Waste Energy Registry:  Regulatory/Economic Analysis

EXECUTIVE SUMMARY

In developing this proposal, EPA prepared an economic analysis to
estimate the cost of the proposal, whether the rule is significant in
terms of economic impact, how the rule might impact small entities, and
the cost-effectiveness of regulatory alternatives.  The results of these
analyses are described next.

The cost of the proposed rule reflects both the costs of collecting
waste energy information, primarily through a survey, and the costs of
maintaining the information on a publicly available EPA website.  EPA
estimates total 3-year costs of $4.9 million for the preferred
alternative. This amount is well below the $100 million threshold for
significant rules.

The analysis determined that private costs per respondent would be under
$700 total, and, thus, do not impose a significant impact, neither on
large nor small businesses.  Furthermore, given that the survey is
targeted at the largest 1% of non-manufacturing establishments and the
largest 2% of manufacturing establishments, the survey is unlikely to
affect many small entities at all.  Respondents that download and submit
Survey reporting information without request from EPA are unlikely to be
small entities because these respondents are likely to know if they have
economically feasible recoverable waste energy.

The analysis also compared regulatory options for the proposed rule. 
Specifically, the analysis evaluated the cost-effectiveness of the
preferred alternative of including combined heat and power (CHP) in the
scope of the program.  Including CHP is expected to increase program
costs by $3.0 million from $1.9 million without CHP to $4.9 million with
CHP.  However, cost-effectiveness is improved by adding CHP: although
costs increase by 58%, the number of surveyed establishments increases
by 217% (i.e., increase of 7,592 from 3,506 establishments to 11,098
establishments). In other words, the cost per survey response (at a 50%
response rate) when CHP is included is $883 (i.e., $4.9 million divided
by 5,549 returned survey responses) compared to a cost of $1,084 (i.e.,
$1.9 million divided by 1753 returned survey responses) when CHP is not
included. Including CHP raises cost-effectiveness by 23% using these
metrics.

INTRODUCTION

This document is the regulatory/economic analysis for the development of
a rule for establishing the Registry of Recoverable Waste Energy Sources
(Registry) as directed by Congress in Title IV of the Energy
Independence and Security Act of 2007 (EISA) signed into law by
President Bush on December 19, 2007.

Subtitle D of EISA focuses on industrial energy efficiency and contains
new provisions designed to improve energy efficiency.  EPA is required
under Subtitle D, Part E to establish a recoverable waste energy
inventory program (the program).  Specifically, EPA must:

Develop an ongoing survey of all major domestic industrial and large
commercial sources (as defined by the Administrator) as well as the
sites at which the sources are located and review of each source for the
quantity and quality of waste energy produced.

Publish a rule within 270 days of EISA enactment that establishes the
criteria by which sites that have financial paybacks of five years of
less will be listed in the Registry of Recoverable Waste Energy Sources
(the Registry).

Establish the Registry within one year of EISA enactment.

Provide an annual report to Congress describing lost opportunities for
domestic waste-heat recovery projects and calculating the quantity of
lost energy and emission reductions.

Develop a grant program to fund additional efficiency programs in those
DOE certified States that have achieved 80 percent or more of the waste
heat recovery opportunities.

This document presents regulatory/economic analyses applicable to the
rulemaking required to establish the Registry and the associated
procedures for populating and administering the Registry.  The document
is organized as follows:

Background

Regulatory Options

Affected Universes

Costs to EPA and the Affected Universes

Benefits of the Program

Impacts on Small Entities

Appendix 1:  Estimated Cost of Registry

Appendix 2:  Estimated Cost of Survey

Appendix 3:  Draft Survey Form

BACKGROUND

EPA is required under EISA Title IV to establish a recoverable waste
energy inventory program.  Key elements of the provisions are:

Section 372, Survey and Registry.  EPA shall conduct an ongoing survey
of all domestic major industrial and large commercial sources (as
defined by the Administrator) as well as the sites at which the sources
are located, and review each source for the quantity and quality of
waste energy produced.  EPA shall establish a Registry of recoverable
waste energy sources within one year of EISA enactment, and publish a
rule within 270 days of EISA enactment for the criteria by which sites
are to be included in the Registry.

Criteria shall include:

A requirement that a listed project be economically feasible by offering
a payback of invested costs (including incentives offered under Part E)
not later than five years after the date of operation;

Standards to ensure that projects proposed for inclusion in the Registry
are not developed or used for the primary purpose of making sales of
excess power under the regulatory provisions of Part E; and

Procedures for contesting listings.

EPA shall calculate the total quantities of potentially recoverable
waste energy from sources, nationally and by state, and make public the
total quantities and information on the criteria pollutant and
greenhouse gas emissions savings that might be achieved with recovery of
the waste energy from all sources listed on the Registry.

EPA shall not list any source constructed after EISA enactment if EPA
determines that the source:

Was developed for the primary purpose of making sales of excess electric
power under the regulatory provisions of the part; or

Does not capture at least 60 percent of the total energy value of the
fuels used in the form of useful thermal energy, electricity, mechanical
energy, chemical output, or any combination thereof.

Section 373, Waste Energy Recovery Incentive Grant Program.  The
development of a grant program to fund additional efficiency programs in
those DOE certified States that have achieved 80 percent or more of the
waste heat recovery opportunities.

Section 374, Additional Incentives for Recovery, Use, and Prevention of
Industrial Waste Energy.  An annual report to Congress describing lost
opportunities for waste-heat recovery projects and calculating the
quantity of lost energy and emission reductions.

The current rulemaking addresses only Section 372.  

The Registry will be populated in two ways:  (1) the most likely sources
in all relevant industrial and commercial sectors will be surveyed by
EPA, and (2) sources may download and submit Survey reporting
information without request from EPA.  EISA states that the program must
include “an ongoing Survey” of all major domestic industrial and
large commercial sources as well as the sites at which the sources are
located, and “a review of each source for the quantity and quality of
waste energy produced.”  The Registry will compile potential waste
energy recovery projects from a variety of sources and sites. The
Registry is not intended to include minor industrial and small
commercial sources.  EPA expects to repeat the survey and refresh the
Registry every 3 to 5 years.

Under Executive Order 12866 and other requirements, EPA is required to
prepare an assessment of the costs and benefits of “significant”
regulatory actions.  EPA must also examine alternatives to any proposed
rule in order to choose the best possible outcome as embodied in a
Regulatory Impact Analysis (RIA).  Formal RIAs are required for
economically significant rulemakings with potential annual impacts of
$100 million or more on the U.S. economy.  A preliminary bounding
analysis indicated that a formal RIA will not be required for this rule,
although an economic analysis of key regulatory options is needed for
the proposed rulemaking.  

REGULATORY OPTIONS

The regulatory options considered in this analysis relate to the
potential definitions of waste energy, which affect the scope of the
program.  The EISA definition of waste energy is:

“(A)	exhaust heat or flared gas from any industrial process;

waste gas or industrial tail gas that would otherwise be flared,
incinerated, or vented;

a pressure drop in any gas, excluding any pressure drop to a condenser
that subsequently vents the resulting heat; and

such other forms of waste energy as the Administrator may determine.”

With respect to (C), the EPA work group has discussed whether or not to
include in the Registry pressure drop sources in pipeline transfer
stations, because none of these types of projects has been shown to be
economic, there are no projects like this operating now, and a recent
study by the Interstate Natural Gas Association of America supports
this.  The EPA has chosen to define (D) above as those forms of waste
energy that include traditional combined heat and power (CHP)
opportunities at major industrial and large commercial sources.

This analysis considers the following three major options for
implementing Section 372:

Option 1:	Do not issue regulations.  Under this option, EPA would not
issue regulations establishing the Registry and the criteria for listing
sites on the Registry.  No costs would be incurred by any party as a
result of this action.  Similarly, no benefits would result from this
option.

Option 2:	Issue regulations only for (A) waste heat, (B) waste stream
with fuel content, and (C) pressure drop recovery.  Under this option,
EPA would issue regulations establishing the Registry and the criteria
for listing sites in the Registry.  As a result, costs would be incurred
by the private sector and EPA.  Similarly, benefits would result from
this option.  The costs and benefits of Option 2 will reflect the scope
of the rule, which would include only large commercial and industrial
waste heat to power, waste gas and tail gas, and pressure drop.  Option
2 does not include traditional combined heat and power (CHP)
opportunities.

Option 3:	Option 2 plus combined heat and power (CHP).  Under this
preferred option, EPA would issue regulations establishing the Registry
and the criteria for listing sites in the Registry.  As a result, costs
would be incurred by the private sector and EPA.  Similarly, benefits
would result from this option.  The costs and benefits of Option 3 will
reflect the scope of the rule, which would include large commercial and
industrial waste heat to power, waste gas and tail gas, pressure drop,
and traditional combined heat and power (CHP) opportunities.

THE AFFECTED UNIVERSES

This analysis employs NAICS codes to describe affected universes. 
Exhibit 1 summarizes all the relevant codes.  Each regulatory option
involves a different affected universe.  

There is no affected universe for Option 1, the no regulation/no
Registry option.

