			

		  UNFUNDED MANDATES REFORM ACT ANALYSIS

FOR THE COMPRESSION-IGNITION (CI) STATIONARY RECIPROCATING INTERNAL
COMBUSTION ENGINE (RICE) 

  NESHAP UNDER THE CLEAN AIR ACT

		(February, 2010)

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

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

	This rule includes a maximum achievable control technology (MACT)
standard for CI RICE that are major sources of HAP and a generally
available control technology (GACT) standard for RICE that are area
sources of HAP.   Spark-ignition (SI) RICE, a type of RICE covered in
the proposed rule published in March of last year, will be regulated
under a final rulemaking that will be signed by August 10, 2010. 
Existing compression ignition engines will incur compliance costs (the
costs of control measures and testing, monitoring, recordkeeping, and
reporting) under this rule.

This rule affects existing CI RICE (defined as RICE constructed before
2006) but not new ones.  Estimates of existing CI RICE by engine type
and compliance cost estimates by engine type were used as inputs to
calculate the economic impact of the rule.

The economic impact analysis (“EIA”) that is included in the RIA
indicates that prices of affected output from the affected industries
will increase as a result of the rule, but the changes will be small. 
The largest impacts are on the electric power generating industry
because it bears more costs from the rule than any other affected
industry (nearly 80 percent of the total annualized costs).  For all
affected industries, annualized compliance costs are 0.6 percent or less
on average of sales for firms.  

Based on the estimated compliance costs associated with this rule and
the predicted changes in prices and output in affected markets, the
estimated social costs are $373 million (2008 dollars), which is the
same as the estimated compliance costs.  

 It is estimated that HAP emissions from existing RICE will be reduced
by 1,000 tons per year by 2013.  Reductions in formaldehyde,
acetaldehyde, acrolein, methanol, and other HAPs are included in this
estimate.  The rule will also achieve in 2013 reductions in criteria
pollutants.   Reductions in carbon monoxide (CO) will total about 14,000
tons per year, about 27,000 tons of volatile organic compounds (VOC),
nearly 2,800 tons per year of particulate matter (PM), all of which are
in the fine fraction (PM2.5 - 2.5 microns in diameter and below).   The
final rule will also reduce emissions of SOx through the use of
ultra-low sulfur diesel fuel (ULSD).  We have not quantified the SOx
reductions that would occur as a result of engines switching to ULSD
because we are unable to estimate the number of engines that already use
ULSD and therefore we are unable to estimate the percentage of engines
that may switch to ULSD due to this rule.  If none of the affected
engines would use ULSD without this rule, then we estimate the SOx
reductions are 31,000 tpy in the year 2013.  If all of the affected
engines would use ULSD regardless of the rule, then the additional SOx
reductions would be zero.

Exposure to CO can affect the cardiovascular system and the central
nervous system.  Emissions of PM can result in premature fatalities and
many respiratory problems (such as asthma and bronchitis) and emissions
of NOx and SO2 can also transform into PM in the atmosphere.  NOx and
VOC can also transform into ozone, and this can also lead to premature
mortalities and many respiratory problems.  

The total monetized benefits of the rule range from $940 million to $2.3
billion (2008 dollars) in 2013 with a 3 percent discount rate and $850
million to $2.1 billion (2008 dollars) in 2013 with a 7 percent discount
rate.  The monetized benefits are comprised primarily of the benefits
from reductions in directly emitted PM2.5 and PM2.5 created from
transformation of NOx and SO2.  We cannot provide a monetary estimate
for the benefits associated with reductions of HAP and CO due to a lack
of scientific knowledge of the links between the reductions in incidence
of the health and environmental effects listed and a value that can be
placed on them.  EPA currently has research going on to provide such
monetized estimates.   The methodology for estimating monetized benefits
is discussed in more detail in the RIA.  

Our analysis also includes the economic impacts on small entities.  The
analysis of impacts on small entities is done as part of compliance with
the Small Business Regulatory Enforcement Fairness Act (SBREFA), and is
referred to by reference in this report.  We estimate that all small
private sector entities will have annualized costs of less than 1
percent of their sales in all industries except NAICS 2211 (electric
power generation, transmission, and distribution) and NAICS 111 (Crop
and Animal Production).  For these industries, the number of private
sector small entities having annualized costs of greater than 1 percent
of their sales is less than 5 percent.

Small government entities may also be affected by this rule as well as
small private sector entities.   As presented in the RIA, we find that
no small government entity will have compliance costs of more than 0.2
percent of their revenues.  Hence, no small government entity will be
impacted significantly by this rule. 

Although this rule will not have a significant impact on a substantial
number of small entities (SISNOSE), EPA nonetheless has tried to reduce
the impact of this rule on small entities. EPA carefully examined the
regulatory alternatives, and selected the lowest cost/least burdensome
alternative that EPA deems adequate to achieve the statutory
requirements of Clean Air Act section 112 and effectively reduce
emissions of HAP.  Some alternatives considered that provided more than
the minimum level of control were deemed as not technically feasible or
cost-effective for EPA to implement for small engines and emergency
engines.   All of these actions should reduce the level of small entity
impacts including impacts to small governments..  

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