1
MEMORANDUM
DATE:
June
2,
2005
SUBJECT:
Cost
Impacts
Associated
with
NSPS
for
Stationary
CI
ICE
FROM:
Tanya
Parise,
Alpha­
Gamma
Technologies,
Inc.

TO:
Sims
Roy,
EPA
OAQPS
ESD
Combustion
Group
The
purpose
of
this
memorandum
is
to
provide
an
estimate
of
the
cost
impacts
of
the
proposed
new
source
performance
standards
(
NSPS)
for
stationary
compression
ignition
(
CI)
internal
combustion
engines
(
ICE).
Costs
associated
with
the
proposed
rule
include
costs
of
add­
on
emission
control
and
activities
related
to
engine
certification
for
manufacturers,
and
the
cost
of
initial
notification,
recordkeeping,
and
testing
for
certain
engine
owners
and
operators.

The
total
estimated
costs
of
the
proposed
NSPS
for
stationary
CI
engines
are
presented
in
Table
1.
The
capital
cost
of
control
of
the
NSPS
is
estimated
to
be
$
67
million
in
2015,
the
model
year
for
which
all
stationary
CI
ICE
would
have
to
meet
final
Tier
4
emission
standards.
The
annual
cost
of
control
of
the
NSPS
is
estimated
to
be
$
46
million
in
2015.
The
total
annual
cost
in
2015
is
estimated
to
be
$
57
million.
Total
estimated
control
costs
by
North
American
Industry
Classification
System
(
NAICS)
codes
are
shown
in
Table
2
for
the
following
industries:

335312
­­
Motor
and
Generator
Manufacturing
333911
­­
Pump
and
Pumping
Equipment
Manufacturing
333912
­­
Air
and
Gas
Compressor
Manufacturing
333992
­­
Welding
and
Soldering
Equipment
Manufacturing
2
Table
1.
Summary
of
Total
Costs
Associated
with
NSPS
Type
of
Cost
Total
Costs
($)

2011
2012
2013
2014
2015
2016
2017
Capital
Control
Cost
30,979,878
40,072,436
42,449,091
62,633,605
66,847,709
68,582,222
70,316,736
Annual
Control
Cost
4,376,759
10,421,567
16,843,561
26,083,667
36,069,319
43,310,598
56,807,506
Engine
Certification
844,916
844,916
844,916
844,916
844,916
844,916
844,916
Initial
Notification
5,768
5,768
5,768
5,768
5,768
5,768
5,768
Recordkeeping
10,194,065
12,540,355
15,014,194
17,562,107
20,218,455
22,949,698
25,755,835
Total
Annual
Cost
15,421,507
23,812,606
32,708,439
44,496,458
57,138,458
70,110,981
83,414,025
*
Summed
values
may
not
total
due
to
rounding.

Table
2.
Summary
of
Control
Costs
Associated
with
NSPS
by
NAICS
NAICS
Control
Cost
($
million)

2011
2012
2013
2014
2015
2016
2017
335312
Capital
control
Annual
control
25.7
3.8
31.8
8.7
33.2
13.8
46.2
20.7
49.9
28.4
51.2
36.2
52.4
44.4
333911
Capital
control
Annual
control
1.4
0.2
2.1
0.5
2.3
0.8
4.2
1.4
4.3
2.0
4.4
2.6
4.5
3.2
333912
Capital
control
Annual
control
3.1
0.4
4.9
1.0
5.5
1.8
9.8
3.2
10.1
4.6
10.4
6.0
10.6
7.5
333992
Capital
control
Annual
control
0.8
0.09
1.2
0.2
1.5
0.4
2.5
0.8
2.6
1.1
2.7
1.5
2.7
1.9
3
*
Summing
values
in
this
table
may
not
total
to
Table
1
values
due
to
rounding.
Projected
Number
of
New
Engines
The
projected
number
of
new
stationary
CI
internal
combustion
engines
per
year
in
the
years
2011
through
2017
is
given
in
Table
3.
The
methodology
for
determining
the
projected
number
of
new
stationary
CI
internal
combustion
engines
is
discussed
in
the
memorandum
entitled
"
Population
and
Projection
of
Stationary
Engines."
The
estimate
given
in
Table
3
represents
the
number
of
new
stationary
CI
engines
per
year
and
includes
all
applications.
It
is
estimated
that
80
percent
of
the
total
population
of
stationary
CI
engines
are
used
in
emergency
service
and
that
the
remaining
20
percent
are
non­
emergency
engines.

