September 2010
Economic Impact Analysis for
Corporate Parent and NAICS
Reporting Amendment to MRR
Report for Final Rule
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CONTENTS
Section 1 Introduction and Background 1-1
Section 2 Summary of the FINAL Ammendment 2-1
2.1 Definition of Affected Entities 2-1
2.2 Rationale for Collecting Information on Parent Company(s), NAICS
code(s) and Cogeneration 2-6
Section 3 FACILITY- and Supplier-LEVEL Cost Analysis 3-1
3.1 Estimating the Loaded Hourly Wage Rates 3-1
3.2 Estimating Facility and Supplier Reporting Burden 3-2
3.2.1 U.S. Parent Company Name, Address, and Percent Ownership 3-2
3.2.2 North American Industry Classification System (NAICS) Code(s)
and Cogeneration 3-4
3.2.3 Summary of Burden Esitmate Per Facility 3-6
Section 4 Economic Analysis 4-1
4.1 National Cost Estimates 4-1
4.1.1 National Cost Estimate 4-2
4.2 Small Entity Analysis 4-4
4.3 Synopsis of Benefits 4-4
Section 5 Statutory and Executive Order Reviews 5-1
5.1 Executive Order 12866: Regulatory Planning and Review 5-1
5.2 Paperwork Reduction Act 5-1
5.3 Regulatory Flexibility Act (RFA) 5-3
5.4 Unfunded Mandates Reform Act (UMRA) 5-4
5.5 Executive Order 13132: Federalism 5-5
5.6 Executive Order 13175: Consultation and Coordination with Indian Tribal
Governments 5-5
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5.7 Executive Order 13045: Protection of Children from Environmental
Health Risks and Safety Risks 5-6
5.8 Executive Order 13211: Actions that Significantly Affect Energy Supply,
Distribution, or Use 5-6
5.9 National Technology Transfer and Advancement Act 5-6
5.10 Executive Order 12898: Federal Actions to Address Environmental Justice
in Minority Populations and Low-Income Populations 5-6
5.11 Congressional Review Act 5-7
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LIST OF TABLES
Table 2-1.Examples of Regulated Entities by Category 2-2
Table 3-1 Loaded Hourly Wage Rates by Labor Category 3-1
Table 3-2. Summary of Burden Estimate Per Facility For Parent Company Name(s), Address(es),
and Percent Ownership 3-4
Table 3-3. Summary of Burden Estimate for NAICS and Cogeneration Per Facility 3-5
Table 3-4. Summary of Burden Estimate Per Facility 3-6
Table 4-1. Number of Facilities and Suppliers Required to Report GHG Emissions by Industry
Sector 4-2
Table 4-3. National Burden and Costs to Reporters by Data Element and Reporting Year 4-4
Table 5-1. Cost Summary for Final Rulemaking 5-1
in
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Section 1
INTRODUCTION AND BACKGROUND
EPA has finalized a rule that amends the Final Mandatory Reporting of Greenhouse
Gases Rule (40 CFR part 98) to require reporters subject to the rule to provide: (1) the name,
address, and percentage ownership of their U.S. parent company(s); (2) their primary North
American Industry Classification System (NAICS) code(s) as well as all additional applicable
NAICS code(s); and (3) an indication of whether or not any of their reported emissions are from
one or more cogeneration units.
The Final Mandatory Reporting of Greenhouse Gases Rule, hereafter 40 CFR part 98,
requires reporting of GHG emissions from large sources and suppliers in the United States.
Under Part 98, suppliers of fossil fuels or industrial greenhouse gases, and facilities that emit
25,000 metric tons or more per year of GHG emissions are required to submit annual reports to
EPA.1 A list of the information that all reporters must submit in their annual reports is included
in the general provisions of the rule (see 40 CFR 98.3(c)). This list includes owner/operator
identification information, but does not currently require reporters to provide information on
their U.S. parent company(s), on their primary and other applicable NAICS code(s), or on
whether any of their reported emissions are from one or more cogeneration units. Today's final
rule amends 40 CFR part 98 to require facilities and suppliers subject to the rule to provide this
additional information in their annual reports.
The balance of this report provides a summary of the final rule's requirements; definition
of the affected entities; a rationale for additional information requirements; a summary of the
compliance burden; the economic impact analysis; and a summary of EPA's compliance with
relevant rulemaking Executive Orders and statutes.
1 Because they are not covered under 40 CFR part 98, this rule does not apply to mobile sources.
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Section 2
SUMMARY OF THE FINAL AMMENDMENT
EPA has added reporting elements to the list of items included in annual GHG reports
submitted by facilities and suppliers subject to 40 CFR part 98. This final amendment requires
facilities to report the following additional data fields: (1) the legal names and physical addresses
of all U.S. parent companies and the percent of ownership held by each; (2) all applicable
NAICS codes, one of which must be designated, and a second that may be designated, as
primary; and (3) an indication of whether or not the reported emissions include those from one or
more cogeneration units. The collection of information regarding facilities' and suppliers' U.S.
parent companies and NAICS codes will assist in aggregation of facility-based GHG emissions
data to the corporate level and the industrial sector level. Identifying cogeneration facilities will
provide EPA with additional information regarding facility emissions and will assist in
understanding what emissions are being released onsite versus offsite.
2.1 Definition of Affected Entities
The final amendment applies universally to all subparts of 40 CFR part 98. Therefore,
facilities and suppliers that meet the applicability criteria for any of the subparts of 40 CFR Part
98 are required to report the additional data elements included in this final amendment.2
Regulated categories and entities subject to this amendment are listed in Table 2-1.
2 EPA will not be implementing subpart JJ of the 40 CFR part 98 using funds provided in its FY2010 appropriations
due to a Congressional restriction prohibiting the expenditure of funds for this purpose. In addition, today's
proposed amendment does not apply to mobile sources because they are not covered under 40 CFR Part 98.
