November 2010
Economic Impact Analysis for the
Mandatory Reporting of
Greenhouse Gas Emissions
F-Gases: Subparts I, L, DD, QQ, SS
Final Report
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CONTENTS
Section 1 Introduction and Background 1-1
1.1 Background 1-1
1.2 Final Rule: Fluorinated Greenhouse Gas Subparts 1-2
1.2.1 Subpart I: Electronics Manufacturing 1-3
1.2.2 Subpart L:Fluorinated Gas Production 1-3
1.2.3 Subpart DD: Electric Transmission and Distribution Equipment
Use 1-3
1.2.4 Subpart QQ: Imports and Exports of Fluorinated GHGs in Pre-
Charged Equipment and Closed-Cell Foams 1-4
1.2.5 Subpart SS: Electrical Equipment Manufacture or Refurbishment
and Manufacturing of Electrical Components 1-4
1.3 Economic Impact Analysis for F-Gas Subparts 1-4
Section 2 Regulatory Background 2-1
2.1 EPA's Overall Rulemaking Approach 2-1
2.1.1 Stakeholder Outreach to Identify Reporting Issues 2-1
2.1.2 Consideration of Comments Received 2-3
2.1.3 Analysis of Emissions by Sector 2-3
2.2 Statutory Authority 2-4
2.3 Existing Reporting Programs 2-4
Section 3 Development of Subparts 3-1
3.1 Subpart I - Electronics Manufacturing 3-1
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3.1.1 Definition of Affected Entities 3-1
3.1.2 Summary of Major Changes Since Proposal 3-2
3.1.3 Selection of Reporting Threshold 3-3
3.1.4 Selection of Monitoring Methods 3-4
3.1.5 Selection of Data Reporting Requirements 3-8
3.1.6 Selection of Recordkeeping Requirements 3-8
3.2 Subpart L - Fluorinated GHG Producers 3-9
3.2.1 Definition of Affected Entities 3-9
3.2.2 Summary of Changes Since the Initial Proposal 3-9
3.2.3 Selection of Reporting Threshold 3-11
3.2.4 Selection of Monitoring Methods 3-11
3.2.5 Selection of Data Reporting Requirements 3-12
3.2.6 Selection of Recordkeeping Requirements 3-12
3.3 Subpart DD—Electric Transmission and Distribution Equipment Use 3-12
3.3.1 Definition of Affected Entities 3-12
3.3.2 Summary of Changes Since Proposal 3-13
3.4 Subpart QQ - Importing/Exporting of Pre-charged Equipment and Foams 3-14
3.4.1 Definition of Affected Entities 3-14
3.4.2 Summary of Proposal 3-14
3.4.3 Summary of Changes Since the Proposal 3-15
3.4.4 Selection of Reporting Threshold 3-15
3.4.5 Selection of Monitoring Methods and QA/QC Requirements 3-16
3.4.6 Selection of Data Reporting Requirements 3-16
3.4.7 Selection of Recordkeeping Requirements 3-17
3.5 Subpart SS - Electrical Equipment and Components Manufacturing 3-17
3.5.1 Definition of Affected Entities 3-17
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3.5.2 Summary of Changes Since Proposal 3-18
3.5.3 Selection of Reporting Threshold 3-19
3.5.4 Selection of Monitoring Methods and QA/QC Requirements 3-19
3.5.5 Selection of Data Reporting Requirements 3-20
3.5.6 Selection of Recordkeeping Requirements 3-20
Section 4 Engineering Cost Analysis 4-1
4.1 Introduction 4-1
4.2 Overview of Cost Analysis 4-1
4.2.1 Baseline Reporting 4-1
4.2.2 Reporting Costs 4-2
4.3 Cost Analysis for Subpart I - Electronics Manufacturers 4-5
4.3.1 Model Facility Development 4-5
4.3.2 Determination of Cost Elements 4-6
4.3.3 Proportion of Facilities in the Different Model Facility Levels 4-8
4.3.4 Assigning Costs to Cost Elements 4-9
4.3.5 Estimation of Facility Costs for Each Threshold Level 4-15
4.4 Cost Analysis for Subpart L—Fluorinated Gas Production 4-15
4.4.1 Model Facility Development 4-15
4.4.2 Cost Analysis for Mass Balance Approach - Option 1 4-16
4.4.3 Cost Analysis for Option 2- Process Vent Testing 4-18
4.5 Cost Analysis for Subpart DD—Electric Power Systems 4-21
4.5.1 Model Facility Development 4-21
4.5.2 Determine Cost Elements 4-21
4.5.3 Proportion of Facilities in Different Model Facility Levels 4-22
4.5.4 Assigning Costs to Cost Elements 4-22
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4.5.5 Estimate per Facility Costs for Each Threshold Level 4-24
4.6 Cost Analysis for Subpart QQ—Imports and Exports of Fluorinated GHGs.... 4-24
4.6.1 Model Facility Development 4-24
4.6.2 Determine Cost Elements 4-26
4.6.3 Analyze Proportion of Facilities in the Different Model Facility
Categories 4-26
4.6.4 Assigning Costs to Cost Elements 4-27
4.6.5 Estimate per Facility Costs for Each Threshold Level 4-29
4.7 Subpart SS—Electrical Equipment Manufacturing 4-29
4.7.1 Model Facility Development 4-29
4.7.2 Determine Cost Elements 4-30
4.7.3 Analyze Proportion of Facilities in the Different Model Facility
Categories 4-31
4.7.4 Assigning Costs to Cost Elements 4-31
4.7.5 Other Costs 4-33
4.7.6 Estimate per Facility Costs for Each Threshold Level 4-33
4.8 Public Sector Burden 4-33
Section 5 Economic Impact Analysis 5-1
5.1 Selection of Reporting Thresholds 5-1
5.1.1 Subpart I- Electronics Manufacturing 5-1
5.1.2 Subpart L- Fluorinated Gas Production 5-3
5.1.3 Subpart DD- Sulfur Hexafluoride from Electric Power Systems 5-5
5.1.4 Subpart QQ- Imports and Exports of Fluorinated GHGs in Pre-
Charged Equipment and Closed-Cell Foams 5-6
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5.1.5 Subpart SS- Electrical Equipment Manufacture or Refurbishment
and Manufacturing of Electrical Components 5-7
5.1.6 National Emissions Covered Under Selected Thresholds 5-7
5.2 National Cost Estimates 5-8
5.3 Economic Impact Analysis 5-9
5.3.1 Overall Method of Assessing Economic Impacts 5-9
5.3.2 Assessing Economic Impacts on Small Entities 5-10
Section 6 Statutory and Executive Order Reviews 6-1
6.1 Executive Order 12866: Regulatory Planning and Review 6-1
6.2 Paperwork Reduction Act 6-1
6.3 Regulatory Flexibility Act 6-3
6.3.1 Identify Affected Sectors and Entities 6-3
6.3.2 Develop Small Entity Economic Impact Measures 6-4
6.3.3 Results of Screening Analysis 6-4
6.4 Unfunded Mandates Reform Act 6-5
6.5 Executive Order 13132: Federalism 6-6
6.6 Executive Order 13175: Consultation and Coordination with Indian Tribal
Governments 6-7
6.7 Executive Order 13045: Protection of Children from Environmental
Health and Safety Risks 6-7
6.8 Executive Order 13211: Actions that Significantly Affect Energy Supply,
Distribution, or Use 6-7
6.9 National Technology Transfer Advancement Act 6-8
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6.10 Executive Order 12898: Federal Actions to Address Environmental Justice
in Minority Populations and Low-Income Populations 6-8
Section 7 Conclusions 7-1
7.1 Summary of Sectors Covered 7-1
7.1.1 Subpart I - Electronics Manufacturing 7-1
7.1.2 Subpart L - Fluorinated GHG Producers 7-1
7.1.3 Subpart DD: Electric Transmission and Distribution Equipment
Use 7-2
7.1.4 Subpart QQ - Importing/Exporting of Pre-charged Equipment and
Foams 7-2
7.1.5 Subpart SS - Electrical Equipment and Components
Manufacturing 7-3
7.2 Estimated Costs and Impacts of the GHG Reporting Program 7-3
Section 8 References 8-1
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LIST OF TABLES
Table 4-1. Labor Categories and Hourly Rates 4-4
Table 4-2. Number of Representative Affected Entities Used in the Cost Analysis 4-9
Table 4-3. Labor Categories and Hourly Rates 4-10
Table 4-4. Responsibilities for Regulation Compliance by Labor Category Per Facility
Category 4-11
Table 4-5. Subpart L - F-Gas Mass Balance Approach: Labor Costs (2006$) 4-18
Table 4-6. Subpart L - F-Gas Mass Balance Method: Capital and O&M Costs (2006$) 4-18
Table 4-7. Subpart L - F-Gas Process Vent (Avg. per plant basis): Labor Costs (2006$).... 4-20
Table 4-8. Subpart L - F-Gas Process Vent Method: Capital and O&M Costs (2006$) 4-20
Table 4-9. Subpart L - F-Gas Typical Facility: Labor Costs (2006$)Error! Bookmark not defined.
Table 4-10. Subpart L - F-Gas Typical Facility: Capital and O&M Costs (2006$)Error! Bookmark not define
Table 4-11. Labor Categories and Hourly Rates 4-22
Table 4-12. Responsibilities for Regulation Compliance by Labor Category 4-23
Table 4-13. Other Costs Associated with Reporting and Recordkeeping 4-24
Table 4-14. Number of Representative Affected Entities Used in the Cost Analysis 4-26
Table 4-15. Allocation of Facilities to Model Types 4-27
Table 4-16. Labor Categories and Hourly Rates 4-27
Table 4-17. Responsibilities for Regulation Compliance by Labor Category 4-28
Table 4-18. Number of Representative Affected Entities Used in the Cost Analysis 4-30
Table 4-19. Labor Categories and Hourly Rates 4-31
Table 4-20. Responsibilities for Regulation Compliance by Labor Category Per Facility 4-32
Table 4-21. Other Costs Associated with Reporting and Recordkeeping 4-33
Table 5-1. Threshold Analysis for Subpart I - Electronics Manufacturing Industry 5-2
Table 5-2. Summary of Rule Applicability under the Proposed Emission-Based
Thresholds for Subpart I - Electronics Manufacturing Industry 5-3
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Table 5-3. Threshold Analysis for Fluorinated GHG Emissions from Production of
HFCs, PFCs, SF6, NF3, CFCs, and HCFCs (Uncontrolled Emissions) 5-4
Table 5-4. Threshold Analysis for Fluorinated GHG Emissions from Production of
HFCs, PFCs, SF6, NF3, CFCs, and HCFCs (Controlled Emissions) 5-5
Table 5-5. Threshold Analysis for Subpart DD - Electric Power Systems 5-6
Table 5-6. Threshold Analysis for Subpart QQ-Imports of Fluorinated GHGs in Pre-
Charged Equipment and Closed-Cell Foams 5-6
Table 5-7. Threshold Analysis for Subpart QQ-Exports of Fluorinated GHGs in Pre-
Charged Equipment and Closed-Cell Foams 5-7
Table 5-8. Threshold Analysis for Subpart SS- Electrical Equipment Manufacture or
Refurbishment and Manufacturing of Electrical Components 5-7
Table 5-9. Estimates of Emissions (MtCC^e) Reported in 2008 Under the Selected
Option 5-8
Table 5-10. National Cost Estimates by Subpart: Selected Option 5-9
Table 5-11. Number of Establishments by Affected Industry and Enterprise Size: 2002 5-12
Table 5-12. Receipts by Affected Industry and Enterprise11 Size ($2002 Million) 5-14
Table 5-13. Establishment Sales Tests by Industry and Enterprise21 Size: First Year Costs.... 5-17
Table 5-14. Establishment Sales Tests by Industry and Enterprise11 Size: Subsequent
Years Costs 5-19
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SECTION 1
INTRODUCTION AND BACKGROUND
1.1 Background
On December 26, 2007, President Bush signed the FY2008 Consolidated Appropriations
Act authorizing funding for EPA to issue a rule requiring the mandatory reporting of greenhouse
gas (GHG) emissions (Consolidated Appropriations Act, 2008, Pub. L. No.110-161, 121 Stat
1844, 2128 (2008)). An accompanying joint explanatory statement directed EPA to "use its
existing authority under the Clean Air Act" to develop a mandatory GHG reporting rule.
The Final Mandatory Reporting of Greenhouse Gases Rule (Final MRR) (40 CFR part
98) was signed on September 22, 2009 by Administrator Lisa Jackson; and published in the
Federal Register on October 30, 2009 (74 FR 56260). The Final MRR, which is effective on
December 29, 2009, included reporting of GHGs from the facilities and suppliers that EPA
determined appropriately responded to the direction in the 2008 Consolidated Appropriations
Act1. These source categories capture approximately 85 percent of U.S. GHG emissions through
reporting by direct emitters as well as suppliers of fossil fuels and industrial gases.
EPA initially proposed reporting requirements for electronics, fluorinated GHG
production, and electrical equipment use on April 12, 2009 (74 FR 16448) as part of the larger
rulemaking effort to establish a GHG reporting program for all sectors of the economy. In
addition, EPA requested comment on requiring reporting of the quantities of fluorinated GHGs
imported and exported inside pre-charged equipment and foams. However, EPA did not include
requirements for these source categories in the Final Mandatory GHG Reporting Rule.
EPA deferred action on these requirements because EPA received a number of lengthy,
detailed comments regarding the proposed requirements for electronics and fluorinated GHG
production (subparts I and L, respectively), several comments regarding the definition of
"facility" for electric power system use (Subpart DD), and several comments regarding a
reporting requirement for imports and exports of fluorinated GHGs contained inside pre-charged
equipment and foams (included in today's final rule as Subpart QQ). These comments, which
are described in more detail in the discussions of the individual source categories in the April 12,
2010 proposed rule, raised concerns about the costs and technical feasibility of implementing
subparts I and L as initially proposed, requested clarification of how "facility" should be
interpreted under subpart DD, and both favored and opposed a requirement to report imports of
1 Consolidated Appropriations Act, 2008, Public Law 110-161, 121 Stat. 1844, 2128.
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fluorinated GHGs contained in imported and exported pre-charged equipment and closed-cell
foams.
EPA recognized the concerns raised by stakeholders, and decided to re-propose
significant pieces of these subparts. The revised proposed rule was published in the Federal
Register on April 12, 2010. A public hearing on the proposed rule was held on April 20, 2010 in
Washington, DC, and the 60-day public comment period ended on June 11, 2010.
For subparts I and L this rule incorporates a number of changes including, but not limited
to, the addition of different methodologies that provide improved emissions coverage at a lower
cost burden to facilities as compared to the initial April 2009 proposal. Where aspects of the
initial proposals for subparts I and L are retained in this rule, such as in the basic mass-balance
methodology for subpart L (as an option for some facilities) and in many of the equations for
subpart I, today's rule adds more flexibility in how and how frequently the underlying data are
gathered. In addition, EPA is requiring facilities to report emissions from manufacture or
refurbishment of electrical equipment and to report the quantities of fluorinated GHGs imported
and exported inside pre-charged equipment and foams.
EPA believes the monitoring approaches required in this rule, which combine direct
measurement and facility-specific calculations, effectively balance accuracy and costs, and that
they are warranted even though the rule does not contain any emissions reduction requirements.
As we stated in the October 2009 Final MRR, the data collected by the rule are expected to be
used in analyzing and developing a range of potential CAA GHG policies and programs. A
consistent and accurate data set is crucial to serve this intended purpose.
1.2 Final Rule: Fluorinated Greenhouse Gas Subparts
This rule requires reporting of fluorinated greenhouse gas (F-GHG) emissions from
electronics manufacturing, production of fluorinated gases, and use of electric transmission and
distribution equipment. EPA is also requiring such reporting from manufacturers of electrical
equipment, import and export of pre-charged equipment, and closed cell foams. These F-GHG
source categories are covered under Subparts I, L, DD, QQ, and SS of the rule. This section
provides a brief introduction to the industries covered by each subpart and identifies which
subparts were included in the initial proposal.
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1.2.1 Subpart I: Electronics Manufacturing
The electronics manufacturing source category consists of facilities that manufacture
semiconductors, liquid crystal displays (LCDs), micro-electro-mechanical systems (MEMS),
photovoltaic cells (PV), and light-emitting diodes (LEDs).The rule applies to electronics
manufacturing facilities that emit GHGs from electronics manufacturing processes such as
plasma etching, chemical vapor deposition, chamber cleaning, and heat transfer fluid use.
Subpart I was included in the initial MRR proposal but omitted from the final rule. EPA
received comments from entities within the covered industries regarding the requirements put
forth in the initial proposal. EPA took these comments into consideration in the development of
this final rule.
1.2.2 Subpart L:Fluorinated Gas Production
The fluorinated gas production source category consists of processes that manufacture a
fluorinated gas from any raw material or feedstock chemical, except for processes that generate
HFC-23 during the production of HCFC-222. Under the rule, these facilities would be required
to report their fluorinated GHG emissions from fluorinated gas production, transformation, and
destruction, as well as combustion-related CO2, CH4 and nitrous oxide (N2O) emissions from
stationary fuel combustion. Fluorinated gases include fluorinated GHGs (HFCs, PFCs, SF6,
NF3, HFEs, etc.), CFCs, and HCFCs. Similarly, emissions of CFCs and HCFCs (considered
ozone depleting substances rather than F-GHG) are addressed under the regulations
implementing Title VI of the Clean Air Act and are therefore excluded from this subpart.
Like Subpart I, Subpart L was included in the initial MRR proposal but omitted from the
final rule. After receiving comments on the proposed regulation, EPA has modified the rule with
respect to entities under this subpart.
1.2.3 Subpart DD: Electric Transmission and Distribution Equipment Use
The electric transmission and distribution equipment use source category includes gas-
insulated substations, circuit breakers, other switchgear, and gas-insulated lines containing SF6 or
PFCs. Equipment also includes gas containers such as pressurized cylinders, gas carts, new
equipment owned but not yet installed, or other containers. Notwithstanding the definition of
facility in subpart A, for purposes of this subpart, "facility" means an electric transmission and
2 Since HFC-23 emissions for HCFC-22 production are addressed under Subpart O, they are omitted from this
subpart.
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distribution system which is the collection of SF6- and PFC insulated equipment linked through
electric power transmission or distribution lines and operated as an integrated unit by one electric
power entity or several entities that have a single owner.
Regulation of Subpart DD was proposed under the initial MRR, but was excluded after
EPA received several comments regarding the definition of "facility" as it would be covered
under the rule. After taking these comments under consideration, EPA has clarified the
definition for this final rule.
1.2.4 Subpart QQ: Imports and Exports of Fluorinated GHGs in Pre-Charged Equipment
and Closed-Cell Foams
This source category consists of any entity that is importing or exporting pre-charged
equipment that contains a fluorinated GHG and also includes any entity that is importing or
exporting closed-cell foams that contain a fluorinated GHG.
Today's rule introduces Subpart QQ as a new addition to the MRR. This source category
was not proposed in the initial rule.
1.2.5 Subpart SS: Electrical Equipment Manufacture or Refurbishment and Manufacturing
of Electrical Components
This source category consists of electrical equipment manufacturers and refurbishers of
SF6 or PFC-insulated closed-pressure equipment and sealed-pressure equipment including gas-
insulated substations, circuit breakers and other switchgear, gas-insulated lines, or power
transformers containing sulfur-hexafluoride (SF6) or perfluorocarbons (PFCs).Like Subpart QQ,
this source category was not covered under the initial MRR proposal and final rule.
1.3 Economic Impact Analysis for F-Gas Subparts
As part of the regulatory process of developing these rules, EPA is required to conduct an
economic impact analysis (EIA). This report documents the EIA methods and results and
proceeds as follows: Section 2 describes the current regulatory context into which the new rules
will be integrated. Section 3 explains the development process for each of the four subparts, and
Section 4 details the individual cost analyses methodology used to evaluate each regulation.
Section 5 presents the results of the economic impact analysis. A review of executive orders is
provided in Section 6, which is followed by a brief EIA summary and conclusion in Section 7.
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SECTION 2
REGULATORY BACKGROUND
The intent of this rule is to collect accurate and timely GHG emissions data that can be
used to inform future policies. Although the mandatory GHG rule is unique, EPA carefully
considered other federal and state programs during development of the rule. The reporting
program will supplement rather than duplicate other U.S. government GHG programs. We
outline EPA's overall rulemaking approach, statutory authority, and summarize our review of
GHG monitoring protocols below.
2.1 EPA's Overall Rulemaking Approach
The greenhouse gas reporting program will provide comprehensive and accurate data
which will inform future climate change policies. Potential future climate policies include
research and development initiatives, economic incentives, new or expanded voluntary
programs, adaptation strategies, emission standards, a carbon tax, or a cap-and-trade program.
Because we do not know at this time the specific policies that will be adopted, the data reported
through the greenhouse gas reporting system should be of sufficient quality to support a range of
approaches.
To these ends, we identified the following goals of the greenhouse gas reporting system:
Obtain data that is of sufficient quality that it can be used to support a range of
future climate change policies and regulations.
Balance the rule coverage to maximize the amount of emissions reported while
excluding small emitters.
Create reporting requirements that are consistent with existing GHG reporting
programs by using existing GHG emission estimation and reporting methodologies to
reduce reporting burden, where feasible.
2.1.1 Stakeholder Outreach to Identify Reporting Issues
Early in the development process, we conducted a proactive communications outreach
program to inform the public about the rule development effort. We solicited input and
maintained an open door policy for those interested in discussing the rulemaking. Since January
2008, EPA staff has held more than 100 meetings with stakeholders, including the following:
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trade associations and firms in potentially affected industries/sectors;
state, local, and tribal environmental control agencies and regional air quality
planning organizations;
state and regional organizations already involved in GHG emissions reporting,
such as TCR, CARB, and Western Climate Initiative (WCI); and
environmental groups and other nongovernmental organizations.
We also met with U.S. Department of Energy (DOE) and U.S. Department of
Agriculture (USDA), which have programs relevant to GHG emissions.
During the meetings, we shared information about the statutory requirements and
timetable for developing a rule. Stakeholders were encouraged to provide input on key issues.
Examples of topics discussed included existing GHG monitoring and reporting programs and
lessons learned, thresholds for reporting, schedules for reporting, scope of reporting, handling of
confidential data, data verification, and the role of states in administering the program. As
needed, the EPA technical workgroups followed up with these stakeholder groups on a variety of
methodological, technical, and policy issues. EPA staff also provided information to tribes
through conference calls with different Indian tribal working groups and organizations at EPA
and through individual calls with tribal board members of TCR.
For a full list of organizations EPA met with when developing this rule please see the
memo found at EPA-HQ-OAR-2008-0508-055.
On April 10, 2009 (74 FR 16448), EPA proposed the GHG reporting rule. EPA held two
public hearings, and received over 16,000 written public comments. The public comment period
ended on June 9, 2009.
In addition to the public hearings, EPA had an open door policy, similar to the outreach
conducted during the development of the proposal. As a result, EPA met with over 4,000 people
and 135 groups between proposal signature (March 10, 2009) and the close of the comment
period (June 9, 2009). Details of these meetings are available in the docket (EPA-HQ-OAR-
2008-0508). EPA also visited two fluorinated gas production facilities and conducted multiple
meetings and conference calls with fluorinated gas producers in order to better understand the
current practices and issues associated with measuring emissions of fluorinated GHGs from
fluorinated gas production facilities.