Table
3:
Projected
Number
of
New
Stationary
CI
Engines
Per
Year
from
2011
through
2017
HP
Range
2011
2012
2013
2014
2015
2016
2017
50­
100
21,481
22,243
23,006
23,768
24,530
25,293
26,055
100­
175
19,061
19,615
20,168
20,722
21,276
21,829
22,383
175­
300
19,230
19,911
20,592
21,273
21,954
22,635
23,316
300­
600
7,004
7,168
7,333
7,498
7,662
7,827
7,991
600­
750
960
976
993
1,009
1,026
1,042
1,059
>
750
4,781
4,908
5,034
5,160
5,287
5,413
5,539
Total
72,516
74,820
77,125
79,429
81,734
84,038
86,343
*
The
projected
number
of
new
stationary
CI
engines
in
this
table
represents
non­
emergency
and
emergency
engines.

Cost
of
Control
Engine
manufacturers
must
certify
all
their
stationary
non­
emergency
CI
engines
to
final
Tier
4
PM
and
NOx
emission
standards
according
to
the
schedule
for
nonroad
diesel
engines
shown
in
Table
4.
The
final
Tier
4
PM
standards
for
stationary
nonemergency
CI
engines
greater
than
or
equal
to
25
horsepower
(
HP)
are
based
on
the
use
of
catalyzed
diesel
particulate
filters
(
CDPF).
For
stationary
non­
emergency
CI
engines
greater
than
or
equal
to
75
HP,
the
NOx
emission
standards
are
based
on
utilizing
NOx
adsorbers.
The
EPA
is
not
proposing
any
emission
standards
that
are
based
on
add­
on
control
for
NOx
for
stationary
CI
engines
less
than
75
HP.
The
proposed
NSPS
does
not
require
emergency
engines
to
meet
emission
standards
based
on
add­
on
controls.
Therefore,
no
control
costs
are
associated
with
emergency
4
engines.

Table
4.
Tier
4
Emission
Standards
Schedule
for
Engine
Manufacturers
HP
Range
Model
Year
PM
NOx
<
25
Tier
4
standard
is
not
based
on
add­
on
control
Tier
4
standard
is
not
based
on
add­
on
control

25
to
<
50
2013

50
to
<
75
2013

75
to
<
100
2012
2014

100
to
<
175
2012
2014

175
to
<
300
2011
2014

300
to
<
600
2011
2014

600
to

750
2011
2014
>
750
to

1,200
2015
2015
>
1,200
2015
2011
*
The
EPA
does
not
expect
there
will
be
any
stationary
CI
engines
less
than
50
HP
and
has
therefore
not
included
the
cost
of
control
for
engines
less
than
50
HP
in
this
estimate.
**
Note
that
based
on
information
used
to
estimate
the
projected
number
of
new
stationary
CI
engines,
it
appears
that
the
majority
of
stationary
CI
engines
greater
than
750
HP
are
generator
sets.
Our
estimates
of
NOx
and
PM
emission
reduction
for
engines
greater
than
750
HP
are
therefore
based
on
the
final
Tier
4
emission
standards
for
generator
sets.