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Table 2-1. Examples of Regulated Entities by Category
C "silegorv
NAIC'S
C "otlcs
K\:iiii|)les of ke^uliiled Knlitics
General Stationary Fuel Combustion
Sources
211
Extractors of crude petroleum and natural gas.
321
Manufacturers of lumber and wood products.
322
Pulp and paper mills.
325
Chemical manufacturers.
324
Petroleum refineries, and manufacturers of coal products.
316, 326, 339
Manufacturers of rubber and miscellaneous plastic products.
331
Steel works, blast furnaces.
332
Electroplating, plating, polishing, anodizing, and coloring.
336
Manufacturers of motor vehicle parts and accessories.
221
Electric, gas, and sanitary services.
622
Health services.
611
Educational services.
Electricity Generation
221112
Fossil-fuel fired electric generating units, including units owned by Federal and municipal
governments and units located in Indian Country.
Adipic Acid Production
325199
Adipic acid manufacturing facilities.
Aluminum Production
331312
Primary Aluminum production facilities.
Ammonia Manufacturing
325311
Anhydrous and aqueous ammonia manufacturing facilities.
Cement Production
327310
Portland Cement manufacturing plants.
Ferroalloy Production
331112
Ferroalloys manufacturing facilities.
Glass Production
327211
Flat glass manufacturing facilities.
327213
Glass container manufacturing facilities.
327212
Other pressed and blown glass and glassware manufacturing facilities.
HCFC-22 Production and HFC-23
Destruction
325120
Chlorodifluoromethane manufacturing facilities.
Hydrogen Production
325120
Hydrogen manufacturing facilities.
Industrial Waste Landfills
322110
Pulp mills.
322121
Paper mills.
322122
Newsprint mills.
322130
Paperboard mills.
311611
Meat processing facilities.
311411
Frozen fruit, juice, and vegetable manufacturing facilities.
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C "silegorv
NAIC'S
( odes
K\:iiii|)les of ke^uliiled Knlitics
311421
Fruit and vegetable canning facilities.
325193
Ethanol manufacturing facilities.
324110
Petroleum refineries.
Industrial Wastewater Treatment
562212
Solid waste landfills.
322110
Pulp mills.
322122
Newsprint mills.
322130
Paperboard mills.
311611
Meat processing facilities.
311411
Frozen fruit, juice, and vegetable manufacturing facilities.
311421
Fruit and vegetable canning facilities.
221320
Sewage treatment facilities.
Iron and Steel Production
331111
Integrated iron and steel mills, steel companies, sinter plants, blast furnaces, basic oxygen
process furnace shops.
Lead Production
331419
Primary lead smelting and refining facilities.
331492
Secondary lead smelting and refining facilities.
Lime Production
327410
Calcium oxide, calcium hydroxide, dolomitic hydrates manufacturing facilities.
Magnesium Production
331419
Primary refiners of nonferrous metals by electrolytic methods.
331492
Secondary magnesium processing plants.
Municipal Solid Waste Landfills
562212
Solid waste landfills.
221320
Sewage treatment facilities.
Nitric Acid Production
325311
Nitric acid manufacturing facilities.
Petrochemical Production
32511
Ethylene dichloride manufacturing facilities.
325199
Acrylonitrile, ethylene oxide, methanol manufacturing facilities.
325110
Ethylene manufacturing facilities.
325182
Carbon black manufacturing facilities.
Petroleum Refineries
324110
Petroleum refineries.
Phosphoric Acid Production
325312
Phosphoric acid manufacturing facilities.
Pulp and Paper Manufacturing
322110
Pulp mills.
322121
Paper mills.
322130
Paperboard mills.
Silicon Carbide Production
327910
Silicon carbide abrasives manufacturing facilities.
Soda Ash Manufacturing
325181
Alkalies and chlorine manufacturing facilities.
212391
Soda ash, natural, mining and/or beneficiation.
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C "silegorv
NAIC'S
( odes
K\:iiii|)les of ke^uliiled Knlitics
Titanium Dioxide Production
325188
Titanium dioxide manufacturing facilities.
Underground Coal Mines
212113
Underground anthracite coal mining operations.
212112
Underground bituminous coal mining operations.
Zinc Production
331419
Primary zinc refining facilities.
331492
Zinc dust reclaiming facilities, recovering from scrap and/or alloying purchased metals.
Suppliers of Coal Based Liquids Fuels
211111
Coal liquefaction at mine sites.
Suppliers of Petroleum Products
324110
Petroleum refineries.
Suppliers of Natural Gas and NGLs
221210
Natural gas distribution facilities.
211112
Natural gas liquid extraction facilities.
Suppliers of Industrial GHGs
325120
Industrial gas manufacturing facilities.
Suppliers of Carbon Dioxide (CO2)
325120
Industrial gas manufacturing facilities.
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The list of regulated entities presented in Table 2-1 is not intended to be exhaustive, but
rather provides a guide for readers regarding entities likely to be regulated by this action. Table
2-1 lists the types of entities that EPA currently is aware of that could be potentially affected by
this action. Other types of entities not listed in the table could also be subject to reporting
requirements. To determine whether an entity is affected by this action, you should carefully
examine the applicability criteria found in 40 CFR part 98, subpart A.
Summary of Reporting Requirements
In this final rulemaking, EPA is requiring reporting of data elements related to
information on a reporter's U.S. parent company(s). Under this amendment, facilities and
suppliers will provide the legal name(s) and address(es) of all U.S. parent company(s) and their
respective percentages of ownership.
Reporting Requirements
Under this amendment, the following data elements would be reported:
• All U.S. Parent Company Legal Name(s);
• All U.S. Parent Company Physical Address(es);
• Percent of Ownership by each U.S. Parent Company;
• Primary NAICS Code(s);
• All additional applicable NAICS Code(s); and
• Whether or not the reported emissions include emissions from one or more
cogeneration units.