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2.1.2 Consideration of Comments Received
In the April 2009 proposed mandatory GHG reporting rule, the electronics, fluorinated
GHG production, and use of electrical equipment source categories were included as subparts I,
L, and DD. In addition, EPA requested comment on requiring reporting under subpart 00 of the
quantities of fluorinated GHGs imported and exported inside pre-charged equipment and foams.
EPA received a number of lengthy, detailed comments regarding proposed subparts I and L,
several comments regarding the definition of "facility" under subpart DD, and several comments
regarding a reporting requirement for imports and exports of F-GHGs contained inside pre-
charged equipment and foams. These comments, which are described in more detail in the
discussions of the individual source categories in the proposed rule, raised concerns about the
costs and technical feasibility of implementing subparts I and L as initially proposed, requested
clarification of how "facility" should be interpreted under subpart DD, and both favored and
opposed a requirement to report imports of F-GHGs contained in imported and exported pre-
charged equipment and closed-cell foams. EPA recognized the concerns raised by stakeholders,
and decided not to finalize subparts I, L, and DD with the Final MRR, but chose instead to re-
propose significant pieces of these subparts in April, 2010.
The re-proposed rule incorporated a number of changes including, but not limited to,
different methodologies that provide improved emissions coverage at a lower cost burden to
facilities than would have been covered under the initial proposed rule. In addition, EPA
proposed requirements to report the quantities of fluorinated GHGs imported and exported inside
pre-charged equipment and foams, and to report emissions from manufacture of electrical
equipment, which are covered under Subparts QQ and SS. This rule was published in the
Federal Register on April 12, 2010. During the 60-day comment period following the public
hearing for the rule, EPA received further requests from commenters for clarification and
revisions to certain aspects of the each subpart. EPA took these comments into account while
developing today's final rules for the F-gas subparts.
2.1.3 Analysis of Emissions by Sector
For each of the source categories considered for this rule, EPA compiled information on
current conditions in the category, including information about existing monitoring equipment or
reporting frameworks, estimated emissions of GHGs, and estimated productive capacity or
throughput. Incremental costs of measuring GHG emissions and conducting reporting activities
were estimated under multiples scenarios. The cost estimates and analysis methodologies are
detailed in Sections 4 and 5 of this report.
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2.2 Statutory Authority
As proposed, EPA is promulgating this rule under its existing CAA authority;
specifically, authorities provided in CAA section 114. As discussed in detail in Sections I.C and
II.Q of the preamble to the final rule establishing the GHG Reporting Program (74 FR 56260,
October 30, 2009), CAA section 114 provides EPA with broad authority to require information
mandated by this rule, because such data will inform and are relevant to EPA's carrying out a
wide variety of CAA provisions. Under CAA section 114(a)(1), the Administrator may require
emissions sources, persons subject to the CAA, or persons whom the Administrator believes may
have necessary information to monitor and report emissions and provide such other information
as the Administrator requests for the purposes of carrying out the provisions in the CAA (except
for a provision of title II with respect to motor vehicles).
As discussed in greater detail in "Mandatory Reporting of Greenhouse Gases, EPA's
Response to Public Comment's Section 3- Legal Issues" (EPA-HQ-OAR-2008-0508), the CAA
provides EPA with broad authority to require the comprehensive and accurate information
mandated in this rule because such data will inform, and are relevant to, EPA's analyses of
various CAA provisions. EPA may gather information for a variety of purposes, including for
the purpose of assisting in the development of implementation plans or of emissions standards
under CAA section 111, determining compliance with implementation plans or such standards,
or more broadly for "carrying out any provision" of the CAA. In addition, CAA section 103
authorizes EPA to establish a national research and development program, including non-
regulatory approaches and technologies for the prevention and control of air pollution as it
relates to GHGs and climate change.
2.3 Existing Reporting Programs
In addition to the greenhouse gas reporting program, a number of voluntary and
mandatory GHG programs already exist or are being developed at the State, regional, and
Federal levels. These programs have different scopes and purposes. Many focus on GHG
emission reduction, whereas others are purely reporting programs. In addition to the GHG
programs, other Federal emission reporting programs and emission inventories are relevant to the
GHG reporting rule. Several of these programs are summarized in this section.
Since the 1990s, EPA has operated a number of non-C02 voluntary partnership programs
aimed at reducing emissions from GHGs such as methane, SF6, and PFCs. There are two sector-
specific partnerships to reduce SF6 emissions: the SF6 Emission Reduction Partnership for
Electric Power Systems, with over 80 participating utilities, and the SF6 Emission Reduction
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Partnership for the Magnesium Industry. Partners in these programs implement practices to
reduce SF6 emissions and prepare corporate-wide annual inventories of SF6 emissions using
protocols and reporting tools developed by EPA. There are also two partnerships focused on
PFCs: The Voluntary Aluminum Industrial Partnership (VAIP) promotes technically feasible and
cost-effective actions to reduce PFC emissions; industry partners track and report PFC emissions
reductions. Similarly, the Semiconductor Industry Association and EPA formed a partnership to
reduce PFC emissions in which a third party compiles data from participating semiconductor
companies and submits an aggregate (not company-specific) annual PFC emissions report.
In developing the rule, we carefully reviewed the existing reporting programs,
particularly with respect to emissions sources covered, thresholds, monitoring methods,
frequency of reporting and verification. States may have, or intend to develop, reporting
programs that are broader in scope or are more aggressive in implementation because those
programs are either components of established reduction programs (e.g., cap and trade) or being
used to design and inform measures that reduced GHGs indirectly (e.g., energy efficiency).
Where possible, we built upon concepts in existing Federal and State programs in developing the
mandatory GHG reporting rule. For a full summary of the reporting programs reviewed in the
development of the mandatory reporting rule please see the Regulatory Impact Analysis for the
Mandatory Reporting of Greenhouse Gas Emissions EPA-HQ-OAR-2008-0508.
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SECTION 3
DEVELOPMENT OF SUBPARTS
The F-Gas source categories included in this rule are:
Subpart I -Electronics Manufacturing;
Subpart L - Fluorinated Gas Production;
Subpart DD - Electric Transmission and Distribution Equipment Use
Subpart QQ - Imports and Exports of Fluorinated GHGs in Pre-Charged
Equipment and Closed-Cell Foams; and
Subpart SS - Electrical Equipment Manufacture or Refurbishment and
Manufacturing of Electrical Components.
This section provides additional details about the development of these subparts (e.g.,
which were included in the initial proposal and which subparts are new additions to the original
MRR). For each subpart, this section also provides a brief description of required monitoring
methods and data reporting and recordkeeping requirements.
3.1 Subpart I - Electronics Manufacturing
3.1.1 Definition of Affected Entities
Electronics manufacturing includes, but is not limited to, the manufacture of
semiconductors, liquid crystal displays (LCDs), microelectromechanical (MEMS), and
photovoltaic cells (PV). The electronics industry uses multiple long-lived F-GHGs such as
perfluorocarbons (PFCs), Hydrofluorocarbons (HFCs), sulfur hexafluoride (SF6), and nitrogen
trifluoride (NF3), as well as nitrous oxide (N2O). This rule would apply to electronics
manufacturing facilities that emit equal to or greater than 25,000 metric tons of C02e per year3
from electronics manufacturing processes such as plasma etching, chemical vapor deposition,
chamber cleaning, and heat transfer fluid use.
3 As discussed further below, EPA is proposing that uncontrolled emissions be used for purposes of determining
whether a facility's emissions are equal to or greater than 25,000 mtC02e.
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In this action, EPA is designating methods to estimate emissions from cleaning and
etching processes for semiconductor, LCD, MEMS, and PV manufacture and also methods for
estimating N2O emissions from deposition and other manufacturing processes such as chamber
cleaning. EPA is also clarifying methods for estimating emissions from heat transfer fluids.
EPA is also presenting methods for reporting controlled emissions from abatement systems.
3.1.2 Summary of Major Changes Since Proposal
The April 2010 proposal included the following reporting provisions for electronics
manufacturers: (1) a single emissions-based reporting threshold for semiconductor, LCD,
MEMS, and PV facilities; (2) modified methods for estimating emissions from cleaning and
etching activities for semiconductor facilities and other electronics facilities including those that
manufacture LCDs, MEMS, and PV; (3) methods for estimating facility N2O emissions; (4)
clarified methods for estimating emissions from heat transfer fluids; and (5) revised methods for
reporting controlled emissions from abatement equipment.
After considering comments in response to the April 2010 proposal, EPA has further
revised and clarified the regulations on the electronics manufacturing industry for today's final
rule. The changes to the rule include the following:
EPA has revised the methodology for semiconductor manufacturing facilities to
require affected facilities4 to estimate and report emissions from etching and cleaning
using five process categorizations differentiated by two wafer technologies (150/200
mm and 300 mm wafer size).
EPA has added a requirement for the largest semiconductor facilities (defined as
facilities with annual capacities of greater than 10,500 m2 of silicon) to estimate and
report their emissions from the plasma etching process type using directly measured
recipe-specific emission factors, (i.e. using an approach consistent with the 2006
IPCC Tier 3 method).
EPA has modified the procedures by which facilities must develop gas
consumption apportioning factors. Facilities are required to apportion gas
consumption using facility-specific engineering models based on quantifiable metrics
of fluorinated GHG-using activity and to document and verify these models, as
specified by EPA, in site GHG Monitoring Plan (as required under 40 CFR 98.3).
EPA will permit the use of facility-specific models based on quantifiable metrics,
such as wafer pass or wafer starts, provided a facility acceptably documents and
verifies the model.
4 Covers facilities that have emissions equal to or greater than 25,000 mtC02e
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EPA has revised the requirement to recalculate gas- and facility-specific heel
factors by requiring facilities to recalculate these factors if the trigger point for
change out used to establish a gas- and facility-specific heel factors differs by more
than 5 percent from the previous trigger point.
EPA has added methods by which to calculate uptime and the DRE for a specific
gas/categorization set. EPA has also modified how uptime is calculated by defining
an "operational mode" for abatement systems.
EPA has further defined direct recipe-specific measurements (i.e., an approach
based on the 2006 IPCC Tier 3 method) by adding definitions for "individual recipe"
and "similar recipes."
EPA has added provisions for the largest facilities to submit extension requests
for only specific monitoring requirements and QA/QC standards demonstrating that it
is not reasonable feasible to implement the use of a quantifiable indicator for
apportioning gas to all etch processes and obtain directly measured emission factors
for all etch processes at the facility. This extension request is in addition to
permitting the use of BAMM through March 31,2011. EPA does not anticipate
approving extension requests beyond December 31, 2011 except in extreme
circumstances which include safety, a requirement being technically infeasible or
counter to other local, State or Federal regulations.
EPA has added provisions for facilities that manufacture LEDs to estimate and
report their emissions using an approach based on two process types, plasma etching
and chamber cleaning, and default emission factors (utilization and by-product
formation rates).
3.1.3 Selection of Reporting Threshold
Under this rule, facilities that manufacture semiconductors, LCD, MEMS, and PV would
be subject to an emissions-based threshold of 25,000 mtC02e. Consistent with other sections of
the Final MRR, for the purposes of determining whether a facility emits equal to or greater than a
25,000 mtC02e, a facility must include emissions from all source categories for which methods
are provided in the rule. For purposes of the threshold determination under subpart I, EPA is
offering two different methods, depending on whether the facility manufacturers semiconductors,
MEMS, LCDs or PVs. It is important to note that these methods are only for determining
whether a facility exceeds the threshold; methods required for monitoring and reporting
emissions data are presented in sections 3.1.5 and 3.1.6 below.
To determine whether a manufacturer falls above or below the 25,000 metric tons of
C02e threshold, EPA is requiring that semiconductor, MEMS, and LCD facilities use gas
specific emission factors assuming 100% manufacturing capacity to calculate annual metric tons
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of emissions in CO2 equivalents. Because we understand that heat transfer fluids are widely used
within semiconductor manufacturing, EPA is requiring that semiconductor manufacturers add
10% of total clean and etch emissions at a facility to their estimate. PV facilities must multiply
annual fluorinated GHG purchases or consumption by the gas-appropriate 100-year GWPs, as
defined in Table A-l of Subpart A of Part 98, to calculate annual metric tons of emissions in CO2
equivalents.
EPA is requiring an emissions estimating method that does not account for destruction by
abatement equipment because actual emissions from facilities employing abatement equipment
may exceed estimates when based on the manufacturers' rated DREs of the equipment and may
therefore exceed the 25,000 metric tons C02e threshold without the knowledge of the facility
operators. When abatement equipment is used, electronics manufacturers often estimate their
emissions using the manufacturer-supplied DRE for the equipment. However, abatement
equipment may fail to achieve its rated DRE either because it was not installed properly, is not
being properly operated and maintained, or because the DRE value itself was incorrectly
measured due to a failure to properly account for the effects of dilution.
EPA is imposing an emissions-based threshold in response to comments received on the
initial proposal that stated the proposed capacity-based threshold created ambiguity. EPA
believes an emissions-based threshold will simplify the applicability determination and that by
applying the method for determining whether the threshold is met, a facility will be able to
quickly determine whether they must report under this rule.
3.1.4 Selection of Monitoring Methods
Today's rule specifies methods to monitor and estimate fluorinated GHG and N2O
emissions from semiconductor, LCD, MEMS, and PV manufacture. The methods discussed
below include the following:
estimating emissions from cleaning and etching processes;
estimating facility N20 emissions;
estimating emissions from heat transfer fluids; and
reporting controlled emissions from abatement systems.
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The methods described in this section are for estimating emissions that are required to be
reported under this subpart.
3.1.4.1 GHG Emissions Calculations and Monitoring Overview
To calculate fluorinated GHG and N2O emissions from electronics manufacturing
facilities, reporters (i.e. covered facilities) must use the following methods, as appropriate.5
Fluorinated GHG emissions from electronics manufacturing production processes
All electronics manufacturing facilities are required to calculate fluorinated GHG
emissions from etch and clean processes by estimating emissions of input fluorinated GHGs and
of by-product fluorinated GHGs. This is done by applying utilization factors and by-product
formation factors (collectively referred to as "emission factors" below) to the consumption of
each fluorinated GHG by each process type, process sub-type or recipe, as appropriate. The
methods prescribed for use by different types of electronics manufacturing facilities differ in the
values of these emission factors, the level of aggregation to which the factors are applied
(process type, process sub-type, or recipe), and whether defaults or facility-specific factors are
applied.
Gas Consumption
Electronics manufacturing facilities must use the following methods to calculate and
apportion gas consumption:
Gas consumption as calculated using the facility's purchase records,
disbursements, gas container inventories, and gas- and facility-specific heel factors.
Gas consumption apportioning factors developed using facility-specific
engineering models based on quantifiable metrics of fluorinated GHG-using activity.
Fluorinated GHG Utilization and By-Product Formation Rates (Emission Factors)
Electronics manufacturing facilities must use the following methods for applying
fluorinated GHG emission factors, as appropriate.
5 Covered facilities are electronics manufacturing facilities that have emissions equal to or greater than 25,000
mtC02e. For electronics manufacturing, EPA is requiring that uncontrolled emissions be used for purposes of
determining whether a facility's emissions are equal to or greater than 25,000 mt C02e.
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3.1.4.2 F-GHG Emissions Estimation Methods -PV, LCD, MEM, and LED
Manufacturing
Facilities that manufacture PV, LCDs, MEMS, and LEDS are required to estimate their
emissions using default emissions factors for two process types: plasma etching and chamber
cleaning. A facility may use directly measured recipe-specific emission factors in lieu of
defaults only if the factors are measured in accordance with the 2006 ISMI Guidelines,
International SEMATECH #06124825A-ENG, with limited exceptions.6 A facility must use
only default emission factors or only recipe-specific emission factors; the combined use of
emission factor types within the same reporting year is not permitted.
3.1.4.3 F-GHG Emissions Estimation Methods - Semiconductor Manufacturing
Facilities that Fabricate Devices on Wafers Measuring 300 mm or less in Diameter
Semiconductor manufacturing facilities that fabricate devices on wafers measuring 300
mm or less in diameter and have an annual manufacturing capacity of less than or equal to
10,500 m2 silicon must estimate their emissions using default emissions factors for the following
five categorizations.
process type plasma etching;
process category in-situ plasma chamber cleaning;
process category remote plasma chamber cleaning;
process category in-situ thermal chamber cleaning; and
process type wafer cleaning.
This approach is hereinafter referred to as the "Tier 2c Method." Semiconductor
manufacturing facilities that fabricate devices on wafers measuring 300 mm or less in diameter
and have an annual manufacturing capacity greater than 10,500 m2 silicon must estimate their
emissions using the five categorizations as defined for the Tier 2c method. However, instead of
using default emission factors for the plasma etching process type, facilities must use directly
measured recipe-specific emission factors. These facilities must use default emission factors for
the following:
process category in-situ plasma chamber cleaning;
6 EPA is permitting facilities to use emission factors measured in accordance with the 2001 ISMI Guidelines
provided the emissions factors were measured prior to January I, 2007. Documentation for the measurements is
required.
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process category remote plasma chamber cleaning;
process category in-situ thermal chamber cleaning; and
process type wafer cleaning.
The following hybrid methodology is hereinafter referred to as the "Tier 2d Method." A
facility may use directly measured recipe-specific emission factors in lieu of chamber and wafer
cleaning defaults only if the factors are measured in accordance with the 2006 ISMI Guidelines,
International SEMATECH #06124825A-ENG, with limited exceptions.7 A facility must use
only default emission factors, or only recipe-specific emission factors for chamber and wafer
cleaning; the combined use of emission factor types within the same reporting year is not
permitted.
3.1.4.4 F-GHG Estimation Methods—Semiconductor Facilities that Fabricate Devices
on Wafers Measuring 300 mm or more in Diameter
Semiconductor manufacturing facilities that fabricate devices on wafers measuring
greater than 300 mm in diameter must estimate all of their emissions from plasma etching,
chamber cleaning, and wafer cleaning using directly measured recipe-specific emission factors.
Emission factors must be measured in accordance with the 2006 ISMI Guidelines, International
SEMATECH #06124825A-ENG, with limited exceptions.8
3.1.4.5 Methodfor Estimating N2O Emissions
Electronics manufacturing facilities must calculate emissions of N2O using:
Requirements for calculating and apportioning gas consumption as outlined above
for "Fluorinated GHG emissions from electronics manufacturing production
processes"
Manufacturing production process emission factors for chemical vapor deposition
and other electronics manufacturing production processes.
3.1.4.6 Methodfor Estimating Emissions of Heat Transfer Methods
Electronics manufacturing facilities must calculate emissions from heat transfer fluids
using a mass balance approach in which disbursements are properly accounted for according to
procedures provided in 40 CFR part 98, subpart I.
7 See footnote 5.
8 See footnote 5.
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3.1.4.7 Methodfor Reporting Controlled Emissions from Abatement Equipment
Electronics manufacturing facilities that wish to document and report controlled
fluorinated GHG and N2O emissions from abatement systems must certify that that abatement
system is installed, operated, and maintained in accordance with the manufacturers'
specifications, as well as account for uptime of abatement systems. Facilities must calculate
controlled emissions using either:
Destruction or removal efficiencies based on a default value of 60%. Under this
approach, certification that the abatement system is specifically designed for
fluorinated GHG and N20 abatement is required; or
EPA's Random Sampling Abatement System Testing Program (RSASTP) to
measure destruction or removal efficiencies using EPA's Protocol for Measuring
Destruction or Removal Efficiency of Fluorinated Greenhouse Gas Abatement
Equipment in Electronics Manufacturing, Version 1, EPA 430-R-10-003.
3.1.5 Selection of Data Reporting Requirements
Owners and operators would be required to report fluorinated GHG and N2O emissions
for the facility for all plasma etching, chemical vapor deposition, chamber cleaning, and wafer
cleaning processes as well as all heat transfer fluid use. The text of today's rule details the
specific data reporting requirements for this sector.
For each abatement system for which a facility is reporting controlled emissions, the
following would be required: certification that the abatement device is installed, operated, and
maintained according to manufacturers' specifications; the uptime and the calculations to
determine uptime for that reporting year; the DRE used (i.e. either the EPA default DRE value or
a properly measured DRE); and required documentation to use the EPA default DRE value or a
properly measured DRE.
These data form the basis of the calculations and are needed for EPA to understand the
reported emissions and verify their reasonableness.
3.1.6 Selection of Recordkeeping Requirements
EPA is requiring that facilities keep records of data used to estimate emissions, records
supporting values used to estimate emissions, purchase records, and invoices for gas purchases
and sales.
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For those facilities that are reporting controlled emissions, EPA requests that the
following records be kept: documentation to certify that each abatement device used at the
facility is installed, maintained, and operated in accordance with manufacturers' specifications;
records of the uptime and the calculations to determine uptime; abatement system calibration and
maintenance records; required documentation to use either the EPA default DRE value or a
properly measured DRE; and dated certification by the technician who makes the measurement
that the destruction or removal efficiency is calculated in accordance with the methods in EPA
43 0-R-10-003.
These records consist of values that are directly used to calculate the emissions that are
reported and are necessary to enable verification that the GHG emissions monitoring and
calculations are done correctly.
3.2 Subpart L - Fluorinated GHG Producers
3.2.1 Definition of Affected Entities
An affected entity under subpart L is defined as any facility that produces a fluorinated
gas from any raw material or feedstock chemical. Fluorinated gas production includes the
production of fluorinated GHGs (including HFCs, PFCs, SF6, NF3, and HFEs) and
chlorofluorocarbons (CFCs) or hydrochlorofluorocarbons (HCFCs). EPA stipulates that
production of fluorinated gases does not include the reuse or recycling of fluorinated GHG or the
generation of HFC-23 during the production of HCFC-22.
Facilities that produce fluorinated gases will be required to report their fluorinated GHG
emissions from fluorinated gas production, transformation, venting, and destruction, as well as
combustion-related CO2. CH4 and nitrous oxide (N2O) emissions from stationary fuel
combustion. Fluorinated gases include fluorinated GHGs (HFCs, PFCs, SF6, NF3, HFEs, etc.),
CFCs, and HCFCs. However, emissions of HFC-23 from HCFC-22 production are addressed
under subpart O and are therefore excluded from this subpart. Similarly, emissions of CFCs and
HCFCs are addressed under the regulations implementing Title VI of the Clean Air Act and are
therefore excluded from this subpart.
3.2.2 Summary of Changes Since the Initial Proposal
The proposal published in the Federal Registry in April of 2010, included revisions to
several of the provisions in the initial proposed subpart L (April 2009). The subsequent
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comment period provided commenters an opportunity to respond to the new proposal. Today's
final rule reflects EPA's consideration of the concerns raised during this comment period.
Today's Subpart L rule incorporates a number of changes since proposal including, but
not limited to, the following:
EPA has clarified when and how the scoping speciation ("scoping test" in the
proposed rule) must be performed.
EPA has added more flexibility to the mass-balance approach in order to: allow
use of the mass-balance approach with process that do not produce fluorinated GHGs
but may emit them (e.g., process wafers that transform fluorinated GHGs);
incorporate process variability into the error calculation; and provide an alternative to
the error limits for facilities that do not wish to calculate them
EPA has added more flexibility to the emission factor approach by:
- Changing the method for determining whether the emissions of a process fall
below the 10,000 mtC02e cutoff that allows the use of engineering calculations
rather than stack testing.