The
cost
of
NOx
adsorbers
and
CDPF
are
based
on
costs
developed
for
the
rule
for
nonroad
diesel
engines
and
were
presented
in
the
memorandum
entitled
"
Control
Costs
for
NOx
Adsorbers
and
CDPF
for
CI
Engines."
The
capital
and
annual
costs
of
NOx
adsorber
and
CDPF
are
presented
in
Table
5.
Total
control
costs
for
nonemergency
stationary
CI
engines
were
estimated
based
on
these
control
costs
multiplied
by
the
average
HP
for
each
HP
range
(
also
shown
in
Table
5)
and
the
estimated
number
of
new
non­
emergency
engines.
The
total
control
costs
were
shown
in
Table
1.
5
Table
5.
Capital
and
Annual
Costs
for
NOx
adsorber
and
CDPF
HP
Range
Average
HP
NOx
Adsorber
CDPF
Total
Capital
Cost
($/
HP)
Total
Annual
Cost
($/
HP)
Total
Capital
Cost
($/
HP)
Total
Annual
Cost
($/
HP)

50­
75
63
10
1
12
2
75­
100
88
10
1
12
2
100­
175
135
8
1
10
2
175­
300
238
7
1
9
1
300­
600
450
6
1
8
1
600­
750
675
6
1
8
1
750­
1,200
975
5
1
7
1
1,200­
3,000
2,100
5
1
7
1
>
3,000
5,000
5
1
7
1
*
The
EPA
does
not
expect
there
will
be
any
stationary
CI
engines
less
than
50
HP
and
has
therefore
not
included
the
cost
of
control
for
engines
less
than
50
HP
in
this
estimate.

Cost
of
Certification
Manufacturers
of
stationary
CI
engines
will
be
required
to
certify
their
engines
starting
with
the
2007
model
year.
Based
on
information
received
from
engine
manufacturers,
EPA
has
estimated
that
about
200
engine
families
currently
certified
for
nonroad
use
will
be
required
to
be
certified
to
the
rule
for
stationary
CI
engines.
The
EPA
expects
that
minimal
additional
effort
will
have
to
be
spent
certifying
these
200
engine
families
for
stationary
use
also.
It
is
estimated
that
the
manufacturer
will
have
to
spend
1
hour
per
engine
family
to
certify
each
engine
family
to
the
requirements
of
the
stationary
CI
rule.
It
is
assumed
that
a
technical
person
will
handle
the
certification
at
a
rate
of
$
65
per
hour.
The
EPA
estimates
a
cost
of
$
13,000
per
year
to
certify
stationary
CI
engines
that
are
currently
certified
to
the
nonroad
CI
engine
rule.

In
addition,
EPA
estimates
that
another
35
engine
families
that
are
used
for
stationary
purposes
only
will
be
required
to
be
certified
to
the
emission
standards
of
the
rule.
These
engines
are
not
currently
certified
to
any
nonroad
standards
and
manufacturers
of
these
engines
would
need
to
conduct
all
activities
that
are
associated
with
obtaining
certification
for
these
engines.
The
EPA
anticipates
that
the
manufacturer
burden
to
certify
stationary
only
engine
families
will
be
the
same
as
the
manufacturer
burden
EPA
has
previously
estimated
for
the
certification
of
nonroad
CI
1Information
Collection
Request
Support
Statement.
Information
Requirements
for
Nonroad
Diesel
Engines
(
Nonroad
Large
SI
Engines
and
Marine
Diesel
Engines)
(
Amendments).
Spring
2004.
Assessment
and
Standards
Division,
Office
of
Transportation
and
Air
Quality,
Office
of
Air
and
Radiation,
U.
S.
Environmental
Protection
Agency.
ICR
Tracking
Number
1897.07.

6
engines1.

