DRAFT MEMORANDUM

TO:	Docket for rulemaking, "Asphalt Processing and Asphalt Roofing Manufacturing NESHAP RTR Proposal" (EPA-HQ-OAR-2017-0662)
DATE: 	September 21, 2018
SUBJECT:	Economic Impact Analysis for Asphalt Processing and Asphalt Roofing Manufacturing NESHAP RTR Proposal


Introduction

This document addresses the potential economic impact and small business screening assessments of the proposed amendments to the National Emission Standards for Hazardous Air Pollutants (NESHAP): Asphalt Processing and Asphalt Roofing Manufacturing based on the residual risk and technology review (RTR). The costs associated with the proposed amendments are related to a one-time review of the proposed amendments and periodic performance tests for particulate matter and total hybrocarbon once every five years. The proposed amendments also reflect cost savings associated with a proposed monitoring option and filter replacements. The docket for rulemaking, "Asphalt Processing and Asphalt Roofing Manufacturing NESHAP RTR Proposal" (EPA-HQ-OAR-2017-0662) contains an Excel workbook that documents the analyses presented in this memorandum.

Summary of Costs of the Proposed Amendments

Eight facilities are subject to the proposed ammendments. Four facilities will incur costs only and four facilities will accrue net savings. The total estimated net compliance cost savings of the proposed action are estimated to be approximately $221,000 (2016$, net present value  -  NPV, assuming a 7 percent discount rate) over five years. Because periodic performance testing would be required every five years, we estimated and summarized the cost savings over a five year period. We also estimated an equivalent annualized value (EAV) of the compliance cost savings to be approximately $15,500 annually (assuming a 7 percent discount rate). For details on how the cost savings were calculated, please see the Excel workbook titled "Supporting Calculations for Cost Impacts Amendments Asphalt Processing and Asphalt Roofing Manufacturing09202018.xslx" in the docket.

Economic Impacts

Economic impact analyses focus on changes in market prices and output levels. If changes in market prices and output levels in the primary markets are significant enough, impacts on other markets may also be examined. Both the magnitude of costs needed to comply with a rule and the distribution of these costs among affected facilities can have a role in determining how the market will change in response to a rule. The proposed amendments are estimated to have a net compliance cost savings and not result in market impacts.

Small Business Screening Analysis

The proposed amendments to the Asphalt Processing and Asphalt Roofing Manufacturing NESHAP RTR are projected to affect eight facilities. None of the four facilities that will incur costs are considered small entities because they all exceed the Small Business Administration's (SBA) size standards for small. Because there are no small entities, this action will not have a significant economic impact on a substantial number of small entities (SISNOSE). The remainder of this section provides background on the small business screening analysis for the four facilities.

EPA conducted this small business screening analysis at the ultimate (i.e., highest) level of ownership, evaluating parent entities of affected facilities. EPA identified the size of ultimate parent entities by using the SBA size standard guidelines. The criteria for size determination vary by the organization/operation category of the ultimate parent entity. Federal and state governments are considered to be large entities, or governmental jurisdictions. Municipalities and other political units with populations fewer than 50,000 are considered to be small entities, or governmental jurisdictions. For privately-owned (non-government) entities, small entities are those with less than the threshold level of sales or number of employees specified by SBA for each of the relevant North American Industry Classification System (NAICS) sectors. 

To find out what facilities would be impacted by this proposal, first we examined the recommendations under "Asphalt Processing and Asphalt Roofing Manufacturing NESHAP RTR proposal" (EPA-HQ-OAR-2017-0662) and identified the facilities that are projected to incur costs or accrue cost savings as a result of this action. To do this, we identified the ultimate parent entity owning each facility, and then determined the status of each ultimate parent entity (e.g., federal government, state, municipality, firm, etc.). We primarily used publicly available information on Hoover's, Inc. online database to identify the ultimate owner of a facility. In some cases, we used self-published data by entities. In this analysis, there are only private companies and no federal government, state, or municipal facilities would be affected in this proposal.

Third, we followed SBA size standard guidelines to determine which privately-owned ultimate parent entities would be considered small entities in this analysis. These SBA size standard guidelines are specified by industry, each having a threshold level of employees, revenue, or assets below which an entity is considered small. SBA size standard guidelines list all industries, along with their associated NAICS code and SBA size standard. Therefore, it was necessary to identify the specific NAICS code associated with each ultimate parent entity to determine the appropriate size standard to apply.

The NAICS codes for most companies were found on Hoover's, Inc. online database and were used to identify the NAICS codes for the ultimate owner of a facility. Because the facilities affected by this action are owned by ultimate parent companies in a broad range of industries, we considered SBA size standard guidelines for three different NAICS codes, including 324110, Petroleum Refineries, 327993, Mineral Wool Manufacturing, and 324122, Asphalt Shingle and Coating Materials Manufacturing. Then, we compared the relevant entity size of each ultimate parent entity to the SBA size standard (i.e., number of employees or sales).  We determined none of the four facilities that will incur costs are considered small entities because they all exceed the SBA's size standards for small.