- Providing an additional two months to develop emission factors and emission
calculation factors.
- Allowing use of engineering calculations or assessments with all batch
processes, regardless of emissions.
- Allowing emissions testing after the control device if the vent is controlled
and annual emissions bypassing (i.e., not vented to) the control device are less
than 10,000 mtC02e.
- Requiring testing of only the largest-emitting operating scenario and any other
operating scenario that (1) emits more than 10,000 mtC02e through the vent, and
(2) has an emission calculation factor that differs by 15 percent or more from the
emission calculation factor of the tested operating scenario. (In the proposed rule,
stack testing would have been required for each operating scenario.)
- Expanding the set of test methods that can be used for emissions testing to
include industry standard sampling and analytical methods that have been
validated using EPA Method 301 or other validation methods.
- Expanding the set of methods that can be used for quantifying emissions from
equipment leaks.
- For purposes of quantifying emissions from equipment leaks, defining "in
fluorinated GHG service" as containing or contacting a feedstock, byproduct, or
product that contains 5 percent or more total fluorinated GHG by weight.
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EPA is adding a requirement to monitor and report fluorinated GHG emissions
from containers when the residual fluorinated GHG (heel) is vented to the atmosphere
rather than recaptured and reused or destroyed.
EPA has also added a one-time requirement to report existing data and analysis
regarding the formation of products of incomplete combustion (PICs) that are
fluorinated GHGs during the destruction of fluorinated gases.
EPA has clarified that PICs are excluded from reporting under the rule after the
one-time initial reporting requirement.
EPA is limiting the proposed BAMM provision to allow fluorinated gas
production facilities to use BAMM through June 20, 2011 without submitting a
request to EPA. In the proposal, facilities would have been allowed to use BAMM
only through March 31, 2011 without submitting a request.
3.2.3 Selection of Reporting Threshold
Under the rule, owners and operators of fluorinated gas production facilities would be
required to estimate and report GHG emissions if they are equal to or greater than 25,000
mtC02e in the absence of control technology (e.g., thermal oxidation).
As is true for the other source categories covered by the Mandatory GHG Reporting
Rule, EPA is allowing that fluorinated gas production facilities could cease reporting if their
emissions were less than 25,000 mtCC^e per year for five consecutive years or less than 15,000
mtC02e per year for three consecutive years.
A full discussion of the threshold selection analysis is available in the revised Fluorinated
Gas Production TSD (EPA-HQ-OAR-2009-0927). For specific information on costs, including
unamortized first year capital expenditures, please refer to section 4.
3.2.4 Selection of Monitoring Methods
EPA is allowing facilities to use either a mass-balance approach or a site-specific,
process-vent-specific emission factor (PSEF) approach to estimate their fluorinated GHG
emissions. The mass-balance approach is similar to that of the April, 2009 proposal, as well as
that included in the April, 2010 proposal, but has been modified in some details in response to
comments. Facilities using either approach would be required to perform a one-time scoping
speciation to identify the F-GHGs in certain emitted streams and to verify the destruction
efficiency (DE) of any destruction devices every ten years.
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3.2.5 Selection of Data Reporting Requirements
Under the rule, owners and operators of facilities producing fluorinated GHGs would be
required to report both their fluorinated GHG emissions and the quantities used to estimate them
on a process-specific basis. For the mass-balance approach, this includes the masses of the
reactants and products and the masses of the reactants, by-products, and products destroyed or
recaptured. For the emission factor and emission calculation factor approach, data to be reported
includes the process activity used to calculate emissions (e.g., the tons of product produced or
tons of reactant consumed) and the emission factors used to estimate them. Owners and operators
must also report the mass of each fluorinated GHG gas emitted, including the mass of each
fluorinated GHG emitted from equipment leaks.
Where fluorinated gas production facilities have estimated missing data, the facility
would be required to report the reason the data were missing, the length of time the data were
missing, the method used to estimate the missing data, and the estimates of those data.
3.2.6 Selection of Recordkeeping Requirements
Maintaining records of the information used to determine the reported GHG emissions is
necessary to enable us to verify that the GHG emissions monitoring and calculations were done
correctly. Under the rule, owners and operators of facilities producing fluorinated GHGs would
be required to retain records documenting the data reported, including records of monthly
emission estimation calculations, including all data that went in to the calculations, calibration
records for flowmeters, scales, and gas chromatographs, and documentation of emission factor
development activities. These records are necessary to verify that the GHG emissions
monitoring and calculations were performed correctly.
3.3 Subpart DD—Electric Transmission and Distribution Equipment Use
3.3.1 Definition of Affected Entities
The electric transmission and distribution equipment use source category includes gas-
insulated substations, circuit breakers, other switchgear, and gas-insulated lines containing SF6
or PFCs. Equipment also includes gas containers such as pressurized cylinders, gas carts, new
equipment owned but not yet installed, or other containers. Notwithstanding the definition of
facility in subpart A, for purposes of this subpart, "facility" means an electric transmission and
distribution system which is the collection of SF6- and PFC insulated equipment linked through
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electric power transmission or distribution lines and operated as an integrated unit by one electric
power entity or several entities that have a single owner.
Reporting by the electric transmission and distribution system is comprised of the
system-wide collection of gas-insulated equipment located between the point of generation or the
point at which electricity is obtained from a different power entity and the point at which the
customer or another electric power entity receives the electricity, and must be based on the
aggregation of emissions of all servicing inventory and equipment. All individual pieces of
equipment that are located within the system are included regardless of ownership.
EPA defines an electric power entity as a company; an electric cooperative; a public
electric supply corporation as the Tennessee Valley Authority; a similar Federal department or
agency such as the Bonneville Power Administration; the Bureau of Reclamation or the Corps of
Engineers; a municipally owned electric department offering service to the public; or an electric
public utility district (a "PUD"); also a jointly owned electric supply project such as the
Keystone.
3.3.2 Summary of Changes Since Proposal
While Subpart DD remains largely unchanged from the initial proposal, EPA has made a
few modifications after receiving several comments regarding the source category definition and
the rule requirements. In the final rule, EPA is clarifying that "operators" refers to operators of
the collection of system assets including SF6 equipment and not operators of Electric Systems,
whose responsibility is to monitor and control electricity in that system in real time. EPA is also
clarifying that system boundaries are specific to delivery to the customer or another electric
power system. EPA is also requiring scale recalibration is accordance with manufacturer
specifications or every three years, whichever is sooner, and that the scales are required to be
accurate with +/- 2 pounds of the scale's capacity. Finally, EPA is including costs of reporting
requirements ($1,700 in reporting costs for each facility) which had inadvertently been omitted
from the proposal RIA.
With the exception of the updates discussed in the previous paragraph, the requirements
for entities covered under Subpart DD are identical to those described in the proposed MRR (see
docket # EPA-HQ-OAR-2008-0508).
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3.4 Subpart QQ - Importing/Exporting of Pre-charged Equipment and Foams
3.4.1 Definition of Affected Entities
This source category consists of any entity that is importing or exporting pre-charged
equipment that contains a fluorinated GHG and also consists of any entity that that is importing
or exporting closed-cell foams that contain a fluorinated GHG. A variety of products containing
fluorinated greenhouse gases (F-GHGs), nitrous oxide (N2O), and carbon dioxide (CO2) are
imported into and exported from the United States. Pre-charged equipment includes air-
conditioning, refrigeration, and electrical equipment. Closed-cell foams that are imported and
exported include polyurethane (PU) rigid foam used in insulation in domestic refrigerators and
freezers; commercial refrigeration foam,; PU rigid sandwich panel continuous and discontinuous
foam; extruded polystryrene (XPS) sheet foam; and XPS boardstock foam.
3.4.2 Summary of Proposal
In the April 2009 proposed rule EPA did not require reporting of the quantities of GHGs
imported and exported inside products. EPA was concerned that it would be difficult for
importers and exporters to identify and quantify the quantities of GHGs inside some products
and that the number of importers and exporters would be high. However, EPA requested
comment on the option of requiring reporting of imports and exports of HFCs and SF6 contained
in pre-charged air-conditioning, refrigeration, and electrical equipment and in closed cell foams.
EPA noted that for these products, information on the size and chemical identity of the charge or
blowing agent is likely to be readily available to importers and exporters (e.g., from nameplates
affixed to equipment, servicing manuals, and product information for foams). Moreover, as
noted above, the total quantities of imported and exported F-GHGs in pre-charged equipment
and foams are significant.
After carefully considering the comments and available information on imports and
exports of F-GHGs inside pre-charged equipment and foams, EPA proposed to require reporting
of these imports and exports in the revised April 2010 proposal. Importers and exporters of pre-
charged equipment and closed-cell foams would be subject to requirements similar to those for
importers and exporters of bulk GHGs. In addition, equipment importers would be required to
report the types and charge sizes of equipment and the number of pieces of each type of
equipment that they imported or exported, while foam importers would be required to report the
volume of foam and F-GHG density of the foam that they imported. As is true for importers and
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exporters of bulk F-GHGs, importers and exporters of equipment and foam would only be
required to report if their total imports or exports exceeded the 25,000 mtC02e threshold.
3.4.3 Summary of Changes Since the Proposal
Following the comment period on the April 2010 proposal, EPA has modified the
regulations on Subpart QQ for today's final rule. The changes to Subpart QQ are as follows:
EPA has revised the reporting requirements for closed-cell foams such that, in
cases where the importer or exporter does not know the identity and amount of
fluorinated GHGs inside the closed-cell foam, they can report the amount of
fluorinated GHGS imported or exported on a Co2e basis, based on information from
the manufacturer.
EPA has revised the definition of closed-cell foams to exclude packaging foam.
EPA has revised the requirements for importers such that the port of entry and
country of origin are no longer listed under data reporting requirements. These two
data elements are now listed under recordkeeping requirements.
EPA has revised the requirement for exporters such that the port of exit and
countries to which items were exported are no longer listed under data reporting
requirements. These are two data elements are now listed under recordkeeping
requirements.
EPA has clarified that importers and exporters must report the number of pieces
of pre-charge equipment and closed-cell foam imported with each unique
combination of charge size and charge type. Importers and exporters cannot report
the average charge size or most common fluorinated GHG used for a particular type
of equipment.
3.4.4 Selection of Reporting Threshold
Under the final rule, EPA is requiring that importers and exporters of F-GHGs contained
in pre-charged equipment and closed cell foams report their fluorinated GHG emissions if either
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their total imports or their total exports, in equipment, foams, and in bulk, exceed 25,000 mtCC^e
per year. This threshold is the same as that for bulk imports and exports.
3.4.5 Selection of Monitoring Methods and QA/QC Requirements
EPA is requiring importers and exporters of equipment and foams to estimate their
imports and exports of each F-GHG by multiplying the mass of the F-GHG contained in each
type of equipment or foam by the number of pieces of equipment or by the volume of foam, as
appropriate. EPA believes that information on F-GHG identity and charge size (or density, for
foams) should be readily available to importers and exporters.
3.4.6 Selection of Data Reporting Requirements
Under the rule, EPA will require importers and exporters of pre-charged equipment and
closed cell foams to report the following:
(1) The total mass in metric tons of each fluorinated GHG imported or exported in pre-
charged equipment or closed-cell foams.
(2) For each type of pre-charged equipment, the identity of the fluorinated GHG used as
a refrigerant or electrical insulator, charge size (holding charge9, if applicable), and number
imported or exported.
(3) For closed-cell foams that are imported or exported inside of appliances, the identity
of the fluorinated GHG contained in the foam, the quantity of fluorinated GHG contained in the
foam in each appliance, and the number of appliances imported for each type of appliance.
(4) For closed cell-foams that are not inside of appliances, the identity of the fluorinated
GHG, the density of the fluorinated GHG in the foam (kg F-GHG/cubic foot), and the quantity of
foam imported or exported (cubic feet) for each type of closed-cell foam.
(5) Dates on which the pre-charged equipment or closed-cell foams were imported or
exported.
(6) Ports of entry through which the pre-charged equipment or closed-cell foams passed.
9 This refers to any holding charge consisting of a fluorinated GHG. Holding charges consisting of other gases, such
as nitrogen, are not included.
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(7) Countries from or to which the pre-charged equipment or closed-cell foams were
imported or exported.
EPA is collecting this information because it is necessary either to understand the total
volume of F-GHGs imported or exported inside of pre-charged equipment and foams (and
thereby contributing to the U.S. supply of F-GHGs) or to verify submitted information.
3.4.7 Selection of Recordkeeping Requirements
EPA is requiring importers and exporters of equipment and closed cell foams to retain the
following records:
(1) a copy of the bill of lading for the import or export;
(2) the invoice for the import or export; and
(3) for imports, the U.S. Customs entry form.
Persons who transship pre-charged equipment and closed cell foams containing
fluorinated GHGs must maintain records that indicate that the pre-charged equipment or foam
originated in a foreign country and did not enter into commerce in the United States. This
information is necessary to verify submitted information.
3.5 Subpart SS - Electrical Equipment and Components Manufacturing
3.5.1 Definition of Affected Entities
Affected entities under subpart SS are defined as electrical equipment manufacturers of
SF6-insulated closed-pressure system equipment and sealed-pressure system equipment including
gas-insulated substations, circuit breakers, other switchgear, gas-insulated lines, or power
transformers containing sulfur-hexafluoride (SF6) or perfluorocarbons (PFCs).
Electrical equipment manufacturers purchase bulk SF6 gas to (1) install a nominal charge
in high-voltage closed-pressure equipment, (2) ship alongside closed-pressure equipment for
topping off at installation site, (3) fill sealed-pressure equipment with its intended lifetime supply
of SF6, and (4) develop and test equipment. Fugitive emissions of SF6 from equipment
manufacturers typically occur during the manufacturing of equipment but can also occur during
the other uses of SF6 at manufacturing facilities.
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While EPA believes that SF6 represents the majority of emissions from this source
category, manufacturers may also use PFCs as dielectrics and heat transfer fluids in power
transformers. For example the PFC perfluorohexane (C6F14) is used for retrofitting CFC-113
cooled transformers.
According to the U.S. Inventory of Greenhouse Gas Emissions and Sinks: 1990-2007
(U.S. Environmental Protection Agency, 2009), total U.S. estimated emissions of SF6 from
electrical equipment manufacturers was estimated to be 0.81 million metric tons C02e in 2006.
EPA is requiring reporting from electrical equipment manufacture and refurbishment facilities
because these operations represent a significant source, approximately 5% of SF6 emissions. It is
estimated that ten equipment manufacturers were responsible for these emissions.
EPA is also including emissions of PFCs emitted during the manufacture or
refurbishment of PFC-containing power transformers because the National Inventory has no
information on this source and because use of transformers is expected to grow in the future.
This source category comprises electrical equipment manufacturers and refurbishers of
SF6 or PFC-insulated closed-pressure system equipment and sealed-pressure system equipment
including gas-insulated substations, circuit breakers, other switchgear, gas-insulated lines, or
power transformers containing sulfur-hexafluoride (SF6) or perfluorocarbons (PFCs).
3.5.2 Summary of Changes Since Proposal
The major changes in this rule since the proposal are identified in the following list.
Scale recalibration is required in accordance with manufacturer specifications or
once every three years, whichever is sooner.
Scales are required to be accurate within +/- 2 pounds of the scale's capacity.
EPA is allowing use of a statistically representative value for emissions
downstream of the flowmeter measuring the mass of SF6 being transferred from the
storage container to the equipment being filled. The statistically representative value
must be based on a statistically representative sample size for each combination of
hose and valve of a given sized diameter.
To increase flexibility, EPA is providing an additional option for determining the
mass of SF6 or the PFCs disbursed to customers in new equipment. EPA is allowing
the equipment's nameplate capacity or, in cases where equipment is shipped with a
partial charge, the equipment's partial shipping charge to be assumed as equal to the
disbursement.
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The quantity of gas charged in to delivered equipment and added during
installation by the manufacturer must be certified by the manufacturer and expressed
in pounds of SF6 or PFC.
The electrical equipment manufacturer must estimate the annual SF6 and PFC
emissions from the equipment being installed on the electric power system's
premises, only when the title of the equipment has not yet been transferred, using an
equipment installation mass balance equation.
3.5.3 Selection of Reporting Threshold
EPA is requiring electrical equipment manufacturers to report their SF6 and PFC
emissions if their total annual purchases of SF6 and PFCs exceed 23,000 lbs. This consumption-
based threshold is equivalent to an emissions-based threshold of 25,000 mtC02e, assuming an
average manufacturer emission rate of 10%.
3.5.4 Selection of Monitoring Methods and QA/QC Requirements
In developing the approach, EPA reviewed the 2006 IPCC Guidelines, the U.S. GHG
Inventory, DOE 1605(b), EPA's Climate Leaders Program, and The Climate Registry. In the
IPCC Guidelines, Tiers 1 and 2 are based on default and country-specific SF6 and PFC emission
factors, but Tier 3 is based on a mass-balance approach for estimating SF6 and PFC emissions at
each life-cycle stage of the equipment.
The monitoring methods for calculating SF6 and PFC emissions from electrical
equipment manufacturing and refurbishment are similar to the methodologies described in the
2006 IPCC Guidelines Tier 3 methods for emissions from electrical equipment manufacturing.
EPA is requiring that all SF6 and PFC emissions be reported, including those from
equipment testing, manufacturing, decommissioning and disposal, refurbishing, and from storage
cylinders, as well as combustion-related CO2, CH4, and nitrous oxide (N2O) emissions from
stationary fuel combustion. The Tier 3 approach is being used because it is the most accurate
and it is feasible for all equipment manufacturers to conduct the mass balance analysis for SF6
and PFCs using readily available information.
A comparable mass-balance approach is used for subpart DD Sulfur Hexafluoride (SF6)
andPerfluorocarbons (PFCs) from Electrical Equipment at an Electric Power System. The
mass-balance approach works by tracking and systematically accounting for all facility uses of
SF6 and PFCs during the reporting year. The quantities of SF6 and PFCs that cannot be
accounted for are assumed to have been emitted to the atmosphere. The emissions of SF6 and
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PFCs must be estimated and reported separately. All quantities required to calculate the mass-
balance equations for this subpart must be measured using scales or flow meters that are certified
with an accuracy and precision within two pounds of the scale's capacity.
In addition, EPA will require that electrical equipment manufacturers keep records for the
QA/QC requirements including check-out sheets and weigh-in procedures for cylinders, residual
gas amounts in cylinders sent back to suppliers, invoices for gas and equipment purchases or
sales, and documentation of recycling and destruction. The records that are being requested are
the minimum needed to reproduce and confirm emission calculations.
3.5.5 Selection of Data Reporting Requirements
EPA is requiring annual reporting for the electrical equipment manufacturing and
refurbishing industry. Equipment manufacturers would report all SF6 and PFC emissions,
including those from equipment testing, equipment manufacturing, and bulk SF6 and PFC
handling. However, the emissions would not need to be broken down and reported separately for
testing, manufacturing, or bulk SF6 and PFC handling. Along with their emissions, electrical
equipment manufacturers will be required to submit the following supplemental data: SF6 and
PFCs with or inside equipment delivered to customers, SF6 and PFCs returned by customers with
or inside equipment, bulk SF6 and PFC purchases, SF6 and PFCs sent off-site for destruction or
to be recycled, SF6 and PFC returned from offsite after recycling, SF6 and PFCs stored in
containers at the beginning and end of the year, and SF6 and PFCs returned to suppliers.
Facilities must also report a description of the engineering methods and calculations used to
determine emissions from hoses or other flow lines that connect the container to the equipment
that is being filled.
These data must be submitted because they are the minimum data that are needed to
understand and reproduce the emission calculations that are the basis of the reported emissions.
3.5.6 Selection of Recordkeeping Requirements
In this action, EPA is requiring that electrical equipment manufacturers be required to
keep records documenting (1) their adherence to the QA/QC requirements specified in the rule,
and (2) the data that would be included in their emission reports, as specified above. Facilities
must also keep check-out and weigh-in sheets and procedures for cylinders, documentation of
residual gas amounts in cylinders sent back to suppliers, and invoices for gas purchases and
sales.
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SECTION 4
ENGINEERING COST ANALYSIS
4.1 Introduction
EPA estimated costs of complying with the rule for process emissions of GHGs in each
affected industrial facility. EPA used available industry and EPA data to characterize conditions
at affected sources. Incremental monitoring, recordkeeping, and reporting activities were then
identified for each type of facility, and the associated costs were estimated.
4.2 Overview of Cost Analysis
The costs of complying with the rule will vary from one facility to another, depending on
the types of emissions, the number of affected sources at the facility, existing monitoring,
recordkeeping, and reporting activities at the facility, etc. The costs include labor costs for
performing the monitoring, recordkeeping, and reporting activities necessary to comply with the
rule. For affected facilities, costs include monitoring, recording, and reporting of GHG emissions
from production processes and from stationary combustion units. All costs referred to in this
section are reported in 2006 dollars.
For each source category, we first provide a general overview of baseline reporting (if
data are available); two costs components associated with this information collection; labor costs
(i.e., the cost of labor by facility staff to meet the information collection requirements of the
rule); and capital and operating and maintenance costs (e.g., the cost of purchasing and installing
monitoring equipment or contractor costs associated with providing the required information).
Additional details of the data, methods, and assumptions underlying the costs are documented in
a separate cost appendix and in accompanying Technical Support Documents (TSDs). The TSDs
also include information on the assumptions and methods used to identify representative entities
or groups of entities used to develop the cost analysis for each subpart.
4.2.1 Baseline Reporting
When data are available to determine how many companies are currently implementing
approaches consistent with the methods at the facility level to meet internal GHG management
programs or state or voluntary reporting programs at the domestic or international level, we
include a discussion of the baseline reporting practices. When data are not available, EPA is
assuming that none of the facilities in these source categories are currently reporting emissions
and that many of the requirements will result in "new" or "full" costs to meet reporting
requirements. Specifically, EPA is assuming that there will be additional costs for any sampling
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and testing in the requirements in methods (i.e., carbon contents of process inputs, such coke,
coal, carbonate composition, or actual emissions). EPA is also assuming that additional costs will
be incurred for preparing monitoring and QA/QC plans, performing the calculations, reporting
the results, and maintaining records.
4.2.2 Reporting Costs
To ensure consistency in the development of cost estimates across all sources, EPA
developed a cost spreadsheet template used for each subpart to compile, document, and calculate
per unit reporting costs. Detailed instructions were provided along with the cost spreadsheet
template that clearly explained the data to be compiled and calculated. The template included
three tables; analysis of reporting thresholds, analysis of monitoring and reporting options, and
unit costs for monitoring and reporting. Key variables and data fields were clearly defined to
ensure that costs developed for each subpart used a standard set of methods and assumptions
(e.g., method for annualization of capital costs, interest rate to be applied to capital).
Labor Costs. The costs of complying with and administering this rule include the time of
managers, technical, and administrative staff in both the private sector and the public sector.
Staff hours are estimated for activities including:
¦ monitoring (private): staff hours to operate and maintain emissions monitoring
systems;
¦ reporting (private): staff hours to gather and process available data and reporting it to
EPA through electronic systems; and
assuring and releasing data (public): staff hours to quality assure, analyze, and release
reports.
Staff activities and associated labor costs may vary over time. Thus, cost estimates are
developed for start-up, first-time reporting, and subsequent reporting.