EPA defines U.S. parent company(s) as the highest-level United States company(s) with
an ownership interest in the reporting entity as of December 31 of the year for which data are
being reported. The U.S. parent company's physical address is defined as the street, city, state
and zip code of the U.S. parent company's physical location.
For this amendment, EPA defines a North American Industry Classification System
(NAICS) code as the six-digit code that represents the product(s)/activity(s)/service(s) at the
facility or supplier as listed in the Federal Register and defined in "North American Industrial
Classification System Manual 2007," available from the U.S. Department of Commerce,
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National Technical Information Service. The final amendment requires reporters to provide the
primary NAICS code that most accurately describes the primary product/activity/service at the
facility, based on revenue. The primary product/activity/service is the principal source of
revenue for the facility or supplier. If necessary, reporters may provide up to two primary
NAICS codes. Reporters must also provide all additional NAICS codes that correspond to the
product(s)/activity(s)/service(s) at the facility that are not related to the principal source of
revenue for the facility or supplier.
In addition, EPA is requiring all reporters subject to 40 CFR part 98 to indicate (by
checking yes or no) whether some or all of the GHG emissions they report are from one or more
cogeneration (also known as combined heat and power) units located at the facility. For the
purposes of this proposal, a cogeneration unit is defined as "a unit that produces electrical energy
and useful thermal energy for industrial, commercial, or heating or cooling purposes, through the
sequential or simultaneous use of the original fuel energy."3
2.2 Rationale for Collecting Information on Parent Company(s), NAICS code(s) and
Cogeneration
The purpose of collecting the name and physical address of the U.S. parent company(s) in
the annual reports for 40 CFR part 98 is to assist in aggregating facility-based GHG emissions
data to the corporate level. This additional data element allows EPA to compile more
comprehensive information on corporate GHG emissions and conduct a variety of analyses.
The data collected through this final rule would be immediately available to EPA and
could be used for the purposes of providing additional information to support more effective
research and develop actions to address GHG emissions. For example, corporate parent and
NAICS data would assist EPA in developing and improving emission inventories, as well as
characterize emissions data in several different ways. A more detailed understanding of the
sources and operational categories of GHG emissions could lead to improvements in air
pollution emissions information that is relied upon to develop effective control strategies. For
example, EPA could use the NAICS code information gathered by this rule to compare results
both within industries and across industry sectors.
3 40 CFR 72.2
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In addition, the information gathered through this rule will be immediately available to
enhance EPA's implementation of various nonregulatory programs aimed at encouraging
voluntary reductions of GHG emissions. Under the authority of CAA section 103, EPA has
launched a variety of nonregulatory programs aimed at reducing emissions of GHGs. The
additional data will assist EPA by providing more detailed information on possible sources, and
facility operations within industrial sectors for EPA to work with in the context of these
programs.
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Section 3
FACILITY- AND SUPPLIER-LEVEL COST ANALYSIS
EPA estimated the costs of complying with this final rule. The cost analysis estimates the
incremental contributions to total reporting burden expected under 40 CFR part 98 and
compliance costs associated with reporting the data elements described above. EPA estimated
compliance costs based on the time facilities and suppliers spend meeting the final rule
requirements and the associated labor wage rates. The cost analysis is based on industries
currently subject to 40 CFR part 98 and does not account for facilities expected to be added to
the program through upcoming actions.
3.1 Estimating the Loaded Hourly Wage Rates
The personnel responsible for reporting the required information are likely to vary by
industry sector and/or by facility. Table 3-1 provides estimates of the expected personnel titles,
labor categories, and loaded hourly wage rates used in the Mandatory Reporting of Greenhouse
Gas Emissions Final Rule Regulatory Impact Analysis.4
Table 3-1. Loaded Hourly Wage Rates by Labor Category
Personnel Tjpe
11 onrl> Wage Kale
Management
electricity manager
$88.79
refinery manager
$101.31
industrial manager
$71.03
Lawyer
$101.00
Average Management
$90.53
Technical
electricity engineer/technician
$60.84
refinery engineer/technician
$63.89
industrial engineer/technician
$55.20
Average Technical
$59.98
Mended U age Male
S(i0.22
To reflect that both management and technical staff will be involved in reporting the
above data elements, an overall blended wage rate was developed based on estimates from the
Toxic Release Inventory (TRI) program for similar data element reporting. Management staff is
4 U.S. EPA, 2009. Regulatory Impact Analysis for the Mandatory Reporting of Greenhouse Gas Emissions Final
Rule (GHG Reporting). September.
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estimated to be involved in approximately 0.8 percent of the reporting, while technical staff is
likely to be needed for the remaining 99.2 percent. Thus, the blended wage rate used in this
analysis is $60.22 per hour.
3.2 Estimating Facility and Supplier Reporting Burden
The burden estimates presented below are primarily based on EPA's professional
judgment. Under the final rule, affected facilities and suppliers ("reporters") would report U.S.
parent company information in their annual GHG emissions reports. It is assumed that more
time will be required in the first year of reporting as each reporter becomes familiar with the
requirement and locates and enters the relevant information. In subsequent years, it is assumed
that the information is pre-populated in a web application. Reporters will still need to spend time
to review the information and in some cases may need to revise it. Therefore, staff will continue
to spend time on the required data elements, but not as much as in the first year.
3.2.1 U.S. Parent Company Name, Address, and Percent Ownership
Under the final rule, reporters will provide the legal names and physical addresses of all
their U.S. parent companies together with each U.S. parent company's percentage of ownership.
