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Regulatory Impact Analysis for the New Source
Performance Standards for the Synthetic Organic
Chemical Manufacturing Industry and National
Emission Standards for Hazardous Air Pollutants for
the Synthetic Organic Chemical Manufacturing
Industry and Group I & II Polymers and Resins

Industry


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U.S. Environmental Protection Agency
Office of Air and Radiation
Office of Air Quality Planning and Standards
Research Triangle Park, NC 27711


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EPA-452/P-23-001
March 2023

Regulatory Impact Analysis for the New Source Performance Standards for the Synthetic
Organic Chemical Manufacturing Industry and National Emission Standards for Hazardous Air
Pollutants for the Synthetic Organic Chemical Manufacturing Industry and Group I & II

Polymers and Resins Industry

U.S. Environmental Protection Agency
Office of Air Quality Planning and Standards
Health and Environmental Impacts Division
Research Triangle Park, NC


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CONTACT INFORMATION

This document has been prepared by staff from the Office of Air and Radiation, U.S.
Environmental Protection Agency. Questions related to this document should be addressed to the
Air Economics Group in the Office of Air Quality Planning and Standards, U.S. Environmental
Protection Agency, Office of Air and Radiation, Research Triangle Park, North Carolina 27711
(email: OAQPSeconomics@epa.gov).

ACKNOWLEDGEMENTS

In addition to U.S. EPA staff from the Office of Air and Radiation, personnel from RTI
International contributed data and analysis to this document.


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TABLE OF CONTENTS

Table of Contents	i

List of Tables	hi

List of Figures	vii

1	Executive Summary	1-1

1.1	Background	1-1

1.1.1	NESHAP for subparts F, G, H, I, U, & W	1-2

1.1.2	NSPS subparts III, NNN, RRR. & YYb	1-4

1.2	Market Failure	1-5

1.3	Results for Proposed Action	1-5

1.3.1 Baseline for the Regulation	1-5

1.4	Organization of the Report	1-14

2	Industry Profile	2-15

2.1	SOCMI Industry Profile	2-15

2.1.1	Oil and Gas Sectors and SOCMI	2-20

2.1.2	SOCMI Supply Chain Disruptions	2-22

2.1.3	Ethylene	2-24

2.2	P&R Groups I and II	2-29

2.2.1	Group I Industry Profile	2-30

2.2.2	Industry Organization of Group I Industries	2-31

2.2.3	Prices for Group I Industries	2-33

2.2.4	General Production Description of Group I Industries	2-36

2.2.5	Product Description of Group I Industries	2-36

2.2.6	Group II Industry Profile	2-41

2.2.7	Industry Organization of Group II Industries	2-41

2.2.8	Prices for Group II Industries	2-42

2.2.9	Product Description and Markets of Group II Industries	2-44

3	Emissions and Engineering Cost Analysis	3-45

3.1	Introduction	3-45

3.1.1	HON	3-45

3.1.2	P&R I (Subpart U)	3-46

3.1.3	P&R II (Subpart W)	3-47

3.2	Emission Points and Controls	3-47

3.2.1	Heat Exchange Systems	3-48

3.2.2	Storage Vessels	3-49

3.2.3	Process Vents	3-50

3.2.4	Transfer Racks	3-53

3.2.5	Wastewater	3-53

3.2.6	Equipment Leaks	3-54

3.2.7	Flares	3-56

3.2.8	Fenceline Monitoring	3-57

3.3	Engineering Cost Analysis Summary Results	3-58

4	Benefits of Emissions Reductions	4-65

4.1 Introduction	4-65

4.1.1	Ethylene oxide	4-66

4.1.2	Chloroprene	 4-67

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4.1.3	Benzene	4-67

4.1.4	1,3-Butadiene	4-68

4.1.5	Ethylene dichloride (1,2-dichloroethane)	4-68

4.1.6	Vinyl chloride	4-68

4.1.7	Chlorine	4-69

4.1.8	Maleic anhydride	4-69

4.1.9	Acrolein	4-70

4.1.10	Other Hazardous Air Pollutants (HAP)	4-70

4.2	Ozone-related Human Health Benefits	4-70

4.2.1	Estimating Ozone Related Health Impacts	4-71

4.2.2	Selecting air pollution health endpoints to quantify	4-71

4.2.3	Quantifying Cases of Ozone-Attributable Premature Mortality	4-73

4.3	Approach to Estimating PM2.5-related Human Health Benefits	4-74

4.3.1	Selecting Air Pollution Health Endpoints to Quantify	4-75

4.3.2	Quantifying Cases of PM2.5-Attributable Premature Death	4-77

4.4	Economic Valuation	4-79

4.4.1	Benefit-per-Ton Estimates	4-81

4.4.2	Ozone Vegetation Effects	4-83

4.4.3	Ozone Climate Effects	4-83

4.5	Ozone-, NOx- and PM2 5 -Related Benefits Results	4-83

4.6	Characterization of Uncertainty in the Monetized Benefits	4-86

4.7	Climate Impacts	4-87

4.8	Total Monetized Benefits	4-104

5	Economic Impact Analysis	5-107

5.1	Introduction	5-107

5.2	Economic Impact Analysis	5-107

5.3	Description of Approach/Model/Framework	5-108

5.4	Small Business Impacts Analysis	5-119

5.4.1 Screening Analysis	5-121

5.5	Employment Impact Analysis	5-123

6	COMPARISION OF COSTS AND BENEFITS	6-125

6.1	Results	6-125

6.2	Uncertainties and Limitations	6-130

7	References	7-133

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LIST OF TABLES

Table 1-1: Monetized Benefits, Compliance Costs, and Net Benefits for Proposed Amendments to the HON (dollars
in million 202 l$)a	1-7

Table 1-2: Monetized Benefits, Compliance Costs, and Net Benefits for Proposed Amendments to P&R I (dollars in
million 202IS) 	1-9

Table 2-1: Select SOCMI Chemicals by Feedstock*	2-16

Table 2-2: Top 10 Globally Produced SOCs by Total Market Value	2-19

Table 2-3: Polymers and Resin Group I Industries	2-31

Table 2-4: Concentration Findings of Affected Group I Industries	2-32

Table 2-5: Chemical Manufacturing (NAICS 325) Product Price Index, 2012-2021 (2012 = 100)	2-33

Table 2-6: Producer Price Index of Synthetic Rubber, 2012-2021 (Index for 2012 is normalized to 100)	2-35

Table 2-7: Polymers and Resin Group II Industries	2-41

Table 2-8: Concentration Findings of Affected Group II Industries	2-41

Table 2-9: Producer Price Index of Epoxy and Resins, 2012-2021 (2012 = 100)	2-43

Table 3-1: VOC and HAP Cost Effectiveness for the Control Option Evaluated	3-48

Table 3-2: Summary of Storage Vessel Control Options Evaluated for the HON	3-49

Table 3-3: Nationwide Emissions Reductions and Cost Impacts of Control Options Considered for Storage Vessels
at HON Facilities	3-49

Table 3-4: Nationwide Emissions Reductions and Cost Impacts of Control Options Considered for Storage Vessels
at P&R I Facilities (not collocated with HON facilities)	3-50

Table 3-5: Summary of Continuous Process Vent Control Options Evaluated for the HON and P&R INESHAP 3-51

Table 3-6: Nationwide Emissions Reductions and Cost Impacts of Control Options Considered for Continuous
Process Vents at HON Facilities	3-51

Table 3-7: Nationwide Emissions Reductions and Cost Impacts of Control Options Considered for Continuous
Process Vents at P&R I Facilities	3-51

Table 3-8: Nationwide Emissions Reductions and Cost Impacts of Control Options Considered for Batch Front-end
Process Vents at P&R I Facilities	3-51

Table 3-9: Average Cost And Emission Reductions for Process Vents Subject to the HON Used for the Suite of
Proposed Process Vent Requirements Evaluated for the NSPS subparts Ilia, NNNa, and RRRa	3-52

Table 3-10: Nationwide Emissions Reductions and Cost Impacts of Control Options Considered for Non-HON Vent
Streams Triggering NSPS Subparts Ilia, NNNa, and/or RRRa	3-53


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Table 3-11: Nationwide Emissions Reductions and Cost Impacts of Control Options Considered for Wastewater
Streams at HON Facilities	3-54

Table 3-12: Nationwide Emissions Reductions and Cost Impacts of Control Options Considered for Wastewater
Streams at P&R I Facilities	3-54

Table 3-13: Nationwide Emissions Reductions and Cost Impacts of Control Options Considered for Affected
Facilities Triggering NSPS Subpart Wb	3-55

Table 3-14: Nationwide Cost Impacts (2021$) for Flares in the SOCMI Source Category that Control Emissions
from HON Processes including P&R I Flares Collocated with HON Processes	3-56

Table 3-15: Nationwide Cost Impacts (2021$) for Flares that Control Emissions from P&R I Processes	3-57

Table 3-16: Nationwide Flare Control Efficiency and Emission Reduction Estimates for Flares in the SOCMI Source
Category that Control Emissions from HON Processes	3-57

Table 3-17: Nationwide Flare Control Efficiency and Emission Reduction Estimates for Flares that Control
Emissions from P&R I Processes	3-57

Table 3-18: Nationwide Cost Impacts of Fenceline Monitoring for HON	3-58

Table 3-19: Nationwide Cost Impacts of Fenceline Monitoring for P&R 1	3-58

Table 3-20: Detailed Costs for the HON Source Category by Emission Point for the Proposed Rule (2021$)	3-59

Table 3-21: Detailed Costs for the P&R I Source Category by Emission Point for the Proposed Rule (2021$)	3-61

Table 3-22: Detailed Costs for the P&R II Source Category by Emission Point for the Proposed Rule (2021$)... 3-62

Table 3-23: Summary of the Total Costs by Rule ($2021)	 3-62

Table 3-24: Discounted Costs, for the Proposed Amendments to the HON, P&R I, and P&R IINESHAP, and
Subparts Wb, Ilia, NNNa, and RRRa NSPS, 2024-2038 (million 2021$, discounted to 2023)	 3-63

Table 3-25: Summary of the HAP and VOC Emission Reductions per Year by Rule	3-63

Table 3-26: Summary of Emission Changes (Increases or Reductions) Other Than HAP and VOC per Year,
Cumulative and by Proposed Rule*	3-64

Table 4-1: Human Health Effects of Ambient Ozone and whether they were Quantified and/or Monetized in this
RIA	4-73

Table 4-2: Human Health Effects of PM2 5 and whether they were Quantified and/or Monetized in this RIA	4-77

Table 4-3: Synthetic Organic Chemicals: Benefit per Ton Estimates of Ozone-Attributable Premature Mortality and
Illness for the Proposal, 2024-2038 (2021$)	4-84

Table 4-4: Synthetic Organic Chemicals: Benefit per Ton Estimates of NOx-Attributable Premature Mortality and
Illness for the Proposal, 2024-2038(2021$)	4-84

Table 4-5: Synthetic Organic Chemicals: Benefit per Ton Estimates of NOx-Attributable Premature Mortality and
Illness for the Proposal, 2024-2038(2021$)	4-84

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Table 4-6: Total Benefits Estimates of Ozone-, NOx- and PM2.5-Attributable Premature Mortality and Illness
(million 2021$)a,b,c	4-85

Table 4-7: Undiscounted Benefits Estimates of Ozone-, NOx- and PM2 s-Attributable Premature Mortality and
Illness for the Proposed Option (million 2021$), 2024-2038ab	4-86

Table 4-8: Interim Social Cost of Carbon Values, 2024-2038 (2021$/Metric Ton CO2)	4-95

Table 4-9: Interim Social Cost of Methane Values, 2024-2038 (2021$ /Metric Ton CH4)	4-95

Table 4-10: Interim Social Cost of Nitrous Oxide Values, 2024-2038 (2021$ /Metric Ton N2O)	4-96

Table 4-11: Monetized Benefits of Estimated CO2, CH4, N20 Changes of the Proposed HON Amendments, P&R I
and P&R IINESHAP and Subpart Wb, Ilia, NNNa, and RRRa NSPS Amendments, 2024-2038, (million 2021$) 4-
103

Table 4-12: Summary of Monetized Benefits PV/EAV for the Proposed HON Amendments, 2024-2038, (million

2021$), Discounted to 2023	4-104

Table 4-13: Summary of Monetized Benefits PV/EAV for the Proposed P&R I Amendments, 2024-2038, (million
2021$), Discounted to 2023	4-105

Table 4-14: Summary of Monetized Benefits PV/EAV for the Cumulative Impact of the Proposed HON
Amendments, P&R I and P&R II NESHAP and Subpart Wb, Ilia, NNNa, and RRRa NSPS Amendments, 2024-
2038, (million 2021$), Discounted to 2023	4-106

Table 5-1: Prices, Production, and Trade Quantities for the Seven Synthetic Organic Chemical Commodities
Selected (in Metric Tons)	5-109

Table 5-2: Control Costs Attributed to Each Chemical Modeled (2021$)	5-111

Table 5-3: Elasticity Parameter Values and Sources	5-112

Table 5-4: Butadiene Results	5-116

Table 5-5: Styrene Simulation Results	5-116

Table 5-6: Acrylonitrile Simulation Results	5-117

Table 5-7: Acetone Simulation Results	5-117

Table 5-8: Ethylene Dichloride Simulation Results	5-118

Table 5-9: Ethylene Glycol Simulation Results	5-118

Table 5-10: Ethylene Oxide Simulation Results	5-119

Table 5-11. SBA Size Standards by NAICS Code	5-120

Table 5-12. Summary Statistics of Potentially Affected Entities	5-121

Table 5-13: Distribution of Estimated Compliance Costs by Rule and Size for Proposed Options ($2021)a	5-122

Table 5-14: Compliance Cost-to-Sales Ratio Distributions for Small Entities, Proposed Options3	5-122

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Table 5-15: Compliance Cost-to-Sales Ratio Thresholds for Small Entities - Proposed Options3	5-123

Table 6-1: Summary of Monetized Benefits, Compliance Costs, and Net Benefits PV/EAV for HON, 2024-2038
(million 2021$, discounted to 2023)	6-127

Table 6-2: Summary of Monetized Benefits, Compliance Costs, and Net Benefits PV/EAV for P&R I, 2024-2038
(million 2021$, discounted to 2023)	6-128

Table 6-3: Summary of Monetized Benefits, Compliance Costs, and Net Benefits PV/EAV for All Rules, 2024-
2038 (million 2021$, discounted to 2023)	6-129

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LIST OF FIGURES

Figure 2-1 Global Price of Ethylene (USD$/metric ton)	2-26

Figure 2-2: Global Price of Butadiene from 2017 to 2019 with Estimated Figures for 2020 to 2022	2-28

Figure 2-3: P&R Group I and II Facilities Map	2-30

Figure 4-1: Frequency Distribution of SC-CO2 Estimates for 2030	4-98

Figure 4-2: Frequency Distribution of SC-CH4 Estimates for 2030	4-98

Figure 4-3: Frequency Distribution of SC-N20 Estimates for 2030	4-99

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1 EXECUTIVE SUMMARY

1.1 Background

The U.S Environmental Protection Agency (EPA) is proposing amendments to the
National Emissions Standards for Hazardous Air Pollutants (NESHAP) for subparts (40 CFR
part 63, subparts F, G, H, & I) that apply to synthetic organic chemical manufacturing industry
(SOCMI) and to equipment leaks from certain non-SOCMI processes located at chemical plants.
These four NESHAP are more commonly referred to together as the Hazardous Organic
NESHAP (HON). The HON contains maximum achievable control technology (MACT)
standards for HAP from heat exchange systems, process vents, storage vessels, transfer racks,
wastewater, and equipment leaks at chemical plants that are major sources of HAP producing
SOCMI chemicals (e.g., bulk commodity chemicals) and for equipment leaks for certain non-
SOCMI chemical processes. The EPA is proposing to revise NESHAP requirements for storage
tanks, loading operations, and equipment leaks to reflect cost-effective developments in
practices, process, or controls of hazardous air pollutants (HAP).

The EPA is also proposing amendments to the NESHAP for subparts (40 CFR part 63,
subparts U and W) that apply to the polymers and resins (P&R) Group I and II industries. P&R
Group I refers to major source facilities that produce certain elastomers and regulates HAP
emissions from nine different source categories. P&R Group I contains MACT standards for
HAP from storage tanks, process vents, equipment leaks, wastewater systems, and heat exchange
systems. P&R Group II applies to existing and new epoxy resins and non-nylon polyamides
production operations that are located at major sources. Similarly, P&R Group II contains
MACT standards for HAP from storage tanks, process vents, equipment leaks, and wastewater
systems.

The EPA is also proposing New Source Performance Standards (NSPS) to reflect best
system of emissions reduction for four SOCMI NSPS subparts (40 CFR part 60, subparts III,
NNN, RRR, & VV) for emissions of volatile organic compound (VOC) from SOCMI air
oxidation unit processes, SOCMI distillation operations, SOCMI reactor processes, and
equipment leaks located at SOCMI sources. The proposal also includes revisions related to
emissions during periods of startup, shutdown, and malfunction (SSM); additional requirements
for electronic reporting of performance test results, performance evaluation reports, and

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compliance reports; revisions to monitoring and operating requirements for control devices; and
other minor technical improvements.

1.1.1 NESHAPfor subparts F, G, H, I, U,&W

The statutory authority for the proposed NESHAP amendments is provided by sections
112 and 301 of the Clean Air Act (CAA), as amended (42 U.S.C. 7401 et seq.). Section 112 of
the CAA establishes a two-stage regulatory process to develop standards for emissions of HAP
from stationary sources. Generally, the first stage involves establishing technology-based
standards and the second stage involves evaluating those standards that are based on maximum
achievable control technology (MACT) to determine whether additional standards are needed to
address any remaining risk associated with HAP emissions. This second stage is commonly
referred to as the "residual risk review." In addition to the residual risk review, the CAA also
requires the EPA to review standards set under CAA section 112 every 8 years and revise the
standards as necessary taking into account any "developments in practices, processes, or control
technologies." This review is commonly referred to as the "technology review," and is the
subject of this proposal.

In the first stage of the CAA section 112 standard setting process, the EPA promulgates
technology-based standards under CAA section 112(d) for categories of sources identified as
emitting one or more of the HAP listed in CAA section 112(b). Sources of HAP emissions are
either major sources or area sources, and CAA section 112 establishes different requirements for
major source standards and area source standards. "Major sources" are those that emit or have
the potential to emit 10 tons per year (tpy) or more of a single HAP or 25 tpy or more of any
combination of HAP. All other sources are "area sources." For major sources, CAA section
112(d)(2) provides that the technology-based NESHAP must reflect the maximum degree of
emission reductions of HAP achievable (after considering cost, energy requirements, and non-air
quality health and environmental impacts). These standards are commonly referred to as MACT
standards. CAA section 112(d)(3) also establishes a minimum control level for MACT standards,
known as the MACT "floor " In certain instances, as provided in CAA section 112(h), the EPA
may set work practice standards in lieu of numerical emission standards. The EPA must also
consider control options that are more stringent than the floor. Standards more stringent than the
floor are commonly referred to as beyond-the-floor standards. For area sources, CAA section

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112(d)(5) allows the EPA to set standards based on generally available control technologies or
management practices (GACT standards) in lieu of MACT standards. For categories of major
sources and any area source categories subject to MACT standards, the second stage in standard-
setting focuses on identifying and addressing any remaining {i.e., "residual") risk pursuant to
CAA section 112(f) and concurrently conducting a technology review pursuant to CAA section
112(d)(6). MACT standards were finalized for the HON source category in 1994. The residual
risk and technology review (RTR) was finalized in 2006.

The MACT standards for P&R Group I (40 CFR part 63, subpart U) were initially
promulgated in 1996. Most recently, the agency conducted its RTR of the Group INESHAP in
2008, for four source categories, and in 2011, for the remaining source categories. The MACT
standards for P&R Group II (40 CFR part 63, subpart W) were initially promulgated in 1995,
with the agency most recently conducting its RTR of the Group II NESHAP in 2008.

The source categories that are the subject of this proposal include the HON source
category (and whose facilities, sources and processes we often refer to as "HON facilities,"
"HON sources," and "HON processes") and several Polymers and Resins Production source
categories covered in P&R Group I and II (see section II.B of the preamble for detailed
information about the source categories). The North American Industry Classification System
(NAICS) code for SOCMI facilities begins with 325, for P&R I is 325212, and for P&R II is
325211, but is not exhaustive of affective facilities.

As defined in the Initial List of Categories of Sources Under Section 112(c)(1) of the
CAA Amendments of 1990 (see 57 FR 31576, July 16, 1992) and Documentation for
Developing the Initial Source Category List, Final Report (see EPA-450/3-91-030, July 1992),
the SOCMI source category is any facility engaged in "manufacturing processes that produce
one or more of the chemicals [listed] that either (1) use an organic HAP as a reactant or (2)
produce an organic HAP as a product, co-product, by-product, or isolated intermediate." Related
chemicals for the HON and P&R Group I and II source categories are listed in the Industry
Profile section of this report.

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1.1.2 NSPS subparts III, NNN, RRR, & VVb

The EPA's authority for the NSPS proposal is CAA section 111, which governs the
establishment of standards of performance for stationary sources. CAA section 111(b)(1)(A)
requires the EPA Administrator to list categories of stationary sources that in the Administrator's
judgement cause or contribute significantly to air pollution that may reasonably be anticipated to
endanger public health or welfare. The EPA must then issue performance standards for new (and
modified or reconstructed) sources in each source category pursuant to CAA section
111(b)(1)(B). These standards are referred to as new source performance standards, or NSPS.
The EPA has the authority under CAA section 111(b) to define the scope of the source
categories, determine the pollutants for which standards should be developed, set the emission
level of the standards, and distinguish among classes, type, and sizes within categories in
establishing the standards.

Section 111(b)(1)(B) of the CAA requires the EPA to "at least every 8 years review and,
if appropriate, revise" new source performance standards. Section 111(a)(1) of the CAA provides
that performance standards are to "reflect the degree of emission limitation achievable through
the application of the best system of emission reduction which (taking into account the cost of
achieving such reduction and any non-air quality health and environmental impact and energy
requirements) the Administrator determines has been adequately demonstrated." We refer to this
level of control as the best system of emission reduction or "BSER " The term "standard of
performance" in CAA 111(a)(1) makes clear that the EPA is to determine both the BSER for the
regulated sources in the source category and the degree of emission limitation achievable
through application of the BSER. The EPA must then, under CAA section 111(b)(1)(B),
promulgate standards of performance for new sources that reflect that level of stringency. These
subparts were originally promulgated pursuant to CAA section 111(b) on June 29, 1990
(subparts III and NNN); August 31, 1993 (subpart RRR); and November 16, 2007 (subpart VV).

The emission sources covered by these NSPS subparts are comparable (and in many
instances are the same) as HON sources subject to our standards for process vents (NSPS III,
NNN, & RRR) and equipment leaks (NSPS VV), though regulated pollutants and definitions of
what constitutes an affected source/affected facility are different between the NESHAP and
NSPS.

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1.2	Market Failure

Many regulations are promulgated to correct market failures, which otherwise lead to a
suboptimal allocation of resources within a market. Air quality and pollution control regulations
address "negative externalities" whereby the market does not internalize the full opportunity cost
of production borne by society as public goods such as air quality are unpriced.

While recognizing that the optimal social level of pollution may not be zero, HAP and
VOC emissions impose costs on society, such as negative health and welfare impacts, that are
not reflected in the market price of the goods produced through the polluting process. For this
regulatory action the goods produced are chemical products (e.g., butadiene, ethylene oxide). If
processes of producing butadiene or ethylene oxide yield pollution emitted into the atmosphere,
the social costs imposed by the pollution will not be borne by the polluting firms but rather by
society as a whole. Thus, the producers are imposing a negative externality, or a social cost from
these emissions, on society. The equilibrium market price of chemical products such as
butadiene or ethylene oxide may fail to incorporate the full opportunity cost to society of
consuming the chemical product. Consequently, absent a regulation or some other action to limit
such emissions, producers will not internalize the negative externality of pollution due to
emissions and social costs will be higher as a result. This proposed regulation will serve to
address this market failure by causing affected producers to begin internalizing the negative
externality associated with HAP and other emissions also affected by this proposal such as VOC.

1.3	Results for Proposed Action

1.3.1 Baseline for the Regulation

The impacts of regulatory actions are evaluated relative to a baseline that represents to
the extent possible the world without the regulatory action. In this RIA, the EPA presents
analysis results for the proposed amendments to the HON, P&R I, P&R II, and several proposed
NSPS (VVb, Ilia, NNNa, RRRa). Throughout this document, the EPA focuses the analysis on
the proposed requirements that result in quantifiable compliance cost or emissions changes
compared to the baseline as identified above. For each rule and most emissions sources, EPA
assumed each facility achieved emissions control meeting current standards, and estimated
emissions reductions and cost relative to this baseline. The baseline does include what are termed

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as "excess emissions" reflecting current emissions from the SOCMI and thus are pertinent to
estimates of emission reductions for the proposed HON and P&R I and I amendments and our
estimates of emission reductions are calculated relative to these "excess emissions." We
calculate cost and emissions reductions relative to the baseline for the period 2024-2038. This
time frame spans the time period from when the NSPSs take effective (under the assumption that
the proposed action is finalized in 2024) through the lifetime of the typical capital equipment (15
years) expected to be installed as a result of the proposed NESHAP and NSPS amendments if
finalized.

The summaries of impact results below are for the proposed options. In accordance with
OMB Circular A-4 (US OMB, 2003),1 we also present impact results for a more stringent and
less stringent set of options as defined by that circular, which is the guidance for regulatory
analysis to be followed by Federal agencies preparing an RIA such as this one. These alternatives
are defined in Chapter 6, where results are presented for these options along with those for the
proposed option.

1.3.1.1 Overview of Costs and Benefits for the Proposed Options

The proposed amendments to the HON constitute a significant regulatory action. This

action is significant, under section 3(f)(1) of Executive Order 12866, because it likely to have an
annual effect on the economy of $100 million or more or adversely affect in a material way the
economy, a sector of the economy, productivity, competition, jobs, the environment, public
health or safety, or state, local, or tribal governments or communities. The EPA monetized the
projected benefits of reducing VOC emissions in terms of the value of avoided ozone-
attributable deaths and illnesses, both short- (ST) and long-term (LT). The EPA also monetized
the benefits and disbenefits from changes in emissions of climate pollutants such as carbon
dioxide (CO2), nitrous oxide (N2O), and methane (CH4).

Table 1-1 also presents projected benefits, climate disbenefits (including benefits),
compliance costs, and net benefits, and HAP emission reductions from the proposed amendments
to the HON. The projected climate disbenefits are caused by increased electricity usage for the
controls included in the cost analysis for the proposed HON. Projected climate benefits are

1 U.S. Office of Management and Budget. Circular A-4, "Regulatory Analysis." September 17, 2003. Available at
https://www.whitehouse.gov/wp-content/uploads/legacY drupal files/omb/circulars/A4/a-4.pdf.

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caused by reduction of CH4 emissions from control of flares. Certain control options analyzed in
this RIA lead to chemical product recovery, which has been monetized as product recovery
credits. Net compliance costs are calculated as total compliance costs minus product recovery
credits. For a discussion of product recovery, see Chapter 3. Monetized net benefits are projected
to be negative using short- and long-term estimates of ozone health benefits and both 3 percent
and 7 percent social discount rates, and including the climate benefits and disbenefits estimated
at 3 percent. Further, while benefits from HAP reductions and VOC reductions outside of the
ozone season have not been monetized for this proposed action, EPA expects these benefits are
positive. Also monetized for this proposed action are climate benefits from emission reductions
of CH4 and the climate disbenefits from increases in CO2 and N2O emissions resulting from
increased electricity usage associated with additional emissions controls. The unmonetized
effects include disbenefits from secondary emissions increases of CO2 resulting from increased
electricity usage associated with additional emissions controls. As mentioned earlier, we
calculate cost and emissions reductions relative to the baseline for the period 2024-2038, with
costs discounted to 2023.

Table 1-1: Monetized Benefits, Compliance Costs, Emission Reductions and Net Benefits
for Proposed Amendments to the HON (dollars in million 2021$2)a	

3 Percent Discount Rate	7 Percent Discount Rate



PV

EAV

PV

EAV

Monetized Health Benefits'3

$78

$6.5

$53

$5.8



and

and

and

and



$690

$58

$470

$51

Climate Disbenefits (3%)°

$(25.4)

$(2.1)

$(25.4)

$(2.1)

Net Compliance Costs'1

$1,385

$116

$922

$101

Compliance Costs

SI, 393

$117

$927.7

$102

Value of Product Recovery

$8

SI

$5

$0.8

Net Benefits

$(1,280)

$(107)

$(844)

$(93)



and

and

and

and



$(670)

$(56)

$(427)

$(48)

Nonmonetized Benefits	5,726 tons of HAP emission reductions. Health effects from reduced exposure to

ethylene oxide, chloroprene, benzene, 1,3-butadiene, vinyl chloride, ethylene
	dichloride, chlorine, maleicanhydride, and acrolein	

a Totals may not sum due to independent rounding. Numbers rounded to two significant digits unless otherwise
noted.

b Monetized benefits include ozone related health benefits associated with reductions in VOC emissions. The health
benefits are associated with several point estimates and are presented at real discount rates of 3 and 7 percent for

2 When necessary, dollar figures in this RIA have been converted to 2021$ using the annual GDP Implicit Price
Deflator values in the U.S. Bureau of Economic Analysis' (BEA) NIPA Table 1.1.9 found at found at
.

1-7


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benefits. The two benefits estimates are separated by the word "and" to signify that they are two separate estimates.
The estimates do not represent lower- and upper-bound estimates. Benefits from HAP reductions and VOC
reductions outside of the ozone season remain unmonetized and are thus not reflected in the table. The unmonetized
effects also include disbenefits resulting from the secondary impact of an increase in CO emissions.

0 Monetized climate benefits and disbenefits are based on changes (increases) in CO2 and N20 emissions and
decreases in CH4 emissions and are calculated using four different estimates of the social cost of each greenhouse
gas (SC-GHG) (model average at 2.5 percent, 3 percent, and 5 percent discount rates; 95th percentile at 3 percent
discount rate). For the presentational purposes of this table, we show the benefits and disbenefits (and net benefits)
associated with the model average SC-GHG at a 3 percent discount rate, but the Agency does not have a single
central SC-GHG point estimate. We emphasize the importance and value of considering the benefits and disbenefits
calculated using all four SC-GHG estimates; Please see Table 4-11 for the full range of SC-GHG estimates. As
discussed in Chapter 4, a consideration of climate benefits and disbenefits calculated using discount rates below 3
percent, including 2 percent and lower, is also warranted when discounting intergenerational impacts. A number in
parentheses denotes a negative value. Negative climate disbenefits is a positive value.
dNet compliance costs are the engineering control costs minus the value of recovered product. A negative net
compliance costs occurs when the value of the recovered product exceeds the compliance costs.

1.3.1.2 Overview of Costs and Benefits for the Proposed P&R I

The proposed amendments to P&R I do not constitute an economically significant

regulatory action. This action is a significant regulatory action Table 1-2 presents projected
monetized health benefits, climate disbenefits (inclusive of climate benefits as with the HON
summary impacts table above), compliance costs, and HAP emissions reductions from the
proposed amendments to P&R I. There are projected climate benefits caused by CH4 emission
reductions, and projected climate disbenefits caused by CO2 and N2O emissions increases. While
benefits from HAP reductions and VOC reductions outside of the ozone season have not been
monetized for this action, EPA expects these benefits are positive. As mentioned earlier, we
calculate cost and emissions reductions relative to the baseline for the period 2024-2038, with
cost discounted to 2023.

1-8


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Table 1-2: Monetized Benefits, Compliance Costs, and Net Benefits for Proposed
Amendments to P&R I (dollars in million 2021$)a	



3 Percent Discount Rate

7 Percent Discount Rate



PV

EAV

PV

EAV



$2.6

$0.22

$1.8

$0.19

Health Benefits'3

and

and

and

and



$23

$1.9

$16

$1.7

Climate Disbenefits0

$40.5

$3.4

$40.5

$3.4

Net Compliance Costs'1

$121

$10

$78

$8.6

Compliance Costs

$122

$10.2

$79

$8.7

Value of Product Recovery

1.0

$0.2

$1

$0.1



($159)

($13)

($116)

($12)

Net Benefits

and

and

and

and



$(139)

$(12)

$(103)

$(10)

Nonmonetized Benefits

a Totals may not sum due to independent rounding. Numbers rounded to two significant digits unless otherwise
noted.

b Monetized benefits include ozone related health benefits associated with reductions in VOC emissions. The health
benefits are associated with several point estimates and are presented at real discount rates of 3 and 7 percent for
benefits. The two benefits estimates are separated by the word "and" to signify that they are two separate estimates.
The estimates do not represent lower- and upper-bound estimates. Benefits from HAP reductions and VOC
reductions outside of the ozone season remain unmonetized and are thus not reflected in the table. The unmonetized
effects also include disbenefits resulting from the secondary impact of an increase in CO emissions.

0 Monetized climate benefits and disbenefits are based on changes (increases) in CO2 and N20 emissions and
decreases in CH4 emissions are calculated using four different estimates of the social cost of each greenhouse gas
(SC-GHG) (model average at 2.5 percent, 3 percent, and 5 percent discount rates; 95th percentile at 3 percent
discount rate). For the presentational purposes of this table, we show the benefits and disbenefits (and net benefits)
associated with the model average SC-GHG at a 3 percent discount rate, but the Agency does not have a single
central SC-GHG point estimate. We emphasize the importance and value of considering the benefits and disbenefits
calculated using all four SC-GHG estimates. Please see Table 4-11 for the full range of SC-GHG estimates. As
discussed in Chapter 4, a consideration of climate benefits and disbenefits calculated using discount rates below 3
percent, including 2 percent and lower, is also warranted when discounting intergenerational impacts. A number in
parentheses denotes a negative value. Negative climate disbenefits is a positive value.
dNet compliance costs are the engineering control costs minus the value of recovered product. A negative net
compliance costs occurs when the value of the recovered product exceeds the compliance costs.

1.3.1.3 Overview of Costs and Benefits for the Proposed P&R II

The proposed amendments to P&R II do not constitute an economically significant

regulatory action. This action is a significant regulatory action Table 1-3 presents projected
monetized health benefits, and compliance costs, from the proposed amendments to P&R II.
There are minimal emission reductions from the proposed amendments (less than 1 ton per year
of HAP and VOC). There are no projected climate benefits and disbenefits from these proposed
amendments. While benefits from HAP reductions and VOC reductions outside of the ozone
season have not been monetized for this action, EPA expects these benefits are positive. As

1-9


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mentioned earlier, we calculate cost and emissions reductions relative to the baseline for the
period 2024-2038.

Table 1-3: Monetized Benefits, Compliance Costs, and Net Benefits for Proposed
Amendments to P&R II (dollars in million 2021$)a



3 Percent Discount Rate

7 Percent Discount Rate

PV

EAV

PV

EAV

Monetized Health Benefits'3











$0

$0

$0

$0

Net Compliance Costs0

$4

$0.4

$3

$0.4

Compliance Costs

$4

SO. 4

S3

SO. 4

Value of Product Recovery

$0

SO

SO

SO.O

Net Benefits

$(4)

$ (0.4)

$(3)

$ (0.4)

.. . , „ r. 1 ton/year of HAP emission reduction. Reduced health exposure to
Nonmonetized Benefits . ,, , , .
	epichlorohydrin	

a Totals may not sum due to independent rounding. Numbers rounded to two significant digits unless otherwise
noted.

b There are no monetized health benefits for this proposed rule. There are also no climate benefits or disbenefits for
this proposed rule. The unmonetized effects also include disbenefits resulting from the secondary impact of an
increase in CO emissions.

0 Net compliance costs are the engineering control costs minus the value of recovered product. A negative net
compliance costs occurs when the value of the recovered product exceeds the compliance costs. For this proposal,
there is no product recovery.