Exhibit 2 lists potentially affected industry codes for Option 2.  These
codes are representative of the sectors that EPA expects to survey
and/or include in the Registry.  The specific codes are subject to
change as EPA continues its research and analysis.  Exhibit 2 notes
which of the three statutory definitions of waste energy are believed to
be relevant to each NAICS codes.  A survey of 1% of the establishments
in non-manufacturing codes and 2% in manufacturing codes means surveying
3,506 establishments.

Exhibit 3 lists potentially affected industry codes for Option 3, which
is the preferred option.  Exhibit 3 shows sectors that are expected to
have recoverable waste energy for CHP projects.  These codes also may
change as EPA continues its research and analysis.  A survey of 1% of
the establishments in non-manufacturing codes and 2% in manufacturing
codes means surveying 11,098 establishments.



Exhibit 1

DESCRIPTIONS OF KEY NAICS CODES

211 – Oil and Gas Extraction:  Industries that operate or develop oil
and gas field properties, including crude petroleum and natural gas
exploration; drilling, completing, and equipping wells; operating
separators, desilting equipment, and field gathering lines; and any
other activities involved in oil and gas preparation up to the point of
shipment.  Establishments include those that operate oil and gas wells
on their own or for others.  Also incorporated is the recovery of
hydrocarbon liquids and sulfur recovery from natural gas. 

212 – Mining (except Oil and Gas):  Industries practicing mining, mine
site development, and beneficiating of metallic minerals and nonmetallic
minerals, including coal (the process of reducing extracted material to
particles which can be separated into minerals and waste). 
Establishments in this subsector are comprised of those that maintain
full responsibility for operating mines and quarries (except oil and gas
wells) and those that operate mines and quarries for others.

221320 – Sewage Treatment:  Companies engaged in operating sewer
systems or sewage treatment works that collect, treat, and dispose of
wastewater.

221330 – Steam and Air-Conditioning Supply:  Establishments taking
part in providing and distributing steam (including geothermal steam
production), heated air, or cooled air.

311 – Food Manufacturing:  Industries that transform livestock and
agricultural products into products for intermediate or final
consumption, distinguished by the raw materials (typically of animal or
vegetable origin) processed into food products. Food products produced
in these industries are normally sold to wholesalers or retailers.

312 – Beverage and Tobacco Product Manufacturing:  Industries that
manufacture beverages and tobacco.  Beverage industries include those
which manufacture nonalcoholic beverages, alcoholic beverages through
the fermentation process, and distilled alcoholic beverages.  Tobacco
manufacturing includes redrying and stemming tobacco and manufacturing
tobacco products, such as cigarettes and cigars.

313 – Textile Mills:  Industries that transform a basic fiber (natural
or synthetic) into a product such as yarn, or into a fabric that is
further manufactured into useable items, such as apparel, sheets,
towels, and textile bags for individual consumption. Main processes
include preparation and spinning of fiber, knitting/weaving fabric, and
finishing of textiles.  

314 – Textile Product Mills:  Establishments that make textile
products (except apparel), typically utilizing cut and sew processes
(i.e., purchasing fabric and cutting and sewing to make nonapparel
textile products.)

315 – Apparel Manufacturing:  Industries that have two distinct
manufacturing processes: cut and sew, and knit fabric first and then cut
and sew the fabric into garments.

316 – Leather and Allied Product Manufacturing:  Establishments that
transform hides into leather by tanning or curing and fabricating the
leather into products for final consumption. This subsector also
includes the manufacture of similar products from other materials, such
as rubber, plastic, or textiles (leather substitutes).

321 – Wood Product Manufacturing:  Industries that manufacture wood
products such as lumber, plywood, veneers, wood containers, wood
flooring, wood trusses, manufactured homes, and prefabricated wood
buildings.  Production processes include sawing, planing, shaping,
laminating, and assembling wood products starting from logs that are cut
into bolts, or lumber that can be further cut, or shaped by lathes or
other shaping tools.

322 –  Paper Manufacturing:  Establishments that make pulp, paper, or
converted paper products, consisting of three activities: manufacturing
pulp via separating the cellulose fibers from other impurities in wood
or used paper; manufacturing paper via matting these fibers into a
sheet; and converting paper products from paper and other materials via
various cutting and shaping techniques.

323 – Printing and Related Support Activities:  Industries that print
products such as newspapers, books, labels, business cards, stationary,
business forms, and other materials, and perform support activities,
such as data imaging, platemaking services, and bookbinding.

32411 – Petroleum Refineries:  Establishments mainly focusing on
refining crude petroleum into refined petroleum involving one or more of
the following: (1) fractionation, (2) straight distillation of crude
oil, and (3) cracking.

324191 – Petroleum Lubricating Oil and Grease Manufacturing: 
Establishments engaged in blending or compounding refined petroleum to
make lubricating oils and greases and/or re-refining used petroleum
lubricating oils. 

325 – Chemical Manufacturing:  Industries centered around the
transformation of organic and inorganic raw materials by a chemical
process and the formulation of products.  The subsector distinguishes
the production of basic chemicals from the production of intermediate
and end products produced by further processing of basic chemicals.

326 – Plastic and Rubber Products Manufacturing:  Establishments
creating goods by processing plastic materials and raw rubber.

327 – Nonmetallic Mineral Product Manufacturing:  Industries that
transform mined or quarried nonmetallic minerals, such as sand, gravel,
stone, clay, and refractory materials, into products for intermediate or
final consumption.  Establishments include those that manufacture
products such as bricks, refractories, ceramic products, and glass and
glass products, such as plate glass and containers. Also included are
cement and concrete products, lime, gypsum and other nonmetallic mineral
products including abrasive products, ceramic plumbing fixtures,
statuary, cut stone products, and mineral wool.

331 – Primary Metal Manufacturing:  Industries that smelt or refine
ferrous and nonferrous metals from ore, pig, or scrap, using
electrometallurgical and other process techniques.

3311 – Iron and Steel Mills and Ferroalloy Manufacturing: 
Establishments that are mainly engaged in one or more of the following:
(1) direct reduction of iron ore, (2) manufacturing pig iron in molten
or solid form, (3) converting pig iron into steel, (4) manufacturing
ferroalloys, (5) making steel, (6) manufacturing shapes (e.g., bar,
plate, rod, sheet, strip, wire), and (7) forming pipe and tube.

3313 – Alumina and Aluminum Production and Processing:  Establishments
doing one or more of the following: (1) refining alumina, (2) making
aluminum (i.e., the primary production) from alumina, (3) recovering
aluminum from scrap or dross, (4) alloying purchased aluminum, and (5)
manufacturing aluminum primary forms (e.g., bar, foil, pipe, plate, rod,
sheet, tube, wire).

3314 – Nonferrous Metal (except Aluminum) Production and Processing: 
Industries engaged in smelting ores into nonferrous metals and/or
primary refining of nonferrous metals (except aluminum) using
electrolytic or other processes.

3315 – Foundries:  Establishments that pour molten metal into molds or
dies to form castings.  Foundries may perform operations, such as
cleaning and deburring, on the castings they manufacture.  

332 – Fabricated Metal Product Manufacturing:  Industries that
transform metal into intermediate or end products (other than machinery,
computers and electronics, and metal furniture) or treat metals and
metal formed products fabricated elsewhere.  Establishments may use one
or more of the following processes: forging, stamping, bending, forming,
and machining, used to shape individual pieces of metal; and other
processes, such as welding and assembling, used to join separate parts
together.

333 – Machinery Manufacturing:  Industries that create end products
that apply mechanical force, such as the application of gears and
levers, to perform work.  Important processes include forging, stamping,
bending, forming, machining to shape individual pieces of metal,
welding, and assembling.

334 – Computer and Electronic Product Manufacturing:  Industries that
manufacture computers, computer peripherals, communications equipment,
similar electronic products, and components for such products.  

335 – Electrical Equipment, Appliance, and Component Manufacturing: 
Establishments that manufacture products that generate, distribute,
store, and use electrical power (e.g., electric motors, generators,
transformers, switchgear apparatus, devices for storing electrical
power, transmitting electricity, and wiring devices) and that produce
electric lamp bulbs, lighting fixtures, and parts.

336 – Transportation Equipment Manufacturing:  Industries that produce
equipment for transporting people and goods.  Processes utilized include
bending, forming, welding, machining, and assembling metal or plastic
parts into components and finished products.

337 – Furniture and Related Product Manufacturing:  Industries that
make furniture and related articles, such as mattresses, window blinds,
cabinets, and fixtures.  Processes utilized include cutting, bending,
molding, laminating, and assembly of such materials as wood, metal,
glass, plastics, and rattan.

339 – Miscellaneous Manufacturing:  Industries that make a wide range
of products (for example, sporting and athletic goods such as tennis
racquets and golf balls) that are not easily classified into other
specific NAICS subsectors in manufacturing.  Products manufactured range
from medical equipment to jewelry.  

44511 – Supermarkets and Other Grocery (except Convenience) Stores: 
Supermarkets, grocery stores, and delicatessens engaged in retailing
general food products, such as canned and frozen foods, fresh and
prepared meats and fish, and fruits and vegetables.

4862 – Pipeline Transportation of Natural Gas:  Pipeline
transportation of natural gas from processing plants to local
distribution systems, including natural gas storage, operation, and
transmission. 

48811 – Airport Operations:  International, national, or civil
airports/public flying fields, or those establishments supporting
airport operations such as air traffic control and baggage handling.