Reporting entities will need to determine their ownership structure in order to identify and
determine the percent ownership of all of their U.S. parent companies. EPA assumes that each
reporter's staff will obtain this information from elsewhere in the company by requesting the
information via email, in-person request or a telephone call, or by checking files. Once obtained,
the information will be entered into the electronic reporting form and then reviewed as part of an
overall review of the submission.
The burden associated with reporting parent company name(s), address(es) and percent
ownership is summarized in Table 3-2. For reporters with one owner, the amount of time
required to identify the single U.S. parent company and to determine and provide its name,
address, and percent ownership is estimated to be 40 minutes per reporting entity in the first year
(20 minutes to identify/report name, 20 minutes to identify/report address) and 30 minutes per
reporting entity (20 minutes to identify/report name, 20 minutes to identify/report address) in
subsequent years.
Reporters with multiple owners would require additional time to determine and report the
names and addresses of all parent companies. EPA estimates an additional burden of 20 minutes
associated with identifying each parent company. EPA determined the incidence of reporters
with multiple parents in order to estimate the total industry burden for the final rule and, as
discussed in Section 4.1.1, has assumed that reporters with multiple parent companies would
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have, on average, three owners. Thus, in Table 3-2, EPA presents a burden estimate of 80
minutes to identify/report three parent company names and addresses in the first reporting year
(60 minutes to identify/report names, 20 minutes to identify/report addresses) and 70 minutes in
subsequent years (60 minutes to identify/report names, 10 minutes to identify/report addresses).
The final rule also requires reporters to specify the percent ownership of each owner in
addition to the legal name(s) and physical address(es). To obtain this information, EPA assumes
that each reporter's staff will consult with internal sources (e.g., legal or financial staff) or call
outside information sources, such as Dun and Bradstreet.5 While EPA anticipates that reporters
with one owner will not require additional time to determine and report percent ownership (as it
will equal 100%), the Agency estimates that reporters with multiple owners will require an
additional 5 minutes in all reporting years to determine and report this information. EPA expects
reporters with multiple owners to obtain information about various owners simultaneously, rather
than sequentially and therefore require minimal additional time. For example, a reporter may
obtain information about several owners via one consultation with legal or financial staff.
To summarize, the time burden for those reporting one U.S. parent company is 40
minutes per reporter in the first year and 30 minutes in subsequent years, and the time burden for
those reporting multiple U.S. parent companies is 85 minutes per reporter in the first year and 75
minutes in subsequent years. Thus, EPA anticipates that reporters with multiple U.S. parent
companies will incur an additional time burden of 45 minutes per facility per year as compared
to reporters with one parent company.
Reporting costs are calculated by multiplying the average hourly wage rate ($60.22/hr)
by the fraction of one hour (burden reported in minutes) in each year. Based on the information
available for this analysis, the reporting cost a reporter with one owner is $40.15 in the first year
and $30.11 in subsequent years. For a reporter with multiple owners, cost is estimated at $85.31
in the first year and $75.28 in subsequent years. Table 3-2 summarizes the time and financial
burden estimates per reporter.
5 Note that electric utilities are required to report this information to the Energy Information Administration, so
facility staff should already possess information on percent ownership. This information is reported on EIA Form
860, Schedule 4, and made publically available in the Annual Electric Generator Report database.
http://www.eia.doe.gov/cneaf/electricity/page/eia860.html
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Table 3-2. Summary of Burden Estimate Per Reporter For Parent Company Name(s),
Address(es), and Percent
3wnership.
Data Element
Blended
Hourly
Wage
Rate
($2006)
Year 1
(minutes)
Year 1 Cost
($2006/facility)
Subsequent
Years
(minutes)
Subsequent
Year Cost
($2006/facility)
l-'acililies \\ illi One Ow nei"'
U.S. Parent
Company
Name
$60.22
20
$20.07
20
$20.07
U.S. Parent
Company
Address
$60.22
20
$20.07
10
$10.04
Percent
Ownership13
$60.22
0
$0
0
$0
Total
$60.22
40
$40.15
30
$30.11
l-'acililies willi Multiple Owners'
U.S. Pareni
Company
Names
sou.::
ou
$60.22
ou
soo j:
U.S. Parent
Company
Addresses
$60.22
20
$20.07
10
$10.04
Percent
Ownership13
$60.22
5
$5.02
5
$5.02
Total
$60.22
85
$85.31
75
$75.28
aNumbers may not add due to rounding.
bFor facilities with one owner, EPA assumed time spent obtaining U.S. parent company name and address would be sufficient to
determine the percent ownership (100%). For facilities with more than one owner, EPA assumed an additional 5 minutes
would be necessary to determine and report percent ownership for each owner.
3.2.2 North American Industry Classification System (NAICS) Code(s) and Cogeneration
EPA requires reporters to also provide all North American Industry Classification System
(NAICS) code(s) associated with their operations, as well as an indication of whether or reported
emissions include those from one or more cogeneration units. It is assumed that the reporting
entity's staff will obtain their NAICS code(s) from elsewhere in the company by in-person
request, email, a telephone call, or by checking files available to the staff elsewhere in the
company. Staff will also determine whether the facility's energy consumption includes energy
derived from cogeneration by making a phone call, checking files, or making an in-person
information request. Once obtained, the information will be entered into the electronic reporting
form and then reviewed as part of an overall review of the submission. All facilities and
suppliers are required to report the primary NAICS code that most accurately describes the
primary product/activity/service at the facility, based on revenue. The primary
product/activity/service is the principal source of revenue for the facility or supplier. If
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necessary, reporters may provide up to two primary NAICS codes. Reporters will also provide
all additional NAICS codes that correspond to the product(s)/activity(s)/service(s) at the facility
that are not related to the principal source of revenue for the facility or supplier.