1.3.1.4 Overview of Costs and Benefits for the Proposed Subpart Wb NSPS

The proposed amendments to the subpart VVb NSPS do not constitute an economically

significant regulatory action. This action is a significant regulatory action Table 1-4 presents
projected monetized health benefits, and compliance costs (with and without product recovery),
from the proposed amendments to subpart VVb. There are no projected climate benefits or
disbenefits. While benefits from VOC reductions outside of the ozone season have not been
monetized for this action, EPA expects these benefits are positive. As mentioned earlier, we
calculate cost and emissions reductions relative to the baseline for the period 2024-2038.

1-10


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Table 1-4: Monetized Benefits, Compliance Costs, and Net Benefits for Proposed NSPS
subpart Wb (dollars in million 2021$)a	



3 Percent Discount Rate

7 Percent Discount Rate

PV

EAV

PV

EAV



$1.2





$0.09

Monetized Health Benefits'3

and

$0.10 and

$0.85 and

and



$11

$0.93

$7.5

$0.82

Net Compliance Costs0

$11.0

$0.9

$8.0

$0.9

Compliance Costs

$13.3

$1.1

$9.7

$1.1

Value of Product Recovery

$2.3

$0.2

$1.7

$0.2



$(9.8)

$(0.8)

$(7.2)

$(0.8)

Net Benefits

and

and

and

and



$0

$0.03

$(0.5)

$(0.1)

a Totals may not sum due to independent rounding. Numbers rounded to two significant digits unless otherwise
noted.

b Monetized benefits include ozone related health benefits associated with reductions in VOC emissions. The health
benefits are associated with several point estimates and are presented at real discount rates of 3 and 7 percent for
benefits. The two benefits estimates are separated by the word "and" to signify that they are two separate estimates.
The estimates do not represent lower- and upper-bound estimates. Benefits from HAP reductions and VOC
reductions outside of the ozone season remain unmonetized and are thus not reflected in the table. There are no
climate benefits or disbenefits associated with this proposed NSPS.

0 Net compliance costs are the engineering control costs minus the value of recovered product. A negative net
compliance costs occurs when the value of the recovered product exceeds the compliance costs.

1.3.1.5 Overview of Costs and Benefits for the Proposed Subparts Ilia, NNNa, and RRRa
The proposed amendments to the subparts Ilia, NNNa, and RRRa, do not constitute an

economically significant regulatory action. This action is a significant regulatory action Table 1-

5 presents projected monetized health benefits, climate disbenefits (inclusive of climate benefits

as with the HON summary impacts table above), and compliance costs (with and without product

recovery), from the proposed amendments to these three NSPS. There are projected climate

benefits caused by CH4 emission reductions, and projected climate disbenefits caused by CO2

and N2O emissions increases. While benefits from HAP reductions and VOC reductions outside

of the ozone season have not been monetized for this action, EPA expects these benefits are

positive. As mentioned earlier, we calculate cost and emissions reductions relative to the baseline

for the period 2024-2038.

1-11


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Table 1-5: Monetized Benefits, Compliance Costs, and Net Benefits for Proposed
Amendments to Subparts Ilia, NNNa, and RRRa (dollars in million 2021$)a



3 Percent Discount Rate

7 Percent Discount Rate



PV

EAV

PV

EAV



$4.6

$0.39

$3.2

$0.35

Monetized Health Benefits'3

and

and

and

and



$41

$3.5

$28

$3.0

Climate Disbenefits0

$(6.8)

$(0.57)

$(6.8)

$(0.57)

Net Compliance Costs'1

$56

$4.7

$40

$4.4

Compliance Costs

$56

$4.7

$40

$4.4

Value of Product Recovery

SO

SO

SO

SO



($45)

($3.7)

($30)

($3.5)

Net Benefits

and

and

and

and



$(8)

$(0.6)

$(5)

$(0.8)

a Totals may not sum due to independent rounding. Numbers rounded to two significant digits unless otherwise
noted.

b Monetized benefits include ozone related health benefits associated with reductions in VOC emissions. The health
benefits are associated with several point estimates and are presented at real discount rates of 3 and 7 percent for
benefits. The two benefits estimates are separated by the word "and" to signify that they are two separate estimates.
Benefits from HAP reductions and VOC reductions outside of the ozone season remain unmonetized and are thus
not reflected in the table. The estimates do not represent lower- and upper-bound estimates. The unmonetized effects
also include disbenefits resulting from the secondary impact of an increase in CO emissions.

0 Monetized climate benefits and disbenefits are based on changes (increases) in CO2 and N20 emissions and
decreases in CH4 emissions and are calculated using four different estimates of the social cost of each greenhouse
gas (SC-GHG) (model average at 2.5 percent, 3 percent, and 5 percent discount rates; 95th percentile at 3 percent
discount rate). For the presentational purposes of this table, we show the benefits and disbenefits (and net benefits)
associated with the model average SC-GHG at a 3 percent discount rate, but the Agency does not have a single
central SC-GHG point estimate. We emphasize the importance and value of considering the benefits and disbenefits
calculated using all four SC-GHG estimates. Please see Table 4-11 for the full range of SC-GHG estimates. As
discussed in Chapter 4, a consideration of climate benefits and disbenefits calculated using discount rates below 3
percent, including 2 percent and lower, is also warranted when discounting intergenerational impacts. A parenthesis
around a number denotes it as having a negative value). Negative climate disbenefits is a positive value.
dNet compliance costs are the engineering control costs minus the value of recovered product. A negative net
compliance costs occurs when the value of the recovered product exceeds the compliance costs.

1.3.1.6 Overview of Costs and Benefits for All Rules

Table 1-6 presents the cumulative projected monetized health benefits, climate
disbenefits (inclusive of climate benefits as with the HON summary impacts table above), and
compliance costs (net of product recovery). Cumulatively, there are 6,053 tons per year of HAP
emission reductions and 23,515 tons per year of VOC emission reductions, and Table 3-25
contains those reductions both cumulatively and by proposed rule. There are also emission
increases (per year) in criteria pollutants of 17.4 tons of fine particulate matter (PM2.5), 349 tons

1-12


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of nitrogen oxides (NOx), and 1.37 tons of sulfur dioxide (S02) due to additional energy usage
from the controls applied in the proposal cost analysis. Finally, there are emission increases per
year of 741,102 tons of carbon dioxide (C02), 6.86 tons of nitrous oxide (N20), and emission
decreases per year of 22,951 tons of methane (CH4). Table 3-26 contains the changes in
emissions other than for HAP and VOC. Thus, there are projected climate benefits caused by
CH4 emission reductions, and projected climate disbenefits caused by CO2 and N2O emissions
increases. While benefits from HAP reductions and VOC reductions outside of the ozone season
have not been monetized for this action, EPA expects these benefits are positive. As mentioned
earlier, we calculate cost and emissions reductions relative to the baseline for the period 2024-
2038, discounted to 2023

Table 1-6: Monetized Benefits, Compliance Costs, Emission Reductions, and Net Benefits
for Proposed Amendments to HON, P&R I, and P&R IINESHAP and Proposed
Amendments to subpart Wb, Ilia, NNNa, and RRRa NSPS (dollars in million 2021$)a



3 Percent Discount Rate

7 Percent Discount Rate



PV

EAV

PV

EAV



$81

$6.8

$56

$6.1

Monetized Health Benefits'3

and

and

and

and



$730

$61

$490

$54

Climate Disbenefits0

$8.2

$0.7

$8.2

$0.7

Net Compliance Costs'1

$1,579

$132

$1,052

$116

Compliance Costs

$1,590

$133.4

$1,059.7

$117.1

Value of Product Recovery

$11

$1.4

$7.7

$1.1



($1,506)

($126)

($1,100)

($110)

Net Benefits

and

and

and

and



$(857)

$(71)

$(570)

$(63)

6,053 tons/year of HAP

..	. , „ r.	Health effects of reduced exposure to ethylene oxide, chloroprene,

onmone ze ene 1 s	benzene, 1,3-butadiene, vinyl chloride, ethylene dichloride, chlorine,

	maleic anhydride and acrolein	

a Totals may not sum due to independent rounding. Numbers rounded to two significant digits unless otherwise
noted.

b Monetized benefits include ozone related health benefits associated with reductions in VOC emissions. The health
benefits are associated with several point estimates and are presented at real discount rates of 3 and 7 percent for
benefits. The two benefits estimates are separated by the word "and" to signify that they are two separate estimates.
Benefits from HAP reductions and VOC reductions outside of the ozone season remain unmonetized and are thus
not reflected in the table. The estimates do not represent lower- and upper-bound estimates. The unmonetized effects
also include disbenefits resulting from the secondary impact of an increase in CO emissions.

0 Monetized climate benefits and disbenefits are based on changes (increases) in CO2 and N20 emissions and
decreases in CH4 emissions and are calculated using four different estimates of the social cost of each greenhouse
gas (SC-GHG) (model average at 2.5 percent, 3 percent, and 5 percent discount rates; 95th percentile at 3 percent
discount rate). For the presentational purposes of this table, we show the benefits and disbenefits (and net benefits)
associated with the model average SC-GHG at a 3 percent discount rate, but the Agency does not have a single
central SC-GHG point estimate. We emphasize the importance and value of considering the benefits and disbenefits

1-13


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calculated using all four SC-GHG estimates. Please see Table 4-11 for the full range of SC-GHG estimates. As
discussed in Chapter 4, a consideration of climate benefits and disbenefits calculated using discount rates below 3
percent, including 2 percent and lower, is also warranted when discounting intergenerational impacts. A number in
parentheses denotes a negative value. Negative climate disbenefits is a positive value.
dNet compliance costs are the engineering control costs minus the value of recovered product. A negative net
compliance costs occurs when the value of the recovered product exceeds the compliance costs.

1.4 Organization of the Report

The remainder of this report details the methodology and the results of the RIA. Chapter
2 presents a profile of the SOCMI and P&R Group I and II industries, which also cover the
industries with sources affected by the NSPS amendments included in this rulemaking. Chapter 3
describes emissions, emissions control options, and engineering costs. Chapter 4 presents the
benefits analysis, including the monetized health benefits from VOC and other emission
reductions, a qualitative discussion of the unmonetized benefits associated with HAP emissions
reductions and the monetized benefits associated with climate emissions decreases (CH4) and
disbenefits associated with climate (CO2 and N2O) emissions increases. Chapter 5 presents
analyses of economic impacts, impacts on small businesses, and a narrow analysis of
employment impacts. The economic impacts include estimates of price and output changes in
response to the costs of different proposed rules. The small business impact analysis includes
estimates of annual cost to sales calculations for affected small business, and concludes that no
proposed rule in this rulemaking will have a significant impact on a substantial number of small
entities (or SISNOSE). Chapter 6 presents a comparison of the benefits and costs. Chapter 7
contains the references for this RIA.

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2 INDUSTRY PROFILE

This chapter will provide a profile of SOCMI and P&R Group I and II industries affected
under this combined rulemaking. While there is overlap between these rules, affected facilities
and area sources are distinct enough that this chapter will provide separate sub-chapters for
SOCMI and P&R Group I and II below. EPA constructed facility lists for these rules based on
data from the 2017 National Emissions Inventory (NEI). However, instances where facility-
specific data was not available in the in the 2017 NEI, more recent data was collected from the
2018 NEI or recent state submittals to the Emissions Inventory System (EIS).3 The construction
of the facility list is described in the preamble for the proposed action.

2.1 SOCMI Industry Profile

The synthetic organic chemical manufacturing industry (SOCMI) consists of about 400
chemicals. A U.S. Environmental Protection Agency (EPA) regulatory impact analysis from
1994 identified approximately 30 key chemicals that represent a large portion of output from the
industry.4 This profile revisits these chemicals and their feedstocks, listed in Table 2-1, to
provide an updated industry profile.

3	Revenue and employment information was collected through manual search of D&B Hoover's database in 2022.

4	U.S. EPA. Regulatory Impact Analysis for the National Emissions Standards for Hazardous Air Pollutants for

Source Categories: Organic Hazardous Air Pollutants from the Synthetic Organic Chemical Manufacturing
Industry and Other Process Subject to the Negotiated Regulation for Equipment Leaks. EPA-453/R-94-019.
March 1994.

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Table 2-1: Select SOCMI Chemicals by Feedstock*

Benzene

Methane

Styrene-Butadiene Rubber

Formaldehyde

Cyclohexylamine

Chloroform

Hydroquinone

Methyl Tertiary Butyl Ether

Styrene

Methyl Chloride

Acetone

Ethylene

Bisphenol-A

Butadiene

Propylene Glycol

Polybutadiene

Toluene

Ethylene Dichloride

Benzoic Acid

Ethylene Oxide

Xylene

Ethylene Glycol

Terephthalic Acid

Triethylene Glycol

Phthalic Anhydride

Propylene

Naphthalene

Acrylonitrile

Ether

Butylene

*This list of chemicals is from the HON Regulatory Impact Analysis (EPA, 1994)

Synthetic organic chemicals (SOCs) are derived from chemical reactions using
feedstocks containing carbon, such as fossil fuels like oil and natural gas. Supply relies on the
market prices of these feedstocks, but advancements in technology and energy efficiency have
resulted in large production economies of scale. The main source of demand for SOCs is plastics
manufacturers. In addition, there is demand from a multitude of other industries, including but
not limited to rubber, paints, adhesives, food, and pesticides (Barnicki, 2017).

Existing overall market and industry research for SOCs is scarce. The SOC market in the
United States was valued at $168 billion in 2022 (IBISWorld). SOCMI is a subsector of the
much larger organic chemicals market, which includes natural organic chemicals. Seven of the
eight major feedstocks (excluding naphthalene) belong to a subset of SOCs called
petrochemicals, named for their derivation from crude oil and natural gas, in addition to other
possible sources like coal or vegetable oils. Petrochemicals can be used to make a variety of
products, including rubber, fuel, cleaning agents, and plastics (ScienceDirect, 2022).

2-16


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The global petrochemicals market size value was $556.1 billion in 2021. An industry
report from Grand View Research prepared in 2021 forecasts the petrochemical market to grow
at a compound annual growth rate (CAGR) of 6.2% from 2022 to 2030. The growth in demand is
expected to result from an increase in demand for downstream products from various end-use
industries such as construction, pharmaceuticals, and automotive. Because crude oil is the basic
raw material in production, crude oil price volatility significantly affects production and the final
costs of petrochemical products (Grand View Research, 2021).

Ethylene had the largest revenue share for the petrochemical industry, over 40.0% in
2021. The large revenue share from the ethylene market is due to the wide variety of everyday
products that use this chemical. Ethylene is developed into four different compounds that
produce many products, including:

•	Polyethylene (Plastics) - used to make food packaging, bottles, bags, and other
plastics-based goods.

•	Ethylene Oxide / Ethylene Glycol - becomes polyester for textiles, as well as
antifreeze for airplane engines and wings.

•	Ethylene Dichloride - this, in turn, becomes a vinyl product used in PVC pipes,
siding, medical devices, and clothing.

•	Styrene - synthetic rubber found in tires, as well as foam insulation

Ongoing industrialization and growing automotive and packaging sectors in emerging

economies such as India, Brazil, Vietnam, and Thailand are forecasted to drive up demand for
ethylene products. Butadiene was the second-largest product segment in 2021. Methanol is
predicted to have the fastest revenue growth, a CAGR of 7.8%, over the forecast period.
Methanol is a chemical building block for hundreds of everyday products, including plastics,
paints, car parts and construction materials. Methanol also is a clean energy resource used to fuel
cars, trucks, buses, ships, fuel cells, boilers and cook stoves. There is increasing demand for
methanol from industries such as construction, paints and adhesives, pharmaceuticals, plastics,
and automotive (OEC, 2022a).

The Asia Pacific region has a volume share of over 50.0% of the petrochemicals industry.
Increasing natural gas exploration activities in the United States and Canada will grow the
petrochemicals market in North America over the coming years; additionally, this provides an

2-17


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opportunity for substituting some raw materials with natural gas in the production of several
petrochemicals (Grand View Research, 2021).

In 2018, total global trade of petrochemicals was valued at $123 billion. From 2017 to
2018, exports of petrochemicals worldwide grew by 42.5%, from $86.5 billion. The top
exporters in 2018 were Saudi Arabia ($17.0 billion), the United States ($12.8 billion), Germany
($9.8 billion), Belgium ($7.5 billion), and Thailand ($7.0 billion). Of United States exports,
26.4% went to Mexico, 21.2% to Canada, and 8.97% to China.

The top importers of petrochemicals were China ($19.4 billion), Germany ($7.24 billion),
the United States ($6.39 billion), Italy ($4.76 billion), and Turkey ($4.19 billion). The United
States imported 42% of its petrochemicals from Canada, 19.9% from Mexico, 6.11% from
Germany, and the remainder largely from Asia (OEC, 2022a). Hence, the U.S. was a net exporter
in 2018 with exports at nearly twice the size of imports in monetary terms.

The SOCMI industry is marginally competitive because companies continuously
participate in mergers, acquisitions, and joint ventures with governments and other stakeholders.
For example, Chevron Phillips Chemical and Qatar Petroleum announced a joint venture on a
chemical plant in Qatar in 2019. As of 2019, LyondellBasell Industries N.V., a multinational
company founded in the Netherlands, held the largest market share of 4% (ChemAnalyst, 2021).
That same year, LyondellBasell and the China Petroleum & Chemical Corporation (Sinopec)
formed a joint venture to produce propylene oxide and styrene monomer in China (Novicio,
2021).

As more natural gas is tapped in the United States and prices decrease (as of 2021), the
United States has become increasingly cost competitive. More U.S. firms are keeping production
in the United States instead of outsourcing to foreign countries or using imported oil. For
example, firms like Dow Chemical, Exxon Mobile, Chevron Phillips Chemical, and Royal Dutch
Shell have all invested in new ethylene plants and projects in the United States over the last
several years, causing a significant increase in ethylene production (Pearce, 2014). As of 2021,
the United States held approximately 40% of the world's ethane petrochemical production
capacity (Novicio, 2021). In 2022, the world gas supply chain was disrupted by the war in
Ukraine. However, because of limited domestic LNG shipping capacity, U.S. gas prices are

2-18


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likely to remain below global market prices, continuing to give the U.S. petrochemical
manufactures a slight competitive advantage.

Table 2-2 summarizes the top ten globally produced SOCs by total market value, with
U.S. trade statistics and their common use cases. U.S. exports and imports include their global
rank (in parentheses) if they fall within the top five global importers and exporters of that
commodity.

Table 2-2: Top 10 Globally Produced SOCs by Total Market Value	

Chemical

Total Production
	(year)	

Total
Global
Trade

U.S.
Exports
(global
rank)

U.S.
Imports
(global
rank)

Uses

Xylene

$178.45B (2021) $2.18B

$49.9M

$26.1M

Propylene

$96.47B (2021) $5.59B $559M (3) $142M

Ethylene

$81.34B (2020) $4.95B

$401M (5)

$191K

Benzene

S.3B (2021)

$4.75B

$38.7M $632M (2)

Production of drugs and
plastics; solvents;
intermediate for dyes and
organic synthesis,
especially isophthalic acid;
insecticides; aviation fuel;
manufacturing of polyester
and alkyl resins; fibers,
films, and resins;
herbicide; production of
polyester polyurethanes
used in paints and sealants
Plastics and carpet fibers;
chemical intermediate for
the manufacture of
acetone, isopropylbenzene,
isopropanol, isopropyl
halides, propylene oxide,
acrylonitrile, and cumene;
production of gasoline or
used as a fuel in oil
refineries

Oxyethylene welding;
chemical manufacturing;
fruit ripening; general
anesthetic; common
ingredient in household
products, such as plastics,
certain foods, and some
detergents; manufacturing
ethylene oxide;
polyethylene for plastics,
alcohol, mustard gas, and
other organics
Solvent for chemical
synthesis, constituent in
motor fuels, detergents,
explosives,

pharmaceuticals, dyestuffs

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U.S.

U.S.







Total

Exports

Imports





Total Production

Global

(global

(global



Chemical

(year)

Trade

rank)

rank)

Uses

Terephthalic Acid

$49.2B (2020)

$4.12B

$23.3M

$414M (2)

Feedstock for the
production of polyesters,
such as PET; wool
processing; production of
plastic films and sheets;
added to certain poultry
feeds and antibiotics to
increase effectiveness

Styrene

$34.23B (2022)

$7.22B

$1.65B (1)

$387M (5)

Polystyrene production
(low cost, low friction
plastic used in packaging,
textiles, and construction)

Toluene

$21.15B (2021)

$1.62B

$40.2M

$133M (4)

Solvent in aviation and
automotive fuels; chemical
production; production of
paints, paint thinners,
fingernail polish, lacquers,
adhesives, and rubber;
printing and leather tanning
processes; production of
benzene, TNT, nylon,
plastics, and polyurethanes

Bisphenol-A

$16.23B (2020)

$1.46B

$2.88M

$37.2M

Production of
polycarbonate plastics and
epoxy resins

Acrylonitrile

$12.9B (2020)

$2.03B

$584M (1)

$9.26M

Manufacture of acrylic and
modacrylic fibers,
production of plastics

Styrene-Butadiene

$10.24B (2020)

$4.49B

$259M

$472M (2)

Rubber products such as

Rubber









gloves, tires, and adhesives

2.1.1 Oil and Gas Sectors and SOCMI

Olefins5 (ethylene, propylene and butadiene, and butenes) are derived from both natural
gas and petroleum. The aromatics (benzene, toluene, and xylenes) are derived from petroleum
and, minorly, coal. Whether natural gas fractions or petroleum are used for olefins varies
throughout the world depending on the availability of natural gas and demand for gasoline. Both

5 Olefins are a class of chemicals made up of hydrogen and carbon with one or more pairs of carbon atoms linked by
a double bond. They are used as building block materials for products such as plastics, detergents, and adhesives.

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light and heavy naphthas6 are petroleum fractions that can be used to make olefins. But they can
also be used to make gasoline (Wittcoff, 2012).

In the United States, approximately 95% of all organic chemicals by weight are
derivatives of petroleum and natural gas. There has historically been ample natural gas supply in
the United States, resulting in cheaper processing of ethane and propane, as opposed to more
expensive petroleum cracking processes7 for liquids, and naphtha.

In addition, the United States has had an ample supply of propylene, because it is
produced in steam cracking for other products and because catalytic cracking is a required
process in the gasoline industry. The propylene industry is based on this reaction that occurs in
the catalytic cracking process, yielding billions of pounds of product generated (Wittcoff, 2012).

Because of low-cost and high-domestic availability in the United States, there is an
incentive for U.S. manufacturers to use natural gas as a feedstock, replacing heavier liquid gases
such as naphtha. Changes in incentives for raw material use also affects byproduct production
prices, because byproducts, such as butadiene resulting from ethylene cracking, could be affected
by new technologies or production processes. Most prices for raw materials will respond in the
same direction as the changes in price for natural gas. Material costs respond in the opposite
direction of natural gas prices, while costs for byproducts respond in tandem with natural gas
prices (DeRosa, 2015).

The petroleum industry is often divided between upstream and downstream activities.
Upstream activities include exploration, production and transportation of crude oil and gas
transformation into final products through refineries. Downstream activities include processing
of crude oil in refineries, as well as the distribution and marketing activities for related oil-
derived products (Santos Manzano, 2005).

6	Naphthas are any of various volatile, highly flammable liquid hydrocarbon mixtures used chiefly as solvents and

diluents and as raw materials for conversion to gasoline.

7	Cracking is the process by which heavy hydrocarbon molecules are broken up into lighter molecules by means of

heat and usually pressure and sometimes catalysts. Cracking is the most important process for the commercial
production of gasoline and diesel fuel.

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The chemical industry is considered an upstream industry, because it purchases raw
materials such as petroleum, natural gas, coal, and metallic or nonmetallic minerals and does not
usually sell these products to final consumers. About one-fifth of materials are sold to other firms
in the chemical industry for additional processing, and then the remainder is sold to other
industries to assist in product manufacturing or services (Wittcoff, 2012).

It is often the case that oil refineries become integrated with nearby petrochemicals
plants. This integration allows both plants to exchange supply chain streams. The petrochemical
facility receives streams of raw materials from the oil refinery, and the refinery receives back
streams from the petrochemical plant that can be used again for petroleum products (e.g.,
gasoline blending). The petrochemical plants produce high-value products like ethylene,
propylene, styrene, butadiene, and benzene. Furthermore, these base petrochemicals can be
transformed further into other products like plastics, polyvinyl chloride (PVC), polystyrene,
polyethylene, polypropylene, elastomers, and aromatics-based products.10

The petrochemical industry is significantly affected by the volatility of crude oil prices
because oil is a basic raw material used for product manufacturing. Both price and supply
volatility have affected the production costs of petrochemicals, increasing the overall cost of the
production process. Related factors, such as the increase in consumers in developed and
developing regions who are concerned about environmental sustainability, as well as price
changes in raw materials used in petrochemical creation, are additional factors that influence the
market (Santos Manzano, 2005).

2.1.2 SOCMI Supply Chain Disruptions

Supply chain disruptions can happen either upstream or downstream, but it is worth
noting that within the chemical industry upstream suppliers tend to be of greater concern to
overall business continuity (Kotze, 2017). Analyzing chemical supply chains is often a difficult
task because multiple infrastructure systems support related supply chains.

Geopolitically, a "risk-free" trading perspective is one of domestic production as a
sourcing option. From the geopolitical supply risk indicator work cited in Helbig (2016), the
political stability of a trading partner country is weighted by its share of the sum of total import
flows and domestic production all together. The identification of geopolitical risk factors such as

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political stability, absence of violence or terrorism, domestic availability, and share of import
flows within a trading country often corresponds to different supply chain points that are based
on international trade patterns, where supply concentration or political instability result in market
price volatility (Helbig, 2016).

In addition to geopolitical risk factors, natural hazard disruptions affect many facets of
the petrochemical supply chain, resulting in longer recovery periods before production continues
(Stamber, 2011). As an example, Hurricane Ike in 2008 damaged readily available utilities, raw
materials, logistics, and production sites that negatively affected efforts to begin operations post-
disaster. These disruptions often ripple both up and down the supply chains, affecting recovery.

Increases in the use of different feedstocks, such as natural gas, can also provide insights
into production and market cost effects that can occur in chemical supply chains.7 In the United
States, incentives for natural gas use affect price patterns for byproducts of petrochemicals, such
as benzene, butadiene, and propylene. The cost of benzene, a byproduct of naphtha, stays
relatively constant during this feedstock change. The cost of butadiene, in contrast, increases as
natural gas prices decrease. Butadiene is a byproduct of ethylene cracking streams, and as
feedstocks change to exclude naphtha from cracking procedures through the integration of ethane
cracking streams, industry costs are minimized, and butadiene prices rise.9

On a global scale, COVID-19 and the Russia-Ukraine war have both affected oil and
chemical market prices. Continuing trends remain to affect the industry through changing
societal concerns for environmental issues, preferences for sustainable products, accelerated
energy transition, capacity demand and growth, and the continuous adoption of digitization.
These trends, while not all expected to continue after the COVID-19 pandemic, have disrupted
pertinent supply chains. The first quarter of 2020 saw an unanticipated downturn for the oil, gas,
and chemical industries as oversupply issues were exacerbated, and global oil price collapses
narrowed domestic feedstock cost advantages that petrochemical companies in the United States
benefitted from (Deloitte Insights, 2022).

While the COVID-19 crisis may have abated somewhat worldwide since 2020, the
Russia-Ukraine war has also been a key factor in oil price changes in 2022. Consumer demand
reduced as oil prices increased, thus eroding profitability in the chemical industry. China has
surpassed the United States as the world's largest chemical market; it now accounts for more

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than 45% of worldwide chemical sales. Some European chemical companies are also feeling this
pressure, as they expect a drop in 2022 profit (Stokes, 2022).

2.1.3 Ethylene

Ethylene is a valuable chemical product in both the U.S. and the world. It is the third
most valuable synthetic organic chemical product as of 2020 with $81.34 billion in revenue
worldwide. U.S. exports of ethylene were $401 million as of 2020. Ethylene by-products are
valuable due to their many important uses in common products. One of those by-products is
ethylene oxide. Ethylene oxide is used in the synthesis of ethylene glycol, as a sterilizing agent
for medical supplies and foods, as a fumigant, and as an insecticide.8

Due to the EPA's 2016 updated Integrated Risk Information System (IRIS) inhalation
unit risk estimate (URE) for ethylene oxide, which shows that ethylene oxide is significantly
more toxic than previously known (i.e., resulting in an inhalation URE 60 times greater than the
previous URE over a 70-year lifetime), the EPA is concerned about the cancer risks posed from
the SOCMI (i.e., HON) source category. The EPA's 2006 risk and technology review (RTR) did
not have the benefit of this updated URE at the time it was conducted, but if it had, it would have
necessarily resulted in different conclusions about risk acceptability and the HON's provision of
an ample margin of safety to protect public health.

Similarly, for chloroprene, when the EPA conducted the first residual risk assessment for
the HON and neoprene production source categories, there was no suitable EPA IRIS inhalation
URE for chloroprene and, therefore, no cancer risk was attributed to chloroprene emissions in
either of those risks reviews. The EPA's 2006 and 2008 RTRs did not have the benefit of this
new URE at the time they were conducted, but if they had would have necessarily resulted in
different conclusions about risk acceptability and P&R I's provision of an ample margin of
safety to protect public health. Consequently, this industry profile examines ethylene broadly, a

: Observatory of Economic Complexity (2022). "Oxirane (ethylene oxide)." https://oec.world/en/profile/hs/oxirane-
ethylene-oxide

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key feedstock of ethylene oxide and chloroprene. Butadiene is also examined and is a coproduct
of ethylene production.

Ethylene is a hydrocarbon gas that is produced by some fruits and vegetables through
natural processes. Ethylene is a by-product during the decomposition of organic material. It is a
common ingredient in various household products, including plastic, certain foods, and some
detergents. In 2020, ethylene was the world's 596th most traded product, with a total trade of
$4.95 billion. Between 2019 and 2020 the exports of ethylene decreased by 27.8%, from $6.85
billion to $4.95 billion, in part due to the Covid-19 pandemic. Trade in ethylene represents
0.03% of total world trade (OEC, 2022b).

Ethylene is used to produce fabricated plastics, antifreeze, and fibers. It is also used in the
process to produce ethylene oxide and to produce polyethylene for plastics, alcohol, mustard gas,
and other organics (National Center for Biotechnology Information, 2022a). Ethylene is a
product of steam cracking of petroleum hydrocarbons. Multiple feedstocks produce ethylene,
including ethane, propane, butanes, naphthas, and gas oils. Naphthas are the primary raw
material used in Western Europe and Japan, accounting for more than three-fourths of ethylene
produced. Ethane is the primary feedstock in the United States, followed by propane, naphthas,
gas oils, and butane. Small amounts of ethylene are recovered from other feedstocks, such as
retrograde-field condensates and refinery waste gases. Dehydration of ethanol is the third
commercial process for producing ethylene (National Center for Biotechnology Information,
2022a).

In 2020, the top exporters of ethylene were the Netherlands ($682 million), South Korea
($608 million), the United Kingdom ($587 million), and the United States ($401 million). Of
U.S.'s ethylene exports, 38.5% were exported to Taiwan, 34.2% to China, 9.78% to Indonesia,
9.03% to Belgium. In the United States from 2019 to 2020, the export value was $401 million,
an increase of 82.6% from a 2018 to 2019 value of $219 million (Fernandez, Ethylene Prices
Globally 2022, 2022).

In 2020, the top importers of ethylene were China ($1.35 billion), Belgium ($921
million), Indonesia ($552 million), Germany ($432 million), and Sweden ($360 million). In the
United States from 2019 to 2020, the import value was $190,000, an increase of 135.4% from a
2018 to 2019 value of $81,000 (Fernandez, Ethylene Prices Globally 2022, 2022).

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The average price of ethylene worldwide was approximately $697 per metric ton in 2020.
By July 2021, the average price for the year had risen to $1,014 per metric ton (see Figure 2-1),
45% higher than the previous year, "The global production capacity of ethylene is expected to
grow from approximately 200 million tons in 2020 to some 300 million tons by 2025"
(Fernandez, Ethylene Prices Globally 2022, 2022).

1,500
1,250

1,155

2017	2018	2019	2020	2021*

Figure 2-1 Global Price of Ethylene (USD$/metric ton)

The global ethylene market is expected to grow from $81.34 billion in 2020 to $161.61
billion by 2028 at a CAGR of 8.3% during the forecast period of 2021 to 2028. The increased
use of coal as a feedstock for producing ethylene and the rising demand for ethylene products in
the construction industry are some of the factors fueling the ethylene market (Global Newswire,
2022).

Key companies in the global ethylene market are Saudi Basic Industries Corp., Exxon
Mobil Corporation, Dow DuPont Inc., Royal Dutch Shell pic, China Petroleum & Chemical
Corporation, Chevron Phillips Chemical Company LLC, LyondellBasell Industries N.V., The
National Petrochemical Company, BASF SE, and Lonza Group, among others (Polaris Market
Research, 2021).

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2.1.3.1 Butadiene

Butadiene (1,3-Butadiene) is a synthetic, colorless gas that is basically insoluble in water
but soluble in ethanol, ether, acetone, and benzene (National Center for Biotechnology
Information, 2022b). Butadiene emits acrid fumes and is flammable when it is heated. When
butadiene is oxidized, it can form explosive peroxides. Butadiene rubber is a primary material
used in the production of car tires, gaskets, hoses, synthetic brushes, and synthetic carpets
(National Center for Biotechnology Information, 2022b).

Butadiene is used as a monomer in the manufacturing process of many different types of
polymers and copolymers. It is also used as a chemical intermediate in the production of
industrial chemicals. Butadiene is manufactured primarily as a co-product of ethylene production
from steam cracking in the United States, Western Europe, and Japan (National Center for
Biotechnology Information, 2022b).

The global 1,3 butadiene market is expected to reach $33.01 billion by 2020. Growing
demand for tires of all types "on account of an upturn in the automotive industry (particularly in
China, India, and Brazil) is expected to remain a key driving factor for the global market" (Grand
View Research, 2015).

As shown in Figure 2-2, the price of butadiene has decreased since 2017. At the start of
the first quarter of 2022, prices remained low initially. "During January (2022), the prices
dropped significantly by 10% as compared to last quarter of 2021. The initial decline in the
prices was attributed to the abundant supplies and weak trading activities. Demand from
downstream Styrene Butadiene Rubber (SBR) and Acrylonitrile Butadiene Styrene (ABS) plastic
has remained bearish in the region. As the upstream Crude and Natural gas prices rallied
upwards by the mid quarter, the Butadiene sentiments shifted marginally towards the upward
side in USA. Korea, a major exporter of Butadiene exported the product in USA at sky high
values due to soaring freight charges. The prices of Butadiene FD Texas were last assessed at
USD1445/MT during March, 2022 in United States. Moreover, robust demand from downstream
derivatives SBR and PBR kept the Butadiene prices on the higher side" (Fernandez, 2021).

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1 750

1 505.5

2017	2018	2019	2020*	2021*	2022*

Figure 2-2: Global Price of Butadiene from 2017 to 2019 with Estimated Figures for 2020
to 2022

2.1.3.2 Ethylene Oxide

Ethylene oxide is a colorless, flammable, toxic gaseous cyclic ether with a sweet ether-
like smell (National Center for Biotechnology Information, 2022c). "Ethylene oxide is used
especially in the synthesis of ethylene glycol and as a sterilizing agent for medical supplies and
foods, as a fumigant and as an insecticide" (OEC, 2022c).

Exposure to ethylene oxide can be highly irritating to the eyes, skin, and respiratory tract,
inducing nausea and vomiting and causing central nervous system depression (National Center
for Biotechnology Information, 2022c). It is also mutagenic in humans, and chronic exposure is
associated with an increased risk of leukemia, stomach cancer, pancreatic cancer, and non-
Hodgkin lymphoma (OEC, 2022c).

