across all of these enterprise size categories. As a result, the sales test will overstate the cost-to-receipt ratio for establishments owned by small businesses, because the reporting costs are likely lower than average entity estimates provided by the engineering cost analysis. Cost-to-sales ratios for industrial categories are reported in Tables 6.9 through 6.12. Table 6.8 shows impacts avoided for small sources of GHG for title V. In Tables 6.9 and 6.10, impacts avoided for new and modifying PSD sources, respectively, are presented. Table 6.11 shows the avoided costs compared to sales for title V permitting. These ratios are calculated using data on the average avoided cost of compliance per facility and data on the average sales per establishment obtained from the Census Bureau. Cost-to-sales or revenue ratios for commercial and residential categories are reported in Tables 6.12 through 6.14. Table 6.12 shows impacts avoided for small commercial and residential sources of GHG for title V. Tables 6.13 and 6.14 show impacts avoided for modifying and new PSD commercial and residential sources, respectively. The burden avoided per-entity costs of the rule are shown in Table 3.0 for title V. The avoided burden cost associated with obtaining an operating permit is $46.4 thousand per source for industrial sources of GHG emissions and approximately $23 thousand for commercial and residential sources. An avoided cost of $1,677 is estimated for sources requiring title V permitting revision. For modifying PSD sources, the avoided burden costs with obtaining a permit is $84.5 thousand per source for industrial sources of GHG emissions and approximately $59 thousand per source for commercial and residential sources. Finally, for new PSD sources, the avoided burden costs are the sum of the avoided title V and modifying PSD costs. Thus, the avoided burden costs are approximately $130.8 thousand per source for new industrial sources of GHG emissions and approximately $82 thousand per source for new commercial and residential sources. the appropriate enterprise size categories. Using the SUSB data on typical establishments means that the cost-to- sales ratios are identical, whether computed at the establishment level or at the enterprise level. 11 For the one to 20 employee category, we excluded SUSB data for enterprises with zero employees. These enterprises did not operate the entire year. 69 ------- The cost-to-sales estimates show that the avoided costs for industrial sources typically are zero up to 1.5 percent of their sales, but they can be as high as 19 percent for certain sources (e.g., aluminum plants with less than 20 employees). For PSD, the avoided ICR cost-to-sales ratios range from zero to 2.7 percent for modifying and from zero to 4.2 percent of sales for new industrial sources. These avoided cost-to-sales ratio for PSD do not consider avoided BACT costs due to lack of sufficient data currently. For commercial sources, the average avoided cost to sales ratios range from 0.5 to 4.2 percent for title V. These average avoided cost-to-sales ranges increase for PSD to approximately from 1.2 to 10.7 percent of their sales or revenues for modifying commercial and multifamily residential sources and 1.6 to 14.9 for new commercial and residential PSD sources. 6.4 Economic Relief to Permitting Authorities In this final rule, the thresholds for requiring title V and PSD permits are increased above statutory CAA levels resulting in millions of potential title V sources and tens of thousands of new and modifying PSD sources being able to postpone obtaining a permit for a phase-in period of about 5 years. This action will provide significant regulatory relief to States, local government, and tribal permitting authorities. The magnitude of permits that would need to be addressed and the dollar estimate of the additional costs in labor and administrative costs permitting authorities would otherwise incur if GHG are a regulated pollutant absent this rulemaking are shown in Tables 3.0 and 3.2 in Section 3. For title V permits, permitting authorities will experience avoided costs of approximately $21 billion relating to approximately 2 million new operating permits annually that otherwise would need to be processed. Although this administrative burden represents a huge burden to these agencies, Part 70 of the CAA does provide for a mechanism for the affected permitting authorities to recoup the costs of operation associated with administering this expanded permit program. EPA recognizes in this tailoring rule that the sheer magnitude and burden of these additional small GHG sources cannot feasibly be met by these permitting authorities on administrative burden grounds for a period of at least 5 years regardless of the ability to include these increased costs in fees charged to sources. However, the economic consequences to permitting authorities of this permitting program are offset in the fee structure these authorities are allowed to charge sources obtaining title V permits. 70 ------- For PSD permitting authorities, no such mitigating fee structure currently exists. Thus, the funding for administering a PSD permitting program to include tens of thousands of additional new and modifying PSD sources annually would need to be met by these permitting authorities from current revenue sources. At present, there are approximately 58 State, local, and tribal PSD permitting programs operating in the United States and approximately 49 additional State, local, or tribal government authorities that are administering federal programs under delegation from EPA. It is difficult to estimate the economic consequences of the regulatory relief afforded to the individual permitting authorities, because the number of PSD permits processed each year varies by permitting authority over time depending on the number of new and modifying sources occurring in a given location. However, the National Association of Clean Air Agencies (NACAA) has, through a member survey, broadly assessed the additional resource and burden considerations of EPA treating GHG as a regulated pollutant. NACAA provided this information to EPA to help improve our understanding of agencies' burdens.12 Under the current PSD program requirements, these permitting authorities process an average of 8 PSD permits for new and modifying sources each year (range of 0 to 56 for individual respondents). These surveyed permitting authorities indicate they would need an average of 12 new full-time employees (range of 1 to 63) costing an average of $1.1 million annually (range $60 thousand to $6.3 million) with a 10-fold increase in permits occurring as a result of including GHG as a regulated pollutant. Some of these permitting authorities indicated that hiring new employees is not possible at this time because of budget constraints and hiring freezes. All respondents indicated that new training would be needed to address GHG permitting. Rather than the 10-fold increase in permits postulated in NACAA's survey, EPA estimates the increase would more likely be 100-fold making these estimates a significant understatement of the potential impacts on permitting authorities. For more information about the sources affected by alternative thresholds and currently covered by title V and PSD, see Attachments B and C. 12 Memorandum from Mary Stewart Douglas NACAA, to Juan E. Santiago, Group Leader, Operating Permits Group, U.S. EPA OAQPS. September 3, 2009. 71 ------- Table 6.8. Avoided Title V Costs to Sales for Small Industrial Sources of GHG Emissions Sector Electricity Generating Units Industrial Industrial Industrial Industrial Industrial Industrial Industrial Industrial Industrial Industrial Industrial Industrial Industrial Industrial Industrial Industrial Industrial Industrial Source Category Electricity Generating Units Adipic Acid Production Aluminum Production Ammonia Manufacturing Cement Production Electronics Manufacturing Ferroalloy Production Glass Production HCFC-22 Production Hydrogen Production Iron and Steel Production Lead Production Lime Manufacturing Magnesium Production Nitric Acid Production Petrochemical Production Petroleum Refineries Phosphoric Acid Production Pulp and Paper Manufacturing NAICS 22 325199 331312 325311 327310 334 331112 327 325120 325120 331111 3314 327410 3314 325311 3251 324110 325312 3221 SBA Size Standard i 1,000 1,000 1,000 750 750 500-1,000 1,000 1,000 1,000 750-1,000 500 750-1,000 1,000 500-1,000 3 500 750 Average Cost Per Entity (2007$) $46,350 $46,350 $46,350 $46,350 $46,350 $46,350 $46,350 $46,350 $46,350 $46,350 $46350 $46,350 $46,350 $46,350 $46,350 $46,350 $46,350 $46,350 $46,350 Cost per entity for All Establishments (%) 0.2% 0.1% 0.1% 0.2% 0.1% 0.2% 0.1% 0.7% 0.4% 0.4% 0.1% 0.2% 0.3% 0.2% 0.2% 0.1% 0.0% 0.1% 0.0% Cost per Entity for <20 Employees (%) 2.6% 1.7% 19.0% 2.4% 1.5% 3.6% NA 4.5% 8.3% 8.3% 11.6% 3.1% 12.8% 3.1% 2.4% 1.4% 0.7% 7.8% 3.1% Cost per Entity for 20 to 99 Employees (%) 0.2% 0.5% NA 1.4% 1.1% 0.6% NA 0.9% 0.3% 0.3% 0.6% 0.3% 0.9% 0.3% 1.4% 0.3% 0.0% NA 0.4% Cost per Entity 100 to 499 Employees (%) 0.2% 0.2% NA NA 0.2% 0.2% NA 0.5% 1.1% 1.1% 0.2% 0.2% NA 0.2% NA 0.1% 0.0% NA 0.1% Cost per Entity for 500 to 749 Employees (%) 0.2% NA NA NA NA 0.1% NA 0.3% NA NA 0.1% NA NA NA NA 0.1% 0.0% NA 0.1% Cost per Entity for 750 to 999 Employees (%) 0.1% 0.0% NA NA NA 0.1% NA 0.5% NA NA NA NA NA NA NA 0.1% NA NA 0.0% Cost per Entity for 1,000 to 1,499 Employees (%) 0.1% NA NA NA 0.1% 0.1% NA 0.4% NA NA NA 0.1% NA 0.1% NA 0.1% NA NA 0.0% to (continued) ------- Table 6.8. Avoided Title V Costs to Sales for Small Industrial Sources of GHG Emissions (continued) Sector Industrial Industrial Industrial Industrial Industrial Industrial Energy Energy Energy Waste Treatment Waste Treatment Source Category Silicon Carbide Production Soda Ash Manufacturing Titanium Dioxide Production Zinc Production Ethanol Production Food Processing Underground Coal Mines Oil and Natural Gas Systems Oil and Natural Gas Systems Landfills MWCs NAICS 327910 325181 325188 3314 325193 311 21211 211 486 562 562 SBA Size Standard 500 1,000 1,000 750-1,000 1,000 500-1,000 500 500 4 $12.5 million $12.5 million Average Cost Per Entity (2007$) $46,350 $46,350 $46,350 $46,350 $46,350 $46,350 $46,350 $46,350 $46,350 $46,350 $46,350 Cost per entity for All Establishments (%) 0.4% 0.1% 0.2% 0.2% 0.1% 0.2% 0.2% 0.2% 0.2% 1.5% 1.5% Cost per Entity for <20 Employees (%) 3.6% 3.8% 3.3% 3.1% NA 4.4% 3.6% 2.9% 0.4% 6.7% 6.7% Cost per Entity for 20 to 99 Employees (%) 0.8% NA 1.9% 0.3% NA 0.5% 0.5% 0.3% 1.7% 1.0% 1.0% Cost per Entity 100 to 499 Employees (%) 0.3% NA 0.5% 0.2% NA 0.1% 0.2% 0.1% 1.4% 0.5% 0.5% Cost per Entity for 500 to 749 Employees (%) NA NA NA NA NA 0.1% NA 0.1% NA 0.4% 0.4% Cost per Entity for 750 to 999 Employees (%) NA NA NA NA NA 0.1% 0.2% 0.1% NA 0.3% 0.3% Cost per Entity for 1,000 to 1,499 Employees (%) NA NA NA 0.1% NA 0.1% NA 0.0% NA 0.5% 0.5% Since the SBA's business size definitions (http://www.sba.gov/size) apply to an establishment's ultimate parent company, we assume in this analysis that the enterprise definition above is consistent with the concept of ultimate parent company that is typically used for Small Business Regulatory Enforcement Fairness Act (SBREFA) screening analyses. 1 NAICS codes 221111, 221112, 221113, 221119, 221121, 221122 - A firm is small if, including its affiliates, it is primarily engaged in the generation, transmission, and/or distribution of electric energy for sale and its total electric output for the preceding fiscal year did not exceed 4 million megawatt hours. 2 500 to 1,500. For NAICS code 324110: For purposes of Government procurement, the petroleum refiner must be a concern that has no more than 1,500 employees nor production greater than 125,000 barrels per calendar day total Operable Atmospheric Crude Oil Distillation capacity. Capacity includes owned or leased facilities as well as facilities under a processing agreement or an arrangement such as an exchange agreement or a throughput. The total product to be delivered under the contract must be at least 90 percent refined by the successful bidder from either crude oil or bona fide feedstocks. 3 NAICS Subsectors 333, 334, 335 and 336: For rebuilding machinery or equipment on a factory basis, or equivalent, use the NAICS code for a newly manufactured product. Concerns performing major rebuilding or overhaul activities do not necessarily have to meet the criteria for being a "manufacturer" although the activities may be classified under a manufacturing NAICS code. Ordinary repair services or preservation are not considered rebuilding. 4 Subsector 486: Pipeline Transportation (486110 Pipeline Transportation of Crude Oil 1,500, 486210 Pipeline Transportation of Natural Gas $7.0 million, 486910 Pipeline Transportation of Refined Petroleum Products 1,500, 486990 All Other Pipeline Transportation $34.5 million) ------- Table 6.9. Avoided Costs to Sales for Small Modifying Industrial GHG PSD Emission Sources Sector Electricity Generating Units Industrial Industrial Industrial Industrial Industrial Industrial Industrial Industrial Industrial Industrial Industrial Industrial Industrial Industrial Industrial Industrial Industrial Industrial Industrial Industrial Source Category Electricity Generating Units Adipic Acid Production Aluminum Production Ammonia Manufacturing Cement Production Electronics Manufacturing Ferroalloy Production Glass Production HCFC-22 Production Hydrogen Production Iron and Steel Production Lead Production Lime Manufacturing Magnesium Production Nitric Acid Production Petrochemical Production Petroleum Refineries Phosphoric Acid Production Pulp and Paper Manufacturing Silicon Carbide Production Soda Ash Manufacturing NAICS 22 325199 331312 325311 327310 334 331112 327 325120 325120 331111 3314 327410 3314 325311 3251 324110 325312 3221 327910 325181 SBA Size Standard (effective August 11, 2008) i 1,000 1,000 1,000 750 2 750 500-1,000 1,000 1,000 1,000 750-1,000 500 750-1,000 1,000 500-1,000 3 500 750 500 1,000 Average Cost Per Entity (2007$) $84,530 $84,530 $84,530 $84,530 $84,530 $84,530 $84,530 $84,530 $84,530 $84,530 $84,530 $84,530 $84,530 $84,530 $84,530 $84,530 $84,530 $84,530 $84,530 $84,530 $84,530 Cost per Entity for All Establish- ments (%) 0.3% 0.1% 0.1% 0.3% 0.3% 0.3% 0.1% 1.3% 0.7% 0.7% 0.2% 0.3% 0.6% 0.3% 0.3% 0.2% 0.0% 0.1% 0.1% 0.8% 0.1% Cost per Entity for <20 Employees (%) 4.7% 3.0% 34.6% 4.3% 2.7% 6.6% NA 8.1% 15.1% 15.1% 21.2% 5.6% 23.3% 5.6% 4.3% 2.5% 1.3% 14.2% 5.6% 6.6% 6.9% Cost per Entity for 20 to 99 Employees (%) 0.4% 1.0% NA 2.5% 2.0% 1.1% NA 1.6% 0.5% 0.5% 1.2% 0.6% 1.7% 0.6% 2.5% 0.6% 0.1% NA 0.6% 1.5% NA Cost per Entity 100 to 499 Employees (%) 0.3% 0.3% NA NA 0.4% 0.3% NA 0.9% 2.1% 2.1% 0.4% 0.3% NA 0.3% NA 0.2% 0.0% NA 0.1% 0.5% NA Cost per Entity for 500 to 749 Employees (%) 0.3% NA NA NA NA 0.2% NA 0.6% NA NA 0.1% NA NA NA NA 0.1% 0.0% NA 0.1% NA NA Cost per Entity for 750 to 999 Employees (%) 0.2% 0.0% NA NA NA 0.1% NA 0.9% NA NA NA NA NA NA NA 0.3% NA NA 0.1% NA NA Cost per Entity for 1,000 to 1,499 Employees (%) 0.2% NA NA NA 0.2% 0.1% NA 0.7% NA NA NA NA 0.3% NA 0.3% NA NA NA 0.1% NA NA (continued) ------- Table 6.9. Avoided Costs to Sales for Small Modifying Industrial GHG PSD Emission Sources (continued) Sector Industrial Industrial Industrial Industrial Energy Energy Energy Waste Treatment Waste Treatment Source Category Titanium Dioxide Production Zinc Production Ethanol Production Food Processing Underground Coal Mines Oil and Natural Gas Systems Oil and Natural Gas Systems Landfills MWCs NAICS 325188 3314 325193 311 21211 211 486 562 562 SBA Size Standard (effective August 11, 2008) 1,000 750-1,000 1,000 500-1,000 500 500 4 $12.5 million $12.5 million Average Cost Per Entity (2007$) $84,530 $84,530 $84,530 $84,530 $84,530 $84,530 $84,530 $84,530 $84,530 Cost per Entity for All Establish- ments (%) 0.3% 0.3% 0.2% 0.4% 0.4% 0.3% 0.4% 2.7% 2.7% Cost per Entity for <20 Employees (%) 6.0% 5.6% NA 7.9% 6.6% 5.2% 0.8% 12.2% 12.2% Cost per Entity for 20 to 99 Employees (%) 3.5% 0.6% NA 1.0% 1.0% 0.5% 3.2% 1.9% 1.9% Cost per Entity 100 to 499 Employees (%) 0.9% 0.3% NA 0.3% 0.4% 0.2% 2.6% 0.9% 0.9% Cost per Entity for 500 to 749 Employees (%) NA NA NA 0.1% NA 0.1% NA 0.8% 0.8% Cost per Entity for 750 to 999 Employees (%) NA NA NA 0.2% 0.3% 0.1% NA 0.6% 0.6% Cost per Entity for 1,000 to 1,499 Employees (%) NA 0.3% NA 0.1% NA 0.1% NA 0.8% 0.8% Since the SBA's business size definitions (http://www.sba.gov/size) apply to an establishment's ultimate parent company, we assume in this analysis that the enterprise definition above is consistent with the concept of ultimate parent company that is typically used for Small Business Regulatory Enforcement Fairness Act (SBREFA) screening analyses. 1 NAICS codes 221111, 221112, 221113, 221119, 221121, 221122 - A firm is small if, including its affiliates, it is primarily engaged in the generation, transmission, and/or distribution of electric energy for sale and its total electric output for the preceding fiscal year did not exceed 4 million megawatt hours. 2 500 to 1,500. For NAICS code 324110: For purposes of Government procurement, the petroleum refiner must be a concern that has no more than 1,500 employees nor production greater than 125,000 barrels per calendar day total Operable Atmospheric Crude Oil Distillation capacity. Capacity includes owned or leased facilities as well as facilities under a processing agreement or an arrangement such as an exchange agreement or a throughput. The total product to be delivered under the contract must be at least 90 percent refined by the successful bidder from either crude oil or bona fide feedstocks. 3 NAICS Subsectors 333, 334, 335 and 336: For rebuilding machinery or equipment on a factory basis, or equivalent, use the NAICS code for a newly manufactured product. Concerns performing major rebuilding or overhaul activities do not necessarily have to meet the criteria for being a "manufacturer" although the activities may be classified under a manufacturing NAICS code. Ordinary repair services or preservation are not considered rebuilding. 4 Subsector 486: Pipeline Transportation (486110 Pipeline Transportation of Crude Oil 1,500, 486210 Pipeline Transportation of Natural Gas $7.0 million, 486910 Pipeline Transportation of Refined Petroleum Products 1,500, 486990 All Other Pipeline Transportation $34.5 million) ------- Table 6.10. Avoided Costs to Sales for Small New PSD Industrial GHG Sources Sector Electricity Generating Units Industrial Industrial Industrial Industrial Industrial Industrial Industrial Industrial Industrial Industrial Industrial Industrial Industrial Industrial Industrial Industrial Industrial Industrial Industrial Industrial Industrial Industrial Source Category Electricity Generating Units Adipic Acid Production Aluminum Production Ammonia Manufacturing Cement Production Electronics Manufacturing Ferroalloy Production Glass Production HCFC-22 Production Hydrogen Production Iron and Steel Production Lead Production Lime Manufacturing Magnesium Production Nitric Acid Production Petrochemical Production Petroleum Refineries Phosphoric Acid Production Pulp and Paper Manufacturing Silicon Carbide Production Soda Ash Manufacturing Titanium Dioxide Production Zinc Production NAICS 22 325199 331312 325311 327310 334 331112 327 325120 325120 331111 3314 327410 3314 325311 3251 324110 325312 3221 327910 325181 325188 3314 SBA Size Standard (effective August 11, 2008) i 1,000 1,000 1,000 750 750 500-1,000 1,000 1,000 1,000 750-1,000 500 750-1,000 1,000 500-1,000 3 500 750 500 1,000 1,000 750-1,000 Average Cost per Entity (2007$) $130,880 $130,880 $130,880 $130,880 $130,880 $130,880 $130,880 $130,880 $130,880 $130,880 $130,880 $130,880 $130,880 $130,880 $130,880 $130,880 $130,880 $130,880 $130,880 $130,880 $130,880 $130,880 $130,880 Cost per Entity for All Enterprises 0.5% 0.2% 0.2% 0.5% 0.4% 0.5% 0.2% 2.0% 1.1% 1.1% 0.3% 0.5% 0.9% 0.5% 0.5% 0.2% 0.0% 0.1% 0.1% 1.2% 0.2% 0.4% 0.5% Cost per Entity for <20 Employees 7.2% 4.7% 53.6% 6.7% 4.2% 10.2% NA 12.6% 23.3% 23.3% 32.9% 8.7% 36.1% 8.7% 6.7% 3.9% 2.1% 22.0% 8.7% 10.2% 10.7% 9.3% 8.7% Cost per Entity for 20 to 99 Employees 0.7% 1.5% NA 3.9% 3.2% 1.7% NA 2.4% 0.8% 0.8% 1.8% 1.0% 2.7% 1.0% 3.9% 0.9% 0.1% NA 1.0% 2.3% NA 5.4% 1.0% Cost per Entity 100 to 499 Employees 0.5% 0.5% NA NA 0.5% 0.5% NA 1.4% 3.2% 3.2% 0.7% 0.5% NA 0.5% NA 0.4% 0.1% NA 0.2% 0.8% NA 1.3% 0.5% Cost per Entity for 500 to 749 Employees 0.4% NA NA NA NA 0.3% NA 1.0% NA NA 0.2% NA NA NA NA 0.2% 0.0% NA 0.2% NA NA NA NA Cost per Entity for 750 to 999 Employees 0.4% 0.1% NA NA NA 0.2% NA 1.4% NA NA NA NA NA NA NA 0.4% NA NA 0.1% NA NA NA NA Cost per Entity for 1,000 to 1,499 Employees 0.2% NA NA NA 0.3% 0.2% NA 1.0% NA NA NA 0.4% NA 0.4% NA 0.3% NA NA 0.1% NA NA NA 0.4% (continued) ------- Table 6.10. Avoided Costs to Sales for Small New PSD Industrial GHG Sources (continued) Sector Industrial Industrial Energy Energy Energy Waste Treatment Waste Treatment Source Category Ethanol Production Food Processing Underground Coal Mines Oil and Natural Gas Systems Oil and Natural Gas Systems Landfills MWCs NAICS 325193 311 21211 211 486 562 562 SBA Size Standard (effective August 11, 2008) 1,000 500-1,000 500 500 4 $12.5 million $12.5 million Average Cost per Entity (2007$) $130,880 $130,880 $130,880 $130,880 $130,880 $130,880 $130,880 Cost per Entity for All Enterprises 0.4% 0.6% 0.7% 0.5% 0.7% 4.2% 4.2% Cost per Entity for <20 Employees NA 12.3% 10.2% 8.1% 1.2% 18.9% 18.9% Cost per Entity for 20 to 99 Employees NA 1.5% 1.5% 0.8% 4.9% 2.9% 2.9% Cost per Entity 100 to 499 Employees NA 0.4% 0.5% 0.3% 4.0% 1.3% 1.3% Cost per Entity for 500 to 749 Employees NA 0.2% NA 0.1% NA 1.2% 1.2% Cost per Entity for 750 to 999 Employees NA 0.2% 0.5% 0.2% NA 1.0% 1.0% Cost per Entity for 1,000 to 1,499 Employees NA 0.2% NA 0.1% NA 1.3% 1.3% Since the SBA's business size definitions (http://www.sba.gov/size) apply to an establishment's ultimate parent company, we assume in this analysis that the enterprise definition above is consistent with the concept of ultimate parent company that is typically used for Small Business Regulatory Enforcement Fairness Act (SBREFA) screening analyses. 1 NAICS codes 221111, 221112, 221113, 221119, 221121, 221122 - A firm is small if, including its affiliates, it is primarily engaged in the generation, transmission, and/or distribution of electric energy for sale and its total electric output for the preceding fiscal year did not exceed 4 million megawatt hours. 2 500 to 1,500. For NAICS code 324110: For purposes of Government procurement, the petroleum refiner must be a concern that has no more than 1,500 employees nor production greater than 125,000 barrels per calendar day total Operable Atmospheric Crude Oil Distillation capacity. Capacity includes owned or leased facilities as well as facilities under a processing agreement or an arrangement such as an exchange agreement or a throughput. The total product to be delivered under the contract must be at least 90 percent refined by the successful bidder from either crude oil or bona fide feedstocks. 3 NAICS Subsectors 333, 334, 335 and 336: For rebuilding machinery or equipment on a factory basis, or equivalent, use the NAICS code for a newly manufactured product. Concerns performing major rebuilding or overhaul activities do not necessarily have to meet the criteria for being a "manufacturer" although the activities may be classified under a manufacturing NAICS code. Ordinary repair services or preservation are not considered rebuilding. 4 Subsector 486: Pipeline Transportation (486110 Pipeline Transportation of Crude Oil 1,500, 486210 Pipeline Transportation of Natural Gas $7.0 million, 486910 Pipeline Transportation of Refined Petroleum Products 1,500, 486990 All Other Pipeline Transportation $34.5 million) ------- Table 6-11. Avoided Title V Permitting Costs to Sales for Permit Revisions Due to GHG Sector Electricity Generating Unites Industrial Industrial Industrial Industrial Industrial Industrial Industrial Industrial Industrial Industrial Industrial Industrial Industrial Industrial Industrial Industrial Source Category Electricity Generating Units Adipic Acid Production Aluminum Production Ammonia Manufacturing Cement Production Electronics Manufacturing Ferroalloy Production Glass Production HCFC-22 Production Hydrogen Production Iron and Steel Production Lead Production Lime Manufacturing Magnesium Production Nitric Acid Production Petrochemical Production Petroleum Refineries NAICS 22 325199 331312 325311 327310 334 331112 327 325120 325120 331111 3314 327410 3314 325311 3251 324110 SBA Size Standard (effective August 11, 2008) i 1,000 1,000 1,000 750 2 750 500-1,000 1,000 1,000 1,000 750-1,000 500 750-1,000 1,000 500-1,000 3 Average Cost Per Entity (2007S/entity) $1,677 $1,677 $1,677 $1,677 $1,677 $1,677 $1,677 $1,677 $1,677 $1,677 $1,677 $1,677 $1,677 $1,677 $1,677 $1,677 $1,677 Cost per Entity for All Enterprises 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% Cost per Entity for Size <20 Employees 0.1% 0.1% 0.7% 0.1% 0.1% 0.1% NA 0.2% 0.3% 0.3% 0.4% 0.1% 0.5% 0.1% 0.1% 0.0% 0.0% Cost per Entity for Size 20 to 99 Employees 0.0% 0.0% NA 0.1% 0.0% 0.0% NA 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.1% 0.0% 0.0% Cost per Entity for Size 100 to 499 Employees 0.0% 0.0% NA NA 0.0% 0.0% NA 0.0% 0.0% 0.0% 0.0% 0.0% NA 0.0% NA 0.0% 0.0% Cost per Entity for Size 500 to 749 Employees 0.0% NA NA NA NA 0.0% NA 0.0% NA NA 0.0% NA NA NA NA 0.0% 0.0% Cost per Entity for Size 750 to 999 Employees 0.0% 0.0% NA NA NA 0.0% NA 0.0% NA NA NA NA NA NA NA 0.0% NA Cost per Entity For Size 1,000 to 1,499 Employees 0.0% NA NA NA 0.0% 0.0% NA 0.0% NA NA NA 0.0% NA 0.0% NA 0.0% NA oo (continued) ------- Table 6.11. Avoided Title V Permitting Costs to Sales for Permit Revisions Due to GHG (continued) Sector Industrial Industrial Industrial Industrial Industrial Industrial Industrial Industrial Energy Energy Energy Waste Treatment Source Category Phosphoric Acid Production Pulp and Paper Manufacturing Silicon Carbide Production Soda Ash Manufacturing Titanium Dioxide Production Zinc Production Ethanol Production Food Processing Underground Coal Mines Oil and Natural Gas Systems Oil and Natural Gas Systems Landfills NAICS 325312 3221 327910 325181 325188 3314 325193 311 21211 211 486 562 SBA Size Standard (effective August 11, 2008) 500 750 500 1,000 1,000 750-1,000 1,000 500-1,000 500 500 4 $12.5 million Average Cost Per Entity (2007S/entity) $1,677 $1,667 $1,677 $1,677 $1,677 $1,677 $1,677 $1,677 $1,677 $1,677 $1,677 $1,677 Cost per Entity for All Enterprises 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.1% Cost per Entity for Size <20 Employees 0.3% 0.1% 0.1% 0.1% 0.1% 0.1% NA 0.2% 0.1% 0.1% 0.0% 0.2% Cost per Entity for Size 20 to 99 Employees NA 0.0% 0.0% NA 0.1% 0.0% NA 0.0% 0.0% 0.0% 0.1% 0.0% Cost per Entity for Size 100 to 499 Employees NA 0.0% 0.0% NA 0.0% 0.0% NA 0.0% 0.0% 0.0% 0.1% 0.0% Cost per Entity for Size 500 to 749 Employees NA 0.0% NA NA NA NA NA 0.0% NA 0.0% NA 0.0% Cost per Entity for Size 750 to 999 Employees NA 0.0% NA NA NA NA NA 0.0% 0.0% 0.0% NA 0.0% Cost per Entity For Size 1,000 to 1,499 Employees NA 0.0% NA NA NA 0.0% NA 0.0% NA 0.0% NA 0.0% VO (continued) ------- Table 6.11. Avoided Title V Permitting Costs to Sales for Permit Revisions Due to GHG (continued) Sector Waste Treatment Source Category MWCs NAICS 562 SBA Size Standard (effective August 11, 2008) $12.5 million Average Cost Per Entity (2007S/entity) $1,677 Cost per Entity for All Enterprises 0.1% Cost per Entity for Size <20 Employees 0.2% Cost per Entity for Size 20 to 99 Employees 0.0% Cost per Entity for Size 100 to 499 Employees 0.0% Cost per Entity for Size 500 to 749 Employees 0.0% Cost per Entity for Size 750 to 999 Employees 0.0% Cost per Entity For Size 1,000 to 1,499 Employees 0.0% oo o Since the SBA's business size definitions (http://www.sba.gov/size) apply to an establishment's ultimate parent company, we assume in this analysis that the enterprise definition above is consistent with the concept of ultimate parent company that is typically used for Small Business Regulatory Enforcement Fairness Act (SBREFA) screening analyses. 1 NAICS codes 221111, 221112, 221113, 221119, 221121, 221122 - A firm is small if, including its affiliates, it is primarily engaged in the generation, transmission, and/or distribution of electric energy for sale and its total electric output for the preceding fiscal year did not exceed 4 million megawatt hours. 2 500 to 1,500. For NAICS code 324110: For purposes of Government procurement, the petroleum refiner must be a concern that has no more than 1,500 employees nor production greater than 125,000 barrels per calendar day total Operable Atmospheric Crude Oil Distillation capacity. Capacity includes owned or leased facilities as well as facilities under a processing agreement or an arrangement such as an exchange agreement or a throughput. The total product to be delivered under the contract must be at least 90 percent refined by the successful bidder from either crude oil or bona fide feedstocks. 3 NAICS Subsectors 333, 334, 335 and 336: For rebuilding machinery or equipment on a factory basis, or equivalent, use the NAICS code for a newly manufactured product. Concerns performing major rebuilding or overhaul activities do not necessarily have to meet the criteria for being a "manufacturer" although the activities may be classified under a manufacturing NAICS code. Ordinary repair services or preservation are not considered rebuilding. 