From an analysis of NAICS code reporting to EPA's Toxics Release Inventory (TRI)
program, over 99 percent of reporters listed three or fewer NAICS codes.6 Therefore, for the
purposes of estimating the potential costs of this rulemaking, it is assumed that each reporter will
report three NAICS codes. The amount of time required for a reporter to provide information for
additional NAICS codes is proportional to the number of NAICS codes: each additional code is
assumed to require the same reporting time as the primary NAICS code.
As shown in Table 3-3, the amount of time required at each facility to provide primary
and other applicable NAICS codes is estimated to be 10 minutes per NAICS code in the first
year and 2.5 minutes per NAICS code in subsequent years. In addition, the amount of time
required to determine whether a facility derives energy from cogeneration is estimated to be 10
minutes per facility in the first year and 2.5 minutes per facility in subsequent years. In total, the
amount of time to report these data elements (three NAICS codes plus cogeneration) is expected
to be 40 minutes in the first year and 10 minutes in subsequent years. Reporting costs are
calculated in the same way as discussed in section 3.2.1: by multiplying the average hourly wage
rate ($60.22/hr) by the burden estimate (time for labor expressed in minutes and converted to
hours) for each year. The resulting reporting cost per facility is $40.15 in the first year and
$10.04 in subsequent years.
Table 3-3. Summary of Burden Estimate for NAICS and Cogeneration Per Facility
Data Element
Blended
Hourly
Wage Rate
($2006)
First Year
(minutes)
Year 1 Cost
($2006/facility)
Subsequent Years
(minutes)
Subsequent
Year Cost
($2006/facility)
Primary Facility
NAICS Code
$60.22
10
$10.04
2.5
$2.51
Two Additional
NAICS Codes
$60.22
20
$20.07
5
$5.02
Facility Cogeneration
$60.22
10
$10.04
2.5
$2.51
Total Burden
$60.22
40
$40.15
10
$10.04
6 99.5% of TRI reporters in all reporting years (RY) provided three or fewer NAICS codes. In RY2008, 98.9% of
TRI reporters provided three or fewer NAICS codes. Source: TRI Public Data Releases.
http://www.epa.gOv/TRI/tridata/index.htm#pdr
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3.2.3 Summary of Burden Estimate Per Facility
In summary, the estimated total cost under this final rule is approximately $80 in the first
year and $40 in subsequent years for each reporter with one parent company and about $125 in
the first year and $85 in subsequent years for each reporter with more than one parent company.
As a result, this rule would only have a significant economic impact on facilities with annual
revenues of less than eight thousand ($8,000) dollars a year. Table 3-4 summarizes the burden
estimates on a per-reporter basis.
Table 3-4. Summary of Burden Estimate Per Reporter
Data Element
Blended
Hourly
Wage Rate
($2006)
First Year
(minutes)
Year 1 Cost
($2006/facility)
Subsequent
Years
(minutes)
Subsequent
Year Cost
($2006/facility)
l-'acililies willi One Pare
ill Compain
U.S. Parent Company
Name
20
$20.07
20
$20.07
U.S. Parent Company
Address
$60.22
20
$20.07
10
$10.04
Percent ownership
0
$0
0
$0
NAICS Code(s) and
Cogeneration
40
$40.15
10
$10.04
Totals
$60.22
80
$80.29
40
$40.15
l-'acililies willi More I hail One Parent ( ompain
U.S. Parent Company
Names
60
$60.22
60
$60.22
U.S. Parent Company
Addresses
$60.22
20
$20.07
10
$10.04
Percent ownership
5
$5.02
5
$5.02
NAICS Code(s) and
Cogeneration
40
$40.15
10
$10.04
Totals
$60.22
125
$125.46
85
$85.32
""Estimates assume reporters have three U.S. parent companies.
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Section 4
ECONOMIC ANALYSIS
EPA has prepared this EIA to provide decision makers with a measure of the incremental
costs of using industry resources to comply with the final rule. As noted in EPA's (2000)
Guidelines for Preparing Economic Analyses, several tools are available to estimate costs,
ranging from simple direct compliance cost options to the development of more complex market
analyses that estimate market changes (e.g., price and consumption) and economic welfare
changes (e.g., changes in consumer and producer surplus). This EIA estimates the direct
compliance costs per facility and supplier delineated by industry sectors and sources.
In addition, the cost analysis is based on facilities and suppliers currently subject to 40
CFR part 98, including subparts that were finalized after EPA proposed the Corporate Parent and
NAICS Reporting amendment.7 Specifically, the finalization of subparts T (Magnesium
Production), FF (Underground Coal Mines), TT (Industrial Waste Landfills), and II (Industrial
Wastewater Treatment) resulted in a higher number of facilities and suppliers subject to the final
Corporate Parent and NAICS Reporting amendment. This analysis does not account for facilities
and suppliers expected to be added to 40 CFR part 98 through upcoming actions. The methods
and assumptions used to estimate the compliance costs for facilities and suppliers currently
subject to the rule would likewise apply to industries that may be added to 40 CFR part 98 in the
future. Therefore, the addition of new facilities and suppliers would increase the total
compliance costs in proportion to the increase of the reporting universe. Accordingly, EPA does
not expect the burden for newly added industries to change the conclusions of this economic
analysis.
4.1 National Cost Estimates
The total national cost under this final rule is $944,000 in the first year and $470,000 in
subsequent years ($2006). These costs include a public sector burden estimate of $90,000 in the
first year and $40,000 in subsequent years for program implementation and verification
activities. A private sector burden estimate accounts for the remaining $854,000 in the first year
and about $430,000 in subsequent years.
Calculating the national compliance cost involves two steps. First, estimates of the
reporting cost per facility are calculated as weighted averages of cost for facilities with one
7 See Mandatory Reporting of Greenhouse Gases from Magnesium Production, Underground Coal Mines,
Industrial Wastewater Treatment, and Industrial Waste Landfills; Final Rule (75 FR 39736; July 12, 2010).