Nearly all production of ethylene oxide in the United States uses the direct vapor phase
oxidation process. "This process oxidizes ethylene with air or oxygen in the presence of a silver
catalyst to produce ethylene oxide" (OEC, 2022c).

In 2020, the top exporters of oxirane (ethylene oxide) were Germany ($161 million), the
Netherlands ($123 million), Belgium ($40 million), France ($28.9 million), and Russia ($15.8

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million) (OEC, 2022c). In the United States from 2019 to 2020, the export value was $8.82
million, a decrease of 14.7% from a 2018 to 2019 value of $10.3 million.

In 2020, the top importers of oxirane (ethylene oxide) were Belgium ($88.9 million),

Italy ($80.4 million), Germany ($73.6 million), France ($40.5 million), and the United Kingdom
($19.2 million). In the United States from 2019 to 2020, the import value was $68,900, an
increase of 975% from a 2018 to 2019 value of $6,410.

Prices of nonyl phenol ethoxylates (upstream product of ethylene oxide) in the United
States grew as over 2021 and the first quarter of 2022 "in response to the higher Ethylene Oxide
feedstock prices and outstretching demand" (ChemAnalyst, 2022).

Supply shocks can have a significant impact on the relatively concentrated market. For
example, "the curtailed operations in ExxonMobil's Baytown refinery following an explosion in
late December 2021 have continued to create a supply deficiency of upstream olefins and
consequently caused its prices to gain significant numbers. The high upstream pricing, which got
transferred to its downstream Ethylene Oxide, weighed on the input cost of Nonylphenol
Ethoxylates. Prompting the manufacturers for a price increase, thus, the Nonylphenol
Ethoxylates US discussions reached $1923/MT FOB9 Gulf Coast in the quarter ending March
2022" (U.S. EPA, 2016).

2.2 P&R Groups I and II

This sub-chapter focuses on the industries of the Polymers and Resin Group I and II
NESHAP. The economic and financial information in this chapter characterizes the conditions in
these industries which are likely to determine the nature of economic impacts associated with the
implementation of the NESHAP.

Section 2.2 provides an overview of the Group I synthetic rubber industries. Section 2.2.1
details the production processes, properties, and unique market characteristics for each
elastomer. Section 2.3 provides an overview of the industries covered by Polymers and Resin

9 "MT FOB" stands for "metric ton free on board." This refers to the price of one metric ton of a chemical product,
which includes the cost of the product and the cost of loading it onto a vessel for transportation. "FOB" means
that the cost of transportation from the point of origin to the port of shipment is included in the price, but the cost
of shipping the product to its final destination is not included.

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Group II Sections 2.3.1 describes epoxy resins and non-nylon polyamides production and their
markets.

Figure 2-3 provides a geographic overview of where Group I and Group II facilities
affected by this rule are located across the U.S. Group I facilities are clustered in the South with
most based in Louisiana and Texas and others spread across the Midwest. There are fewer Group
II facilities affected under this aile; four facilities are distributed in the South, while one is
located in Oregon.

~ P&R II Facility
Q P&R I Facility

dCDP $3

Q A

Figure 2-3: P&R Group I and II Facilities Map

2.2.1 Group I Industry Profile

This section reviews the organization, processes, and products of the affected synthetic
rubber industries. The affected firms are further identified by size and economic impacts in a
later section. Each facility considered in the production of Group I elastomers is categorized by a
North American Industry Classification System (NAICS) code. This code is a "standard used by
Federal statistical agencies in classifying business establishments for the purpose of collecting,
analyzing, and publishing statistical data related to the U.S. business economy" and used for
defining industries. Across the identified facilities in Group I, there are four unique NAICS

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industries with varying representation in the associated NESHAP and the U.S. economy.10 Table
2-3 provides 2017 data for these industries in the U.S. economy, not only considering facilities
directly impacted by this rulemaking.11 Data on industries is sourced from the quinquennial
Economic Census which last occurred in 2017.

Table 2-3: Polymers and Resin Group I Industries	

NAICS Name of Industry

Number of Facilities

(% of Total
	Facilities)	

Total Revenue
in 2017 (in
Billions)

Total
Employment
in 2017

325110

325211

325212
325998

Petrochemical Manufacturing
Plastics Material and Resin
Manufacturing

Synthetic Rubber Manufacturing
All Other Miscellaneous Chemical
Product and Preparation Manufacturing

1 (5.6%)
3 (16.7%)
13 (72.2%)
1 (5.6%)

$52.97
$89.52
$8.39
$21.85

9,369
75,998
9,661
36,900

2.2.2 Industry Organization of Group I Industries

This section provides information on the structure of the covered synthetic rubber
industries and the characteristics of the market organization of the affected Group I industries.
This is an attempt to characterize the impacts regulation can have in more detailed terms.

Table 2-4 shows how the firms in each product category can be characterized by market
concentration: the market share percentage for the 50 largest firms of the affected industries by
NAICS code. The standard economic framework is that the higher the market concentration, the
more that changes in input price caused by regulation will lead to rises in output price. An
example of this is presented in a 2018 report by Abdela and Steinbaum, which concludes that
there is a market concentration problem in U.S. production, generally (Abdela, 2018). This
assumption has been criticized by Newmark, who argues that "[P]rice-concentration studies are
severely flawed. In industries in which sellers compete on quality and amenities, a positive price-
concentration relation could result, not from coordinated effects, but from competitive
superiority" (Newmark, 2004).

10	U.S. Census Bureau (2022). North American Industry Classification System. Retrieved from

https://www.census.gov/naics/

11	Data available at https://www2.census.gov/programs-surveys/susb/tables/2017/us_6digitnaics_rcptsize_2017.xlsx.

Accessed 11/7/2022. We note the publication of data from the 2022 Economic Census will not occur until late
2023 or early 2024.

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The table provides additional evidence to examine these issues. In addition to the percent
values claimed by the largest companies in the product categories, it includes the Herfindahl-
Hirschman Index (HHI) for industries based on value added. This index provides a signal of how
concentrated market power is across a particular industry.

The U.S. Department of Justice (DOJ) and the Federal Trade Commission (FTC) use the
HHI to identify markets where there are potential anti-trust concerns. They consider markets
with an HHI below 1,000 to be unconcentrated; markets with HHI between 1,000 and 1,800 are
considered moderately concentrated, and markets with HHI above 1,800 to be "highly
concentrated" (U.S. EPA, 2013). For a given market, the HHI is calculated by squaring the
market share of each firm competing in the market, then summing the squared shares, as shown
in the following equation:

HHI = sf, where Si is the market share of the ith firm.
Table 2-4: Concentration Findings of Affected Group I Industries

NAICS

Name of Industry

HHI Value*

Finding

325110

Petrochemical Manufacturing

2,868.4

Concentrated

325211

Plastics Material and Resin Manufacturing

409.9

Unconcentrated

325212
325998

Synthetic Rubber Manufacturing

All Other Miscellaneous Chemical Product and

652.6
164.8

Unconcentrated
Unconcentrated

Preparation Manufacturing

Notes: *HHI is based on the 50 largest companies for each NAICS code. HHI for years after 2012 are not available since
comprehensive concentration data from the 2017 Economic Census is not yet available. This value is found using "value added"
which is a measure of manufacturing activity. Value added is derived by subtracting the cost of purchased inputs from the value
of shipments.

Source: US Census. Economic Census (August 2015). https://www.census.gov/data/tables/2012/econ/census/manufacturing-
reports.html

By the DOJ definition above, the only product category for which markets could be
considered concentrated by the HHI was petrochemical manufacturing in 2012. Market
concentration can develop due to various barriers to entry, pushing out potential entrants into a
market. Barriers such as supply chain connection, capital requirements, and access to human
capital can push certain industries to concentrate. Factors like these may be relevant in the case
of the concentration of petrochemical manufacturing. However, there is evidence of a
competitive market for the other synthetic rubber industries impacted by this regulation.

Competition for the synthetic rubber industries can arise due to a number of factors. The
products of these industries can in some cases be substituted for one another. Other natural

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rubbers and imported products can also act as substitutes for these products. The presence of
these alternatives can create excess capacity and can lead to falling prices for these industries.

2.2.3 Prices for Group I Industries

From 2012 to 2021, product prices for the wider chemical manufacturing sector (NAICS
325) have increased overall, but the trend has been marked with some volatility over the years.
Prices began falling in 2015, stayed steady and then increased considerably in 2017 and 2018,
and increased sharply in 2021 by almost 12 percent year-over-year. Table 2-5 shows this erratic
pattern in detail.

Table 2-5: Chemical Manufacturing (NAICS 325) Product Price Index, 2012-2021 (2012 =
100)	























2012-

NAICS 325

2012

2013

2014

2015

2016

2017

2018

2019

2020

2021

2021

Chemical
Manufacturing

100.0

101.4

103.4

101.7

102.6

106.6

111.5

112.2

111.0

124.0



Change from
Previous Year



1.4

2.0

-1.7

0.9

4.0

4.8

0.7

-1.2

13.0

24.0

% Change
from Previous



1.4%

2.0%

-1.6%

0.9%

3.9%

4.5%

0.7%

-1.1%

11.7%

24.0%

Year























Source: U.S. Department of Labor, Bureau of Labor Statistics. Industries at a Glance: Chemical Manufacturing - NAICS 325.
https://www.bls.gov/iag/tgs/iag325.htm

Table 2-6 shows a closer look at prices for synthetic rubber and related products from
2012 to 2021. Note that changes in product prices do not directly relate to the changes in
synthetic rubber prices. Over this period, synthetic rubber prices fell considerably with a clear
surge around 2017. This increase was a result of various supply-side conditions including
growing costs in inputs to Styrene Butadiene Rubber (SBR), technical issues related to several
manufacturing locations equipment failures affecting around 40 percent of U.S. styrene
production, shortage of butadiene as well as its feedstock materials due to production issues, and
other production issues. Tires and pneumatic tire prices remained relatively steady with only
modest year to year changes, whereas rubber and plastics hose prices increased overall with
some volatility in years 2013, 2015, and 2021.

Additionally, while not shown in the RIA, prices for natural rubber did not directly match
the price changes in natural rubber as might be assumed from their substitutability. This is due to
natural rubber following the supply-side constraint of agricultural inputs, whereas synthetic
rubbers face the constraint of the availability and price of hydrocarbons. Moreover, the demand

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for rubbers is application dependent and may be based on the physical properties such as heat
resistance and tear strength necessary for a particular use. This means substitutability of synthetic
rubbers cannot be widely determined without knowing the needs of certain rubber applications
(Wagner, 2020).

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Table 2-6: Producer Price Index of Synthetic Rubber, 2012-2021 (Index for 2012 is normalized to 100)



2012

2013

2014

2015

2016

2017

2018

2019

2020

2021

2012-2021

Synthetic Rubber

100.0

88.3

85.7

75.3

73.8

80.2

82.3

78.9

73.3

85.8



YoY Change



-11.7

-2.6

-10.4

-1.5

6.4

2.1

-3.4

-5.6

12.5

-14.2

% YoY Change



-11.7%

-2.9%

-12.1%

-2.0%

8.7%

2.6%

-4.1%

-7.1%

17.1%

-14.2%

Tires, Tubes,























Tread, and Repair

100.0

98.2

95.8

93.8

92.4

93.4

94.6

95.6

95.9

100.1



Materials























YoY Change



-1.8

-2.4

-2.0

-1.4

1.0

1.2

1.0

0.3

4.2

0.1

% YoY Change



-1.8%

-2.4%

-2.1%

-1.5%

1.0%

1.3%

1.1%

0.3%

4.4%

0.1%

Pneumatic Tires























(on-road, off-road,

100.0

98.2

95.7

93.6

92.1

93.1

94.3

95.3

95.6

99.7



and other)























YoY Change



-1.8

-2.5

-2.1

-1.5

1.0

1.2

1.1

0.3

4.1

-0.3

% YoY Change



-1.8%

-2.5%

-2.2%

-1.6%

1.1%

1.3%

1.1%

0.3%

4.3%

-0.3%

Rubber and
Plastics Hose

100

104.1

105.2

104.0

105.3

106.0

109.2

112.7

114.0

122.1



YoY Change



4.1

1.1

-1.2

1.3

0.7

3.2

3.5

1.3

8.1

22.1

% YoY Change



4.1%

1.0%

-1.1%

1.2%

0.6%

3.1%

3.2%

1.1%

7.1%

22.1%

Rubber and























Plastics Hose (for
on- and off-road

100

106.7

106.5

102.1

105.2

105.3

109.3

111.8

112.7

114.6



vehicles)























YoY Change



6.7

-0.18

-4.4

3.0

0.1

4.0

2.5

0.8

1.9

14.6

% YoY Change



6.7%

-0.2%

-4.1%

3.0%

0.1%

3.8%

2.3%

0.7%

1.7%

14.6%

Note: "YoY" is an acronym for "Year over Year."

Source: Federal Reserve Economic Data, Economic Research Division, Federal Reserve Bank of St. Louis, https://fred.stlouisfed.org/seriesAVPU071102,
https://fred.stlouisfed.org/series/WPU0712, https://fred.stlouisfed.org/series/WPU0712010, https://fred.stlouisfed.org/series/WPU07130411,
https://fred.stlouisfed.org/series/WPU071304118

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2.2.4	General Production Description of Group I Industries

Synthetic rubber production requires the synthesis of monomers (derived from
petrochemicals), followed by their polymerization. This process results in an aqueous suspension
of rubber particles, or the latex, which may then be processed into marketable, dry, raw rubber.
Synthetic rubbers are usually compounded with various additives and then molded, extruded, or
calendared into the desired solid form. A percentage of elastomer production is also supplied in
the form of water dispersions, called latexes (primarily used in foam rubber). HAP emission
sources in synthetic rubber facilities include equipment leaks, process vents, wastewater, and
storage tanks. It is important to note that elastomer production sites subject to this standard may
be collocated with other production facilities that are, or will be, subject to NESHAP standards
other than the Group I NESHAP. For example, a refining facility, chlorine plant, SOCMI
facility, or non-elastomer polymer facility could be located on the same site as Group I
production units.

2.2.5	Product Description of Group I Industries

The affected Group I elastomers are classified as synthetic rubbers which have specific
elasticity and yield properties. Synthetic rubbers are either used as stand-alone products, or are
compounded with natural rubber, other thermoplastic materials, or additives, depending on the
desired end-use characteristics. This section describes the properties of each elastomer
individually and identifies its primary end uses. Portions of this section are adapted from the
Economic Impact Analysis for the Polymers and Resin Group I NESHAP (EPA, 1995).

2.3.1.1 Butyl Rubber (Including Halobutyl Rubber)

Butyl rubbers are copolymers of isobutylene (also known as isobutene) and other

monomers. Other typical monomers include isoprene and methylstyrene. Most butyl rubber is
produced by precipitation polymerization, although other methods may be used. Halobutyl
rubber is a type of butyl rubber elastomer produced using halogenated copolymers and is
typically used as a sealant. Characteristics of butyl rubber include low permeability to gases and
high resistance to tear and aging. Butyl rubber is used as an input to the production of tires,
tubes, and tire products. It is also used into the production of inner tubes because of its low air

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permeability. Butyl rubber is used in the production of automotive and mechanical goods,
adhesives and caulks like halobutyl rubber (Thomas, 2022a).

Butyl rubber had a total trade of $592 million in 2020. Between 2019 and 2020, the
exports of butyl rubber decreased by 0.71 percent, from $596 million to $592 million. Russia had
the highest total exports of butyl rubber, valued at $193 million, while the US was third at $65.5
million. For the same year, China was the largest importer at $197 million (OEC, 2022d).

Halobutyl rubber had a total trade of $1.59 billion in 2020. Between 2019 and 2020, the
exports of halobutyl rubber decreased by 19.3 percent, from $1.97 billion to $1.59 billion.
Singapore had the highest total exports of halobutyl rubber, valued at $266 million, while the US
was fourth at $239 million. For the same year, China was the largest importer at $291 million,
whereas the U.S. was fifth highest at $108 million (OEC, 2022e).

2.3.1.2	Epichlorohydrin Elastomers (EPI)

The production of EPI uses epichlorohydrin, ethylene oxide, and allyl glycetal ether,

which are combined in a polymerization process. Due to its low gas permeability and resistance
to heat, fuel, and abrasion, EPI is primarily used in automotive applications including gaskets,
hoses, and seals.12 Market information on epichlorohydrin elastomers markets was limited.

2.3.1.3	Ethylene-Propylene Rubber (EPDM)

The ethylene-propylene category includes both ethylene-propylene copolymers (EPD)

and ethylene-propylene terpolymers (EPDM). EPDM is produced from the polymerization of
ethylene and propylene, which may occur in either a solution process or a suspension process.
EPDM is characterized by lower cost relative to other elastomers, and resistance to cracking, low
temperature flexibility, and weather. EPDM compounds have been developed for many different
applications including automotive, industrial, construction, and HVAC. End uses include roofing
membranes, impact modifiers, oil additives, automobile parts, gaskets and seals, and hoses and
belts. The wide range of uses of this elastomer is attributable to its multifunctional nature
(Thomas, 2022b).

12 BRP Manufacturing (2000). Epichlorohydrin Rubber, https://brpmfg.com/epichlorihydrin-rubber/epichlorohydrin-
rubber/

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EPDM had a total trade value of $1.57 billion in 2020. Between 2019 and 2020, the
exports of EPDM rubber decreased by 18.2 percent, from $1.92 billion to $1.57 billion. The U.S.
had the highest total exports of EPDM rubber, valued at $444 million. For the same year, China
was the largest importer at $282 million, whereas the U.S. was fourth highest, at $90.8 million
(OEC, 2022f).

2.3.1.4	Chlorosulfonated Polyethylene (Hypalon™)

Chlorosulfonated polyethylene, also known by the discontinued trade name "Hypalon™"

(Anixter, 2022), is formed from polyethylene through a chlorination and chlorosulfonation
process. Chlorosulfonated polyethylene is characterized by excellent resistance to ozone,
oxidation, UV rays, and weather. Uses of chlorosulfonated polyethylene include coatings for
roofs and tarpaulins, hose construction, wire coverings, industrial rolls, and sporting goods
(Industrial Rubber Goods, 2022). Market information on Chlorosulfonated polyethylene markets
was limited.

2.3.1.5	Nitrile Butadiene Latex (NBL)

Nitrile butadiene latex (NBL) is a polymer consisting primarily of unsaturated nitriles and

dienes, usually acrylonitrile and 1,3-butadiene, and is polymerized by free radical emulsion
through advanced techniques, that is sold as a latex. It is used in several applications because of
its low cost, ease of processing, and low flammability. NBL is also used in several applications
like gloves and storage because of its oil resistance (Senlos Chem, 2022).

NBL had a total trade value of $1.6 billion in 2020. Between 2019 and 2020, the exports
of NBL rubber increased by 33.8 percent, from $1.19 billion to $1.6 billion. South Korea had the
highest total exports of NBL, valued at $886 million. For the same year, Malaysia was the largest
importer at $1.08 billion. The U.S. was not among the five largest exporters or importers of NBL
(OEC, 2022g).

2.3.1.6	Nitrile Butadiene Rubber (NBR)

Nitrile butadiene rubber (NBR) is a copolymer of acrylonitrile and butadiene. Its most

significant characteristic is its resistance to mineral oils, vegetable oils, and hydraulic fluids.
NBR is the preferred product for gasoline hoses, gaskets, and printing rolls. Many of the
properties of nitrile rubber are directly related to the proportion of acrylonitrile in the rubber.
NBR is used in many hose applications where oil, fuel, chemicals, and solutions are transported.
In powder form, NBR is used in cements, adhesives, and brake linings, and in plastics

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modification. NBR is also used in belting and cable, in addition to its uses in O-rings and seals,
adhesives and sealants, sponges, and footwear (Polymerdatabase, 2022a).

NBR had a total trade value of $890 million in 2020. Between 2019 and 2020, the exports
of NBR decreased by 16.8 percent, from $1.07 billion to $890 million. South Korea had the
highest total exports of NBR, valued at $197 million, while the U.S. was fourth at $101 million.
For the same year, China was the largest importer at $187 million, whereas the U.S. was third
highest at $81.3 million (OEC, 2022h).

2.3.1.7	Neoprene

Polychloroprene, also known as Neoprene, is produced from chloroprene through an
emulsion process. It is characterized by its high flexibility, resistance to oils, strength, and
resistance to abrasion, making it suitable for many diverse uses. Neoprene is similar to NBR in
end uses, given that the primary use is for hoses and belts, with the remaining uses allocated
among mechanical, adhesive, and wire and cable end uses. In latex form, Neoprene is used to
manufacture household and industrial gloves (Polymerdatabase , 2022b).

In 2021, the total neoprene market was valued at $2.23 billion, with the Asia-Pacific
market holding 40 percent of the market share. Acumen Research and Consulting projects a
compound annual growth rate of 2.6 percent from 2022 to 2030. Two identified key market
drivers are an increased adoption of neoprene rubber in the automotive sector and continual
growth in construction and electronics industries in emerging economies. Denka is also a
prominent manufacturer in this market, producing over 23 percent of neoprene (Acumen
Research and Consulting, 2022).

2.3.1.8	Styrene-Butadiene Latex (SBL)

Styrene-butadiene latex (SBL) is a polymer consisting primarily of styrene and butadiene

monomer units produced using an emulsion process and sold as a latex. Most commercial
styrene-butadiene polymers are heavily crosslinked, so they have a high gel content. This
provides a greater degree of toughness, strength, and elasticity compared to other materials,
allowing for its usefulness as a latex. SBL is commonly used as a "coating in paper products,
such as magazines, flyers and catalogs, to achieve high gloss, good printability, and resistance to
oil and water." It's also a popular choice as an adhesive in construction applications (Mallard
Creek Polymers, 2020).

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SBL had a total trade value of $939 million in 2020. Between 2019 and 2020, the exports
of SBL decreased by 13.4 percent, from $1.8 billion to $939 million. Germany had the highest
total exports of SBL, valued at $255 million, while the U.S. was second at $122 million. For the
same year, China was the largest importer at $165 million (OEC, 2022i).

2.3.1.9	Styrene-Butadiene Rubber (SBR)

Styrene-butadiene rubber (SBR) is produced in the largest volume of all the synthetic

rubbers. Its chemical properties include favorable performance in extreme temperatures,
resistance to cracking and abrasion, and stability over time. The dominance of SBR among
synthetic rubber types is attributable to its availability and processability. The availability of
styrene and butadiene in fossil hydrocarbons make these two inputs an abundant source of
synthetic rubber, and styrene and butadiene can be combined into rubber compounds which are
easily processed into tire molds. Types of SBR differ in the ratios of styrene to butadiene, their
content of additives, or the type of polymerization process used during the manufacturing
process. The substitutability of SBR with natural rubber is primarily determined by the
fluctuating prices of each, and by the properties required in the end product (Polymerdatabase ,
2022c).

SBR had a total trade value of $4.49 billion in 2020. Between 2019 and 2020, the exports
of SBR rubber decreased by 19.8 percent, from $5.6 billion to $4.49 billion. South Korea had the
highest total exports of SBR, valued at $713 million. For the same year, China was the largest
importer at $627 million, whereas the U.S. was second highest at $472 million (OEC, 2022j).

2.3.1.10	Polybutadiene Rubber (PBR)

Polybutadiene rubber (PBR) is formed from butadiene which undergoes emulsion

polymerization. After SBR, polybutadiene rubber is the synthetic rubber produced in the second
highest volume. It is also a relatively low-cost elastomer. The major use of PBR is in tires for the
side walls and treads. To augment properties such as traction, rolling and abrasion resistance, it is
typically compounded with other elastomers such as natural rubber and SBR. Other applications
are golf ball cores, inner tubes of hoses for sandblasting, and covers for pneumatic and water
hoses. Polybutadiene is also used as a toughening agent in the production of certain plastics
(Polymerdatabase, 2022d).

PBR had a total trade of $2.35 billion in 2020. Between 2019 and 2020, the exports of
PBR decreased by 25.1 percent, from $3.14 billion to $2.35 billion. South Korea had the highest

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total exports of PBR, valued at $427 million, while the U.S. was third highest, at $241 million.
For the same year, China was the largest importer at $320 million (OEC, 2022k).

2.2.6 Group II Industry Profile

This section reviews Group II industries, which are characterized by the following source
categories: epoxy and resins production and non-nylon polyamides production. The affected
firms are more explicitly identified by size and economic impacts in a later section. Like the
Group I facilities, each facility is identified using a NAICS code. Among the identified facilities
in Group II, there are three unique NAICS codes represented in the associated NESHAP and the
U.S. economy. Table 2-7 provides 2017 data for these industries in the US economy, not only
considering facilities directly impacted by this rulemaking.11

Table 2-7: Polymers and Resin Group II Industries





Number of Facilities

Total Revenue

Total

NAICS

Name of Industry

(% of Total
Facilities)

in 2017 (in
Billions)

Employment
in 2017

324110

Petroleum Refineries

1 (20%)

$478.60

63,594

325110

Petrochemical Manufacturing

1 (20%)

$52.67

9,369

325211

Plastics Material and Resin
Manufacturing

3 (60%)

$89.52

75,998

2.2.7 Industry Organization of Group II Industries

This section provides information on the structure of the covered epoxy and resins
industries, and the characteristics of the market organization of the affected Group II industries.
This is an attempt to characterize the impacts this proposed regulation can have in more detailed
terms.

Table 2-8 discusses how the firms in each product category can be characterized by
market concentration: the market share percentage for the 50 largest firms of the affected
industries by NAICS code.

Table 2-8: Concentration Findings of Affected Group II Industries

NAICS

Name of Industry

HHI Value*

Finding

324110

Petroleum Refineries

786

Unconcentrated

325110

Petrochemical Manufacturing

2,868.4

Concentrated

325211

Plastics Material and Resin Manufacturing

409.9

Unconcentrated

Notes: *HHI is based on the 50 largest companies for each NAICS code. HHI for years after 2012 are not available since
comprehensive concentration data from the 2017 Economic Census is not yet available. This value is found using "value added"

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which is a measure of manufacturing activity. Value added is derived by subtracting the cost of purchased inputs from the value
of shipments.

Source: US Census. Economic Census (August 2015). https://www.census.gov/data/tables/2012/econ/census/manufacturing-
reports.html

As presented in Section 2.2.1 and based on the given U.S. Department of Justice
definition, only the petrochemical manufacturing markets could be considered concentrated in
2012. Whereas the HHI for both petroleum refineries and plastics materials and resin
manufacturing markets suggest more competitive, unconcentrated industry markets. Like
synthetic rubbers, most affected facilities under this rule inhabit more competitive markets,
which generally suppress the profit margins for certain firms and increases the price elasticity of
demand. A market with higher price elasticity of demand shows a larger change in quantity
demanded relative to a particular change in price.

2.2.8 Prices for Group II Industries

Like Group I industries, Group II industries are also a part of the chemical manufacturing
sector (NAICS 325). More information on price for this sector can be found in Section 2.2.2. In
this section, Table 2-9 shows a closer look at prices for epoxy and resins, and related products,
from 2012 to 2021. Note that changes in the product prices of adhesives, coatings, and paper do
directionally relate to price changes in the broader "Plastics Material and Resins Manufacturing"
(Plastics and Resins) category, but the magnitude of these changes are varied.

Over this period, each product category saw overall prices increase with certain years
with volatility in 2015 and 2019. In 2021, each product category saw its highest single-year spike
in prices with Plastics and Resins increasing by over a third of its 2020 value. This one-year
increase was largely a result of demand-side and supply-side conditions exacerbated by the
Covid-19 pandemic. On the demand-side, Covid-19-related lockdowns increased the demand for
delivered goods and therefore greater plastic packaging, while the healthcare industry augmented
plastic demands for personal protective equipment (PPE). Supply-side issues also constrained the
availability of plastics and resins due to related labor shortages or production slowdowns, as well
as more widespread international supply chain difficulties (Pederson, 2021).

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* E.O. 12866 Review - Draft - Do Not Cite, Quote, or Release During Review *

Table 2-9: Producer Price Index of Epoxy and Resins, 2012-2021 (2012 = 100)



2012

2013

2014

2015

2016

2017

2018

2019

2020

2021

2012-2021

Plastics Material























and Resins

100.0

103.5

107.8

97.3

92.7

97.6

102.3

98.0

94.6

126.1



Manufacturing























YoY Change



3.5

4.3

-10.5

-4.6

4.9

4.7

-4.3

-3.5

31.6

26.1

% YoY Change



3.5%

4.2%

-9.7%

-4.7%

5.3%

4.8%

-4.2%

-3.6%

33.4%

26.1%

Adhesive























Manufacturing:
Synthetic Resin and

100.0

100.7

102.1

101.3

100.2

101.7

104.2

106.5

107.0

113.0



Rubber Adhesives























YoY Change



0.7

1.4

-0.8

-1.1

1.5

2.4

2.4

0.4

6.0

13.0

% YoY Change



0.7%

1.4%

-0.8%

-1.1%

1.5%

2.4%

2.3%

0.4%

5.6%

13.0%

Paint and Coating
Manufacturing

100.0

101.3

102.1

101.0

100.5

101.6

105.3

110.0

112.1

121.3



YoY Change



1.3

0.8

-1.1

-0.6

1.1

3.7

4.7

2.1

9.1

21.3

% YoY Change



1.3%

0.8%

-1.1%

-0.5%

1.1%

3.7%

4.4%

1.9%

8.2%

21.3%

Paper

Manufacturing

100.0

102.2

103.6

103.4

102.6

105.2

108.9

110.2

108.6

117.6



YoY Change



2.2

1.4

-0.2

-0.8

2.6

3.7

1.3

-1.6

9.0

17.6

% YoY Change



2.2%

1.4%

-0.2%

-0.8%

2.5%

3.5%

1.2%

-1.5%

8.3%

17.6%

Note: "YoY" is an acronym for "Year over Year".

Source: Federal Reserve Economic Data, Economic Research Division, Federal Reserve Bank of St. Louis, https://fred.stlouisfed.org/series/PCU325211325211,
https://fred.stlouisfed.org/series/PCU3255203255204, https://fred.stlouisfed.org/series/PCU325510325510, https://fred.stlouisfed.org/series/PCU322322

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* E.O. 12866 Review - Draft - Do Not Cite, Quote, or Release During Review *

2.2.9 Product Description and Markets of Group II Industries

The epoxy resins production source category involves the manufacture of basic liquid
epoxy resins used in the production of glues, adhesives, plastic parts, and surface coatings. This
source category does not include specialty or modified epoxy resins. The non-nylon polyamides
production source category involves the manufacture of epichlorohydrin crosslinked non-nylon
polyamides used primarily by the paper industry as an additive to paper products. Natural
polymers, such as those contained in paper products, have little cross-linking, which allows their
fibers to change position or separate completely when in contact with water. The addition of
epichlorohydrin cross-linked non-nylon polyamides to these polymers causes the formation of a
stable polymeric web among the natural fibers. Because the polymeric web holds the fibers in
place even in the presence of water, epichlorohydrin cross-linked non-nylon polyamides are also
referred to as wet-strength resins. HAP emission sources in Group II facilities include:
equipment leaks, process vents, wastewater, and storage tanks.

The epoxy resin market had a size of $12.8 billion in 2022. Grand View Research
projects a compound annual growth rate of 7.3 percent from 2022 to 2030, forecasting a 2030
revenue of $22.4 billion. A key market driver is an increased demand for paints and coatings due
to increased construction spending in North America and Western Europe. In 2021, "paints and
coating" accounted for more than 37 percent of revenue share of epoxy resin applications and
Asia-Pacific accounted for more than 61 percent of revenue share by region of the market (Grand
View Research, 2022).

The non-nylon polyamide resin market had a size of $3.27 billion in 2020. Between 2019
and 2020, the exports decreased by 10.5 percent, from $3.65 billion to $3.27 billion. Germany
had the highest total exports, valued at $197 million, while the US was second at $529 million.
For the same year, China was the largest importer at $502 million, whereas the US was fourth
highest at $155 million (OEC, 20221).

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* E.O. 12866 Review - Draft - Do Not Cite, Quote, or Release During Review *
3 EMISSIONS AND ENGINEERING COST ANALYSIS
3.1 Introduction
3.1.1 HON

In general, the HON applies to chemical manufacturing process units (CMPUs) that: (1)
produce one of the listed SOCMI chemicals, and (2) either use as a reactant or produce a listed
organic HAP in the process. A CMPU refers to the collection of equipment assembled and
connected by pipes or ducts to process raw materials and to manufacture an intended product. A
CMPU consists of more than one unit operation. A CMPU includes air oxidation reactors and
their associated product separators and recovery devices; reactors and their associated product
separators and recovery devices; distillation units and their associated distillate receivers and
recovery devices; associated unit operations; associated recovery devices; and any feed,
intermediate and product storage vessels, product transfer racks, and connected ducts and piping.
A CMPU includes pumps, compressors, agitators, pressure relief devices, sampling connection
systems, open-ended valves or lines, valves, connectors, instrumentation systems, and control
devices or systems. A CMPU is identified by its primary product.

The emissions sources affected by the current HON includes heat exchange systems and
maintenance wastewater regulated under NESHAP subpart F; process vents, storage vessels,
transfer racks, and wastewater streams regulated under NESHAP subpart G; equipment leaks
associated with SOCMI processes regulated under NESHAP subpart H; and equipment leaks
from certain non-SOCMI processes at chemical plants regulated under NESHAP subpart I.

As of July 1, 2022, there were 207 facilities that are major sources of HAP emissions in
operation that are subject to the HON. The list of facilities located in the United States that are
major sources of HAP and part of the SOCMI source category with processes subject to HON is
available in the memorandum titled: "Lists of Facilities Subject to the HON, Group I and Group
II Polymers and Resins NESHAPs, and NSPS subparts VV, VVb, III, NNN, and RRR" (ERG,
2023a).

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* E.O. 12866 Review - Draft - Do Not Cite, Quote, or Release During Review *

3.1.2 P&R I (Subpart U)

The P&R INESHAP generally follows and refers to the requirements of the HON, with
an addition of requirements for batch process vents. Generally, the P&R I NESHAP applies to
elastomer product process units (EPPUs) and associated equipment. Similar to a CMPU in the
HON, an EPPU means a collection of equipment assembled and connected by hard-piping or
duct work used to process raw materials and manufacture elastomer product. The EPPU includes
unit operations, recovery operations, process vents, storage vessels, and equipment that are
covered by equipment leak standards and produce one of the elastomer types listed as an
elastomer product {i.e., the list found in Section 1.0 above). An EPPU consists of more than one
unit operation. An EPPU includes, as equipment, pumps, compressors, agitators, pressure relief
devices, sampling connection systems, open-ended valves or lines, valves, connectors, surge
control vessels, bottoms receivers, and instrumentation systems, and control devices or systems.

The emissions sources affected by the current P&R I NESHAP includes heat exchange
systems and maintenance wastewater regulated under NESHAP subpart F; storage vessels,
transfer racks, and wastewater streams regulated under NESHAP subpart G; equipment leaks
regulated under NESHAP subpart H. Process vents are also regulated emission sources but,
unlike the HON, these emissions sources are subdivided into front and back-end process vent
process vents in P&R I. The front-end are unit operations prior to and including the stripping
operations. These are further subdivided into continuous front-end process vents regulated under
NESHAP subpart G and batch front-end process vents that are regulated according to the
requirements within the P&R I NESHAP. Back-end unit operations include filtering,
coagulation, blending, concentration, drying, separating, and other finishing operations, as well
as latex and crumb storage. The requirements for back-end process vents are not sub categorized
into batch or continuous and are also found within the P&R I NESHAP.

As of July 1, 2022, there were 19 facilities that are major sources of HAP emissions in
operation that are subject to the P&R I NESHAP. The list of facilities located in the United
States that are major sources of HAP is available in the memorandum titled: "Lists of Facilities
Subject to the HON, Group I and Group II Polymers and Resins NESHAPs, and NSPS subparts
VV, VVa, III, NNN, and RRR" (ERG, 2023a).