48831 – Port and Harbor Operations:  Operating and maintaining ports,
harbors/docking/piers, or canals.  

493120 – Refrigerated Warehousing and Storage:  Operating refrigerated
warehousing and storage facilities or storing furs for the trade,
typically via blast freezing, tempering, and modified atmosphere
storage.  

518 – Internet Service Providers, Web Search Portals, and Data
Processing Services:  Internet Service Providers and Web Search Portals
provide access to or aid in navigation on the Internet.  Data Processing
Services, conversely, process, transform, or prepare data for
dissemination to others.  

521 – Monetary Authorities - Central Bank:  Establishments performing
central banking functions, including issuing currency, managing the
Nation’s money supply and international reserves, acting as fiscal
agents for government, or holding deposits representing other bank
reserves.  

5221 – Depository Credit Intermediation:  Establishments engaged in
accepting deposits and lending funds, differentiated by variations in
deposit liability types assumed and credit extended.

5222 – Nondepository Credit Intermediation:  Public and private
establishments which extend credit or lend funds raised by credit market
borrowing, differentiated based on type of credit extended.  

6111 – Elementary and Secondary Schools:  Institutions providing
academic courses and coursework which allow a basic preparatory
education, typically of kindergarten through 12th grade (including
school boards and school districts, boarding schools, finishing schools,
and parochial schools).  

6112 – Junior Colleges:  Institutions providing academic or technical
courses, and granting associate degrees, certificates, or diplomas below
the baccalaureate level.

6113 – Colleges, Universities, and Professional Schools:  Institutions
providing academic courses and granting degrees at baccalaureate or
graduate levels.  

622 – Hospitals:  Industries providing medical, diagnostic, and
treatment services to inpatients, including physician, nursing, health,
and specialized accommodation services.  Specialized facilities and
equipment form a key part of the production process. 

623 – Nursing and Residential Care:  Industries which offer
residential care in addition to either nursing, supervisory, or other
care types for residents.

71211 – Museums:  Establishments engaged in the preservation and
exposition of objects with historical, cultural, or educational value.

71213 – Zoos and Botanical Gardens:  Establishments preserving and
exhibiting live plant and animal displays.

71311 – Amusement and Theme Parks:  Establishments operating a range
of attractions such as water rides, games, shows, mechanical rides, and
refreshment stands.

71321 – Casinos (except Casino Hotels):  Establishments operating
gambling facilities that provide wagering games and activities, such as
slot machines and sports betting. Gambling cruises and riverboat casinos
also are included.  

72111 – Hotels (except Casino Hotels) and Motels:  Short-term lodging
in hotel, motor hotel, resort hotel, and motel facilities.  Included in
the establishments may be food and beverage services, conference rooms
and convention centers, recreational services, and parking.

72112 – Casino Hotels:  Short-term lodging in hotel facilities which
have a casino on-site with table wagering games and other gambling
activities.  Establishments typically offer food and beverage services,
entertainment, parking, and conference/convention facilities.

812331 – Linen Supply:  Establishments supplying—on rental or
contract basis—laundered items including but not limited to table and
bed linens, towels, uniforms, or coats.  

812332 – Industrial Launderers:  Establishments supplying—on a
rental or contract basis—laundered industrial work uniforms, including
protective and clean room apparel and dust control items (mops, rugs,
mats, etc.).  

922140 – Correctional Institutions:  Establishments managing and
operating correctional institutions designed for detention, correction,
and rehabilitation of adult/juvenile offenders sentenced by a court. 
Code 922140 does not include jails and other local or regional detention
establishments.

Source: U.S. Census Bureau, 2002 NAICS Codes and Titles;   HYPERLINK
"http://www.census.gov/epcd/naics02/naicod02.htm" 
http://www.census.gov/epcd/naics02/naicod02.htm 



 Exhibit 2

OPTION 2:  POTENTIALLY AFFECTED INDUSTRIES AND TYPES OF WASTE ENERGY

NAICS	Industry	Waste Heat	Waste

Streams

with

Fuel

Content	Pressure

Drop

Recovery

211	Oil and Gas Extraction	Yes	Yes	 

212	Mining (except Oil and Gas)	Yes	 	 

22132	Sewage Treatment 	 	 	 

  221320	Sewage Treatment 	 	Yes	 

22133	Steam and Air-Conditioning Supply	 	 	 

  221330	Steam and Air-Conditioning Supply	 	 	Yes

311	Food Manufacturing	Yes	Yes	Yes

312	Beverage and Tobacco Product Manufacturing	Yes	 	 

313	Textile Mills	Yes	 	Yes

314	Textile Product Mills	Yes	 	Yes

321	Wood Product Manufacturing	 	Yes	Yes

322	Paper Manufacturing	 	 	Yes

324	Petroleum and Coal Products Manufacturing	 	 	 

  32411	Petroleum Refineries	Yes	Yes	Yes

  324191	Petroleum Lubricating Oil and Grease Manufacturing	Yes	Yes	Yes

325	Chemical Manufacturing	Yes	Yes	Yes

326	Plastics and Rubber Products Manufacturing	 	Yes	 

327	Nonmetallic Mineral Product Manufacturing	Yes	 	 

331	Primary Metal Manufacturing	 	 	 

  3311	Iron and Steel Mills and Ferroalloy Manufacturing	Yes	Yes	Yes

  3313	Alumina and Aluminum Production and Processing	Yes	Yes	 

  3314	Nonferrous Metal (except Aluminum) Production and Processing	Yes
 	 

  3315	Foundries	Yes	 	 

332	Fabricated Metal Product Manufacturing	 	Yes	 

336	Transportation Equipment Manufacturing	Yes	Yes	Yes

337	Furniture and Related Product Manufacturing	 	Yes	 

486	Pipeline Transportation	 	 	 

  4862	Pipeline Transportation of Natural Gas	Yes	 	 

6113	Colleges, Universities	 	 	Yes

622	Hospitals	 	 	Yes

81233	Linen and Uniform Supply	 	 	 

  812331	Linen Supply	 	 	Yes

  812332	Industrial Launderers	 	 	Yes

92214	Correctional Institutions	 	 	 

  922140	Correctional Institutions	 	 	Yes



Exhibit 3

OPTION 3:  POTENTIALLY AFFECTED INDUSTRIES AND TYPES OF WASTE ENERGY

NAICS	Industry	Waste Heat	Waste

Streams

with

Fuel

Content	Pressure

Drop

Recovery	CHP

211	Oil and Gas Extraction	Yes	Yes

Yes

212	Mining (except Oil and Gas)	Yes

	Yes

22132	Sewage Treatment 





221320	Sewage Treatment 

Yes

Yes

22133	Steam and Air-Conditioning Supply





221330	Steam and Air-Conditioning Supply

	Yes	Yes

311	Food Manufacturing	Yes	Yes	Yes	Yes

312	Beverage and Tobacco Product Manufacturing	Yes

	Yes

313	Textile Mills	Yes

Yes	Yes

314	Textile Product Mills	Yes

Yes	Yes

315	Apparel Manufacturing



Yes

316	Leather and Allied Product Manufacturing



Yes

321	Wood Product Manufacturing

Yes	Yes	Yes

322	Paper Manufacturing

	Yes	Yes

323	Printing and Related Support Activities



Yes

324	Petroleum and Coal Products Manufacturing





32411	Petroleum Refineries	Yes	Yes	Yes	Yes

324191	Petroleum Lubricating Oil and Grease Manufacturing	Yes	Yes	Yes
Yes

325	Chemical Manufacturing	Yes	Yes	Yes	Yes

326	Plastics and Rubber Products Manufacturing

Yes

Yes

327	Nonmetallic Mineral Product Manufacturing	Yes

	Yes

331	Primary Metal Manufacturing





3311	Iron and Steel Mills and Ferroalloy Manufacturing	Yes	Yes	Yes	Yes

3313	Alumina and Aluminum Production and Processing	Yes	Yes

Yes

3314	Nonferrous Metal (except Aluminum) Production and Processing	Yes

	Yes

3315	Foundries	Yes

	Yes

332	Fabricated Metal Product Manufacturing

Yes

Yes

333	Machinery Manufacturing



Yes

334	Computer and Electronic Product Manufacturing



Yes



Exhibit 3 (continued)

OPTION 3:  POTENTIALLY AFFECTED INDUSTRIES AND TYPES OF WASTE ENERGY

NAICS	Industry	Waste Heat	Waste

Streams

with

Fuel

Content	Pressure

Drop

Recovery	CHP

335	Electrical Equipment, Appliance, and Component Manufacturing



Yes

336	Transportation Equipment Manufacturing	Yes	Yes	Yes	Yes

337	Furniture and Related Product Manufacturing

Yes

Yes

339	Miscellaneous Manufacturing



Yes

44511	Supermarkets and Other Grocery (except Convenience) Stores



Yes

48811	Airport Operations



Yes

48831	Port and Harbor Operations



Yes

49312	Refrigerated Warehousing and Storage



Yes

493120	Refrigerated Warehousing and Storage





518	Internet Service Providers, Web Search Portals, and Data Processing
Services



Yes

521	Monetary Authorities - Central Bank



Yes

522	Credit Intermediation and Related Activities





5221	Depository Credit Intermediation



Yes

5222	Nondepository Credit Intermediation



Yes

6111	Elementary and Secondary Schools



Yes

6112	Junior Colleges



Yes

6113	Colleges, Universities

	Yes	Yes

622	Hospitals

	Yes	Yes

623	Nursing and Residential Care 



Yes

71211	Museums



Yes

71213	Zoos and Botanical Gardens



Yes

71311	Amusement and Theme Parks



Yes

71321	Casinos (except Casino Hotels)



Yes

72111	Hotels (except Casino Hotels) and Motels



Yes

72112	Casino Hotels



Yes

81233	Linen and Uniform Supply





812331	Linen Supply

	Yes	Yes

812332	Industrial Launderers

	Yes	Yes

92214	Correctional Institutions





922140	Correctional Institutions

	Yes	Yes



COSTS TO EPA AND AFFECTED UNIVERSES

The costs of the regulations will reflect the actions taken to
establish, populate, and administer the Registry, including whether CHP
projects are within the scope of the rule and the survey.  U.S. EPA,
entities surveyed by EPA, and entities that download and submit Survey
reporting information without request from EPA will all incur the costs
of the program.  The survey is the primary driver of the costs of the
program.  This analysis assumes that EPA will survey up to 2% of
manufacturing establishments and 1% of establishments in other sectors
for each Option.