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parent company (99 percent) and cost for facilities with more than one parent company (1
percent). Second, the weighted average per-reporter reporting costs ($81 in first year and $41 in
subsequent years, see Table 4-3) are multiplied by the number of entities subject to the reporting
requirements (10,551 facilities, see Table 4-1) to generate the total industry compliance costs.
EPA has estimated reporting costs for the initial and subsequent reporting years, which
are summarized in Table 4-3. The estimates of the number of reporters and total costs are
conservative because some reporters are subject to more than one subpart. Given data
limitations, EPA could not accurately estimate the number of reporters likely to be subject to
more than one subpart and therefore likely overestimated the number of individual reporters. As
a result, the national cost estimate may exceed the actual costs.
Table 4-1. Number of Facilities and Suppliers Required to Report GHG Emissions by
Industry Sector
Industry
Number of
Other Industries
Number of
Facilities
Facilities
Stationary Combustion
3,000
Glass
55
Landfills
2,751
' Nitric Acid
45
Natural Gas Suppliers
1,502
Hydrogen
41
Electricity Generation
1,108
Ammonia
23
Pulp and Paper
566
Phosphoric Acid
14
Petroleum Product Suppliers
315
Aluminum
14
GHG Suppliers
167
C02 Suppliers
13
Petroleum Refineries
300
Lead
13
Iron and Steel
121
Magnesium Production
11
Underground Coal Mines
114
Ferroalloy
9
Cement
107
Titanium oxide
8
Lime
89
Zinc
5
Petrochemical
80
Soda Ash
5
Food Processing
63
Adipic Acid
4
Other
268 -
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Table 4-2. Facilil
ty Ownership in the Electric Utility Sector
Number of
()« lid's
Nil in her of
(il'IKTillUI'S
Percent ill' l oiiil
Cjcnoriilors
Pcrcenl of l-iicililios
with Multiple
()w ners
1
1,280
86.96%
-
2
121
8.22%
63.02%
3
29
1.97%
15.10%
4
15
1.02%
7.81%
5
8
0.54%
4.17%
6
7
0.48%
3.65%
7
2
0.14%
1.04%
8
3
0.20%
1.56%
9
1
0.07%
0.52%
10
0
0.00%
0.00%
11
0
0.00%
0.00%
12
2
0.14%
1.04%
13
1
0.07%
0.52%
14
1
0.07%
0.52%
15
0
0.00%
0.00%
16
2
0.14%
1.04%
Source: Energy Information Administration (EIA), Annual Electric Generator Report 2007. Form EIA-860 Database Annual
Electric Generator Report. Available at: http://www.eia.doe.gov/cneaf/electricitv/page/eia860.html.
Based on an analysis of the EIA data, approximately 13 percent of the utilities reported
multiple owners in 2007. Across this subset of electric utilities the average number of owners
was three.
In the other industry sectors subject to 40 CFR part 98, data are not readily available to
estimate the number of facilities with more than one corporate owner. While multiple
ownership is not uncommon in other sectors, no evidence has been found to quantify the
frequency of multiple ownership in other sectors subject to the rule. Facilities and suppliers in
other industries are still assumed to have only one U.S. parent company. Summing the total
industry cost for all industries and for each data element yields the national compliance cost
estimate. Table 4-3 provides the national burden (i.e., estimate of labor hours) and compliance
cost estimates for this final rule.
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Table 4-3. National Burden and Costs to Reporters by Data Element and Reporting Year
Data Element (by year)
Reporting Burden
(Hrs)
Reporting Cost
($2006)
Reporting Cost
per Facility"
U.S. Parent Company Name, Address, and Percent Ownership
First Year
7,142
$430,109
$40.77
Subsequent Years
5,384
$324,214
$30.73
Primary NAICS Code and Cogeneration
First Year
7,034
$423,582
$40.15
Subsequent Years
1,759
$105,895
$10.04
National Totals'3
First Year
14,176
$853,691
$80.91
Subsequent Years
7,142
$430,109
$40.77
a Reporting cost per facility values (see Table 3-4) are weighted averages of cost for facilities with one parent company (99
percent) and cost for facilities with more than one parent company (1 percent).
b Numbers may not add due to rounding.
A total of 10,551 facilities will incur roughly 14,000 hours and $850,000 in overall costs
to comply with the final rule in the first year and about 7,100 hours and $430,000 overall to
comply in subsequent years. Per facility, the average cost amounts to approximately $81 in the
first year and $41 in subsequent years.
4.2 Small Entity Analysis
EPA assessed the potential impacts of the final rule on small entities (small businesses,
governments, and non-profit organizations). The average ratio of annualized reporting program
costs to revenues would be less than 0.01 percent. As a result, EPA has concluded that this
action will not have a significant economic impact on a substantial number of small entities.
4.3 Synopsis of Benefits
EPA has supplemented its analysis the potential benefits of GHG reporting with an
assessment of the benefits of corporate parent and NAICS reporting. The benefits of a reporting
system are based on their relevance to policy making, transparency issues, and market efficiency.
In developing the GHG reporting program, EPA conducted a systematic literature review of
existing studies about the benefits. The greatest benefit of mandatory reporting of industry GHG
emissions to government will be realized in developing future GHG policies. Accurate and
transparent information is necessary for the implementation of efficient approaches that meet
environmental goals with the lowest cost to the economy. In addition, the GHG reporting
program will benefit the public by increased transparency of facility emissions data. See the
final rule that promulgated 40 CFR part 98 for additional discussion about the benefits of GHG
reporting (74 FR 56368; October 30, 2009).
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The additional data collected under today's final rule contributes to these benefits. As
discussed in Section 2.2 of this document, the data collected through this final rule would be
immediately available to EPA and could be used for the purposes of providing additional
information to support more effective research and develop actions to address GHG emissions.