A
total
of
1,077
nonroad
engine
families
will
be
certified
per
year
under
the
nonroad
CI
engine
program.
The
EPA
estimated
that
10
nonroad
engine
families
will
be
subject
to
selective
enforcement
audits
(
SEA),
which
equates
to
approximately
1
percent
of
the
engine
families.
The
EPA
believes
that
it
is
reasonable
to
assume
that
the
same
percent
of
SEA
would
occur
for
stationary
engines.
In
addition,
for
the
nonroad
CI
engine
information
collection
request,
EPA
took
into
account
the
manufacturers'
need
to
investigate
and
report
emission­
related
defects
and
assumed
that
10
percent
of
the
engine
families
trigger
the
defect­
investigation
threshold.
The
EPA
assumed
that
manufacturers
would
require
126
hours
of
effort
per
engine
family
to
perform
the
investigation
and
submit
the
required
reports.
Since
stationary
engines
will
be
required
to
follow
the
certification
program
that
is
established
for
nonroad
engines,
the
EPA
believes
that
the
same
percentage
of
stationary
engine
families
would
have
to
conduct
defect­
reporting
with
the
same
amount
of
effort.
A
certification
cost
of
$
2,156
per
engine
family
for
engine
families
that
will
be
certified
for
stationary
use
only
has
also
been
included.
Finally,
consistent
with
the
nonroad
CI
engine
ICR,
operation
and
maintenance
costs
associated
with
engine
certification
have
been
included.
Operation
and
maintenance
costs
include
expenses
related
to
engine
testing.
Costs
are
for
laboratory
time,
the
use
of
test
equipment,
engine
parts,
fuel
and
other
supplies,
and
fabrication
of
test
tools
and
fixtures.
The
EPA
estimates
a
total
certification
cost
of
about
$
830,000
to
certify
engine
families
that
are
not
already
certified
to
nonroad
CI
standards.
Table
6
presents
a
breakdown
of
the
various
costs
related
to
the
certification
process.
7
Table
6.
Estimated
Cost
of
Certifying
Engine
Families
for
Stationary
Use
Only
Requirement
Estimated
Labor
Hours
per
Engine
Family
Labor
Cost
per
Engine
Family
O&
M
Costs
per
Engine
Family
Number
of
Families
Total
Cost
per
Year
Mgr.
@
$
73/
hr
Tech.
@
$
65/
hr
Cler.
@
$
33/
hr
Certification
Application*
2
36
6
$
2,690
$
0
35
$
169,610
Recordkeeping
0.2
2.2
2
$
224
$
0
35
$
7,847
Certification/
Durability
Testing
0
168
0
$
10,920
$
4,776
35
$
549,360
Selective
Enforcement
Audits
5
100
10
$
7,210
$
75,105
1
$
82,315
Defect
Reporting
6
40
80
$
5,696
$
0
4
$
22,784
Total
$
831,916
*
Cost
for
certification
application
includes
fees
assessed
at
$
2,156
per
engine
family.

Cost
of
Initial
Notification
The
rule
requires
owners
and
operators
of
non­
emergency
stationary
CI
engines
that
are
greater
than
3,000
HP
or
that
have
a
displacement
of
10
liters
per
cylinder
or
more
to
submit
an
initial
notification.
Engine
manufacturers
have
indicated
that
approximately
160
stationary
CI
engines
greater
than
3,000
HP
are
sold
each
year.
The
EPA
estimates
that
20
percent
of
all
engines
are
used
for
non­
emergency
purposes.
This
means
that
there
are
an
estimated
32
new
non­
emergency
engines
greater
than
3,000
HP
sold
each
year
that
would
have
to
submit
an
initial
notification.
According
to
manufacturers,
eight
engines
with
a
displacement
of
10
liters
per
cylinder
or
more
are
sold
in
the
U.
S.
each
year.
All
of
these
engines
are
assumed
to
be
nonemergency
engines
and
would
have
to
submit
an
initial
notification.
Owners
and
operators
of
pre­
2007
model
year
non­
emergency
stationary
CI
engines
that
are
greater
than
175
HP
and
that
are
not
certified
are
also
required
to
submit
an
initial
notification.
However,
since
the
cost
estimates
in
this
memorandum
are
shown
for
the
years
2011
through
2017,
the
cost
of
initial
notification
for
pre­
2007
model
year
engines
are
not
presented.
Owners
and
operators
of
emergency
stationary
CI
engines
are
not
required
to
submit
any
notifications.