4 Subsector 486: Pipeline Transportation (486110 Pipeline Transportation of Crude Oil 1,500, 486210 Pipeline Transportation of Natural Gas $7.0 million, 486910 Pipeline Transportation of Refined Petroleum Products 1,500, 486990 All Other Pipeline Transportation $34.5 million) ------- Table 6.12. Title V Avoided Costs for Small New Commercial Sources of GHG Emissions Compared to Annual Sales Revenue Sector Commercial Commercial Commercial Commercial Commercial Commercial Commercial Commercial Commercial Commercial Commercial Commercial Commercial Commercial Commercial Commercial Commercial Commercial Commercial Commercial Source Category Education Enclosed Mall Food Sales Food Service Inpatient Health Care Laboratory Laboratory Lodging Nonrefrigerated Warehouse Nursing Office Other Outpatient Health Care Public Assembly Public Order and Safety Refrigerated Warehouse Religious Worship Retail Other than Mall Service Strip Shopping Mall NAICS 61 531120 722 622 541380 5417 721 49311 623 531120 81 621 71 49312 813110 44^5 81 531120 SBA Size Standard (effective August 11, 2008) 7.0-35.0 7 7.0-20.5 34.5 12 7 7 25.5 7.0-13.5 7 7.0-25.0 7.0-34.5 7 25.5 7 7.0-29.0 7.0-25.0 7 Average Cost Per Entity (Sl,000/entity) $23,175 $23,175 $23,175 $23,175 $23,175 $23,175 $23,175 $23,175 $23,175 $23,175 $23,175 $23,175 $23,175 $23,175 $23,175 $23,175 $23,175 $23,175 $23,175 $23,175 Avoided Cost to Average Sales Revenues for All Enterprises 0.82% 1.35% NA 3.12% 0.03% 1.17% 0.45% 1.01% 1.06% 1.08% 1.35% 3.49% 1.94% 1.50% NA 0.46% 4.19% 0.72% 3.49% 1.35% Avoided Cost to Sales Revenues Size <20 Employees 6.12% 2.45% NA 7.25% 1.21% 3.87% 2.69% 5.14% 3.08% 7.43% 2.45% 6.15% 3.61% 4.26% NA 2.62% 9.22% 2.39% 6.15% 2.45% Avoided Cost to Sales Revenues Size 20 to 99 Employees 1.05% 0.38% NA 1.87% 0.41% 0.82% 0.39% 1.14% 0.85% 1.45% 0.38% 1.04% 0.82% 1.00% NA 0.62% 1.09% 0.34% 1.04% 0.38% Avoided Cost to Sales Revenues Size 100 to 499 Employees 0.34% 0.21% NA 1.49% 0.12% 0.54% 0.15% 0.46% 0.54% 0.87% 0.21% 0.56% 0.60% 0.25% NA 0.38% 0.21% 0.27% 0.56% 0.21% Avoided Cost to Sales Revenues Size 500 to 749 Employees 0.19% 0.13% NA 1.73% 0.05% 0.32% 0.12% 0.41% 1.42% 0.95% 0.13% 0.67% 0.54% 0.19% NA NA 0.16% 0.42% 0.67% 0.13% Avoided Cost to Sales Revenues Size 750 to 999 Employees 0.12% 0.19% NA 1.83% 0.04% 0.30% 0.13% 0.20% 0.79% 0.88% 0.19% 0.72% 0.58% NA NA NA 0.05% 0.60% 0.72% 0.19% Avoided Cost to Sales Revenues Size 1,000 to 1,499 Employees 0.10% 0.10% NA 1.75% 0.02% 0.79% 0.12% 0.35% 0.67% 0.65% 0.10% 0.90% 0.42% 0.12% NA 0.36% 0.06% 0.61% 0.90% 0.10% oo (continued) ------- Table 6.12. Title V Avoided Costs for Small New Commercial Sources of GHG Emissions Compared to Annual Sales Revenue (continued) Sector Residential Source Category Residential NAICS 531110 SBA Size Standard (effective August 11, 2008) 7 Average Cost Per Entity (Sl,000/entity) $23,175 Avoided Cost to Average Sales Revenues for All Enterprises 2.33% Avoided Cost to Sales Revenues Size <20 Employees 3.23% Avoided Cost to Sales Revenues Size 20 to 99 Employees 0.70% Avoided Cost to Sales Revenues Size 100 to 499 Employees 0.84% Avoided Cost to Sales Revenues Size 500 to 749 Employees 0.81% Avoided Cost to Sales Revenues Size 750 to 999 Employees NA Avoided Cost to Sales Revenues Size 1,000 to 1,499 Employees NA oo to The Census Bureau defines an enterprise as a business organization consisting of one or more domestic establishments that were specified under common ownership or control. The enterprise and the establishment are the same for single-establishment firms. Each multi-establishment company forms one enterprise—the enterprise employment and annual payroll is summed from the associated establishments. Enterprise size designations are determined by the summed employment of all associated establishments. Since the SBA's business size definitions (http://www.sba.gov/size) apply to an establishment's ultimate parent company, we assume in this analysis that the enterprise definition above is consistent with the concept of ultimate parent company that is typically used for SBREFA screening analyses. NAICS code 611519: Job Corps Centers. For classifying a Federal procurement, the purpose of the solicitation must be for the management and operation of a U.S. Department of Labor Job Corps Center. The activities involved include admissions activities, life skills training, educational activities, comprehensive career preparation activities, career development activities, career transition activities, as well as the management and support functions and services needed to operate and maintain the facility. For SBA assistance as small business concern, other than for Federal Government procurements, a concern must be primarily engaged in providing the services to operate and maintain Federal Job Corps Centers. NAICS code 541711 and 541712: For research and development contracts requiring the delivery of a manufactured product, the appropriate size standard is that of the manufacturing industry. ------- Table 6.13. Avoided Costs for Small Modifying Commercial PSD GHG Emission Sources Compared to Annual Sales Revenue Sector Commercial Commercial Commercial Commercial Commercial Commercial Commercial Commercial Commercial Commercial Commercial Commercial Commercial Commercial Commercial Commercial Commercial Commercial Commercial Commercial Source Category Education Enclosed Mall Food Sales Food Service Inpatient Health Care Laboratory Laboratory Lodging Nonrefrigerated Warehouse Nursing Office Other Outpatient Health Care Public Assembly Public Order and Safety Refrigerated Warehouse Religious Worship Retail Other than Mall Service Strip Shopping Mall NAICS 61 531120 722 622 541380 5417 721 49311 623 531120 81 621 71 49312 813110 44-45 81 531120 SBA Size Standard (effective August 11, 2008) 7.0-35.0 7 7.0-20.5 34.5 12 7 7 25.5 7.0-13.5 7 7.0-25.0 7.0-34.5 7 25.5 7 7.0-29.0 7.0-25.0 7 Average Cost Per Entity (Sl,000/entity) $59,152 $59,152 $59,152 $59,152 $59,152 $59,152 $59,152 $59,152 $59,152 $59,152 $59,152 $59,152 $59,152 $59,152 $59,152 $59,152 $59,152 $59,152 $59,152 $59,152 Avoided Cost to Average Sales Revenues for All Enterprises 2.10% 3.45% NA 7.97% 0.08% 2.98% 1.15% 2.59% 2.70% 2.76% 3.45% 8.91% 4.95% 3.84% NA 1.17% 10.68% 1.84% 8.91% 3.45% Avoided Cost to Sales Revenues Size <20 Employees 15.61% 6.26% NA 18.52% 3.09% 9.88% 6.88% 13.12% 7.87% 18.96% 6.26% 15.71% 9.20% 10.88% NA 6.69% 23.53% 6.09% 15.71% 6.26% Avoided Cost to Sales Revenues Size 20 to 99 Employees 2.67% 0.96% NA 4.78% 1.05% 2.08% 1.01% 2.91% 2.17% 3.70% 0.96% 2.66% 2.08% 2.55% NA 1.58% 2.77% 0.88% 2.66% 0.96% Avoided Cost to Sales Revenues Size 100 to 499 Employees 0.87% 0.53% NA 3.80% 0.30% 1.38% 0.38% 1.16% 1.37% 2.22% 0.53% 1.43% 1.54% 0.63% NA 0.97% 0.54% 0.69% 1.43% 0.53% Avoided Cost to Sales Revenues Size 500 to 749 Employees 0.49% 0.34% NA 4.42% 0.13% 0.83% 0.31% 1.05% 3.62% 2.43% 0.34% 1.71% 1.38% 0.48% NA NA 0.40% 1.08% 1.71% 0.34% Avoided Cost to Sales Revenues Size 750 to 999 Employees 0.31% 0.50% NA 4.66% 0.09% 0.76% 0.34% 0.51% 2.01% 2.25% 0.50% 1.84% 1.49% NA NA NA 0.13% 1.52% 1.84% 0.50% Avoided Cost to Sales Revenues Size 1,000 to 1,499 Employees 0.25% 0.25% NA 4.46% 0.06% 2.01% 0.32% 0.89% 1.71% 1.65% 0.25% 2.28% 1.08% 0.31% NA 0.92% 0.16% 1.56% 2.28% 0.25% oo (continued) ------- Table 6.13. Avoided Costs for Small Modifying Commercial PSD GHG Emission Sources Compared to Annual Sales Revenue (continued) Sector Residential Source Category Residential NAICS 531110 SBA Size Standard (effective August 11, 2008) 7 Average Cost Per Entity (Sl,000/entity) $59,152 Avoided Cost to Average Sales Revenues for All Enterprises 5.95% Avoided Cost to Sales Revenues Size <20 Employees 8.25% Avoided Cost to Sales Revenues Size 20 to 99 Employees 1.78% Avoided Cost to Sales Revenues Size 100 to 499 Employees 2.15% Avoided Cost to Sales Revenues Size 500 to 749 Employees 2.07% Avoided Cost to Sales Revenues Size 750 to 999 Employees NA Avoided Cost to Sales Revenues Size 1,000 to 1,499 Employees NA oo The Census Bureau defines an enterprise as a business organization consisting of one or more domestic establishments that were specified under common ownership or control. The enterprise and the establishment are the same for single-establishment firms. Each multi-establishment company forms one enterprise—the enterprise employment and annual payroll is summed from the associated establishments. Enterprise size designations are determined by the summed employment of all associated establishments. Since the SBA's business size definitions (http://www.sba.gov/size) apply to an establishment's ultimate parent company, we assume in this analysis that the enterprise definition above is consistent with the concept of ultimate parent company that is typically used for SBREFA screening analyses. NAICS code 611519: Job Corps Centers. For classifying a Federal procurement, the purpose of the solicitation must be for the management and operation of a U.S. Department of Labor Job Corps Center. The activities involved include admissions activities, life skills training, educational activities, comprehensive career preparation activities, career development activities, career transition activities, as well as the management and support functions and services needed to operate and maintain the facility. For SBA assistance as small business concern, other than for Federal Government procurements, a concern must be primarily engaged in providing the services to operate and maintain Federal Job Corps Centers. NAICS code 541711 and 541712: For research and development contracts requiring the delivery of a manufactured product, the appropriate size standard is that of the manufacturing industry. ------- Table 6.14. Avoided Costs to Small PSD New Commercial GHG Emission Sources Sector Commercial Commercial Commercial Commercial Commercial Commercial Commercial Commercial Commercial Commercial Commercial Commercial Commercial Commercial Commercial Commercial Commercial Commercial Commercial Commercial Source Category Education Enclosed Mall Food Sales Food Service Inpatient Health Care Laboratory Laboratory Lodging Nonrefrigerated Warehouse Nursing Office Other Outpatient Health Care Public Assembly NAICS 61 531120 722 622 541380 5417 721 49311 623 531120 81 621 71 Public Order and Safety Refrigerated Warehouse Religious Worship Retail Other than Mall Service Strip Shopping Mall 49312 813110 44-45 81 531120 SBA Size Standard (effective August 11, 2008) 7.0-35.0 7 7.0-20.5 34.5 12 7 7 25.5 7.0-13.5 7 7.0-25.0 7.0-34.5 7 25.5 7 7.0-29.0 7.0-25.0 7 Average Cost Per Entity (SlOOO/entity) $82,327 $82,327 $82,327 $82,327 $82,327 $82,327 $82,327 $82,327 $82,327 $82,327 $82,327 $82,327 $82,327 $82,327 $82,327 $82,327 $82,327 $82,327 $82,327 $82,327 Avoided Cost to Average Sales Revenues for All Enterprises 2.92% 4.80% NA 11.09% 0.11% 4.14% 1.59% 3.60% 3.76% 3.84% 4.80% 12.41% 6.89% 5.35% NA 1.63% 14.87% 2.57% 12.41% 4.80% Avoided Cost to Sales Revenues Size <20 employees 21.74% 8.71% NA 25.78% 4.30% 13.76% 9.57% 18.26% 10.96% 26.40% 8.71% 21.87% 12.81% 15.15% NA 9.31% 32.77% 8.48% 21.87% 8.71% Avoided Cost to Sales Revenues Size 20 to 99 employees 3.72% 1.34% NA 6.65% 1.46% 2.90% 1.40% 4.05% 3.02% 5.15% 1.34% 3.70% 2.90% 3.55% NA 2.20% 3.86% 1.22% 3.70% 1.34% Avoided Cost to Sales Revenues Size 100 to 499 employees 1.21% 0.74% NA 5.29% 0.42% 1.92% 0.53% 1.62% 1.91% 3.09% 0.74% 2.00% 2.14% 0.87% NA 1.35% 0.75% 0.97% 2.00% 0.74% Avoided Cost to Sales Revenues Size 500 to 749 employees 0.68% 0.47% NA 6.15% 0.18% 1.15% 0.42% 1.46% 5.04% 3.38% 0.47% 2.38% 1.93% 0.67% NA NA 0.56% 1.50% 2.38% 0.47% Avoided Cost to Sales Revenues Size 750 to 999 employees 0.43% 0.69% NA 6.49% 0.13% 1.06% 0.48% 0.71% 2.79% 3.13% 0.69% 2.56% 2.08% NA NA NA 0.18% 2.12% 2.56% 0.69% Avoided Cost to Sales Revenues Size 1,000 to 1,499 employees 0.34% 0.35% NA 6.21% 0.08% 2.80% 0.44% 1.23% 2.38% 2.30% 0.35% 3.18% 1.51% 0.43% NA 1.28% 0.22% 2.17% 3.18% 0.35% oo (continued) ------- Table 6.14. Avoided Costs to Small PSD New Commercial GHG Emission Sources (continued) Sector Residential Source Category Residential NAICS 531110 SBA Size Standard (effective August 11, 2008) 7 Average Cost Per Entity (SlOOO/entity) $82,327 Avoided Cost to Average Sales Revenues for All Enterprises 8.29% Avoided Cost to Sales Revenues Size <20 employees 11.49% Avoided Cost to Sales Revenues Size 20 to 99 employees 2.48% Avoided Cost to Sales Revenues Size 100 to 499 employees 2.99% Avoided Cost to Sales Revenues Size 500 to 749 employees 2.89% Avoided Cost to Sales Revenues Size 750 to 999 employees NA Avoided Cost to Sales Revenues Size 1,000 to 1,499 employees NA The Census Bureau defines an enterprise as a business organization consisting of one or more domestic establishments that were specified under common ownership or control. The enterprise and the establishment are the same for single-establishment firms. Each multi-establishment company forms one enterprise—the enterprise employment and annual payroll is summed from the associated establishments. Enterprise size designations are determined by the summed employment of all associated establishments. Since the SBA's business size definitions (http://www.sba.gov/size) apply to an establishment's ultimate parent company, we assume in this analysis that the enterprise definition above is consistent with the concept of ultimate parent company that is typically used for SBREFA screening analyses. NAICS code 611519: Job Corps Centers. For classifying a Federal procurement, the purpose of the solicitation must be for the management and operation of a U.S. Department of Labor Job Corps Center. The activities involved include admissions activities, life skills training, educational activities, comprehensive career preparation activities, career development activities, career transition activities, as well as the management and support functions and services needed to operate and maintain the facility. For SBA assistance as small business concern, other than for Federal Government procurements, a concern must be primarily engaged in providing the services to operate and maintain Federal Job Corps Centers. NAICS code 541711 and 541712: For research and development contracts requiring the delivery of a manufactured product, the appropriate size standard is that of the manufacturing industry. oo ------- Section 7 Statutory and Executive Order Reviews 7.1 Executive Order 12866 - Regulatory Planning and Review Under section 3(f)(l) of Executive Order (EO) 12866 (58 FR 51735, October 4, 1993), this action is an "economically significant regulatory action" because it is likely to have an annual effect on the economy of $100 million or more. Accordingly, EPA submitted this action to the Office of Management and Budget (OMB) for review under EO 12866 and any changes made in response to OMB recommendations have been documented in the docket for this action. In addition, EPA prepared an analysis of the potential costs and benefits associated with this action. This analysis is contained in the RIA for this final rule. A copy of the analysis is available in the docket for this action and the analysis is briefly summarized in section VII of this preamble. This rule uses a phased-in approach for requiring larger sources of GHG emissions to comply with title V operating permit and PSD statutory requirements, essentially lifting this burden for a period of at least 6 years for a large number of sources of GHG. Thus, this rule provides regulatory relief rather than regulatory requirements for these GHG sources. For sources of GHG that will be required to obtain title V permits and/or comply with PSD requirements, there are no direct economic burdens or costs as a result of this final rule, because these requirements are not imposed as a result of this rulemaking. Statutory requirements to obtain a title V operating permit or to adhere to PSD requirements are already mandated by the CAA and by existing rules, not by this rule. As a result, this Tailoring rule annual effect on the economy will be positive because it will result in billions of dollars of regulatory relief during the phase-in period. 7.2 Paperwork Reduction Act This action does not impose any new information collection burden. Instead, this action will significantly reduce costs incurred by sources and permitting authorities relative to the costs that would be incurred if EPA did not revise the rule. Based on our revised GHG threshold data analysis, we estimate that over 80,000 new and modified facilities per year would be subject to PSD review based on applying a GHG emissions threshold of 100/250 tpy using a CO26 metric. This is compared to 280 PSD permits currently issued per year, which is an increase of more than 280-fold. Similarly, for title V, we estimate that over six million new sources would be 87 ------- affected at the 100-tpy threshold for GHGs using the CC^e metric. By increasing the volume of permits by over 400 times, the administrative burden would be unmanageable without this rule. However, OMB has previously approved the information collection requirements contained in the existing regulations for PSD (see, e.g.. 40 CFR 52.21) and title V (see 40 CFR parts 70 and 71) under the provisions of the Paperwork Reduction Act, 44 U.S.C. 3501 et seq. and has assigned OMB control number 2060-0003 and OMB control number 2060-0336. The OMB control numbers for EPA's regulations in 40 CFR are listed in 40 CFR part 9. 7.3 Regulatory Flexibility Act 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 APA 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. Small entities include small businesses, small organizations, and small governmental jurisdictions. For purposes of assessing the impacts of this final action on small entities, small entity is defined as: (1) a small business that is a small industrial entity as defined in the U.S. SB A size standards (see 13 CFR 121.201); (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; or (3) a small organization that is any not-for-profit enterprise that is independently owned and operated and is not dominant in its field. After considering the economic impacts of this final rule on small entities, the Administrator certified that this final action will not have a significant economic impact on a substantial number of small entities. In determining whether a rule has a significant economic impact on a substantial number of small entities, the impact of concern is any significant adverse economic impact on small entities, since the primary purpose of the regulatory flexibility analyses is to identify and address regulatory alternatives "which minimize any significant economic impact of the rule on small entities." 5 USC 603 and 604. Thus, an agency may certify that a rule will not have a significant economic impact on a substantial number of small entities if the rule relieves regulatory burden, or otherwise has a positive economic effect on all of the small entities subject to the rule. We have therefore concluded that this final rule will relieve the regulatory burden for most affected small entities associated with the major PSD and title V operating permits 88 ------- programs for new or modified major sources that emit GHGs, including small businesses. This is because this rule raises the major source applicability thresholds for these programs for the sources that emit GHGs. As a result, the program changes provided in this rule are not expected to result in a significant economic impact on a substantial number of small entities. 7.4 Unfunded Mandates Reform Act This rule does not contain a federal mandate that may result in expenditures of $100 million or more for state, local, and tribal governments, in the aggregate, or the private sector in any 1 year. Only those few states whose permitting authorities do not implement the federal PSD and title V rules by reference in their SIPs will have a small increase in burden. These states will have to amend their corresponding SIPs to incorporate the new applicability thresholds, since the burden reducing thresholds that we are finalizing with this rule will not otherwise apply to the PSD and title V programs. Thus, this rule is not subject to the requirements of sections 202 or 205 of UMRA. This rule is also not subject to the requirements of section 203 of UMRA because it contains no regulatory requirements that might significantly or uniquely affect small governments. As discussed earlier, this rule is expected to result in cost savings and an administrative burden reduction for all permitting authorities and permittees, including small governments. 7.5 Executive Order 13132 - Federalism This action does not have federalism implications. It will not have substantial direct effects on the states, on the relationship between the national government and the states, or on the distribution of power and responsibilities among the various levels of government, as specified in Executive Order 13132. These final amendments will ultimately simplify and reduce the burden on state and local agencies associated with implementing the PSD and title V operating permits programs, by providing that a source whose GHG emissions are below the proposed levels will not have to obtain a PSD permit or title V permit. Thus, Executive Order 13132 does not apply to this action. In the spirit of Executive Order 13132, and consistent with EPA policy to promote communications between EPA and state and local governments, EPA specifically solicited comment on the proposed rule from state and local officials. 89 ------- 7.6 Executive Order 13175 - Consultation and Coordination with Indian Tribal Governments Subject to the Executive Order 13175 (65 FR 67249, November 9, 2000) EPA may not issue a regulation that has tribal implications, that imposes substantial direct compliance costs, and that is not required by statute, unless the federal government provides the funds necessary to pay the direct compliance costs incurred by tribal governments, or EPA consults with tribal officials early in the process of developing the proposed regulation and develops a tribal summary impact statement. EPA has concluded that this action may have tribal implications. However, it will neither impose substantial direct compliance costs on tribal governments, nor preempt Tribal law. There are no tribal authorities currently issuing major NSR permits; therefore, it will not currently impose direct compliance costs on tribal governments. EPA consulted with tribal officials early in the process of developing this regulation to allow them to have meaningful and timely input into its development by publishing an ANPR that included PSD GHG tailoring options for regulating GHGs under the CAA. (73 FR 44354, July 30, 2008) As a result of the ANPR, EPA received several comments from tribal officials on differing PSD GHG tailoring options presented in the ANPR which were considered in the proposal and this final rule. Additionally, we also specifically solicited comment from tribal officials on the proposed rule (74 FR 55292, October 27, 2009). As required by section 7(a) of Executive Order 13175, EPA's Tribal Consultation Official has certified that the requirements of the Executive Order have been met in a meaningful and timely manner. A copy of the certification is included in the docket for this action. 7.7 Executive Order 13045 - Protection of Children from Environmental Health and Safety Risks EPA interprets EO 13045 (62 FR 19885, April 23, 1997) as applying only to those regulatory actions that concern health or safety risks, such that the analysis required under section 5-501 of the EO has the potential to influence the regulation. This action is not subject to EO 13045 because it does not establish an environmental standard intended to mitigate health or safety risks. 90 ------- 7.8 Executive Order 13211 - Actions That Significantly Affect Energy Supply, Distribution, or Use This action is not a "significant energy action" as defined in Executive Order 13211(66 FR 28355 (May 22, 2001)), because it is not likely to have a significant adverse effect on the supply, distribution, or use of energy. Further, we have concluded that this rule is not likely to have any adverse energy effects because this action would not create any new requirements for sources in the energy supply, distribution, or use sectors. 7.9 National Technology Transfer and Advancement Act Section 12(d) of the National Technology Transfer and Advancement Act of 1995 ("NTTAA"), Public Law No. 104-113, 12(d) (15 U.S.C. 272 note) directs EPA to use voluntary consensus standards in its regulatory activities unless to do so would be inconsistent with applicable law or otherwise impractical. Voluntary consensus standards are technical standards (e.g., materials specifications, test methods, sampling procedures, and business practices) that are developed or adopted by voluntary consensus standards bodies. The NTTAA directs EPA to provide Congress, through OMB, explanations when the Agency decides not to use available and applicable voluntary consensus standards. This action does not involve technical standards. Therefore, EPA did not consider the use of any voluntary consensus standards. 7.10 Executive Order 12898 - Federal Actions to Address Environmental Justice in Minority Populations and Low-Income Populations Executive Order (EO) 12898 (59 FR 7629 (Feb. 16, 1994)) establishes federal executive policy on environmental justice. Its main provision directs federal agencies, to the greatest extent practicable and permitted by law, to make environmental justice part of their mission by identifying and addressing, as appropriate, disproportionately high and adverse human health or environmental effects of their programs, policies, and activities on minority populations and low- income populations in the United States. EPA has concluded that it is not practicable to determine whether there would be disproportionately high and adverse human health or environmental effects on minority and/or low income populations from this rule. This rule is necessary in order to allow for the continued implementation of permitting requirements established in the statute. Specifically, without this rule, the CAA permitting programs (PSD and Title V) would become overwhelmed and 91 ------- unmanageable by the millions of GHG sources that would become newly subject to them. This would result in severe impairment of the functioning of these programs with potentially adverse human health and environmental effects nationwide. Under this rule and the legal doctrines of absurd results, administrative necessity, and one-step-at-a-time, EPA is ensuring that the CAA permitting programs continue to operate by limiting their applicability to the maximum number of sources the programs can possibly handle. This approach is consistent with congressional intent as it allows PSD applicability to at least the largest sources initially, at least to as many more sources as possible, and as promptly as possible over time. By doing so, this rule allows for the maximum degree of environmental protection possible while providing regulatory relief for the unmanageable burden that would otherwise exist. Therefore, we believe it is not practicable to identify and address disproportionately high and adverse human health or environmental effects on minority populations and low income populations in the United States under this final rule. 7.11 Congressional Review Act The Congressional Review Act, 5 U.S.C. 801 et seq., as added by the Small Business Regulatory Enforcement Fairness Act of 1996, generally provides that before a rule may take effect, the agency promulgating the rule must submit a rule report, which includes a copy of the rule, to each House of the Congress and to the Comptroller General of the United States. EPA will submit a report containing this rule and other required information to the U.S. Senate, the U.S. House of Representatives, and the Comptroller General of the United States prior to publication of the rule in the Federal Register. A Major rule cannot take effect until 60 days after it is published in the Federal Register. This action is a "major rule" as defined by 5 U.S.C. 804(2). 92 ------- Section 8 Limitations and Uncertainties The benefits, costs and economic impacts estimated in this RIA are subject to limitations and uncertainties. The benefits of this rule are the regulatory relief provided to small sources of GHG and permitting authorities. Regulatory relief estimates are provided for the final rule Steps 1, 2 and 3 on an annual basis as well as for the full phase-in period. The benefits or avoided permitting are based upon the best data available currently regarding sources affected and burden cost estimates but are subject to uncertainties. Benefit Estimate Limitations and Uncertainties Uncertainties exist in the affected source counts at different thresholds used to estimate regulatory relief due to the absence of a comprehensive data set of facility-level GHG emissions across all sectors on which to base the number of facilities subject to title V and PSD permitting at alternative regulatory thresholds. These affected source counts are multiplied by the permit burden cost estimates to derive the benefits (regulatory relief) estimates for the rule. Specific uncertainties in the estimates of affected sources, burden estimates and other limitations of the benefits analysis are discussed below. a. Uncertainties in Estimates of Affected Sources In order to estimate the number of facilities that exceed a given GHG threshold (such as a 100 or 250 tpy CO2e emission threshold for baseline analysis), it is necessary to have emissions inventory data at the facility or building level, including, and particularly for lower threshold scenarios, numerous small sources in the residential and commercial sectors (e.g., apartment buildings and office buildings). Historically, however, EPA has not collected sector-wide, facility-level information for GHG emissions under the CAA (with the exception of information from electric generating units required to report CO2 emissions under the Acid Rain Program reporting requirements). To date, national EPA inventories of GHG sources have primarily focused on 'top-down' estimates of GHG emissions from sectors and sources, and not facility- level estimates. As a result, many of the uncertainties described here result from the absence of a comprehensive data set of facility-level GHG emissions across all sectors. For residential, commercial, and smaller manufacturing operations, our current analysis relies on sample facility datasets and 'top-down' sector data (e.g., national fuel consumption statistics and/or building characteristics). There are inherent uncertainties in developing source 93 ------- counts from the allocation of these nationally aggregated statistics. The allocation factors we used, based on U.S. Energy Information Administration statistical sampling procedures and energy consumption statistics, are likely the best available to estimate the population of residential, commercial, and small manufacturing sources exceeding different GHG thresholds. However, uncertainties may result in either overestimating or underestimating GHG emissions for a given individual facility. It is worth noting that our estimates for the largest GHG emitting sources, such as electric utilities and refineries, are derived from bottom-up calculations of individual facility/building emissions so that there is increased certainty in evaluating and comparing the facility counts at the higher GHG threshold scenarios where residential and commercial sources are not highly affected. Although there are different levels of uncertainty in our facility level estimates across sectors, we do believe that the data are sufficiently robust to use in the aggregate to assess national permitting level impacts. EPA's estimate of affected sources is based on their potential to emit emissions, as opposed to actual emission levels. PTE is defined as the maximum capacity of a stationary source to emit a pollutant under its physical and operational design, including certain legal limitations, for example, on emissions or hours of operation. PSD and Title V programs both use PTE for defining and identifying major sources. Although we have attempted to identify reasonable adjustments to account for PTE in our methodology, there are significant uncertainties in our PTE-based estimates, particularly for the commercial, residential and small manufacturing sectors that have not traditionally been subject to any form of air permitting. In practice, for example, for the residential sector and for many of the facilities in the commercial sector, where CO2 emissions are primarily due to space heating/appliance usage, the combustion units are not likely to be used constantly at their maximum rated capacity because heating is not needed year-round and heating systems have thermostats. However, for our analysis we do assume full PTE-based estimates for the residential and commercial sectors, using PTE adjustment factors of 10 and 6.6, respectively to adjust actual emissions to PTE level. Absent industry specific data, for small manufacturing source categories we assume a PTE adjustment factor of 2; individual manufacturing facilities may operate their combustion equipment at levels above and below this capacity utilization rate, but we believe this PTE adjustment reflects a reasonable average rate across the variety of small manufacturing facilities included in the threshold analysis. Ultimately, the number of sources brought into either the PSD or Title V 94 ------- programs due solely to their PTE would depend on how EPA interprets PTE for various types of emitting equipment (e.g., space-heating furnaces in residential and commercial buildings), and the extent to which streamlined mechanisms are made available for sources to obtain legal limits on their PTE so that the programs are not applicable. No such decisions or interpretations have been made at this point and, as mentioned in the preamble, they will require significant time to develop. As a result, our threshold analysis uniformly assumes that no PTE limits are in place for any of the affected sectors, which may likely be the case in the immediate stages of GHG permitting for affected sources. There is significant uncertainty in both our modification rate for newly major GHG sources and in our estimate of modification activity at existing major sources that will become subject to PSD review for GHG emission increases. The general uncertainty results from predicting not only how many major sources will undergo physical or operational changes in any given year, but also which of those changes would result in GHG emissions increases that would exceed a proposed GHG significance level. First, information is not available across sectors and source categories on the types and numbers of specific physical and operational changes that would result in GHG emissions increases in amounts that can be estimated and that therefore can be compared to various GHG emissions significance levels. Second, there is uncertainty in how many project modifications will occur within any given year because decisions on these projects are driven by facility- and sector-based growth patterns and business planning decisions. Lastly, some source categories and units that emit GHGs have not previously been subject to any type of permitting or reporting requirements; as a result, for these sources, there is very little historical record for use in estimating the number and types of projects that would occur at these sources and, in turn, establish an appropriate significance level for GHGs. b. Uncertainties in Permitting Costs The permit burden cost estimates that are multiplied by the source counts to derive the benefits of the rule are also subject to uncertainty. As noted Attachment C to the RIA, the primary reference sources for our estimate of burden hours and costs for permitting GHGs are the most recent ICRs for the PSD and title V programs. There a number of uncertainties introduced in using these references for costing GHG permitting activities. First, we are assuming that the average, conventional pollutant per-permit costs will be similar for GHGs. We do recognize the likelihood that residential and commercial permits would be simpler and have a 95 ------- lower per-permit burden than traditional industrial sources, and have made adjustments for this: however, for industrial sources we assume per-permit costs on par with what are estimated in the latest ICRs for PSD and title V programs. There is uncertainty in applying these average ICR- based costs to GHG permitting, even for industrial sources, because there is no historical track record for permitting these GHG sources and thus any cost efficiencies that have been realized over the years for conventional pollutant permitting, and thus reflected