Costs to EPA

Apart from issuing regulations, EPA will incur the following types of
costs:

Costs of designing and conducting the survey, including the cost of
developing the waste energy survey tool (WEST).  The costs of survey
design will vary less between Options 2 and 3 than will the costs of
implementing the survey.  Cost estimates are based on assumptions
described in Appendix 2.

Costs of designing, establishing, maintaining, and administering the
Registry itself.  The costs of the Registry are not expected to vary
significantly between Options 2 and 3.  Cost estimates are based on
assumptions described in Appendix 1.

Costs of EPA staff managing the program for three years.

Survey Costs.  The estimated cost of the survey to EPA includes the
costs of developing the WEST and conducting the survey.  EPA estimated
the cost of developing the WEST at $70-90K, and this analysis uses $70K
for Option 2 and $90K for Option 3, because Option 3 includes CHP and
Option 2 does not.  The cost of the survey is based on the assumptions
and approach described in Appendix 2, and this analysis uses $242K for
Option 2 and $302K for Option 3, which involves surveying more
establishments than Option 2.  In summary, survey costs are as follows:

	Option 2	Option 3

Develop WEST	$70K	$90K

Conduct Survey	242K	302K

Total	$312K	$392K



Registry Costs.  The estimated cost of the Registry to EPA includes the
costs of designing, establishing, updating, and maintaining (for 3
years) the Registry.  The cost of the Registry is based on the approach
and the assumptions in Appendix 1.  In summary, Registry costs are as
follows:

	Option 2	Option 3

Registry	$75K	$85K



Program Costs.  EPA estimated its labor for staffing the program at one
full-time employee ($150K/year)  for Option 2 and two full-time
employees ($300K/year) for Option 3 for three years:

	Option 2	Option 3

EPA staffing	$450K	$900K



Total EPA Costs.  Exhibit 4 below summarizes EPA’s costs.

Exhibit 4

EPA COSTS

	Option 2	Option 3

Survey costs	$312K	$392K

Registry costs	75K	85K

EPA staffing	450K	900K

Total	$837K	$1,377K



Costs to the Private Sector

This analysis includes the private sector’s costs of responding to
EPA’s survey as well as the private sector’s costs related to the
Registry.  These costs are primarily labor costs, with negligible
non-labor costs.  Although described as private sector costs, labor in
some NAICS codes -- such as 221320, 6113, 622, 922140 -- may qualify as
state and local government employees.  Therefore, the analysis also
considers labor costs of state and local governments.

Costs of responding to EPA’s survey include the following activities:

Opening the survey and routing it appropriately

Reviewing the survey and deciding how to respond, including consultation
with legal counsel

Locating needed information

Entering data into the survey tool and transmitting outputs back to EPA

Some survey recipients will not take the time to complete the survey. 
These respondents might incur costs for opening the survey and costs, if
any, for determining whether to respond.  This analysis assumes a 50%
rate of response.

Private sector costs related to the Registry include:

Costs of downloading and submitting Survey reporting information without
request from EPA (e.g., finding and reviewing Survey instructions,
locating needed information, entering data into the Survey tool, and
transmitting outputs back to EPA)

Requesting EPA’s suggestions for optimum means of recovery

Requesting conditional listings for new sites

Submitting petitions contesting listings

This analysis assumes that the number of establishments that download
and submit Survey reporting information without request from EPA will
equal 10% of the number of establishments surveyed under Options 2 and
3.  In other words, Option 2 assumes 351 establishments will download
and submit Survey reporting information without request from EPA, while
Option 3 assumes 1112 establishments will download and submit Survey
reporting information without request from EPA.

Hourly Labor Costs.  Labor costs are expected to include some
combination of managerial-level, engineering, legal counsel, and
administrative staff time.  See Exhibit 5, which presents data on hourly
compensation rates for selected NAICS codes by type of labor. 
Compensation 

Exhibit 5

LABOR RATES FOR SELECTED NAICS CODES ($2007)



Management	Architecture

and 

Engineering	Legal	Office and

Administrative

Support

211	Oil and Gas Extraction	67.41	58.87	58.61	27.69

212	Mining (except Oil and Gas)	56.85	41.02	na	25.77

221320	Sewage Treatment*	62.58	49.91	66.50	32.50

221330	Steam and Air-Conditioning Supply*	51.66	38.99	55.58	21.58

31-33	Manufacturing	62.42	44.64	67.70	27.08

44511	Supermarkets and Other Grocery 

(except Convenience) Stores**	35.67	na	na	13.25

4862	Pipeline Transportation of Natural Gas	58.77	42.00	67.20	24.76

48811	Airport Operations***	55.83	44.72	na	26.06

48831	Port and Harbor Operations****	62.19	45.18	na	32.97

493120	Refrigerated Warehousing and Storage*****	55.15	45.35	54.75	26.46

518	Internet Service Providers, Web Search Portals, and Data Processing
Services	71.19	48.26	72.32	27.89

521	Monetary Authorities - Central Bank	67.84	na	78.76	27.59

5221	Depository Credit Intermediation	57.68	55.07	58.97	24.79

5222	Nondepository Credit Intermediation	64.89	49.43	49.23	26.86

6111	Elementary and Secondary Schools	49.51	39.42	51.45	24.33

6112	Junior Colleges	51.54	38.81	47.99	26.70

6113	Colleges, Universities, and Professional Schools	54.90	41.09	55.93
27.72

622	Hospitals	51.89	36.15	50.50	22.65

623	Nursing and Residential Care 	41.01	na	43.61	21.99



Exhibit 5 (continued)

LABOR RATES FOR SELECTED NAICS CODES ($2007)



Management	Architecture

and 

Engineering	Legal	Office and

Administrative

Support

71211	Museums^	44.58	33.35	73.39	16.18

71213	Zoos and Botanical Gardens^	44.58	33.35	73.39	16.18

71311	Amusement and Theme Parks^^	45.23	na	na	16.03

71321	Casinos (except Casino Hotels)^^^	39.05	37.64	na	15.17

72111	Hotels (except Casino Hotels) and Motels^^^^	33.50	30.27	43.83
13.80

72112	Casino Hotels	42.01	28.15	47.64	16.13

812331	Linen Supply^^^^^	46.83	35.22	na	20.05

812332	Industrial Launderers^^^^^	46.83	35.22	na	21.05

	Average (unweighted)	52.65	41.40	58.81	23.08

 	 	Federal	State	Local	Avg. All

922140	Correctional Institutions	35.65	26.43	25.83	29.31

*	2213 - Water, sewage, and other systems.

**	4451 - Grocery stores.

***	4881 - Support activities for air transportation.

****	4883 - Support activities for water transportation.

*****	4931 - Warehousing and storage.

^	7121 - Museums, Historical Sites, and similar institutions

^^	7131 - Amusement parks and arcades

^^^	7132 - Gambling industries

^^^^	7211 - Traveler accommodations

^^^^^	8123 - Dry cleaning and laundry services

Source:  May 2007 National Industry-Specific Occupational Employment &
Wage Estimates, Bureau of

Labor Statistics



costs include wages/salaries as well as employer-paid benefits.  Where
data are not available, the analysis uses the overall average values by
type of labor to fill in gaps.  For example, lacking rates for
Architecture/Engineering and Legal for Code 44511 (Supermarkets), the
analysis substitutes the average (unweighted) labor rates shown (i.e.,
$41.40 and $58.81 respectively).

Cost Escalation.  Although the labor costs in this analysis are expected
to be incurred in the near future (i.e., 2009-11), some escalation in
labor costs should be expected given the following facts:

In private industry, compensation costs rose 3.2 percent in the year
ended March 2008, the same as for the year ended March 2007.

For state and local government, the increase for the year ended March
2008 was 3.6 percent, a decrease from the 4.6 percent increase for the
March 2007 year.

The rate of increase for private industry and state and local government
combined was 3.3 percent for the year ended March 2008, following a 3.5
percent increase for the year ended March 2007.  For the six years
2003-2008, the average increase in compensation was 3.45 percent.

