			

		  UNFUNDED MANDATES REFORM ACT ANALYSIS

FOR THE PROPOSED AMENDMENTS TO THE PORTLAND CEMENT NESHAP UNDER THE
CLEAN AIR ACT

		(April, 2009)

	This document provides an analysis of the effects of the U.S.
Environmental Protection Agency’s (“EPA”) proposed Portland Cement
national emissions standard for hazardous air pollutants (NESHAP)
rulemaking under Title III of the Clean Air Act (“CAA”) on State,
local, and tribal governments, and the private sector as required by the
Unfunded Mandates Reform Act of 1995 (“UMRA”).  EPA has determined
that an UMRA analysis is required because the proposed Portland Cement
NESHAP rulemaking will affect units operated by State and local
governments, and will impose a cost on the private sector greater than
$100 million in any one year.

	This UMRA analysis examines the impacts of the proposed rule on units
that are owned by State, local, tribal governments and the private
sector.  This analysis is based on the regulatory impact analysis
(“RIA”) prepared for this proposed rule.  The RIA for this proposed
rule includes EPA’s assessment of costs, benefits, and economic
impacts and can be found in the docket for this rulemaking at  
HYPERLINK "http://www.regulations.gov"  www.regulations.gov .  

	This proposed rule includes a maximum achievable control technology
(MACT) standard for Portland cement facilities that are major or area
sources of HAP.  We expect this proposed rule to affect 93 portland
cement manufacturing facilities located in the U.S. and Puerto Rico. 
Compliance costs estimated by facility were used as inputs to calculate
the economic impact of the proposed rule.

For the proposed Portland Cement NESHAP, EPA estimated the costs and
emissions reductions that would occur due to the implementation of the
proposed emission limits based on both an engineering cost analysis and
partial equilibrium economic model and the Industrial Sector Integrated
Solution Model.  These emission reductions are based on 2005 emission
baselines.

The emission reductions of the proposed amendments estimated as part of
the engineering cost analysis for existing kilns are 3,800 lb/yr for
mercury, 13,000 tpy for THC, 2,700 tpy for HCl, and 10,600 tpy for PM. 
In addition, the proposed emission limits would result in concurrent
control of 116,000 tpy.  For the 20 new kilns expected over the next
five year the estimated emission reduction are 2,400 lb/yr for mercury,
920 tpy of THC, 900 tpy g HCl, 3,100 tpy of PM , and 20,000 tpy for SO2.

These controls will also reduce emissions of secondary PM2.5 (and coarse
PM (PM10-2.5 ) as well).  This is PM that results from atmospheric
transformation processes of precursor gases, including SO2.

In addition to this traditional estimation of emission reductions, EPA
employed the ISIS model to estimate emission reductions.  The estimation
of emission reductions in the ISIS model accounts for the optimization
of the industry and includes the addition of new kilns, kiln
retirements, replacements, and expansions as well as installation of
controls.  Using the ISIS model, in 2013 we estimate reductions of
11,400 lbs of mercury, 11,670 tons of THC, 2,780 tons of HCl, 10,530
tons of PM and 160,000 tons of SO2 compared to total emissions in 2005 

The market adjustments in price and quantity were used to estimate the
changes in aggregate economic welfare. Higher cement prices and reduced
consumption lead to consumer welfare losses ($402 million). Domestic
producers (in aggregate) experience a net loss of $204 million. The
total domestic surplus loss (consumer and producers) totals $606
million. Other countries selling cement to the United States will
benefit from higher cement prices (a surplus gain of $89 million

The total monetized benefits of the proposed rule range from $4.4 to
$11.00 billion (2005) dollars).  We expect these proposed amendments to
prevent 620 to 1600 premature mortalities.  The monetized benefits are
comprised primarily of the benefits from reductions in directly emitted
PM2.5 and PM2.5 created from transformation of NOx and SO2.  We cannot
provide a monetary estimate for the benefits associated with reductions
of HAP and CO due to a lack of scientific knowledge of the links between
the reductions in incidence of the health and environmental effects
listed and a value that can be placed on them.  EPA currently has
research going on to provide such monetized estimates.   We are also
unable to quantify and monetize all categories of benefits of NOx
reductions (ecosystem and environmental effects), and to monetize
reduction in premature mortalities associated with ozone reductions. 
The methodology for estimating monetized benefits is discussed in more
detail in the RIA.  

EPA performed a screening analysis for impacts on the three affected
small entities by comparing compliance costs to entity revenues. EPA’s
analysis found that the ratio of compliance cost to company revenue for
two small entities (including a tribal government) would have an
annualized cost of between 1 percent and 3 percent of sales. One small
business would have an annualized cost of 4.8 percent of sales.  All
three affected facilities are projected to continue to operate under
with-regulation conditions. 

	EPA also evaluated small business impacts using the ISIS model.  There
are a total of 7 kilns identified to be associated with small business
facilities affected by this proposal. ISIS identified one of these kilns
to retire in 2013 as a result of the proposed NESHAP.  A second kiln
reduces its utilization by 56 percent in 2013 but recovers later in the
2013 to 2018 time frame as the demand increases.  All the remaining
small business kilns operate at full capacity throughout the 2013 to
2018 time frame.

Although this proposed rule will not impact a substantial number of
small entities, EPA nonetheless has tried to reduce the impact of this
proposed rule on small entities by setting the proposed emissions limits
at the MACT floor, the least stringent level allowed by law.  In the
case where there are overlapping standards between this NESHAP and the
Portland Cement NSPS, we have exempted sources from the least stringent
requirement thereby eliminating the overlapping monitoring, testing and
reporting requirements by proposing that the source comply with only the
more stringent of the standards.  We continue to be interested in the
potential impacts of this proposed rule on small entities and welcome
comments on issues related to such impacts.

One small government entity, a tribe may also be affected by this
proposed rule. EPA estimates that the facility owned by a tribal
government will incur approximately $2.1 million in costs per year. 

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