MEMORANDUM


DATE:	November 18, 2014

SUBJECT:	Revised Cost Impacts of Pressure Relief Device Monitoring for the Off-site Waste and Recovery Operations Source Category

FROM:	Lesley Stobert, EC/R Inc.

TO:		Paula Hirtz, EPA/OAQPS/SPPD/RCG


      The purpose of this memorandum is to present the revised estimated cost impacts of the proposed requirements for pressure relief device (PRD) monitoring for the Off-site Waste and Recovery Operations (OSWRO) source category. The requirements for OSWRO facilities are being finalized in 40 CFR part 63, subpart DD and apply to major sources of hazardous air pollutants (HAP) emissions at existing and new facilities under the national emissions standards for hazardous air pollutants (NESHAP). The addition of PRD monitoring to the NESHAP for this source category is being finalized along with proposed changes evaluated under the EPA's Risk and Technology Review (RTR) program, which is addressing statutory requirements under section 112(d)(6) and 112(f)(2) of the Clean Air Act (CAA). The costs of the PRD monitoring program for OSWRO facilities has been updated since proposal to include the costs for four additional facilities that the EPA has learned are subject to the OSWRO NESHAP. Section 1 provides background information, followed by the estimated costs of the final PRD monitoring requirements for the source category in section 2.

1.0  	BACKGROUND

      On July 2, 2014 (79 FR 37850), the EPA proposed amendments to the OSWRO source category following the results of a review required by section 112(d)(6) of the CAA, which directs the EPA to review previously issued NESHAP regulations and to revise them as necessary (taking into account developments in practices, processes and control technologies) no less frequently than every 8 years. Section 112(f)(2) of the CAA requires the EPA to assess, within 8 years of promulgation of the original NESHAP for major sources and area sources subject to MACT, the remaining risks due to emissions of HAP from these source categories and determine whether the emissions standards provide an ample margin of safety to protect public health. These reviews are collectively referred to as residual risk and technology reviews (RTRs).

  	In addition to the residual risk and technology reviews performed regarding the NESHAP, the EPA also reviews existing provisions of the NESHAP during the RTR process. In light of and consistent with a 2008 United States Court of Appeals for the District of Columbia Circuit decision (Sierra Club v. EPA, 551 F.3d 1019 (D.C. Cir. 2008)), in which portions of two provisions in the EPA's CAA section 112 regulations governing the emissions of HAP during periods of startup, shutdown and malfunction (SSM) were vacated, the EPA proposed to eliminate the SSM exemption for the OSWRO source category and require that the CAA section 112(d) emissions standards apply at all times, including periods of SSM. In addition, in order for the treatment of malfunction-caused releases to the atmosphere to conform with the reasoning of the Court's ruling, the EPA proposed that PRDs in off-site material service must be monitored. For the July 2014 proposal, the cost of these monitoring devices were estimated. Following the July 2014 proposal, the EPA received information from industry representatives that four additional facilities that were not known to be part of the OSWRO source category are subject to the OSWRO NESHAP. We have revised our analysis of PRD monitoring costs for the OSWRO source category to include these four additional facilities for a total of 49 facilities that will be impacted by these requirements. 

2.0 	COST IMPACTS 

      Owners or operators could use a range of methods to identify pressure releases, record the time and duration of each pressure release and immediately notify operators that a pressure release is occurring, including parameter monitoring systems that facilities may already have in place. However, in order to estimate the costs associated with requiring monitoring of PRDs for OSWRO facilities, it was conservatively assumed that operators would install wireless electronic indicators on each PRD in off-site material service that vents to the atmosphere. To estimate the cost of electronic indicators, we used information from analyses performed by the South Coast Air Quality Management District (SCAQMD) of California, which were conducted in support of a rule that requires continuous monitoring of a percentage of PRDs at refineries by installing a monitoring device capable of recording the duration of each release and quantifying emissions. Wireless technology allows continuous monitoring of PRDs and makes it easier for operators to identify releases and leaks. There are several types of monitoring devices available, including acoustic sensors and pressure/differential pressure sensors. These sensor units communicate with a base radio that interfaces with the existing control system. The costs for PRD wireless monitoring, based on information from the SCAQMD analyses, are summarized in Table 1. We note that our cost estimate, which assumed the installation of electronic indicators on each relief device that vents to the atmosphere, likely overstates actual costs to the industry, as an owner or operator may use parameter monitoring systems already in place. 
      
      The monitoring device cost provided by the SCAQMD was based on vendor costs and ranged from $5,000 to $10,000, with an average of $7,500, and includes device parts, installation, and maintenance, as well as a data retrieval system. According to the SCAQMD analyses, annual operating costs are minimal because they typically only include periodic replacement of inexpensive batteries. It was assumed that, for this analysis, these costs were presented in 2007 dollars and were therefore escalated to 2012 dollars. As a result, the total capital investment was determined to be $8,345 per PRD. 
 
      According to the SCAQMD analyses, the cost of electronic monitoring systems is not linear, and facilities requiring a larger number of monitors are expected to benefit from economies of scale. Therefore, the sixth-tenths rule was applied to calculate initial costs. As shown in Table 1, the total capital investment for the model OSWRO facility, which has 13 PRDs, was determined to be $38,900. A capital recovery factor of 0.1424 was applied to the total capital investment to get an annualized cost for the model plant of $5,500/yr (no operating costs were estimated as they are assumed to be minimal).




    Table 1. Total Capital Investment and Annualized Cost of PRD Monitoring

Cost Parameter
                                     Value
Number of PRDs at Model OSWRO Facility[a]
                                      13
Unit Device Installation Cost[b]
                             $7,500 (2007 Dollars)

                           $8,345 (2012 Dollars)[c]
Facility Total Capital Investment[d]
                                    $38,886
Total Capital Investment for the OSWRO Source Category[e]
                                  $1,905,410
Capital Recovery Factor
                                   0.1424[f]
Total Annualized Cost Per Facility
                                    $5,537
Total Annualized Cost for the OSWRO Source Category[e]
                                   $271,313
        Minor discrepancies are due to rounding.
        [a] Median of number of PRDs reported in responses to a questionnaire sent to OSWRO facilities in 2013 under the authority of CAA section 114. 
        [b] Device cost is average of range provided.
        [c] Chemical Engineering Index for 2007 is 525.4 and 584.6 for 2012.
        [d] Calculated using sixth-tenths rule. Facility Cost ($) = PRD Unit Cost ($) * (No. of PRDs)^0.6
        [e] Total costs for the source category based on 49 facilities that will be subject to these requirements.
        [f] Capital recovery factor calculated based on 7 percent interest and 10 year equipment life.



