
MEMORANDUM

TO:	Dockets for rulemaking, "Surface Coating of Large Appliances (Subpart NNNN)" (EPA-HQ-OAR-2017-0670)
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 Surface Coating of Large Appliances (Subpart NNNN)

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 Surface Coating of Large Appliances (40 CFR part 63, Subpart NNNN) based on the residual risk and technology review. The costs estimated for the amendments to subpart NNNN are associated with familiarization with the rule requirements and changes to the Startup, Shutdown, and Malfunction (SSM) requirements for all ten affected entities. Facilities will be required to meet the standards during startup, shutdown and malfunction and use the electronic reporting tool for annual reports, performance testing, and notifications. 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 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 this rule is the recordkeeping requirement for startup, shutdown, and malfunction, and the requirement that facilities use the electronic reporting tool. While the electronic reporting requirement is expected to be no more burdensome than the current reporting requirement, there are costs associated with becoming familiar with the rule requirements and electronic reporting system, as well as re-evaluating previously developed SSM record systems. The one-time total cost (in 2016$) of this rule is estimated to be $23,000 for the ten affected entities in 2019. 

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, the per-facility costs for familiarization with the rule requirements and changes to the SSM requirements were compared to the annual sales revenue for the ultimate owner of the affected facilities to estimate the total burden for each ultimate owner. The ten affected facilities are owned by six different parent companies, and the total costs associated with Subpart NNNN's requirements range from 0.000002 to 0.02 percent of annual sales revenues per ultimate owner. 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 surface coating of large appliances fall into one of the following North American Industry Classification System (NAICS) codes: 332313, Plate Work Manufacturing; 333413, Industrial and Commercial Fan and Blower and Air Purification Equipment Manufacturing; 333415, Air‑Conditioning and Warm Air Heating Equipment and Commercial and Industrial Refrigeration Equipment Manufacturing; or 335220, Major Household Appliance Manufacturing. The SBA defines small entities in these NAICS codes as having 750 or fewer employees, 500 or fewer employees, 1,250 or fewer employees, or 1,500 or fewer employees, respectively. One of the affected facilities was identified as a small entity, but as the costs associated with Subpart NNNN's requirements are 0.02 percent of that facility's annual sales revenue, there are no significant economic impacts on a substantial number of small entities (SISNOSE) from these amendments.