in the current ICRs, may not be initially realized for GHG permitting. For example, we assume the same public hearing estimate as included in the ICR for current PSD permits (i.e., that 1 in 50 major PSD permits require a hearing)—for GHG sources this number may be higher initially if there ends up being significantly more public interest in these permits. We do believe overall, however, that larger facilities, especially those affected at higher threshold levels, will have had sufficient permitting experience such that out ICR-based costs should reasonably reflect the added burden of including GHGs. As mentioned above, in our burden scenario analyses we do discount the ICR-based per- permit costs for residential and commercial sources to reflect what we believe will generally be simpler permits, involving primarily uniform combustion type equipment. For PSD we discount the per-permit cost by 30%, and for title V we discount the per-permit cost by 50%. There is significant uncertainty in these estimated discounts since we have no track record for permitting these smaller commercial and residential sources. However, we do believe that, based solely on the type and uniformity of the GHG emission units that would be subject to permitting at these facilities under lower GHG threshold scenarios, that average per-permit costs would be less than those currently experienced by more complex industrial facilities, with numerous emission units, for currently regulated pollutants. c. Additional uncertainties and limitations of the benefits analysis Current avoided permitting cost or regulatory relief estimates also do not include the avoided costs to comply with PSD BACT requirements due to lack of available data. This omission will tend to reduce the amount of regulatory relief that smaller sources of GHG reported in this RIA will experience during the phase-in period. In addition to the avoided BACT costs we are unable to quantify, there are likely general economic costs associated with requiring permitting for these smaller sources of GHG. Numerous public comments on the proposed rule spoke to the economic burden permitting would place on sources above the actual 96 ------- costs to obtain a permit. These costs might include delays or impediments to entering a new market or to expand existing facilities to accommodate economic growth. These avoided costs might be viewed as additional costs of doing business or barriers to entry for these smaller sources of GHG. The avoided economic costs of these possible additional costs or barriers to doing business have not been considered in the regulatory relief estimates provided for this final rule due to lack of available information on the nature and value of such avoided impacts. If such avoided cost estimates were available, these estimates would tend to increase the regulatory relief burden reported for the final rule. For the multiple year regulatory relief estimates, we assume that the annual estimates can be extrapolated to multiple years without adjustment. This presumes that permitting activity would be constant over time. It is quite possible that permit activity for these smaller sources may grow over time with economic growth and will likely vary from year to year due to differences in business activity. However, we do not have sufficient information about these year-to-year variations nor expected growth in permitting to develop more precise estimates. Given the uncertainty in the annual relief estimates and the short time frame analyzed (five years), we feel it reasonable to not consider these potential yearly fluctuations for the phase-in period. Consideration of growth in permits over time would tend to increase the regulatory relief estimates reported for the final rule. In a similar manner, we do not discount the phase-in regulatory relief to the present in this final report. Since the analytical time period evaluated varies from annual up to five years, we feel this is a reasonable approach. Discounting the regulatory relief estimates to present values would tend to lower the present value total amount of regulatory relief reported. Social Cost Limitations and Uncertainties The social costs of this rule are the foregone environmental benefits that might occur during the phase-in period absent this rulemaking. This subject is discussed in Section 4 of the RIA. We are unable to estimate the PSD BACT requirements that would likely occur for the smaller sources of GHG at this time. Because BACT is a case-by-case decision and evolves over time, because we do not at this time have historical experience with the available controls for small-source GHG emissions, and because of the inherent uncertainty in describing the types of sources that would have triggered BACT absent this rule, we cannot quantify the emission 97 ------- reductions that might be feasible or the associated pollution control costs. For this reason, the social costs of this rule are discussed qualitatively in this RIA. Economic Impact Limitations and Uncertainties As previously discussed there is uncertainty in the estimates of sources affected by this final rule and the permitting burden costs used to estimate the benefits (regulatory relief) of this rule. These uncertainties also affect the economic impact analysis conducted. In the economic impact analysis, we compare the avoided permit burden cost estimates to average industry revenues in order to gauge the magnitude of regulatory relief for affected sources. We used average industry revenue, and average firm revenue estimates by firm size to estimate avoided- cost-to-sales ratios due to lack of data specific to the sources actually obtaining regulatory relief. The actual benefits to individual firms affected by this rule may differ from industry averages. 98 ------- Section 9 References U.S. Census Bureau. Statistics of U.S. Businesses: 2002. U.S. Department of Labor, Bureau of Labor Statistics. Consumer Price Index 2002-2007. http://www.bls.gov/cpi/. U.S. Environmental Protection Agency. April 2010. Summary of Methodology and Data Use to Estimate Burden Relief and Evaluate Resource Requirements at Alternative Greenhouse Gas Permitting Thresholds. (Appendix C) U.S. Environmental Protection Agency. April 2010. Technical Support Document for Greenhouse Gas Emissions Threshold Evaluation. (Appendix B) U.S. Environmental Protection Agency. November 2006. Final Guidance for EPA Rulewriters: Regulatory Flexibility Act as Amended by the Small Business Regulatory Enforcement Fairness Act. http://www.epa.gov/sbrefa/documents/rfaguidancel l-00-06.pdf U.S. Small Business Administration. Table of Small Business Size Standards. Accessed 8/11/08. http://www.sba.gov/idc/groups/public/documents/sba_homepage/serv_sstd_tablepdfpdf. 99 ------- Attachment A Source Categories Affected by the Rule with Industry Detail Table A-l. Title V Sources Expected to Experience Regulatory Relief at Alternative Threshold Levels by Industry Category1 Title V Source Category Electricity Generating Units Adipic Acid Production Aluminum Production Ammonia Manufacturing Cement Production Electronics Manufacturing Ferroalloy Production Glass Production HCFC-22 Production Hydrogen Production Iron and Steel Production Lead Production Lime Manufacturing Magnesium Production Nitric Acid Production Petrochemical Production Petroleum Refineries Phosphoric Acid Production Pulp and Paper Manufacturing Silicon Carbide Production Soda Ash Manufacturing Titanium Dioxide Production Zinc Production Ethanol Production Food Processing Unspecified Industrial Stationary Combustion (Other Manufacturing and Industrial Facilities) Underground Coal Mines Oil and Natural Gas Systems Landfills MWCs Sources Experiencing Regulatory Relief at Alternative Thresholds 25,000 tpy 161 0 0 0 0 134 0 247 0 33 0 4 3 0 1 0 o J 0 0 0 0 0 o 5 54 3,438 163,054 135 2,266 1,430 1 50,000 tpy 285 0 0 0 0 145 0 247 0 37 0 4 23 0 2 0 3 0 3 0 0 0 3 54 3,438 165,083 160 2,353 2,447 1 Final Rule Step 2 100,000 tpy 285 0 0 0 0 177 0 247 0 43 0 4 29 0 3 0 3 0 15 0 0 0 3 97 3,438 166,661 183 2,353 3,164 1 Final Rule Stepl Anyway 285 0 0 0 0 190 0 247 3 61 0 4 37 0 18 0 3 0 160 0 0 0 3 119 3,438 166,693 235 2,353 3,357 1 (continued) 100 ------- Table A-l. Title V Sources Expected to Experience Regulatory Relief at Alternative Threshold Levels by Industry Category (continued) Title V Source Category Stationary Combustion Equipment (Generators) All Commercial — Stationary Fuel Combustion Multi-Family Fuel Combustion Single-Family Fuel Combustion Total Sources Experiencing Regulatory Relief at Alternative Thresholds 25,000 tpy 37,351 1,354,760 610,340 3,925,000 6,098,352 50,000 tpy 37,351 1,355,321 610,480 3,925,000 6,102,374 Final Rule Step 2 100,000 tpy 37,351 1,355,870 610,500 3,925,000 6,105,361 Final Rule Stepl Anyway 37,351 1,355,921 610,500 3,925,000 6,105,913 thresholds are shown as tpy CC^e. Attachment B U.S. Environmental Protection Agency. April 2010. "Technical Support Document for Greenhouse Gas Emissions Threshold Evaluation." See docket at EPA-HQ-OAR-2009- 0517. 2Modifying PSD sources are also expected to experience regulatory relief, but these estimates are not reflected in this table. 101 ------- Table A-2. New PSD Sources Expected to Experience Regulatory Relief at Alternative Threshold Levels by Industry Category New PSD Sources Source Category Electricity Generating Units Adipic Acid Production Aluminum Production Ammonia Manufacturing Cement Production Electronics Manufacturing Ferroalloy Production Glass Production HCFC-22 Production Hydrogen Production Iron and Steel Production Lead Production Lime Manufacturing Magnesium Production Nitric Acid Production Petrochemical Production Petroleum Refineries Phosphoric Acid Production Pulp and Paper Manufacturing Silicon Carbide Production Soda Ash Manufacturing Sources Experiencing Regulatory Relief at Alternative Thresholds1'2 25,000 tpy 20 0 0 0 0 0 0 1 0 0 0 0 0 0 0 0 0 0 0 0 0 50,000 tpy 29 0 0 0 0 0 0 1 0 0 0 0 0 0 0 0 0 0 0 0 0 Final Rule Step 2 100,000 tpy 33 0 0 0 0 0 0 1 0 0 0 0 0 0 0 0 0 0 0 0 0 Final Rule Stepl Anyway 93 0 0 0 0 0 0 1 0 0 0 0 0 0 0 0 0 0 0 0 0 (continued) 102 ------- Table A-2. New PSD Sources Expected to Experience Regulatory Relief at Alternative Threshold Levels by Industry Category (continued) New PSD Sources Source Category Titanium Dioxide Production Zinc Production Ethanol Production Food Processing Unspecified Industrial Stationary Combustion (Other Manufacturing and Industrial Facilities) Underground Coal Mines Oil and Natural Gas Systems Landfills MWCs Stationary Combustion Equipment (Generators) All Commercial - Stationary Fuel Combustion Multi-Family Fuel Combustion Single-Family Fuel Combustion All Sources Experiencing Regulatory Relief at Alternative Thresholds1'2 25,000 tpy 0 0 4 41 529 0 23 0 0 299 12,034 6,397 515 19,863 50,000 tpy 0 0 4 47 534 0 38 0 1 299 12,038 6,400 515 19,906 Final Rule Step 2 100,000 tpy 0 0 7 47 544 0 44 0 1 299 12,039 6,400 515 19,930 Final Rule Stepl Anyway 0 0 10 47 546 0 48 0 2 299 12,041 6,400 515 20,002 Regulatory alternatives reflect tons per year CO2e potential to emit. Attachment B U.S. Environmental Protection Agency. April 2010. "Technical Support Document for Greenhouse Gas Emissions Threshold Evaluation." See docket at EPA-HQ-OAR-2009-0517. 2Modifying PSD sources are also expected to experience regulatory relief, but these estimates are not reflected in this table. 103 ------- Attachment B Technical Support Document for Greenhouse Gas Emissions Thresholds Evaluation Air Quality Policy Division Office of Air Quality Policy and Standards U.S. Environmental Protection Agency March 29, 2010 ------- Table of Contents Page 1. Purpose 4 2. Overview 4 3. Emissions-based Threshold Analysis 5 3.1 General Description of Overall Approach 5 3.1.1 Threshold Levels 5 3.1.2 Greenhouse Gases 6 3.1.3 Source Sectors 7 3.1.4 Potential to Emit Methodology 8 3.1.5 New and Modified Sources 9 3.2 Threshold Summary Results 9 3.3 Electricity Generating Sector 12 3.4 Industrial Sector 14 3.4.1 Data Sources 17 3.4.2 Potential to Emit 17 3.4.3 Methodology for New Units 18 3.5 Methodology for Existing Unspecified Industrial Stationary Combustion Source Category Emissions 18 3.6 Methodology for Existing Specific Industrial Sectors Considering Combustion, Process, and Fugitive Emissions 20 ------- 3.6.1 Adipic Acid Production 21 3.6.2 Aluminum Production 23 3.6.3 Ammonia Production 25 3.6.4 Cement Production 26 3.6.5 Electronic Production 27 3.6.6 Ethanol Production 29 3.6.7 Ferroalloy Production 31 3.6.8 Food Processing 33 3.6.9 Glass Manufacturing 34 3.6.10 HCFC-22 Production 35 3.6.11 Hydrogen Production 37 Table of Contents (cont.) Page 3.6.12 Iron and Steel Production 38 3.6.13 Lead Production 41 3.6.14 Lime 42 3.6.15 Magnesium Production and Processing 43 3.6.16 Nitric Acid Production 45 3.6.17 Petrochemical Production 46 3.6.18 Petroleum Refineries 48 3.6.19 Phosphoric Acid Production 50 3.6.20 Pulp and Paper Manufacturing 51 3.6.21 Silicon Carbide Manufacturing 52 3.6.22 Soda Ash Production 54 3.6.23 Titanium Dioxide Production 55 3.6.24 Zinc Production 56 3.7 Energy Sector 57 3.7.1 Oil and Gas Systems 57 11 ------- 3.7.2 Underground Coal Mining 58 3.8 Waste Sector 61 3.8.1 Landfills 61 3.8.2 Municipal Solid Waste Combustors 63 3.9 Agriculture (Stationary Fuel Combustion) 64 3.10 Commercial Stationary Fuel Combustion 66 3.11 Residential Buildings 69 3.11.1 Single-Family Homes 70 3.11.2 Multi-Family Residential Buildings 71 References 76 Appendix A 81 Appendix B 82 in ------- Technical Support Document for Permit Thresholds for Greenhouse Gases 1. Purpose The purpose of this document is to provide the background information that was used to support EPA's decision process on evaluating and selecting greenhouse gas (GHG) major source applicability thresholds for Prevention of Significant Deterioration (PSD) and Title V permitting for EPA's final rule "Prevention of Significant Deterioration and Title V Greenhouse Gas Tailoring Rule". The document describes the analysis used to estimate the number of existing and new facilities (e.g., industrial plant or commercial building) that would exceed different GHG emission threshold levels. The document also summarizes the results of this analysis for each sector. The results of this analysis served as one of the fundamental bases for evaluating administrative burdens at both existing permitting thresholds and for evaluating and selecting proposed alternative permitting thresholds to address administrative necessity concerns. 2. Overview In order to support EPA's assessment of the administrative burden created by adding GHGs to existing Prevention of Significant Deterioration (PSD) and Title V permitting programs, it was necessary to develop information on the number of affected facilities at both the current permitting major source thresholds (generally, 100 tons per year for Title V and 100 or 250 tons per year for PSD depending on the source category classification) and at alternative higher thresholds. An affected facility would be one who's annual emissions of the GHG equal or exceed the major source threshold being evaluated. Eight threshold levels ranging from 100 to 100,000 tons per year of GHG emissions were evaluated. Some of the alternative thresholds evaluated are the same as ones (e.g., 25,000 tons per year CO2-equivalents) considered in previous studies and in support of EPA's proposed and final GHG mandatory reporting rules (GHG MRR, 74 FR 68, pp. 16447 - 16731 and 74 FR 209, pp. 56260-56519, respectively). One key difference between the emissions data developed for this analysis and the emissions data developed to support the proposed GHG MRR is that this analysis is based on a facility's "potential to emit" (PTE) while the proposed GHG reporting rule was based on "actual" emissions (i.e., the emissions a facility actually emits in a given year). PTE is defined as the maximum capacity of a stationary source to emit a pollutant under its physical and operational design, including certain legal limitations, for example, on emissions or hours of operation. NSR and Title V programs both use PTE for defining major sources. The end result is generally that more facilities will exceed a given threshold on a PTE basis than on an actual basis. This is an important differentiation in terms of both evaluating the thresholds under this rule and when comparing the results to other threshold analysis, such as the supporting data for the EPA's GHG MRR. ------- Although the primary focus of this analysis was on the potential administrative burden associated with different GHG permitting emission levels as represented in terms of number of facilities potentially subject to permitting, information on GHG emissions from affected facilities was also collected to assess the relative coverage of national stationary source GHG emissions at the different threshold levels. While the environmental impact associated with the different GHG permitting levels was not used as the basis for the GHG applicability thresholds identified in the final GHG tailoring rule, the information on national emissions coverage provides a useful measure to consider the potential scope of the proposed alternative thresholds, their coverage of key GHG emission source categories, and whether they promote the environmental purposes of the PSD and Title V programs. 3. Emissions-based Threshold Analysis 3.1 General Description of Overall Approach This section presents a general description of the overall approach EPA used to evaluate a range of permitting thresholds in terms of the number of sources affected, and amount of emissions covered. EPA made use of earlier analyses performed to develop emission thresholds for the proposed and final GHG MRR, or used the same data sources when additional analyses were required. EPA did not conduct primary research for this analysis, but instead relied on published research and publicly available government data, such as EPA's eGRID database of electric generating source emissions, Economic and Housing Census data, and Energy Information Agency (EIA) data on energy consumption. 3.1.1 Threshold Levels EPA evaluated eight different GHG emission thresholds: GHG Thresholds (tons per year) 100 250 1,000 5,000 10,000 25,000 50,000 100,000 The first two thresholds are the current Clean Air Act major source criteria pollutant thresholds for the federal operating permit program under Title V (generally, 100 tpy for major ------- source applicability), and the PSD construction permit program under Title I. Under PSD, a "major stationary source" is any source belonging to a specified list of 28 source categories which emits or has a PTE of 100 tpy or more, or any other source type which emits or has the potential to emit such pollutants in amounts equal to or greater than 250 tpy. The six additional thresholds cover the range of thresholds evaluated for the proposed GHG MRR, and add two additional thresholds at 5,000 and 50,000 tons per year. Like the Clean Air Act, the permit thresholds are based on U.S. short tons (tons) instead of metric tons (nitons). There is a three-orders-of-magnitude range in the thresholds which reflects the much higher quantity of GHG emissions compared to criteria pollutant emissions from the primary source of GHG emissions, fossil fuel combustion. For example, an uncontrolled natural gas- fired boiler that emits 100 tons of NOX annually would at the same time emit about 100,000 tons ofCO2. The threshold analysis of source counts and emissions was done on a "potential to emit" basis, because that is the basis that is relevant for the permitting requirements under PSD and title V. Potential emissions (in short tons) from each source were evaluated against the threshold levels in order to determine whether or not a source would be included in the threshold count. When a source was identified as being covered by a given threshold level, the actual emissions from that source were included to determine the emissions covered by the threshold. In other words, where summary tables present "Tg GHG Emissions Covered per Year" these are the actual emissions that would be covered by the threshold level, given the source count arrived at considering potential to emit emission levels. 3.1.2 Greenhouse Gases EPA evaluated emissions of the major GHGs that are directly emitted by human activities at the eight threshold levels. The GHGs evaluated are shown below in Table 1. For purposes of this analysis emissions were evaluated on both an individual GHG mass basis and CO2- equivalent basis (CC^e). CC^e normalizes the different heat trapping capacities of the different GHGs to that of CC>2. A quantity of a GHG is converted to a CC^e basis by multiplying the mass of the compound emitted by its Global Warming Potential (GWP). The GWP is a metric that incorporates both the heat-trapping ability and atmospheric lifetime of each GHG relative to CO2. ------- Table 1 Major GHGs Directly Emitted by Human Activities Greenhouse Gas Carbon dioxide Methane Nitrous oxide Perfluorocarbons Hydrofluorocarbons Sulfur hexafluoride Chemical Formula or Acronym CO2 CH4 N2O PFCs MFCs SF6 Global Warming Potential (GWP)* 1 21 310 Varies by compound Varies by compound 23,900 * GWP values as codified in the EPA's final GHG mandatory reporting rule: Table A-l to Subpart A of Part 98 - Global Warming Potentials, FR, Vol.74, No. 209, p. 56395. Sector descriptions contained in this document include a discussion of GHGs evaluated for each sector. If the analysis included more than one GHG, the description includes gas- specific counts as well as a CC^e count. The threshold analyses for stationary fossil fuel combustion were simplified by excluding CH4 and N2O emissions, because CC>2 comprises over 99 percent of GHG emissions from fossil fuel combustion. 3.1.3 Source Sectors In this analysis EPA evaluated the same range of stationary source types with direct GHG emissions as identified in the proposed and final GHG MRR. The proposed GHG MRR source categories were based on a comprehensive review of all U.S. source categories with GHG emissions, to include the categories that emit the most significant amount of GHG emissions. The stationary sources evaluated in this analysis can be grouped in the sectors shown below: • Electricity Generation (facilities with fossil fuel-fired electric generating units); • Industry (range of industries with process and combustion GHG emissions); • Energy (oil and gas extraction, transport, and processing; underground coal mining); • Waste Treatment (landfills and municipal solid waste incinerators); • Agriculture (stationary fuel combustion); • Commercial (stationary fuel combustion); and • Residential (stationary fuel combustion). ------- A number of direct emission source types included in the GHG MRR analysis were not included in the potential to emit analysis because the GHG emissions from these sources were primarily fugitive emissions. Fugitive emissions are emissions which are not released, or could not be reasonably released, through a stack or vent. Under the PSD rules, fugitive emissions are only included in potential to emit estimates if the source is one of 28 listed PSD source categories. Excluded fugitive emissions sources are listed below: • Electrical equipment SF6 emissions; • Wastewater treatment plants not associated with one of 28 listed PSD source categories (combustion is captured in the commercial sector analysis); and • Agricultural manure management. 3.1.4 Potential to Emit Methodology As noted earlier, the potential to emit (PTE) is the amount of emissions that can be emitted from a source operating at full capacity. The annual PTE is based on operation at full equipment capacity, 24 hours per day, 365 days per year (8,760 hours per year). For example, if a boiler has a maximum rated heat input capacity often million Btu per hour, the annual PTE for that boiler is the amount of emissions from burning 87,600 million Btu of fuel: 10 mmBtu/hr x 8,760 hrs/yr = 87,600 mmBtu/yr Capacity information and annual GHG emissions were available for some of the source categories from analyses performed to support the GHG MRR. In some cases the supporting analyses had already calculated GHG emissions on a full capacity basis, in which case EPA directly used those estimates as PTE estimates. Alternatively, some data from the supporting analysis estimated actual annual emissions using a baseline year. If capacity and baseline year production information was provided in the supporting data, EPA adjusted the source actual emissions estimate by the ratio of annual capacity to baseline production to estimate PTE. If capacity information was not available, EPA used capacity factors from other data sources to adjust actual emission estimates to PTE estimates. These capacity factors add varying uncertainty to the PTE estimate. Detailed descriptions of the different PTE calculation methodologies are included in the source descriptions in the following section. Removal by pollution control equipment was considered in the PTE estimates, though control equipment removal was relevant in only a few cases (thermal oxidation of HPCs and CH4). Also, as noted earlier, fugitive emissions, were only included in the PTE estimates if the source was one of the 28 listed PSD source categories. For example, fugitive CH4 emissions from oil and gas transmission stations were not included in CH4 or CC^e emissions when comparing to the different thresholds, but were included for iron and steel plants. ------- 3.1.5 New Construction The source population data from the analyses supporting the GHG MRR, and other data sources provide information on existing sources and their emissions. The PSD and title V program requirements and applicability determinations, however, also apply to newly constructed sources. The general approach for estimating the annual number of newly constructed sources was to apply growth rates in the number of units or facilities in a source category to the number of existing facilities at the different thresholds. Growth rates were available from a variety of sources including Economic Census data, EIA energy survey data, and various EPA regulatory impact analyses and information collection requests which require source population estimates. In some cases there was sufficient information to distribute new sources to different thresholds based on emission information specific to the new sources (electric generating, municipal solid waste combustors, and commercial stationary fuel combustion). Otherwise EPA assumed the same size and threshold distribution for new units as for existing units. For example, if the annual growth rate in a category was one percent, the number of existing facilities above a threshold were multiplied by the fractional growth rate to estimate the number of new facilities at that threshold per year. EPA did not develop estimates for modifications to exsiting sources (which can be potentially subject to PSD requirements) as part of this threshold study; estimates for modifications were prepared under a separate burden analysis prepared for the final GHG tailoring rule and located in the final docket for the rulemaking13. 3.2 Threshold Summary Results The resulting counts of affected stationary source facilities and the amount of actual GHG emissions covered at different PTE thresholds for all sectors are shown in the tables below. GHG emissions covered at each threshold are in Tg, which is equivalent to million metric tons. SI units were used for the covered emissions to be consistent with the EPA's official U.S. GHG Inventory so that comparions could be made to the inventory in terms of emissions coverage at different applicability thresholds. The complete data for the sectors and subsectors are provided in supporting spreadsheets that accompany this report. These spreadsheets are identified in Appendices A and B. 13 See "Summary of Methodology and Data Used to Estimate Burden Relief and Evaluate Resource Requirements at Alternative Greenhouse Gas (GHG) Permitting Thresholds" contained in the public docket for the final tailoring rule atEPA-HQ-OAR-2009-0517. ------- Table 2 COie Threshold Summary — All Stationary Source Sectors GHG Threshold (tons per year) 100 250 1,000 5,000 10,000 25,000 50,000 100,000 Number of Existing Sources 6,118,252 1,079,483 302,863 59,140 30,341 16,564 9,980 5,326 Number of New Facilities Added per Year 67,469 19,755 4,430 549 313 140 96 72 CO2e Emissions Covered (Tg per year) 3,867 3,786 3,723 3,622 3,564 3,493 3,387 3,267 Table 3 Threshold Summary — All Stationary Source Sectors GHG Threshold (tons per year) 100 250 1,000 5,000 10,000 25,000 50,000 100,000 Number of Existing Sources 6,113,861 1,075,078 298,527 55,313 26,836 13,637 8,109 4,226 Number of New Facilities Added per Year 67,469 19,755 4,430 549 313 139 96 72 CO2 Emissions Covered (Tg per year) 3,651 3,570 3,513 3,413 3,357 3,293 3,212 3,114 10 ------- Table 4 CH4 Threshold Summary — All Stationary Source Sectors GHG Threshold (tons per year) 100 250 1,000 5,000 10,000 25,000 50,000 100,000 Number of Existing Sources 4,201 3,851 2,887 1,042 466 138 34 o J Number of New Facilities Added per Year 0 0 0 0 0 0 0 0 CH4 Emissions Covered (Tg per year) 7.807 7.759 7.321 4.740 3.697 2.234 1.185 0.211 Table 5 Threshold Summary — All Stationary Source Sectors GHG Threshold (tons per year) 100 250 1,000 5,000 10,000 25,000 50,000 100,000 Number of Existing Sources 47 46 31 5 0 0 0 0 Number of New Facilities Added per Year 0 0 0 0 0 0 0 0 N2O Emissions Covered (Tg per year) 0.074 0.074 0.068 0.022 0 0 0 0 11 ------- Table 6 High GWP Gases Threshold Summary ~ All Stationary Source Sectors GHG HFC HFC HFC HFC PFC SF6 GHG Threshold* (tons per year) 100 250 1,000 5,000 and above 100 and above 100 and above Number of Existing Sources o J 3 1 0 0 0 Number of New Facilities Added per Year 0 0 0 0 0 0 GHG Emissions Covered (Tg per year) 0.001 0.001 0.001 0 0 0 * Where a threshold is not listed for a particular GHG, threshold counts for that threshold and any higher thresholds can be assumed to be zero. 3.3 Electricity Generating Sector Data Sources The latest version of EPA's eGRID database (2006) was used to estimate the PTE of electricity generating facilities and counts of units above the different emission thresholds. The eGRID database includes year 2004 characteristics, operating information, and annual emissions (including CO?) for U.S. facilities that have a generation capacity greater than one MW, and sell electric power to the grid. A facility's PTE was estimated based on the eGRID generator table. The generator table, which is based on the 2004 EIA form 860 database, provides prime mover, generator nameplate capacity, and primary energy source (fuel type) for each generator down to 0.1 MW. To calculate PTE, we combined the nameplate capacity and primary fuel for each of the fossil-fired units with average fuel based prime mover heat rates (Btu/kWh) published by EIA (EIA, 2007). 12 ------- Table 7 ECU Prime Mover Heat Rates (EIA Electric Power Annual, Table A7, 2007) Prime Mover Steam turbine Simple combustion turbine Combined cycle combustion turbine Internal combustion engine Fuel Coal Gas Oil Gas Oil Gas Oil Gas Oil Average Heat Rate (Btu/kWh) 10,114 10,466 10,400 11,459 13,216 7,445 11,015 9,923 10,149 The eGRID database includes cogeneration plants and generating units at industrial plants that primarily supply electric power and steam to a host facility. We eliminated these units from the electric generation facility population based on North American Industry Classification System (NAICS) code, so that the only facilities included were facilities with a NAICS code beginning with 22 (Utilities). The generator-nameplate-heat-rate approach potentially underestimates PTE for cogeneration plants, where a portion of the burner heat input provides useful thermal energy in addition to electric output. This potential to underestimate PTE affects 321 of 2,237 or 14 percent of facilities evaluated. Methodology for Existing Facilities Fuel combustion was the only source of GHG emissions considered for the electricity generation sector. From the eGRID and EIA information EPA calculated a maximum annual fuel heat input based on 8,760 hours of operation for the combustors associated with the generator. This calculated maximum annual heat input was used with fuel combustion emission factors from the GHG MRR for the primary fuel, to calculate the facility PTE. The calculations covered 10,487 fossil fuel-fired generators with nameplate capacities down to 0.1 MW or 100,000 kW. EPA also did not evaluate fugitive CHi emissions from facility coal piles. Fossil fuel- fired steam electric plants with heat input greater than 250 mmBtu/hr heat input are one of the 28 listed PSD source categories that include fugitive emissions when calculating PTE. However, the CC>2 PTE from combustion alone for this size facility is about 225,000 tons per year. This is 13 ------- well over all of the emission thresholds considered in this analysis without consideration of the contribution of fugitive CH4. New Units The eGRID generator table includes an online year field. To determine the number of new units per year at different thresholds EPA counted generators online each year and totaled the emissions associated with those generators at the facility level over the 15-year period from 1990 through 2004. Counts were made of the number of these facilities over the different PTE thresholds, and averaged over the 15 years to arrive at the number of new or modified facilities per year. Threshold Summary The table below shows the facilities and emissions covered at the different emission thresholds based on the described methodology. There were a total of 2,237 facilities in the electric generation population, so all facilities and all emissions are covered up to the 5,000 ton PTE threshold. Almost all emissions (99.9 percent), and about 75 percent of facilities are covered at the highest 100,000 ton PTE threshold. Table 8 Threshold Summary Results — Electricity Generating Sector GHG Threshold (tons per year) 100 250 1,000 5,000 10,000 25,000 50,000 100,000 Number of Existing Sources 2,237 2,237 2,237 2,237 2,195 2,076 1,911 1,721 Number of New Facilities Added per Year 93 93 93 91 86 73 64 60 CO2Emissions Covered (Tg per year) 2,373 2,373 2,373 2,373 2,373 2,373 2,373 2,371 3.4 Industrial Sector The industrial sector comprises establishments engaged in the mechanical, physical, or chemical transformation of materials, substances, or components into new products, and specifically includes businesses classified in Sectors 31-33 according to the North American 14 ------- Industry Classification System (NAICS). Industrial source greenhouse gases result from manufacturing processes as well as combustion processes. Because there is a great deal of variability within the sector, this technical support document includes industry-specific discussions after a general sector overview. For the industrial sector, EPA considered the six individual greenhouse gases separately, and also prepared an analysis considering CC^e. In preparation of the GHG MRR, EPA identified 23 industrial sectors where the GHG emissions were significant; these sectors are listed in Table 9. 