Based on labor rate information from the Bureau of Labor Statistics,
this analysis escalates the compensation data as follows:

Escalation to 2008	=	3.3%

Escalation to 2009	=	3.45%

Escalation to 2010	=	3.45%

Escalation to 2011	=	3.45%



Number of Labor Hours Required.  The number of hours of labor time
needed to respond to the survey depends, in large part, on the types of
recoverable waste energy sources at each location because each type
requires different questions to be answered (see Appendix 3).  Exhibits
2 and 3 above show for Regulatory Options 2 and 3, the covered NAICS
codes and the types of recoverable waste energy for each code.  This
analysis uses the following assumptions regarding the number of required
hours to respond to the survey based on the number of different types of
recoverable waste energy expected in the different NAICS codes:

1 type	=	6 hours

2 types	=	8 hours

3 types	=	10 hours

4 types 	=	12 hours

For example, a location being surveyed under Option 2 is assumed to
spend from 6 to 10 total hours responding to the survey depending on how
many types of recoverable waste energy sources the site has.  Of the 29
NAICS codes potentially affected under Option 2, 17 may involve a single
type of waste energy, 6 may involve two types of recoverable energy, and
6 may involve all three types of recoverable energy.  For Option 3, a
site is assumed to incur up to 12 total hours of respondent time
depending on how many types of waste energy are found at that location. 
Of the 51 NAICS codes potentially affected under Option 3, 24 may
involve a single type of waste energy, 16 may involve two types of waste
energy, five may involve three types of waste energy, and six may
involve all four types of waste energy.

For estimating labor costs of survey respondents, the analysis assumes
the following weights among the types of labor:

Exhibit 6

LABOR HOURS BY TYPE OF WASTE ENERGY FOR SURVEY RESPONDENTS

	One Type	Two Types	Three Types	Four Types

Management	2	2	2	2

Engineering	1	2	3	4

Legal	2	2	2	2

Administrative	1	2	3	4

Total	6 hours	8 hours	10 hours	12 hours



The 50% of establishments that do not respond to the survey will
nevertheless incur costs.  Some will likely spend several hours
evaluating the survey and determining whether to respond; other
establishments may spend negligible time in declining to respond.  This
analysis assumes that non-respondents incur one-half the labor time and
cost incurred by respondents.

The analysis estimates private sector costs of responding to the survey
by multiplying the number of labor hours estimated for NAICS code survey
response times the appropriate average rates for labor costs escalated
to 2009.  For the survey as a whole, the estimated response costs are
based on surveying 1% of non-manufacturing establishments and 2% of
manufacturing establishments in each Code with a 50% rate of response. 
The targeted number of establishments in the different NAICS codes
appears in Exhibit 7.  Private costs are presented in Exhibit 8.

Exhibit 7

NUMBER OF ESTABLISHMENTS BY SELECTED NAICS CODE, 2002

NAICS

Code	Title	Number of

Establishments	Targeted

Establishments

211	Oil and Gas Extraction	7,629 	76 

212	Mining (except Oil and Gas)	7,205 	72 

221320	Sewage Treatment 	831 	8 

221330	Steam and Air-Conditioning Supply	97 	1 

  311	Food Manufacturing	25,698 	514

  312	Beverage and Tobacco Product Manufacturing	3,232 	65 

  313	Textile Mills	4,045 	81 

  314	Textile Product Mills	7,332 	147 

  315	Apparel Manufacturing	13,359 	267

  316	Leather and Allied Product Manufacturing	1,549 	31 

  321	Wood Product Manufacturing	17,052 	341 

  322	Paper Manufacturing	5,546 	111 

  323	Printing and Related Support Activities	36,902 	738 

  32411	Petroleum Refineries	349 	7

  324191	Petroleum Lubricating Oil and Grease Manufacturing	330 	7

  325	Chemical Manufacturing	13,096 	262

  326	Plastics and Rubber Products Manufacturing	15,462 	309 

  327	Nonmetallic Mineral Product Manufacturing	16,674 	333 



Exhibit 7 (continued)

NUMBER OF ESTABLISHMENTS BY SELECTED NAICS CODE, 2002

NAICS

Code	Title	Number of

Establishments	Targeted

Establishments

  3311	Iron and Steel Mills and Ferroalloy Manufacturing	1,259 	25 

  3313	Alumina and Aluminum Production and Processing	584 	12 

  3314	Nonferrous Metal (except Aluminum) Production and Processing	958 
19 

  3315	Foundries	2,558 	51

  332	Fabricated Metal Product Manufacturing	61,652 	1,233 

  333	Machinery Manufacturing	27,941 	559 

  334	Computer and Electronic Product Manufacturing	15,883 	318 

  335	Electrical Equipment, Appliance, and Component Manufacturing	6,601
	132 

  336	Transportation Equipment Manufacturing	12,202 	244 

  337	Furniture and Related Product Manufacturing	22,083 	442 

  339	Miscellaneous Manufacturing	29,507 	590

44511	Supermarkets and Other Grocery (except Convenience) Stores	62,934 
629 

4862	Pipeline Transportation of Natural Gas	1,936 	19 

48811	Airport Operations	1,942 	19 

48831	Port and Harbor Operations	212 	2 

493120	Refrigerated Warehousing and Storage	970 	10 

518	Internet Service Providers, Web Search Portals, and Data Processing
Services	15,587 	156 

521	Monetary Authorities - Central Bank	58 	1 

5221	Depository Credit Intermediation	114,286 	1,143 

5222	Nondepository Credit Intermediation	53,026 	530 

6111	Elementary and Secondary Schools	20,894 	209 

6112	Junior Colleges	931 	9 

6113	Colleges, Universities, and Professional Schools	3,377 	34 

622	Hospitals	7,569 	76 

623	Nursing and Residential Care 	67,900 	679 

71211	Museums	4,464 	45 

71213	Zoos and Botanical Gardens	525 	5 

71311	Amusement and Theme Parks	772 	8 

71321	Casinos (except Casino Hotels)	562 	6 

72111	Hotels (except Casino Hotels) and Motels	46,440 	464 

72112	Casino Hotels	333 	3 

812331	Linen Supply	1,107 	11 

812332	Industrial Launderers	1,423 	14 

922140	Correctional Institutions and Jails	5,046   	50   

 	Total	769,310 	11,118 

Source:	U.S. Census Bureau, Statistics of U.S. Businesses, County
Business Patterns (2002); www.census.gov/csd/susb/susb02.htm, accessed
on 06/30/08.  All data except for NAICS Codes 518 and 922140.  

NAICS Code 518: http://www.census.gov/econ/census02/
data/industry/E521.HTM, accessed on 6/30/08.

NAICS Code 922140, the U.S. Census Bureau does not collect establishment
data. Information on the number of correctional institutions and jails
obtained from the U.S. Justice Department's "Census of State and Federal
Correctional Facilities (2000)" and Census of Jails (1999), obtained at
(  HYPERLINK "http://www.ojp.usdoj.gov"  http://www.ojp.usdoj.gov ).  



Exhibit 8

PRIVATE COSTS OF THE SURVEY

	Option 2	Option 3

Respondents	$574,099	$2,008,501

Non-Respondents	287,050	1,004,250

Total	$861,149	$3,012,751



Option 3 entails greater private costs than Option 2 for two reasons:

(1)	Option 3 includes more NAICS codes than Option 2 and, thus, surveys
7,592 more establishments than Option 2 (i.e., 11,098 establishments
surveyed under Option 3 minus 3,506 establishments surveyed under Option
2)

(2)	For NAICS codes surveyed by both Option 2 and Option 3, the Option 3
cost is greater per survey because of additional time required for CHP
questions under Option 3

Private Costs of Participation in the Registry without EPA Requests.  In
addition to the private costs related to responding to the Survey, the
private sector will incur costs related to downloading and submitting
Survey reporting information without requests from EPA.  This analysis
focuses on these costs, because EPA expects few requests for technical
input, few (if any) contested listings, and few (if any) new site
listings.  The analysis assumes that some establishments will request
copies of the survey to complete themselves.  Adding 1 hour net for the
research leading up to requesting the survey yields the following as the
expected labor:

Exhibit 9

LABOR HOURS BY TYPES OF WASTE ENERGY FOR COMPLETION OF SURVEYS WITHOUT
REQUEST FROM EPA

	One Type	Two Types	Three Types	Four Types

Management	3	3	3	3

Engineering	1	2	3	4

Legal	2	2	2	2

Administrative	1	2	3	4

Total	7 hours	9 hours	11 hours	13 hours



Because the NAICS codes and types of recoverable waste energy for these
entities are not known, the number of hours could range from 7 to 13
hours each.  Similarly, hourly compensation rates will vary because
different compensation rates for labor are found in different NAICS
codes.  To address these uncertainties, the analysis uses the average
(unweighted) values calculated for labor costs across the selected NAICS
codes.  The analysis also uses the average number of hours (i.e., 10
hours) together with escalated average hourly rates to calculate costs
for completions of the Survey without requests from EPA for 2009, 2010,
and 2011, which are $473.33, $489.66, and $506.55, respectively.  There
is no solid basis for estimating the number of such completions that
might be offered or when they might be received.  This analysis assumes
that for Option 2 the number will equal 10% (i.e., 351) of the total
number of surveyed establishments (i.e., 3,506) and that completions
will occur equally in 2009, 2010, and 2011.  For Option 3, the analysis
also assumes that the number of such completions will equal 10% (i.e.,
1,110) of the total number of surveyed establishments (i.e., 11,098),
recognizing that Option 3 surveys more entities than does Option 2;
completions of the Survey without request from EPA will occur equally in
2009, 2010, and 2011.

