			

		  UNFUNDED MANDATES REFORM ACT ANALYSIS

FOR THE SPARK-IGNITION (SI) STATIONARY RECIPROCATING INTERNAL COMBUSTION
ENGINE (RICE) NESHAP UNDER THE CLEAN AIR ACT

		(August, 2010)

	This document provides an analysis of the effects of the U.S.
Environmental Protection Agency’s (“EPA”) stationary
spark-ignition (SI) 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 SI 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 final rule includes a maximum achievable control technology (MACT)
standard for SI RICE that are major sources of HAP and a generally
available control technology (GACT) standard for RICE that are area
sources of HAP.   Existing spark-ignition engines will incur compliance
costs (the costs of control measures and testing, monitoring,
recordkeeping, and reporting) under this rule.  New spark-ignition
engines will not be affected by this rule.  This rule will be
promulgated on August 10, 2010 as directed under a court-order.  

This rule affects existing SI RICE (defined as RICE constructed before
June 12, 2006) but not new ones.  Estimates of existing SI RICE by
engine type and compliance cost estimates by engine type were used as
inputs to calculate the economic impact of the rule.  SI RICE are
defined as emergency and non-emergency engines based on their extent of
use in a typical year.  Most engines affected by this rule are in the
non-emergency category.   Emergency engines will not be required to add
controls to meet the final rule’s requirements, but will have to
submit to monitoring, recordkeeping, reporting, and testing
requirements. 

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 (slightly more than 50 percent of the total annualized costs). 
For all affected industries, annualized compliance costs are 0.5 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 $253 million (2009 dollars), which is the
same as the estimated compliance costs.  

 It is estimated that HAP emissions from existing RICE will be reduced
by 6,000 tons per year by 2013.  Reductions in formaldehyde,
acetaldehyde, acrolein, methanol, benzene 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 109,000 tons per year, about 31,000 tons of volatile organic
compounds (VOC), and nearly 96,000 tons per year of nitrogen oxides
(NOx).  

Exposure to CO can affect the cardiovascular system and the central
nervous system.   Emissions of NOx and VOC can also transform into PM
(including PM2.5) in the atmosphere.  Exposure to PM emissions can
result in premature fatalities and many respiratory problems (such as
asthma and bronchitis).  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 $510 million to $1.2
billion (2009 dollars) in 2013 with a 3 percent discount rate and $460
million to $1.1 billion (2009 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 VOC.  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.  Overall, the monetized net
benefits of the final rule are $250 million to $980 million and $210
million to $860 million, at 3% and 7% discount rates, respectively.  

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 and 112
(Crop and Animal Production).  For NAICS 2211, the number of private
sector small entities having annualized costs of greater than 1 percent
of their sales is less than 5 percent.  For NAICS 111 and 112, the
number of small entities having annualized costs of greater than 1
percent of their sales is about 30 percent, but no small entity has an
impact of 2 percent or greater.   We conclude that there is no
significant impact on a substantial number of small entities (SISNOSE)
that results from this rule.

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 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 from major and area sources.  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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