
MEMORANDUM

TO:	Dockets for rulemaking, "Printing, Coating and Dyeing of Fabrics and Other Textiles (Subpart OOOO)" (EPA-HQ-OAR-2017-0668)
DATE:		December 4, 2018
SUBJECT:	Economic Impact and Small Business Screening Assessments for Amendments to the National Emission Standards for Hazardous Air Pollutants for the Printing, Coating and Dyeing of Fabrics and Other Textiles (Subpart OOOO)

Introduction
      
This document summarizes economic impact and small business screening assessments for the amendments to the National Emission Standards for Hazardous Air Pollutants for the Coating and Dyeing of Fabrics and Other Textiles (40 CFR part 63, Subpart OOOO) based on the residual risk and technology review. The costs estimated for the amendments to subpart OOOO are associated with performance testing once every five years for 13 facilities, as well as costs associated with familiarization with the rule requirements and changes to the Startup, Shutdown, and Malfunction (SSM) requirements for all 43 affected entities. A discussion of the regulatory options evaluated and their detailed cost estimates is provided in the November 28, 2018, technical memorandum entitled "Updated Costs/Impacts of the Proposed 40 CFR Part 63 Subparts NNNN, OOOO and RRRR Monitoring Review Revisions," available in the docket.

Costs of the Amendments

This rule will require periodic air emissions testing to measure organic HAP destruction or removal efficiency at the inlet and outlet of the add-on control device, or control device outlet concentration of organic HAP, once every five years for existing and new surface coating affected sources using the emission rate with add-on controls compliance option. Currently, there are 21 facilities that use add-on control devices for fabric coating operations, and eight of these are already required to perform testing as part of renewing their 40 CFR part 70 operating permit.

This rule will also require that the emission standards be met at all times, including during startup, shutdown, and malfunction, and will require the use of the electronic reporting tool for annual reports, performance testing, and notifications. The burden associated with these requirements is the recordkeeping requirement for startup, shutdown, and malfunction, and the requirement that facilities use the electronic reporting tool. While the electronic reporting requirements are expected to be no more burdensome than the current reporting requirements, there are some costs associated with re-evaluating previously developed SSM record systems in year one.

The costs for each year in the time period of analysis are presented in the table below. A seven-year time period was chosen for this analysis because it is assumed that facilities must become familiarized and comply with the regulation, and testing is required every five years. The costs in 2019 are related to familiarization with the rule requirements and changes to the SSM requirements, while the costs reported in 2021 are those related to performing the emissions test and reporting the results. The 2018 equivalent annualized value (in 2016$) of the costs over the seven-year time period range is $72,000 assuming a three percent discount rate and $75,000 assuming a seven percent discount rate.

Table 1. National Cost of Amendments (2016$)
                                       
                              Undiscounted Costs
                          Total 2018 Discounted Value
                                     Year
                                     Labor
                                 Testing Costs
                                     Total
                                      3%
                                      7%
                                     2019
                                    $90,000
                                      $0
                                    $90,000
                                    $87,000
                                    $84,000
                                     2020
                                      $0
                                      $0
                                      $0
                                      $0
                                      $0
                                     2021
                                    $60,000
                                   $330,000
                                   $390,000
                                   $360,000
                                   $320,000
                                     2022
                                      $0
                                      $0
                                      $0
                                      $0
                                      $0
                                     2023
                                      $0
                                      $0
                                      $0
                                      $0
                                      $0
                                     2024
                                      $0
                                      $0
                                      $0
                                      $0
                                      $0
                                     2025
                                      $0
                                      $0
                                      $0
                                      $0
                                      $0
                                 Present Value
                                      --
                                      --
                                      --
                                   $450,000
                                   $400,000
                          Equivalent Annualized Value
                                      --
                                      --
                                      --
                                    $72,000
                                    $75,000
Note: Values rounded to two significant digits.

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. 

For the purpose of analyzing the impact on firms, performance testing costs were treated as capital costs because facilities are expected to contract with a testing company to perform the testing. The testing costs were annualized at a 5.25 percent interest rate over the 5-year testing period, under the assumption that facilities would obtain a 5-year loan to finance the testing. Some facilities only face costs associated with familiarization with the rule requirements and changes to the SSM requirements, while other facilities face additional costs associated with conducting emissions tests and reporting the results. To assess the maximum potential impact, the largest cost expected to be experienced in any one year is compared to the total sales for the ultimate owner of the affected facilities to estimate the total burden for each facility. The total costs associated with Subpart OOOO's proposed requirements range from 0.00002 to 0.42 percent of annual sales revenue per affected entity. These costs are not expected to result in a significant market impact, regardless of whether they are passed on to the purchaser or absorbed by the firms.

The EPA prepared a small business screening assessment to determine if any of the identified affected entities are small entities, as defined by the U.S. Small Business Administration (SBA). The affected facilities that perform coating and dyeing of fabrics and other textiles fall into one of the following North American Industry Classification System (NAICS) codes, where the associated SBA small entity size threshold appears in parentheses: 313110, Fiber, Yarn, and Thread Mills (1,250 or fewer employees); 313210, Broadwoven Fabric Mills (1,000 or fewer employees); 313310, Textile and Fabric Finishing Mills (1,000 or fewer employees); 313320, Fabric Coating Mills	(1,000 or fewer employees); 314110, Carpet and Rug Mills (1,500 or fewer employees); 314999, All Other Miscellaneous Textile Product Mills (500 or fewer employees); 322220, Paper Bag and Coated and Treated Paper Manufacturing (750 or fewer employees); 323111, Commercial Printing (except Screen and Books) (500 or fewer employees); 325211, Plastics Material and Resin Manufacturing	(1,250 or fewer employees); 326130, Laminated Plastics Plate, Sheet (except Packaging), and Shape Manufacturing (500 or fewer employees); 326220, Rubber and Plastics Hoses and Belting Manufacturing (750 or fewer employees); 326299, All Other Rubber Product Manufacturing (500 or fewer employees); 334290, Other Communications Equipment Manufacturing (750 or fewer employees); 334418, Printed Circuit Assembly (Electronic Assembly) Manufacturing (750 or fewer employees); 335932, Noncurrent‑Carrying Wiring Device Manufacturing (1,000 or fewer employees); 336390, Other Motor Vehicle Parts Manufacturing (1,000 or fewer employees); or 336992, Military Armored Vehicle, Tank and Tank Component Manufacturing (1,500 or fewer employees).
Eighteen of the potentially affected entities are small entities. However, the annualized costs associated with Subpart OOOO's requirements for these 18 affected small entities range from 0.00112 to 0.42 percent of annual sales revenues per affected entity. Therefore, there are no significant economic impacts on a substantial number of small entities (SISNOSE) from these amendments.