15 ------- Table 9 Industrial Sectors and GHG Emissions NAICS Code 325199 331312 325311 327310 334 325193 331112 3116 327 325120 331111 3314 327410 3314 325311 3251 324110 325312 3221 327910 325181 325188 3314 Industrial Sector Adipic Acid Production Aluminum Production Ammonia Production Cement Production Electronics Manufacturing Ethanol Production Ferroalloy Production Food Processing Glass Production HCFC-22 Production Hydrogen Production Iron and Steel Production Lead Production Lime Manufacturing Magnesium Production Nitric Acid Production Petrochemical Production Petroleum Refineries Phosphoric Acid Production Pulp and Paper Manufacturing Silicon Carbide Production Soda Ash Manufacturing Titanium Dioxide Production Zinc Production CO2 X X X X X X X X X X X X X X X X X X X X X X X X CH4 X X X X X N2O X X SF6 X X HFC X X PFC X X In addition, there are a large number of industrial establishments across all industrial sectors that emit less significant amounts of GHGs (primarily CC^) from stationary source fuel combustion. Combustion emissions from these establishments were analyzed under the Unspecified Industrial Stationary Combustion source category. 16 ------- 3.4.1 Data Sources There were several primary data sources used in preparation of the permit threshold analysis. EPA consulted analyses prepared in support of the GHG MRR for the 23 industrial sectors for which combustion, process and fugitive emissions were significant. These documents can be found in the docket numbered EPA-HQ-OAR-2008-0508. The TSDs contain industry- specific analyses of process, fugitive, and combustion emissions for industries. Supporting analyses used to prepare the TSDs are found in entries 0046.7 and 0046.8 of the GHG MRR docket. These emissions estimate details were helpful in breaking down TSD emission estimates to compare facility-specific emissions against the additional threshold levels considered in the permit threshold analysis, including 100, 250, 5,000, and 50,000 tons per year. Combustion emissions analyses for the Unspecified Industrial Stationary Combustion sectors used data from the 2002 Manufacturing Energy Combustion Survey (MECS) and the U.S. Census Bureau's 2002 Economic Census. MECS is a survey of manufacturing and industrial energy uses and costs prepared by the EIA (EIA, 2007). Data is collected by manufacturing establishment through mailed questionnaires. The 2002 MECS data reflects responses accounting for approximately 98 percent of the manufacturing payroll, and reports separate energy use estimates for 48 NAICS industrial sector groups. The MECS provided information on the amount of fuel burned in 2002 by sector on an employment basis. The 2002 Economic Census data provided information on the number of establishments sorted by three- digit NAICS code and disaggregated into specific size categories based on employment (U.S. Census, 2004). 3.4.2 Potential to Emit As mentioned earlier in this document, permit threshold analyses considered both actual emissions and PTE. When capacity information was not available, the analyses applied utilization rates from the Industrial Production and Capacity Utilization, Federal Reserve Statistical Release G-17 in order to adjust actual emissions to determine PTE emissions. These utilization rates are prepared quarterly with annual revisions, and are published on the web (http://www.federalreserve.gov/releases/gl7). The main data source for the industrial production and capacity utilization rates is the U.S. Census Bureau's Census of Manufactures. Data introduced from other Census Bureau publications include the Census of Services and the Services Annual Survey (for publishing) and selected Current Industrial Reports. Additional government source data include new annual data on minerals from the U.S. Geological Survey (USGS) and updated deflators from the Bureau of Economic Analysis (BEA). In addition, the annual revisions include monthly production estimates that reflect updated seasonal factors and the inclusion of monthly source data that became available (or were revised) after the closing of the regular four-month reporting window. 17 ------- 3.4.3 Methodology for New Units To determine the number of new units per year, EPA compared the number of establishments by three-digitNAICS code in 1998 to the number of establishments by three-digit NAICS code in 2002, and determined an average annual growth rate for each three-digit NAICS code. The growth rates were applied to each threshold count to determine the number of annual new establishments per industry per threshold. If the growth rate was determined to be negative, EPA assumed that no new establishments would be added; however, establishments were not reduced to reflect negative growth rates. EPA also supplemented these growth rates with agency estimates of expected new sources from various information collection requests (ICR) and regulatory impact analyses (RIA) efforts. 3.5 Methodology for Existing Unspecified Industrial Stationary Combustion Source Category Emissions In order to determine establishment counts and emissions totals for the unspecified industrial stationary combustion sources, EPA used 2002 Economic Census data showing manufacturing employment by NAICS code and Manufacturing Energy Consumption Survey (MECS) data published by EIA. Calculating greenhouse gas emissions required determining energy consumption per employee by industry and applying emission factors specific to the consumption profile derived from MECS data. The Economic Census data (2002) provide a count of establishments by employment category, where employment category is defined by number of employees (e.g., 1-4, 5 - 9,... ,500 - 999,... ,more than 2,500). The MECS energy consumption data provide energy consumption by industry. Both the employment data and the energy consumption data are organized according to the NAICS codes. As part of this analysis, EPA calculated industry-specific GHG emission factors. The factors were calculated by considering actual fuel consumption in 2002, as determined by EIA. Actual fuel consumed was multiplied by fuel-specific GHG emission factors to determine GHG emissions by fuel type by industry. To simplify the analysis, EPA only included CO2 emissions and ignored CH4 and N2O in the CO2e calculations. CO2 makes up between 99.3 and 99.7 percent of estimated CO2e emissions. Emissions for each fuel type were combined to determine total emissions for a sector. Total emissions per sector were divided by total energy consumption per sector to determine a factor to calculate GHG emissions per mmBtu of energy consumption specific to the industrial sector. The GHG emission factors were then multiplied by the energy consumption per employee in order to determine emissions per employee. Multiplying the result by the average number employees per establishment, EPA determined total GHG emissions per establishment. The total emissions numbers were used to determine number of establishments and volume of emissions that would be caught by each of the permit thresholds under consideration. 18 ------- As discussed previously, a separate threshold analysis was conducted for 23 industrial sectors determined to have significant GHG emissions in the GHG MRR analysis. In order to quantify the unspecified industrial stationary combustion source emissions, the combustion emissions and establishment counts from 19 of these sectors were subtracted from the total industrial MECS analysis. For the remaining four industries, HCFC-22 production, hydrogen production, magnesium production, and nitric acid production, EPA could not readily isolate combustion emissions. For these industries, their establishment counts were subtracted from the unspecified industrial source threshold counts based on process emission threshold evaluations, assuming that any facility exceeding a threshold for process-based emissions would exceed the threshold regardless of their combustion CC>2 emissions. Potential to Emit In order to determine potential to emit from the MECS and Economic Census numbers, EPA assumed a capacity utilization factor of 50%. There is a wide variety of generally smaller manufacturing sources included under this general source category. Based on comments we received on the proposed GHG tailoring rule, we are using a 50% capacity utilization rate for this final analysis to better reflect what can be deemed reasonable operation under normal conditions for facilities in these source categories. Sources may operate their combustion equipment at levels above and below this capacity utilization rate, but we believe the 50% utilization rate reflects a reasonable average rate across the variety of facilities represented in this category. New Units EPA applied industry-specific growth rates to each sector and summed across sectors in order to determine number of new units. Threshold Summary 19 ------- Table 10 COie Threshold Summary ~ Unspecified Industrial Stationary Combustion GHG Threshold (tons per year) 100 250 1,000 5,000 10,000 25,000 50,000 100,000 Number of Existing Sources 172,142 112,659 64,535 20,785 12,215 5,875 3,272 958 Number of New Facilities Added per Year 546 319 239 83 61 18 12 2 CO2e Emissions Covered (Tg per year) 372.307 367.636 357.855 318.759 289.198 245.579 206.881 145.106 3.6 Methodology for Existing Specific Industrial Sectors Considering Combustion, Process, and Fugitive Emissions These analyses were based primarily on the GHG MRR TSDs and the supporting analyses, including facility specific emission information. The estimates considered each greenhouse gas separately. The GHG MRR TSDs included threshold counts and emissions calculations for 1,000, 10,000, 25,000, and 100,000 metric tons per year. Two steps were required for permit threshold consideration. First, emissions were recalculated in order to conduct the analysis in short tons for comparison to the permit thresholds. Second, the emissions were considered against the finer threshold stratification considered in the permit threshold analysis. For the permit threshold analysis, EPA determined that if the GHG MRR analysis showed all of the establishments exceeded a threshold, after adjustment for short tons, all of the establishments exceeded any lower thresholds. However, where fewer than 100 percent of the establishments exceeded a threshold, additional analysis was required to compare emissions to the permit thresholds of 100, 250, 5,000, and 50,000 tons per year. EPA used the supporting summaries for the GHG MRR which included facility-specific consumption, process, and fugitive emission reports in order to determine counts and emissions for each of the permit thresholds. 20 ------- 3.6.1 Adipic Acid Production There are four Adipic Acid Production plants in the U.S., all of which are estimated to exceed the highest 100,000 metric tons per year emission threshold for CC^e on an actual emissions basis. Therefore all plants will also exceed all PTE thresholds on a CC^e basis. The CO26 emission estimate includes N2O process emissions that total about 5.9 million metric tons CO26, and 3.4 million metric tons of CC>2 from stationary fuel combustion sources. N2O Individual plant production and emission estimates were not made available because of confidential business information (CBI) claims. However, from the Technical Support Document for the Adipic Acid Production Sector: Proposed Rule for Mandatory Reporting of Greenhouse Gases (EPA-HQ-OAR-2008-0508-0005), overall U.S. adipic acid production was estimated to total approximately one million metric tons in 2006. The smallest U.S. plant only produced about two percent of the total. This plant, however, is the only plant that is uncontrolled. The three larger plants with the bulk of production have control equipment with N2O control efficiencies that range from 90 to 99 percent. The uncontrolled N2O emission factor is 300 kg N2O/mton adipic acid. Based on the two percent production share, this uncontrolled plant emitted about 6,000 metric tons of N2O (no GWP adjustment). This leaves about 13,100 metric tons of N2O from the three larger controlled plants. Two plants representing about 64 percent of production have control efficiencies in the range of 90 to 95 percent, and one plant with about 34 percent of production has control close to 99 percent (EPA, 2001). Assuming similar production shares today, the share of national production (which is assumed for this analysis to be equivalent to capacity) appears to range from 30 to 35 percent for the three plants. Therefore, emissions and PTE for the controlled plants range from to 4,000 metric tons to 4,700 metric tons of N2O per year. CO2 The CO2 emissions from fuel combustion can similarly be apportioned to the four plants. The smallest plant, with only two percent of national production, is estimated at CC>2 emissions of 67,500 metric tons, and the next smallest, with 30 percent of national production, is estimated at 101,300 metric tons. Potential to Emit The PTE for each facility was assumed to be equivalent to the emissions based on the apportionment described above. New Units EPA assumed that no new plants would be constructed for this sector. 21 ------- Threshold Summary Table 11 COi Threshold Summary ~ Adipic Acid Production GHG Threshold (tons per year) 100 250 1,000 5,000 10,000 25,000 50,000 100,000 Number of Existing Sources 4 4 4 4 4 4 4 o J Number of New Facilities Added per Year 0 0 0 0 0 0 0 0 CO2 Emissions Covered (Tg per year) 3.376 3.376 3.376 3.376 3.376 3.376 3.376 3.309 Table 12 Threshold Summary ~ Adipic Acid Production GHG Threshold (tons per year) 100 250 1,000 5,000 10,000 25,000 50,000 100,000 Number of Existing Sources 4 4 4 1 0 0 0 0 Number of New Facilities Added per Year 0 0 0 0 0 0 0 0 N2O Emissions Covered (Tg per year) 0.019 0.019 0.019 0.006 0 0 0 0 22 ------- Table 13 COie Threshold Summary ~ Adipic Acid Production GHG Threshold (tons per year) 100 250 1,000 5,000 10,000 25,000 50,000 100,000 Number of Existing Sources 4 4 4 4 4 4 4 4 Number of New Facilities Added per Year 0 0 0 0 0 0 0 0 CO2e Emissions Covered (Tg per year) 9.298 9.298 9.298 9.298 9.298 9.298 9.298 9.298 >.6.2 Aluminum Production The primary aluminum production process results in emissions of CC>2 and PFCs. The reduction of the alumina occurs through electrolysis in a molten bath of natural or synthetic cryolite (NasAlFe). The reduction cells contain a carbon lining that serves as the cathode. Carbon is also contained in the anode, which can be a carbon mass of paste, coke briquettes, or prebaked carbon blocks from petroleum coke. During reduction, most of the carbon in the anode is oxidized and released to the atmosphere as CC>2. Potential to Emit C02 The Technical Support Document for Process Emissions from Primary Production of Aluminum: Proposed Rule for Mandatory Reporting of Greenhouse Gases (EPA-HQ-OAR- 2008-0508-0006) apportioned CC>2 emission estimates from the U.S. GHG inventory to the 13 operating smelters based on each smelters share of total capacity. Operating smelter emissions were all above 100,000 tons of CC>2, so no PTE estimate was required. Capacity information for the two idle smelters shows that these smelters are also capable of emitting over 100,000 tons of CC>2 per year. PFCs The reduction cells also emit two PFCs: perfluoromethane (CF4) and perfluoroethane (C2F6). The GWPs of the two PFCs are 6,500 and 9,200 respectively. During the smelting 23 ------- process, when the alumina ore content of the electrolytic bath falls below critical levels required for electrolysis, rapid voltage increases occur, which are termed "anode effects." Anode effects cause carbon from the anode and fluorine from the dissociated molten cryolite bath to combine, and produce fugitive emissions of CF4 and C2F6. Anode effects released approximately 2.5 million metric tons of CF4 and C2p6in 2006 as documented in the GHG MRR TSD. CF4 made up at least 85 percent of the combined emissions in 2006 (Inventory of U.S. GHG Emissions and Sinks: 1990 - 2007). These emissions on a CO26 basis are equivalent to about 410 short tons of combined emissions as PFC. The proposed GHG MRR TSD estimated CC^e emissions from primary aluminum smelters at full capacity. The largest smelter has 11 percent of U.S. operating capacity. Therefore the largest smelter has a PTE of not more than 45 tons of PFC, and no facilities have a PTE greater than 100 tons. New Units No new primary aluminum facilities are expected to be built. The growth rate in primary metals from the Economic Census data is only about 0.4 percent. Threshold Summary Threshold summaries are displayed below for CC>2 and CC^e. All facilities have a PFC PTE less than 100 tons per year on a PFC basis. Table 14 COi Threshold Summary ~ Primary Aluminum GHG Threshold (tons per year) 100 250 1,000 5,000 10,000 25,000 50,000 100,000 Number of Existing Sources 15 15 15 15 15 15 15 15 Number of New Facilities Added per Year 0 0 0 0 0 0 0 0 GHG Emissions Covered (Tg per year) 3.800 3.800 3.800 3.800 3.800 3.800 3.800 3.800 24 ------- Table 15 Threshold Summary ~ Primary Aluminum GHG Threshold (tons per year) 100 250 1,000 5,000 10,000 25,000 50,000 100,000 Number of Existing Sources 15 15 15 15 15 15 15 15 Number of New Facilities Added per Year 0 0 0 0 0 0 0 0 GHG Emissions Covered (Tg per year) 3.951 3.951 3.951 3.951 3.951 3.951 3.951 3.951 3.6.3 Ammonia Production EPA reviewed the proposed Supporting Data for Threshold Analysis Subpart E- W, Greenhouse Gas Mandatory Reporting Rulemaking, March 10, 2009 (EPA-HQ-OAR-2008- 0508-0046.7) to determine actual emissions and calculate the potential to emit for 24 ammonia plants in operation. The analysis spreadsheet details CC>2 actual emission calculations for each plant based on ammonia production and urea production, and CO2, CH4, and N2O emission calculations for stationary fuel combustion based on 2006 data. For purposes of permit threshold analysis, the CH4 and N2O emissions from combustion were not significant. Potential to Emit Capacity information in the spreadsheet is based on the engineering design capacity adjusted for 340 days per year of effective production capability, using information provided by the United States Geological Survey (USGS). The PTE estimates were made by multiplying the actual emission estimates by the ratio of annual ammonia capacity to annual ammonia production adjusted to 365 days a year of operation instead of 340. EPA assumed that ratio also held for stationary combustion units at the plant. New Units EPA assumed that no new plants would be constructed for this sector. 25 ------- Threshold Summary Table 16 Threshold Summary — Ammonia Production GHG Threshold (tons per year) 100 250 1,000 5,000 10,000 25,000 50,000 100,000 Number of Existing Sources 24 24 24 24 24 24 24 22 Number of New Facilities Added per Year 0 0 0 0 0 0 0 0 CO2e Emissions Covered (Tg per year) 14.543 14.543 14.543 14.543 14.543 14.543 14.543 14.540 3.6.4 Cement Production Process-related CC>2 emissions from cement production are the second largest source of industrial CC>2 emissions in the United States. Cement production is done in two stages. The first stage is clinker production. In clinker production, raw materials (primarily limestone) are heated to induce calcination and produce lime. Lime reacts with silica-containing materials and iron ore and aluminum to form clinker. During the process, CC>2 is generated as a byproduct and released to the atmosphere. Also during clinker production, some of the clinker raw materials form partially or fully calcinated cement kiln dust instead of forming clinker, resulting in additional process-related CO2 emissions. In the second stage of the production process, the clinker is ground and mixed with gypsum and other materials to make cement. Potential to Emit The Technical Support Document for Process Emissions from Cement: Proposed Rule for Mandatory Reporting of Greenhouse Gases (EPA-HQ-OAR-2008-0508-0008) shows 107 cement facilities in the U.S., 106 of which exceed all permit thresholds for CC>2 (according to the TSD, the one facility that does not exceed the 100,000 tons per year threshold accounted for over 90,000 metric tons of CC^e and approximately one-tenth of one percent of the cement industry emissions in 2006). 26 ------- New Units Growth for the industrial sector was estimated at 0.4 percent, and as such, no additional facilities were included in this analysis. Threshold Summary Table 17 COie Threshold Summary — Cement Production GHG Threshold (tons per year) 100 250 1,000 5,000 10,000 25,000 50,000 100,000 Number of Existing Sources 107 107 107 107 107 107 107 106 Number of New Facilities Added per Year 0 0 0 0 0 0 0 0 CO2e Emissions Covered (Tg per year) 86.83 86.83 86.83 86.83 86.83 86.83 86.83 86.74 3.6.5 Electronic Production The Technical Support Document for Process Emissions from Electronics Manufacture (Semiconductors, MEMs, Liquid Crystal Displays, and Photovoltaics) (EPA-HQ-OAR-2008- 0508-0009) examined emissions of high GWP gases for semiconductor and related industry plants. Emissions from stationary fuel combustion were not included in the source category analysis, but were instead captured by the unspecified industrial stationary combustion analysis. EPA has followed this approach here as well. Approximately one million metric tons of SFe as CC^e were emitted from the semiconductor industry in 2006 (Inventory of U.S. Greenhouse Gas Emissions and Sinks: 1990 - 2007). This is equivalent to 46 short tons of SFe. The semiconductor industry uses multiple long-lived fluorinated gases in plasma etching and plasma enhanced chemical vapor deposition (PECVD) processes to produce semiconductor products. These include PFCs, which are also used as heat transfer fluids. Approximately 3.5 million metric tons of PFCs as CC^e were emitted from the semiconductor industry in 2006 (Inventory of U.S. Greenhouse Gas Emissions and Sinks: 1990-2007). 27 ------- Table 18 Electronic Production PFC Emissions Semiconductor PFC CF4 C2F6 C4F8 Total 2006 CO2e Emissions (million nitons) 1.2 2.2 0.1 3.5 PFC GWP 6,500 9,200 8,700 - 2006 PFC Emissions (tons) 204 264 13 481 Potential to Emit The Federal Reserve capacity utilization factor for the electronics industry in 2006 was 79.8 percent. Based on this capacity utilization factor the PTE of all of the semiconductor plants combined is estimated at 56 tons of SFe and 600 tons of PFC. EPA identified 216 facilities in the semiconductor-electronics sector. Of these, the largest facility emitted six percent of total semiconductor emissions on a CC^e basis (includes non-PFCs), which is a maximum of 30 tons of PFC. On a PTE basis, the largest facility would emit 36 tons, based on an assumption that the industry capacity is distributed similarly to emissions. Therefore no facility exceeds 100 tons per year on an actual or PTE basis for PFC. New Units Growth for the industrial sector was estimated at -1.8 percent, and as such, no additional facilities were included in this analysis. Threshold Summary Electronics industry emissions from plant processes only exceed emission thresholds on a CO26 basis. Facility stationary fuel combustion emissions are not included in the threshold comparisons for the industry. 28 ------- Table 19 COie Threshold Summary ~ Electronics Production GHG Threshold (tons per year) 100 250 1,000 5,000 10,000 25,000 50,000 100,000 Number of Existing Sources 199 191 159 109 88 65 54 22 Number of New Facilities Added per Year 0 0 0 0 0 0 0 0 CO2e Emissions Covered (Tg per year) 5.948 5.947 5.934 5.819 5.701 5.399 5.100 3.417 '1.6.6 Ethanol Production In the proposed GHG MRR, EPA determined that the sources of GHG emissions at ethanol production facilities that must be reported under the proposed rule are stationary fuel combustion, onsite landfills, and onsite wastewater treatment. For the GHG MRR supporting analysis, data were unavailable to estimate facility emissions from these combined sources. Instead, data on stationary fuel combustion requirements for different plant capacities were used to estimate the minimum number of facilities that would meet each of the examined reporting rule facility-level thresholds. CC>2 emissions from combustion constitute the majority of the GHG emissions from ethanol production and therefore provide an adequate measure for determining threshold counts. 29 ------- Table 20 Ethanol Fuel Combustion COie Emissions by Plant Size (from the Proposed GHG MRR TSD Spreadsheet) Ethanol Produced (wet milling process) (million gallons) 290 245 200 200 100 85 40 35 20 2.6 Coal Combustion Emissions (nitons CO2e/year) 1,519,585 1,283,787 1,047,990 1,047,990 523,995 445,396 209,598 183,398 104,799 13,624 Natural Gas Combustion Emissions (nitons CO2e/year) 853,536 721,091 588,646 588,646 294,323 250,174 117,729 103,013 58,865 7,652 Table 21 Proposed Reporting Rule Threshold Analysis Results Threshold CO2e (tons per year) 1,000 10,000 25,000 100,000 Number of Existing Sources ~ Actual Basis 101 93 86 43 Percent of Existing National Sources* 72% 66% 61% 31% National ethanol production source population was estimated at 140 plants nationwide. Potential to Emit The permit threshold PTE analysis relied on this same approach and data. Therefore CH4 emissions from onsite landfills and wastewater treatment plant digesters were not included in the PTE analysis, and we did not estimate emission coverage at each threshold. Also, the analysis for the proposed GHG MRR did not evaluate thresholds of 100, 250, 5,000, and 50,000 tons per year. EPA assumed that all existing plants would exceed the 100 and 250 ton per year thresholds 30 ------- based on fuel combustion associated with the wet milling process. For the 5,000 and 50,000 thresholds, EPA included the number of sources exceeding the next highest threshold. For example, the count of sources exceeding the 5,000 tons per year level only includes the sources exceeding the 10,000 ton threshold in the Technical Support Document for Ethanol Facilities: Proposed Rule for Mandatory Reporting of Greenhouse Gases (EPA-HQ-OAR-2008-0508- 0010). New Units EPA estimates that ten new ethanol production facilities will be built per year. Threshold Summary Table 22 Threshold Summary ~ Ethanol GHG Threshold (tons per year) 100 250 1,000 5,000 10,000 25,000 50,000 100,000 Number of Existing Sources 140 140 101 101 93 86 86 43 Number of New Sources Added per Year 10 10 7 7 7 6 6 3 3.6.7 Ferroalloy Production In evaluating ferroalloy production in the U.S., EPA considered actual production at six facilities, as published in the U.S. Inventory of Greenhouse Gas Emissions and Sinks: 1990 - 2007 for 2006, and the capacity to produce at three facilities for which production information was not published due to competitive concerns. Potential to Emit EPA's PTE calculations consider the Federal Reserve's 2006 monthly industrial capacity utilization estimates for the primary metals industry classification which shows utilization at 85.9 ------- percent for 2006. The PTE calculations do not affect the threshold analysis, because all facilities emit over 100,000 metric tons of CC^e per year. New Units Applying the growth factor for the industrial sector, 0.4 percent, results in no additional facilities for the analysis. Threshold Summary Table 23 Threshold Summary ~ Ferroalloy Production GHG Threshold (tons per year) 100 250 1,000 5,000 10,000 25,000 50,000 100,000 Number of Existing Sources 9 9 9 9 9 9 9 9 Number of New Facilities Added per Year 0 0 0 0 0 0 0 0 CO2 Emissions Covered (Tg per year) 1.717 1.717 1.717 1.717 1.717 1.717 1.717 1.717 Table 24 CH4 Threshold Summary ~ Ferroalloy Production GHG Threshold (tons per year) 100 250 Number of Existing Sources o 5 0 Number of New Facilities Added per Year 0 0 CH4 Emissions Covered (Tg per year) 0.0003 0 32 ------- Table 25 COie Threshold Summary ~ Ferroalloy Production GHG Threshold (tons per year) 100 250 1,000 5,000 10,000 25,000 50,000 100,000 Number of Existing Sources 9 9 9 9 9 9 9 9 Number of New Facilities Added per Year 0 0 0 0 0 0 0 0 CO2e Emissions Covered (Tg per year) 1.726 1.726 1.726 1.726 1.726 1.726 1.726 1.726 3.6.8 Food Processing Food processing includes meat, poultry and fruit and vegetable processing. Emissions derive from combustion and fugitive methane related to wastewater treatment. For purposes of this permit threshold analysis, EPA did not consider the fugitive methane from wastewater treatment because these are the only greenhouse gas emissions from the source category other than combustion, and food processing is not a listed PSD source category. Consequently, emissions from this subsector considered in this analysis were limited to combustion emissions and were calculated using the MECS approach. Potential to Emit EPA used the Federal Reserve's 2004 capacity utilization factor of 79.3 percent for the food industry to calculate PTE emissions. New Units In addition, new establishments were calculated assuming a continuation of the growth rate of 1.2 percent, as calculated using the methodology described earlier in this document. 33 ------- Threshold Summary Table 26 Threshold Summary — Food Processing GHG Threshold (tons per year) 100 250 1,000 5,000 10,000 25,000 50,000 100,000 Number of Existing Sources 3946 2281 1499 1030 749 482 10 0 Number of New Facilities Added per Year 47 27 18 12 9 6 0 0 CO2e Emissions Covered (Tg per year) 16.848 16.709 16.379 15.723 14.354 12.257 0.596 0 3.6.9 Glass Manufacturing EPA used the Supporting Data for Threshold Analysis Subpart E - W, Greenhouse Gas Mandatory Reporting Rulemaking, March 10, 2009 (EPA-HQ-OAR-2008-0508-0046.7), to analyze emissions for permit thresholds from glass manufacturing. Annual fuel combustion and glass production are estimated for each plant based on 2004 estimated plant sales and 2002 MECS energy intensity (energy per sales dollars). The spreadsheet shows CC>2 emission estimates from industrial processes and stationary fuel combustion, as well as CH4 and N2O emission estimates from stationary fuel combustion. Potential to Emit Plant capacities are not available in the spreadsheet. To estimate PTE, EPA divided the actual annual emissions by a capacity utilization factor of 0.50 or 50 percent. New Units EPA used an estimated annual growth rate of 0.4 percent for the nonmetallic mineral product manufacturing sector to determine the number of new units for this analysis. 34 ------- Threshold Summary Table 27 CO2e Threshold Summary ~ Glass Manufacturing GHG Threshold (tons per year) 100 250 1,000 5,000 10,000 25,000 50,000 100,000 Number of Existing Sources 369 364 222 201 175 104 21 3 Number of New Facilities Added per Year 1 1 1 1 1 0 0 0 CO2e Emissions Covered (Tg per year) 4.425 4.425 4.341 4.302 4.162 3.277 1.208 0.366 3.6.10 HCFC-22 Production Chlorodifluoromethane (HCFC-22) is produced for use in refrigeration and air conditioning systems and as a chemical feedstock for manufacturing synthetic polymers. Because HCFC-22 depletes stratospheric ozone, its production for non-feedstock uses is scheduled to be phased out by 2020 under the U.S. Clean Air Act. Feedstock production, however, is permitted to continue indefinitely. A high global warming potential (GWP) greenhouse gas, trifluoromethane (HFC-23), is generated as a byproduct during the manufacture of HCFC-22. Emissions of HFC-23 in 2006 were estimated to be 13.8 million metric tons on a CC^e basis from three HCFC-22 production plants. Estimates were based on the plants operating at capacity. Annual emissions in terms of both metric tons CC^e and tons HFC-23 are summarized in Table 30 below. 