Applying the above approach to estimating the hourly labor costs and
required number of labor hours for each Code and regulatory option
produces the following results:

Exhibit 10

PRIVATE COSTS OF

COMPLETING THE SURVEY WITHOUT REQUEST FROM EPA (3 years)

Regulatory Option 2	$166K

Regulatory Option 3	$545K



Summary of Costs.  Exhibit 11 combines the EPA and non-EPA costs
estimated as described above:

Exhibit 11

SUMMARY OF COSTS



Option 2	Option 3

EPA

	Development of Waste Energy Survey Tool

$70K	$90K

Administration of Survey

242K	302K

Development and Administration of Registry (3 years)

75K	85K

EPA Program Management (3 years)

450K	900K

Total

$837K	$1,377K

Non-EPA



	Responses to Survey

$574K	$2,009K

Non-Respondents to Survey

287K	1,004K

Responses not Requested by EPA (3 years)

166K	545K

Total

Grand Total EPA and Non-EPA

$1,027K

$1,864K	$3,558K

$4,935K



BENEFITS

Under Options 2 and 3, a variety of benefits can result from
establishing the Registry and conducting waste energy surveys.  These
benefits can include the following:

Being informed about the potential for economically feasible waste
energy recovery

Obtaining technical assistance from EPA

Qualifying for incentives under Sections 273 and 274

Receiving unsolicited information and offers from services that can
facilitate waste energy recovery

Saving money and decreasing emissions by recovering waste energy

Being recognized for completing a waste energy recovery project

Determining whether certain states have obstacles to recovery of waste
energy

Data to support annual reports to Congress

Learning about the distribution of waste energy recovery opportunities
across sectors

  Ballpark estimates for each of the four types of projects likely to be
included in the Registry, based on gross technical potential estimates,
indicate the following potential annual emissions reductions:

Large commercial and industrial waste heat to power:  30-40 MMTCE

Waste gas and tail gas:  5-7 MMTCE

Pressure drop:  2-3 MMTCE

Traditional CHP (on-site electric and steam demand):  65-175 MMTCE

This analysis does not attempt to quantify or value these benefits. 
Rather, the analysis compares the cost-effectiveness of Options 2 and 3.
Expanding the scope to include CHP is expected to increase program costs
by $3.0 million from Option 2’s $1.9 without CHP million to preferred
Option 3’s $4.9 million with CHP.  However, cost-effectiveness is
improved by adding CHP: although costs increase by 58%, the number of
surveyed establishments increases by 217% (i.e., increase of 7,592 from
3,506 establishments to 11,098 establishments). In other words, the cost
per survey response (at a 50% response rate) when CHP is included is
$883 (i.e., $4.9 million divided by 5,549 returned survey responses)
compared to a cost of $1,084 (i.e., $1.9 million divided by 1753
returned survey responses) when CHP is not included. The preferred
alternative of including CHP raises cost-effectiveness by 23% using
these metrics.

REGULATORY FLEXIBILITY ACT/SMALL BUSINESS REGULATORY ENFORCEMENT
FAIRNESS ACT ANALYSES AND ACTIVITIES SUPPORT

The Regulatory Flexibility Act (RFA), as amended by the Small Business
Regulatory Enforcement Fairness Act (SBREFA), requires agencies to
determine if their proposed rules will have a significant economic
impact on a substantial number of small entities.  In cases where it is
determined that a rulemaking may result in such an impact, EPA must
prepare an Initial Regulatory Flexibility Analysis (IRFA) and Final
Regulatory Flexibility Analysis (FRFA).  EPA would also in these cases
be obliged to conduct outreach to small entities through a SBREFA panel.
 By convening this panel along with OMB’s Office of Information and
Regulatory Affairs and the Small Business Office of Advocacy, and
following through with a formal report, EPA would solicit the input of
small entities on potential impacts and less burdensome regulatory
alternatives, and take this input into account in developing
regulations.  EPA must also, in cases that require RFAs, prepare
compliance guides to make it easier for small entities to understand
what they have to do to comply with the rules.  Fundamentally, EPA must
assess the burden of its regulatory options on all affected entities as
a function of their sizes, and find new or modified options to reduce
that burden for smaller entities.

The most important question is whether the regulatory options can be
designed so as to avoid imposing a “significant impact on a
substantial number of small entities,” or SISNOSE.  The results of
this regulatory analysis show that neither Option 2 nor Option 3 would
affect a substantial number of small entities and neither would impose
costs amounting to more than a small fraction of the threshold of one
percent of revenues traditionally used by EPA to identify significant
impacts.

Typically, EPA measures impacts on small entities using the ratio of
compliance costs divided by revenue or annual budgets (for educational
or non-profit institutions) and analyzes the results to determine
whether the rulemaking is likely to result in a SISNOSE.  This analysis
indicates that small entities will incur minimal compliance costs, well
under the 1% benchmark most commonly used:

Survey Response Cost. Picking the highest rates shown in Exhibit 4 for
each labor category regardless of NAICS code, using the distribution of
hours shown in Exhibit 5, and escalating the 2007 labor rates to 2009,
yields a ceiling cost of $552.82 per responding establishment.  For this
amount to be greater than 1% of annual revenues, the establishments
surveyed must have annual revenues of less than $55,282.  EPA does not
anticipate that establishments with such small revenues will have
economically recoverable waste energy and does not intend to survey
them.

Cost of Survey Responses not Requested by EPA. Picking the highest rates
shown in Exhibit 4 for each labor category regardless of NAICS code,
using the distribution of hours shown in Exhibit 5, and escalating the
2007 rates to 2009, 2010, 2011, yields ceiling costs of $629.21,
$650.92, and $673.38 respectively per establishment for downloading and
submitting Survey reporting information without request from EPA.  For
this amount to be greater than 1% of annual revenues, such
establishments must have annual revenues of less than $62,921 (2009),
$65,092 (2010), and $67,338 (2011).  EPA does not anticipate that such
small businesses will have economically recoverable waste energy and
does not intend to survey them.

.

Small Business Size Parameters

The first step in this analysis involved collecting the small entity
size parameters for the potentially affected industry sectors.  The
Small Business Administration (SBA) provides detailed guidance on the
cut-offs for small entities, generally setting them on the basis of
number of employees or annual revenues for individual NAICS codes. 
Exhibit 12 presents the SBA cut-offs for the potentially affected
industry sectors.  There is some flexibility allowed in setting the
cut-off.  The use of a higher or lower cut-off can be convenient if data
sources (e.g., from the County Business Patterns or the U.S. Census of
Manufactures) happen to group some entities above the SBA cut-off along
with some that are below; alternatively, an appropriate fraction of
entities within a size bracket spanning the cut-off can be assumed to be
small entities.  Combining data on the size distribution of the entities
in the affected industries with the SBA size cut-offs will thus allow
calculation of the number of affected small entities in affected
industries for both options.

For this proposed regulation, the number of small entities in the
affected industries does not necessarily represent the number of
affected small entities.  The goal of the survey is to target the
largest establishments in the selected sectors, because -- all other
factors being equal -- larger sized establishments are more likely to
have waste energy that is economically recoverable.  This emphasis on
establishment size and the number (1% - 2%) of entities to be surveyed
in each code together can demonstrate that the survey is unlikely to be
sent to a substantial number of small entities.



Exhibit 12

SBA SIZE STANDARDS

NAICS

Code

(2002)	Title	Size

Standard

($ Millions)	Size

Standard

(employees)

211	Oil and Gas Extraction	 	500

212	Mining (except Oil and Gas)	 	500

221320	Sewage Treatment 	6.5

	221330	Steam and Air-Conditioning Supply	11.5

	  311	Food Manufacturing

500-1,000

  312	Beverage and Tobacco Product Manufacturing

500-1,000

  313	Textile Mills

500-1,000

  314	Textile Product Mills

500-1,000

  315	Apparel Manufacturing

500

  316	Leather and Allied Product Manufacturing

500-1,000

  321	Wood Product Manufacturing

500

  322	Paper Manufacturing

500-750

  323	Printing and Related Support Activities

500

  32411	Petroleum Refineries

1,500

  324191	Petroleum Lubricating Oil and Grease Manufacturing

500

  325	Chemical Manufacturing

500-1,000

  326	Plastics and Rubber Products Manufacturing

500-1,000

  327	Nonmetallic Mineral Product Manufacturing

500-1,000

  3311	Iron and Steel Mills and Ferroalloy Manufacturing

750-1,000

  3313	Alumina and Aluminum Production and Processing

750-1,000

  3314	Nonferrous Metal (except Aluminum) Production and Processing

750-1,000

  3315	Foundries

500

  332	Fabricated Metal Product Manufacturing

500-1,500

  333	Machinery Manufacturing

500-1,000

  334	Computer and Electronic Product Manufacturing

500-1,000

  335	Electrical Equipment, Appliance, and Component Manufacturing

500-1,000

  336	Transportation Equipment Manufacturing

500-1,500

  337	Furniture and Related Product Manufacturing

500

  339	Miscellaneous Manufacturing

500

44511	Supermarkets and Other Grocery (except Convenience) Stores	25	 

4862	Pipeline Transportation of Natural Gas	6.5	 

48811	Airport Operations	6.5	 

48831	Port and Harbor Operations	23.5	 

493120	Refrigerated Warehousing and Storage	23.5	 

518*	Internet Service Providers, Web Search Portals, and Data Processing
Services*	23	 