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3.1.3 P&R II (Subpart W)

The P&R IINESHAP takes a different regulatory and format approach from the P&R I
NESHAP but still refers to HON provisions for a portion of the standards. There are two basic
subcategories of manufacturing sources in the P&R II NESHAP - basic liquid epoxy resins
(BLR) and wet strength resins (WSR). A BLR means resins made by reacting epichlorohydrin
and bisphenol A to from diglycidyl ether of bisphenol-A (DGEBPA). A WSR means
polyamide/epichlorohydrin condensates which are used to increase the tensile strength of paper
products.

The emission sources affected by the P&R II NESHAP are all HAP emission points
within a facility related to the production of BLR or WSR. These emission points include process
vents, storage tanks, wastewater systems, and equipment leaks. Equipment includes connectors,
pumps, compressors, agitators, pressure relief devices, sampling connection systems, open-ended
valves and lines, and instrumentation system in organic HAP service. Equipment leaks are
regulated under the HON {i.e., NESHAP subpart G).

Process vents, storage tanks, wastewater systems combined are regulated according to a
production-based emission rate {e.g., pounds HAP per million pounds BLR or WSR produced)
standard for existing sources in both BLR (130 pounds) and WSR (10 pounds). For new sources,
BLR requires 98 percent reduction or an overall limit of 5,000 pounds of HAP per year. New
WSR sources are limited to 7 pounds of HAP per million pounds WSR produced.

As of July 1, 2022, there were 5 facilities that are major sources of HAP emissions in
operation that are subject to the P&R II NESHAP. The list of facilities located in the United
States that are major sources of HAP is available in the memorandum titled: "Lists of Facilities
Subject to the HON, Group I and Group II Polymers and Resins NESHAPs, and NSPS subparts
VV, VVa, III, NNN, and RRR" (ERG, 2023a).

3.2 Emission Points and Controls

The EPA evaluated developments in practices, processes, and control technologies for
heat exchange systems, storage vessels, process vents, transfer racks, wastewater, and equipment
leaks for processes subject to the HON, P&R I, and P&R II. Moreover, for the NSPS subpart
VVa, we evaluated BSER for equipment leaks; and for the NSPS subparts III, NNN, and RRR

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we evaluated BSER for process vents associated with air oxidation units, distillation operations,
and reactor processes, respectively. We analyzed costs and impacts for each emission source
(e.g., process vents) by each rule. For the different NSPS, we determined cost-effectiveness, cost
per ton of emissions reduced, on a VOC basis. For each NESHAP, we determined cost-
effectiveness on a HAP basis from the VOC emissions.

3.2.1 Heat Exchange Systems

Heat exchangers are devices or collections of devices used to transfer heat from process
fluids to another process fluid (typically water) without intentional direct contact of the process
fluid with the cooling fluid (i.e., non-contact heat exchanger). There are two types of heat
exchange systems: Closed-loop recirculation systems and once-through systems. Closed-loop
recirculation systems use a cooling tower to cool the heated water leaving the heat exchanger and
then return the newly cooled water to the heat exchanger for reuse. Once-through systems
typically use surface freshwater (e.g., from rivers) as the influent cooling fluid to the heat
exchangers, and the heated water leaving the heat exchangers is then discharged from the
facility.

Based on our review, we identified the following control option (a development in
practice) for heat exchange systems: quarterly monitoring with the Modified El Paso Method,
using a leak action level defined as a total strippable hydrocarbon concentration (as methane) in
the stripping gas of 6.2 ppmv (and not allowing delay of repair of leaks for more than 30 days
where a total strippable hydrocarbon concentration (as methane) in the stripping gas of 62 ppmv
or higher is found). This option would also require re-monitoring at the monitoring location
where the leak was identified to ensure that any leaks found are fixed. More information on these
systems and control options can be found in the preamble for this rulemaking.

Table 3-1: VOC and HAP Cost Effectiveness for the Control Option Evaluated

for Heat Exchange Systems at HON Facilities (2021$)	

VOC Emission Reductions

HAP

VOC

HAP

VOC

HAP

(tpy)

Emission

Cost

Cost

Cost

Cost



Reductions

Effectiveness

Effectiveness

Effectiveness

Effectiveness



(tpy)

w/o Credits

w/o Credits

with Credits

with Credits





($/ton)

($/ton)

($/ton)

($/ton)

934

93

244

2,441

(656)

(6,559)

*A parenthesis around a number denotes a negative value.

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3.2.2 Storage Vessels

Storage vessels are used to store liquid and gaseous feedstocks for use in a process, as
well as to store liquid and gaseous products from a process. Most storage vessels are designed
for operation at atmospheric or near atmospheric pressures; high pressure vessels are used to
store compressed gases and liquefied gases. Atmospheric storage vessels are typically cylindrical
with a vertical orientation, and they are constructed with either a fixed roof or a floating roof.
Some, generally small, atmospheric storage vessels are oriented horizontally. High pressure
vessels are either spherical or horizontal cylinders.

Below in Tables 3-2 through 3-4 is a presentation of different control options considered
for storage vessels, and then costs and emissions reductions for the different regulatory options.
More information on these systems and control options can be found in the preamble for this
rulemaking.

Table 3-2: Summary of Storage Vessel Control Options Evaluated for the HON

Storage Vessel
Control Option

Control Option Description



SV1

Revise the HON and P&R INESHAP applicability threshold to require existing storage
vessels between 38 m3 (10,000 gal) and 151 m3 (40,000 gal) with a vapor pressure >6.9
kPa to add control



Control is assumed to be a retrofitted IFR





SV2

SV1 plus require upgraded deck fittings and controls for guide poles for all IFR storage
vessels

SV3

Convert each EFR to an IFR through installation of a geodesic dome plus require
upgraded deck fittings and controls for guide poles.

Table 3-3: Nationwide Emissions Reductions and Cost Impacts of Control Options
Considered for Storage Vessels at HON Facilities

Control Total capital Total VOC HAP
option investment annualized emission emission
($) costs ($/yr) reductions reductions

(tpy) (tpy)

HAP cost

effectiveness

($/ton)

HAP incremental
cost effectiveness
(from Option 1)
($/ton)

1	1,727,000 $327,400 58.0 40.6

2	2,191,500 $415,500 68.2 47.7

3	28,916,200 $4,065,700 84.3 59.0

8,070
8,710
68,880

12,400
N/A

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Table 3-4: Nationwide Emissions Reductions and Cost Impacts of Control Options
Considered for Storage Vessels at P&R I Facilities (not collocated with HON facilities)
Control Total capital Total	VOC	HAP	HAP cost HAP

option investment annualized emission emission effectiveness incremental
($)	costs ($/yr) reductions reductions ($/ton)	cost

(tpy)	(tpy)	effectiveness

(from Option 1)

	($/ton)	

1

109,000

20,700

3.7

2.6

7,960

-

2

131,000

24,800

4.1

2.9

8,550

13,700

3

912,200

128,300

2.7

1.9

67,500

N/A

3.2.3 Process Vents

A process vent is a gas stream that is discharged during the operation of a particular unit
operation (e.g., separation processes, purification processes, mixing processes, reaction
processes). The gas stream(s) may be routed to other unit operations for additional processing
(e.g., a gas stream from a reactor that is routed to a distillation column for separation of
products), sent to one or more recovery devices, sent to a process vent header collection system
(e.g., blowdown system) and APCD (e.g., flare, thermal oxidizer, carbon adsorber), and/or
vented to the atmosphere. Process vents may be generated from continuous and/or batch
operations,13 as well as from other intermittent, types of operations (e.g., maintenance
operations). If process vents are required to be controlled prior to discharge to the atmosphere to
meet an applicable emissions standard, then they are typically collected and routed to an APCD
through a closed vent system.

Tables 3-5 through 3-10 include a summary of control options for process vents, and
costs and emission reductions for each option and type of process vents considered under each of
the rules in this proposed rulemaking. More information on these systems and control options
can be found in the preamble for this rulemaking.

13 P&R I and P&R II regulate process vents from both continuous and batch operations. The HON and NSPS
subparts III, NNN, and RRR only regulate process vents if some, or all, of the gas stream originates as a
continuous flow.

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Table 3-5: Summary of Continuous Process Vent Control Options Evaluated for the HON

and P&R I NESHAP

Process Vent

Control Option Description

Control Option



PV1

• Remove TRE concept in its entirety from HON and P&R I NESHAP.



• Remove 50 ppmv and 0.005 scmm Group 1 process vent thresholds from HON and P&R



I NESHAP.



• Redefine a HON and P&R I NESHAP Group 1 process vent (require control) as any



process vent that emits >1.0 lb/hr of total organic HAP.

PV2

• Same as PV1, but redefine a HON and P&R I NESHAP Group 1 process vent (require



control) as any process vent that emits >0.10 lb/hr of total organic HAP.

PV3

• Keep TRE concept in HON and P&R I NESHAP, but change index value threshold from



1.0 to 5.0 W



• Keep 50 ppmv and 0.005 scmm Group 1 process vent thresholds in HON and P&R I



NESHAP.

Table 3-6: Nationwide Emissions Reductions and Cost Impacts of Control Options
Considered for Continuous Process Vents at HON Facilities

Control

Total capital

Total annualized VOC emission

HAP emission

HAP cost

option

investment ($)

costs ($/yr) reductions (tpy)

reductions (tpy)

effectiveness









($/ton)

1

1,218,000

3,150,000 436

436

7,200

2

5,732,000

10,329,000 809

533

19,400

3

1,493,000

3,208,000 441

441

7,300

Table 3-7: Nationwide Emissions Reductions and Cost Impacts of Control Options

Considered for Continuous Process Vents at P&R I Facilities



Control

Total capital

Total annualized VOC emission

HAP emission

HAP cost

option

investment ($)

costs ($/yr) reductions (tpy)

reductions (tpy)

effectiveness









($/ton)

1

198,000

586,000 51.0

51.0

11,500

2

557,000

1,242,000 80.1

72.4

17,200

3

215,000

590,000 54.8

54.8

10,800

Table 3-8: Nationwide Emissions Reductions and Cost Impacts of Control Options

Considered for Batch Front-end Process Vents at P&R I Facilities



Control

Total capital

Total annualized VOC emission

HAP emission

HAP cost

option

investment ($)

costs ($/yr) reductions (tpy)

reductions (tpy)

effectiveness









($/ton)

1

811,000

650,700 105

105

6,200

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Process Vents - Subpart Ilia, NNNa, and RRRa NSPS

Table 3-9: Average Cost and Emission Reductions for Process Vents Subject to the HON
Used for the Suite of Proposed Process Vent Requirements Evaluated for the NSPS
subparts Ilia, NNNa, and RRRa	

Total Annual
Total Annual	Cost w/	VOC Emission

Cost ($/yr)	Recovery	Reductions (tpy)

Credits ($/yr)

Flare monitoring	3,752,200	789,200	789,200	93

requirements1

Maintenance vent	-	460	460

requirements2

Revising the standard 39,300	98,400	98,400	9.1

from a TRE calculation
to control of all vent
streams3

„ .	Total Capital

Description	Investment ($)

Adsorber monitoring 26,500	2,500	2,500	0.21

(carbon cannisters)(4)

1	For additional details, see the document titled Control Option Impacts for Flares Located in the SOCMI Source
Category that Control Emissions from Processes Subject to HON and for Flares that Control Emissions from
Processes Subject to Group I and Group II Polymers and Resins NESHAPs, which is available in the docket for this
rulemaking.

2	For additional details, see the document titled Review of Regulatory Alternatives for Certain Vent Streams in the
SOCMI Source Category that are Associated with Processes Subject to HON and Processes Subject to Group I and
Group II Polymers and Resins NESHAPs, which is available in the docket for this rulemaking.

3	For additional details, see the document titled Clean Air Act Section 112(d)(6) Technology Review for Continuous
Process Vents Located in the SOCMI Source Category that are Associated with Processes Subject to HON,
Continuous Front-end and Batch Front-end Process Vents Associated with Processes Subject to Group I Polymers
and Resins NESHAP, and Process Vents Associated with Processes Subject to Group II Polymers and Resins
NESHAP, which is available in the docket for this rulemaking.

4	For additional details, see the document titled Analysis of Monitoring Costs and Dual Bed Costs for Non-
Regenerative Carbon Adsorbers Used in the SOCMI Source Category that are Associated with Processes Subject to
HON and for Non-Regenerative Carbon Adsorbers that are Associated with Processes Subject to Group I Polymers
and Resins NESHAP, which is available in the docket for this rulemaking.

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Table 3-10: Nationwide Emissions Reductions and Cost Impacts of Control Options
Considered for Non-HON Vent Streams Triggering NSPS Subparts Ilia, NNNa, and/or
RRRa

Scenario

Total Capital
Investment

($)

Total Annual
Cost ($/yr)

Total Annual
Cost w/
Recovery
Credits ($/yr)

voc

Emission
Reductions

(tpy)

Cost-
effectiveness
w/ Recovery
Credits ($/ton
VOC)

Scenario 1	1,665,300 461,000

(i.e., one affected facility
at a new greenfield
facility)

Scenario 2 (i.e., new 7,609,500	1,780,000

affected facility at six
existing facilities)

Scenarios 3 and 4 (i.e., 15,192,500 3,558,000

12 existing affected

facilities modified or

triggers the

reconstruction

requirements)

Total	24,467,300 5,799,800

461,000

93

1,780,000 392

3,558,000 783

4,960

4,540

4,540

5,799,800	1,269

4,570

3.2.4	Transfer Racks

We did not identify any developments in practices, processes, or control technologies for
HON transfer racks that would achieve a greater HAP emission reduction beyond the emission
reduction already required by the HON. Therefore, under CAA section 112(d)(6) we are not
proposing any changes to the HON for this emission process group based on our technology
review.14 We note, however, that under CAA section 112(d)(2) and (3) we are proposing changes
to the applicability threshold for HON transfer racks to fill a regulatory gap in the current HON.

3.2.5	Wastewater

HAP are emitted into the air from wastewater collection, storage, and treatment systems
that are uncovered or open to the atmosphere through volatilization of organic compounds at the
liquid surface. Emissions occur by diffusive or convective means, or both. Diffusion occurs
when organic concentrations at the water surface are much higher than ambient concentrations.
The organics volatilize, or diffuse into the air, to reach equilibrium between aqueous and vapor
phases. Convection occurs when air flows over the water surface, sweeping organic vapors from

14 P&R I and P&R II sources do not have transfer racks as emission sources.

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the water surface into the air. The rate of volatilization is related directly to the speed of the air
flow over the water surface.

The HON defines wastewater to mean water that: (1) Contains either: (i) an annual
average concentration of Table 9 (to NESHAP subpart G) compounds of at least 5 ppmw and has
an annual average flow rate of 0.02 liter per minute (1pm) or greater or (ii) an annual average
concentration of Table 9 (to NESHAP subpart G) compounds of at least 10,000 ppmw at any
flow rate, and that (2) is discarded from a CMPU that meets all of the criteria specified in 40
CFR 63.100 (b)(1) through (b)(3). Wastewater is process wastewater or maintenance wastewater.

P&R I defines wastewater similarly to how the term is defined in the HON, except
instead of referring to Table 9 (to NESHAP subpart G) compounds, P&R I refers to Table 5 (to
NESHAP subpart U) compounds. P&R II defines wastewater as aqueous liquid waste streams
exiting equipment at an affected source. No further stratification into groups for applicability is
specified.

Below in Tables 3-11 and 3-12 are costs and emission reductions for control options
considered for wastewater under the proposed HON amendments, and P&R I. More information
on these systems and control options can be found in the preamble for this rulemaking.

Table 3-11: Nationwide Emissions Reductions and Cost Impacts of Control Options
Considered for Wastewater Streams at HON Facilities

Control
option

Total capital
investment ($)

Total annualized VOC emission
costs ($/yr) reductions (tpy)

HAP emission
reductions (tpy)

HAP cost

effectiveness

($/ton)

1

504,766,000

210,739,500 2,755

2,755

76,500

Table 3-12: Nationwide Emissions Reductions and Cost Impacts of Control Options
Considered for Wastewater Streams at P&R I Facilities

Control
option

Total capital
investment ($)

Total annualized VOC emission
costs ($/yr) reductions (tpy)

HAP emission
reductions (tpy)

HAP cost

effectiveness

($/ton)

1

46,847,800

22,548,200 220

220

102,500

3.2.6 Equipment Leaks

Emissions of VOC and HAP from equipment leaks occur in the form of gases or liquids
that escape to the atmosphere through many types of connection points (e.g., threaded fittings) or
through the moving parts of certain types of process equipment during normal operation.

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Equipment regulated by the HON, P&R I, and P&R II includes agitators, compressors,
connectors, instrumentation systems, OEL, PRDs, pumps, sampling collection systems, and
valves15 that contain or contact material that is 5 percent by weight or more of organic HAP,
operate 300 hours per year or more, and are not in vacuum service.

Based on the costs and emission reductions for the options, we determined that none of
them are cost effective. Therefore, we are not proposing to revise the HON, P&R I, and P&R II
to reflect the requirements of these options pursuant to CAA section 112(d)(6). However, tighter
requirements on equipment leaks will be proposed under Subpart VVb NSPS. Table 3-13
provides costs and emission reductions for these tighter requirements by type of affected
facilities as well as the total costs and emission reductions. More information on these systems
and control options can be found in the preamble for this rulemaking.

Table 3-13: Nationwide Emissions Reductions and Cost Impacts of Control Options

Considered for Ai

'fected Facilities Triggering NSPS Subpart VV

)



Total



Total Annual

voc

Cost-
effectiveness
w/ Recovery

Credits
($/ton VOC)

Scenario

Capital
Investment
($)

Total Annual
Cost ($/yr)

Cost w/
Recovery
Credits ($/yr)

Emission
Reductions

(tpy)

Scenario 1

416,600

77,500

60,900

18

3,380

{i.e., two











affected











facilities at a











new greenfield
facility)











Scenario 2 {i.e.,

7,081,700

1,317,900

1,035,800

313

3,310

34 new affected











facilities)











Scenarios 3 and

208,300

38,800

30,500

9

3,390

{i.e., one











modified











existing
affected











facility)











Total

7,706,600

1,434,200

1,127,200

340

3,320

15 We believe P&R II contains a typographical error in that valves are currently excluded from the definition of
equipment leaks at 40 CFR 63.522; see section III.D. 10 of this preamble for our rationale for this conclusion and
our proposal to address this issue.

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3.2.7 Flares

Flares that control emissions from processes subject to HON or the P&R INESHAP are
required to meet certain design and operating requirements as specified in 40 CFR 63.11. The
available data at the time these NESHAP were promulgated suggested that flares meeting these
design and operating requirements would achieve a minimum destruction efficiency of no less
than 98 percent emissions control. Relatively recent evidence through Passive Fourier Transform
Infrared spectroscopy (PFTIR) testing suggests that steam- and air-assisted flares can have a
significant degradation in destruction efficiency when operated at high turndown or at other
times when steam- and air-assist rates are too high (EPA, 2012). As many of the flares operated
at HON and P&R I facilities are steam- or air-assisted, concerns of poor flare destruction
efficiency are particularly significant. We note that a substantial portion of the costs, both capital
and annual, for the proposed HON and P&R I amendments and for this entire proposed action,
are from the proposed control requirements for flares. Tables 3-14 and 3-15 present cost and
emission reductions for flare control options proposed as part of the HON and P&R I
amendments under this proposed action. More information on these systems and control options
can be found in the preamble for this rulemaking.

Table 3-14: Nationwide Cost Impacts (2021$) for Flares in the SOCMI Source Category
that Control Emissions from HON Processes including P&R I Flares Collocated with HON

Processes	

Total Capital Investment Total Annualized Cost
	Control Option	(MM$)	(MM$/yr)	

Flare Operational and Monitoring	.

t-. .	,	323.1	o/.o

Requirements

Work Practice Standards for Flares

Operating Above Their Smokeless	3.34	0.79

Capacity

Nationwide Total	326.4	68.6

00 We were unable to quantify emissions reductions for this option but anticipate some excess emissions reductions.

(b:i VOC and HAP emission reductions are anticipated excess emissions impacts based on ensuring flares achieve the MACT
level of control.

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Table 3-15: Nationwide Cost Impacts (2021$) for Flares that Control Emissions from P&R
I Processes



Total Capital Investment

Total Annualized Cost

Control Option

(MM$)

(MM$/yr)

Flare Operational and Monitoring
Requirements

Work Practice Standards for Flares

6.93

1.46

Operating Above Their Smokeless

0.08

0.02

Capacity





Nationwide Total

7.1

1.48

Table 3-16: Nationwide Flare Control Efficiency and Emission Reduction Estimates for
Flares in the SOCMI Source Category that Control Emissions from HON Processes

Control
Alternative
Description

Average
Destruction
Efficiency'3'

voc

Emissions
(tons/yr)

HAP
Emissions
(tons/yr)

VOC
Emission
Reductions
(tons/yr)

HAP
Emission
Reductions
(tons/yr)

Baseline

85.9

21,455

5,237





NHVcz >270 Btu/scf
on 15- minute average
with allowance to use
1,212 Btu/scf as net
heating value for
hydrogen

98.6

2,130

520

19,325

4,717

Table 3-17: Nationwide Flare Control Efficiency and Emission Reduction Estimates for
Flares that Control Emissions from P&R I Processes

Control
Alternative
Description

Average
Destruction
Efficiency'3'

VOC
Emissions
(tons/yr)

HAP
Emissions
(tons/yr)

VOC
Emission
Reductions
(tons/yr)

HAP
Emission
Reductions
(tons/yr)

Baseline
NHVcz >270 Btu/scf on
15- minute average with
allowance to use 1,212
Btu/scf as net heating
value for hydrogen

85.9
98.6

626
62

156
16

564

141

3.2.8 Fenceline Monitoring

Fenceline monitoring refers to the placement of monitors along the perimeter of a facility
to measure pollutant concentrations. Coupled with requirements for root cause analysis and
corrective action upon triggering an actionable level, this work practice standard is a
development in practices considered under CAA section 112(d)(6) for the purposes of managing
fugitive emissions. Below in Tables 3-18 and 3-19 are cost and emission reductions associated

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with several fenceline monitoring scenarios or options in the proposed HON and P&R I
amendments. More information on fenceline monitoring and implementation options can be
found in the preamble for this rulemaking.

Table 3-18: Nationwide Cost Impacts of Fenceline Monitoring for HON	

Monitoring scenario

# Facilities

Monitoring option

Total capital

Total annualized



Impacted

description

investment ($)

costs (million $/yr)

1

35

Passives only (1

4,016,000

2,141,000





analyte)*

2

46

Passives only (2

2,295,000

1,282,000





analytes)

3

9

Cannisters only

115,500

5,366,000





Cannisters and





4

16

1,606,000

10,397,000





passives (1 analyte)





Cannisters and





5

20

1,721,000

12,869,000





passives (2 analytes)

* An analyte is the chemical substance being measured. For these fenceline monitoring options, the analyte is a

HAP monitored under HON and P&R I requirements.





Table 3-19: Nationwide Cost Impacts of Fenceline Monitoring for P&R I



Monitoring scenario

# Facilities

Monitoring option

Total capital

Total annualized



Impacted

description

investment ($)

costs ($/yr)

1

1

Cannisters and

11/1



1

1

passives (2 analytes)

114, /UU

toy,uuu

2

1

Cannisters only

12,800

596,000

3.3 Engineering Cost Analysis Summary Results

Table 3-20 below presents a summary of the costs for the proposed HON amendments by
emission point and in total. Capital and total annual costs are shown, and total annual costs are
shown with and without product recovery. The effect of product recovery on the total annual
costs is quite small, as is shown in the table. The total capital cost of the proposed HON
amendments is about $440 million, and the total annual cost is about $163 million (with product
recovery) and $164 million (without product recovery) in 2021 dollars. The estimation of total
capital cost (synonymous with total capital investment) and total annual cost follows the
methodology in the EPA Air Pollution Control Cost Manual (EPA, 2017). Estimates of total
annual cost includes both operating and maintenance and annualized capital costs (from capital
recovery). The inclusion of product recovery reduces the total annual cost by only 0.5 percent
(about $900,000, as shown in the table), but its inclusion leads to annual cost savings from
controls for heat exchange systems.

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Table 3-20: Detailed Costs for the HON Source Category by Emission Point for the
Proposed Rule (2021$)	

Emission Point

Total Capital
Cost ($)

Total Annual Cost

($/yr)

Without Recovery
Credits

Total Annual

Cost ($/yr)
With Recovery
Credits

Annual
Recovery
Credits
($/yr)

Flares

$326,443,400

$68,658,000

$68,658,000

$0

Fenceline Monitoring

$9,754,300

$32,055,300

$32,055,300

$0

Pressure Relief Devices

$16,829,400

$7,481,600

$7,481,600

$0

Storage Vessels

$2,191,500

$415,500

$415,500

$0

Storage Vessels - Degassing

$0

$751,500

$751,500

$0

Storage Vessels - Pressure Vessels

$77,700

$72,900

$72,900

$0

Storage Vessels - 240hr Maintenance

$2,637,400

$456,500

$456,500

$0

Maintenance

$0

$94,200

$94,200

$0

Heat Exchange Systems

$783,800

$237,700

-$603,000

$840,800

Process Vents

$1,217,600

$3,149,700

$3,149,700

$0

EtO Risk

$76,517,700

$47,920,100

$47,895,800

$24,300

Dioxins/Furans

$3,920,000

$2,275,000

$2,275,000

$0

Carbon Cannisters

$53,000

$5,000

$5,000

$0

Total

$440,426,200

$163,572,000

$162,708,600

$870,500

Tables 3-21 through 3-22 below presents a summary of the costs for the proposed P&R I
(Table 3-21) and P&R II (Table 3-22) amendments by emission point and in total. Capital and
total annual costs are shown, and total annual costs are shown with and without product
recovery. The effect of product recovery on the total annual costs is quite small, as is shown in
Table 3-21 for P&R I. The total capital cost of the proposed HON amendments is about $25
million, and the total annual cost is about $15 million (with product recovery) and $15 million
(without product recovery) in 2021 dollars. The estimation of total capital cost (synonymous
with total capital investment) and total annual cost follows the methodology in the EPA Air
Pollution Control Cost Manual (EPA, 2017). Estimates of total annual cost includes both
operating and maintenance and annualized capital costs (from capital recovery). The inclusion of
product recovery reduces the total annual cost by only 0.2 percent (about $29,000, as shown in
the table), but its inclusion leads to annual cost savings from controls for heat exchange systems.
For the P&R II proposed amendments, Table 3-22 shows that the total capital cost is about $3
million, with about $2 million in total annual costs and no product recovery.

For the various NSPS proposals, as shown in Table 3-23, the total capital cost for the
subpart VVb is about $8 million, with a total annual cost of just over $1 million with product

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recovery included. With product recovery included, the total annual cost is about $300,000
higher. For the other three NSPS (subpart Ilia, NNNa, RRRa) considered together, the total
capital cost is about $24 million, with a total annual cost of about $8 million as shown in Table
3-23. There is no product recovery associated with the controls to meet the requirements for
these three NSPS.

Finally, the cumulative total capital cost for the entire proposed action, as shown in Table
3-23, is about $501 million, with a total annual cost for the entire action of $186 million with
product recovery. Given that the product recovery is just over $1 million, the total annual cost
without product recovery is $187 million. The cumulative product recovery is only about 0.6
percent of the total annual costs.

Engineering cost estimates in this chapter include projections of revenue from product
recovery. This is because control options analyzed in this RIA lead to the recovery of chemical
products. Recovered chemical product affected by this rulemaking is monetized as recovery
credits by multiplying VOC emissions reductions by a VOC credit of $900/ton (2021 dollars).

Because the controls considered lead to product recovery, it is possible for the cost of a
control option to be negative once the value of product recovery is considered (the potential
annualized costs may be outweighed by the revenue from product recovery). This observation
may typically support an assumption that owners of facilities would continue to perform the
emissions abatement activity regardless of whether a requirement is in place, because it is in their
private self-interest. However, there may be an opportunity cost associated with the installation
of environmental controls or implementation of compliance activities (for purposes of mitigating
the emission of pollutants) that is not reflected in the control costs. If environmental investment
displaces investment in productive capital, the difference between the rate of return on the
marginal investment displaced by the mandatory environmental investment is a measure of the
opportunity cost of the environmental requirement to the regulated entity. To the extent that any
opportunity costs are not added to the control costs, the compliance costs presented above may
be underestimated. In addition, the hurdle rate is defined as the minimum rate of return on an
investment that a firm would deem acceptable under typical business practices. Thus, if the
hurdle rate is higher on average for firms in this industry than the interest rate used in estimating

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the compliance costs (in this proposed action, 5.5% at the time of this analysis), then these
investments in environmental controls may not necessarily be undertaken on average.

From a social perspective, however, the increased financial returns from product recovery
accrue to entities somewhere along the chemical product supply chain and should be accounted
for in a national-level analysis. An economic argument can be made that, in the long run, no
single entity bears the entire burden of compliance costs or fully appropriates the financial gain
of the additional revenues associated with chemical product recovery. The change in economic
surplus resulting from product recovery may be likely to be spread across different market
participants. The simplest and most transparent option for allocating these revenues would be to
assign the compliance costs and revenues to a model plant and not make assumptions regarding
the allocation of costs and revenues across economic agents.

Table 3-21: Detailed Costs for the P&R I Source Category by Emission Point for the
Proposed Rule (2021$)	

Emission Point

Total Capital
Cost ($)

Total Annual Cost

($/yr)

Without Recovery
Credits

Total Annual

Cost ($/yr)
With Recovery
Credits

Annual
Recovery
Credits

($/yr)

Flares

$6,996,100

$1,481,000

$1,481,000

$0

Fenceline Monitoring

$127,600

$1,255,000

$1,255,000

$0

Pressure Relief Devices

$504,400

$128,500

$128,500

$0

Storage Vessels

$130,900

$24,800

$24,800

$0

Storage Vessels - Degassing

$0

$12,300

$12,300

$0

Storage Vessels - Pressure Vessels

$2,200

$2,100

$2,100

$0

Storage Vessels - 240hr Maintenance

$39,500

$6,800

$6,800

$0

Maintenance

$0

$8,700

$8,700

$0

Heat Exchange Systems

$48,300

$9,900

($19,300)

$29,300

Process Vents

$1,009,000

$1,236,900

$1,236,900

$0

CP Risk

$15,948,900

$10,354,500

$10,354,500

$0

Dioxins/Furans

$560,000

$325,000

$325,000

$0

Carbon Cannisters

$27,000

$2,000

$2,000

$0

Total

$25,393,800

$14,847,500

$14,818,200

$29,200

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Table 3-22: Detailed Costs for the P&R II Source Category by Emission Point for the
Proposed Rule (2021$)	

Emission Point

Total Capital
Cost ($)

Total Annual Cost

($/yr)
Without Recovery
Credits

Total Annual Cost
($/yr)

With Recovery
Credits

Annual
Recovery
Credits
(S/yr)

Pressure Relief Devices

$132,700

$33,800

$33,800

$0

Storage Vessels - Degassing

$0

$6,200

$6,200

$0

Maintenance

$0

$2,300

$2,300

$0

Dioxins/Furans

$2,800,000

$1,625,000

$1,625,000

$0

Total

$2,932,500

$1,667,200

$1,667,200

$0

Table 3-23: Summary of the Total Costs by Rule ($2021)

Rule

Total Capital
Cost ($)

Total Annual Cost

($/yr)

Without Recovery
Credits

Total Annual Cost

($/yr)

With Recovery
Credits

Annual
Recovery
Credits
(S/yr)

HON

$440,426,200

$163,572,000

$162,708,600

$870,500

P&R I

$25,393,800

$14,847,500

$14,818,200

$29,200

P&R II

$2,932,500

$1,667,200

$1,667,200

$0

NSPS Wb

$7,706,600

$1,434,200

$1,127,200

$307,000

NSPS Ilia, NNNa, & RRRa

$24,467,300

$5,799,800

$5,799,800

$0

Total

$500,926,400

$187,320,700

$186,121,000

$1,206,700

We also show the costs in another way - the current day estimate of the costs of these
rules over an analysis time period, and an equivalent annualized value of those costs over the
same analysis time period. To facilitate the presentation of these costs, Table 3-24 presents the
present value (PV) and equivalent annualized value (EAV) of costs over the analysis time period
of 2024-2038 for the cumulative impacts in this rulemaking, discounted to 2023. The present
value is a current day estimate of the costs over the analysis time period for this proposed
rulemaking, and the equivalent annualized value is the average annual value of these costs whose
sum is the PV. These costs include the value of product recovery, which is a very small
percentage of the costs for the HON (less than 1 percent of the total annual costs) and
cumulatively (also less than 1 percent of the total annual costs). Showing the costs in this way is
consistent with OMB Circular A-4.

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Table 3-24: Discounted Costs, for the Proposed Amendments to the HON, P&R I, and
P&R II NESHAP, and Subparts Wb, Ilia, NNNa, and RRRa NSPS, 2024-2038 (million
2021$, discounted to 2023)	

	Year	3 percent	7 percent	

Total Annual Cost with Revenue Total Annual Cost with Revenue
from Product Recovery	from Product Recovery

2024	$146.7	$126.0

2025	$143.9	$118.7

2026	$140.6	$111.9

2027	$116.7	$89.4

2028	$110.1	$83.6

2029	$110.0	$78.1

2030	$100.7	$63.8

2031	$97.8	$59.6

2032	$94.9	$55.7

2033	$92.2	$52.0

2034	$89.5	$48.6

2035	$87.3	$45.5

2036	$86.9	$42.5

2037	$81.9	$39.7

2038	$79.6	$37.1
PV $1,578.8 $1,052.1

	EAV	$132.3	$115.5	

Note: Discounted to 2023. Totals may not sum due to independent rounding. Numbers rounded to two significant digits unless
otherwise noted. The EAV is an annualized cost for it is an estimate calculated from annual costs across the 15 year
analytical timeframe.

Table 3-25 contains a summary of the HAP and VOC emission reductions per year for
each proposed rule within this regulatory action, and cumulative (total) estimates. These
emission reductions are calculated based on a baseline that include the excess emissions from
flares as explained in Chapter 1 of this RIA. Table 3-26 contains a summary of other pollutants
emissions changes (increases and decreases), both for criteria other than VOC and climate
pollutants, cumulatively for this proposed action.

Table 3-2525: Summary of the HAP and VOC Emission Reductions per Year by Rule

Rule

HAP Emission Reductions (tons
per year)

VOC Emission Reductions (tons
per year)

HON

5,726

21,142

P&R I

326

763

P&R II

1

1

NSPS Wb

N/A*

340

NSPS Ilia, NNNa, & RRRa

N/A

1,269

Total

6,053

23,515

*N/A - not available. No HAP reductions are estimated for the proposed NSPS included in this rulemaking.

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Table 3-2626: Summary of Emission Changes (Increases or Reductions) Other Than HAP
and VOC in Tons per Year, Cumulative and by Proposed Rule*	

Pollutant

Total

HON

P&RI

Hla/NNNa/RRRa

CO

845

714

110

21.51

co2

741,102

609,761

115,975

15,366

ch4

(22,951)

(20,177)

(2,017)

(756)

n2o

6.86

5.27

1.54

0.06

NOx

349

272

73

3.96

pm25

17.4

12.7

4.75

0

so2

1.37

0

1.37

0

*A parenthesis denotes emission reductions.

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4 BENEFITS OF EMISSIONS REDUCTIONS

4.1 Introduction

The emission controls installed to comply with this proposed action are expected to
reduce emissions of volatile organic compounds (VOC) which, in conjunction with NOx and in
the presence of sunlight, form ground-level ozone (O3). This chapter reports the estimated ozone-
related benefits of reducing VOC emissions in terms of the number and value of avoided ozone-
attributable deaths and illnesses. The potential benefits from reduced ecosystem effects from the
reduction in O3 concentrations are not quantified or monetized here. Time and data limitations
for quantifying the effect of this action on biomass loss and foliar injury and the ensuing loss of
ecosystem services prevent an assessment of the benefits to ecosystems. The EPA provides a
qualitative discussion of the benefits of reducing HAP emissions later in this chapter. Finally, we
include an analysis of the climate benefits and disbenefits for this proposed action. We include a
presentation of benefits estimates for each of the proposed rules in this rulemaking, and also a
cumulative estimate with total benefits for the entire rulemaking.