35 ------- Table 28 HCFC-22 Production HFC-23 Emissions HCFC-22 Production HFC-23 2006 CO2e Emissions (million metric tons) 13.8 HFC GWP 11,700 2006 HFC Emissions (short tons) 1,300 Source: Reporting Rule TSD Potential to Emit Confidential business information (CBI) claims on production information limited EPA's PTE analysis. The Technical Support Document for Emissions of HFC-23 from Production of HCFC-22: Proposed Rule for Mandatory Reporting of Greenhouse Gases (EPA-HQ-OAR- 2008-0508-0015) estimated that all three plants emit over 100,000 metric tons CO2e on a capacity basis by a factor of 85 or more, or a minimum of 800 short tons of HFC-23. These estimates did not account for HFC-23 capture and destruction at two of the three plants. Therefore, actual emissions at two of the plants will be lower, and can be limited through permitting. We assumed that all three plants exceed the 100 and 250 ton actual and PTE thresholds, and that one plant (uncontrolled) exceeds the 1,000 ton PTE threshold. Because the TSD did not include estimates of CC>2 emissions from fuel combustion, and the CBI claims noted above, the PTE analysis does not quantify fuel combustion emissions specifically for the three plants. Stationary fuel combustion emissions from the plants were instead captured under the analysis for unspecified industrial stationary combustion. New Units U.S. production between 1990 and 2006 increased by 11 percent while emissions declined by 62 percent. The declines in emissions from control equipment and process changes offset the production increases. Therefore we did not estimate any new facilities or modifications that would increase facility emissions more than 100 tons per year. 36 ------- Threshold Summary Table 29 HFC Threshold Summary - HCFC-22 Production GHG Threshold (tons per year) 100 250 1,000 5,000 Number of Existing Sources o 3 o 5 i 0 Number of New Facilities Added per Year 0 0 0 0 HFC Emissions Covered (Tg per year) 0.001 0.001 0.001 0 Table 30 CO2e Threshold Summary - HCFC-22 Production GHG Threshold (tons per year) 100 250 1,000 5,000 10,000 25,000 50,000 100,000 Number of Existing Sources 3 3 o J 3 o J 3 3 o J Number of New Facilities Added per Year 0 0 0 0 0 0 0 0 CO2e Emissions Covered (Tg per year) 13.848 13.848 13.848 13.848 13.848 13.848 13.848 13.848 3.6.11 Hydrogen Production EPA estimated CC>2 emissions from merchant hydrogen production using the process and combustion ratio of 8.62 tons of CC>2 emissions per ton of hydrogen production. About 95 percent of all hydrogen (not just merchant hydrogen) produced in the U.S. today is made from natural gas via steam methane reforming. In steam methane reforming fueled by natural gas combustion, the process and combustion emissions go up the same stack from the boiler/reformer unit. Because the emissions are predominately process emissions and because 37 ------- the natural gas combustion products are emitted from the same stack, EPA has treated all the emissions as process emissions. Potential to Emit EPA developed estimates assuming hydrogen production at capacity level. Therefore, no adjustment to the emissions estimates is needed to account for PTE emissions. New Units Based on the industry growth factor of-0.1 percent for chemical manufacturing, EPA assumed that no new plants would be constructed. Threshold Summary Table 31 COi Threshold Summary — Hydrogen Production GHG Threshold (tons per year) 100 250 1,000 5,000 10,000 25,000 50,000 100,000 Number of Existing Sources 75 75 74 62 51 42 38 32 Number of New Facilities Added per Year 0 0 0 0 0 0 0 0 CO2e Emissions Covered (Tg per year) 15.227 15.227 15.226 15.202 15.130 15.007 14.890 14.441 3.6.12 Iron and Steel Production EPA used the Supporting Data for Threshold Analysis SubpartE- W, Greenhouse Gas Mandatory Reporting Rulemaking, March 10, 2009 (EPA-HQ-OAR-2008-0508-0046.7) for the proposed GHG MRR threshold analysis to determine process and combustion CO2 and process CH4. The iron and steel production source category includes taconite iron ore processing facilities, integrated iron and steel making facilities, electric arc furnace (EAF) steelmaking facilities that are not located at integrated iron and steel facilities, and coke oven facilities that 38 ------- are not located at integrated iron and steel facilities. Facility processes and facilities covered in the spreadsheet are shown in the table below. Table 32 Iron and Steel Processes, Facilities, and Capacity Information Iron and Steel Process Basic oxygen furnace (EOF) Blast Furnace (BF) Sintering Coke ovens Electric arc furnace (EAF) Taconite furnace Integrated steel plant fuel combustion* Coke oven gas combustion* EAF steel plant fuel combustion Number of Facilities 18 17 5 18 92 8 19 9 92 Capacity Information Yes Yes Yes Yes No Yes No No No * Six plants had emissions from coke oven gas combustion was included in integrated steel plant fuel combustion. Potential to Emit The analysis covered 130 plants, and in all cases, except for EAF plants, GHG emissions were estimated based on operations at plant capacity. For EAF plants, EPA used the 2007 Federal Reserve industrial capacity utilization percentage of 86.6 percent for primary metal — iron and steel production, to adjust estimated actual emissions to PTE. The spreadsheet contained emission CC^e estimates which included CC>2, CH4, and N2O emissions. Process CFLt emissions were backed out of the CC^e totals using the process CFLt emissions reported in the U.S. GHG Inventory, and apportioning these emissions to the different plants based on their capacity in those processes. N2O emissions are primarily related to fuel combustion and were not backed out for separate treatment. New Units No new iron and steel facilities are expected to be built. The growth rate in primary metals from the Economic Census data is only about 0.4 percent. 39 ------- Threshold Summary Table 33 CO2 Threshold Summary — Iron and Steel Production GHG Threshold (tons per year) 100 250 1,000 5,000 10,000 25,000 50,000 100,000 Number of Existing Sources 130 130 130 129 128 123 116 113 Number of New Facilities Added per year 0 0 0 0 0 0 0 0 CO2 Emissions Covered (Tg per year) 85.150 85.150 85.150 85.148 85.141 85.057 84.831 84.655 Table 34 Threshold Summary — Iron and Steel Production GHG Threshold (tons per year) 100 250 1,000 5,000 10,000 Number of Existing Sources 18 17 17 3 0 Number of New Facilities Added per Year 0 0 0 0 0 CH4 Emissions Covered (Tg per year) 0.034 0.033 0.033 0.011 0 40 ------- Table 35 COie Threshold Summary ~ Iron and Steel Production GHG Threshold (tons per year) 100 250 1,000 5,000 10,000 25,000 50,000 100,000 Number of Existing Sources 130 130 130 130 128 123 116 114 Number of New Facilities Added per Year 0 0 0 0 0 0 0 0 CO2e Emissions Covered (Tg per year) 85.151 85.151 85.151 85.151 85.141 85.058 84.832 84.656 3.6.13 Lead Production According to the 2006 U.S. Geological Survey (USGS), lead production in the U.S. includes both the primary, direct smelting (one facility) and secondary lead production (16 facilities). Process emissions of CC>2 are a byproduct of the coke consumed during the smelting or reforming processes. EPA calculated total process emissions based on lead production as reported in the USGS. In the Supporting Data for Threshold Analysis SubpartE- W, Greenhouse Gas Mandatory ReportingRulemaking (EPA-HQ-OAR-2008-0508-0046.7), combustion emissions are combined with process emissions to determine total actual emissions. Potential to Emit In order to determine PTE emissions, EPA considered the Federal Reserve's 2006 monthly industrial capacity utilization estimates for primary metals industry classification which shows utilization at 85.9 percent for 2006, and adjusted to achieve 100 percent utilization. New Units EPA assumed no new facilities would be added for the industry, given an expected growth rate of 0.4 percent per year for primary metal manufacturing industry. 41 ------- Threshold Summary Table 36 CO2e Threshold Summary ~ Lead Production GHG Threshold (tons per year) 100 250 1,000 5,000 10,000 25,000 50,000 100,000 Number of Existing Sources 17 17 17 17 16 13 12 1 Number of New Facilities Added per Year 0 0 0 0 0 0 0 0 CO2e Emissions Covered (Tg per year) 0.861 0.861 0.861 0.861 0.855 0.799 0.761 0.089 3.6.14 Lime The Supporting Data for Threshold Analysis Subpart E - W, Greenhouse Gas Mandatory Reporting Rulemaking, March 10, 2009 (EPA-HQ-OAR-2008-0508-0046.7) was also used to estimate GHG PTE for lime plants. Potential to Emit To estimate PTE, EPA divided annual actual CC>2 emissions from the calcining process and fuel combustion emissions of CO2, CH4, and N2O by regional capacity factors available in the spreadsheet for each plant. The capacity factors ranged from 43 to 136 percent. New Units EPA assumed no new facilities would be added for the industry. 42 ------- Threshold Summary Table 37 Threshold Summary — Lime Production GHG Threshold (tons per year) 100 250 1,000 5,000 10,000 25,000 50,000 100,000 Number of Existing Sources 89 89 89 89 89 86 66 60 Number of New Facilities Added per Year 0 0 0 0 0 0 0 0 CO2 Emissions Covered (Tg per year) 27.262 27.262 27.262 27.262 27.262 27.237 26.533 26.180 3.6.15 Magnesium Production and Processing The magnesium metal production (primary and secondary) and casting industry typically uses SF6 as a cover gas to prevent the rapid oxidation and burning of molten magnesium in the presence of air. A dilute gaseous mixture of SFe with dry air and/or CC>2 is blown over molten magnesium metal to induce and stabilize the formation of a protective crust. A small portion of the SFe reacts with the magnesium to form a thin molecular film of mostly magnesium oxide and magnesium fluoride. The amount of SF6 reacting in magnesium production and processing is being studied but presently assumed to be negligible, and therefore all SFe used is assumed to be emitted into the atmosphere. For the proposed GHG MRR Technical Support Document for Process Emissions from Magnesium Production and Processing: Proposed Rule for Mandatory Reporting of Greenhouse Gases., EPA reported that national annual SF6 emissions from magnesium production and processing totaled approximately 3.2 million metric tons CC^e in 2006. The facility population totaled 13 facilities that emitted 3.0 million metric tons CC^e. The SF6 emissions (no GWP adjustment) were 148 and 138 short tons respectively. Ten magnesium die casting facilities accounted for 29 percent (44 tons), and primary and secondary production accounted for 64 percent (96 tons) of the total emissions. Other small casting activities accounted for the remaining 7 percent (ten tons). 43 ------- Potential to Emit EPA used the analysis in the TSD for the proposed GHG MRR, where EPA had evaluated thresholds of 1,000, 10,000, 25,000, and 100,000 metric tons per year. Facility-level information is not made publicly available because of confidential business information (CBI) claims. From that earlier analysis EPA estimated that the same number of facilities exceeded the 100, 250, and 1,000 tons CO2e per year PTE threshold as determined in the GHG MRR TSD for the 1,000 metric tons per year threshold. In a similar fashion, EPA used the GHG MRR TSD facility counts at 10,000 metric tons CC^e per year to estimate facilities at the 5,000 tons per year PTE threshold, and 100,000 metric tons per year for the 50,000 tons CC^e per year PTE threshold. The permit threshold analysis did not include CC>2 emissions from fuel combustion. That information was not available in the TSD for the proposed GHG MRR. On an SF6 mass basis, the average emissions per facility are only 11 tons of SF6, well below 100 tons per year. Therefore we assumed that none of the facilities have a potential to emit more than 100 tons per year of SF6. New Units EPA assumed no new units would be added for the sector. Threshold Summary Table 38 COie Threshold Summary ~ Magnesium Production GHG Threshold (tons per year) 100 250 1,000 5,000 10,000 25,000 50,000 100,000 Number of Existing Sources 13 13 13 11 11 11 9 9 Number of New Facilities Added per Year 0 0 0 0 0 0 0 0 CO2e Emissions Covered (Tg per year) 2.955 2.955 2.955 2.94 2.94 2.94 2.781 2.781 44 ------- 3.6.16 Nitri c Aci d Product! on EPA used the 2006 nameplate capacity (metric tons of HNOs 100 percent acid basis) for 45 nitric acid plants and 2006 acid production from the GHG MRR TSD supporting spreadsheet (EPA-HQ-OAR-2008-0508-0046.7) to determine N2O emissions. Potential to Emit The GHG PTE was calculated by multiplying actual N2O emissions as CC^e by the ratio of nameplate capacity to 2006 production. The permit threshold analysis, based on the GHG MRR TSD, does not include GHG emissions from co-located stationary combustion units. Also the permit threshold analysis does not account for overlap between facilities in the Nitric Acid and Ammonia categories, which have both ammonia and nitric acid production processes. New Units EPA assumed no new units would be constructed for this sector. Threshold Summary Table 39 Threshold Summary ~ Nitric Acid Production GHG Threshold (tons per year) 100 250 1,000 5,000 10,000 25,000 50,000 100,000 Number of Existing Sources 43 42 27 4 0 0 0 0 Number of New Facilities Added per Year 0 0 0 0 0 0 0 0 N2O Emissions Covered (Tg per year) 0.055 0.055 0.049 0.016 0 0 0 0 45 ------- Table 40 Threshold Summary ~ Nitric Acid Production GHG Threshold (tons per year) 100 250 1,000 5,000 10,000 25,000 50,000 100,000 Number of Existing Sources 45 45 45 45 45 44 43 42 Number of New Facilities Added per Year 0 0 0 0 0 0 0 0 CO2e Emissions Covered (Tg per year) 17.732 17.732 17.732 17.732 17.732 17.724 17.706 17.667 >.6.17 Petrochemical Production EPA determined that the portion of the petrochemical production sector most relevant for permit threshold analysis includes the manufacture and production of acrylonitrile, carbon black, ethylene, ethylene dichloride, ethylene oxide, and methanol, because the IPCC considers production of greenhouse gases from these processes significant compared to other petrochemical processes. Emissions from the manufacturing processes vary significantly and process emissions take many forms. Process emissions include direct oxidation of CC>2, off-gassing of CH4 and CC>2, and the direct release of CC>2 and CH4 from equipment leaks. Process emissions are the primary consideration for acrylonitrile, ethylene, and ethylene oxide processes. In addition, some processes require combustion of supplemental fuel. Both process and combustion emissions are significant for carbon black and methanol processes. Potential to Emit EPA's analysis assumed petrochemical production at the capacity level. Therefore, no adjustment to the emissions estimates is needed to account for PTE. New Units Based on an industry growth factor of-0.1 percent for chemical manufacturing, EPA assumed that no new plants would be constructed. 46 ------- Threshold Summary Table 41 Threshold Summary ~ Petrochemical Production GHG Threshold (tons per year) 100 250 1,000 5,000 10,000 25,000 50,000 100,000 Number of Existing Sources 98 98 98 97 96 96 94 91 Number of New Facilities Added per Year 0 0 0 0 0 0 0 0 CO2 Emissions Covered (Tg per year) 52.081 52.081 52.081 52.080 52.073 52.073 52.005 51.806 Table 42 CH4 Threshold Summary ~ Petrochemical Production GHG Threshold (tons per year) 100 250 1,000 5,000 10,000 25,000 50,000 100,000 Number of Existing Sources 55 52 37 5 1 0 0 0 Number of New Facilities Added per Year 0 0 0 0 0 0 0 0 CH4 Emissions Covered (Tg per year) 0.130 0.129 0.121 0.035 0.010 0 0 0 47 ------- Table 43 Threshold Summary ~ Petrochemical Production GHG Threshold (tons per year) 100 250 1,000 5,000 10,000 25,000 50,000 100,000 Number of Existing Sources 98 98 98 97 96 96 94 91 Number of New Facilities Added per Year 0 0 0 0 0 0 0 0 CO2e Emissions Covered (Tg per year) 54.826 54.826 54.826 54.825 54.818 54.818 54.748 54.595 3.6.18 Petroleum Refineries In developing the permit threshold analysis for petroleum refineries, EPA quantified CH4 process emissions from wastewater, fugitive, flares, and storage tanks. Process CC>2 emissions derived from flares, hydrogen plant emissions, and sulfur plant emissions. In addition, on-site combustion emissions were calculated considering fuel consumed by type. Potential to Emit EPA assumed that petroleum refineries were operating at capacity level. Therefore, no adjustment to the emissions estimates was needed to account for PTE. New Units According to the ICR prepared for the New Source Performance Standard (NSPS), EPA expects that no new refineries will be built over the next few years. 48 ------- Threshold Summary Table 44 Threshold Summary ~ Petroleum Refineries GHG Threshold (tons per year) 100 250 1,000 5,000 10,000 25,000 50,000 100,000 Number of Existing Sources 150 150 150 150 149 146 137 129 Number of New Facilities Added per Year 0 0 0 0 0 0 0 0 CO2 Emissions Covered (Tg per year) 202.947 202.947 202.947 202.947 202.938 202.887 202.575 202.065 Table 45 CH4 Threshold Summary ~ Petroleum Refineries GHG Threshold (tons per year) 100 250 1,000 5,000 Number of Existing Sources 129 109 31 0 Number of New Facilities Added per Year 0 0 0 0 CH4 Emissions Covered (Tg per year) 0.083 0.080 0.042 0 49 ------- Table 46 Threshold Summary ~ Petroleum Refineries GHG Threshold (tons per year) 100 250 1,000 5,000 10,000 25,000 50,000 100,000 Number of Existing Sources 150 150 150 150 149 146 137 129 Number of New Facilities Added per Year 0 0 0 0 0 0 0 0 CO2e Emissions Covered (Tg per year) 204.897 204.897 204.897 204.897 204.888 204.835 204.513 203.988 i.6.19 Phosphoric Acid Production Phosphoric acid is produced by combining sulfuric acid and phosphate rock. CC>2 is emitted when the limestone component of phosphate rock reacts with the sulfuric acid. Potential to Emit When these process emissions are combined with combustion emissions, all 14 plants have emissions that exceed the highest threshold level; consequently, no PTE analysis was required. New Units Based on an industry growth factor of-0.1 percent for chemical manufacturing, EPA assumed that no new plants would be constructed. 50 ------- Threshold Summary Table 47 Threshold Summary ~ Phosphoric Acid Production GHG Threshold (tons per year) 100 250 1,000 5,000 10,000 25,000 50,000 100,000 Number of Existing Sources 14 14 14 14 14 14 14 14 Number of New Facilities Added per Year 0 0 0 0 0 0 0 0 CO2e Emissions Covered (Tg per year) 3.838 3.838 3.838 3.838 3.838 3.838 3.838 3.838 3.6.20 Pulp and Paper Manufacturing Permit threshold analysis for this sector is focused on the energy intensive, fugitive emitting pulp, paper, and paperboard manufacturing subsectors. Process emissions include CC>2 which is emitted in the recovery cycle at kraft and soda facilities associated with the chemical pulp process. The CC>2 emitted from kraft mill lime kilns originates from two sources: (1) fossil fuels burned in the kiln; and (2) conversion of calcium carbonate (or "lime mud") generated in the recovery process to calcium oxide. The bulk of the emissions considered derive from combustion. Many boilers use biomass fuel, and the burning of spent pulping liquors to produce steam for facility processes is considered biomass combustion for the GHG MRR. The emissions numbers considered for the permit threshold analysis are non-biogenic (net of any biogenic emissions). Considering only non-biogenic emissions, 96.5 percent of the facilities and 99.7 percent of the emissions are captured by all of the thresholds proposed for consideration of the permit threshold rule. Potential to Emit Because 99.7 percent of emissions were captured at even the highest threshold, no additional PTE estimate was calculated in this analysis. 51 ------- New Units Based on an industry growth factor of-2.5 percent for paper manufacturing, and previous EPA analysis for the pulp and paper NSPS ICR, EPA assumed that no new plants would be constructed. Threshold Summary Table 48 Threshold Summary — Pulp and Paper Manufacturing GHG Threshold (tons per year) 100 250 1,000 5,000 10,000 25,000 50,000 100,000 Number of Existing Sources 425 425 425 425 425 425 422 410 Number of New Facilities Added per Year 0 0 0 0 0 0 0 0 CO2e Emissions Covered (Tg per year) 57.700 57.700 57.700 57.700 57.700 57.700 57.688 57.527 i.6.21 Silicon Carbide Manufacturing In 2006, one facility produced silicon carbide in the U.S. Silicon carbide is primarily an industrial abrasive manufactured from silica sand or quartz and petroleum coke. Approximately 35 percent of the carbon from the petroleum coke is retained with the silicon carbide, and the rest is emitted as both CC>2 and CH4. In addition, emissions from combustion account for approximately ten percent of total emissions. Potential to Emit Emissions from this plant exceed all permit threshold levels; as a result, EPA did not consider PTE calculations. New Units EPA assumed there would be no new facilities constructed. 52 ------- Threshold Summary Table 49 COi Threshold Summary ~ Silicon Carbide Manufacturing GHG Threshold (tons per year) 100 250 1,000 5,000 10,000 25,000 50,000 100,000 Number of Existing Sources 1 1 1 1 1 1 1 1 Number of New Facilities Added per Year 0 0 0 0 0 0 0 0 CO2 Emissions Covered (Tg per year) 0.101 0.101 0.101 0.101 0.101 0.101 0.101 0.101 Table 50 CH4 Threshold Summary ~ Silicon Carbide Manufacturing GHG Threshold (tons per year) 100 250 1,000 Number of Existing Sources 1 1 0 Number of New Facilities Added per Year 0 0 0 CH4 Emissions Covered (Tg per year) 0.0004 0.0004 0 53 ------- Table 51 COie Threshold Summary ~ Silicon Carbide Manufacturing GHG Threshold (tons per year) 100 250 1,000 5,000 10,000 25,000 50,000 100,000 Number of Existing Sources 1 1 1 1 1 1 1 1 Number of New Facilities Added per Year 0 0 0 0 0 0 0 0 CO2e Emissions Covered (Tg per year) 0.109 0.109 0.109 0.109 0.109 0.109 0.109 0.109 3.6.22 Soda Ash Production Soda Ash production emissions were nearly evenly split between process and combustion emissions. Process emissions result from calcining trona ore to produce soda ash. Potential to Emit PTE emissions were calculated based on the capacities of the production units. New Units In 2006, there was a glut of soda ash in the domestic market; EPA assumed no new units would be constructed. 54 ------- Threshold Summary Table 52 CO2e Threshold Summary — Soda Ash Production GHG Threshold (tons per year) 100 250 1,000 5,000 10,000 25,000 50,000 100,000 Number of Existing Sources 5 5 5 5 5 5 5 5 Number of New Facilities Added per Year 0 0 0 0 0 0 0 0 CO2e Emissions Covered (Tg per year) 3.121 3.121 3.121 3.121 3.121 3.121 3.121 3.121 3.6.23 Titanium Dioxide Production EPA used USGS as the source for production capacity for the eight facilities that produced titanium dioxide in 2006. Potential to Emit Emissions were assumed to represent PTE operating levels. New Units EPA assumed that no new plants would be constructed. 55 ------- Threshold Summary Table 53 Threshold Summary ~ Titanium Dioxide Production GHG Threshold (tons per year) 100 250 1,000 5,000 10,000 25,000 50,000 100,000 Number of Existing Sources 8 8 8 8 8 8 8 7 Number of New Facilities Added per Year 0 0 0 0 0 0 0 0 CO2e Emissions Covered (Tg per year) 3.686 3.686 3.686 3.686 3.686 3.686 3.686 3.628 3.6.24 Zinc Production The Zinc production emissions and facility count estimates include process and combustion emissions associated with primary smelting and secondary recycling facilities. Potential to Emit For PTE estimates, EPA considered the Federal Reserve's 2006 monthly industrial capacity utilization estimates for primary metals industry classification which shows utilization at 85.9 percent for 2006, and adjusted to achieve 100 percent utilization. New Units EPA assumed that no new units would be constructed. 56 ------- Threshold Summary Table 54 Threshold Summary — Zinc Production GHG Threshold (tons per year) 100 250 1,000 5,000 10,000 25,000 50,000 100,000 Number of Existing Sources 9 9 9 9 8 5 5 5 Number of New Facilities Added per Year 0 0 0 0 0 0 0 0 CO2e Emissions Covered (Tg per year) 0.852 0.852 0.852 0.852 0.843 0.802 0.802 0.802 3.7 Energy Sector 3.7.1 Oil and Gas Systems In consideration of the permit thresholds, EPA considered the Fugitive Emissions Reporting from the Petroleum and Natural Gas Industry: Background Technical Support Document (EPA-HQ-OAR-2008-0508-0023). This document details combustion emissions and fugitive emissions from offshore petroleum and natural gas facilities, onshore natural gas processors, onshore natural gas transmission, underground natural gas storage, and liquid natural gas storage. EPA determined that oil and gas exploration, development, transmission, and distribution are not listed PSD source categories, and therefore fugitive emissions from these activities were not considered for PSD applicability as it relates to major source thresholds. EPA's analysis focused on combustion emissions from these sources. Potential to Emit EPA used a capacity utilization figure of 50 percent to determine PTE emission estimates and counts. This rate is meant to reasonably represent an average utilization rate across a variety of combustion equipment types used in the oil and gas industry subsectors described above. New Units 57 ------- EPA determined new units based on a growth factor of 1.0 percent for the sector. Threshold Summary Table 55 Threshold Summary ~ Oil and Gas Systems GHG Threshold (tons per year) 100 250 1,000 5,000 10,000 25,000 50,000 100,000 Number of Existing Sources 4762 4762 4762 3722 3095 2496 1045 387 Number of New Facilities Added per Year 48 48 48 37 31 25 10 4 CO2e Emissions Covered (Tg per year) 88.264 88.264 88.264 86.192 83.619 79.386 56.949 32.750 3.7.2 Underground Coal Mining GHG emissions from underground coal mining include CH4 fugitive emissions released from the coal seam and surrounding rock during mining and post-mining activities (coal bed CH4), and fuel combustion emissions of CC>2, CH4, and N2O. Fugitive CH4, emissions are captured and vented by ventilation systems and degassing systems. Captured and vented CH4 emissions from active mines were considered in the PTE analysis. Because underground coal mining is not one of the 28 PSD source categories for which fugitive emissions were required to be included in the emissions determination, fugitive emissions from post mining operations, surface mines, and inactive mines were not included in the permit thresholds analysis. The Technical Support Document for Under ground Coal Mines: Proposed Rule for Mandatory Reporting of Greenhouse Gases (EPA-HQ-OAR-2008-0508-0032) identified 612 active underground coal mining facilities but analysis of CH4 emissions was limited to 128 "gassy" mines where CH4 monitoring was already in place (due to existing CH4 emissions above Mine Safety and Health Administration (MSHA) threshold levels). The U.S. GHG Inventory (EPA, 2008) reports that 233 underground coal mines (including 133 gassy mines) ventilated CH4 in 2007. Fuel combustion emission estimates for the GHG MRR TSD from all underground coal mines, based on U.S. Census energy use data, were found to comprise between one and 58 ------- three percent of total CC^e emissions, with coal bed CH4 accounting for the bulk of GHG emissions. In addition to the emissions data on the 128 gassy mines contained in the GHG MRR TSD, EPA considered combustion emissions from 289 bituminous underground coal mines, using U.S. Census data from 2002. Potential to Emit CH4 CH4 emission estimates that were developed for the GHG MRR TSD were used for both actual emissions and PTE emissions permit threshold analysis. EPA assumed that venting and degassing were continuous throughout the year; therefore, actual emission estimates equal PTE emission estimates. The estimates considered 128 gassy mines, which were assumed to be the largest emitters of vented CH4. The smallest mine of this group had annual CH4 emissions of 26 tons; therefore EPA assumed that the annual CH4 emissions from the 105 vented mines that were not included in the TSD analysis were less than 26 tons. CO2 CC>2 emissions were estimated in the same manner as for other Unspecified Industrial Stationary Combustion categories, based on the ICF analysis (ICF, 2007) using the MECS approach. Emissions were estimated based on Census information including fuel consumption per employee and the distribution of establishments by the number of employees. PTE was estimated by using a capacity utilization factor of 86.3 percent as published by the Federal Reserve. New Units The number of underground bituminous coal mines in the U.S. is on the decline. EIA data show that only Colorado had an increase in the number of underground coal mines between 2006 and 2007 (EIA, 2008). The EIA data show that overall the number of underground coal mines decreased from 2006 to 2007 by eight percent; consequently, EPA assumed no new underground mines would be built, http://www.eia.doe.gov/cneaf/coal/page/acr/table 1 .html. 59 ------- Threshold Summaries Threshold summary tables are shown below for CJLt (vented fugitive emissions), CC>2 (fuel combustion), and CO2e (vented fugitive CH4 and combustion CO2). Table 56 COi Threshold Summary — Underground Coal Mining GHG Threshold (tons per year) 100 250 1,000 5,000 10,000 25,000 Number of Existing Sources 238 202 63 30 30 0 Number of New Facilities Added per Year 0 0 0 0 0 0 CO2e Emissions Covered (Tg per year) 0.783 0.778 0.692 0.577 0.577 0 Table 57 CH4 Threshold Summary — Underground Coal Mining GHG Threshold (tons per year) 100 250 1,000 5,000 10,000 25,000 50,000 100,000 Number of Existing Sources 110 110 110 53 38 24 13 1 Number of New Facilities Added per Year 0 0 0 0 0 0 0 0 CO2e Emissions Covered (Tg per year) 1.586 1.586 1.586 1.420 1.361 1.147 0.784 0.105 60 ------- Table 58 Threshold Summary — Underground Coal Mining GHG Threshold (tons per year) 100 250 1,000 5,000 10,000 25,000 50,000 100,000 Number of Existing Sources 238 238 126 124 123 103 78 55 Number of New Facilities Added per Year 0 0 0 0 0 0 0 0 CO2e Emissions Covered (Tg per year) 39.520 39.520 33.945 33.943 33.936 33.606 32.800 31.241 3.8 Waste Sector 5.8.1 Landfills The landfill PTE analysis includes both municipal solid waste (MSW) landfills and onsite industrial landfills associated with pulp and paper and food processing. The analysis used a modification of the landfill emission modeling approach used for the proposed GHG MRR threshold analysis. Like the GHG MRR analysis, the permit threshold PTE analysis did not include onsite industrial landfills for ethanol processing facilities or industrial land application systems. GHG Emissions Decomposition of waste in landfills generates CH4 and CC>2. The amount of CH4 generated from a given landfill is a function of several factors: the total amount of waste disposed in the landfill; the characteristics of the waste; and the climatic conditions. The amount of CfL; emitted is the amount of CfL; generated minus the amount of CfL oxidized by aerobic microorganisms in the landfill cover material. Also subtracted from the total is the amount of CH4 that is destroyed by combustion of the vented gas. The CC>2 produced by decaying waste is not considered an anthropogenic emission, and is not counted in GHG emission totals. Likewise, CC>2 resulting from the combustion of landfill CH4 is not accounted for as an anthropogenic emission under international accounting guidance. 61 ------- According to the 2008 U.S. Inventory, MSW landfills emitted 111.2 million metric tons CH4 (CO26 basis) in 2006. The majority of the CH4 emissions from on-site industrial landfills occurs at pulp and paper facilities and food processing facilities. In 2006, these landfills emitted 14.6 million metric tons CC^e Potential to Emit The methodology used for the proposed GHG MRR threshold analysis was also used to estimate CH4 generation rates and emissions in 2006 for the PTE analysis. A landfill-specific model developed by EPA to support its proposed GHG MRR was used to estimate CH4 generation and potential generation from municipal landfills. The generation estimate was adjusted with assumptions on oxidation in landfill cover, and destruction by combustion for energy recovery or flaring. The industrial landfill generation and emission estimates are based on the U.S. GHG Inventory. Industrial landfills were assumed not to have energy recovery or flaring, so there was no difference between generation and emissions. New Units EPA did not estimate the number of new facilities added each year with CH4 emissions above the different thresholds due to the time delay between landfill construction and emission generation. Threshold Summary Table 59 Threshold Summary ~ Landfills GHG Threshold (tons per year) 100 250 1,000 5,000 10,000 25,000 50,000 100,000 Number of Existing Sources 4,131 4,117 4,053 3,564 3,265 2,701 1,684 967 CO2e Emissions Covered (Tg per year) 125.621 125.619 125.592 124.552 122.788 115.937 92.340 72.722 62 ------- Table 60 CH4 Threshold Summary ~ Landfills GHG Threshold (tons per year) 100 250 1,000 5,000 10,000 25,000 50,000 100,000 Number of Existing Sources 3,885 3,562 2,692 981 427 114 21 2 CH4 Emissions Covered (Tg per year) 5.973 5.931 5.539 3.274 2.326 1.087 0.401 0.106 i.8.2 Municipal Solid Waste Combustors The threshold analysis for the proposed GHG MRR included municipal solid waste combustors (MWC) in the general stationary fuel combustion category. The analysis used the eGRID database, which is discussed in the PTE methodology description for electric generating units. Data and Methodology EPA used the latest version of the eGRID database (2006) to estimate the PTE of MWC facilities and counts of facilities above the different emission thresholds. The eGRID database includes year 2004 characteristics, operating information, and annual CC>2 emissions for U.S. facilities that have a generation capacity greater than one MW and sell electric power to the grid. By using eGRID, EPA assumed that all MWC facilities sell power to the grid. Potential to Emit EPA identified 75 MWC facilities based on the generator primary fuel in the generator table (primary fuel equals MSW) in the eGRID database. The eGRID database contains CC>2 annual emissions estimates for the facilities. For CC>2 emissions, eGRID uses a standard assumption that 70 percent of the heat value of the waste stream comes from renewable materials and 30 percent comes from nonrenewable materials. The renewable fraction has a CC>2 emission rate of zero; therefore, the PTE threshold analysis is based on the nonrenewable or fossil fraction assumption. EPA estimated PTE by dividing the annual emissions from eGRID by the eGRID plant capacity factor. 