Loaded hourly labor rates (also referred to as "wage rates") were developed for several
labor categories to represent the employer costs to use an hour of employees' time in each of the
manufacturing sector labor categories used in this analysis. The labor categories correspond to
the job responsibilities of the personnel that are likely to be involved in GHG emissions
monitoring activities at the manufacturing facility level to comply with the rulemaking.
For purposes of this study, EPA adopted the methodology used by Cody Rice (2002) to
calculate the wage rates for the EPA's Toxics Release Inventory (TRI) Program. Thus, the wage
rates calculated for different labor categories included the employer costs for employee
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compensation (comprising the basic wages and the corresponding benefits) and the overhead
costs to the employer.10
For each labor category, the following formula was used to calculate the wage rates:
Loaded Hourly Labor Rate ($/hr.) = Basic Wages ($/hr.) *
(1 + Benefits Loading Factor + Overhead Loading Factor).
The benefits loading factor corresponds to the relative share of benefits compensation in
the total employee compensation (comprising basic wages and benefits). Although the benefits
factor tends to vary by labor category and by industry (0.37 to 0.50), for purposes of this
analysis, we have assumed the benefits loading factor (1.7) to remain the same for each labor
category across all industries within the manufacturing sector due to a lack of availability of
necessary industry-specific data on benefits paid to employees.
The overhead loading factor corresponds to the share of overhead costs to the employer
relative to the total employee compensation. For purposes of this analysis, we have also adopted
the same overhead loading factor that Cody Rice (2002) used in her wage rate calculations. Thus
the overhead loading factor that we used in the wage rate calculations remains the same for all
labor categories and across all industry types within the manufacturing sector. The overhead
loading factor was assumed to be 0.17.
The loaded labor rates for the four labor categories that are used in the cost analysis for
each subpart covered under this rule and are also reported in the appropriate sectors labor cost
tables in the following sections.
lOFor each employee, the employer also incurs overhead costs (comprising the rental costs of the office space, computer
hardware and software, telecommunication and other equipments, organizational support, etc.) required for and used by the
employee to effectively fulfill his/her job responsibilities. These costs are over and above the employee compensation costs.
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Table 4-1. Labor Categories and Hourly Rates
Labor Category
Description
Loaded Hourly Rate ($/hour)
Legal
Oversees legal aspects of company
reports and data-reporting forms.
$101.00/hour
Managerial
Oversees work at a high level and
is the final authority on all
reporting requirements.
$71.03/hour
Technical
Conducts monitoring of emissions
sources, checks for accuracy,
performs measurements.
$55.20/hour
Clerical
Assists with documentation and
recording information
$29.65/hour
Capital and O&M Costs. This includes the cost of purchasing and installing monitoring
equipment or contractor costs associated with providing the required information. Selected
subparts do not require capital expenditures because the selected monitoring option does not
require capital equipment or the reporter already owns the necessary monitoring equipment.
Equipment costs include both the initial purchase price of monitoring equipment and any
facility/process modification that may be required. For example, the cost estimation method for
mobile sources involves upstream measurement by the vehicle manufacturers. This may require
an upgrade to their test equipment and facility. Based on expert judgment, the engineering costs
analyses annualized capital equipment costs with the appropriate lifetime and interest rate
assumptions. Cost recovery periods vary by industry (5 to 15 years) with one-time capital costs
are amortized at a rate of 7%.
Other Recordkeeping and Reporting. Additional reporting ($500) costs was added to all
subparts.
Cost Analysis by Subpart. The balance of section 4 provides the cost data by subpart.
The data are the basis for the economic impact analysis described in detail in Section 5 of this
document. This chapter provides these data, as well as background information needed to
understand the engineering costs analysis conducted for each source and the reporting option
selection.
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4.3 Cost Analysis for Subpart I - Electronics Manufacturers
4.3.1 Model Facility Development
This analysis is based on the costs of monitoring fluorinated greenhouse gas (F-GHG)
and nitrous oxide (N20) emissions from electronics manufacturing facilities. Electronics
manufacturing facilities were broken into three categories; non-semiconductor electronics (3
facilities), large semiconductor (29 facilities), and non-large semiconductor (62 facilities).11'12
Non-semi conductor electronics includes facilities that manufacture micro-electromechanical
systems (MEMS), liquid crystal displays (LCDs), and photovoltaics (PV).
Through industry comments and the PFC Reduction/Climate Partnership for
Semiconductors, the EPA has improved its understanding of semiconductor facilities and their
emissions and has assigned a method of compliance to each electronics manufacturing facility
category. For cost estimates, non-semi conductor facilities were assigned to use the "Tier 2b
Method" based on IPCC's Tier 2b two process categories (chamber cleaning and plasma etching)
in order to comply with Subpart I. Non-large semiconductor facilities were assigned to use the
"Tier 2c Method" defining the following five process categories and default emission factors: (1)
chamber cleaning - in situ plasma; (2) chamber cleaning - remote plasma; (3) chamber cleaning
- in-situ thermal; (4) plasma etching; and (5) wafer cleans. The largest semiconductor facilities
were assigned to use the "Tier 2d Method" which is identical to the "Tier 2c Method" for all
facility process categories except plasma etching, which requires directly measured recipe-
specific emission factors similar to the 2006 IPCC Tier 3 methodology.13 Annual costs differ for
each of the three electronics manufacturing categories because they are subject to different
requirements, as detailed below under "Monitoring Costs". In addition, MEMS, LCD, and PV
manufacturing use fewer types of F-GHGs than semiconductor manufacturing facilities.
Therefore, cost estimates for these other types of electronics facilities were developed using cost
estimates from EPA's initial proposal for a "small" semiconductor facility and scaling these
costs to account for the use of a smaller set of gases.14
11 Number of facilities based on Semiconductor Equipment and Materials Industry (SEMI). July 2007. World Fab Forecast.
http://www.semi.org/en/index.htm and does not include LED facilities.
12 The distinction between large and small semiconductor facilities is based on the facility's manufacturing capacity and the
wafer size the facility manufactures.
13 Plasma etching emission factors must be measured in accordance with the 2006 ISMI Guidelines, International SEMATECH
#06124825A-ENG, with limited exemptions.
14 In its initial 2009 proposal for electronics manufacture, EPA defined "small" semiconductor facilities as those facilities with
annual capacities less than 10,500 m2 silicon (147 facilities out of 175 total facilities). In the initial proposal, those facilities
were required to estimate their emissions using an approach based on the IPCC Tier 2b method.
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4.3.2 Determination of Cost Elements
The total costs associated with complying with the proposed rulemaking were broken into
four elements, which are described below.
Monitoring costs. The following types of monitoring costs were identified:
Collection of activity data for estimating F-GHG and N2Q emissions.
As previously mentioned costs for collecting activity data differ depending on the facility
category (large semiconductor, non-large semiconductor, or other electronics manufacturing).
Using the "Tier 2b Method" non-semiconductor facilities are required to estimate
emissions using (1) gas consumption as calculated using the facility's purchase records,
inventory, and gas-and facility-specific heel factors, (2) facility specific methods for
apportioning gas usage by IPCC's Tier 2b two process categories (clean and etch), (3) updated
Tier 2b default emissions factors, and (4) either EPA published default DRE value or properly
measured DRE where appropriate.
Non-large semiconductor facilities assigned to the "Tier 2c Method" would be required to
use an approach for estimating emissions which includes the following components: (1) gas
consumption as calculated using the facility's purchase records, inventory, and gas-and facility-
specific heel factors, (2) facility specific methods for apportioning gas usage by five process
categories, (3) default emission factors (including factors for by-products) based on five process
categories, and (4) either EPA published default destruction or removal efficiency (DRE) value
or properly measured DRE where appropriate. Facilities could either use emission factors
provided by EPA or develop/acquire facility-specific emissions factors from process equipment
manufacturers. In addition, facilities that have monitoring infrastructure or the necessary data to
estimate emissions obtained through recipe-specific measurements would be permitted to do so.
The costs presented in this analysis reflect the use of default emission factors and EPA published
DRE values.
Under the "Tier 2d Method" the largest semiconductor facilities were assigned to use an
approach for estimating emissions which includes (1) gas consumption as calculated using the
facility's purchase records, inventory, and gas-and facility-specific heel factors, (2) facility
specific methods for apportioning gas usage by five process categories (3) default emission
factors (including factors for by-products) based on four process categories and directly
measured emission factors for the etching process, and (4) either EPA published default
destruction or removal efficiency (DRE) value or properly measured DRE. Similar to the "Tier
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2c Method", facilities can use either default emission factors or developed emission factors for
the four non-etch processes, however the facility must measure and develop recipe-specific
emission factors for all etch processes. The cost analysis reflects using default factors for the
non-etch processes and the cost to measure and develop emission factors for etch processes. Due
to the complex nature of apportioning gas in a large semiconductor facility, EPA has added
software costs to account for the challenge of apportioning gases to etch processes.
Annual costs to report controlled emissions from abatement systems.
Under the final rule, any facility that wishes to reflect abatement of F-GHGs in its
emissions estimates would be required to certify that the abatement system is installed, operated,
and maintained in accordance with manufacturers' specifications and either use EPA published
DRE default value or properly measured DRE. Facility costs incurred for assuring abatement
systems are properly installed, operated, maintained, and reported, and accounting for uptime
have been included for large facility categories in this cost analysis.15 However, because DRE
measurements are optional, the EPA's estimated costs for performing DRE testing was not
included for any facility category in this cost analysis.
Collection of data for estimating heat transfer fluid (HTF) emissions.
In the proposed rule, electronics manufacturing facilities that use heat transfer fluids were
required to account for emissions from use of heat transfer fluids using a mass-balance approach.
EPA understands heat transfer fluids are widely used within semiconductor manufacturing;
however, EPA is uncertain about heat transfer fluid use in other electronics manufacturing
facilities. For this reason, costs associated with emissions from heat transfer fluids were
conservatively included in all electronics manufacturing categories. The mass-balance approach
uses company-specific data and accounts for differences among facilities' HTFs (which vary in
their global warming potentials), leak rates, and service practices.
Reporting costs. The following types of reporting costs were identified:
Reporting F-GHG emission estimate.
Electronics manufacturing facilities will be required to complete and submit company-
specific annual reports. Costs associated with reporting activity data were included for all
categories. Facilities that employ abatement systems and wish to reflect the emission reductions
15 Facility costs incurred for assuring abatement systems are properly installed, operated, maintained, and reported,
and accounting for uptime are based on 32 technical labor hours. This cost is only included for large
semiconductor facilities based on SIA's comments that 29 facilities would incur abatement compliance costs.
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due to these systems in their emissions estimates will need to provide certification that the
system is installed, operated, and maintained in accordance with manufacturers' specifications in
their annual reports.5 This certification process also includes an annual assessment of the
equipment uptime. It is assumed there are no other costs associated with using default DRE
values.
Facilities that choose to reflect emissions reductions through direct measurement of DRE
at the facility, performance confirmed through direct DRE measurement (i.e., consistent with
EPA's DRE Protocol) would be required. As previously stated, direct DRE measurements are
optional, therefore reporting costs for DRE testing were not included in the cost analysis for any
of the electronics manufacturing categories.
Reporting heat transfer fluid emissions estimate.
Electronics manufacturing facilities are required to complete and submit data-reporting
forms. EPA has included costs for reporting heat transfer fluid emissions from all facilities
because EPA is uncertain about whether LCD, PV, and MEMS manufacturing facilities use heat
transfer fluids.
4.3.3 Proportion of Facilities in the Different Model Facility Levels
Semiconductor, MEMS, PV, and LCD facilities would determine whether they exceed
the emissions-based threshold using IPCC Tier 1 emission factors and assuming no abatement.
For PV facilities, annual emissions would be estimated by multiplying annual F-GHG
consumption by the appropriate GWP factor. For semiconductor facilities, 91 out of 175 entities
exceed the 25,000 mtCC^e threshold which includes 96 percent of total semiconductor
emissions. For MEMS facilities, the 25,000 mtCC^e threshold includes two out of 12 entities
and includes 66 percent of total MEMS emissions. For LCD facilities, no entities exceed the
25,000 mtC02e threshold. Only one PV facility is included in the 25,000 mtCChe threshold
which includes 47 percent of total PV emissions. The number of each type of facility that EPA
estimates will meet the 25,000 mtCC^e threshold and required to report is identified in Table 4-2.
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Table 4-2. Number of Representative Affected Entities Used in the Cost Analysis
Threshold
Number of Representative Entities
Semiconductors
(All)
MEMS
Liquid Crystal
Display
Photovoltaics
1,000
134
10
5
16
10,000
108
4
1
1
25,000
91
2
0
1
100,000
55
0
0
0
4.3.4 Assigning Costs to Cost Elements
Assigning costs to each of the cost elements was completed using the four labor
categories (legal, managerial, technical and clerical) and associated labor rates presented in Table
4-3. EPA assigns responsibilities to each labor category to estimate labor hours. Finally, EPA
estimates the annualized capital costs and operation & maintenance (O&M) costs for each of the
cost elements.
Determining Labor Categories.
To evaluate labor costs, it was not only necessary to determine the amount of time
required for all of the tasks associated with monitoring, but also to determine who will perform
each task.
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Table 4-3. Labor Categories and Hourly Rates
Labor Category
Description
Loaded Hourly Rate ($/hour)
Legal
Oversees legal aspects of company
reports and data-reporting forms.
$101.00/hour
Managerial
Oversees work at a high level and
is the final authority on all
reporting requirements.
$71.03/hour
Technical
Conducts monitoring of emissions
sources, checks for accuracy,
performs measurements.
$55.20/hour
Clerical
Assists with documentation and
recording information
$29.65/hour
Allocate Responsibilities and Estimate Labor Hours.
Labor hours for all categories (large and non-large semiconductor and other electronics
facilities) were estimated using IPCC's Tier 2b method from the initial proposed method for
small semiconductor facilities and industry comments. EPA, drawing on its experience with
semiconductor facilities voluntarily reporting emission via its sector Partnership, estimated the
labor hours borne by non-large semiconductor facilities using IPCC's Tier 2b method and
scaling the hours to represent 5 process categories. Large semiconductor facility burden hours
were also based on scaling IPCC's Tier 2b method to four process categories (which account for
70 percent of all facility processes) and adding IPCC's Tier 3 method for the etching process (30
percent of all facility processes). The burden hours and costs borne by other electronics
manufacturers were estimated using cost estimates from EPA's initial proposal for a small
semiconductor facility and scaling these costs down to account for the use of a smaller set of
gases, as these facilities use fewer types of PFCs than the semiconductor manufacturing
facilities. In addition, information received from industry on burden hour estimates for technical
staff to measure gas- and facility-specific heel factors were included. Table 4-4 presents the
burden hours allocated to each labor category across all affected facility types covered under
subpart I. The hours and costs for estimating emissions of heat transfer fluids were based on the
ICR for EPA's SF6 Emission Reduction Partnership for Electric Power Systems. Under the SF6
Partnership, electric power systems report emissions using a mass-balance method that is
essentially identical to that proposed for heat transfer fluids in semiconductor facilities.
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Table 4-4. Responsibilities for Regulation Compliance by Labor Category Per Facility Category
Cost Element
Responsibilities and Hours by Labor Category
Legal
Managerial
Technical
Clerical
Responsibilities
Hours
Responsibilities
Hours
Responsibilities
Hours
Responsibilities
Hours
Large Semiconductors—Tier 2d Method
Monitoring
Collection of activity data
for F-GHG emission
estimate
Provide quality assurance
of analyses and authorize
completeness of the
checks.
15.7
Collect data on gas consumption,
gas utilization, and by-product
formation. Perform calculation
for four process categories using
default factors provided by EPA
(Costs for EF Tier 3 EF
Development for etch is under
capital costs).
228
Assist in recording and
maintaining data collected
on gas consumption, gas
utilization and by-product
formation
3.6
Collect data for mass-
balance calculation of
Heat Transfer Fluids
Provide quality assurance
of analyses and authorize
completeness of the
checks.
2.4
Collect activity data related to
E1TF emissions
10
Assist in recording and
maintaining data on
collected activity data
related to E1TF emissions
6.7
Reporting
Complete and submit
company-specific annual
report
Oversee legal aspects
of annual report
submission
0.26
Provide quality assurance
of annual report.
10.8
Complete and submit company-
specific annual report
25.3
Assist with completing and
submitting the company-
specific annual report
8.4
Complete and submit data
reporting forms for mass-
balance calculation of
Heat Transfer Fluids
Review and submit data
reporting form.
3.5
Review instructions and
complete the form for data
reporting
3.5
Maintain data reporting
records.
1.9
Abatement/DRE data
gathering
Abatement system quality
assurance audit and reporting
32
Recordkeeping
Collect and store
necessary records for
compliance
Review and submit
appropriate records
2.4
Assure that appropriate records
are kept
24.7
Assist with recordkeeping
and filing
5.7
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Cost Element
Responsibilities and Hours by Labor Category
Legal
Managerial
Technical
Clerical
Responsibilities
Hours
Responsibilities
Hours
Responsibilities
Hours
Responsibilities
Hours
Non-Large Semiconductor Facilities—Tier 2c Method
Monitoring
Collection of activity data
for F-GHG emission
estimate
Provide quality assurance
of analyses and authorize
completeness of the
checks.
3.6
Collect data on gas consumption.
Perform calculations using IPCC
Tier 2b default emission factors.
257.3
Assist in recording and
maintaining data collected
on gas consumption, gas
utilization and by-product
formation
Collect data for mass-
balance calculation of Heat
Transfer Fluids
Provide quality assurance
of analyses and authorize
completeness of the
checks.
2.2
Collect activity data related to
HTF emissions
9.4
Assist in recording and
maintaining data on
collected activity data
related to HTF emissions
6.11
Reporting
Completion of company-
specific annual report
Oversee legal aspects
of annual report
submission
0.26
Provide quality assurance
of annual report.
10.8
Complete and submit company-
specific annual report
25.3
Assist with completing and
submitting the company-
specific annual report
8.4
Complete and submit data
reporting forms for mass-
balance calculation of
Heat Transfer Fluids
Review and submit data
reporting form.
3.5
Review instructions and
complete the form for data
reporting
3.5
Maintain data reporting
records.
1.7
Recordkeeping
Collect and store
necessary records for
compliance
Review and submit
appropriate records
2.39
Assure that appropriate records
are kept
24.7
Assist with recordkeeping
and filing
5.7
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Cost Element
Responsibilities and Hours by Labor Category
Legal
Managerial
Technical
Clerical
Responsibilities
Hours
Responsibilities
Hours
Responsibilities
Hours
Responsibilities
Hours
Non-Semiconductors—Tier 2b Method
Monitoring
Collection of activity data
for F-GHG emission
estimate
Provide quality assurance
of analyses and authorize
completeness of the
checks.
7.2
Collect data on gas consumption,
gas utilization, and by-product
formation. Perform calculation
for five process categories using
default factors provided by EPA.
169.5
Assist in recording and
maintaining data collected
on gas consumption, gas
utilization and by-product
formation
Collect data for mass-
balance calculation of
Heat Transfer Fluids
Provide quality assurance
of analyses and authorize
completeness of the
checks.
4
Collect activity data related to
HTF emissions
17
Assist in recording and
maintaining data on
collected activity data
related to HTF emissions
11
Reporting
Completion of company-
specific annual report
Oversee legal aspects
of annual report
submission
0.26
Provide quality assurance
of annual report.
10.8
Complete and submit company-
specific annual report
25.3
Assist with completing and
submitting the company-
specific annual report
8.4
Complete and submit data
reporting forms for mass-
balance calculation of
Heat Transfer Fluids
Review and submit data
reporting form.
3.5
Review instructions and
complete the form for data
reporting
3.5
Maintain data reporting
records.
1.7
Recordkeeping
Collect and store
necessary records for
compliance
Review and submit
appropriate records
2.4
Assure that appropriate records
are kept
24.7
Assist with recordkeeping
and filing
5.7
4-13
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Capital and O&M Costs
Non-Large Semiconductor. LCD. PV and MEMS Facilities: The EPA estimated that
non-large semiconductor facilities and non-semiconductor facilities using the "Tier 2b" or "Tier
2c" method would incur no capital or O&M costs.
Large Semiconductor Facilities: For the largest semiconductor facilities using the "Tier
2d Method", the EPA has estimated capital and O&M costs associated with developing both
apportioning software and emission factors for the etch processes. Facilities were assumed to
share software development resources if they are owned by the same company; EPA estimated
11 companies own the 29 large semiconductor facilities. Industry apportioning software capital
costs were based on the assumption that each of the 11 companies would pay the full software
development cost (based on 2,000 labor hours required to develop the software at a technical
engineer labor rate) for one of their facilities and each subsequent facility the company owned
would pay 50 percent of the software development cost (i.e., 11 facilities pay full cost and 18
facilities pay 50 percent). Facility software capital cost was then calculated by dividing total
industry software capital cost by 29 facilities. Apportioning software O&M costs were based on
a 10 year software lifetime.16 Industry capital costs for emission factor development (etch
processes only) was assumed to be incurred per company and based on labor costs associated
with three technical engineers (2,000 hours each) needed to develop emission factors. The EPA
assumed that facilities will already have the necessary equipment to develop emission factors
and therefore did not include capital cost estimates for equipment. In order to obtain facility
capital cost for emission factor development, the total industry cost was divided by 29 facilities.
O&M costs for emission factor development represents the cost for updating/revising emission
factors as needed based on changes to a facility's processes, recipes, or equipment (estimated to
be every 7 years)17. All capital costs (for both software and emission factor development) were
annualized with an interest rate of 7.0 percent.
Other Costs
The EPA estimated that the per-facility optional cost of directly measuring DREs in
accordance with EPA's DRE Protocol is $71,766. This cost was not included in this economic
analysis since direct measurements of DREs are optional. The cost estimate was based on the
assumption that a large semiconductor facility would have approximately 50 etch tools, all of
16 O&M cost for software is based on 500 labor hours at an industrial engineer labor rate.
17 O&M costs were not factored into first year costs to a facility.
4-14
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which have PFC abatement systems. The EPA estimates that 20 percent of these fifty systems
would be required to be tested annually and that it would take two weeks to test these ten
systems per year. The cost for two weeks worth of testing was based on industry estimates and
EPA's experience conducting DRE testing. While 90 percent of this cost is related to labor and
10 percent is related to freight shipments and measurement study supplies, it was assumed that
the facilities outsource the DRE measurement and thus this cost was not considered a labor cost
for the facility.
4.3.5 Estimation of Facility Costs for Each Threshold Level
Once the labor hours were calculated, by category, for each of the cost elements, they
were multiplied by the associated labor rates to estimate labor costs per facility for each facility
category (large semiconductor facilities, non-large semiconductor facilities, and non-
semiconductor facilities). Finally, the unit cost per facility was multiplied by the number of
facilities that exceed the reporting threshold for each type of facility, resulting in the total
national costs per year for this sector.
4.4 Cost Analysis for Subpart L—Fluorinated Gas Production
4.4.1 Model Facility Development
For the Fluorinated Gas Production subpart, model facilities were developed based on the
number of products at a single facility using known data for Fluorinated Gas Production
facilities. Facilities were then categorized as producing one, three or six products using either
continuous or batch processes. Facilities that were assumed to use continuous processes to
produce their products were assumed to employ two processes per product and two vents per
process. Facilities that were assumed to use batch processes to produce their products were
assumed to employ five processes per product and five vents per process.