The PV of the cumulative health benefits for the proposed rules range from $81 million at
a 3 percent discount rate to $56 million at a 7 percent discount rate with an EAV of $6.8 million
to $6.1 million respectively. The PV of the benefits for the proposed rule range from $730
million at a 3 percent discount rate to $490 million at a 7 percent discount rate with an EAV of
$61 to $54 million respectively. Specific estimates of monetized health estimates for each
proposed rule can be found later in this chapter in Section 4.5. All estimates are reported in 2021
dollars. The monetized climate benefits of reductions of pollutants such as CH4 and disbenefits
resulting from increasing emissions of CO2 and N2O as presented in Chapter 3 are included in
this chapter in Section 4.6. The monetized climate benefits and disbenefits are calculated using
interim benefit per ton estimates of the social cost of greenhouse gases (SC-GHG) estimates as
explained later in this RIA chapter, and are estimated at negative $8.2 million PV at a 3 percent
discount rate ($0.7 million EAV).

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Health Effects from Exposure to Hazardous Air Pollutants (HAP)

In the subsequent sections, we describe the health effects associated with the main HAP
of concern from SOCMI (found within the HON), P&R I, and P&R II source categories:
ethylene oxide (Section 4.1.1), chloroprene (Section 4.1.2), benzene (Section 4.1.3), 1,3-
butadiene (Section 4.1.4), vinyl chloride (Section 4.1.5), ethylene dichloride (Section 4.1.6),
chlorine (Section 4.1.7), maleic anhydride (Section 4.1.8) and acrolein (Section 4.1.9). This
proposal is projected to reduce ethylene oxide emissions from HON processes by approximately
58 tons per year (tpy) and reduce chloroprene emissions from Neoprene Production processes in
P&R I by approximately 14 tpy. We also estimate that the proposed amendments to the
NESHAP would reduce other HAP emissions (excluding ethylene oxide and chloroprene) from
the HON, P&R I, and P&R II source categories by approximately 1,123 tpy. We also estimate
that the proposed amendments to the NESHAP will reduce excess emissions of HAP from flares
in the SOCMI and P&R I source categories by an additional 4,858 tpy. The Agency was unable
to estimate HAP emission reductions for the proposed amendments to the NSPS in this
rulemaking.

Quantifying and monetizing the economic value of reducing the risk of cancer and non-
cancer effects is made difficult by the lack of a central estimate of estimate of cancer and non-
cancer risk and estimates of the value of an avoided case of cancer (fatal and non-fatal) and
morbidity effects. Due to methodology and data limitations, we did not attempt to monetize the
health benefits of reductions in HAP in this analysis. Instead, we are providing a qualitative
discussion of the health effects associated with HAP emitted from sources subject to control
under the proposed action.

4.1.1 Ethylene oxide

Ethylene oxide is used as a chemical intermediate in the manufacture of ethylene glycol
(antifreeze), textiles, detergents, polyurethane foam, solvents, medicine, adhesives, and other
products. Health effects from acute (short-term) exposure to ethylene oxide in humans consist
mainly of central nervous system depression and irritation of the eyes and mucous membranes.
Chronic (long-term) exposure to ethylene oxide in humans can cause irritation of the eyes, skin,
nose, throat, and lungs, and damage to the brain and nervous system. There is also some
evidence linking ethylene oxide exposure to reproductive effects (ATSDR, 2022). EPA has

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classified ethylene oxide as carcinogenic to humans by the inhalation route of exposure. Ethylene
oxide is a potent carcinogen, and evidence in humans indicates that exposure to ethylene oxide
increases the risk of lymphoid cancer and, for females, breast cancer (U.S. EPA, 2016).

4.1.2	Chloroprene

Chloroprene is used primarily in the manufacture of poly chloroprene (e.g., Neoprene),
which is used to make diverse products requiring chemical, oil, and/or weather resistance (e.g.,
adhesives, automotive and industrial parts (e.g., belts and hoses), caulks, flame-resistant
cushioning). Health effects from acute (short-term) inhalation exposure to high concentrations of
chloroprene include headache, irritability, dizziness, insomnia, fatigue, respiratory irritation,
cardiac palpitations, chest pains, nausea, dermatitis, and corneal necrosis. Health effects of
chronic (long-term) exposure may include fatigue, chest pains, irritability, dermatitis, and hair
loss. Other effects reported include changes to the nervous system, changes to the cardiovascular
system, and depression of the immune system. There is evidence of an association between
occupation exposure to chloroprene and liver cancer. There is also evidence suggesting an
association between occupational exposure to chloroprene and lung cancer (U.S. EPA, 2010).
Studies in animals have found an increased risk of tumors in multiple organs/organ systems
(including reproductive, hepatic, respiratory, gastrointestinal, dermal and ocular). The EPA has
classified chloroprene as likely to be carcinogenic to humans (U.S. EPA, 2010).

4.1.3	Benzene

Benzene is used as a constituent in motor fuels and is found in gasoline service station
and motor vehicle exhaust emissions into air. Acute effects of benzene inhalation exposure in
humans include neurological symptoms such as drowsiness, dizziness, headaches, and
unconsciousness. Exposure to benzene vapor can cause eye, skin, and upper respiratory tract
irritation. Chronic exposure to benzene is associated with blood disorders, such as preleukemia
and aplastic anemia (ATSDR, 2007a). The EPA's Integrated Risk Information System (IRIS)
database lists benzene as a known human carcinogen by all routes of exposure. IRIS found a
causal relationship between benzene exposure and acute lymphocytic leukemia and a suggestive
relationship between benzene exposure and chronic non-lymphocytic leukemia and chronic

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lymphocytic leukemia (U.S. EPA, 2000). IARC has also determined that benzene is a human
carcinogen (IARC, 2018).

4.1.4	1,3-Butadiene

1,3-Butadiene is used in the production of styrene-butadiene rubber, plastics, and
thermoplastic resins. A variety of reproductive and developmental effects have been observed in
mice exposed to 1,3-butadiene by inhalation (ATSDR, 2012). There are no human data on
reproductive or developmental effects (ATSDR, 2012). Epidemiological studies of workers in
rubber plants have shown an association between 1,3-butadiene exposure and increased
incidence of leukemia (U.S. EPA, 2002). Animal studies have reported tumors at various sites
from 1,3-butadiene exposure. EPA has classified 1,3-butadiene as carcinogenic to humans by the
inhalation route of exposure. (U.S. EPA, 2002).

4.1.5	Ethylene dichloride (1,2-dichloroethane)

Ethylene dichloride is primarily used in the production of vinyl chloride as well as other
chemicals. Inhalation of concentrated ethylene dichloride vapor can induce effects on the human
nervous system, liver, and kidneys, as well as respiratory distress and cardiac arrhythmia. No
information is available on the chronic effects of ethylene dichloride in humans. In animal
studies, chronic (long-term) inhalation exposure to ethylene dichloride has been observed to
cause effects on the liver and kidneys. Decreased fertility and increased embryo mortality have
been observed in inhalation studies of rats (ATSDR, 1992). Epidemiological studies are not
conclusive regarding the carcinogenic effects of ethylene dichloride, due to concomitant
exposure to other chemicals. Following treatment by gavage (experimentally placing the
chemical in the stomach), several tumor types have been induced in rats and mice. An increased
incidence of lung papillomas has been reported in mice after topical application. EPA has
classified ethylene dichloride as a Group B2, probable human carcinogen (U.S. EPA, 1999).

4.1.6	Vinyl chloride

Most of the vinyl chloride produced is used to make polyvinyl chloride (PVC) plastic and
vinyl products. Acute (short-term) exposure to high levels of vinyl chloride in air has resulted in
central nervous system (CNS) effects, such as dizziness, drowsiness, and headaches in humans.
Chronic (long-term) exposure to vinyl chloride through inhalation and oral exposure in humans

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has resulted in CNS effects and liver damage. Animal studies have reported effects on the liver,
kidney, and CNS from chronic exposure to vinyl chloride (ATSDR, 2006). Vinyl chloride
exposure via inhalation has been shown to increase the risk of a rare form of liver cancer,
angiosarcoma of the liver, in humans. EPA has concluded that vinyl chloride is carcinogenic to
humans by the inhalation and oral routes of exposure, and highly likely to be carcinogenic by the
dermal route of exposure (U.S. EPA, 2000).

4.1.7	Chlorine

Chlorine (Cb) is a gas that is a potent irritant to the eyes and respiratory tract. Exposure
to low levels of chlorine can result in nose, throat, and eye irritation. At higher levels, breathing
chlorine gas may result in changes in breathing rate and coughing, and damage to the lungs.
Studies in volunteers exposed to controlled concentrations of chlorine indicate that exposures to
1-3 ppm produce mild irritation of the nose that can be tolerated for about 1 hour; 5 ppm may
produce eye irritation; headache and throat irritation may occur at concentrations of 5-15 ppm;
30 ppm produces immediate chest pain, nausea and vomiting, dyspnea, and cough; and 40-60
ppm produces toxic pneumonitis and pulmonary edema. Concentrations in typical human
exposure environments are much lower than these levels unless an accident involving chlorine
takes place nearby (e.g., a leak from a chlorine tank or a leak from a facility that produces or uses
chlorine). Chronic (long-term) exposure to chlorine gas in workers has resulted in respiratory
effects, including eye and throat irritation and airflow obstruction (ATSDR, 2010). EPA has not
assessed chlorine for carcinogenicity under the IRIS program (U.S. EPA, 1994).

4.1.8	Maleic anhydride

Maleic anhydride is used in the formulation of resins. Exposure to maleic anhydride may
occur from accidental releases to the environment or in workplaces where it is produced or
used. Acute (short-term) inhalation exposure of humans to maleic anhydride has been observed
to cause irritation of the respiratory tract and eye irritation. Chronic (long-term) exposure to
maleic anhydride has been observed to cause chronic bronchitis, asthma-like attacks, and upper
respiratory tract and eye irritation in workers. In some people, allergies have developed so that
lower concentrations can no longer be tolerated. Kidney effects were observed in rats chronically

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exposed to maleic anhydride via gavage (CalEPA, 2001). EPA has not assessed maleic
anhydride for carcinogenicity under the IRIS program (U.S. EPA, 1988).

4.1.9	Acrolein

Acrolein is primarily used as an intermediate in the synthesis of acrylic acid and as a
biocide. It is toxic to humans following inhalation, oral or dermal exposures. Acute (short-term)
inhalation exposure may result in upper respiratory tract irritation and congestion. The major
effects from chronic (long-term) inhalation exposure to acrolein in humans and animals consist
of general respiratory congestion and eye, nose, and throat irritation (ATSDR, 2007b). The EPA
IRIS program noted, in 2003, that the potential carcinogenicity of acrolein cannot be determined
because the existing data are inadequate for an assessment of human carcinogenic potential for
either the oral or inhalation route of exposure (U.S. EPA, 2003).

4.1.10	Other Hazardous Air Pollutants (HAP)

In addition to the compounds described above, other toxic compounds might be affected
by this action. Information regarding the health effects of those compounds can be found in
Health Effects Notebook for Hazardous Air Pollutants (at https://www.epa.gov/haps/health-
effects-notebook-hazardous-air-pollutants) and in the EPA Integrated Risk Information System
(IRIS) database (at https://iris.epa.gov/AtoZ/71ist type=alpha).

4.2 Ozone-related Human Health Benefits

This section summarizes the EPA's approach to estimating the incidence and economic
value of the ozone-related benefits estimated for this action. The Regulatory Impact Analysis
(RIA) Final Revised Cross-State Air Pollution Rule (U.S. EPA, 2021) and its corresponding
Technical Support Document Estimating PM2.5 -and Ozone - Attributable Health Benefits (TSD)
(U.S. EPA, 2021) provide a full discussion of the EPA's approach for quantifying the incidence
and value of estimated air pollution-related health impacts. In these documents, the reader can
find the rationale for selecting the health endpoints quantified; the demographic, health and
economic data applied in the environmental Benefits Mapping and Analysis Program—
Community Edition (BenMAP-CE); modeling assumptions; and the EPA's techniques for
quantifying uncertainty.

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Implementing this action will affect the distribution of ozone concentrations throughout
the U.S.; this includes locations both meeting and exceeding the NAAQS for O3. This RIA
estimates avoided Cb-related health impacts that are distinct from those reported in the RIAs for
the O3 NAAQS (U.S. EPA, 2015). The O3 NAAQS RIAs hypothesize, but do not predict, the
benefits and costs of strategies that states may choose to enact when implementing a revised
NAAQS; these costs and benefits are illustrative and cannot be added to the costs and benefits of
policies that prescribe specific emission control measures.

4.2.1	Estimating Ozone Related Health Impacts

We estimate the quantity and economic value of air pollution-related effects by
estimating counts of air pollution-attributable cases of adverse health outcomes, assigning dollar
values to these counts, and assuming that each outcome is independent of one another. We
construct these estimates by adapting primary research—specifically, air pollution epidemiology
studies and economic value studies—from similar contexts. This approach is sometimes referred
to as "benefits transfer." Below we describe the procedure we follow for: (1) selecting air
pollution health endpoints to quantify; (2) calculating counts of air pollution effects using a
health impact function; (3) specifying the health impact function with concentration-response
parameters drawn from the epidemiological literature.

4.2.2	Selecting air pollution health endpoints to quantify

As a first step in quantifying 03-related human health impacts, the EPA consults the
Integrated Science Assessment for Ozone (Ozone ISA) (U.S. EPA, 2020) as summarized in the
TSD for the Final Revised Cross State Air Pollution Rule Update (U.S. EPA, 2021). This
document synthesizes the toxicological, clinical, and epidemiological evidence to determine
whether each pollutant is causally related to an array of adverse human health outcomes
associated with either acute {i.e., hours or days-long) or chronic {i.e., years-long) exposure. For
each outcome, the ISA reports this relationship to be causal, likely to be causal, suggestive of a
causal relationship, inadequate to infer a causal relationship, or not likely to be a causal
relationship.

In brief, the ISA for ozone found short-term (less than one month) exposures to ozone to
be causally related to respiratory effects, a "likely to be causal" relationship with metabolic

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effects and a "suggestive of, but not sufficient to infer, a causal relationship" for central nervous
system effects, cardiovascular effects, and total mortality. The ISA reported that long-term
exposures (one month or longer) to ozone are "likely to be causal" for respiratory effects
including respiratory mortality, and a "suggestive of, but not sufficient to infer, a causal
relationship" for cardiovascular effects, reproductive effects, central nervous system effects,
metabolic effects, and total mortality.

The EPA estimates the incidence of air pollution effects for those health endpoints listed
above where the ISA classified the impact as either causal or likely-to-be-causal. Table 4-1
reports the effects we quantified and those we did not quantify in this RIA. The list of benefit
categories not quantified shown in that table is not exhaustive. And, among the effects we
quantified, we might not have been able to completely quantify either all human health impacts
or economic values. The table below omits any welfare effects such as biomass loss and foliar
injury. These effects are described in Chapter 7 of the Ozone NAAQS RIA (2015).

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Table 4-1: Human Health Effects of Ambient Ozone and whether they were Quantified
and/or Monetized in this RIA.

Category

Effect

Effect
Quantified

Effect
Monetized

More
Information

Mortality from

Premature respiratory mortality from
short-term exposure (0-99)

V

V

Ozone ISA1

exposure to ozone

Premature respiratory mortality from
long-term exposure (age 30-99)

V

V

Ozone ISA



Hospital admissions—respiratory (ages
65-99)

V

V

Ozone ISA



Emergency department visits—
respiratory (ages 0-99)

~

~

Ozone ISA



Asthma onset (0-17)

~

~

Ozone ISA



Asthma symptoms/exacerbation
(asthmatics age 5-17)

~

~

Ozone ISA

Nonfatal morbidity
from exposure to

Allergic rhinitis (hay fever) symptoms
(ages 3-17)

~

~

Ozone ISA

Minor restricted-activity days (age 18-
65)

~

~

Ozone ISA

ozone

School absence days (age 5-17)

~

~

Ozone ISA



Decreased outdoor worker productivity
(age 18-65)

—

—

Ozone ISA2



Metabolic effects (e.g., diabetes)

—

—

Ozone ISA2



Other respiratory effects (e.g.,
premature aging of lungs)

—

—

Ozone ISA2



Cardiovascular and nervous system
effects

—

—

Ozone ISA2



Reproductive and developmental effects

—

—

Ozone ISA2

1	We assess these benefits qualitatively due to data and resource limitations for this analysis. In other analyses we

quantified these effects as a sensitivity analysis.

2	We assess these benefits qualitatively because we do not have sufficient confidence in available data or methods.

4.2.3 Quantifying Cases of Ozone-Attributable Premature Mortality

Mortality risk reductions account for the majority of monetized ozone-related benefits.
For this reason, this subsection and the following provide a brief background of the scientific
assessments that underly the quantification of these mortality risks and identifies the risk studies
used to quantify them in this RIA for ozone. As noted above, the Estimating PM2.5- and Ozone-
Attributable Health Benefits TSD describes fully the Agency's approach for quantifying the
number and value of ozone air pollution-related impacts, including additional discussion of how
the Agency selected the risk studies used to quantify them in this RIA. The TSD also includes
additional discussion of the assessments that support quantification of these mortality risk than
provide here.

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In 2008, the National Academies of Science (NRC 2008) issued a series of
recommendations to EPA regarding the procedure for quantifying and valuing ozone-related
mortality due to short-term exposures. Chief among these was that "... short-term exposure to
ambient ozone is likely to contribute to premature deaths" and the committee recommended that
"ozone-related mortality be included in future estimates of the health benefits of reducing ozone
exposures..." The NAS also recommended that".. .the greatest emphasis be placed on the
multicity and [National Mortality and Morbidity Air Pollution Studies (NMMAPS)] ... studies
without exclusion of the meta-analyses" (NRC 2008). Prior to the 2015 Ozone NAAQS RIA, the
Agency estimated ozone-attributable premature deaths using an NMMAPS-based analysis of
total mortality (Bell et al. 2004), two multi-city studies of cardiopulmonary and total mortality
(Huang et al. 2004; Schwartz 2005) and effect estimates from three meta-analyses of non-
accidental mortality (Bell et al. 2005; Ito et al. 2005; Levy et al. 2005). Beginning with the 2015
Ozone NAAQS RIA, the Agency began quantifying ozone-attributable premature deaths using
two newer multi-city studies of non-accidental mortality (Smith et al. 2009; Zanobetti and
Schwartz 2008) and one long-term cohort study of respiratory mortality (Jerrett et al. 2009). The
2020 Ozone ISA included changes to the causality relationship determinations between short-
term exposures and total mortality, as well as including more recent epidemiologic analyses of
long-term exposure effects on respiratory mortality (U.S. EPA, 2020). In this RIA, as described
in the corresponding TSD, two estimates of ozone-attributable respiratory deaths from short-term
exposures are estimated using the risk estimate parameters from Zanobetti et al. (2008) and
Katsouyanni et al. (2009). Ozone-attributable respiratory deaths from long-term exposures are
estimated using Turner et al. (2016). Due to time and resource limitations, we were unable to
reflect the warm season defined by Zanobetti et al. (2008) as June-August. Instead, we apply this
risk estimate to our standard warm season of May-September.

4.3 Approach to Estimating PM2.5-related Human Health Benefits

This section summarizes the EPA's approach to estimating the incidence and economic
value of the PM2.5-related benefits estimated for this rule. The Regulatory Impact Analysis for
the Proposed National Emission Standards for Hazardous Air Pollutants: Coal- and Oil-Fired
Electric Utility Steam Generating Units Review of the Residual Risk and Technology Review
(U.S. EPA, 2023a) and its corresponding Technical Support Document Estimating PM2.5 -and

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Ozone - Attributable Health Benefits (TSD) (U.S. EPA, 2023b) provide a full discussion of the
EPA's approach for quantifying the incidence and value of estimated air pollution-related health
impacts. In these documents, the reader can find the rationale for selecting the health endpoints
quantified; the demographic, health and economic data applied in the environmental Benefits
Mapping and Analysis Program—Community Edition (BenMAP-CE); modeling assumptions;
and the EPA's techniques for quantifying uncertainty.

Implementing this rule will affect the distribution of PM2.5 concentrations throughout the
U.S.; this includes locations both meeting and exceeding the NAAQS for PM and ozone. This
RIA estimates avoided PM2.5-related health impacts that are distinct from those reported in the
RIA for the PM NAAQS (U.S. EPA, 2022). The PM2.5 NAAQS RIA hypothesizes, but does not
predict, the benefits and costs of strategies that States may choose to enact when implementing a
revised NAAQS; these costs and benefits are illustrative and cannot be added to the costs and
benefits of policies that prescribe specific emission control measures.

We estimate the quantity and economic value of air pollution-related effects by
estimating counts of air pollution-attributable cases of adverse health outcomes, assigning dollar
values to these counts, and assuming that each outcome is independent of one another. We
construct these estimates by adapting primary research—specifically, air pollution epidemiology
studies and economic value studies—from similar contexts. This approach is sometimes referred
to as "benefits transfer." Below we describe the procedure we follow for: (1) selecting air
pollution health endpoints to quantify; (2) calculating counts of air pollution effects using a
health impact function; (3) specifying the health impact function with concentration-response
parameters drawn from the epidemiological literature.

4.3.1 Selecting Air Pollution Health Endpoints to Quantify

As a first step in quantifying PM2.5-related human health impacts, the EPA consults the
Integrated Science Assessment for Particulate Matter (PM ISA) (U.S. EPA, 2019a) as
summarized in the TSD for the Final Revised Cross State Air Pollution Rule Update (U.S. EPA,
2021b). This document synthesizes the toxicological, clinical, and epidemiological evidence to
determine whether each pollutant is causally related to an array of adverse human health
outcomes associated with either acute {i.e., hours or days-long) or chronic {i.e., years-long)
exposure. For each outcome, the ISA reports this relationship to be causal, likely to be causal,

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suggestive of a causal relationship, inadequate to infer a causal relationship, or not likely to be a
causal relationship.

The ISA for PM2.5 found acute exposure to PM2.5 to be causally related to cardiovascular
effects and mortality {i.e., premature death), and respiratory effects as likely-to-be-causally
related. The ISA identified cardiovascular effects and total mortality as being causally related to
long-term exposure to PM2.5 and respiratory effects as likely-to-be-causal; and the evidence was
suggestive of a causal relationship for reproductive and developmental effects as well as cancer,
mutagenicity, and genotoxicity.

The EPA estimates the incidence of air pollution effects for those health endpoints listed above
where the ISA classified the impact as either causal or likely-to-be-causal. Table 4-2 reports the
effects we quantified and those we did not quantify in this RIA. The list of benefit categories not
quantified shown in that table is not exhaustive. Among the effects we quantified, we might not
have been able to completely quantify either all human health impacts or economic values. The
table below omits health effects associated with SO2 and NO2, and any welfare effects such as
acidification and nutrient enrichment. These effects are described in the Technical Support
Document "Estimating PM2.5- and Ozone-Related Benefits", which details the approach EPA
followed for selecting and quantifying PM-attributable effects (U.S. EPA, 2021).

In December of 2022, EPA published the Regulatory Impact Analysis (RIA) for the
proposed Particulate Matter National Ambient Air Quality Standards (U.S.EPA, 2022). EPA
quantified the PM-related benefits of this rule prior to publishing of the proposed PM NAAQS
RIA. For this reason, the PM-related benefits reported in this RIA reflect methods consistent
with an earlier version of the TSD (U.S. EPA, 2021). Though the methodology employed in this
RIA is largely consistent with the PM NAAQS RIA, here we estimate PM-attributable mortality
using concentration-response parameters that differ from those applied in the PM NAAQS RIA.
Specifically, we estimate PM-attributable deaths using concentration-response parameters from
the Di et al. (2017) and Turner et al. (2016) long-term exposure studies of the Medicare and
American Cancer Society cohorts, respectively. By contrast, the PM NAAQS RIA quantified
PM-attributable mortality using concentration response parameters from the Wu et al. (2020) and
Pope et al. (2019) long-term exposure studies of the Medicare and National Health Interview
Survey cohorts, respectively.

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Table 4-2: Human Health Effects of PlVb.sand whether they were Quantified and/or

Monetized in this RIA.

Category

Effect

Effect
Quantified

Effect
Monetized

More
Information

Premature

Adult premature mortality from long-term exposure (age 65-99

~

~

PM ISA

mortality
from

or age 30-99)









exposure

Infant mortality (age <1)

~

~

PM ISA

to PM2 5











Heart attacks (age >18)

~



PM ISA



Hospital admissions—cardiovascular (ages 65-99)

~

V

PM ISA



Emergency department visits— cardiovascular (age 0-99)

~

V

PM ISA



Hospital admissions—respiratory (ages 0-18 and 65-99)

~

V

PM ISA



Emergency room visits—respiratory (all ages)

~

V

PM ISA



Cardiac arrest (ages 0-99; excludes initial hospital and/or
emergency department visits)

~



PM ISA



Stroke (ages 65-99)

~



PM ISA



Asthma onset (ages 0-17)

~

~

PM ISA



Asthma symptoms/exacerbation (6-17)

~

~

PM ISA

Nonfatal

Lung cancer (ages 30-99)

~

~

PM ISA

morbidity

Allergic rhinitis (hay fever) symptoms (ages 3-17)

~

~

PM ISA

from

Lost work days (age 18-65)

~

~

PM ISA

exposure

Minor restricted-activity days (age 18-65)

~

V

PM ISA

to PM2.5

Hospital admissions—Alzheimer's disease (ages 65-99)

~

V

PM ISA



Hospital admissions—Parkinson's disease (ages 65-99)

~

V

PM ISA



Other cardiovascular effects (e.g., other ages)

—

—

PM ISA2



Other respiratory effects (e.g., pulmonary function, non-asthma
ER visits, non-bronchitis chronic diseases, other ages and





PM ISA2



populations)









Other nervous system effects (e.g., autism, cognitive decline,





PM ISA2



dementia)







Metabolic effects (e.g., diabetes)

—

—

PM ISA2



Reproductive and developmental effects (e.g., low birth weight,
pre-term births, etc.)

—

—

PM ISA2



Cancer, mutagenicity, and genotoxicity effects

—

—

PM ISA2

1	We assess these benefits qualitatively due to data and resource limitations for this analysis. In other analyses we

quantified these effects as a sensitivity analysis.

2	We assess these benefits qualitatively because we do not have sufficient confidence in available data or methods.

4.3.2 Quantifying Cases of PM2.5-Attributable Premature Death

This section summarizes our approach to estimating the incidence and economic value of
the PM2.5-related ancillary co-benefits estimated for this rule. A full discussion of EPA's
approach to selecting human health endpoints, epidemiologic studies and economic unit values
can be found in the Technical Support Document (TSD) supporting the final Cross-State Update

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rule (U.S. EPA, 2021b). The user manual for the environmental Benefits Mapping and Analysis
Program-Community Edition (BenMAP-CE) program16 separately details EPA's approach for
quantifying and monetizing PM-attributable effects in the BenMAP-CE program. In these
documents the reader can find the rationale for selecting health endpoints to quantify; the
demographic, health and economic data we apply within BenMAP-CE; modeling assumptions;
and our techniques for quantifying uncertainty.

The PM ISA, which was reviewed by the Clean Air Scientific Advisory Committee of the
EPA's Science Advisory Board (U.S. EPA-SAB-CASAC, 2019), concluded that there is a causal
relationship between mortality and both long-term and short-term exposure to PM2.5 based on the
body of scientific evidence. The PM ISA also concluded that the scientific literature supports the
use of a no-threshold log-linear model to portray the PM-mortality concentration-response
relationship while recognizing potential uncertainty about the exact shape of the concentration-
response function. The PM ISA identified epidemiologic studies that examined the potential for a
population-level threshold to exist in the concentration-response relationship. Based on such
studies, the ISA concluded that".. .the evidence from recent studies reduce uncertainties related
to potential co-pollutant confounding and continues to provide strong support for a linear, no-
threshold concentration-response relationship" (U.S. EPA, 2019a). Consistent with this evidence,
the EPA historically has estimated health impacts above and below the prevailing NAAQS.17

Following this approach, we report the estimated PM2.5-related benefits (in terms of both
health impacts and monetized values) calculated using a log-linear concentration-response
function that quantifies risk from the full range of simulated PM2.5 exposures (U.S. EPA, 2021b).
As noted in the preamble to the 2020 PM NAAQS final rule, the "health effects can occur over
the entire distributions of ambient PM2.5 concentrations evaluated, and epidemiological studies
do not identify a population-level threshold below which it can be concluded with confidence

16	BenMAP-CE Manual and Appendices, 2022. https://www.epa.gov/benmap/benmap-ce-manual-and-appendices

17	The Federal Register Notice for the 2012 PM NAAQS notes that "[i]n reaching her final decision on the appropriate annual
standard level to set, the Administrator is mindful that the CAA does not require that primary standards be set at a zero-risk level,
but rather at a level that reduces risk sufficiently so as to protect public health, including the health of at-risk populations, with an
adequate margin of safety. On balance, the Administrator concludes that an annual standard level of 12 ug/m3 would be requisite
to protect the public health with an adequate margin of safety from effects associated with long- and short-term PM2.5 exposures,
while still recognizing that uncertainties remain in the scientific information."

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that PM-associated health effects do not occur."18 In general, we are more confident in the size of
the risks we estimate from simulated PM2.5 concentrations that coincide with the bulk of the
observed PM concentrations in the epidemiological studies that are used to estimate the benefits.
Likewise, we are less confident in the risk we estimate from simulated PM2.5 concentrations that
fall below the bulk of the observed data in these studies (U.S. EPA, 2021b). As described further
below, we lacked the air quality modeling simulations to perform such an analysis for this
proposed rule and thus report the total number of avoided PM2.5-related premature deaths using
the traditional log-linear no-threshold model noted above.

4.4 Economic Valuation

After quantifying the change in adverse health impacts, we estimate the economic value
of these avoided impacts. Reductions in ambient concentrations of air pollution generally lower
the risk of future adverse health effects by a small amount for a large population. Therefore, the
appropriate economic measure is willingness to pay (WTP) for changes in risk of a health effect.
For some health effects, such as hospital admissions, WTP estimates are generally not available,
so we use the cost of treating or mitigating the effect. These cost-of-illness (COI) estimates
generally (although not necessarily in every case) understate the true value of reductions in risk
of a health effect. They tend to reflect the direct expenditures related to treatment but not the
value of avoided pain and suffering from the health effect. The unit values applied in this
analysis are provided in Section 5.1 of the TSD for the Revised Cross State Update rule (U.S.
EPA, 2021).

Avoided premature deaths account for 95 percent of monetized ozone-related benefits
and 98 percent of monetized PM-related benefits. The economics literature concerning the
appropriate method for valuing reductions in premature mortality risk is still developing. The
value for the projected reduction in the risk of premature mortality is the subject of continuing
discussion within the economics and public policy analysis community. Following the advice of
the Scientific Advisory Board's (SAB) Environmental Economics Advisory Committee (SAB-
EEAC), the EPA currently uses the value of statistical life (VSL) approach in calculating
estimates of mortality benefits, because we believe this calculation provides the most reasonable

18 https://www.govinfo.gov/content/pkg/FR-2020-12-18/pdf/2020-27125.pdf

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single estimate of an individual's WTP for reductions in mortality risk (U.S. EPA-SAB, 2000).
The VSL approach is a summary measure for the value of small changes in mortality risk
experienced by a large number of people.

The EPA continues work to update its guidance on valuing mortality risk reductions and
consulted several times with the SAB-EEAC on the issue. Until updated guidance is available,
the EPA determined that a single, peer-reviewed estimate applied consistently best reflects the
SAB-EEAC advice it has received. Therefore, the EPA applies the VSL that was vetted and
endorsed by the SAB in the Guidelines for Preparing Economic Analyses while the EPA
continues its efforts to update its guidance on this issue (U.S. EPA, 2016). This approach
calculates a mean value across VSL estimates derived from 26 labor market and contingent
valuation studies published between 1974 and 1991. The mean VSL across these studies is $10.7
million ($2016).19

The EPA is committed to using scientifically sound, appropriately reviewed evidence in
valuing changes in the risk of premature death and continues to engage with the SAB to identify
scientifically sound approaches to update its mortality risk valuation estimates. Most recently,
the Agency proposed new meta-analytic approaches for updating its estimates which were
subsequently reviewed by the SAB-EEAC. The EPA is taking the SAB's formal
recommendations under advisement (U.S. EPA, 2017b).

Because short-term ozone-related premature mortality occurs within the analysis year, the
estimated ozone-related benefits are identical for all discount rates. When valuing changes in
ozone-attributable deaths using the Turner et al. (2016) study, we follow advice provided by the
Health Effects Subcommittee of the SAB, which found that".. .there is no evidence in the
literature to support a different cessation lag between ozone and particulate matter. The HES
therefore recommends using the same cessation lag structure and assumptions as for particulate
matter when utilizing cohort mortality evidence for ozone" (U.S. EPA-SAB 2010).

These estimated health benefits do not account for the influence of future changes in the
climate on ambient concentrations of pollutants (USGCRP 2016). For example, recent research
suggests that future changes to climate may create conditions more conducive to forming ozone.

19 In 1990$, this base VSL is $4.8 million. In 2016$, this base VSL is $10.7 million.

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The estimated health benefits also do not consider the potential for climate-induced changes in
temperature to modify the relationship between ozone and the risk of premature mortality (Jhun
et al. 2014; Ren et al. 2008a, 2008b).

4.4.1 Beneflt-per- Ton Estimates

The EPA did not conduct air quality modeling for this rule. Rather, we quantified the
value of reducing PM concentrations using a "benefit-per-ton" approach, due to the relatively
small number of facilities and the fact that these facilities are located in a discrete location.
Specifically, EPA believes that the emissions reductions due to this rule are small and because
we cannot be confident of the location of new facilities under the NSPS, EPA elected to use the
benefit-per-ton. EPA did not expect full air quality modeling to show a significant difference
between the policy and baseline model runs. Instead, we used a "benefit-per-ton" (BPT)
approach to estimate the benefits of this rulemaking. These BPT estimates provide the total
monetized human health benefits (the sum of premature mortality and premature morbidity) of
reducing one ton of the VOC precursor for ozone from a specified source. Specifically, in this
analysis, we multiplied the estimates from the "Synthetic Organic Chemicals" sector by the
corresponding emission reductions. The method used to derive these estimates is described in the
BPT Technical Support Document (BPT TSD) on Estimating the Benefit per Ton of Reducing
Directly-Emitted PM2.5, PM2.5 Precursors and Ozone Precursors from 21 Sectors and its
precursors from 21 sectors (U.S. EPA, 2021). As noted above, we were unable to quantify the
value of changes in exposure to HAP, CO, and NO2.

As noted below in the characterization of uncertainty, all BPT estimates have inherent
limitations. Specifically, all national-average BPT estimates reflect the geographic distribution of
the modeled emissions, which may not exactly match the emission reductions that would occur
due to the action, and they may not reflect local variability in population density, meteorology,
exposure, baseline health incidence rates, or other local factors for any specific location. In an
effort to address this limitation we have generated regional level BPTs for the synthetic organic
chemicals sector. Given sector specific air quality modeling and the small changes in emissions
considered in this action, the difference in the quantified health benefits that result from the BPT
approach compared with if EPA had used a full-form air quality model should be minimal.