63 ------- New Units To determine the number of new per year at different thresholds, EPA counted the number of generators online each year, and totaled the nameplate capacity for each online year. This information was compared to the total facility nameplate capacity, and the PTE for the increased capacity was calculated by multiplying the facility PTE by the fraction of nameplate capacity associated with the new generators. EPA counted the facilities that exceeded the PTE thresholds during each period, and computed a 15-year average to determine the number of new or modified facilities per year. Threshold Summary Table 61 COi Threshold Summary ~ Municipal Solid Waste Combustors - GHG Threshold (tons per year) 100 250 1,000 5,000 10,000 25,000 50,000 100,000 Number of Existing Sources 75 75 75 75 75 74 67 40 Number of New Facilities Added per Year 2 2 2 2 2 2 1 1 CO2 Emissions Covered (Tg per year) 6.255 6.255 6.255 6.255 6.255 6.24 6.071 4.958 3.9 Agriculture (Stationary Fuel Combustion) The analysis for the Agriculture sector was limited to stationary fuel combustion CC>2 emissions from internal combustion diesel engine generators. Fugitive emissions of CH4 from enteric fermentation, and CC>2, CH/t, and N2O from manure management were not included because farms and related operations are not in the 28 PSD source categories that require quantification of fugitive emission PTE for determining major source status, and because of the large uncertainties and lack of information on determining what component of the non- combustion emissions at agricultural operations would be defined as non-fugitive for PSD purposes. Fuel combustion for building space heating and other farm purposes were not included in the estimates, but would be a component of farm PTE. 64 ------- Data and Methodology EPA used the 2007 ICF analysis to estimate the number of farms covered by the different thresholds (ICF, 2007). Emissions from diesel generators on farms were estimated using data on the average generator size in Delaware (EEA, 2004), and data on energy use on farms for non- transport/non-machinery motors (Brown and Neal 2005). Using these data, EPA estimated the number of diesel generators on farms and apportioned the generators across farm sizes, assuming no farm has more than one generator. Potential to Emit EPA assumed that a high proportion of farms would run the generators infrequently, and a smaller proportion would have a generator as the only power source, requiring nearly constant operation. EPA used this distribution to determine actual and potential emissions, with PTE emissions based on the assumption that the generators ran 24 hours per day, 365 days per year. EPA recognizes that this approach underestimates the PTE for all farm stationary fuel combustion sources, because it is limited to diesel engine generators used primarily to run pumps and motors, and does not include additional sources such as fuel combustion for drying and curing, space heating, and water heating. New Units New generator installations were estimated based on information in the Regulatory Impact Analysis (RIA) for the spark ignition stationary combustion engine NSPS and area NESHAPS (EPA, 2007). The on-farm engine population of diesel generators used for irrigation increased four percent between 1998 and 2003, or about 0.8 percent annually. 65 ------- Threshold Summary Table 62 CO2 Threshold Summary ~ Farm Stationary 1C Engines CO2 Threshold (tons per year) 100 250 1,000 5,000 10,000 25,000 50,000 100,000 Number of Existing Sources 37,351 37,351 0 0 0 0 0 0 Number of New Engines Added per Year 299 299 0 0 0 0 0 0 CO2 Emissions Covered (Tg per year) 0.512 0.512 0 0 0 0 0 0 3.10 Commercial Stationary Fuel Combustion Data Source EPA used EIA's Commercial Building Energy Consumption Survey (CBECS) to estimate commercial sector stationary fuel combustion GHG emissions and PTE. CBECS is a national sample survey that collects information on the stock of U.S. commercial buildings, their energy- related building characteristics, and their energy consumption and expenditures. Commercial buildings include all buildings in which at least half of the floor space is used for a purpose that is not residential, industrial, or agricultural; thus, the source category includes building types that might not traditionally be considered "commercial," such as schools, correctional institutions, and buildings used for religious worship. The CBECS survey is conducted every four years and the most recent survey was completed for 2003. The CBECS survey sample was designed so that survey responses could be used to estimate characteristics of the entire nationwide commercial building stock. The 2003 survey selected 6,955 potential case buildings for sampling. The sampling procedures resulted in 5,215 completed building interviews for a response rate of 82 percent. To make national estimates from the sample data, EIA calculated base sampling weights for each building (the reciprocal of the probability of that building being selected into the sample). In other words, the base sampling weight is the number of national buildings represented by the sampled building. The base weight was further adjusted to account for nonresponsive bias. 66 ------- EIA publishes summary tables from the survey, and posts "microdata" files on the EIA website. The CBECS microdata consist of the 5,215 sampled building records, which each correspond to a single sampled building. For each building, these files contain information such as the building size, climatic region, census region, year constructed, types of energy used, and energy consumption and expenditures. These individual building microdata records are also the basis for the summary tables published by EIA. Emissions Methodology EPA used the CBECS microdata to estimate commercial building emissions and populations above emission thresholds. Each of the 5,215 microdata records corresponds to a single sampled building. EIA has made available 20 different data files of the microdata records which contain a wide range of information on characteristics and energy use for each building. EPA's analysis relied on guidance provided by EIA on how to use the data. As noted above, the CBECS sample was designed so that survey responses could be used to estimate characteristics of the entire commercial building stock nationwide. The table below provides examples from EIA on how to calculate national commercial building characteristics from the sample building data. Table 63 EIA Website Examples To Find the National Estimate for: Total number of buildings Total number of office buildings Total floor space Total floor space in buildings with air conditioning Total electricity consumption in KWh Do This... Sum ADJWT8 (weight factor) Sum ADJWT8 for cases where PBA8 (building code) = "02" Create a new variable (weighted square footage) by multiplying ADJWT8 by SQFT8 (floor space) for each case, then sum this new variable Sum the new weighted square footage variable (see above) for cases where COOLS (air conditioning) = "1" Create a new variable (weighted electricity consumption) by multiplying ADJWT8 by ELCNS8 (electricity consumption) for each case, then sum this new variable And You Should Get... 4,858,749.82 (or 4,859 thousand) 823,805.47 (or 824 thousand) 71,657,900,522 (or 7 1,658 million ft2) 63,559,999,624 (or 63,560 million ft2) 1,043,175,710,751 (or 1,043 billion kWh) Source: http://www.eia.doe.gov/emeu/cbecs/cbecs2003/public use 2003/cbecs pudata2003.html. EIA calculated base sampling weights for each surveyed building (these are the reciprocal of the probability of that building being selected into the sample). Therefore, a building with a base weight of 1,000 represents itself and 999 similar but unsampled buildings in 67 ------- the total building stock. The base weight is further adjusted to account for non-response bias. The variable "ADJWT8" in the data file is the final weight. The ADJWT8 weight factor is used as described in Table 63 to extrapolate the survey sample to a national scale for any value. In order to obtain a national value each sample building's value must be multiplied by the building's weight (ADJWT8). All of the weighted values are then summed. 2003 CO2 Emissions EPA calculated the CC>2 emissions for each of the 5,215 buildings based on the annual natural gas and oil consumption reported for the building. For national emission estimates and counts of buildings with annual CC>2 emissions over any threshold, EPA multiplied the base weights by the sample emission totals to determine the national estimate of buildings with emissions over the threshold. Potential to Emit EPA estimates that commercial buildings operate at 15 percent of capacity. EPA considered several sources in making the PTE factor determination: • A report prepared by Energy and Environmental Analysis, Inc. for Oak Ridge National Laboratory describing the industrial and commercial boiler population in the United States (EEA, 2005). The report estimated an average commercial boiler capacity factor of 16 percent. • Reports on cooking equipment energy use by the Food Service Technology Center in California suggesting that the cooking equipment in food service establishments operate at about ten percent of a theoretical maximum capacity based on 8,760 hours per year (Pechan, et.al, 2008). • A study of Los Angeles dry cleaners performed by the Pollution Prevention Education and Research Center (PPERC) in 2004 which demonstrates that dry cleaners operate boilers at about 10 to 15 percent of maximum capacity over a normal year (Pechan, et al., 2008). New Buildings The CBECS data identifies the year the sampled buildings were constructed. We used the construction year information to identify the number of new buildings built each year in the 1990 to 2003 period. Counts of the average number of these buildings built per year were then made at the different emissions and PTE thresholds. Threshold Summary The count of buildings and emissions at the threshold levels for the entire sector are shown in the table below. Threshold results by commercial building categories (e.g., offices, public assembly, schools) are provided in Appendix B. 68 ------- Table 64 COi Threshold Summary — Commercial Sector Stationary Fuel Combustion CO2 Threshold (tons per year) 100 250 1,000 5,000 10,000 25,000 50,000 100,000 Number of Existing Sources 1,355,921 731,477 172,654 18,167 5,660 1,161 600 51 Number of New Facilities Added per Year 22,123 12,041 2,922 196 96 7 3 2 CO2 Emissions Covered (Tg per year) 119.262 105.306 69.885 29.384 17.765 8.790 6.003 1.012 3.11 Residential Buildings Data Sources EPA used residential fuel consumption data from EIA's Residential Energy Consumption Survey, and multi-family building and unit data from U.S. Census (Census) surveys to estimate CC>2 emissions and PTE for fuel combustion at single and multi-family residential properties. The RECS is a national area-probability sample survey that collects energy-related data for occupied primary housing units. The most recent 2005 survey collected data from 4,382 households in housing units statistically selected to represent the 111.1 million housing units in the United States. RECS data are tabulated for the four Census regions, the nine Census divisions, and for the four most populous States — California, Florida, New York, and Texas. The RECS sample was designed so that survey responses could be used to estimate characteristics of the national stock of occupied housing units. In order to arrive at national estimates from the RECS sample, EPA calculated base sampling weights for each housing unit as the reciprocal of the probability of that building being selected into the sample. Therefore, a housing unit with a base weight of 10,000 represents itself and 9,999 similar, but not sampled housing units in the total stock of occupied residential housing units. The base weight is further adjusted to account for non-response bias. Ratio adjustments were also used to ensure that the RECS weights add up to Census Current Population Survey estimates of the number of households. The RECS data are provided at the housing unit level, and not at the building level. EPA used additional data from the Census on multi-family building population characteristics to estimate total property emissions and PTE for multi-unit properties. Census data were from two 69 ------- sources: the Property Owner and Manager Survey (POMS, 1996) and the American Housing Survey (AHS, 2005). 3.11.1 Single-Family Homes The RECS data was used directly to estimate CO2 emissions from fossil fuel combustion at single-family housing units for space heating, water heating, and appliances. EPA assumed that each unit in an attached single-family building was a separate source, with combustion equipment under different ownership. The annual energy consumption by fuel (1,000 Btus) for the surveyed unit was multiplied by the fuel CO2 emission factor to estimate annual emissions. Total single-family unit emissions for the entire country were calculated by multiplying CO2 emissions for each units by the base sampling weight. Potential to Emit The PTE for a single-family unit was calculated by dividing the CO2 emissions from the unit by a capacity factor of 0.1. This factor was estimated by comparing the average annual CO2 emissions per heated floor space area per hour by climate zone, to required heat input capacity. The required heat input capacity was based on rule of thumb heating system requirements for the different climate zones. The table below shows the average Btu/ft2-hour from the RECS data and Heating Requirement (Btu/ft2) by climate zone. A heating system efficiency of 80 percent was used to estimate the required space heating capacity. Table 65 Single-Family Detached and Attached Households with Fossil Fuel-Fired Space Heating (from RECS, 2005) Households (millions) 6.8 16.7 17.0 18.9 Climate Zone(s) 5 4 3 land 2 Heating Degree Day Range > 7,000 5,500 - 7,000 4,000 - 5,499 < 4,000 Average Annual Fuel Consumption (Btu/ft2-hour) 4.8 5.4 4.6 3.8 Space Heating Requirement* (Btu/ft2) 50-60 45-50 40-45 Zone 2: 35-40 Zone 1: 30-35 * Heating requirement ranges are from www.acdirect.com/svstemsize.php. 70 ------- 3.11.2 Multi-Family Residential Buildings Emission Rates As noted earlier in the Data Source section, the RECS data are on an individual unit basis, not building or property basis, so a different approach was required for multi-family units where EPA assumed common ownership of the property fuel combustion equipment. In order to estimate property emissions and the number of properties above different emission and PTE thresholds, EPA combined the RECS data with data from the POMS and AHS. From the RECS data, EPA first calculated average residential unit CC>2 emissions for the two most common fuels (natural gas and oil) by multi-family category. These are shown in the table below. Table 66 Multi-Family Residential Unit ~ Average Annual COi Emissions (from RECS, 2005) Multi-Family Category (number of units) 2 to 4 units 5 or more units Natural Gas Space Heating (tons CO2/residential unit-year) 4.8 3.0 Fuel Oil Space Heating (tons CO2/residential unit-year) 8.3 8.9 EPA also obtained annual CC>2 emission rates from an EPA analysis that was based on Lawrence Berkeley National Lab (LBNL) modeling studies. Those rates were estimated for old and new building units (see Table 67). The pre-1980 building estimate compares with the overall average from the RECS data. The post-1980 building estimates are much lower, particularly for units burning fuel oil. Table 67 Multi-Family Residential Unit ~ Average Annual COi Emissions (from 2008 EPA Analysis based on LBNL, 1997) Multi-Family Category (building age) Pre- 1980 building Post-1980 building Gas Serviced Units (tons CO2/residential unit-year) 4.75 2.65 Fuel Oil Serviced Units (tons CO2/residential unit-year) 7.17 3.87 71 ------- Existing Property Characteristics Information on the distribution of multi-family properties by number of units per property was taken from the 1995 - 1996 POMS. The data are aggregated by different housing unit ranges. The table below shows the property size distribution from unpublished POMS data (NMHC Quick Facts — Apartment Stocks (http://www.nmhc.org)). The POMS data were for privately owned housing only and excluded public housing projects (about 13,500 buildings and 1,326,000 units). For our estimates, the building numbers were adjusted to current (2005) levels based on the RECS unit data (unit ratio of RECS to POMS). EPA assumed the same unit distribution in the adjustment. Table 68 Multi-Family Residential Property Size Distribution (from National Multi-Housing Council tabulation of unpublished POMS data 1995 - 1996) Number of Rental Units on Property 2 3 4 5-9 10-14 15-19 20-29 30-39 40-49 50-99 100 - 199 200 - 299 300-399 400 - 499 500 - 749 Over 750 Total Number of Properties (1995 - 1996) 1,558,700 336,030 341,350 281,500 70,390 36,780 38,000 18,166 14,431 26,694 19,804 7,775 2,966 1,307 723 307 2,754,923 Number of Units (1995 - 1996) 3,093,200 1,025,900 1,436,800 1,897,700 862,280 602,260 916,750 604,240 702,790 2,009,400 2,952,300 1,948,400 1,058,800 605,130 431,360 437,670 20,584,980 Average Number of Units per Property 2 3 4 7 12 16 24 33 49 75 149 251 357 463 597 1,426 72 ------- The adjusted POMS size distribution and average number of units in each category were combined with information from RECS on the percentage of units that use gas or oil for space heating. The gas and oil emission factors from the previous tables were applied to the average number of units in each property size category by fuel to estimate property annual CO2 emissions. For our final estimates we used the LBNL based emission factors for post-1980 buildings, over the RECS based factor. We found that these lower emission factors resulted in total emissions more in line with the total based on all RECS units and residential sector estimates in the U.S. Greenhouse Gas Inventory. The RECS-based factors combined with the POMS property distribution data resulted in a larger overestimate in overall category annual emissions. The lack of information on the building population over 50 units, and lack of information on the correlation between unit emissions and the building/property size are large sources of uncertainty in the estimates at thresholds above 1,000 tons. Potential to Emit PTE was estimated using the same ten percent capacity factor as used for the single family residential units New Properties The AHS data provided information on new construction used to estimate the number of new buildings and new units with natural gas space heating that were constructed in the 1999 - 2005 period. To simplify the analysis, EPA ignored the limited use of fuel oil for space heating in new units. The AHS data provided separately the number of new buildings with gas space heating per year, and a size distribution for all new buildings per year. The AHS size distribution stopped at 50 and larger, and was slightly different in other categories from the POMS data. EPA adjusted the distribution based on the POMS distribution and then used the same emission and capacity factor approach as used for existing units. 73 ------- Table 69 American Housing Survey New Building Data Building Size: Number of Units per Building 2 3-4 5-9 10-19 20-29 30-49 50 or more Total Number of New Buildings per Year (1999 - 2005) (thousands) 6.3 5.4 6.1 6.0 3.1 1.0 1.0 29.0 Fraction of All New Buildings per Year (1999 - 2005) 0.22 0.19 0.21 0.21 0.11 0.03 0.03 1.00 New Gas Buildings per Year (1999 - 2005) (thousands) 16.0 16.0 Number of New Gas Buildings per Year 3,468 2,995 3,389 3,310 1,734 552 552 16,000 74 ------- Threshold Summary Table 70 CO2 Threshold Summaries — Residential Sectors Threshold (tons per year) Number of Existing Sources Number of New Facilities Added per Year CO2 Emissions Covered (Tg per year) Multi-Family Residential 100 250 1,000 5,000 10,000 25,000 50,000 100,000 610,500 137,000 51,200 7,800 1,400 160 20 0 11,300 6,400 1,100 120 20 o 5 0 0 54.285 42.192 32.399 14.934 4.933 1.392 0.006 0 Single-Family Residential 100 250 1,000 3,925,000 45,350 0 33,000 515 0 51.408 1.670 0 Total Residential Sector 100 250 1,000 5,000 100,00 25,000 50,000 100,000 4,535,500 182,350 51,200 7,800 1,400 160 20 0 44,300 6,915 1,100 120 20 o 6 0 0 105.693 43.862 32.399 14.934 4.933 1.392 0.006 0 75 ------- References Brown, E., and Elliott, R.N., On-Farm Energy Use Characterizations, Report Number IE052, ©American Council for an Energy-Efficient Economy, Washington, D.C., March 2005. http://www.aceee.org/pubs/ie052full.pdf E.H. 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U.S. Environmental Protection Agency (EPA), Office of Air and Radiation, Technical Support Document for Process Emissions From Electronics Manufacture (Semiconductors, MEMs, Liquid Crystal Displays, andPhotovoltaics), January 29, 2009 (EPA-HQ-OAR-2008-0508- 0009). U.S. Environmental Protection Agency (EPA), Office of Air and Radiation, Technical Support Document for Ethanol Facilities: Proposed Rule for Mandatory Reporting of Greenhouse Gases, February 4, 2009 (EPA-HQ-OAR-2008-0508-0010). U.S. Environmental Protection Agency (EPA), Office of Air and Radiation, Technical Support Document for the Ferroalloy Production Sector: Proposed Rule for Mandatory Reporting of Greenhouse Gases, January 22, 2009 (EPA-HQ-OAR-2008-0508-0011). U.S. Environmental Protection Agency (EPA), Office of Air and Radiation, Technical Support Document for the Glass Manufacturing Sector: Proposed Rule for Mandatory Reporting of Greenhouse Gases, January 22, 2009 (EPA-HQ-OAR-2008-0508-0014). U.S. Environmental Protection Agency (EPA), Office of Air and Radiation, Technical Support Document for Emissions of'HFC-23 from Production ofHCFC-22: Proposed Rule for Mandatory Reporting of Greenhouse Gases, February 06, 2009 (EPA-HQ-OAR-2008-0508- 0015). U.S. Environmental Protection Agency (EPA), Office of Air and Radiation, Technical Support Document for the Hydrogen Production: Proposed Rule for Mandatory Reporting of Greenhouse Gases, August 5, 2008 (EPA-HQ-OAR-2008-0508-0016). 78 ------- U.S. Environmental Protection Agency (EPA), Office of Air and Radiation, Technical Support Document for the Iron and Steel Sector: Proposed Rule for Mandatory Reporting of Greenhouse Gases, September 9, 2008 (EPA-HQ-OAR-2008-0508-0017). U.S. Environmental Protection Agency (EPA), Office of Air and Radiation, Technical Support Document for the Lead Production Sector: Proposed Rule for Mandatory Reporting of Greenhouse Gases, January 22, 2009 (EPA-HQ-OAR-2008-0508-0018). U.S. Environmental Protection Agency (EPA), Office of Air and Radiation, Technical Support Document for the Lime Manufacturing Sector: Proposed Rule for Mandatory Reporting of Greenhouse Gases, January 22, 2009 (EPA-HQ-OAR-2008-0508-0019). U.S. Environmental Protection Agency (EPA), Office of Air and Radiation, Technical Support Document for Process Emissions from Magnesium Production and Processing: Proposed Rule for Mandatory Reporting of Greenhouse Gases, February 10, 2009 (EPA-HQ-OAR-2008-0508- 0020). U.S. Environmental Protection Agency (EPA), Office of Air and Radiation, Technical Support Document for the Petrochemical Production Sector: Proposed Rule for Mandatory Reporting of Greenhouse Gases, September 9, 2008 (EPA-HQ-OAR-2008-0508-0024). U.S. Environmental Protection Agency (EPA), Office of Air and Radiation, Technical Support Document for the Petroleum Refining Sector: Proposed Rule for Mandatory Reporting of Greenhouse Gases, September 9, 2008 (EPA-HQ-OAR-2008-0508-0025). U.S. Environmental Protection Agency (EPA), Office of Air and Radiation, Technical Support Document for the Phosphoric Acid Production Sector: Proposed Rule for Mandatory Reporting of Greenhouse Gases, February 20, 2009 (EPA-HQ-OAR-2008-0508-0026). U.S. Environmental Protection Agency (EPA), Office of Air and Radiation, Technical Support Document for the Pulp and Paper Sector: Proposed Rule for Mandatory Reporting of Greenhouse Gases, February 11, 2009 (EPA-HQ-OAR-2008-0508-0027). U.S. Environmental Protection Agency (EPA), Office of Air and Radiation, Technical Support Document for the Silicon Carbide Production Sector: Proposed Rule for Mandatory Reporting of Greenhouse Gases, January 22, 2009 (EPA-HQ-OAR-2008-0508-0028). U.S. Environmental Protection Agency (EPA), Office of Air and Radiation, Technical Support Document for the Soda Ash Manufacturing Sector: Proposed Rule for Mandatory Reporting of Greenhouse Gases, January 22, 2009 (EPA-HQ-OAR-2008-0508-0029). U.S. Environmental Protection Agency (EPA), Office of Air and Radiation, Technical Support Document for the Titanium Dioxide Production Sector: Proposed Rule for Mandatory Reporting of Greenhouse Gases, January 22, 2009 (EPA-HQ-OAR-2008-0508-0031). 79 ------- U.S. Environmental Protection Agency (EPA), Office of Air and Radiation, Technical Support Document for Underground Coal Mines: Proposed Rule for Mandatory Reporting of Greenhouse Gases, February 4, 2009 (EPA-HQ-OAR-2008-0508-0032). U.S. Environmental Protection Agency (EPA), Office of Air and Radiation, Technical Support Document for the Zinc Production Sector: Proposed Rule for Mandatory Reporting of Greenhouse Gases, January 22, 2009 (EPA-HQ-OAR-2008-0508-0033). 80 ------- Appendix A Sector Permit Threshold Counts and Emissions by GHG The listed electronic spreadsheet files contain the permit threshold counts and emissions for each sector and subsector by GHG. These listed files are included in separate files in the docket (EPA-HQ-OAR-2009-0517). Please refer to the following file names for additional information on specific sectors and GHGs: • GHG Data for Final Tailoring Rule Development - CO2e.xls • GHG Data for Final Tailoring Rule Development - CO2.xls • GHG Data for Final Tailoring Rule Development - CH4.xls • GHG Data for Final Tailoring Rule Development - N2O.xls • GHG Data for Final Tailoring Rule Development - HFC.xls • GHG Data for Final Tailoring Rule Development - PFC.xls • GHG Data for Final Tailoring Rule Development - SF6.xls 81 ------- Appendix B Commercial Building Sector — Permit Threshold Results by Commercial Category Please refer to the electronic file "Commercial Building Category CC>2 Permit Threshold Results.xls." in the docket for EPA-HQ-OAR-2009-0517 82 ------- Attachment C Summary of Methodology and Data Used to Estimate Burden Relief and Evaluate Resource Requirements at Alternative Greenhouse Gas (GHG) Permitting Thresholds March 2010 1. Introduction This paper summarizes an assessment of the estimated resource requirements for permitting authorities to include GHG at several possible major source permitting thresholds and the burden reduction and costs savings for permitting authorities and sources as a result of requiring the inclusion of GHG in the title V and Prevention of Significant Deterioration (PSD) permitting programs at thresholds greater than the current statutory requirements. A preliminary analysis to support the tailoring rule proposal resulted in an earlier version of this Technical Support Document, found at EPA-HA-OAR-2009-0517.14 Based on comments received on the proposal and updates to key assumptions, this revised summary presents the updated methodology and burden reduction estimates resulting from several permitting threshold alternatives considered for the final tailoring rule. The analysis was performed considering GHG emissions on a carbon dioxide equivalent (CC^e) basis, which represents the sum of the six primary GHG with their respective global warming potentials (GWP) applied. Time and costs associated with permit activities are derived from existing Information Collection Requests (ICRs) for the title V and PSD programs. Estimates for the number of affected sources used in 14 "Summary of ICR-based Data Used to Estimate Avoided Burden and Evaluate Resource Requirements at Alternative GHG Permitting Thresholds;" Prepared by EPA Staff; August 2009. ------- this analysis were obtained from the GHG thresholds evaluation, which can be found at EPA- HQ-OAR-2009-0517.15 2. Methodology for Estimating Permitting Burden Due to GHG Emission Sources This section describes the basic methodology we used to estimate the different types and quantities of permitting actions that would be affected by addressing GHGs under the PSD and title V permitting programs. The final burden results summarized in Section 3 are based on the methodologies described in this section. In developing our methodology, we established different applicability options under which GHG emission sources would be regulated. These GHG applicability thresholds range from the statutory threshold levels (100 and 250 tpy) to different combinations of major source and significance levels based on GHG emissions, and finally, applicability based on GHG-related additions to otherwise occurring permitting actions for non-GHGs (also referred to here and in the preamble for this action as the 'anyway' source approach). We considered several different major source/major modification threshold combinations. We chose the combinations to reflect representative, incremental steps along the possible range. Because it is time- and resource- intensive to develop estimates for a given step, we chose intervals that best reflect representative points within the range given those time and resource constraints. For example, as it became evident from the analysis that the 100,000 tpy CO26 major source threshold would be a viable option under one of the phase-in steps in the GHG tailoring rule, we needed to then evaluate different GHG significance level options in combination with the 100,000 tpy CC>2 major source level to determine the ultimate impact on PSD and title V permitting activity. 