Option 1, the Mass Balance Approach, requires that a monthly fluorine or carbon balance
of all inputs and outputs be performed using measurements of the masses of the inputs and
outputs and of the fluorine or carbon content of the inputs and outputs. Greenhouse gas (GHG)
emissions are calculated from the difference of fluorine- or carbon-in minus fluorine- or carbon-
out. For this evaluation, the average facility using either Mass Balance Approach was assumed
to have four processes on site.
Option 2, the Process Vent Method, requires the development of emission factors for
each process vent. For vents whose GHG emissions exceed 10,000 mt C02e/year, facilities
4-15
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must use emissions testing to establish the emission factor. For other vents, facilities may use
engineering calculations to establish the emission calculation factor. For the purpose of this
evaluation it was assumed that one quarter of the process vents had GHG emissions over 10,000
mtC02e per year. Thus, for the "average" facility, it was assumed that 25 percent of vents would
be measured by emission testing and the other three quarters would be evaluated using
engineering calculations. Under the proposed rule, facilities are required to develop emission
factors and emission calculation factors in the first year and to update them every ten years
thereafter.
When calculating the cost impact for the Process Vent Method, it was apparent that a
single "outlier" facility was distorting the average cost per facility. This "outlier" is comprised of
many more processes than the average facility, and also consists of processes that are very
complicated and require many steps. Thus, the cost for this particular outlier is not at all
representative of the cost that the "average" facility will see. Thus, the cost for this particular
outlier is not at all representative of the cost that the "average" facility will see. Thus, the outlier
was excluded for purposes of summarizing the typical cost to a facility. However, the outlier
cost was still included for the nationwide impact analysis.
Under the Process Vent Method, Option 2, facilities would be required to estimate their
emissions from equipment leaks every year. Under both Option 1 and Option 2, facilities would
also be required to measure the destruction efficiency of their destruction device (e.g., thermal
oxidizer) initially and every ten years thereafter.
4.4.2 Cost Analysis for Mass Balance Approach - Option 1
This section identifies the costs associated with complying with the rulemaking using
Option 1, the Mass Balance approach. Compliance costs for this option include both labor and
non-labor (capital and O&M) costs and both startup and recurring costs. The "average" plant that
utilized the mass balance approach was estimated to have a total of 4.67 processes. The total
first year cost for the mass balance method is $127,440 in labor costs and $12,061 in capital
costs. Tables 4-5 and 4-6 summarize the labor and non-labor costs respectively.
Initial planning costs were estimated for the time needed to review the rule and prepare
required initial notifications and records. These planning hours include resolving questions,
reviewing drawings, conducting source inspections, defining constraints, writing the engineering
report and onetime costs for equipment leak measurement, such as walk-down and field
verification, populating software and initial monitoring setup costs.
4-16
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For the mass balance approach, the first year planning hours include 6.4 management
hours, 12.5 administrative hours and 124.9 hours for the industrial engineer/technician. Quality
assurance/quality control costs for planning, meetings, sample analysis certification and annual
review total 4.6 hours for the industrial manager, 92.9 industrial engineer/technician hours and
37.1 administrative hours. No planning costs are incurred in subsequent years, and QA/QC hours
drop from 135 in the first year to a total of 34 in subsequent years.
Sampling, analysis, monitoring and calculation costs were estimated on a per-continuous-
process basis. Existing facilities have indicated that the mass balance method is not practical for
batch processes, due to higher cost and the nature of the batch processes, so costs for batch
processes have not been calculated.
For the mass balance approach, first year stream sampling and analysis costs include
1798 hours for the industrial engineer/technician, 179.8 administrative hours and 89.9
management hours. This includes 165 engineer/technician hours, 8.25 management hours and
16.5 administrative hours to perform the mass balance measurements and calculations for each of
the 4.67 processes. It also includes 330 engineer/technician hours, 16.5 management hours and
33 administrative hours to complete the scoping study on each of the 3.1 processes above the
one-ton threshold. These costs apply only to the first year.
First year recordkeeping and reporting costs were estimated to include 24.7 industrial
engineer/technician hours, 5.7 management hours and 2.4 administrative hours to compile and
store data annually. Labor requirements for preparing the annual report include 7.3 industrial
engineer/technician hours, 0.7 management hours, and 1.7 administrative hours to prepare the
annual report. These costs remain unchanged in subsequent years.
Capital costs included include $12,061 to hire a consultant to perform Destruction
Efficiency Testing.
4-17
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Table 4-5. Subpart L - F-Gas Mass Balance Approach: Labor Costs (2006$)
Activity
Labor Rates (per hour)
Labor Cost per Year
per Reporting
Unit/Facility
Legal
Managerial
Technical
Clerical
$101.00
$71.03
$55.20
$29.65
First
Year
Subseq.
Year
First
Year
Subseq.
Year
First
Year
Subseq.
Year
First
Year
Subseq.
Year
First
Year
Subseq.
Year
Planning
6.4
0.0
124.9
0.0
12.5
0.0
$7,719
$0
QA/QC
4.6
1.2
92.9
23.2
37.1
9.3
$6,555
$1,638
Recordkeeping
2.4
2.4
24.7
24.7
5.7
5.7
$1,702
$1,702
Sampling and analysis
(calculations)
89.9
0
1,798.0
0
179.8
0
$110,960
$0
Reporting
0.7
0.7
7.3
7.3
1.7
1.7
$503
$503
Total
0
0
103.99
4.24
2,047.80
55.20
236.80
16.70
$127,440
$3,844
Note: All costs are in constant 2006$s.
Table 4-6. Subpart L - F-Gas Mass Balance Method: Capital and O&M Costs (2006$)
Activity
Cost Categories
Total Reporting
Cost per
Unit/Facility
Capital Cost
Equipment
Lifetime
(years)
Annualized
Capital Cost
(per year)
O&M Costs
(per year)
First
Year
Subseq.
Year
Equipment (selection, purchase,
installation)
Performance testing
$12,061
10
$845
$845
$845
Recordkeeping and Reporting
Travel
Sampling costs
Total
$12,061
$845
$0
$845
$845
Note: All costs are in constant 2006$s. Annualization uses 7% interest rate.
4.4.3 Cost Analysis for Option 2- Process Vent Testing
This section presents costs associated with complying with the rulemaking using Option
2, Process Vent Testing. These include both labor and non-labor (capital and O&M) costs and
both startup and recurring costs. The "average" plant that utilized the process vent approach was
4-18
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assumed to have a total of 5 processes. An average of 2.5 process vents were assumed to be
evaluated by testing. The remaining vents, accounting for 75% of the total vents at a facility,
were assumed to be evaluated using the engineering calculation approach. In effect, this was
assumed to require engineering calculations for each of the 5 processes at the average facility
complying with the Process Vent approach.
In each of the following paragraphs, the costs are broken out between the process vent
emissions estimates and the equipment leak assessment. For the average facility, the total first
year labor cost (Table 4-7) for the process vent method is $124,768. A capital cost of $17,521
per average facility is also estimated, as shown in Table 4-8.
Initial planning costs were estimated for the time needed to review the rule and prepare
required initial notifications and records. These planning hours include resolving questions,
reviewing drawings, conducting source inspections, defining constraints, writing the engineering
report and onetime costs for equipment leak measurement, such as walk-down and field
verification, populating software and initial monitoring setup costs.
For Option 2, the planning labor includes 1.8 hours for the industrial manager, 55.1 hours
for the industrial engineer/technician, and 44 administrative hours, totaling $4,474. There are no
planning costs estimated in subsequent years. Quality assurance/quality control requires an
estimated 105.2 hours during the first year ($4,992), and 26.35 hours in subsequent years
($1,251).
Sampling, analysis, monitoring and calculation costs were on a per-vent basis for the
process vent testing and a per-process basis for process vent calculations and for equipment
leaks.
Sampling and analysis is estimated to require 2,067.33 hours, costing $111,568, during
the first year; and 70.75 hours, costing $3,917, in subsequent years.
Recordkeeping costs were estimated on an annual basis, requiring 32.8 industrial
engineer/technician hours, 2.4 management hours and 16.3 administrative hours to compile and
store data, and costing $2,466. Labor requirements for preparing the annual report included 15.4
industrial engineer/technician hours, 0.7 management hours, and 12.3 administrative hours to
prepare the annual report, at a cost of $1,267.
Capital costs included equipment for leak detection such as the monitoring device and
data collection system. It was assumed that half of the facilities already possess monitoring and
4-19
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data collections systems, and that half of the facilities would be required to complete Destruction
Efficiency Testing.
Capital costs for the average facility totaled $17,521 (annualized to $1,227) in equipment
purchases, and an annual rental cost, in subsequent years, of $1,280 for sampling equipment.
Table 4-7. Subpart L - F-Gas Process Vent (Avg. per plant basis): Labor Costs (2006$)
Activity
Labor Rates (per hour)
Labor Cost per Year
per Reporting
Unit/Facility
Legal
Managerial
Technical
Clerical
$101.00
$71.03
$55.20
$29.65
First
Year
Subseq.
Year
First
Year
Subseq.
Year
First
Year
Subseq.
Year
First
Year
Subseq.
Year
First
Year
Subseq.
Year
Planning
1.8
0
55.1
0
44.0
0
$4,474
$0
QA/QC
3.4
0.9
67.8
17.0
34.0
8.5
$4,992
$1,251
Recordkeeping
2.4
2.4
32.8
32.8
16.3
16.3
$2,466
$2,466
Sampling and analysis
(calculations)
73.2
0.75
1,849.3
70.0
144.8
0
$111,568
$3,919
Reporting
0.7
0.7
15.4
15.4
12.3
12.3
$1,267
$1,267
Total
0
0
81.48
4.71
2,020.48
135.29
251.48
37.15
$124,768
$8,904
Note: All costs are in constant 2006$s.
Table 4-8. Subpart L - F-Gas Process Vent Method: Capital and O&M Costs (2006$)
Activity
Cost Categories
Total Reporting
Cost per
Unit/Facility
Capital Cost
Equipment
Lifetime
(years)
Annualized
Capital Cost
(per year)
O&M Costs
(per year)
First
Year
Subseq.
Year
Equipment (selection, purchase,
installation)
$5,460
10
$382
$382
$382
Performance testing
$11,200
10
$845
$845
$845
Recordkeeping and Reporting
Travel
Sampling costs
$0
$1,280
Total
$17,521
$1,227
$1,227
$2,507
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4.5 Cost Analysis for Subpart DD—Electric Power Systems
4.5.1 Model Facility Development
The model facility for electric power systems is an electric utility that operates an average
amount (nameplate capacity) of SF6-containing transmission equipment. Costs are not expected
to vary widely among utilities because all utilities would track the same set of quantities (SF6
stored, acquired, and disbursed; equipment installed and retired), and the costs of tracking and
reporting these quantities are relatively modest.
The model facility is assumed to already have the capital and technical capability to
monitor and report emissions of SF6 using a mass-balance formula. To use the formula, facilities
must track their SF6 inventory in cylinders, SF6 acquisitions, and SF6 disbursements, as well as
their equipment commissioning and decommissioning. These data are already tracked by
utilities, but not necessarily as closely and comprehensively as required to develop all utility
level mass-balance inputs. Thus, as discussed below, the model facility is assumed to incur some
costs for tracking and reporting SF6 emissions.
4.5.2 Determine Cost Elements
The total costs associated with the proposed rulemaking for electric power systems were
estimated using labor hours from an Information Collection Request (ICR) performed for EPA's
SF6 Emission Reduction Partnership.18 The labor hours were multiplied by current labor costs to
calculate the reporting costs under the proposed reporting rule.
All labor costs are considered on an annual basis and are divided into the following four
categories:
Regulation Compliance Determination Costs. Recurring costs consist of reviewing the
instructions of the mass-balance reporting form and associated materials to ensure the proper
procedures are in place to obtain technically accurate inputs.
Monitoring Costs. Recurring costs consist of gathering information for the mass-balance
reporting form and associated materials. The information gathered represents the movement of
SF6 throughout the system. Since SF6 is often handled and stored at the substation level,
18 EPA. (2000). Supporting statement for EPA Information Collection Request number 1933.01 "Information
collection activities associated with EPA's SF6 Emission Reduction Partnership for Electric Power Systems."
4-21
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collecting information is usually a bottom-up process that is the most labor-intensive activity in
the reporting process.
Reporting Costs. Recurring costs consist of completing and reviewing the information
requested by the mass-balance reporting form and associated materials as well as submitting all
materials.
Recordkeeping Costs. Recurring costs consist of maintaining a record of the emissions
inventory and documentation.
4.5.3 Proportion of Facilities in Different Model Facility Levels
There is only one model facility for electric power systems.
4.5.4 Assigning Costs to Cost Elements
Determine Labor Categories
To evaluate labor costs, it was not only necessary to determine the amount of time
required for all of the tasks associated with the compliance, monitoring, reporting, and
recordkeeping activities, but also to determine who will perform each task. For this analysis,
three labor categories were used as shown in Table 4-9.
Table 4-9. Labor Categories and Hourly Rates
Labor Category
Description
Loaded Hourly Rate ($/hour)
Managerial
Oversees work at a high level and
is the final authority on all
reporting requirements. Reviews
reporting forms to ensure accuracy
and consistency
$71.03/hour
Technical
Compiles data to develop mass-
balance inputs. Performs emission
calculations on reporting form
$55.20/hour
Clerical
Assists with documentation and
recording information
$29.65/hour
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Allocate Responsibilities and Estimate Labor Hours
Labor hours for all cost elements were estimated based on consultation between EPA and
SF6 Emission Reduction Partners conducted for the 2000 Partnership ICR. Table 4-10
summarizes the allocation of hours and responsibilities by labor category.
Table 4-10. Responsibilities for Regulation Compliance by Labor Category
Cost Element
Responsibilities and Hours by Labor Category
Managerial
Technical
Clerical
Per Facility/
Per
Company
Responsibilities
Hours
Responsibilities
Hours
Responsibilities
Hours
Regulation Compliance Determination Costs
Review the
instructions, SF6
mass-balance
reporting form, and
associated materials
Review the
instructions to
the level
required to
perform
oversight
responsibilities
1
Review the
instructions to
the level
required to
compile data
and perform
necessary
calculations
1.5
Per Facility
Monitoring Costs
Gather information
for the SF6 mass-
balance reporting
form and associated
materials
Institute and
oversee proper
data collection
procedures that
account for all
SF6 within the
system
4
Compile SF6
data and sort
data into
appropriate
input categories
for the mass-
balance formula
17
Perform
measurements
and collect
documentation
that track SF6 gas
movements
11
Per Facility
Reporting Costs
Complete and review
the information
requested by the SF6
mass-balance
reporting form and
associated materials
Review
reporting forms
to ensure
accuracy and
consistency
3.5
Calculate inputs
for the mass-
balance
reporting form.
Perform facility-
wide sf6
emission
calculations
3.5
Provide data and
supporting
documentation to
technical and
managerial staff
1.5
Per Facility
Submit the SF6
mass-balance
reporting form and
associated materials
0
0
Combine the
mass-balance
reporting form
with all
necessary
materials and
submit
0.2
Per Facility
Recordkeeping Costs
Maintain a record of
the emissions
inventory and
documentation
0
0
File the mass-
balance reporting
form and
associated
materials into the
recordkeeping
0.2
Per Facility
4-23
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Cost Element
Responsibilities and Hours by Labor Category
Managerial
Technical
Clerical
Per Facility/
Per
Company
Responsibilities
Hours
Responsibilities
Hours
Responsibilities
Hours
system
Other Costs
Other costs consist of postage costs—for submitting materials in a one ounce package,
and photocopying costs—for maintaining records of the reporting form and associated materials.
These costs were gathered by EPA in the SF6 Emission Reduction Partnership ICR.
Table 4-11. Other Costs Associated with Reporting and Recordkeeping
Element
Description
Costs ($)
Postage Costs
Postage costs for submitting the reporting form and associated materials
$0.38
Photocopying
Costs
Photocopying costs for maintaining a record of the emissions inventory
and associated materials
$11.66
4.5.5 Estimate per Facility Costs for Each Threshold Level
Once the labor hours were calculated, by category, for each of the cost elements, they
were multiplied by the associated labor rates to estimate labor costs per facility. Other costs,
consisting of postage and photocopying, were then added to the labor costs to calculate the total
cost per facility. For calculating national costs, the total cost per facility was multiplied by 141,
which is the number of facilities that exceed the reporting threshold.
4.6 Cost Analysis for Subpart QQ—Imports and Exports of Fluorinated GHGs
4.6.1 Model Facility Development
Importers and exporters of products containing fluorinated GHGs include manufacturers,
distributors, and retailers of these products. Such products include several types of refrigeration
and air-conditioning equipment and foams containing HFCs and electrical equipment containing
SF6. This analysis does not consider the costs of C02 and N20 contained in imported and
exported products. Although EPA does not have data on the amount of C02 or N20 imported
and exported in products (e.g., carbonated sodas and cans of whipped cream), the relatively small
quantities of C02 or N20 contained in each unit and the relatively low GWPs of these gases
4-24
-------
(compared to those of the fluorinated GHGs) imply that the CCVequivalent quantities imported
are likely to be small both nationally and per importer.
There is one model entity that represents importers/exporters of products containing
fluorinated GHGs and the specific reporting activities and costs.
• Importers/Exporters offluorinated GHG—containing products: An entity that imports or
exports products or foam containing fluorinated GHGs or equipment containing SF6.
This entity is assumed to import or export 15 equipment types (with distinct charge sizes
and possibly chemicals) in 20 shipments each year.
The proposed monitoring method for fluorinated GHGs-containing products and
equipment requires the identification of the total amount of each fluorinated GHG
imported/exported inside the products and/or the quantity of products imported/exported (e.g.,
number of pieces of equipment) along with information on the identity and quantity of the
fluorinated GHG in each unit or piece. Persons importing equipment that contain both a
fluorinated GHG refrigerant and a foam blown with a fluorinated GHG (e.g., household
refrigerators) would separately report these GHGs (which are generally different). Similarly,
total exports of chemical actually contained in exported equipment, foams, or other products
would be reported by exporters, by chemical in metric tons or metric tC02e. Trans-shipments
(i.e., products containing GHGs that originate in a foreign country and enter the United States en
route to an ultimate destination in another foreign country) would be exempt from reporting.
Importers/exports of products containing fluorinated GHGs would report their imports/exports
on the corporate level.
Table 4-12 presents the number of affected entities that would be subject to the rule based
on alternative emission thresholds.
4-25
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Table 4-12. Number of Representative Affected Entities Used in the Cost Analysis
Number of Representative Entities"
Threshold
All HFC Equipment
All Foam Products
All SF6 Equipment
Importers
Exporters
Importers
Exporters
Importers
Exporters
1,000
50
25
50
25
8
10
10,000
50
25
50
25
8
5
25,000
50
25
50
25
8
0
100,000
50
25
50
25
8
0
aWhile listed separately in the table above to illustrate the number of importers and number of exporters, importers and exporters
are the same entities for SF6 equipment, and in some cases, the same entities for HFC equipment and foam products. As such,
the per-facilities costs will increase—to reflect activities associated with both importing and exporting, and the overall number of
respondents will decrease given the overlap.
4.6.2 Determine Cost Elements
The total costs associated with complying with the proposed rulemaking can be broken
into 4 elements, each of which is described below.
Monitoring Costs. Costs for tracking quantities of products imported and the quantity of
fluorinated GHGs in these products include first-year costs to establish a system such as a
spreadsheet or database to track charge sizes for different types of equipment and the
numbers of pieces of that type of equipment that are imported. Subsequent year costs
include maintaining this system.
Reporting Costs. The reporting costs associated with complying include annual labor
hours for reporting the quantities of products or foam imported and/or exported; and the
name and quantity of fluorinated GHG within each product or foam imported and/or
exported.
Record Keeping Costs. Additional and reporting ($500) costs were also added to each
facility.
4.6.3 Analyze Proportion of Facilities in the Different Model Facility Categories
To classify facilities into different groups, the activities undertaken at each model facility
type were evaluated. The activities conducted by each model facility are listed in the model
facility development section for this subpart. Table 4-13 indicates the number of facilities that
fall into each model facility category.
4-26
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Table 4-13. Allocation of Facilities to Model Types
Segment
Number of Facilities
Importer of HFC-containing equipment
50
Exporters of HFC-containing equipment
25
Importer of HFC-containing foams
50
Exporter of HFC-containing foams
25
Importers of SFr,-containing equipment
8
Exporters of SFr,-containing equipment
10
4.6.4 Assigning Costs to Cost Elements
Determining Labor Categories
To evaluate labor costs, it was not only necessary to determine the amount of time
required for all of the tasks associated with monitoring, but also to determine who will perform
each task. For this analysis, two labor categories were used as shown in Table 4-14.
Table 4-14. Labor Categories and Hourly Rates
Labor Category
Description
Loaded Hourly Rate
(2006$/hour)
Managerial
Oversees work at a high level and
is the final authority on all
reporting requirements.
$71.03/hour
Technical
Conducts monitoring of emissions
sources, checks for accuracy,
performs measurements.
$55.20/hour
Allocating Responsibilities and Estimate Labor Hours
Assigning labor hours for all cost elements was based on the following approach.
To determine hours for the first year, the time to assemble relevant paperwork for the first
year was taken into account, as well as the time to develop a listing of equipment types and foam
products, and the time to enter in the data for all equipment types across all shipments.
4-27
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To determine hours for subsequent years, the time to maintain the ongoing, relevant
paperwork was taken into account as well as the time to enter in the data for all equipment types
across all shipments. Management time in both the first and subsequent years was assumed to
represent 10 percent of total time for both the first and subsequent years.Table 4-15 summarizes
the allocation of hours and responsibilities by labor category. The reporting labor hours shown
in this table represent the time estimated to complete the cost element for all activities applicable
to the entity (i.e., import, export).
Table 4-15. Responsibilities for Regulation Compliance by Labor Category
Cost Element
Responsibilities and Hours by Labor Category
Managerial
Technical
Per Facility/
Per
Company*
Responsibilities Hours
Responsibilities Hours
Importer/Exporter of Fluorinated GHG-containing Product (including foams and SF6-containing equipment)
Registration Compliance Data
None Estimated
Monitoring
First Year:
Tracking System
To oversee the design of a
database or spreadsheet to
track imports/exports
4
To establish a database or
spreadsheet to track
imports/exports
40
Per Company
Subsequent Years:
Tracking System
To review maintained
tracking system
3
To update and maintain
tracking system
31
Per Company
Reporting
Report Data
To review the data
1
To collect data records
already measured by an
instrument
3
Per Company
Record Keeping
None Estimated
Once the labor hours were calculated, by category, for each of the cost elements, they
were multiplied by the associated labor rates to estimate labor costs per facility. No additional
costs are assumed.
4-28
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Capital Cost Annualization and O&M Costs
There are no assumed capital costs related to monitoring emissions and archiving of
information, and therefore there are no associated O&M costs.
4.6.5 Estimate per Facility Costs for Each Threshold Level
Once the labor hours were calculated, by category, for each of the cost elements (as
shown in Table 4-15, they were multiplied by the associated labor rates (as shown in Table 4-14)
to estimate labor costs per facility. The unit cost per entity was multiplied by the number of
facilities that exceed the reporting threshold (as shown in Table 4-13), to determine the total
national costs per year for this sector.