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The EPA systematically compared the changes in benefits, and concentrations where
available, from its BPT technique and other reduced-form techniques to the changes in benefits
and concentrations derived from full-form photochemical model representation of a few different
specific emissions scenarios. Reduced-form tools are less complex than the full air quality
modeling, requiring less agency resources and time. That work, in which we also explore other
reduced form models is referred to as the "Reduced Form Tool Evaluation Project" (Project),
began in 2017, and the initial results were available at the end of 2018. The Agency's goal was to
create a methodology by which investigators could better understand the suitability of alternative
reduced-form air quality modeling techniques for estimating the health impacts of criteria
pollutant emissions changes in the EPA's benefit-cost analysis, including the extent to which
reduced-form models may over- or under-estimate benefits (compared to full-scale modeling)
under different scenarios and air quality concentrations. The EPA Science Advisory Board
(SAB) convened a panel to review this report.20 In particular, the SAB assessed the techniques
the Agency used to appraise these tools; the Agency's approach for depicting the results of
reduced-form tools; and steps the Agency might take for improving the reliability of reduced-
form techniques for use in future Regulatory Impact Analyses (RIAs).

The scenario-specific emission inputs developed for this project are currently available
online. The study design and methodology are described in the final report summarizing the
results of the project (IEc, 2019. Evaluating Reduced-Form Tools for Estimating Air Quality
Benefits. Final Report). Results of this project found that total PM2.5 BPT values were within
approximately 10 percent of the health benefits calculated from full-form air quality modeling
when analyzing the pulp and paper sector, a sector used as an example for evaluating the
application of the new methodology in the final report. The ratios for individual PM species
varied, and the report found that the ratio for the directly emitted PM2.5 for the pulp and paper
sector was 0.7 for the BPT approach compared to 1.0 for full-form air quality modeling
combined with BenMAP. This provides some initial understanding of the uncertainty which is
associated with using the BPT approach instead of full-form air quality modeling.

1 85 FR 23823. April 29, 2020.

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4.4.2	Ozone Vegetation Effects

Exposure to ozone has been found to be associated with a wide array of vegetation and
ecosystem effects in the published literature (U.S. EPA, 2020). Sensitivity to ozone is highly
variable across species, with over 66 vegetation species identified as "ozone-sensitive," many of
which occur in state and national parks and forests. These effects include those that cause
damage to, or impairment of, the intended use of the plant or ecosystem. Such effects are
considered adverse to public welfare and can include reduced growth and/or biomass production
in sensitive trees, reduced yield and quality of crops, visible foliar injury, changed to species
composition, and changes in ecosystems and associated ecosystem services.

4.4.3	Ozone Climate Effects

Ozone is a well-known short-lived climate forcing GHG (U.S. EPA, 2013). Stratospheric
ozone (the upper ozone layer) is beneficial because it protects life on Earth from the sun's
harmful ultraviolet (UV) radiation. In contrast, tropospheric ozone (ozone in the lower
atmosphere) is a harmful air pollutant that adversely affects human health and the environment
and contributes significantly to regional and global climate change. Due to its short atmospheric
lifetime, tropospheric ozone concentrations exhibit large spatial and temporal variability (U.S.
EPA, 2009b). The IPCC AR5 estimated that the contribution to current warming levels of
increased tropospheric ozone concentrations resulting from human methane, NOx, and VOC
emissions was 0.5 W/m2, or about 30 percent as large a warming influence as elevated CO2
concentrations. This quantifiable influence of ground level ozone on climate leads to increases in
global surface temperature and changes in hydrological cycles.

4.5 Ozone-, NOx- and PM2.5 -Related Benefits Results

Table 4-3, 4-4 and 4-5 list the estimated VOC-, NOx- and PIVh.s-related benefits per ton
applied in this national level analysis. Benefits are estimated using two alternative concentration-
response parameters from three epidemiologic studies when quantifying both PM2.5 and ozone-
related mortality (Di et al. 2017, Turner et al. 2016 and Katsouyanni et al. 2009) These results
are discounted at 3 and 7 percent for a 2021 currency year. For all estimates, we summarize the
monetized health benefits using discount rates of 3 percent and 7 percent for the 15-year analysis
period of this rule discounted back to 2023 rounded to 2 significant figures as presented in Table

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4-5. The PV of the benefits for the proposed rulemaking range from $81 million at a 3 percent
discount rate to $56 million at a 7 percent discount rate with an EAV of $6.8 million to $6.1
million, respectively. The PV of the benefits for the proposed rulemaking range from $730
million at a 3 percent discount rate to $490 million at a 7 percent discount rate with an EAV of
$61 to $54 million, respectively. All estimates are reported in 2021 dollars. Undiscounted
benefits are presented by year for the proposed and less stringent alternative options in Table 4-4
and Table 4-5. For the full set of underlying calculations see the "Final HONSOCMI Benefits
workbook," available in the docket for the proposal.

Table 4-3: Synthetic Organic Chemicals: Benefit per Ton Estimates of Ozone-Attributable
Premature Mortality and Illness for the Proposal, 2024-2038 (2021$)	

Discount Rate

Year



3 Percent



7 Percent

2025

$686

and

$5,892



$617

and

$5,285

2030

$731

and

$6,487



$659

and

$5,817

2035

$771

and

$7,136



$699

and

$6,391

2040

$805

and

$7,668



$731

and

$6,881

Note: The standard reporting convention for EPA benefits is to round all results to two significant figures. Here, we
report all significant figures so that readers may reproduce the results reported below.

Table 4-4: Synthetic Organic Chemicals: Benefit per Ton Estimates of NOx-Attributable
Premature Mortality and Illness for the Proposal, 2024-2038(2021$)	

Discount Rate

Year



3 Percent



7 Percent

2025

$18,079

and

$18,398



$16,271

and

$16,590

2030

$19,355

and

$20,206



$17,441

and

$18,185

2035

$21,163

and

$22,652



$19,036

and

$20,312

2040

$22,758

and

$24,672



$20,525

and

$22,226

Note: The standard reporting convention for EPA benefits is to round all results to two significant figures. Here, we
report all significant figures so that readers may reproduce the results reported below.

Table 4-5: Synthetic Organic Chemicals: Benefit per Ton Estimates of NOx-Attributable
Premature Mortality and Illness for the Proposal, 2024-2038(2021$)	

Discount Rate

Year

3 Percent





7 Percent

2025

$18,079

and

$18,398



$16,271

and

$16,590

2030

$19,355

and

$20,206



$17,441

and

$18,185

2035

$21,163

and

$22,652



$19,036

and

$20,312

2040

$22,758

and

$24,672



$20,525

and

$22,226

Note: The standard reporting convention for EPA benefits is to round all results to two significant figures. Here, we
report all significant figures so that readers may reproduce the results reported below

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Table 4-6: Total Benefits Estimates of Ozone-, NOx- and PM2.5-Attributable Premature Mortality and Illness (million

2021$)a'b'c	

All Rules

Less Stringent Regulatory Option	Proposed Regulatory Option	More Stringent Regulatory Option

Discount Rate	Discount Rate	Discount Rate

3 Percent	7 Percent	3 Percent	7 Percent	3 Percent	7 Percent

PV $81 and $730 $55 and $490 $200 and $850 $130 and $570 $85 and

$760

$58 and $520

EAV $6.8 and $61 $6.3 and $54 $17 and $71 $15 and $63 $7.0 and

$63

$6.3 and $56

Non-Monetized Benefits

Health benefits associated with emission reductions of 6,053 tpy of HAP including hexane, benzene, methanol, 1,3-butadiene, and vinyl acetate.





Health benefits associated with reduction of 58 tpy of ethylene oxide and 14 tpy of chloroprene.





Ecosystem benefits related to the reductions of ozone and nitrogen and sulfur deposition.





"Discounted to 2023

bRounded to 2 significant figures.

°Benefits are estimated for Ozone, NOx and PM2 5.

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Table 4-77: Undiscounted Benefits Estimates of Ozone-, NOx- and PM2.5-Attributable
Premature Mortality and Illness for the Proposed Option (million 2021$), 2024-2038a'b

3 Percent	7 Percent

Year

2024

$16

$67

$14

$60

2025

$16

$67

$14

$60

2026

$16

$67

$14

$60

2027

$16

$67

$14

$60

2028

$17

$74

$15

$66

2029

$17

$74

$15

$66

2030

$17

$74

$15

$66

2031

$17

$74

$15

$66

2032

$17

$74

$15

$66

2033

$18

$81

$17

$73

2034

$18

$81

$17

$73

2035

$18

$81

$17

$73

2036

$18

$81

$17

$73

2037

$18

$81

$17

$73

2038

$19

$88

$18

$79

a Rounded to 2 significant figures

b Benefits are estimated for Ozone, NOx and PM2 5

4.6 Characterization of Uncertainty in the Monetized Benefits

In any complex analysis using estimated parameters and inputs from a variety of models,
there are likely to be many sources of uncertainty. This analysis is no exception. This analysis
includes many data sources as inputs, including emission inventories, air quality data from
models (with their associated parameters and inputs), population data, population estimates,
health effect estimates from epidemiology studies, economic data for monetizing benefits, and
assumptions regarding the future state of the world {i.e., regulations, technology, and human
behavior). Each of these inputs are uncertain and generate uncertainty in the benefits estimate.
When the uncertainties from each stage of the analysis are compounded, even small uncertainties
can have large effects on the total quantified benefits. Therefore, the estimates of annual benefits
should be viewed as representative of the magnitude of benefits expected, rather than the actual
benefits that would occur every year.

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4.7 Climate Impacts

We estimate the social benefits of GHG reductions expected to occur as a result of the
proposed standards using estimates of the social cost of greenhouse gases (SC-GHG)21,
specifically using the social cost of carbon (SC-CO2), social cost of methane (SC-CH4), and
social cost of nitrous oxide (SC-N2O). The SC-GHG is the monetary value of the net harm to
society associated with a marginal increase in GHG emissions in a given year, or the benefit of
avoiding that increase. In principle, SC-GHG includes the value of all climate change impacts
(both negative and positive), including (but not limited to) changes in net agricultural
productivity, human health effects, property damage from increased flood risk and natural
disasters, disruption of energy systems, risk of conflict, environmental migration, and the value
of ecosystem services. The SC-GHG, therefore, reflects the societal value of reducing emissions
of the gas in question by one metric ton and is the theoretically appropriate value to use in
conducting benefit-cost analyses of policies that affect GHG emissions. In practice, data and
modeling limitations naturally restrain the ability of SC-GHG estimates to include all the
important physical, ecological, and economic impacts of climate change, such that the estimates
are a partial accounting of climate change impacts and will therefore tend to be underestimates of
the marginal benefits of abatement. The EPA and other Federal agencies began regularly
incorporating SC-GHG estimates in their benefit-cost analyses conducted under Executive Order
(E.O.) 1286622 since 2008, following a Ninth Circuit Court of Appeals remand of a rule for
failing to monetize the benefits of reducing GHG emissions in that rulemaking process.

21	Estimates of the social cost of greenhouse gases are gas-specific (e.g., social cost of carbon (SC-CO2), social cost

of methane (SC-CH4), social cost of nitrous oxide (SC-N20)), but collectively they are referenced as the social
cost of greenhouse gases (SC-GHG).

22	Presidents since the 1970s have issued executive orders requiring agencies to conduct analysis of the economic

consequences of regulations as part of the rulemaking development process. E.O. 12866, released in 1993 and
still in effect today, requires that for all significant regulatory actions, an agency provide an assessment of the
potential costs and benefits of the regulatory action, and that this assessment include a quantification of benefits
and costs to the extent feasible. Many statutes also require agencies to conduct at least some of the same
analyses required under E.O. 12866, such as the Energy Policy and Conservation Act, which mandates the
setting of fuel economy regulations. For purposes of this action, monetized climate benefits are presented for
purposes of providing a complete benefit-cost analysis under E.O. 12866 and other relevant executive orders.
The estimates of change in GHG emissions and the monetized benefits associated with those changes play no
part in the record basis for this action.

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In 2017, the National Academies of Sciences, Engineering, and Medicine published a
report that provides a roadmap for how to update SC-GHG estimates used in Federal analyses
going forward to ensure that they reflect advances in the scientific literature (National
Academies, 2017). The National Academies' report recommended specific criteria for future SC-
GHG updates, a modeling framework to satisfy the specified criteria, and both near-term updates
and longer-term research needs pertaining to various components of the estimation process. The
research community has made considerable progress in developing new data and methods that
help to advance various components of the SC-GHG estimation process in response to the
National Academies' recommendations.

In a first-day executive order (E.O. 13990), Protecting Public Health and the
Environment and Restoring Science To Tackle the Climate Crisis, President Biden called for a
renewed focus on updating estimates of the social cost of greenhouse gases (SC-GHG) to reflect
the latest science, noting that "it is essential that agencies capture the full benefits of reducing
greenhouse gas emissions as accurately as possible." Important steps have been taken to begin to
fulfill this directive of E.O. 13990. In February 2021, the Interagency Working Group on the SC-
GHG (IWG) released a technical support document (hereinafter the "February 2021 TSD") that
provided a set of IWG recommended SC-GHG estimates while work on a more comprehensive
update is underway to reflect recent scientific advances relevant to SC-GHG estimation (IWG,
2021). In addition, as discussed further below, EPA has developed a draft updated SC-GHG
methodology within a sensitivity analysis in the regulatory impact analysis of EPA's November
2022 supplemental proposal for oil and gas standards that is currently undergoing external peer
review and a public comment process.23

The EPA has applied the IWG's recommended interim SC-GHG estimates in the
Agency's regulatory benefit-cost analyses published since the release of the February 2021 TSD
and is likewise using them in this RIA. We have evaluated the SC-GHG estimates in the
February 2021 TSD and have determined that these estimates are appropriate for use in
estimating the social benefits of GHG reductions expected to occur as a result of the proposed
and alternative standards. These SC-GHG estimates are interim values developed for use in

23 See https://www.epa.gov/environmental-economics/scghg

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benefit-cost analyses until updated estimates of the impacts of climate change can be developed
based on the best available science and economics. After considering the TSD, and the issues
and studies discussed therein, EPA finds that these estimates, while likely an underestimate, are
the best currently available SC-GHG estimates until revised estimates have been developed
reflecting the latest, peer-reviewed science.

The SC-GHG estimates presented in the February 2021 SC-GHG TSD and used in this
RIA were developed over many years, using a transparent process, peer-reviewed
methodologies, the best science available at the time of that process, and with input from the
public. Specifically, in 2009, an interagency working group (IWG) that included the EPA and
other executive branch agencies and offices was established to develop estimates relying on the
best available science for agencies to use. The IWG published SC-CO2 estimates in 2010 that
were developed from an ensemble of three widely cited integrated assessment models (IAMs)
that estimate global climate damages using highly aggregated representations of climate
processes and the global economy combined into a single modeling framework. The three IAMs
were run using a common set of input assumptions in each model for future population,
economic, and CO2 emissions growth, as well as equilibrium climate sensitivity (ECS)—a
measure of the globally averaged temperature response to increased atmospheric CO2
concentrations. These estimates were updated in 2013 based on new versions of each IAM
(Nordhaus (2010), Anthoff (2013a) and (2013b), Hope (2013)).24 In August 2016,the IWG
published estimates of the social cost of methane (SC-CH4) and nitrous oxide (SC-N2O) using
methodologies that are consistent with the methodology underlying the SC-CO2 estimates. The
modeling approach that extends the IWG SC-CO2 methodology to non-CC>2 GHGs has
undergone multiple stages of peer review. The SC-CH4 and SC-N2O estimates were developed
by Marten, Kopits, Griffiths, Newbold, and Wolverton (2015) and underwent a standard double-
blind peer review process prior to journal publication. These estimates were applied in regulatory
impact analyses of EPA proposed rulemakings with CH4 and N2O emissions impacts.25 The EPA

24	Dynamic Integrated Climate and Economy (DICE), Climate Framework for Uncertainty, Negotiation, and

Distribution (FUND), and Policy Analysis of the Greenhouse Gas Effect (PAGE) 2009

25	The SC-CH4 and SC-N20 estimates were first used in sensitivity analysis for the Proposed Rulemaking for

Greenhouse Gas Emissions and Fuel Efficiency Standards for Medium- and Heavy-Duty Engines and Vehicles-
Phase 2 (U.S. EPA, 2015a).

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also sought additional external peer review of technical issues associated with its application to
regulatory analysis. Following the completion of the independent external peer review of the
application of the Marten et al. (2015) estimates, the EPA began using the estimates in the
primary benefit-cost analysis calculations and tables for a number of proposed rulemakings in
2015 (U.S. EPA, 2015b), (U.S. EPA, 2015c). The EPA considered and responded to public
comments received for the proposed rulemakings before using the estimates in final regulatory
analyses in 2016.26 In 2015, as part of the response to public comments received to a 2013
solicitation for comments on the SC-CO2 estimates, the IWG announced a National Academies
of Sciences, Engineering, and Medicine review of the SC-CO2 estimates to offer advice on how
to approach future updates to ensure that the estimates continue to reflect the best available
science and methodologies. In January 2017, the National Academies released their final report,
Valuing Climate Damages: Updating Estimation of the Social Cost of Carbon Dioxide, and
recommended specific criteria for future updates to the SC-GHG estimates, a modeling
framework to satisfy the specified criteria, and both near-term updates and longer-term research
needs pertaining to various components of the estimation process (National Academies, 2017).
Shortly thereafter, in March 2017, President Trump issued Executive Order 13783, which
disbanded the IWG, withdrew the previous TSDs, and directed agencies to ensure SC-GHG
estimates used in regulatory analyses are consistent with the guidance contained in OMB's
Circular A-4, "including with respect to the consideration of domestic versus international
impacts and the consideration of appropriate discount rates" (E.O. 13783, Section 5(c)). Benefit-
cost analyses following E.O. 13783 used SC-GHG estimates that attempted to focus on the
specific share of climate change damages in the U.S. as captured by the models (which did not
reflect many pathways by which climate impacts affect the welfare of U.S. citizens and
residents) and were calculated using two discount rates recommended by Circular A-4, 3 percent
and 7 percent.27 All other methodological decisions and model versions used in SC-GHG
calculations remained the same as those used by the IWG in 2010 and 2013, respectively.

26	See IWG (2016b) for more discussion of the SC-CH4 and SC-N20 and the peer review and public comment

processes accompanying their development.

27	The EPA regulatory analyses under E.O. 13783 included sensitivity analyses based on global SC-GHG values and

using a lower discount rate of 2.5%. OMB Circular A-4 (OMB, 2003) recognizes that special considerations

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On January 20, 2021, President Biden issued Executive Order 13990, which re-
established an IWG and directed it to develop an update of the social cost of carbon and other
greenhouse gas estimates that reflect the best available science and the recommendations of the
National Academies. In February 2021, the IWG recommended the interim use of the most
recent SC-GHG estimates developed by the IWG prior to the group being disbanded in 2017,
adjusted for inflation (IWG, 2021). As discussed in the February 2021 TSD, the IWG's selection
of these interim estimates reflected the immediate need to have SC-GHG estimates available for
agencies to use in regulatory benefit-cost analyses and other applications that were developed
using a transparent process, peer reviewed methodologies, and the science available at the time
of that process.

As noted above, EPA participated in the IWG but has also independently evaluated the
interim SC-GHG estimates published in the February 2021 TSD and determined they are
appropriate to use here to estimate climate benefits. The EPA and other agencies intend to
undertake a fuller update of the SC-GHG estimates that takes into consideration the advice of the
National Academies (2017) and other recent scientific literature. The EPA has also evaluated the
supporting rationale of the February 2021 TSD, including the studies and methodological issues
discussed therein, and concludes that it agrees with the rationale for these estimates presented in
the TSD and summarized below.

In particular, the IWG found that the SC-GHG estimates used under E.O. 13783 fail to
reflect the full impact of GHG emissions in multiple ways. First, the IWG concluded that those
estimates fail to capture many climate impacts that can affect the welfare of U.S. citizens and
residents. Examples of affected interests include direct effects on U.S. citizens and assets located
abroad, international trade, and tourism, and spillover pathways such as economic and political
destabilization and global migration that can lead to adverse impacts on U.S. national security,

arise when applying discount rates if intergenerational effects are important. In the IWG's 2015 Response to
Comments, OMB—as a co-chair of the IWG—made clear that "Circular A-4 is a living document," that "the use
of 7 percent is not considered appropriate for intergenerational discounting," and that "[t]here is wide support for
this view in the academic literature, and it is recognized in Circular A-4 itself." OMB, as part of the IWG,
similarly repeatedly confirmed that "a focus on global SCC estimates in [regulatory impact analyses] is
appropriate" (IWG, 2015).

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public health, and humanitarian concerns. Those impacts are better captured within global
measures of the social cost of greenhouse gases.

In addition, assessing the benefits of U.S. GHG mitigation activities requires
consideration of how those actions may affect mitigation activities by other countries, as those
international mitigation actions will provide a benefit to U.S. citizens and residents by mitigating
climate impacts that affect U.S. citizens and residents. A wide range of scientific and economic
experts have emphasized the issue of reciprocity as support for considering global damages of
GHG emissions. Using a global estimate of damages in U.S. analyses of regulatory actions
allows the U.S. to continue to actively encourage other nations, including emerging major
economies, to take significant steps to reduce emissions. The only way to achieve an efficient
allocation of resources for emissions reduction on a global basis—and so benefit the U.S. and its
citizens—is for all countries to base their policies on global estimates of damages.

As a member of the IWG involved in the development of the February 2021 SC-GHG
TSD, the EPA agrees with this assessment and, therefore, in this RIA, the EPA centers attention
on a global measure of SC-GHG. This approach is the same as that taken in EPA regulatory
analyses over 2009 through 2016. A robust estimate of climate damages to U.S. citizens and
residents that accounts for the myriad of ways that global climate change reduces the net welfare
of U.S. populations does not currently exist in the literature. As explained in the February 2021
TSD, existing estimates are both incomplete and an underestimate of total damages that accrue to
the citizens and residents of the U.S. because they do not fully capture the regional interactions
and spillovers discussed above, nor do they include all of the important physical, ecological, and
economic impacts of climate change recognized in the climate change literature, as discussed
further below. The EPA, as a member of the IWG, will continue to review developments in the
literature, including more robust methodologies for estimating the magnitude of the various
damages to U.S. populations from climate impacts and reciprocal international mitigation
activities, and explore ways to better inform the public of the full range of carbon impacts.

Second, the IWG concluded that the use of the social rate of return on capital (7 percent
under current OMB Circular A-4 guidance) to discount the future benefits of reducing GHG
emissions inappropriately underestimates the impacts of climate change for the purposes of
estimating the SC-GHG. Consistent with the findings of the National Academies and the

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economic literature, the IWG continued to conclude that the consumption rate of interest is the
theoretically appropriate discount rate in an intergenerational context, and recommended that
discount rate uncertainty and relevant aspects of intergenerational ethical considerations be
accounted for in selecting future discount rates (IWG (2010), (2013), (2016a), (2016b)).28
Furthermore, the damage estimates developed for use in the SC-GHG are estimated in
consumption-equivalent terms, and so an application of OMB Circular A-4's guidance for
regulatory analysis would then use the consumption discount rate to calculate the SC-GHG. EPA
agrees with this assessment and will continue to follow developments in the literature pertaining
to this issue. EPA also notes that while OMB Circular A-4, as published in 2003, recommends
using 3% and 7% discount rates as "default" values, Circular A-4 also reminds agencies that
"different regulations may call for different emphases in the analysis, depending on the nature
and complexity of the regulatory issues and the sensitivity of the benefit and cost estimates to the
key assumptions." On discounting, Circular A-4 recognizes that "special ethical considerations
arise when comparing benefits and costs across generations," and Circular A-4 acknowledges
that analyses may appropriately "discount future costs and consumption benefits.. .at a lower rate
than for intragenerational analysis." In the 2015 Response to Comments on the Social Cost of
Carbon for Regulatory Impact Analysis, OMB, EPA, and the other IWG members recognized
that "Circular A-4 is a living document" and "the use of 7 percent is not considered appropriate
for intergenerational discounting. There is wide support for this view in the academic literature,
and it is recognized in Circular A-4 itself." Thus, EPA concludes that a 7% discount rate is not
appropriate to apply to value the social cost of greenhouse gases in the analysis presented in this
proposal. In this analysis, to calculate the present and annualized values of climate benefits, EPA
uses the same discount rate as the rate used to discount the value of damages from future GHG
emissions, for internal consistency. That approach to discounting follows the same approach that
the February 2021 TSD recommends "to ensure internal consistency—i.e., future damages from

28 GHG emissions are stock pollutants, where damages are associated with what has accumulated in the atmosphere
over time, and they are long lived such that subsequent damages resulting from emissions today occur over many
decades or centuries depending on the specific greenhouse gas under consideration. In calculating the SC-GHG,
the stream of future damages to agriculture, human health, and other market and non-market sectors from an
additional unit of emissions are estimated in terms of reduced consumption (or consumption equivalents). Then
that stream of future damages is discounted to its present value in the year when the additional unit of emissions
was released. Given the long time horizon over which the damages are expected to occur, the discount rate has a
large influence on the present value of future damages.

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climate change using the SC-GHG at 2.5 percent should be discounted to the base year of the
analysis using the same 2.5 percent rate." EPA has also consulted the National Academies' 2017
recommendations on how SC-GHG estimates can "be combined in RIAs with other cost and
benefits estimates that may use different discount rates." The National Academies reviewed
"several options," including "presenting all discount rate combinations of other costs and benefits
with [SC-GHG] estimates."

While the IWG works to assess how best to incorporate the latest, peer reviewed science
to develop an updated set of SC-GHG estimates, it recommended the interim estimates to be the
most recent estimates developed by the IWG prior to the group being disbanded in 2017. The
estimates rely on the same models and harmonized inputs and are calculated using a range of
discount rates. As explained in the February 2021 TSD, the IWG has concluded that it is
appropriate for agencies to revert to the same set of four values drawn from the SC-GHG
distributions based on three discount rates as were used in regulatory analyses between 2010 and
2016 and subject to public comment. For each discount rate, the IWG combined the distributions
across models and socioeconomic emissions scenarios (applying equal weight to each) and then
selected a set of four values for use in agency analyses: an average value resulting from the
model runs for each of three discount rates (2.5 percent, 3 percent, and 5 percent), plus a fourth
value, selected as the 95th percentile of estimates based on a 3 percent discount rate. The fourth
value was included to provide information on potentially higher-than-expected economic impacts
from climate change, conditional on the 3 percent estimate of the discount rate. As explained in
the February 2021 TSD, this update reflects the immediate need to have an operational SC-GHG
that was developed using a transparent process, peer-reviewed methodologies, and the science
available at the time of that process. Those estimates were subject to public comment in the
context of dozens of proposed rulemakings as well as in a dedicated public comment period in
2013.

Table 4-8, Table 4-9, and Table 4-10 summarize the interim SC-CO2, SC-CH4, and SC-
N2O estimates for the years 2024-2038. These estimates are reported in 2020 dollars in the
IWG's 2021 TSD but are otherwise identical to those presented in the IWG's 2016 TSD (IWG,
2021). For purposes of capturing uncertainty around the SC-CO2 estimates in analyses, the
February 2021 TSD emphasizes the importance of considering all four of the SC-CO2 values.
The SC-GHG increases over time within the models {i.e., the societal harm from one metric ton

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emitted in 2030 is higher than the harm caused by one metric ton emitted in 2025) because future
emissions produce larger incremental damages as physical and economic systems become more
stressed in response to greater climatic change, and because GDP is growing over time and many
damage categories are modeled as proportional to GDP.

Table 4-8: Interim Social Cost of Carbon Values, 2024-2038 (2021$/Metric Ton CO2)	

Emissions Year	Discount Rate and Statistic



5% Average

3% Average

2.5% Average

3% 95th
Percentile

2024

$17

$58

$85

$173

2025

$18

$59

$86

$176

2026

$18

$60

$88

$180

2027

$19

$61

$89

$184

2028

$19

$62

$90

$187

2029

$20

$63

$92

$191

2030

$20

$64

$93

$194

2031

$21

$66

$95

$198

2032

$21

$67

$96

$202

2033

$22

$68

$97

$206

2034

$23

$69

$99

$210

2035

$23

$70

$100

$214

2036

$24

$71

$102

$218

2037

$24

$73

$103

$222

2038

$25

$74

$105

$226

Note: These SC-CO2 values are identical to those reported in the 2016 TSD (IWG, 2016a) adjusted to 2021 dollars
using the annual GDP Implicit Price Deflator values in the U.S. Bureau of Economic Analysis' (BEA) NIPA Table
1.1.9 (U.S. BEA 2022). This table displays the values rounded to the nearest dollar; the annual unrounded values
used in the calculations in this analysis are available on OMB's website:
https://www.whiteh0use.g0v/0mb/inf0rmati0n-regulat0rv-affairs/regulat0rv-matters/#scghgs.

Source: Technical Support Document: Social Cost of Carbon, Methane, and Nitrous Oxide Interim Estimates under
Executive Order 13990 (IWG 2021)

Table 4-9: Interim Social Cost of Methane Values, 2024-2038 (2021$ /Metric Ton CH4)
Emissions Year	Discount Rate and Statistic



5% Average

3% Average

2.5% Average

3% 95th
Percentile

2024

$807

$1,742

$2,265

$4,604

2025

$835

$1,791

$2,323

$4,737

2026

$864

$1,840

$2,381

$4,871

2027

$892

$1,889

$2,439

$5,005

2028

$920

$1,938

$2,496

$5,139

2029

$949

$1,987

$2,554

$5,272

2030

$977

$2,036

$2,612

$5,406

2031

$1,013

$2,093

$2,678

$5,566

2032

$1,049

$2,151

$2,745

$5,726

2033

$1,084

$2,209

$2,811

$5,887

2034

$1,120

$2,266

$2,878

$6,047

2035

$1,156

$2,324

$2,945

$6,207

2036

$1,192

$2,382

$3,011

$6,367

2037

$1,228

$2,439

$3,078

$6,527

2038

$1,263

$2,497

$3,144

$6,687

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Note: These SC-CH4 values are identical to those reported in the 2016 TSD (IWG, 2016a) adjusted to 2021 dollars
using the annual GDP Implicit Price Deflator values in the U.S. Bureau of Economic Analysis' (BEA) NIPA Table
1.1.9 (U.S. BEA 2022). This table displays the values rounded to the nearest dollar; the annual unrounded values
used in the calculations in this analysis are available on OMB's website:
https://www.whitehouse.gOv/omb/information-regulatorv-affairs/regulatorv-matters/#scghgs.

Source: Technical Support Document: Social Cost of Carbon, Methane, and Nitrous Oxide Interim Estimates under
Executive Order 13990 (IWG 2021)

Table 4-10: Interim Social Cost of Nitrous Oxide Values, 2024-2038 (2021$ /Metric Ton

NiO)	

Emissions Year	Discount Rate and Statistic



5% Average

3% Average

2.5% Average

3% 95th
Percentile

2024

$6,861

$20,991

$30,578

$55,293

2025

$7,071

$21,446

$31,157

$56,550

2026

$7,282

$21,901

$31,737

$57,808

2027

$7,492

$22,357

$32,317

$59,066

2028

$7,702

$22,812

$32,897

$60,324

2029

$7,913

$23,267

$33,477

$61,582

2030

$8,123

$23,722

$34,057

$62,840

2031

$8,381

$24,235

$34,693

$64,256

2032

$8,639

$24,747

$35,330

$65,671

2033

$8,897

$25,259

$35,967

$67,087

2034

$9,155

$25,772

$36,604

$68,502

2035

$9,413

$26,284

$37,241

$69,918

2036

$9,671

$26,797

$37,877

$71,333

2037

$9,929

$27,309

$38,514

$72,749

2038

$10,187

$27,821

$39,151

$74,165

Note: These SC-N20 values are identical to those reported in the 2016 TSD (IWG, 2016a) adjusted to 2021 dollars
using the annual GDP Implicit Price Deflator values in the U.S. Bureau of Economic Analysis' (BEA) NIPA Table
1.1.9 (U.S. BEA 2022). This table displays the values rounded to the nearest dollar; the annual unrounded values
used in the calculations in this analysis are available on OMB's website:
https://www.whitehouse.gOv/omb/information-regulatorv-affairs/regulatorv-matters/#scghgs.

Source: Technical Support Document: Social Cost of Carbon, Methane, and Nitrous Oxide Interim Estimates under
Executive Order 13990 (IWG 2021)

There are a number of limitations and uncertainties associated with the SC-GHG
estimates presented in Table 4-8, Table 4-9, and Table 4-10. Some uncertainties are captured
within the analysis, while other areas of uncertainty have not yet been quantified in a way that
can be modeled. Figure 4-1, Figure 4-2, and Figure 4-3 present the quantified sources of
uncertainty in the form of frequency distributions for the SC-CO2, SC-CH4, and SC-N2O
estimates for emissions in 2030 (in 2021$). The distribution of the SC-CO2 estimate reflects
uncertainty in key model parameters such as the equilibrium climate sensitivity, as well as
uncertainty in other parameters set by the original model developers. To highlight the difference
between the impact of the discount rate and other quantified sources of uncertainty, the bars
below the frequency distributions provide a symmetric representation of quantified variability in

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* E.O. 12866 Review - Draft - Do Not Cite, Quote, or Release During Review *

the SC-CO2 estimates for each discount rate. As illustrated by the figure, the assumed discount
rate plays a critical role in the ultimate estimate of the SC-CO2. This is because CO2 emissions
today continue to impact society far out into the future, so with a higher discount rate, costs that
accrue to future generations are weighted less, resulting in a lower estimate. As discussed in the
February 2021 TSD, there are other sources of uncertainty that have not yet been quantified and
are thus not reflected in these estimates.

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CO UJ1

I °

5% Average = $20

3% Average = $65

i

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12.5% Average = $93



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95th Pet = $195

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Q 5.0%

~	3.0%

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i	I 5th - 95"1 Percentile

1 of Simulations

n—n—n—n—n—n—n—n—m—n—n—n—m—n—n—n—n—n—n—n—m—n—n—rr
0 20 40 60 80 1 00 120 140 160 180 200 220 240 260 280 300 320 340

Social Cost of Carbon in 2030 [2021$ / metric ton C02]

Figure 4-1: Frequency Distribution of SC-CO2 Estimates for 203029



1 2

3% Average = SJOOO

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Figure 4-2: Frequency Distribution of SC-CH-t Estimates for 2G3030

29 Although the distributions and numbers are based on the full set of model results (150,000 estimates for each
discount rate and gas), for display purposes the horizontal axis is truncated with 0.47 to 0.89 percent of the
estimates falling below the lowest bin displayed and 0.30 to 3.7 percent of the estimates falling above the highest
bin displayed, depending on the discount rate and GHG.

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E.O. 12866 Review - Draft - Do Not Cite, Quote, or Release During Review

a

e

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Figure 4-3: Frequency Distribution of SC-N2O Estimates for 203031

The interim SC-GHG estimates presented in Table 4-8, Table 4-9, and Table 4-10 have a

number of limitations. First, the current scientific and economic understanding of discounting
approaches suggests discount rates appropriate for intergenerational analysis in the context of
climate change are likely to be less than 3 percent, near 2 percent or lower (IWG, 2021). Second,
the IAMs used to produce these interim estimates do not include all of the important physical,
ecological, and economic impacts of climate change recognized in the climate change literature
and the science underlying their "damage functions" - i.e., the core parts of the IAMs that map
global mean temperature changes and other physical impacts of climate change into economic
(both market and nonmarket) damages - lags behind the most recent research. For example,
limitations include the incomplete treatment of catastrophic and non-catastrophic impacts in the
integrated assessment models, their incomplete treatment of adaptation and technological
change, the incomplete way in which inter-regional and intersectoral linkages are modeled,
uncertainty in the extrapolation of damages to high temperatures, and inadequate representation

311 Although the distributions and numbers are based on the full set of model results (150,000 estimates for each
discount rate and gas), for display purposes the horizontal axis is truncated with 0.018 to 0.106 percent of the
estimates falling below the lowest bin displayed and 0.42 to 2.88 percent of the estimates falling above the
highest bin displayed, depending on the discount rate and GHG.

