





MEMORANDUM

TO:	Mary Johnson, U.S. Environmental Protection Agency, OAQPS/SPPD

FROM:	Eastern Research Group

DATE:	December 2012

SUBJECT:	Revision of Cost Impacts for Reconsideration of the NESHAP for Area Sources:  Industrial, Commercial, and Institutional Boilers



1.0	INTRODUCTION
      This memorandum describes corrections to cost impacts published in Estimated Impacts from the Proposed Amendments to the NESHAP for Area Sources: Industrial, Commercial, and Institutional Boilers  which provides details for  the estimated cost, emissions, and secondary impacts for the proposed amendments to the promulgated March, 2011 Area Source Industrial, Commercial, and Institutional Boiler NESHAP (76 FR 15554)[1].  The data presented in this memorandum represent the cost impacts from the March 2011 Final Rule to the December 2011 Proposed Reconsideration of the final rule (76 FR 80532) for the selected options 4E and 4N, and replace the data presented in Section 3.0 of the published Estimated Impacts from the Proposed Amendments to the NESHAP for Area Sources: Industrial, Commercial, and Institutional Boilers.  This memorandum also discusses why annualized costs for existing area sources increased from the March 2011 final rule.
      This memorandum is separated into the following sections:
      1.0	Introduction
      2.0	Discussion of Changes to Cost Impacts
      3.0	References
2.0	DISCUSSION OF CHANGES TO COST IMPACTS
      The November 2011 memorandum titled "Estimated Impacts from the Proposed Amendments to the NESHAP for Area Sources:  Industrial, Commercial, and Institutional Boilers" portrayed cost impacts for both existing and new area source boilers[1].  Table 1 ("Summary of Changes to Cost Impacts since Promulgated Rule") in this previous memorandum portrayed costs from regulatory option 3E for existing area sources and regulatory option 3N for new area sources.  Because the options selected in the final rule were regulatory options 4E and 4N, Table 1 is being updated to portray cost impacts calculated under regulatory options 4E and 4N for existing and new area source boilers, respectively.  A discussion of the various regulatory options is provided in the memorandum titled "Revised Methodology for Estimating Impacts from Industrial, Commercial, Institutional Boilers at Area Sources of Hazardous Air Pollutant Emissions" in the docket[2].  In option 3E, all existing large (greater than 10 million British thermal units per hour) coal-, biomass-, and liquid-fired boilers must meet mercury (Hg) and carbon monoxide (CO) limits based on MACT.  Similarly, in option 3N, new large biomass- and liquid-fired boilers, as well as new coal-fired boilers of any size, must meet Hg and CO limits based on MACT.  Options 4E and 4N are similar to options 3E and 3N, respectively, with the exception of existing and new biomass- and liquid-fired boilers being subject to a tune-up in lieu of Hg and CO limits.
      Table 1 contains the cost impacts for options 3E and 3N as presented in Table 1 of the memorandum "Estimated Impacts from the Proposed Amendments to the NESHAP for Area Sources:  Industrial, Commercial, and Institutional Boilers".  Table 2 contains the cost impacts for the chosen regulatory options 4E and 4N.

Table 1 - Summary of Changes to Cost Impacts since Promulgated Rule for Alternative Regulatory Options 3E and 3N
                                    Source
                       Total Capital Investment ($2008)
                       Total Annualized Costs ($2008)[A]
                                       
                               Promulgated Rule
                                Reconsideration
                               Promulgated Rule
                                Reconsideration
                         Existing Sources (option 3E)
                                 2,100,370,929
                                 2,100,370,929
                                  586,995,677
                                  598,829,342
                                  New Sources
                                  (option 3N)
                                  619,756,216
                                  508,933,671
                                  264,869,374
                                  234,624,437
A Annualized costs for existing sources include energy assessment costs.
Table 2  -  Summary of Changes to Cost Impacts since Promulgated Rule for Chosen Regulatory Options 4E and 4N
                                    Source
                       Total Capital Investment ($2008)
                       Total Annualized Costs ($2008)[A]
                                       
                               Promulgated Rule
                                Reconsideration
                               Promulgated Rule
                                Reconsideration
                               Existing Sources
                                  (option 4E)
                                 1,303,809,341
                                 1,303,809,341
                                  487,097,790
                                  499,569,047
                                  New Sources
                                  (option 4N)
                                  125,236,654
                                  76,398,844
                                  47,762,318
                                  27,559,196
[A] Annualized costs for existing sources include energy assessment costs.
      
2.1	Increased Annualized Costs for Existing Sources
      In the memorandum "Revised Methodology for Estimating Impacts from Industrial, Commercial, Institutional Boilers at Area Sources of Hazardous Air Pollutant Emissions", the annualized costs for fabric filters for existing large coal-fired area source boilers were incorrectly assigned a cost of $274,739 per boiler.  We have revised the annual cost estimate for these units to $422,359 per boiler.   The total annual cost for all existing large coal-fired area source boilers expected to install a fabric filter has been revised from $30,383,446 (reported in the memorandum "Revised Methodology for Estimating Impacts from Industrial, Commercial, Institutional Boilers at Area Sources of Hazardous Air Pollutant Emissions") to $42,225,467.
3.0	REFERENECS

1.	Eastern Research Group.  Estimated Impacts from the Proposed Amendments to the NESHAP for Area Sources: Industrial, Commercial, and Institutional Boilers.  November, 2011.

2.	Gibson, G., S. McClutchey, and A. Singleton, ERG.  Revised Methodology for Estimating Impacts from Industrial, Commercial, Institutional Boilers at Area Sources of Hazardous Air Pollutant Emissions.  February, 2011.