4.7 Subpart SS—Electrical Equipment Manufacturing
4.7.1 Model Facility Development
The model facility for electrical equipment manufacture or refurbishment and
manufacturing of electrical components is a manufacturer that produces an average amount
(nameplate capacity) of SF6-containing transmission and distribution equipment. Costs are not
expected to vary widely among electrical equipment manufacturers because all manufacturers
would track the same set of quantities (SF6 stored, acquired, and disbursed), and the costs of
tracking and reporting these quantities are relatively modest.
The model facility is assumed to already have the capital and technical capability to
monitor and report emissions of SF6 using a mass-balance formula. To use the formula, facilities
must track their SF6 inventory in cylinders, SF6 acquisitions, and SF6 disbursements. These data
are already tracked by electrical equipment manufacturers, but not necessarily as closely and
comprehensively as required to develop all manufacturer-level mass-balance inputs. Thus, as
discussed below, the model facility is assumed to incur some costs for tracking and reporting SF6
emissions.
Table 4-16 presents the number of affected entities that would be subject to the rule based
on alternative emission thresholds under subpart SS.
4-29
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Table 4-16. Number of Representative Affected Entities Used in the Cost Analysis
Threshold
Number of
Representative Entities
1,000
10
10,000
10
25,000
10
100,000
5
4.7.2 Determine Cost Elements
The total costs associated with the proposed rulemaking for electrical equipment
manufacturers were estimated using labor hours from an Information Collection Request (ICR)
performed for EPA's SF6 Emission Reduction Partnership.19'20 The labor hours were multiplied
by current labor costs to calculate the reporting costs under the proposed reporting rule. All labor
costs are considered on an annual basis and are divided into the following four categories:
Regulation Compliance Determination Costs. Recurring costs consist of reviewing the
instructions of the mass-balance reporting form and associated materials to ensure the proper
procedures are in place to obtain technically accurate inputs.
Monitoring Costs. Recurring costs consist of gathering information for the mass-balance
reporting form and associated materials. The information gathered represents the movement of
SF6 throughout the system.
Reporting Costs. Recurring costs consist of completing and reviewing the information
requested by the mass-balance reporting form and associated materials as well as submitting all
materials.
Recordkeeping Costs. Recurring costs consist of maintaining a record of the emissions
inventory and documentation.
19 EPA. (2000). Supporting statement for EPA Information Collection Request number 1933.01 "Information
collection activities associated with EPA's SF6 Emission Reduction Partnership for Electric Power Systems"
20 Although the ICR was focused on the costs of reporting SF6 emissions from electric utilities rather than electrical
equipment manufacturers, the inputs required to calculate emissions and the activities involved with reporting are
similar for both sectors. Therefore, the costs incurred for electrical equipment manufacturers are assumed to be the
same as the costs incurred for electric power systems.
4-30
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4.7.3 Analyze Proportion of Facilities in the Different Model Facility Categories
There is only one model facility for electrical equipment manufacture or refurbishment
and manufacturing of electrical components.
4.7.4 Assigning Costs to Cost Elements
Determining Labor Categories
To evaluate labor costs, it was not only necessary to determine the amount of time
required for all of the tasks associated with monitoring, but also to determine who will perform
each task. For this analysis, two labor categories were used as shown in Table 4-17.
Table 4-17. Labor Categories and Hourly Rates
Labor Category
Description
Loaded Hourly Rate ($/hour)
Managerial
Oversees work at a high level and
is the final authority on all
reporting requirements. Reviews
reporting forms to ensure accuracy
and consistency
$71.03/hour
Technical
Compiles data to develop mass-
balance inputs. Performs emission
calculations on reporting form
$55.20/hour
Clerical
Assists with documentation and
recording information
$29.65/hour
Allocating Responsibilities
Labor hours for all cost elements were estimated based on consultation between EPA and
SF6 Emission Reduction Partners conducted for the 2000 Partnership ICR. Table 4-18
summarizes the allocation of hours and responsibilities by labor category.
4-31
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Table 4-18. Responsibilities for Regulation Compliance by Labor Category Per Facility
Cost Element
Responsibilities and Hours by Labor Category
Managerial
Technical
Clerical
Responsibilities
Hours
Responsibilities
Hours
Responsibilities
Hours
Regulation Compliance Determination Costs
Review the instructions, SF6 mass-
balance reporting form, and
associated materials
Review the instructions to the
level required to perform
oversight responsibilities
1
Review the instructions to the
level required to compile data
and perform necessary
calculations
1.5
0
Monitoring Costs
Gather information for the SF6 mass-
balance reporting form and
associated materials
Institute and oversee proper data
collection procedures that account
for all SF6 within the system
4
Compile SF6 data and sort data
into appropriate input categories
for the mass-balance formula
17
Perform measurements and collect
documentation that track SF6 gas
movements
11
Reporting Costs
Complete and review the information
requested by the SF6 mass-balance
reporting form and associated
materials
Review reporting forms to ensure
accuracy and consistency
3.5
Calculate inputs for the mass-
balance reporting form. Perform
facility-wide SF6 emission
calculations
3.5
Provide data and supporting
documentation to technical and
managerial staff
1.5
Submit the SF6 mass-balance
reporting form and associated
materials
0
0
Combine the mass-balance
reporting form with all necessary
materials and submit
0.2
Recordkeeping Costs
Maintain a record of the emissions
inventory and documentation
0
0
File the mass-balance reporting
form and associated materials into
the recordkeeping system
0.2
4-32
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4.7.5 Other Costs
Other costs consist of postage costs—for submitting materials in a one ounce package,
and photocopying costs—for maintaining records of the reporting form and associated materials.
These costs were gathered by EPA in the SF6 Emission Reduction Partnership ICR and are
presented in Table 4-19.
Table 4-19. Other Costs Associated with Reporting and Recordkeeping
Element
Description
Costs ($)
Postage Costs
Postage costs for submitting the reporting form and associated materials
$0.38
Photocopying Costs
Photocopying costs for maintaining a record of the emissions inventory and
associated materials
$11.66
4.7.6 Estimate per Facility Costs for Each Threshold Level
Once the labor hours were calculated, by category, for each of the cost elements, they
were multiplied by the associated labor rates to estimate labor costs per facility. Other costs,
consisting of postage and photocopying, were then added to the labor costs to calculate the total
cost per facility. For calculating national costs, the total cost per facility was multiplied by 10,
which is the number of facilities that exceed the reporting threshold.
4.8 Public Sector Burden
EPA estimates the public sector burden to be $383,582 per year; $72,000 per year is for
verification activities, and remaining costs are for program implementation and developing and
maintaining the data collection system. Program implementation activities include, but are not
limited to, developing guidance and training materials to assist the regulated community,
responding to inquires from affected facilities on monitoring and applicability requirements, and
developing tools to assist in determining applicability.
4-33
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SECTION 5
ECONOMIC IMPACT ANALYSIS
EPA has prepared an EIA to provide decision makers with a measure of the social costs
of using resources to comply with the proposed GHG reporting requirements. As noted in EPA's
(2000) Guidelines for Preparing Economic Analyses, several tools are available to estimate
social costs and range from simple direct compliance cost methods to the development of a more
complex market analysis that estimates market changes (e.g., price and consumption) and
economic welfare changes (e.g., changes in consumer and producer surplus). Given data
limitations and the size scope of the proposed rule, EPA has used the direct compliance cost
method as a measure of social costs.
5.1 Selection of Reporting Thresholds
5.1.1 Subpart I- Electronics Manufacturing
This analysis is based on the costs of monitoring fluorinated greenhouse gas and N20
emissions from electronics manufacturing facilities. Electronics manufacturing facilities were
broken into three categories; non-semi conductor electronics (3 facilities), largest semiconductor
(29 facilities), and non-largest semiconductor (62 facilities). Non- semiconductor electronics
facilities include facilities that manufacture micro-electro-mechanical systems (MEMS), liquid
crystal displays (LCDs), and photovoltaics (PV).
In the initial proposal, EPA proposed capacity-based thresholds equivalent to 25,000
metric tons of C02e for manufacture of semiconductors, LCDs, and MEMS, and an emissions-
based threshold of 25,000 metric tons of C02e for manufacture of PV. As stated in the initial
proposal, EPA proposed to use a capacity-based threshold based on the published capacities of
facilities, as opposed to an emissions-based threshold, where possible, because EPA believed
that it simplified the applicability determination. In comments received in response to the initial
proposed rule, several comments indicated that the proposed capacity-based threshold created
ambiguity. In response to the comments received on the initial proposed capacity-based
threshold, EPA is now proposing an emissions-based threshold of 25,000 mtC02e for
manufacture of semiconductors, LCD, MEMS, and PV.
In the analysis, EPA considered emission thresholds of 1,000 metric tons C02e, 10,000
metric tons C02e, 25,000 metric tons C02e, and 100,000 metric tons C02e per year. This
analysis used IPCC Tier 1 emission factors and assumed no abatement. Table 5-1 presents the
emissions and facilities that would be captured by the respective emissions thresholds.
5-1
-------
Table 5-1. Threshold Analysis for Subpart I - Electronics Manufacturing Industry
Emission
Threshold
Level (metric
tons C02e/yr)
Total
National
Emissions
(metric tons
C02e/yr)
Total
Number of
Facilities
Emissions Covered
Facilities Covered
metric tons
C02e/yr
Percent
Facilities
Percent
1,000
5,984,463
216
5,962,091
99.6%
165
76%
10,000
5,984,463
216
5,813,200
97%
114
53%
25,000
5,984,463
216
5,622,570
94%
94
44%
100,000
5,984,463
216
4,737,622
79%
55
26%
EPA selected the 25,000 metric tons C02e per year threshold because this threshold
maximizes emissions reporting, while excluding small facilities that do not contribute
significantly to the overall GHG emissions.
The proposed emissions-based thresholds are estimated to include approximately 76
percent of semiconductor facilities and 7 percent of the non-semiconductor facilities (see Table
5-2). At the same time, the thresholds are expected to cover nearly 96 percent of fluorinated
GHG emissions from semiconductor facilities, and 54 percent of fluorinated GHG emissions
from non-semiconductor facilities.
5-2
-------
Table 5-2. Summary of Rule Applicability under the Proposed Emission-Based Thresholds
for Subpart I - Electronics Manufacturing Industry
Emission Threshold
Level (metric tons
C02e/yr)
Total
National
Emissions
(metric tons
C02e/yr)
Total
Number of
Facilities
Total Emissions
of Source
(metric tons
C02e)
Emissions Covered
Facilities Covered
metric
tons
C02e/yr
Percent
Facilities
Percent
Semiconductors
25,000
175
5,741,676
5,492,066
96%
91
52%
Non-Semiconductors
25,000
41
242,786
130,504
54%
3
7%
Combined these emissions are estimated to account for close to 94 percent of fluorinated
GHG emissions from the electronics industry as a whole. To determine whether a manufacturer
falls above or below the proposed 25,000 metric tons of C02e, EPA is proposing that
semiconductor, and non-semi conductor MEMS facilities use gas specific 2006 IPCC Tier 1
emission factors assuming 100% manufacturing capacity to calculate annual metric tons of
emissions in C02 equivalents. For non-semi conductor PV facilities, EPA is proposing that they
facilities multiply annual fluorinated GHG purchases or consumption by the gas-appropriate
100-year GWPs, as defined in Table A-l to Subpart A of Part 98, to calculate annual metric tons
of emissions in C02 equivalents. None of these calculations shall account for emission
abatement technologies.
For additional background information on the threshold analysis, refer to the Electronics
Manufacturing TSD (EPA-HQ-OAR-2009-0927). For specific information on costs, including
unamortized first year capital expenditures, please refer to section 4.3.
5.1.2 Subpart L- Fluorinated Gas Production
Under the proposed rule, owners and operators of fluorinated gas production facilities
would be required to estimate and report GHG emissions if those emissions, including both
combustion and fluorinated GHG emissions, would exceed 25,000 mtC02e in the absence of
control technology (e.g., thermal oxidation).21
21 Following the precedents set by other Clean Air Act regulations, EPA is using the term "uncontrolled" to describe
such emissions. Specifically, EPA is proposing to define "uncontrolled fluorinated GHG emissions" as a gas
stream containing fluorinated GHG which has exited the process (or process condenser, where applicable), but
5-3
-------
In developing the threshold, we considered multiple controlled and uncontrolled
emissions thresholds, including 1,000, 10,000, 25,000, and 100,000 metric tons C02e. For
fluorinated GHG production processes (including fluorinated anesthetics production processes),
uncontrolled (pre-control) emissions were estimated by multiplying a factor of 3 percent by the
estimated production at each facility. For CFC and HCFC production processes (except for
HCFC-22 production processes), uncontrolled emissions were estimated by multiplying a factor
of 2 percent by the estimated production at each facility. Uncontrolled emissions are strongly
influenced by by-product generation rates, which are known to vary between zero and several
percent for fluorinated gas production processes; thus, these estimates are uncertain. Controlled
emissions were assumed to be half of uncontrolled emissions at each facility. Because EPA has
little information on combustion-related emissions at fluorinated gas production facilities, these
emissions were not included in the analysis. The results of the analysis for production of HFCs,
PFCs, SF6, NF3, CFCs, and HCFCs are shown in Tables 5-3 and 5-4.
Table 5-3. Threshold Analysis for Fluorinated GHG Emissions from Production of HFCs,
PFCs, SF6, NF3, CFCs, and HCFCs (Uncontrolled Emissions)
Threshold
Level (metric
tons C02e/r)
Total National
Emissions
(metric tons
C02e)
Number of
Facilities
Emissions Covered
Facilities Covered
Metric tons
C02e
Percent
Number
Percent
1,000
10,600,000
14
10,600,000
100%
14
100%
10,000
10,600,000
14
10,600,000
100%
14
100%
25,000
10,600,000
14
10,600,000
100%
14
100%
100,000
10,600,000
14
10,600,000
100%
13
93%
which has not yet been introduced into an air pollution control device to reduce the mass of fluorinated GHGs in
the stream. The term does not imply that the emissions are never controlled, but is synonymous with "pre-
control emissions."
5-4
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Table 5-4. Threshold Analysis for Fluorinated GHG Emissions from Production of HFCs,
PFCs, SF6, NF3, CFCs, and HCFCs (Controlled Emissions)
Threshold
Level (metric
tons C02e/r)
Total National
Emissions
(metric tons
C02e)
Number of
Facilities
Emissions Covered
Facilities Covered
Metric tons
C02e
Percent
Number
Percent
1,000
10,600,000
14
10,600,000
100%
14
100%
10,000
10,600,000
14
10,600,000
100%
14
100%
25,000
10,600,000
14
10,600,000
100%
14
100%
100,000
10,600,000
14
10,300,000
97%
10
71%
As can be seen from the tables, most HFC, PFC, SF6, NF3, CFC, and HCFC production
facilities would be covered by all the thresholds considered. Although we do not have facility-
specific production information for producers of fluorinated anesthetics, we believe that few or
none of these facilities are likely to have uncontrolled emissions above the proposed threshold.
However, it is possible that EPA has underestimated total pre-control emissions from anesthetics.
In its threshold analysis for fluorinated GHG production, EPA has assumed that emissions have
GWPs similar to those of the product produced. However, fluorinated anesthetics are
hydrofluoroethers, and other HFE production processes of which EPA is aware generate by-
products with higher GWPs than the product. A full discussion of the threshold selection analysis
is available in the revised Fluorinated GHG Production TSD (EPA-HQ-OAR-2009-0927-012).
5.1.3 Subpart DD- Sulfur Hexafluoride from Electric Power Systems
The model facility for electric power systems is an electric utility that operates an average
amount (nameplate capacity) of Sulfur Hexafloride (SF6)-containing transmission equipment.
Costs are not expected to vary widely among utilities because all utilities would track the same
set of quantities (SF6 stored, acquired, and disbursed; equipment installed and retired), and the
costs of tracking and reporting these quantities are relatively modest.
In the analysis, EPA considered emission thresholds of 1,000 metric tons C02e, 10,000
metric tons C02e, 25,000 metric tons C02e, and 100,000 metric tons C02e per year. This
analysis used IPCC Tier 1 emission factors and assumed no abatement. Table 5-5 presents the
emissions and facilities that would be captured by the respective emissions thresholds.
5-5
-------
Table 5-5. Threshold Analysis for Subpart DD - Electric Power Systems
Emission
Threshold
Level (metric
tons C02e/yr)
Total
National
Emissions
(metric tons
C02e/yr)
Total
Number of
Facilities
Emissions Covered
Facilities Covered
metric tons
C02e/yr
Percent
Facilities
Percent
1,000
12,400,000
1,364
12,190,000
98.31%
578
42.38%
10,000
12,400,000
1,364
10,960,000
88.39%
183
13.42%
25,000
12,400,000
1,364
10,320,000
83.23%
141
10.34%
100,000
12,400,000
1,364
5,950,000
47.98%
35
2.57%
EPA selected the 25,000 metric tons C02e per year threshold because this threshold
maximizes emissions reporting, while excluding small facilities that do not contribute
significantly to the overall GHG emissions.
The proposed emissions-based thresholds are estimated to include approximately 10
percent of electrical power systems transmission equipment (see Table 5-5). At the same time,
the thresholds are expected to cover nearly 83 percent of SF6 emissions.
5.1.4 Subpart 00- Imports and Exports of Fluorinated GHGs in Pre-Charged Equipment
and Closed-Cell Foams
Under the current proposal, EPA is proposing to require that importers and exporters of
F-GHGs contained in pre-charged equipment and closed cell foams report their imports and
exports if either their total imports or their total exports, in equipment, foams, and in bulk,
exceed 25,000 mtCC^e per year. This threshold is the same as that for bulk imports and exports.
Table 5-6. Threshold Analysis for Subpart QQ-Imports of Fluorinated GHGs in Pre-
Charged Equipment and Closed-Cell Foams
HFC Refrigeration/AC
Equipment
SF6 Electrical Equipment
Closed-cell Foams
Threshold
Level
Imports
Covered
Importers
Covered
Imports
Covered
Importers
Covered
Imports
Covered
Importers
Covered
1,000
16,992,965
50
1,888,932
8
3,025,285
50
10,000
16,992,965
50
1,888,932
8
3,025,285
50
25,000
16,992,965
50
1,888,932
8
3,025,285
50
100,000
16,992,965
50
1,888,932
8
0
0
5-6
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Table 5-7. Threshold Analysis for Subpart QQ-Exports of Fluorinated GHGs in Pre-
Charged Equipment and Closed-Cell Foams
Threshold
Level
HFC Refrigeration/AC
Equipment
SF6 Electrical Equipment
Closed-cell Foams
Exports
Covered
Exporters
Covered
Exports
Covered
Exporters
Covered
Exports
Covered
Exporters
Covered
1,000
3,061,830
25
153,323
10
1,089,177
25
10,000
3,061,830
25
107,326
5
1,089,177
25
25,000
3,061,830
25
0
0
1,089,177
25
100,000
3,061,830
25
0
0
0
0
5.1.5 Subpart SS- Electrical Equipment Manufacture or Refurbishment and Manufacturing
of Electrical Components
EPA is proposing to require electrical equipment manufacturers to report their SF6 and
PFC emissions if their total annual purchases of SF6 or PFCs exceed 23,061 lbs. This
consumption-based threshold is equivalent to an emissions-based threshold of 25,000 mtCC^e,
assuming an average manufacturer emission rate of 10%. EPA chose the consumption-based
threshold, as it is believed to allow equipment manufacturers to quickly determine if they are
subject to reporting requirements by referencing their SF6 purchase records.
Table 5-8. Threshold Analysis for Subpart SS- Electrical Equipment Manufacture or
Refurbishment and Manufacturing of Electrical Components
Emission Threshold (Mt C02 Eq)
1,000
10,000
25,000
100,000
Consumption Threshold (lbs. of SF6)
922
9,220
23,061
92,244
Number of Facilities Above
10
10
10
5
Percent of Facilities Above
100%
100%
100%
50%
Total Emissions of Facilities Above (Mt C02 Eq)
814,128
814,128
814,128
569,890
Percent of Emissions Above
100%
100%
100%
70%
5.1.6 National Emissions Covered Under Selected Thresholds
The total national emissions covered under the selected options are 53.4 MtCC^e (Table
5-9). The majority of these covered emissions are from the importers and exporters of fluorinated
GHGs covered by Subpart QQ (26.1MtC02e). Although the majority of cost and emissions
information reported in this economic and small entity analysis is organized by subpart, EPA
5-7
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also mapped each subpart to an industry included in the North American Industry Classification
System (NAICS); the mapping allows the cost data to be used in conjunction with other
economic census data.
Table 5-9. Estimates of Emissions (MtC02e) Reported in 2008 Under the Selected Option
Subpart
Emissions Coverage (MtC02e)
Subpart I - Electronics Industry
5.6
Subpart L - Fluorinated Gas Production
10.6
Subpart DD - Sulfur Hexalfuoride (SF6) from Electric Power Systems
10.3
Subpart QQ - Imports and Exports of Fluorinated GHGs
26.1
Subpart SS - Electrical Equipment Manufacture or Refurbishment and
Manufacturing of Electrical Components
0.8
Total
53.4
5.2 National Cost Estimates
As shown in Table 5-10, the total national costs for the selected option are estimated to
be $7.6 million in the first year and $7.24million in subsequent years ($2006). This includes a
public sector burden estimate of $384,000 for program implementation and verification
activities. Subparts bearing the greatest share of the ongoing private costs of the rule in the first
year are the electronics industry (38%) and fluorinated gas producers (40%).
In addition to total national costs by subpart under the selected option, we also report
average cost per ton to support additional analysis of the greenhouse reporting programs. The
average ongoing (subsequent year) private cost per metric ton varies by subpart; measures range
from less than $0.01 per ton (Subpart SS) to $0.36 per ton (Subpart I).
5-8
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Table 5-10. National Cost Estimates by Subpart: Selected Option
Subpart
2007
NAICS
First Year
Subsequent Years
Millions
2006$
$/ton
Share
Millions
2006$
$/ton
Share
Subpart I - Electronics
Industry
334413,334119
$2.9
$0.52
38%
$5.4
$0.96
76%
Subpart L - Fluorinated Gas
Production3
325120
$3.0
$0.28
40%
$0.2
$0.02
2%
Subpart DD - Electric
Transmission and
Distribution Equipment Use
221121
$0.6
$0.05
7%
$0.6
$0.05
8%
Subpart QQ - Imports and
Exports of Fluorinated
GHGs
326140,326150,
333415,335313,
336391,423610,
423620, 423720,
421730,421740,
443111,443112,
422610
$0.7
$0.03
9%
$0.6
$0.02
9%
Subpart SS - Electrical
Equipment Manufacture
and Refurbishment and
Manufacturing of Electrical
Components
33361,33531
$0.02
$0.03
0.3%
$0.02
$0.03
0%
Private Sector, Total
$7.2
95%
$6.8
95%
Public Sector, Total
$0.4
5%
$0.4
5%
Total
$7.6
100%
$7.2
100%
aSubpart L costs include costs for outlier facility. Columns may not sum to totals due to rounding. .
5.3 Economic Impact Analysis
EPA assessed how the regulatory program may influence the profitability of companies
by comparing the monitoring program costs to total sales (i.e., a "sales" test). The techniques
and data we use are identical to the MRR rule and focus on small entities. We provide additional
details of the analysis below.