15 "Technical Support Document for Greenhouse Gas Emissions Thresholds Evaluation;" Office of Air Quality Policy and Standards; March 29, 2010. ------- PSD Permits Table 2-1 summarizes EPA's estimate of modifications and new construction PSD permitting actions potentially affected by the addition of GHG as a regulated air pollutant at different GHG threshold options for PSD applicability. These actions are broken down by type of modification and new construction activity. Three types of modifications are included in this analysis: major modifications at major sources that are triggered by increased conventional pollutant emissions, but also exceed the significance level for GHG; modifications previously considered minor that become major modifications due to GHG emissions occurring at existing major sources; and modifications at newly major GHG sources due solely to emissions exceeding the significance level threshold for GHG. For new construction, two types of sources are listed - those that are major sources due solely to the emissions of GHG, and those which are classified as major due to conventional pollutant emissions, but also exceed the GHG significance level (or 'anyway' sources). The first line items in Table 2-1 for modifications and new construction present estimates of GHG-related permitting actions that would occur at 'anyway' sources ; these are labeled in the table as "Current Modifications - Add Additional GHG" and "Newly Constructed Major Sources - Add Additional GHG." The August 2008 ICR for the New Source Review (NSR) program estimates that 282 PSD and 519 non-attainment NSR permits are issued annually.16 EPA's initial 16 Prevention of Significant Deterioration and Non-Attainment Area New Source Review (Renewal), EPA ICR Number 123.23, OMB Control Number 2060-0003, 2008. A copy of this document is available in the docket for the final Tailoring Rule. ------- burden analysis concentrated solely on the 282 annual PSD actions. If a source is major for a pollutant for which an area is designated non-attainment, all significant emissions or significant emissions increases of pollutants for which the area is in attainment are still subject to ------- Table 2-1. Estimated Number of PSD Permit Actions Exceeding GHG17 Threshold Options Threshold Current Modifications - Add Additional GHG Minor Modifications Becoming Newly Major Modifications at Newly Major Sources Modifications Total Newly Constructed Major Sources - Add Additional GHG Newly Constructed Major Sources Newly Constructed Sources Total Total 100/250 tpy major; 100/250 tpysig. level 448 17,894 43,942 62,284 240 19,649 19,889 82,173 25,000 tpy major; 25,000 tpysig. level 448 8,947 250 9,645 240 10 250 9,895 50,000 tpy major; 50,000 tpysig. level 448 1,789 117 2,354 240 3 243 2,597 100,000 tpy major; 50,000 tpy sig. level 448 1,789 20 2,257 240 2 242 2,499 100,000 tpy major; 75,000 tpy sig. level 448 895 20 1,363 240 2 242 1,605 100,000 tpy major; 100,000 tpy sig. level 448 0 20 468 240 2 242 710 Non- GHG 448 0 0 448 240 0 240 688 17 GHG threshold options are all based on tpy CO2e. The Non-GHG option is based on a PSD action being triggered for a non-GHG, conventional pollutant (e.g., nitric oxides), where a GHG-related PSD review is only necessary when associated GHG emissions for the project exceed 75,000 tpy CO2e. ------- PSD review. Thus, some of the facilities applying for nonattainment permits may also undergo PSD actions at the same time. Although there is no way of accurately predicting which of the 519 nonattainment actions might also coincide with a PSD action related to GHG emissions, we believe it is likely that most will since they typically involve large emission sources; thus, it is assumed all nonattainment actions from the ICR annual estimate will also need a PSD permit. Therefore, in this final analysis, to more accurately depict the number of PSD permitting actions occurring annually, it is assumed that all 801 permitting actions above involve a PSD action. We estimate that 70% of these permit actions are modifications, or 560 of the 801, based on feedback received from the National Association of Clean Air Agencies (which estimated that some 65% of these permitting actions involve modifications); other commenters on the proposed tailoring rule (who generally said that most permitting actions involve modifications); and EPA program staff experience.18 Further, 80% of these modifications are expected to involve combustion activities with GHG emission levels exceeding the statutory thresholds and any of the significance levels we considered, up to an including the 100,000 tpy CC^e level, thus requiring the inclusion of GHG related requirements in a PSD permit.19 This equates to 448 modifications annually. We believe that any of the modifications that would be subject to PSD due to the conventional emissions would also be large enough to increase GHGs by at least 100,000 tpy of CO2e. 18 "NACAA Summary on Permitting GHGs Under the Clean Air Act"; Memorandum from Mary Stewart Douglas, National Association of Clean Air Agencies to Juan Santiago, EPA/OAQPS, September 3, 2009. 19 The 80% estimate was obtained by reviewing a sample of PSD modification permits to determine the number involving combustion that would emit GHGs. This review showed that approximately 80% of PSD permitting actions involve combustion units of all types. These permitting actions are being permitted for, or taking limits for, NOx or some other combustion-related emission. These run the gamut of industrial activity, from power generators to manufacturing facilities, and many other types. ------- The 240 remaining annual permit actions—labeled in Table 2-1 as "Newly Constructed Major Source- Add Additional GHG"—are assumed to be construction of new major sources as determined by emissions of one or more NAAQS pollutants. Due to the size and emissions of sources currently subject to the PSD permitting program, it is believed all of these newly constructed major sources will exceed each of the GHG thresholds we considered, including the 100,000 tpy CO26, and will also need to include GHG-related requirements in the PSD permit. In total, all 688 major permitting actions mentioned above will need to factor in GHG requirements as indicated in Table 2-1. For permitting authorities, 50 additional burden hours are estimated to include the GHG requirements in a permit.20 For affected sources, approximately 222 additional burden hours are needed, based on the two line items in the current NSRICR we expect to be impacted by the addition of GHG - approximately 120 hours to "obtain guidance on data needs" and 102 hours for the "preparation of BACT analysis." That is, the current NSR ICR indicates that on average, affected sources spend 222 hours for these two activities for their conventional pollutants. We expect that they will need to spend an equal amount of time for these two activities for their GHG emissions. The sources will need to "obtain guidance on data needs" because they will be analyzing their emissions from GHG units and will need to prepare a separate BACT analysis for their GHG emissions, or else expand the BACT analysis they would otherwise do for their conventional pollutants to account for their GHG emissions. We believe 20 A well-known gas with a familiar BACT process, such as NOx, requires an average of 20-30 burden hours to be included in a permit. As less is known regarding GHGs and the BACT decision process, expert staff judgment set the burden for permitting authorities to add GHG to permits at 50 hours. This is because determining BACT entails review and analysis of the available control techniques. For a well-known pollutant, the experience of the permitting authority allows it to efficiently consider the various options and narrow them down promptly to the one that should be considered BACT. Because no BACT determinations have ever been made, permitting authorities will need to invest additional time into reviewing the available technologies and selecting which one should be considered the best for the particular source. In the absence of any previous experience selecting BACT for GHG sources, we estimate that twice as much time will be necessary as for conventional pollutants. ------- that the remaining activities that the affected sources must undertake would not be appreciably lengthened by their need to include GHG emissions. According to the NSRICR, approximately 74,591 minor permitting actions occur annually, including the following: 30% involve new minor sources, new synthetic minor sources, and synthetic-based modifications; 30% involve true minor modifications; 20% involve netting- based minor modifications; and 20% involve minor/administrative permit revisions.21 We believe that a number of projects that could have taken limits or netted out of PSD review and thereby obtain a minor permit will now be required to apply for a major PSD permit, depending on the significance threshold set for GHG. These projects are identified in Table 2-1 under "Minor Modifications Becoming Newly Major." Combining the number of synthetic-based modifications (7,459) and netting-based modifications (14,909) identified in the ICR, approximately 22,368 of these actions could potentially become major modifications subject to PSD review if their associated GHG emissions increases exceed the selected GHG significance level option. We did not count 'new minor sources' and 'new synthetic minors' because we have already accounted for them as potential major GHG sources if their PTE emissions exceed the selected GHG major source threshold option. Based on staff review of samples of minor source permits, it is estimated that 80% of the current minor modification actions likely involve combustion sources - totaling 17,894 actions of the total 22,368 minor modification actions.22 Some of these actions may trigger the requirements of the PSD program depending on their GHG emission increases and the selected GHG significance threshold. In the absence of any experience involving GHG sources and any sufficient quantitative data from commenters, we determined the number of these actions on the 21 See NSR ICR at page 11. 22 See footnote 6, above (basis for 80% calculation). ------- following basis: We assumed the following percentage of the total 17,984 actions would move to a major modification status due to GHG increases for each of the GHG significance level options considered in this analysis: 50% at 25,000 tpy CO2e; 10% at 50,000 tpy CO2e; 5% at 75,000 tpy CO2e; and zero at 100,000 tpy CC^e. To determine these percentages, we considered the relative emissions of CO2 emissions to NOx emissions at the current major modification significance level threshold for NOx (40 tpy). For example, for an average natural gas combustion boiler (a common industrial combustion unit that is part of many modification projects), a 40 tpy NOx emissions would coincide with a 56,000 tpy CO26 level. Since many combustion related projects keep just under the 40 tpy NOx level to avoid major modification status, we assume that the CO26 emissions for a similar project will be around the 50,000 tpy CO26 level. Based on the relationship in combustion-related emission levels between NOx and CO26 just described, we believe it is reasonable to expect that all these currently minor modification projects involving combustion units will exceed the 100 tpy GHG significance level under the baseline scenario. This is because we do not believe that the sources at which these projects occur will be able to structure their operations so as to limit their GHG emissions to less than 100 tpy GHGs. However, at higher GHG significance level options, we assume that a decreasing proportion of projects will be significantly large enough, or they may emit GHGs close enough to the GHG significance level to be able to limit their operations or net-out for GHGs like they can for NOx. In the absence of experience and quantitative information from commenters we made the following assumptions regarding how many of these formerly minor modification projects would be subject to major PSD review at the different GHG significance level options: at the 25,000 tpy CO26 significance level, we estimate that half of the modifications will be able to limit their operations to avoid PSD ; at the 50,000 tpy CO26 ------- significance level, we estimate that 10% of these previously minor now major modifications will be covered by PSD; at the 75,000 tpy CC^e significance level we estimate that only 5% of these currently minor modification projects move into a major modification status for GHGs; and lastly, at the 100,000 tpy CC^e significance level, we assume that none of these projects will be large enough by themselves to trigger major PSD review. In addition to sources becoming subject to PSD requirements because of GHG emissions related to modifications, new construction will occur that will require a PSD permit solely due to the source's potential GHG emission levels, identified in Table 2-1 as "Newly Constructed Major Sources." Based on the source data obtained from the GHG thresholds evaluation, these newly constructed major sources involve both industrial and commercial/residential facilities.23 The current NSRICR notes that permitting authorities spend approximately 300 hours processing and issuing a new construction industrial source PSD permit. Sources spend almost 870 hours on average preparing for the same permit. In the previous burden analysis, commercial/residential permits were assumed to require only 20% of the time necessary for an industrial permit. While it is still believed that these sources are less complex than their industrial counterparts in terms of numbers and types of emissions sources and control requirements, EPA now estimates the commercial/residential permits to take 70% of the time required to complete an industrial permit, resulting in approximately 210 hours and 866 hours for permitting authorities and sources respectively.24 This is based on comments received, which stated that we had significantly underestimated the amount of time needed. These commenters emphasized that commercial and residential sources will generally be located in populated areas, and therefore 23 "Technical Support Document for Greenhouse Gas Emissions Thresholds Evaluation;" Office of Air Quality Policy and Standards; March 29, 2010. 24 See Tables 2-2 and 2-3. 10 ------- may elicit significant amounts of public input, which in turn will increase the amount of time needed compared to our initial estimates. However, the commenters generally did not provide quantitative information. As a result, we conducted further evaluation of the additional support and outreach activities for permitting authorities to assist with applicability determinations and emissions calculations, as virtually all commercial/residential sources will have no experience with the PSD permitting process. There are also many permit preparation activities that represent a fixed cost, such as preparation of notices and public hearings. Of the sources falling in this category, the number requiring PSD permitting will vary depending on where the thresholds for triggering PSD review (both major source and modifications thresholds) are established. Table 2-2. Average Permitting Authority Burden per GHG PSD Permit Type Activity Attend Preapplication Meetings Answer Respondent Questions Log In and Review Data Submissions Request Additional Information Analyze for and Provide Confidentiality Protection Prepare Completed Applications for Processing File and Transmit Copies Prepare Preliminary Determination Prepare Notices for and Attend Public Hearings Application Approval Notification of Applicant of PA Determination Submittal of Information on BACT/LAER to RBLC Total Burden Hours per Permit Burden Hours per Permit - Industrial 36 20 16 8 24 38 8 36 40 48 8 19 301 Burden Hours per Permit - Commercial/ Residential" 27 15 12 6 2 29 6 27 30 36 6 14 210 " In general, to process commercial/residential permits, permitting authorities will have to spend 75% of the amount of time they spend on industrial permits, except they will have to spend even less time on confidentiality due to the fact that most residential sources are not likely to be concerned about confidentiality. Commercial/residential permits will be much simpler than industrial permits, but a large part of the permitting costs are fixed costs. For example, organizing and holding a hearing for a much simpler permit, compared to a more complex permit, nevertheless take almost as long because of the document preparation, travel, and organizational details. 11 ------- Table 2-3. Average Source Burden per GHG PSD Permit Type Activity Burden Hours per Permit - Industrial Burden Hours per Permit - Commercial/ Residential" Preparation and Planning Determination of Compliance Requirements Obtain Guidance on Data Needs Preparation of B ACT Analysis 170 120 102 170 120 102 Data Collection and Analysis Air Quality Modeling Determination of Impact on Air Quality Related Values Post-construction Air Quality Monitoring 200 100 50 40 30 20 Permit Application Preparation and Submittal of Permit Application Public Hearings Revisions to Permit Total Burden 60 24 40 866 60 24 40 606 aPSD permit applications for commercial/residential sources will be significantly simpler than industrial source PSD permit applications. However, due to their inexperience, we estimate commercial/residential sources will take as long to complete their steps for their permit application as it will for industrial sources to complete their steps. Commercial/residential sources will, on average, have much less work for data collection and analysis. We estimate that they will have approximately 25% as much work in these areas (90 hours) compared to industrial sources (350 hours). However, commercial/residential sources will have to spend some time on data collection analysis is because some of them will have conventional pollutants that they emit in amounts that exceed the "significance" levels, but not the "major" levels, and they will have to analyze those conventional pollutants. Our 25% estimate is based, in the absence of actual experience or quantitative data from commenters, on our judgment that significantly less than 50% of commercial/residential sources emit conventional pollutants in amounts that equal or exceed the significance levels, but those that do may have to spend more time than industrial sources on data collection because they are unfamiliar with the tasks and therefore will face a learning curve. Finally, an existing, but newly classified major source for GHG, may undergo a modification for which it will then be subject to PSD permitting requirements. This category of PSD permitting activity is listed on Table 2-1 as "Modifications at Newly Major Sources." With this new major source status, these facilities must apply for and be issued a PSD permit, if they undergo a major modification. See Appendix A for a list of newly major sources at different 12 ------- major source GHG thresholds. We estimate that 4% of these newly major sources will undergo modifications. This rate was obtained by dividing the current 560 annual PSD modification- related permit actions (i.e., 70% of 801 actions identified in the NSRICR) by the existing major source population of 14,700 major source title V permits. This represents our best available estimate of the rate of PSD modification activity at major sources, and we make the assumption that this rate will also apply for newly major GHG sources. We recognize that there is some level of uncertainty in applying this rate to GHG-only sources, particularly for sources in unconventional sectors such as commercial and residential categories, however we believe at higher GHG threshold levels, where large industrial sources predominate, that this modification rate provides a reasonable estimate of modification activity. As no data are yet available for commercial/residential sources and because we cannot conclude that they will differ from industrial sources, we select the same 4% rate for modification activity. Title V Permits Title V programs also complete several types of permitting actions annually, including processing and issuing new permits, permit revisions, and permit renewals. Newly constructed major sources or sources designated newly major due to a modification are required to apply for and be issued a title V permit in order to operate. In addition to sources new to title V, permitting authorities must add GHG terms to permits for sources exceeding the threshold set for GHG emissions. Permitting authorities may face burdens to update existing title V permits for GHG under two possible scenarios: (1) EPA promulgates or approves any applicable requirements for GHGs that would apply to such a source, which would generally require a permit reopening or renewal application, or (2) the source makes a change that would result in an applicable requirement for GHG to newly apply to the source, such as PSD review, which would generally require an application for a permit revision. Permitting authorities will also need to process permit 13 ------- renewal applications, generally on a five-year cycle, and such renewals would need to assure that the permit properly addresses GHG. The April 2007 Title VICR estimates that 50 permits are completed every year for new sources.25 For this analysis, it is assumed that all 50 of these typically large industrial-type sources will be capable of potentially emitting GHG and will need to add GHG-related requirements to the permit. The estimated burden per title V permit in the ICR represents an average of multiple pollutants; we estimate the addition of GHGs will add an additional 10% of the time currently estimated for a new title V permit. We believe that 10% is the appropriate amount because for the most part, these sources will simply need to add information concerning inventory, reporting, or monitoring of their GHG emissions, as appropriate, which they can readily do. The ICR also identifies 3,267 permit renewals conducted on an annual basis. As not all sources potentially emit GHG above a determined threshold, this analysis examines the estimated 80% involving combustion activities that most likely have the potential to emit GHG above the series of potential thresholds evaluated.26 Therefore, approximately 2,614 sources will need to address GHG in the new version of the permit. Revisions to title V permits will also be necessary based on the number of modifications calculated for this analysis. Revisions occurring specifically due to GHG may involve significant revisions, minor revisions, or administrative actions to operating permits. EPA estimates that this activity will require 40 hours per permit on average for permitting authorities to complete.27 The 25 Information Collection Request for State Operating Permit Regulations (Renewal), EPA ICR Number 1587.07, OMB Control Number 2060-0243, 2007. A copy of this document is available in the docket for the final Tailoring Rule. 26 The 80% estimate was obtained through a review of existing title V permit source categorization. 27 The Title V ICR indicates the burdens associated with revisions are as follows: 90 hours for a significant revision, 30 hours for a minor revision, and 5 hours for an administrative action. See Table 8 at 23. It is not known which 14 ------- number of operating permit revisions will vary based on the number of previously minor modifications now qualifying as major modifications, and modifications at newly major sources, both listed in Table 2-1. At any level, it is assumed that the 448 modifications involving combustion that occur annually will need to include any GHG requirements in the revision of their respective title V permits. EPA estimates that permitting authorities will spend, in addition to the current burden to issue a title V permit revision, an additional 10% of the 40 hours needed to complete this process, or four hours per action. Finally, new industrial and commercial/residential sources will be entering title V permitting programs annually due solely to their GHG emissions. These commercial/residential sources that exceed the major source threshold solely due to their GHG emissions will not likely have substantial applicable requirements in the near term and/or will not require as much time to process as those for industrial sources, which have other applicable requirements in addition to those related to their GHG emissions. However, upon further evaluation and in response to comments from permitting authorities, EPA believes its initial estimate of one-tenth of the burden hours required was considered too low. Permitting authorities would confront substantial challenges as they have little experience with such sources and their GHG emissions. Commercial/residential sources themselves will have no experience with the title V permitting process, which will increase the time needed to assess GHG emissions, complete the application, and respond to permitting authority comments. We also expect that in many cases the draft permits will undergo high levels of public participation through public comment periods, public hearings, and petitions for reconsideration. Therefore, EPA assumes preparing a permit for revision will be required for any modification that exceeds the GHG significance level threshold; therefore, EPA averages the three permitting burdens to obtain a value of 40 hours per permit. 15 ------- affected commercial/residential sources will take 50% of the time a permitting authority currently spends on issuing a title V permit for an industrial source. Table 2-4. Average Permitting Authority Burden per GHG Title V Permit Activity Permit Application Review Draft Permits Preparation Comment Period Notification Hold Public Hearings Interaction with EPA Analyze Public Comments Permits Issuance Total Burden Burden Hours per Permit - Industrial 100 150 10 100 20 40 8 428 Burden Hours per Permit - Commercial/ Residential" 33 50 10 90 5 20 6 214 "Commercial/residential permits will be simpler, so that it would take the permitting authority about 1/3 of the time to review the permit application and draft the permit than it would for an industrial source permit. The comment period notification and time for public hearings, however, would be about the same because of the fixed time burdens necessary to provide notice and hold hearings. The amount of time interacting with EPA would be much less because of the relative simplicity of the permits. Analyzing public comments would take half as long as for an industrial permit because although the permits are much simpler, there could be a fair amount of public interest because of the location of the source. Permit issuance would take a less time than for an industrial source because most of the costs are fixed, although the permit is simpler. Table 2-5. Average Source Burden per GHG Title V Permit Activity Prepare Application Draft Permits Interaction Public Hearing Participation Total Burden Burden Hours per Permit - Industrial 300 40 10 350 Burden Hours per Permit - Commercial/ Residential" 150 20 10 180 "Commercial/residential permit applications will be significantly simpler than industrial source title V permit applications. However, due to their inexperience, we estimate commercial/residential sources will take half as long to complete their steps for their permit application as it will for industrial sources to complete their steps. Less interaction, again 50% less time, will be needed with permitting authorities during the permit drafting process. However, public hearing participation will likely require the same amount of time because of the fixed time burdens necessary to complete hearings. 16 ------- Uncertainties in Estimates of Affected Sources In order to estimate the number of facilities that exceed a given GHG threshold (such as a 100 or 250 tpy CC^e emission threshold for baseline analysis), it is necessary to have emissions inventory data at the facility or building level, including, and particularly for lower threshold scenarios, numerous small sources in the residential and commercial sectors (e.g., apartment buildings and office buildings). Historically, however, EPA has not collected sector-wide, facility-level information for GHG emissions under the CAA (with the exception of information from electric generating units required to report CC>2 emissions under the Acid Rain Program reporting requirements). To date, national EPA inventories of GHG sources have primarily focused on 'top-down' estimates of GHG emissions from sectors and sources, and not facility- level estimates. As a result, many of the uncertainties described here result from the absence of a comprehensive data set of facility-level GHG emissions across all sectors. A full description of the methodology used for determining facility level emissions is provided in our GHG thresholds evaluation study, which can be found at EPA-HQ-OAR-2009-0517.28 For residential, commercial, and smaller manufacturing operations, our current analysis relies on sample facility datasets and 'top-down' sector data (e.g., national fuel consumption statistics and/or building characteristics). There are inherent uncertainties in developing source counts from the allocation of these nationally aggregated statistics. The allocation factors we used, based on U.S. Energy Information Administration statistical sampling procedures and energy consumption statistics, are likely the best available to estimate the population of residential, commercial, and small manufacturing sources exceeding different GHG thresholds. "Technical Support Document for Greenhouse Gas Emissions Thresholds Evaluation;" Office of Air Quality Policy and Standards; March 29, 2010. 17 ------- However, uncertainties may result in either overestimating or underestimating GHG emissions for a given individual facility. It is worth noting that our estimates for the largest GHG emitting sources, such as electric utilities and refineries, are derived from bottom-up calculations of individual facility/building emissions so that there is increased certainty in evaluating and comparing the facility counts at the higher GHG threshold scenarios where residential and commercial sources are not highly affected. Although there are different levels of uncertainty in our facility level estimates across sectors, we do believe that the data are sufficiently robust to use in the aggregate to assess national permitting level impacts. EPA's estimate of affected sources is based on their potential to emit (PTE) emissions, as opposed to actual emission levels. PTE is defined as the maximum capacity of a stationary source to emit a pollutant under its physical and operational design, including certain legal limitations, for example, on emissions or hours of operation. NSR and Title V programs both use PTE for defining and identifying major sources. Although we have attempted to identify reasonable adjustments to account for PTE in our methodology, there are significant uncertainties in our PTE-based estimates, particularly for the commercial, residential and small manufacturing sectors that have not traditionally been subject to any form of air permitting. In practice, for example, for the residential sector and for many of the facilities in the commercial sector, where CC>2 emissions are primarily due to space heating/appliance usage, the combustion units are not likely to be used constantly at their maximum rated capacity because heating is not needed year-round and heating systems have thermostats. However, for our analysis we do assume full PTE-based estimates for the residential and commercial sectors, using PTE adjustment factors of 10 and 6.6, respectively to adjust actual emissions to PTE level. Absent industry specific data, for small manufacturing source categories we assume a PTE adjustment 18 ------- factor of 2; individual manufacturing facilities may operate their combustion equipment at levels above and below this capacity utilization rate, but we believe this PTE adjustment reflects a reasonable average rate across the variety of small manufacturing facilities included in the threshold analysis. Ultimately, the number of sources brought into either the NSR or Title V programs due solely to their PTE would depend on how EPA interprets PTE for various types of emitting equipment (e.g., space-heating furnaces in residential and commercial buildings), and the extent to which streamlined mechanisms are made available for sources to obtain legal limits on their PTE so that the programs are not applicable. No such decisions or interpretations have been made at this point and, as mentioned in the preamble, they will require significant time to develop. As a result, our threshold analysis uniformly assumes that no PTE limits are in place for any of the affected sectors, which may likely be the case in the immediate stages of GHG permitting for affected sources. There is significant uncertainty in both our modification rate for newly major GHG sources and in our estimate of modification activity at existing major sources that will become subject to PSD review for GHG emission increases. The general uncertainty results from predicting not only how many major sources will undergo physical or operational changes in any given year, but also which of those changes would result in GHG emissions increases that would exceed a proposed GHG significance level. First, information is not available across sectors and source categories on the types and numbers of specific physical and operational changes that would result in GHG emissions increases in amounts that can be estimated and that therefore can be compared to various GHG emissions significance levels. Second, there is uncertainty in how many project modifications will occur within any given year because decisions on these projects are driven by facility- and sector-based growth patterns and business planning decisions. Lastly, 19 ------- some source categories and units that emit GHGs have not previously been subject to any type of permitting or reporting requirements; as a result, for these sources, there is very little historical record for use in estimating the number and types of projects that would occur at these sources and, in turn, establish an appropriate significance level for GHGs. Uncertainties in Permitting Costs The primary reference sources for our estimate of burden hours and costs for permitting GHGs are the most recent ICRs for the PSD and title V programs. There a number of uncertainties introduced in using these references for costing GHG permitting activities. First, we are assuming that the average, conventional pollutant per-permit costs will be similar for GHGs. We do recognize the likelihood that residential and commercial permits would be simpler and have a lower per-permit burden than traditional industrial sources, and have made adjustments for this: however, for industrial sources we assume per-permit costs on par with what are estimated in the latest ICRs for PSD and title V programs. There is uncertainty in applying these average ICR-based costs to GHG permitting, even for industrial sources, because there is no historical track record for permitting these GHG sources and thus any cost efficiencies that have been realized over the years for conventional pollutant permitting, and thus reflected in the current ICRs, may not be initially realized for GHG permitting. For example, we assume the same public hearing estimate as included in the ICR for current PSD permits (i.e., that 1 in 50 major PSD permits require a hearing)—for GHG sources this number may be higher initially if there ends up being significantly more public interest in these permits. We do believe overall, however, that larger facilities, especially those affected at higher threshold levels, will 20 ------- have had sufficient permitting experience such that out ICR-based costs should reasonably reflect the added burden of including GHGs. As mentioned above, in our burden scenario analyses we do discount the ICR-based per- permit costs for residential and commercial sources to reflect what we believe will generally be simpler permits, involving primarily uniform combustion type equipment. For PSD we discount the per-permit cost by 30%, and for title V we discount the per-permit cost by 50%. There is significant uncertainty in these estimated discounts since we have no track record for permitting these smaller commercial and residential sources. However, we do believe that, based solely on the type and uniformity of the GHG emission units that would be subject to permitting at these facilities under lower GHG threshold scenarios, that average per-permit costs would be less than those currently experienced by more complex industrial facilities, with numerous emission units, for currently regulated pollutants. 