521	Monetary Authorities - Central Bank	na	na

5221	Depository Credit Intermediation	165 (in assets)	 

5222	Nondepository Credit Intermediation	6.5^	 

6111	Elementary and Secondary Schools	6.5	 

6112	Junior Colleges	6.5	 

6113	Colleges, Universities, and Professional Schools	6.5	 

622	Hospitals	31.5	 

623	Nursing and Residential Care 	6.5^^	 



Exhibit 12 (continued)

SBA SIZE STANDARDS

NAICS

Code

(2002)	Title	Size

Standard

($ Millions)	Size

Standard

(employees)

71211	Museums	6.5	 

71213	Zoos and Botanical Gardens	6.5	 

71311	Amusement and Theme Parks	6.5	 

71321	Casinos (except Casino Hotels)	6.5	 

72111	Hotels (except Casino Hotels) and Motels	6.5	 

72112	Casino Hotels	6.5	 

812331	Linen Supply	13	 

812332	Industrial Launderers	13	 

922140**	Correctional Institutions**	na	-

*	518- Data Processing, Hosting, and Related Services.

**	Small business standards are not established for this sector. 

^	2 subsectors - $165 million in assets.

^^	of 6 subsectors, three are $6.5 million, two are $12.5 million, one
is $9 million

Source: Table of Small Business Size Standards, Small Business
Association,   HYPERLINK "http://www.sba.gov/services/

contractingopportunities/sizestandardstopics/tableofsize/index.html" 
http://www.sba.gov/services/

contractingopportunities/sizestandardstopics/tableofsize/index.html 



Exhibit 13 displays the number of establishments owned by firms
according to revenue size for the selected NAICS codes.  Unfortunately,
the SBA size standards shown in Exhibit 12 use cut-off values that do
not match the revenue sizes reported by the Census Bureau, which are
shown in Exhibit 13.  Nevertheless, a comparison of the two exhibits
shows that, for most of the NAICS codes, a substantial proportion of the
establishments have owners that exceed the small business revenue
criteria.  The number of establishments in the $100 million+ category
constitutes about 23% of the total number of establishments.  Given that
EPA expects to survey 1-2% of the largest establishments in each
selected code, it is unlikely that any small establishments -- measured
by revenue size -- will be included in the survey.  Even for NAICS codes
6001 (elementary and secondary schools), 71211 (museums), and 71213
(zoos and botanical gardens), a survey of the largest 1% of the
establishments would rarely involve sites with less than $50 million of
annual revenues.

Exhibit 14 shows the distribution of establishments by number of
employees.  In NAICS codes 211, 212, and 31-33 (selected codes),
significant proportions of establishments are owned by firms that have
more than 500 employees:

14% of establishments in Code 211 are owned by firms that have more than
500 employees.

28% of establishments in Code 212 are owned by firms that have more than
500 employees.

10% of establishments in the selected manufacturing Codes are owned by
firms that have more than 500 employees.

Exhibit 13

NUMBER OF ESTABLISHMENTS FOR SELECTED NAICS CODES BY OWNING FIRM’S
REVENUE SIZE (2002)

NAICS

Code	Title	Total	SB Total	%SB	Number of Establishments by Revenue Size





	< 100,000	100,000 -

499,999	500,000 -

999,999	1,000,000 - 

4,999,999	5,000,000 -

9,999,999	10,000,000 - 49,999,999	50,000,000 - 

99,999,999	100,000,000+

221320	Sewage Treatment 	         831 	         683 	82%	        202 	  
      272 	           80 	            116 	            13 	             
52 	                  4 	               92 

221330	Steam and Air-Conditioning Supply	           97 	           62 
64%	          12 	          13 	            8 	             13 	        
     5 	              11 	                 -   	               35 

44511	Supermarkets and Other Grocery  (except Convenience) Stores	    
62,934 	     42,172 	67%	     4,864 	    14,726 	      6,633 	      
10,065 	       2,655 	         3,229 	            1,216 	         19,546


4862	Pipeline Transportation of Natural Gas	      1,936 	           79 
4%	            8 	          32 	           10 	             22 	        
     7 	              21 	                  4 	           1,832 

48811	Airport Operations	      1,942 	      1,153 	59%	        209 	    
    406 	         179 	            280 	            79 	            284 
               101 	             404 

48831	Port and Harbor Operations	         212 	         143 	67%	       
  24 	          40 	           17 	             35 	            10 	    
         17 	                13 	               56 

493120	Refrigerated Warehousing and Storage	         970 	         718 
74%	          54 	         171 	           81 	            218 	        
   72 	            122 	                10 	             242 

518	Internet Service Providers, Web Search Portals, and Data Processing
Services	     15,587 	     15,587 	100%	     1,815 	      5,318 	     
2,506 	         3,884 	          953 	         1,111 	n/a	n/a

5222	Nondepository Credit Intermediation	     53,026 	     24,523 	46%	 
   5,026 	      9,633 	      3,380 	         4,949 	       1,535 	      
  3,231 	            1,304 	         23,968 

6111	Elementary and Secondary Schools	     20,894 	     18,445 	88%	    
2,731 	      4,305 	      2,858 	         6,844 	       1,707 	        
1,923 	               256 	             270 

6112	Junior Colleges	         931 	         554 	60%	          77 	     
   111 	           52 	            199 	          115 	            180 	
               73 	             124 

6113	Colleges, Universities, and Professional Schools	      3,377 	     
1,560 	46%	        314 	         432 	         183 	            438 	   
      193 	            732 	               390 	             695 

622	Hospitals	      7,569 	      3,154 	42%	        184 	         194 	 
       126 	            501 	          548 	         1,601 	            
  633 	           3,782 

623	Nursing and Residential Care 	     67,900 	     39,404 	58%	    
5,497 	      9,760 	      3,730 	       12,978 	       7,439 	      
14,399 	            3,810 	         10,287 

71211	Museums	      4,464 	      4,249 	95%	     1,393 	      1,509 	   
     519 	            663 	          165 	            173 	             
  34 	                 8 

71213	Zoos and Botanical Gardens	         525 	         467 	89%	       
105 	         170 	           67 	             92 	            33 	     
        40 	                  6 	               12 

71311	Amusement and Theme Parks	         772 	         645 	84%	       
133 	         224 	         104 	            150 	            34 	      
       39 	                  9 	               79 

71321	Casinos (except Casino Hotels)	         562 	         302 	54%	   
      37 	          77 	           41 	            102 	            45 	
           130 	                36 	               94 

72111	Hotels (except Casino Hotels) and Motels	     46,440 	     37,101 
80%	     5,747 	    15,132 	      7,110 	         7,824 	       1,288 	 
       2,119 	               993 	           6,227 

72112	Casino Hotels	         333 	         120 	36%	          19 	      
   39 	           13 	             32 	            17 	              48 
                21 	             144 

812331	Linen Supply	      1,107 	         819 	74%	          97 	       
 249 	         107 	            199 	            69 	              98 	 
              33 	             255 

812332	Industrial Launderers	      1,423 	         650 	46%	          68
	         160 	           81 	            172 	            70 	         
    99 	                54 	             719 

922140	Correctional Institutions	-	-

n/a	n/a	n/a	n/a	n/a	n/a	n/a	n/a

Total	   293,832 	   192,590 	66%	    28,616 	    62,973 	    27,885 	  
    49,776 	      17,052 	       29,659 	            9,000 	        
68,871 

Source:  U.S. Census Bureau, Statistics of U.S. Businesses, County
Business Patterns (2002);   HYPERLINK
"http://www.census.gov/csd/susb/susb02.htm" 
www.census.gov/csd/susb/susb02.htm , accessed on 06/30/08.  All data
except for NAICS Codes 518 and 922140.  

NAICS Code 922140, the U.S. Census Bureau does not collect establishment
data. Information on the number of correctional institutions obtained
from the U.S. Justice Department's "Census of State and Federal
Correctional Facilities (2000)"; obtained at (http

For NAICS Code 518, the highest revenue size included is $10,000,000 or
more.  

NAICS Code 518, the U.S. County Business Patterns does not collect data
for NAICS Code 518.  Information for NAICS Code 518: U.S. Census Bureau,
Economic Census
(2002);http://factfinder.census.gov/servlet/IBQTable?_bm=y&-ds_name=EC02
51SSSZ5&-NAICS2002=518, accessed on 06/30/08.