31 Although the distributions and numbers are based on the full set of model results (150,000 estimates for each
discount rate and gas), for display purposes the horizontal axis is truncated with 0.036 to 0.098 percent of the
estimates falling below the lowest bin displayed and 0.072 to 2.9 percent of the estimates falling above the
highest bin displayed, depending on the discount rate and GHG.

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* E.O. 12866 Review - Draft - Do Not Cite, Quote, or Release During Review *

of the relationship between the discount rate and uncertainty in economic growth over long time
horizons. Likewise, the socioeconomic and emissions scenarios used as inputs to the models do
not reflect new information from the last decade of scenario generation or the full range of
projections.

The modeling limitations do not all work in the same direction in terms of their influence
on the SC-GHG estimates. However, as discussed in the February 2021 TSD, the IWG has
recommended that, taken together, the limitations suggest that the SC-CO2 estimates used in this
rule likely underestimate the damages from GHG emissions. EPA concurs that the values used in
this RIA conservatively underestimate the rule's climate benefits. In particular, the
Intergovernmental Panel on Climate Change (IPCC) Fourth Assessment Report, which was the
most current IPCC assessment available at the time when the IWG decision over the ECS input
was made, concluded that SC-GHG estimates "very likely.. .underestimate the damage costs"
due to omitted impacts (IPCC, 2007). Since then, the peer-reviewed literature has continued to
support this conclusion, as noted in the IPCC's Fifth Assessment report and other recent
scientific assessments (IPCC, 2014), (IPCC, 2018), (IPCC, 2019a), (IPCC, 2019b), (USGCRP,
2016), (USGCRP, 2018), (National Academies, 2016b), (National Academies, 2019). These
assessments confirm and strengthen the science, updating projections of future climate change
and documenting and attributing ongoing changes. For example, sea level rise projections from
the IPCC's Fourth Assessment report ranged from 18 to 59 centimeters by the 2090s relative to
1980-1999, while excluding any dynamic changes in ice sheets due to the limited understanding
of those processes at the time. A decade later, the Fourth National Climate Assessment projected
a substantially larger sea level rise of 30 to 130 centimeters by the end of the century relative to
2000, while not ruling out even more extreme outcomes. EPA has reviewed and considered the
limitations of the models used to estimate the interim SC-GHG estimates and concurs with the
February 2021 SC-GHG TSD's assessment that, taken together, the limitations suggest that the
interim SC-GHG estimates likely underestimate the damages from GHG emissions.

The February 2021 TSD briefly previews some of the recent advances in the scientific
and economic literature that the IWG is actively following and that could provide guidance on,
or methodologies for, addressing some of the limitations with the interim SC-GHG estimates.
The IWG is currently working on a comprehensive update of the SC-GHG estimates taking into
consideration recommendations from the National Academies of Sciences, Engineering and

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Medicine, recent scientific literature, public comments received on the February 2021 TSD and
other input from experts and diverse stakeholder groups (National Academies, 2017). While that
process continues, the EPA is continuously reviewing developments in the scientific literature on
the SC-GHG, including more robust methodologies for estimating damages from emissions, and
looking for opportunities to further improve SC-GHG estimation going forward. Most recently,
the EPA presented a draft set of updated SC-GHG estimates within a sensitivity analysis in the
regulatory impact analysis of the EPA's November 2022 supplemental proposal for oil and gas
standards that that aims to incorporate recent advances in the climate science and economics
literature. Specifically, the draft updated methodology incorporates new literature and research
consistent with the National Academies near-term recommendations on socioeconomic and
emissions inputs, climate modeling components, discounting approaches, and treatment of
uncertainty, and an enhanced representation of how physical impacts of climate change translate
to economic damages in the modeling framework based on the best and readily adaptable
damage functions available in the peer reviewed literature. The EPA solicited public comment on
the sensitivity analysis and the accompanying draft technical report, which explains the
methodology underlying the new set of estimates, in the docket for the proposed Oil and Gas
rule. The EPA is also conducting an external peer review of this technical report. More
information about this process and public comment opportunities is available on EPA's website.32
EPA's draft technical report will be among the many technical inputs available to the IWG as it
continues its work.

Table 4-11 show the estimated monetary value of the estimated changes in CO2, CH4,
N2O, and total GHG emissions expected to occur over 2024 through 2038 for this proposal. The
EPA estimated the dollar value of the GHG-related effects for each analysis year between 2024
and 2038 by applying the SC-GHG estimates presented in Table 4-8, Table 4-9, and Table 4-10
to the estimated changes in GHG emissions in the corresponding year as shown in Chapter 3.
The EPA then calculated the present value (PV) and equivalent annualized value (EAV) of

32 See https://www.epa.gov/environmental-economics/scghg

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benefits from the perspective of 2023 by discounting each year-specific value to the year 2023
using the same discount rate used to calculate the SC-GHG.33

33 According to OMB's Circular A-4 (OMB, 2003), an "analysis should focus on benefits and costs that accrue to
citizens and residents of the United States", and international effects should be reported, but separately. Circular
A-4 also reminds analysts that "[different regulations may call for different emphases in the analysis, depending
on the nature and complexity of the regulatory issues." To correctly assess the total climate damages to U.S.
citizens and residents, an analysis should account for all the ways climate impacts affect the welfare of U.S.
citizens and residents, including how U.S. GHG mitigation activities affect mitigation activities by other
countries, and spillover effects from climate action elsewhere. The SC-GHG estimates used in regulatory
analysis under revoked EO 13783 were a limited approximation of some of the U.S. specific climate damages
from GHG emissions. These estimates range from $8 per metric ton CO2, $222 per metric ton CH4, and $2,594
per ton N20 (2021 dollars) using a 3 percent discount rate for emissions occurring in 2024 to $10 per metric ton
CO2, $315 per metric ton CH4, and $3,408 per ton N20 using a 3 percent discount rate for emissions occurring in
2038. Applying the same estimate (based on a 3% discount rate) to the GHG emissions reduction expected under
this proposed rule would yield benefits from climate impacts within U.S borders of -$5.8 million in 2024,
increasing to -$7.4 million in 2038 for CO2, $5 million in 2024, increasing to $7.2 million in 2038 for CH4, and -
$0,018 million in 2024, increasing to -$0,023 million in 2038 for N2O. However, as discussed at length in the
IWG's February 2021 SC-GHG TSD, these estimates are an underestimate of the benefits of GHG mitigation
accruing to U.S. citizens and residents, as well as being subject to a considerable degree of uncertainty due to the
manner in which they are derived. In particular, as discussed in this analysis, EPA concurs with the assessment in
the February 2021 SC-GHG TSD that the estimates developed under revoked E.O. 13783 did not capture
significant regional interactions, spillovers, and other effects and so are incomplete underestimates. As the U.S.
Government Accountability Office (GAO) concluded in a June 2020 report examining the SC-GHG estimates
developed under E.O. 13783, the models "were not premised or calibrated to provide estimates of the social cost
of carbon based on domestic damages" p.29 (U.S. GAO, 2020). Further, the report noted that the National
Academies found that country-specific social costs of carbon estimates were "limited by existing methodologies,
which focus primarily on global estimates and do not model all relevant interactions among regions" p.26 (U.S.
GAO, 2020). It is also important to note that the SC-GHG estimates developed under E.O. 13783 were never
peer reviewed, and when their use in a specific regulatory action was challenged, the U.S. District Court for the
Northern District of California determined that use of those values had been "soundly rejected by economists as
improper and unsupported by science," and that the values themselves omitted key damages to U.S. citizens and
residents including to supply chains, U.S. assets and companies, and geopolitical security. The Court found that
by omitting such impacts, those estimates "fail[ed] to consider.. .important aspect[s] of the problem" and
departed from the "best science available" as reflected in the global estimates. California v. Bernhardt, 472 F.
Supp. 3d 573, 613-14 (N.D. Cal. 2020). The EPA continues to center attention in this analysis on the global
measures of the SC-GHG as the appropriate estimates given the flaws in the U.S. specific estimates, and as
necessary for all countries to use to achieve an efficient allocation of resources for emissions reduction on a
global basis, and so benefit the U.S. and its citizens.

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Table 4-11: Monetized Benefits of Estimated CO2, CH4, N2O Changes of the Proposed HON Amendments, P&R I and P&R II

NESHAP and Subpart Wb, Ilia, NNNa, and RRRa NSPS Amendments, 2024-2038, (million 2021$)



sc-co2

(Millions

of 2021$)





SC-CH4 (Millions

of 2021$)





SC-N20 (Millions of 2021$)



Year

Discount rate and statistic

5% 3% 2.5%
Average Average Average

3% 95th
Percentile

5%
Average

Discount rate and statistic

3% 2.5%
Average Average

3% 95th
Percentile

5%
Average

Discount rate and statistic

3% 2.5%
Average Average

3% 95th
Percentile

2024

$(13)

$(43)

$(63)

$(128)

$19

$40

$52

$106

$(0.05)

$(0.14)

$(0.21)

$(0.38)

2025

$(13)

$(44)

$(64)

$(131)

$19

$41

$53

$109

$(0.05)

$(0.15)

$(0.21)

$(0.39)

2026

$(13)

$(44)

$(65)

$(133)

$20

$42

$55

$112

$(0.05)

$(0.15)

$(0.22)

$(0.40)

2027

$(14)

$(45)

$(66)

$(136)

$20

$43

$56

$115

$(0.05)

$(0.15)

$(0.22)

$(0.41)

2028

$(14)

$(46)

$(67)

$(139)

$21

$44

$57

$118

$(0.05)

$(0.16)

$(0.23)

$(0.41)

2029

$(15)

$(47)

$(68)

$(141)

$22

$46

$59

$121

$(0.05)

$(0.16)

$(0.23)

$(0.42)

2030

$(15)

$(48)

$(69)

$(144)

$22

$47

$60

$124

$(0.06)

$(0.16)

$(0.23)

$(0.43)

2031

$(15)

$(49)

$(70)

$(147)

$23

$48

$61

$128

$(0.06)

$(0.17)

$(0.24)

$(0.44)

2032

$(16)

$(49)

$(71)

$(150)

$24

$49

$63

$131

$(0.06)

$(0.17)

$(0.24)

$(0.45)

2033

$(16)

$(50)

$(72)

$(153)

$25

$51

$65

$135

$(0.06)

$(0.17)

$(0.25)

$(0.46)

2034

$(17)

$(51)

$(73)

$(156)

$26

$52

$66

$139

$(0.06)

$(0.18)

$(0.25)

$(0.47)

2035

$(17)

$(52)

$(74)

$(159)

$27

$53

$68

$142

$(0.06)

$(0.18)

$(0.26)

$(0.48)

2036

$(18)

$(53)

$(75)

$(162)

$27

$55

$69

$146

$(0.07)

$(0.18)

$(0.26)

$(0.49)

2037

$(18)

$(54)

$(76)

$(165)

$28

$56

$71

$150

$(0.07)

$(0.19)

$(0.26)

$(0.50)

2038

$(19)

$(55)

$(77)

$(168)

$29

$57

$72

$153

$(0.07)

$(0.19)

$(0.27)

$(0.51)

NPV

($149)

($558)

($842)

($1,690)

$225

$552

$738

$1,469

($1)

($2)

($3)

($5)

EAV

$(15)

$(48)

$(70)

$(146)

$23

$48

$61

$127

($0.1)

($0.2)

($0.2)

($0.4)

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4.8 Total Monetized Benefits

Table 4-12 through Table 4- present a summary of monetized benefits for the proposed
amendments to rules included in this rulemaking, both individually and cumulatively. Net
benefits in each table are calculated as the sum of health benefits and climate benefits (including
climate disbenefits). Benefits related to both short- and long-term exposure of ozone are
estimated. Tables presenting benefits list both estimates, with short-term exposure benefits listed
first. A complete presentation of benefits relative to costs appears in Chapter 6 of this RIA. We
note, as we mentioned in Chapter 1, that there are minimal monetized benefits for the proposed
P&R II amendments, and hence there is no table of benefits for this proposed rule below. In
addition, the benefits for the Subpart VVb and Ilia, NNNa, and RRRa NSPS proposals are the
same for the less and more stringent options, and thus those estimates are already presented
earlier in this chapter. Hence, there is no table of benefits for each of these proposed rules below.

Table 4-12: Summary of Monetized Benefits PV/EAV for the Proposed HON Amendments,
2024-2038, (million 2021$), Discounted to 2023	

Proposal	Less Stringent Alternative More Stringent Alternative

3%

PV

EAV

PV

EAV

PV

EAV



$78

$6.5

$52

C/l A 0nH

$228

$19

Monetized Health Benefits

and

and

and

.ph-.h- dim

and

and



$690

$58

$427

4>JO

$1,900

$160

Climate Disbenefits

$(25.4)

$(2.1)

$(25.4)

$(2.1)

$(25.4)

$(2.1)



$103

$8.6

$77

$6.5

$253

$21

Net Benefits

and

and

and

and

and

and



$715

$60

$452

$38

$1,925

$162

7%















$111

$12

$32

$3.5

$137

$15

Monetized Health Benefits

and

and

and

and

and

and



$900

$99

$256

$28

$1,100

$120

Climate Disbenefits (3%)

$(25.4)

$(2.1)

$(25.4)

$(2.1)

$(25.4)

$(2.1)



$136

$14.1

$57.4

$5.6

$162

$17

Net Benefits

and

and

and

and

and

and



$925

$101

$281

$30

$1,125

$122

Note: Monetized air-quality related health benefits include ozone related health benefits associated with reductions
in VOC emissions. The health benefits are associated with several point estimates and are presented at real discount
rates of 3 and 7 percent. The two benefits estimates are separated by the word "and" to signify that they are two
separate estimates. The estimates do not represent lower- and upper-bound estimates. Benefits from HAP reductions
and VOC reductions outside of the ozone season remain unmonetized and are thus not reflected in the table. The
unmonetized effects also include disbenefits resulting from a secondary increase in CO emissions. Monetized
climate benefits and disbenefits are based on changes (increases) in CO2 and N20 emissions and decreases in CH4
emissions and are calculated using four different estimates of the social cost of each greenhouse gas (SC-GHG)

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(model average at 2.5 percent, 3 percent, and 5 percent discount rates; 95th percentile at 3 percent discount rate). For
the presentational purposes of this table, we show the benefits and disbenefits associated with the model average
SC-GHGat a 3 percent discount rate, but the Agency does not have a single central SC-GHG point estimate. We
emphasize the importance and value of considering the benefits and disbenefits calculated using all four SC-GHG
estimates; please see Table 4-11 for the full range of SC-GHG estimates. As discussed in Chapter 4, a consideration
of climate benefits and disbenefits calculated using discount rates below 3 percent, including 2 percent and lower, is
also warranted when discounting intergenerational impacts.

The costs included in estimates of net benefits in this table are 2024 annual estimates. Parentheses around a number
denotes a negative value. Negative climate disbenefits is a positive value. Rows may not appear to add correctly due
to rounding.

Table 4-13: Summary of Monetized Benefits PV/EAV for the Proposed P&R I
Amendments, 2024-2038, (million 2021$), Discounted to 2023	

Proposal

Less Stringent
Alternative

More Stringent
Alternative

3%

PV

EAV

PV

EAV

PV

EAV

Monetized Health

$2.6
and

$23

$0.22 and

$2.6
and

$23

$0.22
and
$1.9

$4
and

$36

$0.34
and
$3.0

Benefits

$1.9

Climate Disbenefits

$40.5

$3.4

$40.5

$3.4

$40.5

$3.4

Net Benefits

$(38)
and
$(18)

$(3)
and
$(1)

$(38)
and
$(18)

$(3)
and
$(1)

$(36) and
$(4.5)

$(2.7) and
$(0.4)

7%

Monetized Health
Benefits

Climate Disbenefits

(3%)

Net Benefits

$1.8

$0.19

$1.8

$0.19

$2.7

$0.3

and

and

and

and

and

and

$16

$1.7

$16

$1.7

$24

$2.7

$40.5

$3.4

$40.5

$3.4

$40.5

$3.4

$(39)

$(3.2)

$(39)

$(3.2)

$(37)

$(3.1)

and

and

and

and

and

and

$(25)

$(1.7)

$(25)

$(1.7)

$(17)

$(0.7)

Note: Monetized benefits include ozone related health benefits associated with reductions in VOC emissions. The
health benefits are associated with several point estimates and are presented at real discount rates of 3 and 7 percent.
The two benefits estimates are separated by the word "and" to signify that they are two separate estimates. The
estimates do not represent lower- and upper-bound estimates. Benefits from HAP reductions and VOC reductions
outside of the ozone season remain unmonetized and are thus not reflected in the table. The unmonetized effects also
include disbenefits resulting from a secondary increase in CO emissions. Monetized climate benefits and disbenefits
are based on changes (increases) in CO2 and N20 emissions and decreases in CH4 emissions are calculated using
four different estimates of the social cost of carbon (SC-GHG) (model average at 2.5 percent, 3 percent, and 5
percent discount rates; 95th percentile at 3 percent discount rate). For the presentational purposes of this table, we
show the benefits and disbenefits associated with the model average SC-GHG at a 3 percent discount rate, but the
Agency does not have a single central SC-GHG point estimate. We emphasize the importance and value of
considering the benefits and disbenefits calculated using all four SC-GHG estimates; please see Table 4-11 for the
full range of SC-GHG estimates. As discussed in Chapter 4, a consideration of climate benefits and disbenefits
calculated using discount rates below 3 percent, including 2 percent and lower, is also warranted when discounting
intergenerational impacts. The costs included in estimates of net benefits in this table are 2024 annual estimates.
Parentheses around a number denotes a negative value. Negative climate disbenefits are a positive value. Rows may
not appear to add correctly due to rounding.

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Table 4-14: Summary of Monetized Benefits PV/EAV for the Cumulative Impact of the
Proposed HON Amendments, P&R I and P&R II NESHAP and Subpart Wb, Ilia, NNNa,
and RRRa NSPS Amendments, 2024-2038, (million 2021$), Discounted to 2023	

	Proposal	Less Stringent Alternative More Stringent Alternative

	3%	PV	EAV	PV	EAV	PV	EAV

$84	$7.0	$81	$7.0	$85	$7.0

Health Benefits	and	and	and	and	and	and

$730	$63	$729	$63	$760	$63

Climate Disbenefits	$8.2	$0.7	$8.2	$0.7	$8.2	$0.7

$76 $6.3 $73 $2.1 $77 $6.3
Net Benefits and and and and and and
	$722	$62	$721	$34	$758	$57

7%

$56	$6.1	$55	$6.3	$58	$6.3

Health Benefits	and	and	and	and	and	and

$490	$54	$490	$56	$520	$56

Climate Disbenefits (3%) $8.2	$0.7	$8.2	$0.7	$8.2	$0.7

$48	$5.4	$47	$5.6	$50	$5.6

Net Benefits	and	and	and	and	and	and

	$482	$53	$482	$55	$512	$55

Non-Monetized Benefits

Health benefits associated with emission reductions of 6,053 tpy of HAP including hexane, benzene, methanol, 1,3-
butadiene and vinyl acetate.

Health benefits associated with reduction of 58 tpy of ethylene oxide and 14 tpy of chloroprene.

Ecosystem benefits related to the reductions of ozone and nitrogen and sulfur deposition.	

Note: Monetized benefits include ozone related health benefits associated with reductions in VOC emissions. The
health benefits are associated with several point estimates and are presented at real discount rates of 3 and 7 percent.
The two benefits estimates are separated by the word "and" to signify that they are two separate estimates. The
estimates do not represent lower- and upper-bound estimates. Benefits from HAP reductions and VOC reductions
outside of the ozone season remain unmonetized and are thus not reflected in the table. The unmonetized effects also
include disbenefits resulting from a secondary increase in CO emissions. Monetized climate benefits and disbenefits
are based on changes (increases) in CO2 and N20 emissions and decreases in CH4 emissions and are calculated using
four different estimates of the social cost of each greenhouse gas (SC-GHG) (model average at 2.5 percent, 3
percent, and 5 percent discount rates; 95th percentile at 3 percent discount rate). For the presentational purposes of
this table, we show the benefits and disbenefits (including net benefits) associated with the average SC-GHG at a 3
percent discount rate, but the Agency does not have a single central SC-GHG point estimate. We emphasize the
importance and value of considering the benefits and disbenefits calculated using all four SC-GHG estimates; please
see Table 4-11 for the full range of SC-GHG estimates. As discussed in Chapter 4, a consideration of climate
benefits and disbenefits calculated using discount rates below 3 percent, including 2 percent and lower, is also
warranted when discounting intergenerational impacts. The costs included in estimates of net benefits in this table
are 2024 annual estimates. A number with parentheses around it is a negative value. Negative climate disbenefits are
a positive value. Rows may not appear to add correctly due to rounding.

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5 ECONOMIC IMPACT ANALYSIS

5.1	Introduction

The proposed amendments to the NESHAP for the HON constitute a significant action
according to Executive Order 12866. As discussed in the previous section, the emissions reductions
projected under the action are projected to produce substantial VOC health benefits. At the same
time, these proposed HON amendments are projected to result in environmental control expenditures
by the synthetic organic chemical manufacturing sector to comply with the rule. The proposed
amendments to the NESHAPs for P&R Group I and II, and their respective NSPS subparts (III,
NNN, RRR, & VV) are not projected to be significant, but they also are expected to result in VOC
health benefits and increased environmental control expenditures.

Economic impact analyses focus on changes in market prices and output levels. If
changes in market prices and output levels in the primary markets are significant enough,
impacts on other markets may also be examined. Both the magnitude of costs needed to comply
with a proposed rule and the distribution of these costs among affected facilities can have a role
in determining how the market will change in response to a rule. This chapter analyzes three sets
of economic impact, small entity, and distributional analyses for each individual rule included in
this proposal action directed toward complementing the benefit-cost analysis and includes a
partial equilibrium analysis of market impacts of three sets of NESHAP amendments from this
rule package, analysis of impacts to potentially affected small entities, and employment impacts.

5.2	Economic Impact Analysis

This section summarizes the economic analysis of environmental control costs for the
synthetic organic chemicals manufacturing industries (SOCMI). This analysis models the impact
of two sets of control costs for three different proposed NESHAP amendments for the HON and
P&R Group I and II, specifically. The analysis does not include economic impacts calculated for
four proposed New Source Performance Standards (NSPS) - subparts III, NNN, RRR, and VV -
that are part of the same rulemaking in which the three different NESHAP are also included.

This section outlines the data and sources used to calibrate and parameterize a simplified
partial equilibrium model representing elastic domestic and foreign sources of supply and a

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single domestic consumer with elastic preferences. The model uses different cost shocks,
including domestic compliance costs, foreign inflation, and combinations.

Economic analysis was conducted for seven synthetic organic chemicals in the SOCMI
list. These chemicals were selected for their relative market size and the availability of data to
conduct the economic analysis. The seven chemicals for which market analysis was conducted
are butadiene, styrene, acrylonitrile, acetone, ethylene dichloride, ethylene glycol, and ethylene
oxide.

5.3 Description of Approach/Model/Framework

5.3.1.1	Data Limitations

There were several limitations to data inputs for the economic modeling, including the

availability of production data, the allocation of the control costs from facilities to individual
chemical markets, and the ability to find specific market dynamics (elasticity) data. For
production data, the primary source for most of the chemicals in this analysis included the
American Fuel & Petrochemical Manufacturers (AFPM) Petrochemical Statistics dataset
published in the first quarter of 2022.

For cost data, control costs were calculated by facility, but little detail was initially
available on facility-level production, such as chemical or quantities produced. To allocate the
control costs to specific chemicals, data was sourced from Securities and Exchange Commission
(SEC) filings, company websites, and specific industry reports to identify chemicals produced at
each facility to support the method for cost allocation from facilities to individual chemical
markets for the partial equilibrium analysis.

For market supply and demand elasticities, no sources of previous SOCMI modeling
were found, so elasticities were assigned to chemicals based on markets associated with end use
products for the chemicals (such as different types of plastics or PVC piping).

These limitations are discussed more in detail in the following two subsections.

5.3.1.2	Benchmark Data

There are approximately 400 synthetic organic chemicals, nearly all of which are

contained within a single 6-digit North American Industry Classification System (NAICS) code
(325199). A detailed description of the approximately 25 largest SOCMI markets is contained in

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the SOCMI Industry Profile prepared for this proposed action.34 The main limitation of collecting
data for the industry profile was a lack of domestic production for each of the synthetic organic
chemicals.

Trade data do, however, provide more granular information on products via harmonized
system (HS) commodity codes. For the economic analysis, we selected seven of the largest
SOCMI sectors, drawing domestic production quantities from the AFPM Petrochemical
Statistics dataset, prices from Intratec commodities data (Intratec, 2023), and trade quantities
from the United Nations "Comtrade" dataset (United Nations, 2022). Table 5-1 summarizes the
physical quantities and prices for each of the seven chemicals included in the analysis.

Table 5-1: Prices, Production, and Trade Quantities for the Seven Synthetic Organic
Chemical Commodities Selected (in Metric Tons)	

Chemical

U.S. Production
(tonnes)

Exports
(tonnes)

Imports
(tonnes)

Price
($/tonne)

Butadiene

1,218,232

46,261

391,496

1,220

Styrene

3,659,415

1,099,780

211,776

1,841

Acrylonitrile

848,390

529,330

9,003

1,040

Acetone

1,514,800

42,229

84,459

1,839

Ethylene dichloride

9,731,200

727,454

475

723

Ethylene glycol

1,578,142

1,269,166

236,920

1,220

Ethylene oxide

2,400,027

928

5

1,486

5.3.1.3 Control Data

Control cost data are available for 225 facilities subject to HON or P&R I, not including

the value of product recovery, which occurs in the HON and P&R I cost analyses due to
detection and repair of equipment leaks. Inclusion of the value of product recovery would lead to
double counting of impacts from a social welfare perspective. More information on how product
recovery is estimated and monetized can be found in Section 3.3 of this RIA. The control cost
data did not include the production processes or a detailed accounting of chemicals produced at
the facilities. To develop a method to allocate the control costs to specific chemicals, we
reviewed annual SEC filings (for most companies the 2021 10-k Report) and facility websites for
all facilities to identify the chemicals produced at the facility. We found general information

34 RTI International. SOCMI Industry Profile. Prepared for the U.S. EPA. July 2022.

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about the types of chemicals produced at 116 (51 percent) of those facilities and more detailed
production data by chemical names for 79 (36 percent) of the facilities.

For the 79 facilities with the best {i.e., most complete) chemical production data, we used
this information to identify which of the facilities were producing butadiene, styrene,
acrylonitrile, and acetone. We allocated the control costs to these chemicals at the 79 facilities by
equally distributing the control costs based on the total number of chemicals identified in
production at that facility. The control costs for each chemical were then scaled up to the entire
population based on the percentage of total control costs represented in the population of 79
facilities with specific chemical data.

For ethylene dichloride, ethylene glycol, and ethylene oxide, we reviewed publicly
available reports to identify facilities that produced each specific chemical and then allocated a
portion of the facility's HON costs to their production. The P&R costs apply only to polymers
and resin products, so only HON costs were relevant for these three chemicals. For ethylene
di chloride, a technical report on the conditions of use for ethylene di chloride listed the 15
facilities producing ethylene dichloride in the United States in 2018 (Material Research L3C,
2019). We allocated half of the HON control costs at each of these facilities to ethylene
dichloride because most of these facilities are PVC production facilities, and ethylene dichloride
is one of the two major chemical inputs, but there was not enough data to determine how much
of the HON costs would be applied to the other chemicals produced.

The ethylene oxide facilities were identified from a Bloomberg Law article (Saiyid,
2019) that listed the top 16 sources of ethylene oxide emissions, 10 of which were production
facilities and the other 6 were medical sterilization facilities. The American Chemistry Society
(2023) stated that at the end of 2018 the United States had 15 ethylene oxide facilities. The
ethylene glycol facilities were identified from a toxicology profile from the Department of
Health and Human Services (DHHS) (2010). The list of ethylene glycol facilities was from 2008,
so it may not include all current production facilities. The DHHS report noted that nine ethylene
oxide production facilities were included in the HON control cost data, six of which also
produced ethylene oxide. These facilities did not generally provide detailed production data by
chemical; for ethylene glycol and ethylene oxide, half of the HON costs for each facility were
allocated to each chemical. Because only 10 of the 15 ethylene glycol production facilities were

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identified, the HON costs were multiplied by 1.5 to represent the entire population of facilities.
Table 5-2 details the control costs for each chemical used in the model. Three of the seven
chemicals are found to have total control costs of more than one percent of total domestic
production value, though none reach two percent or higher.

Table 5-2: Control Costs Attributed to Each Chemical Modeled (2021$)









Domestic

Total Control



HON Control

P&R Control

Total Control

Production Value

Cost % of

Chemical

Cost (USD/yr)

Costs (USD/yr)

Costs (USD/yr)

(USD/yr)

Domestic Value

Acrylonitrile

$13,370,931

$886,272

$14,257,202

$880,400,521

1.619%

Acetone

$4,816,333

$1,965,581

$6,781,915

$2,779,501,547

0.244%

Butadiene

$4,921,906

$3,895,051

$8,816,958

$1,483,128,462

0.594%

Ethylene

$8,684,650

$0

$8,684,650

$7,022,564,654

0.124%

dichloride











Ethylene

$22,905,950

$0

$22,905,950

$1,633,103,944

1.403%

glycol
Ethylene

$36,441,600

$0

$36,441,600

$3,559,565,671

1.024%

oxide











Styrene

$11,487,402

$4,794,858

$16,282,260

$6,722,358,387

0.242%

All 255

$163,572,000

$16,514,700

$180,086,700





facilities

5.3.1.4 Synthetic Organic Chemicals Manufacturing Industries (SOCMI) Model

For the analysis, EPA developed a simplified partial equilibrium model that can be

calibrated to the benchmark data above. The model represents elastic domestic and foreign
production and consumption (four elasticities) and a domestic consumer foreign-domestic
substitution elasticity (one elasticity). Elasticity estimates are scarce for the specific chemicals.
We identified several key elasticity values to populate our five elasticity parameters. For supply
elasticities, we used a value of 0.54 from Chambers and Lichtenberg (1994) econometric
estimation of long-run fertilizer supply for all chemicals except acetone. For acetone, we used a
supply elasticity value of 0 because it is a byproduct of the production of phenol, a much higher
value product.

For demand elasticities, we used values associated with a predominant end use industry
for the product, if possible. For styrene, butadiene, ethylene glycol, ethylene dichloride, and
ethylene oxide, we used a value of-0.38 from Trangadisaikul's (2011) econometric estimation
of global tire demand, a proxy market for rubber production.

Ethylene oxide is most commonly used for sterilizing medical equipment, and ethylene
glycol and ethylene dichloride are more commonly used in plastic production, but demand
elasticity data for those markets were not found in our research, so we used the secondary market

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of a rubber production input. For acrylonitrile and acetone, we used a value of-1.04 from
Martinez's (2012) estimation of demand elasticity for human-made fabrics in the textile industry
because textile fiber production is a common use for those two chemicals. Last, we took a
foreign-domestic consumer demand substitution elasticity estimate of-2.4 from Ahmad and
Riker (2019) in order to account for substitution in consumer demand between domestic and
foreign production of these chemicals. Our current estimates are summarized in Table 5-3.

Table 5-3: Elasticity Parameter Values and Sources

Elasticity

Symbol

Value

Source

Supply [domestic (y), imports (m)]

ay = am

0.54

Chambers and Lichtenberg (1994)

Demand [domestic (d). foreign (/)]

Su Su

C3 C3

II II

C3 C3

-0.38
-1.04

Trangadisaikul's (2011)
Martinez (2012)

Consumer substitution

adf

-2.4

Ahmad and Riker (2019)

The model is a modified version of that specified in Riker and Schreiber (Riker, 2019) in
combination with the calibrated share form of the constant elasticity of substitution (CES)
function detailed in Rutherford (2002). However, the original distinction between different
import sources is removed since our model is only intended to cover domestic compliance cost
shocks. Elastic domestic and foreign production is specified as:

(1)

y= n-

M

= M (&Y

\PJ

(2)

where Y is the value of domestic production, M is the value of imports, P is the corresponding
price, and bars ( ) denote the benchmark value of a variable. Domestic and foreign demand are
specified similarly to production as:

, ^clD

D

= d(^)
\Pr.



OfD

x= x\^~

(3)

(4)

where D is total domestic demand and X is total export demand. We specified total domestic
consumption as an aggregate of domestic- and foreign-produced goods using the calibrated share
form of the CES function as:



dD = e D —

\Vy)

/ p \ffc
fD = (1 — 9)D (~~~~)

(5)

(6)

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where dD is domestic consumer demand for domestic goods, and fD is domestic consumer
demand for foreign goods, and:

_ py dD	(7)

py D+ pmjD

The final conditions for the model require market clearance (i.e., that supply equal demand in the
domestic and foreign markets for the chemical). We specified this requirement as:

0 = Y - X - dD	(9)

0 = M-fD	(10)

These nine equations (excluding the 6 parameter definition in equation 9) form the basis

of our model with the six quantity (Y, M, D, X, dD, fD) and three price (py, pm, pc) variables,

which makes a square system of equations that we can implement in a constrained nonlinear

system (CNS) mathematical program in the GAMS software language using a constrained

optimization solver.

5.3.1.5 SOCMI Model Simulations and Results

For each of the seven chemicals in this analysis, we implemented five counterfactual

shocks to the model to simulate new market outcomes. To implement counterfactual cases
including increased production costs from regulatory compliance or inflation, we included cost
shock parameters in equations (11) and (12) as follows:

K=p(—M*	(11>

\(1 + Cy)Pyj

-( Pm \am	02)

M = Ml	

\(1 + cf)PmJ

where the cost parameters, cy and cy, are expressed in percentage terms and, when positive,
reduce the effective prices received by suppliers.

Our analysis of the economic impact of costs includes three scenarios:

1)	compliance costs due to the HON rule,

2)	the compliance costs due to the two P&R rules,

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3) the total compliance costs due to the three rules.

We also modeled two foreign market inflation scenarios to investigate the
impact/interactions of an increased price of natural gas in foreign producing countries:

1)	inflation cause by rises in foreign natural gas (NG) prices only—primarily energy

inputs. This is referred to as foreign low inflation (INFLO).

2)	inflation cause by rises in foreign NG and natural gas liquid (NGL) prices associated

with the product inputs. This is referred to as foreign inflation high (INF HI).

•	Note: We assumed foreign gas prices do not affect domestic production costs.

For the inflation caused by NG and NGL price increases, we applied the average annual
spot price increase in German NG prices from 2018 to 2021 ($8.57/mmBtu and $15.91 mm/Btu,
respectively35) to the price increases due to NG and NGL price changes from the ACS study on
the impact of NG and NGL prices on the U.S. chemical manufacturing industry (DeRosa, 2015).
The chemicals with benzene as a feedstock—butadiene, styrene, and acetone—do not have any
production cost increase associated with increased NG or NGL prices because benzene is a
production by-product of other higher value products and does not have a cost change due to NG
or NGL prices.

For each of the seven chemicals, we ran a business-as-usual (BAU) benchmark
replication {i.e., essentially a baseline model run) and the following five model runs:

•	BAU: cy = 0% and cy = 0% (no compliance costs and no foreign inflation)

•	HON: cyl = HON compliance costs only

•	PR: cy2 = P&R compliance costs only

•	CC TOT : cyl + cy2 = HON and P&R total compliance.

•	INF: cy = Foreign inflation costs only (no compliance costs)

•	CC+INF: cyl + cy2 + Cf = HON and P&R compliance costs and foreign inflation costs

35 https://Ycharts.com/indicators/germanv natural gas border price

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Model results for each of the seven chemicals included in the analysis are presented in
Tables 5-4 through Table 5-10. The simulated market impacts are consistent with our
expectations in that control costs result in higher market prices and lower output and foreign
inflation leads to domestic output percentage increases and dampens the impact of the
regulation's compliance costs.