3. Evaluation of ICR-based Resource Requirements for Permitting Authorities at Different Possible GHG Permitting Thresholds For the proposal, EPA examined resource requirements at the statutory-based 100/250 tpy CO26 emission levels—referred to as the 'baseline' analysis in the following tables—as well as at 10,000 tpy, 25,000 tpy, and 50,000 tpy CC^e levels. Due to comments received on the proposal and this improved burden analysis, the 10,000 tpy threshold was eliminated as not being a viable alternative since it did not adequately address administrative necessity concerns. In this analysis, in addition to the baseline analysis, EPA broadened the options to consider thresholds ranging from a 25,000 tpy CC^e major source applicability level for PSD and title V up to a 100,000 tpy CO26 level, with associated PSD GHG significant levels of equal magnitude. EPA 21 ------- also considered the impact on burden of different PSD GHG significance levels combined with the 100,000 tpy major source level, including 50,000 CO2e, 75,000 CO2e, and 100,000 CO2e. The choice of a PSD significance level also has a direct impact on title V burdens since a greater number of PSD permit requirements that result from modification activities will result in a greater number of necessary title V revisions. PSD Permits Table 3-1 presents the estimated burden for permitting authorities at different possible PSD GHG major source applicability thresholds. Descriptions of the different thresholds selected are provided below. Burden estimates for the PSD program are calculated based on listed values obtained from Tables 6-1 and 6-2 the NSRICR. The ICR does not distinguish between new construction and modification actions; therefore, Table 3-1 combines the actions into permit preparation issuance based solely on GHG emissions or the addition of GHG requirements to permits being issued for conventional sources, or "anyway" permits. PSD permit preparation and issuance is further divided into industrial and commercial/residential sources since less time is required for commercial/residential sources. Baseline After receiving comments on the proposal and reevaluating the initial estimates, EPA has determined the impact of regulating GHG emissions under current PSD statutory thresholds for applicability. Baseline burden and cost were calculated at the 100 tpy and 250 tpy major source permitting threshold (the 100 tpy threshold applies to the 28 source categories identified in the 22 ------- Clean Air Act section 169(1)). At these thresholds, the additional annual permitting burden for permitting authorities is estimated at 19.5 million hours at a cost of $1.5 billion. Table 3-1. Additional Permitting Authority PSD Burden with GHG (Annual) Activity Burden Hours per Permit Affected Permits Total Burden (hours) Total Cost ($2007)a 100/250 tpy Major /100 tpy Significance Threshold ("Baseline") PSD Permit Preparation and Issuance - Industrial PSD Permit Preparation and Issuance - Commercial/Residential13 Additions to Current PSD Applications0 Total Additional Burden 301 210 50 26,089 55,509 688 7,852,789 11,656,890 34,400 19,544,079 $606,392,367 $900,145,046 $2,656,368 $1,509,193,780 25,000 tpy Major/ 25,000 tpy Significance Threshold PSD Permit Preparation and Issuance - Industrial PSD Permit Preparation and Issuance - Commercial/Residential Additions to Current PSD Applications Total Additional Burden 301 210 50 9197 63 688 2,768,297 13,230 34,400 2,815,927 $213,767,894 $1,021,621 $2,656,368 $217,445,883 50,000 tpy Major/ 50,000 Significance Threshold PSD Permit Preparation and Issuance - Industrial PSD Permit Preparation and Issuance - Commercial/Residential Additions to Current PSD Applications Total Additional Burden 301 210 50 1906 28 688 573,706 5,880 34,400 613,986 $44,301,577 $454,054 $2,656,368 $47,411,999 100,000 tpy Major/ 50,000 tpy Significance Threshold PSD Permit Preparation and Issuance - Industrial PSD Permit Preparation and Issuance - Commercial/Residential Additions to Current PSD Applications Total Additional Burden 301 210 50 1809 4 688 544,509 840 34,400 579,749 $42,046,985 $64,865 $2,656,368 $44,768,218 100,000 tpy Major/ 75,000 tpy Significance Threshold PSD Permit Preparation and Issuance - Industrial PSD Permit Preparation and Issuance - Commercial/Residential Additions to Current PSD Applications Total Additional Burden 301 210 50 915 4 688 275,415 840 34,400 310,655 $21,267,546 $64,865 $2,656,368 $23,988,779 100,000 tpy Major/ 100,000 tpy Significance Threshold PSD Permit Preparation and Issuance - Industrial PSD Permit Preparation and Issuance - Commercial/Residential Additions to Current PSD Applications Total Additional Burden 301 210 50 20 4 688 6020 840 34,400 41,260 $464,864 $64,865 $2,656,368 $3,186,097 Non-GHG-Based Threshold PSD Permit Preparation and Issuance - Industrial PSD Permit Preparation and Issuance - Commercial/Residential Additions to Current PSD Applications 301 210 50 0 0 688 0 0 34,400 $0 $0 $2,656,368 23 ------- I Total Additional Burden | | | 34,400 | $2,656,368 "Labor cost of $77.22/hr from Prevention of Significant Deterioration and Non-Attainment Area New Source Review (Renewal), EPA ICR Number 1230.23, OMB Control Number 2060-0003, 2008. bAssume permit preparation and issuance for commercial/residential permits takes 70% the amount of time needed to prepare and issue an industrial permit. 'For current permit applications, assume it takes an additional 50 hours to include GHG requirements in the permit. Alternate Threshold Scenarios After determining the baseline, additional annual burden was determined at six different major stationary source threshold levels in order to evaluate the relative differences in impacts to permitting authorities. Estimates represent the additional burden and costs due to GHG permitting beyond to the burden currently experienced by permitting authorities and sources. The first scenario is the threshold proposed in the GHG Tailoring Rule of 25,000 tpy CO2e. Results of this analysis indicate a total of 9,260 new permits, plus 688 permit actions to include GHG related requirements into current PSD permitting actions (including both new construction and modifications). This additional workload equates to 2.8 million hours for permitting authorities at a cost of $217 million. Note this is an increase over our initial results at proposal of over 185,000 burden hours and $8.7 million. Again, increases are due to more accurate estimates of annual modifications and burden associated with commercial/residential permits. Increasing the emission threshold to 50,000 tpy will lead to an estimated 614,000 hours additional burden at a cost of $47.4 million. This scenario estimates 1,934 new construction or modification activities will be subject to PSD permitting annually due to GHG. Setting a threshold of 100,000 tpy with a significance level of 50,000 tpy, permitting authorities will spend an estimated 580,000 hours preparing and issuing permits, at a cost of $44.8 million. At this level, EPA estimates 1,813 new actions require PSD permits. 24 ------- Next, at the 100,000 tpy threshold with a 75,000 tpy significance level, the annual permitting authority burden will increase by 311,000 hours at a cost of $24 million. In this scenario, 919 new permit actions will occur annually. At a 100,000 tpy threshold, with a 100,000 tpy significance level for modifications, EPA estimates there are 20 new industrial PSD permit actions and four commercial/residential. Permitting authorities will spend an estimated 41,000 additional hours on permits at a cost of $3.2 million. The final scenario involves only sources that are required to get a PSD permit due to their non-GHG emissions and then are further required to add GHG related requirements as a result of GHG emissions increases from modifications, or GHG emissions at newly constructed facilities, exceeding a significance threshold of 75,000 tpy GHG. In this scenario, only the annual 688 PSD permit actions derived from the NSRICR are expected to need the inclusion of GHG related requirements to the permits. The additional burden to permitting authorities under this scenario is estimated at 34,000 hours at a cost of $2.7 million. Title V Permits Table 3-2 presents the estimated burden for permitting authorities at different possible title V GHG major source applicability thresholds. Descriptions of the different thresholds selected are provided below. Burden estimates are calculated and annual values derived from Tables 7 and 8 of the current Title V ICR.29 29 For consistency, the permitting authority labor costs are updated to 2007 dollars utilizing the 2007 General Schedule Salary Table from the Office of Personnel Management. 25 ------- Baseline EPA reevaluated our estimates of the additional administrative burden and cost of including GHG emitters in the title V program at the current 100 tpy statutory threshold level. To determine the impact of regulating GHG emissions under current title V program, baseline 26 ------- Table 3-2. Additional Permitting Authority Title V Burden with GHG (Annual) Activity Burden Hour per Permit Affected Permits Total Burden (hours) Total Cost ($2007)" 100 tpy (associated with PSD 100/250 tpy maj./lOO tpy sig.) New Permit Preparation and Issuance - Industrial Add GHG component to new Non-GHG Permitb New Permit Preparation and Issuance - Commercial/Residential0 Permit Revisions - due to GHG Permit Revisions - add GHG to Current Non-GHG Permits Permit Renewals'1 Total Additional Burden 428 43 214 40 4 9 71,829 50 1,985,948 61,836 448 2,614 30,742,812 2,150 424,992,872 2,473,440 1,792 23,526 458,236,592 $1,414,169,352 $98,900 $19,549,672,112 $113,778,240 $82,432 $1,082,196 $21,078,883,232 25,000 tpy (associated with PSD 25,000 tpy maj./25,000 tpy sig.) New Permit Preparation and Issuance - Industrial Add GHG component to new Non-GHG Permit New Permit Preparation and Issuance - Commercial/Residential Permit Revisions - due to GHG Permit Revisions - add GHG to Current Non-GHG Permits Permit Renewals Total Additional Burden 428 43 214 40 4 9 2,103 50 444 9,197 448 2,614 899,941 2,150 94,945 367,880 1,792 23,526 1,390,234 $41,397,301 $98,900 $4,367,455 $16,922,480 $82,432 $1,082,196 $63,950,764 50,000 tpy (associated with PSD 50,000 tpy maj./50,000 tpy sig.) New Permit Preparation and Issuance - Industrial Add GHG component to new Non-GHG Permit New Permit Preparation and Issuance - Commercial/Residential Permit Revisions - due to GHG Permit Revisions - add GHG to Current Non-GHG Permits Permit Renewals Total Additional Burden 428 43 214 40 4 9 981 50 208 1,906 448 2,614 419,868 2,150 44,441 76,240 1,792 23,526 568,017 $19,313,928 $98,900 $2,044,271 $3,507,040 $82,432 $1,082,196 $26,128,767 100,000 tpy (associated with PSD 100,000 tpy maj./50,000 tpy sig.) New Permit Preparation and Issuance - Industrial Add GHG component to new Non-GHG Permit New Permit Preparation and Issuance - Commercial/Residential Permit Revisions - due to GHG Permit Revisions - add GHG to Current Non-GHG Permits Permit Renewals Total Additional Burden 428 43 214 40 4 9 172 50 18 1,809 448 2,614 73,473 2,150 3,781 72,360 1,792 23,526 177,082 $3,379,773 $98,900 $173,911 $3,328,560 $82,432 $1,082,196 $8,145,772 27 ------- Table 3-2 cont'd. Additional Permitting Authority Title V Burden with GHG (Annual) Activity Burden Hour per Permit Affected Permits Total Burden (hours) Total Cost ($2007)" 100,000 tpy (associated with PSD 100,000 tpy maj./75,000 tpy sig.) New Permit Preparation and Issuance - Industrial Add GHG component to new Non-GHG Permit New Permit Preparation and Issuance - Commercial/Residential Permit Revisions - due to GHG Permit Revisions - add GHG to Current Non-GHG Permits Permit Renewals Total Additional Burden 428 43 214 40 4 9 172 50 18 915 448 2,614 73,473 2,150 3,781 36,600 1,792 23,526 141,322 3,379,773 $98,900 $173,911 $1,683,600 $82,432 $1,082,196 $6,500,812 100,000 tpy (associated with 100,000 tpy ma.j./ 100,000 tpy sig.) New Permit Preparation and Issuance - Industrial Add GHG component to new Non-GHG Permit New Permit Preparation and Issuance - Commercial/Residential Permit Revisions - due to GHG Permit Revisions - add GHG to Current Non-GHG Permits Permit Renewals Total Additional Burden 428 43 214 40 4 9 172 50 18 20 448 2,614 73,473 2,150 3,781 800 1,792 23,526 105,522 $3,379,773 $98,900 $173,911 $36,800 $82,432 $1,082,196 $4,854,012 Non-GHG Based Threshold New Permit Preparation and Issuance - Industrial Add GHG component to new Non-GHG Permit New Permit Preparation and Issuance - Commercial/Residential Permit Revisions - due to GHG Permit Revisions - add GHG to Current Non-GHG Permits Permit Renewals Total Additional Burden 428 43 21 40 4 9 0 50 0 0 448 2,614 0 2,150 0 0 1,792 23,526 27,468 0 $98,900 $0 $0 $82,432 $1,082,196 $1,263,528 "Salaries from Title V ICR adjusted to 2007 dollars using 2007 OPM General Schedule Salary Table available at: http://www.opm.gov/oca/07tables/index.asp 'incorporating GHG information/requirements into significant revisions and permit renewals adds an additional 10% of the current time (90 hours each) 'New commercial/residential permits require half the time needed for new industrial permits dThe Title V ICR estimates that 3,267 permits annually undergo renewal - assume 80% of these involve combustion 28 ------- burden and cost are calculated at the 100 tpy threshold level, which is the generally applied major source applicability level under title V. At the statutory threshold level, it is estimated that over six million sources will become newly subject to title V. A source generally must apply for a title V permit within one year of becoming subject to permitting, then the permitting authority must take final action (issue or deny) on the permit applications within 18 months of receipt. We expect these new permits will not be issued all at once, but rather will come in over a three-year time frame based on the statutory requirements listed above. Therefore, we assume that one- third of the newly subject sources will apply for and obtain a permit annually, requiring almost 460 million burden hours to prepare and issue over two million new operating permits at an additional cost of $21.1 billion. Alternate Threshold Scenarios After determining the baseline, additional burden was determined at six different major stationary source threshold levels in order to evaluate the relative differences in impacts to permitting authorities. Estimates represent the additional annual burden and costs due to GHG permitting beyond the burden and costs currently experienced by permitting authorities and sources. The first scenario is the threshold proposed in the GHG Tailoring Rule of 25,000 tpy CO26. Results of this analysis indicate a total of 2,547 new permits, as well as 50 permits that would need to include GHG requirements in their permits. This additional workload equates to 1.4 million hours for permitting authorities at a cost of $64 million. Note that this is an increase over our initial results at proposal of approximately 985,000 burden hours and $45 million. As 29 ------- with PSD programs, increases are due to more complete estimates of annual modifications and the revised burden associated with commercial/residential permits. Increasing the emission threshold to 50,000 tpy will lead to an estimated 568,000 hours additional burden at a cost of $26.1 million. This scenario estimates 1,189 new sources will be subject to title V permitting annually due to GHG. To examine the impact of significance levels on the overall burden, EPA considered the impact on burden of different PSD GHG significance levels of 50,000 CO2e, 75,000 CO2e, and 100,000 CO26 combined with the 100,000 tpy major source level The choice of a PSD significance level has a direct impact on title V burdens since a greater number of PSD permit requirements that result from modification activities will result in a greater number of necessary title V revisions. This effect is apparent in Table 3-2. Note that for all three scenarios, EPA estimates there are 172 industrial and 18 commercial/residential new title V permit actions due to GHG. Setting a threshold of 100,000 tpy with a PSD significance level of 50,000 tpy, permitting authorities will spend an estimated 177,000 hours preparing and issuing permits, at a cost of $8.1 million. Note that under this scenario, 1,809 revisions are estimated annually to update existing operating permits due to modification activities. Utilizing a 75,000 tpy PSD significance level, the annual permitting authority burden is estimated to increase by 161,000 hours at a cost of $7.4 million. At this significance level, 915 operating permit revisions will be necessary due to GHG. This decrease from the previous scenario is due to fewer modifications exceeding the higher significance level threshold and requiring revisions to an operating permit. At a 100,000 tpy threshold, with a 100,000 tpy PSD significance level for modifications, EPA estimates there are 30 ------- only 20 permit revisions annually. Permitting authorities will spend an estimated 106,000 additional hours on permits at a cost of $4.9 million. The final scenario involves only sources that are required to get a title V permit for emissions other than GHG and that are required to add GHG related requirements. Under this scenario, only the annual issuance of 50 permits noted in the Title VICR are expected to need the inclusion of GHG related requirements to the permits. The additional burden to permitting authorities under this scenario is estimated at 27 million hours at a cost of $1.3 million. 4. Burden Relief Estimates for Permitting Authorities and Sources at Several Possible GHG Major Source Applicability Thresholds for Title V and PSD The following tables indicate the estimated burden relief when comparing the baseline levels with several threshold levels for GHG applicability as described in the previous sections. In Tables 4-1 through 4-4, the first three columns indicate the cost per permit and total cost to permitting authorities at a GHG threshold level equal to the statutory threshold levels for title V and PSD (100 and 100/250 tpy, respectively). The next three columns reflect the estimated costs for permitting authorities with the permitting thresholds (both for PSD and title V) set at the specified levels. In the final three columns, the burden relief is estimated - the time and costs alleviated relative to the baseline levels by establishing several GHG permitting thresholds as previously described. The burden relief for sources at the different permitting thresholds is presented in Tables 4-5, 4-6, and 4-7 below. Table 4-8 estimates the cost savings if a non-GHG based related trigger is used. This information on burden relief was used to compile the final Regulatory Impact Analysis (RIA) for the final GHG tailoring rule. Please see the final RIA contained in the public 31 ------- docket for this GHG tailoring rule for a full explanation and description of the burden relief provided by the final GHG tailoring rule actions. 32 ------- Table 4-1. Estimated Burden Relief for Permitting Authorities Utilizing a 25,000 tpy Major/ 25,000 tpy PSD Significance Threshold Activity All Title V lOOtpy and PSD 250 tpy Cost per Permit (2007$) Number of Permits Total Cost (2007$) 25,000 tpy or Greater Cost per Permit (2007$) Number of Permits Total Cost (2007$) Avoided Burden Cost per Permit (2007$) Number of Permits Total Cost (2007$) Title V Permits New Industrial - Due to GHG Current Industrial - Add GHG New Commercial/Residential Permit Revisions - Due to GHG Permit Revisions - Add GHG Permit Renewals Total Permits Affected $19,688 $1,978 $9,844 $1,840 $184 $414 71,829 50 1,985,948 61,836 448 2,614 2,122,725 $1,414,175,915 $98,900 $19,549,672,112 $113,778,240 $82,432 $1,082,196 $19,688 $1,978 $9,844 $1,840 $184 $414 2,103 50 444 9,197 448 2,614 14,856 $41,403,864 $98,900 $4,370,736 $16,922,480 $82,432 $1,082,196 $19,688 $1,978 $9,844 $1,840 $184 $414 69,726 0 1,985,504 52,639 0 0 2,107,869 $1,372,772,051 $0 $19,545,301,376 $96,855,760 $0 $0 PSD Permits New Industrial New Commercial/Residential Current Applications - Add GHG Total Permits Affected Total Permitting Authority Costs $23,243 $16,216 $3,861 26,089 55,509 688 82,286 $606,386,627 $900,133,944 $2,656,368 $22,588,066,734 $23,243 $16,216 $3,861 9,197 63 688 9,948 $213,765,871 $1,021,608 $2,656,368 $281,404,455 $23,243 $16,216 $3,861 16,892 55,446 0 72,338 $392,620,756 $899,112,336 $0 $22,306,662,279 33 ------- Table 4-2. Estimated Burden Relief for Permitting Authorities Utilizing a 50,000 tpy Major/50,000 tpy PSD Significance Threshold Activity All Title V lOOtpy and PSD 250 tpy Cost per Permit (2007$) Number of Permits Total Cost (2007$) 50,000 tpy or Greater Cost per Permit (2007$) Number of Permits Total Cost (2007$) Avoided Burden Cost per Permit (2007$) Number of Permits Total Cost (2007$) Title V Permits New Industrial - Due to GHG Current Industrial - Add GHG New Commercial/Residential Permit Revisions - Due to GHG Permit Revisions - Add GHG Permit Renewals Total Permits Affected $19,688 $1,978 $9,844 $1,840 $184 $414 71,829 50 1,985,948 61,836 448 2,614 2,122,725 $1,414,175,915 $98,900 $19,549,672,112 $113,778,240 $82,432 $1,082,196 $19,688 $1,978 $9,844 $1,840 $184 $414 981 50 208 1,906 448 2,614 6,207 $19,313,928 $98,900 $2,047,552 $3,507,040 $82,432 $1,082,196 $19,688 $1,978 $9,844 $1,840 $184 $414 70,848 0 1,985,740 59,930 0 0 2,116,518 $1,394,861,987 $0 $19,547,624,560 $110,271,200 $0 $0 PSD Permits New Industrial New Commercial/Residential Current Applications - Add GHG Total Permits Affected Total Permitting Authority Costs $23,243 $16,216 $3,861 26,089 55,509 688 82,286 $606,386,627 $900,133,944 $2,656,368 $22,588,066,734 $23,243 $16,216 $3,861 1,906 28 688 2,622 $44,301,158 $454,048 $2,656,368 $73,543,622 $23,243 $16,216 $3,861 24,183 55,481 0 79,664 $562,085,469 $899,679,896 $0 $22,514,523,112 34 ------- Table 4-3. Estimated Burden Relief for Permitting Authorities Utilizing a 100,000 tpy Major/75,000 tpy PSD Significance Threshold Activity All Title V lOOtpy and PSD 250 tpy Cost per Permit (2007$) Number of Permits Total Cost (2007$) 100,000 t Cost per Permit (2007$) py; 75,000 tpy or Greater Number of Permits Total Cost (2007$) Avoided Burden Cost per Permit (2007$) Number of Permits Total Cost (2007$) Title V Permits New Industrial - Due to GHG Current Industrial - Add GHG New Commercial/Residential Permit Revisions - Due to GHG Permit Revisions - Add GHG Permit Renewals Total Permits Affected $19,688 $1,978 $9,844 $1,840 $184 $414 71,829 50 1,985,948 61,836 448 2,614 2,122,725 $1,414,175,915 $98,900 $19,549,672,112 $113,778,240 $82,432 $1,082,196 $19,688 $1,978 $9,844 $1,840 $184 $414 172 50 18 915 448 2,614 4,217 $3,386,336 $98,900 $177,192 $1,683,600 $82,432 $1,082,196 $19,688 $1,978 $9,844 $1,840 $184 $414 71,657 0 1,985,930 60,921 0 0 2,118,508 $1,410,789,579 $0 $19,549,494,920 $112,094,640 $0 $0 PSD Permits New Industrial New Commercial/Residential Current Applications - Add GHG Total Permits Affected Total Permitting Authority Costs $23,243 $16,216 $3,861 26,089 55,509 688 82,286 $606,386,627 $900,133,944 $2,656,368 $22,588,066,734 $23,243 $16,216 $3,861 915 4 688 1,607 $21,267,345 $64,864 $2,656,368 $30,499,233 $23,243 $16,216 $3,861 25,174 55,505 0 80,679 $585,119,282 $900,069,080 $0 $22,557,567,501 35 ------- Table 4-4. Estimated Burden Relief for Permitting Authorities Utilizing a Non-GHG Trigger Activity All Title V lOOtpy and PSD 250 tpy Cost per Permit (2007$) Number of Permits Total Cost (2007$) Non-GHG Trigger Cost per Permit (2007$) Number of Permits Total Cost (2007$) Avoided Burden Cost per Permit (2007$) Number of Permits Total Cost (2007$) Title V Permits New Industrial - Due to GHG Current Industrial - Add GHG New Commercial/Residential Permit Revisions - Due to GHG Permit Revisions - Add GHG Permit Renewals Total Permits Affected $19,688 $1,978 $9,844 $1,840 $184 $414 71,829 50 1,985,948 61,836 448 2,614 2,122,725 $1,414,175,915 $98,900 $19,549,672,112 $113,778,240 $82,432 $1,082,196 $19,688 $1,978 $9,844 $1,840 $184 $414 0 50 0 0 448 2,614 3,112 $0 $98,900 $0 $0 $82,432 $1,082,196 $19,688 $1,978 $9,844 $1,840 $184 $414 71,829 0 1,985,948 61,836 0 0 2,119,613 $1,414,175,915 $0 $19,549,672,112 $113,778,240 $0 $0 PSD Permits New Industrial New Commercial/Residential Current Applications - Add GHG Total Permits Affected Total Permitting Authority Costs $23,243 $16,216 $3,861 26,089 55,509 688 82,286 $606,386,627 $900,133,944 $2,656,368 $22,588,066,734 $23,243 $16,216 $3,861 0 0 688 688 $0 $0 $2,656,368 $3,919,896 $23,243 $16,216 $3,861 26,089 55,509 0 81,598 $606,386,627 $900,133,944 $0 $22,584,146,838 36 ------- Table 4-5. Estimated Burden Relief for Sources Utilizing a 25,000 tpy Major/25,000 tpy PSD Significance Threshold Activity All Title V lOOtpy and PSD 250 tpy Cost per Permit (2007$) Number of Permits Total Cost (2007$) 25,000 tpy or Greater Cost per Permit (2007$) Number of Permits Total Cost (2007$) Avoided Burden Cost per Permit (2007$) Number of Permits Total Cost (2007$) Title V Permits New Industrial - Due to GHG Current Industrial - Add GHG New Commercial/Residential Permit Revisions - Due to GHG Permit Revisions - Add GHG Permit Renewals Total Permits Affected $46,350 $4,440 $23,175 $1,677 $156 $780 71,829 50 1,985,948 61,836 448 2,614 2,122,725 $3,329,289,600 $222,000 $46,024,344,900 $103,698,972 $69,888 $2,038,920 $46,350 $4,440 $23,175 $1,677 $156 $780 2,103 50 444 9,197 448 2,614 14,856 $97,474,050 $222,000 $10,289,700 $15,423,369 $69,888 $2,038,920 $46,350 $4,440 $23,175 $1,677 $156 $780 69,726 0 1,985,504 52,639 0 0 2,107,869 $3,231,815,550 $0 $46,014,055,200 $88,275,603 $0 $0 PSD Permits New Industrial New Commercial/Residential Current Applications - Add GHG Total Permits Affected Total Source Costs $84,530 $59,152 $21,669 26,089 55,509 688 82,286 $2,205,303,170 $3,283,468,368 $14,908,272 $54,963,344,090 $84,530 $59,152 $21,669 9,197 63 688 9,948 $777,422,410 $3,726,576 $14,908,272 $921,575,185 $84,530 $59,152 $21,669 16,892 55,446 0 72,338 $1,427,880,760 $3,279,741,792 $0 $54,041,768,905 37 ------- Table 4-6. Estimated Burden Relief for Sources Utilizing a 50,000 tpy Major/50 ,000 tpy PSD Significance Threshold Activity All Title V lOOtpy and PSD 250 tpy Cost per Permit (2007$) Number of Permits Total Cost (2007$) 50,000 tpy or Greater Cost per Permit (2007$) Number of Permits Total Cost (2007$) Avoided Burden Cost per Permit (2007$) Number of Permits Total Cost (2007$) Title V Permits New Industrial - Due to GHG Current Industrial - Add GHG New Commercial/Residential Permit Revisions - Due to GHG Permit Revisions - Add GHG Permit Renewals Total Permits Affected $46,350 $4,440 $23,175 $1,677 $156 $780 71,829 50 1,985,948 61,836 448 2,614 2,122,725 $3,329,289,600 $222,000 $46,024,344,900 $103,698,972 $69,888 $2,038,920 $46,350 $4,440 $23,175 $1,677 $156 $780 981 50 208 1,906 448 2,614 6,207 $45,469,350 $222,000 $4,820,400 $3,196,362 $69,888 $2,038,920 $46,350 $4,440 $23,175 $1,677 $156 $780 70,848 0 1,985,740 59,930 0 0 2,116,518 $3,283,820,250 $0 $46,019,524,500 $100,502,610 $0 $0 PSD Permits New Industrial New Commercial/Residential Current Applications - Add GHG Total Permits Affected Total Source Costs $84,530 $59,152 $21,669 26,089 55,509 688 82,286 $2,205,303,170 $3,283,468,368 $14,908,272 $54,963,344,090 $84,530 $59,152 $21,669 1,906 28 688 2,622 $161,114,180 $1,656,256 $14,908,272 $233,495,628 $84,530 $59,152 $21,669 24,183 55,481 0 79,664 $2,044,188,990 $3,281,812,112 $0 $54,729,848,462 38 ------- Table 4-7. Estimated Burden Relief for Sources Utilizing a 100,000 tpy Major/75,000 tpy PSD Significance Threshold Activity All Title V lOOtpy and PSD 250 tpy Cost per Permit (2007$) Number of Permits Total Cost (2007$) 100,000 tpy; 75,000 tpy or Greater Cost per Permit (2007$) Number of Permits Total Cost (2007$) Avoided Burden Cost per Permit (2007$) Number of Permits Total Cost (2007$) Title V Permits New Industrial - Due to GHG Current Industrial - Add GHG New Commercial/Residential Permit Revisions - Due to GHG Permit Revisions - Add GHG Permit Renewals Total Permits Affected $46,350 $4,440 $23,175 $1,677 $156 $780 71,829 50 1,985,948 61,836 448 2,614 2,122,725 $3,329,289,600 $222,000 $46,024,344,900 $103,698,972 $69,888 $2,038,920 $46,350 $4,440 $23,175 $1,677 $156 $780 172 50 18 915 448 2,614 4,217 $7,972,200 $222,000 $417,150 $1,534,455 $69,888 $2,038,920 $46,350 $4,440 $23,175 $1,677 $156 $780 71,657 0 1,985,930 60,921 0 0 2,118,508 $3,321,317,400 $0 $46,023,927,750 $102,164,517 $0 $0 PSD Permits New Industrial New Commercial/Residential Current Applications - Add GHG Total Permits Affected Total Source Costs $84,530 $59,152 $21,669 26,089 55,509 688 82,286 $2,205,303,170 $3,283,468,368 $14,908,272 $54,963,344,090 $84,530 $59,152 $21,669 915 4 688 1,607 $77,344,950 $236,608 $14,908,272 $104,744,443 $84,530 $59,152 $21,669 25,174 55,505 0 80,679 $2,127,958,220 $3,283,231,760 $0 $54,858,599,647 39 ------- Table 4-8. Estimated Burden Relief for Sources Utilizing a Non-GHG Trigger Activity All Title V lOOtpy and PSD 250 tpy Cost per Permit (2007$) Number of Permits Total Cost (2007$) Non-GHG Trigger Cost per Permit (2007$) Number of Permits Total Cost (2007$) Avoided Burden Cost per Permit (2007$) Number of Permits Total Cost (2007$) Title V Permits New Industrial - Due to GHG Current Industrial - Add GHG New Commercial/Residential Permit Revisions - Due to GHG Permit Revisions - Add GHG Permit Renewals Total Permits Affected $46,350 $4,440 $23,175 $1,677 $156 $780 71,829 50 1,985,948 61,836 448 2,614 2,122,725 $3,329,289,600 $222,000 $46,024,344,900 $103,698,972 $69,888 $2,038,920 $46,350 $4,440 $23,175 $1,677 $156 $780 0 50 0 0 448 2,614 3,112 $0 $222,000 $0 $0 $69,888 $2,038,920 $46,350 $4,440 $23,175 $1,677 $156 $780 71,829 0 1,985,948 61,836 0 0 2,119,613 $3,329,289,600 $0 $46,024,344,900 $103,698,972 $0 $0 PSD Permits New Industrial New Commercial/Residential Current Applications - Add GHG Total Permits Affected Total Source Costs $84,530 $59,152 $21,669 26,089 55,509 688 82,286 $2,205,303,170 $3,283,468,368 $14,908,272 $54,963,344,090 $84,530 $59,152 $21,669 0 0 688 688 $0 $0 $14,908,272 $17,239,080 $84,530 $59,152 $21,669 26,089 55,509 0 81,598 $2,205,303,170 $3,283,468,368 $0 $54,946,105,010 40 ------- APPENDIX A Table A-1. Newly Major Affected Source Estimates Based on Threshold Level Source Type EGUs Industrial Oil/Gas/Coal production Waste Treatment Commercial Residential Total 1 00/250 tpy PSD 285 141,160 2,588 3,344 731,477 182,350 1 00 tpy Title V 285 170,910 2,588 3,358 1,355,921 4,535,500 1,061,204 6,068,562 25,000 tpy 124 4,002 187 1,927 1,161 160 7,561 50,000 tpy 0 1,934 75 910 600 20 3,539 100,000 tpy 0 256 52 193 51 0 552 Based on information contained in the "Technical Support Document for Greenhouse Gas Emissions Thresholds Evaluation;" Office of Air Quality Policy and Standards; March 29, 2010 and information retrieved from EPA's enforcement and compliance history online (ECHO) database during January 2010. ECHO is a computer-data based created and maintained by the EPA that contains source-specific data submitted primarily by state and local environmental agencies. See http://www.epa-echo.gov/echo/index.html. 41 ------- United States Office of Air Quality Planning and Publication No. EPA- Environmental Protection Standards 452/R-10-003 Agency Health and Environmental Impacts April 2010 Division Research Triangle Park, NC 42 ------- |