For example, corporate parent and NAICS data would assist EPA in developing and improving
emission inventories, as well as characterize emissions data in several different ways. A more
detailed understanding of the sources and operational categories of GHG emissions could lead to
improvements in air pollution emissions information that is relied upon to develop effective
control strategies. For example, EPA could use the NAICS code information gathered by this
rule to compare results both within industries and across industry sectors. See Section 2.2 for
additional details regarding the use and benefits of the data collected under the program.
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Section 5
STATUTORY AND EXECUTIVE ORDER REVIEWS
5.1 Executive Order 12866: Regulatory Planning and Review
This action is not a "significant regulatory action" under the terms of Executive Order
(EO) 12866 (58 FR 51735, October 4, 1993) and is therefore not subject to review under the EO.
Although this is not a significant economic rule, EPA prepared an analysis of the
potential costs and benefits associated with the final amendment to provide insights on the
potential effects. This analysis is contained in the Economic Impact Analysis for this rule [EPA-
HQ-OAR-2009-0925], A copy of the analysis is available in the docket for this action and is
briefly summarized here. In the economic analysis, EPA has summarized the final rule and
presented a summary of the compliance burden and costs. The cost analysis, presented in Section
3, estimates the total annualized burden as follows:
Table 5-1. Cost Summary for Final Rulemaking
Cost
Year 1
Subsequent years
($ 1,000s)
($ 1,000s)
National compliance
$854
$430
Public
$90
$40
Total
$944
$470
Overall, EPA has concluded that the costs of the proposal to collect information on U.S. parent
company(s), NAICS, and co-generation information as part of 40 CFR part 98 are outweighed by
the potential benefits of more comprehensive information about GHG emissions.
5.2 Paperwork Reduction Act
The information collection requirements for the final amendments have been submitted
for approval to the Office of Management and Budget (OMB) under the Paperwork Reduction
Act, 44 U.S.C. 3501 et seq. An Information Collection Request (ICR) document was previously
prepared for the Final Mandatory Reporting of Greenhouse Gases Rule (40 CFR part 98) and
was assigned EPA ICR number 2300.03. The information collection requirements of the final
Corporate Parent, NAICS and Cogeneration Reporting amendment to 40 CFR part 98 are
documented in an additional ICR document, which was assigned EPA ICR number 2374.02.
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The data collected through this final rule would be immediately available to EPA and
could be used for the purposes of providing additional information to support more effective
research and develop actions to address GHG emissions. For example, corporate parent and
NAICS data would assist EPA researchers in developing and improving emission inventories, as
well as characterize emissions data in several different ways. A more detailed understanding of
the sources and operational categories of GHG emissions could lead to improvements in air
pollution emissions information that is relied upon to develop effective control strategies. For
example, EPA could use the NAICS code information gathered by this rule to compare results
both within industries and across industry sectors.
In addition, the information gathered through this rule will be immediately available to
enhance EPA's implementation of various nonregulatory programs aimed at encouraging
voluntary reductions of GHG emissions. Under the authority of CAA section 103, EPA has
launched a variety of nonregulatory programs aimed at reducing emissions of GHGs, including
Climate Leaders, Combined Heat and Power Partnership, and Energy Star. The additional data
will assist EPA by providing more detailed information on possible sources, and facility
operations within industrial sectors for EPA to work with in the context of these programs.
This information collection is mandatory and will be carried out under CAA section 114.
EPA published a proposed confidentiality determination on July 7, 2010 (75 FR 39094) that
specified which data reporting elements in 40 CFR part 98 would be treated as confidential
business information (CBI) and which data elements must be available to the public under
section 114 of the CAA. A final determination will be issued before any part 98 data is
released.
As outlined in the ICR for this final rule, the projected average annual cost and hour
burden for non-federal respondents is about $571,000 and 9,500 hours. The estimated average
annual burden per response is 0.15 hour; the proposed frequency of response is annual for all
respondents that must comply with the proposed amendments; and the estimated average number
of likely respondents per year is 10,551. The cost burden to respondents resulting from the
collection of information includes the total capital cost annualized over the equipment's expected
useful life (averaging $0), a total operation and maintenance component (averaging $0 per year),
and a labor cost component ($571,000 per year). Burden is defined at 5 CFR 1320.3(b). These
cost numbers differ from those shown elsewhere in this Economic Impact Analysis (EIA)
because ICR costs represent the average cost over the first three years of the rule whereas the
EIA reports costs separately for the first and subsequent years of the rule. Also, the total cost
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estimate of the rule in the EIA includes the cost to the Agency to administer the program. The
ICR differentiates between respondent burden and cost to the Agency.
An agency may not conduct or sponsor, and a person is not required to respond to, a
collection of information unless it displays a currently valid OMB control number. The OMB
control numbers for EPA's regulations in 40 CFR are listed in 40 CFR part 9.
5.3 Regulatory Flexibility Act (RFA)
The Regulatory Flexibility Act (RFA) generally requires an agency to prepare a
regulatory flexibility analysis of any rule subject to notice and comment requirements under the
Administrative Procedure Act or any other statute, unless the agency certifies that the rule will
not have a significant economic impact on a substantial number of small entities. Small entities
include small businesses, small organizations, and small governmental jurisdictions.
For purposes of assessing the impacts of the final rule on small entities, small entity is
defined as: (1) A small business as defined by the Small Business Administration's regulations at
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; and (3) a small
organization that is any not-for-profit enterprise which is independently owned and operated and
is not dominant in its field.
After considering the economic impacts of the final amendments on small entities, I
certify that this action will not have a significant economic impact on a substantial number of
small entities. The additional per-entity costs are small enough (less than $81 in year 1 and $41
in subsequent years) that the burden for the overall rule is not enough to constitute a significant
economic impact on a substantial number of small entities. The small entities directly regulated
by the final amendments include small businesses across all sectors encompassed by the rule,
small governmental jurisdictions and small non-profits. We have determined that some small
businesses will be affected because their production processes emit GHGs that must be reported,
or because they have stationary combustion units on site that emit GHGs that must be reported.