5.3.1 Overall Method of Assessing Economic Impacts
To assess the possible economic impacts associated with the rule, EPA compared per-
facility program costs to facility sales for facilities of various sizes. Data on sales revenues for
facilities of various sizes was obtained from the Census Bureau's Statistics of U.S. Businesses
(SUSB) database for 2002. SUSB provides establishment-level information on revenues
enterprise size; EPA is assuming that "enterprise" corresponds to firm or company, and
"establishment" corresponds to facility. Facility-level costs of complying with the rule are
compared to sales revenues for typical facilities, and for facilities owned by companies of
5-9
-------
various sizes in the tables below. As noted above, the focus of our analysis is impacts to small
entities.
5.3.2 Assessing Economic Impacts on Small Entities
The first step in this assessment was to determine whether the rule will have a significant
impact on a substantial number of small entities (SISNOSE). To make this determination, EPA
used a screening analysis that allows us to indicate whether EPA can certify the rule as not
having a SISNOSE. The elements of this analysis included
¦ identifying affected subparts and entities,
selecting and describing the measures and economic impact thresholds used in the
analysis, and
determining SISNOSE certification category.
5.3.2.1 Identify Affected Subparts and Entities
The industry subparts covered by the rule were identified during the development of the
cost analysis for the reporting rule. The SUSB data provide national information on the
distribution of economic variables by industry and size. These data were developed in
cooperation with, and partially funded by, the Office of Advocacy of the Small Business
Administration (SBA) (SBA, 2008a). The data include the number of establishments
(Table 5-11), and receipts (Table 5-12) and present information on all entities in an industry
covered by the rule; however, many of these entities would not be expected to report under the
preferred option because they would fall below the 25,000 hybrid threshold. SUSB also provides
this data by enterprise employment size. The census definitions in this data set 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, 2002. 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.
5-10
-------
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
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.
Because the SBA's business size definitions (SBA, 2009c) 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.
We also report the SB A size standard(s) for each industry group in order to facilitate
comparisons and different thresholds.
5-11
-------
Table 5-11. Number of Establishments by Affected Industry and Enterprise3 Size: 2002
Owned by Enterprises with:
2007
NAICS
NAICS Description
Subpart
SBA Size Standard
(effective August 22,
2008)
Total
Establishments
1 to 20
Employees
20 to 99
Employees
100 to 499
Employees
500 to 749
Employees
750 to 999
Employees
1,000 to
1,499
Employees
334413
Semiconductor and
Related Device
Manufacturing
I
500
1,098
458
220
138
19
19
16
334119
Other Computer
Peripheral Equipment
Manufacturing
I
1,000
815
411
169
85
17
7
11
325120
Industrial Gas
Manufacturing
L
1,000
551
45
20
20
NA
30
55
221121
Electrical Power Systems
DD
< 4 Million MWh
217
39
20
29
1
NA
NA
326140
Polystyrene Foam
Product Manufacturing
QQ
500
551
176
123
85
16
1
20
326150
Urethane and Other Foam
Product (except
Polystyrene)
Manufacturing
QQ
500
610
192
133
73
19
8
3
333415
Air-Conditioning and
Warm Air Pleating
Equipment
and Commercial and
Industrial Refrigeration
Equipment
Manufacturing
QQ
750
840
303
187
87
10
25
20
335313
Switchgear and
Switchboard Apparatus
Manufacturing
QQ
750
563
273
105
46
6
NA
10
336391
Motor Vehicle Air-
Conditioning
Manufacturing
QQ
750
72
34
17
8
NA
1
1
423610
Electrical Apparatus and
Equipment, Wiring
Supplies,
and Related Equipment
Merchant Wholesalers
QQ
100
14,337
7,458
1,679
1,016
248
113
87
423620
Electrical and Electronic
Appliance, Television,
and
Radio Set Merchant
Wholesalers
QQ
100
3,510
2,156
554
189
19
39
72
-------
2007
NAICS
NAICS Description
Subpart
SBA Size Standard
(effective August 22,
2008)
Total
Establishments
Owned by Enterprises with:
1 to 20
Employees
20 to 99
Employees
100 to 499
Employees
500 to 749
Employees
750 to 999
Employees
1,000 to
1,499
Employees
423720
Plumbing and Eleating
Equipment and Supplies
(Elydronics) Merchant
Wholesalers
QQ
100
5,144
2,871
720
455
134
21
16
423730
Warm Air Eleating and
Air-Conditioning
Equipment
and Supplies Merchant
Wholesalers
QQ
100
5,598
2,394
929
654
213
52
355
423740
Refrigeration Equipment
and Supplies Merchant
Wholesalers
QQ
100
1,482
724
271
193
4
28
29
443111
Elousehold Appliance
Stores
QQ
$9 M
10,002
7,628
806
312
NA
73
1
443112
Radio, Television and
Other Electronics Stores
QQ
$9 M
24,226
11,181
1,760
1,230
38
75
328
422610
Plastics Materials and
Basic Forms and Shapes
Merchant Wholesalers
QQ
100
3,717
2,238
518
281
26
20
58
33361
Engine, Turbine, and
Power Transmission
Equipment
Manufacturing
ss
500- 1,000
922
375
208
94
14
11
12
33531
Electrical Equipment
Manufacturing
ss
750- 1,000
2,651
1,311
522
246
41
23
19
a 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 Small Business Regulatory Enforcement Fairness Act (SBREFA) screening analyses.
bThe 2002 SUSB data uses 1997NAICS codes. For this industry, the relevant code isNAICS 422610.
-------
Table 5-12. Receipts by Affected Industry and Enterprise3 Size ($2002 Million)
Owned by Enterprises with:
SBA Size Standard
1,000 to
(effective August 22,
Total
1 to 20
20 to 99
100 to 499
500 to 749
750 to 999
1,499
NAICS
NAICS Description
Subpart
2009)
Establishments
Employees
Employees
Employees
Employees
Employees
Employees
Semiconductor and
Related Device
334413
Manufacturing
I
500
63,779
701
1,755
3,711
775
2,593
1,434
334119
Other Computer
Peripheral Equipment
Manufacturing
I
500
18,135
642
1,680
2,712
1,405
247
1,372
Industrial Gas
325120
Manufacturing
L
1,000
5,780
22
292
71
NA
NA
NA
221121
Electrical Power Systems
DD
< 4 Million MWh
13,831
74
353
406
NA
NA
NA
326140
Polystyrene Foam
Product Manufacturing
QQ
500
6,330
209
623
689
NA
NA
539
Urethane and Other
326150
Foam Product (except
Polystyrene)
Manufacturing
QQ
500
7,170
307
772
1,063
288
NA
NA
Air-Conditioning and
Warm Air Pleating
Equipment
and Commercial and
Industrial Refrigeration
333415
Equipment
Manufacturing
QQ
750
24,699
409
1,460
1,813
348
980
803
335313
Switchgear and
Switchboard Apparatus
Manufacturing
QQ
750
8,593
347
641
826
NA
NA
NA
Motor Vehicle Air-
336391
Conditioning
Manufacturing
QQ
750
3,396
31
72
NA
NA
NA
NA
423610
Electrical Apparatus and
Equipment, Wiring
Supplies,
and Related Equipment
Merchant Wholesalers
QQ
100
93,524
21,850
16,229
9,690
1,648
1,339
766
Electrical and Electronic
Appliance, Television,
and
Radio Set Merchant
423620
Wholesalers
QQ
100
68,255
9,640
10,388
10,577
2,418
1,805
4,291
-------
Owned by Enterprises with:
SBA Size Standard
1,000 to
(effective August 22,
Total
1 to 20
20 to 99
100 to 499
500 to 749
750 to 999
1,499
NAICS
NAICS Description
Subpart
2009)
Establishments
Employees
Employees
Employees
Employees
Employees
Employees
423720
Plumbing and Eleating
Equipment and Supplies
(Elydronics) Merchant
Wholesalers
QQ
100
31,668
8,304
12,322
4,156
686
247
51
423730
Warm Air Eleating and
Air-Conditioning
Equipment
and Supplies Merchant
Wholesalers
QQ
100
25,599
5,426
5,075
3,551
613
526
NA
423740
Refrigeration Equipment
and Supplies Merchant
Wholesalers
QQ
100
5,014
1,333
1,791
581
14
187
NA
443111
Elousehold Appliance
Stores
QQ
$9 M
12,619
5,432
2,801
1,354
NA
NA
NA
Radio, Television and
443112
Other Electronics Stores
QQ
$9 M
53,557
6,325
3,510
1,612
NA
NA
NA
Plastics Materials and
Basic Forms and Shapes
422610
Merchant Wholesalers
QQ
100
32,648
7,345
5,785
4,091
614
687
338
Engine, Turbine, and
Power Transmission
33361
Equipment
Manufacturing
ss
500 - 1,000
37,701
429
1,326
2,067
309
333
304
33531
Electrical Equipment
Manufacturing
ss
750- 1,000
33,211
1,330
2,912
4,096
979
1,089
406
a 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 Small Business Regulatory Enforcement Fairness Act (SBREFA) screening analyses.
bThe 2002 SUSB data uses 1997NAICS codes. For this industry, the relevant code isNAICS 422610.
-------
5.3.2.2 Develop Small Entity Economic Impact Measures
Because the rule covers a large number of subparts and primarily covers businesses, the
analysis generated a set of sales tests (represented as cost-to-receipt ratios)22 for NAICS codes
associated with the affected subparts. Although the appropriate SB A 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 allows 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.
These sales tests examine the average establishment's total annualized mandatory
reporting costs to the average establishment receipts for enterprises within several employment
categories23 (first year costs: Table 5-13; subsequent year costs: Table 5-14). 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.
22The 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 non-profits (if applicable): "Expenditure" test; annualized compliance cost as a percentage of annual
operating expenses
23For the one to 20 employee category, we exclude SUSB data for enterprises with zero employees. These
enterprises did not operate the entire year.
5-16
-------
Table 5-13. Establishment Sales Tests by Industry and Enterprise3 Size: First Year Costs
L/l
-»J
2007
NAICS
NAICS Description
Sub-part
SBA Size
Standard
(effective
August 22,
2008)
Average
Cost Per
Entity
($/entity)
All
Enter-
prises
Owned by Enterprises with:
1 to 20
Employees
20 to 99
Employees
100 to 499
Employees
500 to 749
Employees
750 to 999
Employees
1,000 to
1,499
Employees
334413
Semiconductor and Related Device
Manufacturing
I (Semis)
500
$19,980
0.03%
1.16%
0.22%
0.07%
0.04%
0.01%
0.02%
334413
Semiconductor and Related Device
Manufacturing
I (Non-Semis)
500
$16,046
0.02%
0.94%
0.18%
0.05%
0.04%
0.01%
0.02%
334119
Other Computer Peripheral Equipment
Manufacturing
I (Non-Semis)
500
$16,046
0.06%
0.92%
0.14%
0.04%
0.02%
0.04%
0.01%
325120
Industrial Gas Manufacturing
L
1,000
$126,523°
1.08%
23.19%
0.77%
3.19%
NA
NA
NA
221121
Electrical Power Systems
DD
< 4 Million
MWh
$2,213
0.00%
0.10%
0.01%
0.01%
NA
NA
NA
326140
Polystyrene Foam Product
Manufacturing
QQ
500
$3,364
0.03%
0.25%
0.06%
0.04%
NA
NA
0.01%
326150
Urethane and Other Foam Product
(except Polystyrene)
Manufacturing
QQ
500
$3,364
0.03%
0.19%
0.05%
0.02%
0.02%
NA
NA
333415
Air-Conditioning and Warm Air
Heating Equipment
and Commercial and Industrial
Refrigeration
Equipment Manufacturing
QQ
750
$3,364
0.01%
0.22%
0.04%
0.01%
0.01%
0.01%
0.01%
335313
Switchgear and Switchboard Apparatus
Manufacturing
QQ
750
$3,364
0.02%
0.24%
0.05%
0.02%
NA
NA
NA
336391
Motor Vehicle Air-Conditioning
Manufacturing
QQ
750
$3,364
0.01%
0.33%
0.07%
NA
NA
NA
NA
423610
Electrical Apparatus and Equipment,
Wiring Supplies,
and Related Equipment Merchant
Wholesalers
QQ
100
$3,364
0.05%
0.10%
0.03%
0.03%
0.05%
0.03%
0.03%
423620
Electrical and Electronic Appliance,
Television, and
Radio Set Merchant Wholesalers
QQ
100
$3,364
0.02%
0.07%
0.02%
0.01%
0.00%
0.01%
0.01%
423720
Plumbing and Heating Equipment and
Supplies
(Hydronics) Merchant Wholesalers
QQ
100
$3,364
0.05%
0.10%
0.02%
0.03%
0.06%
0.03%
0.09%
423730
Warm Air Heating and Air-
Conditioning Equipment
and Supplies Merchant Wholesalers
QQ
100
$3,364
0.07%
0.13%
0.05%
0.06%
0.10%
0.03%
NA
423740
Refrigeration Equipment and Supplies
Merchant
Wholesalers
QQ
100
$3,364
0.09%
0.16%
0.05%
0.10%
0.08%
0.04%
NA
443111
Household Appliance Stores
QQ
$9 M
$3,364
0.24%
0.42%
0.09%
0.07%
NA
NA
NA
443112
Radio, Television and Other
Electronics Stores
QQ
$9 M
$3,364
0.14%
0.53%
0.15%
0.23%
NA
NA
NA
422610
Plastics Materials and Basic Forms and
Shapes
QQ
100
$3,364
0.03%
0.09%
0.03%
0.02%
0.01%
0.01%
0.05%
-------
SBA Size
Average
Owned by Enterprises with:
Standard
(effective
Cost Per
All
1,000 to
2007
August 22,
Entity
Enter-
1 to 20
20 to 99
100 to 499
500 to 749
750 to 999
1,499
NAICS
NAICS Description
Sub-part
2008)
($/entity)
prises
Employees
Employees
Employees
Employees
Employees
Employees
Merchant Wholesalers
Engine, Turbine, and Power
Transmission Equipment
33361
Manufacturing
SS
500 - 1,000
$2,213
0.00%
0.17%
0.03%
0.01%
0.01%
0.01%
0.01%
33531
Electrical Equipment Manufacturing
ss
750 - 1,000
$2,213
0.02%
0.19%
0.04%
0.01%
0.01%
0.00%
0.01%
a The Census Bureau defines an enterprise as a business organization consisting of one or more domestic establishments that were specified under common ownership or control.
The enterprise and the establishment are the same for single-establishment firms. Each multi-establishment company forms one enterprise—the enterprise employment and
annual payroll are summed from the associated establishments. Enterprise size designations are determined by the summed employment of all associated establishments.
Since the SBA's business size definitions (http://www.sba.gov/size) apply to an establishment's ultimate parent company, we assume in this analysis that the enterprise definition
above is consistent with the concept of ultimate parent company that is typically used for Small Business Regulatory Enforcement Fairness Act (SBREFA) screening analyses.
Note: Receipt data in Table 5-7 has been adjusted to 2006$ using the latest GDP implicit price deflator reported by the U.S. Bureau of Economic Analysis (103.257/92.118=1.121)
http://www.bea. gov/national/nipaweb/Index.asp (accessed December 21, 2009).
bThe 2002 SUSB data uses 1997NAICS codes. For this industry, the relevant code isNAICS 422610.
Total Annualized Costs for Subpart L are computed as a weighted average of costs for Mass Balance and costs for Process Vent, excluding the outlier facility.
-------
Table 5-14. Establishment Sales Tests by Industry and Enterprise3 Size: Subsequent Years Costs
L/l
o
2007
NAICS
NAICS Description
Sub-part
SBA Size
Standard
(effective
August 22,
2008)
Average
Cost Per
Entity
($/entity)
All
Enter-
prises
Owned by Enterprises with:
1 to 20
Employeesb
20 to 99
Employees
100 to 499
Employees
500 to 749
Employees
750 to 999
Employees
1,000 to
1,499
Employees
334413
Semiconductor and Related Device
Manufacturing
I (Semis)
500
$19,980
0.03%
1.16%
0.22%
0.07%
0.04%
0.01%
0.02%
334413
Semiconductor and Related Device
Manufacturing
I (Non-Semis)
500
$16,046
0.02%
0.94%
0.18%
0.05%
0.04%
0.01%
0.02%
334119
Other Computer Peripheral Equipment
Manufacturing
I (Non-Semis)
500
$16,046
0.06%
0.92%
0.14%
0.04%
0.02%
0.04%
0.01%
325120
Industrial Gas Manufacturing
L
1,000
$9,859°
0.08%
1.81%
0.06%
0.25%
NA
NA
NA
221121
Electrical Power Systems
DD
< 4 Million
MWh
$2,213
0.00%
0.10%
0.01%
0.01%
NA
NA
NA
326140
Polystyrene Foam Product Manufacturing
QQ
500
$2,933
0.02%
0.22%
0.05%
0.03%
NA
NA
0.01%
326150
Urethane and Other Foam Product (except
Polystyrene)
Manufacturing
QQ
500
$2,933
0.02%
0.16%
0.05%
0.02%
0.02%
NA
NA
333415
Air-Conditioning and Warm Air Heating
Equipment
and Commercial and Industrial
Refrigeration
Equipment Manufacturing
QQ
750
$2,933
0.01%
0.19%
0.03%
0.01%
0.01%
0.01%
0.01%
335313
Switchgear and Switchboard Apparatus
Manufacturing
QQ
750
$2,933
0.02%
0.21%
0.04%
0.01%
NA
NA
NA
336391
Motor Vehicle Air-Conditioning
Manufacturing
QQ
750
$2,933
0.01%
0.29%
0.06%
NA
NA
NA
NA
423610
Electrical Apparatus and Equipment,
Wiring Supplies,
and Related Equipment Merchant
Wholesalers
QQ
100
$2,933
0.04%
0.09%
0.03%
0.03%
0.04%
0.02%
0.03%
423620
Electrical and Electronic Appliance,
Television, and
Radio Set Merchant Wholesalers
QQ
100
$2,933
0.01%
0.06%
0.01%
0.00%
0.00%
0.01%
0.00%
423720
Plumbing and Heating Equipment and
Supplies
(Hydronics) Merchant Wholesalers
QQ
100
$2,933
0.04%
0.09%
0.02%
0.03%
0.05%
0.02%
0.08%
423730
Warm Air Heating and Air-Conditioning
Equipment
and Supplies Merchant Wholesalers
QQ
100
$2,933
0.06%
0.12%
0.05%
0.05%
0.09%
0.03%
NA
423740
Refrigeration Equipment and Supplies
Merchant
Wholesalers
QQ
100
$2,933
0.08%
0.14%
0.04%
0.09%
0.07%
0.04%
NA
-------
2007
NAICS
NAICS Description
Sub-part
SBA Size
Standard
(effective
August 22,
2008)
Average
Cost Per
Entity
($/entity)
All
Enter-
prises
Owned by Enterprises with:
1 to 20
Employeesb
20 to 99
Employees
100 to 499
Employees
500 to 749
Employees
750 to 999
Employees
1,000 to
1,499
Employees
443111
Household Appliance Stores
QQ
$9 M
$2,933
0.21%
0.37%
0.08%
0.06%
NA
NA
NA
443112
Radio, Television and Other Electronics
Stores
QQ
$9 M
$2,933
0.12%
0.46%
0.13%
0.20%
NA
NA
NA
422610
Plastics Materials and Basic Forms and
Shapes
Merchant Wholesalers
QQ
100
$2,933
0.03%
0.08%
0.02%
0.02%
0.01%
0.01%
0.04%
33361
Engine, Turbine, and Power Transmission
Equipment Manufacturing
ss
500 - 1,000
$2,213
0.00%
0.17%
0.03%
0.01%
0.01%
0.01%
0.01%
33531
Electrical Equipment Manufacturing
ss
750 - 1,000
$2,213
0.02%
0.19%
0.04%
0.01%
0.01%
0.00%
0.01%
a The Census Bureau defines an enterprise as a business organization consisting of one or more domestic establishments that were specified under common ownership or control.
The enterprise and the establishment are the same for single-establishment firms. Each multi-establishment company forms one enterprise—the enterprise employment and
annual payroll are summed from the associated establishments. Enterprise size designations are determined by the summed employment of all associated establishments.
Since the SBA's business size definitions (http://www.sba.gov/size) apply to an establishment's ultimate parent company, we assume in this analysis that the enterprise definition
above is consistent with the concept of ultimate parent company that is typically used for Small Business Regulatory Enforcement Fairness Act (SBREFA) screening analyses.
Note: Receipt data in Table 5-7 has been adjusted to 2006$ using the latest GDP implicit price deflator reported by the U.S. Bureau of Economic Analysis (103.257/92.118=1.121)
http://www.bea. gov/national/nipaweb/Index.asp (accessed December 21, 2009).
bThe 2002 SUSB data uses 1997NAICS codes. For this industry, the relevant code isNAICS 422610.
Total Annualized Costs for Subpart L are computed as a weighted average of costs for Mass Balance and costs for Process Vent, excluding the outlier facility.
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5.3.2.3 Results of Screening Analysis
The Regulatory Flexibility Act generally requires an agency to prepare a regulatory
flexibility analysis of any rule subject to notice and comment rulemaking requirements under the
Administrative Procedure Act or any other statute, unless the agency certifies that the rule will
not have a significant economic impact on a substantial number of small entities. Small entities
include small businesses, small governmental jurisdictions, and small not-for-profit enterprises.
For the purposes of assessing the impacts of the rule on small entities, we defined a small
entity as (1) a small business, as defined by SBA's regulations at 13 CFR Part 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 impact of the rule on small entities, EPA has concluded
that this action will not have a significant economic impact on a substantial number of small
entities. As shown in Tables 5-13 and 5-14, the average ratio of annualized reporting program
costs to receipts of establishments owned by model small enterprises was less than 1% for
industries presumed likely to have small businesses covered by the reporting program.
We acknowledge that several enterprise categories have ratios that exceed this threshold
(e.g., enterprise with one to 20 employees). The Industrial Gas Manufacturing industry (NAICS
325120) has sales test results over 1% for all enterprises. The following enterprise categories
have sales test results over 1% and for entities with less than 20 employees: Industrial Gas
Manufacturing (325120) and Semiconductor and Related Device Manufacturing (334413).
Below we take a more detailed look at the categories noted above as having sales test
ratios above 1%. EPA collected information on the entities likely to be covered by the rule as
part of the expert sub-group process.
5.3.2.4 Threshold-based Analysis of Categories Having Sales Test Ratios A bove 1 %
Industrial Gas Manufacturing (325120)
Subpart L covers facilities included in NAICS codes for Industrial Gas Manufacturing
(NAICS 325120). Within this subpart, EPA identified 13 ultimate parent company names
covered by the proposed rule. Using publicly available sources (e.g., Hoovers.com), we collected
parent company sales and employment data and found that only one company could be classified
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as a small entity. Using the cost data for a representative entity (see Section 4), EPA determined
the small entity's cost-to-sales ratio is below one percent.