The
cost
of
an
initial
notification
is
estimated
at
$
144.
The
initial
notification
is
based
on
2
technical
hours,
which
EPA
estimates
is
a
sufficient
amount
of
time
to
prepare
and
submit
the
information
associated
with
an
initial
notification.
The
management
and
clerical
hours
are
estimated
as
a
percentage
of
the
technical
hours
8
[(
2
hrs
x
$
65
hr
)

(
0.05
x
2
hrs
x
$
76
hr
)

(
0.1
x
2
hrs
x
$
33
hr
)]
x
40
Engine
and
are
5
and
10
percent,
respectively.
The
labor
rates,
on
a
per­
hour
basis,
were
obtained
from
the
Bureau
of
Labor
Statistics
web
site
(
http://
www.
bls.
gov/
news.
release/
ecec.
toc.
htm)
as
posted
for
June
2004.
The
base
labor
rates
are
$
28.20
for
technical
personnel,
$
32.12
for
management,
and
$
13.91
for
clerical.
The
total
compensation
rate
is
$
38.82
for
technical
personnel,
$
45.29
for
managerial,
and
$
19.92
for
clerical.
This
accounts
for
paid
leave,
insurance,
etc.
The
compensation
rates
were
then
adjusted
by
an
overhead
and
profit
rate
of
167
percent.
The
final
total
wage
rates
are
as
follows:

Technical
Personnel:
$
65
per
hour
Management:
$
76
per
hour
Clerical:
$
33
per
hour
The
total
cost
of
submitting
initial
notifications
was
calculated
using
the
following
equation:

yielding
a
total
cost
for
submitting
initial
notifications
of
$
5,768
per
year,
as
shown
in
Table
1.

Cost
of
Recordkeeping
The
proposed
rule
includes
recordkeeping
requirements
that
apply
to
owners
and
operators
of
certain
stationary
CI
ICE.
Owners
and
operators
of
emergency
stationary
engines
are
required
to
keep
records
of
the
hours
spent
operating
during
non­
emergencies,
i.
e.,
during
maintenance
and
testing.
The
rule
requires
that
owners
and
operators
limit
this
time
to
30
hours
per
year.
A
non­
resettable
hour
meter
must
be
installed
to
keep
track
of
operation
during
non­
emergencies
to
ensure
the
hours
of
operation
restricted
by
the
rule
is
not
exceeded.
According
to
vendors,
an
hour
meter
is
typically
included
with
the
engine,
therefore,
no
separate
cost
of
the
hour
meter
was
estimated.
The
EPA
anticipates
that
minimal
effort
will
be
involved
in
recording
the
number
of
hours
spent
in
emergency
operation
and
estimates
that
about
1/
2
hour
per
year
of
technical
labor
will
be
required
to
record
and
keep
the
appropriate
records.

The
EPA
estimates
that
there
will
be
308,225
new
emergency
engines
subject
to
the
rule
in
the
year
2011.
This
estimate
includes
75
percent
of
2006
model
year
emergency
engines
and
2007
through
2011
model
year
emergency
engines.
The
cost
of
recording
hours
during
non­
emergency
operation
in
2011
was
calculated
as
follows:
9
1/
2
hr
Technical
Labor
x
$
65
hr
x
308,225
Engines
1/
2
hr
Technical
Labor
x
$
65
hr
x
5,439
Engines
yielding
a
total
cost
for
recording
hours
of
operation
during
non­
emergencies
of
$
10,017,313.

Owners
and
operators
of
stationary
CI
ICE
that
are
equipped
with
DPF
are
required
to
install
a
backpressure
monitor
that
notifies
the
operator
when
the
high
backpressure
limit
of
the
engine
is
approached.
Control
technology
vendors
have
indicated
that
a
backpressure
monitor
is
typically
included
with
the
equipment
so
no
separate
cost
was
estimated.
Owners
and
operators
are
required
to
keep
records
of
any
corrective
action
performed
after
the
backpressure
monitor
alerts
the
operator.
The
earliest
a
DPF
would
be
required
would
in
the
year
2011,
therefore,
recordkeeping
costs
associated
with
this
requirement
has
been
estimated
for
2011
model
year
and
later
engines.
The
EPA
expects
that
cleaning
of
the
DPF
will
be
conducted
about
once
per
year.
This
is
based
on
what
the
California
Air
Resources
Board
estimated
for
the
stationary
CI
engine
regulation,
where
cleaning
was
expected
to
occur
every
1,500
hours
of
operation.
Information
indicates
that
non­
emergency
engines
operate
on
average
about
1,000
hours
per
year,
therefore,
cleaning
is
anticipated
to
occur
about
once
per
year.
Again,
minimal
effort
is
involved
with
keeping
records
of
action
taken
after
the
backpressure
monitor
has
alerted
the
operator
that
the
high
backpressure
limit
has
been
reached
and
EPA
estimates
that
1/
2
per
year
of
technical
labor
will
be
sufficient
to
document
the
action
taken.