Exhibit 14

NUMBER OF ESTABLISHMENTS FOR SELECTED NAICS CODES BY OWNING FIRM’S
EMPLOYEE SIZE (2002)

NAICS

Code	Title	Total	SB Total	%SB	Number of Establishments by Size (Number
of Employees)





	0	1 - 4	5 - 9	10 - 19	20 - 99	100 - 499	500+

211	Oil and Gas Extraction	         7,629 	         6,584 	86%	       
597 	         3,830 	      932 	      477 	           456 	          292
	        1,045 

212	Mining (except Oil and Gas)	         7,205 	         5,166 	72%	    
   477 	         1,427 	      754 	      759 	        1,078 	         
671 	        2,039 

311	Food Manufacturing	       25,698 	       22,206 	86%	     2,007 	   
     6,463 	    3,915 	   3,341 	        4,254 	       1,951 	       
3,767 

312	Beverage and Tobacco Product Manufacturing	         3,232 	        
2,734 	85%	        350 	           906 	      394 	      364 	          
497 	          195 	           526 

313	Textile Mills	         4,045 	         3,657 	90%	        271 	     
   1,007 	      566 	      443 	           711 	          395 	         
 652 

314	Textile Product Mills	         7,332 	         6,979 	95%	       
573 	         2,874 	    1,184 	      961 	        1,050 	          317 
           373 

315	Apparel Manufacturing	       13,359 	       12,970 	97%	     1,846 	
        3,606 	    2,136 	   2,019 	        2,671 	          692 	      
    389 

316	Leather and Allied Product Manufacturing	         1,549 	        
1,485 	96%	        131 	           567 	      226 	      199 	          
255 	           97 	             74 

321	Wood Product Manufacturing	       17,052 	       15,662 	92%	    
1,151 	         4,293 	    2,772 	   2,693 	        3,482 	       1,271 
        1,390 

322	Paper Manufacturing	         5,546 	         4,242 	76%	        155 
           552 	      402 	      534 	        1,271 	          755 	    
   1,877 

323	Printing and Related Support Activities	       36,902 	       35,627
	97%	     2,192 	       14,392 	    7,640 	   5,018 	        5,130 	    
  1,255 	        1,275 

32411	Petroleum Refineries	           349 	           349 	100%	        
22 	             44 	        28 	        13 	             29 	          
28 	           185 

324191	Petroleum Lubricating Oil and Grease Manufacturing	           330
	           266 	81%	         11 	             74 	        36 	       
46 	             63 	           36 	             64 

325	Chemical Manufacturing	       13,096 	       11,575 	88%	        601
	         2,470 	    1,545 	   1,418 	        2,208 	       1,352 	     
  3,502 

326	Plastics and Rubber Products Manufacturing	       15,462 	      
12,518 	81%	        568 	         2,396 	    1,817 	   1,976 	       
3,785 	       1,901 	        3,019 

327	Nonmetallic Mineral Product Manufacturing	       16,674 	      
13,615 	82%	        821 	         3,125 	    2,061 	   1,975 	       
3,302 	       1,788 	        3,602 

3311	Iron and Steel Mills and Ferroalloy Manufacturing	         1,259 	 
       1,259 	100%	        157 	           296 	      208 	      189 	  
        169 	           69 	           171 

3313	Alumina and Aluminum Production and Processing	           584 	    
      584 	100%	         18 	             86 	        57 	        53 	  
          96 	           94 	           180 

3314	Nonferrous Metal (except Aluminum) Production and Processing	      
    958 	           958 	100%	         52 	           185 	      106 	  
     95 	           174 	          108 	           238 

3315	Foundries	         2,558 	         2,223 	87%	         90 	        
  395 	      305 	      380 	           705 	          348 	          
335 

332	Fabricated Metal Product Manufacturing	       61,652 	       58,630 
95%	     3,300 	       18,135 	  11,433 	   9,943 	      12,100 	      
3,309 	        3,432 

333	Machinery Manufacturing	       27,941 	       25,826 	92%	     1,343
	         6,862 	    4,682 	   4,439 	        5,974 	       1,995 	     
  2,646 

334	Computer and Electronic Product Manufacturing	       15,883 	      
14,525 	91%	     1,028 	         3,534 	    2,116 	   2,059 	       
3,435 	       1,497 	        2,214 

335	Electrical Equipment, Appliance, and Component Manufacturing	       
 6,601 	         6,176 	94%	        315 	         1,353 	      931 	    
 797 	        1,361 	          628 	        1,216 

336	Transportation Equipment Manufacturing	       12,202 	       11,623 
95%	        678 	         2,610 	    1,577 	   1,490 	        2,383 	   
   1,172 	        2,292 

337	Furniture and Related Product Manufacturing	       22,083 	      
21,338 	97%	     1,577 	         8,386 	    4,204 	   3,075 	       
3,201 	          895 	           745 

339	Miscellaneous Manufacturing	       29,507 	       25,083 	85%	    
2,409 	       12,325 	    5,168 	   3,517 	        3,772 	       1,205 	
       1,111 

521	Monetary Authorities - Central Bank	             58 	              -
  	0%	          -   	              -   	         -   	        -   	     
       -   	            -   	             58 

5222	Depository Credit Intermediation	     114,286 	       46,999 	41%	 
      239 	         3,963 	    2,489 	   3,806 	      17,199 	    
19,303 	       67,287 

Total	     471,032 	     370,859 	79%	   22,979 	     106,156 	  59,684 
 52,079 	      80,811 	     43,619 	     105,704 

Source:  U.S. Census Bureau, Statistics of U.S. Businesses, County
Business Patterns (2002); www.census.gov/csd/ susb/susb02.htm, accessed
on 06/30/08.  All data except for  NAICS Codes 518

and 922140.  

For manufacturing codes, SBA size limits run from 500 employees to 750,
1,000, and 1,500 employees.  For the 473 six-digit subcodes making up
the manufacturing sector codes 31-33, nearly three-quarters are subject
to the 500 employee SBA standard, about a quarter are divided into 750
or 1,000 employee standards, and fewer than 1% have a 1,500 employee SBA
size criterion.  Although SBA uses 750 and 1,500 as small business
criteria for certain NAICS codes, available data on the establishments
comprising the Codes do not use those cut-offs.  Thus, the data describe
the number of establishments with 1,000 or more employees but not the
number of establishments with greater than 1,500 employees.  Similarly,
the data categorize establishments with 500-999 employees, so the number
of establishments with 750 employees or fewer can not be determined.

The largest employee size standard of 1500 applies to petroleum
refineries (Code 324110), ammunition (excluding small arms)
manufacturing (Code 332993), and aircraft manufacturing (Code 336411). 
The establishment data for these three codes indicate the following:

Because about 3% of the 349 petroleum refineries have 1,000 or more
employees, there is a small probability that a few refineries with fewer
than 1,500 employees will be included in the survey of 7 petroleum
refineries.  Even in the worst case where all 7 of the surveyed
petroleum refineries qualified as small businesses, this would not
constitute a substantial number of affected entities.  

Because nearly 9% of the 273 aircraft manufacturing establishments have
1,000 or more employees, there is a very small probability that some
aircraft manufacturing establishments with fewer than 1,500 employees
will be included of the survey of 5 aircraft manufacturing
establishments.  Even in the worst case where all 5 of the surveyed
aircraft manufacturing establishments qualified as small businesses,
that would not constitute a substantial number of affected entities.

On the other hand, none of the ammunition manufacturing establishments
reported having 1,000 or more employees, which means that  the entire
code is comprised of small businesses.  Based on the total of 52
establishments in this Code, the one establishment selected for the
survey will qualify as a small business.

As noted earlier, about 12% of the 344 6-digit manufacturing codes have
an SBA cut-off of 1,000 employees and an equal number are subject to the
750 employee standard.

SBA has no small business criteria for NAICS 521 (Monetary Authorities
– Central Bank) nor for NAICS 922140 (Correctional Institutions). 
Code 521 includes only 58 establishments, which means that it would have
very little impact on costs or affected entities.  Code 922140, on the
other hand, includes about 1,681 adult correctional institutions,
according to the U.S. Department of Justice; adding jails yields a total
of 5,046 establishments.  Given that EPA intends to target the largest
1-2% of establishments, the survey is unlikely to be sent to any small
entities in the above codes.

Although small businesses are not intended to be targeted by the survey,
it is conceivable that some small businesses may want to download and
submit Survey reporting information without request from EPA.  EPA does
not expect a significant number of small businesses to do so because
small businesses typically lack the necessary volume of economically
recoverable waste energy, which EPA will explain on its website.  The
WEST tool is expected to screen out projects that would not be
economical (e.g., due to small size).

 An RIA comprehensively assesses the effects of alternative actions and
the trade-offs among them and requires estimates of the net benefits of
the proposed regulation and alternatives to it, as well as the
distribution of these costs and benefits.  

 Waste Energy Recovery Opportunities for Interstate Natural Gas
Pipeline,  prepared for the Interstate Natural Gas Association of
America by ICF International ( February, 2008).

 Note that these MMTCE savings are a best-guess estimate based on gross
technical potential, which is much different than economic potential.

 The categories of emission estimates are additive.  

 An exception is the cut-off for electric generating units (EGUs), which
is expressed in terms of units of electricity output.  NAICS Code 5221
is another exception because the cut-off is expressed as dollar
magnitude of assets.

 US Department of Justice, Bureau of Justice Statistics, “Census of
State and Federal Correctional Facilities, 2000” and Census of Jails
(1999).

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Exhibit 1 (continued)

DESCRIPTIONS OF KEY NAICS CODES

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