Small governments and small non-profits are generally affected because they have regulated
landfills or stationary combustion units on site, or because they own a local distribution company
subject to 40 CFR part 98, subpart NN (natural gas suppliers).
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At promulgation of 40 CFR part 98, EPA examined the impact on small entities (74 FR
56369). In addition, EPA described the steps the EPA took to reduce the impact of 40 CFR part
98 on small entities (74 FR 56369).
5.4 Unfunded Mandates Reform Act (UMRA)
Title II of the Unfunded Mandates Reform Act of 1995 (UMRA), 2 U.S.C. 1531-1538,
requires Federal agencies, unless otherwise prohibited by law, to assess the effects of their
regulatory actions on State, local, and tribal governments and the private sector. Federal
agencies must also develop a plan to provide notice to small governments that might be
significantly or uniquely affected by any regulatory requirements. The plan must enable officials
of affected small governments to have meaningful and timely input in the development of EPA
regulatory proposals with significant Federal intergovernmental mandates and must inform,
educate, and advise small governments on compliance with the regulatory requirements.
The final 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 one year. As shown in the Section 4, EPA estimated the several national cost estimates and
found annual expenditures were below $100 million threshold. Thus, the final rule is not subject
to the requirements of sections 202 or 205 of UMRA.
The final 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. The rule requires facilities already subject to 40 CFR part 98 to provide additional
data in each annual GHG report and the additional data elements required are the same for all
facilities and suppliers (private and public).
Nonetheless, EPA assessed the potential impacts of the final rule on small entities (small
businesses, governments, and non-profit organizations). The average ratio of annualized
reporting program costs to revenues would be less than 0.01 percent. As a result, EPA has
concluded that this action will not have a significant economic impact on a substantial number of
small entities.
This final rule applies to sources covered by 40 CFR part 98, which include facilities that
supply fuel or chemicals that when used emit greenhouse gases, and facilities that directly emit
greenhouses gases. The final amendments do not apply to governmental entities unless the
government entity owns a facility that directly emits greenhouse gases above threshold levels
such as a landfill or large stationary combustion source. In addition, this final rule does not
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impose any implementation responsibilities on State, local, or Tribal governments and it is not
expected to increase the cost of existing regulatory programs managed by those governments.
Thus, the impacts on governments affected by this final rule are expected to be minimal.
5.5 Executive Order 13132: Federalism
EO 13132, entitled "Federalism" (64 FR 43255, August 10, 1999), requires EPA to
develop an accountable process to ensure "meaningful and timely input by State and local
officials in the development of regulatory policies that have Federalism implications." "Policies
that have Federalism implications" is defined in the EO to include regulations that 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."
The final amendments do not have Federalism implications. They 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 EO 13132. However, for a more detailed discussion about how 40
CFR part 98 relates to existing State programs, please see Section II of the preamble to the
Mandatory Reporting of Greenhouse Gas Emissions Final Rule (74 FR 56266).
This final rule amendment applies directly to facilities that supply fuel or chemicals that
when used emit greenhouse gases or facilities that directly emit greenhouses gases. They do not
apply to governmental entities unless the government entity owns a facility that directly emits
greenhouse gases above threshold levels such as a landfill or large stationary combustion source,
so relatively few government facilities would be affected. This regulation also does not limit the
power of States or localities to collect GHG data and/or regulate GHG emissions. Thus, EO
13132 does not apply to the final amendments.
5.6 Executive Order 13175: Consultation and Coordination with Indian Tribal
Governments
The final amendments are not expected to have Tribal implications, as specified in EO
13175 (65 FR 67249, November 9, 2000). The final rule amendment applies directly to facilities
that supply fuel or chemicals that when used emit greenhouse gases or facilities that directly emit
greenhouses gases. The final amendments do not pose significant costs on either a per entity or
national basis; few, if any, facilities expected to be affected by the final amendments are
anticipated to be owned by Tribal governments. Thus, Executive Order 13175 does not apply to
the final amendments.
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However, EPA sought opportunities to provide information to Tribal governments and
representatives during development of 40 CFR part 98, as documented in the preamble to the
final GHG Reporting Rule (74 FR 56371).
5.7 Executive Order 13045: Protection of Children from Environmental Health Risks
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.
5.8 Executive Order 13211: Actions that Significantly Affect Energy Supply,
Distribution, or Use
This action is not subject to Executive Order 13211 (66 FR 28355 (May 22, 2001)),
because it is not a significant regulatory action under Executive Order 12866.
5.9 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 (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 options, sampling procedures, and business practices) that are
developed or adopted by voluntary consensus standards bodies. NTTAA directs EPA to provide
Congress, through OMB, explanations when the Agency decides not to use available and
applicable voluntary consensus standards.
This final rulemaking does not involve technical standards. Therefore, EPA is not
considering the use of any voluntary consensus standards.
5.10 Executive Order 12898: Federal Actions to Address Environmental Justice in
Minority Populations and Low-Income Populations
EO 12898 (59 FR 7629, February 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
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environmental effects of their programs, policies, and activities on minority populations and low-
income populations in the United States.
EPA has determined that the final rule amendment will not have disproportionately high
and adverse human health or environmental effects on minority or low-income populations
because they do not affect the level of protection provided to human health or the environment.
The final rule amendment does not affect the level of protection provided to human health or the
environment because it addresses information collection and reporting.
5.11 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 not a "major rule" as defined by 5 U.S.C. 804(2). This rule will be effective [INSERT
THE DATE 60 DAYS AFTER PUBLICATION IN THE FEDERAL REGISTER],
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