
MEMORANDUM

TO:	Dockets for rulemaking, "Metal Coil Surface Coating Plants (Subpart SSSS)" (EPA-HQ-OAR-2017-0685)
DATE:		February 12, 2019
SUBJECT:	Economic Impact and Small Business Screening Assessments for Proposed Amendments to the National Emission Standards for Hazardous Air Pollutants for Metal Coil Surface Coating Plants (Subpart SSSS)

Introduction
      
This document summarizes economic impact and small business screening assessments for the proposed amendments to the National Emission Standards for Hazardous Air Pollutants for Metal Coil Surface Coating Plants (40 CFR part 63, Subpart SSSS) based on the residual risk and technology review. The costs estimated for the proposed amendments to subpart SSSS are associated with performance testing once every five years for 30 add-on control devices at 21 facilities, as well as costs associated with familiarization with the rule requirements and changes to the Startup, Shutdown, and Malfunction (SSM) requirements, and requiring the use of electronic data reporting for future performance test data submittals, notifications, and reports for all 48 affected entities. A discussion of the cost estimates is provided in the February 2019 technical memorandum entitled "Costs/Impacts 40 CFR Part 63 Subparts KKKK and SSSS Monitoring Review Revisions," available in the docket.

Costs of the Proposed Amendments

This proposal would 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 41 facilities that use add-on control devices for metal coil coating operations. Twenty of these facilities are already required to perform testing as part of renewing their 40 CFR part 70 operating permit. This analysis assumes that the remaining 21 of the 48 facilities, using 30 controls, would be affected by the proposed periodic testing requirements.

This proposal 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 related to changes in 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 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 will become familiar with the regulation in the first year, must test by the third year, and testing is required every five years thereafter. The costs in 2020 are related to familiarization with the rule requirements and changes to the SSM requirements, while the costs reported in 2022 are those related to performing the emissions test. The 2019 equivalent annualized value (in 2016$) of the costs over the seven-year time period is $120,000 assuming a three percent discount rate and $130,000 assuming a seven percent discount rate. In the absence of changes to the rule, additional testing costs of $680,000 (unannualized) would be required in 2027 and every five years thereafter.

Table 1. National Cost of Proposed Amendments (2016$)
                                       
                              Undiscounted Costs
                            Total Discounted Value
                                     Year
                                     Labor
                                 Testing Costs
                                     Total
                                      3%
                                      7%
                                     2020
                                   $120,000
                                      $0
                                   $120,000
                                   $120,000
                                   $120,000
                                     2021
                                      $0
                                      $0
                                      $0
                                      $0
                                      $0
                                     2022
                                   $120,000
                                   $560,000
                                   $680,000
                                   $640,000
                                   $590,000
                                     2023
                                      $0
                                      $0
                                      $0
                                      $0
                                      $0
                                     2024
                                      $0
                                      $0
                                      $0
                                      $0
                                      $0
                                     2025
                                      $0
                                      $0
                                      $0
                                      $0
                                      $0
                                     2026
                                      $0
                                      $0
                                      $0
                                      $0
                                      $0
                                 Present Value
                                      --
                                      --
                                      --
                                   $760,000
                                   $710,000
                          Equivalent Annualized Value
                                      --
                                      --
                                      --
                                   $120,000
                                   $130,000
Note: Values rounded to two significant digits and may not add exactly due to rounding. Labor costs adjust 2018$ values in ICR package for this rule to their 2016$ equivalent using GDP Implicit Price Deflator.

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 proposed 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 proposed 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 48 affected facilities are owned by 25 different parent companies, and the total costs associated with Subpart SSSS's proposed requirements range from 0.00001 to 0.28 percent of annual sales 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.

EPA also 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 ultimate owners of affected facilities that perform metal coil surface coating fall into one of the following North American Industry Classification System (NAICS) codes, where the associated SBA small entity size threshold appears in parentheses: 321918, Other Millwork (including Flooring) (500 or fewer employees); 322220, Paper Bag and Coated and Treated Paper Manufacturing (750 or fewer employees); 325992, Photographic Film, Paper, Plate and Chemical Manufacturing (1500 or fewer employees); 325998, All Other Miscellaneous Chemical Product and Preparation Manufacturing (500 or fewer employees); 331110, Iron and Steel Mills and Ferroalloy Manufacturing (1500 or fewer employees); 331313, Alumina Refining and Primary Aluminum Production (1000 or fewer employees); 331315, Aluminum Sheet, Plate and Foil Manufacturing (1250 or fewer employees); 331318, Other Aluminum Rolling, Drawing, and Extruding (750 or fewer employees); 331420, Copper Rolling, Drawing, Extruding, and Alloying (1000 or fewer employees); 332311, Prefabricated Metal Building and Component Manufacturing (750 or fewer employees); 332322, Sheet Metal Work Manufacturing (500 or fewer employees); 332431, Metal Can Manufacturing (1500 or fewer employees); 332812, Metal Coating, Engraving (except Jewelry and Silverware), and Allied Services to Manufacturers (500 or fewer employees); 333996, Fluid Power Pump and Motor Manufacturing (1250 or fewer employees); or 337920, Blind and Shade Manufacturing (1000 or fewer employees).
Ten of the potentially affected entities are small entities. However, the annualized costs associated with Subpart SSSS's proposed requirements for the seven ultimate owners of these ten affected small entities range from 0.0029 to 0.28 percent of annual sales per ultimate owner. Therefore, there are no significant economic impacts on a substantial number of small entities (SISNOSE) from these proposed amendments.
