MEMORANDUM
To:	David Putney, U.S. Environmental Protection Agency (EPA), OAQPS
From:	Mike Laney and Beatrix Jackson, RTI International
Date:	August 22, 2019
Subject:	Draft Cost impacts of proposed residual risk and technology review amendments to the Taconite Iron Ore Processing NESHAP
_____________________________________________________________________________
Background
The purpose of this memo is to estimate the cost savings associated with the proposed residual risk and technology review (RTR) amendments to the Taconite Iron Ore Processing NESHAP (i.e., 40 CFR part 63, subpart RRRRR). These proposed amendments include the removal of the current requirement for quarterly internal baghouse inspections for each baghouse that is equipped with a bag leak detection system (BLDS) and the reduction of the minimum run time for required Method 5 compliance tests from 2 hours to 1 hour.
Baghouse Inspection
The current taconite NESHAP requires that baghouses be equipped with bag leak detection systems and conduct inspections of the baghouse according to the requirements in 40 CFR 63.9631(a). Under the proposed rule, baghouses equipped with BLDS would not be required to conduct quarterly internal baghouse inspections, as currently required by 40 CFR 63.9631(a)(7).
To estimate the annual cost savings of removing the internal baghouse inspection requirements, the person-hours for each internal inspection requirement was estimated (i.e., 4 hours per inspection). The estimated person-hours for each inspection requirement were then multiplied by the frequency of the required internal inspections (i.e., 4 inspections per year) to estimate the person-hours required for a single baghouse. The total person-hours per year per baghouse was estimated at 16 hours.
Labor rates were based on Bureau of Labor Statistics (BLS) data.[1] An hourly wage of $44.54 was used and a rate of 110 percent was applied to account for overhead costs, or $48.99. The fully burdened hourly wage used was $93.53.
An estimated 75 baghouses would be affected by this amendment.[2] Multiplying the annual person-hours and labor rate by the number of baghouses gives an estimated total cost savings of $112,241 per year. The information used to estimate costs are summarized in Table 1.
Test Run Time Requirement
The current taconite NESHAP requires that each particulate matter Method 5 test run be 2 hours in length for a total 6 hours of testing time. Under the proposed rule, the time for each test run would be reduced from 2 hours to 1 hour. Estimated annual savings per facility, as provided by industry,[2] ranged from $2,000 to $20,000. Total annual savings for the industry would be an estimated $78,000. The estimated cost reductions are summarized in Table 2.
Total Estimated Cost Impacts
The total estimated cost impacts associated with the proposed RTR amendments to the Taconite Iron Ore Processing NESHAP are a savings of about $190,000 per year (i.e., $112,241 per year for the removal of quarterly internal baghouse inspections for baghouses equipped with BLDS plus $78,000 per year for the reduction of Method 5 test runs from 2 hours to 1 hour).
References
1. Bureau of Labor Statistics, Occupational Employment Statistics, Environmental Engineers, May 2018.
2. Email with attachments. Balserak, P., American Iron and Steel Institute, to Putney, D. USEPA. List of Suggested Reg Improvements, March 15, 2019.

Table 1. Cost of Quarterly Internal Baghouse Inspection Required in 40 CFR 63.9631(a)(7)
                            Inspection requirement
                                 Rule citation
                              Required Frequency
                        How requirement is implemented
                          Person-hours per occurrence
                           Occurrences per baghouse
                                 Unit of time
                       Occurrences per baghouse per year
                      Person-hours per baghouse per year
                            Labor rate 
($/hour)[a]
                              No. of baghouses[2]
                             Annual cost ($/year)
Internal inspection of BH
                                 63.9631(a)(7)
                                   Quarterly
                               Once per quarter
                                       4
                                                                              1
/quarter
                                       4
                                      16
                                     93.53
                                      75
                                    112,241

Mean hourly wage[1]
 $                  44.54 


Mean hourly wage, including 110% overhead
 $                  93.53 


Note: Assumed that all baghouses are pulse jet.




                                       

Table 2. Cost Reduction to Reduce Test Run Time From 2 Hours to 1 Hour [a]
                                Taconite Plant
                         Estimated Annual Cost Savings
ArcelorMittal Minorca
                                    $4,500
U.S. Steel - Keetac
                                    $2,000
U.S. Steel - Minntac
                                    $15,000
Hibbing Taconite
                                    $8,500
United Taconite
                                    $7,000
Northshore Mining
                                    $20,000
Empire
                                    $10,000
Tilden
                                    $11,000
                                     Total
                                    $78,000

[a] Cost data obtained from email from Paul Balserak (AISI), dated March 15, 2019[2].