Electronic Computer Manufacturing (334111) and Semiconductor and Related Device
Manufacturing (334413)
Data on the number of electronics facilities comes from the World Fab Watch and the
Flat Panel Display Fabs on Disk datasets. The census data categories cover more establishments
than just those facilities covered in the rule. Subpart I covers facilities included in NAICS codes
for Semiconductor and Related Device Manufacturing (334413) and Other Computer Peripheral
Equipment Manufacturing (334119). The World Fab Watch dataset includes 216 facilities (94 of
which exceed the 25,000 ton threshold), while the sum of the two NAICS codes include 1,903
establishments. Covered facilities with emissions greater than 25,000 MtC02e per year are
unlikely to be included in the 1 to 20 employees size category. Emissions are roughly
proportional to production, and establishments with 1 to 20 employees total only 1.6% of total
receipts, while the proposed threshold excludes 6% of industry emissions from the least-emitting
facilities.
Although this rule would not have a significant economic impact on a substantial number
of small entities, the Agency nonetheless tried to reduce the impact of this rule on small entities,
including seeking input from a wide range of private- and public-sector stakeholders. When
developing the rule, the Agency took special steps to ensure that the burdens imposed on small
entities were minimal. The Agency conducted several meetings with industry trade associations
to discuss regulatory options and the corresponding burden on industry, such as recordkeeping
and reporting. The Agency investigated alternative thresholds and analyzed the marginal costs
associated with requiring smaller entities with lower emissions to report. The Agency also
selected a hybrid method for reporting, which provides flexibility to entities and helps minimize
reporting costs.
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SECTION 6
STATUTORY AND EXECUTIVE ORDER REVIEWS
This section describes EPA's compliance with several applicable executive orders and
statutes during the development of the F-GHG reporting rule, under subparts I, L, DD, QQ, and
SS of the Mandatory Reporting Rule.
6.1 Executive Order 12866: Regulatory Planning and Review
Under Executive Order (EO) 12866 (58 FR 51735, October 4, 1993), this action is a
"significant regulatory action" because it may raise novel legal or policy issues arising out of
legal mandates, the President's priorities, or the principles set forth in the EO. 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 this EIA, including an analysis of the potential costs associated
with this action. In this report, EPA has identified the regulatory options considered, their costs,
the emissions that would likely be reported under each option, and explained the selection of the
option chosen for the rule. The costs of the rule are reported in Section 4, and the economic
impacts and qualitative benefits assessment are reported in Section 5. EPA's cost analysis
estimates that for the minimum reporting under the recommended regulatory option, the total
annualized cost of the rule will be approximately $7.6 million (in $2006) during the first year of
the program and $7.32 million in subsequent years (including $0.4 million of programmatic costs
to the Agency). Overall, EPA has concluded that the costs of the F-GHG Reporting Rule are
outweighed by the potential benefits of more comprehensive information about GHG emissions.
6.2 Paperwork Reduction Act
The information collection requirements in this final rule have been submitted for
approval to the Office of Management and Budget (OMB) under the Paperwork Reduction Act.
44 U.S.C. 3501 etseq. The Information Collection Request (ICR) document prepared by EPA
has been assigned EPA ICR number [XXXX.XX],
EPA has identified the following goals of the mandatory GHG reporting system:
Obtain data that is of sufficient quality that it can be used to analyze and inform
the development of a range of future climate change policies and potential
regulations.
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Balance the rule's coverage to maximize the amount of emissions reported while
excluding small emitters.
Create reporting requirements that are, to the extent possible and appropriate,
consistent with existing GHG reporting programs in order to reduce reporting burden
for all parties involved.
The information from F-GHG facilities will allow EPA to make well-informed decisions
about whether and how to use the CAA to regulate these facilities and encourage voluntary
reductions. Because EPA does not yet know the specific policies that will be adopted, the data
reported through the mandatory reporting system should be of sufficient quality to inform policy
and program development. Also, consistent with the Appropriations Act, the reporting rule
covers a broad range of sectors of the economy.
This information collection is mandatory and will be carried out under CAA Sections
114. Information identified and marked as Confidential Business Information (CBI) will not be
disclosed except in accordance with procedures set forth in 40 CFR Part 2. However, emissions
information collected under CAA Sections 114 generally cannot be claimed as CBI and will be
made public.24
The projected cost and hour respondent burden in the ICR, averaged over the first three
years after promulgation, is $6.9 million and 76,701 hours per year. The estimated average
burden per response is 183.9 hours; the frequency of response is annual for all respondents that
must comply with the rule's reporting requirements; and the estimated average number of likely
respondents per year is 417. The cost burden to respondents resulting from the collection of
information includes the total capital and start-up cost annualized over the equipment's expected
useful life (averaging $2.70 million per year) a total operation and maintenance component
(averaging $9.5 thousand per year), and a labor cost component (averaging $4.15 million per
year). Burden is defined at 5 CFR Part 1320.3(b).
These cost numbers differ from those shown elsewhere in the EIA because ICR costs
represent the average cost over the first three years of the rule, but costs are reported elsewhere
in the EIA for the first year of the rule. Also, the total cost 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, estimated to be $384,000. An agency may not conduct
24 Although CBI determinations are usually made on a case-by-case basis, EPA has issued guidance in an earlier
Federal Register notice on what constitutes emission data that cannot be considered CBI (956 FR 7042 - 7043,
February 21, 1991). As discussed in Section II.B of the preamble to the rule, EPA will be initiating a separate
notice and comment process to make CBI determinations for the data collected under this rule.
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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. When this ICR is approved by OMB, the
Agency will publish a technical amendment to 40 CFR Part 9 in the Federal Register to display
the OMB control number for the approved information collection requirements contained in the
final rule.
6.3 Regulatory Flexibility Act
The Regulatory Flexibility Act generally requires an agency to prepare a regulatory
flexibility analysis of any rule subject to notice and comment rulemaking requirements under the
Administrative Procedure Act or any other statute, unless the agency certifies that the rule will
not have a significant economic impact on a substantial number of small entities. Small entities
include small businesses, small governmental jurisdictions, and small not-for-profit enterprises.
The first step in this assessment was to determine whether the rule will have a significant
impact on a substantial number of small entities (SISNOSE). To make this determination, EPA
used a screening analysis that allows us to indicate whether EPA can certify the rule as not
having a SISNOSE. The elements of this analysis included
¦ identifying affected sectors and entities,
selecting and describing the measures and economic impact thresholds used in the
analysis, and
determining SISNOSE certification category.
6.3.1 Identify Affected Sectors and Entities
For the purposes of assessing the impacts of the rule on small entities, we defined a small
entity as (1) a small business, as defined by SBA's regulations at 13 CFR Part 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.
For the F-GHG Reporting Rule, small entity is defined as a small business as defined by
the Small Business Administration's regulations at 13 CFR 121.201; according to these size
standards, criteria for determining if ultimate parent companies owning affected facilities are
categorized as small vary by NAICS. Small entity criteria range from total number of employees
at the firm fewer than 100 to number of employees fewer than 1000; one affected NAICS,
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44311, defines small entities as those with sales below $9 million. Tables 5-11 through 5-14
present small business criteria and enterprise size distribution data for affected NAICS.
6.3.2 Develop Small Entity Economic Impact Measures
The ratio of total annualized compliance costs to firm sales (or sales test) is the selected
impact measure. Details are provided in section 5.3, and results are presented in Table 5-3 for
first-year costs and in Table 5-4 for subsequent year costs. These sales tests examine the average
establishment's total annualized mandatory reporting costs to the average establishment receipts
for enterprises within several employment categories25. 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
6.3.3 Results of Screening Analysis
After considering the economic impact of the rule on small entities, EPA has concluded
that this action will not have a significant economic impact on a substantial number of small
entities. The average ratio of annualized reporting program costs to revenues for F-GHG firms
owned by model small enterprises and likely to be affected by the final rule was generally less
than 1%. For two NAICS, however, some size categories (especially those with 1-20 employees)
show costs exceeding 1% of sales. These sectors are Industrial Gas Manufacturing (NAICS
325120) and Semiconductor and Related Device Manufacturing (NAICS 334413). A more
careful examination of impacts on small firms in these NAICS codes was conducted.
Analysis of firms in NAICS 334413 shows that firms with fewer than 20 employees
produce less than 2% of output; firms below the 25,000 Mt C02e threshold release
approximately 6% of emissions. Because emissions and production levels are highly correlated,
firms fewer than 20 employees are generally not expected to be affected by the final rule; if they
are, their costs are likely to be lower than the overall average costs used in the screening
analysis. Thus, EPA does not expect the final rule to impose significant costs to a substantial
number of small entities in NAICS 334413.
25For the one to 20 employee category, we exclude SUSB data for enterprises with zero employees. These
enterprises did not operate the entire year.
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Subpart L covers facilities included in NAICS codes for Industrial Gas Manufacturing
(NAICS 325120). Within this subpart, EPA identified 13 ultimate parent company names
covered by the final rule. Using publicly available sources (e.g., Hoovers.com), we collected
parent company sales and employment data and found that only one company could be classified
as a small entity. Using the cost data for a representative entity (see Section 4 of the EA), EPA
determined the small entity's cost-to-sales ratio is below one percent.
Although this rule would not have a significant economic impact on a substantial number
of small entities, the Agency nonetheless tried to reduce the impact of this rule on small entities,
including seeking input from a wide range of private- and public-sector stakeholders. When
developing the rule, the Agency took special steps to ensure that the burdens imposed on small
entities were minimal. The Agency conducted several meetings with industry trade associations
to discuss regulatory options and the corresponding burden on industry, such as recordkeeping
and reporting. The Agency investigated alternative thresholds and analyzed the marginal costs
associated with requiring smaller entities with lower emissions to report.
Through comprehensive outreach activities after proposal of the rule, EPA held meetings
and/or conference calls with representatives of the primary audience groups. After proposal,
EPA posted a general fact sheet for the rule, information sheets for every source category, and an
FAQ document. We continued to meet with stakeholders and entered documentation of all
meetings into the docket. One public hearing was held on April 12, 2010, which included three
speakers from industry and one non-governmental environmental group. In addition, 20 outreach
meetings were held. We considered public comments in developing the final rule.
During rule implementation, EPA will maintain an "open door" policy for stakeholders to
ask questions about rule or provide suggestions to EPA about the types of compliance assistance
that would be useful to small businesses. EPA intends to develop a range of compliance
assistance tools and materials and conduct extensive outreach for the final rule.
6.4 Unfunded Mandates Reform Act
Title II of the Unfunded Mandates Reform Act of 1995 (UMRA), P.L. 104-4, establishes
requirements for federal agencies to assess the effects of their regulatory actions on state, local,
and tribal governments and the private sector. Under Section 202 of the UMRA, EPA generally
must prepare a written statement, including a cost-benefit analysis, for final rules with "federal
mandates" that may result in expenditures to state, local, and tribal governments, in the
aggregate, or to the private sector, of $100 million or more in any one year.
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This 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. Overall, EPA estimates that the total annualized costs of this final rule are
approximately $7.6 million for the first year, and $7.2 million for subsequent years ($2006).
Thus, this final rule is not subject to the requirements of sections 202 or 205 of UMRA.
This 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. Facilities subject to the final rule include manufacturers, wholesalers, and retailers.
None of the facilities currently known to undertake these activities are owned by small
governments.
6.5 Executive Order 13132: Federalism
Executive Order 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 executive order 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."
This final rule 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.
This regulation applies to manufacturers, wholesalers, and retailers. 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, Executive Order 13132 does not apply
to this final rule.
In the spirit of Executive Order 13132, and consistent with EPA policy to promote
communications between EPA and State and local governments, EPA specifically solicits
comment on this proposed action from State and local officials.
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6.6 Executive Order 13175: Consultation and Coordination with Indian Tribal
Governments
Executive Order 13175, entitled "Consultation and Coordination with Indian Tribal
Governments" (59 FR 22951, November 6, 2000), requires EPA to develop an accountable
process to ensure "meaningful and timely input by tribal officials in the development of
regulatory policies that have tribal implications."
This final rule is not expected to have tribal implications, as specified in Executive Order
13175. This regulation applies to facilities that directly emit GHGs. We do not expect facilities
owned by tribal governments to be affected by this rule. Thus, Executive Order 13175 does not
apply to this final rule.
Although Executive Order 13175 does not apply to this final rule, EPA sought
opportunities to provide information to tribal governments and representatives during
development of the MRR rule. In consultation with EPA's American Indian Environment Office,
EPA's outreach plan for the MRR included tribes. For a complete list of tribal contacts, see the
"Summary of EPA Outreach Activities for Developing the Greenhouse Gas Reporting Rule," in
the Docket for this final rulemaking (EPA-HQ-OAR-2008-0508-055). In addition to the
consultation activities supporting the MRR, EPA continues to provide information to tribal
governments and representatives during development of the Track II rules such as this final
rulemaking. EPA specifically solicits additional comment on this proposed action from tribal
officials.
6.7 Executive Order 13045: Protection of Children from Environmental Health and
Safety Risks
EPA interprets Executive Order 13045 (62 F.R. 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 executive order has the potential to influence the regulation. This
action is not subject to Executive Order 13045 because it does not establish an environmental
standard intended to mitigate health or safety risks.
6.8 Executive Order 13211: Actions that Significantly Affect Energy Supply,
Distribution, or Use
This final rule 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 final rule is not likely
to have any adverse energy effects.
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This proposal relates to monitoring, reporting, and recordkeeping at facilities that
manufacture, sell, import, or export F-GHG related products; it does not adversely affect energy
supply, distribution or use. Therefore, we conclude that this final rule is not likely to have any
adverse effects on energy supply, distribution, or use.
6.9 National Technology Transfer 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 methods, 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 rule involves technical standards. EPA will use voluntary consensus standards from
at least four three different voluntary consensus standards bodies, including the following:
ASTM, ASME, and International SEMATECH Manufacturing Initiative, and EPA . These
voluntary consensus standards will help facilities monitor, report, and keep records of GHG
emissions. No new test methods were developed for this rule. Instead, from existing rules for
source categories and voluntary greenhouse gas programs, EPA identified existing means of
monitoring, reporting, and keeping records of greenhouse gas emissions. The existing methods
(voluntary consensus standards) include a broad range of measurement techniques, such as
methods to measure gas or liquid flow and methods to identify the contents of vented or
exhausted streams. The existing methods (voluntary consensus standards) include a broad range
of measurement techniques, such as methods to measure gas or liquid flow; and methods to
gauge and measure petroleum and petroleum products . The test methods are incorporated by
reference into the rule and are available as specified in 40 CFR 98.7.
6.10 Executive Order 12898: Federal Actions to Address Environmental Justice in
Minority Populations and Low-Income Populations
Executive Order 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
environmental effects of their programs, policies, and activities on minority populations and low-
income populations in the United States.
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EPA has determined that this final rule will not have disproportionately high and adverse
human health or environmental effects on minority or low-income populations because it does
not affect the level of protection provided to human health or the environment. This final rule
does not affect the level of protection provided to human health or the environment because it is
a rule addressing information collection and reporting procedures.
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SECTION 7
CONCLUSIONS
The supplemental proposal requires reporting of fluorinated greenhouse gas (F-GHG)
emissions from electronics manufacturing, production of fluorinated gases, and use of electrical
equipment. EPA is also proposing to require such reporting from manufacturers of electrical
equipment, import and export of pre-charged equipment, and closed cell foams. These F-GHG
source categories are covered under Subparts I, L, DD, QQ, and SS of the rule.
7.1 Summary of Sectors Covered
7.1.1 Subpart I — Electronics Manufacturing
Electronics manufacturing includes, but is not limited to, the manufacture of
semiconductors, liquid crystal displays (LCDs), microelectricomechanical (MEMS), and
photovoltaic cells (PV). The electronics industry uses multiple long-lived F-GHGs such as
perfluorocarbons (PFCs), Hydrofluorocarbons (HFCs), sulfur hexafluoride (SF6), and nitrogen
trifluoride (NF3), as well as nitrous oxide (N2O). This proposed rule would apply to electronics
manufacturing facilities that emit equal to or greater than 25,000 metric tons of C02e per year26
from electronics manufacturing processes such as plasma etching, thin film deposition, chamber
cleaning, and heat transfer fluid use. EPA is also proposing methods to estimate emissions from
cleaning and etch processes for semiconductor, LCD, MEMS, and PV manufacture and also
methods for estimating N2O emissions from deposition and other manufacturing processes such
as chamber cleaning. EPA is also clarifying methods for estimating emissions from heat transfer
fluids. Finally, EPA is proposing methods for verifying destruction or removal efficiency (DRE)
from abatement equipment.
7.1.2 Subpart L — Fluorinated GHG Producers
Affected entities under subpart L are defined as any facility that produces a fluorinated
gas from any raw material or feedstock chemical. Fluorinated gas production includes the
production of fluorinated GHG, CFC, or HCFC. EPA stipulates that production of fluorinated
gases does not include the reuse or recycling of fluorinated GHG or the generation of HFC-23
during the production of HCFC-22.
26 As discussed further below, EPA is proposing that uncontrolled emissions be used for purposes of determining
whether a facility's emissions are equal to or greater than 25,000 mtC02e.
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Facilities that produce fluorinated gases will be required to report their fluorinated GHG
emissions from fluorinated gas production, transformation, and destruction, as well as
combustion-related CO2. CH4 and nitrous oxide (N2O) emissions from stationary fuel
combustion. Fluorinated gases include fluorinated GHGs (HFCs, PFCs, SF6, NF3, HFEs, etc.),
CFCs, and HCFCs. However, emissions of HFC-23 from HCFC-22 production are addressed
under subpart O and are therefore excluded from this subpart. Similarly, emissions of CFCs and
HCFCs are addressed under the regulations implementing Title VI of the Clean Air Act and are
therefore excluded from this subpart.
7.1.3 Subpart DD: Electric Transmission and Distribution Equipment Use
The electric transmission and distribution equipment use source category includes gas-
insulated substations, circuit breakers, other switchgear, and gas-insulated lines containing SF6 or
PFCs. Equipment also includes gas containers such as pressurized cylinders, gas carts, new
equipment owned but not yet installed, or other containers. Notwithstanding the definition of
facility in subpart A, for purposes of this subpart, "facility" means an electric transmission and
distribution system which is the collection of SF6- and PFC insulated equipment linked through
electric power transmission or distribution lines and operated as an integrated unit by one electric
power entity or several entities that have a single owner.
Regulation of Subpart DD was proposed under the initial MRR, but was excluded after
EPA received several comments regarding the definition of "facility" as it would be covered
under the rule. After taking these comments under consideration, EPA has clarified the
definition for this final rule.
7.1.4 Subpart (JO - Importing/Exporting of Pre-charged Equipment and Foams
Affected entities under subpart QQ are defined as any entity that is an importer and/or
exporter of pre-charged equipment or closed-cell foams that contain fluorinated GHGs. A
variety of products containing fluorinated greenhouse gases (F-GHGs), nitrous oxide (N2O), and
carbon dioxide (CO2) are imported into and exported from the United States. Pre-charged
equipment includes air-conditioning, refrigeration, and electrical equipment. Closed-cell foams
that are imported and exported include polyurethane (PU) rigid foam used in insulation in
domestic refrigerators and freezers,; commercial refrigeration foam,; PU rigid sandwich panel
continuous and discontinuous foam; extruded polystryrene (XPS) sheet foam; and XPS
boardstock foam.
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EPA is proposing to require reporting of these imports and exports. Importers and
exporters of pre-charged equipment and closed-cell foams would be subject to requirements
similar to those for importers and exporters of bulk GHGs. In addition, equipment importers
would be required to report the types and charge sizes of equipment and the number of pieces of
each type of equipment that they imported or exported, while foam importers would be required
to report the volume of foam and F-GHG density of the foam that they imported. As is true for
importers and exporters of bulk F-GHGs, importers and exporters of equipment and foam would
only be required to report if their total imports or exports exceeded the 25,000 mtC02e
threshold.
7.1.5 Subpart SS — Electrical Equipment and Components Manufacturing
Affected entities under subpart SS are defined as electrical equipment manufacturers and
refurbishers of SF6-insulated closed-pressure system equipment and sealed-pressure system
equipment including gas-insulated substations, circuit breakers, other switchgear, gas-insulated
lines, or power transformers containing sulfur-hexafluoride (SF6) or perfluorocarbons (PFCs).
EPA is proposing to require reporting of SF6 and PFC emission from electrical equipment
manufacturing and refurbishing using a mass-balance monitoring method comparable to the
approach specified for subpart DD, Sulfur Hexafluoride (SF6) and Perfluorocarbons (PFCs)
from Electrical Equipment at an Electric Power System.
Facilities covered under subpart SS would be required report annual emission report all
SF6 and PFC emissions, including those from equipment testing, equipment manufacturing, and
bulk SF6 and PFC handling. In addition, electrical equipment manufacturers would be required to
submit supplemental data that includes: SF6 and PFCs with or inside equipment delivered to
customers, SF6 and PFCs returned by customers with or inside equipment, bulk SF6 and PFC
purchases, SF6 and PFCs sent off-site for destruction or to be recycled, SF6 and PFC returned
from offsite after recycling, SF6 and PFCs stored in containers at the beginning and end of the
year, SF6 and PFCs returned to suppliers. If applicable, facilities would also be required to report
combustion-related CO2. CH4 and nitrous oxide (N2O) emissions from stationary fuel
combustion. EPA would only require emission reporting a facility's total annual purchases of
SF6 and PFCs are greater than 23,000 lbs. This reporting threshold is equivalent an emissions-
based threshold of 25,000 MtCC^e, assuming an average manufacturer emission rate of 10%.
7.2 Estimated Costs and Impacts of the GHG Reporting Program
The total national costs for the selected option are estimated to be $7.6 million in the first
year and $7.2 million in subsequent years ($2006). This includes a public sector burden estimate
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of $384,000 for program implementation and verification activities. Subparts bearing the greatest
share of the ongoing private costs of the rule are the electronics industry (76%) and imports and
exports of fluorinated GHGs (9%). The average ongoing (subsequent year) private cost per
metric ton varies by subpart; measures range from approximately than $0.02 per ton (Subpart
SS) to $0.96 per ton (Subpart I). The national costs are distributed to several economic sectors
and represent less than 0.01% of 2008 gross domestic product; overall, EPA does not believe the
rule will have a significant macroeconomic impact on the national economy or on small entities
within those sectors.
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SECTION 8
REFERENCES
Burton (2007). Assessing the need for FC abatement standards, Solid State Technology, January
2007. Available at:
http://sst.pennnet.com/display_article/281422/5/ARTCL/none/none/l/Assessing-the-
need-for-FC-abatement-standards/
U.S. Environmental Protection Agency (EPA). 2000. Guidelines for Preparing Economic
Analyses. EPA 240-R-00-003. Washington, DC: EPA. Available at
.
U.S. Environmental Protection Agency. 2009. U.S. Inventory of Greenhouse Gas Emissions
and Sinks: 1990-2007.
U.S. Small Business Administration (SBA). 2008a. Firm Size Data from the Statistics of U.S.
Businesses: U.S. Detail Employment Sizes: 2002.
http://www.census.gov/csd/susb/download_susb02.htm.
U.S. Small Business Administration (SBA). 2008b. Firm Size Data from the Statistics of U.S.
Businesses: Dynamic Data by Births, Deaths, Growth, and Decline, U.S. Industry Data:
2003-2005. http://www.sba.gov/advo/research/data.html.
U.S. Small Business Administration (SBA). 2009c. Table of Small Business Size Standards
Matched to North American Industry Classification System Codes. Effective August 22,
2008. http://www.sba.gov/services/contractingopportunities/sizestandardstopics/
size/index, html.
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