•	Butadiene shows modest impacts of domestic production, decreasing about 0.20%.
Because butadiene is a benzene by-product, there is no impact on foreign production
costs due to NG or NGL price changes.

•	Styrene and ethylene dichloride see the smallest impacts on domestic production,
decreasing less than 0.05%.

•	Acrylonitrile sees the largest output drop in response to compliance costs {0.51%)
because of its smaller market size and relatively higher P&R compliance costs.
Acrylonitrile also sees a high percentage drop in imports from higher foreign NG prices
because of its high sensitivity to NGL prices.

•	Acetone is the only product that does not see (at our significance level) a drop in
production or an increase in price due to the compliance costs because of its very low
relative compliance cost increase (only 0.17% of production costs).

•	Ethylene glycol has a production decrease of about 0.5% with compliance costs.
However, it sees a net increase in production of about 0.25% with the foreign NG prices
increase.

•	Ethylene oxide faces the highest compliance costs for chemical products affected by this
proposal due to the expected use of large add-on control technologies such as thermal
oxidizers for compliance with the HON and P&R I requirements. It only sees a modest
decrease in domestic production, however, because of its large domestic market and very
low imports. In particular, there have been almost no ethylene oxide imports to the
United States in the past 5 years.

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Table 5-4: Butadiene Results



BAU

HON

PR

CC TOT

INF

CC+INF

Quantities













Output

1,218

1,217

1,217

1,216

1,218

1,216





-0.11%

-0.09%

-0.20%

0.00%

-0.20%

Exports

46

46

46

46

46

46





-0.05%

-0.04%

-0.08%

0.00%

-0.08%

Imports

391

392

392

392

391

392





0.12%

0.09%

0.21%

0.00%

0.21%

Demand

1,563

1,563

1,563

1,562

1,563

1,562





-0.06%

-0.04%

-0.10%

0.00%

-0.10%

Prices ($000/tonne)













Domestic

1.22

1.22

1.22

1.22

1.22

1.22





0.16%

0.08%

0.25%

0.00%

0.25%

Consumption

1.22

1.22

1.22

1.22

1.22

1.22





0.16%

0.08%

0.25%

0.00%

0.25%

Import

1.22

1.22

1.22

1.23

1.22

1.23





0.25%

0.16%

0.41%

0.00%

0.41%

Table 5-5: Styrene Simulation Results



BAU

HON

PR

CCTOT

INF

CC+INF

Quantities













Output

3,659

3,658

3,659

3,657

3,659

3,657





-0.04%

-0.02%

-0.06%

0.00%

-0.06%

Exports

1,100

1,099

1,100

1,099

1,100

1,099





-0.04%

-0.01%

-0.05%

0.00%

-0.05%

Imports

212

212

212

212

212

212





0.08%

0.03%

0.11%

0.00%

0.11%

Demand

2,771

2,770

2,771

2,770

2,771

2,770





-0.04%

-0.02%

-0.05%

0.00%

-0.05%

Prices ($000/tonne)













Domestic

1.84

1.84

1.84

1.84

1.84

1.84





0.11%

0.05%

0.11%

0.00%

0.11%

Consumption

1.84

1.84

1.84

1.84

1.84

1.84





0.11%

0.05%

0.11%

0.00%

0.11%

Import

1.84

1.84

1.84

1.85

1.84

1.85





0.16%

0.05%

0.22%

0.00%

0.22%

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Table 5-6: Acrylonitrile Simulation Results



BAU

HON

PR

CC TOT

INF

CC+INF

Quantities













Output

848

844

848

844

850

845





-0.54%

-0.04%

-0.57%

0.18%

-0.39%

Exports

529

527

529

526

528

525





-0.52%

-0.03%

-0.55%

-0.34%

-0.90%

Imports

9

9

9

9

6

6





0.52%

0.03%

0.57%

-38.34%

-38.00%

Demand

328

326

328

326

328

326





-0.53%

-0.04%

-0.57%

0.07%

-0.50%

Prices ($000/tonne)













Domestic

1.04

1.05

1.04

1.05

1.04

1.05





0.48%

0.00%

0.58%

0.29%

0.87%

Consumption

1.04

1.05

1.04

1.05

1.04

1.05





0.48%

0.00%

0.58%

-0.10%

0.48%

Import

1.04

1.05

1.04

1.05

0.85

0.86





0.96%

0.10%

1.06%

-18.37%

-17.50%

Table 5-7: Acetone Simulation Results



BAU

HON

PR

CC TOT

CC+INF LO

CC+INF HI

Quantities













Output

1,515

1,515

1,515

1,515

1,515

1,515





0.00%

0.00%

0.00%

0.00%

0.00%

Exports

42

42

42

42

42

42





0.00%

0.00%

0.00%

0.00%

0.00%

Imports

84

84

84

84

84

84





0.00%

0.00%

0.00%

0.00%

0.00%

Demand

1,557

1,557

1,557

1,557

1,557

1,557





0.00%

0.00%

0.00%

0.00%

0.00%

Prices ($000/tonne)













Domestic

1.84

1.84

1.84

1.84

1.84

1.84





0.00%

0.00%

0.00%

0.00%

0.00%

Consumption

1.84

1.84

1.84

1.84

1.84

1.84





0.00%

0.00%

0.00%

0.00%

0.00%

Import

1.84

1.84

1.84

1.84

1.84

1.84





0.00%

0.00%

0.00%

0.00%

0.00%

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Table 5-8: Ethylene Dichloride Simulation Results



BAU

HON

PR

CC TOT

INF

CC+INF

Quantities













Output

9,731

9,729

9,731

9,729

9,731

9,729





-0.03%

0.00%

-0.03%

0.00%

-0.03%

Exports

727

727

727

727

727

727





-0.03%

0.00%

-0.03%

0.00%

-0.03%

Imports

0

0

0

0

0

0





0.21%

0.00%

0.21%

-8.00%

-8.00%

Demand

9,004

9,002

9,004

9,002

9,004

9,002





-0.03%

0.00%

-0.03%

0.00%

-0.03%

Prices ($000/tonne)













Domestic

0.72

0.72

0.72

0.72

0.72

0.72





0.14%

0.00%

0.14%

0.00%

0.14%

Consumption

0.72

0.72

0.72

0.72

0.72

0.72





0.14%

0.00%

0.14%

0.00%

0.14%

Import

0.72

0.72

0.72

0.72

0.70

0.70





0.14%

0.00%

0.14%

-3.46%

-3.32%

Table 5-9: Ethylene Glycol Simulation Results



BAU

HON

PR

CCTOT

INF

CC+INF

Quantities













Output

1,578

1,571

1,578

1,571

1,589

1,582





-0.43%

0.00%

-0.43%

0.67%

0.26%

Exports

1,269

1,266

1,269

1,266

1,263

1,260





-0.23%

0.00%

-0.23%

-0.47%

-0.71%

Imports

237

239

237

239

222

223





0.79%

0.00%

0.79%

-6.44%

-5.73%

Demand

546

544

546

544

548

546





-0.37%

0.00%

-0.37%

0.31%

-0.05%

Prices ($000/tonne)













Domestic

1.04

1.04

1.04

1.04

1.05

1.06





0.58%

0.00%

0.58%

1.25%

1.93%

Consumption

1.04

1.05

1.04

1.05

1.03

1.04





0.96%

0.00%

0.96%

-0.77%

0.10%

Import

1.04

1.05

1.04

1.05

1.00

1.01





1.45%

0.00%

1.45%

-3.66%

-2.31%

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Table 5-10: Ethylene Oxide Simulation Results



BAU

HON

PR

CCTOT

INF

CC+INF

Quantities













Output

2,400

2,395

2,400

2,395

2,400

2,395





-0.23%

0.00%

-0.23%

0.00%

-0.23%

Exports

1

1

1

1

1

1





-0.22%

0.00%

-0.22%

0.00%

-0.22%

Imports

0

0

0

0

0

0





0.00%

0.00%

0.00%

0.00%

0.00%

Demand

2,399

2,394

2,399

2,394

2,399

2,394





-0.23%

0.00%

-0.23%

0.00%

-0.23%

Prices ($000/tonne)













Domestic

1.49

1.50

1.49

1.50

1.49

1.50





0.61%

0.00%

0.61%

0.00%

0.61%

Consumption

1.49

1.50

1.49

1.50

1.49

1.50





0.61%

0.00%

0.61%

0.00%

0.61%

Import

1.49

1.50

1.49

1.50

1.46

1.47





0.94%

0.00%

0.94%

-1.75%

-0.87%

5.4 Small Business Impacts Analysis

For the proposed rule, the EPA performed a small entity screening analysis for impacts
on all affected facilities by comparing compliance costs to historic revenues at the ultimate
parent company level. This is known as the cost-to-revenue or cost-to-sales test, or the "sales
test." The sales test is an impact methodology the EPA employs in analyzing entity impacts as
opposed to a "profits test," in which annualized compliance costs are calculated as a share of
profits. The sales test is frequently used because revenues or sales data are commonly available
for entities impacted by the EPA regulations, and profits data normally made available are often
not the true profit earned by firms because of accounting and tax considerations. Also, the use of
a sales test for estimating small business impacts for a rulemaking is consistent with guidance
offered by the EPA on compliance with the Regulatory Flexibility Act (RFA)36 and is consistent
with guidance published by the U.S. Small Business Administration's (SBA) Office of Advocacy
that suggests that cost as a percentage of total revenues is a metric for evaluating cost increases
on small entities in relation to increases on large entities (SBA, 2017).

36 The RFA compliance guidance to the EPA rule writers can be found at



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For purposes of assessing the impacts of this action on small entities, a small entity is
defined as: (1) a small business as defined by the Small Business Administration's (SBA)
regulations at 13 CFR 121.201; (2) a small governmental jurisdiction that is a government of a
city, county, town, school district or special district with a population of less than 50,000; and (3)
a small organization that is any not-for-profit enterprise that is independently owned and
operated and is not dominant in its field. Businesses in the Gasoline Distribution source category
predominately have NAICS codes 325199 (All Other Basic Organic Chemical Manufacturing).
For the SBA small business size standard definition for each NAICS classification, see below in
Table 5-11.

Table 5-11. SBA Size Standards by NAICS Code	





Size

Size
Standards
(Number of
employees)

NAICS
Codes

NAICS U.S. Industry Title

Standards
(million$ of
annual

sales/revenues)

325110

Petrochemical Manufacturing



1,000

325120

Industrial Gas Manufacturing



1,000

325130

Synthetic Dye and Pigment Manufacturing



1,000

325180

Other Basic Inorganic Chemical Manufacturing
Cyclic Crude, Intermediate, and Gum and Wood Chemical



1,000

325194

Manufacturing



1,250

325199

All Other Basic Organic Chemical Manufacturing



1,250

325211

Plastics Material and Resin Manufacturing



1,250

325212

Synthetic Rubber Manufacturing



1,000

325220

Artificial and Synthetic Fibers and Filaments Manufacturing



1,000

325311

Nitrogenous Fertilizer Manufacturing



1,000

325320

Pesticide and Other Agricultural Chemical Manufacturing



1,000

325412

Pharmaceutical Preparation Manufacturing



1,250

325620

Toilet Preparation Manufacturing



1,250

325920

Explosives Manufacturing
All Other Miscellaneous Chemical Product and Preparation



750

325998

Manufacturing



500

EPA constructed a facility list for the HON and P&R Group I and II source categories.
For information on how this list was constructed, see Section 2. The initial facility lists consisted
of 207 HON facilities, 19 P&R I facilities (and 10 of the P&R I facilities are collocated with
HON processes), and 5 P&R II facilities (and 3 of the P&R II facilities are collocated with HON
processes). However, revised counts of active and unique facilities reduced the size of these lists.

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EPA identified the ultimate parent company along with revenue and employment information for
facilities using D&B Hoover's database. In total, EPA identified 100 ultimate parent companies
as owners of the 214 facilities, of which ten of these ultimate parent companies were identified
as small entities (counts of parent companies do not sum over rules due to some companies
owning facilities subject to multiple rules). These companies, including the small entities,
operate in the SOCMI industry, which is marginally competitive as a whole as mentioned in
Chapter 2 of this RIA. Summary statistics for these ultimate parent companies are in Table
5- below.

Table 5-12. Summary Statistics of Potentially Affected Entities	

Rule

Size

No. of Ultimate Parent
Companies

Number of
Facilities

Mean Revenue
(million 2021$)

Median
Revenue
(million 2021$)



Small

10

11

$252

$72.1

HON













Not Small

88

192

$22,600

$5,160



Small

1

2

$290

$290

P&R I













Not Small

11

16

$40,900

$8,940



Small

0

0

_

_

P&R II













Not Small

4

5

$78,900

$22,900

Rules Combined

Small
Not Small

10
90

11

203

$252
$22,400

$72.1
$5,160

Note: Some facilities are affected by more than one rule and therefore, to avoid double counting, "Rules Combined"
will not equal the sum of facilities noted in individual rules.

5.4.1 Screening A nalysis

Using the facility list discussed in the above section, EPA conducted cost-to-sales
analysis for the proposed action to screen small entities for potentially significant impacts. We
present results specifically for each of the HON, P&R I and P&R II proposals, and a total
estimate for all of these three rules. We are unable to provide an estimate of small entity impacts
for the NSPS in this proposed action due to an inability to link impacts to specific known
facilities and ultimate parent owners. While a sales test can provide some insight as to the
economic impact of an action such as this one, it assumes that the impacts of a rule are solely
incident on a directly affected firm (therefore, no impact to consumers of the affected product),
or solely incident on consumers of output directly affected by this action (therefore, no impact to

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companies that are producers of the affected product). Thus, an analysis such as this one is best
viewed as providing insight on the polar opposites of economic impacts: maximum impact to
either directly affected companies with no impact on their consumers, or vice versa. A sales test
analysis does not consider shifts in supply and demand curves to reflect intermediate economic
outcomes. For a partial equilibrium analysis of the economic impacts of this action that attempts
to parse impacts on consumers relative to producers, see section 5.2.

The results of this analysis for the proposed options are presented below. Table 5-13
shows the distribution of average costs for ultimate parent companies by proposed rule. Tables-8
and 9 below show the distribution of cost-to-sale ratios (CSRs) by rule and the percentage of
CSRs clearing 1 percent and 3 percent for each rule. We present the results both with costs
including product recovery and without product recovery. The results are virtually identical
regardless of whether or not product recovery is included.

Table 5-13: Distribution of Estimated Compliance Costs by Rule and Size for Proposed
Options ($2021)a	

Rule

Size

No. of Firms

Average Cost with
Product Recovery

Average Cost without
Product Recovery

HON

Small

10

$261,000

$265,000

Not Small

88

$854,000

$850,000

P&RI

Small

1

$43,900

$43,900

Not Small

11

$921,000

$922,000

P&R II

Small
Not Small

0
4

$333,000

$333,000

Rules Combined

Small
Not Small

10
90

$227,000
$843,000

$231,000
$847,000

a There are some firms, including one small firm, that are impacted by more than one proposed rule. This explains
why the totals of combined impacted firms are less than the straight summation across the proposed rules.

Table 5-14: Compliance Cost-to-Sales Ratio Distributions for Small Entities, Proposed
Options3	

With Product Recovery	Without Product

Rule





Included

Recovery Included





Mean

Maximum

Mean

Maximum







CSR

CSR

CSR

CSR

HON



10

0.427%

1.26%

0.459%

1.40%

P&RI

No. of Small Entities

1

0.030%

0.030%

0.030%

0.030%

P&R II



0

-

-

-

-

All

No. of Small Entities

10

0.431%

1.26%

0.462%

1.40%

a There is one small firm that is impacted by more than one proposed rule. This explains why the totals of combined
impacted firms are less than the straight summation across the proposed rules.

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Table 5-15: Compliance Cost-to-Sales Ratio Thresholds for Small Entities - Proposed

Options3	

, „ , , _	T i j j Without Product Recovery

With Product Recovery Included	T i j j

^	nr>hi/Hpn

Kuie



No. of Small

%of Small

No. of Small

%of Small





Entities

Entities

Entities

Entities



No. of Small Entities

10

100%

10

100%

HON

Greater than 1%

2

20%

2

20%



Greater than 3%

0

0.0%

0

0.0%



No. of Small Entities

1

100%

1

100%

P&R I

Greater than 1%

0

0.0%

0

0.0%

Greater than 3%

0

0.0%

0

0.0%



No. of Small Entities

0

-

0

-

P&R II

Greater than 1%

-

-

-

-



Greater than 3%

-

-

-

-



No. of Small Entities

10

100%

10

100%

All

Greater than 1%

2

20%

2

20%



Greater than 3%

0

0.0%

0

0.0%

a There is one small firm, that is impacted by more than one proposed rule. This explains why the totals of combined
impacted firms are less than the straight summation across the proposed rules.

Given the relatively low average CSR for small entities (both with and without product
recovery), as well as there being only two small entities with a CSR of at least 1 percent and no
small entities with a CSR of at least 3 percent for the proposed HON amendments, we conclude
that it is unlikely that the proposed changes to the HON would have a significant impact on a
substantial number of small entities (SISNOSE), and therefore we certify that there is no
SISNOSE for this proposal Given that there are no small entities with a CSR of at least 1 percent
for either the P&R I or P&R II proposals, we conclude that we can certify no SISNOSE for
either of these proposed rules.

5.5 Employment Impact Analysis

This section presents a qualitative overview of the various ways that environmental
regulation can affect employment. Employment impacts of environmental regulations are
generally composed of a mix of potential declines and gains in different areas of the economy
over time. Regulatory employment impacts can vary across occupations, regions, and industries;
by labor and product demand and supply elasticities; and in response to other labor market
conditions. Isolating such impacts is a challenge, as they are difficult to disentangle from
employment impacts caused by a wide variety of ongoing, concurrent economic changes. The
EPA continues to explore the relevant theoretical and empirical literature and to seek public

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comments in order to ensure that the way the EPA characterizes the employment effects of its
regulations is reasonable and informative.

Environmental regulation "typically affects the distribution of employment among
industries rather than the general employment level" (Arrow, et al., 1996). Even if impacts are
small after long-run market adjustments to full employment, many regulatory actions have
transitional effects in the short run (Office of Management and Budget, 2015). These movements
of workers in and out of jobs in response to environmental regulation are potentially important
and of interest to policymakers. Transitional job losses have consequences for workers that
operate in declining industries or occupations, have limited capacity to migrate, or reside in
communities or regions with high unemployment rates.

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6 COMPARISION OF COSTS AND BENEFITS

In this chapter, we present a comparison of the benefits and costs of this proposed action.
We present benefits and costs for each proposed rule and their more and less stringent
alternatives, except we group the impacts of the Ilia, NNNa, and RRRa NSPS proposals together
for presentational clarity and consistent with the presentation of impacts for these three NSPS in
the preamble for this proposed action. As explained in the previous chapters, all costs and
benefits outlined in this RIA are estimated as the change from the baseline, which reflects the
current business practice for the affected sources as mentioned in Chapter 1, particularly with
regard to emissions from flares. As stated earlier in this RIA, there is no monetized estimate of
the benefits for the HAP emission reductions expected to occur as a result of this proposed
action. We do present monetized estimates for other impacts of this action, such as benefits from
both short- and long-term reduced exposure to ozone caused by VOC emissions reductions and
benefits from decreases in CH4 emissions and disbenefits from increases in CO2 and N2O
emissions.

6.1 Results

As part of fulfilling analytical guidance with respect to E.O. 12866, EPA presents
estimates of the present value (PV) of the benefits and costs over the period 2024 to 2038. To
calculate the PV of the social net benefits of the proposed action, annual benefits and costs are in
2021 dollars and are discounted to 2023 at 3 percent and 7 percent discount rates as directed by
OMB's Circular A-4. The EPA also presents the equivalent annualized value (EAV), which
represents a flow of constant annual values that would yield a sum equivalent to the PV. The
EAV represents the value of a typical cost or benefit for each year of the analysis, consistent with
the estimate of the PV, in contrast to year-specific estimates.

The presentation of impacts in this chapter includes those for more and less stringent
options to those for the proposal as a whole (that is, across all proposed rules). The more
stringent option is the same as the proposal except that tighter controls for HON process vents
and storage vessels, and also such controls on P&R I process vents (or PV, when discussing
types of affected sources) and storage vessels (SV), are included. The tighter process vent
controls in the more stringent option are defined as option PV2 in Table 3-3 of this RIA, and the

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tighter storage vessels controls are defined as option SV3 in Table 3-2 of this RIA. The less
stringent option is the same as the proposal except that weaker controls for storage vessels
defined as option SV1 in Table 3-2 of this RIA are included. The less stringent option does not
include any other differences in options from the proposal. Thus, the differences in stringency for
analyses in the RIA reflect different stringencies primarily in the proposed HON options. Since
the differences in stringency occur only for options considered under the proposed HON
amendments, we present impacts below for the proposed HON and cumulative. More and less
stringent options were not available for the other proposed rules.

Tables 6-1 through 6-3 presents a summary of the monetized benefits, compliance costs,
and net benefits (including climate disbenefits) of the proposed HON, proposed P&R I, and
cumulatively, and the more and less stringent alternatives for in terms of present value (PV) and
equivalent annualized value (EAV). Tables presenting benefits list both figures, with short-term
benefits listed first.

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Table 6-1: Summary of Monetized Benefits, Compliance Costs, and Net Benefits PV/EAV for HON, 2024-2038 (million 2021$,
discounted to 2023)	

Proposal	Less Stringent Alternative	More Stringent Alternative

3%

PV

EAV

PV

EAV

PV

EAV

Monetized Health

$78 and $690

$6.5 and $58

$77 and $690

$6.5 and $58

$79 and $706

$7 and $58

Benefits













Climate Disbenefits

(25.4)



(25.4)

(2.1)

(25.4)

(2.1)

(3%)













Net Compliance

1,385

116

1,381

115

1,440

120

Costs













Compliance Costs

1,393

117

1,389

116

1,449

121

Value of Product

8

1

8

1

9

1

Recovery













Net Benefits
7%

$(1,280) and $(670)

$(107) and $(56)

(1,278) and $(666)

$(106) and $(55)

$(1,336) and $(709)

$(111) and $(60)

/ /O

Monetized Health

$53 and $470

$5.8 and $51

$53 and $470

$6.5 and $58

$54 and $476

$6.5 and $59

Benefits













Climate Disbenefits

(25.4)

(2.1)

(25.4)

(2.1)

(25.4)

(2.1)

(3%)













Net Compliance

922

101

918

102

959

105

Costs













Compliance Costs

927

102

923

103

965

106

Value of Product

5

0.8

5

1

6

1

Recovery













Net Benefits

$(844) and $(427)

$(93) and $(48)

$(840) and $(423)

$(93) and $(62)

$(880) and $(458)

$(96) and $(44)

Note: Monetized benefits (incorporating disbenefits) include those related to public health and climate. Monetized air quality related health benefits include ozone related health benefits associated with
reductions in VOC emissions. The health benefits are associated with several point estimates and are presented at real discount rates of 3 and 7 percent. The two benefits estimates are separated by the
word "and" to signify that they are two separate estimates. The estimates do not represent lower- and upper-bound estimates. Benefits from HAP reductions and VOC reductions outside of the ozone
season remain unmonetized and are thus not reflected in the table. The unmonetized effects also include disbenefits resulting from a secondary increase in CO emissions. Monetized climate benefits and
disbenefits are based on changes (increases) in C02 and N20 emissions and decreases in CH4 emissions and are calculated using four different estimates of the social cost of each greenhouse gas (SC-
GHG) (model average at 2.5 percent, 3 percent, and 5 percent discount rates; 95th percentile at 3 percent discount rate). For the presentational purposes of this table, we show the benefits and disbenefits
associated with the model average SC-GHG at a 3 percent discount rate, but the Agency does not have a single central SC-GHG point estimate. We emphasize the importance and value of considering
the benefits and disbenefits calculated using all four SC-GHG estimates; please see Table 4-11 for the full range of SC-GHG estimates. As discussed in Chapter 4, a consideration of climate disbenefits
calculated using discount rates below 3 percent, including 2 percent and lower, is also warranted when discounting intergenerational impacts. The costs presented in this table are 2024 annual estimates.
Net compliance costs are the compliance costs minus the value of product recovery from compliance with the rule. Hence, net compliance costs are negative if the value of product recovery exceeds the
compliance costs. Parentheses around a number denotes that is has a negative value. Negative climate disbenefits are a positive value. Rows may not appear to add correctly due to rounding.

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Table 6-2: Summary of Monetized Benefits, Compliance Costs, and Net Benefits PV/EAV for P&R I, 2024-2038 (million
2021$, discounted to 2023)	

Proposal	Less Stringent Alternative	More Stringent Alternative

3%

PV

EAV

PV

EAV

PV

EAV

Health Benefits

$2.6 and $23

$0.22 and $1.9

$2.6 and $23

$0.22 and $1.9

$4.0 and $36

$0.34 and $3.0

Climate Disbenefits (3%)

40.5

3.4

40.5

3.4

40.5

3.4

Net Compliance Costs

121

10

121

10

130

11

Compliance Costs

122

10.2

122

10.2

131.5

11.4

Value of Product Recovery

1

0.2

1

0.2

1.5

0.4

Net Benefits
7%

$(158) and $(138)

$(13) and $(11)

$(158) and $(138)

$(13) and $(11)

$(166) and $(134)

$(14) and $(11)

/ /o

Health Benefits

$1.8 and $16

$0.19 and $1.7

$1.8 and $16

$0.19 and $1.7

$2.7 and $24

$0.30 and $2.7

Climate Disbenefits (3%)

40.5

3.4

40.5

3.4

40.5

3.4

Net Compliance Costs

78

8.6

78

8.6

84

9.1

Compliance Costs

79

8.7

79

8.7

85

9.2

Value of Product Recovery

1

0.1

1

0.1

1

0.1

Net Benefits

$(116) and $(103)

$(12) and $(10)

$(116) and $(103)

$(12) and $(10)

$(121) and $(100)

$(12) and $(10)

Note: Monetized benefits (incorporating disbenefits) include those related to public health and climate. Monetized air quality related health benefits include ozone related health benefits associated with
reductions in VOC emissions. The health benefits are associated with several point estimates and are presented at real discount rates of 3 and 7 percent. The two benefits estimates are separated by the
word "and" to signify that they are two separate estimates. The estimates do not represent lower- and upper-bound estimates. Benefits from HAP reductions and VOC reductions outside of the ozone
season remain unmonetized and are thus not reflected in the table. The unmonetized effects also include disbenefits resulting from a secondary increase in CO emissions. Monetized climate benefits and
disbenefits are based on changes (increases) in CO2 and N20 emissions and decreases in CH4 emissions and are calculated using four different estimates of the social cost of each greenhouse gas (SC-
GHG) (model average at 2.5 percent, 3 percent, and 5 percent discount rates; 95th percentile at 3 percent discount rate). For the presentational purposes of this table, we show the benefits and disbenefits
(and net benefits) associated with the model average SC-GHG at a 3 percent discount rate, but the Agency does not have a single central SC-GHG point estimate. We emphasize the importance and
value of considering the benefits and disbenefits calculated using all four SC-GHG estimates; please see Table 4-11 for the full range of SC-GHG estimates. As discussed in Chapter 4, a consideration of
climate benefits and disbenefits calculated using discount rates below 3 percent, including 2 percent and lower, is also warranted when discounting intergenerational impacts. The costs presented in this
table are 2024 annual estimates. Net compliance costs are the compliance costs minus the value of product recovery from compliance with the rule. Hence, net compliance costs are negative if the value
of product recovery exceeds the compliance costs. Rows may not appear to add correctly due to rounding. A number in parentheses denotes a negative value. Negative climate disbenefits are a positive
value.

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Table 6-3: Summary of Monetized Benefits, Compliance Costs, and Net Benefits PV/EAV for All Rules, 2024-2038 (million
2021$, discounted to 2023)	

Proposal	Less Stringent Alternative	More Stringent Alternative

3%

PV

EAV

PV

EAV

PV

EAV

Health Benefits

$81 and $730

$6.8 and $61

$81 and $729

$6.8 and $60

$85 and $765

$7.0 and $63

Climate Disbenefits

8.2

0.7

8.2

0.7

8.2

0.7

(3%)













Net Compliance Costs

1,579

132

1,552

130

1,604

134

Compliance Costs

1,590

133.4

1,563

131.4

1,616

135.5

Value of Product

11

1.4

11

1.4

12

1.5

Recovery













Net Benefits
7%

$(1,506) and $(857)

$(126) and $(72)

$(1,479) and $(831)

$(124) and $(71)

$(1,527) and $(847)

$(128) and $(72)

/ /O

Health Benefits

$56 and $490

$6.1 and $54

$55 and $489

$6.1 and $54

$58 and $516

$6.3 and $56

Climate Disbenefits

8.2

0.7

8.2

0.7

8.2

0.7

(3%)













Net Compliance Costs

1,052

121

1,034

119

1,069

123

Compliance Costs

1,060

122

1,041

120.2

1,077

124.3

Value of Product

7.7

1.1

6.5

1.2

8

1.3

Recovery













Net Benefits

$(1,100) and $(562)

$(110) and (63)

$(1,081) and $(553)

$(124) and $(66)

$(1,019) and $(551)

$(117) and $(68)

Nonmonetized 6,053 tons/year of HAP

Benefits Health effects of reduced exposure to ethylene oxide, chloroprene, benzene, 1,3-butadiene, vinyl chloride, ethylene dichloride, chlorine,
	maleic anhydride and acrolein	

Note: Monetized benefits (incorporating disbenefits) include those related to public health and climate. Monetized air quality related health benefits include ozone related health benefits associated with
reductions in VOC emissions. The health benefits are associated with several point estimates and are presented at real discount rates of 3 and 7 percent. The two benefits estimates are separated by the
word "and" to signify that they are two separate estimates. The estimates do not represent lower- and upper-bound estimates. Benefits from HAP reductions and VOC reductions outside of the ozone
season remain unmonetized and are thus not reflected in the table. The unmonetized effects also include disbenefits resulting from a secondary increase in CO emissions. Monetized climate benefits and
disbenefits are based on changes (increases) in C02 and N20 emissions and changes (decreases) in CH4 emissions and are calculated using four different estimates of the social cost of each greenhouse
gas (SC-GHG) (model average at 2.5 percent, 3 percent, and 5 percent discount rates; 95th percentile at 3 percent discount rate). For the presentational purposes of this table, we show the benefits and
disbenefits (and the net benefits) associated with the model average SC-GHG at a 3 percent discount rate, but the Agency does not have a single central SC-GHG point estimate. We emphasize the
importance and value of considering the benefits and disbenefits calculated using all four SC-GHG estimates; please see Table 4-11 for the full range of SC-GHG estimates. As discussed in Chapter 4, a
consideration of climate disbenefits calculated using discount rates below 3 percent, including 2 percent and lower, is also warranted when discounting intergenerational impacts. The costs presented in
this table are 2024 annual estimates. Net compliance costs are the compliance costs minus the value of product recovery from compliance with the rule. Hence, net compliance costs are negative if the
value of product recovery exceeds the compliance costs. A number in parentheses denotes a negative value. Negative climate disbenefits are a positive value. Rows may not appear to add correctly due
to rounding.

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Given these results, the EPA expects that implementation of the proposed HON, based
solely on an economic efficiency criterion, should provide society with a relatively potential net
gain in welfare, notwithstanding the expansive set of health and environmental benefits and other
impacts we were unable to quantify such as monetization of benefits from VOC emission
reductions occurring outside of the ozone season (the months of October-April). The same holds
true for the proposed P&R I and IINESHAP and for all proposed amendments (including the
NSPS) considered cumulatively. Further quantification of directly emitted VOC and HAP would
increase the estimated net benefits of each proposed action and cumulatively.

6.2 Uncertainties and Limitations

Throughout the RIA, we considered a number of sources of uncertainty, both quantitatively and
qualitatively, regarding the benefits, and costs of the proposed amendments. We summarize the
key elements of our discussions of uncertainty here:

Projection methods and assumptions: Over time, more facilities are newly established or
modified in each year, and to the extent the facilities remain in operation in future years, the
total number of facilities subject to the action could change. We assume 100 percent
compliance as these proposed rules and existing rules are implemented, starting from when the
source becomes affected. If sources do not comply with these rules, at all or as written, the cost
impacts and emission reductions may be overestimated. Additionally, new control technology
and approaches may become available in the future at lower cost, and we are unable to predict
exactly how industry will comply with the proposed rules in the future.

Years of analysis: In addition, the counts of units projected to be affected by this proposed action
are held constant. Given our analytical timeframe of 2024-2038, it is possible that the affected
unit counts may change. The years of the cost analysis are 2024, to represent the first-year
facilities that the NSPS proposed in this rulemaking will be effective, through 2038, to
represent impacts of the action over the life of installed capital equipment, as discussed in
Chapter 3. Extending the analysis beyond 2038 would introduce substantial and increasing
uncertainties in projected impacts of the proposed regulations.

• Compliance Costs: There may be an opportunity cost associated with the installation
of environmental controls (for purposes of mitigating the emission of pollutants) that

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is not reflected in the compliance costs included in Chapter 3. If environmental
investment displaces investment in productive capital, the difference between the rate
of return on the marginal investment (which is discretionary in nature) displaced by
the mandatory environmental investment is a measure of the opportunity cost of the
environmental requirement to the regulated entity. To the extent that any opportunity
costs are not included in the control costs, the compliance costs presented above for
this proposed action may be underestimated.

BPT estimates: As discussed earlier in Chapter 4, all national-average BPT estimates reflect the
geographic distribution of the modeled emissions, which may not exactly match the emission
reductions that would occur due to the action, and they may not reflect local variability in
population density, meteorology, exposure, baseline health incidence rates, or other local
factors for any specific location. Recently, the EPA systematically compared the changes in
benefits, and concentrations where available, from its BPT technique and other reduced-form
techniques to the changes in benefits and concentrations derived from full-form photochemical
model representation of a few different specific emissions scenarios. Reduced form tools are
less complex than the full air quality modeling, requiring less agency resources and time. That
work, in which we also explore other reduced form models is referred to as the "Reduced Form
Tool Evaluation Project" (Project), began in 2017, and the initial results were available at the
end of 2018. The Agency's goal was to better understand the suitability of alternative reduced-
form air quality modeling techniques for estimating the health impacts of criteria pollutant
emissions changes in the EPA's benefit-cost analysis. The EPA continues to work to develop
refined reduced-form approaches for estimating benefits. The scenario-specific emission
inputs developed for this project are currently available online. The study design and
methodology are described in the final report summarizing the results of the project, available
at	https://www.epa.gov/sites/production/files/2Q19-

11/documents/rft combined report 10.31.19 final.pdf.

Non-monetized benefits: Numerous categories of health and welfare, and climate-related benefits
are not quantified and monetized in this RIA. These unquantified benefits, including benefits
from reductions in emissions of pollutants such as HAP which are to be reduced by this
proposed action, are described in detail in Chapter 4 of this RIA and various NAAQS RIAs.

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VOC health impacts: In this RIA, we quantify an array of adverse health impacts attributable to
emissions of VOC. The Integrated Science Assessment for Particulate Matter ("ISA") (U.S.
EPA, 2019) identifies the human health effects associated with ambient particles, which
include premature death and a variety of illnesses associated with acute and chronic exposures.

Monetized climate benefits and disbenefits: The EPA considered the uncertainty associated with
the interim social cost of carbon (SC-GHG) estimates, which were used to calculate the climate
benefits and disbenefits from the increase in CO2 and N2O emissions and the decrease in CH4
emissions projected under the proposed amendments in this rulemaking. Some uncertainties
are captured within the analysis, while other areas of uncertainty have not yet been quantified
in a way that can be modeled. A full list and discussion of uncertainties in the analysis of
monetized climate benefits and disbenefits can be found in Chapter 4 of this RIA.

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United States	Office of Air Quality Planning and Standards	Publication No. EPA-452/P-23-001

Environmental Protection	Health and Environmental Impacts Division	March 2023

Agency	Research Triangle Park, NC

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