As
mentioned,
the
earliest
DPF
would
be
required
would
be
in
the
year
2011
and
engines
between
175
and
750
HP
would
be
equipped
with
DPF
in
this
year.
The
EPA
estimates
that
5,439
new
non­
emergency
engines
between
175
and
750
HP
will
come
online
in
2011.
To
estimate
the
cost
of
recording
action
taken
following
backpressure
alerts
in
2011,
the
following
equation
was
used:

yielding
a
total
cost
for
recording
action
taken
after
backpressure
alerts
in
the
year
2011
of
$
176,768.
Adding
the
cost
of
recording
backpressure
alerts
to
the
cost
of
recording
the
number
of
hours
of
operation
during
non­
emergencies
($
10,017,313),
yields
a
total
recordkeeping
cost
of
about
$
10,194,100
in
2011,
consistent
with
the
figure
shown
in
Table
1
for
this
year.
10
11
$
2,000
per
test
x
12,200
Engines
MY
2006
x
0.75
x
0.20
Cost
of
Testing
The
majority
of
owners
and
operators
of
stationary
CI
engines
covered
by
this
rule
will
demonstrate
compliance
by
purchasing
a
certified
engine.
There
will
be
a
period
during
which
certified
stationary
non­
emergency
CI
engines
may
not
be
available.
The
proposed
NSPS
requires
that
engine
manufacturers
certify
their
2007
model
year
and
later
stationary
CI
engines
to
the
nonroad
diesel
engine
emission
standards.
The
proposed
rule
also
requires
pre­
2007
model
year
engines
subject
to
the
rule
to
meet
emission
standards
based
on
current
levels
achieved.
However,
pre­
2007
model
year
engines
may
not
be
available
as
certified
engines
since
the
proposed
rule
requires
that
engine
manufacturers
certify
stationary
engines
starting
with
2007
model
year
engines.
Therefore,
some
owners
and
operators
of
pre­
2007
model
year
engines
will
have
to
demonstrate
compliance
by
other
means.
Options
for
demonstrating
compliance
include
keeping
records
of
engine
manufacturer
or
control
device
vendor
data
and
test
results
for
a
performance
test
conducted
on
a
similar
engine.
The
owner
and
operator
may
also
demonstrate
initial
compliance
by
conducting
a
performance
test
on
the
engine.
The
EPA
expects
that
most
owners
and
operators
will
rely
on
information
available
from
the
engine
manufacturer
and
control
device
vendor
to
demonstrate
initial
compliance
and
estimates
that
only
20
percent
of
stationary
pre­
2007
model
year
non­
emergency
CI
engines
subject
to
the
rule
will
conduct
a
performance
test.
No
performance
testing
is
expected
to
occur
after
certified
engines
become
available
although
the
enforcing
agency
may
request
a
performance
test.

For
purposes
of
estimating
costs,
it
is
assumed
that
2006
model
year
engines
will
test
in
2006
and
based
on
the
applicability
date
of
the
rule
(
engines
ordered
after
the
proposal
date
and
manufactured
after
April
1,
2006),
the
EPA
estimates
that
about
75
percent
of
2006
model
year
engines
will
be
affected
by
the
rule
and
will
have
to
comply
with
emissions
limitations.
A
performance
test
is
expected
to
cost
approximately
$
2,000
and
EPA's
projection
estimates
indicate
that
there
will
be
approximately
12,200
new
non­
emergency
stationary
CI
engines
in
2006,
of
which
75
percent,
or
9,150
will
be
affected
by
the
rule.
The
cost
of
testing
in
2006
was
calculated
as
follows:

yielding
estimated
testing
costs
of
about
$
3.7
million
for
2006
model
year
engines.
